Socialism and the Concentration of Capital

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By H. Kelly.

SOCIAL-DEMOCRATS resemble Christian Scientists in more ways than one, but their greatest similarity is in the "faith" cure they advocate. Society is pictured as a pyramid in course of construction. During the time when the individual owned his tools, and before the advent of the modern factory system, capital or wealth was distributed among a larger number of people; gradually capital began to combine, the individual workman and small capitalist were swept into the factory as employees. Increasing like a snow-ball rolled in the snow, this juggernaut crushed its victims wholesale, and the process of concentration of capital proceeded apace. The rich get richer, the poor get poorer, the middle man is crushed out. The process of absorption goes rapidly on, the number of capitalists decreases each year; the pyramid approaches completion; a hundred years from now one hundred families will own 90 or 99 per cent. of the wealth; twenty-five years more and the number will be reduced to seventy-five; fifty years, fifty families; seventy-five years, twenty-five families; two hundred years—at last we reach the apex: the pyramid is complete, Marx is vindicated; one man owns all the wealth, and then—ah, then a metamorphosis takes place; Congress, the representatives of this slavish people who have submitted to such bondage all these generations, awaken, the giant stretches his limbs, growls and puts Mr. Rockefeller-Gould in an insane asylum, or shoveling coal, and calmly expropriates him for the benefit of the whole people. No revolution, no bloodshed, no strikes, no disturbances; it's all done according to science, and science—Karl Marx—ordained it and it had to be.

When Karl Marx wrote his "Capital" he was living in England—at that time the great commercial nation— and it was from England's development that he drew his conclusions and formed his prophecy.

Tcherkesov in his "Pages of Socialist History" has shown, by figures beyond dispute, that the middle class has grown enormously since Marx's time. I refrain from quoting in order to stimulate reading on this subject.* Tcherkesov covers the subject clearly and comprehensively, and if my readers are searchers for truth and wish to inform themselves on this subject, Tcherkesov's booklet will enlighten them as to the utter fallacy of this so-called concentration theory.

"But surely in this country things are different," you will say. "Can you not see the giant trusts crushing out the small capitalists, and have we not reached the stage where we have a billionaire?" I have mentioned before that the Social-Democrats claim that capital is concentrating into fewer and fewer hands, crushing the middle man or small capitalist out of the ranks of the well-to-do and into those of the working class; and that, further, this process of concentration and elimination is going on at such a rate that in a hundred years one hundred families will own 90 or 99 per cent, of the wealth of the country. In this connection there are several very interesting facts that have come to my notice lately.

In "The Worker," February 9, 1907, Mr. W. J. Ghent has an article taken from "The Independent," entitled "The Census and the Socialists," in which he tries to show how rapidly capital is concentrating; and this is how he does it: "The organization of large establishments," says the Census Bulletin, "either by new construction or by bringing independent manufacturing enterprises under the same ownership, has been one of the conspicuous features in connection with the manufacturing industries of the country."

From Mr. Ghent's approving smile one would think that each and every one of these small capitalists handed over his business to a larger one and retired penniless, swallowed up in accordance with Marx's concentration theory. What really happened was that the small capitalist amalgamated, formed a joint stock company to easier fleece the public, and when the worst comes

  • "Pages of Socialist History," by W. Tcherkesov, translated by Voltairine de Cleyre.

to the worst, he goes bankrupt, pays fifty cents (or less) on the dollar and starts a new business in his wife's name. The small capitalist never ceased to be a capitalist, and plundered the public just as much, holding ten per cent, of the shares in a hundred-thousand-dollar company, as he did when he ran a ten-thousand-dollar business himself. He may have occupied a subordinate position, perhaps he was even a salaried man, but an exploiter of labor he remained. Mr. Ghent further says that this Census Bulletin (that of 1905) shows an increase of but 16 per cent, of wage earners—workingmen, in the manufacturing industry and 42.7 per cent . increase in the salaried officials, clerks, etc.—the middle class. Please remember, this distinction of classes is Mr. Ghent's. He says that workers are always paid wages, while the middle class receives salaries. It is well known that those engaged in commercial occupations, such as managers, salesmen, clerks, etc., the boiled-shirt element, consider themselves a class apart and always represent the "safe and sane" interests. They are usually well paid and thoroughly imbued with the sacred rights of property, and their increase is ominous. It shows a development of machinery, it is true, but it also shows an increasing number of capitalistic defenders, and proves that the cheap labor of our country and of our "Colonial Possessions" is working harder than ever to require this extra 42.7 per cent. distributors of commodities.

On January 20, 1907, Prof. Schurman, of Cornell University, and Mr. Morris Hillquit had a debate at the New Rochelle Forum on Individualism vs. Socialism— Social-Democracy. The debate was printed in full in "The Worker" of February 2, and while Mr. Hillquit's exposition of Socialism—Social-Democracy—was as poor as Prof. Schurman's defense of Individualism— Capitalism—the latter's figures and Mr. Hillquit's reply bear on our subject.

