holders of record in the American Company, and more than 100,000 are acquiring stock. There are also more than 19,000 outside holders of common stock of Associated Companies and more than 147,000 owners of preferred stock of Associated Companies; and, in addition, there are more than 24,000 paying for stock in installments.

A

INSURANCE COMPANY OWNERS

ND a similar picture holds for the great business of insurance. In 1904, many of the insurance companies were stock companies, the majority of whose stock was controlled by a few men. The Equitable Life Assurance Company of the United States at that time was a stock company with very restricted ownership. In 1922, it was a mutual company with 952,659 policies, the policy holders being the owners. The Metropolitan was a stock company, whose policy holders were allowed to vote, but the majority of whose stock. was held by two thirds of the directors. This company is now a mutual company and in 1922 it had outstanding approximately 27,400,000 ordinary and industrial policies, the policy holders being the owners. The New York Life Insurance Company at the first date, while purely mutual and with about 800,000 holders, was in effect controlled through 25,000 reserve proxies. To-day it is still a mutual company, and in 1922 it reported 1,717,898 policies, policy holders being the owners. And so the Prudential Company, which, in 1904, was a stock company with limited control, is now a mutual company and in 1922 reported more than 23,600,000 ordinary and in dustrial policies in the hands, as estimated, of approximately 17,000,000 owners. According to the best available estimates, there are outstanding at present in the neighborhood of 83,000,000 insurance policies for more than $60,000,000,000-an amount greater than the pre-war wealth of France and nearly as great as the estimated wealth of this country in 1890 in the hands of about 45,000,000 owners.

The foregoing illustrations of increas

ing popular ownership by no means cover the whole field. They do cover a substantial part of it. But the picture of the democratization of industry in America would not be complete without a reference at least to other fruits of democracy. Here, more than 11,000,000 families, embracing 55,000,000 persons, own their own homes. Here, 36,000,000 people have savings of savings of more than $21,000,000,000. Here, 3,500,000 farmers own farms covering more than 72 per cent. of the farm lands. Compare savings here with those in Europe and farm ownership with that of the more advanced foreign countries. The contrast is striking. is striking. In Europe, 80,000,000 people have savings of only $9,000,000,000.

In England, only 9.8 per cent. of the farm acreage is operated by owners; in Australia, 21.1 per cent.; in New Zealand, 41.5 per cent.; in Belgium, 45.8 per cent.; and even in France, which had its revolution, 52.8 per cent.

It

Another of the worthy fruits of democracy is a very recent development. Labor, as such, has gone into banking. Mr. Warren S. Stone has recently stated that there were in November, 1924, twenty-eight labor banks in operation, seven more in process of organization, and that there were sixty applications awaiting investigation. He estimates that by the end of the year the combined resources of labor banks will be in the neighborhood of $150,000,000. This achievement is highly significant. strikingly testifies not only to the high stage of evolution in financial thinking that labor has reached, but also to the well-being of labor and to its capacity to appreciate its opportunities and responsibilities; and no other country is even remotely succeeding in doing so much to increase the capacity of people to get on in the world as is' the United States. Here, education belongs to all the people and is for all the people; and this country is spending more annually for education than all the other nations in the world for which statistics are available.

A tabular statement may be helpful to the reader and bring the present status

democracy here where it exists in its most advanced, if not in its only real form, the meaning of a decent regard for the average man. They are highly significant. They indicate happenings which are little known. They witness to a silent but strong evolutionary movement. In fact, they suggest a movement almost revolutionary in its speed and magnitude, and justify even a broader and stronger statement than the following from Professor Carver:

This ownership of the factories and the plants by the workers themselves is coming more rapidly in this country than it can possibly come in any other country, and it is coming without any reformer knowing that it is coming. He has not had anything to do with it. It is coming because the ordinary economic forces are putting into the hands of the workers the money with which to buy the plant in which they are working.

Very few reformers, especially of the professional sort, know that this revolution is going on. Revolutions sometimes come in that way. The world quietly turns over while the professional reformers are barking at the moon. The real things are accomplished, not by people who think they are accomplishing great things; they are accomplished by people who do the day's work and do it well, who function efficiently in society and don't know always that they are revolutionizing the world. And this is that kind of revolution.

