This is a digital copy of a book that was preserved for generations on library shelves before it was carefully scanned by Google as part of a project
to make the world's books discoverable online.
It has survived long enough for the copyright to expire and the book to enter the public domain. A public domain book is one that was never subject
to copyright or whose legal copyright term has expired. Whether a book is in the public domain may vary country to country. Public domain books
are our gateways to the past, representing a wealth of history, culture and knowledge that's often difficult to discover.
Marks, notations and other marginalia present in the original volume will appear in this file - a reminder of this book's long journey from the
publisher to a library and finally to you.
Usage guidelines
Google is proud to partner with libraries to digitize public domain materials and make them widely accessible. Public domain books belong to the
public and we are merely their custodians. Nevertheless, this work is expensive, so in order to keep providing this resource, we have taken steps to
prevent abuse by commercial parties, including placing technical restrictions on automated querying.
We also ask that you:
+ Make non-commercial use of the files We designed Google Book Search for use by individuals, and we request that you use these files for
personal, non-commercial purposes.
+ Refrain from automated querying Do not send automated queries of any sort to Google's system: If you are conducting research on machine
translation, optical character recognition or other areas where access to a large amount of text is helpful, please contact us. We encourage the
use of public domain materials for these purposes and may be able to help.
+ Maintain attribution The Google "watermark" you see on each file is essential for informing people about this project and helping them find
additional materials through Google Book Search. Please do not remove it.
+ Keep it legal Whatever your use, remember that you are responsible for ensuring that what you are doing is legal. Do not assume that just
because we believe a book is in the public domain for users in the United States, that the work is also in the public domain for users in other
countries. Whether a book is still in copyright varies from country to country, and we can't offer guidance on whether any specific use of
any specific book is allowed. Please do not assume that a book's appearance in Google Book Search means it can be used in any manner
anywhere in the world. Copyright infringement liability can be quite severe.
About Google Book Search
Google's mission is to organize the world's information and to make it universally accessible and useful. Google Book Search helps readers
discover the world's books while helping authors and publishers reach new audiences. You can search through the full text of this book on the web
at http : //books . google . com/|
Digitized by
Google
Digitized by
Google
Digitized by
Google
f- LIBRARY
I UNIVERSITY OF
I CAUFOKNIA
1 SANTA CRUZ
I
Digitized by
Google
//
1
Digitized by
Google
Digitized by
Google
PREPAREDNESS AND AMERICA'S
INTERNATIONAL PROGRAM
®iie Pinnate
VoLXJMte LXVI July, 1916
Edftob: CLYDE LYNDON KING
Absocxatb Edrob: T. W. VAN METRE
Amzbtamt Editob: JOSEPH H. WILLITS
Editor Book Dbpt.: ROSWELL C MoCREA
Editobial Coumcil: J. C. BALLAGH, THOMAS CONWAY, Jr., S. S. HUEBNER. CARL
KELSEY, CLYDE LYNDON KING. J. P. LICHTENBERGER, ROSWELL C.
McCREA, SCOTT NEARING, E. M. PATTERSON, L. S. ROWE,
ELLERY C. STOWELL, T. W. VAN METRE. F. D.
WATSON, JOSEPH H. WILLITS
The Ahsrican Academy op Political and Social Science
36th and Woodland Avenue
Philadelphia
1916
Digitized by
Google
Copyright, 1916, by
American Academy of Poutical and Social Scibncb
All rightfi reserved
EUROPEAN AGENTS
England; P. S. King & Son, Ltd., 2 Great Smith St., Westminater, London, S. W
France: L. Larose, Rue Soufflot, 22, Paris.
Germany: Mayer & MtUler, 2 Prinz Louis Ferdinandstrasse, Berlin, N. W.
Italy: Giornale Degli Economisti, via Monte Savello, Palaxso Orsini, Rome.
Spain: E. Dossat, 9 Plaza de Santa Ana, Madrid.
Digitized by
Google
CONTENTS \TG€>3
PART I— THE BASIS OF A DURABLE PEACE AND THE SAFEGUARDS
AGAINST FUTURE INTERNATIONAL CONFLICTS
Page
THE BASIS OF NATIONAL SECURITY 1
S. N. Patten, Ph.D., Of the University of Pennsylvania.
THREE PLANS FOR A DURABLE PEACE 12
William I. Hull, Professor of History and International Relations,
Swarthmore College.
THE CENTRAL ORGANIZATION FOR A DURABLE PEACE... 16
Fannie Fern Andrews, Member, Central Organization for a Durable
Peace.
ISOLATION OR WORLD LEADERSHIP? AMERICA'S FUTURE
FOREIGN POLICY 22
George Nasmyth, Ph.D., Secretary, Massachusetts Branch, League to
Enforce Peace.
ECONOMIC PRESSURE AS A MEANS OF PRESERVING PEACE 26
Herbert S. Houston, Treasurer, League to Enforce Peace, New York.
AN ARMED INTERNATIONAL TRIBUNAL THE SOLE PEACE-
KEEPING MECHANISM ! .. . 32
Oscar T. Crosby, Warrenton, Virginia.
THE BASIS OF A DURABLE PEACE 35
John H. MacCracken, Ph.D., LL.D., President, Lafayette College.
THE ROAD TO A DURABLE PEACE 44
Edward A. Filene, Boston.
THE LEAGUE TO ENFORCE PEACE— A REPLY TO CRITICS 50
Theodore Marburg, M.A., LL.D., Baltimore, Md.
PART II— WHAT PROGRAM SHALL THE UNITED STATES STAND
FOR IN INTERNATIONAL RELATIONS?
WHAT PROGRAM SHALL THE UNITED STATES STAND FOR
IN INTERNATIONAL RELATIONS? 60
Walter Lippmann, Editorial Board, The New RepMic.
AMERICA'S INTERNATIONAL RESPONSIBILITIES AND FOR-
EIGN POLICY 71
George Louis Beer.
AMERICA'S NEED FOR AN ENFORCED PEACE 92
Talcott Williams, LL.D., Director, School of Journalism, Columbia
University,
iii
Digitized by
Google
iv Contents
THE ECONOMIC CONFERENCES OF PARIS AND THE UNITED
STATES ' 95
Alexander Oldrini, New York City.
ISOLATION OR COOPERATION IN INTERNATIONAL AFFAIRS? »8
Samuel McCune Lindsay, Professor of Social Legislation, Columbia
University.
GERMANY AND THE MONROE DOCTRINE 102
Dr. M. J. Bonn, Professor at the University of Munich, Bavaria.
WHAT PROGRAM SHALL THE UNITED STATES STAND FOR IN
HER RELATIONS WITH JAPAN AND CHINA— THE PROB-
LEM AND A PRACTICAL SOLUTION 106
Sidney L. Gulick, D.D., New York.
WHAT NATIONAL POLICY SHALL WE ADOPT WITH REFER-
ENCE TO MEXICO? 118
L. S. Rowe, Ph.D., LL.D., University of Pennsylvania.
EFFECT OF PREPAREDNESS UPON AMERICA'S INFLUENCE
AND POWER 126
William J. Stone, Chairman, Committee on Foreign Relations, United
States Senate.
THE TRUE BASIS FOR AMERICA'S WORLD INFLUENCE.... 130
Thomas P. Gore, United States Senator from Oklahoma.
PUBLIC* OPINION IN FOREIGN POLICIES 136
Norman Angell, London, England.
AMERICAN POLICY AND EUROPEAN OPINION 140
Walter E. Weyl, Editorial Staflf, The New Republic, New York City.
PART in— THE EFFECT OF A LARGE MILITARY AND NAVAL
ESTABLISHMENT ON OUR DOMESTIC INSTITUTIONS AND
POLICY
A, Arguments for Preparedness
THE SIGNIFICANCE OF NAVAL PREPAREDNESS 147
Josephus Daniels, Secretary of the Navy.
THE EFFECT ON AMERICAN INSTITUTIONS OF A POWERFUL
MILITARY AND NAVAL ESTABLISHMENT 157
Herbert Croly, Editor, The New Republic, New York City.
THE DEMOCRACY OF UNIVERSAL MILITARY SERVICE 173
Franklin H. Giddings, LL.D., Professor of Sociology and History of
Civilization, Columbia University.
BEWAREDNESS 181
Henry D. Estabrook, New York City.
Digitized by
Google
Contents v
NATIONAL IDEAM AND PREPAREDNESS 187
Wilbur C. Abbott, Profeflsor of History, Yale Umversity.
CX)MMAND OF THE AIR 192
Rear Admiral Robert E. Peary, Washington, D. C.
A FOREIGN VIEW OF THE ARGUMENTS AGAINST PREPARED-
NESS IN THE UNITED STATES 200
George Nestler Tricoche, Late Stafif Officer, French Foot Artillery.
AMERICAN INFLUIJNCE AS AFFECTED BY PREPAREDNESS 212
W. Morgan Shuster, President, The Century Company, New York
City.
B. Argument Against Large Naval and Military Establishments
PREPAREDNESS IS MILITARISM , 217
Oswald Garrison Villard, New York Evening Post, New York City.
THE "PREPAREDNESS" CAMPAIGN IS SUPERFICIAL 225
Frederick F. Ingram, Detroit, Mich.
MILITARY PREPAREDNESS A PERIL TO DEMOCRACY 228
Charles E. Jefferson, D.D., LL.D., New York.
ARMAMENTS AND CASTE 237
Simeon Strunsky, Editorial Staff, New York Evening Post, New York
City.
MILITARISM AND THE CHURCH 247
Algernon S. Crapsey, Rochester, N. Y.
DEMOCRACY OR IMPERIALISM— THE ALTERNATIVE THAT
CONFRONTS US 250
Frederic C. Howe, Commissioner of Immigration at the Port of New
York.
BOOK DEPARTMENT 259
INDEX 277
BOOK DEPARTMENT
GBNBRAL WORKS IN ECONOMICS
Ingbah— A History of Poliiical Economy (R. C. McCrea) 259
GBOGRAPHT
McFASLAim— Economic Geography (G. B. Roorbach) 259
AGBICm/rURE, MINING, FORESTRT AND FISHERIES
HusBNBR — AgricuUvral Commerce (L. D. H. Weld) 260
Digitized by
Google
vi Contents
COMMBBGE AND TRAN8POBTATION
Hess and WHALmo—OuUinea of American Railway Tranaportation (E. R.
-\ Johnson) 261
MONET, BANKING AND FINANCE
Huntington — A History of Banking and Currency in Ohio Before the CvbiX
War (E. M. Patterson) 261
Plehn — Government Finance in the United Stales (E. M. Patterson). 261
SOCIOLOGY AND MODERN SOCIAL PROBLEMS
Bristol — Social Adaptation (C. Kelsey) 261
DuRKHEiM — The Elementary Forms of the Religious Life (J. P. Lichtenberger) 263
BiJ^v— The New Public HedUh (C.Kelsey) 264
LePrincb and Orenstein — Mosquito Control in Panama (C. Kelsey) 264
Mac^— Socialism in America (A. Fleisher) 264
Parsons — Social Freedom: A Study of the Conflicts between Social Classificar
tion and Personaliiy (J. P. Lichtenberger) 265
Sccyrr^The New Slavery (C. Reitell) 265
SuNOERLAND — Child Welfare Work in Pennsylvania, A Child Welfare Sym-
posium (S. Nearing) '. 265
ToYmB—Habits that Handicap (C. Kelsey) 266
Wjllub— The Strtiggle for Justice (J. P. lichtenberger) 266
POLITICAL AND GOVERNMENTAL PROBLEMS
Barnett — The Operation of the Initiative, Referendum and Recall in Oregon
(C.L.King) 267
Elliott — American Government and Majority Rule (C. L. King) 267
Henry— T/ie Police Control of the Slave in SouJth Carolina (J. C. Ballagh) 268
Maitland and Montague — A Sketch of English Legal History (W. E. Liint) . 268
MicBEiA— Political Parties (C. L. King) 269
NoLEN — City Planning (C. Aronovici) 270
Orth — Readings on the Relation of Government to Property and Industry (J. T.
Young) 270
ZuEBLiN — American Municipal Progress (H. G. Hodges) 271
INTERNATIONAL PROBLEliS
Allen, Whitehead and Chadwick — The Great War (C. G. Fenwick) 272
Hyde — The Two Roads: International Government or Militarism (J. C. Bal-
lagh) 273
LuTzow— r^ HussiU Wars (G. C. Sellery) 273
MISCELLANEOUS
Bolton — Texas in the Middle Eighteenth Century (M. A. Hatcher) 274
Clark — The Constitutional Doctrines of Justice Harlan (T. R. Powell) 274
Cody — How to Deal With Human Nature in Business (H. W. Hess) 275
d*Olivet — Hermeneulic Interpretation of the Origin of the Social Slate of Man
and of the Destiny of the Adamic Race (W. L. Abbott) 275
Ti^EhB— Irrigation in the United States {T,R.T&yloT) 276
Digitized by
Google
FOREWORD
The decision to devote the Twentieth Annual Meeting of the
Academy to a discussion of America's International Program was
reached after long and careful deliberation. In reaching this
decision the Committee on Annual Meeting was influenced by the
fact that the opportunity was offered the Academy to perform an
important national service in guiding public opinion in a matter
of vital importance to the future of our country.
The agitation for adequate preparedness has been carried on
with but little reference to the question, — "For what are we pre-
paring?" It is evident, in other words, that the nature and extent
of "preparedness" depend to a very large degree on the specific
foreign policy which the United States is going to pursue. To
make a fetish of preparedness without reference to the principles
for which we are going to stand in international relations is to
invite disaster. The purpose which the Annual Meeting Com-
mittee had in mind was to make clear to the people of the country
the relation between foreign policy and preparedness. The papers
presented throw a flood of light on this vital question, and indicate
clearly that a turning point has been reached in our national history.
Upon the decisions of the next few years will depend to a very large
extent whether the United States is to be a disturbing factor in
world politics or whether we are to stand for a policy of international
cooperation with all that goes therewith.
It is a tribute to the patriotism and spirit of service of the
eminent men and women who participated in the Twentieth
Annual Meeting that they were willing to make the sacrifice neces-
sary to attend the sessions. The Academy is under deep obligations
to them and herewith wishes to express its appreciation and thanks.
Our thanks are also due to the various committees that contributed
so much toward the success of the sessions.
The Annual Meeting on so large a scale was made possible
through the generosity of a group of friends of the Academy who
contributed toward a special Annual Meeting Fund. To each and
vii
Digitized by
Google
viii FORBWOBD
every one of these generous donors the officers of the Academy
desire to express their sincere thanks.
The Academy also desires to express its thanks to the Phila-
delphia Chamber of Commerce for the privilege of using the hall
of the association for the morning sessions. An expression of
appreciation is also due to the University Club, the Union League
Club, Manufacturers' Club, City Club and the Acorn Club for
privileges extended to the guests of the Academy during the pe-
riod oi the meeting.
L. S. RowB,
President.
Digitized by
Google
THE BASIS OF NATIONAL SECURITY
^Y S. N. Patten, Ph.D.,
Of the UniverBity of Pennsylyania.
All America is united by common interests which are clearly
defined and distinct from that of other nations. While we all
recognize this fact, the principles involved are so imperfectly
worked out that we fail to see either the grandeur of our culture or its
defects. The traditional, the tribal and the battle cries of particu-
lar epochs get an emphasis out of all proportion to their importance.
They cause us to submerge general principles and lofty ideals under
the chaff and debris of fresh emotional outbursts.
This culture is not a homogeneous growth based on home ex-
perience, but is the product of foreign thought consciously imported
and yet made vital to us by oiu* own experience. We are thus
prevented from seeing the essence of these importations and thus
separating its husk from its kernel. Oiu* early culture came in the
form of Christianity, whose basal concepts are brother loVe, sacri-
fice, conscience and charity. There are, however, two varieties of
. Christianity — the pure and the composite. Organized Christianity
has through the centuries received impure currents of thought from
outside influences; as a result it is possible to give an interpretation
of it that makes the foreign elements overshadow the real essence
of our culture. The old and the foreign have not been displaced
even by the radical reformer. We find, therefore, a political ad-
mixture that becomes dominant whenever state needs dominate
over spiritual ends. Peace in the one sense is meek docility or the
absence of the spirit of rebeUion. In a pure Christianity peace is a
state of mind, a freedom from external coercion. In its secondary
sense it means a harmonious Ufe coupled with a perfect adjustment
to vironal conditions. Force and peace are contrasts, the one being
the essence of poKtical domination; the other is a rule of conscience,
a flow of feeling and the joy of adjustment.
Discipline as a poUtical concept means a subordination of
interest and life to some superior: to those accepting the pure
Christian view it means a unity of action for common ends with
1
Digitized by
Google
2 The Annals of the Amebican Academy
nothing of the docility aristocracies have forced on the world. Cour-
age is a tribal impetus to kill and hate or it is the will to resist
aggression thus making conscience and duty controlling motives.
No group have met death more courageously than have the Chris-
tian martyrs of all ages. They die not for party or clan but that
"all may live and have life more abundantly.''' Such is the essence
of our religious inheritance and the conflict that rages within it
between the discipline of love and of war. It is the rule of oriental
despots over against the freedom of emotion and conscience.
As in religion, so in government we find a composite view con-
tending with pure concepts that are the outcome of our racial ex-
perience. Representative government is our great contribution to
the thought of the world. Our victories have been those of thought
over force and yet the advocates of brutal suppression are always
present and in times of danger force measures on a reluctant people
that their better judgment opposes. We are too close on the arro-
gant suppression of the South during the Reconstruction epoch
or similar atrocities committed by England in Ireland to be blind
to what forceful methods do when race or party passion gets the
upper hand. Yet no American would point to this epoch nor is
there any Englishman who would declare that similar deeds in Ire-
land represented the flower of our civilization. We do not always
rise to the full height of our possibilities, but the trend of our civili-
zation is against the suppression of thought and freedom. It is this
record and its benefits that our excited martial friends, yearning
for a return of old methods, would have us repudiate. Force, they
think, must be used when persuasion fails to bring immediate re-
sults.
Before discussing the need of thus reversing our cherished no-
tions a third element in our cultural advance should be formulated.
Here we find a principle scarcely recognized which must in time
become the corner-stone of democratic culture. Home Rule is a
term we apply to Ireland and as states rights has had a place in
American thought yet these notable instances are but examples of
the new way of making public decisions and of securing popular
control of our diverse activities. As the state grows it takes on
economic functions; these must be distributed between the nation
and locality in a way that narrows the scope of national domination
and broadens that of local control. The community is the old
Digitized by
Google
The Basis of National Security 3
tribe revived under new conditions which should be given a chance
to develop and bear its legitimate fruit. Local uniformity differs
from national coercion in that the person can choose his group;
when among the like-minded he can intensify its feeling and attain
his cherished ends without thwarting the Uke desires and aims of
other persons. The freedom of the person is not the freedom of
anarchy but a freedom in choosing his residence. His town, his
trade, his cultural institutions dominate him not through force
but through their attractive power.
These are the maxims of the new patriotism, the flower of
democratic advance. It means that every region has its common
interests and the right to advance them by group action. The
doctrine of state rights is a crude expression of a great principle
partially seen and often wrongly applied. Our larger states are
dwarfed nations that use coercion with as Uttle restraint as an
Elastem potentate. Their minor powers should be given to the
locality and the broader economic functions given over to the
nation. Then we might with truth claim to be a democracy and
inaugurate a rule of love instead of force. The nation's power would
then be limited to fields where our interests evoke our assent while
each locality would be a group of like-minded persons among whom
a conmion culture could be attained by the growth of higher mo-
tives. It is these ideals that our supermen, our incipient aristocracy,
our military enthusiasts would destroy or at least contend that they
will fail to carry us safely through the present world crisis.
Nor are the advocates of controlled peace in a better position
although their philosophical errors come from another source.
The real victory that our culture has won is different from what they
assume. We have progressed not as majorities enforce their man-
dates at the expense of minorities but in proportion as rights are
accorded to such minorities. It is the dominant who yield in each
new elevation of culture. We change from a material control to a
spiritual control as majorities cease to impose their will on their
opponents. The real victory of the North in our Civil War was
not when Lee surrendered but when Northern soldiers were with-
drawn from the South to permit the former rebels to control their
local governments. In the Boer war the victory was in the restora-
tion of the Boers to power and not in their forced submission. The
Catholic emancipation and Irish Home Rule marks epochs of prog-
Digitized by
Google
4 Thb Annals of thb Amebican Academy
ress that overtop the defeat of Napoleon. It is not enforced peace,
but enforced restraints of majority action that is our glory. We are
rightly proud of our bills of rights and constitutions but what are
they but restraints on majority actions. Shall we violate this
glorious record by imposing our ideas and political mechanisms on
unwilling nations or shall we permit them to solve their own prob-
lems in their own way?
It is an essential thought in all peace propaganda that tribal
animosities should be displaced and that groupal emotions should
be reorganized aroimd new centers. These emotions find a fitting
outlet in home and city life where their full expression is in harmony
with the larger units with which they should cooperate. Groupal
feelings thus have their direction altered, but the ultimates of
hiunan nature that lie back of them are imaltered even if unfelt.
In emergencies their force is unabated, essentially sound and pro-
tective. The most fundamental of these is self-protection. In
a crisis the instinct of self-preservation rightfully dominates and
its decisions are not adverse to peace but its best mainstay. What
I do because I must, always excites admiration and never distrust
or animosity. It is the premeditated injury that is resented and
becomes the basis of indignation if personal, and of race feuds if
national.
Every naan and nation must at times exercise instinctive de-
fense which must be judged by the momentary situation and is
highly moral if the motive is self-protection. It is one thing in-
stinctively to resent an insult to wife or child and quite another to
carry arms for fear they may be insulted. If everyone carries
arms to avenge insults or to uphold honor, more people would be
killed in useless disputes and for imaginary insults than would be
saved from real injury. Consciously to prepare is to degrade social
life to the level of a border town. With nations also it is they who
go fully armed that invite trouble, not those who rely on instinctive
protection. The present war is a good illustration of how prepared-
ness adds fuel to passions and makes conflict inevitable. Vigorous
instinctive self-klefense is moral and righteous. Often bold and
seeming arbitrary decisions must be made and severe penalties must
be enforced. But the decision and the enforcement must be in-
stinctive coming from an aroused spirit of humanity and not from
musty codes or antiquated precedents. The case is given away as
Digitized by
Google
The Basis of National Sbcuritt 6
soon as argument or threat begins. Such cases, however, will be
few. The mainstay of peaceful measures lies in the opposite plan
of a thorough understanding and of a conscious yielding of many
legitimate rights so as to gain the most essential ends. Even our
wrong opponent has himself been wronged and these wrongs must
be righted before we seek to impose a penalty.
In primitive communities isolated from each other and without
industrial intercourse the conflicts are over favorite areas or arise
from race hatreds. The antagonisms between tribes and nations
are thus fierce and frequent while the social bonds are weak or non-
existent. Defense is therefore urgent; an appeal to common ideals
impossible. That religion and morality under these conditions
should become tribal is perhaps necessary. It was inevitable that
martial ideas should become mixed with the real tenets of our
reUgion and this gives an historical basis for a miUtant church.
But this justification has lost its basis. Commerce ^nd industry
have bound the world into a homogeneous unit. Economics can be
trusted to uphold universal peace and give it a better basis than
martial ideals. The real protection of each nation is the interest
other nations have in its welfare. Thought is now based on uni-
versal premises that all accept and on policies tested by recent ex-
perience. When to these are added the influences an enlightened
self-interest imposes, we have a basis of peace that only some fierce
revival of tribal emotions can break. Steadily these new forces
are gaining the upper hand and so modify our emotions that moral-
ity and culture make a common appeal and buttress each other in
the suppression of primitive passions. Religion can thus free itself
from the gospel of hate and purify itself from the dross of martial
concepts.
We must not, however, go too far or too fast. There are
negative factors that demand consideration in the formation of a
national poUcy which if neglected make more trouble than if con-
sciously faced. The most persistent of these is fear which is all the
more dangerous when without any basis. America today may not
be in danger of invasion and yet a panic of fear may be fanned into
active existence by a sensational press from vague rumors. A vivid
description of how New York may be captured can upset the nerves
of the nation without a single foe being in sight. Just as locking
doors at night makes one feel safe even if it is no guarantee of safety.
Digitized by
Google
6 The Annals of the American Academy
so national defense is necessary, not so much to ward off danger as to
suppress our inherited timidity. The problem of national defense
thus becomes a legitimate one even to one who feels no danger and
who believes that religious, moral and economic forces are our best
safeguards.
The difference between a pacifist and an emotional patriot is
not in the fact of defense but in the bases on which it should rest.
Two of these bases are sound even in most advanced nations:
first, the best defence is an instinctive defense based on our primary
reactions and not on premeditated plans. The prepared nations
will get into trouble oftener, do more bluffing and suffer more in the
end than they who act only when they see some wrong is com-
mitted. Be sure there is some clearly defined cause and then act
quickly at any cost until the end is attained. The action of the
North in our Civil War is a good example of the virtues and failures
of instinctive defense. No one would deny that this action was
wiser and more democratic than would have been any amount of
conscious military preparation. But something is involved in
instinctive defense which most people overlook when the principle
is appUed to national affairs. No preconceived restraints, no tradi-
tional policy, no antique notion of law or right should check the
alertness or vigor of effective national protection. Any real danger
must be instantaneously guarded against not merely by negative
measures but by positive attack.
The second principle is that for America, a naval defense is
much cheaper and more effective than is a miUtary defense. A
serious mistake is made when military and naval defense are as-
sumed to involve the same principles. A naval war could be carried
to a successful conclusion without any disturbance of industrial life.
We need submarines and fast cruisers, not battleships. If we had
the fastest cruisers no fleet could approach our shore. It is the
transports in the rear and not the battleships in the front that are
the real danger. How could a foreign army be transported across
the sea if our ships were fast and our submarines efficient? The
popular picture of a naval fight is that of two groups of battleships
struggling for the mastery. But why should we submit to such a
test? To fight effectively is to make the ocean dangerous and not
to use up all our strength in one naval battle. A discussion between
two admirals as to the tactics of a recent naval review illustrates this
Digitized by
Google
The Basis op National Sbcubitt 7
principle. The umpire decided against the fleet defending our
coast on the ground that its commander divided his fleet to gain the
rear of the invader instead of fighting an open battle for the mas-
tery of the sea. The diflference between the "stand up and fight"
policy and a Fabian policy is as old as warfare. Which of the two
is superior can be determined only by the actual conditions in a
given case. It is important, however, to notice that the "stand up
and fight" policy, noble as it seems, would cost the coimtry billions
of dollars, and if its one glorious battle went against us would expose
us to tremendous losses. The other policy would not prevent some
small city from being destroyed but would prevent any serious in-
vasion. An umpire of the sort in command of a battleship might
do himself honor, but the naval defense of America ought to be
entrusted to other hands. The real fighting should be done a
thousand miles from our shore by single ships that can strike im-
expected blows and successfully escape if faced by a superior force.
Such a defense would not be costly. Less men and money would
be demanded than we now pay. But to be effective, naval action
must not be hampered by technicahties that make instinctive de-
fense impossible. The evil of the rules of naval warfare that our
President seeks to establish is that they would take from us our
most effective means of defense when a real danger arises and make
a large army necessary to protect our harbors. If unhampered, our
present naval budget would give protection against every nation
but England. It is not our own shores that are costly to defend,
but our outl3ring possessions and their defense demands a change of
policy rather than more expenditure.
Two policies are open to the United States. We may give up
the Monroe Doctrine and yield our outlying possessions. Then
our defense by fast cruisers and submarines is simple, effective, and
not burdensome. But if we wish to retain the Monroe Doctrine,
defend the Philippines and influence China or adopt any other aggres-
sive policy, our problem becomes the same as that of England and
demands a joint control of all oceans. England's supremacy at sea
has not been questioned during the present war nor has she been in
any real danger of invasion. It is only her entangling alliances on
the continent that cause her present troubles and have brought out
her deficiencies. A joint control of the ocean by Britain and Amer-
ica means no increase of present naval expenses and would permit
Digitized by
Google
8 The Annals of the American Academy
a large decrease of army expenditure. Such a policy would mean
the dividing the world into two parts, one of which would be imder
Anglo American control. This would include the British Isles,
America, Africa, India and Australasia. All these can be made safe
by a control of the sea. They form a natural unit where democratic
ideals have ample scope for expansion. If we put the defense of
our ideals above our material needs an alliance with Britain is the
only logical procedure. Their defense and ours must run along the
same lines and demand a full control of the seas. He is an enemy to
our Uberty who contests this control and his schemes must be
thwarted without delay.
To restate this thought in more general terms there are three
fundamental psychological reactions that statesmen neglect at their
peril. They are instinctive defense, instinctive fear and the in-
stinctive yearning for groupal relations. Our political philosophy
tries to make us think of ourselves as individuals, but it is a defec-
tive philosophy at best and mere intellectual dillettantism in its
ordinary forms. From this philosophy we are breaking and natural
groups, home, church, school, trade, locality, and nation are being
formed that dominate the individual in spite of himself. For the
same reason any cosmopolitan scheme is without any vital force
and would be disregarded when groupal interests oppose its formulas.
In culture, language and institutions our groupal feeUngs bind us to
England and it will be easy to form the adjustment, political and
economic, that will give this groupal feeling full play. But a con-
trolled peace for the whole world is a paper scheme based on false
principles. It would involve us in difficulties instead of avoiding
them. But if we act groupally our defense must be instinctive,
safe and practical. We cannot be a Don Quixote defending small
nations or antiquated political concepts. Nor can we be con-
trolled by a maudlin sentimentality that prevents effective defense
or makes it costly. We need to guard our culture, our liberty and
our institutions as effectively as do the Germans and have the same
lofty ideal of the subordination of the person to the state. But we
want an Anglo American state free from the taint of military domina-
tion.
The principle of national preservation is not different from,
but is in essence the same as, that of individual self-defense. It is
supreme in moments of peril and to it for the time all else is to be
Digitized by
Google
The Basis of National Security 9
subordinated. What we need is not its denial but its stern ap-
plication to our present perils and needs. Shall we, aroused by
sentimental emotions, try to protect a few excursionists whose
curiosity leads them into the war zone, or shall we say that the
control of the sea is as vital to our liberty as is the control of land to
Grermany and give warning to all nations that we do not mean to
remain passive if a hostile nation threatens our integrity? Where
does the defense of America begin — three miles from our own coast
or three miles from the Japanese, German or any other coast from
which a national peril may loom? Shall we go to antiquated prin-
ciples of international law for the basis of our defense, or to the
instinctive reactions that nature has planted in our heredity? Shall
our defense conform to our psychological inheritance or to our paper
philosophies? Any foreign policy is wrong that conflicts with ulti-
mate realities and seeks to put up barriers that in the hour of na-
tional peril we would be forced to repudiate. It is only fair that we
give others the same right of instinctive defense that we will demand
for our own defense. Present yielding will give future stability.
Better a temporary loss than the establishment of false principles.
The vital point in this position turns on the difference between
military and naval defense. The one is a useless extravagance, a
menace to national liberty, and would be a blot on our culture. To
impose a military discipline on the American people would be to
imitate the worst features of German civilization, with all the evils
we deplore. The docility of the trained conscript is the real danger.
We have enough of this personal humility and servility without
enforcing it by a national discipline. Naval defense does not in-
volve these dangers. The expense need not be above our present
expenditure if the cost of the army is kept within proper bounds.
Should England and America imite in a common defense, large
sums could be saved. It is not our defense but the attempted con-
trol of other civilizations that would debase our ideals and in the end
lead to bankruptcy.
The essence of this position is that oiu* culture rests on five
distinct principles which often conflict but yet have in time been
blended into a harmonious whole. These are Instinctive Defense,
Brother Love, Representative Government, Home Rule and Eco-
nomic Interests. Thinkers and writers arrive at different conclu-
sions as they give emphasis to some of these principles at the expense
Digitized by
Google
10 Thb Annals of the Amebican Acadbmt
of others. The main distinction, however, is between those whose
thought is purely a result of nationiil experience or of older thought
verified by recent events, and those whose minds are so cramped by
book knowledge that actual experience seems but a defectiVe guide.
The hybrid thinker knows much of Greece, Rome, Germany, France
and Russia and goes to them for his ultimate catagories. Or, he
accepts a view that elevates English thought to a dogmatic eminence
and thus neglects the vital reactions of the American people. While
akin to the English, our view and experience is really saner than
theirs, because less disturbed by abnormal conditions and anti-
quated traditions.
Our ultimate choices are therefore simple and make only one
of two alternatives sane and rational. We must either emphasize
Brotherly Love and rely on its winning power or we must take In-
stinctive Defense and Economic Interests as our guides. With love
as a dominating principle, we can remain in isolation, relying on Good
Will and International Brotherhood for our protection. Should
these fail or seem likely to be insuflScient, an alliance with England
is the only practical defense open to us. Her problems are the same
as ours; her culture is our cultm*e and her defense involves the same
measures which we must adopt. Together we could defend one
half of the world without any resort to a military discipline that
would be destructive to Uberty and economic prosperity. The
world would be then divided into three economic zones, Anglo
American, Continental Europe and Eastern Asia. There could
thus arise three isolated civilizations with economic interests that
would not seriously collide. It is only when we seek to stretch our
control over antagonistic races or seek to dispute their ascendancy
on their own territory that we evoke formidable opposition and thus
force on ourselves the need of a military organization more destruc-
tive to ourselves than to our foes. The great evil in the world is
not war but the docility that martial discipline imposes. It is
better to be free than to be dominant, even if the latter has the glit-
ter of world uniformity.
This new patriotism I would define as National Pacifism. The
contrast is a triple one in which the brooding alarmist is at one pole
and the international socialist at the other. The middle ground
is a national organization quieting instinctive fear and promoting
industrial efficiency. By increasing income, by cooperative living.
Digitized by
Google
The Basis of National Security 11
and by spreading justice, our emotional nature is brought into
harmony with culture, science, and brother love. As men sink
below the normal their fear, hate, and passion rise as awesome spec-
ters. There is a like danger from a dominance of the intellect. Ra-
tionalism, utilitarianism, cosmopoUtanism, and other varieties of
international thought create an opposition between heredity and
culture. No one can be properly called a pacifist who ignores human
nature so completely as to make it rebel against his schemes. More
than the meager ties of speculative thought are needed to bind men
in effective units. The national, the local, and the economic are
the forces through which our heredity has developed, and they alone
are capable of firmly protecting normal life. To them we must look
for the broader view and :soUd basis on which our advancing culture
may rest. Race, hate, and fear disappear when normal men are
reorganized along economic lines. The old patriotism had them
as its main agents; the new must be their bitter foe. Brother love
and economic cooperation are the two elements which, united, give
the true basis of nation and patriotism.
Digitized by
Google
THREE PLANS FOR A DURABLE PEACE
By William I. Hull,
Professor of History and International Relations, Swarthmore College.
I believe it was Count Von Eulenburg who declared that a
durable peace upon this earth is to be found only in the cemetery.
But there are people, even in Germany, who do not accept that
pessimistic view; and in Germany and elsewhere, all over the
world, there are people who are earnestly and determinedly seeking
for the proper basis of a durable peace.
As I have thought over the various plans for bringing this most
desired end about, it has seemed to me that they class themselves
under three headings; and, as an American, I may call these three
plans, perhaps without undue conceit, the German, the Allied and
the American.
The German plan of preserving a durable peace was to build
up mighty armaments. "Let us have an army so invincible that
no other power will dare to attack us, and we can then preserve the
peace." Great Britain adopted practically the same philosophy.
"Let us build up a navy so powerful that not even Germany, with
its unequalled army, will dare to attack us." And so we have seen
during the last generation the unprecedented building-up of armies
and of navies.
That plan of preserving the peace is at present somewhat under
a cloud. It is true that there are Germans who insist that they did
not go far enough, that their army was not big enough; and there
are Englishmen who insist that they did not go far enough, that
their navy was not big enough, and that if they had both been larger,
the peace would have been preserved. The rest of the world is
very skeptical, however, of the validity of that argument. This
plan of preserving the peace is not only a big thing in itself, but the
rest of us are convinced that it carries inevitably the seeds of war-
fare with it.
The second plan of preserving the peace has emerged amongst
the Allies. They claim that durable peace must be preserved by
an alliance of the armed power, an alliance of the military forces,
12
Digitized by
Google
Thbeb Plans for Durable Peacb 13
of nations that are like-minded with themselves; and in this time
of war they have built up these enormous and unprecedented al-
liances. They are looking forward, also, to the time of peace, when
these alliances shall continue to cooperate, both in a military and
in a commercial way.
A third plan for the preservation of peace is what I venture to
call the American plan. It is a plan which rejects both the increas-
ing armaments of the separate nations and also alliances between
the armed forces of the separate nations. It is a plan which was
entered upon by the thirteen independent states Of our infant re-
public back in 1789. This plan is based not upon the optimism,
the millennial optimism, that men will stop quarreling with one
another, but upon the determination that when quarrels arise be-
tween states as between citizens, they shall be settled not by mili-
tary force but by judicial process.
We, in America, have put that experiment into operation.
We have found that it works. The Hague Conferences of 1899
and 1907 represent the first attempt to give to the rest of the world
the American plan of preserving a durable peace. The Hague Con-
ferences, in the endorsement of international arbitration and in the
establishment of the permanent Court of Arbritration, took the
first step in the application of that American program for the rest
of the world; and the world is looking forward to the time when the
forty-six nations in the family of nations shall settle their inter-
national diflferences and disputes as regularly and as inevitably by
judicial process, as the forty-eight states of our union settle
interstate disputes.
Now, what is the supreme difficulty in the realization of this
American program? Some have thought that it is the difficulty
of getting disputes before the arbitral tribunal, and the League to
Enforce Peace has made it its object to compel by economic and,
if necessary, by military pressure, the bringing of disputes before
the international tribunal. Some think that the supreme difficulty
is to get the awards of the court accepted. This has not proven the
case, however, as far as experience shows; for out of about two
hundred and forty-three disputes settled by arbitration since
1794, not a single one of the decisions of the tribunals has been re-
sisted.
Are there, theo, already in existence sanctions sufficient to
Digitized by
Google
14 The Annals of the Amebican Academy
bring disputes before the court and to have the decisions of the
court accepted when they are handed down? It would certainly
seem that there are, in view of the fact that more than twelve score
have been accepted. Among these forces is, first, diplomacy, — ^an
international diplomacy. I fear that too many, — ^that the ninety-
nine, perhaps, of every hundred American citizens who are demand-
ing that in case Germany does not yield to the demands of the
United States, diplomatic relations shall be broken, — do not really
understand what is meant by the breaking of diplomatic negotia-
tions. I cannot analyze this great power of our time, but can merely
remark that if diplomatic pressure can be made almost world-wide
instead of being exercised by one nation only, as would be the case
of the United States against Germany, the diplomatic power alone
is of enormous strength.
Secondly, the commercial and financial sanction, to which I can
only allude at this time; and thirdly, the great power of public
opinion, — both national public opinion and international public
opinion. Lord Bryce, in his American Commonwealth, has revealed
to us Americans the tremendous, the sovereign power of public
opinion within our own country. There is a public opinion in
every country. It is that great, unorganized sovereignty to which
President MacCracken referred, and it has been appealed to scores
of times, as I have indicated, and has never yet failed. If that
public opinion within each nation and between the nations can be
thoroughly organized, it will form the third of these twentieth cen-
tury sanctions.
Then, fourthly, we are told that force is alwajrs behind the
law. Yes, that is true; but it is a long way behind the law in civ-
ilized communities. It is the ultimate sanction of law; and how
many thousands of disputes are settled through legal process by no
more physical force than is represented by the exertion of the judge
who presides in pronouncing the decision?
It is undoubtedly the last resort; yes, but what kind of force
is it? Is it merely military power? Would this international
police force towards which we are looking represent the military
power of each nation? Would it represent the allied military pow-
ers of a few nations? Not if it is a genuine police force.
This leads me to say that I devoutly hope that that element of
the League to Enforce Peace which stands for a genuine interna-
Digitized by
Google
Thbbb Plans fob Dubablb Pbacb 15
tional police force will triumph within that organization, that it
will triumph over that other element of the League to Enforce
Peace, which insists that the military force represented by a partial
alliance of national armaments shall be the sanction, and that this
military force shall be placed in the forefront of the program.
On the other hand, there has existed in this country ever since
the second Hague Conference, and long before the ''f rightfulness"
of the present war caused the League to Enforce Peace and the
plans for an Anglo-American or Pan-American offensive and de-
fensive alliance to spring into existence, an organization which
stands absolutely upon the judicial basis for the settlement of in-
ternational disputes. This organization, the American Society for
the Judicial Settlement of International Disputes, believes explic-
itly that when the right kind of a court can be organized, and when
the diplomatic, ^economic and public opinion sanctions can be or-
ganized and placed behind that court, international disputes will
come naturally and invariably before it, and the awards of the
court in those disputes will be accepted as regularly and naturally
as are the awards of the Supreme Court of the United States.
This society stands also upon the proposition that if force is ever
used, even as the ultimate sanction, it shall be, not national arma-
ments, and not an alliance of national armaments, but a genuine
police power.
Now, that is the road, also, that has been taken by the Central
Organization for fi Durable Peace. Its program was launched at
The Hague, it is true; but it is the old, historic program of the
United States of America; and this Organization for a Durable Peace,
and the Hague Conferences of the future, are going to work stead-
fastly along the American pathway to complete, world-wide and
permanent success.
Digitized by
Google
THE CENTRAL ORGANIZATION FOR A DURABLE
PEACE
Bt Fannie Fbbn Andrews,
Member, Central Organization for a Durable Peace.
Whether silence or speech should obtain at the present time,
whether during war all constructive action for the future welfare
should cease, is a question long since answered. It is a notable
fact that during the horrors of the Thirty Years' War, Grotius
wrote his treatise on the Rights of War and Peace, which was the
first systematic statement of the principles of the law which should
regulate the conduct of nations in their mutual intercourse. This
work, as pointed out by the American Journal of International Law,
"convinced statesmen, bound nations, and molded the thought of
future generations, substituting as it did a rule of conduct based
upon right reason for mere force." Today, as we witness the intol-
erable consequences of violated standards, we stake our only hoi>e
on the prospect of a new departure in the development of law and
in the subjection of the nations to its rule. Indeed, the world
may need another Grotius.
Of one thing, however, we are certain — ^that the fundamental
basis of the new world order which must come after the present
war must be laid today. When the representatives of the states
come together in the midst of the wreck and desolation left by the
war, their task will be almost overwhelming, for they will be charged
with nothing less than a general reorganization of international
procedure. This will be accomplished by utilizing the existing
elements of order and by combining them with others which fit the
changed conditions. What the new elements will be will depend
on generally accepted opinions, for as the nations have appec^d to
public opinion in all parts of the world to justify their actions in the
war, so they will lend a sensitive ear to projects which have been
endorsed by any considerable body of people. The moment calls
for full and free discussion, for in no other way can wise conclu-
sions be reached. The obligation of the present, then, is to formu-
late and to promulgate the plans for a new departure in international
16
Digitized by
Google
Central Organization for a Durable Peace 17
procedure. We may mold history tomorrow if we can mold opinion
today.
Of the various efforts designed to organize public opinion for the
support of a new world order, the Central Organization for a Dur-
able Peace stands out prominently. This was formed by the Inter-
national Confidential Meeting at The Hague last April, when thirty
international jurists, statesmen, economists and publicists from
Germany, Belgium, England, Austria-Hungary, Italy, Holland,
Norway, Sweden, Denmark, Switzerland and the United Stat^
came together to discuss the basis of a durable peace. The delib-
erations of this meeting, which, it should be pointed out, in no way
concerned the present war, were summed up in the Minimum-
Program, which is offered to the world "as a foundation for common
action."
The nine points of this program were drawn up with the view
of meeting the practical situation after the war. The establish-
ment of a durable peace involves two steps. It is natural that the
people who have carried the heavy burden of the war will reserve
to themselves the regulation of the settlement of immediate ques-
tions, especially those which touch the political, financial, and
territorial situation. We may expect, therefore, that in the con-
gress which will assemble to draw up the terms of peace, there will
be a limited number of states, and that consequently the settle-
ment will be made by the same group of men who failed to prevent
this most disastrous of wars. In order that this settlement may
not result in a mere armistice, having in it the seeds of future war,
it must adhere to certain principles.^
The Minimum-Program points out two safeguards, and here
it must be emphasized that this is in reality a minimum-program,
stipulating only those principles, without adherence to which a
durable peace is impossible. The program points first to the prin-
ciple of nationality. It recognizes that the political frontiers in
Europe, coinciding only rarely with the limits of nationalities, are
a constant cause of war. The Central Organization for a Durable
Peace does not attempt to regulate these conditions, which are the
result of an historical evolution, but it insists that whatever may
be the issue of the war, the number of such cases may not be aug-
mented by the next treaty of peace. It states definitely that in
the annexation or transfer of territory the interests and wishes of
Digitized by
Google
18 The Annals of the American Academy
the population concerned should be the only point considered, and
wherever possible consent should be obtained, by plebiscite or
otherwise. The second safeguard is the insistence that states shall
introduce in their colonies protectorates and spheres of influence,
liberty of commerce, or at least equal treatment for all nations. In
this domain, we find a fruitful source of conflict, and it is incumbent
upon any congress which bases its settlement on the principles of a
durable peace to deal with this branch of economic rivalry because
of its potency in creating dangerous oppositions and thereby pro-
voking wars.
So far, then, the Minimum-Program concerns the Peace-settle-
ment Congress, and it is not amiss to mention again that it is merely
laying down principles which it considers most fundamental. It
might with great propriety urge the study of other problems which
will face the congress when it begins^ to fix the conditions of peace.
The meaning and obligation of guarantees of neutrality, the rights
and duties of invading armies and civilian populations in occupied
territory, the usage of prisoners of war, reprisals, war-zones, the
arming of merchantmen, the regulation of submarine warfare, the
law of blockade and contraband — all these matters, and many
others also, will come up for consideration. One need only mention
the problem of fixing war indemnities to be reminded of the task
which will confront this congress.
The Central Organization for a Durable Peace bases its program
on the calling of two assemblies — a comparatively small body to
draw up the terms of peace as described above, and a large body
representative of all civilized, states to deal with the reestablish-
ment and strengthening of international law, this to be called
through the machinery of the Hague Conference. It is evident
that the matters mentioned above concern the whole body of civi-
lized states, since there can be no permanent settlement of some
of the questions which concern the belligerents imtil many world
questions of international law are satisfactorily dealt with. In
this connection, the problem of armaments and the freedom of the
sea are especially urged for present consideration.
It is necessary to organize peace if it is to be durable. The
program proposes, in addition to the Hague Court of Arbitration,
a Court of Justice, a Council of Investigation and Conciliation,
and the permanent organization of the Hague Conference. Thus
Digitized by
Google
Central Organization for a Durable Peace 19
no entirely new institution is included in the plan. The Hague
Court of Arbitration presents a successful record since its organi-
zation in 1902. The Second Hague Conference voted by a large
majority the project of an International Court of Justice, although,
as is well known, it failed to realize on account of the difficulties
incident to the problem of its composition. The idea of a Council
of Investigation and Conciliation for dealing with non-justiciable
questions, those indeed which are most likely to lead to war, has
developed from the Commission of Inquiry established by the First
Hague Conference. Finally, to look forward to the development
of the Hague Conference into an international assembly, meeting
periodically to formulate and codify rules of international law,
coincides with the spirit of the Second Hague Conference in provid-
ing for the calling of the Third.
Besides urging the consideration of those principles of durable
peace which should govern the Peace-settlement Congress, and the
plan for international organization, the Central Organization for a
Durable Peace states that the stability of peace will never be main-
tained by measures of international order alone. In speaking of the
limitations of international law, Mr. Root said: ''Law cannot con-
trol national policy, and it is through the working of long continued
and persistent national policies that the present war has come.
Against such policies all attempts at conciliation and good under-
standing and good-will among the nations of Europe have been
powerless." The Program mentions two measures in this domain
which are especially indispensable: (1) the guarantee to the national
minorities of civil equality, religious liberty and the free use of their
native languages; (2) the parliamentary control of foreign politics
with interdiction of all secret treaties.
The most striking part of the Minimum-Program, and that
which offers a great departure from present international procedure,
is the provision for an international treaty, binding states to refer
their disputes to a judicial tribunal or to the Coimcil of Investiga-
tion and Conciliation, and further to use concerted diplomatic,
economic and military pressure against any state that breaks the
treaty. According to this plan, we find developed a world League
of Peace, which, if supported by a strong public opinion,^can come
into existence through the action of the world congress tOj^be called
after the war. It is not the intention to defer the organization of
Digitized by
Google
20 Thb Annals op the American Academy
this League of Peace until all states are willing to sign the treaty.
When a number of states of sufficient importance to make the
League effective become signatories, it should be declared organized.
But it is the intention that the League should always remain open;
that it ought above all to avoid the character of a political alli-
ance; and that it ought to be, and ought always to remain, a
League of Peace. This plan, and that of the League to Enforce
Peace, are so similar that the two organizations might well join
forces in giving to the world a stable basis for a durable peace.
The aim of the Central Organization for a Durable Peace is
to form national groups in all countries who will make a technical
study of the proposals laid down in the Minimum-Program.^ Nine
research committees have been organized, representing the nine
points of the Minimum-Program. Some thirty-five research studies,
including nine prepared by members of the American committee,
have been sent to the various chairmen. These studies are to be
made the basis of technical study and discussion. In estimating
the importance of this work, one has only to mention the names
of those who are taking part in it. Among those who have pre-
pared research studies are Dr. W. H. de Beaufort, Ex-Minister of
Foreign Affairs, and Ex-Prime Minister Heemskerk of Holland, Ex-
Minister Adelsward of Sweden, Professor Lammasch of Austria,
Mr. G. Lowes Dickinson of England, Professor Altamira of Spain,
Professor Koht and Mr. Lange of Norway, Professor Michels of
Italy, Professor Stauning of Denmark, Professor Andr6 Mercier of
Switzerland, General De Meester of Holland and Professor Schtick-
ing of Germany, not to mention our own distinguished group.
Through these study groups, which now represent twenty-six
nations, this organization is building up a united support of the
underlying principles of equitable law, and is thereby destined to
become a world factor in influencing the great settlement. The
effort demands the support of the world. The people of one nation
* Following are the members of the International Executive Committee of
thjB Central Organisation for a Durable Peace: Dr. H. C. Dresselhuys, President,
Holland; Th. Baron Adelsw&rd, Sweden; Prof. R. Altamira, Spain; Mrs. Fannie
Fern Andrews, United States; G. Lowes Dickinson, Great Britain; Mgr. Dr. A.
Giesswein, Hungary; Prof. Dr. H. Koht, Norway; Prof. Dr. H. Lanmiasch,
Austria; Prof. Dr. Achille Loria, Italy; Paul Otlet, Belgium; J. Scherrer-Ftille-
mann, Switzerland; Prof. Dr. Walther Schftcking, Germany; Th. Stauning, Den-
mark; Jhr. Dr. B. de Jong van Beek en Donk, General Secretary, The Hague.
Digitized by
Google
Central Organization for a Durable Peace 21
alone, or of a group of nations, cannot effect a new world order; it is
a task for the civilized world. The work of the Central Organiza-
tion for a Durable Peace may be described as a simultaneous world
study to prepare for action at the supreme moment of the world's
history which we shall witness after the war. This moment will
call for high statesmanship — a statesmanship freed from bias, rest-
ing its action on legal principles, and motived by the desire to estab-
lish the eternal laws of justice and humanity.
Digitized by
Google
ISOLATION OR WORLD LEADERSHIP?
AMERICA'S FUTURE FOREIGN POLICY
By George Nasmyth, Ph.D.,
Secretary, Massachusetts Branch, League to Ehforce Peace.
Is the future foreign policy of America to be that of isolation
or of leadership in world poUtics? This is the question of principle
which underUes our general theme, "What shall the United States
stand for in International Relations" and it brings America to the
cross roads of a great decision. If our discussion of a League to
Enforce Peace is to have any practical bearing, it must be by affect-
ing American foreign policy, for it is only through American foreign
poUcy that we can affect international relations. This brings us to
the critical issue of the next decade. I believe this will be the most
wonderful ten years of human history. During these years we shall
all have to line oiu^elves up on one side or the other of this great
issue — ^the issue between world federation or of international an-
archy.
Note that the line of division is not that between militarists
or pacifists, nor between more armament or less armament, nor
between preparedness or anti-preparedness. It is a clean-cut
division between world federalists and anti-federalists. The old
struggle which we had in those critical years of American history
from 1783 to 1789 and continuing through the first half of the last
century, — ^the struggle between national rights and state rights, —
now is to be repeated on a world scale, with world rights as against
national rights.
Now, this poUcy of leadership in world poUtics involves risks.
I am surprised that this underlying question has not been debated
before. In all the discussions that I hear about the League to
Enforce Peace, I find the debate tiumng about minor points but not
about this great issue of whether we shall abandon the traditional
American foreign poUcy which pledges us not to interfere in Eu-
ropean politics, whether we shall give up our policy of isolation and
run the risk, as under the League's plan we might well be criticized
22
Digitized by
Google
Isolation or Leadership? 23
of doing, of getting involved in a war in Europe over unknown
causes.
When this basic objection begins to appear, and I am sure
that we shall get down to this fundamental question eventually, it
seems to me that the reply is this: In the first place> we do not risk
being involved in wars over unknown causes. There is only one
cause for war under the League's program, and that is a violation,
a deliberate violation, of solemn treaty pledges. In the second
place, does not the present system of international anarchy involve
risks? Have we not been in fact on the brink of war during the
past year, ever since the LusUania crisis, not knowing but what each
morning we might wake up and find another ship torpedoed, more
American lives destroyed, and a crisis coming on in which we should
be dragged, by forces beyond our control, into the world war?
If we look back over the recurring international crises of the
past year, it is clear that the real question which we have to decide
is not isolation or world poUtics. That issue has been decided for us
by the events of the past century. The world has become so small, as
the result of the work of the scientists and engineers, and the growth
of the means of communication, that we can no longer remain
aloof from the life of the other nations. We have been elected
citizens of the world, without either our knowledge or Consent.
Even now we are being taxed without representation to carry on
this war, and we shall be taxed still more heavily in the economic
crises which this war will produce in the future.
The real issue, then, is this: Shall we shut our eyes to the plain
fact that we have become a part of the world, and try to keep up an
impossible policy of isolation, and then be dragged in at the heels
of a great militaristic development of the world if Europe remains
an armed camp? Or shall we frankly recognize the facts and take
a boldly constructive initiative and ask the other nations to join
with us in organizing the world? On this question the League to
Enforce Peace speaks in unnustakeable terms; its object is to con-
vince American pubUc opinion that the only rational poUcy is to
stand, not for international anarchy, but, world organization under
justice and law.
Now, how is such a League of Nations to be brought about?
It has been suggested that the peace conference which ends the war
will be the best opportunity. Others have suggested that the third
Digitized by
Google
24 The Annals of the American Academy
Hague Conference, following after the war, will be the time. The
League's program specifically states that its object is to establish
and maintain peace after the close of the present war. But I be<-
lieve that at the present time there is an opportunity to make a great
advance in this direction of world organization. Suppose that
President Wilson should offer to the belligerent nations, not merely
a formal tender of good offices, but a constructive plAn of mediation,
based on an understanding of the real purpose for which the people
in all the nations are fighting — security against the danger of aggres-
sion in the future, and an opportunity to develop their civilization
in peace. Suppose he should make a simultaneous proposal to the
warring nations in terms something like these:
Will you, Germany, agree to evacuate Belgitun and Northern
France and Northern Servia; to compensate Belgitun; to enter into
a league to enforce peace which will guarantee all nations against
the danger of aggression in the future?
And suppose that at the same time he should say to the Allies :
If Germany accepts these conditions, will you agree to discuss
terms of peace? If not, what are the definite terms of settlement
which you will take as a basis for discussion?
In order to give these proposals carrying power, we should at
the same time signify that America is wiUing to do its share towards
the reconstruction of the new world order by agreeing to (1) become
one of the guarantors of Belgiimi's neutraUty after the war; (2)
throw the weight of our economic resources against any nation which
shall violate the neutraUty of any independent buffer states, such as
Poland, which may be created; and (3) become a member of a
league of nations to enforce peace, thus giving Germany and all
other countries additional guarantees of national security under a
system of world law and order.
In other words, we have the opportunity, by a constructive
offer of mediation of this kind, to get a discussion of definite terms
of settlement under way, and once under way, this discussion would
soon lead to a much clearer understanding of the real issues of the
war than we have at present.
And there is one other way in which we may make an advance —
the formation of a Pan-American League of Peace. We have ad-
Digitized by
Google
Isolation or Leadership? 25
vanced very far in that direction with the offer which Secretary
Lansing has made to the ambassadors and ministers of the Latin
American republics. Here we are really proposing a League to En-
force Peace, with at least an economic sanction — ^non-shipment of
arms and ammunition to the states which violate their agreements
or to revolutionary parties which do not represent a majority of the
people.
Lastly, there is still an opportunity for an action which, to my
mind, should have been taken a year or more ago, — calling a con-
ference of neutrals. Great Britain, in her last note, has practically
asked us to do that. It would be a conference to discuss our own
neutral rights and help each other maintain them, but there might
come out of this a constructive offer of mediation.
Here are at least three ways by which, before the end of the
war, we may make definite advance toward the organization of the
world. As soon as we have public opinion strongly in favor of a
League of Peace, here is the opportunity by which America may
almost immediately place herself in the leadership of this great
constructive movement of modem history.
Digitized by
Google
ECONOMIC PRESSURE AS A MEANS OF PRE-
SERVING PEACE
By Herbert S. Houston,
Treasurer, League to Enforce Peace, New York.
At the meeting of the Academy a year ago^ there was serious
and scholarly discussion of the results in commerce, in government
and in himian progress that would follow from the great war.
Today that war still continues and, at the moment, we ourselves
seem to be at its very brink. And so we come again, at this meeting
of the Academy, to consider the questions that confronted and dis-
turbed us a year ago.
At such a time it may require a brave spirit to look through
battle smoke to hills of hope beyond on which shall rise, some day,
world courts of justice, following the orderly processes of law. But
that was the dream of Penn, in whose city we gather. It was the
dream of Hugo Grotius, of Emanuel Kent and of hundreds of others,
all through the generations. And two months after oiu: meeting
of last April, there gathered in this city of Penn, several hundred
men who had the faith to believe that the great dream might come
true and the courage to plan definitely to that ^d. As was fitting,
they assembled in Independence Hall and there formulated the
proposals of the League to Enforce Peace. Here was a mighty
challenge flung in the face of a warring world — a challenge to es-
tablish peace, when the war ends, on a basis of justice and to main-
tain it through courts, upheld by international agreements and
made effective by international forces. And these proposals have
received broad popular support. The Chamber of Commerce of
the United States appointed a committee to study the economic
results of the war and to consider plans for a lasting peace. After
a careful survey of all the plans for peace this committee submitted
the proposals of the League as constituting the wisest and most
^The proceedings of this meeting appeared in the following volumes of
The Annals: Vol. LX, July, 1915, "America's Interests as affected by the
European War"; and Vol. LXI, September, 1915, "America's Interests after the
European War."
26
Digitized by
Google
Economic Pr«ssure and Peace 27
practicable that had been formulated, and the hundreds of con-
stituent commercial bodies in the National Chamber, with several
hundred thousand members, voted in favor of them by a great
majority; in fact all but one of the four proposals received a ma-
jority in excess of two thirds. Last October the International Peace
Congress, in session in San Francisco, embodied these proposals
in its platform; and peace societies in Massachusetts, in New York,
in Pennsylvania and throughout the country have taken similar
action. Many church associations have given their support, as
have the economic societies in various cities. Recently in New
York the Executive Committee of the League met in conference
with the leaders of the Security League, the Navy League and
of other preparedness organizations and it was discovered that
they were practically of one mind in favoring national defense
for America and international peace for the wor'.d, resting
on law and on courts. Bight now the Associated Advertising
Clubs are carrying forward a nation-wide publicity campaign under
that shibboleth "National Defense and International Peace,"
in support of the 30,000 engineers who, during last May,
made a card-index sxurey of industry so that it may be mob-
ilized for defense, if need comes. In the coming national political
conventions the proposals of the League to EJnforce Peace will be
presented for adoption in party platforms. All this is a record of
things done, or now in hand to do, in furtherance of a plan to secure
world peace that has been formulated since the last meeting of the
Academy. I submit that it is a cheerful record, in a time of war
and rumors of war, and that it gives some ground for the hope that
wars may be reduced in nimiber in the future, if not wholly done
away with.
A year ago* I referred briefly to a resolution that had been pre-
sented before the Chamber of Commerce of the United States,
favoring the use of economic pressure as a force to further world
peace. Today I can say boldly that that view has the support of
the business men of America. By an overwhelming majority, in
the referendimi of which I have made mention, they favored the use
of a ''System of commercial and financial non-intercourse" against
nations which, after joining with other nations in setting up courtSy
>See The AmaU, Vol. LXI, September, 1915, p. 272.
Digitized by
Google
28 The Annals of thb American Academy
persisted in going to war before taking their international differences
to these courts for decision.
Let us briefly examine commerce as economic pressure. Of
what does it consist and how could it be applied? The most effec-
tive factors in world-wide economic pressure, such as would be re-
quired to compel nations to take justiciable issues to a World Court
for decision, are a group of international forces. Today money is
international because in all civilized countries it has gold as the
common basis. Credit based on gold is international. Commerce
based on money and on credit is international. Then the amazing
network of agencies by which money and credit and commerce are
employed in the world are also international. Take the stock
exchanges, the cables, the wireless, the international postal service
and the wonderful modern facilities for communication and inter-
communication— all these are international forces. They are
common to all nations. In the truest sense they are independent
of race, of language, of religion, of culture, of government, and of
every other human limitation. That is one of their chief merits
in making them the most effective possible power used in the form
of economic pressure to put behind a World Court.
Business today is really the great organized life of the world.
The agencies through which it is carried forward have created such
a maze of interrelations that each nation must depend on all the
others. A great Chicago banker, John J. Arnold, Vice-President
of the First National Bank of that city, said to me a few weeks ago
that so closely drawn and interwoven had become the economic
net in which the world was enmeshed that if the great war could
have been postponed four or five years it would never have swept
down upon men like a thunderbolt of destruction. As an additional
strand of great strength in the warp and woof of modern progress,
Mr. Arnold believes that an International Clearing House will come
— ^in fact that it is an inevitable development in international
finance, for settling balances between nations, just as our modern
clearing houses now settle balances between banks in cities in which
they are located. Beyond question such an International Clearing
House, when established, would quickly become an invaluable
auxiliary to a World Court, helping to give it stability and serving,
when occasion arose, as a mighty agency through which economic
pressure could be applied.
Digitized by
Google
Economic pREssxms and Peacb 29
And I believe Mr. Arnold is right in his view that an Interna-
tional Clearing House is bound to come. Business, finance, and
commerce are now so truly international that there is a manifest
need of it. As a strong proof of this let me remind you that when
this war broke, 40 per cent of the securities of the world were held
internationally.
Now economic pressure is not a new thing in the world. It has
been used before by one nation against another and usually with
tremendous effectiveness. When Philip was organizing the great
armada the merchants of London persuaded the merchants of
Genoa to withhold credit and moneys from the Spanish King.
The result was that the armada was delayed for over a year,
and then the English were prepared to meet the shock. What
could be done three centuries ago for a year to delay a
Power so great as Spain then was could be done in this century
far more effectively. And it has been employed in this century.
When the German Emperor dispatched the gunboat to Agadir
bringing on the acute crisis with France, I happened to be in Paris.
On the fourth day of the crisis I was having luncheon at the Grand
Hotel with a young French banker of the Credit Lyonnais. I re-
marked on the fact that the crisis was becoming less acute and in-
quired the reason. "We are withdrawing our French investments
from Germany," was the rejoinder "and that economic pressure
is relieving the situation.'' As we all know, it not only relieved the
situation but it served as a definite means to prevent a war that
seemed imminent. Now I submit that a force which England
could use against Spain in the sixteenth century and that France
could use against Germany in the twentieth century — in each
case let me remind you a single nation was applying force against
another single nation and that nation its enemy — I submit that that
force can be applied by all nations collectively against another nation
that refuses to take a justiciable issue to a World Court for a
decision.
A nation that should decline to take justiciable questions to
the World Court, after having agreed with other nations to do so,
would manifestly become an outlaw. Why shouldn't other nations
immediately declare an embargo of non-intercoiu^e with an out-
law nation, refusing to buy from that nation or to sell to that nation
or have any intercourse whatsoever with that nation?
Digitized by
Google
30 The Annals op the American Academy
One of the great advantages of economic pressure is that it can
be applied from within, rather than from without. Economic pres-
sure touches the war chest of every country. Instead of fighting
with bullets we can fight also with the money and credit that must be
behind bullets. And the world can fight in that way to protect
the civilization that has been slowly and painfully built up through
the centuries if it will use the force of commerce that stands ready
to its hand. Nations can declare an economic embargo' against
an offending nation. Or it is more accurate to say the offending
nation raises an economic embargo itself by its own act in breaking
its pledge to other nations and placing itself outside the pale of
civilization by becoming an outlaw.
Of coiu^e, the one apparently strong and valid argument to be
brought against economic pressure is that it would bring great loss
to the commerce of the nations applying it. But that loss would be
far less than the loss brought by war. And there would be no loss
whatever if war were avoided.
If a balance could be rightly struck in this country is there
any one who believes that our interests would be best served by war
in some other country? This is quite apart from any question of
humanity or civilization. Let it be a trial balance of commerce
alone and it will show a heavy debit against war. And an account-
ing will show the same result in all other countries. If this be true,
with only current commerce entering into the equation, how stag-
geringly true it becomes when the piled up debts caused by war are
considered. Economists who have examined the matter state
that this war has already cost over sixty billions of dollars. And
the end is not yet.
So why shouldn't business, which has been binding the ^orld
more closely together for centuries, be employed to protect the world
against the waste and loss of war? The loss in trade would be small
or great in proportion to the amount and duration of the pressure;
but it would be at most only an infinitesimal fraction of the loss
caused by war. The League to Enforce Peace stands for the use of
both economic and military power against a nation that goes to war
before submitting any question arising to the international court.
If the question is submitted and decision rendered the nation can go
to war if it is so disposed, but the League believes that it will not
be so disposed. Instead, in the time required for submitting the
Digitized by
Google
Economic Pressure and Peace 31
question to the court and getting a decision a nation will, as a rule,
have its war fever cooled and its calmness restored, with the result
that the court's decree will be accepted. There is not a case on
record of a nation refusing to abide by an arbitration decision, in all
the arbitrations that have been held in the last century. So if
nations can be brought before an international tribunal the record
shows that decrees will be obeyed and wars avoided.
Digitized by
Google
AN ARMED INTERNATIONAL TRIBUNAL THE SOLE
PEACE-KEEPING MECHANISM
By Oscab T. Crosby, •
Warrenton, Virginia.
Some thoughtful men believe that the human race is benefited
by the heroisms, the sacrifices and the discipline of war. They con-
scientiously oppose efforts to subjugate nations to that rule of rel-
ative peace which obtains between the groups constituting nations.
Other thoughtful men (now the vast majority, I believe) hold
that killing-contests subtract from, more than they add to, the
simi of human happiness. They believe that discipline, sacrifice —
yea, even heroism — may enter into the civil life of men while we
still strive to lift up heavy masses of our brethren from poverty and
ignorance to comfort and enlightenment.
This latter view is here assumed — though it is recognized that
argument may be required to sustain it against the militarist view
first stated.
If we want to escape from international war, and from the bur-
densome preparations for war — how shall we do it?
Obviously the most direct and safest method would be to follow
general experience gained in suppressing violence between individuals,
tribes, clans, provinces and federated states as they have successively
coalesced into groups of larger numbers and more complex political
organization. In this process sovereignty has been continuously
sacrificed to a greater or less degree. The loss of this precious at-
tribute has been compensated by the gain of order — of settled tran-
quillity. This compensation is not yet complete even in our most
civilized states. Violence still appears occasionally between in-
dividuals and between various groups — political, social, economic.
But the repressive mechanism soon works. Order re-appears.
Contests, other than the physical shock of body against body,
continue, while yielding a little after every disturbance, to a larger
codperation. Now the mechanism which produces this result may
be wholly typified by the justice-of-the-peace and his constable.
And it may be described as centralized judging power controlling
32
Digitized .by
Google
An Abmbd International Tribunal 33
centralized force. These have been substituted for diverse or in-
dependent judging and for competitive force. This centralized
mechanism is the foundation of civilization within the state. It
deals with imperfect men. Had it waited upon ideal citizenship,
we should still be savages.
The relative tranquillity thus attained is bought at a price.
That price is the subordination of minor interests to general interest.
It pays me to submit to what I consider an xmjust decision, because
by this submission I participate in the general tranquillity, and ob-
tain protection from all violence except that of the central force.
And if I have not suflScient intelligence to grasp this fact, then you —
the majority — put me under duress. Your organized central force
renders the task comparatively easy. Mere knowledge of the exis-
tence of your force renders me comparatively tractable.
Can those groups which are now the remaining sovereigns
in our world — the fifty odd independent states — ^find any other for-
mula for attaining that (relative) mutual tranquillity which is en-
joyed within their boundaries?
Let us briefly consider some of the compromises now much
mooted.
There is, first, limitation of armaments by mutual agreement.
Small armaments — or even disarmament — cannot guarantee peace.
It only diminishes the peace-time cost of war. We may fight with
less expensive weapons than dreadnaughts. But we shall find no
way of controlling war-preparation by rules which smack of the
Sermon on the Moimt. Strength will not write itself down to the
level of weakness, while physical violence remains as the vUimxUe de-
terminant of international disputes. And if such folly were put into
words, the inventor would bring them to naught. He will sleep-
lessly defeat any attempt to fix exact ratios between ready-to-use
capacity for destruction.
Next, we have various forms of "cooling-ofif" devices — agree-
ments to delay war after failure of diplomatic agencies — ^by sub-
mission of disputes to various forms of forceless courts.
The vice of all these methods lies in this — ^that very frequently
the issiie will he resolved in favor of one or the other contestant, during
any period of delay beginning after failure of all formal and ioformal
methods that have always been open to states. To delay will mean
to yield. We may always do that without treaties and toothless
Digitized by
Google
34 The Annals of the American Academy
courts. And meanwhile, what suspicions, what hates, will be en-
gendered as we learn — or fancy we learn — of our rival's preparation
for the ultimate shock of arms!
Next we have the proposal of the League to Enforce Peace.
Again forceless courts. Again final resort to arms. But something
else beside. We must see the miracle of unanimity among all on-
looking nations who are to judge when a supposed recalcitrant shall
have committed an "act of hostility" before going to a court.
But we have cut each other's throats for ten thousand years ex-
pressing differences of view as to what constitutes an "act of hos-
tiUty"! Why should we agree in the futiure? And if the League
program be modified to provide for a central organism of judging
and enforcing, then we reach the Armed International Tribunal —
sole peace-keeping mechanism.
To attain it, we must amend our Constitution. A proposal
to that effect is' now pending before the United States Senate. It
may produce the great desideratum — Simultaneous Discussion in
Responsible Parliaments of Identical Propositions for an Inter-
national Tribunal.
i^"- f
Digitized by
Google
THE BASIS Of A IDURABLE PEACE
By John H. MacCrackbn, Ph.D., LL.D.,
President, Lafayette College.
I take the opposite view of preparedness from that of Professor
Patten. I do not believe that "consciously to prepare drags our
social life down to the level of a border town" unless that means the
level of such border towns as Geneva or the Hague. Nor that "the
present war is a good illustration of how preparedness adds fuel to
passions and makes conflict inevitable. " Neither do I believe with
Professor Patten that "eponomics can be trusted to uphold universal
peace and give it a better basis than martial ideals" unless it be
accompanied with a change in poUtical organization. Neither do
I agree with Professor Patten as to the disastrous effects of some
form of universal military training. On the contrary, as an educator
and as a believer in democracy, I am inclined to believe that a mild
fonpa of military training, which would be no more burdensome than
the Swiss system, would not only make for preservation of peace
within our borders, but would make for democracy by uniting all
Americans in at least one common interest, and would supply a
certain obvious defect in the moral training now furnished by out
public school system. On the other side, I am ready to go farther
than Professor Patten probably would be willing to go, in favoring
a revision of the doctrine of sovereignty and the yielding of the
right to make war to an international tribunal or a leagueto enforce
peace. \ T G ti o
Discussions of peace terms are premature. The war is not yet
over. For Americans to assume that they will have much to say
about the terms of peace, except in so far as those terms affect the
rights of neutrals, would be justly resented by those who are bearing
the biurden of the war. If Washington's maxim, "avoid entangling
foreign alliances" prevents us from lifting a finger to stay a cata-
clysm, certainly it should prevent us taking any part in the distribu-
tion of the plums. I take it, therefore, that in dbcussing the basis
of a durable peace it is not intended that we should discuss the terms
of peace which may conclude the present war; whether Germany
35
Digitized by
Google
36 The Annals of the Amebican Academy
should keep Belgium or Alsace Lorraine, whether Poland should be
independent, whether Servia should be annexed to Austria-Hungary,
whether Germany's colonies should remain in the hands of France
or England, returned to Germany, or made independent. Whether
the peace to be concluded in 1917 or 1918 will endure imtil 2017
or 2018, will depend largely on what the terms of that peace are.
Nevertheless, they are not our business.
We may, however, as political philosophers, subscribe to cer-
tain general propositions:
(1) A peace may be durable because* protected by over-
powering force.
(2) A peace may be durable because held in equilibrium
by nicely calculated adjustments of the balance of political
power. /
(3) A peace may be durable because it rests upon justice
and because the conditions which it creates are inherently
reasonable.
We may even go further and say with the 100 German scholars —
Hamack, Delbrueck, Dernburg and the rest^" We subscribe to the
principle that the incorporation or annexation of politically in-
dependent nations, and people accustomed to independence is to be
condenmed*' and even then have said little more than that freemen
never shall be slaves and as for those who are slaves or vassals, it
matters little whether they serve one master or another. Some of
us would perhaps go even further and say with the Englishman
Vernon Lee "to transfer a province is as undemocratic as to sell a
slave. "
Nor can we say that the only condition of a durable peace is
the decisive defeat of one side or the other. If Germany is victo-
rious a durable peace may come, backed by an invincible army and
economic vassalage. If the allies win, a durable peace may come
backed by nice balances of power and the limitations placed upon
militarism. A drawn conflict might conceivably be followed by a
century of peace, through a new alignment of the allies. Stranger
things have happened in history than that Russia and Japan, Eng-
land and Germany should make common cause. As President
Tupper has recently said: "The cessation from war may be pro-
longed for a century through causes not one of which may be to the
Digitized by
Google
Basis of a Dttbablb Pbacb 37
honor of peace. *' No, it is unprofitable to be drawn into European
family troublesi and to be made a divider of family estates between
brothers.
What we have to consider is, first, how we may deliver our-
selves as a nation from the fear of war and insure the durability
of our own peace, and secondly, how we may free the world in the
future from the social and economic disturbances which we, along
with Europe, suffer through international conflict. This is a sub-
ject which has been discussed by wise men for 200 years. I have
no solution to offer in twenty minutes.
Some good practical suggestions have been made which all
must endorse:
(1) The freedom of the seas and immunity from capture
of belligerents' goods will internationalize three-fourths of the
globe.
(2) Provision for a year's delay before going to war, to
let anger cool, is desirable but hardly practicable unless there is
some way of stopping secret preparations in the meantime.
(3) A coimcil of conciliation has proved useful in private
industrial disputes and might help in national conflicts.
(4) Publicity in international negotiations which would
permit public opinion to make itself felt before any acute stage
was reached is to be encouraged.
If we want a permanent cure, however, we must go somewhat
deeper.
In the interest of clear thinking, we ought to define the much
abused word "peace." There are a good many of us interested in
doing away with the settlement of international disputes by arms,
who have no expectation of thereby terminating international con-
flicts. In our private life today, we have done away for the most
part with the ready appeal to the revolver, the knife, or the lynching
rope as a means of settling the conflicts of individual wills. But
conflicts and the spirit of conflict remain. The economic struggle
is severe. Conflict between various reUgious beUefs is by no means
fought out. There is conflict between races, between Irish and
Jews and Germans, between Italian and Swede and Japanese, and
between white and black within our own nation in spite of durable
peace, and those who believe that conflict and struggle is the order
Digitized by
Google
38 Thb AnkaLS 09 the AiffiHtOAK Academy
of the universe, need have no concern lest if we abolish the crude
appeal to gunpowder and the physical overpowering of the in-
dividual as a means of settling international disputes there will not
remain international conflicts, hatreds, jealousies and strivings
sufficient to fulfill any biologic law.
It is not a static condition which we have in mind, therefore,
when we talk of a durable peace, but a cleared arena in which men
may struggle in more diversified ways than the conditions of trench
fighting or airships or submarines permit. And because the conflict
possible in times of peace is so much more complex than the con-
flict possible in war, we must not be surprised that those who tire
easily of mental intricacies are disposed to say, "better a clean-cut
straight-out fight and be done with all subtleties and intricacies."
''Better war with plain soldiers than peace under the leadership
of the lawyers, scribes and pharisees." Fortunately, war itself
is becoming so complex, so much a matter of nice machines, of rail-
roading, of chemistry, of tunneling, of shooting at unseen foes and
toiling in remote machine shops, that to the one who really under-
stands war, it has lost a good deal. of the appeal of the old straight-
out man-to-man conflict, and is well nigh as tantalizing and baflling
as the more complex conflicts of peace. Have nothing to fight about
is not the only answer, therefore, to the question, how may we have
a durable peace. There is the second answer. Accustom men
to use different weapons in their conflicts. Both answers are said
to be Utopian. To some, the last seems the more Utopian of the two,
but to political philosophers, who, as Professor Patten lias suggested,
must be psychologists as well, the second seems perhaps less Utopian
than the first.
Those who believe in getting rid of the causes of war, say, if
we want to preserve peace there must be no economic struggle be-
tween nationalities as such, that is, there must be no national tariff
walls, no national spheres of influence. The watch word must be
the open door. If we want to avoid conflict with Germany after
the war, they say, don't shut out her goods, give her a chance to sell
freely, and sell freely to her in exchange. If we want to avoid con-
flict with Japan, enforce the terms of our treaty, allow the Japanese
to buy land in California, overcome the notion that a white skin is
superior to a yellow one. Let the Philippines, they urge, go their
own way and if Germany or Japan want them, thank God it is not
Digitized by
Google
Basis of ▲ Durable Pbacb 39
our concern. Avoid conflict of religious creeds by claiming nothing
that the others will not concede. If anybody objects to the reading
of the Bible in the schools, drop it. If anybody objects to a Christ-
mas carol, drop it. If anybody objects to an Easter vacation, drop
it. If economic conflict becomes too severe, form a trust and let
the people pay. If the union threatens a strike, don't fight, give
whatever they ask, the pubUc will foot the bill. Get rid of struggle,
of conflict, at any cost, especially conflict with the fellow who can
fight. No price is too high to pay for industrial peace has become a
maxim among insiders in the business world just as it has become a
maxim that it never pajrs to go to law. Justice, they say, is a very
dear commodity and the ideal only of the immature and inexperi-
enced. In opposition to this tendency there are many who believe
that a durable peace, bought at the price of sacrifice of ideals and
convictions, would be bought too dear, who believe we are not here
for the purpose of getting through life with as Uttle discomfort and
annoyance as possible, but that we are here to struggle, as all the
rest of nature struggles, evolving through such struggle properly
directed, into a higher civilization. "Instead of dreading interna-
tional disputes as mere curses and dangers," as someone has said, "we
we must learn to regard them as we think of our differences in do-
mestic poUtics, as the very springs of movement and change, and
the proof that we are alive and are adapting ourselves to our en-
vironment. "
But though the termination of struggle may not be our object,
may we not reasonably inquire how international conflicts may cease
to be conflicts of arms? To the scholar this does not seem so chi-
merical as to do away with the occasions of war. If it is the law
of nations to struggle, it is also the law of the individual, and yet,
we have gradually defined the conditions of that struggle for the
individual. The revolver is still useful to the individual in his
struggle, and yet we have said in many large cities you cannot even
own a revolver. The fist has all the sanction of nature and yet
its use is so much restricted by law that men will pay seventy-five
thousand dollars to see two men use their fists on each other, so
rare is the sight. Instinctive fighting. Professor Pattei^ finds more
meritorious than fighting which is the result of rational premedita-
tion and yet European nations justify the hanging of the woman
who shoots in defeose of her qhUd and the destruction of a whole
Digitized by
Google
40 The Aknals of the Amebican Academy
village for the shots of two or three men not in uniform. The view
of German militarism is the very opposite of Professor Patten's
view, nothing is more immoral than instinctive fighting. We are
dealing in war, then, not with a natural necessary phenomenon but
with a fiction created by the human mind; with a game which is
played according to certain rules sanctioned by the reason not by
emotion or natural instinct. A man in uniform may do what one
out of uniform may not do. If a ship follows the natural instinct
to escape, you may sink her and her passengers with good conscience,
if she stops, you must give the passengers a chance for life. If a ship
enters a neutral port, it may leave in twenty-four hours; but if it
stays thirty, it stays for the war. Now, however much justification
there may be in nature, in instinct, for simple conflict, there is no
question that war, as we know it now, is the product of human reason,
and as the product of human reason, it must be amenable to reason.
Just as a corporation has not the natural rights which an individual
has, but because it is the creation of law is subject to law, so war, as
we know it today, because it is the child of mind, is subject to mind.
If the law can say to a corporation, you cannot practice law, because
you are not endowed with any natural rights, so reason, having
contrived modem warfare, can say to it, you have ceased to be a
reasonable tool for reason's purposes, you are outlawed. Why
should questions arising out of our daily national life be settled by
methods utterly extraneous to our normal national life? It is one
of those misleading half truths to say, all government rests upon
force, the power to hold the physical body and to destroy it.
The first step to a durable peace, therefore, is to convince men
of the ridiculousness of war. The present war is being fought to
determine whether anybody shall have the right to say / am Lord,
and there is none beside me; whether anybody or any nation shall
occupy so undisputed a lordship that the mere rattling of his scab-
bard shall determine international disputes. But will it settle that
question? No nation will ever again on this planet be allowed to
test its martial equipment in combat with some other nation with a
fair field and no favor. The present war undoubtedly proves that
Grermany had the best military establishment, but it also proves that
diplomacy and a fair judgment of world conditions are as important
as a fighting machine. This will become still more evident when
the Peace Council meets, for all recent wars have shown that the
Digitized by
Google
Basis of a Dxtbablb Pbaco 41
fruits won by arms are likely to be filched by intrigue. The con-
flict will show that in the game played according to the rules includ-
ing the rule which allows me to turn a neutr^ nation into a supply
depot for munitionsi including the rule which allows me to march
non combatants in front of my soldiers and to use captives as labor-
ers, the might of this group of nations is greater than the might of
that group of nations. Now if there were no rules this would be an
important and incontestible fact of nature to be accepted as such,
and to be reckoned with accordingly. In primitive conditions, the
man who can physically overpower you is undisputed lord, and any
arrangement into which you may enter must recognize this fact.
By nature the human male can dominate the female. If there were
no rules to the game that would be a fact by which we must all make
our reckonings, and some do go back to it when it comes to an argu-
ment on suffrage. But once you admit any rules to your game, once
you rationalize your instinctive procedure, you have entered on a
process to which it is difficult to set limits. If two nations can
agree, we will only fight according to these rules, they can also agree
we will not fight to kill at all. As long ago as David and Goliath,
it was possible for tribes to fight by selected champions, and colleges
can still limit their football teams to eleven men no matter how big
the college. There is, therefore, in the essence of things, no inev-
itable necessity in warfare so far as the human reason can see any
more than in college hazing or in class scraps.
Now the American people see this perhaps more clearly than
other people, but how can they take advantage of their rational view
of war? If we are sure that it is a game we do not want to play and
if there are any other nations of the same mind, we can minimize
the police bbsiness by joining hands; by following the procedure of
the league to enforce peace; by providing an international court
with an international army and navy to back its decrees.
What is the greatest theoretical obstacle to any such inter-
nationalism?
A false doctrine of sovereignty.
A false doctrine of what constitutes greatness.
A false doctrine of what is to be most admired and worshipped.
We have been taught that a state which was under any obliga-
tion to anyone, either by way of moral obligation or by contractual
relation, is not free and is not a complete state. It has parted with
Digitized by
Google
42 The Annals of thb American Academy
a portion of its sovereignty. Sovereignty knows no law. The
more isolated , the more self-sufficient the state, the freer from in-
terrelations, except with inferiors, the greater the state.
Now this is undoubtedly good natural theology as well as classic
political theory. But with the help of Christian teachings, poUtical
philosophers have advanced to a point where they see that it is
false. '*The future of civilization after the war," says Lowes Dickin-
son, ' Vill depend upon the decision of the question, whether it is
their independence or their interdependency that the nations will
stress.'' All modern civilization depends on complexity of relation
not on isolation. The great man is not the man who sits isolated,
but the man who is most tied up with other men. The man who
stands to gain is not the man who never deals save with inferiors,
but the man who is readiest to contract with his equals.
The ideal of devotion to country was as strong in the hearts of
many statesrightsmen in relation to their State of Virginia or to
North Carolina as it can ever be in the heart of any American
toward America. If the states had realized the immeasurable dif-
ference between the confederation, and the United States under the
constitution, doubtless they would never have given their consent.
Yet we can see no moral dishonor in their surrendering the right to
make war, thus impairing their right to sovereignty. When Chief
Justice Marshall enlarged and made possible the concept of the
people of the United States, he was sowing the seed which was to
reach fruition in the Civil War and make this, once for all, a united
people. ''If we want to bring in internationalism, '' says Brailsford,
''we must go behind powers, to the populations which are capable
of thought on other than national lines." We must use Marshall's
conception of sovereignty not poUtically organized, or &t least tran-
scending the political organization. This concept alone could j ustif y
international coercion. But this will not be enough unless you
provide some machinery as a rudimentary organ at least through
which this sovereignty can find expression.
Internationalism will come, it has been said, when we have the
international mind. Perhaps we ought to say the international hand
or tongue. It is not too early to sow the seed for it. The socialists
and the tradesunionists will help. The first step is for us who are
college professors to see that a true up'-to-date doctrine of sover-
eignty is taught in our colleges and universities and from there it
Digitized by
Google
Basis of a Durable Peace 43
will filter down and be taught in our public schools. Then oiur chil-
dren will be ready to surrender, on behalf of this country, the right
to make war, to an international tribunal.
Finally, we must combat with all of our powers the notion that
war is the supreme form of tribal expression, that its biological and
moral effects are benefits the race cannot spare, and that the game
of killing, played according to rationalized rules, is an* appropriate
manifestation of the general cosmic struggle for rational man.
Much of our modem ideas of citizenship and nationality find
their roots in the tpwn life of mediaeval cities. One aspect of that
town life we have neglected to our cost. It is the king's ban — pro-
claiming extraordinary penalties upon him who should disturb the
peace of the city, and thus interfere with its freedom of trade. Peace
thus came to be one of the highly prized privileges of cities and city
dwellers in turbulent times, and where strife would naturally have
broken out most easily, because of the arrival of strangers, and con-
flict of economic interests there, by the proclamation of the king's
ban, peace did most prevail.
As a basis of durable peace and as a safeguard against future
international conflicts, let us try to revive for our modern world
trade market, the king's ban against any disturber of the peace.
Digitized by
Google
THE ROAD TO A DURABLE PEACE
By Edwabd a. Filene,
Boston.
The w6rld has become convinced that might is not right,
but it has yet to learn that right is not might — at least, right is
not mighty enough to insure its automatic triumph. Most of us
are convinced that miracles do not happen in the affairs of men and
nations, or that if they do they are no more the exclusive property
of right than they are the exclusive property of might. If we read
history in the light of facts rather than our wishes, we are forced
to see that when left to themselves in an unregulated contest might
triumphs over right more times than right triumphs over might,
but right will always prevail, provided as much straight thinking
is put into it and as much power put behind it as is given to the de-
signs of might.
These principles are fundamental to any discussion of the forces
of war and the forces of peace. This war is a dramatic illustration
of what can happen when the force of the world is used to break law
instead of to maintain it. History will probably regard the present
war as essentially a conflict of social ideals. Two hundred years
from now, this war will probably be referred to as the "Great Social
War."
I take it that most of us here believe that in this conflict of
social ideals democracy with all of its shortcomings more nearly
represents the right than does any other social or national ideal.
And this' war, to my mind, is proving that, so long as autocratic
nations support their claims with force, the more democratic na-
tions dare not trust for protection merely to their superior ideals.
If democratic ideals are superior, we have no right to run any risk
of their safety. We have not yet reached the time when an ideal
will stop a bullet. Force without ideals is dangerous, but ideals
without force are too often powerless. We have worked out the
ideal of peace with clearness. The problem of our generation is to
work out the machinery of peace with eflSciency.
I conceive it, therefore, to be the duty of every democratic
nation to be prepared adequately to defend its ideals against the
44
Digitized by
Google
The Road to a Durable Peace 45
encroachment of autocratic might. But it is not easy to awaken
an enthusiasm for preparedness in a democratic nation with its
natural aversion to military power. The rank and file of American
democracy, at least, fears that with an effective fighting force at
hand there is the danger of a hasty yielding to the temptation of war.
It may appeal to some as a weakness in a democracy that it does
not respond more readily to the call of preparation for self-defense,
but to my mind, just there lies the superiority of a democracy.
I am convinced that if with the preparedness movement there
could be joined an international policy under which the economic
and military forces of the United States would be dedicated not
only to the cause of national defense but also to helping to main-
tain more permanent peace among nations, that millions of our cit-
izens now opposed to the preparedness movement would become
enthusiastic advocates of it.
The most pressing problem that the war has forced upon us
as a nation is the problem of adequate national defense combined
with a policy that will look towards the mobilizing of the economic
and military force of all nations for the support of law rather than
the breaking of law.
It is just such a policy that is advocated in the platform of the
League to Enforce Peace, the central proposal of which advocates
the establishment of an International Court and Council of Con-
ciliation supported by a League of Nations agreeing to submit their
differences thereto for examination before proceeding to make war;
and further agreeing to use their combined force (first in the form
of business and financial non-intercourse or in the form of military
action if economic pressure proves ineffective) against any nation
of the League that refuses to submit its difficulty for examination
before making war.
The desire for some plan that will look toward an effective
guarantee of more lasting peace among the nations is well nigh
universal. In a democracy such as ours, the danger is that such
desire will remain scattered, unorganized and therefore ineffective.
The general public needs, above aU things, unification of sentiment.
The men of business, of labor, of agriculture and of government
need a common standing ground from which to look into the future
and to plan for a wise direction of its vital interests. Unless the scat-
tered desires for more permanent peace can be fused into one great
Digitized by
Google
46 The Annals op the American Academy
national movement that shall capture not only the mind but the
enthusiasm of the whole people, there is little hope that America
will play its part in the reconstruction of human society at the end
of the War. The program of the League to Enforce Peace, more than
any other program, offers such a common ground.
It is not a program that gives complete satisfaction to the ex-
treme pacifist or the extreme miUtarist. It agrees with the pacifist
that the goal toward which America should work is that of lasting
peace among the nations, but it insists that civilization has not
yet reached and may never reach the point where force can be with-
drawn as a sanction for law. It agrees with the miUtarist that
public opinion must have force behind it before it can become effec-
tive in keeping the peace of the world, but it insists that the mili-
tary preparedness of a nation should be used not merely in national
defense but also in support of an international policy of law as
against war for the settlement of disputes between nations.
None of us are sanguine enough to expect that any plan will
eliminate the necessity for using force in the affairs of nations at
least for some time to come, but we are confident that methods
can be devised so that when force is used it will be used in the pres-
ervation of order rather than in the mutual destruction of the nations
at difference just as within the nation police protection has taken the
place of individual combat.
The following propositions, in my judgment, represent an
accurate analysis of the present situation with reference to the pre-
paredness movement and the duty of the United States toward
the problem of more permanent world peace.
I. We need preparedness for national defense.
The instinct of self preservation is one of the fundamental
forces of nature and when justly exercised in the defense of the in-
dividual or the nation cannot be adjudged other than moral.
II. We cannot get adequate preparedness imless we combine
with it an international policy which will restrain its use for aggran-
dizement and will pledge its use to the maintenance of interna-
tional law.
This is because of democracy's instinctive fear of the possible
misuse of miUtary power. A trip through the Great Middle West
Digitized by
Google
Thb Road to a Durable Psacb 47
will convince anyone that the rank and file of Americans are not in
the mood to support a movement for a great military power dedi-
cated solely to the cause of national defense. President Wilson
accurately interpreted the American spirit when recently he said:
America will have forgotten her traditions, whenever, upon any occasion, she
fights merely for herself under such circumstances as will show that she has for-
gotten to fi|^ for all mankind. And the only excuse that America can ever have
for the aasertton of her physical force is that die asserts it in behalf of the interests
of homanity. When America oeaaes to be unselfish, she will cease to be America.
When she forgets the traditions of devotion to human rights in general which
gave spirit and impulse to her founders, she will have lost her title deeds to her
own nationality.
This high tradition of unselfishness indicates that America
will respond to any movement for preparedness if it be dedicated
not only to national but to international interests at one and the
same time.
in. The Democratic instinct thus proves itself sound, because
in the long run an unselfish international policy will result in the
best possible selfish protection.
IV. Without an international policy that makes peace more
lasting, the nations of Europe must enter another race for arma-
ments which, together with their war debts and the rebuilding
of their industries, will create an urgent need for money that will
force them to institute a destructive competition for markets that
will react against the progress of democracy by complicating all of
our fundamental problems.
If, at the end of the war, no method but war is left for the settle-
ment of the inevitable disputes that will arise between nations,
Europe will be driven to institute this race for markets in order to
prepare herself for the next war, and the probable effect of such a
race for markets upon our American problems will be as follows:
a. Our Export Problem
Our foreign markets will be greatly narrowed and in some lines
closed by the reduced power to buy on the part of the European
nations. Indirectly, the power to buy will be reduced among other
nations. Our foreign markets will be further restricted by the high
protective tariffs which the European nations will maintain at the
Digitized by
Google
48 The Annals op the American AcAbEMY
close of the war, first, as a method of securing greater income and
second, as a method of making each nation as neariy self-sufficient
as possible, for self-sufficiency is a great military asset.
b. Our Tariff Problem
It will be suggested that we can meet such a situation by erect-
ing high tariff walls. But in many cases nothing short of a pro-
hibitory tariff will meet the situation, and a prohibitory tariff
would result, first, in a serious reduction of our governmental in-
come, and second, would further restrict our export trade, because
between nations as between individuals it takes two to make a
trade. Therefore, any serious restrictions on our imports would,
in the long run, limit our exports.
c. Our Taxati(m Problem
If the urgency of the situation should force us to a high pro-
tective tariff, our income would be so seriously reduced that we
would face great deficits. These deficits would suggest an increas-
ing amount of direct taxation, and efforts at direct taxation inva«
riably produce violent protest and serious class strife. Through-
out history, nations have gone down in efforts to levy direct taxes
to the satisfaction of all classes.
d. Our Labor Problem
If Europe throws upon our markets vast amounts of goods
produced by labor that for patriotic reasons accepts abnormally
low wages, it is clear that the higher wages of American labor will
be thrown into a serious competition. There is, I know, a dispo-
sition upon the part of some to believe that labor will be so scarce
in Europe at the end of the war that European wages will be kept
up. But it must be remembered that to an imprecedented degree
women have been drafted into the industrial army of Europe, and
that every year a vast number of boys are entering manhood and
becoming available for industry. There is reason to believe that
more labor will be available at the close of the war than before.
