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good subsistence will be perfectly sure to men with ordinary intelligence, and when it will not pay to bother about acquiring wealth.

The CHAIRMAN, Nobody will want to be rich :

Mr. ATKINSON. Nobody will want to be rich. And that leads me to the most intereresting branch of the subject.

The committee here took a recess for one hour.

After recess.

The CHAIRMAN (to Mr. Atkinson). How much capital is employed in proportion to the value of its product in the course of a year!

Mr. Atkinson. The fact has been referred to in the books, first by Dr. Chalmers, not many years ago, then followed up by reference in Mill and others, to the effect that the capital or substantial result of labor saved in a given community never did and never can exceed two or three years' product in the richest community. The demonstration of that theory, I think, had not been made absolutely possible until the publication of Carroll D. Wright's census in Massachusetts for 1875, taken in connection with the commissioners' reports on what D. A. Wells calls the pagan system of taxation in Massachusetts—the taxation of all kinds of personal property under duress. By col. lating the facts in these several publications, it appears that the actual property of Massachusetts reached by assessment was, in 1875, $2,200,000,000 in value. That consisted of $1,311,000,000 of real estate; $530,000,000 of personal property; $238,000,000 of savings-bank deposits; $84,000,000 taxed by the State to manufacturing corporations; $31,000,000 of bank capital taxed by the State. Now, in this list of property there are, of course, two kinds—the land, which obtains its value from the use that is made of it (which the Almighty gave free), and the symbol of or title to property as it exists in the form of bond and mortgage. Between these two comes the real substance, or capital, representing the saved labor of two and a half centuries of existence of the colony and State. The ordinary rule of the assessor in appraising values (which are now fully as high as the real values throughout the State) is to consider the land twothirds and the buildings and works on the land one-third. It would be safe to take the rule of halving it and counting one-half of the real estate to be actual capital, or substance put into form for use by human labor. I then take the personal property and divide that in a similar manner, not by halving, but according to rules not difficult to apply. The $238,000,000 in savings banks consist of real property to the extent named ($8,000,000). The rest of it ($230,000,000) consists of evidences of debt in some form-mortgages or personal securities. The corporation tax is mainly on real capital; the bank tax, of course, is so only to a small degree. Ruling on the larger side rather than on the minimum, the capital of Massachusetts does not exceed $1,000,000,000 for 1,652,000 people. That is $600 a head in round figures. In addition to that there would be mechanics' tools and stocks of goods on the way to the consumer, on the shelves, and in the shops, and a few other comparatively insignificant items which would not add very much to the valuation or alter the conditions very much. These valuations were in currency at a time when there was a premium of from 10 to 12 per cent. on gold.

On the other hand, the annual product of Massachusetts in manufactures was 3592,000,000; in fisheries, $7,700,000; in agriculture and mining, $43,500,000; aggregating $643,000,000 in currency. Of course there is in this computation a large du-' plication of cloth and clothing, of leather and leather goods, and the like. There is also a very large omission which represents work done in the year, and productive work, to wit, the household work, on which no price can be put. But, after consultation with Mr. Wright, and after looking it over with the utmost care, we reached the conclusion that the actual original value of the natural product of Massachusetts was $300 a head, so that the sum of saved labor in the richest State in the nation, in ratio to the population, is two years' work. If you want to be perfectly safe, cut the production in half, call it $330,000,000, then you have three years' gain; and that is all that you have.

That illustrates the proposition that the law of progress is the destruction of capital through invention and discovery, that nothing old is useful, and nothing useful is very old ; that there is nothing so fluid as fixed capital; nothing that requires such constant change in order to keep up with the discoveries and inventions of the day. The most striking example of that is the analysis made by Mr. William A. Burke, of Lowell, in one of the cotton mills of Lowell, as between the dates of 1838 and 1876, by wbich analysis it appeared that a cotton mill in 1838 (being a piece of very fixed capital to the eye and the imagination) required 231 persons, working thirteen hours a day, to yield a given product of commodity; and that, in 1876, what passed from the samne mill required the work of 90 persons working ten hours a day to produce the same quantity of cloth. But of the original mill there is nothing left but the foundation. It has been changed entirely, I think, more than once. Yet it is the same capital to the mind, and it is the same corporation. It has always been successful, and it has always done its work well. Its product has been mainly exported.

