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THE GROWTH OF AMERICAN CITIES

UPPER PICTURE: THE BUSINESS CENTRE OF PASADENA, CAL., IN 1888.

LOWER PICTURE:

THE SAME VIEW IN 1910. THE POPULATION OF PASADENA INCREASED FROM 9,117 IN 1900 TO 30,291 IN 1910, OR 232 PER CENT.

THE TWO BIG TASKS OF CONGRESS

T

HE tug-of-war now comes with the reduction of the tariff. This difficult task is at once. a great opportunity and a difficult necessity. For, of all subjects (not excluding even the making of appointments to office), this is the most hazardous, politically the most dangerous, and, in general, the most heavily "loaded" of all public subjects. If the tariff were eliminated from our political history, our political history would be a simple story; for it has been the mother of the largest brood of our troubles for the greater part of a century.

The duty of reducing the rates equitably - that is, substantially but not ruinously

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is now undertaken with intelligence, with diligence, and with resolution. From whatever point of view it be regarded, mistakes will be made. There will be fierce criticism, even bitter feeling, aroused. The necessary effect on some branches of business will be bad - for a few persons, for a short time; for some permanently; for old abuses yield somebody a profit. The general effect will be to cause a certain hesitation in commercial and financial life

a part of it a wise hesitation, much more of it mere groundless fear, the contagion of uncertainty. The commercial world, at least a part of it, must readjust itself to new conditions.

But the consumer, which is to say the whole people, will be helped by a judicious readjustment. Commerce itself will receive a large benefit by the substitution of natural for artificial forces. Of the economic righteousness of judicious reductions in many of the present rates, no man who has a firm grasp on commercial facts can have a doubt.

In discussing the disturbance that changes in duties make, it is too much the fashion to consider only those changes that do damage to some group of manufacturers and too little the fashion to consider those changes that will be of great benefit to a larger number of manufacturers as well as to consumers. For every one man who is "hit" by reductions, there are ten or twenty or a hundred who are helped. We are far too likely to conduct all our

tariff discussion with the status quo as the point of departure. The status quo is, in many respects, not a normal condition, but a highly artificial condition. The manufacturers that will be helped far outnumber those that will be hurt.

And it is encouraging to see that the commercial world has so far behaved with great good sense, good sense that points hopefully to our weathering this tariff storm without serious disturbance. This is another proof that, when we undertake even the most difficult tasks with reasonableness and with honesty and with resolution, we can always count on the great reserves of character and even self-denial that distinguish the American people and make our democracy the most reasonable and satisfactory scheme of government that men have yet invented or evolved.

II

Following the tariff, will come some change in our currency and banking laws. This is another long-deferred and difficult task. But we have been approaching it so gradually, and discussion and events have so well prepared the ground, that there is hope that this, too, may be accomplished without rude shocks to the current business of the country.

If these two long-standing and difficult tasks be done with reasonable success, the new Administration will have passed two dangers that beset it and will have done two most serious and helpful duties to our commercial and financial life and to the American people.

THE ORGANIZATION OF COUNTRY

LIFE

HE organization of country life— these words have been worn so threadbare that we fail to take in their full meaning or to be thrilled by them. But, if country life can be properly organized, the most helpful task in our world will have been done or begun; for it is a process, like all other normal growths, that will never end.

It is cheerful news that Secretary Houston, of the Department of Agriculture, regards this large piece of constructive work as his

especial duty and opportunity; and the teacher; in others, the whole people without President, of course, is of a like mind.

When you come to think of it, the essential difference between the town and the country is this: one is organized and the other is not. The town is organization. Street-cars, the very streets themselves, banks, churches, exchanges, clubs, libraries, sewers, water, shops all these denote organization. It is by these that men do their business, live their lives with the least waste of time and effort, and enjoy what we call "civilization.' Everything in the town is organized, correlated, conducted, not on an individual but on a community basis.

On the other hand, the farmer as a rule must yet do everything on an individual basis, or too nearly on an individual basis. He grows his crop, harvests it, gets it to market, sells it; he buys his necessities individually; he does his chores individually; he is a man far too much by himself, far too much deprived of the economic and social advantages of combined action. This sums up his disadvantages. Now there are, of course, in many parts of the United States, in spite of our backwardness in coöperation, many successful organizations, some for selling, some for buying, some for both, some for other economic duties, some for social help of many sorts. But the great mass of our country folk are yet unorganized.

definite leadership-for one good purpose here, for another good purpose there.

