Some Political Phases of Government Ownership

I

THERE has been a revival lately of proposals for and discussion of government ownership in the United States. Congress within recent years has enacted legislation creating postal savings banks and a parcel post; and former Postmaster-General Hitchcock advocated government purchase of the telegraph lines. An act for government construction of railroads in Alaska has been passed. Senator Kenyon of Iowa has proposed that Congress create a commission to investigate the results of public ownership of railroads abroad. A committee of post-office officials lately reported in favor of acquiring the telephone lines. And Senator Kenyon and Senator Marline of New Jersey, after serving on the committee which investigated the strike, in 1913, in the coal-mines of West Virginia, reported in favor of government acquisition of all coal-mines, to prevent such strikes.

The people favored the postal-savings-bank and parcel-post laws. They may have approved government construction of railroads in Alaska, although few had considered the question on its merits. Doubtless but a small minority has studied the expediency of such gigantic projects as purchase and operation of telegraphs, telephones, railways, and coal-mines. But the fact that prominent, public men do make such proposals is significant. They usually know what ideas have taken root in the public mind, and what it is prepared to receive. Most Americans still mistrust state enterprise. But the feeling is not so strong as formerly. Unless a good case shall be made against public ownership, sentiment may crystallize in favor of state telephones, telegraphs, railways, and mines. The continuance of private ownership even of farms is not certain. The movement for the single tax is in its essence a movement for the public ownership of land.

In view of these facts, serious discussion of the probable results of state socialism under the conditions in the United States is pertinent. The effects of the nationalization of merely the great public-service enterprises, such as the telephone, telegraph, and railway systems, would be numerous and important enough. Still more varied, numerous, and momentous would be the results if the coal-mines also should be made public property.

One of the important questions raised is whether government ownership and management would increase or reduce the economic cost of production. The government can raise capital cheaper than private corporations. But the government would manage as well as own. Would its management be so efficient as to conserve the saving in the cost of capital? If government management were efficient, and the cost of production were reduced, it would be possible to improve the services rendered, reduce rates or prices, raise wages, and improve working conditions, or turn profits into the public treasury. If government management were inefficient the results would be of an opposite character.

Thirty-three years ago an Italian government commission made a most thorough investigation of public ownership of railroads, and reached several important conclusions. One was that under government ownership, ‘politics,’ as President Hadley phrased it, ‘would corrupt the railroad management and the railroad management would corrupt politics.’ This would cut the public with a two-edged sword. Political influence would cause the government industries to be ill-managed. Nothing else is so fatal as such influence to the efficient management of state enterprises. And if the state management should become a factor in politics, then politics would be demoralized. No influence holding a greater menace to free institutions could be injected into politics than the influence of government departments which controlled the expenditure of billions of dollars annually and employed millions of voters.

Most of the concerns the nationalization of which is suggested render ‘ public services.’ Therefore, under private ownership, they must secure franchises from the public, and are subject to government control and regulation. In connection with this control and regulation various questions of public policy arise which often get more or less into politics. One is, what rates the concerns shall charge. Another is, what improvements and extensions they shall be allowed or required to make, and on what terms. Still another, is the conditions under which they may require their employees to work. In some cases the wages they shall pay have nearly got into politics. Under government ownership, questions of similar character regarding all of the nationalized industries might be drawn into politics.

II

In the consideration of the rates or prices of a concern regulated or managed by government, controversies and antagonisms spring up between different classes of buyers of goods or service, who think that unfair discrimination is practiced as between them. They develop between different communities which think that they are not equitably dealt with. They spring up and become embittered between those who sell the goods or service and those who buy them.

In many cases the questions raised by such controversies and antagonisms have, under private ownership, become issues in politics in the United States. The public-service companies have tried to defeat or minimize public regulation by seeking to control the nomination and election, and the subsequent official action, of lawmakers and other public servants. The publicservice companies which have used these methods have not alone been at fault. Sometimes they have employed them to prevent ‘ strike ’ legislation. Sometimes the campaign contributions and bribes which they have given have been blackmail.

In time the public found that regulation by mere legislative enactment usually is either futile or harmful. Experience taught it that the way to take public-service corporations out of politics, and at the same time to make regulation effective, was to delegate the work of regulation to administrative commissions. The increase of regulation, and the change of its form, have reduced the influence of the public-service companies over politics, and seem to have shown that they can be used to destroy it.

