| Notes |
The Engineers and The Price System
Thorstein Veblen
1921
I. On the Nature and Uses of Sabotage
III. The Captains of Finance and the Engineers
IV. On the Danger of a Revolutionary Overturn
V. On the Circumstances Which Make for a Change
VI. A Memorandum on a Practicable Soviet of Technicians
I. On the Nature and Uses of Sabotage
“Sabotage” is a derivative of “sabot,” which is French for a wooden shoe.
It means going slow, with a dragging, clumsy movement, such as that manner of footgear may
be expected to bring on. So it has come to describe any manoeuvre of slowing down, inefficiency,
bungling, obstruction. In American usage the word is very often taken to mean forcible obstruction,
destructive tactics, industrial frightfulness, incendiarism and high explosives, although that is plainly
not its first meaning nor its common meaning. Nor is that its ordinary meaning as the word is
used among those who have advocated a recourse to sabotage as a means of enforcing an argument
about wages or the conditions of work. The ordinary meaning of the word is better defined by
an expression which has latterly come into use among the I. W.W., “conscientious withdrawal of
efficiency “although that phrase does not cover all that is rightly to be included under this technical
term. The sinister meaning which is often attached to the word in American usage, as denoting
violence and disorder, appears to be due to the fact that the American usage has been shaped chiefly
by persons and newspapers who have aimed to discredit the use of sabotage by organized workmen,
and who have therefore laid stress on its less amiable manifestations. This is unfortunate.
It lessens the usefulness of the word by making it a means of denunciation rather than of
understanding. No doubt violent obstruction has had its share in the strategy of sabotage as carried
on by disaffected workmen, as well as in the similar tactics of rival business concerns. It comes
into the case as one method of sabotage, though by no means the most usual or the most effective;
but it is so spectacular and shocking a method that it has drawn undue attention to itself. Yet
such deliberate violence is, no doubt, a relatively minor fact in the case, as compared with that
deliberate malingering, confusion, and misdirection of work that makes up the bulk of what the
expert practitioners would recognize as legitimate sabotage. The word first came into use among the
organized French workmen, the members of certain syndicats, to describe their tactics of passive
resistance, and it has continued to be associated with the strategy of these French workmen, who are
known as syndicalists, and with their likeminded running mates in other countries.
But the tactics of these syndicalists, and their use of sabotage, do not differ, except in detail, from
the tactics of other workmen elsewhere, or from the similar tactics of friction, obstruction, and
delay habitually employed, from time to time, by both employees and employers to enforce an
argument about wages and prices. Therefore, in the course of a quarter century past, the word has
quite unavoidably taken on a general meaning in common speech, and has been extended to cover
all such peaceable or surreptitious manoeuvres of delay, obstruction, friction, and defeat, whether
employed by the workmen to enforce their claims, or by the employers to defeat their employees,
or by competitive business concerns to get the better of their business rivals or to secure their own
advantage. Such manoeuvres of restriction, delay, and hindrance have a large share in the ordinary
conduct of business; but it is only lately that this ordinary line of business strategy has come to be
recognized as being substantially of the same nature as the ordinary tactics of the syndicalists. So
that it has not been usual until the last few years to speak of manoeuvres of this kind as sabotage
when they are employed by employers and their business concerns. But all this strategy of delay,
restriction, hindrance, and defeat is manifestly of the same character, and should conveniently be
called by the same name, whether it is carried on by business men or by workmen; so that it is no
longer unusual now to find workmen speaking of “capitalistic sabotage” as freely as the employers
and the newspapers speak of syndicalist sabotage. As the word is now used, and as it is properly used,
it describes a certain system of industrial strategy or management, whether it is employed by one or
another. What it describes is a resort to peaceable or surreptitious restriction, delay, withdrawal, or
obstruction.
Sabotage commonly works within the law, although it may often be within the letter rather than the
spirit of the law. It is used to secure some special advantage or preference, usually of a businesslike
sort. It commonly has to do with something in the nature of a vested right, which one or another
of the parties in the case aims to secure or defend, or to defeat or diminish; some preferential right
or special advantage in respect of income or privilege, something in the way of a vested interest.
Workmen have resorted to such measures to secure improved conditions of work, or increased wages,
or shorter hours, or to maintain their habitual standards, to all of which they have claimed to have
some sort of a vested right. Any strike is of the nature of sabotage, of course. Indeed, a strike is a
typical species of sabotage. That strikes have not been spoken of as sabotage is due to the accidental
fact that strikes were in use before this word came into use. So also, of course, a lockout is another
typical species of sabotage. That the lockout is employed by the employers against the employees does
not change the fact that it is a means of defending a vested right by delay, withdrawal, defeat, and
obstruction of the work to be done. Lockouts have not usually been spoken of as sabotage, for the
same reason that holds true in the case of strikes. All the while it has been recognized that strikes
and lockouts are of identically the same character.
All this does not imply that there is anything discreditable or immoral about this habitual use of
strikes and lockouts. They are part of the ordinary conduct of industry under the existing system,
and necessarily so. So long as the system remains unchanged these measures are a necessary and
legitimate part of it. By virtue of his ownership the owner employer has a vested right to do as he will
with his own property, to deal or not to deal with any person that offers, to withhold or withdraw
any part or all of his industrial equipment and natural resources from active use for the time being,
to run on half time or to shut down his plant and to lock out all those persons for whom he has
no present use on his own premises. There is no question that the lockout is altogether a legitimate
manoeuvre. It may even be meritorious, and it is frequently considered to be meritorious when its
use helps to maintain sound conditions in business that is to say profitable conditions as frequently
happens. Such is the view of the substantial citizens. So also is the strike legitimate, so long as it
keeps within the law; and it may at times even be meritorious, at least in the eyes of the strikers.
It is to be admitted quite broadly that both of these typical species of sabotage are altogether fair
and honest in principle, although it does not therefore follow that every strike or every lockout
is necessarily fair and honest in its working-out. That is in some degree a question of special
circumstances.
Sabotage, accordingly, is not to be condemned out of hand, simply as such.
There are many measures of policy and management both in private business and in public
administration which are unmistakably of the nature of sabotage and which are not only considered
to be excusable, but are deliberately sanctioned by statute and common law and by the public
conscience. Many such measures are quite of the essence of the case under the established system
of law and order, price and business, and are faithfully believed to be indispensable to the common
good. It should not be difficult to show that the common welfare in any community which is
organized on the price system cannot be maintained without a salutary use of sabotage that it to say,
such habitual recourse to delay and obstruction of industry and such restriction of output as will
maintain prices at a reasonably profitable level and so guard against business depression. Indeed,
it is precisely considerations of this nature that are now engaging the best attention of officials and
business men in their endeavors to tide over a threatening depression in American business and a
consequent season of hardship for all those persons whose main dependence is free income from
investments.
Without some salutary restraint in the way of sabotage on the productive use of the available
industrial plant and workmen, it is altogether unlikely that prices could be maintained at a
reasonably profitable figure for any appreciable time. A businesslike control of the rate and volume
of output is indispensable for keeping up a profitable market, and a profitable market is the first and
unremitting condition of prosperity in any community whose industry is owned and managed by
business men. And the ways and means of this necessary control of the output of industry are always
and necessarily something in the nature of sabotage something in the way of retardation, restriction,
withdrawal, unemployment of plant and workmen whereby production is kept short of productive
capacity.
The mechanical industry of the new order is inordinately productive. So the rate and volume of
output have to be regulated with a view to what the traffic will bear that is to say, what will yield
the largest net return in terms of price to the business men who manage the country’s industrial
system. Otherwise there will be “overproduction,” business depression, and consequent hard times
all around. Overproduction means production in excess of what the market will carry off at a
sufficiently profitable price. So it appears that the continued prosperity of the country from day
to day hangs on a “conscientious withdrawal of efficiency” by the business men who control the
country’s industrial output. They control it all for their own use, of course, and their own use means
always a profitable price. In any community that is organized on the price system, with investment
and business enterprise, habitual unemployment of the available industrial plant and workmen, in
whole or in part, appears to be the indispensable condition without which tolerable conditions of life
cannot be maintained. That is to say, in no such community can the industrial system be allowed
to work at full capacity for any appreciable interval of time, on pain of business stagnation and
consequent privation for all classes and conditions of men.
The requirements of profitable business will not tolerate it. So the rate and volume of output must
be adjusted to the needs of the market, not to the working capacity of the available resources,
equipment and man power, nor to the community’s need of consumable goods. Therefore there must
always be a certain variable margin of unemployment of plant and man power. Rate and volume of
output can, of course, not be adjusted by exceeding the productive capacity of the industrial system.
So it has to be regulated by keeping short of maximum production by more or less as the condition
of the market may require. It is always a question of more or less unemployment of plant and man
power, and a shrewd moderation in the unemployment of these available resources, a “conscientious
withdrawal of efficiency,” therefore, is the beginning of wisdom in all sound workday business
enterprise that has to do with industry.
All this is matter of course, and notorious. But it is not a topic on which one prefers to dwell. Writers
and speakers who dilate on the meritorious exploits of the nation’s business men will not commonly
allude to this voluminous running administration of sabotage, this conscientious withdrawal of
efficiency, that goes into their ordinary day’s work. One prefers to dwell on those exceptional,
sporadic, and spectacular episodes in business where business men have now and again successfully
gone out of the safe and sane highway of conservative business enterprise that is hedged about with a
conscientious withdrawal of efficiency, and have endeavored to regulate the output by increasing the
productive capacity of the industrial system at one point or another.
But after all, such habitual recourse to peaceable or surreptitious measures of restraint, delay, and
obstruction in the ordinary businesslike management of industry is too widely known and too well
approved to call for much exposition or illustration. Yet, as one capital illustration of the scope and
force of such businesslike withdrawal of efficiency, it may be in place to recall that all the civilized
nations are just now undergoing an experiment in businesslike sabotage on an unexampled scale and
carried out with unexampled effrontery. All these nations that have come through the war, whether
as belligerents or as neutrals, have come into a state of more or less pronounced distress, due to a
scarcity of the common necessaries of life; and this distress falls, of course, chiefly on the common
sort, who have at the same time borne the chief burden of the war which has brought them to this
state of distress. The common man has won the war and lost his livelihood.
This need not be said by way of praise or blame. As it stands it is, broadly, an objective statement
of fact, which may need some slight qualification, such as broad statements of fact will commonly
need. All these nations that have come through the war, and more particularly the common run of
their populations, are very much in need of all sorts of supplies for daily use, both for immediate
consumption and for productive use. So much so that the prevailing state of distress rises in many
places to an altogether unwholesome pitch of privation, for want of the necessary food, clothing,
shelter, and fuel. Yet in all these countries the staple industries are slowing down. There is an ever
increasing withdrawal of efficiency. The industrial plant is increasingly running idle or half idle,
running increasingly short of its productive capacity. Workmen are being laid off and an increasing
number of those workmen who have been serving in the armies are going idle for want of work,
at the same time that the troops which are no longer needed in the service are being demobilized
as slowly as popular sentiment will tolerate, apparently for fear that the number of unemployed
workmen in the country may presently increase to such proportions as to bring on a catastrophe.
And all the while all these peoples are in great need of all sorts of goods and services which these idle
plants and idle workmen are fit to produce. But for reasons of business expediency it is impossible
to let these idle plants and idle workmen go to work that is to say for reasons of insufficient profit to
the business men interested, or in other words, for the reasons of insufficient income to the vested
interests which control the staple industries and so regulate the output of product. The traffic will not
bear so large a production of goods as the community needs for current consumption, because it is
considered doubtful whether so large a supply could be sold at prices that would yield a reasonable
profit on the investment or rather on the capitalization; that is to say, it is considered doubtful
whether an increased production, such as to employ more workmen and supply the goods needed
by the community, would result in an increased net aggregate income for the vested interests which
control these industries. A reasonable profit always means, in effect, the largest obtainable profit.
All this is simple and obvious, and it should scarcely need explicit statement. It is for these business
men to manage the country’s industry, of course, and therefore to regulate the rate and volume of
output; and also of course any regulation of the output by them will be made with a view to the
needs of business; that is to say, with a view to the largest obtainable net profit, not with a view to the
physical needs of these peoples who have come through the war and have made the world safe for the
business of the vested interests. Should the business men in charge, by any chance aberration, stray
from this straight and narrow path of business integrity, and allow the community’s needs unduly
to influence their management of the community’s industry, they would presently find themselves
discredited and would probably face insolvency. Their only salvation is a conscientious withdrawal of
efficiency. All this lies in the nature of the case. It is the working of the price system, whose creatures
and agents these business men are. Their case is rather pathetic, as indeed they admit quite volubly.
They are not in a position to manage with a free hand, the reason being that they have in the past,
under the routine requirements of the price system as it takes effect in corporation finance, taken on
so large an overhead burden of fixed charges that any appreciable decrease in the net earnings of the
business will bring any well managed concern of this class face to face with bankruptcy.
At the present conjuncture, brought on by the war and its termination, the case stands somewhat
in this typical shape. In the recent past earnings have been large; these large earnings (free income)
have been capitalized; their capitalized value has been added to the corporate capital and covered
with securities bearing a fixed income charge; this income charge, representing free income, has
thereby become a liability on the earnings of the corporation; this liability cannot be met in case
the concern’s net aggregate earnings fall off in any degree; therefore prices must be kept up to such
a figure as will bring the largest net aggregate return, and the only means of keeping up prices is a
conscientious withdrawal of efficiency in these staple industries on which the community depends
for a supply of the necessaries of life.
The business community has hopes of tiding things over by this means, but it is still a point in doubt
whether the present unexampled large use of sabotage in the businesslike management of the staple
industries will now suffice to bring the business community through this grave crisis without a
disastrous shrinkage of its capitalization, and a consequent liquidation; but the point is not in doubt
that the physical salvation of these peoples who have come through the war must in any case wait
on the pecuniary salvation of these owners of corporate securities which represent free income. It is a
sufficiently difficult passage. It appears that production must be curtailed in the staple industries, on
pain of unprofitable prices. The case is not so desperate in those industries which have immediately
to do with the production of superfluities; but even these, which depend chiefly on the custom of
those kept classes to whom the free income goes, are not feeling altogether secure. For the good of
business it is necessary to curtail production of the means of life, on pain of unprofitable prices,
at the same time that the increasing need of all sorts of the necessaries of life must be met in some
passable fashion, on pain of such popular disturbances as will always come of popular distress when
it passes the limit of tolerance.
Those wise business men who are charged with administering the salutary modicum of sabotage at
this grave juncture may conceivably be faced with a dubious choice between a distasteful curtailment
of the free income that goes to the vested interests, on the one hand, and an unmanageable onset of
popular discontent on the other hand. And in either alternative lies disaster.
Present indications would seem to say that their choice will fall out according to ancient habit, that
they will be likely to hold fast by an undiminished free income for the vested interests at the possible
cost of any popular discontent that may be in prospect and then, with the help of the courts and the
military arm, presently make reasonable terms with any popular discontent that may arise. In which
event it should all occasion no surprise or resentment, inasmuch as it would be nothing unusual
or irregular and would presumably be the most expeditious way of reaching a modus vivendi.
During the past few weeks, too, quite an unusually large number of machine guns have been sold to
industrial business concerns of the larger sort, here and there, at least so they say. Business enterprise
being the palladium of the Republic, it is right to take any necessary measures for its safeguarding.
Price is of the essence of the case, whereas livelihood is not.
The grave emergency that has arisen out of the war and its provisional conclusion is, after all,
nothing exceptional except in magnitude and severity.
In substance it is the same sort of thing that goes on continually but unobtrusively and as a matter
of course in ordinary times of business as usual. It is only that the extremity of the case is calling
attention to itself. At the same time it serves impressively to enforce the broad proposition that
a conscientious withdrawal of efficiency is the beginning of wisdom in all established business
enterprise that has to do with industrial production. But it has been found that this grave interest
which the vested interests always have in a salutary retardation of industry at one point or another
cannot well be left altogether to the haphazard and ill coordinated efforts of individual business
concerns, each taking care of its own particular line of sabotage within its own premises. The needed
sabotage can best be administered on a comprehensive plan and by a central authority, since the
country’s industry is of the nature of a comprehensive interlocking system, whereas the business
concerns which are called on to control the motions of this industrial system will necessarily work
piecemeal, in severalty and at cross-purposes. In effect, their working at cross-purposes results
in a sufficiently large aggregate retardation of industry, of course, but the resulting retardation is
necessarily somewhat blindly apportioned and does not converge to a neat and perspicuous outcome.
Even a reasonable amount of collusion among the interested business concerns will not by itself
suffice to carry on that comprehensive moving equilibrium of sabotage that is required to preserve
the business community from recurrent collapse or stagnation, or to bring the nation’s traffic into
line with the general needs of the vested interests.
Where the national government is charged with the general care of the country’s business interests,
as is invariably the case among the civilized nations, it follows from the nature of the case that the
nation’s lawgivers and administration will have some share in administering that necessary modicum
of sabotage that must always go into the day’s work of carrying on industry by business methods and
for business purposes. The government is in a position to penalize excessive or unwholesome traffic.
So, it is always considered necessary, or at least expedient, by all sound mercantilists, as by a tariff
or by subsidies, to impose and maintain a certain balance or proportion among the several branches
of industry and trade that go to make up the nation’s industrial system. The purpose commonly
urged for measures of this class is the fuller utilization of the nation’s industrial resources in material,
equipment, and man power; the invariable effect is a lowered efficiency and a wasteful use of these
resources, together with an increase of international jealousy. But measures of that kind are thought
to be expedient by the mercantilists for these purposes that is to say, by the statesmen of these
civilized nations, for the purposes of the vested interests.
The chief and nearly the sole means of maintaining such a fabricated balance and proportion among
the nation’s industries is to obstruct the traffic at some critical point by prohibiting or penalizing any
exuberant undesirables among these branches of industry. Disallowance, in whole or in part, is the
usual and standard method.
The great standing illustration of sabotage administered by the government is the protective tariff, of
course. It protects certain special interests by obstructing competition from beyond the frontier. This
is the main use of a national boundary. The effect of the tariff is to keep the supply of goods down
and thereby keep the price up, and so to bring reasonably satisfactory dividends to those special
interests which deal in the protected articles of trade, at the cost of the underlying community.
A protective tariff is a (typical conspiracy in restraint of trade. It brings a relatively small, though
absolutely large, run or free income to the special interests which benefit by it, at a relatively, and
absolutely, large cost to the underlying community, and so it gives rise to a body of vested rights and
intangible assets belonging to these special interests.
