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RIGHT REV. JOHN A. RYAN, D.D.

A recognized authority. Right Rev. John
A. Ryan, D.D., in this pamphlet analyzes
and applies the principles expounded by Pope
Leo XIII in his encyclical on "The Condition
of Labor" and Pope Pius XI in his encyclical
on "Reconstructing the Social Order."

New York. N. Y.

THE PAULIST PRESS
401 West 59th Street



STa



CAPITAL and LABOR
By Right Rev. John A. Ryan, D.D.

POPE LEO’S ENCYCLICAL ON LABOR
URING the week of May 10, 1931, delegations
from many countries arrived in Rome to celebrate
the anniversary of the Encyclical, “On the Condi-
tion of Labor.” It was published by Pope Leo

XIII on the fifteenth of May, 1891. Forty years
later it retains sufficient vitality to evoke pil-

grimages in honor of its principles and in testimony of its

achievements.

What is the nature of this mighty pronouncement and
why was it issued? It is a comprehensive treatment of the
relations between capital and labor. The main reason for
its publication is expressed in the words of its august

Author: “Some remedy must be found, and quickly found
for the misery and wretchedness which press so heavily at

this moment on the very poor.” Like his Divine Master,
Pope Leo had “compassion on the multitude.”

During the quarter of a century immediately preceding

the year, 1891, Bishop Ketteler in Germany, Cardinal Man-
ning in England, Cardinal Mermillod in Switzerland, Baron

Vogelsang in Austria, Count de Mun in France, Professor
Perin in Belgium, Professor Toniolo in Italy and many other
Catholic leaders, had denounced the evils of modern indus-
trialism and sought adequate remedies. While all Catholics

realized that the social question could be solved only through

Christian principles, they differed among themselves con-
cerning the meaning and the application of these principles.

According to one school, the remedy for bad industrial con-
ditions was to be sought in the benevolence of the employ-

l



2 CAPITAL AND LABOR

ing class and the Christian resignation of the laboring class.

Another Catholic group placed the chief emphasis upon

Christian justice.

Moved by the sufferings of the workers, the need of all
for sound doctrine and “the responsibility of the Apostolic

office,” Pope Leo determined to draw up a comprehensive

statement on the social question; to set forth clearly and

definitely “the principles which truth and justice dictate for

its settlement.” He spoke with the full voice of Apostolic
authority: “in the exercise of the rights which belong to

Us,” were his own words. “No practical solution of the
question,” he continued, “will be found without the as-

sistance of religion and the Church.”

That industrial questions, relations and practices are all

governed by religion and morality, is the most fundamental

and far reaching general doctrine in the Encyclical. This

teaching contradicts and condemns such familiar assertions

as the following: “The Church should have nothing to say
about business”; “religion and economics do not mix”;

“priests and bishops should preach the Gospel instead of dis-

cussing industrial questions.” Against all such shallow

utterances the Encyclical reasserts and restates the tradi-

tional doctrine, that economic as well as other human ac-
tions are subject to the moral law; that buying and selling,

borrowing and lending, employing and serving, wage paying

and rent paying, are either right or wrong, good or bad,

just or unjust. None of these practices, nor any other in-
dustrial practice, can claim immunity from the moral law

nor asylum in an unmoral vacuum. No intelligent and loyal
Catholic can read the Encyclical and continue to assert that

Christian principles have no business in the market place.

Not a Partisan Document

While the Encyclical has been called the Magna Charta
of labor, while it was written primarily on behalf of labor,

and while it affords much more comfort to the toiling masses



CAPITAL AND LABOR 3

than to any other social group, it is not a partisan pronounce-

ment. It ignores neither the rights of the rich nor the duties

of the poor. Immediately after the introductory paragraphs,

it enters upon a systematic and somewhat lengthy defense of

private property and refutation of Socialism. Many of us
can recall a period when this was the only part of the
Encyclical that received attention in the speeches and writ-

ings of Catholic leaders and publicists. In those days the

Socialist movement loomed as a serious menace to justice,
religion and social welfare. Happily that time and that

danger have passed, at least in the United States. Against

Socialism I delivered many speeches and wrote many arti-
cles, including a prolonged debate in a popular magazine;

nevertheless I have been silent on the subject for at least

fifteen years. I see neither profit nor glory in slaying the

slain, nor in flogging a corpse.

Pope Leo admonishes the workers not to indulge in

dreams of equality or of earthly happiness. He stresses the
manifold differences that “naturally exist among mankind.”
Men differ in “capacity, skill, health and strength.” In-
equality of fortune is consequently inevitable. Earth cannot

be made paradise; for “to suffer and to endure is the lot
of humanity.” Nor is class naturally hostile to class; on
the contrary, capital and labor are mutually dependent and

should live in mutual agreement. Employers must treat
their employees not as “chattels to make money by,” but as
persons endowed with the dignity and worth of men and
Christians. On the other hand, the laborer should “carry
out honestly and fairly all equitable agreements,” abstain
from injury and violence to the property or person of the
employer, and “have nothing to do with men of evil princi-
ples.”

