F

CHAPTER I

THE WRONG REMEDY

OR the last fifteen years the Federal Government has coöperated with the farmer through

the Department of Agriculture, with the railroads through the Interstate Commerce Commission, with the barker through the Treasury Department and later through the Federal Reserve Board, and the result has been beneficial to all. When the farmer comes to Washington now he finds a group of government experts who talk his own language and who understand scientifically his problems and his needs. He can submit to them his difficulties and be sure that they will receive sympathetic consideration. His government coöperates with him in working out a solution of his problems which is beneficial not only to him, but to the public generally.

The cotton grower, for example, finds men in Washington who are studying the broad aspects and needs of his industry. Constructive work, which the individual grower could not undertake, is carried through at government expense. New kinds of cotton are experimented with in order to increase the quantity and quality of the yield. Any calamity,

such as the boll weevil, is handled by government experts and thousands of dollars spent to stop it. When difficulties in marketing cotton arise, the government suggests plans for bringing the producers and consumers of cotton together and has even gone so far as to advance money to assist the growers in carrying their cotton until a satisfactory market was created.

The same is to some extent true of the producers of wheat and corn and of the stockmen who raise cattle and hogs and sheep. They find the agencies of the Department of Agriculture constantly at hand assisting them in improving their stock, marketing their product, increasing the yield of the soil, and in general assisting in working out the economic problems involved in stock raising and agriculture.

In like manner railroad men now find in the Interstate Commerce Commission men who understand railroading both in its details and in its broadest aspects. Difficulties of rate classification which have for years perplexed the traffic departments of our great railroads are now being worked out with scientific precision by the experts of that Commission. The questions of safety upon the railroads in which the public is so vitally concerned are demanding from day to day the thought of men trained in this particular field, and the railroads are reaping the benefit of this work through efficient operation, protection to property, and increased reputation for

safety. The Interstate Commerce Commission has brought into the railroad field a vast reform in cost accounting. Much can still be done in this field, but adequate systems of cost accounting have been installed in all the railroad systems of the country, and uniformity of nomenclature and terms has been adopted, which has enabled the Interstate Commerce Commission to compile the best railroad information that exists in the world. These statistics have served not merely as a basis for further legislation, but they have been of invaluable service to the railroad men themselves in working out internal reforms and questions of policy for their roads.

Bankers have in the same way been benefited by the coöperation of the government, particularly since the establishment of the Federal Reserve Board. The work of this board is to coördinate the banking forces of the country and coöperate with bankers in order to conserve the financial resources of the nation. Not only will this be of great value to the public in preventing crises and financial disturbances, but it will also enable the individual banker to fortify himself against disaster and protect his institution, its stockholders, and the local community in which it operates.

In each of these cases-in the case of the farmer, the railroad man, and the banker-there has been harmony between the government and private enterprise. Mutual understanding and coöperation be

*See Anthracite Rate Case, 35 I. C. C. 220, 267, 268, 269.

tween them has resulted beneficially both to the public and to the private interests affected.

On the other hand, what a contrast there has been during the last fifteen years in the relation between the government and the merchant and manufacturer. This latter situation has been due in a large measure to a general misunderstanding-a misunderstanding by the public and its representatives in Congress of the needs of business, and a misunderstanding by 'business men of the place which the government should occupy in their affairs. Business men have journeyed to Washington from time to time, seeking remedies for their ills. They found nothing there but a suspicious Congress and executive departments offering no sympathetic, constructive solution to their problems. In fact, the Department of Justice was the only part of the administrative machinery of the government which seemed to present any hopeful source of advice and direction at all. If the lawyers in the Department of Justice seemed to business men to care little or nothing for the perplexing economic problems which confront business men, it was not their fault, but was a defect in governmental machinery. It was the duty of those in charge of this department to concern themselves primarily with violations of law. Congress had not vested them with power to advise or to aid with constructive suggestions. This situation produced an attitude in the Department of Justice which seemed to business men unfortunately legalistic.

Let me be concrete in order to illustrate how this old attitude, which fortunately now is changing, appeared to business men. At a time past a committee from a trade association, representing one of our large industries, journeyed to Washington and sought the advice of the Department of Justice upon the legality or illegality of certain articles of association which their organization desired to adopt. The lawyers of the Department of Justice took the articles and examined them. They found them to be a plan for coöperation among business men for bettering the conditions of their industry; a plan for uniformity in cost accounting, for standardizing methods, processes, materials, and products, for stimulating technical study and improvement, for gathering credit information and for uniform plans of welfare work among employes. They found no suggestion .. of price fixing or conspiracy. They found, in fact, an avowal of intention to avoid any activity which could be construed as a violation of law. It was perfectly evident that the articles of association were not illegal, and that they represented an entirely legitimate form of business coöperation. But the traditions of the department prevented the lawyers, whatever their personal feeling might have been, from giving advice in advance. They informed the committee that they were not able to place the approval of the government on any form of coöperation among business men, however innocent it might appear to be on its face. They stated that the De