The Menace of Privilege, by Henry George Jr.
Installment 35

We are pleased to present, in installments, a very rare yet significant book written by former Congressman Henry George Jr. in 1905.

Earlier installments are available at the Progress Report Archive.


Privilege Corrupts At the Highest Levels

Judges and Senators have been bought for gold.

- ALEXANDER POPE: Essay on Man.

POLITICS is the peculiar province of Privilege. Wherever the grants of power we call privileges are to be had from Federal, State or municipal Government, or wherever privileges, having been granted, have to be protected against attack, there the hand of those seeking or of those possessing will be found in politics.

And since the authority to make grants lies with legislative bodies all over the country, from Congress at Washington down to the councils in remote villages, the effort to get or to preserve such privileges will everywhere be active. Far and wide will there be effort to put into legislative office men favoring such grants, and to keep out men opposed. Whether the purpose be to get or to protect steam railroad grants, or land grants, or bounty grants, or contract grants, or bond grants, or tariff or other grants arising from taxation, individuals or corporations wanting them will put brains and money into congressional elections and will keep "Black Horse Cavalry" alert when Congress is in session.

Individuals or corporations having or seeking railroad, telegraph, telephone, water or other public franchise privileges, or subsidies, "graft" expenditures or advantages from taxation will, directly or indirectly, do their utmost for the cause of privilege in State and municipal elections and afte~vard, through the lobby, in legislative halls.

Privilege is the prize, the spoil, of politics. The salaries of public office-holders are commonly called such; but by comparison with privilege such salaries are as nothing. Indeed, it is notorious that candidates who are known not to be rich men often spend more in a campaign than the salaries they will obtain if elected. Such men do not do this from any sense of pride of office nor for their health. They do it "for what there is in it" -- for the large returns that service in such office to privilege will bring them. Hence pnvilege is the real spoil of politics. And it is enormous spoil. It is a huge river of wealth that comes from laying villages, towns, cities, States and the nation at large under contribution.

But this contribution is not after the manner of a conquering army of old that slew and sacked. It is effected in the modern way, peaceably and legally, by acts of legislature that make direct gifts from the public treasury or that grant powers for appropriating wealth from the general mass of the people.

Some idea of the magnitude of such powers may be drawn from the fact that in Greater New York alone the ownership of the franchises or mere rights of way used by the public service corporations there is by competent judges computed to be worth at the present time $40,000,000 a year. The gross revenues of the railroads throughout the country are nearly $2,000,000,000 annually. A portion of this, but a minor portion, constitutes cost of operation and interest on and replacement of the capital actually invested in roadbeds, buildings, locomotives, cars and other furnishings. The large remainder of this great revenue represents the garnerings of the privileges granted by Congress and the State Legislatures -- chief of which is the franchise or right of way, or power to levy tolls on traffic.

Moody, in his "Truth about the Trusts," computes that there are today "over 440 large industrial, franchise and transportation trusts" in the United States "with a total floating capital" of more than $20,000,000,000. This "floating capital," meaning the stocks and bonds, represents far more than the combined machinery and equipment of these companies. The chief elements represented are the various kinds of government-made advantage by special or general acts of legislation conferred upon these trusts. These government-made advantages we are here calling privilege.

Privilege, then, is of great range and enormous magnitude. It is nothing less than a widespread power to rob the mass of the real wealth producers -- the general body of the people. It is to be had by the control of politics.

To get control of politics in order to obtain grants of privilege, the unscrupulous will strive long and patiently, and will use any means. They will help build up political machines and create bosses, subsidize parties and buy control of nominating conventions. They will debauch the suffrage and purchase public officials. So mighty is the prize of privilege that our princes will have it at almost any cost. They will corrupt our elections at every turn to get permission to rob the people.

And once such privilege is granted, effort is made to perpetuate and extend it. Another offspring of government is used to accomplish this. We give it the name of "corporation." A corporation is an artificial person created by government. It consists of one or more persons united in one body to act in certain ways, and having, within specified limits, all the powers of natural persons. The life in this artificial body is continuous, even though the natural members composing it may change. Hence, while natural persons die, this artificial person created by government lives on.

