BlUTUAL IN P! Ri : - 
 
 OF 
 
 LABOR AND CAPITAL 
 
 FOURTH EDITION REVISED 
 
 By GEORGE WILDER CARTWRIGHT 
 
BANCROFT 
 LIBRARY 
 
 0- 
 
 THE LIBRARY 
 
 OF 
 
 THE UNIVERSITY 
 OF CALIFORNIA 
 
GEORGE WILDER CARTWRIGHT 
 
Mutual Interests of 
 Labor and Capital 
 
 BY 
 GEORGE WILDER CARTWRIGHT 
 
 Author of 
 
 The Cartwright Anti-Trait Law of California 
 Bolshevism, Labor and Capital 
 The Derailing Switch 
 
 Tht Price / Success, etc. 
 
 MUTUAL INTERESTS ASSOCIATION 
 
 OF AMERICA 
 724 So. SPRING ST. LOS ANGELES, U. S. A, 
 
 First Edition Copyrighted 1918 
 Fourth Edition Copyrighted 1919 
 By G. W. CARTWRIGHT 
 Los Angeles, Cal. 
 
This little volume is started on its 
 mission to bring labor and capital to a 
 better understanding with each other, 
 and if its purpose shall be accomplished 
 in some small degree, abundant com- 
 pensation will have crowned the humble 
 efforts of 
 
 THE AUTHOR. 
 
CONTENTS 
 
 PAGE 
 
 Socialism 9 
 
 Labor and Capital 38 
 
 Bacon and Beans 63 
 
 Freak Laws 77 
 
 Agitators and Demagogues 97 
 
 Regulation of Business by Law 109 
 
 German Efficiency and American Liberty 127 
 
When the government owns everything and 
 does everything and the people own nothing and 
 do nothing, will we all be happy? 
 
 Socialism 
 
 Mr. President: 
 
 Why not agitate for something that will bring 
 happiness, contentment and prosperity to the 
 world, instead of something that will bring strife, 
 desolation, poverty and misery ? 
 
 'What has the agitator to offer us after the 
 destruction of what we have ? 
 
 Let us look first and leap afterwards. 
 
 The Soul of the World is on fire. It is vibrant 
 with the crushed hopes of the centuries. It is 
 burning for something it has not had and that 
 we must help it to get. 
 
 The world needs statesmen, not politicians. 
 The world needs wisdom, not words, just now. 
 This is the hour for cool heads and calm delib- 
 eration. Whatever is good for most of us is 
 
10 SOCIALISM 
 
 best for all of us. Any government is better than 
 no government. Law and order must be pre- 
 served at any cost, but let us strive for justice 
 and wisdom in its administration. 
 
 The whole world is seething with an unrest 
 that threatens the destruction of all liberty, all 
 order, all property, all means of production. The 
 poison of hate has sunk deep in the hearts of men 
 and filled their minds with madness. There must 
 be a remedy. 
 
 Employer and Employee. 
 
 The problems of worker and employer must be 
 solved. They have been sidestepped, dodged, 
 neglected and evaded by the politicians the world 
 over. They will never be solved by the politicians. 
 
 The politician will do as he has always done. 
 He will keep his eye on the ballot-box and his 
 hand in the public treasury. He will do what 
 appears to be the popular thing, not the effective 
 thing. He will expand his chest and lift his 
 hypocritical voice about the rights of the work- 
 ingman, the downtrodden poor, and the iniqui- 
 ties of capital, just as the more honorable bu* 
 
SOCIALISM 11 
 
 misguided agitators do. Many of the newspapers 
 will do the same They always have. It increases 
 their circulation among the workingmen, upon 
 which their advertising rates are based. 
 
 They may teach false doctrines too long. They 
 did in Russia, and among the first confiscations 
 of property were the great newspaper plants of 
 the empire. Among the first victims of mad 
 wrath were those who agitated for it. 
 
 When orderly government is destroyed, how- 
 ever bad that government may have been, the 
 mob that takes charge of affairs does not follow 
 the rule of reason. The captain of the mob today 
 may have his head in the basket tomorrow. 
 
 Asleep. 
 
 We in this country have been sleeping at the 
 switch. We have left the problem of worker and 
 employer to the dreamer, the agitator and the poli- 
 tician. But the time has come when the best 
 brains of the nation must focus their combined 
 rays upon it if orderly government is to endure. 
 
 It cannot be settled by employers alone, for 
 they will have a narrow, biased and circumscribed 
 
12 SOCIALISM 
 
 view. It cannot be settled by labor leaders alone, 
 for the very same reason. It cannot be solved 
 until we have taught the people to understand 
 that labor and capital are partners in the field of 
 production and distribution; that the prosperity 
 of one aids the prosperity of the other ; that what- 
 ever hurts either hurts both; that labor needs 
 capital and the brains that go with capital just 
 as much as capital needs labor and the brain and 
 brawn that go with labor ; that when either labor 
 or capital is endangered they should rush to each 
 other's defense; and, finally, that in their rela- 
 tions to each other they must be guided by the 
 Square Deal. 
 
 Wages. 
 
 There must be reasonable wages and reason- 
 able hours (wages may be too high as well as too 
 low) ; there must be such wholesome conditions 
 of employment as will tend toward tranquility 
 and contentment; there must be such adequate 
 protection of capital from the menace of the agi- 
 tator and the vote-hunting politician that capital 
 will seek larger and more extended fields of 
 activity. Active capital spells higher wages and 
 
SOCIALISM 13 
 
 steadier employment. Capital will not invest 
 where politicians supervise its handling, nor 
 when strikes and lockouts are constantly threat- 
 ened, IDLE DOLLARS MEAN IDLE MEN. 
 
 Strikes. 
 
 The strike of forty thousand men at Seattle, 
 not only took away the income of the strikers 
 and their employers, indirectly deprived other 
 thousands of men from gaining a livelihood, and 
 lost to the world the wealth that would have been 
 created, but it did something far more damaging 
 to labor. It frightened every intended invest- 
 ment into hiding, caused thousands of manufac- 
 turers to postpone extensions, and left hundreds 
 of thousands of idle men who would have been 
 given employment, had there been no strike. 
 
 Take the politician off the back of industry, 
 remove all unnecessary, meddlesome, vote-getting 
 political regulation of business, assure the man 
 who has a dollar or a million dollars that there 
 will be no strikes excepting for the gravest rea- 
 sons, and hundreds of millions of dollars now in 
 hiding will be thrown into active industry. Mills 
 
14 SOCIALISM 
 
 now going at half capacity will run full blast. 
 There will be jobs hunting for men instead of 
 men hunting for jobs. 
 
 Cost of Living. 
 
 The criminal folly of quarreling over wages 
 and hours should be called the unpardonable sin. 
 These are scientific questions and should be set- 
 tled by a simple rule of mathematics. With all 
 due respect to those who think that wages should 
 be regulated by the cost of living, a little thought 
 will prove that the cost of living is regulated by 
 wages. The higher the wages, the higher the 
 cost of living, temporary variations due to over 
 or under production excepted. 
 
 When wages were $1.50 a day, a fine pair of 
 shoes cost $3.00. When wages were $3.00 a day 
 the same shoes cost $6.00. 
 
 If wages were $100.00 a day the shoes would 
 cost $200.00. This same rule holds good with all 
 articles of consumption. But: 
 
 If wages are too high, or the hours too short, 
 American industries cannot compete, capital mi- 
 grates to other countries or lies idle, and labor 
 
SOCIALISM 15 
 
 goes unemployed. If wages are too low labor 
 loses its purchasing power, sales of articles of 
 consumption fall away and business in all lines 
 stagnates. In either case both worker and em- 
 ployer suffer unnecessary loss. 
 
 But, between these two extremes there is a 
 scientific wage that will be best for both worker 
 and employer. When labor and capital learn that 
 their interests are mutual, that they are partners, 
 they will get within shooting distance of this 
 scientific wage. 
 
 Labor-Saving Machinery. 
 
 Those who advocate ridiculously short hours 
 upon the theory that it will provide more jobs 
 for more men, are suffering from mental aberra- 
 tion. Had their theory been adopted in the stone 
 age we would still be living in tree-tops and un- 
 der the shelter of rocks and caves. They forget 
 that human want keeps pace with human inge- 
 nuity. 
 
 The ax and the saw enabled men to build log 
 houses. They were no longer satisfied with life 
 in caves and under the shelter of rocks. They 
 
16 SOCIALISM 
 
 could not use their stone hatchets, but there was 
 a greater demand for labor in the house-building 
 business with axes and saws than there had ever 
 been in cutting fagots with their stone hatchets. 
 Human want kept pace with human ingenuity. 
 
 When the Mergenthaler Linotype was in- 
 vented, a great protest went up from the printers. 
 They thought the new invention would rob them 
 of employment. One man could do the work of 
 five or six. What were we to do with the idle 
 men? was heard on every side. But it was soon 
 discovered that the cheapness of printing with the 
 new invention so increased the demand for printed 
 matter, that there was a greater demand for 
 printers than ever before. Merchants printed 
 more catalogues. Business men printed more cir- 
 culars. Newspapers sprang up in greater num- 
 ber. Human want kept pace with human inge- 
 nuity. 
 
 When Cartwright invented the loom English 
 weavers threatened to lynch him, but it was not 
 many years until they erected a monument to his 
 memory. The loom had reduced the price of cloth 
 until everyone could wear sufficient clothing for 
 
SOCIALISM 17 
 
 comfort and the demand for weavers increased 
 beyond the supply. 
 
 Human want kept pace with human ingenuity. 
 
 So it was with the cotton gin, the typewriter, 
 and other labor-saving inventions. They in- 
 creased the demand for labor by bringing more of 
 the luxuries, comforts and conveniences of life 
 within the reach of all. 
 
 To limit hours of labor for the purpose of giv- 
 ing employment to more people would lose to the 
 race the benefits of inventive genius. It would 
 stop the wheels of progress. 
 
 Profit -Sharing. 
 
 What the world needs is more efficiency, not 
 less efficiency. 
 
 In those industries where a profit-sharing plan 
 is feasible, efficiency and loyalty to employer and 
 employment can be greatly increased by a scien- 
 tific division of the excess profits of the industry 
 over and above a reasonable wage on the one hand 
 and a reasonable return to capital on the other. 
 Capital must have an inviting opportunity for 
 profit, or it will not invest, and labor goes unem- 
 
18 SOCIALISM 
 
 ployed. The laborer should have an opportunity 
 to increase his own income by his own efforts, 
 his own efficiency, and his own loyalty. He should 
 not have to depend upon the good will of the fore- 
 man or superintendent of the plant. A gift of a 
 few dollars at Christmas will not answer. The 
 worker may be pleased with it, but it will not 
 increase his loyalty nor his efficiency. Subcon- 
 sciously he resents it. The "hand that gives is 
 always above the hand that receives." Nor will 
 raising his wages increase his efficiency. Wher- 
 ever it is practicable, he should be given an 
 opportunity to share in the excess profits of the 
 enterprise. This gives him a direct interest in 
 the results of industry, and offers a direct incen- 
 tive for increased exertion. He feels the respon- 
 sibility and pride of partnership. He will help to 
 make the vote-hunting political meddler unpopu- 
 lar. He will report the faithless fellow-worker 
 to the manager. He will look after the interests 
 of the business as never before. He will not only 
 increase his own income, but he will stabilize and 
 increase the profits of his employers. 
 
 Most of the profit-sharing plans heretofore 
 
SOCIALISM 19 
 
 attempted have been clumsy, unscientific and in- 
 equitable, yet many of them have produced the 
 above results. 
 
 No permanent solution of the problems of 
 worker and employer can be brought about until 
 the vagaries of socialism have been fully and 
 finally exposed. The socialist orator has a large 
 heart and a larger imagination. He presents his 
 false doctrine with convincing eloquence, but he 
 lacks the power of understanding the ultimate 
 springs of human action. 
 
 Socialism is beautiful to think about, but false 
 in principle and impossible in practice. It will 
 not work. It is unworkable. Socialist colonies 
 starve and disband. If it is ever adopted in 
 any country, that country will starve until it re- 
 turns to private property and private profits. 
 That has been its history. That will be its history 
 until time shall have changed the motives that 
 control the activities of mankind. 
 
 Most socialists assume that no man is entitled 
 to make a profit out of another man's toil. That 
 sounds good at first blush, but it is false in prin- 
 ciple, impossible in practice, and dishonest in fact. 
 
20 SOCIALISM 
 
 I am entitled to all I produce with my own 
 hands and with my own brain. I am entitled to 
 all that I produce with my hands and brain, aided 
 with the tools, machinery and other capital that 
 I have saved out of my earnings with my hands 
 and brain. But, am I entitled to all that I produce 
 with my hands and brain when I use the tools, 
 machinery and other capital that you have saved 
 out of your earnings with your hands and your 
 brain ? 
 
 The great majority of people live up to the full 
 measure of their earning power. Without some- 
 one to save, the race would starve. Are those 
 who save to be compelled to turn the result of 
 their savings over to others who have not, and 
 without compensation? Is not the very thought 
 repugnant to your sense of common honesty? 
 
 Civilization is the outgrowth of saving. Are 
 those who have saved to be denied all reward for 
 that service to the rest of mankind? 
 
 In practice, would you be willing to give me 
 the free use of your capital without compensa- 
 tion?- Should you be called a high-class burglar 
 for paying wages to me when I use your tools, 
 
SOCIALISM 21 
 
 factory and business ability? Yet this is the dis- 
 honest and impractical view often expressed by 
 socialists. They assume that all accumulations 
 are the result of some kind of business chicanery. 
 They forget, or do not want you to remember 
 that RIGID ECONOMY IN EARLY LIFE and 
 SPARTAN DEVOTION TO DUTY are the 
 price of success. 
 
 Nine Years Starving Period. 
 
 Jamestown Colony, Virginia, was founded in 
 1607. Every student of American history will 
 remember the "Nine Years Starving Period" 
 through which the colony passed, but many have 
 forgotten or did not learn the tremendous lesson 
 that it taught. 
 
 The colonists had come to America for a com- 
 mon purpose. Their minds were of a common 
 mould. They had left their homes in England, 
 turned their faces toward the setting sun, braved 
 the terrors of the Atlantic, to "subdue the wilder- 
 ness," establish new homes and enjoy greater 
 freedom. They were inured to the hardships 
 of frontier life Their wants were few. Their 
 
22 SOCIALISM 
 
 needs were simple. They were isolated from 
 competition and outside interference. Each col- 
 onist occupied the log cabin assigned to him and 
 the rude furniture that had been carved from the 
 trees of the forest nearby. 
 
 The land was held and tilled in common. They 
 stored all products in a common warehouse. 
 They drew their supplies from that warehouse 
 according to the size of the respective families. 
 In other words, all means of production and dis- 
 tribution were publicly owned and controlled. 
 That is just what socialists advocate. If ever 
 there was a time in history when socialism could 
 have been made to work, it was there in James- 
 town Colony. Yet under this arrangement the 
 colony starved for nine long years. Many died. 
 
 The explanation is easy: The world requires 
 the best that each person can do. It has been the 
 experience of ages that when you assure a man 
 a livelihood and offer no grand prize for extraor- 
 dinary effort, he may do his bit but he won't do 
 his best. 
 
 The prospect of private gain and the spur of 
 necessity are the only universal incentives to 
 exertion, 
 
SOCIALISM 23 
 
 The more the state does for the man, the less 
 the man will do for himself. 
 
 Every prop or assistance that society gives to 
 the individal lulls him into a sense of lazy se- 
 curity and saps the fine fiber of manly self- 
 reliance. That is why social and health insurance 
 destroy individual efficiency. These props take 
 out the man's "backbone" and put a "wishbone" 
 in its place. 
 
 Socialism ignores all of these principles. 
 
 Brown, Jones and Jenkins. 
 
 Let us take three men in Jamestown Colony: 
 Brown, robust, deep-chested, industrious, could 
 hoe ten rows of corn in a day. He was willing 
 to do it. Jones, weak and one-lunged, could hoe 
 but two rows. Jenkins, more powerful than 
 Brown, could hoe twelve rows, but from sheer 
 laziness would hoe only two rows in a day. 
 
 Brown did his duty at first, but every time he 
 looked across the field and saw his two comrades 
 hoeing but two rows of corn in a day, he slack- 
 ened his pace until finally the procession moved 
 
24 SOCIALISM 
 
 at the speed of the slowest and laziest man, and 
 so the colony starved. 
 
 Compulsory hours of labor were adopted. No 
 family was allowed to draw supplies unless each 
 able-bodied member had worked at least six hours 
 a day. This afforded but slight and only tem- 
 porary relief. Malingering or imaginary sick- 
 ness were practiced by the lazy and the colony 
 continued to starve. 
 
