CHAPTER VI
The Captain of Industry

THE Captain of Industry is one of the major institutions of the nineteenth century. He has been an institution of civilised life—a self-sufficient element in the scheme of law and custom—in much the same sense as the Crown, or the Country Gentleman, or the Priesthood, have been institutions, or as they still are in those places where the habits of thought which they embody still have an institutional force.¹ For a hundred years or so he was, cumulatively, the dominant figure in civilised life, about whose deeds and interests law and custom have turned, the central and paramount personal agency in Occidental civilisation. Indeed, his great vogue and compelling eminence are not past yet, so far as regards his place in popular superstition and in the make-believe of political strategy, but it is essentially a glory standing over out of the past, essentially a superstition.² As regards the material actualities of life, the captain of industry is no longer the central and directive force in that business traffic that governs the material fortunes of mankind ; not much more so than the Crown, the Country Gentleman, or the Priesthood.

Considered as an institution, then, the captain of industry is the personal upshot of that mobilisation of business enterprise that arose out of the industrial use of the machine process. And the period of his ascendency is, accordingly, that era of (temperately) free competition that lies between the Industrial Revolution of the eighteenth century and the rise of corporation finance in the nineteenth, and so tapering off into the competitive twilight-zone of the later time when competition was shifting from industry to finance. But in the time of his ascendency the old-fashioned competitive system came up, flourished, and eventually fell into decay, all under the ministering hand of the Captain.

As is likely to be true of any institution that eventually counts for much in human life and culture, so also the captain of industry arose out of small beginnings which held no clear promise of a larger destiny. The prototype rather than the origin of the captain of industry is to be seen in the Merchant Adventurer of an earlier age, or as he would be called after he had grown to larger dimensions and become altogether sessile, the Merchant Prince. In the beginning the captain was an adventurer in industrial enterprise—hence the name given him; very much as the itinerant merchant of the days of the petty trade had once been an adventurer in commerce. He was a person of insight—perhaps chiefly industrial insight—and of initiative and energy, who was able to see something of the industrial reach and drive of that new mechanical technology that was finding its way into the industries, and who went about to contrive ways and means of turning these technological resources to new uses and a larger efficiency; always with a view to his own gain from turning out a more serviceable product

with greater expedition. He was a captain of workmanship at the same time that he was a business man ; but he was a good deal of a pioneer in both respects, inasmuch as he was on new ground in both respects. In many of the industrial ventures into which his initiative led him, both the mechanical working and the financial sanity of the new ways and means were yet to be tried out, so that in both respects he was working out an adventurous experiment rather than watchfully waiting for the turn of events. In the typical case, he was business manager of the venture as well as foreman of the works, and not infrequently he was the designer and master-builder of the equipment, of which he was also the responsible owner.³ Typical of the work and spirit of these Captains of the early time are the careers of the great tool-builders of the late eighteenth and early nineteenth century.⁴

Such, it is believed, were many of those to whom the mechanical industries owed their rapid growth and sweeping success in the early time, both in production and in earning-capacity ; and something of this sort is the typical Captain of Industry as he has lived, and still lives, in the affections of his countrymen. Such also is the type-form in terms of which those substantial citizens like to think of themselves, who aspire to the title. If this characterisation may appear large and fanciful to an unbelieving generation, at least the continued vogue of it both as a popular superstition and as a business man’s day-dream will go to show that the instinct of workmanship is not dead yet even in those civilised countries where it has become eternally right and good that workmanship should wait on business. The disposition to think kindly of workmanlike service is still extant in these civilised nations, at least in their day-dreams; although business principles have put it in abeyance so far as regards any practical effect.

