The proposal of the social reformers, as far as the workers are concerned aims to put an end to this deterioration, to standardize industry or to establish a minimum of wages, leisure, health, and industrial efficiency. The writer says that the Socialists aim at something more than this.

"The criterion of social justice in every civilized community," he writes, "is, and always has been, not how large or how intense is the misery of the social debtor class, but what is done with the social surplus of industry? It was formerly used to build pyramids, to create a landed or ecclesiastical or literary aristocracy, to conduct wars, or to provide the means of a sensuous life for the majority of a privileged class, and the means of dilettantism for the minority of it. The difference between the near Socialist and the true Socialist is principally that the main attention of the former is given to the negative side of the social problem—the condition of the submerged classes, while that of the latter is given to the positive side of the problem—the wonderful development, power, and life that would come to that race and the individual if a wise and social use were to be made of the surplus of industry."

FOOTNOTES:

[46] "Fabianism and Empire," p. 62.

[47] Articles by Hyman Strunsky on Welfare Work, The Coming Nation, 1910.

[48] do, do.

[49] Lloyd George, op. cit., p. 93.

[50] Lloyd George, op. cit., p. 81.

[51] Winston Churchill, op. cit., p. 101.

[52] John A. Hobson, "The Crisis of Liberalism," p. 3.

[53] Professor Simon Patten, The Annals of the American Academy of Political and Social Science, July, 1908.

[54] Speech of President Hadley before the Brooklyn Institute of Art and Sciences (1909).

[55] A more democratic and truthful view of the German educational system is that of Dr. Abraham Flexner (see the New York Times, October 1, 1911). He says that the Germans have to solve the following kind of an educational problem:—

"What sort of educational program can we devise that will subserve all the various national policies—that will enable Germany to be a great scientific nation, that will enable it to carry on an aggressive colonial and industrial policy, and yet not throw us into the arms of democracy? Their present educational system is their highly effective reply.

"Our problem is a very different one," Dr. Flexner remarks. "Our historic educational problem has been and is quite independent of any position we might be able to achieve in the world. That problem has always been: How can we frame conditions in which individuals can realize the best that is in them?"

Dr. Flexner is then reported to have quoted the following from a Springfield Republican editorial:—

"Germany could readily train her masses with a view to industrial efficiency, whereas our industrial efficiency is only one of the efficiencies we care about; the American wishes to develop in many other ways, and to have his educational system help him to do it."

[56] New York Times, Nov. 12, 1911.

[57] F. H. Streightoff, "The Standard of Living among the Industrial People of America."

[58] Interview with Sir Joseph Ward, New York, April 15, 1911.

[59] Winston Churchill, op. cit., p. 325.

[60] Winston Churchill, op. cit., p. 186.

[61] Winston Churchill, op. cit., pp. 240, 243.

[62] Winston Churchill, op. cit., pp. 250, 252.

[63] Lloyd George, op. cit., pp. 68-69.

[64] Winston Churchill, op. cit., p. 197.

[65] Winston Churchill, op. cit., p. 197.

[66] The Outlook, June, 1911.

[67] Sidney Webb, the Contemporary Review (1908) and "Basis and Policy of Socialism," pp. 83, 84.

[68] The Survey (New York), 1910, pp. 81-82, 466, 731-732.

[69] H. G. Wells, "First and Last Things," p. 133.

[70] Edmond Kelly, "Twentieth-Century Socialism," p. 314.

[71] Vorwaerts (Milwaukee), Feb. 3, 1898.



CHAPTER V

COMPULSORY ARBITRATION

So far I have spoken only of the constructive side of the new capitalism's labor program, its purpose to produce healthy and industrially efficient laborers so as to increase profits. "State Socialism" gives the workingman as a citizen certain carefully measured political rights, and legislates actively in his behalf as a profit-producing employee at work, but its policy is reversed the moment it deals with him and his organizations as owners and sellers of labor.

Towards the individual workers, who are completely powerless either politically or economically until they are organized, the new capitalism is, on the whole, both benevolent and actually beneficent. But it does not propose that organized labor shall obtain a power either in industry or in government in any way comparable to that of organized capital.

"Successful State Socialism," as Victor S. Clark says in writing of the Australian experiments, "depends largely upon perfecting public control over the individual."[72] But compulsory arbitration of labor disputes which reaches the wage earners' organizations, is far more important to "State Socialism" than any other form of control over individual. A considerable measure of individual liberty may be allowed without endangering this new social polity, and it is even intended systematically to encourage the more able among the workers by some form of individual or piece wages—or at least a high degree of classification of the workers—and by a scheme of promotion that will utilize the most able in superior positions, and incidentally remove them out of the way as possible leaders of discontent.

Nor is it intended to use any compulsion on labor organizations beyond that which is essential to prevent them from securing a power in society in any way comparable to that of property and capital. For this purpose compulsory arbitration is the direct and perfect tool. It can be limited in its application to those industries where the unions really occupy a position of strategic importance like railroads and coal mines, and it can be used to attach to the government those employees that are unable to help themselves. I have mentioned those weaker groups of employees who would be unable to improve their condition very materially except by government aid, and, even when so raised to a somewhat higher level, have no power to harm capitalism. Compulsory arbitration or some similar device must therefore replace such crudely restrictive and oppressive measures as have hitherto been applied to the unions.

In the United States all "dangerous" strikes are at present throttled by court injunctions forbidding the strikers to take any effective action, and boycotts are held to be forbidden by the Sherman law originally directed against the "trusts." Recently the Supreme Court decided that the officers of the American Federation of Labor were not to be imprisoned for violation of the latter statute. But the decision was purely on technical grounds, and the court upheld unanimously the application of the law to the unions. There is little question that the attorney for the manufacturers, Daniel Davenport, was right when he thus summed up the court's opinion:—

"It held that the boycott is illegal; that the victim of the boycott has the right to go into court of equity for protection by injunction; that such court has the right to enjoin any and every act done in enforcing the boycott, including the sending out of boycott notices, circulars, etc., that the alleged constitutional right of free speech and free press affords the boycotter no immunity for such publication; that for a violation of the injunction the party violating it is liable to be punished both civilly and criminally."

Against this law and the use of injunctions in labor disputes the Federation of Labor has introduced a bill through Congressman W. B. Wilson, which aims to free the unions from these legal obstacles by enacting that no right to continue the relation of employer to employee or to carry on business shall be construed as property or a property right; and that no agreement between two or more persons concerning conditions of employment or its termination shall constitute a conspiracy or an offense against the law unless it would be unlawful if done by a single individual, and that, therefore, such an act is not subject to injunctions. While neither of the great parties has definitely promised to support this particular measure, one party has made a vague promise to restrict injunctions, and the leaders of the progressive wings of both are quite definite about it. Nearly half of the House of Representatives voted for the repeal of the Sherman law as applied against union boycotts. Senator La Follette has demanded the abolition of this species of injunction, and Governor Woodrow Wilson has accused our federal courts of "elaborating a theory of conspiracy destined to bring 'the sympathetic strike' and what is termed 'the secondary boycott' under legal condemnation."

Such reforms are not as radical as might appear to Americans, for the boycott is legal in Germany, while the crime of "conspiracy" was repealed in Great Britain in 1875, and the rights of strikers were further protected in that country by the repeal of the Taff Vale decision against picketing a few years ago, and yet unions are in no very strong position there. And weak as they are, the talk of compulsory arbitration is growing, and it seems only question of time until some modification of it is adopted. And, though the abuse of injunctions and the other forms of anti-union laws and decisions now prevailing will probably be done away with in this country, there is little doubt that here also employers will use some great coal or railroad strike as a pretext for enacting a compulsory arbitration law.[73]

Similarly, as governments continue to take on new industrial functions, great importance is attached to the right of government employees, now denied, to organize and to join unions. Senator La Follette and other progressives also champion this right against President Taft, and will doubtless win their fight, but, as I shall show later a right to organize does not mean a right to strike—and there seems no probability that any government will fail to answer the effort to strike on any very large scale either by punishment for conspiracy against the State or by excluding the strikers permanently from government employment. They will doubtless be offered, as in France, instead of the right to strike, the right to submit their grievances as a body, if they wish it, to some government board (see Part III, Chapter VI).

The Australasian labor leaders were the first and are still the chief advocates of compulsory arbitration among the unionists, and if they find it used against them they have nobody but themselves to blame. That Labor is disappointed in the result in those countries is shown by the fact that of late years, both in Australia and New Zealand, the most important strikes have been settled outside of the compulsory arbitration acts, and Mr. Clark states that he is unaware of any important exception.

