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AMERICA
and the
NEW EPOCH
0
CHARLES P. STEINMETZ. A.M.. Ph.D.
HARPER 6* BROTHERS
PUBLISHERS
NEW YORK AND LONDON
-3^n "^"V
America and tiik New Epoch
Copyriglit, 1916, by Harper & Brothers
Printed in the United States of America
Pubhshed October, 1916
C-R
Ju
CONTENTS
CHAP. PAGE
Introduction v
I. Era3 in the World's History 1
II. The Epoch of the French Revolution ... 13
III. The Individualistic Era: From Competition to
Co-operation 19
IV. The Individualistic Era: The Other Side . . 44
v. England in the Individualistic Era . . . . G3
VI. Germany in the Individualistic Era .... 74
VII. The Other European Nations in the Individual-
istic Era 87
VIII. America in the Past 103
IX. America in the Individualistic Era . . . .119
X. PuBUc AND Private Corporations 132
XI. Democracy and Monarchy 142
XII. Evolution: Political Government 150
XIII. Evolution: Industrial Government .... 164
XIV. Evolution: Inhibitory Power 177
XV. The American Nation 188
XVI. The Future Corporation 199
XVII. Conclusion 217
INTRODUCTION
The following does not represent my senti-
ments, but gives the conclusions drawn from
the historical facts which of necessity follow
from the preceding causes, regardless whether
we like them or dislike them.
Sentiment has nothing to do with, can exert
no influence on, the phenomena of nature, on the
workings of nature's laws, whether it be the
cosmic laws which let winter follow summer,
regardless whether we wish it or not, or the
economic laws which plunged the world into
war with England and Germany as pro-
tagonists, irrespective whether we are pa-
cificists or militarists, pro-German or pro-
English.
In judging on the meaning of historical
facts, on events which we see occurring before
our eyes, we must entirely set aside our senti-
ments and our wishes, and, like in any physical
or engineering problem, draw the conclusions
which follow from tlie premises, whether they
INTRODUCTION
are agreeable or not. If we do so, and record
the facts and search back to their causes, we
very soon find that there is nothing in this
world which we can condemn, but that the
attitude of mind of condemning one thing,
approving another, is illogical, as bringing the
personal element of our egotism into the chain
of cause and effect. If we do so, we have dis-
franchised ourselves from the community of
reasoning intellects, and then we assuredly will
be led astray, and our conclusions will be prej-
udiced and wrong. But if we set aside our
personal relations and our personal interests, we
find that nothing that is or that has happened
can be condemned, but everything is the neces-
sary result of causes which have brought it
about, and back of these causes we find other
causes and so by the chain of cause and effect
everything that is is traced beyond the per-
sonal element of the actors taking part in the
event.
Thus, if the reader docs not like many of the
statements given in the following, I also do
not like many of the conclusions which I had
to draw; but, nevertheless, they are and re-
main the conclusions which follow from the
physical, economic, and social facts, and I be-
INTRODUCTION
lieve I had an unusual opportunity of observa-
tion from all sides of the politico-industrial
structure of to-day.
Born and educated in Germany, of German
and Polish descent, I have lived most of my
life in America, as an American citizen. The
Germany of my recollection is the agricultural
Germany of a bygone age, but the industrial
Germany of to-day has remained a foreign
country to me, while I have numerous good
friends in England.
When I came to this country, nearly a genera-
tion ago, everything was strange to me, thus
impressed itself on my memory far more strong-
ly than it would on a native who had grown up
under these conditions, and, therefore, in com-
paring the conditions of our country of to-day
with those of a generation ago, I can see the
enormous changes which have taken place.
As socialist, I took an active part in the ten
years' political war of the German social democ-
racy against Bismarck, succeeded in escaping
to Switzerland, when the Government tried to
arrest me, and, after continuing my studies there,
came to America. I have always retained my
interest in public welfare and politics, have held
and am holding political office in my home
INTRODUCTION
town, and am still dues-paying member of the
Socialist party organization.
When I landed at Castle Garden, from the
steerage of a French liner, I had ten dollars and
no job, and could speak no English. Now,
personally I have no fault to find with existing
society; it has given me everything I wanted;
I have been successful professionally, in en-
gineering, and have every reason to be personally
satisfied, and the only criticism which I can
make is that I would far more enjoy my ad-
vantages if I knew that everybody else could
enjoy the same.
For several years I was employed by a small
manufacturer; then for nearly a quarter of a
century with a huge manufacturing corpora-
tion, and helped make it what it is to-day.
Thus I have seen the working of small individ-
ualistic production — where every cent increase
of wages appears so much out of the pockets
of the owner — and of corporate production,
and have realized, from my acquaintance with
the inside workings of numerous large corpora-
tions, that the industrial corporation is not the
greedy monster of popular misconception, bent
only on exploitation, and have most decidedly
come to the conclusion that, even as crude and
INTRODUCTION
undeveloped as the industrial corporation of
to-day still is in its social activities, if I were
an unknown and unimportant employee I
would far rather take my chances with the
impersonal, huge industrial corporation than
with the most well-meaning individual em-
ployer.
Charles P. Steinmetz.
August, 1916.
AMERICA AND THE
NEW EPOCH
AMERICA AND THE
NEW EPOCH
I
ERAS IN THE WORLD's HISTORY
WHILE this is being written the world's
war is entering its third year, and no
entl to the catastrophe is yet in sight.
. All attempts to explain the cause of the dis-
aster have failed: the assassination of the
Austrian Crown Prince, the violation of Bel-
gium's neutrality. Slavish expansion, Prussian
militarism, British greed alike do not explain.
The assassination of the Austrian Crown
Prince may have justified a punitive expedition
against Servia, but not that Russia, England,
and France come to the assistance of the
assassins.
The violation of the neutrality of Belgium
I
AMERICA AND THE NEW EPOCH
does not appear acceptable to an American as
explanation of England's entrance into the war.
It would imply that the American's moral sense
is so inferior to that of the Englishman that
the latter went to war for a moral issue, while
beyond mere academic condemnation not a
single voice was raised in America for war in
defense of Belgium; nay, such obligation was
expressly disclaimed.
The battle lines between Slav and German
have been wavering to and fro in the East for
over fifteen centuries without kindling a world's
war, and while the old fight for the ground, be-
tween Slav and German, would flare up with
renewed intensity as incident of a world's war,
it cannot be the cause.
Prussian militarism and British greed — or, in
the language of the neutral mind, German or-
ganization and England's financial interests — as
causes of the war explain nothing, but leave the
questions: What created Germany's powerful
centralized organization? Why were England's
financial interests threatened by Germany .^^
W^ith the failure of finding a satisfactory
cause for the war we are forced to realize that
we stand before one of those inevitable catas-
trophes in the liistory of the human race, that
ERAS IN THE WORLD'S HISTORY
we are passing through one of those historical
epochs which have clianged the organization of
human society, an epoch Hke that which, begin-
ning in the August night of 1789, with the
declaration of the rights of man, liberie, egal-
ite, f rater 7iiie, and ending on the battle-field of
Waterloo, changed the world from feudalism
to industrial capitalism, or that earlier epoch
of the migration of the German tribes, which
buried the classic civilization of ancient times
under the ruins of the Roman Empire and es-
tablished the feudal society of the Middle Ages,
or that still earlier epoch before the dawn of
history when the Aryan migration ended the
neolithic age and laid the foundation of the
classic civilization.
We know nothing about the social condition
before the Aryan migration. When the Aryans
came they came as conquerors, the conquered
autochthons became rightless slaves, Helots, la-
boring for the conqueror-citizens as masters,
and so all ancient civilization, Egypt and Baby-
lon, Hellas and the Macedonian empires, and
finally their culmination in the Roman Empire,
were based on slavery — a rightless class of
slaves doing all the work, a citizen class sup-
ported by slave labor and thus having its time
AMERICA AND THE NEW EPOCH
free for war, administration, or art, whatever
the national character and inclination, and a
class of free men without rights and power, de-
spised alike by slave and slave-owner, but con-
sidering themselves vastly above the slaves, and
serving the masters as slave-drivers, managers,
etc.{perioikoi — libertini — the "poor white trash"
of our own classic civilization of the South).
In the classic era art rose to heights never
approached since, and in the Roman Empire
was accomplished what the world has never
experienced since — universal peace for several
centuries.
But the classic era finally came to an end,
not by overthrow, but by internal decay: the
Roman Empire, based on the labor of the
conquered nations, failed to conserve the source
of its strength, the people which it exploited.
So nation after nation was exhausted, while
race suicide destroyed the ruling classes. So
the purple passed from Italy to France; Spain,
the Balkan nations, Africa, and Asia, even far-
away England supplied emperors; but hardly
any of the later Roman emperors was of Roman
descent.
In the second great epoch of human history,
when the "barbarians" finally destroyed the
ERAS IN THE WORLD'S HISTORY
Roman Empire and founded their own nations,
it was an empty shell which they destroyed —
the life of the ancient civilization had long
gone out.
The state of the barbarians which overran
the Roman Empire was the tribal organization,
an aristocratic democracy; that is, a nation of
free and equal citizens, composed of families
differing more or less in social standing, by
their history, their prowess, influence, etc., and
led,when leadership appeared necessary, bj^ some
prominent male member of the most influential
leading family, but accepting the leadership vol-
untarily, without recognizing any right to rule.
Such was the foundation on which later feu-
dalism was built.
When these tribes overran the Roman Em-
pire, their relations to the conquered "Romans"
necessarily were very different from those of
the Aryans to their predecessors. There could
be no question of slavery. The German bar-
barians had for so many generations obeyed the
orders of the Roman Empire, as servants, aux-
iliaries, and mercenaries, had lived so long
under the glamour of the Roman Empire, that
when the relations reversed, and the barbarians
became the masters, it was inconceivable for
5
AMERICA AND THE NEW EPOCH
them to make slaves out of their former masters,
but these gradually merged into and modified
the barbarian tribal organization; the masses
became the tillers of the soil, the educated
classes acquired a position within and still out-
side of the tribal organization, as the "clergy,"
and so the feudal societj^ of the Middle Ages
was born, by the amalgamation of the con-
quered nations with the conquering German
barbarians.
Feudalism inherently recognized no slavery,
but all people had some rights, though different
according to their occupation, their station in
society, from the tiller of the land, who was
bound to the soil, to the lord of the manor,
who was supported by the tribute — the "tenth"
— of the former, but who in his turn had to pro-
tect the former from enemies, and had to do
service to his overlord.
A permanent classification of society was
thus established, with the three main classes:
the common people, or tillers of the soil and
artisans; the nobility, or warrior class; and the
clergy, or educated class. Each class was sub-
divided again into numerous grades, from the
county squire to the duke and king, and the
"classes" of feudal society never were "castes,"
ERAS IN THE WORLD'S HISTORY
as to-day in India, but there was always tlie
possibility of rising from one class into a higher
one, however difficult this may have been some
time in the later Middle Ages, and there was
always the danger of dropping down into a
lower class.
Feudalism was fairly satisfactory as long as
it remained a commensal organism — that is, all
classes gave and received; the tiller of the soil
received protection from the feudal lord in ex-
change for his tribute of a part of his harvest,
the feudal lord gave protection to the tiller of
the soil in exchange for the tribute received,
and gave military service to his overlord in
exchange for protection against his enemies;
the clergy took charge of the intellectual and
religious life, etc.
But feudalism was an organization adapted
to an essentially agricultural society, and there
was no place within it for industry, manufac-
ture, and commerce, and when, in the later
Middle Ages, arts and industries developed in
the cities, when the crusades and later on the
African, Indian, and American discoveries de-
veloped commerce, conditions arose with which
the feudal organization of society could not
cope.
7
AMERICA AND THE NEW EPOCH
Thus in the industrial cities of central Europe,
of Italy, and later England, the development
proceeded away from feudalism, toward a form
of society very much akin to that of the later
individualistic era after the French Revolution.
The feudal city governments — the patrician
families — were overthrown by the industrial
organization of artisans and merchants, the
guilds, and democratic industrial governments
established. Powerful free cities and feder-
ations of free cities, as the Ilansa, arose, broke
away from feudalism — especially when the in-
vention of gunpowder made the armored
knight helpless — and started a new era.
In England, protected by the ocean, this re-
organization of society, although starting much
later than on the Continent, survived and grad-
ually merged by evolution into the individual-
istic age.
This is England's strength, as well as her weak-
ness. Derived by gradual evolution through
centuries, the indivichialistic industrial age is
far deeper rooted in the national character than
in nations which have more recently emerged
from feudalism. But, on the other hand, nu-
merous remnants of feudalism have survived,
such as the respect for lords, the reverence for
ERAS IN THE WORLD'S HISTORY
titles, etc., which have been swept away in
nations where the transition has been of more
revolutionary character.
On the Continent, feudalism once more tri-
umphed over the industrial city.
With increasing subdivision and specializa-
tion of classes, feudalism finally reached its last
development in the absolute monarchy. The
"retainers" of the lord of the manor became
the army of mercenaries of the duke or king.
The king thus became independent of the vol-
untary service of the feudal lords, the noblemen.
Against the army of mercenaries, maintained
by the ruler, the individual lord or the indus-
trial city had little chance, and were reduced to
submission.
In the perpetual wars between the merce-
nary armies maintained by the more powerful
rulers, culminating in the Thirty Years' War,
central Europe was laid waste, the beginning of
the new industrial era wiped out with the de-
struction of the prosperity of the cities, and the
absolute feudal monarchy emerged, as exem-
plified in the "grand monarch," Louis XIV. of
France; the monarch was the state — L'etat
c'est mot — but beneath him there was an infi-
nite graduation from the highest to the lowest
AMERICA AND THE NEW EPOCH
nobility, parallel thereto the clergy, and far
beneath the rightless toiling masses.
But in this development of the absolute mon-
archy based on mercenary armies, feudalism
had ceased to be commensal, and therewith for-
feited its right of existence. The armies of
mercenaries had made the ruler independent of
the good-will of his subjects. The enormous
cost of the large armies of mercenaries required
in the perpetual wars, the cost of maintaining
the estate of the "grand monarch," the need of
attaching the nobility to the court by sharing
the spoils with them, all this meant continu-
ously increasing exploitation of the people, and
for the masses it was no more, as in the early
'days of feudalism, exchange of protection for
a part of the product of their work, but it was
exploitation by everybody, ceaseless toil and
no hope, and to the masses the feudal society
of the "grand monarch" offered nothing. There-
fore they had no interest in the maintenance of
this society, their lot could not become worse
by any overthrow of society, and all their inter-
ests thus were against society, and became rev-
olutionary.
When incompetent and weak rulers followed
the "grand monarch," the storm broke, and in
10
ERAS IN THE WORLD'S HISTORY
the great revolution feudalism was submerged
and France gave the world a new era, that of
individualism, or industrial capitalism, as we
may call it by its present-day characteristics.
Other developments contributed to the catas-
trophic change in the epoch of the French Rev-
olution, which overthrew feudalism.
The individualism of the industrial cities had
been vanquished in the wars of the mercenary
armies, but not entirely extinguished, and from
the cities gradually permeated all society.
The steadily deteriorating condition of the
masses, and parallel thereto the degeneration of
the ruling classes, created an increasing disgust
with the existing form of society among the
better elements of tlie privileged classes; we
must realize that in the declaration of the rights
of man, which started the revolution, the nobil-
ity and clergy voluntarily gave up their privi-
leges over the tiers eiat.
The invention of the steam-engine had come
and had begun to revolutionize society; com-
merce and trade rose to increasing power; Eng-
land had solved the problem of feudalism by be-
heading one king and giving the walking-papers
to the next one who had started to play the
"grand monarch," and had brought a king from
11
AMERICA AND THE NEW EPOCH
abroad, with the impHed understanding that
he would follow his predecessor if he took him-
self too seriously; and England was gradually
beginning to emerge as an industrial nation.
The American colonies had revolted and set
up a democracy, declaiming that "all men are
born free and equal."
Prussia, under Frederic II., had established
compulsory education, had educated all her
subjects, and then had withheld political rights
from them.
The philosophy of Voltaire and his contem-
poraries had with destructive logic attacked all
accepted standards, from royalty to religion,
and shattered the self-confidence of the defend-
ers of established order, and the renaissance of
literature had spread the modern ideas through
wide circles.
II
THE EPOCH OF THE FRENCH REVOLUTION
THE fire which consumed feudalism was
kindled in the French parliament, called
together when the feudal monarchy, bankrupt
by ineflSciency and extravagance, had arrived
at the end of its rope. The declaration of the
rights of man, made in the August night of
1789, ranges with the Magna Charta and our
Declaration of Independence as one of the
greatest documents of human history.
It wiped out all privilege.
It demanded the freedom of the fullest in-
dividual development for all human beings —
liberie.
It established equal rights before the law for
all — egalite.
The last demand, brotherhood of man, fra-
ternitc, was promptly forgotten for another
century.
The great revolution was bloodless, the privi-
13
AMERICA AND THE NEW EPOCH
leged classes voluntarily resigned their special
rights.
This was the beginning of the great epoch
which ushered in the new era of modern society.
It almost was the end. Immediately all the
enemies of progress, all the powers of darkness
and reaction, sprang to arms against France,
the pron>ulgator and defender of the new idea.
Internal enemies arose everywhere in France,
even the royal court conspired with the coun-
try's enemies. Europe's greatest military power,
the Prussian army, invaded France in the
north; the Austrian and German army in the
south; rebellions flared up; never was a nation
in so desperate condition. Even England,
though already on the path toward the new
era, joined the enemies of progress, and con-
sistently throughout the entire epoch fought
the battle of feudalism against the new era of
individualism. It was a full generation later,
when the unholy alliance of Austria, Russia, and
Prussia had again welded the world into the
fetters of feudalism, that England finally woke
up and made the first breach in the chain by
sinking the Turkish fleet at Navarino and so
setting the Greeks free, while the new nation of
the Western Hemisphere threw down the gant-
14
EPOCH OF THE FRENCH RvyvOLUTION
let to feudalism by the declaration of the
Monroe Doctrine.
But in the early days of the epoch it was
France alone against the world. Then France
showed that a nation, inspired by a single great
and progressive idea, can defy the world and
conquer. The guillotine cleared France from
traitors and internal enemies. The Prussian
army was ignominiously defeated in the Ar-
gonnes, the Austrian army vanquished; in
the Gironde the rebels hunted down; Toulon
fell and was punished for making common
cause with the country's enemies, and soon the
French armies rolled over central Europe,
bringing freedom and equal rights to the na-
tions. Prussia and Austria were humiliated,
and under the dictator Napoleon the lesson
taught to the world that there is nothing sacred
or superior in royalty, and kings and rulers
were made and unmade at the whim of the
country lawyer's son, the Emperor Napoleon;
and some of Europe's most aristocratic rulers
of to-day are the descendants of common folk,
put on the throne by the country lawyer's
son.
The Russian winter — not the Russian army —
broke the spell of victory of France, and on the
AMERICA AND THE NEW EPOCH
battle-field of Waterloo finally tlie Prussian
army under Blueclier saved tlie British army
and turned defeat into victory, and France was
conquered.
But not so the new idea. The defeat of
France had become possible only by the adop-
tion of the new idea of liberty and individual-
ism, for which France had fought. After the
defeat of Jena, when Prussia was at its lowest
depths, Stein, Scharnhorst, Gneisenau had re-
organized the Prussian nation, introduced the
new ideas, and it was a new Prussia, the Prussia
of the new era, which rose and defeated Na-
poleon.
Thus, while France was defeated, the ideas
which France had given to the world con-
quered.
It is true, after Waterloo a temporary reac-
tion set in. In unholy alliance, Austria, Rus-
sia, and Prussia, together with the restored
Bourbon France, tried to re-establish feudalism.
But in 1830 France broke away, under the
bourgeois king, Louis Philippe, and in 1848 the
revolution swept over Europe and swept away
the last remnant of feudalism. Except in
Prussia. There the revolution was a draw, and
feudalism kept fighting on until the great par-
16
EPOCH OF THE FRENCH REVOLUTION
liamentary fight in the early CO's, when year
after year the Prussian parhament refused the
Government all budget appropriations, while
the monarch disregarded the constitution and
continued to govern without parliament.
The controversy was finally compromised
after the victorious war of Prussia against Aus-
tria, and the formation of the North German
Customs Union in 1866. The entrance of the
other German states, in which capitalism was
further advanced in power than in Prussia, in-
duced Bismarck to make concessions, while on
the other side the beginning danger of the social
democracy made capitalism more inclined tow-
ard compromise with the monarchical govern-
ment.
It is important to realize this historical de-
velopment as it laid the foundation of the or-
ganization which brought about the present
world's war.
While individualism, in the form of industrial
capitalism, has never completely conquered in
Prussian Germany, it has early conquered and
ruled supremely in England.
The history of the world is the history of in-
dustry, arts, and commerce, and war and revo-
lution, conquest and defeat, are merely the out-
17
AMERICA AND THE NEW EPOCH
ward appearances, the signs or mark-stones of
the true history of the human race, which is
made on the fields and farms, in the factories
and workshops, in the business houses and
shipping-offices.
Ill
THE INDIVIDUALISTIC ERA: FROM COMPETITION
TO CO-OPERATION
THE epoch of the French Revolution, ush-
ered in by the declaration of the rights of
man — liherte, egalite, fraternite — struck the fet-
ters of feudalism from the human race, and gave
free play to the intelligence, energy, and initia-
tive of all the millions of human beings. The
development of the steam-engine, of steamship
and locomotive, and later of telegraph, tel-
ephone, and electric power, forged the tools;
the free and unrestrained competition, which is
the industrial expression of the individualistic
age, gave the driving force which led to the
great industrial development of the last cen-
tury. The result was that the last century has
seen a greater progress of mankind than all the
previous centuries together.
Competition thus became the industrial ex-
pression of the individualistic era.
19
AMERICA AND THE NEW EPOCH
Under the competitive system of industrial
organization — "capitalistic society," as it is
often called — the means of production, trans-
portation, and distribution of commodities have
increased enormously and apparently without
limit.
As the result, the standard of living of man-
kind steadily rose, and things which in one gen-
eration were a luxury available only to a few,
became a common necessity to the next gener-
ation.
The increased productivity cheapened the
cost and so stimulated consumption, and this
again increased the production, led to further
improvements, cheapening the cost and increas-
ing the consumption. The competitive age
thus has given to the masses of people a stand-
ard of living superior to that of the privileged
classes in the feudal age.
But in spite of the enormous and very often
artificially stimulated increase of consmnption
of commodities, a check had to come in the
wild race between increasing production and in-
creasing consumption. The ability of con-
sumption, and with it the demand for the
commodities of industrial production, is not
capable of unlimited increase, and therefore
20
FROM COMPETITION TO CO-OPERATION
finally a time came when the means of produc-
tion of commodities increased beyond the
demand possible under existing conditions.
England was the first nation to benefit from
the competitive organization of society. While
all Europe was plunged into the Napoleonic
wars, England, protected by the ocean, organ-
ized its trade and industries. Therefore Eng-
land was the first nation in which the means
of production developed beyond the possible
demand. Temporarily the problem was solved
by supplying the markets of the world, and
thereby taking care of the rapidly increasing
excess of its producing facilities over its own
demand. Thus England became a great ex-
porting nation, and by the profits of its foreign
trade laid the foundation of its later financial
power.
But gradually the other nations caught up.
So Germany, once — still within the memory of
the present generation — an industrial depend-
ency of England, became independent, then
became England's competitor in the markets of
the world, and to-day China is about the only
large remaining outlet for the over-production
of the industrial nations. Therefore the great
interest of the nations in the "opening up of
21
AMETUCIA AND THE NEW EPOCH
China," and their mad scramble to get control
of its markets.
America is in a peculiar and very fortunate
position. As a new country with a vast capital
in natural resources, and with a relatively low
population density, but a rapidly growing pop-
ulation, it offered great opportunities of devel-
opment. That part of the United States which
is least favored by nature, but which was settled
first — the New England States — felt the pinch
of the industrial problem already in the middle
of the nineteenth century, but the problem was
solved, at least temporarily, by forcibly ex-
cluding foreign competition from the United
States, and so reserving the markets of the
South and of the West to the industrial New
England States. This was the issue on which
the Civil War was fought; the abolishment of
slavery was merely an incident of this economic
issue. The Civil War thus was an economic
war, just as every great war has been; it con-
solidated the United States industrially as one
nation, while the Revolutionary War had made
it politically one nation.
The great industrial development of our
country in the last generation was the result.
Finally even in the United States the rapidly
22
FROM COMPETITION TO CO-OPERATION
increasing means of production have crept up
to and beyond the means of possible consump-
tion. This occurred later than in any other
civilized nation, for various reasons. The rap-
idlj' increasing population meant an abnormal
increase of demand. The development of the
vast possibilities of the country in farming,
mining, transportation, etc., absorbed a vast
amount of industrial products, and offered em-
ployment and means of living to millions, and
this increase of population again increased the
possible consmnption. The vast natural re-
sources made it possible to use what we had
not produced, and thereby led to an average
consumption, an average standard of living,
beyond that of any other country. This is
a rather serious problem, as it means that our
nation has largely been living on its capital and
not on its income, and thereby acquired habits
of the spendthrift. But our natural resources
are greatly depleted, and when it will not be
possible any more to cut down for lumber the
trees which we have not planted, to take out
from the soil as crops what we have not put in,
but when every tree which we cut down will
have to be planted and raised, as in other
countries, when we shall have to put into the
23
AMERICA AND THE NEW EPOCH
soil as fertilizer whatever we take out as crops,
then under the present industrial organization
of our country we will not be able to maintain
our present standard of living.
All these features together have created an
abnormal increase of consuming capacity of our
nation, and so it was only in the last decades
that the means of possible production have be-
gun to increase beyond the possible demand for
consumption and the industrial problem has
become urgent.
This problem had not been expected in the
early days of the competitive system of society,
and while to-day most people throughout the
civilized world feel that there is a hitch some-
where in the working of free competition, most
people do not yet clearly realize where and why
competition failed to bring about that stable
balance between production and consumption
which was the orthodox idea of the economists
of the past, in the early days of the individualis-
tic era, and which is still the conception of many
of those who, far from the work of the world
under the student lamp and in the chairs of our
universities, ponder over the problems of the
nation.
The conception of competition as a benevo-
84
FROM COMPETITION TO CO-OPERATION
lent force in the industrial progress was based
upon the theory that by competition between
the producers prices would be lowered down to
near the cost of production, stopping just as
much above the cost of production as is neces-
sary to give a fair profit.
The fallacy involved in this reasoning is the
neglect of the economic law that it is more
economical to operate a business or a factory
at a loss than it is to have it stand idle; be-
cause to have an industry, a factory, stand
idle, involves the continuous loss in fixed
charges.
