The New Freedom

There may have been a time when the tariff did not raise prices, but that time is past; the tariff is now taken advantage of by the great combinations in such a way as to give them control of prices. These things do not happen by chance. It does not happen by chance that prices are and have been rising faster here than in any other country. That river that divides us from Canada divides us from much cheaper living, notwithstanding that the Canadian Parliament levies duties on importations.

But "Ah!" exclaim those who do not understand what is going on; "you will ruin the country with your free trade!" Who said free trade? Who proposed free trade? You can't have free trade in the United States, because the government of the United States is of necessity, with our present division of the field of taxation between the federal and state governments, supported in large part by the duties collected at the ports. I should like to ask some gentlemen if very much is collected in the way of duties at the ports under the particular tariff schedules under which they operate. Some of the duties are practically prohibitive, and there is no tariff to be got from them.

When you buy an imported article, you pay a part of the price to the Federal government in the form of customs duty. But, as a rule, what you buy is, not the imported article, but a domestic article, the price of which the manufacturer has been able to raise to a point equal to, or higher than, the price of the foreign article plus the duty. But who gets the tariff tax in this case? The government? Oh, no; not at all. The manufacturer. The American manufacturer, who says that while he can't sell goods as low as the foreign manufacturer, all good Americans ought to buy of him and pay him a tax on every article for the privilege. Perhaps we ought. The original idea was that, when he was just starting and needed support, we ought to buy of him, even if we had to pay a higher price, till he could get on his feet. Now it is said that we ought to buy of him and pay him a price 15 to 120 per cent. higher than we need pay the foreign manufacturer, even if he is a six-foot, bearded "infant," because the cost of production is necessarily higher here than anywhere else. I don't know why it should be. The American workingman used to be able to do so much more and better work than the foreigner that that more than compensated for his higher wages and made him a good bargain at any wage.

Of course, if we are going to agree to give any fellow-citizen who takes a notion to go into some business or other for which the country is not especially adapted,—if we are going to give him a bonus on every article he produces big enough to make up for the handicap he labors under because of some natural reason or other,—why, we may indeed gloriously diversify our industries, but we shall beggar ourselves. On this principle, we shall have in Connecticut, or Michigan, or somewhere else, miles of hothouses in which thousands of happy American workingmen, with full dinner-pails, will be raising bananas,—to be sold at a quarter apiece. Some foolish person, a benighted Democrat like as not, might timidly suggest that bananas were a greater public blessing when they came from Jamaica and were three for a nickel, but what patriotic citizen would listen for a moment to the criticisms of a person without any conception of the beauty and glory of the great American banana industry, without realization of the proud significance of the fact that Old Glory floats over the biggest banana hothouses in the world!

But that is a matter on one side. What I am trying to point out to you now is that this "protective" tariff, so-called, has become a means of fostering the growth of particular groups of industry at the expense of the economic vitality of the rest of the country. What the people now propose is a very practical thing indeed: They propose to unearth these special privileges and to cut them out of the tariff. They propose not to leave a single concealed private advantage in the statutes concerning the duties that can possibly be eradicated without affecting the part of the business that is sound and legitimate and which we all wish to see promoted.

Some men talk as if the tariff-reformers, as if the Democrats, weren't part of the United States. I met a lady the other day, not an elderly lady, who said to me with pride: "Why, I have been a Democrat ever since they hunted them with dogs." And you would really suppose, to hear some men talk, that Democrats were outlaws and did not share the life of the United States. Why, Democrats constitute nearly one half the voters of this country. They are engaged in all sorts of enterprises, big and little. There isn't a walk of life or a kind of occupation in which you won't find them; and, as a Philadelphia paper very wittily said the other day, they can't commit economic murder without committing economic suicide. Do you suppose, therefore, that half of the population of the United States is going about to destroy the very foundations of our economic life by simply running amuck amidst the schedules of the tariff? Some of the schedules are so tough that they wouldn't be hurt, if it did. But that isn't the program, and anybody who says that it is simply doesn't understand the situation at all. All that the tariff-reformers claim is this: that the partnership ought to be bigger than it is. Just because there are so many of them, they know how many are outside. And let me tell you, just as many Republicans are outside. The only thing I have against my protectionist fellow-citizens is that they have allowed themselves to be imposed upon so many years. Think of saying that the "protective" tariff is for the benefit of the workingman, in the presence of all those facts that have just been disclosed in Lawrence, Mass., where the worst schedule of all—"Schedule K"—operates to keep men on wages on which they cannot live. Why, the audacity, the impudence, of the claim is what strikes one; and in face of the fact that the workingmen of this country who are in unprotected industries are better paid than those who are in "protected" industries; at any rate, in the conspicuous industries! The Steel schedule, I dare say, is rather satisfactory to those who manufacture steel, but is it satisfactory to those who make the steel with their own tired hands? Don't you know that there are mills in which men are made to work seven days in the week for twelve hours a day, and in the three hundred and sixty-five weary days of the year can't make enough to pay their bills? And this in one of the giants among our industries, one of the undertakings which have thriven to gigantic size upon this very system.

