Chapter XVII: Part 17

The orator would go on to tell you about the happiness and sunlight that flood the slaughter-house in which Dreadnought Hams are made. You would hear about the lovely, whimsical old character, who, one day, when in the act of polishing off a pig, stood in a position of suspended animation with knife poised above the twitching ear of the unfortunate swine, and seizing the hand of the owner as he passed benevolently by, kissed it fervently and left on it a tear of gratitude. Perhaps you would not hear that in the ardour of loyal zeal this lovable old person practically cut the pig to ribbons, thus saving it from a nervous collapse, nor would you be permitted to hear a repetition of the imprecations the old man muttered after the departing back of the owner, for these things should not be heard,--in fact, they do not exist in the world of advertising. Nothing would be said about the red death of the pig, the control of the stock-raiser, the underpaying of the workers, the daughter who visits home when papa is out and the neighbours are not looking, the long years of service and the short shrift of age, the rottenness and hypocrisy of the whole business--no, nothing should be said about such things. But to make up for the omission, you would be told in honied words of the workers who lovingly kiss each ham as it is reverently carried from the plant to receive the patriarchal blessing of the owner before it is offered up as a sacrifice to a grateful but greedy public. The whole affair would suggest to you a sort of Passion Play in which there was neither Judas nor Pilot, but just a great, big happy family of ham producers.

This speech, as I have said, would soon appear in the principal papers of the country. It would be published in installments, each one bearing its message of peace on earth, good-will to men, and the public--always preferring Pollyanna to Blue Beard--would be given an altogether false impression of Dreadnought Hams, and the conditions under which they were produced. But this particular speech would be only a small part of the idealism you would be permitted to absorb. There would also be a patriotic speech about Old Glory, which would somehow become entangled with the necessity for creating a wider demand for a certain brand of socks. There would perhaps be a speech on the sacredness of the home, linked cunningly with the ability of a certain type of talking-machine to keep the family in at nights and thus make the home even more sacred. There would be speeches without end, and idealism without stint, and at last every one would shake hands with every one else and the glorious occasion would come to an end only to be repeated with renewed vigour and replenished optimism on the following Friday.

But the actual work of creating advertisements is seldom done in this rarefied and rose-tinted atmosphere; it is done in the more prosaic atmosphere of the advertising agency. (And let it be said at once that although, even in the case of agencies engaging in “Honest Advertising” campaigns, many such firms indulge in the unscrupulous competitive practice of splitting their regular commission with their clients in order to keep and secure accounts, there are still honest advertising agencies.)

Now there are two important classes of workers in most agencies--the copy-writer and the solicitor--the man who writes the advertisements and the man who gets the business. This latter class contains the wolves of advertising, the restless stalkers through the forests of industry and the fields of trade. They are leather-lunged and full-throated; death alone can save their victims from hearing their stories out. Copywriters, on the other hand, are really not bad at heart; sometimes they even possess a small saving spark of humour, and frequently they attempt to read something other than _Printer’s Ink_. But the full-fledged solicitor is beyond all hope. Coming in close touch with the client who usually is an industrialist, capitalist, stand-patter, and high-tariff enthusiast, the solicitor gradually becomes a small edition of the man he serves, and reflects his ideas in an even more brutal and unenlightened manner. In their minds there is no room for change, unless it be change to a new kind of automobile they are advertising, for new furniture, unless it be the collapsible table of their latest client, for spring cleaning, unless thereby one is introduced to the virtues of Germ-Destroying Soap. Things must remain as they are and the leaders of commerce and industry must be protected at all costs. To them there are no under-paid workers, no social evil, no subsidized press, no restraint of free speech, no insanitary plants, no child-labour, no infant mortality due to an absence of maternity legislation, no good strikers, and no questionable public utility corporations. Everything is as it should be, and any one who attempts to effect a change is a socialist, and that ends it all.

Advertising is very largely controlled by men of this type. Is it any wonder that it is of a reactionary and artificial nature, and that any irresponsible promoter with money to spend and an article to sell, will find a sympathetic and wily minister to execute his plans for him, regardless of their effect on the economic or social life of the nation?

Turning, for the moment, from the people who create advertisements to advertising as an institution, what is there to be said for or against it? What is there to advance in justification of its existence, or in favour of its suppression? Not knowing on which side the devil’s advocate pleads his case, I shall take the liberty of representing both sides, presenting as impartially as possible the cases for the prosecution and defence and allowing the reader to bring in the verdict in accordance with the evidence.

