The constitutional provisions above mentioned may be regarded as having a twofold purpose. They were designed to limit, if not destroy, the power of the legislature to invade the sphere of municipal affairs, and also to confer upon cities the general power to act for themselves, by virtue of which they could on their own initiative, subject to certain restrictions contained in the constitution, set up their own government, formulate and carry out a municipal policy and manage their own affairs to suit themselves. This would seem to be implied necessarily in the grant of constitutional power to frame a charter for their own government. A liberal interpretation of this feature of the constitutions in question would have held that all cities to which it applied were thereby authorized to exercise all powers not expressly withheld by the constitution or the statutes of the state. This, however, has not been the attitude of the courts. Their reluctance to give home-rule provisions a liberal interpretation may be illustrated by a decision of the supreme court of Washington. In addition to the power granted to cities of the first class to frame their own charters the constitution of this state provides that "any county, city, town, or township, may make and enforce within its limits all such local, police, sanitary and other regulations as are not in conflict with general laws." In view of the attitude that courts have generally taken in this matter it is not surprising that the supreme court of Washington has intimated that the above-mentioned constitutional provisions are not self-executing. Moreover, it does not seem disposed to concede even to cities of the first class any important powers except such as have been expressly conferred by statute. For example, the statutes of Washington authorize cities of the first class "to regulate and control the use" of gas supplied by a private corporation, and the charter of Tacoma expressly gave to the city council the power to fix the price of gas so supplied. Suit was brought to enjoin the city from exercising this power which was claimed under the constitutional and statutory authority given to cities of the first class. The supreme court held that while Tacoma had the power to regulate and control, expressly given it by statute, it did not have the power to fix the price.[164] This decision evinces a singular lack of sympathy on the part of the court with the home-rule provisions of the constitution of Washington.

But although the effort to confer upon cities by constitutional enactment the power to manage their own affairs has thus far largely failed, it indicates a growing appreciation of the nature of the problem and the character of the remedy that must be applied. A more clearly defined and effective public opinion in favor of municipal self-government must in the end overcome judicial opposition.

The most liberal interpretation of which these constitutional provisions are susceptible, however, would not have ensured complete municipal self-government. Unless a city is given adequate financial powers, a constitutional grant of the right of local self-government does not enable it to exercise much choice in relation to the more important matters of municipal policy. By narrowly limiting the powers of cities in this direction, they have been largely deprived of the advantages which they would have enjoyed under a consistent application of the home-rule principle. A certain amount of freedom in the use of the taxing power would seem to be no less essential to the city than to the state itself. Within reasonable limits it ought to be conceded the right to formulate its own scheme of taxation. In every important American city the taxes collected for municipal purposes greatly exceed those imposed for the support of the county and state government. In a matter which so vitally concerns the city it ought to have some right to pursue a policy of its own. This right has not been recognized, however, even in the constitutions which have made most concessions to the principle of municipal home rule. By this means all innovations or reforms in municipal taxation except such as may be authorized by the state itself are effectually prevented. It could not, for instance, exempt personal property from taxation, or make a tax on ground rent the main source of its revenue.

The power to incur debt for municipal purposes is no less essential than the power to tax. The present-day city must spend large sums in making public improvements the cost of which it is necessary to distribute over a period of years. To limit too narrowly the borrowing power of cities for these purposes would prevent them from realizing the full benefits of unhampered self-government. This does not imply that a city should own and operate all industries of a quasi-public character, but it does imply that it should have the unquestioned right and the power to do so. Unless this is the case it is not in a position to secure the most favorable terms from such private corporations as may be allowed to occupy this field. Unreasonable restrictions upon the borrowing power of cities by placing obstacles in the way of municipal ownership of public utilities tend to deprive the people of the most effective safeguard against the extortion of private monopolies.

The limitation placed upon the amount of municipal indebtedness has not had altogether the effect intended. This is mainly due to the fact that the debt limit fixed in the state constitutions was in many cases so low that it did not permit cities to make absolutely necessary public improvements, such as the paving of streets and construction of sewers. To make these improvements without resorting to credit would require the owners of the property affected to advance the full amount of their cost. This would in many instances be extremely inconvenient. Accordingly, an effort was made to find some method of evading these restrictions which would be upheld by the courts. This was accomplished by issuing bonds to be paid out of a special fund which was to be created by taxes assessed against the property of the district charged with the cost of the improvements. The courts held that this was merely a lien upon the property of the district in question, and not a municipal debt within the meaning of the above-mentioned constitutional limitations. These decisions by the courts may not appear to be in harmony with the letter of the constitutional provisions relating to municipal indebtedness, but they are hardly at variance with their spirit. The object of these restrictions was not so much to limit the rights of the property-owning classes as to protect them against the extravagance of the propertyless voters. To make an exception in favor of municipal indebtedness incurred in this way and for these purposes was not calculated to work any hardship upon property owners, but rather to give them the power to authorize the employment of credit for their own advantage. They were protected against the abuse of this particular kind of indebtedness inasmuch as the consent of the owners of a majority of the property affected was quite generally required.

One influence which helped to mold a public sentiment in favor of constitutional provisions limiting the amount of municipal indebtedness was the rapid increase in the debts of American cities during the period that immediately followed the Civil war. For this condition of affairs the state government itself was largely to blame. It had prescribed a form of municipal organization which was scarcely compatible with an efficient and responsible management of financial matters. Moreover, the state government, as we have seen, could empower its own agents to borrow money for a purpose which it had authorized and obligate the city to pay it. The effort to correct these evils, first noticeable about the year 1870, took the form of constitutional provisions limiting the amount of indebtedness which could be incurred by or on behalf of cities. The main object of these provisions was to protect municipal taxpayers against an extravagant use of the borrowing power for local purposes, whether exercised by state or municipal authorities.

Another advantage which these provisions seemed likely to secure to the capital-owning class deserves at least a passing mention. This policy of limiting the amount of municipal indebtedness was adopted at a time when, owing to the rapid growth of urban population, the local monopolies of water, light, transportation, etc., were becoming an important and extremely profitable field for the investment of private capital. The restrictions imposed upon the power of cities to borrow money would retard, if not preclude, the adoption of a policy of municipal ownership and thus enable the private capitalist to retain exclusive possession of this important class of industries.

That the constitutional restrictions upon the general indebtedness of cities have retarded the movement toward municipal ownership is beyond question. It is not likely, however, that they will much longer block the way to municipal acquisition of those industries in which private management has proven unsatisfactory, since it may be possible to evade them by resorting to the device of a special fund. The same line of argument which has been accepted by the courts as supporting the constitutionality of the special fund for local improvement purposes is no less applicable to special debts incurred for the purchase of revenue-producing public utilities, such as water works, lighting plants and street railways. Under this arrangement, however, the city must not assume any responsibility for the payment of the capital borrowed, the creditors advancing the purchase price or cost of construction, looking solely to the earnings under municipal operation for the payment of both principal and interest. It may be doubted whether the courts in permitting cities to employ the special fund in relation to local improvements realized its possibilities in the direction of municipal ownership.[165]

These restrictions upon the powers of cities indicate a fear that too much local self-government might jeopardize the interests of the propertied classes. This attitude on the part of those who have framed and interpreted our state constitutions is merely an expression of that distrust of majority rule which is, as we have seen, the distinguishing feature of the American system of government. It is in the cities that the non-possessing classes are numerically strongest and the inequality in the distribution of wealth most pronounced. This largely explains the reluctance of the state to allow cities a free hand in the management of local affairs. A municipal government responsive to public opinion might be too much inclined to make the public interests a pretext for disregarding property rights. State control of cities, then, may be regarded as a means of protecting the local minority against the local majority. Every attempt to reform this system must encounter the opposition of the property-owning class, which is one of the chief reasons why all efforts to establish municipal self-government have thus far largely failed.

We thus see that while property qualifications for the suffrage have disappeared, the influence of property still survives. In many ways and for many purposes property is directly or indirectly recognized in the organization and administration of municipal government. The movement toward democracy has had less influence upon property qualifications for the suffrage and for office-holding in its relation to municipal than in its relation to state and national affairs. When the Federal Constitution was adopted the property qualifications for voting and office-holding in force in the various states were not disturbed. The Constitution did not recognize the principle of universal suffrage. It not only allowed the states to retain the power to prescribe the qualifications of voters in state and municipal elections, but also limited the suffrage for Federal purposes to those who were qualified to vote at state elections.[166] The removal, during the first half of the nineteenth century, of property qualifications for voting at state elections and holding state offices had the effect of placing the Federal suffrage upon a popular basis.

