The Trouble With Taxing Corporations

On May 28, 2013, Eduardo Porter writes in The New York Times:

The case of Starbucks is particularly troubling for every government concerned about how it is going to finance itself in the future.

As Edward Kleinbard of the University of Southern California noted: if Starbucks could generate so much “stateless” income — beyond the reach of tax authorities both where it makes and sells the Frappuccinos and where it is incorporated as a company — “any multinational firm can.”

That means that as the government seeks new sources of revenue to pay for an expanding safety net and an aging population, it should probably look outside the corporate sector.

“We have a tax problem; we are not collecting enough tax revenue — period,” said Jim Hines of the University of Michigan. “But we are never going to finance what we need with corporate taxes.”

Instead, governments seeking revenue might do best focusing their efforts on taxing people, who cannot flee as easily, or taxing what people consume.

Some of this may come at the expense of progressivity in the tax code.

The Social Cost Of Capitalism

On July 30, 2013, Paul Craig Robers writes on OpEdNews:

Social costs are costs of production that are not born by the producer or included in the price of the product. There are many classic examples: the pollution of air, water, and land from mining, fracking, oil drilling and pipeline spills, chemical fertilizer farming, GMOs, pesticides, radioactivity released from nuclear accidents, and the the pollution of food by antibiotics and artificial hormones.

Some economists believe that these traditional social costs can be dealt with by well defined property rights. Others think that benevolent government will control social costs in the interests of society.

Today there are new social costs brought by globalism. For developed countries, these are unemployment, lost consumer income, tax base, and GDP growth, and rising trade and current account deficits from the offshoring of manufacturing and tradable professional service jobs. The trade and current account deficits can result in a falling exchange value of the currency and rising inflation from import prices. For underdeveloped countries, the costs are the loss of self-sufficiency and the transformation of agriculture into monocultures to feed the needs of international corporations.

Economists are oblivious to this new epidemic of social costs, because they mistakenly think that globalism is free trade and that free trade is always beneficial.

Economists are also unaware of the social costs of deregulation. The ongoing financial crisis which requires massive public subsidies to “banks too big to fail” is a social cost resulting from government accommodating Wall Street pressure to deregulate the financial system by repealing the Glass-Steagall Act, by removing the position limits on speculators, by preventing the CFTC from regulating derivatives, and by turning the Anti-Trust Act into dead-letter law and permitting massive economic concentrations. The social costs of successful corporate lobbying is enormous. But economists who believe that markets are self-regulating imagine that an enormous gain in efficiency has occurred, not massive social costs.

In order to keep the deregulated financial system afloat, the Federal Reserve has monetized trillions of dollars of debt over the last several years. Real interest rates have been driven into negative territory. Retirees are unable to earn any interest income on their savings and have to draw down their capital in order to cover their living expenses.

The liquidity injected into financial markets by the Federal Reserve’s policy of quantitative easing has produced huge bond and stock market bubbles. When they pop, more American wealth will be wiped out and more jobs will be lost.

Consider just one example of the social costs of jobs off-shoring. When US corporations produce abroad the goods and services that they market to Americans, the goods and services that flow into the US arrive as imports. Thus, the trade deficit rises dollar for dollar.

The Undercovered Dark Cloud In The Shrinking-Deficit Story

On May 30, 2013, David Cay Johnston writes in the Columbia Journalism Review:

Look at the monthly Treasury Statements for the current year and previous years, and there is a clear surge in April. Federal receipts grew almost $88 billion to $406.7 billion, up more than 27 percent from a year earlier. That $88 billion is largely from a combination of increased corporate tax revenues and both individual income and payroll taxes.

Federal revenues should grow much faster than the economy in a recovery, even a weak one. That’s because tax rates are higher on higher incomes, and the data available so far (which don’t come up to the present) show incomes rising only at the top since the depths of the recession. For the bottom 90 percent of Americans, average real incomes were actually down 6.7 percent from 2008 to 2011, according to the latest analysis of tax return data by economist Emmanuel Saez of UC Berkeley.

Ordinary income includes wages, salaries and the exercise of stock options. In 2012 the top marginal tax rate was federal 35 percent, but in 2013 that rose to 39.6 percent on taxable incomes above $400,000 ($450,000 for married different-sex couples). In addition, there is a new Medicare surcharge tax of 0.9 percent on salaries and other earned income above $200,000 for singletons ($250,000 for married couples).

The top tax rate on investment income also rose, from 15 percent to 20 percent, prompting many people to sell profitable investment at the close of 2012. And capital gains are extremely concentrated, IRS data show. In 2010, just 7,747 taxpayers—out of 143 million—reported 38 percent of all capital gains. High-income taxpayers also pay a 3.8 percent Medicare tax on most of their capital gains, dividends, interest, rents, and most royalties.

That means that the rise in revenues that helped reduce the 2013 deficit may not owe much to broadly-shared growth—and a good bit of it may just reflect the richest households shifting the earnings away from future years into 2012. A similar surge occurred in 1986, when wealthy Americans took income to avoid paying more the following year once the Tax Reform Act took effect.

The real solution to deficit reduction and elimination, as well as for national debt, is to finance FUTURE economic growth simultaneously with broadening private, individual ownership of wealth-creating, income-producing productive capital assets.

The real discussion should be about OWNERSHIP. The richest Americans are rich because they are OWNERS of wealth-creating, income-generating productive capital assets.

This is the reality of the FUTURE, unless you and I and every other human being with a desire to be someone and contribute to the betterment of society do something about it. It all comes down to what source of income will each of us gain access to and whether we will Own or Be Owned in the economic sense.

The statement “Own or Be Owned” suggests the two alternative worlds of the FUTURE. Today’s reality is that the average citizen does not own wealth-creating productive capital assets (as do the wealthy rich people in our society). To change one’s plight from that of capital-less or under-capitalized and solely dependent on a job or government welfare assistance in one form or another, citizens must share in the ownership of the money system. Most of you out there do not even know how money is created. Money is created when the Federal Reserve Bank (a central bank privately owned) loans it to banks that you have your checking account or meager savings account (if any) with, and the banks re-loan it multiple times because laws allow them to have a fraction of the amount on hand or in reserve in relation to the amount of loans they are allowed to make (fractional banking). This creates boom and bust cycles in the national economy, and empowers an elite few who really OWN America. With proposed Capital Homesteading, the Federal Reserve would serve as a “public bank” and would loan money directly to citizens, who must put it in a personal special super-IRA retirement account which would invest in dividend-paying stocks of corporations that use the money for productive, economy-growing purposes. This would empower all, instead of an elite few and eliminate fractional-reserve boom and bust. It would also provide for unlimited private sector growth, and eliminate the need for socialist welfare programs funded with tax extraction and national debt. This would back the currency with real products or goods and services and reduce the size and scope of government. As government becomes smaller because individual citizens are able to support themselves and their families living off dividend income and resulting REAL jobs, national debt would be retired and demand for taxes would shrink. The tax system would be changed to be far simpler, flatter, and fairer. And all of us would be on the path to prosperity, opportunity, and economic justice to pursue our personal desires and experiences as we become strongly independent and responsible.

Everyone reading this article is invited to visit and consider joining the Web site of the Coalition for Capital Homesteading, an advocacy group advancing the Just Third Way vision and comprehensive system reforms designed to achieve a people-empowered, market oriented, property-based approach to economic democracy at local, regional, and national levels.

What I and my colleagues at the Coalition For Capital Homesteading ( are recommending is that the Federal Reserve become a more accountable and effective engine of non-inflationary private sector growth. We are asking the President and Congress to call on the Federal Reserve to use its existing discount powers under Section 13, paragraph 2 to open up a new source of mass purchasing power through widespread worker and citizen ownership of productive capital.

Today the Federal Reserve uses its powers to monetize unsustainable government debt, bail out banks deemed “too big to fail,” and widen the gap between the top 1 percent and the bottom 99 percent. The Federal Reserve could play a more positive role, removing artificial barriers to equal citizen access to acquiring and owning productive capital wealth. By creating asset-backed money for production, supported by growth-oriented tax policies, the Federal Reserve could truly help promote shared prosperity in a market system.

Chairman Benjamin Bernanke and other members of the Federal Reserve need to wake-up and implement Section 13 paragraph 2, which directs the Federal Reserve to create credit for local banks to make loans where there isn’t enough savings in the system to finance economic growth.

I urge those interested to examine the systems logic behind the Capital Homestead Act’s tax and monetary reforms, expressed in “A New Look At Prices And Money” published in the Journal of Socio-Economics (

Sign the Petition at

Sign the Petition at

Sign the petition at

The answers are to be found in the proposed Capital Homestead Act at and, and the Agenda of The Just Third Way Movement at

After Their Taxpayer Bailouts, Banks Are Raking In Record Profits By Hiking Fees

On May 29, 2013, Omar Rivero writes on

Watch Pulitzer Prize-winning New York Times columnist Gretchen Morgenson tells Bill that, five years after the country’s economic near-collapse, banks are still too big to fail, too big to manage, and too big to trust HERE:

While the American middle-class continues to struggle with an unprecedentedly deplorable jobs market, the very same large financial institutions and multinational banks that got us into this mess are doing swimmingly.

According to a new report by the Federal Deposit Insurance Corporation(FDIC) released Wednesday, the American banking industry earned $40.3 billion in the first quarter of this year alone, breaking the record for the highest ever for a single quarter and up 15.8% from the first quarter of 2012, when the industries profits were a healthy $34.8 billion.

After nearly destroying the global financial economy and having to be bailed out by the American taxpayer, not only are these multinational banks laughing in the face of the middle class by raking in record high profits, they are also making sure that their improved finances do not “trickle-down” to the general economy and working class.

The report shows that only about half of all US banks improved their profits this year, the lowest level since 2009. This proves that the banking industry’s growth is being sustained by only a handful of big banks.

These banks are Citigroup Inc., J.P. Morgan Chase and Company, Wells Fargo and Company, and Bank of America Corporation, all of which have benefited from President Bush’s generous taxpayer bailout and record low borrowing rates from the Federal Reserve.

You may be asking yourself, but don’t know interest rates lead to lower revenue from bank loans?

Yes, but while the industry’s profit margins from charging interest have declined, the big banks are ratcheting up revenue from costumer fees, despite complaints from customers and consumer advocates like Senator Elizabeth Warren.

Also, although the federal government gave them generous bailout loans when their finances were struggling, banks have themselves shamelessly adopted stricter lending standards for the middle class, requiring higher credit scores, larger down payments, and proof of employment.

Do you see what they did there? The big banks, destroyed the American middle-class and their own finances with reckless and criminal financial fraud, demanded generous loan terms for their taxpayer bailouts, and now have the gall to turn around and refuse to lend out the very same money we gave them, simply because they don’t trust our “credit scores”.

Why do Private Property Rights Matter- The Case Of An NC Mountain Man


Eustice Conway overlooks his Turtle Island Preserve near Boone NC. Image source:

On May 29,2013, Vicky Kaseorg writes on North Carolina Conservative Dot Net:

Are government officials upset that someone can survive without them? Thirty years ago, Eustace Conway bought 100 acres in North Carolina with a vision of a self-sufficient, simpler life style. Turtle Island Preserve became his home and livelihood, with income earned by teaching eager groups self-dependence using nothing but the land and their wits. He lives simply without the need for a single government subsidy, program, or hand out. The now 1000 acre settlement is a working, educational farm, with every building and facility made from materials and often forgotten skills once utilized by our pioneering ancestors. This lost art of survival, and simple living is alluring to many in a culture that is consumed with materialism and dependence on the government.

