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The Rebirth of the Corporation

American Illustrated Magazine – June 1906

The property of this country is owned by the many and controlled by the few. That is the essence of the corporation problem as Judge Grosscup showed in his article “Who Shall Own America?” in the December number of this magazine. On that foundation he now begins to build his positive doctrines. Instead of exploiting evils, he calls attention to the seeds of reform already being sown by a few well-managed corporations and shows how the true remedy for the trust problem does not lie in government ownership, but in public control through individual ownership.


In my article, Who Shall Own America? in the December number of the AMERICAN MAGAZINE, I endeavored to bring out the distinction between the thing called the “corporation” and the “property domain” covered and controlled by corporate ownership — the distinction between the actual property and its mere legal embodiment. To comprehend the national problem that confronts us, the keeping of this distinction in mind is vital. The corporation is no sin in itself. The corporation as the legal method of wielding large masses of individual resources to a common end, has been one of the most helpful agencies of modern life. But the corporation left to do as it pleases — emancipated from all care as to its character and birth, and all watchfulness of its conduct afterwards — is the cause of the great sin that has grown up within the vast property domain covered by corporate ownership.

I endeavored in the article mentioned to bring out that the pre-eminent wrong in the property domain covered by the corporation —the wrong that is father to nearly all the other wrongs — lies in the fact that in this domain control was practically narrowed to an exceptional class of people, and in the nature of things, as they now exist, would continue to narrow; and that, unlike the statesmanship which distributed the public landed domain — so widely that the farms of America are to-day the property of the people of America — the statesmanship dealing with corporate properties has shown no concern that this domain, too, should become the property of the people.


I endeavored also to bring out this fact: This monopoly of proprietorship by the few, this exclusion of the many, is not because the actual wealth of the country is owned by the few. The wealth of the country is not owned by the few. It is still owned by the people. But the people at large have been content to deposit that wealth on financial streams, which in turn converge in the great money centers; and, once there, these streams are turned again, in one form or other, into the great corporate enterprises, the ownership of which is not returned to the people. To illustrate: five men have an enterprise, costing say ten millions, which they wish to establish. They are not possessed of the ten millions, but they have the good fortune to be standing where the financial streams converge; so out of the stream they take the millions in the nature of a loan, securing it by a lien upon the enterprise. To the stream they give back the bonds representing the cost; to themselves they issue the stock representing the proprietorship. And thus all the possibility of growth of successful enterprise — the wealth that ought honestly to be created each year in the property domain covered by the corporation — goes, not to the many who furnish the capital, nor in large part to the man who furnishes the idea, but chiefly to the few whose advantageous position at the confluence of the streams enables them, to the exclusion of all others, to lay hands upon the cargoes as they come down.

Such appropriation of the newly created wealth of the country through concentration of proprietorship is bad enough, but it is not the only evil of our corporation policy. There is an economic as well as a political and a moral side to this concentration of proprietorship. It is responsible largely for every extortion in the way of prices, both those paid and those taken, that has been practiced; for by offering, through the go-as-one-pleases corporation, unexampled opportunity to make fortunes on paper in an hour, it has bred the disposition, uncontrolled by conscience, to make those fortunes actual by any device at hand. Take, for instance, the enterprises that have been unnecessarily overcapitalized. No overcapitalization, however excessive, can increase by a farthing the intrinsic value of any property. Nor can it increase by a farthing the earnings. To men who wish to hold the securities of a corporation as an investment, or to dispose of them upon their real merits, an honest capitalization is better than overcapitalization. But overcapitalization is not without a purpose. What is that purpose? Well, to swell on paper one dollar into five, though both cover exactly the same fractional part of a corporate property, is a wonderful appeal to the imagination. Fifty thousand dollars on the face of a certificate looks bigger than ten thousand. And the imagination justifies itself by foreseeing enormous increase of business and enormous economies — all of which would be very well if they only happened. But what happens usually is this: to make up for the imagined increase of business, and the imagined economies that have not come about, and at the same time make good the overcapitalized securities, the price lists are worked and kept working just so long as effective competition can be shut out. And the present system, by converging the streams of the country’s resources to points accessible only by the few, effectually shuts out the means wherewith to create competition.