Now the idea of most of the advocates of what is called labor reform is that the prosperity of a community consists, to a vast degree, in this acenmulation of things constituting capital, whereas the welfare of the community consists far less in that accumulation of things than in the distribution of the product of that capital. It is the quick distribution of the production of capital and labor that constitutes the welfare and prosperity; and capital has a value either to its owner or to the community only so far as it promotes ample production and quick distribution. Now, if the work of 200 years has resulted in the saving of two or three years of labor, there cannot have been any great duress or hardship on those who did the work of that accumulation. It must have consisted in the gradual accretion of a very small part of each year's production.

In order to trace that out and see what is the distribution to-day between labor and capital, I take the same example of the cotton industry in the United States as a great concrete example. The consumption of cotton in the United States for the year ending September first was about 1,550,000 bales. That was consumed by about ten and a half millions of spindles, these ten and a half million spindles representing an amount of concentrated capital in great mills and works which affect the imagination, which appear to be masses of wealth that the poor can take little interest or share in, and never expect to enjoy very much of. Now let us see what the work done is. The capital in the ten and a half millions of cotton spindles, at a fair valuation, to-day is just about equal to the annual product. That is, supposing the ten and a half millions of spindles, at $12.50 a spindle, to represent $130,000,000 capital, the actual product, at the present market value of goods, is also just about $130,000,000. The proportion of capital in cotton mills is very large in ratio to the value of production. These old mills are not worth as much as my estimate; new mills would cost more.

The CHAIRMAY. That does not differ much from the iron works.

Mr. Atkinson. No. The rule is about the same in regard to all these large undertakings. . Now $130,000,000 capital is applied to the doing of a certain work, and to the making of a certain product. Who gets that product? How is that product divided as between the laborer and the capitalist? The first element in the production consists of 1,550,000 bales of cotton. This, at tive bales to the hand, represents the labor of about 310,000 laborers—if evenly divided among them, according to their relative skill and ability to work-and, at ten cents a pound (last year's price), aggregates $75,000,000. The labor of the mill comes next, and (on the average in this country) costing six cents a pound, it amounts to $35,000,000, divided between some 120,000 and 140,000 laborers in very even division. The next items of cost are the oil, starch, fnel, supply-materials, the materials for repairs, the insurance, and the taxes. So far as concerns the materials (consisting of things that are raised all over the country), they do not represent sources of great fortune, but represent a division among another large number of laborers—fifteen and a half million dollars divided between forty or sixty thousand laborers. You have then got to a cost of abont $125,000,000, divided among tive or six hundred persons. Now you have got left, under an ordinary, normal condition of affairs (not under the condition of these late years), a possible profit of 10 per cent. At a profit of 10 per cent. that business would increase with great rapidity. That would represent a setting aside out of the annual product an estimated profit of $12,000,000 to $13,000,000, against $125,000,000 already distributed among laborers, in very even proportions. But, when you have got your 10 per cent. into the hands of your capitalist, he has to pay out, for depreciation and extra charges (in a normal condition of affairs), 4 per cent. at least, leaving in the hands of the capitalists who own these factories, 6 per cent., or about $2,500,000. Yet that sum does not remain for luxurious consumption or for wasteful expenditure, but is, through the pockets of its owners, distributed largely in very even proportious among their domestic servants, and among the people who furnish the snbsistence of their families. And when you come to the last analysis you cannot find a remainder exceeding 1 per cent. that goes to any sort of luxurious consumption, or to the accumulation of wealth that is not in its nature productive. And it is also the sum out of which an increase of capital in cotton spinning must come. In a normal condition of affairs, unless at least 3 per cent. of the annual product of cotton mills can be set aside for the construction of new factories, a scarcity of cotton goods would soon ensue.

After an interval Mr. Atkinson resumed as follows:

I had brought the distribution or wholesale valnes of the product of capital invested in cotton spindles down to a point in which I had attempted to prove that labor, in one form or other, by one way or other, receives ninety-nine per cent of every year's product now, in proportions not varying very much one from another, and that the increment which goes to luxurious consumption, or to the creation of wealth not of a productive character, does not exceed, and cannot in the nature of things exceed, one per cent. The same rule applies to the distribution of this wholesale product at retail

. The value at wholesale price, you will remember, was abont $135,000,000 on an assumed investment (not now worth its cost) of $130,000,000 of capital invested. A distribution

at retail that would yield to the distributor ten per cent. would be eagerly followed and that kind of business would vastly and rapidly increase.

