Contemporary American History, 1877-1913
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Title: Contemporary American History, 1877-1913
Author: Charles A. Beard
Release date: November 8, 2010 [eBook #34253]
Language: English
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CONTEMPORARY AMERICAN HISTORY
1877-1913
by
CHARLES A. BEARD
Associate Professor Of Politics in Columbia University
New York
The Macmillan Company
1914
All rights reserved
Copyright, 1914,
By The Macmillan Company.
Set up and electrotyped. Published February, 1914.
Norwood Press
J. S. Cushing Co.--Berwick & Smith Co.
Norwood, Mass., U.S.A.
PREFACE
In teaching American government and politics, I constantly meet large
numbers of students who have no knowledge of the most elementary facts
of American history since the Civil War. When they are taken to task for
their neglect, they reply that there is no textbook dealing with the
period, and that the smaller histories are sadly deficient in their
treatment of our age.
It is to supply the student and general reader with a handy guide to
contemporary history that I have undertaken this volume. I have made no
attempt to present an "artistically balanced" account of the last
thirty-five years, but have sought rather to furnish a background for
the leading issues of current politics and to enlist the interest of the
student in the history of the most wonderful period in American
development. The book is necessarily somewhat "impressionistic" and in
part it is based upon materials which have not been adequately sifted
and evaluated. Nevertheless, I have endeavored to be accurate and fair,
and at the same time to invite on the part of the student some of that
free play of the mind which Matthew Arnold has shown to be so helpful in
literary criticism.
Although the volume has been designed, in a way, as a textbook, I have
thrown aside the methods of the almanac and chronicle, and, at the risk
of displeasing the reader who expects a little about everything
(including the Sioux war and the San Francisco earthquake), I have
omitted with a light heart many of the staples of history in order to
treat more fully the matters which seem important from the modern point
of view. I have also refused to mar the pages with black type, paragraph
numbers, and other "apparatus" which tradition has prescribed for
"manuals." Detailed election statistics and the guide to additional
reading I have placed in an appendix.
In the preparation of the book, I have made extensive use of the volumes
by Professors Dunning, Sparks, Dewey, and Latane, in the American Nation
Series, and I wish to acknowledge once for all my deep debt to them. My
colleague, Mr. B. B. Kendrick, read all of the proofs and saved me from
many an error. Professor R. L. Schuyler gave me the benefit of his
criticisms on part of the proof. To Dr. Louis A. Mayers, of the College
of the City of New York, I am under special obligations for valuable
suggestions as to arrangement and for drafting a large portion of
Chapter III. The shortcomings of the book fall to me, but I shall be
recompensed for my indiscretions, if this volume is speedily followed by
a number of texts, large and small, dealing with American history since
the Civil War. It is showing no disrespect to our ancestors to be as
much interested in our age as they were in theirs; and the doctrine that
we can know more about Andrew Jackson whom we have not seen than about
Theodore Roosevelt whom we have seen is a pernicious psychological
error.
CHARLES A. BEARD.
COLUMBIA UNIVERSITY,
November, 1913.
TABLE OF CONTENTS
CHAPTER PAGE
I. THE RESTORATION OF WHITE DOMINION IN THE SOUTH 1
II. THE ECONOMIC REVOLUTION 27
III. THE REVOLUTION IN POLITICS AND LAW 50
IV. PARTIES AND PARTY ISSUES, 1877-1896 90
V. TWO DECADES OF FEDERAL LEGISLATION, 1877-1896 117
VI. THE GROWTH OF DISSENT 143
VII. THE CAMPAIGN OF 1896 164
VIII. IMPERIALISM 199
IX. THE DEVELOPMENT OF CAPITALISM 229
X. THE ADMINISTRATIONS OF THEODORE ROOSEVELT 254
XI. THE REVIVAL OF DISSENT 283
XII. MR. TAFT AND REPUBLICAN DISINTEGRATION 317
XIII. THE CAMPAIGN OF 1912 344
APPENDIX 382
BIBLIOGRAPHY 383
INDEX 391
CONTEMPORARY AMERICAN HISTORY
CHAPTER I
THE RESTORATION OF WHITE DOMINION IN THE SOUTH
When President Hayes was inaugurated on March 4, 1877, the southern
whites had almost shaken off the Republican rule which had been set up
under the protection of Federal soldiers at the close of the Civil War.
In only two states, Louisiana and South Carolina, were Republican
governors nominally in power, and these last "rulers of conquered
provinces" had only a weak grip upon their offices, which they could not
have maintained for a moment without the aid of Union troops stationed
at their capitals. By secret societies, like the Ku Klux Klan, and by
open intimidation, the conservative whites had practically recovered
from the negroes, whom the Republicans had enfranchised, the political
power which had been wrested from the old ruling class at the close of
the War. In this nullification of the Fifteenth Amendment to the Federal
Constitution and other measures designed to secure the suffrage for the
former bondmen, President Grant had acquiesced, and it was openly
rumored that Hayes would put an end to the military regime in Louisiana
and South Carolina, leaving the southern people to fight out their own
battles.
Nevertheless, the Republicans in the North were apparently loath to
accept accomplished facts. In their platform of 1876, upon which Hayes
was elected, they recalled with pride their achievement in saving the
Union and purging the land of slavery; they pledged themselves to pacify
the South and protect the rights of all citizens there; they pronounced
it to be a solemn obligation upon the Federal government to enforce the
Civil War amendments and to secure "to every citizen complete liberty
and exact equality in the exercise of all civil, political, and public
rights." Moreover, they charged the Democratic party with being "the
same in character and spirit as when it sympathized with treason."
But this vehement declaration was only the death cry of the gladiators
of the radical Republican school. Stevens and Sumner, who championed the
claims of the negroes to full civil and political rights, were gone; and
the new leaders, like Conkling and Blaine, although they still waxed
eloquent over the wrongs of the freedmen, were more concerned about the
forward swing of railway and capitalist enterprises in the North and
West than they were about maintaining in the South the rule of a handful
of white Republicans supported by negro voters. Only a few of the
old-school Republicans who firmly believed in the doctrine of the
"natural rights" of the negro, and the officeholders and speculators who
were anxious to exploit the South really in their hearts supported a
continuance of the military rule in "the conquered provinces."
Moreover, there were special circumstances which made it improbable that
President Hayes would permit the further use of troops in Louisiana and
South Carolina. His election had been stoutly disputed and it was only a
stroke of good fortune that permitted his inauguration at all. It was
openly charged that his managers, during the contest over the results of
the election in 1876, had promised the abolition of the military regime
in the South in return for aid on the part of certain Democrats in
securing a settlement of the dispute in his favor. Hayes himself had,
however, maintained consistently that vague attitude so characteristic
of practical politicians. In his speech of acceptance, he promised to
help the southern states to obtain "the blessings of honest and capable
self-government." But he added also that the advancement of the
prosperity of those states could be made most effectually by "a hearty
and generous recognition of the rights of all by all." Moreover, he
approved a statement by one of his supporters to the effect that he
would restore all freemen to their rights as citizens and at the same
time obliterate sectional lines--a promise obviously impossible to
fulfill.
Whether there was any real "bargain" between Hayes and the Democratic
managers matters little, for the policy which he adopted was inevitable,
sooner or later, because there was no active political support even in
the North for a contrary policy. A few weeks after his inauguration
Hayes sent a commission of eminent men to Louisiana to investigate the
claims of the rival governments there--for there were two legislatures
and two governors in that commonwealth contending for power. The
commission found that the Republican administration, headed by Governor
Packard, was little more than a sham, and advised President Hayes of
the fact. Thereupon the President, on April 9, 1877, ordered the
withdrawal of the Federal troops from the public buildings, and
Louisiana began the restoration of her shattered fortunes under the
conservative white leadership. A day later, the President also withdrew
the troops from the capitol at Columbia, South Carolina, and the
Democratic administration under Governor Wade Hampton, a former
Confederate veteran, was duly recognized. Henceforward, the freedmen of
the South were to depend upon the generosity of the whites and upon
their own collective efforts, aided by their sympathizers, for whatever
civil and political rights they were permitted to enjoy.
_The Disfranchisement of the Negro_
Having secured the abolition of direct Federal military interference
with state administrations in the South, the Democrats turned to the
abrogation of the Federal election laws that had been passed in
1870-1871, as a part of the regular reconstruction policy for protecting
the negroes in the exercise of the suffrage. These election laws
prescribed penalties for intimidation at the polls, provided for the
appointment, by Federal circuit courts, of supervisors charged with the
duty of scrutinizing the entire election process, and authorized the
employment of United States marshals, deputies, and soldiers to support
and protect the supervisors in the discharge of their duties and to keep
the peace at the polls.
These laws, the Republican authors urged, were designed to safeguard
the purity of the ballot, not only in the South but also in the North,
and particularly in New York, where it was claimed that fraud was
regularly employed by the Democratic leaders. John Sherman declared that
the Democrats in Congress would be a "pitiful minority, if those elected
by fraud and bloodshed were debarred," adding that, "in the South one
million Republicans are disfranchised." Democrats, on the other hand,
replied that these laws were nothing more than a part of a gigantic
scheme originated by the Republicans to fasten their rule upon the
country forever by systematic interference with elections. Democratic
suspicions were strengthened by reports of many scandals--for instance,
that the supervisors in Louisiana under the Republican regime had
registered "eight thousand more colored voters than there were in the
state when the census was taken four years later." Undoubtedly, there
were plenty of frauds on both sides, and it is an open question whether
Federal interference reduced or increased the amount.
At all events, the Democrats, finding themselves in a majority in the
House of Representatives in 1877, determined to secure the repeal of the
"force laws," and in their desperation they resorted to the practice of
attaching their repeal measures to appropriation bills in the hope of
compelling President Hayes to sign them or tying up the wheels of
government by a stoppage in finances. Hayes was equal to the occasion,
and by a vigorous use of the veto power he defeated the direct assaults
of the Democrats on the election laws. At length, however, in June,
1878, he was compelled to accept a "rider" in the form of a proviso to
the annual appropriation bill for the army making it impossible for
United States marshals to employ federal troops in the execution of the
election laws. While this did not satisfy the Democrats by any means,
because it still left Federal supervision under the marshals, their
deputies and the election supervisors, it took away the main prop of the
Republicans in the South--the use of troops at elections.
The effect of this achievement on the part of the Democrats was apparent
in the succeeding congressional election, for they were able to carry
all of the southern districts except four. This cannot be attributed,
however, entirely to the suppression of the negro vote, for there was a
general landslide in 1878 which gave the Democrats a substantial
majority in both the House and the Senate. Inasmuch as a spirit of
toleration was growing up in Congress, the clause of the Fourteenth
Amendment excluding from Congress certain persons formerly connected
with the Confederacy, was not strictly enforced, and several of the most
prominent and active representatives of the old regime found their way
into both houses. Under their vigorous leadership a two years' political
war was waged between Congress and the President over the repeal of the
force bills, but Hayes won the day, because the Democrats could not
secure the requisite two-thirds vote to carry their measures against the
presidential veto.
However, the Supreme Court had been undermining the "force laws" by
nullifying separate sections, although it upheld the general principle
of the election laws against a contention that elections were wholly
within the control of state authorities. In the case of United States
_v._ Reese, the Court, in 1875, declared void two sections of the law of
1870 "because they did not strictly limit Federal jurisdiction for
protection of the right to vote to cases where the right was denied _by
a state_," but extended it to denials by private parties. In the same
year in the case of United States _v._ Cruikshank the Court gave another
blow to Federal control, in the South. A number of private citizens in
Louisiana had waged war on the blacks at an election riot, and one of
them, Cruikshank, was charged with conspiracy to deprive negroes of
rights which they enjoyed under the protection of the United States. The
Supreme Court, however, held that the Federal government had no
authority to protect the citizens of a state _against one another_, but
that such protection was, as always, a duty of the state itself. Seven
years later the Supreme Court, in the case of United States _v._ Harris,
declared null that part of the enforcement laws which penalized
conspiracies of two or more citizens to deprive another of his rights,
on the same ground as advanced in the Louisiana case.[1]
On the withdrawal of Federal troops and the open abandonment of the
policy of military coercion, the whites, seeing that the Federal courts
were not inclined to interfere, quickly completed the process of
obtaining control over the machinery of state government. That process
had been begun shortly after the War, taking the form of intimidation
at the polls. It was carried forward another step when the "carpet
baggers" and other politicians who had organized and used the negro vote
were deprived of Federal support and driven out. When this active
outside interference in southern politics was cut off, thousands of
negroes stayed away from the polls through sheer indifference, for their
interest in politics had been stimulated by artificial forces--bribery
and absurd promises. Intimidation and indifference worked a widespread
disfranchisement before the close of the seventies.
These early stages in the process of disfranchisement were described by
Senator Tillman in his famous speech of February 26, 1900. "You stood up
there and insisted that we give these people a 'free vote and a fair
count.' They had it for eight years, as long as the bayonets stood
there.... We preferred to have a United States army officer rather than
a government of carpet baggers and thieves and scallywags and scoundrels
who had stolen everything in sight and mortgaged posterity; who had run
their felonious paws into the pockets of posterity by issuing bonds.
When that happened we took the government away. We stuffed the ballot
boxes. We shot them. We are not ashamed of it. With that system--force,
tissue ballots, etc.--we got tired ourselves. So we had a constitutional
convention, and we eliminated, as I said, all of the colored people whom
we could under the Fourteenth and Fifteenth Amendments." The experience
of South Carolina was duplicated in Mississippi. "For a time," said the
Hon. Thomas Spight, of that state, in Congress, in 1904, "we were
compelled to employ methods that were extremely distasteful and very
demoralizing, but now we are accomplishing the same and even better
results by strictly constitutional and legal procedure." It should be
said, however, that in the states where the negro population was
relatively smaller, violence was not necessary to exclude the negroes
from the polls.
A peaceful method of disfranchising negroes and poor whites was the
imposition of a poll tax on voters. Negroes seldom paid their taxes
until the fight over prohibition commenced in the eighties and nineties.
Then the liquor interests began to pay the negroes' poll taxes and by a
generous distribution of their commodities were able to carry the day at
the polls. Thereupon the prohibitionists determined to find some
effective constitutional means of excluding the negroes from voting.
This last stage in the disfranchisement process--the disqualification of
negroes by ingenious constitutional and statutory provisions--was
hastened by the rise during the eighties and nineties of the radical or
Populist party in the South, which evenly balanced the Democratic party
in many places and threatened for a time to disintegrate the older
organization. In this contest between the white factions a small number
of active negroes secured an extraordinary influence in holding the
balance of power; and both white parties sought to secure predominance
by purchasing the venal negro vote which was as large as, or perhaps
larger than, the venal white vote in such northern states as
Connecticut, Rhode Island, or Indiana. The conservative wing of the
white population was happy to take advantage of the prevailing race
prejudice to secure the enactment of legislation disfranchising a
considerable number of the propertyless whites as well as the negroes;
and the radicals grew tired of buying negro voters.
Out of this condition of affairs came a series of constitutional
conventions which devised all sorts of restrictions to exclude the
negroes and large numbers of the "lower classes" from voting altogether,
without directly violating the Fifteenth Amendment to the Federal
Constitution providing against disfranchisement on account of race,
color, or previous condition of servitude.
The series of conventions opened in Mississippi in 1890, where the
Populistic whites were perhaps numerically fewest. At that time
Mississippi was governed under the constitution of 1868, which provided
that no property or educational test should be required of voters, at
least not before 1885, and also stipulated that no amendment should be
made except by legislative proposal ratified by the voters.
Notwithstanding this provision, the legislature in February, 1890,
called a convention to amend the constitution "or enact a new
constitution." This convention proceeded to "ordain and establish" a new
frame of government, without referring it to the voters for
ratification; and the courts of the state set judicial sanction on the
procedure, saying that popular ratification was not necessary. This
constitution provides that every elector shall, in addition to
possessing other qualifications, "be able to read any section of the
constitution of this state; or he shall be able to understand the same
when read to him or to give a reasonable interpretation thereof." Under
such a general provision everything depends upon the attitude of the
election officials toward the applicants for registration, for it is
possible to disfranchise any person, no matter how well educated, by
requiring the "interpretation" of some obscure and technical legal
point.
Five years later South Carolina followed the example of Mississippi, and
by means of a state convention enacted a new constitution disfranchising
negroes; and put it into force without submitting it to popular
ratification.[2] The next year (1896) the legislature of Louisiana
called a convention empowered to frame a new constitution and to put it
into effect without popular approval. This movement was opposed by the
Populists, one of whom declared in the legislature that it was "a step
in the direction of taking the government of this state out of the hands
of the masses and putting it in the hands of the classes." In spite of
the opposition, which was rather formidable, the convention was
assembled, and ordained a new frame of government (1898) disfranchising
negroes and many whites. The Hon. T. J. Symmes, addressing the
convention at the close, frankly stated that their purpose was to
establish the supremacy of the Democratic party as the white man's
party.
Four principal devices are now employed in the several constitutional
provisions disfranchising negroes: (1) a small property qualification,
(2) a prerequisite that the voter must be able to read any section of
the state constitution or explain it, when read, to the satisfaction of
the registering officers, (3) the "grandfather clause," as in Louisiana
where any person, who voted on or before 1867 or the son or grandson of
such person, may vote, even if he does not possess the other
qualifications; and (4) the wide extension of disfranchisement for
crimes by including such offenses as obtaining money under false
pretenses, adultery, wife-beating, petit larceny, fraudulent breach of
trust, among those which work deprivation of the suffrage.
The effect of these limitations on the colored vote has been to reduce
it seriously in the far South. If the negro has the amount of taxable
property required by the constitution, he is caught by the provision
which requires him to explain a section of the state constitution to the
satisfaction of the white registering officers. The meanest white,
however, can usually get through the net with the aid of his
grandfather, or by showing his expertness in constitutional law. Mr. J.
C. Rose has published the election statistics for South Carolina and
Mississippi;[3] it appears that in those states there were, in 1900,
about 350,796 adult male negroes and that the total Republican vote in
both commonwealths in the national election of that year was only 5443.
At a rough guess perhaps 2000 votes of this number were cast by white
men, and the conclusion must be that about ninety-nine out of every
hundred negroes failed to vote for President in those states. It is
fair to state, however, that indifference on the part of the negroes was
to some extent responsible for the small vote.
The legal restrictions completed the work which had been begun by
intimidation. Under the new constitution of 1890 in Mississippi, only
8615 negroes out of 147,000 of a voting age were registered. In four
years, the number registered in Louisiana fell from 127,000 in 1896 to
5300 in 1900. This was the exact result which the advocates of white
supremacy desired to attain, and in this they were warmly supported by
eminent Democrats in the North. "The white man in the South," said Mr.
Bryan in a speech in New York, in 1908, "has disfranchised the negro in
self-protection; and there is not a Republican in the North who would
not have done the same thing under the same circumstances. The white men
of the South are determined that the negro will and shall be
disfranchised everywhere it is necessary to prevent the recurrence of
the horrors of carpet bag rule."
Several attempts have been made to test the constitutionality of these
laws in the Supreme Court of the United States, but that tribunal has
been able to avoid coming to a direct decision on the merits of the
particular measures--and with a convincing display of legal reasoning.
