i iiluIUli. i 0
'.
It
Dpilic Fundamentally
i Says Ilr.
" . Ecossyelt-"
EOT SORE SPOTS EXIST.
Dishssestj Must Bs Eliminated
. , Jhcagh Innocent,
J . . Suffer. "
ADVOCATES ; NEW LAWS.
Ccrreacj Legislation ' Regulation of
.Corporations, Inheritance and In
- come Taxes Among Presi- -
Z" '','-( ' V ?-" -V; , ' ,'" .,?- ,-' 4 S
x ' ; Wal Recommen-' ' .
', . . -'
; .'.i dations. - ,
- To the Senate" and House of Repre-
. sentatlves; ;, ,
,.: Nqi nation has greater resources than
our?, and 1 think It can be truthfully
aald that the .citizens of no nation pos
sess greater energy and Industrial abll-
. Ity. In 09 nation are the fundamental
business conditions sounder than In
i ours . at , this very moment, and It is
foolish, when such Irtbe case, for peo-
1 pie (6 hoard money instead of keeptngj
ft in atmna hnnlra tnv ft- la fttiph nnn)ri.
log that is the immediate occasion of
': money - stringency. Moreover, as a
rule, the buslness of our people li con
1 ducted with honesty and probity, and.
a ; mis applies suae 10 larma ami recto
ries, to railroads and banks, to all our
legitimate commercial enterprises. ,
tin any, largo body of men. however,
flier? are certain to be some who are
. ' dishonest, and if the .conditions aw
- such that these nien prosper or commit
V theirnilsdeeds with Impunity their x-
inunity. Where these men are business
-. uivu vi greai oa 8ui.ii j uuu ui ieiujn.ua-
ment both nnscruptilous and reckless
; - - and where tho conditions are sucn that
r i they act without supervision or control
r, and at 'first . without effective check
. innocent people- into making Invest
ments or embarking In kinds of busi-
."'',. w nna rnnr n Mtn v nnominn 1 i. linn
1e misdeeds of these successfully dls-
'; comes not. only upon them, but upon
the iunocenj: - meu whom . they , have
" ? - misled. It is a painful - awakening
' . - Whenever r It occurs, and naturally
. when It does 'occur, those who nncr
are apt to forget that the. longer It
.' . war' deferred the more . painful ; It
; i guilty it Is both wise and proper to
- endeavor, so far as possible, to inlni
; mlze the distress of those who have
been misled by the guilty . Yet it is
. ..notpossible to retrain" because.of such
distress from striving to, put an end
to the misdeeds that nre the ultimate
causes of the suffering and as a means
to this end where possible to punish
- those responsible for them.-. There may
be honest differences of opinion as to
: many governmental poUcjos, but cure
. . ly there can bo no such differences ns
to the need of unflinching perseverance
in the war against successful dishon
esty. -'T .
? in" my; message to- tho congress on
toc. :. mil.) . l Kn u . . :i ;.
i "If the folly of man mars tho general
, well being,' then those who nro Inno
cent of .the folly will havo to pay part
bf the penalty incurred by those who
are guilty of the folly.- A panic brought
t on bytthe speculative folly of part , of
? ; the uusiuess.( communuy. woiiiu miri
the whole ousuicss community, ; pu
Biicb. stoppage of wclfure, though It
- might be severe." would) not be lasting.
.' .. In the long run the one vital fnetor Iu
the Dcrmanent nrosnerlty of the coun-
" 5try Is the high, individual character of
- the average J American ; w:orker, . the .
vrrft A mpr loan citizen, no matter
-."whether his work be mental or man
naT whether be be farmer or wage
,:Worlier, businesj man or professional
: man. 1 ( - - ' ' ,
', "In our industrial and social system
'l the interests of all men are so closely
"Intertwined that In th immense ten
r ; jority bf cases a straight dealing man
Jt 'who by "his efficiency, by his Ingenuity
" and. industry benefits) himself must
also benefit others. Normally the man
I J of great productive capacity who be
comes rich by . guiding the labor of
many other men does so by enabling
thcm to produce more than they could
' ' prodtice without his guiaance, and both
be and they share In the bencflt which
comes also to the public at large. The
Buperflclal fact that the shoring may
1 . be unequal "must never blind n to th
f underlying fact that tliece s this shar
t Ing an. that the benefit comes in some
''.' "'f degree to each man concerned. Nor
mally .the wageworker. the man of
, mall means and the average consum
er as well ns the average producer are
, all alike helped by making conditions
.such that the man of exceptional busi
ness ability receives an exceptional re-
ward for hl ability, 8owtling caa
be done by legislation to belp tho gen
eral prosperity, but no siu-h help of a
'permanently beneficial character can
be given to the lcssyible and less for
tunate sate ns the trsults of a policy
which shall inure to the advantage x
all industrious nasi etlicieut people who
act decently, and this is only another
wav of saying that r.ny benefit which
comes to the less able and less, fortu
nate must of necessity come even more
to the more 'able and more fortunate.