The cost of production, whether it be that of
a few quarts of milk which a farmer peddles
through a country town, or of the most intri-
cate machinery, or of common necessities, as
shoes, clothing, or of the transi)ortation and
distribution of goods, or of the electric energy
supply of a city, always consists of two parts,
a fixed cost and a proportionate cost. The
former comprises all those expenses which go
on whether anything is produced or the pro-
duction stopped by lack of demand for the
product. The latter represents that part of the
cost which is proportional to the amount of
commodity produced. Fixed cost, for instance,
25
AMERICA AND THE NEW EPOCH
is the interest on the investment. Whether the
factory is working full capacity, or only part of
its capacity, or standing entirely idle, the interest
charges continue the same. Proportionate cost,
for instance, is that of raw materials; if we
produce twice as much, twice as much material
is needed. If the production ceases, the con-
sumption of raw material ceases. Possibly, in
bygone days of simplest individual production,
the fixed cost may have been negligible; if the
shoemaker in the earliest Colonial days did
not find enough work in making shoes, he could
probably do some harness-making, or some
carpenter work in his shop, and so earn his
living. But if to-day the demand W shoes
falls off and the shoe-factory has to shut down,
the interest on the investment represented by
the factory goes on just the same; the depre-
ciation of machinery, of buildings, etc., con-
tinues; some maintenance is still required —
that is, a considerable part of the cost of pro-
duction continues even if the production has
stopped. This part of the cost of production,
which is called the fixed cost, as it is independ-
ent of the amount of the product, and which
continues even if there is no production, varies
from a few per cent, in some simple opera-
2G
FROM COMPETITION TO CO-OPERATION
tions up to over 90 per cent, of the total cost
of the product, in some hydro-electric power
plants.
The result is that unlimited competition, as
soon as the ability of producing has increased
beyond the available demand for the product,
forces the price down not merely to the value
giving a fair profit above the cost of production,
as dreamt by the early economists, but the
dropping of price stops only there, where it
would become cheaper to stop production than
to produce at a loss — that is, where the loss in
production exceeds the loss of having the in-
dustry stand idle: the limitation of price, forced
by competition, is below the cost of produc-
tion, a . I as the result the level reached by free
industrial competition is an unstable condition,
a condition of production at a loss, which can
exist and continue for a limited time only, but
finally ends in the bankruptcy of many of the
producers, in serious losses to others, and in
wide-spread destruction of values.
Consider as an illustration the case of a very
large industrial power plant: for every $100
invested in the plant the annual income may
be $50. These $50 are disposed of as fol-
lows;
27
AMERICA AND THE NEW EPOCH
Labor $ 9
Fuel 6
Other materials and supplies 11
Taxes 3
Depreciation 6
Interest 5
Dividends 6
Surplus 4
Of these expenses, all the fuel, most of the
labor and materials, and a part of the depre-
ciation are proportionate costs — that is, costs
which vary with the amount of commodity
produced, and would, therefore, vanish if, due
to competition, the production should cease.
Taxes and interest, however, most of the
depreciation, and a small part of labor and of
materials are fixed costs — that is, continue re-
gardless whether the plant is operating full
capacity, or at reduced output, or entirely
standing idle. (Dividends should in reality be
included in fixed cost, as without dividends no
capital could be induced to invest, and the
plant could, therefore, not exist. They will,
however, be omitted, as temporarily, for some
years, an industrial organization can continue
without dividends. Surplus represents the
amount of income set aside for times when the
income falls below the cost of production — that
is, is an insurance against temporary losses.)
28
FROM COMPETITION TO CO-OPERATION
The distribution of proportionate cost and of
fixed cost per $100 capital invested in the
plant thus would be:
At an annual income of $50 :
Proportionate Fixed
Cost Cost
Labor $ 8 $1
Fuel G
Other materials 10 1
Taxes 3
Depreciation 2 4
Literest 5
Total $20 $14
Gram! total. . . $40
leaving $10 for dividends and surplus.
If the production were entirely stopped, the
$26 proportionate cost, per $100 invested,
would be saved, but the $14 fixed cost, per $100
of capital invested, would continue, as a loss or
impairment of capital, of 14 per cent, per year,
and thus, in ^Y' = '^ years, the entire capital
would be wiped out by the losses, and lost.
Thus it is economically not possible to shut
down the plant and wait until there is again a
demand for the commodity.
Suppose now, to maintain the plant in oper-
ation, the price of the commodity were reduced
from $50 to $33.
At $40 total cost of production, this would
29
AMERICA AND THE NEW EPOCH
give an annual loss of $40 — $33 = $7, or 7 per
cent, of the invested capital, thus would wipe
out the capital of the company in -7- = 14
years, and be destructive. Nevertheless, rather
than close down entirely and incur the annual
loss of 14 per cent, of the invested capital, it
would be preferable, when forced by competi-
tion, to lower the price of the commodity below
cost, to $33, as the loss thereby incurred, of
7 per cent., is less than the loss in standing idle.
For the different prices of the conii .odity,
per $100 of investment, the profits and the
losses, and the time until the capital invested
in the plant is wiped out by the losses, would
then be:
rice of Commodity;
Per $100 of
Invested Capital
Dividends and
Surplus
Per Cent.
Loss
Per Cent.
Capital
Wiped Out
In
$50
10
45
5
. .
40
0
0
35
5
20 years
30
10
10 "
26
14
7 "
25
15
0.7 "
20
20
5
Shut down:
14
7 "
Thus, when forced by unrestricted competi-
tion it would be more economical to operate,
selling the product below cost, at any loss up to
30
IROM COMPETITION TO CO-OPERATION
14 per cent. — although this would inevitablj'^ ruin
the company — rather than close down and ac-
cept the still greater toss of the entire fixed cost.
But operation at a loss, though not so rapidly
destructive as shut down, still means financial
disaster, and when forced by unrestricted com-
petition thus ends in ruin.
We have seen, and still see all around us,
the destruction of producers wrought by com-
petition, the waste of intellectual and physical
values incident thereto, and the resultant dam-
age to the industry, and with it to society.
The failure of the industrial system of com-
petition to come up to the expectations of the
early days thus was due to the failure of recog-
nizing in the theory of competition the bearing
of the fixed cost of production on the level
reached by competitive production.
The natural result of this industrial law is
that free competition cannot continue, but
that intelligent people in charge of the industries
all over the world — whether they be the milk-
men or ice-dealers supplying a small country
town, or the presidents of rolling-mills or rail-
roads— have to come together and stop unlim-
ited competition before the level of destruction
is reached.
3 31
AMERICA AND THE NEW EPOCH
This led to co-operation as the industrial force
which is taking the place of competition.
Many people in our country, in all walks of
life, economists and statesmen, even, do not yet
realize the working of this economic law and
its consequence.
They see competition vanishing before co-
operation or consolidation, and, still dreaming
of competition as the beneficent force which it
was in the early days of industrial develop-
ment, endeavor to restore competition. There-
fore, you see all the attempts to resurrect to
life a dead issue by legal enactments, by trying
to break up the cori^orations, enforcing com-
petition by law, etc. All this is contrary to the
economic laws underlying industrial produc-
tion, and is therefore helpless, and must remain
a failure. No legal enactment can change this,
but the laws of nature are above man-made
laws, and political law violating the laws of
nature is void. You may destroy the indus-
tries by legal interference, and plunge the na-
tion in disaster and chaos, but you cannot re-
store competition. It is dead, just as dead as
the feudalism of the Middle Ages. Co-operation
is taking its place.
This, here in America, many of our leaders
32
FROM COMPETITION TO CO-OPERATION
of thought in the theoretical field, in our uni-
versities, in our political offices, have not real-
ized, neither do the mass of the people realize
it yet, and consequently they mistake the effect
for the cause. They imagine industrial consoli-
dation is killing competition, and try to stop
consolidation by breaking up the corporations,
while in reality the death of competition as a
beneficent industrial force is the cause of con-
solidation, has led to the corporation as the
only means of industrial production. Thus, not
the "trusts" are killing competition, but the
failure of competition is the cause of industrial
consolidation, of the corporations.
Thus, wherever outside forces did not inter-
fere, the inevitable, because natural, industrial
development in the individualistic era is, from
small production by numerous independent in-
dividual producers — in the days before Lincoln,
in our country — to a smaller number of larger
industrial establishments still personally owned
and managed. Then by consolidation of the
stronger, and elimination of the weaker ones,
came the formation of industrial corpora-
tions, each representing the combination of
numerous individual producers. In the begin-
ning these corporations were still largely domi-
33
AMERICA AND THE NEW EPOCH
nated by individuals, their organizers, but
gradually the personal element stepped into the
background and vanished, the number of cor-
porations decreased and their size increased
until finally the entire industry was organized
into a moderate number of very large corpora-
tions, often still in fierce and destructive com-
petition with one another. Of necessity then
followed the formation of a co-operative ar-
rangement between the corporations dominating
the industry, for self-preservation against the
general destruction inevitable by unrestrained
competition. Sometimes it was the formation
of a single corporation controlling the entire
industry; more frequently one large corpora-
tion controlling a large part of the industry, and
a number of smaller corporations, which, while
financially and administratively independent,
by tacit understanding accepted the prices fixed
by the dominating corporation. Usually, how-
ever, with a number of large corporations in the
field, the destructive competition was elimi-
nated by agreements limiting production to
that conforming with the demand, and agree-
ing upon prices maintaining a fair margin
of profit. Such CO - operative agreements
varied in nature from practical consolidation
FROM COMPETITION TO CO-OrERATION
into a trust or syndicate to a mere gentle-
man's agreement.
Such a co-operative agreement on prices and
production is necessary if the industry shall sur-
vive and the nation escape industrial disaster,
and in countries in which an intelligent central-
ized government looked after the welfare of the
nation, as in Germany, such elimination of
competition and consolidation for the common
good has been encouraged and assisted, and
often enforced by the Government, while in
countries in which the Government is entirely
under the control of capitalism and has no in-
dependent power, as in England, the Govern-
ment has stood aside and allowed the corpora-
tions to organize more or less efficiently^ Only
in our country has the national Government,
impelled by the remnants of the small individ-
ual producers, the still powerful middle-class
interests, attempted to outlaw the co-operation
of corporations and by political laws to legis-
late against economic laws, without realizing
that economic laws are laws of nature, are inev-
itable, and their defiance, whether by an indi-
vidual or by a nation, means self-destruction.'
There was, however, some excuse for the op-
position against the co-operation of the corpo-
35
AxMERICA AND THE NEW EPOCH
rations controlling the industry, in tlie danger
to the public welfare which the power of such
co-operative organization may involve in a na-
tion like ours, which has no stable, permanent,
and therefore responsible Government, but in
which the Government is still largely dominated
by the principle of rotation in office for the
distribution of spoils. In the control of an
industry by the co-operation of the industrial
corporations in controlling production and
prices, it is possible to limit production below
the demand, and so "corner" the product, and
to raise the prices beyond those giving a fair
return on the legitimate investment of capi-
tal. Then the combination becomes a national
menace, especially where foreign competition
does not act as a check, as in free-trade England.
Sometimes such ex[)loilation of the public may
be premeditated, but more often it is the result
of the inefficiency of production, and the latter
is the more serious side of the problem, as it is
more difficult to deal with than a mere attempt
of extortion.
The modern corporation, which is the present
expression of the co-operative system of indus-
trial organization, is such a relatively new de-
velopment that its structure is still crude and
30
FROM COMPETITION TO CO-OPERATION
defective in many ways. Its activities are four-
fold— financial, administrative, technical, and
social. As capital is the foundation of our
present industrial system, financial consolida-
tion is the first step of industrial co-operation.
Administrative consolidation and reorganiza-
tion must follow, and then technical or engi-
neering reorganization, to reap the benefit of
industrial co-operation. The technical side of
the corporation is the purpose of its existence;
manufacture, transportation, etc., are technical
or engineering pi'oblems, and the administra-
tive and financial activities, therefore, merely
means to accomplish the legitimate object of
the corporation — production. Therefore, where
the progress stops with administrative consoli-
dation and does not reach engineering re-
organization for the higher efficiency made
possible thereby, the results are disappointing,
and dissatisfaction of the public follows and
sooner or later makes itself felt by hostile atti-
tude toward the corporation. Where the work
has stopped with the financial consolidation
and does not reach administrative reorganiza-
tion, waste and extravagance and financial
disaster are liable to result.
It cannot be denied that a considerable part
37
AMERICA AND THE NEW EPOCH
of the public hostility against corporations re-
sulted from the increase of the price of the com-
modity controlled by some corporations. The
failure of proceeding beyond financial consoli-
dation, the failure of efficient administrative,
and especially technical reorganization, re-
sulted in not realizing the decreased cost of
production which the economy of mass pro-
duction should bring about, and the need of
paying the cost of consolidation then led to an
increase of the price of the commodity, instead
of the decrease which should be the result of
co-operative production, and the absence of
competition then allowed such a situation to
persist longer than is safe. At the same time, it
must be realized that the corporations are the
creations of man, that the industrial develop-
ment of our country has been so enormously
rapid and the number of men capable of direct-
ing it safely is relatively so insufiicient that
many things which should be done, which the
corporation leaders realize as desirable and
necessary and wish to have done, remain undone
for a long time, because men capable of doing
them cannot be found.
The inevitable defects of the new industrial
growth led to the demand for supervision and
38
FROM COMPETITION TO CO-OPERATION
control of corporations, and siicli supervision
and control thus has been established by legisla-
tive action of municipalities, states, and nation,
in the various commissions, from the Interstate
Commerce Commission of tlie Federal Govern-
ment down to municipal commissions dealing
with local industries. The unfortunate feature
is that the men who created these industrial
commissions, and who serve in them, very often
do not understand the economic position of the
corporations as industry's most efficient tool,
do not realize that we are in the transition from
the competitive to the co-operative system of
industry, and much of the legislation thus is
inquisitorial rather than constructive, and as
the result it is questionable whether thus far
the legislation regarding corporations has not
done more harm than good for the nation.
The structural elements of the industrial cor-
porations are human beings, and when replacing
their separate industrial efforts as individual
producers by their co-operative work in the
corporate organization, their individual efforts
for their own well-being also require consolida-
tion into an organization for their common wel-
fare. And, after all, while the purpose of the
corpolration is industrial production, the pur-
39
AMERICA AND THE NEW EPOCH
pose of industrial production is the welfare of
the members of society, the producers, so that
the final purpose of all is the welfare of societj^ \
The realization of "social work" as one of
the essential activities of the corporation has
come last. It is just being approached by
many corporations. Sometimes it is the result
of the pressure exerted by independent and often
hostile employees' associations — labor unions.
Or where the corporation has succeeded in
suppressing organized action of its employees,
by spontaneous outbreaks — syndicalism. But
whatever the reasons may be for entering social
work, it must be realized that it is not a "char-
ity," a "social duty," but is just as integral a
part of the corporation as the financial or the
administrative activities.
The most serious defect of the social activ-
ities of the corporations to-day — welfare and ed-
ucation— is the lack of men capable to direct
the work. To organize and direct this imi)or-
tant activitj'^ of the modern corporation requires
men who have to a high degree the social sense,
and at the same time are thoroughly familiar
with the other activities of the company, finan-
cial, administrative, and technical, so as to co-
ordinate their social work with the other
40
FROM COMPETITION TO COOPERATION
activities of the corporation. Such men are
few, and herein hes the greatest limitation of
the rapid advance of the corporate organiza-
tion of society, which is necessary for its
economic efficiency.
The question is often asked by the extreme
individuah'st. With industrial competition dead
and the national — or international — corpora-
tion taking the i)lace of the numerous independ-
ent and competing producers, will not industrial
progress stop, and stagnation — that is, retro-
gression— result from the suppression of indi-
vidual enterprise, the absence of the rivalry
between competitors, which brings out their
best efforts, their initiative and ambition?
Industrial competition of everybody for
himself and against everybody else — and the
devil take the hindmost — has failed and is dis-
appearing, is, indeed, practically dead, but there
is growing up in the industrial organizations a
competition to further the common end, the
welfare and advance of the organization, a
rivalry, who can accomplish most for the benefit
of the corporation, and the reward is in power,
in reputation, and also financially. It is this
competition of co-operation which the change of
the industrial system from competition to co-
41
AMERICA AND THE NEW EPOCH
operation is introducing into the industries; the
same competition of co-operation as exists in sci-
entific circles in the universities of the world, the
same as has made armies victorious and nations
powerful and, when failing by the encroachment
of class privilege and favoritism, has defeated
armies and destroyed nations.
Success is often measured by the accumula-
tion of wealth; but does anybody really im-
agine that to the multi-millionaires, to the great
financiers of to-day, the accumulation of money
far beyond any possible personal use is the in-
ducement? Is it not rather the power which
the money represents, and does not the power
of great scientific reputation, of statesmanship,
etc., attract equally great minds? If we speak
of really great men — men whose greatness
everybody recognizes — a Lincoln, Washington,
Franklin — does anybody know or ask how rich
they were, how "successful" they were from
the point of view of measuring success by
wealth? So ambition, rivalry, the success of
power and accomplishment remain, even if
money would cease to be the goal. However,
even to-day the chances of financial success in
unrestrained industrial competition are rather
remote, and in the big corporation a far better
42
FROM COMPETITION TO CO-OPERATION
chance of success is afforded than in individual
production, even from the financial point of
view.
Thus the nightmare that the elimination of
industrial competition and the development of
the vast industrial corporation would stifle
progress by destroying ambition requires no
serious consideration; the reverse is the case.
We still hear a lot of talk on the necessity of
individual enterprise for progress, but even to-
day and for some time back, when any really
great work was considered, individual enter-
prise usually failed, and the corporation, either
the private corporation, or the public corpo-
ration— municipality. State, or nation — had to
step in.
IV
THE INDIVIDUALISTIC ERA! THE OTHER SIDE
POLITICAL and industrial freedom unfet-
tered the ambition, the initiative, the cre-
ative, and inventive abihty of all the human
race and so founded our modern industrial civ-
ilization on the basis of individualism.
But differently expressed, this foundation of
our civilization means, "Everybody for himself,
and the devil take the hindmost." What then
if the hindmost does not care to be taken? And
organized mediocrity is more powerful than
individualistic ability.
For a long time this issue did not arise; the
opportunities opened up by the destruction of
feudal i)rivilege were so vast that few indeed
were those who did not find their social and
industrial position materially better than in
previous ages. In the small individualistic pro-
duction of the first half-century of capitalism
everybody with some initiative and ability
44
THE OTHER SIDE
found opportunity to make himself industrially
independent and moderately prosperous — as
pros})erity was considered in these, the golden
days of individualism. But the means of pro-
duction rai)idly increased, competition between
producers became more severe and destructive,
the smaller producer had to make room for the
larger, and the chances of the individual em-
ployee to rise into the ranges of the employers
became less and less, and so again classes de-
veloped, a smaller employer's class and a larger
class of employees.
But while under feudalism men were fairly
well satisfied within their class as long as they
were justly and fairly treated in accordance
with their position in society, it was not so in
capitalistic society. A change had occurred in
man and that change was education. The power
which had brought about this change was the
steam-engine. Through it man graduated from
laborer to machine-tender. Before the days of
the steam-engine, man, assisted by animals,
supplied the power wliich society demanded in
raising and moving things, on farms, and in
industries. The steam-engine relieved man of
mechanical power, supplying it a hundred- and
a thousand-fold, and man became the operator,
15
AMERICA AND THE NEW ^ EPOCH
the director, and the tender of the machine. But
a higher inteUigence and higher knowledge is re-
quired to direct the mechanical work of the
machine than is required in direct labor, and
thus the steam-engine, while increasing the
power of man a hundred- and a thousand-fold,
made education a necessary requirement of his
industrial usefulness.
In the feudal age education was unnecessary
for the efficiency of the serf's labor, and was ob-
jectionable because making him dissatisfied with
his lot, and all that was necessary was a little
religion to hold out the hope of reward in
heaven for his earthly' toil. ~But capitalism re-
quired some education for the efficiency of the
workers, and the industrial development of a
country is closely measured by the eflBciency of
its public school system. Thus, even in Russia,
where an autocratic government opposes the
education of the masses, industrial corpora-
tions maintain schools for their employees.
But education, however limited, meant some
reasoning power, and very soon the question
was asked why the unsuccessful majority should
not share in the good things of life appropriated
by the minority, and the answer was — organi-
zation. But there could be no force behind such
4G
THE OTHER SIDE
organization so long as it appeared to the in-
dividual employee a shorter and more promis-
ing way to rise personally into the employer's
class, and then share in the exploitation of his
former co-workers.
Just as under feudalism the serf had an op-
portunity to rise into the ruling class — but the
chances were very remote — so under capitalism
the wage-earner by exceptional opportunity,
intelligence, and initiative could rise into the em-
ployer's class, but the chances became increas-
ingly remote, and such terms as "wage-slavery"
arose to represent the situation, and the con-
ception of a "class consciousness" of the pro-
letarian wage-earner found its expression in
industrial organization as labor unions, and po-
litical organization in the socialistic parties,
which took up the representation of the class
of the exploited, in opposition and often in hos-
tility to the exploiting class, in fighting for a
greater share of the industrial production. It is
significant that in countries in which the seg-
regation into working class and ruling class had
become sharpest, and the chances to rise from
class to class least, the industrial or political
organization of the workers has become most
powerful, while in America the vast natural re-
4 47
AMERICA AND THE NEW EPOCH
sources and the opportunities of a new country
make the chance to rise to independence by no
means negligible even to-day, and the organi-
zation of the wage-earners never has reached an
effective political stage, "class consciousness"
has not become the slogan of a powerful polit-
ical party, such as it did, for instance, in Ger-
many, already a generation ago.
,_JWith the further development of industrial
capitalism gradually the corporation took the
place of the large individual employer, and the
"employer's class" steadily dwindled down.
First, individual personality still dominated the
corporation: the "Harriman" roads, the "Van-
derbilt" interests, etc. But with the death of
the men who organized the corporations, their
management became impersonal, and so we
find to-day, at least in those industries in which
the development has progressed furthest, no
more a class of employers and a class of em-
ployees, but impersonal capital is the employer,
and all the human beings, from the president to
the laborer, are employees. With the wide
range of activities of the employees of capital,
there are wide differences of interest, but the
sharp dividing line between the antagonistic
interests of hostile classes is decreasing, and
48
THE OTHER SIDE
"class consciousness" is beginning to become
an anachronism. To revive it as an antagonism
between salaried officials and wage-earners, or
between shop and office force, fails where many
a journeyman's earnings exceed the salaries of
the younger men of the clerical force, and the
distinction between office and shop is often lower
pay and less freedom of the young man in the
office force than in the shops. It is again sig-
nificant how large a membership in the Social-
ist party of America is represented by office
men and by the middle class, the small individ-
ual producers and farmers of the West, an
element which hardly comes under the wage-
earner's conception of "class consciousness,"
but which is rather more a survival of the past
daj^s of small capitalistic production than the
beginning of the realization of a co-operative
commonwealth .
With the corporate organization of modern
industry the employer's class is disappearing,
and impersonal capital becomes the only em-
ployer, and all people connected with the in-
dustries become employees. But impersonal
capital is owned by persons, a capitalist class,
and the war of the classes would continue be-
tween the capitalist class and a class-conscious
49
AMERICA AND THE NEW EPOCH
working class. But who are the capitalist class?
The idle rich? r)pa)0)V TratSe? TTij[xaTa, at best,
harmless fools, living on the wealth created by
their fathers? They fill the newspapers with
foolishness and scandal, they figure in campaign
speeches "to paint a moral, to adorn a tale.'*
But industrially, socially, politically they are a
negligible factor, they are no part of our na-
tional and industrial life, and are being rapidly
exterminated by race suicide. No movement
could derive its inspiration from a fight against
them. Then there are the great financiers and
multi-millionaires. They may be in some in-
stances oppressors and exploiters, may be a
national menace and require to be fought, but
they are merely the managers, the employees of
their capital, working just as any other em-
ployee in the service of capital, and bound by
it in their action. Furthermore, capital is scat-
tered from the single family house with its heavy
mortgage, of the workman, or the few hun-
dred dollars in the savings-bank, to the em-
ployee who receives from interest and divi-
dends an appreciable addition to his salary or
wages, and finally the employee whose salary
is small compared with his income from stocks
and bonds. Where, then, is the dividing line
50
THE OTHER SIDE
between capitalist and worker, the line which
distinguishes the one class from the other?
And with the decreasing returns from smaller
capital holdings, a class distinction becomes
less and less possible.
But all argumentation against the existence
of classes, all evidence that there are no classes
in modern individualistic society does not wipe
out the fact felt by all that there is a sharp
dividing line going through modern society, that
there is a large majority which does not, and
cannot, look at things in the same way as the
minority — a minority controlling and satisfied
with existing society, therefore patriotic in the
defense of this society, and a majority of workers
who in sentiment and feeling are hostile to in-
dividualistic society, feel that society does not
give to them what they believe themselves en-
titled to — however dull and indistinct this
feeling may often be.
Over most of the workers hangs throughout
all their life the fear of unemployment, the fear
of sickness, the fear of old age. No matter how
well paid their work, no matter how much they
have saved and placed in the savings-bank or
invested in a small living-place, they never can
lose the fear that a long-extended period of un-
51
AMERICA AND THE NEW EPOCH
employment, a long sickness, may wipe out
their small savings and bring them face to face
with starvation ; that in their old age, the poor-
house or the private charity of their relatives
will be their lot.
It is these three great fears which distinguish
the majority from the minority and make the
former dissatisfied with society. This is the
cloven foot of the individualistic era — "the
devil take the hindmost." Individualistic so-
ciety has failed to guarantee and insure the
right to live of all human beings, and all those
who feel that they may some time in their life
be caught as "the hindmost" naturally do not
look on our society as the best possible, are not
patriotic in its defense.
Only one nation, Germany, has eliminated
these three great fears, has established the prin-
ciple, "the right to a living, and the duty to
work," by an effective unemployment insurance,
sickness insurance, and old-age insurance, and
the result we see to-day. Whatever views we
may hold on the merits of the issues of the war,
there can be no denying that all the Germans,
from the socialist working-man to the aristo-
cratic nobleman, stand back of the nation,
while we have seen the disinclination of the
52
THE OTHER SIDE
English worker aguinst voliintury enlistment,
his opposition against fighting for his nation,
which finally made conscription necessary. Un-
fortunately, we see the same here in our coun-
try: in all the present patriotic revival, in the
preparedness movement, the workers and their
organizations are conspicuously absent.
In this respect the individualistic era has
failed to satisfy the masses of the people, has
failed to give them what they demand — social
and industrial safety; and no talk about un-
desirable paternalism, un-American ideas, etc.,
can obscure the fact of the failure.
This is the great problem modern industrial
society has to face and to solve. It is the
driving force back of the "social activities"
which the modern corporation is beginning to
recognize.
The success of industrial capitalism is based
on mass production by subdivision of labor.
But with the increasing subdivision of work,
the character of the work has changed, and
with it the attitude of the worker toward it:
the creative element has gone out of the work.
To the shoemaker of former days who, from
the leather as raw material, made a complete
pair of shoes, to the machinist who collaborated
53
AMERICA AND THE NEW EPOCH
in building a finished machine, there was a sat-
isfaction in the creation of things which neces-
sarily gave them an interest in their work.
This satisfaction in his work the piece-worker
cannot feel, who makes the same seam in every
one of the thousand shoes which pass before
him in the shoe-factory, or who makes the same
slash in every one of the carcasses passing be-
fore him in the slaughter-house, or drops the
same bolt into the same kind of hole in the
automobile factory.
