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HOW WOULD YOU HAVE VOTED ? cussed locally, and in very many cases deterYES.

mined by States and cities. No doubt every () would the New York “ World." It

Senator and every Representative has experi

mental knowledge of the working of the rule. says that the first duty of a doctor in an

The evidence has been available to them all. emergency case is to save the patient's

No members of a possible board of arbitration life, not to prescribe a system of moral and should have been better informed. The Memeconomic conduct for him in the event that bers of Congress are chosen for the specific he survives. The “ World ” continues : purpose of regulating the business intercourse It is the duty of Congress to take such prac

of States and individuals. ... The principle of ticable means as may be adopted at once to

arbitration is in no way affected by the action remove the excuse for a strike. Whatever fur

of Congress. ther adjustments are necessary can be left for With characteristic felicity and force of the future. That is the common-sense method,

phrase the “New Republic ” thus disand Congress is displaying far more intelligence and patriotism than its critics. ... A philosophic fire department might plausibly

The eight-hour day, like the phrases “due contend that its chief duty was not to extinguish

process,” “

,"?“ reasonable," "living wage," has not the flames, but to frame a fireproof building

a definite and unequivocal meaning. It reprecode and strengthen the laws against arson.

sents a general principle of action, a kind of That would no doubt be an admirable public

norm for the industrial world. It cannot be service, but in the meantime the building would

applied rigidly, but its general intention can be burn down, the fire would communicate itself to

made a standard in concrete cases. Congress other buildings, and a whole community would

should declare for it, and so establish in the be left homeless. We prefer the Congressional

minds of employers, men, and public authori. way of putting out the fire first, and determin

ties a standard to which they can appeal. The ing later whether it was of incendiary origin or

modern community requires an official decladue to defective wiring, and whether the owner

ration of what constitutes a civilized working can legally collect his insurance.

day, and the President is right in believing that

eight hours meets the consensus of opinion Yet why disregard arbitration? The action

among those who have thought humanely and of the President and of Congress in so doing disinterestedly on the subject. . . . Mr. Wilson is defended by the Cedar Rapids (Iowa) has done what high statesmanship in a democ“ Gazette" as follows:

racy must do: he has interpreted the demands, The Congress is the proper and the most com

principles, and interests of group interests, and petent board of arbitration. In this case the

lifted them up into a National programme. . Congress had so much courage that it refused

He has shown how to turn an emergency to to dodge the responsibility and by a show of

constructive purposes. cowardice follow Congressional precedents of The political necessity which compelled the half a century standing.

President and a Democratic Congress to act The President and the Congress declined to

as they have is thus explained by the Detroit delegate their authority and elected to stand or

“ News: fall in the estimation of the public by the exercise of their own convictions.

President Wilson is running on a platform Whichever side had lost the greater number

which recognizes the eight-hour day. That of points by the decision of a specially created

clause was placed in the Democratic platform board of arbitration would have alleged preju

because the leaders of the party believe that dice, incompetence, or lack of understanding. the American people are willing to recognize Nothing would have been settled. The issue

eight hours as the proper work period. The would have been left open for the promotion of

President cannot withdraw from that position. other disagreements involving similar causes of

As might be expected, other Democratic discussion.

papers, like the Columbia (South Carolina) The President and the Congress could not

State," are insistent that President Wilson have created a board and conferred upon it

has scored another victory, one which, though greater authority than they themselves enjoy. Having the authority, it was their duty to act.

of internal concern only, affects the people The Congress has had this eight-hour question of the United States scarcely less than would before it for several years. It has been dis- the decision for war or peace with a foreign


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nation. The credit for the settlement must “ I have been reading your editorial articles go to the White House, affirms the “ State,"

on the threatened railroad strike. Why is it and continues :

that most of them blame the employees? I am

the wife of a locomotive fireman and I know It is the President who has first brought the

what kind of a life they have about as well as negotiations to a clear point where public opinion could crystallize on the eight-hour-day

any one. issue. It is the President who, after striving

" It is not more money that is the main thing

they are fighting for, but shorter hours. Do vainly to effect a settlement by other means, has undertaken the delicate but highly necessary

you think twenty-five to thirty cents an hour task of arranging the matter by new legislation.

is such a very high rate of wages for a

man who stands and shovels tons of coal and To the criticisms of Mr. Hughes, the Re

rakes and fixes up raging fires, tends to steam, publican nominee for the Presidency, the

watches signals, and tries not to make black Brooklyn "Citizen " replies as follows; smoke, especially on some of those very warm

