THE DREAD OF A PROFIT.—III.
IT is upon the fact noted in our previous articles— that the great profits in modern industries are made up by tiny individual contributions—that profit-sharing, though a thing so excellent and so attractive per se, ham come to grief. After he sums which must be paid for the hire of capital, and for securing the best form of manage- ment and so on, have been allotted, the money which goes to the final recipient of profits, or the " Profiteer " as we now call him, is often, though large in the aggregate, so small when it is divided among the people who morally ought to have a share in it, that profit-sharing becomes a derision. Perhaps it will be said : " But this would be better than nothing." Yes, as long as it lasted ; but remember that in abolishing profit you would have destroyed initiative and knocked out the lynch-pin of industry. You could do it once no doubt, but in the next generation who is going to run the risk of a commercial speculation if he knows that it is " Heads I lose, tails you win " ? " If my speculation comes to grief I am of course ' done in ' in any case. If it succeeds I am to be stripped naked, if not actually hanged from a lamp-post as a Profiteer.' No, thank you. I prefer a comfortable berth and a good salary in the Anti-Profiteering Branch of the Board of ' Trade "—so argues the man tempted to show enterprise in the development of new industries.
There are plenty of was of showing how the " Profiteer," even if he makes a very' cushy " job for himself, is already kept in good economic order by our social system. The tax-gatherer does pretty well annually on the profits the " Profiteer " has heaped up, and does even better at his death. With these matters, however, we cannot now deal in detail. Again, we are perfectly willing to admit that in the problem of profits, as in all other human things, nothing absolute can be affirmed. Though the mass of profit-making is not only innocuous but positively bene- ficial to the world at large, we acknowledge that in special circumstances there may be, and often no doubt are, illegitimate profits or profits illegitimately large, and that these in times like the present may very possibly require to be checked. Even the best things, and we believe generally that profit-making is one of them, demand sometimes the temporary application of the brake and the drag. What we do say is that on the whole profit-making is the power that makes the commercial wheel go round, and that the present attitude towards. profits is one which if it is not kept well in restraint is likely to ruin commerce and industry. It will destroy those economic developments whence alone can come that democratization which we desire to see prevail in the industrial as in the political world. If we only leave things alone, small profits and quick returns over a vast area will be the order of the day, and by no means an unbeneficent one. If we prevent this, we are much more likely to get back to the old in- dustrial configuration of small profits and small wages, the age of the usurer rather than of the popular bank, of minor monopolists and the narrow industry rather than of the big businesses with the open field for every type of human ability. We cannot explore in these articles the whole economic region concerned with profits, and the effects upon industry of attempting to limit them by other means than the natural and wholesome method of introducing fresh competition or of cheapening the hire of capital, which cheapening always comes, and must come, from increased accumulations of capital. We must, however, say a few words upon a subject which is too often neglected—namely, the way in which the hope of a profit has literally showered benefits upon the community, while it has often resulted in no profit at all for the would-be " Profiteer," but a dead loss. This fact is hardly ever mentioned, and yet the country can everywhere show improvements of all kinds made in the unsuccessful hope of a profit. It is not too much to say that the greater part of our marshlands have been drained, our fields fenced, our arable land made cultivable, our meadowlands improved, and our farm-buildings erected in the vain hope of a profit. No doubt certain fortunate men have made a good deal from agricultural improve- ment—i.e., from stubbing " Thornaby Waste," &c. It is possible that Coke of Norfolk, for instance, made money by his improved agriculture and his invention of the rec- tangular sheep. On the other hand, there were thousands of improving landlords who, following his example, drained, cleared, and fenced wild and unproductive lands in the hope of making a profit, but who would have done far better if they had put their money out to usance. But these un- successful landowners, though they did nothing economically for themselves, did undoubtedly greatly benefit the nation. Certainly some of the landowners who undertook such improvements in the past were intentional benefactors, but the greater number of them were unquestionably moved to do what they did by the consideration that if things went well, as they hoped, they or their heirs would be enriched. They played, in fact, for high stakes ; but had they known that if they won the high stakes would certainly be taken from them, that would have been quite enough to freeze their genial expectations. Again, the hope of a profit immensely facilitated the healthy growth of our great cities and the system of putting only a moderate number of people upon an urban acre. The hope of a profit led landlords in London and in many watering-places and commercial towns to speculate in houses, or to stimu- late speculation by making roads and letting their land out on easy terms. We are told of people who made vast profits because some watering-place grew up upon a piece of sandy cliff-top, but we do not hear, because it is nobody's interest or business to draw attention to them, ofithe miles and miles of expensive roadway which have been laid down all along our coasts in the hope of attracting people to build and which have led to no " development." Many of these roads, after waiting in vain for purchasers, have had to be written off as dead losses.
But perhaps the best and most striking example of the public benefits conferred by the hope of a profit, though it proved illusory, is that afforded by the original investors in the London Tubes. There can be no doubt whatever that nothing has benefited London as a whole more than the Tubes. They provide quick, safe, sanitary, and comfort- able travelling at a fast rate of speed, and, perhaps most important of all, they keep down the congestion of vehicles in the streets. Yet the enterprising people who originally put their money into them in the very natural and reason- able hope that they would eventually get a large profit have not realized their ambition. What has materialized has been the public benefit. The private profit for the original speculators has proved entirely illusory. If profits are not interfered with, no doubt in the future as in the past many people will repeat this beneficial process, and in speculating for a profit which they will not obtain will confer a public benefit. We shall thus get great public improvements, which no Government would dare to attempt, and to which indeed we have economically no right, because the capitalist is a sporting person, and often prefers when money is cheap to run a good deal of risk in investing his money to getting only a low rate of interest. But if we confiscate profits when they are what the non-capitalist thinks unduly large, we shall get very few imitators of the sporting habit in this country. People who want to speculate will prefer to put their money abroad to keeping it here.
It is unfortunately useless to tell the capitalist that he ought to b3 ashamed of being such a coward, and that no sane person wants to deprive him of all profit but only of his profits when they get inordinately large. It is the nature of anybody engaged in speculation to magnify not only the possibility of gain but also the possibility of loss. The man who thinks that there is great risk of confiscation if he does well and a certainty of bankruptcy if he does ill, and if he strikes the middle position only such a rate of interest to be obtained as he could get in the public Funds, would be almost certain to leave his money in the sweet security of the 5f Per Cents. Look at it how you will, by confiscating large profits, or even by threatening profits, you create an atmosphere in which trade is deprived of the stimulus of enterprise. To put it in another way. Instead of saying : " Take care what you are doing. If you make a big profit you will be an enemy to society, and we shall rightly deprive you of that profit," it is in the true interests of the State to approach the hesitating capitalist with some such cheerful words as these : "Don't stand vacillating. Have a run for your money. Take up some big public improvement and carry it through. If you make a loss upon it, you will at any rate have the satisfaction of know- ing that you have done a public benefit, whereas if, as we hope and believe will be the case, you make a profit, it may be enormously large. Go in and win, and remember that the dear public stands to gain anyway."
This sounds a very beneficent, kind-hearted attitude for the State to assume, but in these days it is not perhaps quite so unselfish as it appears. For after all, if the man does make a great profit, say 20 per cent. on the money he puts into the enterprise, the State which encourages him has the secret satisfaction of knowing that it will get something like 10 per cent. for itself every year, and a very large slice of the speculator's enhanced capital when he comes to die, and will very possibly get the whole of it by the time his grandson has succeeded. " Thou shalt not muzzle the ox when he treadeth out the corn " was, like so many other Jewish maxims, not only a very humane but a very practicable and reasonable one.
(Conclusion.)
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