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Popular Science Monthly/Volume 84/February 1914/The Struggle for Equality in the United States III

THE STRUGGLE FOR EQUALITY IN THE UNITED STATES.
III
By Professor CHARLES F. EMERICK

SMITH COLLEGE

Politics and Business

A common objection to political agitation is that it disturbs business, and either diminishes or renders uncertain the incomes of the laboring and property-owning classes. As an argument against agitation that is purely destructive, this objection is undoubtedly sound. To unsettle business without the prospect or possibility of sooner or later bettering working and living conditions is to render the existing situation worse and is therefore unjustifiable. But as an argument against agitation that is constructive the objection is footless. To urge people to submit tamely to things as they are is to argue that existing conditions are either as they ought to be or that they are incapable of being righted. Neither of these positions can be accepted. Moreover, to inculcate a fatalistic spirit would in the long run be bad for business itself. For the element in human nature that protests against injustice and contrives ways and means to overcome it is closely allied to the element that discovers defects in and improves the technique of industry. The fact that our age is not only highly inventive but also much given to social amelioration is more than a mere coincidence. Whatever lessens the latter is apt to deaden the former.

 
I

A favorite argument in certain quarters is that if the business world were let alone it would reform itself without suffering the disadvantages which political agitation entails. This position is untenable. In the first place, the business world can not if it would leave politics alone. Business enterprise dependent upon franchises and corporate privileges inevitably drifts into politics. Wherever matters of public as well as of private concern are involved, the state is necessarily a party to the transaction. This is notorious in the case of the liquor traffic. So long as business men embark in enterprises dependent upon a protective tariff, they can not well complain if they become the victims of political agitation. Those whose interests are opposed to protection quite as much as those who profit by it are entitled to a hearing. Many of the questions which arise in connection with money, banking, railways, trusts and the relations between capital and labor can only be settled by political action. In foreign relations the state is the handmaid of business. Business and politics simply can not be divorced.

In the second place, the diversity of opinion in the business world itself is mainly responsible for the prolonged controversies that unsettle business. In our political contests, the business interests are not a unit. They are not agreed about reforming the currency or revising the tariff. In regard to the trusts, the small capitalists are opposed to the large. In the controversy over railway rates, many farmers, manufacturers and shippers have been arrayed against the railways. At times the railways have entered politics to prevent the large shippers from securing rebates by playing off one road against another. The agitation which led to the enactment of the Elkins law in 1903 is a notable instance. There is no such solidarity of interests among business men as the socialist doctrine of the class struggle would lead one to expect. Our industrial leaders compete scarcely less in the political than in the industrial field. Some of them enter politics to obtain favors for themselves, while others are compelled to enter for self-protection. The railway interest has occasionally been on the offensive and then again on the defensive in our politics. Business men are less in the political limelight than lawyers, but they are more frequently the moving power behind the scenes. There are no more persistent political strategists than many members of the business community. Without their support, many a professional politician would find himself out of a job, and the political agitation that unsettles business would have a very short life.

In the third place, more important than reforming business is the problem of keeping it on a high level, much as the preservation of health transcends the curing of disease, and what preventive medicine is to the public health "pitiless publicity" is to the level of business morals. It is only in a political atmosphere that is potentially critical that those in charge of large business can be expected to be on their good behavior. If every would-be agitator were put under lock and key, the tone of business life would undoubtedly sink to a lower plane.

Fourthly, the fact that business, if let alone, will reform itself is no argument against the use of means that promise to hasten the process, any more than the fact that a patient will in time get well proves that there is no use in calling in a medical practitioner. The doctrine of laissez faire has long since been discredited.

Fifthly, the disturbing effect upon business of political agitation that is necessary should be sharply distinguished from that which is unnecessary, and due account taken of the fact that the self-seeking demagogue is by no means wholly to blame for the latter. The obstinate shortsightedness of not a few men prominent in the business world is also responsible. In place of cooperating with well-meaning politicians in devising appropriate remedies for manifest ills, a studied attempt is frequently made to arouse opposition by creating a state of alarm. To this end the mildest kind of proposals are misrepresented by a subsidized press, the most sinister motives imputed to their advocates, and the possible ills that may ensue grossly exaggerated. The consequence is that much-needed reforms are sometimes delayed and the temper of the public tried until the foundation of the business order is undermined. It is not far from the truth to assert that certain opponents of the "Roosevelt policies" unwittingly contributed more to bring about the panic of 1907 than did the utterances of Mr. Roosevelt himself. The movement for railway control has made headway in the face of the most pigheaded opposition. A good deal of the time of the conservative reformer is taken up with denying allegations which he has no thought of entertaining. Mr. Lincoln, in the course of one of his debates with Douglas, said:

