# Popular Science Monthly/Volume 81/August 1912/An Economic Interpretation of Present Politics

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* AN ECONOMIC INTERPRETATION OF PRESENT POLITICS
By Professor C. C. ARBUTHNOT
WESTERN RESERVE UNIVERSITY
ONE hesitates in taking the reader's time to call his attention to the fact that the present is an exceptional period of political unrest and anxiety over governmental policies touching certain public economic relationships. "Conservation," "graft," "the tariff," and "special privileges" have been talked about and about until the honest citizen who is trying to get a decent living for his family would be utterly weary if he were not so vitally interested in the results of the agitation. His interest in insurgency has become a demand for progression. There is determination in it.
The conservatives have felt that the whole hubbub is the result of unreasonable clamor, cheap reformers and low-priced magazines; that the people do not know when to leave well-enough alone, and that the wise policy is to adhere to the time-honored practises of the fathers until the storm blows by. On the other hand, great masses of the people are smarting under a sense of wrong and burdened by a feeling of oppression too great to be borne. They suspect they are playing the game of life with the cards stacked so that neither skill nor luck can be hoped to yield results favorable to themselves. The popular demand is for "fairness," "a square deal," and "equality of opportunity." The uneasy feeling prevails that the general public is losing something as well as the sense of personal injury. An exploitation of the many, collectively and individually, for the benefit of a few seems to be the evil of the day. Passionate reproaches, fierce denunciations, and tempestuous outbursts of feeling accompanied by determined action are aimed at the abuses. And yet no one can point to any fresh overt acts, or new public policies, or unusual legislation against which to protest. The subjects of the complaints are not the uncommon features, but the complaints themselves are. The economic and political phenomena assailed are time-honored, well-established heritages from the country's past that have come down to us from far enough back to be esteemed almost institutions characteristic of the republic. They do not need to be explained. It is the outcry against them that is to be accounted for, and the understanding is not far to seek. It is evident in view of our economic history.
Careful readers of history and students of social movements have ​never seen the man on horseback appear in contented eras among satisfied people, notwithstanding all there is to be said for the powers of persuasion, the stir of audacity, and the impact of personality. The ponderous body politic can not be moved by word of mouth nor by the breath of eloquence. Merely preaching to it is foolishness. Internal pangs or external irritation are required to arouse activity. Demagogues are symptoms, agitators are weather cocks, and reformers are men who put themselves at the head of processions. When conditions are favorable for the start the opportunity for leadership arises and the self-seeking struggle with the public-spirited for the direction of the aroused energies. This guidance is of immense importance and no one should shut an eye to the danger of the glory-hunter's sway, nor lessen the credit due the reformer. But to understand the social situation in times of agitation there is need of separating in mind the more or less factitious elements from the fundamental forces at work. From this point of view speeches in legislative halls, on the stump, from the platform and the pulpit, the declarations of political parties and the editorials in the press, the harangues of public-square orators and the excited utterances of disputing citizens are not in the last analysis the outcome of the personal desire of a man or of a group, nor of a spontaneous moral tidal wave sweeping the community, nor of a resolute tugging at the ethical boot-straps of the country. Great national movements are products of fundamental forces in national life. The prophet who lifts his voice before these forces have begun to work dies in disappointment, or, if his message is too unpleasant to his contemporaries, he may achieve martyrdom. And if he has seen truly, succeeding generations may canonize him. The current of a people's thinking is glacial, slow to move; irresistible but largely determined by the contour of its bed. To the study of this formative influence one should address himself for an understanding of the greater changes that mark the history of public opinion.
At the close of the eighteenth century this nation began its career under unique conditions. A relatively small number of people possessed a vast territory over part of which they were sparsely living. Natural resources were boundless and wealth to be had for the taking. Acquisition was the watchword of the time. To open up the country was the economic ideal of the period. To this end were turned by common consent all the individual and collective energies available.