Ah, the whole mass of the fraud is falling away, and men are beginning to see disclosed little groups of persons maintaining a control over the dominant party and through the dominant party over the government, in their own interest, and not in the interest of the people of the United States!

Let me repeat: There cannot be free trade in the United States so long as the established fiscal policy of the federal government is maintained. The federal government has chosen throughout all the generations that have preceded us to maintain itself chiefly on indirect instead of direct taxation. I dare say we shall never see a time when it can alter that policy in any substantial degree; and there is no Democrat of thoughtfulness that I have met who contemplates a program of free trade.

But what we intend to do, what the House of Representatives has been attempting to do and will attempt to do again, and succeed in doing, is to weed this garden that we have been cultivating. Because, if we have been laying at the roots of our industrial enterprises this fertilization of protection, if we have been stimulating it by this policy, we have found that the stimulation was not equal in respect of all the growths in the garden, and that there are some growths, which every man can distinguish with the naked eye, which have so overtopped the rest, which have so thrown the rest into destroying shadow, that it is impossible for the industries of the United States as a whole to prosper under their blighting shade. In other words, we have found out that this that professes to be a process of protection has become a process of favoritism, and that the favorites of this policy have flourished at the expense of all the rest. And now we are going into this garden and weed it. We are going into this garden and give the little plants air and light in which to grow. We are going to pull up every root that has so spread itself as to draw the nutriment of the soil from the other roots. We are going in there to see to it that the fertilization of intelligence, of invention, of origination, is once more applied to a set of industries now threatening to be stagnant, because threatening to be too much concentrated. The policy of freeing the country from the restrictive tariff will so variegate and multiply the undertakings in the country that there will be a wider market and a greater competition for labor; it will let the sun shine through the clouds again as once it shone on the free, independent, unpatronized intelligence and energy of a great people.

One of the counts of the indictment against the so-called "protective" tariff is that it has robbed Americans of their independence, resourcefulness, and self-reliance. Our industry has grown invertebrate, cowardly, dependent on government aid. When I hear the argument of some of the biggest business men in this country, that if you took the "protection" of the tariff off they would be overcome by the competition of the world, I ask where and when it happened that the boasted genius of America became afraid to go out into the open and compete with the world? Are we children, are we wards, are we still such puerile infants that we have to be fed out of a bottle? Isn't it true that we know how to make steel in America better than anybody else in the world? Yet they say, "For Heaven's sake don't expose us to the chill of prices coming from any other quarter of the globe." Mind you, we can compete with those prices. Steel is sold abroad, steel made in America is sold abroad in many of its forms, much cheaper than it is sold in America. It is so hard for people to get that into their heads!

We set up a kindergarten in New York. We called it the Chamber of Horrors. We exhibited there a great many things manufactured in the United States, with the prices at which they were sold in the United States, and the prices at which they were sold outside of the United States, marked on them. If you tell a woman that she can buy a sewing machine for eighteen dollars in Mexico that she has to pay thirty dollars for in the United States, she will not heed it or she will forget it unless you take her and show her the machine with the price marked on it. My very distinguished friend, Senator Gore, of Oklahoma, made this interesting proposal: that we should pass a law that every piece of goods sold in the United States should have on it a label bearing the price at which it sells under the tariff and the price at which it would sell if there were no tariff, and then the Senator suggests that we have a very easy solution for the tariff question. He does not want to oblige that great body of our fellow-citizens who have a conscientious belief in "protection" to turn away from it. He proposes that everybody who believes in the "protective" tariff should pay it and the rest of us should not; if they want to subscribe, it is open to them to subscribe.

