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Privilege, Poverty, and Liberalism
Charles R. Eckert
[A speech delivered in the U.S. House of
Representatives, 5 May 1938]
Mr. Speaker, the New Deal epitomizes the liberal movement in America.
The groundwork was prepared by thousands of earnest and sincere
friends of the cause of social justice throughout the years. Until
1933 it was without form, but under the dynamic leadership of
President Roosevelt the movement began to take definite form. It was
then that privilege and its emissaries began to appreciate for the
first time the formidable aspects of the movement.
The immediate task of the New Deal was to arrest the ravages of the
most disturbing, devastating, and pernicious depression in the
Nation's history. All was well while this phase of the New Deal was
being developed. The brilliant leadership of the President caught the
imagination of the country and the stimulating influences that
followed in the wake of the march of the New Deal was acclaimed with
shouts of approval by friends and foes alike. If finis could have been
written to the end of this chapter, the glory of the New Deal would
have gone down in history undimmed and with flying colors. And a less
courageous leader than President Roosevelt might have considered the
thought and let the world go hang.
But not so with the President. There was a great task ahead. To stop
the ravages of the depression was only a part of the job. The social
structure needs to be reformed in order that economic liberty and
permanent prosperity may be established. Besides, this was the promise
of the Democratic Party in 1932, at whose hands Franklin D. Roosevelt
received the nomination for the Presidency. The Democratic Party
solemnly declared that the best efforts of the party and the nominees
would be put forth to reform the economic system in the spirit of the
doctrine "Equal rights to all, special privileges to none,"
for the purpose of establishing economic liberty.
Encouraged by the enthusiastic reception the work of the
extraordinary session of the Seventy-third Congress received by the
Nation, President Roosevelt proceeded undaunted and unabashed toward
the development of the New Deal, with an eye single to permanent
recovery. This, in the nature of things, brought the President and his
party into head-on collision with the powerful and mighty in
monopolized business and finance, and henceforth the war was on. At
the beginning, resentment was only smoldering, but as the New Deal
marched on to new attacks against the evils and iniquities of
privilege, the more ferocious and fiery became the emissaries of
privilege, so that now the war is raging fast and furious all along
the battle front.
Liberalism dare not blink this fact. Liberalism is approaching not
only the bitterest struggle but the most vital in its history, and
therefore it behooves the liberals to take stock, commune together,
examine the New Deal, locate its weaknesses, remove what is unsound
and reinforce with what is sound.
First of all, the fact must be recognized that liberalism is not a
fixed and definite quality. The structure of liberalism is in the
making. It is a never-ending process and its steady growth and
strength depend upon the accuracy with which the underlying principles
of true democracy and free society will be respected in its
development. If false and spurious creeds and faiths creep into the
philosophy of liberalism, its vitality will be weakened and in due
course bring disaster to the cause. A New Deal half false and half
true cannot stand. It must be made true - true in the sense that the
natural laws governing human society must be religiously obeyed.
Albert J. Nock, in a recent issue of the Atlantic Monthly, calls
attention to the great truth that natural law operates in the realm of
economics as inexorably as in the realm of physics. This fact as yet
is not accepted wholly by the liberal forces, but the time has come
when it must be accepted if the Nation is to escape the pitfalls that
befell the nations of antiquity because of their obstinacy and
stupidity. The New Deal will be able to withstand the attacks of its
foes only if the liberal forces will place themselves on sure and
solid ground.
Much that has been done in the name of the New Deal is fine. Its
program of relief has much to recommend it. Its reforms in behalf of
human welfare, as embodied in the social-security program with its
old-age benefits, unemployment insurance, mothers' aid, youth
assistance, and so forth, is not only of inestimable value but adds
that spirit of humanity that is so essential in the struggle for human
right and economic justice. Of course, the relief program must, as
time goes on and as rapidly as conditions permit, be reformed and
improved so that the benefits of old-age pensions and the rest will be
shared and enjoyed by all the people in such degree and in such
fashion as will give a full measure of comfort and satisfaction.