So much for the general viewpoint of the Encyclical.
Let us turn now to its specific and constructive proposals.
The most important of these can be summarized under four
heads: namely, wages, unions, the State and property.



4 CAPITAL AND LABOR

Living Wages

As regards wages, Pope Leo repudiates freedom of con-
tract as a universal measure of justice. “There is,” he de-

clares, “a dictate of nature more imperious and more ancient
than any bargain between man and man, namely, that the
remuneration must be sufficient to support the wage-earner
in reasonable and frugal comfort. If through necessity or

fear of a worse evil the workman accept harder conditions
because an employer will give him no better, he is made
the victim of force and injustice”

This is the doctrine of the living wage. Pope Leo does
not say that it expresses complete justice. It is merely the

minimum amount that is due to every wage-earner by the
mere fact that he is a human being, with a life to maintain,
and a personality to develop. The special qualifications
which entitle men to more than the minimum of justice,
such as skill, hazard, responsibility, cost of training, etc.,

are not considered in the Pope’s discussion. On the other
hand, the living wage that he has in mind is an amount suffi-

cient not merely for the worker himself, but also for the

proper maintenance of his family.

The enduring importance of this declaration is demon-
strated by two outstanding facts. First, the majority of male

adult workers, even in the United States, have not yet ob-

tained the living wages demanded by the Encyclical. The
second fact is even more significant. According to all com-

petent students, the existing industrial depression is mainly

due to the capacity of our industries to produce more goods

than can be sold. The surplus products cannot be sold be-
cause the masses who would like to buy more have not the
necessary purchasing power. If all our workers had been

getting living wages during the prosperous years of the last

decade the depression would not have been nearly so severe

nor the recovery nearly so long delayed.

The teaching of the Encyclical on wages is as vital,



CAPITAL AND LABOR 5

as pertinent and as beneficent today as when it came from

from the pen of the Vicar of Christ forty years ago.

Labor Organization

The Catholic Church has always regarded organization,

whether of employees or of employers, as the normal condi-

tion. She has never accepted the heresies of rampant indi-

vidualism and unlimited competition. Pope Leo deplores

the disappearance of the ancient guilds, and expresses grati-

fication over various forms of workmen’s associations; “but

it were greatly to be desired that they should become more

numerous and more efficient.” Men have a natural right to
enter them, a right which cannot be annulled by the State.

“We may,” says the Pope, “lay it down as a general and
lasting law, that workingmen’s associations should be so or-

ganized and governed as to furnish the best and most suit-

able means for attaining what is aimed at, that is to say, for

helping each individual member to better his condition to
the utmost in body, mind and property.” On the other
hand, Pope Leo denounces those societies which “are in the

hands of secret leaders, . . . who do their utmost to get
within their 'grasp the whole field of labor, and force work-

ingmen either to join them or to starve.”
The first of the two passages just quoted implicitly con-

demns the insidious “open shop” campaign, and every other
movement which seeks to render the unions ineffective, by
denying the right of adequate collective bargaining.

Pope Leo makes more than one reference to joint asso-
ciations of employers and employees, “which draw the two
classes more closely together.” The underlying principle
is exemplified in joint conferences for the establishment of

trade agreements, in shop committees, works councils and
other arrangements for increasing the control of labor over

employment conditions and industrial operations. Upon the
application and extension of this principle and these



6 CAPITAL AND LABOR

methods depends to a very great extent the attainment of

industrial peace.

The Function of the State

Concerning the State, Pope Leo lays down one gen-
eral principle and several specific applications. “When-
ever the general interest or any particular class suffers or is

threatened with injury which can in no other way be met or
prevented, it is the duty of the public authority to inter-

vene.” No more comprehensive principle of State interven-
tion could be reasonably desired. Applying the principle to

industrial relations, Pope Leo declares that the law should

forestall strikes by removing unjust conditions; protect the

worker’s spiritual welfare and his right to Sunday rest; re-

strict the length of the working day, so that men’s labor

will not “stupefy their minds and wear out their bodies”;

prohibit the employment of children “in workshops and fac-

tories until their bodies and minds are sufficiently de-

veloped”; prevent the entrance of women into occupations
for which they are not fitted; and provide all workers with

“proper rest for soul and body.” While the Pope does not

explicitly declare that the State should enforce a, living wage,

he clearly indicates that such action should be taken in de-

fault of voluntary arrangements.