In fact, it seems to be true that many, perhaps most, of those persons who amassed fortunes out of the proceeds of industry during this early period (say, 1760-1860), and who thereby acquired merit, were not of this workmanlike or pioneering type, but rather came in for large gains by shrewd investment and conservative undertakings, such as would now be called safe and sane business. Yet there will at the same time also have been so much of this spirit of initiative and adventure abroad in the conduct of industry, and it will have been so visible an element of industrial business-as-usual at that time, as to have enabled this type-form of the captain of industry to find lodgment in the popular belief; a man of workmanlike force and creative insight into the community’s needs, who stood out on a footing of self-help, took large chances for large ideals, and came in for his gains as a due reward for work well done in the service of the common good, in designing and working out a more effective organisation of industrial forces and in creating and testing out new and better processes of production. It is by no means easy at this distance to make out how much of popular myth-making went to set up this genial conception of the Captain in the popular mind, or how much more of the same engaging conceit was contributed toward the same preconception by the many-sided self-esteem of many substantial business men who had grown great by “buying in” and “sitting tight,” and who would like to believe that they had done something to merit their gains. But however the balance may lie, between workmanship and salesmanship, in the makeup of the common run of those early leaders of industrial enterprise, it seems that there will have been enough of the master-workman in a sufficient number of them, and enough of adventure and initiative in a sufficient number of the undertakings, to enable the popular fancy to set up and hold fast this genial belief in the typical captain of industry as a creative factor in the advance of the industrial arts ; at the same time that the economists were able presently to set him up, under the name of “Entrepreneur,” as a fourth factor of production, along with Land, Labor, and Capital. Indeed, it is on some such ground that men have come to be called “Captains of Industry” rather than captains of business. Experience and observation at any later period could scarcely have engendered such a conception of those absentee owners who control the country’s industrial plant and trade on a restricted output.

By insensible degrees, as the volume of industry grew larger, employing a larger equipment and larger numbers of workmen, the business concerns necessarily also increased in size and in the volume of transactions, personal supervision of the work by the owners was no longer practicable, and personal contact and personal arrangements between the employer-owner and his workmen tapered off into impersonal wage contracts governed by custom and adjusted to the minimum which the traffic would bear. The employer-owner, an ever increasingly impersonal business concern, shifted more and more to a footing of accountancy in its relations with the industrial plant and its personnel, and the oversight of the works passed by insensible degrees into the hands of technical experts who stood in a business relation to the concern, as its employees responsible to the concern for working the plant to such a fraction of its productive capacity as the condition of the market warranted for the time being.

So the function of the entrepreneur, the captain of industry, gradually fell apart in a two-fold division of labor, between the business manager and the office work on the one side and the technician and industrial work on the other side. Gradually more and more, by this shift and division, the captain of industry developed into a captain of business, and that part of his occupation which had given him title to his name and rank as captain of “industry” passed into alien hands. Expert practical men, practical in the way of tangible performance, men who had, or need have, no share in the prospective net gain and no responsibility for the concern’s financial transactions, unbusinesslike technicians, began to be drawn into the management of the industry on the tangible side. It was a division of labor and responsibility, between the employer-owners who still were presumed to carry on the business of the concern and who were responsible to themselves for its financial fortunes, and on the other hand the expert industrial men who took over the tangible performance of production and were responsible to their own sense of workmanship.

Industry and business gradually split apart, in so far as concerned the personnel and the day’s work. The employer-owners shifted farther over on their own ground as absentee owners, but continued to govern the volume of production and the conditions of life for the working personnel on the businesslike principle of the net gain in terms of price. While the tangible performance of so much work as the absentee owners considered to be wise, fell increasingly under the management of that line of technicians out of which there grew in time the engineering profession, with its many duties, grades, and divisions and its ever increasingly numerous and increasingly specialised personnel. It was a gradual shift and division, of course. So gradual, indeed, that while it had set in in a small way before the close of the eighteenth century, it had not yet been carried out completely and obviously by the close of the nineteenth, even in the greater mechanical industries. In fact, it has not yet been carried through to so rigorous a finish as to have warranted its recognition in the standard economic theories. In the manuals the captain of industry still figures as the enterprising investor-technician of the days of the beginning, and as such he still is a certified article of economic doctrine under the caption of the “Entrepreneur.”