But that the workers in Australia still hope to use this legislation for their purposes is shown by the referendum of 1911, by which they sought to nationalize the State laws on the subject. At the time of the railroad strike in Victoria, Australia, in 1903, a law was passed which imposed a penalty of "twelve months' imprisonment or a fine of one hundred pounds" for engaging in a strike on government railways, and made a man liable to arrest without warrant or bail "for advising a strike orally or by publication, or for attending any meetings of more than six persons for the purpose of encouraging strikers." Even then the limit had not been reached. In 1909 the Parliament of New South Wales passed an act especially directed against strikes in any industry which produced "the necessary commodities of life [these being defined as coal, gas, water, and food] the privation of which may tend to endanger human life or cause serious bodily injury," and the penalty of twelve months' imprisonment of the Victorian law was extended to all this vast group of industries also. The law of New South Wales was most stringent, providing that any one taking part in a strike meeting under these circumstances is also liable to twelve months' imprisonment, and that the police may break into the headquarters of any union and seize any documents "which they reasonably suspect to relate to any walk-out or strike." Under this law the well-known labor leader, Peter Bowling, was sentenced to one year of imprisonment.

The unions violently denounced this enactment, but chiefly as they had denounced previous legislation, on the ground that it permitted unorganized workmen to apply for relief under the law. That is to say, while the employers were using the law to make striking a crime, they were extending such benefits as it produced to the nonunion workers who can often be used as tools for their purposes. But the astounding hold that "State Socialism" has on the Australian masses, especially on the working people, is shown by the steadfast belief that this measure can be amended so as to operate to their interest. Bowling and his unions made a serious agitation for the general strike against the coercive measure just mentioned, but it was only by a tie vote that the New South Wales Labour Congress even favored protest in the form of cancelling the agreement which the unions had made under the Industrial Disputes Acts, while in the next elections New South Wales returned a majority of labor representatives opposing Bowling's policy of radical protest. That is, the majority of the working people still express confidence in the possibilities of compulsory arbitration, and even want to extend it.

Professor Le Rossignol of the United States and Mr. William D. Stewart of New Zealand have undertaken a careful and elaborate investigation of compulsory arbitration in New Zealand.[74] A reference to a few of their quotations from original documents will show the nature and possibilities of this coercive measure as it has developed in the country of its origin. The original law in New Zealand was introduced by the Honorable William Pember Reeves, the Minister of Labor, in 1894, and was supported by the labor leaders. Mr. Reeves says: "What the act was primarily passed to do was to put an end to the larger and more dangerous class of strikes and lockouts. The second object of the act's framer was to set up tribunals to regulate the conditions of labor."

"Mr. Reeves' chief idea," say our authors, "was to prevent strikes, and a great deal more was said in Parliament about industrial peace than about the improvement in the conditions of labor which the act was to bring about. But there can be little doubt that the unionists, without whose help the act could not have been passed, thought more of the latter than of the former result, and looked upon the act as an important part of the new legislation for the benefit of the working class." Here is the contrast that we must always keep in mind. The purpose of the unionists is to see if they cannot obtain improvements in their conditions; the purpose of the employers and also of "the public" is to prevent strikes. One of the most able students of the situation, Mr. MacGregor, has shown that since the passing of the law the latter purpose has been thoroughly accomplished, since it has been used not only as was originally intended, to settle labor disputes which become so serious as to threaten to "arrest the processes of industry," but that it has practically built up a "system of governmental regulation of wages and conditions of labor in general." That is to say, the law has accomplished rather the purposes of the employers than those of the employees.

In another point of the most fundamental importance the law has become something radically different from what the labor leaders who first favored it hoped it would be. The act of 1894 was entitled: "An act to encourage the formation of industrial unions and associations and to facilitate the settlement of industrial disputes by conciliation and arbitration." By the amendment of 1898 the words, "to encourage the formation of industrial unions and associations," were left out. Thus the law ceased to be directly helpful to the very unions which had done so much to bring it about and are the only means employees possess to make the law serve them instead of becoming a new weapon for employers.

An early decision of the Arbitration Court in 1896 had declared that preference should be given to the unionists. "Since the employer was the judge of the qualifications of his employees, the unionists did not gain much by this decision," say Le Rossignol and Stewart. "In later awards it was usually specified that preference was granted only when the union was not a closed guild, but practically open to every person of good character who desired to join." These later decisions brought it about that the so-called preference of unionists became no preference at all. "The Arbitration Court, except in a few minor cases, has refused to grant unconditional preference and the unionists, realizing that preference to an open union is no preference at all, now look to Parliament for redress and demand statutory unconditional preference to unionists."

In 1905 strikes and lockouts were made statutory offenses, and a single judge was given the power practically to force the individual worker to labor. After ten years of trial the law had become almost unrecognizable from the workingman's standpoint, and from this moment on the resistance to it has grown steadily. In a decision rendered in 1906, the Chief Justice said: "The right of a workman to make a contract is exceedingly limited. The right of free contract is taken away from the worker, and he has been placed in a condition of servitude or status, and the employee must conform to that condition." Not only do judges have this power, but they have the option of applying or not applying it as they see fit, for the amendment of 1908 "expressly permits the court to refuse to make an award if for any reason it considers it desirable to do so." With a law, then, that in no way aids the unions, as such—however beneficial it may be at times to the individual workingman—and which leaves an arbitrary power in the hands of the judge elected by an agricultural majority, what has been the concrete result? Especially, what principles have been applied by the judges?

Of course the first principle has been that all the working people should get what is called a "minimum" or a "living" wage, but our authors show that merely to keep their heads above the sea of pauperism was not at all the goal of the workers of New Zealand. No doubt they were already getting such a wage in that relatively new and prosperous country, yet this was all the new law did or could offer, besides keeping existing wage scales up to the rising cost of living. Anything more would have required, not compulsory arbitration, but a series of revolutionary changes in the whole economic and political structure. "Another stumbling block in the way of advance in wages is the inefficient or marginal or no-profit employer, who, hanging on the ragged edge of ruin, opposes the raising of wages on the ground that the slightest concession would plunge him into bankruptcy. His protests have their effect on the Arbitration Court, which tries to do justice to all the parties and fears to make any change for fear of hurting somebody. But the organized workers, caring nothing for the interests of any particular employer, demand improved conditions of labor, though the inefficient employer be eliminated and all production be carried on by a few capable employers doing business on a large scale and able to pay the highest wages."

Here is the essential flaw in compulsory arbitration in competitive industries (its limitations under monopolies will be mentioned later). The courts cannot apply a different standard to different employers. On the other hand, they cannot fix a wage which any employer cannot afford to pay or which will drive him out of business. That is to say, the standard tends to be fixed by what the poorest employer can pay, the employer who, from the standpoint either of capital or of labor or of efficient industry, really deserves to be driven from business. An exception is made only against such employers as cannot even afford to pay a living wage—these alone are eliminated.

Le Rossignol and Stewart show that in view of these considerations the court has repeatedly stated that "profit sharing could not be taken as a basis of awards, on the ground that it would involve the necessity of fixing differential rates of wages, which would lead to confusion, would be unfair to many employers, and unsatisfactory to the workers themselves."

With such a principle guiding the court, and it is probably a necessity under commercial competition, it is no wonder that some of the representatives of the unions have claimed that annual real wages have actually fallen. "It is not easy," say our authors, "to show that compulsory arbitration has greatly benefited the workers of the Colony. Sweating has been abolished, but it is a question whether it would not have disappeared in the years of prosperity without the help of the Arbitration Court. Strikes have been largely prevented, but it is possible that the workers might have gained as much or more by dealing directly with their employers than by the mediation of the court. As to wages, it is generally admitted that they have not increased more than the cost of living. A careful investigation by Mr. von Dalezman, the Registrar-General, shows that, while the average wages increased from 1895 to 1907 in the ratio of 84.8 to 104.9, the cost of food increased in the ratio of 84.3 to 103.3. No calculation was attempted for clothing or rent." If we take it into account that rents have risen very rapidly and are especially complained of by the working people, we can see that real wages, measured by their purchasing power, probably fell in the first twelve years of compulsory arbitration, notwithstanding that it was on the whole a period of prosperity in the Colony. For ten years, as a consequence, the complaints of the workers against the decisions have been growing, "not because the wages were reduced, but because they were not increased and because other demands were not granted."