The influence of the democratic movement was less marked, however, in the domain of municipal affairs. Here the old system under which voting and office-holding were regarded as the exclusive right of the property-owning class has not entirely disappeared. In this as in other respects the American state has evinced a fear of municipal democracy. It is true that in the choice of public officials the principle of manhood suffrage prevails. But the suffrage may be exercised either with reference to candidates or measures; and in voting upon questions of municipal policy, which is far more important than the right to select administrative officers, the suffrage is often restricted to taxpayers or the owners of real estate. Thus in Colorado, which has gone as far as any state in the Union in the direction of municipal democracy, no franchise can be granted to a private corporation or debt incurred by a city for the purpose of municipal ownership without the approval of the taxpaying electors. When we consider that 72 per cent. of the families living in Denver in the year 1900 occupied rented houses,[167] and that the household goods of a head of a family to the value of two hundred dollars are exempt from taxation,[168] the effect of this restriction is obvious. In thus limiting the right to vote, the framers of the state constitution evidently proceeded upon the theory that the policy of a city with reference to its public utilities should be controlled by its taxpayers. The justification for this constitutional provision is not apparent, however, inasmuch as the burden of supporting the public service industries of a city is not borne by the taxpayers as such, but by the people generally. Such a system makes it possible for the taxpaying class to control public utilities in their own interest and to the disadvantage of the general public. The part of the community who are taxpayers, if given the exclusive right to control these industries, would be tempted to make them an important source of municipal revenue. They would be likely to favor high rather than low or reasonable charges for these necessary public services, since their taxes would be diminished by the amount thus taken from the non-taxpayers through excessive charges. Where the majority of the citizens are property owners and taxpayers there is but little danger that public ownership will be subject to this abuse. But where there is great inequality in the distribution of wealth and a large propertyless class, democracy is the only guarantee that the benefits of municipal ownership will not be monopolized by the property-owning class.

An investigation of the practical working of municipal ownership in American cities will show that this danger is not purely imaginary. In the year 1899 53.73 per cent. of the waterworks in this country were owned and operated by municipalities, public ownership being the rule in the larger cities. Taking the thirteen largest plants in the United States, all of which were municipally owned, the income from private users was $20,545,409, while the total cost of production, including estimated depreciation, aggregated only $11,469,732. If to this amount be added the estimated taxes, interest on total investment and rental value of the municipally owned quarters occupied for this purpose, the total cost of production would be $22,827,825. Private consumers, however, used only 80.2 per cent. of the water supplied. If the 19.8 per cent. supplied free for public purposes had been paid for at the same rate charged to private users, the total income from these 13 municipally owned plants would have been $25,817,720. This would have been $2,989,895 in excess of a fair return upon the total investment. No one would claim that the price of water has been increased under municipal ownership. As a matter of fact, it has been substantially reduced and the quality of the water at the same time improved. The reduction in price, however, has been less than it would have been, had the interests of the consumers alone been considered. If the object of municipal ownership is to supply pure water at the lowest possible price to the general public, there is no good reason why the city should demand a profit on the capital it has invested in the business. This would certainly be true where the earnings under municipal ownership have been sufficient to pay for the plant. In this case it would be an injustice to consumers to make them contribute, over and above the cost of operating the plant, an additional amount sufficient to pay interest on the investment, inasmuch as they have supplied the capital with which the business is carried on. Any attempt to make municipal ownership a source of revenue would mean the taxation of water consumers for the benefit of property owners. Nor is there any reason why the private consumers of water should be made to pay for the water used for public purposes. The water needed for public buildings, for cleaning streets and for extinguishing fires ought to be paid for by those chiefly benefited—the property-owning class.

If instead of considering these thirteen waterworks together, we take a single example—the third largest plant—the tendency to make public ownership a source of revenue is more clearly seen. The income from private users in the case of this plant was $4,459,404. The city used for public purposes 29.5 per cent. of the total amount supplied, which if paid for at the rate charged private consumers would have made the total income from operation $6,325,395. This would have been $2,929,232 more than was required to pay all expenses, including interest on the total investment.[169]

In the case of electric-light plants private ownership is the rule, only 460 of the 3,032 plants being under municipal ownership. The Report of the United States Commissioner of Labor[170] gives the data for 952 of these plants, 320 of which are municipally owned and operated. Municipal ownership, however, is mainly confined to the smaller cities and towns. This is shown by the fact that although more than one-third of the 952 plants above mentioned are under municipal control, only 30 out of 277, or less than one-ninth of the largest plants, are municipally owned. This is to be accounted for by the more determined opposition to the policy of municipal ownership by the capitalist class in the larger cities, where private management is most remunerative. Municipal plants, too, are often restricted to public lighting, not being allowed to furnish light or power for commercial purposes. This restricted form of municipal ownership is merely a slight concession on the part of the private monopolist to the taxpaying class. The general public, as consumers of light and power, derive no benefit from such a policy.

These and other facts which might be mentioned illustrate the natural tendency of a system under which the power of the masses is limited in the interest of the property-owning class. The chief evils of municipal government in this country have their source not in majority but in minority rule. It is in the city where we find a numerically small but very wealthy class and a large class owning little or no property that the general political movement toward democracy has encountered the most obstinate resistance. Only a small part of our urban population own land or capital. The overwhelming majority of those who live in cities are employees and tenants. In the year 1900 74.3 per cent. of the families in the 160 cities of the United States having 25,000 or more population lived in rented houses and only 14.5 per cent. in unmortgaged homes.[171] In the smaller towns the proportion of property owners was larger, while in the country the majority of the population belonged to the land-holding class, 64.4 per cent. of the "farm" families owning their homes, 44.4 per cent. of such families owning homes that were unencumbered.[172]

"Much has been said concerning the necessity of legislative interference in some cases where bad men were coming into power through universal suffrage in cities, but the recent experience of the country shows that this has oftener been said to pave the way for bad men to obtain office or grants of unusual powers from the legislature than with any purpose to effect local reforms. And the great municipal scandals and frauds that have prevailed, like those which were so notorious in New York City, have been made possible and then nursed and fostered by illegitimate interference at the seat of State government."[173]

The numerical preponderance of the property-owning class in the country and of the propertyless class in the cities must be taken into account in any attempt to find an explanation of the reluctance on the part of the state to recognize the principle of municipal self-government. When we consider that the state government, even under universal suffrage, is largely government by taxpaying property owners, we can understand why the progress toward municipal democracy has been so slow. Under universal suffrage municipal self-government would mean the ascendency of the propertyless class, and this, from the standpoint of those who control the state government, would jeopardize the interests of the property-holding minority.

This is doubtless one of the chief reasons why the state government has not been willing to relinquish its control over municipal affairs. This fact is not recognized, however, by present-day writers on American politics. It is generally assumed that the corruption in state and municipal government is largely due to the ascendency of the masses. This view of the matter may be acceptable to those who from principle or interest are opposed to democracy, but it ignores the facts which a careful analysis of the system discloses. Even in our state governments the changes that have been made as a concession to the newer democratic thought are less important than is generally supposed. The removal of property qualifications for voting and office-holding was a concession in form rather than in substance. It occurred at a time when there was an apparently inexhaustible supply of free land which made it possible for every one to become a landowner. Under such circumstances universal suffrage was not a radical or dangerous innovation. In fact, property qualifications for voting and office-holding were not necessary to the political ascendency of property owners in a community where the great majority of the citizens were or could become members of the property-owning class. It is not likely that property qualifications would have been removed for state purposes without a more serious struggle, if the wide diffusion of property in the state at large had not appeared to be an ample guarantee that the interests of property owners would not be endangered by universal suffrage. It was probably not intended that the abolition of property qualifications should overthrow the influence of property owners, or make any radical change in the policy of the state government.

It is easily seen that the removal of property qualifications for voting and office-holding has had the effect of retarding the movement toward municipal home rule. Before universal suffrage was established the property-owning class was in control of both state and city government. This made state interference in local affairs unnecessary for the protection of property. But with the introduction of universal suffrage the conservative element which dominated the state government naturally favored a policy of state interference as the only means of protecting the property-owning class in the cities. In this they were actively supported by the corrupt politicians and selfish business interests that sought to exploit the cities for private ends. Our municipal conditions are thus the natural result of this alliance between conservatism and corruption.