If therefore the less fortunate man
Is moved by envy of bis more fortu
nate brother to, strike at the condi
tions u nder ' which they ba ve both ,
though unequally prospered, the result
wjll assuredly be that, while damage
may come fo the 'one' struck at, it.wljl
visit wth an even heavier,-load the
one who strikes the blow. - Taken as
a' whole, wo must nil. go up or go down
together. s ' ' . ,
, "Jet, while not merely admitting but
Insisting upon this, it is also tine that
where there is no, governmental re
straint or supervtelou some of the ex
ceptional men use , their energies not
in ways that are for the common good,
but" in ways wnlch. tell against this
common good.'y The fortunes 'amassed
through coiTporate'organlsatloq .ate now
so large and vest such power in those
that wield them as to make It a matter
of hecessity to give to the sovereign
that lsto i tho government,; which rep
resents the people as a whole some ef
fective power ot sirpertlsloa oyer their
corporate use. - In order . to Insure ft
healthyBoclal and industrial life every
big corporation should be held respon
Bible by and be accountable to some
sovereign strong enough to control its
conduct 1 1 am. In no souse hostile to
corporations. ; This is ari age of com
binationand any effort to prevent alf
combination will be not only liseless,'
but. in the end .vicious, because of the
contempt for law. which the failure to
enforce law inevitably produces. We 1
"should, moreover, recognize in cordial
and ample fashion: the immense good
effected by corporate agencies In . a
country'. such as. ours and the wealth
of iutellect; energy and fidelity devoted
to their service, and therefore normally
to the service of the public,' by their of
fleers and directors.. The corporation
has come to stay, Just as the trades
union has' come to stay. ' Each can do
and has done great gopd.'l J"nch Bhould .
bo favored so, long as it does good.
But each should be sharply checked
where it acts against law and Justice.
' v"The makers of our hational
constitution provided especially that4
the regnlatlon of interstate cpmmerce
should cbme within the sphere. of the
general government. The arguments
In favor of their; taking this stand were
even then overwhelming? But they are
J M stronger today t Jn view of the enor
mous' development -of -greats business
agsncics,:. usually, corporate .Jn- form,
Experience ? has shown conclusively
that it J. useless to try to get any: ade
quate :tegulaH;lon; and supervision ; of
these "great corporations by state ac
tion. Such regulation and supervision
can only be effectively exercised by a
sovereign whose Jurisdiction is coex
tensive with the field of , work of the
corporations that la, by ithe national
government I -believe that this regu
lation aud supervision-can be obtained
by the enactment of law by the con
gress. ? pur steady aim should
be by legislation, cautiously and caret
fully, undertaken, but resolutely per
severed in, to, assert the sovereignty of
the national government by affirmative
action. r: i
"This Is only in form an innovation.
In 'substance it Is merely a restora
tion, for from the earliest time such
regulation of industrial activities has
been recognized In -the action of the
lawmaking bodies, and all that I pro
pose U to meet the changed conditions
in such' manner as will prevent, the
commonwealth abdicating the power
it baa always possessed, not only" Jn,
this country, but also in England.; be
fore and sVe this country became a
separate nation..; ; ";' ' ,' . - .
"It has been a misfortune that the
national laws on ;,;thlsJ. subject . have
hitherto been of ft negative or prohib
itive rather than an affirmative kind
and still more that they? baTe in part
sought to prohibit What Could not be
effectively prohibited and have In part
la their prohibitions confounded what
should; be 'allowed and ;whaf should
not be allowed.? It is generally Rselesii
to JrjT' to prohibit all restraint bn com
petition, "whether this restraint be rea
sonable or unreasonable,-and where It
Is not useless it - la generally hurtful.