The first charge--that the low state of the press and the magazine world is due solely to advertising--is not, I believe, wholly fair. There is no use denying that advertising is responsible for the limitation of free utterance and the nonexistence of various independent and amusing publications. However, assuming that advertising were utterly banished from the face of the earth, would the murky atmosphere be cleared thereby? Would the press become free and unafraid, and would the ideal magazine at last draw breath in the full light of day? I think not. Years before advertising had attained the importance it now enjoys, public service corporations and other powerful vested interests had found other and equally effective methods of shaping the news and controlling editorial policies. The fact remains however, and it is a sufficiently black one, that advertising is responsible for much of the corruption of our papers and other publications, as well as for the absence of the type of periodicals that make for the culture of a people and the enjoyment of good literature. When a profiteering owner of a large department store can succeed in keeping the fact of his conviction from appearing in the news, while a number of smaller offenders are held up as horrid examples, it is not difficult to decide whether or not it pays to advertise. When any number of large but loosely conducted corporations upon which the people and the nation depend, can prevent from appearing in the press any information concerning their mismanagement, inefficiency, and extravagance, or any editorial advocating government control, one does not have to ponder deeply to determine the efficacy of advertising. When articles or stories dealing with the unholy conditions existing in certain industries, or touching on the risks of motoring, the dangers of eating canned goods, or the impossibility of receiving a dollar’s value for a dollar spent in a modern department store, are rejected by many publications, regardless of their merit, one does not have to turn to the back pages of the magazine in order to discover the names and products of the advertisers paying for the space. Indeed, one of the most regrettable features of advertising is that it makes so many things possible for editors who will be good, and so many things impossible for editors who are too honest and too independent to tolerate dictation.

Another charge against advertising is that it promotes and encourages the production of a vast quantity of costly articles many of which duplicate themselves, and that this over-production of commodities, many of them of highly questionable value, is injurious to the country and economically unsound. This charge seems to be well founded in fact, and illustrated only too convincingly in the list of our daily purchases. Admitting that a certain amount of competition creates a stimulating and healthy reaction, it still seems hardly reasonable that a nation, to appear with a clean face each morning, should require the services of a dozen producers of safety razors, and several hundred producers of soap, and that the producers of razors and soap should spend millions of dollars each year in advertising in order to remind people to wash and shave. Nor does it seem to be a well-balanced system of production when such commodities as automobiles, sewing machines, face powders, toilet accessories, food products, wearing apparel, candy, paint, furniture, rugs, tonics, machinery, and so on _ad infinitum_ can exist in such lavish abundance. With so many things of the same kind to choose from, there is scarcely any reason to wonder that the purchasing public becomes addle-brained and fickle. The over-production of both the essentials and non-essentials of life is indubitably stimulated by advertising, with the result that whenever business depression threatens the country, much unnecessary unemployment and hardship arises because of an over-burdened market and an industrial world crowded with moribund manufacturing plants. “Give me a strong enough motor and I will make that table fly,” an aviator once remarked. It could be said with equal truth, “Give me money enough to spend in advertising and I will make any product sell.” Flying tables, however, are not nearly so objectionable as a market glutted with useless and over-priced wares, and an army of labour dependent for its existence upon an artificially stimulated demand.

The claim that advertising undermines the habits of thrift of a nation requires no defence. Products are made to be sold and it is the principal function of advertising to sell them regardless of their merits or the requirements of the people. Men and women purchase articles to-day that would have no place in any socially and economically safe civilization. As long as this condition continues, money will be drawn out of the savings accounts of the many and deposited in the commercial accounts of the few--a situation which hardly makes for happy and healthy families.

It has been asserted by many that advertising is injurious to literary style. I am far from convinced that this charge is true. In my belief it has been neither an injurious nor helpful influence. If anything, it has forced a number of writers to say a great deal in a few words, which is not in itself an undesirable accomplishment. Nor do I believe that advertising has recruited to its ranks a number of writers or potential writers who might otherwise have given pearls of faith to the world. However, if it has attracted any first-calibre writers, they have only themselves to blame and there is still an opportunity for them to scale the heights of literary eminence.

The worst has been said of advertising, I feel, when we agree that it has contributed to the corruption of the press, that it does help to endanger the economic safety of the nation, and that, to a great extent, it appeals to the public in a false and unhealthy manner. These charges certainly are sufficiently damaging. For the rest, let us admit that advertising is more or less like all other businesses, subject to the same criticisms and guilty of the same mistakes. Having admitted this, let us assume the rôle of the attorney for the defence and see what we can marshal in favour of our client.

First of all, I submit the fact that advertising has kept many artists alive--not that I am thoroughly convinced that artists should be kept alive, any more than poets or any other un-American breed; but for all that I appeal to your humanitarian instincts when I offer this fact in support of advertising, and I trust you will remember it when considering the evidence.

In the second place, advertising is largely responsible for the remarkable strides we have taken in the art of typography. If you will examine much of the literature produced by advertising, you will find there many excellent examples of what can be done with type. To-day no country in the world is producing more artistic and authentic specimens of typography than America, and this, I repeat, is largely due to the influence of advertising.

