struggle of the community at large are but the factors that produce this increase of value. This increase Mr. George, following Karl Marx and adopting his language, styles "the unearned increment," and on this increment, created, as he argues, not by the landowner, but by the people, the burden of taxation should rest, instead of, as in the present system, being placed on the shoulders of those who have tilled, subdued, or built or labored on the soil.

The discontent, or rather the longing for change to which the vote for Mr. George gave expression, was no new thing. It had, as we have already pointed out, long existed in the classes who are dependent on wages, and given birth to the countless trade unions and brotherhoods that finally culminated in the Knights of Labor.

Discontent, however, had now also spread in other classes, and the mercantile and manufacturing interests, the shippers and handlers of goods, were profoundly dissatisfied with the management of the railroads as regards transportation of goods, and loud were the complaints of unjust favoritism.

It was only natural, under these circumstances, that one of the matters which occupied the attention of statesmen and business men, and which finally led to Congress passing, in 1887, the Interstate Commerce Act, was the prevalent system of incorporation. The bill itself was designed to stop the encroachments of railway corporations on individual rights, and to check discrimination in the rates of freight to the advantage of certain localities or certain favored customers. It was not without protracted debate that the measure became law, and it was not without considerable misgivings and foreboding of evil that the railroads commenced to comply with its provisions. The ultimate or permanent success of even this measure is still quite doubtful. An investigation held in April, 1889, elicited the fact that, while the great railway managers had found difficulties in the way of carrying out its provisions, none of them asked for its repeal. On the contrary, they urged the necessity of the Government strictly enforcing its provisions on all railroads in the United States or that pass through the United States. This last demand was aimed especially at the Canadian railroads, of which the Grand Trunk Railroad has a branch running through the State of Maine, and derives the bulk of its business from the Western cities of Chicago, Detroit, and St. Paul. The law too, it was urged, placed American transcontinental lines at a disadvantage compared with the great Canadian Pacific Railroad that runs to Vancouver's Island from the Atlantic seaboard. Built by the aid of lavish subsidies from the Canadian Government and guarantees from the British Government, this transcontinental line, running wholly outside the United States, is necessarily exempt from the action of its laws.

CHAP. XXXV.

INTERSTATE COMMERCE BILL.

1839

It is not, moreover, hampered by any such restrictions as those embodied in the Interstate Commerce Bill respecting rates of freight or the relation of the rates of freight to the number of miles over which the freight is carried. It can, therefore, carry some classes of goods between England and San Francisco cheaper than our lines can. The contention, therefore, of the railway managers is that, as far as the connections of this company extend to the United States, so far ought the Interstate Commerce Bill to be enforced.

The question, however, of what rates railroads ought to charge and how they are to be managed so as to ensure fair treatment to all localities, is a secondary question to that which is asked respecting the power, the steadily increasing power, wealth, and solidarity of all the great corporations that have sprung up, more particularly since the war, and the plethora of money which followed the peace. Personal feeling, too, enters into the question. In a country like ours, republican in government, democratic in principle, where all citizens are equal, and where all can aspire to even the highest honors that the nation can bestow, the enormous fortunes amassed in a few years by the managers and manipulators of these colossal corporations, seem almost an outrage on the individual. This view is natural, although its existence may be deplored. The change which has come over the whole system of incorporations has been a gradual one, inevitable in the increasing development of means of communication, the increasing products of the soil, and the rapidly advancing progress of our industries. It is a change which is taking place over all the world, a change indicative of a tendency to substitute combined action for individual competition. In the earlier days of our national life the conditions under which industrial corporations existed, without railway or telegraphic communications, were not such as to give them a pronounced advantage over the individual. All this is now changed, and the corporation has shown its superiority; it is to the mass of the people what a highly organized and trained army is to an undrilled, unconnected, inharmonious, and scattered aggregation of individuals.

There are many kinds of business in which, if the individual is not very highly endowed, it is better for him to take service with a corporation. Individual success is growing more rare; and even the successful individual is usually succeeded by a corporation of some sort. In the United States, as in England, the new era came into a country which had always been decided in its leanings to individual freedom; and the country could see no new departure in recognizing fully an individual freedom of incorporation instead of the old system, under which each incorporation was a distinct legislative act. General provisions were rapidly adopted by the several States, providing forms by which any group of persons could incorporate

themselves for any purpose. The first act of the kind was passed in Connecticut, in 1837, and the principle of the English Limited Liability Act of 1855 was taken directly from it. The change was first embodied in New York in its constitution of 1846, as follows: "Corporations may be formed under general laws, but shall not be created by special act except for municipal purposes, and in cases where, in the judgment of the Legislature, the objects of the corporation cannot be attained under general laws." The general laws were for a long time merely directions to the corporators as to the form of the certificate and the place where it was to be deposited. The New York provision was only a development of the principle of a statute of 1811, applying to manufacturing, but it is an instance of what was taking place all over the country. The consequent freedom of corporations was also influenced by the law, as expounded by the Supreme Court of the United States in the "Dartmouth College case" (1819), which principle has always been the object of vigorous but unsuccessful criticism. The States are prohibited by the Constitution from passing any laws which shall alter the obligation of contracts. This decision held that a charter was a contract between the State and the corporation created by it, and therefore unalterable, except by consent of the corporation. The States were careful thereafter to insert in all charters a clause giving the State the right to alter the charter, but the decision has tended to give judges a bias in favor of the corporations in all fairly doubtful cases. Corporations in the United States thus grew luxuriantly, guarded by the Constitution and very little trenched upon by the States.

