Popular Science Monthly/Volume 80/February 1912/The Conflict of Administrations

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THE CONFLICT OF ADMINISTRATIONS
By President FRANK L. McVEY

UNIVERSITY OF NORTH DAKOTA

IN a letter to the governors of the states, at the close of the revolutionary war, Washington fervently prayed for four things, which he humbly conceived as not only essential, but actually vital, to the existence of the United States as an independent power. These four things were: an indissoluble union of the states under one federal head; a sacred regard for public justice; the adoption of a proper peace establishment; and the prevalence of a civic and friendly disposition among the people of the United States which will induce them to forget their local prejudices and policies, to make those mutual concessions which are requisite to the general prosperity, and in some instances to sacrifice their individual advantages to the interests of the community.

None of the revolutionary fathers could see difficulties other than those of a sea-coast commerce policed by many petty sovereigns. The problem of cooperation between the federal authority and the states would, in their opinion, arise only when brought to the surface by a state jealous of its prerogatives, never through the action of the federal authority. A hundred and twenty-five years have passed, and not only has the unexpected happened, but persons and corporations engaged in commerce seek the extension of federal power at the expense of state authority, if need be, in order that commerce may go on unhampered and free from restrictions of a territorial character.

Men rang the bells in steeples and gave utterance to their jubilation in loud hurrahs when King George's fleet left New York harbor. They had forgotten that a nation did not exist; that effective cooperation had ceased when Washington disbanded his army in 1783; that the union which was then dissolved existed only as a tradition, while the states were thirteen independent sovereigns, jealous of each other and open to the abuses of foreign intrigue. Thus at the beginning of the twentieth century in America has arisen a new type of problem in the conflict of administrations, solvable only by a process of cooperation.

Writing to Duane, Hamilton declared "the fundamental defect is a want of power in congress. Three causes contribute to this misfortune. In the people a jealous excess of the spirit of liberty, in congress a diffidence of their own authority, and a want of sufficient means at their disposal." "The clear duty of congress," declared Hamilton, "was to usurp powers in order to preserve the republic, but its courage stopped short of this solution, while the confederation as it stood was fit neither for war nor for peace."

The problem confronting the people of America in 1783 was the conversion of a voluntary league of states into a firm union. They needed to be first awakened to the necessity of organization and the adoption of a national policy; and after this the instrument of agreement must be drafted and the government established. It is not necessary at this time to discuss the detailed story of the constitution's making. From the beginning of its inception, men took opposite views as to the rights of the individual states and the nature of the powers that should be given to the central government. Those who upheld the idea of state's rights feared in their hearts the rule of the people. They argued for state representation in the national congress while maintaining that federal authority should be reduced to a minimum. The federalists, on the other hand, insisted upon a broad interpretation of the powers of the national government, thereby creating a controversy which furnished the basis of modern party relations, until materially modified by the tendency, brought about by the civil war, to discuss the import of questions rather than functions of government. The same motive, however, which caused men to turn to the states in the earlier day now causes them, in a measure, to look to the federal government, since it is believed that, in some degree at least, the rule of the people can be materially modified.

For a period of nearly thirty years after the civil war government in the United States, both federal and commonwealth, was used largely as an agency for the promotion of wealth. Special privileges came to overshadow common rights, and many problems were left untouched because in the opinion of the courts of the day the federal government had no authority over them, and the states by the constitution were not authorized to deal with such problems. But as industry has grown in immensity and spread its organization from commonwealth to commonwealth, producing a series of new problems in the movement of commerce from state to state, there has arisen a friction and questioned authority between the two branches of government in the United States. The constitution of the United States provided that the states should have all the rights of government, with the exception of the right of secession, impliedly determined by the results of the civil war, those powers which the constitution expressly confers on the federal government, and those which the constitution withholds from the states. It did not take many years for shrewd lawyers to discover that there existed in the interpretations of the two court systems a "twilight zone," as it has been picturesquely put by one of America's party leaders.

The specific powers of the federal government were determined narrowly, while the general powers of the state were interpreted specifically. There arose, as a consequence, certain types of problems, certain species of acts, to which no special law seemed to apply, which left their authors in the possession of concerns working in a no-man's-land. To meet this serious difficulty it has been proposed on one side that there shall be a marked increase of federal authority which will deal with all such problems, and on the other there has been insistence that the sanctity of the constitution shall be maintained, the sacredness of the judiciary upheld, and the doctrine of the division of powers kept intact.