We can also advance as an argument in favour of advertising that it has contributed materially to a greater use of the tooth-brush and a more diligent application of soap. Advertising has preached cleanliness, preached frantically, selfishly and for its own ends, no doubt, but nevertheless it has preached convincingly. It matters little what means are used to achieve the end of cleanliness as long as the end is achieved. This, advertising has helped to accomplish. The cleanliness of the body and the cleanliness of the home as desirable virtues are constantly being held up before the readers of papers and magazines. As has been said, there are altogether too many different makes of soap and other sanitary articles, but in this case permit us to modify the statement by adding that it is much better to have too many of such articles than too few. This third point in favour of advertising is no small point to consider. The profession cannot be wholly useless, if it has helped to make teeth white, faces clean, bodies healthy, homes fresh and sanitary, and people more concerned with their bodies and the way they treat them.

The fourth point in favour of advertising is that through the medium of paid space in the papers and magazines certain deserving movements have been able to reach a larger public and thus recruit from it new and valuable members. This example illustrates the value of advertising when applied to worthy ends. In all fairness we are forced to conclude, that, after all, there is much in advertising that is not totally depraved.

Now that we are about to rest the case, let us gaze once more through the magic portals of the advertising world and refresh our eyes with its beauty. On second glance we find there is something strangely pathetic and wistfully human about this World That Never Was. It is a world very much after our own creation, peopled and arranged after our own yearnings and desires. It is a world of well regulated bowels, cornless feet, and unblemished complexions, a world of perfectly fitting clothes, completely equipped kitchens, and always upright and smiling husbands. To this world of splendid country homes, humming motors, and agreeable companions, prisoners on our own poor weary world of reality may escape for a while to live a few short moments of unqualified comfort and happiness. Even if they do return from their flight with pockets empty and arms laden with a number of useless purchases, they have had at least some small reward for their folly. They have dwelt and sported with fascinating people in surroundings of unsurpassed beauty. True, it is not such a world as Rembrandt would have created, but he was a grim old realist, who, when he wanted to paint a picture of a person cutting the nails, selected for his model an old and unscrupulous woman, and cast around her such an atmosphere of reality that one can almost hear the snip of the scissors as it proceeds on its revolting business. How much better it would be done in the advertising world! Here we would be shown a young and beautiful girl sitting gracefully before her mirror and displaying just enough of her body to convince the beholder that she was neither crippled nor chicken-breasted, and all day long for ever and for ever she would sit thus smiling tenderly as she clipped the pink little moon-flecked nails from her pink little pointed fingers.

Yes, I fear it is a world of our own creation. Only a few persons would stand long before Rembrandt’s crude example, while many would dwell with delight on the curves and allurements of the maid in the advertising world. Of course one might forget or never even discover what she was doing, and assuming that one did, one would hardly dwell upon such an unromantic occupation in connection with a creature so fair and refined as this ideal young woman; but for all that, one would at least have had the pleasure of contemplating her loveliness.

So many of us are poor and ill-favoured in this world of ours, so many girls are not honestly able to purchase more than one frock or one hat a year, that the occasion of the purchase takes on an importance far beyond the appreciation of the average well-to-do person. It is fun, therefore, to dwell upon the lines and features of a perfectly gowned woman and to imagine that even though poor and ill-favoured, one might possibly resemble in a modified way, the splendid model, if one could only get an extra fifteen minutes off at lunch-time in order to attend the bargain sale. There are some of us who are so very poor that from a great distance we can enjoy without hope of participation the glory and triumph of others. The advertising world supplies us with just this sort of vicarious enjoyment, and, like all other kinds of fiction, enables us to play for a moment an altogether pleasing rôle in a world of high adventure.

Therefore let us not be too uncharitable to the advertising world. While not forgetting its faults, let us also strive to remember its virtues. Some things we cannot forgive it, some things we would prefer to forget, but there are others which require less toleration and fortitude to accept when once they have been understood.

As long as the printed word is utilized and goods are bought and sold, there will be a place and a reason for advertising--not advertising as we know it to-day, but of a saner and more useful nature. He would be a doughty champion of the limitation of free speech who would deny a man the right to tell the world that he is the manufacturer of monkey-wrenches, and that he has several thousands of these same wrenches on hand, all of which he is extremely anxious to sell.

Advertising, although a precocious child, is but in its infancy. In spite of its rapid development and its robust constitution, it has not yet advanced beyond the savage and bragging age. It will appeal to our instincts of greed as quickly as to our instincts of home-building. It will make friends with the snob that is in us, as readily as it will avail itself of the companionship of our desire to be generous and well-liked. It will frighten and bulldoze us into all sorts of extravagant purchases with the same singleness of purpose that it will plead with our self-respect in urging us to live cleaner and better lives. It will use our pride and vanity for its own ends as coolly as it will use our good nature or community spirit. It will run through the whole gamut of human emotions, selecting therefrom those best suited to its immediate ends. Education alone will make the child behave--not the education of the child so much as the education of the reader.

Advertising thrives to-day in the shadows created by big business, and, as a consequence, if it would retain its master’s favour it must justify his methods, and practise his evil ways. Here it must be added that there are some honest advertising agencies which refuse to accept the business of dishonest concerns. It must also be added that there are some magazines and newspapers which will refuse to accept unscrupulous advertisements. These advertisements must be notoriously unscrupulous, however, before they meet this fate. There are even such creatures as honest manufacturers, but unfortunately for the profession they too rarely advertise. As a whole, advertising is committed to the ways of business, and as the ways of business are seldom straight and narrow, advertising perforce must follow a dubious path. We shall let it rest at that.