Look at the economic side from another angle — the angle of actual service obtained, rather than of prices. I take for illustration a well-known case. With an eye open to a big return, Mr. A. comes into a large and growing city. He finds that its people are being served by an antiquated and inadequate street-car system. By a shrewd stroke or two, he gets this system into his possession. Instantly a change takes place. The system is enlarged, reaching territory that before had gone unserved. The system is rejuvenated, the latest cars and the latest motive power are substituted for the oldest. Thus far all is well. For the moment, and on the exterior side, Mr. A. is the genius of a beneficial progress.

But under this exterior is an interior: and in the center of this interior, curled up like a worm in the core of an apparently sound apple, is a purpose. The interior consists of a network of guaranties of existing bonds and stocks; the issuance of further bonds and stock; and the maintenance of dividends on these new stocks. But the purpose is not to keep these stocks, but to sell them; not to make them of actual first quality, but of seeming first quality; and to carry out that purpose the dividends must be pushed to the highest point.

The farmer takes out of his crop something to return to the soil to refertilize it. The manager of a corporation, looking to the real interest of his stockholders, takes of the earnings enough to maintain the property. Not so with this promoter. A proper maintenance of the property would have meant lower stock market quotations. Need anyone ask the result? At the end of twenty years, a broken down street-car system; an indignant public; four or five thousand shareholders waking up to the consciousness that they have been trapped and the manipulator of the “purpose” in possession of one of the great fortunes of the country. Now a public corporation policy that had taken any thought of the public would have seen to it that throughout this period, dividends or no dividends, the efficiency of the system was maintained. A public corporation policy that had taken any thought of the four or five thousand shareholders would have seen to it that the trick could not have been worked.

Having shown these things then — a condition of things which politically, economically and morally is undoing all the ideals that lie at the basis of republican government — the inquiry arises, What is to be the end of it all? Is there any cure from within? The corporation is the only structure in sight into which to gather and exercise the creative energies of America’s industrial progress. Shall it be remodeled from within, or torn down from without? Or shall it be allowed to remain as it is?

The remedies from without are of two kinds. First, general public ownership, and secondly, the corporation as it exists to-day, but bitted and reined in the matter of conspiracies to control prices. To each of these remedies I wish to devote a few words.


In opposing a general public ownership, I do not wish to be understood as opposing the ownership by the public of such restricted public utilities as munic-ipal gas or lighting plants, water plants, or even mu-nicipal street railways, though many of the consid-erations against general public ownership are appli-cable here also; for I am not sure that as long as the city hall shall have franchises to vote, the “gray wolves” can be kept out; and it may become essential in the interest of clean city government, if for no other reason, to give up the otherwise undoubted economic advantage of private operation under public control. What I mean, when I say I am op-posed to general public ownership, is that the people of this country still have it in their power so to re-form and reconstruct the corporation policy of the country that, as between the corporation thus reformed and even restricted public ownership, the latter is to be opposed, and strenuously opposed.

One controlling economic reason for opposing public ownership is that every individual in society prospers just in proportion as industry gets the best there is in human capability; on the other hand, government control and direction never gets, and in the nature of things never can get, all there is, or the best there is, in human capability. No one knows this so well as he who having been in private enterprise, goes into some enterprise controlled by government, or having been in government service, goes into private enterprise. To the mind of such a person the difference is tangible, clearly distinct, like the line dividing Kentucky from Ohio before slavery had been abolished. And the reason is not far to seek.

Every enterprise of consequence has many places to fill, each place varying from its fellows in the kind of individual capability it demands. Correspondently every enterprise has many individuals to select from, each individual varying from his fellows in the kind of capability he has to give; so that the success of an enterprise depends, not so much upon the mere fact of acquiring capable men, as upon the wise distribution of the men to their places — the right man in the right place.

