First World War Centennial

X

PUBLIC AND PRIVATE CORPORATIONS

OUR governments, as now constituted, are not adapted for efficient constructive work. The smaller the governmental organi­zation and the more, therefore, there is an op­portunity for constructive work, in a democratic nation, the more this is evident. Much efficient constructive work has been done by the Federal Government; the Panama Canal, the reclama­tion work, our Army and Navy, as far as they have been left free from civilian—that is, politi­cal—interference. Some constructive work also has been done by States, but it rarely has been characterized by economic efficiency; compare the building of the New York State Barge Canal with that of the Panama Canal. In the smallest political organization—municipality, township, or village—inefficiency, waste, and incompetency have been customary, except in those rare cases where one strong man got control and remained in control for a sufficiently long time to accomplish results; but then it was not democracy, but Cæsarism, or "bossism," as we call it, which scored.

The reason which is usually given for the in­efficiency of our municipal governments is their control by politicians, the control of the elec­tions by the political party machines, and a strong and increasing sentiment has arisen among the better class of citizens, toward im­proving the efficiency of the municipal govern­ment, by change of the form of government. Various forms of such reform government have been devised, as "commission government," "city manager government," etc.

The general characteristics of these reform governments are:

A longer term of office, five or even seven years instead of the two years' term now cus­tomary in most municipalities.

Elimination of the periodic complete change of the government; at every election only a part of the officers is changed, and a greater continuity of the administrative body is thus secured.

Much greater power, authority, and respon­sibility of the officers.

A small number of elective officials.

Election by persons, without recognition of political parties.

Elimination of district representation by choosing all officers by election from the com­munity at large.

Referendum and recall.

The last feature, however, is objected to by many conservative citizens, as dangerously radical, and thus not included in many com­mission governments.

The experience was that such commission governments, when introduced, almost always were successful in the opinion of the leading citizens, gave a great increase in economy and efficiency of the municipal government, an ab­sence of control by political bosses and party machines; in short, were a great step in ad­vance.

But now many of these commission govern­ments have been in existence for a considerable number of years, and from these reports come in which are not always favorable, and claims have been made regarding some commission governments that they are more inefficient and unsatisfactory than the political government which they replaced, and some communities have abandoned commission government and gone back to the old form of government.

The question then arises whether the economic success of the change from political to commis­sion government was really due to the form of the new government, or whether it was merely the result of the change which disorganized the forces that made for inefficiency and waste. Gradually during the years these forces adapted themselves to the new form of government, got control of it, and it became just as bad as the previous form, or even worse, due to the greater power of the officials and their longer term of office, which increased their irresponsibility.

Municipal government by party machines controlled by irresponsible political bosses is bad; but it is a rather significant fact that where the citizens "rose in their might and turned the rascals out," and elected a reform government, fusion government, citizens ticket, etc., such government often has been worse than the "corrupt" political government which it replaced, and incompetency, political and so­cial inexperience, and reformatory hobbies have resulted in still greater inefficiency and waste.

It is interesting to note that our country's greatest city has for a century been controlled by the same irresponsible and "corrupt " political organization, and however often reform move­ments have wrested the power from the hands of Tammany Hall, it has always come back, and often with such an avalanche as to leave no doubt of the failure of the reform government.

There may be some reason in this; the polit­ical boss desires to remain in power, the political machine expects to be in existence and retain its control for generations, and this means some responsibility, however indirect. It imposes a control and limitation in the abuse of power, which does not exist with the individual re­former who is not restrained by any responsible power from carrying out his ideas, whatever they may be. It again is significant that where fusion administrations by several parties have won elections, almost always every one of the "fused" parties have disclaimed responsibility for the elected officials.

The great trouble with political reform is that it is rarely based on successful practical experience, but rather represents the academic reasoning of well-meaning, but often rather in­experienced and impractical, dreamers.

The logical and, therefore, most promising, and, at the same time, most natural method of remedying unsatisfactory results, is to look around where the same or similar conditions exist, but the results are satisfactory, and then apply, or adapt, the methods which have given satisfactory results, to the conditions where the results have been unsatisfactory. It is strange that in all the agitation for improving the ef­ficiency of the municipal corporation, in all the studies of commission government, municipal charters, etc., very little thought has been given to those forms of government which have proven satisfactory, efficient, and economical—the gov­ernments of the industrial corporations.