Eustace Conway demonstrates the art of blacksmithing to Maria Montes, Rhett Taylor, 9, and his mom, Julie Taylor at Turtle Island Preserve

Eustace Conway demonstrates the art of blacksmithing to Maria Montes, Rhett Taylor, 9, and his mom, Julie Taylor at Turtle Island Preserve

However, last September, the  Watauga County Planning Department cited several health and sanitary violations in Conway’s encampment. After decades of operating Turtle Island Preserve, suddenly the mountain man is a threat to public safety and welfare! He has been told to cease and desist with public camps until the buildings are torn down or rebuilt with the violations rectified. The County has threatened tocondemn the buildings. Conway’s primitive outhouses, kitchen, food storage facilities, and building construction do not meet State building codes. For example, his lumber was improperly marked and labeled. Unlike commercially labeled lumber, Conway cut and prepared the lumber at his own sawmill. Though this is private land, and the groups contract willingly with full knowledge of the primitive nature of the Preserve, (which indeed is the point of the Preserve), the county now requires that Conway’s property meet modern code standards. Conway argues that his construction methods have been around for hundreds of years, and recent engineering studies found his facilities superior to modern code standards. Indeed, his construction methods predate code standards themselves!

At its core, this case is a property rights issue. How pivotal is the issue of private property rights to a free society? Are property rights less important than other “human rights”? Is private property ownership fair and just? To what degree can or should the government infringe upon private property?

Dr. Clarence Carson believes that property rights are not only critical, but underlie all other unalienable rights. Dr. Carson proposes that when property rights are lost, all rights are lost. He states, “There is probably no way of conceiving of individual rights other than as either property rights or extensions of property rights. Our right to life stems from the fact that it is our own (and only) life. Our right to the disposal of our time stems from the fact that it is our own time. Our right to the use of our faculties stems from the fact that they are our own. Remove from them the concept of private property and the claim to them goes as well.”

imageDr. Carson cites numerous examples, including Nazi Germany, Stalinist Russia, and other totalitarian countries. When property rights were seized, other rights followed. Dr. Carson feels the reason for this is obvious. If property rights no longer belong to the individual, then they must be controlled by another entity- presumably the government. Whoever controls the property, controls all enterprise that may be conducted upon that property as well. As Carson eloquently claims, “The reason for this should be apparent. Man’s necessity for property is absolute; his survival and all activities depend upon it. When government has control of it all, man’s concern with it becomes preponderant, for his access to it is no longer secure. Not only does it magnify the importance of property but also of government. Total control over all property becomes the means for total control over men. The law which disposes property in this situation also disposes men. Indeed, the wedding of property to government turns the control over things into control over men. What may start out as an effort to subordinate property ends up as the subordination of man.”

In societies where private property ownership is considered a fundamental right, the people flourish. Conversely, in societies with collective or government control of property ( communism), forcible removal of other human rights, and repressive, totalitarian regimes historically result. One cannot trounce on the laws and rules of private property ownership without undermining other fundamental rights.

The Biggest "Takers" And Societal Parasites Are The Rich, Not The Working Class And Poor

On May 13, 2013, Paul Buchheit writes on

Corporations have used numerous and creative means to avoid their tax responsibilities. They have about a year’s worth of profits stashed untaxed overseas. According to the Wall Street Journal, about 60% of their cash is offshore. Yet these corporate ‘persons’ enjoy a foreign earned income exclusion that real U.S. persons don’t get.

Corporate tax haven ploys are legendary, with almost 19,000 companies claiming home office space in one building in the low-tax Cayman Islands. But they don’t want to give up their U.S. benefits. Tech companies in 19 tax haven jurisdictions received $18.7 billion in 2011 federal contracts. A lot of smaller companies are legally exempt from taxes. As of 2008, according to IRS data, fully 69% of U.S. corporations were organized as nontaxablebusinesses.

There’s much more. Companies call their CEO bonuses “performance pay” to get a lower rate. Private equity firms call fees “capital gains” to get a lower rate. Fast food companies call their lunch menus “intellectual property” to get a lower rate.

Prisons and casinos have stooped to the level of calling themselves “real estate investment trusts” (REITs) to gain tax exemptions. Stooping lower yet, Disney and others have added cows and sheep to their greenspace to get a farmland exemption.

Only 3 percent of the CEOs, upper management, and financial professionals wereentrepreneurs in 2005, even though they made up about 60 percent of the richest .1% of Americans. A recent study found that less than 1 percent of all entrepreneurs came from very rich or very poor backgrounds. Job creators come from the middle class.

So if the super-rich are not holding the world on their shoulders, what do they do with their money? According to both Marketwatch and economist Edward Wolff, over 90 percent of the assets owned by millionaires are held in a combination of low-risk investments (bonds and cash), personal business accounts, the stock market, and real estate.

The real discussion should be about OWNERSHIP. The richest Americans are rich because they are OWNERS of wealth-creating, income-generating productive capital assets.

This is the reality of the FUTURE, unless you and I and every other human being with a desire to be someone and contribute to the betterment of society do something about it. It all comes down to what source of income will each of us gain access to and whether we will Own or Be Owned in the economic sense.

The statement “Own or Be Owned” suggests the two alternative worlds of the FUTURE. Today’s reality is that the average citizen does not own wealth-creating productive capital assets (as do the wealthy rich people in our society). To change one’s plight from that of capital-less or under-capitalized and solely dependent on a job or government welfare assistance in one form or another, citizens must share in the ownership of the money system. Most of you out there do not even know how money is created. Money is created when the Federal Reserve Bank (a central bank privately owned) loans it to banks that you have your checking account or meager savings account (if any) with, and the banks re-loan it multiple times because laws allow them to have a fraction of the amount on hand or in reserve in relation to the amount of loans they are allowed to make (fractional banking). This creates boom and bust cycles in the national economy, and empowers an elite few who really OWN America. With proposed Capital Homesteading, the Federal Reserve would serve as a “public bank” and would loan money directly to citizens, who must put it in a personal special super-IRA retirement account which would invest in dividend-paying stocks of corporations that use the money for productive, economy-growing purposes. This would empower all, instead of an elite few and eliminate fractional-reserve boom and bust. It would also provide for unlimited private sector growth, and eliminate the need for socialist welfare programs funded with tax extraction and national debt. This would back the currency with real products or goods and services and reduce the size and scope of government. As government becomes smaller because individual citizens are able to support themselves and their families living off dividend income and resulting REAL jobs, national debt would be retired and demand for taxes would shrink. The tax system would be changed to be far simpler, flatter, and fairer. And all of us would be on the path to prosperity, opportunity, and economic justice to pursue our personal desires and experiences as we become strongly independent and responsible.

Everyone reading this article is invited to visit and consider joining the Web site of the Coalition for Capital Homesteading, an advocacy group advancing the Just Third Way vision and comprehensive system reforms designed to achieve a people-empowered, market oriented, property-based approach to economic democracy at local, regional, and national levels.

What I and my colleagues at the Coalition For Capital Homesteading ( are recommending is that the Federal Reserve become a more accountable and effective engine of non-inflationary private sector growth. We are asking the President and Congress to call on the Federal Reserve to use its existing discount powers under Section 13, paragraph 2 to open up a new source of mass purchasing power through widespread worker and citizen ownership of productive capital.

Today the Federal Reserve uses its powers to monetize unsustainable government debt, bail out banks deemed “too big to fail,” and widen the gap between the top 1 percent and the bottom 99 percent. The Federal Reserve could play a more positive role, removing artificial barriers to equal citizen access to acquiring and owning productive capital wealth. By creating asset-backed money for production, supported by growth-oriented tax policies, the Federal Reserve could truly help promote shared prosperity in a market system.

Chairman Benjamin Bernanke and other members of the Federal Reserve need to wake-up and implement Section 13 paragraph 2, which directs the Federal Reserve to create credit for local banks to make loans where there isn’t enough savings in the system to finance economic growth.

I urge those interested to examine the systems logic behind the Capital Homestead Act’s tax and monetary reforms, expressed in “A New Look At Prices And Money” published in the Journal of Socio-Economics (

Sign the Petition at

Sign the Petition at

Sign the petition at

The answers are to be found in the proposed Capital Homestead Act at and, and the Agenda of The Just Third Way Movement at

The Corporation And The People

The Outlook – January 12, 1907

The Corporation and the People:
Are We on the Right Track?

By the Hon. Peter S. Grosscup



Writings by the Hon. Peter S. Grosscup:

The Beef Trust Enjoined

How to Save the Corporation

Who Shall Own America?

The Rebirth of the Corporation

The Corporation and the People: Are We on the Right Track?

No one doubts, I think, that but for the thing we call the “corporation,” the relation of the corporation to the people, and the questions that such relationship raises, there would have been no New York campaign last fall on the lines that the New York campaign followed, and no results so full of question marks.

Mr. Hughes stood in the State for what Mr. Roosevelt stands in the Nation — the policy of holding the corporations to a strict accountability to law; a policy chiefly carried out through the medium of lawsuits. True, some amendment to the law, as it heretofore existed, has been made, and other amendments are suggested; but the main proposition in the programme of the progressive wing of the Republican party is that the law, as it stands, is almost if not quite sufficient — that the chief thing needed is to compel the corporations, as they now exist, to obey the law.

Mr. Hearst stood for the same things, nominal at least, but with this addendum: That he was in dead earnest, while the Republicans were not — that, if successful, he would rescue government from corporation control, while the Republican party is so subject to corporate influence that it cannot rescue itself from corporate control. And on this issue, in the main, he pushed his canvass to a conclusion that brought to the ticket headed by him recruits enough from the Republican ranks to divide with the Republican ticket, almost equally, the vote of the great State of New York.

Now, with Mr. Bryan’s announced policy, also before us, that the thing to do is to dig up the big corporations, root and branch — nothing different thus far being offered by any National political leader for the consideration of the people — the political weather for 1908 can be pretty fairly foretold. We may have a Presidential campaign not fought out on clear, high lines, on an issue upon which the people will be called upon to say aye and nay, but degenerated into a political mêlée, wherein the louder the denunciation of the corporation and all who are allied with it, the more likely will be the prospects of victory.

Thus confronted, is it not high time that the conservative intelligence and conscience of the country should look the situation squarely in the face? Are we indeed on the right track? Is reformation by denunciation the only cure? Is reformation by lawsuits the only cure, or the best cure? Is not the disease deeper, and must not, therefore, the cure go deeper into conditions as they exist to-day?

To answer these inquiries requires that we take a look backward, to the end, say of the Civil War closed, which was the beginning, in a general way, of the new industrial era.

When the Civil War closed, we were still an agricultural people. The property of the country was still in a very large measure the land of the country. The farmer’s boy still lived on the lands. Railways there were, but not the great railways of the present day; manufactures there were, but not the great so-called trusts; mercantile establishments, but not the great department store.

