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the industrial revolution which has progressed so rapidly during recent years.
"Every new feature of this industrial revolution produces hardship because in its later stages it has been literally a revolution instead of an evolution. The new inventions and discoveries and the new methods of taking advantage of the business facilities afforded by the extraordinary development of our material civilization have caused the changes to proceed with such marvelous rapidity, that at each stage some body of workers finds itself unable to ac. commodate itself to the new conditions with sufficient speed to escape hardship. In the end the accommodation of the class takes place; at times too late for the well being of many individuals. The change which would be unaccompanied by hardship if it came slowly, may be fraught with severe suffering if it comes too fast, even when it is in the end beneficial. Occasionally, moreover, the change is positively deleterious, and very often, even when it is on the whole beneficial, it has features which are the reverse. In some cases, while recognizing the evil, it is impossible with our present knowledge to discover any remedy. In others, a remedy can be applied, but as yet only at a cost that would make it worse than the trouble itself. In yet others it is possible by acting with wisdom, coolness and fearlessness, to apply a remedy which will wholly or in great part remove the evil while leaving the good behind. We do not wish to discourage enterprise. We do not desire to destroy corporations; we do desire to put them fully at the service of the State and the people.
“The machinery of modern business is so vast and complicated that great caution must be exercised in introducing radical changes, for fear the unforeseen effects may take the shape of widespread disaster. Moreover, much that is complained about is not really the abuse so much as the inevitable development of our modern industrial life. We have moved far away from the old simple days when each community transacted almost all its work for itself and relied upon outsiders for but a fraction of the necessaries, and for not a very large portion even of the luxuries, of life. Very many of the anti-trust laws which have made their appearance on the statute books of recent years, have been almost or absolutely ineffective because they have blinked the all-important fact that much of what they thought to do away with was incidental to modern industrial conditions, and could not be eliminated unless we were willing to turn back the wheels of modern progress by also eliminating the forces which have brought about these industrial conditions. Not only trusts, but the immense importance of machinery, the congestion of city life, the capacity to make large fortunes by speculative enterprises, and many other features of modern existence could be thoroughly changed by doing away with steam and electricity; but the most ardent denouncer of trusts would hesitate to advocate so drastic a remedy. What remains for us to do, as practical men, is to look the conditions squarely in the face, and not to permit the emotional side of
tlie question, which has its proper place, to blind us to the fact that there are other sides. We must set about finding out what the real abuses are, with their causes, and to what extent remedies can be applied.
“That abuses exist, and that they are of a very grave character, it is worse than idle to deny. Just so long as in the business world unscrupulous cunning: is allowed the free rein which, thanks to the growth of humanity during the past centuries, we now deny to unscrupulous physical force, then just so long there will be a field for the best effort of every honest social and civic reformer who is capable of feeling an impulse of generous indignation, and who is far sighted enough to appreciate when the unscrupulous individual works by himself. They are much worse when he works in conjunction with his fellows, through a corporation or trust. Law is largely crystallized custom, largely a mass of remedies with which humanity has become thoroughly familiar. In a simple society only simple forms of wrong can be committed. There is neither the ability nor the opportunity to inflict others. A primitive people provides for the punishment of theft, assault and murder, because the conditions of the existing society allow the development of thieves and murderers and the commission of deeds of violence; but it does not provide for the punishment of forgery because there is nothing to forge, and, therefore, no forgers. The gradual growth of humanitarian sentiment, often unconscious or but semi-conscious, combined with other causes, step by step emancipated the serf from bodily subjection to his over-lord; he was then protected in his freedom by statute; but when he became a factory hand the conditions were new and there were no laws which prevented the use of unguarded machinery in the factories, or the abuses of child labor, forced upon the conscientious employers by the unscrupulous until legislation put them on an equality. When new evils appear there is always at first difficulty in finding the proper remedy; and as the evils grow more complex, the remedies become increasingly difficult of application. There is no use whatever in seeking to apply a remedy blindly; yet this is just what has been done in reference to trusts.
“Much of the legislation not only proposed but enacted against trusts is not one whit more intelligent than the mediaeval bull against the comet, and has not been one particle more effective. Yet there can and must be courageous and effective remedial legislation. '
“To say that the present system, of haphazard license and lack of supervision and regulation, is the best possible, is absurd. The men who endeavor to prevent the remedying of real abuses, not only show callous disregard for the suffering of others, but also weaken those who are anxious to prevent the adoption of indiscriminate would-be remedies which would subvert our whole industrial fabric. The chicanery and the dishonest, even though not technically illegal, methods through which some great fortunes have been made, are scandals to our civilization. The man who by swindling or wrongdoing acquires great wealth for himself at the expense of his fellow, stands as low morally as any predatory mediaeval nobleman, and is a more dangerous member of society. Any law, and any method of construing the law which will enable the community to punish him, either by taking away his wealth or by imprisonment, should be welcomed. Of course, such laws are even more needed in dealing with great corporations or trusts than with individuals. They are needed quite as much for the sake of honest corporations as for the sake of the public. The corporation that manages its affairs honestly has a right to demand protection against the dishonest corporation. We do not wish to put any burden on honest corporations. Neither do we wish to put an unnecessary burden of responsibility on enterprising men for acts which are immaterial; they should be relieved from such burdens, but held to a rigid financial accountability for acts that mislead the upright investor or stockholder, or defraud the public.
“The first essential is knowledge of the facts, publicity. Much can be done at once by amendment of the corporation laws so as to provide for such publicity as will not work injustice as between business rivals.