Now the government may compete with private enterprise in getting capable men, but it has not thus far shown anything of the capacity of a private enterprise to assign the right man always to the right place. The agency which in private enterprise succeeds so generally, in eventually landing in the right place the right man, is not simply good intention, nor mere intelligence, but the intelligence and intention which constantly study the enterprise in hand — which make it the one affair in life, constantly thought of and planned for; an intelligence and intention, too, which are themselves as nearly as possible permanent. That kind of seeking out and watchfulness, few government departments possess. The men in charge of government departments may be intelligent and well-intentioned, but they are in to-day and out to-morrow. The thing under them is not their child. They never, as a matter of fact, get their hands and their mind fully into the work. And this will always be the case, for in its nature republican government is founded on short tenures and frequent changes.

Nor will civil service change this. Civil service examinations may secure capable men, but no civil service examination can assign the right man to the right place, can pick out of the thousand capable men just the kind of capability that is fitted to this place and just the kind that is fitted to that. Indeed, between government control and private control, the difference in that respect is almost the exact difference between what we call true organization and what is the merest aggregation; for in private enterprise each man has come by a process of attrition to the place he is best fitted to fill, while in government employment each man is dropped into his place irrespective of special fitness, and under civil service is riveted there. And all this is said on the assumption that politics would have no part in government ownership and operations. When we stand before that side of the question, efficient public ownership looks almost hopeless.


Government control and operation would also be found, I think, to have a disadvantageous effect upon the special interest of the laboring man. Labor sometimes gets less than the enterprise employing can afford to pay; but labor never gets more, at least for any length of time, than the enterprise can afford to pay. Lowered efficiency therefore means lowered wages. And public ownership always has been, and always will be on this account, attended by lower wages. The men who are motormen on the municipal street railways of Glasgow, for instance, get a little less than thirteen cents an hour; the motormen of Chicago get from twenty-one to twenty-four cents an hour. The locomotive engineer of a German government railroad gets fifty dollars per month; the American locomotive engineer makes easily three times that much. And through the whole schedule of wages paid by public and by private enterprises, the same difference runs — a difference founded on the fundamental economic law that it is intelligent organization, including, above all things, the intelligent selection and assignment of men, that determines what wages the enterprise can afford to pay.

But there is still another side to this objection — what may be called its personal side — the effect of public ownership on organized labor. Much as labor organizations have been abused here and there by opposing interests, and much as here and there labor organizations have abused their privileges, it is in labor organizations that the laboring man finds, and will continue to find, the source of bettered conditions.

Asking for higher wages the one man is unheard. But the many speaking as one make themselves heard. So that the labor organization is the laborers’ industrial protector.

But the many speaking as one must have some one to whom to speak —some concrete party with whom to deal. Under government ownership that party would be the whole public. Let not the ready sympathy of the people for alleviative measures, such as factory legislation, and the like, be given too wide a significance, for even there the task was long and hard. Nor the readiness of the public to side in, at times of labor strikes, with the employees. In those situations the public is an outside party, not the other party. Until in some public controlled enterprise there is a demand by the employee for higher wages or changed conditions — some demand that will directly cost the public something in dollars and cents — the laboring man is without proof that the public can be more easily reached than private enterprise.

Something in this line, however, we already know. Government servants, from the highest to the lowers, are the poorest paid people in America; put, man for man, against corresponding grades in private enterprise — the President of the United States against the presidents of the great corporations, cabinet officers against the managers of corporation departments, postal clerks on the railways against express clerks, laborers against laborers — the advantage in every case is with the employee of the private enterprise. And this we know, too, that though the matter has often been urged, the people at large will not listen to any proposition for increase of pay in the government service. Given then a private employer, or the public as employer, with whom to deal — the one a thousand times more accessible, and infinitely prompter to reach results than the other — to my mind nothing is clearer than that employment by the public would be followed by a severe impairment of the influence and efficiency of the labor organization, and of the good it has done for its membership.


