THE GOVERNMENT’S HANDICAP
In this chapter an argument is made that no government, and
especially no republic, can supply the necessary management for
business enterprises. The effect of popular and political
interference with public business is illustrated.
The principal reason why government business operations are always
financial failures is that no republic can supply the all-essential
third leg. Its management is always defective. It can furnish capital,
it can employ labor, but in a government where the people have a voice,
management always buckles.
Senator Aldrich was frequently quoted as saying that the government
could save three hundred million dollars per annum if it would apply
business principles to its affairs. The distinguished senator never
said that. What he did say was that the government _would_ save three
hundred million dollars per annum if it _could_ apply business
principles. Experience had taught the senator what experience has
taught everyone who has had experience and what observation has taught
the observing: that it cannot be done.
During the campaign of 1916, I sat on the platform and heard the then
candidate for governor of a great middle-west state tell an audience
that if he were elected governor, he would apply business principles to
state affairs. I followed him and told his hearers that, if elected, he
would do nothing of the kind. In the first place, it was impossible,
and, secondly, they would not consent to it even if it were possible. I
reminded them that I knew better than their candidate, for I had tried
it. I did suggest, however, that simply because business principles
cannot be applied to public affairs, is no excuse for conducting public
affairs in a thoroughly unbusinesslike manner. It is not necessary to
violate every business principle because some cannot be applied.
The candidate was elected, as he deserved to be, and has made one of
the best, many say the best, governor his state ever had. But he will
have to admit that he cannot remove officials simply for inefficiency,
and he cannot make appointments in the face of public opposition,
however fit and worthy the applicant. In a thousand ways he cannot
exercise the independent discretion which he would if president of a
bank or the head of some industrial corporation.
When I took charge of the Treasury Department I found an appraiser at
one of the principal ports who had outlived his usefulness. He was not
dishonest. Dishonesty is the least of all evils of government service.
He was simply inefficient. He had a good army record, was a very
reputable gentleman, highly esteemed, absolutely honest, and Mr.
McKinley had made him appraiser. There were many evidences of
inefficiency. Importers at far distant ports were entering their
merchandise at this city and shipping them back home, manifestly for
the purpose of evading the payment of appropriate duties. I have no
doubt that the government was losing a million dollars or more a year
through the inefficiency of this good man.
President Roosevelt authorized a change. I informed the two senators
from that state what had to be done, and asked them to select the best
man they could find and I would arrange a vacancy to meet their
convenience. President Lincoln is credited with saying that when he had
twenty applicants for a position and appointed one, he made nineteen
enemies and one ingrate. I wanted to protect these senators from
nineteen enemies.
They found an excellent man and I had the old appraiser come to
Washington. He fully recognized his utter failure, and willingly
resigned. We parted friends. The inexperienced will suppose that was
the end of the incident. It was not. It was the beginning of it. The
removal was declared to be purely a political deal. The President was
criticized, I was abused and the two senators maligned. Every prominent
Grand Army man in the country was asked to protest, and most of them
did, until this dear old fellow was made to believe he had been imposed
upon. He published his grievances in an extended interview and in about
three months died of a broken heart.
The people will not consent that public affairs shall be conducted as
business is conducted. Had this man been in the employ of a business
enterprise in any large city, his removal would not have elicited so
much as a notice that he had resigned for the purpose of giving
attention to his “long-neglected private affairs.”
Public opposition to the application of business principles to
government affairs is well illustrated in the location and erection of
public buildings. Chicago has a federal building which was intended to
accommodate, and does hold, not only the post office, but serves as
court house, custom house and shelters all other federal offices. It
cost nine million dollars and is ill-suited for anything. There are
plenty of architects who can design a court house, or a post office, or
an office building, but no one has yet appeared, and no one ever will
be found, who can combine the three without ruining all.
