suggested a thing that I did not like, that is, that the classes are separate in interest in this matter. I do not think so. I speak always of the population of the country. The population of the country would have its comforts and its wealth diminished by the reduction of machinery.

The CHAIRMAN. I have only used the term "classes" because, in the evidence heretofore given, the term has been used and we have had a large number of witnesses professing to represent particular classes. They say that they do not get a fair share of the products of industry, and they give various reasons for it, among the most prominent of which is that there is too much machinery, or that machinery is operated too much, and that it throws labor out of employment. Of course your attention has necessarily been given to that matter, and the committee wants the benefit of any judgment that you have on the subject.

Mr. SUMNER. I understood that in using the word "classes" you were quoting others, but at the same time I thought that I would like to be understood as denying that you can make this distinction. These social and industrial forces reach all through society. We are all in together and cannot separate ourselves if we wanted to. If we shut down machinery we shut down the production of wealth and there would be less wealth in the community, and all of us would feel it in our comforts and our possessions.

The CHAIRMAN. Objection is made that the wealth of the community is not properly distributed. Is there any way in which legislation can intervene to remedy the distribution?

Mr. SUMNER. None whatever. When you use the word "properly distributed," you mean, of course, fairly distributed. I can only say again that I cannot see any sense to those terms at all. Some people are a great deal richer than other people; that is very true. If the social condition is free and the movement of population perfectly free, and if all individuals are left to seek their own industries, then I do not see any result except that every man gets just what comes to him according to his industry, his efficiency, his skill, his education, and his self-denial. And therefore I do not see any definition of a proper distribution except just that distribution which everybody gets on a perfectly free system. If you had a system of guilds or close corporations of any kind, that were interfering with men and preventing them from going into some line of employment, barring them out in order to make employment for somebody inside, there, of course, you would be interfering with the natural and fair and proper distribution. But I do not see any definition of a fair distribution except that which every man gets by his own industry and energy and skill.

The CHAIRMAN. The grievance complained of is that, in the operations of society, certain persons, who are just as deserving as others, find it impossible to get any employment at all. They say that society owes them a living; that, if they cannot get work at private hands, the public should intervene for the time being and provide some place where their labor could be employed, and where they could get a livelihood. They claim that they are just as industrious and meritorious as other citizens; and the proposition is for government to intervene and provide them with employment. What have you got to say to that? Can that be done?

So

Mr. SUMNER. That cannot be done; no, sir. The moment that government provided work for one, it would have to provide work for all, and there would be no end whatever possible. Society does not owe any man a living. In all the cases that I have ever known of young men who claimed that society owed them a living, it has turned out that society paid them-in the State prison. I do not see any other result. ciety does not owe any man a living. The fact that a man is here is no demand upon other people that they shall keep him alive and sustain him. He has got to fight the battle with nature as every other man has; and if he fights it with the same energy and enterprise and skill and industry as any other man, I cannot imagine his failingthat is, misfortune apart.

The CHAIRMAN. You do not recognize that view of the constitution of government, that it is in any way bound to provide for the existence of its members?

Mr. SUMNER. Not at all; and the reason why, is that if it did so, it would have a larger and larger accumulation of paupers on its hands all the time, until all the people were paupers. Take it in this way: suppose that I am twenty-one years of age, and that I say that the government owes me a living, and that it is bound to furnish me work. If the government is bound to furnish me work, how much work? I do not really want work myself, but I want things to enjoy. Work is disagreeable; there is too much of it in the world. I have enough work generally every day to occupy me for three days if I could keep agoing; I cannot catch up with my work at all. I do not want work. What I want is, instead of work, good things to enjoy-that is, wages. Now, if the government is obliged to furnish me with wages-that is, to furnish me with existence (the working element is a mere incident), is it bound to furnish my wife with existence? because I want to get married. If I am twenty-one years of age, of course I would like to get married. Now is the government bound to furnish support to the lady too, or furnish me enough to support us both? Suppose you say yes,

