Book 1 — CHAPTER IToC

CHAPTER IToC

CAPITALISM IS STUPID

§ 1. Overproduction

The first and most glaring evil of the competitive system is that it is stupid. In support of this I shall call as witnesses captains of industry whom the business men regard as the greatest authorities in the world: John D. Rockefeller[24], Henry O. Havemeyer[25], Elbert H. Gary[26] and others.

Socialists are accused of being impractical. I shall have failed in properly presenting the Socialist case if I do not succeed in demonstrating that the impractical people are the bourgeois, the Roosevelts, Tafts and Bryans who, though aware of the waste of the competitive system, insist upon maintaining it; and that the only practical people are those who, like the Socialists, having perceived the waste that attends the competitive system, seek to replace it by a more economic plan.

No one will, I think, deny that the most practical business men to-day in America are Rockefeller, Pierpont Morgan, Havemeyer, and the others who have been engaged in organizing our great trusts. Now the only object of a trust is to eliminate the unnecessary waste of competition; and the only difference between the Socialist and the trust magnate is that the Socialist wants the benefit derived from reducing competition to be shared by all; whereas Rockefeller, Pierpont Morgan and the other trust magnates want the profit secured by the elimination of waste all to themselves.

I do not suppose there is any man living so prejudiced or so dull as to deny that, if Socialism could present a system by which all could be made to profit from the elimination of the waste of the competitive system in such a manner that the profit of each shall be proportional to the amount which each contributes, Socialism would be justified. The only point upon which there can be discussion is whether it is possible to suggest a workable plan under which the evils of competition can be eliminated, and the blessings of coöperation take their place. In other words, is coöperation a practical cure for competition? It is obviously impossible to decide whether a given treatment would constitute a cure for a given disease, without a thorough knowledge of the disease. It is therefore essential that we should be clear as regards the defects of the competitive system, and how far these defects are curable and how far incurable.

The beauty of the competitive system upon which the bourgeois loves to dwell is that it is automatic; whenever there is overproduction in an industry prices fall, profits disappear and therefore capital flows away from it; as soon as overproduction comes to an end prices rise, profits reappear and capital flows back to it. And the beauty of this automatic system is the more commended because it closely follows Nature; and indeed, the system of Nature is beautiful in the extreme. The sun draws the vapor of pure water from the salt ocean; lifts it high into the air, wafts it by propitious breezes to the continent; sheds it in beneficent rain upon the thirsty land, and deposits it in gigantic reservoirs of ice and snow upon our mountain heights; there is the supply upon which during hot summers we depend; and the hotter the summer, and the more therefore we need moisture, the more the snow and glaciers melt and furnish us with torrents of refreshing streams; so that at last the vapor that has been drawn by the sun from the ocean, in obedience to the inevitable law of gravitation, returns to it in a thousand rivers, after having performed its function of nutrition and refreshment on the way.

In the same fashion demand is ever beckoning labor and capital to seek new fields, tempting them from the low levels of low interest to high levels of high profit; and supply, increasing through their efforts, is forever bringing them back, like the force of gravitation, to the point whence they started; and the cycle is repeated over and over again, performing its mission of production and distribution on the way.

Unfortunately, Nature, though beneficial in the main, does not accomplish its work without distressing incidents. Breezes are not always propitious; they sometimes create disastrous havoc; torrents are sometimes more than refreshing, and summers unduly hot.

For example, the more abundant a crop is, the more prosperous the country which grows the crop ought to that extent to be; but it sometimes happens that, in such case, prices fall so low as to bring disaster to those who have grown it.[27]

Nature is not always to be depended on. Occasionally a crop entirely fails, and when this happens, as lately in India, millions are exposed to starvation and thousands actually starve.

Even when Nature is most bountiful the competitive system results in misfortune. For example, the President of the Boston Chamber of Commerce in a speech to the Chamber said in 1891:

"In 1890 we harvested a cotton crop of over eight million bales—several hundred thousand bales more than the world could consume. Had the crop of the present year been equally large, it would have been an appalling calamity to the section of our country that devotes so large a portion of its labor and capital to the raising of cotton."[28]

In 1905 the newspapers announced "the South is proposing to burn cotton so as to keep up its price."[29] And still more recently the same suggestion has been made regarding the tobacco crop in Kentucky.

Again, the competitive system under which every man goes into the business where he sees most profit, inevitably leads to periods of overproduction, and overproduction leads to unemployment and misery.

No political economist denies the obvious fact that whenever an industry is known to be profitable, capitalists are likely to engage in this industry—indeed, this is one of the automatic processes which the Manchester school has put forward as constituting the chief merit of the system. It is, of course, important for the community at large that prices should in no one industry become excessive; and obviously the disposition of capital to rush into industries where profits are high, does by competition tend to reduce prices, and thus prevent them from becoming excessive. But economists, especially those of the Manchester school, have not been willing to recognize that this disposition of capital to flow into productive enterprises may, though sometimes beneficial, be also sometimes ruinous; may, indeed, often result in a devastating deluge. These economists, therefore, it may be well to confront with a brief history of one or two of our largest combinations. Let us take as a first example the sugar trust.

Just before the organization of this trust, overproduction had become so excessive that of forty refiners in the United States eighteen became bankrupt. Of the twenty-two that remained, eighteen combined. Of the refineries belonging to these eighteen, eleven were closed, leaving seven to do profitably the work which had previously been done unprofitably by forty.

The history of the whisky trust shows overproduction to a still more aggravated degree. Before the organization of the Distilling and Cattle-Feeding Company, agreements were entered into by the majority of the distillers; under one of them they agreed to reduce production to forty per cent of what it at that time was; subsequently they agreed to reduce still further to twenty-eight per cent; and of eighty of the principal distillers who organized the Distilling and Cattle-Feeding Company, the establishments of sixty-eight were closed, leaving only twelve distilleries operating.