The general economic policies of this country come more nearly to conforming to a sound economic program than do those of any other government on the face of the earth. That is why we are achieving so much more in the way of prosperity for all classes than any other country is achieving.

This movement toward the democratization of industry through popular ownership is in its infancy. In the large, it has developed almost within a decade. It will spread as the nation grows and as enterprises increase in magnitude. It is becoming the settled policy of more and more corporate businesses to promote the ownership not only of their own employees in their business but also of the public generally; and it is important to remember that a large part of the public which

278

is acquiring ownership in big business consists of employees. This policy has been dictated in part by the recognition of the fact that a wider financial foundation contributes to a sound financial structure and a greater ease in securing funds. It was given impetus by government financing during the war, which revealed more clearly the fact that there were vast numbers of small investors who had savings and who were willing to invest them. These businesses are devising special plans and machinery to interest employees and investors at large and to aid them in becoming capitalists. Reference has already been made to the customer ownership activities of such utilities as the electric power and gas companies.

Not the least interesting and far reaching of the policies and plans to aid employees and small investors generally throughout the nation in becoming owners are those of the American Telephone and Telegraph Company and the Associated Companies of the Bell System of which it is the head. The Bell System is a nation-wide system. It serves all the people of the nation. It has as its settled policy not only to have its employees become owners in the System but also to induce people generally, especially its customers, to become owners of the American Telephone and Telegraph Company and to become financially interested in the Associated Companies. It invites nation-wide ownership.

THE LAW OF NEW YORK STATE

ΤΑ

HE New York law, under which the American Company is incorporated, provides that new stock must be offered to stockholders; but there are three methods by which non-stockholders may become owners of its stock: first, through the purchase of rights by the public when a new issue of stock is made and the use of the rights in subscribing to stock; second, by employee acquisition of stock under the employee stock purchase plan; and third, by buying stock at the market price.

The first of these methods I shall not

comment on. As to the second, I have already pointed out that there are now more than 65,000 employee stockholders and that about 100,000 are acquiring stock. In reference to the third, the Bell Telephone Securities Company, a subsidiary of the American Company, is engaged in spreading information about Bell System securities and particularly about the stock of the American Company, in calling people's attention to the fact that the stock exists, that it can be purchased in the market at the market price, and that it yields a safe and good return. It also offers to facilitate the purchase of such stock, especially by small investors, with whom, through the coöperation of the employees of the Associated Companies, it is able to get in touch in most parts of the Union. It assists them in having their orders executed through the ordinary investment channels and its plans permit them to pay for stock in installments, if they wish to do so.

The results have been striking. In less than three years, about 99,000 persons have purchased more than 800,000 shares of stock in the market at the market price for an amount approximating $100,000,000. The average purchase for each person has been about 8 shares. During the first ten and a half months of 1924 more than 43,000 persons purchased about 231,000 shares in the market, involving an expenditure in excess of $28,000,000-an average of approximately 5.2 shares for each purchaser, and an average for those purchasing on the installment plan of about 2.7 shares. This activity will continue and the ownership of the company by the public will spread.

In addition to the owners of the stock of the American Company there are those who are financially interested in the Bell System through ownership of preferred stock of Associated Companies. The preferred stockholders of five of these companies-the New York Telephone Company, the Bell Telephone Company of Pennsylvania, the Southwestern Bell Telephone Company, the Wisconsin Telephone Company, and the Chesapeake and Potomac Telephone

Company of Baltimore-now number more than 140,000, and there are more than 25,000 persons paying for stock in installments.

DISTRIBUTION OF STOCK

OR the most part, this stock was distributed to small investors, particularly to customers, mainly through the employees of the companies. That the purchasers of the stock, as a rule, were people of small means is indicated by the fact that an average of about 2.7 shares was allotted to each purchaser. A classification of the applicants for the preferred stock offered by the Bell Telephone Company of Pennsylvania, the Wisconsin Telephone Company, and for part of that of the Southwestern Bell Telephone Company, aggregating 118,799 for 733,676 shares, is given below. It is highly significant. It is a literal crosssection of American society. It indicates at a glance the sort of people that are owners of the business; and it may be said in passing that a similar classification of thousands of the holders of the stock

of the American Company would reveal a similar picture.