The Constitution of the United States simply states that no citizen
shall be deprived of the right to vote on account of race, color, or
previous condition of servitude, and that the representation of any
state in Congress shall be reduced in the proportion to which it
deprives adult male citizens of the franchise. The ingenious provisions
of the southern constitutions do not deprive the negro of the right to
vote on account of his color, but on account of his grandfather, or his
inability to expound the constitution, or his poverty. In one of the
cases before the Supreme Court, the plaintiff alleged that the Alabama
constitution was in fact designed to deprive the negro of the vote, but
the Court answered that it could not afford the remedy, that it could
not operate the election machinery of the state, and that relief would
have to come from the state itself, or from the legislative and
political departments of the Federal government.[4]
_Social Discrimination against the Negro_
The whites in the South were even less willing to submit to anything
approaching social equality with the negro than they were to accept
political equality. Discriminations against the negro in schools, inns,
theaters, churches, and other public places had been common in the North
both before and after the Civil War, and had received judicial sanction;
and it may well be imagined that the southern masters were in no mood,
after the War, to be put on the same social plane as their former
slaves, and the poor whites were naturally proud of their only
possession--a white skin. Knowing full well that this temper prevailed
in the South the radical Republicans in Congress had pushed through on
March 1, 1875, a second Civil Rights Act designed to establish a certain
social equality, so far as that could be done by law.
The spirit of this act was reflected in the preamble: "Whereas it is
essential to just government, we recognize the equality of all men
before the law, and hold that it is the duty of government in its
dealings with the people to mete out equal and exact justice to all, of
whatever nativity, race, color, or persuasion, religious or political;
and it being the appropriate object of legislation to enact great
fundamental principles into law." After this profession of faith, the
act proceeds to declare that all persons within the jurisdiction of the
United States shall be entitled to the full and equal enjoyment of the
accommodations, advantages, facilities, and privileges of inns, public
conveyances on land or water, theaters and other places of amusement,
subject to limitations applied to all alike, regardless of race or
color. The act further provided that in the selection of jurors no
discrimination should be made on account of race, color, or previous
condition of servitude under a penalty of not more than $5,000.
Jurisdiction over offenses was conferred upon the district and circuit
courts of the United States, and heavy penalties were imposed upon those
who violated the law. This measure was, of course, hotly resisted, and,
in fact, nullified everywhere throughout the Union, north and
south--except in some of the simple rural regions.
The validity of the act came before the Supreme Court for adjudication
in the celebrated Civil Rights Cases in 1883 and a part of the law was
declared unconstitutional in an opinion of the Court rendered by Mr.
Justice Bradley. According to his view, the Fourteenth Amendment did not
authorize Congress to legislate upon subjects which were in the domain
of state legislation--that is to create a code of municipal law for the
regulation of private rights; but it merely authorized Congress to
provide modes of relief against state legislation and the action of
state officers, executive or judicial, which were subversive of the
fundamental rights specified in the amendment. "Until some state law has
been passed," he said, "or some state action through its officers or
agents has been taken, adverse to the rights of citizens sought to be
protected by the Fourteenth Amendment, no legislation of the United
States under said Amendment, nor any proceeding under such legislation
can be called into activity: for the prohibitions of the Amendment are
against state laws and acts done under state authority."
The question as to whether the equal enjoyment of the accommodations in
inns, conveyances, and places of amusement was an essential right of the
citizen which no state could abridge or interfere with, Justice Bradley
declined to examine on the ground that it was not necessary to the
decision of the case. He did, however, inquire into the proposition as
to whether Congress, in enforcing the Thirteenth Amendment abolishing
slavery and involuntary servitude, could secure the social equality
contemplated by the act, under the color of sweeping away all the badges
and incidents of slavery. And on this point he came to the conclusion
that mere discriminations on account of race or color could not be
regarded as badges of slavery. "There were," he added, "thousands of
free colored people in this country before the abolition of slavery,
enjoying all of the essential rights of life, liberty, and property the
same as white citizens; and yet no one at that time thought that it was
any invasion of his personal status as a freeman because he was not
admitted to all of the privileges enjoyed by white citizens, or because
he was subjected to discriminations in the enjoyment of accommodations
in inns, public conveyances, and places of amusement."
Clearly, there was no authority in either the Thirteenth or Fourteenth
Amendment for the section of the Civil Rights Act relative to inns,
conveyances, and places of amusement, at least so far as its operation
in the several states was concerned. If, however, any state should see
fit to make or authorize unlawful discriminations amenable to the
prohibitions of the Fourteenth Amendment, Congress had the power to
afford a remedy or the courts in enforcing the Amendment could give
judicial relief. Thus, while the Justice did not definitely say that the
elements of social equality provided in the Civil Rights Act were not
guaranteed by the Fourteenth Amendment, his line of reasoning and his
language left little doubt as to what was the view of the Court.
Section four of the Civil Rights Act forbidding, under penalty,
discrimination against any person on account of race, color, or previous
condition of servitude in the selection of jurors had been passed upon
by the Supreme Court in the case of _Ex parte_ Virginia, decided in
1879, in which the section was held to be constitutional as providing
not a code of municipal law for the regulation of private rights, but a
mode of redress against the operation of state laws. The ground of
distinction between the two cases is clear. A section forbidding
discrimination in inns and conveyances is in the nature of a code of
private law, but a section forbidding discrimination in the selection of
jurors under penalty simply provides a mode of redress against
violations of the Fourteenth Amendment by state authorities.
Undoubtedly there is an admissible distinction between discrimination
against negroes in the selection of juries and the discrimination
against them in inns and public conveyances, for the former may have
definite connection with the security of those civil rights of person
and property--as distinct from social rights--which the Fourteenth
Amendment was clearly designed to enforce. This was the principle which
was brought out by the Court in the two decisions.[5] But if Justice
Bradley in the Civil Rights cases had frankly made the distinction
between _civil_ and _social_ rights, and declared the act
unconstitutional on the ground that it attempted to secure social rights
which the Fourteenth Amendment was not intended to establish, then the
decisions of the Court would have been far more definite in character.
Even if the Supreme Court had not declared the social equality provision
of the Civil Rights Act unconstitutional, it is questionable whether any
real attempt would have been made to enforce it. As it turned out, the
Court gave judicial sanction to a view undoubtedly entertained by the
major portion of the whites everywhere, and it encouraged the South to
proceed with further discriminatory legislation separating the races in
all public and quasi-public places. Railroads and common carriers were
compelled to provide separate accommodations for whites and blacks, "Jim
Crow Cars," as they are called in popular parlance, and to furnish
special seats in street railway cars. These laws have also been upheld
by the courts; but not without a great strain on their logical
faculties.
Undoubtedly there are mixed motives behind such legislation. It is in
some part a class feeling, for whites are allowed to take their colored
servants in the regular coaches and sleeping cars. Nevertheless, the
race feeling unquestionably predominates. As the author of the Louisiana
"Jim Crow Car" law put it: "It is not only the desire to separate the
whites and blacks on the railroads for the comfort it will provide, but
also for the moral effect. The separation of the races is one of the
benefits, but the demonstration of the superiority of the white man over
the negro is the greater thing. There is nothing that shows it more
conclusively than the compelling of negroes to ride in cars marked for
their especial use."
_The Attitude of the North_
Although all possibility of northern interference with the southern
states in the management of their domestic affairs seemed to have
disappeared by Cleveland's first administration, the negro question was
continuously agitated by Republican politicians, and at times with great
vigor. They were much distressed at losing their Federal patronage
after the election of Cleveland in 1884; and this first Democratic
presidential victory after the War led many of them to believe that they
could recover their lost ground only by securing to the negro the right
to vote. The Republicans were also deeply stirred by the
over-representation of the South in the House of Representatives under
the prevailing system of apportionment. They pointed out that the North
was, in this respect, at even a greater disadvantage than before the
Civil War and emancipation.
Under the original Constitution of the United States, only three fifths
of the slaves were counted in apportioning representatives among the
states; under the Fourteenth Amendment all the negroes were counted,
thus enlarging the representation of the southern states. And yet the
negroes were for practical purposes as disfranchised as they were when
they were in servitude. It was pointed out that "in the election of 1888
the average vote cast for a member of Congress in five southern states
was less than eight thousand; in five northern states, over thirty-six
thousand. Kansas, which cast three times the vote of South Carolina, had
only the same number of congressmen." The discrepancy tended to
increase, if anything. In 1906, a Mississippi district with a population
of 232,174 cast 1540 votes, while a New York district with 215,305 cast
29,119 votes.
The Republicans have several times threatened to alter this anomalous
condition of affairs. In 1890, Mr. Lodge introduced in the House of
Representatives a bill providing for the appointment of federal election
commissioners, on petition of local voters, endowed with powers to
register and count all votes, even in the face of the opposition of
local officers. This measure, which passed the House, was at length
killed in the Senate. In their platform of 1904, the Republicans
declared in favor of restoring the negro to his rights under the
Constitution, and for political purposes the party in the House later
coupled a registration and election law with the measure providing for
publicity of campaign contributions. It was not acted upon in the
Senate. In 1908, the Republicans in their platform declared "once more
and without reservation, for the enforcement in letter and spirit of the
Thirteenth, Fourteenth, and Fifteenth Amendments to the Constitution
which were designed for the protection and advancement of the negro,"
and condemned all devices designed to disfranchise him on grounds of
color alone. Although they have been in possession of all branches of
the Federal government several times, the Republicans have deemed it
inexpedient to carry out their campaign promises.
With the decline in the influence of the Civil War veterans in politics,
the possibility of Federal interference has steadily decreased. The
North had never been abolitionist in temper or political belief, as the
vote of the Free Soil party demonstrates. The Republican party was a
homestead, railway, and protectionist party opposed to slavery in the
territories, and its great leader, Lincoln, had long been on record as
opposed to political and social equality for the negro. Emancipation had
come as a stroke of fortune--not because a majority of the people had
deliberately come to the conclusion that it was a measure of justice. As
in the French Revolution at its height, the extreme radicals forged to
the front for a time, so during the Civil War and its aftermath,
"radical" Republicans held the center of the stage and gave to politics
a flavor of talk about "human rights" which was foreign to practical
statesmen like Clay and Webster. In a little while, practical men came
to the helm once more, and they were primarily interested in economic
matters--railways, finance, tariff, corporations, natural resources, and
western development. The cash nexus with the South was formed once more,
and made far stronger and subtler than in olden days. Agitation of the
negro question became bad form in the North, except for quadrennial
political purposes.
_The Negro Problem_
Thus the negro, suddenly elevated to a great height politically, was
almost as suddenly dropped by his new friends and thrown largely upon
his own ingenuity and resources for further advance. His emancipation
and enfranchisement had come almost without effort on his own part,
without that development of economic interest and of class consciousness
that had marked the rise of other social strata to political power. It
was fortuitous and had no solid foundation. It became evident,
therefore, that any permanent advance of the race must be built on
substantial elements of power in the race itself. The whites might help
with education and industrial training, but the hope of the race lay in
the development of intellectual and economic power on its own account.
In relative numerical strength the negro is not holding his own, because
of the large immigration from Europe. In 1790, the negro population
formed 19.3 per cent of the whole, and since that time it has almost
steadily declined, reaching at the last census 10.7 per cent of the
whole. Even in the southern states where the stream of foreign
immigration is the least, the negro population has fallen from 35.2 per
cent in 1790 to 29.8 per cent in 1910. In education, the negro has
undoubtedly made great progress since the War, but it must be remembered
that he was then at the bottom of the scale. The South, though poor as
compared with the North, has made large expenditures for negro
education, but it is authoritatively reported that "nearly half of the
negro children of school age in the South never get inside of the
schoolhouse."[6] The relative expenditures for the education of white
and colored children there are not ascertainable, but naturally the
balance is heavily in favor of the former. When we recall, however, the
total illiteracy of the race under slavery and then discover that in
1910 there was an average daily attendance of 1,105,629 colored children
in the southern schools, we cannot avoid the conclusion that decided
changes are destined to be made in the intellectual outlook of the race.
Reports also show that negroes are accumulating considerable property
and are becoming in large numbers the holders of small farms.
Nevertheless a very careful scholar, Dr. Walter Willcox, believes that
the figures "seem to show that the negro race at the South, in its
competition with the whites, lost ground between 1890 and 1900 in the
majority of skilled occupations which can be distinguished by the aid of
the census figures." Taking the economic status of the race as a whole,
the same authority adds: "The conclusion to which I am brought is that
relatively to the whites in the South, if not absolutely as measured by
any conceivable standard, the negro as a race is losing ground, is being
confined more and more to the inferior and less remunerative
occupations, and is not sharing proportionately to his numbers in the
prosperity of the country as a whole or of the section in which he
mainly lives."
The conclusions of the statistician are confirmed by the impressions of
such eminent champions of the negro as Dr. W. B. Dubois and Mr. Thomas
Fortune. The former declares that "in well-nigh the whole rural South
the black farmers are peons, bound by law and custom to an economic
slavery, from which the only escape is death or the penitentiary." The
latter holds that the negro has simply passed from chattel to industrial
slavery "with none of the legal and selfish restraints upon the employer
which surrounded and actuated the master." These writers attribute the
slow advance of the race to the bondage of law and prejudice to which it
is subjected in the South, and everywhere in the country, as a matter of
fact. Whatever the cause may be, there seems to be no doubt that the
colored race has not made that substantial economic advance and achieved
that standard of life which its friends hoped would follow from
emancipation. Those writers who emphasize heredity in social evolution
point to this as an evidence of the inherent disabilities of the race;
while those who emphasize environment point out the immense handicap
everywhere imposed on the race by law, custom, and prejudice.
Whatever may be the real truth about the economic status of the race,
and after all it is the relative progress of the mass that determines
the future of the race, there can be no doubt that there is an
increasing "race consciousness" which will have to be reckoned with. The
more conservative school, led by Booker T. Washington, is working to
secure for the negro an industrial training that will give him some kind
of an economic standing in the community, and if this is achieved for
large numbers, a radical change in social and political outlook will
follow, unless all signs of history fail. On the other hand, there is
growing up a radical party, under the inspiration of Dr. W. B. Dubois,
which pleads for unconditional political and social equality as a
measure of immediate justice. Dr. Dubois demands "the raising of the
negro in America to full rights and citizenship. And I mean by this no
halfway measures; I mean full and fair equality. That is, a chance to
work regardless of color, to aspire to position and preferment on the
basis of desert alone, to have the right to use public conveniences, to
enter public places of amusement on the same terms as other people, and
to be received socially by such persons as might wish to receive them."
With both of these influences at work and all the forces of modern life
playing upon the keener section of the colored population, nothing but
congenital disabilities can prevent a movement which ruling persons,
North and South, will have to take into account. How serious this
movement becomes depends, however, upon the innate capacity of colored
masses to throw off the shiftlessness and indifference to high standards
of life that, their best friends admit, stand in the way of their
gaining a substantial economic basis, without which any kind of a solid
political superstructure is impossible. The real negro question now is:
"Can the race demonstrate that capacity for sustained economic activity
and permanent organization which has lifted the white masses from
serfdom?"
FOOTNOTES:
[1] In 1894 the Democrats during Cleveland's administration completed
the demolition of the system by repealing the remaining provisions.
[2] Disfranchising provisions were adopted in other southern states as
follows: North Carolina, in 1900; Alabama and Virginia, in 1901;
Georgia, in 1908. See Lobingier, _The People's Law_, pp. 301 ff.; W. F.
Dodd, _Revision and Amendment of State Constitutions_.
[3] _The Political Science Review_, November, 1906, p. 20.
[4] Giles _v._ Harris, 189 U. S., 474.
[5] See a Massachusetts case decided before the Civil War upholding
similar discriminations against negroes. Thayer, _Cases on
Constitutional Law_, Vol. I, p. 576.
[6] This is partly due to the absence of compulsory attendance laws.
CHAPTER II
THE ECONOMIC REVOLUTION
Long before the Civil War, steam and machinery had begun to invade
American industries and statesmen of the new commercial and industrial
order had appeared in Washington. The census of 1860 reported nearly a
million and a half wage earners in the United States, and more than a
billion dollars invested in manufacturing. By that year over thirty
thousand miles of railway had been constructed, including such important
lines as the New York Central, the Erie, the Baltimore and Ohio, and the
Pennsylvania. Politicians of the type of Stephen A. Douglas, who
discussed slavery in public and devoted their less obvious activities to
securing grants of public lands and mineral resources to railway and
manufacturing corporations, had begun to elbow the more cultivated and
respectable leaders like Calhoun, Webster, and Alexander Stephens, who
belonged to the old order.
But the spectacular conflict over slavery prevented the political
results of the economic transformation from coming to the surface. Those
who had occasion to watch the proceedings of Congress during the two
decades just before the War discovered the manipulations of railway
corporations seeking land grants and privileges from the Federal
Government and the operations of the "protected" interests in behalf of
increased tariffs. Those were also harvest days for corporations and
companies in the state legislatures where special charters and
privileges were being bartered away by the wholesale. There was emerging
in a number of the larger industrial centers a small, though by no means
negligible, labor movement. But the slavery issue overshadowed
everything. The annexation of Texas, slavery in the territories, the
Compromise of 1850, the Nebraska bill, and Bleeding Kansas kept the mind
of the North from the consideration of the more fundamental economic
problems connected with the new order. The politicians, to be sure, did
not live by the slavery agitation alone, but it afforded the leading
topics for public discussion and prevented the critical from inquiring
too narrowly into the real staples of politics.
The Civil War sharply shifted the old scenery of politics. It gave a
tremendous impetus to industry and railway construction. The tariff
measures during the War gave to manufacturers an unwonted protection
against foreign competition; the demand for war supplies, iron, and
steel, railway materials, textiles, and food supplies, quickened every
enterprise in the North; the great fortunes made out of speculations in
finances, contracts for government supplies, and land-grants placed an
enormous capital in private hands to carry forward business after the
War was over.
Within little more than a quarter of a century the advance of industry
and commerce had made the United States of Lincoln's day seem small and
petty. The census of 1905 showed over twelve billion dollars invested in
factories and nearly five and one half million wage earners employed. In
that year, the total value of manufactured products was over fourteen
billion dollars--fifteen times the amount turned out in 1860. As late as
1882 the United States imported several hundred thousand tons of steel
rails annually, but within ten years the import had fallen to 134 tons
and no less than 15,000 tons were exported. At the close of the Civil
War about 3000 tons of Bessemer steel were produced annually, but within
twenty years over two million tons were put out every twelve months.
The building of railways more than kept pace with the growth of the
population and the increase in manufacturing. There were 30,000 miles of
lines in 1860; 52,000 in 1870; 166,000 in 1890; and 242,000 in 1910.
Beginning at first with the construction of lines between strategic
centers like Boston and Albany, and Philadelphia and Reading, the
leaders in this new enterprise grew more bold. They pushed rapidly into
the West where there were no cities of magnitude and no prospect of
developing a profitable business within the immediate future. Capital
flowed into the railways like water; European investors caught the
fever; farmers and merchants along prospective lines bought stocks and
bonds, expecting to reap a harvest from increased land values and
business, only to find their paper valueless on account of preferred
claims for construction; and the whole West was aflame with dreams of a
new Eldorado to be created by transportation systems.
