brought into the state, the taxes on such earnings are paid
by the final consumers, with a good profit on the tax, not
only to the railways, but to every jobber, wholesaler and
retailer who handles the goods.
Gross earnings taxes are not taxes on these corporations,
but taxes on the people. It is time the people stopped fool-
ing themselves with the idea that they are getting any taxes
out of the railways and these other corporations by this
32 The Minnesota Legislature of 1915
Of course if we had no control over their charges, then
any such taxes would be clear gain; but we do have control
over their charges, and so the whole system fails of its
object and taxes the wrong people. More than, this it taxes
them far more heavily than if the same amount were raised
by direct taxation.
There is another bad feature of this system that is
usually overlooked. In every city and village in the state
all kinds of street improvements grading, paving, sewer,
water mains, sidewalks, etc. are paid for by special assess-
ment against the owner of the abutting property. The rail-
ways escape all this. They also escape all taxes on their
valuable terminal lands, and even on the lands that were
freely given them by the state and the nation to encourage
the building of the roads.
Exemption from these land taxes and special assess-
ments is just so much clear gain to the corporations.
The gross earnings system is a very successful method
of letting the corporations off with no taxes at all, and putting
a double burden on the patrons of the companies and the
In the session of 1915, Mr. Gilman introduced a resolution
for a committee to investigate the whole gross earnings sys-
tem and report to the next session; but he did not push it
and it never came to a vote.
Natural Sources of Revenue.
The state of Minnesota was wonderfully rich in natural
resources. Its mines and forests and water power were among
the greatest in the world. Its soil the most fertile, and its
locations for great and powerful cities the most desirable.
The forests are largely cut off gone forever and we
have a few millionaire lumber barons as the net result.
The minerals are fast going and we are not getting half
what we should. If we could devise a system of taxes that
would reach the royalties that now swell the fortunes of
the mine owners, we would have tapped a source of vast
public revenue. This should be done without delay, not
by a tonnage tax on the output of the mines, but by a very
heavy tax on the royalties now paid to the fee owners. Such
a tax could not be passed on, but must be paid by the mine
The enormous value of our water power and the fabulous
wealth in our city lands and lots could be made to yield
much larger revenues to the state if we would cease taxing
industry and increase the taxes on the value of these lands.
As every one knows, these values are created by all the
people, and so far as justice and fair play are concerned, the
whole people ought to have them to meet public needs, in-
stead of permitting them to swell the fortunes of land
grabbers and speculators.
The man who owns the title deed to an iron mine, or
a city lot, or a water power, or to any other part of Nature's
free gift to the children of men, has no moral nor legal right
to these values that are not due to his efforts, but are due
to the presence and energy, the civilization and moral status
of the whole people.
The Minnesota Legislature o/, 1915 33
The people always have the moral right to change their
system of taxation; and when they shall decide to stop
fining and penalizing themselves for their thrift and in-
dustry, and to take for public use these publicly-created
values, there will not be so many useless millionaires in the
world; but there will be more useful citizens who can afford
to have decent homes and comfortable surroundings.
Unemployment, Wage Regulation and Taxation.
There is just one natural source of employment in any
community, namely, the land, the resources of nature in
that community. If the land is easy to get for use people
will make farms and gardens on it and employ labor. They
will erect factories, warehouses and stores on it and employ
labor. They will build homes on it and employ labor. In
fact, no matter to what use the land is put labor must be
employed. You can't use land without employing labor.
On the other hand, if land is hard to get if the burden
is so heavy that people cannot afford to put it to use then
labor will not be employed. It will walk the street vainly
looking for a job. Every idle lot means idle men. If all the
land were held idle, all the people would necessarily be idle
and would soon starve to death.
Now, what has taxation to do with all this? Everything!
Everything! Our present system of taxation lets a man off
easy so long as he holds his land idle and thus keeps labor
off of it. The moment he starts to make his land useful and
sets labor to work he can't use his land without setting labor
to work that moment we begin to pile the taxes on him as
if he were a criminal to be fined and penalized.
A certain enterprising firm of St. Paul has erected on
University avenue a beautiful, commodious building a gem
of art and convenience heated, lighted and ventilated in the
most up-to-date fashion. Here, in the midst of beautiful sur-
roundings, in fresh air and sunshine, they employ about 750
people, mostly young men and women, making useful things,
which are sold in all parts of the civilized world. Because
they are doing this, because they have erected this beautiful
building, assembled here the machinery and materials of in-
dustry, brought here these 750 people and set them to work,
the tax laws of the state of Minnesota compel us to impose
on them every year a fine of over $2,000 on the building and
an additional fine of more than $3,000 on their machinery,
money and credits and on the raw material and finished
products of their industry. This is in addition to the taxes
they pay on their land. This is the fine that we, impose upon
them because they are making their land useful and em-
ploying labor on it, instead of holding it idle and keeping
labor off it.
