Philip Dru: Administrator Part 13

Under Dru's instruction the commission was to limit the power of the courts to the extent that they could no longer pa.s.s upon the const.i.tutionality of laws, their function being merely to decide, as between litigants, what the law was, as was the practice of all other civilized nations.

Judges, both Federal and State, were to be appointed for life, subject to compulsory retirement at seventy, and to forced retirement at any time by a two-thirds vote of the House and a majority vote of the Senate. Their appointment was to be suggested by the President or Governor, as the case might be, and a majority vote of the House and a two-third vote of the Senate were necessary for confirmation.

High salaries were to be paid, but the number of judges was to be largely decreased, perhaps by two-thirds. This would be possible, because the simplification of procedure and the curtailment of their powers would enormously lessen the amount of work to be done. Dru called the Board's attention to the fact that England had about two hundred judges of all kinds, while there were some thirty-six hundred in the United States, and that the reversals by the English Courts were only about three per cent. of the reversals by the American Courts.

The United States had, therefore, the most complicated, expensive and inadequate legal machinery of any civilized nation. Lawyers were no longer to be permitted to bring suits of doubtful character, and without facts and merit to sustain them. Hereafter it would be necessary for the attorney, and the client himself, to swear to the truth of the allegations submitted in their pet.i.tions of suits and briefs.

If they could not show that they had good reason to believe that their cause was just, they would be subject to fines and imprisonment, besides being subject to damages by the defendant. Dru desired the Board on Legal Procedure and Judiciary to work out a fair and comprehensive system, based along the fundamental lines he had laid down, so that the people might be no longer ridden by either the law or the lawyer. It was his intention that no man was to be suggested for a judges.h.i.+p or confirmed who was known to drink to excess, either regularly or periodically, or one who was known not to pay his personal debts, or had acted in a reprehensible manner either in private or in his public capacity as a lawyer.

Any of these habits or actions occurring after appointment was to subject him to impeachment. Moreover, any judge who used his position to favor any individual or corporation, or who deviated from the path of even and exact justice for all, or who heckled a litigant, witness or attorney, or who treated them in an unnecessarily harsh or insulting manner, was to be, upon complaint duly attested to by reliable witnesses, tried for impeachment.

The Administrator was positive in his determination to have the judiciary a most efficient bureau of the people, and to have it sufficiently well paid to obtain the best talent. He wanted it held in the highest esteem, and to have an appointment thereon considered one of the greatest honors of the Republic. To do this he knew it was necessary for its members to be able, honest, temperate and considerate.

CHAPTER x.x.x

A NEW CODE OF LAWS

Dru selected another board of five lawyers, and to them he gave the task of reforming legal procedure and of pruning down the existing laws, both State and National, cutting out the obsolete and useless ones and rewriting those recommended to be retained, in plain and direct language free from useless legal verbiage and understandable to the ordinary lay citizen.

He then created another board, of even greater ability, to read, digest and criticise the work of the other two boards and report their findings directly to him, giving a brief summary of their reasons and recommendations. To a.s.sist in this work he engaged in an advisory capacity three eminent lawyers from England, Germany and France respectively.

The three boards were urged to proceed with as much despatch as possible, for Dru knew that it would take at least several years to do it properly, and afterwards he would want to place the new code of laws in working order under the reformed judiciary before he would be content to retire. The other changes he had in mind he thought could be accomplished much more quickly.

Among other things, Dru directed that the States should have a simplification of land t.i.tles, so that transfers of real estate could be made as easy as the transfer of stocks, and with as little expense, no attorneys' fees for examination of t.i.tles, and no recording fees being necessary. The t.i.tle could not be contested after being once registered in a name, therefore no litigation over real property could be possible.

It was estimated by Dru's statisticians that in some States this would save the people annually a sum equal to the cost of running their governments.

A uniform divorce law was also to be drawn and put into operation, so that the scandals arising from the old conditions might no longer be possible.

It was arranged that when laws affecting the States had been written, before they went into effect they were to be submitted to a body of lawyers made up of one representative from each State. This body could make suggestions for such additions or eliminations as might seem to them pertinent, and conforming with conditions existing in their respective commonwealths, but the board was to use its judgment in the matter of incorporating the suggestions in the final draft of the law.

It was not the Administrator's purpose to rewrite at that time the Federal and State Const.i.tutions, but to do so at a later date when the laws had been rewritten and decided upon; he wished to first satisfy himself as to them and their adaptability to the existing conditions, and then make a const.i.tution conforming with them. This would seem to be going at things backward, but it recommended itself to Dru as the sane and practical way to have the const.i.tutions and laws in complete harmony.

The formation of the three boards created much disturbance among judges, lawyers and corporations, but when the murmur began to a.s.sume the proportions of a loud-voiced protest, General Dru took the matter in hand. He let it be known that it would be well for them to cease to foment trouble. He pointed out that heretofore the laws had been made for the judges, for the lawyers and for those whose financial or political influence enabled them to obtain special privileges, but that hereafter the whole legal machinery was to be run absolutely in the interest of the people. The decisive and courageous manner in which he handled this situation, brought him the warm and generous approval of the people and they felt that at last their day had come.