The teaching of the Encyclical on the obligation of the
State to the working classes is particularly pertinent to our

own country, where influential persons and groups still pro-
claim the shallow slogan, “no class legislation.” Pope Leo

was a greater realist as well as a more intelligent humani-

tarian than those who profess adherence to this fallacious
and inhuman formula. He was well aware that if the State
is to apply the principles of distributive justice it must legis-

late for the special needs of each class. “The richer classes,”
he says, “have many ways of shielding themselves, and
stand less in need of help from the State

;
whereas, the mass



CAPITAL AND LABOR 7

of the poor have no resources of their own to fail back upon,
and must chiefly depend upon the assistance of the State.

And it is for this reason that wage-earners, since they mostly
belong to that class, should be specially cared for and pro-

tected by the Government.”

The Diffusion of Ownership

Sixteen or seventeen years ago, the manager of a public

utility corporation unctuously and patronizingly assured me
that he had great admiration for the Catholic Church be-

cause it was such a staunch defender of private property.

Recalling the glorious history of the Church on this sub-

ject, I was moved to pity for this man’s ignorance. He was
under the impression that the attitude of the Church toward

private property is merely that of a super-policeman. Had
he read Pope Leo’s Encyclical on Labor he would have
found not only a defense of the institution of private prop-

erty but a demand for a better distribution . It should be
the policy of the State, said Pope Leo, “to induce as many
as possible of the humbler class to become owners.” As a
consequence, “property will become more equitably di-
vided,” and “the gulf between vast wealth and sheer poverty

will be bridged over.”

The Pope’s observations on this subject afford little com-
fort to the apologists for industrial autocracy. He deplores
the division of industrial society into two classes, one of

which “holds power because it holds wealth; has in its

grasp the whole of labor and trade
;
manipulates for its own

benefit and its own purposes all the sources of supply, and
is even represented in the councils of the State itself.”

Those students and thinkers who believe that industrial re-
lations will not be stabilized nor industrial peace assured

until the wage-earners become to a great extent participants

in the ownership of industry, will find considerable encour-

agement in Pope Leo’s declarations on private property.



8 CAPITAL AND LABOR

Universal living wages, effective labor unions, adequate

legislation and a wider diffusion of property—these four
specific remedies would solve the social question, or at least

bring it as near to solution as is attainable by the instru-
ments of economics and politics.

Effects and Summary

Among the most important effects of the Encyclical are
the following: the general recognition that industrial ques-

tions have religious and moral aspects, and that the solution

of these questions is to be found mainly in the principles

of justice; the almost universal acceptance of the principle

of a living wage; the widespread belief in labor organiza-

tion; the improved attitude of the laboring classes toward

the Catholic Church; the quickening of the conscience of

the employing classes, and the general, even though belated

and inadequate, response of Catholic leaders to the exhorta-

tion to study and strive to solve the social question.

If Catholics have been too timid in applying the doc-

trines of the Encyclical to actual industrial conditions, the

explanation is to be found in the complexity of the problems

and in the weakness of the flesh, despite the willingness of

the spirit. Moreover, the last ten years have witnessed a

great improvement in Catholic understanding of the great

document.

In closing I shall try to summarize in a few sentences

the spirit of the Encyclical on Labor. Almost at its begin-

ning we find these words: “A small number of very rich
men have been able to lay upon the teeming masses of the
laboring poor a yoke little better than that of slavery it-

self.” Were I or any other priest to use this language in a
sermon, many good persons would assume that the preacher
had turned radical if not Bolshevik. Pope Leo denies that

the Church is concerned only with the spiritual needs of her

children; he declares that it considers also “their temporal



CAPITAL AND LABOR 9

and earthly interests.” The Church wishes that the poor
“should rise above poverty and wretchedness and better

their condition in life, and for this she makes a strong en-

deavor.” Hence Pope Leo published this Encyclical so full

of sympathy with the working classes and so comprehensive

in its reforms and remedies. On the other hand, the Vicar
of Christ exhibits all these things in their proper proportions.

He insists that material prosperity will not make earth a
paradise. Improved labor conditions are not the end of life;

they are only a means to virtuous living and to the attain-
ment of life eternal. When justice is placed upon this eternal
foundation it becomes infinitely more significant and vastly
more effective than when it is based on mere humanitarian-
ism. We who strive for industrial justice and industrial re-
forms in the spirit of the Encyclical can feel assured that we
are promoting the purposes of God, that we are seeking the
welfare of labor sub specie ceternitatis.

