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perhaps this rate will be a fair average retained by the bank, while $13.37 will for the Continent. The Government be applied to the discharge of the principal. lends money to farmers for special pur- The final payment will be almost wholly poses at a lower rate, but I am speaking devoted to the payment of principal as of the ordinary commercial rate for the the first one went largely to the payment repayment of a mortgage loan. I know of interest. In this way, one half of i per that it is difficult for an American farmer cent. will repay the principal in 54 years, to understand that a loan will be repaid provided a constant payment is maintained in full by annual payments which are on the principal for interest during the lower than our present interest charges entire period. The manifest advantages alone; but it is a fact that can easily be are so great that we should press this demonstrated.
matter most vigorously. The usual method of negotiating these This system of making loans for agrilong-time mortgage credits is by fixing cultural purposes was first undertaken by a rate of repayment which cannot be coöperative mortgage associations in Gerchanged during the life of the loan. This many. The joint stock banks, representrate of payment includes an allowance ing private capital, accepted this plan of for current interest due on the loan, an transacting business as soon as it was amount to be kept by the bank for ad- demonstrated that farmers by coöperation ministration, and a certain sum to be could secure capital in the world's marcredited on the principal. In the lan- kets at fair terms. Both systems have guage of the bank, these are called “interest, been in successful operation for many administration, and amortization." years. The joint stock banks have found
The standard length of time in Europe Iand mortgage business profitable and for a long-time loan is 54 years. For such safe from a banking standpoint. Here, a loan at the present time the rate is again, is a question of policy presented to 4.85 per cent., divided as follows: interest, American bankers. Land mortgage bonds 4 per cent., administration, .35 per cent., secured by mortgages payable on the and amortization (payment on principal) amortization principle will be introduced .50 per cent. This rate will pay both into the United States. The future deprincipal and interest and repay all charges velopment of our Nation imperatively due to the bank in 54 years. As this demands it. There are two models, each will seem almost incredible to some of which has been proved by years of students, I will give a concrete illustration successful experience. One is a bond of how it works. It does not depend upon issued against a first mortgage on real compound interest, but upon the fact estate and guaranteed by an association that though the rate of yearly payment of farmers who are the borrowers — the remains the same, the charge for interest coöperative plan; the other is a bond and administration is constantly decreas- issued on like security and guaranteed by ing because they are computed on the a joint stock bank which is an association principal sum which is constantly being of lenders. Unless our existing banks repaid. Therefore, the proportion which adopt the latter method of financing the is applied toward the repayment of the farmers of America, coöperative organizaprincipal is always increasing.
tions among the borrowers will inevitably For illustration: If the debt were $1,000, grow up because the principle of self-help the debtor will pay $24.25 every six will compel it. months. Of the first payment, $20 will I have discussed only the main principles go for interest, $1.75 belongs to the bank, involved. The question of personal credit and $2.50 is applied to the repayment of falls within the domain of Federal legislathe principal. When the debt is half dis- tion while that of land mortgage goes more charged, however, this distribution will directly to the state legislatures. And be greatly changed. The borrower will there will have to be many changes in pay $24.25 as usual; of this amount, only many of our state laws before that busi$10 will go for interest, 88 cents will be ness will be on a satisfactory basis.
THE FIFTH ARTICLE OF
THE CONTROL OF THE CURRENCY PUBLIC OR PRIVATE?
BURTON J. HENDRICK
F ALL Mr. Wilson's Cabinet sitting about a presidential table the ministers, Mr. McAdoo has Secretary is realizing his earliest aspirathe most immediate interest tions. Corporations, railroads, tunnels, in the deliberations of the and metropolitan transit systems have
present Congress. In a sense been merely the interruptions of Mr. he is its residuary legatee. The law- McAdoo's career; public life has always makers are engaged in solving the two been its ultimate goal. As a child he had great problems which have distracted imagined himself as a Congressman or a the Nation since the Civil War: the tariff Senator, a director of national policies, and the currency. In doing this they are perhaps even a President-maker; the fampiling up work exclusively for the Treasury ily traditions all naturally impelled him Department. Mr. McAdoo will have to in this direction. In the North a college enforce the new tariff law. He will have boy who entertains such ambitions usually another task entirely novel to an American says that he hopes “to enter politics." In Secretary of the Treasury, at least in times the South a young man similarly inclined of peace: the collection of an income tax. unblushingly announces that he “intends He will probably have to install a new to become a statesman." There is a wellnational banking system. This boyish- defined profession for those who combine looking Secretary may therefore find that the trade and a certain amount of legal the management of a great Nation's finan- practice: it is known as “law and statesces is as exciting a task as the construc- manship.” That was the career which tion of the Hudson River tunnels.