The era of feverish construction was shortly followed by the combination
of lines and the formation of grand trunk railways and particular
"systems." In 1869, Cornelius Vanderbilt united the Hudson River and New
York Central lines, linking the metropolis and Buffalo, and four years
later he opened the way to Chicago by leasing the Lake Shore Michigan
and Southern. About the same time two other eastern companies, the
Pennsylvania and Baltimore and Ohio secured western connections which
let them into Chicago.
It must not be thought that this rapid railway expansion was due solely
to private enterprise, for, as has been the standing custom in American
politics, the cost of doubtful or profitless undertakings was thrown as
far as possible upon the public treasury. Up to 1872, the Federal
Government had granted in aid of railways 155,000,000 acres of land, an
area estimated as "almost equal to the New England states, New York, and
Pennsylvania combined; nineteen different states had voted sums
aggregating two hundred million dollars for the same purpose; and
municipalities and individuals had subscribed several hundred million
dollars to help railway construction." To the Union Pacific concern
alone the Federal Government had granted a free right of way through
public lands, twenty sections of land with each mile of railway, and a
loan up to fifty million dollars secured by a second mortgage on the
company's property. The Northern Pacific obtained lands which a railway
official estimated to be worth enough "to build the entire railroad to
Puget Sound, to fit out a fleet of sailing vessels and steamers for the
China and India trade and leave a surplus that would roll up into the
millions." Cities, townships, counties, and states voted bonds to help
build railways within their limits or granted rights of way and lands,
in addition, with a lavish hand.
The chronicle of all the frauds connected with the manipulation of land
grants to railways and the shameless sale of legal privileges cannot be
written, because in most instances no tangible records have been left.
Perhaps the most notorious of all was the Credit Mobilier scandal
connected with the Union Pacific. The leading stockholders in that
company determined to secure for themselves a large portion of the
profits of construction, which were enormous on account of the prodigal
waste; and they organized a sham concern known as the Credit Mobilier in
which they had full control and to which the construction profits went.
Inasmuch as the Federal Government through its grants and loans was an
interested party that might interfere at any time, the concern, through
its agent in Congress, Oakes Ames, a representative from Massachusetts,
distributed generous blocks of stock to "approachable" Senators and
Representatives. News of the transaction leaked out, and a congressional
investigation in 1872 showed that a number of men of the highest
standing, including Mr. Colfax, the Vice President, were deeply
implicated. Nothing was done, however; the leading conspirator, Ames,
was merely censured by the House, and the booty, for the most part,
remained in the hands of those connected with the scandal. When the
road was complete, "it was saddled with interest payments on $27,000,000
first mortgage bonds, $27,000,000 government bonds, $10,000,000 income
bonds, $10,000,000 land grant bonds, and if anything were left, dividend
payments on $36,000,000 of stock."
* * * * *
It would be easy to multiply figures showing astounding gains in
industry, business, foreign trade, and railways; or to multiply stories
of scandalous and unfair practices on the part of financiers, but we are
not primarily concerned here with the technique of inventions or the
history of promotion.[7] The student of social and political evolution
is concerned rather with the effect of such material changes upon the
structure of society, that is, with the rearrangements of classes and
the development of new groups of interests, which are brought about by
altered methods of gaining a livelihood and accumulating fortunes. It is
this social transformation that changes the relation of the individual
to the state and brings new forces to play in the struggle for political
power. The social transformation which followed the Civil War embraced
the following elements.
In the first place, capital, as contrasted with agriculture, increased
enormously in amount and in political influence. Great pecuniary
accumulations were thenceforward made largely in business
enterprise--including the work of the entrepreneur, financier,
speculator, and manipulator under that general term. Inevitably, the
most energetic and the keenest minds were attracted by the dominant mode
of money-making. Agricultural regions were drained of large numbers of
strenuous and efficient men, who would otherwise have been their natural
leaders in politics. To these were added the energetic immigrants from
the Old World. That forceful, pushing, dominating section of society
historically known as the "natural aristocracy" became the agents of
capitalism. The scepter of power now passed definitively from the
masters of slaves to the masters of "free laborers." The literary and
professional dependents of the ruling groups naturally came to the
defense of the new order.[8] The old contest between agrarianism and
capitalism now took on a new vigor.[9]
On the side of the masses involved in the transition this economic
revolution meant an increasing proportion of wage workers as contrasted
with agriculturalists, owning and operating their farms, and with
handicraftsmen. This increase is shown by the following table, giving
the number of wage earners in _manufacturing_ alone:
POPULATION WAGE EARNERS
1850 23,191,876 957,059
1860 31,443,321 1,311,246
1870 38,558,371 2,053,996
1880 50,155,783 2,732,595
1890 62,947,714 4,251,535
1900 75,994,575 5,306,143
1910 91,972,266 6,615,046
In terms of social life, this increase in wage workers meant, in the
first place, a rapid growth of city populations. In 1860, the vast
majority of the people were agriculturists; in 1890, 36.1 per cent of
the population lived in towns of over 2500; in 1900, 40.5 per cent; in
1910, 46.3 per cent. In the forty years between the beginning of the
Civil War and the close of the century, Chicago had grown from 109,260
to 1,698,575; Greater New York from 1,174,779 to 3,437,202; San
Francisco from 56,802 to 342,782.
In the next place, the demand for labor stimulated immigration from
Europe. It is true there was a decline during the Civil War, and the
panic of 1873 checked the tide when it began to flow, but by 1880 it had
nearly touched the half-a-million mark, and by 1883 it reached the
astounding figure of 788,992. Almost all of this immigration was from
Germany, Ireland, Great Britain, and Scandinavian countries, less than
one in twenty of the total number coming from Austria-Hungary, Italy,
and Poland in 1880. On the Pacific coast, railway building and
industrial enterprise, in the great dearth of labor, resorted to the
Orient for large supplies of Chinese coolies.
This industrial development meant the transformation of vast masses of
the people into a proletariat, with all the term implies: an immense
population housed in tenements and rented dwellings, the organization of
the class into trades-unions, labor parties, and other groups; poverty
and degradation on a large scale; strikes, lockouts, and social warfare;
the employment of large numbers of women and children in factories; the
demand for all kinds of legislation mitigating the evils of the
capitalist process; and finally attacks upon the very basis of the
industrial system itself.
This inevitable concomitant of the mechanical revolution, the industrial
proletariat, began to make itself felt as a decided political and
economic factor in the decade that followed the War. Between 1860 and
1870, the railway engineers, firemen, conductors, bricklayers, and cigar
makers had formed unions. In the campaign of 1872 a party of Labor
Reformers appeared; and a few years later the Knights of Labor, a grand
consolidated union of all trades and grades of workers, came into
existence as an active force, conducting an agitation for labor bureaus,
an eight hour day, abolition of contract labor systems, and other
reforms, and at the same time engineering strikes.
In 1877 occurred the first of the great labor struggles in that long
series of campaigns which have marked the relations of capitalists and
workingmen during the past four decades. In that year, trouble began
between the management of the Baltimore and Ohio railway and its
employees over a threatened reduction in wages--the fourth within a
period of seven years. From this starting point the contest spread
throughout the East and Middle West, reaching as far as Texas. Inasmuch
as there was already considerable unemployment, the strikers saw that
only by violence and intimidation could they hope to prevent the
companies from moving their trains. Troops were called out by the
governors of several states and Federal assistance was invoked.
Pittsburgh fell almost completely into the hands of the strikers;
railway buildings were burned and property to the value of more than ten
million dollars destroyed. Everywhere the raw militia of the states was
found to be inefficient for such a serious purpose, and the superior
power of the Federal Government's regular troops was demonstrated. Where
railways were in the hands of receivers, Federal courts intervened by
the use of injunctions and the first blood in the contest between the
judiciary and labor was drawn.
The last, but perhaps most significant, result of the industrial
revolution above described has been the rise of enormous combinations
and corporations in industry as well as in transportation. An increasing
proportion of the business of the country has passed steadily into
corporate, as contrasted with individual, ownership;[10] and this
implies a momentous change in the rights, responsibilities, and economic
theories of the owners of capital. Moreover, it involves the creation of
a new class of men, not entrepreneurs in the old sense, but organizers
of already established concerns into larger units.
The industrial revolution had not advanced very far before an intense
competition began to force business men to combine to protect themselves
against their own weapons. As early as 1879 certain oil interests of
Cleveland, Pittsburgh, Philadelphia, and other centers had begun to
control competition by making agreements through their officers. Three
years later, they devised an excellent scheme for a closer organization
in the formation of a "trust." They placed all their stocks in the hands
of nine trustees, including John D. Rockefeller, who issued in return
certificates representing the proportionate share of each holder in the
concern, and managed the entire business in the interests of the
holders.
The trust proved to be an attractive proposition to large business
concerns. Within five years combinations had been formed in cotton oil,
linseed oil, lead, sugar, whisky, and cordage, and it was not long
before a system of interlocking interests began to consolidate the
control of all staple manufactures in the hands of a few financiers. Six
years after its formation the Standard Oil Company was paying to a small
group of holders about $20,000,000 annually in dividends on a capital of
$90,000,000, and the recipients of these large dividends began to invest
in other concerns. In 1879, one of them, H. M. Flagler, became a
director of the Valley Railroad; in 1882, William Rockefeller appeared
as one of the directors of the Chicago, Milwaukee, and St. Paul; in
1887, John D. Rockefeller was connected with a syndicate which absorbed
the Minnesota Iron Company, and about the same time representatives of
the Oil Trust began to figure in the Northern Pacific, the Missouri,
Kansas, and Texas, and the Ohio River railways. Thus a perfect network
of financial connections throughout the country was built up.
But on the whole the decades following the Civil War were characterized
by economic anarchy, _laissez faire_ with a vengeance. There were
prolonged industrial crises accompanied by widespread unemployment and
misery among the working classes. In the matter of railway management
the chaos was unparalleled.
Shortly after 1870 a period of ruinous competition set in and was
followed by severe financial crises among the railways. Passenger and
freight rate "wars" for the "through" traffic brought many roads to the
verge of bankruptcy, in spite of their valiant efforts to save
themselves by exorbitant charges on subsidiary branches where they had
no competition. Crooked financiering, such as the watering of stocks,
misappropriation of construction funds by directors, and the purchase of
bankrupt lines by directors of larger companies and their resale at
great advances, placed a staggering burden of interest charges against
practically all of the lines. In 1873 nearly half of the mileage in the
country was in the hands of court receivers, and between 1876 and 1879
an average of more than one hundred roads a year were sold under the
foreclosure of mortgages. In all this distress the investors at large
were the losers while the "inside" operators such as Jay Gould,
Cornelius Vanderbilt, and Russell Sage doubled their already
over-topping fortunes.
A very good example of this "new finance" is afforded by the history of
the Erie Railway. In 1868, Vanderbilt determined to secure possession of
this line which ran across New York State in competition with the New
York Central and Hudson River lines. Jay Gould and a group of operators,
who had control of the Erie, proceeded to water the stock and "unload"
upon Vanderbilt, whose agents bought it in the hope of obtaining the
coveted control. After a steeple chase for a while the two promoters
came to terms at the expense of the stockholders and the public. Between
July 1 and October 24, 1868, the stock of the Erie was increased from
$34,000,000 to $57,000,000, and the price went downward like a burnt
rocket. During the short period of Gould's administration of the Erie
"the capital stock of the road had been increased $61,425,700 and the
construction account had risen from $49,247,700 in 1867 to $108,807,687
in 1872. Stock to the amount of $40,700,000 had been marketed by the
firm of Smith, Gould, and Martin, and, incredible as it may seem, its
sale had netted the company only $12,803,059."[11]
The anarchy in railway financing, which characterized the two decades
after the War, was also accompanied by anarchy in management. A Senate
investigating committee in 1885 enumerated the following charges against
the railroads: that local rates were unreasonably high as compared with
through rates; that all rates were based apparently not on cost of
service but "what the traffic would bear"; that discriminations between
individuals for the same services were constant; that "the effect of the
prevailing policy of railroad management is, by an elaborate system of
secret special rates, rebates, drawbacks, and concessions, to foster
monopoly, to enrich favorite shippers, to prevent free competition in
many lines of trade in which the item of transportation is an important
factor;" that secret rate cutting was constantly demoralizing business;
that free passes were so extensively issued as to create a privileged
class, thus increasing the cost to the passenger who paid; that the
capitalization and bonded indebtedness of companies largely exceeded the
actual cost of construction; and that railway corporations were engaged
in other lines of business and discriminating against competitors by
unfair rate manipulations. In a word, the theories about competition
written down in the books on political economy were hopelessly at
variance with the facts of business management; the country was at the
mercy of the sharp practices of transportation promoters.
* * * * *
However, emphasis upon this great industrial revolution should not be
allowed to obscure the no less remarkable development in agriculture.
The acreage in improved farm lands rose from 113,032,614 in 1850 to
478,451,750 in 1910. In the same period the number of farms increased
from 1,449,073 to 6,361,502. Notwithstanding the significant fact that
"whereas the total population increased 21 per cent between 1900 and
1910, the urban population increased 34.8 per cent and the rural
population 11.2 per cent," the broad basis of the population during the
half a century here under consideration has remained agricultural, and
in 1913 it was estimated that at the present rate of transformation "it
will take a generation before the relative number of industrial wage
workers will have reached half of all bread winners."
_The Development of the West_
When Hayes was inaugurated, a broad wedge of territory separated the
organized states of the East from their sister commonwealths in the far
West--Oregon, California, and Nevada. Washington, Idaho, Montana,
Wyoming, Utah, Arizona, New Mexico, Dakota, and Indian Territory still
remained territories. Their combined population in 1870 was under half a
million, less than that of the little state of Connecticut. New Mexico
with 91,000 and Utah with 86,000 might, with some show of justification,
have claimed a place among the states because Oregon was inhabited by
only 90,000 people. The commonwealth of Nevada, with 42,000, was an
anomaly; it had been admitted to the Union in 1864 to secure the
ratification of the Thirteenth Amendment abolishing slavery.
This vast and sparsely settled region was then in the second stage of
its economic evolution. The trapper, hunter, and explorer had gathered
most of their harvest, and the ranchmen and cowboys with their herds of
cattle were roaming the great grazing areas, waging war on thieves, land
syndicates, and finally going down to defeat in the contest with the
small farmer who fenced off the fertile fields and planted his homestead
there. So bitter were the contests among the cattle kings, and so
extensive was the lawlessness in these regions during the seventies and
early eighties that Presidents were more than once compelled to warn the
warlike parties and threaten them with the Federal troops.
Of course, the opening of the railways made possible a rapidity in the
settlement of the remaining territories which outrivaled that of the
older regions. The first Pacific railroad had been completed in 1869;
the Southern Pacific connecting New Orleans with the coast was opened in
1881; and two years later the Atchison, Topeka, and Santa Fe was
finished, and the last stroke was put on the Northern Pacific,
connecting Chicago and Portland, Oregon. Thus four lines of
communication were established with the coast, traversing the best
agricultural regions of the territories and opening up the
mineral-bearing regions of the mountains as well. Lawless promoters fell
upon the land and mineral resources with that rapacity which Burke
attributed to Hastings.
* * * * *
Utah presented, in the eighties, the elements of an ordered and
well-advanced civilization and could with some show of reason ask for
admission as a state. The territory had been developed by the Mormons
who settled there, after suffering "persecution" for their religious
opinions and their plural marriages, in Illinois and Missouri.
Notwithstanding an act of Congress passed in 1862 prohibiting polygamy,
it continued to flourish. The territorial officers were nearly all
Mormons and the remoteness of the Federal authority prevented an
enforcement of the law. Consequently, it remained a dead letter until
1882, when Congress enacted the Edmunds law prescribing heavy penalties,
including the loss of citizenship, for polygamous practices. Hundreds of
prosecutions and convictions followed, but plural marriages were openly
celebrated in defiance of the law. At length, in 1887, Congress passed
the Edmunds-Tucker act authorizing the Federal Government to seize the
property of the Mormon church.
Meanwhile the gentile population increased in the territory; and at
length the Mormons, seeing that the country was determined to suppress
polygamy and that, while the institution was maintained, statehood could
not be secured, decided upon at least an outward acquiescence in the
law. After much discussion in Congress, and notwithstanding the repeated
contention that the Mormons were not sincere in their promises, Utah was
admitted as a state in 1895 under a constitution which, in accordance
with the provisions of the enabling act of Congress, forbade polygamous
and plural marriages forever. Thus the inhabitants of the new state were
bound by a solemn contract with the Union never to restore the marriage
practices which had caused them so much trouble and "persecution," as
they called it.
* * * * *
Although the Mormons were the original pioneers and homestead makers in
that great region, theirs was in fact the last of the middle tier of
territories to receive statehood. They had left the advancing frontier
line far behind. To the northward that advance was checked by the
enormous Sioux reservation in Dakota, but the discovery of gold in the
Black Hills marked the doom of the Indian rights. Miners and
capitalists demanded that the way should be made clear for their
enterprise and the land hungry were clamoring for more farms. Indeed,
before Congress could act, pioneers were swarming over the regions
around the Indian lands. Farmers from the other northern states,
Norwegians, Germans, and Canadians were planting their homesteads amid
the fertile Dakota fields; the population of the territory jumped from
14,181 in 1870 to 135,177 in 1880, and before the close of the next
decade numbered more than half a million. It was evident that the region
was destined to be principally agricultural in character, inhabited by
thrifty farmers like those of Iowa and Nebraska. Pretensions to
statehood therefore rose with the rising tide of population.
Far over on the western coast, the claims of Washington to statehood
were being urged. The population there had increased until it rivaled
Oregon and passed the neighboring commonwealth in 1890. In addition to
rich agricultural areas, it possessed enormous timber resources which
were to afford the chief industry for a long time; and keen-sighted men
foresaw a swift development of seaward trade. Between the Dakotas and
Washington lay the narrow point of Idaho and the mountainous regions of
Montana, now rapidly filling up with miners and capitalists exploiting
the gold, silver, coal, copper, and other mineral resources, and
rivaling the sheep and cattle kings in their contest for economic
supremacy.
After the fashion of enterprising westerners, the citizens of these
territories began to boast early of their "enormous" populations and
their "abounding" wealth, and to clamor for admission as states. Finding
their pleas falling upon unheeding ears, the people of the southern
Dakota took matters into their own hands in 1885, called a convention,
framed a constitution, and failing to secure the quick and favorable
action of Congress threatened to come into the Union unasked. Sober
counsels prevailed, however, and the impatient Dakotans were induced to
wait awhile. Meantime the territory was divided into two parts in 1887,
after a popular vote had been taken on the matter.
As had been the case almost from the beginning of the Republic, the
admission of these new states was a subject of political controversy and
intrigue at the national capital. During Cleveland's first
administration the House was Democratic and the Senate Republican.
