Date: February 7, 1923
Location: New York, NY
(Original document available here)
More and more the business of the country is taking on a public aspect. Even in its obscurity it is no longer considered entirely personal, and as it rises higher and higher into notice, it is less and less considered as purely private. The very large enterprises of the country have been brought under government control. Transportation and banking are the outstanding examples of industry subject to important state and national restrictions. Agriculture is for the most part unregulated while it remains on the farm, but when it reaches the exchange and the stock-yard a vigorous regulation begins. The insurance business is under most careful supervision. While many of these regulations are the result of direct action of the government, those which are even more important and useful arise from an educated public opinion. The present power of organization is so extensive and complete that business becomes charged with a public trust. This is especially true of that business which you represent. Its very nature makes it of great public importance.
Insurance is the modern method by which men make the uncertain certain, and the unequal equal. It is the means by which success is almost guaranteed. It is part charity and part business, but all common sense. Through its operation the strong contribute to the support of the weak, and the weak secure, not by favor but by right, duly purchased and paid for, the support of the strong. Every insurance policy is a declaration of independence, a charter of economic freedom. He who holds one has overcome adversity.
The principle upon which this proceeds is all very plain. It has its foundation in thrift. Everyone knows that it is not what is earned, but what is saved which measures the difference between success and failure. This is a difference so slight from day to day as to seem unimportant and of no consequence, but in the aggregate of even a few years it amounts to a sum of great importance. The ability to save is based entirely upon self control. The possession of that capacity is the main element of character. It passes over at once into the realm of good citizenship. He who sells an insurance policy sells a certificate of character, an evidence of good citizenship, an unimpeachable title to the right of self-government.
This is all the more plain when it is remembered that the development of insurance has gone along with the development of democracy, the right of the people to rule. This is a very old principle, but a very recent practice. Whoever has discussed government since the days of recorded thought has taken up this subject for consideration. Yet ours was the first nation completely to acknowledge it and, in theory, undertake to put it into operation. The whole trend of our institutions has been in this direction.
Political democracy was established by the National and State Constitutions. It was extended to all native born and naturalized citizens, without regard to race or color, by the amendments which resulted from the War of ‘61. It was further extended to include both sexes by the last amendment. That sovereignty which was once claimed as the attribute of none but princes has at last been acknowledged to repose solely in all the people. They, and they alone, govern. This principle of democracy no jurisdiction anywhere on earth now dares openly to deny. Government belongs to the people.
Along with political democracy has come educational democracy. The privilege and the right to know, once also claimed as the exclusive domain of the clergy and nobility, has not only been extended to but enjoined upon the people. The monastery open only to a class, the college which could be attended by but few, through its influence was universal, have been supplemented by the professional school, the technical, agricultural, and trade school, reaching down to vocational training and to compulsory attendance. Education belongs to the people.
Where once substantially all property was held in a few great estates and the people, for the most part, were left to a condition of tenantry and serfdom, the laws of equal inheritance, the rise of the great system of commerce, have broken up the great domains into small holdings and brought about a general diffusion of wealth. By the device of incorporation, the ownership of great enterprises has become broadly distributed, while through trade union and shop committees there has been a very broad sharing of management and control. All the while we have been working towards democracy in industry. Property belongs to the people.
In harmony with this principle has gone the development of insurance. Beginning with small associations, which practically wagered on their respective length of life, it broadened out into a form of endowment where one need not die, but live, in order to win. And lastly there has come industrial insurance with small weekly payments adjusted to every public requirement. It is not too much to say that, along with government, education and property, insurance belongs to the people.
Not only by theory, but by fact, is this conclusion sustained. The reports of the various companies show the wide diffusion which has been effected. For the calendar year 1921, in the ordinary field, there were 17,683,000 policies in force carrying insurance of $36,378,538,000. In the industrial field, there were 54,097,000 policies carrying insurance of $8,006,120,000, making a total of 71,760,000 policies carrying an aggregate insurance of $44,384,658,000, while the total assets of the life insurance companies for the year 1920 were $7,319,997,000. Disregarding possible duplications, it would appear that nearly seventy per cent. of the people are protected by insurance, for which there is pledged an amount nearly equal to one-fifth of the total estimated wealth of the entire nation. These are all facts which are beyond dispute.
