So strong was the protest against annexation, that the treaty could not command the necessary two-thirds vote in the Senate. The matter was disposed of by the passage of a joint resolution (March 1, 1845) which required only a majority vote in both houses of Congress. President Polk therefore took office with the mandate of the country and the decision of both houses of the retiring Congress, in favor of annexation.

Mexico, in the meantime, had offered to recognize the independence of Texas and to make peace with her if the Texas Congress would reject the joint resolution, and refuse the proffered annexation. This the Texas Congress refused, and with the passage, by that body, of an act providing for annexation, the Mexican minister was withdrawn from Washington, and Mexico began her preparations for war.

President Polk had taken office with the avowed intention of buying California from Mexico. The rupture threatened to prevent him from carrying this plan into effect. He therefore sent an unofficial representative to Mexico in an effort to restore friendly relations. Failing in that, he and his advisers determined upon war as the only feasible method of obtaining California and of settling the diplomatic tangle involved in the annexation of Texas.

4. The Conquest of Mexico

The Polk Administration made the Mexican War as a part of its expansionist policy.

"Although that unfortunate country (Mexico) had officially notified the United States that the annexation of Texas would be treated as a cause of war, so constant were the internal quarrels in Mexico that open hostilities would have been avoided had the conduct of the Administration been more honorable. That was the opinion of Webster, Clay, Calhoun, Benton, and Tyler.... Mexico was actually goaded on to war. The principle of the manifest destiny of this country was invoked as a reason for the attempt to add to our territory at the expense of Mexico."[29]

After the annexation of Texas it became the duty of the United States to defend that state against the threatened Mexican invasion.

Mexican troops had occupied the southern bank of the Rio Grande. General Zachary Taylor with a small force, moved to a position on the Nueces River. Between the two rivers lay a strip of territory the possession of which was one of the sources of dispute between Mexico and Texas. What followed may be stated in the words of one of the officers who participated in the expedition: "The presence of the United States troops on the edge of the territory farthest from the Mexican settlements was not sufficient to provoke hostilities. We were sent to provoke a fight, but it was essential that Mexico begin it" (p. 41). "Mexico showing no willingness to come to the Nueces to drive the invaders from her soil, it became necessary for the 'invaders' to approach to within a convenient distance to be struck. Accordingly, preparations were begun for moving the army to the Rio Grande, to a point near Matamoras. It was desirable to occupy a position near the largest center of population possible to reach without actually invading territory to which we set up no claim whatever" (p. 45).[30]

The occupation, by the United States troops, of the disputed territory soon led to a clash in which several United States soldiers were killed. The incident was taken by the President as a sufficient cause for the declaration of a state of war. The House complied readily with his wishes, passing the necessary resolution. Several members of the Senate begged for a delay during which the actual state of affairs might be ascertained. The President insisted, however, and the war was declared (May 13, 1846).

The declaration of war was welcomed with wild enthusiasm in the South. Meetings were called; funds were raised; volunteers were enlisted, equipped and despatched in all haste to the scene of the conflict.

The North was less eager. There were protests, petitions, demonstrations. Many of the leaders of northern opinion took a public stand against the war. But the news of the first victories sent the country mad with an enthusiasm in which the North joined the South.

The United States troops, during the Mexican War, won brilliant—almost unbelievable successes—against superior forces and in the face of immense natural obstacles. Had the war been less of a military triumph there must have been a far more widely-heard protest from Polk's enemies in the North. Successful beyond the wildest dreams of its promoters, the victorious war carried its own answer to those who questioned the worthiness of the cause. Within two years, the whole of Mexico was under the military control of the United States, and that country was in a position to dictate its own terms.

The demands of the United States were mild to the extent of generosity. Under the treaty the annexation of Texas was validated; New Mexico and Upper California were ceded to the United States; the lower Rio Grande was fixed as the southern boundary of Texas, and in considerations of these additions to its territory, the United States agreed to pay Mexico fifteen millions of dollars.

Under this plan, Mexico was paid for territory that she did not need and could not use, while the United States gave a money consideration for the title to land that was already hers by right of conquest, and of which she was in actual possession.

The details of the treaty are relatively unimportant. The outstanding fact is that Mexico was in possession of certain territory that the ruling power in the United States wanted, and that ruling power took what it wanted by force of arms. "The war was one of conquest in the interest of an institution." It was "one of the most unjust ever waged by a stronger against a weaker nation."[31]

Congressman A. P. Gardner of Massachusetts summarized the matter very pithily in his debate with Morris Hillquit (New York, April 2, 1915), "We assisted Texas to get away from Mexico and then we proceeded to annex Texas. Plainly and bluntly stated, our purpose was to get some territory for American development." (Stenographic report in the New York Call, April 11, 1915.)

5. Conquering the Conquered

The work of conquering the Southwest was not completed by the termination of the war. Mexico ceded the territory—in the neighborhood of a million square miles—but she was giving away something that she had never possessed. Mexico claimed title to land that was occupied by the Indians. She had never conquered it; never settled it; never developed it. Her sovereignty was of the same shadowy sort that Spain had exercised over the country before the Mexican revolution.

The new owners of the Southwest had a very different purpose in mind. No empty title would satisfy them. They intended to use the land. The Indians—already in possession—resented the encroachments of the invaders, but they fared no better than the Mexicans, or than their red-skinned brothers who had contended for the right to fish and hunt along their home streams in the Appalachians. The Indians of the Southwest fought stubbornly, but the wars that meant life and death to them were the merest pastime for an army that had just completed the humiliation of a nation of the size and strength of Mexico. The Indians were swept aside, and the country was opened to the trapper, the prospector, the trader and the settler.

The Mexican War was a slight affair, involving a relatively small outlay in men and money. The total number of American soldiers killed in the war was 1,721; the wounded were 4,102; the deaths from accident and disease were 11,516, making total casualties of 5,823 and total losses of 15,618.[32]

The money cost of the Mexican War—the army and navy appropriations for the years 1846 to 1849 inclusive—was $119,624,000. Obviously the net cost of the war was less than this gross total,—how much less it is impossible to say.

No satisfactory figures are available to show the cost in men and money of the Indian Wars in the Southwest. "From 1849 to 1865, the government expended $30,000,000 in the subjugation of the Indians in the territories of New Mexico and Arizona."[33] Their character may be gauged by noting from the "Historical Register" (Vol. 2, p. 281-2) the losses sustained in the four Indian Wars of which a record is preserved. In the Northwest Indian Wars (1790 to 1795) 896 persons were killed and 436 were wounded; in the Seminole War (1817 to 1818) 46 were killed and 36 were wounded; in the Black Hawk War (1831-2) the killed were 26 and the wounded 39; in the Seminole War (1835-1842) 383 were killed and 557 wounded. These were among the most serious of the Indian Wars and in all of them the cost in life and limb was small. Judged on this standard, the losses in the Southwest, during the Indian Wars, were, at most, trifling. The total outlay that was involved in the conquest of the vast domain would not have covered one first class battle of the Great War, and yet this outlay added to the territory of the United States something like a million square miles containing some of the richest and most productive portions of the earth's surface.

This domain was won by a process of military conquest; it was taken from the Mexicans and the Indians by force of arms. In order to acquire it, it was necessary to drive whole tribes from their villages; to burn; to maim; to kill. "St. Louis, New Orleans, St. Augustine, San Antonio, Santa Fe and San Francisco are cities that were built by Frenchmen and Spaniards; we did not found them but we conquered them." "The Southwest was conquered only after years of hard fighting with the original owners" (p. 26). "The winning of the West and the Southwest is a stage in the conquest of a continent" (p. 27). "This great westward movement of armed settlers was essentially one of conquest, no less than of colonization" (p. 370).[34] None of the possessors of this territory were properly armed or equipped for effective warfare. All of them fell an easy prey to the organized might of the Government of the United States.