During the period of construction, the Chicago post office occupied
temporary quarters on the lake front in a wooden building, veneered
with brick, built expressly for the purpose. Unquestionably it was the
most convenient, and therefore the best post office in the United
States. This of course is from the standpoint of a business man.
Everyone connected with it regretted its abandonment for the huge,
imposing but outrageous new building. The architect’s pride centered in
its enormous dome. All the mail had to be taken from the basement up a
steep incline and, until they began using heavy gasoline trucks, it
required four horses to pull out from under the building what one horse
could haul to the depot.
Pittsburgh wanted a building equally imposing, and Congress
appropriated a million dollars to buy a site. That sum would pay for
nothing suitable in the central part of the city. The newspapers had
all purchased property at the top of the hill, in the newer part of the
city, and the Secretary of the Treasury was expected to locate the
Federal Building accordingly. He did not do so and for this reason:
There were no street cars going near the proposed site. It was before
the advent of gasoline trucks and the mail would have to be hauled up
the long inclines by teams. In slippery weather a team of horses,
unless freshly shod, cannot climb that hill with an empty wagon.
Inspired by the experience at Chicago, the Secretary decided to give
Pittsburgh the best post-office service in the world. An entire block
near the principal depot was purchased, at fifty percent or more above
its market value. But that was relatively cheaper than anything else
offered, and less proportionately than what the government is usually
compelled to pay. A suitable site for a business enterprise employing a
like number of people, and doing an equal volume of business, would be
tendered on a silver platter. The people’s government never got
“something for nothing” until we entered the war. What it then got and
where it got it is quite generally surmised.
The intention was to erect a steel-framed post office, not more than
three stories high, with wide court, so the light would be abundant,
install a system of pneumatic or electric carriers, with tubes
extending to all the depots and substations of the city. This, I
submit, is exactly what any business concern would have done. But it
was not satisfactory. A perfect furore was raised, every bit of which
had its root either in a hope of profit through the location of the
building, or in a desire for a big and imposing public building with an
enormous dome. The people thought it a shame that Pittsburgh should be
asked to put up with the expenditure of a fraction of the money that
had been thrown away in Chicago, and the fact that one hour would be
saved in the distribution and delivery of every piece of mail, did not
palliate the offense. A post office erected solely for the purpose of
efficient mail service will satisfy no community.
There are quite a large number of ports of entry where the entire
revenue collected is not enough to pay the expenses of the office. In
my annual reports I recommend that several of these be abolished, but
no congressman from those states would support such a recommendation
and no congressman from any other state would favor it lest economies
applicable to his own locality would be thus invited. Everyone insists
upon economy in government matters, but all demand that it be exercised
in a distant state, and preferably in some territory or in the District
of Columbia where the franchise is denied.
Many will remember William S. Holman of Indiana, for many years
chairman of the Committee on Appropriations. He was not only an able
man but a wise and economical statesman, and merited the appellation by
which he was internationally known, “The Watchdog of the Treasury.” The
Committee on Rivers and Harbors, desiring his support, inserted an item
for dredging a creek extending into Holman’s district, so ships could
come to central Indiana. Of course Mr. Holman wanted to be returned and
was therefore compelled to support the bill. He even made a short
speech in favor of this particular item. When he closed, Tom Reed arose
to remark in his inimitable drawl,
“’Tis sweet to hear the honest watchdog’s bark,
Bay deep-mouthed welcome as he draws near home.”
A SELF-EVIDENT FACT
No government subordinate or bureau chief ever got into difficulty
except when he did something. No one ever knew a refusal to act, or a
delay in acting, to be the subject of judicial or legislative
investigation. Pigeonholes all filled is infinitely safer than a few
signed documents. This is fully recognized throughout the whole realm
of public service and the result is logical—everything of a decisive
nature is deferred as long as possible.
In 1906 Congress authorized the Secretary of the Treasury to settle a
claim for ice sold to the government for the use of the Union Army in
1863. I am the only official who, in more than forty years, could have
been impeached for action taken in connection with that knotty problem.
