Irresponsible Collectivism

There is no better way of understanding the nature of our current economic and social problems than that of delving into the past. Economic institutions come into being by growth; their virtues and defects are best understood by reference to that growth. In “The Nationalizing of Business, 1878-1898,” Ida B. Tarbell sets forth in an admirable manner a period of American economic development which is more significant, in terms of our present impasse, than any other. Roughly speaking, it was during these two decades that our present industrial order came into being. The origin of many of the economic and social problems which confront the nation today can be traced back to the developments which took place during that period.

As Miss Tarbell aptly indicates in the title to her book, the period was one during which economic interests became organized on a national basis. The growth and spread of the population, the improvements made in the systems of communication, and the maintenance of a highly protective tariff—these contributed to the nationalization of economic life. In outward appearances our economy remained competitive; actually, however, it became less and less so owing to the growth of combinations. The decline of competition was most marked in manufacturing enterprise. Many new industries came into being, and the old ones expanded; but always the trend was toward the formation of combinations. A highly competitive, local industry gave way to large-scale business combinations, producing for a national market. Businessmen decried the uncertainty and instability which attended free competition. However efficient they might be, they could never be sure but that competitors would wreck the market. In proportion, therefore, as more and more capital was put into a business it became necessary to guard against losses. By forcing his competitors into a combination a businessman could in a measure achieve the desired security.

This, in short, was the position taken by John D. Rockefeller, who pioneered the movement toward combinations of enterprise. He and his associates desired to do away completely and permanently with competition in the oil refining and marketing business; they came close to achieving their goal when in 1879 they were able to organize the Standard Oil Trust. One might question the ethics of Mr. Rockefeller’s tactics, but from a strict economic point of view the arguments were in his favor. One of the fundamental propositions of Marxianism is that competitive business inevitably assumes monopolistic forms. This prediction was certainly borne out in the developments which took place during this period. As noted by Miss Tarbell, between 1880 and 1895 no less than forty industrial combinations were formed. In each, monopolistic powers in varying degrees were made possible. Henceforth one was to hear much about “big business.”

Such widespread massing of capital and control did not take place without protests by those whose interests were threatened, if not invaded. For many years past the farmers had been subjected to merciless exploitation by the railroad barons. Now they had to face industrial giants whose monopolistic powers enabled them to set prices almost at will. The position of the farmer in the national economy was most certainly a weakened one. No one knew this better than the farmers themselves. Spurred on by a fall of agricultural prices in the ‘eighties, the farmers undertook to build up national organizations to represent their interests. In 1892 they joined with labor to form the People’s Party. Their program of reform included free and unlimited coinage of silver, government ownership of the means of communication, a graduated income tax, a shorter workday for industrial laborers, a restriction of “undesirable” immigration, and the popular election of senators. In the elections which followed no substantial gains were made. None the less, the country was awakened to the fact that there was a farm problem which awaited a solution.

The plight of the urban wage-earners was no less severe than that of the farmer. They, too, viewed with alarm the growing concentration of wealth in fewer and fewer hands. If capital organized on a national basis, so must labor. The Noble Order of Knights of Labor was formed. It employed at first conservative methods to better the lot of the laborer. Fruitless efforts were made to establish co-operative undertakings. Failing in this direction, the Knights sponsored numerous strikes and boycotts, especially during the hard times which followed the Panic of 1884. Shortly before, there had been instituted another national organization to represent labor, namely, the American Federation of Labor. Under the spirited leadership of Samuel Gompers it centered its attention upon improving the position of the skilled worker. It, too, fostered strikes to accomplish its aims. But whether the laborers joined one or the other organization, the fact remained that their struggle with capital was a fierce one. Much blood was shed, as witness the Haymarket riot and the Homestead strike.

In the face of such general discontent, reflecting as it did the far-reaching changes being wrought in our national eco-

nomic structure, the response of the federal government was nothing short of futile. A program for the regulation of the railroads was belatedly enacted in 1887. Here was an industry with which every element of the national economy was in one way or another connected. Its very nature ren-

dered it monopolistic. But instead of recognizing it to be such and providing for an effective system of control, Congress established a feeble commission to insure the maintenance of competition. In respect to the growth of industrial monopolies, the attitude of Congress was no less faulty. Here again the idea prevailed that competition must be restored and maintained. Such was the object of the Sherman Anti-Trust Act. It was a failure from the beginning. It could not halt a movement that was natural and inevitable. For example, in 1898 alone, twelve huge business combinations were formed.

That the general public failed to comprehend the nature of the economic and social problems confronting the nation at this time is proved only too well by the course which the presidential election of 1896 took. Coming as it did after a period of severe economic stress, this campaign should have been made the occasion of a plea by the liberal elements for a thoroughgoing reform of our economic order. As it was, however, free silver was made the issue. The shadow was mistaken for the form. Democratic leadership was as yet unwilling to face the real issues—those arising from the growth of irresponsible collectivism.

In her volume Miss Tarbell has given a vivid and skillful presentation of the course of American economic development during two important decades. The book is particularly illuminating in the light which it casts upon the origin of many of our current economic and social problems.