In addition, the intensity of this unprecedented and relentless
commercial competition will divert public thought and energy from
the fundamental problems of social progress. And this would mean
an intensifying of our class strife and labor difficulties.
All this presents a grave outlook but it must be remembered
Digitized by
Google
The Road to a Durablb Peacs 49
that if at the end of this war some method other than war can be
established for the settlement of future disputes that Europe will
be relieved to some extent of this abnormally urgent need of money
and therefore America can escape this complication of her problems.
V. In addition to material defense, a policy of preparedness for
national defense as a means toward international peace can be made
the centre around which will gather a national movement in which
may be awakened in Americans new ideals and new loyalties and
new ambitions such as the Europeans are gaining as a sort of by-
product of the sacrifice and suffering of war.
Along this road lies the purest approach to a durable peace.
If we wiU follow it, as I feel siu:e we will, oiu: high confidence in
democratic institutions and in the destiny of America will be justi-
fied.
Digitized by
Google
THE LEAGUE TO ENFORCE PEACE— A REPLY TO
CRITICS '
By Theodore Marburg, M.A., LL.D.,
Baltimore, Md.
The League to Enforce Peace welcomes criticism; its sponsors
feel that criticism will only serve to bring out the strength of its
case.
Yes, the platform lacks details and elaboration. It does not
lack definition. Nor has there been lack of study and public dis-
cussion of its possible workings. We have got to overcome the
initial difficulty of getting the powers to agree to any plan. There-
fore the simplicity of this one. It is felt that if the nations can be
gotten to subscribe to its fundamental principles, the envoys
charged with the duty of perfecting the plan will be equal to all
questions of detail, program or organization. The plan contem-
plates ''not a league of some states against others, but a union of as
many as possible in their common interest."
The central idea of the League is that wars are the result of
the condition of international anarchy out of which the world has
never yet risen, that they will not cease until justice prevails and
that justice cannot triumph until the world organizes for justice.
We find within the modern state certain institutions such as legis-
lature, courts, and executive, which aim to prevent strife among
men and to promote the general welfare by promoting legal and
social justice and by enlarging opportunity. This system was
applied to the states, originally sovereign entities, composing the
American union. Entering the Union involved a certain surrender
of sovereignty and independence and a sacrifice of the principle of
equality in the unequal representation in the lower house of the
federal legislature. The interests of the states, economic and
other, had often clashed and resort to arms between them had not
been unknown. Because of this fact some of them were slow to
consent to the plan. But the workings of the Continental govern-
ment, crude as it was, convinced men that in this direction lay
progress, in this direction light for the world; and, though with
60
Digitized by
Google
League to ENFofecB Peace 51
hesitation and misgivings on the part of some, all finally took the
step. Once only in a century and a quarter has the peace between
them been disturbed. True, the South was forced to abandon the
institution of slavery, and lack of protective duties against the
cheaper agricultural products of the West caused farms to be
abandoned in New York and New England. But individuals
moved freely from one section to another. There was no suppres-
sion of local aspirations and ideals. On the whole the welfare of
each made for the welfare of all. And today the benefits of the
Union are imquestioned. We naturally ask ourselves why the
same organization which brings justice and peace and orderly
progress within the nation may not be applied with equal success
between the nations. Far from representing a confusion of ideas
it is the essence of logic. The question is: how far can we attempt
to go in the direction of such organization at present? On this
question the League to Enforce Peace occupies a middle ground.
And because of this fact it faces criticism by two opposing groups.
One maintains that we go too far, the other that we do not go far
enough.
Men who previous to the present war were opposed to the
introduction of the element of force in international institutions
have now come to regard it as essential.
The principal declared purpose of the League to Enforce Peace
is to make war, immediate and certain war, upon any nation which
goes to war without a previous hearing of the dispute. A Council of
Conciliation will entertain disputes arising out of a clash of political
interests. Incidentally a true international court of justice is to be
set up to entertain justiciable questions, and there are to be con*
ferences from time to time to formulate and codify international
law. In the measure in which nations are estopped from fighting,
the growth of law will be stimulated and resort to international
tribunals become more frequent. These latter happy results in
their turn will diminish resort to arms. But it is manifestly not
justiciable questions, nor even the nebulous state of international
law, which, by and large, brings war. War arises principally out
of conflicts of policy. To deal with these successfully is the im-
mediate problem before the world. The demand for a hearing of
the dispute once complied with, nations, members of the League,
are then free to go to war as under present conditions. That is to
Digitized by
Google
52 The Annals of thb American Academy
say, the League as such stops short of enforcing the judgment or
award. In fact, it is a question whether the Council of Concilia-
tion, unless requested to do so, will proceed to an award at all;
though it must be remembered that nations submitting a dispute
to any tribunal may, and often will, enter into an agreement before-
hand to respect the decision.
The failure to enforce the judgment or award is a source of
objection to the League's program on the part of men whose opin-
ion is entitled to respect, among them Charles W. Eliot. Their
criticism is that, unless the verdict be enforced, many wars will
still take place, and that, if a nation may be called upon to defend
its position by force of arms after a hearing has been had, arma-
ments must be maintained. Both of these criticisms the League
admits to be valid. The check upon war would be much more
effective if the nations could be persuaded to accept a plan providing
not only for compulsory investigation, but for an award, and finally
for a sanction which would insure the execution of the award.
But the 'desirable' is not always the 'realizable.' It is felt that,
although in the interest of world peace they ought to be willing to
give and take, as a matter of fact the Great Powers would not enter
into an agreement to submit all disputes to a tribunal if they were
bound to carry out the award. Great Britain, for example, might
have the question of Gibralter or Egypt, or a sphere of influence,
brought up; Japan the question of Korea or her activities in China;
The United States the Monroe Doctrine or the question of Oriental
immigration. To be realizable — i.e., somthing which governments
at the present stage of world feeling and enlightenment are likely
to adopt — the plan must, therefore, omit the feature of executing
the award.
Under existing practices when two nations enter an arbitration
they do so voluntarily. The nature of the question to be decided
is defined in the preliminary agreement and they know beforehand
the worst that can befall them. When at present, therefore, they
consent to arbitrate a question they do it in the full expectation of
abiding by the result. To go further and enter into general treaties
in pairs looking to the settlement of future disputes is still a very
different matter from entering into a common treaty with a large
group of nations. In the former case each nation knows pretty
well the antecedents, policy and interests of the contracting party.
Digitized by
Google
Leagxte to Enforce Peace 53
In the latter, that fact is much more complicated. The United
States, for example, would be willing to go much further in a treaty
with Great Britain than in a treaty with the Balkan States or
Turkey. There still remain in the plan two steps which constitute
an advance over existing practice, namely (a) the obligation of the
signatories binding themselves to use the tribunals they may set
up; (b) the use of force to compel them to do so if recalcitrant.
Now why do we base such high hopes on a mere hearing? Be-
cause experience, municipal and international, points to its great
value in warding off actual strife. In the state of Massachusetts
there has long existed a provision for compulsory investigation of
labor disputes in the quasi-public services. The power to summon
witnesses and lay bare the facts of the dispute, without proceeding
to a judgment, has prevented labor war in these services. In Can-
ada we witness the successful working of the Dominion Law cover-
ing similar disputes and properly extended to coal-mining, the stop-
page of which vitally touches the public interest. In the inter-
national field there is the Dogger Bank affair, referred successfully
to the International Commission of Inquiry set up by the First
Hague Conference.
Such a League as is proposed would necessarily have an Execu-
tive Council or Directorate, sitting at the capital of some small
country, and charged, amongst other duties, with one certain duty
of overwhelming importance, namely, that of declaring war in the
name of the League on any nation which went to war without a
preliminary hearing of the dispute or an earnest attempt to secure
one. And this is the one sole cause for war by the League. There
is no other.
War on land cannot well be made without invading the terri-
tory of the enemy. It will be remembered that at the beginning of
the present war France retired her forces a certain number of kilo-
metres within her own borders. If some such rule as this were set
up, the locus of the first battle, a geographical fact, could be easily
determined, and there would remain no doubt as to who the of-
fender was. No provocation, whether by threat, either of word or of
preparation, nor even an alleged act of injustice, would be accepted
as an excuse. There would be no conference of the powers to de-
liberate as to what action, if any, should be taken, to raise in the
breast of the would-be aggressor the hope that dissension among the
Digitized by
Google
54 The Annals of the American Academy
powers might lead to the customary inaction. The Executive
Council would be in being, charged with one supreme and certain
duty, to make war upon the oflFender. That duty to declare war in
the name of the League is a heavy responsibility, and therefore th6
"fact on which the Executive Council is asked to act should be an
easily ascertainable fact. Warlike preparation is not an easily
ascertainable fact, nor is that of unjust acts. Both are facts most
difficult to ascertain, and therefore are to be neither a ground for the
declaration of war by the League nor an excuse for war by the na-
tion offending against the provisions of the League.
The constitutional power of the United States to enter into
such a compact already exists. Mr. Taft has pointed to its exercise
in connection with the treaties guaranteeing the integrity of Cuba
and Panama. They carry the obligation to use force if necessary.
When the contingency contemplated by the treaties arises, Con-
gress, which alone has the power to declare war, would be called
upon to fulfil the treaty obligations. The country was justified in
taking this risk because the treaties make for the security of Cuba
and Panama and so for peace.
Our critics, pointing out that conciliation is a voluntary proc-
ess, assert that to force conciliation is a contradiction in terms.
They set up their own straw man and then proceed to knock him
down. The League does not force conciliation. It simply forces
a hearing, leaving the parties free to accept or reject the finding.
Under the League, nations are prevented from going to war to get
what they suppose to be their rights until, by means of a hearing, not
only the outside world but — that which is of high importance—
their own people have the facts of the dispute spread before them.
They are not prevented from indulging in that costly pastime if,
after a hearing, they still hold to the opinion that they are being
wronged.
In the meantime, pending the hearing, each disputant is en-
joined by the League, under penalty of war, from continuing the
objectionable practice or proceeding with the objectionable project.
The judicial tribunal which the League aims to create will be
a true World Court with permanent judges, and the assembly an
embryo World ParUament to meet periodically. The Court, while
set up by the League, will be open to any nation electing to use it.
And there is no reason why the Parliament, though convened and
Digitized by
Google
Lbaoub to Enforce Peace 55
prorogued by the League, may not be composed of representatives
of all nations, a true development of the Hague Conferences and the
Interparliamentary Union. If now, the League should fail of its
main object and melt away, these institutions shoiild remain, a
valuable legacy to the world. Far from running counter to the
promising current of arbitration, the project therefore is moving
with it. It is not blocking it.
By far the weightiest argument against the League is the en-
tangling alliance argument. Of this it should be said that when
avoidance of such alliances was enjoined by Washington we were a
smaU country highly vulnerable because of our comparative weak-
ness. Who shall say the same of us today? A people of one hun-
dred million, with untold wealth, so placed geographically as to be
practically unconquerable by any single power or likely combina-
tion of powers! The dominant trait in Washington was his sense
of duty. Were he alive today would he not recognize the obliga-
tion of his country to fulfil a duty to the society of nations instead of
taking advantage of its fortunate geographical position to shirk
that duty? He saw what codperation meant for the colonies.
Would his vision be less clear in sensing the great need of our day,
the overwhelming importance of international organization to take
the place of international anarchy? America may on the surface
appear a selfish nation but she has been stirred to her depth by
ethical movements in the past and may be counted upon to rouse
herself in similar fashion again. An appeal in a high cause involving
sacrifice, even hardship and suffering, would go further today than
is dreamed of by the high priests of gain and ease and security.
Thousands of Americans who have not shut their eyes and ears to
the sights and sounds of this awful day are ready for some attempt
to destroy the monster, war, and ready to have their country play
its part as the mother of men.
A people wedded to justice will not be afraid to assume its
share of responsibility in a league of nations in order to lighten the
curse of war in the world even though it involves risks. For the
principal objection to war is that it is such a wholesale source of
injustice, public and private.
We teach our children not to mind so much what is done to
them but to mind very much what is done to others; to be slow to
resent little offenses and slights, and even injuries they themselves
Digitized by
Google
56 The Annals of the American Academy
suffer; but to be ready at all times to act when some one else is
being persecuted or injured. We teach them, too, that the only
fear any one should have is the fear of doing wrong. Has not the
day arrived when these should likewise be substantially the stand-
ards of conduct for nations? I say 'substantially' because the
standards of private conduct are modified for nations by the fact
that the nation is a trustee of the interests of its people and of its
special form of civilization, including the political principles which
it represents.
In most civilized countries, the day is past when a principal
obligation of the individual is to insist on his rights. It is the side
of duty, rather than rights, which is emphasized today; and the
new order of international society toward which the nations are
moving will do the same.
I feel strongly that the present evil of recurring war is due
largely to the selfish motives which have dominated the policies of
all nations in the pas{. The United States probably has been
governed by them less than other countries but even its attitude
leaves much to be desired. A better day cannot dawn until it is
realized that in general (he future interest of a nation vnU be found
to lie in the direction of a present duty to the society of nations.
The fact that Europe permitted the crime of 1870 made possible
the crime of 1914. The tragedy we are now witnessing holds
within it the seeds of untold future disaster for all of us. And unless
the neutral world realizes the significance of it, unless it acts now
as if the society of nations were already in existence and assumes its
full share of responsibility for the triumph of the right, the seed
will bring its harvest.
Has not the time come when this great country should stand
for the right, should strike for the right when necessary, and should
help organize the world for right? And how much less frequent
the need of striking at all when such absolute and potential power as
a League of all the great nations will represent shall be back of the
right!
Until we have such organization no country can be really
free. Plato has defined the free man as he who has sufficient con-
trol over his appetites to be governed by reason in choosing be-
tween good and evil. What nation today is free to choose between
good and evil? How few the nations that would not lay down the
Digitized by
Google
League to Enforce Peace 67
burden of armaments if they felt themselves free to do so! Within
the state true liberty is secured only by a surrender of license; that
is, by self denial and by a measure of restraint imposed upon each
by all. Society implies restraint; self restraint and restraint from
without. In the society of nations there can be no true liberty
without surrender, in some measure, of sovereignty and independ-
ence. It is the duty of the United States to help in organizing the
world for justice because it is only through justice that peace can
be secured. A selflish policy which leaves a government apathetic
to a universal woe and causes it to act only when its own rights are
trespassed upon cannot produce peace. There must be cooperation
with other nations in the cause of justice. Thus much for sacrifice
if sacrifice be called for.
But, while ready for it if need be, we cannot admit that the
plan of the League to Enforce Peace would actually involve the
United States in wars. The League would not be instituted unless
it embraced all or nearly all of the great nations. Its military
power would thus be overwhelmingly preponderant. Now, what
is the dominant demand of the League? A hearing of the dispute
before going to war! Could any demand be more reasonable, more
just? We are charged with planning an oligarchy implying oppres-
sion. If we sought to enforce the award of a tribunal in disputes
involving conflicts of political policy there would really be danger of
oppression. To avoid this we should then demand that the League
embrace not only all or nearly all the great nations but the smaller
progressive nations as well, so that out of their united action sub-
stantial justice might emerge. But what injustice, what oppres-
sion, can arise from a demand for a hearing which leaves the dis-
putant free to go to war afterwards? And is there any nation,
however powerful, which would refuse this reasonable demand if
faced, as it would be, with the alternative of having to wage war
against practically the civilized world?
The French Ambassador at Rome reports San Giuliano's
view, July 27, 1914: "Germany at this moment attaches great
importance to her relations with London Sknd he believes that if any
power can determine Berlin in favor of peaceful action it is England."
Two days earlier, July 25, Sazonof had asked that England place
herself clearly on the side of Russia and France. Such an act on
the part of the British Cabinet was not possible because, until
Digitized by
Google
58 The Annals of the American Academy
Belgium was invaded, it was doubtful whether the people of the
British Isles would support the government in a hostile attitude
toward the Central Powers. But the opinion is general today that
if Germany had known with certainty that England would Une up
against her, she would not have declared war. Under the plan of
the League Germany would have known that she would have not
only England to reckon with but Italy and the United States and
the A. B. C. countries of South America, not to mention minor
members of the League. Now is it reasonable to suppose that
facing such a possibiUty she would have denied Sir Edward Grey's
demand for a conference over the dispute?
The only loss a nation could suflFer by a hearing would be that
of being deprived of the advantage of superior preparedness. And
is not that one of the very advantages we want to take away from
nations in the general interest? Nations bent on aggression would
go through the form of a hearing and proceed with their designs
afterwards. There would, therefore, still be wars. But it is in-
conceivable that the League as such would ever be called upon to
wage war under the terms of the compact. It is possible that after
a hearing the nations may still regard a threatened war as so unjust
or so dangerous to the world at large that they will come together
anyway and say: " this may not be." But that they may do now.
Objection is made that the League plan calls for cooperation
with monarchies. In many constitutional monarchies such as
those of Italy, Holland, the Scandanavian countries, etc., the people
practically enjoy self-government. France and Switzerland are
republics, and England is a true democracy despite its monarchial
form of government. Drawing our love of liberty originally from
England, we paid back the debt by the example of the successful
practice of a broad democracy. We thus encouraged its growth
not only in the mother country but generally throughout the world.
Social democracy, which is opportunity to rise in life and is largely
the result of economic conditions, is greater in all new countries
than in the countries of the old world. It is greater in Canada,
Australia, New Zealand and the United States than in England.
But when we come to poUtical democracy, which is the opportimity
for the will of the people to express itself in law, there is more of
that in England than in the Uaited States, If one kuows what
Digitized by
Google
League to Enforce Peace 59
the will of the English people is he can pretty well gauge the action
of the English Parliament. Is the same true here? Old age and
disability pensions every justice loving man of the United States
would like to see established here. Have we got them? If it be
the fault of federal or state constitutions does this alter the fact?
Digitized by
Google
WHAT PROGRAM SHALL THE UNITED STATES STAND
FOR IN INTERNATIONAL RELATIONS?
By Walter Lippmann,
Editorial Board, The New Republic,
I
We have been invited to do some very slippery guess-
ing. Out of our little fragments of knowledge and error, out
of our half-analyzed prejudices and loyalties and hopes, we are to
piece together a theory of the r61e we wish America to play. We
are compelled to make innumerable estimates on insufficient evi-
dence, and many a fact we cling to may prove to be an aspiration.
We are illustrating the assertion that a democracy stakes its sal-
vation on its hypotheses.
For though no one of us can possibly know enough to be certain,
no one of us can shirk this speculation. No one can reserve de-
cision until the truth is perfectly clear. For we are not dealing
with a point in Babylonian architecture over which a breathless
world can suspend judgment for a generation or two. We are in
that living zone of real choices where refusal to commit oneself
is in itself a gigantic practical decision. A scholarship which was
afraid to commit itself because it did not know enough to feel sure
would merely be trying to conceal its vanity by covering the pride
of intellect with the cloak of science.
II
Casting about for a method of grasping this complicated sub-
ject, it has seemed to me useful to make a few rough distinctions.
We may say I think the nations of the world consist, first of all, of
the great powers — ^Britain, Russia, Germany, Japan and the United
States. They contain the major force of the world, and from them
come the major initiatives of world politics. Grouped about them
are the second class powers — ^France, Italy, Austria-Hungary,
themselves of great importance but not decisive. Following them
may be put third class states — such as Roumania, Bulgaria, the
Scandinavian countries, the Argentine, Chile, and perhaps Brazil.
In any calculation of forces in the world, their adherence one way
60
Digitized by
Google
United States and International Relations 61
or the other affects the balance of power. All three classes consist
of states which may be said to be represented in the concert of the
powers.
Beyond them lie the territories about which the great decisions
are made, the territories which constitute the objects of diplo-
matic action — almost all of Africa, of Latin America, Turkey,
Persia and China. The discussion which goes on in the concert
of the powers centers chiefly in these weak territories. Sometimes
the discussion is about the actual control of some part of them, as
in the Morrocan crisis, the Bagdad railway episode, the Anglo-
Persian Convention, or the scramble for vantage in China. Some-
times the discussion turns upon securing additional favor and
prestige, as in the intrigue of Europe to attach the Balkan States
to one diplomatic group or the other. Sometimes the struggle turns
on the effort to secure strategic advantages, such as Germany's
attempt to open a road to the Levant, to secure a naval base in the
Atlantic. Sometimes the argument turns on the method of con-
ducting war for supremacy in the Council of Nations, as in Ger-
many's plea for that limitation of sea power which she calls the
"freedom of the seas."
Ill
A perfectly disinterested international program would be
concerned primarily with the strengthening of the backward states.
Its great object would be to create order and strength in countries
like China, Turkey, and the Caribbean States. A real friend of
mankind would be passionately devoted to the regeneration of
those territories which constitute the stakes of diplomacy. He would
wish to see their finances put in order, their administration mod-
ernized, their economic resources developed and not exploited, their
people educated. He would believe that when states become mod-
em and strong they cease to be the objects of imperialistic bargains,
and are admitted to a place in the Council of the Nations.
Now historic events and geographic facts have indicated two
great spheres of backward territory where the United States has a
part to play — ^Latin America and China. As nations go, the United
States has had a noble if negative program in respect to them. The
Monroe Doctrine, in spite of all its vagueness, has meant a resolu-
tion on the part of the United States to give Latin America the
opportunity to find itself.
Digitized by
Google
62 The Annals of thb American AcADiiMf
Some of the Latin countries have done so, but others, especially
those facing the Caribbean, have not succeeded in reaching that
degree of political eflBciency which the world requires. The ques-
tion put to us is whether we shall take an affirmative part in regen-
erating them, or whether our policy shall be one of protection and
irresponsibility. We are at present pursuing both policies — ^towards
Mexico a sort of meddlesome laissez-faire — ^towards Haiti and San
Domingo a positive program aimed at stability. The reason we
pursue those differing policies is due largely to the fact that it is
easier to intervene in Haiti than in Mexico — ^the one is not costly,
the other would be. And I am not prepared to say that that isn't
a good reason for making the distinction. But, nevertheless, the fact
remains that we cannot forever hold to a Mexican policy which
allows Mexico a free hand and at the same time protects her against
the consequences. The day may come, if Mexico doesn't straighten
itself out, when we may have to choose between some kind of posi-
tive American intervention, and serious trouble with Europe.
While the method in regard to Mexico is not clear, the American
purpose is. We are conmiitted to the realization of stable and
progressive government in Mexico. Whether we citn attain that
by diplomatic and financial pressure and advice, whether we shall
have to undertake a partial or a complete armed. intervention, I do
not know. But our guiding motive is to use as little force as is
needed to attain the end.
The central item of our international program is the regenera-
tion of Latin America. But behind this program lies the politics
of the world, and before we can undertake it with any assurance we
need to know how the nations of Europe and Asia would regard it.
But that is a very difficult thing to know, and we are compelled to
make a number of guesses. We may rule out Russia. It can have
no counter-ambitions in Latin America. Britain we may assume
to be more than friendly to our program. Though there will be
competition between American and British merchants and capital-
ists, the imperial interests of Great Britain are not concerned with
conquest in Latin America. The Empire is almost as much con-
cerned as we are in the successful reform of Central and South Amer-
ica. On all vital issues there the United States and Great Britain
are in a position to cooperate, a fact which ought to prejudice our
policy in a decidedly pro-British way.
Digitized by
Google
United States and International Relations 63
Concerning German plans in South America there is much
greater difficulty in making a decision. It is said, of course, that
Germany dreams of a dominion in Southern Brazil. The fact
probably is that some Germans do, and some don't. It may be
that German policy has crystallized now and turned definitely
towards the Near East — but this we know, without mastery of the
seas, a German colony in Southern Brazil would be a hostage to
fortune, and I am inclined to believe that for a long time it will be
utterly beyond German power to maintain a supreme army in
Europe, and a supreme navy in the Atlantic. But even if there is
a danger we must remember that Southern Brazil is nearer to
Europe than it is to us, and that the danger is if anything more
real to Great Britain than to the United States. It is a danger,
however, only if Southern Brazil is temptingly easy to conquer. It
is possible, therefore, to eliminate it entirely by an Anglo-American
naval entente. With the adherence of France and possibly Italy,
the supremacy of the seas would be invincible. If that exists,
conquest in Latin America ceases to be a possibility.
IV
If our program is the regeneration of the Latin states, our
politics must it seems to me look towards definite cooperation with
the British Empire. In that cooperation, I believe, lies the hope
of our future. We have reached a point where we are emerging
from our isolation. Foreign trade is drawing us into the outer
world; we are lending capital abroad, planning a merchant marine
and a naval program. Wherever we go, we cannot help meeting
that organizaton of one quarter of the human race which is known
as the British Empire. We cannot ignore it — no world power can.
And we have got to choose, and choose soon between antagonism
and friendship. Germany made the choice about twenty years
ago. She chose to challenge the mistress of the seas and brought
down upon the world an unthinkable calamity. We have to make
the same choice. Surely if there is any wisdom and humanity in
us we shall seek a self-respecting friendship with the British Com-
monwealth,
I do not need to remind you of Canada, touching us at the
noblest and longest frontier in the world, or of Australia and New
^eaiand^ so like oiirselves ip democratic hope, subject to the ^am^
Digitized by
Google
64 The Annals oIf the American Academy
fears about the Orient. It seems to me that if two states so parallel
in interest as America and England cannot find the way of codpera-
tioH then there is little hope in the world. I realize the prejudices
which fight against it — prejudices fastened upon us in school where
children are taught to regard Indians and Red Coats as their natural
enemies; prejudices cultivated not a little by trade competition,
and kept alive as a political issue by fanatical Irish and German
politicians. But our future, and I think the future of the Empire,
depends upon the conquest of that prejudice, and it is altogether
intolerable that racial memories should be permitted to thwart and
distort our efforts to come to an understanding with the British.
All competent observers are agreed that after the war the
problem of imperial reorganization will be one of the great issues.
The more hopeful ones look forward to a commonwealth in which
the five self-governing dominions are placed on a more equal footing
in the determination of imperial policy. We shall then find our-
selves the neighbor not of an isolated Canada, Australia, New
Zealand, but of a series of federated democracies. Are we to ignore
them, or worse still to challenge them? Are we to follow the advice
of our militarists and build a navy to compete with theirs? If we
do, we are preparing a disaster and conspiring against liberty. A
schism of the English-speaking world would leave all its parts
exposed to attack. It would leave us in a state of armed and ter-
rified isolation. It would drive the British either to misalliances
with the conquering empires of the East, or lay them open to de-
struction. For if liberalism divides its forces in the next genera-
tion, it will be cutting its own throat. England cannot alone con-
tinue to pay the financial and human cost of defending the Empire.
We cannot alone pay the cost of isolation in a world where we have
no ally. Whether we desire merely the safety of our own territory,
or the safety of this hemisphere, there is, it seems to me, no choice
but to come to a definite agreement with Great Britain.
That is the policy upon which our international program must
rest. The kind of world we desire, a world of stable, autonomous,
interdependent democracies acting as the guardians of less devel-
oped peoples — that vision depends upon the cooperation of the
United States and Great Britain. France and Latin America,
perhaps Italy, too, would be magnetized to it, and we should have
^tablished a mighty area of security. No one need pretend that
Digitized by
Google
United States and International Relations 65
within it complete justice would prevail. The American negro,
the Hindu, the Irish, the Egyptian would still suffer oppression.
But if there were enough freedom from external danger, the mind
of the west would be freed for the solution of those questions.
Perhaps the greatest political problem of the future is being
prepared in China. A great but weak people is on the verge of
conquest and exploitation. If that calamity is engineered, John
Hay's prophecy will come true. The storm center of mankind
will pass from Turkey and the Balkans to China, and for genera-
tions the nations will be convulsed. A quarter of the human race
is involved, and .every power has a stake in China. If internation-
alism means anything real, it means above all that China must not
be disintegrated and destroyed. What China needs is time to
develop, time to modernize herself, time to find her own strength.
The kind of work we are pledged to do in Latin America needs to
be done on a much greater scale in China. But we cannot do it
alone. We cannot from our isolation challenge the ambitions of
Japan. That must be done if at all by the united western nations,
and the core of that unity is Anglo-American cooperation.
The question of whether or not to hold on to the Philippines
is primarily a factor of this larger problem. If we fail to unite
with the British Empire, then we must withdraw our aid from China,
and that means that we must for our own safety withdraw from the
outpost at the Philippines. If China is to fall to Japan, then the
Philippines should go with it. If Japan is to have complete do-
minion, we cannot afford to leave an indefensible possession lying
across her path. But if in cooperation with England and France
we propose to protect China, then the retention of the Philippines
is a risk we can afford to take.
VI
I realize that to talk of Anglo-American codperation in the
midst of this war seems like trying to organize the world in a per-
manent alliance against Germany. Yet I believe that just the
opposite result is likely to follow. For Germany will not be elim-
inated as a great power. In so far as the war is a struggle between
G^nnany and England no permai^ent decision is likely to be reached.
Digitized by
Google
66 The Annals of thb American Academy
Realizing this, responsible British officials have begun to talk about
a permanent economic entente against Germany. They feel that
if Germany is allowed to recuperate, she will challenge the Empire
in a generation or two.
This is a prospect to make men shudder, and it is one which
from every human point of view is intolerable. Whatever influence
we have should be used to prevent it from happening. But how?
It seems to me that in an Anglo-American alliance. Great Britain
and France would find so much safety that they could risk a con-
ciliatory policy towards Germany after the war. I for one should
be inclined to say that the United States must insist on that as one
of the terms of our bargain. Take away from England the fear
of destruction, an alliance with us would do that, and the foreign
policy of England after the war will be directed by liberals instead
of jingoes. Take away from Germany the possibility of a standing
grievance, and liberal Germany may come to the top. For when
the costs of this war come to be assessed in Germany, there is,
I believe, nothing that can preserve the present ruling classes except
a fear on the part of the people that the world is conspiring to crush
them. After the war, the best allies the German oligarchy will
have are the bogeys of England and Russia. Dispel tho&e bogeys
by a generous policy like that dealt out to the Boers, give the German
democracy air, and instead of a Germany frightened into aggression,
there may arise a new Germany with which the western world can
live at peace. To that great end we can contribute by the right
kind of understanding with Great Britain.
VII
But understanding is not an easy thing to create, and unhappily
there is not much of it at present. Our neutrality has made us no
friends except in Belgium; and the kind of cooperation I have
suggested cannot be reasoned into existence. It must be warmed
and illuminated by some dramatic and gallant action.
There is, I think, one thing the United States might do which
would give to Anglo-American and Franco-American friendship
the impetus it requires. Belgium is the opportunity. A large
number of people in England, France, and the United States, I
think an increasing number, believe that we missed a great moral
opportunity in failing to stamp our disapproval upon the yiojatipp
Digitized by
Google
tJNiTBD States and International Relations 6?
of Belgium. It was a missed opportunity, I think, but it is one for
which it is hardly fair to blame the administration. The fact is
no one seems to have thought of it at the time. At least no one
thought of it out loud. Mr. Roosevelt's first utterance so far as I
can discover was on November 8, 1914, three months after the
crime.
Yet the feeling exists today that we should have done some-
thing about Belgium. It is not too late to do something. After
the war, Belgium will again have to be neutralized by the Powers,
and I suggest to you that the United States might become one of
the guarantors. Politically this would accomplish two great
things. It would give Belgium an unquestioned international
status, and so dispel that modicum of honest German sentiment,
mistaken I believe, which says that Belgium was a potential ally
of France and England. Secondly, it would be a real protection to
France and England — ^we should be offering them something very
tangible, and in return we could in self-respect ask them to open
negotiations for an agreement about Latin America, the Far East,
a naval and an economic arrangement. Belgium, which is the
rallying point for liberal sentiment in the western world, may be-
come the pledge which imites it.
VIII
But the real bond of unity is an agreement about sea power, a
thing which cannot be insisted upon too much. The future of
America is bound up with the future of sea power. Our security
from invasion exists so long as no potential enemy can command the
seas against us. The security of the Monroe Doctrine, or of the
new Pan-Americanism depends upon the control of the seas. The
future of China can be decided by the nations which control the
seas.
This control was exercised for a long time by Great Britain.
But towards 1900 the face of things changed when Germany began
to build a challenging navy. England found that she could no
longer dominate all the oceans, and there followed what might be
called the partitioning of sea power. The British fleet was con-
centrated in the North Sea, the western Pacific was turned over to
Japan, the Mediterranean to France, and the Caribbean to us.
The arrangement has worked fairly well during this war in the sense
Digitized by
Google
68 The Annals oJ" the American Academy
that except sporadically the highways of the world have remained
open. No man can calculate the benefit to peaceful civilization
which has come from the fact that the Allies have had a clear do-
minion of the seas. It has given us a security which we should never
have enjoyed if Germany had been able to make the ocean a battle
ground. Sea power has held together, and that is why we in Amer-
ica have been able to escape the worst ravages of the war. Had
the Allies lost conmiand of the seas, the suffering of America and
most of the neutral world would have been enormous.
The Germans speak of sea power as a tyranny. And in a
sense they are right. It has enabled a little island to play the
leading part in world politics. The possession of sea power is the
ability to exert tremendous pressure on every other nation. But
though it is autocratic, sea power differs radically from a conquer-
ing army. Its power is in the main bloodless — ^it doesn't overrun
and bum and destroy, and lay waste the homes of men. If sea
power is sufficiently strong it wins victories without fighting battles.
The effect of it may be cruel in that it can be used to starve a people,
but it hasn't the quality of inunediate, murderous violence which
belongs to militarism on land. It can be employed with deliber-
ation, with regard to non-combatant life. It is force, but force
tempered so that civilized men can use it with discrimination.
Of all forms of armed coercion it is the most decent and the
most effective. It is the ideal weapon for international policing.
It can be used at the least cost to humanity. But the humanity
of sea power and the effectiveness of it depend upon its unity and its
supremacy. A divided sovereignty of the seas means a cruel
anarchy of the seas. It means a ruinous competition in armaments
and endless warfare by rivals]^f or sea power.
It is better for the world, I think, to endure a tyranny like
England's than to relapse into an anarchy such as the Germans
plan. It is better that one power should be the master than that
three or four should be fighting for mastery, just as it is better to
live in a country ruled by an efficient autocracy than in one where
a number of factions are struggling for supremacy.
But as things stand now, England can no longer maintain the
comipiand of the seas. She has already partitioned it among her
allies. She is challenged by Germany. If the worst happened she
might be challenged by the United States. And all observers
Digitized by
Google
United StATSs a:^ Intbrkational Relations 69
know that the alliance with Japan is likely to prove a rope of sand.
We are face to face, therefore, with the most serious calamity that
could happen to our civilization — ^the disintegration of sea power.
To that supreme fact American foreign policy must be ad-
justed. All else is trivial in comparison to it. I submit to you
that the whole internal democratic program of the United States,
the program for Latin America, the program for the preservation
of China is endangered now, and will be wrecked, if the unity
and supremacy of sea power are destroyed.
We must do our part in preserving it, we and the self-govern-
ing dominions of the Empire. The British Isles, Canada, Aus-
tralia, New Zealand, South Africa, and the United States must
share and preserve the command of the sea. If that command is
maintained, it will grow stronger by its own strength. France and
Italy and Pan America will gain by it and support it if it is strong.
But if it is weak and faltering, we shall all be drifting in different
directions, and an endless confusion and intrigue of world politics,
of shifting alliances, of panic armament will plague us. It is in
the power of the United States and Great Britain to establish such
an area of security that the unaggressive nations will be drawn
towards them.
The variety of the peoples involved in such an alliance is so
great that it would have to exercise its power in a liberal way.
Within it would be all races, religions, languages, and grades of
civilization, and that is the stuff of which liberalism is made. Such
an alliance could not be autocratic in its policy because the people
composing it would be too heterogeneous. It would not always be
wise or just, but in the long nm it would not dare to be too harsh
or too selfish. It would touch all humanity at too many points
for it to adopt the dangerous morality of a narrow nationalism.
IX
I hope I have no illusions about the di£Biculties of such an alli-
ance, the problem of converting Americans to it, the problem of
finding the concrete basis of agreement with Britain, or of creating
the machinery of conducting a common policy. But what alterna-
tive is there? What has anybody to offer that is less dangerous
and less diflScult? Surely, no one will dare to come before you
urging us to a policy of armed isolation. For isolation is out of the
Digitized by
Google
70 The Annals o^ thb American AcADEiir
question because it postulates an impossibUity. It assumes that
we can somehow or other ignore the fate of the British Empire; it
assumes that somehow or other we are not concerned with the dis-
integration of sea power; it assumes that we can compete with British
trade, the British marine, and the British navy without bringing
disaster upon ourselves. Those who talk of isolation merely reveal
their indifference. They simply refuse to face the stem realities
which a change in world conditions has revealed to the imagination.
We are in a time when the inadequacy of language is a cause of
despair. For all that we care about hangs upon a vision of what
sea power means, and upon Hhe will to act upon that vision.
X
All larger schemes, such as those for a League of Peace with
Permanent Courts of Arbitration and Conciliation must rest it
seems to me on the imity and supremacy of sea power concentrated
in the hands of the liberal powers of the west. They may be work-
able, but they will be workable only if the British Empire, the
United States, France, Pan America, and ultimately Germany are
knit together, their economic conflicts compromised, their military
resources pooled, their diplomacy in a league of the west. For
what the world needs is not so much international machinery, as a
cohesion of power. Without that we shall be like the doctrinaires
who write perfect constitutions for Haiti instead of imiting the
factions which disrupt it.
The task of the liberal in international affairs is to rivet to-
gether the liberal states, to focus within them overwhelming power,
and by the majesty of their strength and the wisdom of their policy
to seduce the empires into friendship. No machinery we can sug-
gest, no rule of international law is likely to survive, unless the
liberal world represents a sufficient union of power to make it a
shield for men's protection, and a standard to which the people
can rally.
Digitized by
Google
AMERICA'S INTERNATIONAL RESPONSIBILITIES AND
FOREIGN POLICY
Bt Gbobgb Louis Bbbr.
The present world-wide war has brought home to all thinking
men the firm conviction that the existing S3rstem of international
relations is out of harmony with the fundamental facts of modern
life. As a result of the application of scientific discoveries to means
of conmiunication, mankind has, during the past hundred years,
become a unit in a concrete sense never before realized. But within
this all-embracing unity there is a considerably more clearly defined
entity composed of the states of western civilization. Despite
marked differences of gravest significance, these states have been
developing on parallel, and even on converging, lines. Art, science,
literature, and philosophy have become international, but far more
binding than the ties thus established are those resulting from the
commercial and financial interdependence of the western world.
These ever growing relations necessitated some regulation, and the
system slowly elaborated in response to this need is embodied both
in a vast series of specific treaties and in the ill-defined precedents
of interstate usage known as international law. The present war,
both in its outbreak and in its course, has furnished concrete proof
that this system is woefully inadequate.
The essential difficulty is that the underlying facts of interstate
relations find inadequate expression in existing international in-
stitutions. While the world has become in an actual sense a unit,
there is no real organization binding together the constituent ag-
gregates.^ In the political world of today, the state is the final real-
ity, and the prevailing concept of its nature must be radically
changed before the inchoate world-community can take effective
shape. There is no vinctilum juris binding the sovereign states to-
gether. Anarchy is still the dominant characteristic of interstate
relations. For, according to the current doctrine, the state is
> "Idealists sigh for the Comity of Nations. But it la already in existence .
It is only the Comity of States wfaioh seems impossible." C. DelisJe Bunyi, Th^
BforaUiy qfNoHoM, pp, 22S, 229.
7%
Digitized by
Google
72 The Annals of the American Academy
responsible to no superior and because of its sovereignty — ^naturally
unlimited — ^it is the sole judge of its actions. The repudiation of a
solemn treaty or the violation of clearly-defined precepts of inter-
national law are justified on grounds of necessity. These admittedly
illegal and immoral acts are considered as injuries solely by the
states immediately concerned. They are not regarded as offences
against the unorganized society of nations and hence the states not
adversely affected do not feel justified, provided they even be so
inclined, either to raise their voices in protest or, still less, to use
economic pressure or force against the offender.
This concept of state sovereignty is a predominant characteris-
tic of modern nationalism. It is to a great extent a philosophical
and legal fiction inherited from a different past and out of accord
with modern facts.* It divides the world into sharply segregated —
and from the social and economic standpoint, largely artificial —
politico-legal units. Under its sway each one of these states is
primarily, if not exclusively, interested in its own welfare and,
in pursuing it, tends to disregard the rights and interests of its
fellows and to ignore those of mankind as a whole. All states are in
varying degrees infected with this self-regarding nationalism,
which is the fundamental cause of the present war and which will
cause further catastrophes in the future unless the state can be
effectively controlled by some form of world-organization. Apn
parently such a consummation cannot be fully realized for a con-
siderable time, because the sense of international obligation and
responsibility — ^the willingness to forego or even to jeopard national
advantage in mutual service for mankind as a whole — ^is more or
less undeveloped in all states.
At one extreme in the world of today is a state like the German
Empire which, impelled by the aggressive doctrines of a reactionary
economic philosophy and by an almost pagan worship of the God of
War and at the same time impressed with its self-imposed task to
redeem a decadent world, rides rough-shod over the rights of others.
But almost, if not equally, as disastrous to the civilization of the
world is such an attitude as that of the United States which, im-
mersed in concern for its own peace and liberty, has adhered to a
•C/. C. Delisle Bums, The Morality of Nations, passim; Ch. Seignebos,
181&-1915 (English translation), p. 34; Roland G. Usher, The Challenge of the
ftUvre, p. 193; John Dewejr, German Philosophy and Politics ,[p. 13}.
Digitized by
Google
America's International Responsibiutieb 73
policy of "no foreign entanglements" outside the western hemi-
sphere that is tantamount to a repudiation of all responsibility for
maintaining justice and right in interstate relations other than such
as directly affect the American continents.
It follows ineluctably from these premises that we of the
United States cannot escape a certain degree of negative responsi-
bility for the deplorable chaos into which western civilization has
fallen. Although German political philosophy has been widely
taught in America by scientists trained in German universities, it
cannot be said that its doctrines have become an integral part of
general thought. While the organic theory of the state is, as a rule,
not questioned, the conclusions that may be drawn from it have not
been pushed to their logical extreme. Above all, the complete
subordination of the citizen to the state is repugnant to American
individualism. Furthermore, in the eyes of most Americans, the
German concept of the state as a living personality, with no moral
responsibility but to itself, is a metaphysical abstraction correspond-
ing in no degree to actuahty. Nor is the Grerman visualization of
the world as a group of inherently antagonistic and morally self-
sufficient states, each a l^w unto itself, in accord with American
political traditions and ideals. American poUtical thought does not
emphasize the value of the state and ignore the rights and importance
of mankind as a whole. It inclines towards the concept of a mor-
ally responsible state conforming to the pubUc opinion of the as yet
unorganized world-commimity. There is impUcit in it the ideal
of such an ultimate community based on the essential unity of
humanity. Practically nothing effective, however, has been done
by the United States to make this ideal an eventual possibility.
By our traditional policy of aloofness from European affairs,
we have deliberately refused to assume those obligations that every
state owes to mankind. This policy may have been expedient in
the days of our weakness, but even then it had some unfortunate
consequences that in our provincial outlook are frequently ignored.
Absorption in our own development was an unquestionable factor
in protracting Europe's struggle against the domination of Napo-
leon. Writing of that period, Admiral Mahan with characteristic
insight pointed out: "The United States, contrary alike to the
chief interests of mankind and to her own, sided upon the whole.
Digitized by
Google
74 Thb Annals of thb Ambbican Acadbmt
though by no meSekiis unanimouslyy against Great Britain."' The
only legitimate defence for such a policy of deliberate isolation is
impotence, but the United States steadfastly adhered to this atti-
tude even after it had become one of the Great Powers and it thus
forfeited the influence it could and should have exerted upon the
affairs of mankind.
It is true that we have in various directions attempted to exert
our influence for the advancement of humanity, but except to a
limited extent, and then well-nigh exclusively in Central and South
America, we have refused to assume any obligations for the appli-
cation of our political ideals. One does not have to be an adherent
of the German theory of force to realize that in international rela-
tions, as at present regulated, mere words, unless there is a willing-
ness if necessary to back them up by deeds, are futile. Force alone
leads to Prussianism, to the doctrine that might makes right, with
its dire consequences both to victor and victim. Words, no matter
how cogent be the moral argiunents, are on many occasions totally
ineffective especially when it is known that there is no intention
whatsoever of wielding anything more warlike than the pen. The
futility of such a course in the imorganized world of today was
sadly realized by Secretary Hay when he was obliged to witness the
breakdown of his Chinese policy by Russia's action in Manchuria.
In 1903, he wrote to Henry White:
The Chinese, as well as the Russians, seem to know that the strength of our
position is entirely moral, and if the Russians are convinced that we will not
fight for Manchuria — as I suppose we will not — and the Chinese are convinced
that they have nothing but good to expect from us and nothing but a beating
from Russia, the open hand will not be so convincing to the poor devils of Chinks
as the raised club. Still, we must do the best we can with the means at our dis-
position."^
In that the United States resolutely refused to become involved
in any European matters and, furthermore, in that, because of its
patent unwillingness to use more than moral suasion, it left to
*Mahan, The Influence of Sea Power on the French BevdtUion, II, p.
285. Twenty years ago, Prof. John W. Burgess took American historians to task
for passing over "our partiality for the French in the struggle to place a Napole-
onic despotism over aJl continental Europe, which Great Britain was using all
her powers to prevent." PolUieal Science Quarterly XI, p. 64. See also Richard
Ofai^s remarks in the AUaniie Monthly for March of 1900.
« W. R. Thayer, Life and Lettere of John Hay II, p. 360.
Digitized by
Google
Amebica's Intsbnational Rbsponsibilitibs 75
others the protection of its policies in the Far East, we cannot escape
a degree of negative responsibility for the existing world-war. An
examination of recent international history and of the fundamental
aim of German world politics will make this nexus apparent.
There is a disconcerting vagueness about Germany's ambitious
plans, but the general underl3ring thought is unmistakable. When
the German statesmen, economists, and publicists tried to pierce
the veil of the future and to picture the world toward the end of this
century, they saw three great political aggregates — ^the American,
the British, and the Russian — outranging in cultural influence and
potential strength all other states of western civilization and dwarf-
ing a Germany whose political growth under existing territorial
arrangements could apparently not compete with theirs.* Hence
the insistent striving for a repartition of the world in conformity
both with Germany's actual military strength and with some
hypothetical future need for more land for her growing population
as well as for new markets and fresh sources of supply for her ex-
panding industries. There was no question either of any real need
or of any actual handicap Under existing conditions. As these
plans for expansion could be realized only at the expense of the
British Empire or of the Monroe Doctrine, the enemy of enemies in
German eyes appeared to be the so-called "Anglo-Saxon block."
The Anglo-Saxon, says Paul Rohrbach in his widely-read book Der
Deutsche Gedanke in der WeUy "have spread over such vast expanses
that they seem to be on the point of assuming the cultural control
of the world, thanks to their large numbers, their resources and their
inborn strength."* Similarly, Maximilian Harden pointed out
that "Great Britain and North America tend to form a commimity
of interests. On the two oceans, the Anglo-Saxons of the two con-
tinents group themselves together in unity of will. The hegemony
of the white race will be theirs, if we do not make up the old quarrel.
United with Prance, we should be invincible on land and sea."^
Not only is the cultural solidarity of English-speaking peoples fully
recognized, but also the fact that their separate developments have
* On the extensive, but undeveloped, economic poflsibilitieB of Germany's
African posBesriona, see Sir Harry Johnston's "The German Colonies," in the
BdMurgh Renew of October of 1914.
• Rohrbach, gcrmon World Policies^ p. 5.
' Zfikutift, July 1, 1911, quoted in Ch. Andler's Pan-Oennanism, p. 68.
Digitized by
Google
76 The Annals op the American Academy
formed part of what is essentially one historical process. Briefly,
the broad purpose of German imperialism is to eject the English-
speaking peoples from the prominent positions they have acquired
in all continents. What English-speaking pioneers — discoverers,
adventurers, traders, and settlers — have slowly and laboriously
accomplished largely by individual enterprise, the German Empire
with its consciousness of military strength planned to duplicate in a
few decades.
This hostile purpose toward the English-speaking peoples first
manifested itself plainly during the years when the difficulties be-
tween Briton and Boer in South Africa were reaching a climax
and when Spain was forced by the United Staies to relinquish the
last remnants of her old colonial empire in the East and West. One
direct result of this menace was the significant movement for greater
cohesion that has made the British Empire a unit during the present
war and which promises, after its conclusion, to lead to the creation
of adequate political machinery for the continuous expression of
this solidarity. Another simultaneous result, just a^ truly although
somewhat less obviously traceable to the Grerman perU, was the
marked increase in friendship between England and the United
States and their cordial co6peration in some international questions.
A few, very few it is true, isolated Americans urged that tWs friend-
ship should ripen into an alliance, but against such a proposal
stood not only the traditions of aloofness inherited from "The
Fathers of the Republic," btit also the prejudices of some elements of
America's heterogeneous population.* The great mass of the people
were immersed in their own diverse affairs and had only the most
superficial knowledge of international politics, while their leaders,
with lack of courageous foresight, refused to question the traditional
* On June 23, 1900, John Hay wrote to John W. Foster: "What can be done
in the present diseased state of the public mind? There is such a mad-dog hatred
of En^and prevalent among newspapers and politicians that anything we should
now do in China to take care of our imperiled interests, would be set down to
'subservience to Great Britain' All I have ever done with England is to
have wrung great concessions out of her with no compensation Every
Senator I see says, ' For God's sake, don't let it appear we have any understanding
with England.' How can I make bricks without straw? That we should be com-
peUed to r^use the assistance of the greatest power in the world, in carrying out
our own policy y because all Irishmen are Democrats and some Germans an fools —
is enough to drive a man nuul." W. R. Thayer, Zoc. cU. II, p. 234.
Digitized by
Google
Amebica's International Responsibilities 77
policy. It was realized by only an infinitesimally small fraction of
the American people that what was protecting South America from
German ambitions was not so much the Monroe Doctrine as, pri-
marily, British sea power. Had the United States entered into such
an alliance, it is more than probable that Germany would have real-
ized the futility of attempting to change the course of history. As a
cultural entity "the Anglo-Saxon block'' did not seem an insuper-
able obstacle, but a clearly defined alliance upon this foimdation
would have given Germany pause. Had such an alliance been
consummated some fifteen years ago, the entire course of world
history would have been far different and far more conformable
to American ideals and interests; and its crowning climax, the pres-
ent European agony, would in all probability have been avoided.
It is for us Americans to ponder^over these facts and to ask ourselves
whether we can claim entire dissociation from the slaughter on
Europe's blood-stained fields. The world is so closely interrelated
that no great state can selfishly decline to assume the obligations
resulting from membership in the world-community without disas-
trous consequences not Only to others but in the end to itself as well.
Great Britain is the centre of a vast political aggregate, mis-
leadingly designated as an empire but rapidly developing into a
genuine commonwealth of diverse nations and races.* It covers
approximately one-fifth of the world's area and includes somewhat
more than one-quarter of mankind. Its foreign commerce is in
volume even more than proportionately extensive. On account of
these facts every political change throughout the entire world must
necessarily in some way or other affect the British Empire. Its
foreign policy during the past fifteen years has been completely
dominated by the Gterman menace. This has been the determining
factor in recent international history and explains many apparently
unconnected events in Africa, China, Persia, the Balkans, and
Asiatic Turkey. The main object of British policy was security and
all efforts were made to avert a European war into which the British
Empire would inevitably be drawn. The plan adopted to prevent
the impending German attack was to settle all outstanding dis-
putes with other states and to create a diplomatic combination that
would hold Germany back. At the same time, a conciliatory policy
* See Philip H. Kerr's "Commonwealth and Empire" in The Empire and the
Futwre (MacmiUan, 1916).
Digitized by
Google
78 The Annals op the American Acadbmt
* •
was pursued toward Germany and extensive concessions were made
to her.
After the Agadir crisis of 1911, which had brought Europe to the
verge of war, England set seriously about the task of meeting Ger-
many's demands for expansion. As the Belgian Minister in London
at that time wrote: "Ce qui est certain est que le but que Ton a en
vue est pacifique. On voudrait k tout prix diminuer la tension
existante entre les deux pays L' Angleterre est dispose
k ne plus contrecarrer I'Allemagne dans les questions secondaires,
mais on ne doit pas lui disputer la supr^matie sur mer."" The
negotiations were carried on in this spirit and shortly before the
outbreak of the war there had been concluded agreements that gave
Germany practically a free hand in the economic exploitation of
Mesopotamia/^ and removed British opposition to a rearrangement
of the African map to meet Germany's ambitious requirements.
Even so ardent an expansionist as Paul Rohrbach was jubilant and
surprised over the outcome of these negotiations."
In the course of this policy many important British interests
were sacrificed and some political principles were jettisoned, but
apparently the only other alternative was a world-war, and that
was England's nightmare. This was of course patent to Germany
but, in addition, Britain's friends and allies fully realized it and some
did not hesitate to take advantage of the situation. In 1911,
Russia unquestionably violated the spirit of the Anglo-Russian
agreement of 1907, whose intent was to maintain the integrity and
independence of Persia in their then existing status, and she was
able to do so with impunity because tension at that time between
England and Russia would have been Germany's signal for bringing
about a general European war. W. Morgan Shuster's brief and
tumultuous career in Persia was exactly synchronous with the
Agadir crisis in Europe. Similarly, the German peril tied England's
hands when, prior to the present war, Russia and Japan were firmly
establishing themselves in Mongolia and in Manchuria.^'
1* Belgische Aktenatuecke, 1905-1014, p. 105.
u Parliamentary Debates, House of Commons, June 29, 1914.
u Rohrbach, Zum Weltvolk hindurchl, pp. 47, 48; Rohrbach, Germany's
Isolation, pp. 130, 131. See also "The Anglo-German Negotiations in 1014,"
in The New Republic of December 18, 1915.
" J. O. P. Bland, "The Future of China," in the Edinburgh Review for October
of 1014', J. F. Abbott, Japanese Expansion and American Policies, pp. 66-71.
Digitized by
Google
AmBBICA*8 iNtfiRNAHONAt ftfiSPONSIBlLlfnfiS 79
The entire policy of England during the past decade was un-
questionably what Professor Keutgen of Hamburg dubbed it:
"Eine Politik der Schwaeche." Its very weakness, its almost
openly avowed pacifism, convinced Germany that England was a
negUgible factor and in this way it conduced to bringing about the
war whose fundamental purpose it was to avert. On the other
hand, Sir Edward Grey's policy of a defensive coalition was based
upon a fuller realization of the imminence and gravity of the German
menace than obtained in most well informed quarters in England
and it succeeded in keeping intact a diplomatic group of such strength
as will in all likelihood be able to thwart the German plan of world
domination.
During the course of these vicissitudes of the past decade, not
a few things were done which were repugnant to the American con-
science. But our government, pursuing its traditional course, was
silent; and the vehement complaints of a few individual Americans
totally ignored the question whether or no their country might have
had some duty in the premises. In the complacency of our nega-
tive rectitude, we have never contemplated the undeniable fact
that those who might have prevented these deeds in the Balkans,
China, Persia, and elsewhere were wellnigh helpless so long as the
United States adhered to its poUcy of self-regarding isolation. In
addition, definite American interests were prejudiced. The policy
of the open-door in China could not be maintained by England alone
without breaking up the European defensive combination against
Germany and the knowledge that we would under no circumstances
use more than moral suasion rendered our advocacy of this policy
ineffective. A reconstruction of what the past might have been
had we been wiUing to assume obligations for the welfare of the
world is not a futile pastime but a valuable object lesson for the
present and for the future.
Today Europe is in the throes of an agonizing war, in which
the future of civilization is at stake. All the fundamental questions
arising from artificial boundary lines based upon political and mili-
tary considerations and resulting in suppressed and exploited na-
tionalities are in the crucible. In the days of Louis XIV and of
Napoleon, the fundamental issue was whether or no Europe, pri-
marily, was to be saved from the domination of one supreme mili-
tary power. But the present struggle involves not only the freedom
Digitized by
Google
§0 I'he Annals of thb Amebican Academy
of Europe, but in addition, that of the whole world, for the attempted
hegemony of Europe was to serve as the basis for German mastery
of the other continents. German ambitions avowedly looked to an
extra-European goal. Furthermore, although it cannot be said
that the war is one of autocracy upon democracy, for Russia is allied
with the liberal Great Powers, yet the future of democracy is vitally
involved in the outcome. For, in a world so unorganized politically
that its peace is at the mercy of one Power, the crucial test of any
form of social organization cannot be the more or less satisfactory
character of its internal political life, but must perforce be its ability
to defend itself and to survive in a struggle imposed by others.
Were European democracy to fail in this crisis, its fate would be
sealed and America would become the last bulwark of free govern-
ment. For this fundamental reason, there is an almost literal truth
in the statement that the Allies are fighting America's battles.
The American people has some vague perception that the
most far-reaching issues are at stakes, but it has seemingly only the
faintest realization of the extent to which the future of the United
States is contingent upon the defeat of German ambitions. As a
result Americans, although predominantly pro-Allies in sentiment,
do not see that their own interests not only warrant but even demand
participation in the struggle. Naturally, with the still undeveloped
sense of responsibility for the welfare of the rest of the world, the
cause of civilization in itself makes no compelling appeal. Hence
the United States is overwhelmingly averse from being drawn into
the war, and the official neutrality maintained by Washington is an
accurate expression of the will of the great mass of the people. In
the eyes of not a few there seems to be something dignified in this
neutrality, as if the United States were placed in the position of a
judge appraising the actions of the warring nations. Others pride
themselves on some moral quality supposedly inherent in an atti-
tude of neutrality. A Uttle reflection would, however, demonstrate
that there is no warrant whatsoever for such sentiments. Neutrality
is essentially passive and is a right or privilege sanctioned by inter-
national usage, but it is in no sense a moral duty. Obviously, a
great Power which, in a crisis that is determining the destiny of the
world, and hence also its own future, deUberately remains passive
and refrains from aiding what it considers to be the cause of civiliza-
tion is by this inaction placed upon the moral defensive. Its neu-
Digitized by
Google
Amsbica^b Intbrnational Ebsponsibilities 81
trality, instead of being, as is generally assumed, a priori meritorious,
requires justification if it is to escape condemnation. Whether this
justification will commend itself to the judgment of the future is
another matter. At all events, a daily increasing nimiber of those
Americans that can think independently have reached the conclu-
sion that the rigidly negative neutrality of our government is doing
violence to the best instincts of American idealism and is causing
progressive demoralization.
What has been neglected in the past cannot be altered; nor can
a nation trained for generations to look within change its self-
centred attitude in a day. But the past and present may serve as
warnings to make America's future part in the world a more useful
and ennobling one. The war has directed the attention of thinking
America to problems that formerly seemed almost academically
remote. In some, the horrors of the war have produced such a
revulsion that they are seeking what seems to them to be salva-
tion in a Pan-Americanism which in their eyes means renewed and
reinforced isolation in this hemisphere. They are ready to relin-
quish the Philippines, to abandon China to whatever fate the am-
bitions of others may allot to her and, under the spell of a somewhat
fetichistic republicanism, they desire 'He complete and round out
the immunity from entangling foreign alliances proposed by Wash-
ington and Monroe, by asking our European friends to liberate all
territory in any of the Americas now held by them."" Canada,
of course, is excepted. They wish to carry to its logical conclusion
Secretary Olney's dictimi that any permanent political imion be-
tween a European and an American state is "unnatural and inex-
pedient," and to make real the Pan-American unity that John
Quincy Adams and Clay planned and which Blaine energetically
fostered. But the solidarity upon which this imity is premised is
largely fictitious in its spiritual, cultural, political, economic, and
even in its geographical elements. The cultural and economic ties
between Europe and America are far stronger than those binding
together the Americas.^^ English-speaking, the so-called Anglo-
Saxon, America and Latin America are not mere geographical terms
^ Charles H. Sherrill, Modernising the Monroe Doctrine, p. 139. C/. pp.
136, 137.
^Cf. James Bryce, South America, chap. XIV; F. Garcia CalcUron, Lea
Dbnocratiea Latines de VAmirique, pasaim.
Digitized by
Google
82 The Annals of the Amebican Academy
but express vital social facts. To ignore this is to court disaster.
Hence many, while favoring Pan-Americanism as a step forward
toward internationalism, deem it dangerous to the extent that it
tends to ignore the interdependence of Europe and America. This
interdependence has been conspicuously emphasized by the war.
As a consequence, ever growing numbers of Americans have rejected
the gospel of renewed isolation and of artificial seclusion in the
western hemisphere, and have reached the conclusion that the
policy of aloofness from European affairs is obsolete and that we
must in the future assume our share of the burden of upholding the
pubUc right of the world. Various influential movements, such as
the proposed "League to Enforce Peace" and the widespread de-
mand for military and naval preparedness, indicate a radical change
in our att^itude toward foreign policy and a deeper insight into the
dynamics of international relations. But while it is generally as-
sumed that we are destined, whether we likejt or not, to be drawn
more and more into the international field, there has been little
discussion of the part that we are to play. Shall we remain free
from all entanglements, shall we merely promise diplomatic support
in certain contingencies, or shall we enter into definite alliances?
Furthermore, shall our future military preparations be merely
sufficient to prevent a successful invasion of the United States, or
shall they be adequate to protect our growing interests in foreign
lands?
Naturally the decision on all these points will be vitally affected
by the future course of the war and by the settlement that follows it.
Whatever these may be, it seems certain that the present general
alignment of the Powers will for some time after the close of the war
be continued in the diplomatic and economic spheres and that, if
the United States is to have an effective voice and its interests are
to be adequately considered, we must join one or the other group.
Isolated, the United States would be defenceless and without in-
fluence. It would be folly to overlook the fact that the part played
by h neutral in a world-wide internecine war cannot arouse friendly
feeUngs among any of the belligerents. The Central Empires are
unquestionably incensed at the purchase by the Allies of supplies in
America, and there is this to be said for their attitude that, already
before the war, they had held that a non-combatant state could not
become an extensive source of such supplies without violating its
Digitized by
Google
America's International Responsibilities 83
neutrality." Furthermore, these Powers have protested against
our not obliging the Allies to permit American raw materials and
foodstuffs to reach them and their case is strengthened by the fact
that we have to some extent accepted their view of the interna-
tional law applicable in these instances. According to not irrespon-
sible reports, that are inherently far from improbable, a bill of
damages is being prepared in Germany which will make even the
indirect Alabama claims as massed in Sumner's exuberant imagina-
tion appear insignificant. On the other hand, while the Entente
Allies are grateful for sympathy and fully appreciate the personal
services rendered by many Americans both in the field and in relief
work, they realize how insignificant all this is in view of the impor-
tance to America of their ultimate victory. Nor do they feel under
any obligation for our selling to them at enormously inflated prices
arms and amunition, as well as raw materials, whose proceeds are
not only enriching us but also bringing about a virtual economic
revolution to their detriment. Furthermore, they resent that they
have had somewhat to restrict the full pressure of their sea power
out of deference to our rights as neutrals. In a conflict of this scope
and intensity, the belligerents cannot, without doing violence to
hmnan nature, nourish kindly feelings toward the neutral who
profits by their distress.
If the United States should be thus friendless and isolated after
the war, the consequences would certainly be serious and might
possibly be disastrous. Our foreign policy is preeminently devoted
to two objects, the enforcement of the Monroe Doctrine and the
maintenance of the open-door in China, Both have idealistic as
well as economic phases. Our aim is to preserve South and Central
America free from foreign domination so that the twenty republics
located there may develop their characteristic institutions un-
hampered by outside dictation. The corollary to the Monroe Doc-
trine is Pan- Americanism, which is not a national policy of the
United States but an American international movement to foster
closer spiritual, political, and economic relations between all the
u The Gennan Krieiftbrauch im Landkriege states this explicitly. See J. H.
Morgan, The Qerman War Book, p. 148. This contention was the basis of the
Austro-Hungarian protest of June 20, 1916. Department of State, Earopean
War No. 2, p. 103. See also the German Memorandum of April 4, 1014. Ibii.^
No. 1, pp. 73, 74.
Digitized by
Google
84 The Annals of the Ambbican Academy
Americas. Similarly, in China, our aim is not merely to preserve
and widen a market for our goods, but to keep intact the political
independence and administrative integrity of that backward coim-
try with its swarming millions.
The most disturbing feature about Germany's much advertised
"place in the sim" was its apparently deliberate vagueness. It
was nowhere and everywhere. Whenever in any quarter of the
globe the political waters became troubled, Germany extemporized
vital interests in whose protection she was ready to shake the
mailed fist. The policy of Napoleon III in demanding compensa-
tion for France whenever Prussia added to its power, has been
justly denoimced by German historians as vicious, but the same'
policy has in turn been adopted by United Germany and has kept
the world in a continuous ferment. Grerman militarism and di-
plomacy have for two decades been the incubus of Europe. It is
obvious that if ever a new Germany over the seas is to arise, the
most likely, if not the only possible place is Brazil, in whose
southern states there is already a considerable German nucleus
aroimd which to build such a daughter-nation. German econom-
ists and publicists have persistently painted this dream.** Against
its realization, however, stood as insuperable barrier, not alone
the Monroe Doctrine, but in first line, the British fleet. The grave
danger is that after the war, an unchastened and imbeaten, though
not victorious, Germany may seek to retrieve its fortxmes by an-
nexing Southern Brazil. A well-known English historian, J. Holland
Rose, has already spoken sympathetically of this plan** and it may
be that England, weary of the incessant wrangling and not averse
from having German ambitions deflected from Africa, and Asia, will
no longer interpose her fleet as barrier. As Professor Usher has
said, "the easiest concession for the Allies to make will' be the con-
trol of Asia Minor by Germany and Austria and a free hand for both
in South America, leaving Great Britain and France still supreme
in Africa and Asia."*® What Americans must bear in mind is
^' For some details of the voluminous literature on this subject, see: Oerman
Ambitions (New York, 1903); Ch. Andler, Pan-Oermanism; F. Garcia Cald^ron,
Les D^ocraties Latinea de VAm4riqu€t pp. 269-273.
" J. H. Rose, The Origins of the War^ p. 188. See also Moreton Frewen's
"The Monroe Doctrine and the Great War" in the Nineteenth Century and After ^
of February, 1916.
** R. G. Usher, The Challenge cf the Future, p. 231. See also pp. 314, 315.
Digitized by
Google
Ambbica's Intbbnational Rbsponsibilitibs 85
that their country as a body politic has as yet done nothing during
the war which entitles it to special consideration from the belliger-
ents.
Such difficulties and others of a similar nature in the Far East
confront us imless we emerge from our voluntary isolation and
join hands with other nations. But more than mere general moral
codperation and more than mere active support in specific instances
are necessary if in the future war is to be avoided and at the same
time our interests and the independence of South America and of
China are to be preserved. It is plain even to the most casual ob-
server that Japan is at present attempting to gain a predominant
economic and political position in China. The ultimate success of
this attempt will depend primarily upon whether or no England
after the war will be in such a position that in opposing Japan she
can afford to run the risk of that country joining the Central Em-
pires. In making her decision, our attitude in this special instance
will count for little or nothing with England; the main consideration
will be the general balance of the Powers in Europe. Our active
support merely in one isolated case, with otherwise a general ad-
herence to our policy of aloofness, would be no compensation for a
possible defection of Japan to the Teutonic Powers. Whether or
no China's fate is to be determined by the same circiunstances as
was Persia's rests mainly with us.
It is obvious that the only Powers with whom our political
traditions and our material interests would permit active codpera-
tion are the present Allies of the Quadruple Entente and among
them England would naturally be the one to whom our common
civilization would draw us most closely. An alliance of the United
States with the British Empire on clearly defined terms, made in the
open light of the day, would effectively secure the future peace of the
world and its development along progressively democratic lines.
Continuous codperation is necessary, but a mere entente would not
be sufficient, as has been proven by this war. For, had Germany
been faced with the certainty of England entering the war, she would
probably not have forced matters as she did. Similarly, the ex-
pression "British Empire" is used advisedly, as one of the results
of the war bids fair to be such a reorganization of this vast
commonwealth as will give the great self-governing dominions —
of which New Zealand and Australia are the world's most ad-
Digitized by
Google
86 The Annals op the American Academy
vanced democracies*^ — an important part in the framing of for-
eign policy.
For such a defensive alliance, clearly defined as to its scope,
there are firm spiritual and political foundations. Both branches
of the politically separated, but culturally imited, English-speaking
race have essentially the same political institutions and ideals. In
both an unfettered public opinion, basing its judgments upon the
dictates of personal morality, as a rule obliges the government in its
conduct of foreign affairs to conform to standards that are not
generally recognized elsewhere. Without disparaging any other
state, it may be confidently said that of all the Great Powers these
are the only ones not infected with dreams of military glory or with
ambitions of territorial aggrandizement at the expense of others.
With them alone is peace the genuine goal of policy. As a result,
the general foreign policy of the British Empire and that of the
United States follow parallel lines. The fimdamental aim of both
states is security, but security does not mean merely safety from
invasion. In these days of rapid commimication and of ever closer
economic interdependence of the world, security implies in addition
the protection of a nation's interests in other countries.
For the United States, security both in the narrower and in the
broader sense is obviously contingent, in the main, upon sea power.
But this power is an economic fact that cannot be improvised. It
may be most readily secured by an alliance with the British Empire
whose control of the seas rests, in ultimate analysis, not upon a
navy that any nation sufficiently rich might duplicate, but upon
the fact that its mercantile marine is somewhat in excess of 43 per
cent of the world's total tonnage." As a result of this fact alone,
apart from the existing economic interdependence and the extensive
common frontier, friendship and codperation with the British Empire
is imperative. When Canning suggested to Rush, our Minister at
London, the policy that [led to the formulation and enunciation of
the Monroe Doctrine, he said that he did not think that concert of
action would be necessary, believing that the knowledge that Great
Britain and the United States were of the same opinion would by its
moral effect prevent European interference in South America.
^ CJ, Frani Oppenheimer, The Slate p. 19.
^ American Whitaker 1016, p. 74. For further details, see ibid,, pp. 215 ff ;
StaHsUschee Jakrhuch fuer das Deutsche Retch 1916, pp. 50* ff; 8taU9man*s
Year Book 1916, pp. Iv, 81 ff.
Digitized by
Google
Amebica's Internatioxal Responsibilities 87
This belief was founded. Canning said, ''upon the large share of the
maritime power of the world which Great Britain and the United
States shared between them, and the consequent influence which
the knowledge of their common policy could not fail to produce on
the rest of the world." When at this time, Monroe turned to Jeflfer-
son for advice, the aged statesman replied: "Great Britain is the
nation which can do us the most harm of any one or all on earth, and
with her on our side we need not fear the whole wojld." The situa-
tion is essentially the same today .^ The successful and peaceful
maintenance of our policies toward Latin America and toward China
depends largely upon British support.
"Man is a creature," said Robert Louis Stevenson, "who
lives not upon bread alone, but principally by catchwords," and
we as a nation have been markedly prone to believe in the efficacy
of phrases. The strength of the Monroe Doctrine has from the
very outset been derived from British sea power. Whether it will
continue to do so depends largely upon our willingness to form an
alliance with the British Empire. In so far as this doctrine is con-
cerned, the general interests and political ideals of both countries co-
incide. There is no likelihood of friction provided we do not adopt
the reactionary policy of using the Monroe Doctrine and Pan-
Americanism to secure by treaty or otherwise special and exclusive
privileges that would shut the door to British commerce.** If
we frankly agreed to a self-denying ordinance to this effect and at
the same time assumed responsibility** — as apparently we are to
do — ^for some measure of order and justice in the disturbed parts of
Central and South America, England's extensive economic interests
in those regions, created by centuries of enterprise, would be amply
« "While England as the mistresB of the aea would be our most fonnidable
adversary, she could also be our most useful friend and her friendship is of as
much importance to us as is ours to her." American Foreign Policy. By a
Diplomat (Boston, 1009), p. 40.
** Such a perversion of Pan-Americanism would probably have serious oon-
sequenoes. See Sir Hairy Johnston, Common Sense in Foreign Policy, pp. 16,
16, 88 fif .
» In 1805, during the Venezuela difficulty, Salisbury denied that the United.
States was " entitled to affirm as a universal proposition with reference to a number
of independent States, for whose conduct U <u8ume$ no reeponeibUity, that its in-
terests are neceaBariiy concerned in whatever may befall those states simply
because th^ are situated in the Western Hemisphere."
Digitized by
Google
88 The Anxalb of the American Academy
safeguarded. Under such conditions, the Monroe Doctrine would
unquestionably secure the British Empire's full support.
Nor is there any conflict between an Anglo-American alliance
and Pan-Americanisnt When, some ninety years ago, this vision
first took hold of men, one of its ardent advocates, the great liberator,
Bolivar, believed that England should take a prominent part in any
union of the American nations.'^ And today a Pan-Americanism
that excludes the British Eknpire — an American power of rank
second only to tBe United States — ^is unwisely narrow. Similarly,
in China, there are no prospective points of friction. Apart from
the disinterested desire of both peoples to see the hitherto stationary
civilization of that backward country conform to progressive stand-
ards, British and American interests are limited to seeing that their
commerce is not discriminated against by tariffs and railway rates
that give an unfair advantage to their competitors.
But aside both from the general obligation of every state to see
that justice and order obtain in the world and also from the de-
mands of national self-interest, there is one additional most potent
argument for an Anglo-American alliance. Hitherto, not as a re-
sult of any virtues innate in them, but rather by the fortimate acci-
dent of position, the English-speaking peoples have been able to
escape the burdens and dangers of large military establishments.
Apparently if they do not codperate in protective measiu'es, neither
will be thus fortunate in the future. The tendency of every human
instrument is to seek occasion to demonstrate its effectiveness and
the existence of a powerful army leads insensibly to an aggressive
attitude toward other states. It also inclines toward the estab-
lishment of a military caste that is not subject to the civil law. Fur-
thermore, it frequently results in the subordination of policy to
military considerations and to the control of the body poUtic by the
military authorities. These evils of militarism are most clearly
exemplified in modern Germany. The notorious Zabem affair*^
was an inevitable manifestation of a system that gives the Reichs-
tag virtually no control over the army.** In 1906, Colonel von
Deimling frankly told the Reichstag that its decision counted for
'^ Bolivar's Code of Pan-Amerioanism, in New York Times Magtuine of
March 26, 1016.
" W. H. Dawson, What U Wrong wUh Germany^ pp. 124-130.
M Hans Delbrueok, Regienmg und Volkavnlle, p. 136.
Digitized by
Google
Ambrica's Intbbnational Resfonsibilitibs 89
naught and that he would never withdraw a single soldier from South
Africa, ''unless my Emperor issues a command to that effect."**
Equally significant is the fact that the German Foreign Office, had
it been so inclined, was powerless to prevent the invasion of Bel-
gium after it had become apparent that such action would bring
England into the war. On August 5, 1914, the German Under-
Secretary of State informed the Belgian Minister at Berlin that "le
Department des Affaires Etrang^res ^tait impuissant. Depuis que
Tordre de mobilisation avait 6t6 lanc4 par TEmpereur, tous les
pouvoirs appartiennent k Tautorit^ militaire. C'^tait elle qui
avait jug4 que Tinvasion de la Belgique 4tait une operation de guerre
indispensable."'®
Militarism is of course not s3monymous with preparedness, but
the menace of the former is inherent in the latter. Already we are
told that civilians should imquestioningly and uncritically accept
the decisions of the General Staff as to the requisite size of our army.
The great advantage of an Anglo-American alliance is that its main
reliance would be an invincible sea power. Except to a very minor
degree, none of the insidious dangers of militarism are to be feared
from a strong navy. Even in the most powerful navies, compara-
tively few men are required. The British Navy, abnormally en-
larged as it was already before the war by the German peril, in-
cluded then only 150,000 men. Hence its political influence must
be relatively negligible. Moreover, a fleet is essentially a defensive
weapon. Sea power can prevent an opponent from being vic-
torious and is thus frequently the decisive factor in hostilities, but
in an offensive war it is merely the adjimct of the army. "Naval-
ism" and "Marinism" are misleading — ^and incidentally barbarous —
expressions that have been invented since the war to divert atten-
tion from something radically different — German militarism.
It is almost axiomatic that the miUtary and naval forces of any
nation should be cpmmensurate not only with its policies but also
with its alliances and less formal imderstandings with other states.
It is evident that if the United States remains in isolation and free
from what are popularly known as foreign entanglements, the extent
of its military preparedness must be far greater than if it were allied
*• Eyans Lewin, The Oermans and Africa, p. 123.
^^Royaume de Belgique^ Correspondence Diplomalique 191 4-1915 , II, p. 45.
/SeQatoo Baioii Beyens, l^'4Uemafne avant la Querre, p. \\%,
Digitized by
Google
90 The Annals of the American Academy
with the British Empire. England is in a similar position. In any
eventuality, the old days of comparatively light burdens will prob-
ably not return for some time. But the weight of the future load
will largely depend upon whether such an alliance is made. Only in
this way can security be safeguarded with armaments of such an
extent as not to endanger the political institutions t3rpical of English-
speaking peoples. With the aid of comparatively small armies re-
cruited from a manhood extensively trained to arms, their joint
navies should be fully able not only to protect them but to secure
the general peace of the world. Local wars may still occur in
Europe (and elsewhere as well) but as in the case of the existing con-
flict, so in all probability also in all future international difficulties
tending toward world-wars, the fundamental causes will lie in extra-
European conditions. Before the war, the French of Alsace-
Lorraine, the Danes of Schleswig, and the Poles of the eastern
provinces had taught Germany the futility of annexing unwilling
European peoples. The coiurse of military events may forcibly
close Germany's eyes to this lesson and, by proving how impossible
is her dream of world-empire, may divert her restless energies toward
the East and Southeast of Europe. If so, the old lesson will prob-
ably have to be learned anew.
An effective alliance between the British Empire and the
United States would mean the harmonious cooperation of one-third
of the population of the globe, of whom about 155 millions are Cau-
casians of the most progressive and democratic type. When, about
a year ago at Oxford, Lord Milner advocated such an alliance before
an American audience, one of his auditors is reported to have ob-
jected that it would be unfair to the other nations. Unquestionably
in the case of aggressive peoples, such a combination might be a
menace. The argiunent, however, would have been more cogent
before the events of the past twenty months. In view of the
military developments during this interval, it is quixotically ab-
surd. Until some system of world-organization is established, the
English-speaking peoples must place main reliance upon their
united strength to withstand the dangers to which their conunon
civilization is still exposed.
Such an alliance made merely for defensive purposes and seek-
ing to secure peace, order, and justice throughout the world would
ff^cilitate the formation of soine organization for the still inchoi^t^
Digitized byVjOOQlC
AmBBICA^S InTEIINATIONAL IlESP6NSIBlLlTIEd 91
world-community. It would naturally attract to itself the nations
of like mind and could be made the foundation-stone for that federa-
tion of all the world of which statesmen, philosophers, and poets
have dreamt. But before such an event can even <;ome within the
range of practical politics, the prevailing concept of unlimited state
sovereignty must be greatly modified. Though the individuars
complete liberty of action is theoretically restricted by his member-
ship in the state, it is only by means of it that he can find the true
freedom essential to his fullest development. Similarly, the state
is part of a real but still imorganized world-community and it can-
not without devitalizing its life seek to evade the responsibilities
resulting from this f act.'^ Ultimately, it is hoped, Mazzini's dream
will come true and the self -regarding nationalism of the present day
will be replaced by a world-system of which each xrnit shall be dedi-
cated to the mutual service of mankind as a whole.*' The initial
step toward this goal cannot, however, be said to have been taken
until Great Powers like the United States are ready to emerge from
their self-regarding isolation and to contract binding and durable
ties with those of like mind for the maintenance of the public right
of the world.
^ " Present facts, then, demand the recognition of continuous and normal
interdq3endence of States. The nature^of the State is to be understood, at least
in part, from its relations with other States: and all philosophies which even imply
that the State is isolated are out of date. Indeed, one may say that the modem
State must be imderstood by this external reference. In the same sense the
individual cannot be understood in isolation, but only by continual reference to
society or to his relations with other individuals." C. Delisle Bums, The Moral-
ity qf NaiionSf p. 50. See also p. 158.
** Although no writer of modem times has done more to glorify the nation,
Mazsini did not regard it as the final unity. In his eyes "a nation is guilty of
'the grand refusal' if it do not stand forward and take its place, to the limit of its
PQwer, in international politics. In this, and nothing short of this, lies for him the
final justification of national existence Hence his exhortations to
the United States (in 1854) to play its part in world politics." J. Maccunn,
Six Radical Thinkers, pp. 208, 209.
Digitized by
Google
AMERICA'S NEED FOR AN ENFORCED PEACE
By Talcott Williams, LL.D.,
Director, School of Journalism, Columbia University.
The program of the United States must be decided by the
experience of the past generations and the prospect of ihe future.
The world, large and small countries together, has become predatory.
From the discovery of America, 1492, to the Congress of Berlin,
1878, the lands of Europe had acquired and held 14,000,000 square
miles of colonial territory. From 1878 to 1914, these countries
had added 13,000,000 square miles of colonies. Add ''spheres of
influence" and the colonial area acquired from the Congress of
Berlin to the ravage and rapine of Belgium had equalled the area
acquired of in four centuries from Columbus to Bismarck.
The European world has not only become predatory in the
last generation, it has all there is to be had except three areas.
The first of these is the Moslem area from Morocco across the south
coast of the Mediterranean, the Balkans, Turkey, Arabia and Persia
to Afghanistan and Beluchistan.
The present war is, in large measure, being fought to decide the
final fate of this area, much of which has already been staked out,
Morocco, Algeria and Tunis to France, Tripoli to Italy, Egypt to
England, Persia divided between Russia and England; but any and
all these territories may be shifted when the conflict is won. China
is the second area which is within the ambition and calculation of
the lands engaged in this war from Germany to Japan, with all
that falls between. The third area whose possible acquisition the
colonial and predatory publications and newspapers of Europe
discuss is Latin America from the Rio Grande south to Cape Horn.
Of these three areas, the Moslem tract from Cape Spartel to
the highlands that look down on the valley of the Indus, has been
preserved by the jealousies of predatory Europe. Whichever
party to the present conflict wins will divide the region. But for
the United States, and the differences between European countries,
China would have been divided in 1900. But for the United States,
and the United States aloi^e, Latin America would have been con-
02
Digitized by
Google
America's Need fob an Enfobcsd Peace 93
quered as easily as was Mexico half a century ago. Until the United
States intervened, Maximilian seemed secure in his Mexican Empire.
This predatory appetite which has doubled European colonies
in the last 38 years will neither change nor be satisfied with current
colonial possessions. The same forces which have rolled resistless
over 13,000,000 to 14,000,000 square miles in the past generation,
will dispose of 12,000,000 square miles, now left, whose populations
are unable to defend the lands in which they live, exactly as, since
1878, a like area has been annexed. Of the 12,000,000 square miles
still open, two-thirds, 8,000,000 square miles, stretch from Pata-
gonia to Mexico. Two years ago, two short years ago, people
would have argued that treaties, civilization and Christianity would
protect these weaker lands. No one will urge this today. The vast
movement of troops across the seas, world-wic^e campaigns have
shown that all the earth is open to the armies of Europe.
The United States has protected Latin America for 95 years,
and the centennial of the Monroe Doctrine will find it needing
defence more than in 1821. The United States itself will be left
more accessible to invasion than in all its history. If troops can be
carried from Vladivostock to Marseilles, what a trifle to carry an
army across the Atlantic.
But the United States should not arm for itself alone. If it
does, its purpose must be selfish and may be, probably will be,
futile. The peace of the world is the lofty end for which the United
States should arm. Through a League to Enforce Peace, with an
American army and navy suflBcient to make such a league over-
powering, the United States should have as its program in inter-
national relations not its own narrow safety but the security of
humanity. Secure this and all is secure.
In July, 1914, war and peace quivered in the trembling balances
of fate. Had the United States and all nations now neutral been
ready to demand that Serbia be given the investigation and arbitra-
tion this little land demanded, the Austrian troops would not, in all
probability, have crossed the Danube. Had the powers today
neutral been so organized as a league that they could unite in demand-
ing that a neutralized state, like Belgium, must not be attacked,
German troops would have hesitated at the Belgian frontiers, and
this hesitation would have given peace more friends than had war
in each and all the lands now at strife. The Monroe Doctrine is noth-
Digitized by
Google
d4 The Annals of the American AcAD^iu^t
itng but neutralization against Europe. As a military proposition,
would be cheaper and safer for the United States to underwrite
the risks of the world against war, than to insiure all the risks of
two continents, as for a century past, and infinitely nobler. Mere
national safety, while all the world is ablaze, is ignoble. The only
program in international relations which is worthy of the United
States is the peace of the world, through a League to Enforce Peace
such as is urged by a growing organization in this country and has
support and advocacy in every belligerent and neutral coimtry.
Digitized by
Google
THE ECONOMIC CONFERENCES OF PARIS AND THE
UNITED STATES
Bt Alexandsb Oldrini,
New York City.
The world war Was started by the German Empire through
the conquest of Belgium in violation of treaty rights guaranteed by
the conqueror itself. The subsequent invasion of France checked
at the battle of La Mame is more than a war, even if of conquest;
and should be viewed with regards to its far-reaching importance
as one of those millennarian upheavals by which humanity gradually
rises to better organization and civilization. It points to the final
passage from the low-middle-ages conception of force as morally
superior to human rights and liberties — of which, whether in
diplomacy or on the battlefield, the teuton race guided by Prussian
imperialism to conquest, is today the open champion. But the
passing of this conception cannot take place until the allied nations
of Europe shall have completed the absolute destruction of German
imperialism.
The struggle may, however, prove a long one before the certain
victory of civilization, of right over might, for the teuton race
represents in the present European conflagration a mechanic brute
force of great power and eflBciency, mainly in destruction. Since
the teuton race is bent on assuring to themselves the supremacy of
Europe and of the world "the establishment of power," according
to the characteristic phrase of Von Moltke — German power — over
democracy, no truce, no peace of any duration could, in our estima-
tion, be possible today; nor until the final victory of the allies
over the armies of the central powers. Then only will the spirit
of civilization rule supreme in international laws and treaties over
the spirit of conquest. Thus it is that, while military operations
had been going on since 1914 from the north of Scotland to the
Dardanelles and beyond, a parallel movement of vast economic
international significance was arising among the allied nations, in
completion of the Pact of London, with a view to check German
penetration after the war and to regulate their national interests 'm
Digitized by
Google
96 The Annals of the American Academy
their relation with the neutrals. Under such premises it would seem
to us the work of timely wisdom for the neutral nations of Europe
and pf America to concur in the solution of the economic prob-
lem of the future in the proper spirit of codperation. And
the sooner the wiser, for the aforesaid movement will eventually
reach all national activities such as trade, commerce, industries,
finance, transportation, emigration and navigation. Moreover, the
commercial and international treaties of the future will be subject
to this economic league of the allied nations (the United States of
Europe), on the structure of which will obviously depend the whole
intercourse between the United States of America and Europe in
their dual capacity of producer and consumer. When the time will
come for such new treaties Europe will eventually find itself divided
into two groupings separated by an impassable gulf of conflicting
interests and aims: the Central power group of about 150 million
and the group of the Allied Nations with about 350 million including
Russia and Japan. ' The logical consequence is that after the war,
in the economic fields, the neutrals will have to face a totally new
situation ; t^hat which will be prepared in the course of the Conferences
of the Allied Nations (Italy, 1915, France, 1916, Rome, October
1916, and London, February 1917) under the following program
subscribed to last month in Paris by seven nations and their colonies,
viz: France, England, Russia, Italy, Japan, Belgium and Servia.
ECONOMIC PROGRAM OF THE ALLIES
Conference op Pabis — April 30, 1916
1. An understanding concerning all legislation intended to
regulate commercial relations among the belligerents, such as the
execution of contractSi the recovery of creditSi sequestration of
goods and the subject of patents.
2. Precautionary measiires to be taken against invasion of
allied countries by German products after the passage from the
state of war to the state of peace.
3. Reparation of war damages.
4. Reduction of postal telegraphic and telephone rates among
the allied countries.
5. Agreements relative to the international transport of goods,
^f Crei^tion of an international patent office.
Digitized by
Google
Economic Conferences op Pams and United States 97
7. The commercial regime of the colonies of the allied countries.
8. Internationalization of laws concerning stock companies.
9. Measures intended to reduce metallic circulation throiijgh an
international chamber of compensation and postal check system.
10. Uniform principles to be inscribed in the laws relative to
false designation of merchandise.
11. Failures.
12. Legislation regarding the loss and theft of bonds payable to
bearer.
Besides military preparedness, which in my estimation should
proceed with the utmost speed throughout the country for the
eventual affirmation of right as superior to might, preparedness for
the defense of American interests seems to us the most effective to
all intents and purposes; economic preparedness with a view to
meeting the new situation to be offered by Europe after this war,
as herein briefly indicated. And the best move towards that aim
would undoubtedly be that of joining the Allied Nations of Europe
in their Conferences, before economic lines are drawn between
themselves and for themselves as a league with regard to other
nations. The accession of the United States to the Allies Con-
ferences is much desired. Expressions to that effect have recently
been made in London and repeated in France and Italy. In the
event that the government of Washington, owing to neutrality,
should not seek admission, it is our conviction that nothing could
prevent American Chambers of Commerce, Boards of Trade and
other American business institutions from participating in the gen-
eral discussions of the Allies with great benefit both to themselves
and to the United States. This is particularly true because, imtU
other merchant navies will have come into e^pstence, the carrying
power of the world will remain with the Allied Nations of Europe.
Digitized by
Google
ISOLATION OR COOPERATION IN INTERNATIONAL
AFFAIRS?
By Samuel McCune Lindsay,
Professor of Social Legislation, Columbia University.
A large and articulate section of American public opinion today
seems to have learned nothing from the startling events of the
present great international conflict, nothing from our Experiences
in the Spanish-American war, nothing from our success in trans-
planting the principles of democracy and civil liberty in the Philip-
pines, Porto Rico and Cuba, nothing from the changed conditions of
foreign trade, and is wholly unconscious and unmoved by the world
forces that are making for internationalism in trade, culture, law
and religion. If this is the real voice of America, or is to become
such, there is very little use to talk about any program in inter-
national relations because we could hardly expect to participate in
the making of a program which we consider remote to our interests
and for which we assumed no responsibilities. Such an attitude
unfortunately seems to have the sanction of good tradition and
unhappily it harmonizes all too well with the selfish indulgences, the
slothful intellectual perceptions and the benumbed moral senses of
those elements of our population that have the largest share of the
easily acquired and often illy-gotten gains of a period of great
material prosperity. That such persons are living in a fool's para-
dise without security of tenure and with no guarantee of rights
which others are bound to respect seems to make little difference.
When this nation was in its infancy with only a little over three
millions of people occupying an undeveloped continent in very
great physical isolation from the rest of the world by reason of the
then existing means of communication, the great American patriot,
Washington, solemnly advised against entangling European alliances
and wisely regarded the business in hand of developing our own
resources and building a nation as of such overwhelming importance
to us that the dynastic quarrels and the political conflicts of the old
world might well be considered no concern of ours. That advice,
^ood as it was at the close of the eighteenth century, has become b^
98
Digitized by
Google
Isolation ob CoSpsbation? 99
tradition, and, with but slight modification through the develop-
ment of the Monroe doctrine which would seem to have brought at
least the other countries of the two American continents within the
scope of our legitimate international interests, it is now considered
by some as a sanction for an American policy of isolation in world
affairs at the beginning of the twentieth century.
However, we have not yet begun to think about international
duties and responsibilities in a way that gives us any basis for an
international policy. We have played too often the part of an irre-
sponsible bully in our dealings with other nations and when they
have tried to ascertain what we really seek to accomplish our only
indication of a policy has been that we want to be let alone. The
only reason we have not been treated as a bully deserves to be has
probably been because the stronger nations of Europe have been
too fully engrossed in watching each other to spare the time and
effort to bring us to account. The isolation which we are supposed
to stand for has become too artificial under conditions of modem com-
munication and intercourse to be tenable even if it were justified
by the most literal application of the traditional doctrines of Wash-
ington. It is high time that we reexamine the premises on which
Washington based his doctrine and apply the high patriotic spirit
and insight of Washington to the complex situations in world affairs
of today.
What we need in America just now, more than anything else,
is a rebirth of patriotism, of love of our institutions, of devotion to
individual liberty and the principles of democracy and of a desire
to make these things live forever in the world and a determination
to fight for their preservation in whatever quarter of the globe their
permanency for us and for our children is assailed. We need a
rebirth of just the kind of patriotism that Washington and those
who had with him ^shared the sacrifice and the cost knew how to
appreciate at its true value.
We are not yet a nation in much more than the outward
appearances of nationality and some of the material resources for
concerted action. We are still altogether too much a mere aggrega-
tion of discordant elements of various nationalities but with the
richest possibilities of amalgamation which, once America responds
to the call of nationality and comes to feel strongly for concerted
action, may in a remarkably short time make her the dominant
Digitized by
Google
100 The Annals of the Amebic an Academy
exponent of democracy in the affairs of the whole world. This will
not be the case, however, until we face about squarely in the matter
of seeking a selfish isolation from the troubles of the old world and
find in our own sense of growing power a willingness to serve the
cause of humanity and to make the struggles of democracy akin
throughout the world.
This does not mean that we are to flatter ourselves that we are
entitled to assert any superiority of achievement in the working out
of democracy in our own land or that we seek to impose on the
world any obligation to conform to our institutions. We certainly
have enough yet to do and territory enough of our own to conquer
to make us humble and truly void of envy of the lands or the prob-
lems of other nations but we have had peculiarly favorable condi-
tions for national growth and the results have abundantly justified
our faith in the seeds of democracy and civil liberty that have been
sown on our soil. We are expanding in our commerce and producing
more than we need of an increasing variety' of goods which meet
human needs while at the same time our expanding culture is creat-
ing an increasing demand for products from the remote parts of the
world which we can acquire only by trade and exchange of products.
All of this is bound up intimately with our democracy and my sole
contention in this connection is that we cannot develop the sort of
civiUzation that these economic changes, partly of our own creation
and partly due to world changes which we would be powerless to
alter if we would, impose upon us if we imagine that it is possible or
to our interest to try to build a Chinese wall around America and
protect it from invasion from without or revolution from within.
What is even more important, the sort of intercourse with the rest
of the world which will promote our own development most will be
that with democracies — industrial democracies — ^like our own, and
hence we should lend every possible aid to the growth of industrial
democracy, in every quarter and in every form it presents itself, in a
spirit of international cooperation in the common tasks of democ-
racy. This means an eventual program of peace, of course, because
only under organized cooperation of the highest order in which con-
flicting interests are harmonized can democracy succeed, but it may
mean a program of war in which democracies must prove their
ability to defend their rights against exploiters and the champions
of special privilege before a suflSciently large area of international
Digitized by
Google
Isolation ob CoOpebation? 101
oodperation can be created to allow of the continuous peaceful
growth of democracies. We shall need here in America to make
common cause with the real democratic elements in European
nations so as to assist those elements to become dominant in the pub-
lic policies of their respective nations and to shape international rela-
tions in harmony with the conditions of growth in democracies.
Those conditions involve increasingly, factors which are international
in character and are already beyond the power of any one nation to
control. International cooperation seems, therefore, essential to
freedom of trade and intercourse on which our American democracy
will increasingly depend for its very existence and the conditions
which a century and a quarter ago may have justified a policy of
isolation have so completely changed that they no longer play an
important part in our national life. The very same reasoning that
led us to that conclusion then will now dictate, on the premises of
the world conditions of today, a policy of international codperation
and a new sense of international responsibility which America must
assume in order to be true to her traditions and to preserve her
institutions. We shall not concern ourselves any more now than
heretofore with old world dynastic quarrels and European politics
based on the intrigues and diplomacy of the past but we shall have
to do our part to shape the new world-poUtics and bear our share
of the burden of enlarging the scope of genuine democracy which
requires ever an enlarging area in which to develop, if it is to endure
and serve the needs of mankind.
