^^^ip^a^ir mm^^'^M^E^Mi \n The North Dakola Cornell University Library HD3890.N9A4 1920 The North Dakota industrial program.a re 3 1924 002 765 349 )gram A Report on the Organization and Pro- gress of the North Dakota State Industries, and the Administration of Related Laws, Protecting and Promoting Agriculture and Other Industries in the State, Enacted and Established by the Sixteenth Session of the North Dakota Legislative Assembly. Issued by The Industrial Commission of North Dakota MAY 1, 1920 HD 38^0 HI AH 1*1X0 FROM Commissioner of Immigration BISMARCK, NORTH DAKOTA Bismarck TniBUNi State Printers THE LIBRARY OF THE NEW YORK STATE SCHOOL OF INDUSTRIAL AND LABOR RELATIONS AT CORNELL UNIVERSITY Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/cletails/cu31924002765349 The North Dakota Industrial Program A Report on the Organization and Pro- gress of the North Dakota State Industries, and the Administration of Related Laws, Protecting and Promoting Agriculture and Other Industries in the State, Enacted and Established by the Sixteenth Session of the North Dakota Legislative Assembly. issued by The Industrial Commission of North Dakota MAY 1, 1920 FROM Commissioner of Immigration BISMARCK, NORTH DAKOTA THE INDUSTRIAL COMMISSION LYNN J. FEAZIER, Governor - Chairman WM. LANGER - - - - Attorney General JOHN N. HAGAN Commissioner of Agriculture and Labor W. A. ANDERSON - - Secretary DEPARTMENTS THE BANK OF NORTH DAKOTA F. W. Cathro, Manager and Director General. THE MILL AND ELEVATOR ASSOCIATION J. A. McGovern, Manager. THE HOME BUILDING ASSOCIATION Robert E. Blakemore, Manager. TABLE OF CONTENTS Page The Industrial Program 5 American Democracy 10 The Development in North Dakota 15 The Bank of North Dakota 20 The Mill and Elevator Association 30 The Home Building Association 37 Economic Administration of State Industries 41 Value of Mill and Elevator Service — To State ., 44 To Consumers 48 Taxation and State' Finances 51 Other Progressive Laws _ 68 Workmen 's Compensation 69 Other Progressive Labor Legislation 74 State Bonding of Public Officials 76 State Insurance 78 Guarantee of Bank Deposits 79 Department of Immigration 79 Hail Insurance „ 81 Grain Grading Law _ 84 U. S. Supreme Court Sustains Industrial Commission 87 THE INDUSTRIAL PROGRAM The North Dakota system of state industries was created by the Sixteenth Session of the State Legislature in response to a demand on the part of the people that had been growing in in- sistence for more than ten years. The pioneers of North Da- kota had been exploited by land speculators, transportation mon- opolists, loan sharks and elevator and milling combines practi- cally since the earliest settlement of the State. Partial victories against railway monopolies had been secured, in common with other states, nearly twenty years earlier, resulting in the pas- sage of the Sherman Anti-Trust law, which was followed by other acts of Congress aiming to prevent railway discrimination aud to curtail extortionate transportation charges. In North Dakota, as elsewhere throughout the great grain growing states, oppressive monopoly centered in the ownership of the elevators through which their grain had to pass and of the big mills in which it was manufactured and distributed to the trade. The rural credit service had always been inadequate and interest rates oppressive. An unjust system of taxation weighed heavily upon agriculture, as upon other industry, letting the privileges of the, great corporations off practically scot-free. Farmers attempted to free themselves from these several forms of exploitation by organizing for co-operative action. The Farmers' Equity in North Dakota had a rapid growth during a number of years, for a while giving promise that it might prove thfe means of freeing agriculture from monopolistic control and establishing it on a sound and durable basis. But no sooner did it appear that the Equity organization was likely to be successful than it became the target for the combined attacks of the transportation, the marketing and the money monopolies. Again and again the Equity farmers demanded state legislation checking this exploitation, and repeatedly their efforts were thwarted by politicians in the employ of these interests. Finally, the farmers became convinced that they would get no relief until they made themselves the political masters of the State. As they constituted more than eighty per cent of the population it was apparent that this pre- sented no great difficulty, provided, that they could organize their forces and contsol their votes. A plan was devised and first tried out in 1916, which later met with a success that startled the entire nation. The farmers organ- ized themselves in to the Nonpartisan League. Through this or- ganization they selected candidates for the legislature and for state offices, whom they pledged to carry out their program, nom- inating these candidates on the ticket of the political party form- erly in the majority in the State. In the elections of 1916 the farmers elected a majority in the lower house of the legislative assembly, as well as the governor and other more important state offices. In 1918 they secured a two-thirds majority in both houses of the assembly, and all of the state offices. So that, when the legislature met in January of 1919, the organized farmers were for the first time in a position to legislate for the removal of the monopolistic control of agriculture. They had written into the platform of the program on which they had successfully waged their campaigns the folowing planks : The exemption of farm improvements from taxation; State owned and operated elevators, flour mills and pack- ing plants; State hail insurance ; Fair grain grades, based upon milling and baking values; Rural credits at cost. Possibly, at the beginning of this struggle for the emancipation of North Dakota farmers, they had not definitely settled in their minds whether these activities should all be state owned and oper- ated, or whether some or all of them should be conducted co-oper- atively under the protection of a government in which they had acquired their proportionate representation. But as the cam- paign developed- it became more and more apparent to them that unless they placed the full political power of the state gov- ernment back of these services they could not hope to establish and maintain them in the face of the now thoroughly alarmed private interests whose privileges would disappear with their success. ' So that they came out of the campaign with a determin- ation to establish every one of these enterprises under the con- trol and operation of the State. The promptness with which the legislature set about its task, and the swift and sure manner in which it handled these prob- lems, gave ample evidence that the farmers had thoroughly made up their minds. They had determined to establish under the con- trol and operation of the State a marketing service, a credit ser- vice and an insurance service that should be free from all private monopoly and that should give the farmers ready access to credit and fair and stable markets for their products. At the same time they had determined that the taxes for the support of state and local government should be so redistributed that privilege would bear the greater part of the burden, and that industry should be as little as possible hampered or discouraged. They aimed at a system of taxation that would derive necessary revenues chiefly from land values, corporate privileges and incomes. Farm im- provements were completely exempted; and liberal exemptions were made on household goods, personal eifects, tools of work- ragmen, farm equipment and small city homes. This tax adjustment was not, however, as has been often asserted, chietiy for the purpose of greatly increasing revenues in order to support the new state enterprises. In fact, the program contemplated thai, once established, these enterprises should be self-supporting. While they were to be operated on a non-profit basis, it was ex- pected that charges for services rendered would be sufficient to cover all costs of operation, the accumulation of a reasonable surplus, and the payment of the interest and principal of the state bonds issued to finance them. So thoroughly did the legislators work out this scheme, and so confident were they of its practicability, that the appropriations for the defraying of expenses of organization were very.light, add- ing but very little to the general tax burden. The entire program was worked out with the utmost deliberation, and apparently with a consciousness of the absolute certainty of its receiving the en- thusiastic support of the majority of the people of the State. This does not mean that no opposition was expected. On the contrary, it had been foreseen that prompt and vigorous action would be taken by the opponents of the program, immediately upon the close of the session and thS signing of the btUs by the governor. Preparatory to the enactment of this program the farmers' organization had initiated amendments to the consti- tution vfhich would make the necessary legislation possible aii tax levy, the Standard Oil Company had already withdrawn its suit and had given assurance that it would pay its taxes; so that from this source alone more than $250,000 was assured, the col- lection of which seemed doubtful when the property tax levy was made. The Special Session repealed the money and credits taxes entirely, and extended exemptions under the income tax law to an extent rendering it unlikely that payments of income taxes would be resisted. So that the finance committees of the Special Session felt entirely safe- in estimating that there would be new revenues ample to make up the difEerence between the amount of the reduction in appropriations and the reduction of the tax levy. Reports have been circulated to the effect that the Special Session slashed appropriations without method, and careless of the effect that the reductions might have upon necessary public services. It has also been charged that some of the reductions were spitefully made, for the purpose of punishing certain de- partments and state officials who had, since the close of the reg- ular session, developed open and vigorous hostility to the major- ity of the state administration. These charges cannot be sub- stantiated. In making the original appropriations the legislature provided emergency funds for certain departments, on account of real or alleged increases in the office force that would be neces- sary for the carrying out of the new state laws. The heaviest of these emergency appropriations were in the departments of the tax commissioner, the state auditor and the attorney gen- eral. It was impossible to eliminate the emergency appropriation for the tax commissioner, because the new tax laws have greatly increased the business of that office, and because the legislature had concentrated the entire business of assessment of taxes under the State Tax Commissioner, which had formerly ' been divided between the tax commission, the board of equalizati u and the state auditor. On the other hand, the work of the auditor's office had been correspondingly reduced. The appro- 53 priation for the attorney general's office had been greatly in- creased, on account of the extra expenses that it was anticipated would be incurred in the defense of the new laws. It turned out, however, that the attorney general and the greater pfut of his office force were antagonistic to these laws, giving them at best only luke-warm support, while in many instances directly and openly opposing them. Very naturally, the legislature thought this a good place to use the ax. So that, so far as the state offices were concerned, the chief reductions were made in the appropriations for the state auditor and the attorney .gen- eral. Only one considerable reduction was made in appropria- tions for state institutions — that of the State Reform , School, which was reduced from $308,960 to $218,960, or by the amount of $90,000. This was done by cutting out the provision for the erection of a new main building, and therefore did not impair the general maintenance fund of the institution. It was simply a question of making the reduction where it would be least felt. The reductions in the original appropriations total $389,685. .But new appropriations were made by the Special Session, aggre- gating $142,000; so that the net decrease in original appropria- tions amounts to $247,185. Distribution of Appropriations The appropriations for the biennium beginning July 1, 1919, and ending July 1, 1921, as reduced by the Special Session, amount to $7,024,837.10. This amount is distributed as follows : To the legislature, state departments and offices $1,844-, 257.79 Educational Institutions $2,196,544.99 Other educational appropriations 708,200.00 Total for educational purposes 2,904,744.99 Penal and charitable and other state institutions 1,523,207.00 New state industries 435,000.00 The state institutions account for over 63 per cent of "the total appropriations. On the other hand, the appropriations for state industries amount to only 6.192 per cent of the total, and only a small part of this has been expended. In the light of these figures the viciousness of the attempts to make it appear that