From the foregoing review it might appear to be the natural conclusion that the economic element in the present war is practically negligible. By far the greater proportion of the trade relations of the world—and the relations most significant to the general welfare—obtain between the very nations that are now endeavoring to destroy one another. The opportunities for concessionary capital that could be secured by any nation, if completely victorious, can hardly be equivalent to the losses of the far more important industrial capital at home. It is certain that if all capital had been conscious of its interest, and the question of peace or war had been left to capital, each hundred dollars having one vote, there would have been no war. There is a war: costly demonstration to the Socialists that capital does not, as alleged, enjoy control of modern political society.
Before we accept this view, however, let us look somewhat more closely upon the structure of capital as a social economic force. We shall find that it is not homogeneous, but embraces two elements differing widely in character. The one, which we may denominate capital proper, is characterized by cautious calculation, by a preference for sure if small gains, to dazzling winnings. The other, which we may call speculative enterprise, is characterized by a readiness to take risks, a thirst for brilliant gains. The relative political power of the two elements, as we shall see, is not proportioned to their respective pecuniary volumes. Accordingly, altho it may easily enough be demonstrated that the majority interest of European capital has been seriously prejudiced by the present war, it does not follow that a large share of the responsibility for the war may not be fixed upon capital. The minority interest may have determined a majority vote.
Capital proper thrives best in a settled order of society, where the risks of loss are at a minimum. It accepts favors from government, to be sure, but politics is no part of its game; peace, and freedom from disturbing innovations, are its great desiderata. Speculative enterprise, on the other hand, thrives best in the midst of disorder. Its favorite field of operations is the fringe of change, economic or political. It delights in the realm where laws ought to be, but have not yet made their appearance. To control the course of legal evolution, to retard it or divert it, are its favorite devices for prolonging the period of rich gains. Politics, thus, is an essential part of the game of speculative enterprise.
At the outset of the modern era, speculative enterprise quite overshadowed capital proper. Colonial trade, government contracts, domestic monopolies were the chief sources of middle class fortunes. But with the progress of industry, slow, plodding capital has been able steadily to encroach upon the field of enterprise, or to create new fields of its own. In our own society the promoter of railway, and public utilities, the exploiter of public lands, the trust organizer, are as prominent, relatively, as in any modern nation. Quantitatively their interests are, however, greatly inferior to those of the trader, manufacturer, banker, the small investor and the farmer, to whom a ten per cent return is a golden dream, and twenty per cent a temptation sent by the Evil One.
But quantitatively inferior as the speculative capitalist really is, his hold upon the popular imagination is vastly more powerful than that of his slow-going colleague. Say that an employer of this type prefers to spend money on machine guns to repress strikes rather than in better wages: instantly it is declared by all the radicals of the earth that such is the general spirit of capitalism. No radical is able to keep clearly in mind that the overwhelming majority of employers are doing their best to keep their working forces contented, and are succeeding fairly well. The radicals, however, are not the only persons whose minds are overcrowded with the doings of the speculative capitalist. You and I read eagerly the lives of Jay Gould, Oakes Ames, Harriman and Morgan, feeling that somehow we are thereby brought nearer to the spirit of modern life. We find it impossible to sustain an interest in the account of the life of James Metzger, grocer, who set out in life worth ten thousand, and by faithful attendance upon his customers, without ever once taking a risk, ended life with an estate of one hundred thousand. James Metzger is a type of the thousands making up the ranks of capital proper. His story is told in statistics, which you and I won’t read.
We may love or we may hate the speculative capitalist, but at all events we admire him. We admire him when he works for the public interest, and we admire him when his efforts are subversive of the public good. We admired Harriman when he built the Salt Lake cut-off, and we admired him when he cut the Alton melon. Now, is it to be supposed that the speculative capitalist does not turn this popular admiration to use as a political force, since politics is a part of his game? Inconceivable! As compared with his brother of the small profits and quick return, he enjoys a plural vote in our political scheme.
VII
In a new country of vast natural resources, especially if it is not too well governed, there is sufficient scope for both speculative enterprise and capital proper. The United States has been such a country, at least down to a very recent date. There was easy money enough for all men of shrewdness and resolution possessed of the necessary initial stake—public forests to be leveled, railways to be built or wrecked, trusts to be organized, cities to be provided with public utilities. But all this easy money now appears to be in danger of being locked up. We have a conservation movement in full swing, and a civic reform tendency that is no longer a mere cloak for the insatiable appetite of plunderers out of power. The popular attitude toward monopolistic combinations is growing ominously serious; if old and strong combinations do not dissolve in fear before it, yet those who would organize new combinations are deeply discouraged. We have an Interstate Commerce Commission with the will and the power to choke all railways when some are believed to have stealings in their gorge. Already we are beginning to hear murmurs about town, that in view of the popular hostility to wealth, it will be necessary for American capital to look to foreign investments. Not foreign investments in England and France and Germany, where government is efficient and capital proper prevails. But foreign investments in the undeveloped countries, in a Land of the Morning, “east of Suez.”
In England the domestic field for capitalistic speculation has long been restricted. For generations the British citizen has been taught to look to Asia, Africa, America, for the opportunities for sudden wealth. Germany, more recently launched upon an industrial career, might have offered many rich opportunities at home. But Germany has been well governed. The early nationalization of railways closed one lucrative field; the cities, with their excellent business governments, have taken control of their own utilities, or have driven hard bargains with private enterprise. Industrial combinations have been as numerous as with us; but they have assumed the form of the Kartell—a legally binding agreement between independent producers, fixing prices and volume of production. Such a form of organization, like our former “pools,” distributes the profits of combination fairly equitably among all the producers, and therefore has offered little opportunity for such promoter’s gains as we are familiar with in American trust finance. Some opening there was, of course, for speculative enterprise. The launching of new industrial companies, dealings in real estate, the military and naval industries, laid the basis for many astounding mushroom fortunes. But the progress of governmental effectiveness has been steadily encroaching upon these fields. The German internal situation, then, has been such as to recommend the Ausland to those who wish to risk large stakes on the chance of brilliant returns.
The progress of modern industrial society, with its parallel development in the art of government, tends to the extrusion of speculative capital, and its concentration in the tropical and subtropical belts. In the older societies the process has been in operation for a considerable time; with us it is just beginning. But in a generation, we may be sure, much of our own speculative capital, like that of the older countries, will be engaged in colonial exploitation.