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 petitions 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 judgeship 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 XXX
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 assist 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 titles, 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 titles, and no recording fees being
necessary. The title 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 Constitutions, 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 constitution 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 constitutions 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 assume 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 XXXI
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 municipalities, 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
municipalities, 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 cumbersome, and yet not
small enough to prohibit the employment of able men to form the
assessment 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 assessed 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 homogeneous 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 XXXII
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 homogeneous nation.
Therefore, after the Revolution, Dru saw that the time had come for this
trend to assume 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-PARTNERSHIP
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