The same succession of events is found in the history of the American Steel and Wire Company, and indeed of practically all American trusts.

This inevitable tendency towards overproduction vitally concerns workingmen, for it is upon them that the evil consequences of this process first and most fatally fall. As soon as the process results in the inevitable reduction of prices to near cost, the manufacturer must either throw workmen out of employment or reduce wages. Wages constitute the only elastic element in cost, and it is therefore the workingman who first pays for the evil working of this system. And not only does the workingman pay for it, but the employer pays for it also; for workingmen, to protect their interests, strike, and only the wealthiest employers can stand the strain of a strike; the rest are ruined by it.

Even a reduction of the hours of work or the days of employment in the week will, if it lasts long enough, ruin the employer, for he has still to pay the fixed charges of the factory, and if prices get low enough, and he cannot sell his goods except at a ruinous loss, he ends by not having means to pay these charges; and this process is illustrated in the cases just mentioned; for example, eighteen out of forty sugar refiners became bankrupt; and it was not till the eighteen were ruined that a combination was possible amongst the rest.

One method employed by trusts to keep up prices at home is to sell their excess of goods in foreign markets at prices below cost.

Mr. Gary, President of the Federal Steel Company, testified before the Industrial Committee that steel had been recently shipped to Japan at a price below the domestic price.[30]

Mr. J.W. Lee, President of the three independent pipe-line organizations, testified that prior to 1895 "oil for export was sold below the cost of crude at the refinery."[31]

Again, at a time when the American trade was paying $28 for steel rails, the same steel rails were sold in Japan at $20.[32]

Obviously, the nations who are the victims of this process are not long going to tolerate it; but this is a relatively small part of the international complications produced by overproduction. The most serious consequence of overproduction is that manufacturers, when they can no longer get a remunerative price for their goods in the home markets, are inevitably driven to seek it elsewhere. They seek foreign markets, and failing foreign markets, they seek new markets by colonization or conquest.

It is impossible to read the history of the British Empire during the last 150 years without becoming persuaded that its so-called greed for conquest inevitably results from the necessity under which English manufacturers have been to secure markets for their increasing goods. Either British factories had to close, and British workmen to be thrown out of employment, or England must, by colonization or conquest, secure a price outside her own borders for the goods which competition perpetually tended to make her factories overproduce.

Indeed, the war through which England compelled China to purchase Indian opium looks like the greatest of international crimes; yet, when we understand this so-called crime of England, it turns out to have been a commercial necessity; for the remunerative prices obtained by the production of opium in India had so developed this branch of business that millions of Indians depended for their lives upon it, and either Chinese must poison themselves with opium, or Indians must die of hunger. The responsibilities of England were to her subjects first. The Chinese had to pay the price of this responsibility.

No better illustration of the wicked despotism that results from existing industrial conditions could be given than this; it brought about a condition of things under which England must commit a crime against China, or millions of her subjects must perish in Hindustan.

The millions that would starve in India if the opium market were suddenly closed remind us of the millions who are on the verge of starvation here in the United States,[33] and have been for two years past because of inherent and incurable defects in our industrial system. It is no answer to say that the evil results of overproduction are promptly remedied by the fluidity of capital to flow towards profitable and to withdraw from unprofitable manufactures. Every time such withdrawal takes place a corresponding number of workmen are thrown out of employment, are subjected to want and anguish of anxiety. The evil of this system cannot be explained away by pointing out that the capital withdrawn from one manufacture will soon be reinvested in another. A cotton-spinner cannot in a week or a month become a boilermaker. The commercial system which makes it easy for a capitalist to maintain income at cost of agony to the workingman does not recommend itself to the political student seeking the establishment of Justice in economic conditions. For, unfortunately, labor is not as "fluid" or insensible as capital. The workingman is a human being with the capacity for pain and anxiety that characterizes our race; and every time that capital profits by its fluidity to flow from one industry to another, the lives of men, women, and children are threatened by want. Even in prosperous times memories of the last panic and the certainty of a recurring panic keep their hearts haunted by fear.

Overproduction is by no means the only cause for these periods of unemployment. Indeed, the panic of 1907 was not the result of overproduction, but of overinvestment, or what the French call the "immobilization of capital." Every nation has two very different uses for wealth: one for keeping its population alive and comfortable, the other for developing the resources of the country, e.g., building roads and railroads, exploiting mines and quarries, etc. If too much wealth is immobilized in the latter, there is not enough for the former. The important function of regulating this matter is in the hands of bankers who make money not only out of the prosperity of prosperous times, but out of the panic of panic periods. Thus in May, 1907, the bankers, knowing that there had been overinvestment, took care of themselves by selling securities at top-notch prices, occasioning what was called the "rich man's panic," because the rich men of leisure were its victims; so that when the poor man's panic came in October and stocks tumbled to one-half of May prices, the bankers were able to reinvest the proceeds of May sales at fifty per cent profit. One of the consequences of this operation was that in October, 1907, neither manufacturers nor railroad men could get money to keep their work going; gangs of five thousand men at a time were summarily dismissed by railroads, and manufactures shut down.

Of course, the bankers did not "make the panic," as has been sometimes ignorantly asserted; they only made money out of it both ways—out of high prices in May and out of low prices in November. And this illustrates one of the great defects of the competitive system—that it puts different sets of men in a position where they can make individual profit out of the misfortunes of their neighbors; bankers out of panics; distillers and liquor dealers out of drunkenness; manufacturers and retailers out of adulteration, and so down the whole gamut of production and distribution; and this is the process which the bourgeois approves because it "makes character."

But the unemployment that is the necessary result of all periods of depression, whether produced by overproduction or overinvestment, deserves more than passing mention for its fruits in the shape of misery, pauperism, prostitution and crime, are menacing and prejudicial to the race.