But the true strength of the New Deal lies in its moral and economic
soundness; therefore every measure incorporated and made a part of the
New Deal must withstand the acid test of good morals and sound
economics. The forces of liberalism will do well to accept the counsel
of Woodrow Wilson, to make sure of their ground, and besides making
sure of their ground, it is also important that liberals exercise a
high degree of patience. The liberal movement, as stated before, is
not a static thing, but a faith, a belief, a religion as it were, that
is as endless as time itself. Therefore the end sought is not the
vital thing, but the sure knowledge and faith that the liberal
movement is on the right road and going in the right direction. To
this purpose liberals are enjoined to consider with prayerful
meditation Henry George's observation as to the source and growth of
true social reforms. He said:
"Social reforms are not secured by noise and
shouting, by complaints and denunciations, by the formation of
parties, or the making of revolutions, but by the awakening of
thought, by the progress of ideas. Until there is correct thinking
there cannot be right action, and when there is correct thought
right action will follow."
Under leave to extend my remarks there is included the following
letter addressed to the Honorable Harold L. Ickes, Secretary of the
Interior:
April 27, 1938.
Hon. Harold L. Ickes,
Department of the Interior, Washington, D. C.
My Dear Mr. Ickes: I was very much interested in your free and
frank discussion of the trend of politics Tuesday evening, April
19, before a group of House Members. I share your deep concern
over the fate of the liberal movement in America. Is it to be
eclipsed by the forces of reaction? Wise action and intelligent
leadership are needed in the immediate future. Woodrow Wilson is
authority for the statement that -
"All that America needs is a new and sincere
thought in politics, distinctly, coherently, and boldly
uttered, by men who are sure of their ground."
This is a bit of counsel that the liberal forces of America
might contemplate with profit. They must make sure and certain
of their ground. The great danger to the liberal movement lies
in the lack of understanding. It is not enough that liberals
shout liberalism, for liberalism is a many-sided thing. There
are liberals and liberals, but the liberals that fit into the
American scheme of things must chart a course and propose a
program that will conform to the fundamental principles of true
democracy and free society.
Quoting Woodrow Wilson again, as to the reason why America was
set up, he said:
"The reason that America was set up was that
she might be different from all the nations of the world is
this: That the strong could not put the weak to the wall; that
the strong could not prevent the weak from entering the race.
America stands for opportunity. America stands for a free
field and no favors."
And the Democratic Party, in its declaration of principles in
1932, declared:
"In conclusion, to accomplish these purposes
and to recover economic liberty, we pledge the nominees of
this convention the best efforts of a great party whose
founder announced the doctrine which guides us now in the hour
of our country's need. 'Equal rights to all, special
privileges to none'."
Here, in concise and popular phrase, is set forth the reason
for America's birth and the foundation upon which her
institutions rest. The genesis of America and the reason of her
being are guideposts by which the course of the liberal movement
must be charted. Liberals cannot afford to be swayed or diverted
from the path outlined by the fundamental principles of true
democracy.
After the adjournment of the extraordinary session of the
Seventy-third Congress, I addressed a letter to President
Roosevelt, felicitating him on his superb leadership, and
incidentally commented as follows:
"Much of the legislation enacted by the
Seventy-third Congress does not square with the democratic
philosophy of government. Some of the most important and
far-reaching legislation enacted is in direct conflict with
the fundamental principles of true democracy. But this, we
have a right to believe, was done because of the present
condition of the body politic. The body politic is sick,
desperately sick, and as with the human body, when strength is
impaired by reason of illness, the freedom of the patient is
restricted for a time so as to allow Nature to work a
recovery.