because it is necessary to keep the population going and to keep up the community. Very well. If the government furnishes work for me and support for myself and my wife, how many children is it bound to support? For, if I can depend upon the gov ernment to furnish me and my children with existence, I need not stop to deliberate whether I can afford to get married or not; and, of course, I get married immediately, I have no reason to be anxious about the care of my family (and in the natural course of things I should have a very large one). All the other people would go into the married state at an equally early age, and with as little need to be anxious about the future; and they would be all rearing very large families of children; and, as each grows up, he would come upon the government with a demand exactly the same as I had in the first instance; and so you would go on until you would have the whole community paupers, all living upon something-I do not know what. For it is obvious that, at the same time that the number of mouths to be filled is increasing by a grand system of encouragement, the amount of capital to be consumed by those mouths would be, on the other hand, diminished; because those who had any capital would be either hiding it away or carrying it off to some other country which did not go on that principle; or else they would enjoy it as they went along, and not save anything to give to other people. That is the reductio ad absurdum of the proposition you quote. The CHAIRMAN. The proposition has been several times made to organize the gov ernment on a communistic or socialistic system, viz, that government should employ all the labor and should give everybody a living. I understand you to say that, in your judgment, the result of such a system as that would be a rapid increase of popu lation-more rapid than the means of subsistence-until the whole community would be reduced to poverty?

Mr. SUMNER. Yes; there would be an increase of population and a reduction of capital-a loss on both sides. I suppose everybody would see that in saving his capital he was merely saving it to give to other people to consume. Saving would soon stop, and everybody would look out for himself and not provide for others. That is the real stumbling-block of all schemes to make everybody happy-that, if you make them happy, they will increase the population until the means of subsistence will not support it.

The CHAIRMAN. It has been suggested that we might relieve the industry of the country by the imposition of new taxes; that is, that we might raise all or a considerable portion of the revenues of the government by a tax on income. I should like very much to ask whether you have given your attention to that question, and whether you think that it would result in relief to the industry of the country and enable capital to give large employment to labor.

Mr. SUMNER. I am in favor of an income tax as a matter of public finance. If we had an income tax and could do away with tariff taxes, the result, I think, would be very beneficial to the whole community. The non-capitalist classes, those who depend upon their labor and who have no income or profits from capital, are the consumers and pay this consumers' tax, which is laid directly by the tariff. There would be a relief to them in that respect. But I am particularly in favor of an income tax as a measure of public finance. I think that it belongs to any good system of finance, and that it ought to be in every governmental system.

The CHAIRMAN. In that case the property and not the consuming power of the country pays the taxes?

Mr. SUMNER. Then the production of the country would pay the taxes.

The CHAIRMAN. And not the consumption of the country?

Mr. SUMNER. The production, of course, is all consumed in the same year.

The CHAIRMAN. Then the tax would be on the annual accumulation of capital?

Mr. SUMNER. No; the income tax would be on the annual net income. I am almost afraid to say that I am in favor of an income tax.

The CHAIRMAN. I said so yesterday.

Mr. SUMNER. I mean, not that I am afraid of my opinion, but that I am afraid of being misunderstood, because there has been so much stuff talked about income tax and such absurd propositions suggested for an income tax. I should like to say that I would not tolerate the suggestion of an income tax except on two or three very stringent conditions. One is that the exemption of an income tax should be drawn very low down to the cost of living. There must be an exception, but I would draw it very low, say at $1,000. I see that that has been suggested in the platform of some of the National conventions. I think that the exemption ought to be at $1,000; and, furthermore, I think that it should not be a graduated income tax. I would not like to be understood for one moment as favoring a graduated income tax. The CHAIRMAN. Be good enough to state the impolicy of a graduated income tax. Mr. SUMNER. A graduated income tax would be a tax upon efficiency, on talent, on skill, on accumulation, and on self-denial. Every man who exerted himself with any great energy and skill and talent to produce wealth and to accumulate wealth would be subjected all the time, as he went along and succeeded, to a heavier and heavier penalty for doing so, which, of course, is not to be tolerated at all.