Thus the work of the world has largely
changed to labor, to drudgery, and the interest
which the worker of former days found in his
work he now seeks outside of the working-
hours. As the result, the demand for shorter
working-hours, though existing in former times,
has become more insistent now, with the
changed character of most of the industrial
work. It is often difficult for the captain of
industry, the leader, or manager to understand
why the employees demand the eight-hour work-
ing-day, while he himself is working twelve or
fourteen hours without complaint: but let us
distinguish between creative work and monot-
onous labor, and the matter is clearer. Of the
twelve hours of the director, two hours may be
54
THE OTHER SIDE
uninteresting mechanical routine, drudgery;
ten hours supervision, administration, direction
of work — in short, creative activities; and com-
pared with the piece-worker the balance of
labor stands two hours against eight hours. It
is true, very few of the workers in our modern
industries who continuouslj'^ do the same thing
over and over again would be willing to change
to an occupation where they have to use their
intelligence to a greater extent, where a variety
of action requires reasoning alertness. But this
merely means that their intelligence and ability
have never been developed sufficiently to appre-
ciate creative activity, or has been dulled and
depressed at an early age; but it does not make
the continuous repetition of piece-work any less
monotonous.
Thus the demand for a shorter workday,
backed by the employees' organizations, has
steadily decreased the hours of work until now
we are approaching the eight-hour workday as
standard, have reached it in many occupations,
and realize that it is coming inevitably through-
out all the industrial world. There can be no
serious objection against the eight-hour day,
provided that it is universal. The objection is
the handicap in industrial competition met by a
AMERICA AND THE NEW EPOCH
corporation with eight-hour working-day against
a corporation working nine or more hours. Thus
if the efforts toward a shorter working-day could
be more equahzed, directed against those em-
ployments in which the working-hours are long-
est, there would be much less justified opposition
than now.
It is often stated that by the increased ef-
ficiency of work the same amount can be done
in eight hours as in nine hours. It is true that
the working efficiency increases with the short-
ening of the hours, and the reduction from nine
hours to eight hours may not mean a decrease
of one-ninth of the output, but it means a very
substantial decrease of output, sufficient to
prove a serious handicap in competition with a
nine-hour day.
Shorter hours means a decreased plant effi-
ciency, and thus an increase of the fixed cost
representing interest and depreciation of the
factory investment, as the plant remains idle
a larger part of the time, and this will have to
be met by operating in several shifts, utilizing
the plant by several successive sets of em-
ployees.
But what afterward? With the eight-hour
day accomplished, the demand will not stop,
56
THE OTHER SIDE
but go toward a seven-hour day, six-hour day,
etc. What is the ultimate Hmit at which the
decrease of the hours of labor will have to
stop, if our civilization shall continue? Or what
readjustment in our social organization, in our
standards of living, will be required to accommo-
date it to a greatly reduced labor supply?
One hundred years ago the average workday
was ten to eleven hours. Now it is eight to
nine hours. It has decreased about 20 per cent.
The productivity of work in these hundred
years, by the steam-engine and the infinite num-
ber of inventions and improvements following
it, has increased at least tenfold — probably
more nearly twenty- to thirty-fold, but for il-
lustration let us assume only a tenfold increase.
Thus with only an average of one hour's work
during the day we could now produce as much
as we did in ten hours, a hundred years ago,
and could live in the same manner, with the
same standard of living which satisfied us a
hundred years ago, by working only one hour
per day. But we have realized on the increased
productivity of man, not by a reduction of the
hours of labor, but by an increase of consump-
tion of commodities. In short, we are getting
the benefit by receiving many more commod-
57
AMERICA AND THE NEW EPOCH
ities — eight to ten times as much as satisfied
us a hundred years ago — but not by working
much shorter hours. But is this abnormal in-
crease of consumption, which in spite of the
enormous increase of productivity requires al-
most the same working-hours, desirable, or is it
even desired? Is it not to a large extent arti-
ficial and unnatural, fostered by the producers?
A considerable part of the world's work of to-
day is not production, but is advertising, selling,
and all those activities which essentially aim
to increase the production by stimulating de-
mand where it did not exist. By these artificial
means the consumption has been increased to
keep up with the production at the old rate of
working-hours.
Suppose now we should discontinue consump-
tion of things we never cared for until somebody
persuaded us to their use and be satisfied with
only four to five times the commodities with
which we got along one hundred years ago;
this would give a four-hour workday. But the
elimination of all the work in making us use
more than we have the inclination to use, by
advertising, selling, etc., the elimination of ob-
vious waste and inefficiency, of duplication of
production, etc., would still further materially
58
THE OTHER SIDE
reduce the work of the world, so that, even
without discounting the improvements and in-
ventions which are continuously being made,
we can see a world with a standard of living
fully as satisfactory as ours, but working only
four hours a day, only two hundred days during
the year — that is, taking a week or two for
recreation at every holiday, and two months'
vacation in summer.
This is far away, but it Is no idle dream, for
we only need to look across the water, toward
war-torn Europe, and we can see conditions
which, with the waste of war removed, would
not be far different from the above. While the
entire world is called upon to feed and supply
the Allies during this war, the blockaded Central
Powers feed and supply themselves and get
along fairly successfully, as far as we can see,
and what little trouble there is is due to imper-
fections of the new organization rather. But if
we allow for the millions of producers who are
kept in productive idleness in the armies, and
supported by the best the nation has in food,
physical and medical supervision, the other
millions wasting their energy in unproductive
work in making ammunition and war materi-
als, subtract the mass of products consumed by
59
AMERICA AND THE NEW EPOCH
these unproductive elements, the consumption
of the peaceful part of the nation certainly
amounts to materially less than four hours per
day productivity. Thus, under better skies,
the same organization of production and elimi-
nation of waste would make the above dream
a reality.
And indeed, when we think of it, we see that
our present civilization is frightfully inefficient
in man getting the best use of his life.
We live to work, a fool once said, and millions
of other fools have since repeated it. But why
should we live, if labor is all. we get out of it?
The Church of the Middle Ages was consistent
in saying that we live to work and thereby to
earn eternal reward in heaven ; but in the mod-
ern age, where transcendental religion and social
life are kept separate conceptions, we do not live
to work and sleep, or eat to work, but we work
and sleep and eat to live; life has become the
object; its aim, to make the best of ourself as
individual, as member of the family, the com-
munity, the nation, and of mankind in general.
If, then, work and sleep and eating are neces-
sities of living, the efficiency of life is measured
by how large a part of our life we have at dis-
position for ourselves, not occupied by neces-
00
THE OTHER SIDE
sities, but free to fulfil life's aim as we under-
stand it.
In spite of the enormous advance of the
human race in the hist hundred years, the in-
crease of efficiency of life has been very small.
Let us look at it. One hundred years ago,
man worked ten hours a day, an average, for
300 days during the year. This meant:
Total number of hours
(luring the year 3Gj X 24 = 8,7C0 hours = 100%
Sleeping (8 hrs. i)er day)
and eating (1 hr.) ... 365 X 9 = 3,985 hours = 37.5%
Working, 300 days at
10 hours 300 X 10 = 3,000 hours = 34.4%
Leaving available as
free time 2,475 hours = 28.1%
At present, with an eight-hour workday, work-
ing 300 days during the year, it means:
Total number of hours
(luring the year 305 X 24 = 8,760 hours = 100%
Sleeping (8 hrs. per day)
and eating (1 hr.) ... 365 X 9 = 3,285 hours = 37.5%
Working, 300 days at
8 hours 300 X 8 == 2,400 hours = 27.4%
Leaving available as
free time 3,085 hours = 35.1%
Thus, in spite of the great progress during the
last hundred years, the efficiency of human life
has increased only from 28. 1 per cent, to 35.1
61
AMERICA AND THE NEW EPOCH
per cent., or by 7 per cent., and still is ex-
tremely small, 35.1 per cent.
If, however, we could fully realize on our
advancements, with a four-hour day and 200
working-days, the record would stand:
Total number of hours
during the year 3G5 X 24 = 8,760 hours = 100% '
Sleeping (8 hrs. per
day), eating (1 hr.) 365 X 9 = 3,285 hours = 37.5%
Working, 200 days at
4 hours 200 X 4 = 800 hours = 9.1%
Leaving available as free time 4,G75 hours = 53.4%
This would give 53.4 per cent, as a maximum
possible efficiency, under the present conditions
of human knowledge, nearly twice as much as
one hundred years ago, and would be an
advancement worth while.
ENGLAND IN THE INDIVIDUALISTIC ERA
WHILE France in the great revolution gave
the world the industrial era, England
very soon took the leadership, and has retained
it ever since. Various causes contributed: the
early start of England in gradual revolution
from the industrial centers of the later Middle
Ages, which had been destroyed on the Conti-
nent by the perpetual wars of the absolute mon-
archies, but survived in England; the protec-
tion of its island position by the ocean, which
kept hostile armies out of England during the
Napoleonic wars; the acquisition of a great
colonial empire : whenever Napoleon conquered
and annexed another country, England took its
colonies, and when France, after its final defeat
by the allies, had to give back all these nations,
England, as one of the allied "liberators," kept
most of their colonies, and so India, South
Africa, etc., became English. The wealth of
5 63
AMERICA AND THE NEW EPOCH
England in coal and iron, the fundamental
requisites of industrialism, gave her a great
advantage. But most instrumental of all, and
more dominant than the other incidental ad-
vantages, was the strongly individualistic char-
acter of the Anglo-Saxon race, which gave it the
leadership in the individualistic era, and supplied
the initiative to create industrial capitalism.
England thus became the great industrial
country, producing and supplying the world
with steel and iron, textiles, machinery, and all
manufactured goods, England became the uni-
versal world's supply of manufactured goods,
from the fetishes and idols of the heathen to
the Bibles and missionaries to convert them.
Free trade, early established in England, and
consistently maintained, gave a cheap supply of
food and raw materials. An effective i)ropa-
ganda spread free trade to the other nations,
unrestrictedly opened their markets to English
products, and for generations retarded the de-
velopment of industries in other nations, and
kept them industrial dependencies — like our
nation before the Civil War. England was a
prosperous industrial nation under free trade,
and so the other nations were led to believe if
they only embraced free trade they would be-
G4
ENGLAND IN THE INDIVIDUALISTIC ERA
come equally industrial and prosperous. It
took generations to realize that for England as
a dominating industrial nation, having no in-
dustrial competitor, free trade was an advan-
tage, but no industrial development could hope
for success in another nation in competition
with the powerful, highly developed industries
of England, having open access to the markets.
We may listen with rather mixed feelings to the
complaints of our protectionists, asking for
"protection" of our "infant industries," when
we hear that these infant industries hold first or
second rank in the world's production, and often
sell their products in the foreign markets
cheaper than in our own country; but in the
agricultural America before the Civil War, in
the agricultural Germany of fifty years ago,
any new industry was certain to be crushed
quickly and promptly and destroyed by Eng-
land's dumping competitive products regardless
of price — and then recuperating by higher
prices when the new industry had been de-
stroyed. There was nothing immoral or im-
proper in this; it is done to-day by every in-
dustrial nation, as it is the law and code of the
competitive age — the stronger destroys or
absorbs the weaker.
65
AMERICA AND THE NEW EPOCH
But finally the other nations — ^America after
the Civil War, then Germany and the others —
closed their gates, developed their own indus-
tries, became industrially independent of Eng-
land, and finally became her competitors on
the markets of the world.
For over half a century, however, England
Leld the markets of the world without any
competition. Then and thus, from the vast
profits of this time, was the foundation laid of
the vast financial power of England, which still
to-day holds the world in bondage.
With the development of America and Ger-
many as industrial nations began the decadence
of England's industries. Developed at an earlier
time and under conditions when there was no
serious competition, England's industrial sys-
tem did not show the productive efficiency of
its later competitors. America and Germany
both organized their industries on a larger scale
with more modern conceptions, and especially
they utilized to the fullest extent all the intel-
lectual abilities of the nation, while England
failed in this respect.
England's industrial preponderance had been
built up from the factory and the machine-shop,
by men working up from the ranks, but the
G6
ENGLAND IN THE INDIVIDUALISTIC ERA
country's higher educational institutions had
little part in the industrial development. Thus
deprived of many of the country's best intelli-
gences, unable to secure the higher industrial
efficiency which comes from the broad and
systematic training of the industrial leaders in
technical educational institutions, England's
industries found themselves at an increasingly
serious disadvantage against their later com-
petitors, and when, in the last decades, the
seriousness of the situation was beginning to be
realized, remedial action was difficult, because
the educational institutions, not receiving the
assistance and co-operation of the industries,
had in their technological branches remained
behind the engineering schools of America and
Germany.
In these latter countries, in the beginning of
the industrial awakening a close co-operation
and practically an alliance had been established
between the industry and the technical college
or university. The industry gave preference to
the college-trained men — the reverse of what
was the rule in England — often, as in the elec-
trical industry, even made college training prac-
tically mandatory for all higher positions, and
the leaders of the industry devoted consider-
67
AMERICA AND THE NEW EPOCH
able time and attention, and even gave material
financial assistance, to the engineering schools,
opened their establishments to instructors and
students of these schools, advised and guided
their courses, and so did everything to make the
engineering schools most useful for the indus-
tries, while the faculties of the technical schools
quickly realized the advantage of this close co-
operation with the industry, encouraged it to
the fullest extent, wherever possible selected
their instructors from the industries, in short,
availed themselves of the assistance given by
the industries.
As the result, with the exception of those
industries such as ship-building, on which her
existence depended, England, once the only in-
dustrial nation, dropped behind America and"
Germany, especially so in the'^nore recent
industries. Thus in electrical engineering, in
the last years before the war, when there was
any great electrical engineering work done in
England or her colonies, it was usually "made
in America" or "made in Germany."
Contributory to the industrial decadence was
England's labor situation. In the early days of
the period the standard of living of the British
industrial worker was relatively high, especially
C8
ENGLAND IN THE INDIVIDUALISTIC ERA
so in comparison with the masses in the other,
industrially undeveloped nations. With the in-
creasing power of industrial capitalism the
standard of the industrial worker was gradually
but steadily lowered, and with it his industrial
efficiency. First this was little noticed, es-
pecially as there was no comparison yet with
the conditions in other nations, in which indus-
trialism was just beginning, and even after the
lowering of the standard of living became
marked, for generations conservatism and the
strong individualistic tendency of the English-
men prevented effective organization to combat
the lowering of the standard. It was significant
that during the latter part of the nineteenth
century, at the numerous international con-
gresses of the labor interests the British trade-
unionists either held ostentatiously aloof, or
opposed any joint national or political action.
When finally, in the last years, the mass or-
ganization of the British labor elements came
industrially and politically, it came with a
rush, and while accomplishing material results
in arresting the downward trend of the stand-
ard of living, it had the defects of any very
rapid growth: the absence of the stability and
steadiness of development, which can be given
C9
AlVIERICA AND THE NEW EPOCH
only by gradual evolution, but not by revo-
lutionary change; the preponderance of de-
structive over constructive tendencies; the un-
necessarily great harm to the industries by the
cataclysmic activities, etc.
By this time, the first period, that of England
as industrial power, had passed; other nations
had forged ahead industrially, and England had
entered the second period of her capitalistic
age, that of England as financial power.
It is significant to realize that industrial con-
vulsions, such as strikes of half a million or a
million railway workers, miners, etc., which
would have paralyzed and plunged into indus-
trial panic any other nation, passed over Eng-
land without any appreciable effect on her
prosperity.
What mattered it to England that she lost
the American market and American industries
grew and supplied the home market and en-
tered the world's market, even into England,
as long as the American industries were financed
by British capital and the profits of the Ameri-
can industries went to England, hundreds of
millions per year, as dividends and interest on
British investment in American industries?
What mattered it, when British industries de-
70
ENGLAND IN THE INDIVIDUALISTIC ERA
clined, as long as all over the world, from Mexico
to Ceylon, and from China to South Africa, agri-
culture and industry, financed by British capi-
tal, sent their profits to England, and the entire
world thus paid tribute? Not political tribute
as conquered nations, as of old, but tribute just
the same — industrial tribute — the return on
British capital invested all over the world; the
capital which had been created by the profits of
the British industries during the time when
England was the leading industrial nation, and
had accumulated ever since.
Thus England became more or less inde-
pendent of its home production, became the
great financial power of the world, London the
world's financial center which controlled the
industries of the nations, and so England be-
came able to a large extent to live on the re-
turns of her capital invested throughout the
world.
This is for England the most serious side of
the present war. It is British capital which
must bear the enormous, almost inconceivable
financial burden of the war, and however vast
British capital is, it is gradually being impaired
by the steady drain, and with every month
that the war continues, the reorganization of
71
AMERICA AND THE NEW EPOCH
England's economic system after the war be-
comes more certain, the necessity of recon-
structing its domestic economy so as to carry
a much larger part of its consumption by na-
tional production, less by industrial exploitation
of other nations or colonies — that is, to live
more fully on its productive income, less on the
interest of its capital.
While this readjustment and retrenchment
necessarily must lead to wide-spread hardship,
it is undoubtedly the best that could have
happened to England as a living nation. No
nation has yet lived as parasite on the work of
other nations, and remained alive; so the
Roman Empire has gone to decay; so Spain,
when after the discovery of America the riches
of the new continent came to her in the silver-
fleets, has fallen from her height and not re-
covered yet, after centuries.
But for all the other nations of the world —
those which were "developed" by British cap-
ital— it will mean reorganization and recon-
struction, also; an industrial depression first,
by the withdrawal of the British money, which
had "made the wheels go," and then a gradual
recovery under a more complete national
industrial independence.
li
ENGLAND IN THE INDIVIDUALISTIC ERA
In our country the conditions have been
somewhat different, in so far as we have largely
escaped the industrial depression, and our in-
dustrial recovery under national, American cap-
ital has been very rapid. Before 1893, America
was practically a financial dependency of Eng-
land. After the panic of 1893, America's finan-
cial strength gradually rose, and during the
two years of the present war we have made an
enormously rapid progress toward financial
independence, largely because a considerable
part of the British capital, which had to be
withdrawn from the markets of the world to
finance the war, found its way to America to
pay for supplies, food, and industrial products.
However, we must not overestimate our
position. We are still very far from financial
independence, and the hope to see the world's
financial center shift from London to New
York is still very much of a dream — far from
realization. Not a dream, however, but quite
within reach is the opportunity to replace Eu-
ropean capital by American capital in the indus-
trial development of those countries which are
within our sphere of influence — South America,
Central America, and Mexico.
VI
GERMANY IN THE INDIVIDUALISTIC ERA
THE development of Germany during the
individualistic era was dominated by two
features — the late arrival of capitalism, and the
early arrival of the socialistic movement. In-
dustrial capitalism in Germany became vic-
torious a generation later, while a powerful
Social Democratic party made its appearance in
Germany a generation earlier than in any other
nation. The result was that before the con-
flict between capitalism and feudalism was
ended, capitalism had already to meet the at-
tacks of socialism, and as the result in Germany
industrial capitalism has in reality never gained
as complete control of the nation and its gov-
ernment as was the case elsewhere.
The reactionary period of the unholy alli-
ance was broken and the individualistic era
finally established in France by the revolution
74
GERMANY IN THE INDIVIDUALISTIC ERA
of 1830 and the revolution of 1848 swept away
the last remnant of feudalism and established
individualism all over Europe, except in Prussia.
There the revolution of 1848 was a draw, and
the final conflict between capitalism and feu-
dalism was waged in the Prussian parliament
in the early 60's. Both parties endeavored to
get the assistance of the labor movement which
was then just beginning. Industrial capitalism
organized labor unions on the lines of the early
British trade-unions; these flourished for a
little while, but soon weakened and died before
the rising tide of socialistic labor organization.
Bismarck endeavored to attach the young So-
cialist party to the assistance of the monarch-
ical government, but nothing but complete
surrender of the monarchy to democratic so-
cialism would have satisfied the early Socialists,
while the movement was not yet suflSciently
strong to cause Bismarck to offer material con-
cessions. Thus a three-cornered fight con-
tinued. With the consolidation of Germany un-
der Prussian leadership, by the Austrian and
the Franco-German war, capitalism finally
gained the control of the nation, but at the
same time the monarchy became so firmly es-
tablished that all previous dreams of the re-
75
AMERICA AND THE NEW EPOCH
formers, of republicanism and complete democ-
racy, vanished forever.
For a few years in the early 70's, during the
business prosperity following the Franco-Ger-
man war, Germany was under almost complete
capitalistic government. But gradually Bis-
marck, as the leader of the monarchical forces,
weakened and eliminated the more radical and
oppositional elements of industrialism (the
"democrats," "progressives," etc.), while the
rising Social Democratic vote threatened capi-
talism and the monarchy alike. The time thus
appeared ripe for an alliance between capitalism
and the monarchy, against socialism; capital-
ism surrendering its demand of complete control
of the national Government, while the monarchy
conceded to share the Government with capi-
talism. Such an alliance thus followed, not as a
formal agreement like that entered into between
the German Social Democracy and the monarchy
at the beginning of the present war, but as a
tacit understanding. The ten years' war against
tlie Social Democratic party was the result,
under Bismarck as the leader of the joint forces
of monarchy and industrial capitalism. Special
laws were passed against socialism, and succes-
sively made more rigorous; labor unions were
7G
GERMANY IN THE INDIVIDUALISTIC ERA
dissolved and their funds confiscated; indus-
trial strikes suppressed by the military power
of the Government; the Social Democratic party
outlawed, its leaders expatriated and driven as
homeless wanderers from place to place; all
socialistic publications in Germany suppressed;
the introduction into Germany of socialistic lit-
erature punished by heavy prison sentences,
and new judicial interpretations created by the
governmental judges. For instance, the official
paper of the Social Democratic party was pub-
lished weekly in Switzerland, as publication in
Germany was forbidden. Its introduction, sale,
and distribution in Germany were forbidden. In
the first years of the war against socialism, only
those were punished who were convicted of
selling or distributing the paper. Later on the
possession of several copies, even only two, of
the same number, was accepted by the judges
as evidence of the intention of distributing the
paper, and finally men were punished with six
months in prison for having a single copy of the
paper, on the ground that in getting the copy
of the paper they had "induced the editor [in
Switzerland] to distribute the paper and thereby
to break the law.'*
The ten years' war was won by the Socialists,
77
AMERICA AND THE NEW EPOCH
and the allied forces of industrial capitalism and
the monarchical government defeated; the per-
secution of the Socialists had to be abandoned,
the special laws against socialism dropped, and
the Social Democrac}^ — now swollen to a party
of over a million votes — recognized as a legiti-
mate political party, and Bismarck, defeated
and discredited, had soon to relinquish his
power and retire into private life.
Then began the reorganization of the Ger-
man nation, the change from individualism
toward co-operation, which has made the in-
dustrial Germany of to-day.
In the mean time a new emperor, the present
Kaiser, had ascended the throne, while politi-
cally and industrially the conflict was raging
between the remnant of feudalism, represented
by the "Junkers," the industrial capitalism, and
the Social Democrac3\
First the new Emperor reorganized the army
and got complete control of it. This assured
the safety of the monarchy against any revo-
lutionary opposition, but also gave him the
name of the "War Lord," which in foreign
countries has clung to him until to-day.
By an effective progressive social legislation
the masses were conciliated and attached to the
78
GERMANY IN THE INDIVIDUALISTIC ERA
monarchy, and socialism, deprived of its revo-
lutionary character, became an evolutionary
party, grew to the largest and most powerful
political party, with six million votes, and by
its demands and criticism pushed forward the
social and industrial reorganization. Thus by
effective and liberal governmental old-age insur-
ance, sickness insurance, and unemployment in-
surance, the three great fears which hung over
the masses in all other countries, were elimi-
nated, extreme poverty vanished, slums disap-
peared, and the condition of the masses became
superior to that in all other countries, even in
America, where the neglect of social legislation
is gradually making itself felt now. The out-
ward sign was the disappearance of immigra-
tion from Germany, in spite of the rapidly in-
creasing population; the inward evidence the
absolute unanimity with vvhich the masses, led
by the Social Democratic party, stood back of
the Government in the present war.
Corporate organization of the industries was
assisted and pushed, often to the extent of the
Government or the Emperor personally partici-
pating financially.
The industrial organizations were encour-
aged to expand and to combine, consolidation
6 79
AMERICA AND THE NEW EPOCH
of corporations to syndicates and trusts assisted
by the Government and even enforced — as in
the potash syndicate — but at the same time an
effective supervision and close control of the
corporations and trusts estabhshed to safe-
guard the people against any possible abuse of
the corporate power.
The result was that the antagonism of the
masses against the corporations, which here in
America paralyzes our rapid industrial progress
and threatens to destroy our prosperity by in-
terfering with the industries' most effective tool,
the corporation, has never appeared in Ger-
many, but consolidation has proceeded un-
checked.
The educational system was reorganized, and
the university idea extended Into the industrial
field, and a universal system of industrial edu-
cation established, from the vocational school
which takes the graduate of the public schools
and does in a more efficient manner what the
apprenticeship of former times did, the teaching
of a trade, up to the large polytechnic schools
leading to the highest fields of engineering.
Thus the individualistic age of everybody for
himself gradually gave way before a co-opera-
tive organization of the nation, giving every-
80
GERMANY IN THE INDIVIDUALISTIC ERA
body the best opportunities for his or her devel-
opment as an efficient and effective member of
society, guaranteeing to everybody the right to
Hve, but imposing the duty to work.
The result was obvious: an enormous in-
crease of efficiency in every direction, in indus-
try, science, commerce, and administration.
Thus Germany became the leading industrial
nation of the world, forcing England into sec-
ond rank, and making it difficult even for our
country, in spite of our vast natural resources,
to hold our own.
With the conquest of the markets of the
world by industrial Germany came wealth, and
Germany became a financial power, and British
capital began to meet the competition of Ger-
man capital in the exploitation — or "develop-
ment," as we call it — of foreign countries. It is
true that England's financial strength was, and
still is, very much greater than Germany's.
But England, no more the leading industrial
nation, needed the return of her invested cap-
ital for her support, while Germany still more
than supported herself by her industries, and
the returns of her foreign investments thus were
additional wealth. Therefore, in her foreign
investments Germany, not depending on the
81
AMERICA AND THE NEW EPOCH
returns, could offer terms whicli England, de-
pending on the return of her capital for her
support, could not meet, and Germany's rising
financial power thus not merely threatened
England's prosperity, but threatened the very
existence of the British nation. For some time
matters were compromised; in the Morocco af-
fair, in the interference of German capitalistic
interests with the consolidation of England's
African empire (Cape to Cairo railroad, etc.)»
in the Bagdad railway, etc. But inevitably a
final conflict had to come, and to allow Ger-
many's increasing financial power to drive
British capital out, or reduce its returns to the
low values which Germany's surplus capital
could meet, meant suicide for England.
Thus either England or Germany had to be
wiped out as a financial power, and for England
this would have meant national disaster. Fi-
nancially, English capital could not fight Ger-
man capital, as explained above, and the only
possible solution thus was recourse to force —
that is, war.
Thus it is true that in this war England is
fighting for her existence; she is fighting for
her financial supremacy, and on this depends
tile existence of the England of to-day.
82
GERISLVNY IN THE INDIVIDUALISTIC ERA
But in this, also, lies England's weakness in
the present war. It was easy for the German
Government, by merely repeating the loose talk
indulged in England at the beginning of the
war, of "crushing the Prussian Empire," and
"breaking up Germany in many little inde-
pendent nations," etc., to make all Germans
realize that they were fighting for the existence
of their nation, and therewith of their superior
social and industrial conditions. But it is much
more difficult to make the masses of England
realize that in fighting for British financial su-
premacj^ they are fighting for their own wel-
fare, especially when they feel that they ha^^e
not shared in England's financial prosperity,
that England's financial power has contributed
rather to the lowering of their standard of living,
by making England independent of its indus-
trial success, and that all that they have se-
cured in the last years was by fighting against
the same financial powers which now call upon
them for help against Germany.