"It is in this sense that the restrictions imposed on
the social and industrial order are justified. The task before
the administration when it entered upon its duties March 4,
1933, was to avoid utter and complete disaster, and therefore
every known means to avoid the impending cataclysm had to be
employed. To meet the emergency, Congress and the
administration can justify their course, and Democrats can
consistently give it wholehearted approval and support.
"But merely to avoid disaster is not enough. We must
build for permanent recovery. This is a big task and will
require vision, courage, faith, and intelligence of a high
order. It will lead over paths as yet untrod. But they must be
traversed. To halt and hesitate and doubt spells ruin. Neither
the Democratic Party nor the administration can afford to
fail. The consequence would be too frightful to contemplate."
On July 2, 1935, in my remarks in the House, I said: "The
New Deal, in its deeper meaning, is a long-range program. It is
designed to serve a dual purpose: First, temporary recovery; and
second, permanent social justice. Much has been done in the name
of the New Deal for temporary recovery. Some steps have been
taken looking toward permanent recovery and others are in
contemplation. That every measure proposed either for temporary
relief or permanent recovery is sound is not to be expected. No
one pretends that the New Deal is perfect. Attempts will be made
to achieve its purpose that will seem awkward, futile, and
illogical. It no doubt contains features that are undemocratic.
These, by trial and error, can be discovered and eliminated, and
only those in harmony with sound economics and genuine democracy
retained. This is the task ahead for the New Deal."
In the letter to President Roosevelt I further said: "In
your speech, The Philosophy of Government, delivered before the
Commonwealth Club, San Francisco, September 23, 1932, you stated
'Government includes the art of formulating a policy and using
the political technique to attain so much of that policy as will
receive general support; persuading, leading, sacrificing,
teaching always, because the greatest duty of a statesman is to
educate.'
"But in teaching, persuading, leading, we must be sure of
our ground. There is in social affairs a natural order, and it
is the duty of the statesman to discover and follow it. Not to
discern clearly and distinctly the natural order is fraught with
danger, for as has been truly said, 'If the blind lead the
blind, both will fall into the ditch.' When the natural order is
clearly perceived, the task of steering the Ship of State is as
sure and certain and definite as the control of an ocean
greyhound under the guiding hand of a skilled and trained
navigator.
"The program set up by the administration in the present
crisis may be likened to the work of a certain railroad company
that recently erected a bridge across the Ohio River at
Steubenville, Ohio. The new bridge was built on the foundations
of the old, and during the entire period of the construction of
the new bridge not a single train was delayed, nor traffic
interrupted in any way. The old bridge and the new in the course
of construction were so flanked with temporary trestles that
both the old and the new construction lost their semblance as
bridges. But after the temporary trestles and the old bridge
were removed, the structure was there in all its beauty,
grandeur, and strength.
"And so let us hope that the work of the administration
thus far is but a temporary device set up for use while the
permanent structure of social justice is being fashioned and
molded and constructed in harmony with the great order of
things.
" 'There is in human affairs one order which is the best.
That order is not always the order which exists, but it is the
order which should exist for the greatest good of humanity. God
knows it and wills it. Man's duty is to discover and establish
it.'
"The New Deal, in its deeper aspect, is designed to end
the exploitation of the many by the few; to permanently weed out
and eliminate the parasites and overprivileged; to forever
silence the threnody of unrequited toil; to bring equal
opportunity and economic freedom Ito all; and to make America in
fact what it is in name, a land of 'equal rights to all, special
privileges to none'. "
If the liberal movement is to fulfill its mission and bring to
pass that measure of freedom, opportunity, and prosperity to the
people of America that is due them, the New Deal in its deeper
aspect must be amplified, developed, and perfected. It is not
enough to provide relief to the unemployed and ease the pain and
anguish of the victims of a disordered economic system. The
system must be reformed and readjusted to fit present economic
conditions and assure to the people the rights and opportunities
for which America was set up.
