Your pay envelope

My dear John,

If you listen to a Socialist speaker, or pick up a Socialist periodical, you are pretty certain to come face to face with the assertion that “the poor are now growing poorer and the rich richer every day.” If you ask for further particulars, you will soon discover that the chief reason why Socialists believe that this is what is happening is because Karl Marx predicted that it is what was going to happen.

The great founder of Socialism was very certain that the development of capitalism would tend to produce constantly-increasing “wretchedness, oppression, slavery, degeneracy, and exploitation” of the working class (“Capital,” p. 790); and while a few writers, like Kirkup in the “History of Socialism” (p. 386), admit that “Marx made a serious mistake,” because “facts and reasonable expectations combine clearly to indicate that the democracy ... is marked by a growing intellectual, moral and political capacity, and by an increasing freedom and prosperity,” the great mass of Socialists agree with Snowden’s assertion (“The Socialist’s Budget,” p. 8) that “the few cannot be rich without making the many poor.”

This principle, formulated by Marx, is known as “the law of the concentration of capital,” and, if we are to accept this formula, we must be able to prove that capital is being concentrated “in the hands of a smaller and smaller number of capitalists, that large fortunes are created at the expense of smaller fortunes, and that great capitalists are increased by the extinction of small ones” (Tcherkesoff, “Pages of Socialist History,” p. 23).

In a few words, Marx insisted that capitalism was dividing the world into two classes—the owning class and the toiling class—and that the third, or middle class, was rapidly being eliminated, some few of its members being absorbed into the upper-class while the great majority, becoming impoverished, were destined to sink to the lowest of proletarian depths.

But is this what has happened in the half a century or so that has passed since Marx formulated this “law of capitalistic development”? If this “law” is ever to prove itself true, it is time, as Tcherkesoff says, “that it should be exemplified by at least some few economic phenomena”; yet during this period the number of small capitalists not only has not diminished, but has actually increased, while the doctrine of increasing misery, instead of being verified, is contradicted by indisputable statistics which show, as Professor Hatton has asserted (in his Cleveland, Ohio, debate), that “there is an increasing betterment in the condition of the laboring classes.” Certainly none but a most prejudiced Socialist will assert that there is any tangible evidence to indicate that the people are dividing into two hostile camps, especially in view of the fact—so easily demonstrated—that fully 90 per cent. of the capitalists, big and little, have come from the ranks of the workers, while the number of small investors increases with such leaps and bounds as almost to defy the efforts of the statistician to keep pace with them. It was these undeniable facts that compelled Bernstein, though a Socialist, to take issue with Marx. He saw that there was no “increasing misery” of the masses, that the wealth of the world was not being centralized in a few hands; but that, instead, the number of the possessing classes grows absolutely and relatively.

In all my letters, John, I have tried to avoid such things as abstruse theories and dry statistics, but we have at last reached a point where statistics are necessary if we are to get a clear view of the situation. Such statistics are necessary, not only because they show the absurdity of Marx’s predictions, but also for the reason that without this knowledge we should be unable to protect ourselves against the false testimony that Socialists are so ready to introduce as “facts.”

For example, John Spargo (in “Socialism”) quotes Lucien Sanial as authority for the statement that, in 1900, there were 250,251 persons in the United States who possessed $67,000,000,000, “out of a total of $95,000,000,000, given as the national wealth; that is to say, .9 of one per cent of the total number in all occupations owned 70.5 per cent of the total national wealth. The middle class, consisting of 8,429,845 persons, being 29 per cent of the total number in all occupations, owned $24,000,000,000, or 25.3 per cent of the total national wealth. The lowest class, the proletariat, consisting of 20,393,137 persons, being 70.1 per cent of the total number in all occupations, owned but $4,000,000,000, or 4.2 per cent of the total wealth.” In brief: “Of the 29,073,233 persons ten years old and over engaged in occupations, .9 of 1 per cent own 70.5 per cent of total wealth.”

Mr. Spargo asks us to accept these figures as true because Mr. Sanial, “an expert statistician,” says that they are authentic. Don’t let him fool you, John. Mr. Sanial simply “guesses” that his statistics are reliable, and, as he is a “red card” Socialist, he must either tell us just where he got his authority for these figures or be ruled out of court as a prejudiced “guesser.”

And he can’t do it. He can’t do it, simply because there are no census records, or other official figures, upon which to base his statistics on wealth distribution between the classes, no accurate information upon this subject within the reach of any human being. Yet it is upon such “evidence” that Socialists rely to prove that Marx was a true prophet!

But this is an old trick. As Stuart P. West says (The Common Cause, June, 1912), “the Socialist of the agitator-demagogue type has no fine sensibilities about making his statements square with painstaking inquiries into the truth. He makes broad assertions, backing them up with a few statistics which are partly guess-work, partly half-truths, and relies upon the lack of information among his audience to do the rest.”

So much for the unreliable character of Socialist figures in general. Now, let us get down to facts.