' The iinoeess;fut nrosecutlon of
one' device to evade the law Immedi
ately develops another device to accom
plish Ihe same purpose. What is need
ed is not sweeping prohibition of every
arrangement, good or bad, which may
tend f o restrict .competition but such
adequate superrlsioR and regulation as
will "prevent any; restriction of com
petltiolj from being to the detriment of
the pnblic, as well as such sn per vision
aud t regulatiorr as; ,wljl i prevent other
abuses in ha wjiy "connected with re
strictlon of competition." " ' ; " ' i
I have called your attention In these
quotations to what I have already said
because I am satisfied that ft is the
duty of the national government to em
body' in action the principles thus ex-
PKD0ru k-
INTERSTATE
Founders Provided For Fullest Covern
tnent Control. . ' . ;
No small part of. the trouble that we
have romes froni' trrylng to an.ix
treme the national virtue of self reli
ance, of independence In Initiative and
action. It l wise to conserve this Vir
tue and to provide for its fullest exer
clsrt compatible with seeing thfct lib
erty docs not," become a liberty to
wrong others, Unfortunately this' is
the kind of liberty that the lack or alt
effective regulation inevitably breeds.
Tb -founder .of - the constitution in
COMJIERCE.
Tided that the national government
should have complete and sole control
of .interstate commerce. There Was
tlien practically no interstate busi
ness save such, as was conducted L-.."
water, and, this the national govern
ment at once proceeded to regulate In
thoroughgoing and effective fashion.
Conditions have now so wholly chang
ed that the interstate 'commerce, by
water Is. Inslgnlflcant compared with
the amount that goes by land, and al
most all big business concerns are now
engaged in Interstate commerce. As a
result. It can lie but partially and im
perfectly controlled or- regulated by
the action of any, one of 'the ' several J
states,4 such action inevitably-tending
to 1 either too drastic or else too lax
and In either 'case Ineffective for pujs
poses of justice."1 Only' the national
government can in thorottghgolngMsh.
Ion exercise the needed contreL This ,
does not menu that' there should be
any extension of federal nufhotity, for
such authority ' already exists under
the constitution in amplest and most
far reaching form, but It does rean
that-there should be .an extension of
federal activity. This is not advocat
ing een'traliYtioiiult Is merely looking
facts In the face and - real king "that
centralization! in business has already
come and cannot be avoided or undone
and that the-publlc at large can only '
protect Itself from .certain evil effects
of this business centralization by pro
viding better methods for the exercise
of control '' through the authority vftt
ready 1 -centralized in the Rational gov
ernmentir v the constitution t Itself. .
There must be no halt in the. healthy
constructive course of action which
this nation has elected to pursue and
has steadily pursued during the last
six years as shown; both In the legis
lation of the congress and the admin
istration of the law by the depart
ment of justice, The most vital need
Lb In connection with the railroads. - As
to these, in my Judgment, there should
now be either a national incorporation
act or a law licensing railway compa
nies to engage in interstate commerce
upon certain conditions. The . law
should be so framed as to give to the
interstate commerce commission pow
er to pass upon the future Issue of se
curities, while ample means Bhould be
provided to enable the. .'commission,
whenever in its Judgment it is neces
sary, o make a physical valuation of
any railroad. As I stated in my mes
sage to the congress a year ago, rail
roads Bhourd be given power to enter
into agreements, subject to these.agree
ments being made public in minute de
tail and to the consent of the inter-'
state commerce commission being first
obtained. Ttottl 4: the national govern
ment assumes proper control of inter
state xommee Jq thaxerelMjof the
uthorityN it already ppsse8ss it L'Wlir
be imposslbte either to give to or to
get from the railroads full justice. The
railroads and all other great corpora
tions will do well to recognize that thlB
control must come; The only question
is as to what governmental body can
most " wisely exercise it. ' The courts
will determine the limits -within which
the .federal authority can' exercise it,
and. there will still remain ampje work
within each state for the railway com
mission of that state, and the national
Interstate .commerce commission will
work In harmony with the several
state commissions, each within its own
province, to achieve the desired end. v
; THE SHERMAN LAW. :
Should Be .Amended to Permit Proper
Combinations In Business. ;
-' Moreover, in my : Judgment, ' there
should be additional legislation looking
to the proper control of the great busi
ness concerns ' engaged in interstate
business, this control to be exercised,
for their own benefit and prosperity no
less than for the protection of invest
ors and of the general public, ,JUL I
have repeatedly Bald in messages to
the congress and elsewhere,' experience
hal definitely shown ; not merely the
unwisdom, but the futility,' of endeav
orlng to put a stop to all business com
binations. Modern . Industrial condi
tions are such that combination is not
only necessary buV inevitable It is
so in the world of business just as it is
so iu the world of labor, and it is as
idle to desire to put ai end to all cor
porations, .to al blg combinations of
capital as to desire, to put an end to
combinations, of labor. Corporation and
f labor union alike have come to stay.