When the unions perceived that the principles for which they have been contending were not granted, and that their material conditions were not being improved, it was suggested that the judge of the Arbitration Court should be elected by the people, in the hope that the unions might control the election, "but this would be at variance with all British traditions and could not be brought about," say our authors. No doubt British tradition has had something to do with the matter, but the impracticability of this remedy is much more due to the fact that the employees confront an agricultural and middle class majority.

At first it was the employers who were displeased, but now they are becoming converted. The employers, say Le Rossignol and Stewart, "have come to realize that they might have lost more by strikes than they have ever lost by arbitration; and, since the workers have been dissatisfied, the employers are more disposed to stand by the act, or to maintain a neutral attitude, waiting to see what the workingmen will do."

It would seem, then, that the real gain from the law has been through the abolition of strike losses, and since these had previously been borne by employers and employees alike, this saving has been pretty equally divided between the two classes, neither making any relative gain over the other. But at the bottom this is a blow to the unions, for the purpose of every union policy is not merely to leave things where they were before, but to increase the workers' relative share. Any policy that brings mutual gain requires no organized struggle of any kind. It is the workers who are the plaintiffs, and the employers the defendants. When things are left in statu quo it is a moral and actual defeat for the employees.

This is why, in the last two or three years, the whole labor movement in New Zealand has arisen against the law. In 1908 the coal miners' union refused to pay a fine levied against it, alleging that it had no funds. "In this position the union was generally condemned by public opinion, but supported by a number of unions by resolutions of sympathy and gifts of money. Finally, the Arbitration Court decided to proceed against the men individually for their share of the fine. The whole of the fine, together with the costs of collection, amounting to over 147 pounds, was recovered by means of attachment orders under the Wages Attachment Act of 1895. According to a recent decision of the Court of Appeals, the men could have been imprisoned, if they had refused to pay, for a maximum term of one year, but it was not necessary to do this, and public opinion was not in favor of imprisonment for the offense."

This and other strikes in 1907 and 1908 "caused a widespread opinion among employers and the general public that the act should be amended chiefly for the sake of preventing strikes. The laborers, as a class, were not enthusiastic about the matter, since the proposed amendments were designed to compel them to obey the law rather than to bring them any additional benefit." After having been debated for a year, a new law was passed, and went into effect January 1, 1909. This new law, though still compulsory, repeals some of the features of the previous legislation which were most obnoxious to the unions. Even this act, however, they found entirely unsatisfactory, and "during the year ending March 31, 1909, sixteen workers' unions, and a like number of employers' unions, had their registration cancelled for neglect, while two other unions formally cancelled their registration." This meant practically that these unions have withdrawn from the field of the act and expressed their disapproval of compulsory arbitration, even in its recently modified form. Not only have the unions been withdrawing, but, freed from its bondage, they began at once to win their most important strikes, indicating what its effect had been. Even the employees of the State have been striking, and successfully.

"The workers' position is embarrassing. The original act was passed for their benefit as well as to prevent strikes, but when it could no longer be used as a machine for raising wages, they were the first to rebel against it." There can be no doubt that our authors are correct, and that the working people are beginning to feel they have been trapped. In both New Zealand and Australia they have given their approval to an act which in actual practice may become more dangerous than any weapon that has ever been forged against them. The only possible way they could gain any advantage from it would be if they were able to elect the judge of the Arbitration Court, but, to obtain a political majority for this purpose, they would have to develop a broad social program which would appeal to at least a part of the agriculturists as well as to the working people, but here we turn to the considerations to be brought out in the next chapter.

Mr. Charles Edward Russell, as the result of two visits to Australasia, has very ably summed up the Socialist view of compulsory arbitration in The Coming Nation, of which he is joint editor. Mr. Russell says:—

"The thing is a failure, greatly to the surprise of many capable observers, and yet just such a result might have been expected from the beginning, and for two perfectly obvious reasons, both of which, strange to say, were universally overlooked.

"In the first place, the court was nominally composed of three persons, and really of one. That one was the judge appointed by the government.

"The representative of the employers voted every time for the employers; the representative of the unions voted every time for the unions; the judge alone decided, and might as well have constituted the whole court.

"At first the judge decided most of the cases in favor of the policy of increasing wages. Fine, again. Many wage scales ascended.

"But the judge, as a rule, did not like his job. He desired to get to the Supreme Court as rapidly as possible; to the Supreme Court where the honors were. A succession of judges went by. At last came one that agreed with the employers that wages were too high for the welfare of the country. This had long been a complaint of the manufacturers in particular, who were fond of pointing out how high wages discouraged the opening of new factories, and consequently the development of the country. This judge, being of the same opinion, apparently, began to decide the cases the other way.

"Then, of a sudden the second fatal defect in the system opened up.

"The men grew restless under the adverse decisions of the court. That raised a new question.

"How are you going to compel men to work when they do not wish to work under the conditions you provide?

"Nobody had thought of that."

Referring, then, to the failure to prevent the strike of the slaughterers against the law in 1907, or to punish them after they had forced their employers to terms, Mr. Russell gives the Socialist opinion of the legislation of 1908, passed to remedy this situation:—

"At the next session of Parliament it amended the law to meet these unexpected emergencies and find a way to compel men to work.

"To strike after a case had been referred to the court was now made a crime, punishable by a fine, and if the fine were not paid, the strikers' goods could be distrained and he could be imprisoned. Any labor union that ordered a strike or allowed its members to strike was made subject to a fine of $500. Outside persons or organizations that aided or abetted a strike were made subject to severe penalties.

"Fine, again. But suppose the labor unions should try to evade the law by withdrawing from registry under the act? Government thought once more, and produced another amendment by which the penalties for striking were extended to all trades engaged in supplying a utility or a necessity, whether such trades were organized or not.

"You could hardly surpass this for ingenuity. 'Supplying a necessity' would seem to cover about everything under the sun and to make striking impossible. There must be no more strikes.

"Sounds like home, doesn't it? To do away with strikes. You see the employing class, which all around the world gets what it wants and controls every government, had put itself back of the arbitration law. It had discovered that the law could be made to be a good thing, so it was at the dictation of this class that the amendments were passed. What the injunction judges do in America, or try to do, the law was to do in New Zealand.

"Except that not Judge Goff nor Judge Guy, nor any other injunction judge of our own happy clime, has dared to go quite so far as to declare that all striking everywhere is a crime to be punished with imprisonment.

"How are you going to compel men to work? Why, thus, said the government of New Zealand. Put them in jail if they do not like the terms of their employment."

Mr. Russell then gives an account of the miners' strike, above referred to, which he points out was ended by the labor department paying the miners' fines. He concludes:—

"Mr. Edward Tregear, a scholar and thinker, had filled for many years the place of chief secretary for labor. It is not a cabinet office, but comes next thereto. He is a wise person and a sincere friend of the worker, as he has shown on many occasions. As soon as he heard that the ministry actually purposed to imprison the miners because they did not like the terms of their employment, he went to the minister of labor and earnestly protested, protested with tears in his eyes, as the minister himself subsequently testified, begged, argued, and pleaded. No possible good could come from such rigor, and almost certainly it would precipitate grave disaster.

"To all this the minister was obdurate. Then Mr. Tregear said that he would resign; he would not retain his office and see men imprisoned for exercising their inalienable right of choice, whether they would or would not work under given conditions.

"Now Mr. Tregear was one of the most popular men in New Zealand, and his resignation under such conditions would raise a storm that no ministry would care to face. Hence the government was in a worse situation than ever. On one side it fronted a dangerous venture with the certainty of a tremendous handicap in the resignation of the chief secretary, and on the other hand was an acknowledgment that the arbitration law was a failure and could be violated with impunity.

"In this emergency decision was halted for a few hours while the government people consulted. Meantime, by quick and desperate efforts, the strike was ended, and the men went back to work.

"This left the fines unpaid. The labor department solved that difficulty and allowed the defeated government to make its escape from a hopeless situation by paying the miners' fines.

"To all intents and purposes it was the end of compulsory arbitration in New Zealand. Not nominally, for nominally the thing goes on as before; but actually. It is only by breaking our shins upon a fact that most of us ever learn anything; and the exalted ministry of New Zealand had broken its shins aplenty on a fact that might have been discerned from the start.

"If you are to have compulsory arbitration, you must compel one side as much as the other.

"But in the existing system of society, when you come to compelling the workers to accept arbitration's awards, you are doing nothing in the world except to compel them to work, and, however the thing may be disguised, compulsory work is chattel slavery, against which the civilized world revolts.

