Editorial: Wealth and Directive Ability. (1929)

Editorial from the January 1929 issue of the Socialist Standard

Socialists do not question the need for organisation in industry. What we do question is that Capitalist argument that industry is, and must be, directed by Capitalists. It is, in the main, already directed by salaried employees, members of the working class. Only in the field of financial operations do we find Capitalists themselves normally engaged and even these operations are more and more being performed by paid employees. The Capitalist class own and control industry. They do not direct it. Recently certain Capitalist politicians and newspapers have disclosed some interesting facts and opinions on the “directive ability” of our masters. 

First listen to Mr. Baldwin, speaking at Saint Andrew’s Hall, Glasgow, on November 22nd, 1928 (“Morning Post,” November 23rd) :—

   Since the days when private industry gave place to the joint stock company there have battened on the joint stock companies large numbers of men connected with management, and directors, who are parasitical to industry, and nothing but parasitical.

The City Editor of the “Manchester Guardian” (November 26th) commented on Mr. Baldwin’s speech. He wrote:—

  It is difficult in public life for a man to continue to hold a post after he has, through age or other cause, become obviously unfit to carry out the duties attaching to it. But in the administration of public companies a far laxer standard prevails. It is almost a matter of tradition that once a man has been elected to a board he shall continue to hold his seat for life, and that, if for any reason his retirement is called for, he is entitled to compensation for loss of an office which, in most cases, is legally terminable by the shareholders without notice.

Then Sir Malcolm Robertson, Ambassador to Argentina, tells us that he knows of —

   directors, chairmen, even general managers and passenger traffic managers, of some of the greatest companies connected with Argentina, who have never been in South America. (“Evening Standard,” 11 December.)

Sir Henry Slesser, speaking at Denaby on December 17th, related an incident which recently happened in the House of Commons. He met a man and asked why he was looking so happy. The man replied:—

    “Lord X has made me a director in one of his companies.” Sir Henry Slesser asked if the man knew anything about the business of the company, and he replied “ No, but it is worth £500 a year.” (“Daily Express,” 17 Dec.)

It seems, therefore, that directors do not have to know anything about the company, nor do they have to be where the work of the company goes on. If, then, directors do not direct, what do they do?

Mr. E. C. Grenfell, the banker and financier, answers that question. Speaking in the House of Commons, he said (“Hansard,” December 10th, column 1813):—

   The conception of a director, merely from his name, is that he directs the company; that he has a large share in appointing people: really, that he knows all about the company. Nothing is more fallacious. A director of most companies is a part-time man who serves the company to the best of his ability by giving advice when asked.

And these "parasites,” these "part-time” gentlemen who “don’t know anything about the company,” but who give advice "to the best of their ability” about companies operating perhaps on the other side of the globe, sometimes get quite well paid. Something like £10,000 a year was paid to the directors of Marconi Company, a company which, according to the Editor of "The Times,” was "scandalously mismanaged.” (“Times,” October 6tb, 1927.)

Eight directors of the Dominion Tar and Chemical Company received £104,000 as “compensation for displacement" when the company was bought up by Canadian interests. ("Daily Express," December 6th.) When the Bodega Company was bought up by Slaters, the directors received £15,000 "compensation.” ("Daily Express," November 30th.)

Two directors of Robert Ingham Clark and Co., paint manufacturers, received no less than £170,000 in similar circumstances, ("Daily Express," December 6th.)

And while we are on the subject of the special ability of our masters, let us turn from industry to the House of Lords, the special preserve of the leisured class. Lord Salisbury, speaking in the House of Lords on November 14th, 1928, said:—

  We are called upon to take action because we are conscious that the legislation we are turning out of this House instead of being good is very often bad. It throws an enormous burden upon unfortunate litigants who are the victims of it.

He went on to describe recent legislation as "clumsy, slipshod, incomprehensible and inefficient." ("Daily Mail," November 15th.)

Lord Banbury said that "the greater part of the legislation passed in the last twenty years had better never have been passed."

What would we do without Capitalists to direct industry and hereditary rulers to legislate for us?

The Kings of Capital and the Captains of Industry. (1929)

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?

Adolph Kohn

A Look Round. (1930)

From the January 1930 issue of the Socialist Standard

The Communist "Intellectual."