While the public-service companies have ceased in most places to be an important factor in politics, politics, unfortunately, has continued to be a factor in the regulation of their rates as well as of other features of their business. But the extent to which politics influences state regulation has declined, while so completely has regulation of interstate rates been turned over to the Interstate Commerce Commission that it has almost ceased to be a factor in national politics.

If the railways, telegraph and telephone systems, and other industries whose interstate operations are now regulated by the Interstate Commerce Commission were acquired by the government, the fixing of their rates might be left in the hands of the Commission. But whether this would be done is questionable. The government charges the people for carrying their letters, newspapers, and other mail; and the question has been raised whether the rates, especially for second-class mail, are reasonable; but the government has never had an expert and impartial investigation of the subject made by the Interstate Commerce Commission or any similar body. The government employs the railways to carry the mails, as passengers and shippers employ them to carry them and their goods. But the government does not submit the reasonableness of its mail-pay rates to the Interstate Commerce Commission, as the reasonableness of passenger and freight rates must be submitted to it. The rates for which the railways must carry the mails are fixed arbitrarily, and largely on political considerations, by Congress and the Postmaster-General. The law gives the Interstate Commission some authority over the parcel-post rates; but those rates also have been fixed arbitrarily and on political considerations by Congress and the Postmaster-General. If the telegraph and telephone systems were acquired they would be incorporated into the postoffice department, and the control of their rates probably would be withdrawn from the Commission. The authority to fix railway rates doubtless would at first be left with the Commission. But, wherever the rate-making authority might be lodged, it is doubtful whether telephone, telegraph, or railway rates could, under government ownership, be kept out of politics.

Under government ownership the existing limitations on the fixing of rates by public authority would be razed. Chief among these is the constitutional rule prohibiting the making of rates which deprive a company of a fair return. Under this rule, lawmakers and courts must fix rates according to the special conditions of each case. The result is, especially as to railways, that the rates allowed to be charged are much higher in some parts of the country than in others; in the west and south than in the east. Under government ownership the dominant part of the public could have rates fixed in any way that wisdom, caprice, political expediency, or selfish interest might suggest. For it would always be possible, if any body to which the ratemaking authority was delegated should refuse to make rates as any section or class wished, to appeal to Congress. Congress could require the recalcitrant regulating body to be reorganized, or could abolish it, as it abolished the Commerce Court when that court’s decisions did not suit it. Or Congress might lay down new principles according to which the regulating body must act; or prescribe whole schedules of rates itself.

Now, it is very likely that under government ownership the people of the parts of the country where rates are relatively high would demand that their rates be made as low as the lowest. But if this were done, the earnings of the government railways would be heavily reduced. Losses would result which would have to be met by taxation of the entire public. Therefore, the people of the more populous and industrially developed sections very likely would resist the demands of other sections for reductions of rates. This would raise an issue over which bitter political struggles might be fought. Political struggles have resulted from similar causes even in Germany, where politics exerts less influence on state railway management than anywhere else. In Canada, on the government-owned Intercolonial Railway, the rates are thirty per cent lower than the average on the other railways of the country. Owing to this — and to its uneconomical management — the Intercolonial for years has not earned its interest, and in 1913 did not earn even its operating expenses. Its low rates operate to give a subsidy to the people living along it, which all the people of Canada pay back in taxes. And this subsidy has exerted a more than negligible influence on the results of recent elections in the eastern provinces.

All who use railway or telegraph or telephone service largely, have a motive for seeking to have the rates for the service made low. But it is to the interest of the general public under government ownership to have rates charged that will at least cover operating expenses, depreciation, and interest on the investment. Otherwise, as on the Intercolonial, there results a deficit which must be paid from taxes. In view of this conflict of interest it is easy to see how, under government ownership, the question how high rates in general should be made, or what rates should be charged this or that large class of users of public services, might become a political issue.

The history of the United States is not devoid of examples of struggles affecting sectional or class interests which have resulted in legislation based, not on scientific and economic, but on political principles. The tariff question, which, while much less complicated and important, is in many ways similar to the railway-rate question, has exerted a corrupting influence on American politics for a century and a quarter. If government ownership of railways, telegraphs, mines, and so forth, should be entered upon, the question what rates and prices should be charged for their services and products probably would add a page to our history similar to that written by the tariff. It is frequently said that under government ownership the fixing of rates for public services would be intrusted to a non-political commission. It is significant that, although long advocated, no such step has been taken to remove the tariff from politics.

