The Confessions Of A Reformer
Frederic C. Howe
[Part 7 of 11]
CHAPTER 20 / CONFLICT AND COMPROMISE
My early years at the law had been made tolerable to me only
through intimate association with Harry and James R. Garfield. They
had the kind of moral distinction that the Romans described as
manliness -- virtus. It was tolerant, kindly, scrupulous. To
them I was a liberal, even a radical. I became identified with
things they did not believe in, I left the Republican Party, turned
Democrat and free-trader, and was closely associated with Tom
Johnson. The causes that I espoused were bad for our business. I
undoubtedly offended substantial clients, yet my partners never
protested against my choices; they never sought to dissuade me from
any decision, and never in an association of a dozen years alluded
to financial considerations as a reason for keeping silent or
changing my course. I realized at the time how generous this was.
And I have realized it more fully since. For the herd instinct is
strong in all of us. It is jealous of departure from creeds and
punishes deserters from the ranks more severely than it does those
who have never been admitted.[p.198]
When James R. Garfield was elected to the State Senate I left the
comparative idleness of the outer office and was taken into the
firm, which, as Garfield, Garfield & Howe, lasted for a dozen
years. Then James R. Garfield went into President Roosevelt's
Cabinet, and Harry Garfield was called to Princeton as professor of
politics, to become later president of Williams College.[p.198]
I remember one case of the death of a worker in the steel-mill. He
had been ordered to repair something at the top of a blast-furnace.
Protesting that the place was dangerous, the scaffolding insecure,
and the heat unbearable, he had been ordered again to do as he was
told, and had fallen, in accordance with his own just and terrible
prevision, into the mass of blazing iron. The defense was that the
man had known the danger and had voluntarily gone into it. He had
assumed the risk when he accepted employment. Furthermore, some
other employee, and not the corporation, was alleged to be
responsible for the defective scaffolding. The workman himself, or
one of his fellows, was guilty of the negligence that caused his
death.[pp.199-200]
I still remember the faces of the widow and children, the
plaintiffs in the case, who were left penniless. The policy of
corporations was to wear out plaintiffs by keeping the cases in the
courts. This was cheaper than settlement, and as cases could not be
gotten through the Supreme Court inside of three or four years, it
meant an all but complete denial of Justice. The attitude of
corporation lawyers was that claimants for personal injuries were "strikers,"
and that the lawyers who took their claims on a contingent fee were
"ambulance-chasers."[p.200]
But there was a deep and fundamental protest within me against the
law as an institution. I liked change, fluidity, movement. Anything
that balked freedom irked me. The law was opposed to change, it
thwarted the free movement of life. It was not responsive to
changing conditions. The law was in fact a dead man's philosophy It
went back for its leading cases to the distant past. It found its
guiding principles in the opinions of men long since dead rather
than in the needs and conditions of to-day. Th common law was
developed into a system of jurisprudence at the hands of mediaeval
lawyers who were paid retainers of the old aristocracy. It was
custom developed into law for the convenience of the ruling class.