Digitized by
Google
GERMANY AND THE MONROE DOCTRINE
By Db. M. J. Bonn,
Professor at the University of Munich, Bavaria.
The Monroe Doctrine can be approached from a purely theo-
retical point of view: the question can be asked whether it has any
legal force; whether it is binding on other countries; whether it is
right and justifiable that a sovereign country like the United States
is acting as the guardian of other sovereign countries without any
request from them. German lawyers and political philosophers
have been greatly interested in these questions. I have to acknowl-
edge openly, that such is not the case with me. I look upon the
Monroe Doctrine as a policy proclaimed and acted upon by the
United States in their own interest, and I am discussing that
policy as a policy and not as a treaty. From that point of view the
question I have to answer is very simple. Is Germany willing to
respect the policy of the Monroe Doctrine? Or she is going to try
and efifect a permanent settlement in South America?
There are a great many people who believe in the existence of
German plans of colonization in South America. Germany, they
explain, is very densely populated. Her African colonies, even if
she were to retain them after the war, cannot be settled by white
people; but South America is a country where a superabundant
white population from Germany might be settled.
Such ideas might have had some weight thirty years ago, when
there was a big German emigration. Though the population of
Germany has increased by nearly thirty millions, emigration has
come to a standstill; there is even a yearly immigration of seasonal
laborers of nearly three quarters of a million. For the purpose of
settling a superabundant population, Germany does not want South
America today, for she has no such population to settle. There
will be no such emigration in the future, as long as German trade
and German industries go on. If that trade was ever stopped
permanently, even the excellent social organization of the German
people could not prevent emigration. There is a movement abroad
to bring about at the conclusion of the war a permanent commercial
102
Digitized by
Google
Gbbmany and thb Monbob Doctbinb 103
isolation of Germany; if that could be done, Germany would be in a
very bad position. There would be permanent unrest in Europe
and probably a very great emigration from Germany. It would
scarcely settle in South America, but rather direct its course towards
the United States. People in the United States, who are afraid
of an increased German immigration, have a great interest in the
continuation of German commercial activities after the war.
As far as the social and economic problems of Germany are
concerned, they do not impel her towards an infringement of the
Monroe Doctrine. They drove her to do business with South Amer-
ica, but that business was done on competitive lines, not based on
monopoly, and she could go on doing that business peacefully, for
the existence of the Monroe Doctrine prevented a scramble for
South America, and maintained the principle of the open door.
It has often been said that in times passed the chief defense of
the Monroe Doctrine has been the British Fleet. A permanejnt
settlement in South America in opposition to England's wishes,
would have been impossible to any nation. But England had really
no reason to object to a permanent German settlement in South
America. In fact, she would have hked it. It would not have
taken anything away from her that she owned, nor that she was
ever likely to get. It would have embroiled Germany with the
United States and saddled her permanently with a problem, which
would have kept her busy for many years. There were many hints
in the British Press during the last fifteen years, that Germany might
confer a benefit upon mankind, if she took up the control and the
permanent reform of some South American country. England's
goodwill could have easily been bought. It is diiBFerent, of course,
with the United States. Their friendship has been valued by the
German government and the German people in times past; their
desires have been respected. For after all that is the true meaning
of the Venezuela incident as described so often lately. Germany
declared explicitly that she did not want any permanent acquisition
of Venezuelian soil. She considered it possible that during the
blockade a temporary landing might be necessary. The United
States, it seems, were afraid of a temporary landing being trans-
formed into a permanent occupation. Whether the suspicion was
justified or not, they resorted to what might be considered a threat,
Germany gave in; she did Qot {give in becaiise she wBfi afraid- Her
Digitized by
Google
104 The Annals of the Ahebigan Acadeht
policy is not carried out in such a haphazard way as to omit an
ample measure of preparedness, if she had meant to effect a perma-
nent occupation; she gave in because she valued the friendship of the
United States higher than the possible advautage of bringing Presi-
dent Castro to terms quickly.
The chief protection for the Monroe Doctrine and its real
permanent guarantee is the nature of the South American problem.
If South America was an uninhabited country, it might be
easy to start a settlement, which in due time would develop into a
daughter state. As British colonization has shown in Australia,
no great strain on military or financial resources would follow. If
South America was inhabited exclusively by lowly native races,
occupation and conquest would be easy. Three thousand white
Germans ruled thirteen million nt^tives scattered over one million
square miles in Africa. But South America is settled by people of
Latin origin, there is no large German element amongst them. Of
four and one-half million immigrants arriving in the Argentine
Republic, two and one-quarter million were Italians; only sixty
thousand were Germans. Of the total immigrants to Brazil 3.4
per cent were German. South America has been a Latin-Indian
country in the past; it is becoming more Latin every day. Even
if there were no native bom South Americans, German immigrants
could not come in great numbers as they could not compete with the
standards of living of the Portuguese, Spaniards and Italians. Any
South American country would have to be conquered against the
will of her inhabitants, many of whom are of European stock.
It would have to be taken by force of arms. It would have
to be held in the same way. A large army would have to be
quartered permanently to subdue the natives, and the security
of this army would depend upon the unhampered control of
the sea. Its safety, so to speak, would be at the mercy
of any sea power. It would be a task ever increasing in
size, for the natives of the newly acquired South American
colony would be of the same origin as their free neighbors.
These would back revolution and rebellion and bring about a
permanent fight, which could only be settled by the conquest
of the whole sub-continent, or by the ejectment of the would-be
conquerors. England's experiences in South Africa have shown
Germany the difl^culty of such conquest. Though she ht^d two
Digitized by
Google
Gebmant and thb Monbob Doctbinb 105
friendly colonies. Cape Colony and Natal, which she could use as
bases, England needed an army of three hundred thousand men to
defeat a few thousand Boers. And England's experiences in Ireland
have shown Germany the difficulties of holding subject a race of
European stock.^ Ireland is only two and three quarters of an hour
from England today; she has been colonized three times by English
settlers; her inhabitants are few in number, and she has always
been a source of weakness to her conqueror. To try to rule per-
manently many millions of alien races many thousand miles away,
would be a task no sane German statesman would care to undertake.
For Germany is a country surrounded by mighty nations; she has
a national army organized for home defense; she cannot send them
away as England did her professional soldiers to occupy perma-
nently f aroff continents.
The difficulty of achieving a permanent settlement in South
America, which would benefit and not burden Germany, is the real
reason why South America need not be afraid of Germany. And
the existence of the Monroe Doctrine, which would prevent other
nations from trying to play a game which Germany is too wise to
indulge in, obviates any scranlble for South America. Germany
went into China because she was sure a partition of China was im-
minent. As long as the Monroe Doctrine continues, she need not
be afraid of such a settlement in South America.
As time goes on the states of South America are getting stronger
and sounder. Their governments will become more and more
reliable, and the sources of friction of the past will diminish in num-
ber. And with them will disappear any incitement which in days
gone by might have made a permanent acquisition of South Ameri-
can territory appear easy and profitable to people who did i\ot take
the trouble to face the real difficulties of occupation or colonization.
Digitized by
Google
WHAT PROGRAM SHALL THE UNITED STATES STAND
FOR IN HER RELATIONS WITH JAPAN AND
CHINA— THE PROBLEM AND A PRACTICAL
SOLUTION
By SmNBY L. Gulick, D.D.,
New York.
The international relations of the United States fall naturally
into three principal groups: those, namely , of our relations with
Europe, with Latin America, and with the Far East, and consti-
tute three distinct problems. The right solution of each of these
problems is of the highest importance to the welfare, not only of
the United States, but to the other countries also. I confine my
discussion to the third group, and shall consider only the question
of our relations with Japan and China.
The great world-problem of the twentieth century is undoubt-
edly the problem of the contact of the East and the West. Whether
it shall bring weal or woe depends largely on the United States.
Shall our Oriental policy be based on national selfishness with race
pride, arrogance and disdain? Shall it be devoid of sympathy?
And shall we rely on military might for carrying it through? Or
shall we above all things seek to give justice, courtesy and a square
deal? Considering only our own interests and stampeded by ill-
foimded suspicion and falsehood, shall we set up our Oriental policy
in complete disregard of their problems, needs and feelings? Or
shall we remove dangers of conflict by a policy of friendly considera-
tion and genuine helpfulness? Shall we observe both the spirit and
the letter of our treaty obligations, or shall we continue to disregard
both the spirit and the letter, holding as obligatory and sacred only
such clauses as conform to our selfish interests?
To these questions America must give answer in practical
shape in the course of the coming decade. If matters are allowed
to drift and the natural impulses of the natural man control our
national policies, the nature of our answers can be readily foretold.
Only the nation-wide study of this new world-problem by millions
of our citizens can develop such knowledge and conviction on these
matters that right relations with Asia may finally be established.
106
Digitized by
Google
Relations with Japan and China 107
Let me present with utmost brevity a sketch of the problem
and of the method for its solution.
A New A^ia
Mankind has entered on a new era. Races and civilizations
for ages separated and self-sufficient are now face to face; their
interests are rapidly commingling. New relations are being es-
tablished between the East and the West, between the masterful
white nations and the hitherto peaceful and submissive -peoples of
Asia. All great races whether of the East or of the West are proud,
ambitious, determined. These qualities aie part cause of their
greatness. ^
Old and New Japan
When Japan first came in contact with the white man, 1550-
1600, she welcomed him. She gave him full opportunity. About
a million Japanese, it is believed, became Christian. Then when
Japan learned of the white man's aggressions and ambitions for
world conquest, she concluded that the white man meant a White
Peril, to avoid which she turned him out, exterminated Chris-
tianity and for 250 years carried out her policy of exclusion most
completely.
In 1853 Japan woke to discover how belated and helpless she
was, due to her exclusion policy. She wavered for a decade, suffered
revolution due to different conceptions as to the right policy to take
in dealing with the white man and finally late in the sixties adopted
her new policy, — that of learning the secrets of the white man's
power, in order to maintain national existence and honor on a basis
of equality with the white man. This has been Japan's controlling
ambition for fifty years. Her success, her war with Russia pro-
claimed. Japanese cannon at Mukden were heard around the world
proclaiming to the white man the end of his undisputed supremacy,
and to the races of Asia the way in which to meet the White Peril.
All Asia awoke to hope and effort.
Japan is Misunderstood
There is, however, wide misunderstanding as to what Japan
asks. She does not ask for free immigration for her laborers. She
recognizes that any large entrance of Japanese into California
Digitized by
Google
108 The Annals of thb Ambbican Acabbmt
would produce both economic and racial difficulty. She is ready to
do whatever may be needful consistent with national honor and
dignity to save America from embarrassment on both lines, as her
faithful administration of the ''Gentlemen's Agreement" witnesses
and her recent adjustment of the laws dealing with expatriation.
She is willing to continue holding back all Japanese laborers from
coming to this country.
What Japan Earnestly Pleads For
What Japan does ask and asks earnestly is that there shall be
no invidious and humiliating race legislation which shall involve
her fair name. Japan stands for national honor in international
relations. For this she has been strenuously striving for half a
century. Is the maintenance of friendship possible between two
nations when one insists on humiliating the other?
Old China
For ages China was so vast, preponderant, selfnsufficient and
self-satisfied that she simply ignored the white man when he ap-
peared on her horizon. Even the wars by which England forced
opium upon her did not apparently disturb her much.
But when port after port was taken by foreign powers; when
Germany took Eiao Chao for the killing of two missionaries; and
when Russia took Port Arthur after it had been forced back from
Japan; when England took Wei-hei-wei and France Kwan-chau-
wan; and when foreigners were gaining mining rights and railroad
concessions throughout China, Chinese began to realize that some-
thing must be done, or they would soon cease to exist as a self-
governing people.
China's first reaction was like Japan's, namely, demand for a
policy of exclusion. That brought on the Boxer uprising (1900).
It was, however, too late. The armies of the Allies relieved Pekin
and proved to China that the white man and Western civilization
could neither be excluded nor ignored. They imposed upon her
as penalty an indemnity, far in excess of expenses, amounting to
$687,566,706.
China Learns from Japan
After a few years of vacillation, confusion, turmoil and revo-
lution, came Japan's victory over Russia (1905), which announced
to the world that an Asiatic race can hold its own against the white
Digitized by
Google
Relations with Japan and China 109
man and that the way by which to do it is to learn all that the white
race knows. China listened and learned.
One month after Japan made peace with Russia, China abol-
ished her system of classical education, over two thousand years
old, and started on the new policy. Since then China has been
introducing western education, western science, western political
life at a tremendous rate. The Manchu dynasty is gone. The
characteristic Chinese queue is gone from large sections of the
country. We now have a new China, ambitious, energetic, resource-
ful, progressive and becoming self-conscious. Her young men by
the hundred thousand are learning western ways. As a short cut
to western knowledge tens of thousands of Chinese students have
been in Japan.
Some decades will doubtless be needed before China will reach
the stage of political stability and.occidentalization already, reached
by Japan. But she will get there as surely as time moves onward.
And when that time comes her demand for "most favored nation
treatment" will be loud and insistent.
Asia's Appeal to America
Both China and Japan are facing mighty problems. The early
solution of those problems concerns, not themselves alone, but all
the world. Our fate is in truth involved in theirs. The urgency
accordingly of their appeal should command our earnest and sym-
pathetic attention and secure our action. Our own national
welfare through the long future, no less than our national character,
are intimately involved in our response to that appeal. China's
appeal for justice and friendly treatment was made decades ago,
but has been completely ignored by the statesmen and Christians
of America. Japan's appeal is more recent. Will America heed
it any better?
The story of our dealings with China is, as a whole, one of
which we need not be ashamed. We have not seized her territory,
bombarded her ports, extracted indemnities or pillaged her cap-
itals as have other nations. On the contrary, we have helped
preserve her from "partition" at a grave crisis in her relations with
western lands. We returned a considerable part of the Boxer
indemnity that came to us. We have stood for the open door and
a square deal* Our consular courts have been models of probity
Digitized by
Google
110 Thb Ann alb of the American Academy
and justice. The work of our missionaries in hospitals, educationi
and in famine and flood relief has been highly appreciated.
In consequence of such factors the Chinese as a nation hold
today a highly gratifying attitude of friendship toward us.
America's Treatment of Asiatics
When we turn, however, to the story of what mahy Chinese
have suffered here, our cheeks tingle with shame. The story would
be incredible were it not overwhelmingly verified by ample docu-
mentary evidence. Treaties have pledged rights, immunities and
protection. They have, nevertheless, been disregarded and even
knowingly invaded; and this not only by private individuals, but
by legislators) and administrative officials. Scores of Chinese have
been murdered, hundreds wounded and thousands robbed by anti-
Asiatic mobs, with no protection for the victims or punishment for
the culprits. State legislatures, and even Congress, have enacted
laws in contravention of treaty provisions. Men appointed to
federal executive offices have at times administered those laws and
regulations in highly offensive methods.
The Scott Law of 1888 and the Geary Law of 1892 are still in
force, though the essential injustice of some of their provisions and
their disregard of Chinese treaty rights have long b^n recognized.
They are producing constant anti-American feeling among Chinese
legitimately in America.
With regard to the Scott Law, Senator Sherman said that
it was "one of the most vicious laws that have passed in my time
in Congress." It was passed as a "mere political race between the
two houses .... in the face of a Presidential election." Sen-
ator Dawes sarcastically referred to keeping the treaties as long as
we had a mind to. The law was "a rank unblushing repudiation of
every treaty obligation .... unwarranted by any existing
danger — a violation such as the United States would not dare to
commit toward any warlike nation of Europe."
The Chinese Minister steadily protested against the plain vio-
lation of treaty; just preceding the Geary Act, he wrote six letters
to Mr. Blaine, only two of which were so much as acknowledged.
He declared that the Geary Act was worse than the Scott Act, for
it not only violated every single article of the treaty of 1880 but
also denied bail, required white witnesses, allowed arrest without
Digitized by
Google
Rblations with Japan and China 111
warrant and put the burden of proof on the Chinese. He quoted
our own statement on the harsh and hasty character of the act, not
required by any existing emergency, whose political motive was
well understood both in China and the United States. In his final
protest he said: "The statute of 1892 is a violation of every prin-
ciple of justice, equity, reason and fair dealing between two friendly
powers."
Believing that the law would be pronounced unconstitutional
because of its plain contravention of the treaty, the Chinese carried
their case up to the Supreme Court.
Judge Field, who presented the judgment of the court, said:
"It must be conceded that the aqt of 1888 is in contravention of the
treaty of 1868 and of the supplemental treaty of 1880, but it is not
on that account invalid It (a treaty) can be deemed
. . . . only the equivalent of a legislative act, to be repealed
or modified at the pleasure of Congress It is the last
expression of sovereign will and must control." "The question
whether our government was justified in disregarding its engage-
ments with another nation is not one for the determination of the
courts This court is not a censor of the morals of the
other departments of the government."
This makes it clear that a treaty is not the "supreme law of the
land," except as Congress makes and keeps it so.
An Ominoua SUtuUion
If the faithful observance of treaties between the nations of
Europe constitutes the very foundation of civilization, as we are
now Vehemently told, is not the faithful observance of treaties with
Asiatics the foundation of right relations with them? Do not
treaties have moral aspects which should place them on a higher
level of authority than the ordinary acts of Congress. Disregard
of this fundamental principle for the maintenance of right inter-
national relations is fraught with ominous consequences. Congress,
of course, has the power to abrogate a treaty^ but there is a right
and also a wrong way to do it. Is it right for a nation to abrogate
an inconvenient treaty by simply passing laws in contravention to
certain of its pledges? Is it conceivable that Congress would have
treated China as it has, had she been equipped as Japan is today,
with the instruments of occidental civilization?
Digitized by
Google
112 Thb Annals of the American Academy
Now when China becomes equipped with a daily press and
adequate world news, when her national organization becomes better
unified, more efficient and better equipped, when her self-conscious-
ness is more perfectly developed, and when she learns that Chinese
entering America have often suffered ignominious treatment, that
Chinese lawfully here are deprived of rights guaranteed by long
standing treaties, and that privileges granted as a matter of course
to individuals of other nations are refused to Chinese on exclu-
sively racial grounds, is it not as certain as the sunrise that Chinese
friendship for America will wane and serious possibilities develop?
The situation is serious but there is no crisis. China and Japan
have given up sending in useless protests. But I wish earnestly
to press the point that before they feel impelled to raise the issue
again we should ourselves voluntarily and without external pressure
of any kind rectify our laws and our treatment. By so doing, the
warmth and genuineness of their friendship which would surely arise
cannot easily be estimated.
A New Oriental Policy
Is it not clear that America needs a new Oriental policy? The
New Orient renders obsolete and dangerous our nineteenth century
Asiatic policy. Let us promptly adopt a policy which, while it will
provide, on the one hand, for the just demands of the Pacific Coast
States to be protected from swamping Asiatic immigration; will never-
theless also provide, on the other hand, /or full justice and courtesy
of treatment and for complete freedom from race discrimithation whidi
is inevitably regarded as humiliating. The new policy should provide
for observance of the spirit no less than of the wording of our tfeaties,
and be thus in harmony with the principles of good neighborliness.
America's crucial problem with Asia lies, not in Asia, but in
America. Not our diplomacy in the Far East, but our treatment
of Asiatics in the Far West is to be determinative of our Oriental
relations. I therefore omit altogether from consideration in this
necessarily brief paper the question of our foreign diplomacy and
confine my discussion to practical suggestions for the solution of our
domestic problem.
All this means that we need comprehensive immigration legis-
lation dealing with the entire question in such a way as to conserve
American institutions, protect American labor from dangerous
Digitized by
Google
Relations with Japan and China 113
economic competition, and promote intelligent and enduring friend-
liness between America and all the nations, East and West, because
free from differential race treatment.
Outlines of a Comprehensive Immigration Policy and Program
Let me give in briefest outlines a policy and a program that
seems to fulfill the requirements.
1. The Control of Immigration
Immigration from every land should be controlled, and, if
excessive, it should be restricted. The principle of restriction
should be applied equally to every land, and thus avoid differential
race treatment.
2. Americanization the Principle of Control
The proven capacity for genuine Americanization on the part
of those ^ready here from any land should be the measure for the
further immigration of that people. Newcomers make their first
contact with America through those who speak their own language.
The Americanization, therefore, of newcomers from any land de-
pends largely on the influence of those already here from that land.
The number of newcomers annually admissible from any land, there-
fore, should be closely dependent on the number of those from that
land who, having been here five years or more, have actually become
American citizens. These know the language,' customs and ideals
of both peoples, ours and theirs.
America should admit as immigrants only so many aliens
from any land as she can Americanize.
3. The Proposed Restriction Law
Let, therefore, an immigration law be passed which provides
that the maximum permissible annual male immigration from any
people shall be a definite per cent (say five) of the sum of the
American-bom children of that people plus the naturalized citizens
of the same people.
The grandchildren as a rule do not know their ancestral lan-
guage, and therefore do not aid particularly in the Americanization
of newcomers.
In general there would be no restriction on immigration from
Digitized by
Google
114 Thb Annals of thb Ambbican Acadbmt
North Europe. The reverse, however, would be the case for the
countries of South Europe. The permissible immigration from
China and Japan would be less than that which has been coming in
recent years.
Provision should be also made for the protection of all new-
comers from ruthless exploitation and for their distribution, employ-
ment and rapid Americanization. To aid in the accomplishment
of these ends, the federal government should establish —
4. A Bureau of Registration
All aliens should register annually until they become American
citizens, and should pay an annual registration fee, of say ten dol-
lars. We need to know who the aliens are and where they live, and
they need to know that we know these facts about them. A system
of registration could be worked out in connection with a National
Employment Bureau as suggested by the late Professor Henderson
that would not involve police surveillance. This Bureau should
be regarded as a method for friendly aid, not of hostile and suspicious
control.
5. A Bureau for the Education of Aliens for Citizenship
This Bureau should set standards, prepare textbooks, promote
the establishment of night schools by states, cities and towns —
which might receive federal subsidies — and hold examinations.
The education and the examinations should be free. Provision
should be made for the reduction of the registration fee by, say one
dollar, for every examination passed. The education should be
simple and practical, avoiding merely academic proficiency. Let
there be six examinations, three in English and one each in the
History of the American People, in the Methods of our Govern-
ment, local, state and federal, and in the Ideals of Democracy.
When all the examinations have been passed, there would still
remain the annual registration fee of four dollars, so long as the in-
dividual chooses to remain an alien.
6. New RegvlaUons for the Bureau of Naturalization
Citizenship should be granted only to those who have passed
the required examinations provided by the Bureau of Alien Edu-
cation and have maintained good behavior during the five years of
probationary residence. The naturalization ceremony might well
Digitized by
Google
Relations with Japan and China 116
take the form of a dignified welcome service — say on a single day
in the year — the Fourth of July, with appropriate welcome orations,
banners, badges and banquets.
7. Citizenship for all Who Qualify^ Regardleas of Race
Eligibility to naturalization should be based upon personal
qualifications of intelligence, knowledge and character. The mere
fact of race should be neither a qualification nor a disqualification.
Such are the main outlines of the proposed Comprehensive
and Constructive Program here offered for the solution of the entire
immigration problem, Asiatic as well as European. For an ade-
quate understanding, however, of this general proposal we should
consider many details which are here necessarily omitted.
• Advantages of this Policy
Would not the above proposals for a Comprehensive and Con-
structive Immigration Policy coordinate, systematize and ration-
alize om* entire procedure in dealing with immigration, and solve
in a fundamental way its most perplexing difficulties? Such a
policy would protect American labor from danger of sudden and
excessive immigration from any land. It would promote the
wholesome and rapid assimilation of all newcomers. It would
regulate the rate of the coming of immigrants from any land by the
proven capacity for Americanization of those from that land already
here. It' would keep the newcomers always in the minority. It
would be free from every trace of differential race treatment. Our
relations with Japan and China would thus be right.
Such a policy, therefore, giving to every people the "most
favored nation treatment," would maintain and deepen our inter-
national friendship on every side.
An Objection
1 am not ignorant of objections to these proposals that have
been raised by a few critics. They assert that Asiatics and es-
pecially Japanese are not assimilable. They love to quote the
famous lines from Kipling :
Oh, East is East and West is West,
And'never the twain shall meet
Till earth and sky stand presently
At God's great judgment seat.
Digitized by
Google
116 The Annals of the American Academy
They, however, who quote these lines, forget or never heard the
lines that immediately follow:
But there is neither East nor West,
Border nor breed nor birth,
When two strong men stand face to face,
Tho' they come from the ends of the earth.
There are indeed real differences between the East and the
West, yet there is also real and still deeper unity.
This is a question of great importance and deserves careful
study. I have not failed to consider it with some care in my volume
on the "American Japanese Problem." But after all the question
is not really relevant to the general proposals here put forward.
The permissible immigration proposed would be considerably less
than that which is now coming from Asia under present laws.
The question of assimilability of Asiatics, therefore, cannot be
raised as an objection to this 5 per cent restriction proposal. On the
contrary, should not those who urge Asiatic non-assimilability
advocate this policy rather than oppose it?
Condusion
I return now to the questions with which we began. Shall
America's Oriental policy be based upon national selfishness and
race pride or upon the Christian ideal of universal human brother-
hood and Golden Rule internationalism? That will depend largely
on the character of the leadership of our nation in our international
affairs. Will our most expert thinkers on the problems of political
and social science grapple earnestly and scientifically with this prob-
lem of Oriental immigration and assimilation in the Occident?
Will we lead our institutions of learning to devote their earnest
thought and study to the promotion of wholesome thoughts and
attitudes upon this entire question of races and their relations?
Will we teach our people to discard antiquated or one-sided con-
ceptions as to race biology and psychology which promote race
arrogance and prejudice?
The problem of world-peace is not primarily the problem of
treaties, arbitration provisions and Hague Courts, but of mutual
goodwill and confidence among the nations. How can this spirit
be developed? If Asia fears and distrusts Christendom because
of continued injustice, Asia will arm. As Asia arms Cbristeudom
Digitized by
Google
Relations with Japan and China 117
will increasingly fear and distrust her. The way to establish
goodwill and mutual confidence between the East and the West
is for Christendom to act toward Asia in right and helpful ways.
We must voluntarily do her justice, keep our treaties and deal with
all Asiatics who come to our lands in ways that we ourselves would
like to receive were we in their place.
In a word, the international relations of nations, as of individ-
uals, must be Christian if there is to be world-peace and wholesome
development. Nations must not only be just and honest, but they
must be kindly and helpful. They must regard and treat each
other on the basis of imiversal human brotherhood. This and this
alone will evoke real goodwill and mutual trust.
As an American missionary long resident in Japan I appeal
to the citizens of America on behalf, not of Japan alone, but also of
Asia; nor yet on behalf of Asia alone, but of the whole world, includ-
ing our own beloved land. For on the right attitude of the West to
the East hangs the fate of the whole world for centuries to come.
Digitized by
Google
WHAT NATIONAL POLICY SHALL WE ADOPT WITH
REFERENCE TO MEXICO?
By L. S. Rowb, Ph.D., LL.D.,
University of Pennsylvania.
The questions involved in our relations with Mexico, while
both serious and complex, lend themselves to satisfactory solution,
provided we are willing to adopt a policy which will be sincerely and
genuinely helpful to Mexico; a policy so formulated that it will
contribute toward enabling her to solve her problems in her own way;
in accordance with the genius, the political preparation and the social
status of her people. Such a policy demands that we discard those
mediaeval standards of vengeance which would lead us to visit
upon an entire people, the misdeeds and crimes of a handful of
bandits.
We must, furthermore, learn to deal with the Mexican situation
on a basis of fact rather than through the intermediary of political
phrases. It is astonishing to what an extent we are the slaves and
even dupes of mere catchwords. We use the terms "democracy,"
"inalienable rights," "will of the people," as if they had no relation
whatsoever to the social and political development of a people.
We assume that the particular form of government and the par-
ticular type of institution that we have developed in the United
States are not only the goal to which all nations should aspire,
but are something which should be introduced immediately as a
guarantee to their happiness, progress and prosperity.
It is this failure to face the facts of the Mexican situation that
has prevented us from making our full contribution toward the
reestablishment of order in that unhappy country. In fact, for a
time it looked as if our policy, far from contributing to the refis-
tablishment of order, would become a disturbing factor in the in-
ternal situation, perpetuating and even aggravating the conditionf
of anarchy that prevailed.
In any attempt to formulate a policy which will at once sub-
serve our best interests as well as those of Mexico there are two or
three cardinal facts which must ever be kept in mind.
118
Digitized by
Google
POLICT WITH RbfBMNCB TO MeXICO 11©
In the first place, we must recognize that Mexico is living under
a written constitution which is out of harmony with the basic needs
of her people. In a moment of idealistic emulation of the United
States, a small group of her leaders adopted a constitution based
on the federal system of the United States. What Mexico needed
and still needs is a unified national system sufficiently strong to
make its power felt in every section of the republic, and thus ca-
pable of assuring respect for law and order. A strong and centra-
lized national government does not necessarily mean a tyrannical
government. No one would call the French system tyrannical,
and yet it is highly centralized. In a sense it is true, therefore, that
no president can ever hope successfully to govern Mexico in strict
conformity with her present constitution. The twenty-six years
of the administration of General Diaz, as compared with the long
period of anarchy, from 1810 to 187^, furnish adequate and con-
vincing proof of this fact. Until the provisions of the Mexican
constitution are brought into harmony with the political needs of the
nation there will be a wide gap between the real political system and
that embodied in the written constitution.
The Mexican people are neither turbulent nor difficult to
govern. From the time of the first movement for independence
in 1810 until the present day, Mexico's difficulties are traceable
to the ruthless conflicts of political factions. For over one hundred
years, political agitation in Mexico has taken the form of armed
conflict rather than of free discussion. In most cases these con-
flicts were due to the ambitions of local political leaders who made
the ignorant and trusting Indians their dupes rather than their
beneficiaries.
The Madero revolution of 1910, like the Juarez revolution of
the early '60'8, was an exception to this rule and assumed real
national proportions; based on a real political^ economic and
social purpose. In spite of the remarkable progress of the
country during the administration of President Diaz there is
one fact which stands out with great clearness and which
explains the opposition which gradually undermined his power
and finally led to his overthrow. General Diaz fell into the
error of confusing national wealth with national welfare. He
assumed that the exploitation of the natural resources of the
country, with its accompanying investment of foreign capital.
Digitized by
Google
120 The Annals of ths Amebican Acadbmt
would inevitably lead to the betterment of the condition of the
laboring classes. This was a perfectly natural error inasmuch as it
represented the prevailing economic doctrine of the period. He
failed to appreciate the fact that in countries in which the laboring
population is ignorant and lacks all spirit of co5peration and com-
bination, the exploitation of the laboring classes is an inevitable
accompaniment to the exploitation of natural resources. National
wealth may advance by leaps and bounds, but the position of sub-
jection of the working classes prevents them from securing a fair
share of the national surplus. This is precisely what occurred in
Mexico. The fact that some real progress was made only served
to awaken a spirit of discontent. The situation in Mexico is such
that any national administration, in order to be really successful,
must extend its protecting care to the masses of the working people.
This means social legislation of a highly developed character,
guaranteeing a minimum wage and adequate protection against
exploitation through company stores, payment in kind, advances
in anticipation of wages, etc.
Furthermore, if we really desire to avoid armed intervention,
we must do everything in our power to assure the establishment of
a strong, responsible government in Mexico. This means some-
thing far more than the formal recognition of this or that de facto
government. It is a well known fact that the Texan and New
Mexican borders are the favorite hatching places for conspiracies
against established order in Mexico, and that most of the sub-
versive movements have received either financial or other material
support from American sources. If we are to assist Mexico in
the solution of her problems, we must so guard our frontier that
revolutionary movements hatched on American soil will not.be
permitted to develop, and that the American border will be closed
in fact, as well as in law, to the furnishing of arms and ammunition
to revolutionary leaders.
If we adopt as the cardinal principle of our policy the estab-
lishment of a strong and stable government in Mexico we must be
prepared to assist her in the solution of the difficult problems in-
volved in her financial reorganization. This does not involve the
necessity of pledging the credit of the United States government,
but it does mean that American financiers must be encouraged to
assist Mexico in the rehabilitation of her national finances. This
Digitized by
Google
PoLicnr WITH Rbfebsncb to Mexico 121
financial codperation is more important at the present moment
than at any previous period in Mexican history owing to the govern-
ment's dire necessity, on the one hand, and to the closing of Euro-
pean sources of credit on the other.
Finally, I desire to refer to the delicate question raised by
the long series of border difficulties, and to the policy which we
should pursue with reference thereto. If our instinctive reactions
are to be mediaeval, if our attitude is merely to wreak vengeance
on those who commit depredations without reference to the
effect of such a policy on our relations with the Mexican people,
we are on the high road not only to armed intervention but to war
with Mexico.
I desire to make a plea for a different viewpoint, a different
attitude, a different guiding principle in the formulation of our
policy. Unless I am much mistaken, the President of the
United States would never have sent a punitive expedition into
Mexico if he had not feared that the Congress of the United States
would force him to measures more radical and more drastic. If he
had been in a position to depend on the self-control, the patience and
forbearance of Congress, I believe he would have said to the Amer-
ican people:
The sending of a pimitive force into Mexico will endanger
the cardinal principle of our Mexican policy, namely the re-
estabUshment of order within the republic. Such an expedi-
tion cannot help but undermine the de facto government by
arousing a suspicion in the minds of the Mexican people that
their government is a party to foreign invasion. It will make
the reSstablishment of order in Mexico more difficult because
it mH encourage revolutionary leaders to call upon the Mexi-
can people to oust the invading foreigner. By sending our
troops into Mexico we become the mere plaything of events;
any untoward incident may precipitate a prolonged and bloody
struggle with the Mexican nation.
The fact that we are encountering great difficulty in finding the
leader of the brigands is an indication of the forbearance which we
should show in giving to the Mexican government ample time to
bring the outlaws to justice. It is unworthy of a great nation such
as ours to engage in a mere man hunt on foreign soil. The de facto
government of General Carranza is now in control, and we can well
^ord to lei^ve with it the task of hunting out the wrong-
Digitized by
Google
122 The Annals op the Amebic an Academy
doers. He is in a far better position to do this than we. Let ns
by all means hold the Carranza government responsible for the
punishment of the wrongdoers, but let us not embark upon a policy,
the immediate consequence of which may be, that in endeavoring
to wreak vengeance on a few outlaws we find ourselves forced to
wage war on sixteen millions of innocent people.
Today when the real purpose of the punitive expedition has
been accomplished, when the band of outlaws has been dispersed
and so many of its members killed, the large and courageous thing
to do would be to say to the country :
Our mission in Mexico, if a mission it was, is fulfilled. We
withdraw our troops, satisfied that the Oarranza government
will make the best endeavor to fulfill its promises. We do not
wish to endanger our amicable relations with the Mexican
people by continuing the delicate and anomalous situation
created by the presence of United States soldiers on Mexican
soil.
While such a policy would arouse immediate criticism from the
unthinking, especially in this year of presidential manouvering, I
finely believe that it would soon receive the approval of the sound
and sober judgment of the American people.
There is no reason why we should not enter into a joint
agreement with Mexico in order to establish an eflfective control
of the border. A joint agreement would mean the codperation of
the Mexican army and the army of the United States, and would
make impossible, or at least exceedingly unlikely, a recurrence of
the unfortunate events which during the last few months have
brought the two nations to the verge of war. Such cooperation
would be deeply appreciated in Mexico and while its operation
would, no doubt, meet with some difficulties during the early
stages, it would ultimately become not only a safeguard to our
border but an assurance to the Mexican people of the spirit of
international helpfulness that is dictating American policy.
We can do much to assist Mexico in the solution of her grave
domestic problems, but we must not delude ourselves with the
thought that we are better able to solve them than Mexico herself,
or that we can greatly accelerate their lasting solution through a
poUcy of dictation or armed intervention. Mexico must make
enormous sacrifices in order to educate her people and to iQcre^^
Digitized by
Google
t^oucT WITH IIbfbrencb TO Mexico 123
their industrial efficiency; she must make a stupendous effort to
develop a small land-holding class, and she must provide a
highly organized system of protective legislation for her laboring
classes. No one who really knows the Mexican people and who has
studied their characteristics with sympathetic interest, can help
but feel that all of these problems are capable of solution, but that
for their solution much time and endless patience will be required.
There will be much groping, much stumbling, many false starts
and endless discouragements, but it will be through the overcoming
of these obstacles that the Mexican nation will develop the qualities
necessary for self-government, and the Mexican administration
will acquire the experience necessary to grapple with large national
problems.
For the United States the choice lies between a policy of help-
ful cooperation and one of armed intervention. If a policy of
helpful cooperation be adopted our government will prevent Amer-
ican soil from becoming the hatching ground of conspiracies against
order in Mexico; our financiers will assist the Mexican government
in the rehabilitation of her finances, and our capitalists, in the con-
duct of great Mexican enterprises, will have due regard for the
welfare and for the economic and social advance of the Mexican
people. With such" codperation the problems of reestablishing
order in Mexico, of maintaining a stable government and of govern-
ing a docile and peaceable people become comparatively simple.
Through popular education and the adoption of measures designed
to increase the industrial efficiency of the laboring classes, the foun-
dations will be laid for the intelligent participation of the masses
of the Mexican people in the political life of the country, thus en-
abling her to look .forward to th6 development of something ap-
proaching democratic government.
The alternative to the policy of helpful cooperation is armed
intervention. Through such intervention we assume the respon-
sibility for a series of problems for which we are temperamentally
unfitted. We introduce into our domestic political situation a dis-
turbing factor and we destroy at one blow the hope of a real Pan-
American, continental policy. Armed intervention in Mexico,
besides being a grave injustice to the mass of the Mexican
people, will alienate for generations to come the sympathies of
Digitized by
Google
124 Thb Ankalb Of TRB Ambbican AcADSmr
the peoples of Central and South America. We will be regarded
as aggressors, coveting the property of our neighbors.
From whatever point of view, therefore, we approach the ques-
tion, whether from the standpoint of our own domestic policy, the
welfare of Mexico, or our position on the American continent, our
relations with Mexico should be determined by a spirit of inter-
national codperation, which will assure Mexico of our integrity
of purpose and give to the other republics of the American conti-
nent, as well as to the world at large, assurance that the United
States stands for a new concept of international relations, one in
which mutual suspicion shall give way to confidence, aggression to
cooperation, and trickery to helpfulness.
Digitized by
Google
EFFECT OF PREPAREDNESS UPON AMERICA'S
INFLUENCE AND POWER
By William J. Stone,
Chairman, Committee on Foreign Relations, United States Senate.
I have been complimented by a request to open the discussion on
this interesting subject, "The Effect of a Policy of Naval and
Military Preparedness on America's Influence as a World Power."
Ishalltaketwo views of the subject: First, our historical policy
and its effects. Secondly, a reverse policy and its effects.
It may be safely said that hitherto the United States has not
stood before the world as a great war power, but, on the contrary,
has stood, essentially and conspicuously, as a great peace power.
Our government and people have not devoted themselves assidu-
ously or with great concern to the task of maintaining either a strong
military or naval establishment. These interests have held a sub-
ordinate place in the thought and activities of our national life. On
four notable occasions our government found itself confronted with
the necessity of hurriedly and largely augmenting its military
strength to meet emergencies. I refer, of course, to the War of 1812
with Great Britain, the War with Mexico, the Civil War between
the States, and the War of 1898 with Spain. So far as the military
establishment, as contradistinguished from the naval establishment,
go^, the government was compelled in each of these four stated
emergencies to rely largely, if not chiefly, upon a volunteer force.
Judged by the results of these several conflicts, it may be said with
confidence that the government did not in any instance rely in vain
upon its volunteer army, nor rely in vain upon the other resources
necessary to war which the government was obliged hastily to con-
struct and organize. Naturally these results tended to impress the
public mind with the belief that the nation might continue to rely
upon the patriotism and power of the people who ordinarily follow
peaceful pursuits to take care of the coimtry whenever an emergency
should arise demanding military service. Moreover, it has been an
old traditional American policy that a large permanent military
establishment was imdesirable.
126
Digitized by
Google
126 The Annals op imo AMEiticAN Acadsmt
There have been several reasons for this national iEittitude.
Among these reasons, it has been believed that a large standing
army, in the immediate control of men whose lives are devoted to
military activities, might, under the dominating command of some
abnormally ambitious man or coterie of ambitious men, become
dangerous to our ideals of a simple representative democracy; that
such an organization would entail grievous and needless burdens on
the country; and that it would tend to create a military caste ti^t
would in the course of its development incline to bring us more and
more into sympathy with the military spirit and policy prevailing in
European nations — ^a spirit and policy generally condemned in this
coimtry. Following the admonitions of the elder statesmen who
founded and developed our institutions, the mass of our people long
ago settled down into the belief that they could safely depend upon
the militia and citizen soldiety to grapple with possible dangers
coming from the outside to threaten our national welfare. Because
of all this, while we have progressed along all other lines with strides
almost without parallel, we have remained practically stationary
with respect to our regular military establishment, and, until within
the last quarter of a century, have done comparatively little to aug-
ment our naval establishment. During the last 25 or 30 years we
have added materially to our naval armaments, although we still
hold a comparatively inferior rank among the greater maritime
nations.
I believe this to be, briefly stated, a correct outline of the policy
of this nation with respect to its military and naval interests during
the course of our national history of more than 130 years. For 130
years we have been, so far as organized military force is concerned,
in a state of comparative unpreparedness for war. Distinctly we
have been upon a peace basis. What, then, has been the effect of
this non-military policy upon our national development and life? I
do not say that it is due to this policy, but undoubtedly during this
long period our national expansion and development, leading to
national prosperity and happiness, have been phenomenal. In .ad-
dition to our wonderful progress at home, I think it safe to say that
the influence of America for good on the outside world has been very
great. It will hardly be controverted that the influence of our
national example, taken all in all, has been beneficial throughout
the world. I have thought proper to say this much about our long-
Digitized by
Google
America's Intlubncb and Powbb 127
continued policy of peace in order that we might by wB,ir of contrast
have this aspect of our national life in mind when we turn to consider
the immediate question before this distinguished body, namely,
"The Effect of a Policy of Naval and Military Preparedness on
America's Influence as a World Power."
That brings me to my second proposition: Shall we reverse the
old policy, or materially change it, so as to approach more nearly to
a permanent war footing? That question involves both the need
for and the effects of a change. There is now a strong movement
abroad in the land to change our old policy with respect to naval
and military affairs. On the ground that new world conditions
have made it necessary, we have started upon a program for a great
and rapid enlargement of both our military and naval establish*
ments; and this we are doing in the name of preparedness — espe-
cially in the name of what is called preparedness for defense. All
of us still proclaim devotion to peace; but it is said that we must
be prepared to fight for peace if necessary to make it certain. And
there is more in that than one might think at first blush.
I have spoken of the need of a change of policy; but the scope
of the exact question before us scarcely requires me to discuss
whether this proposed change would be wise or unwise, and the
limit on my time forbids such a discussion. Moreover, my prin-
cipal task is only to provoke discussion. Nor is it necessary for me
to discuss the limitations that prudence or patriotism would place
upon our preparedness program.
Perhaps it is sufficient to say, that as we move along from one
generation to another the conditions and environments of nations
change, and in consequence it may follow that what was a wise
policy in the past might not be a wise policy for the present or future.
I repeat, that from time to time the relations of different nations to
each other are changed — changed sometimes from choice and some-
times from necessity. For example, these relations may be changed
from choice when two or more nations have in mind to accomplish
a certain purpose esteemed to be of mutual advantage; and that
purpose may be good or bad, praiseworthy or sinister. But whether
it be for a good or a bad purpose, whenever nations combine to
accomplish something which other nations regard as inimical to
them, the result is a counter-combination. History has furnished
ys with man^ instances of cpmbinatioiis made for mutual advanta^e^
Digitized by
Google
128 The Annals of the American Academy
which in turn have led to combinations in opposition; especially is
this true with respect to European nations. There may be irritating
causes for combinations, relating, for example to territory or to
commerce, or it may be to promote a mere ambition to extend the
power of one nation or combination to the detriment of another.
These irritating causes may be numerous and varied; and they have
in the past as often related to small things as to great things. Any-
way, as the world grows in population and opulence and the national
breathing space becomes more and more contracted, the restless
ambition of rulers, and sometimes the grasping impatience of peoples,
stirs up a dangerous spirit which pants for dominance and larger
opportunity. For causes of this kind and others, which may bear
even to us a hideous and threatening aspect, great nations both east
and west of us have organized, equipped, and maintain great mili-
tary and naval establishments. These stupendous organizations
have been made ostensibly for defense and for the preservation of
peace. O Peace, what crimes are committed in thy name I
But the reasons for these stupendous armaments which we see
about us, whatever they are, are of minor importance. The fact
is that for half a century the armaments of a large part of the world
have been increasing until practically all of Europe and a large part
of Asia have become vast military encampments. In the face of
this comes the question — Shall we hold steadfastly to our old policy
of peace without preparedness? Primarily, of course, the answer
to this question must depend first upon our safety at home, and,
secondly, upon our influence on the outside world as a power both
capable and willing to protect its rights anywhere under the sun.
Whether considered from one of these standpoints or the other,
speaking for myself, I think that a large permanent or standing land
military force is as undesirable now as ever. I have felt that our
military needs would be adequately supplied if we established a
number of large training schools and camps throughout the country,
where young men could be taught the essentials of military tactics
and service. In this way I have believed that we would gradually,
and, indeed, rapidly, fill the country with young men educated in
the rudiments of military service, and at the same time keep alive
the martial spirit of our people, which I .deem of high importance.
Likewise, I have believed that the government ought to have con-
stantly at its command the means of thoroughly and efllciently
Digitized by
Google
America's Influbncb and Power 129
equipping an army of almost any size. Beyond these items of
preparedness, I think we could safely rely on a regular army of
between 100,000 and 150,000 men, supplemented by the National
Guard, and by our millions of patriotic people in civil life. To my
thinking there is not one chance in thousands that we will ever be
called upon to defend against an invading army of any magnitude,
or to send an army of invasion of great size into any foreign land.
I cannot believe that any benefit would come to this country from a
great standing army that would compensate for the burden of its
maintenance. That is all I shall say upon that subject.
My belief is that if ever we are attacked by a foreign power
strong enough to make the onslaught perilous, it will come from the
sea, not from the land. Hence, I am an ardent advocate, always
have been, of the most complete and thorough sjrstem of coast de-
fenses. Everything that military and naval science can devise to
make our coasts impregnable, I am for. Likewise, and along the
same line of thought, I have always been and still am not only an
advocate of, but in fact an agitator for, a great navy. I would create
a navy strong enough not only to resist assault, but strong enough,
if need should arise for it, to take th^ offensive; strong enough to
protect American honor and American interests anywhere in the
world.
And now I answer your question, if question it be, by saying
that with our seacoasts prepared for defense as I have indicated, and
with a navy riding the waves strong enough not only to defend, but
to assault if need be, the danger of possible foreign aggression would
practically disappear. Add to this such military preparedness as I
have outlined, I am confident that we would hold a position which
would have the effect of vastly increasing our prestige, influence, and
power among the nations of the world.
Digitized by
Google
THE TRUE BASIS FOR AMERICA'S WORLD
INFLUENCE
By Thomas P. Gore,
United States Senator from Oklahoma.
There is a peculiar propriety, there is a double fitness in the
discussion of the present subject in the city of Philadelphia. This
city was christened in the very name of human fraternity. It was
dedicated to the sentiment — shall I say to the unrealized dream? — of
the brotherhood of man. It was founded and builded upon the
principle that man is in some sense his brother's keeper and should
not become his brother's butcher, a principle which would deny the
sufiiciency of Cain's answer, had he answered the question, ''Where
is Abel, thy brother? " by saying that he lived across the border.
Such an answer would have challenged the very spirit of humanity.
Few, if any, will agree with Bax when he says that the day is fast
approaching when to call a man a patriot will be the deepest insult
which can be offered him. Hardly more in this country will agree
with Bernhardi or Reumelin when they declare that patriotism is the
circumference of morality and that the moral law does not bind the
sovereign state. Between these extremes there are those of us who
believe that the love of country is not only a noble virtue but is a
virtue essential to organized society.
Starr King declared that self-love is the freezing point of the
social virtues. Beyond and better than this is the love of family
and the love of country, both of which have their proper places in
the social and moral economy. Much as we cherish these senti-
ments, much as we respect these virtues, we cannot choose but agree
with Miss Edith Cavell when she said, with the light of another
world breaking in her face, "Patriotism is not enough." No sub-
limer sentiment has been uttered since Gethsemane. Whatever
else this may mean it means that beyond patriotism there is a prin-
ciple of humanity, a principle of good will which should be held
sacred, inviolate and universal. This principle must be the basis
of international law, the soul of international justice. It should be
the sovereign principle of every nation which assumes to be or aspires
to become a world power.
13Q
Digitized by
Google
Americans World InJIiUence 131
I say there is a double fitness in this discussion in this city be-
cause Philadelphia is the birthplace of the United States as an in-
dependent nation. Nay, more, it is the birthplace of the United
States as a world power. The United States became a world power
on July 4, 1776. The Declaration of Independence was the greatest
moral force set in motion among the sons of men since the sun veiled
itself in darkness rather than witness the Divine Tragedy. When
Charles James Fox heard of the destruction of the Bastille he ex-
claimed, ''How much is this the best and greatest event in the his-
tory of the world? " It was not so great an event as the Declaration
of Independence. It was largely the effect, the Uneal descendant of
that Declaration. The self-evident truths set forth in that in-
dictment of tyranny have been leavening the entire world with the
spirit of liberty, equality and fraternity. These principles account
for many a revolution in western Europe, and even the silent, brood-
ing £)ast with its mighty millions has during the present century felt
the deferred but quickening impulse of the selfsame principles.
This new conception of the rights of man has in some measure af-
fected the status of every Uving human being. It has lent a new
dignity to human nature itself. It has been a beacon to the op-
pressed and to the persecuted everywhere.
The influence of the United States as a world power has further
made itself felt as affecting the individual in the aboUtion of the
doctrine of indefeasible allegiance and in the establishment of the
principle of voluntary expatriation.
The United States became a world power when in its very cradle
it drove the British Lion — if I may so say — halt and bleeding from
the Thirteen Colonies, when it triumphed in arms over an embattled
empire, the mightiest upon the globe. The United States was acting
as a world power when it refused to subnait to the multiplying in-
juries and insults of the Barbary States and rescued the commerce
of Christendom from a tolerated piracy which had continued for
centuries.
That the United States is a world power was further evidenced
when in a second passage at arms with Great Britain it abrogated
the pretensions of that and other countries in regard to the impress-
ment of sailors and seamen and established in theory, if not in fact,
the freedom of the seas. It was the voice of a world power when
the United States proclaimed the Monroe Doctrine and placed itself
Digitized by
Google
132 The Annals op the American Academy
as a bar in the pathway of the holy alliance in its effort to resub-
jugate the emancipated Spanish colonies in America. By that one
act alone the United States erected a permanent safeguard in the
new world against the ambition and encroachment of the old, gave
the western hemisphere an identity and destiny of its own. When
the United States prevailed upon Japan to unbolt the doors of that
hermit kingdom to the advent of western civilization it breathed the
breath of a new life into the dead and dying Orient.
I cannot accept the theory that the United States became a
world power as a consequence of the Spanish-American War. The
character of a nation as a world power must be determined by two
considerations. First, the character of the ends which it seeks to
accomplish in world politics. Second, the character of the means
which it employs for the accomplishment of these ends. The effect
of a nation's activities as a world power depends not entirely upon
its own intentions or the character of its means and its ends, but
depends largely upon the opinion, indeed, I may add, upon the
suspicions, which other nations may entertain as to its intentions,
its means and its ends. World power must be exercised through
one of two forces, or through a Combination of two forces. I mean
moral forces and military force.
In the main I shall leave others to judge as to the character of
the objects which the United States has sought as a world power and
as to the character of the means which it has employed. I shall
leave others to conclude for themselves whether the United States
has relied upon moral forces rather than upon military force in the
prosecution of that splendid career in world politics which she has
hitherto achieved.
Of course, it was our vast military and naval establishment
which enabled us to vindicate the Declaration of Independenci^ and
create this republic. It was our trained regulars, our seasoned
veterans which enabled us to triumph over the raw recruits, the
undisciplined militia of Great Britain. It was our vast naval and
military establishment, it was our universal compulsory military
service which brought victory to our arms in the War of 1812, in the
Mexican War and in the majestic struggle for the perpetuation of the
Union. Does not such a suggestion rob our history of its chiefest
splendor and rob our greatest national achievements of their true
moral worth and significance?
Digitized by
Google
America's World Influbncb 133
We have never been a nation in arms. We should never be a
nation in arms. We have, indeed, maintained moderate naval and
military establishments; relatively they have been small. Our
moral and political conquests have been out of all proportion to our
organized miUtant forces.
Few Americans, if any, believe in peace at any price, imless
thjBy mean by that at the price even of war. No one who cherishes
the traditions of this republic, certainly no one hving in Philadelphiai
will assert that all wars are dishonorable. The Revolution was
surcharged with glory. The necessity and the justice of a war must
determine its character. Disarmament will not be adopted as a prac-
tical policy by any one country unless it be made universal. One
reason is that the worst of two coimtries can determine whether they
shall have peace or war. Unhappily, goodwill is not always a buckler
against bayonets. The triple armor afforded by a just quarrel is
not inipervious either to arrowheads or to 42-centimeter projectiles.
No nation should be too proud to do right. Herein lies one of the
chief evils and dangers of miUtarism. A sense of power is calculated
to breed an indifference to justice. Might usurps the jurisdiction
of right.
What just foreign policy have we ever undertaken as a world
power and failed to prosecute to success merely through the want of a
greater army and a greater navy? What just foreign poUcy would
we have undertaken but which we forbore to undertake for the lack
of a larger miUtary and naval establishment? Upon what great
foreign poUcy would we now embark but for the sense of naval and
mihtary weakness and inferiority? As a world power, should force
or justice be the soul and the support of our foreign poUcies? If
an irresistible army and navy be essential to oiu* character as a
world power will they be less essential to the success of oth^ nations
as world powers? If we had such irresistible forces would we em-
bark upon foreign policies which he outside the scope and possibility
of moral conquest? Would we embark upon poUcies to the ac-
complishment of which only armed forces were adequate? Would
such a course promise greater success and greater service to man-
kind than we have already accompUshed? Would it promise more
of good than of evil?
In politics, for the want of a better guide, we must resort to
precedent and analogy. Have vast naval and military armaments,
Digitized by
Google
134 The Annals op the American Academy
has preparedness, enabled other nations to work out their destinies
as world powers without war? There are two points of view. The
first is that preparedness averts war. Of course this is true; uni-
versal experience bears witness to its truth. Germany's unrivaled
preparedness has kept the world at peace. But for universal com-
pulsory service perhaps Germany might at this hour be involved in
war. France has universal compulsory service. She is enjoying
its inevitable consequences — unmolested peace. Russia has uni-
versal compulsory service — the war god is a stranger to her shores.
Italy and Austria enjoy all the blessings of peace which are insepa-
rable from universal service. Great Britain is the master, the might-
iest navy upon the seven seas. This has been her pledge of peace
and her security against war and its calamities.
I have always noticed that the strongest of tooth and claw are
by nature gentle and amiable. By a sort of instinct they exemplify
the virtues of the peacemaker. The lion is a symbol of physical
strength and prowess. He employs that strength only for the
security and protection of the defenceless. The tiger's claw is a
sort of refuge for the affrighted fugitives of the forest and his stripes
are the Red Cross or the white flag of the jungle. The beak and
talons of the eagle are an ark of safety to the doves of peace. The
serpent's fangs were designed and are used not to bruise but to pro-
tect the heels of Adam's children — perhaps you have noticed that.
This might be called the irony of nature.
We are as well prepared today both for domestic and foreign
policies and protection as we have ever been in our history. We
have never engaged in a foreign war not of our own declaring. No
nation under the sun has ever declared war against the United
States.
The other point of view is this: I heard a senator assert the
other day that unpreparedness id the pathway that leads to war.
Of course, the senator reasoned well. Who will be so bold as to
deny that unpreparedness for war begets war? Was it not the un-
preparedness of Germany that precipitated her into this holocaust
of blood and fire? Was it not unpreparedness on the part of Russia
and on the part of France that broke their peace and dragged them
into this carnival of slaughter? Was it not unpreparedness on the
part of Austria, Italy and Great Britain that plunged them head-
long into this whirlpool of blood, this whirlwind of flame? Who
Digitized by
Google
America's World Influence 135
will deny that unpreparedness caused this war? Who will deny
that preparedness would have prevented this war? Is not this the
logic of militarism?
Did it ever occur to you that every nation on the globe which
has prepared for war has got what it prepared for? Did it ever
occur to you that the United States, the only great nation under the
Sim which is unprepared for war, is the only great nation which is
today enjoying peace and its infinite blessings? Does this suggest
the relationship of cause and effect?
Whatever may be done by our government to further naval and
military preparation, whatever may be essential in the way of further
naval and military preparation, the United States should continue
in the future as in the past to rely chiefly upon moral rather than
upon military force, and to dedicate itself to the principles of human-
ity and to the idea and ideals of peace, arbitration and international
justice.
The cause of international peace never stood in such sore need
of friends as at the present hour. This is, indeed, the darkest hour
in all its history. But let us hope that the pending darkness is but
that ominous darkness which precedes and which presages the com-
ing splendors of the dawn.
Digitized by
Google
PUBLIC OPINION IN FOREIGN POLICIES
By Nobman Angell.
Discussions of this kind are sometimes vitiated by presenting
a false antithesis or alternative. The discussion of war and peace
and preparedness is often made as an issue between increasing mili-
tary forces or leaving the forces as they are, or a method of force
and no force — some such antithesis — whereas I beg to submit it
isn't that at all in practice.
The real problem is, " How shall the force of mankind be used? "
And the discussion is not really as between those who believe that
it is possible to organize a world without force and those who think
that in some way force of itself will solve the whole problem.
For however great your force may be, it will be ineffective to
civilized ends unless you decide beforehand how it shall be used.
It is sometimes said that if, in some wonderful way, England or
France, had only been more prepared, this war would not have
happened. Well that obviously isn't certain. Twenty years ago,
for instance, there was a great advocacy of conscription in England;
and for what purpose? For the purpose of fighting France. If
that agitation succeeded and the general impulse and feeling had
developed along the pathway on which they began, we would
have had an Anglo-French War. I don't see quite how that would
have aided our fight against the Germanic danger, if it be a danger.
More reasonably can we say that, if Germany had known for
certain that England would have come into this war, had known
that Italy would have gone against her, then she would have hesi-
tated and possibly would not have precipitated war at all. But,
in the absence of that knowledge, the force of those two nations,
however much greater it may have been, would have had no deter-
rent influence. The thing which might have checked German
aggression would not have been the existence of force, it would have
been the existence of force plus the knowledge as to how it was
going to be used.
136
Digitized by
Google
Public Opinion in Fobbign Policies 137
That is why we must settle what our preparedness is for.
What do we intend to do with this increasing power when we have
it.
England has passed through one stage of pacifism — ^that is to
say the John Bright and the Richard Gobden stage. Those men,
who were concerned to keep peace for their country, found that the
man of disorder, the Jingo, the man who desired to satisfy his tem-
per by war, was always trying to find some excuse for increasing
the military instrument, trying, as a matter of fact, to entangle his
nation in order that the necessity for a greater military establish-
ment should be apparent. The natural reaction to that attitude
was to say, "For Heaven's sake, keep out of it," and for a half-
century or so that was the dominant attitude of English pacifism.
But this war has demonstrated that it will not answer. We
must go beyond that. We must pass out of that stage of mere pas-
sive inaction and recognize that we cannot live in isolation. You
have a hundred of your citizens massacred on the high seas in a
quarrel in which you are not concerned at all. Your industrial life
is turned upside down by reason of a war which is going on in the
other side of the world. For good or evil you are affected by issues
which are there being fought out. You must sooner or later intervene,
and the problem for the United States is " How shall we intervene? "
In all this, there is one thing that we seem to have overlooked.
At bottom it is a question of will. If the world decided that it
wanted to live at peace, it would. It hasn't come to that decision
yet. This nation is not, as a matter of fact, at present interested
in its foreign problem. It is far more interested in baseball. That
is just a simple statement of fact. Chatting the other day with a
journalist friend of mine, I asked him why the newspapers hadn't
paid more attention since the Lusitania went down, to alternative
methods of action, something other than war, the future foreign
policy of the United States, things very relevant to the problem
which was presented to us on the morning after the Lusitania was
sunk, nearly a year ago. He said, "It is impossible copy. Our
people are not interested in it, save when they think that there is
going to be a war the day after tomorrow. For forty-eight hours
Digitized by
Google
138 The Annals of the American Academy
it would make good copy. From the moment the danger of war
had passed, it would cease to be good copy.''
Now, how can you have an informed public opinion when you
cannot get a degree of continued attention, even as relative as that?
Our first problem is to see how we can direct the attention of our
people, how we can get the great mass to discuss, to realize the im-
portance of foreign poUcies as affecting their domestic concerns.
Now I think there is only one way. We must take all the risks,
I beUeve, of an absolutely open diplomacy. We in England who
advocate democratic control of foreign affairs do not advocate it
because we beUeve that a democracy can manage negotiations
better than the experts in the foreign office. We don't beUeve
that for a moment. But we have got to take scrme risk if we are
to have the people of Europe educated at all in the question of
foreign policies. For if these issues do not find a place in the news-
papers, the people are not going to talk about these things at all.
In the old days, when the deliberations of Parliament were secret,
the proposal that they should be reported was met with the same
kind of horror with which your diplomatists of today meet the sug-
gestion that all their dispatches should be pubUshed. "What!"
said these good country gentlemen in ParUament, "Subject the
grave deUberations of our statesmen to the cackle of the hoi poUoi?
Why, it would be the end of all government!" Well, as a matter
of fact, the first effect of publicity of parliamentary debates was
rather outrageous public criticism, and it did render the parUa-
mentary task much more difficult. But the final result has certainly
been wholesome.
Therefore one means of precipitating the discussion of foreign
affairs in your country is to insist, so far as possible, that any ne-
gotiations that take place shall be public. And apart from that,
all those who are in relation in any way with public opinion, either
as journalists, authors, university men, what you will, should
utilize every factor they can, in order to concentrate the attention
of the people upon this very grave problem which confronts them,
which the public will finally settle.
It is only a question of whether the public will settle it without
Digitized by
Google
Public Opinion in Foreign Policies 139
knowledge or with knowledge. Because even where you have
secret diplomacy, in the last resort it is your violent explosion of
public opinion, as in the Spanish War, which settles the issues.
It is finally public opinion which does settle these matters, anyway.
The only question is, Will it be an informed public opinion or one
that is not informed at all?
Digitized by
Google
AMERICAN POLICY AND EUROPEAN OPINION
By Walter E. Weyl,
Editorial Staff, New Republic^ New York City.
What I wish to suggest in this paper is that the European at-
titude towards America, what Europe thinks of us, hopes of us,
and fears from us, should be one of the decisive factors in determin-
ing not only how we should arm but also what foreign policy we
should pursue. No nation can be a law unto itself, for none is
supreme; each nation must more or less accommodate its policy
to the policy of other powerful nations. Europe being hard-pressed
and quite naturally timorous and'suspicious, will not be won over to
any vague, and therefore potentially ambitious and aggressive
American policy, easy formulae or pacific protestations. She will
judge us by the actual course of our international action. Our
safety and our peace, therefore, lie in defining our policy, in sharply
delimiting it, in refraining from mere instinctive national grabbing,
in withholding support from European coalitions which seek selfish
aims, in joining with any coalition which seeks peace on the basis
of an orderly, progressive change and growth of Europe and the
world. Our true policy, dictated alike by our own needs and the
state of mind of Europe, lies in consciously promoting international
law and morality and in facilitating joint international action.
If we can gradually translate this ideal into a realistic and concrete
national poUcy, we shall be fulfilling the hopes of millions of Uberal-
minded Europeans, who in the midst of the fatal strife long for its
cessation, and look for leadership to the nation which is freest from
traditions of animosity, which has least to gain from war, and not
least to gain from enduring peace.
This belief that America in its foreign policy ^ust take into
account European opinion has long been ignored. In our robustious
days a few generations ago, when we were more aggressive and pro-
vincial than we now are, to have given weight to what Europe might
think of any action we chose to take would have seemed absurdly
irrelevant. What we thought of Europe's good opinion was dem-
onstrated by the character of the diplomats we sent to her courts.
Let Europe concern herself with her own petty squabbles, her own
140
Digitized by
Google
American Policy and European Opinion 141
parochial preoccupations, and leave us Americans to the fulfillment
of our magnificent national destiny. We were great believers in the
doctrine that Europe should mind her own business.
It is not difficult to discover thq cause of the change in our at-
titude. Commercially and intellectually we are now tightly bound
to Europe, and we are not immune even from the danger of military
or naval pressure. We are beginning to realize that what Europe
expects of us is an important part of our national environment and
is, or should be, a condition of our national action. Whether we
like it or not, we cannot but recognize that though we ourselves
are potentially strong, the real power in this world lies in Europe.
Her more than four hundred million inhabitants, her stupendous
wealth, her keen intelligence, her secure domination of outlying
colonies in other continents, give her a collective power almost as
much greater than ours as ours is greater than Mexico's. In the
past this immense might of Europe has been concealed by a division
of the continent into two almost equal hostile groups, which has
enabled us to oppose our own xmity to Europe's weakened duality.
But division and union, coaUtion and mutual hostility are in their
essence transitory, and in our relations to Europe we must consider
the possibility of those nations ranging themselves in combinations
which will be far more effective than any today in exerting influence
and pressure upon our own development. We can no longer dis-
r^ard Europe's attitude towards America.
Our new plans of armament, present and prospective, add to
Europe's justified interest in American intentions. We shall be
naive if we conclude that we may arm as heavily as we wish and
still leave Europe xmconcerned. Even in the midst of the present
world-conflict, in which ulterior considerations break down xmder
the pressure of the immediate, all European chancelleries must be
giving earnest thought to our projected preparations and must be
considering how this increased military strength of ours will a£feot
their own ambitions and their own national security. For it is a
commonplace that no nation arms for the sole pleasure of seeing
its citizens in uniform but only for national purposes and, construc-
tively at least, against some other nation. England felt herself
menaced by the German navy despite pacific German assurances,
just as Germany felt herself menaced by the Russian army. Whom
then, the European asks, does the American armament imperil?
Digitized by
Google
142 The Annals op the American Academy
Whom does it aid? What ambitions of what power must be cur-
tailed to prevent our force being added to already antagonistic
forces? The entrance of this wealthy and powerful nation into
world politics is of agonizing concern to European nations, which
must scheme and contrive and fight to hold their place in the world.
It is in vain that we shall hope to allay these fears by declaring
that our new armaments are purely defensive. Diplomatic pro-
testations are cheap; all armaments, all wars, all acts of aggression,
even the baldest, are called defensive. Germany, Austria, Eng-
land, Russia, claim today that they are fighting in self-defense, as
we also claimed, when in 1846 we forced war upon Mexico. But
a defense of rights which are not admitted by an opponent, is either
defense or aggression according to the point of view. In what,
Europe may ask, will American defense consist? Are Americans
solely to defend their continental territory and their island posses-
sions? Or are they to defend the open door in China, the freedom of
the seas, the integrity of small nations, the indiscretions of a Vene-
zuela, the financial irregularities of, let us say, an Ecuador or Peru?
A plea of self-defense may cover an infinity of shadowy pretensions
and of very real aggressions.
Nor is it to be expected that the astute gentlemen who conduct
European foreign affairs will construe our motives with excessive
charity or interpret our diplomacy in terms of our own history
primers. Already many of them think of our poUtical leaders as
very concrete, prescient and ruthless, if heavy-handed, statesmen.
They read in our history of aggressions against Spain, Mexico
and Colombia; of promises not always kept; of treaties not always
scrupulously maintained, and note with envy the immensity and
supreme ease of our territorial expansion. They ascribe to us more
foresight than we possess, not realizing how often we have happily
blundered into success, how often we have pursued Realpolitik in
our sleep. "We Germans," a Berlin professor recently assured me,
"write fat voliunes about Realpolitik but understand it no better
than babies in a nursery.'' "You Americans," he added, I thought
enviously, "understand it far too well to talk about it."
In other words, our new power, expressed in military terms,
will, unless we are on our guard, prove a source of«peril. Our de-
fensive armaments may be used for frankly aggressive purposes,
and will be dangerous in proportion as they are susceptible of such
Digitized by VjOOQIC
American Policy and £uropean Opinion 143
use. This menace of our new armament lies not only in the fears
which it may arouse in Europe but also in the hopes and ambitions
it may awaken in the breast of some of our own citizens. We can-
not, of course, avoid the resultant peril by arming inadequately
instead of adequately. Though there may be wisdom in avoiding
quarrels there is surely none in entering upon conflicts xmpre-
pared. Either we should declare our intention not to resist at all
or should, while minimizing the chances of strife, make such prep-
arations for resistance as the balance in power between our probable
enemies and our probable alUes would indicate as necessary. Our
true safety does not he in disbanding an army or dismantling a
navy, because it has latent aggressive capabUities, but in a formu-
lation of a reasonable, restrained and completely imambiguous
foreign policy. We shall be safer, and shall preserve a wider lat-
titude of action, if Europe knows exactly where we stand.
A few considerations will illustrate the danger of an instinctive,
unforeseen and ambiguous poUcy. If, for example, Great Britain
infers from presidential and other utterances that we are intent
upon outbuilding her navy, and therefore xmdermining her security,
may she not conceivably be tempted to precipitate a conflict at
a moment favorable to her? If we menace her with imdefined,
grandiose plans, need she be over-solicitous in her support of us
either against European or Asiatic foes? Again, there is a highly
important but still nebulous American poUcy, which all Americans
are willing to die for but few Americans are willing to study and
understand. Now if the Monroe Doctrine is ever so twisted as to
suggest a policy of "the inside track^' in Latin America, by which
our own citizens will be favored with concessions, privileges and
trade opportunities to the detriment of Europe, may we not be con-
fronted with a coalition of nations, intent on keeping us within
bounds, as Japan was confronted in 1895 by Germany, Russia and
France? I do not insist that any of these events is probable, but
only that their probability is enhanced by any vagueness or in-
certitude of foreign poUcy, that makes Europe apprehensive.
On the other hand, a mere definition of poUcy, if the policy is
adventurous and stalking, is quite as Uttle Ukely to bring about
peace or security. To announce far-reaching though definite plans
of expansion is merely to increase and unite your enemies. Nor
is a policy of joint action with one or another of the two European
Digitized by
Google
144 The Annals of the American AcADAMt
coalitions desirable or peace-furthering, if such a coalition is aimed
only at the perpetual maintenance of the status quo and at the re-
pression of other nations, which require expansion. Peace cannot be
secured by embalming the world. You cannot stop progress as you
stop a watch. Some of the nations will grow faster than others;
trade routes will change; the technique of production, the range
of consmnption, the source of supply of prime raw materials will
change, and with these transformations will come new demands on
the part of nations, and new alignments. The result will be that
any merely conservative coalition with its static conception of the
world will burst asunder. It is not because it seems bold that a
policy of imion with one or another of the European coalitions is,
if possible, to be avoided. Boldness is often the safest course.
There are, however, two considerations which should make us hes-
itate before entering upon such hostile coalitions. The first is the
indefiniteness and infinite expansibility of their nationalistic aims,
in which we Americans may have no interest; the second is the pos-
sibility that such coalitions will prove merely repressive, static and
reactionary, and will be broken up again into a new balance of
powers, in which we shall be compelled to take our place and assume
unnecessarily heavy obligations. By no such methods can we
secure our peace and bring our national aims into some sort of con-
formity with the best opinion of Europe. What we might be driven
to do by a sudden national peril, what alliances we might then have
to make or responsibilities accept, is apart from the question.
If, however, we retain our present latitude of choice we should not
pursue a policy which will purchase temporary stability at the ex-
pense of future wars and continual alarms. There is no gain in
substituting a new balance for the old, in converting the delicate
balance of Europe into an equally delicate balance of all the world.
A higher ideal, which sustains even in this war the peoples of
Europe, is that of a coalition, open to all powers, a coalition which
will be a true concert, and will seek not only immediate peace, but
such a goverance of the world, such a continuous and progressive
adjustment of the rival economic and other interests of the nations as
will give to each some part at least of its reasonable demands, and
thus tend to reverse the motives pushing towards war. Our own
policy, while not surrendering vital national interests, should define
them, bring them into some measure of harmony with the interests
Digitized by
Google
American Policy and European Opinion 145
of other powers, and aid in the upbuilding of an international sys-
tem, which, though doubtless not immediately possible, lies in the
direction in which great economic world forces are today developing.
What I am here proposing is admittedly an ideal and a general
direction and not in any sense a ready-to-use plan, which will
give us peace without effort. I have no such plan to propose, and
if I had, I should be merely adding to the hundreds of interesting
and suggestive expedients, daily evolved. It is easy to hit upon
expedients, which the world would be the better for adopting, but it
is far less easy to convert hundreds of milUons of people to a willing-
ness to make the necessary sacrifices and concessions, without which
no such plan is practicable. What is needed in America is not an
excellent scheme, which will tell us in advance what we should do in
each case as it arises, but a change in our outlook, an end to our
sense of immunity and moral aloofness, a growth in a community
of sentiment with Europe, a conviction that a juster, more plastic
and more secure international constitution is in our own interest as
also of Europe. We shall advance along these Unes only as there
develops in America a resolute determination to bring our vague
longings for peace and international justice into harmony with
our own national interests, and to translate these longings into
the exertion by the United States of a steady influence upon the
creation of sound international sentiment and durable international
institutions.
To ignore the obstacles is to hamper the already difficult
realization of this ideal. Deep-lying international conflicts, eco-
nomic and racial, are innumerable. 'The privilege of developing
backward countries, the right of access to the sea, the right of
small national groups to autonomy or even td independence, the
right of over-populated peoples to emigrate, the right of small
nations to be safeguarded from attack — all these involve perplexing
conflicts of principle and interest. It is fair for us to guarantee
Belgium's neutrality, to secure a revision of the law of the sea, to
urge joint government by the powers of new colonial acquisitions.
But each of these problems is itself immensely complicated and has
troublesome implications and quite unexpected reactions, and in
each case our high ideal must be brought to the level of the practi-
cable. We must labor jointly in such enterprises with other na-
tions. We cannot do it alone. We dare not be merely Quixotic,
Digitized by
Google
146 The Annals Of the American Academy
merely meddlesome, a censor of the world's morals, a voice crying
aloud in the wilderness. Within these limitations, however, there
is a wide range of international relations, within which we may make
our influence felt.
The age of laissez-faire, of non-interference between the na-
tions, is passing. What were once internal problems are today of
world concern. The present evils are recognized; the remedies also
are vaguely perceived. What is needed is a composition of rival
national claims, the wider application of the principle of joint use,
the realization that after all the common interests of the nations
which are endangered by a world war do in the main outweigh the
divisive interests. But to cement these international liens, which
beneath the surface are being formed out of the economic necessities
of the age, some nation must take the initiative.
This natural leadership, I conceive, falls to America, not because
we are better or wiser than others, but because we are the child of
all the peoples with allegiance to all, a nation without deep in-
herited hatreds, economically self-poised, comparatively satisfied,
and inspired by ideals of democracy and peace.
Digitized by
Google
THE SIGNIFICANCE OF NAVAL PREPAREDNESS
By Josephus Daniels,
Secretary of the Navy.
Fifty years ago there lived in my horae town, Raleigh, N. C,
an eloquent orator and distinguished Senator, by name George E.
Badger, Secretary of the Navy under Harrison. Writing a letter
of introduction for Badger to Choate, Daniel Webster said: "As
a lawyer, he is your equal and my superior/' He had the habit,
peculiar to his generation — could we not revive it to the literary
excellence of our public addresses — of practicing his most important
speeches upon some person or persons of sensitive organism to
determine how they would take when delivered. There is a tradi-
tion that, called upon to speak to a mixed audience, and anxious
that he should sense the popular will, Mr. Badger, when he had
written his address, stopped at his grocer's one afternoon and rather
astonished the grocer by asking him to call at his home that evening
as he wished to consult him upon an important matter. The sur-
prised grocer, dressed in his best, presented himself at the appointed
time at the home of the learned judge. " I have asked you to call,"
said Judge Badger, "because I wish to read you a speech I am to
make in the court-house tomorrow and desire your opinion upon
what impression it will make on those who will hear it," and, with-
out ceremony, proceeded to read his speech to the untaught dis-
penser of flour and sugar. It was truly an eloquent address, couched
in stately diction, upholding the Websterian doctrine of the indis-
soluble union of indestructible states, made when the South was
in the throes that preceded the war between the states.
When he had finished reading — he had a musical voice (with
cadence and passion), and had read his address with emphasis —
he turned to his single enraptured audience and asked: "What
is your opinion, sir, of the address?" The grocer could not com-
mand words of praise to express his approval and delight, and
declared it to be the most eloquent utterance that ever fell from
the lips of man. As he was leaving, he said: "Judge, I am, as you
know, an uneducated man, not a judge of style. May I ask you
147
Digitized by
Google
148 The Annals of the American Academy
why you did me the honor to select me as the man upon whom to
try out your speech instead of some scholarly citizen whose opinion
would have been of more value than mine?" "Certainly," replied
the Judge. "I did not wish the opinion of any scholar or orator.
I wanted to try my speech on the common mind; therefore I sent
for you."
When honored by your invitation to come to Philadelphia
tonight^ and participate in a discussion on "The Significance of
Preparedness," I thought it might not be amiss to interview my
two yoxmgest sons and see if it were still true, as of old times, that
wisdom was found in the heart of a child. The first one to respond
to the inquiry, "What is the significance of preparedness?" was
my fourteen-year-old boy, who is preparing to become an editor,
and who said: "Preparedness is a premium on an insurance policy."
My youngest, who aspires to wear the stars of an admiral, was
quick to give his definition in these words:
If a man ia walking along the street where there are rough men nobody wiU
attack him if they see he has a big gun in his pocket. But if the same crowd
sees him walking along without a gun, he may be slugged. The significance of
preparedness is to carry a gun if you wish nobody to hurt you.
In the multitude of speeches that have been made on "pre-
paredness, "from the hysterical utterances of the disciples of "Blood-
to-the-Bridles" to the soothing preachings of the "Peace-at-any-
price" advocates, I doubt if any of the well-considered definitions
of the significance of preparedness has given so clear and correct
an answer as these youthful militant young Americans.
We have sat at the feet of no greater teacher than Benjamin
Franklin, the greatest editor, the greatest printer, the greatest
philosopher of the New World and exemplar in all that goes to
make real preparedness. Since I have been Secretary of the Navy,
the lessons he taught in the art of being ready have been particu-
larly inspiring. Poor Richard said — ^and it is quoted the world
over — "There never was a good war or a bad peace," and men have
taken that text, without reading the life of that eminently practical
man, and used it as an argument against any measure of prepared-
ness. It was his conviction, when he wrote his almanac, that there
^ This address was delivered before the American Academy of Political and
Social Science at its Twentieth Annual Meeting, session of Friday evening,
April 28, 1916.
Digitized by
Google
SiGNIFICANCB OF NavAL PbBPARBDNBSS 149
could be no good war. But there came a day in his life when he
found that every principle he held dear, the very liberties of his
people, depended upon real and thorough preparedness, and I do
not think that in our history we have an example of any statesman
and leader who in the early days more thoroughly aroused public
sentiment to this end than did this Philadelphia editor.
The career of Franklin was a perfect exemplification of Wash-
ington's plea for a uniform and well-digested plan of preparation.
He exercised the utmost common sense. His energies stimulated
and set the pace for the other colonies, however inadequate and
incomplete their d^ree of preparation may be regarded as judged
by modem standards.
Franklin had his troubles with the Quakers during King
George's War. Their conscientious scruples against war had em-
bittered the other colonists and led them to an attitude of hostility
or indifference to defense measures. Franklin compared this
Quaker element to ''him who refused to pump in a sinking ship,
because one on board would be saved as well as himself." In the
Pennsylvania Gazette, of which he was editor, he prosecuted his
plans for preparedness. As he himself says in his famous pamphlet,
Plain Truth: "I stated our defenseless situation in strong light with
the necessity of union and discipline for our defense." He called
mass meetings; he organized mUitary companies; he saw that the
members of these companies were properly drilled; he got the good
women to make banners and devise mottoes for them; he practiced
what he preached and was able to state: ''I regularly took my turn
of duty there (at the battery) as a common soldier"; he organized
a lottery to raise fimds; he bought or begged cannon from every
quarter where it was possible to secure them; he tactfully pandered
to the Quakers in the state legislature, in wording a bill to appro-
priate £3,000, by using language like this: "For the purchase of
bread, floiur, wheat or other grains," and it was well xmderstood that
he meant by "other grains" gimpowder. It was while he was so
actively engaged in preparing for the defense of Pennsylvania that
there was bom in his mind the idea of an eventual inter-colonial
union.
Franklin's conmion sense was never more fully illustrated than
in his advice and counsel to General Braddock. Franklin was a
tower of strength all throughout the French and Indian War. If
Digitized by
Google
150 The Annals of the American Academy
Braddock, ungracious and contemptuous upon the whole, had
heeded Franklin, he probably would not have met with defeat and
death on his way to Fort Duquesne. He sneered at Franklin's
distinct warning against the dangers of Indian ambuscade. Brad-
dock was writhing in disgust at this time because Virginia and Mary-
land had supplied his army with only 25 wagons for his transport
and commissary. Franklin, through his paper and by his influence,
quickly secured 150 wagons and 259 "carrjring horses'' for Brad-
dock from among the thrifty Pennsylvania farmers. He also fur-
nished 20 pack horses for poorly paid ofldcers in Braddock's force.
Braddock was naturally delighted with Franklin and in his letters
to the home government accorded him the highest praise for his
foresight and eflSciency. Franklin even went into debt by giving
bond for £20,000 sterling for the wagons and supplies which he had
furnished to Braddock, and this debt haunted him for a long time
imtil it was finally assumed by the Colonial Government of Massa-
chusetts. That the Revolution, against overwhelming odds, was
finally decided on the side of liberty was largely due to the fore-
sight and efforts of Franklin to make preparation.
His example of loving peace, of hating war and yet recognizing
that no people ever secured and maintained liberty who were not
able to defend it, compelled the colonists to make whatever prep-
aration was necessary. So that I invoke the example of one who
did not hesitate to change his opinion — ^to put under foot his own
maxim, ** There is no good war and no bad peace."
In our days of stress and anxiety, our eyes have turned, per-
haps as never before in all history, to the Navy. From the good
hour when John Paul Jones secured the first salute to our flag on
the waters, in every time of national crisis the Navy has played an
heroic and generally vital part in the preservation of our liberties.
There never was a time when it was called upon that it did not com-
pel the nation's pride and gratitude. Jones and his compeers made
its name a terror upon the seas. Perry on Lake Erie and Macdon-
ough on Lake Champlain built their own fleets and won decisive
victories. It was the American Navy that drove piracy from the
Mediterranean. American history has been tardy in doing justice
to the Navy's part in the war between the states and to the ad-
ministration, of the war-time secretary, Gideon Welles. It was
when he, in close conference with Abraham Lincoln, bottled up the
Digitized by
Google
Significance of Naval Preparedness 151
seaports of the South, and put an end to blockade running, that
the Confederacy was smothered to death.
We have come to a day when we cannot wait for war to create
a navy. Macdonough required eighty days to fell the trees, build
the ships and win a victory on Champlain, but modern super-dread-
naughts and battle-cruisers cannot be constructed so quickly. No
battleship has been built under three years, and, up to the last few
years, it has taken five and six years to build our greatest ships.
If we are to have a Navy strong and powerful, we must look ahead
and provide for it in times of profound peace. The issue before
the American people has passed from the question of whether we
should have a navy or not, or a strong navy or not. Upon that
question the American people are agreed. The question is how soon
and how strong shall we create our Navy.
In 1903 the General Board of the Navy, headed by that illus-
trious naval officer. Admiral George Dewey, recommended to the
Secretary of the Navy a naval program providing for the construc-
tion annually of two of the largest ships that could be built, with
a number of lesser craft, which, if carried out, would have given
in 1919 forty-eight dreadnaughts and the complements thereof.
But the people and the officials were so Uttle interested in this pro-
gram, announced to the Department of the Navy but held confi-
dentially from the American people, who never heard of it for a
dozen years, that it remained a sealed book; and, in the very year
after it was written, the Secretary of the Navy went before the Naval
Affairs Committee and recommended only one battleship and one
gunboat, and President Roosevelt in 1907, in his message to Con-
gress, declared: "I do not ask that we continue to increase our
Navy." And from that day interest in the Navy in high office
and among the people lagged.
Yet there were far-seeing men who secured the construction of
a number of dreadnaughts not surpassed by any nation of the
world, and now, for the first time in many .years, there is an aroused
public sentiment that this country, proud of the Navy it has, glad
that it is as strong as it is, is determined that it shall be larger and
that it shall be stronger.
The sixty-third Congress, before the European war cloud
lowered, began, upon a scale larger than any previous Congress, to
strengthen our Navy. It authorized the construction of five dread-
Digitized by
Google
152 The Annals of the American Academy
naughts and increased the appropriation for new construction from
twenty-two million dollars to seventy million dollars. It rather
went ahead of a quiescent public, which did not feel the necessity
because the merchant marine had disappeared.
When I became Secretary of the Navy, the first duty that
pressed itself upon me was to secure enough men in the Navy to
fill the complements of all our ships. Although Congress the pre-
vious August had authorized four thousand additional men, the
enlisted personnel had absolutely declined more than one hundred
from August to March, and we were short 4,700 men. Enlist-
ments, circulars and invitations did not bring us the type of young
men we needed in the Navy. Unless you have the man behind the
gun and the right sort of man, you have no preparedness in the
real sense.
There was a time when parents did not desire their sons to
join the Navy. And when enlistments expired, it was not easy for
the discharged bluejacket to get a position, because the Navy did
not then train the minds of the men at all or their hands in skill so
thoroughly as now. The first few days I was in oflBce, I noticed on
a placard inviting young men into the service a picture of half
dressed women in the tropics, with sailors and marines lounging
near by. I ordered them to be destroyed. We determined, in the
councils of the Navy, that young men should not be enticed into the
Navy by inducement to immorality; that they should be better
trained for citizenship and for the trades; and that they should
find avenues for proper promotion, even to commissioned rank,
according to American ideals and traditions, if they continued in
the service. The result of that policy, the very basis of prepared-
ness, is that there has been a waiting list in the navy. The enlist-
ment has increased 14 per cent, and a month from now this Con-
gress will add at least sixteen thousand more men to the Navy and
the Marine Corps — enough to man all the ships in the American
Navy.
You cannot have an institution in America that is not Ameri-
canized. Whenever the Navy builds a bulkhead between an Ameri-
can bluejacket of brains and character and a commission, you have
an institution that is not American. To this recognition and en-
couragement, now introduced in the Navy, American boys are
responding, and their fathers and mothers for them. In our three
Digitized by
Google
SiONiFiCANCB OF Nayal Prbparbdness 153
years, we have given commissions as Ensigns to sixteen young men
who entered from the ranks. Each year we are appointing fifteen
yomig fellows from the ranks to the Naval Academy. We have
appointed fifteen paymasters from this splendid body of young
men and one hundred eighty-seven payclerks from the enlisted
personnel.
There was a time when the chief thing a man in the Navy
needed to know was how to climb the mast and give a cheerful
"aye, aye, sir." The battleship of today is the most complicated
piece of machinery in the world, and there is no place on it for ig-
norance. It is a place for skill, and a skill which the Navy must
itself furnish. On the old Constitution, at Newport, R. I., there is a
radio school where lads from the interior and from the coast, from
homes of the well-to-do and from homes where the father toils in
the mill and the mother serves at her machine, are mastering the
mysteries of wireless. It was with a peculiar satisfaction that I saw
them there, some of them just beginning, their keen zest for the
task shining in their eyes; others on the eve of departure to take their
responsible positions in the fleet. An honorable discharge from the
Navy means so much today as a recommendation that a sharper
in a Connecticut town printed forged discharges and sold them to
youths who could not obtain a place without that easy passport to
position.
When the Senate of the United States was considering the Army
Bill last week there was incorporated in that bill an idea which Lew
Wallace wrote to Sumner: "The only hope of a great American
Army is to educate the soldiers, and, when we establish a school in
every regiment, we will secure all the men we need for our Army."
That provision is now in the Army Reorganization Act. The idea
has been carried out in the Navy for three years. The German
armies in the trenches in Europe put a similar plan into effect early
in the war. Opportimity for education and promotion will attract
to our Army and Navy young men of aspiration, of courage, and
of ability. And nothing else will.
The problem of officers in both the Army and Navy is a serious
one. There has been but one institution for producing them in the
Navy, and that is the Naval Academy at Annapolis. The sixty-
third Congress passed an act continuing a law about to lapse
authorizing the appointment of five hundred thirty-one additional
Digitized by
Google
154 The Annals op the American Academy
officers in the Navy. The present Congress has passed a sunilar
act and so popular is the service that, when the examiner opened
his doors last week, two thousand young men went up to stand the
examination although only five hundred can be appointed.
We are even going outside the Naval Academy, in our present
emergency, to secure officers, and the bill now pending in Congress
provides for the appointment of eighty aviators from civil life- so
as to secure officers to meet the needs of that growing arm of the
service. I am told by gentlemen who have traveled in Europe that
the men who have made the best reputation are daring young chaps
from eighteen to twenty-two, with what is really a sixth sense —
that of flying. We are going to open doors in our hydro-aeroplane
service to young men of this kind, and we are going to the colleges
and universities and technical schools to add needed engineers.
There are pending in Congress several measures for increasing
the Navy. My prediction is that Congress will authorize as many
battleships, submarines and destroyers as the private navy yards of
this country can build in the next three years. In this connection
let me say that, for the rapid increase of the Navy, we are dependent
not only upon naval officers, and upon Congress, but also upon the
manufacturers of America. Most of my time for a month has been
spent in keeping in touch with these men, urging them to speed up,
so that they can furnish the material with which to build our ships
promptly. In most instances they have responded readily, and I
am one of those who believe that whenever a national emergency is
presented to American business men they will respond, even if there
is the attraction of larger profits from foreign countries.
Modern wars are being fought with machinery. The engineers
who handle the 42-centimeter guns and the manipulators of motors
and the delicate machinery in heavier-than-air monoplanes and bi-
planes are as essential to victory as the soldiers who charge bayo-
nets. We are reading of army corps being held in check by ''cur-
tains of fire." But we have not realized until recently that real
preparedness is dependent upon the mobilization of industries and
the card-indexing of inventive genius, as well as the providing of
war munitions. With no hope of reward, save the gratitude of the
country, eleven engineering and scientific societies last July, upon
my invitation, named two distinguished members each to serve on
what is now known as the Naval Consulting Board. These scien-
Digitized by
Google
Significance of Naval Preparedness 156
tists, in conjunction with men of similar inventive and scientific
genius and training in the Navy, are materially aiding us in new
lines of invention and construction, giving weeks and months of
their time to the study of serious naval problems. There is not a
perfect or wholly satisfactory motor for submarine or aeroplane in
the world. Abroad three aeroplanes are required for every flier.
Erosion in guns makes their life and serviceability short. To the
solution of these problems American science has responded with
the same alacrity with which patriots answer the call to the colors.
There is incorporated in the pending Naval Bill before Congress an
appropriation for a million and a half dollars for an experimental
laboratory, in which these men of science may make experiments
and try to solve problems which are to be solved for national de-
fense. And the President in his message to Congress called upon
that body to cooperate with him in securing the aid of these think-
ing, originative, investigative minds.
We have learned something from the European war. When
it began the people of Great Britain had the idea, as most nations
have had, that the nation with the most money was certain to win,
and they congratulated themselves that they had as the Chancellor
of the Exchequer that wonderful man who knew, Moses-like, how
to smite rocks out of which revenues would gush in abundance. But
the war did not last long before the English people took Lloyd
George from the place .of Chancellor of the Exchequer and raised
him to Minister of Munitions, to a new and higher place, because
they found that no matter how much money a nation had, unless it
had a man in high place who could mobilize the industries, who could
marry science to money in readiness for defense, they could not be
prepared for great emergencies. In France, a new cabinet officer
has been created. He occupies a like place to that held by Lloyd
George in England. All the world knows that in Germany science
and preparedness have been married for many years. If we are to
have real preparedness in this country, every factory in America
must be able and ready to make some sort of munitions. They
must have the government gauges and patterns, ready to install
at a moment's notice. We have now an organization, composed
of five of the chief engineers and scientists, in every state in the
Union, with 36,000 active assistants who voluntarily and without
compensation are giving their time and their genius to helping
Digitized by
Google
156 The Annals op the American Academy
the Navy to be ready in its comprehensive program of prepared-
ness.
The American Navy is our first line of protection. It is the
right arm of defense, the protector of the American home. Let us
not be misguided into thinking that we have a navy as strong as it
ought to be. Let us uphold the hands of the members of Congress
who are laboring to make our navy larger and stronger, but, while
we do that, let us not give ear to those who say hysterically, as a
certain perfervid orator said a few night ago, speaking to the Real
Estate Exchange of New York, "Gentlemen, I never go to bed
at night without expecting the next morning that some foreign
foe will blow this town up. We have no Army, we have no coast
defence, we have no Navy, we have nothing." And then, he added,
with what he thought would carry weight: "I feel so keenly about
this, that I wouldn't invest a dollar in real estate in New York."
His audience, dependent for support upon the traffic in real estate,
received this absurd statement with derisive laughter. Men who
are so pessimistic and so ignorant about what is being done remind
me of the maiden ladies in Boston who, during the Spanish- Ameri-
can War, sent delegations to Washington and wanted the whole
fleet to lie outside of Boston harbor to protect them from the
Spanish Navy which they daily thought they saw in the offing.
In this matter of preparedness in America, we shall, now that
we are awake, go forward steadily, rapidly and earnestly, to repair
the lack of building for the past dozen years, and we shall build a
navy here of such size and strength as the American people need.
We cannot build it in a day, because battleships are of slow growth;
but the sentiment is now aroused, and we now have before us the
problems of promptly securing the construction of the ships that,
Congress will authorize. I trust there will be no need for us to com-
mandeer the private yards, for I am one of those who^believe that,
whatever the need of America may be, Americans will be equal to
the task.
Digitized by
Google
THE EFFECT ON AMERICAN INSTITUTIONS OF
A POWERFUL MILITARY AND NAVAL
ESTABLISHMENT
By Herbert Croly,
Editor, The New Republic, New York City.
Of all the novel and perplexing problems which have been fas-
tened on the American nation by the proposal to make a very large
increase in its military and naval armament, there is none which
bristles with more difficulties than the subject on which I am ad-
dressing you this morning. What will be the effect on American
domestic life and institutions of a more efficient, expensive and pow-
erful military and naval establishment?
Americans who are opposing ''preparedness" are basing their
opposition largely upon the havoc which it is expected to work in
our traditional internal order. Americans who are advocating
"preparedness" are basing their approval largely upon the better
order, which it is expected to impose upon our time-honored in-
ternal chaos. Americans who are hesitating are basing their
hesitation largely upon misgivings as to the wisdom of exposing
American institutions and life to the corrosive effect of such a
dubious and perilous innovation. These are the questions which
American public opinion is considering most anxiously and with the
smallest prospect of future agreement. The country is not think-
ing so much about what we can and should do with a larger army
and navy. It is thinking rather about what a larger army and navy
may or will do to us.