CHAPTER x.x.xI

THE QUESTION OF TAXATION

The question of taxation was one of the most complex problems with which the Administrator had to deal. As with the legal machinery he formed a board of five to advise with him, and to carry out his very well-defined ideas. Upon this board was a political economist, a banker, who was thought to be the ablest man of his profession, a farmer who was a very successful and practical man, a manufacturer and a Congressman, who for many years had been the consequential member of the Ways and Means Committee. All these men were known for their breadth of view and their interest in public affairs.

Again, Dru went to England, France and Germany for the best men he could get as advisers to the board. He offered such a price for their services that, eminent as they were, they did not feel that they could refuse. He knew the best were the cheapest.

At the first sitting of the Committee, Dru told them to consider every existing tax law obliterated, to begin anew and to construct a revenue system along the lines he indicated for munic.i.p.alities, counties, states and the Nation. He did not contemplate, he said, that the new law should embrace all the taxes which the three first-named civil divisions could levy, but that it should apply only where taxes related to the general government. Nevertheless, Dru was hopeful that such a system would be devised as would render it unnecessary for either munic.i.p.alities, counties or states to require any further revenue. Dru directed the board to divide each state into districts for the purpose of taxation, not making them large enough to be c.u.mbersome, and yet not small enough to prohibit the employment of able men to form the a.s.sessment and collecting boards. He suggested that these boards be composed of four local men and one representative of the Nation.

He further directed that the tax on realty both in the country and the city should be upon the following basis:--Improvements on city property were to be taxed at one-fifth of their value, and the naked property either in town or country at two-thirds of its value. The fact that country property used for agricultural purposes was improved, should not be reckoned. In other words, if A had one hundred acres with eighty acres of it in cultivation and otherwise improved, and B had one hundred acres beside him of just as good land, but not in cultivation or improved, B's land should be taxed as much as A's.

In cities and towns taxation was to be upon a similar basis. For instance, when there was a lot, say, one hundred feet by one hundred feet with improvements upon it worth three hundred thousand dollars, and there was another lot of the same size and value, the improved lot should be taxed only sixty thousand more than the unimproved lot; that is, both lots should be taxed alike, and the improvement on the one should be a.s.sessed at sixty thousand dollars or one-fifth of its actual value.

This, Dru pointed out, would deter owners from holding unimproved realty, for the purpose of getting the unearned increment made possible by the thrift of their neighbors. In the country it would open up land for cultivation now lying idle, provide homes for more people, cheapen the cost of living to all, and make possible better schools, better roads and a better opportunity for the successful cooperative marketing of products.

In the cities and towns, it would mean a more h.o.m.ogeneous population, with better streets, better sidewalks, better sewerage, more convenient churches and cheaper rents and homes. As it was at that time, a poor man could not buy a home nor rent one near his work, but must needs go to the outskirts of his town, necessitating loss of time and cost of transportation, besides sacrificing the obvious comforts and conveniences of a more compact population.

The Administrator further directed the tax board to work out a graduated income tax exempting no income whatsoever. Incomes up to one thousand dollars a year, Dru thought, should bear a merely nominal tax of one- half of one per cent.; those of from one to two thousand, one per cent.; those of from two to five thousand, two per cent.; those of from five to ten thousand, three per cent.; those of from ten to twenty thousand, six per cent. The tax on incomes of more than twenty thousand dollars a year, Dru directed, was to be rapidly increased, until a maximum of seventy per cent. was to be reached on those incomes that were ten million dollars, or above.

False returns, false swearing, or any subterfuge to defraud the Government, was to be punished by not less than six months or more than two years in prison. The board was further instructed to incorporate in their tax measure, an inheritance tax clause, graduated at the same rate as in the income tax, and to safeguard the defrauding of the Government by gifts before death and other devices.

CHAPTER x.x.xII

A FEDERAL INCORPORATION ACT

Along with the first board on tax laws, Administrator Dru appointed yet another commission to deal with another phase of this subject. The second board was composed of economists and others well versed in matters relating to the tariff and Internal Revenue, who, broadly speaking, were instructed to work out a tariff law which would contemplate the abolishment of the theory of protection as a governmental policy. A tariff was to be imposed mainly as a supplement to the other taxes, the revenue from which, it was thought, would be almost sufficient for the needs of the Government, considering the economies that were being made.

Dru's father had been an ardent advocate of State rights, and the Administrator had been reared in that atmosphere; but when he began to think out such questions for himself, he realized that density of population and rapid inter-communication afforded by electric and steam railroads, motors, aeroplanes, telegraphs and telephones were, to all practical purposes, obliterating State lines and molding the country into a h.o.m.ogeneous nation.

