wx 1703 ^rXSTPtpOMCjIUIlQ^^ mM. Wi^K'''-V'. vmm'!^ '^:< wms mm y.( ['':r ')'.]■: . The Trust Question Answered and American Panics TWO LECTURES By Howard H. Caldwell Price 10 Cents COPYRIGHTED 1912 By the Author PUBLISHED BY H. H. CALDWELL 2162 Thirty-eighth Ave., Oakland, Cal, 15 ''T'-f.-X^ HOWARD H. CALDWELL LECTURER Author of "Our Mental Enslavement," "Warl" etc. t !: /. (ir,!:r;l 1 ! I |;|' Ah V The Trust Question Answered CHAPTER I. POPULAR MISCONCEPTION OF THE TRUSTS THE SMALL CAPITALIST CLASS ^ During the past twenty years, since consolidation in ^ industry has been so rapid, the newspapers of the •- smaller capitalist class and their political mouthpieces have voiced a demand for the destruction of the O *Trusts," and the return to the days of small pro- ^ ductior < Mr. Bryan, Mr. Hearst, and many other politicians representing this class politically, have denounced these ^ organizations of capital as criminal conspiracies, and ^ have endeavored, like Mrs. Partington, to sweep back (J) the sea of evolution with a broom. They desire to return to the days of small production, O' and "free competition," They style themselves "pro- C gressive," but are in reality standing for the most re- ^ actionary position in American politics today. They de- ^ sire to turn back the hands of time fifty years, to a ?2 period passed by us in our evolution, and to which it is *~ impossible to return. It was a time of the greatest prosperity for their class, during which time they had sufficient economic strength to control our political government, mold our law and morals to conform to the slightest desires of their class. They believe this retrogression is possible, but we find no precedent for it in history. It would be as sensible to advocate the destruction of the railroads and the return to the. stage coach. By means of organization and system in our indus- trial methods we have increased our output thirteen fold per capita during the last century. Not the least of the labor saving devices was the modern industrial combination popularly known as the "Trust." ^ The declining political prestige of this class as they are industrially and financially overwhelmed by the \ t t industrial combinations, is weakening the voice of tht^ ''Trust Buster.". The small capitalist class lost control of the Demo- cratic party in 1904 and since that time has only found expression in small ''reform" movements, like Hearst's Independence League, and "insurgent" movements from states backward in their industrial development. As this class has been hopelessly passed in our evo- lutionary development, it is a waste of time to further consider it. THE LARGE CAPITALIST CLASS In the year 1860 the banking and manufacturing cap- italists of this country carried through a successful re- volution at the ballot box, and vvith their newly organ- ized Republican party wrested power from the slave- holding and trading classes, and captured control of the federal government. This victory w^as won by a plurality vote, consequent- ly their opposition being in the majority, the slavehold- ing interests went into armed rebellion against federal authority. The control of the federal government gave the man- ufacturing and banking classes an advantage in the game of war, which the rebels could not muster suf- ficient force to overcome. They used the federal authority, backed by large armies during the Reconstruction period, to ruthlessly beat down any opposition at the ballot box and so kept the South practically disfranchised. At no time since 1860 has the small capitalist had control of the federal government. His "rights" have been trampled upon, and his code of morals thrown aside to make way for the interests of the large capital- ist class and their ideas of right and wrong. The demonitization of silver, the high protective tar- iff, the increase in army, navy, and consular service all to protect the interests of banker and manufacturer^ were all progressive steps in the furtherance of the in- terests of the large capitalists. The "Imperialistic" policy adopted by the Federal government during the later part of the last century, as well as the war of conquest upon the Spanish, the annexation of islands for coaling stations, the increase 5 in naval and military establishments and the colonial policy, were all in the interests of the banker and the manufacturer and at the expense of the rest of the population. Today the interests of the banker and captain of in- dustry dominate all our political, educational, religious and social institutions. Our courts decide that their wants are constitutional and that the demands of all other classes are unconstitutional. Their will is backed up bv civil law and military forces. The consolidation of industry to eliminate the useless waste of the competitive system, has enabled the large capitalist to sell ^oods at a profit, and furnish them to the public at a price below the cost of production by his small competitor. The monopolists today are seeking for some kind of trust regulation that will stop evolution, and are looking for a Joshua to make the sun stand still. They do not want the sun of their capitalist system to set forever. They are trying to shut their eyes to the fact that their system is but a transitory one be- tween individual and co-operative production. Evolu- tion will not be stopped. Their political soothsayers in the House of Congress very greatly resemble the In- dians who tried to lasso the first locomotive that passed through their hunting grounds. SOME SHORT-SIGHTED LABOR UNION EDITORS The merging of many factories under one ownership, some of the factories being unionized and others under open shop conditions, made it possible during strikes in union factories to run the non-union factories. This gave the large corporations more power in fight- ing the trade union than the individual competing man- ufacturer possessed. The blacklist became a more ef- fective weapon against the union man as the industries passed into fewer hands. The monopoly of the market by the trust removed the fear of a competitor securing the business during labor troubles. The ability of the monopolist to fix the price of the product and to eliminate competitors at will, made the monopolist more secure against any pressure brought to bear by the labor union, through strikes or boycotts. 6 A recofirnition of the jofrowin.^ power of private mon- opoly caused the labor union editors for many years to side with the small capitalist "trust busters" in their futile endeavors to return to small production. The union label adopted by many unions was in most cases a sort of compact between union and small cap- italist to feht the "Trust." The manifest saving of waste in production on a large scale made this a very expensive and abortive method of checking the growth of large industry. The labor editors' most common misconception was that to destroy the "Trusts" would reduce the cost of living. The facts are, however, that the "Trusts" un- dersell their individual competitors and prevent further competition by eliminating the waste incidental to competition and so make it impossible for any small firms to enter the field again. The labor unions of the world are awakening to the fact that they must combine with all other workers on farm and in workshop in a political movement distinct froTH and opposed to all parties of the capitalist class, large or small, that they may use their overwhelming numbers to capture political power. When they use this political rower to emancipate themselves they will establish Socialism. The nation must own the "Trusts," instead of the "Trust" magnates owning the nation. To understand why we must do this we will review briefly the indus- trial history of the American people, and find why this is the only solution of the "Trust" question. CHAPTER II. OUR INDUSTRIAL EVOLUTION During the time the American Colonies were under the control of the British government the Americans were an agricultural and trading people. At the time of the invention of the steam engine (1768) only two per cent of the American freemen were wage workers, the remainder of them were self- employing farmers, mechanics and merchants. A few ship owners trafficked in slaves, smuggle^d commodities past the British custom officers, while some other budding capitalists distilled New England rum from West Indian Molasses and used it for the purchase of slaves in Africa. The appearance of the steam engine, followed by power driven machinery in all industries and particu- larly in the weaving industry, increased the output of cotton to an enormous extent, where the power looms and the cotton gin was in use. This eliminated the handicraftsman very rapidly, and produced the capital- ist and wage working classes. We find one wage worker plus a machine able to pro- duce in one day as much as five hand workers had done. They, unable to compete with the machine, are compelled to sell their labor for a wage to its owner, competing with each other in the sale of their labor. Those who remain outside the gates unemployed are unfortunately equipped with stomachs that grow hun- gry about three times a day. The hungry man outside the factory will work for an existence wage in preference to starvation. He will not work for less than a living, so the necessities of the hungry man outside the shop fix the wages of the man employed within the shop at an existence wage. Since the establishment of the wage system as the dominant system in industry, the averagg