The municipality is a public corporation, owned and governed by the citizens; the indus­trial corporation is a private corporation, owned and operated by the stockholders. In size and capitalization, many industrial corporations are far larger than the average municipal corpora­tion; many smaller. Thus there is no essential difference in size. But the municipal corpora­tion, as a rule, is inefficient; the private corpo­ration efficient. What, then, is the difference in their government which makes the difference between efficiency and inefficiency? The fre­quent elections, the short term of office, two years, in the municipal corporation is consid­ered one of the causes of inefficiency, and in commission government charters we thus ex­tend the office term to five years. But the industrial corporation elects its directors every year, thus has a still shorter office term, and still it is efficient! District representation is another alleged cause for inefficiency, and there­fore often eliminated by reform charters, and all officers chosen from the city at large. But every corporation which owns a number of fac­tories has representatives of its different fac­tories, of its different manufacturing interests, its different other activities in its governing boards. Referendum and recall are considered dangerously radical novelties by many; but their principle is old and stale in the corpora­tions, and every board of directors, every officer, would resign at any time on demand of the majority of the stockholders.

What, then, is the difference between corpo­ration government and municipal government which gives the former the efficiency not pos­sessed by the latter? In the corporation, at every election, every director, every officer, is re­elected, as a matter of course, unless the owners—in this case, the stockholders—are very much dissatisfied with the management of the cor­poration, and desire to make a radical change, and this occurs very rarely. In the municipality, however, as a matter of course, the officers are not re-elected, no matter how much the owners—the citizens—are satisfied, but it is customary to change officers at every election, except in rare cases.

Thus the corporation government is contin­uous, and thereby efficient; the officer knows that if he acts right he will remain in office as long as he wishes. He can, therefore, plan and organize, and accomplish results. The annual election thus is essentially an official referendum and recall vote, insuring the responsibility and response of the officers to the owners' interests.

Compare this continuity of management with the biennial overthrow and more or less com­plete change of all the administrative and ex­ecutive organization, policy, and experience, occurring in the municipality, and the reason of the inefficiency of the latter, the efficiency of the former is given. Unfortunately, the tend­encies for governmental reform are very little in this direction in which efficiency has been proven, but rather are in the opposite direc­tion, to lengthen the office terms—thereby in­creasing the irresponsibility—and to discourage re-election, often to such an extent as to make it illegal; as if it were not the most foolish thing imaginable, if you have a man who is competent to do a thing, has the experience, and is willing to do it, to put him out of the office and put a new man in who has no experience. The argu­ment that it is dangerous to re-elect the same man many times, since he may establish him­self permanently in power, might have had some justice in the days of Washington, but certainly is silly to-day.

Thus, to make our present municipal gov­ernments most efficient, as efficient as corpo­ration governments, would require abandon­ment of the custom of changing officers at every election in favor of the custom of re-electing the same men as long as they are reasonably satisfactory, after picking out good and efficient men at first. But no change of the form of municipal government is required, except, per­haps, that to annual election instead of biennial.

However, the custom of rotation in office—often for the distribution of spoils—is so inborn in our nation, has so much become a habit, from the early Colonial days when it was the natural way, that it does not appear probable that it could be changed, at least, not very soon; but as long as this is not done our municipal govern­ment will remain inferior to our corporation government, in constructive work, no matter what other improvements are made in our po­litical governments.

Very few of the improvements proposed in the government of our municipalities are new; most of them are old and long established in the industrial corporation governments. For instance, proportional representation and mi­nority representation. It does not exist in most public elections. A small change in the vote, therefore, shifts majority to minority, and catas­trophically reverses all governmental policies, as the result of an insignificant percentage of voters changing their views and thereby con­verting a narrow majority into a minority. As a matter of course, every efficient corporation has always given representation in the board of directors to any minority of stockholders large enough to be entitled thereto; it would not have been efficient, thus would have been an economic disadvantage to exclude a minority from representing their views in the board, and proportional representation, which includes mi­nority representation, has always been the aim of corporation management.