Of a similar character, in so far that in effect they are in the nature of sabotage conscientious
withdrawal of efficiency are all manner of excise and revenue stamp regulations; although they
are not always designed for that purpose. Such would be, for instance, the partial or complete
prohibition of alcoholic beverages, the regulation of the trade in tobacco, opium, and other
deleterious narcotics, drugs, poisons, and high explosives. Of the same nature, in effect if not
in intention, are such regulations as the oleomargarine law; as also the unnecessarily costly and
vexatious routine of inspection imposed on the production of industrial (denatured) alcohol, which
has inured to the benefit of certain business concerns that are interested in other fuels for use in
internal combustion engines; so also the singularly vexatious and elaborately imbecile specifications
that limit and discourage the use of the parcel post, for the benefit of the express companies and
other carriers which have a vested interest in traffic of that kind.
It is worth noting in the same connection, although it comes in from the other side of the case, that
ever since the express companies have been taken over by the federal administration there has visibly
gone into effect a comprehensive system of vexation and delay in the detail conduct of their traffic,
so contrived as to discredit federal control of this traffic and thereby provoke a popular sentiment in
favor of its early return to private control.
Much the same state of things has been in evidence in the railway traffic under similar conditions.
Sabotage is serviceable as a deterrent, whether in furtherance of the administration’s work or in
contravention of it.
In what has just been said there is, of course, no intention to find fault with any of these uses of
sabotage. It is not a question of morals and good intentions. It is always to be presumed as a matter
of course that the guiding spirit in all such governmental moves to regularize the nation’s affairs,
whether by restraint or by incitement, is a wise solicitude for the nation’s enduring gain and security.
All that can be said here is that many of these wise measures of restraint and incitement are in the
nature of sabotage, and that in effect they habitually, though not invariably, inure to the benefit of
certain vested interests ordinarily vested interests which bulk large in the ownership and control of
the nation’s resources. That these measures are quite legitimate and presumably salutary, therefore,
goes without saying. In effect they are measures for hindering traffic and industry at one point or
another, which may often be a wise business precaution.
During the period of the war administrative measures in the nature of sabotage have been
ereatly extended in scope and kind. Peculiar and imperative exigencies have had to be met, and
the staple means of meeting many of these new and exceptional exigencies has quite reasonably
been something in the way of avoidance, disallowance, penalization, hindrance, a conscientious
withdrawal of efficiency from work that does not fall in with the purposes of the Administration.
Very much as is true in private business when a situation of doubt and hazard presents itself, so
also in the business of government at the present juncture of exacting demands and inconvenient
limitations, the Administration has been driven to expedients of disallowance and obstruction with
regard to some of the ordinary processes of life, as, for instance, in the nonessential industries. It has
also appeared that the ordinary equipment and agencies for gathering and distributing news and
other information have in the past developed a capacity far in excess of what can safely be permitted
in time of war or of returning peace. The like is true for the ordinary facilities for public discussion
of all sorts of public questions.
The ordinary facilities, which may have seemed scant enough in time of peace and slack interest,
had after all developed a capacity far beyond what the governmental traffic will bear in these uneasy
times of war and negotiations, when men are very much on the alert to know what is going on.
By a moderate use of the later improvements in the technology of transport and communication,
the ordinary means of disseminating information and opinions have grown so efficient that the
traffic can no longer be allowed to run at full capacity during a period of stress in the business of
government.
Even the mail service has proved insufferably efficient, and a selective withdrawal of efficiency has
gone into effect. To speak after the analogy of private business, it has been found best to disallow
such use of the mail facilities as does not inure to the benefit of the Administration in the way of
good will and vested rights of usufruct.
These peremptory measures of disallowance have attracted a wide and dubious attention; but they
have doubtless been of a salutary nature and intention, in some way which is not to be understood by
outsiders that is to say, by citizens of the Republic. An unguarded dissemination of information and
opinions or an unduly frank canvassing of the relevant facts by these outsiders, will be a handicap on
the Administration’s work, and may even defeat the Administration’s aims. At least so they say.
Something of much the same color has been observed elsewhere and in other times, so that all this
nervously alert resort to sabotage on undesirable information and opinions is nothing novel, nor is it
peculiarly democratic.
The elder statesmen of the great monarchies, east and west, have long seen and approved the like.
But these elder statesmen of the dynastic regime have gone to their work of sabotage on information
because of a palpable division of sentiment between their government and the underlying
population, such as does not exist in the advanced democratic commonwealths. The case of Imperial
Germany during the period of the war is believed to show such a division of sentiment between
the government and the underlying population, and also to show how such a divided sentiment on
the part of a distrustful and distrusted population had best be dealt with. The method approved by
German dynastic experience is sabotage, of a somewhat freeswung character, censorship, embargo on
communication, and also, it is confidently alleged, elaborate misinformation.
Such procedure on the part of the dynastic statesmen of the Empire is comprehensible even to a
layman. But how it all stands with those advanced democratic nations, like America, where the
government is the dispassionately faithful agent and spokesman of the body of citizens, and where
there can consequently be no division of aims and sentiment between the body of officials and any
underlying population all that is a more obscure and hazardous subject of speculation. Yet there has
been censorship, somewhat rigorous, and there has been selective refusal of mail facilities, somewhat
arbitrary, in these democratic commonwealths also, and not least in America, freely acknowledged to
be the most naively democratic of them all. And all the while one would like to believe that it all has
somehow served some useful end. It is all sufficiently perplexing.
II. The Industrial System and the Captains of Industry It has been usual, and indeed it still is not
unusual, to speak of three coordinate “factors of production” : land, labor, and capital. The reason
for this threefold scheme of factors in production is that there have been three recognized classes
of income: rent, wages, and profits; and it has been assumed that whatever yields an income is a
productive factor. This scheme has come down from the eighteenth century. It is presumed to have
been true, in a general way, under the conditions which prevailed in the eighteenth century, and
it has therefore also been assumed that it should continue to be natural, or normal, true in some
eminent sense, under any other conditions that have come on since that time.
10
Seen in the light of later events this threefold plan of coordinate factors in production is notable for
what it omits. It assigns no productive effect to the industrial arts, for example, for the conclusive
reason that the state of the industrial arts yields no stated or ratable income to any one class of
persons; it affords no legal claim to a share in the community’s yearly production of goods. The
state of the industrial art is a joint stock of knowledge derived from past experience, and is held and
passed on as an indivisible possession of the community at large. It is the indispensable foundation of
all productive industry, of course, but except for certain minute fragments covered by patent rights or
trade secrets, this joint stock is no man’s individual property.
For this reason it has not been counted in as a factor in production. The unexampled advance
of technology during the past one hundred and fifty years has now begun to call attention to its
omission from the threefold plan of productive factors handed down from that earlier time.
Another omission from the scheme of factors, as it was originally drawn, was the business man.
But in the course of the nineteenth century the business man came more and more obtrusively to
the front and came in for a more and more generous portion of the country’s yearly income which
was taken to argue that he also contributed increasingly to the yearly production of goods. So a
fourth factor of production has provisionally been added to the threefold scheme, in the person of
the “entrepreneur,” whose wages of management are considered to measure his creative share in the
production of goods, although there still is some question as to the precise part of the entrepreneur in
productive industry.
“Entrepreneur” is a technical term to designate the man who takes care of the financial end of
things. It covers the same fact as the more familiar “business man,” but with a vague suggestion of
big business rather than small. The typical entrepreneur is the corporation financier. And since the
corporation financier has habitually come in for a very substantial share of the community’s yearly
income he has also been conceived to render a very substantial service to the community as a creative
force in that productive industry out of which the yearly income arises. Indeed, it is nearly true that
in current usage “producer” has come to mean “financial manager,” both in the standard economic
theory and in everyday speech.
There need of course be no quarrel with all this. It is a matter of usage.
During the era of the machine industry which is also the era of the commercial democracy business
men have controlled production and have managed the industry of the commonwealth for their own
ends, so that the material fortunes of all the civilized peoples have continued to turn on the financial
management of their business men. And during the same period not only have the conditions of life
among these civilized peoples continued to be fairly tolerable on the whole, but it is also true that
the industrial system which these business men have been managing for their own private gain all
this time has continually been growing more efficient on the whole. Its productive capacity per unit
of equipment and man power has continually grown larger. For this very creditable outcome due
credit should be, as indeed it has been, given to the business community which has had the oversight
of things. The efficient enlargement of industrial capacity has, of course, been due to a continued
advance in technology, to a continued increase of the available natural resources, and to a continued
11
increase of population. But the business community have also had a part in bringing all this to pass;
they have always been in a position to hinder this growth, and it is only by their consent and advice
that things have been enabled to go forward so far as they have gone.
This sustained advance in productive capacity, due to the continued advance in technology and in
population, has also had another notable consequence. According to the Liberal principles of the
eighteenth century any legally defensible receipt of income is a sure sign of productive work done.
Seen in the light of this assumption, the visibly increasing productive capacity of the industrial
system has enabled all men of a liberal and commercial mind not only to credit the businesslike
captains of industry with having created this productive capacity, but also to overlook all that the
same captains of industry have been doing in the ordinary course of business to hold productive
industry in check. And it happens that all this time things have been moving in such a direction and
have now gone so far that it is today quite an open question whether the businesslike management
of the captains is not more occupied with checking industry than with increasing its productive
capacity.
This captain of industry, typified by the corporation financier, and latterly by the investment
banker, is one of the institutions that go to make up the new order of things, which has been
coming on among all the civilized peoples ever since the Industrial Revolution set in. As such, as an
institutional growth, his life history hitherto should be worth looking into for any one who proposes
to understand the recent growth and present drift of this new economic order. The beginnings
of the captain of industry are to be seen at their best among those enterprising Englishmen who
made it their work to carry the industrial promise of the Revolution out into tangible performance,
during the closing decades of the eighteenth and the early decades of the nineteenth century. These
captains of the early time are likely to be rated as inventors, at least in a loose sense of the word. But
it is more to the point that they were designers and builders of factory, mill, and mine equipment,
of engines, processes, machines, and machine tools, as well as shop managers, at the same time that
they took care, more or less effectually, of the financial end. Nowhere do these beginnings of the
captain of industry stand out so convincingly as among the English toolbuilders of that early time,
who designed, tried out, built, and marketed that series of indispensable machine tools that has made
the practical foundation of the mechanical industry. Something to much the same effect is due to be
said for the pioneering work of the Americans along the same general lines of mechanical design and
performance at a slightly later period. To men of this class the new industrial order owes much of its
early success as well as of its later growth.
These men were captains of industry, entrepreneurs, in some such simple and comprehensive sense
of the word as that which the economists appear to have had in mind for a hundred years after,
when they have spoken of the wages of management that are due the entrepreneur for productive
work done. They were a cross between a business man and an industrial expert, and the industrial
expert appears to have been the more valuable half in their composition. But factory, mine, and ship
owners, as well as merchants and bankers, also made up a vital part of that business community out
of whose later growth and specialization the corporation financier of the nineteenth and twentieth
centuries has arisen. His origins are both technological and commercial, and in that early phase of
his life history which has been taken over into the traditions of economic theory and of common
sense he carried on both of these lines of interest and of work in combination. That was before the
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large scale, the wide sweep, and the profound specialization of the advanced mechanical industry
had gathered headway.
But progressively the cares of business management grew larger and more exacting, as the scale
of things in business grew larger, and so the directive head of any such business concern came
progressively to give his attention more and more exclusively to the “financial end.” At the same time
and driven by the same considerations the businesslike management of industry has progressively
been shifting to the footing of corporation finance. This has brought on a further division, dividing
the ownership of the industrial equipment and resources from their management. But also at the
same time the industrial system, on its technological side, has been progressively growing greater and
going farther in scope diversity, specialization, and complexity, as well as in productive capacity per
unit of equipment and man power.
The last named item of change, the progressive increase of productive capacity, is peculiarly
significant in this connection. Through the earlier and pioneering decades of the machine era it
appears to have been passably true that the ordinary routine of management in industrial business
was taken up with reaching out for new ways and means and speeding up production to maximum
capacity. That was before standardization of processes and of unit products and fabrication of parts
had been carried far, and therefore before quantity production had taken on anything like its later
range and reach.
And, partly because of that fact because quantity production was then still a slight matter and greatly
circumscribed, as contrasted with its later growth the ordinary volume of output in the mechanical
industries was still relatively slight and manageable. Therefore those concerns that were engaged in
these industries still had a fairly open market for whatever they might turn out, a market capable
of taking up any reasonable increase of output. Exceptions to this general rule occurred; as, e.g.,
in textiles. But the general rule stands out obtrusively through the early decades of the nineteenth
century so far as regards English industry, and even more obviously in the case of America. Such an
open market meant a fair chance for competitive production, without too much risk of overstocking.
And running to the same effect, there was the continued increase of population and the continually
increasing reach and volume of the means of transport, serving to maintain a free market for any
prospective increase of output, at prices which offered a fair prospect of continued profit. In the
degree in which this condition of things prevailed a reasonably free competitive production would be
practicable.
The industrial situation so outlined began visibly to give way toward the middle of the nineteenth
century in England, and at a correspondingly later period in America. The productive capacity of
the mechanical industry was visibly overtaking the capacity of the market, so that free competition
without afterthought was no longer a sound footing on which to manage production. Loosely,
this critical or transitional period falls in and about the second quarter of the nineteenth century
in England; elsewhere at a correspondingly later date. Of course the critical point, when business
exigencies began to dictate a policy of combination and restriction, did not come at the same date in
all or in most of the mechanical industries; but it seems possible to say that, by and large, the period
of transition to a general rule of restriction in industry conies on at the time and for the reason so
indicated. There were also other factors engaged in that industrial situation, besides those spoken of
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above, less notable and less sharply defined, but enforcing limitations of the same character. Such
were, e.g., a rapidly gaining obsolescence of industrial plant, due to improvements and extensions, as
also the partial exhaustion of the labor supply by persistent overwork, underfeeding, and unsanitary
conditions but this applies to the English case rather than elsewhere.
In point of time this critical period in the affairs of industrial business coincides roughly with the
coming in of corporation finance as the ordinary and typical method of controlling the industrial
output. Of course the corporation, or company, has other uses besides the restrictive control of the
output with a view to a profitable market, but it should be sufficiently obvious that the combination
of ownership and centralization of control which the corporation brings about is also exceedingly
convenient for that purpose. And when it appears that the general resort to corporate organization
of the larger sort sets in about the time when business exigencies begin to dictate an imperative
restriction of output, it is not easy to avoid the conclusion that this was one of the ends to be served
by this reorganization of business enterprise. Business enterprise may fairly be said to have shifted
from the footing of freeswung competitive production to that of a “conscientious withholding of
efficiency,” so soon and so far as corporation finance on a sufficiently large scale had come to be the
controlling factor in industry.
At the same time and in the same degree the discretionary control of industry, and of other
business enterprise in great part, has passed into the hands of the corporation financier. Corporate
organization has continually gone forward to a larger scale and a more comprehensive coalition
of forces, and at the same time, and more and more visibly, it has become the ordinary duty of
the corporate management to adjust production to the requirements of the market by restricting
the output to what the traffic will bear; that is to say, what will yield the largest net earnings.
Under corporate management it rarely happens that production is pushed to the limit of capacity.
It happens, and can happen, only rarely and intermittently. This has been true, increasingly, ever
since the ordinary productive capacity of the mechanical industries seriously began to overtake and
promised to exceed what the market would carry off at a reasonably profitable price. And ever since
that critical turn in the affairs of industrial business somewhere in the middle half of the nineteenth
century it has become increasingly imperative to use a wise moderation and stop down the output
to such a rate and volume as the traffic will bear. The cares of business have required an increasingly
undivided attention on the part of the business men, and in an ever increasing measure their day’s
work has come to center about a running adjustment of sabotage on production. And for this
purpose, evidently, the corporate organization of this business, on an increasingly large scale, is very
serviceable, since the requisite sabotage on productive industry can be effectually administered only
on a large plan and with a firm hand.
“The leaders in business are men who have studied and thought all their lives. They have thus
learned to decide big problems at once, basing their decisions upon their knowledge of fundamental
principles.” Jeremiah W.
Jenks. That is to say, the surveillance of this financial end of industrial business, and the control
of the requisite running balance of sabotage, have been reduced to a routine governed by settled
principles of procedure and administered by suitably trained experts in corporation finance. But
under the limitations to which all human capacity is subject it follows from this increasingly exacting
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discipline of business administration that the business men are increasingly out of touch with that
manner of thinking and those elements of knowledge that go to make up the logic and the relevant
facts of the mechanical technology. Addiction to a strict and unremitting valuation of all things in
terms of price and profit leaves them, by settled habit, unfit to appreciate those technological facts
and values that can be formulated only in terms of tangible mechanical performance; increasingly
so with every further move into a stricter addiction to businesslike management and with every
further advance of the industrial system into a still wider scope and a still more diversified and more
delicately balanced give and take among its interlocking members.
They are experts in prices and profits and financial manoeuvres; and yet the final discretion in all
questions of industrial policy continues to rest in their hands. They are by training and interest
captains of finance; and yet, with no competent grasp of the industrial arts, they continue to
exercise a plenary discretion as captains of industry. They are unremittingly engaged in a routine
of acquisition, in which they habitually reach their ends by a shrewd restriction of output; and yet
they continue to be entrusted with the community’s industrial welfare, which calls for maximum
production.
Such has been the situation in all the civilized countries since corporation finance has ruled industry,
and until a recent date. Quite recently this settled scheme of business management has shown
signs of giving way, and a new move in the organization of business enterprise has come in sight,
whereby the discretionary control of industrial production is shifting still farther over to the side of
finance and still farther out of touch with the requirements of maximum production. The new move
is of a twofold character: (a) the financial captains of industry have been proving their industrial
incompetence in a progressively convincing fashion, and (b) their own proper work of financial
management has progressively taken on a character of standardized routine such as no longer calls
for or admits any large measure of discretion or initiative. They have been losing touch with the
management of industrial processes, at the same time that the management of corporate business
has, in effect, been shifting into the hands of a bureaucratic clerical staff. The corporation financier
of popular tradition is taking on the character of a chief of bureau.
The changes which have brought the corporation financier to this somewhat inglorious position of a
routine administrator set in along with the early growth of corporation finance, somewhere around
the middle of the nineteenth century, and they have come to a head somewhere about the passage
to the twentieth century, although it is only since the latter date that the outcome is becoming at
all clearly defined. When corporate organization and the consequent control of output came into
bearing there were two lines of policy open to the management: (a) to maintain profitable prices
by limiting the output, and (b) to maintain profits by lowering the production cost of an increased
output. To some extent both of these lines were followed, but on the whole the former proved the
more attractive; it involved less risk, and it required less acquaintance with the working processes of
industry. At least it appears that in effect the preference was increasingly given to the former method
during this halfcentury of financial management. For this there were good reasons. The processes
of production were continually growing more extensive, diversified, complicated, and more difficult
for any layman in technology to comprehend and the corporation financier was such a layman,
necessarily and increasingly so, for reasons indicated above.