pay of the average worker is the average cost of living in every locality. During the time when machine production was dis- placing the hand worker, and there was ready sale for ALL machine made goods, the capitalist stated as a dogma: "Competition is the life of trade." They meant by this that the more people there were engaged in their line of industry (provided there was a greater demand for goods than could be supplied), the better opportunity they had for studying the methods of production and sale of the products. It should really have been called "emulation" instead of "competition." Each capitalist continually reinvested the profits taken froiii his workers in employing those working men displaced by labor-saving machinery, in building his factory larger and making more machinery for him. It was the wage working class who built all the fac- tories, m.ade all the machinery, discovered and applied 8 new ideas in increasing output, then lost their title to the factories, through not receiving their full pay, but only a LIVING wage. It was the wage system that robbed the workers of possession of the industries built by them. The whole history of the development of our pres- ent industrial system has been the gradual displace- me)it of independent self-employing hand workers by machinery and wage workers. There has been a steady loss of ownership by the worker of the tools he uses. The capitalist, as his factory was increased in size, was compelled to seek ever wider markets for his goods. Commodities are only made to sell. No busi- ness man will intentionally allow more goods to be made in his factory than can be sold by him. It is the amount of the demand that controls the output. Now let us see what it is that limits the de- mand. We have found that the worker, under this competitive wage system, only receives a wage suffic- ient to buy the necessessaries of life, which is but a fraction of his total output. No matter how rich a capitalist may be, he is unable to eat more than one meal at one time. He can only wear one suit of clothes with comfort at a time, con- sequently there is a limit to his ability to consume. The capitalist class receives all the worker produces over a living. It is a far larger amount than the cap- italist class consumes. These goods would accumulate in the warehouses, overflow the market, and stop fur- ther production were it not for the fact that the cap- italist continually uses his surplus to hire the workers displaced by machinery, to enlarge the factories and machinery to displace more of the hand workers. WE HAVE NOW REACHED THE POINT IN MOST OF THE INDUSTRIES WHERE THE HAND WORK- ERS HAVE BEEN COMPLETELY ELIMINATED BY MACHINERY, AND WHERE THE MACHINERY IS SUFFICIENT IN THE WORLD TO SUPPLY ALL OF THAT KIND OF GOODS THE WORLD MARKET CAN TAKE. At this time we find the capitalists dropping their old dogma, "competition is the life of trade." Each capitalist, in his attempt to continue the system of investment of his profits in enlarging his business, iii 9 compelled to fight desparately with his fellow capitalist to prevent having his market taken from him. This means expensive salesmen, advertising, adulteration of goods to lower the cost of production, and a greatly in- creased cost in selling the product. With this cut- throat competition many firms are forced into bank- ruptcy. The cost attached to the sale of the product added no value to it, but must be charged to the consumer. THIS WAS THE CONDITION OF BUSINESS THAT FORCED THE ORGANIZING OF THE "TRUSTS." We will say, for example, that there are thirty firm^ engaged in one line of industry. Each firm must send a salesman to every important city to visit their own and other factories' customers. The wages and expenses of these men often consti- tute 25 per cent of the price of the goods. Each firm must, if it intends to remain in business, maintain an advertising system that will reach all sections of the country. The scenery along the railroad lines is spoiled by signs telling how much better one firm's goods are than anothers. This adds nothing to the value of the goods, but must be paid for by the customer, or the firm fails in business. One company in a certain territory finds its market encroached upon by competitors, so that the company is forced to enter the others' fields. This makes the average haul of the product to its market almost half way across the country. The ex- penses, freight and express charges must be paid by the purchasers to make the business a success. Each competing manufacturer has no definite knowl- edge of the amount of goods in any line his competitor intends to put on the market. This anarchy of produc- tion often throws a lot of unsalable goods upon the mar- ket, a part of which can not be sold at any price. This chaotic condition of business was but a logical step in the evolution of the competitive system. At this stage of development, though the useful worker received but 17 per cent of his product in wages, most of the remainder was frittered away in the wastes of competition. Many capitalists during this period were not getting 10 profits, but were actually losing what they had pre- viously accumulated. We will suppose, for example, that thirty firms are engaged in one industry. We now see possibly twenty of these firms arriving at the conclusion that something will have to be done to end wasteful compe- tition. One of the most brainy men among them starts to organize a trust. They hold a meeting, form an organization similar to a labor union, and enter into an agreement with each other to fix a price below which none shall go in the sale of their commodities. They also agree not to employ working people blacklisted by some other firm in the combination. They agree upon other points that tend to limit competition between each other in the sale of their products. Each firm puts up security that it will live up to its part of the agreement or binds itself by some other method mutually satisfactory. A trust has been formed. Each man retains indi- vidual ownership in his factory and individually takes the profits therefrom, having no share in the profits of the other firms, within the trust. Time brought forth many weak points in this form of organization. Each firm had the incentive to give rebates secretly to the others' customers, and so cap- ture them from the rival firms. These unsatisfactory workings, within the trusts were the cause of the form- ation of the modern corporation. The invention of the corporation was, next to the steam engine, the most important invention during the existence of the capitalist system of wealth pro- duction. It was tfie creation of a legal individual who nevei* died, who could hold property, who shouldered all responsibility, who could not be put in jail, who could not be bung, and who could do anything that any other individual could do. It was the method by which the business man could retire from active participation in the business, have the business carried on and receive an increased income from it. The capitalists at this stage of industrial evolution ordered their lawmakers to make laws legalizing this new method of doing business. We now find these twenty firms that had combined in the trust, organizing a new corporation. They then 11 appraise the plants of each firm and sell them to the corporation, taking stock in the new company for prob- ably twice the- value of their factories. They call this "watering" the stock and state in jus- tification that the elimination of waste justifies the in- creased valuation. We now notice some revolutionary changes taking place in the conduct of their business. The new corporation sends but one salesman to each city formerly visited by a salesman from each of the twenty competing firms within the trust, so the wages and expenses of the other nineteen salesmen are saved. Another feature of the corporation is that they use each factory to make the goods for its own neighbor- hood and thereby cut out at the very least three- fourths of the former expense for freight. In advertising we find one advertisement represent- ing the twenty consolidated companies. They may ad- vertise five times as much as each firm formerly did previous to consolidation and still save three-quarters of the former total cost, in addition to covering the field much more thoroughly than did their competitors. Any of the twenty factories where the cost of opera- tion is high, are closed down. The factories, where the cost of operation is cheaper, are increased in size. One superintendent now superintends a large factory and gets about the same wages he received when in charge of a small one. One engineer is all that is needed to operate one large engine that generates five times the horse power that is generated by an engine in a small factory, so several engineers lose their positions. The saving in cost of management, superintendence, ocsigning, accounting, time-keeping, cost of material by buying in large quantities, better fuel facilities make it possible for the large company to make goods cheaper than its competitors. They establish one central selling agency which cuts down eqormously the former cost of that department of the manufacturing business. Lack of space prevents us enumerating hundreds of other points where large production has an economic advantage over small competitive business. But We HAVE COVERED ENOUGH TO SHOW THE READ- ER THAT THE NEW CORPORATION CAN SELL 12 AT A PROFIT, CHEAPER THAN THEIR SMALL COMPETITORS CAN