The industrial arts are a matter of tangible performance directed to work that is designed to be of material use to man, and all the while they are calling for an increasingly exhaustive knowledge of material fact and an increasingly close application to the work in hand. The realities of the technician’s world are mechanistic realities, matters of material fact. And the responsibilities of the technician, as such, are responsibilities of workmanship only; in the last resort responsibility to his own sense of workmanlike performance, which might well be called the engineer’s conscience. On the other hand the arts of business are arts of bargaining, effrontery, salesmanship, make-believe, and are directed to the gain of the business man at the cost of the community, at large and in detail. Neither tangible performance nor the common good is a business proposition. Any material use which his traffic may serve is quite beside the business man’s purpose, except indirectly, in so far as it may serve to influence his clientele to his advantage.

But the arts of business, too, call all the while for closer application to the work in hand. Throughout recent times salesmanship has come in for a steadily increasing volume and intensity of attention, and great things have been achieved along that line. But the work in hand in business traffic is not tangible performance. The realities of the business world are money-values ; that is to say matters of make-believe which have the sanction of law and custom and are upheld by the police in case of need. The business man’s care is to create needs to be satisfied at a price paid to himself. The engineer’s care is to provide for these needs, so far as the business men in the background find their advantage in allowing it. But law and custom have little to say to the engineer, except to keep his hands off the work when the interests of business call for a temperate scarcity.

So, by force of circumstances the captain of industry came in the course of time and growth to be occupied wholly with the financial end of those industrial ventures of which he still continued to be the captain. The spirit of enterprise in him took a turn of sobriety. He became patient and attentive to details, with an eye single to his own greater net gain in terms of price. His conduct came to be framed more and more on lines of an alert patience, moderation, assurance, and conservatism; that is to say, his conduct would have to fall into these lines if he was to continue as a Captain under the changing circumstances of the time. Changing circumstances called for a new line of strategy in those who would survive as Captains and come into the commanding positions in the business community, and so into control of the industrial system. It should perhaps rather be said that the force of changing circumstances worked a change in the character of the Captains by eliminating the Captains of the earlier type from the more responsible position and favoring the substitution of persons endowed with other gifts and trained to other ideals and other standards of conduct; in short, men more nearly on the order of safe and sane business, such as have continued to be well at home in responsible affairs since then.

Under the changing circumstances the captains of industry of the earlier type fell to second rank, became lieutenants, who presently more and more lost standing, as being irresponsible, fanciful project-makers, footless adventurers, fit only to work out innovations that were of doubtful expediency in a business way, creators of technological disturbances that led to obsolescence of equipment and therefore to shrinkage of assets. Such men are persons whom it is not for the safe and sane Captains of the newer type to countenance ; but who should be handled with circumspection and made the most of, as project-makers whose restless initiative and immature versatility is counted on to bring about all sorts of unsettling and irritating changes in the conditions of industry; but who may also, now and again, bring in something that will give some patiently alert business man a new advantage over his rivals in business, if he has the luck or the shrewdness to grasp it firmly and betimes. Under the changed circumstances the spirit of venturesome enterprise is more than likely to foot up as a hunting of trouble, and wisdom in business enterprise has more and more settled down to the wisdom of “Watchful waiting.” ⁵