Since Lee’s surrender to Grant all of this has been transformed. The farmer’s boy is no longer in the country; he is in the great centers working for the corporation. The clerk in the mercantile establishment no longer looks forward to an individual career — he is the employee of a great corporation. The towns have grown, while the country has stood still; the corporation has grown, while individual careers in business and labor have become almost obsolete. During the period from 1865 to 1906 nearly every species of property, except land, has gone under corporate ownership and control.

I do not complain of this. I only put it before the reader as a fact. What I wish to set alongside of this fact, however, is the other fact — without which Mr. Hearst would have had no ground on which to build his appeal to human nature; without which Mr. Bryan and Mr. Roosevelt would have to rest their careers on other issues — the fact that the ownership and control of the property of the country, almost as fast as it passed into corporate form, passed away from the people. The causes I do not now discuss. I am only stating the fact. In the old industrial life, when agriculture was the largest interest of the country, the farms were owned by the people who occupied them. The farmer’s boys remained at home until the married; then they became owners of farms of their own, either in the neighborhood or further West. Indeed, the one great ideal of the statesmanship of that day was to distribute the lands to those who would occupy them — to divide up the proprietorship of the land among those who did the farming. In the new industrial life into which we have come, the farmer’s boy is in the towns, still contributing his help toward farming the lands, but from the machine shops and manufactories that turn out agricultural implements. And in these great industrial enterprises, all of them in corporate form, he has no interest as owner, and no prospect of such an interest. Through this channel alone — the draining of the farmer’s boy into the towns — one-fourth of our population, perhaps, has been turned away from the institution of private property as a National interest that concerns them.

In the old industrial life the merchandising of the country was carried on by individuals and small firms — each man behind the counter either owning an interest in the business, or looking forward to the time when he would own an interest in a similar business. The small merchant is no more. The salesman looking forward to ownership is no more — another mighty army added to those already named, who have been turned away from private property as a National interest that concerns them.

In the old industrial life the artisan owned his shop, and the journeyman and the apprentices worked for the day when they, too, would be independent proprietors. That day has gone. There are now no proprietor artisans, no expectant journeymen and apprentices — another mighty army added to those who have been turned away from the institution of private property as a National interest that concerns them.

The savings of a people are their uninvested surplus — the sums that the depositors have gathered together for which they have not found a satisfactory investment. In the old industrial life these savings went into proprietorship of one kind or another. They created the new enterprises that became the competitors of the old. They constituted then, as they constitute now, almost the sole capital available for the purposes of competition. But in the new industrial life, though the savings have greatly increased, the people invest, for themselves, little if any of their savings; nor do the people exercise any influence on how such savings shall be invested. Depositing them in some local financial institution, the depositors give the matter no further thought. The deposits, of course, are not inactive. Put upon the financial streams that converge in the great money centers, these deposits constitute almost the sole capital available to start new enterprises — the difference between the old life and the new being that in the old this available capital was still at the call of competition, while in the new it is within the control solely of those who own the present enterprises and are therefore interested in keeping out competition. A mighty shift, this, from the ideals that lie at the basis of the institution of private property under republican institutions. A mighty strain upon the patience and patriotism to which alone we can look for the maintenance of that institution. So that when you ask me where Mr. Hearst got his following, my answer is that a large part of his following was ready made for him in the conditions I have just stated.

With this, the underlying effect of the transformation from the old life into the new, before us, and remembering that human nature cannot be repealed, let us ask ourselves again, What is the thing to be done? Mr. Roosevelt, thus far, has confined himself to the enforcement of the law as it now exists. He is aiming, unless it be indirectly, at nothing calculated to bring back the people into the ownership of the country’s property — nothing calculated to counteract the system whereby the available capital of the country is placed at the disposition of those who already own the enterprises of the country. Is that to be the alpha and omega of the present corporation agitation?

Mr. Bryan follows closely along the same lines. To his vision the corporation does not loom up the necessary embodiment of the new industrial life — the form that in the very nature of things that new life was bound to take on. His vision, and the vision of those who see with him, is confined rather to the corporation as the embodiment of tendencies that necessarily must be oppressive. Governed by feelings like that, the corporation can never be made to be what it ought to be — a republican institution of republican government; an institution of the people, for the people. Governed by feelings like that, the corporation can never be made to be what our schools are, what our laws relating to real estate are, what our other institutions are — something that is ours and that concerns us because it is ours. On the contrary, under that kind of perspective the corporation appears as an alien, an outsider, a stranger with whom the great body of the people can have no relation other than that of strangers with a stranger. Is that to be the beginning and the end of the great awakening? Is it to be the permanent policy of the country that the corporation shall be isolated — put under the ban, as a house where smallpox has broken out is put under the ban? Or shall the house be cleaned up, remodeled, if necessary rebuilt on lines of conservatism, fidelity to trust, and honesty that will invite back into the new industrial life of the country the people of the country?

Will this policy of isolating the corporation — leaving it untouched except by denunciation or lawsuits — prevent monopoly? It has not thus far, in a single instance that I know of, broken up a monopoly. It has enjoined, by court decree, separate corporations from conspiring with one another to fix prices; but it has not prevented them from uniting in one large corporation, and in that way controlling prices.

Will this policy of isolation — leaving the corporation untouched except by lawsuits — restore competition? To restore competition there must be raised up competitors; and to raise up competitors requires that the capital of the country be available, not solely to those who already have the field, but to those who contemplate entering the field. Under the present policy governing corporations, the capital of the country is not thus available. Capital exists, exists in abundance, exists as the wealth, too, not of those whom we call the rich, but of the people at large. But it is not available to raise up competitors; for the competitor of the corporation must be itself a corporation, and under the free and easy, go-as-you-please present corporation policy of the country, the peo-ple at large do not directly invest their wealth in cor-porate enterprise of any kind. They prefer to intrust it rather to the financial institutions; and thus de-posited, it flows to those who own existing corpora-tions, and who on that account are interested, not in raising up competitors, but in suppressing them. No policy that keeps asunder the institutions that wield the capital of the country and the people who fur-nish it will succeed in restoring to industry the bal-ancing effects of competition. To raise up competi-tors, the instrumentality that utilizes capital, and the people who furnish it, must be brought together.

Will this policy of isolating the corporation — leaving it untouched except by lawsuits — bring peace to our country; satisfy the human instinct that lies at the bottom of all this unrest? Here is America our aim has been to create as much as we can. To that end every incentive has been offered, and every protection thrown around, the creation of new property. Here in America our aim has been to divide with labor, as equitably as can be done, the immediate profits of enterprise. To that end we have protected our workers against the leveling effects of work done in foreign lands, and have legalized the organizations that enable the workers, in dealing with capital, to deal with the strength of united interest. But beyond that point, except in the case of the public lands, we have not gone. We have taken no pains to furnish the worker with any instrumentality through which he might with reasonable safety, transmute a part of his day’s profits into a permanent property interest. We have taken no pains to interest him as proprietor at all. We have done nothing to furnish the people at large with an instrumentality through which their individual capital might be transmuted into permanent property interests. We have done nothing in that direction at all. The one instrumentality in which the new industrial life embodied itself, and in the nature of things was compelled to embody itself, though State-created, has thus far been left a shell, under whose roof and behind whose walls every form of treachery and nearly every form of theft were given free rein.

Instinctively the American seeks the ownership of property. It was the prospect of a property independence that brought the first Americans over the sea. It is that instinct that took their children to the West. Congress appealed to that instinct in the homestead and pre-emption acts, and the appeal has been responded to by more than a million and a half of American families. A policy that leaves that instinct unsatisfied — that appeals, not to the individual, his hope and prospect in life, but solely to that quality in human nature that gets satisfaction out of making others, who happen to be more fortunate, obey the law, laudable as that kind of satisfaction is, will bring no lasting peace. There can be in this country, permanently, no such thing as an exclusive proprietary class. Flesh and blood will not stand it. Intelligence and conscience rebel against it. The American voter, even now, in a blind way, is rising up against it. Sound economic judgment tells us that, compared with private enterprise, government ownership is a failure. Sound economic judgment tells us that, compared with private enterprise, government ownership would put skilled labor where neither organization nor skill would do the laborer much good; for let the labor market slip from those who possess it by organization and merit, to the wide expanses of politics, and all the advantages that organization and merit now hold would soon be leveled. Sound economic judgment tells us that the prosperity of America is due to the fact that the men who can invent are inventing; that the men who can think things out are thinking things out; that the men who can organize are organizing; that the men who can do the best things with their hands are doing the best things — each according to his individual gift; and that government ownership would upset all this — turn prosperity over to the keeping of pull or chance. But of what avail is sound economic judgment on this or any other subject when it runs counter to human nature? It is not because the wife in the market pays more than she has been accustomed to pay for the necessaries of life that the country is in a state of unrest. It is not because the husband gets less wages than he would like to get that this unrest exists. The unrest springs from that instinct in human nature that inspires every manly heart with an ambition to have some individual part in the achievements of his time; so that the question always remains, What will hold back the American people when they come to the point where they must choose, finally, between a system of private property in which they have come to feel they have no individual part, and property owned by the Nation of which they are a part? Will human nature suppress itself? Or will it be the institution, that no longer engages their interest, that will be engulfed?

The great Democratic party was founded as guardian to the individual man. Why does it not accept, intelligently accept, the economic destiny that has created the corporation, turning its energies to such corporate reformation as would bring back into industrial life, in the full enjoyment of what was meant to be his appointed portion, the individual man? The Republican party has shown its capacity to be a true friend of the people at the same time that it is a true friend of property — a true friend of property at the same time that it is a true friend of the people. It was the Republican party that put into the Constitution of the Nation the guaranty, the greatest that private property has to-day, that it should not be taken or abridged except under due process of law; along with the guaranty, the greatest that the humblest of our people have to-day, that life and liberty should ever be under the protection of national law. It was the Republican party that distributed the Western country into millions of farms, each the possession of some hopeful family of Americans; not fearing, however, to utilize the “corporation” to push through to the Pacific coast those hands of steel that, binding the old States into the new, made over these farms into populous States.

It is the Republican party that, through its tariff policy, claims to be securing to the worker with his hands the largest possible share in the division of the profits of enterprise. Why will not the Republican party, true to these inspiring ideals, put its mighty power behind the new ideal?

But what, you ask me, can these parties do? What can the people do to arrest the stream before it reaches the rapids — to substitute for the process that is now concentrating into the hands of the few the proprietorship and control of the incorporated life of the country, a process that will set out to widen and republicanize that life?

My answer is: Remove the causes. Thirty years ago the German people went through corporation experiences much like our own. There, as here, the corporation, as originally designed, was a mere shell. There, as here, under the shelter of that shell, the property of the country was being transferred from the German people at large, even the little they had, to the few. There, thirty years ago, as here now, great corporate scandals were exposed. And there, as here, the human nature that is everywhere behind civilization eventually began to recoil. It began there before it began here, only because conditions reached a climax there earlier than here, and because we as a people were too prosperous and too busy to look even a little way beneath the surface of things.