This explains the great difficulty England
has in raising her armies, while Germany has no
such difficulties; it is obvious that b^'' nature
the Anglo-Saxon is no less patriotic than the
Teuton.
83
AMERICA AND THE NEW EPOCH
It explains, also, why all the reasons given as
the cause of the war appear so insignificant and
insufficient to explain the catastrophe. They
are not the reason, but are mere incidents; but
the real reason, the inevitable clash between
Germany's rising financial power and England's
threatened financial supremacy, on which her
existence depends, could not be given, as it is
not such as to be generally understood, not
such as to cause the universal national enthu-
siasm which is required to lead a successful war.
It explains that tlie war was inevitable, just
as that of the feudal nations against the French
Republic at the end of the eighteenth century,
Germany, organized as a co-operative central-
ized industrial nation, could not be defeated in
the industrial or financial field by the individual-
istic industrial capitalism of England and the
other nations.
Thus the present world's war is the conflict
between the passing era of individualistic in-
dustrialism and the coming era of co-operative
industrial organization, the former represented
by England, the latter by Germany. It thus
constitutes an epoch in the history of man just
as that ushered in by the French Revolution,
which made the transition from feudalism to
84
GERMANY IN THE INDIVIDUALISTIC ERA
iiidividiuilism. And in many other respects
there is a striking similarity. One nation —
France in the previous, Germany in the present,
epoch — adopted the new principles and intro-
duced them in its national organization, and
the increase in its economic efficiency, resulting
from the new era, threatened the stability and
safety of the nations which held to the old
era, and caused them to ally themselves against
the reformer in the attempt to suppress by
forcible means, by war, the "dangerous" new
conceptions of human society. Just as the in-
dividualistic era conquered, though France, its
exponent, was finally defeated in the field of
Waterloo, so in the present war the new era
of co-operative organization has conquered,
whatever may be the outcome of the military
war; for already England, the exponent and
leader of individualism, had to throw over all
her individualistic tenets and adopt as rapidly-
as possible the co-operative organization, which
has created Germany's industrial strength and
therewith the danger to the other nations.
Thus we see in free and individualist England
such tyrannical interference with personal lib-
erty as contained in the "Defense of the Realm
Act," compulsory military conscription, requi-
85
AMERICA AND THE NEW EPOCH
sition of private factories for military use, gov-
ernmental blacklisting of private corporations
which refuse to co-operate, commandeering of
private property by the exchange against war
loans, of industrial securities deposited in trust
and fiduciary, interference with luxuries, food,
etc., and even here in America, far away from
the war, we talk about preparedness, compul-
sory military training, mobilization of the
industries, etc., etc.
Thus, even if Germany should be utterly
defeated and crushed, it would be only by the
adoption b}' the Allies of the co-operative indus-
trial organization against which they went to
war, and the era of individualism thus is passed
forever, though a temporary reaction may still
give it an apparent but short life, and the era of
co-operative social organization is at hand.
VII
THE OTHER EUROPEAN NATIONS IN THE INDI-
VIDUALISTIC ERA
FRxVNCE has never become a great industrial
country like England or Germany. Weak-
ened by a generation of continual war under
the first Napoleon, its recovery retarded by the
reactionary period under the unholy alliance
and the revolutions of 1830 and 1848, which led
to the Second Empire with its repeated wars,
and ended in the disastrous Franco-Prussian
war, France never had the chance of undis-
turbed industrial development which other
nations had. The decreasing birth-rate, and
finally the decreasing population, made the
social problem less severe than in nations with
rapidly increasing population, as Germany,
where national production had to provide not
only for the existing population, but for a great
increase of population. Adding hereto the
thrift and the saving habits of the French, it
87
AMERICA AND THE NEW EPOCH
is easily understood that France became a
wealthy country, with the wealth rather dis-
tributed in moderate fortunes throughout the
entire population, and not massed in a few
vast fortunes, surrounded by a poverty-stricken
population, as in the industrial nations.
Though France was unable to compete with
England or Germany in supplying the standard
industrial products to the world's markets, the
inborn artistic temperament of the French na-
tion made France successful in a limited but
very profitable field, and in all those industries
in which an artistic sense is necessary France
became, and is to-day, predominant in the
markets of the world, and has no competition
to fear.
Thus the waves of the conflict for industrial
supremacy between England, Germany, and
America left France untouched.
France's rising financial power was repeatedly
set back — by the extravagance of the Second
Fmpire, by the war indemnity to Germany, and
remained small compared with that of England,
and in any case did not threaten England's
supremacy; as, due to the French national tem-
perament, French capital was to a small extent
only invested in industrial exploitation of for-
OTHER EUROrEAN NATIONS
oign countries. French capital built the Suez
Canal, while the world stood by, scoffing; but
when it proved a success, England appropriated
it. The attempt to build the Panama Canal
proved an impossible task, and tropical disease
conquered; it was only after medical science
had conquered tropical disease, largely by the
work of the American Medical Staff in Cuba
and in the Philippines, that the construction of
the Panama Canal became possible and was
accomplished by our country.
The disastrous financial failure of the French
Panama companies discouraged French in-
vestors, and since that time French wealth has
largely gone into governmental loans of foreign
nations, especially Russia. Thus, when after
Russia's defeat bj^ Japan Russia, nearly bank-
rupt, was threatened by dissolution, and Po-
land, the Baltic provinces, and Finland rose in
revolution, it was French money which came
to Russia's assistance; it was the money of the
French Republic which enabled the Russian
autocracy to subjugate the nations which had
tried to free themselves from the Russian yoke.
When the final conflict between England and
Germany approached, France hesitated for a
moment. But the English-speaking nations
89
AMERICA AND THE NEW EPOCH
were her best customers; the defeat in the
Franco-German war of 1870-71 still rankled,
and when Russia joined England the large in-
vestments in Russian loans needed protection,
and thus France joined the Allies.
Russia has not yet approached the individ-
ualistic era, but is still deep in feudalism. An
autocratic monarchy, discouraging and oppos-
ing intelligence and education, a small intellec-
tual minority, fully as educated, intelligent,
and able as the intellectual classes in any other
country, but helpless and not backed by a
nation; over 80 per cent, of the masses are still
essentially serfs, are illiterate and thereby
deprived of the means of communication be-
yond their immediate surroundings, hence
barred from any intelligent political activity.
The attenuated parliamentarism, represented
by the Duma, thus can be a shadow only; but
if it were real and the Duma had the power of
the British Parliament, it would probably
plunge the nation in still greater misery by sub-
stituting an irresponsible oligarchy for the auto-
cratic monarchy. It is significant that the con-
ditions of the Russian masses have been best
when a strong autocrat ruled, and most un-
favorable under a weak ruler like the present,
DO
OTHER EUROPEAN NATIONS
when a self-constituted group of dukes and
bureaucrats exploited the nation.
The "awakening" of a "new Russia" by the
present war, of which we hear so much, thus is
an idle dream; as a nation Russia is further
behind than Japan was when the American
ships opened it to Western civilization; and it
took Japan two generations to rise to equality
with the Western civilized nations. ^Vhat Rus-
sia needs is not political freedom and parlia-
mentarism, but an enlightened autocrat like
Frederic II. of Prussia was in the middle of the
eighteenth century, who establishes schools
everywhere throughout the country, and forces
all the people to send their children to school.
Then, in a generation, Russia can begin to
think of self-government.
Industrially, Russia is a nation of vast un-
developed resources, requiring capital for its
development, just as Mexico, South America,
China does, and as our country did two gen-
erations ago.
But such development by foreign capital
means exploitation. While the country becomes
prosperous — as Mexico was under Diaz — the
prosperity is not for the natives of the country,
but the wealth of the country, from mines and
91
AMERICA AND THE NEW EPOCH
plantations, enriches foreign nations, and the
lot of the natives is a steady depression of their
standard of living toward serfdom, or, as we
now call it, peonage. Our country has luckily
escaped this faLc, due to the enterprise and
ability of the mixed races which had settled it;
but in the Mexico of to-day we see the result
of the development of a country by foreign
capital in the individualistic era. Russia be-
fore the war was being "developed" largely by
the Germans, and much of the hatred of the
Russian against the German thus is of the same
nature as that of the Mexican against the
American.
Politically, Russia's position has been con-
sistent for centuries. Christianized from Con-
stantinople, by the Greek Catholic church, it
was under the influence of the East Roman
Empire, and when this empire ended by the
conquest of Constantinople by the Turks in
1453, the Russian ruler, related by marriage
to the last Paln'ologus, naturally considered
himself as the heir to East Rome, and the dream
of Russia has been ever since the restoration of
the East Roman Empire as pan-Slavic power,
with the Czar as ruler in the old capital "Czar-
grad" — Constantinople — just as the dream of
92
OTHER EUROPEAN NATIONS
the Germans in the Middle Ages was the resto-
ration of the West Roman Empire, of German
nationality.
Twice Russia was close to the goal; in the
first half of the nineteenth century (1839),
when my countryman, Diebitsch Sabalkanski,
forced the "impregnable" Balkan range, and
finally in 1878, when the Russian army had
penetrated to the walls of Constantinople, but
both times it was defeated by British jealousy;
the British war fleet, passing the Dardanelles,
anchored before Constantinople, and the Con-
gress of Berlin, under Bismarck and Lord Bea-
consfield, >tore up the peace of San Stephano.
Baffled in the Balkans, Russia then turned her
eyes toward a Pacific empire, but here again
England's backing of Japan led to Russian de-
feat. England feared for her Indian empire,
which Russia's rising power seemed to threaten,
as in central Asia the Russian frontier had grad-
ually crept close to the northern frontier of
India.
The territory conquered, "liberated" by Rus-
sia in the Balkans, which England did not allow
her to retain, was formed into small separate
nations, under Turkish sovereignty, and so
Roumania, Servia, Bulgaria, originated. Rus-
93
AMERICA AND THE NEW EPOCH
sia accepted tliis as a transition state, a tempo-
rary condition, until the time when Russia could
completely absorb these countries, as she had
done with Poland and Finland, as England did
with Egypt, and Austria with Bosnia. But
after some time these nations began to take
themselves seriously, developed a national
individuality, especially the more highly civil-
ized ones — Roumania and Bulgaria — and re-
fused to be swallowed, and now lie as a barrier
between Russia and her Turkish prey. xAt the
treaty of Berlin, in 1878, England erected still
another and stronger barrier against Russia,
when she gave Bosnia and the Herzegovina —
which had been destined for Servia — to Austria,
and thus established Austria on the Balkan
Peninsula. Naturally then, Servia, deprived of
its booty, has ever since leaned toward Russia,
and become practically a Russian dependency,
while Roumania and Bulgaria gravitated into
the Austrian sphere of influence, since it was
Russia which threatened their national exist-
ence, by considering them as a temporary ar-
rangement, pending absorption by Russia.
Thus the alignment of these nations in the
present war was to be expected, in spite of the
enmity between Bulgaria and Roumania, en-
OTHER EUROPEAN NATIONS
gendered by the second Balkan war. Racial
differences contributed: Scrvia is Greek Cath-
olic Slav, like Russia. Roumania, however, is
Latin, is the last colony of the ancient Roman
Empire, its language closer to the Latin of the
later empire than any other modern language,
and it is thereby closely attached to Italy.
Bulgaria, while speaking a Slav language since
the days of the great Servian Empire of the
Middle Ages, is of different race from Slav or
Latin, nearer related to the Magyar race of
Hungary.
Thus England, fearing Russia, had closed and
double-locked the gates against Russian expan-
sion in the Balkans, had made the Dardanelles
a closed strait, so as to blockade Russia in the
Black Sea. But when the greater danger from
Germany's rising financial power threatened,
England withdrew her objection against Rus-
sia's occupation of Constantinople, and prom-
ised her assistance to this end. This attached
feudal Russia to individualistic England.
But there is still the old divergency of inter-
est and mutual suspicion between Russia and
England, and makes itself felt to the disad-
vantage of the Allies in this war; England's aim
is to destroy Germany, but to save Austria as
7 95
AMERICA AND THE NEW EPOCH
much as possible as future counter-weight
against Russia. Therefore, also, the British
expedition into Mesopotamia, into Persia, to
occupy as much Turkish territory as possible,
and to keep it frojn falling into Russia's hands.
On the other hand, Russia would prefer Ger-
many to remain sufficiently strong to keep
England in check after the war, but desires
Austria, the barrier in the Balkans, destroyed.
Therefore Russia consistently directed her
drives against Austria, in her own interest, in-
stead of against Germany, in England's interest.
There are probably differences of interest,
also, within the Central Powers, though less pro-
nounced. Germany is the nation which threat-
ened the individualistic era by her co-operative
industrial organization, and Austria is the most
conservative and correspondingly backward
nation within this group, while Hungary is
closely attached to Germany in its social in-
dustrial development, as well as politically.
When in 1848 Hungary attempted to make her-
self independent, a Russian army reconquered
her for Austria, while Prussia's victory over
Austria in 1866 gave Hungary its freedom. Aus-
tria, as the weakest member, had to be pulled
along by her two stronger neighbors, Germany
9G
OTHER EUROPEAN NATIONS
and Hungary. Thus when in the first year of
the war Austria's military organization broke
down, Germany reorganized the armies; when,
later on, the economic pressure resulting from the
food blockade threatened Austria, Germany
again had to organize Austria's internal economy.
Austria, however, was the leading nation in
central Europe before Germany. Her emperor is
of the oldest and most exclusive roj^al family-,
her nobility still far more self-conscious than
that of Germany, and there naturally remained
some feeling of jealousy against Germany as the
upstart leader. It, therefore, is probably not
without intention that Germany does not like
to see Austria become too prominent. Thus
Germany's help against Servia came only when
the Turkish Empire found itself in such danger
as to make German assistance necessary. In
this connection it may be significant that while
the German drive against Russia in 1915 carried
the frontier of the Central Powers forward for
hundreds of miles, beyond the limits of Poland,
in the southeast corner of Galicia some Austrian
territory was left in Russian hands, and the
Allies in Salonica and the Italians in Avlona
were allowed to retain their hold.
Poland as an independent state ended over a
97
AMERICA AND THE NEW EPOCH
century ago, and was divided between Austria,
Prussia, and Russia. But as a nation Poland
still lives; indeed, the national self-conscious-
ness of the Poles greatly increased after the dis-
memberment of the nation, just as that of Ger-
many in the period after the Thirty Years' War.
The large and valuable Polish literature prac-
tically all dates from the time after the division
of Poland. The Poles were a civilized nation
long before the Russians; they were Christian-
ized from the west, from Rome, are Roman
Catholics, and between them and the Greek
Catholic Russians stands the unbridgeable bar-
rier of hatred, which is greater than any other
among men, that of religious persecution and
oppression. Germany has politically oppressed
the Poles, but Germany has little Polish terri-
tory, and even there the majority of the popu-
lation is German, because Prussian Poland was
given to Russia by Napoleon, after Prussia's
defeat. Austria has a large Polish population
in Galicia. Austria has never oppressed the
Poles, but has given them equal political and
social rights, so that there is little enmity be-
tween Austrian and Pole, and as Austria is the
leading Roman CathoHc nation, the Poles have
begun to look toward Austria as their protector,
98
OTHER EUROPEAN NATIONS
since their old protector, France, betrayed them
when, after the Japanese war, France financed
Russia to defeat Poland's attempt for independ-
ence, and England abandoned the Poles in
allying herself with Russia.
Thus a reconstructed Poland, too small a
nation to stand entirely independent, would
probably gravitate toward Austria as protector,
assuming a position similar to Hungary.
Switzerland has an army, small, but not neg-
ligible, and while entirely surrounded by the
war, situated as it is on the heights of the Alps,
no convenient pathway of armies leads through
it, and thus its neutrality is not likely to be
violated like that of Greece or Belgium.
Greece is the only nation whose entire inter-
est is to remain neutral at any sacrifice, for an
alliance with the Central Powers would be sui-
cide, with the enormous coast-line exposed to
the attacks of the Allies, while a union with the
Allies would bring down the thunderbolt in the
fate of Servia and Belgium.
The Turkish power has been steadily declin-
ing since the days of Suleiman II., and if it had
not been for the jealousy of the European na-
tions the Turks would have been driven out of
Europe long ago. But for a century England
99
AMERICA AND THE NEW EPOCH
protected Turkey against Russia — at a price,
however: Cyprus, Egypt, and the Sudan, etc.
When abandoned by England, in her approach
to Russia, Turkey naturally allied herself with
Germany as the only great military power
which had no frontier adjoining Turkey and
thus did not endanger the integrity of the
remnant of the Turkish Empire, but merelj^ de-
sired commercial exploitation as compensation.
It must be realized, however, that there has
been an awakening, and a revival of Moham-
medanism resultant from the war. Christianity
has preached for twenty centuries, "Love your
enemies," and as the result all the civilized
Christian nations slaughter their enemies by
the hundred thousands. But Mohammedanism
has taught, "Help your friends and kill your
enemies," and so the Mohammedan honestly
practises his religious belief, while it requires a
very highly developed state of hypocrisy for
the Christian nations to harmonize their actions
with their professed religion.
Japan, in the Far East, while a party to the
world's war, is really outside of it. Looking
only after her own interest, she is writing the
Monroe Doctrine of Asia into the book of his-
tory: "Asia for the Asiatics." In the Chinese
100
OTHER EUROPEAN NATIONS
war of 1894 she acquired the leadership of the
yellow race; but the European nations de-
prived her of the fruit of victory, and divided
between themselves the territories which Japan
had conquered. Japan had to bide her time.
In the Boxer revolution she took a leading part
in the punitive expedition and so deprived it
of any racial significance. When the time was
ripe Japan struck Russia, deprived her of the
spoils taken in 1894, and ended the dream of
Russia's Pacific empire. Another ten years, and
Germany felt Japan's retaliation and had to
abandon her spoils. But England also had
profited from Japan's coercion in 1894, and it
is significant that Japan has taken not only
the German possessions in China, but also the
German islands in the Pacific, and is holding
them as "strategic positions." Against whom?
Not against Germany; but they are strategic
positions against England's colonies.
We, as Americans, may desire the "open
door" in China, but as believers in the Monroe
Doctrine — "America for the Americans" — we
cannot honestly dispute Japan's "Asia for the
Asiatics," if Japan is capable of making good
in civilization. And there is no doubt about
this, for the yellow race is the only one which
101
AMERICA AND THE NEW EPOCH
has been capable of disputing with the white
race the leadership in civilization, and, indeed,
has held the leadership in some periods in the
world's history. Thus there will be a gradual
coalition of Japan with her defeated enemies,
Russia and Germany, in her preparation to
drive England out of the Far East.
It is necessary to shortly discuss the situation
of the various nations to understand their align-
ment in the world's war and to realize the com-
plexity of the issues: while primarily it is the
inevitable conflict between the old and the new
era, between England and Germany, all the
issues between the nations, which lay slumber-
ing, have flared up and are being fought out,
such as Russia's aim for Constantinople, Po-
land's restoration, the desire of the Balkan na-
tions to safeguard their national independence,
etc., and these secondary issues necessarily more
or less modified and controlled the conduct and
the theater of the war, and so tended to obscure
the main issue.
VIII
AMERICA IN THE PAST
THE history of American colonization can
be divided into three periods, of which the
latter two largely overlap; the period of ex-
ploitation, the period of the classic civilization
of the South, and the period of the individual-
istic civilization of the North.
For centuries after the discovery of America
the new continent was a field of forcible exploit-
ation, but no serious attempts at settlement and
organization of new communities were made.
The European nations, Spaniards, Portu-
guese, etc., attracted by the treasures of gold
and silver, came to plunder, but not to settle
and stay; few remained, and the white popu-
lation thus grew very slowly — and even then
strongly intermixed with the native Indian
population.
The gold and silver fleets carried the loot of
the new continent, gathered by murder and
103
AMERICA AND THE NEW EPOCH
rapine, to Europe, to the disaster of the exploit-
ing nations. Spain and Portugal, becoming par-
asites by the spoils of America, followed the
fate of the Roman Empire, decayed and fell
from their height. When the plunder ended
these nations had ceased to be self-supporting;
poverty thus overtook them, and only to-day,
after centuries, are they beginning to recover.
The new continent was despoiled, no construc-
tive work was done, no new nations were created,
and when finally the period of exploitation came
to an end, and the Spanish-American countries
rose and gained their liberty in the beginning
of the eighteenth century, it was to exchange
exploitation for anarchy; there was nothing on
which to build a stable self-governing nation,
and revolution followed revolution, until finally
a few fairly stable governments emerged — Ar-
gentine, Brazil, Chile, Mexico. And even these
governments are not very stJible; impoverished
by their forcible exploitation of their European
masters in former times, they largely had to
depend on foreign capital for their development,
and what this means we see in the Mexico of
to-day; development by foreign capital means
development for foreigners, but exploitation of
the nation, and if the country is not unusually
104
AMERICA IN THE PAST
rich, its population unusually capable — as was
the case in the United States — or other for-
tunate circumstances intervene and change the
trend of development, sooner or later a reaction
sets in, a revolution against foreign exploitation,
and then it is doubtful whether a stable govern-
ment of the natives for their own interests will
ultimately arise, or whether anarchism will end
the nation as an independent unit, as seems to
be now the fate of Mexico.
Here probably the European war may be a
godsend, may be the saving of the smaller na-
tions of this hemisphere; the vast destruction
of European capital by the world's war forced
the extensive withdrawal of foreign capital from
the South American nations. The jBrst effect,
naturally, was wide-spread disaster; industry,
trade, and agriculture suffered; but the final
outcome may well be a gradual rise of these
nations by their own resources; very slowly in-
deed, compared with the rapid advance possible
by foreign capital, but what is accomplished in
this manner is by the nation and for the benefit
of the nation, is constructive advance and not
destructive exploitation, and here the United
States, as the big brother of these nations, who
has successfully passed the same trials, from
105
AMERICA AND THE NEW EPOCH
foreign exploitation to industrial independence,
may offer material help and assistance. But
this will require a great deal more patience and
forbearance than we have usually shown in our
dealings with other nations.
In the United States the immigration from
the beginning was for colonization. No wealth
of gold or silver attracted the plunderers of
Europe, and the northern shores of the Ameri-
can continent thus were neglected long after
Central and South America had been over-
run and exploited. But when finally the colo-
nization of the United States began, it was for
settlement, and the colonists, driven to our
shores by political and religious persecution,
and later by Europe's unfavorable industrial
and social conditions, came to stay, to form a
new nation.
The Southern colonics languished for a long
time, the climate being too hot for white farm
lal^or. It was the introduction of the negro
slave which made Southern colonization a suc-
cess and created tlie historical South, an agri-
cultural community raising tobacco, cotton,
etc., on large plantations operated by slave
labor. Thus arose a civilization based on slave
labor; a small master class in control of all
106
AMERICA IN THE PAST
political, industrial, and social power, free to
devote their time to administration, literature,
art, and science, highly civilized and superior
intellectually to the uncouth farmers and sailors
of the Northern States, thereby for generations
in control of the political government of the
entire nation. Below them was a mass of
human beasts of burden, slave laborers, as a
rule well kept and taken care of, just as, and
for the same reason that, we take care of our
cattle now, and therefore as a rule not seriously
dissatisfied with their lot ; and a number of poor
white peoi)le, serving the masters as overseers,
helpers, etc., or drifting idly as "poor white
trash." In short, it was a civilization identical
in almost every respect with the classic civiliza-
tion of ancient Greece and Rome, which after
twenty centuries reappeared on this continent.
Such civilization inherently is agricultural, re-
lying for its industrial products on foreign trade,
and free trade thus was the necessary require-
ment of it.
Entirely different was the colonization of the
Northern States, Small individual farmers and
traders settled in New York, Pennsylvania,
New England. The climatic and agricultural
conditions were unsuitable for negro labor, and
107
AMERICA AND THE NEW EPOCH
slavery thus never gained a foothold, but in-
dividual freeholders settled and lived together
in small communities, eking out their living
from the rather poor soil of the Northern States,
or by hunting and trading with the Indians, or
sailing the oceans.
It is in these communities of the early colo-
nial days in the Northern States, that our pres-
ent American Government originated with its
great fundamental democratic principle that
*'all men are born free and equal" and "that
"government can exist only with the consent of
the governed." But here also the foundation
was laid of the terrible defect of our Govern-
ment which has made it a byword of inefficiency
throughout the world — the "rotation in office
for the distribution of spoils."
Historically, the nearest analogy to this early
colonial society of tlie pioneer days probably
is found in the organization of the German
tribes in the prc-feudal days, in the later days
of the Roman Empire; an aristocratic democ-
racy, small communities of citizens, equal in
rights and freedom, similar in occupation,
knowledge, and experience, though differing in
their standing in the community, tlieir influ-
ence and authority; very strongly individualistic
108
AMERICA IN THE PAST
and self-reliant; trained by experience and ne-
cessity to take care of themselves in fighting
against the hardship of their existence, against
the barren soil, unfriendly nature, hostile Indi-
ans. Little help was to be expected from a
Government which was practically non-existing;
locally the loosest kind of government, essen-
tially a voluntary co-operation with little man-
datory power, and far away across the ocean a
central government in the English king, which
essentially limited itself to foreign relations,
but took little part in the local issues of the
community, and where the British colonial
governor attempted to govern the internal af-
fairs of the colony it usually was a failure and
led to resentment and opi)osition, and finally to
the Revolution. Thus the relation of the Amer-
ican Colonics to the Britisli king was similar to
that of the German tribes in the pre-feudal days
to the Augustus in Rome as their far-distant
overlord.
In the small agricultural community of the
Colonial days, consisting of citizens of similar
occupation, character, and intelligence, any
member of the community could carry out the
simple functions of the Government about
eciually well, but the office was a duty rather
109
AMERICA AND THE NEW EPOCH
than an lionor, and however little time it de-
manded, it would have been unfair to ask the
same citizen to carry it for many years.
Thus in those days and under this simple
form of social structure it was natural that any
intelligent citizen was considered eligible to any
oflBce, but that the oflSce-holder changed at
every term.
Thus became ingrained in the American na-
tional character the conception that any intelli-
gent citizen can fill any ojQSce, and that it is
desirable to change the office-holder at every
election.
While this was feasible and worked satis-
factorily in the simple colonial society, it has
become a serious handicap in our present highly
complex civilization. When in rapid succession
a theater-director, a physician, a minister, a
lawyer are placed in administrative charge of a
municipality — all good men and true, but none
of them by i)rofessional experience qualified to
the administration of the municipal corporation
of to-day — or where a barber is placed in charge
of the city water- works, a saloon-keeper in the
administration of tlie public works, no matter
how cai)al)le, honest, and intelh'gent the men
may be, the failure of any professional qualifi-
110
AMERICA IN THE FAST
cation, the absence of the knowledge and experi-
ence required for the efficient administration of
the office necessarily must lead to the incom-
peLency and inefficiency which we see displayed
throughout all our political life; and when, then,
the incumbent in the office is changed by the
election or appointment of his equally incom-
petent successor, just when he begins to under-
stand a little of the duties of his office, the neces-
sary result is the failure of political government,
which is the characteristic of our nation.
This is the bad inheritance from our early
Colonial days, which we shall have to over-
come to reap the full benefit of the great prin-
ciples created then and later laid down in the
Declaration of Independence and in the Con-
stitution.