The changing circumstances by force of which the conduct of industrial business so gradually came under the hands of a saner generation of Captains, actuated more singly by a conservative estimate of the net gain for themselves,—these circumstances have already been recited in an earlier passage, in sketching the rise and derivation of the business corporation and the conditions which brought corporation finance into action as the ordinary means of controlling the output of industry and turning it to the advantage of absentee owners. So far as these determining circumstances admit of being enumerated in an itemised way they were such as follows: (a) the industrial arts, in the mechanical industries, grew gradually into a complex and extensive technology which called for a continually more exhaustive and more exact knowledge of material facts, such as to give rise to engineers, technicians, industrial experts; (b) the scale on which industrial processes were carried out grew greater in the leading industries, so as to require the men in charge to give their undivided attention to the technical conduct, the tangible performance of the work in hand; (c) the business concerns in which was vested the ownership and control of the industrial equipment and its working also grew larger, carried a larger volume of transactions, took on more of an impersonally financial character, and eventually passed over into the wholly impersonal form of the corporation or joint-stock company, with limited liability; (d) the continued advance of the industrial arts, in range, scope, and efficiency, increased the ordinary productive capacity of the leading industries to such a degree that there was continually less and less question of their being able to supply the market and continually more and more danger that the output would exceed what the market could carry off at prices that would yield a reasonable profit—that is to say the largest obtainable profit ; (e) loosely speaking, production had overtaken the market; (f) eventually corporation finance came into action and shifted the point of businesslike initiative and discretion from the works and their management, and even from the running volume of transactions carried by the business office of the concern, to the negotiation and maintenance of a running volume of credit; (g) the capitalisation of credit with fixed charges, as involved in the corporate organisation, precluded shrinkage, recession, or retrenchment of assets or earnings, and so ordinarily precluded a lowering of prices or an undue increase of output,—undue for purposes of the net gain. Business enterprise, therefore, ceased progressively to be compatible with free-swung industrial enterprise, and a new order of businesslike management went progressively into action, and shuffled a new type of persons into the positions of responsibility; men with an eye more single to the main chance at the cost of any whom it may concern.

Among these circumstances that so made for a new order in industrial business the one which is, presumably, the decisive one beyond the rest is the growing productive capacity of industry wherever and so far as the later advances in industrial process are allowed to go into effect. By about the middle of the nineteenth century it can be said without affectation that the leading industries were beginning to be inordinately productive, as rated in terms of what the traffic would bear ; that is to say as counted in terms of net gain. Free-swung production, approaching the full productive capacity of the equipment and available man-power, was no longer to be tolerated in ordinary times. It became ever more imperative to observe a duly graduated moderation, and to govern the volume of output, not by the productive capacity of the plant or the working capacity of the workmen, nor by the consumptive needs of the consumers, but by what the traffic would bear ; which was then habitually and increasingly coming to mean a modicum of unemployment both of the plant and the available man-power. It was coming to be true, increasingly, that the ordinary equipment of industry and the available complement of workmen were not wanted for daily use, but only for special occasions and during seasons of exceptionally brisk trade. Unemployment, in other words sabotage, to use a word of later date, was becoming an everyday care of the business management in the mechanical industries, and was already on the way to become, what it is today, the most engrossing care that habitually engages the vigilance of the business executive. And sabotage can best be taken care of in the large ; so that the corporations, and particularly the larger corporations, would be in a particularly fortunate position to administer the routine of salutary sabotage. And when the Captain of Industry then made the passage from industrial adventurer to corporation financier it became the ordinary care of his office as Captain to keep a restraining hand on employment and output, and so administer a salutary running margin of sabotage on production, at the cost of the underlying population.⁶

But the account is not complete with a description of what the Captain of Industry has done toward the standardisation of business methods and the stabilisation of industrial enterprise, and of what the new order of business-as-usual has done toward the standardisation of the Captain and eventually towards his neutralisation and abeyance. As has already been remarked, he was one of the major institutions of the nineteenth century, and as such he has left his mark on the culture of that time and after, in other bearings as well as in the standards of business enterprise. As has also been remarked above, the Captain of Industry and his work and interests presently became the focus of attention and deference. The Landed Interest, the political buccaneers, and the priesthood, yielded him the first place in affairs and in the councils of the nation, civil and political. With the forward movement from that state of things in which business was conceived to be the servant of industry to that more mature order of things under which industry became the servant of business, and then presently industrial business of the simpler sort became the servant of the big business which lives and moves on the higher level of finance at large,-— as this progression took effect and reshaped the Captain to its uses, the growth of popular sentiment kept pace with the march of facts, so that the popular ideal came to be the prehensile business man rather than the creative driver of industry ; the sedentary man of means, the Captain of Solvency. And all the while the illusions of nationalism allowed the underlying population to believe that the common good was bound up with the business advantage of these captains of solvency, into whose service the national establishment was gradually drawn, more and more unreservedly, until it has become an axiomatic rule that all the powers of government and diplomacy must work together for the benefit of the business interests of the larger sort. Not that the constituted authorities have no other cares, but these other cares are, after all, in all the civilised nations, in the nature of secondary considerations, matters to be taken care of when and so far as the paramount exigencies of business will allow.

