From the January 1929 issue of the Socialist Standard
Once again America’s rapid economic march illustrates the truth of the Socialist case. Twenty years ago we had occasion to point the lesson of the struggle between the Titans—Andrew Carnegie and Pierpoint Morgan. That was a conflict between two powers representing two factors in economic life. Not two individuals having a wrestling match, not a personal struggle between two great minds; but a dramatic and mighty clash between two social forces—one waning and outstripped by the economic advance, the other triumphant and in harmony with the economic trend. Carnegie’s personal knowledge of the steel industry and his life-work in personal conduct of the steel business—this could not withstand the influence of mere moneyed men, Morgan and his banking colleagues of Wall Street; men who knew not the making of steel, but who controlled vast financial resources. And so Andrew Carnegie’s Pittsburgh and other huge foundries became part of the United States Steel Corporation. Morgan won because those who controlled finance were able to buy and buy out those who knew the industry, but whose capital was smaller.
And that lesson illuminated industrial history since that day. The silent but sweeping changes in social life saw the passing of famous firms and famous names who had been absorbed by the huge financial combines. Men who boasted how much personal interest they took in the control of their business were pushed aside, crushed or swallowed up by the men who had a finger in hundreds or thousands of different businesses and who took no personal interest in manufacture. It was the day of the Big Banks, the Finance Company, the Debenture Loan or Stock, the Mortgage Bond and other strangleholds of finance that took charge of the title deeds of “the man of property and the men of industry.”
Then upon the scene emerges the ideal of all anti-Socialist arguments—the Man of Invention appears—Henry Ford. Henry Ford was a pioneer in the industry with a small workshop actually engaged in the manufacture of motor engines. The suitability of the cheap motor to the times gave a rapid and continuous fillip to Ford’s business. By using the inventions of many others and gathering round him the picked and trained brains of the workers to superintend and run the industry, Fords became the largest motor business in the world. .
Personal control and personal supervision played a good part in the early days of the business, but the time arrived in economic competition when mere personal control, brains and knowledge of an actual industry, no longer decided who was victor in the world of industry. The bankers of Wall Street, led by Morgan, heavily financed Ford’s competitors, who were able to produce a cheap car which sold quicker than Fords. Henry Ford closed down for nearly a year in 1927, while the whole factory was overhauled and new machinery installed to get out an improved car that would once more capture the market. The 1928 Ford car came and was heralded as the wonder of autos, but the power of finance in the modern world was hardly reckoned with. The great competitor of Ford was no personally conducted firm with personal savings behind it, but the General Motors Corporation, backed by the leading financiers of America—a combine which had absorbed dozens of motor companies and other firms making all the parts and trimmings of the modern car. Ford’s great asset—the use of the most modern machinery, each doing one small part and that only—this was duplicated and triplicated by the combine which had more finance than Ford. So the General Motors Co. at Detroit, Flint, and many other “plants,” completely re-planned their machine industry and laid down the best and most efficient machines with the latest speeding-up methods.
Henry Ford—God of the Individualists, Apostle of Competition, Father of the Gospel of Personal Service—finds his firm to-day losing ground heavily. The great concern opposing him—owned by men who know not engines, but who have finance and can hire the trained workers who do know engines—this General Motors Co. are able to say that their Chevrolet Car—the one put out to smash the Ford—sold 84,503 in July, against 43,094 Fords.
Where will it end and what does it portend? The story of Morgan and Carnegie looks like being repeated. King Capital is no respecter of persons—Grow or bust, is his dictum!
And so the firm of Ford looks like eventually being driven to combine with the large financial trust or go under. The workers will go on making cars and the bondholders will continue to reap the profits. Their employers will read stock exchange lists and thus get their knowledge of the industry. Henry Ford and his type will be shareholders in the concern which can do better by hiring hungry workers than by waiting for the working pioneer to get fresh ideas.
There is the lesson—ownership of wealth and more wealth is the winning card.
Finance buys up the personally-conducted businesses and becomes the ruler of more and more workers.
Shall the octopus grow or will the men and women who do the actual work in business and industry learn that they can run society without the parasite—financial or industrial?