the indus- trial program is responsible for the increases in appropriations is sufficiently apparent. And when all the truth is known con- cerning the imperative need of state educational and other iiis-^itu- tions for additional funds, these misrepresentations and fals^'hojds can be characterized by no milder term than as a treacherous be- trayal of the interests of the people of North Dakota. This money 54 goes to defray the expenses of caring for those of the State's pop- ulation who have become a public charge, and most of all for the education of its children. Former administrations, for the purpose ■of making political capital, had starved the educational iustitu- tiofis of the State; buildings were allowed to become dilapidated for the need of repairs ; appropriations for much needed new build- ings were refused or cut off after being made, by arbitrary reduc- tion of the tax levies ; the teaching force was cut down ; depart- ments were left without sufficient equipment — in fact, the entirfe educational service was being impaired by a niggardly policy, ap- parently dictated wholly by political motives. The politicians themselves well knew that there would come a time when the slack in these appropriations would have to be taken up, or a part of the educational service abandoned. But apparently they would rather that the State should face this certainty than to run the risk of being thrown out of office on a charge of extravagance, There really was danger that the majority of the people of the State might look at the matter in this light. The people had no faith in the politicians, and their days were numbered. This policy of starving the state institutions in order to keep down appropriations, seems to have been a last desperate attempt to prolong their power for a few years more, vdth the hope that the crisis they were creating could be shifted over to the peoples' representatives after Ihey had been ousted. This is exactly what occurred. Between 1910 and 1917 there was a constant falling off in appropriations for educational institutions. The appro- >priations for charitable institutions for 1915 was $694,172; in 1919 it was brought up to $1,523,207. The 1915 appropriation for educational purposes was $1,228,937, which was increased to $1,493,122 in 1917, an increase of something more than 12 per cent. This was brought up to $2,196,554 in 1919, an increase of 47.11 per cent over 1917 and of 59.11 per cent over 1915. The average biennial appropriations for all state institutions over the period from 1915 to 1919 inclusive were $2,624,281. The appro- priations for these purposes in 1919 were $1,095,471 in excess of this average. In round numbers, on the basis of average appropriations for the six year period, the 1919 legislature provided $1,000,000 to- wards covering accumulated deficiencies. Bearing in mind that a beginning was made in taking up this slack by the 1917 legis- lature, which contained a majority of farmer members in the lower house, some idea can be obtained of the extent of the failure of former administrations properly to take care of the educa- 55 tional and penal and charitable institutions of the State. A study of the conditions of state educational and charitable institutions, as left by the old regime in North Dakota, will show that the farmers ' government could have done no less for these institutions without betraying the trust reposed in its members by the people. The Increase in Appropriations and Its Distribution The total increase of the 1919 appropriations over those made in 1917 is $2,900,980.11, representing an increase of 70.34 per cent. This increase was distributed as follows: Percentage The Legislature $ 13,399.00 .5 State Departments 475,057.0Q 16 State Judiciary 39,250.00 1.35 Education 899,572.86 31 State institutions other than educational (chiefly penal and charitable) 866,347.00 30.5 Emergency fund 95,000.00 3.29 Bounties 89,000.00 3 . 1 State Industries 435,000.00 15 Miscellaneous .-. 71,581.13 2 .46 (The' apparent disagreements between the separate amounts and percentages and the total is due to the fact that there were decreases in certain appropriations, which are not taken into account.) The 1919 Tax Levies . According to the first estimate made by the state tax com- missioner for the use of the state board of equalization the amount or revenues that would be derived from sources other than the property tax was $1,410,374.59. As one-half of the orig- inal appropriations amounted to $3,721,001.21 and there were $227,581.59 of old appropriations that would probably be drawn, the amount necessary to cover probable expenditures from the general fund was $3,948,582.80. Subtracting the $1,410,374.59 estimated from other sources the remainder necessary to be levied for the general fund was $2,538,208.21. .Allowing 25 per cent for delayed collections, this required a levy of $3,384,277 on the as- sessed valuation as it was then approximated. In addition it was necessary to levy for the sinking fund for the payment of old state bonds $60,560; for the interest fund for old and new state bonds. $257,380 ; and for the Soldier Bonus fund $757,000. This gave a total of $4,511,760 to be raised for all purposes by the 56 state levy on general property, requiring a rate of levy of 2.98 mills. After the reduction of 25 per cent on the levy for the general fund by the Special Session of the legislature, and the securing of final returns on assessed valuations, these levies were correct- ed as follows : For the general fund $2,594,179 For the bond sinking fund 60 950 For the bond interest fund 259,027 For the Soldier Bonus levy 761,873 Giving a total levy for all state purpbses of $3,676,039, requir- ing a levy on the corrected valuation for all property ($1,523,- 746,929) of 2.4125 mills. This made an increase in all property taxes for state purposes of 117.27 per cent, and in the levy for the general fund of 64.99 per cent over the previous year. Expressed in terms of cents in the dollar and presuming that all taxes are applied proportion- ately, to the various appropriations, these taxes are distributed as follows : State bond sinking fund 1.658 State bond interest fund 7.046 Soldier bonus fund 20.72 Legislature 1.42 State departments 12.43 State judiciary 2.13 Education ". 29.18 Other state institutions ., 15.30 Military appropriations 80 State emergency 1.16 Public printing ..._ 33 State fairs 2'51 Bounties 1.56 State industries 4.37 Miscellaneous 1.63 Seventy and fifty-seven hundreds cents out of every dollar of the property taxes go to the support of the different departments of the state government, state institutions, state industries, coun- ties and state and to rural and high schools. Only 4.37 cents out of every dollar of the state property tax goes to meet the appro- priation for the new state industries, and approximately 7 cents for interest on the new state bonds, making a total of 11.37 cents out of every dollar on account of the new state industries. But, 57 as elsewhere explained, the earnings of these industries will more than cover the expenditures out of the appropriations for the first year, and as few bonds have yet been sold, the greater part of the interest fund remains intact to be applied on the bonds sold next year ; so that in all probability no additional levy will have to be made next year for that purpose. 1919 State Expenditures Figuring that one-half of the biennial appropriations as reduced will be available for expenditure during the fiscal year of 1919- 1920, the total to be covered from the revenues from all sources is as follows: One-half biennial appropriations $3,512,418.55 For the interest and sinking funds 240,940.00 For the Soldier Bonus fund 761,873.00 Giving a total of $4,514,281.55 This amount seems large as compared with the total expendi- tures of the previous year, which were approximately $2,183,297. However, as already explained, more than $1,000,000 is incliiiled in the 1919 appropriations to cover deficits and defieiences in former appropriations, one-half of which would necessarily be covered by the 1919 revenues. In addition there are the Soldier Bonus fund, appropriations for new state depaH- ments, the allowance of 25 per cent for delayed collections, and a deficit of unpaid railroad taxes for the two preceding veara, to say nothing of the new state industries. The several amounts for purposes not included in the expenditures of the previous year are summarized as follows: One-half of the excess of $1,000,000 appropriated for state institutions applied to accumulated deficiencies and deficits $ 500,000.00 1917-1918 railroad taxes unpaid 194,000.00 One-half of the biennial appropriations for new state departments (not in- cluding new state industries) 198,315.00 Soldier Bonus fund 761,837.00 One-half biennial appropriations for the new state industries 217,500.00 Levy for interest fund for the new •state bonds 202,087.00 58 Excess of delayed tax collections that will be carried over to 1920 of delay- ed coUectioHS credited to 1919 on ac- count of allowing 25 per cent for .delayed collections 299 249.00 Total in excess of ordinary current ex- penses to be covered by 1919 reve- ^^es $2,272,998.00 Of this excess $694,000 goes to make up deficiencies in appro- priations for educational and other state institutions and to cover the deficit caused by the failure to collect $194,000 of railroad taxes for 1917-1918, which is also a deficit; $198,215 to new state departments; $419,587, including the levy for the interest fund, to the new state industries ; the remainder being excess of un- collected taxes carried over to 1920. In percentages the distribution is as follows: Per cent. Educational deficits and deficiencies 29 New state departments 8.3 Soldier Bonus fund 32.1 New state industries 17.7 Allowance for delayed collections 12.9 It appears therefore that 82.3 per cent of the total increase in state revenues in 1919 over 1918 goes to cover expenditures in no way related to the new state industries. As elsewhere pointed out the appropriations for the new state industries actually drawn will be more than covered by earnings of the first -year and the amount levied for the fund remains practically intact .for use next year. So that the new state industries are in the last analy- sis responsible for no part of the increase of the state taxes. Taken separately every one of these increases can be justified. It has already been shown that the additional provisions for edu- cational and other state institutions were absolutely necessary. The deficit caused by the non-payment of railroad taxes of course had to be covered. The allowance for delayed collections had to be made in order to keep on a cash basis. That the provision for returned soldiers was imperatively necessary no one will deny. And the flew departments — Commissioner of Immigration, Flood Control, and Hail Insurance — cover services that the State has been badly in need of for years. Subtracting the total for these 59 purposes, the expenditures for carrying on all departments of the state government were actually less than they were in 1918. The abstract of the property taxes shows that in 1918 $1,766,408 was derived from the state levy on property. This was to make up- the difference between the amount that it was estimated would be raised from other sources and the amount of the estimated ex- penditures. The revenues from other sources were $518,582, giv- ing a total of $2,284,990. There was a net balance in the general fund, according to the state auditor's figures furnished to the tax commissioner July 1, 1919, of $101,593. Subtracting this amount from the total revenues, there remains $2,183,297, which represents the total expenditures for general purposes. The ap- propriations and levies for like purposes in 1919, after subtract- ing the total of the extraordinary appropriations shown above, is $2,141,283.55. So that the ordinary appropriations to be covered by 1919 revenues were $42,113.45 less than in 1918. The following statement shows the probable condition of state finances at the end of the current fiscal year and for the ensuing fiscal year for which appropriations were made by the 1919 leg- islature. Estimated Receipts and Expenditures for General State Purposes for the Fiscal Year 1919-1920 Receipts Expenditures Prom miscellane- One-half of appro- ous fees and oth- priations a s re- er collections, as duced by Spec- estimated by the eial Session $3,512,418.55 state tax com- , Pixed levies 1,001,683.00 missioner $ 220,'000.00 Probable credit Prom state taxes balance July 1, other than the 1920 1,134,520.45 property tax . — 1,334,000.00 Net balance from $5,648,802.00 1918 101,593.00 Unused or return- ed a p p r o p ria- tions 250,000.00 Prom state levy on property, money and credits and gra in tax, as shown b y A b - 60 straet of County- Tax lists in the of fi c e of the State Tax Com- missioner 3,743,209.00 $5,648,802.00 The credit of $1,134,520.45 shown above includes $728,542 of taxes that it is estimated will not be collected until after July 1, 1920, leaving a net balance of $405,978.45, which will be a cash balance if collections have not been overestimated. The amount estimated as coming from sources not shown in the abstract of returns from the counties (other state taxes and fees) is made up as