"This is the way the thing works out, and the only way it ever can work out. There can be no such thing as compulsory arbitration without this ultimate situation.

"If, therefore, any one in America believes in such a plan for the settlement of labor troubles, I invite the attention of such a one to this plain record.

"For my own part, years ago I was wont to blame the labor leaders of America because they steadfastly rejected compulsory arbitration, and I now perceive them to have been perfectly right. The thing is impossible."[75]

A somewhat similar act to the Australasian ones, though less stringent, has been introduced in Canada. The Canadian law, which is a compromise between compulsory arbitration and compulsory investigation, applies to mines, railways, and other public utilities. Strikes have been prevented, but let us see what benefits the employees have received. Whatever its effect on wages and hours, the law has the tendency to weaken the unions, which hitherto have been the only reliable means by which employees were able to advance their condition. Not only does it make organization seem less necessary, but it takes the most powerful weapon of the union, the ability to call a sudden strike. If we add to this the unfavorable influence on public opinion in case the unions are not contented with the rewards, and the fact that the law works against the union shop, which is the basis of some unions, we can understand the ground of their hostility.

"The Canadian Labour Disputes Investigation Act" is especially interesting and important because it is serving as a model for a campaign to introduce legislation along similar lines into the United States. Already Mr. Victor S. Clark, the author of the study of the Australian Labour Movement, to which I have referred at the beginning of the chapter, has been sent by Mr. Roosevelt and Mr. Taft to investigate into the working of the act. Ex-President Charles W. Eliot of Harvard has also advocated strenuously and at some length a similar statute, and it has been made the basis for the campaign in Massachusetts and other states. Mr. Clark reported: "Under the conditions for which it was devised, the Canadian law, in spite of some setbacks, is useful legislation, and it promises more for the future than most measures—perhaps more than any other measure—for promoting industrial peace by government intervention."

Here is the very keynote to compulsory arbitration, according to its opponents, whose whole attack is based on the fact that its primary purpose is not to improve the condition of the working people, but to promote "industrial peace by government intervention."

Mr. Clark concedes that "possibly workers do sacrifice something of influence in giving up sudden strikes," though he claims that they gain in other ways. "After such a law is once on the statute books, however, it usually remains, and in New Zealand, Australia, and Canada it has created a new public attitude toward industrial disputes. This attitude is the result of the idea—readily grasped and generally accepted when once clearly presented—that the public have an interest in industrial conflicts quite as immediate and important in its way as that of the conflicting parties. If the American people have this truth vividly brought to their attention by a great strike, the hopeful example of the Canadian act seems likely, so far as the present experience shows, to prove a guiding star in their difficulties." (Italics mine.)

In the agitation that was made in behalf of a similar law in Massachusetts, just exactly what is meant by the word "public" began to appear. It refers not only to the consumers of the article produced by the industry in which the strike occurs, but also to other dependent industries, to the merchants of the locality where the workmen live, and to the real estate interests. Here, then, are definite economic interests which are concerned primarily in the prevention of strikes and in the uninterrupted operation of the industry, and only in a secondary way in rates of wages. It is not a disinterested and non-partisan public; it is not on the side of the employers nor on the side of the employees, but it is opposed to the most effective weapons the working people have yet found to advance their interests, namely, the strike and the boycott.

It is said that if the workers lose the right to strike, the employers lose the right to lockout. It has been customary to set the lockout over against the strike as being of equal importance, but this is not the truth. Employers can discharge their workingmen one at a time when they are dissatisfied with a limited number; and they can often find a business protest for temporarily shutting down or restricting their output. To abolish strikes, then, is to take away the employees' chief means of offense or defense; while to pretend to abolish strikes and lockouts is to leave in the hands of the employers the ability to discharge or punish in other ways the men with whom they are dissatisfied.

When it was proposed to introduce the Canadian law in Massachusetts, no unionists of prominence indorsed it, but it was favored by a very large number of employers, while those employers who objected did so for widely scattered reasons. Mr. Clark is probably right in suggesting that, while such a law will not be enacted in the United States as things are now, it is very probable that it can be secured after some industrial crisis—and there is little doubt that President Eliot and perhaps also Mr. Roosevelt, for whom Mr. Clark was investigating, and many other influential public men, are expecting this time to arrive soon.

The attitude of a large minority of British unions and of a considerable part of the British Socialists is similar to that of the Canadian and Australian majority. When in 1907 the railway employees of Great Britain were for the first time sufficiently aroused and organized, and on the point of a national strike, a settlement was entered into through the efforts of Mr. Lloyd George and the Board of Trade (and it is said with the assistance of King Edward) which involved an entirely new principle for that country. A board was constituted to settle this and future strikes of which the Master of Rolls and other British functionaries were the leading elements. Actually the workers consented for several years to leave in the hands of the judges over whose election and appointment they have only an indirect and partial, if indeed any, control, complete power over their industrial life. The executive of the Fabian Society issued a manifesto congratulating the government on this "progressive" settlement, though few prominent labor leaders were willing to give it their full indorsement. The Fabian manifesto said that the advance in wages which could be secured by the settlement "will undoubtedly have been secured on the trade-union program, through the trade-union organization, by the trade union's representatives, and finally, in the argument before the arbitrator, by the ability of the trade union's secretary." But this settlement had nearly all the features of the Canadian law which I have just mentioned, and especially in failing to give any recognition to the unions, left the strongest possible weapon in the hands of their enemies. Nevertheless, more than a third of the members of the British Trade Union Congress voted since that time for a compulsory arbitration act, and British radicals like Percy Alden, M.P., to say nothing of conservatives, agitate for a law along New Zealand lines. The railway strike of 1911 has decreased the popularity of this proposal among unionists and Socialists, but has augmented it in still greater proportion among nearly all other classes. In the meanwhile, in spite of the employees' efforts, and external concessions by the employers, the power in the newest railway conciliation scheme lies also in the hands of the government (see Part III, Chapter V).

Statements by President Taft and other influential Americans lead us to believe it will be a very short period of years before similar legislation is applied to this country, in spite of the hostility of the unions, or perhaps with the consent of some of the weaker among them, which have little to gain by industrial warfare. While Secretary of War, Mr. Taft predicted a controversy between capital and labor which should decide once and for all how capital and labor should share the joint profits which they created. In this and many similar utterances there is foreshadowed the interference of the State. Indeed, the settlement of the Pennsylvania coal strike in 1903 was a clear example of such interference, and there is no question that the precedents established will be followed up on the next occasion of the kind by some arrangement even less advantageous to employees who now almost universally feel, as the present demands of the miner's union show, that they got the worst of the former decision.

The railway and mining situations in Great Britain, and the demand for the government to take some measure to protect employees against the "trusts" in this country (to say nothing of the menace of a great coal strike), promise to make compulsory arbitration an issue of the immediate future. Mr. Roosevelt, who now proposes that the government should interfere between monopolies and their employees, is the very man who is responsible for the coal strike tribunal of 1903, which not only denounced sympathetic strike and secondary boycott, but failed to protect the men against discrimination on account of their unionism. Were he or any one like him President, the institution of government wage boards would be dreaded like the plague.

Similarly Mr. Winston Churchill, in Great Britain, recognizes the extreme seriousness of the situation. His position is ably summed up by the Saturday Evening Post:—

"Winston Churchill has propounded a capital-and-labor puzzle to his British constituents.

"To a modern state, he says in substance, railroad transportation is a necessity of life—and how literally true this is of England was shown in the general strike of last August, when the food supply in some localities ran down to only a few days' requirements. So the government cannot permit railroad transportation to be paralyzed indefinitely by a strike. It cannot sit by and see communities starve. A point will soon be reached where it must intervene and force resumption of transportation.

"Strikes, however, form one of the modern means of collective bargaining between employer and employees. They are, in fact, the workmen's final and most effective resource in driving a bargain. Denied the right to strike, labor unions would be so many wooden cannon at which employers could laugh. If the employer knew absolutely that the men could not strike, he might offer any terms he pleased. In wage bargaining the men would not stand on a level footing, but be bound and gagged.

"If, then, the government takes away, or seriously restricts, the right of the men to strike, isn't it bound to step into the breach and readjust the balance between them and the employer, by compelling the employer to pay them fair wages? There can be no free bargaining if it is known that at a certain point the government will intervene on one side. Must it not, then, also be known that at a certain point the government will intervene on the other side and compel payment of adequate wages?

