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with its wages only so much of the product, and that capital did not consume all of the remainder of the product. We found that when labor had consumed to the full extent of its wages, and when capital had consumed all it wanted, there was still left an unconsumed surplus. We agreed that this surplus could only be disposed of abroad. We agreed, also, that the effect of unloading this surplus on another country would be to develop the resources of that country, and that in a short time that country would have an unconsumed surplus. We extended this process to all the countries on the planet, till every country was producing every year, and every day, an unconsumed surplus, which it could dispose of to no other country. And now I ask you again, what are we going to do with those surpluses?”

Still no one answered.

“Mr. Calvin?” Ernest queried.

“It beats me,” Mr. Calvin confessed.

“I never dreamed of such a thing,” Mr. Asmunsen said. “And yet it does seem clear as print.”

It was the first time I had ever heard Karl Marx’s61 doctrine of surplus value elaborated, and Ernest had done it so simply that I, too, sat puzzled and dumbfounded.

“I’ll tell you a way to get rid of the surplus,” Ernest said. “Throw it into the sea. Throw every year hundreds of millions of dollars’ worth of shoes and wheat and clothing and all the commodities of commerce into the sea. Won’t that fix it?”

“It will certainly fix it,” Mr. Calvin answered. “But it is absurd for you to talk that way.”

Ernest was upon him like a flash.

“Is it a bit more absurd than what you advocate, you machine-breaker, returning to the antediluvian ways of your forefathers? What do you propose in order to get rid of the surplus? You would escape the problem of the surplus by not producing any surplus. And how do you propose to avoid producing a surplus? By returning to a primitive method of production, so confused and disorderly and irrational, so wasteful and costly, that it will be impossible to produce a surplus.”

Mr. Calvin swallowed. The point had been driven home. He swallowed again and cleared his throat.

“You are right,” he said. “I stand convicted. It is absurd. But we’ve got to do something. It is a case of life and death for us of the middle class. We refuse to perish. We elect to be absurd and to return to the truly crude and wasteful methods of our forefathers. We will put back industry to its pre-trust stage. We will break the machines. And what are you going to do about it?”

“But you can’t break the machines,” Ernest replied. “You cannot make the tide of evolution flow backward. Opposed to you are two great forces, each of which is more powerful than you of the middle class. The large capitalists, the trusts, in short, will not let you turn back. They don’t want the machines destroyed. And greater than the trusts, and more powerful, is labor. It will not let you destroy the machines. The ownership of the world, along with the machines, lies between the trusts and labor. That is the battle alignment. Neither side wants the destruction of the machines. But each side wants to possess the machines. In this battle the middle class has no place. The middle class is a pygmy between two giants. Don’t you see, you poor perishing middle class, you are caught between the upper and nether millstones, and even now has the grinding begun.

“I have demonstrated to you mathematically the inevitable breakdown of the capitalist system. When every country stands with an unconsumed and unsalable surplus on its hands, the capitalist system will break down under the terrific structure of profits that it itself has reared. And in that day there won’t be any destruction of the machines. The struggle then will be for the ownership of the machines. If labor wins, your way will be easy. The United States, and the whole world for that matter, will enter upon a new and tremendous era. Instead of being crushed by the machines, life will be made fairer, and happier, and nobler by them. You of the destroyed middle class, along with labor⁠—there will be nothing but labor then; so you, and all the rest of labor, will participate in the equitable distribution of the products of the wonderful machines. And we, all of us, will make new and more wonderful machines. And there won’t be any unconsumed surplus, because there won’t be any profits.”

“But suppose the trusts win in this battle over the ownership of the machines and the world?” Mr. Kowalt asked.

“Then,” Ernest answered, “you, and labor, and all of us, will be crushed under the iron heel of a despotism as relentless and terrible as any despotism that has blackened the pages of the history of man. That will be a good name for that despotism, the Iron Heel.”62

There was a long pause, and every man at the table meditated in ways unwonted and profound.

“But this socialism of yours is a dream,” Mr. Calvin said; and repeated, “a dream.”

“I’ll show you something that isn’t a dream, then,” Ernest answered. “And that something I shall call the Oligarchy. You call it the Plutocracy. We both mean the same thing, the large capitalists or the trusts. Let us see where the power lies today. And in order to do so, let us apportion society into its class divisions.

“There are three big classes in society. First comes the Plutocracy, which is composed of wealthy bankers, railway magnates, corporation directors, and trust magnates. Second, is the middle class, your class, gentlemen, which is composed of farmers, merchants, small manufacturers, and professional men. And third and last comes my class, the proletariat, which is composed of the wage-workers.63

“You cannot but grant that the ownership of wealth constitutes essential power in the United States today. How is this wealth owned by these three classes? Here

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