III

Under state socialism it would be necessary for Congress to determine, directly or indirectly, what expenditures should be made for increasing and improving the facilities of the state industries, and for carrying on their services. The annual investment in additions to and permanent improvements in the concerns whose properties it is proposed to nationalize, is enormous. Recent years have been a period of relative depression in the railway business in the United States; yet the investment of new capital in the railways alone, during the five years ending June 30, 1913, averaged about $700,000,000 a year. The similar investment of the American Telephone & Telegraph Company in its telephone lines amounts to about $56,000,000 annually. This annual new investment in the Bell system is $5,000,000 greater than the largest expenditure ever made by the government on rivers and harbors in any year, while the annual new investment in railways is fourteen times the maximum annual appropriation for rivers and harbors, and about equals the total expenditure on rivers and harbors since the foundation of the government. Under normal conditions the new investment made annually by the concerns whose properties it is proposed to nationalize is well over $1,000,000,000. Under either private or public ownership the amount invested must steadily, and even rapidly, increase, if the services rendered are to keep pace with the demands and needs of the public.

Under private ownership and management it is necessary in many cases for railway, telegraph and telephone, and other public-utility companies to obtain authority from public bodies to make extensions and improvements. In their attempts to secure favorable action, public-service companies have often resorted to improper methods. But in a great majority of instances public-service companies decide upon and make expenditures for their additions and improvements without reference to or effect on politics.

Would it be possible, under public ownership and management, to make extensions and improvements involving an investment of at least one billion dollars annually, with as little effect on politics as is the case under private ownership? Are the expenditures of the government for rivers and harbors and public buildings made regardless of political considerations and without political effect? On the contrary, the appropriations for these purposes, and even those for army posts and naval yards and stations, influence and are influenced by politics. Repeatedly have high-minded and patriotic public men—such as sUnited States Senator Theodore E. Burton of Ohio— denounced the grossly wasteful appropriations made by Congress for the political benefit of its members, and spread the disgraceful record before the public.

‘The desire of Congressmen for reelection,’ declared Senator Burton recently, ‘ and the local pride of selfish districts frequently occasion indefensible expenditures for both these purposes [the erection of public buildings and improvement of rivers and harbors]. It would hardly be exaggeration to say that one third of our total appropriations for rivers and harbors has been wasted by the extravagant and unscientific system under which they have been applied. . . . By this same system of framing appropriation bills for public buildings, political considerations triumph over the needs of the service and considerations of public economy and efficiency. As a result we have these bills written with an eye to the number of congressional districts in the country rather than to more patriotic considerations.’ It is sometimes said that these abuses are decreasing. ‘The most discouraging feature of this condition,’ declares Senator Burton, ‘ is that it seems to be growing worse each year.’¹

In many countries appropriations for government railways have played the same kind of part in politics that appropriations for some public purposes play now in the United States. In the earlier history of railways a number of lines were built by individual states in this country. In every instance evidence was afforded that under government ownership politics is likely to corrupt the railroad management and the railroad management to corrupt politics. The experience of North Carolina is typical. The North Carolina Railroad, which was built by the state, began at Goldsboro and was laid out in the form of a horseshoe, which disregarded both physical and traffic considerations. Its historian explains that unless the road ‘had gone to the home of Governor Morehead, had passed by Hillsboro, the home of Secretary of the Navy, Governor, and United States Senator Graham, and other distinguished men, had taken in the state capital in its route, and terminated in the midst of the descendants of the signers of the Mecklenburg Declaration of Independence, it could not have come into existence at all!’ ‘So long,’ he adds, ‘as the state attempted to operate it, the political factions along its route had to be appeased by seats in its directorate, and favors more or less discriminating were a necessity both to individuals and to influential centres.’ ²

Expenditures on the railways always have been used more or less to influence political results in Australia and New Zealand. When New Zealand began railway construction in the seventies the government had a comprehensive plan for the development of the lines. ‘But from every part of the country arose a clamor for a fair share in the public expenditure, and the appropriations were doled out to more than thirty different districts with undue regard to political influences.’³ To these perversions of the original plan has been attributed the financial failure of the state railways of New Zealand.