The life of the liberal movement in America depends upon how
well this task will be performed, and to this end a necessary
first step is the recognition of the eternal principles
underlying social justice and free society. Just as the New
Deal, in its unfoldment, keeps step with these principles, to
that extent and to that degree will it be successful. To the
extent that it fails, there will be failure.
The liberal forces of America may well heed the doctrine
announced by the founder of a great political party, "Equal
rights to all, special privileges to none."
Privilege, the mother of monopoly, is the major evil in our
economic system, and, therefore, the liberal forces must make
sure that none enjoy favors, for so long as privileges or favors
are enjoyed by some there cannot be social justice or permanent
prosperity. It is privilege that enables the few to ride on the
backs of the many. Thomas Jefferson said:
"The mass of mankind has not been born with
saddles on its backs, nor a favored few booted and spurred to
ride them by the grace of God."
There are those, however, who, by legal legerdemain, are booted
and spurred, that are riding the mass of mankind. But in every
instance the boots and spurs are rooted in privilege. Destroy
privilege and the riders will automatically be unhorsed. The
problem confronting the liberal movement therefore is, How can
the booted and spurred, those who enjoy special privileges, be
unhorsed? They will not volunteer to dismount, for it still
remains true, as Tolstoy said:
"The privileged are willing to do everything
for the masses excepting the one thing needful; and that is,
to get off their backs."
The magnitude of the evil and injustice that privilege exerts
in human society may be appreciated, in part at least, when it
is remembered that privilege exacts from labor and capital
upward of one-third of their entire production; that is to say,
if the national income is sixty billions annually, upward of
twenty billions are appropriated by privilege. But this is not
all. Labor and capital are also called upon to contribute, out
of the remaining forty billions or less, approximately fifteen
billions annually in the form of taxes for the support of local,
State, and Federal Governments. Between the exactions of
privilege, on the one hand, as tribute, and the exactions of
Government, on the other, as taxes, labor and capital are
ground, as it were, between the upper and the nether millstone
of a maladjusted economy system, grinding labor into poverty and
driving capital into despair.
In the face of such a condition, why should there be so much
confusion and ignorance as to the major cause of poverty and
unemployment?
The problem resolves itself into a matter of simple arithmetic.
The whole is no larger than the sum of its parts, and the
portion of the national income taken by privilege as tribute and
by Government as taxes leaves less than one-half of the entire
product to be divided between the workers and those who furnish
the tools. Under such a scheme of things, how, may we ask, can
there be prosperity? He who runs ought to be able to see why
labor is illy paid and capital fearful to venture out of its
hiding places.
Let it be stated over and over again, that privilege is the
troublemaker - the root cause of our economic woes. Privilege
neither toils nor spins, yet its beneficiaries fare sumptuously.
Legal privilege may be defined as "an immunity or an
exemption conferred by special grant in derogation of common
right," or, in Blackstone's phrase, "A branch of the
King's prerogative subsisting in the hands of the subject."
There are many types of legal privileges. The major ones,
however, may be designated as follows:
The privileges enjoyed by public-utility corporations.
The privileges enjoyed by the banking fraternity.
The privileges enjoyed by the owners of the natural resources
and valuable land sites.
The privileges enjoyed by the beneficiaries of the tariff and
other taxing privileges.
The privileges enjoyed by the holders of patent rights.
The abolition of privilege in private hands is a major task
confronting the liberal movement in America. How? What steps can
be taken to achieve this end? Here is the crux of the problem.
While the task may seem difficult and puzzling, yet it is not
unsolvable. First of all, there must be an intelligent analysis
of the various types of privilege, to the end that the source
from which privilege draws its strength may be ascertained. Let
us, for example, consider the public-utility problem.
A great cry is heard these days about a feud between public
utilities and the Federal Government. Criticisms emanate from
many sources to the effect that the Federal Government's
attitude toward public utilities is an unwarranted interference
with private business and a threat against private property.
These criticisms are due to the fact that great confusion exists
in the public mind as to the exact status of a public utility.