The CHAIRMAN. There are plenty of people who would be very willing to take the income of some of these very rich men and pay a pretty heavy tax on it.

Mr. SUMNER. I suppose so, but it would be a very great injury to the community to have them do it.

The CHAIRMAN. What would happen upon an increase of the tax say to 50 per cent. on incomes of over $100,000? What would be the effect of a provision of that sort?

Mr. SUMNER. The effect, of course, would be to check the most able, energetic, and efficient men in the community-to set a limit to their exertions, and to say, Here, be a good citizen up to this point, but if you go beyond that we will set you back. The CHAIRMAN. If a man had more income than that limit he would not stay in the country, would he?

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Mr. SUMNER. Of course he would not, and that would withdraw the capital. ple talk a great deal about capital. They want to kill off capital. They get up superstitions about capital, and think that there is something peculiar and remarkable about it. But capital is nothing in the world but property in a particular use, and the security that is given to capital is nothing but making a man secure in the possession and enjoyment of the products of his own industry.

The CHAIRMAN. There is a point beyond that which has been alluded to very prominently, and that is that there is a great deal of capital in the world which is not the fruit of a man's industry, but has been got by inheritance, got while he was not contributing anything. It is said that there is a great deal of such property as that; and it is felt to be a grievance, and it is said that that kind of property should be taxed very largely. What is your view of that-of this concentration of property in a few hands by inheritance?

Mr. SUMNER. There is no such thing as that in this country. There cannot be in a new country like this, especially where there is no law of entail. If property is inherited by a man who is not competent and fit to handle it in this country, it slips through his fingers very quickly. If a man who has not inherited his father's capacity to manage money inherits money, he cannot keep it, and in this country it is quite as hard to keep capital as it is to get it.

The CHAIRMAN. One man who is quite competent to manage property, inherits property worth, annually, $5,000,000, while another man, quite as competent, inherits nothing. The latter says, "This is a grievance; this man is no better than I am. His natural rights are no greater than mine. I find him living in a palace with all the appliances of comfort and luxury, while I have to live in a hovel. That is wrong and a grievance."

Mr. SUMNER. It is not any wrong or grievance whatever to the man who has not inherited the fortune. Of course the institution of bequest or inheritance came from the institution of property combined with the institution of the family. It has grown up in society through five thousand years of history, by the human race feeling its way along, trying to adapt its institutions to human life in order to reach the maximum of good-trying to get along from worse to better. The love of a parent for his children, and his desire to accumulate for them, is the very strongest motive to temperance, prudence, self-denial, and all the industrial virtues. It is the very strongest hold that there is on him after he has got over his youth and comes to the years of real discretion. That affection for his children, and his desire to accumulate for them, holds him up to the efforts of a good citizen more than any other force in human nature; and society has simply provided for that by establishing the institution of bequests. Not that I think you could defeat it very well if you should try, because a man would give his property to his children in his lifetime if you forbade him to give it to them in the way of bequest after his death. Furthermore, the inheritance of capital from generation to generation is the way in which the human race keeps up the steady advance of civilization. That is, that every generation gets on a little farther than the last one in extending the comforts and conveniences and elegancies of life by the transmission of capital from one generation to another. If you transmit capital from one generation to another, of course the only question is, to whom in the next generation you will give it. Inheritance is simply a practical institution and arrangement that makes it pass to the children because it is the interest of socitey to encourage the parents always to follow the industrial and civic virtues.

The CHAIRMAN. In other words, society has found no better mode than the present mode.

Mr. SUMNER. That is all.

The CHAIRMAN. That being the fact, is it not possible that there may be a better mode? For instance, we have modified the laws in regard to property steadily during the last thousand years. Are we at the limit of improvement in that direction? Can we do nothing to equalize a little more the conditions of life or the possession of property?

