Chapter 22
We had made an appointment to meet the ladies at the dining-hall fordinner, after which, having some engagement, they left us sitting attable there, discussing our wine and cigars with a multitude of othermatters.
"Doctor," said I, in the course of our talk, "morally speaking, yoursocial system is one which I should be insensate not to admire incomparison with any previously in vogue in the world, and especiallywith that of my own most unhappy century. If I were to fall into amesmeric sleep tonight as lasting as that other and meanwhile thecourse of time were to take a turn backward instead of forward, and Iwere to wake up again in the nineteenth century, when I had told myfriends what I had seen, they would every one admit that your world wasa paradise of order, equity, and felicity. But they were a verypractical people, my contemporaries, and after expressing theiradmiration for the moral beauty and material splendor of the system,they would presently begin to cipher and ask how you got the money tomake everybody so happy; for certainly, to support the whole nation ata rate of comfort, and even luxury, such as I see around me, mustinvolve vastly greater wealth than the nation produced in my day. Now,while I could explain to them pretty nearly everything else of the mainfeatures of your system, I should quite fail to answer this question,and failing there, they would tell me, for they were very closecipherers, that I had been dreaming; nor would they ever believeanything else. In my day, I know that the total annual product of thenation, although it might have been divided with absolute equality,would not have come to more than three or four hundred dollars perhead, not very much more than enough to supply the necessities of lifewith few or any of its comforts. How is it that you have so much more?"
"That is a very pertinent question, Mr. West," replied Dr. Leete, "andI should not blame your friends, in the case you supposed, if theydeclared your story all moonshine, failing a satisfactory reply to it.It is a question which I cannot answer exhaustively at any one sitting,and as for the exact statistics to bear out my general statements, Ishall have to refer you for them to books in my library, but it wouldcertainly be a pity to leave you to be put to confusion by your oldacquaintances, in case of the contingency you speak of, for lack of afew suggestions.
"Let us begin with a number of small items wherein we economize wealthas compared with you. We have no national, state, county, or municipaldebts, or payments on their account. We have no sort of military ornaval expenditures for men or materials, no army, navy, or militia. Wehave no revenue service, no swarm of tax assessors and collectors. Asregards our judiciary, police, sheriffs, and jailers, the force whichMassachusetts alone kept on foot in your day far more than suffices forthe nation now. We have no criminal class preying upon the wealth ofsociety as you had. The number of persons, more or less absolutely lostto the working force through physical disability, of the lame, sick,and debilitated, which constituted such a burden on the able-bodied inyour day, now that all live under conditions of health and comfort, hasshrunk to scarcely perceptible proportions, and with every generationis becoming more completely eliminated.
"Another item wherein we save is the disuse of money and the thousandoccupations connected with financial operations of all sorts, wherebyan army of men was formerly taken away from useful employments. Alsoconsider that the waste of the very rich in your day on inordinatepersonal luxury has ceased, though, indeed, this item might easily beover-estimated. Again, consider that there are no idlers now, rich orpoor--no drones.
"A very important cause of former poverty was the vast waste of laborand materials which resulted from domestic washing and cooking, and theperforming separately of innumerable other tasks to which we apply thecooperative plan.
"A larger economy than any of these--yes, of all together--is effectedby the organization of our distributing system, by which the work doneonce by the merchants, traders, storekeepers, with their various gradesof jobbers, wholesalers, retailers, agents, commercial travelers, andmiddlemen of all sorts, with an excessive waste of energy in needlesstransportation and interminable handlings, is performed by one tenththe number of hands and an unnecessary turn of not one wheel. Somethingof what our distributing system is like you know. Our statisticianscalculate that one eightieth part of our workers suffices for all theprocesses of distribution which in your day required one eighth of thepopulation, so much being withdrawn from the force engaged inproductive labor."
"I begin to see," I said, "where you get your greater wealth."
"I beg your pardon," replied Dr. Leete, "but you scarcely do as yet.The economies I have mentioned thus far, in the aggregate, consideringthe labor they would save directly and indirectly through saving ofmaterial, might possibly be equivalent to the addition to your annualproduction of wealth of one half its former total. These items are,however, scarcely worth mentioning in comparison with other prodigiouswastes, now saved, which resulted inevitably from leaving theindustries of the nation to private enterprise. However great theeconomies your contemporaries might have devised in the consumption ofproducts, and however marvelous the progress of mechanical invention,they could never have raised themselves out of the slough of poverty solong as they held to that system.
