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man. Since January 1st, Governor Sulzer has been conducting a spectacular campaign for several important reforms. He has been battling for efficiency and economy in expenditures, for prison reform, for the improvement of the state's highways, and for direct primaries, all the time making a fight against Tammany Hall and boss-rule.

No one disputes that all these things are admirable and popular. And yet Governor Sulzer is apparently making little headway. For example, all authorities agree that the administration's direct primary campaign bill is admirable; that it is a much better bill than the measure which Governor Hughes advocated three years ago; and that if passed it would greatly improve political conditions in the state. But so far public opinion has not emphatically placed itself on Governor Sulzer's side. Three years ago Governor Hughes aroused the popular mind on this same issue; Governor Sulzer elicits only the most perfunctory response, and Tammany kills his bill with impunity.

The explanation is simple. The people have not abandoned their belief in this reform. The plain fact is that they have little enthusiasm for Mr. Sulzer. They have no great confidence in his fundamental sincerity. It is not that the attacks of Tammany Hall upon the Governor's character have had any influence on the popular mind. It sees through these things as keenly as it has seen through Governor Sulzer himself. The Governor's whole political career, since the days when, as Speaker of the New York Assembly, he proved a subservient tool of Tammany Hall publicly eulogizing its leader as "that great statesman, Richard Croker" - has not been the kind which rejoices sober-thinking American citizens. antics as governor, the stage setting which he has found indispensable for all his public acts, his cheap assumptions of democracy, his widely advertised imitations of Mr. Charles E. Hughes and of Mr. Woodrow Wilson, have not reassured them. His whole career has seemed to indicate that Mr. Sulzer was prepared to play the particular kind of politics that seemed

His

ost likely to advance his political for

tunes. In the old days, he threw in his fortunes with Tammany Hall, because that policy seemed likely to pay returns; under present conditions, on the other hand, Mr. Sulzer finds it convenient to adopt a different programme. The fact that the people refuse to accept him at his own present valuation, and become lukewarm even when as governor he is apparently striving for things in the public interest, discloses a healthy political state of mind. Character is, after all, the one essential in a public man. Bombastic championing of the "peoples' cause," spectacular assaults upon bosses, even energetic work in behalf of necessary reforms will not avail; what the people demand, above all, is a real, honest, sincere, devoted man. The American people still yearn for ideal political leadership. In that way our political salvation lies. And the popular mind seems unerringly to detect the true from the false in its leaders.

MR

AN AMERICAN AN AMERICAN POINT OF VIEW R. ROGER W. BABSON, the financial statistician, in one of his recent reports printed the following under the title, "The United States of America." It is particularly interesting because Mr. Babson has a perspective which the stay-at-homes often lack:

When leaving America last November I was more or less apprehensive concerning my country, but after traveling ten thousand miles about the world I conclude it is a pretty good place after all! Let me mention seven features which especially appeal to me:

zone.

(1) We have a great area in the temperate It is the temperate zone that does and will rule the world. Business men and investors should remember this. If the northern

hemisphere is not large enough for your activity, jump to the temperate zone of the southern hemisphere. Don't trouble the tropics.

(2) We have a wonderful soil and very great natural resources. Coal, iron, copper, and gold, as well as wide forests and fertile fields, are ours. Truly, God has been very good to us and all should try to be worthy trustees of these great gifts.

(3) We are isolated so as not to be involved in the great international strife to which most

nations are subject. The young men of our country little appreciate their exemption from three years of compulsory military service. We little realize the great blessings we enjoy, owing to our neutrality. Moreover, Germany, England, and France maintain their great armies and navies to avoid being swallowed up! May our nation ever remain neutral! I, for one, hope the policy of the new Wilson Administration will continue along these lines.

