STONE & WEBSTER JOURNAL

SEPTEMBER, 1917

EDITORIAL COMMENT

In a few weeks we shall all be asked to subscribe to the second Liberty Loan. Those accustomed to reflect seriously on the course of events must be reminded of a fact which many persons minimize, and even overlook, namely, that capital is highly essential to an advanced civilization. Capital is too often condemned by unthinking persons, and this spirit is not absent even at the present moment, when the world is depending on capital to save it from the destruction of the things it accounts most precious. Capital is a sine qua non of national development. Those nations that have failed to create it have lacked, and still lack, not only the material comforts of life, but true liberty and mental freedom as well. The late Professor William G. Sumner, one of the hardest headed thinkers this country ever produced, once said: "Some years ago I listened to an address by a social agitator who said, 'I can get along with anybody in my audiences except these mean, stingy, little fellows who have saved a few hundred dollars in the savings bank and then have borrowed enough more to build a little house of two tenements, one of which they rent. When I begin to talk about interest, and rent, and Henry George, they get up and go out by the whole seatful at a time.' The statement was the most eloquent recognition I ever heard of the power and beneficence of capital. It has always remained in my memory as a confession by an opponent of the education effected by savings. and of the benefit conferred on society by savings banks." The benefit conferred on society by capital is indeed inestimable. It is true there is a great deal of discontent in the world today, and it has a way of venting itself by objurgations of capital. But it is very unthinking. To quote Professor Sumner again: "It seems to be taken for granted that discontent is a

sufficient proof of grievance which third parties are bound to take cognizance of and redress. It might be argued with far greater plausibility that discontent is a proof of prosperity. If you look around the world today you will find that discontent is greatest where the chances are the greatest. A man who has never had anything or a chance to get anything is not discontented; he rests contented with what he has always been accustomed to. Let him enjoy an opportunity and win something and the effect will be to excite his wish to win more."

Our Oldest Public Utility Corporations

Mr. F. J. Wood's article in this issue on "New England Toll Bridges" is a fitting supplement to his article in the February issue on "Toll Roads." These two efforts are worthy of thoughtful consideration by all who are interested in the development of public utilities in the United States.

They remind us for one thing of the fact that public utilities, as we now construe that term, have no past to speak of. The last half century has witnessed the advent of the telephone, the electric light, and electric traction. The middle of the nineteenth century produced the telegraph. The railroads date from 1829, and the use of gas from 1816. Earlier than corporations furnishing these utilities were those constructing and maintaining toll bridges and toll roads. In short, the only public utility that could claim as remote an antiquity as the two just mentioned is waterworks, dating from about the same period.

The toll bridge and the toll road are practically our oldest public utilities. Yet many persons now alive can recall the tòll bridge, and not a few have had experience with the toll road, although the latter saw its palmy days around 1830 and the former almost immediately after. Within a few years of the close of the Civil War, both were virtually a thing of the past, though traces of them can still be found in rural communities. Yet though they are a part of our ancient history, they date back merely to the closing years of the eighteenth century, and, as we have already said, many persons now alive have memories of them.

Thus we are reminded of the fact that we are still a new country, with a limited experience in the handling of economic problems of the most vital and far-reaching character. The private corporation is but a thing of yesterday. This country

had practically no knowledge of it until after the Revolutionary War. Its beginning was purely tentative and its early methods were largely fortuitous. It came into existence to meet felt needs, for the satisfaction of which there were only limited supplies of capital. It is curious to note, however, that great as were the advantages to be derived from the efforts of private corporations supplying public utilities, the attitude of the public to such corporations was even at the start one of more or less veiled hostility. The public utilities were needed and the community for the most part found it advantageous to make it worth while for capital to supply them. But nevertheless, the attitude was then critical and has always remained so.

This is unfortunate, for it has imposed two risks upon capital. In the first place there is the ordinary business risk, to which has been added what may be called the psychological risk — that is, the risk based upon the fear of arbitrary interference by a community whose preconceptions are of an unfriendly nature.

These reflections, however, have nothing to do with Mr. Wood's articles, which are written in the spirit of the archaeologist, the engineer and the economist. Among historians there is a strong conviction that the real explanation of an existing institution can never be reached by purely metaphysical methods. There must in every case be a resort to history. It is necessary to know the conditions which gave birth to the institution, and the methods which covered its early operation, as the thing of today is usually the necessary consequence of the thing of yesterday. Hence, no one is of more value to the community than the student who accurately traces for us the origin of human institutions.

Labor's Unique Position in the War

The Boston Herald recently published an editorial entitled "Labor Strikes in Time of War," of which the following is a copious extract:

"Ten million young men in this country have been registered subject to draft. If physically qualified, and not exempted, they may be required to give up their business, their means of livelihood and even their lives. The pay received as a soldier will hardly equal the lowest wage or salary received as a private individual. The soldiers will have no right or power to strike for

a higher wage. They must work eight, ten, or fifteen hours, as the situation may demand. Whether they shall be kept equipped, armed and fed, depends upon those who remain at home. Under the bills already passed and still to be passed by Congress, the wealth of this country is being conscripted to furnish the money needed to carry on the war. This money taken from incomes, war profits, estates, etc., will buy the equipment, the food and the munitions required to keep and maintain our armies.

"No properly qualified man within the age limit can avoid going to war. No qualified person in the United States can avoid paying the tax out of which our soldiers are cared for. We have conscription of men; we have conscription of wealth. There is only one class in the community that is apparently under no obligations, and that is labor. We need ships to take our men abroad and to carry the food to our men and to the allies. Labor, which avoids going to war on the ground that it is necessary to stay in this country, strikes for wages several times greater than the wage of our soldier. Tens of thousands of miners in Illinois and Kentucky refuse to produce coal, the lack of which is causing anxiety not only to manufacturers, but to householders, especially in the Northwest and in New England. Every day that the strikers remain out of the mines, just so much coal fails to be produced.

"The wages paid the miners are several times the wage of a soldier; the miners' hours are much shorter than a soldier's hours; but he apparently is exempt from any obligation to this nation at time of war. The owner of a factory, a mine or a farm is compelled to deliver at a price fixed by the government, whatever the government wants. The young man duly qualified is compelled to deliver his life if need be to the nation, and to receive pay of one dollar per day for fourteen hours' labor. Those who remain at home to furnish food, equipment, coal, munitions, etc., refuse to work unless paid several times the pay of a soldier, threaten to tie up all our industries and to destroy the produce of our farms, and the leaders of labor maintain that labor ought not to be compelled to labor except at prices and for such hours as labor itself may fix. Compulsory arbitration even between employer and employee is resisted."

This is a somewhat picturesque presentation of the situation, yet in its implications it accords with sound economic thinking. The older economists, Adam Smith, for example, declare that production involves three factors land, labor and