The professor said:

"But, says the speaker, there has been a great change. It is the era of big production, social production, and capitalistic appropriation. Well, the use of abstract terms like those is very dangerous. Many a man becomes the slave of some abstract idea or theory because he has not worked it out logically or connected it with the facts. What do you mean by the coming of big industries in this country, for instance, and displacing the individualistic system? Take our farms. I have before me some statistics on the subject . I have, Mr. Chairman, in general a good deal of skepticism about figures, unless I know where they come from and who got them up. These figures come from the United States Census. Furthermore, they were prepared for me by Professor Wilcox, of Cornell University, who, after Dr. North, was the statistical expert of the Census Bureau. That, I think, will guarantee the accuracy of these figures.

What do they tell about the farms of the United States? Ten million people in this country are engaged in farming. That makes one-third of the bread winners of the country. Do you find in the farms of the country an increasing tendency toward big scale production? (Voices: Yes, yes.)

I knew you would say that, some of you, because you assume it as a matter of course. But it is wrong. I knew you would say it, because your theory would be false unless something like that was true. But it is not true. Here are the facts: In 1890 there were in the United States, total farms east of the Mississippi River— I don't go beyond, where the arid country is—3,072,000. In 1900, 3,678,000. In the one case we w1ll say in round numbers 3,000,000 and in the other case, 3,700,000. How many of these farms had 1,000 acres or more in 1890 and how many in 1900, respectively? In 1890 there were 14,708 of 1,000 acres or more. In 1900, although the total number of farms had increased by 600,000, only 10,000 had 1,000 acres or more. Or, putting it otherwise, for every farm of 1,000 acres or more in the United States in 1890 there were 209 farms smaller than that; whereas in 1900 there were 339 farms smaller than that. So far as farming is concerned, big-scale production is not operative but the opposite.

That provides for 10,000,000 of our people. I see no coming or sign of the coming of the Socialist state of Marx in that condition of things.

1 What about our manufacturing? Everybody knows what an important interest it is. Not as important as agriculture, of course, but still a very large number of people are engaged in it . One-fourth of all our breadwinners are in "manufacturing and mechanical pursuits," as the census calls it. Now, how many of these enterprises do you think are big-scale production enterprises? Well, in the first place, we have 215,000 establishments of the hand-working grade—carpenters, blacksmiths, and the like—215,000 establishments. In the nature of things they are not susceptible of large-scale production. Your blacksmith shop, your carpenter shop, they stay as they are, small. Take, then, the manufacturers proper. How many of them employ an army of men? Well, here they are: There are 296,000 manufacturing establishments, excluding the 215,000 handworking establishments—in round numbers 300,000 manufacturing establishments. How many of these employ how many men? Well, here is the answer: Of the three hundred thousand, 41,000 have no employees at all, being run by their owners; 125,000 have from one to four employees; 79,000 have from five to twenty employees; 24,000 have from 21 to 51 employees; 11,000 have from 51 to 100 employees; 8,000 have from 100 to 250 employees; 2,800 have from 250 to 500 employees; 1,000 have from 500 to 1,000 employees; and 443 have over 1,000 employees. How many laborers were engaged in all these 300,000 manufacturing establishments? 4,700,000. How many of them were in establishments having over 500 persons? 800,000. Seventeen per cent . of all—one in six."

Figures are never very terrifying to a Social-Democrat, unless they have the party label on them; so Mr. Hillquit, instead of being crushed, replied as follows:

"I will come to the farmer. I will do Dr. Schurman the favor of following his method. I will, for a moment, become scientific myself, and go back to his census figures of 1890.

"In farming, he says, the process of development has not been toward big farms. Here I admit Dr. Schurman's contention. But on the farm, on the other hand, capitalist exploitation has grown tremendously. According to these very figures of 1890 fifty-three per cent. of all the farmers in this country had their farms on rent or under mortgage. The mortgaged indebtedness of the farmers was no less than $1,100,000,000. The American farmers surrendered annually the equivalent of $100,000,000 of their products to an idle, moneylending class, in the shape of rent and interest."

He also quoted Prof. Walker as saying that, deducting rent and interest, the American former receives less than the average wage worker. Perhaps he does, but 47 per cent. of them, according to the "scholarly" Hillquit's own admission, own their own farms. Prof. Schurman in his reply stated that the mortgages were being paid off rapidly—perhaps not as rapidly as a defender of the present system would have us believe, so much so that in the nineties Cornell University had a million dollars invested in farm mortgages in Kansas at six per cent. To use Prof. Schurman's words, "We cannot invest a dollar there to-day. They themselves have become capitalists. They have paid off their debts."

