considerable decreases in value as compared with the budget estimates, and the Minister of Finance is rendered uneasy thereby. But, then, the tax on passenger tickets, the institution of which we announced in these pages in 1906, has not yet yielded sufficient returns. Although the public is dissatisfied, the tax will not be taken off as yet, for the working expenses increase there, as in other places, in a very considerable degree. The coefficient working, which in 1900 did not exceed 59 per cent, reached 67 per cent in 1907. (It was 69.99 in 1909.) Again, has Belgium, on her side, any cause to rejoice over having assumed control of her railways? Our readers know they have not; every year we give them all the information on this point with which the budget reports furnish us. Here the financial results are not good, and it is particularly difficult to estimate the deficit, which has been accumulating since the state first took over the line, on account of the want of clearness in the bookkeeping of this department, and in which the fall in prices has on several occasions been modified. The deficit, since the acquisition of the lines by the state, has reached over 86 millions. This industrial country is suffering, as well, from inadequacy of installation, and frequent expressions of discontent are made by the people who are served by the line. Going further south, on our way to Italy, we come to Switzerland. Here, again, our readers are kept supplied with information as to the returns since the Federal government again took over the lines. From 1903 to 1908 the balance of the profit and loss account has only once shown a surplus; that was in 1906. All the other years the working showed a deficit, and this deficit amounted to nearly six million francs in 1908. This situation is receiving the attention of the Federal council, which does not hesitate to admit that the financial crisis of the Federal Railways may have a bad effect on Swiss credit. When we come to Italy, we find the worst conditions imaginable. The last deficit amounted to something like 75 million francs. Since the state has taken over the working of the lines more than 1,000 million francs has had to be borrowed for the improvement of the system and for the salaries of the staff, which, as we know, is very exacting and very turbulent. If we now leave Europe and ask Japan what state-ownership has done for her, this is what her ministers would say: The total payments for the taking over have exceeded by more than 156 million francs the estimates for the scheme; the improved conditions which were promised at the time of taking over have been deferred until later, because the coefficiency of the working is always increasing; the issues of debentures made to indemnify the companies weigh heavily on the financial market. Such are, then, roughly, the balance sheets of the state-owned railways. Such examples ought to have opened the eyes of our parliament at the time of taking over the Western. Our experience, if we may judge from its beginning, will only be another case to add to the other countries. It will show that the state, in France as elsewhere, cannot make an industrial success of its railways. The states either work them "socially" and make the ratepayer contribute the deficit, or they work them "fiscally" as in Prussia-which is rare-where they make their railways a source of revenue and could not really consent to improve the tariffs. More often than not, owing to unlucky political action, they work them "socially," with the result that no one is satisfied. majority in France belong to this category. A first demonstration was made on the old state line; when they wished to try an extension, this will prove a dear school. But all the examples offered by foreign states would not modify the opinion of those who believe these problems to be not political but questions of economy. The THE PEOPLE'S INVESTMENTS IN RAILWAYS AT THE FOURTH ANNUAL MEETING OF THE ASSOCIATION OF We have before us one of the gigantic questions of political economy which are ever rising larger and larger with the increasing development of our democracy; a question of political economy, I say advisedly, because it has to do with the economy of the whole state, and touches the vital interests of the millions of thrifty and prudent members of society. It is not at all a question as to the earning of a profit on the capital invested in the insurance business. Here we have no problem of capitalism and the proletariat; there is no clash of interests between employers and workmen; there is no antagonism of class interests. It is simply a study of the organized control and investment of the savings of those in our democracy of 100,000,000 who wish to provide for their families and for days of helplessness and ill-luck. Is it well with this gigantic fund on which our wives and children are to depend? Or, are there dangers to be watched for? It is an economic question which demands serious attention. It deserves the more attention because of the surprising magnitude of the interests involved. We have very recently heard much of postal savings banks and of the nature and magnitude of these savings. The total current assets of the insurance companies, however, January 1, 1910, are $3,643,857,971, or