Politically, the first period in the history of
our country represents its consolidation as an
English-speaking nation: the Dutch, French,
Spanish, etc., colonies were absorbed or forced
into a position where they coidd no longer
threaten the supremacy of the English colonies,
and wars between European nations could no
longer be waged on American battle-fields.
Hereby the American colonies were withdrawn
from all direct interest in the controversies
8 111
AMERICA AND THE NEW EPOCH
fought out between European nations, and their
relations with the "Mother Country," England,
thus became the predominant issue. No longer
disturbed by the reflection of European wars, the
colonies grew in strength and self-confidence,
and when England failed to recognize their
claims to control their own destiny, the Revolu-
tion was the result.
It left the colonies independent, but as thir-
teen separate nations, and the issue then was
whether and how far they should co-operate.
They might have remained independent and
separate, other nations formed on the continent,
and what is now the United States would have
become a number of separate and independent
nations, just as South America is to-day, with
constant rivalries and contentions. Fortunately
we escaped this; the Union was formed by vol-
untary co-operation of the thirteen States, and
ever since the progress toward closer co-opera-
tion and centralization of the nation has gone
on steadily.
However, as the States had voluntarily en-
tered the Union, so, naturally, it might be held
that they could withdraw again from the Union
whenever they desired. Thus when in 1812,
during the unsuccessful war with England,
AMERICA IN THE PAST
delegates of the New England States met at
Hartford and seriously discussed the advis-
ability of again becoming British colonies, the
withdrawal from the Union did not appear such
treason as it seems to us now. Even when, in
ISGO, the South lost control of the national
Government and the Southern States withdrew
from the Union and formed the Confederation,
many people considered that they had the right
to do so and recommended to let them go.
Fortunately, better counsel prevailed. Other-
wise we would have two nations, and in the
agricultural depression of 1893 the North would
probably have split again into an industrial
East and an agricultural West, and with three
nations with different and antagonistic interests
dividing the continent, America woidd have
been led into the same path which Europe fol-
lowed, with the same result.
Thus it was Lincoln's administration which
established forever the principle, "The Union,
One and Indivisible." It was this issue which
was fought out in the Civil War, and the Civil
War thus created the American Nation, not the
Revolutionary War; the latter made the States
independent of England, and thus separated
the development of America from that of Eu-
113
AMERICA AND THE NEW EPOCH
rope, but it did not yet permanently settle the
character of the American development, whether
it should be that of a stable, peaceful nation, or
an equilibrium of nations balancing on the
sword's point, like Europe.
^ The development of the South as a stable,
civilized community antedates that of the
North, and during the period from the Revo-
lutionary War to the Civil War, the South
governed the Union. However, the classic or-
ganization of the South was that of a low pop-
ulation density, while the individualistic soci-
ety of the North is capable of far greater pop-
ulation density, with its numerous small farms
operated by citizens instead of the few large
plantations operated by slave labor found in
the South.
But the New England farms, never very fer-
tile, became more and more exhausted, hunting
ceased with the disappearance of the game, the
Indian trade vanished with the Indian, and
when the population penetrated farther into
the interior of the country, the ocean-carrying
trade contributed less to the support of the
nation. Thus industrial development appeared
the only saving of the steadily increasing popu-
lation, and the numerous small water-powers
lit
AMERICA IN THE PAST
along New England's mill-streams invited. But
there could be no successful development of
industries in competition with England's es-
tablished superior industrial power, without
protection of the new industries by tariff laws.
But the agricultural South required free trade
for the exchange of its crops against England's
industrial products.
Thus the issues were joined between the
free trade demanded by the South and the pro-
tective tariff required to raise the industries
needed for the support of the North.
The South controlled the Government, but
the North was growing more rapidly in popu-
lation, and all efforts of the Southern states-
men politically in charge of the nation could
not forever postpone the day when the North
got control of the Government, with Lincoln's
election.
The emancipation of the slaves broke the
power of the South by destroying its labor, and
the South was ruined, the classic period of our
civilization ended, and the individualistic era of
industrial capitalism ruled supreme on this
continent.
For many years the South was conquered
territory, received the treatment which now
115
AMElllCA AND THE NEW EPOCH
the conquered nations— Belgium, Servia, Egypt
— receive, while the North, protected against
England's competition, and with the vast ter-
ritories of the West and the South as assured
markets, rapidly developed its industries.
For a generation the South was suffering in
poverty, then, in the 90's, came the beginning
of the new South and the decadence of the New
England States.
The industries had advanced to such manu-
facturing units that the small mill-streams of
New England did not satisfy the power require-
ments any more, while the numerous large
rivers of the South offered abundant power.
Electrical engineering had advanced far enough
to make the place of the power consumption
independent of the source of power, by long-
distance transmission, and the same economic
laws which had taken the cotton industry from
England and transferred it to New England, as
nearer to the source of supply of raw materials
and of denuind for the finished products, these
same laws now began to withdraw the cotton
industries from New England and locate it in
the Southern States witliin the cotton-fields,
and the New England mills began to languish,
the Southern colLou-mills increased and nudti-
IIG
AMERICA IN THE PAST
plied. In 1894 tlie first electrically driven
cotton-mill in the South started at Columbia,
N. C, built with Northern capital. The next
year the Peltzer Mill, owned by Southern capi-
tal, started electrical operation, and since that
time the South has rapidly become an indus-
trial country, like the North a generation ago;
cheaper power, better and cheaper raw mate-
rials, cheaper living conditions in the Southern
climate, gave all the advantage to the South,
while New England had to find its saving by
the increasing emigration of its population to
the middle West and the far West of our
country, and New England's farms are standing
abandoned.
The antagonism of interests between the
South and the North, which caused the Civil
War, thus has vanished before the industrial
development of tlie South, made possible by
electrical power, and the only differences still
remaining are those due to the later industrial
development of the South, which thus far has
failed to protect its labor supply by adequate
educational laws, and laws against the exploita-
tion of child labor and women labor. These are
now the issues, and .ire the black marks against
the present South — illiteracy, exploitation of
117
AMERICA AND THE NEW EPOCH
children and of women. Just as the industries
of the North prosper in spite of the withdrawal
of the children for education, and the limitation
of their exploitation, under the still more favor-
able conditions of the South the same will be
the case.
IX
AMERICA IN THE INDIVIDUALISTIC ERA
DURING the Civil War, when industrial
capitalism extended its sway over the en-
tire United States, and in the years following
the war we were in the first period of the indi-
vidualistic era, that of numerous small and
independent producers, all more or less success-
ful, due to the still almost untouched resources
of the new continent. Then we had a large,
prosperous middle class, and little diflSculty ex-
isted for any man with a fair amount of intelli-
gence and ambition to rise to independence.
These were the golden days, to which our in-
dividualists hark back, which our legislatures
and governments attempt to restore by legal
enactments. But the world does not stand
still, for standstill is death; in free competition,
the more successful producers destroyed the less
successful ones; companies and corporations
formed and absorbed or defeated the individual
119
AMERICA AND THE NEW EPOCH
producers, the Larger corporations absorbed or
vanquished the smaller ones, combined with
each other in still larger ones, and so, by the
working of inexorable economic laws, the con-
solidation of the industries progressed from
numerous small producers to the formation of
huge corporations, w^ith competition steadily
growing more strenuous, more intense, and more
destructive.
Finally, in the 90's the end was reached;
especially in those industries which had been
organized into a few large corporations. The
necessity of keeping the factories going, with
the steadily increasing excess of productive
capacity over the demand for the products, had
made competition so vicious that it threatened
with destruction the victor as well as the van-
quished, in a universal v.Tcck of the industry.
Thus co-operation had to come, of neces-
sity, to avoid the destructive effects of com-
petition.
Thus co-operative agreements between for-
merly competing corporations came, and the
individualistic era seemed to approach its end,
the co-operative era to arrive.
The fundamental jirinciple of industrial co-
operation between corporations in the same or
120
AMERICA IN THE INDIVIDUALISTIC ERA
similar fields comprise control of production;
control of prices; interchange of information.
Control of production 7neans: Elimination of
the constantly recurring periods of business
depression and business boom, by restricting
excessive production in boom times, and main-
taining production in times of impaired busi-
ness confidence by manufacture for stock, by
encouraging consumption by means of long-
extended credits, acceptance of stock in pay-
ment, financial assistance for starting new en-
terprises and extending existing ones, etc.
Elimination of unrestricted competition is
accomplished by dividing the production be-
tween the corporations in a definite percentage
based on their previous business, or their capi-
talization, or their producing facilities; or by
dividing the business territorially, or by divid-
ing it by the character of the manufactured
products, etc.
Control of prices means: Agreement on the
same prices by all producers, either by definitely
fixing such prices, where such is possible, with
periodic readjustment; or by an agreement on
the methods of computing selling prices from
the individual items of the cost of production,
etc.
121
AMERICA AND THE NEW EPOCH
Agreement on the legitimate profits of the
middlemen, by fixing the retail prices, etc.
Interchange of information includes: Inter-
change of technical information and experience
between manufacturing and technical staffs,
joint use and interchange of patent rights,
trade-marks, etc.
Mutual consultation on administrative prob-
lems, commercial and financial questions, etc.
Mutual holdings of stock of the corporations,
interlocking directorates, etc.
Practically all these necessary requirements
for safely guiding our industrial prosperity from
the competitive age, which has failed and is
dead, into the coming co-operative age, have
been outlawed by our Government.
The result is that from the beginning of this
century, when the corporate development of
industry was arrested by the interference of the
Government, instigated by a misguided public
demand, our industrial development has not
progressed, but lapsed back; the industries
have grown larger, the corporations financially
more powerful, but as an industrial nation we
have gone backward with increasing rapidity.
Competition has not been restored; no polit-
ical law can resurrect a corpse, and while you
AMERICA IN THE INDIVIDUALISTIC ERA
can forbid co-operation by legislation, you can-
not by law order people or corporations to
commit suicide.
The result thus has been increasing dis-
organization, interference, inefficiency, and
waste, leading to an industrial chaos just as
regrettable for our national welfare as un-
necessary.
What were the causes for this forcible arrest
of the natural industrial development of our
nation, which threatens its future welfare, nay,
even its existence.'^
"While in other nations the industrial devel-
opment was fairly uniform throughout the na-
tion, in our nation the development in the
Eastern States was about a generation ahead
of that in the middle West and the West. Thus,
when in the East the corporate organization ap-
proached the co-operative stage there was still
a large class of small, individual producers in
the West who felt their existence threatened by
the rise of corporate industrial power, and were
ready to fight the corporation by all means, po-
litical and otherwise, in the vain attempt to
avoid the inevitable, the extinction of the small
producer before the higher efficiency of organ-
ized corporate production. Add thereto the
123
AMERICA AND THE NEW EPOCH
not negligible independent middle class, which
still exists in the East, and all those who have
tried and failed, and therefore naturally hate
those who have succeeded in organizing big
production, and we §et a formidable political
power; but, however much we may sympathize
with the individual who desires to preserve his
industrial independence, it is a reactionary
movement, however progressive some of its
leaders may call themselves, and either the re-
actionary forces must be overcome by educa-
tion and otherwise, or the nation's progress is
threatened.
•An equally serious enemy to the progress
toward co-operation is the strong individualistic
temperament of a large part of the American
citizens, especially those who come from Anglo-
Saxon descent; the attitude of mind which
rather wishes to be the first in a small puddle
than the second in the wide ocean; tempera-
ments who prefer to be president of a ten-
thousand-dollar business rather than assistant
to the president of a hundred-million-dollar
corporation. We must also consider that many
of the organizers and corporation leaders are
pronounced individualists, do not understand
what they arc doing and whereto the path
124
AP^lEllICA IN THE INDIVIDUALISTIC ERA
leads into which economic laws forced them, and
thus leadership in the transition from competi-
tion to co-operation by men understanding the
industrial situation and its needs has often been
lacking.
Then there was antagonism of the labor inter-
ests, unjustified and illogical, indeed, since all
labor organizations are based on the principle of
co-operation. However, they feared the greater
power of organized industrial capital and point
to powerful corporations who have kept union-
ism out of their works. And in the days when
this popular resentment against corporate or-
ganization originated, there were some indus-
trial controversies fought to a finish by the
corporations, to the suppression of the labor
organizations, possibly beyond the point where
social wisdom should have called a halt in the
interest of future co-operation and friendly feel-
ing with the masses of the people.
One of the most serious causes of the rise of
popular resentment against the corporations
was the character of the corporation itself, es-
pecially in the early days, its crudeness and
inefficiency, which in many cases led to a failure
of realizing the advantage expected from co-
operation. There is no constructive supervisory
U5
AMERICA AND THE NEW EPOCH
power, in our country, as was represented by the
central Govermncnt in Germany; our Govern-
ments, from the federal down to the municipal,
are not organized for constructive activity, and
thus their entrance in the field is largely inhibi-
tory, liable to disorganize by interference. The
tariff wall excluded the check afforded by com-
petition with other nations. Thus over-capi-
talization was frequent, and seriously handi-
capped some corporations for years, until their
business had grown up to their capitalization.
Sometimes the over-capitalization was inten-
tional; water, or the result of excessive organi-
zation charges; but the most frequent and most
serious, because unavoidable, cause was the
necessarily excessive cost of absorbing smaller
competitors; the price usually is not the value
of the competitor's business; often this is nil —
but is based on the harm which the competitor
could do in unrestrained competition, before it
is destroyed. Thus millions have been paid
for competitors which brought in practically no
assets, and still it was a good bargain, since still
more millions would have been lost in fighting
the competitor.
Occasionally even competing comi)anics have
been organized, not for honest industrial pro-
126
AMERICA IN THE INDIVIDUALISTIC ERA
duciion, but for forcing an established corpora-
tion to buy it out — a kind of blackmail against
which no protection existed.
Thus the industrial consolidation was accom-
plished at heavy sacrifice in capital, and corre-
sponding sacrifice in economic efficiency. An-
other incident in causing public hostility was
the wreckers — those financiers who organized or
got control of corporations, not for industrial
production, but to get quickly as much out of
them as possible, and then abandon them,
squeezed out and wrecked. Some names of the
previous generation are still remembered.
A most serious cause of the popular antago-
nism was the failure of the corporation in one
of its most important activities, that of the
social relations to its employees and to the
public at large. In those early days the leaders
and organizers of corporate production were al-
together too much inclined to consider the cor-
poration as their own private property, and felt
that paying such wages as they had to pay to
get efficient workers comprised all their rela-
tions to the em])loyees, and that toward the
general public they had no obligations at all.
But while against the individual small employer
of Lincoln's days the individual employee or
9 127
AMERICA AND THE NEW EPOCH
the public could help themselves, they became
helpless against the corporate power of organized
industry.
The first time this was forcibly impressed
upon the public by the great anthracite-coal
strike, when miners and mine-owners could not
agree, and as the result the people of New
England suffered, their children died from ex-
posure, until finally the Federal Government
had to interfere in the "private relations" be-
tween employer and employee, in the interest
of public welfare. The change brought about
by the corporate development, in the power
relation between the individual employee or
the general public and the industrial employer,
necessarily placed upon the corporation the
duty to establish an efficient equivalent for the
self-help of the individual. This is now gradu-
ally being recognized by the corporations, and
more and more the social (and educational, as
part thereof) relations with the employees and
the general public have become a recognized part
of corporation activity. But it took a long time
for the corporations to realize it, and great harm
had been done in the mean time to the relation
between corporation and pul)llc.
It is in this direction that we must hope for
128
AMERICA IN THE INDIVIDUALISTIC ERA
the bringing about of a better understanding
between corporate industrial organization and
the general public.
To a rapidly increasing extent the industrial
corporations thus realize their social duties,
perceive that the establishment and preserva-
tion of harmonious social relations between the
industrial corporation and the public, including
its employees, is an essential and important
part of corporation activity. Nevertheless, in
most corporations this activity is still very far
from what it must be to restore industrial peace.
We need only to look at the names of the men
who are in charge of the social activities of even
very progressive corporations, and we cannot
fail to realize that very often they q,re not the
same class of men, not of the same caliber, as
the men in charge of the technical, the admin-
istrative, and the financial activities of the
corporation.
However, there is a rapid progress noticeable
in this direction.
All this makes us realize that the present
wide-spread hostility against corporations is not
the work of irresponsible demagogues, but is
the result of causes, deep-seated in our national
and industrial development, and therefore re-
129
AMERICA AND THE NEW EPOCH
quires the fullest attention of industry's most
competent and able leaders.
The powerful, co-operating group of corpora-
tions, controlling an industry or a group of in-
dustries, if in the control of irresponsible men
for selfish purposes, is a far more dangerous
menace to the public than were the isolated
small producers of bygone days; but so is a
sharp-edged tool far more dangerous in the
hand of the vicious or criminal than a dull one,
and still nobody but a fool would dull his tools
when he desires to accomplish results. But this
is exactly what we as a nation have been doing
steadily during the last eight years: we at-
tempt to destroy by legislation modern indus-
try's most efficient tool, outlaw all the actions
which are necessary for industrial efficiency, and
gradually get into the hysterical state where we
begin to consider mere bigness and efficiency as
criminal.
In the mean time the old world has gone to
pieces in Europe, and a new one, an era of co-
operation, begins to rise from the ruins. Ger-
many already has organized its industries co-
operatively, has encouraged and almost enforced
by governmental acts all those co-operative
activities of corporations which we have out-
130
AMERICA IN THE INDIVIDUALISTIC ERA
lawed, and an industrial eflSciency resulted
which became a menace to the individualistic
nations and led to the war, as discussed before.
England is reorganizing co-operatively its in-
dustrial and financial system, apparently un-
noticed and unobserved by us, at least in its
significance, and is progressing in it at a rate of
which we do not dream, and against the new
Europe, as it will emerge from the war, our na-
tion, with its present suicidal policy of industrial
self-destruction, will be hopelessly outclassed.
This is the real danger which the European
war threatens to us — not a foreign invasion —
quite likely this is the last great military war
the world will ever see, but an industrial war,
and the destruction of a continent, our own
America, by the high economic efficiency of the
co-operative industrial organization of the na-
tions tried in the fire of the European war —
unless we awake in time, and prepare — not
battle-ships and armies, however useful they
may be in their lunited sphere, but friendly re-
lations based on the recognition of their inter-
ests, between all really progressive elements of
society, finding their expression in legislation
that will advance instead of retard industrial
co-operation.
PUBLIC AND PRIVATE CORPORATIONS
OUR governments, as now constituted, are
not adapted for eflScient constructive
work. The smaller the governmental organi-
zation and the more, therefore, there is an op-
portunity for constructive work, in a democratic
nation, the more this is evident. Much efficient
constructive work has been done by the Federal
Government; the Panama Canal, the reclama-
tion work, our Army and Navy, as far as they
have been left free from civilian — that is, politi-
cal— interference. Some constructive work also
has been done by States, but it rarely has been
characterized by economic efficiency; compare
the building of the New York State Barge
Canal with that of the Panama Canal. In the
smallest political organization — municipality,
township, or village — inefficiency, waste, and
incompetency have been customary, except
in those rare cases where one strong man got
132
PUBLIC AND PRIVATE CORPORATIONS
control and remained in control for a sufficiently
long time to accomplish results; but then it was
not democracy, but Ca^sarism, or "bossism," as
we call it, which scored.
The reason which is usually given for the in-
efficiency of our municipal governments is their
control by politicians, the control of the elec-
tions by the political party machines, and a
strong and increasing sentiment has arisen
among the better class of citizens, toward im-
proving the efficiency of the municipal govern-
ment, by change of the form of government.
Various forms of such reform government have
been devised, as "commission government,"
"city manager government," etc.
The general characteristics of these reform
governments are:
A longer term of office, five or even seven
years instead of the two years' term now cus-
tomary in most municipalities.
Elimination of the periodic complete change
of the government; at every election only a
part of the officers is changed, and a greater
continuity of the administrative body is thus
secured.
Much greater power, authority, and respon-
sibility of the officers.
133
AMERICA AND THE NEW EPOCH
A small number of elective officials.
Election by persons, without recognition of
political parties.
Elimination of district representation by
choosing all officers by election from the com-
munity at large.
Referendum and recall.
The last feature, however, is objected to by
many conservative citizens, as dangerously
radical, and thus not included in many com-
mission governments.
The experience was that such commission
governments, when introduced, almost always
were successful in the opinion of the leading
citizens, gave a great increase in economy and
efficiency of the municipal government, an ab-
sence of control by political bosses and party
machines; in short, were a great step in ad-
vance.
But now many of these commission govern-
ments have been in existence for a considerable
number of years, and from these reports come
in which are not always favorable, and claims
have been made regarding some commission
governments that they are more inefficient and
unsatisfactory than the political government
which they replaced, and some communities have
134
PUBLIC AND PRIVATE CORPORATIONS
abandoned commission government and gone
back to the old form of government.
The question then arises whether the economic
success of the change from political to commis-
sion government was really due to the form of
the new government, or whether it was merely
the result of the change which disorganized the
forces that made for ineflSciency and waste.
Gradually during the years these forces adapted
themselves to the new form of government, got
control of it, and it became just as bad as the
previous form, or even worse, due to the greater
power of the officials and their longer term of
office, which increased their irresponsibility.
Municipal government by party machines
controlled by irresponsible political bosses is
bad; but it is a rather significant fact that
where the citizens "rose in their might and
turned the rascals out," and elected a reform
government, fusion government, citizens ticket,
etc., such government often has been worse
than the "corrupt" political government which
it replaced, and incompetency, political and so-
cial inexperience, and reformatory hobbies have
resulted in still greater inefficiency and waste.
It is interesting to note that our coimtry's
greatest city has for a century been controlled
135
AMERICA AND THE NEW EPOCH
by the same irresponsible and " corrupt " political
organization, and however often reform move-
ments have wrested the power from the hands
of Tammany Hall, it has always come back,
and often with such an avalanche as to leave
no doubt of the failure of the reform government.
There may be some reason in this; the polit-
ical boss desires to remain in power, the political
machine expects to be in existence and retain
its control for generations, and this means some
responsibility, however indirect. It imposes a
control and limitation in the abuse of power,
which does not exist with the individual re-
former who is not restrained by any responsible
power from carrying out his ideas, whatever
they may be. It again is significant that where
fusion administrations by several parties have
won elections, almost always every one of the
"fused" parties have disclaimed responsibility
for the elected officials.
The great trouble with political reform is
that it is rarely based on successful practical
experience, but rather represents the academic
reasoning of well-meaning, but often rather in-
experienced and impractical, dreamers.
The logical and, therefore, most promising,
and, at the same time;, most natural method of
136
rUBLIC AND PRIVATE CORrORATIONS
remedying unsatisfactory results, is to look
around where the same or similar conditions
exist, but the results are satisfactory, and then
apply, or adapt, the methods which have given
satisfactory results, to the conditions where the
results have been unsatisfactory. It is strange
that in all the agitation for improving the ef-
ficiency of the municipal corporation, in all the
studies of commission government, municipal
charters, etc., very little thought has been given
to those forms of government which have proven
satisfactory, efficient, and economical— the gov-
ernments of the industrial corporations.
The municipality is a public corporation,
owned and governed by the citizens; the indus-
trial corporation is a private corporation, owned
and operated by the stockholders. In size and
capitalization, many industrial corporations are
far larger than the average municipal corpora-
tion; many smaller. Thus there is no essential
difference in size. But the municipal corpora-
tion, as a rule, is inefficient; the private corpo-
ration efficient. What, then, is the difference
in their government which makes the difference
between efficiency and inefficiency? The fre-
quent elections, the short term of office, two
years, in the municipal corporation is consid-
137
AMERICA AND THE NEW EPOCH
ered one of the causes of inefficiency, and in
commission government charters we thus ex-
tend the office term to five years. But the
industrial corporation elects its directors every
year, thus has a still shorter office term, and
still it is efficient! District representation is
another alleged cause for inefficiency, and there-
fore often eliminated by reform charters, and
all officers chosen from the city at large. But
every corporation which owns a number of fac-
tories has representatives of its different fac-
tories, of its different manufacturing interests,
its different other activities in its governing
boards. Referendum and recall are considered
dangerously radical novelties by many; but
their principle is old and stale in the corpora-
tions, and every board of directors, every officer,
would resign at any time on demand of the
majority of the stockholders.
What, then, is the difference between corpo-
ration government and municipal government
which gives the former the efficiency not pos-
sessed by the latter.'^ In the corporation, at
every election, every director, every officer, is re-
elected, as a matter of course, unless the owners
— in this case, the stockholders — are very much
dissatisfied with the management of the cor-
138
PUBLIC AND PRIVATE CORPORATIONS
poration, and desire to make a radical change,
and this occurs very rarely. In the municipality,
however, as a matter of course, the officers are
not re-elected, no matter how much the owners
— the citizens — are satisfied, but it is customary
to change officers at every election, except in
rare cases.
Thus the corporation government is contin-
uous, and thereby efficient; the officer knows
that if he acts right he will remain in office as
long as he wishes. He can, therefore, plan and
organize, and accomplish results. The annual
election thus is essentially an official referendum
and recall vote, insuring the responsibility and
response of the officers to the owners' interests.
Compare this continuity of management with
the biennial overthrow and more or less com-
plete change of all the administrative and ex-
ecutive organization, policy, and experience,
occurring in the municipality, and the reason
of the inefficiency of the latter, the efficiency
of the former is given. Unfortunately, the tend-
encies for governmental reform are very little
in this direction in which efficiency has been
proven, but rather are in the opposite direc-
tion, to lengthen the office terms — thereby in-
creasing the irresponsibility — and to discourage
139
AMERICA AND THE NEW EPOCH
re-election, often to such an extent as to make
it illegal; as if it were not the most foolish thing
imaginable, if you have a man who is competent
to do a thing, has the experience, and is willing
to do it, to put him out of the office and put a
new man in who has no experience. The argu-
ment that it is dangerous to re-elect the same
man many times, since he may establish him-
self permanently in power, might have had some
justice in the days of Washington, but certainly
is silly to-day.
Thus, to make our present municipal gov-
ernments most efficient, as efficient as corpo-
ration governments, would require abandon-
ment of the custom of changing officers at every
election in favor of the custom of re-electing
the same men as long as they are reasonably
satisfactory, after picking out good and efficient
men at first. But no change of the form of
municipal government is required, except, per-
haps, that to annual election instead of biennial.
However, the custom of rotation in office —
often for the distribution of spoils — is so inborn
in our nation, has so much become a habit, from
the early Colonial days when it was the natural
way, that it does not appear probable that it
could be changed, at least, not very soon; but
110
PUBLIC AND PRIVATE CORPORATIONS
as long as this is not done our municipal govern-
ment will remain inferior to our corporation
government, in constructive work, no matter
what other improvements are made in our po-
litical governments.
Very few of the improvements proposed in
the government of our municipalities are new;
most of them are old and long established in
the industrial corporation governments. For
instance, proportional representation and mi-
nority representation. It does not exist in most
public elections. A small change in the vote,
therefore, shifts majority to minority, and catas-
trophically reverses all governmental policies,
as the result of an insignificant percentage of
voters changing their views and thereby con-
verting a narrow majority into a minority. As
a matter of course, everj^ efficient corporation
has always given representation in the board of
directors to any minority of stockholders large
enough to be entitled thereto; it would not
have been efficient, thus would have been an
economic disadvantage to exclude a minority
from representing their views in the board, and
proportional representation, which includes mi-
nority representation, has always been the aim
of corporation management.