follows: Insurance tax $230,000 Inheritance tax 100,000 Oil tax , 490,000 Incorporation tax 14,000 Excise tax (capital stock) 100,000 Income tax ; 400,000 Fees 220,000 $1,554,000 Estimated Receipts and Expenditures for Greneral State Purposes Including Fixed Levies for the Fiscal Year 1920-1921 Receipts Expenditures From income taxes Balance of 1919- for 1919, not cred- 19 21 appropria- ited to fiscal year tions $3,512,418.55 1919-1920 $350,000.00 Soldier Bonus fund 1,142,809.19 Prom inc o m e taxes, 1920 750,000.00 $4,655,227.74 From oil tax 400,000.00 ?rom c r p o r ation excise tax _ 100,000.00 From i n h e r itance tax 100,000.00 From insurance tax... 230,000.00 Uncollected taxes or cash from 1919- 1920 988,812.45 Total receipts $3,168,812.45 61 Balance to be rais- ed by levy on property 1,486,415.29 $4,655,227.74 Necessary rate of levy 1.05 mills Necessary rate of levy for general fund only (after deducting Soldier Bonus levy 3 mills It appears from the above statement that the revenue from other sources than the porperty tax will nearly wipe out the state levy for general purposes in 1920-1921. It must be remem- bered, however, that the income tax has yet been proved out only in part, and that in other states new tax laws have usually been litigated. That has been true so far in the ease of the new tax laws in North Dakota. The Standard Oil Company took the oil tax law into court, and the case has been settled to the advant- age of the State without a final decision. The corporation excise tax has been held unconstitutional as assessed on inter-state carriers. The income tax law may yet be litigated, though it is entirely unlikely that any of its provisions except those applying, to non-resident holders of stocks and bonds of corporations doing business in North Dakota will be defeated. If only $500,000 in addition to the $400,000 credited to 1919 should be obtained from income taxes, the levy on property will be 1.43 mills, including, the Soldier Bonus levy, or .68 mills for the general fund only. Comparison With Other States A comparison of the North Dakota appropriations, expendi- , tures, and taxes with those of other states of the northwest, will show conclusively the superior economy of the North Dakota state government. After including provisions for the new state departments and industries and the Soldier's Bonus fund, the North Dakota appropriations and revenues are relatively lower than in any other state in the northwest. Beginning with the states adoining North Dakota, we find that though Minnesota has less than three times the population of North Dakota, its total taxes for all general state and local purposes amount to $109,- 504,246, as against $29,553,804 in North Dakota. The total of all property taxes for general state purposes is $3,742,616 in North Dakota and $14,514,710 in Minnesota. North Dakota obtains, ac- cording to the tax commissioner's estimate, $1,554,000 from all 62 other sources than the property tax, while Minnesota obtains $12,- 565,841 from like sources. The total of all state taxes for general purposes, including fees, is $5,296,676 in North Dakota, and $27,080,552 in Minnesota. On the basis of population, the per capita taxation for all gen- eral and local purposes is $36.00 in North Dakota and $46.00 in Minnesota. The per capita of all state taxes is $6.20 in North Dakota, and $11.40 in Minnesota. The Minnesota state taxes on farm land averages $28.25 per average quarter section, as against $10.10 in North Dakota. All general taxes levied on farm land amount to $86.00 per average quarter section in North Dakota, and 188.00 in Minnesota. Comparing appropriations: The total for all general state purposes, including the building and general maintenance funds of state institutions, for the biennial period 1919-1921 is $7,- 024,827 in North Dakota. The total for Minnesota is $32,044,022. On the basis of the expenditures of one-half of the biennial appropriations during the first year, the total general expendi- tures for North Dakota will be $3,512,418, and for Minnesota $23,294,110. That is, with a population more than one-third that of Minnesota, the state expenditures for general purposes in North Dakota, including the levy for the Soldier's Bonus found and the appropriations and levies to support the new strit? industries, will be only a little more than one-seventh the ex- penditures of Minnesota. The per capita expenditures are $4.30 for North Dakota and $9.80 for Minnesota. The contrast between the two states is probably even greater than is expressed by these figures . North Dakota has followed her customary plan of providing for the construction and up- keep of the buildings of state institutions out of the general ap- propriations, which are covered by the tax revenues for the bien- nial period. The North Dakota appropriationsfor these purposes amounted to nearly one million dollars for the current fiscal year. In Minnesota, five million six hundred thousand dollars in certificates of indebtedness are being issued for this purpose. Furthermore, the North Dakota Soldier's Bonus fund comes en- tirely out of current taxes, while in Minnesota the greater part is derived from the sale of certificates of indebtedness. Though final figures are not obtaiinable from Montana, the latest information that can be secured indicates that state taxes' are considerably higher there than in North Dakota, and that at the same time the Montana levies will fall far short of meeting the appropriations made by the legislature. Apparently the 63 Montana state taxes amount to $6.37 per capita, as against $6.20 in North Dakota. The North Dakota state expenditures, including fixed levies will amount to $5.52 per capita, while on the same basis the figures for Montana will be in the neighborhood if $10.00. If the estimates of revenues from sources other than the prop- erty tax made by the state tax commissioner are correct, North Dakota will have a balance in cash or uncollected taxes of ov?r seven hundred thousand dollars at the end of the year, while apparently Montana will be more than one million and a quarter behind. In comparing with the remaining border state, the first thing to be kept in mind is that South Dakota made no provision for the compensation of returned soldiers. Yet the total state property tax levy is $3,753,554, as against $3,742,616 in North Dakota. If we subtract the Soldier's Bonus fund from the North Dakota total, we get a remainder of $2,980,779, which is $77,388 less than the South Dakota levy. Land is assessed for taxation in North Da- kota at an average of $26.19 an acre, while the average- assessed valuation in. South Dakota is $40.85. The state general property tax per capita, including the Soldier 's Bonus fund is $4.50 in North Dakota, while in South Dakota, with no provision for service men, it is $4.90. Excluding the Soldier's Bonus fund, the per capita tax is $3.56 in North ' Dakota, as against $4.90 in South Dakota. The state tax per average quarter section is $12.34 in South Dakota, as against $10.10 in North Dakota. ' The following table gives the comparison between North Da- kota and eight other western and northwestern states. Three of these states have created a Soldier's Bonus fund, and there- fore the amount levied for that purpose is excluded in each case, in order to put them on a fair basis of comparison with the others. ' 64 >-; ■!^ <^ tj ^ lis .^3 H Is S ^ ftS ^ Is S a • S P s North Dakota $ 2',914,166 $ 817,554 $3.r,G Minnesota 11,289,471 2,378,128 4.74 Nebraska 7,436,000 1,309,627 5.68 Colorado 5,049,317 1,040,842 4.85 South Dakota -, 3,695,763 753,897 4.90 Kansas 6,015,698 1,896,520 3.17 Oklahoma 5,825,571 2,465,4Q2 2.37 Wisconsin 7,125,865 2,580,800 2.77 Washington 11,072,882 1,723,757 6.42 Including the taxes for Soldier Bonus funds in the three states which have provided such funds, we get the following results : > State Per capita tax Minnesota $6.05 Wisconsin 5.45 North Dakota 4.49 The bonus provided for soldiers is $10.00 for each year in the service in Wisconsin, $15.00 in Minnesota, and $25.00 in North Dakota. So that, paying a soldier bonus twice the average paid by these other two states, North Dakota still has the lowest per capita state taxes. In the foregoing table there are . only three states — -Kansas, Oklahoma and Wisconsin — which, without the soldier bonus levy, have lower per capita state taxes than North Dakota with the soldier bonus levy. If these states had made provisions for their returned soldiers equal to that of North Dakota, their per capita taxation would have been brought up to or above that of North Dakota. And there is still another explanation of the lower per capita taxes in those states. In two of them, at least, there is a greater proportion of the state revenues derived from other sources than the property tax than in North Dakota. Besides, those states are more thickly populated. Considering North Da- kota's population in relation to the area of the state, and consid- ering the fact that her soldier bonus levy is the highest of the states which have any provision for service men, the North Dakota per capita of state taxes is far under that of any other state in this comparison. 65 Excepting the cases of Minnesota and Montana, the abovp, comparisons are made on the basis of property taxes only. Data are not available for making comparisons of the total taxes of all kinds, except in these two cases. Especially in the case of Minnesota, the contrast is much more favorable to North Dakota if all other taxes are included. Minnesota obtains fortj^-seven p^r cent of its tax revenue from other than property taxes, while North Dakota obtains only thirty-one per cent. It is true 'ihat Minnesota returns to the counties a consid&rable amount of taxes collected by the state (thirty-five and five-tenths per cent 'n 1918) but the same is true of North Dakota. In Minnesota the entire proceeds of the taxes on railways, telephoned, telegraphs and other general public utilities goes into the state treasury. In North Dakota only the amount raised by the state mill levy goes lo the support of the state. Yet, North Dakota returns $431,600 to the counties and local districts. If the total proceeds of the taxes on public utilities went into the state treasury, as in Minnesota; North Dakota could return to the counties and local districts all the state taxes it now collects and a part of the utilities' taxes as well. That is, the revenues from the tax on the railways and other public utilities, added to the revenue now obtained frcai sources other than the property tax would be more than enough to pay all the expense of the North Dakota state government. , The gross North Dakota state revenue from all sources is $5,- 296,616. The total of the utilities taxes for 1919, based on returns from thirty-six counties, is estimated by the state tax commis- sioner to be $4,147,017. The revenues from sources other than the property tax amount to $1,621,170 (including money and cred- its) and these two amounts total $5,768,187, which is $471,511 more than the present revenue from all sources. So that if the state of North Dakota taxed the public utilities exclusively the state treasury, as is done in Minnesota, ' and continued to collect the present tax on general, property, it could return to the counties— The amount now returned $ 431,50,0 The amount of the property tax 3,676,039 apd The excess of the utilities taxes, as shown above 471 571 A total returned to the counties of $4,579,050 As already pointed out, North Dakota will have a considerable balance on the credit side of its account at the end of the cur- rent fiscal year. To the westward, Montana is facing bank- 66 ruptcy. And in Minnesota there is talk of the necessity of call- ing a special session of the legislature in order to provide funds to carry the state university throu'gh the ensuing school year. According to press reports, a member of the Minnesota tax com- mission, speaking recently before a meeting of tax payers in Minneapolis, made the statement that all taxes -would certainly be considerably increased next year, and expressed the opinion that a modern income tax is the only salvation for Minnesota, North Dakota has already enacted an income tax law, which h in many respects superior to any other income tax system in existence in this country. From present indications it appears that from this and other sources North Dakota will derive all or nearly all of her state revenues'within the near future, leaving the property tax to the countiesand local districts. Of course it may take some time to perfect the North Dakota tax system; but that will be np more than has happened in other states makiug important changes in their tax laws. The North Dakota laws have already weathered a fiercer storm of opposition than any system of laws in any other state have ever been subjected to. And this is not so much due to imperfection in the laws themselves, as to the fact that they were passed at a time when all legislation was subjected to the sever- est criticism.! It is already very evident that the system is a good one, and that in the main, the North Dakota laws will be permanent. 