<h2>CHAPTER 39</h2>
<h3>INCOME AND SOCIAL SERVICE</h3>
<h4>§ I. INCOME FROM PROPERTY</h4>
<div class="sidenote">The justice of property questioned</div>
<p>1. <i>Property rights must meet the test of social expediency.</i> If private
property is defended on the ground of social expediency, it must show
good social results. It is not a sacred thing; it is open to
examination, and must be judged by its fruits. Of all the forms of
income, that from property has been most strongly attacked. The thought
is that enjoyment of wealth should not be found apart from labor, and
that it should bear some proportion to services performed. The enjoyment
of an ample income by one who does no more than to draw checks or to
sign coupons seems to many minds to be unjust; and it is often
questioned whether there is any social service performed by the
receivers of the rent from land. Property seems in many cases to be
distributed without rule or reason. It does not correspond with beauty,
strength, wit, wisdom, temperance, gentleness, or charity. Since the
beginning of the Christian era, reformers have assailed and preached
against the prevailing inequality of wealth. The idea that incomes, if
not equal, should correspond to social service has always been present
in some vague way in the minds of men.</p>
<div class="sidenote">Social effect of the right to give</div>
<p>2. <i>The right to transmit property by inheritance or by gift may be
judged with reference to its effect on the giver, on the receiver, and
on society at large.</i> It is well to take these three points of view. The
right to dispose of property either during life or at death has
undoubtedly in many<span class="pagenum"><SPAN name="Page_371" id="Page_371">[Pg 371]</SPAN></span> ways a good effect on the character of men. It
stimulates the father to provide for his children, the husband to
provide for his wife. There is a joy in giving, a joy in the power to
bestow one's wealth on those one loves. The right to give stimulates
industry, frugality, ingenuity, and yields productive results. Much of
the existing wealth probably never would have been created if men did
not have this right of gift. But there is a limit to the working of this
motive, and other motives often are much more effective. Many men after
gaining a competence continue to work for love of wealth and power in
their own lifetime, as the miser continues to toil for love of gold.
When men without families die wealthy, when men that have not the
slightest interest in their nearest relatives labor and amass wealth
till their dying day, it is evident that the right to bequeath property
has little to do with their efforts. Love of accumulation and love of
power in these cases supply the motive. A more limited liberty to
dispose of property at death might still suffice, therefore, to call out
the greater part of the efforts now made to accumulate property.</p>
<div class="sidenote">Effect of the right to receive</div>
<p>That the effects on the receiver of the property are good is somewhat
more doubtful. It is true that children raised in great comfort or
luxury would be more than ordinarily unhappy if plunged into poverty or
even into humble circumstances on the death of their parents. There is
much social justification for permitting families to maintain an
accustomed standard of comfort. Few would deny that a moderate provision
by parents to provide education and opportunity for their children is
commendable and desirable. But the evil effects of waiting for dead
men's shoes are proverbial. Many a boy's greatest curse has been his
father's fortune. Men of native ability wait idly for fortune to come,
and opportunities for self-help slip by unheeded. The world often
exclaims over the failure of the sons of noted men to achieve great
things, for, despite confusing evidence, men still have faith in
heredity. A too easy fortune saps<span class="pagenum"><SPAN name="Page_372" id="Page_372">[Pg 372]</SPAN></span> ambition and relaxes energy; and thus
rich men's sons, if not most carefully and wisely trained, are made
pitiable paupers in spirit, while the self-made fathers think their boys
have chances they themselves did not enjoy. The greater social loss is
not the dissipated fortunes, but the ruined characters.</p>
<div class="sidenote">Broader social effects of inheritance</div>
<p>The effects of inheritance on the community are good in so far as it
secures efficient management of wealth. If the son or relative has been
in business with the deceased, there is a reason that he should inherit
the property, and his succession to it makes the least disturbance to
existing business conditions. But every profligate son is an argument
against inheritance; every incompetent heir is an argument in the hands
of the enemies of the existing order of society. It is to society's
interest that no able-bodied member shall stand idle. Every child should
have presented to him the motive to devote his powers to the social
welfare in economic or other directions. Moreover, many feel that the
great fortunes now accumulating through successive generations in the
hands of a few families are endangering our free society, even if these
fortunes should continue to be well administered. There is a widespread
feeling that the heredity of great wealth is, like the heredity of
political power, out of harmony with the democratic spirit—though this
may easily become a misleading comparison. Still, democracy wishes to
see men as individuals put to the test, not profiting forever by the
deeds of their forebears. This feeling is shared by those who cannot be
charged with radical prejudices. A few years ago the Illinois Bar
Association passed a somewhat startling resolution favoring moderate
limits to inherited fortunes. Every year sees bills of this purport