XI
DEMOCRACY AND MONARCHY
As seen in the preceding chapters, a reorgan-
jLa. ization of our nation's industrial-political
system is inevitable, if we hope to retain and
extend our industrial prosperity against the
highly organized and efficient co-operative sys-
tems of industrial society into which the Euro-
pean war is forcing the nations. We will have
to stop our muddling, our interference of every-
body with everybody, and prepare to meet
Europe by a still more efficient co-operative
industrial system.
How can we organize such efficiency of in-
dustrial co-operation? What forms or shapes
must such organization assume in our nation?
It is a matter of evolution, of which we cannot
foresee the end, but one thing we can see with
certainty, and that is, how not to proceed; we
cannot copy European organizations and hope
to be successful. It would, indeed, be an easy
142
DEMOCRACY AND MONARCHY
task if we could. We all realize that Germany
had reached the highest industrial efficiency
before the war, and thus it would appear nat-
ural to copy the German methods, the German
organization, and thereby expect to get the
same efficiency. But the industrial organiza-
tion which has been so successful in Germany,
if attempted in our country, would, in all prob-
ability, be a disastrous failure. We may just
as well realize this, as there is a strong sentiment
in our country to copy European ways, es-
pecially now, when the need of preparedness to
meet the European nations after the war has
been so forcibly impressed upon us, that many
of us have lost all perspective and hysterically
call for doing something or anything, however
foolish it might appear on calmer consideration.
Methods of organization and industrial prog-
ress which have been successful in Europe can-
not be successful in our country, nor can
American ways be transplanted to Europe and
there give the same results as here, because our
national temperament is entirely different, is,
indeed, the opposite of that of all European na-
tions. x\merica's national character is democrat-
ic, while that of all the European nations, from
republican France to constitutional Germany
lo 143
AMERICA AND THE NEW EPOCH
and autocratic Russia or theocratic Turkey, is
monarchical, and between these two national
temperaments there is an unbridgeable gulf.
The fundamental difference between the two
national temperaments is best illustrated by con-
sidering the different ways by which a change,
such as an industrial progress, is brought about.
In the monarchical nation the problem such
as the necessity of vocational education, or of
labor legislation, old-age insurance, etc., is dis-
cussed by individuals, societies; political parties
write it in their platforms, etc. ; but all this re-
mains a mere academic discussion without re-
sults, until the central Government is converted
to the new idea. Then the new idea is intro-
duced by governmental order; the central Gov-
ernment makes the plans and establishes the
organization; a federal bureau, with sub-
organizations in the states or provinces; below
them others in the municipalities, etc. A part
of the new organization is first introduced, as
much as the federal Government considers ad-
visable, then more and more, and so from the
central Government the organization is ex-
tended toward the periphery, to the individual.
Thus Germany's social and industrial progress
was accomplished; until the federal Govern-
144
DEMOCRACY AND MONARCHY
ment was convinced of the necessity of social
legislation all the demands of the Social Demo-
cratic party were in vain as regards construc-
tive action; though they obviously were the
driving force which finally converted the Gov-
ernment. But when, finally, the Government
was convinced, progress started and proceeded
until the results were accomplished.
Entirely the reverse is the development and
introduction of a new idea in a democratic
nation, as ours. There is no strong federal Gov-
ernment which could force new ideas on the
nation by governmental order, and even if laws
could be passed to this purpose they would
either be declared unconstitutional or remain a
dead letter, like so many of our laws.
A new idea, a proposition toward progress,
etc., is suggested by individuals. It spreads
and is discussed by groups of individuals, and
when it has made sufficient progress it is tried
locally by groups of individuals, local societies,
corporations, or municipalities. Other private
or public groups also try constructively the new
idea, usually in a different form, and finally it
is tried in many different places, by many kinds
of organizations. Thus vocational education
is being tried to-day in our nation. There is an
145
MIERICA AND THE NEW EPOCH
enormous waste of energy by duplication of
work, by repeating tlie same mistakes, etc., but
gradually the more serious errors are recog-
nized and avoided, the experience of previous
constructive work is made at least partly avail-
able in later attempts. With the spreading of
the idea it reaches larger organizations; na-
tional societies, state governments, groups of
corporations, or entire industries. The results
and methods of procedure are codified and in-
formation is exchanged, and when finally the new
idea reaches the national Government it has
been fairly well crystallized into the final form
in which it is feasible, and dangerous errors and
mistakes are eliminated, and if the federal Gov-
ernment takes action, it practically consists in
what may be called standardizing best practice.
But when this occurs, the new idea has long
ceased to be a new idea, has permeated all the
nation, and practically become a part of the
national economy.
This democratic method is very inefficient,
very slow in accomplishing results, and very
discouraging compared with the rapidity with
which progress is possible in a centralized mon-
archical nation. It has, however, the advan-
tage that when results are at last accomplished
146
DEMOCRACY AND MONARCHY
they are permanent, are a part of the nation,
and especially — and this is the most important
advantage — no great mistakes can be made, as
the first constructive trials are on a small scale,
and thus any errors and mistakes limited in
extent, and when the idea becomes national in
scope, all serious errors have been eliminated
by the experience of constructive work in smaller
scope.
Thus the monarchical method is superior by
getting quicker results, but a mistake is liable
to be a national disaster. The democratic
method is slow, but safe. An illustration hereof
is social legislation. We realize that the most
serious problem before our nation, which must
be solved before we can hope for ejQBcient indus-
trial reorganization, is to secure the active co-
operation of the masses, those who are becom-
ing increasingly indifferent, if not antagonistic,
to the maintenance of existing society. The
German Government has solved this problem
by eliminating the three great fears of the
masses by an effective social legislation. The
result was that when called upon for national
defense even the "revolutionary" Social Dem-
ocratic party, with its millions of members,
stood solidly — and actively — behind the Gov-
147
AMERICA AND THE NEW EPOCH
ernment, a plienomenon little understood in
other nations, even by the socialists. We have
been muddling with this problem for half a
generation, and conditions are becoming more
unsatisfactory, rather than better. Here the
monarchical method seems to have shown a
vast superiority, accomplished results, where we
have failed thus far. But was it really so.f^ Be-
fore Germany started its successful social legis-
lation it had tried, under Bismarck, to solve the
problem, in the true monarchical way, by for-
cibly suppressing the elements which were be-
coming indifferent and antagonistic, and had
split the nation in twain, made millions open-
ly hostile to the nation. At the end of the
ten years' war against socialism, when revo-
lutionary socialism had even entered and per-
meated the army, if then Germany had been
involved in a serious war it would have gone to
pieces at the first blow. All that would have
happened which those unfamiliar with the
changed social conditions of Germany expected
to happen and failed to see at the beginning of
the present war.
Thus it cannot be said that the democratic
method — from the intHvidual toward the cen-
tral Government — "concentral," is inferior, nor
lis
DEMOCRACY AND MONARCHY
that it is superior to the "decentral" monar-
chical method — from tlie central Government
toward the individual.
But it can be said that the decentral method
is the only feasible and only possible one for a
nation of monarchical temperament — that is,
for an}^ of the large European nations, and the
concentral method is the only feasible one for
a nation of democratic temperament like ours,
and decentral methods thus are unsuitable and
impossible for a democratic nation — that is, we
cannot copy Europe's successful methods and
hope to succeed.
Our nation is the only large democratic na-
tion, thus we have no example which we can
follow, and the problem of our industrial re-
organization thus is a far vaster one than it
appears at first; we have to find new ways and
means, accomplish a thing which has never been
accomplished before — co-operative organization
of a democratic nation. Democracy itself thus
is on trial before the judgment of history; if we
fail, democratic America ends as a world power,
is an unsuccessful experiment in the world's
history, and the world goes back to monarchical
forms of organization — even if they shoidd call
their ruler "President," and play at elections.
119
XII
evolution: political government
OUR nation has been fairly prosperous and
successful thus far, in spite of our previous
and present method of dealing with social, in-
dustrial, and political problems, which is no
method at all, but mere muddling. However,
we had no serious foreign competition to meet;
we had at our disposition the vast and un-
touched resources of a virgin continent, the
intellectual stores of the Old World, and the
continuous supply of skilled and unskilled labor,
in the despised immigrant, who, after all, has
made America what it is to-day. The most
desirable immigration — from England, Ger-
many, Ireland, Scandinavia — practic<ally ended
years ago, and now, as the result of the war, all
immigration threatens to stop, except perhaps
that from the least desirable nationalities. In-
tellectually, ovir nation has now advanced so
far and on a path so divergent from that of
150
EVOLUTION: POLITICAL GOVERNMENT
Europe that we cannot expect much further
help. The resources of our continent, wliich
appeared inexhaustible to the early settlers, are
practically exhausted, and the time is nearly
here when we will have to stop living as a para-
sitic nation, consuming what we have not pro-
duced, but we will have to live on our income;
putting into the soil as fertilizer what we take
out as crops; planting and raising the trees
which we cut down for lumber; raising the food
which we feed to our sheep and cattle, and that
with a reorganized, highly efficient Europe in
competition.
In our industrial age the essential require-
ments of an efficient national organization com-
prise: Continuity, competency, and responsi-
bility of the administrative organization.
In our complex civilization, it usually takes
years before any work undertaken by an admin-
istrator is completed, many more years before
its results are seen. Thus when the adminis-
tration changes frequently, as in our political
offices, constructive work is done blindly,
started by men who never can follow the work
to completion, see the results appearing and
direct or modify the plans to secure the desired
results most effectively ; or men are called upon
151
AMERICA AND THE NEW EPOCH
to continue and complete work which they have
not started, which they possibly only incom-
pletely understand, or with which they are out
of sympathy. It is only in those side lines of
our political government where the oflSce is held
more continuousl3^ under civil-service rules or
because the office is not sufficiently important
to warrant its inclusion in the "distribution of
spoils," that constructive work is accomplished,,
as in the building of the Panama Canal, the
reclamation work by the Federal Government,
some of the supervisory work by State commis-
sions, etc., and even in these there is the con-
tinuous danger of political interference, of the
work of many years being undone, or per-
verted to vicious purposes by some temporary
political influence. It is so much easier to de-
stroy than to construct; it takes so long a time
to accomplish constructive work, and so short a
time to destroy the work of many years.
Thus there can be no efficiency without con-
tinuity of the administration.
That competency of the director of the work
is necessary for the success of any work is so
obvious that nobody would think this even a
subject of discussion, but as a matter of course,
in legal matters everybody employs a com-
152
EVOLUTION: rOIJTICAL GOVERNMENT
petent lawyer, in matters of health a competent
physician, in matters of administration an ad-
ministrator. But, strange to say, as soon as we
come to the consideration of political ojffices we
disregard all these obvious and self-evident
truisms, and have no hesitation to place a man
who has failed in every business he undertook, in
charge of the business management of the mu-
nicipality ; a man who cannot run his own house-
hold, in administrative charge of the community.
If, then, continuity of office, held by compe-
tent men, is necessary for the efficiency which
is the fundamental requirement of successful
co-operation^ there must be an efl'ective respon-
sibility, at le^st until such time when all men
are angels, or at least sufficiently many that
all offices can be filled with men who are and
remain unselfish, industrious, progressive, and
beyond the possibility of behig perverted by the
power of office.
^-ANh'dt, then, are the structural ejements in
our American nation from which a continuous,
competent, and responsible government coidd
develop by evolution — a government such as is
required for the efficient industrial co-operation
of all citizens in the interest of all, under demo-
cratic principles?
153
AMERICA AND THE NEW EPOCH
In sucli organization there can be no indus-
trial competition, but by the co-operation of all
producers duplication of work and all waste
effort is eliminated. The production is con-
trolled to correspond with the legitimate de-
mands for the product, and all production for
mere profit, without regard to the demand for
the product, ceases, and with it all organization
for the purpose of creating a demand where it
does not exist. As a matter of course, this
eliminates the periodic fluctuations of produc-
tion, which give rise to the successive periods of
business depression and business prosperity, and
which are the bane of our present chaotic in-
dustrial system. In engineering, architecture,
design, etc., instead of a number of men doing
the same work independently, necessarily in-
ferior, due to the limitation of each individual,
and then having somebody select one of the
propositions — often somebody who himself has
not the professional qualifications to judge
which is the best — one proposition would be
made by the co-ojierative effort of all the men
competent professionally, and so embodying
the collective experience and knowledge of all.
Instead of having a number of separate and
competitive sales organizations, each describ-
154,
EVOLUTION: POLITICAL GOVERNMENT
ing and representing — or misrepresenting —
their product, with the result that the prospec-
tive user gets httle rehable information, one
organization will supply complete and correct
information, as there is no further reason to
misrepresent, no reason to dwell extensively on
the favorable features, and omit altogether, or
skip lightly over the unfavorable features, but
every interest is toward correct representation
of all features.
Competition between industries would cease;
thus, in transportation, the country's water-
ways would be used to the fullest extent, in
combination with the railroads, and no interest
would tend to deflect to the railroads what
could more economically be carried by water,
or inversely, and both forms of transportation
would become much more economical by co-
operation.
There would be no desire to graze cattle on
lands adapted for wheat-raising, nor attempts
to raise wheat on farms unsuited thereto, nor
would forest growth be destroyed by sheep-
raising, or the value of the river valleys, of the
country's water-powers, be destroyed by reck-
less deforestation of the headwaters. With the
same interests controlling all these activities it
155
AMERICA AND THE NEW EPOCH
is obvious that no activity would be permitted
which does more harm in one respect than it
profits in another, and no interference would
be allowed between the different industrial
activities, beyond that incident to human im-
perfection, and thus unavoidable.
All this is not a mere impracticable dream, but
it has long been an established fact, has been
the operating principle within all the more pro-
gressive large industrial corporations, and all
that is necessary is to extend methods of eco-
nomic eflScicncy from the individual industrial
corporation to the national organism as a whole.
Thus there will be competition between water
transportation and railway transportation, to
decide which in each individual instance is more
economical, considering quality of the trans-
ported material, distance, time, etc., while now
the waterways may stand idle for lack of a
railway connecting with them, or for lack of
transfer facilities, or hundreds of millions are
wasted in the construction of waterways which
can never economically pay for their cost, but
the only legitimate purpose of which is to keep
the railroad freight rates down by their compe-
tition.
There will be competition, whether gas-engine
15G
EVOLUTION: POLITICAL GOVERNMENT
or electric motor is to be used, whether a local
steam-turbine plant is to be installed, or power
bought from a long-distance transmission sys-
tem. But the decision will be made on the
basis of the relative economy of the various
propositions, uninfluenced by commercial or
financial considerations alien to economy.
Financial manipulation for the mere acquisi-
tion of more money, without regards to con-
structive economical organization, necessarily
must be impossible.
There must be an active co-operation be-
tween all producers, from the unskilled laborer
to the master mind which directs a huge indus-
trial organization. Such active co-operation
presupposes that everybody feels personally in-
terested in the industrial economy. This pre-
supposes that the fear of unemployment, of
sickness, and old age has been relegated into the
relics of barbarism, and everybody is assured an
appropriate living, is assured employment when
capable to work, and protected against want,
maintained in his or her standard of living, when
not able to work, not as a matter of charity, but
as an obvious and self-evident duty of society
toward the individual.
This can be done by effective social legisla-
157
AMERICA AND THE NEW EPOCH
tion, as it has been done in other countries; it
is being actively considered within our indus-
trial corporations as well as by the public at
large; some work in this direction has been
done by legislation, more still within many in-
dustrial corporations, and the development of
this social activity would probably have pro-
gressed still further in our corporations if the
disorganization by legislative interference had
not hindered here, as in most other directions,
the progress of industrial organization.
It is obvious that "industry" here means not
merely the manufacturing industries, but equal-
ly includes transportation and communication,
agriculture, the animal industries, dairying, etc.
— in short, all the human activities which deal
directly or indirectly with the necessities of life.
The economic development of the world, ac-
celerated by the world's war, has made such a
co-operative industrial organization of our na-
tion a necessity of self-preservation.
As structural foundation, on which to build
such structure by evolution, in correspondence
with our democratic national temperament, we
have our political governments — Federal,
State, and municipal — our large national so-
cieties, and our indusli-ial corporations.
158
EVOLUTION: POLITICAL GOVERNMENT
Of these, the poHLical government is the only
one which is all-embracing, is controlled by and
responsible to all citizens, at least nominally.
Therefore, while iLs constructive power may be
practically ?iil, due to its form of organization, it
has a vast inhibitory power, far greater than
any other power in our country. We have seen
this, and continuously see it in the action toward
corporations, in the national conservation move-
ment, even in the power exerted by subordinate
governmental bureaus.
Thus, no organization which does not include
the political government as an essential part of
the structure can hope to succeed.
JThe natural suggestion, then, would be to
have the Federal Government, with its sub-
ordinate State and municipal governments, or-
ganize, control, and administrate the country's
economic-industrial system.
Thus the political government would acquire
and operate all means of transportation and
communication — railroads, canals, pipe lines,
mail and express, telegraph and telephone. It
would supervise and control all corporations
and their relations with each other and toward
the public. It would control the relation of em-
ployees witliin the corporations, by mandatory
n 159
AMERICA AND THE NEW EPOCH
arbitration, by unemployment, sickness, and
old-age insurance; control the hours of work,
and working conditions, etc. There is a consid-
erable sentiment in favor of this organization,
and this sentiment is growing in strength.
It can be done, because it has been success-
fully accomplished abroad, in Germany, and
has united all classes of people, and given the
economic efficiency expected from it.
However, in our nation it would require not
merely that the polilical government take over
the industrial control, as was the case in Ger-
many, but a government would first have to be
created, capable to do this, a problem which is
far more difficult than that which Germany
solved, and appears impossible with the demo-
cratic temperament of our nation. It pre-
supi)Oses a powerful, centralized government of
competent men, remaining continuously in
office, and no political government of this kind
can exist in the America of to-day — nor in the
America of to-morrow.
It is true that our political governments —
Federal, State, and nuuiicipal — are steadily be-
coming stronger, undertake more activities, and
successfully accomplish what they could never
have undertaken twenty years ago; that a
160
EVOLUTION: POLITICAL GOVERNMENT
liiglier class of men enter governmental service
than foi-merly; that the quality of governmental
work improves — graft, corruption, and mis-
management for selfish purposes steadily de-
crease. On the surface the latter may not
appear so, and we hear as much to-day of po-
litical mismanagement and graft as we did
twenty years ago. But if we look deeper into
it we cannot fail to see that the reason of this
is that many things are now resented by the
voters as improper, and lead to political death
of the office-holder, which twenty years ago
were not noticed at all, but passed as natural
and general characteristics of political office.
Thus our political governments are becoming
better, stronger, and more capable of construc-
tive work, and apparently are gradually pro-
gressing from the weak and inefficient govern-
ment of the democratic nation, toward the
strong and efficient government of the mon-
archical nations.
But is this really so, and are we really chang-
ing from the democratic concentral attitude
toward the monarchical decentral attitude of
governmental activity.'^ Looking deeper into
it, there appears nothing to warrant such
assumption, but the increasing strength and ef-
IGl
AMERICA AND THE NEW EPOCH
ficiency of the political government is shown
almost exclusively in concentral direction. That
is, with the continuing development and prog-
ress of our nation, more and more problems,
starting from individual effort and passing
through group, municipal. State action, finallj'
reach the Federal Government and require codi-
fication, on true democratic or concentral prin-
ciples, and therefore of necessity created the
more eflBcient governmental machinery re-
quired to deal with them. But where our
Government has attempted to deal decentrally
with problems, whether national, State, or
municipal — 'that is, attempted to solve prob-
lems which had not been solved and com-
pletely worked out before on smaller scale by
smaller organization — it has failed and is fail-
ing to-day. Such, for instance, is the case in
the dealing with corporations, with the national
conservation movement, etc.
Thus our national character and our Govern-
ment have remained the same, and a solution
of the industrial problem by the initiative of
the political Government remains as improbable
as ever.
Our national societies have done much suc-
cessful industrial organizing work. Such, for
162
EVOLUTION: POLITICAL GOVERNMENT
instance, as the engineering standardization,
which was undertaken and accomplished by
American national engineering societies, and
from here has spread to other countries and is
now concentrally beginning to reach our Gov-
ernment. The movement for industrial safety
originated and developed in this manner. In
the field of morality and temperance, national
societies have been active, also, though perhaps
not always wisely.
However, the organization of even the largest
national societies necessarily is so limited that
with the exceptions of certain definite fields of
activity they cannot be counted upon for more
than assistance and co-operation in the indus-
trial reorganization of the nation.
XIII
evolution: industrial government
HIE large industrial corporation is to-day by
far the most efficient organization, in spite
of the inefficiency forced upon it by the political
Government. It is still very crude and imperfect
in many respects, and especially it is still greatly
deficient in the social relations within the organi-
zation and toward the general public. If an
efficient co-operative government is to be built
up from the industrial corporations, the in-
dustrial corporation must first become united
within itself — that is, the indifference and an-
tagonij?in within the corporation must be over-
come, and the same co-operative feeling brought
about between the shop force and the adminis-
tration which exists and always has existed in
most corporations between the office force and
the administration. That is, the welfare of the
corporation must be made just as nuich to the
interest of the shop force as it is to the interest
161
EVOLUTION: INDUSTRIAL GOVERNMENT
of the office force. Not that there should be no
differences of interest between individual em-
ployee and corporation; differences of interest
exist and will remain among the office men as
well as in the shops. But those hundred thou-
sands who only two years ago were thrown out
of work by the business depression, were willing
to work, but for many months could find no
work, and saw their few dollars which they had
saved, spent; those who had started paying for
a small home and saw all that they had accom-
plished gone by the foreclosure of the mortgage,
saw their families scattered and thrown upon
charity, and all this without any fault of their
own — to them existing society cannot appeal as
the best possible one; they can hardly be ex-
pected to feel interested in tlie maintenance of
a society in which they are treated thus, cannot
be patriotic in the defense of these conditions;
neither can the other hundred thousands or mil-
lions, who have escaped this time, but have the
possibility of the same fate hanging over them.
Thus the assurance of work when capaljle of
working, the insurance of a living in their ac-
customed standard when not capable of work-
ing, are the fundamental requisites to secure
interest in the maintenance of existing condi-
AMERICA AND THE NEW EPOCH
tions witlioiit which there can be no real pa-
triotism, no real co-operation.
This has nothing to do with the broader
question of socialism — that is, of the elimination
of capital. Socialism has as many followers in
the offices of our corporations as it has in the
shops, and in no way precludes co-operation
within the corporation; indeed, in some respects
the corporation may be considered as the first
step toward socialism, and the industrial gov-
ernment of the nation by the united corpora-
tions as preliminary and crude form of socialistic
society.
But assuming the corporation united within
itself, the public sentiment sufficiently educated
to stop political government from its disorgan-
izing activities, nothing would stand in the way
then of organizing an efficient system of co-
operative industrial production, not by some
man's superior organizing power, but in the
natural trend of industrial development.
With absorption of smaller corporations by
larger ones, and consolidation to still larger
corporations, the development proceeds until
the industry is organized in one or a small num-
ber of very large corporations. There is no
competition, but an executive committee of
1()0
EVOLUTION: INDUSTRIAL GOVERNMENT
representatives of the corporations or branches
of corporations engaged in the same and similar
in(iustries co-ordinates and correlates the work
of the corporations, decides on production, on
prices, policies, etc. Executive committees
with their members chosen from different in-
dustries take care of the co-operation of these
industries, and finally an Industrial Senate as the
supreme executive committee co-ordinates, con-
trols, and directs all the country's industries —
that is, governs the country. Thus, an indus-
trial government would be established with an
authority greater than the world has ever seen,
and still without any mandatory power, not,
maintained by a police force, but based on!
mutual co-operation for everybody's interest.-
Any corporation which does not wish to join
or take part in the national industrial organi-
zation is free to stay outside, as long as it con-
forms to the universal policy, but if the outsider
refuses to co-operate, co-operation is withdrawn
from him, also, as "outlaw" or "scab" corpo-
ration, to use the expression of labor organiza-
tions. That is, the organized industries refuse
to do any work for such an outlaw, or have any-
thing to do with any work containing the prod-
uct of the outlaw corporation. Rapid extinction
167
AMERICA AND THE NEW EPOCH
of such outlaw would obviously be the result,
without any legal or mandatory power being
necessary. If we realize how excessive capitali-
zation of otherwise conservative corporations
has been forced, by the necessity of buying up
competitors at exaggerated values based on
their potential destructiveness as competitors;
how corporations have been organized for the
mere purpose of holding up existing corporations
for an excessive price in selling out — it is obvious
that prompt elimination of any body attempt-
ing similar action is necessary in the interest of
the general industrial welfare of the nation.
There is a certain glamour, to some minds, in
the attitude of the one who defies the majority;
the "American hero" who goes as strike-
breaker to work where the organized employees
strike; the individual manufacturer who breaks
price agreements and undersells the others, to
get the business at prices which conservative
producers cannot meet, as they leave no margin
of fair profit. But there is practically never any
moral issue behind the action of the scab,
whether individual or corporation, but it is the
sordid attempt of getting an individual advan-
tage at the cost of the others. It is the opposite
of co-operation, and no efficient industrial sys-
i(;8
EVOLUTION: INDUSTRIAL GOVERNMENT
tern can he built up, as long as sucli altitude
has any chance to succeed even temporarily.
— How would the officers of such national gov-
ernment by the co-operative organization of the
industrial corporations be chosen?/' By popular
election? Imagine the chief engineer of a man-
ufacturing company elected by the majority
vote of all the employees! Or the general man-
ager, or the comptroller, or chemist, or bacteri-
ologist, the mathematician, or designing engi-
neer; it would not be democratic, but it would
be chaotic. Not one-tenth of the emj)loyces
are engineers and therefore capable of judging
on the engineering qualifications, and their vote
in electing the chief engineer would mean noth-
ing; the elected officer almost certainly would be
incompetent for his work, and the same applies
to every other profession. Thus, where pro-
fessional qualification is required by the office,
popular election is impossible. But professional
qualification is required for practically every
officer within the industrial organization; nay,
some qualification — professional, physical, or
otherwise — is needed for almost every indus-
trial position, from the unskilled laborer to the
president, and popular election thus is impossi-
ble for any industrial position. It would mean
169
AMERICA AND THE NEW EPOCH
something only if every elector can personally
satisfy himself that the candidate has the re-
quired qualifications, and this is not possible,
since no elector can judge on the qualification
of every position, and if he could the mere
amount of time required to do so would exclude
the possibility.
Granting, as the fundamental principle of
democracy, that every citizen has the same
right, the same voice and vote in the Government
— and no nation like ours can continue success-
ful without conceding this fundamental prin-
ciple— it means that popular vote by majority
must decide all general questions, all matters of
policy which are of interest to every citizen,
which every citizen can discuss and judge, such
as the questions whether women should vote as
well as men, whether our nation is ready and
willing to police our entire continent and force
its unruly Spanish-American republics to keep
order and peace; but majority vote cannot
decide professional questions or questions of
fact, such as whether vaccination is necessary
to protect us against smallpox epidemics,
whether battle-ships or submarines are more
eflFective, or whether some water-power can be
developed economically or not.