The most recent example of the kind is afforded by Canada. It was decided by the Dominion Parliament that another transcontinental railway should be built. It was determined to turn it over for operation to the Grand Trunk Pacific Railway Company. The construction of the eastern part, known as the National Transcontinental Railway, was, however, undertaken by the government itself, and delegated to the ‘National Transcontinental Railway Commission,’ In its earlier life this commission had no member with railway experience. Progress with its work being unsatisfactory, the government in 1913 created another commission to investigate it. In January, 1914, this commission, of which the general manager of the government-owned Intercolonial was chairman, reported that the National Transcontinental Commission had wasted at least $40,000,000, and made numerous detailed allegations regarding expenditures dictated by political considerations or by something worse. It charged that the part of the line in New Brunswick, which cost $35,000,000, was unnecessary and that it was built to placate the supporters of the government east of Quebec. It stated that the original estimate of the cost of the National Transcontinental was $61,415,000; that the expenditures to September, 1911, had reached $109,000,000; and that the estimates then made indicated that the final cost would be $161,300,000.

In view of such experience in this and other countries, how can anybody doubt that, without a complete revolution in American politics, the appropriations for additions to and improvements in the railways and other large public utilities would, under government ownership here, be made largely with an eye to politics? How can we assume that communities which now demand appropriations for the ‘improvement’ of little streams which can never be navigated, would not, under government ownership, insist that their representatives and senators get them ‘their share’ of appropriations for the construction of new railway lines, regardless of the welfare of the nation as a whole? How can we assume that towns and cities which demand appropriations for public buildings the cost of which is utterly disproportionate to the population and business served, would not under government ownership demand that their Congressmen get appropriations for railway stations whose cost would be utterly disproportionate to the population and business accommodated?

If public men cannot, or will not, resist the demands made on them now, how can we assume that they could and would resist the new and larger demands that would be made on them then? And if the relatively small appropriations for public buildings and rivers and harbors play such havoc in our politics now, what would be the effect produced by the relatively enormous appropriations which would be made under government ownership of telegraphs, telephones, coal-mines, and railways, for the improvement and development of these properties?

In the construction and operation of railways, telegraph and telephone systems, and mines, it is necessary for the managements, whether state or private, to have many business dealings with contracting, manufacturing, and mercantile concerns. The manufacture and sale of railway equipment and supplies alone constitutes one of the largest industries in America. Billions are invested in it; and the number of men employed almost, if not quite, equals the number employed by the railways. There sometimes is graft in new construction and in the purchase of equipment and supplies under both private and state ownership. But there is no politics in them under private ownership, while there almost certainly would be under public ownership.

The promise of tariff legislation that would benefit them has always been used by one of our political parties to catch the votes of numerous large concerns and their employees. Under government ownership the argument that one party was more disposed than another to make large expenditures which would increase the business of equipment and supply-manufacturing concerns, might be used very effectively to attract the support of these concerns and their workmen. The commission which investigated the construction of the National Transcontinental Railway by the Canadian government charged that contracts had been let for the specific purpose of influencing national elections, and in one case even a local election in Quebec.

We have seen how large are the expenditures for improvements and extensions in the industries which it is proposed to nationalize. The expenditures for equipment and supplies used in them in the ordinary course of operation and maintenance are probably equally large. These latter outlays for the railways amount to $700,000,000 annually; for the telegraph and telephone systems to about $100,000,000 annually. If any considerable part of these sums should under government ownership be so laid out as to influence politics the results would be demoralizing.

IV

From a political standpoint, the most important phase of the question of government ownership is the effect which would be produced by the transfer of millions of voters from private to public employment. The following table gives the numbers of employees in the civil service of the government, and of those in the service of the steam railways, electric railways, and express, telephone, telegraph, and coal-mining companies respectively, in the years mentioned: —

