These plans all show the grand energy of this projector, and the Elector entered into them all. He could not carry out the postal service without the consent of the Emperor, and this he was unable to get. Roth and the Elector were ahead of their time; the Emperor was not; he said that the plan proposed “something new, which had never been in use in the time of their ancestors.” The attempt to unite private merchants in the speculation also failed at Leipzig, and elsewhere the attitude toward it was extremely unfriendly.
When the stock of pepper began to accumulate at Leipzig, it was found that the article did not begin to be scarce elsewhere. Although the advances of the Prince were already far greater than he had promised when the plan was formed, it was found impossible to begin sales until all the pepper on the European market elsewhere could be bought up; and at the same time reports came that, in spite of Roth’s contract, any one who had money could buy all the pepper he wanted in India, and that it was coming into Europe freely through Egypt and Venice. In the spring of 1580 the supply in the cities of Holland and Germany was ample. It appeared that Roth could not prevent the contractors for other parts of Europe from shipping to Germany, and the price was falling there; instead of being at fifteen groschen, where the speculators hoped to hold it, it was below twelve. At this point Roth’s creditors began to put attachments on his property. All this led the Elector to say: “We fear that there has been a great mistake in Roth’s original and still repeated assertion that all the pepper which comes into Europe comes through Lisbon.”
In April Roth committed suicide upon hearing of the death of the King of Portugal. It was known that the King of Spain intended to claim the succession, and that the Portuguese would resist; this war and the possibility of a Spanish succession meant ruin to the speculation. The Elector was obliged to send agents in every direction to get possession of the assets of the company, in order to recover his funds. In the end it appears that he escaped without very serious loss; he sold the whole stock to a syndicate of South German merchants, at a price which restored all his capital. After moralizing on his experience he declared: “Inasmuch as I am now weary and sick, and am anxious to pass the remaining time which God vouchsafes me in quiet, I have firmly determined to have done with commerce, whether it would bring me gain or loss.” “I have,” he says again, “strengthened my head and I will have done with false commerce.”[46]
This enterprise was plainly an attempt to exploit a natural monopoly, and to do it by an operation which should embrace the whole world; it was a purely money-making scheme, unrelieved by any social or industrial advantage. It shows how erroneous it is to suppose that the merchants of the fifteenth and sixteenth centuries were inferior in boldness to those of to-day, or superior to them in disposition to sacrifice themselves for the public good; it would be easy to accumulate any amount of evidence that they were, on the contrary, entirely unscrupulous in the pursuit of gain, and that they were bold beyond anything known to modern merchants. They might well be so. This story shows what great risks, dangers, perplexities, and disappointments they were subject to. The risk element was plainly enormous, but the gains corresponded, of course, and hence we find some of these men enormously rich; but it is plain that there was no routine to help the man who had less natural ability. There was no regularity in any of the contributory operations, such as shipping lines and post-office; there were no regular and adequate banking facilities. If by “trust” we mean a combination to exploit a monopoly, either natural or artificial, the men of that period had made an art of that sort of undertaking, and had a skill in it of which the moderns have no conception.
One cannot help admiring the courage and energy of this Roth. He had everything to contend with; he was far in advance of his age. If he had lived in our time he would have been a great captain of industry—we could have given him something better to do than making a corner on pepper.
In our current social discussions there is a special kind of fallacy which consists in quasi-historical assertions. For instance, it is said that the power of capital is increasing and is greater than it ever has been. This is in form an historical assertion, but those who make it never expect to be held to an historical responsibility for it. They throw it out with a kind of risk, because they are not very accurately informed as to the power of capital in former times, and have not heard that it used to act as it does now. Capitalists never had less irresponsible power than now. It is said that monopoly is growing evil; that it never was so great. If people choose to pass laws to make monopolies, they must, of course, take the consequences; but there never was a time when the control of natural monopolies was so rational as now, and there never was a time when the efforts of cliques to make artificial monopolies could be so easily frustrated as now. It is said that trusts embracing the whole world are a new and threatening danger, never heard of before. It has seemed to me that, if we are to have history, it might be well for once to see some facts which illustrate “the good old times” as they really were. Of course nothing is thereby proved as to the good or ill of trusts; but something is proved as to the fallacy of that class of quasi-historical assertions which I have described.
SHALL AMERICANS OWN SHIPS?[47]
Since the war, public attention has been drawn more or less to the marked decline in American shipping. It has been generally assumed and conceded that this was a matter for regret, and some discussion has arisen as to remedies—what to do, in fact, in order to bring it about that Americans should own ships. In these discussions, there has generally been a confusion apparent in regard to three things which ought to be very carefully distinguished from each other: ship-building, the carrying trade, and foreign commerce.
1. As to ship-building—Americans began to build ships, as an industry, within fifteen years after the settlement at Massachusetts Bay. Before the Revolution they competed successfully as ship-builders with the Dutch and English, and they sold ships to be used by their rivals. Tonnage and navigation laws played an important part in the question of separation between the colonies and England, and the same laws took an important place in the formation of the Federal Constitution. One generation was required for the people of this country to get over the hard logical twist in the notion that laws which were pernicious when laid by Great Britain were beneficial when laid by ourselves. The vacillation which has marked the history of our laws about tonnage and navigation is such that it does not seem possible to trace the effects of legislation upon ship-building. In the decade 1850–1860 a very great decline in the number of ships built, especially for ocean traffic, began to be marked. Sails began to give way to steam, but the building of steamships required great advantages of every kind in the production of engines and other apparatus—that is, it required the presence, in a highly developed state, of a number of important auxiliary and coöperating industries. As iron was introduced into ship-building, of course the ship-building industry became dependent upon cheap supplies of iron as it had before been dependent on cheap supplies of wood. No doubt these changes in the conditions of the industry itself have been the chief cause of the decline in ship-building in this country, and legislation has had only incidental effects. It is a plain fact of history that the decline in ship-building began before the war and the high tariff. Of course the effects produced by changes in the conditions of an industry are inevitable; they are not to be avoided by any legislation. They are annoying because they break up acquired habits and established routine, and they involve loss in a change from one industry to another, but legislation can never do anything but cause that loss to fall on some other set of people instead of on those directly interested. Within the last few years it has become certain that steel is to be the material of ocean vessels—a new improvement which will not tend to bring the industry back to this country. On the whole, therefore, the decline in ship-building of the last twenty-five years seems to indicate that somebody else than ourselves must build the world’s ships for the present. We have, by legislative devices, forced the production of a few ocean steamers, but these cases prove nothing to the contrary of our inference. If this nation has a hobby for owning some ships built in this country, and is willing to pay enough for the gratification of that hobby, no doubt it can secure the pleasure it seeks. A fisherman who has caught nothing sometimes buys fish at a fancy price; he saves himself mortification and gets a dinner, but the possession of the fish does not prove that he has profitably employed his time or that he has had sport.