The Erfurt platform (1891) repeated Marx’s assertion that among the workers there is a “growing insecurity of existence, misery, oppression, slavery, degradation and exploitation.” If you thought that this might be true, John, what would you expect to find? That the worker was being pressed closer to the wall, would you not? That wages increased slowly, so slowly as scarcely to approximate the bare cost of subsistence; that there was a more rapid extension of the hours of labor, with pauperism a general rather than an exceptional condition. Let us see.

In the United States, wages have practically doubled since 1860 and the hours of labor have decreased from 15 to 30 per cent. In Norway, Sweden, Germany, Japan, and several other countries, the increase in wages since 1860 has also been fully (where not more than) 100 per cent, while the hours of labor, especially since 1890, have shown a tendency toward improvement consistent with such progress in the United States (cf. The Common Cause, loc. cit.).

The statistics on pauperism afford quite as telling an argument against Marx’s prediction of the increasing misery. In the United States, in 1886, the ratio of paupers was 116.6 to each one hundred thousand inhabitants. In 1903 the ratio had decreased to 101.4 per each one hundred thousand inhabitants.

In England the figures are even more impressive, for the ratio of paupers fell from 62.7 per one thousand inhabitants in 1849 to 26.2 in 1905. As Mr. West says: “There were actually 200,000 fewer paupers in 1905 than in 1849, although the population of the country during these fifty-six years almost doubled, and this in the face of the Marxian predictions.”

But if Marx missed fire in his prophesy regarding the general labor situation, does not the “trustification of industry” show that he was right in the prediction that the wealth of the world was to be concentrated in the hands of the few? Not at all. The census figures of manufactures in the United States—and these figures are representative of world conditions in manufacturing—prove conclusively that the small establishments are not being crushed out of existence. It is true that there has been a steady concentration of industries through the organization of the combinations known as “trusts,” and if it could be shown that this concentration meant that the ownership of all the industries was falling into the hands of a smaller number of persons, there might be some ground for the Socialist contention that the few are absorbing the wealth of the many.

Ten years ago it looked as if this was what was happening, but, during the past decade, the ownership of these corporations has changed so completely that there can no longer be any doubt concerning the outcome. Instead of being a device to promote the cause of Socialism by concentrating the wealth of the nation in the hands of a few interests, the modern “trust” has become in reality an agency for the diffusion of wealth.

Of course, as you know, John, a corporation—even a “trust”—is owned by those who hold its stock. Every shareholder is a partner in the concern; so, when we find that, instead of being owned by fewer persons, the stock is distributed among increasing thousands of persons, it is difficult to see where there is any evidence of marked concentration of industrial wealth.

If you take, for example, the great railway systems, you will find that, whereas in 1901 nine of the leading roads were owned by 50,000 stockholders, in 1911 the stock in these companies was held by 118,000 persons. In 1901 the stock in the fifteen industrial corporations—popularly termed “trusts”—was held by 82,000 persons; in 1911 more than 247,000 individuals owned the stock in these companies.

Think for a moment what these figures mean. “Twenty years ago,” said Mr. West (The Common Cause, August, 1912), “before the movement of combinations had begun, the steel properties of this country were owned by not more than 5,000 persons.” (That might well be called “concentration of industrial wealth,” John!) “Now the Steel Corporation, which at the highest estimate does not represent more than 60 per cent of the steel production of the United States, is owned by 150,000 persons.” As another writer recently said: “If the attorney-general should succeed in destroying the value of the Steel Corporation’s securities, he would not only deprive thousands of the provision they have made against old age, but stop the wholesome movement that is making for the popular ownership of the big corporations and thus for the checking of dangerous wealth concentration.”

You see how little evidence there is in support of the Socialist “law” of concentration.

Another contention of Marx and his followers is that concentration will also show itself in the principal industry of humanity—agriculture. Do the facts support this prediction? Certainly, not in England, or in any other country in Europe. But how about the farmers of the United States? Are they being absorbed and enslaved by a few capitalists?

Once upon a time there was reason to fear that agriculture was to be concentrated in the “bonanza” farms, but the years have gone and the danger is past, “bonanza” farming having proved a failure. Instead, we now have “intensive” farming—a method of raising crops that calls for smaller, rather than larger, farms.

To get a clear view of the agricultural situation in this country, we shall not go back in the records to the date of Marx’s prediction. Such figures would “show him up” in so ridiculous a light that I haven’t the heart to subject his prophesy to this test. Instead, we will simply retrace our steps to 1900, when we find that there were 5,737,372 farms in the United States, the average size being 146.2 acres. In 1910—just ten years later—the number of farms had increased to 6,340,357, and the average holdings had decreased to 138 acres.