The table includes some employees who probably would not be transferred to government service. Such are those of the street railways, which are more likely to be municipalized than nationalized. It does not include some who doubtless would enter government service, as those of the Pullman Company and the private freight-car lines. On the whole, it gives a conservative idea of the number who would soon be employees of the government if such a policy of nationalization as is advocated should be adopted. Furthermore, at present, eight hours is a day’s work in government service, while the standard working day on railways is ten hours. Therefore, if no change should be made in the hours of work of government employees, there would be, under government ownership, a reduction in the working hours on railways which would necessitate an increase of over 350,000 employees. In most other countries there have been large increases in the numbers of employees when railways and other concerns have been nationalized, even when there has been no change in the working day. It is safe, therefore, to estimate that, if the various projects for government ownership should be carried out, there soon would be almost 4,000,000 men in government service. If only the railways, telegraphs, telephones, and affiliated systems of communication and transportation were nationalized, the number of government employees woidd soon rise to 3,000,000. The total number of votes cast for president in 1912 was 15,036,542. The total number of qualified voters is about 21,000,000. Thus the number of government employees would, in such case, amount to from 20 to 25 per cent of the largest vote ever cast for president, and from 14 to 20 per cent of the total qualified electorate of the nation. What would be the political effect?

The present regulations concerning the political activities of government employees are strict. Civil Service Rule I, section 1, provides that employees subject to the rules, ‘while retaining the right to vote as they please and to express privately their opinions on all political subjects, shall take no active part in political management or in political campaigns. . . . Petitions or other communications regarding public business addressed to the Congress, or either house, or any committee or member thereof, by officers or employees in the civil service of the United States, shall be transmitted through the heads of their respective departments or officers, who shall forward them without delay, with such comment as they may deem requisite in the public interest. Officers and employees are strictly prohibited from attempting either directly or indirectly to secure legislation or to influence pending legislation except in the manner above described.’ It is further provided that ‘an employee may not publish or be connected editorially, managerially, or financially with any political newspaper, and may not write for publication any letter or article, signed or unsigned, in favor of or against any political party, candidate, faction or measure.’

If the railways and other industries should be nationalized, an attempt would be made to apply these rules to their employees. The employees of the railways, at least, foresee this, and the leaders of their unions detect in it a powerful argument, from their standpoint, against government ownership. The railway labor organizations now use political means constantly to secure changes in conditions of employment and in railway plants and operating methods. At their conventions they adopt resolutions commending public men who assist them to secure legislation, and denouncing those who oppose them. They have at every state capital and in Washington legislative agents who buttonhole lawmakers persistently, to get votes for their traincrew bills, locomotive-headlight bills, and so on. They have publications through which they urge their members to support public men who are ‘friendly’ and oppose those who are ‘unfriendly.’ By such means the brotherhoods secure the passage of scores of laws and control the choice of many public officials.

If the nation should acquire the railways, the state laws regulating them which the brotherhoods have got passed would be wiped out. A state cannot regulate an instrumentality of the federal government. And if the existing civil-service regulations should be applied, the machinery the brotherhoods have built up for influencing legislation would be destroyed. The highly paid conductors and locomotive engineers contrast their incomes, conditions of service, and freedom of political action with the situation of government civil employees; and they declare that if public ownership would reduce railway employees to the ‘ servitude’ of railway-mail clerks they want none of it.

But it is not certain that the present civil-service rules would be applied to employees of government railways, telephone and telegraph systems, and coal-mines. They would not be if these employees could prevent it; and their numbers would give great potency to their resistance. Besides, while the rules restrict the political activities of government employees, they cannot keep members of Congress from passing legislation for the benefit of employees, or forbid employees to reward their benefactors with their suffrages. Finally, even if the civil-service rules should be extended to the new employees, it does not follow that they would be enforced. The control exercised over the two per cent of the qualified voters now in the government service is no criterion of the degree of control which could be exercised over from ten to twenty per cent of the qualified voters.

If the railways, mines, and other industries should be nationalized, there doubtless would be created to manage them departments hedged about with legislation designed to make them independent of political influence. The officers of these departments doubtless would try to operate the properties efficiently and economically. But efficiency and economy are not consistent with the constant granting of higher wages and easier conditions of work. And, on the other hand, no body of men ever was satisfied for any considerable period with its wages and conditions of employment. Therefore, in the course of a short time the employees would ask for concessions which the managements would refuse. Even under existing civil-service rules the officers would be obliged to transmit the employees’ petitions to Congress. In this or some other way it would speedily be made necessary for members of Congress to go on record either for or against the demands of the employees. Does not experience show that most of them, before they went on record, would consider the probable effect on their political fortunes? Members of Congress are human; and the number of humans who will act contrary to their selfish interests when no plain question of personal honor is involved is not large. Now, on every such issue the general public would be divided, or its attention would be distracted by other issues. But on such issues the government employees would be united. The hundreds of thousands of their relatives and friends would stand with them. The result would be that with respect to these special questions they and their sympathizers would usually hold the balance of power. Many members of Congress would therefore decide that it was to their selfish interest to side with the employees.

Let us suppose, however, that Congress should support the managements in refusing to make important concessions to the employees. By ‘ plumping ’ at the next election for the Congressmen who sided with them and against those who sided against them, the employees and their sympathizers could largely determine the personnel of the next Congress.

To inject the wages and conditions of employment of from two to four million voters into politics would be to inject a most corrupting and demoralizing influence. Elections and legislation should turn on questions affecting the welfare of the entire public, never on issues affecting the selfish interests of but a part of it. When they are determined by class interests and considerations, government in this country will no longer be democratic. It will be oligarchic.

V

The experience of other countries throws light on the effects which would be produced by taking a large body of voters into the employ of our government. In Prussia the government employees exert little influence on politics. But the conditions there weaken, rather than strengthen, the argument for public ownership here. In Prussia under the three-class voting system, which is based on property, the political power of the working classes, including state employees, is extremely small in proportion to their numbers. Besides, government employees are not allowod to organize in any way or for any purpose not sanctioned by their superior officers. The political status of the Prussian state-railway employee has been thus described by J. F. Mills, in an article in the Railway Review, the publication of the National Union of Railway Men of England: —

‘The [Prussian] government’s feudal conceptions may be realized from the fact that it regards its employees as bound to it body and soul, politically as well as industrially; and the open voting system places a terrible power for penalization in the hands of the state authorities, should the state employees choose to vote for candidates of whom the government does not approve. In fact, for state employees to exercise the elementary right of citizenship by voting for the candidate and policy most in accord with their own views, is to run the risk of forfeiting their posts and jeopardizing their livelihood.’

The autocratic Prussian state has kept its employees from resorting to political action; but this result has been accomplished at the sacrifice of their political freedom. They do not dictate to the government; but the government does dictate to them. It cannot be said that government ownership has no political effects in Prussia: it strengthens the government and makes a political nullity of the employees.

Let us cross into France. Here the state is half-democracy, half-bureaucracy. The government owns two of the seven large systems of railroads, the telegraph and the telephone, and has monopolies of the tobacco, match, and other industries. According to the estimate put forward by Mr. William Morton Fullerton, in his book, Problems of Power, 900,000, or eleven per cent, of the 8,000,000 voters are employees of the state. The results are graphically described by Mr. Fullerton. The state employees are allowed to form unions; and the civil servants have been rapidly grouped into organizations designed to get from the state everything that they can. ‘At present there are in France at least 488 professional associations of state employees in the big central government offices, and 202 unions representing the state employees in the match factories, the tobacco factories, the mint, the state railways, and so forth. These various unions are united in a general federation, and it is this colossal new force, which has been encouraged by the state, that was suddenly brought to the notice of the public by the postmen’s strike of March, 1909.’

Appointments to desirable positions in the service are used to further the political ambitions of members of the Corps Legislatif. As Clement Colson, the leading authority on French railway affairs, has shown, when the government in 1908 took over the Western Railway, it turned out the experienced officials to make places for politicians. Political influence being paramount, members of the Chambers are constantly besieged for appointments; and, as Mr. Fullerton says, ‘the deputy is tempted to become a traveling salesman of political or social favors and jimcracks, in return for votes or local influence,’ while ‘ government in France is the tyrannical monopoly of a minority,’— the ruling minority being the employees of the state.

Both reason and experience indicate the impossibility of any government’s taking into its service a large part of the voters without serious political results. A government may succeed in adopting and enforcing rules strictly circumscribing the political activities of its employees. But to do that it must be so strong, or must be made so strong, that the political liberties, not only of its employees, but of the great mass of the citizens, will be repressed or destroyed. In most countries, including the United States, the government is much more likely, if it takes into its service a large part of the voters, to prove unable to restrain them from resorting to political action. Then the employees become the masters, not the servants, of the public, establishing, as in France, ‘a tyrannical government of the majority by the minority.’ Once let from two to four million voters be brought into the service of our government, and able and unscrupulous men will be able to use them to build a political machine which will dominate the nation.