We can understand now why the state has been unwilling to permit the same measure of democracy in municipal affairs that it has seen fit to employ for its own purposes. This is why our limited majority rule, which may be safe enough in the state government, is often deemed inexpedient for the city. It is also the reason for keeping the more important municipal powers under the control of the state government, as well as the ground for continuing property qualifications in the city after their disappearance from the government of the state.

The checks above mentioned are not the only ones to be found, however, in our municipal government. The city is organized, like the state government, on the plan of distributed powers and diffused responsibility. It contains, as a rule, an elaborate system of checks which affords little opportunity for the prompt and effective expression of local public opinion in the administration of municipal affairs. At the same time, it gives the municipal authorities power to inaugurate and carry out policies to which local public sentiment may be strongly opposed. This is seen in the control which the mayor and council quite generally exercise over the matter of municipal franchises. Probably not a city of any importance could be mentioned in which the council has not granted privileges which have enriched individuals and private corporations at the expense of the public. This power has been the chief source of municipal corruption, since it has made the misgovernment of cities a source of great profit to a wealthy and influential class. Those who imagine that the ignorant and vicious part of our urban population is the main obstacle to reform take but a superficial view of the matter. The real source of misgovernment—the active cause of corruption—is to be found, not in the slums, not in the population ordinarily regarded as ignorant and vicious, but in the selfishness and greed of those who are the recognized leaders in commercial and industrial affairs. It is this class that, as Lincoln Steffens says, may be found "buying boodlers in St. Louis, defending grafters in Minneapolis, originating corruption in Pittsburg, sharing with bosses in Philadelphia, deploring reform in Chicago, and beating good government with corruption funds in New York."[174] This is the natural fruit of our system of municipal government. The powerful corporate interests engaged in the exploitation of municipal franchises are securely entrenched behind a series of constitutional and legal checks on the majority which makes it extremely difficult for public opinion to exercise any effective control over them. The effort to provide a remedy for this condition of affairs took the form of a movement to limit the powers of the council. Boards and commissions have been created in whose hands have been placed much of the business formerly controlled by this body. The policy of subdividing the legislative authority of the city and distributing it among a number of independent boards has been carried so far, notably in New York, that, as Seth Low observes, the council has been largely deprived of all its legislative functions with the single exception of the power to grant public franchises.[175] It must not be inferred, however, that public opinion has favored the retention of this power by the council. The attempt on the part of the people to control the franchise-granting power has thus far largely failed, not because of any lack of popular support, but because our constitutional and political arrangements have made it almost impossible for any reasonable majority to overcome the opposition of organized wealth.

Our efforts to bring about reforms in municipal government have thus far largely failed to accomplish what was expected of them because we have persistently refused to recognize the principle of majority rule. We have clung tenaciously to the system of checks and balances with all its restraints on popular control. The evils of municipal government are not the evils of democracy, but the evils of a system which limits the power of the majority in the interest of the minority.



CHAPTER XI

INDIVIDUAL LIBERTY AND THE CONSTITUTION

The eighteenth-century conception of liberty was the outgrowth of the political conditions of that time. Government was largely in the hands of a ruling class who were able to further their own interests at the expense of the many who were unrepresented. It was but natural under these circumstances that the people should seek to limit the exercise of political authority, since every check imposed upon the government lessened the dangers of class rule. The problem which the advocates of political reform had to solve was how to secure the largest measure of individual liberty compatible with an irresponsible government. They were right in believing that this could be accomplished only by building up an elaborate system of constitutional restraints which would narrowly limit the exercise of irresponsible authority. Individual liberty as they understood the term was immunity from unjust interference at the hands of a minority.

This was a purely negative conception. It involved nothing more than the idea of protection against the evils of irresponsible government. It was a view of liberty adapted, however, to the needs of the time and served a useful purpose in aiding the movement to curb without destroying the power of the ruling class. Any attempt to push the doctrine of liberty farther than this and make it include more than mere immunity from governmental interference would have been revolutionary. The seventeenth and eighteenth century demand was not for the abolition, but for the limitation of irresponsible authority. It was not for popular government based upon universal suffrage, but for such modifications of the system as would give to the commercial and industrial classes the power to resist all encroachments upon their rights at the hands of the hereditary branches of the government. The basis and guarantee of individual liberty, as the term was then understood, was the popular veto such as was exercised through the House of Commons. This conception of liberty was realized for those represented in any coordinate branch of the government wherever the check and balance stage of political development had been reached.

The American revolution, which supplanted hereditary by popular rule, worked a fundamental change in the relation of the individual to the government. So far at least as the voters were concerned the government was no longer an alien institution—an authority imposed upon them from above, but an organization emanating from them—one in which they had and felt a direct proprietary interest. It was no longer a government in which the active principle was irresponsible authority, but one which rested upon the safe and trustworthy basis of popular control.

The overthrow of monarchy and aristocracy necessitated a corresponding change in the idea of liberty to make it fit the new political conditions which had emerged. In so far as government had now passed into the hands of the people there was no longer any reason to fear that it would encroach upon what they regarded as their rights. With the transition, then, from class to popular sovereignty there was a corresponding change in the attitude of the people toward the government. They naturally desired to limit the authority and restrict the activity of the government as long as they felt that it was irresponsible; but as soon as they acquired an active control over it, the reason which formerly actuated them in desiring to limit its powers was no longer operative. Their ends could now be accomplished and their interests best furthered by unhampered political activity. They would now desire to remove the checks upon the government for the same reason that they formerly sought to impose them—viz., to promote their own welfare.

This tendency is seen in the changes made in the state constitutions at the beginning of the American revolution. As shown in a previous chapter, they established the supremacy of the legislative body and through this branch of the government, the supremacy of the majority of the qualified voters. We have here a new conception of liberty. We see a tendency in these constitutional changes to reject the old passive view of state interference as limited by the consent of the governed and take the view that real liberty implies much more than the mere power of constitutional resistance—that it is something positive, that its essence is the power to actively control and direct the policy of the state. The early state constitutions thus represent a long step in the direction of unlimited responsible government.

This, as we have seen, was the chief danger which the conservative classes saw in the form of government established at the outbreak of the Revolution. They were afraid that the power of the numerical majority would be employed to further the interests of the many at the expense of the few, and to guard against such a use of the government they sought to re-establish the system of checks. The Constitution which restored the old scheme of government in a new garb also revived the old conception of individual liberty. There is, however, one important difference between the eighteenth-century conception of liberty and that which finds expression in our constitutional literature. Formerly it was because of the lack of popular control that the people generally desired to limit the authority of the government, but the framers of the Constitution wished to bring about the limitation of governmental functions because they feared the consequences of majority rule. Formerly the many advocated the limitation of the power of king and aristocracy in the interest of liberty; now the few advocate the limitation of the power of the many for their own protection. With the abolition of monarchy and aristocracy the attitude of the few and the many has been reversed. The aristocratic and special interests that formerly opposed the limitation of political activity when they were predominant in the government, now favor it as a protection against the growing power of the masses, while the latter, who formerly favored, now oppose it. The conservative classes now regard the popular majority with the same distrust which the liberals formerly felt toward the king and aristocracy. In fact, the present-day conservative goes even farther than this and would have us believe that the popular majority is a much greater menace to liberty than king or aristocracy has ever been in the past.

"There can be no tyranny of a monarch so intolerable," says a recent American writer, "as that of the multitude, for it has the power behind it that no king can sway."[176] This is and has all along been the attitude of the conservative classes who never lose an opportunity to bring the theory of democracy into disrepute. The defenders of the American Constitution clearly see that unless the fundamental principle of popular government is discredited the system of checks can not survive.

There is no liberty, we are told by the present-day followers of Alexander Hamilton, where the majority is supreme. The American political system realizes this conception of liberty mainly through the Supreme Court—an organ of government which interprets the Constitution and laws of Congress and which may forbid the carrying out of the expressed will of the popular majority. It necessarily follows that the authority which can thus overrule the majority and enforce its own views of the system is an authority greater than the majority. All governments must belong to one or the other of two classes according as the ultimate basis of political power is the many or the few. There is, in fact, no middle ground. We must either recognize the many as supreme, with no checks upon their authority except such as are implied in their own intelligence, sense of justice and spirit of fair play, or we must accept the view that the ultimate authority is in the hands of the few. Every scheme under which the power of the majority is limited means in its practical operation the subordination of the majority to the minority. This inevitable consequence of the limitation of popular rule is not alluded to by the advocates of checks and balances, though it is obvious to any careful student of the system.