 Then King James appointed Captain John 
 Smith, the explorer, as governor of Jamestown 
 Colony. Captain Smith must have understood 
 these great fundamental principles : 
 
 The more the State does for the man, the less 
 the man will do for himself. And no man will do 
 his best without the prospect of private gain com- 
 mensurate with the effort. 
 
 Captain Smith parceled out the land, giving 
 to each colonist three acres. We can imagine 
 that he said: 
 
 "Brown, here are your three acres. Whatever 
 you produce belongs to you and to Mollie and the 
 babies. 
 
SOCIALISM 25 
 
 "Jenkins, you lazy lout, here are your three 
 
 acres. Now work or starve. 
 
 "Jones, I know you have weak lungs, but you 
 will have to do the best you can. Maybe the 
 neighbors will help you out." 
 
 Encouraged by the lure of wealth, Brown hoed 
 twelve rows of corn a day. Lazy Jenkins, spurred 
 by stern necessity on the one hand and by the 
 prospect of private gain on the other, hoed fifteen 
 rows a day. Jones, thrown upon his own respon- 
 sibility, discovered that his lungs were better than 
 he thought they were, and he increased his speed 
 to five rows. 
 
 History recites that the colony immediately be- 
 came prosperous under Captain Smith's private 
 ownership plan, 
 
 Captain Smith did not increase the fertility of 
 the soil, nor make the sun shine more brightly, 
 nor cause the rains to come in better season, but 
 he took into account some great fundamental 
 principles : Withdrawal of state support and the 
 prospect of private gain had compelled the lazy 
 and lured the industrious to maximum degrees pf 
 exertion. Prosperity followed. 
 
26 SOCIALISM 
 
 Job Harriman Socialist Colony. 
 
 The Job Harriman Socialist Colony, estab- 
 lished in Antelope Valley, Los Angeles County, 
 California, a few years ago, known officially as 
 the Llano Del Rio Rey Colony, starved out and 
 passed into the discard in the early days of 1918. 
 
 Like all true socialists, Job Harriman was an 
 idealist, a dreamer of dreams. He was the faith- 
 ful disciple of Karl Marx, Engels, Bebel, Bel- 
 lamy, Debs, Hall, Russell, and the rest in endless 
 number whose pathways lead to the land of sweet 
 dreams until the awakening, and then comes dis- 
 illusionment. 
 
 To the thousands of admirers who had listened 
 to his impassioned appeals for "Social Justice," 
 the freedom of the "Wage Slave," the destruction 
 of "Big Business," and to his indictment of "Cap- 
 italism," the news of the failure of Job Harri- 
 man' s colony came as a distinct and painful 
 shock, 
 
 Karl Marx, like the Pied Piper of Hamelin, has 
 lured thousands to destruction. Through a long 
 line of zealous converts since 1848, when he pub- 
 
SOCIALISM 27 
 
 lished his famous work that gave direction to 
 modern socialistic thought, Karl Marx, the mas- 
 ter mind of German sophistry, has wrought havoc 
 in many countries. Job Harriman is only one of 
 his many victims. His most notable and ghastly 
 achievement is the destruction and desolation of 
 Russia, through "Lenine," "Trotzky" and their 
 predecessors. 
 
 Still Dreaming. 
 
 Still inspired with the faith of a dreamer, Job 
 Harriman has removed the wrecked remains of 
 his colony from the arid lands of Antelope Valley 
 to the swamps of Louisiana, and has located the 
 fragments of his colony at Stables in that state. 
 The colony at Stables is likewise doomed to fail- 
 ure. Private enterprises in Antelope Valley are 
 succeeding, but socialism failed. Private enter- 
 prises in Louisiana are succeeding, but socialism 
 will fail. It is not because the climate of Antelope 
 Valley is too dry, nor because it is too wet at 
 Stables. It is because Socialism will not work. It 
 is unworkable. 
 
 In a public speech at Bakersfield in October, 
 
28 SOCIALISM 
 
 1918, 1 gave a history of the failure of Harriman 
 Colony. At the conclusion of my remarks one of 
 the deluded victims of that anfortunate enterprise 
 told me that he believed the failure was due to 
 mismanagement, as much as to laziness or lack of 
 industry. He said that those in authority were 
 totally unfitted by nature, for the positions they 
 managed to secure. They were good men, meant 
 well, but they had impractical theories and con- 
 stantly wasted the energies of the colony by fool- 
 ish and illadvised undertakings. They were popu- 
 lar, had many friends, were good talkers, but poor 
 managers. There were many conflicting opinions 
 and there was much disagreement. Some of the 
 "comrades" were too ambitious for place and 
 power. There were jealousies and heartaches. 
 Colony gossip and scandal were not lacking. How 
 like the story of all socialistic ventures ! 
 
 Politicians 
 
 Under socialism the best politician gets to 
 the front, but political brains cannot manage 
 industry. 
 
 Russia is attempting to run not only her rail- 
 
SOCIALISM 29 
 
 roads, but all of her industries, with political 
 brains instead of business brains and she is mak- 
 ing and will continue to make a mess of it. Sail- 
 ors', soldiers' and peasants' councils cannot run 
 railroads nor other business enterprises. Few 
 business men succeed. But under private owner- 
 ship the poor business manager passes into the 
 junk heap by a natural process of elimination. 
 The masterful business manager survives. The 
 world falls heir to the fruits of successful organ- 
 ization and direction. 
 
 As the masterful business manager accumu- 
 lates wealth he puts it back into industry and 
 gives employment to those who have not the gen- 
 ius of management. 
 
 In any state.where the business enterprises are 
 owned and controlled by the public at large we 
 find incompetence and mismanagement in propor- 
 tion to the extent of such public ownership. An 
 army of political hangers on, a vast overhead ex- 
 pense, and a diminished production almost invar- 
 iably accompany such experiments. The reason is 
 plain. In business under private ownership the 
 poor business man is eliminated and the best busi- 
 
30 SOCIALISM 
 
 ness brains survive. In politics the poor politician 
 is eliminated and the best political brains survive. 
 But it rarely happens that the genius of business 
 organization and direction and the faculty of vote 
 getting and political place finding are combined in 
 one and the same person. 
 
 The political brain seeks popularity. The busi- 
 ness brain seeks production. 
 
 Political brains cannot manage industry. 
 
 Australia 
 
 In Australia the telephones are owned and op- 
 erated by the government. They still use the 
 magneto switching system that was discarded in 
 America over twenty years ago. The Australian 
 government also owns and operates the railroads, 
 and their passenger coaches and general equip- 
 ment and service resemble ours of twenty years 
 ago. What is everybody's business is nobody's 
 business. They are running these enterprises 
 with political brains and there is no incentive to 
 improve. The Australian railways have always 
 lost money. They have never paid expenses. 
 
SOCIALISM 31 
 
 Political Brains a Failure 
 So under government ownership and manage- 
 ment of the means of production and distribution 
 resorted to in socialist communities the best poli- 
 ticians, good speech-makers and hand-shakers 
 but poor managers, are entrusted with the man- 
 agement and control of business enterprises, and 
 the best business men, who rarely have the 
 sauvity or the hand-shaking and speech-making 
 proclivities necessary to political success, are re- 
 tired to the rear ranks. 
 
 Industry languishes. Standards of living are 
 lowered. The door of individual opportunity is 
 closed. There are no inventions. Natural re- 
 sources go undeveloped. No one will take the 
 trouble to pioneer for there is no reward no 
 grand prize. 
 Political brains cannot manage industry. 
 
 Kaweah Socialist Colony 
 
 Kaweah Socialist Colony was established and 
 located on the rich river bottom lands of the 
 Kaweah River Valley in Tulare County, Califor- 
 nia, in the late Ws or the early '90's. 
 
32 SOCIALISM 
 
 The land was as rich as the famed valley of the 
 Nile. The climate was delightful. Everything 
 needed could be produced in abundance. In the 
 beginning the colony was well financed. Contri- 
 butions flowed in from the faithful from many 
 parts of the world. Those of us who lived in the 
 adjoining county of Fresno, looked forward to 
 the time when it could be declared a permanent 
 success and thus vindicate .the claims of socialism. 
 Our hopes were never realized. As long as the 
 outside contributions continued the colony flour- 
 ished, but in a few years these contributions fell 
 away and the colony died the slow death of starv- 
 ation. During the last sad struggle for its exist- 
 ence kind hearted people from neighboring com- 
 munities brought meat, flour and other provisions 
 to their friends in the colony. At first these were 
 distributed among the "comrades/' but as hunger 
 and want increased, those "comrades" who were 
 fortunate enough to have outside friends adopted 
 the practice of hiding these provisions for their 
 own use. Then the colony committees made regu- 
 lar rounds among the colonists in search of hid- 
 den goods, and compelled division whenever any 
 
SOCIALISM 33 
 
 were found. There was not enough to sustain 
 life for all, and one by one the colonists departed, 
 leaving their wrecked hopes behind them, to take 
 up the burden of life anew in the fields of private 
 ownership, private profits, competition, and 
 "capitalism." 
 
 Its Victims 
 
 In 1897, shortly after this colony had collapsed 
 and its members, sadder but wiser, had disbanded, 
 a man came to my place looking for work. I gave 
 him a job. He had put all his money into the Ka- 
 weah Colony venture early in its history and had 
 remained there to the unhappy end. 
 
 I had read "Looking Backward," "Progress 
 and Poverty," many pamphlets, had heard many 
 socialist orators (nearly all of them are orators), 
 had made quite a study of Karl Marx, and was, 
 myself, pretty well saturated with the virus of 
 socialism. To be sure, socialists had produced no 
 practical plan, but I was looking forward to the 
 time when some towering socialist endowed with 
 the prescience of statesmanship would give to the 
 world a scheme by which it would be made suc- 
 cessful in operation. That time can never come. 
 Socialism is false in principle and will never work. 
 
34 SOCIALISM 
 
 One day I asked my socialist employee why 
 Kaweah Colony was a failure. He said that the 
 colony seemed to have more than its share of men 
 and women who would not work ; that there were 
 certain shrewd manipulators who could out talk 
 the other members of the colony, and that they 
 formed a sort of clique or syndicate and got all 
 the soft jobs; that while they were good talkers 
 most of them were wholly unqualified for the posi- 
 tions they managed to get into. He said the col- 
 ony was entirely lacking in executive manage- 
 ment. 
 
 Soviets 
 
 All of the little problems were settled by com- 
 mittees and often in a ridiculous way. If one of 
 the school children had a disagreement with the 
 teacher the school committee would spend a day 
 or two making its investigation and findings. If 
 the stock of flour was running low the committee 
 on supplies would hold a long session and finally 
 reach a conclusion, There were committees for 
 everything, and they met often and long. "They 
 seemed to like committee work better than tilling 
 the soil or harvesting the crop. When we saw our 
 
SOCIALISM 35 
 
 committee comrades wasting all of this time, we 
 did a little loafing on our own hook. Each one 
 seemed to be inspired with the idea that he must 
 not be expected to do more than his share." 
 
 In other words, if Whitesides could pitch five 
 tons of hay in a day, and Lopsides could pitch but 
 two tons, Whitesides promptly slowed up to two 
 tons. The zvhole procession moved at the speed 
 of the slowest and laziest man. 
 
 Socialists are not lazy, but socialism breeds 
 laziness, 
 
 Slavery of Socialism 
 
 "One thing," he said, "was irritating to most 
 of us who did the real work, and that was that if 
 anyone wanted to make some little change or 
 alteration for his own convenience about his own 
 lodgings, it called for a committee meeting and 
 the committee could grant or refuse the privilege. 
 At every turn there was supervision by some 
 committee, whose judgment was law. If I did not 
 like my job and wanted to change it, I must con- 
 sult the committee. There were constant bicker- 
 ings and jealousies about who should have the 
 easy jobs. 
 
36 SOCIALISM 
 
 "I could see no way out of it, for everything 
 belonged to the colony, and the colony could only 
 act through its chosen representatives, but I 
 could not help longing for some of those personal 
 liberties that I was accustomed to under so-called 
 'capitalism/ Few people realize that socialism 
 means slavery to bureaus and committees. 
 
 "Another thing, too, that may seem trivial to 
 you but it grows in importance when you lose it, 
 is a certain pride one takes in the ownership and 
 possession of things that he calls his own. That 
 he can sell or buy or loan or give away. There 
 grows up in one's mind an indescribable hunger 
 for the little piece of ground with a home on it that 
 belongs not to the community but to the man him- 
 self. A home that is sacred from intrusion." 
 Then he added with some hesitation as if he were 
 betraying a secret, "I have heard a lot about wage 
 slavery and have made some speeches about it my- 
 self, but after all, there is not such a great differ- 
 ence between working under the orders of some 
 committee foreman in the colony, and working 
 under a foreman anywhere else. You are not 
 your own boss either way. Under capitalism, if 
 
SOCIALISM 37 
 
 you don't like your job you can quit and hunt an- 
 other one without consulting a committee. No, I 
 still think socialism ought to work, but I don't 
 think I will ever try it again." 
 
 And so, Kaweah Colony, founded with a zeal 
 born of high hope and sublime confidence, passed 
 into the discard leaving its trail of misery and 
 disappointment. 
 
 Of all the hundreds of socialist colonies that 
 have been started not one remains to give living 
 testimony to their worth. The whole history of 
 socialism may be found written in the epitaphs of 
 the colonies that have lived and died. 
 
 The labor problem will not be solved by isms 
 and schisms. 
 
 It cannot be solved by the agitator who exhales 
 the poisons of hate. He wanders like some 
 strange mad thing over the earth, sowing the 
 seeds of discord and discontent that blossom Into 
 floivers of disloyalty and bear the fruits of 
 treason. 
 
 The labor problem will solve itself when each 
 man, woman and child has learned to think more 
 about his duty and less about his rights; when 
 
38 SOCIALISM 
 
 each pays the price of success by doing his dead- 
 level best and saving his money, instead of doing 
 his bit and spending his money. 
 
 Then will poverty disappear from the earth. 
 
The World has been preaching the Gospel of 
 Hate. The World has been sowing the Seeds of 
 Discord and Discontent, The World is reaping 
 its Harvest of Blood. 
 
 Labor and Capital 
 
 Address of Mr. Cartwright delivered in California. 
 
 Mr. President : 
 
 Many years ago I heard a great philosopher 
 commence his lecture by saying, "I doubt if there 
 is anyone present who can tell me whether the 
 first hen laid the first egg, or whether the first 
 egg hatched the first hen. I even doubt if any of 
 you can explain why a horse eats grass and grows 
 hair, while a goose eats grass and grows feathers. 
 This is a queer world, filled up with queer people, 
 surrounded by queer problems." The old philos- 
 opher was right, 
 
 The Golden Egg 
 
 You all know the fable of the goose that laid 
 the golden egg, and you remember how the im- 
 
40 LABOR AND CAPITAL 
 
 provident owner, not satisfied with the past 
 performance of that goose, killed the poor goose 
 and cut it open, expecting to find a whole basket 
 full of golden eggs at once. And you remember 
 the disaster and disappointment that followed. 
 
 With this old fable still lingering in our mem- 
 ories, is it not queer that capital and labor should 
 be doing their dead-level best to kill that goose? 
 That is just what they are about to do. Indeed, 
 what they have almost done. They are flirting 
 with the same disaster and disappointment that 
 befell the man in the fable. 
 
 Verily! this queer old world is filled up with 
 queer people. Cannot capital be made to under- 
 stand that anything that hurts labor, hurts cap- 
 ital ? Cannot labor be made to see that anything 
 that hurts capital, hurts labor more? Can they 
 not be made to realize that their interests are 
 mutual ? 
 
 Cause of the Trouble 
 
 The trouble is, we have been preaching the 
 gospel of hate- 
 
 The trouble is, we have been sowing seeds of 
 discord and discontent. 
 
LABOR AND CAPITAL 41 
 
 The trouble is that for a quarter of a century 
 we have been agitating and legislating and regu- 
 lating the business man out of business and the 
 working man out of his job. 
 
 Nobody wants to be regulated, but everybody 
 wants everybody else regulated, and there is a 
 surprising number of well-meaning politicians 
 who are obsessed with the notion that they are 
 qualified by nature and designated by Providence 
 for that particular job, with salary attached. 
 
 A Fat Job 
 
 We should not blame the politician. It's a fat 
 job and he wants it. Pays a big salary and gives 
 the appointment of deputyships, clerkships, ac- 
 countants, and stenographers, furnishing the 
 double opportunity of providing lucrative places 
 for impecunious relatives and friends and of 
 building up an invincible political machine at the 
 expense of the State. 
 
