"'Ultimately I believe that this control of corporations should undoubtedly, directly or indirectly, extend to dealing with all questions connected with their treatment of their employees, including the wages, the hours of labor, and the like.'

"And what Socialist made himself ridiculous by such a foolish utterance? No Socialist at all; only a paragraph from his latest article on the trusts by Theodore Roosevelt. Five years ago, or when he was still in office and had the power, he would not have dared to make that statement. But he finds it politically safe and expedient to make it now. It is not at all a radical statement. On the contrary, it is simply the echo of E. H. Gary, that is to say, John Pierpont Morgan, president of all the trusts.

"Mr. Roosevelt now proposes that Bismarck attempted in Germany forty years ago to thwart the Socialist movement, and that is State Socialism, so called, which is in fact the most despotic and degrading form of capitalism.

"President Roosevelt, who is popularly supposed to be hostile to the trusts, is in truth their best friend. He would have the government, the capitalist government, of course, practically operate the trusts and turn the profits over to their idle owners.

This would mean release from responsibility and immunity of prosecution for the trust owners, _while at the same time the government would have to serve as strikebreaker for the trust owners_, and the armed forces of the government would be employed to keep the working cla.s.s in subjection.

"If this were possible, it would mark the halfway ground between industrial despotism and industrial democracy. But it is not possible, at least it is possible only temporarily, long enough to demonstrate its failure. The expanding industrial forces now transforming society, realigning political parties, and reshaping the government itself cannot be fettered in any such artificial arrangement as Mr. Roosevelt proposes. These forces, with the rising and awakening working cla.s.s in alliance with them, will sweep all such barriers from the track of evolution until finally they can find full expression in industrial freedom and social democracy.

"In this scheme of State Socialism, or rather State capitalism, Mr.

Roosevelt fails to inform us how the idle owners of the trusts are to function except as profit absorbers and parasites. In that capacity they can certainly be dispensed with entirely and that is precisely what will happen when the evolution now in progress culminates in the reorganization of society."[77] (My italics.)

[72] Victor S. Clark, "The Labour Movement in Australasia."

[73] In her "American Socialism of the Present Day" (p. 185), Miss Hughan has quoted me (see the _New York Call_ of December 12, 1909), as cla.s.sing the abolition of the injunction as one of the revolutionary demands never to be satisfied until the triumph of Socialism. As a means to check the growth of the power of the unions, this method of arbitrary government by judges has never been resorted to except in the United States. It is evident, then, that this statement was only meant for America. It should also have been qualified so as to apply solely to the America of to-day. For as other methods of checking the unions exist in other countries, it is obvious that they could be subst.i.tuted in this country for the injunction, a proposition in entire accord with all I have written on the subject--though unfortunately not stated in this brief journalistic expression. I have now come to the belief, on the grounds given in the text, not only that a new method of fighting the unions (namely, compulsory arbitration) _can_ be subst.i.tuted for the injunction, but that this _will_ be done within a very few years.

[74] Professor Le Rossignol and Mr. William D. Stewart, "Compulsory Arbitration in New Zealand," in the _Quarterly Journal of Economics_.

Reprinted in their book, "State Socialism in New Zealand."

N. B. The reader who is interested is referred to the whole of both these volumes. There is little matter in either that does not have a direct bearing on our subject, and they have been utilized throughout this and the following chapter.

FOOTNOTES:

[75] _The Coming Nation_, Sept. 2, 1911.

[76] The _Sat.u.r.day Evening Post_, Nov. 25, 1911.

[77] The _New York Times_, Nov. 25, 1911.

CHAPTER VI

AGRARIAN "STATE SOCIALISM" IN AUSTRALASIA

Australia and New Zealand are commonly taken as the most advanced of all countries in government ownership, labor reforms, and "State Socialism."

Indeed they are often pictured as almost ideally governed, and the credulity with which such pictures are received shows the widespread popularity of "State Socialism."

