He had incorporated in the Franchise Law the right of Labor to have one representative upon the boards of corporations and to share a certain percentage of the earnings above their wages, after a reasonable per cent. upon the capital had been earned. [Footnote: See [What Co-Partnership Can Do].] In turn, it was to be obligatory upon them not to strike, but to submit all grievances to arbitration. The law was to stipulate that if the business prospered, wages should be high; if times were dull, they should be reduced.
The people were asked to curb their prejudice against corporations. It was promised that in the future corporations should be honestly run, and in the interest of the stockholders and the public. Dru expressed the hope that their formation would be welcomed rather than discouraged, for he was sure that under the new law it would be more to the public advantage to have business conducted by corporations than by individuals in a private capacity. In the taxation of real estate, the unfair practice of taxing it at full value when mortgaged and then taxing the holder of the mortgage, was to be abolished. The same was to be true of bonded indebtedness on any kind of property. The easy way to do this was to tax property and not tax the evidence of debt, but Dru preferred the other method, that of taxing the property, less the debt, and then taxing the debt wherever found.
His reason for this was that, if bonds or other forms of debt paid no taxes, it would have a tendency to make investors put money into that kind of security, even though the interest was correspondingly low, in order to avoid the trouble of rendering and paying taxes on them. This, he thought, might keep capital out of other needful enterprises, and give a glut of money in one direction and a paucity in another. Money itself was not to be taxed as was then done in so many States.
Chapter XXXIII
The Railroad Problem
While the boards and commissions appointed by Administrator Dru were working out new tax, tariff and revenue laws, establishing the judiciary and legal machinery on a new basis and revising the general law, it was necessary that the financial system of the country also should be reformed. Dru and his advisers saw the difficulties of attacking this most intricate question, but with the advice and assistance of a commission appointed for that purpose, they began the formulation of a new banking law, affording a flexible currency, bottomed largely upon commercial assets, the real wealth of the nation, instead of upon debt, as formerly.
This measure was based upon the English, French and German plans, its authors taking the best from each and making the whole conform to American needs and conditions. Dru regarded this as one of his most pressing reforms, for he hoped that it would not only prevent panics, as formerly, but that its final construction would completely destroy the credit trust, the greatest, the most far reaching and, under evil direction, the most pernicious trust of all.
While in this connection, as well as all others, he was insistent that business should be honestly conducted, yet it was his purpose to throw all possible safeguards around it. In the past it had been not only harassed by a monetary system that was a mere patchwork affair and entirely inadequate to the needs of the times, but it had been constantly threatened by tariff, railroad and other legislation calculated to cause continued disturbance. The ever-present demagogue had added to the confusion, and, altogether, legitimate business had suffered more during the long season of unrest than had the law-defying monopolies.
Dru wanted to see the nation prosper, as he knew it could never have done under the old order, where the few reaped a disproportionate reward and to this end he spared no pains in perfecting the new financial system. In the past the railroads and a few industrial monopolies had come in for the greatest amount of abuse and prejudice. This feeling while largely just, in his opinion, had done much harm. The railroads were the offenders in the first instance, he knew, and then the people retaliated, and in the end both the capitalists who actually furnished the money to build the roads and the people suffered.