Vol. 66

Subsidy Debate

When the Senate met Congress: The Ship on Tuesday of last week the unfinished business before it from the last session was Senator Spooner's bill relating to the government of the Philippines. This, however, was set aside, and the Ship Subsidy Bill advanced to take its place. Senator Jones, of Arkansas, demanded the yeas and nays upon this change in the programme, and the vote then recorded was looked upon as in some measure a test of the strength of the subsidy bill. It stood 38 to 20 in favor of giving the subsidy bill the right of way. The Democrats and Populists voted solidly in the negative, but Senator Wellington, of Maryland, was the only Gold Republican to join them. As Senator Wellington had supported Mr. Bryan in the recent campaign on the issue of imperialism, his vote against the subsidy bill was not altogether unexpected. Senator Frye, of Maine, assumed charge of the bill, and made the principal argument in its behalf. He urged that the bill would not cost the treasury all of the $9,000,000 a year proposed as a subsidy, because the subsidized ships would be required to carry mail free and thus save the Government upwards of one million dollars a year. He further urged that the bill would be of immense advantage to the Government in time of war, by building up a merchant marine which could be used for auxiliary cruisers and transports. His chief argument, however, related to the supposed economic advantages which the measure would bring, not only to ship-owners and ship-builders, but to all who produced goods for export. It costs, he explained, from forty to eighty per cent. more to operate American ships than to operate British or Norwegian ships, and he believed that money should be taken from the public treasury to make it profit able for Americans to engage in this losing business. This last argument is one which

No. 16

we believe to be economically unsound, and we think that our present enormous exportation of manufactures and produce completely disproves the old fallacy that American labor is dearer in proportion to what it accomplishes than the labor of other countries. But the economic side of the question is the least important. We oppose the subsidy bill, first, because it opens the door to lobbying for special interests, and is therefore demoralizing; and, second, because it taxes certain classes to subsidize others, and is therefore unjust.

The Army Bill

The Army Bill as it passed the House of Representatives, by a vote of 160 to 133, did not differ materially in its provisions as to the increase of the army from the outline given in these columns last week; the most important provision not included in our description of last week was the canteen amendment proposed by Mr. Littlefield, of Maine, and incorporated in the bill by a vote of 159 to 51. This amendment absolutely prohibits the sale of intoxicants at military posts. It reads as follows:

The sale of or dealing in beer, wine, or any intoxicating liquors by any person in any post exchange or canteen, or army transport, or by the United States, is hereby prohibited. upon any premises used for military purposes The Secretary of War is hereby directed to carry the provisions of this section into full force and effect.

This is certainly a more positive and direct prohibition of the canteen than that contained in the Act of Congress approved last March and rendered ineffective by the decision of Attorney-General Griggs. The wording of the old law was that " no officer or private soldier shall be detailed to sell intoxicating drinks, as a bartender or otherwise, in any post exchange or canteen, nor shall any other person be required or allowed to sell such liquors in

any encampment or fort, or on any premises used for military purposes by the United States." In the course of the debate on the Army Bill, Mr. McCall, a Republican Representative from Massachusetts, put himself on record as definitely and positively opposed to the policy of the Administration in the Philippines, and to the increase in the army demanded to carry on war in that part of the world. The question of promotion and of the placing of volunteer officers in the regular army was left in a somewhat indefinite position by the bill, but the very doubtful provision abolishing the age-limit for lieutenants was retained. President McKinley has placed General Eagan on the retired list, on three-quarters pay for life, after having remitted the unexpired portion of the court-martial sentence of six years' suspension.

The Canteen

We regard the abolition of the

canteen as a measure intended to promote temperance but certain to promote intemperance. Where the canteen has been abolished, the general result has been a collection of the worst groggeries in the immediate vicinity of the camp and a great increase in the number of drunken soldiers. A club in which only beer and light wines are allowed to be sold, and these under government restrictions, and in which drunkenness is distinctly recog nized as bad form, and disorder is a penal offense, is surely better than a collection of saloons in which private interest is aroused to stimulate drinking to the uttermost, in which drunkenness is common and disorder not unusual, and in which there are and can be no restrictions. The Outlook hopes that the Senate will not pass the anti-canteen provision with out giving careful consideration to the judgment of army men on its probable effect.

