Vanishing Landmarks

SUPPOSE A CASE

In a certain city a thousand men are out of employment. In a bank in that city a million dollars are out of employment. In the foothills near the city fifty million tons of coal are out of employment. The unemployed men see the opportunity and offer their joint note for the money with which to develop a coal mine. But the officers of the bank will not lend money that does not belong to them upon the signature of a thousand men, each out of employment. Then management walks in and says to the president of the bank: “I am a practical coal operator. I have had experience, and have associated with me a board of directors, each a successful coal producer. In proof that we understand what we are undertaking, here is the report of the best-known coal engineer in the world, who at our expense has bored every square rod of that tract of coal, showing the exact number of tons available. Here also is an assay showing the quality of the coal. It is worth so much per ton on the track. It will cost so and so to put it on the track. After we have invested a million dollars of our own money, we want to borrow a million to complete the development and for working capital.” By giving a majority of the stock, and all the bonds of the company as collateral, and by each director signing the note, the money is obtained. The hitherto idle men are now employed and a great industry results. Query: Locate the cause. Is it capital? Capital languished and earned nothing. Is it labor? Labor was in rags and labor’s children were crying for bread. That coal field is developed, the wealth of the nation increased, homes are warmed, furnaces made to glow, wheels to turn, by management, plus capital, plus labor. It is so everywhere, in each and every instance, in this and all other lands.

Capital can usually be had upon approved security, and labor is most always available at a satisfactory wage, but management, the one essential of every achievement, is the most difficult thing in the world to find and, when discovered, imposes its own conditions and names its reward.

A WORD OF ADVICE

If teachers of economics and of sociology would somewhat oftener and more generally teach the Benjamin Franklin brand of common sense and make their classes understand that there are in the United States vastly more twenty-five thousand dollar jobs than there are twenty-five thousand dollar men to fill them, bolshevism would diminish as rapidly as it has increased under the opposite tuition. Where do our editors and newspaper writers come from? Whence the principals of our high schools, teachers in our colleges, preachers and lawyers? Ninety percent of them are from our colleges and universities, and those who graduate with socialistic and bolshevistic tendencies have usually imbibed them either from imported professors or from American professors who have received their Ph.D’s in Germany.

In this connection I also want to say a word to parents: Would it not be well early in the life of your boy to impress upon him that he will probably get out of life something fairly commensurate with what he puts into life? You might also suggest that if he will observe he will probably discover that those who complain most because the world has been stingy with them, are seldom able to show a receipt for much that they have contributed to the world. If instead of giving wholesome guidance you permit to go unchallenged the teachings which your boy is certain to get in the school room, in the pew, at the theater and the movie, on the street, and especially from the demagogue, that those who make money are invariably dishonest, those who accumulate wealth are scoundrels and that those who amass fortunes should be in the penitentiary, I will go security for your son that he will never disgrace his parents by getting the family name on the letterhead of any big institution, or in the Directory of Directors.

CHAPTER XXI

THE GOVERNMENT’S HANDICAP

In this chapter an argument is made that no government, and especially no republic, can supply the necessary management for business enterprises. The effect of popular and political interference with public business is illustrated.

The principal reason why government business operations are always financial failures is that no republic can supply the all-essential third leg. Its management is always defective. It can furnish capital, it can employ labor, but in a government where the people have a voice, management always buckles.

Senator Aldrich was frequently quoted as saying that the government could save three hundred million dollars per annum if it would apply business principles to its affairs. The distinguished senator never said that. What he did say was that the government would save three hundred million dollars per annum if it could apply business principles. Experience had taught the senator what experience has taught everyone who has had experience and what observation has taught the observing: that it cannot be done.

During the campaign of 1916, I sat on the platform and heard the then candidate for governor of a great middle-west state tell an audience that if he were elected governor, he would apply business principles to state affairs. I followed him and told his hearers that, if elected, he would do nothing of the kind. In the first place, it was impossible, and, secondly, they would not consent to it even if it were possible. I reminded them that I knew better than their candidate, for I had tried it. I did suggest, however, that simply because business principles cannot be applied to public affairs, is no excuse for conducting public affairs in a thoroughly unbusinesslike manner. It is not necessary to violate every business principle because some cannot be applied.

The candidate was elected, as he deserved to be, and has made one of the best, many say the best, governor his state ever had. But he will have to admit that he cannot remove officials simply for inefficiency, and he cannot make appointments in the face of public opposition, however fit and worthy the applicant. In a thousand ways he cannot exercise the independent discretion which he would if president of a bank or the head of some industrial corporation.