POPE PIUS’ ENCYCLICAL ON RECON-
STRUCTING THE SOCIAL ORDER

After reading the inadequate advance summary of the
recent Papal Encyclical, a prominent rabbi in New York
declared that it was relatively less progressive than Rerum
Novarum. Had he waited until the full text was in his
hands, he could not have passed this judgment. Quadrage-

simo Anno is quite as far ahead of the average, or the con-
servative, economic thought of today as Rerum Novarum
was in advance of the social thought of the last decade of

the nineteenth century. The present Holy Father presents
a comprehensive socio-economic philosophy and program in

terms that are remarkably concrete and in language that is

familiar to this generation.



10 CAPITAL AND LABOR

As it appears in the dedicatory address, the full title of

the Encyclical is “On Reconstructing the Social Order and
Perfecting It Conformably to the Precepts of the Gospel.”

This title is at once descriptive of the subject matter and

indicative of the precise aim and the fundamental character

of its proposals. The reconstruction which the Holy Father
describes and demands is both economic and moral. The
economic doctrine is midway between individualism and So-
cialism. On the one hand, it repudiates economic liberalism,
laissez-faire, and unlimited competition. The terms liberal-
ism and individualism occur many times throughout the En-
cyclical; always with a note of condemnation and some-

times in accents of righteous scorn. The functions which
Pope Pius assigns to the State are very extensive. On the
other hand, he carefully points out the limits of State con-

trol, declaring that it should never go so far as to exemplify

even a moderate degree of real collectivism or Socialism.

Before entering upon the presentation of his own doc-
trines and proposals, Pope Pius recalls the genesis of Pope

Leo’s Encyclical on the Condition of Labor. The most im-
portant and significant statement in these preliminary para-

graphs is this: when Pope Leo wrote, the excessive riches of
the few and the dire poverty of the many were quite satis-
factory to the wealthy, who looked upon this condition as a
necessary consequence of economic laws and who “were con-
tent to abandon to charity alone” the relief of the unfortu-

nate. This attitude the Holy Father condemns, declaring

that it is not “a task of charity to make amends for the
open violation of justice.” This opening note of justice is

very frequently sounded in all of the subsequent sections

of the Encyclical. Several times the Pope uses the term

“social justice.” So far as I am aware, this is the first papal
pronouncement to make use of that phrase. It may have
either of two meanings: general civil and social righteous-

ness; or something akin to distributive justice, inasmuch as

it places obligations upon those who possess economic power



CAPITAL AND LABOR 11

and have control of the distribution of the product of in-

dustry.

I. Effects of “Renim Novarum”

These are briefly described by Pope Pius under three

heads: the Church, as regards the diffusion of Pope Leo’s

doctrine among the clergy and laity and their efforts to give
it practical application; the civil power, as regards benefi-

cent labor legislation, which has assumed the proportions

of “a new branch of jurisprudence,” and organizations,
particularly of workingmen. Under the last head, the Holy

Father stigmatizes that “liberalism” which leads govern-

ments to “the criminal injustice” of treating labor unions

“with disfavor if not with open hostility,” while recognizing

and patronizing “similar corporations among other classes.”
This is a penetrating and just judgment; for the principles

of economic liberalism and individualism were frequently

applied by legislators in such a way as to give the workers
only the freedom to compete, both against the capitalists

and one another, while it permitted capitalists to compete

against labor and to combine with one another. Pius re-

affirms the statement of Leo that workingmen’s associations

should be so organized and governed as “to help each mem-
ber to better his condition to the utmost in body, mind and
property.” While he prefers to see Catholic workingmen
form unions based explicitly upon Catholic principles, he
recognizes that sometimes “peculiar economic conditions”

and other circumstances leave them no choice “but to enroll
themselves in neutral trade unions.” Here and in several
other places the Encyclical restates and emphasizes the tra-
ditional Catholic doctrine that persons having similar eco-

nomic interests should be united in professional or vocational

associations.

At the close of this part, Pope Pius strongly condemns
“some who seem to attach little importance to this [Pope



12 CAPITAL AND LABOR

Leo’s] Encyclical and to the present anniversary celebra-

tion. Such persons/’ he says, “are either entirely ignorant

of its doctrine or unable to understand it” or “open to the

charge of base injustice or ingratitude.”

II. Vindication and Wider Application of
Leo’s Teaching

At the beginning of this section, Pius reasserts the princi-

ple laid down by Leo, that the Church and its Supreme Pon-
tiff have the right to make pronouncements upon social and
economic problems in so far as these “have a bearing upon

moral conduct.” The authority of the Church extends to
“the entire moral law.” Economic laws are not independent

of the moral law or of the final end assigned to man by
God. These clear and positive declarations ought to be a

sufficient reply to the assertion still occasionally made by
Catholics that the Church has no competence nor any au-

thority in “matters of business.”