We have made no attempt in this article to take up the subject of out-door advertising. There is nothing to say about this branch of the profession save that it is bad beyond expression, and should be removed from sight with all possible haste. In revolting against the sign-board, direct action assumes the dignity of conservatism, and although I do not recommend an immediate assault on all sign-boards, I should be delighted if such an assault took place. Were I a judge sitting on the case of a man apprehended in the act of destroying one of these eyesores, I should give him the key to my private stock, and adjourn the court for a week.

J. THORNE SMITH

BUSINESS

Modern business derives from three passions in this order, namely: The passion for things, the passion for personal grandeur and the passion for power. Things are multiplied in use and possession when people exchange with each other the products of specialized labour. Personal grandeur may be realized in wealth. Gratification of the third passion in this way is new. Only in recent times has business become a means to great power, a kind of substitute for kingship, wherein man may sate his love of conquest, practise private vengeance, and gain dominion over people.

These passions are feeble on the Oriental side of the world, strong in parts of Europe, powerful in America. Hence the character of American business. It is unique, wherein it is so, not in principle but in degree of phenomena. For natural reasons the large objects of business are most attainable in this country. Yet this is not the essential difference. In the pursuit of them there is a characteristic American manner, as to which one may not unreasonably prefer a romantic explanation. No white man lives on this continent who has not himself or in his ancestry the will that makes desire overt and dynamic, the solitary strength to push his dream across seas. Islands had been peopled before by this kind of selection, notably England; never a continent. A reckless, egoistic, experimental spirit governs, betrays, and preserves us still.

The elemental hunger for food, warmth, and refuge gives no direct motive to business. People may live and reproduce without business. Civilization of a sort may exist without its offices. The settler who disappears into the wilderness with a wife, a gun, a few tools, and some pairs of domestic beasts, may create him an idyllic habitation, amid orchards and fields, self-contained in rude plenty; but he is lost to business until he produces a money crop, that is, a surplus of the fruits of husbandry to exchange for fancy hardware, tea, window glass, muslin, china, and luxuries.

The American wilderness swallowed up hundreds of thousands of such hearth-bearers. Business was slow to touch them. What they had to sell was bulky. The cost of transportation was prohibitive. There were no highways, only rivers, for traffic to go upon. Food was cheap, because the earth in a simple way was bounteous; but the things for which food could be exchanged were dear. This would naturally be true in a new country, where craft industry must develop slowly. It was true also for another reason, which was that the Mother Country regarded the New World as a plantation to be exploited for the benefit of its own trade and manufactures.

Great Britain’s claim to proprietary interest in America having been established against European rivals by the end of the 17th century, her struggle with the colonists began. The English wanted (1) raw materials upon which to bestow their high craft labour, (2) an exclusive market for the output of their mills and factories, and (3) a monopoly of the carrying trade. The colonists wanted industrial freedom. As long as they held themselves to chimney-corner industries, making nails, shoes, hats, and coarse cloth for their own use, there was no quarrel. But when labour even in a small way began to devote itself exclusively to handicraft, so that domestic manufactures were offered for sale in competition with imported English goods, that was business--and the British Parliament voted measures to crush it. The weaving of cloth for sale was forbidden, lest the colonists become independent of English fabrics. So was the making of beaver hats; the English were hatters. It was forbidden to set up an iron rolling-mill in America, because the English required pig iron and wished to work it themselves. To all these acts of Parliament the colonists opposed subterfuge until they were strong enough to be defiant. That impatience of legal restraints which is one of the most obstinate traits of American business was then a patriotic virtue.

Meanwhile the New England trader had appeared--that adorable, hymning, unconscious pirate who bought molasses in the French West Indies, swapped it for rum at Salem, Mass., traded the rum for Negroes on the African coast, exchanged the Negroes for tobacco in Virginia, and sold the tobacco for money in Europe, at a profit to be settled with God. This trade brought a great deal of money to the colonies; and they needed money almost more than anything else. Then the British laid a ban on trade with the French West Indies, put a tax upon coastwise traffic between the colonies; and decreed that American tobacco should be exported nowhere but to English ports, although--or because--tobacco prices were higher everywhere else in Europe. The natural consequence of this restrictive British legislation was to make American business utterly lawless. As much as a third of it was notoriously conducted in defiance of law. Smuggling both in domestic and foreign trade became a folk custom. John Hancock, the first signer of the Declaration of Independence, was a celebrated smuggler.

During the War of Independence domestic craft industry was stimulated by necessity. But the means were crude and the products imperfect; and when, after peace, British merchants with an accumulation of goods on their hands began to offer them for sale in the United States at low prices, hoping to recover their new-world trade in competitive terms, the infant industries cried out for protection. They got it. One of the first acts of the American Congress was to erect a tariff against foreign-made goods in order that the country might become self-sufficing in manufactures. This was the beginning of our protectionist policy.