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At the same time, owing to a continued increase of population and a continued extension of
the industrial system, the net product of industry and its net earnings continued to increase
independently of any creative effort on the part of the financial management. So the corporation
financier, as a class, came in for an “unearned increment” of income, on the simple plan of “sitting
tight.” That plan is intelligible to any layman. All industrial innovation and all aggressive economy in
the conduct of industry not only presumes an insight into the technological details of the industrial
process, but to any other than the technological experts, who know the facts intimately, any move of
that kind will appear hazardous. So the business men who have controlled industry, being laymen
in all that concerns its management, have increasingly been content to let well enough alone and to
get along with an ever increasing overhead charge of inefficiency, so long as they have lost nothing by
it. The result has been an ever increasing volume of waste and misdirection in the use of equipment,
resources, and man power throughout the industrial system.
In time, that is to say within the last few years, the resulting lag, leak, and friction in the ordinary
working of this mechanical industry under business management have reached such proportions
that no ordinarily intelligent outsider can help seeing them wherever he may look into the facts of
the case. But it is the industrial experts, not the business men, who have finally begun to criticize
this businesslike mismanagement and neglect of the ways and means of industry. And hitherto their
efforts and advice have met with no cordial response from the business men in charge, who have, on
the whole, continued to let well enough alone that is to say, what is well enough for a shortsighted
business policy looking to private gain, however poorly it may serve the material needs of the
community. But in the meantime two things have been happening which have deranged the regime
of the corporation financier: industrial experts, engineers, chemists, mineralogists, technicians
of all kinds, have been drifting into more responsible positions in the industrial system and have
been growing up and multiplying within the system, because the system will no longer work at all
without them; and on the other hand, the large financial interests on whose support the corporation
financiers have been leaning have gradually come to realize that corporation finance can best be
managed as a comprehensive bureaucratic routine, and that the two pillars of the house of corporate
business enterprise of the larger sort are the industrial experts and the large financial concerns
that control the necessary funds; whereas the corporation financier is little more than a dubious
intermediate term between these two.
One of the greater personages in American business finance took note of this situation in the late
nineties and set about turning it to account for the benefit of himself and his business associates, and
from that period dates a new era in American corporation finance. It was for a time spoken of loosely
as the Era of Trust Making, but that phrase does not describe it at all adequately. It should rather be
called the Era of the Investment Banker, and it has come to its present stage of maturity and stability
only in the course of the past quarter century.
The characteristic features and the guiding purpose of this improved method in corporation finance
are best shown by a showing of the methods and achievements of that great pioneer by whom
it was inaugurated. As an illustrative case, then, the American steel business in the nineties was
suffering from the continued use of out-of-date processes, equipment, and locations, from wasteful
management under the control of stubbornly ignorant corporation officials, and particularly from
intermittent haphazard competition and mutual sabotage between the numerous concerns which
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were then doing business in steel. It appears to have been the last-named difficulty that particularly
claimed the attention and supplied the opportunity of the great pioneer. He can by no stretch
of charity be assumed to have had even a slight acquaintance with the technological needs and
shortcomings of the steel industry. But to a man of commercial vision and financial sobriety it
was plain that a more comprehensive, and therefore more authoritative, organization and control
of the steel business would readily obviate much of the competition which was deranging prices.
The apparent purpose and the evident effect of the new and larger coalition of business interests
in steel was to maintain profitable prices by a reasonable curtailment of production. A secondary
and less evident effect was a more economical management of the industry, which involved some
displacement of quondam corporation financiers and some introduction of industrial experts.
A further, but unavowed, end to be served by the same move in each of the many enterprises in
coalition undertaken by the great pioneer and by his competitors was a bonus that came to these
enterprising men in the shape of an increased capitalization of the business. But the notable feature
of it all as seen from the point of view of the public at large was always the stabilization of prices
at a reasonably high level, such as would always assure reasonably large earnings on the increased
capitalization.
Since then this manner of corporation finance has been further perfected and standardized, until it
will now hold true that no large move in the field of corporation finance can be made without the
advice and consent of those large funded interests that are in a position to act as investment bankers;
nor does any large enterprise in corporation business ever escape from the continued control of the
investment bankers in any of its larger transactions; nor can any corporate enterprise of the larger
sort now continue to do business except on terms which will yield something appreciable in the way
of income to the investment bankers, whose continued support is necessary to its success.
The financial interest here spoken of as the investment banker is commonly something in the way of
a more or less articulate syndicate of financial houses, and it is to be added that the same financial
concerns are also commonly, if not invariably, engaged or interested in commercial banking of
the usual kind. So that the same well-established, half syndicated ramification of banking houses
that have been taking care of the country’s commercial banking, with its center of credit and of
control at the country’s financial metropolis, is ready from beforehand to take over and administer
the country’s corporation finance on a unified plan and with a view to an equitable distribution
of the country’s net earnings among themselves and their clients. The more inclusive this financial
organization is, of course, the more able it will be to manage the country’s industrial system as an
inclusive whole and prevent any hazardous innovation or experiment, as well as to limit production
of the necessaries to such a volume of output as will yield the largest net return to itself and its
clients.
Evidently the improved plan which has thrown the discretion and responsibility into the hands of
the investment banker should make for a safe and sound conduct of business, such as will avoid
fluctuations of price, and more particularly avoid any unprofitable speeding up of productive
industry. Evidently, too, the initiative has hereby passed out of the hands of the corporation financier,
who has fallen into the position of a financial middleman or agent, with limited discretion and with
a precariously doubtful future. But all human institutions are susceptible of improvement, and the
course of improvement may now and again, as in his case, result in supersession and displacement.
17
And doubtless it is all for the best, that is to say, for the good of business, more particularly for the
profit of big business.
But now as always corporation finance is a traffic in credit; indeed, now more than ever before.
Therefore to stabilize corporate business sufficiently in the hands of this inclusive quasisyndicate
of banking interests it is necessary that the credit system of the country should as a whole be
administered on a unified plan and inclusively. All of which is taken care of by the same conjunction
of circumstances; the same quasisyndicate of banking interests that makes use of the country’s credit
in the way of corporation finance is also the guardian of the country’s credit at large. From which
it results that, as regards those large scale credit extensions which are of substantial consequence,
the credits and debits are, in effect, pooled within the syndicate, so that no substantial derangement
of the credit situation can take effect except by the free choice of this quasisyndicate of investment
banking houses; that is to say, not except they see an advantage to themselves in allowing the credit
situation to be deranged, and not beyond the point which will best serve their collective purpose as
against the rest of the community. With such a closed system no extension of credit obligations or
multiplication of corporate securities, with the resulting inflation of values, need bring any risk of
a liquidation, since credits and debits are in effect pooled within the system. By way of parenthesis
it may also be remarked that under these circumstances “credit” has no particular meaning except
as a method of accounting. Credit is also one of the timeworn institutions that are due to suffer
obsolescence by improvement.
This process of pooling and syndication that is remaking the world of credit and corporation finance
has been greatly helped on in America by the establishment of the Federal Reserve system, while
somewhat similar results have been achieved elsewhere by somewhat similar devices. That system
has greatly helped to extend, facilitate, simplify, and consolidate the unified control of the country’s
credit arrangements, and it has very conveniently left the substantial control in the hands of those
larger financial interests into whose hands the lines of control in credit and industrial business were
already being gathered by force of circumstances and by sagacious management of the interested
parties. By this means the substantial core of the country’s credit system is gathered into a self
balanced whole, closed and unbreakable, self-insured against all risk and derangement. All of which
converges to the definitive stabilization of the country’s business; but since it reduces financial traffic
to a riskless routine it also converges to the conceivable obsolescence of corporation finance and
eventually, perhaps, of the investment banker.
III. The Captains of Finance and the Engineers
In more than one respect the industrial system of today is notably different from anything that
has gone before. It is eminently a system, self balanced and comprehensive; and it is a system of
interlocking mechanical processes, rather than of skilful manipulation. It is mechanical rather than
manual. It is an organization of mechanical powers and material resources, rather than of skilled
craftsmen and tools; although the skilled workmen and tools are also an indispensable part of its
comprehensive mechanism. It is of an impersonal nature, after the fashion of the material sciences,
on which it constantly draws. It runs to “quantity production” of specialized and standardized goods
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and services. For all these reasons it lends itself to systematic control under the direction of industrial
experts, skilled technologists, who may be called “production engineers,” for want of a better term.
This industrial system runs on as an inclusive organization of many and diverse interlocking
mechanical processes, interdependent and balanced among themselves in such a way that the due
working of any part of it is conditioned on the due working of all the rest. Therefore it will work
at its best only on condition that these industrial experts, production engineers, will work together
on a common understanding; and more particularly on condition that they must not work at cross
purposes. These technological specialists whose constant supervision is indispensable to the due
working of the industrial system constitute the general staff of industry, whose work it is to control
the strategy of production at large and to keep an oversight of the tactics of production in detail.
Such is the nature of this industrial system on whose due working depends the material welfare
of all the civilized peoples. It is an inclusive system drawn on a plan of strict and comprehensive
interdependence, such that, in point of material welfare, no nation and no community has anything
to gain at the cost of any other nation or community. In point of material welfare, all the civilized
peoples have been drawn together by the state of the industrial arts into a single going concern. And
for the due working of this inclusive going concern it is essential that that corps of technological
specialists who by training, insight, and interest make up the general staff of industry must have
a free hand in the disposal of its available resources, in materials, equipment, and man power,
regardless of any national pretensions or any vested interests. Any degree of obstruction, diversion,
or withholding of any of the available industrial forces, with a view to the special gain of any nation
or any investor, unavoidably brings on a dislocation of the system; which involves a disproportionate
lowering of its working efficiency and therefore a disproportionate loss to the whole, and therefore a
net loss to all its parts.
And all the while the statesmen are at work to divert and obstruct the working forces of this
industrial system, here and there, for the special advantage of one nation and another at the cost
of the rest; and the captains of finance are working, at cross purposes and in collusion, to divert
whatever they can to the special gain of one vested interest and another, at any cost to the rest. So
it happens that the industrial system is deliberately handicapped with dissension, misdirection, and
unemployment of material resources, equipment, and man power, at every turn where the statesmen
or the captains of finance can touch its mechanism; and all the civilized peoples are suffering
privation together because their general staff of industrial experts are in this way required to take
orders and submit to sabotage at the hands of the statesmen and the vested interests. Politics and
investment are still allowed to decide matters of industrial policy which should plainly be left to the
discretion of the general staff of production engineers driven by no commercial bias.
No doubt this characterization of the industrial system and its besetting tribulations will seem
overdrawn. However, it is not intended to apply to any date earlier than the twentieth century,
or to any backward community that still lies outside the sweep of the mechanical industry. Only
gradually during the past century, while the mechanical industry has progressively been taking over
the production of goods and services, and going over to quantity production, has the industrial
system taken on this character of an inclusive organization of interlocking processes and interchange
of materials; and it is only in the twentieth century that this cumulative progression has come to a
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head with such effect that this characterization is now visibly becoming true. And even now it will
hold true, visibly and securely, only as applies to the leading mechanical industries, those main lines
of industry that shape the main conditions of life, and in which quantity production has become the
common and indispensable rule. Such are, e.g., transport and communication; the production and
industrial use of coal, oil, electricity and water power; the production of steel and other metals; of
wood pulp, lumber, cement and other building materials; of textiles and rubber; as also grainmilling
and much of the grain growing, together with meatpacking and a good share of the stock raising
industry.
There is, of course, a large volume of industry in many lines which has not, or only in part and
doubtfully, been drawn into this network of mechanical processes and quantity production, in
any direct and conclusive fashion. But these other lines of industry that still stand over on another
and older plan of operation are, after all, outliers and subsidiaries of the mechanically organized
industrial system, dependent on or subservient to those greater underlying industries which make
up the working body of the system, and which therefore set the pace for the rest. And in the main,
therefore, and as regards these greater mechanical industries on whose due working the material
welfare of the community depends from day to day, this characterization will apply without material
abatement.
But it should be added that even as regards these greater, primary and underlying, lines of
production the system has not yet reached a fatal degree of close-knit interdependence, balance,
and complication; it will still run along at a very tolerable efficiency in the face of a very appreciable
amount of persistent derangement. That is to say, the industrial system at large has not yet become
so delicately balanced a mechanical structure and process that the ordinary amount of derangement
and sabotage necessary to the ordinary control of production by business methods will paralyze
the whole outright. The industrial system is not yet sufficiently close-knit for that. And yet, that
extent and degree of paralysis from which the civilized world’s industry is suffering just now, due
to legitimate businesslike sabotage, goes to argue that the date may not be far distant when the
interlocking processes of the industrial system shall have become so closely interdependent and so
delicately balanced that even the ordinary modicum of sabotage involved in the conduct of business
as usual will bring the whole to a fatal collapse. The derangement and privation brought on by any
well organized strike of the larger sort argues to the same effect.
In effect, the progressive advance of this industrial system towards an all-inclusive mechanical
balance of interlocking processes appears to be approaching a critical pass, beyond which it will no
longer be practicable to leave its control in the hands of business men working at cross purposes for
private gain, or to entrust its continued administration to others than suitably trained technological
experts, production engineers without a commercial interest. What these men may then do with
it all is not so plain; the best they can do may not be good enough; but the negative proposition is
becoming sufficiently plain, that this mechanical state of the industrial arts will not long tolerate
the continued control of production by the vested interests under the current businesslike rule of
incapacity by advisement.
In the beginning, that is to say during the early growth of the machine industry, and particularly in
that new growth of mechanical industries which arose directly out of the Industrial Revolution, there
20
was no marked division between the industrial experts and the business managers. That was before
the new industrial system had gone far on the road of progressive specialization and complexity, and
before business had reached an exactingly large scale; so that even the business men of that time,
who were without special training in technological matters, would still be able to exercise something
of an intelligent oversight of the whole, and to understand something of what was required in the
mechanical conduct of the work which they financed and from which they drew their income.
Not unusually the designers of industrial processes and equipment would then still take care of
the financial end, at the same time that they managed the shop. But from an early point in the
development there set in a progressive differentiation, such as to divide those who designed and
administered the industrial processes from those others who designed and managed the commercial
transactions and took care of the financial end. So there also set in a corresponding division of
powers between the business management and the technological experts.
It became the work of the technologist to determine, on technological grounds, what could be done
in the way of productive industry, and to contrive ways and means of doing it; but the business
management always continued to decide, on commercial grounds, how much work should be
done and what kind and quality of goods and services should be produced; and the decision of the
business management has always continued to be final, and has always set the limit beyond which
production must not go.
With the continued growth of specialization the experts have necessarily had more and more to say
in the affairs of industry; but always their findings as to what work is to be done and what ways and
means are to be employed in production have had to wait on the findings of the business managers
as to what will be expedient for the purpose of commercial gain. This division between business
management and industrial management has continued to go forward, at a continually accelerated
rate, because the special training and experience required for any passably efficient organization
and direction of these industrial processes has continually grown more exacting, calling for special
knowledge and abilities on the part of those who have this work to do and requiring their undivided
interest and their undivided attention to the work in hand. But these specialists in technological
knowledge, abilities, interest, and experience, who have increasingly come into the case in this way
inventors, designers, chemists, mineralogists, soil experts, crop specialists, production managers
and engineers of many kinds and denominations have continued to be employees of the captains
of industry, that is to say, of the captains of finance, whose work it has been to commercialize the
knowledge and abilities of the industrial experts and turn them to account for their own gain.
It is perhaps unnecessary to add the axiomatic corollary that the captains have always turned the
technologists and their knowledge to account in this way only so far as would serve their own
commercial profit, not to the extent of their ability; or to the limit set by the material circumstances;
or by the needs of the community. The result has been, uniformly and as a matter of course, that
the production of goods and services has advisedly been stopped short of productive capacity, by
curtailment of output and by derangement of the productive system. There are two main reasons
for this, and both have operated together throughout the machine era to stop industrial production
increasingly short of productive capacity, (a) The commercial need of maintaining a profitable
price has led to an increasingly imperative curtailment of the output, as fast as the advance of
the industrial arts has enhanced the productive capacity. And (b) the continued advance of the
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mechanical technology has called for an ever-increasing volume and diversity of special knowledge,
and so has left the businesslike captains of finance continually farther in arrears, so that they have
been less and less capable of comprehending what is required in the ordinary way of industrial
equipment and personnel. They have therefore, in effect, maintained prices at a profitable level by
curtailment of output rather than by lowering production cost per unit of output, because they have
not had such a working acquaintance with the technological facts in the case as would enable them
to form a passably sound judgment of suitable ways and means for lowering production cost ; and at
the same time, being shrewd business men, they have been unable to rely on the hiredman’s loyalty
of technologists whom they do not understand. The result has been a somewhat distrustful blindfold
choice of processes and personnel and a consequent enforced incompetence in the management of
industry, a curtailment of output below the needs of the community, below the productive capacity
of the industrial system, and below what an intelligent control of production would have made
commercially profitable.
Through the earlier decades of the machine era these limitations imposed on the work of the
experts by the demands of profitable business and by the technical ignorance of the business men,
appears not to have been a heavy handicap, whether as a hindrance to the continued development of
technological knowledge or as an obstacle to its ordinary use in industry.
That was before the mechanical industry had gone far in scope, complexity, and specialization; and
it was also before the continued work of the technologists had pushed the industrial system to so
high a productive capacity that it is forever in danger of turning out a larger product than is required
for a profitable business. But gradually, with the passage of time and the advance of the industrial
arts to a wider scope and a larger scale, and to an increasing specialization and standardization of
processes, the technological knowledge that makes up the state of the industrial arts has called for
a higher degree of that training that makes industrial specialists; and at the same time any passably
efficient management of industry has of necessity drawn on them and their special abilities to an
ever-increasing extent. At the same time and by the same shift of circumstances, the captains of
finance, driven by an increasingly close application to the affairs of business, have been going farther
out of touch with the ordinary realities of productive industry; and, it is to be admitted, they have
also continued increasingly to distrust the technological specialists, whom they do not understand,
but whom they can also not get along without. The captains have per force continued to employ the
technologists, to make money for them, but they have done so only reluctantly, tardily, sparingly, and
with a shrewd circumspection; only because and so far as they have been persuaded that the use of
these technologists was indispensable to the making of money.
One outcome of this persistent and pervasive tardiness and circumspection on the part of the
captains has been an incredibly and increasingly uneconomical use of material resources, and an
incredibly wasteful organization of equipment and man power in those great industries where the
technological advance has been most marked. In good part it was this discreditable pass, to which
the leading industries had been brought by these one-eyed captains of industry, that brought the
regime of the captains to an inglorious close, by shifting the initiative and discretion in this domain
out of their hands into those of the investment bankers. By custom the investment bankers had
occupied a position between or overlapping the duties of a broker in corporate securities and those
of an underwriter of corporate flotation such a position, in effect, as is still assigned them in the
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standard writings on corporation finance. The increasingly large scale of corporate enterprise, as well
as the growth of a mutual understanding among these business concerns, also had its share in this
new move. But about this time, too, the “consulting engineers” were coming notably into evidence in
many of those lines of industry in which corporation finance has habitually been concerned.
