legs OPXLIBRIS The Pack-Asses of Privilege BY PHILIP W. FRANCIS PORTLAND, OREGON Published by the Author 1911 '7* Copyrifht, 1911. by Philip W. Francis USHONa t CO., FINHTIRB, MKTIANO, 0*. Knowing this, that never yet Share of Truth was vainly set In the world's wide fallow; After hands shall sow the seed, After hands from hill and mead Reap the harvests yellow. Whittier. 265461 To THE DEAR CHUM Whose invincible cheerfulness, loyalty, helpfulness and faith have made this work possible, this book is affectionately dedi- cated by her husband. Introduction |T is doubtless true that the contrasts of society to- day are neither so bold nor so distressing as the contrasts of society in other times. Nowhere in the United States, certainly, is there such ignorance or such poverty as we know to have been common to the working masses during the many centuries that elapsed from the fall of the Roman civilization to the destruction of feudalism by the beneficent invention of gunpowder. That the conditions of human life, in the mass, have steadily grown easier and happier, and with constantly accelerated rapidity during the last hundred years or so, is, I think, un- deniable. That this happy progress has been, and will con- tinue to be, the work of evolutionary, and not of revolution- ary forces is, I think, also undeniable. If I read history aright, evolution is no less the fixed law of social progress than of physical progress. The common good steadily moves forward to the common better, impelled by a multitude of interacting forces. We cannot ever all at once obtain the common best by suddenly turning social conditions upside- down. The law of substantial betterment is the law of growth, of ripening, of infinite small graftings on the elder trunk. Seed-time and harvest will not be coerced to fall on a day. He that would reap must sow and bide in patience 6 INTRODUCTION for the crop. First the blade, then the ear, and then the full corn in the ear that is the law of the physical universe, by operation of which we have ascended from mere protoplasmic beginnings to our high, intellectual estate, and that is the law of the social and economic world, without doubt. This is the true optimism, that sees the good which is, and strives with might and main to better that good, as well as the bad which also is. A cheerful acquiescence in all that society is and does in all its traditions, laws, customs and habits is as stupid and harmful as the unreasonable discontent which can see no good nor any happiness in the world. The ultra-conservative and the ultra-radical are both fools after their degree. Yet while the conditions of society have improved and do improve; while the rich distribute their riches as never did rich men before; while on every hand libraries and schools and hospitals abound for the use of all; while hun- dreds of men daily put the lure of ease and gain behind them and toil for humanity's sake in the fields of medicine, sanitation and scientific research of every kind ; while the workman lies softer and feeds more delicately than did kings and nobles three hundred years ago; and while many millions of men and women and children in this land of ours are comfortable and happy, it needs no argument to prove that comfort and happiness are not shared as equitably as they should be. The total wealth produced yearly by the people of the United States is a gigantic mass. We have run far ahead of other nations in the race for wealth, nor does our speed slacken. The imperative problem to which we must INTRODUCTION 7 address our attention is the more equitable distribution of wealth thus created among the creators. Every useful effort toward the solution of this problem is a distinct addition to the sum of human happiness. It is in the lively hope of solv- ing one part and that by no means the least part of this complex problem that I put forth this book. That this book contains a great economic truth, which has singularly enough been overlooked, I feel sure. That this truth will win its way and sometime and somehow work greatly for the com- fort and happiness of my countrymen, I do firmly believe. It is my part to sow the seed of this new doctrine. What the reaping will be, I cannot tell. The future is always on the knees of the gods. Yet, looking ahead to times to come, hope sees wide fields, yellow with full harvests, and the reapers bringing in their sheaves with rejoicing. The Unrecognized Law |AN is naturally a gregarious animal, and civilized man, with his instinctive desire for the company of his fellows strengthened by ages of custom, always seeks association. The necessity of mutual defense against numerous enemies would alone, probably, account for the foundation of cities and towns, if there were no other cause. And the gregarious instinct would have resulted in the founding of municipalities, had there been no necessity of defense. But the sites of considerable towns and cities, from the most remote times, were selected by force of the one circumstance that controls the fortunes of communities always the circumstance of cheaper transportation of goods. It matters not whether the price of transportation was paid in labor, or in barter of goods, or in money-tokens; whether the task was hauling wine and oil and sesame and millet to Nineveh or Babylon by boat, pack-ass or man-power, or whether it was hauling the ore of the Mesaba Range to the furnaces of Pittsburg the one certain determining factor in the foundation and the growth or decay of all communities, great or small, has always been and is now the factor of ease or difficulty cheapness or dearness of transporting goods. Wherever cities have been built at strategic points commanding cheap access to considerable portions of the globe, neither siege nor sack nor the fall of empires nor the attacks of Time have been able to shake them from their IO THE UNRECOGNIZED LAW seats of opulence and power. On the other hand, let but little easier and cheaper routes of trade be opened by a rival community and neither public spirit, nor tradition and custom, nor the spending of toil and treasure, can avert the sure decay of growth and power within the walls of the once vig- orous mart. Doubtless there are other factors of growth and decay, but the cost of transportation is the one sole, dominant, never-absent, decisive umpire of communal life or death. Bearing in mind man's racial necessity of living a communal life, and the absolute dependence of the prosperity of each community upon transportation cost, we will soon perceive clearly that every conceivable condition of society, every ef- fort of man's powers nay, the very fibers and atoms, even, of his physical and intellectual being are profoundly affected by this controlling factor of civilized society. It is the sap in the tree, the blood in the body. No empire, nor Charlemagne's nor Napoleon's, is ever great enough to dis- obey its decrees. No huddle of savages in an African kraal is insignificant enough to escape its vigilance. By its com- manding hand are writ the destinies of kingdoms and of men, the fortunes of a captain-general of commerce, supplying a hemisphere with oil and copper and steel, and the fortunes of the peanut-vender counting his handful of pennies at the cof this country all of us who eat, drink, sleep in houses and wear clothes must pay. Nor is the tax in itself unjust. But in apportioning the tax, the railroads will base the distribution 24 EFFECT ON LAND VALUES of the burden upon three prime factors of computation: classification, weight and length of haul. Now as I have said, this third factor of rate computation is the economic wrong which is chiefly responsible for that unfair distribu- tion of created wealth that causes nearly all our social and financial distresses. And evidently, the freight tax falls lightest on hini best able to pay, and heaviest on him least able to pay. The farmer, for example, living twenty miles from the city market, ships his produce to, and his purchases from that market for much less cost than does the farmer living two hundred miles from the market. Yet the farmer who pays the much smaller tax for the equal service equal as far as both farmers are concerned surely of getting the same amount of produce to market, is in every way best able to pay, owing to the very advantages which his proximity to market gives him. The consideration of this point brings us at once face to face with the most im- portant question of all the probable effect of the Common Rate upon land values. To my mind, by far the most beneficial first effect of a universal like freight charges for like