Unfair distribution of earnings. The evil effects and the remedy

Preface

All pretense to merit from a literary standpoint is waived in the presentation of this work before the public. I have gained my object if I have succeeded in making understood the following, believed by me to be, genuine facts, viz:

That Unfair Distrihidion of Earnings is the true and only cause of over-production, industrial depression and *' hard times."

That the primary agencies of unfair distribution are two :

1. Unfair taxation, exercised through the instrumentality of a false tax code.

2. Unfair exchange, exercised through the: instrumentality of monopoly.

That a proper remedy consists of the introduction of a fair system of taxation and the abolition of monopolies.

That fair taxation, while constituting of itself a remedial measure, will effectuate the abolition of monopolies.

11 PREFACE.

That what must follow is Independent enterprise, free competition and the rapid advancement of society to a state of unrestricted progress and prosperity.

That all must be interested in the change since no class is exempt from the deleterious influences of present morbid conditions.

W. V. M.

Contents

Preface, , • • • . i

Introductory, ; , . . 5

Over-production, industrial depression and "hard times." CHAPTER 1.

Introduction

The substantial ills with which society is afflicted are these : Unfair distribution and the evils and evil agencies growing out of unfair distribution as a primary cause.

By unfair distribution, I mean such a division of earnings as allows to some more than is theirs by right of their own energy and expenditure of means, the process involving a denial to others of an equivalent amount which they have been instrumental in bringing forth. Here is one way in which an unfair distribution of earnings maybe executed: A manufacturing company may pay less than real worth for the hired labor and raw material used in the manufacture of its specific articles of sale, and charge and get more than real worth for the manufactured articles when sold, producing the consequences that the manufacturing company receives a greater share of wealth than by its industry and the use of its capital it has legitimately earned, while the laborers, the furnishers of the raw products, and the purchasers of the finished products have so much wealth deducted without an equivalent given from their earnings. A railroad company may pay less for the labor of others, and for the machinery of transportation than they are worth and charge more for their own services of transportation than they are worth. This giving to one class or set of persons more than the}^ have earned, which can only be done by disallowing to others as much as they have earned is attended, I am forced to believe, with grave and untoward results, the facts of which I will show, or cherish the belief that I will, with the double view in hand, of convincing people whereat lies the foundation of the ills which oppress them, and of giving light upon the proper course to pursue for relief.

A prospective impression of the causes, methods and consequences proposed to be examined as phenomena embraced in unfair distribution and its relations, will be of help to an understanding of the subject, and can be conveyed as well, as in any other way, by the employment of a few ideal illustrations:

The Great Wall Street and Peoples Railroad, I will say, is projected to extend through a certain section of the Union. The projectors resort to the usual custom of asking for aid. They get it. Possibly the National Government aids them with landed donations and in the procurement of funds. State aid of a similar kind is given them, and they get aid along the projected route in the settled districts from cities, towns, counties, townships and private citizens, in the way of bond issues, land and money donations, and other help.

The amounts provided by all or any of these different forms of aid, positively in the gift of means to meet expenditures, negatively in the gift of reliefs from necessity to undergo expenditure, form a magnificent basis available for construction and equipment purposes and the credit necessary to complete.

When after the receipt of such aid and the lapse of time the road is completed, by all the rules commonly governing in such cases the projectors are the leading owners; and having from that fact the balance of control, they usually make use of the advantage to secure, at a trifling cost to themselves by means of dark integrity, whatever interests the people may have reserved in the property during the time of its development.

What follows? Full proprietors, and wholly undeterred by any menaces that exist in law or elsewhere, they turn to and run the road as it if were an instrument provided sglely for their own rapid and grand self-enrichment. They proceed as if they never took thought that the road was ever designed by any one for any other purpose than their self-enrichment, and they conduct it as if that were the sole need of it. By their system of alliances with other roads, and over-charging, and use of the road in general to foster the private interests of themselves instead of the public interests of the founders, they add to their exchequer every year hundreds of thousands of dollars above what is a fair remuneration for their services and a fair profit upon the capital employed, assuming their right to profit upon capital which has been donated to them.

Such practice illustrates how we are repaid for the favors we bestow. Having been induced to relinquish large blocks of our wealth into the hands of a few individuals we are rewarded by its beinof ever afterward used for the swindle and oppression of us.