The American colonists brought the common law to America, and here,
as in England, it has resisted change. Only under protest does it
adjust itself to present-day conditions. The law is not only static,
it takes pride in the fact that it is static. It glories in the
past, in the opinions of Coke, Littleton, and Marshall. The common
law is almost the only body of human thought that is guided by the
opinions and ideas of the past. Science, engineering, medicine are
perennially new. They reach out to the future and invite the
imagination of men.[pp.200-201]
It is for this reason, among others that lawyers are peculiarly
unfitted for public office. They resist change. They are
instinctively hostile to anything new. They are inexperienced in
constructive things. Their professional life and training is
associated with the past. They want the past preserved.[p.201]
...The law, it was evident, remained confused and costly because
it was to the interest of lawyers to keep it so. They did not want
simple, inexpensive procedure.[pp.201-202]
I was critical of my profession, alive to its falsities above as
well as below. Mr. Johnson would have nominated me for the bench,
had I wished it but I had no desire to be a judge. I wanted to take
part in the affairs of the community. To be denied the right to
express my own opinions was to be a man without a country. I
resented the elevation of the courts above the people, their freedom
from criticism, and the sanctity with which judges enveloped
themselves. I felt that a judge should be criticized as freely as
any other public official. He was merely an agent and as such no
more sacrosanct than the mayor. The courts were agencies for
administering one kind of justice, the city and the State agencies
for administering another kind. I came to see that judges had been
enveloped with sanctity for a purpose. Sanctity had come with their
usefulness to corporate interests; with their interference with the
legislature and Congress, with use of the injunction in labor
disputes and their concern for property. It was to the advantage of
the interests so protected to bestow upon judges immunity from
criticism. It added weight to their opinions.[p.202]
Lawyers who were independent-minded were dismissed from
consideration, no matter what their legal qualifications were. When
satisfactory nominees had been decided on, a committee went to
Washington to confer with the President or with the senators from
the State. If some unsatisfactory person was said to be under
consideration, the leading members of the bar rushed to Washington
to protest. I do not remember a vacancy on the federal bench to have
been filled with out consultation with the leading corporation
lawyers of the city, and almost always the nominee was of their
choosing. The same concern was shown in making up the slates for the
State bench. To business interests the judge was a most important
public official. Rarely did a liberal mind find a place on the
ticket.[p.203]
This concern over the judiciary was not, as these men said, a
desire to keep it out of politics, to elevate its character. For
very inferior men were often nominated. The real reason was that the
courts were in politics. They had the final say as to legislation.
They decided on the constitutionality of city ordinances, State
laws, and federal legislation. They had great power in labor
disputes. And this power made them invaluable allies to business
interests, especially to the railroads and public-utility
corporations, whose contracts with the city or whose rights in the
street were subject to regulation. ...[p.203]
This assumption of legislative power on the part of the courts
pushed me to a study of the debates on the federal Constitution. I
could find in them no provision and apparently no intent on the part
of its framers to make the courts the final arbiters in the
legislative field. The reverse seemed to be true. On reading the
debates of the convention I found that several proposals had been
made to lodge such power with the courts, and on each occasion the
proposal had been voted down. Interference of the judiciary with
legislation was a part of the real government that was outside of
and indifferent to the Constitution.[p.204]
Nor did the law impress me as a learned profession. It was a
business, a trade. I had little reverence for the leaders of the bar
and found no inspiration in the philosophy on which the law was
built and the absurdities to which it clung. The "sublimity of
human reason" lawyers called it at banquets. Voltaire had
certainly named it better the "conservator of ancient
abuses."[p.205]
The lawyer, like the business man, had a code of ethics of his
own. It was flexible; it lowered rather than elevated the ethics of
the community. By it a lawyer was enabled to defend a known
criminal, to promote monopolies in defiance of law, to accept any
retainer if it was not too obviously bad. The code ran as follows:
An attorney is an official of the court, a part of the
machinery for the administration of justice. There are four
participants in the administration of justice -- the judge, the
jury, and the counsel for the contending parties. It is the duty of
the judge to know and expound the law; of the jury to ascertain the
facts. It is the duty of opposing counsel to represent their clients
to the best of their ability, no matter what the equities of their
case may be. The lawyer owes but one duty, and that is to his
client. It is not his business to see that exact justice is done, to
be concerned over guilt or innocence. That is the business of the
judge and the jury. And the lawyer is under moral obligation to
render legal services to any one who presents himself. He can be
assigned to that duty by the court when a criminal is without
counsel.[pp.205-206]
But lawyers only applied this code as it fitted in with their
interests to do so. They would defend a big corporation or a rich
criminal, but did not defend the poor. ...They expressed indignation
against "ambulance-chasers who took the cases of widows and
children left desolate by death or injury, and utilized every
technicality of the law and every means of delay to defeat such
contestants in the courts. They saw no impropriety in getting their
cases before friendly judges or in filling the federal and State
courts with men who were sympathetic to their point of view.
...[p.206]
I sensed these things at the time, but I kept silence. I was part
of the system. It was not safe to talk too much about the things one
knew. To challenge the purity of the bench meant challenging the
foundations of society, offending a code of ethics that I was
expected to believe in. ...[p.206]
My professional relations warred indubitably with my convictions.