DELIVER THE GOODS TO THE CONSUMERS. IT WAS AT THIS POINT THAT THE CRY OF "DESTROY THE TRUSTS" WENT UP FROM THE DESPAIRING SMALL BUSINESS MAN. He realized that the large corporation would drive him out of business if some way could not be found to make evolution stand still or turn backward. The Democratic party in 1896, representing "small business' interests" under the leadership of the eloquent Mr. Brj^an, started out on a "trust busting" expedition ; but, alas and alack, they had less funds than their more prosperous opponents, the "large business" men of the country. Mr. Bryan's campaign fund was about $800,000, while his successful rival was gently slipped into the presidential chair with an expenditure of about $iT,ooo.ooe. Mr. Bryan found that it took more than eloquence to win political campaigns, but undismayed he made an- other bold start in 1900. It is painful to relate that the small capitalists were harder pressed for funds for campaign purposes than ever before, while the large corporations had been do- ing very nicely in business and were able to set aside ].irge sums for political purposes ; the consequence was that Mr. Bryan was second once more. In 1904 the small capitalists were unable to put up sufficient funds to retain control of the Democratic party. The Wall street capitalists, tired of furnishing large funds to defeat their "small capitalist'- opponents concluded that it would be wise to own both parties. They found the Democratic politicians, who were weary of waiting for the spoils of office, very docile and easily handled. At the dictation of the large corporations the Dem- ocratic party nominated Mr. Parker for President, and also at their dictation the Republican Party nominated Mr. Roosevelt. Then, as it mattered little which can- didate was elected, they put very little money into the campaign fund. At the last moment the large capitalists threw their money and influence to Mr. Roosevelt, as they 13 feared that the election of Mr. Parker would carry with it many congressmen who were opposed to the large corporations. In this campaign the small business men in the Dem- ocratic Party were very much dissatisfied and many re- fused to vote at all. During the next four years, when Mr. Bryan took a trip around the world, he studied economics and pol- itics en route. He discovered that the small business man was passing in all the industrially developed nations. In the meantime he had been making large sums of money in the Texas oil field in company with Senator Bailey. His pocketbook was growing corpulent and a contented smile was settling over his handsome face. Mr. Bryan had lost all desire to slay, single handed an octopus, or roll evolution backward. In the campaign of 1908 we find the platforms of both the Republican and Democratic parties practically identical, plank by plank. We also notice Mr. Bryan, with a contented purr, accepting the nomination for President. He was then willing to run upon the same platform as the Republic- an candidate. The small capitalists were uttering their last despair- ing cries through the medium of the Hearst papers and finding political expression in Hearst's "Independ- ence League.'* In the campaign of 1912 small business men will have no candidates to vote for to represent their class in- terests. They will be compelled to vote with the large corporations or with the working class. The field of battle is clearing. The class struggle is on. The working class upon one side, the monopolist on the other; one equipped with numbers, the other with gold. It is lucky for us that the force of numbers, if in- telligently organized, wins both at the ballot box and upon the battle field. Some of the wealthy people believe that by keeping the working people in ignorance and teaching "patriot- ism" to the children that they will be able tq. keep up the present class rule and the robbing of the workers indefinitely. As one means to this end we find them 14 spreading the Boy Scout movement, the Y. M. C. A., endowing colleges to control professorships, opposing laws for compulsory education, encouraging the use of child labor, and making their influence felt in all re- ligious institutions. They know that ignorant people will never accom- plish self-government and democracy, but will always be dependent upon personal leaders and an aristocratic form of government. The wealthy insist that patriotism should be taught, for the reason that patriotism means respect for, love of, and obedience to the instituted government of the country in which the individual lives. Through contributing the campaign funds they con» trol the politicians, law making and law enforcing offi- cials, judges to grant injunctions against the workers and soldiers to carry them out. Sometimes they desire to have the striking working- men shot, and need the militia or regular soldiers to do the work, as they do not like to do the bloody work themselves, they have some foolish workingman to do it for them. The working class is now becoming too intelligent to hire out as professional murderers for $15.00 per month, food and clothing. The workingmen do not like to take an oath to stop existing as thinking beings and become automatic killing machines, operating under the orders of a superior officer to murder their own brothers and friends when ordered to do so. The capitalists believe that if they only could teajch the workingmen militarism when they are young enough that their minds would offer no resistance to the murderous thoughts to be inculcated, they might make willing soldiers when they arrive at the age of manhood. Today we find ministers, teachers and politicians at the command of our capitalists organizing Boy Scouts, Boys' Brigades and Boy Rifle Clubs in our schools and churches, to teach our little innocent children (who should instead be taught love and brotherhood), that murder is a laudable thing if done in uniform and under the command of an officer. Through the donations of the wealthy class to the ministers and churches they dictate the code of moral- 15 ity taught to the people. The legal stea^hg of the country from the people and the continued ^obbery of the working class through the wages sys'^^m is made perfectly moral and honest. A man can be a Sunday school superiniandent who steals one hundred millions of dollars yearly from the American workingmen. He is a great business man; his life is held up for the emulation of the Sunday School children. He has paid his workers so little wages that they can not buy the surplus he has taken from them. He can not eat it. He then denies the workingmen em- ployment, who then starve for lack of their product which has been taken by the capitalists. When the children of these poor victims of the wealthy brigands cry for bread, a poor father in des- peration breaks the laws made by the brigand to con- trol him also breaks the moral laws given out from the same source to mentally control him by breaking into the storehouse of his master and taking food out of the store laid up by his own past labor and using it to feed his starving children. Other workingmen wearing uniforms seize him, a slick judge condemns him to prison, the church obediently sends him to hell, and all the other molders of public opinion brand him as a thief, and his fellow workingmen are taught to ostracize him. It is legal, moral and right to steal wholesale from the poor, but taking food from the rich, when hungry, is a crime. When the Socialist advocates making all kinds of stealing illegal we find the wealthy up in arms against them, and all their mouthpieces, parrot-like, from min- ister to petty politicians, denouncing the Socialist. Karl Marx, when he wrote "Das Kapital," before the American Civil War, showed us why "Trusts" must in- evitably result from the competitive system. He also showed us why their combinations would grow into still larger combinations, or mergers of many indus- tries into one company, and then that the nation would be compelled to take over and operate these industries to serve the people instead of exploiting them. We have already developed the merger of many in- dustries under one corporate ownership. The Standard 16 Oil magnates control more than one hundred American industries. When one industry has been trustified for the reason that competition was impossible any longer, we find the profits taken by the large corporations amount to much more than the aggregate profits of the individual firms before the consolidation. They can not invest these profits in the same line of business, as there was already more than enough fac- tories and machinery before consolidation was forced upon them ; it was this fact that first caused the forma- tion of the trust. . They use their profits to buy up and organize an- other industry then, unable to invest further in that industry, they must use the profits of the two in- dustries to buy up a third. We find their capital in- creasing with greater speed as time goes on; it is like a snow ball rolling down a mountain side, gaining speed and weight on its way. If the system continues a few years longer, one com- pany of men will own the earth and the rest of us will be enslaved to these masters of the bread. So it is easy to see that no matter how hard the capitalist class work to keep us in ignorance or how carefully they try to preserve dogmas both as to prop- erty, morals and ancestral institutions, hunger, if nothing else, will drive us to make very revolutionary changes in our governmental