So far as concerns the present argument the ordinary duties of these consulting engineers have
been to advise the investment bankers as to the industrial and commercial soundness, past and
prospective, of any enterprise that is to be underwritten. These duties have comprised a painstaking
and impartial examination of the physical properties involved in any given case, as well as an equally
impartial auditing of the accounts and appraisal of the commercial promise of such enterprises, for
the guidance of the bankers or syndicate of bankers interested in the case as underwriters. On this
ground working arrangements and a mutual understanding presently arose between the consulting
engineers and those banking houses that habitually were concerned in the underwriting of corporate
enterprises.
The effect of this move has been twofold: experience has brought out the fact that corporation
finance, at its best and soundest, has now become a matter of comprehensive and standardized
bureaucratic routine, necessarily comprising the mutual relations between various corporate
concerns, and best to be taken care of by a clerical staff of trained accountants; and the same
experience has put the financial houses in direct touch with the technological general staff of the
industrial system, whose surveillance has become increasingly imperative to the conduct of any
profitable enterprise in industry. But also, by the same token, it has appeared that the corporation
financier of nineteenth century tradition is no longer of the essence of the case in corporation finance
of the larger and more responsible sort. He has, in effect, come to be no better than an idle wheel in
the economic mechanism, serving only to take up some of the lubricant.
Since and so far as this shift out of the nineteenth century into the twentieth has been completed,
the corporation financier has ceased to be a captain of industry and has become a lieutenant
of finance; the captaincy having been taken over by the syndicated investment bankers and
administered as a standardized routine of accountancy, having to do with the flotation of corporation
securities and with their fluctuating values, and having also something to do with regulating the
rate and volume of output in those industrial enterprises which so have passed under the hand of the
investment bankers.
By and large, such is the situation of the industrial system today, and of that financial business that
controls the industrial system. But this state of things is not so much an accomplished fact handed
on out of the recent past; it is only that such is the culmination in which it all heads up in the
immediate present, and that such is the visible drift of things into the calculable future.
Only during the last few years has the state of affairs in industry been obviously falling into the
shape so outlined, and it is even yet only in those larger and pacemaking lines of industry which are
altogether of the new technological order that the state of things has reached this finished shape.
But in these larger and underlying divisions of the industrial system the present posture and drift of
things is unmistakable. Meantime very much still stands over out of that regime of rule of thumb,
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competitive sabotage, and commercial logrolling, in which the businesslike captains of the old
order are so altogether well at home, and which has been the best that the captains have known
how to contrive for the management of that industrial system whose captains they have been. So
that wherever the production experts are now taking over the management, out of the dead hand of
the self-made captains, and wherever they have occasions to inquire into the established conditions
of production, they find the ground cumbered with all sorts of incredible makeshifts of waste and
inefficiency such makeshifts as would perhaps pass muster with any moderately stupid elderly
layman, but which look like blindfold guesswork to these men who know something of the advanced
technology and its working out.
Hitherto, then, the growth and conduct of this industrial system presents this singular outcome.
The technology the state of the industrial arts which takes effect in this mechanical industry is in an
eminent sense a joint stock of knowledge and experience held in common by the civilized peoples.
It requires the use of trained and instructed workmen born, bred, trained, and instructed at the
cost of the people at large. So also it requires, with a continually more exacting insistence, a corps of
highly trained and specially gifted experts, of divers and various kinds. These, too, are born, bred,
and trained at the cost of the community at large, and they draw their requisite special knowledge
from the community’s joint stock of accumulated experience. These expert men, technologists,
engineers, or whatever name may best suit them, make up the indispensable General Staff of the
industrial system; and without their immediate and unremitting guidance and correction the
industrial system will not work. It is a mechanically organized structure of technical processes
designed, installed, and conducted by these production engineers. Without them and their constant
attention the industrial equipment, the mechanical appliances of industry, will foot up to just so
much junk. The material welfare of the community is unreservedly bound up with the due working
of this industrial system, and therefore with its unreserved control by the engineers, who alone are
competent to manage it. To do their work as it should be done these men of the industrial general
staff must have a free hand, unhampered by commercial considerations and reservations; for the
production of the goods and services needed by the community they neither need nor are they in
any degree benefited by any supervision or interference from the side of the owners. Yet the absentee
owners, now represented, in effect, by the syndicated investment bankers, continue to control the
industrial experts and limit their discretion, arbitrarily, for their own commercial gain, regardless of
the needs of the community.
Hitherto these men who so make up the general staff of the industrial system have not drawn
together into anything like a self directing working force; nor have they been vested with anything
more than an occasional, haphazard, and tentative control of some disjointed sector of the industrial
equipment, with no direct or decisive relation to that personnel of productive industry that may be
called the officers of the line and the rank and file. It is still the unbroken privilege of the financial
management and its financial agents to “hire and fire.” The final disposition of all the industrial
forces still remains in the hands of the business men, who still continue to dispose of these forces
for other than industrial ends. And all the while it is an open secret that with a reasonably free hand
the production experts would today readily increase the ordinary output of industry by several fold,
variously estimated at some 300 per cent, to 1200 per cent, of the current output. And what stands
in the way of so increasing the ordinary output of goods and services is business as usual.
24
Right lately these technologists have begun to become uneasily “class conscious” and to reflect
that they together constitute the indispensable General Staff of the industrial system. Their class
consciousness has taken the immediate form of a growing sense of waste and confusion in the
management of industry by the financial agents of the absentee owners. They are beginning to
take stock of that all-pervading mismanagement of industry that is inseparable from its control for
commercial ends. All of which brings home a realization of their own shame and of damage to the
common good.
So the engineers are beginning to draw together and ask themselves, “What about it?” This uneasy
movement among the technologists set in, in an undefined and fortuitous way, in the closing years of
the nineteenth century; when the consulting engineers, and then presently the “efficiency engineers,”
began to make scattered corrections in detail, which showed up the industrial incompetence of
those elderly laymen who were doing a conservative business at the cost of industry. The consulting
engineers of the standard type, both then and since then, are commercialized technologists, whose
work it is to appraise the industrial value of any given enterprise with a view to its commercial
exploitation. They are a cross between a technological specialist and a commercial agent, beset with
the limitations of both and commonly not fully competent in either line. Their normal position is
that of an employee of the investment bankers, on a stipend or a retainer, and it has ordinarily been
their fortune to shift over in time from a technological footing to a frankly commercial one. The
case of the efficiency engineers, or scientific management experts, is somewhat similar. They too have
set out to appraise, exhibit, and correct the commercial shortcomings of the ordinary management
of those industrial establishments which they investigate, to persuade the business men in charge
how they may reasonably come in for larger net earnings by a more closely shorn exploitation of
the industrial forces at their disposal. During the opening years of the new century a lively interest
centered on the views and expositions of these two groups of industrial experts; and not least was the
interest aroused by their exhibits of current facts indicating an all-pervading lag, leak, and friction
in the industrial system, due to its disjointed and one-eyed management by commercial adventurers
bent on private gain.
During these few years of the opening century the members of this informal guild of engineers at
large have been taking an interest in this question of habitual mismanagement by ignorance and
commercial sabotage, even apart from the commercial imbecility of it all. But it is the young rather
than the old among them who see industry in any other light than its commercial value.
Circumstances have decided that the older generation of the craft have become pretty well
commercialized. Their habitual outlook has been shaped by a long and unbroken apprenticeship to
the corporation financiers and the investment bankers; so that they still habitually see the industrial
system as a contrivance for the roundabout process of making money. Accordingly, the established
official Associations and Institutes of Engineers, which are officered and engineered by the elder
engineers, old and young, also continue to show the commercial bias of their creators, in what they
criticize and in what they propose. But the new generation which has been coming on during the
present century are not similarly true to that tradition of commercial engineering that makes the
technological man an awestruck lieutenant of the captain of finance.
25
By training, and perhaps also by native bent, the technologists find it easy and convincing to size up
men and things in terms of tangible performance, without commercial afterthought, except so far
as their apprenticeship to the captains of finance may have made commercial afterthought a second
nature to them. Many of the younger generation are beginning to understand that engineering
begins and ends in the domain of tangible performance, and that commercial expediency is another
matter. Indeed, they are beginning to understand that commercial expediency has nothing better
to contribute to the engineer’s work than so much lag, leak, and friction. The four years’ experience
of the war has also been highly instructive on that head. So they are beginning to draw together
on a common ground of understanding, as men who are concerned with the ways and means of
tangible performance in the way of productive industry, according to the state of the industrial arts
as they know them at their best; and there is a growing conviction among them that they together
constitute the sufficient and indispensable general staff of the mechanical industries, on whose
unhindered teamwork depends the due working of the industrial system and therefore also the
material welfare of the civilized peoples. So also, to these men who are trained in the stubborn logic
of technology, nothing is quite real that cannot be stated in terms of tangible performance; and they
are accordingly coming to understand that the whole fabric of credit and corporation finance is a
tissue of makebelieve.
Credit obligations and financial transactions rest on certain principles of legal formality which
have been handed down from the eighteenth century, and which therefore antedate the mechanical
industry and carry no secure conviction to men trained in the logic of that industry. Within this
technological system of tangible performance corporation finance and all its works and gestures are
completely idle; it all comes into the working scheme of the engineers only as a gratuitous intrusion
which could be barred out without deranging the work at any point, provided only that men made
up their mind to that effect that is to say, provided the makebelieve of absentee ownership were
discontinued. Its only obvious effect on the work which the engineers have to take care of is waste
of materials and retardation of the work. So the next question which the engineers are due to ask
regarding this timeworn fabric of ownership, finance, sabotage, credit, and unearned income is likely
to be: Why cumbers it the ground? And they are likely to find the scriptural answer ready to their
hand.
It would be hazardous to surmise how, how soon, on what provocation, and with what effect the
guild of engineers are due to realize that they constitute a guild, and that the material fortunes of the
civilized peoples already lie loose in their hands. But it is already sufficiently plain that the industrial
conditions and the drift of conviction among the engineers are drawing together to some such end.
Hitherto it has been usual to count on the interested negotiations continually carried on and never
concluded between capital and labor, between the agents of the investors and the body of workmen,
to bring about whatever readjustments are to be looked for in the control of productive industry and
in the distribution and use of its product. These negotiations have necessarily been, and continue to
be, in the nature of business transactions, bargaining for a price, since both parties to the negotiation
continue to stand on the consecrated ground of ownership, free bargain, and selfhelp; such as the
commercial wisdom of the eighteenth century saw, approved and certified it all, in the time before
the coming of this perplexing industrial system. In the course of these endless negotiations between
the owners and their workmen there has been some loose and provisional syndication of claims and
26
forces on both sides; so that each of these two recognized parties to the industrial controversy has
come to make up a loose knit vested interest, and each speaks for its own special claims as a party in
interest. Each is contending for some special gain for itself and trying to drive a profitable bargain
for itself, and hitherto no disinterested spokesman for the community at large or for the industrial
system as a going concern has seriously cut into this controversy between these contending vested
interests. The outcome has been businesslike concession and compromise, in the nature of bargain
and sale. It is true, during the war, and for the conduct of the war, there were some half concerted
measures taken by the Administration in the interest of the nation at large, as a belligerent; but it has
always been tacitly agreed that these were extraordinary war measures, not to be countenanced in
time of peace. In time of peace the accepted rule is still business as usual; that is to say, investors and
workmen wrangling together on a footing of business as usual.
These negotiations have necessarily been inconclusive. So long as ownership of resources and
industrial plant is allowed, or so long as it is allowed any degree of control or consideration in the
conduct of industry, nothing more substantial can come of any readjustment than a concessive
mitigation of the owners’ interference with production. There is accordingly nothing subversive in
these bouts of bargaining between the federated workmen and the syndicated owners. It is a game
of chance and skill played between two contending vested interests for private gain, in which the
industrial system as a going concern enters only as a victim of interested interference. Yet the material
welfare of the community, and not least of the workmen, turns on the due working of this industrial
system, without interference. Concessive mitigation of the right to interfere with production, on the
part of either one of these vested interests, can evidently come to nothing more substantial than a
concessive mitigation.
But owing to the peculiar technological character of this industrial system, with its specialized,
standardized, mechanical, and highly technical interlocking processes of production, there has
gradually come into being this corps of technological production specialists, into whose keeping the
due functioning of the industrial system has now drifted by force of circumstance.
They are, by force of circumstance, the keepers of the community’s material welfare; although they
have hitherto been acting, in effect, as keepers and providers of free income for the kept classes. They
are thrown into the position of responsible directors of the industrial system, and by the same move
they are in a position to become arbiters of the community’s material welfare. They are becoming
class conscious, and they are no longer driven by a commercial interest, in any such degree as will
make them a vested interest in that commercial sense in which the syndicated owners and the
federated workmen are vested interests. They are, at the same time, numerically and by habitual
outlook, no such heterogeneous and unwieldy body as the federated workmen, whose numbers and
scattering interest has left all their endeavors substantially nugatory. In short, the engineers are in a
position to make the next move.
By comparison with the population at large, including the financial powers and the kept classes,
the technological specialists which come in question here are a very inconsiderable number; yet this
small number is indispensable to the continued working of the productive industries. So slight are
their numbers, and so sharply defined and homogeneous is their class, that a sufficiently compact and
inclusive organization of their forces should arrange itself almost as a matter of course, so soon as any
27
appreciable proportion of them shall be moved by any common purpose. And the common purpose
is not far to seek, in the all-pervading industrial confusion, obstruction, waste, and retardation
which business as usual continually throws in their face. At the same time they are the leaders of
the industrial personnel, the workmen, of the officers of the line and the rank and file; and these
are coming into a frame of mind to follow their leaders in any adventure that holds a promise of
advancing the common good.
To these men, soberly trained in a spirit of tangible performance and endowed with something more
than an even share of the sense of workmanship, and endowed also with the common heritage of
partiality for the rule of Live and Let Live, the disallowance of an outworn and obstructive right of
absentee ownership is not likely to seem a shocking infraction of the sacred realties. That customary
right of ownership by virtue of which the vested interests continue to control the industrial system
for the benefit of the kept classes, belongs to an older order of things than the mechanical industry.
It has come out of a past that was made up of small things and traditional makebelieve. For all the
purposes of that scheme of tangible performance that goes to make up the technologist’s world,
it is without form and void. So that, given time for due irritation, it should by no means come
as a surprise if the guild of engineers are provoked to put their heads together and, quite out of
hand, disallow that large absentee ownership that goes to make the vested interests and to unmake
the industrial system. And there stand behind them the massed and roughhanded legions of the
industrial rank and file, ill at ease and looking for new things. The older commercialized generation
among them would, of course, ask themselves: Why should we worry ? What do we stand to gain
? But the younger generation, not so hardbitten by commercial experience, will be quite as likely to
ask themselves: What do we stand to lose? And there is the patent fact that such a thing as a general
strike of the technological specialists in industry need involve no more than a minute fraction of
one per cent, of the population; yet it would swiftly bring a collapse of the old order and sweep
the timeworn fabric of finance and absentee sabotage into the discard for good and all, Such a
catastrophe would doubtless be deplorable. It would look something like the end of the world to all
those persons who take their stand with the kept classes, but it may come to seem no more than an
incident of the day’s work to the engineers and to the roughhanded legions of the rank and file. It is
a situation which may well be deplored. But there is no gain in losing patience with a conjunction
of circumstances. And it can do no harm to take stock of the situation and recognize that, by force
of circumstance, it is now open to the Council of Technological Workers’ and Soldiers’ Deputies to
make the next move, in their own way and in their own good time. When and what this move will
be, if any, or even what it will be like, is not something on which a layman can hold a confident
opinion. But so much seems clear, that the industrial dictatorship of the captain of finance is now
held on sufferance of the engineers and is liable at any time to be discontinued at their discretion, as
a matter of convenience.
IV. On the Danger of a Revolutionary Overturn
Bolshevism is a menace to the vested rights of property and privilege.
Therefore the guardians of the Vested Interests have been thrown into a state of Red trepidation by
28
the continued functioning of Soviet Russia and the continual outbreaks of the same Red distemper
elsewhere on the continent of Europe. It is feared, with a nerve shattering fear, that the same Red
distemper of Bolshevism must presently infect the underlying population in America and bring
on an overturn of the established order, so soon as the underlying population are in a position to
take stock of the situation and make up their mind to a course of action. The situation is an uneasy
one, and it contains the elements of much trouble; at least such appears to be the conviction of
the Guardians of the established order. Something of the kind is felt to be due, on the grounds of
the accomplished facts. So it is feared, with a nerve shattering fear, that anything like uncolored
information as to the facts in the case and anything like a free popular discussion of these facts must
logically result in disaster. Hence all this unseemly trepidation.
The Guardians of the Vested Interests, official and quasiofficial, have allowed their own knowledge
of this sinister state of things to unseat their common sense. The run of the facts has jostled them
out of the ruts, and they have gone in for a headlong policy of clamor and repression, to cover and
suppress matters of fact and to shut off discussion and deliberation. And all the while the Guardians
are also feverishly at work on a mobilization of such forces as may hopefully be counted on to “keep
the situation in hand” in case the expected should happen. The one manifestly conclusive resolution
to which the Guardians of the Vested Interests have come is that the underlying population is to be
“kept in hand,” in the face of any contingency. Their one settled principle of conduct appears to be,
to stick at nothing; in all of which, doubtless, the Guardians mean well.
Now, the Guardians of the Vested Interests are presumably wise in discountenancing any open
discussion or any free communication of ideas and opinions. It could lead to nothing more
comfortable than popular irritation and distrust. The Vested Interests are known to have been
actively concerned in the prosecution of the War, and there is no lack of evidence that their
spokesmen have been heard in the subsequent counsels of the Peace.
And, no doubt, the less that is known and said about the doings of the Vested Interests during the
War and after, the better both for the public tranquility and for the continued growth and profit of
the Vested Interests. Yet it is not to be overlooked that facts of such magnitude and of such urgent
public concern as the manoeuvres of the Vested Interests during the War and after can not be
altogether happily covered over with a conspiracy of silence.
Something like a middle course of temperate publicity should have seemed more to the point. It may
be unfortunate, but it is none the less unavoidable, that something appreciable is bound to come to
light; that is to say, something sinister.
It should be plain to all good citizens who have the cause of law and order at heart that in such a
case a more genial policy of conciliatory promises and procrastination will be more to the purpose
than any noisy recourse to the strong arm and the Star Chamber. A touch of history, and more
particularly of contemporary history, would have given the Guardians a touch of sanity.