The central principle of the Australian and New Zealand reforms is, however, not government ownership or compulsory arbitration, as commonly supposed, but a land policy. By means of a progressive or graduated land tax it is hoped to break up all large estates and to establish a large number of small proprietors. When it was said to Mr. Fisher, the new "Labour Party" Premier of Australia, that this policy was not Socialism, he replied laconically, "It is my kind of Socialism."[78]

The "State Socialism" of Australia and New Zealand is fundamentally agrarian; its real basis is a modernized effort to establish a nation of small farm owners and to promote their welfare.

Next in importance and closely connected with the policy of gradually bringing about the division of the land among small proprietors, is the policy of the government ownership of monopolies. Already New Zealand is in the banking business, and the Australian Labour Party proposes a national bank for Australia. National life and fire insurance are inst.i.tuted in New Zealand; the same measures are proposed for Australia.

Already many railroads are nationally owned, and it is proposed that others be nationalized. Already extensive irrigation projects have been undertaken; it is proposed that the policy should be carried out on a wider scale. But the Australian Labour Party is not fanatical upon this form of "State Socialism." It does not argue, like the British Independent Labour Party, that the civilization of a community can be measured by the extent of collective ownership, for Australasia's experience has already shown the immediate and practical limits of this kind of a movement. New Zealand is already burdened with a very large national debt; Australia proposes that its debt shall be increased only for the purpose of building commercially profitable railways or irrigation schemes, etc., and not in any case for the purpose of national defense or for other investments not immediately remunerative.

The national debt, aside from that based on profit-making governmental undertakings, like railways, is to be reduced, and nationalization of other monopolies is not to be undertaken until new measures of taxation have become effective. These are a graduated land tax and an extension of the graduated income and inheritance taxes.[79]

The program concludes with vigorous measures for national defense.

Australia is to own her navy (supported not by loans, but by taxation), and is to be as independent as practicable of Great Britain. She feels a need for military defense, but she does not propose to have a military caste, however small; the whole people is to be made military, the Labour Party stands for a citizen defense force and not for a professional army. Finally, Australia is to be kept for the white race, especially for British and other peoples that the present inhabitants consider desirable.

There remains that part of the program which has attracted the most attention, namely, the labor reforms: workingmen's insurance, an eight-hour day, and an increase of the powers of the compulsory arbitration courts. Already in fixing wages it has been necessary for the court to decide what is a fair profit to the employers, so profits are already to some degree being regulated. It has been found that prices and the cost of living are rising still more rapidly than wages; it is proposed that prices should also be regulated by withdrawing the protection of the customs tariff from those industries that charge an unduly high price.

I have mentioned the labor element of the program last, for the Australian Labour Party is a democratic rather than merely a labor movement. The Worker's Union, and the Sheep Shearer's Society of the Eastern States, enrolled from the first all cla.s.ses of ranch employees, and "even common country storekeepers and small farmers."[80] Some of the miners' organizations have been built on similarly broad lines, and these two unions const.i.tute the backbone of the Labour Party. The original program of the New South Wales Labour Electoral League, which formed the nucleus of the Labour Party in 1891, proposed to bring together "all electors in favor of democratic and progressive legislation," and was nearly as broad as the present program; that is to say, it was by no means confined to labor reforms.

But are there any other features in the Australian situation, besides the dominating importance of the land question, that rob this program of its significance for the rest of the world? It cannot be denied that there are. In the first place, it is only this recent social reform movement that has begun to put New Zealand and Australia under real democratic government, and this democratization is scarcely yet complete, since the const.i.tutions of some of the separate Australian States and Tasmania contain extremely undemocratic elements; while the federal government is dominated by a Supreme Court, as in the United States. Consequently it is only a few years in some of the States since such elementary democratic inst.i.tutions as free schools were inst.i.tuted.

It is evident, on the other hand, that countries establishing democratic or semidemocratic inst.i.tutions under the conditions prevailing in the world as late as 1890, when the great change took place in New Zealand, or during the decade, 1900-1910, when the political overturn gave Australia to the Labour Party, should be more advanced than France, Germany, Great Britain, or the United States, where the latest great overturn in the democratic direction occurred in each instance a generation or more ago.