But the fundamental objection to general public ownership — an objection so fundamental that it cannot be adequately stated in a line — is that to transpose from the individual to government, the direction, the creation, and the development of those things which constitute industrial progress, would be to reverse the whole order of nature on which the past has been built up; the whole order that from the beginning of things has been evolving, out of the species, the individual; out of the mass, the man; putting to the forefront the individual; developing and uplifting him by putting on him the task and the responsibility of working out the destiny of things. In the light of all history, natural and human, Socialism shows itself to be a step backward, not forward — a doubling back on the road along which the race has come from the days when no man had a hope of his own, or an individual part in the destiny of things.

So much for one remedy. Now for the other cure from the outside — the corporation to remain as it is to-day, but to be bitted and reined in the matter of conspiracy to control prices. The Sherman Anti-Trust Act perhaps was the most significant promise toward that cure. When that act went into effect, we were only at the beginning of the period that marked the development of the so-called trust. How well the promise of cure has been fulfilled is shown by the fact that under the shadow of that act the greatest of the so-called trusts have grown up. True, the administration of President Roosevelt has begun a number of prosecutions. But the beef trust injunction, the railroad rebate injunction, and the Northern Securities decree contain so far their results. With these results I am finding no fault. The railroads say that they are obeying the injunction, and thus far the law officers of the government have not with success disproved, or even tried to disprove, that assertion. No prosecution for contempt under the beef trust injunction has been instituted.


But no thinking man will say that the Sherman Act, or the prosecutions thereunder, have reached the actual disease. No candid observer will say that the sense of the public that something is wrong, indefinable as that sense may be, has been removed, or even modified. The corporate domain of property narrowly owned, though the owning corporations be bitted and reined, is no less than before headed toward grave danger to republican institutions. And if this ownership keeps on narrowing, the people at large more and more remaining outside, the danger will be greater than it ever was before. Indeed, this cure from the outside is no cure at all. It may palliate, but it does not eradicate, it does not restore. Nothing will restore to the people of America the feeling that the opportunities of America are for all alike, short of such a reconstruction of our corporation policy that the corporation hereafter shall more and more come to be an institution of the people, and for the people — a reconstruction which must proceed, not from those who aim to destroy; nor from those to whom perfunctory regulation and prosecution is the alpha and omega of remedy; but from those who see that the thing before them is nothing less than to remove the prejudices and to change the judgments that have been growing up through a generation; and to do this the foundations of the corporation must be laid anew, and laid clean and firm.

But some one at this point inquires: Assume the corporation policy of the country to be reconstructed as you desire, how will the peopleization of the corporate domain show itself in the concrete? What evolution may we expect? The best way to answer inquiries of that kind is to show what has been done, and what has succeeded; and space will permit me to do this only by showing types of what has been done, examples of what has succeeded.

The examples I choose fall under three heads: (a) corporate property successfully and safely owned by large numbers of people who have put their individual resources into their proprietorship; (b) corporate property interesting as owners, or co-partners in its profits, its wage earners; and (c) corporate property which in addition to serving the best interests of its shareholders fulfills the further purpose of serving the best interests of the community in which it operates, thus illustrating the prospective economic side of the corporate domain peopleized.


The first type then — corporate property successfully and safely owned by large numbers of people who have put their individual resources into their proprietorship. Among railroad companies several may be instanced, one or two of them running out from Chicago. Of the capital stock of one of these roads, more than one-half is held in quantities of less than five hundred shares — one-fifth in quantities of less than one hundred shares. Many of the owners are merchants, artisans, and farmers living along the line. The arrangement of the securities is simple. The road has not skipped a dividend in forty-six years. It has declared few extra dividends — none in twenty years. The ideal of the whole management has been not stock jobbing, but investment. And, in the diffusion of ownership, this policy has borne fruit.

