Chapter 2
The right of labor to organize is just as fundamental and necessary as is the right of capital to organize. The right of labor to negotiate, to deal with and solve its particular problems in an organized way, through its chosen agents, is just as essential as is the right of capital to organize, to maintain corporations, to limit the liabilities of stockholders. Indeed, we have come to recognize that the limited liability of the citizen as a member of a labor organization closely parallels the limitation of liability of the citizen as a stockholder in a corporation for profit. Along this line of reasoning we shall make the greatest progress toward solution of our problem of capital and labor.
In the case of the corporation which enjoys the privilege of limited liability of stockholders, particularly when engaged in in the public service, it is recognized that the outside public has a large concern which must be protected; and so we provide regulations, restrictions, and in some cases detailed supervision. Likewise in the case of labor organizations, we might well apply similar and equally well-defined principles of regulation and supervision in order to conserve the public's interests as affected by their operations.
Just as it is not desirable that a corporation shall be allowed to impose undue exactions upon the public, so it is not desirable that a labor organization shall be permitted to exact unfair terms of employment or subject the public to actual distresses in order to enforce its terms. Finally, just as we are earnestly seeking for procedures whereby to adjust and settle political differences between nations without resort to war, so we may well look about for means to settle the differences between organized capital and organized labor without resort to those forms of warfare which we recognize under the name of strikes, lockouts, boycotts, and the like.
As we have great bodies of law carefully regulating the organization and operations of industrial and financial corporations, as we have treaties and compacts among nations which look to the settlement of differences without the necessity of conflict in arms, so we might well have plans of conference, of common counsel, of mediation, arbitration, and judicial determination in controversies between labor and capital. To accomplish this would involve the necessity to develop a thoroughgoing code of practice in dealing with such affairs It might be well to frankly set forth the superior interest of the community as a whole to either the labor group or the capital group. With rights, privileges, immunities, and modes of organization thus carefully defined, it should be possible to set up judicial or quasi judicial tribunals for the consideration and determination of all disputes which menace the public welfare.
In an industrial society such as ours the strike, the lockout, and the boycott are as much out of place and as disastrous in their results as is war or armed revolution in the domain of politics. The same disposition to reasonableness, to conciliation, to recognition of the other side's point of view, the same provision of fair and recognized tribunals and processes, ought to make it possible to solve the one set of questions its easily as the other. I believe the solution is possible.
The consideration of such a policy would necessitate the exercise of care and deliberation in the construction of a code and a charter of elemental rights, dealing with the relations of employer and employee. This foundation in the law, dealing with the modern conditions of social and economic life, would hasten the building of the temple of peace in industry which a rejoicing nation would acclaim.
After each war, until the last, the Government has been enabled to give homes to its returned soldiers, and a large part of our settlement and development has attended this generous provision of land for the Nation's defenders.
There is yet unreserved approximately 200,000,000 acres in the public domain, 20,000,000 acres of which are known to be susceptible of reclamation and made fit for homes by provision for irrigation.
The Government has been assisting in the development of its remaining lands, until the estimated increase in land values in the irrigated sections is full $500,000,000 and the crops of 1920 alone on these lands are estimated to exceed $100,000,000. Under the law authorization these expenditures for development the advances are to be returned and it would be good business for the Government to provide for the reclamation of the remaining 20,000,000 acres, in addition to expediting the completion of projects long under way.
Under what is known as the coal and gas lease law, applicable also to deposits of phosphates and other minerals on the public domain, leases are now being made on the royalty basis, and are producing large revenues to the Government. Under this legislation, 10 per centum of all royalties is to be paid directly to the Federal Treasury, and of the remainder 50 per centum is to be used for reclamation of arid lands by irrigation, and 40 per centum is to be paid to the States, in which the operations are located, to be used by them for school and road purposes.
These resources are so vast, and the development is affording so reliable a basis of estimate, that the Interior Department expresses the belief that ultimately the present law will add in royalties and payments to the treasuries of the Federal Government and the States containing these public lands a total of $12,000,000,000. This means, of course, an added wealth of many times that sum. These prospects seem to afford every justification of Government advances in reclamation and irrigation.