goods of like weight, regardless of distance, would be the inevitable and rapid movement of all land values, upward and downward, toward a permanently common level. Not that absolute equality of value would take place, of course; but a strong tendency to equality, and permanent equality, would unquestionably set in. It is unnecessary to go into extended argument to prove that such an approximate equalization of land values would attend upon an equalization of freight rates. Farming land EFFECT ON LAND VALUES 25 twenty miles from the city in which I live, rents for $25 an acre, and sells for from $250 to $350 an. acre, simply be- cause it has cheap rates to and from the city. If the same freight rates for milk, butter, eggs, poultry and garden and orchard products were annexed to all lands within a radius of five hundred miles from the city; it is certain that there would be a fall in the selling and rental values of the near- by land and a rise in the selling and rental value of the out- lying land. The fall would be much more marked than the corresponding rise, because the loss would be to a com- paratively few acres and the gain would be spread over a great many more acres. But there would be no loss to the farming community as a whole. There would be simply a redistribution of values among a great number of farmers. Indeed, with the impulse given to increased production, and the consequent employment of more consuming labor on the farms and in the city, there would not only be no loss, but a decided gain, by way of decreased cost of food products, since those products could be more cheaply produced, at better average profit, on the lower priced lands. The only losers would be the comparative hand full of owners of high- priced used and unused lands, lying close to the city. In other words, Privilege would lose just so much power to tax in- dustry, and producing and consuming Capital and Labor would have just that much more wealth to divide between them. Poets are prone to sing of rural felicity and well-dis- posed gentlemen of the pen, many of whom could not dif- ferentiate a hay-rake from a hop-pole, are ever ready to 26 EFFECT ON LAND VALUES demonstrate in print that the American farmer lives an ideal life of independence, ease and comfort. But the American farmer knows better and so does his wife. Statistics showing enormous crops and great prices are as misleading as statistics are wont to be. The farmer knows he grows the enormous crops. He also knows that he does not get the enormous prices. As a matter of fact, he is lucky if he gets one-third of the immense sums paid annually by the consumer for the products of the farms. The life of the farmer living at any considerable distance from the great markets is hard, his work is hard, his hours of labor long and his profits a niggardly return, indeed, for the capital invested and the labor per- formed by himself and his family. True, under exceptional circumstances, large profits are made in farming. The raisin farms about Fresno; the apple farms of Southern Oregon and of the Hood River and Yakima Valley regions; the melon farms of the Imperial Valley; the fruit and vegetable farms in many scattered localities, have earned their owners great profits. These are exceptions. And it is a fact that as soon as one of these highly profitable specialized branches of farming shows evidence of permanence of high profits, that branch usually begins to pass from the hands of independent horticulturists or vineyardists or vegetable growers, as the case may be, into the hands of speculative corporate combina- tions which soon apply the pressure of more favorable freight rates to the remaining independent small owners. If crops of any given kind went to every market from every farm on even terms of freight, an intensive system of farming small holdings would be at once possible on millions EFFECT ON LAND VALUES 27 of acres where it is not now possible. This would operate greatly to increase the farmers' profit and decrease his labor, for every farmer knows that it costs less money and work to cultivate an acre in a highly profitable way than two acres in order to get the same gross profit. The small farm, worked to its limit of production, is the minimum of labor with the maximum of profit. But the small farm, is depen- dent for its existence upon freight rates to market which it cannot now obtain unless close to those markets. With the Common Rate in operation, these small intensely cultivated farms would abound, doubling and, perhaps, quintupling the productive capacity of our farming area. Thus homes and a comfortable living would be provided for millions more of the population. The element of speculative value having disappeared, large idle holdings would rapidly be cut up into small tracts and disposed of on equitable terms to actual users. It is true that small tracts can be purchased now, in many districts, cheaper than they could be, probably, if the Common Rate were in force. But it is also true that under present conditions one of these small tracts, in these districts, could not produce enough profit to keep a healthy chicken fed. Five or ten acres, located where freight rates on butter, eggs, poultry, milk, cheese, fruits, berries and like products are prohibitive, might produce a bare living that would sat- isfy a Russian moujik or an Indian ryot, but which would certainly not tempt an American to bend his back to the work of cultivation. The living cost and the profits of the small farmer must come largely from the profitable market- 28 EFFECT ON LAND VALUES ing of dairy and poultry and orchard and garden products the very things for which the consumer now pays extravagant prices and of which the nation, with all its wealth of soil, never has enough. The country could absorb the produce of hundreds of thousands of such small farms. The ability to consume would keep pace with the increased ability to pro- duce. For it must be remembered, maugre some of the doctrinaires, that in actual life the supply most frequently creates the demand, that wealth breeds wealth, that pro- duction excites consumption. If we doubled the production of farm wealth, we would just as certainly increase to that extent the profitable production of manufactured wealth, with a corresponding profitable increase of all the incidental activities of trade and commerce. No nation ever did or ever will injure itself or suffer loss by the increased pro- duction of wealth in any form though it is conceivable that individuals might do themselves thus a temporary injury. Over-production is a bugaboo, fit only to frighten children. It has no> existence as an injurious factor in national life. There need be no fear that if farm land values were approximately equalized by the Common Rate, all our farmers would rush to cultivate special crops and leave none to grow the wheat, the corn, the oats, the barley, the hay and such necessary and homely yields. The American farmer is no fool. His eyes are open. He looks ahead. What is needed, he will grow. The fact is, that with the Common Rate, every section would grow the crops for which the soil is best fitted and the climate most favorable, for with the artificial restraints of unequal freight rates removed, there would be EFFECT ON LAND VALUES 29 no inducement to do anything else. The wheat-grower, for example, knowing that it then would cost him just as much to ship wheat from any farm to any market, would waste no time in looking for good wheat land close to market, but would confine his attention to getting the best land for wheat growing, no matter where situated. He will not care at all whether it is in Dakota, Texas or California. So with the corn-grower, the hay-grower, the oats-grower and every other grower. Open all markets to all lands on the same terms and common sense will send every man to the land best suited to his specialty. Thus the lands would be used, by mere force of natural selection, to the very highest ad- vantage of which they were capable; and this, taking place all over the country, would greatly enlarge the production of wealth on the lands now under cultivation. When I contemplate the estate of competence and digni- fied independence to which millions of American husband- men w r ould be raised by the operation of the Common Rate; when I see, in prospect, the countless homes provided abund- antly with conveniences and luxuries; when I think of the burdens of ceaseless labor and hard living that would be lifted from so many patient shoulders; of the comforts that would be brought to so> many women, worn with hopeless drudgery; of the