institutions. We cannot remain stationary even if we desire to. We can not retain the present status of society, no mat- ter how hard we try. We can not retrogress in our social development. The inevitable trend of evolutionary forces are sweeping onward into the very gates of the Co-oper- ative Commonwealth. CHAPTER III. In the last chapter we have found — First : The com- petitive system was a natural development from the old system of private ownership of the privately used tools into the private ownership of the collectively used tools. Second : That the economic advantage of the capital- 17 . ist in owning the things necessary to the very life of the rest of the people enabled him to buy their labor at the cost of their living. Third : That the wealth produced by the workers and taken by the capitalist under the wage system was con- tinually reinvested in hiring the workers displaced by the machine production to build larger factories and more machinery. Fourth: When the factories were built larger than the market demand required, the cost of selling the product grew rapidly, and the wastes of competition were enormous. Fifth: The trust was the first attempt to limit the waste of competition, but it did not fulfill the expecta- tions of its organizers, and it soon gave way to a better plan of organization, namely, the modern corporation. Sixth: The corporation proved a successful way of securing co-operation among the capitalists for the ex- ploitation of the workingmen collectively employed. Seventh : When one industry was organized and there were sufficient factories and machinery to supply the market, the owners of that industry were compelled to invest their profits in buying up and organizing other industries. The development of the system is leading inevitably to a merger of all the industries. Eighth. As the wastes of competition are eliminated and all useless labor dispensed with, a tremendous un- employed problem results. The workers competing for employment keep the wages at the average cost of existence. The few capitalists, unable to consume the surplus, are also unable to further invest it in hiring workingmen to build more factories and machinery; consequently the capitalist system is breaking down for lack of a market. Ninth: The history of social development down through the ages has shown us that when for anj^" reason the social institutions do not provide a method of getting a living for the majority of the people a revolution always results. This revolution solves the bread question for a time at least, breaks down the old institutions, and puts a new social class in control of the political government. A study of the "trust" question shows us that revolution not only is inevitable but imminent. 18 Tenth: A study of this question forces us to the con- clusion that the only class that can bring order out of chaos, and that has both the power and inclination to brint? about a change for the better, is the working class. Their overwhelming numbers make possible their victory, either at the ballot box or upon the battle field. For the last few years they have not only done all the work of the world, but as hired managers they have superintended it. They are fully equipped to take over the industries and use them in producing for USE in- stead of PROFIT. When they themselves receive their full product there will be no unsalable surplus clogging the wheels of industry. , Self -perservation will force the people to adopt So- cialism. CHAPTER IV. WHAT IS SOCIALISM? Socialism is the next stage in social and industrial evolution after private monopoly. It will not come as a **scheme" or "plan" to be adopted by society, but will grow out of the needs of the people. It will come in spite of the dogmas of doctrinaires. It will come in spite of the mistakes and ill-judged propaganda methods of its friends. It will come in spite of the many cranks and faddists who have attached them- selves to the Socialist movement and have tacked on to our propaganda their little pet schemes. All the manufacturers' and merchants' associations in the world, with their labor spy systems attempting to pervert and destroy our movement, can do little more than check for a time the adoption of Socialism and the overthrow of class rule. Socialism is coming in spite of the blunders of friends and the opposition of enemies — why ? Because nothing else will enable the people to live and make further progress. What is Socialism? Co-operation by the entire na- tion in ownership and operation of the industries of the country. We must have everything that is used together owned collectively. We want things used privately to be owned privately. 19 We must establish a perfect democracy both in con- trol of government and our industrial system. The control by the whole people is even more impor- tant than having the nation merely own them. The ownership of some industries by the government under the control of political parties dominated by cap- italists is not Socialism, but state capitalism. State capitalism is just as objectionable to the So- cialist as private capitalism, because its power over the people is greater. All its co-operative advantages are appropriated by the capitalist class. The Postoffice Department is a fair example of state capitalism. .; Mr. Taft, as the representative of the Republican party, which is financed by the capitalist class in all its campaigns, is endeavoring in his managements of the Postoffice Department to further the interests of the capitalist at the expense of the workers. He is increasing the amount of work expected of each employe and shouldering the work of each e.nploye dis- charged upon those retained. The reason for this is easy to comprehend. Capitalists do not work in the Postoffice, but they send the bulk of the mail, in carry- ing on the correspondence incidental to their business. They want cheap postage. Mr. Taft intends to give them penny postage, provided he can increase the amount of work done by each employe without increas- ing their compensation. All schemes of state capitalism are merely efforts on the part of the capitalist class to cut down the expenses of hiring labor to perform some social function for all the capitalists that none could do as economically if each individually employed this labor. . The Socialists desire above all things to overthrow the capitalists' control of political power and their pri- vate ownership of the industries, which they have made legal by their use of this political power. The Socialists desire a system of industry under which the people will own and operate all the collective- ly used tools of production, distribution and communi- cation. They desire to pay themselves their product without dividing up, as we do now, with the capitalist class. We Socialists are tired of dividing up. 20 The workers have dug the mines, built the factories, made the machinery, constructed the railroads, but the workers own none of these things ; they are divided up among a few wealthy men. The capitalists will only let us use these necessary things provided we will agree to go on dividing with them. When we work with these tools of production owned by the capitalists they take our product from us and divide it, then hand us out of the pay windows sufficient money to buy an existence for ourselves and a small family, then divide the remainder of our product among the capitalist class. and the parasites who hang upon them. They use some of this product collected through a system of taxation in maintaining the police and sol- diers to keep their workers submissive to their laws and their judges' decisions. They contribute voluntarily sufficient money to domi- nate colleges and religious institutions, so that their code of ethics and morals shall be taught the people as perfect justice and absolute truth. It is quite an interesting system, and it has worked for more than a hundred years. It is only breaking down now through its inability to find someone to buy the surplus products extracted from the workers. As a system of production it was more effective that any system previously known to the human race. It has made possible the production of thirteen times as much wealth per capita as we were able to produce one century ago. It has not failed in production: it has only failed in distribution. As the productive power of the worker increases by the elimination of the waste of competition, his buy- ing ability remains stationary, held down to the bare cost of his living, by the competitive wage system. The capitalist, himself unable to consume the profits, finds his own business failing for lack of a market for the goods. The capitalist system has outlived its usefulness and must pass into history, as each previous system has done, when the evolution of industrial methods has necessitated a change. During the past twenty years the corporations have eliminated much useless labor. 