Each f properly managed is a source
of good and -not evll.fi. .Whenever 1
either there lg evil it should be prompt
ly then! tt acconntf but It should re-,
celve hearty encouragement so long as
it is projerly managed. : It is profound
ly immoral to put lor keep on the stnb
ute books a law, nominally. In. the In
terest, of. public, morality, that really
puts a premium upon public Immoral
ity by undertaking to forbid uoneftf
men from doing' what -must ba; done
under modern business conditions, so
that the law itself provides that Itw
i own infraction roust be the condition
precedent upon business success, To
aim at , the' ' accomplishment of too
much usually ' means the. accomplish
ment, of too. little, and often the doing
of positive damage. . Ia my message to
the congress a year ago, In speaking of
the antitrust laws, I said:; r ;
, ,'rTbe actual working of our laws bas
shown tha the effort to prohibit all
combination, good or bad. Is noxious
where it is not Ineffective.,' Combina
tion ot capital, like combination of la
bor, la a necessary clement lit our pres
ent Industrial system. It is not pos
completely to prevent It, and If
It were, possible such complete preven.
tlon would do damage to the body
politic. What we need is not vainly
to try, to prevent all combination, bat
to secure such rigorous and adequate
control land, supervision , of the conv
Mnatlone as to prevent their. Injuring
tic publk or existing ia such forma as
Inevitably to threaten injury.' f It
ia unfortunate that our present laws,
should forbid alt combinations instead
of i sharply discriminating between
those combinations w hich do good and
those combinations which do evil.
Often railroads would, like to combine
for ths purpotie of -preventing a big
shipper from niaintaining improper nd'
vautages at the expeuse of smalt ship
pers and of. the general public; Such a
combination. Instead 'ot Mas forbid
den by. law. should be favored.
It Is. a public evil to have on the
etatute books a law Incapable of full
enforcement. bectfVe ' both judges and
juries realize that Its full enforcement
would destroy' the business of - the
country, for the result Is to make de
cent men violators of the law against
their will and to put a premium on the
behavior of " the ' willful 'wrongdoers."
Such n result in turn tends to throw
the decent man and the willful wrong
doer into close association and -to the
endto drag down the former to the
letter's level, for the man who be
comes a lawbreaker in one way unr
happily tends to lose all respect for
law aud to be willing to break It in"
many ways. No more scathing con
demnation could be visited upon a law
than Is contained In the words of the
Interstate commerce commission when
in commenting upon the fact that the
numerous; joint traffic associations do
technically violate the law they say:
'The decision of the' United States su
preme court In the transmlssourl case
and the Joint Traffic, association case
hisproduced no practical effect upon
the railway- operations of the country.
Sucn associations. In fact, exist now
as they1 did befoe these decisions and
with the same general effect In
Justice to all parties wa' ought prob
ably' to add that it Is difficult to see
how our Interstate-railways could be
operated with, due regard to the inter
est of the' shipper and the railway
without-roncerred action of -the kind
afforded through these associations.'
"This means that the law as con.
Btrued by' the supreme court is such
that' the business of the country can
not be conducted without breaking it.?
J'AS I have elsewhere said:
v. '' .Not a Nsw Proposition. '
:"Ail this is substantially what I have
said' over and over again.. Surely it
ought not to be necessary to say that
it in noebapc or way represents any
hostility to, corporations as such. On
the contrary, it moans a frank recogni
tion of the fact that combinations ot
capital,' like combinations of labor, are.
a natural result of modern , conditions
and of our national development. As
far as in my ability lies, my endeavor
Is' and will, be to prevent abuse of
power by either and to' favor both so
long aa" they do well;iThe tit4 ot thei
national government Is quite as much
to favor and protect honest corpora
tions honest business men of wealth,
as to bring to Justice those individuals
and corporations representing dlshon.
est methods. ; Most certainly there will
be W relaxation by the - government
authorities in the effort to get at any
greAt railroad wrecker any; man w.ho
by clever swindling devices robs In
vestors, .oppresses wageworkerj and
does injustice to the general public.
