Philip Dru: Administrator/Chapter XLIV

Chapter XLIV One Cause of the High Cost of Living

In one of their fireside talks, Selwyn told Dru that a potential weapon in the hands of those who had selfish purposes to subserve, was the long and confusing ballot.

“Whenever a change is suggested by which it can be shortened, and the candidates brought within easy review of the electorate, the objection is always raised,” said Selwyn, “that the rights of the people are being invaded.

“‘Let the people rule,’ is the cry,” he said, “and the unthinking many believing that democratic government is being threatened, demand that they be permitted to vote for every petty officer.

“Of course quite the reverse is true,” continued Selwyn, “for when the ballot is filled with names of candidates running for general and local offices, there is, besides the confusion, the usual trading. As a rule, interest centers on the local man, and there is less scrutiny of those candidates seeking the more important offices.”

“While I had already made up my mind,” said Dru, “as to the short ballot and a direct accountability to the people, I am glad to have you confirm the correctness of my views.”

“You may take my word for it, General Dru, that the interests also desire large bodies of law makers instead of few. You may perhaps recall how vigorously they opposed the commission form of government for cities.

“Under the old system when there was a large council, no one was responsible. If a citizen had a grievance, and complained to his councilman, he was perhaps truthfully told that he was not to blame. He was sent from one member of the city government to the other, and unable to obtain relief, in sheer desperation, he gave up hope and abandoned his effort for justice. But under the commission form of government, none of the officials can shirk responsibility. Each is in charge of a department, and if there is inefficiency, it is easy to place the blame where it properly belongs.

“Under such a system the administration of public affairs becomes at once, simple, direct and business-like. If any outside corrupt influences seek to creep in, they are easy of detection and the punishment can be made swift and certain.”

“I want to thank you again, Senator Selwyn, for the help you have been to me in giving me the benefit of your ripe experience in public affairs,” said Dru, “and there is another phase of the subject that I would like to discuss with you. I have thought long and seriously how to overcome the fixing of prices by individuals and corporations, and how the people may be protected from that form of robbery.

“When there is a monopoly or trust, it is easy to locate the offense, but it is a different proposition when one must needs deal with a large number of corporations and individuals, who, under the guise of competition, have an understanding, both as to prices and territory to be served.

“For instance, the coal dealers, at the beginning of winter, announce a fixed price for coal. If there are fifty of them and all are approached, not one of them will vary his quotation from the other forty-nine. If he should do so, the coal operators would be informed and the offending dealer would find, by some pretext or another, his supply cut off.

“We see the same condition regarding large supply and manufacturing concerns which cover the country with their very essential products. A keen rivalry is apparent, and competitive bids in sealed envelopes are made when requested, but as a matter of fact, we know that there is no competition. Can you give me any information upon this matter?”

“There are many and devious ways by which the law can be evaded and by which the despoliation of the public may be accomplished,” said Selwyn. “The representatives of those large business concerns meet and a map of the United States is spread out before them. This map is regarded by them very much as if it were a huge pie that is to be divided according to the capacity of each to absorb and digest his share. The territory is not squared off, that is, taking in whole sections of contiguous country, but in a much more subtle way, so that the delusion of competition may be undisturbed. When several of these concerns are requested to make prices, they readily comply and seem eager for the order. The delusion extends even to their agents, who are as innocent as the would-be purchaser of the real conditions, and are doing their utmost to obtain the business. The concern in whose assigned territory the business originates, makes the price and informs its supposed rivals of its bid, so that they may each make one slightly higher.”

“Which goes to show,” said Dru, “how easy it is to exploit the public when there is harmony among the exploiters. There seems to me to be two evils involved in this problem, Senator Selwyn, one is the undue cost to the people, and the other, but lesser, evil, is the protection of incompetency.

“It is not the survival of the fittest, but an excess of profits, that enables the incompetent to live and thrive.”

After a long and exhaustive study of this problem, the Administrator directed his legal advisers to incorporate his views into law.

No individual as such, was to be permitted to deal in what might be termed products of the natural resources of the country, unless he subjected himself to all the publicity and penalties that would accrue to a corporation, under the new corporate regulations.

Corporations, argued Dru, could be dealt with under the new laws in a way that, while fair to them, would protect the public. In the future, he reminded his commission, there would be upon the directorates a representative of either the National, State, or Municipal governments, and the books, and every transaction, would be open to the public. This would apply to both the owner of the raw material, be it mine, forest, or what not, as well as to the corporation or individual who distributed the marketable product.

It was Dru’s idea that public opinion was to be invoked to aid in the task, and district attorneys and grand juries, throughout the country, were to be admonished to do their duty. If there was a fixity of prices in any commodity or product, or even approximately so, he declared, it would be prima facie evidence of a combination.

In this way, the Administrator thought the evil of pools and trust agreements could be eradicated, and a healthful competition, content with reasonable profits, established. If a single corporation, by its extreme efficiency, or from unusual conditions, should constitute a monopoly so that there was practically no competition, then it would be necessary, he thought, for the Government to fix a price reasonable to all interests involved.

Therefore it was not intended to put a limit on the size or the comprehensiveness of any corporation, further than that it should not stifle competition, except by greater efficiency in production and distribution. If this should happen, then the people and the Government would be protected by publicity, by their representative on the board of directors and by the fixing of prices, if necessary.

It had been shown by the career of one of the greatest industrial combinations that the world has yet known, that there was a limit where size and inefficiency met. The only way that this corporation could maintain its lead was through the devious paths of relentless monopoly.

Dru wanted America to contend for its share of the world’s trade, and to enable it to accomplish this, he favored giving business the widest latitude consistent with protection of the people.

When he assumed control of the Government, one of the many absurdities of the American economic system was the practical inhibition of a merchant marine. While the country was second to none in the value and quantity of production, yet its laws were so framed that it was dependent upon other nations for its transportation by sea; and its carrying trade was in no way commensurate with the dignity of the coast line and with the power and wealth of the Nation.