 The demagogue has the effrontery to tell us 
 that the corporations pay the tax. That is all 
 right, but what astonishes me is that he expects 
 us to believe it, when all the students of political 
 
42 LABOR AND CAPITAL 
 
 economy know that labor pays all taxes, all losses, 
 all waste, all the time. Where does the .corpora- 
 tion get its money to pay that tax ? The corpora- 
 tion passes the buck. It has to or get out of 
 business. 
 
 The Workingman Pays the Tax 
 
 The corporation passes the buck to its custom- 
 ers and they pass the buck to their customers, and 
 so on down the line until the tax falls upon the 
 man in the trench, the man with the hoe, the 
 man who creates the wealth by applying force to 
 the resources of nature. The workingman pays 
 the tax. Capital never did, never will and never 
 can pay a tax in the final analysis. If we ever 
 succeed in compelling capital to pay all taxes, all 
 losses, all waste, we will deliver a death blow to 
 labor, for capital will become exhausted and labor 
 will lose its opportunity. 
 
 Labor always has, always will, always must 
 pay all taxes, all losses, all waste in the final 
 analysis, either by lower wages or by a higher 
 cost of living. For some years past it has been 
 by an increasing cost of living. This has been 
 
LABOR AND CAPITAL 43 
 
 true from the beginning of history and it will be 
 true to the end of time. It is true under Social- 
 ism as well as under individualism. 
 
 What Is Capital? 
 
 Capital is the residue of the usable wealth cre- 
 ated by this and former generations and handed 
 down to us unused, unwasted, undestroyed. 
 
 Primitive man eked out a precarious existence 
 by applying his bare hands to the resources of 
 nature. He used a convenient club or stone with 
 which to kill some animal for his breakfast. He 
 often went hungry. Necessity became the mother 
 of invention. He stripped the bark from the trees 
 and used the fibre for snares and fish nets. He 
 learned to make and to use spears, bows, arrows 
 and other implements of the chase. These were 
 his capital. Had this capital become exhausted 
 by fire, destruction, loss or waste, or even by 
 taxes, he would have been driven to the original 
 expedient of applying his bare hands to the re- 
 sources of nature for a livelihood. 
 
 Slowly through the ages property rights came 
 to be recognized. Man worked with redoubled 
 
44 LABOR AND CAPITAL 
 
 energy as property rights became more secure. 
 Genius responded to the prospect of gain. Then 
 inventions multiplied and up from savagery and 
 barbarism, through the door of mechanical in- 
 ventions, came the dawn of civilization. 
 
 Mechanical inventions were the "open sesame" 
 to a more comfortable and better living. 
 
 By slow degrees, through the selection of 
 vocations came the divisions and classifications of 
 labor. 
 
 Then came the systematic organization of 
 labor into efficient industrial units, vastly increas- 
 ing its productive power the whole system of 
 production and distribution becoming more and 
 more complicated until we have reached the in- 
 finitely complex industrial activities of the present 
 day. Through all these countless centuries of 
 development the position of the workingman has 
 become less and less precarious, the necessities 
 and comforts of life, more and more abundant and 
 within easier reach. 
 
 The workingman of today enjoys comforts un- 
 known to kings and princes a few centuries ago. 
 
LABOR AND CAPITAL 45 
 
 Plea for Co-operation 
 
 Man no longer goes forth barehanded to battle 
 with the forces of nature. Capital supplies him 
 with the weapons of conquest. Labor and capital 
 are essential partners in the world's great work 
 of production and distribution. Between them 
 there must be established the fullest co-operation, 
 Their interests are mutual if not identical. They 
 must be taught to fight for each other, not 
 against each other. 
 
 Hostile Camps 
 
 Instead of co-operating with each other as 
 partners should, we find them arrayed against 
 each other in hostile camps. Employer's Associa- 
 tions on one side and Labor Unions on the other. 
 How long would any business partnership suc- 
 ceed if the two partners went armed and "layed" 
 for each other instead of co-operating for the 
 common good? 
 
 The man who works nine hours a day for a 
 definite wage, goes home to a hearty meal and a 
 sound sleep, with no responsibility, and gets up 
 
46 LABOR AND CAPITAL 
 
 in the morning refreshed, must not think that he 
 is the only worker. 
 
 The foreman over him works ten hours, the 
 superintendent fourteen hours, and the owner of 
 the plant works all day including Sundays and 
 holidays, sweats blood over the weekly payroll 
 and the monthly bills and pays the full price of 
 his success. I am not sure whether the men are 
 working for him or whether he is working for the 
 men in the plant. When he makes an extra dollar, 
 it goes back into the plant, or into some other 
 plant and it gives another man a job. 
 
 They are all doing their respective shares of 
 the world's work. Why should they separate into 
 hostile camps ? 
 
 All wealth is primarily created by the applica- 
 tion of force to the resources of nature, but in 
 modern times this is done through mechanical 
 appliances furnished by capital and under intelli- 
 gent direction. 
 
 Mind, muscle and money applied to the re- 
 sources of nature, produce all wealth. 
 
 Mind, muscle and money applied to nature pro- 
 
LABOR AND CAPITAL 47 
 
 duce the addition to capital which it is our duty 
 to hand down to coming generations. 
 
 Mind, muscle and money applied to nature pro- 
 duce the necessities, comforts and luxuries of life. 
 
 If labor chops down a tree, capital furnishes 
 the ax. If labor makes a pair of shoes, capital 
 furnishes the factory. If labor tills the soil, cap- 
 ital furnishes the plow. 
 
 Yet capital itself is the product of labor and the 
 misguided I. W. W., the deluded sabotists, who 
 destroy property by fire or otherwise, are making 
 war on the workingman's offspring. They are 
 diminishing the opportunities of themselves and 
 their fellow workers in the struggles incident to 
 human life. 
 
 The Arch Enemy of Labor 
 
 Every time a haystack, granary, warehouse, 
 factory, tool, implement, material or any item of 
 property is destroyed, the world's supply of prop- 
 erty, of wealth, of capital, is diminished just that 
 much and the cost of living goes up in proportion 
 to the amount of the property destroyed. Like- 
 wise the opportunity of the laboring man is 
 
48 LABOR AND CAPITAL 
 
 diminished just that much, and diminished op- 
 portunity means lower wages or higher cost of 
 living. It is out of the sweat of the working- 
 man's brow that the loss must be repaired. 
 
 The malicious destroyer of property is the 
 enemy of capital, to be sure, but he is the ARCH 
 
 ENEMY OF LABOR. 
 
 Capital can stand the strain; it draws upon its 
 reserves. Labor suffers far more; it has no re- 
 serves from which to draw. 
 
 Capital Depends Upon Labor 
 
 On the other hand, capital is utterly dependent 
 upon labor for its usefulness. The ax must have 
 muscle to wield it; the factory must have work- 
 men to operate it and mind, intelligence to 
 direct it. 
 
 Moreover, let the capitalist never forget, not 
 even for a moment, that the great market for the 
 world's products, whether of the farm or of the 
 factory, is to be found among the industrious men 
 and women who are employed at fair wages under 
 fair conditions. Take away the payroll of the 
 
LABOR AND CAPITAL 49 
 
 private enterprises of your community and grass 
 will grow in the streets of your city. 
 
 Idle Dollar, Idle Man 
 
 Universal employment spells prosperity for 
 both worker and employer. The intelligent em- 
 ployer is ready to co-operate in every legitimate 
 movement tending toward permanent employ- 
 ment of our working men and women. Anything 
 that retards, restrains or discourages the invest- 
 ment and active employment of capital, whether 
 it be agitation, legislation, regulation, or labor 
 troubles, or the fear of them, is a calamity to labor 
 and an injury to capital ; for an idle dollar means 
 an idle man and an idle man spells loss of profits 
 on the dollar. 
 
 Hours and Wages 
 
 Perhaps no other question has been so product- 
 ive of friction between employer and employee 
 as the subject of hours and wages. This friction 
 has been caused by a failure to understand the 
 principles involved, as much as by the selfishness 
 of both sides to the controversy, but it has been 
 
50 LABOR AND CAPITAL 
 
 aggravated if not inspired by paid agents of Ger- 
 many all over the world, before the war. 
 
 Some employers suffer from the delusion that 
 the lower the wages and the longer the hours of 
 their workmen, the greater will be the employer's 
 profits. They forget that such men render 
 grudging and inefficient service, while men better 
 paid and better treated do their work with alacrity 
 and are more apt to safeguard the interests of the 
 employer. The one great lesson that employers 
 must learn is, "So treat your employees that they 
 can have no just cause of complaint." 
 
 Analysis of Wages and Hours 
 
 Shortening the hours of labor to the point of 
 highest efficiency is a blessing to labor ; but short- 
 ening the hours below this point is a curse to 
 labor. It raises the cost of living by decreasing 
 the productive power of labor and in the course 
 of years must lower the standard of living. The 
 cost of living over a long period of years is gov- 
 erned by the cost of production and distribution. 
 Speculation, overproduction, or underproduction 
 in a given commodity, may violate this rule for a 
 
LABOR AND CAPITAL 51 
 
 time; combinations and trusts may set it aside 
 temporarily; catastrophes, like the world war, 
 may obscure it for the moment, but in the final 
 reckoning the law that the cost of living is regu- 
 lated by the costs of production and distribution 
 is as immutable as are the laws of God. 
 
 High Cost of Living. 
 
 Every sane man knows that 
 Raising wages raises the cost of living. 
 Shortening hours raises the cost of living. 
 Loafing on the job raises the cost of living. 
 Every strike raises the cost of living. 
 Profiteering raises the cost of living. 
 
 Russia committed all of these follies until butter 
 cost eight dollars a pound and sugar cost the con- 
 sumer six dollars a pound, all under the rule of 
 Lenine and Trotsky. 
 
 We can raise wages, shorten hours, loaf on the 
 job and strike, all the time pretending to help the 
 workingman, until a pair of shoes will cost a 
 thousand dollars, if we want to. But will it help 
 the worker ? 
 
52 ' LABOR AND CAPITAL 
 
 The I. W. W. Argument 
 
 I heard an agitator on Stockton Street in San 
 Francisco, addressing what appeared to be an 
 assemblage of workingmen. 
 
 His hair was disheveled, his eye blazed with 
 excitement, he gesticulated wildly and in the 
 frenzy of his madness, he urged the workingman 
 to work as few hours as he could without losing 
 his job; to do as little for his employer as he 
 dared during those few hours and yet hold his 
 job; to destroy his employer's property whenever 
 he had a sneaking chance; then he took up a 
 collection. 
 
 His audience seemed not to realize that this 
 trinity of evil agencies were the principal causes 
 of the high cost of living immediately before the 
 war. If his insane theories are ever adopted and 
 acted upon by American labor, cost of produc- 
 tion and cost of living in America will become 
 prohibitive. American industry will perish, 
 American laborers and their families will go 
 hungry, foreign manufacturers and producers 
 and their workingmen will reap a golden harvest. 
 
 This agitator, like others of his kind, was 
 
LABOR AND CAPITAL 53 
 
 probably one of Germany's 600,000 paid agents 
 before the war. If American labor could be in- 
 duced to force wages to a high enough point, 
 American manufacturers could not compete with 
 German manufacturers ; if American labor could 
 be deceived into shortening the hours of labor too 
 much, American factories could not compete with 
 German factories ; if American labor slows up on 
 the job, thereby increasing the cost of production, 
 American factories must close while foreign fac- 
 tories work overtime. American labor will stand 
 idle. Foreign manufacturers will absorb the mar- 
 kets of the world. 
 
 If this form of agitation wins out in America, 
 our American workers will have high wages but 
 no job ; short hours but no job ; high cost of living 
 but no job to pay it with. Foreign workers will 
 have lower wages, but their cost of living will be 
 low also, and they will have wages with which 
 to meet it ; their hours will be longer, but they will 
 have a job. 
 
 Science of Wages 
 
 I never lose an opportunity to say that wages 
 and hours should be adjusted with a view to the 
 
54 LABOR AND CAPITAL 
 
 interests of both parties concerned We must not 
 forget that industry depends not only upon mind, 
 muscle and money, but that it would be useless 
 without the men and women who consume the 
 product. Their interests should never be ignored. 
 We have no right to neglect the consuming 
 public. 
 
 Wages and hours are scientific questions. If 
 wages are too low in any country labor loses its 
 purchasing power and business stagnates as it 
 has in China. If wages are too high in any 
 country its industries cannot compete in the mar- 
 kets and labor goes unemployed. Capital, robbed 
 of its profits, gradually withdraws to more favor- 
 able countries. 
 
 Between these two extremes there is a scien- 
 tific wage that is best for both labor and capital. 
 Fair-minded employers and honest labor leaders 
 should put their feet under the same table and 
 figure it out. They could at least come within 
 shooting distance of it, and that is nearer than 
 the agitator or the short-sighted employer will 
 ever come. 
 
LABOR AND CAPITAL 55 
 
 Hours of labor should be treated in the same 
 way. Shortening the hours of labor to the 
 point of highest efficiency increases production 
 and lowers the cost of living. Both labor and 
 capital are benefited. 
 
 Shortening the hours below this point dimin- 
 ishes production, increases the cost of living and 
 hurts both labor and capital. 
 
 The Loafer 
 
 Loafing on the job is despicable and indefensi- 
 ble. The loafer is a direct burden to labor. He 
 increases the cost of production and distribution 
 by drawing pay for nothing; thereby raising the 
 cost of living, and he, as well as the industrious 
 workingman, pays the bill. 
 
 Illustration Brown hires a man at $2.00 per 
 day to hoe his corn. The man works fourteen 
 hours a day and hoes ten rows. The labor cost is 
 therefore 20 cents a row. Fourteen hours is too 
 long a day. The day's work is reduced to ten 
 hours and the man hoes twelve rows, the labor 
 cost is 162-3 cents a row; thus decreasing the 
 cost of production and the cost of living to the 
 advantage of both employer and employee. 
 
56 LABOR AND CAPITAL 
 
 Assume that the agitator comes along- and 
 finally has a six-hour day established. Ten hours 
 was a point of Jhigher efficiency and under the 
 six-hour plan the man hoes only eight rows of 
 corn, the labor cost is therefore 25 cents a row. 
 Brown must raise the price of corn or go out of 
 business. So the cost of living goes up. Then 
 suppose the agitator urges the man to shirk and 
 do as little as possible. He hoes only four rows 
 and the cost of hoeing corn doubles to 50 cents a 
 row. Apply this rule to all industries and the 
 cost of living doubles. If the prices cannot be 
 doubled the employer goes out of business and the 
 workirigman loses his job. If the prices are 
 doubled, the workingman is injured, for the cost 
 of living is doubled without any increase in his 
 earning power. 
 
 Not long since a building contractor related his 
 experience to me. It illustrates this principle so 
 clearly that I repeat it. He said, "Twenty years 
 ago I paid ordinary mechanics $3.00 a day and 
 up, according to ability. They could get board 
 anywhere at $20.00 per month. They worked 
 ten hours. Every man took a pride in his work 
 
LABOR AND CAPITAL 57 
 
 and rendered efficient service. At that time I 
 could build a very good dwelling house for 
 $2,000.00. Today (1913, before the war), I pay 
 them $4.50 per day and a very large percentage 
 of them, through the influence of agitators, shirk 
 their work. The cost of living has trebled and it 
 costs from $6,000.00 to $7,000.00 to build that 
 same house. Ten years ago, one man could easily 
 put in 2500 rivets in one line of steel tank work in 
 one day. Today with improved machinery, the 
 walking delegate in my town will not allow one 
 man to put in more than 500 rivets in a day, and 
 the same thing is happening in every department 
 of construction." 
 
 Poor, simple-minded walking delegate of that 
 town! He thinks he is befriending labor, while 
 in truth and in fact he is augmenting the cost of 
 living and placing the comforts of life beyond the 
 workingman's reach. 
 
 If I can get my wages raised without letting 
 my neighbor get his wages raised, I am benefited 
 but he is injured. If both our wages are raised, 
 neither of us is benefited, because the cost of liv- 
 ing rises proportionately. We have merely at- 
 
58 LABOR AND CAPITAL 
 
 tempted to lift ourselves over the fence by our 
 own boot-straps, 
 
 If all of the workers of the world have their 
 wages doubled, the cost of living is likewise 
 doubled, automatically, and nobody is injured or 
 benefited. 
 
 If one-half of the world's workers should have 
 their wages doubled, the cost of living would rise 
 50 per cent, automatically and the workers whose 
 wages are not raised would suffer great privation. 
 Is that fair? 
 