Contemplating the inevitable and desirable increase of population, there is another phase of reclamation full worthy of consideration. There are 79,000,000 acres of swamp and cut-over lands which may be reclaimed and made as valuable as any farm lands we possess. These acres are largely located in Southern States, and the greater proportion is owned by the States or by private citizens. Congress has a report of the survey of this field for reclamation, and the feasibility is established. I gladly commend Federal aid, by way of advances, where State and private participation is assured.
Home making is one of the greater benefits which government can bestow. Measures are pending embodying this sound policy to which we may well adhere. It is easily possible to make available permanent homes which will provide, in turn, for prosperous American families, without injurious competition with established activities, or imposition on wealth already acquired.
While we are thinking of promoting the fortunes of our own people I am sure there is room in the sympathetic thought of America for fellow human beings who are suffering and dying of starvation in Russia. A severe drought in the Valley of the Volga has plunged 15,000,000 people into grievous famine. Our voluntary agencies are exerting themselves to the utmost to save the lives of children in this area, but it is now evident that unless relief is afforded the loss of life will extend into many millions. America can not be deaf to such a call as that.
We do not recognize the government of Russia, nor tolerate the propaganda which emanates therefrom, but we do not forget the traditions of Russian friendship. We may put aside our consideration of all international politics and fundamental differences in government. The big thing is the call of the suffering and the dying. Unreservedly I recommend the appropriation necessary to supply the American Relief Administration with 10,000,000 bushels of corn and 1,000,000 bushels of seed grains, not alone to halt the wave of death through starvation, but to enable spring planting in areas where the seed grains have been exhausted temporarily to stem starvation.
The American Relief Administration is directed in Russia by former officers of our own armies, and has fully demonstrated its ability to transport and distribute relief through American hands without hindrance or loss. The time has come to add the Government's support to the wonderful relief already wrought out of the generosity of the American private purse.
I am not unaware that we have suffering and privation at home. When it exceeds the capacity for the relief within the States concerned, it will have Federal consideration. It seems to me we should be indifferent to our own heart promptings, and out of accord with the spirit which acclaims the Christmastide, if we do not give out of our national abundance to lighten this burden of woe upon a people blameless and helpless in famine's peril.
There are it full score of topics concerning which it would be becoming to address you, and on which I hope to make report at a later time. I have alluded to the things requiring your earlier attention. However, I can not end this limited address without a suggested amendment to the organic law.
Many of us belong to that school of thought which is hesitant about altering the fundamental law. I think our tax problems, the tendency of wealth to seek nontaxable investment, and the menacing increase of public debt, Federal, State and municipal-all justify a proposal to change the Constitution so as to end the issue of nontaxable bonds. No action can change the status of the many billions outstanding, but we can guard against future encouragement of capital's paralysis, while a halt in the growth of public indebtedness would be beneficial throughout our whole land.
Such a change in the Constitution must be very thoroughly considered before submission. There ought to be known what influence it will have on the inevitable refunding of our vast national debt, how it will operate on the necessary refunding of State and municipal debt, how the advantages of Nation over State and municipality, or the contrary, may be avoided. Clearly the States would not ratify to their own apparent disadvantage. I suggest the consideration because the drift of wealth into nontaxable securities is hindering the flow of large capital to our industries, manufacturing, agricultural, and carrying, until we are discouraging the very activities which make our wealth.
Agreeable to your expressed desire and in complete accord with the purposes of the executive branch of the Government, there is in Washington, as you happily know, an International Conference now most earnestly at work on plans for the limitation of armament, a naval holiday, and the just settlement of problems which might develop into causes of international disagreement.
It is easy to believe a world-hope is centered on this Capital City. A most gratifying world-accomplishment is not improbable.
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State of the Union Address Warren Harding December 8, 1922
MEMBERS OF THE CONGRESS:
So many problems are calling for solution that a recital of all of them, in the face of the known limitations of a short session of Congress, would seem to lack sincerity of purpose. It is four years since the World War ended, but the inevitable readjustment of the social and economic order is not more than barely begun. There is no acceptance of pre-war conditions anywhere in the world. In a very general way humanity harbors individual wishes to go on with war-time compensation for production, with pre-war requirements in expenditure. In short, everyone, speaking broadly, craves readjustment for everybody except himself, while there can be no just and permanent readjustment except when all participate.