The Holy Father declares that he wishes to solve the
doubts that have arisen “even among Catholics” concerning
Pope Leo’s doctrine and, in view of the new needs and the
changed social conditions, to give it a more precise applica-

tion and amplification. The topics discussed in this part
are mainly economic.

Private Property

On this subject, says Pius, some controversy has arisen
among Catholics about the correct interpretation of Leo’s
teaching. Moreover, the Church is sometimes accused of

upholding the wealthier classes against the wage-earners.

Private ownership, he declares, has a two-fold aspect, indi-

vidual and social. While it is necessary for individual wel-

fare, its social aspect should be neither minimized nor ex-

aggerated. The former fault leads to individualism which is



CAPITAL AND LABOR 13

“a pagan concept”; the latter, to collectivism, which is

equally to be condemned. The Popes and the theologians
have always maintained both these elements of ownership.

They have upheld the distinction between the right of
ownership and the proper use of material goods. The limits
of the right are fixed by strict justice; the limits of its

proper use are determined “by certain other virtues.” While

the owner may not use his goods as he pleases, he does not
forfeit the right by a bad use. The task of defining in de-
tail the limits, both of the right and its use, “is the function

of government.” Hence States have maintained many forms
of private property, for example, the primitive, the patri-

archal, the feudal and that which prevails today. In fixing

the limits of the right, the State consequently enjoys con-

siderable latitude. But it must not so restrict the institu-
tion as to prevent individuals from securing and possessing
external goods, or from transmitting them by inheritance.

One general limitation upon rightful use is made by the
natural law. A man’s superfluous income, that which “he
does not need in order to live as becomes his station,” is

subject to “the grave obligations of charity, beneficence and

liberality.” These are those “other virtues” which the Pope

mentioned as determining the limits of the proper use of

goods. The specification of the virtue of liberality in the
Encyclical seems to be particularly appropriate in our time.

According to St. Thomas, the virtue of liberality is part of
the virtue of justice. It has not to do with the debt owed
by strict justice, but with a “certain moral debt.” It de-
mands that wealth be used for the benefit of the community.
Superfluous income, continues the Holy Father, may also be
properly invested in productive enterprises which are “really

useful.” The qualifying phrase is an implicit condemnation
of a great part of the investments that are made in our
society. Some of these are distinctly harmful, since they
promote unproductive speculation; others are useless be-

cause they add to a productive equipment which is already



14 CAPITAL AND LABOR

excessive. In our time the virtue of liberality, the right use

of superfluous riches, could frequently be much more ef-
fectively practiced through gifts to public institutions, such

as churches and schools, or in the payment of high income

and inheritance taxes, than through increasing our already

superabundant instruments of production.

Distribution of the Product of Industry

Labor is not the only title of ownership. The laborer
has a right to the whole product only when he is his own
master, exerting his energy upon his own materials. When
he expends his labor upon the property of his employer,

he cannot lawfully claim the entire resulting product. The
Socialists are wrong in demanding that all the means of pro-

duction be transferred to the State. More subtle is the
error of those who set up “the false moral principle that all
products and profits excepting those required to repair and

replace invested capital belong by every right to the work-

ingman.” Both capital and labor have a right to a share

in the joint product, “and it is flagrantly unjust that either

should deny the efficacy of the other and seize all the

profits.”

This teaching is sufficiently clear and forthright. The
Holy Father does not explicitly assert that the share of the

capitalist is due him by the specific title of productivity,

but that proposition seems to be clearly implied in this

passage.

Pope Pius does not, however, lay down any rule for de-
termining the proportions of the product which should go re-

spectively to labor and capital. All that he says is that the

division “must be brought into conformity with the de-

mands of the common good and social justice.”
In the past, he continues, an excessive share was claimed

and obtained by capital, while the laborer received only “the

barest minimum necessary to repair his strength and to en-



CAPITAL AND LABOR 15

sure the continuation of his class.” Although the condition

of labor has been, considerably improved since the days

when the liberalistic tenets of the Manchester School were
in control, the working classes have not yet obtained their

rightful proportion. The immense number of propertyless
wage-earners and the superabundant riches of the fortunate

few clearly show that the abundant products of industrial-

ism “are far from rightly distributed and equitably shared

among the various classes of men. Every effort, therefore,
must be made that at least in the future a just share only
of the fruits of production be permitted to accumulate in

the hands of the wealthy and that an ample sufficiency be

supplied to the workingman.” Unless such efforts are made
seriously, with energy and without delay, human society
cannot “be effectively defended against the forces of revolu-

tion.”

How much is “ample sufficiency”? The Holy Father’s
interpretation of this phrase is fairly definite. The workers
must have enough to take care of their families with greater

ease and security, to be free from hand to mouth uncer-
tainty and to possess the assurance that some little provision
will remain for their dependents after their own lives are
ended. Later on we are told that wage-earners of all kinds
should be enabled through wages “to attain to the possession

of a certain modest fortune.”

