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stitutional history of the country. It con- is the first constitution ever framed in this tains the doctrine of direct responsibility. country containing a provision for a

A hundred and fifty years ago our budget. It is the first to provide that some forefathers had a very real dread of official shall assume definite responsibility tyranny and also a profound distrust of for the administration expenditures of the the dangers of graft and dishonesty in state. government. An even casual study of Necessity produces most political repolitical events of that time will show that forms and necessity has produced this their distrust was well founded. To avoid important one in New York. tyranny and dishonesty they arranged our Under the revised constitution the governmental machinery so that it did governor, on or before February ist, must not give absolute power to any one man, or submit to the legislature a budget containgroup of men. Two houses of Congress ing a complete plan of proposed expendicheck one another and both check the tures. He must also submit details as to President; the President, in turn, through revenue, and a proposed legislative prothe veto power, checks both branches of gramme for raising the money required. the legislature; the Senate, through its He has the right to appear before the legispower of approving appointments and lature and explain and defend his financial treaties, checks the President in civil ad- programme. The legislature can secure ministration and in the control of our his presence for this purpose at any time. foreign relations..

The law makers cannot increase the Since that time the danger of tyranny has budget or any of its items: they can, largely passed and our political conditions however, reduce or wholly reject them. have much improved. Moreover, the busi- Under such a constitution no governor ness of government is far greater than it could take refuge for the wastes of his used to be. As this strain grows effici- administration among the indistinguishable ency becomes more and more necessary. responsibilities of different legislators, and And at last, somewhat reluctantly, we are these legislators could not succeed in proforced to admit that efficiency is impossible moting wasteful projects, for the governor under our old system of checks and bal- would know that whatever was passed ances, for under it no one can put a finger would be held up against him. on the man responsible for success or failure. Probably New York's proposed budget

To make our officials efficient they must is not a perfect instrument; embodying a have both power and responsibility. By serious attempt, however—the first ever withholding unchecked power from any made in our state and federal systems, one official, we possibly prevent that to centre responsibility for expenditures official from doing harm; on the other hand, and so enforce efficiency in government, we prevent him from doing good. Modern it is the greatest step forward American business proceeds on the directly opposite constitutionalism has taken since the principle. It gives a responsible head meeting of the great convention in 1787. absolute power to run the organization and then holds that head to a strict account ANOTHER BANK FOR SOUTH ability for results.

AMERICA If this idea is common sense as applied to private business, why should it not suc

TA time when so much attention ceed as applied to public business? That

is naturally being directed toward is the question which the makers of the I the extraordinary chain of events new constitution for New York asked them that has ended in the half-billion-dollar selves. Until the meeting of this conven- Anglo-French loan, to the new and imtron, no state has attempted to introduce portant rôle which this Nation is destined this conception of responsible government henceforth to play commercially and into its fundamental law. That is what financially among the nations of Europe, makes this new New York constitution a it is satisfying to see that we are also makdocument of the utmost importance. It ing substantial progress toward the establishment of closer business relations of the manufacturer, the Mercantile Bank of the enduring kind with our Latin-American Americas will operate through control of neighbors-relations of which there has an extensive chain of agencies. Such a been so much talk since the war broke out. system, the management of the new bank

Ever since we began to take serious ac- points out, is better adapted to the peculiar count of our neglected opportunities in the conditions prevailing in its field than that enormously rich field of the countries im- of directly operated branches, because the mediately to the south of us, the provision employment of native knowledge and of banking and credit facilities has been talent is perhaps the first essential to sucrecognized as the necessary forerunner of cessful trade. trade development there. The important beginning made by the National City THE SUCCESS OF WIRELESS TELEBank of New York—the first and so far

PHONY the only institution to take advantage of the authority granted by the Federal ERHAPS the most striking aspect Reserve Act for the establishment of of the recent invention of longbranches of national banks in foreign 1 distance wireless telephony is the countries—is well known. It now has, in coöperative endeavor among men of many addition to a recently acquired branch in callings that was involved in the proHavana, Cuba, five active branches in duction of it. According to Prof. Michael South America--three in the coffee region Pupin, of Columbia University, whose own of Brazil at Rio de Janeiro, Santos, and work was one of the many elements that São Paulo, one in the Argentine at Buenos entered into the final result, credit must Aires, and one in Uruguay at Montevideo. be given not only to the engineering staff

To this same end of reciprocal trade of the American Telephone & Telegraph relationship the National Shawmut Bank Company, headed by Mr. J. J. Carty, but of Boston has lately established connec- also to Mr. Colpitts, the chief of the Westtions as agent and correspondent with the ern Electric Company's research laborBanco de la Nación, Argentina, the gov- atory and to Dr. Whitney, the head of the ernment bank of that republic and the research work of the General Electric largest in South America.