In all this there is, of course, nothing radically new, in principle. In principle it all comes to much the same thing as the older plan which this era of business, big and little, has displaced. So long as nationalism has held sway, the care and affectionate pride of the underlying population has, in effect, ever centered on the due keep of the nation’s kept classes. It is only that by force of circumstances the captain of industry, or in more accurate words the captain of solvency, has in recent times come to be the effectual spokesman and type-form of the kept classes as well as the keeper and dispenser of their keep; very much as the War Lord of the barbarian raids, or the Baron of the Middle Ages, or the Prince of the era of state-making, or the Priesthood early and late in Christendom, have all and several, each in their time, place and degree, stood out as the spokesman and exemplar of the kept classes, and served as the legitimate channel by which the community’s surplus product has been drained off and consumed, to the greater spiritual comfort of all parties concerned.

It is only that the superstitions of absentee ownership and business principles have come into the first place among those “Superstitions of the Herd” which go to make up the spirit of national integrity. The moral excellence and public utility of the kept classes that now march under the banners of absentee ownership and business enterprise are no more to be doubted by the loyal citizens of the Christian nations today than the similar excellence and utility of the princely establishment and the priestly ministrations which have drained the resources of the underlying population in an earlier and ruder age. And the princes of solvency and free income no more doubt their own excellence and utility than the princes of the divine grace or the prelates of the divine visitations have done in their time. It is only a shifting of the primacy among the civilised institutions, with the effect that the princes and the priests of the Grace and the Mercy now habitually creep in under the now impervious cloak of the prince and priest of business; very much as the business adventurer of an earlier day crept in under the sheltering cloak of the prince and the priest of the Grace and the Mercy, on whom the superstitions that were dominant in that time then bestowed the usufruct of the underlying population. For in the nineteenth century the captain of business became, in the popular apprehension, a prince after the order of Melchizedech, holding the primacy in secular and spiritual concerns.

Men are moved by many impulses and driven by many instinctive dispositions. Among these abiding dispositions are a strong bent to admire and defer to persons of achievement and distinction, as well as a workmanlike disposition to find merit in any work that serves the common good. The distinction which is admired and deferred to may often be nothing more to the point than a conventional investiture of rank attained by the routine of descent, as, e. g., a king, or by the routine of seniority, as, e. g., a prelate.

There is commonly no personal quality which a bystander can distinguish in these personages. The case of the Mikado in the times of the Shogunate is perhaps extreme, but it can by no means be said to be untrue or unfair as an illustrative instance of how the predilection for deference will find merit even in a personage who, for all that is known of him, has no personal attributes, good, bad, or indifferent. The kings and prelates of Christendom are only less perfect instances of the same. It is in these cases a matter of distinction, of course, with no hint of achievement, except such achievement as a loyal deference is bound to impute.⁷ It is usual, indeed it seems inevitable, in all such instances of the conventional exaltation of nothing-in-particular, that there is also imputed to the person who so becomes a personage something in the way of service to the common good. Men like to believe that the personages whom they so admire by force of conventional routine are also of some use, as well as of great distinction,—that they even somehow contribute, or at least conduce, to the material well-being at large. Which is presumably to be set down as one of the wonders wrought by the instinct of workmanship, which will not let men be content without some colorable serviceability in the personages which they so create out of nothing-in-particular.

