The Americans

by Hugo Münsterberg

His successor has not had, in the first place, a great interest in questions of commerce. He has necessarily lacked, moreover, such strong authority within his party as would enable him to bring opposing interests into line on such a new policy. The young President was too much suspected of looking askance on great industrial companies. If he had placed himself at the head of the Republicans who were hoping to reduce the tariff, he would have been branded as a free-trader, and would not have been credited with that really warm feeling for protected American industries which in the case of McKinley was taken as a matter of course. More than that, the opponents deterred him, and would have deterred any one else who might have come in McKinley’s footsteps, or perhaps even McKinley himself, with the ghost of bad times which are to come whenever a certain feeling of insecurity is spreading through the commercial world.

Everybody felt that, if the question of tariff should be opened up, unforeseen disputes might ensue. On questions of tariff every industry wields a lever in its own favour, and the Wilson Tariff had sufficiently shown how long and how tragi-comic can be the course from the law proposed to the law accomplished. It was felt everywhere that if the country should be brought into unrest by the fact that no industry could know for some years what its future was to be or where Congress might chance to take off protection, that all industry would be greatly injured. There could be no new undertakings for years, and whatever the ultimate result might be, the mere feeling of uncertainty would make a crisis sufficient to turn the tide of prosperity. And American reciprocity was after all only a matter of philanthropy; for the experience with Canada and Hawaii, it was said, only showed that reciprocity meant benevolence on the part of America.

If America is to be philanthropical, there is enough to do in other ways; but if America is to preserve her commercial interests and her prosperous industries, it is absolutely necessary not to stir up trouble and push the country once more into tariff disturbances and expose industry to doubts and misgivings. And this ghost has made its impression. McKinley’s words have aroused only a faint echo in the party. The need, however, which he instinctively felt remains, and public opinion knows it. It is only a question as to when public opinion will be stronger than party opinion.

There is another thing which gives the anti-protectionists a better chance. Democrats say that high tariff has favoured the trusts. This may be true or false, and statistics speak for both views. But here is a watchword for the party which makes a deep impression, for the trusts are popularly hated. This, too, may be right or wrong, and may be still more easily argued for both sides, but the fact remains, and the seductive idea that abolishing high tariff will deal a fatal blow to the hated, extortionate, and tyrannical trusts gets more hold on the masses day by day. In vain the protectionists say that there is not a real monopoly in the whole country; that every instance of extortionate price calls out competition at once, and injures the trust which charges such price; that protection benefits the small and poor companies as much as the large, and that an attempt to injure the large companies by free-trade enactments would kill all small companies on the instant. And, besides, politics ought not to be run in the spirit of hatred. But the embitterment exists, and arguments avail little. It is incontestable that, of all the motives which are to-day felt to work against protection, the one most effective with the masses is their hatred of the trusts. Herewith we are led from the tariff question to this other problem—the trusts.

The Trust Question

“Von der Parteien Hass und Gunst verwirrt”—to be hated and to be favoured by the parties is the fate of the trusts. But the odd thing is that they are not hated by one party and favoured by the other; but both parties alike openly profess their hatred and yet show their favour by refraining after all from any action. And this inconsistency is not due to any intentional deception.

To be sure, a good deal of it is political policy. The evils and dangers of many trust formations are so obvious that no party would like to praise them openly, and no party will dispense with the cheap and easy notoriety of declaring itself for open competition and against all monopolies. On the other hand, the power of the trusts is so great that neither party dares to break with them, and each has its special favourites, which could not be offended without prejudicing its campaign funds. Nevertheless, the deeper reason does not lie in the matter of expediency, but rather in the fact that no relief has been proposed which promises to be satisfactory. Some want to treat the evil superficially, as a quack doctor tries to allay secondary symptoms; and others want, as President Roosevelt has said, to end the disease by killing the patient. The fact that this inventive nation has still not solved its great economic problem, is probably because the trusts have grown necessarily from the organic conditions of American life, and would continue to exist in spite of all legislative hindrances which might be proposed against them.

When Queen Elizabeth, in violation of the spirit of Anglo-Saxon law, distributed in the course of a year nearly fifty industrial monopolies, and caused the price of some commodities to be doubled, the House of Commons protested in 1601, and the Queen solemnly declared that she would revoke all privileges which endangered industrial freedom; and from that time on, monopolies were done away with. The American people are their own sovereign, and the effect of monopolies is now about the same as it was in England three hundred years ago. But the New World sovereign cannot issue a proclamation revoking the monopolies which it has granted, or at least it knows that the monopolies, if taken from one, would be snatched by another. It is true that the present form of trusts could be made illegal for the future, but some other form would appear, to compass the same ends; and if certain economic departments should be liberated by a free-trade legislation, the same forces would gather at other points. We must consider the essence of the matter rather than its outward form.

The essence is certainly not, as the opponents of trusts like to represent, that a few persons are enriched at the expense of many; that the masses are plundered to heap up wealth for a small clique. The essence of the movement does not lie in the distribution of wealth, but in the distribution of power. The significance of the movement is that in recent times the control of economic agencies has had to become more strongly concentrated. It is a mere attendant circumstance that in the formation of the trusts large financiers have pocketed disproportionately large profits, and that the leading trust magnates are the richest men of the country. The significance of their position lies in the confidence which is put in them. But the actual economic endeavour has been for the organized control of larger and larger undertakings. It has been very natural for the necessary consolidation of smaller parts into new and larger units to be accomplished by men who are themselves rich enough to retain a controlling share in the whole business; but this is a secondary factor, and the same result could have been had if mere agents had been appointed by the owners to all the great positions of confidence.

Almost the same movement has gone on in other economic spheres than the industrial. Railroad companies are all the time being consolidated into large companies, controlled by fewer and fewer men, until finally a very few, like Morgan, Vanderbilt, Rockefeller, Harriman, Gould, Hill, and Cassatt, virtually control the whole railroad system. But this economic movement in the railroad world would not really stop if the state were to take over all the railroads, and a single badly paid secretary of railroads should be substituted for the group of millionaires. The main point is that the savings of the whole country are invested in these undertakings, and are looking for the largest possible returns, and get these only when leadership and control are strongly centralized.