Preoccupation with the domestic effects of military prepared-
ness presided at its official birth. Last summer when President
Wilson decided to include in the legislative program of the admin-
istration provision for a large army he ordered his Secretary of
War to make the plans for an increase conforming to the existing
American military tradition. What the President had in mind is
clear. He had decided that more soldiers must be enlisted and
trained presumably because they might be needed for certain prac-
tical purposes. But after having reached this decision he was
167
Digitized by
Google
15S The Annals of the American Academy
chiefly preoccupied, not with the number and kind of soldiers de-
manded by these practical needs, but with the effect of any increase
at all upon the opinions and traditions of his fellow-countrymen.
He knew his proposals would meet with lively opposition based
chiefly on the presumptive un- Americanism of large armies, and he
preferred to bestow on the plans of the administration not so much
the positive merit of careful adaptation to the practical need as the
negative merit of conformity to a prevailing tradition. In order
to make them politically acceptable the administration plans should
look unofifensive and not too unfamiliar. The American army had
always been the creature of domestic political policy and so it must
remain.
In adopting this course President Wilson was behaving like
a shrewd and cautious political leader. It was the course calcu-
lated to effect a certain result with the smallest friction. He has
been rewarded by the practical collapse of the opposition to his
program. It has been an adroit achievement and an important
success. But the fullest possible recognition of the achievement
should not blind us to the disadvantages of the method. The suc-
cess was purchased by a lack of thoroughness in framing the details
of the plans and by a lack of frankness in explaining their meaning
and consequences. The technical obstacles to adequate prepara-
tion and its political penalties and dangers have been underes-
timated and evaded rather than courageously confronted and
definitely overcome. As a result the American people are acting
in a grave national crisis without any suflBcient understanding of
the bearing of the new policy on their past and its probable effects
on their future.
The American tradition of military organization and policy
which President Wilson wished to preserve was not on its merits
worth so much anxious solicitude. It called for a small standing
professional army which was really no more than a national police
force. Its members, organization and equipment were not adjusted
to a foreign policy or an international condition. Invasion was not
considered a danger against which any elaborate precautions needed
to be taken. In the event of war the navy would act as a screen,
behind which could be trained around a nucleus furnished by the
state militia a volunteer citizens^ army. The aspect of this sys-
tem which Mr. Wilson probably considered most precious was its
Digitized by
Google
Military and Naval Establishment 159
underlying and almost complete civilianism. It included a pro-
fessional army, to be sure, but only in insignificant numbers. The
United States depended ultimately for its soldiers upon its citizens
and it had consequently no reason to fear the corruption of its dem-
"ocratic institutions and ideals by a military caste or spirit. All
this is true, but it is also true that the system was a tissue of in-
adequacies and contradictions. It evaded every difficulty and
ignored every serious responsibility involved by military prepared-
ness.
A democracy should depend ultimately for its soldiers on its
citizens; but our traditional system only pretended to create an
armed citizenry; Its trained soldiers were prevented from being
citizens; its citizens were never sufficiently trained to be good sol-
diers. The American people had no reason to fear their army, but
neither had the possible enemies of the American people. It was
not intended to be dangerous to anybody but a few foreign or do-
mestic marauders. Congress always refused to incorporate in it
a coherent formative idea. It was partly professional and partly
amateur, partly under national and partly under state jurisdiction,
partly based upon the idea of service and partly upon an appeal to
mercenary motives. But above all it was wholly and intentionally
innocuous. It was essentially an attempt to assure civilian control
over the miUtary machine less by making the civil authority strong,
clear-sighted, able and worthy, than by making the army feeble
and incompetent. ^
If, as President Wilson decided last summer, the American
democracy was finally faced by the necessity of seriously preparing
during peace for the possibility of war, this national tradition in
miUtary organization needed to be radically modified rather than
loyally cherished and preserved. The traditional military system
can be fairly characterized as organized unpreparedness. Americans
had believed themselves immune from the grim necessity of antic-
ipating and providing either against social evils at home or the de-
fense of national policies abroad. America was the promised land
precisely because it was deUvered from such moral and physical
stresses and from the structural reenforcement, necessary to with-
stand them. Some years ago one-half of these expectations began to
be abandoned. It became only too apparent that American do-
mestic economy is not a stream which purified itself in the running.
Digitized by
Google
160 The Annals of the American Academy
It had developed the same social disorders as the older European
societies and similar precautions must be taken against them.
The decision to increase the army and navy means the abandon-
ment also of the other half. The organized unpreparedness of our
military system had been based upon a conception of international
relationships and of ensuing American dangers, opportunities and
responsibilities which had ceased to be true. The indispensable
condition of any effective miUtary preparation was a declaration
of war against an essential aspect of the very tradition which the
President was seeking so sedulously to preserve.
In so far as the American tradition in miUtary organization
consisted in the strict and absolute subordination of the military
and naval machines to ultimate civilian control and their employ-
ment for valid political piu*poses, every good American will attach the
utmost importance to its preservation. But in so far as the civilian
control was obtained by paralyzing the army rather than by or-
ganizing the nation, strengthening its government and clarifying its
policy, the existing tradition manifestly constitutes an insuperable
obstacle to effective mihtary preparation. The larger army tvnd
navy must be intended and made ready for actual definite service.
In so far as it is ready for specific service the army must be a dan-
gerous weapon. It must be dangerous to the possible enemies of
the United States; and it must be dangerous to our traditional in-
ternal equilibrium. Unless the American people are willing and
ready to create a powerful weapon, which if misused would prove
to be harmful to them no less than to their possible enemies, the
money and energy spent on miltary preparations will continue to be
a colossal waste. As a matter of fact the American people proved
more willing to create a powerful weapon than its chosen leaders
imagined. The original program of the administration was indeed
framed to look innocuous rather than dangerous. It was based
chiefly upon the principle of amplifying our deficiencies. But the
original program has been radically modified, and every modi-
fication has tended to make it less innocuous and more dangerous.
A reluctant Democratic administration and Congress, which had
every disposition to keep down the scope and cost of miUtary " pre-
paredness," have been forced by the logic of their own decision to
build very much more than they intended. The final legislation is
likely to provide for a really formidable fighting force — one whiqh
Digitized by
Google
MnJTABT AND NaYAL ESTABLISHMENT 161
will be measxirably adjusted in size, training and equipment to the
probable needs of national policy.
The outstanding fact in the proposed military re-organization
is the increase in the professional standing army. In the original
plan little attempt was made to convert the regular army into a
force which was capable of defending the territory of the United
States against invasion or promoting its policies abroad. That task
was reserved for a body of national militia which was subsequently
modified by the House Committee into a body of "federalized"
state militia. But the more these bodies of militia were examined
the more untrustworthy they looked; and the more public opinion
came to favor an increase in the regular army as the one really
dependable military force. The regular army is being increased
until with its own automatically created reserve, it may, if it can
be recruited, afford a sufficient protection against invasion, and
protection against invasion is what the public and the military ex-
perts have on the tops of their minds. But merely as a consequence
of organizing an effective army for defense Congress has done very
much more. It has organized an army which may also constitute
a formidable aggressive force. Instead of creating as the President
and the Democratic leaders intended, a safe and a sane army, they
are being driven to create a really dangerous army — ^a professional
force, as far as possible removed from the conception of an armed
citizenry.
The new American army will be unsafe for two reasons. An
army of this kind is really adapted chiefly to service abroad and con-
sequently to something more than a defensive foreign policy. It is
also the kind of an army which will have a profound reaction on
American domestic life, because as a consequence of its increased
size and authority it will be constantly making imperative demands
upon the civU authorities which they will be reluctant to grant and
which will raise the issue between civil and military control over
American policy. These are precisely the questions which the
President wished to avoid, as they have been avoided in the past,
but from now on they will wax increasingly troublesome. The new
army could not be made serviceable, without becoming xmsafe, be-
cause in the opinion of too many American citizens, a safe army meant
an imperilled country. In truth there was no way in which the do-
mestic life and institutions of the nations could be guaranteed against
Digitized by
Google
162 The Annals of thb American Academy
far-reaching modifications as a consequence of substituting organized
preparedness for organized unpreparedness. An eflScient new mil-
itary and naval establishment is bound in the end to do something
important to the American people, and the certainty of a drastic
result should be recognized in advance. Confident prophecies are
being made as to what this drastic result will be. Many good
Americans predict that our democracy will be ruined by their new
and dangerous servant. Others predict with equal confidence that
a more powerful army and widespread military training is necessary
not merely to save the nation from its possible foreign enemies but
to preserve it from its domestic infirmities. Neither of these pre-
dictions need be taken too seriously. They are the expression of
fears and hopes rather than a disinterested estimate of the action
of social forces. Although drastic result will certainly follow, what
that result will be is by no means so certain. It will depend less
upon the size and organization of the army and the navy than upon
the way in which the nation decides to use them.
At present the American people have not made up their mind
how they will use their new army and navy, and anti-militarists
are insisting that the creation of the larger army and navy should
be postponed until they do. I cannot agree with them. We shall
have to take the risk of preparing first and of deciding later just
'what we are preparing for. To have refused to prepare would
under the circumstances have been an indication of inertia and weak-
ness. To have begun to prepare is on the whole a symptom of self-
confidence. It indicated that the country is not afraid to plunge
forward even though somewhat blindly and to risk the assumption
of a perilous and costly responsibility which before it is redeemed
may diminish many prescriptive rights, damage many vested in-
terests and perhaps change the whole outlook of the American
democracy.
The American nation needs the tonic of a serious moral adven-
ture. It has been too safe, too comfortable, too complacent and
too relaxed. Its Ijesetting weakness is the prevalence of individual
and collective irresponsibility, based on the expectation of accom-
plishing without efifort. Living as it did in a favored land which
was not exposed to attack from without and which offered to good
Americans surpassing opportunities to satisfy their own special and
iadividual purposes, our democracy ha^ not been required to pull
Digitized by
Google
Military and Naval Ebtablishment 163
itself together. It has depended for its cohesion upon loyalty to
an achieved and essentially complete constitutional system, and
upon a suppositious harmony between individual or local, and pub-
lic or national interests. Unlike European countries, it could
afford to leave the satisfaction of many public objects to the
results of an accidental concert among individuals, groups of indi-
viduals, or local political units. It has been reluctant to create
powerful poUtical or economic organs for the accomplishment of
its national purposes, and when instruments of this kind came into
existence as the result of automatic economic and poUtical forces,
the instinct of the democracy was to dissolve, rather than to dis-
cipline and use its own unmanageable servants. It has not Uked
the responsibility of turning such potentially dangerous agents as
a centralized administration, an authoritative legislature, an effi-
cient army or any concentrated embodiment of industrial power
to beneficial public use.
Because of its reluctance to create organs for the accomplish-
ment of peculiarly important pubUc purposes, the American democ-
racy has always been burdened by a huge amount of improvidence
and imcompetence. In the beginning conditions did not demand
the creation of political, economic and social agents powerful
enough to be dangerous to the whole community; and when con-
ditions changed it did not sufficiently care or dare to organize them.
The need first arose from the necessity of providing administrative
and legislative corrections to the enormous power which the trusts
and the party machines had obtained as the result of a combina-
tion between professional politics and organized business. Much
legislative and administrative action has followed but up to date
the attempts to deal with the evils resulting from the concentra-
tion of business and political power in irresponsible private hands
have been at least partly frustrated, because of the reluctance of
the American people to consent to any similarly effective organ-
ization of public power. In a sense the American democracy has
connived at its own poUtical and economic exploitation. So many
excellent voters were profiting in petty ways from the laxity, the
waste, the irresponsible individualism of the prevaiUng system that
they would do nothing effective to reconstruct it. In a kindred
spirit many of the people who are now either opposing miUtary
preparations or are trying to kiU it by lukewarm concessions are aU
Digitized by
Google
164 The Annalb of The American Academit
doing so, not merely because they are afraid of militarism, but be-
cause they shrink from imposing on the voters "the heavy obli-
gation of making really good use of such an exacting and danger-
ous instrument. They fail to see that dangerous situations re-
quire dangerous remedies, the need for which cannot be exercised
merely by refusing to admit the existence or the seriousness of the
problem itself. The propensity to underestimate the seriousness of
its own problems and to meet grave issues with petty half-measures
is. the most insidious and stubborn enemy of the advance of the
American people towards an improved poUtical and social condition.
The advocates of military preparedness are, I think, justified
in anticipating that an army and a navy large enough to be dan-
gerous may introduce into American domestic life a useful ferment —
one which may prove hostile to the prevalent spirit of complacent
irresponsibility. The representatives of the older tradition have
been trying to satisfy the demand for military and naval reorgan-
ization by the same kind of half -measures with which they have
been satisfying the demand for administrative and social reorgan-
ization. But their partial defeat is significant. Our domestic
institutions and policy will and should be subjected to a strain by
military preparedness, severe enough to compel their modification
and readjustment. The national spirit must rise to the occasion.
If the nation had stuck to the method of democratizing the army by
keeping it feeble and inefficient a profoimdly disintegrating agi-
tation would have certainly followed. The demand for military
preparedness cannot be shirked with the same apparent impunity
as the demand for social preparedness. The most conspicuous
aspect of the progressive movement during the past fifteen years
has been the contrast between the enormous effort and the meagre
results. Progressivism gradually became a new expression of
American extravagance — ^an opportimity of subjecting the moral
and intellectual resources of the nation to the kind of conspicuous
waste which has been dissipating oiu* natural resources. The most
serious danger to the work of military preparedness has been that it
would follow the same path and arrange for the expenditure of a
few hundred of millions of dollars a year more without providing
any really trustworthy instrument of national defense or of an en-
lightened foreign policy.
Digitized by
Google
MiLITABY AND NavAL ESTABLISHMENT 165
In the case of miKtary preparedness the danger brings with it a
better chance of being remedied. If a larger American army and
navy are really needed, their efficiency is a matter of national life
and death. Any clear evidence of laxity, neglect and waste can
be used to stir up a troublesome popular excitement. Congress
will be under constant pressure to improve the operation and the
equipment of the new military organ, and, as a consequence of being
obliged to do so, it will be similarly pressed to correct its legislative
methods and clarify its political policies. It cannot eliminate the
waste from such an important department of government work
without subjecting itself to a certain amount of internal reorgan-
ization. A really efficient army and navy is too finely tempered an
instrument to be merely tacked on to the unwieldly administrative
system of today. It cannot be created and operated without the
adoption of legislative methods, which will provide for the increase
of discretion and independence so much needed by all the adminis-
trative departments of the central government and for the promo-
tion of improved methods of conducting public business. The con-
duct of an army and navy is, of course, the supreme example of pure
administration. Any deficiency of resources, any division of re-
sponsibility or authority, any neglect of preliminary research, or
any, infirmity of purpose would be perilous if not fatal to its suc-
cessful functioning. The need of so nicely adjusted an organ will
always be a thorn in the side of that Congress which attempts to
dictkte administrative action in detail instead of being content with
controlling its policy and criticising its operations. If the advo-
cates of preparedness propose to create an organ of this kind they
can scarcely stop short of insisting on an executive budget, and in
general the whole program which reformers have been urging for the
purpose of emancipating the work of administration from an un-
necessary and injurious legislative interference.
The foregoing is only one illustration of the tonic effect which
the attempt to create an efficient and dangerous army may have
upon American domestic institutions. It has become a common-
place that changes may be brought about in the American financial
and industrial organization. The expense of the new army and
navy will be sufficiently heavy to force the reconsideration of the
system of national taxation and to change its adjustment to the
tax system of the various states. The industrial fabric may have
Digitized by
Google
166 The Annals of thb Amebican Acadamt
to submit to a corresponding modification. Of late years progres-
sives have been asking with increasing insistence how far the pro-
fessions, the railroads and the industries of the country were organ-
ized and operated chiefly for the national service or chiefly for pri-
vate and local service. The same questions will now be put by the
advocates of military preparedness. The European war has proved
sufficiently the impossibiUty of seriously preparing for a possible
war without calling upon the whole industrial system for assistance.
If the American industrial system is not prepared to render that
assistance promptly and completely, the country would be unpre-
pared for serious military or naval operations — no matter how well
its soldiers were trained and equipped.
Of even more importance to adequate preparedness than these
measiu'es .of political, financial and industrial reorganization is an
effective method of securing for the new military and naval program
the support of the wage-earners. In the event of a war which in-
volved the national safety they could be counted on to volunteer
in sufficient numbers; but that is not the question. Assuming that
the United States is to have an army, which even in the times of
peace will require of an increasing proportion of the wage-earners
of the country a certain share of their time and labor, how can they
be induced to give what is needed? It is the answer to this ques-
tion which will arouse in the near future the most lively contro-
versy, and upon the way it is answered will largely depend the re-
action of a larger military and naval establishment upon American
domestic institutions and Ufe. In the past the government has
relied for the recruits to the army and the navy upon the expedient
of tempting men to volunteer, but if this expedient is to succeed
in the future, the temptation will have to be very much increased.
It is doubtful whether the new army can be recruited, save at an
excessive cost. For this and for many other reasons an aggressive
and insistent element in public opinion is demanding the substi-
tution of compulsion for the volunteer principle.
The agitation for compulsory military service bears particularly
hard on the subject under discussion, because the arguments in
favor of compulsion are derived from social and political rather than
military sources. It is not pretended that the nation needs the
military service of all the young men of America; but it is claimed
that the yoimg men of America need the benefit of military service.
Digitized by
Google
MnJTABY AND NaYAL ESTABLISHMENT 167
Instead of as at present paying some young men to enter an es-
sentially public occupation, they wish the burden and the oppor-
tunity of the employment to be imposed on all alike, without fear
and without favor. That is the way really to democratize the
American army. Universal service raises American citizens of all
classes and sections, if not of both sexes, to the level of an irksome
common obligation; and this obligation brings with it to an extent
which political and social obligations do not, the occasion for com-
mon association. The experience would enable the young soldier to
realize how far he is a member of a community and how much fellow-
ship in the community means. It is the real solution of the ideal
in an armed citizenry. The nation would obtain soldiers who were
citizens and citizens who were soldiers.
The argument of those Americans, who are seeking to give a
positive social value to the military system and convert it into a
source of national unity, culminates in the foregoing contention.
Instead of considering the army as a troublesome excrescence on
American life, they propose to work it into the very fabric of the
nation. It is to be made the heroic remedy for the insidious disease
of national incoherence. By being universalized, military service is
converted into a most effective form of compulsory national educa-
tion. American citizens will be pulled together by the force of active
comradeship in common labor and genuine sacrifices for the national
welfare.
The idea of making the military system contribute something
of positive value in the domestic life of the country is sound, but it
breaks down when worked as hard as it is by the advocates of com-
pulsory service. They are following the bad example of the tradi-
tional American democrats in insisting that the size of the military
establishment should be determined by its expected reaction on
American domestic life. The traditional democrats were reluctant
to let the nation have as many soldiers or as much military training
as might be needed, because they presupposed a necessary antago-
nism between democracy and military preparation. The contempo-
rary advocates of universal service seek the enlistment and training
of more soldiers than are needed, because they believe that the
American who has undergone military training will constitute a
better rather than a worse citizen. Both of them are falling into
the mistake sq conimon to golf players of keeping their eye too much
Digitized by
Google
168 Thb Annals of thb Abibbican Academy
upon the hole and not enough upon the ball. The former have more
fear of military training than they have confidence in democracy;
the latter have more confidence in military training than they have
confidence in democracy. Both need to understand that an army
is one thing and a democracy is another. An army is a delicate and
dangerous instriunent which may be called upon to perform the ter-
rible work of killing and submitting to being killed and which needs
to be adjusted to the probable nature and amount of this work. A
democracy is a form of political and social organization, which, be-
cause it fastens on the whole people ultimate responsibility for the
public welfare, depends for its fulfillment upon the ability of men to
rise to higher opportunities. The two are not divided by any neces-
sary incompatibility, and it would be a timid and rudimentary
democracy which tied itself to a policy of misrarmament merely
because it is afraid to let enough of its citizens become properly
trained soldiers. But if the two are not divided by any incompati-
bility neither are they tied together by mutual dependence. While a
democracy may obtain incidental educational benefits from universal
military training, only an impoverished democracy would rely upon
compulsory military service for the education of its citizens in the
essentials of citizenship. The American army will never be brought
into wholesome relations with the American democracy until we
cease to consider it either as a bogey or as a vehicle of civic grace.
It is primarily a machine, planned and prepared to accomplish some
desperately important and extremely hazardous practical work.
The reaction of a large army upon the moral integrity of a
democracy depends in some measure upon its size and its method of
being recruited but still more upon the purposes for which the citi-
zens are asked to undergo military service. When in 1848 the
American army was employed in conquering Mexican territory, its
insignificant size and its volunteer origin did not prevent it from do-
ing harm to the morale of the coimtry. The compulsory enlistment
of a large part of the manhood of the North during the Civil War
ultimately strengthened the morale of the American nation, because
its citizens killed and submitted to being killed for the realization
of a binding and leavening political and social ideal. An army of
any size and character can have a demoralizing effect upon the
national life in case it is asked to do predatory work, while an army
of the same size can add something fine and noble to the national
Digitized by
Google
MiLITABT AND NaVAL ESTABLISHMENT 169
moral consciousness, in case it is pressed into the service of an
enlightened national policy.
Thus we get back to the idea which has already been approached
from a somewhat different road. The American army cannot be
made democratic by keeping it weak and disorganized; but neither
can it be democratized by merging the nation into the army. Not
until we know what kind of a policy the larger army and navy will be
required to serve, can we tell whether or not its adventure in mili-
tary preparedness will ultimately be a imiting or a dividing influence
in American domestic life.
The usual explanation that the United States is preparing only
for defense, which is a policy on which all good citizens can agree,
merely begs the question. A nation like Switzerland may arm
purely for defense, because a small nation even if armed to the teeth
is incapable of aggression, and because it cannot have an enemy of
any size, which would not be large enough to threaten its independ-
ence; but in the case of a wealthy, populous and geographically
isolated nation like the United States no sharp line can be drawn
between defensive and aggressive armament. As has been fre-
quently pointed out, the new army and navy will be required to
defend a policy rather than merely a coast line. If the United
States is invaded the invasion will originate not in a wanton attack
from a strong military and naval power, but in a clash with a similar
power over a difference of opinion about neutral rights at sea, the
Open Door in China or the Monroe Doctrine in South America. In
the event of such a quarrel there is really little difference between
fighting to defend a policy and fighting to promote it. The Monroe
Doctrine and the Open Door are from certain points of view aggres-
sive policies, about the meaning and justice of which wide differ-
ences of opinion may exist both in this and in other countries. Hence
what we need most of all to understand is the nature and scope of
the policies in the interest of which we shall organize an eficient
and dangerous army and navy. Until this is known not only can
we not calculate how many and what kind of sailors and soldiers we
may need and what sacrifices the American people may fairly be
asked to make for them, but we shall be equally at a loss to esti-
mate the moral and political reaction of the miUtary preparations
upon American domestic life.
Digitized by
Google
170 The Annalb of thb Amebican Academy
Thus the dubious aspect of the existing situation does not con-
sist in the fact or in the cost of preparedness but in the ambiguity
of its underlying purposes. The American people are being asked
to pay heavily in labor and money for a new army and navy as a
weapon of self-defence, because only in this way can contentious
matters be avoided and a sufficiently general measure of popular sup-
port be frightened into existence. Yet there is a very real probabil-
ity that the new army and navy will be used chiefly for positive and
for aggressive as opposed to merely defensive purposes. These
positive purposes can be made in my opinion even more justifiable
than a negative defensive policy, but their value and meaning is
obscured because they are not frankly admitted, fully discussed and
sufficiently defined. As long as they remain ambiguous and obscure,
they create and encourage a dangerously suspicious and evasive
attitude towards the question of preparedness. The socialists are
already declaring that the new army and navy are intended as
the instruments of imperiahstic exploitation in Mexico and Central
America, and the accusation cannot be answered either by silence
or abuse. As a matter of fact if the soldiers which will be recruited
and trained for the new army see active service anywhere they are
more likely to see it, just as the old army has, outside rather than
inside of the United States. The service beyond the seas may be
susceptible of complete justification as a matter of democratic
national policy, but it cannot be justified as a matter of self-defense,
and only gradually will it be met with the same general approval
and support as would an exclusively defensive service.
So we get back to the consideration which has been impUcit
in this whole discussion. The probable reaction of military pre-
paredness upon American domestic life and institutions will be
determined finally by the ability of the nation to assimilate the
dangerous, immanageable and exacting intruder into its moral or-
ganization. The work of assimilation depends in part upon our
ability to create an army and a navy whose officers and enlisted men
do not cease to participate in the civilian occupations and interests,
yet who at the same time are not prevented by civilian meddling
from doing thoroughly well their own special work. But it depends
still more upon the national policy of which the new army and navy
will be the chief instnunent. In creating such an instrvunent the
American nation is not submitting itself passively to the benign
Digitized by
Google
MiLITABT AND NaVAL ESTABLISHBfBNT 171
influence of a militaristic Saint Michael. Neither is it submitting
itself passively to the malign influence of a militaristic dragon.
Neither is it pursuing a course which like the menace in the army
and the navy after the Spanish American war, will leave its domestic
life and institutions practically unchanged. What it is doing is to
adopt a new and hazardous course, which in case it is to be success-
fully carried through will require certain radical changes in the in-
tellectual and normal make-up of the American democracy.
/ The good American should consequently neither denounce nor
/ glorify military preparedness. He should rather do what he can to
make the country equal to its newly assimied responsibilities. The
probability is that the effect of the adventure will be disastrous
unless the American people can improve their political and economic
organization, socialize their industries and convert their educational
system into a source of democratic citizenship. Efficient and elabo-
rate mihtary preparations will neither prevent us from making these
improvements nor assure their attainment. They must .be ob-
tained, if at all, on their own merits and by a sufficient concentration
of purpose and effort upon special jobs, each in their timi. What the
work of military preparation may do is to help the American people
obtain the habit of concentrated attention upon their own collective
tasks. As a result of an increase in concentration they should be
able to rise more completely both to their obligations and opportuni-
ties, but no such result necessarily follows. It all depends upon the
national polices, domestic and foreign, in the interest of which the
fruits of concentration are used.
The decision to prepare, consequently, decided very little. The
larger army and navy will of itself bring neither ruin nor regenera-
tion to the American people. It will not even bring additional
security, for security is a matter of comparative rather than actual
armament. By deciding to prepare the American nation has merely
issued a challenge to itself to use more foresight, more intelligence, and
more purpose in the management of its affairs. Its more powerful
army and navy like its more energetic and efficient government must
be made the organ of a policy, which wiQ consciously and tenaciously
make for individual and social betterment. Such a policy has not
yet been completely formulated, but the experiments and the discus-
sions of the past year have indicated the direction in which it must
be sought. AU Americans who wish the national military and naval
Digitized by
Google
172 The Annals of the Ambbican Acaobmt
establishment to be a boon rather than a curse to their country
should turn their attention to the business of formulating it. The
foreign policy of a democracy can be democratized only as a result
of a sufficient measure of popular understanding and goodwill; and
upon the democratizing of American foreign policy will depend the
democratizing of its most dangerous organ, — a large and powerful
military and naval establishment.
Digitized by VjOOQIC
THE DEMOCRACY OF UNIVERSAL MILITARY SERVICE
By Fbanklin H. Giddingb, LL.D.,
Professor of Sociology and History of Civilisation, Columbia University.
This topic is resolvable into propositions of the indispensablo
science of guess work. There is no way of knowing what the effect
of a large military and naval establishment on our domestic insti-
tutions and policy will be. The factors of causation are many, and
the contingencies are imcertain. Nevertheless, we must guess as
well as we can. Marvellous as the achievements of experimental
science have been, and great as the accumulations of verified knowl-
edge are, mankind yet goes on its daily way, in matters social and
political, by guessing. It becomes important, therefore, to guess
well. For practical purposes the difference between good guessing
and bad guessing is incalculable. The social and political sciences
are attempts to establish principles and methods of good guessing,
in these domains. Encouraging progress has been made since this
Academy was foimded twenty years ago. It is this progress that
we celebrate today.
The fundamental principles of good guessing are no other than
those of scientific method in general and perhaps this fact offers as
good^a reason as any that could be found in justification of our
temerity in speaking of social and political sciences. A careful
discrimination of facts, qualities, and kinds of things, one from
another, is the first requirement. Painstaking measurement; or
estimate, of quantities is the second requirement. In attempting
to guess what the effect of a large military and naval establishment
upon our domestic institutions and policy will be, we shall plunge
wildly imless we keep these requisites of method continually in
mind.
What, then, are we to understand by the phrase, "A Large
Military and Naval Establishment "? We are a nation of more than
one hundred million souls. An army of one million men would
have been impossibly large for the United States one himdred
years ago^ when oUr total population did not exceed five million
persons, men, women, and children all told. It would have in*-
173
Digitized by
Google
174 The Annals of the American Academy
eluded every male of military age, without allowance for invalids,
cripples, and other incompetents. Would an army of one million
men now be large? It would be less than one per cent of the popu-
lation; it would be approximately five per cent of the male popula-
tion of military age. To the cold-blooded statistician the figure
is not of disturbing magnitude. To the sensitive soul of the pacifist,
it is monstrous. Let us try to arrive at a view acceptable to a
reasoning and commonsensible mind.
I admit that, at the moment, there is a painful failure to agree
upon what or who the reasoning and commonsensible minds are.
The pacifists have of late been exploiting the vocabulary of neuras-
thenic description. Their favorite words are, "hysteria," "hyster-
ical,'' "fright,'* "epidemic of fear." I shall not argue with them
about the mental state of those advocates of preparedness to whom
these terms are so freely and unremittingly applied. I will only
remind you, whom I now address, and who, I assume, are ladies and
gentlemen of scientific temper, that one of the well-recognized
symptoms of real hysteria — ^the genuine thing — ^is the indestructible
conviction of its victims that the normal people round about them
are hysterical.
Returning to tangible things: for a period nearly as long as
the life of this Academy thus far, the world's example and measure
of militarism has been the military strength, organization, equip-
ment, and military morale of Germany. The normal make-up of
this surpassing military force consists of a standing army, in time
of peace, of 870,000 men, reserves of 4,530,000, men all thoroughly
instructed, drilled, and equipped, and an available but imorganized
force of 8,162,400. The population supporting this establishment
is less than 70,000,000 persons. Leaving out of account the unor-
ganized forces, and counting only the instructed and organized
forces, the six greater nations of Europe, namely, Germany, Austria-
Hungary, France, Russia, Italy, and Great Britain normally have
an immediately available military force of more than 25,000,000
men. It will generally be admitted, I suppose, that military pre-
paredness of this magnitude may, without exaggeration, be de-
scribed as militarism.
The area of Europe, which its 25,000,000 to 30,000,000 soldiers
are expected to defend or to devastate, as occasion arises, is 3,754,282
square miles. The area of the United States, plus the area of
Digitized by
Google
ttNivtsRSAL Military SbbvicS 175
Alaska and the area of our island possessions, is 3,743,306 square
imles, or only 10,979 square miles less than the total area of Europe.
If we had a peace-footmg army of one million men, and trained
reserves of five million men, we should have for the protection of
our continental area, Alaska, and island possessions, less than one
fifth of the mihtary establishment maintained upon the equal area
of Europe; Japan and all other nations being left out of the reckon-
ing. It is penmssible to any free bom American to call such a
measure of preparedness "mihtarism" if he wants to. There are
intellects, here and there, that function that way.
So I offer my first contribution to our guessing match upon the
probable effect of a large mihtary establishment in the United
States. My guess is that a peace-footing army of one miUion men,
and a trained reserve force of five miUion more men would have, so
far as any reaction of mere magnitude is concerned, absolutely no
effect whatever upon our American domestic life. It would be
neither more nor less appreciable than a poUce force of 15,000 men
in this city of Philadelphia, with its population of more than one
million and a half inhabitants.
The magnitude, however, of a mihtary establishment is by
no means the only or the most important factor to be regarded when
forecasting its probable reactions. Far more important than any
dimensions that we are likely to have to consider, is the character
or type of the army that we might create in the United States. Like
England we have been, and are now, committed to a hired or pro-
fessional army which, next after monarchy and hereditary rank, is
the most undemocratic thing that man has so far invented. A
hired army does not have to be large to establish undemocratic
standards and to cause mischievous irritation. When the Euro-
pean War is over, the class struggle will break forth afresh, with
fourfold energy. I think that we may confidently anticipate that
the forces of organized labor and of socialism will actively oppose
professional armies. Rightly or wrongly they will insist that a
professional army may, at any time, be used by a dominant capital-
ism to quell strikes and to put down an industrial revolution.
International socialism, to its honor, is opposed to all prevent-
able war, but it does not feel about universal mihtary service as it
feels about a hired and professional army. Universal mihtary
training puts all citizens on the same footing. The proletarian,
Digitized by
Google
176 The Annals op the American Academy
like the man who hires him, is taught the manual of arms, and, in
the event of war, the man who hires him is equally liable with other
men to take his chance in the trenches.
Many of you here present doubtless remember, as I do, the
bitterness engendered by that form of conscription to which the
federal government resorted in our Civil War. My father was the
minister of a Congregational church in a country village, and I
vividly recall my impressions of scenes in our home when women
in humble circumstances came for a word of comfort, holding in
trembling hands the tear-blotted scrap of paper that told of the
death of husband or son, and, child as I was, I felt their smarting
sense of injustice that their loved ones had to go to the battle field
while the relatively well-to-do manufacturer and the merchant
could buy substitutes. I do not need to argue, for you all know,
that the worst of England's troubles in the present war have been
directly attributable to her initial reliance upon an inadequate
professional army, helped out by volunteers; while the superb
democratic solidarity of France is attributable to the equality and
justice of a universal military requirement, which puts all men of
high or low degree on the same footing in the face of suffering and
fate.
So I make my second guess, which is that if we create a hired
army of more than half a million of men, and do not back it up by
some form of universal military requirement and training, we shall
engender irritation and distrust; we shall unnecessarily intensify
the class struggle; and we shall disintegrate such democratic solidar-
ity as we yet enjoy. Whereas, if we follow the examples of Switzer-
land and of France; recognize the responsibility of every able bodied
citizen for the defence of his country; give every man a good, but
not too exacting military training, we shall inspire all citizens with
the conviction that our institutions are fovinded in justice and duty,
and shall thereby invigorate our democracy.
These possible reactions of a larger military establishment are,
I conceive, the most important ones to take account of. There are
others not to be ignored. I will content myself with a brief con-
sideration of two.
It is generally acknowledged by unprejudiced persons that
military training may have an educational value. I count myself
fortunate that in my college days I enjoyed such training for a
Digitized by
Google
Uniybbsal Militaby Sbrvicb 177
time, under the instruction of Captain, afterwards General, Thomas
Ward of the Regular Army. I learned many valuable things that,
as it turned out, I should have had no other opportunity in my life
to learn, and that on the whole have contributed to my physical
health, my sense of social duty, and my comprehension of the impor-
tance of efficiency in team work. Incidentally I learned, I think,
the moral no less than the marching distinction between guiding
right and guiding left, and I have since been trying to " guide right. "
It is urged by men whose intelligence and distinction carry
great weight that all of the educational advantages of military disci-
pline may and should be obtained through other means. Cannot
setting up exercises, cooperative activity, accuracy, regular habits,
and all the rest be taught apart from their associations with war?
Undoubtedly they might be, and they should be. Nevertheless,
they are not, in our schools or in our colleges. After lifelong asso-
ciation with educational interests, I regret to have to say that I
see very little reason to expect that these disciplines will be effect-
ively developed in America unless the demand for them comes from
the same source that has demanded and obtained them in conti-
nental Europe and in Australia. It is a thing one would rather not
say, but it is true: we are a loose-minded and a loose-mannered
people. Money making, and fads invented by lunatics are the
only things that we take seriously. I share the conviction, which
has been growing in many minds, that this deplorable state of
mind, and of behavior is in no small measure the consequence of
our fatuous custom of letting our young people "go on the loose,"
instead of holding them to tasks, duties, discipline, and achievement.
As a fact of experience it seems not to be true that the average
man will do the things that he should do merely because they are
expedient and right. He does them under economic or social
pressure. Economic pressure in the United States, by comparison
with economic pressure in the old world, has been relatively light;
and our social pressure is formless .and relatively ineffective because,
in cutting loose from the aristocratic traditions and conventions of
an older world conamunity we have, at the same time, cut loose
from a priceless heritage of human wisdom, in the vain thought
that the laws of the universe are suspended in the Western Hemi-
sphere.
Among the precepts of wisdom that we have been trying des-
Digitized by
Google
178 The Annals of thb American Academy
perately to ignore is the truth that human beings do not do things
for their health, bodily or spiritual, until their health is gone. They
do things in the day's work because they have to; they do things for
fun because they like to. The well set-up "cop," the fireman, the
middy, and the soldier, do not take their exercises and their drills
because they have reasoned that such exertions are good for them;
they take them under social pressure, because they have to, on
penalty of losing their jobs.
Here we have the crux of the whole question of the educational
value of military training. Education as education, school boys
and college boys do not take seriously in this country, and they
will not take it seriously until they feel a social pressure more effect-
ively organized than any we now have. Young men do take mili-
tary training seriously, they are set up and disciplined by it because
they feel that it is linked to tremendous realities, because it is a
recognition of the solemn fact that nations have been obliged to
repel invasion and to put down insurrection, and that the necessity
may arise again. It is associated with convictions of obligation,
with love of country, with loyalty and obedience.
Yes, with obedience. I am well aware that one half at least
of that opposition to preparedness which parades as pacifism is
neither more nor less than an anarchistic revolt against the teaching
of obedience. I should be in sympathy with it if obedience were
now, as in other days it was, submission to irresponsible power or
authority. But obedience today, in America at least, as in Switzer-
land and in France, is another thing. It is a loyal and rational
acquiescence in the general will; it is the act of being republican; it
is the act of being democratic as distinguished from the verbal
democracy of the humbug and the blatherskite. And this democ-
racy of act, of loyal obedience to the general will, of willing sacrifice
for the general good, is the republicanism that we need; it is the
democracy that we must have if we are to be a nation respecting
ourselves, and worthy of the world's respect.
Upon the second of the possible minor reactions of a larger
military establishment than we have hitherto had in the United
States, I shall be still more brief. Is there danger that by recogniz-
ing the importance of general military training, and by adopting
it, we shall become interested in military operations for their own
sake, and insensitive to the dreadfulness of war? Granting that
Digitized by
Google
Universal Military Service 179
the mamtenance of an adequate army of defence, and a powerful
navy would not in itself be militarism, should we, nevertheless, by
creating such establishments be entering upon a perilous course,
leading to militarism in the end? My answer to this question is
like the answers that I have given to the questions already con-
sidered. I call your attention to certain facts and discriminations.
Where, in all human history, do you find that republican and demo-
cratic populations have become militaristic? Where, in all human
history, do you find monarchies that have not become, or tended
to become militaristic? Militarism is not a simple phenomenon;
it is a highly complex product of many factors intricately combined.
Monarchism harks back to ancient days, to reactionary instincts;
it is intrenched in privilege; it resists change. But mankind pro-
gresses. Progress endangers monarchy; it threatens it with over-
throw. Monarchism as such cares nothing for the populace, except
as a base of supply and a fighting force. Monarchy is excited by
progress; it casts about for policies to turn progress to its own ac-
coimt; militarism is the smn of the policies that it adopts. Mili-
tarism is, in fine, a policy of monarchy excited by progress. Democ-
racy has nothing to gain by aggressive war — ^but everything to
lose. Both instinctively and rationally democracies realize that
such is the truth. Their danger lies not at all in a possible drift
toward miUtarism; it lies rather in a failure to grasp the complexities
of international interests and relations as they stand in the world
today; in a failure to realize that good behaviour by the well-in-
tentioned is no protection against aggression by the ruthless. The
danger of republics and democracies Uei9 in the immense difficulty
of arousing democratic masses to an appreciation of the importance
of forecast, of preparation, of timely organization, of the develop-
ment of efficiency to meet contingencies not only possible but, in
the imperfect and by no means righteous world of today, in the
highest degree probable.
What I have said about the probable reactions of a larger
miUtary establishment on land applies, I think, in the main, to the
question of the probable effect upon our domestic life and institu-
tions of a large naval establishment. We may safely assiune that
the United States does not need the largest navy in the world, or
even a navy as large as that of Great Britain. But we have long
lines of coasts to protect, and the outlying possessions of Alaska
Digitized by
Google
180 The Annals op the American Academy
and our Pacific Islands. By creating a navy secopd to that of Great
Britain, and larger than any other, we should merely measure our
naval strength according to the amoimt of work that it may be
called upon to perform. And I offer as my final guess in this dis-
cussion that neither individual nor nation can undermine character
or endanger free institutions by foresight of events, evidence, pro-
vision of appliances, and discipline of strength according to the
measure of responsibility and of obligation. It was not an alarmist
who said: ''He that provideth not for his own, is worse than an
infidel.''
Digitized by
Google
BEWAREDNESS
By Hbnby D. Estabrook,
New York City.
Fellow Americans! Are we a free people, a people trying the
experiment of self-government — trying to work out our own sal-
vation without the guardianship of king, czar, pope or potentate?
You know that we are. Who gave us our liberty? Nobody. We
conquered it for ourselves in war against a king, and no king ever
yet surrendered to his subjects except upon comptdsion. And as
our government was won by war, so its integrity was preserved by
war, and so imder God we will continue to defend it, by war if
need be, though all the world should come at us in arms.
This is not rhetoric or bombast but the solemn statement of a
solemn fact, and you know it. I agree as to the horrors of war.
It is to prevent the horrors of war that I am in favor of prepared-
ness. Whatever the dangers of a big standing army may be to the
liberties of a people, they cannot obtain in this coimtry, thanks to
the wisdom of our forefathers, who were as much opposed to mili-
tarism as we are. Napoleon said that " an army crawls on its belly,"
meaning that it must have food and clothing and equipment. In
other words, it must have money and lots of it. Now our Con-
stitution wisely provides that every revenue measure must origi-
nate in the House of Representatives, the popular branch of om- na-
tional legislature, so niunerous in its membership that it may fairly
be said to constitute the people themselves. Oiu- Constitution
wisely forbids any appropriation of money by the House of Rep-
resentatives for a longer period than two years. Hence the army
and navy — West Point itself — are absolutely dependent for their
existence from year to year on the will of the people.
The pacifist warns us that we should be afraid to trust the pro-
tection of our lives and liberties and properties to any army made
up of American citizens, but sees no danger whatever in trusting
our lives, Uberties and properties to the tender mercies of armies
made up of citizens of Europe and Japan! Excuse me! If I must
live in terror of an army I insist that it shall be an army made up
181
Digitized by
Google
182 The Annals of thb American Academy
of my fellow citizens and not an army of foreign puppets trained to
do the bidding of a bloodthirsty autocrat. Our own history vin-
dicates the wisdom of our fathers, for after every one of our own wars
our armies have melted back into the body of the people as nat-
urally and inevitably as the smoke of battle melts into the firmament.
But if — ^in the words of the soldier-poet —
If by treacherous yielding chance
Ovii land hath trafficked its splendid anger,
For only a lean inheritance
Of outward lustness and inward languor;
Why then, O comradesi it were full well
If the shocks of our armies were not over;
For the Lord made men to conquer heU,
And not to fatten like kine in clover I
We have been taught that eternal vigilance is the price of
liberty. We repeat this phrase over and over as a reminder of our
duty, and not as a mere ritual that by mouthing has lost its meaning.
And what is vigilance but preparedness?
The significance of preparedness is the significance that inheres
in every precaution taken to avoid or minimize possible dangers.
Caution means "wariness," from whence comes our word "beware."
The motive back of bewaredness is the same precisely that suggests
to Mr. Henry Ford, for example, the wisdom of taking out fire in-
surance on his automobile plant, or, better yet, of spending enough
money m the first instance to make it fireproof. It is the same pre-
cisely that suggests to a steamship company the wisdom of equip-
ping its ships with bulkheads and lifeboats. It is not expected that
any ship will founder on an iceberg. The vigilance and care of
trained men will be employed to prevent such a catastrophe. But
the ship is liable to encounter sudden storms, black nights, and fog
banks; and if a wreck should occur through any misadventure, the
money spent for preparedness will have been well spent. The whole
philosophy and significance of preparedness are summed up in the
current phrase "safety first." The man who goes through life
haphazard and trusting to luck may claim, and even believe, that
he is trusting in God and is therefore wiser, better, and more right-
eous than his neigh'bors, but he is nothing of the sort. The foolish
virgins were Portias compared with him. No man has a right to
lay down on God for help imtil he has done all within his own power
to help himself. God hates a quitter as he does a liar.
Digitized by
Google
Bewabednesb 183
Specifically, and as a national issue, preparedness means a
military equipment adequate to the defense of this government
against possible foreign aggression, and to give sanction to the just
demands of our government upon all those who would otherwise
disregard them. It is amazing to me that any genuine American
should oppose a program looking to this end. Why should our
government maintain sheriffs, policemen, a constabulary, and a
militia to enforce its demands upon its own citizens, but with fat-
uous imbecility take it out in scolding and making faces at a
foreign enemy? The placid assumption of the pacifists, so called,
that preparedness necessarily means war with somebody, or that
those who are in favor of it are less concerned than themselves in
preserving the peace, is on a par with that assumption once made
by Mr. Bryan that all those who were in favor of an honest dollar
and opposed to the free coinage of silver at sixteen to one were ene-
mies of the common people to be crucified on a cross of gold. And
you will recall how near Mr. Bryan came to making them beUeve
all this. Lincoln said "You can fool all of the people some of the
time, and some of the people all of the time, but you can't fool all of
the people all of the time.'' An inscrutable destiny seems to have
set apart Mr. Bryan as the mouthpiece and exponent of the con-
tingent that can be fooled all of the time, and imhappily the con-
tingent is large enough to make it worth his while.
But listen to this from the Holy Bible — ^to what it saysj is liable
to happen to a "careless" people; a smug people, — a people sitting
in fancied security, trusting to their blandishments, their enchanters,
and their stargazers to ward off possible evils. I read from Isaiah:
Now therefore hear this, thou that art given to pleasures, that dwellest care-
lessly (or sittest securely) that sayest in thine heart, I am and there is none else
beside me; I shall not sit as a widow, neither shall I know the loss of children: but
these two things shall come to thee in a moment in one day, the loss of children
and widowhood; in their full measure shall they come upon thee, despite of the
multitude of thy sorceries, and the great abimdance of thine enchantments.
For thou hast trusted in thy wickedness; thou hast said. None seeth me; thy
wisdom and thy knowledge, it hath perverted thee; and thou hast said in thy
heart, I am, and there is none else beside me. Therefore shall evil come upon
thee; thou shalt not know from whence it riseth (or how to charm it away) : and
desolation shall come upon thee suddenly, which thou knowest not. Stand now
with^hine enchantm^ts, and with the multitude of thy sorceries, wherein thou
hist laboured from thy youth; if so be, thou shalt be able to prevail Thou art
wesoed in the muhttude of thy counsels; let now the astrologers (or diviners of
Digitized by
Google
184 The Annals of the American Academy
the heavens), the stargazera, the monthly prognosticators, stand up and save thee
from the things that shall come upon thee. Behold, they shall be as stubble; the
fire shall bum them; they shall not deliver themselves from the power of the flame;
it shall not be a coal to warm at, nor a fire to sit before. Thus shall the things be
unto thee wherein thou hast labored: they that have trafficked with thee from
thy youth shall wander every one his own way; there shall be none to save thee.
Even Jeremiah could not resist the temptations offered by the
unpreparedness of a people, for he said to his own people:
Arise, get you up into a nation that is at ease, that dwelleth without care*
saith the Lord, which hath neither gates nor bars, which dwelleth alone.
And their camels shall be a booty and the multitude of their cattle a spoil.
I will bring their calamity from every side, saith the Lord.
And we are miprepared. We have neither "gates nor bars.'*
We are careless of the future, and the machinations of wicked men
and the ambitions of royalty. We sit in fancied security, trusting
to the potency of our riches and the divinations of our stargazers.
We are fat, otiose, spineless, insolent and rich. Could the devil
himself add anything to this catalogue to make us riper for pluck-
ing? Yes! Yes, for with the best intentions possible we have suc-
ceeded in incurring the enmity of every nation on earth. Is this
state of imbecility to endure? Shall we continue to listen to a
wandering voice? When this voice was recently removed from
the counsels of our government, we thought, good easy souls,
we had gotten rid of it. Has Mr. Bryan proved himself so good a
prophet in the past that we can afford to trust him for the future?
Preparedness, therefore, is only another name for insurance
against contingent evils. And America has more things of value
to insure and more money to pay the premium than any nation in the
world. What is an insurance premium? It is simply the price
paid for peace of mind, for sleep o' nights. It represents, not aii
investment as a source of income, but an annual charge upon the
business protected by it. The insurer kisses his money good-bye,
hoping that the calamity which alone would make it an investment
instead of an expense will never happen. The amount of his pre-
mium is based on the value of the property insured and the char-
acter of the risk. A marine risk at present rates costs money. Our
ship of state is freighted with property worth at least 187 billions
of dollars, and has a passenger list of 100 million souls. Can we
afford to insure it at a premium of about one-f omrth of 1 per cent of
Digitized by
Google
Bewarednebs 185
the value of our goods alone? Can we not afford to spend as much —
nay, only a fraction as much — on our army and navy as we squander
every year on whiskey and tobacco, or half as much as we pay every
year for automobiles? Oh! but it is not the expenditiu^ of dol-
lars per ae that your pacifist objects to. He has a soul above skittles
and beer.
It is the principle of the thing. War, he says, is the curse
of the world, and it is time for the people to put an end to it.
Amen! and Amen! But how would Chinafying America accomplish
that result? The people themselves seldom make war. Only
kings make war, and I tell you that so long as there are kings in the
world there is bound to be war in the world. We may never hope
for imiversal peace until every king and kinglet, prince and prince-
let — together with their preposterous. claims of divine right — ^to-
gether with all the pomps and shams and frauds of royalty have
been extirpated from the earth. The sword of liberty is not a met-
aphor. So long as tjrranny goes armed, liberty dare not disarm.
America would fain be neutral, but if war is hell, neutrality
as we have found it isn't exactly heaven, and so preparedness. be-
comes religion by a sort of necessity.
Washington called it the most effective way of preserving peace
and declared that a free people should not only be always armed but
disciplined according to a plan.
Lincoln declared that war in defense of national life is not im-
moral, and that war in defense of independence is an inevitable
part of the discipline of nations.
Is America a nation with the noblest institutions to maintain,
or a salmagundi of nationalities — a congeries of foreigners over
here for the money in it?
And America has more than her physical possessions to de-
fend. These and her opportunities, she willingly shares with all
who come to her. But the thoughts that are hers, the ideas that
are hers, and hers alone, — she is bound to defend always, in all
wa3rs, and against all comers!
For America today is the cynosure of the world. Her ideas,
like the ideas of Christianity, will disturb the conscience and inspire
the hopes of humanity imtil the coming of that perfect day. Even
China has seen our flag that symbolizes our ideas and our ideals,
and her senile, rheimiy eyes have kindled at the sight. From out
Digitized by
Google
186 Thb Annals of the American AcADEiir
its crimson arteries she has drawn new life, a younger blood, and
has felt the pulse and tingle of the transfusion. China — old, old
China, twin sister of Time himself — China has seen Old Glory and
is struggling with the thought of liberty. And we Americans know
there are thoughts so big that only a Caesarian operation can give
them birth. Jones Bill or no Jones Bill, oiu: flag is in the Orient
to stay. It will never budge from the ramparts of Manila, but
there, like a constellation in freedom's skies, its stars shall multiply
and shine forever.
X
Digitized by
Google
NATIONAL IDEALS AND PREPAREDNESS
By Wilbur C. Abbott,
Professor of Histoiy, Yale University.
An English writer has recently declared that Germany is the
catfish in the cosmic tank, which has stirred up us codfish nations
and prevented our becoming overfat with material prosperity, by
^ving us something else to do and to think about besides getting
rich. And whether one is pro-German or " so neutral that he doesn't
care who whips them," there is something in that statement well
worth pondering. It requires no consideration to perceive that the
tremendous controversy now raging in the United States, and in the
world generally, whatever the military outcome of the war, is having
an influence on the thought of mankind scarcely to be measured
in comparison with any such movement in the past fifty years. It
has not merely diverted our attention from our absorption in money-
getting; it has not only showed us that business, which we have
regarded for a generation as the chief end of man, is, after all, only
one of the interests of the world and not always the most vital one.
It has impressed upon us that moral no less than economic factors
are still a part of hmnan affairs, and the most important ones; that
self-sacrifice, honor and courage, duty and discipUne are still deter-
mining elements in human life, and still to be reckoned with in the
equation. It has caused not merely an extraordinary revival of the
religious factors in human experience, which has, indeed, had little
reflex in this country; but it has revealed a powerful revival of that
sentiment which we call patriotism, which has extended itself even
to the United States. In the face of the doctrines of the so-called
"wider liberty," "greater socialization," and "universal brother-
hood," there has emerged a large body of individuals who have
manifestly no desire to be transformed into citizens of the world, or
even of a municipalized society. They are not anxious to find
themselves men without a country or a home; even though they are
assured that the nation and the family are outworn institutions
doomed to extinction. And, in any consideration of the probable
effect of a change in our national equipment and poUcy, that simple
187
Digitized by
Google
188 The Annals of thb American Academy
and old-fashioned element must be taken into accomit, even though
it has not been so vocal as the more advanced reformers in recent
years.
It is true that some of my friends have declared themselves
with more or less — generally less — ^restraint upon the other side.
Moved by the horrors of war, as well as by a comfortable optimism
which proceeds in many instances from a life which has had few
hard places, they have declared, virtually, that nothing is worth
fighting for. But no one who has really lived in a real world
believes that. He knows that mere goodness, without stre^gth or
intelligence, not only makes him the prey of those with less con-
science than himself, but leads to the destruction of the very ideal
for which he stands. That peace hath her victories no less than war
carries as its corollary that it has its conflicts as well. Nor is any
one who has knowledge of affairs likely to believe that the business
world has renounced self-seeking and the inevitable struggle which
comes from competition. Least of all can any one, viewing the
tremendous world conflict, taking into consideration the pleas of
economic necessity put forward by one set of powers and the steps
being taken by their opponents to inaugurate a trade war On the
conclusion of the armed struggle, be under any illusions that there
are more ways of putting men and nations out of action than by
bullets and bayonets.
But it is as difficult in these days that try men's souls, to de-
clare one's self in favor of reasonable precaution against aggression
without being condemned as a militarist, as it is to urge a policy of
keeping out of unnecessary trouble without being hailed as a pacifist.
It has been said with much humor and more point that recent events
seem to have demonstrated that "Thrice just is he who has his
quarrel armed"; for our own position of benevolent but disarmed
neutrality has brought the United States very nearly to impotence
to a cause in which we, in common with all nations save one consider
right — ^that of humanity in sea warfare.
And this is the second of the considerations which present them-
selves in such a problem as that we have before us, not merely the
preservation of our property but of our principles by the increase
of our land and naval force. It is not easy to see how the mainte-
nance of an army and a navy adequate to attain these ends can be
regarded as dangerous to international morality any more than the
Digitized by
Google
National Idbals and Prbpabsdnsss 189
employment of a proper police force — ^to which our pacifist friends
doubtless contribute — ^is inimical to the social order of the communi-
ties in which they live.
For if history teaches one lesson more than another, it is that
peace and war are not so much questions of so-called preparedness
as of the spirit and aims of a people and its rulers, and this is a prob-
lem not of an army and a navy so much as of the human heart.
The first king of Prussia prepared the army with which his son,
Frederick the Great, wrested Silesia from Austria, but his own
reign was an era of all but unbroken peace. Never has the United
States been in a better position to enforce its authority and extend
its power in the western hemisphere than at the close of Civil War;
and never has its peacefulness been more in evidence. The fun-
damental thing is what nations are trained to think and believe —
those matters of the spirit which we know as traditions and ideals.
Any increase of our forces by sea and land will, obviously, bring
certain new elements into our national life and produce certain
easily predicated results. It will increase taxation; it will open to a
far wider portion of our people what is to them virtually a new pro-
fession, that of arms; it will, in some degree, turn men's thoughts
away from the complacent self-satisfaction which our long isolation
has engendered. What other results it may have, we can but con-
jecture; and it is an old maxim, "never prophesy unless you know.' '
One of my more belligerent friends observed to me that he didn't
know what would happen to the United States if it increased its army
and navy, but he could guess pretty closely what would happen to us
if we didn't. And in that observation lies one answer to the problem.
It is that, if we desire the continuance of the peace which we have
so long enjoyed, that peace in which alone rests the possibility of
working out the solution of the tremendous problems of democracy
in an industrialized society which press so strongly upon us, and
which would be indefinitely postponed or infinitely aggravated by
interference from outside, it is our duty to secure ourselves within
reason against the unscrupulous statecraft which the last ten years
has again introduced into world politics.
Nor is it merely a question of protecting our own shores. No
individual and no nation lives or dies alone, its obligations are not
wholly material nor are they confined within its own borders. Fa-
vored by its geographical location and the political developments of '
Digitized by
Google
190 The Annals of the Abcerican Academy
the European powers during the first three quarters of the nineteenth
century, the United States was enabled to develop a peculiar form
of government and institutions in peace and comparative isolation
without the necessity of maintaining a force to protect itself. Within
a generation circumstances have completely changed. Thanks
to the rise of a militaristic and imperialistic Germany, with am-
bitions for world-dominion, of a modernized Japan hungry for
territorial expansion, to the fact that Europe has entered on the
Pacific stage of her career, that eastern Asia has taken its place in
world-politics, and that the United States now holds the old Spanish
route to the Philippines, we are no longer on the edge but in the
center of affairs. South America is now a first-rate factor in the
world; with the same form of government and measurably the same
ideals as our own. Thus, however we may deprecate or seek to
deny our position and its responsibilities beyond our borders, we are
compelled to look at affairs in a very different light than was vouch-
safed even to our own fathers. Whether we believe that duty has
determined destiny or that destiny has determined our duty, the
fact of our present situation remains essentially the same.
Captain Mahan has acutely observed that this country, like
England, is, for all military purposes, an island nation; since it is
inconceivable that we should expect invasion from Mexico or Can-
ada; and that our policy should be directed with this axiom in mind.
It should be, in brief, a navy adequate to defend our coasts, an army
large enough to support the sea forces, and a reserve sufficient to
support them both. But beside these we should have, in so far as
possible, an "open" diplomacy, and a people "educated," to use a
popular phrase, to a point where the appeal of demagogue and gusts
of popular passion cannot move their government from those prin-
ciples of peace and humanity for which a democracy like ours stands,
if it stands for anything. That such a program can make for the
species of militarism which produces war for what a recent German
publicist defending Hohenzollem aggression has described as "profit
or necessity," no reasonable man can well believe.
That it will in any sense aflfect the framework of our govern-
mental system as we have inherited it from its makers, it is no less
difficult to imagine. But — and here is the point of the whole con-
tention— will it not modify the ideals and ambitions of the society
which underlies that framework; will it not make us as a people
Digitized by
Google
National Ideals and Preparbdujess 191
truculent and belligerent, eager for wider dominion and power, more
ready to engage in far-reaching adventure, imperialistic, centralized,
aggressive? That question does not stand alone. By a natural,
perhaps inevitable process of economic development we have ac-
quired, at the same moment that we have been drawn into the
maelstrom of world politics, a huge population, ignorant not only
of our institutions, our traditions, and the fundamentals of our
polity, but foreign to our civilization. That another generation
may see these men or their children Americans must be the fervent
hope of all who believe in the United States and what it stands for.
But that it will be the country we have known and loved there is
little reason to believe. That its ideals and practices will have
changed, no one can well doubt. And they should change, else
would come stagnation and ultimate death. They do change before
our eyes, though we are blind to the deeper meaning and tendency
of that change. But it is our duty, as we stand at the beginning of
a road that leads we know not whither, to see that, whatever form
the new republic shall take, that it shall maintain "those eternal
qualities of high endeavor, on which, amid all changes of fashion,
formula, direction, fortune, in all times and places, the world's best
hopes depend. " That we should have a hundred thousand or a mil-
lion men in our armies is a question of absorbing practical import-
ance; but beside the deeper issue as to what the people of the United
States believe should be done with them, it sinks into insignificance.
For what men live by, is, in the last result, what they believe. Jus-
tice, tranquillity, defence, welfare and liberty, these were the ideals
of the framers of our constitution. If, through the undreamed-of
adventures of the coming years, we are able to keep our children in
that faith; if, still more, we can inculcate such principles into our
more recently acquired elements, we may look upon the future with
untroubled eyes. '*For he that walks in these statutes, and keeps
these judgments, deals truly, and is just, shall surely live."
Digitized by
Google
COMMAND OF THE AIR
By Rear Admiral Robert E. Peart,
Washington, D. C.
We do not respect a man unless he possesses some elements of
force of character.
And no nation can win respect or exert influence unless it
stands for forcefulness and strength.
Iq no way can we, as a nation, stand so eflfectively for forceful-
ness, for strength, and for world influence, as by Command of the
Air.
Our geographical position, our size, our resources, our wealth,
our astonishing national growth, the watchfulness of Providence
which has accompanied more than one of our national crises, all
indicate that our r61e in the world's future, that our part in world
influence, is to be of the first importance. Just as in the war with
Spain, events external to us and beyond our control forced us from
our position of isolation into that of a world power with possessions
and interests circling the globe, so today events external to us, and
entirely beyond our control, are shaping for us a position and an
influence greater than ever before.
To touch upon only one of the directions in which that world
influence will act, I will note our position as the most influential
member of that American Federation which is surely coming, a
federation of peaceful, prosperous, autonomous states, impregnable
in their union, occupying the entire western hemisphere, seated
upon two continents, reaching from pole to pole. In that coming
world influence, the one great dominant thing which will overshadow
all else will be air superiority and power.
Twenty-four hundred years ago Themistocles, Athenian states-
man, soldier, and creator of Athenian naval policy, asserted the
principle that "He who commands the sea commands all." With
the naval victory of Salamis, which changed the history of the
world, he drove home the truth of his principle, and sent it down
the centuries to be a living axiom of national power and influence
today.
in
Digitized by
Google
COICMAND OF THE AlR 193
"He who commands the sea commands all" still holds good.
But it has a rival, the command of the air, without which it is begin-
ning to be valueless, and in the near future it will be superseded
entirely by the axiom "He who commands the air commands all."
However, we cannot yet minimize the importance of command
of the seas. The battle cruiser offers us the quickest and surest
means of securing that command, but that is another story. What
we must do now is to insure conunand of the air, or we shall be hope-
lessly outclassed. Great and important as is a sufficient navy for
our safety, I speak advisedly when I say that our air service of the
near future will be more vital to our safety than our navy and our
army combined.
Air Inferiority of United Staies
The United States Army was the first army to have an aero-
plane in 1909. Our navy was the first navy to have a seaplane in
1911.
Yet where are we now? We have, army and navy together,
less than 100 aeroplanes, and could hardly muster 50 aviators.
Little Bulgaria with an area somewhat greater than Maine, and a
population less than Massachusetts, has over 300 aeroplanes.
The personnel of the French air service today numbers more
officers and men than there are in our entire army. The personnel
of the British air service numbers more officers and men tfian we
have in our entire navy. Germany has not less than 9,000 aero-
planes, and all these countries are constantly adding with feverish
haste to their equipment in this department.
The Ministries of these nations which have thousands of aero-
planes, and whose frontiers are insignificant compared with ours,
are constantly apologizing to the people of their countries for not
being able to increase their air fleets fast enough to defend their
country and protect the lives of their people.
The sooner we wake up to the fact that command of the air is
absolutely vital to our safety, and that it can be secured more
quickly and at less cost than any other form of defense, the better
it will be for us.
Aeroplane Has Completely Changed Modem Warfare
The aeroplane has completely changed modem warfare. Sur-
prise attacks are no longer possible. And if one of the contestants
Digitized by
Google
194 Thb Annals of the American Academy
can secure command of the air and deprive the other of it, conditions
unmediately become those of a fight between a blind man and one
in possession of his eyesight. In [the present struggle abroad the
air strength of the contestants on the Western front is so nearly
equal, that the balance wavers from side to side, first one and then
the other having the advantage.
In our case, our geographical position gives us a natural advan-
tage which if we utilize now should relieve us of anxiety.
An attack upon us must come by sea. Our coast line as a base
gives us an inestimable advantage in aerial warfare, and will enable
us to send out such a veritable cloud of aeroplanes, as would com-
pletely overwhelm and destroy any number of aeroplanes that could
be transported on the decks of a hostile fleet, thus leaving us in the
possession of our eyes and the enemy blinded.
But we must be ready before the fact. There will be no time
to get ready when the attack comes. Once an enemy secures a base
on our shores, any and every city in the country may be the prey of
his air squadrons. And a single squadron of aeroplanes sweeping
across New York, Philadelphia, Baltimore, or Washington, in a
frightful shower of falling bombs would cause more damage in an
hour, than our entire air service would cost.
Should Have 6y000 Aeroplanes on Each Coast
We should have at the very minimum not less than 2,000 sea-
planes ready for duty on the Atlantic Coast, and an equal number
on the Pacific, 5,000 on each coast would be much better.
At each important place squadrons of aeroplanes should be
parked like tents of the summer encampment of the National
Guard.
Do not think I am talking wildly. In 1900 there were some
700 automobiles in this country. Today there are some 3,000,000
and it has been estimated that the output for this year will be over
1,000,000. The growth of the aeroplane will be equally or more
rapid than that of the automobile.
Aero Coast Patrol
I have the honor to be chairman of a Commission which is
working on a definite constructive proposition that will give us a
continuous picket line of seaplanes around the entire country to
Digitized by
Google
Command of thb Air 105
warn of the approach of an enemy. A central committee made up
of two U. S. Senators, a leader of the House, an Assistant Secretary,
a Head of a Department, a New York banker, and one of our fore-
most inventors, is located in Washmgton. The Adjutant General
of every state, and the Commanding QflBcer of each State Naval
Militia is a member of the Commission.
The total cost of the system will be about $500,000. This is
one third as much as was raised both by France and by Germany by
public susbcription previous to the war for their air services. The
cost of each section will be $10,000. This is an amount easily
within the reach of most coast communities and within the reach of
hundreds of individuals in those communities. Maine was the first
to take up and formally endorse this system, and Maine will have
the honor of estabUshing the first station of the System this smnmer.
Fourteen other states have the funds assured for a section of the
system in each of those states.
The conception is this, a continuous picket line of seaplanes
or flying boats fifty miles or more off shore and two thousand feet
or more in the air, around our entire coasts from Eastport, Maine,
to Brownsville, Texas, and from San Diego, California, to Cape
Flattery, Washington, each machine traveling back anji forth —
back and forth — over its section or "beat," a winged sentinel, form-
ing a cordon, a continuous line of whirring shuttles, weaving a
blanket of protection around the country.
The idea is to divide our entire coast lines into sections of con-
venient length, say about one hundred miles. Each of these sec-
tions and stations will be equipped with a seaplane. Each of these
machines will carry a driver and an observer and be equipped with
light wireless apparatus, powerful glasses and a sensitive micro-
phone. When in active operation these seaplanes in each section
will take their position some fifty miles off shore, and patrol their
respective beats continuously back and forth, in clear weather two
thousand feet or more above the sea, from which altitude ships
fifty miles distant may be seen. At night or in the fog the sea-
planes would, of course, sweep much lower, at all times themselves
invisible to an enemy.
By means of the wireless, information as to the character, num-
ber and apparent destination of approaching ships will be trans-
mitted to the shore station, and from these to Washington whence,
Digitized by
Google
Id6 The Annals of the AMsmcAN Academy
if the ships are hostile, orders will issue directing the movements
of our fleet and the submarine squadrons for the preparation of the
coast defenses and for the concentration of troops, if necessary,
while reserve planes hurrying out will keep the approaching craft
under continuous inspection while themselves invisible.
Such a system is a new departure. The like of it exists nowhere
at present, and yet it involves no new principle, but is simply the
utilization and multiplication of the known capabilities of a single
seaplane.
Follow me a moment. One of these seaplanes is traversing
its beat 60 to 100 miles west of San Francisco and 2,000 feet or more
up in the air. A ship or ships appear on the horizon fifty miles
farther out. The powerful glasses are brought into play by the
observer. His trained eye recognizes the number, character, and
course of the ships. The wireless crackles the information to the
shore station. The shore station transmits it to the great govern-
ment wireless station at San Diego. That station snaps it eastward
across the Rockies. In a few minutes Washington knows all about
it, and, if necessary, orders are snapped back to San Francisco, for
whatever action is advisable.
Let us imagine it is war. This advance notice of the approach
of the enemy is the first step. In modern warfare, hours and even
minutes may spell victory. The enemy is still unaware that his
approach is known, for the sentinel seaplane was invisible to him.
With the next step a cloud of scout aeroplanes sweep out in such
numbers as to overwhelm and destroy the enemy's aeroplanes,
leaving him blinded. Then follow the squadrons of great battle
tri-planes, each machine carrying several tons of high explosives to
drop upon the hostile fleet. You can imagine the result.
In time of peace the undoubted improvement and perfecting
of our seaplanes as a result of the fifty or more machines in this sys-
tem in constant practice and training along our coasts may be worth
the cost of the entire system. If the system results in training the
entire personnel of the Militia Aviation Sections of our coast states,
it will have returned full value on the cost of the system. And a
single plane might discover, report and send assistance to a ship in
distress, that with cargo would be equal in value to the total cost of
the system.
It is proposed to supply the equipment of these stations
Digitized by
Google
Command of thb Ant 197
($10,000 for a Btation) by the private initiative and generosity of the
coast communities. Once equipped the stations will be turned
over to the control of the Naval Militia, and the maintenance and
upkeep of the stations will be met by that Department.
England's Bitter Lesson
Two years ago England was as we are now, asleep, and with
more reason than we, for the possibilities of the; aeroplane were not
then known, while we now have before us an object lesson which
no intelligent mind that knows the facts can fail to imderstand.
They felt secure as we do now. The idea that anything could reach
or harm them in their tight little island was preposterous. Today
the papers, the people, and members of Parliament in England are
saying, " Give us a man at the head of our Air Department who can
protect us from the airships of the enemy, and if he does not do it,
hang him."
We shall be saying the same in the near future, if we do not
learn and utilize now the lesson Providence has put before us.
We have the chance to learn it in peace and sunshine. Our neigh-
bors across the water are learning it in tears and bloodshed.
Suppose such a horror from the air should fall upon this city
as has already fallen more than once upon the east coast of England,
leaving a trail of dead and dismembered women and children, muti-
lated men, and ruined property. Would the whole country flame
with rage? Would there be a snarl of "Why has this happened?"
"Who is responsible?" "Why were we not ready to prevent it?"
The following will give some idea of how death and destruction,
fear, rage, and bitterness of spirit, have driven home to England
the vital importance of air power. Equally instructive material
could be presented from Germany, from France, from Italy, from
Russia, but the British material is more convenient and accessible.
Mr. Balfour in the House of Conmions said:
It would avail nothing to England to have control of the sea unless it had
also control of the air.
Lord Montagu of Beaulieu, in the House of Lords, March 9,
said:
At the present time the air service is merely auxiliary to the fighting forces of the
navy and army. I can see a time coming when the air service wiU be more important
than the army and navy. We must get into the habit of looking at the air service not
Digitized by
Google
198 The Annals op the American Academy
as an auxiliary to the army and navy but as a great service which is an establishment
of it^lf, and to which toe shall have to look in future years for the defense of this
country The advantages of our insularity are rapidly disappearing.
Upon the efficiency of the air service much will depend. Let it not be said with
shame of our generation, that we did not trouble to guard in the air what oiur
forefathers won on the sea.
Lord Beresford said:
The new air warfare is going to be of so tremendous a character that it may
supersede the army and navy. An3rway we should be ahead in the air, the same
as we are on the water.
On the 22d of March in the British House of Commons the
following statements were made in the course of debate:
For dealing with this very pressing question of the air, there should be
sittings every day and if necessary all day, until some solution is found for our
third class position as an air power. Our national pride has suffered a blow which
it will take us many years and much labor to recover from. Our very national
existence in the next twenty years will lie in the ocean of the air. Within the
next five or ten years we may live to see the sky darkened by aeroplanes. The idea
of a country owning five hundred aeroplanes will be looked upon as a humorous
event of the past The suprenuicy of the air lies ready to any government
which has sufficient initiative to see to it.
At a meeting called by the United Ward's Club of the City of
London on March 28, a resolution was moved
that the meeting considers the most effective means of protection against air raids
would be by the creation and maintenance of an efficient air fleet in addition
to and independent of the existing naval and military requirements.
At this meeting Mr. Pemberton-Billing, a member of the House
of Commons said:
What we want to bring about is something grander than the air defense of
London. We want to demand of the government that the money, brains, ability,
and resources we possess shall be employed, and that we shall gain as soon as
possible and maintain forever the supremacy of the air For the cost
of two day's war we could have such a fleet of aeroplanes as would darken the skies.
We must do it. This country must be supreme in the air It has been
suggested that I am a man of one idea. Before many years have passed that one
idea will occupy the minds of many men of this country and women, too. Every
inland town lies on the coast of the ocean of the air, liable to instant and violent
attack. When we think that in about ten years' time countries will possess not
1,000 but 100,000 aeroplanes at the cost of a few battleships, it is a terrible thought,
These aeroplanes will fly at a speed of 100 to 120 miles and hour. Their pow-
ers of mobilization will be alarming. It means that if our relationship with
another country is strained at 6 o'clock in the evening, before we arise in the morn-
ing it will be possible for our principal towns and cities to be laid waste.
Digitized by
Google
Command op the Air 199
Lord Montagu of Beaulieu, guest of the Liberal War Committee
at a luncheon at the House of Commons, March 22, said among
other things:
He had come to speak to a serious and well informed body on the need of
concentrating special attention and effort on aviation. He was pleading for a
more energetic policy in regard to all forms of air craft The struggle
for supremacy in the air was only just beginning and would not stop when peace
came Compared with the cost of dreadnaughts, field guns, and armies
in the field, the cost of even a huge aerial fleet would be small. What was
wanted now in our statesmen and in our nation was more power of imagination.
They could neither win nor hold an Empire merely by "safe" policies. "Safe"
men were all very well for times of peace. But time came when they might be
dangerous. What they wanted now was new men with new ideas. Problems of
the air were all new. There were no precedents to bear in mind, no files to refer
to, no historical works to consult. The new service would need leaders, who had
ideals, foresight, imagination, and scientific training. These leaders must always
have a clear vision of future possibilities, most of which were probabiUties.
All that I have read applies equally to us. It might be said in
Washington, in Committee room or on the floor of Congress.
One Week of War Cost Will Give Us the Lead
One week of present war cost to Great Britain would give this
country such a fleet of aeroplanes as could in an emergency rise from
our shores literally like a flock of sea-gulls, to defend and insure our
national integrity.
The basic ideals of this country, born of our ancestry, our
national growth, our physical position, are bigness and realization.
These two ideals are our ever present though sometimes unconscious
trend in every line of effort. Here is an opportunity for us to make
good on these ideals on a great scale, by taking up in earnest the air
service of this nation, recognizing that it is of crucial importance,
and putting it and ourselves in the very world van.
Our geographical position, our national rank and standing,
our national safety ^ demand it.
Our resources and mechanical genius not only permit it, but
make it easily possible. Shall we do it?
Mr.Chairman, I would that I might have the power to transmit
to this audience the intensity of my feeling on this subject.
It is vital, vitaly vital to us, this Command of the Air.
Digitized by
Google
A FOREIGN VIEW OF THE ARGUMENTS AGAINST PRE-
PAREDNESS IN THE UNITED STATES
By Georqe Nbstler Tricochb,
Late Staff Officer, French Foot Artillery.
The first pomt which generally strikes an unbiased foreigner
in the present discussion about Preparedness is that the adversaries
of increased armaments claim that no sentiment favorable to the
latter seems to exist "outside what is known to have been manu-
factured by the Navy League " Now, to the Euro-
pean who, devoid of prejudices, has taken the trouble of ques-
tioning people in diflferent walks of life, or of simply listening to
conversations, things do not present themselves at all in this light.
It has been said that clergymen and educators are almost unan-
imously adverse to preparation for war. Yet, a poll taken on
preparedness among Presbyterian clergymen by a Chicago magazine
showed 270 favoring larger armaments, and only 50 opposed to it;
on the other hand, an inquiry made by The World last December
proved that former Presidents of the United States, governors,
university presidents, and leading business men of this country
were unanimous in the opinion that preparedness should be dealt
with by the Congress "immediately, without regard to politics."
To a foreign military observer, the growing popularity of summer
camps for students and business men, and the steady increase in the
membership of the National Guard, are the best signs of a change
for the better in public opinion in respect to matters of national
defence.
The arguments against preparedness can be roughly divided
into two classes: those dealing with generalities, those referring
to specific points. Among the former, we find humanitarian or
religious considerations.
The Arguments against Preparedness Answered
War is Incompatible with the Teaching of Christianity. First
it is to be noted that clergymen do not agree on this subject. Canon
Morley very aptly asserts that "in the act of recognizing and
200
Digitized by
Google
Preparedness in the United States . 201
including within herself nations, the Christian Church necessarily
also admitted war within her pale." "Peace at any price is certainly
not a maxim of heavenly origin" declares Rev. Stone Hubbell.
Second, one may find in Christianity a justification for preparedness,
because inadequate preparation causes needless suffering to the sick,
the wounded and all men who have not received a sufficient training
for the hardships of war.
The Very Barbarity of War Makes it Unjustiflable. Un-
doubtedly, war is one of the greatest evils that can befall mankind.
Yet the world's history teaches us that often war has been a necessary
evil. Suppose the American Colonies had not fought England.
Suppose, in 1861, the North had meekly submitted to have the
Union destroyed. Suppose the Cubans had not shaken oflf the
Spanish yoke. Does Mr. Bryan — or Mr. Ford — ^really believe
that the Boers, the Servians, the Belgians ought to have yielded
to the request of the stronger countries which had invaded their
territory, and contented themselves with declaring that they were
"too proud to fight"?
Whether War has its Usefulness or not| it is Bound to Dis-
appear within a Short Time : Therefore, it is Useless to Increase
Armaments. Unfortunately, pacifists do not give us any facts; they
remain within the scope of hopes and expectations, and these are
based as a rule, upon the Hague Court of Arbitration. But it is
a sad truth that the success of the latter has so far been dubious.
None of the serious conflicts that have arisen since the Court was
established has been settled by arbitration. Some adversaries
of preparedness think that a readjustment of militarism will be,
so to speak, the natural outcome of the present war. This is a
highly desirable, yet an impossible occurrence. Should the war
end in a draw, each side will strive to get strong enough to renew
the fight as soon as possible. If one side wins, the victor
will not, himself, reduce considerably his military establishment,
for in the latter lies his only guarantee that his terms will be complied
with. Moreover the vanquished will never be prevented from
cherishing the hope of a revenge. What nation was ever so crushed
that it gave up that hope? It is extremely easy for the American
pacifist to say to the belligerents: '*I think I am getting tired of
this war, and of all wars in general. Kindly stop that troublesome
fighting; cease that slaughter that nauseates me, and shocks my
Digitized by
Google
202 The Annals of the American Academy
nerves. Disann, all of you, and live in peace for ever morel"
This very same philanthropist would think it a bad joke, or an
insult if, after being kicked into the gutter by a bully, he was
told by a bystander: "My friend, for the sake of imiversal harmony,
shake hands with the other fellow, then go home, and forget all
about it." It is customary for people who are not conversant with
military institutions to trust in the exhaustion of the now warring
armies to further the endeavors of those who seek universal and
everlasting peace. This is a gross mistake. Armies recuperate
in a wonderfully short time. Instances of this are numerous in
military history; the best known are those of the Prussian army
after Jena, of the French army after the campaigns of 1812 and
1870-71.
A Strong Military Establishment Fosters the Development of
a War Caste, Liable to Endanger Peace. Now, it jumps to the
eyes that the value of this argument is in direct ratio to the degree
of militarism of the nation to which it apphes. In America,
people seem to confound military preparedness, or even military
spirit with militarism. General Wille, commander of the Swiss
army, remarked lately that there is nothing incongruous in having
compulsory service in a country based on democratic principles.
In fact, real militarism exists nowhere, except in Germany, and,
to some extent, in Russia. France and the nations with an efficient
militia system, Switzerland, Norway, Sweden, Denmark, are not
infected with militarism: is the United States so litUe democratic
that she should dread what causes no fear in those countries?
Preparedness Adds Cubits to the Stature of All Mischief-
Makers in the Land. If we understand this well, pacifists fear
that a greater state of preparation would render this nation ag-
gressive. The history of the United States shows plainly that when
the country at large wishes to avoid war, no amount of clamoring
by the "yellow press" or ordinary scaremongers is heeded by the
Congress or the Cabinet. On the other hand, whenever public
opinion expresses itself forcibly in favor of war, war is liable to
break out in spite of the wishes of the government. It would be
as impossible to create now an overwhelming current of opinion for
a break with Germany or even Mexico, as it was to stop it in 1812
and 1898 when it manifested itself against England and Spain.
The record of this coimtry's dealings with Hawaii, Porto Rico, the
Digitized by
Google
Preparedness in the United States 203
Philippines, Colombia, not to speak of older facts like the appro-
priation of Texas and California, is pretty good for a nation which
has never been prepared for war. From this, one may draw the
conclusion that a state of unpreparedneaa does not preclude ag^
gressiveness.
Pacifists sometimes present this argument in a different way;
The Real Mischief-Makers Are the War Traders and Stockholders
in the Large Armament Firms. Could the influence of these men
become as powerful as it is depicted by anti-militarists? This
appears to be practically impossible if this nation adopts only a
policy of reasonable preparedness. Switzerland has reached a very
good state of military preparation; so did Sweden: yet, there is no
record, in these countries, of a condition of aflfairs like that
pointed out, in Germany, by Karl Liebknecht, and in England by
George H. Perris. Moreover if it be true that federal arsenals can
produce war supplies at about half the price asked by private fac-
tories, why should not the government imdertake the whole fabrica-
tion of guns, ammunitions, and equipment of all kinds? This would
be both an economy, and a guarantee against the activities of war
traders.
Any Increase in Preparedness Paves the Way to an Economical
Situation that may Prove Extremely Onerous to the Taxpayer. Any
sane m^n deplores that money should be used in destructive instead
of constructive pursuits. However, one must also think of what any
war would cost if the country were not prepared. It should be borne
in mind, besides, that what is asked for the United States is only
a reasonable degree of preparedness. Now, if one thinks of the reck-
less expenditure and the graft so frequently reported in other im-
dertakings, one is boimd to wonder at the ado made by pacifists
when the military budget is concerned. They show, as "horrible
examples," the tremendous military expenditures of the
great Europen powers: did they ever realize that a single corpora-
tion president, here, is sometimes paid as much as ten or twelve
French major-generals? That one opera singer, in one evening,
receives what two Russian lieutenant-generals get in a year?
That a certain sheriflTof New York County costs to the taxpayers
just as much as 38 colonels cost the Italian people?
The Present War Shows the Fallacy of The Theory that to Pre-
serve Peace One Must Prepare for War. Therefore, a Greater
Digitized by
Google
204 The Annals op the American Academy
State of Preparedness is Useless to Us as a Protection Against War.
To a Ehiropean, the theory alluded to ceased to have any serious
meaning, not in 1914, but many years ago, as regards great military
powers. But, in as far as other nations are concerned, preparedness
MAY be a good guarantee of peace — ^however paradoxical this
seems. Pacifists scoflf at the Swiss preparedness which, they say,
could not prevent that nation from becoming the prey of one of
the great powers. Undoubtedly the two or three hundred thousand
Swiss militiamen would be unable to beat oflf Cermany, France or
Austria, if any of these countries should deem it of vital importance
to occupy the territory of the Confederation. The question is: is
it possible that circumstances should ever be such that adequate
preparation for war should be of any value to Switzerland? To
this one can emphatically answer: Yes. A mere glance at Swiss
history discloses that fact that, on no less than four occasions, that
little coimtry, which had been sensible enough to organize very
efficiently its citizen soldiery, induced much more powerful nations
to come to terms without a fight, or to refrain from intervention in the
affairs of the Confederation. These events happened in 1838,
1846, 1857 and 1870. In none of these instances, an invasion of
Switzerland was of vital import to the great powers; but they would
have invaded the Swiss territory, had not the Confederation been
in such a state of preparedness that Prussia, like France, thought
ihe play was not worth the candle. That is exactly where lies the
core of the matter: a stronger nation will not molest a v?eaker one
v)henthe latter is ma sufficient state of preparation to catise the former
to believe that it is not worth while to fight. It should not be forgotten
that there has been a time when, in the United States, military
preparedness avoided a rupture with a great military nation. This
was in 1865. at the close of the Civil War. The occupation of
Mexico by the French was contrary to the Monroe Doctrine. The
United States asked Napoleon to withdraw his forces; her demand
.was backed by a well trained army. The French Emperor did not
think it worth while to maintain his stand; and he evacuated Mexico.
War Preparedness May Lead to Ruin. A well known univer-
sity president asserts that "Our people can have war with somebody
or almost anybody in due time and on some excuse if they want to go
to the trouble and expense* to prepare for it." We are* told that
the European countries, which have on so elaborate a scale prepared
Digitized by
Google
Prbpabbdnbss in the United States 205
for war, have gotten exactly what they prepared for. This is by no
means true of all these countries. France, Belgium, England did not
want war. What would have happened to France had she not been
prepared for the struggle? The Germans would have crushed her
long ago: Would such solution benefit the cause of the pacifists?
The latter ask us to look at China, and, in the wrong which Christian
nations have perpetrated upon her, to behold one of the greatest
perils of preparedness. What we cannot fail to see is that China
was pounced upon, just because she was not prepared to fight.
Pacifists claim that the United States was shoved headlong into war
with Spain because she had a navy that outranked the Spanish navy.
Such is not, by any means, the opinion of the majority of American or
foreign diplomats, statesmen or military experts. The intervention
in Cuba was required by public opinion, business interests being
linked with sentimental considerations on that subject. The Maine
incident would have made war unavoidable, under the circum-
stances, even if the navy had not been prepared. A situation
exactly similar was that in 1812 when Congress declared war on
Great Britain despite the fact that it was obvious that the United
States was not ready to engage in such an undertaking. In fact,
the campaign of 1898 ought to be a lesson to pacifists; the blatant
inefficiency of the nJlitia system, the numberless blunders of the
Quartermaster Department, the useless loss of life in the fever camps
in the South have made this war, in the military collies of Europe,
a classical example of the evils and dangers of the lack of prepared-
ness. Regarding Japan, it is stated that ''the Jingo in Nippon
has no difficulty in making a good cause against the United States"
who planted her gims "under Japan's window." In answer to
this it may be stated that if Japanese statemen or politicians are
disturbed at the thought that the United States is increasing her
armaments, then it is a safe assumption that the Nippons have
planned some warlike scheme against America, and the latter is quite
justified therefore in getting ready for a possible rupture with that
nation.
Preparedness is a Reversal of the National Policy of the
United States. Pacifists, and especially Mr. Bryan, deplore the fact
that this country should abandon the hope, ''so long cherished,"
of being an example to Europe. Truth is sometimes unpleasant
to hear, but we must state here that Europeans do not see
Digitized by
Google
206 The Annals of the American Academy
at all why America should set herself as a model for them to admire
and copy. In the dealings of the United States with Mexico
in 1846, with Hawaii, Porto Rico, the Philippines, Colombia,
there is nothing for Europe to learn, because these dealings were
simply forms of aggressiveness — ^hardly consistent with Mr. Bryan's
assertions. One may go one step further and affirm, without the
slightest hesitation, that there are many things the United
States could and should copy, not from German militarism, but
from military institutions of Switzerland, Sweden, Norway, Den-
mark, and even France. Lack of discipline, of self control and
respect for established authority have brought about, in America,
a condition of aflfairs which is nothing short of shameful, and which
has been strongly denounced by the best educators or public
spirited writers in this land. Some of the latter, indeed, have gone so
far as to advocate a short compulsory service to check *'the spread
of a virulent form of moral disease."
The Isolation of the United States not only Renders any War
Unlikelyi but will give Her Ample Time to get Ready, Should War
Become Unavoidable. The man who, in this country, opposes
preparedness on the ground that there is no enemy in sight, resembles
the house owner who would decline to take out an insurance policy,
saying: "My mansion is not exactly fireproof, I know, but I am very
careful about fire. Besides I have decent neighbors on two
sides of my property, and there are ponds on the other sides. I am
not going to bum down!" It is certain that such view would be
deplored by all his friends, for how can he feel safe against the
work of tramps or incendiaries, sparks from somebody else's
chimney, lightning and even an accident caused by himself in a
minute of thoughtlessness? It is not inconsistent to hope in the
formation of the United States of the world, and to get ready to
resist attacks from nations which maintain a warlike attitude.
But let us deal with plain historical facts. If the United States
is free from the disturbing influences that have created unrest in
Europe for so long a time, there must have been other factors
somewhat troublesome on this side of the Atlantic for, as ex-Secre-
tary Garrison remarked, the country hm averaged a war or a fight
of some kind once in every seven yearSy and the army has been used
at least one hundred times to repel invasion, put down insurrec-
tions, etc. Ex-Secretary Bryan said once: "The President knows
Digitized by
Google
PREFAREDNfiSS IN THE UnITED StATES ^07
that if this country needed a million men and needed them in a day,
the call could go out at sunrise, and the sun would go down on a
million men in arms.'' It might be possible to get these men in
a day, but they would be men in arms, not soldiers. Nobody doubts
the valor of the American volunteer; however, nowadays, less than
at any period of military history, personal heroism cannot hope to
win in war. In the older times, a general who had suflfered
losses of 10 per cent with ordinary troops and 25 per cent with
veterans, could be justified in thinking of retreat. In the present
conflict, the Allies' infantry held its ground after losing 60 per cent
and, in a few cases, 70 per cent of the eflfective force. Not only
would it be foolish to rely on made-over-night regiments to fight
any foreign regular army, but this would be criminal towards these
raw recruits, imable to withstand the fatigue and the moral strain
of military operations.
Lastly, it would be interesting to know how persons who believe
in over-night-preparedness expect to provide their men with arms
and ammunition, if no adequate provision is made for this in time of
peace. Iti modem warfare, half a million shells are sometimes fired
in one day. Are shells and cartridges and guns to be manufactured,
also, overnight?
It is Practically Impossible for a Foreign Foe to Overcome the
Coast Defenses or to Land Troops on the Shore of the United States.
It must be admitted that fleets usually prove ineffective against
coast defenses. But, should hostile battleships succeed in coming
near the coasts, it is highly improbable that they would waste
valuable ammunition by trying to make a few holes in the batteries
or to kill a score or two of coast artillerymen. They would rather
devote their fire to the hitting of the city protected by the forts; and this
could he done effectively j by a daring fleets even within the range of the
defense^ s guns. As regards landings, the only point at issue is:
can a foreign army be transported across the seas to this country?
There is no good reason why it could not. One hundred and twenty
thousand men, during the present war, have been conveyed from
Canada to England without a hitch. German officers have re-
peatedly stated that, under favorable circumstances, four army
corps could be sent to America. All this, of course, could be
done only if the United States fleet had been destroyed or much
weakened by losses or some strategical diversion — ^three possible
Digitized by
Google
^08 The Annals of the American Acad^JmY
contingencies, /or the American navy is at present only the third,
if not the fourth, in the world. Be it as it may, it does not seem
worth while to devote much time to the discussion of direct trans-
portation of a landing army to the United States. England, possess-
ing Canada, would not need to land troops on American soil. In
respect to other possible foes, it is obvious that the greatest danger
of war, for the United States, Ues in questions pertaining to the
Monroe Doctrine or to her insular possessions. Should Germany,
for instance, decide to establish herself forcibly in South America,
the theatre of operations would be there on land, after the Empire
had, more or less leisurely, transported its troops to that region,
previous to arupture with the United States. This is a contingency
which no American should fail to have in mind in the discussion
about preparedness.
If One Takes, One by One, the Leading Military Powers of
Europe or Asia, also Canada and Mexico, it is Impossible to Find a
Reason Why any of Them Should Ever Fight This Country.
1. Canada. The assertion that "business interests of the two
countries are so interwoven as to preclude a rupture between them"
is not convincing. Under any circumstances, the Dominion would
be loyal to England, so much the more so because there is no par-
ticularly friendly feeling there towards the United States. It is very
easy for a European to ascertain this fact just now!
2. Mexico. It is hardly worth while observing tl^at he who
feels sure that the United States will never have a war against that
nation is assuming a« great deal. One should not lose sight of the
fact that the government at Washington has pledged itself to see
that European interests in Mexico shall be protected. The time
may come, sooner than pacifists think, when it will have to act
otherwise than by way of a half hearted chase for a bandit.
3. Japan. It must be remarked, first, that even those who
think war with Japan is "impossible," admit, generally, that there
are causes of disaflfection on the part of the Japanese, which might
tend to disturb the "course of friendship." It matters Uttle
whether Japan declares war, or whether the latter is forced upon
the United States government by pubUc opinion. Japan, it is
contended, owes too much to this country to ever want to fight it.
The world's history is made up of palinodes and ingratitude. We
see at present Bulgaria fighting Russia, her godmother; the Turk
Digitized by
Google
]^RBPAtlEDN£SS IN TfiB ITnITED ^TATfiS 209
opposing the French, his ally of 1856; the Boers aiding England
against Germany whose moral support they enjoyed in 1900, — and
80 forth.
4. England. Here again we find the old set of arguments:
sentimental, commercial, financial considerations uniting in making
any future war impossible. Now, the extreme friendliness of
English people towards their American cousins did not prevent
these nations from waging one against the other two wars, lasting
respectively eight and two and one-half years. The good feeling,
towards America, of British workingmen during the Civil War is
not to be denied. However, the Trent Affair does not give
the impression that the English government was kindly disposed
towards the United States. It is still considered today one of the
most serious difficulties that ever arose between the two countries.
The Venezuela incident was another proof that, when national
interests are at stake, close relationship has no longer much value.
Can we be sure that there will never be, at any future time, some
other Trent or Venezuela affairs, and that public opinion, at least
on this side of the Atlantic, will not be roused to the ''breaking
pomt"?
5. Germany. The argument based on the belief that Germany
would not fight the United States because she had too much money
invested in this country need not be considered. A similar situation
existed between England and Germany, and Germany and Russia,
and did not prevent the present conflict. Nor should one pay much
attention to the consideration that several millions of inhabitants
of the United States are of German origin. This situation might
handicap America; it would be very favorable to Germany in case
of war. We all know, by this time, how much that part of the
population is able to accomplish, in many ways, to help the old
Vaterland. Opponents of preparedness ridiculize the contention
that Germany, if victorious, will need territory in South America
or elsewhere; and that, if vanquished, she may be prone to ''steal
American money," in order to recuperate. However, there is no.
telling what a nation which considers treaties mere scraps of paper
could do in respect to American wealth in case of need. This is
admitted by as peaceful a man as ex-President Taft. But let us
look more closely into the matter. Germany may win. It is
well known that victorious nations generally become overbearing
Digitized by
Google
210 The Annals of the American Academy
and arrogant. The attitude of Germany in 1870 was the outcome
of the crushing down of Austria in 1866. In 1871, Germany was
eager to pick a quarrel with Switzerland about some trifles. In
1876, she was equally anxious to attack France while the morale of
the German army was still high, and its confidence complete in the
officers, veterans of 1870. Should Germany be vanquished, it is
logical that, having her activity curtailed in Europe, she should turn
to another field of action, perhaps South America, which has been
for a long time so alluring to her. Against this, the other great
powers would certainly not raise one finger. A European political
writer of much ability and keen judgment, Mr. Joseph Reinach,
said, in Le Figaro:
The more one reflects, the more one is convinced that the economic and
political absorption of America is one of the greatest secrets of the Germanic
Empire, and, that consequently nothing is more inevitable than an eventual
conflict between Germany and the United States It is for America
to decide whether to let Germany choose the hour or choose it herself.
