"Why the State Should Administer the
Central Valley Project"
BY
HARRISON S. ROBINSON
President
CALIFORNIA STATE CHAMBER OF COMMERCE
*
Address delivered before the Sacramento Valley Council of the California State
Chamber of Commerce.
SACRAMENTO, CALIFORNIA SEPTEMBER 14, 1945
"Why the State Should Administer the Central Valley Project"
By
HARRISON
s.
ROBINSONThe Central Valley Project in California was brought into being by the long cycle of dry years in the 1920's. In Tulare, Kern and Kings Counties thousands of acres of farms were abandoned. Lower- ing water tables threatened other acreages. The Leg- islature appropriated money for a survey of the State's water resources. In 1924, the funds for this Project ran short and the State Chamber raised about 100 thousand dollars of supplemental monies by private subscription. The Legislature afterwards repaid this money. A State water plan was developed by the State Engineer, then and in subsequent years, which contained most of the elements which now make up the Central Valley Project.
Reclamation Bureau Enters Project In 1933, 170 million dollars of State Revenue Bonds were authorized to· finance the Project. They could not be sold in the depth of the depression.
Federal funds to start construction were allocated from a Federal Emergency Relief appropriation in 1935. Later in the same year, the Project was ap- proved as a United States Bureau of Reclamation
. Project. Its completed cost for all purposes- aid to
navigation, flood control, irrigation, salinity control in the Delta, hydro-electric power-is now estimated at 360 million dollars. The reasons for the increased cost are a higher Shasta Dam, more power facilities, and the rising cost of labor and materials.
In 1936, the then Chief Engineer of the Bureau of Reclamation stated at a Senate Committee hearing that the funds which Congress would appropriate for the Central Valley Project would be repaid in accordance with the Reclamation Laws (i.e. forty annual pay-
ments) by contract with the State Constituted Water Authority.
State Excluded from Project
References to mutuality of Federal and State opera- tion were not dropped until the 1942 hearings. Only then was an intention evidenced by the Bureau of Re- clamation to remove the State from the Central Valley picture.
Social and Economic Issues Involved The Central Valley Project potentially is more than a plan for irrigation, flood and salinity control, navi- gation and the generation of electric power. Wrapped
up in the same package is the power to influence greatly, sometimes to determine, where and how large numbers of the inhabitants of the great valleys of California shall live, and whether business therein shall be privately or publicly owned and privately or publicly operated; as well as the power to influence, if not to determine, who shall be the owners of those agricultural lands in the valleys, the usefulness of which depends on irrigation.
These are the types of social and economic issues upon which men's minds will often be focused as the
years ahead of us unfold. '
The Pattern of Federal Regional Operations It would be blindness not to see the developing pattern of Federal regional operations where great sums of Federal money have been put into flood con- trol, irrigation and power projects. It is the setting up of a Federal bureau as the richest ana most powerful entity in the region. Once in the saddle and fully under way, it is the very nature of tremendous cen- tralized power to become authoritarian, whether that power resides in the management of a private or a public corporation. This is particularly the case where the wielders of such centralized power are fairly well insulated from effective supervision or criticism. In the Federal regional set-ups they are so insulated, un- less the Administrator himself wills otherwise.
It requires little imagination to foresee the Admin- istrator of a future Central Valley Authority using his position and power to override the social and eco- nomic views of a majority of the citizens of California.
Popular Consent Being Avoided
The people of a commonwealth are entitled to change their social and economic systems. It has been done many times and it will be done again and again. But if such changes are to be made in a demo- cratic country, they should be by popular consent.
That means that the proponents of social and eco- nomic change candidly state their purposes; that all the material facts of the case are brought out into the open; that there is full discussion of the issues, and that the final decision is made by the constitutional expression of the will of a clear majority of the citi- zens.
A sample of this procedure occurred last July when the Labor Party in Great Britain asked the voters for approval of its program to nationalize the Bank of England, the coal mines, electric power, means of in- land transport and the steel industry. They got it.
Their spokesmen say that this program represents the first step, and that later on, if the voters still support them, the Party will go on to nationalize other indus- ries and to establish public ownership of the land.
They say, however, that there will be no confiscation;
that they propose to pay market value for property so acquired by the nation;, that they are opposed to any attempt to injure the savings of the "little man".
One does not have to be a Socialist to describe these procedures as impeccable in terms of good conduct under and in accordance with the laws and customs of Great Britain.
In the United States, however, too many of the proponents of basic economic change are either con- fused or uncandid. They declare that they are striving to preserve capitalism and to strengthen the private enterprise system, at the very times when they advo- cate or actually take steps that are part and parcel of the program of Socialism. They are to be blamed, not for wanting Socialism but for being either stupid or deceitful about what they want.
Public vs. Private Ownership
"The private ownership of the means of production is Capitalism. The public ownership of the means of production is Sorialism." This definition ought to be correct, because I quote it from an article by Harold
J. Laski, Chairman of the Executive Committee of the British Labor Party, published on August 26, 1945.
The United States has long had small segments of Socialism in its economic system. Great Britain is apparently about to find out whether a definitely so- cialistic State can also be a democratic State. Today, no one knows for certain.
In our country, it is well known that plans have been worked out, not only in general terms but in much detail, for setting up a number of regional units, the total of which would include all the territory of continental United States, the pattern and administra- tion of which would, initially at least, follow those of the Tennessee Valley Authority.
Why Was TVA?
In fact, the pattern and precedent of all "regional plans" is TVA. And why was TVA? Principally to introduce manufacturing and improved agriculture, concurrently with improved health and education, into the most backward region in our country; in brief, to attempt to raise the often deplorably low standard of living of the region.