67 OTHER PROGRESSIVE LAWS The Dairy Association Law An act passed by the Special Session of the 1919 legislature provides for the issuance of county bonds for the purchase of dairy cows to be sold to farmers, for the organization:, of dairy associations for the purchase of Such animals for their members, and for the guaranteeing of the loans that are made. Under this law, dairy associations are to be governed by rules prescribed by the Dairy Commissioner and the county commis- sioners, the act providing that such rules shall cover the insur- ance of all animals purchased by members ; that females shall be bred to pure-bred sires ; that the animals shall be guarded against exposure to transmittable diseases ; and that rules a^d regulations shall be made governing the sale of unproductive and unprofit- able animals. New members of associations can be admitted only with the written consent of two-thirds of the old members ; every new member must agree in writing to all the regulations and rules of the association; and members are jointly and severally liable for all debts, contracts and obligations to the county on account of the purchase of animals, to the extent of ten per cent in addition to the amount of individual purchases. The Dairy Association law points the way to progressive and effective action for the organization and financing of the better : and more profitable agricultural industry that is to take the place of the one-crop system. The Feed and Seed Bond's Act The 1919 legislature enacted a law under which county com- missioners of any county may issue bonds for the purpose of mak- ing loans to farmers who had serious crop losses, for the purchase of feed and seed. Under the provisions of this law $2,590,C0'J in bonds and $590,000 in county warrants were issued during 1918. In 1919, $775,000 of these bonds were bought ty the State Board of University and School Lands. While this law has been to some extent regarded as an emerg- ency measure, conditions in those sections of North Dakota where crop losses from drought are most frequent, render it desirable and necessary that there be some permanent provision for relief. Experience under the law has completely proved its value, and it is likely that it will be retained as an important pan of the policy of the State for the protection of its fundamental industry. 68 Workmen's Compensation The North Dakota Workmen's Compensation Law passed in 1919 is probably the most just and liberarever enacted. It em- bodies the best provisions of the Iowa law, which since its en- actment has been used as a model in other states, and .incorporates many provisions from the Federal Compensation law. Of the forty-two states in the union now providing Workmen's Compen- ■sation Insurance, the North Dakota law provides the most liberal ■compensation to workmen and extends the benefits of compensa- tion to more classes of employees. The North Dakota law applies to all employments except agriculture, domestic service, and com- mon carriers by steam railroad; the latter class being taken care of under the United States law. The North Dakota system is administered by a Workmen's Compensation Bureau, consisting of five members, the commissioner of agriculture and labor, the commissioner of insurance, ex-officio, and three other mem- bers appointed by the governor, one to represent employers, (me employees and the third the public. The fund out of which compensations are made is provided by ■annual payments of all employers subject to the law, which are fixed by the Workmen's Compensation Bureau for each employ- ment or occupation. The bureau is empowered to classify cii.- ployments with regard to the degree of hazard, and to fix the rates of premium for each classification, so that all payments will cover the awards made under the act, together with all the costs of administration, and the accumulation of a surplus. The Workmen's Compensation Bureau is required ultimately Lo fix rates that will cover the compensation provided, the expenditures of the bureau and ten per cent annually for the creation of a surplus, until such surplus has reached the amount of fifty thous- and dollars, when the amount annually so set aside shall be five per cent until such time as the surplus shall be large enough to ► guarantee the fund from year to year. It is therefore apparent that the intent of the law is that compensation to employers shall be provided at cost. While the cost of administration for the first year will be higher than for the years after the department is fully organized, the con.mi.s- sioners confidently expect that the expenses for the first year will be far below those incurred by private companies. After the first year the bureau expects to administer the fund at an expense ratio not to exceed ten per cent of the earned prem- iums of the fund, which is one-fourth of the expense ratio of liability insurance companies. This reduction in cost is m;ide 69 possible by the elimination of all duplication of service, of the fifteen to twenty-five dollars on every hundred dollars formerly paid by private companies for luxurious private offices for get- ting business for the payment of large salaries, the up-keep of luxurious offices, and for the payment of the dividends that have to be earned for the stockholders of private- companies. Compliance with the "Workmen's Compensation law relieves an employer of all liability for injuries to any person in his em- ploy. Compliance consists in paying into the fund the premiuins assessed by the bureau. Advance payments are made on the basis of the employer's estimate of his payroll, and at the end of the year he furnishes his actual payroll, the proper adjustments being made if the latter proves to be greater or less than the estimate. Any employer not complying with the provisions of the law is subject to certain penalties and forfeitures provided therein, and in addition is deprived of all "common law" de- fenses — such as the Fellow Servant Rule and Contributory Negli- gence. Furthermore, in case of inury an employee may elect ^o bring his claim to the bureau for hearing; and, notwithstanding the failure of the employer to comply with the law, it will pro- ceed to hear the claim, and if it is found to be valid, to make awards under the law, in all respects as though the employer had complied with its provisions. The employer is then given ten days notice in which to pay the compensation, and in case of failure the bureau will immediately assess a penalty of fifty per cent of the amount of the award, which may be recovered in an action in the name of the State for the benefit of the person entitled to it. The North Dakota Workmen's Compensation law has exiva- territorial application, which means that its provisions protect the employees of North Dakota employers, though injury be in- curred in employment outside of the State. That is, if a North Dakota employer hires a man in North Dakota and sends him to, work in another state, the law will follow him into the other state, and give him protection while performing services covered by his insurance certificate. The state treasurer is custodian of the Workmen's Compensa- tion fund. All moneys in the fund are required to be put out at interest, and the earnings therefrom are credited to the fund. In comparing the amount and cost of protection reported by the North Dakota Workmen's Compensation system with other p-h- ate or public compensation systems, it is important to remember that the North Dakota law provides for Workmen's Compensation 70 Insuraiice — not for Employers Liability Insurance. There is an important difference. Employers Liability Insurance proceeds upon the theory of fault and negligence, so that there is no com- pensation if the injured workman has been at fault or if his negli- gence has contributed to his injury. Or, in other words, the em- ployer is not required to pay for the injury unsless it be proven that it was the result of his fault or negligence. Under this sys- tem a very small percentage of workmen ever recover damages for injury, and that usually after a great deal of delay and ex- pense in court costs and attorney's fees. On the other hand, under Workman's Compensation Insurance the question of fault and negligence is entirely excluded, and proper compen- sation is awarded in all cases of injury, except when resulting from the willful intent of the employee. It follows that larger premiums will have to be paid in order to cover the greater number of awards, and that, other things being equal the cost of administration will be greater, on account of the increased amount of business to be transacted. But, viewed from the broader point of view of justice to workingmen and the pro- tection of the community, it is less costly and more efficient. It as- sures to every workman injured, or to his dependents, proper pro- ■ teetion in case of injury, and at the same time relieves him of all the costly litigation that is involved in the other system. And it re- lieves the community from the necessity of caring for numerous charity patients and paupers who on account of injury in employ- ment are no longer able to support themselves. It tends to maintain a high average of financial responsibility and solvency on the part of employees; relieves merchants from the necessity of ex- tending credit during periods, of disability ; and it relieves the courts of a tremendous amount of litigation, leaving them free to perform other important public services. Most important of all, just and effective "Workmen's Compensation maintains the standard of manhood and womanhood. It enhances the self- respect of the worker. It increases his confidence in the justiL'c and beneficence of his government. It raises his standard of liv- ing, and enables him to support his family in a reasonable degree of comfort, and to educate his children so that they will be self- supporting and self-respecting citizens. ' The North Dakota "Workman's Compensation act covers all in- juries received in the course of employment. If an employee is killed, his dependents receive the compensation No compensa- tion is allowed unless the person injured is disabled for more than seven days; but if the disability exceeds seven days, com- 71 pensation is paid from the time of the injury. Medical, surgical, and hospital services and supplies are paid for out of the com- pensation fund. Compensation is based on a percentage of the wages that would have been earned by the injured employee during the period f'/r which he is disabled. With certain exceptions it is sixty-six and two-thirds per cent of the average weekly earnings'; but the maximum compensation is -not to exceed twenty dollars per week, nor the miaimum to be less than six dollars per week; except in cases where the wage is less than six dollars per week, when the compensation is the full amount of the wage. Where the employee receives an injury which results in total disability, he receives compensation for the remainder of his life. In the case of permanent partial disability the compensa- tion is for life, and is based upon the percentage which the perma- nent partial disability bears to total disability. In all other cases the compensation is adjusted to the amount and the duration of the disability. When an emploj'ee is killed in an accident, or dies as a result of an injury received in the course of the employment and leaves a widow, she will receive a weekly compensation equal to thirty- five per cent of his weekly average earnings, the same continuing until her death or marriage. If the widow remarries she receives a sum equal to one hundred and fifty-six weeks' compensation, and thereafter her compensation ceases. It the employee leaves a widow and children, thirty-five per cent will be allowed to the widow and ten per cent for each child, the total not to exceed sixty-six and two-thirds per cent of the employee's average weekly earnings. The compensation of any child ceases when he marries or reaches the age of eighteen years ; or, if over eigh- teen and incapable of self-support, becomes self-supporting. In the ease of the death of a married woman, due to injury in em- ployment, similar compensation is allowed to the widower and children. In the case of orphans, twenty-five per cent is allowed for one child and ten per cent for each additional child, up to the maximum of sixty-six and two-thirds per cent of the avera^tf weekly wage. Compensation is also allowed to dependent par- ents, brothers, sisters, grandparents and grandchildren. In com- puting compensation in eases of death the law requires that weekly wages shall be considered to have been not more tiian thirty dollars nor less than eighteen dollars, the total weekly compensation not to exceed the weekly wage. 72 As has always been the case where a state has enacted a just and comprehensive workmen's compensation law, a great deal oC opposition was encountered during the first year of the operation of the North Dakota Workmen's Compensation Bureau. The opposition in this instance was intensified by the fact that at the time the law went into operation a bitter conflict was raging ic the State over the enactment of the larger industrial program of which the Workmen's Compensation law is a part. As this c u- flict developed, a part of the state government, including the attorney general's office and that of the state auditor, came to side with the opposition. As a result the Workmen's