But: any such move) as this is In the
Interest of honest railway operators,
of honest i corporations and of those
Who when they invest their small sav
ings, in stocks and bonds wish to be
assured that these win represent
money honestly expended for legitimate
business purposes. To confer upon
the national government the power for
which I asked would be a check upon
overcapitalization. But It alone would
mean an Increase in the value, an in
crease in the safety, of the stocks and
bonds of law abiding, honestly -managed
railroads and would render It far
easier to market their securities;, J
believe improper publicity. There has
been coraplajof of some of the Investi
gations recently carried on, but those
. who complain should pot the blame
where It belongs upon the misdeeds,
. which are done in darkness and not
npon the investigations which brought
them to tight. The adralnistrntton is
responsible for ; turning on the light,
but it is not responsible for what the
light ,showed. ask for full power to
be given the federal government, be
cause no, single state rcau by. legisla
tion effectually cope with these pow
erful . corporations engaged" in inter
state commerce and, while doing them
full Justice exact from tbem jn return
full' justice to. others. - The conditions
of, railroad; activity, the jcondIt!on of
our immense interstate commerce, are
such as to make, the central gojero
ment alone competent to exercise full
supervision and coutrol. u :
; Grave Rstults Abuses,
: "The- grave abuses n Individual
cases of railroad, management. la..; th
past represent wrongs not merely to
the'; general publkvbut above all.
wrong to fair deajlnar and honest cor
pbratlons and meu of wealth, because
they excite a popular anger sod dls
trust which from the Very natureof
the case tend to include la th sweep'
of lt resentment good and bad alike.
From the standpoint of the public 1
csnnot too earnestly say that as toon
as the natural5 and propel resentment
aroused by these abuse becomes lu
discriminate and unthinking It also be
comes not merely unwise' and unfair,
but calculated to defeat the very ends
which those feeling It have Invlew.
There hfi been plenty of ; dishonest
work t.W$ wporatloM in f the past
There Will not b the slightest let-np In
the effort to hunt down and punish ev
ery dlshon'est man. But the bulk of
our business Is honestly done. In the
natural indignation the people feci over
the dishonesty it is all essential that
they should not lose Ihelr heads and
get Arawa into an indiscriminate ild
upon y corporations ill ' peopl of
'wealth, whether they do well . or 111,
Out of any such' "wild movement good
wlil net come, cannot come and never
bas come. On the contrary, the surest
way to Invite reaction Is to follow the
lead of cither' demagogue or visionary
In a sweeping assault upon property
values and upon, public confidence,
which would work incalculable dam
age in the bnslness. world and would
produce such distrust of the agitators
that in the revulsion the distrust would
extend to honest men who in sincere
and sahe fashion are trying to remedy
the evils." y. :'' , ;' F
The antitrust law should not be re
pealed, but it should be made both
more efficient and more In (harmony
with .actual conditions. It should be
so amended as to forbid only the kind
of combination which does harm to the
general public, such amendment to be
accompanied by or to be an incident of
a grant of supervisory power - to the
government -over -these blr concerns
engaged m r interstate Business, xnis
should be; accompanied by provision
for .the compulsory ; publication of ac
counts and the subjection of books and
papers to the Inspection, pf the goyern
ment officials. beginning, has al
ready been made for such supervision
by the establishment of the bureau of
corporations. ' '
MONOPOLY DENOUNCED. '
No Combination Should Be Permitted to
i Corner Necessities at Life.
The antitrust law should not prohibit
combinations that do no injustice to
the public, still less those the existence
of which Is, on the whole, of benefit to
the public. But even if this feature
of the law were abolished there would
remain as ah equally objectionable fea
ture the difficulty and delay now inci
dent to its enforcement The gcrwh
ment must now submit to irksome and
repeated delay before obtaining a final
decision of the courts upon proceedings
instituted, and even a favorable decree
majr mean an empty victory. More
over to attempt to' control these cor
porations py lawsuits means to impose
upon both the department of justice
and the courts an impossible burden.' It
is not feasible to carry on more than a
limited numoer of such suits. ; sucn a
law i to be really effective , mnst of
course be administered by an executive
body and not merely by means of law
suits. , Tlie design should be to pre
vent the abuses incident to the creation
of unhealthy d improper combina
tions Instead of waiting until they are
in existence and then attempting to de
stroy them ; b!y civil or criminal pro
ceedings. - .:', .