Because seven states were involved, the plan of a Federal administrative set-up was developed, using the familiar formula of improving navigation and providing flood control. In this particular case, there was also in being a federally-owned nitrate plant built during W odd War I.
Why "Nationalize" California's Valleys?
One of the supporting arguments for such regional plans is that the country should be divided, for pur- poses of administration and development, into logical regional units. Well, the valleys of the Sacramento and the San Joaquin, and their rivers, form a logical regional unit without crossing any state line whatso- ever and without need or excuse for setting up a Fed- eral regional set-up.
The Sacramento and San J oaquin Valleys are not backward areas, menacing the Nation with unhealthy and illiterate inhabitants. Nor are the people unin- formed as to how to farm. Nor are they lacking in industrial development where there was any justifica- tion for it. As to electric power, the Valleys are well
supplied and the rates, fixed by government itself, are favorable to the consumer.
Why, then, the fever to start a "nationalization" of these Valleys? Why attempt to proceed toward na- tionalization just for its own sake, when other justi- fication is so meager.
At least a part of the answer is that it is the law of the life of Federal bureaus to strive for more and more power; that some earnest, eager people have no idea where they are really going, and that others seek to bring about a socialist State, not with candor and by above-board means, as did the British Labor Party, but by sly device and indirection - a technique of which we have seen altogether too much in the Fed- eral Government.
Change Must Come By Democratic Processes If there are people in California, or if there are people in some community in our State, who want to take over certain means of production and have them publicly owned and operated, let them raise the issue as did the British Labor Party last July. If the limit on farms in irrigated areas is to be 160 acres or 40 acres or 10 acres, let the change be effected by demo- cratic procedures, and let the displaced owners be reasonably compensated. But let us not tolerate any Federal Bureau using the powers and the money of the United States Government to lure or scheme our State into situations vitally affecting our social and economic structure without the approval of our citi- zens, given after the issues are cleady defined, openly debated, and regularly voted upon.
California Must Direct the Central Valley Project
The principal reason for insisting that the irrigation and power phases of the Central Valley Project shall be directed by California and not Washington is to make sure that issues affecting our social and economic system will be determined by the citizens of California through democratic processes, and not by the Board of Directors of a Federal Government corporation or by a proconsul from Washington.
Apart from the support of those who seek as a final objective the public ownership of the means of pro- duction, some of the most earnest support of Federal control of the irrigation and power phases of the
Central Valley Project comes from those who hope ~o see the Federal Government spend hundreds of mIl- lions of dollars in the Central Valley, and never get back more than a small part of it.
Someone in authority in the Bureau of Reclamat~on must have been conscious of the lure of spendmg what looks like somebody else's money when, a~ a meeting in Sacramento recently, its rep~e~entat1ve waved before his audience another 570 millton dol- lars, making nearly one billion in all for the Central Valley Project.
This action of the representative of the Bur~au of Reclamation makes crystal clear that the possessiOn of outstanding engineering skill (which the ~ureau has) does not mean that the Bureau has baslC .economl.c good sense or is a good make.r of public pollcy. Call-
fornia is vitally concerned wIth both of thes.e factors in connection with the Central Valley Project, and Washington is three thousand geographical miles, and often three hundred thousand thought miles, away.
The National Debt and the Standard of Living The national debt will soon top 300 million dollars, or about 8 thousand dollars for each bread-winner in the Nation. Californians enjoy per capita incomes about 40 per cent above the national ~ve,rage, and therefore, with 6.6 per cent of the Nahon s P?pula- tion this State contributes 10.4 per' cent of the Nation's internal revenue collections. We in Cali- fornia, therefore, are obligated for and will pay a proportionately larger share of this and any f~t~re debt which may be incurred for the purpose of .ralSlng living standards. We should have a greater mterest than the people of any other state in the question of whether or not these Federal projects are a sound in- vestment.
Remember that all these Regional Authorities are supposedly justified on the ground that they will help to create a better standard of living. There is a close relationshi p between the national debt and ~he n~
tional standard of living. How close that relat1ons~lp is appears on a consideration of the three ways wIth which the debt can be dealt.
The national debt can be repudiated. Then every- one will go broke and standards of living will almost disappear. The national debt can be cancelled, wholly
or in part, by inflation. Then all standards of living will go down, sometimes away down, because under inflation rarely, if ever, does the increase in incomes of the people catch up with the increase in the cost of everything. On the other hand, the national debt can be reduced to reasonable proportions by adding nothing to it and by making substantial payments on the existing principal, and still the national standards of living can gradually be raised.
There is no way of raising standards of living that does not include working hard and paying one's bills.
No desirable standard of living will long prevail un- less integrity is a characteristic of a people who enjoy it. The integrity of a people is not handed down from Government bureaus. It comes from the grass roots or not at all.
Why Surrender State Control?
I suggest that the course of action of people with good common sense would be to get, as soon as possi- ble' water from the 360 million dollar Project onto the farm lands of the upper San Joaquin, which was the basic and compelling reason for the entire Project;
to make the highest use of the developed power; and then, to get the "feel" of how things are going before starting to spend 527 million dollars on additional works in the Central Valley alone.
I suggest that such people would not be parties to spending Federal funds in any manner which they could not justify to a group of reasonable taxpayers.
Seeing a greater and greater picture, planning big- ger and better-no wet blanket should be thrown over such vision and thinking and study. But men who must justify themselves and their works in a world of realities, wait to learn how an initial project works be- fore doubling or trebling it.