"Mr. Churchill carries his puzzle only that far. On our own account we add, How far will that leave us from regulation of wages as well as of rates by the government, and how far will that leave us from government ownership?"[76]

In a word, Mr. Churchill's remedy for the evils of "State Socialism" is more "State Socialism"—and undoubtedly there is an inevitable trend in that direction. But the government railway strikes of France, Austria, Italy, Hungary, and other countries ought to show him that his remedy, advantageous as it may be from many standpoints, is scarcely to be considered even as a first step towards the solution of the labor problem. As long as capitalists continue to control government, "State Socialism," on the contrary, makes the strike more necessary, more decisive, and invaluable, not only to employees, but to every class that suffers from the government or the economic system it supports.

The most representative of American Socialists, Eugene V. Debs, has given us an excellent characterization of this movement as it appears to most Socialists.

"Successful leaders are wise enough to follow the people. For instance, the following paragraph is to the point:—

"'Ultimately I believe that this control of corporations should undoubtedly, directly or indirectly, extend to dealing with all questions connected with their treatment of their employees, including the wages, the hours of labor, and the like.'

"And what Socialist made himself ridiculous by such a foolish utterance? No Socialist at all; only a paragraph from his latest article on the trusts by Theodore Roosevelt. Five years ago, or when he was still in office and had the power, he would not have dared to make that statement. But he finds it politically safe and expedient to make it now. It is not at all a radical statement. On the contrary, it is simply the echo of E. H. Gary, that is to say, John Pierpont Morgan, president of all the trusts.

"Mr. Roosevelt now proposes that Bismarck attempted in Germany forty years ago to thwart the Socialist movement, and that is State Socialism, so called, which is in fact the most despotic and degrading form of capitalism.

"President Roosevelt, who is popularly supposed to be hostile to the trusts, is in truth their best friend. He would have the government, the capitalist government, of course, practically operate the trusts and turn the profits over to their idle owners. This would mean release from responsibility and immunity of prosecution for the trust owners, while at the same time the government would have to serve as strikebreaker for the trust owners, and the armed forces of the government would be employed to keep the working class in subjection.

"If this were possible, it would mark the halfway ground between industrial despotism and industrial democracy. But it is not possible, at least it is possible only temporarily, long enough to demonstrate its failure. The expanding industrial forces now transforming society, realigning political parties, and reshaping the government itself cannot be fettered in any such artificial arrangement as Mr. Roosevelt proposes. These forces, with the rising and awakening working class in alliance with them, will sweep all such barriers from the track of evolution until finally they can find full expression in industrial freedom and social democracy.

"In this scheme of State Socialism, or rather State capitalism, Mr. Roosevelt fails to inform us how the idle owners of the trusts are to function except as profit absorbers and parasites. In that capacity they can certainly be dispensed with entirely and that is precisely what will happen when the evolution now in progress culminates in the reorganization of society."[77] (My italics.)

[72] Victor S. Clark, "The Labour Movement in Australasia."

[73] In her "American Socialism of the Present Day" (p. 185), Miss Hughan has quoted me (see the New York Call of December 12, 1909), as classing the abolition of the injunction as one of the revolutionary demands never to be satisfied until the triumph of Socialism. As a means to check the growth of the power of the unions, this method of arbitrary government by judges has never been resorted to except in the United States. It is evident, then, that this statement was only meant for America. It should also have been qualified so as to apply solely to the America of to-day. For as other methods of checking the unions exist in other countries, it is obvious that they could be substituted in this country for the injunction, a proposition in entire accord with all I have written on the subject—though unfortunately not stated in this brief journalistic expression. I have now come to the belief, on the grounds given in the text, not only that a new method of fighting the unions (namely, compulsory arbitration) can be substituted for the injunction, but that this will be done within a very few years.

[74] Professor Le Rossignol and Mr. William D. Stewart, "Compulsory Arbitration in New Zealand," in the Quarterly Journal of Economics. Reprinted in their book, "State Socialism in New Zealand."

N. B. The reader who is interested is referred to the whole of both these volumes. There is little matter in either that does not have a direct bearing on our subject, and they have been utilized throughout this and the following chapter.

FOOTNOTES:

[75] The Coming Nation, Sept. 2, 1911.

[76] The Saturday Evening Post, Nov. 25, 1911.

[77] The New York Times, Nov. 25, 1911.



CHAPTER VI

AGRARIAN "STATE SOCIALISM" IN AUSTRALASIA

Australia and New Zealand are commonly taken as the most advanced of all countries in government ownership, labor reforms, and "State Socialism." Indeed they are often pictured as almost ideally governed, and the credulity with which such pictures are received shows the widespread popularity of "State Socialism."

The central principle of the Australian and New Zealand reforms is, however, not government ownership or compulsory arbitration, as commonly supposed, but a land policy. By means of a progressive or graduated land tax it is hoped to break up all large estates and to establish a large number of small proprietors. When it was said to Mr. Fisher, the new "Labour Party" Premier of Australia, that this policy was not Socialism, he replied laconically, "It is my kind of Socialism."[78]

The "State Socialism" of Australia and New Zealand is fundamentally agrarian; its real basis is a modernized effort to establish a nation of small farm owners and to promote their welfare.

Next in importance and closely connected with the policy of gradually bringing about the division of the land among small proprietors, is the policy of the government ownership of monopolies. Already New Zealand is in the banking business, and the Australian Labour Party proposes a national bank for Australia. National life and fire insurance are instituted in New Zealand; the same measures are proposed for Australia. Already many railroads are nationally owned, and it is proposed that others be nationalized. Already extensive irrigation projects have been undertaken; it is proposed that the policy should be carried out on a wider scale. But the Australian Labour Party is not fanatical upon this form of "State Socialism." It does not argue, like the British Independent Labour Party, that the civilization of a community can be measured by the extent of collective ownership, for Australasia's experience has already shown the immediate and practical limits of this kind of a movement. New Zealand is already burdened with a very large national debt; Australia proposes that its debt shall be increased only for the purpose of building commercially profitable railways or irrigation schemes, etc., and not in any case for the purpose of national defense or for other investments not immediately remunerative.

The national debt, aside from that based on profit-making governmental undertakings, like railways, is to be reduced, and nationalization of other monopolies is not to be undertaken until new measures of taxation have become effective. These are a graduated land tax and an extension of the graduated income and inheritance taxes.[79]

The program concludes with vigorous measures for national defense. Australia is to own her navy (supported not by loans, but by taxation), and is to be as independent as practicable of Great Britain. She feels a need for military defense, but she does not propose to have a military caste, however small; the whole people is to be made military, the Labour Party stands for a citizen defense force and not for a professional army. Finally, Australia is to be kept for the white race, especially for British and other peoples that the present inhabitants consider desirable.

There remains that part of the program which has attracted the most attention, namely, the labor reforms: workingmen's insurance, an eight-hour day, and an increase of the powers of the compulsory arbitration courts. Already in fixing wages it has been necessary for the court to decide what is a fair profit to the employers, so profits are already to some degree being regulated. It has been found that prices and the cost of living are rising still more rapidly than wages; it is proposed that prices should also be regulated by withdrawing the protection of the customs tariff from those industries that charge an unduly high price.

I have mentioned the labor element of the program last, for the Australian Labour Party is a democratic rather than merely a labor movement. The Worker's Union, and the Sheep Shearer's Society of the Eastern States, enrolled from the first all classes of ranch employees, and "even common country storekeepers and small farmers."[80] Some of the miners' organizations have been built on similarly broad lines, and these two unions constitute the backbone of the Labour Party. The original program of the New South Wales Labour Electoral League, which formed the nucleus of the Labour Party in 1891, proposed to bring together "all electors in favor of democratic and progressive legislation," and was nearly as broad as the present program; that is to say, it was by no means confined to labor reforms.

But are there any other features in the Australian situation, besides the dominating importance of the land question, that rob this program of its significance for the rest of the world? It cannot be denied that there are. In the first place, it is only this recent social reform movement that has begun to put New Zealand and Australia under real democratic government, and this democratization is scarcely yet complete, since the constitutions of some of the separate Australian States and Tasmania contain extremely undemocratic elements; while the federal government is dominated by a Supreme Court, as in the United States. Consequently it is only a few years in some of the States since such elementary democratic institutions as free schools were instituted. It is evident, on the other hand, that countries establishing democratic or semidemocratic institutions under the conditions prevailing in the world as late as 1890, when the great change took place in New Zealand, or during the decade, 1900-1910, when the political overturn gave Australia to the Labour Party, should be more advanced than France, Germany, Great Britain, or the United States, where the latest great overturn in the democratic direction occurred in each instance a generation or more ago.