But when the work of reform did come there, it was a genuine reform. It did not content itself with indiscriminate denunciation, or with mere lawsuits. Nor did it die out, leaving the door still open to every character of corporation the cunning of men might conceive. Before a corporation can be organized in that country, it must prove, as in a court proceeding, its rightful title to a corporate existence. In the same way it must establish the amount and the character of the capitalization it is allowed to put out. When property is turned in, its value must be judicially ascertained. Upon officers and directors is not conferred supreme power; in the German corporation the shareholders’ meeting is the counterpart of our New England town meetings — a genuine assembly intended to do something more than pass resolutions of approval. And every violation of trust, not merely to the public, but to the shareholder as well, is quickly punished with punishment that smarts. There is in the German corporation no room for one to do, with impunity, in his capacity as a corporation officer or promoter, what if done individually would land him in the penitentiary.

I am not holding up the industrial life of the Germans as an example of what our own should be, or their corporation as an institution to be followed, line by line, in our own work of reconstruction. We have found for our workman ways for increasing his share in the division of the profits of enterprise that the German workman does not enjoy. What the American in the ordinary walks of life could lay by for investment is larger, happily much larger, than anything the German can lay by. But the example is none the less valuable; for it, on such conditions, the German corporation could be reconstructed on lines that have successfully interested, as proprietors, to the extent of their means, the German people at large — resulting in the fact that it is not upon her corporate industries, but upon her unjust landed proprietorship alone, that the forces of German Socialism are directed — what may not be expected in America when the work of corporation reform, in the true spirit of reform, is undertaken and accomplished.

But while I am not attempting in detail to point out the exact structure of the American corporation as it should stand when reconstructed, some of the principles on which the reconstruction should take place can be particularized. The reconstructed corporation, for instance, must have no place in it for those schemes of spoliation that, within or without, plunder the people whose capital has created it and whose patronage must support it. In the reconstructed corporation the securities issued must be related in some way to the values actually put in. In the reconstructed corporation, not only must the officers be trustees of the stockholders, held to the strict accountability to which individual trustees are now held, and denied the privilege, as individual trustees are now denied, of making profit out of their trust; but the administration of the trust, as in the case of individual trustees, must be constantly kept under the eye of some tribunal of the Government. And in the reconstructed corporation tangible inducements ought to be given to the workman, the clerk, the employee of every kind, to secure proprietorship.

I shall not attempt to point out, in detail, how existing corporations shall be brought into the new régime. Considering, however, that existing corporations depend largely on the public, from time to time, to take their securities, especially their bonded securities, the probability is that, as a matter of self-interest — in many cases of life or death — existing corporations would be compelled to conform their organization to the reconstructed organization prescribed by government; for otherwise they would brand themselves as suspects. Then, too, within the respective powers of the nation and States, to prescribe the kind of collateral that banks, insurance companies, and savings institutions shall not take for loans, the Nation and States could exert a leverage toward the new order of things that could not be resisted; for nearly every great corporation is a heavy borrower from these financial reservoirs of the people’s wealth.

But the purpose of this article does not require that I go far into details. That is not the first task to be accomplished. The first duty and the first task is to get the thought of the country turned from the by-roads of corporate reform to the main road — from aims that lead nowhere to a determined aim that will lead to practical results. No one who has observed carefully the workings of public ownership wishes public ownership, at least to any widespread degree; in no other way could the prosperity of the country — the individual prosperity of every man and woman of the country — be so quickly sunk. No help is in sight, as the Wisconsin Commissioner of Labor has just pointed out, from the so-called “co-operative” undertakings; the plain reason being that in this, as in public ownership, the undertakings are never conducted on business principles — never suitably manned. To be conducted on business principles — to be suitably manned — a business undertaking must start and grow in the natural order of things — manned usually by the men who build them up or by men who, in the natural order of business selection, must come to take their places.

The corporation, indeed, is the only form of proprietorship in sight in which our great new industrial life can embody itself, and maintain its vitality. But the corporation itself, as now constructed, looked at as I have tried to point out, from the standpoint of universal human nature (and by that standard it is bound to be judged), is built upon the sands. The duty and the task of this generation of Americans is to put it on the solid-ground of human interest — to so rebuild it that, as the antithesis of public ownership, it will present also a countenance that is human — to make for our incorporated industrial life a name that, along with the other great names of American achievement, can be put on our flag in the contest that is bound some day to come between the civilization of to-day, the product of what has been best in the exertions of mankind, and a civilization that would sink us to the level of what is the worst that mankind can endure. And some day, to some man, will be given the strength successfully to summon to this great task the good sense and the conscience of the American people.


Reprinted by the
Center for Economic and Social Justice
P. O. Box 40711
Washington, DC 20016


How To Save The Corporation

McClure’s Magazine – February 1905

How to Save the Corporation

By Peter S. Grosscup






Writings by the Hon. Peter S. Grosscup:

The Beef Trust Enjoined

How to Save the Corporation

Who Shall Own America?

The Rebirth of the Corporation

The Corporation and the People: Are We on the Right Track?

If, by national prosperity, we mean what the American people, in the mass, are achieving, in the way of increased material output, and power of productivity; if, by national prosperity, we mean that in the mass, our people are richer than in any previous period; that our territory and dominion have been pushed forward, and our influence in the councils of the nations established, as never before; if these things, relating to the people as a whole, constitute national prosperity, then, as never before, we are in a time of the very greatest prosperity. But is there not with a nation, as with an individual, apart from the mere outward life, an inner spirit or soul? And what shall it profit our country if it gain the world, and lose its soul?


The soul of republican America is not in our ambition, as a people, to be great commercially and politically; nor our ambition for increased national territory, national power, or national wealth. The soul of republican America, as a civil government ordained to promote the welfare and happiness of its people, is individual opportunity — the opportunity and encouragement given to each individual to build up, by his own effort, and for himself and those dependent upon him, some measure of dominion and independence all his own. In that one phrase — measurable individual independence, and the opportunity to measurably exercise individual dominion — is comprised the civil history of the Anglo-Saxon race. Our commercial greatness as a people is not in danger of being lost; nor is our increasing national power and prosperity. The loss that republican America now confronts is the loss of individual hope and prospect — the suppression of the instinct that heretofore coming into the American boy’s first grasp of the idea of individual career, and stimulating him ever afterwards, has made us a nation of individually independent and prosperous people. We are, I believe, in the first stage of a sweep of events, that unless turned to a purpose widely different from that now served, will carry us, eventually, to a time when the acquisition of property, by the individuals who constitute the bulk of our people, will cease to be one of the opening and controlling purposes of their lives. This means that, as a republican political institution, America will have lost the spirit which alone promises it life. It means social and, eventually, political revolution.

The thing at which I point is no apparition. It is an approaching fact — a fact that the people of this country have already intuitively discerned. On what theory, other than that of the existence of deep-seated popular apprehension, can be explained the widespread popular movement that brought about the Sherman Anti-Trust act; the anti-trust acts of the several states; the movements against large corporations, based on no better reason, in most instances, than that the corporations were large; the disposition manifest in every quarter, not to accept, but to combat, the rising forms of modern industrial activity? This popular apprehension does not rise solely from anxiety about prices. It grows out of the intuitive perception that, somewhere, something is wrong — that in the face of the future there is a disturbing, even sinister look. To test this intuition by the facts — to turn the feeling, so far as I can, into a correct perception of the facts — is one of the purposes of this article.

Let me preface it by saying that against corporations, as corporations, I have no enmity. Modern civilization requires that capital shall be wielded in large masses. The corporation is civilization’s method of wielding capital in large masses. On that account the corporation is here to stay. The big corporation is here to stay. The only institution in sight to supplant it is state socialism; and state socialism is revolution accomplished


But the fundamental basis of the corporation is the institution of private property and the guaranties our government gives to private property. Now it so happens that the fundamental basis of the thing I have called measurable individual independence, and the opportunity measurably to exercise individual dominion, is also this institution of private property.

Around the institution of private property, therefore, more distinctively than anywhere else, center those changes, in our social and national life, that have been brought about by the appearance of the corporation as the great industrial, modern agent, and that the corporation is destined, I believe, to still more radically bring about. What, then, is this institution of private property, and what is the distinctive transformation it is undergoing as the result of corporate dominion?

In the beginning the Creator so conditioned mankind, that always underneath him would be the earth; always about him the air; always above him the sky. On this, as a dowry, He started us. In the earth He placed the seed, and the powers of motherhood that transform the seed into the full ear. In the bowels of the earth He stored the minerals. In the upper air He leashed the lightnings. And in the earth and air He left them all to wait — to wait for mankind to put forth its hands.

The seeds flowered and bore fruit; but in primitive inadequacy. In course of time mankind discovered that, by intelligence and industry, the flower could be beautified and the fruits sweetened. The minerals were alive, but with energies imprisoned. In course of time mankind found the key to the prison door; and the prisoners, liberated, have built the material structures of civilization. The lightnings glowed and zigzagged, calling out to us unceasingly, at times startling us, determined, like sentient beings, that their capacity of usefulness should not be overlooked.

In the course of time, the yoke was found that, adding these energies of the air to the forces of earth, brighten and strengthen our possession of the earth. The distance thus traveled, from primitive man to the man of today, has been a long one. But every mile was made under the spur, and governed by the rein, of private property. It was the institution of private property that, more than any other secular agency, brought us to civilization; and on this institution, as on a rock, the civilization of the world, and the world’s republican institutions, must continue to rest.


Now, it is just this institution of private property that is undergoing, at this time, a strain never put on it before. The weight producing the strain is the corporation. Not because the corporation, in essence, is retrogressive and unrepublican; but because, in fact, it is unrepublican, and for that reason retrogressive also. Not because the corporation is big and growing bigger; but because, in all this growth of superstructure, the base is narrowing — the proprietorship of the private property of the country, by the bulk of the people of the country, is radically narrowing.

A generation ago, the artisans of the country lived in the country towns. In the country towns were made the shoes we wore, the wagons and carriages, the stoves, the saddlery we used — all the appliances of life; and over the door of each shop hung the sign of the proprietor within. A generation ago, the farm work was done by men living on the farms.

All this is now changed. Nearly one-half of the population of the United States — twelve million active workers, supporting as dependents twenty four millions more — are now connected with the mechanical trades. The men who, in the time of which I have just spoken, with their own hands did the planting and cultivating and harvesting, are now in the manufacturing centers, making the machines that plant and cultivate and harvest. The artisan proprietors in the towns have been succeeded by artisan employees in the great factories. The whole scene of industrial activity has been shifted from town and country to the cities; from the numerous small dominions exercised by individuals, to colossal corporate dominions.

The extent of this shift is told in the census figures. In 1900, according to the census of that year, the whole value of all the farms, the farming utensils, horses, reapers and binders, plows and farm products on hand unsold — that which on a single day would have constituted an inventory of all the agricultural interests from Maine to California — amounted to between eighteen and nineteen billions of dollars; while the capital invested in corporations, including railroads, factories of all kinds, and their products on hand unsold, amounted to twenty-two billions of dollars. Thus corporate dominion has, within thirty years, beginning with almost nothing, outstripped agricultural ownership by more than three billions of dollars; and, barring city real estate, comprises now nearly one-half of the whole wealth of the country.

In the swing of the industrial system, the corporation has come to be the gravitating force that holds the activities in their orbits. Is it much wonder that, in the eyes of those who look upon the corporation as an interloper, it has come to be regarded as a usurper also — the usurper of what the labor of individual men has created; or, that in the eyes of those who, with clearer vision, look upon it as an indispensable phase of industrial evolution, the way in which the corporation shall thereafter be organized, and the bounds given to its dominion, are coming to be the paramount political problems of our time?