FOOTNOTES:

[27] "The Winning of the West," Theodore Roosevelt. New York, Putnam's, 1896, vol. 4, p. 262.

[28] "American Negro Slavery," U. B. Phillips. New York, Appleton, 1918, pp. 171-2.

[29] "History of the United States," James F. Rhoades. New York, Macmillan, 1906, vol. I, p. 87.

[30] "Personal Memoirs," U. S. Grant. New York, Century, 1895, vol. I.

[31] "Personal Memoirs," U. S. Grant. New York, Century, 1895, vol. I, pp. 115 and 32.

[32] "Historical Register of the United States Army," F. B. Heitman. Washington, Govt. Print., vol. 2, p. 282.

[33] "The Story of New Mexico," Horatio O. Ladd. Boston, D. Lothrop Co., 1891, p. 333.

[34] "The Winning of the West," Theodore Roosevelt. Vol. I, p. 26, 27, and Vol. II, p. 370.



VI. THE BEGINNINGS OF WORLD DOMINION

1. The Shifting of Control

During the half century that intervened between the War of 1812 and the Civil War of 1861 the policy of the United States government was decided largely by men who came from south of the Mason and Dixon line. The Southern whites,—class-conscious rulers with an institution (slavery) to defend,—acted like any other ruling class under similar circumstances. They favored Southward expansion which meant more territory in which slavery might be established.

The Southerners were looking for a place in the sun where slavery, as an institution, might flourish for the profit and power of the slave-holding class. Their most effective move in this direction was the annexation of Texas and the acquisition of territory following the Mexican War. An insistent drive for the annexation of Cuba was cut short by the Civil War.

Southern sentiment had supported the Louisiana Purchase of 1803 and the Florida Purchase of 1819. From Jefferson's time Southern statesmen had been advocating the purchase of Cuba. Filibustering expeditions were fitted out in Southern ports with Cuba as an objective; agitation was carried on, inside and outside of Congress; between 1850 and 1861 the acquisition of Cuba was the question of the day. It was an issue in the Campaign of 1853. In 1854 the American ministers to London, France and Madrid met at the direction of the State Department and drew up a document (the "Ostend Manifesto") dealing with the future of Cuba. McMaster summarizes the Manifesto in these words: "The United States ought to buy Cuba because of its nearness to our coast; because it belonged naturally to that great group of states of which the Union was the providential nursery; because it commanded the mouth of the Mississippi whose immense and annually growing trade must seek that way to the ocean, and because the Union could never enjoy repose, could never be secure, till Cuba was within its boundaries." (Vol. viii, pp. 185-6.) If Spain refused to sell Cuba it was suggested that the United States should take it.

The Ostend Manifesto was rejected by the State Department, but it was a good picture of the imperialistic sentiment at that time abroad among certain elements in the United States.

The Cuban issue featured in the Lincoln-Douglas Debates in 1858. It was hotly discussed by Congress in 1859. Only twenty years had passed since the United States, by force of arms, had taken from Mexico territory that she coveted. Now it was proposed to appropriate territory belonging to Spain.

The outbreak of hostilities deferred the project, and when the Civil War was over, the slave power was shattered. From that time forward national policy was guided by the leaders of the new industrial North.

The process of this change was fearfully wasteful. The shifting of power from the old regime to the new cost more lives and a greater expenditure of wealth than all of the wars of conquest that had been fought during the preceding half century.

The change was complete. The slaves were liberated by Presidential Proclamation. The Southern form of civilization—patriarchal and feudal—disappeared, and upon its ruins—rapidly in the West; slowly in the South—there arose the new structure of an industrial civilization.

The new civilization had no need to look outward for economic advantage. Forest tracts, mineral deposits and fertile land afforded ample opportunity at home. It was three thousand miles to the Pacific and at the end of the journey there was gold! The new civilization therefore turned its energies to the problem of subduing the continent and of establishing the machinery necessary to provide for its vastly increasing needs. A small part of the capital required for this purpose came from abroad. Most of it was supplied at home. But the events involved in opening up the territory west of the Rockies, of spanning the country with steel, and providing outlets for the products of the developing industries were so momentous that even the most ambitious might fulfill his dreams of conquest without setting foot on foreign soil. Territorial aggrandizement was forgotten, and men turned with a will to the organization of the East and the exploration and development of the West.

The leaders of the new order found time to take over Alaska (1868) with its 590,884 square miles. The move was diplomatic rather than economic, however, and it was many years before the huge wealth of Alaska was even suspected.

2. Hawaii

The new capitalist interests began to feel the need of additional territory toward the end of the nineteenth century. The desirable resources of the United States were largely in private hands and most of the available free land had been pre-empted. Beside that, there were certain interests, like sugar and tobacco, that were looking with longing eyes toward the tempting soil and climate of Hawaii, Porto Rico and Cuba.

When the South had advocated the annexation of Texas, its statesmen had been denounced as expansionists and imperialists. The same fate awaited the statesmen of the new order who were favoring the extension of United States territory to include some of the contiguous islands that offered special opportunities for certain powerful financial interests.

The struggle began over the annexation of Hawaii. After numerous attempts to annex Hawaii to the United States a revolution was finally consummated in Honolulu in 1893. At that time, under treaty provisions, the neutrality of Hawaii was guaranteed by the United States. Likewise, "of the capital invested in the islands, two-thirds is owned by Americans." This statement is made in "Address by the Hawaiian Branches of the Sons of the American Revolution, the Sons of Veterans, and the Grand Army of the Republic to their compatriots in America Concerning the Annexation of Hawaii." (1897.) These advocates of annexation state in the same address that: "The revolution (of 1893) was not the work of filibusterers and adventurers, but of the most conservative and law-abiding citizens, of the principal tax-payers, the leaders of industrial enterprises, etc." The purpose behind the revolution seemed clear. Certain business men who had sugar and other products to sell in the United States, believed that they would gain, financially, by annexation. They engineered the revolution of 1893 and they were actively engaged in the agitation for annexation that lasted until the treaty of annexation was confirmed by the United States in 1898. The matter was debated at length on the floor of the United States Senate, and an investigation revealed the essential facts of the case.

The immediate cause of the revolution in 1893 was friction over the Hawaiian Constitution. After some agitation, a "Committee of Safety" was organized for the protection of life and property on the islands. Certain members of the Hawaiian government were in favor of declaring martial law, and dealing summarily with the conspirators. The Queen seems to have hesitated at such a course because of the probable complications with the government of the United States.

The U. S. S. Boston, sent at the request of United States Minister Stevens to protect American life and property in the Islands, was lying in the harbor of Honolulu. After some negotiations between the "Committee of Safety" and Minister Stevens, the latter requested the Commander of the Boston to land a number of marines. This was done on the afternoon of January 16, 1893. Immediately the Governor of the Island of Oahu and the Minister of Foreign Affairs addressed official communications to the United States Minister, protesting against the landing of troops "without permission from the proper authorities." Minister Stevens replied, assuming full responsibility.

On the day following the landing of the marines, the Committee of Safety, under the chairmanship of Judge Dole, who had resigned as Justice of the Supreme Court of Hawaii in order to accept the Chairmanship of the Committee, proceeded to the government building, and there, under cover of the guns of the United States Marines, who were drawn up for the purpose of protecting the Committee against possible attack, a proclamation was read, declaring the abrogation of the Hawaiian monarchy, and the establishment of a provisional government "to exist until terms of union with the United States have been negotiated and agreed upon." Within an hour after the reading of this proclamation, and while the Queen and her government were still in authority, and in possession of the Palace, the Barracks, and the Police Station, the United States Minister gave the Provisional Government his recognition.

The Queen, who had 500 soldiers in the Barracks, was inclined to fight, but on the advice of her counselors, she yielded "to the superior force of the United States of America" until the facts could be presented at Washington, and the wrong righted.