about the same as the total savings in all the banks of the United States ($3,713,405,709); larger than the savings in all the institutions of Germany, and three and a half times as great as those of the United Kingdom. The total life insurance of the United States in force this year is larger than the accumulated savings in the institutions of the whole world ($13,425,066,823). On January 1, 1910, there were no less than 28,087,327 policies (including industrial insurance); and the insurance companies of the United States had pledged themselves to provide for beneficiaries sooner or later an aggregate sum of $15,480,721,211-a sum five times as great as the public debt of this country at its highest point at the close of the Civil War, and fifteen times the present debt. Within ten years (1900-1909) the amount of life insurance contracted to be paid has increased by $6,031,601,217 (excluding industrial companies), or six times the total of our national debt. The total current assets carried, January 1, 1910, were $3,643,857,971. This sum is the ship which is carrying the hopes of millions of our people. Is that ship seaworthy? That is the question the people are asking-and which they have a right to ask. And an economist may well give thought to so grave a question. In what form are those assets carried, and what are the conditions affecting their safety now and in the future in this democracy? These assets, of course, were placed in the productive investments of the country, and were grouped roughly as follows (35 companies doing business in New York): 30 per cent. Real estate mortgages.... 12 per cent. Premium notes and policy loans.... 48 per cent. Bonds and stocks of all kinds.... .$1,084,345,817 446,276,468 1,761,404,870 It thus appears that the largest item is that of bonds and stocks. This entry is resolvable into the following, as nearly as can be estimated: Railway bonds (35 companies) Corporation securities ... State, county and municipal securities... .$1,225,576,728 250,000,000 286,000,000 This analysis of the kind of investments in which the people's insurance savings are placed may thus enable us to discuss the fundamental issues in the situation as we find it today. II The situation today in our democracy is a curious complex of ignorance, progress, radicalism, intelligence, idealism, and conservatism. Just as with the greenback and silver manias, so with banking, railways, and corporations, we must face the fact that problems which should-and would in a country like Germany-be sent to experts for solution, must here be settled by a counting of noses in an electorate, which means well, but which is wholly untrained in abstruse subjects of vital importance. Yet the man in the street is likely to insist on being allowed to express his opinion as if he were an expert. The rigidity and cocksureness of the narrow mind is a part of the situation. The great mass of men mean to do the right thing, according to their lights; but the "lights" are practically the whole of the difficulty. Everything depends upon getting the truth before a suspicious and distrustful community. By distortion, a hostile mind can with ease change black into white, and preoccupy the mind with some error for a generation. Sometimes the outlook seems hopeless, and with Rabelais we think that "only if the skies fall, may one hope to catch larks." More than that, we are in the midst of an economic and mental transition which seems to be little understood. We cannot see the forest for the trees. Never in economic history have there been going on more, or more perplexing, changes in industrial organization than in the last few decades. Indeed the modification of our economic structure has been going on faster than our recognition of it, and faster than our ability to analyze and explain it. Education has not kept up with progress. We are still applying obsolete habits of thinking to things which have dropped the old ways of life. We are still estimating complex organizations by standards suited to the simplest order of industry. In addition, our free atmosphere is sure to produce a vigorous growth of radicalism. That is as sure to come in a democracy as weeds in a rich soil. Radicalism is, however, a generous quality, more akin to good than to evil. The danger from it lurks most in the egotistic, truculent, ambitious political leader who uses the generous impulses of radicalism for his own uses. We all know the man among us. "Who peppered the highest was sure to please." Indeed, it is almost pathetic to see how the great mass of men eagerly long to believe in some leader who offers them sincerity, courage, and sympathy for their rights. We are a mercurial people, who often move under waves of emotion without much discrimination. Yet on very difficult public questions which require non-partisan experts, a self-confident, restless politician will not hesitate to break in and appeal to the mob-spirit without regard to future consequences of great moment. "A cow," says Dr. Johnson, "is a very good animal in the field; but we turn her out of a garden." There are many other constituents in the complex in which we must settle our public questions. The possession of property, and the actual conduct of a business great or small works more for |