Alfred Russel Wallace : Alfred Wallace : A. R. Wallace :
Russel Wallace : Alfred Russell Wallace (sic)

 
 
The Railways for the Nation (S634: 1907)

 
Editor Charles H. Smith's Note: Printed in The Arena of January 1907. Original pagination indicated within double brackets. To link directly to this page, connect with: http://people.wku.edu/charles.smith/wallace/S634.htm


    [[p. 1]] Among thinkers who realize the evils of the capitalistic system, and who are more especially opposed to its monopoly of public services which are held and administered in the interests of individuals instead of that of the whole people, it has long been seen that the time is at hand when the railroads must be transferred to the national government, to be held and worked for the benefit of all alike. Under the present system they exist, first, for the benefit of the great capitalists and money-market gamblers, then for that of the shareholders generally, and last of all for the use and convenience of the public.

    I do not here propose to discuss the many and great advantages to the nation of the possession of its own public roads, on which the safety and the very existence of its civilization may be said to depend. They are well known, and almost universally admitted. What I am about to deal with, is, how the nation can best obtain complete possession of these roads, so as to confer a large immediate benefit on the community without doing any real injustice to the shareholders. Most people are so dominated by the idea, that there is no other honest way than actual purchase, at the real or supposed market value to-day, that they are alarmed at the necessity of raising loans or creating new government securities to such an enormous amount as would be required. They know that these new funds would be at the mercy of the great capitalists and railway kings; would be used largely for gambling transactions; and that the smaller shareholders who received or purchased these securities in exchange for their railway shares, would suffer from the market fluctuations that would occur. And further, they are quite sure, that the power of these railway kings is so great, that they would, by bribery and other means, so exaggerate the value of their properties as to obtain much more than a fair price, and thus put a heavy burden upon the taxpayers for generations to come.

    It is for the purpose of avoiding all [[p. 2]] these real or possible dangers, that I have put before the people of England (in a letter to the Daily News) and now put before the people of America, a method of acquisition founded upon a great principle of ethics, which, when it is thoroughly grasped, is seen to solve many problems, and to clear the way to many great reforms in the interest of the people at large. This principle is, that the unborn can have, and should have, no special property-rights; in other words that the present generation shall not continue to be plundered and robbed in order that certain unborn individuals shall be born rich--shall be born with such legal claims upon their fellow-men that, while supplied with all the necessaries, comforts, and luxuries of life they need do no useful work in return. It is not denied that the present generation may properly do work and expend wealth for the benefit of future generations: that is only a proper return for the many and great benefits we have received from those who have gone before us. What this principle says is, that it is absolutely unjust for our rulers (be they a majority or minority) to compel us to pay, to work, or to suffer, in order that certain individuals yet unborn, shall be endowed--often to their own physical and moral injury--with wealth supplied by the labor of their fellow-men. As this is, I consider, perhaps the most important of all ethical principles in its bearing on political reforms and general human progress, it will be well to show that it is in harmony with the teachings of some of the greatest thinkers of the age.

    The great philosopher, Herbert Spencer--so recently lost to us--has perhaps as many admirers and followers in the United States as in his own country. In one of his later volumes, on "Justice," forming Part IV. of his Principles of Ethics, he gives us what he holds to be the very foundation-stone of Justice in the domain of Sociology, in the following words:

"Of man, as of all inferior creatures, the law by conformity to which the species is preserved, is, that among adults the individuals best adapted to the conditions of their existence shall prosper most, and that the individuals least adapted to the conditions of their existence shall prosper least--a law which, if uninterfered with entails survival of the fittest, and spread of the most adapted varieties. And, as before, so here, we see that, ethically considered, this law implies, that each individual ought to receive the benefits and evils of his own nature and consequent conduct: neither being prevented from having whatever good his actions normally bring him, nor allowed to shoulder off on to other persons whatever ill is brought to him by his actions."

    The passage here printed in italics is the "law of social justice," and it is again and again appealed to by its author, being usually condensed into the shorter formula "each shall receive the benefits and evils due to his own nature and consequent conduct." Yet, strange to say, he did not himself carry out his great principle to its logical conclusion, nor apparently see its ethical bearing on some of our most important laws and institutions.

