Part 28

The preparedness campaign was a marvel of efficient business organization. Its promoters made use of every device known to the advertising profession; the best brains were employed, and the country was blanketed with preparedness propaganda.

Officers of the Army and Navy were frank in insisting that the defense of the United States was adequately provided for. (See testimony of General Nelson A. Miles. Congressional Record, February 3, 1916, p. 2265.) Still the preparedness campaign continued with vigor. Congressman Clyde H. Tavenner in his speech, "The Navy League Unmasked," showed why. He gave facts like those appearing in George R. Kirkpatrick's book, "War, What For"; in F. C. Howe's "Why War," and in J. A. Hobson's "Imperialism," showing that, in the words of an English authority, "patriotism at from 10 to 15 per cent is a temptation for the best of citizens."

Tavenner established the connection between the preparedness campaign and those who were making profits out of the powder business, the nickel business, the copper business, and the steel business, interlocked through interlocking directorates; then he established the connection between the Navy League and the firm of J. P. Morgan & Co., 23 Wall St., New York. Regarding this connection, Congressman Tavenner said, "The Navy League upon close examination would appear to be little more than a branch office of the house of J. P. Morgan & Co., and a general sales promotion bureau for the various armor and munition makers and the steel, nickel, copper and zinc interests."

The preparedness movement came from the business interests. It was fostered and financed by the plutocrats. It was their first successful effort at winning public confidence, and so well was it managed that millions of Americans fell into line, fired by the love of the flag and the world-old devotion to family and fireside.

5. Patriots

From preparedness to patriotism was an easy step. The preparedness advocates had evoked the spirit of the founders of American democracy and worked upon the emotions of the people until it was generally understood that those who favored preparedness were patriots.

Plutocratic patriotism was accepted by the press, the pulpit, the college, and every other important channel of public information in the United States. Editors, ministers, professors and lawyers proclaimed it as though it were their own. Randolph Bourne, in a brilliant article (Seven Arts, July, 1917) reminds his readers of "the virtuous horror and stupefaction when they read the manifesto of their ninety-three German colleagues in defense of the war. To the American academic mind of 1914 defense of war was inconceivable. From Bernhardi it recoiled as from a blasphemy, little dreaming that two years later would find it creating its own cleanly reasons for imposing military service on the country and for talking of the rough rude currents of health and regeneration that war would send through the American body politic. They would have thought any one mad who talked of shipping American men by the hundreds of thousands--conscripts--to die on the fields of France...."

The American plutocracy was magnified, deified, and consecrated to the task of making the world safe for democracy. Exploiters had turned saviors and were conducting a campaign to raise $100,000,000 for the Red Cross. The "malefactors of great wealth," the predatory business forces, the special privileged few who had exploited the American people for generations, became the prophets and the crusaders, the keepers of the ark of the covenant of American democracy.

Radicals who had always opposed war, ministers who had spent their lives preaching peace upon earth, scientists whose work had brought them into contact with the peoples of the whole world, public men who believed that the United States could do greater and better work for democracy by staying out of the war, were branded as traitors and were persecuted as zealously as though they had sided with Protestantism in Catholic Spain under the Inquisition.

By a clever move, the plutocrats, wrapped in the flag and proclaiming a crusade to inaugurate democracy in Germany, rallied to their support the professional classes of the United States and millions of the common people.

6. Business in Control

After the declaration of war, the mobilization and direction of the economic war work of the government was placed in the hands of the Council of National Defense, an organized group of the leading business men. The Council consisted of six members of the President's Cabinet, assisted by an Advisory Commission and numerous sub-committees. The "Advisory Commission" of the Council (the real working body) contained four business men, an educator, a labor leader and a medical man. ("The Council of National Defense" a bulletin issued by the Council under date of June 28, 1917.)

Each member of the Advisory Commission had a group of persons coöperating with him. The make-up of these various committees was significant. Among 706 persons listed in the original schedule of sub-committees, 404 were business men, 200 were professional men, 59 were labor men, 23 were public officials and 20 were miscellaneous. It was only in Mr. Gompers' group that labor had any representation, and even there, out of 138 persons only 59 were workers or officials of unions, while 34 were business men and 33 professional men, so that among Mr. Gompers' assistants the business and professional men combined considerably outnumbered the labor men.

The make-up of some of the sub-committees revealed the forces behind the Defense Council. Thus Mr. Willard's sub-committee on "Express" consisted of four vice-presidents, one from the American, one from the Wells-Fargo, one from the Southern and one from the Adams Express Company. His committee on "Locomotives" consisted of the Vice-President of the Porter Locomotive Company, the President of the American Locomotive Company, and the Chairman of the Lima Locomotive Corporation. Mr. Rosenwald's committee on "Shoe and Leather Industries" consisted of eight persons, all of them representing shoe or leather companies. His committee on "Woolen Manufactures" consisted of eight representatives of the woolen industry. The same business supremacy appeared in Mr. Baruch's committees. His committee on "Cement" consisted of the presidents of four of the leading cement companies, the vice-president of a fifth cement company, and a representative of the Bureau of Standards of Washington. His committee on "Copper" had the names of the presidents of the Anaconda Copper Company, the Calumet & Hecla Mining Company, the United Verde Copper Company and the Utah Copper Company. His committee on "Steel and Steel Products" consisted of Elbert H. Gary, Chairman of the United States Steel Corporation; Charles M. Schwab, of the Bethlehem Steel Company; A. C. Dinkey, Vice-President of the Midvale Steel Company; W. L. King, Vice-President of Jones & Loughlin Steel Company, and J. A. Burden, President of the Burden Steel Company. The four other members of the committee represented the Republic Iron and Steel Company, the Lackawanna Steel Company, the American Iron and Steel Institute and the Picklands, Mather Co., of Cleveland. Perhaps the most astounding of all the committees was that on "Oil." The chairman was the President of the Standard Oil Company, and the secretary of the committee gives his address as "26 Broadway," the address of the Standard Oil Company. The other nine members of the committee were oil men from various parts of the country. What thinking American would have suggested, three years before, that the Standard Oil Company would be officially directing a part of the work of the Federal Government?