It would, however, do injustice to the intelligence of those who champion the scheme of checks and balances to give them credit for any real sympathy with the aims and purposes of democracy. Individual liberty as guaranteed by majority rule was not the end which the framers of the Constitution had in view, nor is it the reason why the present-day conservative defends their work. The Constitution as originally adopted did not contain that highly prized guarantee of personal liberty which democracy everywhere insists upon. The failure to make any provision for freedom of the press should be regarded as a significant omission. This, however, was not an essential part of the Federalists' scheme of government, which aimed rather to protect the property and privileges of the few than to guarantee personal liberty to the masses. This omission is the more noteworthy in view of the fact that this guarantee was at that time expressly included in a majority of the state constitutions, and that the temper of the people was such as to compel its speedy adoption as an amendment to the Federal Constitution itself.

Liberty, as the framers of the Constitution understood the term, had to do primarily with property and property rights. The chief danger which they saw in the Revolutionary state governments was the opportunity afforded to the majority to legislate upon matters which the well-to-do classes wished to place beyond the reach of popular interference. The unlimited authority which the state government had over taxation and its power to restrict or abridge property rights were viewed with alarm by the wealthy classes, who felt that any considerable measure of democracy would be likely to deprive them of their time-honored prerogatives. To guard against this danger the Constitution sought, in the interest of the classes which dominated the Federal Convention, to give the widest possible scope to private property. It prohibited private property in nothing—permitting it, as originally adopted, even in human beings. It may be said without exaggeration that the American scheme of government was planned and set up to perpetuate the ascendency of the property-holding class in a society leavened with democratic ideas. Those who framed it were fully alive to the fact that their economic advantages could be retained only by maintaining their class ascendency in the government. They understood the economic significance of democracy. They realized that if the supremacy of the majority were once fully established the entire policy of the government would be profoundly changed. They foresaw that it would mean the abolition of all private monopoly and the abridgment and regulation of property rights in the interest of the general public.

The Constitution was in form a political document, but its significance was mainly economic. It was the outcome of an organized movement on the part of a class to surround themselves with legal and constitutional guarantees which would check the tendency toward democratic legislation. These were made effective through the attitude of the United States courts which, as Professor Burgess says, "have never declined jurisdiction where private property was immediately affected on the ground that the question was political."[177]

"There can be no question that the national government has given to the minority a greater protection than it has enjoyed anywhere else in the world, save in those countries where the minority is a specially privileged aristocracy and the right of suffrage is limited. So absolute have property rights been held by the Supreme Court, that it even, by the Dred Scott decision, in effect made the whole country a land of slavery, because the slave was property, and the rights of property were sacred."[178]

In carrying out the original intent of the Constitution with reference to property the courts have developed and applied the doctrine of vested rights—a doctrine which has been used with telling effect for the purpose of defeating democratic reforms. This doctrine briefly stated is that property rights once granted are sacred and inviolable. A rigid adherence to this policy would effectually deprive the government of the power to make the laws governing private property conform to social and economic changes. It would disregard the fact that vested rights are often vested wrongs, and that one important, if not indeed the most important, task which a government by and for the people has to perform is to rectify past mistakes and correct the evils growing out of corruption and class rule. A government without authority to interfere with vested rights would have little power to promote the general welfare through legislation.

The adoption of the Constitution brought this doctrine from the realm of political speculation into the arena of practical politics. The men who framed and set up our Federal government were shrewd enough to see that if the interests of the property-holding classes were to be given effective protection, it was necessary that political power should rest ultimately upon a class basis. This they expected to accomplish largely through the judicial veto and the power and influence of the Supreme Court. The effect of establishing the supremacy of this branch of the government was to make the legal profession virtually a ruling class. To their charge was committed under our system of government the final authority in all matters of legislation. They largely represent by virtue of their training and by reason of the interests with which they are affiliated, the conservative as opposed to the democratic influences. The power and influence exerted by lawyers in this country are the natural outgrowth of the constitutional position of our Supreme Court. Its supremacy is in the last analysis the supremacy of lawyers as a class and through them of the various interests which they represent and from which they derive their support. This explains the fact so often commented on by foreign critics, that in this country lawyers exert a predominant influence in political matters.

We are still keeping alive in our legal and constitutional literature the eighteenth-century notion of liberty. Our future lawyers and judges are still trained in the old conception of government—that the chief purpose of a constitution is to limit the power of the majority. In the meantime all other democratic countries have outgrown this early conception which characterized the infancy of democracy. They have in theory at least repudiated the eighteenth-century doctrine that the few have a right to thwart the will of the many. The majority has in such countries become the only recognized source of legitimate authority. "There is no fulcrum outside of the majority, and therefore there is nothing on which, as against the majority resistance or lengthened opposition can lean."[179] This statement was made with reference to France, but it would apply as well to England, Switzerland, and all other countries in which the principle of majority rule has received full recognition.

On the other hand American constitutional and legal literature still inculcates and keeps alive fear and distrust of majority rule. The official and ruling class in this country has been profoundly influenced by political ideas which have long been discarded in the countries which have made the most rapid strides in the direction of popular government. The influence which our constitutional and legal literature, based as it is upon a profound distrust of majority rule, has had upon the lawyers, politicians, and public men of this country can hardly be overestimated. It is true that many who have been most influenced by this spirit of distrust toward popular government would be unwilling to admit that they are opposed to majority rule—in fact, they may regard themselves as sincere believers in democracy. This is not to be wondered at when we consider that throughout our history under the Constitution the old and the new have been systematically jumbled in our political literature. In fact, the main effort of our constitutional writers would appear to be to give to the undemocratic eighteenth-century political ideas a garb and setting that would in a measure reconcile them with the democratic point of view. The natural and inevitable result has followed. The students of American political literature have imbibed the fundamental idea of the old system—its distrust of majority rule—along with a certain sentimental attachment to and acceptance of the outward forms of democracy. This irreconcilable contradiction between the form and the substance, the body and the spirit of our political institutions is not generally recognized even by the American students of government. Constitutional writers have been too much preoccupied with the thought of defending and glorifying the work of the fathers and not enough interested in disclosing its true relation to present-day thought and tendencies. As a consequence of this, the political ideas of our educated classes represent a curious admixture of democratic beliefs superimposed upon a hardly conscious substratum of eighteenth-century doctrines. It is this contradiction in our thinking that has been one of our chief sources of difficulty in dealing with political problems. While honestly believing that we have been endeavoring to make democracy a success, we have at the same time tenaciously held on to the essential features of a political system designed for the purpose of defeating the ends of popular government.



CHAPTER XII

INDIVIDUAL LIBERTY AND THE ECONOMIC SYSTEM

The American doctrine of individual liberty had its origin in economic conditions widely different from those which prevail to-day. The tools of production were simple and inexpensive and their ownership widely diffused. There was no capital-owning class in the modern sense. Business was carried on upon a small scale. The individual was his own employer, or, if working for another, could look forward to the time when, by the exercise of ordinary ability and thrift, he might become an independent producer. The way was open by which every intelligent and industrious wage-earner could become his own master. Industrially society was democratic to a degree which it is difficult for us to realize at the present day. This economic independence which the industrial classes enjoyed ensured a large measure of individual liberty in spite of the fact that political control was in the hands of a class.

The degree of individual freedom and initiative which a community may enjoy is not wholly, or even mainly, a matter of constitutional forms. The actual liberty of the individual may vary greatly without any change in the legal or constitutional organization of society. A political system essentially undemocratic would be much less destructive of individual liberty in a society where the economic life was simple and ownership widely diffused than in a community possessing a wealthy capitalist class on the one hand and an army of wage-earners on the other. The political system reacts, it is true, upon the economic organization, but the influence of the latter upon the individual is more direct and immediate than that of the former. The control exerted over the individual directly by the government may, as a matter of fact, be slight in comparison with that which is exercised through the various agencies which control the economic system. But the close interdependence between the political and the business organization of society can not be overlooked. Each is limited and conditioned by the other, though constitutional forms are always largely the product and expression of economic conditions.