170
EVOLUTION: INDUSTRIAL GOVERNMENT
Indeed, even the most radical exponent of
unlimited majority voting realizes this. He may
claim tliat everything should be done and de-
cided by the majority vote, ma^^ in city gov-
ernment demand that every administrative de-
tail h>i brought to decision by majority vote,
that e very city employee from the mayor to the
unskilled laborer be elected; but if he himself
is sick, he does not go before the political body
and ask to elect a physician for him — but he
himself chooses a physician in whose profes-
sional qualifications he has confidence. Or if
his child is sick he would not think of asking the
organization to vote whether it is measles or
scarlet fever, but he takes the decision of a single
physician in preference to any majority vote.
Should the industrial officials, then, be ap-
pointed? But who appoints the appointer.^^
Within certain limits, however, in offices re-
quiring professional qualifications, appointment
gives better results. In a medium-sized town,
for instance, the administration may employ a
thousand people. If they all were elected not
a single elector could devote enough time to
find out the qualifications of every candidate
for every place — even if he were capable pro-
fessionally to judge on it. The result could be
171
AMERICA AND THE NEW EPOCH
imagined. But the mayor can devote enough
time to select, by investigation and consulta-
tion with competent men in each profession,
reasonably competent men as heads of depart-
ments; they, in the same manner, can select
and appoint subheads, and so on, and a reason-
able administrative efficiency could be secu red —
if the mayor is not prejudiced or led by motives
other than administrative efficiency.
But herein lies the weak point of the method
of choosing officers by appointment : it is so easy
to abuse it for selfish purposes, for private or
particularistic interests, to select from a narrow
circle of personal or political friends, to abuse
it for paying political or private debts. Per-
sonal inclination, if not prejudice of the ap-
pointing officer, has too large influence, and, at
the best, gradually the method of appointment
leads into control of the offices by a clique, a
political machine, or group.
Thus neither majority election nor appoint-
ment is capable of giving efficient qualified offi-
cers, such as are necessary in the complex
structure of modern industrial civilization.
There remains a third method — to have the
officer elect himself for the office, or, as we
usually say, "rise from the ranks." It is the
172
EVOLUTION: INDUSTRIAL GOVERNMENT
method which has been so successful in the
modern industrial corporations, especially in
the office force, and has given it the efficient,
centralized, and at the same time flexible and
' progressive organization. It means that largely
every employee makes his own job. If he can
do larger work than his position requires, he
does it, as a matter of course, and is allowed to
do it, as it improves the efficiency of the depart-
D^'-nts in which he works, and thereby the rep-
utation of his superior officers. Thereby he is
virtually in a higher position, and the recogni-
tion thereof, by title and pay, follows as a mat-
ter of course. Thus we see in progressive in-
dustrial corporations people rise to higher and
higher positions, beyond those at whose side
they started, not by election, not by appoint-
ment or "pull," but by their own work, intelli-
gence, and ability. Thus we also see, especially
in those industrial corporations which require
a considerable number of skilled or professional
men, positions created or rather creating them-
selves, and men taking up work useful to the
corporation which was not done before, or not
done in the same manner, and that in the office
as well as in the shops, and in every such corpo-
ration we can find men in offices which were
173
AMERICA AND THE NEW EPOCH
created for them — often will cease when they
drop out. This is not always realized by the
outsider, and it applies not only to a few excep-
tional men, but to very many in all ranks. It
gives a chance for initiative and individual
development within the corporation, which is
now found very rarely outside, and is one of
the most important factors of progress.
Thus more and more positions are filled, not
by appointment by a superior officer, but by
the man starting to do the work, doing it more
and more, and so virtually electing himself into
the position — and the final appointment then
merely legalizes the established fact.
Naturally, this is not always the case, but
equally often some man who shows qualifica-
tions superior to those required for his position
is tried in some entirely different higher posi-
tion where these qualifications are desired.
Thus, to-day there is no place where the
chances are so good for every man to reach the
highest power, to rise to the highest position
which he is capable of filling, as in the large in-
dustrial corporation.
Naturally, we must realize, as stated before,
that the corporate organizations are still crude
and imperfect, and that there are many chances
174
EVOLUTION: INDUSTRIAL GOVERNMENT
to "get lost," to get into "dead-alley positions"
and stay there forever, but this is getting less
and less with the increasing development of
the industrial corporation. Increased efforts are
made to guard against it, as it is uneconomical
for the corporation to use men in positions in-
ferior to those which they could fill. Thus re-
search laboratories have been established for
men showing that they could do valuable re-
search work; new lines of manufacture started
because men happened to be specially interested
and capable in that direction, departments di-
vided or consolidated to suit the personalities
of eni})lo3'ees — that is, to use them at their best
efficiency — and the industrial corporation is far
from the inflexible, rigid machine which it ap-
l)cars to the outsider, who is not familiar with
its working; it is this flexibility which gives it
the economic power and strength.
In the national Government by the co-
operative organization of corporations, there
could thus be no election of officers, nor ap-
pointment, but the offices would fill them-
selves by men rising into them, following the
best practice of our present corporations. The
men interested in engineering would naturally
drift into engineering positions, those with
^^ 175
AMERICA AND THE NEW EPOCH
administrative ability into administrative po-
sitions; those with knowledge and experience
beyond the individual industry, into the field
of correlation between the industries; the most
capable organizers finally into the industrial
senate. The whole organism would be essen-
tially self-governing, consisting of a number of
groups and sub-groups, and further sub-groups
within the latter, each self-governing within its
own activities, supreme within its own field of
activity, subordinate in any other activity to
the group into which the other activity be-
longs, and correlated with any co-ordinate
group through joint committees or through the
larger group of which both are parts.
There is nothing new in such organization,
but it is in existence to-day in many larger
corporations, is the outgrowth of economic
laws working on the individualistic tempera-
ment of our nation. It is essentially demo-
cratic in character; there is no autocratic au-
thority, but every member of the organization
has a directive power within his field of activity.
I have seen large contracts decided or modified
by the opinion of a workman in the shops, who
had to state whether a particular operation
could be done easily or was difficult.
XIV
evolution: inhibitory power
THE industrial corporation of to-day is or-
ganized for effective constructive work; it
has developed the characteristics necessary for
economic efficiency — continuity of organization
and at the same time flexibility to adapt itself
in a high degree to the requirements of indus-
trial production, and to the personality of its
members; it has within itself the responsibility
of the individual toward the whole, and encour-
ages initiative and individualistic development
as important factors of industrial progress, and
especially it has solved the problem of filling
the offices with competent and qualified men.
Neither the political Government nor any other
organization has these characteristics, and it
therefore appears the natural and most logical
step that the executive and administrative Gov-
ernment of our nation in the co-operative era
177
AMERICA AND THE NEW EPOCH
which we are now entering should evolve from
the industrial corporation.
Such organization is commensal — that is,
every member of it gives and receives, and the
maintenance and advance of the organization
thus is to everybody's interest. It thus should
form a stable and permanent form of society,
permanent at least as long as the foundation of
our civilization endures, as stable as was tlie
classic age or the feudal age of human society,
and not self-destructive by its own success, as
was the individualistic age. At least, so it
appears.
It might be called an aristocratic democracy,
using the term aristocratic in its original mean-
ing, that the influence of the individual on so-
ciety should be proportional to his capacity —
democratic; everybody has the same chance,
the same right, and there is no discrimination —
egalite; everybody is free to choose his ac-
tivity, to develop his individuality — liberie;
everybody is guaranteed in his standard of
living, as a matter of necessity, as otherwise the
organization would not be commensal, and
could not exist, but the present indifference and
antagonism of the "proletarian" would remain
— fraternite.
178
EVOLUTION: INHIBITORY POWER
But who guarantees that the industrial gov-
ernment remains commensal and that the
higher officers do not develop into an oligarchy,
a i)atriciate, or nobility; exclude all individuals
from the lower ranks, no matter how competent,
from the higher offices, and reserve the offices
for their own descendants, no matter how in-
competent?
It must be realized that by the law of heredity
— which holds for the average, however excep-
tional an individual may be — the son of the
prominent man starts, and always will start,
with better chances of success than the son of
the poor and uneducated, even if every other
condition is the same, no preference given to
the former, but both treated entirely on their
merits. The law of inheritance, in its broadest
sense, means that the offspring of the highly
educated, intelligent prominent man has inher-
ited some of his parent's ability, absorbed some
more in his early years from his parents, his
surroundings, that his education is watched by
more qualified parents, thus better directed and
more efficient, and thus — if not spoiled by op-
portunity and becoming a failure, he should be
expected to rise farther than the offspring of
parents who cannot give him the same oppor-
179
AMERICA AND THE NEW EPOCH
tunities. Thus, in all fairness, we must expect
more of descendants of prominent parents than
of obscure parents in the higher ranks.
In some respects this is one of the most con-
soling features to the masses of people who
have not risen; more and more, with the in-
creasing complexity of civilization, it becomes
difficult to qualify for higher places in our in-
dustrial organism, without starting with a first-
class education and a more than average intelli-
gence, and chance for a man, starting from the
bottom of the ladder, to rise to great heights
thus becomes increasingly^ less. But this law of
inheritance means that while the individual,
starting from the depths, may not rise very high,
whatever he accomplishes is not lost, but is a
gain for his offspring; they start from a higher
plane than he did, and thus will rise higher, and
if we abandon the narrow and selfish viewpoint
of considering only our own individual self, it
means that everybody, not as individual, but
as family, through generations, has the same
chance to rise to the highest positions in indus-
trial society. '
But, as stated, there is a possibility of abuse
of power of lilglier position, for the benefit of the
"ruling" families. An individual, or small
180
EVOLUTION: INHIBITORY POWER
group, could not do this, as it would be wiped
out by its inefficiency; but the entire society
may well drift into such class government, just
as individual corporations have drifted into the
control of cliques.
Especially great is this danger with the finan-
cial power, as financial power is not inherently
constructive, like industrial power. The finan-
cial power controlling industrial corporations
may be used as one of the greatest constructive
organizing forces in bringing about co-opera-
tion, but it may be abused as a destructive dis-
organizing power, and, therefore, it is probable
that with the progress of the co-operative in-
dustrial organization the industrial adminis-
trative powers will more and more come into
the foreground, the financial power become less
dominating.
Thus such industrial government based on
the development of the corporation is not by
itself entirely safe against abuse drifting in and
destroying its efficiency and thereby endanger-
ing its existence.
Thus, there must be an inhibitory power out-
side of the industrial government; a power not
organized for constructive administration and
executive work, not capable to do such work nor
181
AMERICA AND THE NEW EPOCH
permitted to do it, but invested with an abso-
lute veto to stop any Action of the industrial
senate which is against the public's interest;
that is, which is not commensal — a Trihuniciaie.
The constructive activities of our industrial
commonwealth require professional qualifica-
tions for their direction, and economic efficiency
thus demands an organization which reasonably
assures such professional qualifications. There
are, however, questions of general policy which
have nothing to do with professional qualifica-
tions, but where the decision depends on the
personal preference, but is dictated by no
economic law, and requires no special experi-
ence or knowledge. Such would, for instance,
be the question whether the increasing efficiency
of industrial production should be utilized by
increasing the standard of living, or by reducing
the time of work, or by l^olh; and this question
the unskilled laborer can decide just as efficiently
as the corporation president, as it is merely a
question of personal preference. Such matters,
therefore, must be decided by majority vote of
all the citizens, and cannot safely be left to an
industrial senate or other professional body
without endangering the nation. Of necessity,
the viewpoints of men in different positions
182
EVOLUTION: INHIBITORY POWER
(llfTer, and quite frequently the view of the
majority of all the citizens would differ from
that of the industrial leaders, and if the latter
small minority should prevail it would be the
end of democracy, the nation would not be self-
governing any more in accordance with the
wishes of the majority of its citizens, but would
be under autocratic rule of a minority, and the
only way by which the majority could secure
its wishes would be outside of the laws — by
revolution— just as it did occur in the great
French Revolution, when feudalism had ceased
to be commensal.
This has nothing to do with the question
whether the view of the intellectual minority is
the preferable one; the majority is always right,
because it is the majority — that is, if the ma-
jority of the people desire a thing, we, as indi-
viduals, or as minority, have no right — and no
power, in the long run — to set ourselves up as
judges and say that we are right and the rest
of the world is wrong; we are wrong if we
cannot convince the majority of the correctness
of our views.
Thus there must be, in a democratic nation,
an organization through which the wishes of
the majority of the citizens are expressed and
183
AMERICA AND THE NEW EPOCH
carried out, an organization whereby the na-
tion or any of its sub-groups, such as the munic-
ipality, can by majority vote settle the policies
under which it desires to live, decide questions
such as woman suffrage, decide on war or peace,
on imperialism or particularism, decide whether
the municipality wishes many civic improve-
ments, though resulting in a high tax-rate, or a
lovv^ tax-rate and no improvements. All these
matters are not professional and industrial, but
are questions of policy, of viewpoint, and thus
to be settled hy majoritj^ vote — while the exe-
cution of the polic3^ decided upon by such dem-
ocratic vote would of necessity devolve on the
industrial government as the permanent ad-
ministrative organization.
Such a government, with superior, but general
and essentially negative powers, would gradu-
ally' develop from om* present political govern-
ment, when by the corporate organization of
the industries the administrative or constructive
government is more and more taken over by the
co-operative organization of the industries.
Thus in the natural course of development
])y evolution, from our present industrial po-
litical situation, there should evolve — if not
checked by interference — a dual government of
18t
EVOLJTION: INHIBITORY POWER
our nation in the co-operative era: a construc-
tive industrial government, developed from the
co-operative organization of the industrial cor-
porations; permanent and self-perpetuating,
therefore consisting of the men best qualified
for the direction of the innumerable different
activities of modern civilization.
An inhibitory power, the development of our
present political government, elected at fre-
quent intervals by the majority vote of all the
citizens, having general supervisory power, the
decision on national policies, and the absolute
veto, but having no administrative or execu-
tive power; but the latter is entirely vested in
the positive government, the industrial senate,
while the political government with its national
and local officers is entirely negative.
Such a dual government, a positive con-
structive one and a negative, inhibitory one,
is not a new idea in the world's history; it has
existed once, and has been the most successful
and most efficient government the world has
ever seen — the government of the Roman Re-
public. The Roman Senate, with its officers,
consuls, pra?tors, etc., was the j^ositive power,
in charge of the executive, administration, and
legislation of the republic, and the Senators
185
AMERICA AND THE NEW i,FOCH
were not elected nor appointed, but were the
representatives of the various national interests,
at that time mainly agricultural and commer-
cial, while now they would be industrial. The
people's tribunes represented the negative, in-
hibitory power; they had the absolute veto
and thereby were superior to all other officers.
But they had no executive or administrative
power. They were the only officials elected by
all the people. The inscription on the Roman
standards, "S. P. Q. R.," well represented the
character of this dual government: " Senatus
Populusque Romanus,'' "The Senate and thus
the Roman People."
This government finally failed in the Roman
Republic, by the tribuniciate degenerating and
the Senate then drifting into selfish interests, as
class- government. But the tribuniciate failed
because the means of communication in those
days were insufficient. With the expansion of
the rej)ublic over larger territory it became im-
possible for all the citizens to take part in the
election of the tribunes, but only the population
of the capital could attend the election, and this
was rather the least desirable part of the popu-
lation. Thus the tribunes ceased to be the
representatives of all the people, lost their
18G
EVOLUTION: INHIBITORY POWER
prestige, and finally their power over the Senate
(Gracchus-Sulpicius), and the Senate became
the representative of special interest, until
finally militarism (Mariiis) and its natural
consequence, Coesarism (Sulla, Caesar), ended
the republic.
But the foundation laid by this dual republi-
can government carried the state onward by
its momentum, long after the republican gov-
ernment had ended, to the dominion of the
world, and held for three centuries the entire
civilized world in peace and prosperity, until
there was nothing left of the classic civilization
but a hollow shell which crumbled before the
onslaught of the barbarians.
Thus the government of the Roman Republic,
the greatest governmental structure which the
world has ever seen, was the same in principle
as the dual government, of permanent adminis-
trative and democratic inhibitory power, toward
which we are now drifting.
XV
THE AMERICAN NATION
CO-OPERATIVE industrial organization
presupposes racial unity. There can be
no co-operation as long as there is racial strife
and antagonism within the nation. The Ameri-
can nation was formed— rather is being formed,
since it is still in the formation period — by the
commingling of the Anglo-Saxon, Teuton, Celt,
Slav, and Mediterranean. None of these races
is in the majority or even in such a large mi-
nority that it could expect to have its character,
its viewpoints, habits, and temperament pre-
dominate in the resultant race. The white pop-
ulation of the United States to-day probably
comprises about 30 to 35 per cent, of Anglo-
Saxon origin (English, Scotch, etc.), about 30
per cent, of Teuton origin (German, Dutch,
Scandinavian, etc.), 15 per cent, of Celtic origin
(Irish), and 20 to 25 per cent. Slav and Mediter-
188
THE AMERICAN NATION
ranean. Of the latter, the latest immigrants,
many are not yet citizens.
The American race thus cannot be Anglo-
Saxon, or Teuton, or Irish, or Slav, or Latin,
but nuist have characteristics of all these races,
and to talk about "blood is thicker than water,"
and apply this to "our British cousins," or speak
of Germany as "Fatherland," or of our country
as a "Greater Ireland," this is not American
citizenship, but is racial sectarianism, and as
such to be condemned as reprehensible, since it
retards the bringing about of the racial unity
which is the first and fundamental requirement
of a stable nation.
On the other hand, it must be recognized that
the Anglo-Saxon, or, more correctly speaking,
the English, have an exceptional position in our
race, as the original and oldest constituent.
While all races contributed in the early coloni-
zation of the Atlantic coast, nevertheless the
British were so much in the majority that in
the Colonial days, and even still in the first
part of the nineteenth century the United
States were essentially Anglo-Saxon, that is, the
citizens of British descent were in the majority.
But the great German and Irish immigration of
the middle of the nineteenth century and the
18!)
AMERICA AND THE NEW EPOCH
tendency of the descendants of the early Col-
onists toward race suicide changed this, and
America is not Anglo-Saxon any more, but is a
mixed race in formation. What might have
happened if the gates had been closed to immi-
gration early in the nineteenth century, and the
non-Anglo-Saxon races kept out, does not con-
cern us now any more; history deals with what
is, and not what has been or what might have
been; deals witli facts, not with sentiments.
The English language has conquered and
through it the United States are closely related
to England by a common language, common
forms of expression and intercommunication,
and a common literature, so much so that with
many writers it is difficult to say whether they
are British or American. In some respects it
must, therefore, be regretted that the complete
racial unity of the two English-speaking nations
has not been preserved, that America has not
remained completely of Anglo-Saxon race.
On the other hand, however, it must be real-
ized that it was the mixed races which have
done the world's work, which have led in all
human advance, and it was the vitality given
by the mixture of races which has created all
great nations. Thus England as a nation was
lyo
THE AMERICAN NATION
formed by the mix Lure oi" the Norman and the
Anglo-Saxon; France by the Celt, Roman, and
Frank; far back before history, tradition tells
of the creation of the Roman nation bj^ the tri-
union of tribes — even the name "tribe" con-
tains the root "three," in memory of this
formation of the Roman nation from three
branches.
Thus there is no doubt that had it not been
for the mixture of the various leading races of
the world America would not be what it is
to-day. We can easily realize this by review-
ing the racial characteristics- of the foremost
races which contributed to the American union.
The characteristic of the Anglo-Saxon is his
great initiative. He is the empire-builder. We
only need to think of names like Hastings,
Washington, Nelson, Gordon, Rhodes, Kitch-
ener, etc. To him thus is due the push and the
energy which have opened up and conquered the
New World. We see it in the rapid growth of
the English colonies, compared with the slow
growth of other nations' colonies. But charac-
teristic of the Anglo-Saxon also is the excessive;
individualism which handicaps him in co-
operation, and co-operation more and more
becomes the essential of progress. Thus the
13
191
AMERICA AND THE NEW EPOCH
Anglo-Saxons are not prominent as organizers,
but rather are likely to be muddlers; the pres-
ent world's war affords an excellent illustration
hereof. Thus the Anglo-Saxon creates and
originates, but does not organize what he cre-
ated.
The Teuton does not have the same initiative
as the Anglo-Saxon; he also is an individualist
— especially those of the Teuton races who
emigrated here, because their individualistic
ideas did not conform to the governments under
which they had lived in Europe — but the in-
dividualistic nature of the Teuton is tempered
and controlled to a considerable extent by a
collective or co-operative temperament. As
the result, the Teutons, by their racial charac-
teristics, are the great organizers. We only
need, in the history of our nation, think of a
few names as Astor, Goethals, Guggenheim,
Harriman, Roosevelt, Schijff, Schuster, Schwab,
Strauss, Vanderbilt, Vanderlip, Warburg, Wey-
erhausser, Rockefeller, Wanamaker, etc.
Characteristic of the Celtic race is the strong
collectivistic temperament, associated with an
individualistic nature, which specially fits them
as administrators. It is the Celt who is most
proficient to rule as boss by the consent of the
THE AMERICAN NATION
governed, not as disciplinarian by orders which
his subordinates have to obey, but by giving
the conception of primus inter pares. Thus he
has been most successful in politics, while the
individualistic Anglo-Saxon necessarily is much
less successful in this activity. It is charac-
teristic that America's largest city has been
ruled almost uninterruptedly by the Celtic race,
and that, in the rare instances where a "reform
government" succeeded to carry New York, it
was such a failure that it always was wiped out
at the next election. Also, look around es-
pecially among those corporations which by
their close relationship with large numbers of
the public require a specially high grade of
social sense in their management — public utility
corporations — and you find an abnormally large
number of Irish names among their leaders.
And how about the contribution to America
by the other races, outside of these three leading
civilized races of to-day? Do not let us forget
that the greatest of all Americans was neither
Anglo-Saxon nor Teuton; nay, was not even
Aryan, but was of the Turanian race — Abe
Lincoln.
The three great races which contributed to
the American citizenshiji of to-day are supple-
19;}
AMERICA AND THE NEW EPOCH
mentary, commensal — originator, organizer, ad-
ministrator— jointly they have made our com-
monwealth, and any split between them means
disaster. The Anglo-Saxon alone, without the
co-operation of the Celt and German, may
originate, but probably would not accomplish
much more than a chaotic muddle — somewhat
of this we have seen in the last year in our
country. On the other hand, with the Teuton
and Celt alone, without the Anglo-Saxon,
progress would slow down for lack of initiative.
There really never was a serious racial an-
tagonism in our country. It is true, during the
century of immigration the "native" has looked
down on the "Dutchy," he then in turn on the
"Mike," and again on the "Dago," etc., but
only the names were racial, the antagonism was
not racial, but that of the previous immigrant
toward the lower standard of living of the later
comer, who threatened the higher standard of
living acquired by the former, and as quickly as
the new immigrant acquired the American
standard of living and thereby ceased to be
a danger in lowering the standard, the antag-
onism disappeared.
Politically, racial hatred has found an expres-
sion only once in our country, in the notorious
194
THE AMERICAN NATION
Know-Nothing party of a past generation; but,
unfortunately, there is at present some danger
of a revival of racial antagonism, and this would
be a national calamity, as our nation needs the
friendly co-operation of all the races which have
contributed to the coming American race.
All the nations which are involved in the pres-
ent world's war have contributed to the immi-
gration which has formed the American citi-
zenship of to-day, and it is natural to expect,
however much the immigrants and their de-
scendants have become true Americans, that
they should have some sentimental attachment
or sympathy for the nation of their forefathers.
Indeed, a type of mind which in one or two
generations can lose all attachment for his an-
cestors' nation is not the type of mind from
which to build a strong and enduring nation,
is not the type of mind which we want here
m America; in England, after [nearly a thou-
sand years, the Norman and the Anglo-Saxon
type are still distinguishable.
Thus it is natural and proper that American
citizens of English descent should largely sym-
pathize with England, American citizens of
German descent with Germany, American citi-
zens of Irish descent wish England's defeat, etc.
195
AMERICA AND THE NEW EPOCH
This has nothing to do with their duty as
American citizens, with their allegiance first,
last, and always, toward America.
Unfortunately, an American expatriate raised
the cry of "hyphenate," and an influential press,
misguided by business interests, took it up, and
finally in the utterances of extremists — among
them, unfortunately, some politically very
prominent men — it reached the ultra Know-
Nothing attitude that "only a citizen of British
descent can be a real true American, and any-
body not of Anglo-Saxon descent cannot have
the type of mind which is required for an
American citizen."
With this it became a national menace, for it
challenged the right to citizenship of the ma-
jority of our nation, as the majority is not
Anglo-Saxon any more. Naturally, all political
differences, all issues between the various politi-
cal parties, became secondary in importance be-
fore the defense of the right to citizenship of the
majorit^^ of our present citizens. As seen, it is
a very dangerous and very unfortunate political
issue, which has been raised thus inadvertently
by [)oliticians playing to temporary excitement
of racial prejudice.
Such vicious attempts of making political
19G
THE AMERICAN NATION
capital by creating racial hatred within our
nation should promptly be squashed by all fair-
minded citizens. It is obvious that all Ameri-
cans— with the exception, perhaps, of the red
Indian — are hyphenates; that there are un-
undoubtedly a few — a very few — British-Amer-
icans who are more Englishmen than Americans,
German-Americans who are more Germans than
Americans, etc., but that the overwhelming
majority of all the British-Americans, German-
Americans, Irish-Americans, etc., are Americans
and nothing else.
But some good features the raising of this
issue has produced : it has shown the anachron-
ism in many of our conceptions and forms of
speech. We have been talking of the native-
born Americans "assimilating" the immigrants.
There can be no such thing; assimilation im-
plies two parties becoming similar, but implies
both changing. Thus the native does not assim-
ilate the immigrant, but native and immigrant
assimilate with each other, and the native as
well as the immigrant changes, fortunately, for
it would be a sad America if we still hanged
witches as the Puritan "natives" did, if we still
had the Blue Laws and the religious intolerance
of the old New-Englanders. Or we may say,
197
AMERICA AND THE NEW EPOCH
"America assimilates all the immigrants coming
to its shores into a new, American nation."
But this nation is not like the Puritan, or the
Dutchman of New Amsterdam, or the German
of '48, but has, more or less, the characteristics
of all of these.
Thus, when we speak of America as the
melting-pot of the nations we must realize that
in melting together different metals the alloy
is not like any one of the metals put into the
pot, and thus we must not expect that the prod-
uct coming out of the melting-pot of the nations
will be in temperament and characteristic like
the British-American, will have the British view-
point— or that of any other constituent nation —
however much this may disappoint us.
Inversely, however, we must realize that the
Anglo-Saxon strain is one of the largest in the
composition of the American race; that his-
torically, by the previous preponderance of the
Anglo-Saxon, it has exerted more influence on
the molding of the new nation than any other
race, and that, therefore, at least for some time
to come, Anglo-Saxon characteristics should be
more prominent than those of any other race;
but they cannot be predominant.
XVI
THE FUTURE CORPORATION
THE development of a national government
by the industrial corporation presupposes
that the social functions of the industrial cor-
poration, which are now being developed, have
been extended in all corporations and grown to
an activity equal in importance and scope, and
directed by equally big men, as the technical,
administrative, and financial activities of the
corporation. It would hardly be safe, even with
the control exerted by an inhibitory tribunicial
power, to intrust the entire constructive gov-
ernment of our nation to the industrial cor-
porations of to-day, with their very different
stages of social development.
For the small individual producer of bygone
days there was no social responsibility or duty,
but his business was his private property^ to
carry on in any manner he liked, subordinate
only to the national laws. But when the indus-
199 —
AMERICA AND THE NEW EPOCH
tries became organized in larger and larger cor-
porations, and, as inevitably must be the case
with the continuing industrial deveTopment of
our nation, industries and groups of industries
become essentiall3^ controlled by corporations,
and the corporation comprises the joint pro-
ductive activity of many thousands of em-
ployees, then a social responsibility^, and with
it a social duty, arises in the corporation, and
the corporation can no more be entirely private
property, however much its legal owners may
consider it such. In organized society there can
be no unrestricted private property in any-
thing which may affect or influence public wel-
fare and public interest. This is, and always
has been, the law of every civilized community.
Thus with the growth of the corporation, a new
relation of mutual responsibility with the public
arises. This is fully recognized by all the more
progressive and thus more successful corpora-
tions, and its recognition is the foundation of
the rapidly increasing activities of the corpora-
tions in social relation with their employees,
with the public at large, with educational sys-
tems and institutions, public policy committees,
national associations, etc.
Politically, the issue was first raised in the
200
THE FUTURE CORrORATION
great coal strike, when the President of the
United States forced the contending parties to
arbitrate, and since that time the responsibihty
of the hirge industrial organizations to the na-
tion has been universally established, has been
recognized as a part of our law.
But, unfortunately, there arc still a few large
and powerful corporations which more or less
refuse to recognize their social responsibility to
society, which insist that they are private prop-
erty, responsible to nobody but their stock-
holders, and attempt in their actions toward the
public to carry out this policy. It is these cor-
porations which continuously feed fuel to the
public hostility toward corporations, which
undo what is being accomplished in establish-
ing better relations between corporations, em-
ployees, and public by those corporations who
are realizing their social responsibility and liv-
ing up to it — and which latter thus inversely
would gradually bring the public to a realization
of its social responsibility toward the corpora-
tion as modern industry's most successful
embodiment.
Illustrations of this can be seen in the dealing
of corporations with the complaints of the pub-
lic; from corporations which discourage com-
201
AMERICA AND THE NEW EPOCH
plaints, whether just or unjust, by any means,
apparently endeavor to make it as inconvenient
and uncomfortable to the complainant as pos-
sible, to make him feel like a criminal, and
thereby effectively discourage any further com-
plaint. With such corporations nobody who
once made a complaint will ever like to make
another complaint, but neither will he ever
have a good word for the corporation, but can
be counted forever after among its enemies.
Then there are powerful utility corporations,
which make the complaint department a careful
study of their best men, select qualified officers
with considerable social sense for handling
complaints; they encourage complaints, show
the complainant attention, explain to him the
why and wherefore, and in nine cases out of
ten leave him not merely satisfied, but a friend
and defender of the corporation, and they find
that this method of dealing with complaints,
while it may cost more than merely discourag-
ing complaints by inattention, will pay for itself
as one of the most effective means of creating
friends for the corporation among the public.
Again, there are eorj)orations, stores, hotels,
etc., whose principle in dealing with comi)laints
is that the complainant is always right, their
202
THE FUTURE CORPORATION
own employee wrong; it is unfairness in the
opposite direction, unjust to their own em-
ployees, and often ineffective toward the com-
plainant, who, as a rule, is more satisfied by
being given reasons and explanations rather
than by being told that the employee will be
punished.
The same applies to claims, and to practically
every activity in which the corporation comes
into contact with the public; we find all kinds
of attitudes, from the alleged "the public be
d d," to that of the modern corporation
against which no justified hostility could ever
have arisen even by the most exacting.
The future success of our country as industrial
nation depends on the extent to which co-
operation can be developed within the industrial
corporation, and between public and corpora-
tion. This is realized more and more, and in-
creasing efforts are made to bring about co-
operation. Thus, in most modern corporations
some work is done to establish co-operation, in
some much time and attention are devoted
hereto by the highest officials.
Unfortunately, due to the strong individual-
istic temperament of most corporation leaders,
many of these activities are paternalism rather
20.'} '
AMERICA AND THE NEW EPOCH
than true co-operation. Co-operation implies
two parties coming together. Thus there may
be co-operation between employer and employ-
ees, co-operation between the public and the
corporation; but co-operation of the employees
with the employer in plans devised and intro-
duced by the employer, of the public with the
corporation on a basis established solely by the
corporation, is a misnomer, and such one-sided
attempts of co-operation not infrequently lead
to the reverse, to strained relations and antag-
onism, and that naturally, in a democratic na-
tion, where everybody believes that he knows
best what is good for him.
Thus there are instances of corporations, still
essentially controlled by one man, who created
and originated the business, and who was
deeply interested in the welfare of his employees,
where extensive social work was done for the
employees, often under the immediate personal
supervision of the owner of the corporation.
Excellent sanitary facilities, recreation-rooms, li-
braries and reading-rooms, lectures and lecture-
rooms, gynmasium and athletic fields, social
centers and lounging-rooms, parks and play-
grounds, in short, anything that could make the
employees happy and contented, were provided
204
THE FUTURE CORPORATION
by the corporation, regardless of expense, and
quite likely the thanks was a general strike for
some petty reason, such as that the towels in
the toilet-rooms were washed in a non-union
laundry. The consequence naturally was a
thorough discouragement of the corporation
owner, over the utter lack of appreciation and
thanklessness of the emploj^ees. But was this
justified? Or was not the entire social activity
a violation of the fundamental principle of co-
operation?— that is, of working together, and
based on the conception of the business o\Mier
that he knows better what is good for his em-
ploj^ees than they know themselves — a con-
ception which, even if it should be true, would
necessarily lead to the resentment of those who
by implication are given to understand that
they do not know what is to their interest, but
have to have a guardian.
This is the most serious defect of much of
to-day's social work in the corporation; it
deals with the things which the employer
believes the employees want or should want,
but not what they wish, and thus it is tainted,
in the opinion of the men, with paternalism and
charity.
It is true that the corporation leaders may,
205
AMERICA AND THE NEW EPOCH
in some respects, know better than their em-
ployees what is to the interest of the employees ;
with the broader view from their position they
should know better. But this does not change
the situation. So does the political boss in most
cases know better what is in the interest of his
party than does the individual party member;
but still he does not order, but persuades and
convinces, otherwise he could not long remain
the leader. Now, in our industrial organiza-
tions the most important and most beneficial
results would be the recognition by all the cor-
poration employees, of the corporation leaders
as the leaders in the social activities of the cor-
poration. But this first requires convincing the
employees that the social activity of the corpora-
tion leaders is in the employees' interests. This
is a very difficult problem, in view of the ex-
tensive suspicion of employees against any new
action of the employer. Unfortunately, quite
commonly the difficulty of the problem of es-
tablishing social relation is very imperfectly
recognized by the corporation leaders; compare
the letter written by a corporation to some
prominent customer with the notice informing
the employees of some social activity intro-
duced by the corporation; the utmost care,
THE FUTURE CORPORATION
which is taken in the former not to offend any —
whether just or unjust — sensitivity of the cus-
tomer, while in the latter letter often no thought
is given to this feature of form, but it is assumed
that the employees should be thankful. But it
is the corporation which introduces social ac-
tivities to establish co-operation, as it is the
corporation which, from its broader view, sees
the necessity of greater co-operation, while the
employees do not see it yet, but suspect the new
movement as hostile to their interest, and thus
need convincing that it is not so, require the
same careful consideration which is given to
the particular and easily offended customer.
Herein really lies the weak point of our pres-
ent industrial organization. Thus, where social
activities exist, we often have two kinds of as-
sociations; both consist of practically the same
employees, both are entirely free in the election
of their officers, and still entirely different
types of men are elected in the two organiza-
tions. In the labor unions, "demagogues" and
"agitators" may be elected, but in the social
organization, the sick-benefit societies, etc., the
same men elect as officers good and stable-
minded conservative workmen. Often when
seeing this, we deceive ourselves about the
14 207
AMERICA AND THE NEW EPOCH
"good sense" of the men, that when their o^\^l
money is concerned, in the benefit society, they
do select good officers, even if they allow agita-
tors to run their labor unions. But, helas!
when some really serious problem arises, such
as jeopardizing their existence by a strike, it is
the union officers whom they trust and follow,
not the conservative officers of the social organ-
ization, the benefit society, etc.
What is the meaning of this? Is it not the
feeling underlying in the minds of the men that
the labor union is recognized as an employees'
association, even by those outside of the union,
while the other organizations are considered as
"associations of employees by the employers,"
and as such do not receive the same interest
and confidence; and when choosing ofiicers for
the latter organizations such men are chosen as
the members believe the corporation would like
to see chosen.''
This is the great problem which has not yet
been solved in bringing about co-operation with-
in the corporation; co-operation implies organi-
zation, and how can organizations, independent
and not managed and controlled by the corpo-
ration, be brought about which are accepted as
bona fide independent organizations of em-
208
THE FUTURE CORrORATION
ployees, and not considered as sham organi-
zations and treated as such? A great deal of
trial and failure will undoubtedly be necessary
to solve this problem. Sometimes an organiza-
tion, which was treated listlessly and without
interest for years, picks up suddenly by some
men getting into it, and then gets efficient and
recognized as independent.
If co-operation could be established between
the corporations and the labor unions, within the
limited scope of those activities in which the
two organizations' interests are plainly the same,
such arrangement would immediately receive
the recognition of the employees as truly co-
operative. But, unfortunately, in most places
the relations between the two organizations are
too strained to make such co-operation feasible
and safe for the corporation. Furthermore,
there is the fundamental difficulty that the
labor union is national in scope, and the local
organization limited in power and authority,
depending on the national body, and it would
necessarily be difficult for a corporation to enter
into relations with an organization which is not
independent.
The same difficulty of bringing about real co-
operation exists also between the corporations
209
AMERICA AND THE NEW EPOCH
and the general public. It is the well-recognized
defect of the American business man, which has
largely kept American business out of the
world's market; disinclination to consider any
other viewpoint but his own, failure to con-
sider the foreign customer's peculiarities, hab-
its and wishes, and insistence on the adopted
"standard" way of doing business. Within our
country, less difficulty is experienced, as pro-
ducer and customer both have similar habits
and methods of business. Trouble is liable
to arise only in the dealings between private
and public corporations, such as municipalities.
The attitude of some private corporations in
making their proposition to the municipality in
the form they consider as just and proper, and
then standing pat and refusing to consider any
other arrangement, has led more than once to
unnecessary controversies — usually to the disad-
vantage of the private corporation, as obvious
with the present attitude of the public toward
the corporation. Especially such is liable to
occur with smaller corporations, or smaller
branches of large corporations, which cannot
have sufficiently broad-minded men at the
helm.
The standard attitude of the industrial cor-
210
THE FUTURE CORPORATION
poration has been, and largely still is, to avoid
publicity, that is, not to give information to the
public on the actions, attitude, and intentions
of the corporation, their reasons and causes, not
to explain and defend; in short, not to make
any publicity campaign, but to endeavor to act
fairly and justly and business-like, and expect
the public to recognize and appreciate this.
Probably by this time most of the corporations
have been thoroughly disillusioned in this ex-
pectation, and a whole class of literary men —
and women — have grown up making a comfort-
able living out of "kicking the corporations."
To illustrate: many of those who were in the
oil business in the early days, who tried to do
the same as Standard Oil did, but did not suc-
ceed where Standard Oil succeeded, have been
hounding Standard Oil for years, until finally
the Government dissolved Standard Oil and "re-
stored competition" by dividing it into thirty-
four competing companies, and so reduced the
price of gasoline — and if you do not believe the
latter, kick yourself, because there is no more a
large corporation to hold responsible, as Stand-
ard Oil is dissolved. And so throughout the en-
tire field of industrial production, our Govern-
ment, backed by public opinion, is still "trust-
211
AMERICA AND THE NEW EPOCH
busting," while all other civilized nations are
organizing their industrial production.
But the industrial corporation was to a large
extent to blame for the growth of this hostility;
it was too self-centOTed, self-satisfied, apprecia-
ted too little the effect of public opinion, the
hostility which arises from the use of secretive
methods, and the advantage of explaining its
actions to the public.
Especially in a rapidly growing democratic
nation, it is not reasonable to expect anybody
to go to special pains to find out what others
do, but everybody, to be judged fairly, must
come out before the public and explain his ac-
tions and their reason, must be ready to defend
himself. This the corporations have not done,
and their enemies have done it for them, with
the results seen to-day.
In the last years a change has come and more
and more corporations appreciate their respon-
sibility of informing the public, and many have
done very efficient and very effective work in
giving the public a better understanding of the
corporation's activity. But while technical and
engineering publicity of corporation activity
has been fairly effccllve, the attcmi)ls of cor-
poration men to represent to the public the
212
THE FUTURE CORPORATION
social and industrial activity of the corporation
have often been dismal failures and utterly un-
convincing. Most of them were written in the
style of the lawyer's brief — that is, giving at
length all the favorable features, and suppress-
ing or glossing over the unfavorable ones — and
the picture drawn thus is so obviously untrue
that it carries no conviction. On the other
hand, if a true and fair representation is made
of the corporation as modern industry's most
efficient tool, as a necessary step in the ad-
vance of our civilization, as an organization of
human beings and for human beings, but as a
structure under the laws of evolution, still im-
perfect in some respects, open to improvements
in others, with weaknesses well recognized but
impossible to remedy immediately, because
there are not enough men big enough to do it
— if this picture is drawn, the writer will cer-
tainly find himself quoted by isolated sentences
picked out from his statements and put to-
gether so as to represent exactly the opposite
from what he explained. If he is a corpora-
tion man it certainly will be heralded as a con-
clusive evidence of the badness of the corpo-
ration, that even a corporation man has
condemned it — and in reality he explained ex-
213
AMERICA AND THE NEW EPOCH
actly the opposite. But such is modern literary
"art," as we find it, from daily newspapers to
monthly magazines; it is dishonest and dis-
honorable to garble quotations, single out in-
dividual sentences, and arrange and interpret
them so as to make them give the opposite im-
pression from that which the writer intended
to convey, but, nevertheless, many writers
and editors, who in every other respect are
thoroughly honest, would consider it entirely
proper by such methods to make somebody
apparently express an opinion which he never
held.
Thus the situation stands: to explain the
corporation by giving only the favorable side,
only praise, is ineffectual and unconvincing,
because everybody realizes that nothing is per-
fect. To give a true representation would be
convincing to the fair-minded reader, and
would quickly dispel the unjustified hostility
now existing against the corporation. But it
would by quotation, omission, and inference be
perverted to give exactly the opposite meaning,
and thus is liable to do harm. To say nothing,
avoid all publication, as has largely been done
heretofore, makes the corporation helpless
against the intentional and, what often is much
214)
THE FUTURE CORPORATION
worse, because more impressive, unintentional
misrepresentation.
The only remedy apparent seems to be to
entirely throw open the discussion, give infor-
mation to the fullest extent, and count on the
public gradually realizing what is unfair mis-
representation and what is reasonable. Here
most effective would be the assistance of those
numerous writers who are not connected wilh
corporations nor with the muck-raking crowd,
but have retained an attitude of independence
and fairness, and therefore are listened to by
the fair-minded. And there is within the huge
modern industrial corporation a wonderful field
of romance and interest, still unknown and un-
touched by any writer, which in the hands of
a Kipling or a Jack London would give most
wonderful stories, more interesting and fasci-
nating than any of the tales or novels of bygone
ages of the world's history; the creation of
prosperous industrial cities in the sandy deserts
of the lake shore; the control in the service of
man, for power production in the steam-turbine,
of the steam jet which issues from the high-
pressure steam-boiler at speeds so terrific that,
compared with it, the monster shells of the high-
power guns which have smashed Europe's
ii5
AMERICA AND THE NEW EPOCH
strongest fortifications are crawling with a
snail's pace, or the tragic search for years
through all the continents and islands of the
known and unknown world, for a fiber to make
the Edison lamp filament; and when it was
found and the discoverer returned, chemistry
had in the laboratory created a fiber still su-
perior. The history of the creation of the
United States Steel Corporation, if it could be
written, probably would be more fascinating
and of more human interest than the history of
the birth of many a nation.
XVII
CONCLUSION
THE issue in the European war essentially is
that between the individualistic era of the
past and the co-operative era of the future, and
whatever may be the military results of the
war, this issue is decided and all civilized na-
tions of Europe have abandoned the individual-
is lie principle of industrial organization, and
have organized or are organizing as rapidly as
possible a co-operative system of industrial
l)roduction. Against the vastly higher pro-
ductive efficiency of industrial co-operation of
the European nations after the war, our coun-
try's individualistic industrial organization,
with everybody fighting against everybody else,
industrially, politically, and socially, is hope-
less, and America thus will either fail, cease to
be one of the world's leading industrial nations,
or we must also organize a system of industrial
production based on co-operation and not on
217
AMERICA AND THE NEW EPOCH
competition. That is, we must enter the co-
operative era, or fall by the wayside.
America's national temperament is demo-
cratic, our methods of organization thus con-
central — that is, from the individual units to the
central organism — while all the European na-
tions are of monarchical temperament, their
methods of organization thus decentral, from a
strong central government — political or finan-
cial— toward the individual.
Thus we cannot copy, nor even benefit to
any extent, from the experience of Europe's re-
organization, but must work out our own sal-
vation, on new democratic lines, a problem far
greater and more difficult.
The most promising structural element of the
future co-operative industrial organization, in
our present nation, is the industrial corporation,
and on this probably the structure of co-oper-
ative industrial society will be built in our
democratic nation.
A positive, administrative, and executive in-
dustrial government, i)rofessionally comi)etent,
continuous and permanent, by an industrial
senate. A negative tribuniciate, with no ex-
ecutive or administrative power, but with
superior inhibitory and supervisory power, re-
218
CONCLUSION
sponsible and rapidly responsive to all the
citizens of the nation.
Such a co-operative democratic common-
wealth would be superior in efficiency to the
monarchical co-operative industrial organiza-
tions of Europe, just as much as the Roman
Republic was superior to all other communities
of the classic age.
But the first requirements for the possibility
of such co-operative democratic organization
are racial, industrial, and political unity.
There must be no racial antagonism. The an-
tagonism and fight between the political organi-
zations, nation. State, and municipality and
the industrial organizations must cease and an
intelligent understanding between the public
and the industrial corporations must be estab-
lished. Most of all, however, the foremost
causes of indifference and antagonism of the
masses of producers against the producing or-
ganizations must be eliminated bj' an efficient
and effective establishment of the right of every-
body to live in his accustomed social standard,
and the duty to work when capable. It means
the recognition as the fundamental principle of
civilized society of the first connnandment of
the Bible, "Where is thy brother?" And the
219
AMERICA AND THE NEW EPOCH
outlawing, forever, of Cain's answer, "Am I
my brother's keeper?"
Political legislation, or industrial organiza-
tion, or a combination of both, may bring about
this social reconstruction, and the rapidly in-
creasing interest, within the corporation, in
social activity, promises well in this direction.
With this accomplished, and the enormous
number of the emplo^'ees of the industrial cor-
porations thereby attached to the interests of
the corporations and ready for the defense of
the corporations — just as the millions of the
German Social Democracy were by the social
legislation attached to the nation and ready for
its defense — with this accomplished, quickly
the political power would shift and the political
government, instead of outlawing and fighting
corporate success and business, would be
brought into co-operation with the industrial
corporation, and from thereon the progress
toward democratic co-operative industrial or-
ganization would be steady and rapid.
Internationally the co-operative era would
bring about material changes: with production
controlled, first nationally and then inter-
nationally, by the demand for the product, and
production for the mere profit of producing
220
CONCLUSION
eliminated as uneconomical, much of the inter-
national competition for the markets of the
world would cease, and with it most of the
causes of war. The secondary nations would
come within the sphere of influence, under the
political and industrial guidance of the world's
leading industrial nations. Thus our country's
influence would extend over our continent and
its territorial waters.
International commerce as a system of com-
petition for profit would cease, but would re-
main and even extend in dealing with those
things which one nation, or one territory, can
produce better or more conveniently than
another.
But with international competition ended
and co-operation established, international war
also would become an impossibility as a matter
of course, as there would be no causes for war.
Thus no international court of justice, no
world's congress or international police force,
or other such impossibilities would be needed,
but war between nations would simply become
unthinkable, just as it would be unthinkable
to-day, if the heads of two dei)artments within
the same corporation disagree about some mat-
ter, that the members of the two departments
221
AMERICA AND THE NEAV EPOCH
go out with clubs and pistols to fight out the
disagreement.
And how about socialism? As a matter of
fact, international industrial co-operation would
be so near socialism, would so imperceptibly
merge into it, that nobody would ever be able
to see where "capitalistic society" ended and
the "socialistic commonwealth" began — though
it is obvious that this socialistic commonwealth
will be as different from the dreams of us
socialists of to-day as every accomplished
progress always has been from the first crude
ideas of its originators.
But suppose we do not succeed in bringing
about the racial unity, or the industrial unity,
or the political unity, which is required for the
co-operative industrial organization of our
nation. What then?
Suppose a serious racial antagonism should
arise in our nation, as the result of the European
war, between the Anglo-Saxon on the one side,
and the citizens of German and Celtic descent
on the other side; the Anglo-Saxon would prob-
ably score at first; by his greater initiative, by
his control of much of the political and indus-
trial machinery, he would, by organizing the
Slav and Mediterranean, by political, indus-
^2i
/ CONCLUSION
trial, anu social pressure, drive tlie citizens of
Celtic and German descent from power, and
practically, if not even legally, disfranchise
them. But then, deprived of the organizing
ability of the German, the administrative
ability of the Celt, and with the Anglo-Saxon's
tontempt for the "lower" races, very soon the
Slav and Mediterranean would rise in political
revolt and thus finally the Anglo-Saxon would
disappear from our national organism, just as
the Aryans, which once created India's ancient
civilization, have long disappeared. With the
strongly collectivistic temperament of most
Slav and Mediterranean nations, and the
individualistic races, Anglo-Saxon and Teuton,
hostile against each other, probably the collec-
tivistic— that is, monarchical — temperament
would get into control of our nation, that is,
democracy would cease and a monarchical
state supervene; probably a Caesarism rising
on the military machine created by the Anglo-
Saxon.
Thus, united we stand, divided we fall, ap-
plies racially to our country more than any-
where else.
Fortunately, there is hardly the remotest
possibility of such racial antagonism making
15 223
AMERICA AND THE NEW KT'OCH
headway In our nation, but the attempts of
stirring up racial hatred will undoubtedly meet
the fate of the former Know-Nothing party.
-Granting thus racial unity, what then, if in-
dustrial unity cannot be established; if our
industrial leaders, our political leaders, fail to
grasp the opportunity of insuring the masses oi
producers against unemployment, sickness, old
age, and if indifference, antagonism, and indus-
trial strife remain, or if we fail to realize the
immediate importance and urgency of bringing
about better relations, and things continue to
drift? The corporation would accomplish little,
if anything, in industrial reorganization, as it
would not be supported from within, its em-
ployees, nor from without, the general public.
The demand for the political government to
step in, which already is strong and general,
would naturally increase. The political govern-
ment— municipal. State, and especially the Fed-
eral Government— would take over more and
more industrial activities; supervision of the
railroads by an interstate commerce conmiis-
sion, extending into control, and finally admin-
istration and ownership of the railroads would
follow; the same action extend to all other
means of communication, as telegraph, tele-
224
CONCLUSION
phone, etc". Industrial supervision and con-
trol by an interstate trade commission would
come, entering more and more into the internal
economy, direction, and finally operation and
practical ownership of industries. Simultane-
ous therewith an extended governmental activ-
ity in the ownership and operation of canals,
reclamation works, mines, steamship lines, ship-
yards, farms, etc. The final result thus would
be an industrial reorganization of our nation by
the political government, the Federal Govern-
ment superseding the industrial corporations.
Necessarily, to accomplish this, the govern-
ment must be far more permanent, competent,
and efficient than our present political govern-
ment, and commissions, made as competent and
permanent as possible, would take over most of
the work of industrial control and operation,
the direct elective officials mainly acting in
supervisory capacity, directing the policies of
the commissions. Such organizations, if once
created, would probably be as efficient and sat-
isfactory as the industrial government devel-
oped from the industrial corporation would be.
However, it would require an entire change
of our governmental system, the creation of a
strong centralized government, like that of
225
AMERICA AND THE NEW v^'OCH
many European nations, the introduciion of de-
central methods of dealing with progress and
development. This would be possible only by
a change of our national temperament from
democratic to monarchical — that is, from indi-
vidualistic to collectivistic.
The general character of the later immigration
is, indeed, far more collectivistic than that of
the earlier immigration, and thereby there is
produced a tendency of the nation toward col-
lectivistic temperament, which is held in check
by the influence of the earlier, more individual-
istic elements, but is growing and would prob-
ably gain the more headway, the longer the
present chaotic condition persists. This drift
may gradually change our national character
so as to make the existence of a strong and
stable centralized government possible, and
thereby a control of the co-operative industrial
system by the political government, as it exists,
for instance, in Germany.
However, it will be a matter of generations
before our national temperament, by collectiv-
istic immigration and elimination of the individ-
ualistic strain, has changed sufficiently; and
industrial progress and reorganization in the
co-operative era is so rapid abroad, that long
226
\
t
CONCLUSION
before America's national character could have
changed so far as to make industrial reorgani-
zation by a centralized political government
possible, America as an industrial nation would
have ceased to exist, in competition with the
highly organized and highly efficient co-opera-
tive industrial organizations of Europe.
Thus the time element defeats the possibility
of political industrial reorganization of our na-
tion.
But what then will happen to America if
we cannot bring about the co-operative indus-
trial reorganization necessary to meet a re-
constructed Europe in the new era.'^
Exportation of industrial products naturally
will quickly cease, as with our inefficient in-
dividualistic production we cannot meet in the
markets of the world the competition of the
co-operatively organized nations.
Exportation of raw materials, of agricultural
products .^^ Already to-day our excess produc-
tion of agricultural products, etc., over our home
consumption is not great, and is with the in-
creasing population rapidly decreasing, and that
while we are still using our natural resources.
But with these exhausted in the near future,
with our inefficient and crude methods of agri-
AMERICA AND THE NE\\ % '. ^
culture and production, we soon will have no
surplus to export, but need all that we produce
to feed our own population. With no industrial
products to export, this means, in case of crop
failure or other accidents, famine, or importa-
tion without equivalent to export — that is,
impoverishment of the nation. Thus gradually
our present process of increasing in wealth will
reverse; we will get poorer, mortgage our
country's lands, mines, etc., to foreign capital,
and in the future then stands the fate of the
Mexico, the India of to-day; a country owned
and exploited by foreign capital, for the benefit
of foreigners, but with the natives — the de-
scendants of the Americans of to-day — as the
exploited. Berlin or London as the financial
and industrial center of the world, America as a
country of plantations, of mines, and industrial
establishments, owned, managed, and directed
by foreigners and for foreign profit, with native
American peon labor.
Such is fate, such is the law of evolution:
there is no standstill; either you swim or sink;
either we enter the coming co-operative era of
the world's history and take our place as one
of the leading industrial nations organized for
the highest efficiency possible under co-operative
228
CONCLUSION
industrial production, or wc fall by the wayside,
cease to be one of the world's leading nations,
and merely become a field of exploitation, a
sphere of European influence, to be parceled
out like China.
THE END
4v'0CH
II
I K
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