Those who believe in an increase of federal authority have maintained that the union is a federal one, that the sovereignty of the states never existed, and that with their present authority and power they are merely nuisances clogging the way of the federal government. There is no question that a series of difficult problems have arisen which demand a wider interpretation of federal authority, but the attitude just mentioned would result in the reduction of the states to mere local administrative units with no more power and authority than that possessed by a county or township. It is declared that the conservation of resources is so important that state lines ought not to be taken into consideration in dealing with the problem, while interstate commerce and the questions that are associated with it make it impossible, if we are to be a great commercial nation, to recognize that state authority over commerce and trade exists within certain boundaries.

Such, briefly stated, is the controversy; in its final solution the whole theory of American government is carried with it. In the course of the discussion it will be necessary to examine some of the experiences and outcomes of federal legislation, and to present, if there be any other point of view, what can be done in the development of cooperation between the two branches of government rather than subordination of one as compared with the other.

Over and above every other problem of a national character, in its importance from the point of view of the public, stands, in all probability, that of interstate commerce. The legislation and various attempts at legislation in this connection cover a period of forty years. In the year 1872 Mr. Regan, a congressman from the state of Texas, presented a bill regulating interstate commerce carried on railways. The bill was the outcome of grievances and difficulties arising from the attempts of the various states to secure some betterment of transportation facilities, lower rates and better methods of carrying on the business. Annually for more than fifteen years this bill made its appearance in congress, and it was not until 1887 that the interstate commerce act was passed regulating railroads and railroad rates. Despite the complaints that were made regarding the inefficiency of this law, and the difficulty of bringing under it many of the problems that arose, no other legislation took place until the year 1903, and since then the law has been modified in 1907 and 1910.

If we turn to the national bank act, which has been referred to many times as one of the most beneficent laws that the federal government has put upon the statute books, it will be noted that it had its origin in the necessities of the civil war, that it was developed as a revenue measure in the hope of forcing the banks of the day to buy the bonds of the distressed government. The principles which were recognized by the secretary of the treasury at the time as essential to the establishment of a banking system were taken in part from the experiences of Massachusetts and New York. Out of these came the right of free banking, the principle of the redemption fund, and the issue of paper money upon a bonded security, as important parts of the national bank act.

Passing in quick review the federal legislation relating to pure foods, it will be found that not until 1906 was any legislation secured which authorized the inspection and examination of foods by federal officers and placing upon adulteration an adequate penalty. For seventeen years the people of the nation had urged congress to pass a bill that would meet the many abuses that had arisen in the adulteration of food and dairy products. The same story can be told about the tariff. Since the civil war the different tariffs that have been enacted for the purpose of protecting manufacturers in the United States have steadily increased, and the percentage of the burden laid in the form of customs duty, regardless of the conflict of interests and the necessities of the consumer, has steadily augmented, until under the provisions of the McKinley bill it stood at a higher percentage than at any time in the history of the nation.

Nor is this all. The encroachments upon the financial strength of the states, in the form of added taxes, have come with the growing activity of the federal government, as might well have been expected. In the year 1909 the federal corporation tax was laid upon all corporations engaged in interstate business in the United States. It has been urged that a large revenue would be secured by this form of tax levy; that it would give greater control over the many corporations of the country, making it possible to reorganize their book-keeping and accounting systems along the lines of the best principles of accountancy. The law has now been in existence about two years, and it has been shown clearly that it lays a heavy burden upon corporations in the impossible demands of the accounting methods required, while the principle of self-assessment, now unchecked by government examination, leaves it practically with the corporations to determine what they shall pay. But the worst side of the corporation tax is that the fiscal system of those states that have developed such a plan of taxation is materially affected. These states find that their own sources of revenue are cut into, while the corporations subject to this fiscal control are provided with an argument of double taxation against proper state taxes. This phase of the corporation tax has been regarded by many economic authorities as unfitting the tax for use by the federal government, and its application has been denounced in many quarters as an invasion of the proper field of state taxation.