Individual liberty in any real sense implies much more than the restriction of governmental authority. In fact, true liberty consists, as we have seen, not in divesting the government of effective power, but in making it an instrument for the unhampered expression and prompt enforcement of public opinion. The old negative conception of liberty would in practice merely result in limiting the power of the government to control social conditions. This would not necessarily mean, however, the immunity of the individual from external control. To limit the power of the government may permit the extension over the individual of some other form of control even more irresponsible than that of the government itself—the control which inevitably results from the economic supremacy of a class who own the land and the capital.

The introduction of the factory system forced the great majority of small independent producers down into the ranks of mere wage-earners, and subjected them in their daily work to a class rule under which everything was subordinated to the controlling purpose of the employers—the desire for profits.

The significance of this change from the old handicraft system of industry to present-day capitalistic production is fully understood by all students of modern industry. Even Herbert Spencer, the great expounder of individualism, admitted that the so-called liberty of the laborer "amounts in practice to little more than the ability to exchange one slavery for another" and that "the coercion of circumstances often bears more hardly on him than the coercion of a master does on one in bondage."[180] This dependence of the laborer, however, he regarded as unfortunate, and looked forward to the gradual amelioration of present conditions through the growth of co-operation in production.

Individualism as an economic doctrine was advocated in the eighteenth century by those who believed in a larger measure of freedom for the industrial classes. The small business which was then the rule meant the wide diffusion of economic power. A laissez faire policy would have furthered the interests of that large body of small independent producers who had but little representation in and but little influence upon the government. It would have contributed materially to the progress of the democratic movement by enlarging the sphere of industrial freedom for all independent producers. It does not follow, however, that this doctrine which served a useful purpose in connection with the eighteenth-century movement to limit the power of the ruling class is sound in view of the political and economic conditions which exist to-day. The so-called industrial revolution has accomplished sweeping and far-reaching changes in economic organization. It has resulted in a transfer of industrial power from the many to the few, who now exercise in all matters relating to production an authority as absolute and irresponsible as that which the ruling class exercised in the middle of the eighteenth century over the state itself. The simple decentralized and more democratic system of production which formerly prevailed has thus been supplanted by a highly centralized and thoroughly oligarchic form of industrial organization. At the same time political development has been tending strongly in the direction of democracy. The few have been losing their hold upon the state, which has come to rest, in theory at least, upon the wall of the many. A political transformation amounting to a revolution has placed the many in the same position in relation to the government which was formerly held by the favored few.

As a result of these political and economic changes the policy of government regulation of industry is likely to be regarded by the masses with increasing favor. A society organized as a political democracy can not be expected to tolerate an industrial aristocracy. As soon, then, as the masses come to feel that they really control the political machinery, the irresponsible power which the few now exercise in the management of industry will be limited or destroyed as it has already been largely overthrown in the state itself. In fact the doctrine of laissez faire no longer expresses the generally accepted view of state functions, but merely the selfish view of that relatively small class which, though it controls the industrial system, feels the reins of political control slipping out of its hands. The limitation of governmental functions which was the rallying-cry of the liberals a century ago has thus become the motto of the present-day conservative.

The opponents of government regulation of industry claim that it will retard or arrest progress by restricting the right of individual initiative. They profess to believe that the best results for society as a whole are obtained when every corporation or industrial combination is allowed to manage its business with a free hand. It is assumed by those who advocate this policy that there is no real conflict of interests between the capitalists who control the present-day aggregations of corporate wealth and the general public. No argument is needed, however, to convince any one familiar with the facts of recent industrial development that this assumption is not true.

The change in the attitude of the people toward the let-alone theory of government is, as a matter of fact, the outcome of an intelligently directed effort to enlarge and democratize—not abridge—the right of initiative in its relation to the management of industry. The right of individual initiative in the sense of the right to exercise a real control over production was lost by the masses when the substitution of machinery for tools made them directly dependent upon a class of capital-owning employers. The subsequent growth of large scale production has centralized the actual control of industry in the hands of a small class of large capitalists. The small capitalists as separate and independent producers are being rapidly crushed or absorbed by the great corporation. They may still belong to the capitalist class in that they live upon an income derived from the ownership of stock or bonds. But they have no real control over the business in which their capital is invested. They no longer have the power to organize and direct any part of the industrial process. They enjoy the benefits which accrue from the ownership of wealth, but they can no longer take an active part in the management of industry. For them individual initiative in the sense of an effective control over the industrial process has disappeared almost as completely as it has in the case of the mere wage-earner. Individual initiative even for the capital-owning class has thus largely disappeared. It has been superseded by corporate initiative which means the extinguishment of individual initiative except in those cases where it is secured to the large capitalist through the ownership of a controlling interest in the business.

The abandonment of the laissez faire policy, then, in favor of the principle of government regulation of industry is the outgrowth, not of any hostility to individual initiative, but of the conviction that the monopoly of industrial power by the few is a serious evil. It is manifestly impossible to restore to the masses the right of individual initiative. Industry is too complex and too highly organized to permit a return to the old system of decentralized control. And since the only substitute for the old system of individual control is collective control, it appears to be inevitable that government regulation of business will become a fixed policy in all democratic states.

The laissez faire policy is supposed to favor progress by allowing producers to make such changes in business methods as may be prompted by the desire for larger profits. The doctrine as ordinarily accepted contains at least two erroneous assumptions, viz., (1) that any innovation in production which makes it possible for the capitalist to secure a larger return is necessarily an improvement in the sense of augmenting the average efficiency of labor, and (2) that policies are to be judged solely by their economic effects. Even if non-interference resulted in industrial changes which in all cases increase the efficiency of labor, it would not follow that such changes are, broadly considered, always beneficial. Before drawing any sweeping conclusion we must consider all the consequences direct and indirect, immediate and remote, political and social as well as economic. Hence the ordinary test—the direct and immediate effect upon productive efficiency—is not a satisfactory one. Moreover, many changes in the methods or organization of business are designed primarily to alter distribution in the interest of the capitalist by decreasing wages or by raising prices. In so far as a policy of non-interference permits changes of this sort, it is clearly harmful to the community at large, though advantageous to a small class.

In all democratic countries the conservative classes are beginning to realize that their ascendency in production is imperiled by the ascendency of the masses in the state. It thus happens that in the hope of checking or retarding the movement toward regulation of business in the interest of the people generally, they have taken refuge behind that abandoned tenet of democracy, the doctrine of non-interference.

At the same time they strongly favor any deviation from this policy which will benefit themselves. This is exemplified in their attitude in this country toward our protective tariff system, which, as originally adopted, was designed to encourage the development of our national resources by offering the prospect of larger profit to those who would invest their capital in the protected industries. Under a capitalistic system development naturally follows the line of greatest profit, and for this reason any protective tariff legislation which did not augment the profits of the capitalist would fail to accomplish its purpose. This was recognized and frankly admitted when the policy was first adopted. Later, however, when the suffrage was extended and the laboring class became an important factor in national elections the champions of protection saw that the system would have to be given a more democratic interpretation. Thus the Whig platform of 1844 favored a tariff "discriminating with special reference to the protection of the domestic labor of the country." This was, however, the only political platform in which the labor argument was used until 1872, when the Republican party demanded that "duties upon importations ... should be so adjusted as to aid in securing remunerative wages to labor, and promote the industries, prosperity, and growth of the whole country." Protection, since that time, has been defended, not as a means of augmenting profits, but as a means of ensuring high wages to American workers. The interests of the wage-receiving class, however, were far from being the chief concern of those who were seeking to maintain and develop the policy of protection. It was to the capitalist rather than the wage-earner that the system of protection as originally established made a direct appeal, and it was primarily in the interest of this class that it was maintained even after the labor argument came to be generally used in its defense. The capitalist naturally favored a policy that would discourage the importation of foreign goods and at the same time encourage the importation of foreign labor. It was to his advantage to keep the labor market open to all who might wish to compete for employment, since this would tend to force wages down and thus give him the benefit of high prices.

Any system of protection established in the interest of labor would have excluded all immigrants accustomed to a low standard of living. But as a matter of fact the immigration of cheap foreign labor was actively encouraged by the employers in whose interest the high tariff on foreign goods was maintained. The efforts of the wage-earning class to secure for themselves some of the benefits of protection by organizing to obtain an advance or prevent a reduction in wages was largely defeated through the wholesale importation of cheap foreign labor by the large manufacturing, mining and transportation companies. The agitation against this evil carried on by the labor unions finally resulted in the enactment by Congress of legislation forbidding the importation of labor under contract of employment. This, however, did not, and even if it had been efficiently enforced, would not have given the American workingman any real protection against cheap foreign labor. The incoming tide of foreign immigration has been rising and the civic quality of the immigrant has visibly declined. The free lands which formerly attracted the best class of European immigrants are now practically a thing of the past, and with the disappearance of this opportunity for remunerative self-employment the last support of high wages has been removed. With unrestricted immigration the American laboring man must soon be deprived of any economic advantage which he has heretofore enjoyed over the laboring classes of other countries.