So also Australia and New Zealand which, on the one hand, are still suffering from the disadvantage of having lived until recently under a system of large landed estates, on the other hand have the advantage of dealing with the land question in a period when the governments of these new countries are becoming rich enough, through their own enterprises, to exist independently of land sales, and when farmers are more willing to increase the power of their governments, both in order to protect themselves from the encroachments of capital and of labor, and directly to advance the interests of agriculture. The campaign to break up the large estates has kept the farmers engrossed in politics, and this has occurred in a period when industrial organization has made possible a whole program of "Constructive State Socialism." By taking up this program the farmers and those who wished to become farmers have at once looked to their own interests and secured the political support of other small capitalists and even of a large part of the workingmen.

But working against the nationalization of the unearned increment, against the policy of leasing instead of selling the public land, central features of every advanced "State Socialist" policy, is the fact that the small farmers, daily becoming more numerous, hope that they might themselves reap this increment through private ownership. In no national legislation is it proposed to tax away this increment in _agricultural_ land, which preponderates both in New Zealand and Australia. But, while in other countries the agricultural population is decreasing relatively to the whole, in New Zealand the settlement of the country by the small farmers has. .h.i.therto led it to increase, and the new legislation in Australia must soon have the same result. So, in spite of the favorable auspices, it seems that the climax of the "State Socialism," the transformation of the small farmer into a tenant of the State is not yet to be undertaken, either in the shape of land nationalization or in the taxing away of unearned increment. And while the Australian Labour Party as an organization favors nationalization, a large part of those who vote for this party do not, and its leaders have felt that to have advocated nationalization hitherto would have meant that they would have failed to gain control of the government. And in proportion as the new land tax creates new farmers, the prospects will be worse than they are to-day.

The existing land laws of New Zealand are extremely moderate steps in the direction of nationalization. In 1907, after the best land had been taken up, a system of 66-year leases was introduced, but only as a voluntary alternative to purchase. After 1908 the annual purchases of large estates were divided into small lots and leased for terms of 33 years, but this applies only to a relatively small amount of land. It was only in 1907 that the graduated land tax began to be enforced in a way automatically to break up the large estates as it had been expected to do, and it was only in 1910 that the new and more heavily graduated scale went into effect. And finally it was only in 1907 that large landowners were forbidden to purchase, even indirectly, government land.

It has taken all these years even to discourage large estates effectively, to say nothing of nationalization.

"Some writers have predicted that the appet.i.te for reform by taxation will grow, and that the taxation will be increased and the exemptions diminished until all the rent will be taken and the land practically confiscated, according to the proposals of Henry George. But the landless man, when he becomes a landholder, ceases to be a single taxer, and is strongly opposed to Socialism. The land legislation of New Zealand, although apparently Socialistic, is producing results directly opposed to Socialism by converting a lot of dissatisfied people into stanch upholders of private ownership of land and other forms of private property. The small farmers, then, are breaking away from their former allies, the working people of the towns, who now find themselves in the minority, but who are increasing in numbers and who will demand, sooner or later, a large share in the product of industry as the price of loyalty to the capitalistic system."[81]

Without land nationalization the process of nationalizing industry cannot be expected to proceed faster than it pays for itself--for we cannot reckon as part of the national profits the increased land values national enterprises bring about. Nor will capitalist collectivism at this stage proceed even this fast. Not only do the small taxpayers oppose the government going into debt, but as taxpayers they are responsible for all deficiencies, and they want only such governmental enterprises as both produce a surplus and a sufficient one to pay the deficits of the nonproductive departments of government. To-day only about one fifth of the taxpayers pay either land or inheritance taxes.

But the increasing military expenditures and the greater difficulty of securing large sums by indirect taxation will increase this proportion.

It is likely, then, that State enterprises which, under private capitalism, were used recklessly as aids to land speculation will now be required, as in Germany and other continental countries, to produce a surplus to relieve taxpayers. Private capitalism used the State for promoting the private interests of its directors, State capitalism uses it to produce profits for its shareholders, the small farmers, as taxpayers, or in the form of profits distributed among them as consumers. Only as the government begins to take a considerable share of that increased value in land which nearly every public undertaking brings about, will _all_ wisely managed government enterprises produce such profits.