In the efforts now being put forth to establish a federal income tax the same tendency is to be seen. While it can not be denied that the federal government should have the authority in time of need to levy a federal income tax, yet it is distinctly questionable as to the wisdom of such a tax in time of peace for federal purposes. The problems which confront the states at the present time are indeed serious. Upon them fall all of the burdens of maintaining local government, and these, with the growth of wider ideas regarding the development of society, constantly tend to increase rather than diminish. The states are now called upon to develop extensive educational systems, to care for the insane, to punish criminals, to maintain courts, to preserve order, to build roads, and support the poor, besides erecting public buildings, and in the municipalities providing water, light, paving and the other necessary improvements of modern towns and villages. To have the federal government, therefore, step aside and reach out into the states for additional funds for federal support means interference with the states' fiscal systems and in the long run the weakening of their financial power. In the customs duties and the internal revenue, the federal government has every facility to secure sufficient revenue for the conduct of its business.

What has already been said regarding the history of federal legislation in connection with the interstate commerce act, the national bank act, the pure food and dairy legislation, and the tariff indicates clearly the slowness with which congress meets the problems of legislation, and how difficult it is to secure modification of a law by a body so overwhelmed with legislation for a country as big as America. In nearly every instance the states began the legislation, and carried it forward to a point where it was necessary to look to congress for some wider interpretation in order that relief might be given. The work which congress has done, while commendable in many cases, shows clearly that it can not act intelligently in every instance because of its distance from the problem, and that while it does work out in general some specific lines of action, it can not by the very nature of things meet local needs.

Sixteen years after the introduction of the Began bill came the interstate-commerce act, and for as many more no modification of the law was made, despite the insistent demands for such changes. The national bank act remained practically unchanged after the date of its passage until the year 1900. Examples of this kind go to show that federal legislation is attended by many disadvantages. Undoubtedly congress can deal with large problems on general principles, but on that very account it is often unwise for it to attempt to work out experiments and changes in the law.

It is just here that the states come to play an increasingly important part. They are in fact laboratories in which industrial and political experiments can be worked out on such a scale as to determine the value of the experiment. It means the relieving of the nation as a whole from many of the pangs necessary in the growth of democracy. It means the utilization of the best that comes from such experiments and the saving to the government of the loss of time and disappointment in carrying on large enterprises. The states have, as a consequence, an important governmental function to carry out. They are not to be regarded as mere administrative units, subject to the direction and domination of a federal authority thousands of miles away, with no autonomy such as is found in the case of the departments in France; but they are rather constituent parts of the union, self-directive, and capable of maintaining their own autonomy and of carrying on their own functions within their own boundaries. To them we entrust our daily welfare, while to the federal government are turned over our collective interests. Nevertheless, they are one and the same government, each a part of its frame, working together, but separately organized. To substitute one for the other is to violate the whole principle of the federal scheme.

