Charles G. Ross

“ For the machine, whatever we may think of it, is with us to stay, and our problem is so to readjust its effects as to minimize its evils and equitably distribute its benefits.
The maldistribution of wealth is the fundamental cause of our economic sickness. If we liken society to a tree, we may say that disease has attacked the roots, causing the tree to give off, instead of the luxuriant foliage of which it is capable, the withered leaves of unemployment. ”

“ Is the machine to be the servant or the master of the people? This is a question that each nation must answer for itself.
Through a shorter work week without reduced pay, conceivably we in the United States could so diffuse the benefits of the machine among the people that "purchasing power" would be brought back to the production level and the nation set on the way to a new prosperity—a healthier prosperity than that of the vaunted Coolidge era. This, as we have shown, can only be done through the voluntary or enforced renunciation of excessive profits. ”

“ A man is able in a work day to create wealth eguivalent to his necessaries for subsistence and something over. The employer gets together a number of laborers and receives all or part of this surplus for himself. His income is in proportion to the number of human labor hours which he controls and out of which he makes his profit. If the employer installs a machine which enables one man to produce in eight hours, let us say, the equivalent of 80 human labor hours, then the employer is in the same position with respect to income as if he had 10 men instead of one working for him. ”

“ In other words, the shrinkage of foreign trade by one and one-half billions amounts to only 2 or 3 per cent of our total productivity. Yet as a result of all the adverse forces our production has been reduced by, roughly, ten or twelve billions. This sharp contrast between a national shrinkage of, say, twelve billions, and a loss of one and one-half billions from export trade is an indication of the disarrangement of our own internal production and consumption entirely apart from that resulting from decreased sales abroad. ”

“ Every Congressman wants the Government to save money—but not by separating any of his own constituents from the payroll. Every community is willing that the Government shall spend less money, on the whole, for public buildings, army posts, navy yards and the like—but it flies to arms if the curtailment reaches into its own midst.
What has lately been happening in connection with the President's effort to pare down the budget for the next fiscal year is illustrative of the difficulties in the way of effective economy in Government. ”

“ In our Constitution, grounded as it is in property rights, nothing is said of the right to work; to the contrary, there are the fifth and fourteenth amendments, construed by the Supreme Court to cover a wide area, with their inhibitions against the taking of private property save by "due process of law." The question therefore arises: Can the Government under the Constitution compel private industry, through the five-day week, to reduce its share of the benefits of the machine? ”

“ When it became evident to the least observant that something, after all, was wrong with industry—when the buying not only of jewelry and furs by the speculators but of shoes and groceries by the rest of the people began to fall off, and men were seen walking the streets in search of work—when these things happened, the tune was changed. It was admitted that depression had come to America, but this unhappy condition, it was said, was due to world-wide forces over which we had no control. That the industrial captains of the United States could be at fault was unthinkable. ”

“ Now the vital difference between the wages of capital and the wares of labor is this: The labor hour once expended is non-existent, but the product of the labor hour turned over to the employer and by him exchanged for capital goes on working forever. That is, the workman's labor hour does its share in supporting his life for a day and then expires. The employer takes his profits and invests them, and thereafter for the rest of his life, and the lives of his heirs and assigns forever, these profits are capable of working and producing more profits for whoever controls them. ”

“ Reverting to income, as distinguished from accumulated wealth, it is illuminating to note that only one person out of every 50 in the United States has a net income of sufficient size to require him to pay a tax upon it to the Federal Government. About 2,500,000 persons, or 2 per cent of the population, pay all that is collected under the Federal income tax ”

“ They see both these nations seeking a tenable middle ground, and they are asking whether the United States, in order to prevent a swing to the left, should not consciously turn its face toward the middle.
Men who are not afraid to question the wisdom of unrestricted capitalism—which is practically what we have today—are the real conservators of our institutions. The real threat to them comes not from the handful of Communists in our midst but from the conservative extremists who are not willing to yield an inch. ”

“ Wages are high in the United States, as compared with Europe, not because of our tariff wall, but because of the greater productivity of American labor, our superior manufacturing technique and our vastly greater natural resources. Reduction in the tariff would be reflected in lower prices to the consumer. It would be of particular benefit to the farmer, part of whose plight is due to the fact that he must buy in a protected and sell, by reason of the nature of his product, in an unprotected market. The resultant disparity in prices has long been an important factor in his depression. ”

“ We have reached, at last, a stage in our national thinking in which it is being more and more widely understood, and more and more generally proclaimed by thoughtful leaders of opinion, that our present depression is primarily of our own making, and that the underlying cause is the maldistribution of wealth. ”

“ Economy in government is the easiest thing in the world to preach, because all agree upon it "in principle," and the hardest thing in the world to practice. Undoubtedly, a material saving would be effected by a thorough overhauling and reorganization of the Government departments. As everybody knows, the present set-up is illogical in many respects and is filled with duplication and overlapping of functions.
The root difficulty here is in unregenerate human nature. Every department wants reorganization and economy—but it wants them only for the other departments. ”

“ The problem is not so simple. The Government is a part of the whole. It follows that if the American people, with or without Government ald, regain a measure of prosperity, this prosperity will be reflected in the financial status of the Government; but it does not follow that the curing of the Government's particular depression—its excess of outgo over income—will spell good times for the country. ”