§ 2. Unemployment

The subject of Unemployment has just been treated by an expert in a book[34] hailed by the press as the final word on the subject. All the theories ever propounded as to the cause of unemployment have been reviewed in this book, from overproduction, underconsumption, competition, to "spots on the sun." And the author concludes in favor of competition.[35] As regards the facts and the explanation of these facts, there seems to be no essential disagreement between orthodox economists and Socialists. Both trace unemployment back to competition. And in addition to the arguments given by Mr. Beveridge for tracing unemployment to competition, I venture to add that competition must be decided to be the primary cause, because it is itself the cause of the other so-called causes occasionally proposed—overproduction, underconsumption, underemployment, underpayment—in fact, all except "spots on the sun," which can, I think, except for purposes of hilarity be definitely abandoned.

But although we are agreed as to facts, we very much differ as to emphasis. Mr. Beveridge, and indeed all orthodox economists, pass lightly over the injustice, the immorality and the agony of unemployment. He refers to the "cyclical fluctuation" which gives rise to unemployment as a mere failure of adjustment between demand and supply. "No doubt," he says, "the adjustment takes time and may only[36] be accomplished with a certain amount of friction and loss." Now this "friction and loss," when expressed in money and wealth, seem to us socialists stupid because avoidable; but when expressed in human life and misery, they seem so intolerable that we are prepared if necessary to shatter to bits the whole system that underlies them, in order to "remould it nearer to the heart's desire." We are relieved then when we discover that by applying wisdom instead of temper to the solution of the problem, it is unnecessary to do any shattering, that we can remould it without violence, and that this is what Socialism proposes to do. Mr. Beveridge disposes of the Socialist solution in a sentence: "To abolish the competitive stimulus," he says, "is to abolish 'either the possibility of, or the principal factor in material progress.'"[37] But these few words beg the whole question: Need we abolish the competitive stimulus in the adoption of the Socialist cure? Can we not confine ourselves to eliminating the gambling element in it? Can we not diminish the stakes without abandoning them altogether? Can we not take our arsenic in tonic instead of in fatal doses? These questions belong to our constructive chapters at the end of the book. I shall take up here only a few other points about unemployment which orthodox economists do not sufficiently emphasize, in order that there may be no doubt as to the magnitude of this evil and as to the duty upon us to eliminate it if we can.

Few things irritate the bourgeois more than to speak of workingmen as "wage slaves." I have seen college professors lose their temper over this word so often that they have served to suggest that in using it we are, as children say, getting "warm." We are very near the Negro we are looking for in the woodpile. Unemployment will help us in our search.

Not only the slave, but the savage, has a great advantage over the workingman, in that the former is never unemployed and the latter need never be so unless he chooses. Unemployment then is the peculiar product of our civilization. It is only under this competitive system of ours that a strong, hearty, able-bodied man, not only willing, but burning to work, with plenty of work to be done and with plenty of food to be eaten, is refused both. Although there are vacant lots in the heart of our cities and deserted farms within a few miles of them, the unemployed and the women and children dependent on them are to starve because owing to the "failure of adjustment between supply and demand," no one for two years past has been able to make money by employing them. Why this is so will more fully appear in Book II, Chapter III. It is only necessary here to point out the forces that tend to make the wage slave not only more unfortunate, but more dangerous to the community than the African slave.

The slave owner has the same interest in the welfare of his slaves as the cowboy in his cattle. God knows this is not much, but it is sufficient to keep slaves and cattle in good condition if only for the purpose of getting work out of the one and high prices out of the other. The interest that a slave owner has in the health of his slaves is a continuing one; it lasts during the working years of his slave. The owner has paid a price or his slave has cost him a certain amount to raise. The interest of the owner, therefore, is to get the most work out of the slave during his working years. For this purpose he lengthens these working years to the utmost possible; and accordingly feeds and clothes his slave sufficiently and does not overwork him.

The interest of the factory owner is just the opposite. He has paid nothing out of his capital for what is called the "free labor" he employs; and because free labor exacts a high wage and short hours, it is to the interest of the factory owner to get the greatest work possible out of his employee, regardless whether his employee is overworked. It is to his interest, not only to use his employee, but to use him up; and to this end he speeds up his machinery to the utmost point in order to force his employees to do the greatest work possible during the hours of employment, and has recourse to pacemakers. He does this with perfect security, because he has an unlimited amount of young labor always at his disposal to replace employees prematurely worn out from overwork and the diseases that come from overwork. The factory owner does not adopt these methods out of hardness of heart, but out of the necessity of the market. If he pays a workingman high wages for short hours, he must get the greatest work out of him if he is to compete successfully with other factory owners in the same line of business. Even the most merciful factory owners have to overwork their employees in order to sell goods at prices fixed by the merciless market. This system results in manifold evils. It creates a class not only of unemployed, but of unemployables; men who cannot render efficient service because of disease and of the drunkenness to which overwork tends; for when a workingman feels his strength begin to wane he has recourse to stimulants to last his day out, and once the habit of stimulants is contracted, he loses his appetite for nourishing food and becomes thereby more and more confirmed in the use of intoxicants.

We have here, therefore, a perpetual and necessary production of unemployed and unemployable; the industrial town resembles a gigantic threshing machine which produces its regular quota of unemployed and unemployables as certainly as a threshing machine produces chaff.