literature that might then be had to en- tertain and instruct and refine; of the fuller tables and the happier homely firesides, I confess that my heart swells with- in me. The picture is no idle vision of that I am sure. Some day the men of my country will write into their laws the 3O EFFECT ON LAND VALUES righteous statute which will make a splendid reality of that which is now but the hope and faith of one of the humblest of the citizens of the great Republic. The acorn falls and is trodden under a careless foot; the suns shine and the rains fall and, in the times of God, a mighty oak spreads its branches and men draw gladly to the shade and shelter of its stately and benignant presence. And so, I have faith to believe, will it be with the seed of this economic truth. The Effect of the Common Rate on City Land Values T"1HE effect of the Common Rate upon land values in I cities would naturally be moTe sudden and more marked than the effect upon farm land values. There is an enormously greater difference in the prices of urban lands than there can ever be in the prices of farm land ; and since one small lot in a city may be, and often is, worth a thousand times as much as a lot of the same size in the same city, a decided movement toward nearer equality in these values would doubtless greatly decrease many large private fortunes and would certainly greatly curtail the profit of the real estate speculator. And it is probably true that the movement toward equality would not be a move- ment of lower values upward and higher values downward in the great cities, but a decided fall in the values of high- priced land in such localities, and a slight and much slower rise in the values of land in small cities and towns. This would be due to the single fact that the great cities are few and the aggregate loss would be concentrated, while small cities and towns are numerous and the corresponding aggregate gain would be widely distributed over a great area. But, to my mind this, while disagreeable to the rich few, would be a happy and beneficial result to the many. And as I have said before, the true theory of government and of society is to seek the greatest good of the greatest number. 32 VALUES THAT WOULD FALL The justice of the Common Rate must be measured, not by its results upon the fortunes of these individuals or those, but upon the fortunes of the whole mass of the people. The question to ask and answer is not whether Landlord Jones or Smith will be worse off or better off, but whether the whole community, which by its presence on the spot alone has made Landlords Smith and Jones rich, with no effort on their parts, will be better off. Not long ago a writer in one of the popular magazines made a sententious statement, the full importance of which he probably did not himself realize, but the truth of which is certain. "Freight rates," said he, "make cities." And he might have added, "and unmake cities." Andrew Carnegie, in one of his entertaining books, tells how he saved Pitts- burg's rank as a steel-making center by compelling the Penn- sylvania railroad to grant Pittsburg freight rates to impor- tant markets no higher than rates enjoyed by dangero-us rivals. He won his point by a not idle threat to build a com- peting road. There is not the slightest doubt that the small difference in shipping a ton of steel, thus forced from a rail- road many years ago, made Pittsburg. All our great cities are simply the gigantic embodiment, in brick and stone and steel, of advantages in freight rates. Thirty years ago a lot on the principal street of our daily lives. No autocrat, no Czar, no Caesar, ever could hand down rescript or decree which could so nearly touch the lives and fortunes of cities and men with irresistible pow T er, as can our railroad tariff-makers. The practical destruction of high speculative values of city real estate would not destroy a penny's worth of actual wealth. These speculative values only measure the amount of wealth which non-producers annually take from the pro- duction of active Capital and Labor. They do not add one cent's worth of real wealth to the common stock. To destroy them is only to destroy the power of Privilege to prey on industry. It is certain that in any year, in any community, Capital and Labor exerted on land will produce only a given amount of wealth. It is certain that Capital and Labor can only divide what is left of their joint product when Privilege has taken its toll in the shape of rent. And it is certain that the higher speculative real estate values are in that community the more Rent will take from the joint produce of Capital and Labor and the less produce Capital and Labor will have to divide. Economic laws are as sure to fulfill themselves as are the laws of the physical world. And, hence, so far from 34 VALUES THAT WOULD FALL being desirable, high speculative real estate values are a curse to the community. They prey, by night and by day, upon the very vitals of prosperity. The extravagant figures, constantly paraded with so much pomp of advertising, setting forth triumphantly the phenomenal rise in real estate values in this or that city, are really pitiable exhibits, and form an unpleasant commentary on the state of public intelligence. Lazarus, parading his sores, and exposing with particular pride a new and rapidly swelling tumor, would be as sensible an exhibition. The faster the speculative values rise the faster the law of dimin- ishing returns to Capital and Labor works, and the sure eventual result is a city with fat landlords, lean business men and leaner workmen. Up goes rent and down come interest and wages. And all the time the prime necessaries of life clothing, food and shelter refuse to fall, if they do not actually increase in cost. The Law of Diminishing Returns simply means that on a given quantity of land (using the term "land" in its full economic sense) more and more Capital and Labor can be expended with increasing profit only up to a certain point where profit will begin to decrease and continue to grow less and less. As country folks put it, one cannot farm a one- horse farm with a six-horse team and make things pay. Now, this law applies not only to farms, but to all business; and not only to individuals, but to communities towns and cities in mass. The owners of real estate which has speculative value are constantly inciting more building and the exertion of more Capital and Labor, by urging on the increase of pop- VALUES THAT WOULD FALL 35 ulation. The result is to increase land values and rent, of course; but since no one can eat his cake and keep it, and since where there is dancing the piper must be paid, the inevitable outcome of a period of "boom" is a period of ex- haustion with much gain to the few and much loss to the many. Every so often the result of this thing going on all over the country simultaneously is called a "panic"; when we see the painful and absurd phenomenon of a great people, equipped with the finest machinery of production, used to have and to need wealth, with enormous harvests in field and granary, and no visible natural reason for a wheel to stop or a workman to cease working, sitting in national idleness and distress helpless as a babe in the midst of abundance! The truth is that speculative land values economic Rent have taken so much of the production of Capital and Labor that these two are bankrupt. They have not only given up an enormous share of the wealth they have produced, but have mortgaged their future production. This subject, however, I shall not now discuss, as its importance deserves the fuller treatment I mean to accord it in another chapter of this work. The marked fall in speculative land values would un- questionably check the excessively rapid growth of population which is now so characteristic of our American cities. This will seem an evil result to some, but to the student of men and affairs it will seem, I think, a benefit of high importance to the nation. The congestion of population in a few great centers, which is the work of advantageous freight rates they being the cause, as high speculative real estate values are primarily the effect of increased population is a problem 36 VALUES THAT WOULD FALL to which the nation must address itself with thoughtful con- cern. Our cities grow too fast in proportion to our national growth. To> recruit the armies which march through their streets the rural communities are robbed of their best youth and their wisest age. Into the hoppers of these enormous mills of activity are poured the brains and energy of the land. Nor is the grist that comes out