Now the shift in dominion over private property, from the individual of a generation or so ago to the corporation of today, would have little significance comparatively, if the corporation were only this age’s new way of unifying, massing, individual ownership — leaving the people of the country, generally, though under this new form, the ultimate real owners. But such, unhappily, is not the case. The effect of the corporation, under the prevailing policy of the free, go-as-you-please method of organization and management, has been to drive the bulk of our people, other than farmers, out of property ownership; and, if allowed to go on as at present, it will keep them out. When the individual proprietor of the past sells out his business to the corporation, he does not reinvest his capital in his old line of business. He puts it in the bank, or in some bond. When the workman has got together some savings, he does not become a proprietor or part proprietor. He spends it, or puts it in the bank. To men like these, no kind of active investment, practically considered, is left open. The industries are now dominated by the corporation, and proprietorship in the corporation has come to be for those only who are experienced in corporate ways, or who are willing to take a chance at the corporate wheel. And thus it happens, that just at this moment, we are in the midst of a sweep of events, that unless arrested and turned to a different account, will transform this country from a nation whose property is within the proprietorship of the people at large, to a nation whose industrial property, so far as active proprietorship goes, will be largely in the hands of a few skilled or fortunate so-called captains of industry, and their lieutenants.

Let me set out some of the proofs of the case I have thus undertaken. I might appeal, and with convincing success, too, to the memory of my readers. But I do not rest my case there. I call as witness the figures gathered from the Treasury Department of the United States, and distributed as a part of its official publications. These figures show that the deposits in the banks of the United States in 1880 — national, state, and savings — amounted to a little over two billion and a quarter dollars. The same deposits, in 1904, had grown to about eleven billions. In these figures are included no redeposits. The figures represent the actual bank credits for the years named. Now bank credits, outside the sums that constitute the mere fluid working capital of the country, represent the capital that one class of people are withholding or withdrawing from other forms of investments, that another class of people may borrow and utilize it to push forward their own investments. Would we know who are the people who are withholding and withdrawing from other forms of investment the capital thus deposited, we must inquire who are the depositors; and would we know whether these people are withholding and withdrawing from other investments in a ratio greatly disproportionate to the growth of the general property, we must compare the ratio of deposits with the general growth of property.


Now, in the main, the depositors in our banks and savings societies are not people whom we call the rich. The deposits are gathered largely from the working people and from other people of moderate means. The bulk of the deposits are in the money centers, but their source, like the sources of a great river, are not in the volume of the river itself, nor its larger branches, but in the little springs and raindrops that, unnoticed, form the rivulets; these in turn uniting to form the branches and finally the river itself. To test this my reader need but go to the savings and other banks of his own town. I know of one county with a population of less than twenty-five thousand — an agricultural county without a millionaire in it — whose deposits are well upward of a million. I know another county with a population of perhaps fifty thousand — one-third of whom are connected with the mechanical trades — whose deposits are three and one-half millions. This means, then, that the people who are withholding or withdrawing from active proprietorship the capital thus represented by bank credits, are not the rich, but the people of ordinary means; and it brings us to the next inquiry. What is the disproportion, if any, between the growth in general wealth and this growth of bank credits?

From 1880 to 1904, the population of the country (estimated since 1900) has grown a little over fifty per cent. From 1880 to 1904 (estimated again since 1900), the general wealth of the country — farms, farm implements, city real estate, corporate ownership, bank deposits, everything of every kind and nature — has grown as much perhaps as sixty per cent. In 1900 it was estimated by the government that an equal distribution of the wealth of the United States among its people in 1880 would have yielded to each about one thousand dollars, while such distribution in 1900 would have yielded about eleven hundred dollars. The growth of wealth per capita, therefore, during these two decades, was about ten per cent.

Now mark! During this same period, the amounts invested by our wage-workers and people of ordinary means, in bank deposits — that is, the amount withheld or withdrawn by them from active proprietorship, and left with the banking institutions to loan out to those skilled in the ways of corporations — have grown over five hundred per cent.

To illustrate: suppose a community in 1880 possessed a million dollars, one hundred thousand of which was in bank credits, and the balance in other forms of property; suppose this same community is found in 1904 to have five hundred thousand dollars in bank deposits alone, or five times the former amount. One of two things is apparent: either the community’s population and general wealth have grown proportionately — that is five hundred per cent — or the growth of the bank credits has been at the expense of proprietorship in other forms of active property. Now, what conclusion would be forced upon us if in that community the growth and general wealth was, not five hundred per cent, but only fifty per cent; or, taking the per capita growth as a nearer guide, only ten per cent? Could any one doubt, on such a state of affairs, what was taking place in the community? Can any one doubt, then on the figures I have named, what is taking place respecting the proprietorship of the active properties of the country by the bulk of the people in the country?

It should be borne in mind, too, that the transformation indicated is not a mere pin speck on an otherwise spotless sheet of paper. Were it so, it could perhaps, in the wider vision that makes up judgment on great questions, be safely overlooked. But it cannot be safely overlooked, for the transformation relates to the whole of property that makes up, almost entirely, the last quarter of a century’s addition to our national wealth; to just that property, too, that attracts and fills most completely the public eye.

Nor, viewed purely as a question of economics, can the transformation be ignored. The industrial complaint that has greatest voice today is the danger of monopoly. Corporations owned widely by the people might, perhaps, become monopolies; though I know of no actual instance of a monopoly widely owned. But the antidote of monopoly is competition; and let it come about that corporations be made reasonable safe, and therefore desirable, investments — let it come about that the corporation shall no longer be regarded as a mere financial sinkhole, except for those skilled in its ways — and there will be abundance of capital at hand, as the bank deposits show, to put in the field a competitive corporation, whenever in that field monopoly seems to have established itself. Indeed, the chief reason why any monopoly can now maintain itself is, that besides having a grasp on all the physical sources of productivity within a given field, it has a large grasp, also, on all the financial resources that would otherwise go into the building up of competitors.


But the transformation strikes deeper than mere economic conditions, or the natural laws that govern monopoly and competition. The transformation of the ownership of a country’s industrial property, from its people generally to a few of its people only, reaches the bedrock of social and moral forces on which, alone, the whole structure of republican institutions rests; for, under such conditions, instead of depending, each on himself and his own intelligence chiefly for success, the great bulk of our people, increasingly, will become dependents upon others. Those who possess investible means will come to rely solely upon the great financial institutions; and those who possess nothing but capacity for labor, upon the great organizations of labor. That is paternalism; paternalism in almost its final form; the paternalism that will eventually divide the country into two hostile camps, the camp of those who have, and the camp of those who have not; the paternalism that speedily descends into actual state socialism, or a dry-rotted citizenship as nerveless and squalid as state socialism.

Here, then, in our own day, and at this early hour of the day, is the parting of the ways. Ahead lies the road to paternalism. To the left is the open road to state socialism. They look now like distinct ways, these two roads, over bogs and precipices all their own. But a little way ahead, within the distance that any clear eye can carry, the two roads meet. For let it not be forgotten by those who preach the so-called rights of “industrial liberty,” that the out and out socialists and radical labor men are not the only influences that are pushing our country to the edge of the socialistic precipice. These have allies; and the ally on which they most rely, and justifiably rely, are just those men who, regardless of all considerations other than those of money and power greed, are launching the dishonest corporate contrivances, that, under our existing corporation policy, obtain without hindrance the credit and sanction of the government’s great seal.


It is only by a turn to the right, by what may seem to some a sharp turn, that our one safe pathway forward will be found. That way lies over high ground, Individual Opportunity — the opportunity, actual as well as in theory, to each individual to participate in the proprietorship of the country. That ground is, in its best and highest sense, republican ground. To gain that ground, the paramount problem, is not how to stop the growth of property, and the building up of wealth, but how to manage it so that every species of property, like a healthful growing tree, will spread its roots deeply and widely in the soil of a popular proprietorship. The paramount problem is not how to crush, or hawk at, or hamper the corporation, merely because it is a corporation; but how to make this new form of property ownership a workable agent toward repeopleizing the proprietorship of the country’s industries.

The first step in the solution of that problem is that the government obtain a full grasp of the whole subject matter; and this, in my judgment, can adequately be done only by putting aside the five-and-forty bewildering state hands, for the one great national hand.

The second step, the step for which the first is taken, is to take care upon what kind of corporate proposal the government’s great seal is set — to cut out the stock-jobbing corporation; the water-logged corporation; the mere vision of visionaries; the labyrinthian corporation whose stock and bond issues are so purposely tangled that no mind, not an expert’s, can follow their sinuosities. In short, to regenerate the corporation.

The third step is to open to the wage-earner of the country the road to proprietorship. The basis of every successful enterprise is the command: go forth, increase, and multiply; and to no enterprise can rightfully be denied the fruits of that command. But capital is not the sole thing that enters into enterprise. The skill that puts the ship together, or that subsequently pilots her, is not the sole thing. The men who drive the bolts, and feed the fires, contribute; and to them, as to the capitalists, and to the captains and lieutenants of industry, should go a part of the increment; not as gratuity, but as their proper allotment out of the combined forces that have made the enterprise successful. Of course, to make such partnership between capital and labor a thing that ought to be done, is the work of the big hearts and big brains in the industrial field. But to make such partnership a thing that can be done, is the work of those who shall recast and regenerate the country’s corporation policy.


Whether either of the present great political parties will be found willing to undertake this work of regeneration, I do not know. The main body of the Democratic party would, I believe, enlist. But on one of its wings are the influences of semi-socialism, and on the other a band of so-called conservatives, so conservative, that a single utterance against the sanctity of the present go-as-you-please corporation license is looked upon as political profanity.

The main body of the Republican party would enlist. It was the early Republican party that, through the Homestead and Preëmption laws, peopleized the proprietorship of the public domain. But the Republican party, too, has wings: and it cannot yet be said that the wings may not, on this vital issue, hold back the main body.

But the day of regeneration will come, the day when some party of the people will cease to minimize, to compromise, to hide behind promises and looks; but, going to the root of the matter — the depeopleization of industrial ownership under present policies — it will build from that point upward. That day will come, because higher and higher within the heart of our country is rising the voice, What shall it profit us if we gain the world, and lose our soul?


Reprinted by the
Center for Economic and Social Justice
P. O. Box 40711
Washington, DC 20016


Shall The Prosperity And Property Of America Belong To The Individual American?

American Illustrated Magazine – December 1905

Who Shall Own America?

Shall the Prosperity and Property of America
Belong to the Individual American?
— A Problem and the Solution

By Peter S. Grosscup



Writings by the Hon. Peter S. Grosscup:

The Beef Trust Enjoined

How to Save the Corporation

Who Shall Own America?

The Rebirth of the Corporation

The Corporation and the People: Are We on the Right Track?

Through history, the very basis of the American Republic has been the ownership of the property of the country by individual citizens. They still own the property, or most of it, but the control of that property has passed into the hands of a few great corpora-tions, and the corporations which now control that property with complete control will come to own it, with an absolute ownership, unless something is done. The prevailing temper of the people of the United States is to ruin the domain of the corporations which have sought possession of their property. But the real problem before this generation is not how to ruin nor how to injure this new great domain but how to reclaim it honorably. To suggest a solution of the problem is the purpose of this wise and cogent article.