Fewer than four million unbusiness-like people coming into free possession of that part of the North American continent which is named America was a fabulous business event. We cannot even now comprehend it. They had not the dimmest notion of what it was they were possessed of, nor what it meant economically. Geography ran out at the Mississippi. The tide of Westward immigration was just beginning to break over the crest of the Alleghany mountains.

Over-seas trade grew rapidly, as there was always a surplus of food and raw materials to be exchanged abroad for things which American industry was unable to provide. Foreign commerce was an important source of group-wealth and public interest was much concerned with it. Besides, it was easier to trade across seas than inland. Philadelphia until about 1835 was nearer London than Pittsburgh, not as the crow flies but as freight moves. Domestic business, arising from the internal exchange of goods, developed slowly, owing partly to the wretched state of transportation and partly to the self-contained nature of families and communities. The population was more than nine-tenths rural; rural habits survived even in the towns, where people kept cows and pigs, cured their own meats, preserved their own fruits and vegetables, and thought ready-made garments a shocking extravagance. Business under these conditions performed a subservient function. People’s relations with it were in large measure voluntary. Its uses were more luxurious than vital. There was not then, nor could any one at this time have imagined, that interdependence of individuals, groups, communities, and geographical sections which it is the blind aim of business increasingly to promote, so that at length the case is reversed and people are subservient to business.

In Southern New Jersey you may see a farm, now prosperously devoted to berry and fruit crops, on which, still in good repair, are the cedar rail fences built by a farmer whose contacts with business were six or eight trips a year over a sand road to Trenton with surplus food to exchange for some new tools, tea, coffee, and store luxuries. That old sand road has become a cement pavement--a motor highway. Each morning a New York baking corporation’s motor stops at the farm-house and the driver hands in some fresh loaves. Presently a butcher’s motor stops with fresh meat, then another one with dry groceries, and yet another from a New York department store with parcels containing ready-made garments, stockings and shoes.

Consider what these four motors symbolize.

First is an automobile industry and a system for producing, refining and distributing oil which together are worth as much as the whole estimated wealth of America three generations ago.

Back of the bakery wagon what a vista! An incorporated baking industry, mixing, kneading, roasting, and wrapping the loaf in paraffine paper without touch of human hands, all by automatic machinery. Beyond the Mississippi, in a country undiscovered until 1804, the wheat fields that are ploughed, sown, reaped by power-driven machinery. In Minnesota a milling industry in which the miller has become an impersonal flour trust. A railroad system that transports first the grain and then the flour over vast distances at rates so low that the cost of two or three thousand miles of transportation in the loaf of bread delivered to the New Jersey farm-house is inexpressible.... Back of the butcher’s motor is a meat-packing industry concentrated at Chicago. It sends fresh meat a thousand miles in iced cars and sells it to a New Jersey farmer for a price at which he can better afford to buy it than to bother about producing it for himself.... Back of the grocer’s motor are the food products and canning industries. By means of machinery they shred, peel, hull, macerate, roll, cook, cool, and pack fruits, cereals, and vegetables in cartons and containers which are made, labelled, and sealed by other automatic machinery.... And back of the department store motor are the garment-making, shoe-making, textile, and knitting industries.

If one link in all this ramified scheme of business breaks there is chaos. If the State of New Jersey were suddenly cut off from the offices of business for six months, a third of her population might perish; not that the State is unable potentially to sustain her own, but that the people have formed habits of dependence upon others, as others depend upon them, for the vital products of specialized labour.

All this has happened in the life of one cedar rail fence. You say that is only fifty or sixty years. Nevertheless it is literally so. The system under which we live has been evolved since 1860. The transformation was sudden. Never in the world were the physical conditions of a nation’s life altered so fast by economic means. Yet it did not happen for many years. The work of unconscious preparation occupied three-quarters of a century.

Man acts upon his environment with hands, tools, and imagination; and business requires above everything else the means of cheap and rapid transportation. In all the major particulars save one the founders were ill-equipped for their independent attack upon the American environment. At the beginning of the 19th century there were no roads, merely a few trails fit only for horseback travel. There were no canals yet. And the labour wherewith to perform heavy, monotonous tasks was dear and scarce and largely self-employed. Though the hands of the pioneer are restless they are not patiently industrious. There was need of machinery such as had already begun to revolutionize British industry, but the English jealously protected their mechanical knowledge.

There is a tradition that the Americans were marvellously inventive with labour-saving devices. That is to be qualified. Their special genius lay rather in the adaptation and enthusiastic use of such devices. The introduction of them was not resisted as in the older countries by labour unwilling to change its habits and fearful of unemployment. This was an important advantage.