This leads to another point to which I wish to attract special attention. Unemployment is generally regarded as a purely temporary evil. Indeed, the New York Times took me to task for speaking of it as a permanent evil.[38] The reason for this widespread error is that permanent unemployment is a thing to which we have grown accustomed. Charitable societies are familiar with it and know that it exists all the time; but it is only when unemployment adopts gigantic proportions so that the unemployed crowd our parks and streets and even indulge in public demonstrations, that the public becomes aware of it. And it is not only the regular operation of the industrial threshing machine that produces the unemployed and unemployables; it is the character of certain industries and occupations such as seasonal industries—for example, carpentering and casual occupations, such as stevedores and longshoremen. Mr. Beveridge gives a very graphic picture of the unemployment on the London docks:[39]

Most of us have heard of the great Dock Strike of 1889, and of the distinguished men who undertook to settle it. Efforts were made then to regulate work on the wharves, and while these efforts did improve the condition of the best of the men, as Mr. Beveridge says, "it is seldom realized how small a proportion of the total field of dock and wharf labor is really covered by the reform."[40]

He attributes the maintenance of evil conditions still prevailing on the docks to the "separation of the interests of wharfingers, shipowners, and contractors," to our old enemy—competition.

To appreciate the evil effects of casual or irregular employment, we have again but to quote Mr. Beveridge:

"The knowledge that any man, whatever his experience, however bad his antecedents, might get a job at the docks, attracted to their neighborhood a perpetual stream of blackguards, weaklings and failures from other every occupation. The experience, soon made, that regular attendance was not necessary to secure selection on days when work happened to be plentiful, and the daily alternations of hard exercise and idleness rapidly developed in those who came, if they had it not before, the greatest irregularity of habits, and physical or moral incapacity for continuous exertion. The low physique and half-starved condition of many of the laborers made their work dear at 4d. an hour."[41]

Here he falls in with the evil feature of the competitive system which has been described as gambling with nothing less for stakes than life, health and happiness: "Finally," concludes Mr. Beveridge, "the door is opened to abuse of patronage; convivial drinking and even direct bribery are not unknown as a means of securing employment."[42]

The form of bribery paid by employees when of the female sex is a still darker side of this dark subject.[43]

Another permanent cause of unemployment is underemployment and underpayment. In many occupations, such as coal mining, underemployment is averaged over a year so as to cause little unemployment but much distress; the high wages which the miners are able to stipulate for through their trade unions are reduced by diminishing the days of work in the year. In other occupations underemployment and underpayment reduce employees to a state of starvation, which of course swells the rank of the unemployables.

Having seen how the pressure of the market forces factory owners to overwork their employees and to dismiss all who are not able to earn the wages they receive; how casual employment creates and keeps alive a class of labor such as is described by Mr. Beveridge, and as must perpetually throw employees either upon charity or into the street; and having seen that this is a result of inherent and constant conditions of our industrial system, we are not surprised to find that statistics of unemployment indicate that it exists not only in periods of industrial depression, as is imagined by the New York Times and others, but is, on the contrary, a permanent feature. For example, the September Report of the New York Commissioner of Labor shows that the average percentage of unemployment during the prosperous period between 1902 and 1907, was 16.1 per cent. We shall see later when we endeavor to calculate the amount of our population affected by unemployment, that 16.1 per cent, being derived entirely from trade union reports, does not fully represent the whole, because it is generally admitted that unemployment prevails in much larger proportion in unorganized labor than in organized.[44] The last United States Census sets down the number of factory hands at over 7,000,000. Taking therefore the official figures as representing the minimum of constant unemployment, 16 per cent of 7,000,000 is 1,120,000, and as every factory hand has on an average four persons dependent upon him, this means a total population of 4,480,000, or roughly, four millions and a half permanently in want in the United States owing to this unemployment which orthodox economists recognize as a necessary result of the competitive system.

But the public takes no account of the fact that our industrial system regularly reduces a population of 4,500,000 to want. The public only takes account of the extraordinary unemployment which occasions disorder and riot in times of panic and industrial depression. Panics and industrial depressions must not be confounded. We have seen that industrial depressions are the inevitable result of what Mr. Beveridge calls "cyclical fluctuations" and recur with abominable regularity. Quite independent, however, of these regularly recurring industrial depressions due to the working of the competitive system, there are financial crises or panics due to similar perturbations in our money market. Although they differ in many respects from industrial depressions, nevertheless they have in common with them the inevitable result of producing unemployment on a large scale. The panic of 1907 began as a purely financial crisis, but promptly became a lengthy period of industrial depression. It is not necessary at this point to discuss the relation between these two. But it is important that mere scarcity of money in the panic of 1907 produced unemployment more suddenly and in larger proportions than any other panics that have preceded it.

Not only private enterprises such as railroads, but public bodies such as municipalities, being no longer able to borrow money, had not only to abandon work already voted, but to put a sudden stop to work already undertaken. Laborers were dismissed in batches of five thousand at a time, and every manufacturing and railroad plant was driven by the impossibility of borrowing money to cutting down expenses with a view to increasing the efficiency of the plant. Thus the Pennsylvania Railroad announced that it had so increased the efficiency of its plant that it was able to dismiss 30,000 men during the year; the New York Central during 1907 dismissed ten per cent of the staff upon its main line alone; seventy-six railroads, operating over 172,000 miles of railroad, report an economy of nearly $100,000,000, most of which constituted an economy in wages,[45] and Senator Guggenheim, in an interview published in the Wall Street Journal,[46] said:

"For the first time in many years the employer is getting from his men the 100 per cent in efficiency for which he pays. It is a safe assertion that prior to the panic the efficiency of labor was no higher than 75 per cent, perhaps not even that."

Special attention is directed to the foregoing because unemployment is ceasing to be a merely accidental and periodic phenomenon and is assuming not only larger, but more permanent proportions. In other words, the 30,000 men dismissed by the Pennsylvania Railroad were not dismissed because of a temporary cessation of traffic. They were dismissed because the Pennsylvania Railroad has succeeded in so raising the efficiency of their system that they can permanently run their lines with 30,000 less employees than they could before.

Let us endeavor to form some idea of the unemployment during the last two years. The only State that regularly publishes official reports on this subject is New York. The State of New York derives its information from such trade unions as report to it; and from these reports it seems that during 1908, the average unemployment has been about one-third.