The government of the United States collects and disburses every year over one thousand million dollars. There are some of us who criticize this as a flood of extravagance. There are others who look upon it as the high water mark of government success. But whatever we think of it as an item of politics, we all agree that an annual normal fiscal operation, involving one thousand million dollars, is a new great thing in the history of the nations.

Within the government — the creatures of the government through one of its forty-five States, and brought into being, so far as government is concerned, by a line or two found in the State statute — there are at least two corporations whose fiscal operations exceed even that vast sum. The fiscal operations of other corporations, to a large number, approach that sum. And if we had any way of disentangling the transactions that are strictly corporate, from the entire body of the country’s transactions, it would be found, I think, that the corporate transactions exceed in magnitude, perhaps nine to one, all the other business transactions of our people put together — that the difference in magnitude between the business transactions of a hundred years ago and the business transactions of to-day is almost exactly measured by what the corporation has injected into the business activities of our people.

In looking, however, for means of compari-son, the fiscal side of industry’s activity is not the only means at hand. The activity itself — the actual stir and motion of industrial and business life — show just as strikingly the preponderance of the corporation. Take for illustration our present day facilities for transportation. Every railroad right of way is owned by a corporation. The road-bed upon which the rails are laid was constructed by an incorporated construction company employing implements made by incorporated manufactories. The rails are the output of corporations, from the ore mines of Michigan and the coal fields of Pennsylvania to the rolling mills of Pittsburgh and South Chicago. From their steel frames down to the electric buttons, the cars used are the products of corporations. The whole operation is a corporate operation — the patron coming in touch with individuals only as such individual represents a corporate master.

Or turn from this, the railroad, the greatest single enterprise in America, to the commonest — the supply of the food we eat and the clothes we wear. Our shoes are from a corporation last, our clothing from a corporation loom. The butcher of to-day is a corporation. A corporation gathers for us the fruits that go upon our tables. The loaf of bread as it comes to us is almost exclusively a corporation product. It was a corporation that manufactured the plow that turned up the soil, the harrow that mellowed the soil, the drill that put in the seed, the harvester that cut and gathered the ripened grain. The elevator where the grain was stored was an incorporated elevator, so also the mill that ground the grain into flour, and the biscuit company that baked the loaf. Each step in the making of the loaf was by some corporate activity.

In still another way may be measured the preponderance of the corporation. We are accustomed to say of America that she feeds Europe, and to think of our country chiefly as an agricultural country. The agricultural development has been vast. According to the census of 1900, an inventory of our agricultural wealth — the value of our farms, farm implements, cattle, farm products on hand unsold, all that would go into the schedule of farm resources — showed a total of over eighteen billion dollars. But the same census showed that the wealth embodied in the corporations of the country — the property possessed and wielded by corporations — exceeded this sum by more than five billions of dollars. Barring city real estate, more than half the country’s property is under the form of corporate ownership.

Still another comparison — the setting side by side of the sources out of which our people obtain their livelihood. We are accustomed here again to think of our people as engaged in agricultural pursuits. Two generations ago a large majority were on the farms. But the census of 1900 shows that more than twelve millions of our people are now engaged in mechanical trades — a statement that carries with it the showing that nearly one-half of our people subsist upon what is got by the artisan, in the way of wages, out of the nation’s industrial activities. And when we add to this the men, women and children who live on the wages of clerks, accountants and the like, to these activities, and call to mind the fact that the nation’s industrial activities are nearly all embodied in corporate form, it is seen that much more than one-half of our population live off corporate treasuries. From whatever point of view then, visual to the mind and eye, we may look at it, the domain of property, covered by the corporation, stands out as the great central fact in the industrial life of the century that is just opened.


There is still another view, not wholly physical and financial — a view that goes to the foundations upon which the social and political life of our people is grounded. For some great purpose of His own, the Creator put into visible nature only the germ of what nature ultimately could do for men, leaving it to man himself, by the application of intelligence and industry, to bring out of the germ the ripened fruit. The history of civilization is, in large part, the development of that intelligence and industry. At no time, however, has the intelligence and industry of men done so much or shown such results in the way of increasing the practical comforts of the race as during the past generation or two. Cast back your eyes no further than the days of your grandfather. We needed, then, the better means of going about. Here now are the strong, fleet horses harnessed in steam, and the still stronger and fleeter steeds that travel under the reins of the lightning. We needed better light. Here now is light taken from the atmosphere, and as abundant as the atmosphere itself. We needed better clothing, better food, better shelter. Chemistry went to work in the laboratory, mechanical talent studied the loom, all the trades joined in bringing their best to the places where better things were wanted. We reached out for closer touch with the thought and heart of all the world. The breath of the Creator was put upon our lips, so that humanity everywhere came within our lowest whisper. These measureless new things that have been added to the uses of mankind — this burst of in-vention, transforming the bud in the forces of na-ture into the ripened fruit of practical fact — is the achievement principally of the last half of the last century.

It is these new creations that principally have given rise to the new domain of private property covered by the corporation, a domain so vast that it is difficult to bring it within accurate comprehension; a new domain, that in the rapidity of its creation, and in the pre-eminence of its position in the public eye, is without a parallel anywhere in the whole history of the growth of private property the world over. Were I to say that the corporation has monopolized nearly all that the intelligence and industry of man, through the two most fruitful generations of his existence, have created, my meaning would perhaps be misunderstood. I do not wish to be misunderstood. The fact that I wish to lodge in the mind of my readers is this: That utilizing an undoubted right to put into private property, in some form, the creations of the past two generations, the men who have obtained control of those creations have chosen to put them in the form of corporate as distinguished from individual, ownership, and that it is just in this inner fact, the new great fact of our time, — the corporate form given to the new do-main of private property and its results on individ-ual proprietorship, — that is to be found the social, the political, and the moral significance of our cor-poration problem.


No one agency hitherto has contributed more to the development and ennoblement of the individual life of the people, — and no institution hitherto has been more prized by the people individually, — than the institution of private property. To individually possess something, — something that belongs to one as a thing separate from the belongings of all others, — is the individual instinct that has done everything in the development and stability of per-sonal independence. More than either civil or reli-gious liberty, it constitutes a tangible per-sonal in-dependence. Out of this instinct for indi-vidual pri-vate property has flown the stimulus that is behind nearly everything that has been humanly created and distributed justly, private property has made peoples strong and progressive. America, from the beginning, has been a nation of individual property holders. The prospect that drew the first American across the Atlantic was the prospect of individual proprietorship in lands. The prospect that drew their children across the mountains, into the valley of the Mississippi, was the prospect of lands. The instinct that has peopled Iowa, Nebraska, Kansas, the Dakotas, and the Pacific Coast, is the instinct for land. Farms, homes, herds, fields of grain, reaching out further and further toward the setting sun, — it was upon these, until the new tide of in-dustrial life repre-sented by the corporation set in, that the American people set their heart and aims. And it was due to this instinct that the old public domain, made up of land, became the great central fact, next at least to slavery, of the century just passed.

No nation in the history of the world ever fell into a heritage so vast — the inheritance directly from nature of more than two billion acres of land, available for cultivation and open, therefore, to some character of ownership. No nation in the history of the world ever dealt with a landed inheri-tance as did the people of the United States. The statesmanship that dealt with that landed domain kept us, in that quarter, a nation of individual property holders. And it is because of that fact, contrasted with the statesmanship that has been dealing with the still greater new domain represented by the corporation, that I turn for a moment to that page in our history.

Many ways of dealing with the landed domain lay open. There, for instance, was the old way, — old as government itself, practiced by the Kings of England, in the settlement of our colonies, — the creation, out of the public lands, of large estates. The adoption of this way would have built up large fortunes, and large landed proprietorships.

Then there was the way that would now be known as public ownership. Under this, the vast domain would have remained the joint property of the nation, as the lands in Japan are the property of the nation, each tenant paying his toll into the national treasury. Large estates would not have been created, nor large fortunes. But on the other hand, we would not look out, now, upon the thriving farms, and the robust, independent rural citizenship that constitute the backbone of our security as a people of the future.

The way that was chosen was neither the way of large individual estates, nor the public owner-ship way. The way chosen was to distribute widely among the individuals in the ordinary walks of life the ownership of this landed domain, and the pre-emption and homestead acts had in fact that result. Those measures were founded upon a dis-tinctly republican ideal, — the ideal that money is not the sole basis of capital; that toil is capital; that frugality is capital; that a purpose that will persist through five years of occupancy is capital; that a nation’s wealth, in its highest form of effective-ness, is the individual ambitions of its people. And under these ideals more than half of the public do-main has been occupied, and more than a million families have been given a property stake in their country’s welfare. Let me repeat: The great fact that confronted that generation of statesmen was the almost measureless landed domain belonging to the nation. And the great prosperity that has come to us as a people is due to the wisdom that so man-aged the distribution of that domain that the whole face of our tillable soil presents, to-day, a popula-tion of individual proprietors, — a proprietorship so widely individualized that it can be truthfully said of the farms of America that they belong to the people.

Now it was exactly through this period that witnessed the peopleization of our public landed domain, under the policy and guidance of the pre-emption and homestead laws, that there crept over the horizon into our national life the new domain, — vaster than the other several times over, — that has come under the form of corporate ownership. Had our statesmanship been able to deal with this domain of corporate ownership as it dealt with the landed domain; had the property embodied in the railways, for instance, instead of going under the proprietorship of a few men only, come under part proprietorship of the engineers and firemen who steer the great trains, of the conductors, the brakemen, the switchmen, the whole list of men on whose individual faithfulness to duty the success-ful operation of the roads depend; had our great factories interested as part proprietors the men who smelt the ore and roll out the steel, the men who feed the looms, and supervise their operation; had the great mining properties interested as part proprietors the men who yield to their vocation the health and joy of living in the open day; had the great contracting corporations interested as part proprietors the men who handle the trowel and push the plane; had the men who work with their hands been given opportunity to improve, by ingenuity and persistence, their individual stake as the farmer who obtained land from the government was given such opportunity; had labor of all kinds, instead of subsisting merely on wages, been given individual prospect, and the savings of those who saved, instead of going into the great modern fiscal funnel, from which the men of might, who have control of the outlet, have obtained their power, been given a just dividend out of the great new things that these men of might have created; had such a state of affairs in the vast domain now represented by the corporation been brought about, the corporation would be looked upon to-day, not as something alien and menacing to our national, life, but as the great available channel through which that national life found opportunity to keep up a strong and independent individual citizenship.


But the new great domain of property, covered by the corporation, was not thus peopleized and humanized. Events did not occur here as they occurred in the landed domain. Instead of putting this new domain under a policy that would widely and equitably distribute its property creations among the people, it was left to the corporation, and the corporation, as soon as born out of the loins of the State, was abandoned and left to shift for itself. And thus these two determining currents in our national life, — the policy that controlled the distribution of the landed domain, and the absence of policy respecting the domain now covered by the corporation, though coming in point of time, almost side by side, have run in directions exactly opposite, — the one out to the open sea of permanent republicanism, the other back toward the fastnesses of Feudal conditions; conditions under which to him who had more was added, and from him who had not was taken even the little that he had.

