The Menace of Privilege, by Henry George Jr.
Installment 36

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 Escapes from Democratic Laws

How little was done when Mr. George W. Perkins, chairman of the finance committee of the New York Life Insurance Company, testified that his company gave $48,000 to the Republican National Committee campaign fund in the Presidential fight of 1904, and $50,000 to that fund in each of the Presidential contests immediately preceding! Mr. Perkins not only justified this by saying that he and his associates acted so because they "believed the integrity of our [their] assets was thereby protected," but he suggested that provision should be made in law by which the president of an insurance company, making public report of his doings later, should be authorized to make political donations for his company. "Of course, in a country like ours," said Mr. Perkins, "there might easily arise a situation in which we should contribute a sum of money, say 25, 50, or 75 cents, from each policy 'holder." He proposed that the president of the company be left to make this contribution at his own discretion, without consulting the policy holders, the other officers or the directors of the company!

The indications are that Mr. Perkins is not alone in these remarkable views. At any rate, it is certain that the other two of the three great life insurance companies - the Mutual and Equitable - contributed generously to the recent Presidential campaigns, just as it came out in the legislative investigation that the three companies shared the large expense of maintaining lobbies at the respective State capitals to "watch legislation."

Mr. Warren F. Thrummel, legislative agent of the Mutual, swore that he personally placed a contribution of $2500 in cash in the hands of Chairman Babcock of the Republican Congressional Committee in the campaign of 1904, on the ground that "there was great danger" that the Democrats would carry the House of Representatives, which would probably result in "tariff agitation" and "other legislation" unsettling to business, and hence inimical "to the interests of policy holders"!

Nor in respect to the use of money in politics is it to be assumed for a moment that one party is a whit better than the other. Privilege has no sentiment. It has no partisan preferences. It will trade with either party that can "deliver the goods" - the "goods" being legislation to its liking. If there is rivalry between the parties in this particular, then Privilege will contribute something to each so as to keep both in favor.

And does not the composition of Congress show the effect of this policy? The Senate is composed in the main of men, some of whom are Princes of Privilege and others the representatives of privilege-owning corporations. These men were sent to the Senate by Legislatures controlled by Privilege.

The House of Representatives is to a great extent made up of men whose nominations and elections were effected by railroad, tariff or other powers anxious, if not to get further grants from Congress, at least to conserve those grants they now enjoy. Analysis shows that approximately three fourths of the members of both branches of Congress are lawyers, and observation must convince any one of free mind, as four years' watching from the press gallery has convinced me, that a large proportion of these lawyers are there only nominally in the interest of their respective districts. They are really there for this railroad corporation, or that steel combination; for such and such timber company or so and so tariff-suckling giant.

Such interests, colossal in size and alluring by the magnitude of their achievements, Justice Brewer of the United States Supreme Court has declared, tempt the lawyer as a lawmaker "not merely by the money they possess and with which they can reward, but more by the influence they can exert in favor of the individual lawmaker in the furtherance of his personal advancement." (Address on "The Ethical Obligations of the Lawyer as a Lawmaker," before the Albany Law School, June I, 1904.)

Is this not true? Let some one rise on the floor of the Senate or House and propose, for instance, to take away the tariff "encouragement" from some enormously rich and powerful "infant industry"! Behold! members of the chamber, who until then may have been giving only drowsy attention to the proceedings, bristle with hostile energy and send hurry calls for the absent ones. Storytelling is abruptly abandoned in cloak rooms, and skirmish lines are thrown out against the obnoxious proposal. The favorite maneuver is to make it a prisoner in committee.

On the other hand, tariff hearings before the Ways and Means Committee of the House are nothing less than rapacious and gluttonous choruses of privileged interests for more, more, more power to rob the country. General Garfield, after long experience on that committee, frankly stated as much.

"The fact is notorious," said ex-Secretary of the Interior Carl Schurz in a letter to the public last year in reference to party corruption, "that one of the great party organizations before every national election 'fries the fat' out of its beneficiaries, with the understanding that the beneficiaries will be protected in the enjoyment of their benefits if the yield of the frying process is satisfactory, and if not, not."

And in a public document (House Doc. No.264, Fifty.ninth Congress, first session.) may be seen a letter dated June 5, 1897, from Mr. A. B. Hepburn of the National City Bank of New York (Rockefeller) to Mr. Lyman J. Gage, then Secretary of the Treasury and now the President of the United States Trust Company (Rockefeller), in which Mr. Hepburn, after asking Secretary Gage to make Government deposits in his bank, said, "Of course the bank is very strong, and if you will take the pains to look at our list of directors, you will see that we also have great political claims in view of what was done in the campaign last year."

"Washington is the spot where all roads of public mendicancy converge," says a high-class New York daily, "and a grander army than the Grand Army (of pension hunters) has been for years descending upon the capital, much in the spirit of the Goths marching upon Rome."

And witness from this tale of two telegrams how well Congress is in hand.

One telegram, signed by John D. Rockefeller, Jr., and dated February 6, 1903, was sent to six United States Senators. It ran: "We are opposed to any anti-trust legislation. Our counsel will see you. It must be stopped."

The "we" presumably meant the Standard Oil group. The anti-trust legislation deprecated was embodied in three bills, one against railroad rebates, a second for publicity, a third for the expedition of anti-trust legislation.

On the same day John D. Archbold, chairman of the Board of Trustees and vice-president of the Standard Oil Company, sent the following telegram to United States Senator Matthew S. Quay of Pennsylvania:

These two telegrams found their way into the public press, and an outcry went up against this "most brazen attempt in the history of lobbying." The Littlefield bill was killed, but under the popular pressure created the other two bills were put through both houses and were made laws by President Roosevelt's signature. And with what result? So far little or none.

The Nelson amendment of the Department of Commerce bill required the organization of a Bureau of Corporations. A man of unblemished character, Mr. James A. Garfield, a son of the late President, has been placed at the head of that bureau, and has been armed with the fullest powers for investigation and publicity. Yet what has it availed? Common complaint of a beef trust was looked into and report made that no such trust existed, in face of the manifest fact that there is a most potent and onerous "community of interest" existent between the great meat packers of the country who get special rates on stock cars and who control refrigerator cars.

Through this they can hamper competition and arbitrarily keep down the price of cattle, which they buy; and keep up the price of dressed meat, which they sell. And not only this, but, possessing the refrigerator cars, they also control the fruit and other shipments in such cars.

The Elkins bill, which Mr. Archbold wired Senator Quay the Standard Oil group favored, was an amendment of the Inter-State Commerce Act, with pretense of so strengthening it as practically to prevent railroad discriminations. But when the act came to operation, it was found to have had its claws cut. The former law had not been sufficiently clear in defining what it held unlawful. The amendment remedied this in the plainest terms, but it provided no adequate punishment for infraction. The penalty of imprisonment standing in the original law had quietly been cut out on amendment, so that the railroads could break the Elkins law at their pleasure with merely a fine for punishment if the United States Attorney-General could be induced to prosecute them and they should then be found guilty. Thus what Mr. Archbold, speaking for the Standard Oil group, favored, was an amendment of the Inter-State Commerce Act, which, while appearing to strengthen that law against rate discriminations, really removed the fangs of the law.

These matters perhaps illustrate the subtle power of Privilege in Congress.

Next week -- the notorious Morton pacts.

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