Two weeks later, on the first of February, Minister Stevens issued a proclamation declaring a protectorate over the islands. This action was later repudiated by the authorities at Washington, but on February 15, President Harrison submitted a treaty of annexation to the Senate. The treaty failed of passage, and President Cleveland, as one of his first official acts, ordered a complete investigation of the whole affair.

The Senate Committee on Foreign Relations submitted a report on the matter February 26, 1894. Four members referred to the acts of Minister Stevens as "active, officious and unbecoming participation in the events which led to the revolution." All members of the committee agreed that his action in declaring a protectorate over the Islands was unjustified.

The same kind of a fight that developed over the annexation of Texas now took place over the annexation of Hawaii. A group of senators, of whom Senator R. F. Pettigrew was the most conspicuous figure, succeeded in preventing the ratification of the annexation treaty until July 7, 1898. Then, ten weeks after the declaration of the Spanish-American War, under the stress of the war-hysteria, Hawaii was annexed by a joint resolution of Congress.

The Annexation of Hawaii marks a turning point in the history of the United States. For the first time, the American people secured possession of territory lying outside of the mainland of North America. For the first time the United States acquired territory lying within the tropics. The annexation of Hawaii was the first imperialistic act after the annexation of Texas, more than fifty years before. It was the first imperialistic act since the capitalists of the North had succeeded the slave-owners of the South as the masters of American public life.

3. The Spanish-American War

The real test of the imperial intentions of the United States came with the Spanish-American War. An old, shattered world empire (Spain) held Porto Rico, Cuba and the Philippines. Porto Rico and Cuba were of peculiar value to the sugar and tobacco interests of the United States. They were close to the mainland, they were enormously productive and, furthermore, Cuba contained important deposits of iron ore.

Spain had only a feeble grip on her possessions. For years the natives of Cuba and of the Philippines had been in revolt against the Spanish power. At times the revolt was covert. Again it blazed in the open.

The situation in Cuba was rendered particularly critical because of the methods used by the Spanish authorities in dealing with the rebellious natives. The Spaniards were simply doing what any empire does to suppress rebellion and enforce obedience, but the brutalities of imperialism, as practiced in Cuba by the Spaniards, gave the American interventionists their opportunity. Day after day the newspapers carried front page stories of Spanish atrocities in Cuba. Day after day the ground was prepared for open intervention in the interests of the oppressed Cubans. There was more than grim humor in the instructions which a great newspaper publisher is reported to have sent his cartoonist in Cuba,—"You provide the pictures; we'll furnish the war."

The conflict was precipitated by the blowing up of the United States battleship Maine as she lay in the harbor of Havana (February 15, 1898). It has not been settled to this day whether the Maine was blown up from without or within. At the time it was assumed that the ship was blown up by the Spanish, although "there was no evidence whatever that any one connected with the exercise of Spanish authority in Cuba had had so much as guilty knowledge of the plans made to destroy the Maine" (p. 270), and although "toward the last it had begun to look as if the Spanish Government were ready, rather than let the war feeling in the United States put things beyond all possibility of a peaceful solution, to make very substantial concessions to the Cuban insurgents and bring the troubles of the Island to an end" (p. 273-4).[35]

Congress, in a joint resolution passed April 20, 1898, declared that "the people of the Island of Cuba are, and of right ought to be, free and independent.... The United States hereby disclaims any intention to exercise sovereignty, jurisdiction or control over said island except for the pacification thereof, and asserts its determination, when that is accomplished, to leave the government and control of the island to its people."

The war itself was of no great moment. There was little fighting on land, and the naval battles resulted in overwhelming victories for the American Navy. The treaty, ratified February 6, 1899, provided that Spain should cede to the United States Guam, Porto Rico, Cuba and the Philippines, and that the United States should pay to Spain twenty millions of dollars. As in the case of the Mexican War, the United States took possession of the territory and then paid a bonus for a clear title.

The losses in the war were very small. The total number of men who were killed in action and who died of wounds was 289; while 3,949 died of accidents and disease. ("Historical Register," Vol. 2, p. 187.) The cost of the war was comparatively slight. Hostilities lasted from April 21, 1898 to August 12, 1898. The entire military and naval expense for the year 1898 was $443,368,000; for the year 1899, $605,071,000. Again the need for a larger place in the sun had been felt by the people of the United States and again the United States had won immense riches with a tiny outlay in men and money.

Now came the real issue,—What should the United States do with the booty?

There were many who held that the United States was bound to set the peoples of the conquered territory free. To be sure the specific pledge contained in the joint resolution of April 20, 1898, applied to Cuba alone, but, it was argued, since the people of the Philippines had also been fighting for liberty, and since they had come so near to winning their independence from the Spaniards, they were likewise entitled to it.

On the other hand, the advocates of annexation insisted that it was the duty of the United States to accept the responsibilities (the "white man's burden") that the acquisition of these islands involved.

As President McKinley put it:—"The Philippines, like Cuba and Porto Rico, were entrusted to our hands by the providence of God." (President McKinley, Boston, February 16, 1899.) How was the country to avoid such a duty?

Thus was the issue drawn between the "imperialists" and the "anti-imperialists."

The imperialists had the machinery of government, the newspapers, and the prestige of a victorious and very popular war behind them. The anti-imperialists had half a century of unbroken tradition; the accepted principles of self-government; the sayings of men who had organized the Revolution of 1776; written the Declaration of Independence; held exalted offices and piloted the nation through the Civil War.

The imperialists used their inside position. The anti-imperialists appealed to public opinion. They organized a league "to aid in holding the United States true to the principles of the Declaration of Independence. It seeks the preservation of the rights of the people as guaranteed to them by the Constitution. Its members hold self-government to be fundamental, and good government to be but incidental. It is its purpose to oppose by all proper means the extension of the sovereignty of the United States over subject peoples. It will contribute to the defeat of any candidate or party that stands for the forcible subjugation of any people." (From the declaration of principle printed on the literature in 1899 and 1900.) Anti-imperialist conferences were held in New York, Philadelphia, Chicago, Indianapolis, Boston and other large cities. The League claimed to have half a million members. An extensive pamphlet literature was published, and every effort was made to arouse the people of the country to the importance of the decision that lay before them.

The imperialists said a great deal less than their opponents, but they were more effective in their efforts. The President had said, in his message to Congress (April 1, 1898), "I speak not of forcible annexation, for that cannot be thought of. That, by our code of morals, would be criminal aggression." The phrase was seized eagerly by those who were opposing the annexation of the Spanish possessions. After the war with Spain had begun, the President changed front on the ground that destiny had placed a responsibility upon the American people that they could not shirk. Taking this view of the situation, the President had only one course open to him—to insist upon the annexation of the Philippines, Porto Rico and Guam. This was the course that was followed, and on April 11, 1899, these territories were officially incorporated into the United States.

Senator Hoar, in a speech on January 9, 1899, put the issue squarely. He described it as "a greater danger than we have encountered since the Pilgrims landed at Plymouth—the danger that we are to be transformed from a republic, founded on the Declaration of Independence, guided by the counsels of Washington, into a vulgar, commonplace empire, founded upon physical force."

Cuba remained to be disposed of. With the specific guarantee of independence contained in the joint resolution passed at the outbreak of the war, it seemed impossible to do otherwise than to give the Cubans self-government. Many influential men lamented the necessity, but it was generally conceded. But how much independence should Cuba have? That question was answered by the passage of the Cuban Treaty with the "Platt Amendment" attached. Under the treaty as ratified the United States does exercise "sovereignty, jurisdiction and control" over the island.

4. The Philippines

The territory acquired from Spain was now, in theory, disposed of. Practically, the Philippines remained as a source of difficulty and even of political danger.

The people of Cuba were, apparently, satisfied. The Porto Ricans had accepted the authority of the United States without question. But the Filipinos were not content. If the Cubans were to have self-government, why not they?