Grown wise in all the ways and means of blamelessly defeating the unblest majority, the gentlemanly
government of the British manage affairs of this kind much better. They have learned that bellicose
gestures provoke ill will, and that desperate remedies should be held in reserve until needed. Whereas
29
the Guardians of the Vested Interests in America are plainly putting things in train for a capial
operation, for which there is no apparent necessity. It should be evident on slight reflection that
things have not reached that fateful stage where nothing short of a capital operation can be counted
on to save the life of the Vested Interests in America; not yet. And indeed, things need assuredly
not reach such a stage if reasonable measures are taken to avoid undue alarm and irritation. All that
is needed to keep the underlying population of America in a sweet temper is a degree of patient
ambiguity and delay, something after the British pattern; and all will yet be well with the vested
rights of property and privilege, for some time to come.
History teaches that no effectual popular uprising can be set afoot against an outworn institutional
iniquity unless the movement effectually meets the special material requirements of the situation
which provokes it; nor on the other hand can an impending popular overturn be staved off without
making up one’s account with those material conditions which converge to bring it on. The long
history of British gentlemanly compromise, collusion, conciliation, and popular defeat, is highly
instructive on that head. And it should be evident to any disinterested person, on any slight survey
of the pertinent facts, that the situation in America does not now offer such a combination of
circumstances as would be required for any effectual overturn of the established order or any forcible
dispossession of these Vested Interests that now control the material fortunes of the American people.
In short, by force of circumstances, Bolshevism is not a present menace to the Vested Interests in
America; provided always that the Guardians of these Vested Interests do not go out of their way to
precipitate trouble by such measures as will make Bolshevism of any complexion seem the lesser evil,
which is perhaps not a safe proviso, in view of the hysterically Red state of mind of the Guardians.
No movement for the dispossession of the Vested Interests in America can hope for even a temporary
success unless it is undertaken by an organization which is competent to take over the country’s
productive industry as a whole, and to administer it from the start on a more efficient plan than that
now pursued by the Vested Interests ; and there is no such organization in sight or in immediate
prospect. The nearest approach to a practicable organization of industrial forces in America, just yet,
is the A. F. of L.; which need only be named in order to dispel the illusion that there is anything
to hope or fear in the way of a radical move at its hands. The A. F. of L. is itself one of the Vested
Interests, as ready as any other to do battle for its own margin of privilege and profit. At the same
time it would be a wholly chimerical fancy to believe that such an organization of workmen as the
A.F. of L. could take over and manage any appreciable section of the industrial system, even if their
singleminded interest in special privileges for themselves did not preclude their making a move in
that direction. The Federation is not organized for production but for bargaining. It is not organized
on lines that would be workable for the management of any industrial system as a whole, or of any
special line of production within such a system. It is, in effect, an organization for the strategic defeat
of employers and rival organizations, by recourse to enforced unemployment and obstruction; not
for the production of goods and services. And it is officered by tacticians, skilled in the ways and
means of bargaining with politicians and intimidating employers and employees; not by men who
have any special insight into or interest in the ways and means of quantity production and traffic
management. They are not, and for their purpose they need not be, technicians in any conclusive
sense, and the fact should not be lost sight of that any effectual overturn, of the kind hazily
contemplated by the hysterical officials, will always have to be primarily a technical affair.
30
In effect, the Federation is officered by safe and sane politicians, and its rank and file are votaries
of “the full dinnerpail.” No Guardian need worry about the Federation, and there is no other
organization in sight which differs materially from the Federation in those respects which would
count toward a practical move in the direction of a popular overturn, unless a doubtful exception
should be claimed for the Railroad Brotherhoods. The A.
F. of L. is a business organization with a vested interest of its own; for keeping up prices and keeping
down the supply, quite after the usual fashion of management by the other Vested Interests; not
for managing productive industry or even for increasing the output of goods produced under any
management. At the best, its purpose and ordinary business is to gain a little something for its own
members at a more than proportionate cost to the rest of the community; which does not afford
either the spiritual or the material ground for a popular overturn.
Nor is it the A. F. of L. or the other organizations for “collective bargaining “ that come in for
the comfortless attentions of the officials and of the many semiofficial conspiracies in restraint of
sobriety. Their nerve shattering fears center rather on those irresponsible wayfaring men of industry
who make up the I. W. W., and on the helpless and hapless alien unbelievers whose contribution to
the sum total is loose talk in some foreign tongue. But if there is any assertion to be made without
fear of stumbling it will be, that this flotsam of industry is not organized to take over the highly
technical duties involved in the administration of the industrial system. But it is these and their like
that engage the best attention of the many commissions, committees, clubs, leagues, federations,
syndicates, and corporations for the chasing of wild geese under the Red flag.
Wherever the mechanical industry has taken decisive effect, as in America and in the two or three
industrialized regions of Europe, the community lives from hand to mouth in such a way that its
livelihood depends on the effectual working of its industrial system from day to day. In such a case a
serious disturbance and derangement of the balanced process of production is always easily brought
on, and it always brings immediate hardship on large sections of the community. Indeed, it is this
state of things the ease with which industry can be deranged and hardship can be brought to bear
on the people at large that constitutes the chief asset of such partisan organizations as the A. F. of
L. It is a state of things which makes sabotage easy and effectual and gives it breadth and scope. But
sabotage is not revolution. If it were, then the A. F. of L., the I. W. W., the Chicago Packers, and the
U. S. Senate would be counted among the revolutionists.
Far-reaching sabotage, that is to say derangement of the industrial system, such as to entail
hardship on the community at large or on some particular section of it, is easily brought to bear
in any country that is dominated by the mechanical industry. It is commonly resorted to by both
parties in any controversy between the businesslike employers and the employees. It is, in fact,
an everyday expedient of business, and no serious blame attaches to its ordinary use. Under given
circumstances, as, e.g., under the circumstances just now created by the return of peace, such
derangement of industry and hindrance of production is an unavoidable expedient of “business as
usual.” And derangement of the same nature is also commonly resorted to as a means of coercion
in any attempted movement of overturn. It is the simple and obvious means of initiating any
revolutionary disturbance in any industrial or commercialized country. But under the existing
industrial conditions, if it is to achieve even a transient success, any such revolutionary movement
31
of reconstruction must also be in a position from the outset to overcome any degree of initial
derangement in industry, whether of its own making or not, and to do constructive work of that
particular kind which is called for by the present disposition of industrial forces and by the present
close dependence of the community’s livelihood on the due systematic working of these industrial
forces. To take effect and to hold its own even for the time being, any movement of overturn must
from beforehand provide for a sufficiently productive conduct of the industrial system on which
the community’s material welfare depends, and for a competent distribution of goods and services
throughout the community. Otherwise, under existing industrial conditions, nothing more can be
accomplished than an ephemeral disturbance and a transient season of accentuated hardship. Even a
transient failure to make good in the management of the industrial system must immediately defeat
any movement of overturn in any of the advanced industrial countries. At this point the lessons
of history fail, because the present industrial system and the manner of closeknit community life
enforced by this industrial system have no example in history.
This state of things, which so conditions the possibility of any revolutionary overturn, is peculiar to
the advanced industrial countries; and the limitations which this state of things imposes are binding
within these countries in the same measure in which these peoples are dominated by the system of
mechanical industry. In contrast with this state of things, the case of Soviet Russia may be cited
to show the difference. As compared with America and much of western Europe, Russia is not an
industrialized region, in any decisive sense; although Russia, too, leans on the mechanical industry
in a greater degree than is commonly recognized. Indeed, so considerable is the dependence of the
Russians on the mechanical industry that it may yet prove to be the decisive factor in the struggle
which is now going on between Soviet Russia and the Allied Powers.
Now, it is doubtless this continued success of the Soviet administration in Russia that has thrown
this ecstatic scare into the Guardians of the Vested Interests in America and in the civilized
countries of Europe. There is nothing to be gained by denying that the Russian Soviet has achieved
a measure of success; indeed, an astonishing measure of success, considering the extremely adverse
circumstances under which the Soviet has been at work. The fact may be deplored, but there it is.
The Soviet has plainly been successful, in the material respect, far beyond the reports which have
been allowed to pass the scrutiny of the Seven Censors and the Associated Prevarication Bureaux of
the Allied Powers. And this continued success of Bolshevism in Russia or such measure of success
as it has achieved is doubtless good ground for a reasonable degree of apprehension among good
citizens elsewhere; but it does not by any means argue that anything like the same measure of success
could be achieved by a revolutionary movement on the same lines in America, even in the absence of
intervention from outside.
Soviet Russia has made good to the extent of maintaining itself against very great odds for some
two years; and it is even yet a point in doubt whether the Allied Powers will be able to put down the
Soviet by use of all the forces at their disposal and with the help of all the reactionary elements in
Russia and in the neighboring countries. But the Soviet owes this measure of success to the fact that
the Russian people have not yet been industrialized in anything like the same degree as their western
neighbors. They have in great measure been able to fall back on an earlier, simpler, less closeknit
plan of productive industry; such that any detailed part of this loose knit Russian community is
able, at a pinch, to draw its own livelihood from its own soil by its own work, without that instant
32
and unremitting dependence on materials and wrought goods drawn from foreign ports and distant
regions, that is characteristic of the advanced industrial peoples. This old-fashioned plan of home
production does not involve an “industrial system” in the same exacting sense as the mechanical
industry. The Russian industrial system, it is true, also runs on something of a balanced plan of give
and take; it leans on the mechanical industry in some considerable degree and draws on foreign
trade for many of its necessary articles of use; but for the transient time being, and for an appreciable
interval of time, such a homebred industrious population, living close to the soil and supplying
its ordinary needs by homebred handicraft methods, will be able to maintain itself in a fair state
of efficiency if not in comfort, even in virtual isolation from the more advanced industrial centers
and from the remoter sources of raw materials. To the ignorant, that is to say, to the wiseacres of
commerce, this ability of the Russian people to continue alive and active under the conditions of an
exemplary blockade has been a source of incredulous astonishment.
It is only as a fighting power, and then only for the purposes of an aggressive war, that such a
community can count for virtually nothing in a contest with the advanced industrial nations. Such
a people makes an unwieldy country to conquer from the outside. Soviet Russia is self supporting,
in a loose and comfortless way, and in this sense it is a very defensible country and may yet prove
extremely difficult for the Allied Powers to subdue; but in the nature of the case there need be not
the slightest shadow of apprehension that Soviet Russia can successfully take the offensive against
any outside people, great or small, which has the use of the advanced mechanical industry.
The statesmen of the Allied Powers, who are now carrying on a covert war against Soviet Russia,
are in a position to know this state of the case; and not least those American statesmen, who have
by popular sentiment been constrained reluctantly to limit and mask their cooperation with the
reactionary forces in Finland, Poland, the Ukraine, Siberia, and elsewhere.
They have all been at pains diligently to inquire into the state of things in Soviet Russia; although,
it is true, they have also been at pains to give out surprisingly little information, that being much
of the reason for the Seven Censors. The well published official and semiofficial apprehension of a
Bolshevist offensive to be carried on beyond the Soviet frontiers may quite safely be set down as an
article of statesmanlike subterfuge. The statesmen know better. What is feared in fact is infection
of the Bolshevist spirit beyond the Soviet frontiers, to the detriment of those Vested Interests whose
guardians these statesmen are.
And on this head the apprehensions of these Elder Statesmen are not altogether groundless; for the
Elder Statesmen are also in a position to know, without much inquiry, that there is no single spot
or corner in civilized Europe or America where the underlying population would have anything to
lose by such an overturn of the established order as would cancel the vested rights of privilege and
property, whose guardians they are. But commercialized America is not the same thing as Soviet
Russia. By and large, America is an advanced industrial country, bound in the web of a fairly
closeknit and inclusive industrial system. The industrial situation, and therefore the conditions of
success, are radically different in the two countries in those respects that would make the outcome
in any effectual revolt. So that, for better or worse, the main lines that would necessarily have to be
followed in working out any practicable revolutionary movement in this country are already laid
down by the material conditions of its productive industry. On provocation there might come a flare
33
of riotous disorder; but it would come to nothing, however substantial the provocation might be, so
long as the movement does not fall in with those main lines of management which the state of the
industrial system requires in order to insure any sustained success. These main lines of revolutionary
strategy are lines of technical organization and industrial management; essentially lines of industrial
engineering; such as will fit the organization to take care of the highly technical industrial system
that constitutes the indispensable material foundation of any modern civilized community. They will
accordingly not only be of a profoundly different order from what may do well enough in the case
of such a loose knit and backward industrial region as Russia, but they will necessarily also be of a
kind which has no close parallel in the past history of revolutionary movements. Revolutions in the
eighteenth century were military and political; and the Elder Statesmen who now believe themselves
to be making history still believe that revolutions can be made and unmade by the same ways and
means in the twentieth century. But any substantial or effectual overturn in the twentieth century
will necessarily be an industrial overturn; and by the same token, any twentieth century revolution
can be combated or neutralized only by industrial ways and means. The case of America, therefore,
considered as a candidate for Bolshevism, will have to be argued on its own merits, and the argument
will necessarily turn on the ways and means of productive industry as conditioned by the later
growth of technology.
It has been argued, and it seems not unreasonable to believe, that the established order of business
enterprise, vested rights, and commercialized nationalism, is due presently to go under in a muddle
of shame and confusion, because it is no longer a practicable system of industrial management under
the conditions created by the later state of the industrial arts.
Twentieth century technology has outgrown the eighteenth century system of vested rights. The
experience of the past few years teaches that the usual management of industry by business methods
has become highly inefficient and wasteful, and the indications are many and obvious that any
businesslike control of production and distribution is bound to run more and more consistently
at cross purposes with the community’s livelihood, the farther the industrial arts advance and
the wider the industrial system extends. So that it is perhaps not reasonably to be questioned that
Vested Interests in business are riding for a fall. But the end is not yet; although it is to be admitted,
regretfully perhaps, that with every further advance in technological knowledge and practice and
with every further increase in the volume and complexity of the industrial system, any businesslike
control is bound to grow still more incompetent, irrelevant, and impertinent.
It would be quite hazardous to guess, just yet, how far off that consummation of commercial
imbecility may be. There are those who argue that the existing system of business management
is plainly due to go under within two years’ time; and there are others who are ready, with equal
confidence, to allow it a probable duration of several times that interval; although, it is true, these
latter appear, on the whole, to be persons who are less intimately acquainted with the facts in the
case. Many men experienced in the larger affairs of industrial business are in doubt as to how long
things will hold together. But, one with another, these men who so are looking into the doubtful
future are, somewhat apprehensively, willing to admit that there is yet something of a margin to
go on; so much so that, barring accident, there should seem to be no warrant for counting at all
confidently on a disastrous breakdown of the business system within anything like a two year period.
34
And, for the reassurance of the apprehensive Guardian of the Vested Interests, it is to be added
that should such a break in the situation come while things are standing in their present shape,
the outcome could assuredly not be an effectual overturn of the established order; so long as no
practicable plan has been provided for taking over the management from the dead hand of the
Vested Interests. Should such a self-made breakdown come at the present juncture, the outcome
could, in fact, scarcely be anything more serious than an interval, essentially transient though more
or less protracted, of turmoil and famine among the underlying population, together with something
of a setback to the industrial system as a whole. There seems no reason to apprehend any substantial
disallowance of the vested rights of property to follow from such an essentially ephemeral interlude
of dissension.
In fact, the tenure of the Vested Interests in America should seem to be reasonably secure, just yet.
Something in the nature of riotous discontent and factional disorder is perhaps to be looked for in
the near future in this country, and there may even be some rash gesture of revolt on the part of illadvised malcontents. Circumstances would seem to favor something of the kind. It is conservatively
estimated that there is already a season of privation and uncertainty in prospect for the underlying
population, which could be averted only at the cost of some substantial interference with the vested
rights of the country’s business men, which should seem a highly improbable alternative, in view of
that spirit of filial piety with which the public officials guard the prerogatives of business as usual.
So, e.g., it is now (September, 1919) confidently expected, or rather computed, that a fuel famine is
due in America during the approaching winter, for reasons of sound business management; and it
is likewise to be expected that for the like reason the American transportation system is also due to
go into a tangle of congestion and idleness about the same time barring providential intervention in
the way of unexampled weather conditions. But a season of famine and disorderly conduct does not
constitute a revolutionary overturn of the established order; and the Vested Interests are secure in
their continued usufruct of the country’s industry, just yet.
This hopeful posture of things may be shown convincingly enough and with no great expenditure
of argument. To this end it is proposed to pursue the argument somewhat further presently; by
describing in outline what are the infirmities of the regime of the Vested Interests, which the more
sanguine malcontents count on to bring that regime to an inglorious finish in the immediate future;
and also to set down, likewise in outline, what would have to be the character of any organization of
industrial forces which could be counted on effectually to wind up the regime of the Vested Interests
and take over the management of the industrial system on a deliberate plan
V. On the Circumstances Which Make for a Change
The state of industry, in America and in the other advanced industrial countries, will impose certain
exacting conditions on any movement that aims to displace the Vested Interests. These conditions lie
in the nature of things; that is to say, in the nature of the existing industrial system; and until they
are met in some passable fashion, this industrial system can not be taken over in any effectual or
enduring manner. And it is plain that whatever is found to be true in these respects for America will
also hold true in much the same degree for the other countries that are dominated by the mechanical
industry and the system of absentee ownership.
35
It may also confidently be set down at the outset that such an impartial review of the evidence
as is here aimed at will make it appear that there need be no present apprehension of the Vested
Interests’ being unseated by any popular uprising in America, even if the popular irritation should
rise very appreciably above its present pitch, and even if certain advocates of “direct action,” here
and there, should be so ill-advised as to make some rash gesture of revolt. The only present danger is
that a boisterous campaign of repression and inquisition on the part of the Guardians of the Vested
Interests may stir up some transient flutter of seditious disturbance.
To this end, then, it will be necessary to recall, in a summary way, those main facts of the industrial
system and of the present businesslike control of this system which come immediately into the case.
By way of general premise it is to be noted that the established order of business rests on absentee
ownership and is managed with an eye single to the largest obtainable net return in terms of price;
that is to say, it is a system of businesslike management on a commercial footing. The underlying
population is dependent on the working of this industrial system for its livelihood; and their material
interest therefore centers in the output and distribution of consumable goods, not in an increasing
volume of earnings for the absentee owners. Hence there is a division of interest between the business
community, who do business for the absentee owners, and the underlying population, who work
for a living; and in the nature of the case this division of interest between the absentee owners and
the underlying population is growing wider and more evident from day to day; which engenders a
certain division of sentiment and a degree of mutual distrust.
With it all the underlying population are still in a sufficiently deferential frame of mind toward their
absentee owners, and are quite conscientiously delicate about any abatement of the free income which
their owners come in for, according to the rules of the game as it is played.