Another illustration: The manufacturers of three-profits — a name which I use for conveniency, but which is applicable to many manufactured articles of special utility — are capitalists of great wealth and thrift. Years ago the leading men in that business met in secret council to take into consideration the advancement of their interests by the adoption of methods looking to improvement in the manufacture, sale, business conduct and legislative enactments relative to three-profits. At this meeting they agreed upon a general plan of concerted action and management which had for its object the control of the business of three-profits in such manner as to enable them to regulate the supply, destroy competition, set their own prices upon the labor and raw material which they engaged and to charge what they might see fit for the finished article. By union of action they succeeded in their purposes and they now are, as they long have been, masters of the situation. They are sole dealers, sole dictators of terms, and will not brook opposition. The public is compelled to patronize them or go without. Three-profit mechanics must work for them upon such terms as are allowed or quit the trade, and producers of the raw materials must sell to the combination for such prices as they can get or not sell at all. To keep out native competition the combined three-profit manufactures glut the markets in the vicinity where a new factory has started up at such a ternporary low price as to ruin the new enterprise and force it out of existence. To keep out foreign competition they secure the enactment of tariff' laws forcing foreign manufactures to pay a large price for the privilege if they ship any three-profit goods into this country. As a result their wealth is increasing, as it long has increased, out of all proportion to the increase of a just and fair profit.

This is a picture of the consolidating and monopolizing methods of the present day, permitted and fostered by a faulty system of taxation.

Again. In the province of Wealthy-few the people are divided into two classes, the Opulent and the Common. A double method of taxation there prevails, the direct and the indirect. By the direct method the money which is demanded for public needs is paid directly from the hands of the contributors into the hands of the collectors. The direct tax levies are putatively apportioned according to worths of properties. In practice it is anything else than according to worths of properties, since by schemes of undervaluation, exemption and evasion, the rich Opulents manage to throw the burden of taxation upon the common class of people. The indirect tax is paid by the people of this province when they buy most or all of manufactured goods, they paying each time they make a purchase a certain excess above what they would have to pay were there no indirect tax. The goods upon which this tax is collected are of both foreign and domestic manufactures. The tax upon the foreign goods is collected for the benefit of the government; that upon the domestic goods is collected for the benefit of the domestic manufacturers, the Opulents. Those who bring in the foreign goods advance the tax to the government when the goods are brought in. They are then so much out of pocket for the benefit of the people. They get reimbursement by charging enough when they sell their goods to make up for the government tax they have advanced.

Domestic manufacturers, Opulents, get their tax by adding to the regular profit price of their goods enough to make their price equal the price importers sell at to make up for the government tax which they pay. This double source of revenue — first, the regular profit upon their goods; secondly, the tax collected from the purchasers of their goods, has given, and goes on giving, astonishing riches to the manufacturing Opulents of Wealthy-few. Add, that by schemes of evasion these fellows escape the payment of a large share of what would be under the law their direct tax, and who, seeing as men see now, would not be an orthodox Opulent of Wealthy-few.^

The common people in that land do not get to taste much of the enjoyments flowing from wealth, for the Opulents, having great influence at the law making centers, get import duties so gauged as to give them well nigh the exclusive home trade in their specific lines of business, whence they are enabled to so over-charge and under-pay as to gather up about all the wealth that is produced above what is needed for the plain subsistence of the common people. While the Opulents of Wealthy -few can keep their people in the present way of thinking, as regards both the direct and indirect methods of taxation there pursued, they will, as they look at it, be most admirably circumstanced. They will be supreme against the molestations of large manufacturers abroad and against the inroads of infant manufacturers at home. For while import duties protect them from being overwhelmed by more powerful competitors of foreign nations, no similar law of taxation prevents them from overwhelming infant concerns which attempt to compete with them within the bounds of their own nation.

This shows what is practically the form and workings of part of our system of taxation.

These illustrations will serve to exemplify in the rough, the mistakenness of some of our policies and practices and what is the character of some of the unjustifiable methods employed by designing men for self preferment, though not all. Other methods will be noticed as the development of the subject brings them into relief.