So did the enterprises with which I was connected. I was constantly
required to make some adjustment between the things I believed in
and the things I did. Always there was the conflict involved in
getting on, in standing by the game from which I got my living, a
living that was constantly increasing with my own needs. Of the men
I had known when I came to Cleveland those had risen the fastest and
farthest who asked no questions of their clients, who had the most
skill in devising means to defeat the law, especially in taking
advantage of some business reorganization or foreclosure. To raise a
moral question with a client was the surest way to lose him. He did
not hire a conscience; he hired a lawyer. And he wanted a lawyer to
sense his wants and devise means to satisfy them. Most lawyers made
more money out of business than from the law. They were let in on
enterprises, they participated in underwritings, they were looked
upon as an anchorage by men who felt that they could afford to pay
in this way for additional protection.[pp.211-212]
Constant dilemmas of compromise brought me face to face with the
problem of wealth without labor.[p.212]
CHAPTER 21 / WEALTH WITHOUT LABOR
The clients of our law firm were for the most part railroads,
bankers, manufacturers, business men, and individuals with trust
funds to administer. I noticed that they fell into two quite
distinct groups. Some of them had a great deal of litigation; some
years they prospered, other years not. They had not the best of
credit with the banks, enjoyed no social distinction, and sometimes
went through insolvency.
The second group seemed free from business worries. Its legal work
was consultative; its wealth increased from year to year. These men
took life easily, were socially eminent. They officered the clubs,
were prominent in the Chamber of Commerce, were deferred to in
conventions. The men in the first group were quite as intelligent as
those in the second; they worked harder. Yet they were harassed,
uncertain, and struggling.
Why, I asked myself, are some men easily and permanently rich,
while others, at times equally well-to-do, have an uncertain status?
Why is one group prominent in the affairs of the community and
distinguished in its social life, while the other, quite as able,
has no such financial or social power? What is the key to social and
financial success? I set myself to discovering it.
Obviously it was not hard work. One could not get very rich by
using his hands or his brains. Hard work did not guarantee success.
Nor did thrift and saving. These were virtues of the poor,
inculcated by banks, by employers, and by the Charity Organization
Society. Rich people did not save, they spent; the more they spent
the more they insisted that other people should save. They urged
their employees to be sober, to work hard, to come early and stay
late, but they did not do the things they taught. There was one
philosophy for rich men and their families, another for other
people.[pp.213-214]
I took the directory of directors of Cleveland corporations. I
studied the family histories of the city, of its early settlers, and
the holdings of our clients in various corporations. I worked out a
tabulation of prominent men and of the kinds of business enterprises
with which they were connected. I found that I was making an
investors' guide. It indicated where one should invest his money and
what he should avoid. It showed how some men got rich easily; how
others toiled unprofitably. It was a guide to social distinction; to
family permanence; to identification with the aristocracy. For the
most obvious thing to be deduced from it was that the aristocracy of
Cleveland was found among those who owned city land which their
families had secured as early grants from Connecticut, and which
they had held on to during the intervening years. ...[p.214]
The most distinguished group lived on Euclid Avenue, where their
families had lived for generations. The land on which Cleveland was
built was part of the Western Reserve. It had been settled by a
group of New England families, who had received a grant of land from
the State of Connecticut, known as the Connecticut Land Grant. Late
in the eighteenth century the colony had founded the city of
Cleveland at the mouth of the Cuyahoga River. Many of the families
had held on to their original grants and permitted the city to grow
up around them. Their residential sites on Euclid Avenue were broad
and deep and suggestive of old English estates. They bore imposing
homes set far back from the street. Cleveland had grown slowly for
seventy years; when I came there in 1894 it had a population of
three hundred thousand people, which doubled within a few years.
About 1900 old homesteads in the heart of the city and along lower
Euclid Avenue were being torn down and skyscrapers erected. Instead
of selling the land to builders, the old families leased it on
long-term leases, as is done in London and by the Astors in New
York, and collected ground-rent. The amount of the rent was
reappraised every ten years. In fifteen years' time the annual
rental of certain parcels was almost equal to their purchase price
when I first went to Cleveland. The land shot up in value from a few
hundred dollars a front foot to a thousand dollars, then to two
thousand dollars; some of it was selling at six thousand dollars
before I left the city.[p.215]
The families that owned these sites received substantial fortunes
every year from ground-rentals. Much of their wealth was accidental.
