LETTER XII
My dear Judd:
I have said that unemployment is a disease of the profit system, incurable under that system. I am now going to show why, and I consider these facts the most important in the whole world for a workingman to understand. They are perfectly simple—any child can grasp them; yet they are never mentioned in any newspaper, and never taught in any school. The reason is equally simple—any editor who publishes them, or any teacher who teaches them, immediately loses his job.
I put them into a series of short sentences for you to paste all around the rim of your hat and study while you are sawing timbers and mixing cement. First, then:
The boss is not in business for his health. Ask him!
And then, equally easy to verify:
The boss will make no more goods than he can sell at a profit.
And so, plainly enough:
Profits for the boss, wages for the workingman; no profits for the boss, starvation and death for the workingman.
So far, every business man will agree; in fact, this is the doctrine they hammered into your head during the Coolidge campaign, and it got them seven million plurality. All right, then; and now let us suppose, just for the sake of arguing, that the Coolidge administration believed in allowing the rich to charge as high prices as they pleased for goods, and to break strikes and beat down the wages of the poor; what would happen then? Why, obviously the poor wouldn’t have the money to buy so much goods or to furnish so much profits for the bosses; it would be only the rich who had the money, and goods would be more and more for the rich, and less and less for the poor. Take notice, Judd, the Secretary of the Treasury estimated that in 1919 the amount spent for luxuries in our country was $22,700,000,000—and with millions of families lacking bread!
But with the flood of goods pouring out from the machines, the rich find it harder and harder to consume the product; they take to reinvesting their money, that is, using it to make more machines, to turn out more goods, to be sold for more profits. But already there are more goods than can be sold; there are no longer enough profits to supply the demands of the great mass of heaped-up capital. So comes a glut of goods, and factories have to shut down, and we have “hard times.” Just what are “hard times,” Judd? Paste this in your hat now:
Hard times are tenant farmers starving because they have raised too much food!
And again:
Hard times are weavers in rags, because they have made too much clothing!
And again:
Hard times are carpenters homeless, because they have built too many houses!
And finally:
Hard times are workingmen who have finished making the world for their masters, and are ordered to move on to some other planet!
You will say, Judd, that such absurd things could never happen. To that I answer, very simply:
They are happening right now to several million Americans who are hunting jobs and not finding them!
This insanity of “hard times” comes periodically in our affairs, in great waves known as “business cycles”; they are due at intervals of from seven to ten years, and are just as inevitable as the tides of the sea. Learned economists study the history of these tides of ruin and make charts and diagrams of them; but if you state the cause, you become an outcast from the business world; and so naturally nobody does state it—except a few outcasts like myself.
The professors of economics admit that this trouble is caused by “over-production,” and we must get straight exactly what that means. It doesn’t mean that we have produced more than we need; on the contrary, we have millions living below the wage level of common decency—our average wage is $1,200 a year, and the cost of keeping a family on the bare necessities is $2,000. But it doesn’t matter how much people need; the thing that counts is what they can buy. I give you another slogan, and next time you meet a professor of economics, ask him about it:
If you’ve got the price, you’re a consumer; if you haven’t got the price, you’re a bum.
Well, since we American consumers can’t buy our own product, the owners of the product—that is, the rich—have to look elsewhere for customers, and so comes the hunt for “foreign markets.” Understand me, I do not object to our going abroad for the things we can’t raise at home; to exchange automobiles and moving pictures for bananas and coffee—that is normal business. What I am talking about is a glut of goods that we can’t sell at home, but must sell abroad, under penalty of seeing our workers turned off to starve. We don’t take goods in exchange—oh no, that would break down our home industries, and we protect them by a high tariff wall. What we take are paper promises to pay us at some future date; we go on continually selling more than we buy, and filling our bank vaults with these paper promises, and that is called a “favorable balance of trade.”
