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 XXXIII
THE RAILROAD PROBLEM
While the boards and commissions appointed by Administrator Dru were
working out new tax, tariff and revenue laws, establishing 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 assistance of a
commission appointed for that purpose, they began the formulation of a
new banking law, affording a flexible currency, bottomed largely upon
commercial assets, 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
harassed 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 shipping facilities than their competitors
and competition 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 damned.'
"These things," continued Dru, "did not constitute their sole offense,
for, as you all know, they lobbied through legislatures the most
unconscionable bills, giving them land, money and rights to further
exploit the public.
"But the thing that, perhaps, aroused resentment most was their failure
to pay just claims. The idea in the old days, as you remember, was to
pay nothing, and make it so expensive to litigate that one would prefer
to suffer an injustice rather than go to court. From this policy was
born the claim lawyer, who financed and fought through the courts
personal injury claims, until it finally came to pass that in loss or
damage suits the average jury would decide against the railroad on
general principles. In such cases the litigant generally got all he
claimed and the railroad was mulcted. There is no estimating how much
this unfortunate policy cost the railroads of America up to the time of
the Revolution. The trouble was that the ultimate loss fell, not on
those who inaugurated it but upon the innocent stock and bondholder of
the roads.
"While the problem is complicated," he continued, "its solution lies in
the new financial system, together with the new system of control of
public utilities."
To this end, Dru laid down his plans by which public service
corporations should be honestly, openly and efficiently run, so that the
people should have good service at a minimum cost.
Primarily the general Government, the state or the city, as the case
might be, were to have representation on the directorate, as previously
indicated. They were to have full access to the books, and semi-annually
each corporation was to be compelled to make public a full and a clear
report, giving the receipts and expenditures, including salaries paid to
high officials. These corporations were also to be under the control of
national and state commissions.
While the Nation and State were to share in the earnings, Dru demanded
that the investor in such corporate securities should have reasonable
profits, and the fullest protection, in the event states or
municipalities attempted to deal unfairly with them, as had heretofore
been the case in many instances.
The Administrator insisted upon the prohibition of franchise to "holding
companies" of whatsoever character. In the past, he declared, they had
been prolific trust breeders, and those existing at that time, he
asserted, should be dissolved.
Under the new law, as Dru outlined it, one company might control
another, but it would have to be with the consent of both the state and
federal officials having jurisdiction in the premises, and it would have
to be clear that the public would be benefited thereby. There was to be
in the future no hiding under cover, for everything was to be done in
the open, and in a way entirely understandable to the ordinary layman.
Certain of the public service corporations, Dru insisted, should be
taken over bodily by the National Government and accordingly the
Postmaster General was instructed to negotiate with the telegraph and
telephone companies for their properties at a fair valuation. They were
to be under the absolute control of the Postoffice Department, and the
people were to have the transmission of all messages at cost, just as
they had their written ones. A parcel post was also inaugurated, so that
as much as twelve pounds could be sent at cost.
CHAPTER XXXIV
SELWYN'S STORY
The further Administrator Dru carried his progress of reform, the more
helpful he found Selwyn. Dru's generous treatment of him had brought in
return a grateful loyalty.
One stormy night, after Selwyn had dined with Dru, he sat contentedly
smoking by a great log fire in the library of the small cottage which
Dru occupied in the barracks.
"This reminds me," he said, "of my early boyhood, and of the fireplace
in the old tavern where I was born."
General Dru had long wanted to know of Selwyn, and, though they had
arranged to discuss some important business, Dru urged the former
Senator to tell him something of his early life.
Selwyn consented, but asked that the lights be turned off so that there
would be only the glow from the fire, in order that it might seem more
like the old days at home when his father's political cronies gathered
about the hearth for their confidential talks.
And this was Selwyn's story:--
My father was a man of small education and kept a tavern on the outer
edge of Philadelphia. I was his only child, my mother dying in my
infancy. There was a bar connected with the house, and it was a
rendezvous for the politicians of our ward. I became interested in
politics so early that I cannot remember the time when I was not. My
father was a temperate man, strong-willed and able, and I have often
wondered since that he was content to end his days without trying to get
beyond the environments of a small tavern.