"No mode more wasteful for utilizing human energy could be devised, andfor the credit of the human intellect it should be remembered that thesystem never was devised, but was merely a survival from the rude ageswhen the lack of social organization made any sort of cooperationimpossible."
"I will readily admit," I said, "that our industrial system wasethically very bad, but as a mere wealth-making machine, apart frommoral aspects, it seemed to us admirable."
"As I said," responded the doctor, "the subject is too large to discussat length now, but if you are really interested to know the maincriticisms which we moderns make on your industrial system as comparedwith our own, I can touch briefly on some of them.
"The wastes which resulted from leaving the conduct of industry toirresponsible individuals, wholly without mutual understanding orconcert, were mainly four: first, the waste by mistaken undertakings;second, the waste from the competition and mutual hostility of thoseengaged in industry; third, the waste by periodical gluts and crises,with the consequent interruptions of industry; fourth, the waste fromidle capital and labor, at all times. Any one of these four greatleaks, were all the others stopped, would suffice to make thedifference between wealth and poverty on the part of a nation.
"Take the waste by mistaken undertakings, to begin with. In your daythe production and distribution of commodities being without concert ororganization, there was no means of knowing just what demand there wasfor any class of products, or what was the rate of supply. Therefore,any enterprise by a private capitalist was always a doubtfulexperiment. The projector having no general view of the field ofindustry and consumption, such as our government has, could never besure either what the people wanted, or what arrangements othercapitalists were making to supply them. In view of this, we are notsurprised to learn that the chances were considered several to one infavor of the failure of any given business enterprise, and that it wascommon for persons who at last succeeded in making a hit to have failedrepeatedly. If a shoemaker, for every pair of shoes he succeeded incompleting, spoiled the leather of four or five pair, besides losingthe time spent on them, he would stand about the same chance of gettingrich as your contemporaries did with their system of privateenterprise, and its average of four or five failures to one success.
"The next of the great wastes was that from competition. The field ofindustry was a battlefield as wide as the world, in which the workerswasted, in assailing one another, energies which, if expended inconcerted effort, as to-day, would have enriched all. As for mercy orquarter in this warfare, there was absolutely no suggestion of it. Todeliberately enter a field of business and destroy the enterprises ofthose who had occupied it previously, in order to plant one's ownenterprise on their ruins, was an achievement which never failed tocommand popular admiration. Nor is there any stretch of fancy incompari
ng this sort of struggle with actual warfare, so far as concernsthe mental agony and physical suffering which attended the struggle,and the misery which overwhelmed the defeated and those dependent onthem. Now nothing about your age is, at first sight, more astounding toa man of modern times than the fact that men engaged in the sameindustry, instead of fraternizing as comrades and co-laborers to acommon end, should have regarded each other as rivals and enemies to bethrottled and overthrown. This certainly seems like sheer madness, ascene from bedlam. But more closely regarded, it is seen to be no suchthing. Your contemporaries, with their mutual throat-cutting, knew verywell what they were at. The producers of the nineteenth century werenot, like ours, working together for the maintenance of the community,but each solely for his own maintenance at the expense of thecommunity. If, in working to this end, he at the same time increasedthe aggregate wealth, that was merely incidental. It was just asfeasible and as common to increase one's private hoard by practicesinjurious to the general welfare. One's worst enemies were necessarilythose of his own trade, for, under your plan of making private profitthe motive of production, a scarcity of the article he produced waswhat each particular producer desired. It was for his interest that nomore of it should be produced than he himself could produce. To securethis consummation as far as circumstances permitted, by killing off anddiscouraging those engaged in his line of industry, was his constanteffort. When he had killed off all he could, his policy was to combinewith those he could not kill, and convert their mutual warfare into awarfare upon the public at large by cornering the market, as I believeyou used to call it, and putting up prices to the highest point peoplewould stand before going without the goods. The day dream of thenineteenth century producer was to gain absolute control of the supplyof some necessity of life, so that he might keep the public at theverge of starvation, and always command famine prices for what hesupplied. This, Mr. West, is what was called in the nineteenth centurya system of production. I will leave it to you if it does not seem, insome of its aspects, a great deal more like a system for preventingproduction. Some time when we have plenty of leisure I am going to askyou to sit down with me and try to make me comprehend, as I never yetcould, though I have studied the matter a great deal how such shrewdfellows as your contemporaries appear to have been in many respectsever came to entrust the business of providing for the community to aclass whose interest it was to starve it. I assure you that the wonderwith us is, not that the world did not get rich under such a system,but that it did not perish outright from want. This wonder increases aswe go on to consider some of the other prodigious wastes thatcharacterized it.