the youthful McAdoo had marked out for And Mr. McAdoo certainly looks rather himself. For a number of years, in young and inexperienced for gigantic Chattanooga, Tenn., and in New York responsibilities of this kind. According City, he actually did practise law; "statesto the family record he is fifty years old; manship,” however, circumstances comjudging from external evidence he is about pelled him to postpone. Now, at the age thirty-five. He is tall and slender, mea- of fifty, he has really struck his stride. suring easily six feet two; advancing years Like four other members of Mr. Wilson's have not written their traces in any en- Cabinet, Mr. McAdoo is a Southerner. largement of girth; his figure is as lithe, as This renaissance of Southern activities has well held together, as erect and graceful been generously hailed as a final bridging as a girl's. The silken, dark brown hair of the chasm of sectionalism. Perhaps has not even a touch of gray; the indenta- more than any other member of the tions in his face are not the wrinkles of Cabinet does Mr. McAdoo emphasize years, but the natural corrugations he has this idea. Certainly no one has a keener carried from boyhood. One may easily reason for bitterness; probably no Ameribelieve, therefore, what is actually a can family now in public life suffered more fact, that Mr. McAdoo finds his new from the Civil War than Mr. McAdoo's. Washington duties altogether congenial. Marietta, Ga., where he was born in 1863. He is now just beginning to live, for in was directly in the line of Sherman's march
to the sea. Sherman came through there that when you grew up you would be characteristically “careless about fire,” as serving the ‘Northern nation' as Secretary Henry Grady said. After the Northern of the Treasury with this enormous statue troops had left, the McAdoo homestead of General Sherman constantly before was a mass of smoking ruins, and the whole your eyes!” plantation was so devastated that the That forgetting and readjustment to family never returned to it. Naturally, new and worthy loyalties come easily to the present Secretary is too young to Mr. McAdoo is not surprising to those remember all this; his mother has told many who know him; for his predominant trait times the story, however, how she took him, is lovableness. As head of the tuna baby three weeks old, in her arms and nel company in New York, Mr. McAdoo fled before the advancing Northern army. had several thousand men under his conThe family took root anew in Tennessee; trol; his ideas of discipline were especially Mr. McAdoo's father, formerly a lawyer, vigorous; yet he never had the slightest had to earn a precarious living teaching trouble with his employees. It was not school; the young man himself, early in his until Mr. McAdoo appeared that the 'teens, had to drop his education and go to captious New York traveling public ever work. The name of Sherman naturally entertained any sentiment but hatred for aroused little enthusiasm in Mr. McAdoo's a transit “magnate”; yet everybody had boyish mind, but it was not until he had a good word for Mr. McAdoo. Even assumed his present duties at Washington when he increased his rate of fare from that he realized how completely all these five to seven cents, his patrons seemed to early prepossessions had vanished. The enjoy paying the increased amount. This first thing his eyes lighted on, when he general attitude of affection is not necesglanced out of his office windows, was the sarily based upon any surface characterissplendid equestrian statue of General tics. Mr. McAdoo has certain traits that, William T. Sherman in front of the Treas- in other people, might occasionally offend. ury Building-erected by a grateful Nation He is quick-tempered; he will fly into anfor his success in destroying, among other ger at a clerk who makes a mistake in a numerous things, the McAdoo family for- public document, and reprimand him in tunes. A few minutes afterward Mr. words more forcible than polite. His McAdoo wheeled thoughtlessly around in quickness and incisiveness of speech at his chair; immediately back of his desk, times amount almost to curtness; he finds looking benevolently down upon him, ap- no pleasure, one may be sure, in associapeared the "oil painting” features of John ting with fools. His whole public life has Sherman, one of Mr. McAdoo's most illus- shown that he is aggressive and even trious predecessors in his present office. pugnacious. He entered into the full enThroughout his entire four years, therefore, joyment of battle in his struggle against Mr. McAdoo will live in the closest associa- the transit monopolists of New York; he tion with the Sherman family. Apparent has expressed himself with a painful and ly he finds this association no particular undiplomatic directness in his recent strain. In his New York office, two differences with the great men of Wall pictures long held the places of honor; Street. He never makes the slightest one was that of Jefferson Davis, the other attempt to cultivate popularity. He is that of Abraham Lincoln. “Mr. Lincoln,” the only man in the Cabinet against whom as the Secretary calls him, has long been the Washington correspondents think that one of his favorite authors and a “states- they have a well-founded grievance. man” who fulfilled his own boyhood ideal. They claim that he does not show them
