When we turn to agriculture, the criticisms of the Socialist theory appear more substantial and important. A few years ago we witnessed the rise and rapid growth of the great bonanza farms in this country. It was shown that the advantages of large capital and the consolidation of productive forces resulted, in farming as in manufacture, in greatly cheapened production.[104] The end of the small farm was declared to be imminent, and it seemed for a while that concentration in agriculture would even outrun concentration in manufacture. This predicted absorption of the small farms by the larger, and the average increase of farm acreage, has not, however, been fulfilled to any great degree. An increase in the number of small farms, and a decrease in the average acreage, is shown in almost all the states. The increase of great estates shown by the census figures probably bears little or no relation to real farming, consisting mainly of great stock grazing ranches in the West, and unproductive gentlemen's estates in the East.
Apparently, then, the Socialist theory that "the big fish eat up the little ones, and are in turn eaten by still bigger ones," is not applicable to agriculture. On the contrary, it seems that the great farms cannot compete successfully with the smaller farms. It is therefore not surprising that writers so sympathetic to Socialism as Professor Werner Sombart and Professor Richard T. Ely should claim that the Marxian system breaks down when it reaches the sphere of agricultural industry, and that it seems to be applicable only to manufacture. This position has been taken by a not inconsiderable body of Socialists in recent years, and is one of the tenets of that critical movement within the Socialist ranks which has come to be known as "Revisionism." Nothing is more delusive than statistical argument of this kind, and while these conclusions should be given due weight, they should not be too hastily accepted. An examination of the statistical basis of the argument is necessary.
In the first place, small agricultural holdings do not necessarily imply economic independence, any more than do petty industries or businesses. When we examine the census figures carefully, the first important fact which challenges attention is that, whereas of the farms in the United States in 1880, 71.6 per cent were operated by their owners, in 1900 the proportion had declined to 64.7 per cent. In 1900, of the 5,739,657 farms in the United States, no less than 2,026,286 were operated by tenants. Concerning the ownership of these rented farms little investigation has been made, and it is likely that careful inquiry would elicit the fact that this is a not unimportant phase of agricultural concentration, though not revealed by the figures in the census reports. It remains to be said concerning these figures, however, that they do not lend support to the theory that the small farms are being swallowed up by the larger ones, for in the same period there was a very decided increase in the number of farms operated by their owners. Thus we have the same set of figures used to support both sides of the controversy—one side calling attention to the decreased proportion of farms operated by their owners, the other to the increased number.
A similar difficulty presents itself in connection with the subject of mortgaged farm holdings. In 1890, the mortgaged indebtedness of the farmers of the United States amounted to the immense sum of $1,085,995,960, a sum almost equal to the value of the entire wheat crop. Now, while a mortgage is certainly not suggestive of independence, it may be either a sign of decreasing or increasing independence. It may be a step toward the ultimate loss of one's farm or a step toward the ultimate ownership of one. Much that has been written by Populist and Socialist pamphleteers and editors upon this subject has been based upon the entirely erroneous assumption that a mortgaged farm meant loss of economic independence, whereas it often happens that it is a step toward it. The fact is that we know very little concerning the ownership of these mortgages, which is the crux of the question. It is known that many of the insurance, banking, and trust companies have invested largely in farm mortgages. This is another phase of concentration which the critics of the theory have overlooked almost entirely. One thing seems certain, namely, that farm ownership is not on the decline. It is not being supplanted by tenantry; the small farms are not being absorbed by larger ones. It seems a fair deduction from the facts, then, that the small farmer will continue to be an important factor—indeed, the most important factor—in American agriculture for a long time to come, perhaps permanently. If the Socialist movement is to succeed in America, it must recognize this fact in its propaganda.
V
Most of the criticism of the Marxian theory of concentration is based upon a very unsatisfactory definition of what is meant by concentration. The decrease of small units and their absorption or supercession by larger units is generally understood when concentration is spoken of. But concentration may take other, very different forms. There may be a concentration of control, for example, without concentration of actual ownership, or there may be concentration of actual ownership disguised by mortgages, as already suggested. The sweated trades are a familiar example of the former method of concentration. It has been shown over and over again that while small establishments remain a necessary condition of sweated industry, there is almost always effective concentration of control. To all appearances an independent manufacturer on a small scale, the sweater is generally nothing more than the agent of some big establishment, which finds it more economical to let the work be done in sweatshops than in its own factories. The same thing holds good of the retail trades, many of the apparently independent retail stores being simply agencies for big wholesale houses, controlled by them in every way. In an even larger measure, agriculture is subject to a control that is quite independent of actual or even nominal ownership of the farm. Manifestly, therefore, we need a more accurate and comprehensive definition of concentration than the one generally accepted. Mr. A. M. Simons, in an admirable study of the agricultural question from the Socialist viewpoint, defines concentration as "a movement tending to give a continually diminishing minority of the persons engaged in any industry, a constantly increasing control over the essentials, and a continually increasing share of the total value of the returns of the industry."[105] It is no part of the purpose of this chapter to discuss this definition at length. It is sufficient to have thus emphasized that concentration may be quite as effective when it is limited to control as when it embraces ownership.
There are, then, other forms of concentration than the physical one, the amalgamation of smaller units to form larger ones, and very often these forms of concentration go on unperceived and unsuspected. There can be no doubt that this is especially true of agricultural industry. Many branches of farming, as the industry was carried on by our fathers and their fathers before them, have been transferred from the farmhouse to the factory. Butter and cheese making, for example, have largely passed out of the farm kitchen into the factory. The writer recalls a visit to a large farm in the Middle West. The sound of a churn is never heard there, notwithstanding that it is a "dairy farm," and all the butter and cheese consumed in that household is bought at the village store. Doubtless this farm but presented an exaggerated form of a condition that is becoming more and more common. The invention of labor-saving machinery and its application to agriculture leads to a division of the industry and the absorption by the factory of the parts most influenced by the new processes. When we remember the tremendous rôle which complex agencies outside of the farm play in modern agricultural industry, we see the subject of concentration as it applies to that industry in a new light. The grain elevators, cold-storage houses, creameries, and even railroads, are part of the necessary equipment of production, but they are owned and operated independently of the farm. There is a good deal of concentration of production in agriculture which takes the form of the absorption of some of its processes by factories instead of by other farms.
VI
We must also distinguish between the concentration of industry and the concentration of wealth. While there is a natural relation between these two phenomena, they are by no means identical. The trustification of a given industry may bring together a score of industrial units in one gigantic concern, so concentrating capital and production, but it is conceivable that every one of the owners of the units which compose the trust may have a share in it equal to the capital value of his particular unit, but more profitable. In that case, there can obviously be no concentration of wealth. What occurs is that all are benefited by certain economies, in exact proportion to their holdings in the capital stock. It may even happen that a larger number of persons participate, as shareholders, in the amalgamation than were formerly concerned in the ownership of the units of which the amalgamation is composed. Assuming, for the purposes of our argument, that these persons are represented by new capital, that the former owners of independent units share upon an equitable basis, there will be increased diffusion of wealth instead of its concentration. As Professor Ely says, "If the stock of the United States Steel Corporation were owned by individuals holding one share each, the concentration in industry would be just as great as it is now, but there would be a wide diffusion in the ownership of the wealth of the corporation."[106]