As has been intimated, an average of one-third of organized labor reported by trade unions, means a very much larger proportion of unorganized labor. It is true that Mr. Beveridge disputes this in one passage,[47] but he himself furnishes the evidence of its truth in several others; as for example, where he says that "in practice, therefore, it is found that acute recurrent distress at times of seasonal depression is confined to the unskilled occupations";[48] and again, he points out how the lack of intelligence of unorganized and semi-skilled and unskilled workmen makes it impossible for them to take account of the fluctuations that produce unemployment. "The measure of their failure," he says, "is to be found in those periods of clamant distress which evoke Mansion House Relief Funds."[49]

In Chapter V, again, he points out the chronic distress of unskilled men and that unemployment is largely due to lack of organization. It stands to reason that whereas a factory owner thinks twice before dismissing a skilled workman he will not hesitate to dismiss an unskilled workman whom he can replace at any time.[50]

However much authorities may differ on this in Europe, there can be no question about it in America. It was impossible to read the daily papers in October, 1907, without being satisfied that the first men to suffer were the unorganized and unskilled. Hardly a day passed for weeks without papers announcing the discharge of workingmen in batches of thousands at a time. It was only later that factories shut down, and then for the most part, a day or so in the week. Unfortunately, because the unskilled workingman is unorganized, it is impossible to get any information regarding the extent of unemployment in their ranks; but it can be stated without fear of contradiction, that the percentage of unemployment is much larger in the ranks of the unorganized than in those of trade unions.

The one-third, therefore, as shown by the New York Labor reports, is below the mark, I will not undertake to say how much. In endeavoring to make an estimate as to the extent of unemployment throughout the entire Union, we must remember that the percentage of employment in New York is likely to be larger than in purely agricultural States. On the other hand, nowhere is the percentage of unemployment greater than in the States devoted to mining. The difficulty under which we find ourselves, therefore, in giving the exact figure of the extent of unemployment, makes it wise not to increase the one-third reported by trade unions in New York in consequence of the certainty that this proportion was far larger in unorganized labor; and on the other hand, not to decrease it out of the consideration that there were some States in which the percentage would not be as much as in the State of New York. Under these circumstances it may be assumed that the percentage reported by the trade unions to the Labor Department fairly represents the average unemployment throughout the whole United States of America. Taking the census figures of over 7,000,000 as that of the workingmen in the country, one-third of 7,000,000 is 2,333,333; add to this the number of persons dependent on these workingmen; four to each, 9,333,333; add this to the first figure and we get a population of 11,666,666 which for two years has been on the edge of starvation, and saved from it only through accumulated earnings, help from trade unions and charity. As the unskilled workingman can hardly ever save money owing to the low rate of his wages, and as he is not organized and never receives benefits from a union, it may be said that the large majority of these have been living for two years on the charity of their neighbors.

It is probable, too, that the trade union member has been reduced to depending upon charity; for the last report on savings banks shows that $25,000,000 have been withdrawn during the last year, and their presidents, when interviewed, recognized that this diminution was caused by the withdrawal of funds by the unemployed.

It was also due to the withdrawal of funds by the trade unions. In October, 1907, many trade unions had large sums accumulated which have been applied during the year to the support of the unemployed. The Union of Pressmen had $30,000 last October, all of which has gone to support the unemployed during the year, and this union has suffered comparatively little, only 20 per cent being now idle. This 20 per cent is supported by assessments on those who are at work.

As regards remedies for unemployment, Mr. Beveridge says that "no cure for industrial fluctuation can be hoped for; the aim must be palliation." And he dwells at great length upon the palliative measures to which Switzerland, Germany, Belgium and to a less extent, France, have recourse; employment bureaus, insurance against unemployment, and farm colonies, to which last he refers only incidentally, pointing out that Hollesley Bay had proved for the most part ineffectual.[51] These palliatives have, however, rendered comparatively small service. In Germany, where they have all been applied, unemployment during 1908 reached the rioting stage, at which it becomes dangerous and commands the attention of our economists, as in England. The palliative, to which Mr. Beveridge only incidentally refers, is, to my mind, calculated not only to diminish the evil immediately, but to serve as an important bridge over which the unemployed and unemployables may pass into the Promised Land. The farm colony, however, belongs to the constructive chapter at the end of the book.

Another necessary consequence of the competitive system is a form of unemployment which, because of its importance, deserves consideration by itself—Prostitution.

§ 3. Prostitution

Prostitution is not an easy or agreeable subject to treat; it will be disposed of, therefore, in the fewest words possible. The treatment of it will be summary, not because the subject is unimportant, but because it is abominable. And if it is true that Socialism would put an end to it, this alone, for those who can comprehend the horrors thereof, ought to justify Socialism whatever be the sacrifice necessary to the realization of it. If our present competitive system is responsible for the evil to both sexes that results from prostitution, then the maintenance of this system is, so far as every one of us by indifference tolerates it, nothing less than crime.

We must begin by making ourselves clear as to what prostitution is.

Mere promiscuity of sexual relation does not constitute prostitution, for many a woman is unfaithful to her husband many times without losing social consideration, provided only she conduct herself with sufficient discretion to avoid scandal.

Nor does intercourse for money constitute prostitution; for then prostitution would include all those who marry for money. The real definition of a prostitute is a woman who has intercourse both promiscuously and for a money reward, promiscuity and gain must be united.

Now it will later be made clear that in a Socialist state because every woman would be furnished an opportunity to work, none would be driven to prostitution.

