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Legislation such as that proposed in the bill before you will defeat the purpose definitely avowed by intelligent business leadership better to serve all interests of the community by self-regulation and selfgovernment, and the fair solution of business problems by business experience rather than the hazardous resort to Government agency,
Senator WHEELER. As I gather from the reading of your paper, it is really an eulogization of the chamber of commerce itself?
Mr. MacDoWELL. It is a report of their attitude, gathered by referendum, and taking the different opinions at the national gatherings, and of the sectional views of business men, as represented by the chamber.
Senator BLACK. Just one question : You stated in the first part of your statement that where business was successfully operated, as I understand your position
Mr. MacDOWELL (interposing). Yes, sir.
Senator BLACK. Successfully operated, with due regard to the rights of the public and to the employees that there should be no public regulation.
Mr. MacDoWELL. Yes, sir.
Senator BLACK. Suppose it is not being successfully operated with due regard to the rights of the public and employees, what would be your attitude then?
Mr. MacDOWELL. I think we should research and find out why it is not being successfully operated.
Senator BLACK. You think that would give you the information? Mr. MacDOWELL. That would give us the picture as to why is the coal industry not succeeding, broadly. The one thing is overproduction; and the next is the lack of use of coal. We do not use as much coal as we did formerly.
Senator BLACK. I am not questioning your statement. I am inclined to think that is sound, that if a business is being successfully operated with due regard to the public and to employees, there should be no governmental regulation. But supposing it is not operating with due regard to the public and the employees and I am not assuming that this business is not being so operated, or any other business is not being so operated. Mr. MacDOWELL. No.
Senator BLACK. But if any business is not so operated, or does not come up to those requirements, do you think that would give the Government any more right to attempt to bring about a solution of its problems?
Mr. MacDOWELL. Not in actively taking hold in a regulative sense, or a directive sense.
Senator BLACK. You think it should not take hold?
Senator BLACK. I am not assuming that the coal business is failing; but if the coal business, or any business, should fail to properly function, or has failed to properly function with due regard to the rights of the public and the employees, do you think, when it reaches that condition, that the Government should attempt to regulate it if it is a basic industry?
Mr. MacDoWELL. No; I think it should attempt to work out its own salvation.
Senator BLACK. Even if it has failed —
Mr. MacDOWELL (interposing). The Government can be very helpful, perhaps, in permitting proper cooperation and working along general lines in that way.
Senator BLACK. You think, even if it has failed to be remunerative to the business itself, and to perform its function to the public, that we should not attempt Government regulation such, for instance, as we did in the railroads? Mr. MacDOWELL, Well, I
Senator BLACK (interposing). I am not asking you that in a critical sense, but to get your views, which would help the committee, as your other views expressed there.
Mr. MacDOWELL. I have a feeling myself that industry should be able to work out its problems. If an industry is not sound, failure is a punishment which comes. Ordinarily if industries are not paying they are not injurious to the public.
Senator BLACK. It might be that in that way the public would have to pay unduly high prices.
Mr. MacDOWELL. No. I would say for this business, where the business is not efficiently operated, the business gets less, with the unlimited competition that we insist on in this country.
Senator BLACK. Just another question along that line: Suppose the business itself has formed associations such as you have mentioned. Mr. MacDOWELL. Yes, sir.
Senator BLACK. So that it is, in effect, a general combination of interests with the various branches of that industry. . Mr. MacDOWELL. Yes, sir.
Senator BLACK. Do you think that then it should be left entirely up to that industry, irrespective of the public, to carry out its own problems?
Mr. MacDowELL. I think the industry and the Federal Trade Commission can work together very well to define what could be properly done to encourage research and get the scare out of business which then would stabilize the business.
Senator BLACK. Under that theory then the regulation of the railroads would have been wrong?
Mr. MacDoWELL. Not necessarily. Of course, the railroads are performing a public service of general interest, and I do not think that the business world is criticizing the regulation of the railroads so far as it has gone; some of the railroad men themselves may do it.
Senator BLACK. Well, they did when it was done. Mr. WARRUM. Could I ask a question, Mr. Chairman? Senator COUZENS (presiding). Yes. Mr. MacDOWELL. I am speaking entirely myself, not for the chamber of commerce, in these things you are asking me about, under the circumstances.
Mr. WARRUM. I notice in your statement you are the president of the Armour Fertilizer Works? Mr. MacDoWELL. Yes, sir.
Mr. WARRUM. Is that a constituent member, or a subsidiary of the Armour Packing Co.?
Mr. MacDOWELL. It is a subsidiary to the Armour Co.; yes, sir. Mr. WARRUM. How long have you been president of that company?
business world is ceif general interesse, the railroad.
Mr. MacDoWELL, I have been president since 1910.
Mr. WARRUM. And been a member of the chamber of commerce, too?
Mr. MacDOWELL. Yes, sir.
Mr. WARRUM. You remember that in 1921 Congress passed an act called the packers and stockyards act?
Mr. MacDOWELL. Yes, sir.
Mr. WARRUM. Were you opposing that at that time because it was an interference with private business!
Mr. MacDOWELL. I was not in that end of the business, and I do not recall just what our attitude was. I would suspect that there might have been some opposition.
Mr. WARRUM. And if that bill-you are familiar enough with the operation of that bill to recall that even the commissions that are charged in the stockyards are regulated ?
Mr. MacDOWELL. Yes, sir.
Mr. WARRUM. For cattle sold in the yards, consigned to the yards, and sold at the end of the consignment?
Mr. MacDOWELL. I know that.
Mr. WARRUM. And you are familiar with the fact that just before Christmas a question came up as to the right of Secretary Jardine to fix the rate of commissions charged in the Omaha Yards, and there was a hearing before three Federal judges!