 Railway Strike 
 
 When 400,000 railway employees, by threaten- 
 ing a strike, had the eight-hour day established 
 with excessive pay for overtime, the railways 
 necessarily increased their rates to cover the addi- 
 tional expense of operation. These additional 
 rates were added to the selling price of all com- 
 modities and other workingmen are paying the 
 bill. 
 
 The agitator and the demagogue may argue 
 that the railways should have paid the higher 
 wages without increased rates. But the Inter- 
 state Commerce Commission, after an exhaustive 
 
LABOR AND CAPITAL 59 
 
 investigation, conceded the justice of the demands 
 of the railway companies and granted permission 
 to raise the rates. 
 
 The fact that the acts of the various railroad 
 commissions of the several states, as well as the 
 acts of the Interstate Commerce Commission, 
 have not been too favorable to the railway com- 
 panies, is conclusively proven by an able article 
 published in the Century Magazine of March, 
 1917. 
 
 Arrested Development 
 
 The writer sets forth the startling fact that 
 during the past forty years an average of 5000 
 miles of railway have been built per year, while 
 in 1916, only 297 miles of railway were con- 
 structed. Railroad regulation had well nigh 
 driven the railways out of business, thus retard- 
 ing the development of our natural resources to 
 the great injury of both labor and capital. Think- 
 ing men are glad to note that railway commis- 
 sioners are rapidly correcting their earlier mis- 
 takes. 
 
 But the damage had gone too far. Railroad 
 investments became so unprofitable and uninvit- 
 
60 LABOR AND CAPITAL 
 
 ing that railways could not be sufficiently financed 
 to stand the strain created by the demands of the 
 war, and President Wilson has been compelled 
 to take control of the railways of America. 
 Freight and passenger rates have been still fur- 
 ther increased to prevent too great a loss under 
 government management, thus adding to the high 
 cost of living. 
 
 Let labor never lose sight of this tundamental 
 principle. The wages of one man or set of men 
 cannot long remain higher than the wages of 
 other men engaged in the same industry, unless 
 such man or set of men earn the higher wage by 
 higher efficiency greater productiveness. 
 
 To illustrate : Schmidt in Germany and Jones 
 in America are competing manufacturers of 
 clothespins. If they pay the same wages to men 
 of equal efficiency, they can compete on equal 
 terms and both factories continue in business. 
 But if Schmidt pays only $2.00 per day while 
 Jones is compelled to pay $4.00 per day, Schmidt 
 can sell his clothespins for 15 cents a gross while 
 Jones must charge 30 cents a gross to make the 
 same profit. Jones is driven out of business and 
 
LABOR AND CAPITAL 61 
 
 his men lose their employment, while Schmidt 
 enlarges his plant. This is precisely what hap- 
 pened before the great war, in many lines of 
 manufacture both in England and America. 
 "Made in Germany" appeared on articles every- 
 where. German wages were low. There were 
 no rules limiting output or otherwise increasing 
 factory cost. German exports increased from 
 two and a half billions of dollars in 1909 to almost 
 five billions in 1913. 
 
 England lost a part of her export trade to Ger- 
 many, even to her own colonies, and on account of 
 unwise rules and regulations, including dimin- 
 ished output, Australia increased her imports 
 from Germany from $13,893,000 in 1909, to 
 $21,074,000 in 1913. German workmen were 
 busy while English and Australian workmen 
 were idle. 
 
 Only American Big Business with its vast re- 
 sources, modern equipment, and its scientific 
 grouping of workmen combined with the superior 
 skill and industry of American labor, enabled 
 American manufacturers to compete with Ger- 
 many in the world's markets. If the false leader 
 
62 LABOR AND CAPITAL 
 
 induces American workmen to shirk and give 
 grudging service, we will lose these markets and 
 American workmen will be idle. The man who 
 induces labor to shirk and loaf on the job is labor's 
 greatest enemy. 
 
 The force of these simple illustrations will 
 come home to us in the painful process of re- 
 adjustment after the world war. Millions of men 
 will some day return to productive industries. 
 The pinch of poverty will drive them to heroic 
 sacrifices and superhuman effort, 
 
 Competition in all industrial lines will be ten 
 fold greater than ever before. Wages in pov- 
 erty-stricken Europe will reach low tide, while 
 efficiency in European production will be at high 
 tide. 
 
 American industries and American workmen 
 must meet this competition or get out of the 
 procession. 
 
 The agitator may continue to urge American 
 workmen to demand impossible wages, coupled 
 with inefficient and grudging service. But Amer- 
 ican workmen, when disillusioned, will rise to the 
 occasion. They will turn deaf ears to false 
 
LABOR AND CAPITAL 63 
 
 leaders. The agitator and the demagogue will 
 pass into the discard. 
 
 When the employer and the employee come to 
 their moorings, when they get back their sense of 
 proportion and learn the fundamental principles 
 that control their relations, capital will not want 
 low wages or long hours; nor will labor want 
 high wages and short hours, but both will demand 
 just wages and reasonable hours, based upon a 
 careful consideration of existing facts and of the 
 principles involved. 
 
 And when that desideratum shall be brought 
 about, if some greedy employer refuses to give 
 his employees reasonable wages, hours or condi- 
 tions of employment, the employers' associations 
 will put him on the carpet and compel him to treat 
 fairly with his men. And if some mechanic or 
 other laborer acquires the habit of loafing on the 
 job, his fellow workmen will report him to the 
 Union and have his name stricken from the list 
 of its membership. 
 
 Then shall we have, not the enforced closed 
 shop against labor nor against capital, bringing 
 destruction and disaster to both, but the voluntary 
 
64 LABOR AND CAPITAL 
 
 closed shop against the unjust employer as well 
 as the worthless employee. 
 
 And so, will worker and employer work hand in 
 hand in the world's great field of endeavor. 
 
For God in His wisdom has so limited the use 
 of wealth that no man, however rich, can use 
 much more than his share. 
 
 Bacon and Beans 
 
 Mr. Cartwright's favorite short lecture. 
 
 Gentlemen : 
 
 The prosperity of any community depends upon 
 the condition of its laboring men and women. 
 
 Maximum degrees of prosperity can only be 
 realized when employment is general, wages just, 
 and conditions of employment such as tend to 
 promote contentment and tranquility. 
 
 "Hard times" are always accompanied by wide- 
 spread unemployment, which, in turn, diminishes 
 all lines of business activity. When the workman 
 is out of a job, sales fall away and collections are 
 difficult and uncertain. 
 
 Any investigation into the causes of "hard 
 times" involves serious consideration of the whole 
 subject of political economy. 
 
66 BACON AND BEANS 
 
 It was my interest in the welfare of laboring 
 men that caused me to devote much time to the 
 study of these questions. 
 
 In my earlier study of this subject, I reached 
 the conclusion that the centralization of wealth 
 into the hands of the few was rapidly becoming 
 a menace to free government. I regarded it as 
 an unmitigated evil. I thought that when one 
 man became enormously rich, many men must be 
 made correspondingly poor. 
 
 I believed that the one great overshadowing 
 economic problem of this age is how to procure a 
 wider and more equitable distribution of wealth. 
 The error is a very common one. Millions of 
 people are laboring under that same delusion. 
 Like them, I overlooked the fact that God, in His 
 providence, had solved that problem when He 
 laid the foundations of the race. 
 
 Before discovering my error, I made many 
 speeches about Rockefeller and Carnegie and 
 Morgan and other wealthy men, endeavoring to 
 show how the common people were being impov- 
 erished by their accumulations. 
 
 When a captain of industry makes an extra 
 
BACON AND BEANS 67 
 
 million dollars, whether by honest or by dis- 
 honest methods, he does not wear two suits of 
 clothes instead of one. Providence has ordained 
 that he cannot comfortably wear more than one 
 suit at a time. He does not wear a higher collar ; 
 God has limited the length of his neck. He does 
 not eat two slices of bacon or two pounds of beans, 
 instead of one, for his Creator refuses to increase 
 the capacity of his stomach to make it correspond 
 with the size of his bank roll. 
 
 The rich man neither does, nor tries to do, any 
 of these foolish things. 
 
 When he has made an extra million dollars, 
 he calls in the heads of departments and says, 
 "We have another million dollars to invest. 
 Increase the size of the Chicago plant to full 
 strength. How many men will it take?' 1 "Five 
 hundred men." "Put them to work. How many 
 do we need in St. Louis?" "About three hun- 
 dred." "In San Francisco?" "About the same." 
 "Put all of these men to work and take similar 
 action wherever our lines need extending." 
 
 Additional factories are built, another pipe 
 line is laid, an old factory is repaired and enlarged 
 
68 BACON AND BEANS 
 
 and new enterprises are started. Thousands of 
 men who would otherwise remain idle are given 
 useful employment and every dollar of that 
 million is paid out directly, or indirectly, to 
 labor. The business genius merely becomes the 
 superintendent of a bigger job, without increase 
 of salary. God will not permit him to use that 
 wealth. 
 
 Labor is helped, not hurt. 
 
 The harm comes when we harass and hamper 
 the active business man; when we threaten him 
 with prosecutions and perhaps fine him, or 
 threaten him with fines. When we badger and 
 abuse him without just cause. When we restrain 
 his legitimate activities. The great business man- 
 ager comes into the office with an extra 
 wrinkle in his face. He is discouraged. He calls 
 in the heads of departments and says, "Business is 
 bad. Everybody is against us. We seem to have 
 violated some technical provision of the anti- 
 trust law. The newspapers and politicians have 
 poisoned the minds of the people against us. We 
 must be careful in our expenditures. We must 
 retrench, or we will lose money on our invest- 
 
BACON AND BEANS 69 
 
 ments. Cut down the Chicago plant about 20 per 
 cent, and do the same with all other plants that 
 are not showing large net returns. Do not en- 
 large, any of our old factories nor start any new 
 enterprises until we are sure of our ground. The 
 labor situation is also unsatisfactory. It may give 
 us trouble. Some employers do not pay their 
 men fair wages, nor give them reasonable consid- 
 eration in other respects. This reflects upon all 
 of us indirectly. Moreover, while honest labor 
 leaders are fair, some of the labor agitators are 
 unreasonable in their demands. Let us postpone 
 the erection of that new factory at Pittsburgh 
 until the situation is clarified." 
 
 So thousands of men lose their employment, 
 and thousands more remain idle who could have 
 had employment if you and I had understood this 
 principle of political economy. 
 
 The next day the rich man wears just as good a 
 suit of clothes as ever, just as high a collar, he 
 eats as much bacon and beans as he wants, the 
 capacity of his stomach is undiminished. Only 
 his pride and his usefulness have been impaired. 
 The world has lost the added capital that would 
 
70 BACON AND BEANS 
 
 have been created and labor has lost another op- 
 portunity. The agitator takes up another collec- 
 tion and the politician gets a few more votes. 
 They are the profiteers of the system. 
 
 I do not mean by this, that the rich man should 
 go unwhipped for violations of the law. The rich 
 man as well as the poor man, should be put in jail 
 for dishonesty or violence, and the richer the man, 
 the severer should be his punishment. But there 
 should be no senseless persecution of the rich man 
 merely because he is rich, if he is doing his share 
 of the world's work. The rich man is just as 
 good as the poor man if he behaves as well, for we 
 are all made of the same kind of mud. 
 
 In the years gone by, the door of opportunity 
 has been open to all alike, and I do not want it 
 closed. 
 
 There are no fixed classes nor castes in Amer- 
 ica. The poorest boy born in the slums may, by 
 industry, economy and ability, become a star of 
 the first magnitude in the realm of finance. He 
 may even reach the highest position of trust and 
 power known to mankind the Presidency of the 
 United States. 
 
BACON AND BEANS 71 
 
 Working Class. 
 
 They have working classes in the old world 
 but not in America. In Russia, if your father 
 dug post holes, you and your children after you 
 would dig post holes. In Germany if your father 
 was a cobbler you and your children after you 
 would be cobblers. There was hardly a chance 
 in a million for one to rise above the station in 
 which he was born. But in America, all of the 
 great bankers, merchants, manufacturers, cap- 
 tains of industry, sprang from poverty. 
 
 They paid the price of success. 
 
 They did the thing they were doing a little bet- 
 ter than the other fellow was doing it ; they saved 
 a little each day ; they used their heads for some- 
 thing besides a hatrack. 
 
 Carnegie, Rockefeller, Hill, Schwab, Ford, 
 Doheny and Vanderlip were all poor boys. They 
 worked for wages. Most of the Presidents of the 
 United States rose from poverty. 
 
 Nearly all rich men of today were in the ranks 
 of labor yesterday, and the rich men of tomorrow 
 are in the ranks of labor today. 
 
 But they are not preaching the gospel of hate ; 
 
72 BACON AND BEANS 
 
 they are not sowing the seeds of discord. They 
 are using their brain, as well as their brawn, in- 
 dustriously and with telling effect. They are 
 distinguishing themselves by their faithful serv- 
 ice. They are saving a part of their earnings. 
 They are rising from one position to another. If 
 they are endowed with the power of organization 
 and direction, they will surmount all obstacles and 
 tower above their fellows. But they will never 
 wear more than one suit of clothes at a time, nor 
 will wealth increase their capacity for bacon and 
 beans. 
 
 God has limited the use of wealth and they can- 
 not go beyond that limit. 
 
 They will use their great wealth just as the rich 
 men before them used their great wealth. They 
 will extend their operations; they will endeavor 
 to make still more money; but by so doing they 
 will give useful employment to thousands of 
 workers ; they will increase the world's supply of 
 the necessities and comforts of life ; they will im- 
 prove the world's machinery and processes of 
 manufacture, thereby increasing the productive 
 power of men and so bring more of the comforts 
 and conveniences of life within the reach of all. 
 
BACON AND BEANS 73 
 
 Would we be better off if Rockefeller's wealth 
 were equally distributed to all of us ? He is esti- 
 mated to be worth one billion dollars by some, 
 although I am told by well-informed men that 
 this is an overestimate. Let us accept that sum 
 as correct. 
 
 There are one hundred million people in the 
 United States. Suppose we placed his property 
 in the hands of politicians who would use all 
 diligence in converting it into divisible form. 
 It would probably take several years. But sup- 
 pose it could be done in one year and that we 
 received our several shares in monthly instal- 
 ments. Your share woujd be eighty-three and 
 one-third cents per month. At the end of the 
 year you would have your ten dollars. Thou- 
 sands of men and women would have their em- 
 ployment taken away from them by the destruc- 
 tion of this great institution, and they would 
 be competing with you and me for a new job. 
 Rockefeller would eat as much bacon and beans 
 as he does now, but he would no longer be able to 
 render a great service to the world by cheapen- 
 ing products and bringing them to our very doors, 
 as his organization has done in the past. 
 
74 BACON AND BEANS 
 
 Suppose we let the government run Rockefel- 
 ler's business. Would not the government expand 
 that business out of its profits to meet the wants 
 of the growing population, just as Rockefeller 
 has done? Would not the government give em- 
 ployment to more and more people, just as Rocke- 
 feller has done? Then where would you and I 
 be any better off than we are now? If the gov- 
 ernment could run that great business more 
 economically and efficiently than Rockefeller has 
 run it, the world would be better off. But would 
 the politicians that the government would select 
 run that business better or more economically 
 than it has been run? Would there not be a lot 
 of political hangers-on and tax-eaters who know 
 nothing about the business, and would not the 
 final result be the same as it has been in all social- 
 ist colonies incompetence and mismanagement 
 until that great business fell to pieces and its 
 employees compelled to find employment else- 
 where ? Is not Rockefeller the cheapest and best 
 manager we can get? His only extravagance is 
 said to be attendance upon the Baptist Church; 
 his only dissipations, the building of colleges and 
 hospitals. 
 
BACON AND BEANS 75 
 
 He is not employing a hundred thousand men; 
 they are employing him, and dirt cheap at that. 
 
 Why should we hate those who have saved 
 and accumulated? Those who are thus able 
 to give us employment? Every item of prop- 
 erty save only the bare land represents some- 
 body's saving. Had no one saved anything from 
 the beginning of time there would not be an ax 
 nor a saw nor a hammer nor any kind of tool, 
 machine, or convenience, not even a dwelling 
 house, in existence today. Without them we 
 would be savages of the lowest type, gaining our 
 livelihood with bare hands. Without them there 
 would be no employers and no employment. 
 
 Thanks to Divine Wisdom, there have always 
 been some people who were wise enough to save 
 and accumulate. Wise enough to deny them- 
 selves the luxury of spending all they made. 
 Without them I could find no employment when 
 in need. Why should I be taught to hate them? 
 
