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it wishes to know anything from a Depart- become Presidents of the United States. ment it makes a request for documents and And such simplification and added strength it gets documents instead of facts; or in the Government is not impossible to else it goes through the cumbersome pro- conceive in this forward-looking era. cess of appointing an investigating committee which half the time is not ready

FOR FLEXIBLE FINANCE to report until after the immediate use for the facts has passed. Congress constitutes HE bone and sinew of reconstructhe board of directors of the people's

tion as well as of war is money. business, and certainly it ought to have

The first need of the flood district free, easy, and intimate access to the work- was money, and the normal place to go ing of the business which it directs. Fre- for it was the local banks. To meet the quent human contact between Congress immediate demands for cash these banks and the Cabinet would clear away many drew upon the balances which they had unfortunate misunderstandings and jeal- in banks elsewhere. But that, of course, ousies between the legislators and the was comparatively small. Normally their administrators which have been too com- next step would have been to endorse local mon in the past. Nor would this change commercial paper and send it to their entail either loss or transfer of powers; it corresponding banks outside the flood would merely put better bearings in the district and get cash in return. But our machinery of the Government.

national banking law provides a rigid

ratio between cash reserves and liabilities. II

The correspondent could not send the There is, however, a reform in the cash to the flood district, no matter what machinery of Congress itself which would the security, without depleting its reserves give it a prestige which it does not now below the legal limit. The current of possess, and a wider opportunity for cash that should have flowed to the disleadership. Mr. Underwood is a national trict where it was most needed was figure because he stands for a great public artificially stemmed. To relieve the situapolicy. Mr. Fitzgerald, the chairman of tion the Secretary of the Treasury had to the Appropriations Committee, can hardly take the clumsy means

take the clumsy means of depositing be so classed, nor as yet Mr. Glass, of the several million dollars in the banks of the

, Currency Committee; nor do the names stricken district. of Senators usually bring to the public There are plenty of other examples of mind the committees of which they are a need of a reform in our currency laws chairmen or any great public policy of even if the need were not generally recogwhich they are individually master expo- nized. What currency reform needs above nents. The machinery of legislation is everything is a sponsor who commands the cumbersome. There are thousands and public confidence. It is a hopeful sign, thousands of private bills introduced every therefore, that the President is so keenly year for private pensions, local building - interested in the subject. Whether a all the "pork barrel” measures and measure will come up during this extra many precious days and weeks are spent session of Congress is doubtful, but at in "log-rolling" them through. Within least the hearings have begun and begun the halls of Congress itself lies the remedy. under auspicious circumstances. There

. It is its own master. The day it throws seems to be substantial agreement between off the encumbrance of private business Senator Owen, chairman of the Senate bills and rids its members of the annoy- Committee on Banking and Currency, ances these things entail, it will give its Representative Glass, of the corresponding members the opportunity to stand for House committee, and the President. The great national policies, to train big men on two Cabinet members with whom the big questions. We might then oftener President is chiefly consulting on this find men who in Congress so stamped their measure are Secretary McAdoo, of the individuality upon the public mind as to Treasury, a man of experience in finance,

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and Secretary Houston, of the Depart- ful if men without a broader sympathy with ment of Agriculture, one of the country's the general public than these men had foremost economists.

would be elected by popular vote.

Prob Few bills begin life under so favorable ably, also, men of the type represented by auspices for producing a good measure,

Senator Lorimer will disappear permanand as it will be a party measure it will ently from the Senate. have a good opportunity of becoming law. On the other hand, many people fear

that the change will lose to the Senate POPULARLY CHOSEN SENATORS

able men who have not a personality that

appeals to the public and that their places HE recent amendment to the Con- are likely to be taken by men who are

stitution providing for the popular skilful politicians and little else, and whose

election of United States Senators, usefulness in a body of constructive lawfollowing close upon the heels of the makers would be negligible. Such men amendment making an income tax con- are painfully in evidence at times in Ameristitutional, is another indication of the can public life but they do not frequently well balanced wisdom of the framers of reach the higher places. Presidents have our government. The men of backward- been elected practically by direct popular looking minds have leaned upon the Con- vote for 125 years and during that time stitution as a safeguard against change. the office has been held several times by Temperamentally they felt "change and men of great dignity and only mediocre decay” to be synonymous. Yet the Con