Compen- sation Bureau did not receive the assistance of these departments which the legislature intended, and which, under ordinary con- ditions, it would have had. On the contrary, both of these state offices gave indirect assistance to those among North Dakota employers who atempted to defeat the law. In the first place it was given out that the act was construed by the attorney gen- eral as being elective and optional. When this became generally known many employers refused to comply with the requirements of the Compensation Bureau under the law, pointing to the at- torney general's opinion to sustain their position. No sooner was this erroneous opinion corrected than the state auditor re- fused to draw warrants on proper vouchers for the payment of the salaries of the commissioners and the employees of the bureau. The bureau then issued its own voucher warrants, on its own funds in custody of the state treasurer; whereupon the state treasurer, upon advice from the attorney general, refused to pay such warrants. The next step was taken by the bureau itself, in the form of mandamus proceedings to compel the state treasurer to pay war- rants. The decision of the case in October sustained the action of the bureau, so that its financial business thereafter was independ- ent of the malicious interference of the state auditor's office. Meanwhile the constitutionality of the act was brought into ques- tion in an action brought by an employer, who it was thought was representing the North Dakota Employers' Association. This suit was decided favorably to the law a little earlier than the date of the decision of the bureau's action to compel the payment of warrants. These various actions delayed the effective operation of the Workmen's Compensation law until November 1, 1919, the d^'.y upon which the bureau received notice of the final decision of the last of those cases. Other obstacles and difficulties were en- countered, not only such as accompany the administration of any 73 new law, but many which are due to the fact that the North Da- kota law is more far-reaching and comprehensive than any Work- men 's Compensation law that had formerly been enacted. Prac- tically all of these obstacles have been passed, and there are now fewer than sixty claims pending which were filed prior to Jan- uary 1, 1920. Of claims filed since that date there are seventy which either have not been perfected by the claimants or are of so recent date that they have not yet been reached in the regidar routine of busines. In all seven hundred and fifty-five claims have been filed, all of which have been, acted upon by the bureau, with the exception of those noted above. The expenses of administration to date amount to $37,944.59. The bureau paid out in compensation $27,956.42 and $9,880.16 for medical and hospital service. Awards have been made to the amount of $41,659.58, leaving $3,823,000 to be paid in pensions. The total premiums paid amount to $492,538.97, and interest on the fund has accumulated to the amount of $4,189.94. Oother Progressive Labor Legislation In addition to the Workmen's Compensation law ,the l!.il9 legislature passed laws providing for an eight-hour day for women employed in any manufacturing, mechanical, or merchan- tile establishment, laundry, hotel or restaurant or telephone or telegraph establishment or office, or in any express or transporta- tion company in the State; for a minimum wage law for women; for the inspection of coal mines; limitation of the issuance of in- junctions; the union label on state printing; full train erews; and protection of employees engaged in repairing or construct- ing railway cars, trucks, locomotive engines or other railroad equipment. The minimum wage law provides that the Workmen's Com- pensation Bureau shall have the power to fix standards and hours of employment for women and minors; to require proper condi- tions of employment ; to fix minimum wage ; and to provide rules and regulations for carrying out these powers. Acting under ilio authority of the bureau, a committee has made investigations of the wages and conditions of employment of women and minors in the State, and will recommend in its report a minimum wage for women in merchantile establishments of $17.50, and that no employee shall be required to work more than eight and one-half hours in any one day, forty-eight hours a week, nor more than six hours without at least one rest period of forty- five minutes. The period of apprenticeship recommended is 74 one year, which is divided into four periods of three months each. The wage schedule recommended for apprentices is $12.00 a week for the first three months, $13.00 for the second, $14.00 for the third, and $15.00 for the fourth three-months period. In general these labor laws are modeled after the most pro- gressive and successful laws of other states or of the United States. The most important provisions have already stood the test of the courts, and have become incorporated into the perma- nent labor codes of the country. While the. North Dakota laws are distinctively progressive, it cannot be said that they are un- reasonably favorable to employees or in any other respect dang- erously radical. Criticisms to this effect have several times been made during recent' months, but always with an ignorance or an evidently intentional distortion of the provisions of. the North Dakota laws. This is especially true of the act limiting the issu- ance of injunctions in labor cases. This law is copied almost with- out change from the Federal Anti-injunction law. In order that interested persons who might have been misled by such misrepre- sentations may read this statute and judge for themselves, it is here given in full : CHAPTER 171 (Laws of North Dakota, 1919) An Act Limiting the Powers of Courts to Grant Injunctions a"' J Prohibiting the Issuing of Restraining Orders and Injunctions in Certain Labor Matters. ^ Be It Enacted by the Legislative Assembly of the State of North Dakota: Sec. 1. No restraining order or injunction shall be granted by any Court of this State, or by any judge or judges thereof in any case involving or growing out of a dispute concerning terms or conditions of employment, unless necessary to prevent irreparable injury to property or to a property right of the party making the application, for which injury there is no adequate remedy at law, and such property or property right must be described with particularity in the application, , which must be in writing and sworn to by the applicant or by his agent or attorney. Sec. 2. No restraining order or injunction shall prohibit any person or persons whether singly or in concert from terminating any relation of employment or from ceasing to perform any work or labor or from recommending, advising or persuading others so to do ; or from attending at any place where any person or persons may lawfully be, for the purpose of obtaining or com- municating information, or from persuading any such person to 75 work or to abstain from working; or from ceasing to patronize any party to such dispute ; or from paying or giving to, or with- holding from any person engaged' in such dispute, any strike benefits or other moneys or things of value ; or from assenibLug in a lawful manner, and for lawful purposes ; or from doing any act or thing which might lawfully be done in the absence of i ich dispute by a single person ; nor shall any of the Acts specified in this section be considered or held to be illegal or unlawful in any Court in this State. Sec. 3. In all cases involving the violation of the contract of employment, either by the employer or the employee, where no irreparable damage is about to be committed upon the property or property right of either, no injunction shall be granted, but the parties shall be left to their remedy at law. Sec. 4. All Acts and parts of Acts in conflict with the pro- visions of this Act are hereby repealed. < Approved February 14, 1919. In harmony with this enlightened legislation, the State, of North Dakota has adopted a liberal policy with regard to its own employees, recognizing the right of labor to organise nvA by employing union labor in all state industries. State Bonding of Public Officials In 1915 the state legislature passed an act creating a State Bonding Fund for the bonding of all public ' officials required •/) furnish official bonds. This act makes it the duty of the Com-' missioner of Insurance to issue official bonds to all county, city, town, village, school district, and township officials who are re- quired by law to furnish bonds. An exception was made in the case of officials whose bonds amounted to more than fifty thous- and dollars. The constitutionality of the law creating the State Bonding Fund was questioned in the courts, and a decision lav- orable to the act was not given until November 7, 1917. ' The original act was amended by chapter 158 of the Session Laws of 1917, which established the fund under the management of the Commissioner of Insurance, requires reports from tb; proper local officials showing what officials or employees aro subject to bond, requires that the amount of the premium for such bonds shall be remitted with the report, fixes the amount of premiums, and prescribes that conformance with provi- sions of the act and of any other statute requiring a bond, shaU constitute the bond of each and every public employee. The State and every political subdivision of the State is required to 76 be insured in the State Bonding Fund, and is automatically so in- sured by the payment of premiums and otherwise conforming to the provisions of the act, without the issuing of any bond or any further action on the part of the commissioner. The premium for insurance is twenty-five cents per year per one hundred dollars of the amount of the required bond. The mini- mum premium for each employee is two dollars and fifty cents per year. Premium payments miist be made in advance to the State Treasurer, who is required to keep all moneys so paid in a separate fund to be known as the State Bonding Fund, and to issue proper receipts therefor. The act prescribes the usual conditions of the bond of a public official, the faithful and impartial performance of the duties of the office or employment, and the accounting for all money or property in his charge. In the case of a default or wrongful act on the part of any public employee, the State Auditor, County Auditor, City Audi- tor, Village, Township, or School District Clerk, or other officer responsible for supervision of the bonded employee shall file with the commissioner a claim against the State Bonding Fund; or such claims may be filed by any person injured by such default or wrong:^ul act. Where there is a default or wrongful act creat- ing a liability against the fund, the commissioner is required to notify the State Examiner, who shall then immediately check the accounts of such public employee and file a report with the commissioner, stating the amount, if any, due frqm the State Bonding Fund. All claims against the fund are to be audited by a board con- sisting of the Commissioner of Insurance, the State Examiner, and the Attorney General. No action can be maintained against the State Bonding Fund upon any claim until the claim has first been presented for allow- ance and allowance refused ; but the neglect .of the auditing board to act upon a claim for a period of sixty days is deemed a rejec- tion of the claim. Actions against the Fund are limited to one year. Any person or corporation injured by the default or wrong- ful act of a bonded employee may sue the employee and join the Fund as defendant, and any judgment obtained against such em- ployee is to be paid out of the State Bonding Fund, the Fund hav- ing the right thereafter to recover against the employee. The State Bonding Fund Law has been in operation two years, during which time it has incurred total operating expenses 77 amounting to $3,892.34. During this period the total premiums received amount to $67,081.38. Premiums are due to the amouat of $2,459.12, leaving a cash balance in the Bonding Fund of $60,- 445.82. Since the law has been in operation, the state has not been required to pay out a single cent because of the default of any public official. It is believed by the Insurance Commissioner that the income from accumulated funds will within a short time be sufficient to maiatain the department without any further expense to the state, and without the payment of further premiums. State Insurance Chapter 159 of the Session Laws of 1919 creates the State Fire and Tornado Fund, and, in conformance with its provisions, the Commissioner of Insurance has insured all state property subject to destruction by fire or tornado in that fund, for an amount not exceeding ninety per cent of the actual value of the property, as fixed and determined by the commissioner. Premium rates are determined as nearly as possible on the basis of the average rates charged by responsible fire and tornado companies doing business in the state and issuing policies on property of similar kinds exposed to similar risks. Beginning August 1, 1919, all prop- erty owned by counties, cities, towns, villages and school dis- tricts in the state was ins,ured in like manner. Policies in effect August 1, 1919, were not cancelled