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,

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.

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.