Many workers imagined that the Communist Party were Revolutionary; but one of their leaders, R. Palme Dutt, admits in The Workers' Life (Nov. 15th), that it is not so. He says :—

  “The chief task of the coming congress is to revolutionise the party and its leadership in readiness for the developing period of mass struggles.”

According to his view they need to get rid of relics of Social Democracy and find new leaders and to get into contact with the masses. He is still talking of factory groups years after the “thesis” merchants declared that factory nuclei were the basis of the party. He states that “the question of leadership is at the centre of the whole situation.”

The article is full of the usual high-sounding phrases like “orientation,” “dialectics," “objective situations,” but one looks in vain for any understanding of the road to Socialism. He talks of the need “to press fighting demands on the Labour Government,” and never once points out that the sole need of the working class is to organise to control political power to establish Socialism.

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Labour Deals With Unemployment.

The Labour Government, through its leaders, MacDonald and Thomas, are continually telling us that the only real road to curing unemployment is to increase our trade—especially our export trade. One of the chief defenders of the Labour Party is Forward of Glasgow, which has to admit that their leaders’ theory is all wrong. Forward quotes an answer in the House of Commons (Nov. 26th) by the President of the Board of Trade, and heads the paragraph, "More Work and Fewer Men.” This is the information given by the Board of Trade:—

  “The total mercantile tonnage launched in the United Kingdom in 1925 (excluding unregistered vessels of under 15 tons gross) was 1,123, 049, while the estimated number of persons in the ship-building, ship-repairing, and marine engineering, etc., industries, who were insured against unemployment in July was 301,340.
   “But while in 1928, the comparable tonnage had risen to 1,458,058, the insured workers in these trades had fallen to 257,460.”

The “great” schemes of granting millions to railways, gas companies, road boards, etc., to make these services more efficient; plans to cheapen costs in coal and steel industries, and similar policies, are therefore bound to fail to reduce or arrest unemployment, because efficient industry increases output faster than trade increases.

Mr. Thomas said in the House of Commons (Nov. 4th) that he did not attach so much importance to work schemes as a solution of our unemployment problem as he did to the wider aspect of the “development of our export trade.”

But the Labour Leaders know that when Britain’s export trade was good unemployment and poverty were widespread and now that productive powers have been vastly increased in every country the increase of export trade cannot cure unemployment.

Look at America with its vast Home market and great export trade—a country in which the Telegraph tells us there are millions of “out-of-works”! Was it not only the other day that leading commercial men warned the motor trade that there were a million surplus motor cars in the U.S.A. looking for a market!

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The Labour Liberals.

Labour supporters criticise the Liberal Party’s legislation but they forget that the Labour Party supported all the leading measures passed from 1906 to 1914, although ever since they have claimed these measures were miserly and ineffectual. How close the Liberal Party and the Labour Party were during those years can be gathered from a quotation from the “Life of Philip Snowden, Chancellor of the Exchequer,” by Mr. Bechofer Roberts. The reader can gather how great was the Labour Party’s support of the Capitalist Reform Legislation of the Liberals.

  On the Insurance Act. Snowden took a line directly opposed to the majority of his colleagues, led by Ramsay MacDonald. The Labour Party had put down amendments to the Bill; MacDonald came to an arrangement with the Government not to embarrass it by moving them. Snowden thereupon stood down from the executive of the Labour Party, and threatened to leave it altogether if these tactics were continued. What was the I.L.P. doing, he demanded, to permit such backsliding among its nominees in the House of Commons? Really, the I.L.P. might just as well dissolve, and consider merging itself in the National Liberal Federation; there was simply no difference any longer between the Labour Party and the Liberal Party. And for his part, he wasn't going to acquiesce in this sacrifice of principles to prudence.
  Followed by George Lansbury, F. W. Jowett and Will Thorne, he refused to obey the Labour Whip; they voted against their colleagues. In articles and speeches, Snowden derided the motives which dictated the tactics of MacDonald and the others. Everyone knew, he said, that four-fifths of the Labour Party's members held their seats through arrangements in their constituencies with the local Liberals; was it not ridiculous, therefore, to expect that they would dare to quarrel with the party to whose goodwill they owed their election?