altogether good. Excessive individual riches and much poverty; political and business methods which skate continually on the thin ice of dishonesty, if not criminality; a very general lowering of tone these are unquestionably some of the results of life today in great cities. Now, it is as true as when the Teacher said it that man does not live by bread alone. Character is above dollars as a national asset. We Americans have an inborn faith in our ability to achieve anything material that can be achieved. We face the problem of subduing nature to our needs with alert optimism, and as will as readily undertake to remove mountains as mole hills. And this is well. Otherwise, the buffalo might yet be cropping the grass of the prairies and the Indian lighting his camp fire in the passes of the Rockies. But if we go on from achievement to achievement, from triumph to triumph, and keep not fastheld the righteousness as well as the valor of our fathers, what shall all its gains avail the Republic? Surely, as it was said of olden time, it shall profit a nation nothing if it gain the whole world and lose its own soul. The physical body to remain sound in health demands balanced food, balanced exercise of its powers and an undis- turbed equilibrium of the mechanical and chemical processes VALUES THAT WOULD FALL 37 of its atoms. This equilibrium is as necessary to the health of states as of individuals. And this equilibrium the excessive growth of our cities, at the expense of the small towns and rural districts, continually disturbs. The results are a loss of possible productive power, an undue concentration of Cap- ital and Labor in restricted territories, the gain of great wealth by some non-producers at the expense of great loss by many producers. A careful observer cannot fail to see this evil cause resulting in these evil effects everywhere in the land. This evil has not escaped the eyes of good men. At present there is an earnest effort on foot to return the surplus of this urban population to the country. "Back to the land" is the watchword of those in this work. The purpose is undoubtedly good and the work, in a measure, a benefit. But it remains true that as long as the attractions of the city continue to be greater than the attractions of the country, so long will men of ambition and energy desert the farm and the village for the great town. The moment we begin to equalize the opportunities for gain in the village and in the city, that moment will Capital and Labor and population begin to diffuse themselves over wider areas and the natural equilibrium of things be restored. And this necessary funda- mental equalization of gainful opportunities the Common Rate will bring about automatically. The rising of tomor- row's sun is not more sure. The Effect of the Common Rate on Towns and Villages |N THE foregoing chapter, I asserted that the fall in speculative real estate values and the check of the growth of population in those cities, would be accompanied by a slower, but sure, rise in the real estate values of small towns and farming districts, as well as in an increase of population at such points. Let us now go into an examination of this matter, which certainly is one of importance, for the fundamental argument for the Common Rate is that it will diffuse the wealth constantly being created more equally among those creating that wealth. The contention I have in view all the time is that the first great cause of so much poverty in the midst of so much wealth-making is the unfair distribution of wealth brought about by unequal transportation charges, which gave artificial and grossly unfair values to* real estate in certain limited districts. I have tried to show that the result of the Common Rate would be a fall in these values in those districts, and I think it is equally certain that the values taken away from unduly favored points will not be destroyed and lost, but will be distributed over the whole country and among the whole mass of capital-providers and workers. "Rent," says Ricardo, "is always the difference between produce (i. e. the market value) obtained by the employment of two equal quantities of capital and labor (on land). 4O VALUES WHICH WOULD RISE Whatever diminishes the inequality of produce obtained from successive portions of capital (and labor) employed on the same or new land, tends to lower rent, and whatever increases the inequality necessarily produces an opposite effect and tends to raise rent." Since we see that in our times the productivity of land that is to say, the market price of its product is depen- dent upon freight rates to market, it follows, if the Ricardian law be sound (as it is) that the equalizing of the freight rate would destroy the inequality of produce (except natural inequality of fertility, which in modern days is a factor of no great importance) and so would everywhere lower rent. This would bring about automatically, as I have said, a decided fall in high speculative land values, markedly in the great cities and an eventual widely diffused rise in land values in small towns and farming districts. But this rise would come about slowly, since the operation of the Com- mon Rate would make so much more land and so many more manufacturing opportunities available for the employment of Capital and Labor, that Capital and Labor would every- where be sought by Land, and not Land by Capital and Labor. This would cause a long period of low rent, low speculative values, and high interest and high wages, accom- panied, of course, by great trade activity and wide-spread prosperity. The beneficial effect upon the trade and growth of the small towns and villages would be very marked. The village merchant would be able to buy his stocks as cheap as the city merchant. With less rent to pay he could certainly sell as VALUES WHICH WOULD RISE 4! cheap as the city man. He could make a substantial reduc- tion in nearly all lines to his customers and still have good profit. This would result in increased quantity of goods bought of him, and the ability on his part to carry larger and better assortments of goods. The village farmer, mechanic or manufacturer, enjoying equal markets with the farmer, mechanic or manufacturer near or in the city, would have larger profits and higher wages, and more wealth to exchange for goods. This increase in farm and village opportunities for gain, would result in keeping at home and attracting back home the hundreds of thousands of men who are now crowded into the great centers of population by lack of oppor- tunity to do well in their native rural districts. And so the rural districts would grow in population as well as in wealth. And as population makes increase of land values, the steady annual increase of these values would be distributed all over the country among the whole people. How beneficial this diffusion of capital and labor engaged in wealth-making would be to the railroads themselves is evident, but that sub- ject I shall treat of at some length later. "The destruction of the poor," said the Wise King, long ago, "is their poverty," and in the modern world this saying is sharply accentuated, not only in the case of individuals, but also in the case of communities. Everywhere we see those least able to pay, paying the highest prices for necessaries. In the populous cities, the poor, who buy fuel by the sack, food by the dime's worth, clothing little by little, and a home in the shape of one or two miserable rooms, pay a much greater price than the rich do for the same quantity of necessaries. 