Believing that Dakota was firmly Republican, the Senate passed the
measure admitting the southern region in 1886, but the Democratic House
was unable to see eye to eye with the Senate on this matter. In the
elections of 1888, the Republicans carried the House, and it was evident
that the new Congress would take some action with regard to the
clamoring territories. Montana was probably Democratic, and Washington
was uncertain. At all events the Democrats thought it wise to come to
terms, and accordingly on February 22, 1889, the two Dakotas,
Washington, and Montana were admitted simultaneously.
With less claim to statehood than any commonwealths admitted up to that
time, except Nevada, the two territories of Idaho and Wyoming were soon
enabled, by the assistance of the politicians, to secure admission to
the Union. Republican politics and the "silver interests" were
responsible for this step. Although neither territory had over 40,000
inhabitants in 1880, extravagant claims were made by the advocates of
admission--claims speedily belied by the census of 1890, which gave
Idaho 88,000 and Wyoming 62,000. At last in July, 1890, they were
admitted to the Union, and the territorial question was settled for a
time, although Arizona and New Mexico felt that their claims were
unjustly treated. It was not until seventeen years later that another
new state, Oklahoma, modeled out of the old Indian Territory, was added
to the Union. Finally, in 1912, the last of the continental territories,
Arizona and New Mexico, were endowed with statehood.[12]
_The Economic Advance of the South_
Notwithstanding the prominence given to the negro question during and
after Reconstruction, the South had other problems no less grave in
character to meet. Industry and agriculture were paralyzed by the
devastations of the War. A vast amount of material capital--railways,
wharves, bridges, and factories--had been destroyed during the conflict;
and fluid capital seeking investment had been almost destroyed as well.
The rich with ready money at their command had risked nearly all their
store in confederate securities or had lost their money loaned in other
ways through the wreck of the currency. Plantations had depreciated in
value, partly because of the destruction of equipment, but especially on
account of the difficulties of working the system without slave labor.
The South had, therefore, to rehabilitate the material equipment of
industry and transportation and to put agriculture on another basis than
that of slave labor. Surely this was a gigantic task.
The difficulties of carrying forward the plantation system with free
negro labor compelled the holders of large estates (many of which were
heavily mortgaged) to adopt one of two systems: the leasing or renting
of small plots to negroes or poor whites, or the outright sale in small
quantities which could be worked by one or two hands. This
disintegration of estates went forward with great rapidity. In 1860 the
average holding of land in the southern states was 335.4 acres; in 1880
it had fallen to 153.4; and in 1900 it had reached 138.2. The great
handicap was the difficulty of securing the capital to develop the small
farm, and no satisfactory system for dealing with this problem has yet
been adopted.
The very necessities of the South served to bind that section to the
North in a new fashion. Fluid capital had to be secured, in part at
least, from the North, and northern enterprise found a new outlet in the
reconstruction of the old, and the development of the new, industries in
the region of the former confederacy. The number of cotton spindles in
the South increased from about 300,000 in 1860 to more than 4,000,000 at
the close of the century; the number of employees rose from 10,000 to
nearly 100,000; and the value of the output leaped from $8,460,337
annually to $95,002,059. This rapid growth was, in part, due to the
abundance of water power in the hill regions, the cheap labor of women
and children, the low cost of living, and the absence of labor laws
interfering with the hours and conditions of work in the factories.
Even in the iron and steel industry, West Virginia and Alabama began to
press upon the markets of the North within less than twenty years after
the close of the War. In 1880, the latter state stood tenth among the
pig-iron producing states; in 1890 it stood third. The southern states
alone now produce more coal, iron ore, and pig iron than all of the
states combined did in 1870. The census of 1909 reports 5685
manufacturing establishments in Virginia, 4931 in North Carolina, 4792
in Georgia, and 3398 in Alabama.
The social effects which accompany capitalist development inevitably
began to appear in the South. The industrial magnate began to contest
with the old aristocracy of the soil for supremacy; many former slave
owners and their descendants drifted into manufacturing and many poor
whites made their way upward into wealth and influence. The census of
1909 reports more than thirty thousand proprietors and firm members in
the South Atlantic states, an increase over the preceding report almost
equal to that in the New England states. The same census reports in the
southern states more than a million wage earners--equal to almost two
thirds the entire number in the whole country at the opening of the
Civil War. The percentage of increase in the wage earners of the South
Atlantic states between 1904 and 1909 was greater than in New England or
the Middle Atlantic states.
With this swift economic development, northern capital streamed into the
South; northern money was invested in southern public and industrial
securities in enormous amounts; and energetic northern business men were
to be found in southern market places vying with their no less
enterprising southern brethren. The men concerned in creating this new
nexus of interest between the two regions naturally deprecated the
perpetual agitation of sectional issues by the politicians, and
particularly northern interference in the negro question. Business
interest began to pour cold water on the hottest embers which the Civil
War had left behind.
FOOTNOTES:
[7] The following brief chronology of inventions illustrates the
rapidity in the technical changes in the new industrial development:
1875--Bell's telephone in operation between Boston and
Salem.
1879--Brush arc street lighting system installed in San
Francisco.
1882--Edison's plant for incandescent lighting opened in New
York City.
1882--Edison's electric street car operated at Menlo Park,
New Jersey.
1885--Electric street railways in operation at Richmond,
Virginia, and Baltimore.
[8] For the keenest analysis of this social transformation,
see Veblen, _Theory of the Leisure Class_ and _Theory of
Business Enterprise_.
[9] See below, Chaps. VI and VII.
[10] See below, p. 234.
[11] Youngman, _The Economic Causes of Great Fortunes_, p.
75.
[12] By an act passed in August, 1912, Congress provided a
territorial legislature for Alaska, which had been governed
up to that time by a governor appointed by the President and
Senate, under acts of Congress.
CHAPTER III
THE REVOLUTION IN POLITICS AND LAW
The economic revolution that followed the War, the swift and potent
upswing of capitalism, and the shifting of political power from the
South to the North made their impress upon every branch of the Federal
Government. Senators of the old school, Clay, Webster, Calhoun, Roger
Baldwin, John P. Hale, James Mason, and Jefferson Davis were succeeded
by the apostles of the new order: Roscoe Conkling and Thomas Platt,
James Donald Cameron, Leland Stanford, George Hearst, Arthur P. Gorman,
William D. Washburn, John R. McPherson, Henry B. Payne, Matthew S. Quay,
Philetus Sawyer, John H. Mitchell, and James G. Blaine. The new Senate
was composed of men of affairs--practical men, who organized gigantic
enterprises, secured possession of natural resources and franchises,
collected and applied capital on a large scale to new business
undertakings, built railways, established cities with the advancing line
of the western frontier--or represented such men as counsel in the
courts of law.
Not many of them were great orators or widely known as profound students
of politics in its historical and comparative aspects. A few, like
Blaine, Hoar, and Conkling, studied the classic oratory of the older
generation and sought to apply to the controverted issues of the hour
that studious, orderly, and sustained eloquence which had adorned the
debates of earlier years; but the major portion cultivated only the arts
of management and negotiation. Few of them seem to have given any
thought to the lessons to be learned from European politics. On the
contrary, they apparently joined with the multitude in the assumption
that we had everything to teach Europe and nothing to learn. Bismarck
was to them, if we may judge from their spoken words, simply a great
politician and the hero of a war; the writings of German economists,
Wagner and Schmoller, appear never to have penetrated their studies.
That they foresaw in the seventies and eighties the turn that politics
was destined to take is nowhere evident. They commanded respect and
admiration for their practical achievements; but it is questionable
whether the names of more than two or three will be known a century
hence, save to the antiquarian.
Of this group, Roscoe Conkling was undoubtedly typical, just as Marcus
A. Hanna represented the dominant politicians of a later time. He was an
able lawyer and an orator of some quality, but of no permanent fame. He
took his seat in the Senate in 1867 and according to his biographer
"during the remainder of his life his legal practice was chiefly
connected with corporations that were litigants in the district and
circuit courts of the United States,"[13]--the judges of which courts he
was, as Senator, instrumental in appointing. His practice was lucrative
for his day, amounting to some $50,000 a year.[14] He counted among his
clients the first great capitalists of the country. When he was forced
to retire from New York politics, "the first person who came to see him
on business was Mr. Jay Gould, who waited upon him early one morning at
his hotel."[15] He was counsel for Mr. Collis P. Huntington in his
contest against the state legislation which railway interests deemed
unjust and unconstitutional.[16] He was among the keen group of legal
thinkers who invoked and extended the principle of the Fourteenth
Amendment to cover all the varieties of legislation affecting corporate
interests adversely.[17]
Criticism of the Republican party, and particularly of the policies for
which he stood, Mr. Conkling regarded as little short of treason. For
example, when Mr. George William Curtis, in the New York state
convention of 1877, sought to endorse the administration of President
Hayes, whose independence in office had been troublesome to Mr.
Conkling, the latter returned in a passionate attack on the whole party
of opposition: "Who are these men who in newspapers and elsewhere are
'cracking their whips' over Republicans and playing schoolmaster to the
Republican party and its conscience and convictions. They are of various
sorts and conditions. Some of them are the man-milliners, the dilettanti
and carpet knights of politics, men whose efforts have been expended in
denouncing and ridiculing and accusing honest men.... Some of these
worthies masquerade as reformers and their vocation and ministry is to
lament the sins of other people. Their stock in trade is rancid, canting
self-righteousness. They are wolves in sheep's clothing. Their real
object is office and plunder. When Dr. Johnson defined patriotism as the
last refuge of a scoundrel, he was then unconscious of the then
undeveloped capabilities of the word 'reform.'"[18]
The political philosophy of this notable group of political leaders was
that of their contemporaries in England, the Cobden-Bright school. They
believed in the widest possible extension of the principle of private
property, and the narrowest possible restriction of state interference,
except to aid private property to increase its gains. They held that all
of the natural resources of the country should be transferred to private
hands as speedily as possible, at a nominal charge, or no charge at all,
and developed with dashing rapidity. They also believed that the great
intangible social property created by community life, such as franchises
for street railways, gas, and electricity, should be transformed into
private property. They supplemented their philosophy of property by a
philosophy of law and politics, which looked upon state interference,
except to preserve order, and aid railways and manufacturers in their
enterprises, as an intrinsic evil to be resisted at every point, and
they developed a system of jurisprudence which, as Senators having the
confirming power in appointments and as counsel for corporations before
the courts of the United States, they succeeded in transforming into
judicial decisions. Some of them were doubtless corrupt, as was
constantly charged, but the real explanation of their resistance to
government intervention is to be found in their philosophy, which,
although consonant with their private interests, they identified with
public good.
_Writing Laissez Faire into the Constitution_
Inasmuch as the attacks on private rights in property, franchises, and
corporate privileges came principally from the state legislatures, it
was necessary to find some way to subject them to legal control--some
juristic process for translating _laissez faire_ into a real restraining
force. These leading statesmen and lawyers were not long in finding the
way. The Federal courts were obviously the proper instrumentalities, and
the broad restrictions laid upon the states by the Fourteenth Amendment
no less obviously afforded the constitutional foundation for the science
of legislative nihilism. "No state," ran the significant words of that
Amendment, "shall make or enforce any law which shall abridge the
privileges or immunities of citizens of the United States; nor shall any
state deprive any person of life, liberty, or property without due
process of law; nor deny to any person within its jurisdiction the equal
protection of the laws."
What unseen implications lay within these phrases the most penetrating
thinkers divined at once. Protest was made by the New Jersey legislature
against the Fourteenth Amendment in 1866 on the ground that it would
destroy all the essential rights of a state to control its internal
affairs; and such opinion was widespread. But the most common view was
to the effect that the Amendment would be used principally to surround
the newly emancipated slaves with safeguards against their former
masters who might be tempted to restore serfdom under apprentice and
penal laws and other legal guises. Still there is plenty of evidence to
show that those who framed the Fourteenth Amendment and pushed it
through Congress had in mind a far wider purpose--that of providing a
general restraining clause for state legislatures.
The problem of how best to check the assaults of state legislatures on
vested rights was not new when the Fourteenth Amendment was adopted. On
the contrary, it was one of the first concerns of the Convention of 1787
which drafted the original Constitution of the United States, and it was
thought by the framers that security had been attained by forbidding
states to emit bills of credit and make laws impairing the obligation of
contract. Under Chief Justice Marshall, these clauses were so generously
interpreted as to repel almost any attack which a state legislature
might make on acquired rights. However, in the closing years of
Marshall's service, the Supreme Court, then passing into the hands of
states' rights justices, rendered an opinion in the case of Ogden _v._
Saunders, which clearly held that the contract clause did not prevent
the legislature from stipulating that _future_ contracts might be
practically at its mercy. When a legislature provides by general law
that all charters of corporations are subject to repeal and alteration,
such provision becomes a part of all new contracts. Marshall delivered
in this case a vigorous and cogent dissenting opinion in which he
pointed out that the decision had in effect destroyed the virtue of the
obligation of contract clause.
The case of Ogden _v._ Saunders was decided in 1827. Between that year
and the Civil War the beginnings of corporate enterprise were securely
laid in the United States; and the legislatures of the several states
began the regulation of corporations from one motive or another,
sometimes for the purpose of blackmailing them and sometimes for the
laudable purpose of protecting public interests. At all events, large
propertied concerns began to feel that they could not have a free hand
in developing their enterprises or enjoy any genuine security unless the
legislatures of the states were, by some constitutional provision,
brought again under strict Federal judicial control.
The opportunity to secure this judicial control was afforded during the
Civil War when the radical Republicans were demanding Federal protection
for the newly emancipated slaves of the South. The drastic legislation
relative to negroes adopted by the southern states at the close of the
War showed that even in spite of the Thirteenth Amendment a substantial
bondage could be reestablished under the color of criminal, apprentice,
and vagrant legislation. The friends of the negroes, therefore,
determined to put the substantial rights of life, liberty, and property
beyond the interference of state legislatures forever, and secure to all
persons the equal protection of the law.
Accordingly, the Fourteenth Amendment was adopted, enunciating the
broad legal and political doctrine that no state "shall abridge the
privileges or immunity of citizens of the United States; nor shall any
state deprive any _person_ of life, liberty, or property without due
process of law; nor deny to any _person_ within its jurisdiction the
equal protection of the law."
Here was a restriction laid upon state legislatures which might be
substantially limitless in its application, in the hands of a judiciary
wishing to place the broadest possible interpretation upon it. What are
privileges and immunities? What are life, liberty, and property? What is
due process of law? What is the equal protection of the law? Does the
term "person" include not only natural persons but also artificial
persons, namely, corporations? That the reconstruction committee of
Congress which framed the instrument intended to include within the
scope of this generous provision not only the negro struggling upward
from bondage, but also corporations and business interests struggling
for emancipation from legislative interference, has been often asserted.
In arguing before the Supreme Court in the San Matteo County case, on
December 19, 1882, Mr. Roscoe Conkling, who had been a member of the
committee which drafted the Fourteenth Amendment, unfolded for the first
time the deep purpose of the committee, and showed from the journal of
that committee that it was not their intention to confine the amendment
merely to the protection of the colored race. In the course of his
argument, Mr. Conkling remarked, "At the time the Fourteenth Amendment
was ratified, as the records of the two Houses will show, individuals
and joint-stock companies were appealing for congressional and
administrative protection against invidious and discriminating state and
local taxes. One instance was that of an express company, whose stock
was owned largely by citizens of the State of New York, who came with
petitions and bills seeking Acts of Congress to aid them in resisting
what they deemed oppressive taxation in two states, and oppressive and
ruinous rules of damages applied under state laws. That complaints of
oppression in respect of property and other rights, made by citizens of
Northern States who took up residence in the South, were rife, in and
out of Congress, none of us can forget; that complaints of oppression in
various forms, of white men in the South,--of 'Union men,'--were heard
on every side, I need not remind the Court. The war and its results, the
condition of the freedmen, and the manifest duty owed to them, no doubt
brought on the occasion for constitutional amendment; but when the
occasion came and men set themselves to the task, the accumulated evils
falling within the purview of the work were the surrounding
circumstances, in the light of which they strove to increase and
strengthen the safeguards of the Constitution and laws."[19]
In spite of important testimony to the effect that those who drafted the
Fourteenth Amendment really intended "to nationalize liberty," that is
_laissez faire_, against state legislatures, the Supreme Court at first
refused to accept this broad interpretation, and it was not until after
several of the judges of the old states' rights school had been replaced
by judges of the new school that the claims of Mr. Conkling's group as
to the Fourteenth Amendment were embodied in copious judicial decisions.
_The Slaughter-House Cases_
The first judicial interpretation of the significant phrases of the
Fourteenth Amendment which were afterward to be the basis of judicial
control over state economic legislation of every kind was made by the
Supreme Court in the Slaughter-House cases in 1873--five years after
that Amendment had been formally ratified. These particular cases, it is
interesting to note, like practically all other important cases arising
under the Fourteenth Amendment, had no relation whatever to the newly
emancipated slaves; but, on the contrary, dealt with the regulation of
business enterprises.
In 1869, the legislature of Louisiana passed an act designed to protect
the health of the people of New Orleans and certain other parishes. This
act created a corporation for the purpose of slaughtering animals within
that city, forbade the establishment of any other slaughterhouses or
abattoirs within the municipality, and conferred the sole and exclusive
privilege of conducting the live-stock landing and slaughterhouse
business, under the limitations of the act, upon the company thus
created. The company, however, was required by the law to permit any
persons who wished to do so to slaughter in its houses and to make full
provision for all such slaughtering at a reasonable compensation. This
drastic measure, the report of the case states, was denounced "not only
as creating a monopoly and conferring odious and exclusive privileges
upon a small number of persons at the expense of the great body of the
community of New Orleans, but ... it deprives a large and meritorious
class of citizens--the whole of the butchers of the city--of the right
to exercise their trade, the business to which they have been trained
and on which they depend for the support of themselves and their
families."
The opinion of the court was rendered by Mr. Justice Miller. The Justice
opened by making a few remarks upon the "police power," in the course of
which he said that the regulation of slaughtering fell within the
borders of that mysterious domain and without doubt constituted one of
the powers enjoyed by all states previous to the adoption of the Civil
War amendments. After commenting upon the great responsibility devolved
upon the Court in construing the Thirteenth and Fourteenth amendments
and remarking on the careful deliberation with which the judges had
arrived at their conclusions, Justice Miller then turned to an
examination of the historical purpose which underlay the adoption of the
amendments in question. After his recapitulation of recent events, he
concluded: "On the most casual examination of the language of these
amendments, no one can fail to be impressed with the one pervading
purpose found in them all, lying at the foundation of each, and without
which none of them would have been even suggested; we mean the freedom
of the slave race, the security and firm establishment of that freedom,
and the protection of the newly-made freeman and citizen from the
oppression of those who had formerly exercised unlimited dominion over
him. It is true that only the Fifteenth Amendment, in terms, mentions
the negro by speaking of his color and his slavery. But it is just as
true that each of the other articles was addressed to the grievances of
that race and designed to remedy them as the Fifteenth. We do not say
that no one else but the negro can share in this protection. Both the
language and spirit of these articles are to have their fair and just
weight in any question of construction.... What we do wish to say and
what we wish to be understood as saying is, that in any fair and just
construction of any section or phrase of these amendments, it is
necessary to look to the purpose, which as we have said was the
pervading spirit of them all, the evil which they were designed to
remedy, and the process of continued addition to the Constitution until
that purpose was supposed to be accomplished as far as constitutional
law can accomplish it."