I protest, now and forever, against that counterfeit logic which presumes that because I did not want a negro woman for a slave, I do necessarily want her for a wife, is[1]

The foresight with which men of affairs are commonly credited often fails them when it comes to dealing with public opinion. This appeared in the tactless manner in which the coal operators treated the public during the anthracite strike. According to The Commercial and Financial Chronicle, the New Haven management in the acquisition of trolley lines in no wise strengthened the system, but laid itself open to the charge of trying to establish a transportation monopoly.[2] The fact that the business magnate frequently turns out to be a poor strategist in his relations with the public is no occasion for surprise. Intent on furthering the particular interests with which he is entrusted, he is apt to lose sight of the public interest and to do things which end in bringing down upon him a storm of popular disapproval. Positions of command tend to beget an undue sense of power and a supercilious attitude in one's relations with his fellows. The masterful spirit is often overbearing. The head of a large railway, industrial combination or public service corporation in a large city should be enough of a statesman to understand what the public wants as well as what is good for the general welfare, and in a democracy the man who feels that he belongs to a superior class is unable to understand his fellow men and is incapacitated for this service.

Sixthly, political agitation that is sane and efficient makes for business stability, or at least any ill effects are temporary and are far outweighed by the good effects that abide. It is easy enough to understand why bankers and others who deal with such a sensitive thing as credit view anything that unsettles business with alarm, but there is less excuse for failure to see that the cause of unsettled business is not the agitation which issues out of grievances but the grievances themselves. Reform that is genuine and real is the foundation of enduring prosperity. So averse is an influential portion of the business world to change, that this point is frequently overlooked or but partially recognized.

Amicable relations between the railways and the shippers could not exist so long as unreasonable discriminations were practised by the former. In granting franchises, the public can not be expected to acquiesce unless its interests are properly safeguarded. The passage of the Allen bill by the Illinois legislature constituted a challenge to good citizenship, and there could be no peace until the objectionable bill was repealed. The painful working out of the franchise question in Chicago and Cleveland has placed the street railway securities of these cities on a sound and reputable basis. The report of the commission appointed by President Roosevelt has made for peace in the anthracite coal fields. Not until the tariff is rescued from the hands of special interests and is settled to the satisfaction of the country will the business community know upon what to count. So far as legislation is concerned, much political agitation is either fruitless or results in unwise action. Due credit should, however, be given to an important by-product, namely, the stimulating effect upon the correction of abuses by voluntary action.

 
II

Modern industry repeatedly adjusts itself to new conditions with surprising ease, and those in charge of any business are frequently the first to protest against a proposal to return to the old order of things. The packers advertise that their meats are "U. S. Government Inspected." Insurance companies doing business subject to the laws of such states as Massachusetts, Connecticut, New York and Wisconsin, proclaim the fact. The national banks find the supervision to which they are subjected a valuable asset. The investor's attention is called to the fact that an issue of securities has been approved by a public utility commission. Publicity of corporate accounts has proven a good thing for railway and other corporations. Factory managers now and then face about and approve regulations which they have opposed.[3] It often happens, also, that the arch insurgent of to-day is looked upon as the cautious-going conservative of to-morrow. The south no longer regards Lincoln as an enemy, but as a friend, and among the possibilities of the future is the spectacle of the business interests rallying around a La Follette as their defender against some form of radical-going socialism.

The need of distinguishing between the symptoms and the causes of political unrest is well illustrated by the silver agitation. No political movement since 1870 excited such bitter controversy or did so much to unsettle business. It undoubtedly occasioned the panic of 1893, and prolonged the hard times which followed. The legislation of 1878 and 1890 made our monetary system topheavy and rendered the continuance of the gold standard doubtful. The principal cause of the panic, however, was the appreciation of gold. The persistent fall of prices increased the burden of debts and imposed an unmerited hardship upon large numbers of producers. The free coinage of silver was demanded as a measure of relief. The remarkable increase in the world's output of gold relieved the country from the menace of the silver movement. If prices had continued downward, if wheat had fallen to twenty-five cents per bushel, as Mr. Bryan wrongly predicted, the silver agitation would probably have continued unabated. Likewise, the discontent due to the present era of rising prices promises to continue until the cause is removed, or until the depreciation of gold is offset by some monetary device. Economists are at present discussing the practicability of a "compensating dollar."