As for the rest of us, the time is coming when we shall not have to subscribe. The people of this land have made up their minds to cut all privilege and patronage out of our fiscal legislation, particularly out of that part of it which affects the tariff. We have come to recognize in the tariff as it is now constructed, not a system of protection, but a system of favoritism, of privilege, too often granted secretly and by subterfuge, instead of openly and frankly and legitimately, and we have determined to put an end to the whole bad business, not by hasty and drastic changes, but by the adoption of an entirely new principle,—by the reformation of the whole purpose of legislation of that kind. We mean that our tariff legislation henceforth shall have as its object, not private profit, but the general public development and benefit. We shall make our fiscal laws, not like those who dole out favors, but like those who serve a nation. We are going to begin with those particular items where we find special privilege intrenched. We know what those items are; these gentlemen have been kind enough to point them out themselves. What we are interested in first of all with regard to the tariff is getting the grip of special interests off the throat of Congress. We do not propose that special interests shall any longer camp in the rooms of the Committee on Ways and Means of the House and the Finance Committee of the Senate. We mean that those shall be places where the people of the United States shall come and be represented, in order that everything may be done in the general interest, and not in the interest of particular groups of persons who already dominate the industries and the industrial development of this country. Because no matter how wise these gentlemen may be, no matter how patriotic, no matter how singularly they may be gifted with the power to divine the right courses of business, there isn't any group of men in the United States or in any other country who are wise enough to have the destinies of a great people put into their hands as trustees. We mean that business in this land shall be released, emancipated.

VIII

MONOPOLY, OR OPPORTUNITY?

Gentlemen say, they have been saying for a long time, and, therefore, I assume that they believe, that trusts are inevitable. They don't say that big business is inevitable. They don't say merely that the elaboration of business upon a great co-operative scale is characteristic of our time and has come about by the natural operation of modern civilization. We would admit that. But they say that the particular kind of combinations that are now controlling our economic development came into existence naturally and were inevitable; and that, therefore, we have to accept them as unavoidable and administer our development through them. They take the analogy of the railways. The railways were clearly inevitable if we were to have transportation, but railways after they are once built stay put. You can't transfer a railroad at convenience; and you can't shut up one part of it and work another part. It is in the nature of what economists, those tedious persons, call natural monopolies; simply because the whole circumstances of their use are so stiff that you can't alter them. Such are the analogies which these gentlemen choose when they discuss the modern trust.

I admit the popularity of the theory that the trusts have come about through the natural development of business conditions in the United States, and that it is a mistake to try to oppose the processes by which they have been built up, because those processes belong to the very nature of business in our time, and that therefore the only thing we can do, and the only thing we ought to attempt to do, is to accept them as inevitable arrangements and make the best out of it that we can by regulation.

I answer, nevertheless, that this attitude rests upon a confusion of thought. Big business is no doubt to a large extent necessary and natural. The development of business upon a great scale, upon a great scale of co-operation, is inevitable, and, let me add, is probably desirable. But that is a very different matter from the development of trusts, because the trusts have not grown. They have been artificially created; they have been put together, not by natural processes, but by the will, the deliberate planning will, of men who were more powerful than their neighbors in the business world, and who wished to make their power secure against competition.

The trusts do not belong to the period of infant industries. They are not the products of the time, that old laborious time, when the great continent we live on was undeveloped, the young nation struggling to find itself and get upon its feet amidst older and more experienced competitors. They belong to a very recent and very sophisticated age, when men knew what they wanted and knew how to get it by the favor of the government.

Did you ever look into the way a trust was made? It is very natural, in one sense, in the same sense in which human greed is natural. If I haven't efficiency enough to beat my rivals, then the thing I am inclined to do is to get together with my rivals and say: "Don't let's cut each other's throats; let's combine and determine prices for ourselves; determine the output, and thereby determine the prices: and dominate and control the market." That is very natural. That has been done ever since freebooting was established. That has been done ever since power was used to establish control. The reason that the masters of combination have sought to shut out competition is that the basis of control under competition is brains and efficiency. I admit that any large corporation built up by the legitimate processes of business, by economy, by efficiency, is natural; and I am not afraid of it, no matter how big it grows. It can stay big only by doing its work more thoroughly than anybody else. And there is a point of bigness,—as every business man in this country knows, though some of them will not admit it,—where you pass the limit of efficiency and get into the region of clumsiness and unwieldiness. You can make your combine so extensive that you can't digest it into a single system; you can get so many parts that you can't assemble them as you would an effective piece of machinery. The point of efficiency is overstepped in the natural process of development oftentimes, and it has been overstepped many times in the artificial and deliberate formation of trusts.

A trust is formed in this way: a few gentlemen "promote" it—that is to say, they get it up, being given enormous fees for their kindness, which fees are loaded on to the undertaking in the form of securities of one kind or another. The argument of the promoters is, not that every one who comes into the combination can carry on his business more efficiently than he did before; the argument is: we will assign to you as your share in the pool twice, three times, four times, or five times what you could have sold your business for to an individual competitor who would have to run it on an economic and competitive basis. We can afford to buy it at such a figure because we are shutting out competition. We can afford to make the stock of the combination half a dozen times what it naturally would be and pay dividends on it, because there will be nobody to dispute the prices we shall fix.