No one is as much interested in the prosperity and the standard of living in the Central Valleys as are the people and the Government of the State of Cali- fornia. Certainly in few, if any, parts of the world has so good a job been done in these respects as in California, and the job has been done in the demo- cratic way. Honestly, we have not yet seen anyone who can do a better job and make it stick. There is no reason why the people of California and their Govern- ment &hould not continue at their appointed task, from the Sierras to the Pacific and from the Oregon line to the Mexican Border.
STATEWIDE COMMITTE ON UTILIZATION AND CONTROL
OF WATER RESOURCES
C. F. WENTE, Chairman WILLIAM A. SMITH, Vice-Chairman
W. E. STEWART, Secretary
PAUL BAILEY E11gineer Santa Ana W. R. BAILEY
Attorney Visalia
c. W. BRADBURY Chairman Board of Supervisors
Santa Barbara KARL BRUECK San Joaquin Flood Control
Association Stockton
A. E. CHANDLER Attorney San Francisco C. D. CONWAY Engineer
Los Molhtos Land Company Los Molinos
PETER COOK, Jr.
President
California Central Valley Flood Control Association Rio Vista
c. W. DETERDING, Jr.
Sacramento County Executive Sacramento
STEPHEN DOWNEY Attorney
Sacramento
WILLIAM DURBROW Ma"nager . Nevada Irrigation District Grass Valley
JAMES FAUVER Chairman
Tulare County Water Comm.
Visalia
A. R. GALLAWAY, Jr.
Chairman
State Reclamation Board Sacramento
P. A. GORDON President
Fresno Irrigation District Fresno
H. L. HAEHL Enf{ineer San Francisco
S. T. HARDING
Prof. of Irrigation and Chmn.
Division of Civil Engil1eerinf{
Berk.eley
R. E. HARTLEY Englneer
Oakdale Irrigation Dist. Ass'n.
Oakdale
COL. H. E. HEDGER L. A. County Flood Control
District .
Los Angeles
G. L. HENDERSON Kern County Land Company Bakersfield
J. H. HOWARD General Counsel
Metropolitan Water District Los Angeles
S. H. JONES Napa
CHARLES KAUPKE Wafer Master
Kings River Water Association Fresno
G. A. KENNEDY Supervisor Sonoma County Sebastopol
MILTON KIDD President
California Irrigation Districts Association
Modesto
BARR Y T. LLOYD Ellgi1terr
Hl'ich-Hctchy Water Supply Power f5 Utilities Eng. Bureau Sa1/. Francisco
G.D.NEWTON President
Redditlg Chamber of Commerce Redding
HENRY OHM Member
State Reclamation Board Stockton
W. J. O'LEAR Y Southern Pacific Company Valuation Department San Francisco
A. J. OTTEM Executive Secretary California Central Valley
Flood Control Association Sacramento
CHARLES L. PIODA Salinas
J. J. PRENDERGAST
Brar Valley Mutual Waler Co.
ReJlands
HON. IRWIN QUINN State Senator
Eureka
CHAS. H. SEGERSTROM President
Nevada-Massachusetts Co., Inc.
Sonora
JAMES E. SHELTON Security-First National Bank Los Angeles
A. T. SPENCER Agriculturist Gerber
PHIL D. SWING Attorney
San Diego Co. Water Authority San Diego
MARSHALL WALLACE County Surveyor, Sonoma Co.
Santa Rosa
OFFICERS AND DIRECTORS
CALIFORNIA STATE CHAMBER OF COMMERCE
Fiscal Year 1945-46 HARRISON S. ROBINSON .
ASA V. CALL HARRY A. MITCHELL JAMES E. SHELTON . PRESTON HOTCHKIS . JAMES MUSSATTI .
President
First Vice-President Second Vice-President Third Vice-President Tfeasurer
General Manager DIRECTORS
BAMERT, I.OREN C. lone
CALL, ASA V . . COLLIER, H. D. COOK, PETER, JR ..
DOHERTY, FRANK P ..
EAMES, ALFRED W . . EHRMAN, SIDNEY M.
FALK, ADRIEN J . . FRISSELLE, S. PARKER GARLAND, WILLIAM M .. GROSS, ROBERT E.
HALE, R. B.
HOTCHKIS, PRESTON.
HOTCHKISS, HAL G ..
HUMMEL, E. C. . KNOWLAND, JOSEPH R ..
KOSTER, FREDERICK J.
LUNDBERG, ALFRED J.
MATTEI, A. C. . McFADDEN, A. J ..
MERCIER, A. T.
MITCHELL, HARRY A.
MULLENDORE, W. C.
O'MELVENY, STUART
POLLOCK, GEORGE G.
ROACH, ALDEN G.
ROBINSON, HARRISON S.
SEGERSTROM, CHARLES H.
SHAY, FRANK M ..
SHELTON, JAMES E.
SILBERBERG, M. B.
SPENCER, A. T.
SPROUL, DR. ROBERT GORDON STARK, R. E.
TEAGUE, C. C.
WATSON, JOHN S.
WENTE, CARL F ..
WINNETT, P. G. . ZELLERBACH,
J.
D.Los Angeles San Francisco Rio Vista Los Angeles San Francisco San Francisco San Francisco Fresno Los Angeles Burbank San Francisco Los Angeles San Diego Los Angeles Oakland San Francisco Oakland San Francisco Santa Ana San Francisco San Francisco Los Angeles Los Angeles Sacramento Los Angeles Oakland Sonora San Jose Los Angeles Los Angeles Gerber Berkeley Strathmore Santa Paula Petaluma San Francisco Los Angeles San Francisco
WASHINGTON TRADE ASSOCIATION EXECUTIVES
BUSINESS UNDER TRUMAN
Walter Chamblin, Jr.
Executive Director, Washington Office National Association of Manufacturers *
The man who was feared by his enemies as seeking to portray himself as the indispensable man, as the superman, and the only man capable of guiding the Nation during this critical period, is gone.
