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Philip Dru Administrator : a Story of Tomorrow 1920 - 1935 online

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Gloria, into the fresh air, for it stifles me to think of this phase of
our civilization. I wish I had let our discussion remain upon the high
peak where you placed it and from which we gazed into the promised



The Administrator did nothing towards reducing the army which,
including those in the Philippines and elsewhere, totalled five hundred
thousand. He thought this hardly sufficient considering international
conditions, and one of his first acts was to increase the number of men
to six hundred thousand and to arm and equip them thoroughly.

For a long period of years England had maintained relations with the
United States that amounted to an active alliance, but there was
evidence that she had under discussion, with her old-time enemy,
Germany, a treaty by which that nation was to be allowed a free hand in
South America.

In return for this England was to be conceded all German territory in
Africa, and was to be allowed to absorb, eventually, that entire
continent excepting that part belonging to France.

Japan, it seemed, was to be taken into the agreement and was to be given
her will in the East. If she desired the Philippines, she might take
them as far as European interference went. Her navy was more powerful
than any the United States could readily muster in the far Pacific, and
England would, if necessary, serve notice upon us that her gunboats were
at Japan's disposal in case of war.

In return, Japan was to help in maintaining British supremacy in India,
which was now threatened by the vigorous young Republic of China.

The latter nation did not wish to absorb India herself, but she was
committed to the policy of "Asia for the Asiatics," and it did not take
much discernment to see that some day soon this would come about.

China and Japan had already reached an agreement concerning certain
matters of interest between them, the most important being that Japan
should maintain a navy twice as powerful as that of China, and that the
latter should have an army one-third more powerful than that of Japan.
The latter was to confine her sphere of influence to the Islands of the
Sea and to Korea, and, in the event of a combined attack on Russia,
which was contemplated, they were to acquire Siberia as far west as
practicable, and divide that territory. China had already by purchase,
concessions and covert threats, regained that part of her territory once
held by England, Germany and France. She had a powerful array and a navy
of some consequence, therefore she must needs to be reckoned with.

England's hold upon Canada was merely nominal, therefore, further than
as a matter of pride, it was of slight importance to her whether she
lost it or not. Up to the time of the revolution, Canada had been a
hostage, and England felt that she could at no time afford a rupture
with us. But the alluring vision that Germany held out to her was
dazzling her statesmen. Africa all red from the Cape to the
Mediterranean and from Madagascar to the Atlantic was most alluring. And
it seemed so easy of accomplishment. Germany maintained her military
superiority, as England, even then, held a navy equal to any two powers.

Germany was to exploit South America without reference to the Monroe
Doctrine, and England was to give her moral support, and the support of
her navy, if necessary. If the United States objected to the extent of
declaring war, they were prepared to meet that issue. Together, they
could put into commission a navy three times as strong as that of the
United States, and with Canada as a base, and with a merchant marine
fifty times as large as that of the United States, they could convey
half a million men to North America as quickly as Dru could send a like
number to San Francisco. If Japan joined the movement, she could occupy
the Pacific Slope as long as England and Germany were her allies.

The situation which had sprung up while the United States was putting
her own house in order, was full of peril and General Dru gave it his
careful and immediate attention.

None of the powers at interest knew that Dru's Government had the
slightest intimation of what was being discussed. The information had
leaked through one of the leading international banking houses, that had
been approached concerning a possible loan for a very large amount, and
the secret had reached Selwyn through Thor.

Selwyn not only gave General Dru this information, but much else that
was of extreme value. Dru soon came to know that at heart Selwyn was not
without patriotism, and that it was only from environment and an
overweening desire for power that had led him into the paths he had
heretofore followed. Selwyn would have preferred ruling through the
people rather than through the interests and the machinations of corrupt
politics, but he had little confidence that the people would take enough
interest in public affairs to make this possible, and to deviate from
the path he had chosen, meant, he thought, disaster to his ambitions.

Dru's career proved him wrong, and no one was quicker to see it than
Selwyn. Dru's remarkable insight into character fathomed the real man,
and, in a cautious and limited way, he counseled with him as the need



Of his Council of Twelve, the Administrator placed one member in charge
of each of the nine departments, and gave to the other three special
work that was constantly arising.

One of his advisers was a man of distinguished lineage, but who, in his
early youth, had been compelled to struggle against those unhappy
conditions that followed reconstruction in the South. His intellect and
force of character had brought him success in his early manhood, and he
was the masterful head of a university that, under his guidance, was
soon to become one of the foremost in the world. He was a trained
political economist, and had rare discernment in public affairs,
therefore Dru leaned heavily upon him when he began to rehabilitate the

Dru used Selwyn's unusual talents for organization and administration,
in thoroughly overhauling the actual machinery of both Federal and State
Governments. There was no doubt but that there was an enormous waste
going on, and this he undertook to stop, for he felt sure that as much
efficiency could be obtained at two-thirds the cost. One of his first
acts as Administrator was to call together five great lawyers, who had
no objectionable corporate or private practice, and give to them the
task of defining the powers of all courts, both State and Federal.

