HERBERT HOOVER

CHAPTERS

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Economic Phases

That high and increasing standards of living and comfort should be the first of consideration in public mind and in government needs no apology. We have long since realized that the basis of an advancing civilization must be a high and growing standard of living for all the people, not for a single class; that education, food, clothing, housing, and the spreading use of what we so often term nonessentials, are the real fertilizers of the soil from which spring the finer flowers of life.

The economic development of the past fifty years has lifted the general standard of comfort far beyond the dreams of our forefathers. The only road to further advance in the standard of living is by greater invention, greater elimination of waste, greater production and better distribution of commodities and services, for by increasing their ratio to our numbers and dividing them justly we each will have more of them.

The superlative value of individualism through its impulse to production, its stimulation to invention, has, so far as I know, never been denied. Criticism of it has lain in its wastes but more importantly in its failures of equitable sharing of the product. In our country these contentions are mainly over the division to each of his share of the comforts and luxuries, for none of us is either hungry or cold or without a place to lay his head and we have much besides. In less than four decades we have added electric lights, plumbing, telephones, gramophones, automobiles, and what not in wide diffusion to our standards of living. Each in turn began as a luxury, each in turn has become so commonplace that seventy or eighty percent of our people participate in them.

To all practical souls there is little use in quarreling over the share of each of us until we have something to divide. So long as we maintain our individualism we will have increasing quantities to share and we shall have time and leisure and taxes with which to fight our proper sharing of the “surplus.” The income tax returns show that this surplus is a minor part of our total production after taxes are paid. Some of this “surplus” must be set aside for rewards to saving for stimulation of proper effort to skill, to leadership and therefore the dispute is in reality over much less than the total of such “surplus.” While there should be no minimizing of a certain fringe of injustices in sharing the results of production or in the wasteful use made by some of their share, yet there is vastly wider field for gains to all of us through cheapening the costs of production and distribution through the eliminating of their wastes, from increasing the volume of product by each and every one doing his utmost, than will ever come to us even if we can think out a method of abstract justice in sharing which did not stifle production of the total product.

It is a certainty we are confronted with a population in such numbers as can only exist by production attuned to a pitch in which the slightest reduction of the impulse to produce will at once create misery and want. If we throttle the fundamental impulses of man our production will decay. The world in this hour is witnessing the most overshadowing tragedy of ten centuries in the heart-breaking life-and-death struggle with starvation by a nation with a hundred and fifty millions of people. In Russia under the new tyranny a group, in pursuit of social theories, have destroyed the primary self-interest impulse of the individual to production.

Although socialism in a nation-wide application has now proved itself with rivers of blood and inconceivable misery to be an economic and spiritual fallacy and has wrecked itself finally upon the rocks of destroyed production and moral degeneracy, I believe it to have been necessary for the world to have had this demonstration. Great theoretic and emotional ideas have arisen before in the world’s history and have in more than mere material bankruptcy deluged the world with fearful losses of life. A purely philosophical view might be that in the long run humanity has to try every way, even precipices, in finding the road to betterment.

But those are utterly wrong who say that individualism has as its only end the acquisition and preservation of private property the selfish snatching and hoarding of the common product. Our American individualism, indeed, is only in part an economic creed. It aims to provide opportunity for self-expression, not merely economically, but spiritually as well. Private property is not a fetich in America. The crushing of the liquor trade without a cent of compensation, with scarcely even a discussion of it, does not bear out the notion that we give property rights any headway over human rights. Our development of individualism shows an increasing tendency to regard right of property not as an object in itself, but in the light of a useful and necessary instrument in stimulation of initiative to the individual; not only stimulation to him that he may gain personal comfort, security in life, protection to his family, but also because individual accumulation and ownership is a basis of selection to leadership in administration of the tools of industry and commerce. It is where dominant private property is assembled in the hands of the groups who control the state that the individual begins to feel capital as an oppressor. Our American demand for equality of opportunity is a constant militant check upon capital becoming a thing to be feared. Out of fear we sometimes even go too far and stifle the reproductive use of capital by crushing the initiative that makes for its creation.

Some discussion of the legal limitations we have placed upon economic domination is given later on, but it is desirable to mention here certain potent forces in our economic life that are themselves providing their own correction to domination.