Prostitution is generally the direct result of the disgrace put upon a woman by loss of virtue. She is turned out of her home and her legitimate employment. She has then but one recourse. It is sometimes due to lack of employment; sometimes to the greater facility prostitution affords for making a livelihood with the least labor. In all these cases the primum mobile is the making of a livelihood. As Socialism would remove this primum mobile, would assure a livelihood to every woman upon the single condition of her performing her allotted work—there would be no motive for prostitution. If she refused to perform her allotted task she would become a pauper—but a prostitute never; for a Socialist state, as will be later explained, would segregate paupers in farm colonies, where they would be compelled to support themselves, and would not leave them to demoralize their neighbors by profligacy and prostitution.

It may be objected that society keeps itself pure by casting out women of loose character, and that an innocent girl should not be called upon to work in a factory side by side with one who will deprave her if she can. An exhaustive answer to this would involve a study of the special conditions of each State, the laws of each State, the mental attitude of the people, their tolerance of immorality or their intolerance of it. It is a problem common to every society. This exhaustive study it is not the province of this book to undertake; the subject must be disposed of, therefore, by the following general considerations:

In the society of the wealthy to-day we are confronted by the same problem as would be presented in a coöperative commonwealth in which prostitution would be rendered impossible by state employment regardless of morality. In other words, wealth does for the wealthy class what Socialism would do for the unwealthy; it makes prostitution improbable if not impossible. And the wealthy manage to solve the problem of promiscuity—every wealthy society for itself in its own way.

In one country the woman who outrages morality is socially ostracized; in another she is tolerated; in one country divorces are not only lawful, but fashionable; in others the church forbids divorce but tolerates the complaisant husband. All these are problems of sex which Socialism does not undertake to solve. Later on the scientific and ethical aspects of Socialism will, I hope, lead to the conclusion that Socialism will so raise our ethical standards and habits of mind that sexual irregularities will tend to diminish. Prostitution, however, is not a sex, but an economic problem. A woman does not receive money payment except for economic reasons. If the economic pressure is removed she may be licentious, but she will not be a prostitute. Chastity ought to be a purely moral or social question, not an economic one. The competitive system makes it economic, and of all the crimes imputable to the competitive system, this is the greatest, for it directly perverts not only the human body, but the human soul. Of course, unemployment, in degenerating the body, ultimately degenerates the soul also, but the latter generation is more or less remote; the public conscience may be forgiven for not having discovered or taken account of it. But that we should see women daily compelled by hunger to sell soul as well as body and should then shut against them the door of our homes and our hearts, is a crime not only against them, but against ourselves. We are hardening our hearts as well as theirs. We are forcing our minds to that obliquity which sees in Socialism only "pornographic literature" and "pornographic propaganda" and charges the men who sacrifice their lives to the putting an end to the conditions that produce prostitution with "criminal nonsense" and "grave mental or moral shortcoming."[52]

This evil, like all evils that arise from the competitive system, is not incidental or occasional, but inherent and necessary. It cannot be better stated than by Miss Woodbridge, the secretary of the Working Women's Society, in a report made to the Society on May 6, 1890:

"It is a known fact that men's wages cannot fall below a limit upon which they can exist, but woman's wages have no limit, since the paths of shame are always open to her. The very fact that some of these women receive partial support from brothers or fathers and are thus enabled to live upon less than they earn, forces other women who have no such support either to suffer for necessities or seek other means of support."

The extent to which wages are reduced below starvation rates is also stated as follows:

"The wages, which are low, we find are often reduced by excessive fines, the employers placing a value upon time lost that is not given to service rendered. The salaries of saleswomen range from $2.00 to $18.00, but the latter sum is only paid in rare instances in cloak and suit departments. The average salary in the best houses does not exceed $7.00, and averages $4.00 or $4.50 per week. Cashiers receive from $6.00 to $15.00, averaging about $9.00. Cash girls receive from $1.50 to $2.50 per week, though we know of but one store where $2.50 is paid. In the Broadway stores boys are employed, usually on commission. The average salary of one large shop for saleswomen and cash girls is $2.40; another $2.90; another $3.10; but in the latter, the employees are nearly all men and boys. We find in many stores the rule to fine from five to thirty cents for a few minutes' tardiness. In one store all women who earn over $7.00 are fined thirty cents for ten minutes' tardiness. Cash girls who earn $1.75 per week are fined ten cents for ten minutes' tardiness."

It is hardly necessary to comment on a wage to saleswomen varying from $2.40 to $3.10 a week, and this liable to reduction by fines. It will be observed too that owners of department stores are compelled by the pressure of the market to seek this half-supported help. Miss Woodbridge says:

"In all the stores the tendency is to secure cheap help. You often see the advertisement reading thus: 'Young misses, just graduated, wanted for positions as saleswomen;' which means that being girls with homes they can afford to work cheaper than those who are self-supporting." The words "just graduated" constitute a direct appeal to the educated—that is to say, partially supported—women.

So a self-respecting young girl who desires to contribute to the expenses of the home, sets the rate of wages which drives her less fortunate sister to misery and crime, and thus becomes the unconscious instrument of her shame.

If anyone is not satisfied that the conditions above described must result, unsavory details of a kind to persuade him will be found in the report of Miss Maud E. Miner, probation officer of city magistrates' courts, published in the Survey.

Lastly, temptation would be indirectly as well as directly diminished by the absence of prostitutes as a class. It has been already intimated that prostitution committed injustice to both sexes. By this it was intended to refer to the injustice of exposing our young men to perpetual temptation furnished by the facilities for prostitution. The whole question of sexual morality is mainly one of suggestion. Take eight men accustomed to believe that they cannot dispense with sexual connection; put them in a crew and remove the suggestion that they can obtain relief at any time by substituting therefor the notion of loyalty to the crew or a desire to win a race, and the desire which before seemed uncontrollable practically disappears. The moment the race is over, the old suggestion returns, and the night of a boat race has become proverbial in consequence. The same is true of men who go on hunting expeditions, yachting cruises, into lumber camps, etc. Desire becomes dormant or controllable as soon as facilities for gratifying it disappear; the moment the facility returns, the suggestion is revived, and desire becomes uncontrollable.