The Oleomargarine Bill Apart from the army bill, the most important measure passed by the House of Representatives last week was the Grout bill increasing the tax on oleomargarine from two cents a pound to ten cents. This increase is, indeed, limited to oleomargarine colored so as to look like butter, and the tax on uncolored oleomargarine is by the bill reduced to one-half

of one cent a pound; but as nearly all dealers would find uncolored oleomargarine unsalable for table use, the nominal reduction of the tax on the uncolored product is not deemed important. Mr. Grout, of Vermont, and the other champions of the bill urged that it ought to be passed to prevent fraud, and they showed that oleomargarine is now being sold in stamped packages with the stamp so concealed as to escape the notice of ordinary purchasers. Mr. Grout reported that the amount of oleomargarine sold last year was 104,000,000 pounds, or about "oneninth of the total butter consumption of the country." The opponents of the bill urged the adoption of a substitute prepared by the minority of the Committee on Agriculture, making more effective the safeguards against the sale of oleomargarine as butter. The minority of the Committee, said its Chairman, Mr. Wadsworth, of New York, was as anxious as the majority to prevent the fraudulent sale of oleomargarine as butter, but it recognized the value of oleomargarine as a wholesome article of food, and did not believe in taxing one American industry to make a market for another. Mr. Bailey, of Texas, declared that the avowed purpose of the bill to prevent fraud was itself a fraud. The substitute was defeated by a vote of 113 to 178, and the Grout bill passed by a vote of 196 to 92. Nearly all the votes against the bill were cast by Democrats. There appears to us but one argument against the bill-a doubt whether the taxing power of the Government should be used for any other purpose than raising revenues. If it ever may be so used, it would be to prevent a wholesale fraud on the people, and the sale of oleomargarine as butter is such a fraud. Otherwise why color it at all?

In his annual report The Treasury Report the most important reform urged by Mr. Gage, Secretary of the Treasury, is that of legislation making mandatory under all circumstances the provisions for preserving the parity be tween gold and silver. We hope that such legislation will be an accomplished fact long before another Presidential election disturbs the country. Mr. Gage also hints at such a revision of the present

law as will give greater elasticity to the National bank circulation. Under the law passed last March, the total increase in that circulation has been over seventyseven million dollars. Since the new law authorizing the establishment of National banks with a capital as low as twenty-five thousand dollars, nearly four hundred new banks have been organized, of which number three-eighths represent each a capital of less than fifty thousand dollars. The benefit of National banks is thus given to many communities unable to maintain such institutions under the old law, which did not permit the establishment of National banks with a capital under fifty thousand dollars. The report is explicit relative to the refunding provisions of the new act, which have resulted in the exchange of over three hundred and fifty million dollars' worth of three, four, and five per cent. Government bonds for the new two per cents of 1930. operations of the act have exemplified its wisdom in that gold now flows towards the Treasury instead of away from it. The free gold in that institution at the present time is larger in amount than at any former period of our history. Including the new reserve, the gold in the Treasury belonging to the Government amounts to nearly two hundred and fifty million dollars, while the Treasury holds besides almost as much more against which certificates have been issued.

Tax Reduction Proposals

The

The Ways and Means Committee of the House of Representatives has formulated its bill for reducing the surplus revenue. The prospective surplus, as estimated by Secretary Gage, is in the neighborhood of $80,000,000, and about half this sum could be used in the purchase of bonds if the provisions of the sinking fund act were again given effect. For this and other reasons the Secretary recommended that taxes should be reduced only $30,000,000. The House Committee, however, has recommended a reduction of $10,000,000-claiming that the revenues warrant such a reduction, and that public sentiment demands it. All of the proposed reductions are in the internal revenue taxes imposed in the War Revenue Act of 1898. The chief items are

