CHAPTER XXXII

2

SOCIAL AND ECONOMIC LEGISLATION

FROM certain quarters the demand is often made that business should be taken out of politics, but any person who has given serious thought to the matter knows that the character of a nation's politics depends primarily upon the character of its business.1 Politics has to do with the formulation of popular will into law; and every important law affects business - private rights in property. It would be difficult to imagine a single great political issue which does not in some way or another involve business interests. Protective tariff, control of corporations, ship subsidies, labor legislation, tenement-house laws, taxation all these matters and a hundred more of almost equal importance are in politics and will remain in politics as long as the interests back of them remain in the nation. Manufacturers will favor a protective tariff; the working class will insist on better wages, hours, and conditions of labor; the dwellers in tenement houses will demand more light and better sanitary arrangements; and so on throughout all the various groups into which a nation is divided.

The industries of a nation and economic groups which they create determine fundamentally the nature of the government and the issues which the government must consider. This was fully recognized by the framers of the federal Constitution but has been almost completely lost sight of in the vapid political theorizing that characterized the nineteenth century. "The most common and durable source of factions," said Madison, "has been the various and unequal distribution of property. Those who hold and those who are without property have ever formed distinct interests in society. Those who are creditors and those who are debtors fall under a like discrimination. A

1 See E. Jenks, Short History of Politics; and A. Menger, Neue Staatslehre; A. Bentley, The Process of Government.

2 Goodnow, Politics and Administration.

landed interest, a manufacturing interest, a mercantile interest, a moneyed interest with many lesser interests, grow up of necessity in civilized nations and divide them into different classes actuated by different sentiments and views. The regulation of these various and interfering interests forms the principal task of modern legislation and involves the spirit of party and faction in the necessary and ordinary operations of government.” 1

The Doctrine of Laissez Faire-No Government Interference The United States began its career as an independent nation before the steam engine and machinery had revolutionized western civilization. When the Declaration of Independence was issued, the majority of the people of the United States earned their livelihood by farming or in the few scattered industries in which the simplest of tools were used. There were no great factories filled with complicated machinery, no railways, no large cities with their countless thousands of workingmen dependent for a livelihood upon mills and mines. There were no vast accumulations of capital invested in gigantic enterprises, and consequently no need for government interference and regulation.

Most manufactured articles that were not imported from Europe were made by hand in small workshops where the workman was both master and employee. Indeed, many men hoped that the United States would never become a manufacturing nation. "While we have land to labor," said Jefferson, "let us never wish to see our citizens occupied at a workshop or twirling a distaff. . . . Let our workshops remain in Europe. It is better to carry provisions and materials to workmen there than to bring them to the provisions and materials and with their manners and principles. . . . The mobs of great cities add just so much to the support of pure government as sores do to the strength of the human body." 2

This primitive economic system, resting upon agriculture, handicraft industries, and small business undertakings, had its own justification in political philosophy and jurisprudence. The government should interfere as little as possible with the right of the individual to buy and sell labor and commodities under For the remainder of this profound paper, see Readings, p. 50. ? Quoted in Ford, Rise and Growth of American Politics, p. 104.

whatever terms and conditions he could secure. Each man, ran the theory, is the best judge of what is conducive to his own happiness and will pursue his own enjoyment and self-interest; the result will be generally good. Competition will keep prices down within a reasonable distance from the cost, of production, and any individual, by thrift and industry, may secure the small amount of capital necessary to start in business for himself.

Jefferson was the leading exponent of this doctrine and looked with unconcealed dislike upon the party of strong government led by Hamilton who was willing to use the political system to restore public credit and to advance the interests of manufacturers, merchants, and shippers by protective tariffs. In political theory, though by no means in political practice, the doctrine of Jefferson triumphed; and the notion of the less government the better for the people assumed the leading place in American politics.

In many ways, accordingly, our state governments have favored the development of the class of small property owners to whose interests the individualistic doctrine of the eighteenth century corresponds; and at the same time they have tried to restrain the growth of corporate and other forms of enterprises tending to concentrate wealth in the hands of a small minority. A few states, notably California, Florida, Montana, and Texas, have sought to maintain a class of small farmers by providing that public lands shall be sold or granted only to actual settlers. According to the constitution of California, "the holding of large tracts of land uncultivated and unimproved by individuals or corporations is against the public interest and should be discredited by all means not inconsistent with the rights of private property. Lands belonging to this state which are suitable for cultivation shall be granted only to actual settlers and in quantities not exceeding 320 acres to each settler." The amount of public land to be granted to single individuals and families is strictly limited in several other states; and the laws of all states have abolished the ancient system of primogeniture, according to which the landed estate will pass always to the eldest male heir so that it may be prevented from being broken into small pieces. Perpetuities and monopolies," runs the constitution of Oklahoma, "are contrary to the genius of a free government

and shall never be allowed, nor shall the law of primogeniture or entailments ever be enforced in this state." A few states even limit the term of years for which agricultural land may be leased; and Oklahoma expressly forbids the creation of any corporation in the state for the purpose of buying, acquiring, or dealing in agricultural lands.

While thus endeavoring to encourage widespread diffusion of farming lands, the states have at the same time lent support to the class of small traders, merchants, and manufacturers by restraining the absorbing power of great corporations and combinations. Consequently, in most states, if not in all of them, combinations and trusts to enhance prices and restrain trade or in any way control the prices of commodities or the charges of common carriers are expressly prohibited and declared to be unlawful and against public policy. "Free and fair competition in the trades and industries," declares the constitution of New Hampshire, "is an inherent and essential right of the people and should be protected against all monopolies and conspiracies which tend to hinder or destroy it." Several other state constitutions lay upon the legislature the imperative duty of enacting such laws as may be necessary to prevent trusts, pools, combines, and other organizations from enhancing prices of commodities, restraining competition in the various trades and industries, and otherwise blocking "the natural process of reasonable competition." In their endeavor to maintain the individualist system of competition, our state legislatures have loaded our statute books with laws imposing heavy fines and penalties upon persons and associations seeking to restrain trade in any form.

The Control of Corporations

It must be noted, however, that there is a difference between a combination striving to monopolize any particular interest or group of interests and mere corporations which, however large they may be, do not necessarily constitute monopolies, although they may always show a tendency in that direction. Our state lawmakers have gradually come to perceive this distinction, and while attempting to restrain monopolies, have recognized the

1 Such combinations in restraint of trade were, of course, illegal at common law.