The conflict between the two is more apparent than real. The difficulties of the situation have been materially exaggerated, and not always without a purpose. In the early history of our nation many of the believers in state's rights took that position because of their feeling that the government would not then be in the hands of the people, but would be only representative, and to-day that same feeling exists in the demand that the federal authority be enlarged and the states reduced to minimum power in order that again the authority of the people may be hampered and limited. Much confusion of detail and of procedure clouds the issue. Underlying it all, the principle of action, both in state and federal government, is the same. The law is founded on the common law of England, and there is to be discovered to the diligent inquirer a greater uniformity than diversity. The extent of this uniformity is marvelous. From one state to another have been handed on the principles of legislation and forms of government. In one state is initiated some new phase of political organization, its propagation is carried on into another community, and little by little there moves constantly over the land an increasing uniformity of legislation. While it may be said that as a nation we are face to face with serious industrial problems over which we have no central authority, nevertheless the nation has made some progress under present constitutional provisions and the states are diligently seeking legislation from other sources that will meet the difficulty. The danger is not from this direction, nor is it likely to arise from our failure to solve the problem in a fairly satisfactory way through the utilization of both state and federal governments, but the danger, if from anywhere, is from a tendency seen now and then towards excessive centralization. It is not, however, from tyranny that we are likely to suffer, but rather from a breakdown in an organization too extended and too difficult of effective operation. There can be no question in the minds of students of political history that the future of the nation depends upon the cooperation of the governmental units rather than upon the exaggeration of one of them. Instead of attempting to magnify the federal government, there ought to be a marked movement toward the equalizing of the functions of both. Because of the extending of its authority over a large area, the federal government is in a position to secure information on all topics for utilization in the various states. An instance of this statement is found in the collection of data already undertaken by the different bureaus at Washington. With the authority of the national government behind them, they are able to bring together an immense amount of data that throws light upon many questions. To limit the functions of the federal government to the mere collection of data is not in the mind of any one. A second step could be taken, one that is already being carried on, through the medium of investigation. Thus the collection of data should be supplemented by specific investigations of various matters of interest to the public welfare. Again this alone is not sufficient. Such information must be given publicity, and here the federal government is in a position not only to give wide publicity to its own actions and the results of any investigations which it carries on, but is in a position to insist upon publicity on the part of all interstate corporations. Because of the conflict of authority in the field of commerce many suggestions have been made from time to time by which the federal government is to take over full authority in the matter of incorporating such corporations. It is urged in behalf of this movement that many of the states now permit the incorporation of companies under peculiarly satisfactory provisions for the company, and that as a consequence the other states are not able to control them. There is considerable truth in this position. But the matter is comparatively easily disposed of. There is no reason why congress should not pass an act setting forth the conditions under which any corporation may engage in interstate commerce. These conditions would have reference to capitalization, publicity of accounts, and responsibility for any statements set forth regarding their business. Such a law would in no way necessitate incorporation or the disturbance of the incorporation of companies by the different states. But like the tax upon bank currency passed in 1866, it would have a marked effect in forcing corporations to comply with the federal conditions, while at the same time allowing the states to modify the law so as to apply to the conditions peculiar to their own territory.

Many other instances might be cited in which the same relationships are to be found as in the case of the interstate corporations. The more one studies the situation, the more one is impressed with the fact that the relations between the states and the federal government can be strengthened rather than weakened by the passage of laws on the part of congress which will set forth the conditions under which business concerns can enjoy the privileges of carrying on their traffic between the different states, allowing the regulations to be developed by the commonwealth. It might be argued that this would still retain the worst features of present conditions, without discrimination and with lack of uniformity. But an examination of the laws of the states will confirm the impression that the states are very rapidly taking over those regulations and laws which have been proved by the test of time to be satisfactory and efficient. Any limitations of the authority of a state like Wisconsin, where under the direction of an underlying public sentiment much progress has been made in working out a number of highly efficient methods of dealing with serious questions, would be unwise. It is very doubtful if the same progress could have been made by the federal government through the medium of legislation by congress.

The people of this country are interested in efficient administration. They are not insistent upon either federal or state authority as such. "What they want to see is progress in dealing with some of our serious national questions. But history proves that when a nation tries to cover too large a field and through its national legislative body to deal in detail with local questions, it fails to accomplish the result that was expected. In America we have a very fortunate division of functions, at some points weak, but on the whole a satisfactory division of authority. To push the states down into the position of mere administrative units would result in the weakening of the whole plan of government and in a probable inefficiency because of the distance from central authority in dealing with governmental matters.

Our attitude, then, in this great question of the conflict of administrations should be that of seeking for the full utilization of both federal and state authority, for the elimination of friction between them, and for the securing of an adequate working plan by which both can be used to the best advantage. We are a nation of one people, believing distinctly in the federal form of government. It remains, therefore, for us to insist upon a clear understanding as to the functions of the federal government and a larger realization of the fact that the states are carrying the burden of the expense and difficulties of local problems, and that interference on the part of the federal government is likely to result in an increasing weakness of authority rather than a strengthening of government.

A century and a quarter have passed since the creation of the republic in 1787; the indissoluble union so fervently hoped for by the father of his country is now an accomplished fact; though the regard for justice can hardly be referred to as high, nevertheless the nation is making progress steadily toward more efficient courts; our peace establishment meets the needs of the republic; and great advance has been made toward the civic and friendly disposition among the people of the United States, sufficient to induce them to forget their local prejudices and policies enumerated by Washington as the fourth desideratum. We have still the problem of federal authority and the wise determination of what and how far the government should attempt to rule by central authority. The question is of vast importance; its determination will have much to do with the perpetuation of the republic.