Editor's note: This contribution by the late journalist I.F. Stone first appeared in our January 1975 magazine.
(This is a series of excerpts from The Progressive magazine in the 1930s that are especially relevant today. You can find other delectable items in the current issue of The Progressive, which commemorates the magazine’s 100th anniversary.)
Lawless Big Business Must Be Controlled to Save Democracy
By Harold Ickes, Secretary of the Interior
January 8, 1938
America is in travail. A new America is developing in the womb of time.
What kind of new America will it be?
Will it be an America which has learned how to fit an economic system of private enterprise to the traditions of our democracy?
Will it be an America which will attain economic freedom for the average man so that the political freedom of the Bill of Rights will become a reality and reach out in spirit to meet new conditions in the modern world?
Or will it be another kind of America—an America in which a system of free enterprise has failed so badly as a method of distributing goods that a disgusted people will welcome as a substitute one of the new-fashioned “disciplined” economies in which political liberty is regarded as a disruption of discipline and an intolerable luxury—an American in which the unsatisfied mass will yield democracy to a dictatorship either of the Right or the Left “in exchange for the illusion of a living”?
Here in America it is the old struggle between the power of money and the power of the democratic instinct.
In the last few months this irreconcilable conflict, long growing in our history, has come into the open as never before, has taken on a form and an intensity which makes it clear that it must be fought through to a finish—until plutocracy or democracy—until America’s sixty families or America’s 120 million people win.
Economic power in this country does not rest in the mass of the people as it must if a democracy is to endure. Wealth is not equitably distributed nor do its owners in the main even manage and control it. On the contrary, wealth has become so great and so concentrated that as a matter of fact, it controls those who possess it.
About one-half of the wealth of this country is in corporate form, and over one-half of it is under the domination of 200 corporations, which in turn are controlled by what Ferdinand Lundberg in his recent book referred to as “America’s 60 Families.”
Eight years ago America’s 60 families had held in their hands, since the close of the World War, complete dominion over the economic and political life of the country. They had lulled the American people into the conviction that if the people would grant conditions in which these 60 families would have confidence that they would do as they pleased, the 60 families would put capital to work; enterprise would boom, wages would rise, stocks would soar and there would be two cars in every garage.
The people gave the 60 families this confidence; gave the 60 families this trust in their benevolent despotism—in short, gave the sixty families then what they ask for today, and what happened? Out of their divinely claimed genius as managers of private enterprise the 60 families promptly led the American people into the worst peacetime catastrophe ever known.
Then the disillusioned people changed the government.
The new government bailed the 60 families out of the consequences of their own mesmeric miscalculations and their unintelligent leadership of the system of private enterprise of which they had pretended to be master managers. It preserved the corporate structures in which their capital was invested from going through the wringer of bankruptcy and reorganization and stock assessment.
As an inevitable by-product of preserving the capital structure from going through the wringer to squeeze out water, it preserved the management structure from going through the wringer to squeeze out incompetence and big salaries. Then government sought to modify the way in which the business of the nation was done so that business confidence would be based upon the well-being and purchasing power of 120 million people at the bottom standing on their own feet rather than upon the license of the sixty families at the top and upon their premises, in return for that license, to permit the gravy of their benevolence to trickle down upon the exploited millions at the bottom.
Government did get the economic system back on its feet; did succeed in doing a job where the 60 families had failed.
Government had the system back on its feet so well at the time of the elections of 1936 that, as the president said in his Chicago speech, the patients—over their panic and raising their salaries—felt strong enough to throw their crutches at the doctor.
And last spring government had the business of the country turning over so well that it thought it could safely heed the pleas of private enterprise to government and abandon the economic initiative.
Pursuant to these pleas government cut down public expenditures to keep up purchasing power in order to meet the insistence of private enterprise that business confidence would be greater if government would take steps to balance the budget—assuaged the fears of the head of the biggest bank in the United States about runaway inflation—and turned over to the managers of private enterprise the responsibility they had said that they were eager and willing to assume.
And what happened?
Two things. First, the 60 families that were masterminding private enterprise proved to have learned nothing nor forgotten nothing since 1929 about the management of business under modern conditions. They made the same mistakes they had made before 1929. They ran the stock market up and helped it get started down. They did little or nothing to increase the purchasing power of labor to make up for the government withdrawals and then ran prices to the sky so that the consumer refused to spend what they graciously let him earn.