Our corporations have usually been well managed, and very much of the extraordinary development of the wealth of the United States has been due to them. But a corporation which holds $400,000,000 of property, which owns or influences more than one State legislature, and has a heavy lien on several others, is not an easy creature to control or limit. Wars of rates between rival corporations claiming great stretches of territory as "their own," into which other corporations must not intrude, are startling things to any people. The rise of a corporation like the Standard Oil Company, built upon the ruins of countless individual business concerns, and showing that it can reduce even railway corporations to an obedience which they refuse to the State, is too suggestive of an imperium in imperio to be pleasant to a democracy.

It is, however, in the relations between employers and employed that the change in methods of carrying on business has had most unhappy results. Corporations, it is an old saying, have no souls; the directors, who control everything, are never seen; they are mere names, representing so

CHAP. XXXV.

EMPLOYERS AND EMPLOYED.

1841

much capital and wielding so much power; the subordinates, who execute everything, can merely carry out the instructions they receive. In any case, the substitution of a soulless, intangible abstract creature of the law, such as a corporation is, could not but affect the relations between the capitalist and the laborer, the employer and the employed. It could not but affect them disastrously for at least a time. Still, the disastrous results of such a substitution of employers might have been mitigated, if not quite averted, by mutual forbearance and consideration, but the freedom and power of the corporate employers strained the relations farther than was at all necessary. The first clumsy attempts to control the corporations, by limiting the percentage of their profits, led to the artifice of "watering "-unnecessarily increasing their stock. In good years the nominal dividends were thus kept down to an apparently normal percentage. When bad years, or increasing competition, began to cut down the dividends, the managers were often forced to attack the wages or increase the duties of their employees. "The bad years" began to be more numerous and constant after the financial crisis of 1873 had set in, and the first serious effects appeared in the railroad strikes of 1877, which have been repeated disastrously in following years, as in the strike on the Missouri Pacific and other great lines of communication. One of the most serious of those occurred on Dec. 24 on the Philadelphia and Reading Railroad. Certain men were discharged for declining to move some "boycotted” goods. New hands were employed, and the Knights of Labor demanded that the discharged men should be reinstated. This the company's officials refused to do. A general strike of all employed in the goods traffic followed, and about 25,000 men were thrown out of employment. The Knights of Labor then ordered the 30,000 colliers employed in the coal pits of the company to join the strikers; but, as many of the men remained at work and new men were easily procured, the company was able to move the traffic without difficulty. This was a serious blow to the Knights of Labor. Referring to these disturbances, Mayor Hewitt, of New York, Dec. 19, made a remarkable speech before the Board of Trade, which attracted much attention. He opposed the Knights of Labor, declaring that their obstruction of public business created an issue more important than those of the tariff or the surplus, and that secret organizations acting outside the law, which undertook to stop the work of common carriers, must be put down as guilty of crime worse than burglary or highway robbery.

In April, 1887, an important change took place in the Cabinet, the Secretary of the Treasury, Mr. Daniel Manning, being compelled by ill-health to resign his high position. Mr. Manning, who was born in Albany in 1831, entered in his twelfth year the office of an Albany newspaper, the Argus,

and rose to be its manager, and in 1873 the president of the company. He had also extensive business relations, being elected in 1881 President of the National Commercial Bank of Albany. His personal entry into political life, as distinguished from his journalistic support of his party, took place in 1872, and from 1874 to 1885 he was a member of the Democratic State Committee. To his exertions the election of Grover Cleveland as Governor was mainly due, and his action in the National Convention of 1884, as head of the New York delegation, had equally great influence on his nomination to the Presidency. His knowledge of banking and finance well qualified him for the office to which he was assigned, and his discharge of his duties was satisfactory to the financial and commercial community. After his resignation he paid a visit to Europe, but the improvement of his health did not continue on his return hence, and in December he died, in his native city of Albany.

Before this, several prominent men had passed away, among them three who had unsuccessfully aspired to the Presidency.

In 1885 death removed from the scenes of active life General George B. McClellan, the commander of all the armies of the United States after the retirement of General Scott, and the organizer of the Army of the Potomac. His career in the war and his candidacy for the Presidency in 1864 have already been told in these pages. In that year he had resigned his commission in the army, and took up his residence in New York and New Jersey, of which latter State he became Governor in 1877. Thenceforward he devoted himself to various engineering enterprises, to travel, and to literary pursuits. He was a clear writer, a good speaker, and profoundly versed in the arts of strategy and tactics. Too much caution and a strange suspicion that the Government did not wish him to succeed, led to all his failures and disappointments. But, to quote the words of Prof. Henry Coppee, “his personal magnetism has no parallel in military history, except in that of the first Napoleon. He was literally the idol of his officers and men, and they would obey him when all other control failed."

Samuel Jones Tilden was born in Lebanon, New York, in the year 1814, the descendant of a New England family that settled in America in 1634. His father was a friend of Martin Van Buren, and politics was the very atmosphere of the household in which the boy grew up. Both before and after his entrance at Yale, in 1832, as well as before and after his admission to the bar, his tongue and pen were devoted to discussing the political questions of the day. As a lawyer, he made his fame and laid the foundation of his fortune by his argument in the suit between the Pennsylvania Coal Company and the Delaware and Hudson Canal Company, and from 1855 all the