The direct cause of the condition that thus confronts us is to be found in the character of the corporation under whose form the new domain’s ownership went. Within the freedom of the corporation, for instance, were the means of legally joining together things theretofore separate, and thus creating, by consolidation, a property two-fold, many fold, more valuable, measured by net earnings, than the added values of the separate properties. From an economic point of view, consolidation is thus fully justified. But it came to be the almost universal practice that the whole of this new value, mined and coined out of a shrewd idea put into execution, went to the men who had conceived the idea, and had within their call the financial resources essential to its execution.

Within the freedom of the corporation were the means of so marshaling corporate assets, — that is laying securities, one set over another, — that if the expectations given out at the organization of the corporation were disappointed, the men on the inside still had the securities that were valuable, the public on the outside finding itself in possession of the wilted and fallen exfoliations. And all over the new domain of property that went into corporate form are strewn these fallen and worthless securities.

The corporation had within itself the freedom, a freedom not even discountenanced by the State, of presenting one face to the world and another to its auditor — the freedom so to shift and manipulate, that what was its financial condition yesterday need bear no resemblance to its financial condition of to-day. Men were given liberty, provided the corporate form was chosen, to scheme and plunder — a license to cunning of the higher order that bluntly imitated by ordinary cunning, would have brought the individual employing it, without delay, to the bar of justice, as engaged in criminal schemes to defraud.

In short, the stipulated fee for the privilege of incorporating being tendered, the State has been putting its seal on every contrivance, good or bad, honest or dishonest, and with an indifference that, exhibited elsewhere, would have shocked long since the moral sense of our people.

Out of this indifference — morally, the connivance — have come corporations bankrupt the day they were born. Out of it have come corporations so loosely put together that from the beginning they were destined to founder on the first billow encountered. Out of it have come corporations flying at their masthead the great seal of one of our States, but manned exclusively by pirates. It is legally possible, under our present corporation policy, as I have said elsewhere, for five men to sit at a table, lay a silver dollar in its center, sign articles of incorporation and subscribe to the stock, repocket the dollar, forward by mail to the State capitol the articles, and by return mail receive a certificate from the State under the State’s great seal, certifying that the corporation created is a mil-lion-dollar enterprise. I know of one corporation that was organized recently under the laws of New Jersey, with an authorized capital of forty million dollars. On second thought this must have looked high, even to the promoters, for only ten millions were actually issued. After a little more thought, the ten millions were reduced to two, whether from some scruple of the stockholders or as a business expedient, I do not know. A little while after that the corporation was in the bankruptcy court, with current liabilities, contracted after its organization, of more than one hundred thousand dollars and, assets, all told, of less than twenty-five thousand dollars.

What saves a State, launching such a contrivance, from the moral consequences of having issued a false and fraudulent certificate, except the fact that such spectacles have become so common that they are no longer looked upon with acute disapproval?

Out of this connivance and indifference have come the corporation built solely to promote the personal scheme of its supposed trustees. Their number is legion. I know of one that was so managed in the way of a false showing of net earnings, that after having established an apparent value that brought from every quarter streams of the people’s money, as supposed investments in a substantial enterprise, the ingenious manipulator was enabled to so dispose of his own holdings, at the high prices established, that he took out a personal fortune that would buy out whole counties in the State of Illinois.

These are examples only. They are examples, however, that can be paralleled in the experience of every community. They reveal the lay of this whole region that constitutes our new great property domain — a region that, unlike the landed domain, has been left, in everything relating to the distribu-tion of ownership, to the chance disposition and cunning of the men who first got upon the ground — a region practically lawless, so far as law can be designed to promote the distribution of ownership; governed, not by law, but by the caprice of men.


Let us look now at the effect of all this upon our people and their relationship to the new domain. First of all, perhaps, it brought on that money madness that brands us as a people from nearly all the other peoples of the earth. But the circumstances considered, it is not extraordinary that we went money mad. Throughout the new domain covered by the corporation the government had set no lights. But the region has not been without its lights — the flash every now and then of some Aladdin’s lamp, disclosing the acquisition, in an hour, of personal fortunes that in any other field of private property would have been as impossible as a miracle. A passion for the miraculous took possession of us. And one after another these miracles showed up, until the good old-fashioned notion that a thing to be possessed must first be earned was lost; until all sentiment of sharing opportunity with others was lost; all consciousness that there were others, except as others might be tools or stepping-stone — the whole new domain given over to the mercies of grab. And grab was preached as the legitimate gospel of the times.

Another effect, closely interwoven with the one just stated, has been the exclusion of the laboring man from part proprietorship in the property of the trade to which he is attached. The exclusion is almost complete. With few exceptions, the man who works with his hands does not even own the tool that is in his hands; so that, to the extent that private property is an institution of the country, the laboring man has become almost an alien.

Nor is this exclusion, under the circumstances, extraordinary. It is due, in a large degree, to the money mania just spoken of, — the unbridled rush that left to the founders of corporate enterprise no time, and practically no opportunity to think of, or work out, any distribution of proprietorship that would include any one not with them upon the spot. But the consequence is one of the perils of our national life. When the nation took possession of the landed domain, the invitation went out to all to come in and make for themselves a personal independence. In this new domain, covered by the corporation, no practical invitation has gone to the man who works. Under the old order of things, the artisan had the prospect of some day owning his shop. In the new order there is no world of individual prospect. To the artisan, so far as opportunity for ownership goes, the new domain is a region without hope or law. And on this account more than any other, has grown up that strained relation between labor and capital; that unnatural attitude that marks them, not as friends having a common interest, but as belligerents, constantly at war, or sleeping upon their arms.

Still another effect is the practical exclusion from proprietorship of the people with savings actually accumulated — savings ready to be counted out in dollars and cents. The bank deposits, exclusive of redeposits, amount now to more than eleven billion dollars. These deposits belong not to the rich men of the country, for the rich men of the country are the country’s borrowers, but to the men and women in the ordinary walks of life. Increased by the holdings of the people in the great insurance companies, and other fiscal institutions, they would buy out, perhaps, at any fair valuation, much more than a controlling interest in the whole domain of property that the corporation controls. Now what is the relation of the people, the owners of this great wealth, to the corporate enterprises that have been floated by that wealth? Are the own-ers part proprietors or co-partners in those corpo-rate enterprises? Not at all. The deposits remain the wealth of the people. But the corporate enterprises founded upon that wealth, nurtured by it, without access to which the corporate enterprises would themselves be impossible, are the exclusive property of the few who have been able to obtain the ear of the directors of the insurance companies and the banks. True the deposits of the people have been transmuted into the means of proprietorship, the medium being that huge fiscal funnel, that presenting its opening to the wealth of the entire country, narrows down at the outlet as it approaches active proprietorship, to those only who are its chosen beneficiaries. But such transmutation is not in the direction of the republican ideal that the property of the country should be owned by the people of the country. And the fact of significance is that this narrowing transmutation is on the increase, — enormous increase, — for though the whole wealth of the United States, distributed per capita, has grown in the last twenty years only about eleven per cent, the uninvested deposits for which the people have found no satisfactory investment, ex-cept as deposits, have grown in the same period, about five hundred per cent.

The recent revelations connected with insurance and other circles of high finance help to make my meaning clear. They show instances of enormous corporations launched with no other basis than the borrowed wealth of the people, the control of which has passed from the people’s hands, and while the present method of corporate management remains will be always beyond their reach. They show even more —instances wherein the wealth of the people has been so managed as to transfer not only its use, but in some degree the wealth itself, to those who have control of it; for what other mean-ing can be attached to a transaction that consists in the floating of a vast company, and the booming of its securities, followed by the unloading of those securities on the public at fanciful figures, and this followed in turn by their repurchase by the aforetime boomer at the lower figures to which they had inevitably dropped.


If, up to this point, I have succeeded in bringing my reader to see through appearances to the thing behind appearances, if there now stands out before his mind, as the great new fact of this generation, not the corporation, but the thing underneath the corporation, — the vast new domain of actual private property, to the creation and ownership of which the corporation has contributed nothing but form; if he be impressed with the fact that this actual thing underneath, —the great new domain, — all mere form being swept aside, is the real thing that should engage and stir his interest; if I have succeeded in pointing out that the sin of the corporation, as it affects the ownership of this new great domain, is not that it is a corporation, but that, as a medium of ownership, the corporation has been used to narrow the participation of the people in the ownership of the new domain; in short, if I have the facts of the whole problem be-fore him, in their right relation to each other, the remaining inquiry is, which way shall we turn to undo what has been done, and thereby bring into the new domain the republican ideals that have done so much in the distribution of the landed do-main.

One thing is sure: We should not turn to mad remedies, — deal with the institutions of the new domain as an endangered people would deal with a mad dog. It is one thing to destroy, another to reconstruct. What we want in the solution of the problem before us is not some supposed retribution; what we want is reform, — some practical, workable reform.

Another direction to which we should not turn is State socialism. Just now State socialism is giving its attention to municipal ownership. Respecting municipal ownership of public utilities, could the movement be confined to that field, I have nothing here to say. But in a few years, — probably by the time the next presidential conven-tions meet, — State socialism will have widened out to include the railroads, the telegraphs, and the telephones of the country. Should popular approval follow it there, the program would be extended to the coal and ore mines. And in the end, the whole insti-tution of private property would be endangered. That this delusion, in one or more of these dis-guises, is now under considerable momentum, cannot be truthfully denied. That every revelation of corporate property misused, and of unsuspect-ing people robbed, swells and accelerates the movement, cannot be denied. That every man who comes to the door of the new great property do-main and finds it closed and bolted against such as his kind, is likely to become a recruit to the social-istic movement, cannot be denied. But socialism realized, would overturn civilization, for only in full freedom for the play of that law of natural se-lection, that balances and sifts men until they have found the place in industrial life for which they are best fitted, does the world, and especially the world of labor, obtain the full benefit of the vary-ing rights that have been sown by nature into the brains and hands of her individual children.

Opposed to this growing tendency toward State socialism, and generally accepted, perhaps, as its final antidote, is the policy vaguely phrased State Control of Corporations. By this generally is understood a policy that sees to it that the appetite of corporations for too great profits be kept down, — that corporations be reined and bitted, as an over lively horse is reined and bitted. And Mr. Roosevelt’s administration has become, in this respect, an example of watchfulness that will be the rule of succeeding administrations for a long time to come.

But though this be commendable, as one of the daily concerns of government dealing with daily conditions, as a genuine and lasting solution of the corporation problem, it will fail, completely fail. The vision behind it is far too narrow, the reach of vision far too short to comprehend what the problem really is. It is discerned, of course, or rather felt, that something is wrong — that in the face of conditions as they exist to-day is an abnormal, even sinister look. But this policy thus far has failed to discern that the feeling behind that look is something deeper than dissatisfaction over the price paid for a bar of structural steel or a beefsteak, something infinitely deeper — a human instinct, amounting to a passion, as old as the world itself.

One summer evening, a few years ago, I found myself in one of our northern lakes, pushing out from shore in a little boat, alone. The sky was clear, revealing a firmament from which the stars hung down like points of light; the water unruffled as a mirror, holding in its depths the inverted sky! On no side was there sign of a horizon. Upward, downward, to the right, to the left, whichever way I looked, were the unending reaches of the world-filled sphere.