under the act, but insurance on such property is required hereafter to be made in the State Fire and Tornado Fund, and all necessary increases on existing policies, so as to maintain the amount of insurance required by the provisions of the act. The law does not require the insurance of the property of a town or a school district located outside of the corporate limits of a city or village, unless the town .or school board applies for such insurance and unless such application is approved by the Commissioner of Insurance. For the first five years, only risks of $100,000 or under, are to be carried by the state fund, the com- missioner being required in all cases of risks above this amoimt to insure the additional risk in some reliable fire and tornado company, or companies. The premiums for all insurance are col- lected by the commissioner, w'ho draws warrants upon the State Treasurer against the state fund for tjie amount of any premium due to a private company. At the end of five months operation the State Fire and Tornado Fund has a cash balance of $22,521.15, registered warrants amounting to $1,489.90, premiums receivable $12,652.77, and 78 furniture and fixtures valued at $132.75, making a total of $36,- 797.57. Earned premiums amount to' $15,332.32. This amount represents the net gain of the fund since its establishment. And this is on only a small percentage of public property insured, as all policies in force at the time the act weiit into effect remain ia force until their expiration. Guarantee of Bank Deposits The Depositors' Guaranty Fund law was passed' by the legis- lature of 1917, was approved March 10th, and went into effect July 1st of the same year. All state banks, savings banks, and trust companies come under this law and an annuarl charge is made against these institutions, based on deposits, to create a reserve fund to meet any losses that might occur. No special assessment has been found necessary 'and a good reserve is being built up. There has been one small loss since this law went into opera- tion. The law has created a closer supervision of the institutions protected and has been a benefit to the state banks and the State in general, as well as full protection to all depositors. Department of Immigration The North Dakota Department of Immigration was established August ■7th, 1919, with the appointment of John H. Worst as Commissioner. On September 2, 1919, an office was opened in the state capitol at Bismarck. On April 1, 1920, the department had a complete office force at Bismarck, and a force of seventeen field dep- uties, who are at work in the- states of South Dakota, Minnesota, Wisconsin, Iowa, lUiaois, Ohio, Indiana and Michigan. Most of these field deputies have been working throughout the winter months. They have held meetings in town halls, school houses, churches and private homes, delivering lectures on the advant- ages of North Dakota and the opportunities here for home- builders — especially those seeking to start a farm home. They have met and talked with hundreds of individuals and have distributed thousands of pieces of literature— buUetms, cards, etc., all setting forth the advantages North Dakota has to offer. They have secured the names of hundreds of prospective settlers. The officials of the Department of Immigration are carrying on a thorough and comprehensive educational campaign, on a big s6ale, to acquaint homeseekers outside the state with the op- 79 portunities to be found here and to overcome misinformation and prejudice about the climatic, soil, and social conditions of North Dakota. Through its Publicity Department the publication of a vast amount of information about North Dakota, especially about the grain farming, live stock and marketing conditions, has been secured. A series of display advertisements has been carried in seven of the leading farm journals of the central west. These adver- tisements have brought a flood of inquiries from prospective land seekers, thus getting the department in direct touch with hund- reds of prospective settlers to whom literature of the department is now being regularly supplied. Prom clippings taken from newspapers and magazines rep- resenting all sections of the country from the New England . states to California, the department has proofs in its files of the actual publication of "booster" articles covering a circulation of 7,951,538. If the publication of these articles had been paid for at the advertising space rates charged by the various publica- tions in which they appeared, the total cost would have been $10,363.84. These ' clippings covered the publications to March 1st, only, and do not represent the entirety of this service. All these articles were furnished and their publication secured through the Department of Immigration. This takes in only the publication activities outside the State. Within the State the department has secured the publication of a number of articles for the purpose of getting the people of the state more fully acquainted with the resources and opportunities of North Dakota to the end that North Dakota citizens may assist this movement by their sympathetic support. The department had a state exhibit showing corn and other products at the Mississippi Valley Exposition at St. Louis, the first two weeks in March, which was admitted to be the best agri- cultural exhibit at the exposition. It attracted wide attention. Thousands of pieces of North Dakota literature were distributed, and a keen interest awakened in the minds of a large number of visitors. The department has recently appointed a number of repre- sentatives in different localities who will take prospective set- tlers to see farm lands that are for sale and will thus form the connecting link between buyer and seller. These representa- tives take no commission but charge only actual expenses, $5.00 80 per day and $0.15 per mile for use of auto. This is paid by the seller if a sale is made and by the buyer if no sale is made. Approximately 800 North Dakota farms have been listed for sale with the department. HJail Insurance The Hail Insurance Department was created by the regular session of the 1919 Legislature and was put into operation im- mediately. Under the provisions of the law, all tillable lands in the State are subject to a flat tax of 3 cents per acre. All till- able and cropped lands must be listed by the assessors in the spring and all lands actually cropped automatically become in- sured against damage by hail to the amount of $7.00 per acre in ease of total loss, unless the owner files an affidavit of with- drawal with the County Auditor and the State Hail Insurance Commissioner before the 15th day of June each year. If land is rented the tenant must give his written consent to such with- " drawal. If insured crops are damaged by hail to the extent of 10 per cent or more, the owner or tenant must notify the Department of such fact within three days; such notice to be sent by regis- tered mail. The Department then sends out adjusters to inspect such loss and to award the amount of indemnity due. In October of each year, when ell adjustments have been completed, the total amount of indemnity is ascertained. This sum, minus the fund derived from the 3c flat acreage tax, is then divided by the total number of acres of cropped lands that remained insured for the season, and a levy for indemnity tax is made, apportioned to each county and collected as other taxes are collected; but such indemnity tax may not exceed 50c per acre in any one year. Warrants in payment of indemnity are issued by the Hail De- partment on the 1st day of December, the warrants drawing in- terest at the rate of 6 per cent until called for payment by the State Treasurer. If taxes are paid promptly, every warrant should be called by April of the following year. In order to be prepared to adjust the anticipated losses, the State was divided into four districts and an inspector appointed for each district. About 200 men, mostly farmers, were also ap- pointed to do the field work for the Department. These men were paid at the rate of $5.00 per day when actually working. A great deal of unjust criticism has been advanced against the Department by knockers of the law for appointing such a num- ber of adjusters. The fact is that the great majority of the men 81 appointed never realized the magnitude of the work, and thus were not available when called on, and therefore drew no pay. The figures show that the ratio of overhead expense for adjust- ing in one district was only 1.3 per cent, and that for the whole State 2.17 per cent. The total number of losses reported for the whole State in 1919 was 12,852. The cost of adjusting the same was $47,778.82, or $3.79 per loss. No private insurance company so far has been able to do business at so low an over- head cost. According to figures furnished the Department by the county auditors, there were 28,282,339 2-3 acres in the State classed as tillable land, subject to the 3e tax, bringing a revenue of $857,- 560.19. Of all cropped lands in the State 12,408,551 acres re- mained protected by State Hail Insurance. The total losses in the State in 1919 amounted to $3,452,239.64. When the levy was made it was, of course, necessary to add to the above sum an amount sufficient to cover the necessary running expenses of the Department for 1919 and 1920, plus the estimated interest on- outstanding hail warants. The fact that some of the land had been incorrectly classified was also taken for granted and a small amount covering possible abated taxes included. Such a pre- caution proved timely, as the Department has now on file a good many applications for correction of such taxes. As the venture was new, mistakes necessarily were made, and though the Department blames nobody in particular, it is try- ing this year to take every precaution to the end that thfe mistakes of last year may not be repeated. According to all information at hand on the 10th of October, 1919, it was estimated that an amount of $3,959,647.94 Was neces- sary in order to pay for losses and interest and to secure a fund sufficient to maintain the Department for the coming year, and an indemnity tax of 2'5c per acre was levied against every acre of cropped land in the State -not withdrawn from protection, or on the 12,408,351 acres as given above. The Hail Fund is thus drawn from the following sources : 28,585,339 2-3 acres @ 3c Flat Tax $ 857,560.19 12,408,351 acres @ 25c Indemnity Tax... 3,102,087.75 Total Hail Fund $3,959,647.94 Comparing state hail insurance with that furnished by private companies in North Dakota in 1919, it is found that on the basis of $7.00 risk the premium of private companies amounts to 77 cents per acre, while the state cost, including the 3c an acre flat 82 tax, assuming that the total proceeds of the latter will be charged up to the land insured, is only 32 cents an acre. This amounts to a saving of $5,400,000 on the 12,000,000 acres insured, under the state law. The State Commissioner of Insurance sums up the matter of comparative costs as follows : "No insurance was written in the state in 1919 (except by the state and one or two mutual companies) at less than 10 per cent, or $1.00 per acre on $10.00 risks. This is equal to 70 cents per acre on $7.00 risks. But on the west side of the Missouri River a premium of 12 cents was charged and a like charge was made for insurance of barley, rye, and speltz over the entire state. This premium of 12 cents was also charged in a block of counties in the central part of the State. Therefore it is safe to assume that 11 per cent, or 77 cents an acre would have been about the average cost of insurance for $7.00' protection on the 12,000,000 acres insured in the state fund. "That would have given $9,240,000 gross premiums, based on old line company rates. Granting that we must refund the 3c flat tax on the 16,000,000 acres of uncropped land (amounting to $480,000) which may be regarded as having been donated for those who enjoy protection, the total cost per acre on the 12,- 000,000 acres would be 32 cents. It will thus be seen that the difference between state insurance and line insurance is 45 cents an acre, or a total of $5,400,000 on the 12,000,000 acres insured." Several minor changes eliminating objectional features in the law were effected by the Special Session of the Legislature last winter. The adjusting work will be carried on directly from Bismarck this year, and district inspectors dispensed with. This will insure uniformity of methods, expediency of inspection of losses, and will do away vdth possible duplication. New quarters have been secured in the Capitol Building, and with the improved system of handling claims, the Hail Department looks for an even greater opportunity than ever before to be of benefit to the peo- ple of the State. ?3 THE GRAIN GRADING LAW The Movement for Fair Grain Grades For the past thirty years a favorite method by means of which commercial interests have exploited the farmers of the northwest has been the manipulation of grades. The cruder practices of earlier times — under-weighing, false measures, etc. — ^have been largely abandoned, partly because the farmers are more alert in the defense of their business interests, and partly because of the growth of a business ethics which rightly