A public utility is a public enterprise. It is engaged in
rendering public services, whether in the field of
transportation, communication, or elsewhere, and performing a
governmental function. The public character of a public utility
is due to the fact that any agency engaged in public service is
clothed with sovereignty -the power of the whole people
functioning as a unit. Here is the source of the power that
privilege exerts in the exploitation of the masses. The fact
that those engaged in any public-utility service are enjoying
the power of sovereignty must be kept clearly in mind, for it is
this feature of the utility business that differentiates public
utilities from private business.
The Government may very properly grant to natural or artificial
persons the right to engage in the public-utility business. This
has been done time and time again in the development of the
various public utilities. But in all such cases, as has been
well said by Jeremiah Black, eminent jurist and statesman:
"The proprietary right remains in the
Government and held in trust for use of all the people."
This does not imply that there must be Government ownership or
that the capital invested in public utilities may be
confiscated. On the contrary, legitimate investments in public
utilities and public-utility corporators are entitled to the
same protection and security as investments in private
enterprise. There is no room for debate on this point. The
investments, however, must be legitimate and limited to the
actual value of the property used in the conduct of the
business.
President Roosevelt, in his book Looking Forward, points out
clearly the privileged character of public utilities and the
legal principle applicable to their control and regulation by
Government. President Roosevelt says:
"Let us go back to the beginning of the
subject. What is a public utility? Let me take you back 300
years to King James of England. … It was in the days when
the English were settling Jamestown that a public outcry arose
in England by travelers who sought to cross the deeper streams
by means of ferryboats. Obviously these ferries, which are
needed to connect the highway on one side with the highway on
the other, were limited to specific points. They were,
therefore, monopolistic in their nature.
"These ferryboat operators, because of their privileged
position, had the chance to charge whatever the traffic would
bear, and bad service and high rates had the effect of forcing
much trade and travel into long detours or to the danger of
attempting to ford the streams. The greed and avarice of some
of these ferryboat owners remained a public issue for many
years until in the days of Lord Hale a statement of public
policy was set forth by the great chief justice.
"The law lord said that the ferryman's business was
quite different from other businesses, that the ferry business
was, in fact, vested with a public character, that to charge
excessive rates was to set up obstacles to public use, and
that the rendering of good service was a necessary and public
responsibility.
" 'Each ferry,' said Lord Hale, 'ought to be under a
public regulation, to wit, that it give attendance at due
time, a boat in due order, and take but reasonable toll.'
"In those simple words Lord Hale laid down a standard
which, in theory at least, has been the definition of common
law with respect to the authority of government over public
utilities from that day to this.
"With the advance of civilization, many other
necessities of a monopolistic character have been added to the
list of public utilities -such necessities as railroads,
street railways, pipe lines, and the distribution of gas and
electricity. This principle was accepted, firmly established,
and became a basic part of our theory of government."
In this statement of President Roosevelt there is set forth the
guidepost by which the liberal forces may chart their course
with reference to the public-utility problem. If the policy
outlined therein will be strictly observed by the liberal forces
in the treatment of the public-utility problem, they will be on
solid and impregnable ground.
Inasmuch as the privileged character of a public utility is
well established in principle, it ought to be a simple matter to
draw a line of demarcation between public business and private
business, and this likewise is a task for the liberal forces, as
it is vital to the success of the liberal movement that the
activity of government be confined and limited to its legitimate
function.
Let the fact be boldly and distinctly uttered that, if private
enterprise enters the public-utility field, it is engaging in a
public business and performing a government function, and,
because of this fact, government not only has the right but it
is in duty bound to regulate and control private utilities
operated by natural or artificial persons and, if necessary,
assume its normal and natural function by rendering utility
services to the people directly. This becomes necessary for the
reason that those in fields of endeavor where competition is
impossible the people as a unit, through their government, must
assume control of operation. Louis F. Post, in his Ethics of
Democracy, truly says:
"Where monopoly is inevitable, the service
which is subject to it must be assumed by the public to the
end that in other vocations competition may be freed. Private
monopoly in anything tends to destroy competition in all
things."