Now, at the birth of the Republic and for the first four decades of the nineteenth century the comparatively few corporations created were brought into existence by special acts of legislature. Then came the enactment of general incorporation laws, by compliance with the stipulated conditions of which any one could call a corporation or artificial person into existence. And not only were these conditions of incorporation by subsequent legislation made less and less exacting, thus rendering it easier and easier to create artificial persons, but concurrent legislation widened the limits of power, until now, under the New Jersey Corporation Act, that power, as Assistant United States Attorney-General Beck said, while arguing for the Government in the Northern Securities Merger case, has become infinite as well as perpetual, with secrecy of methods and control vested in a few.

There would, perhaps, be little need for the creating of corporations were it not for the granting of privileges. But artificial persons, which have more powers than natural persons and life-everlasting, are far better suited than natural persons to take care of privileges -- to fight for their continuance and extension. As a consequence, it has now become almost an invariable rule either to form artificial persons under the general corporation laws to receive from Government the special grants of power; or else such privileges, being granted to natural persons, are at once by them turned over to corporations or artificial persons. And these artificial persons possessing Government grants, are the most active and most potent of all persons in politics.

The very significant aspect of the Presidential contest of 1904 was the charge by opponents against the managers of each of the two great parties of receiving campaign contributions from the large privilege-possessing corporations. More significant still was the common belief that the charge was true, the partisan view being that, while the opposing candidate would of necessity be contaminated by such money, their own candidate was too upright and too strong to be swerved in the least from principle, affected in the least for evil.

Yet Presidents are but men, subject to men's strengths and weaknesses. And just as Mr. Buchanan was most complacent in face of the growing aggressiveness of the slave power which seated him and supported him in the Presidency, so monopoly powers might reasonably expect at least protection from a Chief Executive which their money and their efforts materially contributed toward seating in the White House.

In April, 1904, Mr. William Bourke Cockran of New York, on the floor of the House of Representatives, repeated in an insinuating way a newspaper story that the Presidential election of 1896 - the campaign that was won for "honest money" - was bought. Mr. Cockran named $16,ooo,ooo as the sum which was said to be paid. He did not say that this was paid; he quoted what others said. But no step was taken by the House to investigate the matter.

This story is not rendered in the least improbable by the size of the alleged purchase price. For what is a $16,ooo,ooo investment to, say, the Standard Oil group, which, on its $100,000,000 of 'Standard Oil stock,' has received in no year since 1896 less than thirty per cent. dividends and has twice received forty-five per cent. or more? If it should mean protection and profit, what would $16,000,000 be to a syndicate such as, under Mr. Morgan's guidance, cleared $1oo,ooo,ooo within the space of a few months in underwriting and manipulating steel stock?

The sum of $16,000,000 would be only one item in the expense account of railroad combinations whose annual gross revenue is $2,000,000,000. Have not the tariff-engendered monopolies first and last put many times $16,000,000 into Presidential, Senatorial and Congressional elections, to the end of shutting out foreign competition and thereby conducting a systematic robbery of the people at large?

There is nothing remarkable from the amount point of view in the charge repeated by Mr. Cockran. Nor did that aspect of the matter create any general surprise. What drew out intense interest and expectancy for a brief moment was the thought that, in the event of the matter being pried into, persons engaged in the election-debauching business might be found out. But this apprehension on the part of some and hope on the part of the many was short-lived.

Nor was any progress made when, at the meeting of the new Congress in December, 1904, Mr. Cockran introduced a bill in the House for the creation of a commission to investigate the sources of campaign funds of the two great parties. The bill was sent to committee and chloroformed. It was regarded as too dangerous to be admitted to debate and a vote in the House. President Roosevelt in his message at that time made a brief reference to the necessity of legislation against the raising of corruption funds, but nothing further was done by him, and the matter was for the time dropped.

Next week -- secret telegrams, "orange rates" and other little-known shockers.

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