And this is only one case in many thousands in the city
of St. Paul alone. Every city, town and village, every farm
and mine and industry, in the whole country is another case
of the same kind. Everywhere we fine and penalize men
because they put their land to use and employ labor on it.
Everywhere we let men off easy because they hold their land
idle and keep labor off it. And then we stand in amazement
34 The Minnesota Legislature of 1915
and wonder why workers are idle and wages low. Could
anything be more stupid? Yes, and we do it.
We could make a simple change in our system of taxa-
tion. We could stop fining people for using their land and
employing labor, but we don't. We could increase the taxes
on those who held their land idle and prevent labor from
working, but we don't.
Instead of this we establish charities, and woodyards,
and souphouses for those that we prevent from working and
earning their own living. Instead of this we pass minimum
wage laws and other meddlesome regulations to compel em-
ployers to pay higher wages than the market price, stupidly
failing to see that low wages are the direct result of idle land
and industry overburdened by taxation.
If we should relieve this enterprising firm of the annual
fine of more than $5,000, now imposed upon them, because
they are using their land and employing labor if we should
relieve all industry from the burden of taxation and increase
the taxes on the forestallers and land grabbers, don't you sup-
pose wages would rise all along the line, far more than you
can ever force them up by minimum wage laws? And
wouldn't wages keep on going up and stay up just as we made
it easy to put land to use and employ labor, instead of making
it easy to hold land idle and keep labor out of work?
How long would it be till there were two jobs looking
for each man and woman, instead of two or more workers
looking for each job?
Nor can we be charged with trying to create jobs by law.
We are only asking for the repeal of the laws that lock up
the natural opportunities the laws that shut workers away
from the land in country and city, in forest and mine and
Instead of fining and penalizing those who put their land
to use and thus employ labor, repeal these unwise and unjust
tax laws. Take the padlock off the door that leads to op-
portunity and give enterprise and labor a chance.
Require the forestallers and speculators to pay to the
public in taxes the value that the public creates, and there
will no longer be profit in land grabbing.
It will pay them to use the earth rather than to hold
Labor can then take care of itself. Meddlesome legisla-
tion in the interest of labor will no longer be needed.
Employers and worker will both be free, and both will
be far better off.
Even the public service corporations and the other great
employers of labor will be powerless to enslave the workers.
Tax out the land grabbers in country and city, and labor
will take care of itself.
PUBLIC SERVICE CORPORATIONS.
A public service corporation is vitally different from an
ordinary business. It is even different from an ordinary cor-
poration that is engaged in competitive business.
We have individuals, co-partnerships, joint stock com-
The Minnesota Legislature of 1915 35
panics, industrial corporations and co-operative associations
all engaged in ordinary competitive occupations like operating
stores, manufacturing plants, creameries, farms, insurance
companies, newspapers, and hundreds of other lines of busi-
ness which are not in their nature monopolies.
All these compete in the open markets for business and
their, success depends upon the efficiency of their manage-
ment, the quality and price of the articles they furnish and
the general satisfaction they give to their customers.
No one is forced to deal with them if he does not wish
to do so. Their customers are free at all times to leave
them and go somewhere else. For these reasons such lines
of business need no special regulation by the government.
The natural principles of free competition are usually quite
sufficient. The best way to treat such lines of business is
to let them alone.
Public service corporations are wholly different. They
owe their very existence to a grant of public authority. They
are the creatures of statute law. Without a grant from gov-
ernment they could not exist at all. In short they are
created to perform public functions. They do things that
the government itself would be obliged to do if these public
functions were not turned over to them.
It therefore follows that all these public service cor-
porations must at all times be subjected to public control,
and the courts have always held that any reasonable regula-
tions relating to such corporation will be sustained, and the
corporations must obey.
Many people do not believe that such corporations should
be created. They believe that all public business, including
all kinds of public service, should be performed by the
people thru their chosen agents; and not farmed out to cor-
porations at all.
But that is another question.
We have created these corporations, and we have turned
over to them our railways, tetegraphs, telephones, street car
systems, gas, electricity, and, in many cities even the water
The problem now is how shall these corporations be
controlled to what extent shall they be brought under public
The Telephone Bill.
For many years we have had the railway and warehouse
commission whose business it has been to control and regu-
late the railways and public warehouses of the state.
But the telephone companies that operate in all parts
of the state have been a law unto themselves. There has
been no legal provision for their control, and the North-
western Telephone monopoly especially has most vigorously
resented all attempts to bring it under the control of the
railway and warehouse commission.