42 VALUES WHICH WOULD RISE In a measure this holds good of small communities. They pay more for the same goods than the people in large cities do, though the people in large cities have to pay a much greater tax in the shape of higher rents added to the cost of goods. But on the other hand, since the large cities are made, by favor of the railroads, the distributing centers for the goods that go to the small communities, these again must pay a tax on added cost of local freight charges, and a share of the city shippers' high rents. Add to this the greater propor- tional cost of carrying on many scattered business enterprises than of carrying on one great city business, and the result is as stated the people in small communities pay more for the same goods than the people in great cities. Now, the moment the Common Rate was put in opera- tion this condition would vanish. For^once the city and vil- lage are put on equal terms as to freight, the factor of high rents in the city and low rents in the village will overcome the factor of greater economy in operating business on a large scale instead of a small scale, and the prices of goods every- where would tend to come to a common level. This condi- tion, of course, would react upon the excessively high rents in cities, but the final result would be a nearer equalization in rental values and in selling prices of goods everywhere. This would bring about a constant steadiness of market prices, a very great benefit to producer and consumer f\ I am inclined to think that this steadiness of prices and easy and equal access to all markets would have the curious effect of putting the gentlemen who gamble with the necessaries of life in the exchanges of New York and Chicago and other VALUES WHICH WOULD RISE 43 cities practically out of business. The only opportunities these men have to rob their stupid victims are afforded by the fluctuations of prices of cotton, wheat, oats, etc., and while these fluctuations are artificially excited by the gentry who rig these games, the calculations that bring them about are all, in the last analysis, based on the freight cost of get- ting a certain portion of the crops to market. But however that may be, the opening of all markets to every farmer and every small manufacturer or merchant, would unquestion- ably put the millions of our people who live on farms and in small communities on such a basis of prosperity as they have never enjoyed. It is to this great body of American citizenry that I make my appeal. Long residence in great cities has not resulted in admiration of all the influences surrounding life in those centers. With much that is fine, there is much that is debasing. Side by side with a few thousand successful rich men are many thousands of those who, in the homely phrase "just get along" and cheek by jowl with these are many thous- ands of the ignorant and vicious the rag-tag and bobtail of Europe and Asia, the tenement workers, the sweat-shop slaves, the saloon keepers, prostitutes, macquereaux and their protectors among the politicians and police. These infamous and festering sores on the body politic spread their poison through all its veins and arteries. With less of outward cul- ture and refinement than the dwellers. in cities, it is true nevertheless that the sound, healthy mass of American citizen- ship is in the country. There, in the villages and among the fields, dwells the final hope of the nation. There yet is to 44 VALUES WHICH WOULD RISE be found the breed of men whose fathers knelt behind the rail-fences at Bunker Hill; who met with an equal bravery, whether in blue or in gray, in the shock of arms on Gettys- burg's famous field. And there must the Republic seek her strong help when beset by foes within or without. As this is written a newspaper lies at hand a shameless journalistic prostitute which gloats in huge type over the fact that the city in which it is printed has just turned out of office a scholarly and upright Mayor, and a Board of Supervisors composed of honest and intelligent citizens, to make room for a noisy and vicious demagogue and an accom- panying crowd of ex-prizefighters, ward-heelers and scum of that sort. For three years a little band of public-spirited citizens have given freely of their money and time and effort to cleanse that city of its shame and corruption, and their reward has been a torrent of falsehood, abuse and vitupera- tion of almost inconceivable malignity; and this, too, poured out, not alone by the low habitants of the slums, but by editors, lawyers, bankers and business men suborned by powerful interests whose rascality was in danger of justice. What we see in San Francisco, in Philadelphia, in Chicago, in St. Louis, in dozens of cities, justifies the belief that our cities contain too many poor and idle that they grow too fast for their own and the national good. To break up the tendency of our people to flock to these centers and to make the decent, orderly, clean life of the farm and country town more gainful and more attractive is a work to which the best intelligence and the most unselfish patriotism may well bend their utmost effort. The Effect of the Common Rate on Manufacturers |HE most striking change in the American life which has occurred within the memory of men not yet old, is the almost total disappearance of the small manufacturer and the independent mechanic. When men now of middle age were boys, even the smallest village had its wagon-maker, its harness-maker, its shoe-maker, its cabinet-maker, and the like independent mechanic-manufac- turers. In the process of the country's growth in wealth and population nothing would have been more natural than the growth of these small manufacturing shops into larger ones, employing more apprentices and journeymen, and adding their share to the general increase of local activity and local wealth. But we have seen no such growth take place. On the other hand, we have seen all this multitude of small man- ufacturing enterprises perish. Single wagon factories, located two thousand miles away, devour whole forests of timber annually and ship the finished product back to the region where grows the timber ; single shoe factories in New Eng- land take the hides of the Western cattle and return the shoes across the continent to the consumer ; even the beef and mutton of distant states must go alive to one or two monopo- lies in Chicago or Kansas City and be shipped back dressed to the region from which it came before the local butcher 46 BIG SHOPS AND LITTLE ONES can sell the meat to his townsmen. Every form of manufac- turing has been concentrated in a few hands and located in a few centers. This concentration is due solely to one cause the possession of favorable freight rates. To the legal advantage given certain manufacturing interests by the factor of distance haul were added the illegal advantages, which the unscrupulous were always ready to buy, of secret rebates. But without any secret rebates, the same result would have occurred, in less aggravated form, by the action of the dis- tance haul factor alone. It may be urged that the possession of improved machin- ery, the economy of large production and the power of sales- manship possessed by the great factories are the true reasons for their possession of monopoly. The obvious reply is that in the beginning the great factories had none of these advan- tages, because they themselves grew from small beginnings. Granting the factor of business acumen and enterprise as nec- essary to success, it is still certain that among all the thousands of men in business no three or four or a dozen men possessed to themselves a monopoly of acumen and enterprise. No, an advantage, legal or illegal, in freight rates, either on raw materials or fuel or the finished product, spells the secret of success in the case of every monopoly. Take shoes, for instance. There are five million people on the Pacific Coast who wear shoes. There are thousands of cattle to provide hides. There is bark in plenty for tanning the leather. If there is a shoe factory in all this region three times the size of France I am not aware of its existence. Why is there none? Because it would not pay to manufacture BIG SHOPS AND LITTLE ONES 47 shoes. Why would it not pay? Because the New England manufacturers, in order to hold the market would sell cheaper than a manufacturer here could sell. 'How is that possible? Because the Eastern manufacturer with cheaper rates on fuel, machinery, much of the raw and all of the finished product, can reach such a greater population in the East that be can, in a pinch, sell to his Pacific Coast trade at a loss long enough to put a local factory out of business, and despite this loss, earn a profit on his gross business. It is not that the New England manufacturer can ship to Pacific Coast customers cheaper than a Pacific Coast manu- facturer could, but that he can ship to and from all populous Eastern regions cheaper than the Western competitor can. So that, fundamentally, the control of the whole country's trade is given to the Eastern shoe manufacturers because they have the freight rate advantage in the most populous half of the country. The same principle works in every line of manufacturing. jNow, then let us suppose that the freight rates on fuel, machinery, hides, tanned leather on everything that goes directly or indirectly into the making of a shoe as well as the rate on shoes, were flat rates, regardless of distance. The manufacturer on the Pacific Coast or in Texas, or in Florida, could meet the manufacturer in Massachusetts, for instance, on equal terms in every city, town and village in the United States. The battle then would be