A LEGITIMATE QUESTION TO WALL STREET

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OME time before Mr. Wilson's inauguration he made several utterances about

business and business morals-homilies, one might call them. Surely he made no threats, unless his promise of a figurative gallows for the man who should bring on an artificial panic be regarded as a threat. His several speeches on this subject were rather his expression of a belief that we are come to a time when business methods are to be honester, when the strangling of competition is regarded as a crime, when men in the market-place are coming to understand that their activities are not merely to make money but to do a service to society as well.

This is the kind of business world that Mr. Wilson believes in, the kind that makes for the happier dwelling of men together and a more satisfactory working world a working and trading world where conscience and a social responsibility and courtesy have play. And he asked the business men who heard him to help toward bringing such a world into being.

What happened? Stocks fell. Wall Street asked, "What does he mean?" It was reported that many large enterprises that had been contemplated were held up till the sky should become clear. This is amusing, but it has its serious side also. For the sake of argument, let it be granted that Mr. Wilson spoke too often and too vaguely about the business world and the Government. That did not warrant the fear that the Stock Exchange showed. There was a fall in the market price of securities that showed either an absurd fear or a studied warning to him to cease talking.

Now what does this mean? A man, even a President of the United States, might talk ever so much and even ever so foolishly about the book market, or the shoe market, or the lumber market, or the clothing market, yet the book men and the shoe men and the lumber men would not become frightened and sell their property; nor would they "answer back" by "throwing a fit." What is there in the stock and

bond market that makes it different from other markets? Why must these men be so delicately dealt with, or always left alone? Is their business in some way sacred? Or does a part of it rest at all times on such an artificial basis that it must have special consideration? Does its success depend on silence?

It is quite time that gentlemen in Wall Street were thinking of the serious side of this subject. The country is thinking of it, they may be very sure.

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THE "MONEY TRUST"

HE aim of the Pujo Committee in its inquiry into the methods of the great bankers was to show that there exists a consciously constructed 'money trust," which has the power of life and death over the financial world. This has not been proved. But it has been shown that there is a gigantic concentration of money power and a very large control over banking credit. These have come about partly because of the strong men at the financial centre, but mainly because our banking laws permit and invite such concentration of power. It has not been proved that there is a conspiracy, but only that a dangerous condition exists, a condition that permits a few men to wield entirely too much power.

Mr. George F. Baker, one of the powerful New York group of bankers, said of this concentration:

It might not be dangerous, but still it has gone about far enough. In good hands I do not see that it would do any harm. If it got into bad hands it would be bad. very

Another expression of opinion which gained wide publicity and will probably be quoted for many years to come, was made by Mr. J. P. Morgan:

I'd rather have combination than competition. I like a little competition but I like combination better. Control is the important thing; without it you can't do a thing, but no one man could monopolize money. One chandise, but never money or credit. man might get control of railroads or mer

Still another expression of note came

from Mr. Geo. M. Reynolds, president of the Continental and Commercial National Bank of Chicago:

I am opposed to the concentration of any sort of power. I believe that concentration to the point it has already gone is a menace. In saying that I do not wish to sit in judgment on the men who hold that power.

The gist of the evidence, then, is, first, that there does exist powerful concentration of financial credit in New York; second, that this concentrated money power has not yet been used as a conscious oppression; third, that in the judgment of some of the leading financial bankers of the country, it has gone far enough and may become a menace.

But there are many facts in high finance that the public does not know. For instance, it has been denied to the Pujo Committee to put the officers of banks on the stand and to cross-examine them about what these banks have done, or to inquire closely into what securities they hold, why they bought them, and what they have made out of them. The law, apparently, denies the public the right to know the inner operations of the banks as such. Whether this be a wise denial or not, it is true that without these records it is impossible to form anything better than an intelligent guess as to the methods, the ethics, and the abilities of the younger group of men into whose hands these great institutions are now coming.

This inquiry has not been free from suspicion of some unworthy motives, but it has had an illuminating effect. It has made it pretty clear that the machinery exists for the concentration of credit, that our laws are very defective, that the pressing duty of the Government is to change them and to devise some plan for the better diffusion of the "money power."

postmasters under the same protection an equally good executive order, but in this case his motive, since he acted so late in his term, was open to the suspicion of wishing to keep this army of Republican postmasters in their positions. Many Democrats, being very human and very hungry, resent this latter order, and their feeling has shown itself in Congress.

The lesson is hard to learn that such service as these small postmasters do has no logical relation to political faith; and this other lesson - that the more patronage a member of Congress has, the worse for him. Many a man has been defeated for reëlection because in giving an office to one applicant he was obliged to deny it to a hundred others. This is as serious a danger as any that awaits the in-coming party, in that it may lose the election four years hence if it give rein to its spoilsmen. Nothing else causes so much internal strife.

If Congressmen and every officer of the new Administration realize the literal truth of these statements, which has been proved over and over again, and if they content themselves to allow all the civil service executive orders to stand, the howls of disappointment which will at first be heard all along the line will soon die down. Congressmen and executive officers can go about their proper business, relieved of the unspeakable burden of recommending and of making small appointments; and public life will become tolerable. Mr. Wilson, though a firm believer in partyrule, has given good hints, in his administrative conduct in New Jersey, of his soundness on the merit system.