The civilization which measured its strength of genius and the power of science and the resources of industries, in addition to testing the limits of man power and the endurance and heroism of men and women--that same civilization is brought to its severest test in restoring a tranquil order and committing humanity to the stable ways of peace.
If the sober and deliberate appraisal of pre-war civilization makes it seem a worth-while inheritance, then with patience and good courage it will be preserved. There never again will be precisely the old order; indeed, I know of no one who thinks it to be desirable For out of the old order came the war itself, and the new order, established and made secure, never will permit its recurrence.
It is no figure of speech to say we have come to the test of Our civilization. The world has been passing--is today passing through of a great crisis. The conduct of war itself is not more difficult than the solution of the problems which necessarily follow. I am not speaking at this moment of the problem in its wider aspect of world rehabilitation or of international relationships. The reference is to our own social, financial, and economic problems at home. These things are not to be considered solely as problems apart from all international relationship, but every nation must be able to carry on for itself, else its international relationship will have scant importance.
Doubtless our own people have emerged from the World War tumult less impaired than most belligerent powers; probably we have made larger progress toward reconstruction. Surely we have been fortunate in diminishing unemployment, and our industrial and business activities, which are the lifeblood of our material existence, have been restored as in no other reconstruction period of like length in the history of the world. Had we escaped the coal and railway strikes, which had no excuse for their beginning and less justification for their delayed settlement, we should have done infinitely better. But labor was insistent on holding to the war heights, and heedless forces of reaction sought the pre-war levels, and both were wrong. In the folly of conflict our progress was hindered, and the heavy cost has not yet been fully estimated. There can be neither adjustment nor the penalty of the failure to readjust in which all do not somehow participate.
The railway strike accentuated the difficulty of the American farmer. The first distress of readjustment came to the farmer, and it will not be a readjustment fit to abide until he is relieved. The distress brought to the farmer does not affect him alone. Agricultural ill fortune is a national ill fortune. That one-fourth of our population which produces the food of the Republic and adds so largely to our export commerce must participate in the good fortunes of the Nation, else there is none worth retaining.
Agriculture is a vital activity in our national life. In it we had our beginning, and its westward march with the star of the empire has reflected the growth of the Republic. It has its vicissitudes which no legislation will prevent, its hardships for which no law can provide escape. But the Congress can make available to the farmer the financial facilities which have been built up under Government aid and supervision for other commercial and industrial enterprises. It may be done on the same solid fundamentals and make the vitally important agricultural industry more secure, and it must be done.
This Congress already has taken cognizance of the misfortune which precipitate deflation brought to American agriculture. Your measures of relief and the reduction of the Federal reserve discount rate undoubtedly saved the country from widespread disaster. The very proof of helpfulness already given is the strongest argument for the permanent establishment of widened credits, heretofore temporarily extended through the War Finance Corporation.
The Farm Loan Bureau, which already has proven its usefulness through the Federal land banks, may well have its powers enlarged to provide ample farm production credits as well as enlarged land credits. It is entirely practical to create a division in the Federal land banks to deal with production credits, with the limitations of time so adjusted to the farm turnover as the Federal reserve system provides for the turnover in the manufacturing and mercantile world. Special provision must be made for live-stock production credits, and the limit of land loans may be safely enlarged. Various measures are pending before you, and the best judgment of Congress ought to be expressed in a prompt enactment at the present session.
But American agriculture needs more than added credit facilities. The credits will help to solve the pressing problems growing out of war-inflated land values and the drastic deflation of three years ago, but permanent and deserved agricultural good fortune depends on better and cheaper transportation.
Here is an outstanding problem, demanding the most rigorous consideration of the Congress and the country. It has to do with more than agriculture. It provides the channel for the flow of the country's commerce. But the farmer is particularly hard hit. His market, so affected by the world consumption, does not admit of the price adjustment to meet carrying charges. In the last half of the year now closing the railways, broken in carrying capacity because of motive power and rolling stock out of order, though insistently declaring to the contrary, embargoed his shipments or denied him cars when fortunate markets were calling. Too frequently transportation failed while perishable products were turning from possible profit to losses counted in tens of millions.
I know of no problem exceeding in importance this one of transportation. In our complex and interdependent modern life transportation is essential to our very existence. Let us pass for the moment the menace in the possible paralysis of such service as we have and note the failure, for whatever reason, to expand our transportation to meet the Nation's needs.