introduced in the legislatures and in Congress. Andrew Carnegie says it
would be a good thing if every boy had to start in poverty and make his
own way. Cecil Rhodes recorded in his will his contempt for the idle,
expectant heir.</p>
<div class="sidenote">The test of wise inheritance laws</div>
<p>3. <i>Social expediency will limit the right of intestate<span class="pagenum"><SPAN name="Page_373" id="Page_373">[Pg 373]</SPAN></span> inheritance to
persons in essential economic and social relations.</i> Public opinion is
not yet crystallized in favor of this formal proposition, but tends
strongly toward it. The foregoing considerations show that the right of
gift in the lifetime of the giver should be the freest. The right of
bequest, that is, of gift by will, should be liberal. The man who has
acquired wealth may well be trusted to decide who bear to him a close
social or personal relation, and to say whose lives have in a measure
furnished the motives of his activity. But the right of intestate
inheritance by distant relatives is one that stands on weak social
foundations to-day. It appears to be an unreasonable survival from more
patriarchal conditions. The true test is whether the wish to provide for
these heirs has furnished the motive for the producing and preserving of
the wealth. The claims of those nearest in blood and closest in personal
relations are strongest. Family affection and friendship form the
strongest of social ties, and it is socially expedient to cultivate
them. Motives for abstinence and industry must be strengthened. But the
same test shows that the zealous regard of the American law for the
rights of grandnephews in Australia, or even of brothers long absent in
distant quarters of this country, is irrational, and is unjust to the
community where the fortune lies.</p>
<div class="sidenote">Social services of favored classes</div>
<p>4. <i>Many fortunes built on favoring legislation are defended as due to
social service.</i> In the Middle Ages kings often granted great estates to
nobles as rewards for past merit and as a payment for expected public
actions. The great landlords were the magistrates, military leaders, and
supporters of social order, and thus, in the judgment both of the king
and of the commonalty, the nobles earned their incomes by their social
service. While this practice has disappeared under constitutional
government, large grants are still made to royal families. Many
Englishmen who are democratic at heart uphold such grants as the price
of social stability. Regard for royalty is so deep-rooted in the minds
of the people of any long-established monarchy that there is always<span class="pagenum"><SPAN name="Page_374" id="Page_374">[Pg 374]</SPAN></span>
danger in change. England must pay many millions annually as the price
of loyal and conservative sentiment. So long as this is true, a family
of royal figureheads and idlers performs a social service.</p>
<div class="sidenote">Possible social service of protected industries</div>
<p>Protective tariffs sought by wealthy manufacturers are granted, not
ostensibly to help them, but to help the country. The argument is that
the benefits are diffused. Aid to enterprises in private hands, such as
ship subsidies or as the grants to the Pacific railroads, are defended
on the ground that, as a whole, society benefits by thus increasing the
income of one class. The promise of social service is most urged by
those who get the immediate benefit. Their eyes are keenest. The
manufacturer sees clearly the benefits that will come to his factory
from a protective tariff, but before he can get it he must convince many
others that they too will gain. The majority of the American electorate
is not voting a special favor at the polls, but is recognizing what it
believes to be in its own interest. Most students of social questions
doubt the wisdom of most of these grants to the wealthy on grounds of
social service. The burden of proof is on their advocates, but few
to-day are so rash as to say that such a claim of social service is
never sound.</p>
<div class="sidenote">Private property in land questioned</div>
<p>5. <i>Property in natural agents is the most strongly attacked.</i> In the
case of great natural deposits, such as those of coal or iron, the
social service that is performed by the mine-owner is hard to see. Great
incomes are drawn in the form of royalty or rent by those who never lift
a pick or direct a stroke of work. Agricultural land in the hands of
absentee landlords yields an income not very clearly due to social
service, and this phase of property has been especially assailed during
the past century. The modern form of this discussion is concerning "the
unearned increment," the rise in the value of lands as a result of
social growth. It is proposed to appropriate by "the single tax" the
entire rental value of the land for the use of the public.</p>
<p>The defense of property in land is first positive: taking<span class="pagenum"><SPAN name="Page_375" id="Page_375">[Pg 375]</SPAN></span> not the
extreme but the usual case, private property secures the discovery and
development of natural resources and their thorough use and good
management (not necessarily by personal labor with the hands). If this
is true, it is well for the individual and for the community to have
this wealth in private hands. But in other cases there is merely a
negative argument for property in land: no other better method of
employing it has been devised and found practicable The experience with
state ownership of mines, forests, and estates has not definitely
answered in every case the question whether the social results of state
ownership are more favorable than those of private ownership. In some