Among the most pressing needs of that clay was that of capital for fixed investment in such improvements as better means of transportation. This was difficult to secure because the people were without great accumulations of wealth or the experience and instruments for readily collecting what was in existence. The machinery now in operation for promoting great enterprises and carrying through speculative ventures ​is modern. If the Americans of the first years of the nineteenth century could have called forth an institution like the present Wall Street they would have regarded it as the greatest of blessings. As it was, one of the great accumulating agencies was the national government through its taxing power, especially in the form of customs duties. Besides and resting upon this was the public credit made strong by a ready and vigorous policy of paying public debts. The commonwealths shared this credit in a reflected form because leaders did not discriminate sharply between bonds of the states and obligations of the nation. Under such conditions of need for capital to develop the country economically and to bind it together politically, with an agency for supplying the want subject to popular will, it was inevitable that the people look to the government for aid in the construction of the desired public improvements.
Another resource of well-nigh unlimited extent lay in the hand of the federal government. When the British Crown granted charters to many of the colonies that later became parts of the original union, there was no exact knowledge of the lay of the land or the size of the interior of the continent. The terms of the grants were incompatible. The territories given overspread each other so that a division of the land among the independent states which came out of the revolutionary struggle was impossible. The problem was solved by turning over to the national government practically the whole of the area in question. The nation found itself in possession of a domain imperial in scope and possibilities.
With public credit and public land subject to the control of a people full of energy and ambition there could be but one result; their use with a lavish hand in furthering the interests of those who were developing the country's resources. Constitutional provisions, the reflection of current theory, limited the functions of government and we evolved a one-sided individualism whose chief tenet was state control in public benefactions to subjects and laissez faire in private use and enjoyment. Every citizen became an actual or potential beneficiary in the distribution of land and the extension of credit. The easy terms of the land laws threw open the widest opportunity for the acquisition of a farm to any one who cared to take it.
In order to bring these lands within range of the markets good transportation was necessary. The failure of the schemes for this purpose in most of the states in the thirties left a free field to corporate enterprise and every effort was made to encourage the construction of the means of carriage by private companies. The federal government gave lands to the states to be passed on to the railroad organizations as a stimulus. Other lands were given direct. The national credit was granted to new enterprises and second-mortgage bonds taken as security. Immense amounts ​of wealth in lands, money and other forms were granted by smaller political units. This lavish generosity upon the part of governments had the warm support of the whole body of the people because the greater number of the individuals in the country were directly sharing in it or expected further indirect benefits from the development that would follow easy and cheap intercourse.
In this era of expansion the people thought in round numbers and on a grand scale. The superabundance of natural resources and the size of the anticipated results would have made any close scrutiny of the details of the transactions involved seem parsimonious cheeseparing, petty querulousness likely to interfere with the success of the transaction in hand and sure to delay the consummation unanimously wished. The popular will demanded that the thing be put through. All interests had to be conciliated and the ways greased if speed were to be attained. In thus doing business on wide margins and wholesale practically every one who helped the scheme forward felt a democratic right to participate in the benefits conferred. Legislators and administrators looked for an honorarium as a part of the exchange of courtesies incident to the negotiations connected with any public improvement of importance. The people at large were more interested in the execution of the proposed work than in the way it was carried out. Official parasitism on public improvements, graft, was regarded lightly as merely a sharing in the general distribution of the public largess. It was a commonplace; beneficial to the recipients and injurious to no one because, forsooth, it came out of the public abundance.