Many other cases of like character could be cited, some of them railways, some manufacturing corporations. I have in mind a manufacturing corporation that has been owned by practically one set of people for forty years — a stock list which, considering the capital represented, is widely distributed and unless engulfed in some gigantic reorganization, will continue to be owned probably by the same people and their descendants for as many years to come. If you ask me what are the qualities that in the corporations named have given permanency to their ownership, my answer is: Simplicity of organization; immunity from over capitalization; attention to the duties and details of maintenance; dividends conservatively and therefore regularly earned. In other words, these are corporate enterprises which though free from governmental supervision have been conducted as if constantly under the government’s eye.


This brings me to the second type — corporate property that interests its wage earners as owners, or co-partners in its profits. The precise method employed to interest wage earners is in most cases special to the particular enterprise considered. But three examples will be given, all other methods falling somewhere within the boundaries of these examples.

First there is the corporation that helps its employees to purchase its shares at their market value by lending them the money. The company I have in mind has interested in this way thousands of its employees — men who regularly, either in person or by proxy, attend its stockholders’ meetings.

The second example is that of one of the largest manufacturing companies in Chicago, the stock of which is held almost exclusively by the family of the founder, and is not for sale to the employees. In this case during the past six years all of the employees have been given from five to ten per cent. of the net earnings of the preceding year, the distribution amounting this last year to about three hundred thousand dollars.

The third example is that of another manufactur-ing company, one of the largest in the country. Any employee of this company, who earns not more than fifteen hundred dollars a year, may have purchased for his account an amount of the common stock of the company equal to the amount of his annual wages; paying therefor not less than two and one-half per cent a year out of his wages. But to his credit on the purchase price also go the dividends, guaranteed to be not less than twelve per cent. upon the amount of wages actually earned by him. When the employee has been with the company for five years, he may increase his holdings twenty-five per cent., and is guaranteed dividends at fifteen per cent; and after ten years he may increase his holdings fifty per cent. and is guaranteed eighteen per cent. And under this plan nearly every employee is a stockholder in the corporation.

In the first example cited, employees come into the market for the corporation’s stock substantially as any other investor, buying with their own accumu-lated means at the then market price. Investments like this unquestionably engage the increased inter-est of the employee, for from that time on the suc-cess of the corporate enterprise is the success of his individual enterprise. The growth of the corporate property embodies the growth of his individual property stake. But it is manifest that the equity and good results of the arrangement depend largely on the question whether the corporation is constructed on honest lines; for a corporation dishonestly cre-ated, or, though not consciously dishonest, at least built upon intricately overlapping securities, is a corporation some of whose securities at some time are bound to go to the wall. And where the catastro-phe involves employees who have taken and paid for their securities out of their own savings, the perfidy is a double one. Indeed, the equity and the value of such arrangement depend upon that quality in the corporation that in a man we would call character.

In the second example — the division of profits among employees —there is perhaps a more immediate approach to the principle that in the prosperity of an enterprise those who work with their hands are entitled to a share, as well as those who originate the enterprise, those who do its thinking, those whose work is that of management. The one objection that I have heard to this method, in cases otherwise fair, is that the employees’ claim to such division is not a permanent property right — is in the nature of a gratuity, rather than a property right.

The third example — the manufacturing corporation that enables its employees to obtain a part of its stock by paying for it almost wholly out of the earnings of the company to the value of which their labor has contributed — is perhaps the nearest approach to the ultimate ideal. In this example it is recognized, of course, that dollars and cents actually put in are entitled to be first taken out — that is they are first liens — and entitled to the first earnings. Thereafter capital and labor are partners, each getting, not only its fair proportion of the profits from year to year, but also its fair proportion of the permanent results of success and prosperity — the lasting property that grows and continues to grow, out of conditions of success. Were our vast corporate domain on its way to the realization of this ideal — could we see that, so far as labor is concerned, the future had in store for us a continually nearer and nearer approach to this ideal, instead of a constantly increasing distance from the ideal — the sense of injustice that follows us, through even our periods of prosperity, would disappear in the consciousness that another era had opened; that day by day, as time went on, the vast domain of the country’s corporate property would become more and more the property of the people of the country.