Talk of that as sound business? Talk of that as inevitable? It is based upon nothing except power. It is not based upon efficiency. It is no wonder that the big trusts are not prospering in proportion to such competitors as they still have in such parts of their business as competitors have access to; they are prospering freely only in those fields to which competition has no access. Read the statistics of the Steel Trust, if you don't believe it. Read the statistics of any trust. They are constantly nervous about competition, and they are constantly buying up new competitors in order to narrow the field. The United States Steel Corporation is gaining in its supremacy in the American market only with regard to the cruder manufactures of iron and steel, but wherever, as in the field of more advanced manufactures of iron and steel, it has important competitors, its portion of the product is not increasing, but is decreasing, and its competitors, where they have a foothold, are often more efficient than it is.

Why? Why, with unlimited capital and innumerable mines and plants everywhere in the United States, can't they beat the other fellows in the market? Partly because they are carrying too much. Partly because they are unwieldy. Their organization is imperfect. They bought up inefficient plants along with efficient, and they have got to carry what they have paid for, even if they have to shut some of the plants up in order to make any interest on their investments; or, rather, not interest on their investments, because that is an incorrect word,—on their alleged capitalization. Here we have a lot of giants staggering along under an almost intolerable weight of artificial burdens, which they have put on their own backs, and constantly looking about lest some little pigmy with a round stone in a sling may come out and slay them.

For my part, I want the pigmy to have a chance to come out. And I foresee a time when the pigmies will be so much more athletic, so much more astute, so much more active, than the giants, that it will be a case of Jack the giant-killer. Just let some of the youngsters I know have a chance and they'll give these gentlemen points. Lend them a little money. They can't get any now. See to it that when they have got a local market they can't be squeezed out of it. Give them a chance to capture that market and then see them capture another one and another one, until these men who are carrying an intolerable load of artificial securities find that they have got to get down to hard pan to keep their foothold at all. I am willing to let Jack come into the field with the giant, and if Jack has the brains that some Jacks that I know in America have, then I should like to see the giant get the better of him, with the load that he, the giant, has to carry,—the load of water. For I'll undertake to put a water-logged giant out of business any time, if you will give me a fair field and as much credit as I am entitled to, and let the law do what from time immemorial law has been expected to do,—see fair play.

As for watered stock, I know all the sophistical arguments, and they are many, for capitalizing earning capacity. It is a very attractive and interesting argument, and in some instances it is legitimately used. But there is a line you cross, above which you are not capitalizing your earning capacity, but capitalizing your control of the market, capitalizing the profits which you got by your control of the market, and didn't get by efficiency and economy. These things are not hidden even from the layman. These are not half-hidden from college men. The college men's days of innocence have passed, and their days of sophistication have come. They know what is going on, because we live in a talkative world, full of statistics, full of congressional inquiries, full of trials of persons who have attempted to live independently of the statutes of the United States; and so a great many things have come to light under oath, which we must believe upon the credibility of the witnesses who are, indeed, in many instances very eminent and respectable witnesses.

I take my stand absolutely, where every progressive ought to take his stand, on the proposition that private monopoly is indefensible and intolerable. And there I will fight my battle. And I know how to fight it. Everybody who has even read the newspapers knows the means by which these men built up their power and created these monopolies. Any decently equipped lawyer can suggest to you statutes by which the whole business can be stopped. What these gentlemen do not want is this: they do not want to be compelled to meet all comers on equal terms. I am perfectly willing that they should beat any competitor by fair means; but I know the foul means they have adopted, and I know that they can be stopped by law. If they think that coming into the market upon the basis of mere efficiency, upon the mere basis of knowing how to manufacture goods better than anybody else and to sell them cheaper than anybody else, they can carry the immense amount of water that they have put into their enterprises in order to buy up rivals, then they are perfectly welcome to try it. But there must be no squeezing out of the beginner, no crippling his credit; no discrimination against retailers who buy from a rival; no threats against concerns who sell supplies to a rival; no holding back of raw material from him; no secret arrangements against him. All the fair competition you choose, but no unfair competition of any kind. And then when unfair competition is eliminated, let us see these gentlemen carry their tanks of water on their backs. All that I ask and all I shall fight for is that they shall come into the field against merit and brains everywhere. If they can beat other American brains, then they have got the best brains.