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and four times as many people now in Europe and America as there were one hundred years ago, but more than sixty times as much iron is used.

The increased use of gold and silver has been very Money as convenient in this increase of capital. In the early capital days a man could not conveniently pile up a great stock of wheat nor could he conveniently accumulate great numbers of tools. If, however, he could exchange his surplus for gold or silver, he could have his accumulation in a convenient form. Gold and silver could be used to pay workmen or to buy raw materials. A man who could accumulate a large amount of gold with which he could employ men to build or to weave or to transport goods could, in this way, unite their energies and their strength just as the king could unite the energies of the men under his command.

But in recent times business men not only use money The use of and in this way get the advantage of combining the credit strength of many; they use credit. If I wish to build a factory and do not have the money with which to buy lumber and pay workmen, I can still do it provided the man who has lumber to sell and the workmen who have labor to sell will wait for their pay until the factory is running. Of course, they cannot do this unless they themselves have at least a supply of food and clothing sufficient to last until my factory is doing business. Very likely the workmen may not have this. There is still another way out of the difficulty. If my neighbor, or some one else who knows me, has a supply of food, or, what is the same thing, of money, which he will loan me, I can then pay the workmen and build the factory. The great factories and railways and businesses of today are very largely carried on by some form of credit. Men make plans for building automobiles or

some other article for which they believe there will be a demand. They go to banks or other sources and borrow money or arrange for credit. In this way, the earning power of an invention or of a large number of men is organized, or, as we may say, capitalized. The capital required to build a great steel plant is between twenty and thirty million dollars. The United States Steel Company, which owns several mills and a great amount of iron ore, was capitalized at about a billion dollars. The great railways have capitals of hundreds

of millions. The

In the beginnings of the Industrial Revolution a corporation factory might be built by one man; a small steamship as owner

or even a short railway might be owned by one indiand manager

vidual; but as larger and larger factories were built, as railroads connecting distant points and costing vast sums were planned, it was soon found to be far safer and more convenient for many persons to unite and form a corporation to own and manage such a great plant. People in early times had sometimes united in partnership. But in a partnership, if the business should not be successful, each partner would usually be liable for all the debts. This would make partnership risky. The corporation is a very convenient plan for limiting the amount to which any single member can be held responsible. If a thousand men subscribe a thousand dollars apiece to form a million dollar corporation, then no one is liable for more than a thousand dollars. If one member of the corporation dies, his share can be sold to some one else without difficulty and the corporation itself can continue permanently carrying on the business. Practically all our railways and great businesses are now managed in this way. In 1889, although there were more establish

ments owned by individuals than by corporations, the corporations produced sixty-five per cent. of the product. In 1909 corporations produced seventy-nine per cent. of our manufactures, so that nearly four-fifths of the business of the country was in this latter year done by corporations. This corporation plan is undoubtedly advantageous or it would not have had such an extraordinary growth. It has, however, certain dangers which are very easy to see. A corporation enables a great number of people, sometimes many thousands, to unite their savings in a profitable business. But just because there are so many, no one of them has very much responsibility. They elect directors, but the directors cannot consult all the stockholders, and many things may be done by them which the stockholders would not approve. Many of the conflicts between the corporations and workmen have arisen because the real owners of the property did not know the workmen. To work for a corporation is often said to be like working for a machine.

Another danger in the corporation is that it is formed for one single purpose; that is, for profits. A man may wish to make money, but he is likely also to be a neighbor, a friend, a citizen, and all these relations tend to make him kind, reliable, and publicspirited. The corporation may be reliable, for it can be sued in court if it does not pay its debts or carry out its promises. But no one expects a corporation to be very considerate of people beyond what is required by law, and no one expects the corporation to be public-spirited in the same sense in which we may expect this of a citizen. Of course, the managers of corporations may themselves be considerate and publicspirited. In many cases, they may find it to be good

business policy so to conduct the corporation as to serve the public and make friends. But the primary duty of the managers has usually been regarded as that of so conducting the business as to secure profits for the stockholders. This has frequently brought such great corporations as the railroads into conflict with the public, and now the courts hold that certain corporations, which are, as they say, “affected with a public interest,” must consider their duties to the public as well as their duties to their stockholders. In many cases, indeed, the duty to the public is held to be superior.

The

We ask now how these great changes in the way Industrial of making and transporting goods and carrying on Revolution business affect liberty, union, and democracy. sets new

First of all, they have set up a new power in the problems

world. A thousand years ago, if you had come into (1) It any town or country of Europe, you would have found created a two sorts of men who were powerful. One was the new

warriors with the king at their head. They owned power

the land, for the most part. The other was the leaders of the church. The beautiful and massive cathedrals which men built during the Middle Ages show how important a power the church was. Men were then much poorer than today and lived in very small and uncomfortable houses, but they built wonderful churches and cloisters; the church itself was a well-organized institution, and the heads of the church had power greater in some respects than the heads of the armies and states. Today, if you were asked who were the most powerful men in the country, you would perhaps name the President of the United States, the judges of the Supreme Court, and a very few

political leaders; you might, perhaps, think of some church leaders who are prominent; but you would be very certain to name some of the wealthy men of the country, the directors of the great railways, banks, insurance companies, and manufacturing establishments. The great power of these men is due, as we have already said, to the fact that they are leaders of a new kind of union or coöperation--coöperation in industry and business as contrasted with military or church coöperation. This new power is in some respects very favorable to liberty and democracy. It gives more chances to boys to develop their abilities and to do the kinds of things that they like. For, of course, not every boy in former times could make a brilliant soldier, even if he liked fighting. This power is also more peaceful in its methods than the old military power, even if it is often very harsh in its competition. It is probably an advantage also to have more than one or two kinds of power. It will be safer for democracy and for the common man than if there is only one. On the other hand, this new power of wealth has made great problems for liberty and democracy. Just as the king at first kept in his own hands the right to say how everything should be done, and was very indignant if any of his subjects questioned his authority, so some of the captains of industry have wished to keep this power entirely in their own hands and have not been willing to share it or to admit that the public has any right to question the way in which they shall use it. This has led to many conflicts between the capitalists and the people acting through legislatures and courts.

When cloth and shoes and other articles were made by the worker in his own house, he owned his tools.

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