This brings me to the third type — corporate property, which, in addition to serving the best interests of its shareholders, fulfills the additional purpose of serving the best interests also of the public — thus exemplifying the economic side of corporate regeneration. The case in mind is that of a gas company in a city of more than one hundred thousand people in the central West. The method followed was this: Several of the leading citizens of the city incorporated the company. No bonds were issued. Stock was issued only for cash, each dollar of stock bringing into the treasury a dollar of cash. The total capital, issued in shares of small denominations, was offered in the first instance, not to capitalists, but to the citizens of the city who were to become the patrons of the company — the voting power of the stock being vested in trustees named in the organization agreement, the directors and trustees to be elected from time to time by the trustees. Dividends on the stock were fixed at eight per cent., and a price was put upon the gas distributed, that after the deduction of operating expenses, maintenance and depreciation, would pay this dividend and apply something each year upon the repayment of the money paid in upon the stock certificates; it being provided that, when the stock was thus repaid in full, the price of gas should be placed at a figure just sufficient to meet operating expenses, extension, maintenance, depreciation and the like. The corporation was in a sense a benevolent corporation — a corporation for the public good. Though it took too little into account perhaps of the dangers of such a venture, and the personal losses incident thereto, the experiment was successful. Success was due in large measure to the personal pride in the enterprise taken by the trustees who, together with the directors, gave to the affairs of the corporation careful personal attention and supervision. The several officers proved themselves capable managers. The trustees were business men; the enterprise received a business supervision and management. The trustees were not affiliated with politics; the enterprise was burdened with no political pulls. In seventeen years, besides furnishing the people of the city with gas at a reasonable rate, and paying the stipulated dividends upon the stock, the corporation had repaid ninety-five per cent. upon the principal of the stock; and nothing but the laws of the state — statutes that in their enactment had no such corporation as this in mind — prevented this corporation from going on indefinitely in furnishing to the people of the city, at nearly cost, a service under private management — a service that at once gave to the people all the calculated advantages of municipal ownership, along with the incalculable advantage of private management.

The distinction between all these types of corporations and the merely co-operative societies, like some of the English municipal trading societies, must not be lost sight of. The distinctions are inherent and vital. Those co-operative societies were mere aggregations, limited in purpose chiefly to buying and selling, and intended only to eliminate the supposedly unnecessary middleman. They failed in most cases from the lack of order — the lack of that trained personal predominancy which, running through a business, gives it order and keeps it going. They were operated too much as town meetings are run to be entirely successful. The types of corporation I have referred to, on the contrary, are open to none of these risks of disorder; for through them, as through any other corporation, runs that trained personal predominancy without which no commercial business can ever be made to succeed.

But here again some one inquires: Are not the corporations you have cited rare instances? Can you hope to make them the rule? Will the men who have financial means put their means, to any great extent, into enterprises from which they cannot reap a greater personal profit than these examples promise? Is not Capitalism, as human nature goes, bound to be hoggish — bound to look upon the people, the people’s labor, and the people’s accumulated wealth only as oil wherewith to light their own lamps?


If by Capitalism is meant the corporate ideal now in vogue — the child of that public policy that permits men, in the name of a creature of the state, and under the seal of the state, to practice with impunity any device they please in quest of turning into their own that which has been created out of the money of others — I answer Yes, Capitalism is bound to be hoggish, is bound to look upon the people, the people’s labor, and the people’s accumulating wealth only as so much oil for their own lamps. If in the further inquiry —Will the men of financial means put their means, to any great extent, into enterprises from which they cannot reap a greater personal profit than these examples promise? — it is assumed that notwithstanding the reconstruction of the corporation on the lines proposed a certain few men will still have unrestricted command of the financial resources of the country for any purpose to which they wish to devote such resources — my answer will be, that upon the assumption indicated the men commanding the means of the country for any purpose for which they may wish to use them will not be diverted from what they are doing now. Between Capitalism thus perpetuated and outright Socialism — between the present tendencies continued, and some of the perhaps madder remedies offered — I am offering no choice. Each in the end would be calamitous. Both would lead to the time when the individual man shall have perished.