Moreover, there have been already acts on the part of the
Germans which leave no doubt about the intention of that nation
to get a foothold in South America. Do we need to recall the
Teutonic activities in Venezuela and Brazil as early as 1880, in
Venezuela again in 1901, in the Ecuador two or three years ago?
It is absolutely beyond doubt that, towards 1913, a very active
propaganda was conducted in Central and South America by
persons acting under instructions from Berlin. A large number of
pamphlets and much literature of all kinds were distributed among
residents in Colombia, Brazil, Argentina, and other republics.
These pamphlets contain quotations from German writers such as
Sievers, Funke, von Liebert, from Lang's book Reines Deutschium^
and Dr. Tannenberg's Gross Deutschland, They are very suggestive,
as may be judged from the following extracts:
Rio Grande del Sul ought to be converted into a territory held by Grerman
capital and immigration. The historical precedent and the force are with us,
and none can oppose us as long as we decide not to be weakened by inopportune
political aspirations
.... The States divided among themselves like the Republic of
Argentina, Brazil and all those begging republics of South America must be made
by soft ways or by force to listen to our words.
Let us now ask the pacifists a question or two. Have they cogni-
zance of the German Federal Law of July 22, 1913, which makes it
impossible for a German to be other than a subject of the German
Digitized by
Google
Pbeparedness in the United States 211
Empire, and always subject to military service in Germany? Is
it necessary to recall the fact that this amendment to the old
naturalization law of Germany (June 1, 1870) applies to Germans
residiTig and naturalized in the United States? But, outside of these
considerations, there are things that we would like to see
explained by pacifists, from their own standpoint. If Germany
entertains no thoughts of ever fighting this coimtry, why has she
organized such an extensive system of spying all over the land?
Why did her army officers come over, as simple tourists, to study the
American means of communication between the interior and the
Atlantic seaboard? Why'do so many Teutonic writers indulge in
publishing books and articles drawing more or less fanciful pictures
of the conquest of the United States by Germany? An undeniable
fact is that German hostility^has showed itself otherwise than in
literary essays. That feeling manifested itself almost violently in
Manila in 1898; the intrigues of Germany at the occasion of the St.
Thomas purchase are an open secret. The tone of the German
press as r^ards the administration's policy with Mexico has been
unceasingly unfriendly — ^nay, even insulting.
Before concluding this paper, we must briefly examine the asser-
tion of persons who, although recognizing the need of better pre-
paredness, believe that It is Sufficient for the Federal Government
to give more Encouragement to the Militia and to Make Some
Ptovision for a Speedy Organization of Volunteers in Case of War.
It is customary for these persons to lay great stress on the prowess
of armies organized like those of the Boers, the Vendeans of the
French Revolution, and the Tyrolese of Andreas Hofer in 1809.
But, notwithstanding the good marksmanship of the Boers, nothing
could make up for their lack of military organization, instruction
and discipline. The same is true of Vendeans and Tyrolese ; besides,
they were fanatics, marching imder generals who were bom leaders
of men. All were ultimately conquered by soldiers regularly trained,
under competent officers. These facts are well known; yet five
persons perhaps out of ten, in this country, are still under what
we could call "the delusion of the Civil War." They have in mind
the wonderful achievements of Grant and Sherman. They have
lost sight of the cold truth that the troops who compelled Lee to
surrender at Appomattox Court House were as different from the
men of Bull Run as a soldier of the German Guard is now from
the rawest militiaman of the United States.
Digitized by
Google
AMERICAN INFLUENCE AS AFFECTED BY
PREPAREDNESS
By W. Mobgan Shxistbe,
Presideat, The Centuiy Company, New York CSty.
Wars in the future will not be made by one power against
another. We have passed that stage. It will be groups of powers
against other groups of powers or against a single nation. And with
what group do we stand, if you please? Are we a fair-haired child
walking alone in an alley where thugs infest the comers? Are we
under some divine protection which makes it unnecessary for us to
take care of ourselves? Are we so good and so pure that everyone
respects us?
I am for preparedness in this country, yet I certainly would
resent the imputation of being a jingo. I have made speeches for
preparedness because I believe it is the biggest and most vital issue
for the American nation today. I do not think there is a single
domestic question, nor a single international question, nor any
other issue which even approximates in its importance to the
American people the matter of their ability to defend themselves
in the near future.
If I were a preacher and wanted to talk about extending our
good influence to other parts of the world; about beating the unruly
savage over the head in this land and in that; about carr3ring the
ideals of American civilization to this place and to that, then I should
urge upon you a very much more powerful system of preparedness,
an aggressive preparedness; but I deem that to be unnecessary, in-
advisable, and impracticable as we are situated today.
I mean by preparedness, and I hope no one who speaks in favor
of it means anything else, only preparedness to resist unwarranted
aggression against our natural rights as a nation and as a people.
It would be a wonderful thing if some nation were so great and
so good, so powerful and so wise that it might extend its civilization
over the world by persuasion where possible, by force where nec-
essary, and rejuvenate and purify all mankind. But I conceive
such views to belong rather to dreamers than to practical people.
212
Digitized by
Google
American Influence as Affected bt Pbeparedness 213
We have had one such dreamer in the last one hundred and forty
years. Some say we have another, but I do not want to see one
arise in this country, because dreamers may have their work to do,
but they cannot be safe advisers for vast numbers of people, for
one hundred millions of people whose welfare, whose duty to them-
selves must be based upon more practical lines.
We have a duty and a high duty in this world and we have
failed in it sometimes in the past. We have on some occasions
acted the bully, in an international sense; with not quite so much
bloodshed as in some cases where other nations have acted as bul-
lies, but we have been guilty to some extent. And that is the thing
which throws doubt into my mind, and that is why I cannot sit,
convinced that my own country and my own people and I, as a
unit in it, are today risking by their apathy the loss of everything
that they consider dear, without feeling that those who call them-
selves pacifists are a real danger to our country. I think they are
wrong. I think they are sincere, most of them at least, but I think
they are wrong about the American people, and if I did not think
so I would not want to be a citizen of this land.
I am sure that the American people themselves do not necessa-
rily associate power with tyranny and brutaUty, though I am sorry
to say that some other nations seem to have pursued that Une of
logic. If I believed that for this nation to be strong in an inter-
national sense would mean that it would become a tyrant over
smaller nations or larger ones where it coxild, I think I should
willingly choose, so far as I am concerned, the alternative of weak-
ness and unpreparedness. But if I believed that, I woxild not con-
sider myself a good American or fit to be a member of the body
politic which we call our nation.
I do think it is perfectly useless for any nation or for any people,
to talk about good intentions, to talk about humane objects in the
world imless there is the power to back them up. What do you
think of an individual who talks of his purposes, when you know he
is a weakling; when you know he is utterly imable to make good in
anything he may say? Do you respect his motives? What sus-
picion enters your mind? That he is speaking of holy subjects and
lofty motives because he dares not speak of any other? Now
nations, just as individuals, are considered and are held in repute
in the family of nations, and we are held in repute throughout the
Digitized by
Google
214 The Annals of the American Acadebht
world not by what we say or by what we propose to do, but by our
power to do, as estimated in the minds of various cold-blooded and
C3mical gentlemen of many races and nationalities.
It does not make any difference whether we are convinced of
our latent power when we shall be thoroughly aroused and the earth
shall tremble with our passion. That may be of interest to us
locally. No one can tell what a nation will do when it is aroused,
but we can tell what a nation will do when it permits itself to get
aroused in an international quarrel without due preparation of the
most practical description. It will suflfer the useless murder of
thousands* of its citizens. If it is not possible for the American
people and nation of one hundred millions, roughly speaking, today,
to be strong, — strong morally, strong physically and in a military
and naval sense, without provoking among ourselves a suspicion
that we are on the road to militarism, to jingoism, to imperialism,
without provoking, in our own hearts, the suspicion that we are
about to use that organized force, or are liable to use that organized
force, to do wrong to other peoples, great or small, then I ask you
in all sincerity what confidence may we have in ourselves? What
confidence may we have in our moral purposes, whether we are
prepared or unprepared, if we consider that with preparedness we
would use that weapon merely for our own moral undoing? Or that
we are so weak of fibre that because we have the power to strike
a blow we would strike it brutally and in a cowardly manner and for
aggressive purposes?
I do not believe it. But, after all, that is only argument. It
is the only argument left to those of our fellow citizens who preach
that battleships insure war and that preparedness for war brings it
on. There is a half-truth in what they say. Certain kinds of
preparedness, if you please, do bring on war and did bring it on in
Europe, in my opinion.
To use a homely simile, you may go through a dangerous por-
tion of the country about your business, quietly and unaggressively,
and if there are people who attack wayfarers and journeyers and they
see that you are armed they will probably wait for the next man to
come by in the hope that he may not be armed. But through that
same place you might go aggressively, swaggering and boasting of
your ability to impose what you saw fit upon any one or in any place,
and thus get into difficulties merely because you had irritated people
Digitized by
Google
American Influence as Affected by Pbeparedness 215
whose custom was more or less to prey upon the weak, but who never
attacked the strong unless they were irritated up to that point.
That form of preparedness, that form of miUtary or naval power I
should certainly hope never to see in this country.
I do not think a regular army of one hundred thousand or one
hundred and fifty thousand men is enough in this country. But
that is only a detail after all. It is the principle we must see; the
result will follow.
I would be wilUng to cast my vote on this question for the judg-
ment of the loyal men who have studied those problems, the oflScers
of our army and navy (and I have known them for more than twenty
years) , than whom I do not beUeve more simple, loyal, sincere and
unaggressive Americans live anjrwhere in this country.
I have no fears as a citizen of aggression or of the subversion
of our civil institutions by the United States Army, whatever its
siae. They have stood for law and order and they have obeyed the
orders, distasteful at times to their instincts, of civil authorities
all over the globe, without ever considering their own welfare or
their own risks; and their influence in the community, whatever
they may be, is wholesome and good.
You come back into this country and you never see a soldier
or an army officer. It is a positive treat to meet one. I have been
in places where you coxild not throw a stick without hitting large
numbers of them. But I do not believe in the theory that our in-
stitutions would be in any danger if we should have what some
choose to call a large standing army; an increase of three or four
army corps.
I see headlines in our papers to the effect that we have sent
four thousand men into Mexico; and everybody is expected to get
excited. I wonder what the staffs of the different sectors over in the
European battle lines will think when they see that four thousand
troops have been deemed of sufficient importance to be mentioned
in the American newspapers?
It is an apathetic state which we are in after all; that is the real
danger in this country; when the time comes, and there is a real
crisis, in some ways there will be a very wonderful response in this
country, and the only sickening part will be the reflection that ten
times as much could have been done, if there had only been 10 per
cent more of preparedness for it.
Digitized by
Google
216 The Annals op the American Academy
And we must come to know in this country that we have a
duty and that duty is very clear and very simple. Our duty is
first to maintain ourselves as a nation and as a people, and safe-
guard our institutions without injustice or aggression to others;
and secondly, and I emphasize this secondly, to do what good we can
in this world; I put things in this order, because nullities can never
do any good and we must become a factor to be reckoned with
before we can spread any influence, good or bad; before we can
spread anything. Let us then be strong, first for our own sake,
strong because we beUeve in ourselves, because we trust oiu-selves,
and after that let us disseminate whatever good our prestige as a
powerfully organized state may permit. Then, I think, we shall
have been good Americans and shall have added to the peace and
satisfaction of mankind.
Digitized by
Google
PREPAREDNESS IS MILITARISM
By Oswald Gakrison Villard,
New York Evening Poatf New York City.
The significance of preparedness, we are told, lies merely in the
fact that Americans believe that our experiment in democracy is the
most precious thing on earth; that it is of greater moment to all the
world than any other experiment in human government, and that
for it Americans are as ready and as willing to die as were their
fathers in 1861 and their forefathers in the Revolution. "Life,"
remarked to me the other day one who sits in the seats of the mighty,
"is but a beautiful adventure, to be flung away for an ideal when-
ever the hour calls." So we must be ready to count no cost should
the enemy be at the door, particularly if that enemy should be one
who typifies the greatest military efiiciency the world has ever seen,
who believes its experiment in monarchical socialism of far greater
value to humanity than our own brand of democracy, but combines
within itself a military autocracy we hold to be the greatest menace
to mankind in modern times.
And so we are counselled to take from our possible enemy the
very things that have made him efficient and dangerous and become
eflKcient and dangerous ourselves. Not that we shall ever make
war — pace 1846 and 1898 — on anybody; merely that we shall follow
in the footsteps of those who believe that the earth is ruled by fear,
and that there is no other way to preserve peace than by being so
armed that no one shall venture to attack us. And so we have gone
about getting a "preparedness" which we are strenuously but
falsely pretending wUl be ours when the legislation now before Con-
gress passes, and so protect us at the close of the war in Europe, and
even safeguard us should the present difficulties with Germany
result in hostilities. As a matter of fact, the army reorganization
proposed will not be consummated for five years, nor the naval
program until 1925 or 1927, by which time the present war will be
fading into the backgroimd like the earthquakes at St. Pierre and
Messina and San Francisco and other great and horrible convulsiona
of nature, and new world-problems will be upon us,
217
Digitized by
Google
218 The Annals of the American Academy
Now, the real significance of this is that we have all at once, in
the midst of a terrifjong cataclysm, abjured our faith in many things
American. We no longer believe, as for 140 years, in th^ moral
power of an America unarmed and unafraid; we believe suddenly
that the influence of the United States is to be measured only by
the number of our soldiery and our dreadnoughts — our whole his-
tory to the contrary notwithstanding. The ardent efforts of both
sides in the present European struggle at the outbreak of the war
to win for their cause the enormous prestige of the sympathy and
moral support of the United States — although "unprepared" — we
overlook as if it were not the most outstanding fact of the year from
August 1, 1914, to August 1, 1915. We are to deprive the world of
the one great beacon-Ught of a nation unarmed and unafraid, free
from the admitted evils of militarism. We are to complete the
vicious military circle of the world, so that, if we do not desist, if
the oppressed of the nations do not rise in revolt against the whole
accursed military system, the United States will be doing more than
any other nation to intensify the race between peoples as to which
will be armed most and at the greatest cost, and it will be one of the
most hated and dreaded. As Lord Rosebery has said, nothing since
the beginning of the war has been as discouraging, for in Mr. Wil-
son's advocacy of our new policy there has not been up to this
hour one single phase to the eflfect that the United States will be
ready and eager to lead the way to disarmament at the close of the
war, and our five year naval program, as its terms signify, is a pro-
gram for preparedness years hence.
Next, the preparedness policy signifies an entire change in our
attitude towards the military* as to whom we inherited from our
forefathers suspicion and distrust. A cardinal principle of our
polity has always been the subordination of the mihtary to the civil
authority as a necessary safeguard for the republic, particularly in
our national councils, and as to all matters affecting national policy.
Today, in our sudden worship of the expert in uniform, we are told
that what we need is a national council of defence comprising, as one
rear-admiral suggests and some of our new-born leagues of safety
advise, fifteen military and naval oflScers with only seven civilians
graciously given places at the council board. These men, it ap-
pears, sitting in secret session and responsible only to themselves,
are to formulate the policies of the nation, congressmen to have no
Digitized by
Google
Preparedness is Militarism 2ld
other function than to vote the necessary money, ships and men, it
not being theirs to reason why. In other words, the council is to
be our Great General Stafif, and, like its German prototype, it is to
make our Congress vote first like the Reichstag and ask questions
afterwards — ^the questions to be answered only if the council deems
it wise. Its members are not to be elected, but are to be designated
by act of Congress once for all.
Already it is openly stated in the press that the power of the
secretary of the navy is to be curtailed by the present Congress, so
that he shall not be able to overrule the naval men, thus putting the
military directly above the civil. For this purpose the undeserved
unpopularity of the present secretary of the navy is being cleverly
exploited, while the public is kept in ignorance of the fact that
England, the greatest and most efficient naval power on earth, has
never, not even in its direst hour, yielded to the navalists, but has
kept the control of the fleets in the hands of its civilian Lords of the
Admiralty. Simultaneously we hear demands that only our future
admirals and generals, and no civilians, shall be permitted to be our
secretaries of the navy and of war.
But our sudden worship of the military does not end here.
In New York the legislature has just established military drill in all
the boys' schools, while all boys between the ages of fifteen and nine-
teen not at work aire to go to camp as soldiers in the summer. There
was no public demand for this bill, but the militia wished it, and
through it went. Not even in Germany has such a step been ad-
vocated, for there, in the home of militarism, gymnastic exercises
have been recognized as better preparation for life and miUtary
service than miUtary drill. It goes without saying that the smat-
tering of military knowledge the boys will acquire will be of the
slightest value, since it is not planned to let them live in trenches,
handle bombs, or distribute liquid fire and poisonous gases, and the
instruction is bound to be highly superficial. The bill was not de-
bated, and is in its form a model of how not to legislate. It strikes
deliberately at one of the most sacred American liberties — the
right of freedom of thought, of action, and of conscience — since it
excepts not even Quakers, as even England excepts them today.
It goes without saying that we of New York pwe this favor entirely
to the German General Stafif. Yet are we told that militarism has
and can have no foothold among us I As a matter of fact, we are
Digitized by
Google
1^20 1?HE Annals of the American AcADEMt
assured not only that the soldier and the sailor are as infallible as the
Pope at Rome^ but similarly beyond criticism. Let a civilian refer
to the immorality of our army, which has been officially denounced
by a RepubUcan secretary of war as worse than that of any other
army in the world, and the military men in his audience rise and
break up the meeting — ^precisely as British soldiers in England have
discredited their uniforms by refusing to allow orderly meetings
held to discuss peace to exercise the historic Anglo-Saxon right of
free speech.
The pubUcation of a statement, erroneously attributed to a
well-known socialist, reflecting so grossly and unjustly upon the
army as to defeat its own purpose, results in an appeal by military
officers to the postmaster-general for its exclusion from the mail,
which action is taken. The German General Staff would have done
no less and would but have accomplished the same. There is a
deep significance in the demand by the New York TimeSf now one
of the most ultra-conservative class organs in the world, that protes-
tants against preparedness should not be allowed to speak in public
after the President made his first public utterance for preparedness.
It is of the utmost significance as also showing that, as in Europe,
free speech is in danger when it comes to the criticising of the military
class and its program. So the Seven SeaSy the organ of the Navy
League, has recently demanded that Congressman Kitchin be not
allowed to speak on the floor of the House because of his opposition
to a vast navy, which navy, a contributor to this same journal says,
shall have no higher aim than to seize for us the lands of weaker
peoples wherever they may be found. Already some of our Tory
newspapers have begun to admit that there is a miUtary party in
this country — a military party suddenly raised up to add one more
to the innumerable problems of race, of labor, of capital, of church,
and all the rest with which the country is afflicted. If f miiher proof
were needed that we are well along the road towards miUtarism, it
surely lies in the recent demand for the dismissal of the assistant sec-
retary of labor because he thinks soldiers a feudal anachronism.
Further instances could be multipUed; it is only necessary to recall
the fierce outburst of indignation at the labor leader who dared to
say that the working people in this country were not sufficiently
well governed to make them care to fight for their government and
their country.
Digitized by
Google
Preparedness is Militarism 2^1
Now, if our military and naval experts were the shining lights
they pretend to be, why is it that by their own admissions they have
made ducks and drakes of their own army and navy? The malad*
ministration of our submarines cannot, for instance, be laid at the
doors of the civilian control of the Navy Department or those of
Congress; nor can the inefSciency of our regiments be attributed to
the fact that the secretary of war is not a military man. That an
American cavalry regiment can have its own machine guns stolen
from it through the culpable neglect of its officers, and that this
same regiment can, a couple of years later, be surprised in its camp,
lose a hundred horses, and be unable to shoot off its machine guns
because of the dark or to protect the lives of its own men and neigh-
boring citizens, might surely give pause to some of the War College
strategists who are so certain of their competency in their own trade
as to believe that they are better qualified to advise the nation as to
its national and international policies than anybody else who has
never studied the art of war.
The truth is that there are no experts the world over so utterly
discredited as the military ones. It was the all-wise German Gen-
eral Staff that urged the greatest political blunder of modern times,
the invasion of Belgium, as it was the German Navy Staff which
ordered the sinking of the Inmtania and thereby horrified the world
by this unparalleled act of barbarism. The generals who began
this war to the world — ^where are most of them? Where are the
Austrian and Russian generalissimos? Joffre survives as yet, and
so does Von Hindenburg. Kitchener hangs by a thread. Sir John
French, Uke many another, is in retirement, while the frightful
slaughter at the Dardanelles, Uke that at Verdun, spells the shat-
tering of many another reputation that deemed itself wise enough
to lay down the law to civilians. The German General Staff —
what has become of its certainty that it could take Paris in a month,
that the raw levies of Kitchener would not fight, that Zeppelin raids
over London would terrify the hearts of brave Englishmen? And
what soldier truly foresaw trench warfare or the rise of the sub-
marine or the invincibility of coast defences? Yet in this very hour,
when the military the world over ought to be in the dust, we Ameri-
cans are told that we must as blindly accept their decrees as did the
poor, deluded German people in the years leading up to its present
catastrophe. Critics are warned moreover not to point out that
Digitized by
Google
^2^ I'he Annals of the American Academy
every military or naval officer is a biassed expert, since he never
fails to urge more men and more ships to his own personal profit,
for this is already beginning to smack of high treason. We are, of
course, wholly certain that we can never be quite like the Germans;
therefore, a military caste is quite unthinkable among us — ^and yet
we have the word of the secretary of the navy that one high officer
has told him that the only persons who are properly equipped to
judge of the needs and conditions of the navy are officers whose
fathers and grandfathers served in our fleet before them! Who is
there who has come into contact with our navy life on its family
and social side who has not been struck by its tendencies to snob-
bishness and aristocracy?
The air has been full of charges during the passage of the
Army bill by the Senate of the existence of two lobbies, that of the
National Guard and that of those favoring a Continental army.
Both sides seem to the outsider to have proved their charges as to
the existence of those lobbies, in addition to the existence of the
regular army one, which a Cabinet officer once described to me
as ^Hhe ablest, the most dangerous, and the most successful"
lobby that ever came to Washington. We are creating in the
National Guard a political machine of such power that already
regular army officers are asking whether Congress has not created a
Frankenstein to destroy them. It is stated that every private in
the Virginia militia wrote to Congressman Hay, and got others to,
in favor of the miUtia plan, and particularly of the Federal Pay for
the Militia bill. When we recall that this Army bill contains a
clause undoing a half-century of reform by throwing open the civil
service to all soldiers who can obtain the signatures of three officers
to their certificate of good conduct, when we remember the influence
exerted in the matter of earned and unearned pensions by the Grand
Army of the Republic, we ought surely to ponder well the signifi-
cance of what is going on under our eyes.
What it all means is that we are putting the emphasis upon the
wrong things in life, on the old destructive military policy that holds
out no hope for a better world, instead of on the constructive poUcy
of facing squarely towards a world federation or at least the freeing
of the world from the old fear of one nation by another, a world
whose militarism is the most successful device yet invented by ty-
rants, like the Czar of Russia, for keeping their subjects despotically
Digitized by
Google
Prepabedness is Militarism 223
enslaved. It is a militarism which eats up such vast treasures in
wood and iron and steel as to make ridiculous even in our unpre-
pared country any campaign for the preservation of national re-
sources. What will that avail if our defence bill next year is to be
more than half a billion of dollars?
Surely so intelligent a people as our own is not long thus to be
deceived as to the significance of the new use of the old enslaving
cries of patriotism, of national safety, of rallying about the flag.
Nebraska and Michigan have just bid us believe that others will
soon see how for us, too, the paths of military glory "lead but to the
grave" — to the despair that wrings the hearts of Europe and of
England for all who stop to think of the losses to the world from a
war which could never have come but for the armies and navies
built up for defensive purposes and the war-parties born of them,
the real reason for which war no man knoweth. American sanity
and intelligence will speedily see that the outcry for more soldiers
and ships comes not from the masses of the people, but from the
fortunate classes in life, and particularly from the very classes that
have heretofore battened upon every special privilege. The com-
ing of "preparedness" spells but a new phase of the old battle of
democracy against privilege.
American sanity and intelUgeiice and wisdom ought to see to it
when the war excitement is over and news of preparedness is no
longer featured in the press as once were the free-silver fallacy and
the battles against the trusts and the railroads, that their govern-
ment face the other way. Indeed, for right-thinking people this is
the time to let the time-serving and compromising administration in
Washington know that they expect of it the highest "preparedness"
in the form of a readiness to take the lead at the peace conference in
proposing international disarmament or in calling a conference for
this purpose simultaneously with the peace conference. As Mr.
Lansing and Mr. Wilson rise to this opportunity, so will their final
standing be at the bar of history. It is idle to say that there are
international problems beyond solution; that there is no way out of
the present low estate of the world; that its animal passions cannot
be checked. Behold in Paris there are now sitting the repre-
sentatives of eight nations who are legislating not merely as to
measures for carrying on the war against the Central Powers, but as
to such questions as a joint-tariff system, low telephone and tel^-
Digitized by
Google
224 The Annals of the American Academy
graph tolls, an international statute as to the licensing of corpora-
tions, as to bankruptcies, yes, even as to the losses resulting from the
theft of bonds, and as to the false designation of merchandise.
Now, if these great nations can take time and thought in the
middle of a war they believe to be one of life and death to legislate
together as to these things, who shall say that after this frightful
bloodshed they cannot be led by the great American Republic to
legislate on other far more vital themes? He who doubts belongs
in the class with those who despair of humanity, who see nothing
to be gained by tackling world-old evils because they are old; who
bow down before brute passion and would touch neither the Social
Evil, nor any social evil, nor smallpox, nor cancer, nor crime, nor
ignorance, nor poverty, because of their age.
Against the god of might; against the god of force; against the
policy of murder of millions by millions, there will be American citi-
zens to protest as long as there are stars in their courses. Against
every preparation for war men henceforth will rise to say no, even
with their backs to the wall and rifles in front of them. For there
is no slavery in the world like this to arms, none that today so checks
the growth of liberty, of democracy, of the coming of the kingdom of
heaven on earth. They will bear readily and willingly imputations
of fanciful, unpractical idealism, of lack of patriotism; only it must
never be said of them that they were unfaithful to their faith or that
they were ever at peace with militarism, or that they were afraid
to die for their ideals, or that they were traitors to the Prince of
Peace in thought or deed.
Digitized by
Google
THE "PREPAREDNESS" CAMPAIGN IS SUPERFICIAL
By Frederick F. Ingram,
Detroit, Mich.
A preparedness that merely contents itself with appropriations,
soldiers, ships and guns, and that is indifferent to fundamental
economic conditions, is recklessly superficial.
Natural resources lie at the foundation of all preparedness,
whether for peace or for war.
No plan for national defense can be effective without adequate
pufajic control of the raw materials of the nation. Without water-
power for electricity, we cannot manufacture nitrates, the basis of
gunpowder.
But one hundred and twenty public service corporations own
and are holding undeveloped and out of use an amount of water-
power equal to four fifths of all there is developed and in* use by
all the public service corporations in the whole United States.
The Shields Bill, now before the Senate, gives to the private
power companies monopolistic control of far more water-power,
including navigable streams, than all the power of every kind now
in use in United States. Private corporations are authorized by
this bill to seize upon any land, private or public, they choose.
The ownership and control by powerful private corporations,
even in time^ of peace of our natural resources — the raw material
of our industries — operates to divert the created wealth from its
producers to these monopolists. In times of war it might threaten
the very existence of our country.
This applies with equal force to coal, iron, zinc, oil, copper.
Fundamental preparedness requires that our government resume
ownership and control of these natural resources. Lives may be a
vain sacrifice if the natural resources of the country are not available
on the same terms.
Then Real ^^ Preparedness^^ Would Take a Look at Agriculture
Since it is vital that we set our house in order before hostilities,
we believe the government should ascertain why agriculture lan-
guishes and why in spite of the many millions of federal and state
Digitized by
Google
226 The Annals of the American Academy
appropriations spent in its behalf^ farms are being abandoned to
such an extent that the richest agricultural state in the Union showed
a decrease in its total population at the last decennial census, al-
though there was a large increase in the population of its cities.
The rural population in many states is dwindling and farm lands
are being turned into grass or exhausted, are left barren. The
price of farm products continues to soar to such an extent as to be
a problem to the skilled city mechanic who, though receiving a
greatly increased wage, finds it diflScult to live thereon, forcing
women and children into our factories in unprecedented numbers.
Then There Are the Slums
The slums and the great mansions are increasingly abundant
in our cities, while working men are forced to give up their former
homes and take boarders or live in rooms. Meanwhile there are
large areas in these cities unimproved or inadequately improved.
That nation is best defended whose homes are best worth defending.
In preparedness activities there is a principle that is, or should
be, axiomatic — ^it is, that the sacrifice involved should be equal.
Wealth Should Pay Its Share
Our indirect federal taxes are unjust in their incident. In efifect,
they are income or poll taxes and, based on consumption, are mostly
paid by the poor.
Sacrifices Too One-sided
Only recently have we levied any federal taxes on wealth and
even now get but one eleventh of our revenue from wealth. We
hear much of Great Britain's unpreparedness in contrast with Ger-
many when war began, but in that year (1914) Great Britain's
tax collection from wealth was $380,115,000. The United States
on the same per capita ratio would collect about $900,000,000 from
wealth, instead of one fifteenth of that sum. In Germany the com-
bined income tax on men of wealth often reaches 10 to 12 per cent.
Is it safe or reasonable preparedness to expect the poor who
ofifer their lives to their country, also to pay the cost of war out of
their already meager income? That tragic sacrifices be made by the
many while a few are making colossal fortunes out of war contracts?
Fundamental preparedness will remedy such conditions, so
dangerous to the country's welfare, be it at peace or war.
Digitized by
Google
The "Pkeparedness" Campaign Is Superficial 227
Less Danger But More Fear
Since the President, the Secretary of War and the Secretary
of the Navy were saying a year ago that we were fully prepared for
any emergency, Europe, from whence could come our only danger,
has lost at least $10,000,000,000 of wealth in war and 6,000,000
soldiers. '
Should not the President and Congress by investigation discover
the source from which this clamor for war and preparedness for
war comes? For all information open to the public seems only
to confirm the statements made in an article written by T^ Wells
Brex, a noted British writer,
Mr. Brex says:
The war has altered the social face of Europe as much as the glacial epoch
once altered its physical surface and has set back civilization one hundred years,
crumpled Europe's social structure, stunned its arts and sciences, and withered
away its web of travel intercoiufle for a century The warring nations
will be taxed by war debts, while dreadful memories will keep a gulf between the
civilized nations of Europe.
Twenty-five million men have taken up arms and nine million are already
slain or permanently disabled. The total destruction of life will be twenty mil-
lion. This is combatant waste alone. Nearly everywhere the birth rate has
fallen and the death rate is rising. Paris is losing similarly, Berlin and Vienna
much more heavily and, when the great wfu: is over, Europe will realize that no
plague in the middle ages ever ravaged it like this black death.
At the end of the war the population of Europe will not be much greater than
it was before the Napoleonic wars. Confronting the weakened and diminished
people will be such problems as three women to two men of marriageable age;
more old men than young; more boys than workers physically in their prime;
more physically unfit than fit. . . . high commercial frei^^ts, dear imports
and handicapped exports, owing to the shortage of ships. Arts languish and
humanities rust, while shattered Europe lies in a spiritual and intellectual stupor
like that of the dark ages.
Digitized by
Google
MILITARY PREPAREDNESS A PERIL TO DEMOCRACY
By Charles E. Jefferson, D.D., LL.D,,
New York.
An anti-preparedness man is always constrained to begin his
argument with the declaration that he is a stout defender of the
virtue of preparedness. In his opinion, so called anti-preparedness
men are the most enthusiastic, consistent, persistent, and thorough-
going preparedness people now alive. We place extraordinary
emphasis on the absolute necessity of this nation preparing itself
to meet coming duties and perils. We all believe in national defense.
We all realize the value of security. We all desire to safeguard the
nation against invasion. We are second to nobody in devotion to
the flag, in desire to keep its folds free from stain, and to maintain
the principles for which it was unfurled, and to preserve and per-
petuate the institutions over which it waves.
The much derided anti-preparedness men freely admit that we as
a nation are not prepared to meet victoriously the strains and storms
of the coming years. We know that as a people we are not equipped
to fulfill our obligations either to ourselves or to mankind. We
reaUze we are not politicaUy prepared. Our governmental machin-
ery in its present shape is not adequate for our expanding needs.
Our legal apparatus is not sufficiently developed to grapple with
the world's baffling problems. We have not yet devised a way by
which our national government can safeguard the lives of aliens in
the various commonwealths. We have not worked out a plan by
which a state on the sea coast can be prevented from nullifjdng a
national treaty. We have no consistent and clearly stated poUcy
in regard to immigration, or the tariff, or the PhiUppines, or the
Monroe Doctrine. We have as yet created no commissions to
work out in conjunction with the various nations involved, any of
a half dozen intricate and irritating problems out of any one of which
international conflict might arise. We have a department of the
Navy, but no department of International Conciliation, a secretary
of war but no secretary of peace. We spend the enormous sum of
one quarter of a bilUon dollars every year on our army and navy,
228
Digitized by
Google
MiLITAftY t^REPABADNASS 22d
and scarcely a dollar for the maintenance of agencies for feeding the
fountains of international goodwill. We have erected no safe-
guards by which a President of the United States can be prevented
from plunging us into war. Technically only Congress can declare
war, but as our constitution now stands, any President is at liberty
in his dealing with foreign governments, to take steps of such a char-
acter that Congress is virtually committed to war. To reduce the
points of international friction, and to work out a solution for the
problems that hang on from year to year and which, because of
their confused condition, are thunder clouds out of which lightnings
may come: to foster and multiply the forces working for friendly
feeling, and to create more effective legal devices by which the
nations may live harmoniously together, this is preparedness of the
most fundamental and indispensable sort, and of it we have al-
together too little. The first charge which we bring against the
labelled advocates of preparedness is that they overlook the things
which are of primary importance, and lead the nation astray by
creating a great hubbub over matters that are superficial, and do
not at all touch the heart of the world problem.
There is such a thing as industrial preparedness, and we need
it. The great world of the wage-earning masses must be elevated
and harmonized, and a better spirit must be created in the hearts
both of capital and labor. The idea that a nation's life depends
wholly on the courage of its soldiers is an ancient superstition which
the present war has exploded. The delusion that generals and ad-
mirals are the sole custodians of a nation's honor has been dissipated
forever. We now know that mechanics are as necessary for success
on the battle field as the men who carry guns, and that without the
loyal support of the common day laborer no nation can hope for
victory. When Mr. Lloyd George begged the Welsh coal miners
to go back to their work, assuring them that the destiny of the
British Empire rested on their shoulders, the world caught a glimpse
of a fact it will never forget. No nation can any longer be vic-
torious in war unless it has the loyal cooperation of all classes of its
people. Unity of spirit, even more than dreadnaughts and howit-
zers, is the final safeguard of a nation's life. The men who give
their days and nights to elaborating fresh schemes for the multi-
plication of guns, deal too much with the physical, forgetting that
at last everything depends on a nation's soul.
Digitized by
Google
^30 Thb Annals of the Ambbican AcADiiMt
There is such a thing as social preparedness, and we ought to
think about it. We are an unkempt and undisciplined people.
Things run at loose ends in every department of our life. We are
extravagant and wasteful beyond belief. We lack social efficiency.
Many of our municipal governments are a scandal. Our adminis-
tration of public affairs is often a disgrace. We are not fitted to
play our part creditably in the family of nations. What we most
need is certainly not a club.
And are we as a- nation morallyJprepared?J^Readrthe'^annual
record of our homicides, our divorces, our drunkenness, and our
thefts and robberies and defalcations, and all the atrocities of high
finance, and you must admit that we are not morally prepared to
face triumphantly the searching fires of the coming years. Our
criticism of the so-called preparedness crowd is that they think too
much of the outside of the cup and the platter and forget to look in-
. side. They think only of the external armor, and pay scant attention
to the interior defenses, lacking which a nation inevitably siTccumbs.
Physical armor saves no nation. All the perished nations of history
went down to death with their armor on. The enemies which
America has most to fear are not conjectural foes four or five thou-
sand miles away. Our deadliest enemies are inside our own gates.
0 you Americans who clamor so loud for preparedness, why do
you not get your eye on the foes which are foes indeed?
The world-tragedy of the last forty years has been the squan-
dering of brain energy on devising material defenses which in the
crucial hour failed to save Europe from the unspeakable havoc which
they had been created to ward off. If one tenth of the money
spent on defense had been spent in cultivating kindlier feelings and
loftier ideals, this war would never have been. The tragedy of the
Hague Conferences was that both in 1899 and in 1907, a large part
of the time was devoted, not to working out a scheme by which war
might be abolished, but to the work of laying down technical rules
by which the bloody game of human butchery could still be played.
This is the tragedy of America at the present hour. When every
sound mind and heart should be brooding over the question: How
can we so order the world's life that a recurrence of this tragedy
shall never be, there are thousands of Americans thinking of nothing
else, talking of nothing else, suggesting nothing else but the old
stupid experiment which has again and again soaked our planet
Digitized by
Google
Military Preparedness 231
with blood. How are we ever going to get out of the heart-breaking
predicament in which humanity finds itself unless men who think,
dare to break away from the miUtary traditions which have cursed
and destroyed so many generations? Cannot we get beyond the
ideas of Tiglath Pileser and Ramses II? Can not wA rise above the
ideal of the cave man? He always armed for defense. He thought
only of his own skin. He was a low-down undeveloped creature,
and is to be excused, because he lived in the morning of the world.
But what shall we say of men who, living two thousand years after
the death of Jesus Christ, cannot advance an inch in their concep-
tion of international life beyond that which was regnant in the
ancient barbaric world?
But some one asks: Do you not believe in any army or navy
at all? Certainly, We all believe in an army and navy for police
purposes. That is not now up for discussion. The question before
the American people is shall we have adequate preparedness — ^that
is, a preparedness which is considered adequate by the military-naval
experts? That is a kind which we have never had. From the days
of Washington we have been continuously unprepared. All the
experts say so. For one hundred and forty years we have lived in
a fool's paradise. The Specialists are all agreed. We now spend
250 milUon dollars a year, but this is a mere bagatelle. ''This is
not preparedness at all. Let us now prepare in earnest!'' But a
multitude of us shout no! Not now. Not till the end of the war.
at least. Let us Uck into shape the army and navy we already have.
Let us learn how to spend a budget of 250 millions before we squan-
der more.
But somebody says: Is there not danger of a foreign invasion?
We think not. No such danger has ever existed, and there is
less danger now than at any time in our whole history. Our greatest
peril is the peril of miUtary preparedness.
MiUtary preparedness is a peril to democracy, and a menace
to the peace of the world. Piling up explosives in a world where so
many persons carry matches is perilous. Running races in naval
tonnage is exciting, but perilous. Diplomacy which relies on the
pressure of guns is sometimes eflfective, but filways perilous. Mak-
ing other nations afraid of us is perilous. Germany made her
neighbors afraid of her, and so she was gradually surrounded by a
ti^tenini^ ring of steel. W^ shall circle ourselves with a similar
Digitized by
Google
232 Thb Annals of thb American Acadbmt
ring by a like policy of military efficiency. It is perilous to drill the
young men of a nation in the art of shooting human beings. It
brings a degradation of the spirit which is blighting. It is perilous
in these restless days, to pile additional burdens on the backs of the
taxpayers for the support of vast numbers of men in barracks and
on battleships. It is perilous to squander on instruments of slaughter
the money entrusted to us by the Almighty for the service of man-
kind. Our nation is a steward, and it must render a strict account
for all its gold. This is a fact which political and social science
must never fail to take into account. As Huxley used to say:
"We are playing a game with a player who makes no mistakes."
It is perilous to waste the time of our National Congress in intermin-
able discussions over the army and navy. For twenty-five years
Congress has shamefully neglected matters of sovereign importance
to devote session after session to wrangling over the types and num-
bers and prices of ships and guns. It is perilous to play with the
passion of fear. Fear is the mightiest and most demoralizing of all
the passions. Fear paralyzes the nerves of reason. Men no longer
think when they are afraid. Militarism flourishes only in an at-
mosphere of fear. Huge appropriations for ships and guns are pos-
sible only when nations are terrorized. The astute men who are
at the bottom of all this preparedness movement know that now
when the whole world is panic stricken because of long continued
bloodshed, is the best possible time for making a desperate effort to
swing our republic still farther out into the maelstrom of military
preparedness.
Building a huge war machine is perilous again because it play^
into the hands of five men who because of the structure of modern
civilization are endowed with extraordinary power for working
mischief. First comes the military-naval expert. Modern armies
and navies are colossal. Officers are numbered by the thousands,
35,000 to every million men. Some of these officers are certain
to be Homer Leas and Bernhardis. This is inevitable. You cannot
have a gigantic war machine without a military caste. You cannot
have a military caste without a war party. You cannot in this
republic prevent army and naval officials of a certain type chattering
with reporters, talking at banquets, writing for magazines and the
Sunday newspapers, publishing books, everlastingly trying to
Digitized by
Google
MiLiTABY Pbbpabbdnbbs 233
scare the public, and working day and night to increase the size
and prestige of the military and naval establishments.
Along with the military naval expert comes the war trader.
Vote hundreds of millions of dollars for any purpose whatever, and
you raise up at once colossal corporations eager to make the profit
which vast contracts bring. Wherever you have great armies and
navies, you have the Kjrupps, and the Armstrongs , and the Vickers,
and the Creusots, and in order to keep their costly machinery run-
i^g> you must alwajrs, even in days of profoundest peace, be vig-
orously preparing for war. You must change your guns every
few years, you must scrap heap your ships before they are used and
buy new ones. The nations are systematically and continuously
and mercilessly fleeced.
Next comes the irresponsible newspaper editor. He fears
neither God nor man. He fills his columns day after day with
insolent gossip and lying rimiors, always poisoning the wells of
international good will, always playing on the fears and the preju-
dices and ignorance of the crowd. Some future Dante who writes
the Divine Comedy of America will put this type of scoundrel in
the lowest round of hell.
And then comes the Jingo politician, the glowing, effervescing
patriot who wants the United States flag to float all the way to the
Isthmus, or who is certain that in a hundred years we as a nation
will be extinct, or hold in our possession the entire North American
continent. Who has power to close the mouths of the dunces?
By every increase in your army and navy you add new cubits to the
stature of every fool in the land.
And finally there is the conmiercial exploiter, the money maker
who rushes into belated countries and gathers up concessions, and
stakes out zones of influence. He invests the millions of powerful
corporations and syndicates. By unscrupulous methods he pushes
his operations, counting on the government to safeguard his invest-
ments by its army and navy. The gold of a few men shall be made
safe by the blood of the boys of other men. He is a dangerous man.
In every war of the last twenty-five years, he has been at the center
of the clique which has brought on the conflict. The bigger the
army and navy, the more insolent and ambitious this arch-mischief
maker becomes.
The military and naval expert of the Bernhardi type, the covet-
Digitized by
Google
234 The Annals of the American Academy
ous and unscrupulous war trader, the irresponsible and diabolical
newspaper editor, the hot-headed Jingo politician, and the pushing
and rapacious commercial promoter — ^look at them! These are the
five fingers of the hand which is now crushing the world. You
cannot increase the size of your war machine without increasing
the strength of every one of these fingers. To break the power of
that infernal hand, is the first and most imperative duty of all men
who love mankind.
Sombody says: "We arm solely for defense. We prepare not
for war, but against war." Indeed! European nations prepared
only against war, and behold! You cannot change a situation by
altering a preposition. Things are what they are, no matter what
names you give them. Preparing against war is identically the
same thing as preparing far war, and that is why all the military
naval experts, and all the war traders, and all the editors of the baser
sort are heartily in favor of it. They like the change of the prep-
osition. It hoodwinks innocent people who do not take time to
think the subject through.
"We are never going to use our army or our navy for aggres-
sion." Who said that? Who has authority to say that? No one.
The Secretary of the Navy cannot say it. Poor man, he will be
out of oSice long before the big machine he has planned is ready for
use. No congressman can say it. He also is like a flower of the
field. In the morning he grows up and flourishes, but in the even-
ing he is cut down and withered. No President of the United
States can say it. He is in his office for a brief season, and then the
place that once knew him knows him no more. He may possibly
be succeeded by a megalomaniac who has a fashion of thinking his
own notions synonymous with eternal justice, and who when he
wants a thing takes it. Let no one be fooled by all this talk about
never using our army and navy except for defense. Create a war
machine, and God only knows who will use it!
"Ah, but we are a peace loving people." So we are, and so are
all Europeans. There is not a war loving people in Europe. They
all love peace. They all hate war. They spent forty billion dol-
lars in trying to ward this war off. They simply prepared for it,
and so they got it. We live in a universe in which we get not what
we want, but what we deserve. Our deserts are determined by our
actions. Whatsoever we sow, we reap. The universe pays no at-
Digitized by
Google
Military Prxparbbness 235
tention to what we want. No tipler or guzzler wants delirium
tremens. He simply wants the exhilaration which alcohol imparts.
But let him drink long and hard enough and delirium tremens
comes. We do not want war, but let us make ever increasing prep-
aration for war, and there is no escape. Whatsoever we sow we
reap: what we prepare for we get. This is the solemn significance
of preparedness, it leads to death! Therefore let^us prepare now
for peace. It will take the self sacrificing labors of tens of thousands
of men, we know not how many years, to work out the machinery
of peace. We have got to organize the world. It will cost brain
and time and money. Let us spend money for peace, tens of mil-
lions, hundreds of millions, billions, tens of billions, whatever is
necessary for peace!
The preparedness program of the administration makes me
sick at heart. Either America is likely to be invaded or she is not.
If she is in danger of invasion, this program is a trifling and paltry
thing, nothing but a sop to the militaristic Cerberus. It is simply
playing with fire. If we are not likely to be invaded, then this pro-
gram is wildly and wickedly wasteful. It would be wicked at any
time, but is a hundredfold more wicked just now, when we stand
at the gravest crisis in all human history, and when every nation
not engaged in the conflict ought to be asking itself, not how it can
save its own hide, but how it can minister to the crying and awful
needs of a wounded, bleeding world. Tens of thousands of human
beings like ourselves — ^men, women and little children— are on the
verge of starvation, and our government officials come forward with
a scheme that calls for the expenditure in one department alone of
500 million dollars within five short years for the extension of the
machinery of human slaughter. Not one dollar for bread — ^but
every dollar for the dogs of war! "O judgment, thou hast fled to
brutish beasts, and men have lost their reason." Would that we had
a secretary of peace, a man who, at an hour like this, would present
a scheme for increasing the happiness and well being of our people.
Millions for new roads, millions for new buildings, millions for new
schools, millions for new farms to be carved out of the deserts and
the swamps, millions for fighting disease, millions for preventing
accidents, millions for brightening the lives of the poor and the ig-
norant and the forlorn, millions for the solution of problems which
have long vexed us, and millions for forwarding noble enterprises to
Digitized by
Google
236 The Annals op the American Academy
their coronation. Five hundred million dollars to be spent the
next five years in making us a healthier, happier and better people.
This is the preparedness which fits us to fulfill our duties. This is
the preparedness which fits us to stand before God!
But this would not defend us — some one says — from our foreign
enemies. They would be attracted by our increased prosperity
and might break^in and steal our treasures. Well then, let us build
up lines of defense in foreign lands. We have spent one hundred and
seventy eight million on coast defenses, and an expert has declared
that any foreign army can easily walk around them. Why not build
coast defenses which nobody can walk around? Why not build
them in the hearts of the nations? O for a secretary who would
suggest not 500 million dollars for machinery to sink boys of foreign
countries to the bottom of the sea, but who would recommend
500 million dollars for healing the open sore of the world. The price
of a dreadnaught to each of the warring nations for the erection, at
the close of the war, of asylums and hospitals and orphanages and
homes and schools for the service of the great company of those
whom the war will have left impoverished and helpless. The price
of a battle cruiser and torpedo boat and a submarine to each of those
nations for the endowment of these various institutions. Five hun-
dred million dollars for the relief of the nations who are stripped of
their raiment, and wounded and half dead. Why should it be
thought a thing incredible that a Christian nation should do a Chris-
tian deed? Would there then be danger of a foreign invasion?
Some men are so hidebound in their materialism they cannot con-
ceive of any defenses except those made of concrete and steel. We
Americans are often accused of worshiping the almighty dollar.
We are counted money makers, money grabbers. Why not show the
world that we can be money givers? Why not cease this shameful
shivering and whimpering over the prospect of somebody hurting us,
and show the world that we can think of helping others? Spend
your 500 millions on war ships, and in less than twenty years they
are all on the scrap heap. Spend 500 millions on institutions scat-
tered over Europe for the care of those whom this awful war has
maimed and mangled, and they will stand forever as the imperish-
able monuments of a great republic's love. Do you say this is im-
practicable? I tell you it is not, A noble deed is always practicable.
Digitized by
Google
ARMAMENTS AND CASTE
By Simeon Strunskt,
Editorial Staff, New York Evening Post, New York City.
I believe it is not getting too far away from our subject, if I
make no attempt to deal with the concrete results which may be ex-
pected to follow upon a policy of military expansion. I am more
concerned with the spirit which the agitation for large armaments
has brought into being, and which armaments in turn are li]cely to
foster. Our institutions are bound to be shaped by the national
state of mind; and more than that, they are bound to take meaning
from the national state of mind. Externally, Germany of today
has many of the pplitical and social arrangements towards which
we have been struggling in the name of greater democracy. It is
still a guess what militarism will do to the Constitution, to Congress,
to our federal and local machinery, to progressive legislation, to
industrial reform, to child labor, to woman suffrage, to the entire
creed of social righteousness and justice which absorbed us for many
years, until a Presidential year came around and it was suddenly dis-
covered that the higher justice and righteousness have their home
in Servia and Belgium, and not in Alabama and Pennsylvania.
About ^concrete changes we must still speculate. But what is
already manifesting itself is the soul which armaments engender.
About this spirit of preparedness, I do not want to dogmatize.
What I wish to convey is only a general impression, arising from a
mass of impressions as they have come to me in the course of my
daily work in a newspaper office. These impressions are based as
much on the trivial features of the preparedness campaign as on its
important features. My impressions are drawn from what the
advocates of armaments have slaid formally from the platform and
over their signatures in the press, from what they have said casually
to reporters, and from what they have left unsaid. For an appraisal
of the spirit of armament, it seems to me that the proceedings in
Congress are hardly more significant than the proceedings of the
latest woman's auxiliary for creating a large reserve of bandages and
formaldehyde for our wounded soldiers,
237
Digitized by
Google
238 The Annals ^p the American Academy
It is my belief that the differences of opinion, which undoubtedly
exist in this country both as to the necessity and meaning of large
armaments, are to be explained principally by a difference of class-
feeling. In many of the arguments for thorough preparedness and
in the state of mind which these arguments reveal, I detect an at-
titude and an outlook which among the older nations would be
described as a manifestation of the spirit of caste. I am aware that
other reasons have been advanced for the prevailing division of
sentiment. One explanation is geographical. The distinction has
been drawn between public opinion on the two seaboards and
public opinion in the interior of the country. The difference cer-
tainly exists. It is usually accounted for by saying that the people
of the Middle West either do not realize the serious position of this
country in the f £^ce of international developments, or that they self-
ishly refuse to bear the trouble and expense involved in a great
system of national defense. Secure behind the Alleghenies and the
Sierras, the people of the interior either cannot visualize the menace
that confronts the people of the two coasts, or refuse to recognize
their obligations to the general welfare. Whether the fault be a
lack of patriotism or a lack of intelligence, localism is supposed to
be one of the principal reasons why the people of Kansas and Iowa
do not think like the people of New York and Boston.
The second explanation is one that is more often implied than
expressed in the usual plea for armaments. The sentiment is
widespread that indifference or outright opposition to national de-
fense arises from a general weakening of national sentiment and
that this is due to the presence among us of a large population of
foreign birth or of foreign descent. It is true that responsible
political leaders, in discussing Americanism, have been careful to
make the point that Americanism is not a question of birth or
origin; Mr. Roosevelt has asserted repeatedly that hyphenism is
psychological and not ethnographic. Yet in everyday conversation,
in much that has been written and said about Americanism, there
runs this underciurent of conviction, that if today we are not as
resolutely national as we once were, it is because of the heavy di-
lution of our citizenship by immigration. How else shall we explain
the widespread concern about facilitating the process of natural-
ization among our aliens? It is not a logical state of mind. The
only element that has fallen under suspicion is the German element.
Digitized by
Google
AaiiAkin^lB and Castb 23d
It seems rather absurd, every time we suspect a German-American,
to go out and naturalize an Italian, a Slav, a Russian Jew^ or an
Armenian, who by no stretch of the imagination can be conceived
as siding with their native country against our own, even if the inter-
national situation admitted of such a divided allegiance. The
reason, rather, is what I have indicated it to be. It is simply the
general feeling that if we were more purely native today, we would
be more emphatically American.
Neither explanation, the parochialism of the Middle West and
South, or the influence of the foreign element in our population, will
adequately account for the existing opposition to a policy of large
armaments. This will appear if we look a little more carefully into
the variations of popular opinion, both in those sections where the
preparedness sentiment is weakest and where it is strongest. If
Kansas and Iowa were indifferent because they feel secure from in-
vasion, the feeling ought to prevail among all sections of the popu-
lation. Whether you are a banker in Des Moines or a street-car
conductor in Des Moines or a farmer in the interior, you would be
equally secure against an invading army from Germany or Japan.
Actually there is a notable diflference in sentiment, and it is deter-
mined by class conditions.- Trained newspaper observers who
followed in the path of President Wilson to study the effect of his
missionary journey to the West, found this to be the fact. When
they canvassed preparedness sentiment in Des Moines, they found
that the bankers and big business men were in favor of armament
and that the working population was against it. The big army
sentiment was strong in the clubs, and weak in the cheap restau-
rants. For the country as a whole there is sufl&cient evidence
that the labor unions and the farmers are opposed to militarist
expansion. Debates on the subject in the labor federations have
shown an overwhelming sentiment for our traditional polices. Two
million farmers, through their grange representatives at Washing-
ton, have gone on record against preparedness in the hearings before
the Congressional committees. We have the lesson of the Michigan
and Nebraska primaries. And there is significance in the attitude
of the Socialist party with its record of nearly a million votes in the
last Presidential election. That party has nominated an anti-
armament man for the presidency and is conducting its campaign
on the issue.
Digitized by
Google
240 The Annals of ths Ambiucan AcADfiMt
So much for the West. If we turn to that part of the country
where the sentiment for militarist expansion is strongest, we find
the same subdivision of opinion based on class. I speak of New
York because I am best acquainted with conditions there, but what
I say of New York is true of Boston, and I imagine of all large
cities, on the Atlantic coast as far south as Baltimore.
If two years ago we had approached this problem a priori; if
we had said, ''Suppose a wave of Americanism sweeps over the
country, expressing itself in no matter what form, where will this
new patriotism manifest itself most strongly?" how many people
would have prophesied New York? Recall New York's traditional
reputation. It lies almost outside o( the United States geograph-
ically and quite outside of the United States spiritually. It is
the city of the Gay White Way, the tango palaces and the un-
American Sunday. It is the city where fortunes made outside of
New York, in America, are spent, and where ideals made outside
of New York, in America, are rejected and frustrated. It is the
home of that foreign incubus on American life — ^Wall Street. It is
the city, and New York is the state, where the great social and po-
litical movements that have stirred American life during the last
decade have elicited the least response. Recall what the historians
have written of the West as the dynamic center of the national life
and of the East, with New York as its capital, as the dead mass
upon which the western ferment must work. And then consider
the situation we face today of New York as the citadel of the New
Americanism which is measured by armament!
Put aside this traditional vaudeville interpretation of New York
which I have just outlined. There yet remains a solid body of fact
why we should expect a reawakened nationalism not to show itself
at its strongest in New York City. In 1910 the foreign bom pop-
ulation of the United States was 14 per cent of the entire popula-
tion; in New York State it was 30 per cent, or more than twice as
great. In 1910 the native population of foreign or mixed parentage
in the United States was 21 per cent. In New York State it was
33 per cent. If we were still reasoning a priori, what showing in the
matter of Americanism could we predict for New York State, with
only 37 per cent of its people of native parentage as against Kansas
with 72 per cent? Or for Massachusetts with only 30 per cent of
its people of native parentage as against Iowa with 58 per cent?
Digitized by
Google
AmiCAMiJNTd AND Casts 241
Two years ago, looking forward into the future, we should have said
that if a President of the United States found it necessary to under-
take a missionary journey in behalf of Americanism, he would set
out for foreign New York amid the frenzied cheers of the people of
Kansas City, and he would proceed to the redemption of foreign
Boston at the behest of the excited population of Topeka.
But while New York, as a whole, is in favor of army increase,
there are gradations of sentiment. Of our press, for example, the
World, the largest in circulation among morning newspapers, is
moderately in favor of increased armaments, the Sun is emphati-
cally in favor, the Times and the Herald are feverishly in favor; the
Tribune is deliriously in^ favor. The Hearst papers are imperialist
when it is a question of Mexico or Japan, but are strangely pacifist
when it is a question of Europe.
Thus, while New York as a whole is favorable towards arma-
ments, the emphasis varies with class considerations. The tone
of the individual newspapers is plain evidence. Recall that the
Hearst newspapers in New York, as in every city where they are
established, appeal to our lowest social stratum when measured by
the income-tax scale. It is therefore significant that the Hearst
papers should be cooler towards armaments as a reflex of European
conditions, than any other New York newspaper. Go up one step
further and we find that the Pulitzer papers, and especially the
Morning World, appeals predominantly to the small business man,
to the retail shop-keeper, the more prosperous of the skilled worker,
and the moderately prosperous suburban class. And the World
is more outspoken for armaments than the Hearst papers. But
the World shows moderation, and that I attribute to the fact I have
just mentioned that its public is among the smaller business men
and the moderately prosperous sections of the community. It
is only when you reach the solid business class and beyond that,
the realm of big business and established social position — when you
reach the public covered by the Times, by the Sun, by the Herald
and the Tribune, that you find the militaristic agitation in its most
violent form. I believe it is plain that whether in Kansas or in New
York, whether sentiment is predominantly against armaments or
in favor, class lines cut across the prevailing drift of opinion.
In speaking of big armaments as an upper-class policy, I am
not using ''class'' quite in the dignified sense of an economic group
Digitized by
Google
242 The Annals op the American AcADEnnr
in the community. I am thinking of class rather as the word is
used in the society columns. When the Socialists speak of pre-
paredness as a class issue, they will tell you that it is a movement
fostered by the capitalist class with a view to war profits and foreign
trade exploitation. And if we find it difficult to understand why
New York State with a native population of native origin of 37
per cent and Massachusetts with a like population of only 30 per
cent should be hotter for national defense than Kansas or Iowa, the
Socialist will say that New York and Massachusetts pay 48 per
cent of the income tax for the whole country, while Kansas and Iowa
together pay '/lo of one per cent. And of course there are a great
many people who are not Socialists, who do not speak of the '^ cap-
italist" class as the fomenters of militarism, but who nevertheless
do speak of special classes, the munition makers, the armor manu-
facturers and the shipbuilders.
But what I have in mind is not only the influence of the wealthy
munition maker, but the influence of his son at the university and
his wife in society. I am not thinking merely of the well-to-do
classes as consciously favoring war for the sake of profits, but as
favoring the growth of military establisments out of that spirit of
caste which among all aristocracies the world over finds in the busi-
ness of fighting the most congenial of occupations.
Armament is fashionable. I must confess that I am not greatly
impressed by the zest with which "society" has gone in for national
defense. This business of establishing hospital depots, organizing
ambulance imits, drilling high-school girls in uniform with rifle,
strikes me as akin to the zeal with which one goes in for flower shows
and barefoot dancing or whatever may be the fashionable pre-
occupation of the moment. Lenten amusements nowadays have a
way of attaching themselves to a great social purpose. In some
measure we are confronted today with the same spirit which, at
the beginning of the war in Europe, let loose a deluge of duchesses
upon British headquarters in Flanders.
But beyond such comparatively harmless excursions into new
realms of sensation, I think there is to be found among our well-
to-do classes a real approximation to the spirit of noblesse oblige,
I find a sense* of anxious responsibility, of that call to duty, which
across the water is every little while addressed to the "Gentlemen
of England." There is a very distinct appeal now being addressed
Digitized by
Google
Armaments and Castb 243
to the "Gentlemen of America.'' Our prosperous citizenship has
hitherto refused to render service to the community, by doing its
share for the political life of the country. Men of wealth have pre-
ferred to work upon congressmen and legislatures instead of working
in Congress and the legislatures; and their sons have preferred polo
and speed boats. But military service has its own glamour. I can-
not help thinking that a great many young men of wealth, who
hitherto have seen no field open to them in the service of the nation,
now think they have such an opportunity opening up for them.
The army and the navy as a high-class occupation for the rich
unemployed is a factor which enters into the movement toward a
heightened military policy.
This growing sense of responsibility has been aflfected by the
wild talk about our declining sense of patriotism, to which I have
referred. Continuous insistence on the perils of hyphenism has
undoubtedly created the apprehension that a divided allegiance
is threatening the honor and safety of these United States. From
its specific application to German sympathizers the reproach has
been widened so as to include the whole mass of foreign born and the
descendants of the foreign born. The melting pot has proven a
ghastly failure, and the feeling is widespread that if we are ever
plunged into difficulties with other nations, such as we have en-
countered with Germany, we must expect the same disloyalty.
Once that distrust of the great masses of our people becomes
widespread, you can see how it would call forth a reassertion of
Americanism among the people of the old stock. And that senti-
ment would be strongest precisely where the foreign element is most
numerous. To the extent that in New York or Boston the old
native element is threatened with engulfment it would tend to be-
come self-conscious and class-conscious. The natural sense of
social exclusiveness of the well-to-do is heightened by the conscious- '
ness that they are a saving remnant for true Americanism. Amidst
a hyphenated population it is incumbent upon Americans of ancient
origin to assert their fidelity to America, as a protest against the
disloyal and as an example to the wavering or the ignorant. And
the most concrete way in which this demonstration can be made is
through a wholehearted acceptance of militarism, both as a^patriotic
service in itself and as a school for patriotism.
It is in this sense that I have been speaking of the present
Digitized by
Google
244 The Annals of the Ambbican Acadbmt
movement for preparedness as appreciably a caste movement, ac^
tuated by a certain spirit of aloofness from the mass of indifferent
citizenship. It is in this sense that I believe the creation of a large
military and naval establishment will react in turn upon caste
spirit. If our traditional policy were to be changed under the stress
of a universal demand from the citizenship of the country, if the
United States went in for miUtarism on the German scale, and
navaUsm on the British scale, to the abandonment of traditions as
old as the republic, there would yet be some compensation, if that
change were the will of the whole people. From a nation in peace
and industry we would become a nation in arms, but, after all,
France after 1789 was a nation in arms and remained democratic.
But if the militarisation of the United States should be brought
about by the economically and socially superior classes exercising
an influence beyond their numerical strength, militarism would
come to us as a class policy. Among our farmers and workers the
feeling would arise that the policy of armament has been forced
upon the country by the moneyed classes for their own interests,
whether financial or social. Among the rich in turn the feeling
would maintain itself that this country has been saved in spite
of a large part of the nation, and that the future welfare of the coun-
try must depend upon the patriotic and enUghtened devotion of a
small class in the face of a great mass of ignorant, or imperfect, or
disloyal Americanism. That, I believe, is caste.
You may proceed to pile up institutions which in form are
democracy; but if the ruling spirit of the nation is what I have out-
lined it, you will have only a Tory democracy. The voice of the
Tory is making itself heard. You hear it in Mr. George W. Per-
kins' desire for the presence of a commander-in-chief in the White
House. You hear it in the demand for a General Naval Staff
independent of civiUan control. You hear it in a remarkable
editorial published only the other day in one of our New York papers,
from which I wish to read a few sentences. The article is called
"The Warning," and has for its text the insurrection in Ireland.
Our writer says:
The incidents which have taken place in Dublin may be repeated in Chicago,
in Mihiraukee, in New York City, at any moment. They may occur because with
precisely the same warning that the British government has had the American
has neglected, dodged, skulked away from the obvious duty and the immistak-
Digitized by
Google
Abmambnts and Cabtb 245
able facts. .... We have lived in this country of ours amidst disorder, vio-
lenoe, outrage, organized from without There never has been a time
when the American peril could not have been disposed of had our rul^ dared, had
they possessed the courage, the will, the strength to face the situation
The whole world is filled with terrible lessons that are being tau^t to the selfish,
the cowardly, the blind This is the price Britain is payiiig for the
Asquiths and the Greys and all the rest of the "wait and see" — Gallipoli, Mons,
Mesopotamia. .... We have treason and anarchy here. Unless they be
dealt with now we shall have insurrection and machine guns hereafter.
I will not enter into a detailed analysis of this argument. I
will not attempt to examine how close the parallel is between 21
months of the German American question in America and five hun-
dred years of the Irish question. I need not dwell on the fact that
of the three horrid mistakes of the "wait and see'' policy — Mons,
Gallipoli and Mesopotamia — Gallipoli was the work of a strong
young man named Winston Churchill who had the courage, the will
and the strength to send off 100,000 men to die at Gallipoli on his
own hook, and Mesopotamia was the work of another strong man
named General Nixon who, as stated in the House of Commons,
set out for Bagdad on his own initiative. But what I do wish you
to see is that in the writer of the article I have quoted we have pro-
duced a very fair example of the Tory mind and the Tory outlook.
The civil process of the courts by which German plotters have been
seized and sent to prison is not enough for this Junker of Park Row.
What we need is the mailed fist, Bethlehem mailed or Krupp mailed
does not matter. When you think of several hundred csaualties
in the streets of Dublin as the result of weak-kneed sentimen-
talism and compare it with the splendid state of peace and content-
ment which 500 years of the other sort of thing have produced in
Ireland, can you blame this writer for lashing out at the folly and
cowardice of the " wait and see" crowd? And if you gave this young
man a nice, large army, can you see what he would do with it?
Two thousand miles from Park Row, the spirit of Tory de-
mocracy breaks out in a softer, more poetic strain; but the spirit is
there. Mr. William Allen White, somewhat uneasy at an alliance
that he foresees between Mr. Roosevelt and the "plutes*' of Wall
Street, as Mr. White calls them, on a militarist platform, finds
comfort in the thought that Mr. Roosevelt, while working with the
"plutea^^ will yet compel them to pay "tribute." This tribute,
says Mr. White,
Digitized by
Google
246 The Annals of the American Academy
will be paid in larger wages for men, for unemployment insuranoe, for abolition
of child-labor, for shorter hours of women in industry, for workingmen's compen-
sation, for old-age pensions, and state insurance. This means that the rich will
have to divide.
But* which of these things has the Kaiser failed to provide for
his people? And how does this social programme differ from the
Junker state philosophy of a well-fed, safe-guarded, simple-hearted
and simple-minded people contentedly taking orders from a small
ruling class which alone has the intelligence to realize national des-
tiny and the vigor to shape it? There is no perceptible difference
between the ideal state of William of Potsdam and the ideal state
of William of Emporia. The rich will indeed be glad to divide;
for the masses of the people there will be comfort and safety under the
form of democratic institutions; for the rich, the power to shape
the policies of the nation and to apply the democratic machinery
to the uses of imperialism. That vision of social justice which
only a few years ago was to be attained through the efforts of a
democracy inspired by an ideal and conscious of its power, is to be
realized. But it is to come not as the prize of a triumphant de-
mocracy but as a profit-sharing bonus declared by the " plutes."
Digitized by
Google
MILITARISM AND THE CHURCH
By Algernon S. Crapsey,
Rochester, N. Y.
We have in our midst a certain inchoate institution in this
country which we call the Church. We have in that Church an
investment of something Uke $2,000,000,000 and we spend every
year in its support between $200,000,000,000 and $300,000,000,000.
It therefore has an econoiiiic existence if none other. This institu-
tion is based upon certain principles which it declares to be divine
underlying principles of human life. It claims to have a commis-
sion from the Creator of the Universe, the Author of human life,
to teach these principles as necessary to the happiness and even
the being of humanity. It takes in a large and a most important
area of human thought and feeling; that all of this should have
been so completely ignored by the arguments of militarists is most
significant, and we ask ourselves whether it is indeed a fact that
the Christian Church, and with it the Christian religion, has ceased
to exist as a factor in the life of the people of the United States.
The militarist's idea is in direct contradiction to the funda-
mental postulates of Christian teaching. The military method
makes physical force the ultimate means of settling disputes be-
tween the different nations. According to this method, each nation
must always be prepared to resent injuries. It is to go armed with
this in mind all the time. It is as if a private individual were to
arm himself upon the supposition that every man in the street is
hostile to him and desires his injury, so that he must be ready at
every moment of his life to the full extent of his ability to resent
such injuries. And he is to resent them by the use of physical force
because it is physical force of which he is afraid. This is the funda-
mental thought of all militarism.
One hardly needs to say that just the opposite of this is the
foundation principle of that great institution known as the Christian
Church. The pacifist comes in for the sneer and the scorn of the
militarist on the supposition that he does not believe in force. But
just the contrary is the case; the pacifist has faith in force as well
247
Digitized by
Google
248 The Annals of the American Academy
as the militarist, but he believes that there is a force stronger than
physical force. The moral forces of the universe are at his com-
mand, and he fights, not with his sword or his gun, but with his
reason and his conscience. He believes that man is a reasonable
and a moral being and in the ultimate is open to conviction, both
as to the wisdom and the rightfulness of his action. Therefore,
the pacifist lays primary stress upon moral and spiritual preparer
tion and only minor stress on mere physical preparation.
The second emphasis of militarism is on enmity. We are the
natural enemies of other nations and they our natural foes. As
soon as we organize as a group, that separates us from our fellow-
men, and those fellowmen of ours in opposite groups are watching
to see how they can come at us and take advantage of us and spoil
our goods. It is this principle of natural enmity that is insisted on
in season and out of season by those who are preaching military
preparedness. Now unless I am mistaken entirely as to the con-
stitution of that great organization known as the Christian Church,
this thought of enmity is utterly opposed to all that it stands for.
It lays stress not upon enmity but upon friendship. The Founder
of Christianity said: "Ye have heard it said of old times, thou shall
love thy neighbor and hate thine enemy; but I say unto you, love
thine enemy.'' Now in old times, in the days of undeveloped
humanity every stranger was an enemy. Every man who lived
outside the city gates was lawful prey.
But Christianity had come when that condition of society was
outworn and the human race ready for a higher stage of existence;
when friendship and not enmity was to become the natural and
acknowledged relation of human beings. Enmity is the strange
thing, friendship the ordinary; and this principle Christianity applies
to groups as well as to individuals. The nations are the natural
friends of the nations. Germany is no one's natural enemy; it is
everyone's natural friend. It has to make itself an enemy by vio-
lence. Now if one makes himself our enemy that is his lookout not
ours; we stand on our fundamental principle that he is our friend,
no matter what he may do. That is essential to the continuance
of his spiritual life and ours. The great institution which is here in
our midst representing our spiritual and moral life, expending vast
sums of money, officered by more than 200,000 men, insists upon
love and not hate as the primary condition of life, and yet as we
Digitized by
Google
Militarism and the Chubch 249
have seen, this institution and its teaching have been utterly ignored
in the arguments of the militarists.
There is a third principle at the base of militarism which de-
clares that we must continually prepare against future and contin-
gent evils. Our present preparedness campaign is directed not
against actualities but only against remote probabiUties which are
in fact hardly more than mere possibiUties. Now there is no thought
more wasteful of human energy than this, and it is a thought utterly
condemned by the teaching of Christianity. The Founder of Chris-
tianity said "take no thought for the morrow, the morrow shall
take thought for the things of itself, sufficient unto the day is the
evil thereof."
It may be said that fully one-half of human energy has been
thrown away because men have acted contrary to the saying of
Jesus, and the American people today are in great fear where no
fear is. Never in our whole history were we so safe from anything
like foreign invasion as we are at the present moment. The only
two sources of danger suggested to us are Germany and Japan. At
this moment both Germany and Japan are so occupied nearer home
that they have neither the means nor the way to undertake so
stupendous a task as the conquest of the American repubUc. Con-
ditions in Mexico may — ^if they are not handled with wisdom —
make of the American repubUc a conquering nation, but there is
from that quarter not the sUghtest danger of conquest.
All this wild cry for miUtary preparedness has it source, very
largely, in the wishes of those who desire that the American repubUc
shall be a conquering nation, and be based upon the imperialistic
and not the democratic conception of life and government. The
American people will have far more to fear from a large miUtary
establishment of their own than from any military establishment
outside their borders.
One thing seems evident, the American people must either
abandon their religion and dismantle their churches, or else they
must use their reUgion and their churches to curb the present tend-
ency to return frankly and openly to the conditions antecedent to
the preaching of Christianity. Our choice Ues between Christ and
Caesar*
Digitized by
Google
DEMOCRACY OR IMPERIALISM— THE ALTERNA-
TIVE THAT CONFRONTS US
By Frederic C. Howe,
Commissioner of Immigration at the Port of New York.
There is a very general assumption that the time has come for
the United States to abandon its policy of splendid isolation and
enter into the broader field of international relations, and that. this
new policy is demanded by new opportunities, by our expanding
trade and overseas relations, and that a refusal to take this step is an
indication of weakness ora willingness to remain a "little "America in
the field of international affairs.
Were the question as simple as it seems I would agree with this
contention. Were the larger contact with the outside world merely
a contact of expanding trade and commerce, it would seem to me to
be inevitable. But the internationalism of the present day is not
really an internationalism of trade and commerce. Those who are
most actively xu'ging that America take a more positive place in
international affairs are interested in a different kind of imperialism
than that which they urge upon us. They would have us assume
the paraphernaUa of imperialism, of a great navy; they would have
the United States be in a position to use the mailed fist to back
financial interests, enforce their demands, and otherwise adopt the
accessories of imperialism such as those of Germany, Russia, Eng-
land and the great powers of Europe. And it is because an abandon-
ment of our poUcy of splendid isolation inevitably involves us in a
military front, in the adoption of Ehiropean diplomacy, and the
identification of the state department with sinister interests, that
such a poUcy seems to me fraught, not only with peril to our country,
but with most unjust burdens and costs to the great majority of the
common people as well. Imperialism is a menace to democracy. It
is a menace to social reform and internal development. Judged by
the experiences of Europe, imperialism is always at war with the
best interests of the State. And it is for this reason that I believe
in a continuance of the poUcy of isolation and detachment that has
9^rv^d us so well for a century.
m
Digitized by
Google
DeMOCBACY OB tMPBBIALlSli ^51
In the first place it is not possible for America to lay down the
rules of the game in international affairs. They are fixed by the
feudal, aristocratic and dynastic powers of Europe, which still think
in terms of an earlier age. These powers establish the terms of the
contest, and for us to enter upon an imperialistic poUcy means that
we must accept the game as they play it. Outside of England and
France, the great powers of Europe still think of himianity as food
for guns; they still each have a contempt for democracy.
To me democracy is the most precious thing in the world. It
holds the hopes of the future. And imperiaUsm means the weaken-
ing of those things for which democracy stands. There may be
glory in internationalism, but there are necessary costs which democ-
racy has to pay. And in preparing for imperialism, for a wider
field for industrial activity, labor bears the cost. Labor goes to the
front; labor mans the ships; labor leaves its wife and children at
home to get along as best they may. Labor gets none of the gains.
It enjoys none of the concessions, privileges and profits incident to
imperialism. But that is not the end of it. War and preparations
for war, imperialism, militarism, mean colossal expense. They mean
a great increase in the miUtary budget. And the bended back of
labor bears most of the cost of it all as well. Wars would not be
possible were it not for the fact that taxes are collected by indirect
means, upon the things that people consume. This is especially
true in America. For fifty years scarcely a dollar of the federal
taxes was collected from wealth, property, incomes or inheritances.
Ever since the Civil War the federal government has been main-
tained by taxes on consumption, by tariff taxes, excise taxes, in-
ternal revenue taxes. We have supported our army and navy by
taxes on sugar, on clothes, on tobacco, on the things people use.
Each year we collect between $600,000,000 and $700,000,000 from
these sources. Only within the last two years has anything been
collected from incomes; and even today less than one-eighth of our
revenues come from taxes on property of any kind. Labor pays
for imperialism. It pays in money and it pays in blood.
Digitked by
Google
252 The Annals o^ tha Amebican Academy
II
Labor not only bears the cost of imperialism at the front and
at home; labor suffers in legislation as well. Imperialism is usually
identified with a reaction at home. It checks social legislation. It
centers thought upon overseas matters. The progress that has been
going on during the last ten years is likely to be checked with this
new emphasis on overseas interests. The result of the war in Europe
means that the privileged interests who have been called into the
government will continue to rule for many years to come unless
democracy asserts itself through revolution. It may be said that
this is not true of America; that we control things better; that we
are free from privileged interests. But the experiences of the last
fifty years disprove this. During the Civil War banking interests,
financial interests, tariff interests, railroad interests, land grabbing
interests, made their way into the government. They controlled
Congress in their own interests. They controlled the states and the
cities. Ever since the Civil War we have been paying the price of
the war in the control of our agencies of government by the great
interests which took advantage of our necessities at that time. And
they are morfe active today than at any time in our history. Im-
perialism, a great budget, a great navy, and the possible wars which
may come from imperialism mean that the financial interests will
continue to be powerful. In case of great emergency they will be
called in to rule, much as they have been in Europe.
It is because imperialism is a menace to democracy, that it
invites control by privileged interests, that I am opposed to our
government throwing itself into the arms of an imperialistic policy.
Ill
Imperialism again is identified with dollar or private diplomacy,
with the use of the state department and foreign offices in the interest
of those special classes concerned in financial imperialism. In such
a game the people are compelled to act in the dark; democracy plays
with stacked cards. It has to adopt the rules of diplomacy es-
tablished by older nations, and these are the rules of aristocracy
rather than democracy. The diplomacy of Europe is still the diplo-
macy of the eighteenth century. It is controlled by the aristocracy.
It does not think in terms of the people; it thinks in terms of its
Digitized by
Google
Democracy or Imperialism 253
own narrow interests. This is not only true of Russia, Austria-
Hungary and Germany; it is true of England as well. In some
degree it is true of France and Italy, in which democratic countries
the financiers have identified themselves with the diplomatic service
and made it an agency of their will.
Diplomacy is secret. It does not trust the people. It never
takes the people into its confidence. There is scarcely a European
war in the last sixty years in which the diplomats did not figure to
the disaster or detriment of their people. Even in the United States
diplomacy partakes of the aristocratic flavor of Europe. There are
only two great examplars of democratic diplomacy in this country,
and they were Jefferson and Franklin, who a century ago left an
imprint upon the world because they refused to follow the tradi-
tional rules of the diplomatic game, and looked upon themselves as
representatives of the people of the United States to other peoples.
Even today diplomacy in the United States is for the most part open
only to the well-to-do. We do not pay our diplomats sufficiently
to open the service to any but the rich. And our own diplomats,
because of their detachment from the people, their interest in priv-
ileged things, are likely to think not in terms of humanity or of
denaocracy, but of the classes or groups and the interests with which
they are identified. Imperialism and the new internationalism
means the identification of diplomacy and the state department with
overseas interests; and when diplomacy and the state department
are interested in dollar diplomacy, the promotion of industrial and
financial interests, the nation itself is made to serve the will of a
small but interested class.
IV
Imperialism today includes war as one of the means of settling
the disputes of concession hunters and private interests. And if we
knew all the facts we would see that most of the wars of the last
thirty years have been the result of the activities of overseas finan-
ciers, concession seekers, and those interested in obtaining spheres
of influence for loans, mines, railroads, oil wells and other privileged
grants. When these concessions, loans and privileges were granted
by weak or revolutionary peoples, the concessionaires identified
their foreign office with their interests to enforce their claims, even
when it was necessary to dispatch the navy and the army against a
Digitized by
Google
254 The Annals op the American Acadbmt
weaker nation to validate them. The present cataclysm in Europe
is partly, probably largely, the result of a generation of conflict on
the part of the big financial and^industrial interests of Europe which,
when diplomacy failed, insensibly perhaps but none the less in-
evitably, threw their nations into conflict. The old type of wars
came to an end with the Franco-Prussian War.^That was the last
war of the old feudal nationalistic type. Subsequent wars are of a
different kind. The world changed in character about 1890.
Wars and preparation for wars of the last generation have had
their origin in the overseas activities of special interests within the
greater powers. These activities sprang primarily from surplus
wealth seeking investment which the investing classes of England,
France and Germany placed in the weaker countries of the world.
The sums so invested are colossal. They amount in the aggregate
to nearly $40,000,000,000. Along with loans, financial groups have
sought concessions, spheres of influence, opportunities to exploit
weaker peoples. The financiers have been identified with the foreign
office and the diplomatic service, and when conflicts arose between
the financiers the nations have been lured into the contest for the
protection of their investments. This has led to friction, irritation,
and on a number of occasions Europe was on the verge of war because
of the conflict of financial groups which had identified the home
government with their overseas interests.
The new imperialism of finance began with the purchase of the
shares of the Suez Canal in 1876 by Great Britain. English capital
flowed into Egypt. In a few years' time they had loaned the Khe-
dive $400,000,000 on usurious terms. The treasury of Egypt re-
ceived only $100,000,000 of this colossal sum; the bankers retained
the rest as commissions and underwriting profits. The interest on
these loans could not be met. There was fear of revolution. Alex-
andria was bombarded and Egypt occupied by Great Britain, from
which, despite her assurances, she has never been willing to with-
draw. France was crowded out of Egypt. She centered her in-
terests in Tunis and Morocco. These countries, like Egypt, soon
lost their independence. European bankers increased the indebted-
ness of Morocco from $4,000,000 to $32,000,000 in six years' time.
French, German and British interests came into conflict over spheres
of infliuence and the rights of the various concessionaires. The press
of France was controlled by the bankers. It promoted war scares
Digitized by
Google
Dbmocbact or Imperialism 255
and induced France to send an army of occupation into Morocco.
This led to conflict with Germany which nearly precipitated war in
1911.
The same story was repeated in Persia, where Russian and
English interests crowded out Germany. Persia was strangled.
It was divided into two spheres of influence. Debts were made
by English and Russian bankers, and ultimately Persia lost her
independence.
Germany has sent her financial diplomats all over the world.
She has penetrated into most of the countries of South America.
Crowded out of Morocco and Persia, she centered her interests in
Turkey and Asia Minor. The Deutsche Bank received most valu-
able concessions for the Bagdad Railroad. Along with this were
other concessions for mines, lands, harbors and private companies.
The German bankers made colossal profits on the Bagdad Railroad,
which were, however, charged to Turkey. In this process of finan-
cial subjection Turkey became subject to the Deutsche Bank. Fi-
nancial interests led to political intervention. The Kaiser followed
the bankers. Finally Great Britain and the allies were crowded out
of Turkey and Asia Minor as a sphere of influence.
Financial imperialism lay back of the Boer War. British fin-
anciers were interested in valuable mining rights. Similar in-
terests lay back of the war between Russia and Japan. Russian
court financiers owned valuable timber and mining concessions
which Russia refused to evacuate, despite her assurances to do so.
The Chinese five power loan is another instance of financial
imperialism which nearly embroiled the United States. China
wanted to borrow $30,000,000. The banking interests of the great
powers entered into a combination. They refused to loan' her the
small sum she needed and insisted on her taking a larger sum, to wit,
$300,000,000, which was finally, however, reduced to $125,000,000.
The condition of the loan was that China should be saddled with
foreign advisers to control her financial policy. Bankers in the
United States were identified with the six power group. They, too,
desired the state department and diplomacy as an aid to their trans-
actions. One of the most distinguished services which President
Wilson has rendered this country was his veto of dollar diplomacy
in China and the identification of the United States government
with the program of financial imperialism md the parceling out of
bigitized by
Google
256 The Annals op the American Academy
China into spheres of influence among the greater powers. Presi-
dent Wikon said that the whole project threatened the integrity
of China, and that the United States government should not partici-
pate in such a project. The Chinese loan was not dissimilar from
those made to Egypt, Tunis, Morocco, Persia, Turkey, in fact to all
of the weaker powers which have ultimately fallen into the sub-
jugation of the great powers of Europe.
Similar interests are active in Mexico today. They have ac-
quired concessions, privileges, monopolies valued at hundreds of
milUons of dollars. It is said that American claims in Mexico alone
are worth twice as much as the total property holdings of the Mexi-
cans themselves. The interests of England, Germany and France
are equally large, and the financiers of the United States as well as
of Europe are actively interested in intervention in order to validate
and make secure their concessions, many of which strike at the
government of the country. And back of the clamor for interven-
tion in Mexico is the insistence of financiers and privileged interests
that their interests be validated by the action of the United States
government.
And today there is a group of men in New York who are attack-
ing the present administration for its refusal to lend the support of
the state department to their dreams of financial imperialism all
over the world. They are frankly appeaUng for dollar diplomacy,
which means that the young men of America shall be sent out to
collect or validate debts and make good usurious contracts. They
want the United States to act as an isurance agency in their question-
able overseas financial activities.
Closely identified with the financiers of all the great powers are
the munition makers. They sell munitions to revolutionary groups,
to weak nations. They finance weak countries, and when trouble
comes they call upon the stronger powers to suppress the revolutions
and disturbances which their own commercial greed have made pos-
sible. One of the great agencies for promoting militarism all over
the world are the Krupps, the Maxims, the Schneiders and the
munition makers in the United States whose profits and securities
rise or fall with the appropriations for the army and the navy. These
and the financiers are the great promoters of imperialism. They see
Digitized by
Google
Democracy ob Imfbbialism 257
in it the conversion of the nation itself into an insurance agency to
fill their plants with orders on the one hand and validate their debts
with weaker peoples on the other.
It is not possible to attribute such criminal ambitions to any in-
dividual man. Financial imperialism is not personal. You could
not find anyone in the United States who was willing to admit that
his actions were urging the country into war. Nor could you find
anyone in the European countries who was willing to make that
admission. Yet all these agencies together, — the foreign oflSces,
diplomats, financiers, concession hunters, the munition makers, —
form in effect a ruling class. They own or control the press; they
make public opinion. It is they who talk loudest of the dignity of
the country, of the necessity for a great navy to send the flag into
distant parts. And as a result of their activities and their public
opinion, petty personal quarrels are magnified into international
issues which ripen into causes for international conflict.
It is just such conflicts as these that brought Europe to the
verge of civil war on several occasions. It was the accumulation
of such conflicts covering a generation's time that lies back of the
present war.
VI
It is for these reasons that I believe in a continuation of the
policy which has served America so well for over a century. Im-
perialism and overseas expansion are an expression of the activities
and ambitions of classes interested in things dangerous to the peace
and well-being of the state. It means a great navy, the utiUzation of
the foreign office and diplomacy for private ends, and endless conflicts
with the privileged interests of other nations in the exploitation of
the world. Imperialism has always been a menace to democracy;
and at the present time with colossal aggregations of wealth, the close
control of banking and credit and the identification of these in-
terests and munition makers with the governments of Europe, there
is constant danger of conflict and war to any nation, no matter how
democratic it may be, that enters the lists.
A study of the war budgets of Europe shows that the expendi-
ture for navies is in almost direct proportion to the extent of overseas
investments and Colonial expansion. Navalism is a product of
imperialism, and those who are loudest in demanding a great navy
Digitized by
Google
258 The Annals op the American Academy
for the United States are those who are most interested in overseas
investments and concessions. It is these interests that promote
war scares; that arouse people to fancied dangers and sweep thenti
into a hot competition for armies. To play this game means that
America must adopt the methods of the feudal powers of Europe;
it means that our diplomacy must be like their diplomacy; and that
the army and navy departments shall be ready to back the claims of
the state department all 6ver the world.
An examination of the economic conditions in America explains
the rise of this demand for imperialism. Surplus wealth has ap-
peared. It cannot be invested at home at high rates of interest.
The resources of the country have been appropriated. The rail-
roads and mines have been monopolized. Most of the great in-
dustries have been consolidated into great trusts. The opportuni-
ties for investment are not as alluring as they were a generation ago,
and the profits to be obtained in the weaker countries are very much
greater than those which may be obtained at home. To obtain
profitable investments in foreign countries it is necessary to secure
concessions, spheres of influence, and other privileges in conflict
with other powers. Otherwise the loans and investments cannot
be made. And when these concessions are interfered with, or when
a revolution jeopardizes the investments in a weaker state, then the
clamor is raised for intervention, for a vigorous foreign policy, for
the dispatch of ships to protect American interests.
Democracy is so much dearer than any possible gains from
imperialism that every precaution should be taken to protect it.
And democracy today is menaced more by the movement for overseas
imperialism and all that that implies than by any other force. If
the experience of Europe teaches anything it is that influences within
the state are as dangerous to its peace as are armed nations without
the state; and with this experience before us it is our duty to safe-
guard the nation from the creation of new dangers, which under the
patriotic disguise of national dignity are merely agencies of the
privileged and trading and financial classes.
Digitized by
Google
BOOK DEPARTMENT
GENERAL WORKS IN ECONOMICS
Brisco, Nobris a. Economics of Efficiency. Pp. xv, 385. Price, $1.60. New
York: The Macmillan Company.
Ingram, John Kblls. A History of Political Economy (New and Enlarged
Edition). Pp. xix, 315. Price, $1.75. New York: The Macmillan Com-
pany, Agents, 1915.
Ingram's History of Political Economy first appeared in the ninth edition of
the Encyclopedia Britannica in 1885, and in revised form was published as a book
in 1888. It has wielded a wide influence in economic study. The present edition
is a reprint with an illmninating introduction by Professor Ely and a long, sup-
plementary chapter by Professor Scott, reviewing the doctrines of the Austrian
School as well as more recent developments in economic philosophy in Europe
and the United States. Despite the handicaps incident to unavoidable proxim-
ities, personal and temporal, Professor Scott has sketched contemporary American
thought with fairness and insight.
R. C. McC.
GEOGRAPHY
McFarlane, John. Economic Geography. Pp. viii, 560. Price, $2.25. New
York: The Macmillan Company, 1915.
This book, written by the Lecturer in Geography in the University of Man-
chester, England, aims to give a geographic explanation of the economic resources
and industries of the coimtries of the world. The method of treatment combines
the division of the earth into natural regions and the use of pohtical divisions.
That ifl, each country is treated as a imit, but for purposes of description that
country is divided into natural regions, each possessing geographic unity. The
chapter on France illustrates the method employed for each country of the world.
The opening paragraphs give the general geographic and climatic setting of France
and its significance. The country is then described under eight headings:
(1) the Central Massif, (2) the Amorican Massif, (3) Aquitaine, (4) the Mediter-
ranean Region and the Rhone Valley, (5) the Eastern Border, (6) the Basin of
Paris, (7) Conmiunications, (8) Commerce. A diagram of France showing the
natural regions is inserted, which, in connection with a rainfall map of Europe,
gives graphic aid to the text. For gaining ar accurate, understandable picture
of agricultural and industrial France, this account of less than fourteen pages
does as much as some volumes.
It is imfortimate that so many technical geologic terms are used in the physi-
cal descriptions. The fuUy trained economic geographer will have httle difficulty
in following the text, but for one not so trained the physical descriptions will not
be readily understood. The geologic ideas are basal, but technical geologic
terms, many American geographers, at least, believe should be sparingly used in
259
Digitized by
Google
260 The Annals of the American Academy
a work io economic geography whose readers may be economists, historians or
business men. The "Amorican massif/' for example, has little significance for
the man untrained in technical physiography and the use of "primary rocks/'
" pre-Cambrian age," etc., in its description, is forbidding to the general reader
and not essential to the trained geographer's appreciation of the surface features
of the region.
G. B. ROORBACH.
University of Pennsylvania,
AGRICULTURE, MINING, FORESTRY AND FISHERIES
HuEBNER, Grover G. Agricultural Commerce. Pp. xiv, 406. Price, $2.00.
New York: D. Appleton and Company, 1915.
A subtitle reads The Organization of American Commerce in Agricultiu-al
Commodities, and this is a good general description of the contents. Over half
of the book is taken up with descriptions of the trade in specific commodities,
viz., grain, cotton, live stock, wool, tobacco, and fruit. It will be noticed that
fruit, the treatment of which is very general, is the only one of these conmiodities
which goes through to the consumer without an intervening manufacturing pro-
cess. No attention is paid to butter, eggs, poultry, or vegetables, except that we
are told that the trade in vegetables is similar to that in fruit. There are also
chapters on speculation, inspection and grading, collection and dissemination of •
crop reports, insurance, finuicing, prices, and foreign trade.
In describing the trade organization and marketing practices for different
commodities, well selected statistics are introduced to show the location of pro-
duction areas, the volume marketed, and the quantities exported and imported.
The methods of marketing at local points and in central wholesale markets are
then discussed, and good accoimts of the functions of certain middlemen are giv^i.
The author has apparently done little or no first-hand investigating of mar-
keting practices in order to procure information that had not alr^uly foimd its
way into print, but the book is valuable and serviceable in that it brings together
in convenient form a collection of facts from scattered sources. There is very
little discussion of fimdamental problems of market distribution; and controversial
matters, such as the number of middlemen, the value of public markets and direct
marketing, etc., are not touched on.
There is very little in the book with which one can take issue. line elevators
in the grsdn trade (p. 40) were in operation before 1889,; the "on track'' sale in
this trade (p. 86) usually refers to sales on track at coimtry points rather than in
primary markets; the auction companies in the fruit trade (p. 252) rarely receive
consignments direct from growers, and many of the largest ones absolutdy refuse
to do so. The description of the various middlemen in the wholesale fruit and
vegetable trade is inadequate, in view of the importance of this branch of the
marketing machinery. But these are minor matters. Considering the in^ft^i^
purpose of the book — ^a description of the conmierce in important agricultural
staples which are principally raw materials for manufacturing industries — ^the
work is valuable and well executed.
L. D. H. Wbij>.
Sh^ffidd Seiei)tifie School, Yale Unioersiiy,
Digitized by
Google
Book Department 261
COMMERCE AND TRANSPORTATION
Hess, Rai^ph H. and Whaling, Heiskell B. OuUinea of American Railway
Transportatum. Pp. 208. Price, $1.00. Madison: University of Wiscon-
sin, 1915.
A detailed synopsis, with reading references, of the course on American Rail-
way Transportation as given at the University of Wisconsin. The outline is
exceptionally comprehensive and can be used to advantage by those who are
studying transportation outside of the class room as well as by the students at
the University of Wisconsin. -ci t> t
E. £V. J.
MONEY, BANKING AND FINANCE
HuNTmoTON, Chables Clifford. A History of Banking and Currency in Ohio
Before the Civil War. Pp. 312. Price, $1.60. Columbus: The F.J. Heer
Printing Company, 1915.
Professor Himtington divides his study into two parts. The first covers the
period from 1803 to 1843 when the banks operated under special charters. The
second period, during which general banking laws were in force, extended to 1863
at which date the narrative ends. The volume is clearly the result of painstaking
research and is well arranged. The conclusions reached are generally favorable
to the Ohio banks including the State Bank of Ohio, but^re carefully and moder-
ately stated.
E. M. P.
Plehn, Carl C. Government Finance in the United States. Pp. 166. Price,
50 cents. Chicago: A. C. McClurg and Company, 1915.
This brief volume treats almost entirely of the expenditures of federal, state,
county, town and city governments in the United States, referring only in an
incidental way to debts, revenues and financial administration. Needless to say
such a work has been needed and for a brief popular survey has been admirably
done.