 Are they not doing just what I would do if I 
 had the ability and the grit to save and stint my- 
 self as they did to get a start in life? Is it 
 because they can give me a job and enable me to 
 
76 BACON AND BEANS 
 
 make a living out of their wealth while the agi- 
 tator is making a living out of my wages ? Why 
 should I not try to do as they have done, and save 
 something each day that I may also give em- 
 ployment to someone less fortunate than myself ? 
 Why should I not rather hate those who have 
 been so selfish that they have denied themselves 
 nothing, have made no sacrifices, have spent all 
 their earnings, and who for that reason are un- 
 able to give to others employment or assistance 
 when in need? Why should I not hate the agi- 
 tator who is making his living out of me ? Is that 
 the reason he continues to agitate? 
 
 Some rich men are foolishly selfish and oppres- 
 sive, and some workingmen are not honest work- 
 ers, but God has so wisely limited the use of 
 wealth that the richest man cannot eat any more 
 than I can, neither can he wear any more clothes 
 without making himself uncomfortable. As his 
 accumulations increase he merely employs more 
 men. He works harder and for longer hours 
 than before. Why should I envy him? He is my 
 servant, providing me with employment and giv- 
 ing me and those like me the same opportunity 
 
BACON AND BEANS 77 
 
 that he himself had when he started in life. If 
 he dissipates, builds yachts, buys champagne, be- 
 comes a spender, his folly just takes that much 
 wealth away from him and gives it to workmen 
 who build the yacht or make the champagne. 
 
 He has the genius of direction and manage- 
 ment. Through this great gift he increases pro- 
 duction, raises the standard and lowers the cost 
 of living. The world falls heir to the results of 
 his genius. Without intending to be so, he is the 
 provider, the bread ticket, the servant and the 
 slave of the toiling masses. He is not a speech- 
 maker nor a good hand-shaker, but he renders a 
 greater service to the world than either of them. 
 
 He will endow colleges, found libraries, con- 
 tribute to medical and other scientific research, 
 build old people's and children's homes and hos- 
 pitals, just as the rich men of the past have done ; 
 for a just God directs the universe and He will 
 not permit him to use and consume that wealth 
 personally. If he, or his children, attempt to 
 do so, his fortune is dissipated and passes into 
 worthier hands. 
 
 The tall man reaches far up into the tree, 
 
78 BACON AND BEANS 
 
 gathers the choicest fruit and most of it, but his 
 great height and his long arms do not enable 
 him to eat more than his share. He eats what he 
 requires and passes the surplus on to his fellows. 
 The more he gathers the more he hands down to 
 others. His ambition, call it greed if you will, 
 causes him to gather all he can reach, but the 
 limitations which nature has placed upon his 
 ability to consume, compel him to feed his less 
 competent brothers below. A foolish world has 
 been trying to hamper and restrain his efforts 
 to cut off his hands to shorten his arms for- 
 getting that the ungathered fruit will rot upon 
 the trees a loss to all mankind. 
 
 But few men and women are endowed with the 
 genius of music, of art, or of oratory, and so it 
 is with the genius of business management. 
 Financial reports show that out of the millions 
 of business enterprises that are started, only ten 
 per cent succeed. Only a fraction of ten per cent 
 succeed in notable degree. 
 
 The gift of masterful management, organiza- 
 tion, direction, successful control, is as rare as 
 the gifts of music and of art, and like them can 
 
BACON AND BEANS 79 
 
 only be developed by intensive training and inde- 
 fatigable industry. 
 
 The great captain of industry has vision 
 initiative. He reaches far above his fellows and 
 opens up new fields of endeavor new enterprises 
 new methods new comforts new luxuries 
 and passes them on to others. Hamper and re- 
 strain him and you deprive the world of the fruits 
 of his genius. 
 
 Instead of cutting off the arms of the tall man 
 let us put the short man on stilts. 
 
 Educate and train the incompetent. Teach 
 them industry, economy, and skill. 
 
 I no longer worry about the distribution of 
 wealth. I know that industry and economy will 
 give each man his share to use, and if I cannot 
 be as rich as Rockefeller, neither am I burdened 
 with the weight of his responsibility. 
 
 I can sleep more soundly and eat more bacon 
 and beans than he can. 
 
Would you like to live in a land where there are 
 flowers without fragrance, birds zvithout song, 
 and men without ambition? 
 
 Freak Laws 
 
 Address of Mr. Cartwright at the Annual Banquet of the 
 
 Merchants and Manufacturers Association of 
 
 Los Angeles, Cal. 
 
 Mr. President and Gentlemen: 
 
 The world is going some just now. We are 
 moving at a rapid pace and in a strange direction. 
 Everything is topsy-turvy, upside down and in- 
 side out. Everybody grumbles at the high cost 
 of living, and everybody who has anything to sell 
 is asking a higher price. The farmer wants more 
 for his wheat, the butcher more for his meat, and 
 the man more for his muscle. So the cost of living 
 goes up. 
 
 Higher wages, shorter hours and diminished 
 output are the universal demands of labor. 
 Wages, hours and output determine the cost of 
 
FREAK LAWS 81 
 
 production and distribution, and the cost of pro- 
 duction and distribution is the basic factor in 
 establishing the cost of living. So the cost of 
 living goes up and up. 
 
 Labor is trying to lift itself over the fence with 
 its own bootstraps, but it can't be done. We wish 
 it could be done. But, unfortunately, the higher 
 the wages, the shorter the hours, and the smaller 
 the output, the higher the cost of living. 
 
 All the nations want a place in the sun, so every 
 nation is trying to kill off the people of every 
 other nation in order that all of the nations may 
 have that place in the sun. Labor and capital 
 both want prosperity, so labor fights capital and 
 capital fights labor, and if either side wins out, 
 both sides lose out, for their interests are mutual 
 and they rise and fall together. Anything that 
 hurts one hurts the other. 
 
 If labor and capital ever spend half as much 
 time fighting for each other as they have been 
 spending in fighting against each other, there 
 won't be an idle dollar nor an idle man. 
 
 When they learn to co-operate using the square 
 deal both ways, when they learn to figure it out 
 
82 FREAK LAWS 
 
 instead of fighting it out, the problem will be 
 solved. 
 
 Then the agitator will have to quit agitating 
 and the demagogue will have to quit dema- 
 goguing to earn an honest living. 
 
 I am told by your secretary that your organi- 
 zation is unalterably committed to the policy of 
 the open shop. That you will never under any 
 circumstances, or condition, surrender this prin- 
 ciple. Every true and loyal friend of labor will 
 rejoice to hear it. Suppose all of the employers 
 of the United States should unite and form a 
 National Federation of Employers. This you can 
 readily do, and at no great expense, largely 
 through the help of commercial bodies of business 
 men now in existence. 
 
 Then suppose you declare a closed shop against 
 Union Labor. That is what you can do, and what 
 I fear you will do if organized labor insists upon 
 the closed shop. The closed shop gives dictatorial 
 power to those who are able to enforce it. Dicta- 
 torial power may be used wisely and beneficially 
 for a time, but in the end it creates a Frankenstein 
 who rises to destroy his creators. 
 
FREAR LAWS 83 
 
 The closed shop enforced by organized labor 
 would gradually, though unintentionally, extend 
 its powers, rules, restrictions and surveillance un- 
 til it resulted in the closed factory closed oppor- 
 tunities, just as it has in Australia, propagandist 
 teachings to the contrary notwithstanding. 
 
 The closed shop enforced by employers against 
 labor would be even more disastrous. It would 
 take away the hopes, crush the spirit of the toiling 
 millions and tend to establish permanent castes in 
 organized society. The closed shop savors too 
 much of German Autocracy. It shuts the door 
 of opportunity to all but the elect. I am opposed 
 to the closed shop on either side. It violates a 
 great principle of human right. 
 
 The closed shop rings down the curtain upon 
 the liberties of men. 
 
 We have seen what the closed shop has done for 
 Australia. The poor remain poor. The door of 
 opportunity is locked and barred. 
 
 Wages are low as compared with this country, 
 yet the government is constantly called upon 
 to project new enterprises to provide work for its 
 idle men. They have a theory that anyone who 
 
84 FREAK LAWS 
 
 makes a profit by employing labor is guilty of 
 "exploiting" labor. So they have rules and laws 
 and regulations that make it very difficult, if not 
 impossible, for the employer to make a profit. 
 You will not employ men unless you think you 
 will make a profit by employing them ; neither will 
 I, and neither will our Australian friends. So 
 laboring men in Australia have to seek, and do 
 seek, government employment, and at a very low 
 wage. 
 
 Ask their great leaders about the cause of the 
 poverty and they will tell you that God gave 99 
 per cent, of the wealth to America and only 1 per 
 cent, to Australia. Why lay the blame on God? 
 Not so many years ago Australia was prosperous. 
 They sought to lighten the burdens of the poor 
 man by destroying the opportunities of the richer 
 man, and that is the wrong way out. They tried 
 to equalize the distribution of wealth by law. 
 They agitated and legislated and taxed and regu- 
 lated the business man out of his business and the 
 workingman out of his job. They forgot that 
 enterprises will not develop without the prospect 
 of reward. No prize, no race! No profit, no 
 employment! No industry! 
 
FREAK LAWS 85 
 
 To the man without ambition, the man who is 
 content for himself and his children to remain 
 wage-earners to the end of time, such conditions 
 may be alluring. It is to the man with red blood 
 in his veins, and a spring in his step, who wants 
 to do something and be something in this world, 
 who is willing to carve out his own fortune with 
 his own head and his own right arm, that the 
 world must look for advancement 
 
 The closed shop controls, money will not invest, 
 and that is what's the matter with Australia. The 
 same blighting influence is at work in America, 
 and especially in California. It is misguided, yet 
 in large measure sincere, but all the more insid- 
 ious because it is sincere. 
 
 Any law that openly hurts labor is so repug- 
 nant that it cannot pass, yet our law books are 
 full of laws that hurt capital, and thus indirectly 
 hurt labor by limiting, hampering and discourag- 
 ing investors that give employment to labor, and 
 there is an insane clamor for more such laws. 
 California has passed so many untried, ill-consid- 
 ered, experimental laws in the last ten years that 
 it will go down in history as the keystone to the 
 arch of half-baked ideas. 
 
86 FREAK LAWS 
 
 Conservation 
 
 Not so long ago Amos Pinchot, a well-meaning 
 millionaire philanthropist, proclaimed the gospel 
 of conservation. "Conserve America's Natural 
 Resources" came like a call to duty from the lungs 
 of the universe. 
 
 Nobody knew exactly what it meant, but it 
 sounded good and everybody fell for it. The 
 nation proceeded to conserve its forests, its water 
 power, its undeveloped oil lands. 
 
 California never loses an opportunity to try 
 anything called "Reform," so she led the proces- 
 sion of progressive states for conservation. 
 Among other laws along this line California cre- 
 ated a Water Commission with wide discretion- 
 ary powers and fat salaries, and woe to the man 
 or corporation that dared to appropriate and use 
 water for power or other purposes without com- 
 plying with vexatious and annoying rules and 
 restrictions. 
 
 The President (President Taft) withdrew mil- 
 lions of acres of oil-bearing lands from location. 
 We all quit locating watersites, especially in Cali- 
 fornia. There were no more hydro-electric 
 
FREAK LAWS 87 
 
 power developments. Those who dared to drill 
 and develop oil on lands withdrawn were 
 promptly prosecuted by the government, and 
 everybody was happy. 
 
 The raging mountain torrent swept onward to 
 the sea unused. The lakes of oil lay undis- 
 turbed in subterranean caverns. The politicians 
 had made a complete job of it. 
 
 By 1913 millions of willing dollars lay idle and 
 uninvested and hundreds of thousands of willing 
 hands were searching for something to do. 
 But now! In 1918 there is a great fuel shortage. 
 People in the middle west are freezing and in New 
 York, too. The Fuel Administration finds it nec- 
 essary to close down our factories at a loss of 
 $100,000,000 per day. Ah! These corporations 
 have failed in their duty. The railroad commis- 
 sion says we must co-ordinate them. The poli- 
 tician thinks "We ought to create another 
 commission to take these corporations in hand." 
 
 Bosh and nonsense ! If the politician had kept 
 his nose out of business and allowed the activities 
 of our people to develop along natural lines with- 
 out meddlesome, nosey, expensive political inter- 
 
88 FREAK LAWS 
 
 ference, we would have had an abundant supply 
 of oil and gasoline at reduced prices. We would 
 have extracted electric light, heat and power from 
 a thousand mountain streams. Millions of dollars 
 would have been invested and spent in California 
 and thousands of men would have had fruitful 
 employment. But neither man nor money will 
 work full blast under political restraint. 
 
 Regulation 
 
 During the late summer of 1914, 1 happened to 
 be in the thriving little city of Petaluma, when a 
 great political gathering was being addressed by 
 two politicians of nation-wide fame. I attended 
 the meeting. The hall was crowded almost to 
 suffocation. The speakers, as usual, followed the 
 lead of the agitator. They were loud in their de- 
 nunciation of corporations and of big business. 
 They were visibly agitated when making their 
 sympathetic appeal for the vote of the working- 
 man. One of the speakers, with clenched fists 
 and ringing voice, told how the corporations had 
 been driven out of politics in California. The ap- 
 plause was deafening. He might have added that 
 
FREAK LAWS 89 
 
 some of the corporations were also driven out of 
 business and that the increasing army of the 
 unemployed was already the largest in the history 
 of the State, but he did not; he seemed to have 
 overlooked this telling point. The audience was 
 with him to a man. The fusillade of adjectives 
 and adverbs swept everything before it. 
 
 I tried to analyze that speech. Tried to deter- 
 mine the reason for its popularity its compelling 
 force. It was the gospel of hate through and 
 through, propounded with all of the eloquence of 
 an able exponent. The doctrines presented were 
 false in foundation, false in theory, a bundle of 
 sophistries, but lurid, skillful, captivating in de- 
 velopment. It was the towering personality of the 
 man his splendid stage presence his torrential 
 delivery. He was a fighter, not a philosopher. I 
 do not mention his name, I never discuss men. 
 They are unimportant. I prefer to discuss meas- 
 ures. Men are mortal and they die and the worms 
 eat them ; principles live forever. 
 
 The next morning, while I was at breakfast in 
 a downtown restaurant, four workingmen came 
 in. From their dress and appearance they were 
 
00 FREAK LAWS 
 
 evidently mechanics, probably engineers. One 
 of them came up and spoke to me. He proved to 
 be a boyhood schoolmate, whom I had not seen 
 for over thirty years. He introduced me to his 
 companions and they immediately brought up 
 the subject of politics. They asked me if I had 
 attended the meeting of the night before. I told 
 them that I had. Then they asked me if I did not 
 think the speeches were wonderful. I said "Yes, 
 from the standpoint of vote-getting, they were the 
 most wonderful speeches I have ever heard. But/' 
 
 1 said, "have you ever thought of the other side of 
 these questions ?" They did not know there was 
 any other side. "Well," I said, "I did not know 
 there was any other side until a few years ago, 
 but there is another side." Then I asked them, 
 "What did we hear last night? Now let us cut 
 out the adjectives and adverbs, the pounding of 
 the tables, the impressive gesticulation, and get 
 right down to brass tacks. What did we hear?" 
 
 "Why! They reduced railroad freights and 
 fares millions of dollars." "Yes," I said, "we 
 heard that ; what else did we hear ?" 
 
 "They reduced Wells Fargo Express Company 
 
FREAK LAWS 91 
 
 tariffs hundreds of thousands of dollars." "We 
 heard that," I replied. "What else ?" 
 
 "They reduced water rates, and telephone rates 
 and electric light and power rates, millions upon 
 millions. They drove these conscienceless cor- 
 porations out of politics. The people now rule the 
 state." They couldn't think of anything more. 
 The figures showed reductions in freight, fares, 
 tariffs, water rates, light rates, power rates, etc., 
 amounting to a total of $7,000,000.00, according 
 to these speakers. Then I said to these four 
 workingmen, "Seven millions of dollars saved to 
 the great people of the State of California that 
 would otherwise have gone into the insatiable 
 maw of these greedy and heartless corporations. 
 All praise to these champions of the people's 
 rights!" 
 
 Then I asked them, "Have your wages been 
 raised?" "No." "Have you any more money in 
 the bank than you had before?" "No." "Can 
 you buy a can of corn, or beans, or a piece of 
 bacon any cheaper than you could before ?" "No, 
 things have gone up in price." "Are jobs any 
 more plentiful than they were before?" "No, 
 
92 FREAK LAWS 
 
 the country is full of idle men looking for work." 
 That was before the war had absorbed the army 
 of unemployed. The highways and byways of 
 the State were crowded with idle men. 
 
 Then/' I said, "you did not get your share of 
 that seven millions of dollars, did you ?" 
 