21 Socialism will do away with much more useless work. Today the publicly owned Postoffice permits no lost motion, or doing of unnecessary work, but the capitalist class is almost the sole beneficiary. You will notice that but one postman delivers all the mail on your, street, while possibly twenty grocery wagons during the day will deliver groceries each to a few of the fam- ilies in the block. Each of their different teams must be maintained, when one team and one driver could do the work possibly more efficiently. This additional cost must be charged to the consumer. This is but one of the thousands of instances where labor is wasted under the capitalist system. The system of consolidation in business, to eliminate this waste, only benefits the capitalists and throws the worker out of employment. With Socialism, as the sys- tem would be co-operative, it would lessen the labor of the entire people and increase the income of each. To- day it is not necessary to spend time or money ad- vertising postage stamps. Postage stamps do not fluctuate in value. If there is only one two-cent stamp left in the office its price is still two cents. There are no bargain sales in postage stamps. All the people wear shoes. A great deal of the time, labor and money is wasted telling the people truthfully or otherwise that one manufacturer's shoes are better than the rest of the shoes on the market. When we buy shoes we are liable to find paper substi- tuted for leather. The manufacturer has the incentive under this profit system to deceive and swindle the public. When we buy postage stamps we know exactly what we are going to get and that they are the cost of carry- ing the letter to its destination. Is it not perfectly logical that we as a nation can make and distribute our shoes to the consumer at the cost of doing this public service as easily as we carry our mails? Today the shoemaker and other workers employed in the production and distribution of our shoes must make and handle seven pairs of shoes before they receive wages sufficient to buy one pair ; then, as the capitalist class are not equipped with feet like a centipede, and can not wear out the other pairs of shoes, the workers 22 are thrown out of employment. There are more shoes than can be sold. The people then in childlike wonder say, "Why is it that shoemakers' children always go barefoot T* Did you ever stop to think why the food we buy con- tains so much adulteration and poison ? It is due to the profit system. It pays the capitalist to substitute some cheap adulteration or use some poisonous preservative in it to conceal the fact that he is furnishing food that is unfit for human consumption. Under Socialism the poisoning of the people's food will discontinue. When your wife prepares jellies and cans the fruit for the use of your family during the winter she makes them as pure and as edible as possible, as her own loved ones are to consume them. When the whole nation, working collectively under Socialism, prepare their food supply, they will not poison it for the same reason. The last census reports showed that there were more than one million of our most beautiful girls living in houses of prostitution. Did you ever stop to consider the reason for this ? It is one of the by-product of the capitalist system. • Single men compete with married men for employ- ment. The average cost of living for ALL sets the wage. The wages resulting from this competition are not sufficient for the married man to support many children. The young boys and girls go to work at an early age to earn enough for clothing, as the father's wage is not sufficient to buy enough for all. The competitions of the young girls partially support- ed by their parents brings the average female wages considerably below the cost of living of this girl if thrown on her own resources. Census bulletin number one hundred and fifty, issued by the United States government, shows the average wage paid to females in New York city to be $4.00 per week, the average cost of their living to be $8.00 per week, and as a direct result 50,000 girls are in houses of prostitution in that city. You can moralize, resolute and form societies for the suppression of vice, and send ministers with ante- diluvian intellect?: to prosecute these girls, have them 23 arrested and fined, and add still more to the torture that society has already inflicted upon them, but you will find prostitution steadily increasing. It is disgusting to see some "holier that thou art" people upholding the capitalist system and putting in their time hounding the poor victims of it. Socialism will prevent both physical and mental prostitution. Under Socialism the nation will give access to the means of producing wealth to all the people. Society will pay the individual the full social value of his product undimished by profit for any parasite class. With two or three hours work a day a girl could earn a good living and buy all the pretty clothes she needed. No girls would want to follow the disagreeable life of the prostitute, v/hich kills them within five years, and make that five years a nightmare from which death is usually a welcome relief. And an even more disgusting form of prostitution is that of the intellect of writers, preachers, college pr'o- fessors, politicians and other public men who, for the payment of money, lie to the general public, the work- ing class in particular. They declare the present sys- tem just, ethical, divinely moral, impossible of change, desirable, equitaJDle, and a lot of other things that it is not. It would be amusing if it were not so disgusting to see a journalist who voted the Republican ticket editing a Democratic newspaper, or a professor of economics in a Rockefeller university, teaching the Adam Smith school of thought to the students when his own invest- igation had exploded the ideas he was inculcating. It is painful to see a Christian minister throwing aside all the teachings of Jesus, discarding all thoughts of love and brotherhood, and conforming to the moral code of his wealthy church members, defending capital- ism with its lying, cheating, adulteration of food, war, prostitution, merciless individualism and its complete antagonism to the morals and ethics of the Lowly Nazarene. The demands of the commercial and manufacturing capitalists for markets causes them, from time to time, to plunge nations into war. They always send their 24 working people to fight their battles. The intellectual prostitutes employed by the capitalists tell the people that wars are just, necessary, patriotic, and in the in- terest of ALL the people. Christian ministers, purposely forgetting the teach- ings of Jesus, acceptd salaried positions as chaplains of each regiment, upon both sides during the war, and each cheers his side on to battle, each declaring that God Almighty is upon his side in the fight. They give divine sanction to the wholesale murder. Stop for one moment and form a mental picture of Jesus, who turned the other cheek when smitten on one, urging men on to wholesale murder, to further the commercial interests of a group of parisitic capitalists. The prostitution of unfortunate girls contains no degradation compared to this. Socialism will make the people co-operators, instead of competitors, abolishing all classes, and through furnishing a market for all the goods by payment to the producer of his full product, will effectually end all war, remove the cause of intellectual prostitution and place the world in harmony with the co-operative teach- ings of Jesus. The morals and ethics of the new society will reflect the material interests of all the people, not of a dom- inant predatory class as at present. The incentive to lie, cheat, adulterate, steal and to intellectually befog the people will be destroyed. In but few years our children will visit some land- locked bay, where some of the present-day warships will be preserved as relics to show the children the barbarous tools of murder used by their ancestors for the destruction of life and property before the people emerged from the savage system of capitalism. They will look back upon us as little better than savages, steeped in ignorance and superstition, always willing to murder each other to secure a little loot. They may be amused at the way we bowed down before king, potentate and ancient institutions that had long outgrown their usefulness. They will consider us a superstitious people who worshiped our ancestors and allowed ourselves to be governed by men who had been dead for centuries. When we consider the rapid industrial development 25 and the wonderful inventions of the last hundred years we are astounded by the slow mental development of the same period. It can only be accounted for by the fact that the capitalist who desires no change to take place in our industrial system controlled our educational institu- tions. From the cradle up we are taught that the present political and social institutions must remain as they are. Any criticism of our existing government is call- ed unpatriotic and brands the critic a traitor to his country. Any disagreement with the teachings of the preacher classes you with the infidels and the remainder of society shun you as if you were a leper. Any opposition to the morality of our present-day society brands you an outlaw, and punishes you not only by social ostracism, but by imprisonment and pos- sible death should they consider your crime suflUciently reprehensible. They have enslaved us both mentally and physically. We must break the mental chains before we can shake off the physical ones. CHAPTER V. THE SOCIALIST PARTY Public ownership of public utilities would be of no value to the public without an absolutely popular gov- ernment. We must democratize our political institutions. We must have and use the initiative, referendum and right of recall of all our officials, especially of judges. We must extend direct legislation, gradually substi- tuting it for representative government. No man can represent any man on all questions. It is only by direct vote of the people on any question that the real