In his place there is not a superman, not an indispensable man, but a man whose greatness lies in a realization of his own limitations.
So just an average American citizen takes over the greatest office in the world and just an average American citizen will demonstrate that he is capable of handling the job.
This will break down the idea of one-man rule, or of one-man govern- ment and demonstrate again that the strength of the country lies not in the man who runs it but in the people themselves.
It was with this thought in mind that the Constitution of the United States was written.
It will be with this thought in mind that Mr. Truman will exercise the powers of the Office of the Chief Executive.
Those groups which feared government because of fear of one-man rule now have nothing to fear unless they fear the will of a majority of the people speaking through the Congress and the Chief Executive and the Congress.
And, as the leaders of the two great political parties seemingly are in agreement in this conclusion, the question immediately arises:
"What will the people ask of the Congress and the Chief Executive?"
The politician looks to the trend of events as the guidepost for the ac- tions of a President.
Those not in political life most frequently regard the President as re- sponsible for creating the trend. This was especially true in the attitude of many towards the late Mr. Roosevelt.
So, as a jury in reaching a true verdict must close its ears to the oratory of the attorneys and sift for the facts, let's see what shadow the facts of history projects for business under Truman.
First-The Truman administration is less than three months old.
This is but a short time in the life of man and but a tick of a second in world history. Yet, here are some of the things which have happened:
Germany, as a nation, has ceased to exist.
Russia, under the Soviets, has achieved the century old ambition of the Czars, for control of the Balkans and a foothold in western Europe.
The Japanese Diet has abdicated its parliamentary powers to a military cabinet.
* An address presented before the Annual Meeting of WTAE, June 20, 1945.
I~ addition, Mr. Truman, himself, has been positive in international affalrs. No segment of the domestic economy has captured his ear although Wall Street, labor leaders, farm leaders, New Deal leaders and social reform leaders have all tried.
An~, as evidenced by w,ord from home to members of Congress, the Amencan people appear satlsfied and pleased with his conduct.
And all of this has taken place in less than three months.
But these events had their beginning long before three months ago.
So, to appraise Truman, the pages of history must be leafed backward.
First-The problems which Mr. Truman inherited at about 7:00 p.m.
on April 12, were in no way altered by Mr. Roosevelt's death.
S~cond-And this is not always recognized: Mr. Roosevelt's most per- plexmg problem . . . depression . .. was an insolvent legacy from Mr.
Hoover. Of course, many think Mr. Roosevelt chose the most ill-advised policies to make the legacy solvent . . . but the wisdom of his actions is not a part of this story. The important and controlling fact is:
Mr. Truman still has the basic peacetime problems of the Hoover depression to solve.
But let's pause for a moment and see if Mr. Hoover was responsible for the economic disorders which politicians have associated with his name.
Well, first, Mr. Hoover cannot be blamed for most of the American public becoming obsessed with the notion that all could become million- aires by playing the stock market.
And, second, Mr. Hoover did not start the new industrial era which among othe.r thi?-gs, brought forth the automobile with its revolutionar;
effect, especlally m the smaller towns and farming communities.
So let's go back beyond Hoover.
Could it be that Mr. Truman's legacy began with Woodrow Wilson?
He, you know, spoke of the "rights of the Common Man." He too had a definite social program which he called, "The New FreedomJ' ' But such phraseology did not originate with Wilson. It had been heard years before. . . .
Yes, hear~ before the day of William Jennings Bryan and his program for a new soclal order best epitomized in his two speeches:
"You cannot crucify Mankind upon a Cross of Gold" or "Press Down Upon the Brow of Labor a Cross of Thorns."
So backward again, let's turn the pages.
It seems a long way back but to appraise Business Under Truman the roots of the social and economic problems must be found.
And so today, it is fifty years ago.
Grover Cleveland is in the White House.
He is beset with problems growing out of the Civil War . . . up to that time the most devastating in American history.
Workers were hungry and farmers were poor.
Cotton was 6 cents per pound 'and corn sold at 10 cents per bushel.
The remnants of Coxey.'s Army still lingered in the shadow of the nearby Maryland Hills; still hopeful of federal aid for the unemployed . . . the first demand of its kind in the history of the Nation. Yes, here
is the root of unemployment compensation, old-age benefits, the WPA and the cradle-to-the-grave philosophy.
And Washington then like Washington a half century later was over- run by the crackpots with their usual array of magic cures. '
Yet a de~as~ating derression w~s lifting but none then seemingly de- tected that m lts wake It was sowmg the seeds of a new economic order.
Me'n's eyes soon were to be diverted from such unpleasant economic problems as the first skyscraper protruded above the building line on Manhattan to take on seeming magic as it became studded with sparkling electric lights.
Shortly the electric sparkle would twinkle from town to town all over the country and trolley cars would become as commonplace as the one- horse shay.
I t was the threshhold of an era of moving men.
Kipling, Conan Doyle and Stephen Crane were blazing luminaries in the literary sky.
New magazines under the tutelage of Munsey and McClure vied for prominence with a revitalized journalism under Pulitzer.
La Farge exhibited his picture of the South Sea and vitalized the im- agination of man. And the Hawaiian and Samoan incidents bespoke of new trends in the Pacific . . . trends which would have fulfillment later under a man named Truman then as unheard of as the events were un- noticed.
Frohman and Belasco were new to the stage.
L~ngley was toying with a queer contraption which brought laughs and Jeers from those whom he told that it some day would fly.
And an ever lengthening network of rails captured industrial imagination.
It was indeed the threshhold of the era of the beginning of more be- ginnings than any period in history.