The business concerns which so have the management of industry on this plan of absentee ownership
are capitalized on their business capacity, not on their industrial capacity; that is to say, they are
capitalized on their capacity to produce earnings, not on their capacity to produce goods. Their
capitalization has, in effect, been calculated and fixed on the highest ordinary rate of earnings
previously obtained; and on pain of insolvency their businesslike managers are now required to meet
fixed income charges on this capitalization.
Therefore, as a proposition of safe and sane business management, prices have to be maintained or
advanced.
From this businesslike requirement of meeting these fixed overhead charges on the capitalization
there result certain customary lines of waste and obstruction, which are unavoidable so long as
industry is managed by businesslike methods and for businesslike ends. These ordinary lines of waste
and obstruction are necessarily (and blamelessly) included in the businesslike conduct of production.
They are many and various in detail, but they may for convenience be classed under four heads: (a)
Unemployment of material resources, equipment and manpower, in whole or in part, deliberately or
through ignorance; (b) Salesmanship (includes, e.g., needless multiplication of merchants and shops,
wholesale and retail, newspaper advertising and billboards, sales exhibits, sales agents, fancy packages
and labels, adulteration, multiplication of brands and proprietary articles); (c) Production (and sales
cost) of superfluities and spurious goods; (d) Systematic dislocation, sabotage and duplication, due in
36
part to businesslike strategy, in part to businesslike ignorance of industrial requirements (includes,
e.g., such things as cross freights, monopolization of resources, withholding of faculties and
information from business rivals whom it is thought wise to hinder or defeat).
There is, of course, no blame, and no sense of blame or shame attaching to all this everyday waste
and confusion that goes to make up the workday total of businesslike management. All of it is a
legitimate and necessary part of the established order of business enterprise, within the law and
within the ethics of the trade.
Salesmanship is the most conspicuous, and perhaps the gravest, of these wasteful and industrially
futile practices that are involved in the businesslike conduct of industry; it bulks large both
in its immediate cost and in its meretricious consequences. It also is altogether legitimate and
indispensable in any industrial business that deals with customers, in buying or selling; which comes
near saying, in all business that has to do with the production or distribution of goods or services.
Indeed, salesmanship is, in a way, the whole end and substance of business enterprise; and except
so far as it is managed with a constant view to profitable bargains, the production of goods is not a
business proposition. It is the elimination of profitable transactions of purchase and sale that is hoped
for by any current movement looking to an overturn; and it is the same elimination of profitable
bargaining that is feared, with a nerve shattering fear, by the Guardians of the established order.
Salesmanship is also the most indispensable and most meritorious of those qualities that go to make
a safe and sane business man It is doubtless within the mark to say that, at an average, one-half the
price paid for goods and services by consumers is to be set down to the account of salesmanship that
is, to sales cost and to the net gains of salesmanship.
But in many notable lines of merchandise the sales cost will ordinarily foot up to some ten or twenty
times the production cost proper, and to not less than one hundred times the necessary cost of
distribution. All this is not a matter for shame or distaste. In fact, just now more than ever, there is
a clamorous and visibly growing insistence on the paramount merit and importance of salesmanship
as the main stay of commerce and industry, and a strenuous demand for more extensive and more
thorough training in salesmanship of a larger number of young men at the public expense to enable a
shrewdly limited output of goods to be sold at more profitable prices at the public cost. So also there
is a visibly increasing expenditure on all manner of advertising; and the spokesmen of this enterprise
in conspicuous waste are “pointing with pride” to the fact that the American business community
have already spent upward of $600,000,000 on billboards alone within the past year, not to speak
of much larger sums spent on newspapers and other printed matter for the same purpose and the
common man pays the cost.
At the same time advertising and manoeuvres of salesmanlike spellbinding appear to be the only
resource to which the country’s business men know how to turn for relief from that tangle of
difficulties into which the outbreak of a businesslike peace has precipitated the commercialized
world. Increased salescost is to remedy the evils of underproduction. In this connection it may
be worth while to recall, without heat or faultfinding, that all the costly publicity that goes into
salescosts is in the nature of prevarication, when it is not good broad mendacity; and quite necessarily
so. And all the while the proportion of salescosts to production costs goes on increasing, and the cost
of living grows continually greater for the underlying population, and business necessities continue to
37
enlarge the necessary expenditure on ways and means of salesmanship.
It is reasonable to believe that this state of things, which has been coming on gradually for some
time past, will in time come to be understood and appreciated by the underlying population, at least
in some degree. And it is likewise reasonable to believe that so soon as the under lying population
come to realize that all this wasteful traffic of salesmanship is using up their productive forces, with
nothing better to show for it than an increased cost of living, they will be driven to make some move
to abate the nuisance. And just so far as this state of things is now beginning to be understood, its
logical outcome is a growing distrust of the business men and all their works and words. But the
underlying population is still very credulous about anything that is said or done in the name of
Business, and there need be no apprehension of a mutinous outbreak, just yet. But at the same time
it is evident that any plan of management which could contrive to dispense with all this expenditure
on salesmanship, or that could materially reduce salescosts, would have that much of a free margin to
go on, and therefore that much of an added chance of success; and so also it is evident that any other
than a businesslike management could so contrive, inasmuch as salescosts are incurred solely for
purposes of business, not for purposes of industry; they are incurred for the sake of private gain, not
for the sake of productive work.
But there is in fact no present promise of a breakdown of business, due to the continued increase
of salescosts; although salescosts are bound to go on increasing so long as the country’s industry
continues to be managed on anything like the present plan. In fact, salesmanship is the chief
factor in that ever-increasing cost of living, which is in its turn the chief ground of prosperity
among the business community and the chief source of perennial hardship and discontent among
the underlying population. Still it is worth noting that the eventual elimination of salesmanship
and salescost would lighten the burden of workday production for the underlying population
by some fifty per cent. There is that much of a visible inducement to disallow that system of
absentee ownership on which modern business enterprise rests; and for what it may be worth it is
to be admitted that there is therefore that much of a drift in the existing state of things toward a
revolutionary overturn looking to the unseating of the Vested Interests. But at the same time the
elimination of salesmanship and all its voluminous apparatus and traffic would also cut down the
capitalized income of the business community by something like one-half; and that contingency is
not to be contemplated, not to say with equanimity, by the Guardians; and it is after all in the hands
of these Guardians that the fortunes of the community rest. Such a move is a moral impossibility,
just yet.
Closely related to the wasteful practices of salesmanship as commonly understood, if it should not
rather be counted in as an extension of salesmanship, is that persistent unemployment of men,
equipment, and material resources, by which the output of goods and services is kept down to
the “requirements of the market,” with a view to maintaining prices at a “reasonably profitable
level.” Such unemployment, deliberate and habitual, is one of the ordinary expedients employed
in the businesslike management of industry. There is always more or less of it in ordinary times.
“Reasonable earnings” could not be assured without it; because “what the traffic will bear” in the
way of an output of goods is by no means the same as the productive capacity of the industrial
system; still less is it the same as the total consumptive needs of the community; in fact, it does
not visibly tend to coincide with either. It is more particularly in times of popular distress, such as
38
the present year, when the current output of goods is not nearly sufficient to cover the consumptive
needs of the community, that considerations of business strategy call for a wise unemployment of the
country’s productive forces. At the same time, such businesslike unemployment of equipment and
man power is the most obvious cause of popular distress.
All this is well known to the Guardians of the Vested Interests, and their knowledge of it is, quite
reasonably, a source of uneasiness to them. But they see no help for it; and indeed there is no help
for it within the framework of “business as usual,” since it is the essence of business as usual. So also,
the Guardians are aware that this businesslike sabotage on productive industry is a fruitful source
of discontent and distrust among the underlying population who suffer the inconvenience of it all;
and they are beset with the abiding fear that the underlying population may shortly be provoked
into disallowing those Vested Interests for whose benefit this deliberate and habitual sabotage
on production is carried on. It is felt that here again is a sufficient reason why the businesslike
management of industry should be discontinued; which is the same as saying that here again is a
visibly sufficient reason for such a revolutionary overturn as will close out the Old Order of absentee
ownership and capitalized income. It is also evident that any plan which shall contrive to dispense
with, this deliberate and habitual unemployment of men and equipment will have that much more
of a margin to go on, both in respect of practical efficiency and in respect of popular tolerance; and
evidently, too, any other than a businesslike management of industry can so contrive, as a matter
of course; inasmuch as any such unbusinesslike administration as, e.g., the Soviet will be relieved
of the businesslike manager’s blackest bugbear, “a reasonably profitable level of prices.” But for all
that, those shudderingly sanguine persons who are looking for a dissolution of the system of absentee
ownership within two years’ time are not counting on salesmanlike waste and businesslike sabotage
to bring on the collapse, so much as they count on the item listed under (d) above the systematic
dislocation and allround defeat of productive industry which is due in part to shrewd manoeuvres
of businesslike strategy, in part to the habitual ignorance of business men touching the systematic
requirements of the industrial system as a whole. The shrewd worldly wisdom of the businesslike
managers, looking consistently to the main chance, works in harmoniously with their trained
ignorance on matters of technology, to bring about what amounts to effectual teamwork for the
defeat of the country’s industrial system as a going concern. Yet doubtless this sinister hope of a
collapse within two years is too sanguine. Doubtless the underlying population can be counted on
stolidly to put up with what they are so well used to, just yet; more particularly so long as they are
not in the habit of thinking about these things at all. Nor does it seem reasonable to believe that this
all-pervading waste and confusion of industrial forces will of itself bring the business organization to
a collapse within so short a time.
It is true, the industrial system is continually growing, in volume and complication; and with every
new extension of its scope and range, and with every added increment of technological practice
that goes into effect, there comes a new and urgent opportunity for the business men in control to
extend and speed up their strategy of mutual obstruction and defeat; it is all in the day’s work. As
the industrial system grows larger and more closely interwoven it offers continually larger and more
enticing opportunities for such businesslike manoeuvres as will effectually derange the system at the
same time that they bring the desired tactical defeat on some business rival; whereby the successful
business strategist is enabled to get a little something for nothing at a constantly increasing cost
to the community at large. With every increment of growth and maturity the country’s industrial
39
system becomes more delicately balanced, more intricately bound in a web of industrial give and
take, more sensitive to far reaching derangement by any local dislocation, more widely and instantly
responsive to any failure of the due correlation at any point; and by the same move the captains
of industry, to whose care the interests of absentee ownership are entrusted, are enabled, or rather
they are driven by the necessities of competitive business, to plan their strategy of mutual defeat
and derangement on larger and more intricate lines, with an ever wider reach and a more massive
mobilization of forces.
From which follows an ever increasing insecurity of work and output from day to day and an
increased assurance of general loss and disability in the long run; incidentally coupled with increased
hardship for the underlying population, which comes in all along as a subsidiary matter of course,
unfortunate but unavoidable. It is this visibly growing failure of the present businesslike management
to come up to the industrial necessities of the case; its unfitness to take anything like reasonable
care of the needed correlation of industrial forces within the system; its continual working at cross
purposes in the allocation of energy resources, materials, and man power it is this fact, that any
businesslike management of necessity runs at cross purposes with the larger technical realities of
the industrial system, that chiefly goes to persuade apprehensive persons that the regime of business
enterprise is fast approaching the limit of tolerance. So it is held by many that this existing system of
absentee ownership must presently break down and precipitate the abdication of the Vested Interests,
under conviction of total imbecility.
The theory on which these apprehensive persons proceed appears to be substantially sound, so far as
it goes, but they reach an unguardedly desperate conclusion because they overlook one of the main
facts of the case.
There is no reasonable exception to be taken to the statement that the country’s industrial system
is forever growing more extensive and more complex; that it is continually taking on more of the
character of a closeknit, interwoven, systematic whole; a delicately balanced moving equilibrium of
working parts, no one of which can do its work by itself at all, and none of which can do its share
of the work well except in close correlation with all the rest. At the same time it is also true that, in
the commercialized nature of things, the businesslike management of industry is forever playing
fast and loose with this delicately balanced moving equilibrium of forces, on which the livelihood
of the underlying population depends from day to day; more particularly is this true for that largescale business enterprise that rests on absentee ownership and makes up the country’s greater Vested
Interests. But to all this it is to be added, as a corrective and a main factor in the case, that this
system of mechanical industry is an extremely efficient contrivance for the production of goods and
services, even when, as usual, the business men, for business reasons, will allow it to work only under
a large handicap of unemployment and obstructive tactics. Hitherto the margin for error, that is to
say for wasteful strategy and obstructive ignorance, has been very wide; so wide that it has saved the
life of the Vested Interests; and it is accordingly by no means confidently to be believed that all these
ampler opportunities for swift and wide reaching derangement will enable the strategy of business
enterprise to bring on a disastrous collapse, just yet.
It is true, if the country’s productive industry were competently organized as a systematic whole, and
were then managed by competent technicians with an eye single to maximum production of goods
40
and services; instead of, as now, being manhandled by ignorant business men with an eye single to
maximum profits; the resulting output of goods and services would doubtless exceed the current
output by several hundred per cent. But then, none of all that is necessary to save the established
order of things. All that is required is a decent modicum of efficiency, very far short of the theoretical
maximum production. In effect, the community is in the habit of getting along contentedly on
something appreciably less than one-half the output which its industrial equipment would turn out
if it were working uninterruptedly at full capacity; even when, as usual, something like one-half of
the actual output is consumed in wasteful superfluities. The margin for waste and error is very wide,
fortunately; and, in effect, a more patient and more inclusive survey of the facts in the case would
suffice to show that the tenure of the Vested Interests is reasonably secure just yet; at least in so far as
it turns on considerations of this nature.
There is, of course, the chance, and it is by no means a remote chance, that the rapidly increasing
volume and complexity of the industrial system may presently bring the country’s industry into such
a ticklish state of unstable equilibrium that even a reasonable modicum of willful derangement can
no longer be tolerated, even for the most urgent and most legitimate reasons of businesslike strategy
and vested rights. In time, such an outcome is presumably due to be looked for. There is, indeed,
no lack of evidence that the advanced industrial countries are approaching such a state of things,
America among the rest. The margin for error and wasteful strategy is, in effect, being continually
narrowed by the further advance of the industrial arts. With every further advance in the way of
specialization and standardization, in point of kind, quantity, quality, and time, the tolerance of the
system as a whole under any strategic maladjustment grows continually narrower.
How soon the limit of tolerance for willful derangement is due to be reached, would be a hazardous
topic of speculation. There is now a fair prospect that the coming winter may throw some light on
that dark question; but this is not saying that the end is in sight. What is here insisted on is that that
sinister eventuality lies yet in the future, although it may be in the calculable future.
So also it is well to keep in mind that even a fairly disastrous collapse of the existing system of
businesslike management need by no means prove fatal to the Vested Interests, just yet; not so long
as there is no competent organization ready to take their place and administer the country’s industry
on a more reasonable plan. It is necessarily a question of alternatives.
In all this argument that runs on perennial dislocation and cross purposes, it is assumed that the
existing businesslike management of industry is of a competitive nature and necessarily moves on
lines of competitive strategy.
As a subsidiary premise it is, of course, also assumed that the captains of industry who have the
direction of this competitive strategy are ordinarily sufficiently ill informed on technological matters
to go wrong, industrially speaking, even with the most pacific and benevolent intentions. They are
laymen in all that concerns the technical demands of industrial production.
This latter, and minor, assumption therefore need not be argued; it is sufficiently notorious. On the
other hand, the first assumption spoken of above, that current business enterprise is of a competitive
nature, is likely to be questioned by many who believe themselves to be familiar with the facts in
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the case. It is argued, by one and another, that the country’s business concerns have entered into
consolidations, coalitions, understandings and working arrangements among themselves syndicates,
trusts, pools, combinations, interlocking directorates, gentlemen’s agreements, employers’ unions to
such an extent as virtually to cover the field of that large-scale business that sets the pace and governs
the movements of the rest; and that where combination takes effect in this way, competition ceases.
So also it will be argued that where there has been no formal coalition of interests the business men
in charge will still commonly act in collusion, with much the same result. The suggestion is also
ready to hand that in so far as businesslike sabotage of this competitive order is still to be met with, it
can all be corrected by such a further consolidation of interests as will do away with all occasion for
competitive cross purposes within the industrial system.
It is not easy to see just how far that line of argument would lead; but to make it effective and
to cover the case it would plainly have to result in so wide a coalition of interests and pooling of
management as would, in effect, eliminate all occasion for businesslike management within the
system, and leave the underlying population quite unreservedly at the disposal of the resulting
coalition of interests an outcome which is presumably not contemplated. And even so, the argument
takes account of only one strand in that three-ply rope that goes to fashion the fatal noose. The
remaining two are stout enough, and they have not been touched. It is true, economists and others
who have canvassed this matter of competition have commonly given their attention to this one line
of competition alone between rival commercial interests because this competition is conceived to be
natural and normal and to serve the common good. But there remains (a) the competition between
those business men who buy cheap and sell dear and the underlying population from and to whom
they buy cheap and sell dear, and (b) the competition between the captains of industry and those
absentee owners in whose name and with whose funds the captains do business. In the typical case,
modern business enterprise takes the corporate form, is organized on credit, and therefore rests on
absentee ownership; from which it follows that in all large-scale business the owners are not the
same persons as the managers, nor does the interest of the manager commonly coincide with that of
his absentee owners, particularly in the modern “big business.” So it follows that even a coalition of
Vested Interests which should be virtually all-inclusive, would still have to make up its account with
“what the traffic will bear,” that is to say what will bring the largest net income in terms of price;
that is to say, the coalition would still be under the competitive necessity of buying cheap and selling
dear, to the best of its ability and with the use of all the facilities which its dominant position in the
market would give. The coalition, therefore, would still be under the necessity of shrewdly limiting
the output of goods and services to such a rate and volume as will maintain or advance prices; and
also to vary its manipulation of prices and supply from place to place and from time to time, to turn
an honest penny; which leaves the case very near the point of beginning. But then, such a remedy
for these infelicities of the competitive system will probably be admitted to be chimerical, without
argument.
But what is more to the point is the fact, known even when it is not avowed, that the consolidations
which have been effected hitherto have not eliminated competition, nor have they changed the
character of the competitive strategy employed, although they have altered its scale and methods.
What can be said is that the underlying corporations of the holding companies, e.g., are no longer
competitors among themselves on the ancient footing. But strategic dislocation and cross purposes
continue to be the order of the day in the businesslike management of industry; and the volume
42
of habitual unemployment, whether of equipment or of man power, continues undiminished and
unashamed which is after all a major count in the case It is well to recognize what the business men
among themselves always recognize as a matter of course, that business is in the last analysis always
carried on for the private advantage of the individual business men who carry it on. And these
enterprising persons, being business men, will always be competitors for gain among themselves,
however much and well they may combine for a common purpose as against the rest of the
community.
The end and aim of any gainful enterprise carried through in common is always the division of the
joint gains, and in this division the joint participants always figure as competitors. The syndicates,
coalitions, corporations, consolidations of interests, so entered into in the pursuit of gain are, in
effect, in the nature of conspiracies between business men each seeking his own advantage at the cost
of any whom it may concern. There is no ulterior solidarity of interests among the participants in
such a joint enterprise.