Second, the 60 families, unwilling to learn to do business upon the democratic terms of 1937, began to make demands and threats.
To Franklin D. Roosevelt and the overwhelming millions who have three times approved his policy they have made a threat like that which Nicholas Biddle of the Bank of the United States 100 years ago made to Andrew Jackson—a threat that they will refuse to do business at all unless the President and the Congress and the people will repeal all that we have gained in the last five years and regrant them the suicidal license they had enjoyed in 1929.
To the 120 million people of the United States they have made the threat that the professional operators of the American economic system and the professional managers of the capital funds of the United States—capital to which every American man and woman over four generations has contributed sweat and blood—will refuse to operate that economic system, will refuse to let that capital be employed unless they are once more given full power to wreck American democracy in their own sweet way.
To the 120 million people of the United States they have made the threat that, unless they are free to speculate free of regulations to protect the people’s money; unless they are free to accumulate through legal tricks by means of corporations without paying their share of taxes; unless they are free to dominate the rest of us without restrictions on their financial or economic power; unless they are once more free to do all these things, then the United States is to have its first general sit-down strike—not of labor—not of the American people—but of the 60 families and of the capital created by the whole American people of which the 60 families have obtained control.
If the American people call this bluff, then the America that is to be free will be a democratic America, a free America.
If the American people yield to this bluff, then the America that is to be will be a big-business Fascist America—an enslaved America.
The future of America depends upon whether big business can—now, within the coming session of Congress—be compelled to conform to our laws, be compelled to accept the will of the majority, be compelled to cooperate with the rest of the us in trying to make democracy work.
Daniel Webster, a conservative of his day, in a memorable speech delivered at the bicentennial celebration of the landing of the Pilgrims, ascribed the unique growth and survival of democratic institutions in this country to the fact that wealth was equitably distributed, that everyone had a real and not an illusory chance to acquire an economic stake in the welfare of the country and that, in consequence, a democracy involved no irreconcilable conflicts because both economic power and political power existed in the great mass of the people.
This country was envisaged by Thomas Jefferson and the political philosophers of his time as one of economically free and contented property owners. And property meant real property—a man’s home or farm or plantation. It was unbelievable that in America there would ever develop a small group of very rich men who would seek to dominate millions of their fellows. It was inconceivable that legal entities called corporations would grow into Frankensteins that threatened to destroy liberty itself.
Since the earliest days of the Republic, the average American has feared, and has been taught to fear, the concentration of private economic power. He has always been suspicious of dominating influence of large corporate enterprises, and not without reason. It has been a hard fight to preserve a free democracy and system of free individual enterprise against the inroads of concentrated economic power.
There are some who say the fight cannot be won. They despair that the government cannot break or control the concentrations of private economic power. But I am sure the fight can be won. I am unwilling to believe that private economic power will succeed in again securing mastery of the government of these United States.
Big business must be controlled if our democracy is to survive. Our government knows no privileged and class and intends to acknowledge none. Concentrated wealth and power in the hands of a few is just as dangerous today as it has been tin times past when the people fought power and wealth in order to preserve their own human rights.
In other nations and at other times, the people have been forced to carry upon their straining backs a feudal aristocracy that strutted the boards as knights and barons and earls. We find that here in America we have permitted the development of an even more oppressive system of money aristocrats, or corporate earls, of ducal economic overlords. The moneyed aristocracy of American constitutes an even greater menace to our institutions than would a titled class with vintaged handles to their names. It is intolerable that the degree of our democracy should have to depend upon the degree of self-restraint exercised by a handful of men whose corporate tentacles reach their strangling length into every nook and cranny of the land. . . .
If the new America starts out as big business Fascism, it will end as do all Fascist regimes—with Herr Goering’s four-year plans and Singor Mussolini’s capital levies. The insurrecto lords of American big business will sooner or later learn that they are safer with the democratic aspirations of Lincoln’s common people than with the methods of the warlords across the waters. They have only to look abroad to discover while in its theory Fascism is “controlled capitalism,” before long there is always someone ready and able to seize control of “controlled capitalism.”
But the American people, if they are wise, and if they see their problem in time, will never permit the lords of big business the opportunity to make a mistaken choice.
The new America must be a land of free business, not of ruthless business—a land of free men, not of economic slaves.