as follows: Beer, $10,000,000; cigars, $3,000,000; bank checks, $7,000,000; telegrams and express receipts, $3,000,000; notes and mortgages, $4,000,000; insurance, $3,000,000; patent medicines and drugs, $4,000,000; miscellaneous, $6,000,000. The Democratic members of the Committee urged a still larger reduction upon most of the items, including beer their claim being that the large surplus promoted extravagance, particularly for military preparations. While there is some force in this contention, they would be more consistent with their free-trade principles if they protested against reducing the internal revenue taxes upon luxuries and demanded a general revision of the tariff on necessities. Last year the internal revenue receipts-$295,000,000 -were nearly treble what they were at the beginning of the decade, and aggregated more than the entire net annual expenditures of the Government in any year but one between 1870 and 1890. If to the internal revenue receipts are added the miscellaneous receipts from coinage, fees, etc., and the taxes on imported liquors and tobacco, which might properly be made a part of our internal revenue system, there results an aggregate of $350,000,000 revenue independent of the tariff. If the Democrats desire to establish a free-trade system in the near future, they ought to insist that the reductions now made in taxation shall be chiefly upon imported food products such as sugar and tea.

The Isthmian Canal

The Isthmian Canal Commission's report has been made public. It approves the Nicaragua route as, all things considered, the best. It estimates the cost at $200, 540,000, an increase above any previous estimate. But this increase is due to the judgment of the Commission that the canal, in order to meet the exigencies of future maritime commerce, must be made larger and deeper than originally planned. The cost would exceed that of the Panama Canal by about $58,000,000. The Nicaragua Canal would also be considerably longer, the average time required for a vessel to pass through the Panama Canal being estimated at twelve hours; for the Nicaragua Canal, thirty-three hours. The reasons which lead the Commission to

prefer the Nicaragua to the Panama route are chiefly two. First, the distance from the Pacific coast to the Atlantic coast is considerably less by the Nicaragua route; from San Francisco to New York, 377 miles less, to New Orleans 579 miles less, to Liverpool 386 miles less. The time required to pass over these distances would be greater than the difference of time in transit through the two canals. But, secondly, even if the Panama Canal furnished a decidedly superior route, it is apparently clear from the Commission's report that it is and must be private prop erty. "So far as can be ascertained, the (Panama) Company is not willing to sell its franchise, but it will allow the United States to become the owner of part of its stock." The Commission justly considers such an arrangement inadmissible; but, more than this, even if the Panama Canal Company would sell its franchise, that franchise is not permanent, The conces sion of the Government of Colombia to the Panama Company is limited. It provides that the canal shall pass to Colombia after ninety-nine years, Thus, even if arrangements could be made with the Panama Company to purchase the prop erty outright, it still would not be a permanent United States waterway. In our judgment, the Commission is right in regarding this as a conclusive objection to the Panama route. The question whether the interoceanic canal shall be a private piece of property like the Pacific Railroad, or a great National highway like the Mississippi River, is a fundamental question. On this question both the great parties have declared themselves. They both favor a National highway under the ownership, control, and protection of the Government of the United States. To this policy the Republican party has distinctly pledged itself. It would be neither right nor politic to withdraw from the fulfillment of this pledge. It is said that the Panama Company has secured, or expects to secure, the funds necessary to complete that canal, This is no reason why the United States should not go on and build independently its own great highway between the oceans. It is a matter of only secondary importance whether the tonnage ever pays the interest on the cost of construction or not, The Nation needs the highway just as it

needs its great harbors, and it should build the highway and own it, exactly as it should improve and maintain the navigable quality of the Mississippi River. What The Outlook hopes to see, what the interests of the Nation imperatively demand, is the Hay-Pauncefote Treaty confirmed, the neutrality of the canal thus secured by international treaty, and the canal itself then built, owned, and operated by the United States Government, as a necessary connecting link between its eastern and its western coast.