But in the background and attracting but little public notice the course of political events reflected none of the sparkle and glamour which gilded the surface of the times.
The 10-cent corn and the 6-cent cotton were rearing new structures . . .
str~ctures of a different kind . . . structures of mortgage upon mortgage whIch would slowly bring about a political realignment the undercurrent of which has yet to run its course under Truman. '
There were signs and there were tokens of this political change but the beginning of these beginnings went unnoticed.
Take for example the social significance of this:
Before Cleveland, Buchanan was the last Democrat to grace the White House.
As the Buchanan inaugural procession moved down Pennsylvania Avenue in March, 1857, it passed a slave market just south of the Capitol.
In Cleveland's inaugural just 25 years later there marched the first regiment of Negro troops, all citizens of the Republic.
In another 25 years Woodrow Wilson would appoint the Negro to public office.
And in another 25 years Mr. Roosevelt would create the Fair Employ- ment Practices Commission by Executive Order.
And today creation of a permanent FEPC is a major issue plaguing Mr. Truman. He had nothing to do with its inception but it will harass him as long as he is in the White House.
But this change in the status of the Negro was but one of many changes which occurred in the social and economic order in the aftermath of the Civil War.
Philosophers, from Plato down; the historians from the day of Pliny;
all have commented upon the effect of war upon an established order.
T~eir conclusions seemingly are agreed that sweeping changes are in- eVItable and that the scope of the change can be measured almost in exact ratio to the scope and length of the conflict.
And out of the 6-cent cotton and lO-cent corn which followed the Civil War a new cleavage of thinking began to develop. It found expression in that queer adhesion between the property-owning southerner, the western farmer and the tenant dweller of the northern city. And it was this combination of empty pocketed citizens which swept Grover Cleve- land into office.
It would take a half century from the first Cleveland administration to r the advent of the New Deal under Roosevelt for this group to gain the full political power necessary to the attainment of its ideals but the polit- ical and social pattern of today had its inception under Cleveland.
So let's examine more closely the era of the days of a "bicycle built
f~r .two." It was a glittering era. There was Diamond Jim Brady and LIllIan Russell and then there was something which attracted little atten- tion. It was the approval by Congress and the President of a federal income tax law.
. Andrew Carnegie did not view it with apprehension. He never thought It would some day take 95 percent of the profits of the steel industry which he founded and also practically confiscate the personal income of his successors. Carnegie was fearful an income tax would not raise suf- ficient revenue. It is interesting to note that in a letter to Grover Cleve- land on December 14, 1894, that Carnegie urged passage of a. special tariff upon articles purchased by "the pleasure-loving, luxurious living few,"
holding that "these duties would yield double any estimate made of the income tax revenue."
Carnegie raised no question as to the unconstitutionality of the income tax which the Supreme Court of that era held to be unconstitutional.
But the income tax was not a dead issue. It would be reviewed a quar- ter of a century later when another coalition of the property-owning south- erners, the western farmers, and the rent-paying northerners would elect Woodrow Wilson. The income tax then became law by constitutional amendment to become effective as an instrument of raising revenue two decades later when the southern colonels with their northern and western ames elected another candidate to the tune of "Happy Days are Here Again." Thus, it took 50 years for the income tax to reach maturity but it is a husky citizen today.
And it was also under Mr. Cleveland that the federal government first entered the field of labor relations. Upon his recommendation Congress established a Bureau of Labor and later a Commission of Labor and this
new federal arbitration machinery received a severe test in the Pullman Company strike which followed shortly. Mr. Cleveland would book no interference with the movement of interstate commerce or of the United States mail. He then said:
"If it takes the entire army and navy of the United States to deliver a postal card in Chicago, that card will be delivered."
It did take the army to deliver the post card and it was not to be the army's last vi'sit to the city.
Mr. Cleveland's Bureau of Labor would grow in 25 years to a great Department of Labor under Woodrow Wilson and another 25 years later there would come under Roosevelt a National Labor Relations Board and a War Labor Board.
Here, it is seen that the National Labor Relations Act (better known as the Wagner Act) was 50 years in the making but it is here at last . . . and let's note how the arrival of this act affected the army.
Almost 'fifty years from the day that the army arrived in Chicago to deliver a postal card it was back again. This time its mission was slightly different. Instead of dispelling strikers, two soldiers of a military detail' carried Sewell Avery from his office, his plant having been seized by the federal government to break a strike which was interrupting interstate commerce . . . singularly enough conducted largely by mail.
But labor and income taxes are not the only issues which had their genesis in the past.
When Cleveland took office the country was suffering from the defects of the then national banking system and the western farmers were among the chief sufferers. Already there was a far-off cry for abandonment of the gold standard and all of Cleveland's strength was required to main- tain it.
In this fight for the gold standard, Cleveland was accused of Wall Street domination and the charge was made in Congress that British finan- cial interests were dictating Treasury fiscal policy. But the gold standard is gone today.
But the link between business under Mr. Truman and the past goes beyond gold standard, a new social status for the Negro, federal aid for the unemployed, entrance by the federal government in labor disputes, the income tax, capitalistic influence, and British pressure. Anti-trust has roots too that are fifty years old.
The Sherman anti-trust law was enacted in 1890. By the time Cleve- land began his second administration, two years later, there was a grow- ing demand for enforcement of the law which had not been effectively used by' Mr. Harrison.
Mr. Cleveland's Attorney General, Judge Harmon, immediately asked Congress to place more teeth in the law. He then began a vigorous prose- cution which has grown in intensity up to the present and two days ago made ~ossible government action against The Associated Press.