Therefore, after the Revolution, Dru saw that the time had come for this trend to a.s.sume more definite form, and for the National Government to take upon itself some of the functions heretofore exclusively within the jurisdiction of the States. Up to the time of the Revolution a state of chaos had existed. For instance, laws relating to divorces, franchises, interstate commerce, sanitation and many other things were different in each State, and nearly all were inefficient and not conducive to the general welfare. Administrator Dru therefore concluded that the time had come when a measure of control of such things should be vested in the Central Government. He therefore proposed enacting into the general laws a Federal Incorporation Act, and into his scheme of taxation a franchise tax that would not be more burdensome than that now imposed by the States. He also proposed making corporations share with the Government and States a certain part of their net earnings, public service corporations to a greater extent than others. Dru's plan contemplated that either the Government or the State in which the home or headquarters of any corporation was located was to have representation upon the boards of such corporation, in order that the interests of the National, State, or City Government could be protected, and so as to insure publicity in the event it was needful to correct abuses.

He had incorporated in the Franchise Law the right of Labor to have one representative upon the boards of corporations and to share a certain percentage of the earnings above their wages, after a reasonable per cent, upon the capital had been earned. [Footnote: See WHAT CO-PARTNERs.h.i.+P CAN DO below.] In turn, it was to be obligatory upon them not to strike, but to submit all grievances to arbitration. The law was to stipulate that if the business prospered, wages should be high; if times were dull, they should be reduced.

The people were asked to curb their prejudice against corporations. It was promised that in the future corporations should be honestly run, and in the interest of the stockholders and the public. Dru expressed the hope that their formation would be welcomed rather than discouraged, for he was sure that under the new law it would be more to the public advantage to have business conducted by corporations than by individuals in a private capacity. In the taxation of real estate, the unfair practice of taxing it at full value when mortgaged and then taxing the holder of the mortgage, was to be abolished. The same was to be true of bonded indebtedness on any kind of property. The easy way to do this was to tax property and not tax the evidence of debt, but Dru preferred the other method, that of taxing the property, less the debt, and then taxing the debt wherever found.

His reason for this was that, if bonds or other forms of debt paid no taxes, it would have a tendency to make investors put money into that kind of security, even though the interest was correspondingly low, in order to avoid the trouble of rendering and paying taxes on them. This, he thought, might keep capital out of other needful enterprises, and give a glut of money in one direction and a paucity in another. Money itself was not to be taxed as was then done in so many States.

CHAPTER x.x.xIII

THE RAILROAD PROBLEM

While the boards and commissions appointed by Administrator Dru were working out new tax, tariff and revenue laws, establis.h.i.+ng the judiciary and legal machinery on a new basis and revising the general law, it was necessary that the financial system of the country also should be reformed. Dru and his advisers saw the difficulties of attacking this most intricate question, but with the advice and a.s.sistance of a commission appointed for that purpose, they began the formulation of a new banking law, affording a flexible currency, bottomed largely upon commercial a.s.sets, the real wealth of the nation, instead of upon debt, as formerly.

This measure was based upon the English, French and German plans, its authors taking the best from each and making the whole conform to American needs and conditions. Dru regarded this as one of his most pressing reforms, for he hoped that it would not only prevent panics, as formerly, but that its final construction would completely destroy the credit trust, the greatest, the most far reaching and, under evil direction, the most pernicious trust of all.

While in this connection, as well as all others, he was insistent that business should be honestly conducted, yet it was his purpose to throw all possible safeguards around it. In the past it had been not only hara.s.sed by a monetary system that was a mere patchwork affair and entirely inadequate to the needs of the times, but it had been constantly threatened by tariff, railroad and other legislation calculated to cause continued disturbance. The ever-present demagogue had added to the confusion, and, altogether, legitimate business had suffered more during the long season of unrest than had the law-defying monopolies.

Dru wanted to see the nation prosper, as he knew it could never have done under the old order, where the few reaped a disproportionate reward and to this end he spared no pains in perfecting the new financial system. In the past the railroads and a few industrial monopolies had come in for the greatest amount of abuse and prejudice. This feeling while largely just, in his opinion, had done much harm. The railroads were the offenders in the first instance, he knew, and then the people retaliated, and in the end both the capitalists who actually furnished the money to build the roads and the people suffered.

"In the first place," said Administrator Dru to his counsel during the discussion of the new financial system, "the roads were built dishonestly. Money was made out of their construction by the promoters in the most open and shameless way, and afterwards bonds and stocks were issued far in excess of the fraudulent so-called cost. Nor did the iniquity end there. Enterprises were started, some of a public nature such as grain elevators and cotton compresses, in which the officials of the railroads were financially interested. These favored concerns received rebates and better s.h.i.+pping facilities than their compet.i.tors and compet.i.tion was stifled.

"Iron mines and mills, lumber mills and yards, coal mines and yards, etc., etc., went into their rapacious maw, and the managers considered the railroads a private snap and 'the public be d.a.m.ned.'