When there is taken into consideration the experience of the Government in making its wartime loans, the condition of the people is still further evident. Five times the national treasury made a direct appeal for the purchase of bonds. The largest response was at the time of the fourth loan, when 22,777,680 subscriptions offered to purchase $6,993,000,000 of bonds. The total number of subscriptions for the five loans was 66,288,680, offering to purchase $24,070,000,000 of bonds, over-subscribing the various amounts required by $6,570,000,000.
The agricultural condition of the nation further sustains this position. Approximately forty-five million people own or live on farms. The value of the property engaged in that enterprise is shown by the census of 1920 to be about $78,000,000,000. This is almost all divided up into comparatively small holdings. If further confirmation be needed, it is supplied by the millions of householders, the tens of millions of depositors in institutions of savings and owners of stocks and bonds of business enterprises. Finally, the income tax returns show a comparatively small number of people who are in receipt of large incomes, less than 700 of over $300,000 and that number is diminishing, while the total number of incomes has increased reaching 5,332,760. In this further and impressive evidence, not only the large resources but the general distribution of the property of the nation are revealed and confirmed.
This stupendous development is one of the best illustrations of the success in practice of the theory of our institutions. They all rest on a very high estimation of the powers of mankind. It is believed that they have the ability for self-support and that, therefore, their natural state is that of independence. It is believed that they have the capacity for self-control and that, therefore, they are entitled to complete jurisdiction over their government. The principle is that in all things they are the best able to own, control and manage their own affairs. The marvelous extension of insurance bears most impressive testimony of the striking success of this system in the economic life of the nation. The great achievements in this field have been made by the people themselves. The assumption of the necessary costs and burdens have all been voluntary. By the free action of the individual, he makes a contribution to society, over the extent of which he himself has sole determination. He received from society a corresponding support to be applied wheresoever he shall direct. Here is no interposition of a superior force, no mandate of the law, no weak dependence upon government, but the self-directed and vigorous action of the individual himself working out his own destiny. What no government was ever able to do for its subjects, the people have done for themselves. The strength of this whole movement, the virility of this entire principle, is revealed in the fact that it is not imposed upon the people, but results entirely from their own deep and abiding convictions. Such a foundation never fails.
There are several conclusions which arise from these facts and their attendant principles. One of the first is the ever present necessity for peace and an ordered government in accordance with standing law. It is only in a society which possesses stability that there can be economic progress. Probably no one has cared to undertake to sell insurance in Russia for the past few years. In spite of appearances, our country made no profit out of the war, while only loss is apparent in the recent strike in the coal fields and in the railroad shops, and in industrial strife generally. Perhaps out of the loss and inconvenience that has accrued, experience may teach a lesson of the futility of it all, which may be of benefit in the future. Always it has been peace, obedience to law and industrial harmony which have been the contributing factors to that American business success which is reflected in the general prosperity of the people.
Your own experience must be a striking confirmation of this fact. Wherever you and your associates go, the economic burden which the War imposed upon the people at large is perfectly apparent. Although the cost of living, which rose from a scale of 100 to 216, has been receding, it still reaches nearly 170. For almost all the prime necessities, shelter, clothing, food and fuel, the consumer pays a greatly increased price. A very large contributing element to this situation is the increased cost of government. Into the great conflict our country put nearly sixty billions of dollars; about $26,000,000,000 came from loans, and about $32,000,000,000 came from taxation, an amount so stupendous as to put a violent strain on our whole economic fabric. In spite of reductions and economies which are exceedingly gratifying, the appropriation, outside of the Post Office Department which is self-supporting, for the present year were $3,187,000,000, and the same budget for next year is $3,078,000,000. This great sum would more than equal the entire income of 1 ½ million heads of families, earning $2,000 each year, representing on the average 7 1/2 million persons.