“But what would your father have proper consideration; that he gives them said,” remarked Mr. John Skelton Wil- no news; that he apparently cares nothing liams, another Southerner, who is Mr. for the right kind of publicity. To the McAdoo's first assistant - a man average astute politician one of Mr. Mcmuch a Southerner that he says "kyar" Adoo's earliest orders in the Treasury for "car” – “if some one had told him Department would have seemed extremely tactless. This was that minor officials Club. Here again he attended to every should make no announcements to the re- detail; he superintended the decorations, porters; that such matter should come from the purchase of furniture, the selection of his own official headquarters. A failure
A failure table linen, silver, and china. In one reto cultivate the press, the politicians say, spect, at least, Mr. McAdoo decided, his has wrecked more than one promising Railroad Club should stand preëminent: career. And they point to Mr. Taft as a it must provide the best bread of any club “horrible example."
in town. With this idea in mind, he This attitude, however, illustrates pre- invited all the master bakers to forward cisely this point concerning Mr. McAdoo. samples of their handiwork. One day his Like everybody else the newspaper men
friends discovered Mr. McAdoo in his like him. Despite the fact that they re- office surrounded by a large semi-circle of gard the Secretary as one of the most freshly baked loaves of bread. He spent difficult problems, they do not “roast” him. an hour solemnly tasting the samples. For there is a touch of genius in his person- “The man who baked this one shall bake ality which charms and disarms all critics. the Railroad Club's bread," he finally deIt is impossible to remain in his presence cided, indicating the premium loaf. for a few minutes without realizing that Mr. McAdoo is also noted for his reone is face to face with an exceptional man. sourcefulness; he has the happy faculty of Nearly all who write upon Mr. McAdoo never "getting left." He has been known to feel called upon to discover a physical despatch a special train to bring a traveling resemblance to Lincoln. As a matter of bag which he has accidentally left behind fact the only point of similarity is found in this incident really happened a few the eyes - deep, dark, indefinitely haunt- years ago in Arizona. ing, and slightly melancholy. They His fondness for fast automobiling suggest real kindness of heart, genuine amounts almost to recklessness; he has loyalty to friends, sympathy, faithfulness narrowly escaped death three times; and in all the conventional relations of life, he was once arrested in Germany for “enhonesty, and sincerity — in a word, the dangering a railroad train” — the offense characteristics for which one human being consisting in racing with a locomotive to instinctively loves another. In addition see which would have the right-of-way to these less easily defined qualities, Mr. over a crossing. One day an enormous McAdoo has other more outstanding traits. crowd collected in Church Street, New He is a master executive. He is capable York, with eyes upturned toward a of long periods of uninterrupted work, dizzy 'spectre several hundred feet up and has a tremendous capacity for detail. in the air. A large steel girder attached He displayed everywhere this latter quali- to a chain was making an ascent to the ty when building his Hudson River tun- twenty-second story of the Hudson Ternels; from the day he first conceived the minal Building, then in its skeleton stage. idea his was the mind that directed all the Standing on this girder, with hand claspcompany's activities; neither abstruse fi- ing the chain, stood Mr. McAdoo. He nancial nor engineering problems had the was making a personal inspection of slightest terrors for him. As part of this his building — the only way, as things tunnel enterprise Mr. McAdoo construct- then stood, in which he could do so. Slowed what was then New York's largest ly he made the ascent; once arrived at the office building. He did not overlook a top, he picked his way about the fragsingle detail in this structure. He bought mentary floor, stepping gingerly from the real estate, he helped the architects to crossbeam to crossbeam - a single inadplan the building and kept the closest vertent move would have plunged him to personal supervision over its progress. In the pavement below. order to provide a tenant for the top floor “You'd better take the hod elevator -a problem which the real estate men down,” said the foreman; "on the way regarded as insoluble — Mr. McAdoo him down you're apt to get the 'zoop.'” self organized the now flourishing Railroad "What's that?”