Development was the word to conjure with during most of our past and its magic opened men's minds to suggestion in every field of effort. Very early the creation of manufacturing industry became a desideratum. The infant industry needed protection. Notwithstanding the opposition of the South which then saw no promise of local benefit in the policy, the rest of the country enacted a tariff that took the edge off foreign competition if it did not entirely prevent it. Behind this barrier there came into existence factories and mills for the production of commodities as varied as the resources of the country would supply with raw material. The producers of this material rejoiced in the existence of a market immediately at hand and felt the benefit of the policy that the nation was more and more committing itself to carrying out. These new and flourishing manufactories were the nuclei of an urban population ready to purchase the products of farm and field: hence the agricultural interests were persuaded that the value of their lands was enhanced and their labor made profitable by the legislative act that brought the artisans and their families from Europe to the United States. Some palatable arguments allured many into thinking that the duties collected came from the foreigner, while others confident in the ​strength of the expanding nation felt this was another of those beneficent acts of a government rich and solicitous for the well-being of all its citizens. The smoking stacks, the revolving wheels and the hum of the looms were referred to with pride as evidence of success in constructive legislation. As time went on faith in the possibility of legislating the country into prosperity continuously grew stronger and grants of protection became as common as grants of land. The favors were passed around by mutual consent and bargaining until customs duties were placed upon the importation of so many articles that precise knowledge of the effect of the whole system is beyond the grasp of even diligent students. The degree of industrial peace within our walls and prosperity in our palaces was commonly accepted evidence of the success of the American policy that silenced to most ears the doctrinaire objections of a discredited minority.
Parallel with national aid to industry were the grants and franchises given by local and municipal governments with a view to promoting public improvements within their jurisdictions. Street railways were essential to the development of towns and every inducement was offered to capital to lead it to go into their creation. The anticipated benefits were great, and the average citizen, who was busy trying to acquire his share of the collateral gains that were expected to accrue to the community, did not pay much attention to the terms of the contracts, while his representatives frequently exacted from the promoters of the new enterprises the customary informal fees to which in an era of acquisition they felt they were entitled. Fortunes were made all around them through the simple process of taking with governmental sanction and public approbation the lands, the bonds, the tariffs and the franchises that were to be had as part of the great scheme of continental development. There was nothing unusual in picking up these fragments when there were basketfuls being passed. The practise was common and hardly unclean.
From the conditions indicated in this brief analysis of our economic development it is easy to see how certain ideas came to prevail widely in the minds of Americans. At the bottom of our thinking has been the conception of a boundless productive continent to be parceled out by the government among its citizens. We have had the feeling that "the government" apart from the people as a body is wealthy. "Uncle Sam is rich enough to give us all a farm" is a popular expression of the notion. A professor in a well-known university has a stock question that he asks year after year concerning who shall meet the expense of a proposed scheme for social improvement, and the invariable answer is: "Let the government pay for it."
Along with the idea that the government possessed an all but inexhaustible store was the collateral feeling that doles should be given to ​citizens from this property. The land grants made this familiar to the mass of the people and accredited it as a practise. Special grants to citizens, if they could be classified in any way as developmental in their outcome, were favored. Farms, franchises and tariffs were freely given and received. What are referred to now as "special privileges" were merely species of an approved genus.
When the ideas that the country was boundlessly rich and that it should be lavishly generous prevailed, it is not to be wondered at that the officials who were administering the division of the wealth should feel no hesitancy about taking toll of whatever passed through their hands. Graft was a normal collateral result of current practise and is to be distinguished from embezzlement or larceny. The officers were like men passing through a dripping orchard. To pluck and eat was to follow a natural impulse, easily yielded to when everybody was receiving according to their needs.
Out of these conditions of our first hundred years came the ethics of acquisition as a result of our method of exploiting a rich continent; a code which justified the accumulation of wealth by the process of taking it. This was normal and natural. The pertinent question now is, why has it become, or why is it becoming immoral?
A structure is no more stable than its foundation. The phase of public morals discussed here rested upon the fact that the people were carving up the public domain and trying to increase the value of their individual portions. When the good lands of the common heritage had passed from the government's control the general run of citizens had nothing to expect from the public directly. With the extension of the network of railways and other methods of communication over the country at large and the local areas as well, and after the rise of manufactures on a large scale, the prospect of further benefits from further opening of the country did not exist for the major portion of the people. When the populace can no longer look for immediate or collateral benefits of a private nature from governmental grants the policy of distribution is doomed in a democracy. Donations widely scattered may be approved, but if the range is narrowed they become evidences of favoritism and discrimination. As soon as the voters become conscious of the situation they will wipe out the remnants of the system. While "conservation" means both preservation of our natural resources in themselves and their future use for the people as a whole, the popular support behind the movement at present is in the nature of a demand that "landgrabbing" be stopped. What can no longer be done by all will not be permitted to any.