(4) The United States, however, has been blessed not only with land and capital, but by a laboring people unequalled on the face of the earth. Our nation is peopled with some of the best of every country. We should never forget that any man must have courage and ambition to "pull up stakes" in Sweden, Italy, Austria, or Germany and bring his family to America without promise of work or even food. Yes, that takes real courage, and these immigrants will, in my opinion, prove to be the backbone of America. The "Pilgrim Fathers" not only came in 1620 but they have been coming every year since.

(5) It is true that our municipal governments are in many instances failures, and that our state governments are progressive but still, in a sense, experimental. Our National Government, taken as a whole, is the best in the world. No other people enjoys the freedom that we do. Even in England, and also in several other of these older countries, a man is not judged by what he is, but by how he was born; and as for political freedom, it is yet unknown in many of the nations of Europe. My experience the past winter in endeavoring to interest kings and emperors in forming an international institute to measure the relative prosperity of nations allows me to speak with authority,

(6) Not only are our land, people, and government the best in the world, but our railroads, public utility properties, and great industrial plants are also unequalled. Government ownership of railroads may come, but deliver me from it! Oh, if we could only appreciate and help our great railroad builders instead of cursing and kicking them! As clients well know, I am no "stand-patter," and have even been referred to in England and on the Continent as a Socialist, but I do believe that compared with other nations our Government is the cleanest, our corporations the most humane, and our labor the best off in the world. Only in the banking field does Europe lead us. We can learn much from the various banking, Landschaften, and Raiffeisen systems of Europe. American banks are far inferior to those of almost every other great country.

(7) Our farmers and school teachers are a great national asset, the farm is the basis of all material things, and education is the basis of all else. But we should not be too optimistic; our farmers and teachers should get busy. Let us be generous with both! Farming must be encouraged so as to be kept attractive, as we need more farmers. Teaching must be better paid, for we need stronger teachers. On the farms and in the schoolhouses the future of America depends, and we should do everything possible to raise the efficiency of both.

These are simple facts derived after four winters in Europe studying industrial, financial, and social conditions. Therefore, I say let us invest much money at home! Spend a good sum of money on American products! Work with, instead of against, industry! Travel about the United States first! Let us be "boosters" instead of "knockers!" Every day let us thank God that we live in a land of prosperity and freedom; and let us strive to increase and distribute these two great American assets.

ADVENTUROUS SCIENCE

T

HE American flag has been raised and the "Te Deum" has been sung upon the highest point in North America; and in Peru an American has discovered the ancient city of the Incas. Even the discovery of the Poles has not ended this age of adventurous exploration.

On the 7th of June a party led by Archdeacon Hudson Stuck reached the summit of Mt. McKinley, the top of the continent that for years had baffled all human ascent - except Dr. Cook. His "ascent" of Mt. McKinley was an introduction to his "discovery" of the North Pole. Archdeacon Stuck, the Episcopal missionary for Alaska, reminding us of the exploring Jesuit missionaries whose exploits fill the pages of American history, left Fairbanks on March 13th with three companions. Preparations had been under way for months, for as far back as last September one of the party had made a depot of supplies at McPhee Pass, 9,000 feet above sea level, from which the actual start for the summit was made.

The time taken to ascend Mt. McKinley is the first vacation that Archdeacon Stuck has had in the last five years that he has been a missionary to the Alaskan

Indians. Every season during this time some expedition has tried to reach the top of the mountain. All had failed until this mountain-climbing missionary reached the top of the continent and added another chapter to the science of exploration and the adventures of hardy men.

Far in the interior of Peru, on impregnable cliffs above the cañon of the Urubamba River, is Machu Picchu, a wonderful stone-built city now in ruins but once probably the chief citadel of the Incas. For many centuries it has been uninhabited and overgrown with jungle, at last to be rediscovered by an American college professor. In 1911, while looking for Vitcos, the last capital of the Incas, Professor Hiram Bingham, of Yale, discovered the palaces and temples and the defences of the city of Machu Picchu. He came back to this country and fitted out an expedition, financed by Yale University and the National Geographic Society, which has uncovered the wonders of this ancient citadel of refuge to the

modern world.