The situation was complicated by the peculiar relations existing between the Filipinos and the United States Government. Immediately after the declaration of war with Spain the United States Consul-General at Singapore had cabled to Admiral Dewey at Hong Kong that Aguinaldo, leader of the insurgent forces in the Philippines, was then at Singapore, and was ready to go to Hong Kong. Commodore Dewey cabled back asking Aguinaldo to come at once to Hong Kong. Aguinaldo left Singapore on April 26, 1898, and, with seventeen other revolutionary Filipino chiefs, was taken from Hong Kong to Manila in the United States naval vessel McCulloch. Upon his arrival in Manila, he at once took charge of the insurgents.

For three hundred years the inhabitants of the Philippines had been engaged in almost incessant warfare with the Spanish authorities. In the spring of 1898 they were in a fair way to win their independence. They had a large number of men under arms—from 20,000 to 30,000; they had fought the Spanish garrisons to a stand-still, and were in practical control of the situation.

Aguinaldo was furnished with 4,000 or 5,000 stands of arms by the American officials, he took additional arms from the Spaniards and he and his people cooperated actively with the Americans in driving the Spanish out of Luzon. The Filipino army captured Iloilo, the second largest city in the Philippines, without the assistance of the Americans. On the day of the surrender of Manila, 15-1/2 miles of the surrounding line was occupied by the Filipinos and 600 yards by the American troops. Throughout the early summer, the relations between the Filipinos and the Americans continued to be friendly. General Anderson, in command of the American Army, wrote a letter to the commander of the Filipinos (July 4, 1898) in which he said,—"I desire to have the most amicable relations with you and to have you and your people cooperate with us in military operations against the Spanish forces." During the summer the American officers called upon the Filipinos for supplies and information and accepted their cooperation. Aguinaldo, on his part, treated the Americans as deliverers, and in his proclamations referred to them as "liberators" and "redeemers."

The Filipinos, at the earliest possible moment, organized a government. On June 18 a republic was proclaimed; on the 23rd the cabinet was announced; on the 27th a decree was published providing for elections, and on August 6th an address was issued to foreign governments, announcing that the revolutionary government was in operation, and was in control of fifteen provinces.

The real intent of the Americans was foreshadowed in the instructions handed by President McKinley to General Wesley Merritt on May 19, 1898. General Merritt was directed to inform the Filipinos that "we come not to make war upon the people of the Philippines, nor upon any party or faction among them, but to protect them in their homes, in their employments, and in their personal and religious rights. Any persons who, either by active aid or by honest submission, cooperate with the United States in its effort to give effect to this beneficent purpose, will receive the reward of its support and protection."

The Filipinos sent a delegation to Paris to lay their claims for independence before the Peace Commission. Meeting with no success, they visited Washington, with no different result. They were not to be free!

On September 8, 1898, General Otis, commander of the American forces in the Philippines, notified Aguinaldo that unless he withdrew his forces from Manila and its suburbs by the 15th "I shall be obliged to resort to forcible action." On January 5, 1899, by Presidential Proclamation, McKinley ordered that "The Military Government heretofore maintained by the United States in the city, harbor, and bay of Manila is to be extended with all possible dispatch to the whole of the ceded territory." On February 4, 1899, General Otis reported "Firing upon the Filipinos and the killing of one of them by the Americans, leading to return fire." (Report up to April 6, 1899.) Then followed the Philippine War during which 1,037 Americans were killed in action or died of wounds; 2,818 were wounded, and 2,748 died of disease. ("Historical Register," Vol. II, p. 293.)

The Philippines were conquered twice—once in a contest with Spain (in cooperation with the Filipinos, who regarded themselves as our allies), and once in a contest with the Filipinos, the native inhabitants, who were made subjects of the American Empire by this conquest.[36]

5. Imperialism Accepted

The Philippine War was the last political episode in the life of the American Republic. From February 4, 1899, the United States accepted the political status of an Empire. Hawaii had been annexed at the behest of the Hawaiian Government; Porto Rico had been occupied as a part of the war strategy and without any protest from the Porto Ricans. The Philippines were taken against the determined opposition of the natives, who continued the struggle for independence during three bitter years.

The Filipinos were fighting for independence—fighting to drive invaders from their soil. The United States authorities had no status in the Philippines other than that of military conquerors.

Continental North America was occupied by the whites after a long struggle with the Indian tribes. This territory was "conquered"—but it was contiguous—it formed a part of a geographic unity. The Philippines were separated from San Francisco by 8,000 miles of water; geographically they were a part of Asia. They were tropical in character, and were inhabited by tribes having nothing in common with the American people except their common humanity. Nevertheless, despite non-contiguity; despite distance; despite dissimilarity in languages and customs, the soldiers of the United States conquered the Filipinos and the United States Government took control of the islands, acting in the same way that any other empire, under like circumstances, unquestionably would have acted.

There was no strategic reason that demanded the Philippines unless the United States desired to have an operating base near to the vast resources and the developing markets of China. As a vantage point from which to wage commercial and military aggression in the Far East, the Philippines may possess certain advantages. There is no other excuse for their conquest and retention by the United States save the economic excuse of advantages to be gained from the possession of the islands themselves.

The end of the nineteenth century saw the end of the Republic about which men like Jefferson and Lincoln wrote and dreamed. The New Century marked the opening of a new epoch—the beginning of world dominion for the United States.

FOOTNOTES:

[35] "A History of the American People," Woodrow Wilson. New York, Harpers, 1902, Vol. V, pp. 273-4.

[36] For further details on the Philippine problem see Senate Document 62, Part I, 55th Congress, Third Session.



VII. THE STRUGGLE FOR WEALTH AND POWER

1. Economic Foundations

The people of the United States, through their contests with the American Indians, the Mexicans and the Filipinos, have established that "supreme and extensive political domination" which is one of the chief characteristics of empire.

But the American Empire does not rest upon a political basis. Only the most superficial portions of its superstructure are political in character. Imperialism in the United States, as in every other modern country, is built not upon politics, but upon industry.

The struggle between empires has shifted, in recent years, from the political and the military to the economic field. The old imperialism was based on military conquest and political domination. The new "financial" imperialism is based on economic opportunities and advantages. Under this new regime, territorial domination is subordinated to business profit.

While American public officials were engaged in the routine task of extending the political boundaries of the United States, the foundations of imperial strength were being laid by the masters of industrial life—the traders, manufacturers, bankers, the organizers of trusts and of industrial combinations. These owners and directors of the nation's wealth have been the real builders of the American Empire.

As the United States has developed, the economic motives have come more and more to the surface, until no modern nation—not England herself—has such a record in the search for material possessions. The pursuit of wealth, in the United States, has been carried forward ruthlessly; brutally. "Anything to win" has been the motto. Man against man, and group against group, they have struggled for gain,—first, in order to "get ahead;" then to accumulate the comforts and luxuries, and last of all, to possess the immense power that goes with the control of modern wealth.

The early history of the country presaged anything but this. The colonists were seeking to escape tyranny, to establish justice and to inaugurate liberty. Their promises were prophetic. Their early deeds put the world in their debt. Forward looking people everywhere thrilled at the mention of the name "America." Then came the discovery of the fabulous wealth of the new country; the pressure of the growing stream of immigrants; the heaping up of riches; the rapacious search after more! more! the desertion of the dearest principles of America's early promise, and the transcribing of another story of "economic determinism."

Until very recent times the American people continued to talk of political affairs as though they were the matters of chief public concern. The recent growth and concentration of economic power have showed plainly, however, that America was destined to play her greatest role on the economic field. Capable men therefore ceased to go into politics and instead turned their energies into the whirl of business, where they received a training that made them capable of handling affairs of the greatest intricacy and magnitude.

2. Every Man for Himself

The development of American industry, during the hundred years that began with the War of 1812, led inevitably to the unification of business control in the hands of a small group of wealth owners.