They were not only to remodel court procedure, but to eliminate such
courts as were unnecessary. To this board he gave the further task of
reconstructing the rules governing lawyers, their practice before the
courts, their relations to their clients and the amount and character of
their fees under given conditions.

Under Dru's instruction the commission was to limit the power of the
courts to the extent that they could no longer pass upon the
constitutionality of laws, their function being merely to decide, as
between litigants, what the law was, as was the practice of all other
civilized nations.

Judges, both Federal and State, were to be appointed for life, subject
to compulsory retirement at seventy, and to forced retirement at any
time by a two-thirds vote of the House and a majority vote of the
Senate. Their appointment was to be suggested by the President or
Governor, as the case might be, and a majority vote of the House and a
two-third vote of the Senate were necessary for confirmation.

High salaries were to be paid, but the number of judges was to be
largely decreased, perhaps by two-thirds. This would be possible,
because the simplification of procedure and the curtailment of their
powers would enormously lessen the amount of work to be done. Dru called
the Board's attention to the fact that England had about two hundred
judges of all kinds, while there were some thirty-six hundred in the
United States, and that the reversals by the English Courts were only
about three per cent. of the reversals by the American Courts.

The United States had, therefore, the most complicated, expensive and
inadequate legal machinery of any civilized nation. Lawyers were no
longer to be permitted to bring suits of doubtful character, and without
facts and merit to sustain them. Hereafter it would be necessary for the
attorney, and the client himself, to swear to the truth of the
allegations submitted in their petitions of suits and briefs.

If they could not show that they had good reason to believe that their
cause was just, they would be subject to fines and imprisonment, besides
being subject to damages by the defendant. Dru desired the Board on
Legal Procedure and Judiciary to work out a fair and comprehensive
system, based along the fundamental lines he had laid down, so that the
people might be no longer ridden by either the law or the lawyer. It was
his intention that no man was to be suggested for a judgeship or
confirmed who was known to drink to excess, either regularly or
periodically, or one who was known not to pay his personal debts, or had
acted in a reprehensible manner either in private or in his public
capacity as a lawyer.

Any of these habits or actions occurring after appointment was to
subject him to impeachment. Moreover, any judge who used his position to
favor any individual or corporation, or who deviated from the path of
even and exact justice for all, or who heckled a litigant, witness or
attorney, or who treated them in an unnecessarily harsh or insulting
manner, was to be, upon complaint duly attested to by reliable
witnesses, tried for impeachment.

The Administrator was positive in his determination to have the
judiciary a most efficient bureau of the people, and to have it
sufficiently well paid to obtain the best talent. He wanted it held in
the highest esteem, and to have an appointment thereon considered one of
the greatest honors of the Republic. To do this he knew it was necessary
for its members to be able, honest, temperate and considerate.



Dru selected another board of five lawyers, and to them he gave the task
of reforming legal procedure and of pruning down the existing laws, both
State and National, cutting out the obsolete and useless ones and
rewriting those recommended to be retained, in plain and direct language
free from useless legal verbiage and understandable to the ordinary lay

He then created another board, of even greater ability, to read, digest
and criticise the work of the other two boards and report their findings
directly to him, giving a brief summary of their reasons and
recommendations. To assist in this work he engaged in an advisory
capacity three eminent lawyers from England, Germany and France

The three boards were urged to proceed with as much despatch as
possible, for Dru knew that it would take at least several years to do
it properly, and afterwards he would want to place the new code of laws
in working order under the reformed judiciary before he would be content
to retire. The other changes he had in mind he thought could be
accomplished much more quickly.

Among other things, Dru directed that the States should have a
simplification of land titles, so that transfers of real estate could be
made as easy as the transfer of stocks, and with as little expense, no
attorneys' fees for examination of titles, and no recording fees being
necessary. The title could not be contested after being once registered
in a name, therefore no litigation over real property could be possible.
It was estimated by Dru's statisticians that in some States this would
save the people annually a sum equal to the cost of running their

A uniform divorce law was also to be drawn and put into operation, so
that the scandals arising from the old conditions might no longer be