I may here state that unfair distribution is not something peculiar to the age. In all prior times of which history treats, it has been the case that the citizens of one country as against those of another country, or a portion of the citizens as against the rest in their own country, have contrived to get at and enrich themselves from accumulations they have not themselves earned. We are advised that savages have invaded fellow tribes, clubbed and plundered them, then feasted upon the booty gained. That chiefs have arbitrarily appropriated the lands of their own subjects or those of conquered nations, then robbed the tillers of it through exhorbitant rent charges. That members of one race have captured those of another, reduced them to servitude, then subsisted upon the surplus fruits of their labors. These are simply the records of methods popular in their time and place for the execution of unfair distribution. These methods we are now prone to look upon as methods of v'o'ence and robbery, the authors of them as tyrants and plunderers, the objects of them as victims who were forced to succumb and deliver. Such rude methods for the subjection and plunder of a people, the more highly civilized inhabitants of the globe will not now tolerate. Those who do now profit at the expense of their fellowmen have been constrained into the selection and use of methods more refined and less shocking. But though the execution of unfair distribution is conducted in a manner less shocking, it is none the less, on that account, the robbery of men by men. Nor does the refinement of the business make it the less objectionable since the effects are just as harsh and hard to bear.

But because the business of plundering has not changed as man has marched forward and upward, except in the manner of pursuing it, we are not to infer that the business will never cease, and so have all hopes in us for the betterment of the condition of man made naught. Considerations are sufficient, as shall be observed upon hereafter, to assure us that man will eventually rise to the capacity to see all that relates to the evil of unfair distribution, among other things the way to an entire banishment of the evil.

In miy opinion the basic or foundation methods by which unfair distribution is popularly executed at the present day in our country are —

First — Unfair Taxation.

Second — Unfair Exchange.

I call these the foundation methods, because it

has been by getting on the advantageous side of

them that intrio^uers have laid the foundation for-

■/ the inflow of the wherewithal they subsequently '

employ to invest in our homestead possessions, or

incumbrances against them, for the purpose of

reaping additional profit from us in rent and interest. If we apply to and get rectitude in these fundamental methods of dispensing wealth, rectitude in the others will follow as matters of inevitable consequence or march of event.

We have unfair taxation. Taxes are, or should be, solicited and contributed to meet those expenditures for the need and benefit of us which must from the nature and necessities of society as a body, be publicly incurred. For one party to evade payment of his proper share of such requis. ite expenditure is but to cause another or others to pay the unsatisfied portion for him.

Such evasion and shouldering upon others what one himself should bear is a proceeding in nowise different in its nature and production of effects from the art of taking advantage, one of another, in a deal or trade.

Unfair exchange is executed through the instrumentality of monopolies, those having the monopoly of any business or occupation having it in their power to dictate terms of their own making to both buyers and sellers dealing with them. Unfair taxation, such as we have, is a promoter of monopoly. It does not conduce to the perpetuation of industries in disconnected, competitive and independently working wholes, but encourages the aggregation of them into consolidated concerns under single and non-competitive managements. In this form they are creative of unbounded mischief.

Fair taxation would be of double good. First, those who paid taxes would have justice done them. Secondly, it would discourage combinations and give to independent and rising industries strength to defend and continue themselves, whence would follow good. When we had fair taxation we would have the provision which secures us industrial liberty; when we had industrial liberty, man would, impelled by his nature, work out and maintain the solid welfare of himself.

So much upon methods. Let us go ahead and outline some of the results of, and the manner of the connection of these results with, unfair distribution.

OVER-PRODUCTION, INDUSTRIAL DEPRESSION AND "hard TIMES.'^

Readers are familiar with the fact that we are treated every few years with an interval of stagnation in business and industry which is characterized by intense want among a large portion of the population, while the country abounds in such a plenty that the possessors do not know what to do with their stores. Overstocked mills and factories everywhere are closed for want of orders, when thousands upon thousands of people all over the country are in distressive need of the ver}' things which are therein produced. Nobody see^ns to want to buy although everybody is intensely anxious to sell. The hungry laborer cannot trade his labor for produce, for his labor would worse the condition of things by the production of more. Overproduction of the needs of life is just what the trouble is. Yet for the reason that we have over-production we have the living in a state of pinched necessity and distress, the larger portion of our population. This must appear to many strange. Something must appear to them to get out of joint. The question naturally occurs: how is it that the yield of the earth and of toil gets piled up unsold, unused and unsought for while so many are in such dire distress from need of it and owners are so wiUing to sell, but cannot? What is the nature of the monster that lodo^es itself in our midst by spells, and causes everything to come to a stand still, and this in the face of every willingness of the people to act and every readiness of the wheels and implements of industry to be set in motion.