The Labour Party still appeals to and depends on Liberal "goodwill.”

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The Great Left Wing.

Mr. Cook, the Miner’s leader, has declared his entire support for the Labour Government. Mr. Cook, who said that he had a pledge for a 7-hours’ day given by Mr. MacDonald locked up in his desk, is still keen on the Labour Government after they have declined to redeem that pledge. Cook still supports the Labour Government though he confesses that "during the last five months, up to October, 92,655 claims were disallowed by Insurance Officers on the grounds of "not genuinely seeking work'." During the same period, "308,001 claims were disallowed under all the various vile provisions of the Unemployment Insurance Act.” Mr. Cook evidently "forgets” that the "vile” clauses of the Insurance Act were a part of the Insurance Bill passed by the Labour Government in 1924. Yet he sobs, "he has played the game with the Labour Government.” He has ! The Editor of the I.L.P. paper, Forward, describes him (Dec. 14th) as "The greatest cry-baby in Socialist Politics,” but forgets to mention that neither Cook nor the I.L.P. has ever entered Socialist Politics. Forward refers to that curious document called "The Cook-Maxton Manifesto,” in which Maxton and Co. demanded that the unemployed should get maintenance at the same scale as the employed man (since reduced by Maxton and Co. to £l per week). Forward quotes a speech by W. Gallagher, the alleged Communist, to show that he wrote the Manifesto for Cook and Maxton. The Communist Party, it should be recalled, allowed their members to join the Cook-Maxton campaign though they didn’t like the Manifesto.

Gallagher’s speech at a Communist meeting in Glasgow City Hall, on April 7th, was as follows:—

  I have worked with them for years, trying to instil a working-class point of view into them, and all to no purpose. They sent for me to the House or Commons, and there I took Cook down to meet them. There was Wheatley, Buchanan, Campbell Stephen, Kirkwood, and Maxton, and they informed me that they had decided to fight MacDonald and the Labour Party leaders, and wanted my advice as to what they were to do. I told them that a manifesto must be issued and I wrote it for them, and helped them to organise the campaign, and persuaded Cook to go down to St. Andrew's Hall for the opening meeting. When Wheatley was assuring me that he was out to fight the Labour Party leaders, he was busy arranging to bring Arthur Henderson down to Shettleston to speak on his behalf. No, I am absolutely finished with them, and am out to fight them.

Such is the mess that Labour and Communist Politics result in. All reform and "something now” politicians are inevitably involved in the rotten game which Cook says he has played so well.

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Too Much Production.

"Is there enough wealth for all?” is a common question put by anti-Socialists. The existence of luxury all round us and the stored-up wealth that cannot find a market to-day is one aspect of the answer. But what would be the possibilities of wealth production in a society where the workers had access to the raw materials and the machines? That can be seen by the continual reports of the deliberate limitation of production to-day. In the Observer (Dec. 15th) there is a long article on the "Sugar Crisis,” which explains that the only solution for the owners of that industry is to restrict the supply and limit production in Cuba, Java, Czechoslovakia, etc.

The increase in production of sugar has been so immense that the firms such as the Sugar Trust of America are working out a policy to keep the price up by cutting down the production.

In the same paper, on another page, there is an article on "Tin Restriction,” which states that the Tin Producers’ Association, in order to maintain an "economic price” for their metal, propose the cessation of work for 32 hours each week in the mines, and a total cessation of work for one week in January and February, and, if necessary, in March. This applies to all Eastern sources of supply, and also places like Nigeria.

In modern society the ease with which wealth can be produced means lack of work for the worker but only to assure the maintenance of owners’ profits. More wealth could be produced but it does not "pay” the owners to allow that to be done.

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A Social Democratic Curiosity.

Walton Newbold, late Communist M.P., previously in the I.L.P. and now in the S.D.F., explains his "ideas” in the issue of Forward for Dec. 14th. He says :—

   “I am convinced that the propertied classes will never evacuate without the exercise of force. By force I mean physical compulsion. And physical compulsion is absolutely certain, in some phases, to involve an armed clash.”

