Judy's Homegrown Blog

In the following excerpt Woodrow Wilson makes a case for regulating corporations, for making their businesses open to scrutiny so that shareholders may see the scruples and values under which they operate.

“There has come over the land that un-American set of conditions which enables a small number of men who control the government to get favors from the government; by those favors to exclude their fellows from equal business opportunity; by those favors to extend a network of control that will presently dominate every industry in the country, and so make men forget the ancient time when America lay in every hamlet, when America was to be seen in every fair valley, when America displayed her great forces on the broad prairies, ran her fine fires of enterprise up over the mountainsides and down into the bowels of the earth, and eager men were everywhere captains of industry, no employees; not looking to a distant city to find out what they might do, but looking about among their neighbors, finding credit according to their character, not according to their connections, finding credit in proportion to what was known to be in them and behind them, not in proportion to the securities they held that were approved where they were not known. In order to start an enterprise now, you have to be authenticated, in a perfectly impersonal way, not according to yourself, but according to what you own that somebody else approves of your owning. You cannot begin such an enterprise as those that have made America until you are so authenticated, until you have succeeded in obtaining the good-will of large allied capitalists. Is that freedom? That is dependence, not freedom.

“We used to think in the old-fashioned days when life was very simple that all that government had to do was to put on a policeman’s uniform and say, “Now don’t anybody hurt anybody else.” We used to say that the ideal of government was for every man to be left alone and not interfered with, except when he interfered with somebody else; and that the best government was the government that did as little governing as possible. That was the idea that obtained in Jefferson’s time. But we are coming now to realize that life is so complicated that we are not dealing with the old conditions, and that the law has to step in and create new conditions under which we may live, the conditions which will make it tolerable for us to live.

“Let me illustrate what I mean: It used to be true in our cities that every family occupied a separate house of its own, that every family had its own little premises, that every family was separated in its life from every other family. That is no longer the casein our great cities. Families live in tenements, they live in flats, they live on floors; they are piled layer upon layer in the great tenement houses of our crowded districts, and not only are they piled layer upon layer, but they are associated room by room, so that there is in every room, some times, in our congested districts, a separate family. In some foreign countries they have made much more progress than we in handling these things. In the city of Glasgow, for example, they have made up their minds that the entries and the hallways of great tenements are public streets. Therefore, the policeman goes up the stairway, and patrols the corridors; the lighting department of the city sees to it that the halls are abundantly lighted. The city does not deceive itself into supposing that that great building is a unit from which the police are to keep out and the civic authority to be excluded, but it says: ‘These are public highways, and light is need in them, and control by the authority of the city.’

“I liken that to our great modern industrial enterprises. A corporation is very like a large tenement house; it isn’t the premises of a single commercial family; it is just as much a public affair as a tenement house is a network of public highways.

“When you offer the securities of a great corporation to anybody who wishes to purchase them, you must open that corporation to the inspection of everybody who wants to purchase them. There must, to follow out the figure of the tenement house, be lights along the corridors, there must be police patrolling the openings, there must be inspection wherever it is known that men may be deceived with regard to the contents of the premises. If we believe that fraud lies in wait for us, we must have the means of determining whether our suspicions are well founded or not. Similarly, the treatment of labor by the great corporations is not what it was in Jefferson’s time. Whenever bodies of men employ bodies of men, it ceases to be a private relationship. So that when courts hold that workingmen cannot peaceably dissuade other workingmen from taking employment, they simply show that their minds and understandings are lingering in an age which has passed away. This dealing of great bodies of men with other bodies of men is a matter of public scrutiny, and should be a matter of public regulation.”

Wilson, Woodrow. “Chapter 1/The Old Order Changeth.” The New Freedom; a Call for the Emancipation of the Generous Energies of a People. New York and Garden City: Doubleday, Page, 1913. 18-23. Print.

Woodrow Wilson goes on to explain the sad state of affairs of corporate unaccountability and of the large monopolies crushing smaller companies or absorbing them.

“Now, do the workingmen employed by that stock corporation deal with its president and its directors? Not at all. Does the public deal with that president and that board of directors? It does not. Can anybody bring them to account? It is next to impossible to do so. If you undertake it you will find it a game of hide and seek, with the objects of your search taking refuge now behind the tree of their individual personality, now behind that of their corporate irresponsibility.

“And do our laws take note of this curious state of things? Do they even attempt to distinguish between a man’s act as a corporation director and as an individual? They do not. Our laws still deal with us on the basis of the old system. The law is still living in the dead past which we have left behind. This is evident, for instance, with regard to the matter of employers’ liability for workingmen’s injuries. Suppose that a superintendent wants a workman to use a certain piece of machinery. Some of our courts have held that the superintendent is a fellow-servant, or, as the law states it, a fellow-employee, and that therefore, the man cannot recover damages for his injury. The superintendent who probably engaged the man is not his employer. Who is his employer? And whose negligence could conceivably come in there? The board of directors did not tell the employee to use that piece of machinery; and the president of the corporation did not tell him to use that piece of machinery. And so forth. Don’t you see by that theory that a man never can get redress for negligence on the part of the employer? When I hear judges reason upon the analogy of the relationships that used to exist between workmen and their employers a generation ago, I wonder if they have not opened their eyes to the modern world. You know, we have a right to expect that judges will have their eyes open, even though the law which they administer hasn’t awakened.

“Yet that is but a single small detail illustrative of the difficulties we are in because we have not adjusted the law to the facts of the new order.

“Since I entered politics, I have chiefly had men’s views confided in me privately. Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of somebody, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when they speak in condemnation of it.