The spirit of discovery and adventure is still alive as it was in the days of Drake or Pizarro, but it is followed now in the

interest of science and not merely for the lust of gold.

T

A BUSINESS CREED

HE advertising business has taken stock of itself. The Associated Advertising Clubs at their last meeting in Baltimore adopted a creed, and they have instituted the machinery to keep the business clean.

The part of the creed that directly affects the public is:

We believe in truth, the cornerstone of all honorable and successful business, and we pledge ourselves each to one and one to all to make this the foundation of our dealings to the end that our mutual relations may become still more harmonious and efficient. We believe in truth, not only in the printed word, but in every phase of business connected with the creation, publication, and dissemination of advertising.

We indorse the work of the National Vigilance Committee, and believe in the continued

and persistent education of the press and public regarding fraudulent advertising, and recommend that the commission, with the coöperation of the National Vigilance Committee, should pass upon problems raised and We believe it to be the duty of every advertising conduct campaigns of education on these lines interest to submit problems regarding questionable advertising to this commission and to the National Vigilance Committee.

We believe in upholding the hands worthy to be upheld, and we believe that each and every member owes a duty to this association of enforcing the code of morals based on truth in advertising and truth and integrity in all the functions pertaining thereto.

The commission that is charged with carrying this creed into effect is made up of representatives of the thirteen advertising interests that comprise the Associated Advertising Clubs of America, and there is every reason to believe that it ought to be successful. In reality it is a kind of committee on morals.

At the Baltimore Convention, which was attended by delegates from nine countries, Mr. William Woodhead, the manager of Sunset Magazine, was chosen president. The Association, in analyzing its responsibilities to the public, by a unanimous vote approved of laws that would permit the producer of an article to fix the price at which it is to be sold.

There are not a great many businesses that have adopted a creed, but there are many whose organizations, while endeavoring to make business more profitable, exert a strong pressure to keep it upon a higher plane than it has ever been before.

And such endeavors add immensely to our progress and prevent many a scandal in which the people do not often examine - for scandals will grow up in any business their own practices with a critical eye.

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beyond their borders, or amounts to a confiscation of railroad property.

The history of these cases, which were the most important tests of state control over rates ever undertaken in the courts, goes back to 1907. In that year, the Minnesota Railroad and Warehouse Commission established maximum freight and passenger rates within the state, which were substantially below the rates that had previously prevailed.

The railroads affected, among which were two of the leading systems of the country, the Great Northern and Northern Pacific, sought to have the new rates declared void on the grounds that they interfered with the rates prescribed by Federal authority; that their effect was to burden interstate commerce "by creating undue and unjust discriminations between localities in Minnesota and those in adjoining states;" and that, in themselves, they were confiscatory.

A decision handed down on April 8, 1911, by Judge Walter H. Sanborn, of the United States Circuit Court at St. Paul, sustained the contentions of the railroads. Had this decision been upheld by the Supreme Court, state control over railroads would have been practically ended. So vital was the issue raised by the opinion of the lower court that the Conference of Governors appointed a committee to assist the attorney-general of Minnesota in appealing the cases to the court of last resort.

Two of the railroads' contentions were completely denied by the Supreme Court. Justice Hughes held that, though Congress has complete power to regulate interstate commerce, including the power to regulate rates within state boundaries whenever they have an indirect effect upon commerce moving to points beyond, it has never seen fit to exercise that power; therefore, that in prescribing the rates involved, Minnesota did not exceed its authority as defined by the Constitution. He also held that there had been a failure to show that the Minnesota rates resulted in discrimination against shipping centres outside the state. Indeed, he declared that that phase of the controversy was "primarily for the investigation and determination of the Interstate Commerce

Commission, and not for the courts." And he pointed out that in these cases there were no findings of the Commission before the court for review.

In the cases of the Great Northern and Northern Pacific railroads, the rates in question were held not to be confiscatory. But in the case of the Minneapolis & St. Louis Railroad it was held that the rates would not permit a fair return to the company, and, accordingly, the decree of the lower court was to that extent affirmed.