But neither of these conditions is yet fastened upon us. Neither is necessary. Both can be averted. Let me assume that the intelligent patriotism of the country has at last been reached, and aroused; that the mind of the people has opened to the fact that what is wrong in the country is not the corporation intrinsically, but the system of self-aggrandizement and spoliation that, under the existing corporate policy, the corporation encourages and protects; that what is wanted is not the prosecution, in one form or another, of corporations simply because they are big; or continued promises of such prosecutions merely because such promises keep up the interest of the people; but that what is wanted is the corporation, big and little, so rebuilt that in the vast domain of property covered by it the people, who with their hands have worked, may hereafter see their way to participate; the people who accumulate savings may see their way to participate; the people who are to be served may participate — the whole domain turned into a possession calculated to invite their confidence and pride, as out landed domain invited the confidence and pride of those who occupied it.

Let me assume that this comprehension by the country, of what the country needs, is followed by an organized political moral purpose; that one of the great political parties, or both, or some new party, has been compelled to take it up; that corporate reconstruction has been decreed; that the trap-laying corporation is a thing of the past; that the corporation toppling over from excessive capitalization is a thing of the past; that the corporation so dove-tailed and inlaid with securities that no man knows where his particular securities begin or end is a thing of the past; that every craft has been outlawed, little or great, which has helped to drive from the seas of healthy property development the interest and participation of the people at large.

Let us assume also that behind the corporation thus reconstructed there has grown up a national moral conviction that deceit and theft practiced in the corporate domain are not different from theft and deceit in every other domain; and what will follow?

One thing that will follow is this: Day by day as confidence is restored, and the old instinct for individual ownership sees a way clear to its fulfillment, the corporate domain will come more and more under the ownership of the people at large, for the bulk of the wealth of the country is still in the hands of its people. I quote from my former article in this magazine: “While the ownership and control of the new great property domain is narrowed to a few, the wealth on which that ownership rests — from which it largely feeds — is still the possession of the people in the ordinary walks of life. These people own the wealth that makes up the large bank deposits. These people own the largest portion of the nation’s bonds. They have immense sums invested in insurance and trust companies. Though no exact facts are at hand on which to base a statement, I believe it safe to say that the people of America have the financial means at hand to possess themselves, at fair prices, of enough of the new great domain of property to make it as widely individualized as are the farms of America.”


This other thing also will also follow the instinct of the people to participate in the property of the country, corporate as well as other kinds of property, having been stirred anew, a widespread popular habit of scrutiny will grow up never before brought into the field of corporate ownership. And this scrutiny will in time become an intelligent scrutiny; for, once interested and given a fair deal, the ordinary American knows how to judge intelligently almost any business proposition. It will be also an unprejudiced scrutiny —judgment such as is now exercised respecting a farm, or a small business venture. In short, when corporate enterprises have come to be regarded by the people, not as an alien principality in which they have no individual interest, but as a part of their country’s property possessions in which they have an individual interest, there will be brought to their study and judgment by the people at large an habitual attitude of mind, the beneficial effect of which cannot be overestimated — an attitude of the popular mind that will eventuate, more and more, into just the kind of corporate enterprises of which I have given examples; give those engaged in honest corporate enterprises, who wish to enlist in their work the men with whom they are associated, just the opportunity public distrust now denies them.