Among the interesting points emphasized by the author are his words of
caution against the acquisition by governments of utility properties that may soon
become antiquated because of the introduction of new forms of public service.
"The greatest growth of government expenditures is coming in the field of state
finance." New sources of revenue must be foimd and the only effective source
in the long run is the income tax.
E. M. P.
SOCIOLOGY AND MODERN SOCIAL PROBLEMS
Bristol, Lucius Moody. Social Adaptation. Pp. xii, 356. Price, $2.00.
Cambridge: Harvard University Press, 1915.
The subtitle of this volume indicates its purpose and content: A Study in
the Development of the Doctrine of Adaptation as a Theory of Social Progress. The
author has given us a timely and valuable r^um^ of the ideas of the more promi-
Digitized by
Google
262 The Annals op the American Academy
nent students of the last century. I do not know of another book in which one
may find such an accurate and readable digest. Moreover, Professor Moody has
commented critically upon the views presented and thereby added much to the
worth of his book.
The study is divided into four parts. Part I, Introduction, includes a sketch
of the Positive Philosophy of Comte, one of the first men to see that there might
be a science of society. This is followed by a discussion of Herbert Spencer, the
first to catch the glitnpse of cosmic evolution and its application to society. The
introduction is closed by an outline of the methods of social study suggested by
QuStelet (statistics), Lilienfeld (analogy), and DeGreef (classification).
Passive Physical and Physio-Social Adaptation is the subject of Part II.
This includes three chapters. The first deals with Biological Evolution, as out-
lined by Lamarck, Darwin, Weismann, de Vries, and Mendel; the second is on
Neo-Darwinian sociologists (Nietzsche, Kidd, Galton, Pearson, and Lapouge);
the third deals with the Environmental School of Sociologists (Marx, Buckle,
Ratzel, Ripley).
Part III, Passive Spiritual Adaptation, contains five chapters. The first.
Development of the Concept of Society as an Organism, contains a review of
Schaefl3e, Mackenzie, LeBon, Durkheim, with a few comments on other writers.
Sumner, Boas, Westermarck, Hobhouse and Thomas are the anthropological
sociologists mentioned in the next chapter. Gumplowicz, Ratzenhofer and Bage-
hot are the historical sock>logists of the third chapter, and Smith, Tarde, Baldwin,
Drummond and Giddings are treated in the fourth chapter under the title. Sociol-
ogists Emphasizing One All-Important Formula or Principle. The last chapter
discusses the transition from the concept of adaptation as passive to the active
concept and considers the question of free-will.
Part IV, Active Material Adaptation, under the subtitle of Invention and
Production analyzes the work of Ward, Patten and Carver.
Part V deals with Active Spiritual Adaptation. Here we find imder the
subtitle. Active Social Adaptation, Novicow (social progress by cultural attrac-
tion and expansion), Carlyle (the r61e of great men), James (the energies of men),
and Ross (the psychology of social control). Under the title of Idealization and
Religion the ideas of Comte, Ross and Baldwin are briefly treated.
In the closing chapter. Summary and Conclusion, the author Ranees over the
field covered and indicates his own position. "As applied to social problems
and conditions, the theory of adaptation and the philosophy of social-personal-
ism would seem to call for emphasis on the following factors in associational life:
"I. Production of material goods as the basis of life, growth and cultural
development;
"II. The elimination of waste land, waste labor and the waste of natural
resources;
"III. Efficient consumption, — interpreted in terms of production (Carver),
of surplus energy (Patten), or of social well-being;
" IV. Education for social efficiency . . . . ;
"V. Social Control
(a) to secure efficient race stock and to regulate population;
(b) to deal with the anti-social and the social laggards;
Digitized by
Google
Book Department 263
(c) to prevent that competition which experience shows to be un-
econoniic or detrimental to well-being;
(d) to encourage such co5peration as promises to be socially advan-
tageous, and
(e) to secure a more just distribution of wealth."
I am greatly pleased with the quality of the volume. Students will find it
helpful and suggestive. I am a bit surprised that no mention is made of such
works as Ammon Die naluerliche AtisUse heim Menschen; Hildebrand, Die PhUo-
Sophie der Geachichte ale Sodologie; or the wptings of Schallmeyer, Reibmayr,
Hay craft, Ritchie, or the last book of A. R. Wallace, Social Environmenl and
Moral Progress. No reference is made to these, even in the very excellent bibli-
Carl Kelset.
University of Pennsylvania,
DuRKHEiMy EiOLB. The Elementary Forms of the Rdigious Life, Pp. xi, 456*
Price, $4.00. New York: The Macmillan Ck>mpany, 1915.
The authpr presents in this volume one of the most profound social studies
of modem times. Because of its breadth and comprehensiveness, its thorough-
going research, and its positive conclusions, it is destined to become a classic.
Whether its theories are sound or not, it is a book to be reckoned with in all future
discussions of this subject.
Two assumptions constitute the thesis of the work, viz.: First, Religion is
founded in the nature of things. Were this not the case it would have encountered
resistance over which it never could have triumphed. Second, Religion is some-
thing essentially social. '* Religious representations are collective representations
which express collective realities."
Part I is devoted to the statement of the problem and to an analysis of ani-
mism and naturism in which the author finds that these are not elementary l^ut
derivative forms of religious belief. Part II comprising nine chapters is entitled
The Elementary Beliefs. This is a study of totemism. After an elaborate
anal3r8is of the forms and expressions of totemism, studied primarily among the
Australian tribes but supplemented by a wider range of studies, and after a careful
criticism of the theories of Frazier and others, he passes to an investigation of the
origins of these beliefs. Here conclusion is reached that ''the believer is not
deceived when he believes in the existence of a moral power upon which he de-
pends and from which he receives all that is best in himself. " This power exists,
it is society. ''Since religious force is nothing other than the collective force of
the clan, and since this can be represented in the mind only in the form of the
totem, the totemic emblem is like the visible body of the God." Society is the
existence outside ourselves, greater than ourselves, and into which we enter into
commimion. It is symbolized in the totem. Book III develops the principal
ritual attitudes growing out and reacting upon these primitive beliefs. This is
essentiaUy a confirmation of the philosophic interpretation of the origin and
development of religious beliefs on a social basis. It is an induction which sets a
task for future investigators. It may be proved or disproved, but it cannot be
J. P. LiCHTENBERGER.
University of Pennsylvania,
Digitized by
Google
264 The Annals of the American Academy
Hill, Hibbert Winslow. The New Public Health. Pp. 206. Price, $1.25.
New York: The Macmillan Company, 1916.
A remarkably fresh, racy and stimulating discussion of one of the most
important questions of the time will be found in this little volume. By the use
of satire, ridicule and humor the author takes the public to task for its failure to
protect its health and for its dependence on old superstitions rather than technical
knowledge. The foibles of the medical men are not slighted, but the result is a
book which must be read to be appreciated.
The volume is intended to be an exposition of the sphere of the trained public
health man in protecting the commimity, in which work the author has had
personal experience. He shows us that the source of danger in disease is the sick
person and that the attempt to stamp out disease by mimicipal house-cleaning is
barren of results. It is not the quantity of the dirt, but the quality that is im-
portant.
The common public hi^ways for the spread of disease are via water, milk,
food, flies. The great private road is contact. When once we realize that the
danger comes through the sick individual and organize our forces to care for him
and to prevent the spread of germs from him we shall be able to stamp out infec-
tious disease. How the problem was tackled by the older methods and why they
failed is clearly shown. What present knowledge demands also is set forth.
The volume will be of immense value to the layman as well as to the adminis-
trative ofl&cials of schools or towns.
C. K.
LePrince, Jos. A. and Orenstein, A. J. Mosquito Control in Panama. Pp.
xvii, 335. Price, $2.50. New York: G. P. Putnam's Sons, 1916.
It is now well-recognized that the construction of the Panama Canal depended
in large measure upon the ability of those in charge to control malaria and yellow
fever. Two of the men actually engaged in this work have written in most inter-
esting fashion of their task, the methods and results. The story is told in non-
technical terms, and is made clearer by the liberal use of illustrations and charts.
It will be of great interest to anyone who wishes to know the actual problems
encoimtered in the canal zone as well as to the medical student or to the contractor
who may be considering extensive works in tropical regions. It is a record of
work well done.
C. K.
Macy, John. Socialism in America. Pp. x, 249. Price, $1.00. New York:
Doubleday, Page and Company, 1916.
The author states in his preface that this book is ^'intended for readers who
know little about the subject." It will probably not reach this class because it
presupposes throughout an acquaintance with the terminology of socialism and
with the history of the labor movement that the average reader unfortimately
does not possess. It should, however, serve an equally valuable end. It should
clarify the thinking of many radicals and cause the various groups to draw sharper
lines of demarcation. A chapter analyzing the older trade unions and another
Digitized by
Google
Book Department 265
criticudng and explaining the platform of the Socialist Party, clause by clause, are
particularly suggestive and helpful.
A. F.
Papers and Proceedings of the Tenth Annual Meeting of the American Sociological
Society held at Washington, D, C, Dec. 28S1, 1916. War and MUilarism
in their Sociological Aspects. Pp. 166. Price, $1.00. Chicago: University
of Chicago Press, 1916.
Pabsons, Elsie Clews. Social Freedom: A Study of the Conflicts betxoeen Social
Classificaiion and Personality. Pp. 106. Price, $1.00. New York: G. P.
Putnam's Sons, 1915.
An exceedingly keen analysis of the reaction of developing personality against
the psychic and social barriers created by age, sex, kin, caste and place classifica-
tions. Old struggles between individual and group consciousness are presented
in a new light. Emancipated society will witness the freest possible contact
among personalities regardless of the old categories.
J. P. L.
Scott, H. Percy. The New Slavery. Pp. 187. Price, $1.00. Toronto:
William Briggs.
The author senses the severe pressure that the modem consumer is feeling,
due to the general rise in the costs of living. A third of his book consists of selec-
tions gleaned from current newspapers, lectures and magazines to show that the
consumer's trouble is widespread — ever breeding discontent and lawlessness. It
is the new slavery of the common people.
A search for causes is made. The roots of the problem reach back into the
reign of gigantic industrial combinations and trusts, which, in addition to con-
trolling the commodities of living, have taken into their keeping the monetary
and banking S3r8tems. In the way of solution he sees "The New Era'' in which
a consumer's gild is to obtain control of the situation. Quoting the power that
should be wielded upon the trusts, he says: ''The government should allow the
corporation enough of its earnings to pay a good working dividend, say six or
eight per cent. Then all the surpluses should be pooled, and the price of com-
modity— coal, meat, sugar, or what not — fixed for the consumer accordingly."
Nothing fimdamentally new is found in the book, but one appreciates the
outlining of necessary organisation to be carried on by the consumers in order to
obtain a more effective social control.
C. R.
Slingerland, Wiluam H. (Ed.) Child Welfare Work in Pennsyloania. Pp.
xviii, 352. A Child Welfare Symposium. Pp. viii, 138. Price, $2.00. New
York: Russell Sage Foundation, 1916.
Child Welfare Work in Pennsylvania is an intensive analysis of the institutions
for children, and of the general methods of child care in one state. Dr. Hastings
H. Hart, Russell Sage Director of the Department of Child-Helping, has provided
the introduction. The material for the book was collected in a series of first
Digitized by
Google
266 The Annals of the American Academy
hand investigations. The second part of the book deals with miscellaneous
institutions for children. The third part deals with child caring generally, and
the fourth part with the private institutions for dependent children. Statistical
tables present the facts in great detail, and there are many excellent illustrations
scattered through the book. The system of state subsidy to private philanthropic
organizations furnishes an excellent reason for the Pennsylvania study. Other-
wise a state study would be less effective than a study localized in cities or in rural
communities.
The Child Welfare Symposium^ edited by Mr. Slingerland, goes into some
detail regarding the causes that put children in the institutions. The inevitable
overlapping that comes with s3rmposium writing does not seriously detract from
the excellent body of material which these twenty-five special papers furnish
regarding the work for children in the State of Pennsylvania.
S. N.
Towns, Charles B. Habits that Handicap. Pp. xiv, 289. Price, $1.20.
New York: The Century Company, 1915.
When a physician Uke Dr. Richard C. Cabot says of the author: "I do not
hesitate to say that he knows more about the alleviation and cure of drug addic-
tions than any doctor that I have ever 8een,'\the reader expects an unusual dis-
cussion. In this case he is not disappointed. The writer of this note is inclined
to consider this book the strongest presentation he has ever seen of the ** menace
of opium, alcohol and tobacco.*' Its great strength lies in the personal, human
side; in the tracing of the growth of the habits and the psychology of the victims.
Little attempt is made to analyze the economic aspects of the problems. The
greatest weakness of the book is the enormous amount of repetition of ideas and
expressions which decidedly reduces the effectiveness of the author's argument.
From the standpoint of the reader there is certain to be regret that the author
gives no suggestion of the nature of the treatment which he has made so successful
and which he has given to the medical press. For such omission there may be
good reason.
C. K.
Wallis, Louis. The Struggle for Justice. Pp. v, 57. Price, 25 cents. Chicago:
The University of Chicago Press, 1916.
This little monograph is a condensed statement of the social philosophy
underlying the religious revolution of the present — a brief survey of the evolution
of religion through the stage of conflict between the one God and the gods of
greed and graft as represented in Baal, through the strife as to how God is to be
worshiped, whether by dogma or ritual or by righteousness, to the present struggle
over the question of the individual or social interpretation of righteousness. It
is his larger work on The Sociological Study of the Bible epitomized.
J. P. L.
WoRTmNGTON, Mary Gracb. Fifty Benevolent and Social Institutions In and
Near New York. Pp. 100. Price, 26 cents. New York: School of Phil-
anthropy, 1915.
Digitized byVjOOQlC
Book Department 267
POLITICAL AND GOVERNMENTAL PROBLEMS
Barnett, James D. The Operation of the InUiaiive, Referendum and Recall in
Oregon. Pp. xi, 295. Price, $2.00. New York: The Macmillan Company,
1915.
This is an inclusive and thorough study of the operation of the state-wide
initiative and referendum and recall in Oregon. It does not include a study of
the use of the referendum in local affairs. In the appendix are given a good
bibliography of constitutional and statutory provisions relating to these matters,
the vote on matters initiated and referred, examples of the arguments for a measure
on an initiative petition, newspaper advice on direct legislation, recommendations
of the Taxpayers' League, a sample of advertisements, a recall petition and a
recall ballot.
He who would like to get at the facts and the imderlying sentiments upon
which these so-called agencies of democracy are based can find them in no other
book so ably and completely expressed as in this book by Dr. Bamett. Every
phase of the subjects is discussed, such as the actual author of the proposed legis-
lation, motives in legislation, the preparation of measures, the substance and
form of measures, the making of petitions, the multiplicity of measures, campaign
organization, organization of the vote, the relation of direct legislation to the
executive and legislature, checks of the assembly upon direct legislation, the
relation of direct legislation to the courts, to political parties and to stability in
government. Such interesting matters are discussed in detail as the extent to
which voters vote by title; the extent to which they tend to vote "no" on all
measures when there are certain measures to which they are opposed; the extent
to which votes are cast without an evident reading of the measure; the soundness
and wholesomeness of direct legislation and the recall as agencies for securing
responsiveness in government.
The author points out that ''all the most radical measures were rejected by
the voters" but concludes that "on the whole it appears that the voters have
shown a decidedly progressive attitude in direct legislation." He believes that
"the results of direct legislation at least compare favorably with those of repre-
sentative legislation." The work is a highly creditable piece of research on a
current topic.
Clyde Lyndon King.
University of Pennsylvania.
Elliott, Edward. American Government and Majority Ride. Pp. vii, 175.
Price, $1.25. Princeton: Princeton University Press, 1916.
The people of the United States have been hindered in the attainment of
democracy by the form of government through which they have been compelled
to act. This form is primarily a multiplicity of offices as represented in the long
ballot, and in the check and balance system. Historical conditions and develop-
ments are submitted in order to sustain these principles.
Simplification of government is based on the twentieth century belief that
there is no fear of government, and that democracy is not desirous of limiting the
Digitized by
Google
268 The Annals of the American Academy
sphere of govemmental action. The changes needed in order to simplify our
govemment are: (1) centralization of even greater powers, particularly in the
state executives, including power to introduce and advocate bills in the legislature;
(2) the present statutory and constil^utional provisions requiring that a representa-
tive of the legislative body must reside in the district which he represents should
be changed and a representative be allowed to stand for election in any district
regardless of residence. "With law and custom changed so that a man might
represent any district .... the pork barrel as an institution of our political
life would disappear; the representative would have more than local outlook and
yet his sense of responsibility to the people would be enhanced. " (3) The theory
that election is sufficient to secure responsibility should be discarded and the short
ballot for responsible executives with large powers substituted in its place. (4)
These few high executive officials should have the power to make all appoint-
ments in the civil service, including the appointment of judges.
A number of chapters are devoted to historical developments. The book
presents in a readable style old facts under new tendencies.
C. L. K.
GiDDiNGS, Franklin H.; Hart, Albert Bushnell; Johnson, Emort R.; Seug-
MAN, Edwin R. A.; Wilson, Georqe S.; Willoughby, W. W.; Goodrich,
Caspar F. Problems of Readjustment after the War. Pp. vi, 185. Price,
$1.00. New York: D. Appleton and Company, 1915.
Henry, H. M. The Police Control of the Slave in South Carolina. Pp. x, 216.
Price, $1 .00. Emory, Va. : Published by the Author.
Dr. Henry has examined with manifest care and industry the statutes, news-
papers and many manuscript county records of anti-bellum South Carolina, and
has constructed a readable and interesting account of the system of slavery as it
existed in that state. A liberal use is made of the method of incorporating fre-
quent and extensive quotations from the sources into the body of his text. South
Carolina seems to have evolved no emancipation sentiment and her treatment of
the slave appears harsher than that of the states of the Upper South. Though
a logical connection between the nineteen chapters, or topics, imder which the
subject is considered is not always clear, the work is a welcome addition to the
contributions of General McCready on the early history of the institution of
slavery in South Carolina.
J. C. B.
Maitland, Frederic W. and Montague, Francis C. A Sketch of English
Legal History. Pp. x, 229. Price, $1.50. New York: G. P. Putnam's Sons,
1915.
This is a reprint of the well-known articles cpntributed to Traill's Social
England by Maitland and Montague on the history of the law. Their publication
in the present form renders them more accessible and should ensure for them a
wider circle of readers. The editor, James F. Colby, who is Parker Professor of
Law in Dartmouth College, has added a few brief extracts from other sources, such
as Pollock and Maitland's History of English Law and Jenks' Short History of
Digitized by
Google
Book Department 269
English Law, some as insertions in the text and others as notes or appendices.
He has also explained in the notes a few of the technical terms employed in the
narrative and he has appended to each chapter a list of ''recommended readings''
on the topics there treated. The book should be of service to those who wish to
make their first acquaintance with English constitutional or legal history and of
special convenience for use by classes engaged in the introductory study of either
subject.
The work of the editor has been confined within such narrow limits that it
calls for little comment. His choice of extracts to supplement the text appears to
be based generally on a sound judgment of historical values and his numerous
references to books for more extensive reading display a wide knowledge of the
literature of the subject. Yet many good authorities are omitted and poor ones
are sometimes included. Citations from the Anglo-Saxon laws, for example, are
made from Thorpe's translation and not from Liebermann's; Taswell-Langmead's
text4x)ok is recommended frequently for reading on the mediaeval period, while
White's excellent volume is ncJt mentioned. His text, with the exception of a
few typographical errors of minor importance, is an accurate reproduction, though
the same may not be said of the quotations in the foot-notes (e.g.f pp. 17, 22).
W. E. LUNT.
MicH£LS, Robert. Polilical Parties. (Trans, by Eden and Cedar Paul.) Pp.
ix, 416. Price, $3.50. New York: Hearst's International Library Com-
pany, 1915.
Poiitical Parties is the title and A Sociological Study of the Oligarchical Tend-
encies of Democracy the subtitle of a rather informing book by Robert Micheb,
Professor of Political Economy and Statistics of the University of Basle. The
professor clearly has a thesis to prove and marshals his facts to prove it. This
thesis is, aa indicated in the subtitle, that the tendencies of democracy are toward
oligarchy; or, to put it more concretely, that not only is socialism impossible, but
that even b, socialistic policy is impossible. The facts, arguments, and ideas that
the author brings to his work are significant whether or not mistaken.
The major premises in his argument are that leaders are indispensable in
democracies and in all democratic organizations as in social life itself, and that
the inevitable tendency is for all leaders to assert autocratic control. As a corol-
lary of these main premises is the doctrine that "organization, based as it is upon
the principle of least effort, that is to say upon the greatest possible economy of
energy, is the weapon of the strong." Organization means oligarchy whether it
be the oligarchy of popularly chosen leaders or the oligarchy of a politically domi-
nant minority. From out of this inevitable oligarchy come the decisions we
erroneously refer to, according to our author, as the judgments of the masses,
public opinion, or the will of the state.
"The modem party," he says, "is a fighting organization in the political
sense of the term, and must as such conform to the laws of tactics. Now the first
article of these laws is f acihty of mobilization. ' ' Centralization guarantees results.
"Reduced to its most concise expression, the fundamental sociological law
of political parties (the term "political " being here used in its most comprehensive
significance) may be formulated in the following terms: 'It is an organization
Digitized by
Google
270 The Annals op the American Academy
which gives birth to the dominion of the elected over the electors, of the manda-
taries over the mandators, of the delegates over the delegators. Who 8a3rs organ-
ization, says oligarchy. ' ''
It is worthy of note, however, that many of the same arguments used by
Professor Michels can be used just as effectively to prove the possibility of efficient
democracy. The comer-etone of any democracy must be the ascendancy of
leaders — Pleaders, to be sure, in whom the respective groups have confidence.
Through such choice of leaders, democracy is transferred into a government by
the best, intellectually and morally.
The four hundrwi pages of the book are closely crowded with many social
facts, pertaining to the actual working out of such democratic organizations as
the labor unions and socialist parties of the Continent, particularly of Germany,
Italy and France. All his laboratory material the author draws from these labor
and socialistic organizations. Indeed, the book as a whole may be considered as
an attempt to make a cross-section study of the actual social forces at work in
the organization, three million strong, of the socialist party of Germany. The
author makes his study from a hypercritical point of view, and the spirit of his
book is invidious. This is its chief defect. But students of social psychology or
students of the forces really at work in actual government will find the volume
illuminating and charged in every page with human interest and informing facts.
Clyde Lyndon King.
Unwersiiy of Pennsylvania.
NoLEN, John (Ed. by). City Planning. Pp. xxvi, 447. Price, $2.00. New
York: D. Appleton and Company, 1916.
The Uterature dealing with city planning has been accumulating rapidly in
this coimtry. The present book contains chapters written by some of the best
known a^d most experienced city planners and is a sort of a synthetic presentation
of the experience and current opinion on the subject that has gained the widest
acceptance in recent years. While as a text-book for classroom use it lacks order-
liness and clear-cut segregation of subjects, each author has dealt with his sub-
ject in a manner that cannot fail to give to the most uninitiated a clear conception
of the meaning and function of city planning.
Considering the difficulties in the way of securing a consistent whole in so
composite a work as City Planning is, remarkable unity and uniformity have been
attained. The bibliographies at the end of each chapter and the general bibli-
ography at the end of the book deserve special attention, as they include the most
recent and best publications available in this country. References to the best
foreign literature, however, are almost wholly lacking.
C. A.
Orth, Samuel P. Readings oii the Relation of Government to Property and In-
dustry. Pp. viii, 664. Price, $2.25. Boston: Ginn and Company, 1915.
These readings are grouped in such a way as to show the trend of opinion,
both scientific and popular, on such questions as the police power and its gradual
expansion, the control over corporations, the regulation of property by commis-
Digitized by
Google
Book Department 271
sioDS and boards, the regulation of the labor contract, the gradual extension of
federal control over industry and trade and a series of excerpts from the testimony
before the Senate Commerce Conmiittee in 1912 on the revision of the Anti-
Trust laws. The material thus gathered together is intended to be useful for
classes studying the relations of government to industry, and it admirably fulfills
that purpose.
The articles are well chosen from writers representing a broad diversity of
views including manufacturers, publicists, teachers of political science, lawyers,
labor leaders, corporation directors and public officiab.
J. T. Y.
ZuEBLiN, Charles.* American Municipal Progress. (New and Revised Edi-
tion.) Pp. xiv, 522. Price, S2.00. New York: The Macmillan Company,
1916.
This' is an account of recent mimicipal progress in the United States — a
revised and enlarged edition of the author's former work on the same subject,
published in 1902.
The purpose of American Municipal Progress is to instruct in the functions
of American city governments, and to catalogue, comparatively, their accom-
plishments and delinquencies. The structure of the government of our cities,
either in its theoretical or practical aspects, is alluded to only incidently. In the
chapter on Municipal Administration (Chapter XIX) the author discusses very
tersely, allowing all the space the subject deserves, the bicameral system of city
government as exemplified by Philadelphia.
The key-note of the book is municipal ownership. Probably the baldest
claim for this theory occurs in the chapter dealing with the eflficiency of the mimic-
ipality, in which the author states: (p. 395) "There can be no municipal efficiency
while public utilities are in private hands."
The book oiTers an invaluable aid as supplemental reading for the usual
courses in mimicipal government. It makes possible a dovetailing of the actual
results of the administration of the city with the theoretical possibilities of its
structure. The comparative study of accomplishments breathes the zest of life
into the study of the lifeless form. As the author notes in his preface, the "book
is designed primarily to indicate to civic and social workers, pubhc officials, and
inteUigent citizens the vast scope of municipal activity today.'* The difficult
task of presenting a mass of timely facts in an interesting and entertaining way
has been accomplished most creditably. A very unusual style is partly responsi-
ble for this result.
The forty-seven half-tones are up-to-date illustrations of the subjects they
are intended to visualize. A sixty-five page bibliography, listed under the various
chapter titles, is a particularly valuable guide to those working in this field. The
appendix, also divided in accordance with the plan of the text itself, contains
about twenty-five pages of material, mainly statistical.
H. G. H.
Digitized by
Google
272 The Annals op the American Academy
INTERNATIONAL PROBLEMS
Allen, George H., Whitehead, Henrt C, and Chadwick, F. E. The Great
War. (Ist vol., 2d Ed., revised.) Pp. xxx, 377. Philadelphia: George
Barrie's Sons, 1915.
The present work, written by George H. Allen, forms the first of a series of
volumes intended by the publishers to cover the history of the war in an unbiased
and non-partisan manner, and to present as scholarly an account of the crisis as
is possible with the sources of information at our disposal. An introduction by
ex-President Taft furnishes a brief summary of the international situation and a
discussion of the position of the United States in regard to it, particularly in view
of the Lusitania case. Of the other volumes under preparation, the second will
be devoted to a review of the moral or spiritual forces which prepared the minds
of the nations for war, and of the physical resources of the nations and their mo-
bilization, while the third will contain a full record of the outbreak of hostilities
and of the military operations in the opening months of the war. The design of
the publishers is evidently that the voliunes shall make their appeal to the public
not only as a written record and discussion of events, but as a collection of illustra-
tions of persons and places which will give vividness to the narrative and a greater
sense of intimacy with the motive forces controlling the progress of events. These
illustrations, to the number of nearly one hundred, including a number of maps,
have been chosen with excellent judgment, while the bookmaking in general is
worthy of a firm with a reputation.
Dr. Allen devotes the larger part of the volume to the historical background
of the war, and this is foUowed by a very satisfactory analysis of the negotiations
immediately leading up to it. He makes a distinction between the ''potential
causes'' and the "positive causes" of the war, the former being found in the con-
flict between artificial state lines and the boundaries of nationalities, and in com-
mercial rivalries, false biological theories of national development and the quest
for exclusive foreign markets; and the latter being found in the conflict between
the Teutonic powers and Russia in the Balkans with Constantinople as the pivotal
point. It is interesting to note that in his judgment the commercial rivalry
between Great Britain and Germany, which has been so much stressed by German
writers as determining the attitude of Great Britain, may be relegated "to a
remote place among the potential causes.'' On the other hand, the growth of
German sea power figures prominently among the potential causes. Dr. Allen
concedes that Russia's general mobilization was premature, but explains it on the
ground of Austria's uncompromising attitude. He is frank to admit that the
violation of the neutrality of Belgium was not the dominating motive which led
Great Britain to enter the war, but rather an occasion which the British govern-
ment made use of to obtain the support of the people for what was in the ultimate
issue a war of self-preservation. His remarks upon the dangerous influence of
the militaristic spirit upon political policies are particularly in point. On the
whole Dr. Allen has shown that modem scholarship is capable of presenting an
historical narrative which is at once popular in form and yet thoroughly accurate
and well balanced. ^ ^ „
C. G. Fenwick.
Bryn Mawr College.
Digitized by
Google
Book Depabtment 273
Htde, H. E. Tfie TxjDO Roads: Intematumal Government or Militarism, Pp.
xi, 155. Price Is. 3d. London: P. S. King and Son, Ltd., 1916.
The scheme presented in this suggestive little volume was first published in
New Zealand shortly after the outbrecdc of the present war. Whether the thinking
of the British public is yet prepared for it remains to be seen. The author frankly
abandons the doctrine of Nationalism and its consequences of force, also any
attempt to secure lasting peace, through a "league of nations'' by treaties, coali-
tions, or any policy of limitation of armaments, or through adoption of militarism
to offset mHitarism in other nations with its resultant imstable equilibriiun. He
sees the way out through international government, and in thirty-three proposi-
tions he outlines a constitution for a government of nations by nations, somewhat
as a federation governs its units. He calls on England to lead the way which
Germany, if consistent with her declared objective in the war, must follow.
J. C. B.
LuTZOW, The Count. The Hussite Wars. Pp. xiv, 384. Price, $4.50. New
York: E. P. Button and Company.
''AH writers on the Hussite wars agree that these wars were the result of
three causes, the antagonism of the Bohemians to the Church of Rome, the revival
of the Slavic national feeling, and the rise of the democratic spirit which is, to a
greater or lesser extent, evident in many European countries at the beginning of
the fifteenth century" (p. 1).
" In spite of the bitter invectives of the enemies of Bohemia, and in spite also
of the perhaps more harmful writings of indiscriminate praisers of HussiUsm, the
period of the Hussite war will alwa3rs appear to a Bohemian as the most glorious
epoch in the annals of his country" (p. 363).
These words, which respectively open and close The Hussite Warsy will sug-
gest to the informed reader the problems which the author handles and the spirit
in which he works them out. The book covers the years 1420-36 and presupposes,
for its adequate understanding, familiarity with the history of Hus and his move-
ment. This may well be secured in the author's Tfie Life and Times of Master
John Hus (New York, 1909).
The exposition of the Hussite art of war is clear in essentials and most inter-
esting, particular attention being paid to 2izka's use of ironclad wagons canying
field-pieces and serving as a defence for his warriors, ^iika's character is pre-
sented in an attractive Hght, and Prokop fares almost, though in the nature of
the case not quite, as well.
Hussite theologies and disputations receive much attention, and the author
again discriminates between the views of Wycliffe and Hus, and also declares that
" even the T^U)orist, the most advanced party in the Bohemian Church, approached
far less closely to moderate Protestantism than has often been stated" (p. 247).
The learned author seems to have utilized effectively the writings of other
masters of special aspects of 4iis complex subject, and his book is easily the best
treatment of the whole matter that we have in EngUsh. He displays breadth,
tolerance, and freedom from racial or reUgious bitterness, and the perusal of his
Digitized by
Google
274 The Annals op the Amebican Academy
book will lead even the reluctant to concede his right to pride in the achievements
of his people.
G. C. Sellert.
University of Wisconsin.
MISCELLANEOUS
Bolton, Herbert Eugene. Texas in the Middle Eighteenth Century, Pp. x,
501. Price, $3.25, paper; $3.50, cloth. Berkeley: University of California
Press, 1915.
Dr. Bolton has brought together the results of many years of investigation
in the archives of Texas, Mexico and Spain, and has thrown great light upon this
important but hitherto practically imknown period of Texas history. For in-
stance, he has shown that since Texas was first a buffer province against the
encroachments of France and then an important district for the working out of
the changes made necessary by the transfer of Louisiana to Spain, the years. 1731-
1788 were not uneventful, as has been supposed, but were filled with numerous
expansive and defensive projects. These facts are established by a series of
studies in Spanish colonial and administrative history hitherto published as
separate articles in the Texas State Historical Association Quarterly and in the
Southwestern Historical Quarterly , under the following titles: The San Xavier
Missions, 1745-1758, The Reorganization of the Lower Gulf Coast, 1746-1768,
Spanish Activities on the Lower Trinity River, 1746-1771, and The Removal
From and the Reoccupation of Eastern Texas, 1773-1779. To these studies
there has been prefixed a valuable and interesting introduction tracing the ex-
pansive movements in four directions — ^in central Texas, along the coast about
Matagorda Bay, on the Trinity River, and at Nacogdoches on the extreme north-
>eastem frontier.
M. A. H.
Clark, Floyd Barzilla. The Constitutional Doctrines of Justice Harlan. Pp.
vii, 208. Price, $1.00. Baltimore: The Johns Hopkins Press, 1915.
We are coming to recognize that judge-made law is in reality judge-made
law and that the judicial product is dependent upon the temperament and the
social philosophy, as well as the logical faculties, of the wielders of judicial power.
The opinions of individual judges present, therefore, important subjects for
isolated treatment. It is to be hoped that Dr. Clark's study is the forerunner of
similar discussions of the doctrines of other jurists. Professor Clark has done an
important service in calling attention to the need for this method of approaching
the study of constitutional law. His treatment of his subject, however, does not
furnish a desirable model for future work in similar fields. Under appropriate
heads he collects the cases in which Mr. Justice Harlan wrote opinions, presenting
by abstracts and quotations the views of the jurist and comparing them with the
opposing views when there was a divided court. The material from the reports
is well leaned and clearly exhibited. But there is little more. We do not see
the striking personality behind these opinions any more clearly than we can see
Digitized by
Google
Book Department 275
it by reading the official reports. The social and economic tenets of Mr. Justice
Harlan are not brought into clear relief, nor are his characteristic habits of reason-
ing well disclosed. There are photographs from different angles but we look in
vain for a real portrait. We are not told why Mr. Justice Harlan was so often in
the minority, nor given an estimate of the degree to which our law would have been
better or worse if his views had uniformly commended themselves to his colleagues.
Dr. Clark has done so well in what he has undertaken, that it seems ungracious
to criticise him for not undertaking more. But the work which he has left undone
is of such importance that it is sincerely to be hoped that future scholars will not
be satisfied to leave similar omissions in their presentations of the constitutional
doctrines of other jiuists.
T. R. P.
Cody, Sherwin. How to Deed With Human Nature in Business. Pp. xx, 488.
Price, $2.00. New York: Funk and Wagnalls Company, 1915.
This book is an attempt at a unification of the various factors involved in the
ever widening selling field. The abrupt turning from generalization to the con-
crete rather startles at first, but withal the author shows clearly the relation
between individual efficiency and the specific problems involved in business cor-
respondence, advertising and salesmanship. The general spirit of the text should
prove exceedingly suggestive to the selling executive, for the author succeeds at
times in getting at the fundamentals involved in directing and determining the
soul movement of a business. The chief criticism consists in a feeling that the
author could have written two books with the material on hand rather than one.
In other words, he aims to instruct too many selling types at one time. However,
it will prove a most suggestive and helpful exposition for those involved in the
complicated problem of selling.
H. W. H.
d*Olivet, Fabre. (Trans, by Nay&i Louise Redfield.) Hermeneutic Interpre-
tation of the Origin of the Social State of Man and of the Destiny of the Adamic
Race. Pp. lix, 648. Price, $3.50. New York: G. P. Putnam's Sons,
1915.
This is a translation of a metaphysical philosophy written in the first quarter
of the nineteenth century. The author takes as his fundamental principle the
theory that the three great powers of the universe are Providence, Destiny, and
the Will of Man. He interprets all human development and history as the result
of the occult interplay of these forces. The interpretation is speculative, meta-
physical, and unscientific in the extreme. The work can be of value only as a
contribution to the history of philosophy.
W. L. A.
Mabshall, Thomas Maitland. A History of the Western Boundary of the
Louisiana Purchase 1819-1841. Pp. xiii, 266. Price, $1.75, paper; $2.00,
cloth. Berkeley: University of California Press.
PoLLAK, GusTAV. Fifty Years of American Idealism. Pp. ix, 468. Price, $2.50.
Boeton: Houghton, Mifflin Company, 1915.
Digitized by
Google
276 The Ankals of the Ambbican Academy
ScHROEDER, THEODORE. Free Speech for Radicals (Enlarged Edition). Pp. viii,
206. Price, $1.50. New York: Free Speech League, 56 E. 59th Street, 1916.
Teble, Ray Palmer. Irrigation in the United States, Pp. 252. Price, $1.50.
New York: D. Appleton and Company, 1915.
A book with such an inclusive title, written by one who for sixteen years has
been engaged in the study of irrigation for the Department of Agriculture and
the Bureau of the Census, might well present more than ''a general view of irriga-
tion in the United States" in a "popular and non-technical way." Eight pages
are devoted to the field for irrigation; five pages to its history; six pages to climatic
conditions; eleven pages to water supply; twenty-three pages to crops; forty-five
pages to legislation; ninety-one pages to irrigation investments; and twenty-eix
pages to the present and future of irrigation. As the titles of the chapters sug-
gest, some important aspects of irrigation are omitted, and there is lack of propor-
tion between others. The outline followed leads to needless repetition, and the
evident desire for brevity apparently is responsible for certain incomplete state-
ments. The data are taken largely from the thirteenth census, but, wherever
possible, the statistics have been brought up to 1914. On the whole, the book is
a review of the subject, valuable for reference, rather than a contribution to exist-
ing knowledge. The author's conservative and almost pessimistic view of the
immediate future of irrigation and his proposal for publicly subsidizing irrigation
works are interesting features of the book.
T. R. T.
Whttaker, C. W. (Ed.) The American Whitaker Almanac and Encyclopedia
for 1916. Pp. xlviii, 552. Price, $1.00. New York: The Macmillan Com-
pany, 1916.
Digitized by
Google
INDEX
Abbott, Wilbub C. National Ideals Anqell, Nobman. Public Opinion
and Preparednefls, 187-191.
Aeroplanes, 194.
Agriculture, preparedness, 225-226.
AiB, Command of thb. Robert E.
Peary, 192-199.
Air power: 197-199; United States, 193.
ADianoes, formation of, 12-13.
AlHes, economic program, 96-97.
America: cooperation between England
and, 64; economic conditions, 258;
influence, 126; needs, 99, 145, 162-
163.
America's FunniB Foreign Pouct,
Isolation or World Leadership?
George Nasmyth, 22-25.
America's Influence and Power,
Effect of Preparedness upon.
William J. Stone, 125-129.
America's International Responsi-
bujties and Foreign Policy.
George Louis Beer, 71-91.
America's Need for an Enforced
Peace. Talcott Williams, 92-94.
America's World Influence, The
True Basis for. Thomas P. Gore,
130-135.
American Influence as Affected by
Preparedness. W. Morgan Shus-
ter, 212-216.
American Institutions, The Effect
on, of a Powerful Military and
Naval Establishment. Herbert
Croly, 157-172.
American Poucy and European
Opinion. Walter E. Weyl, 140-146.
Andrews, Fannie Fern. The Cen-
tral Organisation for a Durable
Peace, 16-21.
in Foreign Policies, 136-139.
Anglo-American alliance, arguments
for, 88.
Arbitration: between nations, 52;
methods, 53; peace and, 13.
Armaments: increased, 128, 201; large,
239; limitation, 33; menace, 143;
New York's attitude toward, 241;
plans, 141.
Armaments and Caste. Simeon
Strunsky, 237-246.
Army: American, 159, 161, 164, 215;
efficient, 165; increased, 189; types,
175.
bill, passage, 222.
reorganization, 217.
Asia: 107, 109-110.
Asiatics, America's treatment of, 110-
111.
Beer, George Louis. America's In-
ternational Responsibilities and For-
eign Policy, 71-91.
Belgium: invasion, 89, 221; neutrali-
zation, 67.
Bewaredness. Henry D. Estabrook,
181-186.
Bonn, M. J. Germany and the Mon-
roe Doctrine, 102-105.
Canada, United States and, 208.
China: 108, 109; America and, 109-110,
112; financial policy, 255; problems,
109.
China, What Program Shall the
United States Stand for in Her
Relations with Japan and, — the
Problem and a Practical Solu-
tion. Sidney L. Gulick, 106-117.
Church: militant, 5; support, 247.
277
Digitized by
Google
278
Index
Chubch, Militarism and the. Al-
gernon S. Crapsey, 247-249.
Citizenship: democratic, 171; immi-
grants, 114.
Civilization: causes, 80; foundation,
33; future, 79; victory, 95.
Commerce: as economic pressure, 28;
value, 5.
Competition, commercial, 48.
Conciliation, Council of, 52.
Conflicts, international, 145.
Codperation: between nations, 57;
Mexico, 123.
Cooperation, Isolation or, in In-
ternational Affairs. Samuel Mc-
Cune Lindsay, 98-101.
Corporations, private, 225.
Crapsey, Algernon S. Militarism
and the Church, 247-249.
Crises, international, 23.
Croly, Herbert. The Effect on
American Institutions of a Powerful
Military and Naval Establishment,
157-172.
Crosby, Oscab T. An Armed Inter-
national Tribunal the Sole Peace-
Keeping Mechanism, 32-34.
Daniels, Josephus. The Significance
of Naval Preparedness, 147-156.
Defense: 142; coast, 129; Franklin's
preparations for, 149; measures, 149;
military, 9; national, 27, 45, 200, 225,
228, 238; naval, 9; preparedness for,
127.
Democracy: 100, 217; foreign policy,
172; imperialism and, 250, 252, 257;
industrial, 100; military preparation,
167-168; peril, 231; political, 58;
problems, 189; social, 58; superiority
of a, 45.
Democragt, Military Preparedness
a Peril to. Charles E. Jefferson,
228-236.
Democracy of Universal Military
Service, The. Franklin H. Gid-
dings, 173-180.
Democracy or Impbrialibm — ^Thb
al/fernative that confronts xjb.
Frederic C. Howe, 250-258.
Diplomacy: democratic, 253; interna-
tional, 14; rules, 252.
Diplomats, financial, 255.
Disarmament: international, 223; uni-
versal, 133. See aleo Armaments.
Economic Conferences, The, of
Paris and the United States.
Alexander Oldrini, 95-97.
Economic pressure: advantages, 30;
arguments against, 30; commerce as,
28; United States, 177; value of, 29.
fkx)NOMic Pressttre As A Means of
Preserving Peace. Herbert S.
Houston, 26-31.
Economy: moral, 130; social, 130.
Efficiency: military, 232; social, 230.
England: 197; codperation between
United States and, 64, 76, 209.
EsTABROOK, Henry D. Bewaredness,
181-186.
Europe: area, 174; attitude of, towards
America, 141 ; colonial territory, 92;
diplomacy, 252; military organiza-
tion, 174; neutralization, 94; war,
227; war budgets, 257.
European Opinion, American Pol-
icy AND. Walter E. Weyl, 140-146.
Exports, problem, 47-48.
FiLENB, Edward A. The Road to a
Durable Peace, 44-49.
Finance, international, 28.
Force: elements, 51; existence, 136.
Foreign Policies, Public Opinion
IN. Norman Angell, 136-139.
Foreign policy: American, 69; impor-
tance, 138; United States, 83, 86, 140;
value, 143. See also International
Relations.
Foreign Policy, America's Interna-
tional Responsibilitibs and.
George Louis Beer, 71-^1.
Digitized by
Google
Index
279
FOBEIGN POUCT, ISOLATION OR WORLD
Leadership? America's Future.
George Nasmjrth, 22-25.
Foreign View, A, op the Arqumbnts
against Preparedness in the
United States. George Nestler
Triooche, 200-211.
France, air service, 193.
Geary Act, provisions, 110-111.
Germany: air service, 193; commercial
isolation, 102-103; economic prob-
lems, 103; expansion, 78; imperial-
' ism, 76, 95; military' organization,
174; plans, 63, 75; population, 102,
174; relations between United
States and, 209-210; social problems,
103.
Germany and the Monroe Docttrinb.
M. J. Bonn, 102-105.
GmniNGS, Franklin H. The Democ-
racy of Universal Military Service,
173-180.
Gore, Thomas P. The True Basis for
America's World Influence, 130-135.
Great Britian: air service, 193; alliance
between United States and, 85-86,
90; policy, 77, 79; taxation, 226.
GuLiCK, SiDNBY L. What Program
shall the United States stand for in
her Relations with Japan and China
— ^The Problem and a Practical
Solution, 106-117.
Hostility, act of, 34.
Houston, Herbert S. Economic
Pressure as a Means of Preserving
Peace, 26-31.
Howe, Frederic C. Democracy or
Imperialism — ^The Alternative that
Confronts us, 250-258.
Hull, William I. Three Plans for a
Durable Peace, 12-15.
Immigrants: Americanisation, 113; citi-
zenship, 114; registration, 114.
Immigration: advantages, 115; control,
113; legislation, 112-=^113; objections,
115-116; Oriental, 116; policy, 113,
228.
Imperialism: effects, 252; financial,
252, 255.
Imperialism, Democracy or, — ^Thb
Alternative that Conprontb Us.
Frederic C. Howe, 250-258.
Industries: mobilization, 154-155; so-
cialization, 171; value, 5.
Ingram, Frederick F. The "Pre-
paredness'' Campaign is Superficial,
225-227.
International Affairs, Isolation
OR Cooperation in? Samuel Mc-
Cune Lindsay, 98-101.
International conflicts, see Conflicts.
cooperation, 101.
disputes, settlement, 15.
duties. United States, 99.
law: basis, 130; limitations, 19.
organization, importance, 55.
peace, see Peace.
policy: 47; basis, 99.
procedure, reorganization, 16.
program, object, 61, 62.
relations: present system, 71;
United States, 93, 94, 106. See also
Foreign Policy.
International Relations, What
Program Shall the United States
Stand for in. Walter Lippmann,
60-70.
International Responsibilities and
Foreign Policy, America's.
George Louis Beer, 71-91.
International Society, 56.
International Tribunal, An Armed,
THE Sole Peace-Keeping Mechan-
ism. Oscar T. Crosby, 32-34.
Internationalism: estabhshment, 42;
meaning, 65; obstacle to, 41 ; present,
250.
Interstate relations, characteristics, 71.
Intervention: armed, 120; necessity,
137.
Digitized by
Google
280
Indbx
Isolation: policy, 101; United States,
74, 99, 192, 206, 250.
Isolation or Co()pbbation in Intbb-
NATiONAL Affairs? Samuel Mo-
Pune Lindsay, 98-101 .
Isolation or World Leadership?
America's Future Foreign Policy.
George Nasmyth, 22-25.
Japan: 107-108; ambitions, 107-108;
problems, 109; United States and,
208-209.
Japan and China, What Program
Shall the United States Stand
FOR in her Relations with, — ^The
Problem and a Practical Solu-
TioN. Sidney L. Gulick, 106-117.
Jefferson, Charles E. Military
Preparedness a Peril to Democracy,
22^236.
Labor: 251; exploitation, 120; organ-
ised, 176; problem, 48.
disputes, investigation, 63.
Latin America, conquest, 63.
Lindsay, Samuel McCunb. Isola-
tion or Cooperation in International
Affairs, 98-101.
LippMANN, Walter. What Program
shall the United States stand for in
International Relations, 60-70.
MacCrackbn, John H. The Basis
of a Durable Peace, 35-43.
Marbxtrg, Theodore. The League
to Enforce Peace — ^A Reply to Cri-
tics, 6(W9.
Mexico: 118, 120; cooperation, 123;
diflBculties, 119; duties, 122-123;
financial cooperation, 120-121; in-
dustrial efficiency, 123; needs, 119;
policy towards, 62; political agita-
tion, 119; relations between United
States and, 208; reorganization, 120;
United States and, 122.
Mexico, What National Policy
Shall We Adopt wrra Rbfbrbnoi
TO. L. S. Rowe, 118-124.
MiHtarism: 136, 174, 243, 247, 249;
America, 214; danger, 133; efifect,
237; evils, 218; German, 40; policy,
179; promotion, 256; readjustment,
201.
Militarism and the Church. Alger-
non S. Crapsey, 247-249.
Militarism, I^parbdnbss Is. Os-
wald Garrison Villard, 217-224.
MlLTTART AND NaVAL EsTABLISHMBNT,
The Effect on American Instttu-
TioNs OF A Powerful. Herbert
Croly, 167-172.
Military efficiency, policy of, 232.
establishment: enlargement, 127;
large, 125; strong, 202.
expansion: 239-240; results, 237.
organization: American, 168;
Europe, 174; Germany, 174.
preparation: 164; democracy,
167-168; effective, 160.
MiLiTART Preparedness a Peril to
Democracy. Charles E. Jefferson,
228-236.
Military reorganization, 161.
service, 243.
Military Service, The Democracy
OF Universal. Franklin H. Gid-
dings, 173-180.
Military training, educational value,
176-178.
Monroe Doctrine: 7,^61, 87, 99, 103,
104,228.
Monroe Doctrine, Germany and
the. M. J. Bonn, 102-105.
Nasbiyth, George. Isolation or
World Leadership? America's Fu-
ture Foreign Policy, 22-25.
National defense: problem, 6. See
also Defense.
government, centralized, 119.
National Ideals and Preparedness.
WUbur C. Abbott, 187-191.
Digitized by
Google
Index
281
National policy: needs, 161; negative
factors, 5.
National Poucy, What, Shall We
Adopt with Reference to Mexico.
L. 8. Rowe, 118-124.
National preservation, principle, 8-9.
National Secubity, The Basis of.
S. N. Patten, 1-11.
Nations, league of, 24.
Natural resources, exploitation, 120.
Naturalization: bureau of, 114-115;
eligibility, 115.
Naval defense, value, 6-7.
establishment, enlargement, 127.
Naval Establishment, The Effect
ON Ahebican Institutions of a
Powerful Military and. Herbert
Croly, 157-172.
Naval Preparedness, The Signifi-
cance of. Josephus Daniels, 147-
156.
Navy: accomplishments, 150-151; in-
creasing, 154, 189; officers, 153-154;
personnel, 152; problems, 155; sec-
retary of the, 219; strong, 129, 151.
Neutrality: efifects, 66; results, 81; vio-
lation, 82-83.
Neutrals, conference, 26.
New York, attitude of, toward arma-
ments, 241.
Oldrini, Alexander. The Economic
Conferences of Paris and the United
States, 95-97.
Oriental policy, new, 112.
Pacifickm: 247-248; national, 10.
Pan-Americanism: 88; definition, 83-
84; establishment, 81-82.
Paris, The Ecomonic Conferences
OF, AND the United States. Alex-
ander Oldrini, 95-97.
Patriotism: basis, 11; definition, 130.
Patten, S. N. The Basis of National
Security, 1-11.
Peace: America, 127; America's policy,
127; Central Organization for a
Durable, 18; conditions, 18; defini-
tion, 1; durable, 12, 17, 36, 40;
economics and, 5; forces, 44; indus-
trial, 39; international, 27, 135;
League to Enforce, 26, 34, 46, 51, 55,
57, 82; machinery, 44; organization,
18; Pan-American League of, 25;
permanent, 45-46; plans, 26; prepar-
edness ahd, 204; propaganda, 4;
terms, 35; universal, 5, 185; world,
93, 116.
Peace, America's Need for an En-
forced. Talcott Williams, 92-94.
Peace, EkjONOMic Pressure as a
Means of Preserving. Herbert
S.Houston, 26-31.
Peace-Keeping Mechanism, An
ArbiIED International Tribunal
the Sole. Oscar T. Crosby, 32-34.
Peace, The Basis of a Durable.
John H. MacCracken, 35-43.
Peace, The Central Organization
FOR A Durable. Fannie Fern An-
drews, 16-21.
Peace, The League to Enforce, —
A Reply to Critics. Theodore
Marburg, 50-59.
Peace, Ttaj Road to a Dttrable.
Edward A. Filene, 44-49.
Peace, Three Plans for a Durable.
William LHuU, 12-15.
Peary, Robert E. Command of the
Air, 192-199.
Philippines, policy, 228.
Political policy, domestic, 158.
problems, future, 65.
Preparation: adequate, 158; inade-
quate, 201.
Preparedness: 128-129, 249; adequate,
231; advantages, 58; advocates of,
174; agriculture, 225-226; America,
156; arguments against, 148, 200-
211, 230; arguments for, 12, 157, 238;
basis, 152; cost, 170; demand for, 82;
effects, 134, 202, 235; enthusiasm for,
45; forms, 214-215; foundation, 225;
industrial, 229; justification, 201;
Digitized by
Google
282
Indbx
lack of, 205; meaning, 183, 212
military, 46, 89-90, 97, 164, 231
movement for, 46; object, 137
opposition, 157, 178; peace and, 204
policy of, 49; reasonable, 203; re-
quirement, 225; result, 4; signifi-
cance, 148, 182, 217, 218, 235; social,
164, 230; taxation, 203; views on, 35.
Prepakedness, a Foreign View of
THE Arguments against, in the
United States. George Nestler
Tricoche, 200-211.
Preparedness, American Influence
AS Affected by. W. Morgan Shus-
ter, 212-216.
Preparedness, Effect of, upon
America's Influence and Power.
William J. Stone, 125-129.
Preparedness Is Militarism. Os-
wald Garrison Villard, 217-224.
PREPAREDNESS; MILITARY, A PeRIL
TO Democracy. Charles E. Jeffer-
son, 228-236.
Preparedness, National Ideals and.
Wilbur C. Abbott, 187-191.
Preparedness, The Significance of
Naval. Josephus Daniels, 147-156.
"Preparedness" Campaign, The, Is
Superficial. Frederick F. Ingram,
225-227.
Public opinion: America, 98; organi-
zation, 17; power, 14.
Public Opinion in Foreign Policies.
Norman Angell, 136-139.
Public power, organization, 163.
Restriction law, proposed, 113-114.
RowE, L. S. What National Policy
shall we Adopt with Reference to
Mexico, 118-124.
Seas: freedom of, 61; power on, 67-70,
89, 193.
Shuster, W. Morgan. American In-
fluence as Affected by Preparedness,
212-216.
Social ideals, conflict of, 44.
Socialism: 175; international, 175.
South America: German colonization,
102; German plans in, 63; problem,
104.
State, economic functions, 2.
rights, doctrine, 3.
sovereignty, concept, 72.
Stone, William J. Effect of Pre-
paredness upon America's Influence
and Power, 125-129.
Strunsky, Simeon. Armaments and
Caste, 237-246.
Taxation: Great Britain, 226; national,
165; preparedness, 203; problem, 48;
United States, 226, 251; unjust, 226.
Tariff: policy, 228; problem, 48; pro-
tective, 47-48.
Trade, war, 188.
Treaties: international, 19; observance,
111.
Tricoche, George Nestler. A For-
eign View of the Arguments Against
Preparedness in the United States,
200-211.
United States: alliance between Great
Britain and, 85-86, 90; area, 174-175;
as a world power, 131-132; codpera-
tion between England and, 76; for-
eign population, 240; influence of,
218; isolation, 63; national attitude,
126; present position, 190.
United States, A Foreign View of
THE Arguments Against Prepared-
ness IN THE. George Nestler Tri-
coche, 200-211.
United States, The Economic Con-
ferences OF Paris and the. Alex-
ander Oldrini, 95-97.
United States, What Program Shall
THE, Stand for in Her Relations
with Japan and China — The Prob-
lem and a Practical Solution.
Sidney L. GuUck, 106-117.
Digitized by
Google
Index
283
United States, What Program Shall
THE, Stand for in International
Relations. Walter Lippmann, GO-
TO.
Unpreparedness: effects, 134-135; or-
ganijEed, 159, 160; results, 183-184
See also Preparedness.
Vn.T.ARi>, Oswald Garrison. Pre-
paredness is Militarism, 217-224.
War: c&uses, 38-39, 50, 72, 92, 253;
civilization after, 42; complexity, 38;
cost, 30; effects, 43, 227, 251; evils.
56; expenses, 251; forces, 44; future,
82; horrors, 181, 188; international,
32; justice, 133; losses, 227; necessity,
133; results, 26; significance, 56;
un justification, 201.
Warfare, changes, 193-194.
Wetl, Walter E. American Policy
and European Opinion, 140-146.
Williams, Talcott. America's Need
for an Enforced Peace, 92-94.
World organization, 24.
-; — pohtics: German, 75; leadership
' in, 22-23.
power, United States as, 131-132.
Digitized by
Google
Digitized by
Google
NEW POSSIBILITIES IN
EDUCATION
^ftt Annate
VoiiUMB LXVn September, 1916
EDITORIAL COUNCIL
BdHor: CLYDE LTHDON KmO
(T. W. VANMBTRS
AMdttantBditorB: | J. H. WILLITS
BdHor B<K^ Department: ROSWELL C McCREA
Associate Editors
J. C. BALLAGH SCOTT IVBAftING
THOMAS CONWAY, jR. E. M. PATTKtSON
S. S. HUEBinSR L. S. ROWE
CARL KELSEY ELLERY C. STOWELL
J. P. UCHTEIVBERGER F. D. WATSON
Ediior in Charge qf ihia Volume:
AMBROSE L. SUHRIE,
AetietttrU Profeeeor of Elemeniary and Rural
EduoaUan in the School of Eduoalion,
UniversUy of Pennayloania
Tbm AiimaGAH Aoadbict of Poutioal and Social Scivncb
d6TH AMD Woodland Awnub
Philadblphia
1016
Digitized by
Google
Ck>pyright, 1916, by
Ahebican Acadbmt of Political and SoaAL Sgibngs
All rights reeerved
EUROPEAN AGENTS
England: P. S. King & Son, Ltd., 2 Great Smith St., Westminster, London, S. W.
Francs: L. Larose, Rue Soufflot, 22, Paris.
Gbbmant: Mayer & MOller, 2 Prins Louis Ferdinandstrasse, Berlin, N. W.
Italy: Giomale Degli Eoonomisti, via Monte Savello, Palazzo Qrsini, Rome.
Spain: E. Dossat, 0 Plaza de Santa Ana, Madrid.
Digitized by
Google
CONTENTS
Pac*
FOREWORD ix
Editor in Charge of Volume.
INTRODUCTION— THE EDUCATIONAL PROGRAM OF A DE-
MOCRACY xi
Ambrose L. Suhrie, Ph.D., Assistant Professor of Elementary and Rural
Education, School of Education, University of Pennsylvania.
PART J— POINTS OF EMPHASIS IN THE CURRICULUM AND ORGAN-
IZATION OF THE MODERN SCHOOL
A, Training for So(nal and M(n^ Behaoior
APPRECIATION OF MUSIC, LITERATURE AND ART AS A SOCL^
AIM 1
A. Duncan Yocum, Ph.D., Professor of Educational Research and
Practice, School of Education, University of Pennsylvania.
SOCL^ TRAINING THROUGH SCHOOL GROUP ACTIVnTIES 13
Irving King, Ph.D., Assistant Professor of Education, University of
Iowa.
TRAINING IN THE SCHOOLS FOR CIVIC EFFICIENCY 26
J. Lynn Barnard, Ph.D., Professor of History and Government, Phila-
ddphia School of Pedagogy.
THE MORAL TRAINING OF CHILDREN 34
Edward Howard Griggs, A.M., L.H.D., Author and Lecturer,
Spuyten Duyvil, New York City.
B. Training for Vocational Usefulness
THE SCIENCE AND ART OF HOME MAKING 40
Carrie Alberta Lyford, B.S., Specialist in Home Economics, United
States Bureau of Education, Washington, D. C.
EDUCATION FOR PARENTHOOD 47
Thomas C. Blaisdell, Ph.D., Dean, School of Liberal Arts, Pennsylvania
State College.
VOCATIONAL GUIDANCE IN SCHOOL AND OCCUPATION.... 64
John M. Brewer, Ph.D., Instructor in Education, ELarvard University.
EDUCATION FOR LIFE WORK IN NON-PROFESSIONAL OCCU-
PATIONS 64
Frederick G. Bonser, Ph.D., Associate Professor and Director of Indus*
trial Arts, Teachers College, Columbia University.
ill
Digitized by
Google
iv Contents
MANUAL LABOR AND THE ACHIEVEMENT OF NATIONAL
IDEAI^ 77
B. H. Crocheron, M.S.A.y Associate Professor of Agricultural Exteonon,
University of Califomia.
EDUCATION FOR HOME LIFE ON THE FARM 82
Jessie Field, M.S.| Town and Country Secretary, National Board of
Young Women's Christian Associations of the United States.
TRAINING FOR RURAL LEADERSHIP 87
John M. Gillette, Ph.D., Professor of Sociology, University of North
Dakota.
C Training far HeaUh and Physical WeOrBeing
HEALTH AS A MEANS TO HAPPINESS, EFFICIENCY AND
SERVICE 97
Louis W. Rapeer, Ph.D., Professor of Education, Pennsylvania State
College, State College, Pennsylvania.
D. Training for the Right Use of Leisure
PLAY AND RECREATION 107
George E. Johnson, A.M., Assistant Professor of Education, Harvard
University.
TRAINING CHILDREN TO A WISE USE OF THEIR LEISURE. . 115
J. George Becht, Sc.D., Executive Secretary of the Pennsylvania State
Board of Education.
CHILDREN, LIBRARIES AND THE LOVE OF READING 123
Annie Carroll Moore, Supervisor of Work with Children, The New
York Public Library.
PART II-<JONTINUINO READJUSTMENT OF THE CURRICULUM
AND ORGANIZATION OF THE MODERN SCHOOL
A. Through Codperation of CommunUy Centen
THE COMMUNITY CENTER*
THE RURAL SCHOOL COMMUNITY CENTER 130
L. J. Hanifan, A.M., State Supervisor of Rural Schools, Charleston,
West Virginia.
B, Through Codperation of Home and School AssodaHone
THE NATIONAL CONGRESS OF MOTHERS AND PARENT-
TEACHER ASSOCIATIONS 139
Mrs. Frederic Schofif, President National Congress of Mothers and
Parent-Teacher Associations; Director Home Education Division,
Bureau of Education, Washington, D. C.
•An important article on thia aubject failed to reach the Editor in time to be induded In thli
TOlnme. The following reference will be of interest on thia aubjeot: Ward, Edward J., Th$
Btial CftnUr, New York: D. Aj^leton 4e Company, 1018.
Digitized by
Google
Contents v
AN URBAN HOME AND SCHOOL LEAGUE 148
Walter L. PhilipSy A.M., Supervising Principal of Public Schools^ Lans-
downe, Pennsylvania.
THE RURAL SCHOOL IMPROVEMENT LEAGUE 166
Payson Smith, LL.D., State Superintendent of Schools, Maine.
C. Through the School-Hame Program of Work and Study
SCHOOL CREDIT FOR HOME WORK 162
L. R. Aldennan, B.A., Superintendent of Schools, Portland, Oregon.
THE SPREAD OF THE SCHOOL MANSE IDEA 167
George E. Vincent, LL.D., Presidenti University of Minnesota.
PART III-'THE EXTENSION OF OPPORTUNITIES FOR ADULT
EDUCATION
A, Through Continuation Schools and Extension Courses
CONTINUATION SCHOOI^ 170
Artiiur J. Jones, Ph.D., Assistant Professor of Secondary Education,
School of Education, University of Pennsylvania.
UNIVERSITY EXTENSION 182
Louis E. Reber, D.Sc., Dean, University Extension Division, Univer-
sity of Wisconsin.
THE "PEOPLE'S UNIVERSITY" OF MASSACHUSETTS 193
James Ambrose Moyer, Ph.D., Director, Department of University
Extension, Massachusetts State Board of Education.
CORRESPONDENCE SCHOOL INSTRUCTION BY NON-ACA-
DEMIC INSTITUTIONS 202
Lee Galloway, Ph.D., Professor of Conmieroe and Industry, New York
University.
EDUCATION FOR ADULTS THROUGH PUBLIC LECTURES IN
NEW YORK CITY 210
Henry M. Leipsiger, LL.D., Supervisor of Lectures for the New York
Board of Education.
THE SPREAD OF THE COMMUNITY MUSIC IDEA 218
Peter W. Dykema, M.Litt., Professor of Music, University of Wis-
consin.
B. Through Large-Scale Demonstration
EDUCATION THROUGH FARM DEMONSTRATION 224
Bradford Knapp, Chief, Office of Extension Work in the South, States
Relations Service, United States Department of Agriculture, Wash-
ington, D. C.
Digitized by
Google
vi Contents
THE HOME DEMONSTRATION WORK 241
Mary E. Greswell, Assistant in Home Demonstration Work, States
Relations Service, Department of Agriculture, Washington, D. C.
C. Through Library Extension
THE LIBRARY EXTENSION MOVEMENT IN AMERICAN CITIES 250
Arthur E. Bostwick, Ph.D., Librarian, St. Louis Public Library.
LIBRARY WORK IN THE OPEN COUNTRY 257
Sarah Askew, Organizer, New Jersey Public Library Commission.
THE HOME READING COURSES OF THE UNITED STATES
BUREAU OF EDUCATION 267
Ellen C. Lombard, B.S., Special Collaborator, United States Bureau
of Education, Washington, D. C.
D, Through Mi%ceUaneou% Official Agencies
VISUAL INSTRUCTION IN NEW YORK STATE 270
Alfred W. Abrams, Chief, Division of Visual Instruction, State De-
partment of Education, New York.
THE UNITED STATES BUREAU OF EDUCATION AND THE IM-
IMGRANT 273
H. H. Wheaton, J.D., Specialist in Immigrant Education, Bureau of
Education, Washington, D. C.
EDUCATION THROUGH OFFICLAX PUBLICITY 284
William H. Allen, Ph.D., Director, Institute for Public Service, New
York City.
THE PUBLIC SERVICES OF THE COLLEGE AND UNIVERSITY
EXPERT 291
Clyde Lyndon King, Ph.D., Assistant Professor of Political Science,
Wharton School, University of Pennsylvania.
BOOK DEPARTMENT 297
INDEX 322
BOOK DEPARTMENT
GENERAL WORSB IN ECONOMICS
Fbtteb— Economic Principles (R. C. McCrea) 297
Stamp— Bri/wA Incomes and Properly (S. Nearing) 298
Digitized by
Google
Contents vii
GSOOBAPHT
HuMTiNQTON — CwUizotion and ClitnaU (J. R. Smith) 298
AOBICXTUrUBB, lONINOy F0BS8TBT AND FI8HEBIES
Adams— The Conquest of the Tropics (J. R. Smith) 300
Habris and Stbwabt— T^ Principles of Agronomy (J. S. Keir) 300
Robinson — Early Economic Conditions and the Development of AgricyUwre
in Minnesota (J. R. Smith) 302
MANUFACTUBINO INDUSTRY
llT&rBOM— Textiles (M. Keir) 302
COMMBBCB AND TRANSPORTATION
KiBLBR--T^ Commodities* Clause (T. W. Van Metre) 303
McFAUi — Railway Monopoly and Rate Regulation (T. W. Van Metre) 303
Pratt— r^ Rise of RaU Power in War and Conquest (T. W. Van Metre) . . 303
Smjth— Commerce and Industry (W. S. Tower) 304
Sfbars — The Story of the American Merchant Marine (G. G. Huebner) 304
ACCOUNTING, BUSINESS METHODS, INVB8TMBNT AND THE EXCHANGE
GusNTHER — Investment and Speculation (R. Riegd) 305
Montgomery— Aiidt^irH^; Theory and Practice (E. P. Moxey) 306
Raymond — American and Foreign Investment Bonds (L. Chamberlain) 307
LABOR PROBLEMS
Mote — Industrial Arbitration (R. C. McCrea) 307
^EAsmo—AnthraciU (W. H. S. Stevens) 308
RoBmsoN — Organizing a Business (M. Keir) 309
SOCIOLOGY AND SOCIAL PROBLEMS
Bar— A History of Continental Criminal Law (J. P. Lichtenberger) 309
BoNGER — Criminality and Economic Conditions (J. P. Lichtenberger) 310
Flexner and Bachman— ^^ducofion in Maryland (A. L. Suhrie) 311
GooDSELi^— A History of the Family as a Social and Educational Institution
(J. P. Lichtenberger) .^ 311
Osborn — Men of the Old Stone Age (J. P. Lichtenberger) 312
Parkyn— An Introduction to Prehistoric Art (J. P. Lichtenberger) 312
Stbbiohtoff and Streightoff — Indiana: A Social and Economic Survey
(T. W. Van Metre) 313
Walling, Stokes, Hughan, Laidler— r^ Socialism of Today (R. C.
McCrea) 313
Wooi>— Suffering and Wrong (J. P. Lichtenberger) 313
political and governmental problems
Hill— TA« Federal Execuiive (R. G. Gettell) 314
MuNRO — Principles and Methods of Municipal Administration (H. G. James) 314
Digitized by
Google
viii Contents
INTERNATIONAL QUESTIONS
Abbott — Japanese Expansion and American Policies (I. Sharpless) 315
Adleb— TAe World Crisis and lis Meaning (B. D. Mudgett) 316
Baty and Morgan — War: lis Conduct and Legal Restdts (L. S. Rowe) 316
HuBERiCH and King — The Prize Code of the German Empire (L. S. Rowe). . 317
RoHBBACH — German World Policies (J. C. Ballagh) 318
Scfyrr-— The Hague Convention and Declarations of 1899 and 1907 (L. S. Rowe) 318
Woods and Bai/tzlet — Is War Diminishing? (J. P. Lichtenberger) 318
lOSCELLANEOUS
Crbssy— An Outline of Industrial History (R. C. McCrea) 319
FiSHEB — The Mathematical Theory of Probabilities and Its Application to
Frequency Curves and StaHstical Methods (B. D. Mudgett) 319
RTiDDEBB—Indexing and Filing (A. E. Roch6) 319
Ksurm—The Staleaman's Year Book, 1916 (L. S. Rowe) 319
Newell — Irrigation Management (J. S. Keir) 320
RiPLBT— TrM«te, Pools and Corporations (T. W. Van Metre) 320
Robinson — City Planning: with special reference to the Planning of Streets
and LoU (C. Reitell) 320
WiCKWARB— r^ American Year Book, 1916 (L. S. Rowe) 321
Digitized by
Google
FOREWORD
The membership of the American Academy of Political and
Social Science — ^numbering now more than six thousand — ^is made up
principally of intelligent men and women who are both progressive
and public spirited. The great majority of them are laymen in the
field of education. They are nevertheless in most instances among
the leading promoters of all public educational movements which
tend to the enrichment of the individual life or to the collective at-
tainment of our national ideals. They reside in every section of the
country and include among their number representatives of all the
principal vocations. Into their hands this volume of The Annals will
fall in the course of its regular circulation. It is hoped that many
additional copies will be read by members of Chautauqua and Teach-
ers' reading circles and by the regular patrons of our public libraries.
In planning the volume the editor has endeavored, therefore, to
include only such topics as were thought to be worthy of the atten-
tion of these several groups of serious-minded readers.
The United States of today furnishes the best laboratory in the
world's history for the experimental determination of what is really
worth while in the organization, content, and method of public
education. All open-minded, forward-looking citizens are deeply
interested in the general improvement of our educational system.
They earnestly desire to see any and every innovation which promises
real advancement, whether suggested by expert or by layman, given
a fair trial under the most favorable conditions. They recognize —
from a sense of national patriotism — ^the duty of all to promote
country-wide experimentation, on a suitable scale, with every ra-
tional practice in education which has been conspicuously success-
ful in a given local community or in any particular social group
in our complex population.
It is believed that the aims set forth and the practices described
in the articles which follow will indicate in each case one of the lines
of possible national achievement in public education. It is hoped
that the wide study of these aims and practices may result in a more
general attempt at such educational readjustment as may be found
to be sound in theory and feasible in practice.
ix
Digitized by
Google
X FOBBWORD
Part I is devoted to a discussion of some of the newer social
aims in education and to a statement of a few of the changes which
are being made in the curriculum and organization of the school to
bring them into harmony with these aims. Part II tells the story
of some definite attempts to coordinate the activities of the several
social institutions closely related to the school. Part III gives in
outline a description of the functions and activities of some of the
numerous agencies which are promoting the educational interests of
adolescents and adults in the post-school period of life.
Many topics of equal importance with those treated have had to
be omitted for lack of space. This leaves some gaps in the outline
of topics originally planned. It is hoped, however, that the intro-
ductory chapter by the editor may reveal the unity of purpose which
has prompted the selection of those included. The conditions under
which such a volume as this must be compiled and edited render it
impossible to give the whole work the definiteness of aim or the logical
organization and balanced treatment which could be given if the
contributors were able to confer in person with each other and with
the editor before attempting the preparation of their several chap-
ters. It is believed, however, that the articles are well named, that
there is little undesirable repetition and that the table of contents
will be a reliable guide to the reader who has time for only a few
articles on topics along the lines of his special interests or particular
needs. The sub-headings in the longer articles will clearly reveal
the scope and order of treatment.
The editor takes this opportunity to thank all of the numerous
contributors for their voluntary services and for their unfailing
promptness and courtesy in the course of the correspondence
which it has been necessary to conduct in connection with the pre-
paration of this volume.
Ambrose L. Suhrib,
Editor in Charge of Volume.
Digitized by
Google
THE EDUCATIONAL PROGRAM OF A DEMOCRACY
By Ambrose L. Suhbib, Ph.D.,
Assistant Professor of Elementary and Rural Education, School of Education,
University of Pennsylvania.
"It is my hope that the time may soon come when the poorest
child living in the meanest hovel on the remotest momitain side in atl
this commonwealth may enjoy every educational advantage he is
willing to improve."
This sentiment was expressed — ^if the newspaper reports may
be relied upon — by the governor of Pennsylvania in a public address
recently delivered to a group of rural folk assembled at a village
railway station in a remote part of the state. It is a restatement
in modem form of the plea with which Thaddeus Stevens thrilled
and moved his colleagues in the Legislature at Harrisburg in 1835
when the repeal of the law providing for a free school system in
Pennsylvania seemed imminent. It is an epigrammatic and very
impressive statement of the educational aim which has dominated
the efforts of all our great leaders for a century and which has
guided the best impulses of all our people in all sections of the
republic since the founding of our state school systems.
On the opening page of his School and Society, published in 1900,
Professor John Dewey says: "What the best and wisest parent
wants for his own child that must the community want for all its
children. Any other ideal for our schools is narrow and unlovely;
acted upon it destroys our democracy. "
The extent to which we have succeeded in effectively embodying
the ideals set up in these two quotations in the working program of
our twentieth century educational sjrstems — local, state and national
— has given the world the real measure of our civic achievements.
It has also furnished a fair indication of the soundness or unsound-
ness of our national democracy. And whether our educational
achievements as a people are creditable or otherwise, when measured
by the ideals we have professed, it is at once obvious that the
sacrifice made by individuals, communities, and states to realize
these cherished ideals constitute one of the most inspiring chapters
in the whole history of social progress.
Digitized by
Google
Zii iNTBODUCnON
Equality op Educational Opportunitt
If we have failed to provide democratic "equality of educa-
tional opportunity for all the children of all the people'' it must
surely be due to some fundamental misconception of the meaning of
equality or to our inability to reshape our practices in any given
community with sufficient rapidity to meet the changing intel-
lectual, social and economic conditions of a new era. Or the failure
may result from both these causes. At any rate it would seem
worth while to attempt a statement of what is involved in making
(and keeping) our educational system truly democratic. The fol-
lowing propositions would appear to be defensible and sufficiently
important to merit some special emphasis:
1. There should be an efficient school reasonably accessible to
every child who may profit by its ministry.
2. The school system should be so organized and conducted as
to minister with equal diligence to the needs of pupils of each of the
several grades of natural ability.
3. The program of school studies and activities should be so
manynsided as to show equal deference to the tastes and interests
and needs — ^vocational and cultural — of all.
4. The school system should be so organized as not to encour-
age or permit the segregation of social classes and should be so con-
ducted as not to exemplify an undemocratic control of student
activities.
5. The administration and control of our educational systems
should be vested jointly in central and local authorities and the highest
intelligence and best judgment of expert and layman should be brought
to bear on the formulation and execution of general educational policies.
6. All the educational agencies of the local community, of the
state, and of the nation should be brought to bear upon the post-
school education of both adolescents and adults.
It is the purpose of the writer to develop these several theses
as fully as the space allotment will permit.
Schools Made Accessible
There should be an efficient school reasonably accessible to
every child who may profit by its ministry. There is a very general
impression abroad among us that this has long been accomplished.
Not so. We have, to be sure, made legal provision in most states
for bringing elementary school facilities within easy reach of all
our children, but we have in many instances gone no further than
Digitized by
Google
iNTBODUonoN xui
the mere enactment of such provisions. They are by no means
uniformly enforced — not even in the spirit of the law.
In many of our large cities a considerable proportion of our
children of elementary school grade are on part time for lack of
adequate school accommodations and tens of thousands of others are
in schools which ought long ago to have been abandoned. In rural
districts thousands of the smaller children reach school only by
traveling unreasonable distances, and it frequently happens that
they are then housed in most unsuitable buildings — lacking all the
ordinary comforts which are conducive to health and school prog-
ress. The decline in rural population has left many of these schools
with so small an enrollment as to render anything like efficient work
wholly impossible.
In the city the rapid growth of population and the constant
shifting of congested centers have made the problem of providing
suitable and adequate school facilities very difficult of solution. It
is gratifying, however, to note that in many places where the school
population has been increasing most rapidly — ^in the congested areas
of our tenement districts — splendid modern elementary school
buildings are springing up. Many of these are so magnificent and
substantial as to suggest the great cathedrals of the Middle Ages.
In the open country the movement for the consolidation of one-
teacher schools by the free transportation of pupils to some central
point in the district has made much progress in many sections and
promises an easy and satisfactory solution of this problem in all
communities where mountain barriers or impassable roads do not
render the plan impracticable.
In the field of secondary education the situation is far less
satisfactory. The feeling is not unconmion among large numbers of
our people — in city and in country — ^that the state's obligation has
been fully discharged when the mere rudiments of an education have
been provided at public expense. As a result, adequate educational
facilities above the elementary school grades are provided with
certainty only where the majority of the people are aware of the
educational possibilities of the golden period of adolescence. And
even in such communities the equipment of the high school plant
usually makes no adequate provision for all the work of a many-
sided curriculum. There are still large areas, including whole
states, where free secondary education is within reach of only a very
Digitized by
Google
Pupils in High Schcx>ls and Cco^lbges for Each i,ooo Pupils Enrocxed in
Elementary Schools in Each State in 1910
5.MA»»ACMWSrTT5
«a NOfTTM CAROllMAJ
69 hCNTuChv
3« NtW MtXiCO
5*. TCNNCaSttI
A5. VIR4INIA
9Z. NOHTN DAKOTA
19. MA^LANOl
r« 50UrM DAKOTA
tS. MiMOVffI
r*. ^tlMSVLMMi'
•«.NC0RAVU
^ANtW jti»acv
ri WiiCOHiiN 19 CONNtCI ICUT
e2lLUigOl5 ;OMinNt5orA ••Michigan
(Ftom publications of the RtuBell Sace Foundation. There if no food evidence that the diatributions bare
been radicaUy changed dnce 19x0 — the date of this chart.)
Digitized by
Google
Introduction xv
small fraction of the boys and girls that are eligible. At a time when
intelligent men and women everywhere agree that the free education
of all normal young people should continue well through the period
of adolescence, it is surely a violation of every principle of sound
democracy to deny high school advantages to any adolescent
merely because of untoward circumstances over which as an indi-
vidual he can have no control. Unhappily, too, these advantages
are most frequently denied to the alert and ambitious boys and
girls of the rural districts where it would seem the nation is just
now in most urgent need of capable leadership.
It is most gratifjring, however, to note the achievements of the
past two decades in the rapid extension of high schools. Up to the
year 1900 there were scarcely a dozen public institutions in all of the
South which by the best standards of the times could be called high
schools. These were exclusively in the large cities. Today almost
a thousand high grade public secondary schools exist in that section
alone and the progress elsewhere has been almost equally noteworthy.
A single small county in Indiana has built fifteen magnificent rural
high schools during the past eight years. The outlook for the im-
mediate future is bright. The recent rapid growth of permanent
state school funds and the practice of apportioning large grants of
money for the aid and encouragement of the smaller high schools
will in the near future — unless all signs fail — bring secondary edu-
cation, certainly in all our more thickly populated states, within
reach of all who really desire its benefits.
It is scarcely necessary to remark that there is need for a more
general equalization of opportunities for university, college and
technical school training at public expense among all the professional
and industrial groups in our complex population and for a more
equitable distribution of such facilities in the sparsely settled areas
of oiu* country. These readjustments are, in many respects, as
vital to the interests of democracy as is the general promotion of
elementary and secondary education among all the children of all
the people. Lack of space forbids the full development of this
statement.
The situation as described above, while satisfactory in many
respects, presents some bad symptons. The reason for the delay
in many sections — ^in city and in country — in providing school
facilities equally satisfactory in character and reasonably accessible
Digitized by
Google
xvi Intboduction
to all is certainly not due to any serious economic limitations. We
are living in a "surplus economy"; and our total taxable wealth
is adequate for the most severe demands which our school budgets
may make upon it. The real reason then must be found in the
survival of the undemocratic notion that some special consideration
is due the individuals and the communities which contribute the
larger share of the public taxes and that the less prosperous individ-
uals and the poorer communities — ^where usually children are most
numerous — ^are less worthy of consideration. The frequency with
which one may hear the well-to-do classes in our industrial cities re-
mark that such and such school accommodations are "good enough"
for the sweat shop districts and the frequency also with which one
may hear rural folk grant the easy assumption that city people in
general are for some reason "entitled" to better school facilities
than those living in the open coimtry furnish adequate proof that
we have not as a people clearly understood the state's equal obliga-
tion to all. Industrial cities have in many instances accumulated
tremendous taxable assets by removing the natural wealth from
forest and mine in larger areas, sometimes far removed. In some
cases they have found it all but impossible to expend their school
revenues raised from the levy of the minimum millage on an assess-
ment based on a fractional part of the market value of property. In
other instances the " meanest types of schools " have been maintained
for the minimum term only by an excessive burden of taxation upon
the " peasants " who still occupy these denuded mountains. A super-
ficial study of school district boundaries, of property assessments, of
tax rates and of school expenditures in almost any of our states will
at once reveal concrete evidence of glaring inequaUty. The only
real remedy for it must be found in the application of the democratic
principle of "taxing equally all the property of all the people for
the support of equal educational opportunities for all the children of
all the people." In theory this principle has long met with general
acceptance; in practice it has been by no means universally applied.
Until that has been done, the first step has not been taken in carry-
ing out the educational program of a truly democratic republic.
Provisions for Exceptional Children
Our school systems should be so organized and conducted as to
minister with equal diUgence to the needs of pupils of each of the
several grades of natural abiUty.
Digitized by
Google
Introduction xvii
It used to be assumed that the benefits of education were
heaven ordained for the privileged few and that at best these
advantages might be safely extended to such promising children
outside the ranks of the ''best families" as should in some way or
other give indication of the possibility of capable and useful leader-
ship.
With the development during the nineteenth centmy of a more
democratic concept of education, there have come not only free
schools for all but also some forms of educational compulsion,
covering at least the childhood period. This has resulted not
primarily from any philanthropic impulse to guarantee to childhood
its inalienable rights but rather from the conscious purpose of society
to protect itself from the burdens imposed by those who otherwise
might grow up morally vicious, physically defective or economically
dependent. This compulsion first took the form of enforced school
attendance. It brought into our school systems a large contingent
of children either mentally incompetent or physically unfit for prof-
itable participation in the traditional school program of studies
and activities. The rapid decline during the past twenty-five years
in the relative numbers in attendance at private "select" schools
for those thought to be especially capable has brought into the pub-
lic school systems another considerable group.
Our public school enrollment has since been more or less typ-
ical of all the social and industrial groups in our entire population
and is everjrwhere truly representative of all conceivable shades of
variation in individual native endowment of positive and sometimes
even of negative character. This is especially true in the elementary
grades. To state the facts in more scientific terms one might say
that there are about four per cent of talented pupils some of them
bordering on real genius; about ninety-two per cent who are neither
highly talented nor in any real sense feeble-minded ranging from
the bright, active and alert types all the way down to the slowest
and dullest; and about four per cent who may be designated as
feeble-minded, usually including a considerable number of really
deficient mentality.
Speaking in terms of their educability we need to designate only
two groups; the first composed of those who under proper instruc-
tion and training — ^including industrial as well as academic — ^may
become socially competent, that is, self supporting and more or less
Digitized by
Google
xviii Introduction
independent members of society; the second composed of a relatively
small number who, because of congenital weakness or defect or
through serious disease or other subsequent misfortune, will always
— in spite of any advantages which the school may offer — ^be and
remain socially incompetent, that is dependent upon others for
actual support and in most cases requiring institutional care. This
second group includes the morally insane, the violent, the demented,
the feeble-minded, epileptics, those suffering from chronic infectious
diseases, and such as are helplessly crippled or deformed. Not being
in any proper sense of the term educable subjects, they are usually
isolated in custodial institutions.
It may be said with respect to the larger group, those who are
educable and therefore socially competent — and this includes nearly
all the children in most communities — ^that the problem of making
adequate provision for all types of them seems to be one of growing
complexity. This is not really the case, however. The fact that
experts in our psychological clinics, in our schools of education and
in our public school systems have identified many types of misfits
and have discovered some of the causes for the considerable retarda-
tion which has clogged the machinery of our elementary school
grades has only emphasized the complexity of the problem. All
of these special investigations and studies have in one form or another
revealed the simple fact that children have individtud characteristics
and individtud needs. As a result educational authorities and teach-
ers everywhere are making commendable efforts to provide an
educational program of interest and of social value for every child.
They have greatly enriched the course of study in recent years and
have provided for new forms of instruction in a great variety of
special types of public institutions. These include in many of our
large centers at least the following schools or classes: for the blind,
for the deaf, for delinquents (including persistent truants), for
cripples, for anemics, for children suffering from nervous diseases,
for children having speech defects, for foreigners (until they learn
the elements of English), for the backward, for such as especially
need certain types of motor training, and for supernormal or ex-
ceptionally gifted children.^
*See Van Sickle, Witmer and Ayree, Provisumsfor Exceptional CkUdren in
Public SchoolSy United States Bureau of Education, Washington, D. C. Also
Mitchell, David, Schoola and Classes for Exceptional Children, RuaseU Sage
Foundation, New York.
Digitized by
Google
Introduction xix
The progress made in recent years in perfecting plans of school
organization by means of which children in any given school system
might be promoted with varying degrees of rapidity and on the
completion of different amounts of work is quite as gratifying and
commendable.*
It is not necessary to suggest that segregation affords many
practical advantages to so called '^ normal" children (from whose
classes many of them have been removed) as well as to the variants or
sub-deviates themselves. Nor is it necessary any longer to defend
the practice against the objections of those who once regarded it
as un-American and undemocratic. It must be at once obvious to
all intelligent citizens that equality of educational opportunity does
not necessarily imply identity or even similarity of educational
opportunity and that it is in the interests of both society and the
individual that th^e special provisions should be made. Any
educational program which is truly democratic must endeavor to
guarantee to every educable child the fullest measure of spiritual
freedom which is for him attainable — regardless of whether society
has designated him as a genius or a ^'supemormar' or has placed
upon him the stigma of "dullard," '^laggard" or "subnormal."
A Many-Sided Cueeiculum
The program of school studies and activities should be so many-
sided as to show equal deference to the tastes and interests and
needs — ^vocational and cultural — of all.
Much of what has been said under the previous heading would
apply with equal force in support of this proposition. Preparation
for participation in the ever increasingly complex social life of our
times demands a training as wide as life itself. Any intelligent
discussion of the "essentials" of education must be based on a clear
recognition of two fundamental facts; first, that no traditional
course of study, no branch of learning, no type of training, no
"discipline," may properly be regarded as an essential in education
in twentieth century America — ^no matter how important it may
have been at any previous period in history or among any other
people — ^unless it meets some distinctly human need in the life of
the individual or of society; second, that the individual's and
'See Holmes, W. H., School Organization and the Individual Child,
Worcester, Mass.
Digitized by
Google
XX Introduction
society's needs must to an ever increasing degree be supplied by
the ministry of the expert, the professional, whose specialized
knowledge and technical training may never be regarded as the
common essentials in the educational equipment required of all. A
clear recognition of these facts would lead to several important
results:
First. In the elementary school we should omit much of the
traditional subject-matter — ^not whole branches of study, but parts
of them — ^which belongs to the field of the specialist or which for
other reasons no longer functions in our new social order. If this
were done we should have ample time and opportunity to introduce
much new subject-matter which has large social value. We must
first trim the dead limbs from the tree of knowledge.
Second. In the secondary school we should surely place a
larger emphasis upon vocational training in the non-professional
callings. Is it not true that all education of adolescents worthy of
the name has ever been predominantly vocational in its purpose
even for the small number who until recently monopolized the
advantages of the secondary school? And is it not equally true
that for the great majority of men and women — ^in all the callings
of life — ^the truest happiness and the broadest and most genuinely
democratic culture has ever been attained through intelligent and
willing participation in some form of socially useful vocational
activity? It has already been well demonstrated in at least a few
places that the more nearly the secondary school approximates the
spirit of a splendidly organized cooperatively managed work shop
the more genuinely cultural is its discipline and the more certainly
continuing is its influence on most of those who participate in its
activities.
Third. In the field of higher professional education we should
no longer limit full recognition to the so-called learned professions
of law, medicine, and divinity. It is surely open to serious question
whether under the conditions of modem life the lawyer can render
society as significant service as the engineer, whether the physician
can relieve human misery as effectively as the sanitarian can prevent
it, or whether the minister can forestall moral and spiritual disaster
as successfully in most instances as the teacher can. Society still
needs and always will need the services of the ''learned" professions,
but their ministries alone will not suffice. Happily our state uni-
Digitized by
Google
Introduction xxi
versities and even many of our privately endowed colleges of liberal
arts are no longer, through the subtle influence of a "regular''
course, guiding into one line of professional pursuits men and women
preeminently fitted by native gifts and by acquired tastes for some
other. A score of new professions are opening the doorway of oppor-
tunity for multitudes of yoimg men and women to render large
human service and the day is fast coming when no institution of
higher learning chartered for the service of a democracy will wish
to enforce purely traditional requirements or arbitrary standards in
such manner as to close this door in the face of worthy young people
who have come from public high schools which are not — ^and never
ought to be — primarily "college preparatory" institutions.
Each of the several articles included in Part I of this volume
was written to illustrate the extent to which the social viewpoint
has come to dominate in theory and in practice some one or more
aspects of American education in all grades of schools and in all
types of educational institutions. The shifting of points of emphasis
in the curriculum of public education and the number of oppor-
tunities offered by the more flexible organization of the best schools
for larger participation in the common social interests of modern
life furnish ample evidence that schools of all grades are making a
willing response to the demands of twentieth century democracy.'
No Segregation op Social Classes
The school system should be so organized as not to encourage
or even permit the segregation of social classes and should be so
conducted as not to exemplify an undemocratic control of student
activities.
In defense of the first of these propositions it may be said that
the deep cleavage between the social classes in the life of adult soci-
ety— the rich and the poor, the learned and the unlearned, the
members of the "best families" and "common folks," the working
and the leisure groups, the orthodox and the dissenter — at once sug-
gests by contrast that the school is exerting a far-reaching influence
in promoting during the childhood period that social solidarity, that
large human sympathy and common brotherhood, which' is the
essence of true democracy. The American school is undoubtedly
'See Lewis, William D. Democracy's High School, Houghton Mifflin Co.,
New York.
Digitized by
Google
xxii Introduction
one of the very best loved social institutions of modem times and
chiefly, it would seem, because it has broken down so many of the
artificial barriers between social classes. So successful has our public
school system generally been in this respect that the term "common
school" is no longer a term of reproach but rather a badge of honor.
The time has indeed come when every private school must contrib-
ute to democracy as well as to academic eflSciency if it is to com-
mand general approval even among the social class primarily
responsible for its support. Every child of the republic must be
effectively taught to know and trained to feel that neither the rank
nor antiquity of his ancestors, nor his wealth or personal gifts nor
any other accident of fortune can command for him the respect of
his fellows; that this prize can be won only by personal merit.
With respect to the second contention it should be observed
that no matter how fine the ideals which determine the spirit of
control there still is need for eternal vigilance on the part of school
authorities lest a small clique within the student body should
unwittingly exemplify "boss rule" in the conduct of student activ-
ities. And every teacher should make conscious efforts every day
and every hour to promote among students that self control which
is the crowning individual achievement of a free people. School
authorities and teachers should never deceive themselves with the
belief that a school organized like an absolute monarchy can be
made an effective means for instruction and training in the princi-
ples of democracy.
Central and Local School Control
The administration and control of our educational systems
should be vested jointly in central and local authorities and the
highest intelligence and best judgment of expert and layman should
be brought to bear on the formulation and execution of general
educational policies.
The form and spirit of the oflScial control of schools furnishes
a topic the intelligent discussion of which will always be vital to
the interests of democracy. At the time of the educational revival
in New England almost one himdred years ago it was generally
believed that the decadent condition of public school sentiment was
due to the fact that the control of schools had fallen into the hands
of exclusively local and lay authorities. There has been a progress-
Digitized by
Google
iNTEODtJCTlON Xxiii
ive tendency since then to centralize authority in the control and
administration of schools and to place the conduct of schools and
school systems, state, municipal, and rural, under the supervision
of experts or professionally trained leaders. That this has on the
whole resulted in much improvement of educational conditions
must be obvious; that it is fraught with some dangers there can be
no doubt.
It is argued that centralization of authority promotes efficiency
by developing uniformity of educational policy and administrative
practice over large areas, that it permits the collective wisdom of
the larger group to control the actions of the smaller group, that it
guarantees some continuity of policy and that it makes possible
the development of the numerous types of educational experts
without whose guidance and supervision progress cannot be assured.
On the other hand the opponents of centralized control and
administration present some indictments which must not be too
lightly dismissed. They say it lacks adaptability to meet the needs
of communities differing widely in density of population, in indus-
tries, and in economic and social needs; that it uniformly results
in a waning of popular interest; that it diminishes the possibilities
of experimentation with new types of education; and that after a
time it tends to entail the evils of a bureaucracy.
That these advantages and disadvantages of centralization
follow in turn is a matter of common observation in many states
and local communities; that a complete return of the administrative
control of schools to local and lay authorities would be even more
disastrous is equally obvious.
The complete exercise of a given function may be divided between two
agencies, one of which represents the relatively expert and centralized aspect of
administration, the other the more democratic and locaL According to condi-
tions the initiative will be with one or the other of these agencies
Another ssrstem of correctives to centralization is that to be found in the
existence of bodies which, in the exercise of more or less localized functions, reflect
public opinion, inform official and centralized agencies, and in turn, through the
exercise of these powers, are themselves enlightened and have their appreciation
of the general system of administration enhanced
Lay agencies and commissions, temporary or permanent, should be devel-
oped widely to represent local sentiment, to study administration and finally to
express public opinion.
Digitized by
Google
xxiv Introduction
(Commissioner Snedden of Massachusetts suggests a rational
solution:*
The several articles included in Part II of this volume were
written — ^in most instances — ^to illustrate by concrete example
several types of non-official cooperating agencies, whose activities
stimulate local interest and prompt local enthusiasm, and whose
discussions are enlightening to central and local authorities charged
with the official control of public education. Upon such non-
official community organizations and auxiliary school societies as
these we must depend to keep alive the spirit of democratic con-
trol of public education when the forms of such control have
passed.