When I took charge of the Treasury Department I found an appraiser at one of the principal ports who had outlived his usefulness. He was not dishonest. Dishonesty is the least of all evils of government service. He was simply inefficient. He had a good army record, was a very reputable gentleman, highly esteemed, absolutely honest, and Mr. McKinley had made him appraiser. There were many evidences of inefficiency. Importers at far distant ports were entering their merchandise at this city and shipping them back home, manifestly for the purpose of evading the payment of appropriate duties. I have no doubt that the government was losing a million dollars or more a year through the inefficiency of this good man.

President Roosevelt authorized a change. I informed the two senators from that state what had to be done, and asked them to select the best man they could find and I would arrange a vacancy to meet their convenience. President Lincoln is credited with saying that when he had twenty applicants for a position and appointed one, he made nineteen enemies and one ingrate. I wanted to protect these senators from nineteen enemies.

They found an excellent man and I had the old appraiser come to Washington. He fully recognized his utter failure, and willingly resigned. We parted friends. The inexperienced will suppose that was the end of the incident. It was not. It was the beginning of it. The removal was declared to be purely a political deal. The President was criticized, I was abused and the two senators maligned. Every prominent Grand Army man in the country was asked to protest, and most of them did, until this dear old fellow was made to believe he had been imposed upon. He published his grievances in an extended interview and in about three months died of a broken heart.

The people will not consent that public affairs shall be conducted as business is conducted. Had this man been in the employ of a business enterprise in any large city, his removal would not have elicited so much as a notice that he had resigned for the purpose of giving attention to his “long-neglected private affairs.”

Public opposition to the application of business principles to government affairs is well illustrated in the location and erection of public buildings. Chicago has a federal building which was intended to accommodate, and does hold, not only the post office, but serves as court house, custom house and shelters all other federal offices. It cost nine million dollars and is ill-suited for anything. There are plenty of architects who can design a court house, or a post office, or an office building, but no one has yet appeared, and no one ever will be found, who can combine the three without ruining all.

During the period of construction, the Chicago post office occupied temporary quarters on the lake front in a wooden building, veneered with brick, built expressly for the purpose. Unquestionably it was the most convenient, and therefore the best post office in the United States. This of course is from the standpoint of a business man. Everyone connected with it regretted its abandonment for the huge, imposing but outrageous new building. The architect’s pride centered in its enormous dome. All the mail had to be taken from the basement up a steep incline and, until they began using heavy gasoline trucks, it required four horses to pull out from under the building what one horse could haul to the depot.

Pittsburgh wanted a building equally imposing, and Congress appropriated a million dollars to buy a site. That sum would pay for nothing suitable in the central part of the city. The newspapers had all purchased property at the top of the hill, in the newer part of the city, and the Secretary of the Treasury was expected to locate the Federal Building accordingly. He did not do so and for this reason: There were no street cars going near the proposed site. It was before the advent of gasoline trucks and the mail would have to be hauled up the long inclines by teams. In slippery weather a team of horses, unless freshly shod, cannot climb that hill with an empty wagon.

Inspired by the experience at Chicago, the Secretary decided to give Pittsburgh the best post-office service in the world. An entire block near the principal depot was purchased, at fifty percent or more above its market value. But that was relatively cheaper than anything else offered, and less proportionately than what the government is usually compelled to pay. A suitable site for a business enterprise employing a like number of people, and doing an equal volume of business, would be tendered on a silver platter. The people’s government never got “something for nothing” until we entered the war. What it then got and where it got it is quite generally surmised.

The intention was to erect a steel-framed post office, not more than three stories high, with wide court, so the light would be abundant, install a system of pneumatic or electric carriers, with tubes extending to all the depots and substations of the city. This, I submit, is exactly what any business concern would have done. But it was not satisfactory. A perfect furore was raised, every bit of which had its root either in a hope of profit through the location of the building, or in a desire for a big and imposing public building with an enormous dome. The people thought it a shame that Pittsburgh should be asked to put up with the expenditure of a fraction of the money that had been thrown away in Chicago, and the fact that one hour would be saved in the distribution and delivery of every piece of mail, did not palliate the offense. A post office erected solely for the purpose of efficient mail service will satisfy no community.

There are quite a large number of ports of entry where the entire revenue collected is not enough to pay the expenses of the office. In my annual reports I recommend that several of these be abolished, but no congressman from those states would support such a recommendation and no congressman from any other state would favor it lest economies applicable to his own locality would be thus invited. Everyone insists upon economy in government matters, but all demand that it be exercised in a distant state, and preferably in some territory or in the District of Columbia where the franchise is denied.