 They admitted they had not. One of the men 
 spoke up and said, "Boys, I believe I begin to see 
 things. I believe we were listening to a couple 
 of keen politicians last night." Then I said, "I 
 am a stranger to all but one of you, but whatever 
 is good for one of us indirectly helps all of us and 
 if anything hurts one of us the rest of us are in- 
 jured indirectly by that same hurt. The same 
 thing is true in business." 
 
 "Now we were told last night about driving 
 the corporations out of politics and about saving 
 that seven million dollars. But what happened?" 
 I said, "I don't know what happened in Petaluma, 
 I do not live here. But I do know what happened 
 in Sacramento. That is where I live. The rail- 
 road company promptly discharged one-half of 
 the mechanics in their big shops, and put the 
 other half on three days' pay instead of six. 
 
FREAK LAWS 93 
 
 Whether the railroad company adopted that 
 course from necessity, or whether for purposes of 
 retrenchment, or for political effect, I do not 
 pretend to know. But the fact that these men 
 were laid off is a matter of history. These men 
 are now hunting for work. They may even com- 
 pete for your jobs." 
 
 At this point one of the four men turned to the 
 other and said, "That's so, Bill, two of those 
 mechanics were up here last week looking for 
 work." 
 
 "That is not all. Wells Fargo & Co. discharged 
 more than one- third of their employees through- 
 out their entire system, and many other corpora- 
 tions took similar action. These men joined the 
 army of the unemployed. But it does not stop 
 there. The groceryman who had been supplying 
 these employees and their families with food 
 found that his paying customers had fallen off 
 and that he had an extra clerk; and so with the 
 merchant, the boot and shoe man, the druggist, 
 the butcher, the baker, the candles tickmaker, and 
 all these men became involuntary members of the 
 unemployed. Now who paid that seven millions 
 
94 FREAK LAWS 
 
 of dollars?" One of the men, quick as a flash, 
 exclaimed, "LABOR!" and another immediately 
 added, "Yes, every d n dollar of it." 
 
 Then I said, "I was not present when the 
 directors of these various corporations held their 
 meetings, but I know what took place almost as 
 well as if I had been an eye-witness. 
 
 "The president sat at the end of a long table, 
 with the secretary on his left. The directors occu- 
 pied seats along the sides of the table. The 
 secretary read his report showing reductions, 
 reductions, reductions, higher costs of mainte- 
 nance, labor demanding higher wages and shorter 
 hours, losses, losses, on every side as compared 
 with former years. As he read that report the 
 faces of the directors grew longer and longer 
 until they looked like a funeral procession sitting 
 around that table, and when the report was fin- 
 ished, one director got up and said, 'Mr. Presi- 
 dent, we are up against a game we can't beat. 
 They've got us. We're down and out. The agi- 
 tator has won the fight. The newspapers, the 
 demagogue and the people are all against us. 
 The people have been misinformed, misguided, 
 
FREAK LAWS 05 
 
 led around by the nose, but they don't know it 
 and we cannot convince them of it." 
 
 " 'Mr. Secretary, where can we save something 
 out of the wreck? Where can we economize?' 
 The Secretary said, 'You can't economize. You 
 have to have your plant, your equipment, your 
 supplies, and they are rising in price ; there is no 
 place to economize. You might turn off a few 
 men, but you need more men than you have now." 
 'Well, turn them off. It is a choice between 
 economy and bankruptcy/ And so they turned 
 off every employee that could possibly be spared, 
 and thus began the army of the unemployed. 
 
 "After the meeting was over these same di- 
 rectors smoked just as fine a cigar as they had 
 been accustomed to. This was only one of their 
 many investments. No man of affairs puts all of 
 his eggs into one basket. They would have been 
 better pleased if that particular investment had 
 been a good income producer. Men like to have 
 their enterprises succeed ; but they took their loss 
 philosophically. If that investment didn't pay, 
 their other investments would." 
 
 "The next day these directors wore just as 
 
96 FREAK LAWS 
 
 good a suit of clothes as ever; just as high a 
 collar; just as red a necktie; they ate their slice 
 of bacon and their pound of beans; their wives 
 dressed just as becomingly and entertained just 
 as sweetly as if that venture had made millions." 
 
 "But the mechanic, the workingman what 
 about him? He is hunting for a new job. His 
 children are going barefooted to school, and the 
 merchant has lost part of his trade." 
 
 One of the men turned to my old schoolmate 
 and said, "Stewart, I had never thought of it in 
 that light before," and Stewart replied, "Neither 
 had I." 
 
 "Well, boys," I said, "I am not surprised. I 
 have been a student of public questions, and par- 
 ticularly of political economy, for over twenty 
 years, working always, as I thought, in the inter- 
 ests of labor, and I only began to see the light a 
 few years ago." 
 
 "But," I said, "let us pursue the inquiry fur- 
 ther. Suppose we had encouraged and protected 
 capital instead of doing cheap politics. What 
 would have been the result?" 
 
 "Take the hated railroad as an example. 
 
FREAK LAWS 97 
 
 Everybody hates the railroad. I fought them in 
 politics during my whole public career, for they 
 have no business in politics. But they have a right 
 to a square deal. Suppose we had dealt liberally 
 with the railroads, even allowing them to make 
 a sur-profit of say, $10,000,000.00. Outrageous, 
 of course, to allow the railroad to rob the people, 
 but what would have happened? The Directors 
 would have held their meeting just the same, and 
 the secretary would have read his report. But 
 it would have been a report of profits, profits on 
 every hand, instead of losses $10,000,000.00 to 
 the good. And as he read his report the faces of 
 the directors would have spread sidewise instead 
 of lengthwise, until they would have resembled a 
 bunch of full moons sitting around that table. 
 Then that same director would have taken the 
 floor, but he would have said, "Mr. President, 
 railroading pays. We've got a good business. 
 Let us take care of it. Let us put some more men 
 in our shops and take better care of our rolling 
 stock. Five hundred men put to work. Let us 
 put more men in our section gangs and level up 
 and ballast our roadbeds. It will be easier on our 
 
98 FREAK LAWS 
 
 rolling stock and we won't have so many acci- 
 dents. Railroading pays. Another five hundred 
 men put to work. Let us build a new depot here 
 in Sacramento ; the old one is rotting on its foun- 
 dation a disgrace to the city. Another five hun- 
 dred men put to work. Let us build a new line 
 into Antelope Valley. The people up there need 
 the service. It won't pay now, but it will be a 
 feeder to our main line and it will pay after a 
 while. We've got the money. Let us take care 
 of the business. It pays/' 
 
 "So thousands of men are put to work. Two 
 jobs hunting one man, instead of two men hunting 
 one job, and after the meeting these directors 
 would not smoke any better cigars nor wear any 
 higher collar, nor any redder necktie. They could 
 wear only one suit of clothes at a time, and could 
 eat but one slice of bacon and one pound of beans. 
 Every dollar of that ten millions would have been 
 paid out to labor, directly or indirectly. 
 
 "For God, in His wisdom, has so limited the 
 use of wealth that no man, however rich, can use 
 much more than his share." 
 
 One of the men said, "I've learned one thing 
 
FREAK LAWS 99 
 
 this morning that I am not going to forget. Labor 
 and capital must quit fighting. They must stand 
 together." 
 
 We all agreed. And there in that early morn- 
 ing hour, across the breakfast table in that little 
 restaurant, the five of us shook hands and took a 
 pledge that we would spread this doctrine of co- 
 operation, or mutual helpfulness, instead of 
 mutual hatefulness, whenever and wherever we 
 had the opportunity. 
 
 Away with this gosepl of hate! Take it back 
 to the age of barbarism from which it came. Let 
 it sound its war cry, its call to arms. We will 
 answer with a trumpet blast from the pulpit of 
 civilization. 
 
Thoughtful men and women, watching the 
 progress of this movement, conceived in right- 
 eousness by the early reformers, but prostituted 
 to power and pay by the agitator and the dema- 
 gogue, asked themselves the question, "What 
 shall the harvest be?" 
 
 Agitators and Demagogues 
 
 Mr. Chairman : 
 
 Two grave internal problems now vex the State 
 and Nation ; the one is political, the other is indus- 
 trial; but they are so blended together that the 
 remedy must be applied to both in order to reach 
 either. 
 
 It is as if two separate poisons had been 
 injected into the body politic, at its most vulner- 
 able point midway between labor and capital 
 and in such close proximity as to produce one 
 great gaping, virulent ulcer. Both poisons must 
 be eradicated before we can hope for a cure. 
 
AGITATORS AND DEMAGOGUES 101 
 
 I learned in the study of medical jurisprudence 
 that McBurney's point is located midway between 
 the umbilicus and the superior right ileum, which 
 being interpreted means half way between the 
 navel and the right hip bone. It is a most vulner- 
 able point, for there are no bones to dull the keen 
 edge of the surgical instruments. It is here that 
 the surgeon makes his incision to remove your 
 vermiform appendix and the contents of your 
 pocketbook. 
 
 So with the agitator and the demagogue. They 
 injected their deadly poison at the most vulner- 
 able point in the body politic, midway between 
 labor and capital. Agitators and demagogues, 
 also, extract the contents of our pocketbooks. 
 
 Irrepressible Conflict 
 
 For many years the world has been overrun 
 with speakers and writers proclaiming the false 
 doctrine that worker and employer are natural 
 enemies; that they are engaged in an irrepressi- 
 ble conflict; that labor wants high wages, while 
 capital wants low wages, and that the struggle 
 
102 AGITATORS AND DEMAGOGUES 
 
 that began before Moses was hidden in the bull 
 rushes on the banks of the Nile, must rage on 
 through the centuries to come. 
 
 What folly! The same competition exists be- 
 tween men in every relation of business life. The 
 merchant buys the farmer's eggs, butter, grain 
 and other produce at the lowest price that he can 
 induce the farmer to accept. The farmer sells his 
 produce to the merchant at the highest price that 
 he can compel the merchant to pay. The farmer 
 buys his groceries and other supplies from the 
 merchant as cheaply as he can get them, while 
 the merchant charges the farmer as much for 
 these articles as he can compel the farmer to pay 
 without losing the farmer's trade. 
 
 Here again we have the so-called irrepressible 
 conflict. According to the theories of these false 
 economists the farmer and the merchant are nat- 
 ural enemies. They ought to burn each other's 
 property; they ought to impoverish each other. 
 
 Again, what folly ! The welfare of the farmer 
 and the merchant are interdependent. Their in- 
 terests are so interwoven that an injury to one is 
 an indirect injury to the other. If the farmer 
 
AGITATORS AND DEMAGOGUES 103 
 
 goes broke he cannot pay his grocery bill If the 
 merchant goes broke he canont buy the farmer's 
 produce nor furnish the farmer with groceries 
 and other provisions. 
 
 The interests of the farmer and of the merchant 
 are mutual, though not identical, just as the in- 
 terests of worker and employer are mutual though 
 not identical. Any loss or injury to one is an in- 
 direct loss or injury to the other. 
 
 These early writers and speakers were earnest 
 and honest, but they had been educated in the 
 school of hate; they had learned the lessons of 
 hate; they preached the gospel of hate. There 
 were then, and still are, many wrongs to be 
 righted, many errors to be corrected. They 
 labored in a righteous cause, earnestly, but not 
 intelligently. Instead of righting wrongs and cor- 
 recting errors, they led us into a greater wrong, 
 a more grievous error. Instead of curing the 
 disease of the body politic, they spread the conta- 
 gion of hate the deadliest of all diseases. They 
 were eloquent ; they were convincing. It was easy 
 to picture the arrogance of wealth, to depict the 
 sufferings of the poor. There were and still are 
 
104 AGITATORS AND DEMAGOGUES 
 
 cases of such idiotic arrogance; there were and 
 still are cases of suffering among the deserving 
 poor. But the gospel of hate aggravates both. 
 Yet the movement grew in popularity; this false 
 philosophy gained many converts. 
 
 The Agitator 
 
 Finally the grafting agitator saw his oppor- 
 tunity. He joined the movement; he made fiery 
 speeches and took up collections. He published 
 so-called labor newspapers and journals to the 
 great injury of sincere labor newspapers and jour- 
 nals. He posed as the friend of organized labor 
 and got the workingman's money. He got the 
 business man's money from the fear of strikes 
 and boycotts. 
 
 Agitating paid. The agitators increased in 
 number. They preached the gospel of hate and 
 are still preaching it; they sowed seeds of dis- 
 cord and are still sowing them; they reaped a 
 golden harvest and are still reaping. 
 
 More discord spells more money and power for 
 the agitator. 
 
 There are many earnest and sincere labor lead- 
 
AGITATORS AND DEMAGOGUES 105 
 
 ers, but sometimes the agitator becomes a labor 
 leader. He works up a strike; he wants to show 
 his loyalty to labor; besides, labor furnishes a 
 strike-fund and he handles it, directs its use. 
 Moreover, the strike may be settled privately and 
 he may get a fee from the employer. Many false 
 labor leaders have grown rich in this way. 
 
 Labor suffers grievously, but labor's extremity 
 is the agitator's opportunity. 
 
 The Demagogue 
 
 Then came the wily politician with his ear to 
 the ground and his eye on the weather vane. He 
 heard the rumblings of this growing discontent. 
 The weather vane indicated the direction of the 
 political wind, and he spread his sails to the 
 breeze. 
 
 The banker succeeds by securing a large num- 
 ber of depositors, so he conducts his business with 
 a view to pleasing depositors. The merchant suc- 
 ceeds by securing a large number of paying cus- 
 tomers, and he endeavors to so manage his 
 business as to attract customers. The politician 
 succeeds by securing a large number of votes, so 
 
106 AGITATORS AND DEMAGOGUES 
 
 he adopts a policy that will, in his judgment, 
 appeal to the largest number of voters. 
 
 There are more laborers than employers. The 
 politician thought the agitator controlled the 
 labor vote. So the politician joined the agitators 
 with all the zeal of a new convert. He poured 
 out the fires of his soul in bitter invective against 
 big business, for big business has few votes. He 
 out-agitated the agitator. The corporation be- 
 came the special target for all the crooked shafts 
 political cunning could spring, for the corporation 
 has no soul to damn, no flesh to kick, no vote to 
 cast. 
 
 Thoughtful men and women, watching the 
 progress of this movement, conceived in right- 
 eousness by the early reformers, but prostituted 
 to power and pay by the agitator and the dema- 
 gogue, asked themselves the question, "What 
 shall the harvest be?" 
 
 The swelling tide of discontent beat incessantly 
 against the bulwarks of organized society, rising 
 higher and higher with each passing year, until 
 today it threatens the very foundations of orderly 
 government. 
 
AGITATORS AND DEMAGOGUES 107 
 
 The position of the employer becomes more and 
 more precarious and uncertain. Capital is now 
 reluctant to invest in enterprises that require the 
 employment of men, and still more reluctant to 
 invest in undertakings where public regulation 
 may follow. 
 
 Fortunately for the agitator and the dema- 
 gogue, the full fruitage of their labor is obscured 
 by the carnage of the nations. The world war 
 has changed the whole course of industrial events 
 and destroyed all ordinary means of calculating 
 from cause to effect. 
 
 But in 1913 and 1914, before the war com- 
 menced, our State and Nation were filled with an 
 army of unemployed. Industry was prostrated, 
 capital was idle and laborers were searching for 
 work. 
 
 We had agitated, legislated and regulated the 
 business man out of his business and the work- 
 ingman out of his job. 
 
 Idle dollars made idle men. 
 
 The war of the nations created a demand for 
 labor and the products of labor commensurate 
 with the gigantic character of the struggle. War 
 
108 AGITATORS AND DEMAGOGUES 
 
 is always a period of high consumption and low 
 production. Millions of men have been taken 
 from the actve industries where they were pro- 
 ducing the necessities and comforts of life, to 
 take their places in the ranks. 
 
 Thousands of factories that were making 
 articles for the convenience and comfort of man- 
 kind, have been converted into war plants for the 
 manufacture of engines of destruction. 
 
 All of the wars of history pale into insignifi- 
 cance in comparison with the present. The de- 
 mand for labor quickly absorbed the army of the 
 unemployed. The demand was everywhere 
 greater than the supply. 
 
 Then we began to see the effects of the gospel 
 of hate. Strikes and lockouts multiplied on every 
 hand. One wing of labor stood sullen and un- 
 willing. In this crisis of our nation's history, for 
 the first time since the Declaration of Independ- 
 ence, a portion of American labor refused to 
 perform its duty. Let us not blame labor. Let 
 us blame ourselves. While the great majority of 
 our rich men are plain and unpretentious, hard 
 working and considerate of the welfare of their 
 
AGITATORS AND DEMAGOGUES 109 
 
 employees, here and there we find a wealthy snob, 
 particularly among the sons and daughters of 
 those great financiers who by industry and busi- 
 ness genius have built up large enterprises. 
 