Justice Miller dismissed with a tone of impatience the idea of the
counsel for the plaintiffs in error that the Louisiana statute in
question imposed an "involuntary servitude" forbidden by the Thirteenth
Amendment. "To withdraw the mind," he said, "from the contemplation of
this grand yet simple declaration of the personal freedom of all the
human race within the jurisdiction of this government--a declaration
designed to establish the freedom of four million slaves--and with a
microscopic search endeavor to find it in reference to servitudes which
may have been attached to property in certain localities, requires an
effort, to say the least of it."
In Justice Miller's long opinion there is no hint of that larger and
more comprehensive purpose entertained by the framers of the Fourteenth
Amendment which was asserted by Mr. Conkling a few years later in his
argument before the Supreme Court. If he was aware that the framers had
in mind not only the protection of the freedmen in their newly won
rights, but also the defense of corporations and business enterprises
generally against state legislation, he gave no indication of the fact.
There is nowhere in his opinion any sign that he saw the broad economic
implications of the Amendment which he was expounding for the first time
in the name of the Court. On the contrary, his language and the opinion
reached in the case show that the judges were either not cognizant of
the new economic and political duty placed upon them, or, in memory of
the states' rights traditions which they had entertained, were unwilling
to apply the Thirteenth and Fourteenth amendments in such a manner as
narrowly to restrict the legislative power of a commonwealth.
In taking up that clause of the Fourteenth Amendment which provides that
no state shall make or enforce any law abridging the privileges or
immunities of citizens of the United States, Justice Miller declared
that it was not the purpose of that provision to transfer the security
and protection of all fundamental civil rights from the state
government to the Federal Government. A citizen of the United States as
such, he said, has certain privileges and immunities, and _it was these
and these only_ which the Fourteenth Amendment contemplated. He
enumerated some of them: the right of the citizen to come to the seat of
government, to assert any claim he may have upon that government, to
transact any business he may have with it, to seek its protection, share
its offices, engage in administering its functions, to have free access
to its seaports, subtreasuries, land offices, and courts of justice, to
use the navigable waters of the United States, to assemble peaceably
with his fellow citizens and petition for redress of grievances, and to
enjoy the privileges of the writ of habeas corpus. It was rights of this
character, the learned justice argued, and not all the fundamental
rights of person and property which had been acquired in the evolution
of Anglo-Saxon jurisprudence, that were placed by the Fourteenth
Amendment under the protection of the Federal Government.
Within this view, all the ordinary civil rights enjoyed by citizens were
still within the control of the organs of the state government and not
within Federal protection at all. If the privileges and immunities,
brought within the protection of the Federal Government by the
Fourteenth Amendment, were intended to embrace the whole domain of
personal and property rights, then, contended the justice, the Supreme
Court would be constituted "a perpetual censor upon all legislation of
the states, on the civil rights of their own citizens, with authority to
nullify such as it did not approve as consistent with those rights as
they existed at the time of the adoption of this Amendment.... We are
convinced that no such results were intended by the Congress which
proposed these amendments nor by the legislatures which ratified them."
In two short paragraphs, Justice Miller disposed of the contention of
the plaintiffs in error to the effect that the Louisiana statute
deprived the plaintiffs of their property without due process of law. He
remarked that inasmuch as the phraseology of this clause was also to be
found in the Fifth Amendment and in some form in the constitutions of
nearly all of the states, it had received satisfactory judicial
interpretation; "and it is sufficient to say," he concluded on this
point, "that under no construction of that provision that we have ever
seen or any that we deem admissible, can the restraint imposed by the
state of Louisiana upon the exercise of their trade by the butchers of
New Orleans be held to be a deprivation of private property within the
meaning of that provision."
Coming now to that clause requiring every state to give all persons
within its jurisdiction equal protection of the laws, Justice Miller
indulged in the false prophecy: "We doubt very much whether any action
of a state not directed by way of discrimination against the negroes as
a class or on account of their race will ever be held to come within the
purview of this provision." An emergency might arise, he admitted, but
he found no such a one in the case before him.
Concluding his opinion, he expressed the view that the American Federal
system had come out of the Civil War with its main features unchanged,
and that it was the duty of the Supreme Court then as always to hold
with a steady and an even hand the balance between state and Federal
power. "Under the pressure of all the excited feeling growing out of the
War," he remarked, "our statesmen have still believed that the existence
of the states with powers for domestic and local government, including
the regulation of civil rights--the rights of person and property--was
essential to the perfect working of our complex form of government,
though they have thought proper to impose additional limitations upon
the states and to confer additional power on that of the nation."
Under this strict interpretation of the Thirteenth and Fourteenth
amendments, all the fundamental rights of persons and property remained
subject to the state governments substantially in the same way as before
the Civil War. The Supreme Court thus could not become the final arbiter
and control the social and economic legislation of states at every
point. Those champions of the amendments who looked to them to establish
Federal judicial supremacy for the defense of corporations and business
enterprises everywhere throughout the American empire were sadly
disappointed.
Nowhere was that disappointment more effectively and more cogently
stated than in the opinions of the judges who dissented from the
doctrines announced by the majority of the court. Chief Justice Chase
and Justices Field, Bradley, and Swayne refused to accept the
interpretation and the conclusions reached by the majority, and the last
three judges wrote separate opinions of their own expressing their
grounds for dissenting. The first of these, Justice Field, contended
that the Louisiana statute in question could not legitimately come under
the police power and was in violation of the Fourteenth Amendment,
inasmuch as it denied to citizens of the United States the fundamental
rights which belonged to citizens of all free governments--protection
against monopolies and equality of rights in the pursuit of the ordinary
avocations of life. In his opinion, the privileges and immunities put
under the supervision of the Federal Government by the Fourteenth
Amendment comprised generally "protection by the government, the
enjoyment of life and liberty, with the right to acquire and possess
property of every kind, and to pursue and obtain happiness and safety,
subject, nevertheless, to such restraint as the government may justly
prescribe for the general good of the whole." In other words, Justice
Field would have carried the Amendment beyond the specific enumeration
of any definitely ascertained legal rights into the field of moral law,
which, in final analysis, would have meant the subjection of the state
legislation solely to the discretion of the judicial conscience. The
future, as we shall see, was with Justice Field.
In the opinion of Justice Bradley, the Louisiana statute not only
deprived persons of the equal protection of the laws, but also of
liberty and property--the right of choosing, in the adoption of lawful
employments, being a portion of their liberty, and their occupation
being their property. In the opinion of Mr. Justice Swayne, who
dissented also, the word liberty as used in the Fourteenth Amendment
embodied freedom from all restraints except such as were "justly"
imposed by law. In his view, property included everything that had an
exchange value, including labor, and the right to make property
available was next in importance to the rights of life and liberty.
_The Granger Cases_
Three years after the decision in the Slaughter-House cases, the Supreme
Court again refused to interpret the Fourteenth Amendment so broadly as
to hold unconstitutional a state statute regulating business
undertakings. This case, Munn _v._ Illinois, decided in 1876, involved
the validity of a statute passed under the constitution of that state,
which declared all elevators where grain was stored to be public
warehouses and subjected them to strict regulation, including the
establishment of fixed maximum charges. It was contended by the
plaintiffs in error, Munn and Scott, that the statute violated the
Fourteenth Amendment in two respects: (1) that the business attempted to
be regulated was not a public calling and was, therefore, totally
outside of the regulatory or police power of the state; and (2) that
even if the business was conceded to be public in character, and
therefore by the rule of the common law was permitted to exact only
"reasonable" charges for its services, nevertheless the determination of
what was reasonable belonged to the judicial branch of the government
and could not be made by the legislature without violating the principle
of "due process."
Both of these contentions were rejected by the Court, and the
constitutionality of the Illinois statute was upheld. The opinion of the
Court was written by Chief Justice Waite, who undertook an elaborate
examination of the "due process" clause of the Fourteenth Amendment. The
principle of this Amendment, he said, though new in the Constitution of
the United States, is as old as civilized government itself; it is found
in Magna Carta in substance if not in form, in nearly all of the state
constitutions, and in the Fifth Amendment to the Federal Constitution.
In order to ascertain, therefore, what power legislatures enjoyed under
the new amendment, it was only necessary to inquire into the limitations
which had been historically imposed under the due process clause in
England and the United States; and after an examination of some cases in
point the Chief Justice came to the conclusion that "down to the time of
the adoption of the Fourteenth Amendment it was not supposed that
statutes regulating the use or even the price of the use of private
property necessarily deprived an owner of his property without due
process of law." When private property "is affected with public
interest" and is used in a manner to make it of public consequence, the
public is in fact granted an interest in that use, and the owner of the
property in question "must submit to be controlled by the public for the
common good, to the extent of the interest he has thus created."
But it was insisted on behalf of the plaintiffs that the owner of
property is entitled to a reasonable compensation for its use even when
it is clothed with the public interest, and that the determination of
what is reasonable is a _judicial, not a legislative_, matter. To this
Chief Justice Waite replied that the usual practice had been otherwise.
"In countries where the common law prevails," he said, "it has been
customary from time immemorial for the legislature to declare what shall
be a reasonable compensation under such circumstances, or perhaps more
properly speaking to fix a maximum beyond which any charge made would be
unreasonable.... The controlling fact is the power to regulate at all.
If that exists, the right to establish the maximum of charge as one of
the means of regulation is implied. In fact, the common law rule which
requires the charge to be reasonable is itself a regulation as to
price.... To limit the rate of charge for services rendered in a public
employment, or for the use of property in which the public has an
interest, is only changing a regulation which existed before. It
establishes no new principle in the law, but only gives a new effect to
an old one. We know that this is a power which may be abused; but that
is no argument against its existence. _For protection against abuses by
legislatures the people must resort to the polls, not to the
courts._"[20]
The principle involved in the Munn case also came up in the same year
(1876) in Peik _v._ Chicago and Northwestern Railroad Company, in which
Chief Justice Waite, speaking of an act of Wisconsin limiting passenger
and freight charges on railroads in the state, said: "As to the claim
that the courts must decide what is reasonable and not the legislature,
this is not new to this case. It has been fully considered in Munn _v._
Illinois. Where property has been clothed with a public interest, the
legislature may fix a limit to that which shall be in law reasonable for
its use. This limit binds the courts as well as the people. If it has
been improperly fixed, the legislature, not the courts, must be appealed
to for the change."
The total results of the several Granger cases, decided in 1876, may be
summed up as follows:
(1) That the regulatory power of the state over "public callings" is not
limited to those businesses over which it was exercised at common law,
but extends to any business in which, because of its necessary character
and the possibilities for extortion afforded by monopolistic control,
the public has an interest.
(2) That such regulatory power will not be presumed to have been
contracted away by any legislature, unless such intention is
unequivocally expressed.
(3) That the exercise of such regulatory power belongs to the
legislature, and not to the judiciary.
(4) And the _dictum_ that the judiciary can grant no relief from an
unjust exercise of this regulatory power by the legislature.
Although the denial of the right of the judiciary to review the
"reasonableness" of a rate fixed by the legislature in the Granger cases
had been _dictum_, a case was not long arising in which the issue was
squarely raised. Had this case gone to the Supreme Court, the question
of judicial review would have been decided a full decade or more before
it really was. In this case, the Tilley case, a bondholder of a railroad
operating in Georgia sought to restrain the railroad from putting into
force a tariff fixed by the state railroad commission, on the ground
that it was so unreasonably low as to be confiscatory. Judge Woods, of
the Federal circuit court, refused to grant the injunction, basing his
decision squarely upon the dictum in Munn _v._ Illinois, and declaring
that the railroad must seek relief from unjust action on the part of the
commission at the hands of the legislature or of the people.
It was not till seven years after the Granger cases that another case
involving rate regulation was presented to the Federal courts.[21] The
Ruggles case, brought to the Supreme Court by writ of error to the
supreme court of Illinois, in 1883, involved a conviction of one of the
agents of the Illinois Central Railway for violating a maximum passenger
fare statute of that state, and raised substantially the same question
as all of the Granger cases except the Munn case--the right of the
legislature to regulate the rates of a railroad which was itself
empowered by its charter to fix its own rates. The Court affirmed the
doctrine of the Granger cases, Chief Justice Waite again writing the
opinion. The case is noteworthy only for the opinion of Justice Harlan,
concurring in the judgment, but dissenting from the opinion, of the
Court, in so far as that opinion expressed, as he declared, the doctrine
that the legislature of Illinois could regulate the rates of the railway
concerned, in any manner it saw fit. Justice Harlan argued that inasmuch
as the charter of the railroad had conferred upon it the right to demand
"reasonable" charges, the legislature, when it resumed the power of
fixing charges, was estopped from fixing less than "reasonable" charges;
and should charges lower than "reasonable" be fixed, it would be within
the province of the judicial branch to give relief against such an
impairment of the obligation of contract.
Justice Harlan's opinion is interesting not only because it touches upon
the possibility of a _judicial_ review of the rate fixed by the
legislature; but because the learned Justice bases his contention on the
_contract_ between the railroad and the state to the effect that rates
should be "reasonable." This indicates plainly that not even in the mind
of Justice Harlan, who later became the firm exponent of the power of
judicial review, was there any clear belief that the Fourteenth
Amendment as such gave the Court any power to review the
"reasonableness" of a rate fixed by the legislature. In other words, he
derived his doctrine of judicial review from the power of the Federal
judiciary to enforce the obligation of contracts, and not from its power
to compel "due process of law."
It is impossible to trace here the numerous decisions following the
Ruggles case in which the Supreme Court was called upon to consider the
power of state legislatures to control and regulate corporations,
particularly railways. It is impossible also to follow out all of the
fine and subtle distinctions by which the _dictum_ of Chief Justice
Waite, in the Munn case, to the effect that private parties must appeal
to the people, and not to the courts, for protection against state
legislatures, was supplanted by the firm interpretation of the
Fourteenth Amendment in such a manner as to confer upon the courts the
final power to review all state legislation regulating the use of
property and labor. Of course we do not have, in fact, this clear-cut
reversal of opinion by the Court, but rather a slow working out of the
doctrine of judicial review as opposed to an implication that the Court
could not grant to corporations the relief from legislative interference
which they sought. There are but few clear-cut reversals in law; but the
political effect of the Court's decisions has been none the less clear
and positive.
_The Minnesota Rate Case_
It seems desirable, however, to indicate some of the leading steps by
which the Court moved from the doctrine of non-interference with state
legislatures to the doctrine that it is charged with the high duty of
reviewing all and every kind of economic legislation by the states. One
of the leading cases in this momentous transition is that of the
Chicago, Milwaukee, and St. Paul Railway Company _v._ Minnesota, decided
in 1889, which made a heavy contribution to the doctrine of judicial
review of questions of political economy as well as law. This case
involved the validity of a Minnesota law which conferred upon a state
railway commission the power to fix "reasonable" rates. The commission,
acting under this authority, had fixed a rate on the transportation of
milk between two points.
The railroad having refused to put the rate into effect, the commission
applied to the supreme court of the state for a writ of mandamus. In its
answer the railroad claimed, among other contentions, that the rate
fixed was unreasonably low. The supreme court of the state refused to
listen to this contention, saying that the statute by its terms made the
order of the commission conclusively reasonable; accordingly it issued
the mandamus. By writ of error, the case was brought to the Supreme
Court of the United States, which, by a vote of six to three, ordered
the decree of the state court vacated, on the ground that the statute as
construed by the supreme court of the state was unconstitutional, as a
deprivation of property without due process of law.
The opinion of the Court, written by Justice Blatchford, has frequently
been interpreted to hold, and was indeed interpreted by the dissenting
minority to hold, that the judiciary must, to satisfy the requirements
of "due process," have the power of final review over the reasonableness
of all rates, however fixed. It is doubtful whether the language of the
opinion sustains this reading; but the strong emphasis on the place of
the judiciary in determining the reasonableness of rates lent color to
the contention that Mr. Justice Blatchford was setting up "judicial
supremacy." In the course of his opinion, he said: "The question of the
reasonableness of a rate of charge for transportation by a railroad
company, involving as it does the element of reasonableness both as
regards the company and as regards the public, is eminently a question
for judicial investigation requiring due process of law for its
determination. If the company is deprived of the power of charging
reasonable rates for the use of its property, and such deprivation takes
place in the absence of an investigation by judicial machinery, it is
deprived of the lawful use of its property, and thus in substance and
effect, of the property itself without due process of law and in
violation of the Constitution of the United States."
The dissenting members of the Court in this case certainly saw in
Justice Blatchford's opinion an assertion of the doctrine that whatever
the nature of the commission established by law or the form of procedure
adopted, the determination of rates was subject to review by a strictly
judicial tribunal. In his dissent, Mr. Justice Bradley declared that the
decision had practically overruled Munn _v._ Illinois and the other
Granger cases. "The governing principle of those cases," he said, "was
that the regulation and settlement of the affairs of railways and other
public accommodations is a legislative prerogative and not a judicial
one.... The legislature has the right, and it is its prerogative, if it
chooses to exercise it, to declare what is reasonable. This is just
where I differ from the majority of the Court. They say in effect, if
not in terms, that the final tribunal of arbitrament is the judiciary; I
say it is the legislature. I hold that it is a legislative question, not
a judicial one, unless the legislature or the law (which is the same
thing) has made it judicial by prescribing the rule that the charges
shall be reasonable and leaving it there. It is always a delicate thing
for the courts to make an issue with the legislative department of the
government, and they should never do it, if it is possible to avoid it.
By the decision now made we declare, in effect, that the judiciary, and
not the legislature, is the final arbiter in the regulation of fares and
freights of railroads and the charges of other public accommodations. It
is an assumption of authority on the part of the judiciary which, it
seems to me, with a due reverence to the judgment of my brethren, it has
no right to make.... Deprivation of property by mere arbitrary power on
the part of the legislature or fraud on the part of the commission are
the only grounds on which judicial relief may be sought against their
action. There was in truth no deprivation of property in these cases at
all.... It may be that our legislatures are invested with too much
power, open as they are to influences so dangerous to the interests of
individuals, corporations, and societies. But such is the Constitution
of our republican form of government, and we are bound to abide by it
until it can be corrected in a legitimate way."
_The Development of Judicial Review_
A further step toward judicial review even still more significant was
taken, in the case of Reagan _v._ Farmers' Loan and Trust Company,
decided by the Supreme Court in 1894. This case came up from the Federal
circuit court of Texas which had enjoined the state railway
commissioners from fixing and putting into effect railway rates which
the Trust Company, as a bondholder and interested party, contended were
too low, although not confiscatory.
The opinion of the Court, written by Justice Brewer, who, as Federal
circuit judge, had already taken advanced ground in favor of judicial
review, went the whole length in upholding the right of the judiciary to
review the reasonableness, not only of a rate fixed by a commission, as
in the case in hand, but even of one fixed by the legislature. The case
differed in no essential way, declared the justice, from those cases in
which it had been the age-long practice of the judiciary to act as final
arbiters of reasonableness--cases in which a charge exacted by a common
carrier was attacked by a shipper or passenger as unreasonable. The
difference between the two cases was merely that in the one the rate
alleged to be unreasonable was fixed by the carrier; in the other it was
fixed by the commission or by the legislature. In support of this
remarkable bit of legal reasoning, the opinion adduced as precedents
merely a few brief excerpts, from previous decisions of the Court,
nearly all of which were pure _dicta_.