It appears by what Mr. Hughes said at Nash- days we have had ? ville yesterday that if lie had been in Wilson's My husband has come home fairly faintplace the country would have been treated to a ing many a night. He leaves the house every railroad strike. . . . Mr. Hughes wo

morning at five o'clock and gets home any time insisted upon arbitration, and, rather than make from seven to eleven o'clock at night. He has any such compromise as Wilson effected, would worked all summer every Sunday and asked to have thrown the whole country into turmoil. ... be relieved last Sunday, the first one all sumFar from being like Wilson, a man who looks mer, and was refused. to the actual conditions upon which any piece " Tell me what other employment has such of legislation is to take effect, he would fall hours, day in and day out, Sundays, holidays, back upon some hypothetical principle and every day just the same? Most lines of emallow the whole fabric of society to be shaken ployment give some respite from the work. A rather than depart from it. ... With Mr. man is a slave on the railroad, and I think he Hughes, Government does not, it is thus appar. is entitled to his right to fight for shorter ent, involve, as all our statesmen have thought,

hours." compromise and the giving way at one point so that some other point of importance may be HOW WOULD YOU HAVE VOTED ? obtained. . . . He would rather see the whole

NO. country go to smash than yield a point. There are, no doubt, not a few of our voters

So would the New York “ Times.Dewho will applaud this. It will strike them as spite the fact that in general it supports an evidence of strength when, in fact, what it is President Wilson, it describes the legislation evidence of is incapacity for the work of gov- at Washington as “ A National Humiliation,” ernment. But that it will not be approved by

and speaks of it as follows: the majority is certain.

The blackmailing of the whole Nation under In an editorial in “ Commerce and Finance,"

the threat of a strike, the extortion from a by Theodore H. Price, the well-known econo- Nation's Legislature of a special Act granting the mist, we read the following:

demands of the brotherhoods without time to We don't know anything about the writer of

inquire into its justice or its practicability, puts the subjoined letter, which is clipped from the upon the country an intolerable humiliation; it

Sun," but we print it just to show that there reduces 100,000,000 people to a condition of are two sides to a much-discussed question. vassalage, no longer permitted to make laws We rather think that the well-fed men who sit that freely express their will, but held up, as the in parlor cars and become apoplectic over the highwayman's victim is held up, and forced to “menace of the labor unions” would change

instant compliance with the terms imposed upon their views if for just half an hour they had to

them by the leaders of organizations comprising fire the locomotive that is pulling them. We only 400,000 of their number. ... wish they could all read Philip Gilbert Hamer- The brotherhoods deceived the public for a ton's classic book on “Human Intercourse." time; they appear to have deceived the Presi. It was written long before trade unions had any dent. They insisted that their demand for eight political power, but in the chapter on “Con- hours was not arbitrable. It is the general opinfusions” it deals with one's inability to appre

ion that the President erred grievously in not ciate another's feelings in a way that reveals the insisting, with equal firmness, that they consent cause of most misunderstandings and teaches a to arbitration. Instead he appears to have lesson that would prevent many quarrels if it yielded to their demand at once and then to were heeded. But we are forgetting the letter have employed his time in seeking to compel that led us remember Hamerton's book. the railroads to yield. An increase in wages is Here it is :

eminently a fit matter for arbitration, certainly

for deliberate examination and inquiry, to the end that justice shall be done. That the President should have insisted on. The railroad presidents proposed arbitration, were willing to arbitrate; the brotherhoods refused. That is the net situation, and the public understands it perfectly.

What ought to have been done ? The Boston “ Herald " tells us :

Either the President should have referred the whole question to Congress in the first place, after requesting a two weeks' truce from brotherhoods and railroad presidents, or he should have insisted on arbitration at any cost. By trying to make a personal triumph of the affair, and by having to appeal to Congress only as a confession of personal failure after the date for the strike was actually set, Mr. Wilson has thrown the whole railway situation literally into the danger of intermittent anarchy, and American industry into the unsettling pool of politics.

Referring to ex-President Roosevelt's and Governor Hughes's experiences, the Lewiston (Maine) "Journal ” says:

Some one says that a lockout or strike prevented by surrender to special privilege elicits a worse peril ahead than it professes to avert for the present. As the Kaiser blundered seri. ously when he refused to arbitrate the reasonableness of the hell which he projected on Europe, so Wilson's obedient Congress loses to the common sense futurity of all American business by legally putting present prosperity on the unfair list-thus hastening the severity of a certain reaction. .

Having turned down the Roosevelt principle of reference and public regulation, we now get plausibility instead of ability in Congressional and executive life, while rate regulation loses to concentration of political power in the White House.

When legislative price-fixing was undertaken in New York seven years ago, Governor Hughes won the applause of right-minded men and women by vetoing such a bill and did effective work for the consumer by creating a splendid Public Service Commission, which has regulated monopoly power and effectively helped the consumer. But Wilson had and has no such economic forecast.