Mr. SUMNER. I do not know.

The CHAIRMAN. Can we do nothing more to open the way for everybody to acquire property? Can we put any barriers in the way of monopolies ?

Mr. SUMNER. As to what people may do in the future, I do not know. They may come to the millennium some day. If they do, perhaps, they will know how to live in it. It is not for us to develop rules of life for the millennium now.

The CHAIRMAN. But the question presented to the committee is whether there is not something in existing legislation that creates monopolies, and whether there is not some possible legislation that would tend to improve generally the well-being of society?

Mr. SUMNER. I do not know of anything. I have no project of the kind to propose at all.

Mr. RICE. It has been intimated here that government should build railroads and own them, should own the banks, and should issue the currency; and it is said that those who have charters or privileges granted from the government to do these things are favored-favored beyond what is fair and right.

Mr. SUMNER. I am rather inclined to the opinion that we have got to have a struggle with the great corporations before we get through, but I have not any programme for it.

Mr. RICE. Do you think there is something in that suggestion?

Mr. SUMNER. I think we have not yet learned to charter corporations and still exercise the necessary control over them in the public interest; but as to having the government own all the railroads, the only piece of business that the government ever undertook to do is to run the Post Office, and it has a deficit in that department every year. I see great reason to fear, therefore, that if any other functions are given to the government, it will manage them with equal financial success.

The CHAIRMAN. I suppose you know that it would be very easy for the government to make a profit out of the Post Office?

Mr. SUMNER. No.

The CHAIRMAN. It would only have to stop the non-paying routes in the remote parts of the United States and it would very soon make the Post Office self-sustaining. Mr. SUMNER. Yes; but if you withdraw the routes you will not do the post-office business.

The CHAIRMAN. But it would be done where it is a paying business.

Mr. SUMNER. Yes; but you do not do the business.

The CHAIRMAN. We could make it self-sustaining if we took that view of it. It is self-sustaining in England.

Mr. SUMNER. It is self-sustaining in England because the country is densely populated.

The CHAIRMAN. It does not seem to me quite true to say that government cannot conduct the post-office business at a profit when the trouble is that it does not do so in order that it may accommodate the whole country.

Mr. SUMNER. I am not by any means confident that private corporations could not carry on the post-office business equally as well as it is done now, and as cheaply. The CHAIRMAN. It never has been tried.

Mr. SUMNER. O, I only say that I am not satisfied about it. It is only a speculation on my part.

VIEWS OF MR. CHARLES FRANCIS ADAMS, JR.

NEW YORK, August 23, 1878.

Mr. CHARLES FRANCIS ADAMS, jr., appeared before the committee, in response to its invitation.

By the CHAIRMAN :

Question Please to state your residence.-Answer. Quincy, Mass.

The CHAIRMAN. The committee has invited you to appear as a witness before it, on account of your official connection with railway transportation. I understand that you are one of the railway commissioners of the State of Massachusetts.

Mr. ADAMS. Yes; I am chairman of the Board of Railway Commissioners of the State of Massachusetts. I have been a member of that board for nine years-ever since its organization-and I am still a member of it.

The CHAIRMAN. In that capacity I understand that you have had occasion to look into the question of the effect of railroad management on the general business of the country?

Mr. ADAMS. Yes, sir.

The CHAIRMAN. I take it that you prefer to make your statement in your own way. I do not wish to put any questions to you if you are prepared to make a state

ment.

Mr. ADAMS. I appear here at the request of the committee. I am somewhat at a loss to know exactly what is wanted, but I presume that the committee desires such views

as I may be able to give in regard to what can be done through legislation, as respects railroads, to ameliorate the existing business depression.

Mr. RICE. There has been a good deal of complaint before this committee, from various witnesses, that business is depressed and that labor is depressed by the railway management. We want to know whether these complaints are well founded or not, and whether the community is being oppressed by railroad management; if so, in what respect, and what can be done to remove those difficulties by legislation.