A comblpatlon Should not be toler
ated if it abuse the power acquired by
combination to the public detriment.
No corporation or association of any
kind-should be permitted t6 eugage in
foreign or interstate commerce. that is
formed ,fpr .the. purpose of or whose
operations create a monopoly- or gener
al control of the production," sale or
distribution of any one or more of the
prime necessltlea of life or articles of
general use and necessity. Such com
binations are against public policy. They
violate the common law; the. doors
of the courts are closed to those who
art partl-a to them, and I believe the
congress can close the channels of in
terstate commerce against them for its
protection. The law should make its
prohibitions and permissions as clear
and definite as possible,, leaving the
least possible room for arbitrary action
or allegation of such action on the part
of the executive or of divergent inter
pretations bythe courts. Among the
points to be aimed ot should.be the
prohibition of .. unhealthy competition,
Buch as by rendering service at an ac
tual loss for the. purpose of crushing
out competition, the prevention of In
flation of capital, and the prohibition
of a corporation's making exclusive
trade with Itself a condition of having
any trade with' itself. ' Reasonable
agreements -between or combinations
of corporations should be permitted,
provided they are first submitted to
and approved by sorao appropriate gov
eminent body. . '-"''''
The congress has the power to char
ter corporations to engage In interstate
and foreign commerce, and a general
law can be enacted under ! the pro
visions of which existing corporations
could . take out federal charters and
new federal corporations could be cre
ated. As essential provision of inch a
lawshould be a . method of predeter-.
mining by some federal board or com
mission whether the applicant' for n
federal chrter was an association or
combination within the restrictions of
the federal law. Provision should also
be' mado for complete publicity in all
matters affecting the public and com
plete protection to the Investing public
and the shareholders in the matter of
issuing corporate securities.. If an In
corporation law Is not deemed advisa
ble, a license flet for big interstate cor
porations might be enacted or a' com
bination of the two might be tried.
The supervision 'Cstabllsbed might be
anal(jgou8 to that now'exercbied to'ttftium that pur present systeni !s 'sett
national oauas. a ieasi ine amurusr yuniy ueiective. . mere IS seed or a
actshould be supplemented oy speclflfl; f change. Unfortunately, bwever, many
prohibitions of the methods which ex-4 of the proposed fliango must be ruled
perlence bat shown have been of roost from consideration because, they "ar
service in. enabling monopolistic com- complicated, are not easy of corapte
blnatlons f to Ictqsh out competltloa, bensloo and tend to disturb txlsKng
The i teal owners of t corporation ril)t and - Interests We mm also
shouid. be Compelled to do business Jn rule out any plan which would m'aterk
their own name. The right to hold
stock In other corporations should here
after be denied to Interstate corpora
tions unless on approval by the proper
government officials, and a prerequisite
to such approval should be tbe lasting
with the government of all pwtjers and
slockholders. both by the corporation
owning such stock and by the corpora
tion In which such stock Is owned. ;
. To confei; upon the national govern
merit In connection with the amend
ment I advocate in the antitrust law,
power of niHtvlsloM ever big business
concern engaged '? In Interstate com
merce would benefit them as it hal
benefited the national banks
In the
recent business., crlain.lt la noteitorthy
th&i the Institutions which failed were
icstltuTlons which were not under the
supervision and control of the national
government. Those which were under
national control stood the test. .
National control of the kjnd above
advocated wohld be to the benefit of
every well managed railway. From
the standpoint of the public there Is
need for additional tracks, additional
terminals and Improvements la the
actual handling of the railroads, and
all this as rapidly as possible. Ample,
safe and speedy transportation facili
ties are even more necessary than
cheap transportation. Therefore there
Is. need for the investment of money
which will provide for t 11 these things
while at the same time securing as far
as is possible better wage and shorter
hours for their employees. Therefore,
while there must be just and reason
able regulation of rates, we should be
the first to protest against- any arbitra
ryand unthinking movement to cut
the m . ddwn without the I fullest and
most careful consideration of all Inter
ests, concerned and of the actual needs
of the situation.". Only a special body
of men acting for the national govern
ment under authority conferred upon
it by the congress is competent to pass
Judgment on such a matter. '
Those who fear from any reason, the
extension of fedcraf activity will do
well to study the history not on! of
the national banking act, but of the
pure food law, and notably the meat
inspection law recently enacted.' The
pure food law' was opposed so violent
ly that Its passage was delayed for a
decade, yet it has worked unmixed
and immediate good. & The meat in
spection law was even more violently
assailed, and the same men who now
denounce the attitude 'of the national
government in seeking to oversee and
control the workings of interstate com
mon carriers and business, concerns
then asserted that we were "discredit
ing and ruining a great American in
dustry," ' Two years have not elapsed,
and already has become evident that
the great benefit the law confers upon
the pnblic is accompanied by an equal
benefit to the reputable packing estab
lishments. The latter are better off
under the law than they .were without
it The bencflt to Interstate common
carriers and, business concerns from,
the legislation I advocate , would be
equally marked. . r.