The American textile industry was founded by British artisans who came to this country carrying contraband in their heads, that is, the plans of weaving, spinning, and knitting machines which the English guarded as carefully as military secrets.... The pre-eminence of this country in the manufacture and use of agricultural implements is set out in elementary school-books as proof of American inventiveness; yet the essential principles of the reaper were evolved in Great Britain forty years before the appearance of the historic McCormick reaper (1831) in this country, and threshing-machines were in general use in England while primitive methods of flailing, trampling, and dragging prevailed in America. As recently as 1850 the scythe and cradle reaped the American harvest and there still existed the superstition that an iron plough poisoned the soil and stimulated weeds. Of all the tools invented or adopted the one which Americans were to make the most prodigious use of was the railroad; yet the first locomotive was brought from England in 1829, the embargo on machinery having by this time been lifted--and it failed because it was too heavy!

Twenty years passed and still the possibilities of rail transportation were unperceived, which is perhaps somewhat explained by the fact that the one largest vested interest of that time existed in canals. On the map of 1850 the railroads resemble earthworms afraid to leave water and go inland. The notion of a railroad was that it supplemented water transportation, connecting lake, canal, and river routes, helping traffic over the high places.

But in the next ten years--1850 to 1860--destiny surrendered. There was that rare coincidence of seed, weather, deep ploughing, and mysterious sanction which the miracle requires. The essential power of the American was suddenly liberated. There was the discovery of gold in California. There was the Crimean War, which created a high demand abroad for our commodities. The telegraph put its indignities upon time and space. The idea of a railroad as a tool of empire seized the imagination. Railroads were deliriously constructed. The map of 1860 shows a glistening steel web from the seaboard to the Mississippi.

The gigantesque was enthroned as the national fetich. Votive offerings were mass, velocity, quantity. True cities began. The spirit of Chicago was born. Bigness and be-damnedness. In this decade the outlines of our economic development were cast for good.

In the exclusive perspective of business the Civil War is an indistinct episode. It stimulated industry in the North, shattered it in the South. The net result in a purely economic sense is a matter of free opinion. The Morse telegraph code probably created more wealth than the war directly destroyed. Or the bitter sectional row over the route of the first transcontinental railroad which postponed that project for ten years possibly cost the country more than the struggle to preserve the Union. But that is all forgotten.

After 1860 the momentum of growth, notwithstanding the war and two terrible panics, was cumulative. In the next fifty years, down to 1910, we built half as much railroad mileage as all the rest of the world. Population trebled. This fact stands alone in the data of vital statistics. Yet even more remarkable were the alterations of human activity. The number of city dwellers increased 3½ times faster than the population; the number of wage-earners, 2 times faster; clerks, salesmen, and typists, 6½ times faster; banks, 7 times faster; corporations, 6½ times faster; miners, 3 times faster; transportation-workers, 20 times faster, and the number of independent farmers decreased. Wealth in this time increased from about $500 to more than $1,500 _per capita_.

If America in its present state of being had been revealed to the imagination of any hard-headed economist in, say, 1850, as a mirage or dream, he would have said: “There is in all the world not enough labour and capital to do it.” He could not have guessed how the power of both would be multiplied.

First there was the enormous simple addition to the labour supply in the form of immigration. Then the evolution of machinery and time-saving methods incredibly increased the productivity of labour per human unit. Thirdly, the application of power to agriculture and the opening of all that virgin country west of the Mississippi to bonanza-farming so greatly increased the production of food per unit of rural labour that at length it required only half the population to feed the whole. The other half was free. Business and industry absorbed it.

Of what happened at the same time to capital, in which term we include also credit, there could have been no prescience at all. Even now when we think of building a railroad, a telephone system, or an automobile factory the thought is that it will take capital, as of course it will at first, but one should consider also how anything that increases the velocity with which goods are exchanged, or reduces the time in which a given amount of business may be transacted, adds to the functioning power of capital. To illustrate this: the merchant of 1850 did business very largely with his own capital unaided. He was obliged to invest heavily in merchandise stocks. The turn-over was slow. His margin of profit necessarily had to be large. But with the development of transportation and means of communication--the railroad, telegraph, and telephone--and with the parallel growth of banking facilities, the conditions of doing business were fundamentally changed. All the time-factors were foreshortened.

A merchant now has to lock up much less capital in merchandise, since his stocks are easily and swiftly replenished. The turn-over is much faster because people using suburban railways and street-cars go oftener to shop. And not only is it possible for these reasons to do a larger volume of business with a given amount of capital, but the merchant now borrows two-thirds, maybe three-quarters, of his capital at the bank in the form of credit. The same is true of the manufacturer. Formerly he locked up his capital, first in raw materials and then in finished products to be sold in season as the demand was; and there was great risk of loss in this way of matching supply to an estimated demand. Now he sells his goods before he makes them, borrows credit at the bank to buy his raw materials, even to pay his labour through the processes of manufacture, and when the customer pays on delivery of the goods with credit which he also has borrowed at the bank, the manufacturer settles with _his_ bank and keeps the difference. An exporter was formerly one who bought commodities with his own money, loaded them on ship, sent them on chance to a foreign market, and waited for his capital to come back with a profit. Now he first sells the goods to a foreign customer by cable, then buys them on credit, loads them on ship, sells the bill of lading to a bank, uses the proceeds to pay for the goods, and counts his profit. All large business now is transacted in this way with phantom capital, called credit; money is employed to settle differences only.