4nd so, the little anti-trust unit which was as much of a joke as Lang- ley's flying machine back in Cleveland's time, has like the airplane taken on new significance. But it is not the only idea born in the Gay Nineties
when the popular tune was, "The Band Played On" and Casey and his Strawberry Blond was hummed by all of the young couples of that era.
The Strawberry Blond is now forgotten but what Cleveland thought of big business and how it should be regulated is not forgotten and the Se- curity Exchange Commission stands as a monument to his thoughts. But, as though the SEC were not sufficient as a memorial, the new Congress already has received a new federal charters bill of broader scope than the old Borah-O'Mahoney measure. The new measure would apply not only to corporations but also to trade associations set up by business. Thus, there was more than passing significance to these words of Cleveland:
"It would, in my opinion," he said, "be a most valuable protection to the people if large corporations were obliged to report to some depart- ment their transactions and financial condition.
"The State creates these corporations upon the theory that some proper thing of benefit can better be done by them than by private enterprise. . . . It is a grave question when the formation of these artificial bodies ought not to be checked, or better regulated, and in some way supervised."
It is interesting to note the distinction drawn at that time between the corporation and private enterprise as differing types of business activity and therefore subject to differing types of legislation as to their regulation. , And of corporations, he also had this to say:
"This (that is regulation) might well be accomplished by requiring cor- porations to file reports frequently, made out with the utmost detail, and which would not allow lobby expenses to be hidden under the pretext of legal services and counsel fees."
Out of this Cleveland utterance there has come today the Corrupt Practices Act and the Hatch Act which forbid corporations from partici- pating in elections. This Congress will witness a determined effort to broaden the scope of these acts to cover both labor and business organi- zations as Congress itself is fearful of the spreading activities of Sidney Hillman's Political Action Committee which had a minor counterpart fifty years ago in a labor organizat~on known as the Knights of Labor.
But the roots of other than domestic problems also stretch backward.
As Cleveland's administration neared its end the United States turned from a debtor to a creditor nation and the tide of international events lapped closer to the continental shores of North America, shortly to engulf the nation in the Spanish vVar which would take the flag to the other side of the world and sow the seeds for the Japanese war of today.
And the phrases used in that day have a touch of familiarity. Mr.
Cleveland spoke of the "helpless nations;" of "international highwaymen"
and his Secretary of State, Mr. Bayard, in tanG ng of the Samoan affair used this language:
"We have a moral right to expect that no change of native rule shall extinguish the independence of the islands."
The phrase "moral right" fell lightly upon the ears of the pleasure loving of the time but other generations would hear more ahout it as the policy then established would, in the years to come, tie the American people more closely to the doctrine that among nations no less than among individuals, the strong have a duty to protect the rights of the weak, and to see that
others respect them. Few, if any, in the Gay Nineties ever thought that the assertion of this principle would, in 25 years and then in another 25 years, put millions of Americans in uniform and send them overseas.
Thus as the era of a "Bicycle Built for Two" comes to a close there is found something of a blueprint of the present. In Cleveland's time the party composed of the property-owning southern colonels, the rent-payers in northern tenements and the farming Democrats from the west pulled out all the stops, one after the other, on the economic pipe organ.
The scale ran from high notes to low notes and embraced a new tax policy, a new tariff policy, a new monetary base, a new labor policy, a new foreign policy, a new policy toward corporations and the inauguration of a new social order.
But all this new social and economic order was in its inception. Luxury liners had made their appearance. The Pullman was furnishing the com- forts of home and a gay and happy nation danced forward as the "Band Played On."
But to the more thoughtful the pattern of the days to come seemingly was then discernible.
Both a foresight and a warning of Business Under Truman was uttered by Cleveland before leaving the White House.
A half century ago he was sf>eaking in Providence, R. I., before the Commercial Club.
As the businessmen settled back in their banquet chairs, presumably comforted by sirloin steak and sparkling burgundy, they listened to these sober words of the then President of the United States:
"In business circles," he said, "we find but few men who are willing to forego their ordinary work to engage in the business of legislation. Indeed this unfortunate condition has reached such a pass that our businessmen think and often speak of politics as something quite outside of their inter- est and duty . . .
"If they fail in this they will be governed by those who simply make a trade of politics. If it is well that our legislation be influenced by the enlightened and practical business sense of the people, our businessmen must see to it that those they trust are chosen as their law makers. If they are indifferent on the subject, the vast interests which so greatly concern them . . . will be left at the mercy of those who neither under- stand them nor care for them."
The oil lamps of the old Commercial Club burn no more; the "Bicycle Built for Two" is gone; the Gay Nineties are now but legend; but the efrect of 6-cent cotton and of 10-cent corn, which brought the southern planter and the western farmer into a voting unit with the rent payers of the big industrial cities, left a living legacy in the demand for social and economic change.
But new industrial awakening would defer all these through McKinley and Teddy Roosevelt.
Taft encountered some trouble and advocated a voluntary plan for licensing of big corporations and other forms of interstate business by the federal government.
And under Woodrow Wilson the problems became more pressing but the First World War prevented fulfillment of his program of a "New Free- dom for the Common Man."
The boom that followed the immediate depression after World War I delayed the day of reckoning under Harding and Coolidge ev.en ~hough
Mr. Coolidge's term would hear in the McNary-Haugen equalIzatIon fee bill a distant echo from the South and the West of 6-cent cotton and the lO-cent corn.
But the gathering storm broke over Mr. Hoover and would pass on to Mr. Roosevelt who borrowed millions to relieve it only to will it as an unsolved legacy to Mr. Truman.
So in speaking of Business under Truman all this bacldground is a definite part for the issues which Mr. Truman must settle were born long before he took office.
And so now, what kind of a man is Mr. Truman?