Comment is superfluous. Every great industrial enterprise of the United States had secured representation on the committees of business men that were responsible for the direction of the economic side of war making.

Then came the Liberty Loan campaigns and Red Cross drives, the direction of which also was given into the hands of experienced business men. In each community, the leaders in the business world were the leaders in these war-time activities. Since the center of business life was the bank, it followed that the directing power in all of the war-time campaigns rested with the bankers, and thus the whole nation was mobilized under the direction of its financiers.

The results of these experiences were far-reaching. During two generations, the people of the United States had been passing anti-trust laws and anti-pooling laws, the aim of which was to prevent the business men of the country from getting together. The war crisis not only brought them together, but when they did assemble, it placed the whole political and economic power of the nation in their hands.

The business men learned, by first hand experience, the benefits that arise from united effort. They joined forces across the continent, and they found that it paid. James S. Alexander, President of the National Bank of Commerce (New York), tells the story from the standpoint of a banker (Manchester Guardian, January 28, 1920. Signed Article.) In a discussion of "the experience in coöperative action which the war has given American banks" he says, "The responsibility of floating the five great loans issued by the government, together with the work of financing a production of materials speeded up to meet war necessities, enforced a unity of action and coöperation which otherwise could hardly have been obtained in many years."

7. Economic Winnings

The war gains of the plutocracy in the field of public control were important, as well as spectacular. Behind them, however, were economic gains--little heralded, but of the most vital consequence to the future of plutocratic power.

The war speeded production and added greatly to the national income, to investable surplus, to profits and thus to the economic power of the plutocrats.

The most tangible measure of the economic advantage gained by the plutocracy from the war is contained in a report on "Corporate Earnings and Government Revenues" (Senate Document 259. 65th Congress, Second Session). This report shows the profits made by the various industries during 1917--the first war year.

The report contains 388 large pages on which are listed the profits ("percent of net income to capital stock in 1917") made by various concerns. A typical food producing industry--"meat packing"--lists 122 firms (p. 95 and 365). Of these firms 31 reported profits for the year of less than 25 percent; 45 reported profits of 25 but under 50 percent; 24 reported profits of 50 but under 100 percent, and 22 reported profits of 100 percent or more. In this case, a third of the profits were more than 25, but less than 50 percent, and half were 50 percent or over.

Manufacturers of cotton yarns reported profits ranging slightly higher than those in the meat packing industry (pp. 167, 168, 379). Among the 153 firms reporting, 21 reported profits of less than 25 percent; 61 reported 25 but less than 50 per cent; 55 reported 50 but under 100 percent, and 16 reported 100 percent or more.

Profits in the garment manufacturing industry were lower than those in yarn manufacturing. Among the 299 firms reporting (pp. 171, 380) 74 gave their profits as less than 25 percent; 121 gave their profits as 25 but under 50 percent; 65 gave profits of 50 but less than 100 percent, and 39 gave their profits as 100 percent or over.

The profits of 49 Steel plants and Rolling Mills (pp. 100, 365) were considerably higher than profits in any of the industries heretofore discussed. Four firms reported profits of less than 25 percent; 13 reported profits of 25 but less than 50 percent; 17 reported profits of 50 but less than 100 percent, and 15 reported profits of more than 100 percent. In this instance two-thirds of the firms show profits of 50 percent or over.

Bituminous Coal producers in the Appalachian field (340 in number, pp. 130 and 372) report a range of profits far higher than those secured in the manufacturing industries. Among these 340 firms, 23 reported profits of less than 25 percent; 45 reported profits of 25 but under 50 percent; 79 reported profits of 50 but under 100 percent; 135 reported profits of 100 but under 500 percent; 21 reported profits of 500 but under 1,000 percent, and 14 reported profits of 1,000 percent and over. In the case of these coal mine operators only a fourth had profits of under 50 percent and half had profits of more than 100 percent.

The profits in these five industries--food, yarn, clothing, steel and coal--are quite typical of the figures for the tens of thousands of other firms listed in Senate Document 259. Profits of less than 25 percent are the exception. Profits of over 100 percent were reported by 8 percent of the yarn manufacturers, by 13 percent of the garment manufacturers, by 18 percent of the meat packers, by 31 percent of the steel plants, and by 50 percent of the bituminous coal mines. A considerable number of profits ranged above 500 percent, or a gain in one year of five times the entire capital stock.