Walton Newbold, the Labour Party Candidate for Epping, has recently joined the Social Democratic Federation, which holds that the road to Emancipation is by means of the Labour Party. Newbold says that you can only get emancipation by an armed clash, so he joins an organisation that is opposed to it! He does not tell the electors of Epping about the "armed clash” stuff, although he claims, “I did not say one thing on the public platform and do a different thing in Parliament.” And to crown all, he says, “I accept as axiomatic the Class War.” In the next sentence he says, "That is why, viewing the forces ranged on either side, I have declared for a truce.” So he accepts the Class War but wants it suspended for a while! No wonder the S.D.F. welcomes Newbold. He ought to make a good addition to their professional politicians. The Class War with truce!

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More Bibles In Russia.

An answer both to screeching Christians and uninformed Communists is contained in The Tory Daily Record of Glasgow (Dec. 3rd), which reported a meeting of the directors of the Royal National Bible Society of Scotland.

Letters were read from Germany with regard to the introduction of Russian Scriptures into Russia. It was stated that the demand was so great that for some time it had been out of print. "The Soviet Government had itself been printing large numbers of Bibles in Leningrad, Kiev and Odessa.”

Religion is evidently still widespread in Russia under dictatorship.

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The Class Warriors of the I.L.P.

Mr. James Maxton’s recent opposition to Ramsay MacDonald on details of Unemployment Insurance recalls to us how often he has voted for him as leader, and made the usual sentimental eulogies and declarations of loyalty to MacDonald. At the Memorial Hall debate with our late comrade, Fitzgerald, Mr. Maxton said the I.L.P. were not heresy hunters and therefore did not expel their members who supported the Capitalists. Of course, the I.L.P. could not be expected to do this as it would leave them without a membership. When, however, it helps them to catch votes they do expel members, but not on Socialist grounds. They expelled some of their members in Glasgow recently for voting for booze licences. They did not want to lose a lot of their "unco guid” supporters.

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Peace!—But More Arms.

How much nonsense is being written and spoken of the great achievements of the Labour Government in promoting peace schemes! The Kellogg pact was one of the so-called great pillars of peace of which Labour is proud; and it is interesting, therefore, to read in The Daily Herald (Dec. 16th) of the U.S.A. Senator Borah’s speech:—

  "I think that the best evidence of a belief that the Kellogg Pact had removed all question of neutral rights at sea would be a drastic reduction in armaments.
   "If the Peace Pact eliminated all question of rights of neutrals at sea, what can be the reasons for such vast navies? If we do not expect any conflicts at sea, and all conditions in that regard are removed by the Kellogg Pact, then let us manifest our faith in the Pact by taking away the crushing burden of armaments which we are now carrying".

The Senator doesn’t realise that Labour Governments intend to "humanise” war!

Adolph Kohn

Party News (1930)

Party News from the January 1930 issue of the Socialist Standard

Sheffield.

A meeting of members and sympathisers will be held at the A.E.U. Institute (Library) on Tuesday, January 21st, at 7.30 p.m. with a view to forming a branch in Sheffield.

Edinburgh.

A meeting was held on the Mound, Edinburgh, on December 8th and a large number of questions were asked and answered relative to the Party’s position, especially on Russia and the Labour Party. An apologist for the Labour Party opposed and was dealt with. Literature is now available most fine evenings on the Mound and those wishing to reorganise a Branch should communicate with D. Lamond, 15, Barclay Place.

Answer to a Correspondent: Socialism and the Gold Standard. (1930)

From the January 1930 issue of the Socialist Standard

Socialism and the Gold Standard.

We have received a further letter—too long to print in full—from Mr. Edwin Wright, in which he attempts to substantiate statements made in his last letter (see December "S.S."), and introduces a number of fresh points additional to those already being discussed. We deal below with the issues raised last month.

The first issue was Mr. Wright’s denial of our statement that banks make profit by receiving money on deposit and lending it out at a higher rate of interest than the rate they pay to depositors. Mr. Wright’s "evidence” to support his denial consists of a statement which he attributes to Mr. McKenna. Mr. Wright says :—

  Mr. McKenna denies that banks pay their way by merely borrowing from one person and lending to another. His exact words are: "Every bank loan creates a deposit," which is a denial that banks lend money already deposited, if cheques are used.