But where there is also achievement, great deeds according to that fashion of exploits that has the vogue for the time being, this will of itself create distinction and erect a personage. Such is the derivation of the captain of industry in the nineteenth century. Men had learned, at some cost, that their exalted personages created ad hoc by incantation were of something less than no use to the common good, that at the best and cheapest they were something in the nature of a blameless bill of expense. The civilised nations had turned democratic, so much of them as had a fairly colorable claim to be called civilised ; and so they had been left without their indispensable complement of personages to whom to defer and to whom to impute merit. In so far as the ground had been cleared of institutional holdovers from pre-democratic times, there remained but one workable ground of distinction on which a practicable line of personages at large could be erected, such as would meet the ever-insistent need of some intoxicating make-believe of the kind. Democratically speaking, distinction at large could be achieved only in the matter of ownership, but when ownership was carried well out along the way of absentee ownership it was found to do very nicely as a base on which to erect a colorable personage, sufficient to carry a decently full charge of imputed merit.⁸ It results that under the aegis of democracy one’s betters must be better in point of property qualifications, from which the civic virtues flow by ready force of imputation.

So the captain of industry came into the place of first consequence and took up the responsibilities of exemplar, philosopher and friend at large to civilised mankind ; and no man shall say that he has not done as well as might be expected. Neither has he fallen short in respect of a becoming gravity through it all. The larger the proportion of the community’s wealth and income which he has taken over, the larger the deference and imputation of merit imputed to him, and the larger and graver that affable condescension and stately benevolence that habitually adorn the character of the large captains of solvency. There is no branch or department of the humanities in which the substantial absentee owner is not competent to act as guide, philosopher and friend, whether in his own conceit or in the estimation of his underlying population,—in art and literature, in church and state, in science and education, in law and morals,—and the underlying population is well content. And nowhere does the pecuniary personage stand higher or more secure as the standard container of the civic virtues than in democratic America; as should be the case, of course, since America is the most democratic of them all. And nowhere else does the captain of big business rule the affairs of the nation, civil and political, and control the conditions of life so unreservedly as in democratic America ; as should also be the case, inasmuch as the acquisition of absentee ownership is, after all, in the popular apprehension, the most meritorious and the most necessary work to be done in this country.

1: An institution is of the nature of a usage which has become axiomatic and indispensable by habituation and general acceptance. Its physiological counterpart would presumably be any one of those habitual addictions that are now attracting the attention of the experts in sobriety.

2: He is also still a dominant figure in the folklore of Political Economy.

3: Cf. The Engineers and the Price System, ch. ii. “The In dustrial System and the Captains of Industry.”

4: Cf. Roe, British and American Tool-Builders.

5: Doubtless this form of words, “watchful waiting,” will have been employed in the first instance to describe the frame of mind of a toad who has reached years of discretion and has found his appointed place along some frequented run where many flies and spiders pass and repass on their way to complete that destiny to which it has pleased an all-seeing and merciful Providence to call them; but by an easy turn of speech it has also been found suitable to describe the safe and sane strategy of that mature order of captains of industry who are governed by sound business principles. There is a certain bland sufficiency spread across the face of such a toad so circumstanced, while his comely personal bulk gives assurance of a pyramidal stability of principles.

“And the sons of Mary smile and are blessed—they know the angels are on their side, They know in them is the Grace confessed, and for them are the Mercies multiplied. They sit at the Feet, and they hear the Word— they know how truly the Promise runs. They have cast their burden upon the Lord, and—the Lord, He lays it on Martha’s sons.

—RUDYARD KIPLING

6: As someone with a taste for slang and aphorism has said it, “In the beginning the Captain of Industry set out to do something, and in the end he sat down to do somebody.”

7: As a blameless instance of this human avidity for deference and exaltation of personages, a certain Square on Manhattan Island has lately been renamed in honor of a certain military personage who was once, in an emergency, appointed to high rank and responsibility because there was nothing better available under the routine of seniority, and of whose deeds and attainments the most laudatory encomium has found nothing substantially better to say than that it might have been worse. And it is by no means an isolated case.

8: Exception may be taken to all this, to the effect that the requisite personages can always be found in the shape of gentlemen at large—”country gentlemen” or “Southern Gentlemen,” of what not—and “Best Families” who sit secure on a prescriptive gentility of birth and breeding. But in this bearing and seen in impersonal perspective, Gentlemen and Best Families are best to be defined as “absentee ownership in the consumptive phase,” just as the captain of industry may likewise be spoken of impersonally as absentee ownership in the acquisitive phase; which brings the case back to the point of departure.