Suppose we charge the wholesale value with ten per cent. for distribution by the retail shops, that would make thirteen and a half million dollars. Who gets that? Stewart and Claflin do their business at a net profit of less than one per cent. on the aggregate, so far as staple cotton goods are concerned. The wholesale distribution of the wholesale product is compassed at a cost hardly exceeding a broker's commission; and the cost of final retail distribution does not go to capitalists or to wealthy men, but is diffused in the small country shops in small sums through the employés of the shops. And again it can be demonstrated that of this retail distribution nine-tenths goes to those who depend upon each year's work for each year's subsistence, substantially. So that, in one of the great experiments of concentrated capital it is impossible to trace more than one part in a hundred that is not to-day distributed among people whose subsistence depends mainly upon each year's work. And the rule which obtains in respect to this branch of industry obtains doubly in respect to the average manufactures (taking Massachusetts as the example). Why? Because in manufacturing (specifically so named) in Massachusetts the capital is $282,000,000, and the value of the product is $592,000,000. Take it in a large way and the value of the product is twice the value of the capital. Therefore, if capital can secure five per cent. of the product for its primary share, distributing 95 per cent. among laborers to induce them to do the work, it gets ten per cent. on its capital; and at ten per cent. on capital the business will increase very rapidly and give employment to a large additional number of laborers. So that it seems to me that this idea of communism artificially promoted, or the redistribution of product promoted by acts of legislation, is most absurd, for the reason that it would lead to contentions not between the laborer and the capitalist but between different classes of labor as to the respective share which each should get out of a given occupation.

Take that list of the occupations of the people of Massachusetts (1,650,000 in number), most of whom are at work about something, and you will find that the variation of distribution of this enormous product (of which, I have said, ninety-nine parts now go to people who work for their living and one part only to the wealthy for the accumulation of wealth) is strictly according to the intelligence, the industry, integrity, and ability of those who do the work. You find the highest rate of distribution in some higher branches of the mechanical arts. You find a less and less rate as you get down towards labor that is merely automatic, and you finally land at the lowest rate, of the digger and the delver, who is limited to that work by the want of capacity to do anything else. Hence I have thought that it was of the most importance to draw out the fact of this extremely insignificant proportion of capital to labor; and, therefore, it is of the utmost importance justly and rightfully to give to capital the opportunity to accumulate, in order that it inay increase the abundance of things to be distributed among the laborers with whom it is associated and whom it assists in doing the work which constitutes the welfare of both.

As I said, the point to be observed is that, as time goes on, a less and less proportion of the population is required for the lower grades of drudgery that afford no mental stimulus, without which even leisure becomes of no value; I say as a less and less proportion is required, because machinery is set to do that drudgery, there is a gradual steady lifting toward a common diffusion of products on a plane that gives a fair subsistence, and a constantly better and better subsistence as the centuries roll on, to each and all, and by this lifting of the middle masses (the middle region, so to speak, of the social order), making room for a class below that would starve and die if they were not thus lifted up from the ordinary common labor of life.

I was forced into this investigation by a little contention that I once had with Wendell Phillips, who alleged that the property of the United States, by the last census, was $30,000,000,000; and that the reason why it was not $500,000,000,000 of capital was that the capitalist, by charging interest at the rate of six per cent. or more (while production increased at the rate of only three per cent.), had prevented its accumulation; and that, if law had interposed and had prevented the rapacious capitalist from absorbing (through a high rate of interest) an undue share of the products of labor, the accumulations of substance would have been so great that everybody would have had more, and that no one would be obliged to do much hard work.

The CHAIRMAN. Have you stated what your idea is as to the proportion of capital to actual production in the course of the year ?

Mr. ATKINSON. I have stated that, in the whole manufacturing and mechanic occupations in Massachusetts, the capital is $282,000,000, and the product $592,000,000.

The CHAIRMAN. Then, if capital got six per cent. and if there was only an increase of three per cent. of the accumulation of capital, that would practically give all the accumulation to the capitalist ?