Both political friends and political foes agree that at heart he's just a country boy from Missouri. He looks with native suspicion upon what he describes as the "newfangled ideas."
He has but one ISM in his make-up and that's Americanism.
He's been around a lot. He was in the trenches in France as an officer in the last war. But his travels and his elevation to high office have not changed his viewpoint. He just paid off the mortgage on his. mother's home after he became Vice President. And he still looks at thmgs as to now they will affect the folks back home in Missouri.
To him the Icounty court house represents the cornerstone of the
A~er
ican' government. His orbit is now world wide .but the. hub of the .thmk- ing will be governed by the simple and practIcal phIlosophy whIch he learned as a boy in the court house yard.
He was not born a President. He still has to learn to become one.
He is the type of man who likes to associate with Congressmen and the type who never appealed to the New Deal oligarchy. The New ~eal Brain Trust gave him the cold shoulder from the moment he was nommated for the Vice Presidency. He was not of their "make America make the world over" clan and the New Dealers planned
,
to ignore him for the. .
four years he would hold office. But now they are m utter mIsery.
For after all the New Dealers resented Mr. Truman. He had shown no
pa~ience
with Sidney Hillman when he sought to avoid~irect
answers to questions when testifying before the Senate War CommIttee.Then too, Mr. Truman was not a member of the ~elect intellectual hierarchy with which Justice Frankfurter s~rrounded hImself: Nor was he among the coterie of Attorney General BIddle (who he qUickly fired).
Neither was he a student of the Alvin Hansen financial school of thought.
Mr. Truman spent 15 years paying off debts incurred in a business ve~ture
rather than take bankruptcy which showed he was not sympathetIc to the Hansen idea of deficit financing.
And because of all this, no more will be heard of the New De.al purge (approved of by Mrs. Roosevelt) of the ?~nators who voted agamst con- firmation of Henry Wallace and Aubrey Wllhams.
Such is the new picture in Washington. The Democrats of the old school, who kept the party alive in the 12 Republican years between Wilson and Roosevelt, have recaptured control of their party. The work done in those years by such Democrats as John N. Garner, and the late Sena- tors Joe Robinson and Pat Harrison was not done in vain as their pupils once more have returned to power.
And under the order of Presidential succession proposed yesterday designating the Speaker of the House as next in line for the Presidency the old line Democrats are planning to retain this grip on their party.
And, in this background Mr. Truman is planning to run his own ad- ministration.
He will be guided by the policies laid down by his predecessor, especially in the international field, but he himself will give the direction and shape the course.
This is the generally accepted view in Washington where the new Cab- inet appointments have had a favorable acceptance. Even som~ of the opposite political faith have privately pronounced them as "excellent."
This attitude toward the new Cabinet heads likewise has applied to other appointments made by the President.
Mr. Truman's request for new authority to reorganize the executive establishment was not unexpected to those who know him.
Many of Mr. Truman's former colleagues in the Senate know that the President regarded inefficient administration as the greatest weakness of the Roosevelt administration.
The prediction is now generally made that Mr. Truman will seek to consolidate many independent agencies under old established depart- ments. He will then hold his respective Cabinet members responsible for their administration. The only hitch here is that he will have much dif- ficulty in obtaining the necessary authority from Congress.
The selection of Messrs. Clark, Anderson and Schwellenbach has given strength to those who have held such convictions. It also has served to emphasize that the new President does not intend to lean on the strictly New Deal or CIO elements of the Democratic party.
Tom C. Clark is an old line Democrat from Dallas, Texas. He will administer the Department of Justice in line with the traditions of that party. Whatever the law is, Mr. Clark will enforce it. He will not bring indictments for the sake of headlines only or for the purpose of intimida- tion. His past record shows that when he does bring an indictment he honestly thinks he has sufficient evidence to obtain a conviction.
Clinton P. Anderson of Albuquerque, New Mexico, has much the same reputation. His selection as Secretary of Agriculture nearly caused him to choke while eating, his luncheon. He had been called to the White House for what he expected to be a Presidential bawling-out over the harsh things he had said about the food control policies of the last admin- istration. Instead of that he was promoted to the Cabinet.
Mr. Anderson is an insurance executive and a ranch owner. He has never been regarded as having any other than a sound American phi- losophy.
The selection of Lewis B. Schwellenbach to succeed Mrs. Perkins per- haps was the biggest surprise to the leaders of labor. As far as is known the new Secretary of Labor's name was not even discussed with the chiefs of the unions. Mr. Schwellenbach, at present a federal judge, was a for- mer member of the United States Senate from Washington. His voting record there showed him to be a staunch New Deal supporter.
Mr. Schwellenbach was looked upon by his Senate colleagues as a polit- ical associate of David Beck, the AFL Seattle leader. He also is regarded as extremely friendly with the Railway Brotherhoods which Group, Mr.
Truman is quoted by friends as saying, were responsible for his (Truman's) election to the Senate in 1940. The CIO was much displeased with this appointment.
Now let's examine what Mr. Truman says about himself for . . . at his first press conference, he employed the Al Smith philosophy, by telling reporters to look at his record, and his record reveals:
Of big business he has said:
"But I believe in giving them a chance to make decent profits when they behave themselves. And that they must do, if they expect to remain in business."
On another occasion he remarked:
"Our industrial history teaches us that, once an industrial empire has been created, there is a strong tendency for its management to seek to maintain the status quo by fair means or foul, rather than to embark upon new, untried and speculative undertakings, which, after all, is the only sure means through which progress can be made."
Mr. Truman also has defined the function of government and business as follows:
"The function of government, is not to direct and operate (business) either itself or through cartels, but rather to police and curb manifestations of self-interest which are harmful to growth and progress."