The rural telephone companies and their patrons are
subsidiary to the two great companies, the Northwestrn and
the Tri-State; and for many years these small companies
and their subscribers have demanded that the whole tele-
phone system of the state be put under the control of the
railway and warehouse commission, and that the large com-
36 The Minnesota Legislature of 1915
panies be required to make physical connection so that the
subscribers of the subsidiary lines of one large company
could talk with the subscribers to the other line or its
As early as 1907, J. T. Johnson of Fergus Falls, intro-
duced a bill to bring about these results, but it was smothered
In 1909 Mr. Johnson introduced another bill with the
In 1911 F. E. Minnette introduced a bill to the same
effect, but it failed to pass.
In 1913 Minnette and Holmberg came in with a bill
which passed both House and Senate by very large ma-
jorities, but was vetoed by Governor Eberhardt, as a part
of his plan to force upon the state his scheme for a state-
wide public utility commission to regulate and control all
public utilities in the state those belonging wholly within
the cities as well as all others.
This veto aroused a furore of opposition and was one
of the chief causes of Eberhardt's defeat at the primaries
in June, 1914.
Early in the session of 1915 Minnette and Burrows in-
troduced the same bill again, and after full discussion it
passed the House without a dissenting vote.
As thus passed it contained a clause, permitting the
people of any community, by a 65 per cent vote, to let in
a second telephone system.
If a second exchange is to be established at all, a vote
of the people who are interested is the best and most demo-
cratic way to do it.
But is this the best way to remedy a poor service?
Can competition solve this problem? Is competition
possible in regard to public service, as it is in the matter
of groceries, carpenter shops, or any other private business?
Is not the telephone business, like all public service, a
necessary monopoly? And it such a monopoly is in the
hands of a private corporation, is it not the wisest and best
course is it not the only practical course to require the
first company to give good service at a reasonable price?
or get out entirely?
The Senate committee on corporations cut out this refer-
endum clause, and after a very thoro discussion the action
of the committee was sustained.
Senator Lobeck showed that only a small part of the
users of phones in the rural parts of the state lived inside
the villages and cities where the exchanges are located;
and hence to refer the question of a second exchange to all
the voters of such cities and villages whether they were
users of phones or not, would not be a true referendum.
It would refer the question to the wrong people.
This argument seemed conclusive, for only one, Ward
of Fairmont, voted against the bill on final passage.
Mr. Minnette made a strong plea to have the referendum
clause restored, but the conference committee sustained the
action of the Senate, and the House concurred.
Thus ended the long struggle with a popular victory
over the great Northwestern Telephone monopoly.
The Minnesota Legislature of 1915
The Nolan Bill.
For a number of years the Minneapolis General Electric
Company has been operating without a franchise, and has
been charging all the traffic would bear.
The city of Minneapolis is not operating under a home
rule charter and therefore has no power to regulate this
company in any way whatever.
In 1913 W. J. Nolan of Minneapolis introduced into the
House a very short and simple bill granting to the govern-
ing body of every city or village in the state "the right and
power to prescribe and limit the charges which any (public
utility) corporation may demand or receive for the commodi-
ties or services furnished by it."
The people of Minneapolis were eager for this bill, and
the manufacturers and merchants thru their association were
very active in its support.
This bill passed the House without a dissenting vote,
and only four in the Senate really opposed it, W. W. Dunn,
Murray, G. H. Sullivan and J. D. Sullivan.
Then Governor Eberhardt vetoed it. The House passed
it over his veto 83 to 26, but the corporations had too strong
a grip in the Senate and so they and the Governor won the
day and the bill was killed.
Senator Dwinnell had led the fight in the Senate in favor
of this bill; but for some reason, very early in the session
of 1915, Senator William A. Campbell introduced the bill as
Senate File No. 20.
Now Campbell is very unpopular with the stand-patters
and the corporation men in the Senate.
The first move was to amend the bill so as to apply
to Minneapolis only, and then the Senators from Hennepin
county voted five to four for indefinite postponement. Those
voting against the bill were Callahan, Grose, Pauly, Wallace
and Westlake. Those for the bill were Campbell, Dwinnell,
Palmer and Turnham.
Later, on April 10, the Senate supported the majority
of the Hennepin delegation and killed the bill by the fol-
lowing vote, 32 to 16.
to kill the bill were:
Campbell, A. S.
Dunn, W. W.
Peterson, G. M.
to save the bill were:
Campbell, W. A.
Peterson, E. P.
The Minnesota Legislature
Nineteen -Senators did not vote:
Alley Dunn, R. C.
Peterson, F. H.
Five were not present Baldwin, Collester, Healy, Millett
and F. H. Peterson. The other fourteen refused to vote at
all, regarding it a local quarrel.
Why was this bill killed?
Was it not as correct in principle in 1915 as it was
Were not the great mass of consumers just as much
in need of relief from the exactions of this company as they
had been two years before?
Perhaps the common mass of consumers are not paying
quite as much as formerly; but the merchants and manu-
facturers have got such rates as they wanted, and so their
zeal for the bill had largely died out.