The principal end of government is to provide freedom, order, security and justice. To take care of the War debt requires about $1,350,000,000. The expenses of the Veterans’ Bureau aggregate nearly $450,000,000. Pensions about $250,000,000, the Army about $280,000,000 and the Navy about $294,000,000. All of this together makes the cost of national security for a single year $2,624,000,000, out of a budget of $3,078,000,000. Out of the 7 1/2 million persons that we might consider as solely engaged in meeting the cost of government, 6 1/2 million of them are required to meet the bill for national defense. We shall always need and army and navy, but even in the case of our own peaceful nation, if we could be relieved of the waste of war, what a tremendous amount of energy would be transferred into the production of those necessities, conveniences, and even luxuries which minister to human welfare.
When we turn to the industrial field, there is apparent a very serious situation having a widespread effect and causing a great loss. A careful estimation in 1920 placed the membership of trade unions at close to five million. Undoubtedly it has since grown less. What dues are paid is unknown, but it is apparent that the aggregate would be large. The number of industrial conflicts important enough to be reported to the Department of Labor, for 1921, was almost 2300. The Anthracite Bureau estimates the losses accruing to operators and miners in their field from the strike of last year $250,000,000. In the bituminous field there is no estimate, but it is apparent that it must have been very large for that field has much the larger production. The conflict in transportation is said to have cost the railroads from $150,000,000 to $221,000,000, with an attendant loss of wages to their employees of $177,000,000. These total $648,000,000. The indirect loss occasioned by conflict in the coal mines and on the railroads, to the outside public, was an amount which can never be known. When there is added to these the losses which accrued from the thousands of other conflicts, it becomes apparent what a perfectly stupendous burden they all place on the consuming public. Directly and indirectly it may reach $2,000,000,000 in the course of a year. No one knows and no one can tell. On the same basis of income and people as already estimated, this would represent the entire income of one million more heads of families earning $2,000 each year, representing on the average five million more persons.
But the loss is not confined, in such conflicts, to a mere expenditure of treasure. They bring much suffering and privation. Interference with employment, with transportation, or with the production of such necessities as coal, causes suffering from lack of light, heat and power, and privations both to those who produce and those who consume when perishable commodities spoil. Where the conflict becomes acute, loss of life ensues. The destruction of life at Herrin, Illinois, which horrified the whole nation, has been charged to those who were hostile to the employers, while mob law at Harrison, Arkansas, has been charged to those who were hostile to the employees. Whoever was responsible, both these occurrences indicate a trampling on the law and a breaking down of the safeguards of civilization.
The economic effect of all this conflict is perfectly apparent. In the case of war and government it can be exactly measured. In the case of industry it can only be estimated. If the two combined have equalled $4,500,000,000 in a single year, when the entire income of the nation is estimated at about $50,000,000,000, it makes a very heavy burden. No doubt there are two and one-quarter million heads of families who do not earn more than $2,000 each year, though the average for all the people is much in excess of this amount. But if out of a population of something over one hundred million something like eleven million men, women and children might be represented in the amount of effort that goes into these conflicts, the seriousness of the situation becomes perfectly apparent. While nine of the people are working and producing, one of them has to stand guard to prevent from being destroyed, not only that which is being destroyed, not only that which is being produced, but the life and liberty, and the very national existence of the others.
This is an illustration of what a contribution would be made to human happiness, if it were possible to secure peace, obedience to law, and industrial harmony. Whatever affects the government, whatever affects transportation, or any of the great enterprises, with the present organization of society and distribution of wealth, affects the people as a whole. Not only that, but the burden is always most grievous to the weak. The results of these conflicts are all-inclusive, reaching into every home in the land.
