U.s, Congress. House No. 4 Committee Ways and Mean HEARINGS BEFORE THE COMMITTEE ON WAYS AND MEANS HOUSE OF REPRESENTATIVES WITH REFERENCE TO THE NEW REVENUE BILL [THIS PRINT OF THE HEARINGS IS SUBJECT TO REVISION JUNE 11, 1918 WASHINGTON GOVERNMENT PRINTING OFFICE HJ; , Ан 1918 f copy 2. REVENUE BILL. COMMITTEE ON WAYS AND MEANS, The committee met at 10 o'clock a. m., Hon. Claude Kitchin (chair man) presiding. There were also present Representatives Rainey, Dixon, Garner, Dickinson, Oldfield, Crisp, Helvering, O'Shaunessy, Carew, White, Moore, Longworth, Fairchild, Sterling, Martin, Hawley, and Tread way. STATEMENT OF MR. JOHN W. BATDORF, PRESIDENT AMERICAN CONSTITUTIONAL ALLIANCE, 117 WEST ONE HUNDRED AND THIRTY-SECOND STREET, NEW YORK, N. Y. Mr. BATDORF. Mr. Chairman, I am going to make this statement just as short as it can be made, and after the little talk I give, if the members of the Ways and Means Committee will read those little. books, they will understand just what I mean. They can not fail to understand, because I know they are intelligent men. I hope you will permit me, if the members are interested, and if they are not interested I will be very glad to retire to outline a plan, because in listening to the speakers of yesterday it seemed to me that what this committee wanted was a concrete, practical plan to raise $8,000,000,000 by taxation, and in such manner that it might not hurt nor prove a reaction of too great liability upon the consumers. I think that is what you are after. The CHAIRMAN. Yes, sir. Mr. BATDORF. Now, I promise you that I will lay before you a plan. I do not say that you will be agreeable to that plan, but I will give you a positive plan to raise $8,000,000,000 by taxation in a specific way: and I hope you will pardon me if I sometimes become a little dogmatic, because you demand a specific plan, and that will necessarily make some part of my speech a little dogmatic. The CHAIRMAN. Doctor, whom do you represent in appearing before the committee? I notice you are president of the American Constitutional Alliance. Mr. BATDORF. I represent an organization which has been studying for years, under my leadership, a principle and thought of Jefferson as he expressed it in France in 1785, to support a patriotic proposition, to support the Constitution and the Government created under it. In other words, we are an absolutely patriotic body of very intelligent men, who believe the time has arrived when we must get at the truth of things. Because of this Government being carried on by the Hamiltonian doctrine of concentration of power for 125 years, some things have crept into our governmental rulings that have been a hard matter upon the consuming class. The matter with capitalism and the matter with labor is that they have made a sort of bargain to "get theirs" out of society. I would like to speak in strong words of what they think about the consumers, but I will refrain. I think you understand that this Government, by taking over the control of the railroads, and, possibly, soon the shipping, will start the ball to roll toward Government ownership in time. Government ownership is somewhat deceptive. It is bound to lead further and go into what we call State socialism, the State socialism practiced by Germany especially, an autocracy, and beyond that we are bound to be confronted with the principle of Marxism socialism, and beyond that Bolshevikism, and as we enter this path I think, as good American citizens, we should be careful just exactly what we should do. This alliance is ready for work. Its main work has been upon the streets of New York City. It has driven socialism from the streets there. Our organization is the only organization outside of the religious bodies that is permitted to speak on the streets of New York. We supported the Liberty Loan movement and helped the Red Cross movement by our speakers. We have many speakers for this cause, to effect a pure government in this Nation. I now want to state a few facts in our history which will make a base for the argument that must come, if you want a plan to raise $8,000,000,000 from taxation to support this Nation in war for the next year. In the eighties the Supreme Court in three cases made of the corporation a person and a citizen. Those cases are 164 United States, 636, in the case of the United States v. The Northwestern Express Company, in which it was held by the Supreme Court that the corporations are citizens and under section 1 of the fourteenth amendment to the Constitution the rights of corporations are made to stand on the same basis as the rights of natural persons; and in the case of Santa Clara County, California, v. The Southern Railroad Company (113 U. S., 396) the United States Supreme Court declined to hear argument to deny those rights; and, third, in