In our last issue we invited Mr. Wright to say which part of our statement he considered to be wrong. It will be noticed that he does not attempt to do so, but relies entirely on a mere assertion by Mr. McKenna; an assertion unaccompanied by argument or evidence. Let us therefore repeat the statement :—(a) banks receive money on deposit; (b) they pay interest to depositors; (c) they lend money at interest; (d) the interest they pay is less than the interest they receive. Neither Mr. Wright nor anyone else can deny the accuracy of these four propositions.

And now let us see what another banker has to say about the statement attributed to Mr. McKenna.

The late Mr. Walter Leaf, Chairman of the Westminster Bank, in his book "Banking” (Williams & Norgate. 1926) dealt with this question. He wrote as follows:—

  It has indeed been argued that every loan by the banks creates a deposit; that as long as the banks go on increasing their loans, so long will their deposits grow in the same degree, and that thus the banks can be regarded as creating credit. Unfortunately, this theory will not stand confrontation with the facts . . . the course of events in the first half of the year, 1925, gives a decisive answer to this hypothesis.—(P. 102.)

He then gave figures showing that an increase in the amount of loans and advances made by the "Big Five” Joint Stock Banks, from £746 million in January, 1926, to £776 million in June, was accompanied by a decrease in deposits from £1,515 million in January to £1,490 million in June.

The second issue raised by Mr. Wright was his statement (see December "S.S.”) that Marx and Marxians "approve of a gold standard.” We denied this and asked for evidence. Mr. Wright now offers his evidence. He writes:—

  In “Value, Price & Profit,” Marx says, “ Even in England the mechanism (of banking) is less perfect than in Scotland.”—(P. 28.)

   Now Marx unfortunately helps the banker and the rich rather than us. On page 110/111 of 1 Vol. Edition of “ Capital,” he states: “ It is necessary that the quantity of gold be greater than that required as coin. This condition is fulfilled by hoards,” and (P. 110) "this mass of gold must be capable of expansion and contraction.” On page 90 he writes, “The erroneous opinion that it is prices that are determined by the quantity of money . . . this opinion is based on the absurd hypothesis that money is without value when it first circulates.” On page 102, Marx states, “ Money based on credit implies conditions totally unknown to us.”.

These quotations, according to Mr. Wright, show that Marx “approved the gold standard,” and that he “admired our money system,” and that he “defends bankers.”

We would first point out that the last “quotation” is not as Marx wrote it but as it appears after being “doctored” by Mr. Wright.

The correct quotation is "Money based upon credit implies on the other hand conditions, which from our standpoint of the simple circulation of commodities are as yet totally unknown to us.” (Capital, Volume 1. Kerr Edition. P. 143.)

Taken in its context this passage is clear enough and has a meaning totally different from the one assumed by Mr. Wright. Marx is developing an argument stage by stage and in this passage he reminds his reader that he was not “as yet” considering “money based upon credit.”

He did consider it later in Volume I and in Volumes II and III, the existence of which appears to be unknown to our critic.

Mr. Wright fails to realise the whole purpose of the work “Capital.” Mr. Wright imagines that the passages he quotes are intended to be statements of the policy which Marx advocated. This is a childish misunderstanding. “Capital” in general and the passages quoted are statements of the way in which Capitalism was in fact working when Marx studied it.

They are offered as statements of fact, not as tributes to or attacks on bankers.

Mr. Wright’s further contention is that his schemes for money reform "will enable Socialism and Communism to be established far more easily than you hope for.” He himself provides the answer to his illusory hopes. Having quoted Mr. McKenna as his authority for what he erroneously believes to be a fact about banking, he then admits that Mr. McKenna “thinks that Capitalism can be saved by money reform.” So that Mr. Wright’s short cut to Socialism is believed by Mr. McKenna to be a way to the salvation of Capitalism.

Next Mr. Wright bases the operation of his scheme on the existence of “a Socialist Government.”

In other words, Mr. Wright’s schemes cannot be operated until after the working-class have become Socialist and have obtained power. When that condition exists the working-class will use their power for the purpose of establishing Socialism not for the purpose of introducing some trivial alteration in the method by which Capitalism manages its currency. Socialism involves production for use, not for sale and will therefore require no currency system. We, therefore, in agreement with Marx, do not advocate a gold standard or any other currency system. We advocate Socialism.

Editorial Committee.