Too much is made of the extent to which industry is occasionally disturbed by proposed reforms. Human nature is prone to make a scapegoat of others for failures which belong at home, and this tendency seldom appears in a poorer light than when some man of large affairs blames a leading politician for results due to his own cupidity, lack of judgment or dishonesty. If political discussion did not arouse the unwary and keep the investing public on its guard, there is no telling to what lengths the issue of fraudulent prospectuses, the excessive capitalization of good will, the merging of properties at fictitious valuations and other methods of high finance would be carried. Neither is it possible to foresee how much mutual confidence and good faith would be undermined and business disturbed if the politician did not stay the use of these methods. The ordinary man often owes the politician a vote of thanks for saving him from the wiles of the manipulator of securities. The dishonest promoter is less in the public eye than the dishonest politician and is therefore more of a menace to the community. The security market needs more, rather than less, political airing. There is too much parrot-like imitation in making investments, too strong a disposition to accept off-hand opinions as authoritative, too little proneness to analyze reports and to form independent judgments. The result is that the only dollar many people feel sure of is the one they have spent. A leading Chicago daily remarks editorially:

Neither legislatures nor state commissions are responsible for the troubles of the New Haven system. Yet those who have complained and demanded investigation have been denounced as enemies of railroads and their security holders. What would happen if we had a vast twilight zone in the railroad world; what speculators, would-be monopolists, experts in the art of running railroads from Wall street would do in that zone may be left to the imagination of intelligent men.[4]

Modern industry is so organized that it alternates between excessive activity and stagnation, and if it were possible to divorce business from politics there is little reason to suppose that trade fluctuations would be less marked. On the contrary, the reverse would probably prove true. One of the most salutary uses of political agitation is, by sounding a note of caution, to keep business from running to that excess from which it is sure to rebound. Even agitation that is purely destructive may serve this purpose, however harmful it may be in other ways. The complete cessation of political agitation among a people so self-confident as those of the United States would in all probability result in such a reign of speculative activity as to prove a calamity. The politician helps to keep the industrial ship from becoming topheavy.

The fact that political agitation brings out the social side of modern life goes far to compensate for any unwarranted interference by agitators with business affairs. The various facilities, such as schools, books and magazines, which quicken the popular intelligence, would exist to little purpose if the ethical relations in which the age is so rich were barred from discussion. But for politics, considerations of public policy and the equity of social and industrial relations would receive all too scant attention. Few things bring out better the fact that we are all members one of another, or do more to turn people aside from sordid and purely personal ends. There is no game in which the nation finds more delight than politics. Few matters are so frequently the subject of editorial comment or occupy more space in the newspapers and magazines.

Our recurring presidential campaigns have an educational value which the preferential primary by compelling rival candidates to make their appeals directly to the voters promises to enhance. The discussion of such questions as free silver, the tariff, conservation, and the regulation of trusts and railways stimulates the popular intelligence. Viewed simply as a schoolmaster, Mr. Bryan has for years rendered the country an invaluable service. The wisdom of electing state officers and both houses of a legislature every year, as in Massachusetts, is more than doubtful. It is a fair question, however, whether the gain in having our presidential elections come every six years in place of quadrennially is worth what would be lost educationally. The discussion of national issues helps to preserve our sense of nationality. The primary purpose of democracy is not that men may become rich, but that human nature may be perfected by discussion, deliberation and criticism, by exercising the power of self-control, and by learning to give due weight to the rights of others. Any civilization is to be judged by the way it reacts upon the moral and spiritual side of man, and not by the extent, to which it heaps up riches, however necessary the latter may be to human wellbeing and progress.

 
III

In politics, as elsewhere, discretion is sometimes the better part of valor. The protected interests have mainly themselves to thank for the reduction of the tariff which they have experienced at the hands of the Wilson administration. If they had acquiesced in a moderate reduction of duties in 1909, it is probable that they would have been spared the heavier reduction in 1913. If they had permitted the Payne bill to pass the Senate substantially as it passed the House, in place of amending it until it is doubtful whether it revised the tariff upward or downward, the country would probably have accepted the measure as a satisfactory settlement of the question. By overreaching themselves they incensed public opinion and invited a more thoroughgoing reduction of duties.