It was arranged that when laws affecting the States had been written,
before they went into effect they were to be submitted to a body of
lawyers made up of one representative from each State. This body could
make suggestions for such additions or eliminations as might seem to
them pertinent, and conforming with conditions existing in their
respective commonwealths, but the board was to use its judgment in the
matter of incorporating the suggestions in the final draft of the law.
It was not the Administrator's purpose to rewrite at that time the
Federal and State Constitutions, but to do so at a later date when the
laws had been rewritten and decided upon; he wished to first satisfy
himself as to them and their adaptability to the existing conditions,
and then make a constitution conforming with them. This would seem to be
going at things backward, but it recommended itself to Dru as the sane
and practical way to have the constitutions and laws in complete

The formation of the three boards created much disturbance among judges,
lawyers and corporations, but when the murmur began to assume the
proportions of a loud-voiced protest, General Dru took the matter in
hand. He let it be known that it would be well for them to cease to
foment trouble. He pointed out that heretofore the laws had been made
for the judges, for the lawyers and for those whose financial or
political influence enabled them to obtain special privileges, but that
hereafter the whole legal machinery was to be run absolutely in the
interest of the people. The decisive and courageous manner in which he
handled this situation, brought him the warm and generous approval of
the people and they felt that at last their day had come.



The question of taxation was one of the most complex problems with which
the Administrator had to deal. As with the legal machinery he formed a
board of five to advise with him, and to carry out his very well-defined
ideas. Upon this board was a political economist, a banker, who was
thought to be the ablest man of his profession, a farmer who was a very
successful and practical man, a manufacturer and a Congressman, who for
many years had been the consequential member of the Ways and Means
Committee. All these men were known for their breadth of view and their
interest in public affairs.

Again, Dru went to England, France and Germany for the best men he could
get as advisers to the board. He offered such a price for their services
that, eminent as they were, they did not feel that they could refuse. He
knew the best were the cheapest.

At the first sitting of the Committee, Dru told them to consider every
existing tax law obliterated, to begin anew and to construct a revenue
system along the lines he indicated for municipalities, counties,
states and the Nation. He did not contemplate, he said, that the new law
should embrace all the taxes which the three first-named civil divisions
could levy, but that it should apply only where taxes related to the
general government. Nevertheless, Dru was hopeful that such a system
would be devised as would render it unnecessary for either
municipalities, counties or states to require any further revenue. Dru
directed the board to divide each state into districts for the purpose
of taxation, not making them large enough to be cumbersome, and yet not
small enough to prohibit the employment of able men to form the
assessment and collecting boards. He suggested that these boards be
composed of four local men and one representative of the Nation.

He further directed that the tax on realty both in the country and the
city should be upon the following basis: - Improvements on city property
were to be taxed at one-fifth of their value, and the naked property
either in town or country at two-thirds of its value. The fact that
country property used for agricultural purposes was improved, should not
be reckoned. In other words, if A had one hundred acres with eighty
acres of it in cultivation and otherwise improved, and B had one hundred
acres beside him of just as good land, but not in cultivation or
improved, B's land should be taxed as much as A's.

In cities and towns taxation was to be upon a similar basis. For
instance, when there was a lot, say, one hundred feet by one hundred
feet with improvements upon it worth three hundred thousand dollars, and
there was another lot of the same size and value, the improved lot
should be taxed only sixty thousand more than the unimproved lot; that
is, both lots should be taxed alike, and the improvement on the one
should be assessed at sixty thousand dollars or one-fifth of its actual

This, Dru pointed out, would deter owners from holding unimproved
realty, for the purpose of getting the unearned increment made possible
by the thrift of their neighbors. In the country it would open up land
for cultivation now lying idle, provide homes for more people, cheapen
the cost of living to all, and make possible better schools, better
roads and a better opportunity for the successful cooperative marketing
of products.

In the cities and towns, it would mean a more homogeneous population,
with better streets, better sidewalks, better sewerage, more convenient
churches and cheaper rents and homes. As it was at that time, a poor man
could not buy a home nor rent one near his work, but must needs go to
the outskirts of his town, necessitating loss of time and cost of
transportation, besides sacrificing the obvious comforts and
conveniences of a more compact population.

The Administrator further directed the tax board to work out a graduated
income tax exempting no income whatsoever. Incomes up to one thousand
dollars a year, Dru thought, should bear a merely nominal tax of one-half
of one per cent.; those of from one to two thousand, one per cent.;
those of from two to five thousand, two per cent.; those of from five to
ten thousand, three per cent.; those of from ten to twenty thousand, six
per cent. The tax on incomes of more than twenty thousand dollars a
year, Dru directed, was to be rapidly increased, until a maximum of
seventy per cent. was to be reached on those incomes that were ten
million dollars, or above.

False returns, false swearing, or any subterfuge to defraud the
Government, was to be punished by not less than six months or more than
two years in prison. The board was further instructed to incorporate in
their tax measure, an inheritance tax clause, graduated at the same rate
as in the income tax, and to safeguard the defrauding of the Government
by gifts before death and other devices.