I looked about me. To the ends of space, sailing the oceans of space, in and out among each other, were the fleets of the firmament, each star a ship bearing I knew not what list of passengers or cargo, but piloted on courses so accurately charted that through three thousand years and more of human observation no catastrophe has been recorded. And in the center of this world-filled sphere — of this sphere of moving worlds — so accurately poised that on him converged all their changing lines, lay this single individual, this almost unknown individual man.

For a moment the vision humbled me, as one feels humbled who finds himself unexpected in some great, best seat to which he has no claim. But then the inquiry came: Whose eye is it that is sweeping this universe from outpost to outpost? Whose intelligence was it that, unaided by help other than the map of the skies, deciphered out of the skies what courses the fleets were sailing, what courses they had sailed through all times past, what courses they would sail through all time to come? Whose heart is that, like a finely strung instrument, is leaping into the universal chorus? For, vast as the universe is, finely as it may be balanced, infi-nite as is the eternity out of which it came and the eternity into which it is going, it must have been designed from all time for him whose eye and thought have been gradually encompassing it, and whose heart has a string attuned to every one of its harmonies. No. No. The individual man is not swallowed up in the universe. The universe is made for the individual man.

Narrowing our vision to things strictly human — to government, to the church, to progress generally — the same great inspiration appears. Underlying each, the purpose of each, is the individual man. Every sentence in the charter of human liberty was written that the individual might be ennobled. Every inspiration of the church has had for its object his uplifting. The individual put foremost, accounts for every step in the progress of the race. And great as the institution of private property is, it can show not title to existence, except that as in opening opportunity to the achievement of individual independence, it has filled the individuals of the world, since time began, with the stimulus that has made great and lasting the world’s achievements. Behind the look that has come into the face of industrial conditions, as they exist to-day, I repeat, is something deeper than dissatisfaction over prices, something infinitely deeper — the human passion, old as the world itself, to have some lasting individual part in the achievements of mankind. And it is just in this quality of human nature that the root of the corporation problem lies — a problem that will not be solved, or put fairly on its way to solution, until the demands of this deeper human nature are recognized and adequate steps taken to rescue the domain, created by the labor and genius of mankind, from that practical anarchy that, under present conditions, makes it a dark and forbidden ground.


Is the rescue impossible? The tree, artificially crowded and twisted out of its natural symmetry, will not spring out and up the moment the restrains are removed. But if the tree be young and growing, nature in time will repair the deformity. And if we, who have the responsibilities of this day upon our shoulders, resolutely set about the restoration of the young domain of private property, represented by the corporation, to an atmosphere that will invite the nation’s pride and interest, events will take place here, as they have taken place in the landed domain, that will eventually give us here, as it gave us there, an ownership so individualized that it can be said at last, that all the property of the country belongs to the people. Let me marshal a few of the facts that help to give me this faith.

The first of these is, that the bulk of the wealth of the country is still in the hands of its people. Note the distinction. While the ownership and control of the new great property domain is narrowed to a few, the wealth on which that owner-ship rests, — from which it largely feeds, — is still the possession of the people in the ordinary walks of life. These people own the wealth that makes up the large bank deposits. These people own the largest portion of the nation’s bonds, the State bonds, city, country, school district, and road bonds. These people own a large proportion of the railroad and other corporation bonds. They have immense sums invested in insurance and trust companies. Collier’s Weekly gave it as its opinion recently, that the savings in the savings banks of New York alone, would buy out twice over the Standard Oil Company. And though no exact facts are at hand on which to base a statement, I believe it safe to say that the people of America have the fi-nancial means at hand to possess themselves, at fair prices, of enough of the new great domain of property to make it as widely individualized as are the farms of America.

The next fact in proof of my faith is, that the individual instinct for ownership has not yet been put to sleep. Outside of certain classes who have never been genuinely American, the American, wherever you find him, is still keen to have a part in the achievements of the day, and out of that part to realize something toward individual indepen-dence. The trouble is, not lack of instinct, but lack of opportunity, — I mean of course, sober opportunity as distinguished from that fake activity that the stock markets hold up as opportunity.

Nor has this instinct any fear of the corporation simply because it is a corporation. It invests, — for a deposit is in essence an investment, — in the banks, the savings societies, the insurance companies, and other corporations, though they are corporations. The instinct is not afraid of corporation, but it distinguishes between corporations. It is an instinct that reasons, that selects, but always is alive, — keenly alive.

Still another fact is the rapidly growing tendency upon the part of the present owners of enterprises, to admit the men who labor with their hands, into participation in the increase of the enterprise. The world is rapidly waking up to the fact that hands with heart and good will behind them, are immeasurably more capable than hands that beat stroke only to the passing of the minutes. And what is of more consequence, the world is beginning to wake up to the moral truth that the mere size of one’s accumulations do not count for much, —that it is just conduct between man and man that counts; and to this other truth, that labor, making up with capital the force that gives to enterprise its increase, is morally entitled to a share in the increase of the enterprise. This awakening is manifested in those corporations, — and the number is constantly increasing, — that are now trying fairly to interest their employees as shareholders, and those others that apportion to the employees each year, a share of the year’s net earnings. The moral awakening has gone still further, — has gone in some cases to a point where capital divides with labor that portion of the stock issue that stands for what labor, along with capital and management, jointly have done towards increasing the money value of the enterprise as an entirety.

Now men, everywhere, are the creatures of moral forces. The deliberate judgment of a nation, even though it remain a moral judgment only, in the long run rules. Men do not stand out against the righteous judgment of mankind. And a national awakening that would lift the corporation out of the morass of greed and selfishness into which it has fallen, giving to it, in legal form, the moral ideal that labor is a co-partner in every successful enterprise, would be followed, I believe, but such a transformation in the relations of corporation and employee, that in this direction, too, the ownership of the great new domain of property would widen and widen, until it became widely individualized.

But where, say those who have followed me patiently thus far, do you propose to begin? What concrete thing shall be done first? At what point will the way turn out of the morass, into the highway that is to lead us into the uplands of corporate properties humanized?


The beginning of the way is national incorporation. I am for national incorporation as the foundation upon which to build, — the sole way in which the work of re-organization can go on under the eye of one master, instead of five and forty masters.

Mr. Bryan, Commissioner Garfield, and possibly Mr. Roosevelt, favor what is called Federal License. The object of federal license is to bit and curb the present corporation to the end that it travel not ungoverned in the matter of prices. I am for national incorporation as against federal license, not because the two are nearly alike, as some peo-ple suppose, but because in the end to be attained, they are wholly unlike, — national incorporation being the only method that will directly and effec-tively go to the root of the disease, the peopleiza-tion of the ownership of the new domain. I would have the corporation of the future deal fairly with the people in the matter of prices. But I set above that, as the supreme object to be attained, this other thing: That the people of the country be brought back into the ownership of the property of the country. And to attain this, the nation must have its hand, not simply in the guidance of existing corpo-rations, but in the construction of the new corpora-tion.

Contributory to this work of reconstruction, a few general principles may be suggested, the first of which is, that the new corporation must be constructed on lines of simplicity.

There never has been need, from any sound financial point of view, for the labyrinthian constructions that seem the order of the day —securities so overlying each other and often so involved, that no one not an expert buying a security can locate his claim. Two classes of securities ought in every case to be sufficient — the security that represents actual cash paid in, or its equivalent in property, and the security that may be issued from time to time as the value of the property actually increases, and to cover such increased value. The corporation that cannot be financially launched upon lines thus plainly put before the eye ought not to be launched at all, for here, as elsewhere, mystery means not something essential to success, but something open to uses other than the corporation’s success.

Simplicity in the issue of securities such as I have pointed out would not interfere with any legitimate financial need of the corporation. The corporation could still borrow money at stated rates of interest, issuing bonds secured by mortgage upon the properties. But such bonds would be a part of the security that represented actual cash paid in, or its equivalent in property, and for all time, and through all change and consolidation, such bonds, together with the stock securities originally represented by cash or property equivalent, would be the fundamental securities, on which interest or dividends must be paid before the second class of securities could share in the earnings — these secondary securities representing the increment of value, the increase in earning power, the good will of the property, as distinguished from the cash investment constituting the fundamental security.

Provision should be made to interest labor in ownership. The securities issued on account of increased value should be issued only as the increase is shown, not by prediction or expectation, but by such experience as proves the fact, and provision should be made that such securities may be divided equitably between the capital invested and the labor put in, and expedients be adopted to encourage corporations formed on that basis.

The corporation being trustee for its owners, the government must be given opportunity to exercise a constant watch that the trust is executed. Under supervision, something like the watch the government holds over the national banks — seeing to it that financial conditions are always correctly reported, that no capability of the corporation is diverted to private gain, and that transgressions meet with swift punishment — personal schemes would be reduced to a minimum. And what is more, corporation activity would be lifted to a higher plane of personal and moral responsibility. Under such supervision, too, public utility corpo-rations, deriving their existence from the Untied States, could be made to obey those laws that look to the giving of equal opportunity to all, because they could be punished by the government for any form of discrimination or favoritism, not simply by a fine, but by possession taken by the government as the government now takes possession of recu-sant national banks, and such possession continued until the corporation was brought to obey the law.

Provision should be made for a government exchange, or a private exchange under government supervision, through which the securities of national corporations could be bought and sold. In this way would be drawn a distinctly visible line between the securities of national corporations and securities in corporations that refuse to nationalize — a line that would soon be understood as the boundary between corporations that were willing to be faithful trustees of the owners, faithful at the same time to their duties to the people and corporations that had inner and ulterior designs. My own opinion is that this distinct differentiation of the national from the hybrid corporation would in time lead every corporation engaged in interstate commerce voluntarily to incorporate under the national law. A just plan of organization and supervision being offered, the people would not long permit the bank and insurance accumulations to be absorbed in corporations that refused the plan.

That the vast new domain of property, withheld from the ownership of the people by the corporate lawlessness of the past can, without disorder, be restored to the people, requires some faith. That it will be restored by setting those things right that heretofore have been allowed to go wrong, re-quires faith that things once set right and kept right will work themselves out right — that a righteous cause, righteously begun and righteously main-tained, draws aid from a power that, though not fully compassed by our vision, enters mightily into shaping the destinies of mankind.

I have that faith. Whether the world knows it or not, that faith is the faith of the world. More than anything else it has moved the world. And the immediate work that lies before those who believe with me in the regeneration of the corporation is to reach the faith that underlies American character — to set in vibration the moral fiber in our character, that once set in vibration will not rest until the work of regeneration has been begun, and once begun, has been accomplished.

The great fact of to-day is the domain of private property under corporate ownership. Widely and individually owned, in accordance with the instincts of a republican people, this new domain would be the pride of the republic. Narrowly owned, under processes which kept going are bound to narrow its ownership still more, this new domain is the peril of the republic. The prevailing temper of the day is to tear it down. But the real problem is, not how to tear it down, nor how to hamper this new great domain, but how to honorably reclaim it from present conditions that, like the great landed domain distributed by our fathers among the people, this new domain may come likewise into the proprietorship individually of the people. In the end some organization will give to this work the momentum of a political movement. The practical question is: When will some party set out upon this movement? With the cloud that already hangs over the horizon, seamed and streaked with flashes of a people’s impatience, that when becomes a question full of significance.


Reprinted” by the
Center for Economic and Social Justice
P. O. Box 40711
Washington, DC 20016