Yet the Con- ability, but never by a shallow demagogue. stitution has been changed under its own Of course the Senate, directly elected, will provisions. Surely we have lost nothing have a certain amount of demagoguery in in dignity or soundness when change is it. It has now, but under the new method made in this way.

of election it should more than offset any On the other hand the reformers, men of increase in this evil by a more direct immediate mind, demanding almost in- interest in the whole public's business. stantaneous decrees to right this evil and to solve that problem, have caviled at

THE CYCLES OF BUSINESS AND the Constitution as a refuge of "the

POLITICS interests," a document for conditions that we have outgrown. Yet under its pro- IFTEEN years ago we were in the visions an amendment really desired by

midst of an industrial renaisthe people of the land is made in our

sance. Business was fundamental law in ten months from the dominant note in American life. So long time it passed Congress. Surely that is as business prospered, the public bothered quick enough.

little about the Government. In fact, The change, on the whole, is likely to business took care of that as a kind of side improve the personnel of the Senate some- issue. Between that time and now is the what, and greatly improve the esteem in period of the activity of Mr. Theodore which it is held by the public. The real Roosevelt and Mr. William Jennings Bryan, demand for popular election of Senators and it is not an exaggeration to credit those grew out of the impregnable position of two vigorous characters with a large part the "old guard” Senators, whose political of the changed attitude that now prevails. hold upon the legislatures of their states Now the Government is the dominant note was much stronger than their hold upon the and, incidental to its other functions, it is public. With direct elections it ought busy making laws for business. And the not to be possible again to have a Senate force of the revolution that has to a large so much controlled by private interests as measure freed national politics from busithat body was during President Roosevelt's ness control threatened to carry us very administration and during the first part of much farther than that. So large a part President Taft's. Senator Foraker, Sena- of the public as the Progressive party is in tor Penrose, Senator Aldrich — it is doubt favor of having commissions to regulate

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the pre

all kinds of business, as we have been There may be sufficient reason for restrainforced to have commissions to regulate ing general price agreements between manuthe railroads. The Democratic Adminis- facturers, but it is hard to understand why we tration, on the other hand, while it is

should be restrained from making contracts engaged in passing legislation fixing the

with our dealers to prevent price manipulation.

Our dealers are not our competitors. They new relationships between business and

are simply our local representatives; but unless government, desires, once these are fixed,

the present laws are radically changed we must, to leave business alone. That is the next

when our patents expire, either do all our own phase in the cycle: politics and business selling, thereby eliminating any competition unentangled, and both working wholly in for agents, or permit about a thousand wealthy the open without mutual interference. establishments, by temporary price cutting,

to monopolize the distribution of our goods. II

This would end a principle that we, in common Among other laws under discussion to

with many other manufacturers, hold to be a fix the status of business are laws to pre- goods of standard quality shall be sold to the

true principle of fair dealing — that is, that vent a manufacturer from making agree- public in every part of the country at a fixed ments with retailers to maintain a fixed

price that every one knows, without discriminaschedule of prices for his goods. Such tion between people or different places. agreements have been held by several courts to restrain trade and to tend

Such a frank statement would not have toward monopoly. The universal appli- been made fifteen years ago when business cation of this rule would make a very

controlled government. In the first flush noticeable change în marketing. Uneeda

of the emancipation of the Government biscuits might sell in one place for five

from business control such a statement cents a package, as they do now, and in

from a manufacturer would have been another place at two packages for nine

looked

upon with suspicion. Now, cents. Ingersoll watches would sell at as

happily, we are coming to a time when the various prices as $1.50 books do now. At

frank opinions of both business men and least, that would at first sight seem to be political leaders can be stated and disthe result of prohibiting manufacturers

cussed without prejudice or suspicion; from fixing the prices of their articles. and that is a happy augury for the solu

But the actual result may be quite tion of our difficulties. different. The Victor Talking Machine Company sells its products through agents A BUREAU WITHOUT BUREAUwho agree to maintain certain set prices.