There has been one notable exception to this immigration policy. The invasion of cheap Asiatic labor upon the Pacific coast aroused a storm of protest from the laboring population, which compelled Congress to pass the Chinese Exclusion Act. But this legislation, while shutting out Chinese laborers, has not checked the immigration from other countries where a low standard of living prevails. In fact the most noticeable feature of the labor conditions in this country has been the continual displacement of the earlier and better class of immigrants and native workers by recent immigrants who have a lower standard of living and are willing to work for lower wages. This has occurred, too, in some of the industries in which the employer has been most effectually protected against the competition of foreign goods.[181]

The time has certainly arrived when the policy of protection ought to be more broadly considered and dealt with in a public-spirited and statesman-like manner. If it is to be continued as a national policy, the interests of employees as well as employers must be taken into account. The chief evils of the protective system have been due to the fact that it has been too largely a class policy, and while maintained in the interest of a class, it has been adroitly defended as a means of benefiting the classes who derived little or no benefit—who were, indeed, often injured by our tariff legislation.

The large capitalist may grow eloquent in defense of that broad humanitarian policy under which the weak, the oppressed, and the ignorant of all nations are invited to come among us and share in the economic and political opportunities and privileges of American citizens. Such high-sounding and professedly disinterested cosmopolitanism appeals to a certain class of sentimental believers in democracy. It does not appeal, however, to any one who fully understands present-day industrial and political conditions. This capitalistic sympathy for the weak and the oppressed of other nations may be regarded by some as the expression of a broader patriotism, but its tap-root is class selfishness—the desire to secure high profits through maintaining active competition among laborers. As a matter of fact, all legislation does, and always must, appeal to the interest of those without whose influence and support it could not be enacted, and nothing is ever gained for true progress by making the pretence of disinterested love for humanity the cloak for class greed.

The desire of the employing class for cheap labor has been responsible for the greatest dangers which menace this country to-day. It was the demand for cheap labor which led to the importation of the African slave and perpetuated the institution of slavery until, with the voluntary immigration of foreign labor, it was no longer an economic necessity from the standpoint of the employing class. Indeed the very existence of slavery, by discouraging immigration, tended to limit the supply of labor, and by so doing, to cripple all enterprises in which free labor was employed. In this sense the abolition of slavery was the result of an economic movement. It was to the advantage of the employing class as a whole who found in the free labor hired under competitive conditions a more efficient and cheaper instrument of production than the slave whom they had to buy and for whose support they were responsible.

Had it not been for this eagerness on the part of the employing class to secure cheap labor at first through the importation of the African slave and later through the active encouragement of indiscriminate foreign immigration, we would not now have the serious political, social and economic problems which owe their existence to the presence among us of vast numbers of alien races who have little in common with the better class of American citizens. This element of our population, while benefiting the employing class by keeping wages down, has at the same time made it more difficult to bring about that intelligent political co-operation so much needed to check the greed of organized wealth.

The limitation of governmental powers in the Constitution of the United States was not designed to prevent all interference in business, but only such as was conceived to be harmful to the dominant class. The nature of these limitations as well as the means of enforcing them indicate their purpose. The provision relating to direct taxes is a good example. The framers of the Constitution were desirous of preventing any use of the taxing power by the general government that would be prejudicial to the interests of the well-to-do classes. This is the significance of the provision that no direct taxes shall be laid unless in proportion to population.[182] The only kind of a direct tax which the framers intended that the general government should have power to levy was the poll tax which would demand as much from the poor man as from the rich. This was indeed one of the reasons for opposing the ratification of the Constitution.

"Many specters," said Hamilton, "have been raised out of this power of internal taxation to excite the apprehensions of the people: double sets of revenue officers, a duplication of their burdens by double taxations, and the frightful forms of odious and oppressive poll-taxes, have been played off with all the ingenious dexterity of political legerdemain....

"As little friendly as I am to the species of imposition [poll-taxes], I still feel a thorough conviction that the power of having recourse to it ought to exist in the Federal government. There are certain emergencies of nations, in which expedients, that in the ordinary state of things ought to be forborne, become essential to the public weal. And the government, from the possibility of such emergencies, ought ever to have the option of making use of them."[183]

It is interesting to observe that Hamilton's argument in defense of the power to levy poll-taxes would have been much more effective if it had been urged in support of the power to levy a direct tax laid in proportion to wealth. But this kind of a tax would, in the opinion of the framers, have placed too heavy a burden upon the well-to-do. Hence they were willing to deprive the general government of the power to levy it even at the risk of crippling it in some great emergency when there might be urgent need of a large revenue.

This is not strange, however, when we remember that it was the property-owning class that framed and secured the adoption of the Constitution. That they had their own interests in view when they confined the general government practically to indirect taxes levied upon articles of general consumption, and forbade direct taxes levied in proportion to wealth, seems highly probable. It appears, then, that the recent decision of the United States Supreme Court declaring the Federal Income Tax unconstitutional merely gave effect to the original spirit and purpose of this provision.

The disposition to guard the interests of the property-holding class rather than to prevent legislation for their advantage is also seen in the interpretation which has been given to the provision forbidding the states to pass any laws impairing the obligation of contracts. The framers of the Constitution probably did not have in mind the extended application which the courts have since made of this limitation on the power of the states. Perhaps they intended nothing more than that the states should be prevented from repudiating their just debts. But whatever may have been the intention of the framers themselves, the reactionary movement in which they were the recognized leaders, finally brought about a much broader and, from the point of view of the capitalist class, more desirable interpretation of this provision.

There is evidence of a desire to limit the power of the states in this direction even before the Constitutional Convention of 1787 assembled. The legislature of Pennsylvania in 1785 passed a bill repealing an act of 1782 which granted a charter to the Bank of North America. James Wilson, who is said to have suggested the above-mentioned clause of the Federal Constitution, made an argument against the repeal of the charter, in which he claimed that the power, or at least the right of the legislature, to modify or repeal did not apply to all kinds of legislation. It could safely be exercised, he thought, in the case of "a law respecting the rights and properties of all the citizens of the state."

"Very different," he says, "is the case with regard to a law, by which the state grants privileges to a congregation or other society.... Still more different is the case with regard to a law by which an estate is vested or confirmed in an individual: if, in this case, the legislature may, at discretion, and without any reason assigned, divest or destroy his estate, then a person seized of an estate in fee-simple, under legislative sanction, is, in truth, nothing more than a solemn tenant at will....

"To receive the legislative stamp of stability and permanency, acts of incorporation are applied for from the legislature. If these acts may be repealed without notice, without accusation, without hearing, without proof, without forfeiture, where is the stamp of their stability?... If the act for incorporating the subscribers to the Bank of North America shall be repealed in this manner, a precedent will be established for repealing, in the same manner, every other legislative charter in Pennsylvania.... Those acts of the state, which have hitherto been considered as the sure anchors of privilege and of property, will become the sport of every varying gust of politics, and will float wildly backwards and forwards on the irregular and impetuous tides of party and faction."[184]

In 1810 the case of Fletcher v. Peck[185] was decided in the Supreme Court of the United States. Chief Justice Marshall, in delivering the opinion of the court, said:

"The principle asserted is that one legislature is competent to repeal any act which a former legislature was competent to pass; and that one legislature can not abridge the powers of a succeeding legislature. The correctness of this principle, so far as respects general legislation, can never be controverted. But if an act be done under a law, a succeeding legislature can not undo it....

"When then a law is in the nature of a contract, when absolute rights have vested under that contract, a repeal of the law can not devest those rights; ...

"It may well be doubted whether the nature of society and of government does not prescribe some limits to the legislative power; ...

"It is, then, the unanimous opinion of the court, that, in this case, the estate having passed into the hands of a purchaser for a valuable consideration, without notice, the state of Georgia was restrained, either by general principles, which are common to our free institutions, or by the particular provisions of the Constitution of the United States, from passing a law whereby the estate of the plaintiff in the premises so purchased could be constitutionally and legally impaired and rendered null and void."

