7 JANUARY 1938, Page 8

THE CONTROL OF CAPITAL

IN his address to Congress on Monday President I Roosevelt praised democracy as a political system which makes for peace, because government is genuinely in the hands of the people. Yet, in the same speech, he was forced to denounce men in his own country in whose hands are concentrated so much wealth and economic power that they can successfully defy the Government of the United States. By now Americans are used to such attacks. A week earlier Mr. Roosevelt's Secretary of the Interior, Mr. Ickes, had made the same accusations, though in more emphatic language. Indeed, for most Americans, the significance of Mr. Roosevelt's address lay in whether he too would indict " the malefactors of great wealth," " America's 6o families," " the zoo corporations " who, according to Mr. Ickes, control the lives of over izo,000,000 people, " the professional operators of the American economic system, and the professional managers of the capital funds of the United States," who " will refuse to operate the economic system, will refuse to let that capital be employed, unless they are once more given full power to wreck American democracy."

Some of these phrases sound familiar ; they inevitably recall the attacks on the " 200 families " in France by the Front Populaire ; and Mr. Roosevelt's protests on Monday closely resemble M. Blum's attacks on " the strike of capital " which, under his Government, threat- ened to cause the collapse of the franc. The resemblance is not accidental. In both countries popular govern- ments were elected by great majorities, pledged to restore economic prosperity, to restrict the power of private interests, to raise wages, to shorten hours, to strengthen the trade unions and to give legal force to methods of collective bargaining. In both countries the attempt to carry out those pledges was followed by an economic relapse and a withdrawal, justified or not, of capital from production. And it will be remembered that in France the " strike of capital " was only ended by the calling of a " pause " in the programme of social reform and the fall of the Blum Government. What- ever the relation of cause and effect, the facts are indis- putable. It is not surprising that, in America as in France, many believe that the owners of capital went on strike, made political use of their economic power, to defeat progressive programmes which expressed the desires and needs of the vast majority of the population. And if the statements of such a man as Mr. Henry Ford can be taken as typical, such a belief is not unjustified.

Mr. Roosevelt leaves no doubt of where he stands : " I do not propose to let the people down. I am sure the Congress of the United States will not let the people down." He described with some bitterness the methods by which great corporations evaded their fiscal obliga- tions, disowned their responsibilities, defied the law, manipulated their finances, intimidated local and State Governments, resorted to unfair competition in order to concentrate power and wealth in the hands of a few, withheld from the public, by exploiting the patent laws, " the advantages of the progress of science." It is a long and grave indictment ; but it is noticeable that even Mr. Roosevelt's opponents describe his speech as reason- able and moderate. Yet he insisted that he was not attacking business, capitalism, the economic system, as such. He was attacking a small minority of men who by such practices were bringing the system into danger, "The misuse of the powers of capital must be ended, or the capitalistic system will destroy itself through its own abuses " ; and, indeed, once already, in 1929-31; the system almost achieved that self-destruction. Mr. Roosevelt is more likely to go down to history as the saviour than as the destroyer of American capitalism.

But the problem he has now to face is of profound significance for democracy, in Europe as well as America. It is possible that, if he chose to do as " the malefactors of great wealth " wished, they would find a way out of their troubles, profitable to themselves but to no one else; rearmament and public works on a large scale, abandon- ment of progressive reforms, repression of trade unions, is a recipe that might well produce a boom, as it has in Germany*. But by such a policy Mr. Roosevelt would have surrendered democracy to a narrow oligarchy, and in yet another country destroyed that safeguard of peace to which he referred in his speech. For him, as for every democratic statesman, the problem is to com- bine social reform, a rising standard of life, economic security as well as political liberty, with what he described as " reasonable earnings on capital." It is a problem which this country, and every democratic country, must face, and Mr. Roosevelt is right in saying that if the owners of capital, commanding great concentrations of wealth and power, use them irresponsibly, for the greatest gain of themselves only, it cannot be solved. In such circumstances there is no alternative to a gradual transference, if not of the wealth, at least of the power, from the irresponsible few to an authority which is amen- able to public control. Nor is it a question merely of the motives of those who control capital. Under post- War conditions there is little reason to believe that the operation of each man's desire for profit automatically enriches society as a whole ; there are good reasons for believing that, as Mr. Keynes has argued, the direction of investment should be in the control of some body which can make a general survey of the economic system and of its needs.

It can be justly claimed that this country has made some progress towards such a solution. By both political parties it is already admitted in principle that, where the public good demands it, the employment- of capital must be under some form of public control, which, however, may vary, in its form and degree, according to circum- stance. It is enough to mention the London Passenger Transport Board, the Port of London Authority and like bodies. And such control in circumstances where it is demanded does not imply control over the whole system. When and where that principle is to be applied is no doubt a matter of legitimate controversy. The principle itself is accepted, as could be seen most clearly in the debates on the Government's Coal Mines Bill where Conservatives and Socialists alike disowned the few who still claim that absolute and unrestricted control is one of the inalienable and sacred rights of property. In such acceptance lies one of this country's greatest hopes of a progressive and orderly political and social development. And it seems probable that America also, however far from it now, must in the end accept the same principle. Mr. Roosevelt, it is believed, intends to restrict the corporations by revising and strengthening the anti-trust laws. But, as he said in his speech, the corporations have so far evaded the law by devices " which baffle prosecution under the present statutes," and it is probable that they will continue to do so even if the law is strengthened. And, indeed, it is not necessarily the tendency to concentration which is itself the evil to be overcome, but concentration in irresponsible hands, though Mr. Roosevelt, with his belief in the small business man, may not think so ; what is important is that wealth and power on such a scale should be directed to the good of society.