' , Incidentally In- the passage of the
pure food law the action of the vari
ous state food and dairy commission
ers showed in striking fashion bow
much good fpr the whole -people re
sults from the hearty co-operation of
the federal and state officials in secur
ing a given , reform; It is primarily
to, ;tle action of these, state commis
sioners that. we owe tUe enactment of
this law, for they aroused the people
first to demand the enactment and en
forcement of state laws on the subject
and then the enactment of the federal
law, 'without which the state laws
were largely, ineffective. There must
be the closest co-operation between the
national and state governments in, ad
ministering these laws.
THE CURRENCY.
Elasticity la Circulating Mediant i Pres.
ent and Prime Necessity.
In my message to the congress a
'year ago I spoke as follows of the cur
rency: . .. ' '
"I especially call your attention to
the condition of oiir currency laws.
The national bank act; has ably served
a great purpose In aiding the enor
nidus business development of the
country, and within ten : years there
has been an increase in circulation per
capita from $21.41 to $33.08 "For sev
eral years evidence has lcen accumu
lating that additional ; legislation is
needed The recurrence of each crop
season emphasizes the defects of the
present laws. There must soon be 'a
revision of them, because to leave them
as they are means to incur liability
of business disaster,' Sluce your body
adjourned there has beett n fluctuation
in the Interest on call money from 2
per cent to 30 per cent, and the fluc
tuation was even greater during the
preceding six months. , The secretary
of tbe treasury had to step In and ly
wise action put a stop to the niost vio
lent period of oscillation. Even worse
than such fluctuations are the advance
in eohiraerelal rates and the uncertainty
felt la the sufficiency of credit even at
j high rates." All commercial Jaterests
; suffer during each crop period. Ex-
cesslve rates for call money id ew
York attract money from the Interior
btinls i4to the speculative fields This
depletes ; the fund that would other
wise be Available for commercial uses,
and commercial borrowers are forced
to pay abnormal rates, bo that each
fall a tax In the shajte of Increased In
terest charges is placed on the whole
com aierce. of the cob n try. . a. ; :
"The mere sta tement of these facts
1 RHy Impair the value ot the Unlrwl
to secure circulation, the; Issue of
which was made under conditions pe
culiarly creditable to the treasury, I
do not press any especial plan, ; Varl:
out plans bare recently, beeft proposed
by expert, committees of bankers.
Among the flans which are possjbly
feasible and which certainly should re
ceive your consideration is that repeat
edly brought to your attention by the
present secretary of the treasury the
essential feature! of which nave been
approved by many prominent bankers
and business men. According to this
! plan, national , banks sbould be per-
' vw ,.to
I teolCed rryort!on
of . their capital in . notes of a .
kind, the Issue to be tax -1 at i ) L .
a rate as to drive the notes back v ;
not wanted in legitimate trade, 'i , ;
plan would not permit the 'i.-ue i
currency to give baufcs adJltlu.i: 1
profits, but to meet tho emergency pre
sented by times of stringency.
"1 do not say that this Is the riglt
system. I only advance it to empha
size my belief that there is need for
the adoption of some system which
shall be automatic, and. open to all
sound banks, so as to avoid all possi
bility of discrimination and favorit
ism. Such a plan would tend to pre
vent the spasms of high money and
speculation ' which, now; obtain In the
New York market for at present there
is too much currency at certain sea
tons of tbe year, and Its accumulation
at New. fork .tempts .bankers . to lend
it at, low rates -for speculative .pur
poses whereas at other time when
the crops are being moved there is
urgent need for a large but temporary
increase In the currency supply. It
must never be forgotten that this ques-
linn rnnrpma bnsinesa mm rpnmrir
quite as much as bankers.; Especially"
is this true of stockmen farmers and
business men In the west, for at pres
ent at certain seasons of the year the'
difference in Interest rates between the
east and west Is from 6 to 10 per cent,
whereAH in Panada the eonTsixindlnr
difference Is but 2 per cent. Any plan
must of course guard the interests of
western and southern bankers as care- -fully
aa It guards the Interests of New
York 'or Chicago bankers and "mnst be
drawn: from the standpoints' of the
tanner and the merchant no leas than
from the standpoints ot the city bank
er and the country banker." ;
I again1 urge on the congress the need
of immediate attention to this matter.'