the case of Fire Association v. State of New York (119 U. S., 110) the rule is laid down that a corporation of one State doing business in another is to be deemed a person within the meaning of the Constitution. The reasoning of the court was sound at the time. They said that the corporation was formed by a collective lot of citizens and persons, and for that reason that collective or cooperative lot of people should have the same rights as the natural citizen when bound under the corporate law. They forgot one thing, and that is that they permitted a natural person to represent one little stick, but when you bind tens of thousands of sticks into one concrete bundle, animated by one thought, all of them, for the common good and upbuilding of that collective lot of sticks or citizens you have produced a tremendous power in that bundle of sticks to depress and destroy the opportunities of the natural person, as one little stick, in business affairs; and although we put the Sherman antitrust law in 1890 into effect, it has been very little influence to withstand the steady advance of the creation of corporations and the expulsion of the individual, the natural person, and the citizen from continuing a business in competition with the corporation. Commencing in 1910, the Government gave to the people some idea of the strength of corporations, and for five years they continued, but they stopped it abruptly with the end of the fiscal year 1914, and we have only the statistics up to that time, as the work was stopped at that time. The statistics showed we had 316,909 corporations doing business upon that date, the end of the fiscal year 1914; that their share capital was $64,071,000,000; that their bond and note indebtedness amounted to $37,136,000,000, or a total of $101,207,000,000. Our organization thinks it is too bad that the Government deprived the citizens of this Nation of the right of knowledge of how these corporations were created and their affairs were published. We can only go by presumption as to what has grown since. We know, for instance, that in the year 1915 New York State granted more than 10,500 charters to corporations. We know that Maine, West Virginia, Delaware, South Dakota, and Arizona are the homes for creating large corporations to be paid up by the good will of the product of the corporation of the future. We conclude from what has been going on since the end of the fiscal year 1914 that the number of corporations has been largely increased; that its capital, including stocks, bonds, and notes, must amount to somewhere near $120,000,000,000. We believe also that previous to the time when the war started that if the assets of the corporations were inventoried as the individual's cash capitalization must be when he goes before the credit department of the wholesale house, that its capitalization would not have inventoried more than $50,000,000,000. We belieye at the present time that if the capital assets of the corporations were so inventoried, under the rule which I have spoken of, that there might be a possible real value there, and we believe it is there, of about $75,000,000,000, and it is on that basis that we plan. We believe that to escape socialism and Bolshevikism coming to this country, to satisfy labor absolutely in its demands, to settle this question of what capital is, the Government will be compelled— and it is only a question of time to take over the corporations, simply because in the eight-hour law practically the court said, Chief Justice White making the statement, that they will have to be guided by the words the people have ratified in the Constitution, and if they are not there they have got to decide it upon their line of reason. This being the case, the absentee capitalist and the unionist working for corporations had less power to govern the corporation than the laws of the State in which the corporation was organized, or in interstate traffic than what the national law would demand; that practically the corporation to-day under that decision is a machinery of business and a public machinery of business, because in the last analysis the people as sovereigns meet at least one day in four years, a day in November, to indorse a past administration or to institute a new administration, and therefore the people, from that fact, become the sovereigns to rule. But not being as intelligent, all of them, as you wiser men are supposed to be, they simply vote as they have always voted, by parties, and they will have to learn by bitter experience that they must be a body to take care of the state, and not have it as it is in Germany, the state take care of the people. Therefore, they will have to rectify this, and they will rectify it either by going, as I say, to Government ownership under the Hearst |