“ Manifestly, if the essential Federal services are not to be crippled, there can be only cheese paring economies in the field of activities covered by the remaining 30 cents, and no saving of this kind, however desirable it may be, can have any appreciable effect on the present financial position of the Government. It is possible, therefore, to applaud the President's economy drive without becoming optimistic as to its outcome. Real economy, translatable into terms of the taxpayer's dollar, can only be achieved by laying the ax vigorously to our expenditures for future war. ”

“ Nicholas Murray Butler, president of Columbia University, asserts that we are passing through no ordinary depression but through a revolutionary period brought on by long-accumulating forces. What the country needs, he says, is "personalities who are not anxious, like the jockey, to keep their seats in politics but who are willing to tell the people the truth and to guide them toward a constructive, a liberal and a progressive solution of these vast problems." ”

“ First, as already has been pointed out, the Government could help to check the drift of wealth into a few hands and at the same time obtain needed revenue for itself, by imposing heavy surtaxes on great fortunes, increasing death duties and reinstalling the gift tax. It could tax swollen individual incomes to such a point as almost to remove the incentive for piling up vast personal fortunes, a condition which has been approximated in the Scandinavian countries. ”

“ The United States lives on the future and France on the past. That is to say, American industry is so overexpanded that it exists largely upon sales which can only be paid for out of the future earnings of the mass of the people.
French industry does business largely on a cash basis. The French pay for what they buy today with the savings of yesterday, and, as Mark Seguin, French Consul in St. Louis, said recently in a radio speech, French industry never expands in anticipation of increased demand, nor does it do much to stimulate demand. ”

“ In contrast with labor's manifesto are such proposals as those of the Chamber of Commerce and Gerard Swope, both of which look to a kind of fascism. Schemes of this sort would set up a business dictatorship with the Government as a benevolent overlord. They would require the scrapping of the antitrust laws, which are designed to protect the people against extortion, and the substitution of laws designed primarily to protect business from slumps. The welfare of the people, in this new philosophy, would be subordinated to the welfare of business. ”

“ In practice, consumption, or purchasing power, must be maintained on the level of production, which latter can be controlled and stabilized by a progressive decrease in the number of labor hours as invention and improvements increase the output per labor hour. But this remedy will be effective to maintain purchasing power on a level with production only if wages are kept on a level that will give the worker, per year, a sufficient income for his reasonable needs. ”

“ Secretary Mellon has been a constant advocate of complete repeal of the estate tax. In this position he had the warm support of President Coolidge, who argued that the field of estate taxation was one that belonged peculiarly to the states. Coolidge also said that the Government should not "seek social legislation in the guise of taxation"; that if we were going to adopt "socialism" we ought to present the issue to the people "as socialism and not under the guise of a law to collect revenue." ”

“ It will be objected, for one thing, that the laborer by thrift and industry can save money and graduate into the capitalist class. This is true, but only to a very small degree. And if everybody could become rich and retire to live on his profits, the whole capitalistic structure would collapse when the last worker laid down his tools. Why is this? Because as stated, only labor can create wealth, and enough labor must be in operation all the time to create the wealth—the goods—needed by all the people.
Production and Consumption. ”

“ Labels in politics are delusive, but in general it may be said that the fight is between Conservatives and Liberals—between those who believe that the first function of government is to establish prosperity among a privileged class at the top, whence it may diffuse itself at the direction of this class over less fortunate groups, and those who believe that government should concern itself primarily with the welfare of the mass. ”

“ What are we to believe when we find business groups in solemn conclave adopting resolutions against the interference of government in business, and then, the next day, running to the Government for subsidies and subventions? ”

“ In other words, the American depression presents a duplex problem. The Government is head over heels in debt. It ran a deficit during the last fiscal year of $903,000,000, and the deficit for the current fiscal year, which began last July 1, stood on Nov. 1 at $661,000,000. Private industry and business are likewise in a bad way, and hence the people of the United States, who are dependent upon private industry and business for their wages or dividends, are in a bad way. Each person, therefore, has a dual interest in the depression. ”

“ Proponents of the estate tax urge it frankly as a social weapon as well as a revenue producer. In a message to Congress in 1906, Roosevelt advocated heavy death duties, with the primary object of putting "a constantiy increasing burden on the inheritance of those swollen fortunes which it is certainly of no benefit to this country to perpetuate." Andrew Carnegie wrote in his "Gospel of Wealth": "Of all forms of taxation, this seems the wisest. It is dificult to set bounds to the share of a rich man's estate which should go at his death to the public through the agency of the State." ”

“ All the familiar arguments against cutting into the incomes of the very rich—that the whole people ultimately would pay the bill, that higher levies in the upper brackets would drive an increasing amount of wealth into tax-exempt securities, that the Government should not take money needed in industry—were heard. ”

“ We are consuming less and less of the buncombe engendered in the lush days of our prosperity—and in this fact lies some measure of compensation for the plight into which we have got ourselves.
One need not go into the field of radical writing to find vigorous expression of the view that the capitalistic system is on trial. In growing numbers, highly placed defenders of capitalism, men who have prospered under it and who desire its basic features preserved, are saying that if capitalism is successfully to meet the challenge of other forms of soctal organization, it must clean house. ”