 These snobs, although few in number, by their 
 despicable insolence and arrogance have fur- 
 nished the agitator with his leading argument. 
 He pictures all rich men, all employers, as inso- 
 lent and arrogant, and quotes news items from 
 the daily press about monkey dinners and drunken 
 joy rides, and so stirs up a feeling of resent- 
 ment against all wealth, and the politician says 
 "Me too." 
 
 While the agitator and the demagogue were 
 poisoning the minds of the people with false doc- 
 trines and sophistries, you sat supinely by, utter- 
 ing no word of protest. 
 
 The agitator from his soap box and the dema- 
 gogue from his political stump, surcharged the 
 very atmosphere with foul diseases and their 
 statements went unchallenged. 
 
 Then came a great labor leader pledging the 
 loyalty of American labor in the hour of our 
 Nation's peril. 
 
110 AGITATORS AND DEMAGOGUES 
 
 I say to that labor leader, "Agitators have car- 
 ried the bombshell too long. They lighted the 
 torch too many years ago. Their spitting fuse 
 has almost reached the powder magazine. The 
 situation created by them and their kind has 
 passed beyond your control. They 'sowed to the 
 wind; we are reaping the whirlwind/ ' 
 
 Saner men, men with a broader vision, must 
 undo what they have done. We do not question 
 the righteousness of their motives. That ques- 
 tion we leave to their conscience and their God. 
 We condemn only the insanity of their methods. 
 The wrongs of the world have been visualized for 
 centuries. They were not blind, so they saw 
 them. But the causes of these wrongs are more 
 remote. They do not appear upon the surface, so 
 they did not see them. They foolishly believed 
 that higher wages and shorter hours would af- 
 ford relief. They sought to apply their remedy 
 by organized force. To perfect the organization 
 of force, they found it necessary to preach the gos- 
 pel of hate ; so did the Emperor of Germany. 
 
 Let us cherish the hope that the day is not far 
 distant when the agitator, who preaches the gos- 
 
AGITATORS AND DEMAGOGUES 111 
 
 pel of hate, who sows seeds of discord and discon- 
 tent, who leads his deluded followers to a harvest 
 of vengeance, may be driven from his soap box 
 by the very men whose cause he pretends to 
 espouse. 
 
Heal the breach that ought never to have 
 existed between capital and labor, remove the 
 shackles that politics has placed upon the limbs 
 of industry, and the blue dome of heaven will 
 shelter a land without an idle dollar or an idle 
 man. 
 
 Regulation of Business by Law 
 
 Mr. President : 
 
 I am not and shall not become a candidate for 
 office. There is not an office in the gift of the 
 people that I would accept. 
 
 I do not own a single share of stock in any 
 public service corporation, nor do I receive any 
 compensation or profit of any kind from any 
 public service corporation, either directly or indi- 
 rectly. I own some property upon which I receive 
 an income, but no stock likely to be affected by 
 legislation, and I am not going to take up a col- 
 lection. So, I am in a position to tell the truth 
 and to call a spade a spade. 
 
REGULATION OF BUSINESS BY LAW 113 
 
 In nineteen hundred and twelve, I became the 
 manager of the Pacific National Fire Insurance 
 Company of Sacramento, a corporation that had 
 been organized for the purpose of keeping Cali- 
 fornia money in California, a matter of very 
 great importance to our workingmen. Our plan 
 was to sell the stock of the company in small 
 blocks to a selected list of prominent business 
 men in each of the community centers of this and 
 other western states. This, we believed, would 
 insure the immediate success of the company and 
 enable us to accomplish the primary purposes for 
 which the company was launched, without vexa- 
 tious delay. 
 
 In order to secure subscriptions to the capital 
 stock of our company, I found it necessary to in- 
 terview many western business men. This gave 
 me an unusual opportunity to learn the attitude 
 of bankers, merchants, manufacturers and other 
 financiers, not only upon business matters, but 
 upon many important public questions. Many 
 of these interviews were not only highly interest- 
 ing, but they were of exceptional educational 
 value. 
 
114 REGULATION OF BUSINESS BY LAW 
 
 I shall never forget an interview I had with a 
 well-known and highly respected financier of San 
 Francisco. It was in the month of January, 1914. 
 
 Like most genuinely big business men, I found 
 him to be unassuming, easily approachable and 
 an attentive listener. I laid the plans and pur- 
 poses of our company before him. He went into 
 every phase of the question at great length. We 
 consumed the whole afternoon in the discussion. 
 At the conclusion of the interview he turned to 
 me and said, "Mr. Cartwright, you have the best 
 business proposition that has been presented to 
 me in years. I agree with you that the company 
 will be a fine thing for California and that by 
 keeping money at home it will be of great benefit 
 to the laboring men of the state. I agree also that 
 your company will make money barrels of money 
 more money, probably, than you expect. Your 
 plans are well thought out. They will succeed, 
 
 "Now, after making that statement you will be 
 surprised and disappointed when I tell you that I 
 will not invest in your company." 
 
 I was disappointed, and I said so. Here was a 
 shrewd business man with a trained mind, who 
 
REGULATION OF BUSINESS BY LAW 115 
 
 frankly stated that our proposition was sound, 
 that it would make more money than anything 
 else that he had in mind, yet he would not invest. 
 I asked hm to explain. 
 
 "Well," he said, "we owned a lot of railroad 
 stock, a lot of stock in the Pacific Gas and Electric 
 Company, some Wells Fargo Express Company 
 stock and stock of other public service corpora- 
 tions. We also owned controlling shares in sev- 
 eral manufacturing plants, where we employed 
 large numbers of men. It required many years 
 of careful management and patient waiting to 
 perfect these enterprises to a point where we 
 secured a profit above expenses. Costly experi- 
 ments had to be made and disheartening obstacles 
 overcome ; but, finally, we reached the profit line. 
 Handsome dividends were declared. 
 
 "Then the government commenced the serious 
 regulation of common carriers. The President of 
 the United States has always appointed men of 
 exceptional ability as members of the Interstate 
 Commerce Commission. They wanted to regu- 
 late us in a spirit of fairness, but they did not 
 understand our business. It took us thirty years 
 
116 REGULATION OF BUSINESS BY LAW 
 
 to learn that business. It required a great deal 
 of time and a lot of money to compile facts and 
 figures for the information of the Interstate Com- 
 merce Commission to keep them from ruining us 
 by over-regulation. But they were fair-minded 
 men, and notwithstanding the popular clamor that 
 had been aroused by the agitator and fostered by 
 the demagogue, they allowed us to retain what 
 appeared to them to be a fair profit upon our 
 investment. 
 
 "They did not allow us as large a profit as we 
 felt entitled to receive, considering the many 
 years of waiting and the risks we had to run be- 
 fore reaching the profit line, but we had to be 
 satisfied. 
 
 "Then the state commenced to regulate us in 
 dead earnest. The state of California, just now, 
 has one of the ablest railroad commissions in 
 America, but nowhere in the country have the 
 agitator and the demagogue been more industri- 
 ous or more successful than here in California. 
 Popular prejudice against corporations has 
 reached the stage of frenzy. Our Commissioners 
 want to be fair. But you and I could not be fair 
 
REGULATION OF BUSINESS BY LAW 117 
 
 if we were in their places. They are politicians. 
 They know that every act of theirs will influence 
 the vote of the State of California. They know 
 that it is popular to hammer the corporation, and 
 unpopular to defend it. They know that it is 
 popular to reduce rates and unpopular to raise 
 them. If you and I were politicians, what would 
 we do if we were in their places? The business 
 man also asks himself, 'What will the next Com- 
 mission do, if we should happen to select one less 
 able and less honest?' But these are only a part 
 of our troubles. The city comes along to regulate 
 us. City Councilmen are usually politicians, and 
 sometimes grafters. They don't know anything 
 about our business and don't care anything about 
 our business. The politician follows the lead of 
 the agitator, and the grafter by methods peculiar 
 to himself and his kind makes us understand that 
 we must either suffer a rake-off or take a knock- 
 out. Then comes the walking delegate, some- 
 times an earnest worker in the cause of labor, but 
 frequently an agitator, not infrequently a grafter, 
 and sometimes both. He tells us where to head in. 
 He knows nothing and cares nothing about our 
 
118 REGULATION OF BUSINESS BY LAW 
 
 business, and cares little about the honest work- 
 ingman whom he misrepresents. He is there to 
 throw out his chest and show his authority. He 
 is building up a reputation to feather his nest 
 in the Union. We may be compelled to close our 
 plant, causing our workmen to lose their jobs. 
 That makes no difference to him. The Union 
 pays him and he has visions of wealth and power 
 when he shall become the titular head of the labor 
 organization." 
 
 Continuing, this financier said, "Two weeks 
 ago, on New Year's evening, myself and a party 
 of business friends sat at a table in the Techau 
 Tavern to see the old year out. We talked these 
 matters over. We could see no future for honest 
 business or honest labor in California. We 
 spread it on the carpet and we spiked it down that 
 we would never invest another d n dollar in 
 California. We've quit. We will not put a dollar 
 into anything that the state can regulate, nor will 
 we invest in any enterprise that requires the em- 
 ployment of men." 
 
 I asked him what he was doing with his money, 
 and he replied, "We are buying up Canada lands. 
 
REGULATION OF BUSINESS BY LAW 119 
 
 They don't regulate people to death up there, and 
 if they raise our taxes we will raise our rents/' 
 
 Just now, in the good year of our Lord, 1918, 
 the public regulation of some of our enterprises 
 seems to be necessary. There are certain enter- 
 prises that are in themselves natural monopolies. 
 Such enterprises must be regulated and con- 
 trolled by the public, or they must be publicly 
 owned, in order to prevent extortion and insure 
 good service. 
 
 Public regulation is open to the serious objec- 
 tion that it gives the consumer the right to fix 
 the price. This he does through the politician 
 elected directly or appointed indirectly by his vote. 
 There is a constant clamor for increased service 
 and decreased rates. 
 
 The politician who does the regulating is some- 
 times incapable, sometimes weak and vacillating, 
 sometimes dishonest and sometimes all three. He 
 is subjected to great pressure on one side and 
 to great temptation on the other. He must have 
 the wisdom of a Solomon, the courage of a lion, 
 and the integrity and devotion of a martyr, or 
 he may do more harm than good. These qualities 
 
120 REGULATION OF BUSINESS BY LAW 
 
 are rarely combined in one and the same poli- 
 tician. Cowardice is a dominant characteristic 
 of the average politician. He is afraid of the 
 newspapers. He is afraid of public opinion. He 
 is afraid of his constituents, and we here in Cali- 
 fornia have added to his fears by that crowning 
 glory of asinine legislation known as "The 
 Recall." Yes, I voted for it years ago in the 
 senate, but I'm trying to forget it. What is more, 
 I know of a lot of other legislators who are 
 secretly trying to do the same thing. That was 
 in those days of righteous wrath when any meas- 
 ure branded with the magic word "Reform" went 
 through with a whoop, especially if it were re- 
 puted to be anti-railroad or anti-corporation, or 
 even just ANTI-. 
 
 The practical politician no longer asks which 
 side is right or which side is wrong. He wants to 
 know which side has the most votes. 
 
 The fair and equitable regulation of such cor- 
 porate enterprises as may require it is difficult 
 under the most favorable circumstances. Laws 
 for this purpose should be carefully scrutinized 
 and considered. 
 
REGULATION OF BUSINESS BY LAW 121 
 
 A reasonable yes, even an attractive profit 
 to the stockholder over and above depreciation, 
 sinking funds and upkeep, must be allowed to 
 induce further investments and extensions ; other- 
 wise we must face retarded development to the 
 great injury of both labor and capital. 
 
 Had not the prospect of great wealth fired the 
 imagination of inventive genius we would still 
 be traveling by stage-coach and hauling our 
 freight in ox-carts. It was the lure of the grand 
 prize that caused the invention of railroads, 
 steamboats, automobiles and flying machines, and 
 secured financial backing that made them a 
 success. 
 
 The moment we begin our processes of limiting, 
 circumscribing and hampering achievement by 
 withholding great rewards, we set in motion the 
 forces that may ultimately stop the progress of 
 the world. 
 
 We have been altogether too hasty in applying 
 plausible political nostrums for all the fancied 
 ills of organized government. These nostrums 
 in turn produce new political diseases calling for 
 still further remedies, and thus we start an end- 
 
122 REGULATION OF BUSINESS BY LAW 
 
 less chain of political evils and political quack 
 remedies, each necessarily following the other 
 in ever-increasing variety. 
 
 Nearly all of these so-called evils will disappear 
 without the necessity of new laws. EACH PER- 
 SON WILL FIND HIS OWN REMEDY 
 WHEN HE IS WILLING TO DO HIS BEST 
 AND SAVE HIS MONEY, INSTEAD OF 
 DOING HIS BIT AND SPENDING HIS 
 MONEY. 
 
 All successful men apply this remedy. 
 
 Public regulation of enterprises should be con- 
 fined to those that cannot be safely entrusted to 
 the individual, leaving the widest possible oppor- 
 tunity to individual initiative and activity. As a 
 general rule, where competition is practicable and 
 desirable, public regulation is unnecessary and 
 unwarranted. But there are enterprises where 
 competition is impracticable and in some instances 
 not even desirable. 
 
 Take the telephone as an example. Two tele- 
 phone systems in a town are a public nuisance. 
 Competition is neither practical nor desirable. 
 The same is true, though in less degree, with city 
 
REGULATION OF BUSINESS BY LAW 123 
 
 water companies, gas companies, railway compa- 
 nies, and the like. In all these industries competi- 
 tion is either impossible, improbable, or undesir- 
 able, and public regulation follows. Rates and 
 charges of such corporations are regulated to 
 prevent extortion. 
 
 Thus far in this state no effectual attempt has 
 been made to regulate the rates of banks, building 
 and loan associations, or insurance companies. 
 Nor should there be. Competition is keen in all 
 these lines and regulation of rates is not necessary 
 to prevent extortion. Most of these institutions 
 are profitable and should be permitted to remain 
 so. Bank failures are public calamities, and no 
 sane man wants to insure his property or his life 
 in an insurance company that is losing money. 
 
 The regulation of Banks and of Insurance 
 Companies should therefore be confined to a con- 
 servation of their assets. The public has a right 
 to see to it "that their assets are not dissipated. 
 
 Such regulation should be broad, liberal and 
 helpful in its scope, and should never descend to 
 petty meddling with inconsequential affairs, as all 
 too frequently happens in state regulation of 
 
124 REGULATION OF BUSINESS BY LAW 
 
 banks. The commissioners should never seek 
 cheap notoriety and false popularity by "discover- 
 ing" something for politcal effect. Strong, pros- 
 perous banks and insurance companies give 
 stability to business, and they should be protected 
 from the wiles of the vote-seeking politician. 
 
 All regulation of business should be conducted 
 in such way as to interfere as little as possible 
 with the liberties of institutions in the manage- 
 ment of their affairs and at as little cost as possi- 
 ble, for the cost burden finally rests upon the 
 producers of the state, and ultimately upon the 
 wage-earner himself. 
 
 Public regulation should always be limited to 
 the actual and necessary protecton of public 
 rights, and should not be extended and enlarged 
 merely because some public official wants more 
 power. Such enlarged powers intimidate capital, 
 discourage investment, prevent improvement, 
 cause harmful retrenchment and thus deprive 
 labor and capital of fruitful opportunity. 
 
 Commissioners are always asking for more 
 power and ever more power. It seems to be one 
 of the vagaries of human nature that men who 
 
REGULATION OF BUSINESS BY LAW 125 
 
 are entrusted with power believe that they have 
 exercised it wisely and well, and they uniformly 
 believe that their powers should be increased. I 
 never heard of a commissioner charged with the 
 duty of regulating somebody who was not fully 
 convinced that he had done the regulating to the 
 advantage of everybody concerned, including 
 those whom he regulated. So they come to each 
 succeeding session of the legislature, asking for 
 more power to do more regulating. That is just 
 what got the Emperor of Germany into trouble. 
 He wanted too much power. 
 
 Not only should regulation be confined to in- 
 dustries that cannot be safely entrusted to the 
 individual, but these industries should be regu- 
 lated as far as practicable by positive laws nar- 
 rowing the field of official discretion. This should 
 be a government by law, not by discretion. Let 
 us have Commissioners, not Permissioners. 
 
 The students of Blackstone will remember that 
 only three forms of government were known to 
 the ancients : The Monarchy, the Aristocracy and 
 the Democracy. 
 
