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it wishes to know anything from a Department it makes a request for documents and it gets documents instead of facts; or else it goes through the cumbersome process of appointing an investigating committee which half the time is not ready to report until after the immediate use for the facts has passed. Congress constitutes the board of directors of the people's business, and certainly it ought to have free, easy, and intimate access to the working of the business which it directs. Frequent human contact between Congress and the Cabinet would clear away many unfortunate misunderstandings and jealousies between the legislators and the administrators which have been too common in the past. Nor would this change entail either loss or transfer of powers; it would merely put better bearings in the machinery of the Government.

II

There is, however, a reform in the machinery of Congress itself which would give it a prestige which it does not now possess, and a wider opportunity for leadership. Mr. Underwood is a national figure because he stands for a great public policy. Mr. Fitzgerald, the chairman of the Appropriations Committee, can hardly be so classed, nor as yet Mr. Glass, of the Currency Committee; nor do the names. of Senators usually bring to the public mind the committees of which they are chairmen or any great public policy of which they are individually master exponents. The machinery of legislation is cumbersome. There are thousands and thousands of private bills introduced every year for private pensions, local building all the "pork barrel" measures many precious days and weeks are spent in "log-rolling" them through. Within the halls of Congress itself lies the remedy. It is its own master. The day it throws off the encumbrance of private business bills and rids its members of the annoyances these things entail, it will give its members the opportunity to stand for great national policies, to train big men on big questions. We might then oftener find men who in Congress so stamped their individuality upon the public mind as to

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become Presidents of the United States. And such simplification and added strength in the Government is not impossible to conceive in this forward-looking era.

FOR FLEXIBLE FINANCE

HE bone and sinew of reconstruction as well as of war is money.

The first need of the flood district was money, and the normal place to go for it was the local banks. To meet the immediate demands for cash these banks drew upon the balances which they had in banks elsewhere. But that, of course, was comparatively small. Normally their next step would have been to endorse local commercial paper and send it to their corresponding banks outside the flood district and get cash in return. But our national banking law provides a rigid ratio between cash reserves and liabilities. The correspondent could not send the cash to the flood district, no matter what the security, without depleting its reserves below the legal limit. The current of cash that should have flowed to the district where it was most needed was artificially stemmed. To relieve the situation the Secretary of the Treasury had to take the clumsy means of depositing several million dollars in the banks of the stricken district.

There are plenty of other examples of a need of a reform in our currency laws even if the need were not generally recognized. What currency reform needs above everything is a sponsor who commands the public confidence. It is a hopeful sign, therefore, that the President is so keenly interested in the subject. Whether a measure will come up during this extra session of Congress is doubtful, but at least the hearings have begun and begun under auspicious circumstances. There seems to be substantial agreement between Senator Owen, chairman of the Senate Committee on Banking and Currency, Representative Glass, of the corresponding House committee, and the President. The two Cabinet members with whom the President is chiefly consulting on this measure are Secretary McAdoo, of the Treasury, a man of experience in finance,

and Secretary Houston, of the Department of Agriculture, one of the country's foremost economists.

Few bills begin life under so favorable auspices for producing a good measure, and as it will be a party measure it will have a good opportunity of becoming law.

POPULARLY CHOSEN SENATORS

Τ

HE recent amendment to the Con

stitution providing for the popular election of United States Senators, following close upon the heels of the amendment making an income tax constitutional, is another indication of the well balanced wisdom of the framers of our government. The men of backwardlooking minds have leaned upon the Constitution as a safeguard against change. Temperamentally they felt "change and decay" to be synonymous. Yet the Constitution has been changed under its own provisions. Surely we have lost nothing in dignity or soundness when change is made in this way.

On the other hand the reformers, men of immediate mind, demanding almost instantaneous decrees to right this evil and to solve that problem, have caviled at the Constitution as a refuge of "the interests," a document for conditions that we have outgrown. Yet under its provisions an amendment really desired by the people of the land is made in our fundamental law in ten months from the time it passed Congress. Surely that is quick enough.

The change, on the whole, is likely to improve the personnel of the Senate somewhat, and greatly improve the esteem in which it is held by the public. The real demand for popular election of Senators grew out of the impregnable position of the "old guard" Senators, whose political hold upon the legislatures of their states was much stronger than their hold upon the public. With direct elections it ought not to be possible again to have a Senate so much controlled by private interests as that body was during President Roosevelt's administration and during the first part of President Taft's. Senator Foraker, Senator Penrose, Senator Aldrich-it is doubt

ful if men without a broader sympathy with the general public than these men had would be elected by popular vote. Prob ably, also, men of the type represented by Senator Lorimer will disappear permanently from the Senate.