The Minnesota rate decision was a disappointment to the railroads generally, for they have completely changed from their attitude of ten years ago when they preferred state to Federal regulation. The particular points at issue were not considered of such vital importance to the prosperity of the roads directly. They had hoped for a decision that would definitely place them all under the single authority of the Federal Government in matters of rate-making, and practically do away with the regulation of rates by the forty-eight states. Undoubtedly, so many regulating bodies create confusion, and we may be approaching the time when all authority of this kind will be concentrated; but in the past, in spite of many unwise decrees, these state commissions have done much public service.

If their usefulness has passed there is a direct way of practically ending their activity. Justice Hughes's decision made it plain that Congress has the final power to regulate interstate rates and even interstate rates that affect interstate business. Congress can exercise its dormant power to bring order out of the rate-making chaos. Already, preliminary steps have been taken to obtain the necessary legislation.

It is also possible that when a decision is rendered in the so-called "Shreveport case," now before the Supreme Court, the scope of the authority of the states in such matters will be found less extensive than appears in the light of the Minnesota decision. An important aspect of that case is that the Interstate Commerce Commission has declared discriminatory, and set aside, certain rates fixed by Texas within the state limits.

"IN THE HANDS OF RECEIVERS"

D

URING the week of May 24th, in an otherwise dull and uninteresting market for investment securities generally, a sensational fall took place in the prices of the stocks and bonds of the St Louis & San Francisco Railroad.

The circumstances attending it caused experienced observers at once to become apprehensive of an approaching crisis in the company's financial condition. Therefore, little surprise was occasioned among them when, early in the following week, it was announced that the railroad had been taken out of the hands of the existing management and placed in the hands of the United States District Court at St. Louis, to be shielded from its creditors and relieved of the necessity of paying its debts until such time as the financial doctors might be able to cure its ills.

The "Frisco's" illness had been of long standing, although apparently of such a nature as to justify the hope that it might be outgrown. It reached an acute stage, however, when, with several million dollars of obligations falling due, the company found itself in want of both money and credit the only means of relief in that kind of emergency and unable to get either in adequate amount. Without them it went into the hands of receivers.

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There is nothing more perplexing to the average investor than the way in which such situations are dealt with in this country. At best, the reorganization, or readjustment, of the affairs of any corporation of such complex financial make-up as a great railroad, whether it is undertaken with or without the guidance of the courts, is practically certain to impose hardship on some of the security holders. And it frequently happens that there are among these a good many people whom it has remained for hardship to teach the first lessons in the elementary principles of investment. At no time are such important phases of investment as the fundamental

difference between the stockholder, or partner, and the bondholder, or creditor, emphasized more forcibly than when a corporation is in the hands of receivers.

It is timely, therefore, to attempt to pick out of past experience in receiverships a few things that may throw some light on the present case. These are intended only to show the various steps of reorganization in a general way.

Immediately following the naming of receivers for a corporation, there is always a rush to organize "protective committees" to look after the interests of the security holders. The number of these committees usually corresponds closely to the number of different outstanding issues of stocks, bonds, notes, etc. For example, there will be one committee representing preferred stockholders, one representing common stockholders, another representing first mortgage bondholders, still another representing refunding bondholders, and so on through the entire list.

The reason for the organization of these committees is obviously to obtain concerted action among the widely scattered creditors and stockholders, and presumably their membership is made up of men whose interests are identical with those of the people they are chosen to represent. They are sometimes large holders of the securities themselves. Sometimes they are bankers who have had some part in distributing the securities to investors, and who consent to give their time to the committee work because of a moral responsibility to their clients. And sometimes they are self-appointed men, for whose show of solicitude little reason can be found, unless, perchance, it be to afford themselves a kind of employment that is not infrequently provided with a liberal "expense account."

The first work of a protective committee is to arrange with some well known trust company to receive deposits of the securities; then to draw up an agreement to be

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