It is evident from this opinion that the court would have been disposed at that time to declare state laws impairing property rights null and void, even if there had been nothing in the Constitution of the United States to justify the exercise of such a power. Justice Johnson, in a separate opinion, said:

"I do not hesitate to declare that a state does not possess the power of revoking its own grants. But I do it on a general principle, on the reason and nature of things: a principle which will impose laws even on the Deity....

"I have thrown out these ideas that I may have it distinctly understood that my opinion on this point is not founded on the provision in the Constitution of the United States, relative to laws impairing the obligation of contracts."

It was contended in this case that the state of Georgia had the right to revoke the grant on the ground that it was secured by corrupt means. This argument evidently failed to appeal to the court. It was referred to by Justice Johnson who said "as to the idea that the grants of a legislature may be void because the legislature are corrupt, it appears to me to be subject to insuperable difficulties.... The acts of the supreme power of a country must be considered pure...."

It is interesting to observe that the Federalist judges in the early years of our history under the Constitution did not deem it necessary to find a constitutional ground for decisions of this sort. But with the overthrow of the Federalist party and the progress of belief in popular government, there is an evident disposition on the part of the court to extend the protection of the Federal Constitution to all the powers which it claimed the right to exercise. Thus in the Dartmouth College case, decided in 1819, the United States Supreme Court appears to have abandoned its earlier position and to have recognized the Constitution as the source of its power to annul state laws.

"It is under the protection of the decision in the Dartmouth College case," says Judge Cooley, "that the most enormous and threatening powers in our country have been created; some of the great and wealthy corporations actually having greater influence in the country at large, and upon the legislation of the country than the states to which they owe their corporate existence. Every privilege granted or right conferred—no matter by what means or on what pretence—being made inviolable by the Constitution, the government is frequently found stripped of its authority in very important particulars, by unwise, careless, or corrupt legislation; and a clause of the Federal Constitution, whose purpose was to preclude the repudiation of debts and just contracts, protects and perpetuates the evil."[186]

Any government framed and set up to guard and promote the interests of the people generally ought to have full power to modify or revoke all rights or privileges granted in disregard of the public welfare. But the Supreme Court, while permitting the creation or extension of property rights, has prevented the subsequent abridgment of such rights, even when the interests of the general public demanded it. The effect of this has been to make the corporations take an active part in corrupting state politics. Special legislation was not prohibited. In fact, it was a common way of creating property rights. If a bank, an insurance company, or a railway corporation was organized, it was necessary to obtain a charter from the legislature which defined its powers and privileges. The corporation came into existence by virtue of a special act of the legislature and could exercise only such powers and enjoy only such rights and privileges as that body saw fit to confer upon it. The legislature might refuse to grant a charter, but having granted it, it became a vested right which could not be revoked. The charter thus granted by the legislature was a special privilege. In many instances it was secured as a reward for political services by favorites of the party machine, or through the corrupt expenditure of money or the equally corrupt distribution of stock in the proposed corporation among those who controlled legislation. Not only did this system invite corruption in the granting of such charters, but it also created a motive for the further use of corrupt means to keep possible competitors from securing like privileges. It was worth the while to spend money to secure a valuable privilege if when once obtained the legislature could not revoke it. And it was also worth the while to spend more money to keep dangerous competitors out of the field if by so doing it could enjoy some of the benefits of monopoly. By thus holding that a privilege granted to an individual or a private corporation by special act of the legislature was a contract which could not be revoked by that body, the courts in their effort to protect property rights opened the door which allowed corporation funds to be brought into our state legislatures early in our history for purposes of corruption.

But little attention has been given as yet to this early species of corruption which in some of the states at least assumed the proportions of a serious political evil.

"During the first half century banking in New York," says Horace White, "was an integral part of the spoils of politics. Federalists would grant no charters to Republicans, and Republicans none to Federalists. After a few banks had been established they united, regardless of politics, to create a monopoly by preventing other persons from getting charters. When charters were applied for and refused, the applicants began business on the common-law plan. Then, at the instigation of the favored ones, the politicians passed a law to suppress all unchartered banks. The latter went to Albany and bribed the legislature. In short, politics, monopoly, and bribery constitute the key to banking in the early history of the state."[187]

The intervention of the courts which made the conditions above described possible, while ostensibly limiting the power of the state legislature, in reality enlarged and extended it in the interest of the capital-owning class. It gave to the state legislature a power which up to that time it had not possessed—the power to grant rights and privileges of which the grantees could not be deprived by subsequent legislation. Before the adoption of the Federal Constitution no act of the legislature could permanently override the will of the qualified voters. It was subject to modification or repeal at the hands of any succeeding legislature. The voters of the state thus had what was in effect an indirect veto on all legislative acts—a power which they might exercise through a subsequent legislature or constitutional convention. But with the adoption of the Constitution of the United States the Federal courts were able to deprive them of this power where it was most needed. This removed the only effective check on corruption and class legislation, thus placing the people at the mercy of their state legislatures and any private interests that might temporarily control them.

The power which the legislatures thus acquired to grant charters which could not be amended or repealed made it necessary for the people to devise some new method of protecting themselves against this abuse of legislative authority. The outcome of this movement to re-establish some effective popular check on the legislature has taken the form in a majority of the states of a constitutional amendment by which the right is reserved to amend or repeal all laws conferring corporate powers. Such constitutional changes provide no remedy, however, for the evils resulting from legislative grants made previous to their adoption. The granting of special charters is now also prohibited in many states, the constitution requiring that all corporations shall be formed under general laws. These constitutional changes may be regarded as in the interest of the capitalist class as a whole, whose demand was for a broader and more liberal policy—one which would extend the advantages of the corporate form of organization to all capitalists in every line of business. But even our general corporation laws have been enacted too largely in the interest of those who control our business undertakings and without due regard to the rights of the general public.

A study of our political history shows that the attitude of the courts has been responsible for much of our political immorality. By protecting the capitalist in the possession and enjoyment of privileges unwisely and even corruptly granted, they have greatly strengthened the motive for employing bribery and other corrupt means in securing the grant of special privileges. If the courts had all along held that any proof of fraud or corruption in obtaining a franchise or other legislative grant was sufficient to justify its revocation, the lobbyist, the bribe-giver, and the "innocent purchaser" of rights and privileges stolen from the people, would have found the traffic in legislative favors a precarious and much less profitable mode of acquiring wealth.



CHAPTER XIII

THE INFLUENCE OF DEMOCRACY UPON THE CONSTITUTION

The distinguishing feature of the Constitution, as shown in the preceding chapters of this book, was the elaborate provisions which it contained for limiting the power of the majority. The direction of its development, however, has in many respects been quite different from that for which the more conservative of its framers hoped.[188] The checks upon democracy which it contained were nevertheless so skilfully contrived and so effective that the progress of the popular movement has been more seriously hampered and retarded here than in any other country where the belief in majority rule has come to be widely accepted. In some important respects the system as originally set up has yielded to the pressure of present-day tendencies in political thought; but many of its features are at variance with what has come to be regarded as essential in any well-organized democracy.

It is not so much in formal changes made in the Constitution as in the changes introduced through interpretation and usage that we must look for the influence of nineteenth-century democracy. In fact, the formal amendment of the Constitution, as shown in Chapter IV, is practically impossible. But no scheme of government set up for eighteenth-century society could have survived throughout the nineteenth and into the twentieth century without undergoing important modifications. No century of which we have any knowledge has witnessed so much progress along nearly every line of thought and activity. An industrial and social revolution has brought a new type of society into existence and changed our point of view with reference to nearly every important economic and political question. Our constitutional and legal system, however, has stubbornly resisted the influence of this newer thought, although enough has been conceded to the believers in majority rule from time to time to keep the system of checks from breaking down.

Some of the checks which the founders of our government established no longer exist except in form. This is true of the electoral college through which the framers of the Constitution hoped and expected to prevent the majority of the qualified voters from choosing the President. In this case democracy has largely defeated the end of the framers, though the small states, through their disproportionately large representation in the electoral college, exert an influence in Presidential elections out of proportion to their population.

The most important change in the practical operation of the system has been accomplished indirectly through the extension of the suffrage in the various states. Fortunately, the qualifications of electors were not fixed by the Federal Constitution. If they had been, it is altogether probable that the suffrage would have been much restricted, since the right to vote was at that time limited to the minority. The state constitutions responded in time to the influence of the democratic movement and manhood suffrage became general. This placed not only the various state governments but also the President and the House of Representatives upon a basis which was popular in theory if not in fact. Much remained and still remains to be done in the matter of perfecting the party system and the various organs for formulating and expressing public opinion with reference to political questions, before there will be any assurance that even these branches of the general government will always represent public sentiment.