It is impossible to provide an immediate remedy for these conditions. The problem is to avoid producing more conflicts, and to eliminate the causes of conflicts. Those responsible for the control of great business enterprises should, themselves, insist that industry be clean. Those responsible for leadership in the trade unions should, themselves, insist that employment be clean. The management of business ought to be insistent on the administration of justice at Harrison, Arkansas, and the management of trade unions ought to be insistent on the administration of justice at Herrin, Illinois. When carloads of people were left stranded in the unbearable heat of a western desert last August, representatives of the Railroad Brotherhoods are reported to have cooperated in bringing those who were responsible for such action to trial and punishment. This was a most wholesome example, the highest possible demonstration of good faith and praiseworthy patriotism.
The people feel these great burdens keenly. Oftentimes they are unconscious of their cause. They grope about for remedies. They become inclined to listen to those who assert that the trouble lies in our form of government and in our standards of society. Bound and fettered by these conditions, they lose faith in freedom. It becomes easy to conclude that in changing the government and remodeling society a way to escape is to be found. Yet when we examine our laws and customs, they appear to be sound and just. It is neither government nor society that creates conflicts, but those who defy their rules. It is desirable to think of some of these things before we conclude that American institutions are a failure and commit ourselves to their overthrow. It is not a change of treaties, or constitutions, or laws, but a change of heart in which will be found the ultimate remedy. In the liquidation of hate and uncharitableness, and in a resort to compassion and good will there lies the only hope. All about are the marvelous resources of the present, the great opportunities created by science and wealth. They are all open to humanity, provided there be the character and the spirit to receive them. They all wait, not on an enactment of law, but on an attitude of mind.
It is not new to assert that unless those who are in positions of control, either in management or employment, exert themselves to create better conditions there will be action on the part of the public through the instrumentality of government. There is a demand, which is growing more insistent, for a reduction in the cost of the necessaries of life. Shelter, fuel, and transportation are only to be had at a very high cost. The freight bill of the entire nation for last year was just over $4,000,000,000. The coal bill was not much less. What was required to repair the waste of war and industrial conflicts ranks along with these two items. Peace, harmony and obedience could have made a very large reduction in their amount, for the war is in every freight and coal bill. Such a state cannot but produce a violent demand for some kind of government action.
The danger under such circumstances is that either the attempted remedy will be ineffective, or it will make conditions worse. The alternative to private ownership and control is public ownership and control. Broadly extended, this is communism. It is not, however, the elimination of self-interest which is desired, but the creation of an enlightened and humanized self-interest, the realization that true self-interest does not lie in the course of conflict, but of cooperation. The government and its agents are not in the possession of any resources, ability, wisdom, or altruism, except that which they secure from private life. In the last analysis, the government cannot tell the people what to do, the people must of necessity think for themselves and act for themselves, if there is to be maintained a state of responsible freedom. It needs no argument to demonstrate that where the people are the government, they do not get rid of their burdens by attempting to unload them on the government.
In spite of all these difficulties our country is not failing to progress. Already it has paid off more than one-seventh of its public debt. It has been removing both the causes and the disposition of war. Important agreements have been made for the limitation of armaments and for mutual consultation and notification, in case of disagreement or impending peril. The number of industrial conflicts for the first nine months last tabulated run at the rate of less than one-half of those of the previous year. Exports which averaged about $300,000,000 per month for the last fiscal year, now average well toward $400,000,000 per month. Apparently, the great loan made to the British Government is about to be funded, an action which marks a returning economic stability. The spirit of mutual cooperation and helpfulness, which prevails in the insurance world, is coming more and more to prevail in the industrial world. We are not without the beginnings of this same spirit in the international world. A weak sentimentalism plays no part in it. It is based on the theory of helping those who help themselves. Not on the theory that some should bear all the burdens of the others, but on that theory that all should share each others burdens. It is a conspicuous example of that cooperation and charity which are indispensable to the progress of mankind. There is by no means any reason to be discouraged. Rather is there every reason for faith and courage, for the support of our institutions of government and society, and confidence in the increasing power of what is right.
Citation: Vermont Historical Society
The Coolidge Foundation gratefully acknowledges the volunteer efforts of Isaac Oberman, who prepared this document for digital publication.