They had resented the intrusion of business, had fought the laying
of street-car tracks on the avenue, or had insisted on living in the
homesteads of their fathers in the face of encroaching industry.
Many of these families bore old New England names. They controlled
the banks and the social life of Cleveland. Ownership of land was
the hall-mark of power and of caste. No other kind of wealth gave
the same kind of standing.[pp.215-216]
The control of other people's money was next in importance to the
ownership of land. Organize a bank and your own dollar grew to ten.
The pennies, dimes, and dollars of the millions created millions for
the few. All told, the deposits of the people of Cleveland amounted
to two hundred million dollars, or thirty times the amount of the
city's debt, yet a handful of men closely associated, socially
intimate, members of the same club, were able to use this money as
they saw fit. They could lend it to their friends, or to syndicates
which they organized. They could use it in New York. They could do
pretty much as they willed with the business life of the city. They
influenced the press. They were closely identified with both
political parties. The banker was a political power, as he was an
industrial power, through the use of other people's money.[p.221]
Here again I found that the way to get rich was to have other
people trust you, work for you, save for you. If you could use the
money of other people, you need not have much money of your own.
The title-page of my manual for investors read as follows:
"Avoid competition -- become a monopolist."
Great wealth comes from what the community, not the
individual, creates.
The road to wealth and distinction is through control of the gifts
of nature.
Make society work for you.
Everybody works for those who own the land.
Don't save -- spend.
Thrift, humility, and sacrifice are virtues for the poor.
Temperance is a virtue not intended for club consumption.
Aristocracy is not a matter of birth. It is a matter of ownership
of the earth."
These business maxims violated all of my early teachings. "Take
care of the pennies and the dollars will take care of themselves"
did not figure here. Thrift had been a household word in my
childhood, a primary virtue inculcated by all. If I was industrious
and honest; if I worked hard and diligently; if I did things that
were distasteful; if I respected my superiors, I should become rich
and respected, my life would be crowned with success. The rich men I
knew were not thrifty; they asked others to be thrifty for them.
They did not save; others saved for them. They admonished others to
virtues of meekness, humility, and duty, but they observed none of
their own admonitions.[p.222]
They got an underhold on society, got it through monopoly and made
other people work for them. They capitalized something that every
one had to have or controlled a service that every one had to use.
They got rich easily, often quickly, and kept the wealth they had
acquired. It did not take much intelligence to secure this kind of
wealth, or, once secured, to hold on to it. Many men who got rich
out of land had done so against their will, or by accident. Millions
were made out of public-utility corporations by bribing public
officials or contributing to one or both of the political parties,
in consideration of a franchise grant, while hundreds of millions
had come from iron ore, oil, and coal.[p.222]
Men who worked the hardest and who had often the greatest ability
received the smallest returns. Those who contributed most to the
community by building up industry, producing useful things, for some
reason or other did not rise. But year after year the other group
grew richer and acquired social and political power.[pp.222-223]
...Speculation in land was unsocial. Individuals should not be
permitted to enjoy increased land values created by the
community.[p.223]
Must I refuse, I thought, to accept anything I did not myself
produce? I might betake myself to the woods with a rod and gun, but
my abstention would not change conditions. Change could only come
through political action. It involved education, agitation, possibly
control of the government by new groups.
I worked out a compromise. I followed the manual in making
investments, and kept away from competitive enterprises. Some money
that I put into land cleared several hundred per cent in a short
time. A railroad and coal underwriting cleared immense profits.
Securities in a public-utility corporation that cost me little sold
later for one hundred and seventy dollars a share. Industries
protected by patent rights yielded fertile returns on investment. "The
world," I said to myself, "is topsy-turvy; there is no
personal wrong in taking advantage of its topsyturviness to make
such money as one can. But I will keep my opinions straight. I will
advocate municipal ownership, will be honest about the tariff, about
land speculation, about special privileges of all kinds. I cannot
escape the world into which I am born, but I will do what I can to
change it."