Among the arguments against protection is that it inevitably makes business the football of politics. When the tariff is under discussion, business usually slows down until the outcome is foreseen. The average tariff has a short life. Moreover, discussion that does not end in legislation often disturbs business as much as that which does. As a consequence, the protected industries seldom enjoy a long respite from the uncertainty which the discussion of the tariff necessarily entails. The history of the tariff since the Civil War, however, indicates that in the end the protected interests have usually come out on top. After the war, the internal revenue duties on many commodities of domestic production were either reduced or abolished without any corresponding reduction in the import duties. In other words, the margin of protection was substantially increased. The attempt to reduce duties in 1867 was unsuccessful. The reduction of ten per cent, in duties in 1872 was repealed in 1875. The act of 1883 lowered some duties and raised others, but it left the protective system substantially intact. Mr. Cleveland's famous message in 1887 urging a reduction of duties ended in the McKinley act raising duties to a new high level. The democratic tariff of 1894 reduced duties so slightly that Mr. Cleveland refused to sign it. In 1897, the McKinley duties were practically restored, and it is doubtful whether the act of 1909 made any reduction in the average level of duties that served a protective purpose. During all these years, moreover, besides the ad valorem duties that were avowedly protective, an additional amount of protection was concealed in specific duties that purported merely to compensate for the tariff on raw materials. As parliamentarians and political strategists, the protected interests have been more resourceful than their adversaries. The alliances between wool growers, woolen manufacturers and other interests have repeatedly carried the day. The tariff of 1913 marks practically the first discomfiture the advocates of protection have suffered since 1860.

But perhaps the discomfiture is more apparent than real. Taking the country over, the business interests have shown little concern over the reduction of duties. There has been less alarm than preceding the tariff of 1894. With the exception of a few industries, the volume of business has continued at a high level. The net earnings of many industries and of some railways have increased. Apparently, a high tariff is no longer regarded as so vital a matter as twenty years ago. In many instances, only the duties that were nominally protective have been removed by the act of 1913. Two noteworthy exceptions are wool and sugar which go on the free list, the latter, however, not till May 1, 1916. The duties on silks were probably left well above the maximum revenue yielding point. There is no reason to suppose that barbed wire will sell for less because it has been placed on the free list. The new tariff will probably reduce the cost of living but little for the average family. The by-elections, thus far, indicate a vote of confidence in the administration. Moreover, the division of the opposition into Republicans and Progressives promises to give the new tariff a fair trial. It may turn out that the popular mind has exaggerated the importance of the tariff. Many have attributed the panic of 1893 to the tariff of the following year. The part played by the appreciation of gold, the silver agitation and the reckless expansions of railroads during the eighties has been frequently ignored. It has been common to explain good times in terms of a high tariff and hard times in terms of a low tariff. The building of railways has done far more for our industrial development than the tariff, and yet it is usually treated as a matter of minor importance in popular discussion. There is at least a chance that the country will revise its theory of prosperity. Certainly, an industrial policy that promotes the growth of cities is less needed than fifty years ago. The panic of 1907 helped to shatter the popular belief that a high tariff insures prosperity. Much will depend upon the character of the times during the next three or four years. If times are good, the lower duties will probably receive undue credit. If times are hard, an undue amount of blame will probably be laid at the door of the new tariff.

 
IV

The public mind is at present very suspicious of lobbyists. President Wilson recently promoted the progress of the tariff by calling attention to the number of lobbyists in Washington. The right of every one to present any facts, either in person or by proxy, to the members of our legislative bodies is generally conceded. The special interest is entitled to a hearing as well as the disinterested philanthropist. The protected manufacturer has the same right to be heard as the opponent of child labor. If the presentation is done in the open, and if the arguments employed are addressed to the minds and not to the pockets of our legislators and are unaccompanied with threats, no exception can well be taken. The average member of our legislative bodies, as well as the general public, can be trusted to make due allowance for anything one may say in behalf of his own interests. On the other hand, when those who present the facts possess the ballot, there is a fair chance that what they say will receive due consideration.

