Sec. 22. #Growth and nature of the socialist vote.# In 1912 the socialist
party in the United States polled 900,000 votes in the presidential
election. The socialist parties in the various lands have almost
steadily grown, and now cast votes numbering in the aggregate six
to ten million (as variously estimated, the name socialist being
elastic). The socialist parties may be expected to continue
growing. They will ultimately gather within their folds most of
the ultra-discontented, and others that are not able to find an
alternative economic philosophy and a plan that inspire their hopes.
But the socialist party vote is made up of men of many shades
of opinion, a large number of whom hold only the mildest sort
of socialistic philosophy. Not many of the more than 3,000,000
social-democratic voters in Germany before the war were members of the
regular party organization; but they supported the party as the
one unequivocal way to declare themselves against militarism and
undemocratic class-government. In the United States only about one
tenth of the socialistic party voters have been enrolled as members of
the party.

Sec. 13. #Income of banks.# The income of banks is drawn from different
sources, according to the size of the community and the nature of the
banks. While in the villages and smaller cities the commercial banks
perform a number of functions, in the larger cities they usually
specialize in a far greater degree. The trust companies, however, with
their greater versatility, are increasing in number. The income
of banks is derived from discounts, interest on their own capital,
charges for exchange and collection, dividends, interest and rents on
investments, and profit from their bank notes. The capital with which
a bank starts in business[14] could be loaned with less trouble and
more cheaply without starting a bank, but used as a banking capital it
can be loaned in part while still serving to attract deposits, which
are the main source of the income of banks to-day. Charging smaller
customers for exchange is a source of income to some banks, but in
many cases this service is freely performed for regular customers and
becomes a considerable expense. Banks make few investments in real
estate or other physical property; it is, in fact, their duty to keep
out of ordinary enterprises, but they are forced sometimes to take for
unpaid debts things that have been held as security. Profits on
bank notes have at times been the main, almost the sole, motive for
starting banks; but that is not the case to-day when the right of
issue is so strictly limited.

whole business, by mileage or other rules; inter-state comity to be
further developed in this matter
(d) Taxation of interstate enterprises only in due proportion to the
whole business, by mileage or other rules; inter-state comity to be
further developed in this matter.

the tariff revision of that year
The next income tax law was that of 1894, enacted in connection with
the tariff revision of that year. It was declared unconstitutional
before it had gone into effect. The main ground for the decision was
that a tax on incomes from rent of land as well as on incomes from
personal property is direct, and must therefore be apportioned among
the states according to population.

give them widespread political power in other ways
The wealth and industrial importance of the railroads soon began to
give them widespread political power in other ways. It was commonly
charged in some states that the legislature and the courts were
‘owned’ by the railroads. The railroads, in part because they were
the victims at times of attempts at blackmail by dishonest public
officials, declared that they were compelled, in self-defense to
maintain a lobby. The railroad lobby, defensive and offensive, was, in
many states, the all-powerful ‘third house.’ Railroads even had their
agents in the primaries, entered political conventions, dictated
nominations from the lowest office up to that of governor, and elected
judges and legislators. The extent to which this was done differed
according as the railroads had large or small interests within the
state. These statements can with approximate truth now be made in
the past tense, as was not possible a few years ago. A better code
of business morality has developed, and the railroad management”s
relationship of private trusteeship toward the shareholders and of
public trusteeship toward the patrons of the road is now much more
fully recognized. The change was not brought about without long and
strenuous agitation and effort, educational and legislative, as is in
part described below.

personal taxation, applied through inheritance and income taxes
This system of impersonal wealth taxation may then be supplemented by
personal taxation, applied through inheritance and income taxes. These
forms of taxation extend over and reach many of the same persons and
incomes as do ultimately the impersonal taxes. But the summation
of personal incomes gives the necessary condition for applying the
principle of progression so far as this is, by public opinion, deemed
desirable either for fiscal or for social reasons.

