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]

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.

The man who would "succeed" must retain the favor of this group. He does so automatically, instinctively or semi-consciously—it is the common, accepted practice and he falls in line.

The masters need not bribe. They need not resort to illegal or unethical methods. The ordinary channels of advertising, of business acquaintance and patronage, of philanthropy and of social intercourse clinch their power over the channels of public opinion.

9. The Control of Political Machinery

The American government,—city, state and nation—is in almost the same position as the schools, newspapers and churches. It does not turn out tangible, economic products. It depends, for its support, upon taxes which are levied, in the first instance, upon property. Who are the owners of this property? The business interests. Who, therefore, pay the bills of the government? The business interests.

Nowhere has the issue been stated more clearly or more emphatically than by Woodrow Wilson in certain passages of his "New Freedom." As a student of politics and government—particularly the American Government—he sees the power which those who control economic life are able to exercise over public affairs, and realizes that their influence has grown, until it overtops that of the political world so completely that the machinery of politics is under the domination of the organizers and directors of industry.

"We know," writes Mr. Wilson in "The New Freedom," "that something intervenes between the people of the United States and the control of their own affairs at Washington. It is not the people who have been ruling there of late" (p. 28). "The masters of the government of the United States are the combined capitalists and manufacturers of the United States.... Suppose you go to Washington and try to get at your government. You will always find that while you are politely listened to, the men really consulted are the men who have the biggest stakes—the big bankers, the big manufacturers, the big masters of commerce, the heads of railroad corporations and of steamship corporations.... Every time it has come to a critical question, these gentlemen have been yielded to and their demands have been treated as the demands that should be followed as a matter of course. The government of the United States at present is a foster-child of the special interests" (p. 57-58). "The organization of business has become more centralized, vastly more centralized, than the political organization of the country itself" (p. 187). "An invisible empire has been set up above the forms of democracy" (p. 35). "We are all caught in a great economic system which is heartless" (p. 10).

This is the direct control exercised by the plutocracy over the machinery of government. Its indirect control is no less important, and is exercised in exactly the same way as in the case of the channels of public opinion.

Lawyers receive preferment and fees from business—there is no other large source of support for lawyers. Judges are chosen from among these same lawyers. Usually they are lawyers who have won preferment and emolument. Legislators are lawyers and business men, or the representatives of lawyers and business men. The result is as logical as it is inevitable.

The wealth owners control the machinery of government because they pay the taxes and provide the campaign funds. They control public officials because they have been, are, or hope to be, on the payrolls, or participants in the profits of industrial enterprises.

10. It is "Their United States"

The man fighting for bread has little time to "turn his eyes up to the eternal stars." The western cult of efficiency makes no allowances for philosophic propensities. Its object is product and it is satisfied with nothing short of that sordid goal.

The members of the wealth owning class are relieved from the food struggle. Their ownership of the social machinery guarantees them a secure income from which they need make no appeal. These privileges provide for them and theirs the leisure and the culture that are the only possible excuse for the existence of civilization.

The propertied class, because it owns the jobs, the industrial products, the social surplus, the channels of public opinion and the political machinery also enjoys the opportunity that goes with adequately assured income, leisure and culture.

The members of the dominant economic class hold a key—property ownership—which opens the structure of social wealth. Those who have access to this key are the blessed ones. Theirs are the things of this world.

The property owners enjoy the fleshpots. They hold the vantage points. The vital forces are in their hands. Economically, politically, socially, they are supreme.

If the control of material things can make a group secure, the wealth owners in the United States are secure. They hold property, prestige, power.

The phrase "our United States" as used by the great majority of the people is a misnomer. With the exception of a theoretically valuable but practically unimportant right called "freedom of contract," the majority of the wage earners in the United States have no more excuse for using the phrase "our United States" than the slaves in the South, before the war, for saying "our Southland."

The franchise is a potential power, making it theoretically possible for the electorate to take possession of the country. In practice, the franchise has had no such result. Quite the contrary, the masters of American life by a policy of chicanery and misrepresentation, advertise and support first one and then the other of the "Old Parties," both of which are led by the members of the propertied class or by their retainers. The people, deluded by the press, and ignorant of their real interests, go to the polls year after year and vote for representatives that represent, in all of their interests, the special privileged classes.

The economic and social reorganization of the United States during the past fifty years has gone fast and far. The system of perpetual (fee simple) private ownership of the resources has concentrated the control over the natural resources in a small group, not of individuals, but of corporations; has created a new form of social master, in the form of a land-tool-job owner; has thus made possible a type of absentee-landlordism more effective and less human than were any of its predecessors and has decreased the responsibility at the same time that it has augmented the power of the owning group. These changes have been an integral part of a general economic transformation that has occupied the chief energies of the ablest men of the community for the past two generations.

The country of many farms, villages and towns, and of a few cities, with opportunity free and easy of access, has become a country of highly organized concentrated wealth power, owned by a small fraction of the people and controlled by a tiny minority of the owners for their benefit and profit. The country which was rightfully called "our United States" in 1840, by 1920 was "their United States" in every important sense of the word.