Along with the first board on tax laws, Administrator Dru appointed yet
another commission to deal with another phase of this subject. The
second board was composed of economists and others well versed in
matters relating to the tariff and Internal Revenue, who, broadly
speaking, were instructed to work out a tariff law which would
contemplate the abolishment of the theory of protection as a
governmental policy. A tariff was to be imposed mainly as a supplement
to the other taxes, the revenue from which, it was thought, would be
almost sufficient for the needs of the Government, considering the
economies that were being made.

Dru's father had been an ardent advocate of State rights, and the
Administrator had been reared in that atmosphere; but when he began to
think out such questions for himself, he realized that density of
population and rapid inter-communication afforded by electric and steam
railroads, motors, aeroplanes, telegraphs and telephones were, to all
practical purposes, obliterating State lines and molding the country
into a homogeneous nation.

Therefore, after the Revolution, Dru saw that the time had come for this
trend to assume more definite form, and for the National Government to
take upon itself some of the functions heretofore exclusively within the
jurisdiction of the States. Up to the time of the Revolution a state of
chaos had existed. For instance, laws relating to divorces, franchises,
interstate commerce, sanitation and many other things were different in
each State, and nearly all were inefficient and not conducive to the
general welfare. Administrator Dru therefore concluded that the time had
come when a measure of control of such things should be vested in the
Central Government. He therefore proposed enacting into the general laws
a Federal Incorporation Act, and into his scheme of taxation a franchise
tax that would not be more burdensome than that now imposed by the
States. He also proposed making corporations share with the Government
and States a certain part of their net earnings, public service
corporations to a greater extent than others. Dru's plan contemplated
that either the Government or the State in which the home or
headquarters of any corporation was located was to have representation
upon the boards of such corporation, in order that the interests of the
National, State, or City Government could be protected, and so as to
insure publicity in the event it was needful to correct abuses.

He had incorporated in the Franchise Law the right of Labor to have one
representative upon the boards of corporations and to share a certain
percentage of the earnings above their wages, after a reasonable per
cent, upon the capital had been earned. [Footnote: See WHAT CO-PARTNERSHIP
CAN DO below.] In turn, it was to be obligatory upon them not to strike,
but to submit all grievances to arbitration. The law was to stipulate
that if the business prospered, wages should be high; if times were dull,
they should be reduced.

The people were asked to curb their prejudice against corporations. It
was promised that in the future corporations should be honestly run, and
in the interest of the stockholders and the public. Dru expressed the
hope that their formation would be welcomed rather than discouraged, for
he was sure that under the new law it would be more to the public
advantage to have business conducted by corporations than by individuals
in a private capacity. In the taxation of real estate, the unfair
practice of taxing it at full value when mortgaged and then taxing the
holder of the mortgage, was to be abolished. The same was to be true of
bonded indebtedness on any kind of property. The easy way to do this was
to tax property and not tax the evidence of debt, but Dru preferred the
other method, that of taxing the property, less the debt, and then
taxing the debt wherever found.

His reason for this was that, if bonds or other forms of debt paid no
taxes, it would have a tendency to make investors put money into that
kind of security, even though the interest was correspondingly low, in
order to avoid the trouble of rendering and paying taxes on them. This,
he thought, might keep capital out of other needful enterprises, and
give a glut of money in one direction and a paucity in another. Money
itself was not to be taxed as was then done in so many States.



While the boards and commissions appointed by Administrator Dru were
working out new tax, tariff and revenue laws, establishing the judiciary
and legal machinery on a new basis and revising the general law, it was
necessary that the financial system of the country also should be
reformed. Dru and his advisers saw the difficulties of attacking this
most intricate question, but with the advice and assistance of a
commission appointed for that purpose, they began the formulation of a
new banking law, affording a flexible currency, bottomed largely upon
commercial assets, the real wealth of the nation, instead of upon debt,
as formerly.

This measure was based upon the English, French and German plans, its
authors taking the best from each and making the whole conform to
American needs and conditions. Dru regarded this as one of his most
pressing reforms, for he hoped that it would not only prevent panics, as
formerly, but that its final construction would completely destroy the
credit trust, the greatest, the most far reaching and, under evil
direction, the most pernicious trust of all.

While in this connection, as well as all others, he was insistent that
business should be honestly conducted, yet it was his purpose to throw
all possible safeguards around it. In the past it had been not only
harassed by a monetary system that was a mere patchwork affair and
entirely inadequate to the needs of the times, but it had been

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Online LibraryEdward Mandell HousePhilip Dru Administrator : a Story of Tomorrow 1920 - 1935 → online text (page 8 of 14)