The absence of any dissent from this opinion, in spite of the fact that
Judge Gray, who had concurred in Justice Bradley's vigorous dissenting
opinion in the Chicago-Minnesota case four years before, was still on
the bench, indicates that the last lingering opposition to the doctrine
of judicial review in the minds of any of the Court had been dissolved.
Henceforth it was but the emphatic affirmation and consistent
development of that doctrine that was to be expected.
If we leave out of account Mr. Justice Brewer's _dicta_ and consider the
Court to have decided merely the issues squarely presented, the Reagan
case left much to be done before the doctrine of judicial review could
be regarded as established beyond all possibility of limitation and
serious qualification. Other cases on the point followed quickly, but it
was not until the celebrated case of Smyth _v._ Ames, decided in 1898,
that the two leading issues were fairly presented and settled. In this
case the rate attacked was not fixed by a commission, but by a state
legislature itself; and the rate was not admitted by the counsel for the
state to be unreasonable, but was strongly defended as wholly reasonable
and just. The Court had to meet the issues.
The original action in the case of Smyth _v._ Ames was a bill in equity
brought against the attorney-general and the Nebraska state board of
transportation, in the Federal circuit court, by certain bondholders of
the railroads affected, to restrain the enforcement of the statute of
that state providing a comprehensive schedule of freight rates. The
bills alleged, and attempted to demonstrate by elaborate calculations,
that the rates fixed were _confiscatory_, inasmuch as a proportionate
reduction on all the rates of the railroads affected by them would so
reduce the income of the companies as to make it impossible for them to
pay any dividends; and in the case of some of them, even to meet all
their bonded obligations. On behalf of the state, it was urged that the
reduction in rates would increase business, and, therefore, increase
net earnings, and that some at least of the companies were bonded far
in excess of their actual value. Supreme Court Justice Brewer, sitting
in circuit, on the basis of the evidence submitted to him, consisting
mainly of statements of operating expenses, gross receipts, and inter-
and intra-state tonnage, found the contention of the railroads well
taken, and issued the injunctions applied for.
The opinion of the Supreme Court, affirming the decree of Judge Brewer,
was, in the essential part of it--that asserting the principle of
judicial review in its broadest terms--singularly brief. Contenting
himself with citing a few short _dicta_ from previous decisions, Justice
Harlan, speaking for the Court, declared that the principle "must be
regarded as settled" that the reasonableness of a rate could not be so
conclusively determined by a legislature as to escape review by the
judiciary. Equally well settled, it was declared, was the principle that
property affected with a public interest was entitled to a "fair return"
on its "fair" valuation. These principles regarded as established, the
Court proceeded to examine the evidence, although it admitted that it
lacked the technical knowledge necessary to a completely equitable
decision; and sustained the finding of the lower court in favor of the
railroads. There was no dissent.
With Smyth _v._ Ames the doctrine of judicial review may be regarded as
fully established. No portion of the judicial prerogative could now be
surrendered without not merely "distinguishing" but flatly overruling a
unanimous decision of the Court.
The significance of Smyth _v._ Ames was soon observable in the
activities of the lower Federal courts. Within the nine months of 1898
that followed that decision, there were at least four applications for
injunctions against alleged unreasonable rates, and in three of these
cases the applications were granted. During the years that followed
Smyth _v._ Ames, Federal courts all over the country were tying the
hands of state officers who attempted to put into effect legislative
measures regulating railway concerns. In Arkansas, Florida, Alabama,
Minnesota, Missouri, Illinois, North Carolina, Louisiana, and Oregon,
rates fixed by statute, commission, or ordinance were attacked by the
railways in the Federal courts and their enforcement blocked. In several
instances the injunctions of the lower courts were made permanent, and
no appeal was taken to the Supreme Court of the United States. With
Smyth _v._ Ames staring them in the face, state attorneys accepted the
inevitable.
The decision in Smyth _v._ Ames left still one matter in doubt. The
allegation of the railroads in that case had been that the rates fixed
were actually confiscatory--that is, so low as to make dividends
impossible. In the course of his opinion, Justice Harlan had stated,
however, that the railroads were entitled to a "fair return," an opinion
that had been expressed also in the Reagan case, where indeed it had
been necessary to the decision, and still earlier, but with little
relevancy, in the Chicago-Minnesota case. In none of these cases,
however, had any precise definition of the terms "reasonable" or "fair"
return been necessary, and none had been made.
The first direct suggestion of the development of the judicial
reasoning on this point that was to take place is found in the Milwaukee
Electric Railway case, also decided in 1898. In that case Judge Seaman,
of the Federal circuit court, found from the evidence that the dividends
of the street railway company for several years past had been from 3.3
to 4.5 per cent, while its bonds bore interest at 5 per cent. Anything
less than these returns, the judge declared, would be unreasonable,
inasmuch as money loaned on real estate, secured by a first mortgage,
was at that time commanding 6 per cent in Milwaukee.
Eleven years later, in 1909, the Supreme Court sustained virtually the
same rule in the New York Consolidated Gas case, holding, with the lower
court, that the company was entitled to _six_ per cent return on a fair
value of its property (including franchises and the high values of the
real estate used by it in the business), because six per cent was the
"customary" rate of interest at that time in New York City. On the same
day the court decided that a return of six per cent on waterworks
property in Knoxville, Tennessee, was also not unreasonable. In neither
of these cases, however, did the Court attempt any examination or
explanation of the evidence on which it rested its determination that
six per cent was the "customary" rate in the places named; nor did it
attempt to explain the principle on which such "customary" rate could be
determined for other times and places. Plainly there is still room for a
great deal of "distinguishing" on this point. The extreme vagueness of
the rule was exemplified by the decision of Federal circuit Judge
Sanborn in the Shephard case (1912), in which he decided that, for a
railroad running through Minnesota, _seven_ per cent was no more than a
"fair" return, and that any reduction in rates which would diminish the
profits of the road below that figure was unreasonable.
Equally important and of as great difficulty are the questions entering
into the determination of a "fair" valuation. This point is both too
unsettled and too technical to render any discussion of it profitable
here. Attention may, however, be called to two of the holdings in the
Consolidated Gas case. In arriving at a "fair" valuation of the gas
company's property, the Court allowed a large valuation to be placed
upon the franchises of the company--none of which had been paid for by
the companies to which they had originally been issued, and which had
not been paid for by the Consolidated Company when it took them over,
except in the sense that a large amount of stock, more than one sixth of
the total stock issued by the company, had been issued against them,
when the consolidation was formed. The particular facts surrounding this
case are such as to make it very easy for the Court to "distinguish"
this case from the usual one, for the consolidation was formed, and its
stock issued, under a statute that authorized the formation of
consolidations, and forbade such consolidations to issue stock in excess
of the fair value of the "property, franchises, and rights" of the
constituent companies. This last prohibition the Court construed as
indicative of the legislative intention that the franchises should be
capitalized. Equally plain is it, however, that this particular
circumstance of the Consolidated Gas case is so irrelevant that it will
offer no obstacle whatever to the Court's quoting that case as a
precedent for the valuation of franchises obtained _gratis_, should it
so desire.
Another holding of great importance in the Gas case was that the company
was entitled to a fair return on the value of real estate used in the
business, that value having appreciated very greatly since the original
purchase of the real estate, and there being no evidence to show that
real estate of so great value was essential to the conduct of the
business.
The importance of these two holdings is exemplified by the fact that in
this particular case the combined value attributed to the franchises and
the appreciation of real estate was over $15,000,000--more than one
fourth of the total valuation arrived at by the Supreme Court. It will
readily be seen that if these two items had been struck from the
valuation by the Court, it would be possible for the state to make a
still further substantial reduction in the rate charged for gas in New
York City without violating the Court's own canon of reasonableness--a
six per cent return.
The steps in the evolution of the doctrine of judicial review may be
summarized in the following manner:
The Supreme Court first declared that the legislative determination of
what was a "reasonable" rate was not subject to review by the courts.
The first departure from this view was an intimation, confirmed with
increasing emphasis in several cases, that a rate so low as to make any
return whatever impossible was confiscatory and would be set aside by
the Court as violating the Fourteenth Amendment. For a time, however,
the Court took the position (steadily undermined in subsequent
decisions) that a rate which allowed some, even though an "unreasonably
low" return, was not prohibited by the Fourteenth Amendment and could
not be set aside by the Court.
Next in order came the holding that the determination of a commission as
to what was reasonable could not be made conclusive upon the courts, at
least when the commission had acted without the forms and safeguards of
judicial procedure, and, probably, even when it had acted with them.
In the same decision appeared an intimation, which in subsequent
decisions became crystallized into "settled law," that not only were
totally confiscatory rates prohibited by the Fourteenth Amendment, but
also any rates which deprived the owners of the property regulated of a
return equal to what was "customary" in private enterprises.
This rule was applied by the Court for the first time against a rate
fixed by a commission, and where the rate was admitted by the pleadings
to be confiscatory. But it was shortly thereafter applied to a rate
fixed by a legislature, and where the "reasonableness" (not the
confiscatory character) of the rate was a direct issue on the facts and
evidence.
Finally, the principle that what is a "fair" or "reasonable" rate is to
be measured by the customary return in private enterprises under similar
conditions, has been applied in several cases to warrant the requirement
of a definite rate of interest; but no precise rules have been laid down
for the determination of such rate in all cases.
The most striking feature, perhaps, of the development of the doctrine
of judicial review here traced, as seen in the opinions of the Supreme
Court, is the brevity and almost fortuitous character of the reasoning
given in support of the most important and novel holdings. A comparison
of the reasoning in Smyth _v._ Ames, for example, with that in Marbury
_v._ Madison, in which Chief Justice Marshall first held a law of
Congress unconstitutional, will forcibly exemplify this. The explanation
is to be found largely in the fact that each step in advance in the
building up of the doctrine had been foreshadowed in _dictum_ before it
was established as decision. It was thus possible for the judge writing
the opinion in a case when a new rule was actually established, to
quote, as "settled law," a mere _dictum_ from a previous opinion.
Justice Gray's citation, in this fashion, in the Dow case, of Chief
Justice Waite's _dictum_ in the Ruggles case (although he might, with
equal cogency, have cited the Chief Justice's contrary _dictum_ in the
Munn or Peik cases), is a good instance of this curious use of
"precedent"; and parallel instances could be adduced from virtually
every one of the important subsequent cases on this subject.[22]
It is apparent from this all too brief and incomplete account of the
establishment of judicial review over every kind and class of state
legislation affecting private property rights that no layman can easily
unravel the mysterious refinements, distinctions, and logical subtleties
by which the fact was finally established that property was to be free
from all interference except such as might be allowed by the Supreme
Court (or rather five judges of that Court) appointed by the President
and Senate, thus removed as far as possible from the pressure of public
sentiment. Had a bald veto power of this character been suddenly vested
in any small group of persons, there can be no doubt that a political
revolt would have speedily followed. But the power was built up by
gradual accretions made by the Court under the stimulus of skilful
counsel for private parties, and finally clothed in the majesty of
settled law. It was a long time before the advocates of leveling
democracy, leading an attack on corporate rights and privileges,
discovered that the courts were the bulwarks of _laissez faire_ and
directed their popular battalions in that direction.
Those who undertake to criticize the Supreme Court for this assumption
of power do not always distinguish between the power itself and the
manner of its exercise. What would have happened if the state
legislatures had been given a free hand to regulate, penalize, and
blackmail corporations at will during the evolution of our national
economic system may be left to the imagination of those who recall from
their history the breezy days of "wild-cat" currency, repudiation, and
broken faith which characterized the thirty years preceding the Civil
War when the Federal judiciary was under the dominance of the states'
rights school. The regulation of a national economic system by forty or
more local legislatures would be nothing short of an attempt to combine
economic unity with local anarchy. It is possible to hold that the Court
has been too tender of corporate rights in assuming the power of
judicial review, and at the same time recognize the fact that such a
power, vested somewhere in the national government, is essential to the
continuance of industries and commerce on a national scale.
* * * * *
Thus far attention has been directed to the activities of the Federal
Supreme Court in establishing the principle of judicial review
particularly in connection with legislation relative to railway
corporations, but it should be noted that judicial review covers all
kinds of social legislation relative to hours and conditions of labor as
well as the charges of common carriers. In 1905, for example, the
Supreme Court in the celebrated case of Lochner _v._ New York declared
null and void a New York law fixing the hours of work in bakeshops at
ten per day, basing its action on the principle that the right to
contract in relation to the hours of labor was a part of the liberty
which the individual enjoyed under the Fourteenth Amendment. Mr. Justice
Holmes, who dissented in the case, declared that it was decided on an
economic theory which a large part of the country did not entertain, and
protested that the Fourteenth Amendment did not "enact Mr. Herbert
Spencer's _Social Statics_."
As a matter of fact, however, the Supreme Court of the United States has
declared very little social legislation invalid, and has been inclined
to take a more liberal view of such matters than the supreme courts of
the states. The latter also have authority to declare state laws void as
violating the Federal Constitution, and when a state court of proper
jurisdiction invalidates a state law, there is, under the Federal
judiciary act, no appeal to the Supreme Court of the United States.
Consequently, the Fourteenth Amendment means in each state what the
highest court holds it to mean, and since the adoption of that Amendment
at least one thousand state laws have been nullified by the action of
state courts, under the color of that Amendment or their respective
state constitutions.
As examples, in New York a law prohibiting the manufacture of cigars in
tenement houses, in Pennsylvania a law prohibiting the payment of wages
in "scrip" or store orders, and in Illinois a statute forbidding mining
and manufacturing corporations to hold back the wages of their employees
for more than a week were declared null and void. Such laws were
nullified not only on the ground that they deprived the employer of
property without due process, but also on the theory that they deprived
workingmen of the "liberty" guaranteed to them to work under any
conditions they chose. In one of these cases, a Pennsylvania court
declared the labor law in question to be "an insulting attempt to put
the laborer under a legislative tutelage which is not only degrading to
his manhood but subversive of his rights as a citizen of the United
States."
Where the state court nullified under the state constitution, it was of
course relatively easy to set aside the doctrines of the court by
amending the constitution, but where the state court nullified on the
ground of the Fourteenth Amendment to the Federal Constitution, there
was no relief for the state and even no appeal for a review of the case
to discover whether the Supreme Court of the United States would uphold
the state tribunal in its view of the national law. Under such
circumstances, the highest state court became the supreme power in the
state, for its decrees based on the Federal Constitution were final. It
was the freedom, one may say, recklessness, with which the courts
nullified state laws that was largely responsible for the growth of the
popular feeling against the judiciary, and led to the demand for the
recall of judges.[23]
FOOTNOTES:
[13] A. R. Conkling, _Life of Roscoe Conkling_, p. 297.
[14] A. R. Conkling, _Life of Roscoe Conkling_, p. 699.
[15] _Ibid._, p. 671.
[16] _Ibid._, pp. 679 ff.
[17] See below, p. 57.
[18] _Ibid._, p. 540.
[19] Taylor, _Origin and Growth of the American
Constitution_, p. 355. As a matter of fact, Conkling, who was
a member of the committee that drafted the Fourteenth
Amendment, voted against these provisions in Committee.
[20] It is to be noted that the demand of the warehousemen on
the second point was not for a judicial _review_ of the
reasonableness of a rate fixed by the legislature, but a
total _denial_ of the _power_ of a _legislature_ to act in
the matter. The question of the propriety of a judicial
review of the reasonableness of the rates in question was not
raised in the pleadings. It was not difficult, therefore, for
judges in subsequent cases in which the question of judicial
review was squarely raised to explain away as mere _dictum_
this solemn statement by Chief Justice Waite to the effect
that the power of the legislature to regulate being conceded,
the determination of the legislature was binding on the
courts and not subject to review.
[21] Except for two unimportant cases decided in the lower
courts.
[22] It should be noted that the Supreme Court not only
undertook to pass upon the reasonableness of such rates as
the states were permitted to make, but also added in 1886
that no state could regulate the rates on goods transported
within its borders, when such goods were in transit to or
from a point in another state. Such regulation was held in
the Wabash, etc., Railway Company _v._ Illinois (118 U. S.
557) to be an interference with interstate commerce which was
subject to control by Congress only.
[23] Below, p. 287.
CHAPTER IV
PARTIES AND PARTY ISSUES, 1877-1896
It was a long time before the conditions created by the great economic
revolution were squarely reflected in political literature and party
programs. Indeed, they were but vaguely comprehended by the generation
of statesmen who had been brought up in the days of the stagecoach and
the water mill. It is true that the inevitable drift of capitalism in
the United States might have been foreseen by turning to Europe,
particularly to England, where a similar economic revolution had
produced clearly ascertainable results; but American politicians
believed, or at least contended, that the United States lived under a
special economic dispensation and that the grave social problems which
had menaced Europe for more than a generation when the Civil War broke
out could never arise on American soil.
From 1861 to 1913, the Republican party held the presidential office,
except for eight years. That party had emerged from the Civil War
fortified by an intense patriotism and by the support of the
manufacturing interests which had flourished under the high tariffs and
of capitalists anxious to swing forward with the development of railways
and new enterprises. Its origin had been marked by a wave of moral
enthusiasm such as has seldom appeared in the history of politics. It
came to the presidency as a minority party, but by the fortunes of war
it became possessed of instruments of power beyond all calculation. Its
leading opponents from the South deserted in a mass giving it in a short
time possession of the field--all the Federal branches of government. It
had the management of the gigantic war finances, through which it
attached to itself the interests and fortunes of the great capitalists
and bankers throughout the North. It raised revenues by a high tariff
which placed thousands of manufacturers under debt to it and linked
their fortunes also with its fate. It possessed the Federal offices,
and, therefore, railway financiers and promoters of all kinds had to
turn to it for privileges and protection. Finally, millions of farmers
of the West owed their homes to its generous policy of giving away
public lands. Never had a party had its foundations on interests
ramifying throughout such a large portion of society.
And over all it spread the mantle of patriotism. It had saved the Union,
and it had struck the shackles from four million bondmen. In a baptism
of fire it had redeemed a nation. Europe's finger of scorn could no
longer be pointed to the "slave republic paying its devotions to liberty
and equality within the sound of the bondman's wail." The promises of
the Declaration of Independence had been fulfilled and the heroic deeds
of the Revolution rivaled by Republican leaders. As it declared in its
platform of 1876, the Republican party had come into power "when in the
economy of Providence this land was to be purged of human slavery and
when the strength of the government of the people, by the people, and
for the people was to be demonstrated." Incited by the memories of its
glorious deeds "to high aims for the good of our country and mankind,"
it looked forward "with unfaltering courage, hope, and purpose."