"Every man for himself" was the principle that the theorists of the eighteenth century bequeathed to the industrial pioneers of the nineteenth. The philosophy of individualism fitted well with the temperament and experience of the English speaking peoples; the practice of individualism under the formula "Every man for himself" seemed a divine ordination for the benefit of the new industry.

The eager American population adopted the slogan with enthusiasm. "Every man for himself" was the essence of their frontier lives; it was the breath of the wilderness.

But the idea failed in practice. Despite the assurances of its champions that individualism was necessary to preserve initiative and that progress was impossible without it, like many another principle—fine sounding in theory, it broke down in the application.

The first struggle that confronted the ambitious conqueror of the new world was the struggle with nature. Her stores were abundant, but they must be prepared for human use. Timber must be sawed; soil tilled; fish caught; coal mined; iron smelted; gold extracted. Rivers must be bridged; mountains spanned; lines of communication maintained. The continent was a vast storehouse of riches—potential riches. Before they could be made of actual use, however, the hand of man must transform them and transport them.

These necessary industrial processes were impossible under the "every man for himself" formula. Here was a vast continent, with boundless opportunities for supplying the necessaries and comforts of life—provided men were willing to come together; divide up the work; specialize; and exchange products.

Cooperation—alone—could conquer nature. The basis of this cooperation proved to be the machine. Its means was the system of production and transportation built upon the use of steam, electricity, gas, and labor saving appliances.

When the United States was discovered, the shuttle was thrown by hand; the hammer was wielded by human arm; the mill-stones were turned by wind and water; the boxes and bales were carried by pack-animals or in sailing vessels,—these processes of production and transportation were conducted in practically the same way as in the time of Pharaoh or of Alexander the Great. A series of discoveries and inventions, made in England between 1735 and 1784, substituted the machine for the tool; the power of steam for the power of wind, water or human muscle; and set up the factory to produce, and the railroad and the steamboat to transport the factory product.

American industry, up to 1812, was still conducted on the old, individualistic lines. Factories were little known. Men worked singly, or by twos and threes in sheds or workrooms adjoining their homes. The people lived in small villages or on scattered farms. Within the century American industry was transformed. Production shifted to the factory; about the factory grew up the industrial city in which lived the tens or hundreds of thousands of factory workers and their families.

The machine made a new society. The artisan could not compete with the products of the machine. The home workshop disappeared, and in its place rose the factory, with its tens, its hundreds and its thousands of operatives.

Under the modern system of machine production, each person has his particular duty to perform. Each depends, for the success of his service, upon that performed by thousands of others.

All modern industry is organized on the principle of cooperation, division of labor, and specialization. Each has his task, and unless each task is performed the entire system breaks down.

Never were the various branches of the military service more completely dependent upon each other than are the various departments of modern economic life. No man works alone. All are associated more or less intimately with the activities of thousands and millions of their fellows, until the failure of one is the failure of all, and the success of one is the success of all.

Such a development could have only one possible result,—people who worked together must live together. Scattered villages gave place to industrial towns and cities. People were compelled to cooperate in their lives as well as in their labor.

The theory under which the new industrial society began its operations was "every man for himself." The development of the system has made every man dependent upon his fellows. The principle demanded an extreme individualism. The practice has created a vast network of inter-relations, that leads the cotton spinner of Massachusetts to eat the meat prepared by the packing-house operative in Omaha, while the pottery of Trenton and the clothing of New York are sent to the Yukon in exchange for fish and to the Golden Gate for fruit. Inside as well as outside the nation, the world is united by the strong hands of economic necessity. None can live to himself, alone. Each depends upon the labor of myriads whom he has never seen and of whom he has never heard. Whether we will or no, they are his brothers-in-labor—united in the Atlas fellowship of those who carry the world upon their shoulders.

The theory of "every man for himself" failed. The practical exigencies involved in subjugating a continent and wresting from nature the means of livelihood made it necessary to introduce the opposite principle,—"In Union there is strength; cooperation achieves all things."

3. The Struggle for Organization

The technical difficulties involved in the mechanical production of wealth compelled even the individualists to work together. The requirements of industrial organization drove them in the same direction.

The first great problem before the early Americans was the conquest of nature. To this problem the machine was the answer. The second problem was the building of an organization capable of handling the new mechanism of production—an organization large enough, elastic enough, stable enough and durable enough—to this problem the corporation was the answer.

The machine produced the goods. The corporation directed the production, marketed the products and financed both operations.

The corporation, as a means of organizing and directing business enterprise is a product of the last hundred years. A century ago the business of the United States was carried on by individuals, partnerships, and a few joint stock companies. At the time of the last Census, more than four-fifths of the manufactured products were turned out under corporate direction; most of the important mining enterprises were corporate, and the railroads, public utilities, banks and insurance companies were virtually all under the corporate form of organization. Thus the passage of a century has witnessed a complete revolution in the form of organizing and directing business enterprise.

The corporation, as a form of business organization is immensely superior to individual management and to the partnership.

1. The corporation has perpetual life. In the eyes of the law, it is a person that lives for the term of its charter. Individuals die; partnerships are dissolved; but the corporation with its unbroken existence, possesses a continuity and a permanence that are impossible of attainment under the earlier forms of business organization.

2. Liability, under the corporation, is limited by the amount of the investment. The liability of an individual or a partner engaged in business was as great as his ability to pay. The investor in a corporation cannot lose a sum larger than that represented by his investment.

3. The corporation, through the issuing of stocks and bonds, makes it possible to subdivide the total amount invested in one enterprise into many small units.[37] These chances for small investment mean that a large number of persons may join in subscribing the capital for a business enterprise. They also mean that one well-to-do person may invest his wealth in a score or a hundred enterprises, thus reducing the risk of heavy losses to a minimum.

4. The corporation is not, as were the earlier forms of organization, necessarily a "one man" concern. Many corporations have upon their boards of directors the leading business men, merchants, bankers and financiers. In this way, the investing public has the assurance that the enterprise will be conducted along business lines, while the business men on the board have an opportunity to get in on the "ground floor."

The corporation has a permanence, a stability, and a breadth of financial support that are quite impossible in the case of the private venture or of the partnership. It does for business organization what the machine did for production.

The corporation came into favor at a time when business was expanding rapidly. Surplus was growing. Wealth and capital were accumulating. Industrial units were increasing in size. It was necessary to find some means by which the surplus wealth in the hands of many individuals could be brought together, large sums of capital concentrated under one unified control, the investments, thus secured, safeguarded against untoward losses, and the business conservatively and efficiently directed. The corporation was the answer to these needs.

"United we stand" proved to be as true of organizers and investors as it was of producers. The corporation was the common denominator of people with various industrial and financial interests.

The corporation played another role of vital consequence. It enabled the banker to dominate the business world. Heretofore, the banker had dealt largely with exchange. The industrial leader was his equal if not his superior. The organization of the corporation put the supreme power in the hands of the banker, who as the intermediary between investor and producer, held the purse strings.

4. Capitalist against Capitalist

The early American enterprisers—the pioneers—began a single-handed struggle with nature. Necessity forced them to cooperate. They established a new industry. The factory brought them together. They organized their system of industrial direction and control. The corporation united them. They turned on one another in mortal combat, and the frightfulness of their losses forced them to join hands.

The business men of the late nineteenth century had been nurtured upon the idea of competition. "Every man for himself and the devil take the hindermost" summed up their philosophy. Each person who entered the business arena was met by an array of savage competitors whose motto was "Victory or Death." In the struggle that followed, most of them suffered death.

Capitalist set himself up against capitalist in bitter strife. The railroads gouged the farmers, the manufacturers and the merchants and fought one another. The big business organizations drove the little man to the wall and then attacked their larger rivals. It was a fight to the finish with no quarter asked or given.