Many will remember William S. Holman of Indiana, for many years chairman of the Committee on Appropriations. He was not only an able man but a wise and economical statesman, and merited the appellation by which he was internationally known, “The Watchdog of the Treasury.” The Committee on Rivers and Harbors, desiring his support, inserted an item for dredging a creek extending into Holman’s district, so ships could come to central Indiana. Of course Mr. Holman wanted to be returned and was therefore compelled to support the bill. He even made a short speech in favor of this particular item. When he closed, Tom Reed arose to remark in his inimitable drawl,

“’Tis sweet to hear the honest watchdog’s bark,

Bay deep-mouthed welcome as he draws near home.”

A SELF-EVIDENT FACT

No government subordinate or bureau chief ever got into difficulty except when he did something. No one ever knew a refusal to act, or a delay in acting, to be the subject of judicial or legislative investigation. Pigeonholes all filled is infinitely safer than a few signed documents. This is fully recognized throughout the whole realm of public service and the result is logical – everything of a decisive nature is deferred as long as possible.

In 1906 Congress authorized the Secretary of the Treasury to settle a claim for ice sold to the government for the use of the Union Army in 1863. I am the only official who, in more than forty years, could have been impeached for action taken in connection with that knotty problem.

Subordinates in corporations and private business are criticised and lose their positions for failure to act. With the government, men are discharged and disgraced only when they do act. Unless a clerk or bureau chief or head of a department is caught red-handed, so there can be no question of guilt, there is no way to rid the department of an incubus without great difficulty. What I am trying to emphasize is a fact that everyone knows, few recognize, fewer still admit and many deny, to-wit: That government, state and municipal affairs are necessarily conducted upon entirely different principles from ordinary business.

TWO ARMY INCIDENTS

I am indebted to an army officer for the following, which I have not verified and therefore cannot vouch for, but I give it simply because it is absolutely true to life.

During the Indian insurrections in Texas, a certain officer got word to his quartermaster that he must have supplies and ammunition at a given point on the Rio Grande River without delay or his detachment would be annihilated. The quartermaster must have been a civilian for, regardless of red tape and formality, he proceeded to act. He found a boat and sought to engage it. But the river was low and the owner dared not attempt the trip. “But,” said the quartermaster, “if you do not go, those men will be annihilated.” “If I do go,” said the owner, “my boat will be annihilated, and it’s the only boat I have. You have more men.”

Rather than fail, the quartermaster purchased the boat for twelve thousand dollars. He loaded it with supplies and ammunition, started it up the river and made his report. Promptly, the department at Washington refused to ratify the purchase, and reprimanded the quartermaster severely for exceeding his authority in purchasing a boat. I submit that the department was right. No member of Congress would vote to give a quartermaster authority to buy a river steamer. Even the Secretary of the Navy would need congressional authorization. Fortunately, the boat returned and the quartermaster tried to get the man to take it back. He refused. Then the quartermaster found a purchaser, sold the boat for twelve thousand five hundred dollars, paid the purchase price and sent five hundred dollars to Washington. Promptly the department refused to ratify the sale and again reprimanded the quartermaster because he had sold a boat without authority. And the department was again right. Congress never has given and never will give authority to a quartermaster or anyone to sell a boat or anything else except after prolonged condemnation proceedings, and then at auction. Any corporation, under like circumstances, would have made that quartermaster a vice-president. Instead his pay was held up, and he faced court martial until some comptroller risked his official life and reputation by closing the account, also in violation of law.

If I remember correctly, it was Colonel Phillips of the regular army who gave me this chapter from his experience: While in command at a frontier post he was asked by the department to make a recommendation concerning a certain matter. Following the regulations, he referred the matter to his quartermaster. The quartermaster reported favorably to the colonel in command, and he, as colonel, joined in the recommendation and sent it to Washington. In due time he received instructions to proceed and, again obeying regulations, he directed the quartermaster to carry out the instructions of the department. This was done and the quartermaster so reported to the colonel in command, and the colonel approved this report and forwarded it to the department. All of this was regular and would afford no occasion for comment but for the fact that Colonel Phillips, the officer in command, was also quartermaster. He had asked himself what had best be done, made his report to himself, approved the report made to himself, joined in his own recommendation, then directed himself what to do, reported to himself that it had been done and then, as commander of the post, had transmitted all the papers to the department, which, in course of time, were approved, and one more closed incident in the military affairs of the United States of America resulted. He had signed the same paper seven times and there had been no way to abbreviate.