    In an address to the Land Nationalization Society, in 1892, I pointed this out, showing that, in order to give practical [[p. 3]] effect to the principle "some social arrangement must be made by which all individuals may start in life with an approach to 'equality of opportunities.'" Two years later this term was used and popularized by Mr. Benjamin Kidd in his Social Evolution, and it is now widely known, and is quoted with approval by many persons who seem quite unable to see where its complete acceptance will lead them. For it is quite clear that both Herbert Spencer's formula and my own imply, not only equal opportunities of nurture in infancy and of education in youth, but also equal opportunities to earn a livelihood; and this absolutely forbids the inheritance of wealth by individuals. Private bequests, above what is sufficient to give nurture and education, must therefore be abolished, and the surplus used to give all an equal start in life. This economic equality follows from Spencer's law of social justice. For by inheriting exceptional wealth a person receives what is in no way "due to his own nature and subsequent conduct," be its results either evil or good. If, therefore, we accept Spencer's law of social justice as being sound in principle, or adopt the formula of "equality of opportunities" as being anything more than empty words, we must advocate the abolition of all unequal inheritance of wealth, since it is now shown to be ethically wrong, inasmuch as it dignifies unearned wealth and a consequent life of idleness and the pursuit of pleasure, as one to be admired, respected, and sought after.

    It is because I believe absolutely in the truth and importance of these principles, that, as a means of applying them practically I have elsewhere urged the adoption of the somewhat simpler principle, that no rights to property should be recognized in the unborn, in its application to the extinction of national debts, the acquisition of railways by the State, and other such cases. Put in this form, we can support it on the ground that, by continuing any payments of interest or pensions beyond the lives of the present receivers and their direct heirs who may have been brought up to expect such inheritance, we are actually robbing the present generation for the enrichment and supposed advantage of certain unborn individuals, who in most instances, as we now know, are much more likely to be injured than benefited. People are brought up to consider this to be just, because they believe that property is sacred, and that a person has an inherent right to leave his property to any one he likes. But even if we admit this in the case of those objects which are the effective personal property of the owner, as his house, furniture, jewelry, etc., it by no means follows that it applies to what is termed realized wealth or invested capital, consisting of land, shares, bonds, bills, or other securities by means of which the holders are able to claim a share of the produce of the labor of the community without themselves doing any useful work. When it is considered that no revenue or income can possibly be obtained except at the cost of labor, both land and securities being valueless without it, we shall see the iniquity of all those arrangements by which such incomes are made to persist from generation to generation, so that living Englishmen are now paying interest on loans raised by past generations for wars which were unjust or wicked, or for perpetual [[p. 4]] pensions given by immoral kings to their friends or parasites. According to ordinary views of what is right, these various annual payments--many millions in amount--must continue to be paid for ever, or be redeemed at their full capital value, which can only be done by laying fresh burdens on present and future generations. Surely, the real injustice consists in continuing such burdens for the benefit of any other persons than the actual living receivers, who might be materially injured by their immediate cessation.

    Having thus firmly established the principle of not recognizing any claims to property by the unborn, it follows that in all transfers of property from individuals to the State we have only to take account of persons living at the time of the transaction, and of the public interest both now and in the future. When therefore the government determines, for the public good, to take over the whole of the railways of the Union, there will be no question of purchase but simply a transfer of management. All trained and efficient employés will continue in their several stations; and probably their numbers will for some time be steadily increased in order that shorter hours of labor may be adopted and the safety of the public be better guaranteed.

    The first step towards an equitable transfer will be to ascertain, by an efficient and independent enquiry, the actual economic status of the shareholders of each line, dependent largely on the honesty and efficiency of its previous management. As a result of this enquiry the average annual dividends of each company or system which have been honestly earned while keeping up the permanent way and rolling-stock in good repair and thorough working order, would be ascertained. The amount of this average dividend would, thereafter, be paid to every shareholder in the respective companies during their lives, and on their deaths would, except in special cases, revert to the railway department of the State for the benefit of the public.

    The exceptions would be, that in the case of all shareholders leaving families or dependents insufficiently provided for, the dividends would continue to be paid to the widow and to unmarried daughters for their lives, and to sons till they reached the age of twenty-one, so as to help towards their education and industrial training. But whenever the shareholder's property was above a certain amount, and producing sufficient income to support the family in reasonable comfort (which might perhaps be fixed at that of a high-class mechanic), then no such allowance would be made. Of course in a great number of cases where the shareholder was moderately wealthy, there would be no difficulty in drawing the line. In other cases it should be the rule to treat the families of shareholders liberally, so that in no case should actual poverty be caused by the cessation of the dividends.