The swift growth of population has exhausted what once seemed to be a limitless territory. With the disappearance of good free lands falls the notion that the government of itself abounds in wealth. Men have ​come to realize that they have been seeing darkly and now find themselves face to face with the fact that the government is no richer than the possibility of levying upon the income of its citizens. Favors granted by legislation are seen to mean that the hand of the tax and customs collector must be thrust into the pockets of the people to secure the necessary funds. As the realization of this simple truth becomes wider spread self-interest and the spirit of democratic equality rises against the practise. The vigorous opposition to ship subsidies in recent congresses are indicative of the new tendency. All grants by government, direct and indirect, are being more rigorously scrutinized, and none more so than that of protection against competition. Without enumerating the various influences that have produced the present chaos in practical politics, it is safe to say that while the tariff directly affects the cost of living, the present complaints against the recent legislation is due, not so much to an increased burden of duties as to a new sensitiveness to any duties that may seem to carry special benefit to a few at the expense of the many. The mind of the average citizen is reflecting the change that is taking place in his economic status. He no longer thinks of himself as a beneficiary in the development of the country due to the establishment and growth of great manufacturing businesses. He now sees that he is a consumer. When he used to pay out his money for protected articles his thoughts turned to the collateral gains that were expected from the country's expansion. Now he parts reluctantly with the price demanded because the only return is the goods received in exchange, and the additional cost due to the tariff comes to be regarded as an unwarranted exaction. There is no prospect that there will be any further expansion in which he can share. His economic interest lies in the present and forces him to buy his necessary commodities as cheaply as possible, so that the tariff becomes an object of hostility. The attitude to-day is not merely the result of an era of high prices due to other causes in addition to the tariff; it is not a temporary agitation stirred up by trouble-making partisans; it is a change in mind of the people due to a change in fundamental economic facts.
When the people begin to realize that they have to foot all the bills of the public service, directly or indirectly, and that there is no entity called "the government" upon which the burden can be laid; when it is clear that the government is simply themselves in their organized capacity, the institution of graft begins to totter. There arises a strong resolution to examine critically the expenditure of public funds when the private citizen feels that he is contributing them. Exactness and economy in the conduct of the common business and the administration of governmental affairs begins to be demanded from those officials who were formerly suffered to share in the distribution of the riches that figured as part of the public aid and encouragement given private ​individuals with a view to social development. New occasions have taught new duties. When the idea of government in the role of Lady Bountiful is a thing of the past the practises that grew out of it and were more or less a part of it will have to go also. Doubtless there will always be peculation and rascality in the management of the people's affairs, but graft as an institution will cease to be overlooked and become disreputable.
In contrast with earlier practise the granting of franchises and other "special privileges" is being hedged about with limitations and restrictions unknown to our fathers. The new spirit of thrift in the body politic prevents the fast and loose dealing with valuable rights common in the flush days of exploitation. The worth of the privileges is better known now and it is actually greater. The need of conserving all the sources of public income is felt more and more so that there is a demand for quid pro quo when a grant is sought. The work of these companies in building up transportation, lighting and other general conveniences to their present stage has made communities more independent of them and the increase in demand for investments has strengthened the public position. More abundant capital needs opportunities for earning interest, while the body of the citizens have reaped all they can expect from the collateral increase in the value of their property that resulted from the pioneering done by the companies. They are ceasing to give away franchises because they do not need to do so any longer in order to secure the improvements and because the members of the community do not see a chance to participate in the resulting gains. The old methods are becoming immoral.