Subordinates in corporations and private business are criticised and
lose their positions for failure to act. With the government, men are
discharged and disgraced only when they do act. Unless a clerk or
bureau chief or head of a department is caught red-handed, so there can
be no question of guilt, there is no way to rid the department of an
incubus without great difficulty. What I am trying to emphasize is a
fact that everyone knows, few recognize, fewer still admit and many
deny, to-wit: That government, state and municipal affairs are
necessarily conducted upon entirely different principles from ordinary
business.
TWO ARMY INCIDENTS
I am indebted to an army officer for the following, which I have not
verified and therefore cannot vouch for, but I give it simply because
it is absolutely true to life.
During the Indian insurrections in Texas, a certain officer got word to
his quartermaster that he must have supplies and ammunition at a given
point on the Rio Grande River without delay or his detachment would be
annihilated. The quartermaster must have been a civilian for,
regardless of red tape and formality, he proceeded to act. He found a
boat and sought to engage it. But the river was low and the owner dared
not attempt the trip. “But,” said the quartermaster, “if you do not go,
those men will be annihilated.” “If I do go,” said the owner, “my boat
will be annihilated, and it’s the only boat I have. You have more men.”
Rather than fail, the quartermaster purchased the boat for twelve
thousand dollars. He loaded it with supplies and ammunition, started it
up the river and made his report. Promptly, the department at
Washington refused to ratify the purchase, and reprimanded the
quartermaster severely for exceeding his authority in purchasing a
boat. I submit that the department was right. No member of Congress
would vote to give a quartermaster authority to buy a river steamer.
Even the Secretary of the Navy would need congressional authorization.
Fortunately, the boat returned and the quartermaster tried to get the
man to take it back. He refused. Then the quartermaster found a
purchaser, sold the boat for twelve thousand five hundred dollars, paid
the purchase price and sent five hundred dollars to Washington.
Promptly the department refused to ratify the sale and again
reprimanded the quartermaster because he had sold a boat without
authority. And the department was again right. Congress never has given
and never will give authority to a quartermaster or anyone to sell a
boat or anything else except after prolonged condemnation proceedings,
and then at auction. Any corporation, under like circumstances, would
have made that quartermaster a vice-president. Instead his pay was held
up, and he faced court martial until some comptroller risked his
official life and reputation by closing the account, also in violation
of law.
If I remember correctly, it was Colonel Phillips of the regular army
who gave me this chapter from his experience: While in command at a
frontier post he was asked by the department to make a recommendation
concerning a certain matter. Following the regulations, he referred the
matter to his quartermaster. The quartermaster reported favorably
to the colonel in command, and he, as colonel, joined in the
recommendation and sent it to Washington. In due time he received
instructions to proceed and, again obeying regulations, he directed the
quartermaster to carry out the instructions of the department. This was
done and the quartermaster so reported to the colonel in command, and
the colonel approved this report and forwarded it to the department.
All of this was regular and would afford no occasion for comment but
for the fact that Colonel Phillips, the officer in command, was also
quartermaster. He had asked himself what had best be done, made his
report to himself, approved the report made to himself, joined in his
own recommendation, then directed himself what to do, reported to
himself that it had been done and then, as commander of the post, had
transmitted all the papers to the department, which, in course of time,
were approved, and one more closed incident in the military affairs of
the United States of America resulted. He had signed the same paper
seven times and there had been no way to abbreviate.
I submit that if he had been in charge of railroad operations, some
congestion of freight would have resulted while all these necessary
formalities were being worked out.
I want it definitely understood that in recording these instances, no
criticism is intended. No material improvement ever can be made without
throwing wide open every conceivable door and shutter through which
fraud and corruption not only can creep but leap and run. I give them
for no other purpose than to prove established principles to which
there are few if any exceptions, to-wit: That a republic in business is
an ass.