PART III

OTHER FORCES AFFECTING AMERICAN

INSTITUTIONS

CHAPTER XIX

WEALTH

THOUGH Wealth accumulates, men do not necessarily decay. The familiar lines from Goldsmith's "Deserted Village" are: "Ill fares the land, to hastening ills a prey,

Where wealth accumulates, and men decay."

That was written in 1770 when George III, crazy part of the time, and half crazy all of the time, a worthless aristocracy, and a greedy manufacturing class were driving America to the Revolution of 1776. It was a rotten century, begun with Walpole's long rule by open and notorious bribery; bribery of the voters; bribery of members of Parliament. In France things were still worse, and finally the eighteenth century blew up in the French Revolution. In Goldsmith's time it did look as though man was but a money box, and certainly England had grown very rich. But it turned out not so. The Napoleonic wars showed that the blood of Crécy and Agincourt and Drake and Hawkins still flowed in the veins of Englishmen. And a century later all doubts on this subject were dispelled by the World War of 1914.

In America much the same way. In 1860 Europe looked on Americans as shopkeepers and not men, but even Carlyle was finally convinced to the contrary. Later in the World War the valor and intrepidity of the American troops demonstrated that

the wealthiest nation in the world could produce men equal to the Spartans of old.

Wealth did demoralize Rome, but the Romans were a rude, rustic people, with no use for wealth, except to spend it in display and luxury. Rome was not commercial nor industrial. It was a military nation and little else. Its literature and civilization, such as they were, were largely copied from Greece. Rome had a genius for governing, for creating political institutions and laws. Their great generals were usually masters of the civil law and Roman laws followed its conquering legions. Rome originated that wonderful industrial agent, the corporation, but missed its vital spark of limited liability of stockholders. Rome was too raw to get good from sudden wealth and so spent it in barbaric ways.

In America there is little danger that wealth will enervate the people so long as the number of farmers continues. The danger is that in the hands of ambitious men wealth may be misused and lead to confiscation and conflict. In other words, the danger is that wealth will give its representatives too much vigor instead of too little; will strengthen privilege rather than preserve democracy. Safety lies in its distribution. But in this country it is still the general rule — four generations from shirt sleeves to shirt sleeves. The usefulness of children of the rich is in redistributing their wealth and paying taxes.

But in the hands of unscrupulous and crafty men enormous wealth is undoubtedly a menace to republican institutions. Wealthy men will not always be content to be excluded from political positions by the instinct of voters. And wealth has its own way of influencing legislatures and public officials. Especially does it have a terrible resisting power against socialistic legislation.

The problem of the distribution of wealth is the problem of the ages because nature favors the strong and intelligent. It is a problem in America today. The vast natural resources of the

country, the inventive genius of the people in increasing and cheapening production, and the habits of incessant and intense work have made America the richest and most powerful of nations. But population always tends to increase faster than production. There is still enough to go round, but concentration of wealth is a natural process and is taking place in America. The conflict between the have nots with the haves is not yet acute, nor is the institution of private property in danger, nor freedom of contract, but both are being profoundly modified by the regulating power of the state. This regulation, with inheritance taxes and distribution of estates equally among children, and the tendency of inherited wealth to distribute itself by incompetence and recklessness, breaks up most American fortunes and may solve the problem of distribution of wealth. "A great revolution," Professor Munro of Harvard says, "has been going on in the United States since the outbreak of the World War; yet few observers have thus noted its far-reaching significance. It involves nothing less than the gradual disappearance of what we sometimes call the proletariat, the masses of workers who barely earn enough to support themselves and have nothing laid by for a rainy day. There is a proletariat in every European country; in most of these countries it has comprised, and still comprises, the majority of the population. One result of the World War, in these European countries, has been to reduce the size of the middle class, so called, and to increase both the rich, on the one hand, and the proletariat on the other. In America the drift is wholly in another direction. Both the rich and the middle class have greatly increased during the past ten years, while the proletariat, in the European sense of the term, is steadily disappearing. There are three reasons for this change which has all the essentials of a great economic revolution. Industrial prosperity, national prohibition, and the restriction of immigration are the things which mainly account for it." But will it last?

1

Concentrated wealth, in its influence on republican institutions, has an antidote in the farming class and the laboring class. No class is allowed to dominate this country. Thirty years ago capital and the railroads thought they could do as they pleased, but found that they could not. Congress and the courts put them back where they belonged. In the same way when the farmers started practically to confiscate the railroads by "Granger Laws, constitutional law declared such laws illegal. And when labor unions in recent years attempted to dominate and dictate, public sentiment put them down. So also when communism raised its head it was decapitated. Concentrated wealth may lead to civil discord or to absorption of Central and South America, or to a more centralized government, and in this way imperil republican institutions, but it will not consciously or directly attack those institutions. The rich as well as the poor in America stand solidly back of the republic.

Yet the enervating effect of wealth, especially of inherited wealth, cannot be denied. The restraining and elevating influence of character will be emphatically needed to offset the perilous effects of our industrial success. America is likely to have more liquid wealth than all the rest of the world combined. It is somewhat appalling to think of the dangers incident to such power, population, and capital. The strain may be too great for republican institutions. The only hope is in the character of the better part of the people. If that part declines, the end is near. If it improves, it will continue to make America an instrument for the culture and upbuilding of the race, and for demonstrating that the richest and most powerful nation that ever existed is capable of governing itself.

This country has property worth over three hundred billions of dollars - but wealth beyond giving living conditions and opportunities for a higher life may be demoralizing. It is apt to lead to greed for exploitation of other countries in Central and South America, to a craving for idle amusement and the

excitements of city life. It certainly does not lead to the austere life. Nor is it conducive to the perpetuity of republican institutions. On the other hand, its very abundance may lessen its attraction as an object in itself. It certainly does not give the distinction now that it gave fifty years ago. A new kind of career is opening for young men a career devoted to public interests, not necessarily office holding but leading to the good of the public. That kind of leadership means that the mission of America will be continued, namely, that a great people in a greatly diversified country is capable of governing itself. The whole civilized world at present is adopting that principle demonstrated by America.

The chief danger from wealth is its effort to control the government in order to increase wealth itself or to protect itself. The railroads for a long time controlled state governments, especially the legislatures, to get franchises and prevent reductions of rates. Street railways, gas companies, and telephone companies have at times spent great sums of money for similar purposes. Manufacturers have paid for high tariff laws; insurance companies to stop hostile legislation; trusts to raise prices. But all this is temporary and most of it has passed away. "The invisible government," as Senator Beveridge calls it, has had its day. It still exists but is not the menace to American institutions that it was. Nevertheless what Bryce says is true that "as the Love of Money is the root of all evil, so the Power of Money is for popular governments the most constant source of danger, worse than ignorance, worse than apathy, worse than faction, worse than demagogism. This is because it is so multiform, so insidious, so hard to detect, so quick to spread."1

This subject of wealth and of the idle rich, the working rich and the corporation, is considered further later.*

* See Chapter XXXI, infra.