They know that America is not a place of which it can be said, as it used to be, that a man may choose his own calling and pursue it just as far as his abilities enable him to pursue it; because today, if he enters certain fields, there are organizations which will use means against him that will prevent his building up a business which they do not want to have built up; organizations that will see to it that the ground is cut from under him and the markets shut against him. For if he begins to sell to certain retail dealers, to any retail dealers, the monopoly will refuse to sell to those dealer, and those dealers, afraid, will not buy the new man’s wares.

“And this is the country which has lifted to the admiration of the world its ideals of absolutely free opportunity, where no man is supposed to be under any limitations except the limitations of his character and of his mind; where there is supposed to be no distinction of class, no distinction of blood, not distinction of social status, but where men win or lose on their merits.

“I lay it very close to my own conscience as a public man whether we can any longer stand at our doors and welcome all newcomers upon those terms. American industry is not free, as once it was free; American enterprise is not free; the man with only a little capital is finding it harder to get into the field, more and more impossible to compete with the big fellow. Why? Because the laws of this country do not prevent the strong from crushing the weak. That is the reason, and because the strong have crushed the weak and the strong dominate the industry and the economic life of this country. No man can deny that the lines of endeavor have more and move narrowed and stiffened; no man who knows anything about the development of industry in this country can have failed to observe that the larger kinds of credit are more and more difficult to obtain, unless you obtain them upon the terms of uniting your efforts with those who already control the industries of the country; and nobody can fail to observe that any man who tries to set himself up in competition with any process of manufacture which has been taken under the control of large combinations of capital will presently find himself either squeezed out or obliged to sell and allow himself to be absorbed.”

Wilson, Woodrow. “Chapter 1/The Old Order Changeth.” The New Freedom; a Call for the Emancipation of the Generous Energies of a People. New York and Garden City: Doubleday, Page, 1913. 11-16. Print.

Continued from yesterday’s post:

Woodrow Wilson goes on to explain how differently men relate to one another, now that there are huge corporations…

“Yesterday, and ever since history began, men were related to one another as individuals. To be sure there were the family, the Church, and the State, institutions which associated men in certain wide circles of relationship. But in the ordinary concerns of life, in the ordinary work, in the daily round, men dealt freely and directly with one another. Today, the everyday relationships of men are largely with great impersonal concerns, with organizations, not with other individual men.

“Now this is nothing short of a new social age, a new era of human relationships, a new stage-setting for the drama of life.

“In this new age we find, for instance, that our laws with regard to the relations of employer and employee are in many respects wholly antiquated and impossible. They were framed for another age, which nobody now living remembers, which is, indeed, so remote from our life that it would be difficult for many of us to understand it if it were described to us. The employer is now generally a corporation or a huge company of some kind; the employee is one of hundreds or of thousands brought together, not by individual masters whom they know and with whom they have personal relations, but by agents of one sort or another. Workingmen are marshaled in great numbers for the performance of a multitude of particular tasks under a common discipline. They generally use dangerous and powerful machinery, over whose repair and renewal they have no control. New rules must be devised with regard to their obligations and their rights, their obligations to their employers and their responsibilities to one another. Rules must be devised for their protection, for their compensation when injured, for their support when disabled.

“There is something very new and very big and very complex about these new relations of capital and labor. A new economic society has sprung up, and we must effect a new set of adjustments. We must not pit power against weakness. The employer is generally, in our day, as I have said, not an individual, but a powerful group; and yet the workingman when dealing with his employer is still, under our existing law, an individual.

“Why is it that we have a labor question at all? It is for the simple and very sufficient reason that the laboring man and the employer are not intimate associates now as they used to be in time past. Most of our laws were formed in the age when employer and employees knew each other, knew each other’s characters, were associates with each other, dealt with each other as man with man. That is no longer the case. You not only do not come into personal contact with the men who have the supreme command in those corporations, but it would be out of the question for you to do it. Our modern corporations employ thousands, and in some instances hundred of thousands, of men. The only persons whom you see or deal with are local superintendents or local representatives of a vast organization, which is not like anything that the workingmen of the time in which our laws were framed knew anything about. A little group of workingmen, seeing their employer every day, dealing with him in a personal way, is one thing, and the modern body of labor engaged as employees of the huge enterprises that spread all over the country, dealing with men of whom they can form no personal conception, is another thing. You never saw a corporation, any more than you ever saw a government. Many a workingman today never saw the body of men who are conducting the industry in which he is employed. And they never saw him. What they know about him is written in ledgers and books and letters, in the correspondence of the office, in the reports of the superintendents. He is a long way off from them.

“So what we have to discuss is, not wrongs which individuals intentionally do, –I do not believe there are a great many of those, –but the wrongs of a system. I want to record my protest against any discussion of this matter which would seem to indicate that there are bodies of our fellow-citizens who are trying to grind us down and do us injustice. There are some men of that sort. I don’t know how they sleep o’ nights, but there are men of that kind. Thank God, they are not numerous. The truth is, we are all caught in a great economic system which is heartless. The modern corporation is not engaged in business as an individual. When we deal with it, we deal with an impersonal element, an immaterial piece of society. A modern corporation is a means of co-operation in the conduct of an enterprise which is so big that no one man can conduct it, and which the resources of no one man are sufficient to finance.”

Wilson, Woodrow. “Chapter 1/The Old Order Changeth.” The New Freedom; a Call for the Emancipation of the Generous Energies of a People. New York and Garden City: Doubleday, Page, 1913. 6-11. Print.