On the other hand, many people fear that the change will lose to the Senate able men who have not a personality that appeals to the public and that their places are likely to be taken by men who are skilful politicians and little else, and whose usefulness in a body of constructive lawmakers would be negligible. Such men are painfully in evidence at times in American public life but they do not frequently reach the higher places. Presidents have been elected practically by direct popular vote for 125 years and during that time the office has been held several times by men of great dignity and only mediocre ability, but never by a shallow demagogue. Of course the Senate, directly elected, will have a certain amount of demagoguery in it. It has now, but under the new method of election it should more than offset any increase in this evil by a more direct interest in the whole public's business.

THE CYCLES OF BUSINESS AND

POLITICS

IFTEEN years ago we were in the midst of industrial renaisthe pre

sance. Business was dominant note in American life. So long as business prospered, the public bothered little about the Government. In fact, business took care of that as a kind of side issue. Between that time and now is the period of the activity of Mr. Theodore Roosevelt and Mr. William Jennings Bryan, and it is not an exaggeration to credit those two vigorous characters with a large part of the changed attitude that now prevails. Now the Government is the dominant note and, incidental to its other functions, it is busy making laws for business. And the force of the revolution that has to a large measure freed national politics from business control threatened to carry us very much farther than that. So large a part of the public as the Progressive party is in favor of having commissions to regulate

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Among other laws under discussion to fix the status of business are laws to prevent a manufacturer from making agreements with retailers to maintain a fixed schedule of prices for his goods. Such agreements have been held by several courts to restrain trade and to tend toward monopoly. The universal application of this rule would make a very noticeable change in marketing. Uneeda biscuits might sell in one place for five cents a package, as they do now, and in another place at two packages for nine cents. Ingersoll watches would sell at as various prices as $1.50 books do now. At least, that would at first sight seem to be the result of prohibiting_manufacturers from fixing the prices of their articles.

But the actual result may be quite different. The Victor Talking Machine Company sells its products through agents who agree to maintain certain set prices. Mr. Eldridge R. Johnson, its president, states the case of his company thus:

We market our product in the United States through about ten thousand dealers. Nine tenths of them are working hard for a living on limited capital. The other thousand possess ample capital. In order to prevent the manipulation of prices, which would tend to drive the dealers of smaller means out of the business, we sell our goods subject to a license agreement which regulates both the wholesale and the retail prices. The small dealer, with a capital of $5,000, has just the same opportunity in proportion to his capacity as has the large dealer with a capital of $10,000,000. We are not a monopoly and we do not entertain the ambition to become one. There are other manufacturers in this country making similar articles, and we compete with them in getting good agents as well as in getting trade.

There may be sufficient reason for restraining general price agreements between manufacturers, but it is hard to understand why we should be restrained from making contracts with our dealers to prevent price manipulation. Our dealers are not our competitors. They are simply our local representatives; but unless the present laws are radically changed we must, when our patents expire, either do all our own selling, thereby eliminating any competition for agents, or permit about a thousand wealthy establishments, by temporary price cutting, to monopolize the distribution of our goods. This would end a principle that we, in common with many other manufacturers, hold to be a goods of standard quality shall be sold to the true principle of fair dealing—that is, that public in every part of the country at a fixed price that every one knows, without discrimination between people or different places.

Such a frank statement would not have

been made fifteen years ago when business controlled government. In the first flush of the emancipation of the Government from business control such a statement

looked

from a manufacturer would have been upon with suspicion. Now, happily, we are coming to a time when the frank opinions of both business men and political leaders can be stated and discussed without prejudice or suspicion; and that is a happy augury for the solution of our difficulties.

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Mines. It has mine rescue cars, it tests explosives for use in mining, and it makes laboratory and field investigations and experiments. But it passes no rules for mining and has no power to enforce any if it should. Its work is the thoroughly proper government task of disseminating information. It is the moving spirit in the campaign to save lives in the coal mines, but the actual supervision and regulation is done by the state departments of mines. It is a type of Federal bureau which, if ably managed, can be efficient, and which nevertheless is without the centralized power which makes bureaucracy unpopular in a democracy.

THE OBLIGATIONS OF THE MONROE DOCTRINE

R

an

ECENTLY England made urgent demand that Guatemala pay its English debt the bulk of which has been owing for twenty-five years. It was first reported that England had delivered an ultimatum that unless the debt were paid English war ships would go to Guatemala and forcibly collect it. Happily, this was not true, but such an occurrence is not impossible. The Mexican national debt is largely held in Europe. Conditions in Mexico may easily develop to cause the interest on that debt to be defaulted.