opinion of the people can be secured. The female sex is about one-half of the population. They are just as useful and as necessary as the- other half. They must obey the laws made to govern the people, and if we stand for justice and self-government we must extend the suffrage to them as well as to men, 26 otherwise they are voiceless in the making of the laws and under no obligation to obey them. If we take the women into partnership in the raising of families and the maintainance of the home they should be taken into full partnership and allowed to vote upon the laws made to govern our social relation- ships. The Socialists consequently advocate universal suf- frage. The Socialist party is working to bring all tools of social production that are used collectively under public ownership and control. We desire to have all things that are privately used under private ownership. The Socialist party desires to establish freedom of speech, freedom of the press and freedom to follow any line of religious thought that the conscience of each individual dictates. The Socialist does not desire to destroy any church nor to establish a state church, but considers religion a matter of each person's own conscience. The Socialist party is not a religious sect, fad, scheme or Utopian dream, but a political party, organ- ized for the purpose of bringing about a political re- volution. It desires to abolish class government and establish one that is democratic in its operation and that it is so constructed that it will remain so. We have built within our party the machinery of popular self-government. We have succeeded in estab- lishing a system within the party by the use of which leaders are not necessary. Through many years of experience we have improved from time to time this system of self-government until it now works smoothly and effectively. Our party raises its campaign funds by a dues-paying system. In most local organizations of the party the dues are 25 cents per month, 5 cents of which is ex- pended by the national committee, 5 or 10 cents by the state committee and the remainder for local cam- paign work for the local organization. Both state and national committees are elected by referendum vote of the membership, and are subject to recall before the end of their term by this method. The platform and party rules are passed upon by the membership before they become the law of the party. You are invited to join the local organization in your 27 ' '' locality, and you will at once be given full voice and vote in the internal affairs of the party. The old political parties run quite differently. They are autocratic in their control. There is a material reason for ''boss control" in all the old parties. With their form of organization nothing else is possible. Every party requires finances to conduct its pro- paganda. Both Republican and Democratic parties expend more money in each campaign than the aggregate salaries of the officials to be elected. The candidates could not furnish these funds and live. Where do they get them? The business interests contribute the needed money. Some give to one side, some to the other, while many give to both, desiring to have friends at court no matter which way the election goes. Why do hard-headed business men give funds? Is it because they are generous? Hardly. They desire le- gislation to protect their interests and, of course, have to pay for it. What are their interests ? To hire labor cheap, to sell the workers their product at a high price, to charge usurious rates of interest on money loaned to poor peo- ple, to secure high rentals for their properties, to have the protection of law, judge, policeman and soldier in all their struggles against the working people over the wage question. They desire to legalize their code of morals, and force the rest of the people to obey them. Republican, Democrats, Prohibition, Progressive, and all reform parties not using the dues-paying system are dependent for their campaign funds upon the cap- italist class. To receive these funds they are careful to nominate men acceptable to the capitalist class. Every man elected to office by these parties knows that he must stand by the capitalist class, or his career as an office-holder is ended. He may be a nice man, a temperate man, a good friend, a loving father, and a good husband, but to hold his meal ticket he must be a good servant to the capitalist class and take their part in every struggle against the laboring man. You never read of any governor of any state. Repub- lican or Democratic, calling out the militia to shoot the 28 employer during labor troubles. You never hear of a judge, during a strike, issuing an injunction against an employer. It is always against the poor striker. You never hear of a legislature passing laws to protect the working people from the greed of the employing class, unless the Socialist vote has grown to dangereous pro- portions and the capitalists hope, by granting inconse- quential reforms, to satisfy the people and check the rising tide of revolution. No reform short of abolishing capitalistic ownership . and control of the people's means of getting a living is of much real value to them. Nothing short of Socialism will solve the unemployed problem which now confronts us. SOCIALISM IS THE ANSWER TO THE TRUST QUESTION, AND THERE IS NO OTHER POSSIBLE ANSWER. Your place is inside the ranks of the Socialist party. You must take your place with the men and women working for the establishment of a social system that will contain no prostitution, child labor, poverty, misery, degradation, adulteration, cheating, lying, war, hypocrisy, starvation and deceit, but will build upon the ruins of the failing capitalist system a social order that is co-operative instead of competitive, and with a government administered by the people and for the people instead of a plutocracy industrial and political as at present. VOTE FOR SOCIALISM, TALK TO YOUR NEIGH- BOR AND ENLIGHTEN HIM UPON THIS SUBJECT. READ MORE BOOKS DEALING WITH SOCIAL PROBLEMS. SUBSCRIBE FOR SOCIALIST PAPERS AND HEAR THE WORKERS' SIDE OF THE EVERY-DAY QUESTIONS THAT COME BEFORE US. JOIN THE SOCIALIST PARTY "LOCAL" IN YOUR TOWN. THERE WILL BE SOME MEANING TO THE SONG, '^MY COUNTRY, 'TIS OF THEE," WHEN THE SOCIALISTS WIN. THE END. AMERICAN PANICS A HISTORY OF AMERICA'S INDUS- TRIAL DEVELOPMENT, AND THE SIX INDUSTRIAL DEPRESSIONS, WITH THEIR CAUSE AND CURE (Written Dec. 1907.) CHAPTER L THE CAUSE In ancient times, when there was starvation in the land, it was caused by failure of crops, war or lack of industry on the part of the people. It is only within the past one hundred years that a people have starved for the reason that there was too much food produced. The so-called "panic of plenty" is of modern date and is peculier to the capitalist system of wealth pro- duction. The chattel slave never had to starve because he had filled the storehouse with food. The feudal serf was sure of enough to eat and a place to sleep when he had good crops upon the Baron's land. At the time of the American Declaration of Inde- pendence only 2 per cent of the American people were wage workers employed by capitalists, while today most of the people are in the wage-working class. The capitalist class today own practically all the means of producing the things we need to eat and wear, and if they do not own all the farms, they own the means of carrying the farm products to the consumer, which for their purpose, is equally effective. We will date capitalism as a system in this country from the Revolution of 1776. About that time the steam engine was invented. Many power-driven ma- chines also appeared that made it possible for one man, plus a machine, to do the work of several men who did 30 not have a machine to work with, but were dependent upon the old hand methods. THE HAND WORKER, WHO HAD WORKED IN HIS OWN SHOP, COULD NOT COMPETE WITH THE FACTORY PRODUCT AND EARN A LIVING. THIS DROVE HIM TO THE MACHINE OWNER TO SEEK EMPLOYMENT. As each machine displaced several hand workers, he found several men looking for the same job. The competition for employment among those who owned no machines kept their wag^s down to the average cost of existance for people of the working class in that neighborhood. Some workers who formed labor unions to modifj'' this competition, succeeded in raising their wages a little above the average cost of living. Some work- men who were so skillful that their place in the shop was difficult to fill also received a little more than the average. As some skilled workers received a little above the average, we see some unskilled men (among whom (existed the strongest competition for employment and loss unions) getting less than a decent living. Every year the workmen increased their product 'on, more machinery was made, but the workers' share of his product remained a bare existence. The capitalists retain the balance of the workers* product in shape of profit, rent and interest. The Capitalistic Class use what they need, of the surplus the workers made, but still have a large amount left that they must invest. SO, THEY EMPLOY THOSE THAT HAVE BEEN DISPLACED BY LABOR-SAVING MACHINERY, PAY THEM OUT OF THE SURPLUS TURNED OUT BY THEIR MACHINE-WORKING EMPLOYEES AND SET THEM MAKING MORE MACHINERY TO DISPLACE MORE OF THE SELF-EMPLOYING HAND TOOL WORKERS OF AMERICA. This process has been going on, since the beginning of the last century, at a rapid rate. It has taken about one hundred years to transform America from a nation