Mr. Truman has repeatedly emphasized that the government should decide what its policy is to be with regard to postwar business so that business will know the conditions under which it must operate.
He has said the government should set the standards, or to use his own words, "lay down the ground rules," and leave business free to operate within those standards.
Then too, some of Mr. Truman's votes as Senator should be noted. He voted for the Wagner Act, the death-sentence clause in the Utility Hold- ing Company Act, the Wage and Hour Act, and the Reciprocal Trade Agreements Act.
On the other hand, he voted to override the President's effort to limit salaries to $25,000.
And, in voting Mr. Truman has been a consistent friend of small busi- ness in the Senate.
Next of interest about the new President is his likely attitude on pend- ing legislative prop.osals:
First-Compulsory manpower: The Capitol considers it dead and Mr.
Truman will not attempt to revive it.
Second-The Murray Full Employment Bill: He has emphasized there will be full employment legislation.
Third-Extension of OPA: Mr. Truman will probably win his fight for its extension as is; but there is a big BUT in this-he will want the Act administered in line with the intent of the Congress and he will not tol- erate administration in line with the whims and fancies of the bureaucrats.
Fourth-Administrative Law: Mr. Truman will sign-not veto-well considered legislation on this subject. It will fit in with what Congres- sional leaders predict will be a part of his program-the re-creating of cabinet responsibility.
Fifth-Patents: Mr. Truman knows little of the subject. His most direct contact resulted from the Senate War Investigation of patent relationship between American business and foreign countries. He said at that time he was amazed at some of the things he discovered. Senator O'Mahoney, Democrat of Wyoming, will be his chief advisor on this subject.
Sixth-Reconversion: Mr. Truman will want this done as quickly as pos- sible. He knows only too well that he faces a national debt of at least three hundred billion dollars upward, and that the annual tax bill now runs around 42 to 43 billion dollars per year. He will want to cut this down and eliminate further borrowing. He has made clear, to those who have talked with him since taking over the Presidency, that the best solution is a speedy reconversion of an accelerated private business.
Seventh-Government-owned Plants: Mr. Truman's Senate friends state that he wants them operated-operated by private management-that he thinks this can and must be done.
Eighth-Surplus Property: His latest thinking is found in a report of the Senate War Investigating Committee dated December 18, 1944. Here he stated that he felt the present Surplus Property Act was far from per- fect but about as good as could be expected. If Congress recommends reasonable changes he will go along.
Ninth-Taxes: Mr. Truman has declared against tax reduction for the immediate present. At the Capital it is said this statement was prompted largely by Mr. Morgenthau's fear that talk of tax reduction now would impede the 7th War Bond Drive. But a good clue to the Presi- dent's thinking was found in the fact that he has endorsed the Doughton bill (H. R. 2487). This measure would increase specific exemptions from
$10,000 to $25,000. It would release accrued postwar credits as of J anu- ary 1, 1946. It would permit current use of postwar credits thereafter.
It would speed up carry-back refunds, and also refunds on amortization facilities. It is estimated it would improve industry's financial position by 7.5 .billion dollars in the next year. And while nothing is yet definite, the Ways and Means Committee is meeting today to ascertain if it would be possible to enact the measure before the Congressional summer recess which will start about July 15.
Tenth-Reciprocal Trade: Senate action yesterday in all probability means that Mr. Truman will win extension of the Act with the 75 percent reduction proposal . . . but of major importance is the fact that he has publicly said no American industry will be injured, and he is quoted pri-
(
vately as having stated that business will be consulted before any treaties are concluded.
And significant with this expected legislative attitude is what the Chair- man of the Democratic National Committee, and the new Postmaster General to-be, Robert Hannegan, has said in several speeches:
"I hope," he says, "that a national economy free from depression will enable our government to draw a line limiting its own activities, and say to business management:
" 'Beyond this line we shall not go.'
"I hope that when wartime tax schedules can be revised to a peacetime basis, our government will offer the same kind of assurance in the matter of taxes."
There's a marked difference in Mr. Hannegan's words and the 1936 keynote at Philadelphia which was in effect:
"In my first administration they have met their match. In my second administration they will meet their master."
But despite Mr. Hannegan's assurance many in Congress realize that business will not like all of Mr. Truman's policies.
First-It is pointed out that many in business will shortly become per- turbed as Mr. Truman continues to stand by the platform adopted by the 1944 Democratic Convention and previously transmitted in legislative recommendations by Mr. Roosevelt to the Congress.
And second-Honest differences of opinion are expected to arise be- tween the Administration and many in the business world over such issues as these:
What constitutes monopoly and monopolistic practices, including such things as patent rights, price agreements, mergers, holding companies, pro- motional stock sales, marketing agreements and in general the acquisi- tion by big business of its small competitors; also the sphere of govern- ment in social security.
So much for the facts to date for Business under Truman.
In conclusion, the state of mind of the general public is all significant.
The story of the Gay Nineties with its rollicking tune of-"The Band Played On"-is not without its counterpart as an America weary from war senses the spirit of-"Oh What a Beautiful Morning"-as it looks to a postwar world chucked with inventions that will make a new and more sparkling era of the beginning of more beginnings.
But behind all this glitter there remains the unsolved problems- Problems which Truman must meet.
And as the new President faces these 50-year-old problems in the light of today, there comes the echo of Cleveland's words:
"If they (businessmen) are indifferent on the subject (of politics), the vast interests which so greatly concern them . . . will be left at the mercy of those who neither understand them nor care for them."
And still accompanying this echo of Cleveland's voice there will ring in Mr. Truman's ears the staccato of the tom-tom beat of 6-cent cotton and 10-cent corn.