The Chicago “ Evening Post " inquires :

Are four rich and highly organized labor unions the dominating force in this country, or does government still rest in the Congress of the United States? ...

The offense is no less because it is committed by the aristocrats of labor instead of the aristocrats of capital.

Riding along unopposed for years, from wage

advance to wage advance, riding at last over the President himself, these brotherhood chiefs have become mad through the arrogance of their conceit. ..

They have taken their fight from a contest with the railroads to an open assault upon the rights of free government.

A railway strike is an important thing. But more important is the upholding of the principle that the Congress of the United States cannot and will not abdicate its power to legislate for all the people at the bullying demand of an organized class-benefit-seeking minority.

The Boston “ Journal ” charges that the President and Congress have submitted to a hold-up of the Government of the United States, a Government never before coerced into a decision. The “ Journal” proceeds :

They have nullified the principle of arbitration in the United States, a country that professes to live and let live by that principle.

They have defied and defeated public opinion in a country which by its Constitution is committed to government by the rule of public opinion.

They have thereby betrayed the faith and defeated the ideals of the people whom they were chosen to serve.

Most of us have favored the eight-hour day, and expected that some time it would be given the sanction of law. But we did expect it to come by free choice. We never anticipated it as a ransom for the country's life. ...

Terrible as would be the consequences of a great strike, there are sacrifices worth making in the preservation of a free government. Ifit came to a choice between a country-wide railroad strike and an abject surrender by the Government, the people would choose the strike and fight with a will. There are

worse things than a strike, affirms the Philadelphia “ Ledger," and one of them is legislation changing the basic conditions of a great industry when such legislation is enacted under threat in response to a pistol pointed at the Government. “This is not government by injunction, but it is government by intimidation.” The “ Ledger” concludes :

We do not believe that the people of the United States indorse such prostitution of the lawmaking authority. The “Evening Ledger" is devoted to the cause of social reform, to fair working conditions, to the eight-hour law wherever it is feasible. But we can foresee nothing but menace in stretching the Constitution to the breaking-point for the purpose of legislating special concessions to a special class when that class demands this legislation, not by the accepted methods of argument and logic, but by a physical threat.






No apology is needed from us for giving our readers a fourth article on the new Federal Farm Loan Act. It makes a new and perhaps profoundly important step in the direction of “Socializing " government finance. Mr. Clarence Ousley, a well-known expert on agricultural finance and a member of the staff of the Texas Agricultural and Mechanical College, discussed and commended the bill in The Outlook of June 28; Mr. Paul Collins, Progressive candidate for Governor of Minnesota in 1912, criticised it in The Outlook for August 2; its relation to investors was described in the Financial Department of The Outlook for August 23; and we now have the opportunity of presenting the views of an officer of the Government to whom has been especially intrusted the duty of putting the new law into effect. Commissioner Norris is a Philadelphian, of high reputation in the world of business and finance. He was one of the well-known members of the reform administration of Mayor Blankenburgh.—The Editors.

HAT does the Federal Farm Loan this stock there is a double liability—like

Act seek to do? It seeks pri- National bank stock. The association, if

marily to provide a conduit through satisfied of the security of a mortgage, “ inwhich funds may safely flow from the private dorses" or guarantees it, and gets the money investor to the needy farmer at a rate of from the “ Federal land bank” of its disinterest fairly compensatory to the lender, trict, and turns the money over to the indibut which the farmer can afford to pay. It vidual borrower, at the same time using the is universally admitted that this is a laudable five per cent which the borrower has paid for purpose. How is it proposed to be accom- its stock in buying for the association a like plished ? Any farmer wanting to borrow a amount of stock of the bank. To illustrate : sum not less than $100 nor more than If ten farmers borrow $2,000 apiece, each $10,000, representing not more than fifty of them buys $100 worth of stock of the per cent of the value of his land and twenty association. That gives the association per cent of the value of the permanent im- $1,000, which it uses in buying $1,000 provements, the loan to run for not less than worth of Federal land bank stock. The five nor more than forty years, may do it by association gets the dividends on this bank associating himself with nine or more others stock, which should enable it to pay dividends in like case, whose requirements aggregate to its own stockholders, but the stock itself at least $20,000. Every loan must be se- is held by the bank as collateral security cured by a first mortgage. The money can

against the association's guarantees of its be borrowed for only one or more of four members' loans. purposes : (1) to buy land for agricultural Where does the bank get the money to uses ; (2) to buy equipment, fertilizers, and make the loans? First, it has at the start at live stock needed on the farm ; (3) for build- least $750,000 capital. If that amount is not ings or for the improvement of farm lands; subscribed by individuals, firms, corporations, (4) to refund indebtedness now existing, or or State governments within thirty days, the indebtedness hereafter incurred, for one or balance is to be subscribed by the United more of the three previous purposes. Every States. Second, the additional capital it gets borrower must be at the time engaged or as the various farm loan associations in its about to become engaged in the cultivation of district become subscribers to its stock. the farm mortgaged. Installment payments Third, the proceeds of sale of “ Farm Loan must include a sum which, within the life of the Bonds,” secured by the assignment of mortloan, will pay off both interest and principal. gages as collateral, which it is authorized to