of independent self-employing individual workers into a nation of wage slaves, owning no means of wealth production and dependent upon the Capitalist Class 31 for the chance to work. They now work together in large industrial establishments in which the work is subdivided till one man does but a small part of the work on the finished product. They collectively produce about thirteen times as much per capita as the workers of the year 1800 did with their more primitive methods. Now mark carefully these facts that I will prove to your satisfaction in this little book. First, the working class produce all the wealth. Second, the working class receive only an existence, though they have learned how to produce many times as much wealth as their ancestors. Third, The wealth the worker produces, but does not get in his pay envelope, goes to the Capitalist Class in PROFIT, RENT and INTEREST. Fourth, The worker, if he spends his entire pay, can only buy a small part of his entire product, and, as the rich man cannot really consume very much more than the working man, he must invest the balance by employing the displaced hand workers in making more labor-saving (or labor-displacing) machinery. If he does not do this the number of men unemployed cuts down the purchasing power of the people till the fac- tories would shut down for want of a market. Fifth, THE CAPITALIST SYSTEM MUST KEEP EXPANDING OR FAIL. Its method of expansion is to displace the hand worker who was self-employed upon his own tools and raw material by a wage system under which a few men own all the means of life, and the workers pay them all that is produced over an ex- istence for the privilege of using the tools. Sixth, IF, FOR ANY REASON, THIS EXPANSION OF THE CAPITALIST SYSTEM IS CHECKED, A PANIC ENSUES, AS AN UNSALABLE SURPLUS PILES UP AND THE WORKERS ARE LAID OFF AND BEGIN TO STARVE. THE ENTIRE BUSI- NESS WORLD IS IN A DEMORALIZED CONDI- TION UNTIL AN EXPANSION OF THE MARKET CAN BE MADE. THESE DEPRESSIONS DO NOT COME AT REGULAR PERIODS, AS MANY PEOPLE ASSERT, BUT WHENEVER FOR ANY REASON THE EX- PANSION OF THE SYSTEM IS CHECKED. 32 • Eighth. That all the panics up to and including" the one of 1893 were still within our national boundaries and that the present one of 1907 is the final world panic caused by the world markets becoming clogged. Ninth, This panic will remain chronic until the Cap- italist System, which is now rattling to pieces, is supplanted by the system of National Co-operation in which the nation conducts the work of production for USE instead of PROFIT. "Tenth, Socialism is the only cure for the unemployed problem we now face. From now on there will be fluct- uations up and down in the number of unemployed, but the tendency will always be towards a greater num- ber of idle men. Eleventh, When the farmer takes his crops to the capitalist buyer, he also has a falling market, as the workers of the industrial cities are the people who usu- ally consume the major part of the farm products, and about one-third of them are out of work, and all are living on shorter rations than usual. The farmer then buys less of the manufactured goods, and the market sags away more and more. In the next few years this question must be settled by the workers either sinking to the level of India or rising to an Industrial Democracy under which the workers will receive FROM society an equivalent of what they render TO society, and the reign of the Cap- italist will have passed just as the reign of slave holder and serf owner passed away. CHAPTER II. THE FIRST PANIC, 1819 TO 1825 To give the reader a clearer idea of the Capitalistic Panic we will look into the industrial history of Amer- ica and find the cause and remedy for each of the six industrial depressions that have assumed any magni- tude. The first of these occurred in 1819. A period of great prosperity for the Capitalist Class preceded this panic as it has all others since. At the close of the Napoleonic wars, which had oc- cupied the European States for some years, many of. the discharged soldiers, most of whom were craftsmen^- 33 came to America and furnished the American Capitalist Class the much-needed material to develop the system, viz. : a large number of skilled workers who were with- out means of support unless the Capitalist employed them. From 1814 to 1819 commerce was brisk, ships were built in large number, new mills were constructed, and the productive power of the worker was rapidly ad- vanced. There were no roads of any kind worth mentioning over the country, and the people had not as yet builded the system of canals for the purpose of reaching the inland trade. So, thus outside of what trade that could be reached by ships, the market of the American man- ufacturer was very limited, so presently we find expan- sion checked. The factories had been built large enough to supply all the market would take, so the capitalist discharged the men who had been building machinery and enlarging factories. This, by taking their wages out of the market, lessened the demand for manufact- ured goods. In 1819 the wheels of industry commenced to clog with an unsalable surplus, the merchants, unable to sell the stock on hand, commenced to buy more care- fully, and many cancelled orders already given to the manufacturer. The manufacturer now could not meet all his bills. The banks restricted their loans, as they could see the storm coming, and this check to the expansion of cap- italism threw the country into its lirst Capitalistic Panic. People starved for the first time in history because the. product of their labor was so large that it was bursting the storehouses. The United States Bank failed and the financial system broke down. THIS PANIC WAS RELIEVED BY THE BUILDING OF PUBLIC ROADS AND CANALS. The Erie Canal was fmished in 1825, and connected the Great Lakes with the Atlantic Ocean at New York City. This opened a new market for the manufacturer, and the panic was over and the factories were rushing ahead once more. A period of great prosperity (for the manufacturing and trading class) that lasted till 1835 was now on. 34 All the presidents of the United States have been in entire sympathy with the Capitalistic Class, and though each represented usually some special section of the class, yet all did their best to relieve the situa- tion when the capitalistic system threatened to break down. CHAPTER III. THE SECOND PANIC, 1837 TO 1845 When the market reached by the canals and the wag-on roads had been developed, the expansion of the capitalistic system was again checked and the great . panic of 1837 was on. The United States Bank failed as well as many of the State Banks. Eight States became bankrupt. Money nearly disappeared and many riots occurred ; including the Anti-Catholic riots of 1844, which were not so much on account of the religion of the Irish immigrants as it was the fact that there were not enough jobs for the native Americans. STEVEN- SON'S LOCOMOTIVE SAVED THE CAPITALIST SYSTEM THIS TIME. The building of railroads, which started at this period, resulted in giving emplovment to the unem- ployed and opened a wider outlet for the manufacturer. Capitalism again could expand, and prosperity was again in the land. What is known as "prosperity" is a time when most of the workers are employed at living wa.cres and the capitalist is increasing his ownership of the earth. Business now boomed and the annexation of Texas and the war with Mexico, which added a great deal of new territory to the United States, together with the gold discoveries of 1849, kept things prosperous. Any who wished could now get free land, and a lot of new land was settled. CHAPTER IV. THIRD INDUSTRIAL DEPRESSION, 1857 TO 1861 The market of the northern manufacturer was ser- iously interfered with by the growing ill feeling be- tween the slave States and the northern States. 35 In 1857 the "Border Wars" of Kansas had shown the wiser ones that the question of chattel slaves or wage slaves would have to be settled by an appeal to arms. This caused a check to expansion in the manu- facturing world. The anti-north feeling in the slave States caused them to buy all they could in England, where incident- ally the prices were low, but a protective tariff made about equal. As Capitalism was checked in its expansion the wheels of industry again became clogged and anotl^er panic was on. Banks failed as usual and made the situation worse. The depression lasted till the Civil War broke out. This war kept all available men employed killing each other. At the end of the war there were many rich men who had used their control of the powers at Washington to manipulate the currency, bonds, etc., as well as army contracts, so that they were now in good shape to engage in manufacture on a large scale. The disbanding of the armies gave them the men who needed work, so they started to repair the waste caused bj the war. Large industry now made its appearance. Railroads were now built in excess of the country's needs. Every business was on the boom, but the market of the South was ruined by the war and the ^'Carpet Bag" govern- ment that followed it. CHAPTER V. FOURTH PERIOD OF DEPRESSION, 1873 TO 1879 The Franco-German war had lessened the productive power of both those countries, and this had reduced the shipment of merchandise to America. During the time from 1870 to 1872 was a period of great prosperity for the American capitalist. They were at this time ex- pending their profits in railroad building. Railroads were run from "nowhere" to "no place" and were not paying dividends up to the promises of the financial sharks of Wall Street, so the people lost confidence in them as an investment and they fell in value. This stopped railroad building and threw thousands out of empolyment. 