By way of illustration, what is set forth in the voluminous testimony taken in the Colton case, before
the California courts, having to do with the affairs of the Southern Pacific and its subsidiaries, will
show in what fashion the businesslike incentives of associated individuals may be expected to work
out in the partition of benefits within a given coalition. And not only is there no abiding solidarity
of interests between the several participants in such a joint enterprise, so far as regards the final
division of the spoils, but it is also true that the business interest of the manager in charge of such
a syndicate of absentee ownership will not coincide with the collective interest of the coalition as a
going concern. As an illustrative instance may be cited the testimony of the great president of the
two Great Northern railways, taken before a Congressional commission, wherein it is explained
somewhat fully that for something like a quarter century the two great roads under his management
had never come in for reasonable earnings on their invested capital. And it is a matter of common
notoriety, although it was charitably not brought out in the hearings of the commission, that during
his incumbency as manager of the two great railway systems this enterprising railway president had
by thrift and management increased his own private possessions from $20 to something variously
estimated at $150,000,000 to $200,000,000; while his two chief associates in this adventure had
retired from the management on a similarly comfortable footing; so notably comfortable, indeed, as
to have merited a couple of very decent peerages under the British crown.
In effect, there still is an open call for shrewd personal strategy at the cost of any whom it may
concern; all the while that there is also a very appreciable measure of collusion among the Vested
Interests, at the cost of any whom it may concern. Business is still competitive business, competitive
pursuit of private gain; as how should it not be? seeing that the incentive to all business is after all
private gain at the cost of any whom it may concern.
By reason of doctrinal consistency and loyalty to tradition, the certified economists have habitually
described business enterprise as a rational arrangement for administering the country’s industrial
system and assuring a full and equitable distribution of consumable goods to the consumers.
There need be no quarrel with that view. But it is only fair to enter the reservation that, considered
as an arrangement for administering the country’s industrial system, business enterprise based on
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absentee ownership has the defects of its qualities; and these defects of this good old plan are now
calling attention to themselves. Hitherto, and ever since the mechanical industry first came into the
dominant place in this industrial system, the defects of this businesslike management of industry
have continually been encroaching more and more on its qualities. It took its rise as a system of
management by the owners of the industrial equipment, and it has in its riper years grown into a
system of absentee ownership managed by quasiresponsible financial agents. Having begun as an
industrial community which centered about an open market, it has matured into a community of
Vested Interests whose vested right it is to keep up prices by a short supply in a closed market. There
is no extravagance in saying that, by and large, this arrangement for controlling the production and
distribution of goods and services through the agency of absentee ownership has now come to be, in
the main, a blundering muddle of defects. For the purpose in hand, that is to say with a view to the
probable chance of any revolutionary overturn, this may serve as a fair characterization of the regime
of the Vested Interests; whose continued rule is now believed by their Guardians to be threatened by
a popular uprising in the nature of Bolshevism. Now, as to the country’s industrial system which is
manhandled on this businesslike plan; it is a comprehensive and balanced scheme of technological
administration.
Industry of this modern sort mechanical, specialized, standardized, running to quantity production,
drawn on a large scale is highly productive; provided always that the necessary conditions of its
working are met in some passable fashion. These necessary conditions of productive industry are
of a well-defined technical character, and they are growing more and more exacting with every
farther advance in the industrial arts. This mechanical industry draws always more and more
largely and urgently on the natural sources of mechanical power, and it necessarily makes use of an
ever increasingly wide and varied range of materials, drawn from all latitudes and all geographical
regions, in spite of obstructive national frontiers and patriotic animosities; for the mechanical
technology is impersonal and dispassionate, and its end is very simply to serve human needs, without
fear or favor or respect of persons, prerogatives, or politics.
It makes up an industrial system of an unexampled character a mechanically balanced and
interlocking system of work to be done, the prime requisite of whose working is a painstaking
and intelligent coordination of the processes at work, and an equally painstaking allocation of
mechanical power and materials. The foundation and driving force of it all is a massive body by
technological knowledge, of a highly impersonal and altogether unbusinesslike nature, running in
close contact with the material sciences, on which it draws freely at every turn exactingly specialized,
endlessly detailed, reaching out into all domains of empirical fact.
Such is the system of productive work which has grown out of the Industrial Revolution, and on
the full and free run of which the material welfare of all the civilized peoples now depends from
day to day. Any defect or hindrance in its technical administration, any intrusion of nontechnical
considerations, any failure or obstruction at any point, unavoidably results in a disproportionate
setback to the balanced whole and brings a disproportionate burden of privation on all these peoples
whose productive industry has come within the sweep of the system.
It follows that those gifted, trained, and experienced technicians who now are in possession of the
requisite technological information and experience are the first and instantly indispensable factor
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in the everyday work of carrying on the country’s productive industry. They now constitute the
General Staff of the industrial system, in fact; whatever law and custom may formally say in protest.
The “captains of industry” may still vaingloriously claim that distinction, and law and custom still
countenance their claim; but the captains have no technological value, in fact.
Therefore any question of a revolutionary overturn, in America or in any other of the advanced
industrial countries, resolves itself in practical fact into a question of what the guild of technicians
will do. In effect it is a question whether the discretion and responsibility in the management of
the country’s industry shall pass from the financiers, who speak for the Vested Interests, to the
technicians, who speak for the industrial system as a going concern.
There is no third party qualified to make a colorable bid, or able to make good its pretensions if it
should make a bid. So long as the vested rights of absentee ownership remain intact, the financial
powers that is to say the Vested Interests . will continue to dispose of the country’s industrial forces
for their own profit; and so soon, or so far, as these vested rights give way, the control of the people’s
material welfare will pass into the hands of the technicians. There is no third party.
The chances of anything like a Soviet in America, therefore, are the chances of a Soviet of
technicians. And, to the due comfort of the Guardians of the Vested Interests and the good citizens
who make up their background, it can be shown that anything like a Soviet of Technicians is at the
most a remote contingency in America.
It is true, so long as no such change of base is made, what is confidently to be looked for is a regime
of continued and increasing shame and confusion, hardship and dissension, unemployment and
privation, waste and insecurity of person and property such as the rule of the Vested Interests in
business has already made increasingly familiar to all the civilized peoples. But the vested rights
of absentee ownership are still embedded in the sentiments of the underlying population, and still
continue to be the Palladium of the Republic; and the assertion is still quite safe that anything like a
Soviet of Technicians is not a present menace to the Vested Interests in America.
By settled habit the technicians, the engineers and industrial experts, are a harmless and docile
sort, well fed on the whole, and somewhat placidly content with the “full dinnerpail” which the
lieutenants of the Vested Interests habitually allow them. It is true, they constitute the indispensable
General Staff of that industrial system which feeds the Vested Interests; but hitherto at least, they
have had nothing to say in the planning and direction of this industrial system, except as employees
in the pay of the financiers.
They have, hitherto, been quite unreflectingly content to work piecemeal, without much of an
understanding among themselves, unreservedly doing jobwork for the Vested Interests; and they have
without much reflection lent themselves and their technical powers freely to the obstructive tactics
of the captains of industry; all the while that the training which makes them technicians is but a
specialized extension of that joint stock of technological knowledge that has been carried forward out
of the past by the community at large.
But it remains true that they and their dearbought knowledge of ways and means--dearbought on
45
the part of the underlying community are the pillars of that house of industry in which the Vested
Interests continue to live. Without their continued and unremitting supervision and direction the
industrial system would cease to be a working system at all; whereas it is not easy to see how the
elimination of the existing businesslike control could bring anything but relief and heightened
efficiency to this working system, The technicians are indispensable to productive industry of
this mechanical sort; the Vested Interests and their absentee owners are not. The technicians are
indispensable to the Vested Interests and their absentee owners, as a working force without which
there would be no industrial output to control or divide; whereas the Vested Interests and their
absentee owners are of no material consequence to the technicians and their work, except as an
extraneous interference and obstruction.
It follows that the material welfare of all the advanced industrial peoples rests in the hands of
these technicians, if they will only see it that way, take counsel together, constitute themselves the
self directing General Staff of the country’s industry, and dispense with the interference of the
lieutenants of the absentee owners. Already they are strategically in a position to take the lead and
impose their own terms of leadership, so soon as they, or a decisive number of them, shall reach a
common understanding to that effect and agree on a plan of action.
But there is assuredly no present promise of the technicians’ turning their insight and common sense
to such a use. There need be no present apprehension.
The technicians are a “safe and sane” lot, on the whole; and they are pretty well commercialized,
particularly the older generation, who speak with authority and conviction, and to whom the
younger generation of engineers defer, on the whole, with such a degree of filial piety as should go
far to reassure all good citizens. And herein lies the present security of the Vested Interests, as well as
the fatuity of any present alarm about Bolshevism and the like; for the wholehearted cooperation of
the technicians would be as indispensable to any effectual movement of overturn as their unwavering
service in the employ of the Vested Interests is indispensable to the maintenance of the established
order.
VI. A Memorandum on a Practicable Soviet of Technicians
It is the purpose of this memorandum to show, in an objective way, that under existing
circumstances there need be no fear, and no hope, of an effectual revolutionary overturn in
America, such as would unsettle the established order and unseat those Vested Interests that now
control the country’s industrial system. In an earlier paper (Chapter IV,) it has been argued that
no effectual move in the direction of such an overturn can be made except on the initiative and
under the direction of the country’s technicians, taking action in common and on a concerted plan.
Notoriously, no move of this nature has been made hitherto, nor is there evidence that anything
of the kind has been contemplated by the technicians. They still are consistently loyal, with
something more than a hiredman’s loyalty, to the established order of commercial profit and absentee
ownership. And any adequate plan of concerted action, such as would be required for the enterprise
in question, is not a small matter that can be arranged between two days.
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Any plan of action that shall hope to meet the requirements of the case in any passable fashion must
necessarily have the benefit of mature deliberation among the technicians who are competent to
initiate such an enterprise; it must engage the intelligent cooperation of several thousand technically
trained men scattered over the face of the country, in one industry and another; must carry out a
passably complete cadastration of the country’s industrial forces; must set up practicable organization
tables covering the country’s industry in some detail, energy resources, materials, and man power;
and it must also engage the aggressive support of the trained men at work in transportation,
mining, and the greater mechanical industries. These are initial requirements, indispensable to the
initiation of any enterprise of the kind in such an industrial country as America; and so soon as this
is called to mind it will be realized that any fear of an effectual move in this direction at present is
quite chimerical. So that, in fact, it may be set down without a touch of ambiguity that absentee
ownership is secure, just yet.
Therefore, to show conclusively and in an objective way how remote any contingency of this nature
still is, it is here proposed to set out in a summary fashion the main lines which any such concerted
plan of action would have to follow, and what will of necessity be the manner of organization which
alone can hope to take over the industrial system, following the eventual abdication or dispossession
of the Vested Interests and their absentee owners. And, by way of parenthesis, it is always the selfmade though reluctant abdication of the Vested Interests and their absentee owners, rather than
their forcible dispossession, that is to be looked for as a reasonably probable event in the calculable
future. It should, in effect, cause no surprise to find that they will, in a sense, eliminate themselves,
by letting go quite involuntarily after the industrial situation gets quite beyond their control. In
fact, they have, in the present difficult juncture, already sufficiently shown their unfitness to take
care of the country’s material welfare, which is after all the only ground on which they can set up a
colorable claim to their vested rights. At the same time something like an opening bid for a bargain
of abdication has already come in from more than one quarter. So that a discontinuance of the
existing system of absentee ownership, on one plan or another, is no longer to be considered a purely
speculative novelty; and an objective canvass of the manner of organization that is to be looked to
take the place of the control now exercised by the Vested Interests in the event of their prospective
abdication should accordingly have some present interest, even apart from its bearing on the moot
question of any forcible disruption of the established system of absentee ownership.
As a matter of course, the powers and duties of the incoming directorate will be of a technological
nature, in the main if not altogether; inasmuch as the purpose of its coming into control is the care
of the community’s material welfare by a more competent management of the country’s industrial
system.
It may be added that even in the unexpected event that the contemplated, overturn should, in the
beginning, meet with armed opposition from the partisans of the old order, it will still be true that
the duties of the incoming directorate will be of a technological character, in the main; inasmuch as
warlike operations are also now substantially a matter of technology, both in the immediate conduct
of hostilities and in the still more urgent work of material support and supply.
The incoming industrial order is designed to correct the shortcomings of the old. The duties and
47
powers of the incoming directorate will accordingly converge on those points in the administration
of industry where the old order has most signally fallen short; that is to say, on the due allocation of
resources and a consequent full and reasonably proportioned employment of the available equipment
and man power; on the avoidance of waste and duplication of work; and on an equitable and
sufficient supply of goods and services to consumers. Evidently the most immediate and most urgent
work to be taken over by the incoming directorate is that for want of which under the old order the
industrial system has been working slack and at cross purposes; that is to say the due allocation of
available resources, in power, equipment, and materials, among the greater primary industries. For
this necessary work of allocation there has been substantially no provision under the old order.
To carry on this allocation, the country’s transportation system must be placed at the disposal of the
same staff that has the work of allocation to do; since, under modern conditions, any such allocation
will take effect only by use of the transportation system. But, by the same token, the effectual control
of the distribution of goods to consumers will also necessarily fall into the same hands; since the
traffic in consumable goods is also a matter of transportation, in the main.
On these considerations, which would only be reinforced by a more detailed inquiry into the work
to be done, the central directorate will apparently take the shape of a loosely tripartite executive
council, with power to act in matters of industrial administration; the council to include technicians
whose qualifications enable them to be called Resource Engineers, together with similarly competent
spokesmen of the transportation system and of the distributive traffic in finished products and
services. With a view to efficiency and expedition, the executive council will presumably not be a
numerous body; although its staff of intelligence and advice may be expected to be fairly large, and
it will be guided by current consultation with the accredited spokesmen (deputies, commissioners,
executives, or whatever they may be called) of the several main subdivisions of productive industry,
transportation, and distributive traffic.
Armed with these powers and working in due consultation with a sufficient ramification of
subcenters and local councils, this industrial directorate should be in a position to avoid virtually all
unemployment of serviceable equipment and man power on the one hand, and all local or seasonal
scarcity on the other hand. The main line of duties indicated by the character of the work incumbent
on the directorate, as well as the main line of qualifications in its personnel, both executive and
advisory, is such as will call for the services of Production Engineers, to use a term which is coming
into use. But it is also evident that in its continued work of planning and advisement the directorate
will require the services of an appreciable number of consulting economists; men who are qualified
to be called Production Economists.
The profession now includes men with the requisite qualifications, although it cannot be said that
the gild of economists is made up of such men in the main. Quite blamelessly, the economists have,
by tradition and by force of commercial pressure, habitually gone in for a theoretical inquiry into
the ways and means of salesmanship, financial traffic, and the distribution of income and property,
rather than a study of the industrial system considered as a ways and means of producing goods
and services. Yet there now are, after all, especially among the younger generation, an appreciable
number, perhaps an adequate number, of economists who have learned that “business” is not
“industry” and that investment is not production. And, here as always, the best is good enough,
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perforce.
“Consulting economists” of this order are a necessary adjunct to the personnel of the central
directorate, because the technical training that goes to make a resource engineer, or a production
engineer, or indeed a competent industrial expert in any line of specialization, is not of a kind to give
him the requisite sure and facile insight into the play of economic forces at large; and as a matter
of notorious fact, very few of the technicians have gone at all far afield to acquaint themselves with
anything more to the point in this connection than the half-forgotten commonplaces of the old
order. The “consulting economist” is accordingly necessary to cover an otherwise uncovered joint in
the new articulation of things. His place in the scheme is analogous to the part which legal counsel
now plays in the manoeuvres of diplomatists and statesmen; and the discretionary personnel of the
incoming directorate are to be, in effect, something in the way of industrial statesmen under the new
order.
There is also a certain general reservation to be made with regard to personnel, which may
conveniently be spoken of at this point. To avoid persistent confusion and prospective defeat, it will
be necessary to exclude from all positions of trust and executive responsibility all persons who have
been trained for business or who have had experience in business undertakings of the larger sort. This
will apply generally, throughout the administrative scheme, although it will apply more imperatively
as regards the responsible personnel of the directorate, central and subordinate, together with their
staff of intelligence and advice, wherever judgment and insight are essential. What is wanted is
training in the ways and means of productive industry, not in the ways and means of salesmanship
and profitable investment.
By force of habit, men trained to a businesslike view of what is right and real will be irretrievably
biased against any plan of production and distribution that is not drawn in terms of commercial
profit and loss and does not provide a margin of free income to go to absentee owners. The personal
exceptions to the rule are apparently very few. But this one point is after all of relatively minor
consequence. What is more to the point in the same connection is that the commercial bias induced
by their training in businesslike ways of thinking leaves them incapable of anything like an effectual
insight into the use of resources or the needs and aims of productive industry, in any other terms
than those of commercial profit and loss. Their units and standards of valuation and accountancy
are units and standards of price, and of private gain in terms of price; whereas for any scheme of
productive industry which runs, not on salesmanship and earnings, but on tangible performances
and tangible benefit to the community at large, the valuations and accountancy of salesmanship and
earnings are misleading.
With the best and most benevolent intentions, men so trained will unavoidably make their appraisals
of production and their disposition of productive forces in the only practical terms with which they
are familiar, the terms of commercial accountancy ; which is the same as saying, the accountancy
of absentee ownership and free income; all of which it is the abiding purpose of the projected plan
to displace. For the purposes of this projected new order of production, therefore, the experienced
and capable business men are at the best to be rated as well-intentioned deaf-mute blind men.
Their wisest judgment and sincerest endeavors become meaningless and misguided so soon as the
controlling purpose of industry shifts from the footing of profits on absentee investment to that of a
49
serviceable output of goods.
All this abjuration of business principles and businesslike sagacity may appear to be a taking of
precautions about a vacant formality; but it is as well to recall that by trained propensity and
tradition the business men, great and small, are after all, each in their degree, lieutenants of those
Vested Interests which the projected organization of industry is designed to displace, schooled in
their tactics and marching under their banners. The experience of the war administration and its
management of industry by help of the business men during the past few years goes to show what
manner of industrial wisdom is to be looked for where capable and well-intentioned business men
are called in to direct industry with a view to maximum production and economy. For its responsible
personnel the administration has uniformly drawn on experienced business men, preferably men
of successful experience in Big Business; that is to say, trained men with a shrewd eye to the main
chance. And the tale of its adventures, so far as a businesslike reticence has allowed them to become
known, is an amazing comedy of errors; which runs to substantially the same issue whether it is told
of one or another of the many departments, boards, councils, commissions, and administrations,
that have had this work to do.
