The Americans

by Hugo Münsterberg

The Administration might proceed in still another way. A good deal has been said of greater publicity in public affairs, and in the last few years energetic measures have already been taken at the instance of the President. Many of the evils of trusts lie in their concealment of the conditions under which they have been organized; and the new Department of Commerce is empowered to take official testimony concerning all such matters, and to demand this under oath. Whether this will be an ultimate gain is doubted by many, since those acquainted with the matter say that the secrets of modern book-keeping make it impossible to inspect the general condition of a large industrial concern when its promoters desire to conceal the truth. While if one were to go back of the books and lay bare every individual fact to the public eye, the corporations would be considerably injured in their legitimate business. And in any case, this new effort at publicity has so far no judicial sanction. One large trust has already refused to give the information desired because its counsel holds the Congressional law to be unconstitutional, and this matter will have to be settled by the Supreme Court.

The most thoughtful minds are coming slowly to the opinion that neither tariff provisions nor legislation is necessary, but that the matter will eventually regulate itself. The great collapse of market values has opened the eyes of many people, and the fall in the price of commodities manufactured by trusts works in much the same direction. People see, more and more, that most of the evils are merely such troubles as all infant organisms pass through. The railroads of the country were also at first enormously overcapitalized, but the trouble has cured itself in the course of time. The surpluses have been spent on improvements, and railroad shares to-day represent actual values. Such a change has in fact already set in among the trusts. Paternal regulation by the government, which prescribes how industry shall go on, is always essentially distasteful to Americans. Exact regulative measures which shall be just cannot be framed beforehand by any government. Even Adam Smith believed, for instance, that the form of organization known as a stock company was suitable for only a few kinds of business. The American prefers to submit all such questions to the actual business test. All experimental undertakings are sifted by natural selection, and the undesirable and unnecessary ones fall through. It is true that many lose their property in such experiments, but that is only a wholesome warning against thoughtless undertakings and against hasty belief that the methods profitable in one field must be profitable in every other. It is true that here and there a man will make large profits rather too easily, but Roosevelt has well said that it is better that a few people become too rich than that none prosper.

The development of affairs shows most of all that prices can be inflated for a short time, but that they slowly come back to a reasonable figure so long as there are no real monopolies. The experience of the last ten years teaches, moreover, that the most important factor which works against the trusts is the desire for independence on the part of capitalists, who do not for a long time willingly subordinate themselves to any corporation, but are always tempted to break away and start once more an independent concern.

And comparing the situation in 1904 with that of 1900, one sees that in spite of the seeming growth of the trust idea, the trusts themselves have become more solid by the squeezing out of fictitious valuations; they are more modest, content themselves with less profits, and they are much less dangerous because of the competition which has grown up around them. The trusts which originally ruled some whole industry through the country are to-day satisfied if they control two-thirds of it. A single fundamental thought remains firm, that the development of industry demands a centralized control. This idea works itself out more and more, and would remain in spite of any artificial obstruction which might be put before it. But the opposite tendencies are too deeply rooted in human nature, in Anglo-Saxon law, and in the American’s desire for self-initiative, to let this centralization go to dangerous limits.

But those who will not believe that the trusts, with their enormous capitals, can be adequately restrained in this way, may easily content themselves with that factor which, as the last few years have shown, speaks more energetically than could Congress itself—this is organized labour. The question of capital in American economy is regulated finally by the question of labour.

The Labour Question

As the negro question is the most important problem of internal politics, so the labour question is the most important in American economic life; and one who has watched the great strikes of recent years, the tremendous losses due to the conflicts between capital and labour, may well believe that, like the negro question, this is a problem which is far from being solved. Yet this may not be the case. With the negro pessimism is justified, because the difficulties are not only unsolved, but seem unsolvable. The labour question, however, has reached a point in which a real organic solution is no longer impossible. Of course, prophecies are dangerous; and yet it looks as if, in spite of hard words, the United States have come to a condition in which labourers and capitalists are pretty well satisfied, and more so perhaps than in any other large industrial nation. It might be more exact to say that the Americans are nearer the ideal condition for the American capitalist and the American labourer, since the same question in other countries may need to be solved on wholly different lines.

In fact, the American problem cannot be looked into without carefully scrutinizing how far the factors are peculiar to this nation. Merely because certain general factors are common to the whole industrial world, such as capital, machinery, land values, labour, markets, and profits, the social politician is inclined to leave out of account the specific form which the problem takes on in each country. The differences are chiefly of temperament, of opinions, and of mode of life.

It is, indeed, a psychological factor which makes the American labour question very different from the German problem. This fact is neglected, time after time, in the discussions of German theorists and business men. It is, for instance, almost invariably affirmed in Germany that the American government has done almost nothing toward insuring the labourer against illness, accident, or old age, and that therefore America is in this respect far inferior to Germany. It can easily be foreseen, they say, that American manufacturers will be considerably impeded in the world’s market as soon as the progress of civilization forces them to yield this to the working-man.

The fact is that such an opprobrium betrays a lack of understanding of American character. The satisfaction felt in Germany with the laws for working-men’s insurance is fully justified; for they are doubtless excellent under German conditions, but they might not seem so satisfactory to the average American nor to the average American labourer. He looks on it as an interesting economic experiment, admirable for the ill-paid German working-man, but wholly undesirable for the American. The accusation that the American government fails in its duty by not providing for those who have served the community, is the more unjust, since America expends on the average $140,000,000 in pensions for invalid veterans and their widows, and is equally generous wherever public opinion sees good cause for generosity.