cases they clearly are not, in others they may be; and as the balance of
opinion inclines in the direction of public ownership, other reforms
will doubtless be undertaken.</p>
<div class="sidenote">Inequality of fortunes</div>
<p>6. <i>The present inequality of wealth, not private property as such, is
often attacked.</i> It is estimated that in the United Kingdom two per
cent. of the families own seventy-five per cent. of all the wealth,
while ninety-three per cent. own less than eight per cent. In the United
States it is estimated that one per cent. of all the families own more
than the remaining ninety-nine per cent.; and at the other part of the
scale eighty-seven per cent. of all the families own less than twelve
per cent. of all the wealth. The trend has been toward concentration of
fortunes and a larger proportion of the growing income from property is
in a few hands. Many feel that the law of property is defective when
this is possible, although at the same time the average income of the
wage-earner is increasing. Yet, it is not the institution as a whole
that is attacked, but its details. The custom of equal division of
property among children in the United States has not been as effective
in keeping fortunes small as was expected. The wealthy American families
have averaged small, and in some of the most prominent the rule of equal
division has not been followed. Opportunities for the investment of
small savings at low interest are not lacking, but<span class="pagenum"><SPAN name="Page_376" id="Page_376">[Pg 376]</SPAN></span> the great fortunes
overtower the little ones, securing the great profits and great
political and economic power. The farms and the villages are refuges for
the small industry and for the small fortunes, and this fact has a great
influence on our national character. The whole social atmosphere in the
cities, with their extremes of wealth, differs from that in the country,
and this contrast promises to become greater as the years go on.</p>
<div class="sidenote">Private property vs. socialism</div>
<p>7. <i>The ideal of property rights is that they shall furnish the highest
motives for efficient social service.</i> Private property furnishes such a
motive in a broad way, but its most ardent defenders will recognize that
it does so imperfectly. It is an institution that has been tried and
that does the work, while other methods suggested to do away with it are
found to be dreams. The ideal of socialism is the abolition of private
property, the centralizing under the control of the state of all wealth,
except the simple personal belongings, clothing and other consumption
goods. But history and human nature unite to testify that extreme
socialism is an unworkable plan, excepting under special conditions, as
in barbarous times and under a political despotism. The modern ideal for
the control of wealth is the best attainable harmony of liberty and
efficiency. If private property as it is, falls short of that ideal, at
any rate it works either on a small or on a large scale, and socialism
does not work at all. Property rights as they exist are not a product of
pure reason. They are the result of social evolution, of historical
accidents, of class legislation, and of selfish interest in many cases.
Changing social conditions and ideas are bringing many changes in law,
and further change must be expected to come.</p>
<h4>§ II. INCOME FROM PERSONAL SERVICES</h4>
<div class="sidenote">Some anti-social speculative gains</div>
<p>1. <i>Incomes from legitimate enterprise and speculation correspond
roughly to social service.</i> It has been recognized<span class="pagenum"><SPAN name="Page_377" id="Page_377">[Pg 377]</SPAN></span> above that there are
many grades of chance, of speculation, and of enterprise. The extreme
cases are bald crimes and are punished as such. Over some men that never
directly break the law there always hangs a suspicion of guilt. It is
the purpose of the law to make dishonesty unprofitable, but how
imperfectly it does so! There are many cases of chance gains where the
lucky man without social service legally enjoys his fortune. The law
must be framed in broad terms, and cannot provide for every case. It may
broadly forbid lotteries whose evils clearly exceed their benefits. But
what would be the effect of taking away reward for the discovery of a
gold-mine, even though sometimes it is awkward stumbling, not industry,
that reveals the veins of metal? Society has studied that question in
the past; even now changes are being made in the laws; and in their turn
the citizens and legislators of the next generation must decide the
question. It is always under consideration.</p>
<div class="sidenote">Reward and enterprise</div>
<p>Are the rewards of the successful enterpriser greater than he deserves?
How shall it be judged what he deserves? The answer is in the form of a
question, Could society have the service without the reward? Society may
be thought of as hiring the services of the efficient business man at
the lowest price. Does it wish the services of Cornelius Vanderbilt in
organizing a great system of railroads, of Andrew Carnegie, of Pierpont
Morgan? What can it get them for? It must appeal not only to their love
of money but to their love of power. Large services and large results
can be bought only with large rewards. The shrewd enterpriser is not to
be paid with abstract social gratitude. He is not to be tricked, as is a
Chinese god, with tissue-paper gold.</p>
<div class="sidenote">Unmeasured gains of vast wealth</div>
<p>But in many ways fortunes appear to grow without social services, and
sometimes with social harm. Russell Sage, the noted capitalist (who
should know something of Wall Street), in speaking of the greatest of
American corporations, said: "They dominate wherever they choose to go.