CHAPTER 22 / SINGLE-TAXING A CITY
An opportunity came to put my philosophy of the single tax to the
test, but it came inopportunely. The Municipal Traction Company had
failed, my experience in the Senate had closed a chapter in
politics, my law business had suffered, and I wanted to leave
Cleveland. I had a small income and could do as I chose. I felt a
sense of guilt at leaving Tom Johnson, for he was my best friend; he
had been the centre of my life for eight years. And he urged me to
remain. We would take up the fight again, he said, it had been
longer than he anticipated, the people were more wedded to reaction
than he thought, they had to be educated -- we could not leave the
job half done. But I wanted to be doing work of my own and wished to
get away from the hatreds, the conflict, the ostracism which I
professed not to mind. And I felt that Mr. Johnson only half
believed that the fight could be renewed.[p.225]
I went to Europe in the summer to think things out. When I
returned in the fall I had decided for New York. I arrived in
Cleveland on the day of the primaries and went directly to the
voting-booth. There I discovered that I had been nominated by Mr.
Johnson for the Tax Commission. The work of the commission included
the appraisal of every piece of real property in the city and
required six months for its accomplishment. The other nominees were
men with whom Mr. Johnson had great influence, the majority of them
single-taxers. Election meant that I should be arbitrarily turned
away from my own purpose, but it meant also a chance to do a piece
of constructive work. It meant that I could try out our theories in
practice.[pp.225-226]
Mr. Johnson's nominees were approved by the people, and I
acquiesced in the work that he had laid out for me. The task of the
commission was an appalling one, for real estate in Cleveland had
not appraised for ten years. Previous appraisals had been done
badly, if not corruptly, and there was universal inequality. The
constitution of the State required that property should be appraised
for taxation at its full value, a rule that had never been followed,
and apparently nobody expected that it ever would be followed. The
poor were unjustly discriminated against, their homes being often
assessed at full value, while valuable down-town property was
assessed at as low as ten per cent of its value. Homeowners were
paying millions of dollars a year in taxes that should have been
paid by some one else. The opportunity was before the commission not
only of correcting the inequalities of assessments, but of taking
the first step toward the single tax by increasing the valuation of
the land and reducing the valuation placed on improvements. This
meant a complete reversal of the policy pursued by previous
assessors, who had put a low value on land and a high value on
buildings. Their rule had been that the more defenseless the
taxpayer, the heavier his taxes; and that the more men contributed
to the upbuilding of the community the more they should be taxed for
their well-doing.[p.226]
The commission elected as chairman Mr. Arthur May, a prominent
business man, liberal in his opinions and sympathetic to Mr.
Johnson. At our first sitting we determined to do the job
thoroughly, and put an end to the injustice that had prevailed. We
would place all property on the tax-list at its full value as
required by the constitution; we would see if it were not possible
to assess real property by scientific rules that could not be
challenged; when our work was completed we would publish the
valuations determined on in such a way that every property owner
could compare his valuations with his neighbors'. Favoritism should
end and wealthy taxpayers should be assessed on the same basis as
the poorest home-owners.[p.227]
All this was revolutionary. Such a procedure had never been heard
of. Every county in the State violated the provision of the
constitution, and apparently everybody, including the courts,
approved of it. New York City was the only community that had made
an attempt to assess its property at its full value, and by a
defensible system. Before we began our work, members of the
commission went to New York to confer with Mr. Lawson Purdy, who had
been for many years chairman of the Board of Commissioners of Taxes
and Assessments. The most corrupt Tammany governments of New York
had retained Mr. Purdy and given him a free hand in working out an
honest and equitable assessment of real property on a basis of its
market value and according to a uniform rule. No city in England or
on the continent, as far as I know, approximated New York at that
time in the honesty of its tax system, and Mr. Purdy, in my opinion,
has made one of the most distinguished contributions to municipal
politics of any man in this country or abroad. The New York plan of
assessing land at its full market value compelled owners to improve
their property. They had to build high-class structures in
competition with others. It put a penalty on idle landholding, and
compelled shacks and tax-earners to be razed. Compulsion on
landowners to improve their property led indirectly to the fine
architectural development of the city.[p.227]
We studied the work of the New York commission for some days and
decided to employ an expert land-valuer as secretary and bring him
on to Cleveland. This caused outcry from the opposition press, to
which we turned a deaf ear. Our secretary was given a free hand;
aided by Mr. Purdy, we proceeded to organize a corps of valuers
taken for the most part from Case College and Western Reserve
University.