classifies false weighing as larceny. It appears, however, that business ethics, so long as not discovered, still permit a good deal of what is essentially larceny. Through some sort of general connivance among grain dealers and larger milling concerns grain grades have been estah- lished on a basis having no relation to the actual value of the product. Wheat is graded chiefly on its physical characteristics- such as hardness, color, moisture content, etc. These have no necessary relation to the breadrmaking qualities of the grain. This important fact has been brought out in a line of experiments made by the North Dakota Agricultural College, and there has followed an effectively organized and well sustained movement for the establishment of grain grades on the basis of milling and baking values, instead of on the basis of physical characteristics. North Dakota Leads North Dakota has been the leader in this movement for fair grain grades. The farmers' fight of many years against false weights, over-charges, unfair dockage and unjust grading of grain by elevators and mills resulted in the enactment by the 1919 legislature of a law establishing a system of grades, weights and measures, in charge of a state inspector appointed by the governor. Under this system false weights and over-charges have been eliminated and elevators have been compelled to pay for all dockage or to' return it to the farmer. Grain has been graded more nearly in accordance with actual value, and margins be- tween the prices received by the farmers and the prices paid by- millers reduced within more reasonable limits. Meanwhile the wide publicity given to the North Dakota achievement and the direct participation of North Dakota experts in national councils S4 have been important factors in the fixing of federal grain grades more nearly on the proper basis than otherwise would have been possible. , Injunction Against the Grain Grading Law Marking, as it does, the culmination of a thirty-year fight for fair grain grades, the North Dakota grading law is the most im- portant piece of legislation on this subject now in existence. This law has come to be looked upon as the model upon which grain grading legislation should be established throughout the country. The successful working out of the North Dakota plan has held out the hope to all grain growers that the exploitation of the farmer by the grain buyer, through the manipulation of weights, grades and charges would be eliminated once for all. This being the situation, it was to be expected that- those interested in the continuation of the old system would contest the North Dakota law. This has been done, and a United States court has granted an order restraining the North Dakota State Grain Inspector from enforcing the provisions of the law. The outcome of this suit will be a matter of nation-wide interest. The defeat of the North Da- kota law would in all probability change the entire character of the struggle for fair grain grades. Grain growers throughout the country would feel that they could no longer leave it to a single state to champion the cause of honest grades, but that they would have to unite all their forces for the final settlement of the ques- tion as a national issue. In any ease it is certain that the farmers of this country will never again submit to the old exploitation. The movement for fair marketing conditions will go forward, no matter how this case is decided. Millions Saved Farmers Under Fair Grades Law Dr. E. F. Ladd, president of the North Dakota Agricultural College and State Inspector of grades, weights and measures, in charge of the enforcement of the North Dakota Grading Law, says, with regard to the benefits received by North Dakota farm- ers under this law : "So many factors enter into the question of bbnefit to farmers from the enforcement of the grain grading and inspection law * * * that it is very difficult to estimate with a degree of accur- acy how much is saved * * * An enlightened public sentiment, the result of investigations as made by the little mill at the Agri- cultural College * * * ; the discussion among the farmers; and the enactment and enforcement of the grain grading act and the weights and measures act * * * have without doubt re- 85 suited in a vast saving to our fanners * * *. "I feel that I am most conservatively estimating when I say that on each bushel of grain produced by the farmer he receives not less than 5 and possibly as much as 8 cents per bushel benefit * * * * exclusive of the dockage benefits. It is estimated that in 1918 North Dakota produced of merchantable grain and potatoes not less than 245,794,000 bushels. At the minimum saving of 5 cents per bushel this would mean $12,289,- .700. Full crop data for 1919 are not available, but the benefits will stand in the same ratio." And More to Come This saving of more than $12,000,000, as shown by Dr. Ladd, is due to the enforcement of honest weights and measures, the elimination of unfair charges, the enforcement of existing grades and the general education of the farmers. The establishment of grain grades on the basis of milling and baking values is yet to come. Again quoting Dr. Ladd: "But the farmer is not receiving all the benefits which will come to him when we sell our wheat on its real bread produciEg value, instead of on its flour producing and speculative value ; and when our elevators are properly consolidated under co-operative management and state control, with all speculative features elim- inated f * *. By economic management the cost of operating elevators could be reduced one-half and still give them better, profits than they are making today. This is not mere theory, but is statistically shown by the elevator records set forth in one of the earlier bulletins from the Agricultural College; whilte in a bulletin now going to press it is pointed cut that on a 100,000,- 000 bushel crop of wheat sold on its bread-producing value, rather than on its milling and speculative values, as judged from 1,933 cars received and sold in Minneapolis in December, 1919, duriug a period of fifteen days, there would have been a further savmg to the farmers of $11,930,000." It is pointed out in this connection by Dr. Ladd that the con- sumer is probably not benefitted under the present system of pay- ing the farmer less than his grain is worth. Not only is this true, but it is strongly probable that the establishment of a more direct system of marketing will save as much to consumers be- tween the wholesaler and the table as it will save the farmers be- tween the wholesaler and the farm. UNITED STATES SUPREME COURT SUSTAINS NORTH DAKOTA INDUSTRIAL PROGRAM A Victory For the People Stated broadly the recent decision of the United States Supreme Court upholding the power of the people of North Dakota to establish and operate enterprises and facilities by them deemed necessary for the conservation of the resources and the pro- tection and development of the industries of the State, consti- tutes a final victory in a strug-gle that has been waged among English speaking peoples for eight hundred years. The first notable victory in this long fight for political and industrial self-determination was won at Eunnymede, when the barons, clergy, knights and townsmen of England compelled King John to sign the Great Charter. Since that time the struggle has been marked by certain notable epochs; such as the industrial and religious upheaval led by Wyclif and the Lollards; the Refor- mation — through which always and everywhere ran a strong in- dustrial and economic undercurrent; the indiistrial disturbances' leading to the migration to America ; the Revolution of 1688 and the Bill of Rights ; the American Revolution ; the Civil War ; and the struggles of the American people to emancipate themselves from the control of private industrial and financial monopoly, since the abolition of chattel slavery was accomplished. The con- stitutional right of the people to manage their own industrial affairs, whether locally or nationally, has never before been so definitely and conclusively determined. Controversies involving this right have always been more or less mixed up with religious and political issues, questions of national policy, and in this country with a century-long controversy as to the relative powers of the states and the federal government. The problems decided by the Civil War were such as led necessarily to a tremendous emphasis on the part of the courts of the powers of the federal government ; so that for a long time after the end of the war court decisions affecting generally the powers of the states were apt to be restrictive upon the states and favorable to the enlargement of federal action. After a comparatively short period in which there was a tendency on the part of the Supreme Court to limit the operation of the Fourteenth Amendment to citizens of the United States of African descent, there follows a long line of 87 decisions, the effect of which is greatly to restrict both the police and the taxing powers of the states, presumably in the interest of the protection of individual and corporate rights under the Fourteenth Amendment. But of late the pendulum has swung rapidly in the opposite direction. As Judge Amidon says in Scott vs. Frazier: "No judge can investigate judicial decisions rendered during the past ten years without being impressed with the rapid extension of state activity into fields that were form- erly private. ***** Business which will seem to one court to be public will seem to another to be private. 'Can' suc- ceeds 'can't' in this field of law so rapidly that one can hardly tell which word he is looking at. " The order of development in the securing of political or indus- trial rights is always the same — assertion of the right on the part of the people; the embodiment of the right in fundamental or statutory law; the test of the right in the courts, nearly always for a time resulting in adverse decisions ; the final approval and confirmation of the people 's action by the courts. That is exactly what we now have in these decisions. They are clear-cut, comprehensive and conclusive. They clear the right of the people to industrial self-determination of a cloUd that has hung over it throughout the entire development of Eng- lish and American political institutions. The way is now open for the establishment in any state of such public services as are necessary to free the industries of the people from the control and exploitation of private monopoly. The successful establish- ment of these services in the several states will in all probability lead to supplementary federal action. To secure that it may be necessary to amend the constitution of the United States. This may be done by the nation-wide assertion of that very right of self-determination which was exercised by the people of North Dakota when they amended their constitution so as to make the enactment of the present Industrial Program possible. The aU important thing is that the right is upheld and confirmed. The fear of judicial reversement of the exercise of the people 's sover- eignty, with regard to their industrial affairs, is removed. The principle applies with equal effect to national as to state action. Decisions in the "Taxpayers' " Suits , These suits are two in number : 1. Scott vs. Frazier (the so-called Forty-two Taxpayers Suit). 