LETTER XV
My dear Judd:
We are going to take over the industrial plant of the United States, and run it as one planned enterprise for the benefit of the whole people.
Just what do we mean to take? Roughly speaking, all railroads, telegraphs and telephones, all banks, the mines and large factories, the large oil fields with pipe-lines and refineries, the large packing and canning plants, the large warehouses and stores, and what office buildings are necessary for these enterprises. We do not want the homes, nor the personal property, nor the automobiles, nor the livestock; nor, if I have my way, shall we want farms. Some old-time Socialists will contest this, but the new generation will agree, I think. The reason is interesting, and it may help to clear up the whole matter if we begin by considering the problem of the land.
Karl Marx thought that the farms would go the same way as the factories; that is, they would get bigger and bigger, under capitalist ownership. He failed to allow for the essential factor—that no capitalist can work his employes so hard as the small farmer works his women and children. So the small farmer has stayed on his small farm; a free man—except that every year he is deeper in debt to the banker, and in a larger percentage each year he loses the ownership, and is merely a tenant, supporting an absentee landlord. The modern Socialist, recognizing that situation, does not propose to walk into the trap, but seeks a different solution of the land problem.
The single taxer comes, urging us to take the burden of taxes off improvements, which are made by human labor, and put it on the land, which is the gift of Nature. He points to the rise of land values in cities, the so-called “unearned increment”; values go up, because people crowd into the city, and private owners get a colossal increase, which they have done nothing whatever to earn; their gains make a heavy burden on production, which the whole community must pay. That sounded reasonable, and so for a while I was a single taxer; you’ll be interested to know, Judd, that the reason I gave it up was you!
We had a big single tax campaign here in California in 1916, and I put in some hard work at it; among other things I spent a day arguing with my friend Judd. We were sitting on the roof of the garage, laying shingles, and all the time I tried to make you “see” the single tax. But you had read in the Los Angeles “Times” that it would increase the taxes on your two lots, and that had made you mad; also, you had read that it would take the taxes off the rich man’s bonds, and off his wife’s jewels, and that had made you madder. I tried to get you to see the absurdity of believing that the “Times” could be interested in keeping any taxes on the rich; I tried to show the actual reason, that the tax collector couldn’t find the rich man’s bonds, nor his wife’s jewels. But you didn’t get it, Judd, and when I saw the votes of all the other Judds in that election, I decided that the single tax is a tactical blunder. Never again will I be caught proposing to take any taxes off the rich; from that day forth I have been a multiple taxer—I want to put just as many kinds of taxes on the rich as the imagination can invent.
Joking aside, Judd, I changed my whole strategy as result of that day on the roof with you. For twelve or thirteen years I had been expecting to see Socialism brought about by some sort of tax on wealth; but you made me realize how passionately every human creature hates taxes. Could one not find some easier way? I realized that all men like money, the more the merrier; and then came the war, and I saw our government making money by the billions, just by acts of Congress and the waving of a presidential pen. Then came the panic, and I saw our wonderful Federal Reserve System making more billions for the use of the big bankers and the trusts; so a great light dawned upon me, a heavenly light! I see now, Judd, that we shall forget taxes altogether, and take a leaf out of Wall Street’s new book; we shall make as many billions of new money as the emergency requires, and instead of having Wall Street put that new money off on us, we shall put it off on Wall Street!
I know some young workers in our country who call themselves social revolutionists, and are impatient when they hear me talk about compensation for the capitalists. These young people feel ugly towards the capitalists, and for this I do not blame them, seeing how they have been treated. But the point of my criticism is that these young enthusiasts want to be ugly to the capitalists in an old-fashioned, out of date way, with guns and barricades, while I want to be ugly in the modern way of high finance.
What is it we really want? Is it to kill the capitalists? No, but merely to take from them their power to exploit labor. And how do they get this power? By guns and barricades? They hold it that way, of course; but inside each modern country they have devised the new and infinitely more effective scheme of financial manipulation, the creation of imaginary money with which to buy everything in sight. And it is this weapon I want to turn against them. Why, for heaven’s sake, do we want to have insurrections and riots, when by means of this modern Aladdin’s magic we can walk peaceably into every factory and take charge? The capitalists have created the magic lamp for us—this wonderful new Federal Reserve System; all we have to do is to turn out the present board of bankers’ bankers, and put in a new board of workers’ bankers, and create a hundred billion dollars of new money, and pay for the industries, and there you are! Not a court in the land can stop us, and if any capitalist tries to, he is a revolutionist, and we have criminal syndicalism laws for him!
This is “inflation,” we are told; and inflation raises the cost of goods, and so brings no benefit to the worker. Yes, Judd, but get the point clear—inflation is one thing if you use it to buy goods, and quite a different thing if you use it to buy factories. In buying goods, you buy on a rising market, but in buying factories you buy at a fixed price, and so it is the owners who suffer the loss. And that is the beauty of this scheme I am unfolding; these Wall Street gentry have “passed the buck” to us—and we pass it right back!
The Russian revolutionists made a grave mistake in their dealings with world capitalism; they were too honest. They repudiated the debts of the Tsar’s government—declaring that the money had been spent to enslave the Russian workers, and they would never repay it. Therefore world capitalism went to war with Russia, and is still at war, and that error in tactics has cost the new government many times the debts of the old regime. But how much more clever were the capitalist governments of Italy and France! They also owed us money; but they were so polite—they are the politest people in the world! They owed it, of course, and they would pay, of course; never would they dream of failing to pay their debts; but just now they were very poor, and couldn’t pay, and wouldn’t we please lend them another hundred million or so? We loaned it—because if they go bankrupt they will also go Bolshevik, and that scares the gizzard out of our bankers. So these smooth capitalist nations have never paid us a dollar, but their credit is still good, and we never think of them as criminals and murderers—oh, nothing like that, it is all between gentlemen in Wall Street, and the worthless bonds have been worked off on the general public, and all is serene!
So, Judd, I say, let us be gentlemen, too, and pay! Pay any price the capitalists ask—anything to get them out of the factories, and get the workers in! It will mean that we support a horde of parasites for awhile; but we are doing that, anyhow, and can do it better then, because we shall double production. Young Johnny Coaloil will still be able to keep his yacht and his chorus girls on the Riviera, and Mrs. Silly Splash will continue to wear diamond-embroidered bathing suits at Palm Beach; but notice the difference, Judd—from now on they can buy nothing but goods with their money, they can no longer buy the means of production, and so they will not be able to increase their income!
On the contrary, we can proceed at once to cut it down, by means of an inheritance tax. We already have such a tax—the Coolidge crowd is trying to get rid of it at this moment, and likewise the publicity clause of the income tax, which exposes the big exploiters to uncomfortable daylight! But we can put it back, Judd; we can make the provisions that gifts in anticipation of death count as inheritance; we can register the owners of the bonds, and so wipe out that whole mass of privilege in a generation or two. I promised to show you how the useful workers of America can take possession of their industrial plant, and here is the way. Nothing prevents them but lack of knowledge; and that is why I am writing these letters!