 In the Monarchy all the sinews of government 
 
126 REGULATION OF BUSINESS BY LAW 
 
 were knit together in the hand of a single prince. 
 He ruled by divine right. The subjects had such 
 privileges as the king might grant. The king 
 could do no wrong. He was clothed with extraor- 
 dinary discretionary powers. These discretionary 
 powers were known as "The Prerogatives of the 
 King." The king did justice to the subjects by 
 grace, not by compulsion. By the exercise of this 
 prerogative power, this arbitrary discretion, the 
 king could placate or punish internal enemies and 
 opponents and reward friends. He could grant 
 or withhold favors at will. It was this power 
 that filled his court with sycophants seeking 
 favors. 
 
 For six thousand years men have struggled 
 upward toward light and liberty; for freedom 
 from the regulations and restraints of kings and 
 princes ; for the overthrow of their discretionary, 
 their prerogative powers. With the signing of 
 the Declaration of Independence and the estab- 
 lishment of our Federal Constitution, the day star 
 of individual liberty rose to its zenith, its highest 
 point. Under that liberty, unregulated and unre- 
 strained, our rich men grew to be the richest and 
 
REGULATION. OF BUSINESS BY LAW 127 
 
 the largest in number, our poor men the best off 
 and the fewest in number, our workingmen the 
 best paid, housed, clothed and fed of any in all 
 the history of the world. And yet, here in this 
 country, we have politicians who would confer 
 these discretionary powers, these prerogatives 
 that regulate and restrain, upon commissioners. 
 And they call themselves reformers! 
 
 The rights of the citizen in a Democracy must 
 be crystallized into positive laws. He must be 
 independent. He must be able to stand up and 
 demand his rights, while the subject of the Mon- 
 arch can only beg for a privilege. 
 
 When we clothe commissioners with discre- 
 tionary powers we confer upon them the preroga- 
 tives of a king. The shadowy form of democracy 
 remains ; but the substance is gone. It is not an 
 answer to say that our various commisioners 
 have performed their duties with marked ability. 
 Perhaps some of them have. Many of them have 
 not. Many despotisms have been well conducted 
 for a time. The king's favorites have always been 
 loud in his defense and those who feared him also 
 rendered the tribute of praise. Nor is it an 
 
128 REGULATION OF BUSINESS BY LAW 
 
 answer to say that their work has been beneficial. 
 This may all be truthfully said of the Emperor of 
 Germany. His reign has been described as a 
 benevolent despotism. German efficiency under 
 his reign has everywhere been recognized. A 
 despotic government with kingly prerogatives is 
 always efficient under the guidance of an able 
 despot, but it closes the door of independent op- 
 portunity to the individual and the people have no 
 assurance that the succeeding despot will be as 
 good. 
 
 I, for one, prefer American liberty to German 
 efficiency. Let us have commissioners to enforce 
 the law, but let us, as far as practicable, strip them 
 of their prerogatives, their discretionary powers. 
 
 All inspiration to progress finds its chief in- 
 centive in the liberty of the individual. There 
 can be no lasting progress without liberty. There 
 can be no liberty without independence. The 
 independence of democracy is its very soul. 
 
 Civil and religious liberty, freedom of speech 
 and of the press are now engrafted into the very 
 genius of our institutions. They dare not be 
 
REGULATION OF BUSINESS BY LAW 129 
 
 assailed. Industrial freedom must be made 
 equally secure from unnecessary political control. 
 
 Heal the breach that ought never to have 
 existed between labor and capital, remove the 
 shackles that politics has placed upon the limbs 
 of industry, and the blue dome of heaven will 
 shelter a land without an idle dollar, or an idle 
 man. 
 
 I love the freedom of the old America. The 
 freedom that made our country's flag the beacon 
 light toward which the oppressed of all the na- 
 tions of the earth could look for hope and inspira- 
 tion. The freedom that enabled the young man 
 to look with confidence into the future, knowing 
 that the only limitations to his achievements were 
 the boundaries of his intellect and the measure 
 of his energy. 
 
Take away this open field of opportunity by 
 legislation or agitaton, and you crush the stim- 
 ulus to individual initiative that has tempted 
 American Genius to these daring flights. 
 
 German Efficiency 
 and American Liberty 
 
 One hundred and forty-four years have rolled 
 away since Frederick the Great issued his decree 
 that started universal education in Germany. 
 Nearly fifty years later five million serfs were 
 emancipated by official proclamation and serfdom 
 was technically abolished. The German people 
 became a free people on the surface, but centuries 
 of servitude had established a habit of "mind 
 your master" in them that induced an attitude of 
 subservience to inherited authority. Frederick 
 the Great was not inspired by any broad concep- 
 tions of general uplift through the medium of 
 education, but by a desire to increase German 
 
AND AMERICAN LIBERTY 131 
 
 military efficiency. He had learned by observa- 
 tion and experience that the best soldiers were 
 those who had just enough and not too much edu- 
 cation. The ruling 1 classes in Germany clung 
 tenaciously to the feudalistic theory of govern- 
 ment. German statesmen, philosophers and teach- 
 ers uniformly regarded the state as consisting of 
 two distinct and separate classes. The few upon 
 whom the burdens and responsibilities of govern- 
 ment should rest, largely by reason of inherited 
 right, and the masses of comparatively unedu- 
 cated people whose chief function was to render 
 unquestioned obedience to the commands of con- 
 stituted authority. 
 
 The whole German system of education as 
 originally founded by Frederick the Great, and 
 as developed and extended by his successors, has 
 consistently adhered to this fundamental idea. 
 
 The masses of the people were educated in the 
 Volksschulen, or elementary school for the com- 
 mon people. Here they were drilled most thor- 
 oughly in "obedient industry, patience, persist- 
 ence and thoroughness." 
 
 The child was taught from infancy to revere 
 
132 GERMAN EFFICIENCY 
 
 and respect his superiors and habits of obedience 
 to authority became fixed. The education of about 
 ninety per cent, of the German people was con- 
 fined to the Volksschulen. Secondary and higher 
 education were unknown to them. Their rever- 
 ence for the kaiser amounted to a kind of worship. 
 They dared not question his divine right to rule. 
 
 On the other hand, the ruling classes were 
 thoroughly trained in the higher schools and uni- 
 [versities, receiving special technical training in 
 the particular branches relating to their several 
 departments. 
 
 With ninety per cent, of her people schooled to 
 servile obedience and sufficiently educated to 
 render efficient service, and with the ruling 
 classes technically trained each in his special field 
 of endeavor, to organize and to direct, the Ger- 
 man machine developed a massed efficiency hith- 
 erto unknown in the history of the world. 
 
 Individual initiative among the masses re- 
 mained undeveloped. Being neither fostered nor 
 encouraged, the individual was lost in the prog- 
 ress of the mass. The man was merely a part of 
 the great machine. The door of opportunity was 
 practically closed to nine-tenths of the people. 
 
AND AMERICAN LIBERTY 133 
 
 We heard a great deal about German efficiency 
 during the early stages of the war. Nobody says 
 anything about it now. Germany had more regu- 
 lations that infringed personal liberty than any 
 other country. Nothing could be done by the 
 individual without first getting some kind of 
 license or permit. The. goings and comings of 
 each man, woman and child were made a matter 
 of record. Exhaustive reports were required of 
 all persons, firms, and corporations. They had 
 destroyed individual initiative and incentive. 
 Yet, in eighteen months, America did what 
 Germany had not been able to do in forty years. 
 Why should we further Germanize America by 
 regulations and restraints? Why should those 
 who seek to do so call themselves reformers? 
 They draw their inspiration from Caligula, 
 Aurelius, and William II. of Germany, 
 
 American Liberty 
 
 Opposed to this theory of a privileged ruling 
 class, the American people believe "That all men 
 are created free and equal," that the door of, 
 opportunity should be open to each man, woman 
 
134 GERMAN EFFICIENCY 
 
 and child alike; that the child of humblest par- 
 entage may, by industry and ability, rise to the 
 highest places of honor and trust, of wealth and 
 power; that "governments derive their just 
 pow r ers from the consent of the governed." To 
 perpetuate the enjoyment of these ideals, each 
 man is given an equal voice in all of the affairs 
 of the Government. The rich, the poor, the em- 
 ployer, the employee, the wise and the otherwise, 
 have just one vote each. Out of this very system 
 of government has arisen America's greatest 
 problem. 
 
 The German problem was easy. With the 
 masses of the people drilled and schooled to abject 
 obedience, the rulers had only to foster and give 
 direction to that obedience. With the education 
 and training of a recognized ruling class, highly 
 specialized, marvelous efficiency followed as a 
 natural result. 
 
 In Germany the individual meant nothing; in 
 America, everything. Laws limiting and restrain- 
 ing individual initiative and activity in Germany, 
 were harmless or even highly beneficial ; while in 
 America they are ruinous. The efficiency that 
 
AND AMERICAN LIBERTY 135 
 
 Germany had developed by effacing the individual 
 we can only bring about by developing the indi- 
 vidual, and this can be done only by preserving an 
 open field of inviting opportunity. 
 
 The marvelous unfoldment of American re- 
 sources, through the building of railroads, the 
 establishment of great banking institutions and 
 insurance companies, the multiplication of start- 
 ling inventions, the introduction of labor-saving 
 machinery, the extension of foreign and domestic 
 trade, the utilization of water power, the reclama- 
 tion of vast areas of arid lands by irrigation and 
 of swamp lands by levees and drainage, was not 
 brought about by agitation, regulation and 
 restraint. J&UEtcxoh * "***fr 
 
 These results were made possible only by the 
 prospect of rewards commensurate with the 
 gigantic character of the undertakings. Busi- 
 ness and inventive genius responded to the lure 
 of wealth. The rich man grew richer and the 
 poor man better off. Many poor men became rich. 
 Millons of men received profitable employment 
 and standards of living were raised beyond the 
 dreams of men. 
 
136 GERMAN EFFICIENCY 
 
 Take away this open field of opportunity by 
 legislation or agitation, by unwise regulation or 
 restraint, and you crush the stimulus to individual 
 initiative that has tempted American genius to 
 these daring flights. No prize, no race. 
 
 Laws preventing dishonesty and violence by 
 the apprehension and punishment of offenders, we 
 must have; but laws restraining and regulating 
 the activities of our various industries should be 
 carefully scrutinized and considered before adop- 
 tion. German co-operation and co-ordination of 
 industrial forces was made easy through enforced 
 obedience. American co-operation must come 
 voluntarily through the education of the masses 
 of our people. A spirit of generous tolerance 
 must be fostered and encouraged along with an 
 earnest desire to be helpful instead of hurtful. 
 
 Each citizen of America is a member of the 
 ruling class and America's problem requires the 
 education not of ten per cent, as in Germany, 
 but of one hundred per cent of its population in 
 the essential principles of free government. 
 
 The citizen must not only be taught what his 
 
AND AMERICAN LIBERTY 137 
 
 duties are, but he must be inspired with a deter- 
 mination to perform them. 
 
 America's future depends upon the application 
 of the "Square Deal" in every relation of public 
 and private life. The square deal between mer- 
 chant and customer, banker and borrower, em- 
 ployer and employee, and last but not least, the 
 square deal in politics. It must be a two-sided 
 square deal. The customer as well as the mer- 
 chant, the borrower as well as the banker, the 
 employee as well as his employer must be guided 
 by the square deal. 
 
 Laws against fraud and dishonesty keep busi- 
 ness men within "shooting distance" of the 
 square deal in their transactions with each other, 
 but such laws can hardly be made to apply to 
 employer and employee. It is here that we must 
 depend in large measure upon the voluntary 
 square deal between the "high" contracting par- 
 ties. The employer should voluntarily pay his 
 men reasonable wages for reasonable work and 
 furnish conditions of employment as convenient 
 and as safe as the profits of the business and the 
 nature of the employment may justify. The em- 
 
138 GERMAN EFFICIENCY 
 
 ployee should render a good square day's work 
 in the interest of his employer, and if he hopes to 
 rise above his present position he will do some- 
 thing more. 
 
 In the domain of politics in a free country, 
 there will be differences of opinion as to matters 
 of policy, but there can be no differences where 
 questions of elemental honesty are involved. Any 
 law that recognizes classes and proposes to help 
 one class at the expense of another class not only 
 ignores the square deal, but is un-American and 
 is and ought to be unconstitutional. 
 
 Far too many of our laws in recent years have 
 been directed against some industry or class of 
 industries. Every industry so regulated and re- 
 strained has shown retarded development to the 
 great injury of laboring men. They take the 
 form of regulations and restraints. When these 
 restraints are sufficiently multiplied and extended 
 to enough industries, all incentive to individual 
 initiative will have been destroyed and the door of 
 individual opportunity will be as effectually closed 
 in America as it has been in Germany. The rich 
 will remain rich and the poor will remain poor. 
 
AND AMERICAN LIBERTY 139 
 
 These laws have been passed in response to what 
 appeared to be a popular demand superinduced by 
 misguided and misinformed enthusiasts whose 
 speeches and pamphlets have remained unan- 
 swered and unchallenged. 
 
 Here in California, where we have adopted an 
 amendment to our constitution providing for 
 "direct legislation" by means of the initiative and 
 referendum, and have the direct primary system 
 of selecting candidates for office, with the means 
 of recall, the education of the voter to a knowl- 
 edge of the science of government is imperative. 
 The task is a very difficult one because of the 
 many nationalities represented in our population 
 and because of the varied and conflicting interests 
 in a state having every possible variety of soil, 
 climate and production. But it must be done. 
 
 If we can preserve the one big principle of the 
 square deal in politics, if we can add to that the 
 spirit of mutual helpfulness instead of hateful- 
 ness, if we can induce able and honest men to 
 accept public office, Democracy will stand justi- 
 fied before the world as never before. 
 
 There must be no return to the control of a 
 
140 GERMAN EFFICIENCY 
 
 corporation-owned political machine such as pre- 
 vailed in California some years ago NEVER. It 
 savors too much of the German System. Neither 
 must we submit to the domination of a political 
 syndicate that would make a politician's paradise 
 of our state, where fat jobs are parceled out with 
 prodigal liberality to the faithful in the name of 
 "Reform." 
 
 Particularly should we shun the leadership of 
 men and of political parties that pose as the 
 friends of the poor, the enemies of the rich and 
 the champions of labor. They preach class hatred 
 for political power. Class hatred must not exist 
 in America. The one paramount lesson that our 
 people must learn is that any law directed against 
 a class will act as a boomerang*. Laws against 
 labor destroy the world's great market. Laws 
 against capital retard and discourage investment 
 and diminish labor's opportunity. 
 
 America has already stood the supreme test of 
 efficiency imposed by the problems of the war. 
 The ordinary processes and machinery of demo- 
 cratic government were inadequate, but Con- 
 gress, by almost a unanimous vote, conferred 
 
AND AMERICAN LIBERTY 141 
 
 transcendent powers upon our President, thereby 
 creating a democratic autocracy more powerful 
 than any monarchy in history. No other course 
 would have enabled us to make provision for the 
 defense of democracy against German Autocracy, 
 but when the war is over these powers will be 
 withdrawn and American Democracy will return 
 to the orderly processes of representative govern- 
 ment. Never before has such elasticity in the 
 authority of government been exhibited. 
 
 In the earlier stages of the war some of the 
 labor organizations, led by agitators, refused to 
 perform their duty, but the great majority of 
 American workmen have since given abundant 
 proof of their loyalty. 
 
 Likewise a few business men were disposed to 
 make undue profits, but they were not permitted 
 to retain them. 
 
 The most gratifying and encouraging incident 
 of the war was the unanimity with which the 
 captains of industry and the representatives of 
 big business tendered their services to the gov- 
 ernment at a salary of $1.00 per year, while their 
 sons volunteered for service in the trenches and 
 
142 GERMAN EFFICIENCY 
 
 their daughters for service in the Red Cross, 
 serving side by side in genuine comradeship with 
 the sons and daughters of laboring men. 
 
 Who knows? America's great problem may 
 have been solved in the trenches. The rich man's 
 son has learned that laboring men are not all 
 anarchists and the workingman's son has learned 
 that rich men are not all bandits and public plun- 
 derers. The democracy of the trench tends to 
 destroy the artificial distinctions of society and 
 will go far toward removing the feeling of envy, 
 of prejudice and discontent so successfully 
 played upon by the unscrupulous agitator and the 
 misguided enthusiast before the war. The work- 
 ingman in the trench has learned that the rich 
 man was a day laborer only a few years ago and 
 that he rose to wealth by hard work, economy and 
 ability, just as any workman with sufficient 
 ability and industry may do. "It's an ill wind 
 that blows nobody good," and the world calamity 
 that brought these men together, elbow to elbow 
 in the trenches, may bring a new inspiration and 
 meaning to American ideals.