one of business skill and quality of goods. Is it not evident that the monopoly of the shoe trade would pass from a few hands to many, and that independent shoe factories would spring up and make interest 48 BIG SHOPS AND LITTLE ONES for Capital and wages for Labor all over a great territory where such an industry is now unknown? The great factories would by no means have to close their doors. Their monopoly would be ended, that is all. And they would have to meet real competition. If they con- tinued to hold trade it would be by the natural healthy means of the best goods for the lowest price. And this would mean cheaper shoes for the American people. As a result of the general increase of business activity in all lines and the general increase in the profits of capital and labor, there would be an increased buying power, which the shoe trade would beneficially feel, and it is quite certain that the established factories would find a profitable bulk of business, while new competitive factories were growing up elsewhere. It is true that a given quantity of business can only be divided into so many quantities of certain size, but the contention for the Common Rate is that it would make an enormous increase in the quantity of business to be divided. My belief is, and it is not one carelessly formed, that this single factor would double the wealth-consuming power of the United States in ten years. The more wealth a people produce, the more they can and will exchange. Business is the exchange of wealth for wealth wheat for shoes, for instance. Of course, we translate the transaction into terms of money, but money is only the medium of exchange a mere convenience of trade and not wealth in itself. A man naked and alone on a barren island, with neither food, water nor shelter, would be abjectly poor if he had a million dollars in currency. BIG SHOPS AND LITTLE ONES 49 Wealth is of no account except for enjoyment, and nearly all enjoyment is dependent on exchange. Men exchange capital and labor for wealth. When wealth is plentiful it is cheap. Less capital and less labor buy more wealth, or, as we say, Capital earns higher interest and Labor higher wages. High interest and high wages are always the twin benefits which come with increased wealth production. It is remarkable how many persons there are who fail to see this plain economic truth. Nothing is more certain or more true. Conversely, when wealth is scarce, it is dear, and less wealth buys more capital and labor, i. e. dividends are lower and wages lower. That is the exhibit of so-called panic times curtailed wealth production, decreased dividends, lowering of wages. The trinity are inseparable. It is certain that increased wealth production benefits Capital and Labor and, of course, makes trade active. In common talk, the more we make, the more we have; the more we have the more we buy and the better we live. It is remarkable how pithily the common maxims express the laws of Political Economy. The workman says to his mate "There are too many men in town for the job." He states the Law of Marginal Supply and Demand with exactness. He says of the merchant who is moving heaven and earth to increase his business: "That fellow is work- ing to raise his rent." Which is an accurate characteriza- tion of the "unearned increment." It is a pity so many economic writers are afraid to express themselves with equal clearness, common sense and pithiness. The effect of the Common Rate then, on. manufacturing, 5O BIG SHOPS AND LITTLE ONES would be a very great increase of demand for manufactures and the establishment all over the country of small local manufactories to meet this increase. Localities possessing natural advantages, such as water-power, convenient coal or raw materials, and which are now debarred from making use of these advantages by prohibitive freight tariffs, would become the seats of profitable industries, employing the home folk and increasing home trade and values. --There are thousands of such potentially capable localities. The manu- facturers now herded in the cities in order to get the best freight rates, would be free to scatter in search of more naturally advantageous sites, and cheaper rents. This would bring about a decided fall in city rental values an unmixed public good, since a fall in such values simply means that idle Privilege gets less and Capital and Labor get more of the wealth the two produce. There would be a fairer and a much more widely distributed apportionment of profits. The excessive growth of the cities would be to that extent so much more retarded and the growth of the small towns and the attendant rise of country land values that much more accelerated. The consumer would buy cheaper, and produc- ing capital and labor would have more profit, because con- sumers and producers would share between them the share of the profit which speculative land values now take in the shape of excessive rent. It will be observed that with whatever form of activity or line of business we begin our examination, we always find the outcome of the Common Rate to be a wider distri- bution of production, an increase of production, an increase BIG SHOPS AND LITTLE ONES 5 I of demand, a decrease of cost to the consumer and an increase of profit to the producers, Capital and Labor. And this is uniformly so, because the present unequal and unsatis- factory economic conditions in every line of human production and consumption are due to the impost levied on all activity of Capital and Labor by speculative land values in the shape of Economic Rent; and these speculative land values, again, are, at present and for many years to come, made possi- ble by the inequality of transportation rates. A disease may declare its presence in a hundred different patients by a hundred different symptoms, but the physician knows the cause is identical in all cases. If he is a wise physician he treats the cause. Our political doctors have been plastering boils and putting hot water-bags to cold feet and administering tablets for sick stomachs and treating the symptoms of the body politic with local remedies for years, and the body politic is still sick. Some day the common sense of the nation will administer a remedy for the disease itself. The Effect of the Common Rate on Mining JINING is the third of the three prime industries of men. It is a very great industry in our country. Upon coal and iron are founded the bulk of manu- facturing enterprises and the greater business of rail- road construction and maintenance. Upon copper we depend for the transmission of electric energy and the per- formance of a host of minor duties. Upon gold men agree in believing, at least, that they are dependent for exchange tokens. Silver, lead, zinc, tin, quicksilver, antimony, nickel, mica, asbestos, marble, gypsum, limestone, phosphates, borax, soda, talc, fullers' earth these are some of the many min- erals indispensable to modern industries. Oil fills a very large field of usefulness. Beyond doubt the business of min- ing is equal in importance to the business of agriculture or that of manufacturing. Let us now consider what broad effects the Common Rate would produce in this necessary, extensive line of wealth production. For several years the writer has himself been interested in the mining business, with the result of accumulating a fat experience and a slim pocket-book, and his ventures in more lines than one, over a territory reaching from Alaska to Mexico, have brought him into contact with many men engaged as owners, operators, promoters and prospectors of a multitude of mining enterprises. Speaking from this plat- form of practical experience, he is certain that neither agricul- 54 BETTER LUCK TO THE MINER ture nor manufactures are so directly and as it were, at first hand, absolutely dependent for permission to exist upon freight rates as are any and all mining businesses. The legitimate mining promoter and when I speak of mining promoters I refer to a very useful class and not to the gentry who periodically unload wagonloads of wild-cat stocks on the gullible Eastern public the legitimate promoter, before he approaches the probable investor, will inform himself as to the size of his vein or deposit, the percentage of mineral the rock carries and dozens of other items of inquiry, but he knows that the first question he will have to answer will be: "What's the freight ?" Until that question is answered acceptably, it is useless to produce maps, analyses, assays, mill tests or engineer's estimates. It is never "What have you?" but always, "What will it cost you to haul to market?" The average