"Apart from the waste of labor and capital by misdirected industry, andthat from the constant bloodletting of your industrial warfare, yoursystem was liable to periodical convulsions, overwhelming alike thewise and unwise, the successful cut-throat as well as his victim. Irefer to the business crises at intervals of five to ten years, whichwrecked the industries of the nation, prostrating all weak enterprisesand crippling the strongest, and were followed by long periods, oftenof many years, of so-called dull times, during which the capitalistsslowly regathered their dissipated strength while the laboring classesstarved and rioted. Then would ensue another brief season ofprosperity, followed in turn by another crisis and the ensuing years ofexhaustion. As commerce developed, making the nations mutuallydependent, these crises became world-wide, while the obstinacy of theensuing state of collapse increased with the area affected by theconvulsions, and the consequent lack of rallying centres. In proportionas the industries of the world multiplied and became complex, and thevolume of capital involved was increased, these business cataclysmsbecame more frequent, till, in the latter part of the nineteenthcentury, there were two years of bad times to one of good, and thesystem of industry, never before so extended or so imposing, seemed indanger of collapsing by its own weight. After endless discussions, youreconomists appear by that time to have settled down to the despairingconclusion that there was no more possibility of preventing orcontrolling these crises than if they had been drouths or hurricanes.It only remained to endure them as necessary evils, and when they hadpassed over to build up again the shattered structure of industry, asdwellers in an earthquake country keep on rebuilding their cities onthe same site.
"So far as considering the causes of the trouble inherent in theirindustrial system, your contemporaries were certainly correct. Theywere in its very basis, and must needs become more and more maleficentas the business fabric grew in size and complexity. One of these causeswas the lack of any common control of the different industries, and theconsequent impossibility of their orderly and coordinate development.It inevitably resulted from this lack that they were continuallygetting out of step with one another and out of relation with thedemand.
"Of the latter there was no criterion such as organized distributiongives us, and the first notice that it had been exceeded in any groupof industries was a crash of prices, bankruptcy of producers, stoppageof production, reduction of wages, or discharge of workmen. Thisprocess was constantly going on in many industries, even in what werecalled good times, but a crisis took place only when the industriesaffected were extensive. The markets then were glutted with goods, ofwhich nobody wanted beyond a sufficiency at any price. The wages andprofits of those making the glutted classes of goods being reduced orwholly stopped, their purchasing power as consumers of other classes ofgoods, of which there were no natural glut, was taken away, and, as aconsequence, goods of which there was no natural glut becameartificially glutted, till their prices also were broken down, andtheir makers thrown out of work and deprived of income. The crisis wasby this time fairly under way, and nothing could check it till anation's ransom had been wasted.
"A cause, also inherent in your system, which often produced and alwaysterribly aggravated crises, was the machinery of money and credit.Money was essential when production was in many private hands, andbuying and selling was necessary to secure what one wanted. It was,however, open to the obvious objection of substituting for food,clothing, and other things a merely conventional representative ofthem. The confusion of mind which this favored, between goods and theirrepresentative, led the way to the credit system and its prodigiousillusions. Already accustomed to accept money for commodities, thepeople next accepted promises for money, and ceased to look at allbehind the representative for the thing represented. Money was a signof real commodities, but credit was but the sign of a sign. There was anatural limit to gold and silver, that is, money proper, but none tocredit, and the result was that the volume of credit, that is, thepromises of money, ceased to bear any ascertainable proportion to themoney, still less to the commodities, actually in existence. Under sucha system, frequent and periodical crises were necessitated by a law asabsolute as that which brings to the ground a structure overhanging itscentre of gravity. It was one of your fictions that the government andthe banks authorized by it alone issued money; but everybody who gave adollar's credit issued money to that extent, which was as good as anyto swell the circulation till the next crises. The great extension ofthe credit system was a characteristic of the latter part of thenineteenth century, and accounts largely for the almost incessantbusiness crises which marked that period. Perilous as credit was, youcould not dispense with its use, for, lacking any national or otherpublic organization of the capital of the country, it was the onlymeans you had for concentrating and directing it upon industrialenterprises. It was in this way a most potent means for exaggeratingthe chief peril of the private enterprise system of industry byenabling particular industries to absorb disproportionate amounts ofthe disposable capital of the country, and thus prepare disaster.Business enterprises were always vastly in debt for advances of credit,both to one another and to the banks and capitalists, and the promptwithdrawal of this credit at the first sign of a crisis was generallythe precipitating cause of it.