And thus it appears that incorporated business and especially incorporated big business is the vehicle through which laborers and other smaller investors have been furnished and are being furnished an easier and fuller opportunity to become owners and capitalists than has ever before been furnished in any other way, anywhere, at any time, in history. In earlier days when business was transacted by inviduals, firms, or partnerships, there was not the desire on the part of the owners to admit outsiders to ownership except under conditions which barred men of small means. The public generally, and particularly the employee, was not invited to become an owner and had not the means required for participation.

TH

303 1,357 1,003 4,152 783 4,431 1,205 8,916

657

60

3,500

6,717

Domestics

Draftsmen.

Dressmakers

Druggists.

Engravers

Estates

761 42,178

Farmers

1,126

Government Employees.

1,589 7,691

Grocers

879

Hotel Employees

668

Housewives

4,696 2,605 21,626 132,042

Insurance and Real Estate

Laborers

24,317

82,182

So far as can be seen, there is no limit in America to this development of widespread or popular ownership. Corporate business will grow in size. The number. of corporations will increase. The policy of inviting more general ownership will doubtless persist and grow. The only

limit I can suggest is that placed by the willingness or unwillingness of the laborers to work, to exercise will-power, to save, and to invest prudently. This limit is an elastic and growing one in America because wealth is rapidly expanding and the share of laborers in industry is great. It has been estimated that approximately 52 per cent. of the national income goes to wage earners and that about 60 per cent. goes to people with incomes of $2,000 and less. And our national income has been estimated to be $60,000,000,000 or more.

Herein lies the fundamental solution of the problem of the relation of labor and capital. It is the real solution of the problem of the partnership of labor in industry. Intelligent labor knows that, while there may be defects in capitalism, it can have no quarrel with capitalism as a system. It recognizes that capital is the result of work, of self-denial, and saving, and that its destruction, as demanded by some deluded persons here and abroad, would cause a reversion to primitive and futile industrial processes and results-that, in short, it would cause economic and social suicide. It is coming to perceive that the paramount need is to increase the world's output, to expand the amount to be distributed, to raise the standard of living of all laborers, by education to increase their skill and their capacity to avail themselves of opportunities, and to induce them to practice self-denial and to save. And And it is more and more realizing that the ideal and the sensible thing is for every laborer to become a capitalist, a small one if necessary, a big one if he has the requisite character, industry, and willpower. Nearly every man one meets of high position or great means has come. up with no other start than that furnished by good character, good ability, industry, and will power. The instances are the rule and not the exception. There is no other road to industrial capitalism and

success.

The political and economic foundations of America have been deeply and broadly laid. They have been in the making

since the settlements were made at Jamestown and Plymouth. The course that we must follow is clearly indicated by the past. The process is defined so clearly that even the newcomer and the least favored should be able to perceive it. It is the process of evolution and not of revolution. It is only the ignorant who cannot see this or the demagogues who will not see it.

A

THE "NEED" FOR "REMEDIES"

ND yet, there are here those superior beings, boastful of their modernness, who, looking abroad, seem to sense movements and policies there which they think might be imported and promoted here to advantage. They have little awareness of what America means and less understanding of conditions abroad. They do not realize that a person who holds radical views in certain countries. of Europe might consistently, if he were here and knew enough to perceive the real meaning of America, be a very conservative citizen. Few leaders in countries of eastern and southern Europe have advanced to the point where they could develop economic or political programs for the welfare of the average man, which would be in measurable distance of those which we long ago incorporated into our institutions and which are commonplaces with us. Some of the countries of the continent of Europe to which attention is so emphatically directed, with the best that can be done, will not in generations, in point of beneficent legal and economic institutions and of human liberty, establish the basic conditions which have obtained in this country since the beginning. And they will not in a century or more approach the position America has now reached in point of the opportunity which she offers and is increasingly offering to every individual, with the necessary character and capacity to take advantage of it, to work out his own salvation, and to enjoy the fruits of his labor, as are the millions of American men and women who, in increasing numbers, are coming to be the owners of the nation's industry.