The ten or more would-be borrowers form issue and sell to the extent of twenty times its a “ farm loan association," to whose stock capital and surplus. In lending its original each one of them becomes a subscriber to capital it sells more stock, against which it can the extent of five per cent of his loan. On issue more bonds, so that the process perpetuates itself indefinitely. But no matter to fifteen times the capital and surplus of the what gigantic proportions the figures may issuing bank, instead of twenty times, as grow, the “factor of safety "never changes. allowed to the Federal land banks. It is Always there is (1) the conservative basis of therefore manifest that they will be less the original loan; (2) the constant improve- desirable investments and must be sold on a ment in the security resulting from the higher interest basis, which means a higher gradual liquidation of the principal; (3) the rate to the original borrower. It is therefore guarantee of the association, fortified by its extremely doubtful, to say the least, whether bank stock held as security ; (4) the double they will pre-empt the good territory and liability of the members of the association ; restrict the Federal banks to the “financial (5) the assets representing the capital stock of deserts." There would seem to be quite as the bank, equivalent to at least five per cent much justification for the anticipation that of the amount of bonds outstanding ; (6) the they will be hopelessly handicapped in the joint liability as guarantors of the eleven competition with the Federal land banks, and land banks in the event of default by any will have to confine themselves to loans one of them ; and (7) Federal supervision at which the Federal land banks are precluded every point in the process. The fact that from making these bonds are to be certified by the Farm Our knowledge of the various factors Loan Commissioner ; are to be free from entering into the situation is not sufficient to National, State, municipal, and local taxation; enable any one to prophesy with any degree and are to be a lawful investment for all fidu- of safety. Undoubtedly a foundation has ciary and trust funds and accepted as security been laid. Willing hands are already at for all public deposits, should make them an work on the superstructure. If errors or unusually attractive investment.

omissions are discovered—as they probably Suppose peculiar local conditions make it will be—there is an ever-existent power of impossible to form an association, how is the correction. The Act ought to provide a individual farmer to get his loan? The Act safe and attractive outlet for hundreds of provides that in such a case the Farm Loan millions of accumulated capital ; reduce by Board may authorize loans to be made many millions the annual interest charge on through approved corporate agents, who the farming industry ; stimulate the improvemust indorse them, and shall be entitled to ment of existing farms and greatly increase expenses and a commission for so doing. the area of tilled land; encourage the “ back

There is also a provision in the Act author. to the land” movement; and increase the izing the Farm Loan Board to charter “joint quantity and reduce the cost of foodstuffs. stock land banks.” This is criticised as set- Whether it shall actually do these things, and ting up a "rival system of capitalistic banks," to what extent, depends largely upon the and as offering an opportunity to evade the mental attitude of the people. It is not deco-operative idea and some of the other good sirable that honest criticism or helpful sugpoints incident to the “associations” and gestions should be discouraged, but it is " Federal land banks.” It is true that one highly desirable that such criticisms and sugof these privately owned joint-stock banks gestions should be founded on knowledge may make farm loans for any purpose to any and expressed with sincerity and fairness. person and for any amount; but the security When any measure which has been long must be the same as in the case of the Fed- under discussion finally becomes law, there eral land banks—a first mortgage for not always arise critics to point out its damning more than fifty per cent of the value of the errors and prophets to foretell its inevitable land and twenty per cent of the permanent failure to accomplish the results intended. improvements; its operations must be con- Criticism and prophecy are two of the easiest, fined to its own State and one contiguous cheapest, and freest things in the world, and State ; it cannot exact from the borrower there are few indulgences which give more any charge or commission not authorized in

pleasure to their devotees. Manifestly, therethe act; it cannot charge him an interest rate fore, they should not be curtailed. In prigreater than 6 per cent per annum nor vate affairs and personal matters it is usually more than one per cent above the rate at unwise to answer the critic, while counterwhich it is selling its bonds. These bonds prophecy is a waste of time under any concarry no certification by the Farm Loan Com- ditions. But in public matters it is perhaps missioner, and their total issue is limited to (Continued on page following illustrations)

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