The commission prepared a large map showing lot lines of valuable
down-town property. Then we invited in the owners to aid us in
making our preliminary valuations. We asked them to select the most
valuable site in the business section. About this there was little
disagreement: it was on Euclid Avenue, not far from the public
square. Then the commission fixed the valuation of this piece of
property at its actual selling price and announced it to the
assembled property-owners. There was immediate protest; the
valuation increased assessments from three to ten times what they
had been before. The commission's reply was that any one who was
dissatisfied with his valuation could post an offer to sell at the
appraised value; if the commission was not able to dispose of the
property at the valuation placed on it, it would reduce the
assessment. This effectually closed all protests; no one took
advantage of the offer.[p.228]
We continued this procedure in different sections of the city,
values being fixed largely by the people themselves in public
meetings called for the purpose. When our work was finished,
valuations were printed in pamphlets by streets and numbers, so that
every property-owner could compare his assessment with that of his
neighbor. There were fewer appeals than had ever been made in the
record of Cleveland or in that of the State. Our assessments of over
a hundred thousand pieces of real property remained practically
unchallenged; we had secured an approximation to exact equality in
their values.[pp.228-229]
Another rule adopted by the commission reversed the principle that
had previously obtained. We decided that men should be taxed on
their opportunity rather than on their efforts. Our idea was that
the dog in the manger who held his land idle or retarded the city's
development was a public nuisance and should not be encouraged in
being a nuisance. He should be forced to do his share in the
upbuilding of the city. "Payne's cow-pastures"
were a case in point--a big tract of land near the centre of the
city held out of use by one of the old families, who waited for the
ripening of values before they should place it on the market.
We listened willingly to the pleas of men who had recently
constructed fine office-buildings.
"Is it just," they said, "that we
should be punished for improving the city? We tear down shacks and
put up fine buildings. On land next to ours tumble-down buildings
disfigure the city and retard its growth; yet this adjoining land
has increased in value by our buildings. Is it just that we should
be punished by a high valuation on our building while the man who
refuses to build reaps a profit which he did not create?"
People interested in better houses had similar arguments. The city
was growing rapidly, rents were rising. Great stretches of land in
the suburbs were held out of use by speculators. The commission
could encourage the erection of houses by placing a relatively low
valuation on improvements and a high valuation on land.[p.229]
We went as far in our application of the reasonings as the
constitution permitted. Logically we would have relieved all
buildings of taxation. But we were bound by the constitution to
assess improvements. We met the situation by depreciating buildings
in a variety of ways, and materially reduced the valuation upon
them. As a result of our work a great part of the city's taxes were
assessed against land rather than against betterments. They were
shifted from labor on to opportunity. They penalized speculation and
encouraged effort. The home-owner and the poor were relieved of
millions of dollars of taxes that were placed on down-town property,
manufacturing sites, railroad rights of way, and the
water-front.[pp.229-230]
The work of the Tax Commission was the most satisfactory
experience of my political life. It confirmed my belief in the
results that would follow the taxation of land values and the
exemption of improvements from taxation. We were only able to make a
beginning, but the years that followed witnessed a building
development in Cleveland that has made it one of the finest cities
of the Middle West. Vacant land has been forced into use,
tax-earners have been replaced by commercial buildings, Euclid
Avenue has been developed into a business street for five miles
flanked with splendid structures. Suburban land has been laid out by
expert planners with broad boulevards, parks, and playgrounds. For
miles about the city development work has been going on and the
population has been dispersed over a wide area. Cleveland bids fair
to become one of the beautiful cities of America. It has grown with
astounding rapidity and a great part of this development is due, in
my opinion, to the automatic operation of high taxes on land values
and relative low taxes on buildings; one penalized the speculator,
the other gave a premium to the builder. Cleveland has followed one
of the natural laws in the social state.[p.230]