"It was the misfortune of your contemporaries that they had to cementtheir business fabric with a material which an
accident might at anymoment turn into an explosive. They were in the plight of a manbuilding a house with dynamite for mortar, for credit can be comparedwith nothing else.
"If you would see how needless were these convulsions of business whichI have been speaking of, and how entirely they resulted from leavingindustry to private and unorganized management, just consider theworking of our system. Overproduction in special lines, which was thegreat hobgoblin of your day, is impossible now, for by the connectionbetween distribution and production supply is geared to demand like anengine to the governor which regulates its speed. Even suppose by anerror of judgment an excessive production of some commodity. Theconsequent slackening or cessation of production in that line throwsnobody out of employment. The suspended workers are at once foundoccupation in some other department of the vast workshop and lose onlythe time spent in changing, while, as for the glut, the business of thenation is large enough to carry any amount of product manufactured inexcess of demand till the latter overtakes it. In such a case ofover-production, as I have supposed, there is not with us, as with you,any complex machinery to get out of order and magnify a thousand timesthe original mistake. Of course, having not even money, we still lesshave credit. All estimates deal directly with the real things, theflour, iron, wood, wool, and labor, of which money and credit were foryou the very misleading representatives. In our calculation of costthere can be no mistakes. Out of the annual product the amountnecessary for the support of the people is taken, and the requisitelabor to produce the next year's consumption provided for. The residueof the material and labor represents what can be safely expended inimprovements. If the crops are bad, the surplus for that year is lessthan usual, that is all. Except for slight occasional effects of suchnatural causes, there are no fluctuations of business; the materialprosperity of the nation flows on uninterruptedly from generation togeneration, like an ever broadening and deepening river.
"Your business crises, Mr. West," continued the doctor, "like either ofthe great wastes I mentioned before, were enough, alone, to have keptyour noses to the grindstone forever; but I have still to speak of oneother great cause of your poverty, and that was the idleness of a greatpart of your capital and labor. With us it is the business of theadministration to keep in constant employment every ounce of availablecapital and labor in the country. In your day there was no generalcontrol of either capital or labor, and a large part of both failed tofind employment. 'Capital,' you used to say, 'is naturally timid,' andit would certainly have been reckless if it had not been timid in anepoch when there was a large preponderance of probability that anyparticular business venture would end in failure. There was no timewhen, if security could have been guaranteed it, the amount of capitaldevoted to productive industry could not have been greatly increased.The proportion of it so employed underwent constant extraordinaryfluctuations, according to the greater or less feeling of uncertaintyas to the stability of the industrial situation, so that the output ofthe national industries greatly varied in different years. But for thesame reason that the amount of capital employed at times of specialinsecurity was far less than at times of somewhat greater security, avery large proportion was never employed at all, because the hazard ofbusiness was always very great in the best of times.
"It should be also noted that the great amount of capital alwaysseeking employment where tolerable safety could be insured terriblyembittered the competition between capitalists when a promising openingpresented itself. The idleness of capital, the result of its timidity,of course meant the idleness of labor in corresponding degree.Moreover, every change in the adjustments of business, every slightestalteration in the condition of commerce or manufactures, not to speakof the innumerable business failures that took place yearly, even inthe best of times, were constantly throwing a multitude of men out ofemployment for periods of weeks or months, or even years. A greatnumber of these seekers after employment were constantly traversing thecountry, becoming in time professional vagabonds, then criminals. 'Giveus work!' was the cry of an army of the unemployed at nearly allseasons, and in seasons of dullness in business this army swelled to ahost so vast and desperate as to threaten the stability of thegovernment. Could there conceivably be a more conclusive demonstrationof the imbecility of the system of private enterprise as a method forenriching a nation than the fact that, in an age of such generalpoverty and want of everything, capitalists had to throttle one anotherto find a safe chance to invest their capital and workmen rioted andburned because they could find no work to do?