“A drop that makes you feel like your torates” had acquired possession of the stomach and nerves had fallen into your Treasury Department. Was not Mr. shoes."
Williams a bank president, a railroad 'Zoop' or no 'zoop?,” said Mr. Mc- organizer, a member of the Metropolitan Adoo, “I'm going down the way I came Club in New York, and several other up.” On the return trip he did not have similarly malevolent things? the girder to stand on. He placed his foot Senator La Follette and the other critics in the hook at the end of the chain and could hardly have hit upon a more unforgave the signal. One of the workmen tunate specification. For the last ten joined Mr. McAdoo and threw his arm years the favorite beast of the "progresaround him as a protection.
sives" in the Democratic party has been “You go ay-way from heah," said Mr. Mr. Thomas F. Ryan. In this agile gentleMcAdoo. He preferred to make the trip man Mr. Bryan has found the target for his all alone and did so.
most impassioned invective. The public Mr. McAdoo's appointment gave the has not yet forgotten that he introduced ultra-radicals their only chance to assail a resolution, at the Baltimore convention, the Wilson Administration. He was the which called for Mr. Ryan's expulsion from only man whom they could hit upon as that assembly. In his antagonism to this being even remotely tainted with the distinguished Virginian, Mr. Bryan could Wall Street miasma. When Mr. McAdoo hardly find more sympathetic associates came to New York as a young man of than Mr. McAdoo and Mr. Williams. twenty-nine he committed the fatal error Both men have spent the larger part of of establishing a law office with a Wall their business lives combating Mr. Ryan, Street address. Before and after break- and such success as both have achieved ing in upon the metropolis he had had has been won in the teeth of Mr. Ryan's something of a corporation practice; he opposition. Mr. McAdoo fought his way had even organized and served as presi- into New York against the political and dent of trolley companies in Knoxville. financial antagonism of the Metropolitan His great enterprise, the Hudson River and the Interborough syndicates; when tunnels, had enlisted the support of sev- Mr. Williams was engaged in organizing eral well known capitalists; there were the Seaboard Air Line Railroad, his idea even malicious rumors that the house of being to make the property a SouthernJ. P. Morgan had had something to do owned road, independent of Wall Street, with floating his securities. In raising he found the Ryan influence everywhere $70,000,000, in other words, Mr. McAdoo arrayed against him. had made the mistake of seeking the Mr. McAdoo's experiences with Mr. people who actually had the money to Ryan and his associates have the utmost lend, instead of resorting to the corner public interest at this time, for they shed groceryman or neighborhood pawnbroker. much light upon the inevitable question: These circumstances, however, were in- Who, under the Wilson Administration, criminating evidence. The new Secretary "owns” the Treasury Department? Mr. was “Wall Street's representative," the McAdoo had not gone far in his transit man who was to turn the Nation's coffers enterprises in New York when he found into an annex of the National City Bank. himself, almost without intending it, a Certain newspapers published a story that “factor" in the general transit situation Mr. Bryan had declined to enter the a competitor of the Metropolitan Street Cabinet so long as Mr. McAdoo was there, Railway Company, the elevated lines, and and seemed somewhat mystified when Mr. the subway. He was an interloper, an Bryan promptly branded the report as upstart, a man who had arrogantly enfalse and paid a high tribute to Mr. Mc- croached upon territory long since preAdoo's integrity. When the new Secre- empted by Thomas F. Ryan, William C. tary appointed Mr. Williams as his assis- Whitney, P. A. B. Widener, August tant, Senator La Follette at once announced Belmont, and other important people. that the spirit of the "interlocking direc- Many "outside" interests, at different