    It may be pointed out here, that to the very large class of individual shareholders whose shares form part of the scanty income on which they have to live, the change would be an actual benefit, because, instead of the fluctuating income derived from a railway company, not unfrequently resulting in temporary cessation or total loss, they would obtain a fixed and perfectly secure payment under a government guarantee: which income would be continued to such members of [[p. 5]] their family as most required it. Whenever railway-shares formed part of the capital of other companies, the shareholders in those companies might be registered as each holding his proportionate number of shares, and be treated exactly as were other individual shareholders. In certain cases where this would be inconvenient, the government might purchase the shares at a fair valuation, paying for them in terminable annuities for such periods as might be agreed upon, but not to exceed the average duration of two generations, or about sixty years.

    Notwithstanding the explanation I have given of the fundamental law of social justice on which the proposals here made are founded, many readers will still think it would be really more just to raise the necessary money on government bonds, and pay off all railway shares at their full value. I will therefore point out to such persons that this method of full payment would really involve a loss both in income and capital to the great body of small shareholders to whom a secure income is the most important consideration. For in order to continue their income they would have to seek a new and safe investment, and as the whole capital value of the railways--probably many thousands of millions of dollars--would be seeking investment, all good investments would at once rise in value; and in whatever way the shareholders' money was again invested it would produce less income than did their railway shares. At a later period, when most of the money had been invested, and there was no longer an exceptional number of buyers, the selling price of these stocks would fall, and thus both those who wanted income and those who bought for a rise would be worse off than before. Some years ago (in 1888) when English 3 per cent. Consols were at a considerable premium, the government gave notice that the funds would be paid off at par after a fixed date, or exchanged for new Consols at 2 3/4 per cent. till 1903, when they would be further reduced to 2 ½ per cent. As was anticipated, nearly the whole amount--more than six hundred millions of pounds stirling--was exchanged for the new issue, simply because for so large a sum no other equally safe investment could be found. Here then, although full payment in cash was offered, an enormous majority of investors found it necessary to accept the new issue, which both brought in a somewhat smaller income and was for a considerable time of a lower selling value. For the same reasons I believe it would be found that if the government offered to pay individuals the amount found to be the fair capital value of their railway shares, instead of the life-annuities to themselves and families which I have suggested, very few would accept the payment, because they would find on enquiry that no other investment existed which would bring them an equally safe income of equal amount, and this is what most of them would feel to be essential.

    In conclusion I will briefly enumerate a few of the advantages that would accrue to the whole community by the public acquisition of the railways in the way here suggested. The economies and advantages of working the whole system under one general management can hardly be overestimated. Then there [[p. 6]] would be the security felt that no part of the capital employed would be any longer the sport of speculators or financiers for their own interests and to the constant loss of the public. Again, there would be the advantage of utilizing the many competing lines between the same great centers to the fullest advantage of the public, those with the flattest gradients and easiest curves being reserved for express traffic at high speeds, while the lines less suitable for speed would be chiefly used for the transport of minerals, lumber, and other heavy goods. The economy of working one coördinated system of lines would very soon increase the returns and thus admit of lower fares, shorter hours of labor, and higher wages. But the most important result of my proposed system of giving shareholders life-annuities, would be, that owing to yearly deaths without direct heirs, outgoing for these annuities would continually diminish, at first slowly, but after a few years at a tolerably uniform rate, so that at the end of two generations--say from sixty to seventy years--the whole enormous sum of the annual dividends would cease to be paid out, and the entire railway system would become unincumbered public property to be worked and administered with a sole view to the public advantage, and especially for the increased well-being of the vast number of railway servants on whose skill, energy, and watchfulness, the lives of the whole traveling population depend.

    Some of my English critics have proposed, that terminable annuities, not for lives but for a fixed term of eighty or one hundred years, would be fairer to all. But in that case the whole of the population for the next two or three generations would be deprived of steadily increasing advantages in railway service, in order to give unearned incomes to millions of the unborn, and at the same time to endow those unborn and the rest of the now unborn population with all those increased advantages of railway service which those now living, even to the youngest children, would never live to enjoy! These purely financial ideas of what is just and beneficial, in which the living are always to suffer in order to benefit the unborn, are so fundamentally irrational and unjust as to seem only fitted to adorn the comic opera or the jest-book.

    The only set of people who would probably find their gains reduced by the system of life-annuities I have proposed for the redemption of the railways, are the stock-exchange speculators, whose sphere of operation would be diminished by the steady reduction and final disappearance of railway-shares from the money-market. But as these people are nothing less than professional gamblers who live by the public's loss, it will hardly be claimed that what is plainly for the benefit both of the public at large and of all living shareholders who are not speculators, is to be given up in order to satisfy them. I therefore feel some confidence that, after full consideration of the subject in all its bearings, my proposals will, in principle, be found acceptable by a considerable body of those who are endeavoring to modify our civilization in the best interests of the whole community.


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