Application of Leo’s Doctrine on Wages

How can the wage-earner obtain this “ample suffi-
ciency”? Evidently the only means is his wages, for these
are his only source of saving. At the outset of his discus-
sion of this topic, Pope Pius declares that the wage contract
is not essentially unjust and that those persons are in error

who maintain that it should be supplemented by the con-
tract of partnership. Nevertheless, he deems it advisable



16 CAPITAL AND LABOR

that when possible a relationship of partnership should be
introduced as a modification of the wage contract. “In this
way, wage-earners are made sharers in some sort in the
ownership or the management or the profits.” Nothing so
specific as this was laid down by Pope Leo. In effect, it
declares that the workers should become something more
than mere wage-earners. In effect, it endorses the position
of those social students who maintain that the worker should
be gradually introduced to the various advantages of capital

ownership. It implies a certain degree of industrial democ-
racy. The specific method by which this beneficent change
can be brought about is described a little later in the En-
cyclical.

As regards the amount of wages which is just, Pope Pius
declares that the adult male should receive at least sufficient

for the maintenance of the family. While it is right that

the rest of the family should contribute something toward

the common maintenance when they are able, it is wrong
to compel young children to work or to require mothers to
“engage in gainful occupations outside the domestic halls to

the neglect of their own proper cares and duties, particularly
the education of their children.” This measure of remunera-

tion, declares the Holy Father, is demanded by social jus-
tice. If it is not now feasible, it should be brought about
by reforms “introduced without delay.” If the inability
of business to pay this wage is due to bad management or
want of enterprise, “this is not a just reason for reducing

the workingman’s wages.” If the inability rises from the fact

that the industry “is compelled to sell its products at an

unjustly low price,” the blame is to be placed upon those

who cause prices to be insufficient. This evil condition
should be removed through the joint effort of employers and

employees, aided by the public authority. If conditions be-
come extreme, they should consider “whether the business
can continue or whether some other provision should be
made for the workers.” If these rules were applied to our



CAPITAL AND LABOR 17

soft coal industry and, indeed, to several other over-

expanded industries in the United States, they would bring

about the closing down of many superfluous mines and
plants and the transfer of the superfluous workers to other

industries, or such a reduction in the working time as would

enable many of those who are chronically unemployed to
find steady work in the industries to which they still cling.

The Pope’s specifications on this subject are quite in har-
mony with the theory of “planned production,” which is fre-
quently urged as a preventive of industrial depressions.

Unemployment

Of no less importance than good wages, says the Holy

Father, is the provision of opportunities for work. He calls
the present unemployment a “dreadful scourge.” Oppor-

tunities for work, he declares, depend in large measure upon

the scale of wages and are multiplied so long as the scale

is not too high. “All are aware that a scale of wages too

low, no less than a scale excessively high, causes unemploy-

ment.” This is a substantial recognition of the now gener-
ally prevailing theory that our present unemployment is due
to a lack of adequate income and adequate consuming power

in the hands of the wage earners. Continuing, the Holy
Father declares that a reasonable relation should be main-

tained between different groups of wages and between the

prices of the products turned out by the various economic
groups, agrarian, industrial, et cetera. If these harmonious

proportions were established and maintained, the supply of
goods would be sufficient “to uplift men to that higher level
of prosperity and culture which, provided it be used with

prudence, is not only of no hindrance but is of singular help

to virtue.” Here we have an implicit but unmistakable
condemnation of the assumption that compulsory economic

poverty is helpful to a virtuous life.



18 CAPITAL AND LABOR

III. The Reconstruction of the Social Order

This is the most constructive and original part of the

Encyclical. “When we speak of the reform of the social
order,” says Pope Pius, “it is principally the State we have
in mind.” Although the State is not the source of all social

salvation, its function must be emphasized on account of

the evil consequences that have flowed from the theory and

practice of individualism. While much that was formerly
done by small bodies can now be performed only by large
corporations, nevertheless it is a grave evil to permit the

latter to control and perform industrial activities which can

be carried on effectively by smaller groups. This arrange-
ment is as bad as Socialism and for the same reason, namely,

that it prevents the individual and the smaller groups from

doing things which they are able to do for themselves.

“This is a fundamental principle of social philosophy. . . .

The true aim of all social activity should be to help indi-
vidual members of the social body, but never to destroy or
absorb them.”