He was sensitive, and perhaps his lack of education caused him to
hesitate to enter a larger and more conspicuous field.
However, he was resolved that I should not be hampered as he was, and I
was, therefore, given a good common school education first, and
afterwards sent to Girard College, where I graduated, the youngest of my
class.
Much to my father's delight, I expressed a desire to study law, for it
seemed to us both that this profession held the best opportunity open to
me. My real purpose in becoming a lawyer was to aid me in politics, for
it was clear to both my father and me that I had an unusual aptitude
therefor.
My study of law was rather cursory than real, and did not lead to a
profound knowledge of the subject, but it was sufficient for me to
obtain admittance to the bar, and it was not long, young as I was,
before my father's influence brought me a practice that was lucrative
and which required but little legal lore.
At that time the ward boss was a man by the name of Marx. While his
father was a German, he was almost wholly Irish, for his father died
when he was young, and he was reared by a masculine, masterful, though
ignorant Irish mother.
He was my father's best friend, and there were no secrets between them.
They seldom paid attention to me, and I was rarely dismissed even when
they had their most confidential talks. In this way, I early learned how
our great American cities are looted, not so much by those actually in
power, for they are of less consequence than the more powerful men
behind them.
If any contract of importance was to be let, be cronies gathered about
the hearth for their confidential talks.
And this was Selwyn's story:--
My father was a man of small education and kept a tavern on the outer
edge of Philadelphia. I was his only child, my mother dying in my
infancy.
There was a bar connected with the house, and it was a rendezvous for
the politicians of our ward. I became interested in politics so early
that I cannot remember the time when I was not. My father was a
temperate man, strong-willed and able, and I have often wondered since
that he was content to end his days without trying to get beyond the
environments of a small tavern.
He was sensitive, and perhaps his lack of education caused him to
hesitate to enter a larger and more conspicuous field.
However, he was resolved that I should not be hampered as he was, and I
was, therefore, given a good common school education first, and
afterwards sent to Girard College, where I graduated, the youngest of my
class.
Much to my father's delight, I expressed a desire to study law, for it
seemed to us both that this profession held the best opportunity open to
me. My real purpose in becoming a lawyer was to aid me in politics, for
it was clear to both my father and me that I had an unusual aptitude
therefor. My study of law was rather cursory than real, and did not lead
to a profound knowledge of the subject, but it was sufficient for me to
obtain admittance to the bar, and it was not long, young as I was,
before my father's influence brought me a practice that was lucrative
and which required but little legal lore.
At that time the ward boss was a man by the name of Marx. While his
father was a German, he was almost wholly Irish, for his father died
when he was young, and he was reared by a masculine, masterful, though
ignorant Irish mother.
He was my father's best friend, and there were no secrets between them.
They seldom paid attention to me, and I was rarely dismissed even when
they had their most confidential talks. In this way, I early learned how
our great American cities are looted, not so much by those actually in
power, for they are of less consequence than the more powerful men
behind them.
If any contract of importance was to be let, be it either public or
private, Marx and his satellites took their toll. He, in his turn, had
to account to the man above, the city boss.
If a large private undertaking was contemplated, the ward boss had to be
seen and consulted as to the best contractors, and it was understood
that at least five per cent, more than the work was worth had to be
paid, otherwise, there would be endless trouble and delay. The inspector
of buildings would make trouble; complaints would be made of obstructing
the streets and sidewalks, and injunctions would be issued. So it was
either to pay, or not construct. Marx provided work for the needy,
loaned money to the poor, sick and disabled, gave excursions and picnics
in the summer: for all of this others paid, but it enabled him to hold
the political control of the ward in the hollow of his hand. The boss
above him demanded that the councilmen from his ward should be men who
would do his bidding without question.
The city boss, in turn, trafficked with the larger public contracts, and
with the granting and extensions of franchises. It was a fruitful field,
for there was none above him with whom he was compelled to divide.
The State boss treated the city bosses with much consideration, for he
was more or less dependent upon them, his power consisting largely of
the sum of their power.