Mr. ATKINSON. Yes. These figures which I have given on the cotton mill are proximate. I have said that all the accretion of wealth that is luxuriously expended consists of one per cent. Capitalists have not received anything like that in the last few years; but that may be the normal condition. You find that the same ratio holds in regard to persons that holds in regard to the distribution of the product. You cannot find in the list of the population of Massachusetts one per cent. of the population that can, in any sense, be set down as wealthy persons. You find a larger and larger proportion, as the years go by, that have saved something, by which they can give their children a better start in life than they had themselves. But of those who can be said to have accumulated capital, on the income of which they can thereafter live without work, or which they can leave in trust so that their children may be spared the healthy stimulus of prospective want, there is not exceeding one per cent. in any State where the articulations of society are free, and where there are no artificial modes of accretion compassed by act of law.

We have assumed an accretion of wealth from the cotton industry in a normal condition of one per cent. on an outside retail value of $150,000,000 per annum. Suppose we double it and call it $3,000,000. Now suppose that the $3,000,000 had been set aside as this fund of wealth, and suppose that it was divided and not held out as the boon for the exertion of the brain in establishing all these great enterprises, but was divided annually among those 500,000 or 600,000 persons who received the other ninety-five to ninety-eight parts, it would amount to just five or six dollars a year for each of them. That is a fair example; because, in that branch of industry, the capi. tal required is equal to the annual product. These figures are proximate, but they fairly represent true facts; the truth being that the true product of labor is more widely distributed than I have named, and that the sum of luxurious expenditures is less than the figures which I have given. On the other hand, the moment that the net profits of the capitalist become more than six per cent., business will increase, wages will rise, the price of cotton will advance, and the additional sum to be distrib. uted among the working men and women will be far greater in proportion than the sum contributed by capital. Suppose an additional two per cent. profit on capital in cotton fabrics to warrant an increase of only two per cent in wages or earnings; then for every million of dollars absorbed by capital, labor will secure ten to twenty millions. You cannot get away from that ratio for any long period. The moment you get excessive profits in any occupation you promote a rush of capital into that business which brings the profits down to the average.

There is a rule stated by Bastiat which will fully cover this point. It is, that in proportion to the increase of capital the absolute share of the profit of capital is increased, while the relative share is decreased; whereas the share falling to the laborer is increased both absolutely and relatively. Now how is that one per cent. created? By the busy brain and hard mental work of those who increase the capital and thereby increase the aggregate of things to be divided among the laborers. And what they, the capitalists, do secure to themselves is not secured out of the labor which they compel men to perform, but out of a small proportion of the labor which they save men from doing, and which would otherwise be necessary to be done.

I think that the case of Vanderbilt and the New York Central Railroad is the best example of that principle that can be had, because he, by name, is the exponent of the fortune which, in the common minds of the community, is considered the most obnoxious. Now, in what manner and by what method has that fortune been accumulated? By the applying of his mind, his brain, and his skill to reducing the cost of transportation, until, hy means of the railway service of the New York Central and its connections, this has happened: A barrel of flour and a barrel of pork constitute the crude material of the subsistence of an adult mechanic in Massachusetts for one year-constitute that part of his subsistence which can be brought in bulk from distant points. At an average rate of freight of five dollars a ton the subsistence of an adult mechanic in Massachusetts (consisting of a quarter of a ton) is moved from Chicago to Boston, a thousand miles, at the price of a dollar and twenty-five cents, sometimes less. One dollar and twenty-five cents is said to pay a profit to the railroad for doing that work. That is, one day's labor of an ordinary laborer or mechanie, on the specie basis, when employment is reasonably certain. It is half a day's labor of a good carpenter in ordinary times when building is tolerably brisk. Therefore, the function of Vanderbilt has been to eliminate distance and to abate friction; to bring the western farm near to the eastern mechanic, and to save that eastern mechanic froni the arduous labor which he would otherwise of necessity be obliged to exert in order to procure his subsistence in any other way. Therefore, I say that the fortune of Vanderbilt has been accumulated out of the saving that has been compassed by the capitalist to the laborer, and not out of any labor which the capitalist has compelled that laborer to do. And what holds good there holds good throughout the whole of society.

The CHAIRMAN. Of which saving the laborer got the greater part.