Against such a combination of patriotism and economic interest, the
Democratic party had difficulty in making headway, for its former
economic mainstay, the slave power, was broken and gone; it was charged
with treason, and it enjoyed none of the spoils of national office. But
in spite of all obstacles it showed remarkable vitality. Though divided
on the slave question in 1860, those who boasted the name of "Democrat"
were in an overwhelming majority, and even during the Civil War, with
the southern wing cut off completely, the party was able to make a
respectable showing in the campaign which resulted in Lincoln's second
election. When the South returned to the fold, and white dominion drove
the negro from the polls, the Democratic party began to renew its youth.
In the elections of 1874, it captured the House of Representatives; it
narrowly missed the presidency in 1876; and it retained its control of
the lower house of Congress in the elections of 1876 and 1878.
* * * * *
The administration of President Hayes did little to strengthen the
position of the Republicans. His policy of pacification in the South
alienated many partisans who believed that those who had saved the Union
should continue to rule it; but it is difficult to say how much
disaffection should be attributed to this cause. It seems to have been
quietly understood within official circles that support would be
withdrawn from the Republican administrations in Louisiana and South
Carolina. Senator Hoar is authority for the statement "that General
Grant, before he left office, had determined to do in regard to these
state governments exactly what Hayes afterward did, and that Hayes acted
with his full approval. Second, I have the authority of President
Garfield for saying that Mr. Blaine had come to the same conclusion."
Charges based on sectional feeling were also brought forward in
criticism of some of Hayes' cabinet appointments. He terrified the
advocates of "no concession to rebels" by appointing David M. Key, an
ex-Confederate soldier of Tennessee, to the office of Postmaster-General;
and his selection of Carl Schurz, a leader of the Liberal Republican
Movement of 1872 and an uncertain quantity in politics, as Secretary of
the Interior, was scarcely more palatable in some quarters. He created
further trouble in Republican ranks by his refusal to accede to the
demands of powerful Senators, like Cameron of Pennsylvania and Conkling
of New York, for control over patronage in their respective states. No
other President for more than a generation had so many nominations
rejected by the Senate.
On the side of legislation, Hayes' administration was nearly barren.
During his entire term the House of Representatives was Democratic, and
during the last two years the Senate was Democratic also by a good
margin. Had he desired to carry out a large legislative policy, he could
not have done so; but he was not a man of great capacity as an initiator
of public policies. He maintained his dignity and self-possession in
the midst of the most trying party squabbles; but in a democracy other
qualities than these are necessary for effective leadership.
* * * * *
In their desperation, the conservative leaders of the Republican party
resolved to have no more "weak and goody-goody" Presidents, incapable of
fascinating the populace and keeping it in good humor, and they made a
determined effort to secure the renomination of Grant for a third term,
in spite of the tradition against it. Conkling captured the New York
delegation to the national convention in 1880 for Grant; Cameron swung
Pennsylvania into line; and Logan carried off Illinois. Grant's consent
to be a candidate was obtained, and Conkling placed his name in
nomination in a speech which Senator Hoar describes as one of "very
great power."
Strong opposition to Grant developed, however, partly on account of the
feeling against the third term, and particularly on account of the
antagonism to the Conkling faction which was backing him. Friends of
Blaine, then Senator from Maine, and supporters of John Sherman of Ohio,
thought that Grant had had enough honors at the hands of the party, and
that their turn had come. As a result of a combination of circumstances,
Grant never received more than 313 of the 378 votes necessary to
nomination at the Republican convention. After prolonged balloting, the
deadlock was broken by the nomination of James A. Garfield, of Ohio, as
a "dark horse." The Grant contingent from New York received a sop in
the shape of the nomination of Chester A. Arthur, a politician of the
Conkling school, to the office of Vice President.
In spite of the promising signs, the Democrats were unable to defeat the
Republicans in 1880. The latter found it possible to heal, at least for
campaign purposes, the breaches created by Hayes' administration. It is
true that Senator Conkling and the "Stalwart" faction identified with
corporation interests were sorely disappointed in their failure to
secure the nomination of Grant for a third term, and that Garfield as a
"dark horse" did not have a personal following like that of his chief
opponents, the Hero of Appomattox, Blaine of Maine, and Sherman of Ohio.
But he had the advantage of escaping the bitter factional feeling within
the party against each of these leaders. He had risen from humble
circumstances, and his managers were able to make great capital out of
his youthful labors as a "canal-boat boy." He had served several terms
in Congress acceptably; he had been intrusted with a delicate place as a
member of the electoral commission that had settled the Hayes-Tilden
dispute; and he was at the time of his nomination Senator-elect from
Ohio. Though without the high qualities of leadership that distinguished
Blaine, Garfield was a decidedly "available" candidate and his
candidature was strengthened by the nomination of Arthur, who was
acceptable to the Conkling group and the spoilsmen generally.
The Republican fortunes in 1880 were further enhanced by the divisions
among the Democrats and their inability to play the game of practical
politics. Two sets of delegates appeared at the convention from New
York, and the Tammany group headed by "Boss" Kelly was excluded, thus
offending a powerful section of the party in that pivotal state. The
candidate nominated, General Hancock, was by no means a skilful leader.
In fact, he had had no public experience outside of the Army, where he
had made a brilliant record, and he showed no ability at all as a
campaigner. Finally, the party made its fight principally on the "great
fraud of 1876," asking vindication at the hands of the people on the
futile theory that the voters would take an interest in punishing a
four-year-old crime. In its platform, reported by Mr. Watterson, of
Kentucky, it declared that the Democrats had submitted to that outrage
because they were convinced that the people would punish the crime in
1880. "This issue precedes and dwarfs every other; it imposes a more
sacred duty upon the people of the Union than ever addressed to the
conscience of a nation of freemen." Notwithstanding this narrow issue,
Hancock fell behind Garfield only about ten thousand votes, although his
electoral vote was only 155 to 214 for his opponent.
Whether Garfield would have been able to consolidate his somewhat
shattered party by effective leadership is a matter of speculation, for,
on July 2, 1881, about four months after his inauguration, he was shot
by Charles J. Guiteau, a disappointed and half-crazed office seeker, and
he died on September 19. His successor, Vice President Arthur, though a
man of considerable ability, who managed his office with more acumen and
common honesty than his opponents attributed to him, was unable to clear
away the accumulating dissatisfaction within his party or convince the
country that the party would do its own reforming.
In fact, Arthur, notwithstanding the taint of "spoils" associated with
his career, proved to be by no means the easy-going politician that had
been expected. He took a firm stand against extravagant appropriations
as a means of getting rid of the Treasury surplus, and in 1882 he vetoed
a river and harbor appropriation bill which was specially designed to
distribute funds among localities on the basis of favoritism. In the
same year, he vetoed a Chinese exclusion act as violating the treaty
with China, and made recommendations as to changes which were accepted
by Congress. Arthur also advocated legislation against the spoils
system, and on January 16, 1883, signed the Civil Service law.[24] He
recommended a revision of the tariff, including some striking reductions
in schedules, but the tariff act of 1883 was even less satisfactory to
the public than such measures usually are. Judging by past standards,
however, Arthur had a claim upon his party for the nomination in 1884.
* * * * *
But Arthur was not a magnetic leader, and the election of Grover
Cleveland as governor of New York in 1882 and Democratic victories
elsewhere warned the Republicans that their tenure of power was not
indefinite. Circumspection, however, was difficult. A "reform" faction
had grown up within the party, protesting against the gross practices of
old leaders like Conkling and urging at least more outward signs of
propriety. In this faction were Senator Hoar of Massachusetts, George
William Curtis, Henry Cabot Lodge, and Theodore Roosevelt--the last of
whom had just begun his political career with his election to the New
York legislature in 1881. Senator Edmunds, of Vermont, was the leader of
this group, and his nomination was warmly urged in the Republican
convention at Chicago in 1884.
The hopes of the Republican reformers were completely dashed, however,
by the nomination of Blaine. This "gentleman from Maine" was a man of
brilliant parts and the idol of large sections of the country,
particularly the Middle West; but some suspicions concerning his
personal integrity were widely entertained, and not without reason, by a
group of influential leaders in his party. In 1876, he was charged with
having shared in the corruption funds of the Union Pacific Railroad
Company, and as Professor Dunning cautiously puts it, "the facts
developed put Mr. Blaine under grave suspicion of just that sort of
wealth-getting, if nothing worse, which had ruined his colleagues in the
Credit Mobilier." Moreover, Mr. Blaine's associations had been with that
wing of his party which had been involved or implicated in one scandal
after another. Partly on this account, he had been defeated for
nomination in 1876, when he was decidedly the leading aspirant and again
in 1880 when he received 285 votes in the convention. But in 1884,
leaders like Senator Platt, of New York, declared "it is now Blaine's
turn," and he was nominated in spite of a threatened bolt.
The Democrats were fortunate in their selection of Grover Cleveland as
their standard bearer. He had been mayor of Buffalo and governor of New
York, but he had taken no part in national politics and had the virtue
of having few enemies in that field. He was not a man of any large
comprehension of the economic problems of his age, but he was in every
way acceptable to financiers in New York, for he had showed his
indifference to popular demands by vetoing a five-cent fare bill for the
New York City elevated roads which were then being watered and
manipulated by astute speculators, like Jay Gould. Moreover, Mr.
Cleveland possessed certain qualities of straightforwardness and homely
honesty which commended him to a nation wearied of scandalous
revelations and the malodorous spoils system.
These qualities drew to Cleveland the support of a group of eminent
Republicans, like Carl Schurz who had been Secretary of the Interior
under Hayes, George William Curtis, the civil service reformer, Henry
Ward Beecher, and William Everett, who were nicknamed "Mugwumps" from an
Indian word meaning "chief." Although the "reformers" talked a great
deal about "purity" in politics, the campaign of 1884 was principally
over personalities; and, as a contemporary newspaper put it, it took on
the tone of "a pothouse quarrel." There was no real division over
issues, as will be seen by a comparison of platforms, and scandalous
rumors respecting the morals of the two candidates were freely employed
as campaign arguments. Indeed, the spirit of the fray is reflected in
the words of the Democratic platform: "The Republican party, so far as
principle is concerned, is a reminiscence. In practice, it is an
organization for enriching those who control its machinery. The frauds
and jobbery which have been brought to light in every department of the
government are sufficient to have called for reform within the
Republican party; yet those in authority, made reckless by the long
possession of power, have succumbed to its corrupting influence and have
placed in nomination a ticket against which the independent portion of
the party are in open revolt. Therefore a change is demanded." Having
enjoyed no opportunities for corruption worthy of mention, except in New
York City where they had reaped a good harvest during the sunshine, the
Democrats could honestly pose as the party of "purity in politics."
Their demand for a change was approved by the voters, for Cleveland
received 219 electoral votes as against 182 cast for Blaine. A closer
analysis of the vote, however, shows no landslide to the Democrats, for
had New York been shifted to the Republican column, the result would
have been 218 for Blaine and 183 for Cleveland. And the Democratic
victory in New York was so close that a second count was necessary, upon
which it was discovered that the successful candidate had only about
eleven hundred votes more than the vanquished Blaine. Taking the country
as a whole, the Democrats had a plurality of a little more than twenty
thousand votes.
Cleveland's administration was beset by troubles from the beginning. The
civil service reformers were early disappointed with his performances,
as they might have expected. It is true that the Democratic party had
posed in general as the party of "reform," because forsooth having no
patronage to dispense nor favors to grant it could readily make a
virtue of necessity; but it is fair to say that the party had in fact
been somewhat noncommittal on civil service reform, and Cleveland,
though friendly, was hardly to be classed as ardent. The test came soon
after his inauguration. More than one hundred thousand Federal offices
were in the hands of Republicans; the Senate which had to pass upon the
President's chief nominations was Republican and the clash between the
two authorities was spectacular. The pressure of Democrats for office
was naturally strong, and although the civil service reformers got a few
crumbs of comfort, the bald fact stood forth that within two years only
about one third of the former officeholders remained. "Of the chief
officers," says Professor Dewey, "including the fourth class
post-masters, collectors, land officers, numbering about 58,000, over
45,000 were changed. All of the 85 internal revenue collectors were
displaced; and of the 111 collectors of customs, 100 were removed or not
reappointed."
Cleveland's executive policy was negative rather than positive. He
vigorously applied the veto to private pension bills. From the
foundation of the government until 1897, it appears that 265 such bills
were denied executive approval; and of these five were vetoed by Grant
and 260 by Cleveland--nearly all of the latter's negatives being in his
first administration. Cleveland also vetoed a general dependent pension
bill in 1887 on the ground that it was badly drawn and ill considered.
Although his enemies attempted to show that he was hostile to the old
soldiers, his vetoes were in fact based rather upon a careful
examination of the merits of the several acts which showed extraordinary
carelessness, collusion, and fraud. At all events, the Grand Army
Encampment in 1887 refused to pass a resolution of censure. Cleveland
also killed the river and harbor bill of 1887 by a pocket veto, and he
put his negative on a measure, passed the following year, returning to
the treasuries of the northern states nearly all of the direct taxes
which they had paid during the Civil War in support of the Federal
government.
On the constructive side, Cleveland's first administration was marked by
a vigorous land policy under which upwards of 80,000,000 acres of land
were recovered from private corporations and persons who had secured
their holdings illegally. He was also the first President to treat the
labor problem in a special message (1886); and he thus gave official
recognition to a new force in politics, although the sole outcome of his
recommendations was the futile law of 1888 providing for the voluntary
arbitration of disputes between railways and their employees. The really
noteworthy measure of his first administration was the interstate
commerce law of 1887, but that could hardly be called a partisan
achievement.[25]
* * * * *
Holding his place by no overwhelming mandate and having none of those
qualities of brilliant leadership which arouse the multitude, Cleveland
was unable to intrench his party, and he was forced to surrender his
office at the end of four years' tenure, although his party showed its
confidence by renominating him in 1888. He had a Democratic House during
his administration, but he was embarrassed by party divisions there and
by a Republican Senate. Under such circumstances, he was able to do
little that was striking, and in his message of December, 1887, he
determined to set an issue by a vigorous attack on the tariff--a subject
which had been treated in a gingerly fashion by both parties since the
War. While he disclaimed adherence to the academic theory of free trade
as a principle, his language was readily turned by his enemies into an
attack on the principle of the protective tariff. Although the
performance of the Democrats in the passage of the Mills tariff bill by
the House in 1888 showed in fact no strong leanings toward free trade,
the Republicans were able to force a campaign on the "American doctrine
of protection for labor against the pauper millions of Europe."
On this issue they carried the election of 1888. Passing by Blaine once
more, the Republicans selected Benjamin Harrison, of Indiana, a United
States Senator, a shrewd lawyer, and a reticent politician. Mr.
Wanamaker, a rich Philadelphia merchant, was chosen to raise campaign
funds, and he successfully discharged the functions of his office. As he
said himself, he addressed the business men of the country in the
following language: "How much would you pay for insurance upon your
business? If you were confronted by from one to three years of general
depression by a change in our revenue and protective measures affecting
our manufactures, wages, and good times, what would you pay to be
insured for a better year?" The appeal was effective and with a full
campaign chest and the astute Matthew S. Quay as director of the
national committee, the Republicans outwitted the Democrats, winning 233
electors' votes against 168 for Cleveland, although the popular vote for
Harrison was slightly under that for his opponent.
Harrison's administration opened auspiciously in many ways. The
appointment of Blaine as Secretary of State was a diplomatic move, for
undoubtedly Blaine was far more popular with the rank and file of his
party than was Harrison. The civil service reformers were placated by
the appointment of Theodore Roosevelt as president of the Civil Service
Commission, for he was a vigorous champion of reform, who brought the
whole question forcibly before the country by his speeches and articles,
although it must be said that no very startling gains were made against
the spoils system under his administration of the civil service law. It
required time to educate the country to the point of supporting the
administrative heads in resisting the clamor of the politicians for
office.
Harrison's leadership in legislation was not noteworthy. The Republicans
were in power in the lower house in 1889 for the first time since 1881,
but their majority was so small that it required all of the
parliamentary ingenuity which Speaker Reed could command to keep the
legislative machine in operation. Nevertheless, several important
measures were enacted into law. The McKinley tariff act based upon the
doctrine of high protection was passed in 1890. In response to the
popular outcry against the trusts, the Sherman anti-trust law was
enacted the same year; and the silver party was thrown a sop in the form
of the Sherman silver purchase act. The veterans of the Civil War
received new recognition in the law of 1890 granting pensions for all
disabled soldiers whether their disabilities were incurred in service or
not. Negro voters were taken into account by an attempt to get a new
"force bill" through Congress, which would insure a "free ballot and a
fair count everywhere."
* * * * *
There had been nothing decisive, however, about the Republican victory
in 1888, for a few thousand votes in New York changed the day as four
years before. Harrison had not proved to be a very popular candidate,
and there was nothing particularly brilliant or striking about his
administration to enhance his reputation. He was able to secure a
renomination in 1892, largely because he controlled so many
officeholding delegates to the Republican convention, and there was no
other weighty candidate in the field, Blaine being unwilling to make an
open fight at the primaries.
In the second contest with Cleveland, Harrison was badly worsted,
receiving only 145 electoral votes against 277 cast for the Democratic
candidate and 22 for the Populist, Weaver. The campaign was marked by no
special incidents, for both Cleveland and Harrison had been found safe
and conservative and there was no very sharp division over issues. The
tariff, it is true, was vigorously discussed, but Cleveland made it
clear that no general assault would be made on any protected interests.
The million votes cast for the Populist candidate, however, was a solemn
warning that the old game of party see-saw over personalities could not
go on indefinitely. The issues springing from the great economic
revolution were emerging, not clearly and sharply, but rather in a vague
unrest and discontent with the old parties and their methods.
President Cleveland went into power for the second time on what appeared
to be a wave of business prosperity, but those who looked beneath the
surface knew that serious financial and industrial difficulties were
pending. Federal revenues were declining and a deficit was staring the
government in the face at a time when there was, for several reasons, a
stringency in the gold market. The Treasury gold reserve was already
rapidly diminishing, and Harrison was on the point of selling bonds when
the inauguration of Cleveland saved the day for him. Congress was
deadlocked on the money question, though called in a special session to
grant relief; and Cleveland at length resorted to the sale of bonds
under an act of 1875 to procure gold for the Treasury. The first sale
was made in January, 1894, and the financiers, to pay for the bonds,
drew nearly half of the amount of gold out of the Treasury itself.
The "endless chain" system of selling bonds to get gold for the
Treasury, only to have it drawn out immediately, aroused a great hue and
cry against the financial interests. In November, 1894, a second sale
was made with similar results, and in February, 1895, Cleveland in sheer
desperation called in Mr. J. P. Morgan and arranged for the purchase of
gold at a fixed price by the issue of bonds, with an understanding that
the bankers would do their best to protect the Treasury. To the silver
advocates and the Populists this was the climax of "Cleveland's
iniquitous career of subserviency to Wall Street," for it seemed to show
that the government was powerless before the demands of the financiers.
This criticism forced the administration to throw open the issue of
January 6, 1896, to the public, and the result was decidedly
advantageous to the government--apparently an indictment of Cleveland's
policy. Congress in the meantime did nothing to relieve the
administration.