But all the highly developed nations, Britain and France and Germany and Italy and Japan, are in exactly the same plight as ourselves; they also have more goods than their half-starved workers can purchase; they also are looking for foreign markets, to save their business system from collapse. Each finds its chance of salvation in selling to the backward nations, which cannot yet do their own manufacturing. So we run upon this curious situation:
The existence of American industry depends upon our selling cotton shirts to Chinamen, who are so poor they can’t afford but one shirt at a time.
And now, see the next step! Trying to save our own business system, we threaten ruin to the business system of some other country, say Japan. Naturally, the business men of Japan don’t like that; so we have trade rivalry, and out of that we have war. The cause of modern war may be put into one sentence—and I beg you to realize that it’s no joke, but the grimmest of grim realities:
If we don’t go to war with other nations, they will take away from us the chance to sell to Chinamen those cotton shirts of which our workers have produced so many that they have to go in rags.
I could go on like that indefinitely, making funny sentences about this funny system. I could tell the hilarious story of how Britain and Germany went to war to take away from each other the chance to sell shirts to Chinamen—and to Hindoos and Persians and Arabs and Turks, of course. When they had destroyed 30,000,000 human lives and $300,000,000,000 worth of goods you might think they would have cured their “over-production” for quite a while; but they had made a miscalculation, and fought too long, and borrowed too much money from us, and so their governments are burdened with enormous fixed charges, and there is chronic unemployment in both Britain and Germany, and almost a collapse in France.
And how about us? We have that “favorable balance of trade,” so ardently desired by the prosperity boosters; indeed, we have got such a bellyful of it that for the first time we are forced to realize that it’s nothing but wind. Europe owes us, in one form or another, some $19,000,000,000, and can’t even pay the interest; they made no pretense of trying—until they had to borrow some more! Italy came, bowing low and grinning behind its cap, agreeing to pay several billions in the course of 65 years—on condition that we lend another $200,000,000 right off! Germany did the same thing, and France will be doing it, probably before these words see the light of day. Our great financiers accept these paper pledges, for the reason that they are stuck with $19,000,000,000 of them already, and can’t contemplate what will happen when the whole thing turns out to be wind. We go on adding about a billion a year, because the only way we can keep our factories going is to ship our surplus goods abroad—and take nothing back, because that would stop the factories!
We promised our people “prosperity,” you remember, if only they would vote for Coolidge; and they did so, good, patient souls; so now we have to deliver it. The way of “prosperity” is to keep them working to feed and clothe Frenchmen and Germans and Italians and Chinamen and Guatemalans and Haytians—anybody who will send us a beautiful engraved sheet of paper promising to pay us 65 years from now! To be exact, Judd, they don’t even have to engrave the paper; we do that in Wall Street, and they send us a “mission” of white or yellow or black gentlemen in frock coats, to sign opposite the red seal. So here, Judd, you have this wonderful jazz system in its final, delirium stage—our whole people starving themselves on half wages, and sending the surplus abroad, so that our rich men may fill their vaults with pieces of paper which they dare not permit to be redeemed! We already have more than half the gold in the world, and far from taking any more, we have to ship some abroad now and then, to keep some debtor nation from going bankrupt!
Don’t you wish, Judd, that you could find some benevolent storekeeper to do business with you on this ultra-modern jazz basis? Never, never can he be persuaded to take your money, but takes only checks, and does not cash them for 65 years; and if at any time you need money, you threaten to go broke, and immediately he gives you cash and takes some more checks; and if ever you try to send him a truckload of goods, to pay off at least part of the debt, he holds up his hands in a fit of high-tariff horror and says he couldn’t think of taking goods, it would ruin the people inside his store who have the jobs of making that same thing! “For God’s sake, take away your truck,” he exclaims. “Just mail me another paper promise, and anything in the place is yours!”
I conclude with one more sentence for you to learn, Judd:
Our present system of “high finance” is a soap-bubble, which differs from other soap-bubbles in just one respect—it is as big as the world.