So also Australia and New Zealand which, on the one hand, are still suffering from the disadvantage of having lived until recently under a system of large landed estates, on the other hand have the advantage of dealing with the land question in a period when the governments of these new countries are becoming rich enough, through their own enterprises, to exist independently of land sales, and when farmers are more willing to increase the power of their governments, both in order to protect themselves from the encroachments of capital and of labor, and directly to advance the interests of agriculture. The campaign to break up the large estates has kept the farmers engrossed in politics, and this has occurred in a period when industrial organization has made possible a whole program of "Constructive State Socialism." By taking up this program the farmers and those who wished to become farmers have at once looked to their own interests and secured the political support of other small capitalists and even of a large part of the workingmen.

But working against the nationalization of the unearned increment, against the policy of leasing instead of selling the public land, central features of every advanced "State Socialist" policy, is the fact that the small farmers, daily becoming more numerous, hope that they might themselves reap this increment through private ownership. In no national legislation is it proposed to tax away this increment in agricultural land, which preponderates both in New Zealand and Australia. But, while in other countries the agricultural population is decreasing relatively to the whole, in New Zealand the settlement of the country by the small farmers has hitherto led it to increase, and the new legislation in Australia must soon have the same result. So, in spite of the favorable auspices, it seems that the climax of the "State Socialism," the transformation of the small farmer into a tenant of the State is not yet to be undertaken, either in the shape of land nationalization or in the taxing away of unearned increment. And while the Australian Labour Party as an organization favors nationalization, a large part of those who vote for this party do not, and its leaders have felt that to have advocated nationalization hitherto would have meant that they would have failed to gain control of the government. And in proportion as the new land tax creates new farmers, the prospects will be worse than they are to-day.

The existing land laws of New Zealand are extremely moderate steps in the direction of nationalization. In 1907, after the best land had been taken up, a system of 66-year leases was introduced, but only as a voluntary alternative to purchase. After 1908 the annual purchases of large estates were divided into small lots and leased for terms of 33 years, but this applies only to a relatively small amount of land. It was only in 1907 that the graduated land tax began to be enforced in a way automatically to break up the large estates as it had been expected to do, and it was only in 1910 that the new and more heavily graduated scale went into effect. And finally it was only in 1907 that large landowners were forbidden to purchase, even indirectly, government land. It has taken all these years even to discourage large estates effectively, to say nothing of nationalization.

"Some writers have predicted that the appetite for reform by taxation will grow, and that the taxation will be increased and the exemptions diminished until all the rent will be taken and the land practically confiscated, according to the proposals of Henry George. But the landless man, when he becomes a landholder, ceases to be a single taxer, and is strongly opposed to Socialism. The land legislation of New Zealand, although apparently Socialistic, is producing results directly opposed to Socialism by converting a lot of dissatisfied people into stanch upholders of private ownership of land and other forms of private property. The small farmers, then, are breaking away from their former allies, the working people of the towns, who now find themselves in the minority, but who are increasing in numbers and who will demand, sooner or later, a large share in the product of industry as the price of loyalty to the capitalistic system."[81]

Without land nationalization the process of nationalizing industry cannot be expected to proceed faster than it pays for itself—for we cannot reckon as part of the national profits the increased land values national enterprises bring about. Nor will capitalist collectivism at this stage proceed even this fast. Not only do the small taxpayers oppose the government going into debt, but as taxpayers they are responsible for all deficiencies, and they want only such governmental enterprises as both produce a surplus and a sufficient one to pay the deficits of the nonproductive departments of government. To-day only about one fifth of the taxpayers pay either land or inheritance taxes. But the increasing military expenditures and the greater difficulty of securing large sums by indirect taxation will increase this proportion. It is likely, then, that State enterprises which, under private capitalism, were used recklessly as aids to land speculation will now be required, as in Germany and other continental countries, to produce a surplus to relieve taxpayers. Private capitalism used the State for promoting the private interests of its directors, State capitalism uses it to produce profits for its shareholders, the small farmers, as taxpayers, or in the form of profits distributed among them as consumers. Only as the government begins to take a considerable share of that increased value in land which nearly every public undertaking brings about, will all wisely managed government enterprises produce such profits.

The advance of "State Socialism," though it has several other aspects, can be roughly measured by the number of government enterprises and employees. The railways, telegraphs, and the few government-owned mines of New Zealand, have been calculated to employ about one eighth of the population, a greater proportion than in America or Great Britain, but scarcely greater than in Germany or France—and not a very great stride even towards "State Socialism." And it seems likely that the present proportion in New Zealand will remain for some time where it is. Government banking, steamships, bakeries, and the government monopoly of the sale of liquor and tobacco might not prove immediately profitable, and are less heard of than formerly.

Where "State Socialism" has proceeded such a little distance, the material benefits it promises to labor (though in a lesser proportion than to other classes) have not yet accrued. "It must be admitted," write Le Rossignol and Stewart, "that the benefits of land reform and other Liberal legislation have accrued chiefly to the owners of land and other forms of property, and the condition of the landless and propertyless wage earners has not been much improved." Indeed, the condition of the workers is little, if any, better than in America. Mr. Clark writes: "The general welfare of the working classes in Australasia does not differ widely from that in the United States. The hours of work are fewer in most occupations, but the wage per hour is less than in America. The cost of living is about the same in both countries. There appears to be as much poverty in the cities of New Zealand as in the cities of the same size in the United States, and as many people of large wealth." It is no doubt true, as these writers say, that, of the people classed as propertyless, "many are young, industrious, and well-paid wage earners; who, if they have health and good luck may yet acquire a competency" in this as in any other new country. Yet it is only to those who "have saved something," i.e. to property holders, that the State really lends a helping hand.

Even when New Zealand becomes an industrial country, the writers quoted calculate that "it should be possible for the party of property to attach to itself the more efficient among the working class, by giving them high wages, short hours, pleasant conditions of labor, opportunities for promotion, a chance to acquire property, insurance benefits, and greater advantages of every kind than they could gain under any form of Socialism. If this can be done, the Socialists will be in a hopeless minority."

Here we have in a few words the universal labor policy of "State Socialism." Labor reforms are to be given to the working class first, to encourage in them as long as possible the hope to rise; second, when this is no longer effective, to make the upper layers contented, and finally to "increase industrial efficiency," as these same writers say—but at no time to put the workers on a level with the property-owning classes.

Indeed, it is impossible to do more on a national scale, as these writers point out, for both capital and labor are international. If "State Socialism" were carried to the point of equalizing the share of labor, either immigration would be attracted until wages were lowered again, or capital would emigrate, or the nation would have to defend its exclusiveness by being prepared for war.

"It is hard to see how any country, whether Socialistic or individualistic in its industrial organization, can long keep its advantage over other countries without some restriction of immigration. A thoroughgoing experiment in collectivism, therefore, could not be made under favorable conditions in New Zealand or any other country, unless that country were isolated from the rest of the world, or unless the whole world made the same experiment at the same time."

As between comparative isolation possibly in the near future and world-wide or at least international Socialism, certainly many years ahead, the Australian Labour Party, under similar circumstances to that of New Zealand, has chosen to attempt comparative isolation. It does not yet propose to keep out immigrants, but it makes a beginning with all non-white races, and it stands for a policy of high protection and a larger army and navy. Naturally it does not even seek admission into the International Socialist Congress, where if any Socialist principle is more insisted upon than another it is Marx's declaration that the Socialists are to be distinguished from the other working class parties only by the fact that they represent the interests of the entire working class independently of nationality or of groups within the nation.

Moreover, the militarism necessary to enforce isolation may cost the nation, capitalists and workers alike, far more heavily than to leave their country open to trade and immigration. Indeed, it must lead, not to industrial democracy, or even to capitalistic progress, but to stagnation and reaction. The policy of racial exclusion will not only increase the dangers of war, but it will bring little positive benefit to labor, even of a purely material and temporary kind, since the farming majority will not allow it to be extended to the white race. Instead of restricting immigration, the new government projects require a thicker settlement, and everything is being done to encourage settlers of means and agricultural experience, and we cannot question that the coming of white laborers will be encouraged when they are needed.

The size of the farms the government is promoting in New Zealand proves that the country is deliberately preparing for a class of landless agricultural laborers, and Australia is following the example. Since these new farms average something like two hundred acres, we must realize that as soon as they are under thorough cultivation they will require one or more farm laborers in each case, to be obtained chiefly from abroad, producing a community resting neither on "State Socialism" nor even on a pioneer basis of economic democracy and approximate equality of opportunity similar to that which prevailed during the period of free land in our Western States.