36 Jay Cook was the large banker of Wall Street at that time and had large amounts of money loaned on rail- road securities. When the crash came it caught him and he dragged many of the country banks down with him. As they had been in the habit of sending their spare money to this bank in New York for loan pur- poses you can easily see how this failure involved the whole financial system. A period of depression which was very serious for four years had settled over the country. The withdrawal of the Federal troops from the con- quered South allowed conditions to improve there. When the Southern people got rid of the "Carpet Bag" government a market was opened in the South by the Southern capitalist buying machinery to make his former chattel slaves profitable as wage slaves. The expansion of capitalism, as it replaced the former slave system made the buying of manufactured goods better in the North. Again Capitalist "Prosperity" was in the land. It was during this period that the "Corporation" was invented. The Corporation, as it had no soul, never died, and removed the cares of business from its owners, proved one of the greatest helps to the expansion of the Cap- italist system. The factories grew in size, more mines were opened, new and larger machinery was installed and America became the highest developed capitalistic nation of the world, with almost no trade abroad. America had a very small army, a smaller navy, weak foreign policy, a poor system of foreign consuls, no world influence, no colonies, and so very naturally when expansion reached the national boundaries it was checked and a serious crisis came in 1893. CHAPTER VI. FIFTH INDUSTRIAL DEPRESSION, 1893 TO 1897 During the years 1893 to 1897 America experienced the most serious period of depression in her history. Factories were running short time, some closed alto- gether, and many workers starved to death. Soup houses were established all over the country to keep 37 absolute starvation from overtaking a large number of the working class. -Then we noticed the government as usual respond- ing to the needs of the Capitalist Class by adopting a world pohcy of expansion. Troops were sent to China to open the Oriental m_arkets, war with Spain was fomented, colonies established in the Philippines Hav/aii, Porto Rico, etc., and a strong and aggressive foreign policy established. Consulates w^ere established in all countries where there was any chance of getting trade, with instruct- ions to report any opportunity to sell American goods and to act as agents of the Capitalist Class in establish- ing a world market. The capitalist system of the nation again expanding and the panic was over. Again prosperity was in the land for the rich man, but the worker only got his living as usual. WAGES INCREASED F'ROM THAT TIME TO THIS ABOUT TEN PER CENT., BUT THE COST OF THE NECESSITIES OF LIFE INCREASED ABOUT FIFTY PER CENT. (This was written in 1907.) The workers now had steady work, but had to work harder to get a living than before. Most of them were in debt while steadily working, but the Capitalist Class was piling up property. The Boer War also increased the sale of American goods abroad. The Russo-Japanese War also gave the capitalists of this country a large market in the Orient. The trustification of industries and the improvement of American machinery made it possible to undersell all competitors, so we now find this country dominant in the world market. All the European countries who were up to this time Supplying the new countries with manufactured goods sank into a chronic state of business depression. Our principal rivals in the world market, England and Germany, have been undergoing a depression for some time with a permanent unemployed army. AMERICA AND JAPAN WERE THE LAST TO GET CAUGHT IN THIS WORLD-WIDE DEPRES- SION OF 1907. CHAPTER VIL THE SIXTH AND LAST INDUSTRIAL DEPRESSION OF 1907. China is now developing very rapidly as an industrial nation with wages below ten cents per day, working with modern machinery. They can produce for the world market much cheaper than any other nation in the world, so all the rest are checked in their expansion and are failing. In the spring of 1907 the salesmen of the different manufacturers found that the retail trade was not buying as much goods as usual, although the manu- facturer had made up the goods, so of course had trouble in meeting his notes at the bank. A financial stringency resulted. A panic shook Wall Street, on March 14, and for several weeks the large financiers dumped millions of money into the loan market so the manufacturer could renew his notes. The papers talked prosperity and the factories ran on the hopes of a large fall trade. In the Fall the salesmen found the buying of winter goods smaller than the spring trade. Every man engaged in business borrows to increase his capital, to the limit of safety,. so when the winter trade failed to come up to expectations, he was in a bad way. All banks, seeing the storm coming, com- menced to narrow their loans and reach for all the cash they could get. This added to the strain, and again we see a break- down of the financial system caused by the industrial depression. The government, ever watchful of the capitalist in- terests, dumped millions into the New York banks to save the large capitalists from failure. We do not hear of them sending any tons of coal to the working- men whose families were freezing thi^n'nter, or even loaning any money to the working class that have pro- duced all th ^ wealth there is in the country. But we must not complain of this, as the Republican and Democratic Parties do not represent the working class, but do represent the Capitalist Class that pays both parties' car" pai*?n expenses. 39 There is only one party in America that stands for the working class interests, and that is the Socialist Party. They are a dues-paying p )litical party con- trolled and financed by working men and women, with a program that embodies the hopes and aspirations of the working class put into an organized political move- ment. Thfe Socialist Party is the worldwide political move- ment for the liberty of the wage slave. We will deal in the next chapter with the remedy for panics. ■i CHAPTER VIII. CONCLUSIONS Let u sum up the facts we have found by studying the history of industrial development and the panics that have occurred during its growth. We come to the following conclusions : First, The wages of the working class are held down to the existence point by the competition of the work- ers who own no means of wealth production. Second, All the wealth produced by the workers above their cost of living goes to the Capitalist Class in the shape of PROFIT, RENT and INTEREST.. Third, As long as the Capitalist Class can invest all their surplus profit which they cannot consume, all the workers are employed and the capitalist holds title to more and more of the machinery of wealth production. Fourth, THE SYSTEM MUST CONSTANTLY EX- PAND IN THE SAME RATIO THAT SURPLUS VALUE IS PRODUCED BY THE WORKERS, MINUS THAT AMOUNT ACTUALLY CONSUMED BY THE IDLE CAPITALIST CLASS. Fifth, When anything occurs to impede the expan- sion of Capitalism a breakdown occurs with many fail- ures and much suffering. Sixth. AI-T EVIOUS PANICS WERE RELIEVED BY AN OUTLET BEING FOUND IN AN EXPAND- ED MARKET. Seventh, Our market expanded beyond the national boundaries between the panics of 1893 and the present one of 1007, and we have now glutted the world market. Eighth, Our present depression will be permanent ^ 40 Mi slight fluctuations up and down, but mostly down, Jid our unemployed problem will last as long as the Capitalist System endures. When this edition goes to press the ■ are about six millions wage workers out of work, with twenty millions of people dependent upo.: them for support, and many starving. Ninth, The United States Government may find a pretext for war with Japan in hopes of creating a m.arket in the Orient, but, even if Japan is conquered, it will not do much good, as both that country and China are rapidlv growing into exporting nations with cheaper labor, that is as skillful as any in the world when given a little training, and they are now even making their own machinery, and have stopped buying from the United States. Tenth, THERE IS BUT ONE REMEDY FOR THE INDUSTRIAL DEPRESSION AND IT IS ONE THAT THE REPUBLICAN, DEMOCRATIC, OR NO OTHER PARTY FINANCED BY THE CAPITALIST CLASS WILL EVER APPLY. THE CURE IS SOCIALISM. The nation must take over the industries and run them on the basis of national co-operation, giving to the workers the entire product. Then there will be no unsalable surplus, no starving in the mJdst of plenty. We will com.m_ence to live a full life. We now only exist, with actual starvation an ever-present possibility. Let us establish an Industrial Democracy, where the Home, Life, and Liberty of ALL the people v/ill be safeguarded. Join the Socialist Party and help us to free the wage slave and make America a free country. THE END. PRICE OF THIS BOOK IN VARIOUS QUANTITIES 3l,ig.e Copies, Postpaid 10 Cents Each' 20 to 99 Ccpies, Postpaid 5 Cents Each ICO to 999 Coi ics, Postpaid 4 Cents Each 1Cv)0 Copies, Postpaid Wz Cents Each Cash with order. H. H. CALDWELL, 2162 .^8th Ave., Oakland. 5 08 8 *