The answer is to be found in a study of the effects of unfair distribution or that misdivision of earnings which gives continuously to one class shares that another should have. The following illustration will demonstrate the development of these effects:

The Island of Notseen, we will imagine, contains a population of one thousand able bodied men, who, with their families, form an isolated and self-sustaining community. All of these men sustain the relationship of employing proprietors and employed, in the ratio of 50 of the former to 950 of the latter. All the wants of the community are supplied by the management and industry of these one thousand men. But 50 of these men employ the other 950, and pay them wages, so that the subsistence produced by the 1 000 men is first owned by the employing proprietors, who dispense it into the community in manner as merchants sells goods.

We will imagine that the community produces commodities averaging in amount $2,000 worth per day ; that the workmen get $1.50 per day, a rate of wages enabling the lot of 950 to purchase an average of $1,425 worth of commodities daily. Then $575.00 worth becomes the daily average share of the employers. Let us suppose that this $575 worth just suffices to supply the employers with all their personal wants upon the island, and to provide them with the capital they must join with the efforts of themselves and workman to produce the $2,000 daily earnings. We have before us, then, a case of happy adjustment of reward with earnings all around, in which the process of production and consumption are equalized — in which the commodities produced in the community will go as fast as they are prepared, and the people will be kept continuously busy in forming a new supply.

Assuming the adjustment here marked out to be the one suited to exactly maintain equillibrium between supply and demand in this case, let us see what will take place under a change of adjustment. Suppose the employing proprietors of Notseen to go at and reduce the wages of their workman to $1.25 per day, without reducing the scope of their operations, or the prices of their commodities : the workman then will be able to purchase daily, with their wages, only $1187.50 worth of goods or five-sixths as much as they, did before, causing there to be left of their earnings, one-sixth, or a sum equal to $237.50 worth daily, in the hands of the proprietors as a gain or bonus to the latter.

Now, let us keep in sight of this gain or bonus and learn what use is made of it or how it disposes of itself.

The first fact we are made cognizant of is this: the gain shuns ready use or consumption. It is not turned to the speedy benefit of anybody like products that are not gains. At first blush this affirmation may not appear correct, but we shall soon prove the truth of it. We readily understand that the workmen cannot make speedy use of this gain because they cannot purchase it with current washes. Their wao^e income is exhausted upon the expenditure, by each of them of $1.25 per day, or by all of them of $1187.50 per day. They would have to expend $1425 per day to secure the $237.50 worth gained away from them by the cut wages, but this they cannot do out of a wage income of $1.25 per day. So we see that inability to purchase prevents the workmen from making ready use of it. But why does this gain fail to admit of ready use by the proprietors. Because provision existed prior to the cut in wages for full supply of all their regularly accruing wants, both personal and capital, in consequence of which no avenue of need afterward existed into which could be immediately projected this newly gotten gain. Increased extravagance of living on the part of the proprietors would serve for the making way with some of the gain, but the proprietors being in numbers few, and the gain in the aggregate large, the greatest extravagance they are inclined to indulge in suffices for the consumption and extinguishment of but a small portion of it. They can use none of it profitably as capital, it must not be forgotten, since having abridged th e purchasing power of the great body of their customers by the cut in wages, they have need to decrease their capital employed in production rather than to increase it.

The gain is not readily consumed, because the getters of it have no need of it, and the losers of it cannot purchase it.

To the question of v^hat use is made of this gain, we must answer in view of the facts just given, that no material use is made of it at the start.

To the question of how does it dispose of itself, the answer is, that following the customary order of disposing itself this gain for awhile simply accumulates — because it is unusable on the one hand and unpurchasable on the other hand by regular methods, it sets itself to piling up in the bins and shelves of store houses.

So far we have traced this gain and are rewarded by finding that it sets itself to accumulating. Presently we will be made acquainted with a familiar completed development. The accumulation goes on until the proprietors of Notseen have their store houses stocked to suffocacy with everything the people have been in the habit of producing and consuming. That condition of things is popularly know as "over-production," and the reader is advised that the over-production here traced up to, is over-production from the only cause which ever leads to general over-production of the needs of life, namely, unfair distribution, or the practice of profiting, class at the expense of class.