The "finish" came with periodic regularity in the seventies, the eighties and the nineties. The number of commercial failures in 1875 was double the number of 1872. The number of failures in 1878 was over three times that of 1871. The same thing happened in the eighties. The liabilities of concerns failing in 1884 were nearly four times the liabilities of those failing in 1880. The climax came in the nineties, after a period of comparative prosperity. Hard times began in 1893. Demand dropped off. Production decreased. Unemployment was widespread. Wages fell. Prices went down, down, under bitter competitive selling, to touch rock bottom in 1896. Business concerns continued to fight one another, though both were going to the wall. Weakened by the struggle, unable to meet the competitive price cutting that was all but the universal business practice of the time, thousands of business houses closed their doors. The effect was cumulative; the fabric of credit, broken at one point, was weakened correspondingly in other places and the guilty and the innocent were alike plunged into the morass of bankruptcy.

The destruction wrought in the business world by the panic of 1893 was enormous. The number of commercial failures for 1893 jumped to 15,242. The amount of liabilities involved in these failures was $346,780,000. This catastrophe, coming as it did so close upon the heels of the panics that had immediately preceded it, could not fail to teach its lesson. Competition was not the life, but the death of trade. "Every man for himself" as a policy applied in the business world, led most of those engaged in the struggle over the brink to destruction. There was but one way out—through united action.

The period between 1897 and 1902 was one of feverish activity directed to coordinating the affairs of the business world. Trusts were formed in all of the important branches of industry and trade. The public looked upon the trust as a means of picking pockets through trade conspiracies and the boosting of prices. The Sherman Anti-Trust Law had been passed on that assumption. In reality, the trusts were organized by far seeing men who realized that competition was wasteful in practice and unsound in theory. The idea that the failure of one bank or shoe factory was of advantage to other banks and shoe factories, had not stood the test of experience. The tragedies of the nineties had showed conclusively that an injury to one part of the commercial fabric was an injury to all of its parts.

The generation of business men trained since 1900 has had no illusions about competition. Rather, it has had as its object the successful combination of various forms of business enterprise into ever larger units. First, there was the uniting of like industries;—cotton mills were linked with cotton mills, mines with mines. Then came the integration of industry—the concentration under one control of all of the steps in the industrial process from the raw material to the finished product,—iron mines, coal mines, blast furnaces, converters, and rail mills united in one organization to take the raw material from the ground and to turn out the finished steel product. Last of all there was the union of unlike industries,—the control, by one group of interests, of as many and as varied activities as could be brought together and operated at a profit. The lengths to which business men have gone in combining various industries is well shown by the recent investigation of the meat packing industry. In the course of that investigation, the Federal Trade Commission was able to show that the five great packers (Wilson, Armour, Swift, Morris and Cudahy) were directly affiliated with 108 business enterprises, including 12 rendering companies; 18 stockyard companies; 8 terminal railway companies; 9 manufacturers of packers' machinery and supplies; 6 cattle loan companies; 4 public service corporations; 18 banks, and a number of miscellaneous companies, and that they controlled 2000 food products not immediately related to the packing industry.[38]

Business is consolidated because consolidation pays—not primarily, through the increase of prices, but through the greater stability, the lessened costs, and the growing security that has accompanied the abolition of competition.

Again the forces of social organization have triumphed in the face of an almost universal opposition. American business men practiced competition until they found that cooperation was the only possible means of conducting large affairs. Theory advised, "Compete"! Experience warned, "Combine"! Business men—like all other practical people—accepted the dictates of experience as the only sound basis for procedure. Their combination solidified their ranks, preparing them to take their places in a closely knit, dominant class, with clearly marked interests, and a strong feeling of class consciousness and solidarity.

It was in the consummation of these combinations, integrations and consolidations that the investment banker came into his own as the keystone in the modern industrial arch.

5. The Investment Banker

The investment banker is the directing and coordinating force in the modern business world. The necessities of factory production demanding great outlays of capital; the immense financial requirements of corporations; the consolidation of business ventures on a huge scale; the broadened use of corporate securities as investments—all brought the investment banker into the foreground.

Before the Spanish War, the investment banker financed the trusts. After the war he was entrusted with the vast surpluses which the concentration of business control had placed in a few hands. Business consolidation had given the banker position. The control of the surplus brought him power. Henceforth, all who wished access to the world of great industrial and commercial affairs must knock at his door.

This concentration of economic control in the hands of a relatively small number of investment bankers has been referred to frequently as the "Money Trust."

Investment banking monopoly, or as it is sometimes called, the "Money Trust" was examined in detail by the Pujo Committee of the House of Representatives, which presented a summary of its report on February 28, 1913. The committee placed, at the center of its diagram of financial power, J. P. Morgan & Co., the National City Bank, the First National Bank, the Guaranty Trust Co., and the Bankers Trust Co., all of New York. The report refers to Lee, Higginson & Co., of Boston and New York; to Kidder, Peabody & Co., of Boston and New York, and to Kuhn, Loeb & Co., of New York, together with the Morgan affiliations, as being "the most active agents in forwarding and bringing about the concentration of control of money and credit" (p. 56).

The methods by which this control was effected are classed by the Committee under five heads:—

1. "Through consolidations of competitive or potentially competitive banks and trust companies which consolidations in turn have recently been brought under sympathetic management" (p. 56).

2. Through the purchase by the same interests of the stock of competitive institutions.

3. Through interlocking directorates.

4. "Through the influence which the more powerful banking houses, banks, and trust companies have secured in the management of insurance companies, railroads, producing and trading corporations and public utility corporations, by means of stock holdings, voting trusts, fiscal agency contracts, or representation upon their boards of directors, or through supplying the money requirements of railway, industrial, and public utility corporations and thereby being enabled to participate in the determination of their financial and business policies" (p. 56).

5. "Through partnership or joint account arrangements between a few of the leading banking houses, banks, and trust companies in the purchase of security issues of the great interstate corporations, accompanied by understandings of recent growth—sometimes called 'banking ethics'—which have had the effect of effectually destroying competition between such banking houses, banks, and trust companies in the struggle for business or in the purchase and sale of large issues of such securities" (p. 56).

Morgan & Co., the First National Bank, the National City Bank, the Bankers Trust Co., and the Guaranty Trust Co., which were all closely affiliated, had extended their control until they held,—

118 directorships in 34 banks with combined resources of $2,679,000,000.

30 directorships in 10 insurance companies with total assets of $2,293,000,000.

105 directorships in 32 transportation systems having a total capital of $11,784,000,000.

63 directorships in 24 producing and trading companies having a total capitalization of $3,339,000,000.

25 directorships in 12 public utility corporations with a total capitalization of $2,150,000,000.

The investment banker had become, what he was ultimately bound to be, the center of the system built upon the century-long struggle to control the wealth of the continent in the interest of the favored few who happened to own the choicest natural gifts.

6. The Cohesion of Wealth

The struggle for wealth and power, actively waged among the business men of the United States for more than a century, has thus by a process of elimination, subordination and survival, placed a few small groups of strong men in a position of immense economic power. The growth of surplus and its importance in the world of affairs has made the investment banker the logical center of this business leadership. He, with his immediate associates, directs and controls the affairs of the economic world.

The spirit of competition ruled the American business world at the beginning of the last century, the forces of combination dominated at its close. The new order was the product of necessity, not of choice. The life of the frontier had ingrained in men an individualism that chafed under the restraints of combination. It was the compelling forces of impending calamity and the opportunity for greater economic advantage—not the traditions or accepted standards of the business world—that led to the establishment of the centralized wealth power. American business interests were driven together by the battering of economic loss and lured by the hope of greater economic gains.

Years of struggle and experience, by converting a scattered, individualistic wealth owning class into a highly organized, closely knit, homogeneous group with its common interests in the development of industry and the safeguarding of property rights, have brought unity and power to the business world.