Company. Dr. Lee De Forest, the inA still more recent development, and ventor of the De Forest system of wireless one of as much economic significance, has telegraphy, claims credit for one part of been the opening in New York under the the mechanism. And of course, without auspices of two large private banking the pioneer work of Mr. Guglielmo Marhouses— Messrs. Brown Brothers & Com- coni, the achievement would long have pany, and J. & W. Seligman & Company- been deferred. of the Mercantile Bank of the Americas, Thus, one of the dreams of speculative Inc. This new institution, which is ade- scientists has come into reality-in the quately capitalized at $5,000,000, has guise of a few seemingly simple instruments chosen for its field of operations Central -through the coöperative work of an America and the northern republics of Italian scientist and the scientific staffs of South America, where there is now rela- three American corporations. It is an tively small need for general banking facil- admirable example of the fine helpfulness ities, but very great need for capital to use and long-visioned patience of enlightened in producing and marketing coffee, cacao, business working with pure scientists to and hides, the chief articles of export from achieve results that gratify both equally those countries to the United States. and that serve the public as well.

In undertaking to meet the need for such Both of two problems were solved becapital and thereby not only to reduce the fore success with either was announced. large toll which European bankers have The first was the problem of aërial transheretofore exacted from this country for mission of the human voice. The other that service but also to facilitate the open- was the problem of connecting the wireless ing of these new markets to the American system with the existing wire lines. Thus it was made possible not only for naval activities with reasoned confidence. Those officers at the Government wireless station of us who sell our services or our products near Washington City to talk to Mr. Carty here at home have no reason to hesitate. at the Mare Island Navy Yard near San The public here has money to buy. Those Francisco by wireless, but it was possible of us who sell our products to the Allied for President Vail of the telephone com- nations can work with a renewed confipany to talk from New York to Arlington dence now that the loan has strengthened by wire and to have his voice at Arlington their credit here. Those of us who sell in leap from the wire into the ether and span South America and in the East must do so the continent. This means that ultimately with confidence, for this is our opportunity a man in Cleveland, O., will be able to talk to make friends and markets to increase to a man in London, England, and that our prosperity in the future. the conversation will travel by wire from The last year and a half has been a time Cleveland to Sayville, Long Island, by of opportunity for men of courage and wireless from Sayville to some wireless ability, for the shock of changing circumstation near London, and from that wireless stances takes many of the timid out of the station to London by wire.

race. The foundations of most large

successes are made in times of disturbance. PRESENT BUSINESS OPPORTUNI In such times men develop a stride that TIES

carries them far in the easier times that

follow. In those easier times when almost HE New York Central, the Penn every one can succeed are bred the germs sylvania, and other railroads are of disaster. But now is the time to build

reporting better business than last courageously and well for the future. year. Judge Gary reports the steel mills running at full capacity and fair prices and PLAYING WITH THE TARIFF with satisfactory orders ahead.

The reports from the Federal Reserve HERE is again being revised the Districts show a hopeful tendency. There

old and commendable project for is no great general improvement but

a non-political tariff commission there seems to be a little more activity to which, after the manner of the times, almost everywhere, and with that activity the word “scientific” is attached. a stimulating confidence. Crops are good I t is admitted on all sides that the comin the West, and cotton prices are up mittees of Congress which frame the tariff again, and the producing of war supplies schedules do not have time to find out the keeps many manufacturers and others busy facts on which to base their recommendawho would otherwise be idle.

tions. It seems wise, therefore, to have a So much for the physical conditions of permanent tariff commission to find out business. The stock market barometer the facts. of business is temporarily deranged. Specu- Under the present system Congress lation in the so-called war stocks has cre- makes up its mind whether it wants a ated a "boom" in Wall Street. Some people revenue tariff or a protective tariff, and have made fortunes in the speculation, then tries itself to write a bill that will many people have made money, a few carry out the policy wanted. Congress have lost, and many more can assuredly is and must remain the body that decides look forward to losses, for the public never on what kind of a tariff we are to have. vet participated in a boom of this nature But that being decided, Congress can without being left holding the bag when come much nearer getting what it wants the boom was over.

by having experts translate its general But though as investors and workers programme into a specific bill. These at one trade of another in this great experts might form a permanent tariff land we need give little heed to the gyra- commission or they might form a part of Isons of the war stocks, there is ample the Department of Commerce, or they reason for us to pursue our accustomed might be the members of the Trade Commission. Any of these agencies could do the competition to come from the present the work for Congress better than Con- belligerents would then be crying for progress can do it for itself.

tection against the competition of counIf Congress would use any of these tries undisturbed by war. agencies tariff legislation would be greatly Yet we should not let our discounting of improved. But whichever agency were the constant howl for help and protection used would have to follow Congressional blind us to a real and unfair hardship to instructions and at one time devise rates which some of our industries are exposed for revenue only and at other times for We have laws in this country against monoprotection. Our tariff policy would change polies and unfair practices. In certain other just as often as it does now, but each countries the governments encourage and change would be the intelligent working enforce monopolies and unfair practices, out of whatever policy was for the mo- and these foreign monopolies use unfair ment being pursued.

means against our producers and in the This plan could work as well for a low long run to the detriment of our consumers. tariff as it would for a high tariff. As a We should stringently prevent these abuses matter of fact, however, there is good by foreign companies which we will not reason to believe that the tariff commis- tolerate in domestic corporations. sion plan is being agitated chiefly by believers in high protection. The evils THE EARLY BUYER GETS THE BEST of the protective tariff as passed by Con

CHOICE gress received such wholesale public condemnation that the protectionists are IN THE next fifty-five days 95 per looking for another way to get their meas cent. of the Christmas presents in ures adopted.