Vocational Groups

In order to restore the organic character of social life,

the State should encourage the formation and functioning

of smaller industrial groups. It should reestablish voca-

tional groups which would include both the employers and

the employees of an industry. The remedy for present evils
is to be found neither in free competition nor in overwhelm-

ing control by corporations. What the Pope desires is some
kind of guild system providing self-government for each

industry under the protection of the State, but restrained

by the State from oppressing either the worker or the con-

sumer. Employers and employees of the same industry

should, he says, “join forces to produce goods and give

service.” The same principle of cooperation he would ex-



CAPITAL AND LABOR 19

tend to the international field. Since the nations are largely

dependent upon one another in economic matters, they

should endeavor “to promote a healthy economic coopera-

tion by prudent pacts and institutions.”
Immediately following the discussion of vocational

groups, the Encyclical has a few paragraphs concerning “a

special syndical and corporative organization,” which evi-

dently means the industrial system set up by Mussolini.

After praising its good features, the Holy Father refers to

the fear that it involves the substitution of the State for

beneficial private initiative and exhibits “an excessively

bureaucratic and political character.”

IV. Present Conditions and Socialism

At the beginning of this section, His Holiness recalls

the vast changes which have taken place in economic condi-

tions since Pope Leo published his Encyclical forty years

ago. Most conspicuous among the changes are the increased
concentration of capital and the greatly increased control

exercised by large corporations. He speaks of the “despotic
economic domination concentrated in the hands of a few,

and these few frequently not the owners, but only the trus-

tees and directors of invested funds.” In consequence of

this concentration of power, we behold a three-fold struggle
for domination: first, for dictatorship in the economic

sphere; second, the fierce battle of the dictators to acquire

control of the State; finally, the resulting clashes between

States themselves. Individualism has brought about a com-

plete reaction. “Free competition is dead; economic dic-

tatorship has taken its place. Unbridled ambition for

domination has succeeded the desire for gain;, the whole

economic life has become hard, cruel and relentless in a
ghastly measure.” Despite his denunciation of the evils of

present day capitalism, Pope Pius declares that the system
is not “vicious of its very nature.” It is to be condemned



20 CAPITAL AND LABOR

only when it imposes its arbitrary will upon the workers
and the common good, regardless of social justice.

Communism and Socialism

Contemporaneously with the change in the economic or-

ganization since Pope Leo, has come a change in the char-
acter of Socialism. There has occurred a division of the

system and the movement into two groups. One of these
is even more extreme, while the other is in varying degrees

more moderate, than the Socialism which Leo condemned.

The former is known as Communism. It is utterly de-
testable in its class warfare, abolition of private ownership,

violence, cruelty and open hostility to the Church and to

God. The more moderate form of collectivism which retains
the name of Socialism, has in some respects become so
mitigated that its programs “often strikingly approach the

just demands of Christian social reform.” What the moder-
ate Socialists attack nowadays is not so much the possession
of the means of production as “that type of social rulership

which in violation of all justice has been seized and usurped

by the owners of wealth. This rulership in fact belongs

not to the individual owners but to the State. If these

changes continue, it may well come about that gradually
the tenets of mitigated Socialism will no longer be different

from the program of those who seek to reform society ac-
cording to Christian principles.”

The sentence just quoted is immediately followed by a
statement which contains ample authorization of public

ownership of public utilities and of these artificial monopolies

which cannot be kept within reasonable bounds by mere
legislative regulation. This is the sentence: “For it is

rightly contended that certain forms of property must be
reserved to the State, since they carry with them an oppor-
tunity of domination too great to be left to private indi-

viduals without injury to the community at large.” “Those
who demand merely such measures of State control,” con-



CAPITAL AND LABOR 21

tinues the Holy Father, “have no reason for becoming So-

cialists.”

Nevertheless, Pope Pius declares, not all the Socialist

sects which reject Communism have adopted this reason-
able position. For the most part, they merely take a more

moderate attitude with regard to the class warfare and the

abolition of property. Even if Socialism changed its doc-
trine so as to teach nothing reprehensible on these two sub-

jects, it would still be out of harmony with the dogmas of
the Catholic Church because it rejects the eternal life as the

end of man, and sacrifices individual liberty “to the exigen-

cies of efficient production.” It would organize society on

the basis of “compulsion of the most excessive kind,” while

fostering that false liberty which excludes true social au-

thority derived from God; so long as Socialism remains

Socialism, “no one can be at the same time a sincere Cath-

olic and a true Socialist.”