The effect of this revolution of methods upon the morals and manners of business was tremendous. It destroyed the aristocracy of business by throwing the field open to men without capital. Traders and brokers over-ran it. The man doing business on borrowed capital could out-trade one doing business on his own. The more he borrowed, the harder he could trade. Salesmanship became a specialized, conscienceless art. There was no rule but to take all the traffic would bear: let the buyer look out. Dishonesty in business became so gross that it had to be sublimated in the national sense of humour. There are many still living who remember what shopping was like even in the largest city stores when nobody dreamed of paying the price first asked and counter-higgling was a universal custom. Indeed, so ingrained it was that when A. T. Stewart in New York announced the experiment of treating all buyers alike on a one-price basis his ruin was predicted by the whole merchant community.

As credit both increases competition and enables a larger business to be done on a small base of invested capital, the margin of profit in business tends to fall. Under conditions of intense rivalry among merchants and manufacturers operating more and more with phantom capital the margin of profit did fall until it was very thin indeed. This led to the abasement of goods by adulteration and tricks of manufacture, which became at length so great an evil that the government had to interfere with pure-food acts and laws forbidding wilful misrepresentation.

There was a limit beyond which the cost of production could not be reduced by degradation of quality. It was impossible to control prices with competition so wild and spontaneous and with cheapness the touchword of success. Therefore the wages of business were low, and things apparently had come to an impasse. Yet out of this chaos arose what now we know as big business. The idea was simple--mass production of standardized foods. The small, fierce units of business began to be amalgamated. As society is integrated by steps--clan, tribe, nation, State--so big business passed through mergers, combines, and trusts toward the goal of monopoly.

When a number of competing manufacturers unite to produce standard commodities in quantity, much duplication of effort is eliminated, time-saving methods are possible as not before, the cost of production is reduced. There are other advantages. They are stronger than they were separately, not only as buyers of labour, raw materials, and transportation, but as borrowers of capital. The individual or firm is the customer of a bank. The corporation makes a partnership with finance.

Now a curious thing happens. The corporation with its mass production restores the quality of goods. It is responsible for its products and guarantees them by brands, labels and trade-marks. Sugar and oatmeal come out of the anonymous barrel behind the grocer’s counter and go into attractive cartons on his shelf, bearing the name of the producer. Gloves, shirts, stockings, cutlery, furniture, meat products, jams, watches, fabrics, everything in fact becomes standardized by name and price and is advertised by the producer directly to the public over the retailer’s head, so that the small retailer is no longer a merchant in the old sense but a grumbling commission-man. Big business has delivered itself from the impasse; it has recovered control of its profits; but now the retailer’s margin of profit tends to become fixed. What does the retailer do? He applies the same principle to the last act of selling. Enter the chain-store. Obviously a corporation owning a chain of several hundred stores and working, like the manufacturer, with borrowed capital, is stronger than any one retailer to bargain with the powerful producers, and as the chain-store tends to displace the little retailer a balance is restored between the business of production and the business of retailing. Mass production is met by mass selling. The consumer as the last subject may resort to legislation for his protection.

Big business could not have evolved in this way without the aid of the railroads. Their dilemma was similar. Strife and competition had ruined their profits. To begin with, nobody knew what it cost to produce transportation. When a new line was opened it made rates according to circumstances. At points where it met water competition it charged very little, sometimes less than the cost of its fuel, and at points where there was no competition it charged all the traffic would stand. Then as competitive railroad-building excessively increased the high rates steadily fell. Once they got started people were obsessed to make railroads. They made them for speculative reasons, for feudal reasons, for political reasons, for any reason at all. Two men might quarrel in Wall Street, and one would build a thousand miles of railroad to spite the other--build it with the proceeds of shares sold to the public or hypothecated at the bank. Then there would be two roads to divide the business of one. Railroads under these conditions were unscientifically planned and over-built. The profit was rather in the building than in the working of them. There was scandal both ways. Quantities of fictitious capital were created and sold to the public. And when a railroad was built it became the plaything of its traffic manager, who conspired with other traffic managers to sell favours to shippers and to invent disastrous rate-wars in order to profit by the fall of shares on the stock market.

Rates could not be raised or held up, owing to the irresponsible nature of the competition. Transportation is a commodity that cannot be adulterated. How was the profit to be restored in this field of business? Why, by the same method as in industry. That is, by mass production.

Some one discovered that once you got a loaded train out of the terminal and rolling on the right-of-way it cost almost nothing to keep it moving. There was no money in hauling small lots of freight short distances at the highest rates that could be charged; but there was profit in moving large quantities of freight in full cars over long distances at very low rates. At this the railroad people went mad over the long, heavy haul. Here was industry seeking to concentrate itself in fewer places for purposes of mass production; and here were the railroads wanting masses of freight to move long distances. Their problems coincided.

