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no return whatever is made. This is not a new subject, but it has a direct bearing upon the industrial department of state and from that viewpoint must be taken into consideration. And if this should seem to pertain to economics rather than law, I need only mention that the economic advancement of a people must measure the necessity and limit the extent of government.
It is a foundation of law.
Under the old-time condition of individual enterprise, the chance for taking tribute out of the work and the needs and the industry of others was comparatively limited. Modern economic conditions, including the coming of steam and electric power, railways, telegraphs, telephones, marvelous and powerful machinery, giant factories, invention after invention protected by patent, corporate strength of financial power, specialization of industry and the consequent radical changes in the methods of production and distribution, and the extent of market, have resulted in an opportunity for exploitation never before existing in the world; and with the opportunity has come the exploitation. What concerns us in this discussion is not so much how, nor not at all by whom, the exploitation has been accomplished and is being accomplished; but only the fact, the extent and the effect of the practice.
As an illustration of the rapid workings of modern industry and the opportunities it presents, it might be well to cite a recent instance. Through many years of development modern photography was finally evolved; having the modern steam engine with which to furnish power, the inventors, step by step, constructed the dynamo and the electric light; someone brought out the celluloid picture film; the schools had ascertained the number of impressions per second necessary to present a continuous picture to the eye; inventors combined these works of others and produced the moving picture machine with its almost magic powers of illusion; by the aid of the modern corporation the picture show system was founded; br the aid of the railways and the express companies the films were enabled to travel the circuits and furnish regular entertainment; by the aid of the United States mails and the telegraph it became possible to perfect and keep going the business arrangement of the system ; by one means and another the business was centralized and controlled; the result was, the picture show, as we know it today, entertaining millions and causing the flow of constant revenue from every city and town and village in the nation. It is said that within a very few yearsless time than it would take a young lawyer to build up a sound business--this enterprise has made at least thirty men millionaires. This instance is cited, not for the purpose of proving any unjust exactions from the people, but merely to illustrate the possibilities presented by modern economic conditions.
We have reached an age of specialization of industry; of division, of combination, of rapid re-arrangement. Steel working becomes first an individualized industry, then a list of companies. then a corporation. The old country smokehouses give place to the centralized packing companies; a single feature of railroading is made over into the express companies; night-travel gives opportunity for the Pullman system. Telephones come first as a local convenience, and next are a nation-wide system, necessary to all business. The changes are rapid, extensive, surprising. The invention of yesterday becomes the convenience of today, and tomorrow will be built into the structure of business.
By common consent advancing industry promptly adopts the improved, the new and the best utilities, facilities, methods and devices of business. The scythe must be abandoned for the selfbinder; account books must give way to the card-system and the cash register; the automobile becomes a business necessity. The natural tendency is for each new improvement to be incorporated, specialized, centralized.
Out of these conditions and the opportunities they offer has arisen exploitation. Stating the matter briefly, we pay the toll of exploitation throughout the year, and, in one way or another, every day of the year. We complain of the high cost of living. In seeking for a cause some blame the tariff, some the trusts and monopolies, and some attribute the hard condition to the influence of the national patent laws, others to the watering of corporate stocks and bonds. All of these instruments may be used, and are used, as efficient tools of exploitation, but no one of them alone constitutes the sole instrument, and it is also true that they are not the only devices used.
It matters not whether it be the patented typewriting machine with its fixed price, or the non-patented tobacco with its standard price; the patented electric machinery of the electric manufacturing companies, or the non-patented steel rails of the steel companies; the patented machinery of the shoe machinery trust, or the standard price of oils; the patented cash register used by the merchant, or the fixed-price-bacon sold by the merchantthe results are the same. Salt, sugar, breakfast foods, canned goods, drugs, automobiles, the oil for the automobiles—the thread of the seamstress and the armor plate of the battleship—all have been made to return the unearned tribute. The express companies found the system practicable and profitable, and, therefore, exacted their toll.
A Colorado grocery merchant, on being asked which of his goods were controlled by trusts or monopolies, replied: "I can answer you more easily if you ask which are not.” And, on being asked which were not so controlled, replied: “Dried apples.”
Patents have aided in exploitation, because they help towards monopoly and fixed price; no doubt the tariff furnished much opportunity toward the same end; the multiplying of stock and bond capitalization over the actual investment has been a useful instrument wherever there was opportunity to control price, and especially for the purpose of concealing exploitation; but the fixing of price, the exacting of the unearned tribute, is not limited to these particular means or instruemnts; the effect upon industry is the same, even though the means used be selling agencies, buying
agencies, unnecessary middle-men, the division of territory, or the financial strength alone of the corporation in charge.
The effect of this exploitation is not necessarily direct. If the railway must pay an added tribute on engines and rails, it will, if possible, charge the toll back to its shippers, and they, in turn, to their customers. The price of print paper would not appear to be any direct business of ours, but, if the tribute of exploitation be laid upon it, we must repay that tribute in the cost of magazines and law books; and if the express company sees fit to add an exploitation toll for transportation we pay that also. The farmer may have to pay the tribute to the harvester trust, but, if
, the harvester trust should have to pay tribute on the materials used in manufacturing the machinery, then the farmer must pay that additional tribute also.
It would be interesting and most enlightening if some government statistician should figure out for the State of Colorado the number of millions of dollars per year which her citizens pay in tribute of exploitation over and above all ordinary business profit.
The first injury of exploitation is that its general and average effect is to take from the individual and the community and the commonwealth part of the margin, out of the returns of industry, that otherwise would become accumulation and the basis of home prosperity. The income of the average citizen--whether wages, salary or return on ordinary investment-tends toward the normal competitive return, a normal purchasing power; and this is true whether prices generally be high or low. Therefore, if on thirty or forty items of commodity and public service, necessary to living or business, this average citizen is compelled to pay an exploitation tribute of 10 per cent above normal price, then his profit for the year is destroyed. When a community has rendered its industrial service for the year in field and factory, in labor and through its invested capital, it ought to be able to buy its necessary commodities, and pay for the outside service it needs from others, and still have a small margin left to represent gain; but, if the exploitation tribute is too heavy on the purchased commodities and the outside service, then the majority of the members of the community, those who are not middle-men and can shift the burden no further, are deprived of margin and of gain—they have met the high cost of living.
It is argued by some of the apologists for the exploitation practice that the money so taken and so concentrated will, in time, return in the channels of trade, by means of large investments and wholesale employment of labor, and thus all will be well. As a matter of fact, the money so concentrated will, in all probability, be used to purchase or produce other powerful means of exploitation. In any erent, when the money is invested, it will not be given away, and it will not be returned as a gift or repayment to the citizens from whom it was taken. It may never be reinvested in the same state from which it was abstracted. True, it constitutes a margin, a concentrated power ready for investment, but it rests in the hands of the wrong men; a few men or a few companies; instead of in the hands of the thousands of citizens whom it might otherwise make temporarily prosperous. And, not least of the evils, the wealth so concentrated is held under such conditions that its re-investment, or its withholding from investment, its very attitude toward investment, may seriously affect the prosperity of industry in general. To apply the practice to the individual state. If 1,000,000 men in a state are enabled to hold $50.00 apiece as an average, as their margin of saving for a year of industrial work, then the whole people of that state are bound to be prosperous for a time in the active home business and constructive investment induced by the temporary distribution of capital; but if, instead of that condition, one corporation situated in another state has been able, by exploitation, to take that margin of $50, then the million citizens will complain that it costs all of their earnings in order to live; and that state will experience dull times. The corporation will have gathered in its $50,000,000