The Pope deplores the desertion of many Catholics to
the ranks of Socialism and notes the excuses often given for

this defection, namely that “the Church and those professing

attachment to the Church favor the rich and neglect the

workingmen and have no care for them.” Sorrowfully, the
Holy Father admits that some Catholics “are well-nigh un-
mindful of that sublime law of justice and charity which

bind us, not only to give each man his due but to succor
our brethren as Christ our Lord Himself. Worse still there
are those who out of greed for gain do not shame to oppress
the workingman. Indeed, there are some who can abuse
religion itself, cloaking their own unlawful imposition under
its name, that they may protect themselves against the
clearly just demands of their employees. We shall never
desist from gravely censuring such conduct. Such men are
the cause that the Church, without deserving it, may have
the appearance and be accused of taking sides with the
wealthy and of being little moved by the needs and the suf-
fering of the disinherited.”



22 CAPITAL AND LABOR

V. Reform of Morals

At the beginning of the last part of the Encyclical, Pius

repeats the declaration of Leo that society cannot be healed

“save by a return to Christian life and Christian institu-

tions.” Social reconstruction must be preceded by a pro-

found renewal of the Christian spirit. Nowadays, he con-

tinues, vast multitudes of men have great difficulty in at-
tending to their eternal salvation precisely because of the

un-Christian spirit and the immoral methods which per-

meate the social and economic life. The thirst for riches
has always impelled men to break the law of God and
violate the rights of their neighbors, but today it is more

harmful than ever before. Economic insecurity drives men
to relentless competition, urges them to amass profits re-
gardless of justice or charity and persuades them that gains
should be acquired with the least possible labor. Corpora-

tions with their limited liability and their reduced sense of

personal obligation are guilty of abominable abuses. The
number of those who seek wealth without regard to the
means employed is greater than ever before and the bad

example which their success creates for more humbly placed
men is truly deplorable. When the leaders of business
forget morality, the working classes naturally fall into the

same ways, particularly when they experience injustice at
the hands of their employers. The Christian spirit has be-
come so generally impaired that “man’s one solicitude is to
obtain his daily bread in any way he can.”

Return to the Gospel

In the production and pursuit of material goods, men
must once more learn to respect the laws of God and the
rights of their neighbor; in the use of wealth they must
return to the principles of faith and right reason. In all

these respects, they must become imbued with a sense of



CAPITAL AND LABOR 23

equity and must be guided by requirements of a just dis-

tribution. “Sordid selfishness,” which is the great crime of

this age, must give way to Christian moderation which bids
men to seek the Kingdom of God and His justice.

Nevertheless, the virtue of strict justice is not sufficient.

While charity cannot take the place of justice, it is neces-

sary in order to bring about a true union of hearts and

minds. Without charity, there can be no stability in insti-

tutions or arrangements which aim at social peace. With-

out the spirit of charity, the wisest regulations will come

to nothing. The diffusion throughout the world of the spirit
of Christian moderation and charity will bring about the

much desired renewal of human society and the Peace of
Christ in the Reign of Christ.

Obligations of Bishops, Clergy and Laity

The task of social and moral reconstruction is indeed
difficult, but it should be taken up and sustained in the
spirit of soldiers of Christ. There is indeed no good reason

for discouragement. The assistance of associations of work-
ingmen is in itself a great source of encouragement. From
these societies and from groups of employers must be

trained lay apostles who will devote themselves to social
reform. Study circles must be formed on Christian lines.

“Let us not permit, Venerable Brethren and Beloved Chil-

dren, the children of this world to seem wiser in their genera-

tion than we, who by God’s goodness, are children of light.”
This same note upon which Pope Pius closes his great

Encyclical was likewise struck by Pope Leo in the concluding
paragraphs of Rerum Novarum. On the occasion of the
Fortieth Anniversary of the latter more than one speaker
and writer was obliged to confess that this exhortation had
not been faithfully or generally followed by either the clergy
or the laity. All the signs of the present time, however,

indicate that the eloquent recommendations of the present

Pontiff will not suffer the same degree of neglect.



24 CAPITAL AND LABOR

Conclusion

Whatever else may be said about the Encyclical on Re-
constructing the Social Order, it cannot be fairly criticized

as vague, remote or academic. It is realistic throughout,

perceiving clearly both the evils of capitalism and the evils

lurking in extreme proposals of reform. It combines a clear

statement of principles with a detailed presentation of prac-

tical proposals. It gives us not only the principles but their

concrete application. It faces all the facts and deals with

the world of today in language which the world understands.

When the subject under discussion is economic, the termi-
nology used is economic; when moral questions are under
consideration the language is that of ethics. Probably no

honest man will have the hardihood to say that Pope Pius
does not understand existing social and economic conditions

or shrinks from proposing adequate remedies. The Holy
Father has given the world the most comprehensive, specific

and adequate program of social reconstruction that we
possess. Other programs may have been more detailed con-
cerning one or other part of the problem, but none of them

has been at once so fundamental, so well balanced and so

comprehensive. A long time will elapse before another En-
cyclical will be necessary to supplement “Reconstructing the

Social Order.”

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