Individually the members of the wealth-controlling class have learned that "in union there is strength"; collectively they are gripped by the "cohesion of wealth"—the class conscious instinct of an associated group of human beings who have much to gain and everything to lose.

FOOTNOTES:

[37] The 169 largest railroads in the United States have issued 84,418,796 shares of stock. ("American Labor Year Book," 1917-18, p. 169.) Theoretically, therefore, there might be eighty-four millions of owners of the American railroads.

[38] Summary of the Report of the Federal Trade Commission on the Meat Packing Industry, July 3, 1918, Wash., Govt. Print., 1918.



VIII. THEIR UNITED STATES

1. Translating Wealth into Power

The first object of the economic struggle is wealth. The second is power.

At the end of their era of competition, the leaders of American business found themselves masters of such vast stores of wealth that they were released from the paralyzing fear of starvation, and were guaranteed the comforts and luxuries of life. Had these men sought wealth as a means of satisfying their physical needs their object would have been attained.

The gratification of personal wants is only a minor element in the lives of the rich. After they have secured the things desired, they strive for the power that will give them control over their fellows.

The possession of things, is, in itself, a narrow field. The control over productive machinery gives him who exercises it the power to enjoy those things which the workers with machinery produce. The control over public affairs and over the forces that shape public opinion give him who exercises it the power to direct the thoughts and lives of the people. It is for these reasons that the keen, self-assertive, ambitious men who have come to the top in the rough and tumble of the business struggle have steadily extended their ownership and their control.

2. The Wealth of the United States

The bulk of American wealth, which consists for the most part of land and buildings, is concentrated in the centers of commerce and industry—in the regions of supreme business power.

The last detailed estimate of the wealth of the United States was made by the Census Bureau for the year 1912. At that time, the total wealth of the country was placed at $187,739,000,000. (The estimate for 1920 is $500,000,000,000.) Roughly speaking, this represented an estimate of exchangeable values. The figures, at best, are rough approximations. Their importance lies, not in their accuracy, but in the picture which they give of relationships.

The Total Wealth of the United States, Classified by Groups, with the Percentage of the Total Wealth in Each Group[39]

Total Estimated Wealth

Amount (000,000 Per Cent Wealth Groups Omitted) of Total

1. Real Property (land and buildings) $110,676 59

2. Public Utilities (railroads, street railways, telegraph, telephone, electric light, etc.) 26,415 14

3. Live Stock and Machinery (live stock, farm implements and manufacturing machinery) 13,697 7

4. Raw Materials, Manufactured Products, Merchandise (including gold and silver bullion) 24,193 13

5. Personal Possessions (clothing, personal adornments, furniture, carriages, etc.) 12,758 7

Total of all groups $187,739 100

The bulk of the exchangeable wealth of the United States consists of "productive" or "investment" property. If, to the total of 110 billions given by the Census as the value of real property, are added the real property values of the public utilities, the total will probably exceed three quarters of the total wealth of the United States. If, in addition, account is taken of the fact that much of the wealth classed as "raw materials, etc.," is the immediate product of the land (coal, ore, timber), some idea may be obtained of the extent to which the estimated wealth of the country is in the form of land, its immediate products, and buildings. Furthermore, it must be remembered that great quantities of ore lands, timber lands, waterpower sites, etc., are assessed at only a fraction of their total present value.

The personal property of the country is valued at less than one fourteenth of the total wealth. It is in reality a negligible item, as compared with the value of the real property, of the public utilities, and of the raw materials and products of industry.

The wealth of the United States is in permanent form—land and improvements; personal possessions are a mere incident in the total. In truth, American wealth is in the main productive (business) wealth, designed for the further production of goods, rather than for the satisfaction of human wants.

3. Ownership and Control

Who owns this vast wealth? It is impossible to answer the question with anything like definiteness. Figures have been compiled to show that five per cent of the people own two-thirds to three-quarters of it; that the poorest two-thirds of the people own five per cent of it, and that the well-to-do or middle class own the remainder. These figures would make it appear that more than one-fourth of the population is in the middle class. If the income-tax returns are to be trusted this proportion is far too high. On all hands it is admitted that the wealth of the country is concentrated in the hands of a small fraction of the people and the important wealth—that is, the wealth upon which production, transportation and exchange depends—is in still fewer hands.

Neither the total wealth of the country, nor that portion of the total which is owned directly by the propertied class is of most immediate moment. Ownership does not necessarily involve control. A puddler in the Gary Mills may own five shares of stock in the Steel Corporation without ever raising his voice to determine the corporation policy. This is ownership without control. On the other hand, a banking house through a voting trust agreement, may control the policy of a corporation in which it does not own one per cent of the stock. This is control without ownership. Ownership may be quite incidental. It is control that counts in terms of power.

Most of the property owners in the United States play no part in the control of prices or of production, in the direction of economic policy, or in the management of economic affairs.

Theoretically, stockholders direct the policies of corporations, and, therefore, each holder of 5 or 10 shares of corporate stock would play a part in deciding economic affairs. Practically, the small stockholder has no part in business control.

The small farmer—the small business man of largest numerical consequence—has been exploited by the great interests for two generations. Despite his numbers and his organizations, despite his frequent efforts, through anti-trust laws, railway control laws, banking reform laws, and the like, he has little voice in determining important economic policies.

The small savings bank depositor or the holder of an ordinary insurance policy is a negative rather than a positive factor in economic control. Not only does he exercise no power over the dollar which he has placed with the bank or with the insurance company, but he has thereby strengthened the hands of these organizations. Each dollar placed with the financier is a dollar's more power for him and his.

Suppose—the impossible—that half of the families in the United States "own property." Subtract from this number the small stockholders; the holders of bonds, notes and mortgages; the small tradesman; the small farmer; the home owner and the owner of a savings-bank deposit or of an insurance policy—what remains? There are the large stockholders, the owners and directors of important industries, public utilities, banks, trust companies and insurance companies. These persons, in the aggregate, constitute a fraction of one per cent of the adult population of the United States.

Start with the total non-personal wealth of the country, subtract from it the share-values of the small stockholders; the values of all bonds, mortgages and notes; the property of the small tradesman and the small farmer; the value of homes—what remains? There are left the stocks in the hands of the big stockholders; the properties owned and directed by the owners and directors of important industries, public utilities, banks, trust companies and insurance companies. This wealth in the aggregate probably makes up less than 10 per cent of the total wealth of the country and yet the tiny fraction of the population which owns this wealth can exercise a dictatorial control over the economic policies that underlie American public life.

4. The Avenues of Mastery

While control rests back directly or indirectly upon some form of ownership, most owners exercise little or no control over economic affairs. Instead they are made the victims of a social system under which one group lives at the expense of another.

Against this tendency toward control by one group or class (usually a minority) over the lives of another group or class (usually a majority) the human spirit always has revolted. The United States in its earlier years was an embodiment of the spirit of that revolt. President Wilson characterized it excellently in 1916. Speaking of the American Flag, he said,—"That flag was originally stained in very precious blood, blood spilt, not for any dynasty, nor for any small controversies over national advantage, but in order that a little body of three million men in America might make sure that no man was their master."[40]

Against mastery lovers of liberty protest. Mastery means tyranny; mastery means slavery.

Mastery has always been based upon some form of ownership. There is in the United States a group, growing in size, of people who take more in keep than they give in service; people who own land; franchises; stocks and bonds and mortgages; real estate and other forms of investment property; people who are living without ever lifting a finger in toil, or giving anything in labor for an unceasing stream of necessaries, comforts and luxuries. These people, directly or indirectly, are the owners of the productive machinery of the United States.