There is one serious defect in the method of choosing the President. The system makes possible the election of an executive to whom a majority and even a large majority of the voters might be bitterly opposed. From the point of view of the framers of the Constitution the choice of a mere popular favorite was undesirable and even dangerous; but according to the view now generally accepted the chief executive of the nation should represent those policies which have the support of a majority of the people.

It is possible that the candidate receiving a majority of all the votes cast may be defeated,[189] while it often happens that the successful candidate receives less than a majority of the popular vote.[190] When three or more tickets are placed in the field, the candidate having a majority in the electoral college may fall far short of a majority of the popular vote. This was the case when Lincoln was elected President in 1860. There were four candidates for the Presidency, and while Lincoln received a larger popular vote than any other one candidate, he received less than the combined vote for either Douglas and Breckenridge, or Douglas and Bell. In fact, he received less than two-fifths of the total popular vote.

It is easily seen that a system is fraught with grave danger, especially in times of bitter sectional and party strife, which makes possible the election of a minority President. At such times opposition to governmental policies is most likely to assume the form of active resistance when a minority secures control of the government. In other words, a majority is more likely to resist a minority than a minority is to resist a majority. This would be true especially in a country where the people generally accept the principle of majority rule.

It can not be claimed that Lincoln was, or that the South regarded him as, the choice of a majority of the people. A different system which would have precluded the election of a President who did not have a clear majority of the popular vote might have done much toward discouraging active resistance on the part of the Southern States.

No one, in fact, has stated the case against minority rule more clearly or forcefully than Lincoln himself. In a speech made in the House of Representatives January 12, 1848, on "The War with Mexico," he said:

"Any people anywhere, being inclined and having the power, have the right to rise up and shake off the existing government, and form a new one that suits them better. This is a most valuable, a most sacred right—a right which, we hope and believe, is to liberate the world. Nor is this right confined to cases in which the whole people of an existing government may choose to exercise it. Any portion of such people that can may revolutionize, and make their own of so much of the territory as they inhabit. More than this, a majority of any portion of such people may revolutionize, putting down a minority, intermingled with, or near about them, who may oppose their movements. Such minority was precisely the case of the Tories of our own Revolution."[191]

This was quoted in defense of the right of secession by Alexander H. Stephens in his "Constitutional View of the Late War between the States."[192]

The chief remaining obstacles to popular legislation are the Senate and the Supreme Court. Some means must be found to make these two branches of the government responsible to the majority before the government as a whole can be depended upon to give prompt and effective expression to public opinion. The Senate presents the most difficult problem for democracy to solve. The present method of choosing senators is altogether unsatisfactory. It has resulted in making the upper house of our Federal legislature representative of those special interests over which there is urgent need of effective public control. It has also had the effect of subordinating the making of laws in our state legislatures to that purely extraneous function—the election of United States senators. The exercise of the latter function has done more than anything else to confuse state politics by making it necessary for those interests that would control the United States Senate to secure the nomination and election of such men to the state legislatures as can be relied upon to choose senators who will not be too much in sympathy with anti-corporation sentiments.

The Senate has fulfilled in larger measure than any other branch of the government the expectation of the founders. It was intended to be representative of conservatism and wealth and a solid and enduring bulwark against democracy. That it has accomplished this purpose of the framers can scarcely be denied. But the political beliefs of the framers are not the generally accepted political beliefs of to-day. It is immaterial to the people generally that the attitude of the Senate on public questions is in line with the purpose for which that body was originally established. The criticism of the Senate's policy expressed in the phrase "all brakes and no steam"[193] indicates not so much a change in the character and influence of that body as in the attitude of the people toward the checks which the Constitution imposed upon democracy. Conservatism has always been characteristic of the United States Senate, which, as Sir Henry Maine says, is "the one thoroughly successful institution [upper house] which has been established since the tide of modern democracy began to run."[194] Measuring success by the degree of resistance offered to the will of the majority, as this writer does, the conclusion is correct. This is the standard of judgment which the framers of the Constitution would have applied, but it is not the generally accepted standard according to which the success of that body would be judged to-day. We have now come to accept the view that every organ of government must be approved or condemned according as it furthers or thwarts the ends of democracy. Applying this test, the conclusion is inevitable that the Senate as now constituted is out of harmony with present-day political thought.

What, then, can be done to make that body an organ of democracy? There are three distinct evils in the Senate as it is now organized. The first pertains to the irresponsibility of its members due to their method of election and long term of office. But inasmuch as this could be remedied only by a constitutional amendment, it is not likely that anything short of a revolutionary public sentiment in favor of such change could compel the preliminary two-thirds majority in that body which the Constitution makes necessary. A body made up of men who for the most part realize that they owe their political advancement to a minority would naturally be loth to support a change in the system which would place the election to membership in that body directly in the hands of the people. It is improbable that any such reform can be accomplished at present. Any such direct attack upon the system would under present conditions be almost certain to fail. Some method of accomplishing this object must be employed which does not require the co-operation of the Senate, and which, without any constitutional amendment, really deprives the legislature of the power to select United States Senators as the electoral college has been deprived of all power in the choice of President.

The second defect in the Senate is the equal representation of the states in that body. It is not only absurd but manifestly unjust that a small state like Nevada should have as much representation in the controlling branch of Congress as New York with more than one hundred and seventy-one times as much population. A more inequitable distribution of representation it would be difficult to imagine; yet this evil could not be removed even by constitutional amendment, since this matter does not come within the scope of the amending power, unless the state or states affected by such proposed change should all give their assent.

The third defect in the Senate is the extraordinary power which the Constitution has conferred upon it. If it were a directly elected body whose members were apportioned among the states according to population, the overshadowing influence of the Senate would not be a serious matter. But, as shown in Chapter VI, that body controls jointly with the President the appointing and the treaty-making power. Moreover, the latter power may be exercised with reference to many things concerning which Congress has or could legislate. The Senate and the President may thus repeal what Congress has enacted. We thus have the peculiar situation that a law enacted with the concurrence of the House may be repealed without its consent, while a law which takes the form of a treaty can not be repealed without the consent of the Senate.

Theoretically, the Constitution could be amended so as to diminish the power of the Senate, but as a matter of fact no change in the Constitution would be more difficult to bring about. Any proposal to reduce the power of the Senate would jeopardize the prestige and influence of the smaller states no less than the proposal to deprive them of equal representation in that body. The small states approach political equality with the large, just in proportion as the influence of the Senate is a dominating factor in the policy of the government. Any attack on this equality of representation would ally the small states together in defense of this privilege, and make it impossible to obtain the assent of three-fourths of the states to any such change.

There is still another respect in which this equality of representation in the Senate is unfortunate. It tends to make it easier for corporation influences to dominate that body. This arises out of the fact that it is more difficult and more expensive to control the election of senators in a large than in a small state. This tends to make the small states a favorite field for political activity on the part of those corporations which wish to secure or prevent Federal legislation.

The Supreme Court is generally regarded as the most effective of all our constitutional checks upon democracy. Still, if the Senate were once democratized, it would not be a difficult matter to bring the Federal judiciary into line with the popular movement. In fact, the means employed in England to subordinate the House of Lords to the Commons indicates the method which might be employed here to subordinate the Supreme Court to Congress. The Ministry in England, virtually appointed by and responsible to the majority in the House of Commons, secured control of the prerogatives of the Crown, one of which was the right to appoint peers. No sooner did the House of Commons come into possession of this power through a responsible Ministry than it realized the possibility of making use of it to overcome opposition to their policies on the part of the Lords. If the House of Lords did not yield to the House of Commons, the latter, through its Cabinet, could create new peers in sufficient number to break down all resistance in that body. The possession of that power by the Commons and the warning that it would be used if necessary has been sufficient to ensure compliance on the part of the Lords. In a similar manner Congress and the President could control the Supreme Court. The Constitution does not fix the number of Supreme judges. This is a matter of detail which was left to Congress, which may at any time provide for the addition of as many new judges to the Supreme Court as it may see fit. Thus Congress, with the co-operation of the President, could control the policy of the Supreme Court in exactly the same way and to the same extent that the House of Commons controls the House of Lords.