In the event of such an occurrence, what is the duty of the United States? Under the Monroe Doctrine we look unfavorably upon the forcible collection of debts or on any intervention by a foreign power in Central or South America. The origin of this was our fear of the Holy Alliance ninety years ago. To forestall any effort on its part to recapture the revolted Spanish colonies in Latin America, President Monroe, in his message to Congress in December, 1823, said:

With the existing colonies or dependencies of any European power we have not interfered and shall not interfere. But with the governments who have declared their independence and maintained it, and whose independence we have, on great consideration and just principles, acknowledged, we could not view any interposition for the purpose of oppressing them, or

controlling in any other manner their destiny, by any European power, in any other light than as the manifestation of an unfriendly disposition toward the United States.

The American Continents, by the free and sumed and maintain, are henceforth not to be independent condition which they have asconsidered as subjects for future colonization by any European power.

But we have never consistently stuck to these principles. At the end of the Civil War the United States sent troops to the Mexican border to make good its protest against the French army aiding Maximilian, and the French army withdrew in consequence. Five years later, however, England acquired British Honduras without protest from us. But twenty-five years later, when England endeavored to force her own terms in settlement of a dispute with Venezuela, President Cleveland's vigorous attitude forced arbitration.

But this is a new era. People ask whether we have a moral right to leave some of the conditions that exist in Central America. America. The money of foreigners is everywhere in Latin America; foreigners themselves are there in ever-increasing numbers. Trade and finance are much more international than they used to be. To extend the Monroe Doctrine to cover these points renders us liable at any time to serious international complications and responsibilities which we are not prepared to fulfil. And, moreover, the Monroe Doctrine in the vague form that it stands at present does not gain us friends in South America. The smaller Latin American republics are assumption of even a limited responsbility for them does not possibly entail a similar amount of power over them - and they point to the Canal strip.

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the firemen for a similar increase. The trainmen now in their turn ask for more wages. The first dispute was arbitrated by a mixed board of economists, railroad men, and labor men. That award was unsatisfactory as a whole to everybody; but it did increase the wages of most of the engineers and, of course, it increased railroad costs. The second award, under the Erdman Act, had a similar result. The demand of the trainmen would entail probably the largest expense of all if it were granted and, therefore, it may be assumed that if it be arbitrated it will lay an additional cost on the railroads probably as great as the two other increases combined.

If the dispute is important, the results of the condition of labor are even more important. The rise in the cost of living has not only brought about these railroad disputes, with their many attendant dangers, but it has also injured the credit of the railroads to such a degree that practically all the weaker systems of the country are embarrassed and many, even of the strongest, face a situation almost unparalleled in the history of American finance.

A year ago, prophecies that any further financial strain upon the railroads would force some of our best and oldest main line roads to pay from 6 to 7 per cent. for money were sharply criticized by both bankers and railroad heads. Unfortunately, the prophecies have been realized, and to-day expert critics seem to be about evenly divided on the question whether or not the tendency is to go still farther. The New York, New Haven & Hartford and the New York Central railroads have both borrowed at a 6 per cent. rate, and the western roads have fared no better. We have seen, within a year, a wholesale decline in our gilt-edge railroad bonds, in many cases of even 10 per cent.

All the explanations of this phenomenon come to the same underlying cause, namely: the increase in the cost of living; with the consequent decrease in the value of the coupons on bonds and of the interest on mortgages. The railroads, therefore, face a crisis in labor because their workers find the old wages insufficient to purchase the necessities of life; and at the

same time they face a crisis in finance because the holders of their bonds find the coupons insufficient to meet their increase in expenses. And both wages and interest charges must come out of the earnings of the railroads and must be met in full before there are any profits in the business.

On the face of it, there is some justification in the demand of the railroads for an increase in rates. Economically, however, it is easy to prove that the worst way to remedy conditions that arise as a result of the increase in the cost of living is to increase still further the cost of living by raising the price of railroad rates or by any other indirect tax on the consuming public. Therefore the demand of the railroads is, in reality, little more than a make-shift to remedy current conditions. A raise of railroad rates would give temporary relief; but it will not touch the fundamental cause of the railroad trouble.

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What is to be the ultimate result? Are the prices of all standard interest-bearing securities throughout the world to continue on a downward course? Must the cost of living continue to rise? Will wages keep on climbing? Is the whole business world to readjust itself through the coming years to a new scale of cost of manufacture, cost of distribution, and cost to the ultimate consumer?

No one of these momentous questions can be considered by itself; but all of them must be solved through the underlying cause that has created them, namely: the remarkable increase in the cost of the necessities of life. The general average of prices to the consumer in 1912 was higher than was ever recorded in this country except in a period of war. Whether this upward tendency of prices continues or is checked will answer the problem of railroad labor, solve the trouble of crumbling trusts and breaking industries, reply to the anxious bondholder who wonders why his gilt-edge bonds are going down, and determine the anxiety of the householder swamped under his monthly bills. It is significant that the acutest phase of this trouble is occupying the minds of men at the very moment when the United States

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