The advance of "State Socialism," though it has several other aspects, can be roughly measured by the number of government enterprises and employees. The railways, telegraphs, and the few government-owned mines of New Zealand, have been calculated to employ about one eighth of the population, a greater proportion than in America or Great Britain, but scarcely greater than in Germany or France--and not a very great stride even towards "State Socialism." And it seems likely that the present proportion in New Zealand will remain for some time where it is.

Government banking, steamships, bakeries, and the government monopoly of the sale of liquor and tobacco might not prove immediately profitable, and are less heard of than formerly.

Where "State Socialism" has proceeded such a little distance, the material benefits it promises to labor (though in a lesser proportion than to other cla.s.ses) have not yet accrued. "It must be admitted,"

write Le Rossignol and Stewart, "that the benefits of land reform and other Liberal legislation have accrued chiefly to the owners of land and other forms of property, and the condition of the landless and propertyless wage earners has not been much improved." Indeed, the condition of the workers is little, if any, better than in America. Mr.

Clark writes: "The general welfare of the working cla.s.ses in Australasia does not differ widely from that in the United States. The hours of work are fewer in most occupations, but the wage per hour is less than in America. The cost of living is about the same in both countries. There appears to be as much poverty in the cities of New Zealand as in the cities of the same size in the United States, and as many people of large wealth." It is no doubt true, as these writers say, that, of the people cla.s.sed as propertyless, "many are young, industrious, and well-paid wage earners; who, if they have health and good luck may yet acquire a competency" in this as in any other new country. Yet it is only to those who "have saved something," _i.e._ to property holders, that the State really lends a helping hand.

Even when New Zealand becomes an industrial country, the writers quoted calculate that "it should be possible for the party of property to attach to itself the more efficient among the working cla.s.s, by giving them high wages, short hours, pleasant conditions of labor, opportunities for promotion, a chance to acquire property, insurance benefits, and _greater_ advantages of every kind than they could gain under any form of Socialism. If this can be done, the Socialists will be in a hopeless minority."

Here we have in a few words the universal labor policy of "State Socialism." Labor reforms are to be given to the working cla.s.s first, to encourage in them as long as possible the hope to rise; second, when this is no longer effective, to make the upper layers contented, and finally to "increase industrial efficiency," as these same writers say--but at no time to put the workers on a level with the property-owning cla.s.ses.

Indeed, it is impossible to do more on a national scale, as these writers point out, for both capital and labor are international. If "State Socialism" were carried to the point of equalizing the share of labor, either immigration would be attracted until wages were lowered again, or capital would emigrate, or the nation would have to defend its exclusiveness by being prepared for war.

"It is hard to see how any country, whether Socialistic or individualistic in its industrial organization, can long keep its advantage over other countries without some restriction of immigration. A thoroughgoing experiment in collectivism, therefore, could not be made under favorable conditions in New Zealand or any other country, unless that country were _isolated_ from the rest of the world, _or_ unless the whole world made the same experiment at the same time."

As between comparative isolation possibly in the near future and world-wide or at least international Socialism, certainly many years ahead, the Australian Labour Party, under similar circ.u.mstances to that of New Zealand, has chosen to attempt comparative isolation. It does not yet propose to keep out immigrants, but it makes a beginning with all non-white races, and it stands for a policy of high protection and a larger army and navy. Naturally it does not even seek admission into the International Socialist Congress, where if any Socialist principle is more insisted upon than another it is Marx's declaration that the Socialists are to be distinguished from the other working cla.s.s parties only by the fact that they represent the interests of the entire working cla.s.s independently of nationality or of groups within the nation.

Moreover, the militarism necessary to enforce isolation may cost the nation, capitalists and workers alike, far more heavily than to leave their country open to trade and immigration. Indeed, it must lead, not to industrial democracy, or even to capitalistic progress, but to stagnation and reaction. The policy of racial exclusion will not only increase the dangers of war, but it will bring little positive benefit to labor, even of a purely material and temporary kind, since the farming majority will not allow it to be extended to the white race.

Instead of restricting immigration, the new government projects require a thicker settlement, and everything is being done to encourage settlers of means and agricultural experience, and we cannot question that the coming of white laborers will be encouraged when they are needed.