I submit that if he had been in charge of railroad operations, some congestion of freight would have resulted while all these necessary formalities were being worked out.

I want it definitely understood that in recording these instances, no criticism is intended. No material improvement ever can be made without throwing wide open every conceivable door and shutter through which fraud and corruption not only can creep but leap and run. I give them for no other purpose than to prove established principles to which there are few if any exceptions, to-wit: That a republic in business is an ass.

CHAPTER XXII

THE POST OFFICE

The common belief that the Post Office Department is conducted along approved business methods is sought to be dissipated.

The advocates of government ownership continually remind you that the Post Office Department is a government managed affair. It is, and I think I am perfectly safe in saying that until the government took control of the railroads, cables, telegraph and telephone lines, commenced building ships and constructing airplanes, it was the worst managed institution on the face of the earth. And it has mattered little, if any, which political party has had control of its affairs.

For six years every new post office erected in the United States has borne upon its corner stone this inscription: “William G. McAdoo, Secretary of the Treasury.” As you have seen this evidence of official prominence in city after city in every state of the Union, have you wondered why the name of the Postmaster General did not appear above, or below, or at least on the rear of the building? It is simply because the Postmaster General has nothing in the world to do with the selection of sites, erection of buildings, or in their care or improvement. The Treasury Department buys and pays for the sites, prepares the plans, erects the buildings, repairs them, lights them, heats and janitors them. It also pays the rent of post office quarters where the government has not been as yet foolish enough to build. The Treasury Department also audits the accounts of all postmasters and not one dollar of all this expense is charged to postal receipts. Even the salary of the Postmaster General and all his clerks is paid from appropriations independent of postal revenues. Then, with no rent to pay, no coal or current to buy, with janitor and elevator service gratis and accounts audited, the Post Office Department has run behind an aggregate of something over two hundred million dollars. Any express company would be glad to take the Post Office Department off the hands of the government if it could have free rent, free coal, the salaries of their principal officers paid and all their accounts audited gratis, for sixty-five per cent of what it now costs the government to take care of our mail service.

RIVERS AND HARBORS

Under the Constitution, Congress has charge of all navigable streams and harbors and it has spent billions in their improvement. Colonel Hepburn once made the statement on the floor of the House that the appropriations for the improvement of the channel of the Mississippi River between St. Louis and the Gulf were sufficient to have built a ship canal of boiler iron between these two points. No one ever questioned the correctness of the statement.

A recent River and Harbor bill contained an appropriation to dredge the channel of a stream in Texas where the government’s engineers reported there was only one inch of water. Another brook in Arkansas with only six inches of water, got an appropriation. I assume that two more votes were necessary. I might add for the reader’s information that any stream in the United States can be made navigable in law by a joint resolution of the two Houses of Congress saying that it is navigable. Lawyers would call that navigable de jure but many of them cannot be made navigable de facto however much is expended in dredging and widening.

CHAPTER XXIII

CIVIL SERVICE

The sole purpose of discussing the Civil Service System in this connection is to show what must ensue if the government continues its trend and enlarges its business operations. Partisan politics cannot be eliminated, neither does the Civil Service secure the most efficient. Concrete and actual instances are given as illustrations.

So much has been said in favor of Civil Service by its friends, and so much criticism offered by those who know little about it, that I am impelled to submit a few observations drawn from five years’ experience at the head of a department having, a portion of the time, as high as twenty thousand people on its payroll, over ninety percent of whom were in the classified service.

It is not my purpose to criticise or commend. I do intend, however, to make reasonably clear some of the inevitable conditions that would ensue if the government should remain operator or should become owner and operator of railroads, merchant ships, express, cable, telegraph and telephone companies, and other public utilities, constructor of airplanes, merchant ships, and logically producers of all materials and supplies therefor.

Everyone concedes that to avoid complete partisan prostitution of these widely-extended and diversified interests, every agent, servant and employee, with the possible exception of unskilled laborers, would have to be covered under Civil Service. This would palliate the evil but, as we shall presently see, would not prevent political manipulation and influence, and would render efficient service absolutely impossible.

It will be idle to approach this subject without recognizing a very marked distinction between business operations and government service. Business is conducted primarily for the profit that legitimately results. The wise man knows, however, that the better the service, the more certain his rewards. The merchant who best serves his customers will have the most customers to serve, and the lawyer who best protects his clients will have the largest and the most lucrative practice. Service and profit are seldom divorced. If it be true, as has been said, that a grateful people will make a beaten path to the door of him who improves a mousetrap, it is also equally true that the world’s financial rewards are liberal beyond calculation to him who renders any substantial service.