CRACY Mr. Eldridge R. Johnson, its president, states the case of his company thus:

N 1912, the number of men killed in

the coal mines of the United States We market our product in the United States through about ten thousand dealers. Nine

was 359 less than the mumber killed in 1911.

Two thousand, three hundred tenths of them are working hard for a living on

and sixty men lost their lives in and about limited capital. The other thousand possess ample capital. In order to prevent the manip

the mines — that is, 315 men of every ulation of prices, which would tend to drive 100,000 employed. As bad as that is, it the dealers of smaller means out of the business, is our lowest record. The comparison we sell our goods subject to a license agreement with previous years is: which regulates both the wholesale and the retail prices. The small dealer, with a capital

1908 of $5,000, has just the same opportunity in proportion to his capacity as has the large

Number killed dealer with a capital of $10,000,000. We are not a monopoly and we do not entertain the

per 10,000 emambition to become one. There are other

ploved.

4.
.88|3.644.
3

3.92 3.733.15 manufacturers in this country making similar articles, and we compete with them in getting

Back of this consistent reduction in the good agents as well as in getting trade. death rate is the United States Bureau of

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1907

1909

1910

III

1912

Mines. It has mine rescue cars, it tests controlling in any other manner their destiny, explosives for use in mining, and it makes by any European power, in any other light laboratory and field investigations and than as the manifestation of an unfriendly disexperiments. But it passes no rules for position toward the United States. mining and has no power to enforce any if

The American Continents, by the free and it should. Its work is the thoroughly sumed and maintain, are henceforth not to be

independent condition which they have asproper government task of disseminating considered as subjects for future colonization information. It is the moving spirit in by any European power. the campaign to save lives in the coal mines, but the actual supervision and But we have never consistently stuck regulation is done by the state depart- to these principles. At the end of the ments of mines. It is a type of Federal

Civil War the United States sent troops bureau which, if ably managed, can be

to the Mexican border to make good its efficient, and which nevertheless is with- protest against the French army aiding out the centralized power which makes Maximilian, and the French army withbureaucracy unpopular in a democracy. drew in consequence. Five years later,

however, England acquired British HonTHE OBLIGATIONS OF THE

duras without protest from us. But MONROE DOCTRINE

twenty-five years later, when England

endeavored to force her own terms in ECENTLY England made an settlement of a dispute with Venezuela,

urgent demand that Guatemala President Cleveland's vigorous attitude n pay its English debt the bulk of forced arbitration. which has been owing for twenty-five years.

But this is a new era. People ask It was first reported that England had whether we have a moral right to leave delivered an ultimatum that unless the some of the conditions that exist in Central debt were paid English war ships would go America. The money of foreigners is to Guatemala and forcibly collect it. everywhere in Latin America; foreigners Happily, this was not true, but such an themselves are there in ever-increasing occurrence is not impossible. The Mexican numbers. Trade and finance are much national debt is largely held in Europe. more international than they used to be. Conditions in Mexico may easily develop To extend the Monroe Doctrine to cover to cause the interest on that debt to be these points renders us liable at any time defaulted.

to serious international complications and In the event of such an occurrence, what responsibilities which we are not preis the duty of the United States? Under pared to fulfil.

moreover, the the Monroe Doctrine we look unfavorably Monroe Doctrine in the vague form that it upon the forcible collection of debts or on stands at present does not gain us friends any intervention by a foreign power in in South America. The smaller Latin Central or South America. The origin American republics are not sure that of this was our fear of the Holy Alliance assumption of even a limited responsninety years ago. To forestall any effort bility for them does not possibly entail a on its part to recapture the revolted Span- similar amount of power over them and ish colonies in Latin America, President they point to the Canal strip. Monroe, in his message to Congress in December, 1823, said:

THE RAILROADS AND THE With the existing colonies or dependencies

COST OF LIVING of any European power we have not interfered and shall not interfere. But with the govern

WO great disputes between the

Eastern railroads, as a group, and ments who have declared their independence

their workers have been comand maintained it, and whose independence we have, on great consideration and just principles, promised within the last eight months. acknowledged, we could not view any inter- These were the demand of the engineers position for the purpose of oppressing them, or for an increase in wages and the demand of

And,

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the firémen for a similar increase. The same time they face a crisis in finance trainmen now in their turn ask for more because the holders of their bonds find the wages. The first dispute was arbitrated coupons insufficient to meet their increase by a mixed board of economists, railroad in expenses. And both wages and interest men, and labor men. That award was charges must come out of the earnings of unsatisfactory as a whole to everybody; the railroads and must be met in full before but it did increase the wages of most of the there are any profits in the business. engineers and, of course, it increased rail- On the face of it, there is some justiroad costs. The second award, under the fication in the demand of the railroads for Erdman Act, had a similar result. The an increase in rates. Economically, howdemand of the trainmen would entail prob- ever, it is easy to prove that the worst way ably the largest expense of all if it were to remedy conditions that arise as a result granted and, therefore, it may be assumed of the increase in the cost of living is that if it be arbitrated it will lay an addi- to increase still further the cost of living by tional cost on the railroads probably as raising the price of railroad rates or by any great as the two other increases combined. other indirect tax on the consuming public.

If the dispute is important, the results Therefore the demand of the railroads is, in of the condition of labor are even more reality, little more than a make-shift to important. The rise in the cost of living remedy current conditions. A raise of has not only brought about these railroad railroad rates would give temporary relief; disputes, with their many attendant dan- but it will not touch the fundamental gers, but it has also injured the credit of cause of the railroad trouble. the railroads to such a degree that practically all the weaker systems of the country are embarrassed and many,

What is to be the ultimate result? Are even of the strongest, face a situation the prices of all standard interest-bearing almost unparalleled in the history of securities throughout the world to conAmerican finance.

tinue on a downward course? Must the A year ago, prophecies that any further cost of living continue to rise? Will financial strain upon the railroads would wages keep on climbing? Is the whole force some of our best and oldest main line business world to readjust itself through roads to pay from 6 to 7 per cent. for money the coming years to a new scale of cost of were sharply criticized by both bankers and manufacture, cost of distribution, and cost railroad heads. Unfortunately, the pro- to the ultimate consumer? phecies have been realized, and to-day No one of these momentous questions expert critics seem to be about evenly can be considered by itself; but all of them divided on the question whether or not the must be solved through the underlying tendency is to go still farther. The New cause that has created them, namely: the York, New Haven & Hartford and the remarkable increase in the cost of the New York Central railroads have both necessities of life. The general average of borrowed at a 6 per cent. rate, and the prices to the consumer in 1912 was higher western roads have fared no better. We than was ever recorded in this country have seen, within a year, a wholesale de- except in a period of war. Whether this cline in our gilt-edge railroad bonds, in upward tendency of prices continues or

, many cases of even 10 per cent.

is checked will answer the problem of railAll the explanations of this phenomenon road labor, solve the trouble of crumbling come to the same underlying cause, trusts and breaking industries, reply to namely: the increase in the cost of living; the anxious bondholder who wonders why with the consequent decrease in the value his gilt-edge bonds are going down, and of the coupons on bonds and of the interest determine the anxiety of the householder on mortgages. The railroads, there- swamped under his monthly bills. It is fore, face a crisis in labor because their significant that the acutest phase of this workers find the old wages insufficient to trouble is occupying the minds of men at purchase the necessities of life; and at the the very moment when the United States

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