[30] Frederick C. Howe, "Privilege and Democracy in America," p. 277.

CHAPTER II

THE NEW CAPITALISM

President Taft says that if we cannot restore competition, "we must
proceed to State Socialism and vest the government with power to control
every business." As competition cannot be revived in industries that
have been reorganized on a monopolistic basis, this is an admission
that, in such industries, there is no alternative to "State Socialism."

The smaller capitalists and business interests have not yet reconciled
themselves, any more than President Taft, to what the Supreme Court, in
the Standard Oil Case, called "the inevitable operation of economic
forces," and are just beginning to see that the only way to protect the
industries that remain on the competitive basis is to have the
government take charge of those that have already been monopolized. But
the situation in Panama and Alaska and the growing control over
railroads and banks show that the United States is being swept along in
the world-wide tide towards collectivism, and innumerable symptoms of
change in public opinion indicate that within a few years the smaller
capitalists of the United States, like those of Germany and Great
Britain, will be working with the economic forces instead of trying to
work against them. Monopolies, they are beginning to see, cannot be
destroyed by private competition, even when it is encouraged by the
legislation and the courts, and must be controlled by the government.
But government regulation is no lasting condition. If investors and
consumers are to be protected, wage earners will most certainly be
protected also--as Mr. Roosevelt advocates. And from government control
of wages, prices, and securities it is not a long step to government
ownership.

The actual disappearance of competition and the growing harmony of all
the business interests among themselves are removing every motive for
continued opposition to some form of State control,--and even the more
far-sighted of the "Captains of Industry," like Judge Gary of the Steel
Corporation and many others, are beginning to see how the new policy
and their own plans can be made to harmonize. The "Interests" have only
recently become sufficiently united, however, to make a common political
effort, and it is only after mature deliberation that the more
statesmanlike of the capitalists are beginning to feel confident that
they have found a political plan tha