No one will deny that the history of England justifies this statement; but let us remember the reason that Macaulay gave for this insuperable prosperity. “Every man has felt entire confidence that the State would protect him in the possession of what had been earned by his diligence and hoarded by his self-denial.”
It is impossible to maintain that every man now feels this entire confidence. The income “earned by his diligence” is henceforth to be taxed at a progressive rate, and the demagogues are already complaining that the rate is not high enough. The inheritance of his family, “hoarded by his self-denial,” protected by the State until within a few years, now pays taxes which amount to the interest on a billion of dollars. We are assured by a railroad officer that three measures of legislation have increased the expenses of his corporation alone by a sum equal to the interest on $32,000,000, with no appreciable benefit to the public. The number of such laws is incalculable, and the cost of complying with them has become [pg 80]an almost intolerable burden. The income of the railroads declines, while their taxes increase, in some cases two or three fold. Lawyers and office holders thrive and are cheerful; investors suffer and tremble.
The people of New York seem just now to be in a way to find out how the enormous taxes which their rulers have levied on them are expended; but New York has no monopoly of corrupt rulers, and the cost of investigating extravagance is itself extravagant. And yet people wonder at the increased cost of living! Unfortunately the oppressions of government do worse than discourage business enterprise; they tend to demoralize society. There are too many men who hesitate to marry because they do not have confidence in the future, too many married people who do not dare to have more than one or two children, if they dare to have any, to make it possible to maintain that there is now no dread of more than ordinary misgovernment.
It is difficult to ascertain the total wealth of the country. The census bureau is notoriously dilatory. Its latest estimate was for 1904, when this aggregate was computed to be $107,000,000,000, or about $1,300 per caput. Assuming this ratio, the wealth of our people should now be over $120,000,000,000; but the figures are largely conjectural. It happens, however, that we possess some figures that are altogether trustworthy. In the year 1909 the Federal Government imposed a tax of one per cent. on the net income of every corporation, joint stock company, or association, including insurance companies, organized for profit, whenever this net income is over $5,000. There are some other exemptions, but they are not sufficient to demand consideration, and may be disregarded. Now we may be absolutely certain of one thing, and that is that the net income of those concerns will not be overestimated. Their net income may be more than what they report for the purposes of taxation, [pg 81]but it surely cannot be less. For the past year it seems probable that this tax will produce nearly thirty-five millions of dollars net income, after deducting all expenses, losses, depreciation, interest on debts and on deposits paid by banks, and dividends from other companies subject to the tax.
It may be more, but it cannot be less. Here our certainty ends. Guesses will vary, but in view of what we know in a general way of the conditions of business during the past year, we may perhaps venture to assume that the net income of these concerns is six per cent. of their real wealth. If this assumption is correct, their total wealth is 60 billions of dollars, or one half of the total wealth of the nation.
This estimate may be confirmed to some extent by other statistics. Calling the physical value of the railroads fourteen billions, their net earnings at five per cent. would be 700 millions, which corresponds well enough with the figures of the government, although some railroad men would make their net earnings much less. We do not know the net income of the untaxed corporations. Their returns would show its amount, but the government does not supply the information. As there must be now nearly 250,000 such corporations, if their average income is only $2,000 a year, the total could be $500,000,000. If it is $4,000, their income would be almost a billion dollars. On a 5 per cent. basis, the wealth of these corporations would be nearly 20 billion dollars. It seems, on the whole, that the wealth held by corporations is probably more than half our total wealth rather than less.
The bearing of these figures on our subject is now apparent. All of this property is disfranchised. It is, economically, to a very great extent disfranchised; politically, it is altogether disfranchised. What I mean by this is that the owners of this wealth, as owners, have very little to say, and nothing to do, about its care and management. Probably [pg 82]more than half of our people are directly or indirectly interested in it as owners. They have been attracted by a desire to share, however humbly, in big and famous enterprises, by the freedom from liability of the portion of their estates outside the particular investments, and by the freedom at death or withdrawal of associates from appraisals and accountings and probable closing of the business, as is the inevitable practice in mere partnerships. Two centuries ago people who saved money could hardly find ways to invest it. The practice of incorporation has enormously increased our wealth by putting a stop to hoarding without interest, stimulating saving, and broadening industry. The number of individual owners of the bonds and stocks of corporations is incalculable, and their holdings added to those of savings banks, insurance companies, trust companies and other fiduciary institutions, churches, hospitals, and colleges, make up a total of almost fabulous extent. It is true that large sums are loaned to persons, and on mortgages of real estate; but for most people such investments are not desirable or convenient, and they are altogether inadequate to absorb the vast sums that are available. In fact probably most investments of this character are now made by corporations who gather the savings of little depositors and premium payers; and it would cost much more to make them in any other way.