The common people had no one to plead their cause but
the men they had elected and sent to the Senate, and five of
these did not seem to feel it necessary to represent the voters.
Semi-Monthly Pay Day Bill.
This bill required all public service corporations to pay
their employees at least twice a month.
What could be more fair than this? The men have
earned the money. It is theirs. Why should the public ser-
vice corporations be permitted to exact forced loans from their
hired men? Even the semi-monthly pay day leaves a large
amount of wages in the hands of the employers. Even then
they would have in their possession at all times about three
weeks wages, rightfully belonging to each man in their
Suppose one of these corporations employed a thousand
men. Their wages would average at least seventy-five dollars
a month. Here's a capital of about $75,000 that the men
are forced to furnish to their employers without interest.
The bill passed the House 89 to 33 as follows:
Anderson Dare Hulbert
Baker Davis Johnson, M.
Barten Devoid Kneeland
Bendixen Dunleavy Knutson
Bernard Dwyer Kuntz
Bessette Erickson Larimore
Bjorge Frye Larson
Bjorklund Gill Lattin
Boehmke Girling Lee
Borgen Grant Lennon
Bouck Greene Lydiard
Boyd Guilford McGrath
Brown Haislet McLaughlin
Burrows Harrison, J. M. Madigan
Christiansen Hynes, J. H. Malmberg
The Minnesota Legislature of 1915 39
Teigen, L. O.
Thompson, H. O.
Those who voted in the negative were:
Adams Hauser Sanborn
Bjornson Hogenson Searls
Carmichael Hompe Schrooten
Corning Indrehus Smith
Dealand Johnson, J. T. Southwick
Ferrier Leonard Spooner
Flinn Miner Swenson
Gerlich Nietzel Thompson, A. L.
Oilman Parker Tollef son
Hafften Peterson, A. M. Wefald
Harrison, H. H. Pratt Wilkins
The public service corporations now got busy in the
Senate. Petitions were circulated among the railway em-
ployes urging Senators to vote against the bill, and many
who could not be charged with having corporation leanings
were convinced that the working men actually did not want
their pay oftener than once a month.
Several men in Senator Gandrud's district told him they
were afraid it would be taken out of them if the railway
companies should be put to the extra expense that a semi-
monthly pay day would make necessary; and it is probable
that other Senators were influenced by the same kind of
But it was perfectly plain where the corporation men
in the Senate stood. Those who can always be found on the
side of the special interests were strong and strenuous against
The most convincing speech for the bill was made by
Senator Dwinnell of Minneapolis, who declared it absurd
to suppose that any considerable number of working men
did not want the money they had earned. He showed that
it would not place any considerable burden upon the cor-
porations, but even if it did they ought to meet it like men,
and not try to make their employees furnish them with
capital on which to do business. Even as it is the com-
panies retain all the time fifteen to thirty days' wages that
they have no right to.
Others who made strong pleas for justice to the
men were Campbell of Minneapolis, Jackson, Palmer, Pauly,
Griggs, Handlan, Jones and Gardner, who had fathered the
bill and who had worked for it as if his life depended on
40 The Minnesota Legislature of 1915
The opposition to the bill in both Senate and House
may be summed up about as follows:
First, there were those who are always found on the
side of the corporations.
Second, the fact that most of the leading supporters of
the bill had been very bitter opponents of county option,
caused the temperance people to look on the bill from the
start with some prejudice.
Third, the fear that the railways would take it out of their
workmen, caused many of the better paid employees to
oppose the bill in a mild way, or at any rate not to be very
zealous in its support. This had its influence especially on
some country members.
Fourth, several members felt that the extra expense
would give the railways an added excuse to ask for in-
creased freight rates.
And finally there were a number of temperance men
who were quite sure that two pay days a month would mean
two drunks a month, and would not be for the best interest
of even those of the men who most needed their money.
The fault is not with the workers, but with the system.
Change the system. Do away with privileges and the work-
ers will be independent and self-respecting. They will need
The bill had not a vote to spare in the Senate.
Those who voted in the affirmative were:
Adams Grose Peterson, E. P.
Alley Handlan Peterson, F. H.
Benson Hanson Peterson, G. M.
Bonniwell Jackson Rockne
Buckler Johnston Sageng
Callahan Jones Steffen
Campbell, A. S. Knopp Turnham
Campbell, W. A. Lobeck Van Hoven
Dunn, W. W. McGarry Vermilya
Dwinnell O'Neill Ward
Those who voted in the negative were:
Andrews Glotzbach Ries
Baldwin Healy ' Rustad
Blomgren Hegnes Rystrom
Carley Hilbert Sullivan, G. H.
Collester Holmberg Sullivan, J. D.
Denegre Millett Swenson