Education in the Post-School Period of Life
All the educational agencies of the local community, of the
state and of the nation should be brought to bear upon the post-
school education of both adolescents and adults.
That education — ^in the large meaning of the term — ^is the
greatest single human need, that it may be secured during the hours
of labor as certainly as during the hours of leisure, that it may
result from well directed toil as surely as from the study of books,
that it is not entirely dependent upon schools and colleges and
organized institutions of learning, that it is a life-long process and
the most certain means by which men may become free, have come
to be cardinal doctrines among thoughtful people. That so many
capable men and women in our day are devoting their time and
energies to the multiplication and direction of agencies in great
variety — official and non-official — ^for the promotion of the educa-
tion of all people, adults as well as children, furnishes the best
possible evidence that as a nation we are seeking to realize our
spiritual inheritance.
The recent rapid growth in the number and variety of contin-
uation schools and the widening scope of their service especially to
adolescents; the larger participation of university, college and tech-
nical school authorities in the education of non-collegiate groups at
centers far removed from seats of learning and in subjects other
than the standard courses offered by these institutions on the
* See Snedden, David. EducaHonal Readjustment^ Chapter X. Houghton,
Mifflin Co., New York.
Digitized by
Google
iNTBODUCnON XXV
campus; the extension activities of state departments of education
as exemplified by the recent developments in Massachusetts in
the establishment of a University Extension department or division
under the direction and control of the State Board of Education;
the establishment of scores of non-academic institutions offering
correspondence-study courses of a high grade and in a great variety
of technical subjects and enrolling hundreds of thousands of stu-
dents from all the walks of life; the growing tendency among city
school officials to throw school buildings open to community uses
for the special promotion of the education of the adult population
by providing lectures, concerts, moving pictures, etc., at public
expense and under public school direction and supervision as in
New York City; the public presentation in city and in country
of oratorios, dramas and historical pageants in which the whole
community may participate; the farm and home demonstrations
of the possibilities of improvement in rural economic, social and
living conditions by agents of the state and federal governments;
the organized efforts to bring good music, art and literature within
the reach of all classes everywhere and the participation of the
municipal, state and federal governments in the promotion of these
objects; the multiplied activities of official agencies local, state and
national in the promotion of adult education through official
exhibits and reports and through educational propaganda; the
aibtive participation of college and university experts in conferences
for the improvement of civic conditions and the enlargement and
enrichment of our national program of education all bear witness
to the increasing intelligence of all classes and to the growing faith
of a free people in the ministry of public education.
The fifteen separate articles in Part III of this volume describe
each in turn some special aspect of this comprehensive movement
for the extension of educational facilities among adolescents and
adults after their school days are over. It is most inspiring to read
these articles and be made to realize how many thoughtful men and
women in the great industrial pursuits, in factories and mills and
mines and shops, in stores, on railroad trains and elsewhere in the
crowded marts are, under the inspiration of this movement, increasing
their vocational efficiency while pondering great thoughts, profound
principles of life and conduct, gleaned from books; and to contem-
plate how many there are who in the silent hours of the night
Digitized by
Google
xxvi Introduction
are mastering the world's great literature and philosophy and sci-
ence. Each of these contributions not only tells its own story
effectively and interestingly but gives in passing many suggestions
of possible enlargement of the scope of extension activities and
many indications of growing enthusiasm for the whole movement.
No other one of the "new possibilities in education" is more vital
to the interests of democracy than the nation-wide attempt that is
now being made to keep alive the spirit of youth and progress
among all classes of the adult portion of our population and no
other single educational enterprise is likely to be more uniformly
successful and popular in the immediate future.*
Conclusion
Education — using the term in no narrow or pedantic sense —
is the chief business of a democracy. Because it comprehends every
human interest and may be made to minister to every human need
it must be made accessible and free. It is not alone for the gifted
nor for any special or privileged class. For most people (above the
elementary grades) it must be predominantly vocational, in order
that for them it may be truly cultural. All professional training
must aim at social service. Education must be controlled by all
the people in the interests of all the people, and it must be a con-
tinuing, life-long, process. Thus only may we as individuals and
as a nation come into full possession of the spiritual inheritance of
a free people.
• See Perry, A. C. The Extension of Public Education in the United Stales.
United States Bureau of Education, Washington, D. C.
Digitized by
Google
APPRECIATION OF MUSIC, LITERATURE AND ART
AS A SOCIAL AIM
By a. Duncan Yocum, Ph.D.,
ProfefiBor of Educational Research and Practice, School of Education, University
of Pennsylvania.
One of the most fundamental factors in the furtherance of
unity in our national life is the development of a popular taste for
music, literature and art. Such a taste furthers this national
unity both through the promotion of the common culture which is
essential to a truly social democracy, and through the creation of a
common pride in national aesthetic achievement that constitutes
one of the finer phases of patriotism. In a socially unhomogeneous
republic such as ours, each of these means to national unity must
supplement the other. A common culture confined to appreciation
of universal literature and art can promote a social intercourse
between groups otherwise segregated by nationality, specialization
and mode of life, without strengthening the emotional appeal of
national aesthetic achievement. Aesthetic education confined to
students in a particular type of institution or course of instruction
made so technical as to repel or to reject all who are not naturally
artistic, however strongly it may emotionalize national achievement,
makes of the more broadly educated class an aristocracy in aesthetics
as well as in learning. If our composite American people is to
become a whole people, democratic, socially homogeneous, and
politically homogeneous because socially homogeneous, each citizen
must be made a lover not only of music, literature and art universal,
but of American music, American literature and American art.
Our boys and girls should not be taught that there is no such
thing as American literature or that there are no great American
artists and composers. Even foreign-bom Americans, whatever
pride they feel in the aesthetic triumphs of the fatherland, should be
proud of the contributions their compatriots have made to the
aesthetic side of American life since they together came as immi-
grants to our shores. It is America that inspires the foreign-bom
genius; it is in America and for America that he labors, and it is the
1
Digitized by
Google
2 The Annals of the American Academy
recognition of Americans that is winning him renown. But after
all, that art is most strongly American which, in addition to being
"made in America," expresses our national spirit and emotionalizes
our national features and characteristics. Where its appeal is
powerful enough to add to the patriotism of childhood and youth
in place of borrowing from it an interest which it otherwise lacks,
it should form a conspicuous part of aesthetic training.
The Bar to Aesthetic Opportunity
However, the most fundamental contribution of aesthetic
training to citizenship and democracy is the common and intelligent
love of the beautiful which makes possible the finer forms of social
intercourse and is essential to the most manysided enjoyment of
individual leisure. Curiously enough it is in a free system of
public education rather than in prohibitive material and social
conditions, that aesthetic enjoyment finds its real limit. The only
obstacle which still stands in its way is a lack of that good taste and
manysided interest which education alone can develop. The bar to
an appreciation of the beautiful no longer lies in absence of oppor-
tunity that socially and economically limited environment denies.
On the one hand, individual leisure, both in the sense of short-
ened hours of employment and of multiplication of periods assigned
to rest and recreation, is steadily increasing. On the other, every
form of aesthetic enjoyment is being brought within the reach of all.
Every type of book can be cheaply bought. Free libraries, local and
circulating, make it possible to read the most expensive books for
the price of a couple of street car tickets or postage stamps. The
world's greatest pictures are reproduced in penny prints. Through a
miracle which we do not as yet fully understand the whole world
of nature and of art, so far as it is expressed in sound and in color,
however distant in time or space, can be faithfully and dramatically
reproduced through the phonograph and the moving pictures.
Dress can be made as harmonious and becoming in chintzes and
calicoes as in the wardrobe of a princess, while the laborer can
afford to gratify his taste in the furnishing of his cottage more
completely than the millionaire can express his artistic cravings
through his architects and decorators. We are potentially a
truer democracy in aesthetics than in economics or politics. We are
aesthetically undemocratic only in our education.
Digitized by
Google
Music, Literature and Art 3
Technique Undemocratic: Appreciation Democratic
To be sure, a system of public education offers equal opportu-
nity to every future citizen to become an artist. But opportunity
in the material sense is conditioned by a peculiar sort of ability
possessed by the chosen few. Until recently the boy who could not
learn to write a poem or an essay or even to comprehend and re-
member the technique which makes literature an art was denied the
story-telling, the dramatization, the unalloyed enjoyment of selected
masterpieces impressively interpreted, that would make him a lover
of literature in a variety of forms and through a multitude of
interpreters. Until the coming of the phonograph, the teaching of
music in the school has had for its aim singing by rote, without even
the possibility of teaching the pupils to identify and enjoy the
songs and themes of the great composers and to feel the thrill
of symphony and opera. Even now, the great majority of pupils
in the ordinary school are wasting their time in a hopeless effort
at self-expression through brush and pencil possible only to the
artistic few, when each one of them with a normal sense of form and
color could be surely taught to love nature, to appreciate beautiful
pictures, to select artistic ornaments and utensils and to wear ap-
propriate and becoming dress. The late Dr. Harris, former United
States Commissioner of Education, was wrong when he insisted
that we would become artistic in our industrial products when the
introduction of drawing into our public schools should develop
workmen capable of artistic design. We now know that our work-
manship and our merchandise will not become artistic until our
people are well enough educated aesthetically to enjoy and to
purchase the simple and the beautiful.
Whether in literature, painting or music, art is essentially
aristocratic. Aesthetic training, on the contrary, being possible for
all, results in a common love of the beautiful which must be added
to common opportunity for its enjoyment before America can
become aesthetically democratic. Those tendencies and practices
in the teaching of music, literature and art that emphasize the
development of aesthetic appreciation, therefore, will be most
helpful in pointing the way to the adjustment of the material and
method of instruction to the aesthetic demands of social life in a
republic.
Digitized by
Google
4 The Annals of the American Academy
Curiously enough, it is the irresistible movement toward
specific preparation for life, bitterly resented by lovers of culture,
that is most largely responsible for this changing emphasis. To
them the social aim means vocation. Confusing aesthetics with
general training in the sense of discipline and generally useful habits,
they have failed to see that every step toward more intensive
academic study is a step away from literature, music and art, while
the social aim, on the contrary, makes definite preparation for
leisure an end in itself, rather than a by-product of formal study.
A glimpse at some of the definite ways in which appreciation is
being taught in representative schools will serve not only to show
how far the social movement is furthering democracy in culture,
but to illustrate concretely some of the local conditions and dis-
tinctions already discussed.
The Over Analysis op The Literary Masterpiece
In the field of literature, so long as the four years of high
school English were largely confined to the technical analysis of a
few masterpieces as wholes, appreciation suffered not only through
failure to develop interest in a variety of writers and forms of
literature adequate to individual tastes and moods, but often
through the creation of a distaste for exhaustive literary study,
for the masterpieces exhaustively studied, and for the general
literature of which they served as types. Any mode of study that
turns attention from the masterpiece or passage as an emotional
whole to the meaning of petty details and even to the technical
means through which the emotion is produced, lessens appreciation
and enjoyment. If appreciation is to become universal and many-
sided, the study of artistic technique, whether in literature, music
or art, must be confined to special schools or elective courses, except
in those phases that can be so readily developed and become so
much a matter of course, as not only to avoid interference with
emotional appeal, but to be a part of it and to make it intelligent.
Dramatization, for example, especially in the earlier school
grades where pupils with minimum of preparation and costume
or as a spontaneous exercise take the parts of various characters in
their story-books, is being made in hundreds of schools a means to
appreciation of what is most fundamental in dramatic art.
Not only is this technical analysis being lessened or abandoned
Digitized by
Google
Music, LniDBATtmB and Abt 5
in high school and grammar school, but thoroughout the entire
school course. In its place, a number of factors almost wholly
aesthetic, or at least non-technical, are uniting to create a many-
aided love of literature. Story-telling by primary school teachers
and through phonograph records; the impressive reading by teacher
or expert of books and poems, which will not be followed by com-
position writing or quiz; dramatization, where pupils with minimum
preparation and costuming, take the parts of various characters
in their story-books; school plays, which through double or triple
castes, ensure general participation in dramatic activities; the
reading of several primary school readers each year in place of one;
the encouragement of individual reading through school libraries
and the posting or circulation of lists of books suitable for children
of various ages; the circulation by the school of such lists among
parents and the committees that purchase books for Sunday school
libraries; the requirement that pupils shall read a limited number
of books from a list embracing a great variety; the reaction in the
grammar school grades from the critical reading of two or three
masterpieces to the reading of miscellaneous selections from all
forms of literature as was the case with the older school readers;
the modification of college entrance requirements in English to
permit the substitution of evidence of wide reading or broad literary
interests for mastery of technique; all these practices are com-
bining to create a popular taste for what is beautiful in verse and in
prose.
Cultivation op the Love of Music
In music, as in literature, democratic culture demands a love
of music in a variety of forms — especially in the forms which
require a cultivated ear. Everybody loves some form of music
or other, but confined to a brass band, ragtime melodies, fox trots
and one-steps, or even the ordinary sort of hymns and Sunday
school songs, music cannot be regarded as cultural. Still the
beginnings of musical culture lie outside the school. The noblest
music has been adapted to sacred song and remains as a spiritual
possession of the people in common with the meaner melodies that
are more vulgar in religion than in art. Themes from the master-
pieces and songs that are themselves masterpieces are sung in the
home, played in the theater, or whistled by the street Arab. But
Digitized by
Google
6 The Annals of the American Academy
in spite of this universal singing and playing, we lack as a people the
sense of discrimination which finds greater pleasure in the artistic
than the mediocre. It is not that a love of ragtime and of oratorio
can not co-exist. Each is a form of self-expression adapted to
changing mood. But culture demands not only a response to the
sensuous in rhythm and harmony, but an intelligent and sympa-
thetic comprehension of the music which through the genius of
the master expresses the finer imaginings, emotions and aspirations
of the human soul, or miraculously interprets and emotionalizes
human experience. This involves something more than ability to
sing or to perform on piano or violin and something less than
training in musical technique.
Probably Dr. Flexner is right in his suggestion that "all
children should at least endeavor to learn some form of instrumental
music" even though he used it as a hypothetical illustration of pos-
sible forms of educational compulsion. All children should also
be "made to sing." The mediocrity of skill that usually results
is in itself a form of individual enjoyment and self-expression that
does not necessarily interfere with appreciation. Since part singing,
school orchestra, and even inartistic vocal and instrumental solos
make the enjoyment of music more active and social, they should
form a part of public education. Now that the phonograph is
making us more than ever dependent upon music in which we have
no part, it is especially significant that almost 50 per cent of the
two hundred thousand pupils in four hundred American high
schools are given training in chorus singing, 50 per cent of the
schools give some credit toward graduation for chorus work, and
two hundred and thirty-eight high schools have orchestras, though
but a third of them allow any credit for orchestral service. The
early giving of school credit for properly supervised private in-
struction in music by such school systems as those of Berkeley,
California, and Chelsea, Massachusetts, and more recently by those
of Pittsburgh and Hartford, may constitute the first step toward
the teaching of instrumental music in the public school.
While not necessary to an appreciation of good music, school
singing intensifies it for the patriotic songs, folk songs and lyrics
that are rapidly taking the place of exercise and rote. On the
other hand, it is hostile to appreciation only when it is confined to
elementary technique. Mr. Foresman's utilization of the phono-
Digitized by
Google
Music, Literature and Art 7'
graph in the teaching of vocal music by giving for the pupil's imita-
tion, marvelously trained voices and perfectly played instruments
in place of the halting notes of an unskilled teacher, and his linking
of the scale with masterpieces of beauty, have transformed the rote
lesson itself into a means to appreciation.
The chief sin of the school, however, in the teaching of music
has been the omission of work directly planned to develop apprecia-
tion. In the special report on "Music in the Public Schools,"
made by Mr. Earhart of Pittsburgh at the request of United States
Commissioner Claxton, only twenty-four among six hundred and
thirty-one' high schools had courses in musical appreciation and
but forty-nine in the history of music.
Unlike the influence of uniform college entrance requirements in
English, appreciation has not been sacrificed to a technique required
of all. Music has been taught only in its more elementary phases
and almost solely in the elementary school. Even in the college,
the champions of its traditional culture have strangely enough been
satisfied to leave symphony, grand opera and oratorio to individual
taste and opportunity. Its formal courses have been almost
wholly confined to advanced technical training open only to the
specialist, while its glee clubs and orchestras are hardly open
to the charge of elevating musical taste.
The Use op the Phonograph
The introduction of the phonograph into the school and the
multiplication of records which sympathetically reproduce most
of the great masterpieces remove the real bar to the development
of appreciation for what is finest in music in every period of educa-
tion. The teacher who might read a passage from literature im-
pressively is helpless to present a variety of musical selections.
Co5peration from local musical artists, such as that given by the
Combes Conservatory of Music to the Observation School of the
University of Pennsylvania during the summer of 1908, is rarely
practicable. Courses in musical appreciation based on the use of
phonograph records are practicable for every kind of school, from the
little red schoolhouse to the college class. Hundreds of victrolas
or other forms of phonographs and thousands of records have al-
ready been introduced into American schools. Dayton, Ohio,
has long had a victrola in every school, Los Angeles has eighty and
Digitized by
Google
8 Thb Annals of thb American Academy
Trenton sixteen. The danger is that they will become little more
than a source of amusement, with musical appreciation as incidental
an aim as in the home itself. Fortunately the phonograph com-
panies are themselves meeting this need with specially designed
machines, records and courses, though educational experts must
give the same serious study to this new movement as to other
factors in the course of study. In the report made to the University
of Wisconsin and the Department of Education by the State Music
Committee, a course in music appreciation is included among those
recommended to high schools having competent instructors in
music. It is based upon Miss Faulkner's course planned for the
Victor Talking Machine Company but advises the use of local
artists and advanced music students to supplement mechanical
musical instruments.
The work of this course is to study the form and structure of different kinds
of music, to learn the leading composers and become familiar with many of the
famous compositions, to study stories of various artists by means of the talking
machine and to get an idea of good interpretation. Credit, one-fifth, each
semester. This course is open to everyone who takes credit for private study.
Work such as this should begin in the first grade of the elementary
school and continue through the last stage of instruction.
The college should do as much for music as it does for literature.-
An advanced general course in the history of music should be
required to make or to keep students familiar with the school,
nationality, period and individual characteristics of composers,
supplemented by electives, required in various kinds of musical
composition, as in various fields of literature.
And basal for this common culture and a part of it in every
period of development should be a love of patriotic song and pride
in American singers, instrumentalists and composers and their
contributions to universal art.
Appreciation of Form and Color
After all, it is perhaps in art in the field of form and color that
the tendency toward aesthetic appreciation is most marked. Mr.
Famum in his recent report to United States Commissioner Claxton
sharply contrasts the mechanical conceptions of drawing as a school
subject held at the time of the Centennial Exposition of forty years
ago with those of today. To be sure, art appreciation is set down
Digitized by
Google
Music, Lttbraturb and Abt 9
as but one among several fundamental aims and is generally
subordinated to the "carefully guided practice" which is the
"surest if not the only road" to visual discrimination without which
"true appreciation of a work of art" is impossible. But "nearly
every supervisor gives opportunity for practice study in the drawing
course" and in the various means used to illustrate existing tenden-
cies, art appreciation is given prominent place. It is not without
significance that notwithstanding insistence upon actual work in
drawing as the "surest road," the detailed work in appreciation
given in certain of the illustrative courses is quite independent of
"practice." In the high school department of the Ethical Culture
School in New York City pupils who are not studying drawing are
allowed to take the course in appreciation.
From the standpoint of aiding observation, correlation with
manual training and some little contribution to appreciation that
cannot otherwise be gained, a limited amount of work in drawing
may be useful to all individuals. On the other hand, there are many
other ways of teaching observation than through drawing, and all
school studies that are not as highly specialized as advanced work
in drawing itself should be, can be efifectively taught without it.
Here, as elsewhere, the expert in education must analyze and
determine relative aims and values. Owing to the fact that the
planning and supervision of art courses has been given over ex-
clusively to specialists, there is the same added need for an open-
minded study of values as in the case of the high school subjects.
But art appreciation is an aim that is largely independent of the
development of skill and so far as the majority of the pupils are
concerned, should, like literary and musical appreciation, be required
throughout the school course with special emphasis of all that
makes for the development of pride in American art. Strangely
enough, the only course of study in which I happened to find an
injunction for this special emphasis was in that of Salt Lake City.
It is not a new sort of work that is needed but a more universal
requirement of what is already done in many schools. Excellent
reproductions of the great masterpieces can be obtained in penny
prints. The study of pictures and sculpture with the aid of such
books as John C. Van Dyke's How to Judge of a Picture, Miss
Emery's How to Enjoy Pictures, Coffin's A Child's Guide to Pictures,
niust, therefore, not be sacrificed in the vain effort to teach all
Digitized by
Google
10 The Annals of the American Academy
children how to draw. The following "leading questions," for
example, are used in Salt Lake City to increase appreciation of
pictures and make it more intelligent.
The thought the artist aimed to present — the soul of the picture; the artist's
ideal; wherein does the beauty of the picture consist; how far is the scene real, how
far is it idealized; setting of the picture, city or country, indoors or outdoors;
center of interest or main point, composition; source of light — ^what is told of
natural phenomena, storm, wind, sunshine, temperature, etc. What have you to
bring to the picture from your own knowledge of what others have said or written
or painted or sung? Title, interpretation. Technique; how was the original
picture made; by what process is the reproduction made? .... Is there a
something about the picture that cannot be expressed in words? Is that the
quality that made it necessary to express it as the artist did? etc.
The Technical Analysis of Pictures
Unlike a masterpiece of literature, which loses its emotional
appeal as a whole, if in its first impression attention is called to
details of technique, a picture continues to be seen* as a whole
even when attention is directed to its parts and its characteristics.
The picture is still there, each new beauty increasing the impression
made by the whole. The story or poem is lost as a whole as soon
as analysis begins. Hence while technical characteristics of a
literary or musical masterpiece must be matter of course and there-
fore habitual before they can add to its emotional appeal, the
technique of a painting may be studied in detail, during its initial
presentation, without distracting attention from the impression as
a whole. If so, the only objection to such questions as the following
taken from the Denver course lies in their complexity:
What locality is represented; point of view; extent of realism, idealism.
How expressed? By real or imaginary subjects, bearing in mind such principles
as the following: simplicity; breadth; repose; unity; harmony; proportion; equi-
librium; lines; relative tone values; variety; how secured; repetition; perspective,
gradation, subordination, concentration, definiteness, contrast, color— dominant,
analogous or complimentary harmony, warmth, coldness.
One thing is sure. Much that Mr. Farnum includes under the
general head of "Application and Correlation" is an end in itself that
should be realized and can be realized, whether drawing is taught or
not.
Home decoration, the selection of furniture, rugs, pictures and
ornaments, tasteful in themselves, appropriate to the kind of room
and in harmony with each other, is taught in some schools through
Digitized by
Google
Music, Literatube and Abt 11
model homes and color schemes, in others through the actual
fitting up of rooms. The fact that a schoolhouse has beautiful
and appropriate pictures upon its walls, or beautiful grounds and
school gardens which the pupils help to maintain does not necessarily
affect home lif6. In addition to such admirable lists of plants
appropriate for the school grounds and pictures suitable for school-
rooms as have been made by the Public School Art League of
Worcester, Massachusetts, there should be lists of plants appro-
priate for particular part9 of home gardens, and pictures suitable
for different sorts and sizes of rooms, particular colors of wall paper
and special nooks and niches. The planting of trees on the home
grounds of pupils, selected by vote of the school and approved by
parents, has been successfully tried by a teacher in Baltimore
County, Maryland, in place of the ordinary arbor day exercises.
When parents can be led to cooperate with the school authorities,
such arbor dajrs may lead the way to the making of rough drafts
showing the harmonious arrangements of flowers, shrubbery and
trees for individual front yards or lawns. By and by art teachers
may visit homes to praise any artistic things they can discover
and tactfully prepare the way for suggestions as to possible pur-
chases and locations for the rooms of their pupils or for contributions
made by the pupils to the home. Chicago school children are
loaned picture frames appropriate to particular pictures, in much the
same way that they are loaned good books. There is a sharp
contrast between art work such as this and the actual making of all
sorts of art objects, most of which become things of horror when
given prominent and inappropriate space by admiring or self-
sacrificing parents.
Effect of Industrial Art Work
Indeed, the distinctly vocational or industrial trend, which
applied art or drawing is taking in many high schools, is distinct
from the development of appreciation, if not hostile to it. A few
pupils are being taught to make jewelry, pottery and plaster casts,
to bind books, to make dresses, hats, collars and bags, in place of
all pupils being trained to select them. Where part of this work
takes the form of domestic art and girls are taught to do their
own hat-making and dressmaking, appropriateness and becoming-
ness can be directly and effectively taught, but even here selection
should not be ignored. More girls will buy their personal apparel
Digitized by
Google
12 Thb Annals of thb Ambbican Acadbht
than will make it. This fact has been strikingly illustrated lately
in York, Pennsylvania, where girls in continuation school classes
showed little interest when given the opportunity to study dress-
making and hat-trinmiing. In general the factory girl or the shop
girl wishes her leisure time for recreation in which she wears the
hats and the clothing she has earned the money to buy.
Even from the standpoint of self-expression, which has become
the chief aim of drawing and painting, selection is far more fun-
damental than skill. A glaring wall paper, a miscellany of bric-
a-brac, lamps or vases embossed and painted into caricatures of
the beautiful, hats that are fashionable but unbecoming, ostentatious
and flashy jewelry, conspicuous shoes, clothing that cries aloud to
attract the passerby — all that is intimately personal, is so obviously
expressive of the aesthetic self that whether or not one has personally
made it is immaterial, unless lack of skill in making it is accepted
as a partial apology for wearing it.
Conclusion
In short, whether in literature, music or art, the mass of in-
dividuals will always be consumers rather than producers. The
creation of the beautiful and skill in its manifestation belong to the
realm of specialization. Art is social only as it contributes to the
happiness of society rather than of an esoteric cult, and democratic
only where opportunity to acquire it is open to all who have more
than common ability. It is only when aesthetic education seeks
appreciation rather than skill and manifests itself in tasteful selec-
tion rather than artistic production that the fine arts can become
part of a culture that is social and democratic because it is .not only
open to all, but possible for all and required of all. Examples of
schools which emphasize various forms of appreciation have been
more or less haphazardly chosen. Only a complete aesthetic
siurey of American schools can show the extent to which each
community is contributing to these ends and give just credit for
leadership and conspicuous achievement. Only scientific investiga-
tion can determine what materials and methods are most effective.
But even a superficial glimpse at existing conditions and tendencies
shows that education is so adjusting itself to its new aesthetic re-
sponsibilities that a democracy of culture made possible by cheap
literature, the phonograph and the moving picture may soon come
to play its part in the evolution of a truly democratic republic
Digitized by
Google
SOCIAL TRAINING THROUGH SCHOOL GROUP
ACTIVITIES
By Ikving King, Ph.D.,
Assistant Ftofeaaor of Education, University of Iowa.
Current educational practice is marked in very many localities
by much attention to the social relations incident to the work of
the school. More and more are teachers appreciating the educa-
tional possibilities of these social relationships. The major part of
this paper is to be devoted to a presentation of some of the more
important and suggestive attempts to secure really valuable results
from school group activities. ^ It may be proper, however, to state
briefly, by way of introduction to what is to follow, the general
principles on which the social values depend.
The Influence op the Group Upon the Individual
It is a truism of social psychology that the individual is con-
trolled to a certain extent by the group to which he belongs. This
tendency to be influenced by the group pattern, or ideal, occurs
not merely with adults but in an especially striking mariner with
children as they approach the teen period. This control of the
group, while not always an unmixed blessing, may easily become
a valuable educative agency. The evil of it would appear of course
in those cases in which the group pattern chances to be a bad one,
and also when, if ever, the youth is simply impressed with the social
pattern with the result of suppressing his own individuality. Thus,
while it may be a good thing for the boy or girl to be restrained from
undesirable behavior by belonging to a group which does not ap-
prove of such a mode of action, it is good mainly in the proportion
in which the youngster grasps the approved line of conduct as an
ideal and, instead of merely obeying the mandate of the group,
actively embraces the attitude expressed by his companions and
finds in it genuine self-expression.
In other words, group control, to be really educative, must
prove to b^ ft stimulus to the self-activity of the individual^ some-
13
Digitized by
Google
14 The Annals of the American Academy
thing that really arouses the individual to fruitful action where he
would otherwise have been inactive. K the group control is exerted
along broadening and profitable lines it will have much real educa-
tional value for every person who participates. This educative
value obtains wherever worthwhile groups are formed, outside of
school as well as within. With the activities of children outside of
the school we shall not here attempt to deal. It is sufficient to say
that the literature describing the doings of gangs, clubs, etc., is
replete with illustrations of the educative values of group activities.^
We shall here pass at once to the problems of this sort presented by
the school.
All school life, with its classes, its study-room groups, its play-
ground, its school spirit and its class spirit, is a continuous process
of social education through group action. The educational values
of these more informal school activities we may also pass over. It
has been partly from a recognition of the power of the group, even
though exerted quite without premeditation, to shape the character
of the individual that many constructive thinkers and practical
workers in the fields of both secondary and elementary education
have sought to make more definite use of this social force. Another
motive has undoubtedly been largely present in all such efforts,
namely, the purely practical desire to hold within reasonable bounds
the insistent social tendencies of young people. Social activities
there will be, whether the teacher plans for them or not, and the
impulse for much of the constructive development which has re-
cently occurred is doubtless due to the need of facing the practical
situation of a lot of embryonic social groups and directing their
expression so there may be a minimum of undesirable consequences.
However, be the causes what they may, the present-day school is
rapidly coming to an appreciation of the educational significance of
school activities of the social type.
Types op Organization for Social Training
There is a wide range in the variety of efforts that are now
being made to promote a valuable social life in the school. Many
principals have been giving much patient attention to feasible ways
^ See Gunckel, BoyviUe; Buck, Boya* Self-governing Clvbs; Burkheimer and
Cohen, Boya^ Clvba; Puffer, The Boy and his Gang,
Digitized by
Google
Social Training and the School Group 15
and means. A great deal of thought has been given to the proper
administering of student activities in high schools.* Some high
schools have teachers especially charged with the duty of super-
vising and developing the social activities of the students. As to
specific types of development the following may be considered as
inclusive of much that is being currently attempted:
1. The socializatioQ of classroom work.
2. The development and supervision of group activities outside the class-
room.
3. Student participation in school government.
The success, that is to say the educational value, of all such
undertakings depends finally on the esprit de corps which may be
expected to develop in the class or school and which will supposedly
furnish a social stimulus for more energetic action on the part of
the pupils along the lines planned and to some extent suggested by
the school authorities.
The Socialization op Classroom Work
We shall consider first the somewhat wide range of activities
which may be included under the socialization of the work of the '
classroom. The purpose of all such efforts is to throw more respon-
sibility upon the pupils for the conduct of their work, to teach them
social codperation and group spirit by making the work of the
classes more of the nature of cooperative undertakings. In such a
class the teacher and the pupils form a real social group, the teacher
a leader and stimulator in the general group activity but leaving
much to the initiative of pupils in the planning of the conduct of
the class, in finding problems, and in methods of solving them.
Professor Scott's Efforts. — One of the earlier efforts
to develop and demonstrate the effectiveness of the group
as a means of stimulating learning processes was that of Professor
Colin Scott, described by him in detail in his Social EducaUon.
The essential features of Scott's plan consisted in giving opportu-
nity to children (first of the third grade and later in various higher
grades including high and normal schools) to organize on their own
' See Chapter XVI in Johnston's Modem High School, for a suggestive accoimt
of the problem and a suggested method of administering, prepared by Prin. Jesse
B. Davis of the Central High School, Grand Rapids, Michigan.
Digitized by
Google
16 The Annals op the American Academy
initiative into small groups for the purpose of carrying on any
activity which interested them jointly. For the younger children
short periods during the school session were allowed for this "self-
organized group work/' as Scott calls it. The problems chosen by
the children seem to have been rather definitely along the line
of legitimate school interests. There were printing, cooking,
photographic, dramatic and manyal arts groups and others. The
condition on which any self-constituted group was permitted to
undertake work of its own choosing was that the work be approved
by the teacher and quite definitely planned both as to method and
time required by the children proposing it. Each project launched
under these conditions was carried out by the children without
interference by the teacher even to save it from threatened failure.
The children learned to plan and to work cooperatively. They
experienced and learned to overcfome many of the real difficulties
which are apt to develop in any group enterprise. The social train-
ing incident to this type of work had unquestioned value and the
social motivation to intellectual effort and to manual dexterity made
it a very efifective method of "learning" in the narrower meaning
.of that term. In fact one cannot but feel, in reading the accoimt,
that in some respects the learning was more effective than that
which occurs in formal class instruction.
The Parker School Experiments. — Another set of illustra-
tions of the social and more narrowly educational values of group
work may be found in a monograph entitled, "The Social Motive
in School Work," issued by the faculty of The Francis W. Parker
School, Chicago, in 1912. There are here given many significant
illustrations of small children's capacity to plan and carry out
group enterprises. A special part of the school yard was set aside
as "investigation lane" for these group projects, which seem to
have been mostly house building enterprises. The Year Book of
this same school for the next year (1913) tells how groups of children
assumed responsibility for the morning exercises and gives many
illustrations of how these groups planned and carried out interesting
demonstrations for the entertainment and instruction of their
mates.
History in the* Charlestown, Massachusetts, High
School. — The projects thus far described have paved the way for
the more definite socialization of class work by showing that group
Digitized by
Google
Social Training and the School Group 17
work with a large amount of self-direction is not only possible
but quite worth while, whether it be considered from a social or
from a narrowly intellectual point of view. One of the earlier
attempts at socializing class work is described by Miss Lotta Clark,
a history teacher in the Charlestown, Mass., High School.* As this
work of Miss Clark is well known it will be given only brief mention
here but any reader who is unfamiliar with it would do well to con-
sult the suggestive account of it given in Miss Clark's own words.
In brief, the plan, which has been in operation for some thirteen
years and has been adopted by other teachers in the same school,
consists in the organization of the class into a parliamentary club,
with chairman and secretary appointed by the class and changed
at regular intervals. The recitations were made not in response to
questions but were voluntary offerings. The class formed a co5p-
erative group for the study of history in which not merely was the
text studied but much outside material was brought in according
to the differing interests and abilities of the members of the class.
Thrown on its own initiative, the class made rapid progress, did the
work thoroughly, and covered much more ground than had been
covered by previous classes.
One of the marked characteristics of such group activity is its
zestfulness, the energy displayed by the pupils in following up their
self-imposed tasks. Teachers testify to their surprise at finding
what such classes are capable of doing. Miss Clark says that she
learned that "no teacher is equal to the dynamic force of the class
before her." In most classes this dynamic force is slumbering be-
cause of the abnormal and artificial social conditions imposed upon
them. Group work and group responsibility seem to awaken a
response, an energy, a resourcefulness in pupils that seldom appears
in the ordinary, formal, teacher-conducted recitation. In this
connection. Miss Alice L. Marsh, at the conclusion of a suggestive
description of her experience in socializing classroom activity, says,
in commenting upon a surprising ability which had come to the
surface in a boy in one of the groups, "I've a notion that Henry
(and I might have added with truth, every boy and girl) has more
in him than either you or I have ever succeeded in bringing out."*
This is a common observation of those who have tried to utilize the
» "A Good Way to Teach History," School Review, 17: 256.
* "Sodalixing Influences in the Classroom/' The English Journal, 5: 89.
Digitized by
Google
18 The Annals of the American Academy
group spirit and the social motive. Children are surprisingly
resourceful and energetic when they are given a chance to do some-
thing for themselves.
English in the Eastern High School, Detroit. — In the
following paragraphs we give a condensed account of Miss Marsh's
efforts to cultivate a social and cooperative spirit in her English
classes in the Detroit Eastern High School. She first sought to
arouse the friendly group spirit among the pupils by enlisting the
help of the boys, under the direction of one or two especially capable
ones, in the renovation of the rather shabby furniture of the class-
room, and by having a social hour for the girls in which two were
asked to present some facts from the life and work of Jane Addams.
After taldng several steps in the development of a social conscious-
ness, she proposed to her five English classes that they organize as
literary societies. These societies were conducted according to
parliamentary usage.
The minutes of the literary societies stimulated the making of special reports,
and I therefore kept my eyes open for points that would be of interest to different
types of students. One student reported on a short but very thriving story on
the treatment of political prisoners in Russia This started two lines
of research: one on "Prison Reform " and the other on "The Characteristics of the
Russian People.'' The latter was managed by a yoimg man, a Russian Jew,
unusually intelligent, who had been in this country three years. His choice and
arrangement of topics were fine
The two boys in charge of "Prison Reform" were of the type that not only
manage to get their lessons and keep track of the progress of the recitation, but
at the same time make life miserable for the teacher. I made them into a team
and sent them to investigate the neighboring branch libraries. I gave them a
hint about PooU^b Index and The Reader'a Guide. They came back jubilant the
next day, having spent the previous afternoon in the quest. Their list included
twentynseven references, neatly arranged These two boys continued
as chairmen, assigning topics and seeing to it that someone was ready to report
each day.
We included debates in our work, discussing labor questions, municipal
ownership of railways and kindred topics
The further work of these classes covers a considerable range
of topics and gives evidence of much initiative on the part of the
students. Among other things each class edited a newspaper as a
means of vitalizing the work in old English and Scotch ballads.
The students organized among themselves. Five members of each class
were chosen by ballot to act as the editorial staff. Each of these in turn selected
Digitized by
Google
Social Tkaining and the School Group 19
five students to work with him, in soliciting material and in building up some
department of the paper. Under their strenuous efiforts talent which I had never
suspected came to light. They studied details and produced editorials on the
outrages perpetrated by the Lowlanders, and kindred topics.
For each special ability there were opportunities for expression,
joke columns, typewriting for those who knew how, artistic head-
lines from those skilled in lettering, cartoons and illustrations from
the students gifted in drawing; the girls furnished the society notes.
The chairmen came to me and said there were some who had done little or
nothing by way of cooperation. "Do you want me to interfere?" I inquired.
"I should really like to have you see the whole thing through yoursdives, if it
were possible." What arguments were used or what persuasion was brought to
bear on these delinquents I have no means of knowing, but eventually all had
helped and the papers, "oiur" papers, were completed.
This account is quoted at some length to give some idea of the
details of special phases. Miss Marsh in a letter writes further of
the expansion of the socialized ideal the following year. The club
idea spread to other classes and much attention is given to problems
of civic and social welfare which the pupils are face, to face with in
their every-day life.
Composition Work in Shortridge High School, Indianap-
olis.— The following account of a socialized type of class work being
developed in the Shortridge High School of Indianapolis is given
through the courtesy of Mrs. Rose M. R. Mickels of the Depart-
ment of English.*
The experiment herein described was made with a view to improving com-
position work. The lessons jn hterature were delightfully informal and inspiring,
but composition classes were less successful. I therefore resorted to this plan,
which I tried out in several classes, ranging from English III to English VII.
What follows describes the work of an English VII class. This class numbered
thirty. I divided the class into six groups of five pupils each. One member of
each group was asked to act as presiding officer for that group.
On Monday of each week the six groups distributed themselves about the
classroom and began work. The president called his group to order and inquired
whether all had done the assigned work. If anyone was unprepared, the president
inf(Hrmed me when I made my rounds. Thai the members read to one another
thmr work. This was commented upon, at first as to interest. I soon discovered
that every member was eager to be foimd interesting. Themes of unusual interest
were found and reported to me. They were later read in the class. The president
* Communicated by Mrs. Delia McCurdy Thompson, of Shortridge High
School, Adviser of Girls.
Digitized by
Google
20 Thb Annals of thb Ambbican Acadbmt
of the division heard oritioiamB on sentence structure and advised on doubtful
points in punctuation, and other matters of form. At the close of the period he
took up the themes belonging to his group for an inspection of the written work.
His own th^ne he gave to the members of his own group in turn. The president's
theme was expected to be a model, but members of the group were free to oritioiae
it in any way it needed.
I spent the class hour in going from group to group. Sometimes a section
would have something so good that it could hardly wait for my visit. The best
things were read to me and points on which the groups could not agree were
referred to me. I have found that the president is especially delighted when some
member of a group who has not been a credit to it begins to improve. The whole
group, indeed, exults in his success and is eager to have me know of his improve-
ment. Sometimes I find in a group a certain error that the entire class needs to
consider. When this happens I call attention and explain the point. The inti-
macy to which the pupils admit me is surprising and I find that this tones down
my criticism. I can offer it as only one friend to another.
As this plan involves considerable extra work for the presidents I have
recognized this by a slight addition to their term grades, but the extra credit, I
think, affects their interest very little. They do the deed for the deed's sake.
We also kept a record of oiu: outside reading. This furnishes us with a com-
mon interest, for when one finds an unusually good story or book, he naturally
wants the group to share in his pleasure. This class read more in this term than
any other class I have ever had.
I took up the written work about once a month, looked it over and graded
it. I was surprised to find how little I had to correct in the way of faulty sentence
structure, punctuation or spelling. This left me free to comment on other thingi,
method of presentation, diction, etc. I never asked the members of the group to
grade the papers they corrected. A pupil who was failing was reported to me
privately by his president and I gave him at once such aid as I could. As a matter
of fact we had but one failure in the class. He had had a long record of failures
to which he added in this case, by leaving school before the end of the term.
I never asked the class how they liked the experiment. We had a numbtf of
visitors who were deeply interested in oiu: work. When they wanted information
I turned them loose among the class. I never asked them what they learned
there, but they usually insisted upon telling me of the enthusiasm they found.
At the close of the term a number of personal notes were placed on my desk.
They had been written by the group presidents in behalf of their respective groups
to thank me for the freedom and enjoyment oiu: methods of work had given them.
They said that the work had been imusually hard but that it had also been
unusually stimulating and helpful. Several difficulties presented themselves,
indeed one may see at a glance that the plan is far from perfect. It works better
with older pupils. It is sometimes difficult to find the right students for leade^
ship. It does not always cure ingrown laziness on the i>art of certain individuals.
But it does what I expect it to do. It enables us to be mutually helpful and to
accomplish even more in theme writing than was possible by the old method.
Digitized by
Google
Social Training and th» School Group 21
The Principlb Applibd in a Gbombtry Class. — One of the
writer's former students has furnished him with an account of a
self-conducted geometry class which showed the same spirit of
initiative and ability to plan and push its work forward that Miss
Clark found in her history classes. This class finished its text three
weeks sooner than other classes had done and did besides much
ori^al and outside work of its own devising.
One morning I learned that a contest had been planned. The girl who made
the neatest geometrically designed doily or centerpiece, and the boy who drew
ihB best plan for the school grounds were each to receive pennants. The most
interesting feature of this experiment was the class spirit. There was always a
spirit of wholesome competition as well as a determination to stand by one anoth^
and give proper assistance to the weaker pupils, so that all might complete the
course. One weak student dropped out of the class after trying in vain to do the
work. This was a genuine disappointment to the other members of the class
who had worked so hard to save her. Many times through the year the pupils
expressed themselves very strongly in favor of having their other teachers adopt
the plan used in this geometry class as a better means of getting them into the
subjects. At the end of the semester one of the boys said that he considered the
experience he got from the self-conducted geometry class as worth $600.00 in-
vested at 6 per cent interest, compounded annually.
The Development and Supervision of Group Activities
Outside of the Classroom
These are naturally of the widest variety and afford even more
opportunity than does the socialized class for individual initiative,
leadership and social co5peration. We have already referred to the
problem of supervision and as that phase is only indirectly con-
nected with the present paper we shall say nothing further about
it. Supervision is of course necessary that the best educative
values may be realized. The social values are loyalty, lawfulness
and cooperation. Besides this the members of such groups have
their intellectual outlook broadened and enriched. In comparatively
small schools some interesting work is being done to weld the school
as a whole into a true social group. Miss Wilson, principal of the
Crawfordsville (Indiana) High School, writes of her school as having
the spirit of a large family. The girls are organized into a "Sun-
shine Club" which does much for the social interests of the school
and of the community. The boys co5perate as honorary members.
The "family reunions" of this school do much to keep alive the
Digitized by
Google
22 Thb Annals of thb Abierican Acadbht '
spirit of social solidarity the influence of which upon the individual
is marked.
Club Activities in the Lincoln Nebraska High School. —
In the larger schools the subordinate groups are essential to the
development of the social life. The vice-principal of the Lincoln,
Nebraska, High School writes thus of their development of student
activities:
The most extensive activity is the Nebraska Radio Association, a group of
Lincoln High School bo3rs who meet weekly, have parliamentary dnll and discuss
wireless telegraphy. They have at several of their homes some very complete
and e:q>ensive wireless apparatus, so that they can listen to government messages
from Tampa and other long distances. Many of these boys have become excep-
tionally sldllf ul and could easily obtain positions with the government if they so
desired. This is an interesting illustration of a practical intellectual benefit due
largely to the cooperative activity of a self-organized group
Another thing that we are doing in Lincoln High School is to divide all the
students into "home-room" clubs. The student reports at this home room when
he comes in the morning. Here the roll is taken and on Monday mornings they
spend a forty-minute period in this home room. Each teacher may use this forty
minutes as desired. In some rooms they use the time studying but in others
they have organized clubs for special purposes, in one room for pleasure, in another
for baseball, but the one I have in mind to especially tell you about is the one
where they have organized a club for the purpose of raising money to assist needy
students. In this club they are really doing something for somebody else and it
brings about a democratic feeling in a work which benefits themselves in doing
for others.
Then we have various high school organizations such as the Ciceronian Debat-
ing Society which meets bi-weekly for parliamentary drill and debate. During
the year they also have parties and suppers and occasionally a dance. The largest
organization is the Junior Civic League. In the High School this includes all
the Freshmen. In the Grade Schools it includes all the upper grades. Th^
study home civic conditions and several times a year they make excursions to
various points of interest about the city for the sake of learning about their home
town. A number of divisions of this league have started to do some special thing
for their section of the city. I am enclosing a little paper, "The Civic Standard"
which will give you some Idea of what they are trying to do.*
Student Organizations at the Sioux City High School. —
In the Sioux City, la., High School among other student organiza-
tions there is one called the Hi-Y boys which, while organized by
the secretary of the Y. M. C. A.,
is made up entirely of high school boys, not necessarily members of the Y. M. C. A.
These boys meet every Friday evening at the high school at six o'clock where
' Quoted from a letter from Vioe^rinoipal J. J. Marshall, linooln, Neb,
Digitized by
Google
Social Training and the School Group 23
they have a light luncheon in the lunch room forVhich there is a charge of 15
cents. They usually have a speaker for the occasion. Recently they had a "dad
and sons' meeting" where every boy was expected to bring his father. This was
v^ successful. Their motto is clean speech, clean living, clean athletics. This
club of boys has done more to clean up athletics and to bring about a desire on
the part of many boys for higher hving than a group of men could do in years.
Most of the boys have signed an agreement to refrain from cigarette smoking.
While many have slipped back it has nevertheless been a lever which the club
has used to help pull themselves away from the habit.
The girls' friendship club ought to promote cleaner living and cleaner think-
ing on the part of the girls and I think it will. The hterary societies give our
boys and girls opportimity to develop along declamatory and debating lines.
The question has often been put to me by college professors who have had some
of our students, " Why are your students so strong on their feet and so much more
able to express themselves than students from many other high schools?" I have
decided that this ability is largely due to the clubs.
Our work in student musical organizations tends to develop along lines that
are a tittle higher than those developed in athletics and opens up a new vista to
many who thought they had no musical abitity whatsoever. Our school plays
have the same effect. A number of boys who did very poor work in their studies
before they took up music have become much better students since taking up
this and other forms of group work. Athletics help to keep more of our boys in
school Many who would drop out at the end of the first year or who would
flunk along semester after semester manage to pull through so long as they have
the athletic goal before them.^
Over-socialized High Schools. — One practical feature of all
student social activities is that of their cost both in time and money.
Their feasonable limitation in these particulars provides an impor-
tant means of training for high school pupils. There is no doubt
that the student activities of many high schools are excessive and
this has caused some critics to raise the question as to whether they
should not be suppressed altogether. On this point Principal Mc-
Cowan, quoted above, has this comment:
I feel that there are, very often, over-sociaUzed high schools. When I came
to Sioux City six years ago the social organizations were running riot. Each organ-
isation was permitted to have as many social affairs during the school year as it
pleased. There was no limit to the expense. Reports from the parents of some
of the pupils brought out the fact that the social life of the high school was costing
many of them twenty-five to thirty-five dollars a year. A parent in one case,
who had a daughter in school, complained that her assessments and dues had
amounted to twenty-five dollars. The expenses of the boys were naturally
hj^er. For some of the parties given by the boys* clubs the assessment was five
' Quoted from letters from Principal J. S. McCowan, of the Sioux City, Iowa,
High School.
Digitized by
Google
24 Thb Annals of thb Ambbican Acadbht
dollars apiece, and two dollars was very oommon. Now^ the cmnuoX expense to
each member must not exceed two dollars. No assessments are permitted. Club
parties used to cost $250.00, now no club is permitted to spend more than $55.00.
[ think the cause of the excesses lay in the fact there was no faculty supervision*
Clubs used to be allowed to do exactly as they pleased without any suggestion
from the authorities. Suggestions were resented. Some parents were forced to
take their children from school because of the expense of the social life*
I think, however, that properly directed student activities are a very fine
thing for American boys and girls. In order that they may have the greatest
value, however, they must be properly directed and controlled or, instead of the
results being good, they can be only bad.
Comments op College Students. — In the following para-
graphs are given the opinions of college students as to the benefits
they derived from student activities in their high school days. It
will be noted that they emphasize the value of the training in respon-
sibility through self-directed enterprises and the tendency of such
organizations to develop democratic co5peration among different
types of students. These two points perhaps include much of the
value of student activities.
The one social activity of my high school life which I recall as of most value
was the senior class play. The entire responsibility for the play was taken by the
class. They made their arrangements for a coach, for a theatre and for the adver-
tising, all, however, subject to the approval of the principal. Every phase of the
undertaking was discussed enthusiastically and without restraint by the whole
class. We all gave our ideas and all had our parts both as individual^ and as
members of committees. Much democratic feeling was developed by these plays.
One should also mention the awakening of the spirit of united effort and the sub-
ordination of the self-interests for the common good.
Another student writes of the business as well as literary experi-
ence she derived from work upon the school paper. The following
account of the work of the literary societies in a school, while pre-
senting nothing unusual, does illustrate the energetic way in which
pupils take hold of the self -conducted enterprises.
One illustration of the codperation that developed among the students of
these societies is that of a ''Fair'' given by my society in one of the halls of the
town on a Saturday. Money was needed by the high school for books for its
library and each society contributed to the fund. For six weeks we prepared for
this ''Fair." Conmiittees were appointed, each being responsible for some phase
of the undertaking. Each student had some particular part at certain time.
All helped to decorate the hall. Each borrowed furniture from some one in the
oommimity and was responsible for the care and return of it. The girls made
Digitized by
Google
Social Training and thb School Group 25
aprons and cakes and donated them to the society. The girls were divided into
groups of three or four each one of which had to make at least one dollar's worth
of sugar into candy.
Various other preparations are noted which need not be re-
peated. Every high school in the country could give such illustra-
tions. Their value as a means of social training is unquestioned.
Experiments Now in Progress. — The limitations of time and
space do not permit of the offering of much other material on student
activities. In larger schools they are usually elaborately developed
but they do not reveal any diflferences in principle from those in the
smaller schools. The inquiries directed by the writer to persons
interested in these things in high schools shows that in the main
the teachers are absorbed in the rather insistent problems of spon-
sorship and general oversight and have not yet learned to evaluate
the results or to measure them in any very definite way. All sorts
of interesting experiments are today being tried out and when these
are adequately reported .we shall know much more that is worth
while regarding the social-educational values of such types of effort.
Student Participation in School Government
Of this, phase of group action we shall here say little. It has
been widely advertised and discussed and represents, in the writer's
way of looking at it, a very important character-forming influence.
Group responsibility for a good school is fostered and the control
of the group over the individual is well illustrated.
While there are many schools both elementary and secondary
which are trying with success various forms of pupil-participation
in school government, there is stilly a surprising ignorance of and
prejudice against the idea in the minds of many school-men. No
one movement accomplishes more for practical moral education
than does this and moral education is admittedly the greatest need
of American education today. When we reflect upon the social and
moral needs of our school children we cannot but feel that an undue
amount of time is being spent upon questions of administration
and on courses of study which have little ultimate significance for
character formation, the one great problem before our coimtry at
the present time.
Digitized by
Google
TRAINING IN ^HE SCHOOLS FOR CIVIC EFFICIENCY
By J. Lynn Barnard, Ph.D.,
Professor of History^^and Government, Philadelphia School of Pedagogy.
Time was when a man could be a most efficient individual in
his business or profession, in his church relationships, in all matters
of personal concern, and at the same time be utterly inefficient or
even conscienceless as a member of the body politic. Religion and
politics were not to be mixed, nor were religion and business.
But politics might become the handmaiden of business — especially
big business! Democracy seemed to be breaking down, and most
noticeably in our cities. Our reforms were spasms: our relapses
were recoveries — ^returns to the normal order of things.
But this epoch, we believe, is slowly passing. The younger
generation are learning to think straight and true in public matters,
whether of city, state, or nation. They really want to be good citi-
zens, and they are coming to see that "the test of good citizenship
lies in the existence of an intelligent, continuing interest in the ques-
tions of good .... government.'' We are all learning that
the supremest effort must be made to "combine efficiency with our
popular sovereignty.''
The press, the pulpit, women's clubs, civic associations, and
finally the colleges, — all these and others have helped to start what
promises to be a veritable tidal wave of civic interest and enlight-
enment. Have the schools been doipg their part in this training for
civic efficiency? If not, are they awake to the fact and laying plans
for the future? The first question is easily answered, and with an
emphatic negative which has no need of proof. The second query
is as readily met, and with an affirmative the proof of which it is the
purpose of this brief article to present.
Since any education which has the remotest bearing on life is
ndirect preparation for the performance of civic duties, it is
ious that only direct preparation for the meeting of civic obli-
ons is here to be considered.
Formal instruction in civics seems to have come into our schools
26
Digitized by
Google
Training ^r Civic Efficiency 27
soon after the Civil War, in the form of a clause-by-clause memoriza-
tion of the Federal Constitution, interspersed with salaries and
terms of office of government officials. Probably intended at the
beginning to inculcate a spirit of nationality, as opposed to states
rights, in course of time it came to have no justification whatever
and simply lingered on till something vital should come to take its
place. In the conservative East it has had to wait for nearly half a
century!
A course so lacking in interest for pupil and teacher alike, and
so valueless as a means of real civic training, could hardly fail to be
attacked from all sides. The National Education Association, the
National Municipal League, the American Political Science Asso-
ciation, the American Historical Association, and the National
Bureau of Education — not to mention others — ^have recently joined
in the onslaught. And the day of deliverance is at hand for long-
suffering youngsters and apathetic teachers. Fortunately, codp-
eration between these various organizations has been effected and
much valuable time saved.
Theory of the New Civics
In order that what has been worked out in this co5perative
fashion may be understood, it may not be amiss to state briefly the
reasoning that underlies the New Civics.
The object of teaching, generally, may be stated as twofold:
first, cultural, to acquaint the child with his environment; second,
practical, to train for citizenship. There are various sorts of envi-
ronment, each with its corresponding field of study. Among others
is that man-made, social environment which we term the community,
and the study of which we call civics. The community has been
well defined as a group of people in a single locality, bound together
by common interests and subject to common rules or laws. And the
various types of community include the home, the school, the church,
the shop, the state. A citizen is anyone who participates in com-
munity action, sharing its privileges and properly subject to a share
in its duties and responsibilities. The good citizen is one who man-
fully shoulders his obligations as a citizen and performs his part well
as a member of his community. All are citizens, whether young or
old, for all are members of one or more of these communities — al-
ways including the state.
Digitized by
Google
28 Thb Annals of thb AiamcAN Acadshy
Civics, then, on its cultural side is the study of that social en-
vironment we call the community; on its practical side it is a training
for efficient community service and particularly in that type of
conmiunity which we term the state. And this leads us to the con-
clusion that civics as a school subject includes both a curriculum of
studies and a curriculum of activities. How far away this leads us
from the old-time memory endurance test can well be imagined.
The steps in this newer sort of civic training would naturally be:
first, to secure a fund of practical information about civic matters;
second, to arouse interest in the problems studied; third, to stimulate
to such co5peration with community agencies as the maturity and
experience of the pupil enables him (or her) to oflfer, — ^for, be it re-
membered, the " good citizen " must be good for something. Equally
patent, it would seem, but so long overlooked in the teaching of
civics,isthe method of approach. From the near to the remote, from
the simple to the complex, from the concrete to the abstract, from
function to structure, from local to state and national, from mat-
ters of current interest to those of origin and growth, — how else
than by this method — ^at once scientific and " commonsensible" —
can the live interest of the boy and girl be roused and their wills be
strengthened to lend a hand wherever they can? And this making
of good-for-something citizens — of city, state, and nation — ^is the
final goal of the New Civics.
A Practical Proqbam fob the Elbmentabt Schools
And now for a practical program of civic education for our
young citizens. As it is developing over the country for the elem-
tary schools, this program is one in aim and in point of view; while
in method and in detail two main types are emerging, to one or the
other of which all others are likely to conform — until such time as
the two plans shall be happily blended.
The first of these methods, splendidly exemplified by Indian-
apolis, one of the pioneer cities in genuine civic training, makes no
attempt to teach civics as a separate subject before the last year of
the grammar school. It depends, rather, upon so correlating the
various studies — including not only geography and history, but
even arithmetic — that all alike shall contribute their share to the
civic education of the young person. •
The second method, just going into operation in Philadelphia
Digitized by
Google
Training for Civic Epficibnct 29
does not hesitate to label its civic instruction as such, throughout
all the eight years of the elementary school. It deliberately takes
for its own the distinctively civic content to be found in any of the
other subjects of the elementary curriculum, and builds up a unified
structure.
A most interesting account of the former plan, written by Mr.
Arthur W. Dunn, one of its authors, may be found in Bulletin No. 17,
1915, United States Bureau of Education. The writer of this paper
takes the liberty of giving an outline sketch of the latter plan, with
which he is more familiar since he has helped to formulate it.
In the early grades the fundamental civic virtues,— obedience,
helpfulness, courtesy, punctuality, and the like, — are inculcated by
the use of stories, songs, games, memory gems and dramatization.
The aim is threefold : to establish right habits of thought and action
in the children; to project these habits into the home and into their
other relationships as well; to show the pupils how all community
life is based on the embodiment of these virtues in each member of
society.
Later, the pupil is brought in touch with a wider community
than his home and his school, and now he learns of the services that
are being rendered in a personal way to each family represented in
the class, by the milkman, the grocer, the baker, the plumber, the
doctor, the dressmaker, and others. Then follow the services
rendered by corporate agencies, such as the policeman, the fireman,
the street-sweeper, the garbage-collector, the ashes-collector; by
the trolley car, the telephone, the water supply, gas and electricity,
the sewage system, etc. The civic virtues considered in the earlier
grades are here seen to be exemplified to a marked degree, and the
reciprocal duties and obligations resting upon the young citizens
of the class toward those who render these community services are
pra^ically emphasized. Accessible educational and other public
institutions are visited and reported upon, — not even forgetting the
places for suitable amusement and recreation.
Next follows a year devoted to the city as an industrial unit.
The great industries (manufacturing and commercial) which have
helped make the city famous are first considered, and visits are made
to these plants whenever practicable. The various occupations
which may be followed by young people, and even by older ones,
are then discussed, using simple descriptive ''write-ups" and other
Digitized by
Google
30 The Annals of the American Academy
illustrative material. The superior economic position to be gaineu
by those who remain longer in school is especially made plain, both
as to initial wage and as to chances of advancement.
The work of the last two years is based on an attempt to see
how the various elements of community welfare — such as health,
protection of life and property, education, recreation, civic beauty,
communication, transportation, wealth — are secured through va-
rious public and private agencies. This necessitates a practical
insight into the functions performed by various governmental de-
partments, bureaus or commissions, aided by numerous private
associations and committees. As a final round-up, the organization
and functions of government are re-surveyed in such manner as to
differenitiate clearly between city, state, and nation.
Throughout all the later years of the elementary school any
textbook that may be used is supplemented by trips to see the
various agencies at work, followed by reports and class discussions.
And gradually a civics laboratory is being evolved, including laws
and ordinances, reports, plans and charts, maps, models, and even
samples of all sorts, along with photographs, lantern slides and other
illustrative material.
It will be recalled that "the shop" (industry) has been men-
tioned in this paper as one of the types of community of which young
people may expect, sooner or later, to become members; and that,
accordingly, they should prepare to perform their part well as mem-
bers of this particular community. From this it follows that a brief
vocational survey, of a more advanced type than that already de-
scribed, must soon be included in this course of study. It will be
designed to continue the practical occupational guidance begun in
earlier years, so that a fair notion may be gained of what lies ahead
of those who leave at this time and of the greater industrial possi-
bilities in store for those who go on and complete a high school
course. Moreover, as a sort of by-product, the boys and girls
should acquire a profound respect for intelligent hard work, no mat-
ter what the trade or profession followed, and a contempt only
for laziness and inefficiency.
But this "vocational survey" will do more than that, if it ful-
fills its highest function. It will stamp upon the impressionable
minds of these rapidly maturing young persons the fundamental
civic concept that the good citizen in the completest sense is one
Digitized by
Google
Training for Civic Efpicibnct 31
who does not. allow himself to become so engrossed in the process
of making a Uving as to lose sight of those other duties of good
citizenship that he owes to family and friends, to society generally,
and above all to the state.
The conclusion has already been arrived at that civics should
include both a curriculum of studies and a curriculum of activities.
As a part of the latter, the following are evolving naturally from the
course itself: student self-government in the class and even in the
school, at least for certain definite purposes; tjie formation of vol-
untary junior civic leagues, whose activities may extend from thought-
ful care in the home and school and on the street to the extermina-
tion of moths and flies, or even to the cultivation or beautification
of vacant lots; codperation with civic organizations and with govern-
mental agencies.
The Test op Eppicibncy
, The aim of early civic training, no matter what the locaUty or
the method pursued, is clear and definite: to make intelUgent, in-
terested, practical citizens, who will know what good government is
and how to cooperate with public oflScials to get it. Unless, as Mr.
Dunn has well said, the young person's interest shall have been
aroused in civic matters, with corresponding motives for partici-
pation in community life; unless, further, a certain degree of civic
initiative and judgment shall have been cultivated in the boy and
girl, these years of effort will have been largely wasted.
This newer type of civic training, unfortunately, has not yet
been in operation long enough for one to speak over-confidently in
justification of so radical a departure from the old order; nor is any-
one claiming that a panacea has been found for all the ills of the
body poUtic. But the sponsors for the new civics are willing to
abide by the results, as they shall appear in the actual civic life of the
boys and girls who grow up under its influence.
Now a few words as to the sort of civic education that is aheady
being worked out for the secondary school. Here, as in the ele-
mentary school, civics (known familiarly as civil government) has
long been a sort of "poor relation" to history, and accorded the sort
of treatment that such kinsfolk are traditionally held to receive.
If taught at all it was usually in the third or fourth year, along with
United States history, and was often little more than a rehash of
Digitized by
Google
32 The Annals of the American Acadbht
the grammar school civics in a more mature form. Obviously, this
sort of stuff was not even intended to set pupils to thinking — only
to additional memorizing. No adequate gripping of social phe-
nomena, no thought of trying to comprehend even the simpler
social problems of the day or the attempts at their solution, not
even a determination to imderstand in a vital and comprehensive
way the very Constitution that was usually made the basis of study!
No wonder it was often regarded by the teacher as so much wasted
time, filched from history.
But this poor relative is to be richly endowed, her very name
is to be changed from "civics" or "civil government" to "social
science," and she is to be accorded the place of honor at the educa-
tional board — an entire year, and preferably the closing one of the
high school course. Will she be worthy of her new honors?
Without entering into details, which, indeed, are not yet agreed
upon, it will suffice to say that this culminating year of social
science will include the elements of social theory — economic,
political, sociological — with constant illustration and application
to the concrete problems of life. All the practical civics and the
sociaUzed history that the school has found time for must be drawn
upon as a basis, no matter what the method of approach that shall
finally be adopted.
The main purpose here is to help the young person to de-
termine the mutual relationships of the social forces and events he
has been observing throughout his school days. The nature of the
state, of government, of law; representative types of government,
with the strength and weakness of each; the objects and functions
of government; social organization, social leadership, social control,
— all these and other fundamental concepts, both poUtical and eco-
nomic, can be touched upon in a way that shall be interesting and
vital to any normal eighteen-year-old boy or girl.
Carefully selected readings from various authorities may be
safely assigned for report and class discussion, so long as care is
taken that the reading and thinking of the pupils are constantly put
to the test of practical experience and observation. It must be
remembered that the object is to stimulate in our yoimg citizens of
this great Democracy the ability and the desire to analyze familiar
social phenomena, to imderstand their social environment. It may
be thought that this is a rather ambitious program for the secondary
Digitized by
Google
Tbaining for Civic Efficiency 33
school to attempt; but, after all, it is simply the culmination of the
years of observing and thinking that have been going on throughout
the school life, provided those years have been rich in the studies
which train the powers of observation and demand a fair modicum of
close, consecutive thinking.
This brief paper makes no claim of exhausting the subject of
training for civic efficiency. It merely outlines one of the paths
that the schools of tomorrow are going to follow, along with all the
other agencies that make for civic education and civic righteousness.
Digitized by
Google
THE MORAL TRAINING OF CHILDREN
By Edward Howard Griggs, A.M., L.H.D.,
Author and Lecturer, Spuyten Duyvil, New York City.
The type of character moral education should seek to foster is
no mere negative respectability or virtue of cowardice, but the
whole positive and ejBfective moral personality, seeing the best,
loving the best, willing the best. Moral education is, therefore,
not a phase of education, but all education focussed. The one aim
significant enough to solve the controversies of modern education,
to integrate the whole process, furnish the basic principle for a
reasoned philosophy and annul the conflict between training for
vocation and education for life, is positive moral character.
Moral Import in all Aspects of Education
No aspect of education is indifferent in relation to that aim,
and the specific value of each phase of the process is finally deter-
mined by its contribution to it. Hence the harmful triviality of
the notion that moral education means teaching ''morals and
manners" to children thirty minutes a day, three times a week!
The merest statical conditions surrounding the child bear
directly on the development of character. It is a moral necessity
that schoolrooms should be well ventilated and lighted, with quietly
tinted walls and unobtrusive but beautiful decorations, that the
grounds should be ample and pleasant. So too, physical education
finds its proper place, not in training muscular strength or manual
expertness, but in developing the sound, healthy, graceful body
that may be a fitting instrument for the mind and spirit.
Every study in the curriculum directly affects the same end.
It is a moral question that an arithmetic problem should be worked
honestly, that every lesson should be done thoroughly. Nature
study is the great opportunity to teach, without didactic moralizing,
the two fundamental moral principles — effort and conformity —
work and obedience. The whole order of life is based upon them.
34
Digitized by
Google
The Moral Training of Chiij)rbn . 36
If you sow chaff, you cannot reap wheat. If you shirk plowing,
there is a lessened harvest.
Moral Value op Literature and History
Nature, however, sanctions deceit, cruelty and blind selfish-
ness. The higher moral principles — love, unselfish service, sacrifice
—are evident only in human life. Hence the supreme value for
moral education of those subjects in the curriculum that represent
humanism. In the elementary period they are two: history — ^then
chiefly biography — and literature. The two subjects are singularly
complementary: history records the actions of men; hterature ex-
presses their ideals and aspirations. History thus gives the body
of that of which hterature expresses the soul.
Both subjects present life under the reign of law, history telling
what has happened, hterature showing what, given certain charac-
ters and conditions, must have happened. In both, the laws govern-
ing life can be taught, often far more ejBfectively than by direct
ethical instruction. In both, further, is the record of noble deeds
and the portrayal of lofty characters. The result is a gradual mold-
ing of ideals supremely important for the whole after Uf e. Not only
noble, but mingled characters are portrayed — all sorts of human
beings; so that the student learns to reach out over them and appre-
ciate them, and to say, even as child, with the old Latin poet, "I
am Man, and nothing hiunan is foreign to me.''
Direct Ethical Instruction
This indirect moral teaching must, of course, be supplemented
by direct ethical instruction, which, while not the most important
part of moral education, is nevertheless indispensable. To do right,
one must know the right. To give this instruction wisely is difficult,
for children resent didactic moraUzing even more than we do. The
' teaching must be closely associated with the child's experience, and
yet not lost in the concrete, the great principles of life and conduct
being gradually developed. All of them, with one exception, are
impUcit in the experience even of the child. Thus the aim of hfe,
the path leading to the aim, and the laws governing our conduct in
the path, can all be taught, without leaving the field of the child's
own experience. Generally speaking, the wiser the teacher, the less
Digitized by
Google
36 The Annals op the American Academy
desirable is a text-book, in view of the fact that the text-books
available are so didactic and artificial. Talks with the children (not
at them), at regular intervals, dealing with the problems in their
own home and school life, or with the moral questions arising from
the studies above considered, form the ideal medium for such in-
struction, if the teacher is wise enough to use it. The guiding prin-
ciple should be that no critical experience of the child's life be
allowed to pass into the dim shadows of the yesterdays, without
having the meaning of it brought home clearly to the child's mind.
Moral Value op Work and Play
Even more important in the development of positive and
effective moral personality are the activities of the child and the
government and discipline to which he is subjected. Every influ-
ence playing upon him gets its final meaning only when interpreted
in terms of the child's own activity.
As in ethics the superstition long prevailed that action was
morally worthy in proportion as it was hard and unlovely, so in
education the parallel notion held sway for ages that action is edu-
cative in proportion to its hard, forbidding character. Rousseau
made the great protest against this notion; and what Rousseau saw,
Froebel worked out, far more sanely. It is impossible to exaggerate
our debt to the kindergarten for showing the immense educational
value of wisely guided play. In work, part of the energy is spent
in overcoming friction; while in play, all the energy goes into acquir-
ing the activity; hence it is learned much more rapidly. Play, more-
over, is the great opportunity for appreciating the big aspects of
human experience, and especially for learning voluntary social co-
operation in the pursuit of common ends.
Were human nature perfect, play would be the one form of
action; but no one is fitted for life who is not willing and able to
do a great many things he does not like to do, because it is right
that he should do them. Thus, in education, work must be con-
stantly utilized, as well as play, for the development of character.
Work gives the mastery of the means necessary to the ends we seek
and develops self-direction^ and self-control. In the abuse of the
kindergarten and in many homes, where children are titillated and
cajoled into right behaviour, and where nothing is required of them
Digitized by
Google
The Moral TftAiNtN<^ of CmtDitB^ 3?
except what they like to do, the result is a flabby, uncontrolled
character, utterly unfit for the serious business of life.
If children are not required to do some part of the work of the
household, they will not only lack self-dependence, but grow up
into social snobs. The only way to teach a child respect for simple
labor is to require him regularly to perform it. The school can
utilize for moral training, not only forms of industrial work and
manual training — the grammar of physical action — but those sub-
jects, such as mathematics and the languages, which are tools
rather than ends. Moreover, no matter how strong the child's
interest in a study, there is plenty of dead work in any subject if
it is honestly mastered. In requiring this work to be done regularly
and thoroughly lies one of the best opportunities for developing
positive and effective moral personality.
This does not mean that the parent or teacher should multiply
obstacles for the sake of discipline. Remove all possible rocks and
fallen trees from the path, and there will be work and hard climbing
enough, if one travels the path. The more that work is transformed
into play, the better, for always plenty of hard work remains for
the full development of character.
Government and Discipline
In both work and play, the moral result depends upon the
guidance from above. In fact the child's life is constantly under
government and discipline, which exercise the crowning influence
upon character. An autocratic tyranny in the school, even more
than in the state, tends to mold two types of citizens — slaves and
nihilists. The weak children, those who like to obey, become
blindly submissive to the autocratic will over them. We call such
children good, but often they are merely docile. They are not
fitted to be citizens of a democracy, to think for themselves, choose
the best, f-esist injustice and display moral initiative. Just the
strongest children, on the other hand, those who have the best
stuff of human nature in them, tend to become rebels under an
autocratic tyranny. We call such children bad; but generally they
are not bad at all — merely misdirected. If we have made it a sheer
conflict between the child's will and our own, and the child conquers,
all honor to the child! The pity of it is, however, that such children
Digitized by
Google
3d The Annals of the American Academy
are not fitted to go out into the world where there is no freedom of
caprice, but only freedom to obey the laws of life, and be happy
and helpful, or to break yourself against them and perish.
Thus every reason for risking the experiment of democracy in
the state is a multiplied obligation to apply it in the government
and discipline of the home and school. Blind obedience to authority
at best forms a moral habit, which will go to pieces with astonishing
celerity if it is not transformed into inteUigent response to law;
but each time a child voluntarily obeys a principle, the reason for
which he understands, he takes an important step forward in his
own moral development. Thus the teacher should take the children
into his confidence, avoid making rules, and talk with them over
the questions of discipline that arise. Let the children formulate
the principle for themselves, and then how the hands of the one in
authority are strengthened, in dealing with the rare refractory case,
by the public opinion of the school. Democracy in the government
of children means that the aim is not the ease and comfort of the
parent, the economic order of the school or the reputation of the
teacher, but the morcd welfare of each child.
This does not mean that democracy can be applied completely
at the start. That has not been possible in the history of the race,
nor can it be in the development of the individual. Little children
obey us because they love, respect or fear us, and long before the
child can understand why, he should obey. K a child grows to be
seven or eight years old without forming the habit of regular re-
sponse to the authority over him, irreparable harm has been done.
First, obedience, then rational and intelligent obedience as fast as
possible. The point is that we should welcome and seek to further
the transformation from the one type to the other as rapidly as
we can. Habit is merely the stuff out of which morality is made;
it is only when conduct is voluntary and intelligent response to law,
recognized as just, that moral character is formed.
It is hard to relinquish authority, and the better one's moral
equipment and judgment, the more difficult is it to let go at the
right time. Nevertheless, morally, as physically, the child can
learn to walk only by walking. He will fall and hurt himself, it
is true, but he must try; and with all our superior knowledge and
wisdom, we must welcome his effort, relinquish our personal author-
ity as fast as possible, and welcome the transference of his reverence
Digitized by
Google
The Mobal Training of Childben 39
and response from us to the laws of life we are trjring to interpret
to him. Then we may reasonably hope that he will go out into the
^orld, able to express intelligent initiative in our democracy, and
te live voluntarily in harmony with the great laws of life.^
^ For a fuller discussion of the various aspects of moral education considered
m this brief survey, the reader is referred to the author's work on Moral Education,
PubMed by B. W. Huebsch, New York.
Digitized by
Google
THE SCIENCE AND ART OF HOME MAKING
By Carkib Alberta LyporDj B.S.,
Specialist in Home Eoonomios, United States Bureau of Education,
Washington, D. C.
At no time in the history of the home economics movement have
developments been more interesting than at the present. Theory
has given place to practice; prophecy has seen accomplishment;
progress has become assured. The value of established courses
is being measured up in terms of home life, and in just so far as
women have become more efficient homemakers, in just so far can
past work be said to have been successful. Measurement of
results is peculiarly difficult. A new stage in the development of
civilization has brought new problems for the housekeeper, and old
standards of efficiency will not suffice. The housekeeper of today
must recognize the truths that science has revealed and be prepared
to meet present social situations.
The School in the Study op Home Making
Because the problems of the home have become more com-
plicated and its points of contact with the outside world have been
multiplied, the service of the school has been sought to further the
study of home making. In the beginning the schools taught sewing
and cooking, isolated factors in the profession of housekeeping.
Gradually the number of single activities studied has increased
until today earnest attempts are being made to include the whole
round of the housekeeper's duties and all closely related subjects
in the home economics curriculum. How comprehensive such a
course must be even a partial list of the housekeeper's duties will
indicate. Outlined in formal fashion the housekeeper's respon-
sibilities may be summed up under the following heads:
I. A knowledge of the house — ^its sanitary condition and care; its arrangement
for convenience, comfort and aesthetic pleasmre.
II. A koowledge of food — ^the source of its supply, its selection, chemical
composition, nutritive value, cost, preparation and service.
III. A knowledge of textiles and clothing— the sources and process of
manufacture of textiles, the condition of textile industries, selection, cost, care
and repair of dothing.
40
Digitized by
Google
HoMB Making 41
IV. A knowledge of the family — ^the physical, economic, intellectual and
moral development of its members.
V. A knowledge of the relationship of the home to the conmiunity, the state,
and the national government.
In addition to these interests the rural housekeeper may be
engaged in some such activity as gardening, dairying, poultry
raising, canning and preserving, always closely associated with
housekeeping on the farm.
For the most part the problem has been attacked by the
selection for study of those special subjects which seemed most
vital or which the school was best prepared to teach. As much as
possible other duties of the home have been made to center about
the chosen topic but they have naturally been subordinated to it.
Cooking has made possible many lessons in sanitation and laundry
work; the division of the income, art in the home, personal hygiene,
and the ethics of buying have been taught in connection with the
lessons in sewing. Housewifery has been less emphasized but has
been made the subject of profitable and interesting courses. While
this has not proved an ideal method of procedure and courses have
failed to cover the entire problem, much has been accomplished.
Pupils have been awakened to the many sided interests of the house-
keeper and have been imbued with an eager desire to perform
mtelligently all tasks connected with the home.
The Hobce Cottage ob Apartment as Laboratory
The development of courses in home management has been
singularly slow. One of the most interesting and significant move-
ments in home economics at the present time is the use of the
home cottage or practice house for this purpose. Private schools,
public schools, normal schools and teachers' colleges are alike
recognizing its value. The public schools of Providence, R. I.,
New York City, Washington, D. C, Los Angeles, Cal. and Portland,
Ore., have strengthened their homemaking lessons by use of a
cottage or apartment. Teachers College, Columbia University,
New York City, did some valuable work at Speyer School in develop-
ing a course of study for such a practice house. City conditions
necessitated the use of an apartment rather than the separate house,
but the work was developed along the same lines that it must be
developed in any conmiunity. The course for the two grades was
Digitized by
Google
42 The Annals of thb Ambbican Acadbmt
based on the question, "What must a Speyer School girl know
about the art of homemaking? " In the seventh grade, the main
problem was, ''What must a girl of my age know of food, clothing,
and cleanliness in order to help my family to keep well, and strong,
and happy?" and the work of the seventh grade was devoted to a
study of practical questions relating to food and clothing as affected
by health, economics, and art.
In the eighth grade the problem was still more concrete. A
family consisting of father, mother, grandfather and three chil-
dren, aged respectively, 14,. 8, and 2 years, must live on SI, 200 a
year. The question for the class to decide was " What are the main
problems which confront the family who find they must live in this
neighborhood in New York City? " The division of the income, the
responsibility of the housekeeper, question of clothes, food, house-
furnishings, health, recreation, etc., were considered in the eighth
grade course.
For two years the William Eenn High School of Philadelphia
has carried on lessons in an apartment. The income of an imaginary
family has been placed at twelve hundred dollars a year. A
budget is decided upon and carried out in detail as to actual facts
concerning food, shelter, clothing, etc. A minimum household
equipment for the home is determined upon with the aid of the
art teacher. The girls visit a store with their teacher and buy
the house furnishings on a contract account. Dietetics problems
are related to the necessary living conditions of the family. The
girls plan the menus, make out the orders, and, under the super-
vision of the teacher, buy the food at a regular market. Finally
the three meals that have been planned for a day are all prepared
in one lesson, the girls working in groups, and all criticizing the
results as to quantity, quality and balance. This work is continued
until the meals for an entire week have been prepared ; then estimates
are worked out for the year and the budget is corrected to meet this
standard. This is indicative of the best type of work that is
offered in our schools.
Training Schools for Teachers op Hobce Making
Training schools are engaged in the preparation of teachers to
carry on such courses. The State Normal School at Stevens
Point, Wisconsin, has two well-equipped cottages, accommodating
Digitized by
Google
Home Making 43
eight students and a teacher for each, where every girl in the home
economics department lives for four weeks, assuming in turn the
position of housekeeper, cook, dining-room maid and chamber-maid,
thus coming in contact with the duties of modern housekeeping.
The problem of furnishing has been worked out by the classes.
Guests are made welcome and home conditions are simulated
as much as possible. Similar work is being done in several other
places where teacher training is given. Pratt Institute of Brooklyn
has had such a cottage for several years. Southern schools have
been quick to feel the value of this practical experience. At
Borland Institute, Hot Springs, North Carolina, a practice cottage
was put into use more than five years ago. A cottage for this pur-
pose was built at the Mississippi Institute and College in Columbus,
Mississippi, in 1913.
In the university the use of the cottage makes possible the
working out of many dietary problems and efficiency tests that
are of vital importance in home management, so that the cottage
seems to have a place in every grade of school and to lend itself to
the working out of well-rounded courses.
Difficulties involved in teaching household management in the
cottage include the expense to the school and the adjustment of
programs of recitation. These are not insuperable and in the hands
of an able teacher may find a ready solution, for home economics
workers have found practical ways of meeting expenses all along
the line and school schedules have grown more flexible as new types
of work have been introduced.
Points op Emphasis in the Curbiculum
Realizing that in many homes even the girl in the grades has
to help care for the younger members of the family, instruction in
the care of babies is today being included in some public school
courses. A trained nurse is often employed to impart this instruc-
tion, which is given in the most simple, practical way. The large
doll and the nursery furnishings are coming to be part of the home
economics equipment. Lessons on the care of the baby appear in
some school texts. Courses in sewing include garments for the baby.
In some high school classes a complete layette is made. Infant diet
is studied in elementary and secondary schools and in extension
and continuation courses.
Digitized by
Google
44 The Annals of the American Academy
From the first there has been a conscientious attempt to teach
foods and cookery from the standpoint of food values and digesti-
bility. The part that the school can play in this phase of the
work has never been disputed, but better methods of teaching
are developing, recipes of family size are being more generally
used, more lessons center about the preparation of meals, and
economy is receiving stronger emphasis. The elementary courses
are leading to the formation of habits of industry, neatness and
honest work that are strengthened by the more scientific courses
of the high school. Through the lessons in sanitation, biology,
chemistry, physics, physiology, bacteriology and social sciences,
high school teachers are handling subjects that contribute appre-
ciably toward better living.
Clothing has developed from the early lessons on formal
samplers to useful garment making of all sorts, and is closely
interwoven with textile study in its scientific, economic and social
aspects. Hand sewing is adapted to the physical development of
the child. Machine sewing is more generally taught and is in-
troduced in earlier grades. Art and hygiene are both considered in
the discussions on dress and house furnishings. CJourses in sewing
cannot be adequately handled by the woman who is merely the
expert seamstress or the experienced dressmaker, for a background
of science, art and iirdustrial knowledge is essential.
The coming together of young people from homes in various
localities and of different standards to study the problems of home
making gives excellent opportunity for the presentation of commu-
nity problems that are rightly regarded as the concern of the
housekeeper. Therefore state laws relating to pure food, just
weights and measures, public health, etc.; the work of the national
government in the Department of Agriculture and elsewhere; and
the activities of those private agencies whose work has bearing
on the home should be made familiar to [the home economics
student.
The Developbient op a Unipied Curriculum
The establishment of standard courses for certain types of
schools has been gradually taking place. Practice has brought
about one type of course for the grades, another for the high school
Digitized by
Google
HoHB Making 45
and a third for the college. The differentiation between these
types promises to grow more marked since home economics has
become an integral part of the curriculum and has been deemed
worthy of college credit.
The elementary school treats of the duties of home making in a
very practical way. The best methods of carrying on the simple
household industries are taught. The child who completes the
eighth grade in a school where a good course in home economics
has been given can keep the house in sanitary condition, prepare
simple meals and do plain sewing neatly. In the rural schools
where a special home economics teacher is not available, the regular
teacher often accomplishes much by inspiring her children to take an
active interest in the profession of the housekeeper. She may
correlate the work closely with other subjects in the curriculum and
help to give an added dignity to the work of the housekeeper by
making clear its place in relation to other social activities. Since
58 per cent of the children of the nation attend rural schools, the
work which is being done in home economics by the rural teacher is
of special significance.
In the high school a scientific background is provided for the
practical work of the grades. The student is enabled to work out
new methods, to establish ideals, and to determine the best means
of attaining these ideals in the home. Her course includes ad-
ditional phases of sewing, cooking and housewifery, which may have
been previously studied in the grades, and to them are added
dietetics, textiles, dressmaking, laundering, home nursing, care of
babies, household accounts and household management, or a possible'
variation of any one of these. Economics, sociology and the sciences
of biology, physics, chemistry and bacteriology, are recognized as
closely related to the special home economics course. The high
school girl is prepared to keep house under varying conditions,
to adjust herself to changes, and to enter upon a life of growth and
service.
College courses further develop the courses offered in high
school. The girl of more mature mind is ready for experiments and
investigation of all sorts. This is the phase of the subject that has
not yet been adequately worked out and tQ the developmeut qi whicl^
an eager interest is directed,
Digitized by
Google
46 The Annals of the American AcADEBfr
The Growth op the Movement
Today home economics is taught in all of our state agricultural
colleges to which women are admitted; in practically all of our
state normal schools, and in more than three thousand high and
grade schools. It has become a popular course in private schools
but is not yet included in the curricula of the leading women's
colleges. Correspondence courses of collegiate grade are carried on
by four state institutions. In four states, Louisiana, Oklahoma,
Iowa and Indiana, the teaching of home economics in all public
schools is required by law. In many of the normal schools brief
courses are required of all women students to give them a broader
perspective for their general teaching, to enable them to intro-
duce courses in the rural schools, and to prepare them for house-
keeping. '
State supervisors of home economics have been appointed in
four states. Eleven other states have some special system of home
economics supervision. Twenty-three states have prepared courses
of study in home economics for the common schools. For the
most part parents are eager to have their children avail themselves
of the privilege of pursuing such courses. The work involved is
of quite as high a standard as in other school subjects, and special
teachers are making every efifort to keep abreast of the times and to
be informed on all that tends toward better homemaking.
The funds made available by the Smith-Lever Act have led to a
great increase in the amount of extension teaching in the rural dis-
tricts. Women's clubs and other organizations are furthering the
study of homemaking in towns and cities. The public press recog-
nizee the movement as of universal interest. Combination of aQ
these forces is helping to bring about a new era in which the study
of home life and woman's work in the home is to receive the con-
sideration that its importance merits. The campaign which is to
accomplish this end has from the first been a campaign of education
supported by all the forces that speak for progress.
Digitized by
Google
EDUCATION FOR PARENTHOOD
By Thomas C. Blaisdell, Ph.D.,
Dean of the School of the Liberal Arts in the Pennsylvania State College.
Approximately one million, one hundred thousand marriages
^31 be solemnized in the United States in 1916.^ In the families
thus begun perhaps three million children will be bom during the
^^^t six or eight years. One out of five of these children, or about
r^jOOO of them, will die within a year of birth, and another 150,000
J^^ore the fifth birthday.* The right kind of education for the
,,^^ies of parenthood in elementary and high schools, colleges, and
Continuation" classes would cut this startling total to perhaps
75,000, if onQ may judge from what has been accomplished in a
few localities by eflBcient cooperation among health agencies.
Herbert Spencer in What Knowledge is of Most Worth wonders
whether a puzzled antiquarian of a remote future, finding nothing
except our school books and college examinations, would not con-
clude that our courses of study were only for celibates and monastic
wders, and later he says, '* When a mother is mourning over a first-
l^rn .... when she is prostrate imder the pangs of combined
^ef and remorse, it is but a small consolation that she can read
^ante in the original.*' One might add today that she will find but
small consolation in the algebra, Latin, German and ancient history
^hich she has "taken'* in high school, and in the "pure" science and
Psychology, advanced mathematics and foreign language,' theories
^f ethics and of logic, which she has been required to pursue in order
^ Secure a B.A. degree. Might she not wisely ask:
Wbat have these subjects done to prepare me for the MA degree, surely the
^^^r©e which every woman should covet? Would it not have been possible to
*Pply" my chemistry to food values and food combinations, and my psychology
p ^ ethics to the training of children, and to substitute courses in ''Training for
*renthood" for the required work in foreign language, mathematics and phi-
j*^Phy? Would it not be wisdom to make these traditional subjects elective,
^^^^ require a subject which is really fundamental in the education of all?
. ^Xhe latest statistics available are for 1906, when 853,290 marriages took
^IJ^I^ or 39 per cent more than in 1896, when 613,873 marriages occurred. The
' ^te of increase would give 1,086,063 marriages in 1916.
'See Professor Irving Fisher's National ViUUiiy,
47
Digitized by
Google
48 The Annals op the American Academy
Would not such subject matter result in a kind of clear think-
ing, which is not now being done in our traditional high school and
college subjects? Would it not be possible, even in the upper grades,
to "apply" the physiology and hygiene and to substitute really
"human worth" subjects for technical grammar and much arith-
metic, in order that those who never will enter high school may have
some training for parenthood? Further, is not the boy and youth
and yoimg man as much entitled to such training as is his sister?
Three questions perhaps should be answered, namely, (1)
What is now being done in elementary schools, high schools, colleges
and continuation classes toward educating for the duties of parent-
hood? (2) What should be done? (3) What can be done as a
beginning?
What Is Now Being Done
Rural schools, graded schools, high schools, and even colleges
are beginning to realize that food values, cooking and sewing should
have a place in courses of study because of their practical worth,
and as a result domestic science and art are being widely introduced.
Whenever these subjects are taught in a way so practical that they
will function in the laborer's house as well as in the home of the pros-
perous merchant, they may be truly said to contribute to the right
kind of education for parenthood.
There are, however, two real dangers in the teaching of these
subjects. There is doubtless much truth in the criticism that such
work has its foundations in the clouds rather than on solid earth —
that more attention is given to lace and fudge and angePs food than
to kitchen aprons and bread or to economical buying and balanced
menus. Furthermore, are not teachers, capable of the best
work, too often hampered by tradition and by the thought of ex-
hibits and examinations? And finally is there not too much em-
phasis placed on the logical presentation of subjects? Some col-
leges, for example, keep*young women studying general chemistry,
food chemistry, etc., for two years, before allowing them to enter the
sacred precincts of the cooking laboratory. By this time a third
of the young women have tired of the treadmill of theory and have
gone home. The trouble with this sort of teaching is that life is not
logical, and no dictum of the schoolmaster can make it logical. In
life we do, and by doing learn the theory of doing that makes us
Digitized by
Google
Education for Parenthood 49
more efficient in doing the same thing again. Education based
first of all on logic is seldom if ever efficient education.
In Hartford, Connecticut, Montclair, New Jersey, and in other
cities girls in the upper grades are taught to bathe and care for
babies. In a few high schools day nurseries are maintained, thus
giving girls an opportunity to learn something of the care of infants.
Many schools by physical examinations are emphasizing the care of
teeth, of eyes, and of the general health. If the thought of using
such information in their own homes is kept ever prominent such
work is excellent training for the duties of parenthood.
In many schools play is supervised. Games and folk dances
thus learned may be made splendid education for use in the home.
A few high schools are teaching something of eugenics; others are
teaching sex hygiene. Not many are teaching applied ethics,
though the work of Professor F. C. Sharp of the University of Wis-
consin along this line is having a manifest effect in that state and
even more widely.
Perhaps more direct work is being done in continuation classes,
than an3rwhere else. These are maintained by many schools, as
well as by Christian Associations and other organizations in dis-
tricts populated largely by the foreign bom. The work done in
them in training mothers to feed their children wisely and to care
for them properly is notably efficient.
What Should Be Done
To answer this, consider first what the young man and young
woman should be when they come to marriage. Physically they
should be so developed that every muscle and every organ functions
normally. They should understand the heredity, the food, the fresh
air, the exercise and the moderation that make for such physique.
Mentally they should be normal, and should know enough of eugen-
ics to understand the grave danger of marriage on the part of the
mentally deficient. Morally and spiritually, the more nearly they
approach the teachings of Jesus, the better. They should know sex
hygiene, and should have at least general ideas of food values for
babies and children; of when to send for the doctor and what to do
until he comes; of the symptoms of common diseases; of the value
of work and play and rest and sleep and moderation; of the mental
development of children; of the ethical and moral training of chil-
Digitized by
Google
50 The Annals of the Amebican Academy
dren; of the effects of coffee, tea, tobacco and alcohol (within a week
I saw a woman give a glass of beer to a child under three years old) ;
and besides these general ideas they should know just where to get
the books that will give the most specific help.
The early school years should train toward physically efficient
bodies both by teaching and by practice. Fresh air, hygienic
drinking cups, care of the teeth, no coffee, tea, tobacco, or alcohol,
exercise out of doors daily, food values, how to eat, simple sex hy-
giene, lessons for girls in the bathing and caring of infants, something
of how parents and children should play and chum and laugh and
love and work together, — ^all this and much more should be and can
be accomplished in the grades.
In the high school should come more complete training along
all these lines, and in addition there should be courses in simple
eugenics and euthenics, simple applied psychology, practical ethics
after the plan of Professor Sharp, practical biology, both chemistry
and physics as applied to the home, exact but very practical studies
in food values, with at least one comrse of a year aiming directly to
train for the duties of parenthood. Such a course might be called
"Life Problems." It should bring into a imit all the less direct
training found in the various courses. As a basis Professor
McKeever's Training the Girl and Training the Boy might be
used until some book written for the immediate purpose shall
be on the market, both books to be read and studied alike by boys
and girls. With this study should go constant reference to a class
library of perhaps a dozen volumes, merely to give some knowledge
of possible books for later reading.
In granunar schools and high schools emphasis should be
placed on the value of this knowledge in self-training and in help-
ing mother to train younger brothers and sisters. Its value in
after years will care for itself.
All manual training work is education for parenthood, if it is
so taught that in after years the father will make it possible for his
children to supply themselves with tools and nails and screws and
boards and to make the thing wanted, he giving such suggestion and
inspiration as will help them over the hard places. It is peculiarly
effective training when the pupil is permitted to make during his
shop periods something he really wishes to make; when he is set at a
Digitized by
Google
Education fob Parenthood 51
task and compelled to do what is irksome, its educational value is
largely gone. And should not every girl have some opportimity to
learn to drive a nail, and saw a board for the sake of the future home?
Further, should not camp cookery and bachelor's sewing be given
to boys while the more advanced work is being given to girls?
Where find the time for such studies as are here suggested?
Would it not be better to require this work of all students than to
require foreign language, algebra, geometry and ancient history,
if it is impossible to include both? Just how do any of these sub-
jects make for efficient parenthood or citizenship? Do they function
in life? But you must prepare for college? Who said so? Should
the high school, which is the people's college, refuse to educate
merely because many college courses of today belong in the centuries
long past? Some colleges already will accept the student prepared
along the lines indicated; all that are of the twentieth century will
accept them as soon as the high schools begin to graduate them,
exactly as most colleges are today accepting entrance units in voca-
tional work. Put in the courses, and the colleges will have to accept
them. It is only a third of a century ago that most colleges would
not accept a student unless he was prepared in Greek-
What should the college do? For the present exactly the things
suggested for the high school, only it should do them in a more
thorough and practical manner. The definite course suggested
should be included as required work in all college courses, in both
technical and liberal arts schools. Why? Because no college should
send forth a man or woman for leadership who has had no training in
the most important business of life. Coiu'ses in psychology (partic-
ularly in genetic psychology), in ethics, in philosophy, in all sciences,
in pedagogy, in literature, should be taught with this end in view.
Oral composition courses should include story telling for children.
A required course in " Literature for Children" should be established.