"Now, Mr. West," continued Dr. Leete, "I want you to bear in mind thatthese points of which I have been speaking indicate only negatively theadvantages of the national organization of industry by showing certainfatal defects and prodigious imbecilities of the systems of privateenterprise which are not found in it. These alone, you must admit,would pretty well explain why the nation is so much richer than in yourday. But the larger half of our advantage over you, the positive sideof it, I have yet barely spoken of. Supposing the system of privateenterprise in industry were without any of the great leaks I havementioned; that there were no waste on account of misdirected effortgrowing out of mistakes as to the demand, and inability to command ageneral view of the industrial field. Suppose, also, there were noneutralizing and duplicating of effort from competition. Suppose, also,there were no waste from business panics and crises through bankruptcyand long interruptions of industry, and also none from the idleness ofcapital and labor. Supposing these evils, which are essential to theconduct of industry by capital in private hands, could all bemiraculously prevented, and the system yet retained; even then thesuperiority of the results attained by the modern industrial system ofnational control would remain overwhelming.
"You used to have some pretty large textile manufacturingestablishments, even in your day, although not comparable with ours. Nodoubt you have visited these great mills in your time, covering acresof ground, employing thousands of hands, and combining under one roof,under one control, the hundred distinct processes between, say, thecotton bale and the bale of glossy calicoes. You have admired the vasteconomy of labor as of mechanical force resulting from the perfectinterworking with the rest of every wheel and every hand. No doubt youhave reflected how much less the same force of workers employed in thatfactory would accomplish if they were scattered, each man workingindependently. Would you think it an exaggeration to say that theutmost product of those workers, working thus apart, however amicabletheir relations might be, was increased not merely by a percentage, butmany fold, when their efforts were organized under one control? Wellnow, Mr. West, the organization of the industry of the nation under asingle control, so that all its processes interlock, has multiplied thetotal product over the utmost that could be done under the formersystem, even leaving out of account the four great wastes mentioned, inthe same proportion that the product of those millworkers was increasedby cooperation. The effectiveness of the working force of a nation,under the myriad-headed leadership of private capital, even if theleaders were not mutual enemies, as compared with that which it attainsunder a single head, may be likened to the military efficiency of amob, or a horde of barbarians with a thousand petty chiefs, as comparedwith that of a disciplined army under one general--such a fightingmachine, for example, as the German army in the time of Von Moltke."
"After what you have told me," I said, "I do not so much wonder thatthe nation is richer now than then, but that you are not all Croesuses."
"Well," replied Dr. Leete, "we are pretty well off. The rate at whichwe live is as luxurious as we could wish. The rivalry of ostentation,which in your day led to extravagance in no way conducive to comfort,finds no place, of course, in a society of people absolutely equal inresources, and our ambition stops at the surroundings which minister tothe enjoyment of life. We might, indeed, have much larger incomes,individually, if we chose so to use the surplus of our product, but weprefer to expend it upon public works and pleasures in which all share,upon public halls and buildings,
art galleries, bridges, statuary,means of transit, and the conveniences of our cities, great musical andtheatrical exhibitions, and in providing on a vast scale for therecreations of the people. You have not begun to see how we live yet,Mr. West. At home we have comfort, but the splendor of our life is, onits social side, that which we share with our fellows. When you knowmore of it you will see where the money goes, as you used to say, and Ithink you will agree that we do well so to expend it."
"I suppose," observed Dr. Leete, as we strolled homeward from thedining hall, "that no reflection would have cut the men of yourwealth-worshiping century more keenly than the suggestion that they didnot know how to make money. Nevertheless that is just the verdicthistory has passed on them. Their system of unorganized andantagonistic industries was as absurd economically as it was morallyabominable. Selfishness was their only science, and in industrialproduction selfishness is suicide. Competition, which is the instinctof selfishness, is another word for dissipation of energy, whilecombination is the secret of efficient production; and not till theidea of increasing the individual hoard gives place to the idea ofincreasing the common stock can industrial combination be realized, andthe acquisition of wealth really begin. Even if the principle of shareand share alike for all men were not the only humane and rational basisfor a society, we should still enforce it as economically expedient,seeing that until the disintegrating influence of self-seeking issuppressed no true concert of industry is possible."
Looking Backward, 2000 to 1887 Page 22