If you desire to examine more detailed statistics, turn to The Common Cause, (July, 1912), and read the evidence that Mr. West has accumulated. “While the so-called law of concentration fails absolutely to work out under these acreage statistics,” he says, “its failure is still more complete when we compare the movement of acreage with the movement of farm values. The average number of acres in the farm came down from 146 in 1900 to 138 in 1910; but farm land (exclusive of buildings), which was valued at $13,100,000,000 in 1900, rose to $28,400,000,000 in 1910, an increase of 117.4 per cent. In other words, the farm wealth of the country more than doubled during the ten-year period while the average size of farm holdings considerably decreased. The conclusion from these figures is, of course, inevitable: not only has there been no concentration of wealth in land but, on the contrary, there has been an astonishingly great and rapid diffusion of wealth.”

Even Spargo, who is admittedly a well-informed Socialist, recognizes the weakness of the Marxian theory when applied to agriculture, for he says (“Socialism,” p. 134): “One thing seems certain, namely that farm ownership is not on the decline. It is not being supplanted by tenantry: the small farms are not being absorbed by larger ones.”

This is in direct contradiction to the assertions of the majority of Socialist agitators. With voice and pen they are still predicting the downfall of the farmer, and this in spite of the frank admissions of the more fair-minded and informed Socialists that the conditions they describe do not exist.

Quite as contrary to the facts are the Socialist assertions that the slight increase in the proportion of mortgaged farms is proof of the absorption of American farms by the “interests.” In asking us to believe that this is what is happening, Socialists assume that we are so ignorant as to real conditions that we can credit the theory that a mortgage is an inevitable shortcut to bankruptcy, when, as a matter of fact, it is more often the means by which the farmer rises from the ranks of tenantry to the property-owning class. Indeed, Spargo himself admits that this is so. In “Socialism” (p. 134), he says: “Now while a mortgage is certainly not suggestive of independence, it may be either a sign of decreasing or increasing independence. It may be a step toward the ultimate loss of one’s farm or a step toward the ultimate ownership of one. Much that has been written by Populist and Socialist pamphleteers and editors upon this subject has been based upon the entirely erroneous assumption that a mortgaged farm meant loss of economic independence, whereas it often happens that it is a step towards it.”

Having seen how all the predictions of Marx break down when put to the test of practical experience, we shall now consider one more fatal mistake made by this great prophet of “scientific” Socialism. This is what we may term the “verge of starvation” theory.

According to this doctrine of the Socialists, the accumulation of misery is keeping pace so literally with the accumulation of wealth that the great mass of the workers are constantly sinking deeper and deeper below the conditions of existence of their own class (see “Communist Manifesto”). As a result, it is asserted, there are to-day but comparatively few workers who are more than a week or two removed from destitution, whereas, as Skelton shows (“Socialism: A Critical Analysis,” p. 147), “no social fact is better established than that the forty years which have passed since Marx penned this dismal forecast have brought the working classes in every civilized country not increasing degradation, misery, and enslavement, but increasing material welfare, freedom and opportunity of development.”

How is it in your case, John? Are you living on the verge of starvation? If you were to be taken ill, or were to lose your job, would your family be on the town within a week or two? I thought not, and what is true in your case, is just as true in the majority of cases.

There are statistics, too—and plenty of them—to prove that the Socialists have an entirely erroneous impression of the financial condition of the “masses.” First, let us take the savings bank deposits; for, as you know, it is in this kind of a bank that the worker usually puts his savings for safe keeping. The very rich do not bother with a string of little accounts, and, accordingly, savings bank deposits have always been accepted as a measure of the wealth of the people of small or moderate means. Admitting this, what do we find? That, in 1911, more than one in every ten persons in the United States—counting all men, women and children—possessed a bank account, the total amount of these accounts being no less than $4,212,584,000.

The building and loan associations afford another means of deposit for the savings of the worker, and, in 1911, the number of persons who held shares in and paid dues to such associations was nearly 2,200,000, the total assets of the societies being but a trifle less than one billion dollars.

If these facts are not sufficient, study the workers themselves; see how they live and how they spend their money, and then ask yourself if the Socialist is telling the truth when he says that this class of citizens do not share in the increasing prosperity of the nation.

The workers live far better to-day than the so-called middle class was able to live half a century ago. As Willey states (“Laborer and the Capitalist,” p. 190), there are servant girls at the present time who own jewelry that costs more money than our grandmothers could afford to spend for a wedding dress (quoted by Kress, “Questions of Socialists,” p. 22).

In addition to living under so much better conditions that most of the workers now enjoy luxuries that the so-called well-to-do could ill have afforded half a century ago, this class of citizens still manages to find money for several other things. For example, the immigrant workers succeed in saving enough out of their wages to send the vast sum of $300,000,000 to foreign countries every year, while the enormous sums spent by the workers each year in picture shows, candy and for drink in the saloons would be sufficient to start every homeless man in America upon the high road to the ownership of a home.

Talk about locks and bolts against the masses, John—bars to prevent them from enjoying the good things of life! Why, there would be none of these good things of life—no enjoyment, no freedom of any kind—under a system that placed a premium on laziness and saved its highest rewards for the bosses—and that is what Socialism would do!