Porto Rico

Just after the recent elecThe Election in tion in Porto Rico of members of the island's first legislative assembly under United States rule, we noted the extraordinary fact that the Federal party had abstained altogether from going to the polls, allowing the Republicans to win without opposition, and the almost equally remarkable fact that the accounts of the election that had reached this country gave no adequate explanation of this withdrawal. In response to a request from The Outlook for information, we have received a detailed statement of Porto Rican political affairs from Judge William H. Hunt, the Secretary of Porto Rico. The legislative function was intrusted to an Executive Council of eleven appointed by the President, and a House of Delegates of thirty-five, to be elected biennially. Judge Hunt says that, under the act of Congress, the Executive Council was intrusted with power to divide the island into seven districts of about equal population, each of which should elect five members of the House of Delegates. This power was delegated to a committee of five-two Republicans, two Federals, and an Independent. The last proposed a plan which was accepted by the two Republicans and adopted by the Council. Thereupon the two Federal members resigned from the Council, and their party papers declared that it was a Porto Rican custom to thus withdraw when injustice was alleged-a custom agreeable to themselves and comporting with their notions of dignity. The Federal party, however, entered into the election with apparent spirit at first. The qualifications for suffrage were; bona-fide residence in the island for a year and in

the district for six months, together with either ability to read and write or ownership of real estate or of personal property to the value of twenty-five dollars. The total registration was 123,140, and it was believed that the Republicans were in the majority. Both parties filed numerous protests against alleged irregularities in registration, often, Judge Hunt tells us, frivolous and vague. Out of 657 judges of registration 622 were Porto Ricans. Before the registration was finished the Federals threatened to withdraw from the polls, and on November 4 their leader or "President" formally notified the Executive Council that the party withdrew its tickets "because of the lack of protection for our right to vote and the manifest partiality of the Council in favor of the Republican party.'

The Republicans cast 58,367 votes, which, under the circumstances, indicates that they would have had a fairly large majority if the contest had been fought out. There was no serious trouble anywhere at the polls on election day. The acquiescence of the rank and file of the Federal party in these curious political tactics may have been due partly to the belief that in the end a reaction would break the power of a single leader who dictatorially directed the party. At this distance the whole affair seems to indicate that the people of Porto Rico have much to learn about the desirable relations between a majority and a minority and the true character of representative government. Pique rather than persistence seems to have controlled the minority; in politics as in sport, to be a good-natured loser is next to being a winner.

Progress in Porto Rico

Of greater substantial importance is the news of rapid commercial and civil progress in Porto Rico which reaches us in a private letter and with the highest possible official indorsement. December 15 was the day fixed for the end of military rule and the entering of a fully organized civil government into complete power. This civil government has been working in conjunction with the Military Department since May 1 of this year, and has not cost the people of the United States a penny. The island itself is free from debt and has a valuation of perhaps $100,000,000. It

has under cultivation only a quarter of its two million acres. This year the sugar crop will be double the average normal crop, and the tariff gives the sugar-producer a great advantage over his former trade-relation with the United States; while a system of inexpensive driven wells in the southern districts has there greatly increased the possibilities of cane cultivation, and improved methods of extraction are increasing the yield immensely. The coffee estates are recovering from the blow dealt by the hurricane of 1898, and the yield will by next year be normal-formerly coffee furnished seven-tenths of the revenue of the island. Fruit culture is in a hopeful experimental stage. The customs receipts have risen from $1,505 in the first week of May to $43,439 in the second week of November. Receipts have more than paid for expenses. Of the two million dollars allotted by the President for the benefit of Porto Rico under the “Customs Refunding Act," only half has been spent-three-quarters of a million for good roads, one-quarter for food supplies; thus a balance of a million remains for permanent improvements. Education is being provided for both in the towns and the rural districts. Governor Allen is sure that there is less destitution in Porto Rico than ever before; while more people are employed and at better wages. It is true that personal politics, the conservatism of the well-to-do people who favored Spanish rule, and the ignorance of the masses after centuries of neglect by Spanish rulers, all make the problems of development such as require patience; but there is ample evidence that the present administration of the island is making sure and steady progress in educational as well as industrial matters.