While the government was wrestling with the financial problem, the
country was in the midst of an industrial crisis. The number of
bankruptcies rose with startling rapidity, hundreds of factories were
closed, and idle men thronged the streets hunting for work. According to
a high authority, Professor D. R. Dewey, "never before had the evil of
unemployment been so widespread in the United States." It was so
pressing that Jacob Coxey, a business man from Ohio, planned a march of
idle men on Washington in 1894 to demand relief at the hands of the
government. His "army," as it was called, ended in a fiasco, but it
directed the attention of the country to a grave condition of affairs.
Reductions in wages produced severe strikes, one of which--the Pullman
strike of Chicago--led to the paralysis of the railways entering
Chicago, because the Pullman employees were supported by the American
Railway Union. The disorders connected with the strike--which are now
known to have been partially fomented by the companies themselves for
the purpose of inducing Federal interference--led President Cleveland to
dispatch troops to Chicago, against the ardent protest of Governor
Altgeld, who declared that the state of Illinois was able to manage her
own affairs without intermeddling from Washington. The president of the
union, Mr. E. V. Debs, was thrown into prison for violating a "blanket
injunction"[26] issued by the local Federal court, and thus the strike
was broken, leaving behind it a legacy of bitterness which has not yet
disappeared.
The most important piece of legislation during Cleveland's second
administration was the Wilson tariff bill--a measure which was so
objectionable to the President that he could not sign it, and it
therefore became law without his approval. The only popular feature in
it was the income tax provision, which was annulled the following year
by the Supreme Court. Having broken with his party on the money
question, and having failed to secure a revision of the tariff to suit
his ideas, Cleveland retired in 1897, and one of his party members
declared that he was "the most cordially hated Democrat in the country."
_Party Issues_
The tariff was one of the issues bequeathed to the parties from
ante-bellum days, but there was no very sharply defined battle over it
until the campaign of 1888. The Republicans, in their platform of 1860,
had declared that "sound policy requires such an adjustment of these
imposts as to encourage the development of the industrial interests of
the whole country"; and although from time to time they advocated tariff
reductions, they remained consistently a protectionist party. The high
war-tariffs, however, were revenue measures, although the protection
feature was by no means lost sight of. In the campaign of 1864, both
parties were silent on the question; four years later it again emerged
in the Democratic platform, but it was not hotly debated in the ensuing
contest. The Democrats demanded "a tariff for revenue upon foreign
imports and such equal taxation under the internal revenue laws as will
afford incidental protection to domestic manufactures."
From that campaign forward the Democrats appeared to favor a "revenue
tariff" in their platforms. It is true they accepted the Liberal
Republican platform in 1872, which frankly begged the question by
acknowledging the wide differences of opinion on the subject and
remitted the discussion of the matter "to the people in their
congressional districts and the decision of Congress thereon." But in
1876, the Democrats came back to the old doctrine and demanded "that all
custom-house taxation shall be only for revenue." In their victorious
campaign of 1884, however, they were vague. They pledged themselves "to
revise the tariff in a spirit of fairness to all interests"; but they
promised, in making reductions, not "to injure any domestic industries,
but rather to promote their healthy growth," and to be mindful of
capital and labor at every step. Subject to these "limitations" they
favored confining taxation to public purposes only. It was small wonder
that Democratic orators during the campaign could promise "no
disturbance of business in case of victory."
Cleveland, in the beginning of his administration, faithfully followed
his platform, for in his first message he "placed the need of tax
reduction solely on the ground of excess revenue and declared that there
was no occasion for a discussion of the wisdom or expediency of the
protective system." But within two years he had seen a new light, and he
devoted his message of December, 1887, exclusively to a discussion of
the tariff issue, in vague and uncertain language it is true, but still
characterized by such a ringing denunciation of the "vicious, illegal,
and inequitable" system of taxation then in vogue, that the Republicans
were able to call it, with some show of justification, a "free trade
document." The New York _Tribune_ announced with evident glee that
Cleveland had made "the issue boldly and distinctly and that the
theories and aims of the ultra-opponents of protection have a new and
zealous advocate." Of course, Cleveland hotly denied that he was trying
to commit his party to a simple doctrine of free trade or even the old
principle of the platform, "tariff for revenue only." Moreover, the
Democrats, in their platform of the following year, while indorsing
Cleveland's messages, renewed the tariff pledges of their last platform
and promised to take "labor" into a careful consideration in any
revision.
In spite of the equivocal position taken by the Democrats, the
Republicans made great political capital out of the affair, apparently
on the warranted assumption that the voters would not read Cleveland's
message or the platform of his party. In their declaration of principles
in 1888, the Republicans made the tariff the leading issue: "We are
uncompromisingly in favor of the American system of protection. We
protest against its destruction, as proposed by the President and his
party. They serve the interests of Europe; we will support the interest
of America. We accept the issue and confidently appeal to the people for
their judgment. The protective system must be maintained.... We favor
the entire repeal of internal taxes rather than the surrender of any
part of our protective system, at the joint behest of the whisky trusts
and the agents of foreign manufacturers." Again, in 1892, the
Republicans attempted to make the tariff the issue: "We reaffirm the
American doctrine of protection. We call attention to its growth abroad.
We maintain that the prosperous condition of our country is largely due
to the wise revenue legislation of the Republican Congress," _i.e._ the
McKinley bill.
The effect of this Republican hammering on the subject was to bring out
a solemn declaration on the part of the Democrats. "We denounce," they
say in 1892, "the Republican protection as a fraud, a robbery of the
great majority of the American people for the benefit of the few. We
declare it to be a fundamental principle of the Democratic party that
the Federal government has no constitutional power to impose and collect
tariff duties, except for the purposes of revenue only, and we demand
that the collection of such taxes shall be limited to the necessities of
the government when honestly and economically administered." Although
elected on this platform, the Democrats did not regard their mandate as
warranting a serious attack on the protective system, for the Wilson
tariff act of 1894 was so disappointing to moderate tariff reformers
that Cleveland refused to sign it.
A close analysis of the platforms and performances of the parties from
1876 to 1896 shows no clear alignment at all on the tariff. Both parties
promise reductions, but neither is specific as to details. The
Republicans, while making much of the protective system, could not
ignore the demand for tariff reform; and the Democrats, while repeating
the well-worn phrases about tariff for revenue, were unable to overlook
the fact that a drastic assault upon the protective interests would mean
their undoing. In Congress, the Republicans made no serious efforts to
lower the duties, and the attempts of the Democrats produced meager
results.
* * * * *
Among the new issues raised by the economic revolution was the control
of giant combinations of capital. Although some of the minor parties had
declaimed against trusts as early as 1876, and the Democratic party, in
1884, had denounced "land monopolies," industrial combinations did not
figure as distinct issues in the platforms of the old parties until
1888. In that year, the Democrats vaguely referred to unnecessary
taxation as a source of trusts and combinations, which, "while unduly
enriching the few that combine, rob the body of our citizens by
depriving them of the benefits of natural competition." Here appears the
favorite party slogan that "the tariff is the mother of the trusts," and
the intimation that the remedy is the restoration of "natural
competition" by a reduction of the tariff. The Republicans in 1888 also
recognized the existence of the trust problem by declaring against all
combinations designed to control trade arbitrarily, and recommended to
Congress and the states legislation within their jurisdictions to
"prevent the execution of all schemes to oppress the people by undue
charges on their supplies or by unjust rates for the transportation of
their products to market."
Both old parties returned to the trust question again in 1892. The
Democrats recognized "in the trusts and combinations which are designed
to enable capital to secure more than its just share of the joint
product of capital and labor, a natural consequence of the prohibitive
taxes which prevent the free competition which is the life of honest
trade, but we believe the worst evils can be abated by law." Thereupon
follows a demand for additional legislation restraining and controlling
trusts. The Republicans simply reaffirmed their declaration of 1888,
indorsed the Sherman anti-trust law already enacted by Congress in 1890,
and favored new legislation remedying defects and rendering the
enforcement of the law more complete.
The railway issue emerged in 1880 when the Republicans, boasting that
under their administration railways had increased "from thirty-two
thousand miles in 1860 to eighty-two thousand miles in 1879," pronounced
against any further grants of public domain to railway corporations. The
Democrats went on record against discriminations in favor of
transportation lines, but left the subject with that pronouncement. Four
years later the subject had taken on more precision. The Republicans
favored the public regulation of railway corporations and indorsed
legislation preventing unjust discriminations and excessive charges for
transportation, but in the campaign of 1888 the overshadowing tariff
issue enabled them to omit references to railway regulation. The
Democrats likewise ignored the subject in 1884 and 1888. In 1892 the
question was overlooked by the platforms of both parties, although the
minor parties were loudly demanding action on the part of the Federal
Government. The old parties agreed, however, on the necessity of
legislation protecting the life and limb of employees engaged in
interstate transportation.
* * * * *
Even before the Civil War, the labor vote had become a factor that could
not be ignored, and both old parties consistently conciliated it by many
references. The Republicans in 1860 commended that "policy of national
exchanges which secures to the workingmen liberal wages." The defense of
the protective system was gradually shifted by the Republicans, until,
judging from the platforms, its continuation was justifiable principally
on account of their anxiety to safeguard the American workingman against
"the pauper labor of Europe." The Democrats could not overlook the
force of this appeal, and in their repeated demands for the reduction of
the tariff they announced that no devotion to free trade principles
would allow them to pass legislation which might put American labor "in
competition with the underpaid millions of the Old World." In 1880, the
Democratic party openly professed itself the friend of labor and the
laboring man and pledged itself to "protect him against the cormorant
and the commune." In their platform of 1888, the Democrats promised to
make "due allowance for the difference between the wages of American and
foreign labor" in their tariff revisions; and in 1892 they deplored the
fact that under the McKinley tariff there had been ten reductions in the
wages of the workingmen to one increase. In the latter year, the
Republicans urged that on articles competing with American products the
duties should "equal the difference between wages abroad and at home."
Among the more concrete offerings to labor were the promises of
homesteads in the West by the Republicans--promises which the Democrats
reiterated; protection against Chinese and coolie labor, particularly in
the West, safety-appliance laws applicable to interstate carriers, the
establishment of a labor bureau at Washington, the prohibition of the
importation of alien laborers under contract, and the abolition of
prison contract labor. On these matters there was no marked division
between the two old parties; each advocated measures of its own in
general terms and denounced the propositions of the other in equally
general terms.
The money question bulked large in the platforms, but until 1896 there
was nothing like a clean-cut division.[27] Both parties hedged and
remained consistently vague. The Republicans in 1888 declared in favor
of "the use of both gold and silver as money," and condemned "the policy
of the Democratic administration in its efforts to demonetize silver."
Again, in 1892, the Republicans declared: "The American people, from
tradition and interest, favor bimetallism, and the Republican party
demands the use of both gold and silver as standard money, with such
restriction and under such provisions, to be determined by legislation,
as will secure the maintenance of the parity of values of the two
metals, so that the purchasing and debt-paying power of the dollar,
whether of silver, gold, or paper, shall be at all times equal." The
Democrats likewise hedged their profession of faith about with
limitations and provisions. They declared in favor of both metals and no
discrimination for mintage; but the unit of coinage of both metals "must
be of equal intrinsic or exchangeable value, or be adjusted through
international agreement or by such safeguards of legislation as shall
insure the maintenance of the parity of the two metals." Thus both of
the platforms of 1892 are paragons of ambiguity.
FOOTNOTES:
[24] See below, p. 130.
[25] Below, p. 133. The tenure of office law was repealed in
1887. The presidential succession act was passed in 1886.
[26] A judicial order to all and sundry forbidding them to
interfere with the movement of the trains.
[27] See below, p. 119.
CHAPTER V
TWO DECADES OF FEDERAL LEGISLATION, 1877-1896
_Financial Questions_
It was inevitable that financial measures should occupy the first place
in the legislative labors of Congress for a long time after the War.
That conflict had left an enormous debt of more than two billion eight
hundred million dollars, and the taxes were not only high, but they
reached nearly every source which was open to the Federal government.
There were outstanding more than four hundred millions of legal tender
treasury notes, "greenbacks," which had seriously depreciated and, on
account of their variability as compared with gold, offered unlimited
opportunities for speculation and jugglery in Wall Street--of which Jay
Gould's attempt to corner the gold market and the precipitation of the
disaster of Black Friday in 1869 were only spectacular incidents.
Three distinct problems confronted the national administration: the
refunding of the national debt at lower rates of interest, the final
determination of the place and basis of the paper money in the currency
system, and the comparative treatment of gold and silver coinage. The
first of these tasks was undertaken by Congress during Grant's
administration, when, by the refunding acts of 1870 and 1871, the
Treasury was empowered to substitute four, four and one-half, and five
per cent bonds for the war issues at the high rates of five, six, and
even seven per cent.
The two remaining problems were by no means so easy of solution, because
they went to the root of the financial system of the country. Most of
the financial interests of the East were anxious to return to a specie
basis for the currency by retiring the legal tender notes or by placing
them on a metallic foundation. The Treasury under President Johnson
began to withdraw the greenbacks from circulation under authority of an
act of Congress passed in 1866; but it soon met the determined
resistance of the paper money party, which looked upon contraction as a
banker's device to appreciate the value of gold and reduce the amount of
money in circulation, thus bringing low prices for labor and
commodities. Within two years Congress peremptorily stopped the
withdrawal of additional Treasury notes.[28]
Shortly after forbidding the further retirement of legal tender notes,
Congress reassured the hard money party by passing, on March 18, 1869,
an act promising, on the faith of the United States, to pay in coin "all
obligations not otherwise redeemable," and to redeem the legal tender
notes in specie "as soon as practicable." A further gain for hard money
was made in 1875 by the passage of the Resumption Act, providing that on
and after January 1, 1879, "the Secretary of the Treasury shall redeem
in coin the United States legal tender notes then outstanding, on their
presentation for redemption at the office of the Assistant Treasurer of
the United States in the City of New York, in sums of not less than
fifty dollars." When the day set for redemption arrived, the Secretary
of the Treasury was prepared with a large hoard of gold, and public
confidence in the government was so high that comparatively little paper
was presented in exchange for specie.
Out of the conflict over the inflation and contraction of the currency
grew the struggle over "free silver" which was not ended until the
campaign of 1900. To understand this controversy we must go back beyond
the Civil War. The Constitution, as drafted in 1787, gives Congress the
power to coin money and regulate the value thereof and forbids the
states to issue bills of credit or make anything but the gold and silver
coin of the United States legal tender in the payment of debts. Nothing
is said in that instrument about the power of Congress to issue paper
money, and it is questionable whether the framers intended to leave the
door open for legal tenders or notes of any kind.
In 1792, the new Federal government began to coin gold and silver at the
ratio of 1 to 15, but it was soon found that at this ratio gold was
undervalued, and consequently little or no gold was brought to the
Treasury to be coined. At length, in 1834, Congress, by law, fixed the
ratio between the two metals approximately at 16 to 1; but this was
found to be an overvaluation of gold or an undervaluation of silver, as
some said, and as a result silver was not brought to the Treasury for
coinage and almost dropped out of the monetary system. Finally, in 1873,
when the silver dollar was already practically out of circulation,
Congress discontinued the coinage of the standard silver dollar
altogether--"demonetized" it--and left gold as the basis of the monetary
system.[29]
It happened about this time that the price of silver began to decline
steadily, until within twenty years it was about half the price it was
in 1870. Some men attributed this fall in the price of silver to the
fact that Germany had demonetized it in 1871, and that about the same
time rich deposits of silver were discovered in the United States.
Others declared that silver had not fallen so much in price, but that
gold, in which it was measured, had risen on account of the fact that
silver had been demonetized and gold given a monopoly of the coinage
market. On this matter Republicans and Democrats were both divided, for
it brought a new set of economic antagonisms into play--the debtor and
the creditor--as opposed to the antagonisms growing out of slavery and
reconstruction.
Some Republicans, like Senator Morrill, of Vermont, firmly believed that
no approach could be made to a genuine bimetallic currency, both metals
freely and equally circulating, without the cooperation of the leading
commercial nations of the world; and they also went so far as to doubt
whether it would be possible even then to adjust the "fickle ratio"
finely enough to prevent supply and demand from driving one or the other
metal out of circulation. Other Republicans, like Blaine, declared that
the Constitution required Congress to make both gold and silver coin the
money of the land, and that the only question was how best to adjust the
ratio. In a speech in the Senate on February 7, 1878, Blaine said: "I
believe then if Germany were to remonetize silver and the kingdoms and
states of the Latin Union were to reopen their mints, silver would at
once resume its former relation with gold.... I believe the struggle now
going on in this country and in other countries for a single gold
standard would, if successful, produce widespread disaster throughout
the commercial world. The destruction of silver as money and
establishment of gold as the sole unit of value must have a ruinous
effect on all forms of property, _except those investments which yield a
fixed return in money_."
It was this exception made by Blaine that formed the crux of the whole
issue. The contest was largely between creditors and debtors. Indeed, it
is thus frankly stated by Senator Jones of Nevada in a speech in the
Senate on May 12, 1890: "Three fourths of the business enterprises of
this country are conducted on borrowed capital. Three fourths of the
homes and farms that stand in the name of the actual occupants have been
bought on time, and a very large proportion of them are mortgaged for
the payment of some part of the purchase money. Under the operation of a
shrinkage in the volume of money, this enormous mass of borrowers, at
the maturity of their respective debts, though nominally paying no more
than the amount borrowed, with interest, are, in reality, in the amount
of the principal alone, returning a percentage of value greater than
they received--more in equity than they contracted to pay, and
oftentimes more in substance than they profited by the loan.... It is a
remarkable circumstance that throughout the entire range of economic
discussion in gold-standard circles, it seems to be taken for granted
that a change in the value of the money unit is a matter of no
significance, and imports no mischief to society, _so long as the change
is in one direction_. Who ever heard from an Eastern journal any
complaint against a contraction of our money volume, any admonition that
in a shrinking volume of money lurk evils of the utmost magnitude?... In
all discussions of the subject the creditors attempt to brush aside the
equities involved by sneering at the debtors." Both parties to the
conflict assumed a monopoly of virtue and economic wisdom, and the
controversy proceeded on that plane, with no concessions except where
necessary to secure some practical gain.
By 1877, silver had fallen to the ratio of seventeen to one as compared
with gold, and silver mine owners were anxious to have the government
buy their bullion at the old rate existing before the "demonetization"
of 1873. In this they were supported by the farmers and the debtor
classes generally, who thought that the gold market was substantially
controlled by a relatively few financiers and that the appreciation of
the yellow metal meant lower prices for their commodities and the
maintenance of high interest rates. Criticism was leveled particularly
against the bondholders, who demanded the payment of interest and
principal in gold, in spite of the fact that, at the time the bonds were
issued, the government had not demonetized silver and could have paid
in silver dollars containing 412-1/2 grains each. In addition to the
holders of the national debt, there were the owners of industrial,
state, and municipal bonds and railway and other securities who likewise
sought payment in a metal that was appreciating in value.
In the Forty-fourth Congress, the silver party, led by Bland, of
Missouri, attempted to force the passage of a law providing for the free
and unlimited coinage of silver approximately at the ratio of sixteen to
one, but their measure was amended on the motion of Allison, of Iowa, in
the Senate, in such a manner as simply to authorize the Secretary of the
Treasury to purchase not less than two million nor more than fo
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