Civilization in the United States: An inquiry by thirty Americans

by Unknown

However, the second state of the railroad is worse than the first. It is overwhelmed by the monster it has suckled. It is at the mercy of a few big shippers, masters of mass production, who bully it, extort lower and lower rates still, and at length secret rebates, under threat of transferring their tonnage to another railroad or in some cases of building their own railroad, which now they are powerful enough to do. The railroad yields; and whereas before only such industry as survived at intermediate points was penalized by higher freight rates, now all industry outside of big business is at a disadvantage, since big business is receiving secret benefits from the railroads.

There was no philosophy in any of this, not even a high order of intelligence. The will of business is anarchistic; its religion is fatalism. If let alone, it will seek its profit by any means that serve and then view the consequences as acts of Providence.

It has been noted that big business, going in for mass production, restored the honesty of goods. The motive was not ethical. It paid. The public’s good will toward a brand or a trade-mark was an asset that could be capitalized, sometimes for more than plant and equipment, and the shares representing such capitalization could be sold to the public on the Stock Exchange. But what was gained for morality in the honesty of goods was lost again in new forms of dishonesty. Standard Oil products were always cheap and honest; its oil was never watered. But the means by which the Standard Oil Company gained its dangerous trade eminence were dishonest, and the trust was dissolved for that reason by the United States Supreme Court. It happens to be only the most notable instance. There were and are still many others—combines and trusts whose products are honest but whose tradeways are either illegal or ethically repugnant.

One cannot say that business is either honest or dishonest. It is both. Evidence of permanent gain in a kind of intrinsic commercial honesty is abundant. Wild-cat banking has disappeared. A simple book entry between merchants is as good as a promissory note. The integrity of merchandise now is a trade custom. Vulgar misrepresentations have ceased save in the slums of business. The practice of making open prices to all buyers alike, wholesale and retail, is universal. It is no longer possible to print railroad shares surreptitiously overnight and flood the Stock Exchange with them the next morning, as once happened in Erie. Nowhere is character more esteemed than in business.

And yet, in spite of all this and parallel with it, runs a bitter feud between society and business. People are continually acting upon big business through the agencies of government to make it behave. What is the explanation?

Well, in the first place, the improvement in commercial honesty has been owing not so much to ethical enlightenment as to internal necessity. Big business must do its work on credit; there is no other way. Therefore credit is a sacred thing, to be preserved by all means. Men know that unless they are scrupulous in fulfilling their obligations toward it, the system will collapse. As the use of credit increases the code of business become more rigid. It must. One who breaks faith with the code is not merely dishonest, man to man; he is an enemy of credit.

If a stock-market coterie of this day could print Erie shares without notice and sell them the public would suffer of course but Wall Street would suffer much more. Its own affairs would fall into hopeless disorder. That kind of thing cannot happen again. The code has been improved. You now may be sure that anything you buy on the Stock Exchange has been regularly issued and listed. No institution is more jealous of the integrity of its transactions—transactions as such. Purchases and sales involving millions are consummated with a nod of the head and simple dishonesty is unknown. Nevertheless, it is a notorious fact that the amount of money nowadays lost on the Stock Exchange by the unwary public is vastly greater than in Jay Gould’s time. There is, you see, an important difference between formal and moral honesty.

Secondly, business morality is a term without meaning. There is no such thing. Business is neither moral nor immoral. It represents man’s acquisitive instinct acting outside of humanistic motives. Morals are personal and social. Business is impersonal and unsocial.

So far we come clear. Only now, what shall be said of the man in business? He is not a race apart. He may be any of us. How then shall we account for the fact that those evils and tyrannies of big business with which the Congress, the Interstate Commerce Commission, the Department of Justice, the Federal Trade Board, and other agencies of the social will keep open war are not inhibited at the head by an innate social sense? Does the business man lose that sense? Or by reason of the material in which he works does he become an unsocial being? No. The answer is that the kind of business we now are talking about is not conducted by men. It is conducted by corporations.

A thing of policy purely, with only legal responsibilities and no personality, free from hope of heaven or fear of hell, the corporation is both a perfect instrument for the impersonal ends of business and a cave of refuge for the conscience. Business by corporations is highly responsible in all that pertains to business. Business by corporations is in all ethical respects anonymous. A corporation does many things which no one of its directors would do as an individual. The head of a corporation says: “If it were my own business, I should handle this labour problem very differently. But it isn’t. I am a trustee, answerable to five thousand stockholders for the security of their dividends.” Each of the five thousand stockholders says: “It isn’t my business. I am merely one of a great number of stockholders. What can I do about it?”