investor knows no more of the true theories of Political Economy than the average banker knows of the real law of money, which is a very negligible quantity of knowledge, indeed ; but it takes no other knowledge than that acquired in the school of hard knocks to make the mining investor certain that success or failure depends first and last on the cost of transporting his machinery to and his product from his mine. In the very nature of things the great majority of mining deposits are located at considerable distances from the railroad centers where favorable freight rates are to be had. Manufacturers can be herded at convenient strategic points, and large agricultural territories are apt to enjoy some advantage of proximity to transportation centers. But the BETTER LUCK TO THE MINER 55 mine is usually in a remote district. Its output is subject to a long haul. Many of the Western roads, if not openly hostile to mining enterprises, certainly are slow to grant payable rates. And the margin between the rates under which a few favorably situated mines can operate and the best possible profit is so narrow that hundreds and thousands of really valuable mines, less favorably situated, are forced to lie undeveloped. This is true even of such useful products as iron, oil and copper. Not infrequently, too, there are "inside interests" in both manufacturing and transportation corporations which are benefited by the produc- tion of one group of mines and averse to the development of other groups, which may have the natural advantage of situation ; and here the freight rate is brought into play as a staff for the feet of the one and the club for the head of the other. But whether fairly or unfairly used, the mining business depends from first to last wholly upon the cost of getting to market. It is at once the breeding mother and the abject bond-slave of the railroad. I am persuaded that all industries would be benefited by the adoption of the Common Rate. But I am also per- suaded that no great group of industries would be so instan- taneously benefited as would the mining group. With an equal cost of transporting machinery and an equal cost of transporting ores, regardless of length of haul, millions of capital and thousands of men would hurriedly be put to work in the mountains of Colorado, Montana, Utah, Wyoming, Idaho, Washington, Oregon, California, and New Mexico. Gold, silver, copper, lead, iron and coal would pour in 56 BETTER LUCK TO THE MINER abundant streams from the mine mouths that are now closed. The increase of wealth production and of buying power among those engaged in agriculture, manufacturing and trade, which would contemporaneously take place, would provide markets for the increased products of the mines, and the needs of the capital and men employed in this revival of the great basic industry of mining would again provide markets for the produce of the farm and factory. It is impossible to say how far-reaching and how great the effect of a great revival of the mining industry upon all other industries would be, but it would be very far-reaching and very great beyond a doubt. And that the adoption of the Common Rate would thus stimulate and revivify this industry, any man fairly acquainted with the business of mining will agree. The Effect of the Common Rate on Common Carriers |N THE preceding chapters I have sketched, in out- line and with broad strokes, purposely omitting much detail, the effects which the Common Rate might reasonably be expected to produce upon speculative land values; upon Privilege tolls in the shape of rent and unearned increment; upon the conditions of city, town and farm life; and upon the profits of Capital and Labor productively employed in agriculture, manufacturing and mining and the kindred activities of trade. This I may be allowed to call the opening argument in the case of the People of the United States vs. Privilege, Based on Freight Favors; and I call this the opening 'argument because I have followed the practice of the lawyers, who first outline their case in general terms, and afterwards introduce specific facts in evidence to support the argument. This \*Lole book I ask to have regarded as precisely such an opening address. Specific facts and evidence in abundance are certainly not wanting, but I prefer to leave their presenta- tion to a later day in the trial of this great issue which has now begun, but assuredly has not finished. And as a part of this same opening argument, in the same general way, massing conclusions instead of segregating a multitude of facts, let us proceed to consider the probable effect of the Common Rate upon the business of the railroads them- selves. And first, let me say that certainly the water-carriers 58 THE BEE AND THE HONEY must come under the same laws; and at another time their case will be discussed; but at present, since jthe great majority of the people do their shipping in cars, this argu- ment will deal with the railroads as if they were the only common carriers of importance. I have no sympathy with demagogic denunciation of railroads. I am of the West. A boy, I knew its prairies when the buffalo cropped the bunchgrass and the Indian was an odoriferous and unpleasant reality. Mine own eyes have seen a mighty wilderness blossom and fruit under the hand of the husbandman; have seen the camp-fire of the trapper give place to the smoke of the farm-house chimney, and the hunting pasture of the useless savage made the homesteads O'f millions of thrifty and happy folk. And all this incredibly wonderful West exists solely because across the plains, the streams and the formidable mountains the Captains Courageous of Transportation graded and bridged and tunneled and laid their lines of tie and rail. Doubt- less in those formative and turbulent days, when gigantic prizes were to be gained or lost by craft and violence, when foolish and often vindictive legislation was met with any weapon at command with bribery, evasion or defiance these men did many things that were evil. But they did more that was good. The evil has much of it perished with them, but the good they wrought stands up a colossal fact, a towering monument to their high, adventurous valor and their intrepid faith in themselves and the future. The men who put their lives and the men who put their treasures into the building of our American railroads deserved their THE BEE AND THE HONEY 59 rewards of power and money, and their successors deserve their full, fair share of the wealth thus created and being created. If it were in my power to fix such a Common Rate for service as I advocate, neither bond-holder, nor stock- holder, nor railroad chief, nor employe should suffer loss of profit or wage. Surely the bee deserves to eat of the honey he has brought home to the hive. The gross revenue which American railroads will derive from freight business during the coming year will be, in round figures, about two billions of dollars, and for this revenue they will haul, over an average distance of one hundred miles, about two billion tons of freight. Now, I, for my part, would be cheerfully willing to allow the rail- roads a gross payment of tw T o and a half or even three billions of dollars for this same service, if they would perform it under the regulations of the Common Rate. The gross gain to be won by Capital and Labor from Privilege would over and over offset the extra net profit of the railroads. And the extra net profit of the railroads would perhaps not even then be the full share of the gain rescued from Privilege, and fairly due to the enormous capital and numerous labor employed in the useful productive function of transportation by rail. It is a certainty that the great increase in agricultural, manufacturing, mining and trading activity will be followed by a corresponding increase in freight shipments. Now there is a seeming paradox known to all railroad managers: that is, the ability to haul freight under certain conditions below cost and still make money by the operation. It is 60 THE BEE AND THE HONEY on the principle which actuates the shrewd merchant when, at the season's end, he sells the odds and ends of out-of-style goods for less than cost, counting any money got as so much better than throwing the goods out. So a railroad, having its fixed charges and its freight trains to be moved anyway, can earn money by getting additional tonnage at less than the average cost of haul. The engine and engine crew and train crew must go anyway, and the money got for freight that otherwise would ;not be shipped is so much gain. This frequently happens, and the reason is