Monday, February 15, 2016

Socialist Delusions, Capitalist Illusions, X: The Closing of the Frontier


At the Columbian Exposition in Chicago in 1893, Frederick Jackson Turner (1861-1932) delivered a paper titled, “The Significance of the Frontier in American History.”  Turner’s paper was one of the most important studies of the American character, civilization, and economy ever published.

Frederick Jackson Turner
Turner’s thesis was simple.  The uniqueness of the United States was due solely to the opportunity to acquire free land and become one’s own master.  Everything, for example, Alexis de Tocqueville observed about “Democracy in America” was rooted in this simple fact.
What motivated Turner’s analysis was a short, almost incidental comment about the 1890 Census by a government bureaucrat.  As Turner commented in the opening of his paper,
In a recent bulletin of the Superintendent of the Census for 1890 appear these significant words: “Up to and including 1880 the country had a frontier of settlement, but at present the unsettled area has been so broken into by isolated bodies of settlement that there can hardly be said to be a frontier line. In the discussion of its extent, its westward movement, etc., it can not, therefore, any longer have a place in the census reports.” This brief official statement marks the closing of a great historic movement. Up to our own day American history has been in a large degree the history of the colonization of the Great West. The existence of an area of free land, its continuous recession, and the advance of American settlement westward, explain American development.  (Frederick Jackson Turner, “The Significance of the Frontier in American History,” Annual Report of the American Historical Association for the Year 1893.  Washington: Government Printing Office, 1894, 199.)
Daniel Webster (1782-1852)
Why was the frontier important? Because (according to Turner), “So long as free land exists, the opportunity for a competency exists, and economic power secures political power.” (Ibid., 223.)  Or — as Daniel Webster put it three quarters of a century before Turner — “Power naturally and necessarily follows property.”
Unfortunately, as Turner concluded, “at the end of a hundred years of life under the Constitution, the frontier has gone, and with its going has closed the first period of American history.”  Deprived of the benefits of a frontier, Americans would lose their unique character, and the world would lose its “safety valve.”  Society would become increasingly crystalized and static, flaws would increase in magnitude, and the human race would be infinitely poorer for it.
But is that necessarily the case?  Under the past savings assumption — the slavery of savings — yes.  Even the free land of the frontier did not benefit everyone equally, nor was it truly without cost.  Nevertheless, with the disappearance of the land frontier, the opportunities for small ownership on easy terms began disappearing, the wealth and income gap began to widen, and capitalism and its natural fulfillment in socialism, combined to form the Servile State, began to displace any other economic or social arrangement.
Judge Peter Stenger Grosscup
Turner wrote in 1893.  Barely a decade later, the situation had become bad enough that Judge Peter S. Grosscup (1852-1921) published his ground-breaking article, “How to Save the Corporation.”  As a reviewer in the March 19, 1905 issue of the Seattle, Washington Spokesman-Review described Grosscup’s effort — leading to the suspicion that Grosscup was familiar with Turner’s paper:
HOW TO SAVE THE CORPORATION
Three Suggestions by Judge Peter S. Grosscup
“Not how to crush the corporation, but how to save it,” is the text of an article in the February McClure’s by Judge Peter S. Grosscup.  Our sovereign national menace, he says, is the increasing loss of individual proprietorship, the ownership of the industrial property of the nation by fewer people in the form of corporations.  Judge Grosscup asserts that the present tremendous bank hoards of wage earners are a menace: that they ought to be devoted to individual enterprise, as in the early days of the republic; and that to bring this about proprietorship in corporations must be made safe and accessible to working people.
That the institution of private property seems at present doomed by the corporation, Judge Grosscup shows by a striking comparison of the bank deposits in 1880 with those in 1904.  During that period the population of the United States increased about 50 per cent; its wealth increased about 60 per cent; while its bank deposits — representing the capital withheld by the bulk of our citizens from active private enterprise — increased from two and a guarter billion dollars to eleven billion dollars, or over 500 per cent.
This means that wage earners of moderate means increasingly prefer to let others invest their savings for them.  Judge Grosscup’s remarks on this phenomena are memorable:
Without a frontier, free proprietors become wage slaves.
“The transformation of the ownership of a country’s industrial property, from its people generally to a few of its people only, reaches the bedrock of social and moral forces on which alone the whole structure of republican institutions rests; for under such conditions, instead of depending each on himself and his own intelligence chiefly for success, the great bulk of our people increasingly will become dependents upon others.  Those who possess investible means will come to rely solely upon the great financial institutions, and those who possess nothing but capacity for labor, upon the great organizations of labor.  This is paternalism in almost its final form.”
Judge Grosscup’s three suggestions “How to Save the Corporation” are government control: “Putting aside the five and forty bewildering state hands for the one great national hand;” regeneration: “Cut out the stock jobbing corporation, the water logged corporation, the mere vision of visionaries, the labyrinthian corporation, whose stock and bond issues are purposely tangled;” and, third, opening of proprietorship to wage earners: to such workers, no less than to captains and lieutenants of industry, a share of profits should be given, he says.
Clearly America — the world — needs a frontier.  Where, however, is one to be found?
We have a few thoughts on that we’ll post tomorrow.

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