Now if the Department of Agriculture, after it collects accurate information about all these agencies and forces each working in its own way but all toward the same great task if, along with this investigation, it can use the knowledge and authority of the Government to stimulate and to coördinate them, a great movement toward a general organization of country life throughout the United States will have been begun.

This is not spectacular work; but, if there be work of greater value to the producing part of the population and for the building up of our permanent prosperity and for the well-being of the people, you will find it difficult to name it.

And we have come to a time when it is practicable. The people thoroughly understand the necessity of making life in the country profitable and comfortable for the mass of industrious men - the necessity of removing the economic and social hindrances which have come, in a perfectly natural way, with the rapid development of the town. If events could have been ordered so as to present an unparalleled opportunity to Secretary Houston they could not have been better ordered. It is an opportunity for constructive and permanent work in nationbuilding. His promptness in seeing it and in proceeding to undertake it shows a grasp on the fundamental economic tasks of our time and country.

The Department of Agriculture has at once set about the task of finding out what sort of organizations exist and do good service in the several parts of the countryhow they work, what they achieve, how they were begun, and how more like them may THE PASSING OF THE MORGAN be started.

This is the first step toward encouraging the multiplication of such organizations as have grown up out of the necessities of the people and have proven their practical worth. In Minnesota, it is a coöperative store or a coöperative grain elevator; somewhere else, it is a coöperative dairy; somewhere else, coöperative selling activity by truck-growers; somewhere else, organizations for social and intellectual help and pleasure. In one community, it may be an agricultural college that has led the way; in another, a grange, or a farmers' union; in another, a women's club; in another, the Young Men's Christian Association; in another, a preacher, or a

EPOCH

HE death of J. Pierpont Morgan removed one of the great men of our time. He was one of the strongest characters not only of our country but of our era, a real world-figure. And his dominant and at times domineering personality was the key to his character and to his career. What he did he did by the force of his mind and will.

It might be called an accident of birth and of his early start in life that he entered the world of finance. He might conceivably have been a man of action in some other field of large endeavor in which

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he would have won eminence. Of course, he became a man of great wealth. Yet his personal fortune was never as great as the fortunes of several other Americans. He did not care for money merely to accumulate it; and he always exerted a power in the financial and industrial world far out of proportion to his own fortune. He persuaded men; he compelled men; he led men; he dominated men. There were several times in our financial history when, by his personal influence, he prevented a panic. There were times when he threw his great influence to the patriotic service of the Government. For he was both a constructive and a patriotic man.

II

He was born in Hartford in 1837. His father was a merchant at that time, but a few years later he became a partner of Mr. George Peabody and established a banking house in London under the name of J. S. Morgan & Co. It was as a result of this move that J. P. Morgan finished his education in Germany. After a few years of clerical work in the banking business, he helped to organize a small and unimportant Wall Street house under the name of Dabney, Morgan & Co., founded in Civil War times. Eight years later, he made his first public appearance as a financier and banker of importance. It is characteristic perhaps that this first appearance was in the nature of a campaign against Gould and Fisk, who were exploiting for their own purposes a small and unimportant railroad called the Albany & Susquehanna. Under the leadership of Mr. Morgan, this railroad was rescued from the spoilers and sold to the Delaware & Hudson, where it still remains. That episode is said to have been the reason why the powerful banking house of Drexel & Company in Philadelphia sought an alliance with Mr. Morgan and made him head of the New York house of Drexel, Morgan & Co.

The character of the house seems never to have varied. It was founded at the end of an epoch in which the habit of finance was to plunder and destroy, for the personal aggrandisement of the leaders of the financial world. The Morgan firm

had the opposite policy. It never desired to be known as a leader of speculative finance. It always denied strongly that it made or unmade markets. It drew a sharp line between the constructive creditcreating facilities of a banking house and the purely mercenary profit-seeking policies of a brokerage house. It announced its willingness at all times to enter into and carry through to completion any great constructive plan of finance for the benefit of the Government, city, corporation, or individual, if that plan and policy demanded simply the use of banking facilities.