“The chief abuses alleged to arise from trusts are probably the following: Misrepresentation or concealment regarding material facts connected with the organization of an enterprise; the evils connected with unscrupulous promotion; overcapitalization; unfair competition, resulting in the crushing out of competitors who themselves do not act improperly; raising of prices above fair competitive rates; the wielding of increased power over the wage earners. Of course none of these abuses may exist in a particular trust, but in many trusts, as well as in many corporations not ordinarily called trusts, one or more of them are evident. Some of these evils could be partially remedied by modification of our corporation laws; here we can safely go along the lines of the more conservative New England States, and probably not a little farther. Such laws will themselves provide the needed publicity, and the needed circumstantiality of statement. We should know authoritatively whether stock represents actual value of plants, or whether it represents brands or good will; or if not, what it does represent, if anything. It is desirable to know how much was actually bought, how much was issued free; and to whom; and, if possible, for what reason. In the first place, this would be invaluable in preventing harm being done as among stockholders, for many of the grossest wrongs that are perpetrated are those of promoters and organizers at the expense of the general public who are invited to take shares in business organizations. In the next place, this would enable us to see just what the public have a right to expect in the way of service and taxation. There is no reason whatever for refusing to tax a corporation because by its own acts it has created a burden of charges under which it staggers. The extravagant man who builds a needlessly large house nevertheless pays taxes on the house; and the corporation which has to pay great sums of interest owing to juggling transactions in the issue of stocks and bonds has just as little right to consideration. But very great hardship may result to innocent purchasers; and publicity, by lessening the possibility of this, would also serve the purpose of the State.
“Where a trust becomes a monopoly the State has an immediate right to interfere. Care should be taken not to stifle enterprise or disclose any facts of a business that are essentially private; but the State for the protection of the public should exercise the right to inspect, to examine thoroughly all the workings of great corporations just as is now done with banks; and whenever the interests of the public demand it, it should publish the results of its examination. Then, if there are inordinate profits, competition or public sentiment will give the public the benefit in lowered prices; and if not the power of taxation remains. It is therefore evident that publicity is the one sure and adequate remedy, which we can now invoke. There may be other remedies, but what these others are we can only find out by publicity, as the result of investigation. The first requisite is knowledge, full and complete.” The Governor proceeded to discuss Labor Questions:
“I call the attention of the Legislature to the reports of the State Board of Mediation and Arbitration, of the Commissioner of Labor Statistics and of the State Factory Inspector. During the past year very valuable labor measures have been enacted into laws, and they are well enforced. I am happy to say that in speaking of labor legislation I can talk mainly of performance -not of promise. Additional legislation will undoubtedly from time to time become necessary; but many vitally needed laws have already been put upon the statute books. As experience shows their defects, these will be remedied. A stringent eight-hour labor law has been enacted. This is working well as a whole.
“In nothing do we need to exercise cooler judgment than in labor legislation. Such legislation is absolutely necessary, alike from the humanitarian and the industrial standpoints; and it is as much our duty to protect the weaker wage-workers from oppression as to protect helpless investors from fraud. But we must be aware above all things of that injudicious and ill-considered benevolence which usually in the long run defeats its own ends. To discourage industry and thrift ultimately amounts to putting a premium on poverty and shiftlessness. It is neither of benefit to the individual nor to society needlessly to handicap superior ability and energy, and to reduce their possessor to the level of work and gain suited for his less able and energetic rivals.
“There have been a large number of strikes for increase of wages during the past year. The fact that these strikes were not against a reduction, but for an increase, is due to the prosperous condition of the country and State generally. The services of the present excellent Board of Mediation and Arbitration have been in almost constant demand, and they have been gratifyingly successful. The number of controversies amicably adjusted directly and indirectly through its influence, has been greater than that during any year since its creation. The work of mediation—that is, of settling the dispute before it has reached an acute stage-is even more important and successful than that of arbitration proper, after the strike is once on. This being so, it would be well to enact legislation which would compel parties to labor disputes to notify the Board of impending trouble, or of strikes and lockouts.
“The experiment of publishing a quarterly bulletin by the Bureau of Labor Statistics has worked excellently and the bulletin should be continued and improved. I suggest that it would be well to define by statute the questions that may legally be asked of manufacturers by this Bureau. Abuses have occurred in connection with the employment offices in the larger cities, which are now allowed to violate the law with impunity, the power of punishment lying with the local authorities. It would be well to require the keeper of any employment office to procure a license from the State, as in Minnesota and other States. This license should be granted on the payment of a substantial fee, and the business would thus be restricted to responsible parties and kept under the control of the State administration.
“The measures suggested in my message of last year and carried into effect by legislation, increasing the number of factory inspectors, and requiring a license for all shops and rooms where garments are made for general employers, have already greatly increased the efficiency of the Factory Inspector's Department, and enlarged its service to the public. Too little time has elapsed since the sweatshop law went into effect, in September, to give a full report of its benefits. As illustrating its efficiency in interfering with sweatshops I may mention that so far under its provisions 4,942 licenses have been granted and 918 refused. These 918 cases represent the sweatshops which would now have been in operation save for this law and for the way it has been enforced.
“I shall not ask for any increase of the number of salaried inspectors this year; but I recommend that the power be given to the Governor and to the Factory Inspector to name, whenever necessary, unsalaried inspectors to undertake special investigation or aid the Department at special times. Such assistance would increase the efficiency of the work of the Department without imposing added burdens upon the State.
"I urge that the Legislature give particular attention to the need of reform in the laws governing the tenement houses. The Tenement House