Then, too, this other thing will follow: Just as fast as popular interest and intelligent and unprejudiced judgment enter into the ownership and management of the property constituting our corporate domain, the present system of converging all the capital of the country into the great money centers, there to be borrowed by the few and invested by the few for their sole benefit, will subside; for the present system depends upon the prevailing feeling of the people at large that they individually are cut off from participation in corporate property, in consequence of which they do not care how their individual means are actually invested, so long as the bank to which they are entrusted is regarded as responsible. Now inspire these people with the belief that they can, with reasonable security, have an individual stake in the domain that constitutes our corporate property, and they will cease to have no care into what their resources go. They will come to a condition of interest where they will care. And they will come to ex-ercise that care with discrimination and intelligence. The financial institutions, and the men with brains to build and manage, will of course remain the leaders and intermediaries, and to a large extent the advisers also; but corporate ownership more and more will become transactions with the people, man with man; and into such relations is breathed always a sense of responsibility, the pride of doing the right thing, a respect for others, and a yearning for that respect that distance cannot command. All history shows this. The men who have studied the labor world best know it. The men who will become the leaders in corporate enterprise will not be exempt from it. And it will prove an enormous factor in bringing the people of the country into the domain of corporate property, and in increasingly making them its own-ers and beneficiaries.


But some one will say: What you offer is not a cure by “act of Congress.” What you offer is an industrial development, a condition of things that, though humanizing and uplifting, is dependent for realization upon the successful working out of processes that no man can more than approximately forecast. Exactly so. The case in hand, as I have pointed it out, is not one for the surgeon. The case, on the contrary, is one for the exercise of that higher and surer intelligence that, having brought into mind an exact comprehension of the nature of the disease, proceeds at once to arrest and bring to a standstill the causes that have brought on the disease; assured that, the causes gone, and the faith of the patient in his future revived, the corrective forces of nature will do the rest. But let no one lose heart because all that must be done cannot be done by act of Congress. All that can be done by act of Congress is to lay clean and firm in national law the foundations for the new corporation so far as they cover the great interstate industries. All that can be done by the state legislatures is to lay, clean and firm in state law, the foundations for the new corporation for the local industries. Beyond that, the co-operation by the people in their own interest must be relied upon. But let no one on this account, I repeat, lose heart. For a genuine faith in the people has been the moral basis of every reform in history. And in every reform in history it was the awakened people who, taking up the formative idea, carried it to fulfillment. Besides, before any act of Congress that is not merely perfunctory can be passed, and before the states will fall in line behind the nation to remove the causes of the disease, the people must first be awakened, educated, brought to comprehend just what is the matter, and how it can be mended — summoned to America’s final parliament, to intelligently study and settle for themselves the problem that confronts them. And when that is done the evolutionary processes I have endeavored to point out will be already well on their way.

Let me glance back now, with a quick look, over the field I have tried to cover:

Apart from the sin which excludes the people at large from participation as owners in the corporate domain, and the moral and economic consequences which flow from that exclusion, the corporation has proven itself, over and over again, a useful instrument in the promotion of progress.

The sin pointed at is not one necessarily inherent in the corporation. The disease is one which can be eradicated, and this useful agency of civilization saved. As a means of wielding, for a common purpose, large masses of individual resources, the corporation can be owned as widely as the sources from which these resources come.

But while the disease is not without cure, the cure must be intelligently applied. It will not come through the mere indiscriminate denunciation of corporations; nor by the mere passage of anti-trust acts; nor by the prosecution of the corporation simply because it is big. It will not come through the mere putting on the records of the courts of injunction decrees; nor by ignoring, or frittering away through court decisions, the just rights of incorporated property. It will not come by making angry passes at the institution of private property. It will come only when, accepting in sincerity the corporation as an institution of our times, a proven agency of progress and prosperity, we proceed to reform it, that it may become, also, an agency for the equitable distribution of the permanent fruits of progress and prosperity. Every other institution of America is built on republican ideals — the schools, the courts, the suffrage, private property as represented in the public landed domain; and every structure built on these foundations is to-day secure in the pride and appreciation of our people The thing to be done with the corporate domain is to put it on like foundations — to put in motion here, as elsewhere, republican ideals — to put them on a footing that is intelligent and practical. That done, they will fight their own way to ultimate victory.

“Reprinted” by the Center for Economic and Social Justice, P. O. Box 40711, Washington, DC 20016