It may not be good "form" for a revolutionist to take the word of a capitalist professor, but then I am not "class conscious," so my heterodoxy is pardonable; besides, defenders of the present system tell the truth now and then, "even as you and I."

Mr. Lawrence Call, speaking of concentration, says in his letter to "The Worker," issue of February 2, that the mortgage, bond and general indebtedness, public and private, in this country amounts to thirty billions of dollars; the estimated wealth of the nation being1 one hundred and seven billions, of which this thirty billions is a part. Mr. Call's mistake (and here we may again refer to Mr. Hillquit's statement that 53 per cent. of the farmers either rent or hold their farms under mortgage) seems to us to lie in this fact: Mortgages and bonds are to Mr. Call, and in fact to the majority of Social-Democrats, evidences of poverty, whereas bonds always, mortgages generally, are evidences of wealth. A case in point. A young friend of mine is tired of paying rent and at the same time has a little money to invest; he decides to buy a house; the one he selects costs $5,000; he puts up $500 and gives a mortgage on the house. The mortgagee needs money and gives a second mortgage. According to Mr. Call's reasoning my friend is in debt $4,500, and the house with two mortgages on it is a proof of dire poverty. Instead of which, my friend has a partnership arrangement with two other men and owns $500 in the house, which is prosperity—for him, and not poverty. It's true, the occupant of the house is exploited in the shape of interest, to say nothing of rent, but the $500 earns (?) interest, as well as the balance of the money, but the point at issue remains as stated. Or, again, a farmer has a farm worth, let us say, $5,000. He borrows $1,000 on it and invests it in cattle, hogs, or new machinery, and gives a mortgage on his farm. That does not mean that he is poorer than he was; it means that he has improved his farm, and now he has a partner in his mortgagee.

Let us examine the bond question. The P. R. R. Co. has just issued fifty million dollars worth of new bonds. Is it not an evidence of wealth, an evidence that a large number of people believe in the earning capacity of that road, when such an immense sum of money can be raised? Some of the money will be stolen, no doubt, but the major portion of it will be spent on the road. But some will say, interest must be paid, and that is a tax on the future generation. Quite true, but it is not an evidence of wealth concentration; it is gambling on future profits and on the possibilities of exploitation of the workers—there are thousands of shareholders engaged in this form of exploitation.

The distributive trade is held up as an awful example. If there are any who believe that Wanamaker, Macy, Siegel & Cooper and the other large department stores are swallowing up the small shop keepers, let him walk along any street of New York. The avenues especially are lined with small stores and gutter merchants. Wherever one goes the small middle class man, that is not being crushed out, is to be seen. In the radical movement itself there are hundreds of them. Every shyster doctor, lawyer, dentist and other professional men, including Socialist editors, are speculators in real estate or other commercial enterprises, and they are multiplying.

It may and probably will be said that any attempt to prove that the number of property owners is increasing, is collaboration with the capitalists who are continually crying that this is the best of all possible worlds, and an increase in the number of well-to-do people proves it. It may be as Mr. Simons, editor of "The International Socialist Review," said in a debate with Mr. Isaacs on this question: "Right or wrong, we mean to stick to it." That is not my doctrine, and in my humble opinion justice can never be obtained, even for the most worthy cause, by misrepresenting or ignoring facts. Far from being necessary, this attitude is positively harmful to the cause for which Socialists and Anarchists are working. If no other reason existed but the fact that two million children, between the age of 10—15 years are working in field, factory, mine and sweatshop in this country, we would have ample cause to abolish capitalism ; but there are other and quite as important reasons. The abolition of capitalism is a herculean task, one not to be accomplished by pretending that capital is concentrating and that all we have to do is to sit and watch the large fish devour the small fry, as is being repeated week after week, month after month, year after year, and decade after decade. "We must seize the political power in our own hands and usher in the co-operative commonwealth by legislative enactment." No! such talk may do for "Statesmen," prosperous lawyers, doctors, contractors, editors and real estate speculators— Anarchist or Socialist—who can afford to wait for the glad time. Those who feast on the flesh pots of Egypt should at least not pretend to the starving Lazarus that everything is for the best, and that in due time the "divine law" of Marx will work out its way and emancipate the laboring men in spite of capitalism, in spite even of themselves. Read blue books and Census Bulletins, by all means; but analyze and differentiate as you read. If your soul does not rise above dollars, your Philistinism may be strengthened; if it can rise, you may become a revolutionist and strive for the establishment of a more just, humane and equitable form of society. The establishment of that society will not be brought about by voicing platitudes, by misrepresentation of facts or appeals to respectability; rather will it be brought about by an appeal, first, to the intelligence and then to the revolutionary instincts that are inherent in all of us. If that is done, and an intelligent minority of the people are awakened, the change will come. It will certainly not come by preaching fatalism and inevitability. Capitalism is not destroying itself, and the sooner that fact is appreciated, the more intense and revolutionary will the entire Socialist movement become. Speed the time!