Historically there have been a number of stages in the development of mastery. First, there was the ownership of the body. One man owned another man, as he might own a house or a pile of hides. At another stage, the owner of the land—the feudal baron or the landlord—said to the tenant, who worked on his land: "You stay on my land. You toil and work and make bread and I will eat it." The present system of mastery is based on the ownership by one group of people, of the productive wealth upon which depends the livelihood of all. The masters of present day economic society have in their possession the natural resources, the tools, the franchises, patents, and the other phases of the modern industrial system with which the people must work in order to live. The few who own and control the productive wealth have it in their power to say to the many who neither own nor control,—"You may work or you may not work." If the masses obtain work under these conditions the owners can say to them further,—"You work, and toil and earn bread and we will eat it." Thus the few, deriving their power from the means by which their fellows must work for a living, own the jobs.

5. The Mastery of Job-Ownership

Job-ownership is the foundation of the latest and probably the most complete system of mastery ever perfected. The slave was held only in physical bondage. Behind serfdom there was land ownership and a religious sanction. "Divine right" and "God's anointed," were terms used to bulwark the position of the owning class, who made an effort to dominate the consciences as well as the bodies of their serfs. Job-ownership owes its effectiveness to a subtle, psychological power that overwhelms the unconscious victim, making him a tool, at once easy to handle and easy to discard.

The system of private ownership that succeeded Feudalism taught the lesson of economic ambition so thoroughly that it has permeated the whole world. The conditions of eighteenth century life have passed, perhaps forever, but its psychology lingers everywhere.

The job-holder has been taught that he must "get ahead" in the world; that if he practices the economic virtues,—thrift, honesty, earnestness, persistence, efficiency—he will necessarily receive great economic reward; that he must support his family on the standard set by the community, and that to do all of these essential things, he must take a job and hold on to it. Having taken the job, he finds that in order to hold it, he must be faithful to the job-owner, even if that involves faithlessness to his own ideas and ideals, to his health, his manhood, and the lives of his wife and children.

The driving power in slavery was the lash. Under serfdom it was the fear of hunger. The modern system of job-ownership owes its effectiveness to the fact that it has been built upon two of the most potent driving forces in all the world—hunger and ambition—the driving force that comes from the empty stomach and the driving force that comes from the desire for betterment. Thus job-owning, based upon an automatic self-drive principle, enables the job-owner to exact a return in faithful service that neither slavery nor serfdom ever made possible. Job-owning is thus the most thorough-going form of mastery yet devised by the ingenuity of man.

Unlike the slave owner and the Feudal lord the modern job-owner has no responsibility to the job-holder. The slave owner must feed, clothe and house his slave—otherwise he lost his property. The Feudal lord must protect and assist his tenant. That was a part of his bargain with his overlord. The modern job-owner is at liberty, at any time, to "discharge" the job-holder, and by throwing him out of work take away his chance of earning a living. While he keeps the job-holder on his payroll, he may pay him impossibly low wages and overwork him under conditions that are unfit for the maintenance of decent human life. Barring the factory laws and the health laws, he is at liberty to impose on the job-holder any form of treatment that the job-holder will tolerate.

There is no limit to the amount of industrial property that one man may own. Therefore, there is no limit to the number of jobs he may control. It is possible (not immediately likely) that one coterie of men might secure possession of enough industrial property to control the jobs of all of the gainfully occupied people in American industry. If this result could be achieved, these tens of millions would be able to earn a living only in case the small coterie in control permitted them to do so.

Job ownership is built, of necessity, on the ownership of land, resources, capital, credit, franchises, and other special privileges. But its power of control goes far beyond this mere physical ownership into the realms of social psychology.

The early colonists, who fled from the economic, political, social and religious tyranny of feudalism, believed that liberty and freedom from unjust mastery lay in the private ownership of the job. They had no thought of the modern industrial machine.

The abolitionists who fought slavery believed that freedom and liberty could be obtained by unshackling the body. They did not foresee the shackled mind.

The modern world, seeking freedom; yearning for liberty and justice; aiming at the overthrow of the mastery that goes with irresponsible power, finds to its dismay that the ownership of the job carries with it, not only economic mastery, but political, social and even religious mastery, as well.

6. The Ownership of the Product

The industrial overlord holds control of the job with one hand. With the other he controls the product of industry. From the time the raw material leaves the earth in the form of iron ore, crude petroleum, logs, or coal, through all of the processes of production, it is owned by the industrial master, not by the worker. Workers separate the product from the earth, transport it, refine it, fabricate it. Always, the product, like the machinery, is the possession of the owning class.

While industry was competitive, the pressure of competition kept prices at a cost level, and the exploiting power of the owner was confined to the job-holder. To-day, through combinations and consolidations, industry has ceased to be competitive, and the exploiting power of the job-owner is extended through his ownership of the product.

The modern town-dweller is almost wholly in the hands of the private owners of the products upon which he depends. The ordinary city dweller spends two-fifths of his income for food; one-fifth for rent, fuel and light, and one-fifth for clothes. Food, houses, fuel (with the exception of gas supply in some cities), and clothing are privately owned. The public ownership of streets and water works, of some gas, electricity, street cars, and public markets, is a negligible factor in the problem. The private monopolist has the upper hand and he is able through the control of transportation, storage, and merchandising facilities, to make handsome profits for the "service" which he renders the consumer.

7. The Control of the Surplus

The wealth owners are doubly entrenched. They own the jobs upon which most families depend for a living. They own the necessaries of life which most families must purchase in order to live. Further, they control the surplus wealth of the community.

There are three principal channels of surplus. First of all there is the surplus laid aside by business concerns, reinvested in the business, spent for new equipment and disposed of in other ways that add to the value of the property. Second, there are the 19,103 people in the United States with incomes of $50,000 or more per year; the 30,391 people with incomes of $25,000 to $50,000 per year and the 12,502 people with incomes of $10,000 to $25,000 per year. (Figures for 1917.) Many, if not most of these rich people, carry heavy insurance, invest in securities, or in some other way add to surplus. In the third place there are the small investors, savings-bank depositors, insurance policy holders who, from their income, have saved something and have laid it aside for the rainy day. The masters of economic life—bankers, insurance men, property holders, business directors—are in control of all three forms of surplus.

The billions of surplus wealth that come each year under the control of the masters carry with them an immense authority over the affairs of the community. The owners of wealth owe much of their immediate power to the fact that they control this surplus, and are in a position to direct its flow into such channels as they may select.

8. The Channels of Public Opinion

No one can question the control which business interests exercise over the jobs, the industrial product, and the economic surplus of the community. These facts are universally admitted. But the corollaries which flow naturally from such axioms are not so readily accepted. Yet given the economic power of the business world, the control over the channels of public opinion and over the machinery of government follows as a matter of course.

The channels of public opinion—the school, the press, the pulpit,—are not directly productive of tangible economic goods, yet they depend upon tangible economic goods for their maintenance. Whence should these goods come? Whence but from the system that produces them, through the men who control that system! The plutocracy exercises its power over the channels of public opinion in two ways,—the first, by a direct or business office control; and second, by an indirect or social prestige control.

The business office control is direct and simple. Schools, colleges, newspapers, magazines and churches need money. They cannot produce tangible wealth directly, and they must, therefore, depend upon the surplus which arises from the productive activities of the economic world. Who controls that surplus? Business men. Who, then, is in a position to dictate terms in financial matters? Who but the dominant forces in business life?

The facts are incontrovertible. It is not mere chance that recruits the overwhelming majority of school-board members, college trustees, newspaper managers, and church vestrymen, from the ranks of successful business and professional men. It is necessary for the educator, the journalist, and the minister to work through these men in order to secure the "sinews of war." They are at the focal points of power because they control the sources of surplus wealth.

The second method of maintaining control—through the control of social prestige—is indirect, but none the less effective. The young man in college; the young graduate looking for a job; the young man rising in his profession, and the man gaining ascendancy in his chosen career are brought into constant contact with the "influential" members of the business world. It is the business world that dominates the clubs and the vacation spots; it is the business world that is met in church, at the dinner tables and at the social gathering.