Result: mass production gravitates to those far-apart long-haul points to get the benefit of low rates, there is congestion of industrial population at those points, industry at intermediate points is penalized by higher freight rates, and the railroads henceforth equip themselves with mass tonnage primarily in view. You begin now to have steel towns, meat towns, flour towns, textile towns, garment towns, and so on. That interdependence of communities and geographical sections which makes business is in full development.

However, the second state of the railroad is worse than the first. It is overwhelmed by the monster it has suckled. It is at the mercy of a few big shippers, masters of mass production, who bully it, extort lower and lower rates still, and at length secret rebates, under threat of transferring their tonnage to another railroad or in some cases of building their own railroad, which now they are powerful enough to do. The railroad yields; and whereas before only such industry as survived at intermediate points was penalized by higher freight rates, now all industry outside of big business is at a disadvantage, since big business is receiving secret benefits from the railroads.

There was no philosophy in any of this, not even a high order of intelligence. The will of business is anarchistic; its religion is fatalism. If let alone, it will seek its profit by any means that serve and then view the consequences as acts of Providence.

It has been noted that big business, going in for mass production, restored the honesty of goods. The motive was not ethical. It paid. The public’s good will toward a brand or a trade-mark was an asset that could be capitalized, sometimes for more than plant and equipment, and the shares representing such capitalization could be sold to the public on the Stock Exchange. But what was gained for morality in the honesty of goods was lost again in new forms of dishonesty. Standard Oil products were always cheap and honest; its oil was never watered. But the means by which the Standard Oil Company gained its dangerous trade eminence were dishonest, and the trust was dissolved for that reason by the United States Supreme Court. It happens to be only the most notable instance. There were and are still many others--combines and trusts whose products are honest but whose tradeways are either illegal or ethically repugnant.

One cannot say that business is either honest or dishonest. It is both. Evidence of permanent gain in a kind of intrinsic commercial honesty is abundant. Wild-cat banking has disappeared. A simple book entry between merchants is as good as a promissory note. The integrity of merchandise now is a trade custom. Vulgar misrepresentations have ceased save in the slums of business. The practice of making open prices to all buyers alike, wholesale and retail, is universal. It is no longer possible to print railroad shares surreptitiously overnight and flood the Stock Exchange with them the next morning, as once happened in Erie. Nowhere is character more esteemed than in business.

And yet, in spite of all this and parallel with it, runs a bitter feud between society and business. People are continually acting upon big business through the agencies of government to make it behave. What is the explanation?

Well, in the first place, the improvement in commercial honesty has been owing not so much to ethical enlightenment as to internal necessity. Big business must do its work on credit; there is no other way. Therefore credit is a sacred thing, to be preserved by all means. Men know that unless they are scrupulous in fulfilling their obligations toward it, the system will collapse. As the use of credit increases the code of business become more rigid. It must. One who breaks faith with the code is not merely dishonest, man to man; he is an enemy of credit.

If a stock-market coterie of this day could print Erie shares without notice and sell them the public would suffer of course but Wall Street would suffer much more. Its own affairs would fall into hopeless disorder. That kind of thing cannot happen again. The code has been improved. You now may be sure that anything you buy on the Stock Exchange has been regularly issued and listed. No institution is more jealous of the integrity of its transactions--transactions as such. Purchases and sales involving millions are consummated with a nod of the head and simple dishonesty is unknown. Nevertheless, it is a notorious fact that the amount of money nowadays lost on the Stock Exchange by the unwary public is vastly greater than in Jay Gould’s time. There is, you see, an important difference between formal and moral honesty.

Secondly, business morality is a term without meaning. There is no such thing. Business is neither moral nor immoral. It represents man’s acquisitive instinct acting outside of humanistic motives. Morals are personal and social. Business is impersonal and unsocial.

So far we come clear. Only now, what shall be said of the man in business? He is not a race apart. He may be any of us. How then shall we account for the fact that those evils and tyrannies of big business with which the Congress, the Interstate Commerce Commission, the Department of Justice, the Federal Trade Board, and other agencies of the social will keep open war are not inhibited at the head by an innate social sense? Does the business man lose that sense? Or by reason of the material in which he works does he become an unsocial being? No. The answer is that the kind of business we now are talking about is not conducted by men. It is conducted by corporations.

A thing of policy purely, with only legal responsibilities and no personality, free from hope of heaven or fear of hell, the corporation is both a perfect instrument for the impersonal ends of business and a cave of refuge for the conscience. Business by corporations is highly responsible in all that pertains to business. Business by corporations is in all ethical respects anonymous. A corporation does many things which no one of its directors would do as an individual. The head of a corporation says: “If it were my own business, I should handle this labour problem very differently. But it isn’t. I am a trustee, answerable to five thousand stockholders for the security of their dividends.” Each of the five thousand stockholders says: “It isn’t my business. I am merely one of a great number of stockholders. What can I do about it?”

Nobody is personally responsible.