From what has been written it is perhaps apparent that the current agitation is not a reform movement that is leading to a departure from the error of our ways, but a conversion that is changing the whole of our attitude toward many public questions. The spread of the population, the division and occupation of the territory, the development of the country in transportation and manufactures have been part of the eager struggle for the treasures of a new continent in which grants of land, extensions of public credit, protective tariffs, franchises and tacit permission to graft have been prominent features. The ends sought have been accomplished and the means that were formerly reputable because commonly shared are now condemned. They can no longer be general in their effect either directly or indirectly. When they are confined to a few they cease to be benefits and become favors; and favors are odious in a democracy. The old policies are passing away because the old economic basis upon which they rested and from which they arose has passed away. The enemies of the old order have come in like a flood, not because of a particularly high moral tidal wave but because the shore has subsided. What is going under water now is going to stay ​under. These sunken rocks will wreck many a politician's bark in the next few years. Until the change has become definite and the new coast has been charted there will be no safety on political seas. The present confusion of mind makes it difficult for constituents and representatives to understand each other. Chance and whim will determine more than a few public careers before the transition is gone through.
The story of this phase of our economic activity can be compressed into a few sentences. An energetic people possessed with the spirit of equality, and working on an undeveloped domain, flourished forth in a democratic era of acquisition, exploiting natural resources and each other. Now that the natural wealth has been so largely appropriated, it is no longer possible for the majority of the people to continue their former practises, and they have been demanding through a few of their representatives that the minority also cease. This was insurgency.
When the new spirit began to possess the people they endeavored to enact legislation or repeal laws and reorganize administration with a view to abolishing the antiquated institutions and practises that had become odious. They found, however, that the specialization of function had gone so far that there had grown up a governing class of politicians, office holders and administrators fairly distinct from the mass of the citizens. This caste removed from the pressure of new conditions that were changing the lives and thinking of the people in general is dominated by the traditions, customs and practises of an earlier period. The code of ethics of the era of acquisition still obtains among the governing group because the members of this group have not been exposed to the influences to which the common people have been subjected. The representatives of the people now in office represent the people of earlier generations—not their contemporaries. The leaders are in the rear, and persist in staying there. This inability to catch step, this moral inertia, is leading an increasing number of people to doubt the workableness of representative government. When a candidate is elected he enters into the governing group: the atmosphere he breathes is fifty years old: he is soon behind the times. He does what was formerly acceptable, but is no longer so. He does not represent his constituents, for the simple reason that they do not look upon the public affairs as their fathers did. The constituents have changed—the representatives have remained the same.
The extreme difficulty of bringing up to date the machinery of government as at present operated is what is behind the movement for the initiative and referendum that has enrolled within its ranks great numbers of men who have hitherto regarded the proposals of direct legislation as impracticable, cumbersome and out of the question in political units of any great size. Their old objections are as valid as ever they were for a situation in which the people and their representatives are ​morally synchronous. But that is emphatically not the present condition. The period of transition has made it necessary to shorten the pendulum of representative government to make it move as fast as the people wish it to go. The voters have repeatedly tried to set the clock forward by electing new men to office, but the new men after election soon fell into the old swing. Direct legislation seems to be the only way to keep those elected to represent the present from falling into the practises of those who represented the past. Its strength as a political issue lies here. Its function will doubtless be temporary. When it has done its work, it will have made government really representative again and itself doubtless fall into disuse.
Looking at the initiative and referendum thus in the best light leaves one, however, with a decided feeling that the agitation for them is pretty much a "talking point" in the process of developing public interest in changing the methods of public business, very serviceable, of course, to the candidates who are conspicuously eager to "trust the people." As a matter of fact, direct legislation to be successful, will need keen and intelligent public interest. Such an interest would result in a wiser choice of more responsive representatives and accomplish the same results with less strain on the electorate. The disinterested advocates of changes in the mechanism of government in this case are overemphasizing the form to the neglect of the spirit. The new attitude of the public mind will soon be sufficiently strong to secure complete expression in government with or without the aid or hindrance of direct legislation.
No one may expect the new weapons to destroy quickly the old institutions that have become abuses. They are too well rooted to die without a struggle: but in time they will die. There is no longer that upon which they can live.