Government Grants Chapter Twenty-Five third part
|January 9, 2007||Posted by Staff under Archive, Progress Report, The Progress Report|
The Menace of Privilege, by Henry George Jr.
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.
end of CHAPTER 25, TO STOP TAXATION EVILS, GRANTS AND IMMUNITIES
Grants Under General Laws and Immunities in the Courts
This brings us to a consideration of the fourth category of Privilege.
By grants under general laws is meant particularly grants of corporate power under general incorporation laws. When we look at some of its fruits, we may well ask if it is not altogether wrong to create artificial persons, called corporations, since they too often act after the manner of the Frankenstein monster.
But concluding that such persons are not only proper, but necessary to our civilized needs, just as are explosives, we ask where shall be the limitations? Shall we revert to the general usage in this country down to about 1840 and have every incorporation formed by a special legislative act? If not, where shall we stop short of the present Incorporation Act of New Jersey, which, in the words of United States Assistant Attorney-General Beck, grants to persons acting under it, powers “infinite in scope, perpetual in character, vested in the hands of a few, with methods secret even to stockholders” — an incorporation law that permitted the organization of the gigantic United States Steel Corporation inflation and of that “artistic swindle,” as the receiver afterward characterized the United States Shipbuilding Company? Where are we to draw the line?
Preliminary to answering this, it should be noted that both the steel and shipbuilding companies were based upon privileges. The Steel Trust had, according to Mr. Schwab’s estimate, in testimony before the Industrial Commission, natural resources worth at least $8oo,ooo,ooo, with transportation facilities and tariff advantages besides. The Shipbuilding Company, through contracts with the parent or some of the constituent companies, shared the Steel Trust’s advantages, besides expecting a special great privilege of its own in the form of government contracts for ships.
That is to say, the steel and shipbuilding companies were incorporated to exploit privileges otherwise emanating from Government – one form of privilege used to manipulate other forms of privilege.
Examination will show a similar state of things wherever corporations call for common censure. Their incorporating powers are not in themselves the evils that are censurable, but the use of those powers combined with other powers — all of which are legalized by Government.
Look, for example, into the life insurance corporations from which have recently come such sensational revelations. It may be questioned whether it would not be wise and proper to join a life insurance feature with that of a savings bank, and both to the post office service. A savings bank and a limited insurance on the mails are features of the post office system in some of the European countries, with very salutary results.
Surely the savings principle should operate no less well here, and probably life insurance could go with it beneficially to the public. Certain it is that the Federal Government frequently needs considerable quantities of cash, which both a postal savings bank and a postal insurance division would supply.
But this question aside, and assuming that life insurance should be conducted by corporations in private hands, is a repetition of the great scandals of the Equitable, New York and Mutual companies to be avoided? First of all, what are the scandals? Excessive premiums, gross salaries, wild extravagances and a deliberate purpose to withhold dividends from policy holders — are one class of them. But these are really induced or stimulated by another kind, namely, the use of the great funds of these companies in stock and bond gambling and promoting, mostly for the gain, not of the respective companies, but of their officers, boards of directors and inside syndicate cliques.
What is the nature of the stocks and bonds so dealt in? They are the issues of railroad companies, of industrial trusts, or other incorporations around one or several forms of Government favor. It is a case simply of the insurance corporation managers, mainly for their own advantage, exploiting other corporations possessing privileges.
If then the privilege of land monopoly be destroyed by the process of taxation, if the privilege of highway monopoly be transferred to public hands, if tariff and other taxation privileges be wiped out, what important privilege would remain for exploitation through incorporation?
The only possible use to which an artificial person, or corporation, could be put would be that of engaging in the production of wealth where there was an open and free field, where no one had any favor. What matter then if a corporation be organized “infinite in scope, perpetual in character, vested in the hands of a few, with methods secret even to stockholders”?
Indeed, it is probable that in such a state of things, where none had favor, but where all depended on character, the character of such a corporation would be so out of keeping with the openness and fairness of industrial and commercial and banking pursuits as to raise suspicion and prove a disadvantage. The privileges which now attract then being gone, the company so incorporated would appear to be badly handicapped.
Whether or not this would be the popular attitude, it is dear that with other privileges now emanating from Government destroyed or withdrawn from private hands, the task of contracting the limits of the statutes for incorporation would be simple, and would probably meet with little or no opposition. What those limits should be seems to be suggested by the earlier special incorporation acts, when privileges in this country were neither many nor strong. The new act, however, should be modified in such ways as three quarters of a century of advance in population and wealth may appear to make necessary.
It seems reasonable to expect that with a change in forms of incorporation would come changes in the bearing of the courts toward those whom Lincoln called “the plain people.” The cause for both changes would be the same. Monopolies of natural opportunities, public highway franchises and taxation favors being no longer in the hands or within the reach of individuals, great motives would be gone for the abuse of the courts, either in the issuance of arbitrary enjoining orders, or in the confusion of the weak and helpless in the coils of litigation.
Statutory definition of contempt of court and provision for trial by jury in contempt cases might, but scarcely would, be necessary. The courts would largely change their character, since then the causes for trial would mostly be between man and man, and not between man and Privilege, as is now so common. If the land monopolists were taxed out, the tariff monopolists wiped out by repeal of all customs duties, and all the public highways were conducted by publicly elected officials, as now the paved and unpaved roads are — where would be the demand for armies of lawyers, at very high pay, to devise ways to twist, extend and circumvent the laws; to invent pretexts for the assumption of power not expressed in the will of the people; and to cast over it all a glamour of eloquence, tempered by seeming reason and justice? With Privilege gone, the prize for the subornation of legal intellect, both on the bench and at the bar, would have vanished, and practice then would probably resume the lines of settled order and ancient wisdom.
Next Week: Final Chapter! “The Natural Order”
What’s your reaction to this material? Tell it to The Progress Report!