Mr. Atkinson. Of which saving the laborer got ninety-nine parts where the capitalist got one. And there are scarcely any fortunes (except a few made by gambling in Wall street and in bonanza stock, that are infinitesimal in proportion to the great aggregate of fortunes in the community) that are not compassed by the same means. So that it may be said by the man who does his work honestly and rightly in produc

tive enterprises, and who grows rich out of it and obtains a great fortune, that the dollars which are placed to his credit on his business ledger are the sure tokens of the service which he himself has rendered to his fellow-men, and not of the service which he has compelled them to render to him.

The CHAIRMAX. That is admitted by intelligent men on the other side. They admit that Mr. Vanderbilt cheapened the cost of commodities to the community; that Mr. Stewart built up his great business on the same principle, and contented himself with very moderate profits. But they say that if Mr. Vanderbilt or Mr. Stewart had paid a little higher wages to the men whom they employed they would not have been so rich themselves, and their employés would have been better off, And the grievance is that so much of the savings did remain to Mr. Stewart and Mr. Vanderbilt, and so little of it was apportioned among their immediate and direct employés. In other words, it is said that they did not divide fairly with those who directly contributed to their wealth.

Mr. ATKINSOx. Which statement I counter by the statement here made, that they did divide ninety-nine parts of the hundred in the transactions which they entered upon (whether of production or distribution), and that the one part which they retained constituted the fund out of which they have built works of art and architecture, and other things which constitute the wealth of the community, as much as of individuals.

The CHAIRMAN. The answer to that is that the community would prefer to have comfortable homes and houses rather than galleries of art and fine architectural structures, and that if Mr. Stewart and Mr. Vanderbilt had given more to those whom they employed directly, there would have been less money for the purposes described, but still Mr. Vanderbilt and Mr. Stewart would have been abundantly rewarded by having ten or twenty millions of dollars, instead of one hundred millions, at their death; in other words, i hat the one per cent. might have been brought down to one-tenth of one per cent. and still that they might have gone on, and that the great mass of the people employed by them would have been better off.

Mr. ATKINSON. To that I reply that the tendency of all modern commerce, all invention of improvements, has been to reduce the great profits of adventure from the large per cent. of olden times down to the brokerage of to-day; and as to the commerce of to-day, that there is a constantly leveling tendency, through the doing of a large business, to the decrease even of that percentage. Is not that true!

The CHAIRMAN. I think it is; and, as a matter of fact, the opportunities now to make those great fortunes in the way that Vanderbilt and Stewart made theirs, are not so great as when they undertook to make theirs. Is not the laborer, as a rule, getting to-day the whole proceeds of industry in the l'nited States ?

Mr. ATKINSON. As a rule there is no question about it at all. The laborer is getting the whole proceeds, and the capitalist nothing or next to nothing. Some few capital. ists are gaining, but more are being depleted.

The CHAIRMAX. On the subject of those great fortunes that have been complained of so much before us, I would like to ask you a question. Suppose that all the fortunes which may be termed great (greater than a million of dollars) in this couutry were distributed over the mass of the people, can you form any idea how much each person would get ?

Mr. ATKINSOX. Not much. People might realize that they got a little more spending-vuoney for a single day, and that would be the end of it.

The CHAIRMAN. Do you think that it would amount to ten dollars apiece ?

Mr. ATKINSON. No; I do not think it would, if evenly divided. That would be nearly five hundred million of dollars; and I do not think that you can find five hundred million dollars of great fortunes in the United States.

The CHAIRMAN. We would contribute greatly in New York by the estates of Astor, Vanderbilt, and Stewart.

Mr. ATKINSON. If you leave out those exceptional estates, the rest would make up very slowly. It would be like a subscription list, starting out strongly at the head, but petering down very fast as it comes to the end.

The CHAIRMAN. When those great fortunes are once accumulated by this process, is there anything to prevent the perpetuation of those fortunes-anything that legislation can do to promote their distribution ? For instance, you observe that Mr. Vanderbilt gave the bulk of his fortune to one of his sons. Now in France that fortune would have been distributed among the ten or a dozen children. Can we introduce into this country any different policy with reference to the distribution of fortunes ?

Mr. ATKINSOX. I do not think that we can. I think that, in that particular case which you mention, the concentration of the fortune of one person happened rightly, for the reason that he was the only man who could continue to do the service to the community. Whereas, if the fortune had been distributed more widely it might have resulted in a far less effective working of the system of transportation. The community would have had to pay the price.

The CHAIRMAN. You are generalizing from a single case. I am on the great question whether it is desirable for a community to have great fortunes perpetuated in

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