The Theory of Social Revolutions. Adams Brooks
principally at the instigation of the railways themselves, who found the practice unprofitable-have latterly discountenanced discrimination as to persons, but they still uphold discrimination as to localities.3 Now, among abuses of sovereign power, this is one of the most galling, for of all taxes the transportation tax is perhaps that which is most searching, most insidious, and, when misused, most destructive. The price paid for transportation is not so essential to the public welfare as its equality; for neither persons nor localities can prosper when the necessaries of life cost them more than they cost their competitors. In towns, no cup of water can be drunk, no crust of bread eaten, no garment worn, which has not paid the transportation tax, and the farmer's crops must rot upon his land, if other farmers pay enough less than he to exclude him from markets toward which they all stand in a position otherwise equal. Yet this formidable power has been usurped by private persons who have used it purely selfishly, as no legitimate sovereign could have used it, and by persons who have indignantly denounced all attempts to hold them accountable, as an infringement of their constitutional rights. Obviously, capital cannot assume the position of an irresponsible sovereign, living in a sphere beyond the domain of law, without inviting the fate which has awaited all sovereigns who have denied or abused their trust.
The operation of the New York Clearing-House is another example of the acquisition of sovereign power by irresponsible private persons. Primarily, of course, a clearing-house is an innocent institution occupied with adjusting balances between banks, and has no relation to the volume of the currency. Furthermore, among all highly centralized nations, the regulation of the currency is one of the most jealously guarded of the prerogatives of sovereignty, because all values hinge upon the relation which the volume of the currency bears to the volume of trade. Yet, as everybody knows, in moments of financial panic, the handful of financiers who, directly or indirectly, govern the Clearing-House, have it in their power either to expand or to contract the currency, by issuing or by withdrawing Clearing-House certificates, more effectually perhaps than if they controlled the Treasury of the United States. Nor does this power, vast as it is, at all represent the supremacy which a few bankers enjoy over values, because of their facilities for manipulating the currency and, with the currency, credit; facilities, which are used or abused entirely beyond the reach of the law.
Bankers, at their conventions and through the press, are wont to denounce the American monetary system, and without doubt all that they say, and much more that they do not say, is true; and yet I should suppose that there could be little doubt that American financiers might, after the panic of 1893, and before the administration of Mr. Taft, have obtained from Congress, at most sessions, very reasonable legislation, had they first agreed upon the reforms they demanded, and, secondly, manifested their readiness, as a condition precedent to such reforms, to submit to effective government supervision in those departments of their business which relate to the inflation or depression of values. They have shown little inclination to submit to restraint in these particulars, nor, perhaps, is their reluctance surprising, for the possession by a very small favored class of the unquestioned privilege, whether actually used or not, at recurring intervals, of subjecting the debtor class to such pressure as the creditor may think necessary, in order to force the debtor to surrender his property to the creditor at the creditor's price, is a wonder beside which Aladdin's lamp burns dim.
As I have already remarked, I apprehend that sovereignty is a variable quantity of administrative energy, which, in civilizations which we call advancing, tends to accumulate with a rapidity proportionate to the acceleration of movement. That is to say, the community, as it consolidates, finds it essential to its safety to withdraw, more or less completely, from individuals, and to monopolize, more or less strictly, itself, a great variety of functions. At one stage of civilization the head of the family administers justice, maintains an armed force for war or police, wages war, makes treaties of peace, coins money, and, not infrequently, wears a crown, usually of a form to indicate his importance in a hierarchy. At a later stage of civilization, companies of traders play a great part. Such aggregations of private and irresponsible adventurers have invaded and conquered empires, founded colonies, and administered justice to millions of human beings. In our own time, we have seen the assumption of many of the functions of these and similar private companies by the sovereign. We have seen the East India Company absorbed by the British Parliament; we have seen the railways, and the telephone and the telegraph companies, taken into possession, very generally, by the most progressive governments of the world; and now we have come to the necessity of dealing with the domestic-trade monopoly, because trade has fallen into monopoly through the centralization of capital in a constantly contracting circle of ownership.
Among innumerable kinds of monopolies none have been more troublesome than trade monopolies, especially those which control the price of the necessaries of life; for, so far as I know, no people, approximately free, have long endured such monopolies patiently. Nor could they well have done so without constraint by overpowering physical force, for the possession of a monopoly of a necessary of life by an individual, or by a small privileged class, is tantamount to investing a minority, contemptible alike in numbers and in physical force, with an arbitrary and unlimited power to tax the majority, not for public, but for private purposes. Therefore it has not infrequently happened that persistence in adhering to and in enforcing such monopolies has led, first, to attempts at regulation, and, these failing, to confiscation, and sometimes to the proscription of the owners. An example of such a phenomenon occurs to me which, just now, seems apposite.
In the earlier Middle Ages, before gunpowder made fortified houses untenable when attacked by the sovereign, the highways were so dangerous that trade and manufactures could only survive in walled towns. An unarmed urban population had to buy its privileges, and to pay for these a syndicate grew up in each town, which became responsible for the town ferm, or tax, and, in return, collected what part of the municipal expenses it could from the poorer inhabitants. These syndicates, called guilds, as a means of raising money, regulated trade and fixed prices, and they succeeded in fixing prices because they could prevent competition within the walls. Presently complaints became rife of guild oppression, and the courts had to entertain these complaints from the outset, to keep some semblance of order; but at length the turmoil passed beyond the reach of the courts, and Parliament intervened. Parliament not only enacted a series of statutes regulating prices in towns, but supervised guild membership, requiring trading companies to receive new members upon what Parliament considered to be reasonable terms. Nevertheless, friction continued.
With advances in science, artillery improved, and, as artillery improved, the police strengthened until the king could arrest whom he pleased. Then the country grew safe and manufactures migrated from the walled and heavily taxed towns to the cheap, open villages, and from thence undersold the guilds. As the area of competition broadened, so the guilds weakened, until, under Edward VI, being no longer able to defend themselves, they were ruthlessly and savagely plundered; and fifty years later the Court of King's Bench gravely held that a royal grant of a monopoly had always been bad at common law.4
Though the Court's law proved to be good, since it has stood, its history was fantastic; for the trade-guild was the offspring of trade monopoly, and a trade monopoly had for centuries been granted habitually by the feudal landlord to his tenants, and indeed was the only means by which an urban population could finance its military expenditure. Then, in due course, the Crown tried to establish its exclusive right to grant monopolies, and finally Parliament–or King, Lords, and Commons combined, being the whole nation in its corporate capacity,–appropriated this monopoly of monopolies as its supreme prerogative. And with Parliament this monopoly has ever since remained.
In fine, monopolies, or competition in trade, appear to be recurrent social phases which depend upon the ratio which the mass and the fluidity of capital, or, in other words, its energy, bears to the area within which competition is possible. In the Middle Ages, when the town walls bounded that area, or when, at most, it was restricted to a few lines of communication between defensible points garrisoned by the monopolists,–as were the Staple towns of England which carried on the wool trade with the British fortified counting-houses in Flanders,–a small quantity of sluggish capital sufficed. But as police improved, and the area of competition broadened faster than capital accumulated and quickened, the competitive phase dawned, whose advent is marked by Darcy v. Allein,
See the decisions of the Commerce Court on the Long and Short-Haul Clause. Atchison, T.&S.F. By.
Darcy