2. E. A. Greene, H. W. Voight, N. M. Christianfeon and F. V. Woodworth, Plaintiffs in Error, vs. Lynn J. Frazier, Governor, "William Langer, Attorney General, et al. The former action was brought in the United States District Court, which rendered a decree dismissing the bill on the merits, the judge stating that he was of the opinion that there was no jurisdiction, and direct- ing the dismissal on merits to prevent delay and to permit the suit being taken to the United States Supreme Court on appeal. The Supreme Court holds that, as there was no diversity of citi- zenship in this case and as there was no allegation that the loss or injury to any complainant amounted to $3,000, the District Court had no jurisdiction. Therefore, the cause was remanded to the District Court with directions to dismiss the bill for want of jurisdiction. It will be noted that this disposal of the Forty -two Taxpayers' suit leaves the important matters in controversy wholly unde- cided. There is no decision as to the fundamental merits of th? laws themselves; there is no decision as to the power of the people, the legislature or the courts of the State of North Dakota to determine what the people may or may not do for the protec- tion or development of their industries. There is evidence that this is exactly what was intended by the interests behind the Forty-two Taxpayers ' Suit. It is apparent that the entire scheme was framed on the practical certainty that the suit would be dis- missed by the District Court for lack of jurisdiction, and that this decision would finally be upheld by the Supreme Court of the United States. But in view of the history of such cases it might reasonably be hoped by the opponents of the North Dakota Program 'that a final decision would be delayed for some years or at least until after the 1920 campaigns. This scheme was defeated by the bringing of the second action above referred to in which all questions involved in the first case were incorporated. This was brought in a District Court of the State of North Dakota and appealed to the State Supreme Court, where the constitu- tionality of the legislation in question was sustained. From there it was carried on appeal to the Supreme Court of the United States on the question of the alleged deprivation of rights secured to the plaintiffs by the Fourteenth Amendment to the federal constitution, it being contended by the complainants that the laws in question deprived them of property without due process of law. The important effects of this action were : 1. The upholding of the constitutionality of the Industrial Program under the constitution of the State by the Supreme Court of North Dakota ; 89 2. The sustaining of the constitutionality of the program under the federal constitution by a decision of the United States Supreme Court, on the ground that "the people, the legislature and the highest court of the State have declared the purpose for which these several acts v^ere passed to be of a public nature and within the taxing authority of the State. ' ' History of North Dakota Industrial Legislation As was to be expected it is being held by opponents of the North Dakota Industrial Program that these important decisions have no bearing upon the merits of the laws in question. It has been said that: "It simply leaves North Dakota free to go straight to ruin if her people so desire." The objection to this view of the situation is in the assumption that the people will go straight to ruin if allowed to exercise their sovereign power with regard to their industrial rights. That, however, is pure assumption. The people of North Dakota ask for nothing better than that they be left free to determine their own political and industrial destinies, as a great commonwealth of the nation, under such federal re- strictions and enlargements as they, in common with the other states of the Union, have retained or may embody in the funda^ mental law of the Nation. However, there is nothing in the opinion of the United States Supreme Court in this case which indicates that the justices, individually or as a court,' took the view of the matter indicated above. It is true that the court says : "With the wisdom of such legislation, and the soundness of the economic policy involved, we are not concerned. Whether it will result in ultimate good or harm it is not within our prov- ince to inquire." But the court then goes on to examine the ground upon which the Supreme Court of the , State held this legislation not to amount to a taking of property without due process of law. It sums up the reasoning of the state court as follows : "It held, concerning what may in general terms be denominated the 'banking legislation,' that it was justified for the purpose of providing banking facilities, and to enable the State to carry out the purpose of the other acts, of which the Mill and Elevator Association act is the principal one. It justified the Mill and Elevator Association act by the peculiar situation in the State of North Dakota, and particularly by the great agricultural in- dustry of the State. It estimated from facts of which it was authorized to take judicial notice that 90 per cent of the wealth 90 produced by the State was from agriculture ; and stated that upon the prosperity and welfare of that industry other business and pursuits carried on in the State were largely dependent; that the State produced 125 million bushels of wheat each year. The manner in which the present system of transporting and market- ing this great crop prevents the realization of what are deemed just prices was elaborately stated. It was affirmed that the an- nual loss from these sources (including the loss of fertility to the soil and failure to feed the by-products of grain to stock within the State, amounted to $55,000,000. ******* It answered the contention that the industries involved were private in their nature, by stating that all of them belonged to the State of North Dakota, and therefore the activities authorized by the legislation were to be distinguished from business of a private nature having private gain for its objective." Further along the Court says: "This is not a ease of undertaking to aid private institutions by public taxation as was the fact in Citizens' Savings and Loan Association vs. Topeka, 20 Wall. 665. In many instances states and municipalities have in late years seen fit to enter upon pro- jects to promote the public welfare which in the past have been considered entirely within the domain of private enterprises. ' ' And then, in rendering its decision, the Supreme Court of the United States says : "Under the peculiar conditions existing in North Dakota, which are emphasized in the opinion of its highest court, if the State sees fit to enter upon such enterprises as are here involved, with the sanction of its constitution, its legislature and its people, we are not prepared to say that it is within the authority of this court in enforcing the observance of the Fourteenth Amendment, to set aside such action by judicial decision." Clearly the court could have dismissed the case with the bald statement above quoted: That the court is not concerned with the wisdom or soundness of the economic policy involved, since it is within the power of the State itself, by direct vote of the people or by the act of their representatives, to determine what is a public purpose. Instead it chooses practically to adopt the reasoning of the State Supreme Court and to hold in its final decision that, in view of the peculiar conditions existing in North Dakota it will not set aside the decision of the State Court up- holding this Program. What are these peculiar conditions? Some of them are stated 91 in the opinion of the State Supreme Court, summarized in this decision. They are set forth at greater length in the opinion rendered by Judge Amidon when the Forty-two Taxpayers' Suit was before the United States District Court. This opinion has already been cited at length in the January, 1920, Bulletin of The Bank of North Dakota. It will go down to posterity as a classie in the judicial determination of economic progress in this country. Judge Amidon says in part : ' ' The present movement began at least as far back as 1911. In that year an amendment to the State constitution was initiated authorizing the State to acquire one or more terminal grain ele- vators and maintain and operate the same in such manner as the legislative assembly should prescribe. That amendment was adopted in 1913. From that time forward the discussion of the subject of marketing the products of the State has been the main theme of public thought. The movement has gone straight for- ward. The constitution has been repeatedly amended, including the amendments here assailed — all having for their object the correction of the existing system of marketing the State's pro- ducts. Year by year the conviction has deepened, in steadily increasing majorities, that public ownership of terminal elevat- ors, mills, and packing houses is the only effective remedy to cor- rect the evils from which they believe themselves to be suffering. Their decision is not a popular whim, but a deliberate conviction, arrived at as a result of full discussion and repeated presentations of the subject at the polls. The acts which the Court is asked to restrain are not those of public officials, who are pursuing en- terprises of their own devising. Those acts express not simply the judgment of the State Legislature. To authorize their en- actment the people of the State have redrawn their constitution. That is the highest and most deliberate act of a free people. These constitutional amendments authorize and direct the State to do what the defendants are threatening to do. Their acts are simply the carrying out of the mandate of those constitutional amendments. "It is hopeless to expect a population consisting of farmers scattered over a vast territory as the people of this State are to create any private business system that will change the system now existing. The only means through which the people of the state have any experience in joint action is their state govern- ment." 92 Importance of These Decisions It is clear from the above review that these decisions mark an important epoch in the development of legislation establishing state industrial services, not only in North Dakota but through- out the entire country. First. The constitutional status of such legislation is settled beyond further controversy. The decisions leave to the people of each state complete self-determination, economically as well as politically, limited only by those provisions in the fundamental law of the Nation regulating and protecting the intercourse of the people of the several states. The people of each state are left free "to go straight to economic ruin if they so choose," and also they are left free to emancipate themselves from every species of private monopoly which heretofore has economically enslaved them. Any people possessing a real faith in democratic principles will have no doubt as to which of these courses will be chosen. Second. The decisions, both in the state and in the federal courts, are so worded as to make it evident that the courts may be depended upon to aid in the beneficial development of the peo- ple 's industries, instead of hampering and thwarting it by the application of the outworn theory of the existence of some mys- terious power located above or beyond the people themselves, for the purpose of restraining the enforcement of their will. The order in wihich the Supreme Court of the United States sets down the acts of the people of North Dakota in the creation and establishment of this program clearly shows this wise and bene- ficial attitude of the courts — First. The amendment of the constitution by the people, so as to make the desired legislation possible, designated as the highest and most deliberate act of soveignty of which the people are capable ; Second. The enactment of the laws creating the program and establishing the state industries by the legislature, acting as the representatives of the people ; Third. The sustaining of the constitutional amendments and the legislation enacted in accordance therewith by the highest tribunal in the State. Adding to this the favorable decision of the highest court in the land, essentially if not technically going to the merits of the program, we have a complete judicial approval of the North Da- kota industrial plan, which will sustain every future attempt in 93 this and other states to remove fronl the industries of the people the incubus of private monopoly. Third. It is to be noted that there is no question of federal power vs. state rights entering into the controversy decided in these cases. The question of the constitutional power of the federal government to engage in like enterprise is not involved. That question will, however, be involved in the decision of the case now pending in the United States Supreme Court with re- gard to the validity of federal farm loan bonds. In fact the de- cision may go to the constitutionality of the entire act creating the federal farm loan banks. If it should be decided that congress exceeded its constitutional powers in establishing the farm loan banks, an additional importance attaches to the favorable de- cisions in the North Dakota cases. As we have seen these deci- sions establish the economic and industrial self-determination of the people of the states. An unfavorable decision would not only have put a stop to the efforts of the people of North Dakota to emancipate themselves from the industrial control of private monopolies, but would have overthrown state rural credits sys- tems, state marketing systems and important and beneficial muni- cipal services throughout the country. The ports of New Orleans, Seattle, San Francisco and Los Angeles; municipal docks and wharves in other cities; municipal markets; and even municipal light plants and water-works would have been in danger. The North Dakota decisions confirm and protect these enterprises. If the decision should be unfavorable to the power of congress to establish such services as the federal farm loan banks, that would put a stop to the securing of any immediate relief from the evils of private monopoly of essential industrial facilities through fed- eral agency. Meanwhile, the people of the several states wiU be free to work out their economic problems and to plan their indus- trial development according to their several conditions. This is the' natural and normal development. If after the state industrial services are well established it proves that some of the state's undertakings could more beneficially be consolidated and ad- ministered under federal control, then with their experience in local self-determination to guide them, the people of the several states will be able to unite and to secure such amendments to the federal constitution as may be needed to effect such consolidation., That is, through self-determination within the several states, the people of the United States will finally achieve national self-de- termination, industrially as well as politically. 94 Date Due C n aj\. '^■ '''•'6 North Dakota industrial program.a re 3 1924 002 765 349