Thus, early in its career, the house undertook the task of selling in Europe a very large block of stock for the New York Central Railroad, at a time when American markets could not have absorbed the stock. This was probably one of the most important railroad transactions ever carried on by Mr. Morgan both because it demonstrated the banking ability of his house and because it established him definitely as the fiscal agent of the Vanderbilt system.

Similarly, in the period between 1880 and 1890, Mr. Morgan became the prime agent in negotiations between the railroads which at that time were engaged in destructive competition. He was the father of the idea of the "gentlemen's agreement," whereby railroads which had been in the habit of fighting pitched battles amongst themselves for traffic agreed to maintain rates and to abstain, so far as possible, from attempting to cripple or destroy their rivals.

In 1893, the activities of the Morgan house touched Government activities. In that year, the treasury of the United States was practically exhausted, on account of withdrawals of gold for domestic purposes and for shipment. A syndicate in which Mr. Morgan coöperated with the American representatives of the Rothschilds stepped in and offered to supply to the Government about $65,000,000 in gold, and to take in exchange about $62,000,000 of Government bonds. In two months the export of gold was stopped by the operations of this syndicate and by the end of four months free gold in the treasury had reached the point of safety.

A somewhat similar episode took place in the next year. These two syndicate These two syndicate operations brought Mr. Morgan directly in contact with and made him a part of the Government finances.

III

In the seven or eight years following 1893 the constructive genius of Mr. Morgan was seen at its best. When great railroads like the Atchison, the Northern Pacific, the Erie, the Southern Railway, the Union Pacific, the Reading, and others of their type, fell into bankruptcy or ruin as the result of the great depression of 1893, it came to be the habit of all syndicates and protective committees to turn to Mr. Morgan. As the skies began to clear he carried through the reorganizations of all these great systems with the exception of the Union Pacific. His power and prestige grew year by year, and he seemed to be able to command unlimited amounts of cash and unlimited supplies of credit both at home and abroad. While other bankers wrestled with one or two systems, the Morgan house went forward with the reorganizations of half a dozen such systems at one time. It has often been pointed out that in these reorganizations a plentiful supply of water remained in the capital of the new companies, but the fact also remains that almost without exception these reorganizations have weathered the storms that have since intervened, and still remain solvent, if not powerful, corporations.

Success in the reorganization of these fallen railroads urged Mr. Morgan forward to other accomplishments. In the McKinley Presidency, he became known as an organizer of great industrial enterprises; and the climax of his career as a promoter and creator of corporations was reached when, in 1899, he gathered together a group of competing steel companies and created and floated successfully the United States Steel Corporation, which remains to this day the largest corporation in the United States, if not in the world. He followed this success by the flotation of the securities of the International Harvester Company, the International Mercantile Marine, the North.

American Company, and half a dozen less important enterprises of an industrial and public utility character.

The power of the Morgan house seemed to suffer a temporary eclipse in 1903 with the apparent collapse of the United States Steel Corporation, the International Mercantile Marine, and many other merger companies. When the Steel Corporation passed the dividends on its common stock and this stock dropped below $10 a share, many people felt that the end of J. P. Morgan & Co. was not far off. The outcome proved the weakness of this theory. The temporary eclipse of Mr. Morgan, however, brought to the front, as a leading financier, the late E. H. Harriman. Mr. Harriman had confined his efforts largely to the building up of a railroad empire and the creation of a great banking power. In a battle in 1901 between Mr. Morgan and Mr. Hill on one side and Mr. Harriman on the other, the Hill-Morgan forces had retained control of the Northern Pacific, but in order that this end might be accomplished the financial world was plunged into a brief but spectacular and dangerous panic. The battle was probably a drawn battle; but out of it Mr. Harriman emerged much bigger than he had been before, and his growth from that time to his death in 1909 was one of the marvelous chapters in the annals of American business history.

The recovery of Mr. Morgan from the boom period of 1903 to 1907 was as spectacular as his eclipse had been. The great expansion era culminated in a crash in the panic of 1907, when the credit facilities of the Nation broke down under the great burden of expansion and under the action of the Government under Mr. Roosevelt. It seemed at that time as though, for lack of a central controlling force, the banks of the United States were trying to tear one another down and were likely to bring the whole financial world into ruin. At that moment, when all men seemed about to start a scramble for their own safety without regard to the public welfare, Mr. Morgan came to the front, as he had come in 1893 and on many other lesser occasions, and assumed the financial leadership of the country.

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