Why, then, are lobbyists regarded with such suspicion? The answer is that legislative agents have not contented themselves with presentations of facts. They have brought improper influences to bear upon our legislative and executive officers. Perhaps the extent of such influences is exaggerated. The press is prone to chronicle the evil rather than the good that men do. Exceptional instances of wrongdoing may be mistaken for the rule rather than the exception. Lobbyists are, however, rightly regarded with suspicion. The sugar trust long since earned for itself a notorious reputation. In truly non-partisan fashion, it has helped out the campaign funds of Democrats and Republicans alike and has placed both parties under obligations to look after its interests. Its rebating, custom house frauds and secret tapping of the New York City water supply have added to its notoriety. Not many years ago a street railway magnate was reputed to own the city government of Chicago in much the same sense that a merchant owns his stock of goods. "The only reason we do not have a parcels post is the four express companies," John Wanamaker is said to have remarked, when Postmaster-General. The legislatures of certain states have occasionally been the adjuncts of railway or other corporations. The investigation of the insurance companies by the Armstrong committee, whose labors Mr. Hughes so ably directed, disclosed a startling condition of affairs. The venal legislator who introduces "strike bills" has intensified the general sense of suspicion. The excessive multiplication of briefless lawyers who find it difficult to make a living has doubtless contributed to this condition. Organized labor in common with organized capital has violated the proprieties of life. "When a vote affecting the employees of the Boston Elevated was taken during the last session of the Massachusetts legislature, the employees in their uniforms, present in large numbers, made such a demonstration as to intimidate certain legislators. The insidious control of certain members of the press for sinister purposes has excited popular distrust. The newspaper dependent upon legal advertisements or upon any special interest for support is to that extent compromised as an organ of public opinion.

The indiscreet friends of a cause are frequently its worst foes. This is true of protection. There are arguments of weight which can be advanced in favor of a protective tariff. The young industry argument is entitled to respect. It may be wise to diversify industries even at considerable economic sacrifice. Self-preservation requires a nation to produce at least part of its military supplies. Not least among the advantages of protection have been its political consequences. By centering attention upon Washington, and by rendering the different portions of the country industrially interdependent, it has contributed to our unity as a people. Unfortunately, however, such considerations have frequently exercised little influence in the enactment of tariffs. Logrolling has repeatedly extended protection to industries to which it should never have been accorded. Many industries have claimed protection solely as vested interests. Undoubtedly, when protection has once been applied to an industry, it should not be abruptly withdrawn. This is hardly a reason, however, for according protection in the first instance. When tariff bills have been under consideration, Washington has been literally besieged by lobbyists. Private ends rather than consideration for the public welfare lead men to overcrowd the hotel accommodations of the capitol. Presumably the expectations of selfish interests have in a measure been realized or they would long since have ceased to flock to Washington. Even the most ardent believer in "the economic harmonies" will hardly maintain that such a condition is consistent with the public weal. It is commonly believed that "campaign contributions" have been the price of a generous measure of protection. "Jokers" have found their way into tariff acts with alarming frequency. It is not surprising, therefore, that protection has suffered a partial eclipse. In fact, the most serious objection to protection is that it undermines the tone of public life. To meet this objection, its more discreet advocates have from time to time favored a tariff commission. A tariff commission has also been favored by some with a view to postponing or moderating a drastic cut in duties. The arguments which have done most to uphold protection have been in the main those of doubtful validity. The arguments entitled to respect have had little to do with its popularity. In spite of the frequency of tariff discussions, there are few subjects on which there is more loose thinking.

Three things have made the lobbyist a special menace to our public life. The first is government by committees which, according to James Bryce, "gives facilities for the exercise of underhand and even corrupt influence."[5] The second is the spirit of ultra-individualism which places private above public ends. The third is the insatiable desire to amass great wealth and to enjoy the material comforts of life. Great wealth has frequently been the stepping stone to social and political preferment. To ape the well-to-do in the exterior signs of comfort is with many a ruling passion. Happily, however, a reaction is well under way. The misuse of wealth has brought men of large means under suspicion. A large fortune has become a doubtful asset to a man seeking political advancement. The rising tide of idealism is saving us from moral degradation. The unscrupulous business man, labor leader and politician have antagonized the conscience and have aroused the public spirit of a nation. There is a stronger demand for moral earnestness in the public servant. The sins of the insurance companies helped to make Mr. Hughes governor of New York.

(To be continued.)

  1. Debates of Lincoln and Douglas, op. cit., p. 22.
  2. July 12, 1913, p. 86.
  3. Hutchins and Harrison, "A History of Factory Legislation," second edition, p. 155.
  4. The Record-Herald, July 10, 1913.
  5. "The American Commonwealth," edition of 1910, Vol. 1, p. 162.