Unfair distribution, the only cause of general over-production, leads inevitably to general over-production as one of its most eminent effects. Deny a class of a portion of it earnings, and all that portion except what may be used up by the getters of it in extra extravagances, piles up. Those from whom it is gotten are forced to reduce themselves to greater meagerness of Hving. These are some of the first effects, though not all nor the most, as we are upon the verge of discovering. *

The over-stock of commodities in Notseen, consequent upon the greedy action of the proprietors, having assumed proportions beyond which the proprietors care not to let them further expand, other events rapidly follow. The first in order of these is the adoption of measures by the proprietors for the check and decrease of over-production. The execution of these measures consist in the closing down of industries, the discharge of the workmen and the refusal to them of further chance to gain a living by work at their customary vocations.

After this there appear and reign the events known as "industrial depression" and "hard times." These follow in rapid succession after the full development of over-production.

"Over-production" needs no further description for us to have an idea of what it is. "Industrial depression" we know to be the torpor of trade and industry occasioned by the stoppage of operations. Of what sort is the experience of "hard times."

Keeping at' our illustrations, it is the experience of discouraging trials and hard luck, joined with impoverishment and distress, attendant upon the men ift their endeavors, during the season of industrial depression, to maintain soul and body together. For though the men may be forced to desist from earning further subsistence, the physical systems of themselves and families do not cease to demand support.

Common experience teaches us what is the succession of events that will occur through the period of hard times. After their discharge the men subsist so long as they can upon the means they have been enabled to lay by. Their means gone, they seek out their employers and beg to be allowed to resume work for the further support of themselves and families. Comformably to rule, their petition fails of success. The employes are not only denied labor, but are usually accused of shortsightedness and blamed for their condition in language not out of such fashion as this: "No, you should see that there is a plenty of the means of support. You must suffer the consequences of your folly. Had you been less extravagant and shiftless in the past you would not now be without means to purchase a living." To this the petitioners might very convincingly retort, " How is it possible to purchase the whole of a thing with less money than its real worth? Had we saved with unexampled care would that have left in our hands means to purchase the sixth you gained away from us when you reduced our wages twenty-five cents on the day." A reply characteristic of the kind usually given to terminate said conferences is: "It is not our business to engage in arguments with you; we understand how to conduct our affairs, and desire neither your importunity nor your advice."

After this petition and colloquy, which is caused to take place out of sheer desperation in the men rather than from any hope they harbor of succeeding in a sort of attempt that they can not but know will fail, the next event transpires. This event is the reluctant impairment by the workmen of their homesteads. They are forced to part with their home properties — accumulated previous to the era of exaction — in such quantities and upon such terms as they can, or to encumber them, in order to get the wherewithal to live upon. To sell or to mortgage pre-earned possessions was in reality the only thing left the workman to do, the only recourse left open to them for the getting of a living in fact, after their employers had closed down and promulgated the dicta that the stock in hand must be reduced before more should be produced; and if it were done after every imaginable struggle to avoid it, it had to be done before there could be a return to industrialism and "good times."

Those who have no properties to 3neld up on these occasions, or have yielded up all and are still in want before the close of the period, must beg or steal, and in consequence get themselves lodged in pauper shops or prison pens.

Such experiences as these contain the gist of what is meant, when we speak of "hard times.'' They are the peculiarly disagreeable experiences joined with the vanishment of accumulated gains.

They are the more remote and harsh effects of unfair distribution. The denial to the employes of Notseen of their full wages allowed them to Hve less bounteousl}' upon $1.25 per day. Now, for the dissipation of the resulting over-production, industries are closed down and they are denied the chance of getting any sort of a living, except as they surrender pre-earned possessions in exchange for it, beg or steal it, or have it furnished them as paupers or criminals.

It is, indeed, experiencing hard times when willing hands are not peimitted to satisfy the craving stomach by industry, when one is forced to part with the accumulations of his former toil out of dire necessity, and when a victim is sentenced to pay the penalty of pauperism or crime because he has not disobeyed the injunction of nature to preserve life, and given himself up to starve.

This I will let suffice for the dispensing of an idea of the methods and results of unfair distribution, with the hope that it will find its use in making easier to understand what is to follow.

In what has gone before the ill experiences are given as borne by employes for the sake of simplicity and not because it is held that hired laborers alone suffer from unfair distribution. The evil effects of unfair distribution are visited upon everybody, the ordinary farmers, merchants, manufacturers and upon those who are the recipients of the earnings extorted from the common people. An unfair distribution of earnings, no difference how made, whether through unfair taxation or unfair price, or otherwise, affects society in the same disastrous manner. At the expense of some repetition,