that none of our roads is worked to its full capacity. There is not one which could not haul more freight over its rails if it were sure of being offered the freight so as to prevent car-shortage. With new farm acres being cultivated, with new mines being worked, and new manufactories starting and old ones increasing output to meet the new conditions 'of business, there would be a tonnage offered which would tax every road to its limit of energy; and this extra tonnage, as railroad men know, is the source of profit. An almost certain result of the compulsory adoption of the Common Rate would be the combination of all lines of rail and water transportation either in a gigantic pool or an actual consolidation of ownership, directed by depart- ment chiefs, responsible to a governing body. Of course, a change in the laws would be necessary to the legality of this desirable end, but in order to put the Common Rate in force other changes than this must be made. Politicians and statesmen have been busy for centuries hampering the natural developments of trade and commerce, but it is satis- THE BEE AND THE HONEY 6l factory to know from the mouth of history that the laws of economic growth are always too strong, in the long run, to be held in subjection. People and rulers alike stumble in wrong paths, but sooner or later Economic Law takes both alike by the ears and sets their faces in the right direction. We may be quite sure that a complete standard; ization of all rates will lead to a consolidation of all trans- portation corporations, and that people will have seen the wisdom of such a proceeding by the time it is necessary. In order to put the Common Rate in force this general legislation would be necessary: 1. A statute compelling all common carriers to charge a like rate, neither more nor less, for hauling a like weight of like goods and commodities, regardless of the length of the haul. 2. A subsidiary statute providing that the common carrier to whom the shipment is offered shall forward that shipment by the quickest practicable route over its own and connecting lines; and compelling the acceptance and expedi- tious forwarding of the shipment by the connecting line or lines, without any other than the fixed initial common charge to the shipper. The classification of freight, the rates to be charged and all similar decisions should be left to the experienced intelligence of the railroad chiefs. Self-interest is a suffi- cient guarantee that they would not make rates too low to pay good revenue nor too high to prevent revenue. And the laws of the land should be so amended as to encourage the common carriers to pool their managements and so 62 THE BEE AND THE HONEY get for all the thousands of security-holders a practically level share in the profits to be made by the roads. For if the Common Rate is to be the benefit it should be to all business and all wealth producers, we will then have to get ourselves into the attitude of wanting the railroads to make good profits. The economies in the clerical, tariff-making and freight soliciting departments, possible under the operation of the Common Rate, would be a very large item of net revenue to the railroads. And the disappearance of the con- stant friction with individual shippers over classification, alleged favors and other causes of protest and ill-feeling would be a great gain, financially and morally. The sus- picion, dislike and frequent hatred directed against the rail- roads is appalling in bulk. Unreasonable these sentiments often are, but with reason or without, this condition of the public temper is a very real source of discomfort and loss to railways. Almost invariably, the bad feeling is due to either an actual or fancied injustice in freight charges to actual or fancied discrimination. This attitude of suspicion and hostility could not exist with the Common Rate every- where in force. An era of mutual goodwill between shippers and carriers would naturally begin. And this would be no small advantage to the railroads. Divorced from politics, as they would be and railroads are only in politics because originally forced there in self-defense and relieved of any fear of popular dislike or. legislative disaster, the roads could and would address all their energies to the great task of getting the wealth of the nation to the markets. THE BEE AND THE HONEY 63 I am well aware that the tremendous readjustment of values and business problems I advocate could not possibly take place without losses in some directions, and heavy losses among the speculators in land values. But I confess that I am unable to see how the holders of railroad securi- ties, or the revenues of the roads, could be affected, even temporarily, in any other than a beneficial way. A meas- ure which would permit the railroads to increase their gross revenues by millions, while enabling them to institute wide economies in executive and clerical work and in the operation of trains loaded to hauling capacity, and at the same time doing away with the necessity for hateful and expen- sive and demoralizing political alliances and warfares, seems to me to come carrying in its hands benefits so immense and so happy that they far outweigh all objections, whether well or ill taken. No man can be more fully persuaded than I am that the fair profit of the capital and labor employed in the great business of transportation is an absolute essential of national prosperity. There is not one single activity to which the brain and hand of civilized man turn themselves, no matter how enormous or how insignificant that activity may be, which is not intimately dependent for profit upon the prosperity of the carriers. It is the recogni- tion of the basic importance of this factor in modern life, as the regulator of all values and all profits, that perhaps distinguishes this treatise from any other. The Common Rate and Business Panics |HE United States has lately experienced a panic, to use the expressive common term. So far as surface appearance went, it was a money panic alone, and an unnecessary panic. The crops were abundant. Seed-time and the summer had gone and the harvests had not failed. The nation was at peace, within and without. No enemy threatened her gates, and there was no murmur of domestic discontent within her walls. The captains and the privates of the allied army of Capital and Labor answered cheerfully and confidently to the reveille in all the multitu- dinous camps of industry. A bank failed here, a trust company there, and precisely as a few cowards have been know to stampede thousands of brave men, with arms in hand, and send them scurrying out of the battle in head- long, shameful fear and rout, so the whole array of money- owners were stampeded in a wild, ludicrous and disastrous scramble for hiding-places. Everybody ran to hoard his currency or gold the bankers first and far in the lead. The last possible dollar was withdrawn from use and put out of sight in bank-vaults, safe deposit boxes and old cans and stockings. These were the exasperating phenomena easily seen ; and so far as my reading goes, the unanimous opinion of the public prints is that it was indeed a money- panic, a mere senseless exhibition of fear, with no real excuse for occurring. This belief is wrong and arises from a lack of knowledge of the real cause of panics. You may, indeed, succeed in frightening a nation, just as you may frighten an army. (But no- mere bugaboo of 66 THE CAUSE OF PANICS fear will keep an army or a nation frightened for any length of time. The armed host that keeps on running does so because something more than mere fear is thundering at its fugitive heels, and a nation that is in business distress for months and years must look for another cause than the momentary scare of bankers and trustees. The cause of the last panic is identical with the cause of every panic. And the panic would surely have come, with all its distressing features, if bankers and trustees were lions instead of sheep. What then, is the cause of these recurring periods of commercial disaster we call panics? These plagues of the business world return again as regularly as the physical plagues which once recurrently carried death and woe through the streets of the capital cities. The superstition and igno- rance of our fathers looked upon these visitations as direct manifestations of a very choleric Divinity, and scarcely dreamed of any future escape from Omnipotent wrath, slaying its tens of thousands. The better sense of today knows that just plain dirt slew the victims. Civilization no longer cowers in dread of the pestilence. It is rid o