Mr. ADAMS. In the first place, I would say that there are two distinct things that must be kept in mind when talking about railroads. One is, railroad construction, and the other, railroad management. Now, undoubtedly, as Mr. White has said, excessive railroad construction in this country led very largely to the existing business depression. That is, this speculation-this era of madness, as it were, abont building railroads, made what are called good times; that is, there was a great demand for iron and for all kinds of materials, and an enormous number of men were employed at high wages. All this, however, had nothing whatever to do with railroad management. Now, when too many railroads are built, and the subsequent reaction comes, as come it must, a great many men are necessarily then thrown out of employment, a great many iron works are stopped, and there is a great business depression, requiring an economical adjustment, which is now going on. All this has resulted from excessive railroad construction. But when you ask me whether railroad management has had anything to do with producing the present state of affairs, known as "hard times," I should say distinctly that it has not.

Mr. RICE. The committee did not intend to limit you in your statement.

Mr. ADAMS. The collapse of railroad construction contributed immensely to the present condition of business depression; but, so far as railway management is concerned, I cannot say that it contributed to it; and I think that, since the existing depression began, railway management has been the most powerful factor that has been at work to get the country out of it. Excessive railroad construction opened millions of acres to labor that were before that inaccessible, where the people are now going from our cities; and that is the natural relief which is slowly (and with suffering, doubtless) working itself out. Railway management, as an employer of labor, has done better in that regard than any other class in the community. Mr. Hewitt's iron furnaces and mills may shut down and may stop manufacturing, but the railroads run anyhow. The railroads employ all the hands which they employed before the depression. They have reduced wages, it is true, but still the men are employed. Few men earning wages in the railroad business have been turned out of employment as mill hands and factory hands have been. In addition to all this the railroads have been and now are, through their management, bringing forward the produce of the new acreage brought under cultivation, and sending it to Europe at rates unprecedentedly low. America has thus, through their agency, driven out of the market competitors for the products of the soil. I am, therefore, unable to see what legislation can possibly accomplish in the direction indicated, which natural forces are not bringing about a great deal better. For instance, yesterday, in coming on here, I happened to meet with a gentleman on the cars who had at one time in his life taken a very active part as (what was called then) a railroad reformer. He had advocated cheap rates and had supposed that, in doing so, he had gone to what was in those days (ten years ago) considered an extreme point. I mentioned to him the fact (which I believe is a fact) that to-day the Boston and Albany Railroad is regularly hauling in its freight service, a ton of weight, taking dead weight and paying weight together, one mile for half a mill. Now, that is beyond the wildest dreams of the wildest railroad reformers of ten years ago. That, of course, is immediately producing its results in enabling the agriculture of the West to drive every other competitor out of the foreign market; and it is producing remotely the relief which the country needs by bringing the people back to the soil. If you ask me whether there is anything which legislation can do to expedite this natural process, I say very distinctly that I do not see that there is anything; that the process of readjustment is going on as fast as it possibly can go. Further, if asked, I should have to say that, as the result of all my experience in ten years of observation and study, I think the difficulty is not that we do not have legislation enough in regard to railroads, but it is found in the character of that legislation. We have already had a great deal of very crude and puzzling legislation, and I should be very much afraid that any legislation which we may now have (which this or any other committee of Congress would recommend and which would be likely to pass) instead of being calculated to remedy existing evils would be merely legislation of the same character. I do not doubt that the committee would recommend good legislation, but I doubt whether sensible recommendations, in the present state of popular knowledge of the subject, are likely to meet with favor in Congress.

The CHAIRMAN. That criticism applies to legislation of all kinds.

Mr. ADAMS. My observation would undoubtedly lead me to say that it does. The CHAIRMAN. Then the conclusion would be that there should be no legislation of any kind in regard to railroads.