Sec. 3. #Fewer hours and greater efficiency.# Quite contrary to the
foregoing view is the claim that in the shorter day the rate of work
is so increased that the output is at least as large as in the longer
day, or even larger. A faster working pace is possible with a shorter
day, particularly in those operations calling for physical or mental
dexterity. This view is less attractive to the workers than the
preceding one, but is more acceptable to the employers and to the
public. The change undoubtedly has resulted in many cases in the
manner indicated, and could be made to result so in many other cases
by applying the methods of scientific management. But it is a change
which cannot be repeated indefinitely and under all conditions with
like favorable results. Whether in any particular case it can be,
depends in part on the length of the working day at the start. Such an
increase in output might occur in a change from exhausting hours, as
from 12 to 10, and again from 10 to 9, and yet not be possible in a
change from 9 to 8. Moreover, the speeding up of the workers beyond
a certain point may have had physiological effects outweighing the
benefit from shorter hours. It is now said that with the increase of
automatic machinery there are more and more workmen who much of the
time have merely to watch the machine-tool run, and occasionally
adjust the material. There has, however, been collected a notable
body of evidence to show that, in many industries and in different
establishments using much machinery, a reduction of hours to a number
as few as eight has been followed by the increase of the output per
worker, or by improvement in the quality of work, or by improvement
in the management, resulting in a reduction of the cost of production.
This is often sufficient, or more than sufficient, to compensate for
the shorter time. Wages have remained as high as, or higher than,
before, and employment has been more regular. So far as this result
is due to the individual worker, it is explained by the same evidence
referred to below[5] as bearing upon the health of the worker.
This evidence tends to prove that with longer periods of rest and
recreation the worker lives in a physical and mental condition fitting
him far better for his work, and for continuing his working life.

Sec. 4. #Farming viewed as a capitalistic enterprise#. Thus the farm
comes to be looked upon more and more, not just as a home, but much as
if it were a commercial enterprise or a factory, by which products are
made for sale. This change, to be sure, is far from complete, as the
figures for the average farmer”s income show that a large share of the
family living still comes from the farm. It has gone on much further
in some districts than in others, as is indicated in the types of
farming discussed below. But just to the extent that the farmer grows
crops to sell, his outlook on his work undergoes a change. He is
less exclusively a farmer, concerned with the technical processes of
farming; he must be more largely a business man. Like a manufacturing
enterpriser, he buys the factors of production, combines them into
new products, and sells them again. He becomes interested in market
conditions and prices. He grows more commercially-minded. He views
the farm no longer as a fixed area, but one that may be enlarged by
purchase or by rental, and that may be reduced by selling or letting
the less needed parts. One-fifth of farm owners now rent additional
land. In commercial farming the land is not contrasted with capital as
something apart, consisting of the value of the equipment and stock;
but the whole complex of land and other goods is thought of as a
capital-investment. The greater ease of transferring landed-property
in America and the greater mobility of our population have always made
it more natural here than in Europe to look upon land as a capital
investment. This view is now becoming more general as a result of the
commercializing of farming enterprise.

operating their own farms is gradually giving way to a tenantry
in America
These statistics arouse fears that the class of independent farmers
operating their own farms is gradually giving way to a tenantry
in America. But in some respects the figures are misleading unless
carefully interpreted. The increasing proportion of tenants is due not
so much to owners falling into the class of tenants as to the
hired laborers rising into the class of tenants. The number of male
operating owners compared with all male workers (not merely with all
farms) has remained almost constant at about 42 per cent; while the
per cent of hired workers has decreased from 43.3 (in 1880) to 41.4
(in 1890) and to 34.6 (in 1900). Most hired men on farms are farmers”
sons; the city boy does not adapt himself readily to farm work. Most
hired men of native stock become tenants, and finally owners. Only 11
per cent of the hired workers in agriculture (in 1900) were over 35
years of age.

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