Therefore it is the duty of the liberal forces to declare
boldly and distinctly that government will not invade business
that is competitive in character, for such business is not
clothed with the power of sovereignty and therefore private
business. All competitive enterprises may well be left to the
natural law of competition for control and regulation. Much of
the discord and misunderstanding between government and business
today is due to the fact that public business and private
business are subjects of control and regulation indiscriminately
on the part of government without regard to their public or
private character.
Failure to fix a line of demarcation between private business
and public business has resulted in such confusion in the
business world and brought upon private business such a
multitude of regulations, restrictions, and taxes that it is
extremely difficult for private business to function and
survive.
One of the greatest services that the liberal movement could
render to the people of America would be to set itself
resolutely to the task of unshackling private business and
removing the excessive tax load under which it is now
staggering. In the effort to free private business from its
present shackles and tax burdens it is necessary that the
liberal movement consider with intelligence and understanding
the land question and the part that it plays in our national
economy. Philip Snowden, former British Chancelor of the
Exchequer, said:
"There is no economic or social question that
is not at bottom a land question. It is from the land that all
human needs are supplied. The root cause of the world's
economic distress is surely obvious to every man who has eyes
to see and a brain to understand. So long as land is a
monopoly and men are denied equal access to it to apply their
labor to its uses, poverty and unemployment will exist."
Dr. John Dewey, in discussing our economic problem, said:
"One of our great national weaknesses is
speculation. Only a few realize the extent to which
speculation in land is the source of many troubles of the
farmer, the part it has played in loading banks and insurance
companies with frozen assets and compelling the closing of
thousands of banks; nor how high rents, the unpayable
mortgages, and the slums of the cities are connected with
speculation in land values. All authorities on public works
hold that the most fruitful field for them is slum clearance
and better housing. Yet only a few seem to realize that with
our present situation this improvement will put a bonus in the
pockets of landlords, and the land speculator will be the one
to profit financially - for, after all, buildings are built on
land."
In order that the evils of land monopoly as pointed out by
Philip Snowden and Dr. Dewey may be abolished and private
business unshackled and its tax burdens removed, it is important
that the Government's fiscal policy be in accord with sound
canons of taxation. Dr. Dewey, in reference to this phase of our
economic problem, said:
"So with taxation. There are all sorts of
tinkerings going on, but the tinkerers and patchers shut their
eyes to the fact that the socially produced annual value of
land - not of the improvements, but of ground-rent value - is
many billion dollars, and that its appropriation by those who
create it, the community, would at once relieve the tax burden
and ultimately would solve the tax problem."
A sane and rational system of taxation would not only solve the
tax problem but would open the way for the equitable
distribution of the national income and eliminate the major
portion of our economic ills.
It is obvious to those who have given the problem of
unemployment and poverty serious thought that the products of
industry are divided unjustly, resulting in an unbalanced
economy, with little or no purchasing power in the hands of the
masses. And so long as privilege, through its power of monopoly,
exacts billions from the workers and those who furnish the tools
- labor and capital - on the one hand, and government collects
billions in the form of taxes on the other, there can be no
solution of the problem of poverty and unemployment.
In order that the liberal forces of America may retain the
ground gained and move on to greater and more substantial
achievements they must attack courageously and unflinchingly,
yet with intelligence and understanding, the problem of the
equitable distribution of wealth, and the first and major task
in the consideration of this problem is the abolition of
privilege in private hands.
One might continue to discuss further the problem of privilege
and monopoly, but enough has been said to show not only the
magnitude of the task but the course that must be pursued if the
future of America shall be directed by the liberal forces.
Appreciating keenly the high character of your public service,
and with kindest personal regards, I remain, Yours very
sincerely,
Charles R. Eckert
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