CHAPTER XXIV

THE COMMON GOOD

THE selfishness and shortsightedness that have shown themselves so flagrantly in the exploitation of our natural resources are to be found in a hundred ways impeding the socially efficient conduct of American business. Money is thrown into ventures that promise quick returns, and withheld from undertakings far more imperative from the public point of view. The bankers, who lend the funds for new enterprises, enlargements of plant, or production for future sale, have it within their power to considerable extent to favor or withhold favor at their discretion. The people as a whole, and their representatives, have little opportunity to decide whether, for example, agriculture or manufacturing or transportation should be aided with credit, whether housing should be encouraged, whether the savings of the American people should be invested in this country or abroad. Yet these are matters that vitally concern the nation as a whole.

Take the matter of housing. For several years we have been in dire need of hundreds of thousands of homes. The building of private houses, apartments, and tenements has fallen far behind the growth in population. The result is a widespread discomfort, much serious inconvenience, and, for the poor, an overcrowding that is undermining the health and the morals of a considerable section of the population.

Yet theatres and garages have been going up in unprecedented numbers; money has poured into foreign investment in a great volume, lured by the low exchange rates; all sorts of socially unnecessary undertakings have been launched. The country is prosperous, but it apparently can not get, under the present management of its savings, the homes it imperatively needs.

Moreover, in the conduct of a given business, the criterion of success has been the amount of profits it has paid to its stockholders, rather than the service it has rendered to the public. Recently an advertising circular of a well-known moving-picture concern stated, with pride, that it had taken in five million dollars in less than three years from an original investment of $114,000. In other words, movie patrons had been made to pay for their seats enough more than the cost of producing and showing these pictures to pile up this yield to the producers. But this is not social efficiency, it is merely efficiency in making money for a few people by charging unnecessarily high rates to the rest of the people.

So, to take another example, has it been in lifeinsurance. The companies pay high salaries to their officers and high commissions to their agents, with the result that fifteen per cent cost of doing business has been considered reasonable. The United States government during the war insured four million Americans at an overhead cost of less than two per cent. It is needless to multiply instances. Mr. Roger Babson, the conservative financier, has expressed the point of the matter in the following words: "The dominant thought in our whole industrial machinery is not how we can produce the most, but how we can profit the most."

Individual energy and initiative in business must indeed be encouraged. But the public must find ways to control that energy and initiative in the interests of the common good. The laissez-faire policy has shown its insufficiency. It is not merely the selfishness of men that needs checking, it is their honest stupidity, their shortsighted folly. Every year there are many thousands of business failures in this country. These usually involve economic waste and confusion, unemployment, a partial paralysis of the industrialcommercial system, as well as an incalculable amount of anxiety and despair. The great majority of suicides are due to business reverses; and suicides are increasing in this country far faster than the population. It is clear, from every angle, that private business must be far more carefully watched and controlled than heretofore.

It is not that we are fundamentally a selfish people. On the contrary, no people are more generous than we in giving to the needy. The record of our philanthropies astonishes the world. But this is still, for the most part, private altruism; "business is business," still. And it can hardly be otherwise, if it is left free from legal control. For the contagion of profit-making is inevitably irresistible to most participants in the struggle. It is not merely for the money, it is for the pride in success; and success, according to present standards, means large profits. The business man who puts the public service first is in danger of being elbowed out by some less scrupulous rival. How can one employer refuse to use child-labor when his rivals, by using it, are underselling him? Or when the stockholders, whose servant he is, are demanding dividends as large as those his rivals produce? The game of business as it is played

at present is a hard game; and unless one is exceptionally able or favorably situated, one must play it according to the accepted rules. If the results are often socially undesirable, the rules of the game must be altered.

Our fathers were so afraid of governmental tyranny that they wanted the power of the State as slight as possible. But the tyranny of today is not the tyranny of the State, it is the tyranny of money-making business. "Don't deceive yourselves for a moment," President Wilson has written, "as to the power of the great interests which now dominate our development. They are so great that it is almost an open question whether the government of the United States can dominate them or not." In the pioneer days, all were fairly equal in possessions and opportunities; free land was available for every one; the State could leave them to work out their individual salvation. Today our lives have become endlessly interlinked; and the men who hold strategic positions have enormous power over our pocketbooks and our lives. The personal morality of the older preaching must be supplemented by a "social gospel," a doctrine of common responsibility for the common welfare.

President Wilson, even when championing the "new freedom," pointed out that freedom alone is an insufficient ideal. "The individual is caught in a great confused nexus of all sorts of complicated circumstances; and to let him alone is to leave him helpless as against the obstacles with which he has to contend; and therefore, law in our day must come to the assistance of the individual." The weak must be protected against the strong, the scrupulous against the unscrupulous. And nothing but law can accomplish this.

For we must not expect a new social-mindedness to replace the selfishness in men's hearts through the mere preaching of a gospel of repentance. Exhortation will accomplish little, in the face of daily temptation and the sight of others "making their pile." Moreover, it is not right to expect any business man to run the risk of failure-itself a social lossthrough trying to live by a higher code than his fellows observe. No, the more socially-minded conduct of business will come only through the patient construction of a system of guiding and restraining laws. This legislation will not be irksome to the socially-minded, who will see its value, but it will restrain the unscrupulous and the greedy from conduct which tends to lower the standard of practice all along the line.

We must recognize the fact that the capital which is invested in business has come out of the pockets of the people as a whole. For example, the Federal Trade Commission recently pointed out the origin of the capitalization of the meat-packing concerns. One of these concerns has put into its business about fourteen million dollars got from the sale of stocks and bonds, and about a hundred and forty million dollars gathered from the profits on sales. This is the public's share of the investment—about ninety per cent. Add to this the fact that the site-value of their plant has increased enormously owing to the growth in population, and we must realize that most of this property, though legally and legitimately theirs, has been contributed by the public, and must, therefore, be administered in the public interest.

Most business men themselves, if they are educated to realize the social harmfulness of certain practices, will vote for laws to prohibit them, although if there