What, then, would be the consequence if the suggestion were minimized by the absence of prostitution altogether?

But this is not all: Men who seduce young girls and married women have learned to gratify their passions through the facility afforded by prostitution. If our youths were never afforded the chance of taking that first step which leads to the facilis descensus, they would, from the fact of never having gratified their passions, be less likely to undertake to gratify them at the cost of seduction. The suggestion would be absent; all women would tend to be as sacred to a man as his sister. The relation of brother and sister is due entirely to the absence of suggestion; he has learned to regard her with an unconscious respect which removes the possibility of erotic suggestion. What actually happens in the small family of to-day could also happen in the larger family of to-morrow.

This must not be understood as a contention that Socialism would destroy immorality. Far from it. All that is claimed is that it might diminish immorality and that it would put an end to prostitution. This last is reason enough for it.

It is impossible to treat of the economic cause of prostitution without discussing its ethical consequences, because the consequences react upon the cause. But we are here chiefly concerned with its economic features; and it is impossible to put too much emphasis upon the fact that the greatest permanent blot upon our civilization is the necessary result of a competitive system that leaves a large part of our women no other means of livelihood.

Although we have carefully distinguished between the woman who sells herself to one man for a fortune and the common prostitute who sells herself to many men for a pittance, the first is often more to blame than the latter, because the latter is compelled by hunger while the former often barters her chastity out of sheer love of luxury. The whole heredity of man may be altered by the elimination through Socialism of the sordid motive for marriage. Avarice may become diminished by sexual selection. For although sexual selection is not to-day found to have the force in animal heredity that Darwin thought, it is an important factor in human heredity, thanks to the opportunity for deliberate selection furnished by our institution of marriage. But this belongs to another chapter.

From a purely economic point of view, prostitution is to be classed with unemployment, which burdens the community with the support of a class that in a coöperative commonwealth would be self-supporting. It seems hardly necessary to state that the dissipation that attends the life of a prostitute unfits her for work. And not content with being idle herself, she causes others to be idle and constitutes a permanent source of contagion, moral and physical, in our midst.

This is a necessary consequence of the competitive system.

§ 4. Strikes and Lockouts

Another necessary result of a system of production that sets the man who works with his hands against the man who works with his head, is the conflict between capital and labor, that expresses itself in strikes and lockouts. The conflict itself is treated in detail in the chapter entitled Trusts and Trade Unions. Here we shall confine ourselves to its wastefulness in time and money.

The sixteenth Annual Report of the United States Commissioner of Labor,[53] for 1901, estimates the loss to employees resulting from strikes and lockouts from January 1, 1881, to December 1, 1900—a period of twenty years—at $306,683,223, and the loss to employers during the same time at $142,659,104—together $449,342,327; or roughly—$450,000,000. It is interesting to note how much less is the loss to employers who are relatively able to bear it than to employees who are relatively unable to bear it. But without regard to the injustice of a system that bears so hardly upon the workingman, no practical American who desires to see production attended with the least waste and friction, can look upon such a loss as this without impatience and humiliation.

Quite irrespective of the misery that results from unemployment and the evils that attend it for the whole community—employed as well as unemployed—too much emphasis cannot be put upon the foolish waste of human energy that unemployment occasions. There have been for two years in this country over a million (and probably much more than a million) able-bodied men willing and anxious to assist in the production and distribution of the things we need, and who have not been permitted to do so—the energy of over a million, and probably a great many more, absolutely wasted.

I have been amazed at the indifference of our wealthy class, and even of the philanthropists amongst our wealthy class, at this condition of the unemployed until a clue to this indifference was furnished by the naïveté of a few of our captains of industry.

Here is what one of them, Daniel Guggenheim, president of the American Smelting and Refining Company, says to the Wall Street Journal, August 10:

"Every manufacturer in the country has lowered his costs of production, partly through cheaper prices for raw materials, but principally on account of the increased efficiency of labor. The latter is one of the redeeming features of the current depression.

"For the first time in many years the employer is getting from his men the 100 per cent in efficiency for which he pays. It is a safe assertion that prior to the panic the efficiency of labor was no higher than 75 per cent, perhaps not even that.

"Another thing—wherever a thousand men are needed, twelve hundred apply. The result is that the thousand best men are picked; the others, of necessity, must be turned away. But the thousand work more conscientiously, knowing that two hundred are waiting to take the places of the incompetents."

Here again we have one small class benefited by the misery of millions of unemployed, and willing to perpetuate this condition of unemployment in order to profit by it. Of all the waste that attends the competitive system this waste of human energy is the most unjust, and the most unjustifiable, unless it can be found that the pauperism it imposes on the millions and the heartlessness it promotes in the few, contribute, as the bourgeois tells us, "to make character!" But if the waste of human energy at the cost of human agony is a matter of indifference to business men, there is another form of waste which is likely to appeal to them. We Americans pride ourselves upon our business efficiency. In the next chapter we will consider the waste of money that attends the competitive system and how the ablest business men have set about eliminating it.

§ 5. Adulteration

It would seem as though the indifference of the public at large to such wicked and wasteful things as unemployment, strikes, lockouts and prostitution, were due to hardness of heart; but if we observe a similar indifference to adulteration which concerns every individual to the utmost, we have to recognize that tolerance of the evils of the competitive system is due not so much to hardness of heart as to stupidity. For since the dawn of our present civilization, adulteration has been a constant and abominable evil. As the Encyclopedia Americana puts it: "Adulteration is coexistent with trade;"[54] and as the Britannica puts it: "The practice of adulteration has become an art in which the knowledge of science and the ingenuity of trade are freely exercised."