The census of 1880 recorded a population of 50,000,000. In two decades more we may reasonably expect to count thrice that number. In the three decades ending in 1920 the country's freight by rail increased from 631,000,000 tons to 2,234,000,000 tons; that is to say, while our population was increasing, less than 70 per cent, the freight movement increased over 250 per cent.
We have built 40 per cent of the world's railroad mileage, and yet find it inadequate to our present requirements. When we contemplate the inadequacy of to-day it is easy to believe that the next few decades will witness the paralysis of our transportation-using social scheme or a complete reorganization on some new basis. Mindful of the tremendous costs of betterments, extensions, and expansions, and mindful of the staggering debts of the world to-day, the difficulty is magnified. Here is a problem demanding wide vision and the avoidance of mere makeshifts. No matter what the errors of the past, no matter how we acclaimed construction and then condemned operations in the past, we have the transportation and the honest investment in the transportation which sped us on to what we are, and we face conditions which reflect its inadequacy to-day, its greater inadequacy to-morrow, and we contemplate transportation costs which much of the traffic can not and will not continue to pay.
Manifestly, we have need to begin on plans to coordinate all transportation facilities. We should more effectively connect up our rail lines with our carriers by sea. We ought to reap some benefit from the hundreds of millions expended on inland waterways, proving our capacity to utilize as well as expend. We ought to turn the motor truck into a railway feeder and distributor instead of a destroying competitor.
It would be folly to ignore that we live in a motor age. The motor car reflects our standard of living and gauges the speed of our present-day life. It long ago ran down Simple Living, and never halted to inquire about the prostrate figure which fell as its victim. With full recognition of motor-car transportation we must turn it to the most practical use. It can not supersede the railway lines, no matter how generously we afford it highways out of the Public Treasury. If freight traffic by motor were charged with its proper and proportionate share of highway construction, we should find much of it wasteful and more costly than like service by rail. Yet we have paralleled the railways, a most natural line of construction, and thereby taken away from the agency of expected service much of its profitable traffic, which the taxpayers have been providing the highways, whose cost of maintenance is not yet realized.
The Federal Government has a right to inquire into the wisdom of this policy, because the National Treasury is contributing largely to this highway construction. Costly highways ought to be made to serve as feeders rather than competitors of the railroads, and the motor truck should become a coordinate factor in our great distributing system.
This transportation problem can not be waived aside. The demand for lowered costs on farm products and basic materials can not be ignored. Rates horizontally increased, to meet increased wage outlays during the war inflation, are not easily reduced. When some very moderate wage reductions were effected last summer there was a 5 per cent horizontal reduction in rates. I sought at that time, in a very informal way, to have the railway managers go before the Interstate Commerce Commission and agree to a heavier reduction on farm products and coal and other basic commodities, and leave unchanged the freight tariffs which a very large portion of the traffic was able to bear. Neither the managers nor the commission tile@@ suggestion, so we had the horizontal reduction saw fit to adopt too slight to be felt by the higher class cargoes and too little to benefit the heavy tonnage calling most loudly for relief.
Railways are not to be expected to render the most essential service in our social organization without a air return on capital invested, but the Government has gone so far in the regulation of rates and rules of operation that it has the responsibility of pointing the way to the reduced freight costs so essential to our national welfare.
Government operation does not afford the cure. It was Government operation which brought us to the very order of things against which we now rebel, and we are still liquidating the costs of that supreme folly.
Surely the genius of the railway builders has not become extinct among the railway managers. New economies, new efficiencies in cooperation must be found. The fact that labor takes 50 to 60 per cent of total railway earnings makes limitations within which to effect economies very difficult, but the demand is no less insistent on that account.
Clearly the managers are without that intercarrier, cooperative relationship so highly essential to the best and most economical operation. They could not function in harmony when the strike threatened the paralysis of all railway transportation. The relationship of the service to public welfare, so intimately affected by State and Federal regulation, demands the effective correlation and a concerted drive to meet an insistent and justified public demand.
The merger of lines into systems, a facilitated interchange of freight cars, the economic use of terminals, and the consolidation of facilities are suggested ways of economy and efficiency.