Unmistakable signs show that in New Zealand an agrarian oligarchy by no means friendly to labor has already established itself. Even the compulsory arbitration act which bears anything but heavily on employers in general, is not applied to agriculture. After two years of consideration it was decided in 1908 that the law should not apply on the ground that "it was impracticable to find any definite hours for the daily work of general farm hands," and that "the alleged grievances of the farm laborers were insufficient to justify interference with the whole farming industry of Canterbury" (the district included 7000 farms). Whatever we may think of the first justification, the second certainly is a curious piece of reasoning for a compulsory arbitration court, and must be taken simply to mean that the employing farmers are sufficiently powerful politically to escape the law. The working people very naturally protested against this "despotic proceeding," which denied such protection as the law gave to the largest section of workers in the Dominion.

What is the meaning, then, of the victory of a "Labour Party" in Australia? Chiefly that every citizen of Australia who has sufficient savings is to be given a chance to own a farm. A large and prosperous community of farmers is to be built up by government aid. Even without "State Socialism" or labor reform the working people would share temporarily in this prosperity as they did to a large degree in that of the United States immediately after the Civil War, until the free land began to disappear. It was impossible to pay exceptionally low wages to a workingman who could enter into farming with a few months' notice.

The Labour Party hopes to use nationalization of monopolies and the compulsory regulation of wages to insure permanently to the working classes their share of the benefit of the new prosperity. How much farther such measures will go when the agricultural element again becomes dominant is the question. It is already evident that the Australian reform movement, like that of New Zealand, includes, or at least favors, the same class of employing farmers. The fact that a Labour Party is in the opposition in New Zealand, while in Australia a Labour Party has led in the reforms and now rules the country, should not blind us to the farmers' influence. The very terms of the graduated land tax and the value of the farms chosen for exemption show mathematically the influence, not alone of the small, but even the middle-sized farmers. Estates of less than $25,000 in value are exempt, and those valued at less than $50,000 are to be taxed less than one per cent. Such farms, as a rule, must have one or more laborers. Will these employees come in under the compulsory arbitration law? If they do, will they get much benefit? The experience of New Zealand and the present outlook in Australia do not lead us to expect that they will.

Many indications point to a coming realignment of parties such as was recently seen in New Zealand, when in 1909 it was decided to form an opposition Labour Party. And it is likely to come, as in New Zealand, when the large estates are well broken up and the agricultural element can govern or get all they want without the aid of the working people. Already the Australian Labour Party is getting ready for the issue. Its leaders have kept the proposed land nationalization in the background, because they believe it cannot yet obtain a majority. But it may be that the party itself is now ready to fight this issue out on a Socialist basis, even if, like the Socialist parties in Europe, such a decision promises to delay for a generation their control of the government. If the party is ready, it has the machinery to bring its leaders to time, as it has done on previous occasions. For it already resembles the Socialist parties in Europe in this, that it makes all its candidates responsible to the party and not to their constituents. That is to say, while it does not represent the working people exclusively, it is a class organization standing for the interests of that group of classes which has joined its ranks, and for other classes of the community only in so far as their interests happen to be the same.

Already the majority of the Labour Party voters are undoubtedly working people. When it takes a definite position on the land question, favoring one-family farms and short leases or else cooeperative, municipal, or national large-scale operation, and states clearly that it intends to use compulsory arbitration to advance wages indefinitely, including those of farm laborers, there is every probability that, having lost the support of the employing farmers, it will gradually take its place as a party of permanent opposition to capitalism, like the Socialist parties of Europe—until industry finally and decisively surpasses agriculture, and the industrial working class really becomes the most powerful element in society.

Space does not permit the tracing of the "State Socialist" tendency in other countries than Great Britain, the United States, and Australasia. Originally a brief chapter was here inserted showing the similar tendencies in Germany. This is now omitted, but the frequent reference to Germany later in dealing with the Socialist movement makes a brief statement of the German situation essential. For this purpose it will be sufficient to quote a few of the principal statements of the excellent summary and analysis by William C. Dreher entitled "The German Drift towards Socialism":

"The German Reichstag passed a law in May, 1910, for the regulation of the potash trade, a law which goes further in the direction of Socialism than any previous legislation in Germany. It assigns to each mine a certain percentage of the total production of the country, and lays a prohibitory tax upon what it produces in excess of this allotment. It fixes the maximum price for the product in the home market, and prohibits selling abroad at a lower price. A government bureau supervises the industry, sees that the prices and allotments are observed, examines new mines to determine their capacity, and readjusts allotments as new mines reach the producing stage....

"But the radical features of the law are not completed in the foregoing description. The bill having reduced potash prices, the mine owners threatened to recoup themselves by reducing wages. But the members of the Reichstag were not to be balked by such threats; they could legislate about wages just as easily as about prices and allotments. So they amended the bill by providing that if any owner should reduce wages without the consent of his employees, his allotment should be restricted in the corresponding proportion....

"While the law is indeed decidedly Socialistic in tendency, it is not yet Socialism. It hedges private property about with sharper restrictions than would be thought justifiable in countries where, as in the United States, the creed of individualism is still vigorous; and yet it is, in effect, hardly more than a piece of social reform legislation, though a more radical one than we have hitherto seen....

"In Germany, 'the individual withers' and the world of State and Society, with its multifarious demands upon him, 'is more and more.' This is, of course, a Socialistic tendency, but the substitute that the Germans are finding for unlimited competition is not radical Socialism, but organization....

"The State, of course, takes hold of the individual life more broadly, with more systematic purpose. The individual's health is cared for, his house is inspected, his children are educated, he is insured against the worst vicissitudes of life, his savings are invested, his transportation of goods or persons is undertaken, his need to communicate with others by telegraph or telephone is met—all by the paternal State or city.

"Twenty-five years ago the Prussian government was spending only about $13,500 a year on trade schools; now it is spending above three million dollars on more than 1300 schools....

"The Prussian State had also long been an extensive owner of coal, potash, salt, and iron mines. In 1907 a law was passed giving the State prior mining rights to all undiscovered coal deposits. In general, however, it must cede those rights to private parties on payment of a royalty; but the law makes an exception of 250 'maximum fields,' equal to about 205 square miles, in which the State itself will exercise its mining rights. It has recently reserved this amount of lands adjacent to the coal fields on the lower Rhine and in Silesia. The State has already about 80 square miles of coal lands in its hands, from which it is taking out about 10,000,000 tons of coal a year. Its success as a mine owner, however, appears to be less marked than as a railway proprietor; experienced business men even assert that the State's coal and iron mines would be operated at a loss if proper allowances were made for depreciation and amortization of capital, as must be done in the case of private companies. The State also derives comparatively small revenues from its forest and farming lands of some 830,000 acres, which were formerly the property of the Crown....

"The most important State tax is that on incomes, which is in all cases graduated down to a very low rate on the smallest income; in Prussia there is no tax on incomes less than $214. The cities also collect the bulk of their revenues from incomes, using the same classification and sliding scale as the State.

"A highly interesting innovation in taxation is the 'unearned increment' tax on land values, first adopted by Frankfort-on-the-Main in 1904, and already applied by over 300 German cities and towns....

"The bill before the Reichstag [since become a law—W. E. W.] extends sick insurance to farm laborers and household servants, a change which will raise the burden of this system for employers from $24,000,000 to $36,000,000. The bill also provides for pensioning the widows and orphans of insured laborers at an estimated additional expense of about $17,000,000....

"A better result of the insurance systems than the modest pensions and the indemnities that they pay is to be found in their excellent work for protecting health and prolonging life. Many offices have their own hospitals for the sick, and homes for the convalescent....

"All these protective measures have already told effectively upon the death rate for tuberculous diseases. In the three years ending with 1908, deaths from pulmonary tuberculosis dropped from 226.6 to 192.12 per 100,000.

"The accident system has also had a powerful effect in stimulating among the physicians and surgeons the study of special ways and means for treating accident injuries, with reference to preserving intact the strength and efficiency of the patient....

"Bismarck once, in a speech in the Reichstag, explicitly recognized the laborer's right to work. Some twenty German cities have given practical effect to his words by organizing insurance against nonemployment; and the governments of Bavaria and Baden have taken steps to encourage this movement. Under the systems adopted, the laborer pays the larger part of the insurance money, and the city the rest; in a few cases money has been given by private persons to assist the insurance."[82] [N.B. The word "Socialistic" is used by Mr. Dreher in the sense of "State Socialism," as opposed to what he calls "radical Socialism."]