Before industrialism had reached its present development the statutes enacted against adulteration were severe. They punished it with the pillory and tumbrel. The following are the words of the statute:

"If any default shall be found in the bread of a baker in the city, the first time, let him be drawn upon a hurdle from the Guildhall to his own house through the great street where there be most people assembled, and through the great streets which are most dirty, with the faulty loaf hanging from his neck; if a second time he shall be found committing the same offence, let him be drawn from the Guildhall through the great street of Cheepe, in the manner aforesaid, to the pillory, and let him be put upon the pillory, and remain there at least one hour in the day; and the third time that such default shall be found, he shall be drawn, and the oven shall be pulled down, and the baker made to forswear the trade in the city forever."[55]

As the Encyclopædia puts it: "All this has given way to the force of free trade." In other words, freedom of industry has been interpreted to mean freedom of adulteration, and the Act of 1872 accordingly punishes adulteration with "a sum not to exceed fifty pounds," and only provides imprisonment in case of a second offence.[56]

It is interesting to take up any standard encyclopædia and read the cold-blooded accounts of the various poisons introduced into our food and other commodities for the purpose of adulteration. The matter has been well treated by Mr. W.J. Ghent;[57] and in spite of the fact that he is a prominent Socialist his book may be read, because in every case he cites an authority, and his authorities are, for the most part, reports of State Commissions and Health Departments.

It is probable that no article enters more universally into consumption than milk, and of all the articles that we consume, it is most important that milk should be pure, because it is the food of infants and children. Yet in spite of all the laws passed for the prevention of adulteration of milk, "in New York city, during 1902, of 3970 samples of milk taken from dealers for analysis, 2095, or 52.77 per cent, were found to be adulterated. The arrests in the city under the inspection acts were 193 in 1899, 460 in 1900, 464 in 1901, and 722 in 1902."[58]

The experience in Ohio has been just the same as that of New York:

"The Dairy and Food Department of that State was created in 1886. After seventeen years of inspections, arrests and prosecutions, adulterations of milk still continue. 'Out of 1199 samples tested by the chemists,' says the report for the year ending November 15, 1903, 'about one-fourth were found to be either below the required standard in solids and butter fats, or adulterated with that base adulterant known as "formalin" or "formaldehyde."'"[59]

Mr. A.J. Wedderburn calculates that 15 per cent of all our products are adulterated; that is to say, $1,125,000,000 per annum.[60] And this figure does not include adulterations of wine, whisky, beer, tobacco, drugs or patent medicines.

Of eleven samples of coffee compounds analyzed by the Pennsylvania Department in 1897-1898, "six contained no coffee whatever, and none contained more than 25 per cent. The contents ranged from pea hulls (65 per cent in one instance) to bran and the husks of cocoa beans."[61]

The Ohio Report of 1898, in describing what is called "renovated butter," says as follows:

"These factories have agents in all the large markets who buy up the refuse from the commission men and retailers, taking stale, rancid, dirty and unsalable butter in various degrees of putrefaction; this refuse is put through a process of boiling, straining, filtering, and renovating, and is finally churned with fresh milk, giving it a more salable appearance. The effect is only temporary, however, as in a few days the stuff becomes rancid and the odor it gives off is something frightful. It is usually sold to people having a large trade who will dispose of it quickly, for if it is not consumed at once it cannot be used at all without being further renovated."[62]

After immense agitation we have had recent legislation of a character to render adulteration difficult; the Federal Food and Drug Act which went into effect January 1, 1907, since reënacted in thirty of our States, and I suppose that many of our fellow-citizens think that this Food and Drug Act is going to some extent to put an end to adulteration. But is the experience of the entire race during its entire history to be treated as of no importance in this connection? Have we not had laws of this kind before, punishing adulteration in every way—by the pillory and tumbrel as well as by fines and imprisonment—and has any of them had any permanent effect in putting an end to adulteration? How many more centuries are to elapse before we learn the lesson that, so long as you give to one set of men an irresistible motive for adulteration, no laws—no penalties, light or severe, will materially check that impulse. If they are severe the courts will not enforce them; if they are light the trade will disregard them.

It is true that the adulteration of the things we eat and drink is more important than the adulteration of things we wear. Nevertheless it is a matter of no small importance that there is hardly a thing that we do wear that is not adulterated in an astonishing degree. An interesting paper on this subject was read before the Lake Placid Conference on Home Economics, 1908.[63] The art of adulterating textiles seems to be taught in our textile schools: "As a student in a textile school said to a visitor: 'Our teacher is so clever, he can spin wool and cotton together so they can never be detected;'" and adulteration appears to be practically authorized under our New York State law of 1900, which provides that "collars marked 'linen,' 'all linen,' and 'pure linen,' must contain at least one thickness or ply of pure linen." It is a common saying that, although the total supply of wool in the world is only sufficient to meet one-third of the demand, there is always wool to be had.

Of course, one principal reason why adulteration prevails is that it is impossible for the ordinary consumer to detect it. For example, in order to analyze stockings they must be destroyed. No consumer is possessed of the technical schooling necessary to distinguish all-wool or all-silk goods. Indeed it is stated by high authority that such a thing as all-silk and all-wool is not to be purchased in the market, though we continually buy articles declared to be all-wool or all-silk.

I do not know whether the advocates of the present industrial condition, on the ground that it "makes character," would go so far as to approve of adulteration for this reason. It must be admitted, however, that virtually everybody engaged in manufacture, production, and distribution is a partner in the deliberate adulteration of things for the purpose of cheating the public. This has been coexistent with trade and has become recognized as one of our modern arts. The extent to which adulteration is organized can be judged by the fact that "no less than 40,000,000 pounds of fiber made from old rags, called 'shoddy,' are annually made in Yorkshire, at an estimated value of £8,000,000 sterling, and that all is used for adulterating woolen cloth."[64]

FOOTNOTES: