Bankruptcy Mill
I
WHEN Milltown was growing rapidly, a few years ago, the citizens felt a little aggrieved at having to go elsewhere to obtain the benefits of Federal justice. The situation has recently been relieved, though hardly in the way to rouse local pride, by regular visits from the Referee in Bankruptcy and his assistants. Quite suddenly Milltown, which had been booming broadly and handsomely, began to spawn so many bankrupts that the United States found it advisable to install local service, with regular sittings.
The Referee sat in one of the courtrooms of the new county building, his mercy seat being directly under a rather astonishing mural painting of agricultural blessedness. In this scene of beaming plenty, stalwart humans of the hardy stock which settled this county are revealed at their pioneering tasks — chopping trees and bringing in the harvest sheaves. Court attendants, who perforce study this painting closely while the lawyers are talking, point out all manner of minor anachronisms in it, both of anatomy and of costume, but there is no mistaking the atmosphere of placid plenty which it exudes, and its hale glorifying of the good old ways of Man to Earth.
Beneath this massive painting living men seemed dwarfed as they came and went, telling their brief, sad stories on the stand. Even the lawyers, though speaking with authority, seemed scarcely of the same race as the Anaks and Goliaths in the picture. The Court himself, possessed of a countenance and bearing elsewhere commanding, appeared little more than a pygmy here, in spite of his elevation on the bench. His comments were brief and hurried, and while he never failed to show either kindliness or shrewdness, one could see that he would relish the end of this sorry business.
II
A young man, almost a boy, took the stand. Married, out of work for months, owed money he could n’t pay, family sickness the cause of debt, no assets, no automobile. If garnisheed, he would lose his present job. Excused. A discharge will be issued.
A somewhat older man, grocer, small store somewhere in a Polish quarter, had bought at top price a decrepit building, quarter down and pay as you earn. When he tried to repair it, the building sagged from age and swallowed his reserve. What’s it worth now? Not half he paid for it. Question arises: his equity is in his wife’s name now; when did he put it there, and was it to defraud creditors? Case put over, but the Judge seemed not very hearty about delay. Wife or no wife, come what may, the man’s ruined. All that remains is to paw over his small assets, and divide mites.
Came a man named Lincoln, gaunt as Abraham; anyone could see he would stand by his debts as long as he could. Had been a farmer, and ruddier then, no doubt, but now carrying the dirty pallor which comes from indoor work around oil. Not much work, too many to feed, no automobile, not much of anything but debts and children. He would n’t mind the debts except that his creditors were bothering him with garnishees on his pay at the factory. So he had to get clear or starve his children. The Law waved him promptly off the stand; in due course Mr. Lincoln will get his discharge.
A wrangle develops over the failure of a Hungarian merchant to list a debt he owes a neighboring baker. Both men are almost scared out of their voices. The Referee tries to make them talk up, cups his ear, calls for silence, cannot get at the root of it, small matter anyway, but he must postpone the case. Chides the lawyers for wasting his time, but is gentle and kind even with them.
Only once does he lose his judicial serenity. This is when one who seems willing to fish in these troubled waters offers one-third face value for a long list of accounts due a debtor. The Court barked him down, but in general the personification of the Law appeared to be every inch a gentleman performing with swift precision the most merciful of all legal activities.
III
When the last case was called, I left hurriedly, to avoid embarrassing a friend, a gentlewoman of the old school, who was about to appear for her final hearing. No doubt the Court placed her case last on the docket so that there would be few observers of the last act in her financial tragedy. She sat, a forlorn, huddled figure, by the only exit, as I hurried past, our eyes not meeting.
Mrs. Clare, after her husband’s death, took to speculating. An extremely thrifty person in all respects, her initial successes convinced this delicate, quiet woman that she was a second Hetty Green. She pyramided her winnings with what might be considered the coolness of a professional gambler, except that events showed it to be merely the courage of ignorance. At the peak of stock prices she might have sold out for close to a million, but she could not let go. She never spent any profits, never grew extravagant, never had any fun out of her money. Her bank wisely sandbagged her out of the market at a point where she still had a choice home and enough income left to finance a standard of living well above her desires or needs. But she would not stay out. Presently she was back in the market on broker’s margins, and in the end lost everything, even her home. With her fortune wiped out, she still owed money; and there, under the pioneer scene her forefathers knew so well, she waited for the final hearing that would establish her as a bankrupt.
Nothing new, I grant you, in her case; merely the old story of the widow grown mighty in her new freedom. She was in the grasp of the spirit of a mad time, when even men deemed wise talked of a New Era, when foolish youngsters actually believed in the stocks they were selling, when everyone with an axe to grind tried to make us believe that his cutlery was responsible for Prosperity. But, having known more than one generation of Clares, I see in the rise and fall of Mrs. Clare something more than merely the downfall of an individual.
Mrs. Clare’s grandparents entered this state while it was still a territory. They took up land from the government in goodly quantities, tilled the best acres, sold the rest, acquired the position of good farmers in a day when a good farmer stood as high as a village merchant. They sent their sons to college, where they became doctors, lawyers, teachers, engineers. Mrs. Clare’s father was a doctor and she married a doctor’s son. Both her father and her father-in-law were substantial men, looked up to as learned in the county seat where they settled. Though neither pursued the main chance too hotly, being healers first and business men second, some excellent real estate came their way and settled in their laps. One of the two died well off, and stores now grace the corner where he lived; but they are not, at this writing, Mrs. Clare’s stores. In other words, a vast amount of risk, labor, and thrift, persevered in by their ancestors to improve the lot of present and coming Clares, has gone for naught, and the Clares of 1932 will be poorer, both actually and by contrast with their neighbors, than were the Clares of 1832.
In her dizzy climb with the boom, Mrs. Clare passed from the middle to the upper economic class, and then dropped clear through the middle bracket into the proletariat, from which it is unlikely that either she or her descendants will emerge for some time, if ever. Of the other cases under review that day, three were those of merchants gone bankrupt, sliding from the middle class into the lower level. Two represented the defeat of efforts to climb from the cellar to the ground floor, while three revealed merely the misfortunes of toilers caught in the wash when the cellar flooded.
IV
The net of the day showed a clear gain of four for the proletariat, and a proportionate shrinkage in the middle class. In some such degree the process is going on all over the country. The question arises, How small a middle class can America and its going institutions stand on securely?
It is an axiom of political philosophy that the modern, democratic, parliamentary state rests on a middle-class base, the middlers holding the balance between the few rich and the many with little or no margin. It seems evident that the middle class in America has been shrinking for a hundred years or more. While figures for that distant day are not available, a close reading of American history fortifies the view that not less than 70 per cent of the population occupied the middle economic ground in 1830. The average income of the members of this massive bloc might be small in dollars, but the dollars went further, contrasts between classes were less sharp, and a large percentage of the people were in a position to absorb unearned increment in land. Once the ancestors of Mrs. Clare, for instance, made good their homestead on the prairie, and ploughed themselves out of debt into security, they moved into a middle class comprising the great bulk of their fellow citizens. But when Mrs. Clare slipped from the middle class to the lower class, she still further reduced a middle class which already held only 27 per cent of the population. This estimate of the middle class at 27 per cent, while the latest I have seen, is probably already out of line. To-day the middle class may be no more than 20 per cent.
Is this process fated and inescapable? Professor Willford King’s great study, The Wealth and Income of the United States, indicates something of the sort; at least it shows that American incomes tend to classify themselves roughly as do those of Prussia. The middle class, apparently, is a party to its own destruction, since it bulwarks a legal and economic status under which, as time runs on, its part of the nation becomes less and less. And, strangely enough, no latter-day effort to expand the middle class seems to be successful unless it follows a revolution performed by a swollen proletariat.
The French Revolution and the Russian Revolution began as middleclass movements, but their respective middle classes were too small to carry those movements through, and the proletarians took them over. Napoleon finally liquidated the French Revolution on the basis of enlarging the middle class by making serfs and tenants into peasant proprietors. Since which time France has been steady. The net result of that revolution was an enlarged middle class which has resisted sternly all tendencies likely to undermine its position.
It is conceivable that the Russian Revolution may follow the same course. Whereas only 7 per cent of pre-Revolution Russians were middle-class folk, the settlement of the nation, in the long run, may find Russia with a middle class five or even ten times as large. Of course, Stalin & Co. will hardly accept this writing off of their titanic labors without an earnest effort to the contrary, but, as in France, a time may come when the only way of saving any of the fruits of revolution will be through middle-class expansion vital to national stability. Settling a nation after a revolution is of all tasks the most difficult, as Cromwell discovered.
The recent edict giving factory managers more authority over trade-unions, and according more opportunity to the intelligentsia, seems to contain at least the germs of middle-class growth, which is essentially the rise to responsibility of able proletarians more interested in practicalities than in politics. But if and when Russia acquires her most conspicuous historic lack, — a middle class, — the shredding-away process, so evident in America, will presumably set in unless that middle class can find ways of preserving itself against the frictions of peace.
V
Above the Law, as its representatives swiftly sorted Americans downward that day in court, soared the picture of a day that is done. Probably the reality never equaled in bland beauty the portrayal on the wall. But at least that was a time when the common man was also a middle-class man, and as such a dependable supporter of the private-property clause of the Constitution, which, after all, is the most important clause in that document.
I repeat: On just how small a middle class can America, as we know it, securely stand? The question might be put another way: How large a proletariat can America, as we know it, hold out against? But that version of it puts the cart before the horse. The proletariat grows in both numbers and consciousness as the middle class dwindles.