The domination by arbitrary individual ownership is disappearing because the works of today are steadily growing more and more beyond the resources of any one individual, and steadily taxation will reduce relatively excessive individual accumulations. The number of persons in partnership through division of ownership among many stockholders is steadily increasing thus 100,000 to 200,000 partners in a single concern are not uncommon. The overwhelmingly largest portion of our mobile capital is that of our banks, insurance companies, building and loan association, and the vast majority of all this is the aggregated small savings of our people. Thus large capital is steadily becoming more and more a mobilization of the savings of the small holder the actual people themselves and its administration becomes at once more sensitive to the moral opinions of the people in order to attract their support. The directors and managers of large concerns, themselves employees of these great groups of individual stockholders, or policy holders, reflect a spirit of community responsibility.

Large masses of capital can only find their market for service or production to great numbers of the same kind of people that they employ and they must therefore maintain confidence in their public responsibilities in order to retain their customers. In times when the products of manufacture were mostly luxuries to the average of the people, the condition of their employees was of no such interest to their customers as when they cater to employees in general. Of this latter, no greater proofs need exist than the efforts of many large concerns directly dependent upon public good will to restrain prices in scarcity and the very general desire to yield a measure of service with the goods sold. Another phase of this same development in administration of capital is the growth of a sort of institutional sense in many large business enterprises. The encouragement of solidarity in all grades of their employees in the common service and common success, the sense of mutuality with the prosperity of the community are both vital developments in individualism.

There has been in the last thirty years an extraordinary growth of organizations for advancement of ideas in the community for mutual cooperation and economic objectives the chambers of commerce, trade associations, labor unions, bankers, farmers, propaganda associations, and what not. These are indeed variable mixtures of altruism and self-interest. Nevertheless, in these groups the individual finds an opportunity for self-expression and participation in the moulding of ideas, a field for training and the stepping stones for leadership.

The number of leaders in local and national life whose opportunity to service and leadership came through these associations has become now of more importance than those through the direct lines of political and religious organization.

At times these groups come into sharp conflict and often enough charge each other with crimes against public interest. They do contain faults; if they develop into warring interests, if they dominate legislators and intimidate public officials, if they are to be a new setting of tyranny, then they will destroy the foundation of individualism. Our Government will then drift into the hands of timorous mediocrities dominated by groups until we shall become a syndicalist nation on a gigantic scale. On the other hand, each group is a realization of greater mutuality of interest, each contains some element of public service and each is a school of public responsibility. In the main, the same forces that permeate the nation at large eventually permeate these groups. The sense of service, a growing sense of responsibility, and the sense of constructive opposition to domination, constantly recall in them their responsibilities as well as their privileges. In the end, no group can dominate the nation and a few successes in imposing the will of any group is its sure death warrant.

Today business organization is moving strongly toward cooperation. There are in the cooperative great hopes that we can even gain in individuality, equality of opportunity, and an enlarged field for initiative, and at the same time reduce many of the great wastes of over reckless competition in production and distribution. Those who either congratulate themselves or those who fear that cooperation is an advance toward socialism need neither rejoice or worry. Cooperation in its current economic sense represents the initiative of self-interest blended with a sense of service, for nobody belongs to a cooperative who is not striving to sell his products or services for more or striving to buy from others for less or striving to make his income more secure. Their members are furnishing the capital for extension of their activities just as effectively as if they did it in corporate form and they are simply transferring the profit principle from joint return to individual return. Their only success lies where they eliminate waste either in production or distribution and they can do neither if they destroy individual initiative. Indeed this phase of development of our individualism promises to become the dominant note of its 20th Century expansion. But it will thrive only in so far as it can construct leadership and a sense of service, and so long as it preserves the initiative and safeguards the individuality of its members.

The economic system which is the result of our individualism is not a frozen organism. It moves rapidly in its form of organization under the impulse of initiative of our citizens, of growing science, of larger production, and of constantly cheapening distribution.

A great test of the soundness of a social system must be its ability to evolve within itself those orderly shifts in its administration that enable it to apply the new tools of social, economic, and intellectual progress, and to eliminate the malign forces that may grow in the application of these tools. When we were almost wholly an agricultural people our form of organization and administration, both in the governmental and economic fields, could be simple. With the enormous shift in growth to industry and commerce we have erected organisms that each generation has denounced as Frankensteins, yet the succeeding generation proves them to be controllable and useful. The growth of corporate organizations, of our banking systems, of our railways, of our electrical power, of our farm cooperatives, of our trade unions, of our trade associations, and of a hundred others indeed develops both beneficent and malign forces. The timid become frightened. But our basic social ideas march through the new things in the end. Our demagogues, of both radical and standpat breed, thrive on demands for the destruction of one or another of these organizations as the only solution for their defects, yet progress requires only a guardianship of the vital principles of our individualism with its safeguard of true equality of opportunity in them.