How To Get Rich. (1930)

From the January 1930 issue of the Socialist Standard

Ex-Sergeant Goddard was recently defendant in an action brought by the Crown for the recovery of money which he was believed to have received as bribes. The amount was about £12,000 and everyone knew that he could not have saved £12,000 out of his pay. One of the newspaper gossip writers remarked that an “ordinary honest man” would take a lifetime to save so much money. - He would indeed if by “ordinary honest man" were meant the average worker. According to the Ministry of Labour, the weekly earnings of manual workers numbering over five million and spread over all the principal industries, averaged about 50/- per head in 1924. (See Ministry of Labour Gazette, July, 1927.)

The Capitalist class live out of the difference between the value of the goods produced by the workers and the amount paid to the latter as wages and salaries. The Capitalists are able to do this because they own and control the means of production and distribution and can, in consequence, compel the workers to accept employment on these terms—the alternative being unemployment. It is interesting to consider how these fortunate property-owners came to be in the privileged position which they occupy and to consider what hope members of the working-class have of climbing up beside them.

To save £l2,000 in a working life of 40 years would necessitate the putting away of more than the British worker’s total weekly earnings even after allowing for the accumulation of interest. We can, therefore, safely assume that people do not get rich by saving, if all they have to save out of is the wage of a worker. We are nevertheless always being reminded that this or that millionaire started life as a paper boy or a boot-black, and is a “self-made man,” the implication being that wealth is normally the result of the individual’s hard work and ability. Mr. Josiah Wedgwood, B.Sc. (Econ.) has now given us the results of a special inquiry which he undertook in order to find out exactly where the rich get their money.

The results of the Inquiry are set out at length in “The Economics of Inheritance.” (George Routledge & Sons. 1929. Price 12s. 6d.)

It is impossible in brief space even to summarise the elaborate material on which Mr. Wedgwood bases his conclusions. It is, however, interesting to notice that in a review the “Economist” (23rd November) recognises it as “an important book” and has no criticism to offer of the method by which the conclusions are arrived at, nor of the conclusions.

Mr. Wedgwood’s first important conclusion is that

  The proportion of the total property before the War derived from inheritance may be put at round about three-fifths. (See p. 120). 

In other words, our propertied class in 1912 derived less than half their accumulated wealth from savings out of their annual incomes. They were rich mainly because their fathers were rich.

Mr. Wedgwood made a separate inquiry into the sources of the wealth of a considerable number of wealthy people who died recently, basing his examination on documents filed in the Probate Registry at Somerset House. He found that

   Of the Men in the upper and middle Classes at the present day, about one-third owe their fortunes almost entirely to inheritance, . . . another third to a combination of ability and luck with a considerable inheritance of wealth and business opportunity, and the remaining third largely to their own activities.—(P. 163.)

Mr. Wedgwood points out that “many in the third category, though receiving little or no actual property by inheritance or gift, had received a superior education or relatively expensive training.” (P. 164.)

We see, therefore, that the way to get rich is to choose your parents wisely, failing which your chance is small. It is still possible to climb but possible only for the very few who are very lucky.

Lastly, Mr. Wedgwood tells us what are our chances of getting our foot on the ladder.

  The figures . . . suggest that not one in a thousand of the sons of working men (or wage-earners) ever accumulate as much as £10,000 (P. 157), and perhaps 1 in 100 leave £1,000 and over. (Footnote to P. 157.)

We would add a note of warning to any reader who fancies himself as a likely starter for the £10,000 stakes. Ex-Sergeant Goddard, who was paid by the propertied few to protect their property against the propertyless many, thought he saw a way of proving that Capitalism never keeps a good man down. But he committed the unforgivable crime of being found out and is now serving a sentence of 18 months’ hard labour.

The moral of all this is that if you are born into the ranks of the Capitalist class you have an excellent chance of living well and dying with more wealth than your father before you; if you are born a worker you will live hard and die as poor as you began—unless you join with us to get Socialism.

Edgar Hardcastle

Death of a Comrade. (1930)

Obituary from the January 1930 issue of the Socialist Standard

We regret to learn of the death, at the age of 82, of John Haughton, for many years an active worker for Socialism and well-known to members of the Edmonton Branch of which he was one of the earliest members. He was interred at Old Southgate Cemetery.