They can make and unmake any property, no matter how vast. They<span class="pagenum"><SPAN name="Page_378" id="Page_378">[Pg 378]</SPAN></span> can
almost compel any man to sell out anything, at any price." Henry Clews,
the well-known New York banker, said of a certain group of financiers:
"Their resources are so vast that they need only to concentrate on any
given property in order to do with it what they please.... There is an
utter absence of chance that is terrible to contemplate. This
combination controls Wall Street almost absolutely. With such power and
facilities it is easily conceivable that these men must make enormous
sums on either side of the market."</p>
<div class="sidenote">Antisocial use of rare ability</div>
<p>2. <i>The high pay of rare ability and skilled labor reflects in general a
high social service.</i> The large income of some men reflects service to a
narrow class, not to society as a whole. Lawyers as a class aid in
maintaining right, but a corporation lawyer may get enormous fees for
defeating just public claims; a skilful criminal lawyer may grow rich
aiding the guilty to escape justice. Other service ministers to the
whims, follies, and vices of the men who pay the bill. Such a service is
"social" in a mean sense, corresponding to the low standards of desire
in that social group. But what of the high rewards of skilled service
ministering to worthy ends? Such favorites of fortune as Jenny Lind and
Patti have received five thousand dollars for a single concert. Is this
because they are the lucky possessors of a rare gift, or because they
perform a social service deserving such reward? Certainly many of their
auditors get what they want and believe they are getting the worth of
their money.</p>
<div class="sidenote">General social result of rewarding talent</div>
<p>In general the legal right of everyone to get the highest pay he can in
a free and open market is essential to the calling forth of ability. In
a particular instance it is possible that the service would continue if
one half or more of the income were confiscated by the public; but such
a personal discrimination would introduce an arbitrary and demoralizing
uncertainty into the problem. Who can tell how far the exceptional money
rewards have inspired to the highest cultivation of great genius and<span class="pagenum"><SPAN name="Page_379" id="Page_379">[Pg 379]</SPAN></span> of
many minor talents? In a broad but very true sense, therefore, it
appears that high personal achievement, large economic reward, and large
social service are connected.</p>
<div class="sidenote">Social service of manual workers</div>
<p>3. <i>The low income of unskilled labor seems to fall short of its social
service.</i> This does not refer to the feeble-minded or utterly
inefficient, but rather to honest, industrious, "day-laborers," and to
the low-paid manual workers in field, on railroad, and in factory. Their
service is essential to the existence of society as it is, to all the
higher arts, to the sciences, and to the amenities of life; their tasks
are the roughest, most painful, most dangerous; yet their pecuniary
rewards are the lowest. There is such a unity in society that each more
fortunate man is dependent on the services of the humbler laborers who
make up a large part of society. According to the breadth of social
sympathy their claims seem more or less urgent.</p>
<div class="sidenote">The problem of increasing their reward</div>
<p>There is a vaguely recognized and growing conviction that these hewers
of wood and drawers of water should enjoy a larger income. But how are
they to get it? How is society to grant it to them? They get what they
can under the competitive conditions, they get what their service is
worth in the market. Are the conditions of the competition fair? If not,
what will be the effect of a change? If they get more, others will get
less; and with what result? However great the wish for better things,
the attempt to change conditions fundamentally in a forcible and
artificial way is both dangerous and foolish. Improvement must come
through the coöperation of many indirect agencies gradually changing the
nature and direction of the deeper economic forces.</p>
<div class="sidenote">Imperfect social and individual estimates of service</div>
<p>4. <i>The services of each are being measured and paid for by each and
all.</i> In two ways society is putting its valuation on the economic
services of other members of society: first, by law, or formal social
convention; secondly, by individual estimates. By formal law is
determined what institutions shall be continued. If the class of
property owners is considered<span class="pagenum"><SPAN name="Page_380" id="Page_380">[Pg 380]</SPAN></span> worthy of this reward, the institution of
property will be continued; if not, it will be altered or destroyed.
These decisions are made imperfectly, but as well as men of limited
intelligence and honesty can make them. If men were more capable in both
these ways they would enact better laws. Again, individuals are putting
their estimates on others in bidding for services to minister to wisdom
and virtue or to ignorance and vice. If there is to be a much juster
estimate of social service, there must be wiser men in society.</p>
<div class="sidenote">The ideal of social service</div>
<p>Does the world owe each man a living? No; on the contrary, each man owes
the world his services in exchange for his living. The pauperism of
spirit that consists in taking something for nothing is found in every
rank of society that enjoys the blessings of progress without giving its
best services in return. The ideal of a better adjustment of reward and
service grows in the minds of men. Social evolution, shaped by this
changing ideal and by accumulating experience, will bring into closer
relation the social services and the economic rewards of men.</p>
<hr class="chap" />
<p><span class="pagenum"><SPAN name="Page_381" id="Page_381">[Pg 381]</SPAN></span></p>
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