Mr. MacDOWELL. I am not familiar with that.
Mr. WARRUM. But they are regulated; the stockyards even are regulated.
Mr. MacDOWELL. I know that.
Senator WHEELER. You likewise know that we have an inspection of the stockyards?
Mr. MacDoWELL. Yes; a sanitary inspection of the cattle has been carried on for some time. That is rather necessary on account of the foreign trade, and other health measures, that it be done. And it has been very efficiently and properly done.
Mr. LEWIS. You spoke, sir, of the right of self-control of an industry in your paper. Do you know of any self-control that has been applied by the coal industry in its management in your lifetime? Mr. MACDOWELL. I could not answer that.
Senator COUZENS (presiding). Is there a Professor Dyer here to be heard ?
Mr. DYER. Yes, Mr. Chairman.
Senator COUZENS. Just please tell the committee your name and your connection, and so forth.
STATEMENT OF GUS W. DYER, PROFESSOR OF ECONOMICS, VAN
DERBILT UNIVERSITY, NASHVILLE, TENN.
Mr. DYER. My name is Gus W. Dyer, professor of political economy at Vanderbilt University, Nashville, Tenn.
Senator WHEELER. May I ask you this question: How you came to be here to-day? Whom you represent?
Mr. DYER. Whom I represent?
Mr. DYER. I was invited to come here by the president of the National Coal Association.
Senator WHEELER. Are you being paid for making the statement you are to make?
Mr. DYER. I am paid for my expenses and a moderate amount for my time while I am here.
Senator WHEELER. That is all.
Mr. DYER. I am not accustomed to reading in public. A man who is accustomed to speaking extemporaneously in public is somewhat under a handicap in trying to read.
Senator WHEELER. You do not need to read.
Mr. DYER. I would rather read. I think I can say a lot more if I read what I have to say.
Senator BLACK. I have heard you speak. I think you would do better speaking.
Mr. DYER. I would rather read, and I will sit down, if you do not mind.
Senator Couzens. You may be seated, and proceed.
Mr. DYER. The Constitution is the product of philosophical rather than legal minds. It is an outline and brief expression of a philosophy of human society. This philosophy includes all phases of human life.
Hence we have a distinct American theory of industrial life and a distinct American theory of the relation of government to industry which grows out of our general theory of industry.
The central and supreme thought in our whole system and the foundation of our philosophy of human society, in religion, social life, in business-everywhere is the largest possible freedom to the individual to direct his life in his own way under his own authority with the least possible interference from government or from any other outside force.
The ideal of the American theory is self-government, and by selfgovernment the founders meant the right and guaranteed freedom of the individual to direct his life, his religious activities, his educational activities, his social activities, his business activities, as he pleases so long as he does not encroach on similar rights of other individuals. The only legitimate ground on which the Government can restrain his freedom is that he is interfering in an unwarranted way with the legitimate freedom of others. Legitimate governmental restraints under our system are confined to those unwarranted encroachments on the legitimate freedom of other individuals in expressing their inalienable rights of self-government. This is the meaning of freedom of contract which is the very foundation of our industrial system.
The founders of the American system set up two governments. The first and most important was a system of self-government under which the individual is sovereign, king, and no power under the sun can even question his supreme authority in everything that pertains to him as an individual. The second was the organized government of society. In their minds organized government was to be the servant, not the master, of self-government.
No one else has expressed the ideal and functions of these two governments so well as Jefferson in the Declaration of Independence. Man has certain inalienable rights, among them the right to life, liberty, and the pursuit of happiness—he meant the pursuit of his business activities as well as other activities in any field and in any way he pleases-working, buying, selling, making contracts, and so on, although he mentions only a few of these inalienable rights. The expression of these rights is within the field of self-government, and he thus marks the bounds of the sphere of self-government. Then he defines the function of organized government in its relation to self-government. Governments
are instituted not to restrain and restrict the individual in the expression of these rights-nor to dictate to him what to do, and what not to do, nor to dictate to him how to mine coal, how to make his contracts, how and when to sell his coal; governments are instituted to protect him against such interference. Governments are instituted to protect the individual against any invasion of his freedom from any source. The Government itself can not enter this realm, and its prime function is to keep anybody else from invading the realm of the inalienable rights of the individual.
The function of government in relation to business regulation is very similar to the function of an umpire in a football game. It is not the function of an umpire to tell the team how to play the game, what kind of plays to make, how to run, how to tackle, how to interfere. He has nothing whatsoever to do with these things. All these come within the scope of the inalienable rights of the teams, of the players. They may carry the ball to the wrong goal if they so prefer. This is no concern of the umpire. He is there to see to it that they play the game straight, to protect the inalienable rights of freedom of each player against others, and protect the rights of each team awainst the other. This well represents the function of government in the field of industry.
Under the American theory governmental regulation of all ordinary business must be in the interest of legitimate freedom, never against it. Governments are instituted not to restrain freedom but to protect it.
Even in cases of special governmental regulation of business, required by the unusual nature of the business, as in cases of monopolies and business enterprises that involve the health of the people in a vital way, the freedom of the individual in directing the economic processes of such business enterprises must be given the greatest protection possible. Restrictions here are to be limited to those activities of the enterprise that tend to encroach on the legitimate freedom of others
The American theory as embodied in the Constitution, is that the freedom of the individual is the highest good that can be attained through Government, and so can not be sacrificed for anything antagonistic to it, and that the highest and best social welfare comes through protecting the freedom of the individual; hence the position that this freedom mar be restricted in the interest of the great majority, or in the interest of the individual's own welfare, is totally without foundation from this American point of view.
While it is the prime function of gorernment to protect the freedom of the indiridual, the Government may consistently do many