II

There is, of course, one very serious difficulty with the civil service the lack of a proper exit for men and women who have grown old or are for other reasons inefficient. There are bureaus in Washington that are veritable old folks' homes. Pension them? Yes, that would be logical and proper; but everybody hesitates about creating a new pension roll when he sees the pension bill of the Civil War larger now than it has ever been — now, when most of the veterans and their widows of

their own generation are dead. We can successfully carry on war; we can do miracles in developing a vast continent; we can preserve social order; we can do more great tasks of civilization than any other people or any other government under the sun; but we have so far been unable to prevent the pension roll for a war of half a century ago from becoming ever larger as the number of its proper beneficiaries becomes smaller. We seem to have no stuff in us to stop this robbery of ourselves by ourselves. Never a President but one has shown the courage or the honesty to question and to veto the fraudulent private bills giving money to deserters. We give money and shut our eyes and run for fear somebody will cry that we are ungrateful, unloyal, traitorous, and whatnot. An organization to promote pensions scares the life out of everybody in authority, without regard to party, from the Democratic Speaker of the House to the Republican President. One President within a recent period, a man, too, who wished to be considered unusually courageous, found one day by a visitor signing a large pile of acts of Congress. "You know what they are?" he asked. "No, Mr. President, what are they?" "They, sir, are sop, sop to Patriotism, with a big P."

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amendment must be ratified by the legislatures of three quarters of the states — at present thirty-six out of the forty-eight.

The public imagination has never become stirred up over the relative advantages of having the Presidential term four years and the President eligible for reelection, or having it six years and having him ineligible. But both the great critics of our Government, De Tocqueville and Bryce, voiced the unfavorable opinion of our present Presidential term that is held by a very large number of thoughtful Americans.

De Tocqueville, writing in 1834, with Jackson's reëlection of 1832 before him, puts the situation very bluntly:

"When a simple candidate seeks to rise by intrigue, his manœuvres must be limited to a very narrow sphere; but when the chief magistrate enters the lists, he borrows the strength of the Government for his own purposes. In the former case, the feeble resources of an individual are in action; in the latter, the State itself, with its immense influence, is busied in the work of corruption and cabal. The private citizen who employs culpable practices to acquire power can act in a manner only indirectly prejudicial to the public prosperity. But if the representative of the executive descends into the combat, the cares of government dwindle for him into second-rate importance, and the success of his election is his first concern. public negotiations, as well as all laws, are to him nothing more than electioneering schemes; places become the reward of services rendered not to the Nation, but to its chief; and the influence of the Government, if not injurious to the country, is at least no longer beneficial to the community for which it was created.

All

"It is impossible to consider the ordinary course of affairs in the United States without perceiving that the desire of being reëlected is the chief aim of the President; that the whole policy of his Administration, and even his most indifferent measures, tend to this object, and that, especially as the crisis approaches, his personal interest takes the place of his interest in the public good."

Mr. James Bryce, writing fifty years later, puts the same idea in somewhat softer words: "The fact that he is reëligible once, but

(practically) only once, operates unfavorably on the President. He is tempted to play for a renomination by so pandering to active sections of his own party, or so using his patronage to conciliate influential politicians, as to make them put him forward at the next election."

And again:

"The founders of the Southern Confederacy of 1861-65 were so much impressed by the objections to the present system that they provided that their President should hold office for six years, but not to be reëligible."

Methods of getting renominated differ somewhat with different Presidents, but it is a fact that no President that has lived out his term of office, except Pierce and Hayes, has been succeeded by another man of his own party until he had obtained a nomination for a second term. A careful study of the succession shows that if his party stayed in power the President could practically always succeed himself if he chose. Mr. Roosevelt as President could even nominate Mr. Taft as his successor as Republican candidate, but Mr. Roosevelt as a private citizen could not prevent Mr. Taft's renominating himself, even after an unpopular administration, and Mr. Roosevelt characterized the condition of affairs which made this possible in language no less severe than De Tocqueville used.

To make him ineligible for reëlection would remove the temptation from a President to work for his own ends, and would leave him free to attend to the Presidency during the campaign for nomination. The six-year term would give the country. a longer period undisturbed by national campaigns and would give each Administration a better opportunity to do the tasks which it has pledged itself to perform.

But on the other hand there are distinct disadvantages to the proposed amendment. Half way through Mr. Taft's Adminstration, he had ceased to represent the will of the electorate. To have continued his Administration in office for four years after such a landslide as gave the House of Representatives to the Democratic party would have been a travesty on popular government. Six years is too

long for a President who is out of sympathy with the people who elected him. But for a man who is doing his great task well, six years is too short a term. Our history shows that we as a people believe this, for we have reëlected nine Presidents and refused to reëlect the same number.

But perhaps the greatest objection to the proposed amendment now is that it cannot be decided upon its general merits. but must necessarily be fought out upon its bearing upon the length of Mr. Wilson's Administration, his eligibility to reëlection, and the eligibility of Mr. Roosevelt for another term in the White House.

THE INCOME TAX AT LAST

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UT, though difficult, to amend the Constitution is not impossible. Thirty-six states have ratified the amendment to the Constitution allowing the Federal Government to levy a direct income tax. This amendment comes at a particularly opportune moment for the new Administration, for an income tax bill is a logical complement to a tariffreduction programme.

The tariff taxes people with small means a far greater proportion of their incomes. than people of large incomes. A straight income tax collects from all proportionally, and the graduated income tax takes more proportionally from the rich than from the poor.

The extra session will probably take advantage of the amendment immediately to pass an income tax bill to make up any loss in customs revenue that the new tariff schedules may incur.