VI

The fundamental trouble with government ownership is that it reverses a tendency which has marked the progress of modern civilization and has contributed greatly toward promoting it — the tendency toward differentiation of political and economic functions. Under the patriarchal system all political, social and economic functions were concentrated in the patriarch. He was the head of the family, captain of industry, military commander, chief priest, king. Even under feudalism varied and numerous functions and powers were united in the baron. His economic power, and his military and political authority, were coextensive. His retainers were forced to fight for him in order to keep their right to exact a living from the soil; they had to cultivate his land to secure from him protection from the attacks of others and to obtain justice in his court; and it was from these conditions that the evils of the feudal system chiefly arose. The king was, politically and economically, merely a greater feudal baron. From the Middle Ages to the present time the differentiation of these various functions, while often retarded, has never ceased.

Most important of all, perhaps, has been the segregation of the political function of ruling from the economic function of directing industry. The doctrine of laissez-faire, so ardently preached a century ago, was little more than the doctrine that the function of ruling — that is to say of maintaining peace and order — and the function of managing industry should be kept separate, and especially that the former should not needlessly interfere with the latter.

Doubtless for a time laissez-faire was carried too far in both theory and practice. But it is notable that it was during this time that the greatest impetus was given to the development of political freedom, on the one hand, and of industry, on the other.

Government ownership is a movement backward because it would reconsolidate political and economic functions. There must be some sovereign power. This power must be the political power. And by appropriate means and tribunals the political power should so control the management of industry as to prevent and correct abuses not prevented or corrected by economic law. But it does not follow that the sovereign political power should itself assume the exercise of gigantic economic functions.

The modern industrial system has sometimes been likened to the feudal system, because great captains of industry have sometimes used their money and the votes it has enabled them to command, to dominate and corrupt the politics of cities, states, and the nation. When this condition has existed, however, the real vice in it, as under the feudal system, has consisted in the union of political and economic power in the same hands. Those possessing the two kinds of power have been able to use their economic power to attain their political ends, and their political power to attain their economic ends; and both politics and legitimate business have suffered.

Public ownership often is advocated as the only effective means of destroying the corrupting alliance of big business and politics. But already the two great movements for the purification of politics and for the regulation of concerns of a monopolistic or quasimonopolistic character have practically dissolved this alliance, and are raising the tone of politics and reducing the abuses in business. A continuance of efforts to purify politics and improve government, and to use the power of government to destroy and prevent economic and social evils, while avoiding placing unnecessary restrictions and burdens on the exercise of private initiative and enterprise, will have beneficial effects on both politics and business. On the other hand, the adoption of an extensive policy of government ownership would once more combine great political power and great economic power in the same hands.

In the recent past this power has been combined in the hands of leaders of industry; under government ownership it would be combined in the hands of leaders of politics. For government management, like business management, is always more a thing of men than of machinery. Men always have their leaders and bosses, whether in war, or business, or politics; and it is the leaders of politics, whether statesmen or bosses, who really manage the government and who under public ownership would control the management of elections, on the one hand, and of government industries, on the other. They would then exercise a total power incomparably greater than was ever exercised by any body of men in this country. They would have the same political power of the ordinary kind that the leaders of the party dominant in the government have now. The power to determine what rates and prices should be charged by concerns earning billions of dollars annually would be a great power; and they would have it. The power to make contracts for expenditures that amount to billions annually would be a great power; and they would have it. The power to determine whether millions of men should be allowed to keep their jobs would be a great power; and they would have it. The power largely to determine how millions of men would vote, and thereby what men should keep or lose public office, would be a great power; and they would have it. And these would be powers which, once acquired, might be transferred from one group of political leaders to another, but which could never be dissolved into their elements without abolishing government ownership itself; and to abolish it would be much more difficult than to adopt it.

Big business never controlled anywhere near as many voters as it is proposed to take into the government service; yet big business has managed at times to control the politics of cities, of states, and of the nation. In politics, as in war, a small, relatively wellorganized, well-disciplined force is more powerful than a far larger body, if untrained and undisciplined.

If all the aspects of government ownership be considered, the conclusion must be reached that its extensive adoption would be destructive of both the economic and the political welfare of the people of the United States. The people would find that they had created an economic and political Frankenstein which would not only be able to undermine their material well-being and destroy their free political institutions, but which would be irresistibly impelled by its very nature to accomplish this work of ruin.