We need a greater elasticity In our cur
rency, provided, of course, that we rec
ognbHrthe tven greater need bfa safe
and secure currencv. There must al
ways be the most rigid examination
by the national authorities. "Provision
should be made for an emergency cur
rency. The emergency Issue should
of course be made with an effective
guaranty and - upon , conditions - cure
fully prescribed t by the government ,
Ct AinnfiAnA Innnn mtiof . tut Knaat
IT u via cuiwi Bvuv.j innuc uiuot wnvu -
on adequate securities approved by the
government and must be issued under
a heavy tnx. This would permit cur
rency being Issued when the demand
for it was urgent, while securing its
retirement as the demand fell off. It
is worth investigating to determine
whether officers and directors- of na-
tlonnl banks should ever be allowed to
lruin to themselves. Trust ooinnnnles
should 1 subject to thsame supervl- -slon
as banks. legislation to this effect
sbould 1 enacted for the District of
Columbia and the terrltortcSj 1
Yet we must "also remember., that
even the wisest legislation on tbe sub
ject can only accomplish a certain
amount. No legislation can by any'
possiuiury guaraniee me ousmess com
munity, against the results ofjpecula
tive folly any more than it -can guar-;
antee an Individual against the results
of bis extravagance. .When an Indl
vldual mortgages bis house to buy an
automobile he invites , disaster and
when wealthy men or men who pose as
such or are unscrupulously, or foolish
ly eager to become such Indulge in
reckless speculation, especially if it la '
accompanied by dishonesty, they Jeop
ardize not only their own future, bnt'
the future of all their Innocent fellow
citizens, for they expose the .whole
business community to panic and dls-.
tress.
Revenue.
Tbe Income aecouBt of tho nation Is
In a most satisfactory condition... For
tbe six fiscal years ending with the '
1st of July last the total expenditures
and revenues of the national govern
ment, exclusive of the postal revenues
and expenditures were, in round num
bers.' revenues $3405,000,000 and ex
penditures $3,273,000,000. - The net ex
cess of Income over expenditures, in-,
eluding In tbe latter the $50,000,000' ex
pended for the Panama canal was
$190,000,000 for the six years, an aver
ago of about $31,000,000 a year. , This
represeuts an approximation between
income and outgo which it would be .
bard to Improve. The satisfactory ..
working of the present tariff, law has.
becu chiefly responsible for this ex
cellent showing. Nevertheless there la
an evident and constantly growfng feel-,
lug among our people that tbe time Is
rapidly approaching when our system
of revenue legislation must be revised.
THE TARIFF.
Should Not Be Touched Until After
. Presidential Election. ; '
.This country is definitely committed
to 'the protective system, and any ef
fortto uproot It could not 'but cause
widespread htdastria! ; -f disaster. In
other word,: the. principle of, the preii
ent tariff Jaw could not with wisdom
be changedZRut iu a country of such
fhenomenal growth as ours It Is prob
ably well that every dozen years or so
the tariff laws should lie carefully scru
tinized, so as to see that no excessive
or . Improper benefit are conferred
thereby, .that fprojK revenue Is pro
vided and thai our foreign trade Is en
couraged. There must always be as
a minimum a tariff which will not only
allow, for the collection of an ample
revenue,- but which will at least mak
good the difference in cost ot produc
tion here and abrod-that Is. the dif
ference a the labor ; cost . here an I
abroad, for the well being of the w.n t -worker
must ever be a cardinal po!r,t
of American policy. The tj-ic . i
should be approached purely fv-oai a
business standpoint, both the time c 1
the manner f the ch.n' ' !' v .
as to arouse the ml:.' , . i t r ,
and disturbance iu the bus:n"i
and to give the lenst p'.iy f r t
(and factional' motives. "Tlu (' '
etdrratloa should be to s.vs t' t t