I the country are bought. The pleasThis fact ought not to drive any low tariffure of buying and the likelihood of buying advocate to oppose the idea of relieving what will give real pleasure grow progresCongress of the details of schedule-making. sively less the nearer to Christmas it gets. It ought, however, to make them particu- The movement for earlier Christmas larly wary of the wording of any bill osten shopping originated several years ago in sibly designed for this purpose.

the humane desire to relieve in some

measure the oftentimes cruel pressure of II

work on the girls who serve behind the Along with the non-partisan "scientific” counters during the week or two before the programme there is a constantly expressed holiday. It has wisely received the supdread of a flood of European goods that port of the merchants, because they have will swamp us and a cry for some protec- realized the losses they have suffered tion against this menace.

through carelessness and haste in the conThe theory is that wasting a nation's fusion of their crowded stores. And many capital, ruining its markets, and killing its purchasers have coöperated because they men make it a more dangerous competitor, have discovered the satisfaction that comes because in its reduced condition it will be of unhurried selection from stocks of goods willing to accept any profit however small that have not been depleted of the choicand its labor will be willing to work for est articles. minimum wages.

Nevertheless, there is still room for On the other hand European labor may extensions of the efficient and gracious prefer emigration to starvation wages, so custom of early shopping. The wise that labor may be increasingly scarce. thing to do is to buy between the first of Capital is likely to be scarce and taxes November and the 15th, when the Christare certain to be high. Perhaps all the mas stocks are new and the salesmen advantages are not with the warring na- and women untired and when the crowd tions. It is even reasonably probable that of shoppers is not hampering. And this is were we fighting and were Europe at peace a good year to buy Christmas presents those who now cry for protection against generously and wisely.

DIVIDING THE RISKS IN INVESTMENT

Every month the World's Work will publish in this part of the magazine an achicle on

experiences with investment and the lessons to be drawn therefrom

MAN with whom the editor of service property, brought out in good faith

this department has had oc- by one of the best firms of investment casion to discuss questions of specialists and under the best legal advice, many kinds pertaining to the defaulting because of an element which

employment of money in the could hardly be guarded against, absosecurity markets was talking the other day lutely, if the business were to be done all about "the inevitable percentage of the un- over again. foreseeable" in investment.

A bond secured by natural resources was To illustrate, he drew upon his own wide taken for the second illustration. The personal experience, and related some in- security in this instance was a valuable coal stances involving several of what he called property, appraised by experts at more "preferred classes” of investments, in which than twice the total issue of bonds, and in the unforeseeable had come to pass in most active operation, with a comfortable margin unusual ways. His illustrations are given of earnings at the time the bonds were here for the benefit of those of more limited issued and sold. The property was located, experience who are apt so frequently to be- however, as the investor explained, on a come impatient, and even discouraged, railroad which had subsequently failed and upon finding competent authority in- passed into the hands of a road affiliated variably unwilling to put the stamp of with coal mining interests hostile to the inabsolute security on any single investment. dependent mines. This resulted in such

For his first illustration, this investor poor railroad service to the mines of the took the case of a certain street railroad company that issued the bonds in question bond, which he explained was one of an that it failed to carry out its contracts and underlying issue of a company operating in was forced to default. The property was one of the large cities of the country. It in due time bought in by the bondholders at had originally been brought out by an in- foreclosure sale, and had recently been sold vestment banking house that is numbered for less than fifty cents on the dollar, payamong the most conservative and the most able in other bonds the value of which was loyal to clients. The property on which the problematical. bonds were secured, he said, had for many T he reasons entering into this failure, the years been a profitable one, earning a wide investor said, appeared to have been unmargin over its fixed charges. But trouble avoidable, because no one could have forearose between the city and the company seen the failure of the railroad and its effect concerning the franchise, which was held by upon the coal company's business. Noththe company to be perpetual, but by the ing was wrong with the property itself. city to have expired, with the result that The third illustration gave the following the company had been ordered to vacate brief account of the history of a certain the city streets. A legal fight, now. being issue of bonds put out by a railroad that carried on in the United States courts, had, was a “feeder" to one of the great transof course, ensued, and meanwhile the continentals: company had found it necessary to with The smaller road had prospered from the hold the bond interest leaving the bond beginning and had been extended until the holders without any immediate prospect of bonds in question, being part of the first redress.

mortgage issue, represented only about In short, here was a bond, secured by a $6,000 a mile, and there were junior to them thoroughly tested and successful public about $34,000 per mile of refunding bonds,

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