Notoriously, this choice of personnel has with singular uniformity proved to be of doubtful
adviability, not to choose a harsher epithet. The policies pursued, doubtless with the best and most
sagacious intentions of which this businesslike personnel have been capable, have uniformly resulted
in the safeguarding of investments and the allocation of commercial profits; all the while that the
avowed aim of it all, and doubtless the conscientious purpose of the businesslike administrators, has
been quantity production of essential goods. The more that comes to light, the more visible becomes
the difference between the avowed purpose and the tangible performance. Tangible performance
in the way of productive industry is precisely what the business men do not know how to propose,
but it is also that on which the possible success of any projected plan of overturn will always rest.
Yet it is also to be remarked that even the reluctant and blindfold endeavors of these business like
administrators to break away from their lifelong rule of reasonable earnings, appear to have resulted
in a very appreciably increased industrial output per unit of man power and equipment employed.
That such was the outcome under the war administration is presumably due in great part to the fact
that the business men in charge were unable to exercise so strict a control over the working force
of technicians and skilled operatives during that period of stress. And here the argument comes
in touch with one of the substantial reasons why there need be no present fear of a revolutionary
overturn. By settled habit, the American population are quite unable to see their way to entrust
any appreciable responsibility to any other than business men; at the same time that such a move of
overturn can hope to succeed only if it excludes the business men from all positions of responsibility.
This sentimental deference of the American people to the sagacity of its business men is massive,
profound, and alert. So much so that it will take harsh and protracted experience to remove it, or to
divert it sufficiently for the purpose of any revolutionary diversion. And more particularly, popular
sentiment in this country will not tolerate the assumption of responsibility by the technicians, who
are in the popular apprehension conceived to be a somewhat fantastic brotherhood of overspecialized
cranks, not to be trusted out of sight except under the restraining hand of safe and sane business
men.
Nor are the technicians themselves in the habit of taking a greatly different view of their own case.
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They still feel themselves, in the nature of things, to fall into place as employees of those enterprising
business men who are, in the nature of things, elected to get something for nothing. Absentee
ownership is secure, just yet. In time, with sufficient provocation, this popular frame of mind may
change, of course; but it is in any case a matter of an appreciable lapse of time.
Even such a scant and bare outline of generalities as has been hastily sketched above will serve to
show that any effectual overturn of the established order is not a matter to be undertaken out of
hand, or to be maneuvered into shape by makeshifts after the initial move has been made.
There is no chance without deliberate preparations from beforehand. There are two main lines of
preparations that will have to be taken care of by any body of men who may contemplate such a
move: (a) An inquiry into existing conditions and into the available ways and means; and (b) the
setting up of practicable organization tables and a survey of the available personnel. And bound up
with this work of preparation, and conditioning it, provision must also be made for the growth of
such a spirit of teamwork as will be ready to undertake and undergo this critical adventure. All of
which will take time.
It will be necessary to investigate and to set out in a convincing way what are the various kinds and
lines of waste that are necessarily involved in the present businesslike control of industry; what are
the abiding causes of these wasteful and obstructive practices; and what economies of management
and production will become practicable on the elimination of the present businesslike control. This
will call for diligent teamwork on the part of a suitable group of economists and engineers, who will
have to be drawn together by self-selection on the basis of a common interest in productive efficiency,
economical use of resources, and an equitable distribution of the consumable output. Hitherto no
such self-selection of competent persons has visibly taken place, and the beginnings of a plan for
teamwork in carrying on such an inquiry are yet to be made.
In the course of this contemplated inquiry and on the basis afforded by its findings there is no less
serious work to be done in the way of deliberation and advisement, among the members of the group
in question and in consultation with outside technological men who know what can best be done
with the means in hand, and whose interest in things drives them to dip into the same gainless
adventure. This will involve the setting up of organization tables to cover the efficient use of the
available resources and equipment, as well as to reorganize the traffic involved in the distribution of
the output.
By way of an illustrative instance, to show by an example something of what the scope and method
of this inquiry and advisement will presumably be like, it may be remarked that under the new
order the existing competitive commercial traffic engaged in the distribution of goods to consumers
will presumably fall away, in the main, for want of a commercial incentive. It is well known, in a
general way, that the present organization of this traffic, by wholesale and retail merchandising,
involves a very large and very costly duplication of Work, equipment, stock, and personnel, several
hundred per cent, more than would be required by an economically efficient management of the
traffic on a reasonable plan. In looking for a way out of the present extremely wasteful merchandising
traffic, and in working out organization tables for an equitable and efficient distribution of goods to
consumers, the experts in the case will, it is believed, be greatly helped out by detailed information
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on such existing organizations as, e.g., the distributing system of the Chicago Packers, the chain
stores, and the mail-order houses. These are commercial organizations, of course, and as such they
are managed with a view to the commercial gain of their owners and managers; but they are at the
same time designed to avoid the ordinary wastes of the ordinary retail distribution, for the benefit of
their absentee owners. There are not a few object lessons of economy of this practical character to be
found among the Vested Interests; so much so that the economies which result from them are among
the valuable capitalized assets of these business concerns.
This contemplated inquiry will, of course, also be useful in the way of publicity; to show, concretely
and convincingly, what are the inherent defects of the present businesslike control of industry, why
these defects are inseparable from a businesslike control under existing circumstances, and what may
fairly be expected of an industrial management which takes no account of absentee ownership. The
ways and means of publicity to be employed is a question that plainly cannot profitably be discussed
beforehand, so long as the whole question of the contemplated inquiry itself has little more than a
speculative interest; and much the same will have to be said as to the scope and detail of the inquiry,
which will have to be determined in great part by the interest and qualifications of the men who are
to carry it on.
Nothing but provisional generalities could at all confidently be sketched into its program until the
work is in hand.
The contemplated eventual shift to a new and more practicable system of industrial production
and distribution has been here spoken of as a “revolutionary overturn” of the established order.
This flagitious form of words is here used chiefly because the Guardians of the established order are
plainly apprehensive of something sinister that can be called by no gentler name, rather than with
the intention of suggesting that extreme and subversive measures alone can now save the life of the
underlying population from the increasingly disserviceable rule of the Vested Interests. The move
which is here discussed in a speculative way under this sinister form of words, as a contingency
to be guarded against by fair means and foul, need, in effect, be nothing spectacular; assuredly it
need involve no clash of arms or fluttering of banners, unless, as is beginning to seem likely, the
Guardians of the old order should find that sort of thing expedient. In its elements, the move will
be of the simplest and most matter-of-fact character; although there will doubtless be many intricate
adjustments to be made in detail. In principle, all that is necessarily involved is a disallowance of
absentee ownership; that is to say, the disestablishment of an institution which has, in the course of
time and change, proved to be noxious to the common good. The rest will follow quite simply from
the cancelment of this outworn and footless vested right.
By absentee ownership, as the term applies in this connection, is here to be understood the
ownership of an industrially useful article by any person or persons who are not habitually employed
in the industrial use of it. In this connection, office work of a commercial nature is not rated as
industrial employment. A corollary of some breadth follows immediately, although it is so obvious an
implication of the main proposition that it should scarcely need explicit statement: An owner who is
employed in the industrial use of a given parcel of property owned by him, will still be an “absentee
owner,” within the meaning of the term, in case he is not the only person habitually employed in
its use. A further corollary follows, perhaps less obvious at first sight, but no less convincing on
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closer attention to the sense of the terms employed: Collective ownership, of the corporate form,
that is to say ownership by a collectivity instituted ad hoc, also falls away as being unavoidably
absentee ownership, within the meaning of the term. It will be noted that all this does not touch
joint ownership of property held in undivided interest by a household group and made use of by
the members of the household conjointly. It is only in so far as the household is possessed of useful
property not made use of by its members, or not made use of without hired help, that its ownership
of such property falls within the meaning of the term, absentee ownership. To be sufficiently
explicit, it may be added that the cancelment of absentee ownership as here understood will apply
indiscriminately to all industrially useful objects, whether realty or personalty, whether natural
resources, equipment, banking capital, or wrought goods in stock.
As an immediate consequence of this cancelment of absentee ownership it should seem to be
altogether probable that industrially useful articles will presently cease to be used for purposes of
ownership, that is to say for purposes of private gain; although there might be no administrative
interference with such use. Under the existing state of the industrial arts, neither the natural
resources drawn on for power and materials nor the equipment employed in the great and controlling
industries are of a nature to lend themselves to any other than absentee ownership; and these
industries control the situation, so that private enterprise for gain on a small scale would scarcely find
a suitable market. At the same time the inducement to private accumulation of wealth at the cost of
the community would virtually fall away, inasmuch as the inducement to such accumulation now is
in nearly all cases an ambition to come in for something in the way of absentee ownership. In effect,
other incentives are a negligible quantity.
Evidently, the secondary effects of such cancelment will go far, in more than one direction, but
evidently, too, there could be little profit in endeavoring to follow up these ulterior contingencies in
extended speculations here.
As to the formalities, of a legal complexion, that would be involved in such a disallowance of
absentee ownership, they need also be neither large nor intricate; at least not in their main incidence.
It will in all probability take the shape of a cancelment of all corporation securities, as an initial
move. Articles of partnership, evidences of debt, and other legal instruments which now give title to
property not in hand or not in use by the owner, will be voided by the same act. In all probability
this will be sufficient for the purpose.
This act of disallowance may be called subversive and revolutionary; but while there is no intention
here to offer anything in the way of exculpation, it is necessary to an objective appraisal of the
contemplated move to note that the effect of such disallowance would be subversive or revolutionary
only in a figurative sense of the words. It would all of it neither subvert nor derange any substantial
mechanical contrivance or relation, nor need it materially disturb the relations, either as workman or
as consumer of goods and services, of any appreciable number of persons now engaged in productive
industry. In fact, the disallowance will touch nothing more substantial than a legal makebelieve. This
would, of course, be serious enough in its consequences to those classes called the kept classes whose
livelihood hangs on the maintenance of this legal makebelieve. So, likewise, it would vacate the
occupation of the “middleman,” which likewise turns on the maintenance of this legal makebelieve;
which gives “title” to that to which one stands in no material relation.
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Doubtless, hardship will follow thick and fast, among those classes who are least inured to privation;
and doubtless all men will agree that it is a great pity. But this evil is, after all, a side issue, as regards
the present argument, which has to do with nothing else than the practicability of the scheme. So
it is necessary to note that, however detrimental to the special interests of the absentee owners this
move may be, yet it will not in any degree derange or diminish those material facts that constitute
the ways and means of productive industry; nor will it in any degree enfeeble or mutilate that joint
stock of technical knowledge and practice that constitutes the intellectual working force of the
industrial system. It does not directly touch the material facts of industry, for better or worse. In this
sense it is a completely idle matter, in its immediate incidence, whatever its secondary consequences
may be believed to be.
But there is no doubt that a proposal to disallow absentee ownership will shock the moral sensibilities
of many persons; more particularly the sensibilities of the absentee owners. To avoid the appearance
of willful neglect, therefore, it is necessary to speak also of the “moral aspect.” There is no intention
here to argue the moral merits of this contemplated disallowance of absentee ownership; or to argue
for or against such a move, on moral or other grounds. Absentee ownership is legally sound today.
Indeed, as is well known, the Constitution includes a clause which specially safeguards its security.
If, and when, the law is changed, in this respect, what is so legal today will of course cease to be
legal. There is, in fact, not much more to be said about it; except that, in the last resort, the economic
moralities wait on the economic necessities. The economic moral sense of the American community
today runs unequivocally to the effect that absentee ownership is fundamentally and eternally right
and good; and it should seem reasonable to believe that it will continue to run to that effect for some
time yet.
There has lately been some irritation and faultfinding with what is called “profiteering” and there
may be more or less uneasy discontent with what is felt to be an unduly disproportionate inequality
in the present distribution of income; but apprehensive persons should not lose sight of the main fact
that absentee ownership after all is the idol of every true American heart. It is the substance of things
hoped for and the reality of things not seen. To achieve (or to inherit) a competency, that is to say to
accumulate such wealth as will assure a “decent” livelihood in industrial absentia, is the universal,
and universally laudable, ambition of all who have reached years of discretion; but it all means the
same thing to get something for nothing, at any cost.
Similarly universal is the awestruck deference with which the larger absentee owners are looked up
to for guidance and example. These substantial citizens are the ones who have “made good,” in the
popular apprehension. They are the great and good men whose lives “all remind us we can make our
lives sublime, etc.” This commercialized frame of mind is a sturdy outgrowth of many generations of
consistent training in the pursuit of the main chance; it is second nature, and there need be no fear
that it will allow the Americans to see workday facts in any other than its own perspective, just yet.
The most tenacious factor in any civilization is a settled popular frame of mind, and to this abiding
American frame of mind absentee ownership is the controlling center of all the economic realities.
So, having made plain that all this argument on a practicable overturn of the established order has
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none but a speculative interest, the argument can go on to consider what will be the nature of the
initial move of overturn which is to break with the old order of absentee ownership and set up a
regime of workmanship governed by the country’s technicians.
As has already been called to mind, repeatedly, the effective management of the industrial system at
large is already in the hands of the technicians, so far as regards the work actually done; but it is all
under the control of the Vested Interests, representing absentee owners, so far as regards its failure to
work. And the failure is, quite reasonably, attracting much attention lately.
In this two cleft, or bicameral, administration of industry, the technicians may be said to represent
the community at large in its industrial capacity, or in other words the industrial system as a going
concern; whereas the business men speak for the commercial interest of the absentee owners,
as a body which holds the industrial community in usufruct. It is the part of the technicians,
between them, to know the country’s available resources, in mechanical power and equipment;
to know and put in practice the joint stock of technological knowledge which is indispensable
to industrial production; as well as to know and take care of the community’s habitual need and
use of consumable goods. They are, in effect, the general staff of production engineers, under
whose surveillance the required output of goods and services is produced and distributed to the
consumers. Whereas it is the part of the business men to know what rate and volume of production
and distribution will best serve the commercial interest of the absentee owners, and to put this
commercial knowledge in practice by nicely limiting production and distribution of the output to
such a rate and volume as their commercial traffic will bear that is to say, what will yield the largest
net income to the absentee owners in terms of price. In this work of sagaciously retarding industry
the captains of industry necessarily work at cross purposes, among themselves, since the traffic is of a
competitive nature.
Accordingly, in this two cleft arrangement of administrative functions, it is the duty of the
technicians to plan the work and to carry it on; and it is the duty of the captains of industry to see
that the work will benefit none but the captains and their associated absentee owners, and that it
is not pushed beyond the salutary minimum which their commercial traffic will bear. In all that
concerns the planning and execution of the work done, the technicians necessarily take the initiative
and exercise the necessary creative surveillance and direction; that being what they, and they
alone, are good for; whereas the businesslike deputies of the absentee owners sagaciously exercise a
running veto power over the technicians and their productive industry. They are able effectually to
exercise this commercially sagacious veto power by the fact that the technicians are, in effect, their
employees, hired to do their bidding and fired if they do not; and perhaps no less by this other fact,
that the technicians have hitherto been working piecemeal, as scattered individuals under their
master’s eye; they have hitherto not drawn together on their own ground and taken counsel together
as a general staff of industry, to determine what had best be done and what not. So that they have
hitherto figured in the conduct of the country’s industrial enterprise only as a technological extension
of the business men’s grasp on the commercial main chance.
Yet, immediately and unremittingly, the technicians and their advice and surveillance are essential to
any work whatever in those great primary industries on which the country’s productive systems turn,
and which set the pace for all the rest. And it is obvious that so soon as they shall draw together,
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in a reasonably inclusive way, and take common counsel as to what had best be done, they are in
a position to say what work shall be done and to fix the terms on which it is to be done. In short,
so far as regards the technical requirements of the case, the situation is ready for a self-selected, but
inclusive, Soviet of technicians to take over the economic affairs of the country and to allow and
disallow what they may agree on; provided always that they live within the requirements of that state
of the industrial arts whose keepers they are, and provided that their pretensions continue to have the
support of the industrial rank and file; which comes near saying that their Soviet must consistently
and effectually take care of the material welfare of the underlying population.
Now, this revolutionary posture of the present state of the industrial arts may be undesirable, in
some respects, but there is nothing to be gained by denying the fact. So soon but only so soon as the
engineers draw together, take common counsel, work out a plan of action, and decide to disallow
absentee ownership out of hand, that move will have been made.
The obvious and simple means of doing it is a conscientious withdrawal of efficiency; that is to
say the general strike, to include so much of the country’s staff of technicians as will suffice to
incapacitate the industrial system at large by their withdrawal, for such time as may be required to
enforce their argument.
In its elements, the project is simple and obvious, but its working out will require much painstaking
preparation, much more than appears on the face of this bald statement; for it also follows from the
present state of the industrial arts and from the character of the industrial system in which modern
technology works out, that even a transient failure to make good in the conduct of productive
industry will result in a precipitate collapse of the enterprise.
By themselves alone, the technicians can, in a few weeks, effectually incapacitate the country’s
productive industry sufficiently for the purpose.
No one who will dispassionately consider the technical character of this industrial system will fail to
recognize that fact. But so long as they have not, at least, the tolerant consent of the population at
large, backed by the aggressive support of the trained working force engaged in transportation and
in the greater primary industries, they will be substantially helpless to set up a practicable working
organization on the new footing; which is the same as saying that they will in that case accomplish
nothing more to the purpose than a transient period of hardship and dissension.
Accordingly, if it be presumed that the production engineers are of a mind to play their part, there
will be at least two main lines of subsidiary preparation to be taken care of before any overt move
can reasonably be undertaken: (a) An extensive campaign of inquiry and publicity, such as will
bring the underlying population to a reasonable understanding of what it is all about; and (b) the
working out of a common understanding and a solidarity of sentiment between the technicians and
the working force engaged in transportation and in the greater underlying industries of the system:
to which is to be added as being nearly indispensable from the outset, an active adherence to this
plan on the part of the trained workmen in the great generality of the mechanical industries. Until
these prerequisites are taken care of, any project for the overturn of the established order of absentee
ownership will be nugatory.
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By way of conclusion it may be recalled again that, just yet, the production engineers are a
scattering lot of fairly contented subalterns, working piecemeal under orders from the deputies of
the absentee owners; the working force of the great mechanical industries, including transportation,
are still nearly out of touch and out of sympathy with the technical men, and are bound in rival
trade organizations whose sole and self-seeking interest converges on the full dinnerpail; while
the underlying population are as nearly uninformed on the state of things as the Guardians of the
Vested Interests, including the commercialized newspapers, can manage to keep them, and they are
consequently still in a frame of mind to tolerate no substantial abatement of absentee ownership;
and the constituted authorities are competently occupied with maintaining the status quo. There is
nothing in the situation that should reasonably flutter the sensibilities of the Guardians or of that
massive body of well-to-do citizens who make up the rank and file of absentee owners, just yet.
The End |