FOOTNOTES:

[78] Special Correspondence of New York Evening Post, dated Sidney, Dec. 12, 1909.

[79] The data upon which this chapter is based is also obtained chiefly from Mr. Victor Clark's "Labour Movement in Australasia," and "State Socialism in New Zealand," by Stewart and Le Rossignol.

[80] Victor S. Clark, op. cit.

[81] Stewart and Rossignol, op. cit.

[82] The Atlantic Monthly, July, 1911.



CHAPTER VII

"EQUALITY OF OPPORTUNITY"

Many reformers admit that no reforms can bring us towards democracy as long as class rule continues. Henry George, for example, recognizes that his great land reform, the government appropriation of rent for public purposes, is useless when the government itself is monopolized, "when political power passes into the hands of a class, and the rest of the community become merely tenants."[83] In precisely the same way every great "State Socialist" reform must fail to bring us a single step towards real democracy, as long as classes persist.

That strongly marked social classes do exist even in the United States is now admitted by Dr. Lyman Abbott, Andrew Carnegie, and by innumerable other, by no means Socialistic, observers.

"The average wage earner," says John Mitchell, "has made up his mind that he must remain a wage earner. He has given up the hope of a kingdom to come where he will himself be a capitalist."[84] This feeling is almost universally shared by manual wage earners, and very widely also by salaried brain workers. Large prizes still exist, and their influence is still considerable over the minds of young men. But, as was pointed out recently in an editorial of the Saturday Evening Post, they are "just out of reach," and the instances in which they actually materialize are "so relatively few as to be negligible." Even if these prizes were a hundred fold more numerous than they are, the children of the wage earners would still not have a tithe of the opportunity of the children of the well-to-do.

To-day in the country opportunities are no better than in the towns. The universal outcry for more farm labor can only mean that such laborers are becoming relatively fewer because they are giving up the hope that formerly kept them in the country, namely, that of becoming farm owners. Already Mr. George K. Holmes of the United States Bureau of Statistics estimates that in the chief agricultural section of the country, the North Central States, a man must be rich before he can become a farmer, and so rapidly is this condition spreading to other sections that Mr. Holmes feels that the only hope of obtaining sufficient farm labor is to persuade the children of the farmers to remain on the farms.

"Fifty years ago," said McClure's Magazine in a recent announcement, which sums up some of the chief elements of the present situation, "we were a nation of independent farmers and small merchants. To-day we are a nation of corporation employees." There can be no question that we are seeing the formation in this country of very definitely marked economic and social classes such as have long prevailed in the older countries of Europe. And this class division explains why the political democracies of such countries as France, Switzerland, the United States, and the British Colonies show no tendency to become real democracies. Not only do classes defend every advantage and privilege that economic evolution brings them, but, what is more alarming, they utilize these advantages chiefly to give their children greater privileges still. Unequal opportunities visibly and inevitably breed more unequal opportunities.

The definite establishment of industrial capitalism, a century or more ago, and later the settlement of new countries, brought about a revolutionary advance towards equality of opportunity. But the further development of capitalism has been marked by steady retrogression. Yet nearly all capitalist statesmen, some of them honestly, insist that equality of opportunity is their goal, and that we are making or that we are about to make great strides in that direction. Not only is the establishment of equality of opportunity accepted as the aim that must underlie all our institutions, even by conservatives like President Taft, but it is agreed that it is a perfectly definite principle. Nobody claims that there is any vagueness about it, as there is said to be about the demand for political, economic, or social equality.

It may be that the economic positions in society occupied by men and women who have now reached maturity are already to some slight degree distributed according to relative fitness; and, even though this fitness is due, not to native superiority, but to unfair advantages and unequal opportunity, it may be that a general change for the better is here impossible until a new generation has appeared. But there is no reason, except the opposition of parents who want privileges for their children, why every child in every civilized country to-day should not be guaranteed by the community an equal opportunity in public education and an equal chance for promotion in the public or semi-public service, which soon promises to employ a large part if not the majority of the community. No Socialist can see any reason for continuing a single day the process of fastening the burdens of the future society beforehand on the children of the present generation of wage earners, children as yet of entirely unknown and undeveloped powers and not yet irremediably shaped to serve in the subordinate roles filled by their parents.

But the reformers other than the Socialists are not even working in this direction, and their claims that they are, can easily be disproved. Mr. John A. Hobson, for example, believes that the present British government is seeking to realize "equality of opportunity," which he defines as the effort "to give equal opportunities to all parts of the country and all classes of the people, and so to develop in the fullest and the farthest-sighted way the national resources."[85] But even the more or less democratic collectivism Mr. Hobson and other British Radicals advocate, if it stops short of a certain point, and its benefits go chiefly to the middle classes, may merely increase middle-class competition for better-paid positions, and so obviously decrease the relative opportunities of the masses, and make them less equal than they are to-day.

Edward Bernstein, the Socialist, says: "The number of the possessing classes is to-day not smaller, but larger. The enormous increase of social wealth is not accompanied by a decreasing number of large capitalists, but by an increasing number of capitalists of all degrees." Whether this is true or not, whether the well-to-do middle classes are gradually increasing in each generation, say, to 5, 10, or 15 per cent of the population, cannot be a matter of more than secondary importance to the overwhelming majority, the "non-possessing classes," that remain outside. Nobody denies that social evolution is going on even to-day. But the masses will probably not be willing to wait the necessary generations and centuries before present tendencies, should they chance to continue long enough (which is doubtful in view of the rapid formation of social castes), would bring the masses any considerable share of existing prosperity.

To secure anything approaching equality of opportunity, the first and most necessary measure is to give equal educational facilities to all classes of the population. Yet the most radical of the non-Socialist educational reformers do not dare to hope at present even for a step in this direction. No man has more convincingly described what the first step towards a genuinely democratic education must be than Ex-President Charles W. Eliot of Harvard, perhaps our most influential representative of political as opposed to social democracy.

"Is it not plain," asks President Eliot, "that if the American people were all well-to-do they would multiply by four or five times the present average school expenditure per child and per year? That is, they would make the average expenditure per pupil for the whole school year in the United States from $60 to $100 for salaries and maintenance, instead of $17.36 as now. Is it not obvious that instead of providing in the public schools a teacher for forty or fifty pupils, they would provide a teacher for every ten or fifteen pupils?"[86]

The reform proposed by Dr. Eliot, if applied to all the twenty million children of school age in the United States, would mean the expenditure of two billion instead of three hundred and fifty million dollars per year on public education. Ex-President Eliot fully realizes the radical and democratic character of this proposed revolution in the public schools, and is correspondingly careful to support his demands at every point with facts. He shows, for instance, that while private schools expend for the tuition and general care of each pupil from two hundred to six hundred dollars a year, and not infrequently provide a teacher for every eight or ten pupils, the public school which has a teacher for every forty pupils is unusually fortunate.

Dr. Eliot says that while there has been great improvement in the first eight grades since 1870, progress is infinitely slower than it should be, and that the majority of children do not yet get beyond the eighth grade (the statistics for this country show that only one out of nineteen takes a secondary course). "Philanthropists, social philosophers, and friends of free institutions," he asks, "is that the fit educational outcome of a century of democracy in an undeveloped country of immense natural resources? Leaders and guides of the people, is that what you think just and safe? People of the United States, is that what you desire and intend?"

In order not only to bring existing public schools up to the right standard, but to create new kinds of schools that are badly needed, the plan suggested by Dr. Eliot would take another billion or two. He advocates kindergartens and further development of the new subjects that have recently been added to the grammar school course; he opposes the specialization of the studies of children for their life work before the sixteenth or seventeenth year, favors complete development of the high school as well as the manual training, mechanics, art, the evening and the vacation schools, greater attention to physical education and development, and, finally, the greatest possible extension and development of our institutions of higher education. He also advocates newer reforms, such as the employment of skilled physicians in connection with the schools, the opening of public spaces, country parks, beaches, city squares, gardens, or parkways for the instruction of school children. He specifies in detail the improvements that are needed in school buildings, shows what is urgently demanded and is immediately practicable in the way of increasing the number of teachers, paying them better and giving them pensions, indicates the needed improvements in the administration of the school systems, urges the development of departmental instruction through several grades, and the addition of manual training to all the public schools along with a better instruction in music and drawing.