What Can Be Done
One would think, the importance of the end to be attained being
in mind, everything here suggested can be done shortly. Spencer's
Education was published in 1861. He so clearly showed the need of
training for parenthood that one would have expected a decade to
Digitized by
Google
62 The Annals of the American Academy
see such education firmly established. Nearly six decades have
seen almost nothing done. So what can be done? Every interested
teacher can do something indirectly if not directly. In time some-
thing will be done directly in every school. It can come only by
^littles. No school should wait for a demand for it from the people.
The people do not demand advances in education. They look with
a reverent superstition on the medieval curricula of today. For-
eign language and mathematics are sacred. The colored man, freed
from chains, thought a little Latin would educate him. His super-
stitution is all but nation wide. The change must come through the
steady forward march of educational leaders.
But this can be done: Every teacher can be made familiar
with Course No. 3 of the Home Education Division of the United
States Bureau of Education, "A Reading Course for Parents." It
is made up. of a splendid list of books which cover admirably the
field of education for parenthood. A request brings the list. The
books are not expensive. Teachers, once familiar with the course,
can aid in its wide adoption; ministers can recommend it; all can
give it publicity.
Teachers can send to the Bureau of Education for bulletin No.
610, EdiLcaiionfor the Home (four parts), by Benjamin R. Andrews.
This sums up all that is being done in schools and colleges the country
over. It suggests how the sciences may be applied to home training
and outlines various courses of study given at the University of
Wisconsin, at Simmons College, and elsewhere. So, too, teachers
can become familiar with the work of the American Association for
the Study and Prevention of Infant Mortality.
Most of all, every community should organize continuation
classes. At least 2,000,000 young women between sixteen and
twenty-four are employed in this country, and not less than 5,000,-
000 of the same age are unemployed and yet out of school. Classes .
for such young women can be organized in every conmiunity if one
individual has a real interest in the subject. The churches, Y. M.
C. A. and Y. W. C. A. organizations, and schools — all are agencies
that may independently and cooperatively carry on such classes
both for young women and for young men, thus giving them a chance
for out-of-ecbpol tl^^iping, tp make up for what the schools an(l
Digitized by
Google
Education for Pabbnthood 63
colleges have omitted in the past by way of specific training for
the duties of parenthood.'
'For the suggested required course in college and high schooli perhaps the
class library should include the following books, in addition to the ones mentioned :
Tanner's The Child, Chicago: Rand, McNaUy & Co., 1904; Hall's YotUh, New
York: D. Appleton & Co., 1012; Hall's Adoleseence (for college classes). New York:
D. Appleton & Co., 1004; Lippert and Holmes's When to send for the Doctor; Phil-
adelphia: J. B. Uppencott Co., 1013; Adler's Moral Instruction of Children, New
York: D. Appleton & Co., 1895; Betts's Fathers and Mothers, Indianopolis:
Bobbs-Merrill Co., 1916; Forbush's The Coming OeneraHon, New York. D. Ap-
pleton & Co., 1912; Fisher and Fisk's How to Live, New York: Funk & Wagnalls
Co., 1916; Hodges's The Training of Children in Religion, New York: D. Apple-
ton & Co., 1911; Halleck's Psychology and Psychic Cvlture, New York: American
Book Co., 1895; Sharp's Moral Education, Mrs. Fisher's Sdf-Rdiance, and
Kirkpatrick's The Use of Money, Indianapolis: Bobbs-Merrill Co.
Digitized by
Google
VOCATIONAL GUIDANCE IN SCHOOL AND
OCCUPATION
By John M. Brewer, Ph.D.,
Instructor in Education, Harvard University.
Vocational guidance deals with the problems of informing or
advising persons in regard to choosing, preparing for, entering upon
and making progress in occupations. The importance of this prob-
lem is evident to any thinking adult; what is not so obvious is the
practical answer to the question: What can the school do about
vocational guidance? This paper aims to present in summary
fashion the plans and possibilities which suggest the answer. The
very breadth of our problem makes its complexity inevitable.
Glance, if you will, at the topics of the papers in this volume, and
note that many of them are related, directly or indirectly, to success
and happiness in the calling. Besides these subjects, moreover,
vocational guidance must concern itself with the problems of com-
merce and industry: economics, labor organizations, land values,
taxation, transportation; any plan for comprehensive, guidance
must not restrict itself to narrowly educational investigations.
In spite of the importance of the subject of vocational guidance,
and the need for strenuous intellectual endeavor in attempting to
solve its complex problems, schools had made little conscious effort
to work out even a tentative solution until Meyer Bloomfield began
his activities in the Boston schools six years ago. Several causes
have contributed to the reluctance of the school: (a) School people
have not known the occupational world well enough to advise
pupils in regard to vocational opportunities; (b) schools " prepared
for life" only in general and indefinite ways, — ^it was not widely
recognized, as it begins to be now, that culture on the one hand and
specific experiences of a practical sort on the other belong together
and should both be furnished by the school; (c) it was frequently
assumed that parents would provide all the vocational guidance
necessary, or that the job itself would automatically furnish it;
(d) American individualism led to a laissez-Jaire policy, to an ener-
vating admiration of the "self-made" man, and to other such tacit
denials of the utiUty of vocational guidance.
54
Digitized by
Google
Vocational Guidance 65
All this time in which the schools were neglecting the duty of
co5perating with the young people when they were making their
vocational decisions, however, an active but erroneous form of
guidance was going on — a species of false guidance which still
flourishes. The suggestions of the street, village,, city, or limited
environment enter the mind of the child and influence his deci-
sions. XJncriticised information about the successes of others,
suggestions of relatives or of child companions, or newspaper and
magazine advertisements of doubtful veracity aid him in reaching
decisions which determine the course of his whole life. If the school
is not willing that such sources of vocational misinformation should
monopolize the field, it must make systematic efforts to furnish pro-
per substitutes.
What the Schools are Doing
Schools in various parts of the country have already developed
the elements of effective vocational guidance. If certain good plans
now in successful operation could be gathered up and set into motion
in any one school system, that school system would make adequate
provision for guidance. Let us now examine some of these plans.
(1) The Lxte-Cabbeb Class Formed
Some ten or more high schools, within the writer's limited
investigation, are conducting regular classes for the study of oc-
cupations. The following are some illustrations of the work being
done at various places: In Oakland Technical High School, Cali-
fornia, first-year pupils meet in classes once each week throughout
the year, and, under the leadership of teachers who are making a
study of vocational guidance, investigate occupations and study
the problems of continued education in relation to the calling. Boys
and girls are in separate classes. In Middletown, Connecticut, the
life-career class has been a regular part of the high school work for
several years. Recently a textbook for boys has been issued, based
on the work in this school.^ The plan includes a study of the whole
field of occupations, under ten different heads, together with dis-
cussions of the following topics: the importance of vocational in-
formation, characteristics of a good vocation, how to study voca-
* Gowin, Enoch Burton, and Wheatley, William Alonzo, Occupational Ginn
and Company, 1916.
Digitized by
Google
56 The Annals of thb Abiebican Acadbmy
tions, choosing a vocation, securing a position, efficient work and its
reward.
Other plans are fully as comprehensive. Grand Rapids has
accomplished the same result without creating new classes, — ^the
work in English composition has been directed into vocational
channels, and the pupils in all the grades from the seventh through
the high school have the benefit of systemetic enlightenment about
the following topics: vocational ambition, value of education, the
elements of character that make for success in life, vocational bi-
ographies, the world's work, choosing a vocation, preparation for
life's work, vocational ethics, social ethics, civic ethics.*
The life-career class should begin much lower than the high
school; it is known that a large proportion of the "leakage" from
school occurs before the sixth grade. It is unfair to these children
that they should be permitted to go from school into occupational
life without some insight into and outlook upon the opportunities
and problems about them.
(2) School Studies Adapted to Vocational Needs
Many schools which have not organized life-careet classes have
done excellent work in reorganizing the material in the subjects
of the established program. The teacher of a lesson in arithmetic,
geography, language, or science should bear in mind that each child's
life presents certain actual and potential requirements of a personal,
social, occupational, and civic sort, and should see that the study
and experience involved in each lesson are so planned as to contribute
something toward satisfying these needs. Many subjects of the
school program should be almost wholly related to occupational
needs, and practically every lesson in the school work has something
to contribute to success and usefulness in the vocation. Occupa-
tional needs are not the only needs, but they should not be ignored.
Teachers in Boston and Grand Rapids have made progress in this
particular. Many teachers are using the "project" method in
teaching: thus, arithmetical principles are taught in connection
with "keeping store," or building a play house, and the principles
of physics by putting together an automobile. Trips, visits to
museums and galleries and cooperative tasks such as building a
* Davis, Jesse Buttrick, Vocational and Moral Ouidance, Ginn and Com-
pany, 1914.
Digitized by
Google
Vocational Guidance 57
miniatiire landscape, dramatizing an event, or keeping the school
yard clean, may be used as aids in teaching geography, history,
and community civics. It has been said that lack of interest and
profit in school work is largely due to the fact that the tasks as-
signed to children are those that no one outside of school is en-
gaged in performing. Vocational guidance would be much more
inteUigently done if each child might have concrete experiences
in solving actual problems.
(3) School Reobqanization to Meet Vocational Needs
A less direct but very important way in which the school system
can adapt itself to the needs of vocational guidance is by changing
its organization to suit modern needs. Kindergartens, good play-
ground facilities, a school program rich in many different kinds of
mental and manual exercises, and junior high schools with a wide
range of subjects, all help the pupil to find his abiUties and to meas-
ure himself against many kinds of tasks. Versatility is important;
a "jack-of-all-trades" experience is a good basis for the inteUigent
choice of an occupation. Many school systems have in the ele- •
mentary grades simple work in clay, printing, gardening, sewing,
cooking, wood, and iron; and some have work in shoe repairing,
electricity, cement, and bookbinding. The intermediate or junior
high school, which admits children at the end of the sixth grade and
keeps them for three years, offers splendid opportunity for the
child's development and self-discovery. This is the "trying-out
period" — ^the time when teachers and pupils may cooperate for
vocational guidance with great advantage. All pupils at this age
should have a broad study of occupational opportunities.
The organization should provide, too, for individual conferences
on vocational choices, and on such questions as further education,
means of preparation for particular occupations, opportunities of
earning money to allow the education to be continued, and pref-
erences of parents. These conferences need be nothing more than
friendly conversations, with information and advice suited to the
needs of the individual. Each child may be asked to choose several
occupations for special study, with tentative decision on one or two.
No pupil should be asked to make his final choice of an occupation
prematurely, — many may profitably delay the choice until the
college age. We may insist, however, that no one should be forced
Digitized by
Google
58 The Annals of the AsfERiCAN Academy
by economic necessity, or by the negligence of the schools, to enter
a job or an occupation blindly. In the Boston schools the eighth
grade teachers hold individual conferences with their pupils, aiding
them especially in choosing a high school. In Birmingham,
England, men and women imder the general direction of the school
authorities in the occupations often act as advisers of children.
Teachers who are especially qualified for the work should have
time allotted them for vocational guidance. Much can be done on a
volunteer basis in the beginning, but the investigations necessary
to effective work require more time than the teacher can spare from
her regular duties. Those appointed to do counseling should study
the economic, industrial, commercial and professional life of their
communities, and make efforts to cooperate with workers and em-
ployers. They should follow the children who leave school, guiding
them in their progress in the occupations, and deriving from them
valuable information to use in advi^g those still in school. Coun-
selors may hold frequent conferences for developing good methods
in the work.
Parents, too, need help and advice. In Pomona, California,
the vocational director for the schools is holding a series of parents'
meetings for the consideration of problems connected with the
guidance of tjhe children. The school departments in a score- or
more of places have each appointed some one person to exercise
general supervision over the vocational guidance work of the schools.
These oflftcers assist the teachers in finding occupational values
in the studies of the school program, hold teachers' conferences for
the discussion of methods of vocational guidance, enlist the aid
of civic associations, help in securing work, arrange for apprentice-
ship and part-time agreements, investigate occupations, and conduct
life-career classes.
EXTRA-CURRICULAR AlDS IN VOCATIONAL GUIDANCE
The student affairs and club activities of the children give them
experience which is valuable for vocational guidance. The Boy
Scout and Camp Fire Girl movements acquaint their members with
many kinds of useful activities not yet furnished by the schools, and
they substitute projects or "merit badge" tests for formal instruc-
tion. Summer camps, athletics, debating, boys' and girls' clubs,
student self-government, and literary societies all offer opportunities
Digitized by
Google
Vocational Guidance Sd
for learning lessons of self-reliance, service, and co5peration — ^valu-
able traits for all callings of life.
Is finding jobs for children an aid to their vocational guidance?
Some school people unhesitatingly answer yes, while others think
that there are far more profitable activities for the vocational coun-
selor. Though much good argument may be found for the afl5rm-
ative side of the question, and though some ''vocational guidance
bureaus" are concerning themselves almost wholly with placement,
it seems fair to say that other activities in vocational guidance are
more profitable to society and to the individual than securing places
for unprepared children who leave school. The conditions of finding
employment are in an unsatisfactory state, but it is by no means
certain that placement by school people would reUeve these condi-
tions, nor even that the school could obtain better positions for the
masses of workers than they could secure for themselves. Place-
ment deals with the effects of maladjustments in the occupational
world, and the energy of the vocational counselor should be di-
rected at removing the real causes of the difficulty.
The Relation of Vocational Guidance to Vocational
Education
Vocational education is the subject of another paper of this
volume. Great strides forward have been taken during the last
few years, and through this progress the efficiency of vocational
guidance has been greatly increased. It is worth pointing out here,
however, that vocational counseling requires certain essentials in
the program of vocational education. In the first place, it is well
to remember that vocational education must not begin too soon,
even if it aims to help those already at work. Thus, it has been
found that the pupils of the continuation schools (schools which
young people at work attend during working hours for from four to
ten hours per week) are most of them not ready for vocational
education, for they have not really decided on a life-career and they
are working at jobs which o£fer little opportunity for advancement.
In the second place, vocational education must not be too narrowly
restricted to training for the mere occupation. The reasons for
this are that education for social, moral, and citizenship duties must
receive ample attention; and that in spite of careful decision and
careful preparation for an occupation a change in the choice of
Digitized by
Google
60 The Annals Of ths American AcADSMr
Vocation is sometimes made. Vocational training must be broader
than training for one mechanical process; the younger the children
the broader should the schooling be, even if specific training for the
calling be left till after the young people have entered the occupation.
In the third place, vocational preparation should include a
study of the economic, political, and social problems connected
with industry and conmierce. Many a farmer who has failed was
efficient in everything but the problems of transportation and com-
mission; the industrial worker should know something of wages,
taxation, labor organizations, scientific management, unemploy-
ment, the factors in personal and social efficiency, blind alleys in
industry, employment agencies, and welfare work.
Cooperation for Guidance in the Occupation
During the past few years the schools, the workers, and the
employers have joined forces for investigations and improvement
in a way never before thought possible. Vocational surveys, part-
time schemes, continuation schools, extension and short courses,
apprenticeship agreements, more practical methods of teaching, and
new insight into working conditions, on the part of teachers, are
some of the results. Let us note first the findings in regard to young
workers.
(1) The Young Workeb
Investigations have shown that even in the states which do not
tolerate the grosser forms of child labor, schools and occupations are
to blame for the continuance of distressing conditions. It has been
shown that in many instances the school fails to attract the child —
he leaves because neither he nor his parents think that the schooling
is worth while. Economic pressure seems to be less a controling
factor than it was formerly thought to be. Hence the duty of the
school to satisfy the desire for "worth-while" education.
Again, .it has been shown that the working child under sixteen
is usually in a "blind-alley" occupation, — often a mere errand boy,
— and finds himself several years later with no worthy calling and
no preparation for any. Other disadvantages in children's work
are the necessity for their hunting work (this is especially to be
regretted in the case of young girls), the seasonal character of much
of the work for the young, the difficulties due to inefficiency and
misimderstandings, and the wandering from job to job in the vain
Digitized by
Google
Vocational Guidance 61
hope that better conditions of employment will be found. En-
lightened employers as well as educational investigators seem to
have arrived at the conclusion that neither industry nor commence
needs the services of children under sixteen, and that their place is
in the school.
Certain remedies have been proposed and tried; we have space
here only to enumerate them: part-time work for those forced to
earn money (either a half-day each in school and occupation, or
alternate weeks); scholarships for needy children; better working
agreements, these to be filed at the school offices; plans for opening
"blind alleys" — ^for offering training to every young worker for
promotion to a better occupation; progressive raising of the com-
pulsory school age. It seems clear that vocational guidance cannot
be effective without creating or at least working for better opportuni-
ties for boys and girls, hence the counselor is interested in furthering
all movements for putting the school and work experiences of the
young on a sounder basis.
(2) Thb Pboblems of Employment
The vocational counselor is interested, too, in codperating with
employers, the employed, and legislative and executive officials in
the progressive improvement of conditions of labor. If the school
is to prepare boys and girls for a life in industry and commerce, then
it must be deeply interested in the question of wages, fatigue,
hours of labor and steady employment. Some firms hire thousands
annually, in order to keep a force of hundreds. They must be
shown how to reduce this "labor turnover," and men interested in
vocational guidance are assisting in the work. Employment de-
partments are being put in charge of inteUigent and responsible
managers, and plans have been instituted for analyzing jobs, hiring
help, transfers, promotions, handling of complaints and constructive
suggestions, and training employment managers.
The modern movement for "scientific management" must be
safeguarded in its service to society — the counselor must inform
himself regarding this problem. The apparent conflict between
personal ambition and community service must be solved through
the aid of painstaking vocational guidance. School pupils must
be trained for cooperative endeavor. Progressive business houses
are m&king increasing e£fort to use the opinions of the employes in
Digitized by
Google
62 The Annals of thb American Academy
determining the policies Df management, and to turn over to them
the social or welfare work of the establishments.
Both children and adults need guidance in seeking employment,
and the counselor must join in the movement for public employment
agencies and labor exchanges to take the place of the wasteful and
unreliable conmiercial agency. Not only does the vocational
guidance movement concern itself with these problems of employ-
ment; but it maintains also that the coming generation of workers
should be equipped to contribute inteUigently to their solution. The
life-career classes, and the plans for vocational education, should
include a discussion of these problems.
(3) Dangers To Bb AvomED
Vocational guidance has not been free from certain misconcep-
tions and questionable practices. The present utiUty of psychological
testing for vocational guidance has been greatly exaggerated. In
spite of extravagant claims, it is doubtful if any set of laboratory
tests yet devised is of general, practical value for our purposes.
Again, many sincere persons try to advise pupils by first classifying
them into "types." Human nature is complex, however, and no
simple pigeonholes will serve in vocational guidance. Besides, the
theory that there are types of mind has been much discredited
through recent investigations, and no counselor can afford to use
it. Again, there has been in some schools an unwarranted use of
record blanks with long lists of questions involving self-analysis
beyond the abiUties of the children. Teachers, too, have tried to
analyze individual children, labeling one as '^ attentive,'' another
** observant," another "dull," "persistent," "orderly," or "slow."
It is now beginning to be seen that persons cannot be ticketed in
this naive manner, — that the disorderly boy in one kind of activ-
ity is likely to become orderly in another, and that even a moral
quality as honesty may, by the same person, be exhibited
in one situation and be lacking in another. In other words,
the theory of formal discipline or general training must not deceive
the teachers; there are few if any mental qualities which, when pres-
ent in one activity, may be credited to an individual as a general
characteristic. A boy's perseverance in baseball does not guarantee
his perseverance in arithmetic. Some teachers attach too great
importance to mere physical characteristics, or to such vague and
Digitized by
Google
Vocational Guidance 63
unmeasured hypotheses as "the influence of heredity," "innate
qualities," "native ability," and others. All reliance on such data,
together with phrenology, "character analysis," and study of
physiognomies, had best be left to the charlatan. Life is too com-
plex for such short cuts, — scientific study of vocational guidance
problems is necessary, and there is no easy way.
Again, overconfident advice must be avoided; it has been
proved unsafe to attempt to tell a boy just what he can or cannot be-
come. Then, too, imsocial influence has no place in vocational
guidance. School people cannot a£ford to interest themselves in
helping boyB and girls merely to " get ahead of the other fellow, " in the
"race for success," nor to glorify mere will-power imchecked by
social viewpoint, nor to encourage questionable forms of "sale-
manship," as these propositions are advertised in some current
magazines. Moral and social ideals must not be lost sight of. The
student himself must by no means be passive in all this program of
activity. He must progressively awaken to a realization of his
opportunities, and must develop a desire to reap only the rewards
of such honest service as he can fit himself to render. Without the
student's awakening, vocational guidance is of little or no effect.
Conclusion
Such, in brief, are the main currents of interest and accomplish-
ment in the movement for vocational guidance. Though the guid-
ance is to be offered to each pupil in the schools, and to each young
person at work, it will be seen that effective aid can be given only
as schooling and conditions of employment are gradually improved.
At the present time many school systems are making children aware
of occupational opportunities, and preparing them for effective
labor. There is taking place a reexamination and readjustment of
school methods (this volume is one of the evidences), and teachers
are now as never before cooperating with intelligent laymen in the
solution of perplexing problems of employment. The progress in
these fields of educational and economic endeavor during the past
decade gives hope enough for the future. The movement which we
are discussing in this paper aims to contribute its best thought to
these streams of conscious evolution, and, at the same time, to
derive from them the means for a more eflftcient "vocational guid-
ance of youth, " in school and in occupation.
Digitized by
Google
EDUCATION FOR LIFE WORK IN NON-PROFESSIONAL
OCCUPATIONS
By Frederick G. Bonser, Ph.D.,
Associate Professor and Director of Industrial Arts, Teachers College,
Columbia University.
Changes, both vocational and social, have laid new responsibil-
ities upon the school and offered new opportunities for greater
service in life preparation. . We have become conscious of these
changes and their significance, and the need is now as well recognized
and appreciated for vocational education in the non-professional
callings as in the professions.
The breaking down of the apprenticeship system, the developH
ment of specialization and piece work, the diflftculty in securing more
than a few relatively simple manipulative skills or operations in
employment itself, the fact of constant change in industry and
commercial life calling for flexibility and adaptability in workers —
all of these facts and factors have been much discussed, and they
are too well known to require more than passing mention as causes
for the widespread interest in' vocational education. Changes in
social attitude have also come about which are largely the resultant
of vocational changes and changes in economic relationships.
The subordination of the many workers to the one employer, the
frequent exploitation of workers by employers, the occasional
injustices suffered by employers at the hands of organizations of
workers, the development of large and powerful capitalistic cor-
porations on the one hand and of labor combinations on the other,
and the frequent injury of the long-suffering consumer or the inno-
cent bystander have all contributed to develop a collectivistic
attitude which expresses itself in new forms of social responsibility
and social control. The public support and direction of vocational
education has come to be regarded in several states as a social
responsibility, and now the federal government has adopted a policy
of national aid in its support and development.
The early entrance of boys and girls upon vocations and the
consequent neglect of the larger demands of citizenship in their
64
Digitized by
Google
Vocational Education 65
training have had their place in awakening the public to its respon-
sibility in requiring a more effective education for workers in the
industrial, commercial, and agricultural vocations. Four large
ends contribute to the well-being of the individual and equally to
that of the society of which he is a part, namely, (1) the preservation
of health, (2) the development of practical efl5ciency, (3) preparation
for responsible and effective citizenship, and (4> training in the
wise use of leisure. Neglect of any one of these elements means
impah-ed vocational productivity in the long run. In the earlier
movement for vocational education, the emphasis was very partial
to the second of these elements alone. Limiting the training of the
non-professional workers to the development of immediate practical
eflSciency, and failing to develop adaptability and these other more
mdirect elements are both wasteful and dangerous.
Some Controlling Factors in Non-Professional Vocational
Education
Between vocational education for the professions and for the
non-professional occupations there exist a number of fundamental
dififerences. Some of these have been wholly neglected in the haste
with which occasional attempts at vocational education have been
made in industrial and commercial fields. It is worth while to note
these differences and the implications which follow from them:
(1) Early Entrance to Non-Professional Vocations
Entrance upon professional callings assumes a maturity in
years and a foundation in liberal education much greater than in
the fields of industry, commercial life and agriculture entered by
the greater number of workers. While few enter the professions
under twenty years of age, and many not until four or five years
later, the masses of workers in the productive and distributive fields
enter in their teens, many in their very early teens. A full high
school education, a college education, and often a later specialized
professional course make" up the preparation for professional
workers. Few in the non-professional callings have a high school
education and many not even a full elementary school course.
This puts a burden upon the secondary vocational schools which
does not have to be assumed by professional schools, that of
including^the elements of ft liberal education — preparation for
Digitized by
Google
66 The Annals of the American Academy
citizenship and the use of leisure, as well as training for productive
eflSciency. Because of the general neglect by both elementary
and secondary schools, there is also a great need for educating
workers as consumers, giving information and training in the
purchase and use of food, clothing, and other economic necessities.
(2) NECBSsnr fob Specialized Manual Skills
In most of the non-professional callings, there must be developed
various specialized skills in manipulation. This requires the equip-
ment and opportunity for much shop, oflSce or field practice, practical
work involving the use of materials and much repetition in opera-
tions and processes until accuracy and speed are developed approx-
imating productive standards. This involves expense and prob-
lems in the disposal pf products not included in training for pro-
fessional callings.
(3) Ltttle Contact with People — ^Indhtidualistic Work
The professional callings require much contact with people—
the work all deals with personal or human relationships. Many
of the non-professional callings are relatively individualistic. The
work is chiefly with materials and calls for individual, technical
manipulations.
(4) Fluctuations in Character and Location
There is relatively much greater fluctuation in the non-pro-
fessional callings. This fluctuation is of two types, that of the
character of the work itself, and that of the location and quantity
of work. Relatively the professions are conservative and change
but slowly. The professional worker usually becomes identified
with a given location and community, building up permanent social
contacts and relationships. Inventions, discoveries and new types
of organization occasion almost constant change in the character of
industrial and commercial work, and the shifting of centers of
production and the numerous adaptations to meet changing needs
give a mobility and a fluctuation not usual in the professions. This
factor in the productive and distributive occupations imposes a
need for the development of adaptability which did not exist in
the days of apprenticeship and a more domestic type of industrial
production and distribution.
Digitized by
Google
Vocational Education 67
|P) Opfobtunitibs fob Child Labor and Exploitation of Workebs
■ The professional callings offer little opportunity for work by
Jldren, and all require ability and training of a relatively high
jfer. In the organization and division of labor in modem indus-
bl life, there are many kinds of remunerative work which require
ty little ability or training, and which may be accomplished as
by children in their teens as by adults. This fact puts the
kool and the larger well-being of society as represented by efficient
zenship into sharp competition with remunerative occupations
' the plastic, formative years of adolescent youth. Only by social
sure for a more far-sighted economic and social policy can this
for child labor and this exploitation of child life be controlled.
(6) LiTTLB Testing of Aptitudes before Entrance to Vocations
In the professional callings, the long period of preliminary
eral education and the definite professional training serve as a
rtial testing and sifting process whereby the fitness of the indi-
iual for the wort he proposes to undertake may be somewhat
timated in advance. Success in his preparatory work is some
sure of probability of success in the occupation to be followed,
failure usually means elimination. There is thus a type of auto-
matic vocational guidance, although it is often bungling and but
partially effective. In the non-professional callings, however,
entrance upon this or that kind of work is often wholly a matter
of chance. When the need for work comes almost any job that is
offered is taken. The chances for failure or success are about
even. The process of trial and failure or success is begun. One
failure after another may follow at the cost of inefficient work to
the employer, poor service to the public, and waste of effort, dis-
couragement and the habituated attitude of mediocre worth to the
worker.
Implications for Vocational Education
From the foregoing characteristics of non-professional work,
there evolve certain very definite implications for the direction and
development of vocational education for these callings.
(1) The Problem Is One for the Secoi^art School
The problem is clearly one for the period of secondary educa-
tion, covering the years from thirteen or fourteen to eighteen or
Digitized by
Google
6S The Annals of the American Academy
twenty. Vocational education to be of most general value must
begin before the vocation is entered. By the census of 1910, over
eighty-five per cent of all persons in the United States engaged in
gainful occupations were occupied in vocations entered by a majority
of the workers in their teens.
(2) Vocational Activities Should Be Introduced Early
To meet this problem comprehensively, there must be included
in the schools for pupils of twelve years and upward courses de-
signed to give work of appreciable worth in relationship to voca-
tional needs. Many pupils who could not otherwise be retained in
school will remain if they are given some training which will make
for direct increase in efficiency when they go to work.
(3) DiPPERENTIATED CoURSES ShOULD Be OFFERED
There should be provision for the early partial differentiation
of pupils on the basis of aptitudes, interests and probable length of
stay in school. By the beginning of the seventh grade period,
school work, if it at all adequately reflects the life activities outside
of school, should have revealed with sonje degree- of significance the
dominant aptitudes and interests of pupils. These, taken into
account with economic and other home conditions of pupils, should
enable teachers and parents to aid the pupil in a selection of work
for subsequent years which will be of both general educational
value and of rather definite vocational worth. Differentiation
should be only partial for several years, but selections from the
beginning should be made on the basis of definite, clearly appreciated
needs. While pupils having college entrance in view might well
begin the study of a foreign language in the seventh grade, those
expecting early to enter industry should elect an industrial subject
instead, and those inclined toward commercial work should have
opportunity to begin work preparatory to this field rather than
take industrial studies or those leading primarily to college entrance.
With each succeeding year, the number of elective courses in each
field should be increased so that the pupil may approach the time
of entrance upon his vocation with increasing emphasis upon the
life career motive. The junior high school with its flexible courses
of study is the response which the schools are formulating to meet
this situation. The plan promises much for the period of early
adolescence.
Digitized by
Google
Vocational Education 6d
(4) The Liberal Abts Subjects Should Be Modernized
To modernize education in general, there is need for a very
marked reorganization of the usual academic subjects throughout
the public school system to make them all contribute more directly
to the solution of problems of present day life. History, civics,
geography, English, mathematics, and science studies may all select'
those problems and aspects of their respective fields which throw
light upon or which are practically usable in the occupations of
people engaged in productive or distributive enterprise.
(5) The Later Years op High School Should Be Vocational
The latter years of the high school period, those coming to be
known us the senior high school, representing the years of life
between fourteen or fifteen and seventeen or eighteen, may well be
organized as definitely vocational, or at least dominantly influenced
in their organization by vocational motives. This organization,
broadly considered, would include a liberal arts division, made up
to meet the needs of those preparing for higher institutions and
chiefly having in prospect entrance into professional callings; an
industrial division, organized to give preparation as intensive as
possible for industrial callings to be entered immediately upon
leaving school; a commercial division to prepare for immediate
entrance to callings in the commercial field; and an agricultural
division for similar preparation for entrance upon agricultural work.
In each of these divisions there may well be organizations of courses
primarily to meet the needs of women desiring to enter wage-
earning occupations. It is assumed that all girls will regard as
fundamental a preparation for home making, and that, whatever
other vocational motive may determine their selection of wo^k,
they will include home-making courses as an essential supple-
mentary group of studies. It is also assumed that parallel with
the vocational studies in each of these divisions there will be a well
balanced selection of liberal arts subjects organized in terms of
the civic and social needs of present day life. In each division, also,
a selection of courses should be possible which would make a founda-
tion for entrance into still more advanced study of the chosen field
in colleges or technical institutions. While such a fully com-
prehensive plan is not possible to all communities, each community
may select groups of studies for emphasis which meet its own
Digitized by
Google
to I'hb Annals 6p the American Academy
particular needs. By abandoning the ghosts of tradition, the
secondary school may be made to adapt its offerings to any com-
munity, whatever these needs may be. Potentially the secondary
school is a thoroughly democratic and cosmopolitan institution.
(6) Continuation or Vocational Extension Work Is Needed
The fact that great numbers of young people enter upon wage-
earning before the completion of a secondary school course and an
even greater number before finishing the elementary school requires
that provision be made for continuation or part time education
for those at work. For workers not yet physically mature, this
should be day school study. For men and women of maturity,
evening school work may be engaged in without the dangers to
physical and moral health and growth to which adolescents are
subjected by evening school attendance. Such supplementary
education needs to be exceedingly flexible in its offerings. For
many workers there are immediately practical vocational problems
which may be met by supplementary school courses covering from
four or five to eight or ten hours each week. Very often the most
desirable organization of such work is on the basis of short units
each of which meets an immediate and pressing demand of the
worker and each of which would increase his daily efficiency and
earning capacity. In a number of states legal provision has been
made for the public support of continuation school pupils who
are at work but who are excused from work several hours each
week to attend the school. If the occupation entered is satisfactory
and is to be permanent, the continuation school work should
directly supplement it in order to make for direct and increased
eflficiency in it. If the work is but temporary and it is desired to
prepare the student for some other vocation, school work should be
provided which will make a later transfer into the chosen vocation
relatively easy and progress rapid after entrance.
In continuation school work, either day or evening, there is a
large demand for courses in the general education subjects. The
elementary school work in English, mathematics, geography, history
and science are not found adequate. While the cost of evening
work in addition to day school work places a large burden of taxation
upon the community, it is the penalty society should pay for its
failure to adjust itself to modern conditions without child labor.
Digitized by
Google
Vocational Education 71
Great as is the cost, it is a good investment, both economically and
socially. Little that is general in the detailed direction of supple-
mentary day or evening school work may be said, as each community
must study its own problems and needs and adjust and adapt its
offerings to meet these community needs.
The Junior High School and Vocational Education
The junior high school, consisting of the seventh, eighth and
ninth grades, is rapidly responding to the needs of those pupils
who enter wage-earning occupations in their early teens. It does
this by offering in the seventh and following grades an election of
work among several practical courses, usually industrial, commer-
cial, and agricultural. The amount of elective work in any one
of these fields, perhaps not more than two school periods each
day in the seventh year, is increased in the eighth and still more
in the ninth year, where it may receive half time. Parallel with
these practical courses are closely related supplementary courses
and courses continuing the general education of the earlier grades.
In the industrial field, the work may be distributed over wood-
working, metalworking, concrete construction, electrical wiring and
installation, printing and some other forms of industrial activities,
or it may concentrate intensively upon but one or two of these
lines. A combination of these methods is most common, the pupil
taking one or two short units in each field in first, or first and second
years and as a result of this trying-out or testing of his aptitudes
and interests selecting for intensive study during the remainder of
his course the kind of work for which he is best adapted. If he
leaves school at the end of the three years he may enter wage-earning
as a helper with a foundation making him more immediately useful
and also enabling him to advance more rapidly than without this
training. With his practical shop work he has had some supple-
mentary work in industrial mathematics, industrial drawing and
design, and industrial science. He has come to see the worth and
possibilities of school work in vocational preparation, and, if
opportunities for continuation or vocational extension work are
offered by the school, he will usually make every effort to attend
and will continue to grow in efficiency and in earning capacity.
In the commercial or agricultural fields the plan may operate as in
the industrial.
Digitized by
Google
72 The Annals of the Ambbican Academy
Schools have developed in a number of states under such
names as, "vocational schools," "intermediate industrial schools,"
"trade schools" and "shop schools," which ofiFer courses of two or
three years in length somewhat approximating the foregoing
description. But these are usually limited to industrial vocations,
and, in most cases, they are separated quite fully from the "regular"
schools, and tend rather to neglect the continuation of the general
education so much needed by industrial workers. The Vocational
School for Boys and the Manhattan Trade School for Girls of New
York City; the Saunders Trade School of Yonkers, New York;
the Intermediate Industrial School of Cleveland, Ohio; the two
years' course of the Dickinson High School of Jersey City, New
Jersey; the Shop Schools of Rochester, New York; the day industrial
schools of Massachusetts and the industrial continuation schools
of Wisconsin are variants of this type. The Shop Schools of
Rochester, New York, are of special interest because of the definite,
written, three-party agreement entered upon. Here there is full
co5peration between the school and the industries. The school,
the employer and the pupil enter into an agreement, the employer
to provide a certain amount of work and training each week,
paying a specified wage for the work, the school to supplement this
with certain related courses and general subjects, and the pupil to
enter appropriately into both phases of the work.
From most of the schools of the foregoing general type, the
pupil enters the vocation for which he has been preparing as helper
or apprentice with some credit or advanced standing which reduces
ftom one to twd years the time for attaining the rating of journey-
man.
The Senior High School
In the period following the junior high school, or in the usual
Bcond, third and fourth years of high school, more definitely special-
sed vocational courses in industrial, commercial and agricultural
elds may well be offered for those not expecting to enter more
dvanced institutions. Here fully half of the time, or even more
han half, may be devoted to shop, office, or field practice and closely
elated technical or supplementary subjects. Where possible, the
lost satisfactory organization is the cooperative plan, examples
f which are found at Fitchburg, Massachusetts, New York City
nd Cincinnati, Ohio. By this plan, the shop or office work is done
Digitized by
Google
Vocational Edxtcation 73
in commercial plants or offices. The usual method is to pair the
students, one spending a given week at work, the other in school,
alternating the week following, and so on, week about. The school
is then relieved of the expensive equipment, material and teaching
staflF for practical work and devotes its time to the supplementary
technical and general phases of the student's education. A co-
ordinator, spending a part of his time in visiting and organizing
the sequence of problems in shop or office, and a part in visiting and
aiding in the organization of problems in the school, attempts to
secure a unity between practical work and school work that makes
each supplement and support the other. If this co5perative
arrangement with employers is not possible, then the school must
provide the shop, office, or field practice for the development of
working skill and knowledge in the respective fields. A typical and
excellent example of a four years' vocational course for industrial
workers fully provided in all its aspects as a part of the school's
work is that of the Dickinson High School of Jersey City, New
Jersey. From three to four years of practical shop work are oflFered
in each of the more important woodworking and metalworking
industries. With these are extensive technical courses in drawing,
mathematics and science, and some work in general, liberalizing
subjects. Graduates of this school may quickly attain journeyman
standing in the vocations for which they have prepared because of
the intensive shop training and the extensive range of technical
knowledge they have received from the several courses.
The variety in which any school system may reasonably oflFer
specialized vocational courses is a matter of local demand. In all
but the very largest industrial and commercial communities no
specific course should be oflFered until a survey of the given occupa-
tion is made in the commxmity and the annual requirement for new
workers shown to be sufficiently large to justify a class whose
graduates would be absorbed by the demand. If cooperative
courses are possible, the school may support the work with smaller
classes than if the practical work also must be provided by the
school.
The manual training and technical high schools, though
originally developed with the expectation that they would attract
many students for vocational preparation, have become very
largely preparatory schools for colleges of engineering and tech-
Digitized by
Google
74 . Thb Annals of the American Acadebtt
nology. Because of the excellent technical training in subjects
related to shop work, those more enterprising students who do
enter industry after graduation from these schools often rise rapidly
to positions as foremen or to other directive positions requiring
this technical knowledge. A considerable number of boys who
have graduated from the technical high schools of Cleveland, Ohio,
and Springfield, Massachusetts, have entered industry and have
been promoted to positions of directive responsibility. The manual
training or technical high school does not, however, seem to promise
much for those whom we may call the privates in industry^ They
are rather for the non-conmussioned officers of industrial organiza-
tion. The vocational school for the great masses of workers must
not demand so much of the more highly technical nor unrelated
general material, but dwell more intensively upon the practical
and closely related supplementary work. Yet, while laying due
emphasis upon the vocational problems and processes, they need
not crowd out other activities that have an indirect bearing upon
practical efficiency and a very direct bearing upon civic and social
efficiency as a whole.
Private Institutions for Vocational Education
The beginnings of vocational education in this coimtry for
both industrial and commercial work have been conducted quite
apart from the public schools. The mere mention of the business
colleges is sufficient to recall the earlier history of vocational training
for commercial work. By reference to the work of such institu-
tions as Pratt, Wentworth, Drexel, Stout, Armour, Lewis, Hampton,
and Tuskegee Institutes, the various mechanics' institutes, and
Bradley and other polytechnic institutes, all offering courses
preparatory to entrance or to more advanced work in industrial
vocations, we see the beginnings and perhaps the most compre-
hensive development of vocational education for non-professional
vocations. Their work, on the whole, has been better adapted to
the needs of young men and women beyond the secondary school
stage than for early adolescents. In attempting to develop second-
ary work in public schools by imitating these institutions we may
have a reason for the narrowness and mediocre success of some
secondary schools. The almost exclusively practical and technical,
character of the work of these institutions can not be brought
Digitized by
Google
Vocational Education 75
down to the needs of boys in their earlier teens without much
adaptation. However, these institutions have served and are
serving a very real need in their vocational preparation of mature
students. They suggest the need, in many communities, for similar
institutions in which work may be offered following that of the
industrial courses in the senior high school. For those desiring
preparation for entrance to the more highly skilled types of mechan-
ical work we have very few institutions under public support. The
"Middle Technical Schools" of Europe serve as excellent models
for this development in America. In a considerable number of
fields America must still go to Europe for highly skilled workmen.
In almost any manufacturing city in this country with a population
of over 100,000 not having a privately supported mechanics' in-
etitute, a school of this type would be an investment that would
yield substantial dividends to the community.
Present Tendencies and Opportunities in Vocational
Education
At present, the whole trend in American public education is to
relate the work in the school more closely to the significant aspects
of life outside of the school. The greater enrichment of the ele-
mentary school curriculum is to be attained by making its problems
and interests a true reflection of the problems and activities of
everyday life, vocational, civic, and social. In just the measure
that school activities are made representative of vocational activities
will school performance become an index of probable vocational
performance and the school work itself a practical means of voca-
tional guidance. With the possibility for work in the junior high
school that appeals to the vocational aptitudes and interests of
pupils, and work that is so closely related to vocational needs that
its worth is appreciated by parents, the holding or retaining influence
of the school will be markedly increased. With the courses giving
more and more time each succeeding year to preparation for entrance
upon work with advanced standing and increased earning capacity,
no child will wish to withdraw, and no parent* will permit with-
drawal before the work is completed except^f or the most pressing
economic necessity. By safeguarding all vocational courses with
supplementary work providing adequate training for citizenship and
for the profitable use of leisure, the increased individual efficiency
Digitized by
Google
76 The Annals op the American Academy
of the workers and the consequent increase of social efficiency,
wealth, and solidarity will make the development of vocational
education a public investment which will bring large economic and
social returns. In vocational education, the American public
school has a large opportunity and responsibility in the further
development of efficient democracy. Until its offerings for the
preparation of workers in non-professional vocations are as adequate
as for those in the professions, it will fail in its avowed purpose to
provide equality of opportunity.
Digitized by
Google
MANUAL LABOR AND THE ACHIEVEMENT OF
NATIONAL IDEALS
By B. H. Crochbron, M. S. A.,
ABSodate Professoi; of Agricultural Extension, University of California.
We are emerging from our first conquest: we have conquered
the lands. Farms stretch from coast to coast so that desert and
foreet push back to the comers of the continent. Our second con*
quest will be of machines. Already the wheels of industry turn al-
most of themselves while unlimited power from the turbines streams
over wires to distant cities. So great have been our conquests, so
many are the powers harnessed to industrial life that the casual on-
looker may be brought to conclude industrial labor has been abol-
ished by the accumulated knowledge and surplus property laid up
for us by generations of the past and present. The man who lives
in cities is likely to travel little and to see little because his routine
by its security and monotony starves out all adventurous instinct.
So the city man, traveling between his home and the office or store,
complacently dwells upon this as the age of the mind and of ma-
chines. He charms himself iruto the belief that the time is here
when man will no longer earn his living by the sweat of his brow
but rather will sit in Jovian contemplation of a perfected mechanism
which will turn the wheels of agriculture, of commerce, of manu-
facture and of trade.
The Masses Live by Common Toil
The truth is that the world still labors by muscle not by mind.
The farmer tills his lands from early morning till late at evening,
trudging home at sunset wet with sweat. The miner astride his
quivering drill knocks down his tons of ore and gasping comes up
from his shift to change sodden clothes for dry. The mill worker
and mechanic with flying hands and fingers beat through the day
and at night go out the gates tired of muscle and of brain. It
would be well if those street-car and subway philosophers who
derive their image of America from across desk tops and the penny
papers could make a tour of adventure and of exploration to the
mills of their town, the farms that lie about it and the mines in the
77
Digitized by
Google
78 The Annals op the American Academy
nearby hills. They would there find that manual labor is the means
by which America lives and that men not machines are still the con-
tact points with nature. And it is well that it is so. A new and
terrible degeneracy would no doubt creep in when the world sat
down to watch nature do its work. For man, mechanics is only
an assistant, not a substitute. Manual labor must remain the
heritage of the masses, their birthright to earn their bread by the
sweat of their brow.
The Social Significance of Manual Labor Well Done
Education must emphasize the need of manual labor and the
desirability of doing that labor so well that it will produce abundantly
for the needs of the individual and society. In the last century of
America formal education has become universal but it still clings
to the ideals of the fortunate few to whom it was originally restricted ;
those members of the non-laboring class who were to do the plan-
ning, not the working, for the race. Education must aim at the
heart of the problem by teaching that manual labor is necessary and
therefore honorable and that education is a means whereby manual
labor becomes more effective. Educators have long embraced the
theory that the province of education is to deal with higher things
than mere labor; that labor must come soon enough for the masses
of children; and that, therefore, the brief time in schools must be
made a vacation period for the hands while the brain takes its short
and final exercise from whence, perforce, it must come to rest when
school days end and work begins. It seemed to them imperative
that the children of the masses should participate for a time in that
realm of thought and of scholasticism to which they will probably
never have an opportunity to return. As a result some complained
that schools were incompetent, that they had no relation to real life
and that educators were theorists and dreamers. Meanwhile there
sprung up a host of office boys, clerks, odd-job men, hangers-on and
others who had come through the school system to find the world a
place wherein they were required to do something for a living and to
do it by hand as well as by brain.
Occupational Elements in the Curriculum
Only lately have persons grudgingly admitted that schools
should have some relation to occupation; that schools should be the
training ground for work as well as for thought; and that manual
Digitized by
Google
Manual Labob and National Ideals 79
labor on farms, in mines, in mills and shops must be the heritage of
the many who attend the public schools. In response to the demand
for this occupational work, courses in manual training, home eco-
nomics and agriculture have crept into the school systems and some
persons are bold enough to term these courses '^ vocational." In
truth few of them are yet really vocational because they do not
train for a vocation. Rather do they seem to give to the student a
very limited amount of manual dexterity and thought familiarity
in these subjects. Manual training courses in the school do not
trsdn mechanics, home economics courses do not train housekeepers,
nor do agricultural courses train farmers. Much manual training
still putters with tiny tables and jig-saw work. Many home econ-
omics courses peter out in sticky candies badly made and impos-
sible aprons poorly sewn. Most agricultural courses specialize in
tiny gardens and never get out to the fields ^nd farms.
Some of the best vocational and industrial teaching in America
was the earliest. When General Armstrong created the first real
industrial school in America at Hampton in 1868 and thereby cut
the Gordian knot of education, he established a school which was
truly vocational in that he trained men and women for daily work
and turned out therefrom a finished product. From imeducated
labor Hampton makes farmers, bricklayers, carpenters and me-
chanics. Hampton is a vocational school. Such schools are only
P<^ibie, however, where they are regarded as the essential form of
^ucation by those who are to be educated and by those who have
the schools in charge. For real vocational education in manual
pursuits there is tiot yet wide demand from the common folk or from
the educators. Both the people and the pedagogues have received
their education in schools of the old academic type; they are there-
fore likely to regard the old type which trained away from labor as
the only real education. Many schools have been founded upon the
fond dream that they were to train for life's elemental occupations
only to find their trend changed by the men who had their direction
or by the people among whom they were to work.
Tradition and Pedantry in Education
The truth is that the mass of persons whom manual schools
would benefit do not want such schools. They still desire to have
their children study in the direction which to them means learning.
Digitized by
Google
80 The Annals op the American AcADfiMf
Schools for the manual vocations, they believe, may be desirable
for negroes and Indians and perhaps for the people in the next town
or even possibly for their neighbors' children — ^but for their own
children, never. These, they think, are destined for higher and
better things. The public tolerates and even patronizingly ad-
vocates a smattering of so-called "manual training" or "agricul-
ture" provided it does not displace foreign languages or abstract
mathematics; but the people of America who vote do not desire
real vocational training in the manual trades given to their own
children. Real manual education has therefore only been successful
among two classes of persons, first, among the subject races and
peoples such as negroes, Indians and public charges and, second,
among the rich governing class whose foresight and experience in
large affairs have shown to them the need of manual education for
their sons. The schools for dependents and the expensive private
schools, such as the wonderful country life schools of England and
Switzerland, have thus far been the conspicuous successes in training
in manual work.
The rise and development of agricultural education are an
example of the pressure which public opinion exerts toward emas-
culating all attempts to give real and practical public training for
manual labor. The Morrill Act passed by Congress in 1863 set
aside public lands for the support of colleges teaching agriculture
and the mechanic arts. Certainly the act contemplated a practical
education that would fit men to become farmers and mechanics.
But today no agricultural college in America pretends to give more
than a smattering of farm practice despite the fact that there are
more town than farm boys in the agricultural colleges. The agri-
cultural colleges turn out excellent technologists in agriculture and
its related sciences. Some of these become farmers but they learn
farming elsewhere, although they study agricultmre at college.
From 1905 to 1915 many states created secondary agricultural
schools which were planned to give very practical farm training to
farm boys. Extensive systems of such schools were introduced in
Wisconsin, Minnesota, Virginia, Georgia and other states. But
public demand forced these schools to devote much time to the
academic subjects and in turn to minimize their attention to the
practical phases of farming. The schools thus either became
Digitized by
Google
Manxtal Labor and National Ideals 81
academic with a smattering of text-book and laboratory study of
agriculture or thoy were forced to the wall.
The Duty op Educational Lbadbrs
Because the people of America do not want manual education
for their children, the burden is the greater upon educators and other
leaders of pubUc opinion to persistently call to the attention of the
public, whose ear they have, that public manual education is a
necessity for the present and future good of society. We must
teach and preach that "easy Uving" cannot be the lot of all and
therefore it is unsocial and immoral for those who have not earned
it. We must glorify manual labor by treating it fairly and squarely.
We must educate manual labor by teaching it to labor better and
more efficiently. We must hold forth manual work as a vocation
which pays better in life and living than a clerkship. The farm has
more of life than the ribbon-counter; the machine shop pays better
wages than the bank-cage.
Public opinion can also be led and directed by means of a few
privately-supported schools which are independent of pubhc opinion.
Schools like Hampton leap the entire gap in education by frankly
and efficiently training American boys — not Indians, nor negroes,
nor pubUc dependents — ^but American bojrs of good stock for suc-
cessful work in manual occupations. Such schools if successful
become popular by the superior abiUty of their graduates to earn
money in the trades and in turn serve as beacon lights for the
slowly following pubUc opinion and public education.
PubUc schools training for life — which is training for work —
will make boys better farmers, better laborers, and better mechanics.
By so doing they will save America.
Digitized by
Google
EDUCATION FOR HOME LIFE ON THE FARM
By Jessie Field, M.S.,
Town and CJountry Secretary, National Board of Young Women's Christian
Associations of the United States.
Country life can advance just as fast as its homes reach their
best. Everyone knows that a country home at its best is the finest
type of home in the world. And some country homes have reached
this ideal these days when modem conveniences and comforts are
as available in the coimtry as in the city and they have come into a .
great heritage of reaUty and beauty and richness of life and spirit.
On such homes as these, the new kind of country community has
arisen where the chance that comes to the boys and girls surpasses
that to be found anywhere else. Of course, the great majority of
country homes have not come into their own and yet the past few
years have seen a great wave of progress come in this special line.
Naturally, perhaps, the economic side of things about country life
interested people first but we soon saw as a farmer expressed it:
''It's not much use to grow better corn and live stock to get more
money, if we can't use that money to make better homes. And how
are we going to have better homes if we don't train the girls for
it?" And it is a big step in our development of country life that we
have come to recognize the fundamental importance of training for
home life in order that we may make our homes all that it is possible
for them to be in the country.
The Better Equipment op the Modern Farm Home
Not long ago I went to visit some country friends of mine.
The man had just put up a new barn and wanted me to see it before
dark. I hurried into the house to speak to the lady and saw they
had electric lights. Before I had a chance to say anjrthing
about them, however, I went on out to see the new barn. It was
a very modern, convenient barn. The man stepped inside the door
and turned on electric lights all over it, even in the top of the wheat
bin. ''Well," I said, "this is surely up to date. Electric lights
in your barn, too." Then he looked down and laughed and said,
82
Digitized by
Google
Home Life on the Farm 83
"Yes, you see that is the way we happened to have them up at the
house. The contractor said it wouldn't cost but a little extra to
run them on up to the house." That is the way our whole country
life movement is turning these days. It is "running on up" to the
home.
The Countby School and the Country Home
All Uve country schools these days are giving training in the
art of home making. From the well-equipped laboratories of the
consolidated schools and the simple practical teaching of cooking
and sewing in one-room coimtry schools, much of which is done in
home kitchens, the girls are going out better fitted to do their work
in country homes skillfully and eflSciently.
The Mendota Beach School, out from Madison, Wisconsin,
is a sample of a one-room country school which in the past few
years has put in a sewing machine and a simple equipment for teach-
ing cooking and where, with the help of the mothers of the commu-
nity who come in on Friday afternoons, a helpful and thorough
course in home making is being given.
Miss Agnes Samuelson, the county superintendent of Page
County, Iowa, has issued a printed course of study in home making,
thirty-two lessons, which are followed by the one hundred and thirty
country teachers in that county with splendid results.
At the Oak Ridge School, the demonstration nu-al school of
Winthrop Normal, Rock Hill, S. C, taught by Mrs. Hetty Browne,
hot lunches are served, the material for which is partly furnished
from the school garden. This idea of serving something warm at
noon in country schools has become quite general throughout the
United States and is one of the most practical ways in which boyB
and girls are trained for home life.
Corn and Canning and Other Clubs
Side by side with country schools as a great educational agency
are the clubs which are promoted through the state and nation and
the splendid extension work done from our state universities and
colleges of agriculture. Canning and gardening clubs, sewing and
cooking clubs, with the instruction and the contests and exhibits
that go with them, have done great things to arouse interest and to
set standards among country girls in their education for home life.
The girl who has cleared a hundred dollars on a tenth of an acre of
Digitized by
Google
84 The Annals of the American Academy
land, will not only use the money to get further training, but realizes
that she has already mastered much that will help her make a better
home and which will help her to decide to make her home in the
country. A girl who enters in a bread judging contest gets in her
mind a standard about bread which will never leave her satisfied
again with sour, soggy bread. The girl who has seen the even
stitches and the straight seams on the prize apron will always make
her clothing more neatly after that. No one can measure the great
educational value of these clubs, contests and exhibits. They
should always stand side by side with the schools and be used to the
utmost. They hold a great power for reaching and helping in a
practical way in our training for home life on the farm.
Music, Art and Literature in the Farm Home
But there is something more than skill in cooking and sewing
and in the science of home making that is needed. Into the home
life on the farm there naust come the joy and gladness of life; those
who live there must see the blue of the sky and hear the song of the
birds and share in the beauty around them. They must find there,
how they may have a share in all the riches of the world — riches
of music and literature and art. And with all this there must come
the happy sharing of it all with neighbors. This is coming, too,
these days in many country homes and we find every educational
agency helping to bring it about. The State Normal of Kansas, at
Emporia, sends out by parcels post victrolas and records with an
interesting descriptive talk in regard to them to all country schools
in the state desiring them. Many country schools have taken
advantage of this. Many county libraries are being established
now which bring good books within the reach of every country
child. Most country schools have small libraries of their own and
in almost every state, the state library commission furnishes free
traveling libraries. Courses of reading are recommended, includ-
ing a very good one, which is outlined by the United States
Bureau of Education and for the completion of which a certificate is
given.
Social Solidarity in the Open Country
With all these things, we are growing into a new community
consciousness and country people are getting together more. Coun-
try girls are having camps, country boys are going to short courses
Digitized by
Google
Home Life on the Farm 86
at the agricultural colleges. Some communities have neighborhood
dinners in honor of the new renters when they arrive in March.
There is coming to be a fine unselfishness which puts the good of the
whole community above the good of any one person. Many country
people are coming to be like the farmer in the codperative creamery,
who shook his head when his check came, fearing it was too much
and sajdng: "You see it wouldn't be right for me to have too
much for it would have to come out of my neighbors.'' With such
a spirit in a community, we may well hope for great things for the
country homes there.
"The House by the Side op the Road''
Recently at the Eastern Tennessee Farmers' Convention, I
heard one of the ten thousand country club girls in Tennessee re-
cite "The House by the Side of the Road." She was a girl who had
made a great record in canning. She had listened with intense
interest that day as the teacher told how to draft patterns. I am
sure she had done good work in her country school. And as she
stood there so straight and wholesome, with her eyes shining and a
radiant, imselfish look in her face, I knew she had caught this other
greater thing, too, and that she would use all she had learned to make
the country home she would have some day, ''A House by the Side
of the Road" that would be of service to her neighborhood and to
all who came that way. The education for home life on the farm
which is genuine and really worth while will develop in the heart of
every girl and boy a wholesome and happy
Country Life Creed
I am glad I live in the country. I love ita beauty and ita spirit. I rejoice in
the things I can do as a country child for my home and my neighborhood.
I believe I can share in the beauty around me — ^in the fragrance of the or-
chards in spring, in the bending wheat at harvest time, in the morning song of
birds, and in the glow of the simset on the far horizon. I want to express this
beauty in my own life as natxutdly and happily as the wild rose blooms by the road-
side.
I believe I can have a part in the courageous spirit of the country. This
spirit has entered into the brook in our pastiu^. The stones placed in its way call
forth its strength and add to ita strength a song. It dwells in the tender plants
as they burst the seed-cases that imprison them and push through the dark earth
to the light. It soimds in the nesting notes of the meadow-lark. With this cour-
ageous spirit I too can face the bard things of life with gladness*
Digitized by
Google
86 The Annals of the Amebican Academy
I believe there is much I can do in my country home. Through studying the
best way to do my every-day work I can find joy in common tasks donfe well.
Through loving comradeship I can help bring into my ^ home the happiness and
peace that are always so near us in God's out-of-door world. Through such a
home I can help make real to all who pass that way their highest ideal of country
life.
I believe my love and loyalty for my country home should reach out in
service to that larger home that we call our neighborhood. I would join with the
people who live there in true friendliness. I would whole-heartedly give my best
to further all that is being done for a better oommunlty. I would have all that I
think and say and do help to unite country people near and far in that great
Kingdom of Love for Neighbors which the Master came to establish — ^the Master
who knew and cared for country ways and country folks.
Digitized by
Google
TRAINING FOR RURAL LEADERSHIP
Bt John M. Gillette, Ph.D.,
Professor of Sociology, University of North Dakota.
The question of leadership in rural life has assumed much
importance during the course of the discussion that has taken place
and the investigations which have been made relative to country life
problems during the past few years. Quite in agreement with the
findings in other fields of human effort the importance of the per-
sonal factor has emerged as the problems of rural communities have
become better imderstood. The traditional tendency, to elevate
the perso^al factor above all other elements in the situation, first
asserts itself when new social problems arise and men turn their
attention toward discovering solutions; it is asserted that it is
inconsequential to change the form of organization, since if indi-
viduals are right all will be well. The radical reaction from this
view consists in the stressing of organization; the attitude being
assimied that if the perfect form of organization can be found and
adopted the social utopia will have been realized. But eventually
the intelligent conclusion is reached that since society is an assembly
of organizations which human beings use to realize their interests,
neither the human nor the structural factors can be disregarded
but that a greater perfection of institutions is a necessary attain-
ment for the realization of more perfect men.
To generalize, it may be asserted that the attitude of the rural
population concerning its own problems has run the course of these
three stages. The first attitude was the passive one of taking dog-
matic teaching for granted and allowing things to drift. When the
rural problem arose in its full significance, almost the entire empha-
sis was placed on organization, so that reorganization became the
shibboleth, and the economic factor received almost exclusive con-
sideration. But with the passage of time the farmers have become
wiser and, imbued with a larger degree of humanistic sentiment,
they are now discussing what sort of institutions will turn out the
best men and women. And it is very significant that the perception
has gradually arisen that a rural leadership is an indispensible
means to the attainment of permanent improvement.
87
Digitized by
Google
88 The Annals op the Amebican Academy
The Meaning of Leadership
The significance of leadership cannot very well be observed
until a somewhat definite meaning is attached to the term. The
necessary implication of the word may be brought into perspective
by the use of particular cases. A dirty urchin and an aristocratic
lady alike exercise the function of leadership in respect to a dog
through the instrumentality of a chain, in which cases physical
superiority and necessitous instincts play the chief rdle. Super-
ficially, the gaily attired drum major marching at the head of a
band is the epitome of the leader, for does not the band go where he
leads and does it not respond to his spectacular gyrations? Yet the
cynical doubtless would assert that he exercises less influence over
the band than on the minds of the spectators and that his chief
asset resides in .his gay uniform and spectacular movements. Then
there is the body of troops who under its commander goes through
the manual of arms, and performs all sorts of field maneuvers,
filing right and left, marching and countermarching. Surely the
commander is the genuine leader. But so far, he is only a drill
master and the responses which his troops make are purely formal
and mechanical, not due to individual initiative and foresight, but
to the will of a superior oflScer clothed with absolute authority.
Thus by a process of exclusion and assent we arrive at the
point where it is seen that leadership must be invested with certain
characteristics and qualifications which enable it to exercise partic-
ular functions relative to free but susceptible human beings. I
shall express in a few words what I consider the prime requisites
of a productive rural leadership, namely, the power of initiative,
organizing ability, sympathy with human aims, trained intelligence,
and vision or outlook. That these qualifications must be present
in the individual who assumes the function of leadership, at least
to a measurable degree, and that their absence in a working form
from all of the inhabitants of any given community precludes the
possibility of the manifesting of any resident leadership in that
particular community, are statements which probably will prove
acceptable to all.
The Function of the Leadeb
In order that the place and function of the leader in the rural
community may be intellectually visualized it may be well to
depict and exposit the sociological view of the r61e of the exceptional
Digitized by
Google
Rural Leadership 89
man in relation to society and the community. The well balanced
sociological view puts the capable individual into the relationship
with the concept of social progress, not making him exclusively
responsible for it, as does the "great man" theory of Carlyle, not
investing him with exclusive power to bring about changes in
society; but constituting him a very essential factor in the realiza-
tion of movements and transformations which advance collective
interests. Within the scope of this limited conception, then, that
part of progress which is due to direct human intervention is brought
about by the few human beings who constitute the innovating class.
By reason of their inborn capacity and developed ability they
constitute an exceptional class. Out of this class arise the inven-
tors, discoverers, creators of all kinds of new ideas whether social or
"material." Without this class of innovators the structure of
society would remain relatively fixed and the readjustments which
are essential to secure a greater measure of satisfaction would not
take place.
In striking contrast with this small class the great mass of
human beings living in any particular society are regarded as
static relative to society. Were the affairs of society to be left
with them exclusively, they would forever remain as they are and
have been, except for the perturbations set up by means of other
agencies. Instead of having innovating, creating minds, these
people are endowed with imitating minds. They are able to follow
example, to fashion after the models already produced, but not to
initiate, in the sense of projecting the new. As a consequence the
preponderating majority of people are followers only.
In seeking to apply this conception, which, I think will be
agreed, essentially depicts the historic situation, it at first thought
might be concluded that if a community possessed no rare individ-
uals of the first class it could not hope to make progress, imless
happily it could borrow innovators. This makes necessary a closer
inspection of the second, the imitating class, to discover if the case
is that extreme, and fortunately there are signs suflBcient to renew
our shrinking optimism. Since democracy is so largely constituted
of common people it is a satisfaction to learn that there is no such
thing as a "dead level" in it which is inevitable.
Recalling the statement which was previously made regarding
the qualifications a leader must have — ^initiative, organizing ability,
Digitized by
Google
90 The Annals of the American Academy
sympathy, trained intelligence, outlook — ^it is apparent that an
imitative mind may possess all of these attributes, and as a conse-
quence it may prove serviceable as a community leader. It does
not follow that a talented person could not p«*.rform a greater work,
or that an effort should not be made to retain and develop all the
latent talent possible in rural districts. When it is recalled that
most of the businesses are operated by the imitating class and that
the great majority of governmental agents have merely imitative
minds, it becomes apparent that the non-creative mind may have
suflScient intelligence to appreciate what has been worked out by
others elsewhere and to see the advisability of taking steps to
appropriate the plan on the part of its own community. This is
also vision, and organizing ability; for appreciation of what has
been done is vision, and the power to appropriate is organizing
ability, or the ability to reinstate organizations. Beyond this
there must be a reservoir of energy that speeds the work, and a
sympathy with life which makes the undertaking seem desirable.
All of this assumes, of course, that somewhere there must be
leaders of the creative kind, otherwise there would be no plans to
borrow. And because of this we are able to see the reason why the
democracy of community life is not forced to remain on a dead
level. Given the creative power somewhere resident in society,
and given the sympathetic, intelligent, initiating, imitative mind
resident in all communities, and the power of the community,
whether urban or rural, to lift itself to a higher level is provided for.
As in the arena of national society the creative minds are passing
down their ideas and plans to the masses of people, and the life of
the whole people is thereby enabled to approximate the higher
ideals of the talented class, so in rural communities the cooperative
democracy may be heightened and improved by developing a
resident leadership capable of appropriating the efficient plans of
others.
Potential Leadership in the Open Country
It is a common saying that the country lacks leadership and no
doubt it is true. But the same statement could be made success-
fully relative to the city, although it seems to have less force there.
There are to be found in our cosmopolitan centers, and in lesser
places also, wide areas, in some cases great aggregations of nation-
Digitized by
Google
Rural Leadership dl
alities and submerged neighborhoods, where perhaps the most
conspicuous deficiency is that of a competent and loyal leadership.
When the objection is made that the interests of cities as cities are
well looked after, that the ablest men in the nation are deeply
interested in the direction of municipal business, it is suflBcient to
ask: Then why these waste places, these neglected warrens of head-
less populations in such centers? The existence of slums and of
congested backward populations impeaches the pretended leader-
ship in municipalities, and finds it guilty of lacking a fundamental
recognition that the welfare of all alike is the interest of the city
and of falling far short of just and humanitarian reconstruction.
It is possible, even likely, that, as compared with cities, there
is an equal or greater amount of potential leadership in the country.
The best indications point to the existence of an equal abundance of
potential ability in all classes of normal people, and the conditions
of life in rural districts are in favor of the country, since both ad-
vantageous conditions of health and the absence of a large per-
centage of the backward classes are decidedly in its favor.^
Regarding the amount of talent possessed by society generally,
and therefore by country districts, we have somewhat divergent
estimates. In his studies of the amount of genius in England,
Galton concluded that its ratio in the population is about 1 in 4,000.
Lester F. Ward, on the other hand, as a result of his analysis of
European studies, estimated that there must be 1 person in every
500 who is possessed of potential ability .^ By potential ability,
Ward meant the undeveloped inborn talent resident in populations,
the greater portion of which never manifests itself by means of
creative work. In his estimation, therefore, historic genius is but
a fraction of the potential supply, while with Galton it constitutes
the entire supply.
Applications of the Binet test to school children with a view
to discovering the proportion of exceptional children gives support
'See the writer's Constructive Rural Sociology^ Second edition, Chap. 7,
on "The Advantages and Disadvantages of Farm Life, ** and his forthcoming study
entitled A Study in Social DynamicSf Table I, where the rates of natural increase
for rural and urban communities are computed for the first time.
*See "The Conservation of Talent Through Utilization," The Scientific
Monthly, Vol. I, 151-165, where the writer gives a more extended presentation
of the data of these two writers.
Digitized by
Google
92 The AnnaLs oP the American Academy
to WaJ-d's position. According to the reports from such investi-
gationis, unusual children number from 1 to 3 in each 100 of the
school children tested, which for the population would be nearly
1 to 500. Both Ward's estimate and the latter are based on the
inclusion of both sexes, while Galton's obtained for men exclusively-
According to the more liberal estimates, therefore, in rural
neighborhoods having a few hundred inhabitants each, we might
expect to find a number of individuals, who, if developed, would
possess innovating ability. The problem, then, is one of training
this talent so as to secure a due proportion of it for rural service.
As to the imitative class, since it contains the larger number
of people, and since we may conclude that at least the higher grade
members possess qualifications which would enable them to initiate,
organize and direct community enterprises, we are warranted in
concluding that the country contains an ample quota of such
potential leadership. But as in the case of the potentially talented,
the problem is one of arousing, educating and keeping these persons
for duty in rural communities.
Up to the present time the country appears to have given the
nation most of its great leaders in certain lines of life. The greatest
military, political and industrial figures were, at least, country born.
Potentially, their ability originated in the country. In its matured
expression it bore the impress of urban manufacture. That its
ultimate origin was rural may or may not reflect special credit, on
the country. For one thing, that origin is what would be expected
when the rural population was numerically several times as great
as the urban. Again, the great depository of indigenous inhabitants
from whom leadership might be expected to emerge has been the
country. On the other hand, it is asserted, without demonstrable
certainty, in my opinion, that the matured country mind is "more
original, more versatile, more accurate, more philosophical, more
practical, more persevering, than the urban mind."' It must be
admitted that the country is an advantageous place to rear children
because of the very conspicuous absence of soliciting and demoral-
izing influences and of the presence of the habits of work and dis-
cipline practically every farm child is compelled to acquire.
* Scudder, The Annals of the American Academy of Political and Social Science^
March, 1912, p. 177.
Digitized by
Google
Rural Leadership 63
The Migration op Rural Leaders to the City
The country is unfortunate in suffering a large loss of potential
ability of both the creative and imitative kind. During the decade,
190Q-1910, rural districts saw an exodus to the cities of about
3,500,000 persons, a number which amounted to about 30 per cent
of the total urban growth of the decade.^ This would mean an
annual loss to the country of about 350,000 souls, enough to make
a city of approximately the size of Kansas City. On the one side
we have the pull of the city, on the other the repulsion of the country.
The city attracts and fascinates what a recent writer terms the
"lu-ban-minded" individuals,' and the country being distasteful
to them or seeming to offer fewer advantages, acts as a repellant
factor. One reply to a questionnaire, sent to students of the Uni-
versity of North Dakota, seeking to ascertain what those from rural
districts thought of the country, a reply from a city youth who had
lived in the country for a niunber of years, stated: *'If God will
forgive me I will never go back to the country." This, however,
is not representative but symptomatic, but that there is a deep-
seated preference for city life is evidenced by the fact that such
great numbers of retired farmers move to neighboring towns.
Many of the ablest men and women are drawn away from farm
life to the city through the instrumentality of the higher institutions
of learning. An investigation I made a few years ago showed that
few graduates of any such schools who originally came from the
country return there to live. Normal schools, state universities
and state agricultural colleges almost uniformly returned evidence
that their graduates of the indicated class were settling in cities
almost exlusively.' Only the agricultural colleges associated with
universities made much headway toward the return of such gradu-
ates to rural regions. ^
The Need for Rural Leadership
The country possesses a genuine need of a qualified leadership
for many kinds of undertakings. Representing as it does nearly
one-half of the national population and nearly one-fourth of the
* Gillette, Constructive Rural Sociology ^ 2d edition, Chap. 5, p. 86; Gillette
and Davies, Publications American Statistical Association, XIV, 649.
* 'Taychic Causes of Rural Migration," Ernest R. Groves, American Journal
of Sociology, XXI, 622-7.
* Quarterly Journal University North Dakota, 1:67-79; and American Journal
of Sociology, XVI: 646-67.
Digitized by
Google
94 The Annals op the American Academy
nation's wealth, the agricultural class is the most important single
industrial and social class in the United States. Because no class
is as completely and loyally represented by members of another
class as by those of its own, farm populations should have more
trained agriculturists in Congress, and they should have a more
competent agricultural representation in state legislatures than
they now have. As Fiske has said, there are seventy times more
farmers than lawyers in the nation but the latter are far more
influential in legislative matters.^ Agriculture demands leaders,
having economic insight and statesmanship qualities, rightly to
organize and regulate institutions to carry on marketing of produce
and the extension of a fair system of rural credit in behalf of farmers.
For the improvement of agriculture it requires men living on farms
who understand the best methods of production and who are able
both io apply their knowledge and to stimulate others to imitate.
In the work of betterment of home conditions and in advancing
institutions and agencies which shall help overcome rural isolation
and realize a socialized country life there is an urgent call for men
and women having specialized training and leadership qualities.
In so far as the country needs "redemption," if it is to be "re-
deemed, " deliverance must come from the prophets of the rural
peoples themselves, because, in the last resort, only a people is able
to work out its own salvation.
Training for Rural Leadership
Hence we come to the problem of how to obtain a permanent,
resident leadership in and for rural communities. Up to the present
time, for community purposes, the coimtry has depended on a
transient leadership from the outside in the shape of itinerant
preachers and teachers, and for purposes of production, on the
occasional able farmer and the visiting expert. Due reflection
over the situation leads us to think that such sources will never
prove suflScient or eflScient, and that what the country wants most
is men and women who by their training are at one with farm life
and whose influence is ever present because they live in the country
and have their interests there.
Several kinds of agencies may contribute toward supplying
a leadership of the right kind. Our institutions of higher learning
' Challenge of (he Country, p. 121.
Digitized by
Google
Rural Lbadebship 95
must devote more attention to training men and women for country
service. Those which train pastors, teachers and Y. M. C. A.
workers should establish courses of instruction, the content, spirit
and emphasis of which will serve to specialize their students for
constructive work in rural institutions. The nature of the rural
conununity must be emphasized, its particular problems studied,
and the agencies capable of supplementing and improving agri-
cultural life receive much consideration. When training schools
renounce the absurd notion that general training courses qualify
equally well for rural and urban service, a great step in advance
will have been taken. Eklucating individuals specifically for rural
service has the double advantage of qualifying them to carry on
constructive undertakings and of retaining them in that service
because their qualifications tend to make them ineligible for_urban
positions. \T fe t^^
Much is being accomplished by the county agent and the
cooperative demonstrator which the agricultural colleges have
educated for country service. The various states are, especially,
placing many county agents in the field and they have proved
themselves helpful in furthering not only production but community
undertakings of different kinds. Many states have county and
city high schools which are giving instruction in agriculture and
farm subjects, and the occasional state agricultural high school is
a §till more intensified approach to the desired goal. Summer
chautauquas with their lectures and instruction on farm life and
with their visiting groups of farm boys and girls; farmers' institutes;
farmers' clubs, and associations of farmers' clubs; and kindred
organizations are helpfully contributing to the establishment of a
constructive point of view concerning farm life and its problems.
However, the institution which is needed to reach the masses of
country children and to do most to create an abiding interest in
rural afifairs is one which is located in the rural neighborhood, which
touches and ministers to the lives of the residents daily, and which,
filled with an agrarian content and spirit, exercises an abiding,
moulding influence on the young in the direction of rural under-
takings and improvement. The consolidated rural school, with
communityized building and equipment, a corps of eflScient teach-
ers, a teacherage, experimental plot, graded and ruralized curricu-
lum, and having high school facilities as an organic part of the
Digitized by
Google
96 The Annals op the American Academy
socialized course of instruction, possesses the greatest power of
appeal because it is articulated with actual farm life and because it
is within reach of all. Such an institution should stimulate the
talented class toward higher achievements, tending to command
the permanent interest of some members of that class in farm life,
and develop the abler members of the imitative group up to the
level of their greatest efficiency. It doubtless also would accom-
plish for the less able individuals all that any training agency could
hope to do for them.
Digitized by
Google
HEALTH AS A MEANS TO HAPPINESS, EFFICIENCY
AND SERVICE
Bt Loins W. Rapeer, Ph.D.,
PiofesBor of Education, The Pennsylvania State Ck)llege, State College, Pa.
Health is the first wealth and all other values rest on this.
"How are you," expressed in one form or another, is one of the com-
monest greetings the world over. Instinctively all of us recognize
that life itself is the ultimate value and that our first pursuit must
be the increase of its vitality and the enrichment of its meaning.
The nation or individual that loses this prime concern for health and
normal physical development is doomed inevitably to a state of
vital ineflSciency, especially in a complex civilization where a highly
artificial life conduces to vital impairment. Individual and na-
tional health and vigor are not merely natural concomitants of
existence but are achievements to be attained by scientific study and
strenuous endeavor. The ancient Greeks furnish the best example
of a nation which added greatly to the abundance and meaning of
life by continuous training in educational hygiene from infancy.
The harsh demands of preparedness for possible or actual
war have today led many nations to sudden consciousness of health
values and of their widespread failure to achieve them.
Indifference to Health Program
The common indifference to a thoroughgoing program of edu-
cational hygiene for children and adults on the part of those, who
through fortunate heredity and environment have realized both
health and position, is our principal obstacle to progress. Until
these fortunate variations of a complex civilization are made to
understand general health and development conditions and the
means to their amelioration, the democratic sociaUzation of health
and "Ufe more abundant" will be ideal dreams. Our leaders argUe,
"We are healthy. We hardly ever give thought to our health. It
comes about naturally. We never have to take a drop of medicine.
The way to be healthy is to forget it. All that we need to learn
about it will be acquired incidentally." The answer is found in the
97
Digitized by
Google
98 The Annals op the American Academy
undeniable health facts of our nation. Disraeli expressed the proper
viewpoint in these words: ''Public health is the foundation on
which reposes the happiness of the people and the power of a coun-
try. The care of public health is the first duty of a statesman."
And it may well be added as a corollary that to care for individual
and family health is the first and most patriotic duty of a citizen.
In spite of marvellous scientific discoveries and achievements in
the realm of health science in recent decades, we fail generally to
realize how little health and normal physical development have
been socialized and made a part of our common wealth. Measiu'e
by any reasonable standard of physical perfection and health at
random thousand of the persons who pass on the street any day and
what is the result? Learn how many, out of each thousand persons
living in the community, remain at home, out of sight and un-
noticed, ill and socially ineffective. Note how many of each thou-
sand born reach maturity. Examine the children in the public
schools and compute the facts. Study the efficiency of parents in
the homes in bringing up healthy vigorous children so trained that
they will naturally retain it throughout life. What is our actual
health problem?
Our Health Problem
The normal span of life from birth to death is about seventy
years. Heredity is an important influence in determining the length
of this span but environmental conditions may either play havoc
with heredity or play directly into its hands. One fifth to one
eighth of all the babies born in this country each year die before their
first birthday. ''Oh, these are the children of ignorant immi-
grant mothers in the slums of our great cities," the reader may ex-
claim; but the researches of health oflBcers in New York City and
Newark demonstrate that infant mortaUty is far greater in the homes
of our native-bom mothers. These astounding death losses occur
all over the country and by effective efforts they may, as has been
demonstrated, be reduced far below the general average of the coun-
try as a whole in even our most congested cities. What is possible
in commimities taken for demonstration is possible for whole states
and the nation at large. One-fourth to one-sixth of all the children
born each year in this country die before reaching the school age
of six, and countless thousands who have survived enter our schools
Digitized by
Google
Health as a Means to Happiness and Efpicienct 99
80 weakened and maimed by disease and physical defects that they
have Uttle chance of profiting by even the most hygienic schooling
or of Uving to the period of productive maturity. Each year ap-
proximately a hundred thousand school children, or children of
elementary and high school age who should be in school, die in this
country. Half of all who are born each year are in their graves
before the age of thirty — an age when as we all realize most people
are just ready to contribute something to the world. Where is our
boasted civilization when we fail so miserably in conserving himian
life?
Extensive investigation indicates that at any one time three
million persons — three out of every hundred of om: population — are
seriously ill, losing over a bilUon dollars a year to themselves and to
society, not to mention the loss of greater values in the richness, vi-
tality and meaning of Ufe itself. While we have cut down infant
mortality considerably in many places, our death rate remains
almost stationary because of the great and recent increase of deaths
due to degenerative diseases of the heart, kidneys and other organs.
Extensive examinations of employes of big business firms by the
Life Extension Institute, by Dr. Kristine Mann (department store
women),* and by others prove that nearly half of the workers of our
indoor, city populations are low in vitality, suffer from physical
defects, or harbor incipient or well-developed cases of disease.
State insurance of workers against illness affords strong confirm-
atory data. Examinations for entrance into the army and navy
add their evidence. The greatest problem faced by England in the
war has been to obtain men who after a year's strenuous and scien-
tific educational hygiene could be brought into passable phys-
ical condition for filling the trenches. Health is the first wealth;
our present losses are over half preventable without great cost; we
miserably fail in our first duty as individuals and as communities of
citizens. These are grim, undeniable facts which we must reso-
lutely face and vigorously attack with effective weapons.
School Health Data
Medical supervision with its annual examination of millions of
school children, from kindergarten to college, is today adding greatly
to our knowledge of the extent to which we are providing for om:
^Journal of PMic Health for May, 1916.
Digitized by
Google
100 The Annals of the American Academy
children reasonable conditions of health and aiding them in the
achievement of physical development. My own studies show that
in any one year less than a third of our school children are free from
serious ailments or remediable physical defects, not counting teeth
defects ("the people's disease") which aflfects approximately another
third of the school population. In many schools where no dental
crusade has been carried on, about two thirds of the children have
teeth defects; one half of these have beside their teeth defects other
serious defects or diseases. It would be a conservative judgment
to say that on any one day of the school year at least five miUion of
our twenty-two milUon school children are in serious need of vig-
orous remedial measures to place them in even fairly normal con-
dition. Dr. Thomas D. Wood of Columbia University places it at
twelve to fifteen million. But even five millions of our school
children taken with the other millions of the 30 per cent of our entire
population (a hundred millions) under the age of twenty give us
cause for national concern. Military preparedness, the sinking of
the Lusitania^ the Titanic^ the Eastland, or the Slocum, the destruc-
tion of thousands in such fires as those of the Iroquois, the Collin-
wood, or San Francisco, are all serious, attention-seizing concerns;
but the important preparedness and the important life and health
losses which should command the continuous and searching scrutiny
and cooperative effort of our citizens are the losses and drains on
national vitality which we have so meagerly sketched above.
What are we going to do about it? That is the question.
Health Pbogbess
Well, what have we accomplished? In view of our possibil-
ities, we must admit very little. A hundred years from now our
descendants will look back upon our indifiference to health conser-
vation as we look back upon the indifiference and opposition to
public schools of less than a hundred years ago. A curve, or graph,
showing the rise of public and private interest in, and efiforts for,
physical improvement would show a high mode for the ancient
Greeks, an almost zero or negative height during the middle ages, a
very slight and gradual rise up to a score of years ago, and an abrupt
and accelerating rise in these opening years of the twentieth cen-
tury. Take any manifestation of this increased attention to the
first value of life you please and the result will follow closely the
Digitized by
Google
Health as a Means to Happiness and Efficiency 101
general tendency of the curve. Suppose we take the increase in the
number of articles in our magazines, newspapers, and books de-
voted to health and physical development. Most of my readers
can remember when little health matter was published. This
was because there were no readers of such matter and because there
were practically no writers on the subject. Now all is changed.
Books, magazines, newspapers, pamphlets, and Uke publications con-
taining health contributions are literally crowding our book shelves
and our mails. Much of this matter is not widely *read and much of
it is perhaps scarcely worth reading, but that health science, which
has grown so magically in our research laboratories, in our hospitals,
and by means of great experiments Uke the sanitation of Panama
or the prophylactic measures of the Japanese army in the Russian
war, has advanced some twenty to forty years beyond the masses of
our people, no one acquainted with the facts can doubt. We need
this adult schooling through all the agencies of publicity and we need
a radically improved educational hygiene in connection with our
public schools that will result in types of health education which
will produce results.
•
Recent Health Achievements
It would be profitable to realize just what advancement in
health provisions has been accomplished in the last few years. The
playgroimd and recreation movement has swept across this country
like fire in prairie grass. Millions are today spent along these lines
where nickles were expended in 1900. The movement is already
becoming scientific and is being standardized. Scientific health sur-
veys of play and recreation for old and young are becoming every
day more common. Likewise, medical inspection, school nursing,
school dental-cUnics, pubUc and school baths, more sanitary school
buildings with gymnasia, sanitary drinking fountains, humidified
aii;, scientific lighting, movable school-desk-chairs, open-air and
open-window schools, the feeding of school children, care in schools
for mental defectives, cripples, the blind, and other unfortunate
deviates, and an enormously improved public health service in most
cities and in many states — ^all bear witness to the rebirth of the
physical consciousness of the race of which ages of asceticism,
ignorant autocracy, and misdirected individualism almost robbed
us. Today we are beginning to realize the prime human values, to
Digitized by
Google
102 The Annals op the American Acadebtt
face our national health problems, and to lay secure foundations for
personal and national physical eflSciency.
Health Promotion and Education
A great surprise has been the inevitable tendency of all these
reform movements to revert to the pubUc schools. Laws may be
written but only health-educated legislatures will pass them or
make them sound and effective. Only health-educated '^ constit-
uents/' citizens at home who have had some health education and
physical training, will support health legislation or live up to it when
it is passed. Milk stations and other philanthropies may be pro-
vided out of the purse of Mr. and Mrs. Greatwealth but the prac-
tical instruction, not the pure milk handed out, saves the babies'
lives. The general, the most radical, and most effective method of
health promotion is that of education. Knowledge, habits, ideals,
and appreciations, must be developed in any population which is to
be superiorly fit. To develop these in an adult population is to a
slight degree possible. Much is and must be accomplished through
adult education. Education along any line must be a life process.
But direct instruction and persuasion of adults is in a democracy
almost insignificant in effectiveness as compared with the same
amount of effort expended upon plastic childhood. The public
school is the hope of democracy, for health as well as for citizenship.
Our federal government should require thorough annual or more
frequent physical examinations of all persons from birth on, should
provide and enforce thoroughgoing physical education of all per-
sons throughout life, should control absolutely the sanitation of all
our life environment, should eliminate the hereditary sub-deviates,
and provide for eight hours a day of leisure and wholesome recrea-
tion as well as skilled medical attention for all persons. If these
measures were taken the problems of educational hygiene would
not be so great. But we have an individualistic democracy in
which the person is monarch of himself and all he possesses as a
property right, with few but increasing exceptions. We have
not yet the hardihood nor the power of cooperation to provide and
maintain vigorous, physical development agencies of a compulsory
character. Yet we are going far in this direction. We give our
boards of health more power today than we give our police. Public
insurance, eradication of infectious diseases and their causes, pub-
Digitized by
Google
HfiAT.th as a Means to Happiness and Efficienct 103
lie-school health provisions, a tendency on the part of the govern-
ment to require only a physically-desirable day of work from its
employes and the spread of this movement in many great indus-
triesj the tendency to require health examinations before entering
upon and while engaged in many kinds of public service, such as
teaching, and the life-and-death authority handed over to the
government in great disasters such as fires, floods, earthquakes,
epidemics, and others — all point to more vigorous and commanding
health direction and supervision of a compulsory character on the
part of the state in the near future. But still our chief instrument
of health promotion for our own good as individuals and as a nation
must be the instructed and trained, self -active person.
The School's Oppobtunitt and Responsibility
There are many still who conceive of health and physical de-
velopment as only a very minor care of our schools. Many ignore
this aim of schooling entirely. Most schools, public and private,
in this country have been erected and equipped with little attention
to this aim as a prominent one in education. Our high schools, for
example, almost entirely omit hygiene, "how to live," as either an
elective or a required subject. Physical education and medical
supervision are still in most schools conspicuous by their absence.
Only a small proportion of our elementary schools teach hygiene
effectively and use the better text-books made available in the last
few years. Investigations of normal schools show that student-
teachers do not generally get training along this line. Hygiene is
absent, even as an elective, from most college curricula, notwith-
standing the fact that our people schooled and unschooled continue
to fall by tens of thousands before typhoid, tuberculosis, and
many other preventable diseases or vitality-robbing defects!
These products of our schooling systems are the ones who are
losing their precious children needlessly or are failing to strengthen
and equip them for meeting the serious strains of modern complex
life. Here is a woman who is the proud possessor of a Phi Beta
Kappa key, obtained for superior scholarship from one of our lead-
ing universities. Her husband also achieved a similar key. They
are husband and wife and they have a baby nearly a year old.
That baby is almost dying of rickets. Its growth and development
are permanently retarded. The cause is the poor feeding which the
Digitized by
Google
104 The Annals of the American Acadebtt
mother gives it. She learned much of the mummies of Egypt, of
the wars of the Romans, of the several languages required for college
entrance and the bachelor's degree, of the algebra, geometry, etc.,
likewise required, and many other interesting and possibly attrac-
tive "disciplines" and "cultural subjects.'* But she didn't learn a
thing about how to preserve her own or her baby's health ; nor did
her husband. They didn't study the duties of parenthood here to-
day in America in a city flat; they got "training in reasoning, obser-
vation, concentration, and the technique of investigation," but they
didn't get ability to observe the condition of their child, to study
up on baby feeding, or to investigate, to seek authority, and to fol-
low sound advice when the condition of their child was at last
made obvious to them. They had learned many things and had
surpassed most of their fellows in the process but they had failed
to learn how to live healthily and their ignorance of the hygiene
of their child was no more profound than their ignorance regarding
their own health. True and typical examples of this kind have
probably come to the attention of every reader.
Vital efficiency should stand first among the aims of education.
The school as a public, universal agency, dedicated to the ameliora-
tion of the condition of all the people, must take the lead; and this it
is beginning manfully to do. There is no doubt about the future
development along this line! A few progressive systems have
experimentally led and the many will follow. What proves suc-
cessful at Newark, Gary, Boston, Los Angeles, or a single county in
a great state, may soon be adopted and required of all. Educational
hygiene is an important phase of our great national democratizing
process.
Educational Hygiene
The special phases of the whole school process of educational
hygiene are about five in number. They are as follows:
1. Medical supervision — medical inspection, examination, cure
and prevention.
2. School sanitation — a wholesome environment for every child.
3. Physical education — play, gymnastics, folk dances, physical
work.
4. The teaching of hygiene — health instruction of young and
old.
Digitized by
Google
HSALTH AS A MeANS TO HaPPINBSS AND EfFICIBNCT 105
5. The hygiene of methods — wholesome ways of guiding chil-
dren.
These five divisions in many school systems — city, county and
state — are being organized under one head. The term hygiene is
as broad as the terms health and physical development, and broader
than the term physical education as it has come to be known. The
goddess Hygieia of the ancient Greeks was soUcitous for the entire
physical well-being of man. Some would substitute the term phys-
ical education for educational hygiene or school hygiene but they
will probably not prevail. Some insist that the field is too vast to
be du*ected by one man and that the amount of medical, gymnastic,
recreational, psychological and sanitary knowledge and training
such a director would require is too vast to be expected of any one
person. But the same may be said of the superintendent of schools
or the head of any one of our big business corporations. We have
found organization from one center generally profitable and eflFective.
If men with medical degrees and physical education diplomas are
not available, or the present course in these various lines not sat-
isfactory for one who is to be director or supervisor of hygiene in a
school system, such courses will surely be provided and suitably
trained men will inevitably be forthcoming. Others would call the
whole department the department of health or of health supervision.
But such a designation would frequently lead to confusion both as
to the scope of the department and as to whether the general city
health department or the school health department were meant.
The "department of hygiene" and the "supervisor of hygiene" are
perhaps the most desirable designations for the schools. We need
not use the term school hygiene any more than we would use the
term school drawing or school penmanship. These departments and
these supervisors in public school systems have no need for such
redundancy.
We emphasize these distinctions in administration because they
outline the scope, help to get the right start, and encourage sound
development of this whole school movement for national health and
vitality. The field is enticing and expanding. Recent discoveries
in ventilation, for example, which destroy the old lack-of-oxygen
and surplus-of-carbon-dioxide theory of bad \entilation on which our
school houses and ventilating plants are constructed will greatly
Digithzed by
Gpogle
106 Thb Annals of thx American Academy
modify this phase of school architecture and sanitation in the di-
rection of providing perceptible movement of the air, proper hu-
midity, and proper temperature. But our space limits keep us
from expanding the five phases of the work. A six-hundred-fifty
page volume recently published little more than roughly sketches
the outlines of the several fields.^
^Educational Hygiene, Edited by L. W. Rapeer, Soribner's Sons, New York.
Digitized by
Google
PLAY AND RECREATION
Bt George E. Johnson, A.M.,
Assistant Professor of Education, Harvard University.
It is less than a generation since educators began saying much
about the educational value of recreation. Yet many schoolmasters
of former years were sensible of its value. The able but eccentric
Mr. Moody, the first principal of Dummer Academy (Mass.), so the
history of that school tells us, used to regulate the school day by
the tide, in order that the boys might have the best time for bathing.
But with a few notable exceptions the teacher's interest in the past
has been in the physical value rather than the educational value
of recreation. Recuperation, not education, has been the conscious
justification of school yards and recesses.
Increased Interest in Plat and Recreation
There have been several causes contributing to the increased
interest of the last few years in recreation and play. As the first of
these we may mention the rapid increase in the growth of cities,
and the disappearance of the play opportunities of city children.
KindUness first stimulated the attempt to provide better play oppor-
tunities than the streets could afford. But in social matters, kindli-
ness is generally the best policy, and it was soon recognized that
better play opportunities decreased the number of accidents and
lessened mischief. Students began to seek additional grounds for
the belief that the play facilities of children should be improved.
An opportunity for this came through the child-study movement.
With a more intelligent interest in children and a better understand-
ing of their nature and needs came the realization of the truly edu-
cational and social value of play. Psychology, taking direction
more and more from the study of the original tendencies and original
nature of man, emphasized more and more the significance of the
instinctive interests and play activities of children. Meantime, the
relation of commercialized recreation to the social welfare of youth
came to be more clearly recognized, and some of the more serious
evils of misguided recreation, in various communities, were carefully
107
Digitized by
Google
108 The Annals of the American Academy
studied. So also came the realization of the opportunities in recrea-
tion for the social mingling of the different racial groups, and the
wearing down of prejudice and increase of mutual good will and
understanding, so necessary for a truly national spirit in a democ-
racy made up of mixed races like ours.
Agencies Active in Promoting Plat and Recreation
Hence it came about that philanthropists, educators, parents,
citizens grew more and more disturbed at the old laissez-faire
attitude of the school and the community in the matter of recrea-
tion and play. Philanthropic societies, such as social settlements.
Young Men's Christian Associations, Young Women's Christian
Associations, boys' club organizations, and others including
churches and Sunday schools, increased their efforts to provide
wholesome play and recreation. Park departments were stimulated
to a more efficient appeal to the people to use the parks and to
bring '' breathing places " to the people. Groups of men and women,
eager for immediate progress and impatient of the existing slow
moving agencies, formed playground associations. MunicipaUties,
awakened to the popular need and demand, created play and recrea-
tion commissions. Meantime the schools were attempting to appeal
more and more to the play interests of children in their methods of
teaching, and to meet more wisely the recreational needs of their
pupils. It required little pressure, in some communities, to induce
boards of education to appropriate money for supervision of play
and recreation, and to open the school buildings in the evening for
social and recreational uses of the community.
Types of Play and Recreation Centers Established
Naturally the type of play and recreation center that these
various organizations established took color from the character of
the organization developing it. The social workers established
boys' and girls' clubs, settlement houses with indoor gymnasiums,
playrooms, club rooms, and the like; sometimes small outdoor play-
grounds and settlement farms for summer vacation outings. The
park board equipped portions of the large parks for play activities,
converted small squares into playgrounds, and sometimes estab-
lished so-called recreation parks, with children's playgrounds, swim-
ming pools, athletic fields, and field houses. Recreation corn-
Digitized by
Google
Play and Recreation 109
miB^ons most commonly established recreation parks, and small
playgrounds, and concerned themselves somewhat in the oversightof
commercialized recreation centers. Playground associations utilized
school yards, vacant lots, small park areas, school buildings, and
sometimes established recreation parks with buildings, through the
financial aid of the municipality. School boards organized school
playgrounds, supplied playrooms and gymnasiums, swimming pools
and sometimes athletic fields. They established vacation schools in
the summer, and evening social and recreation centers in the winter.
The above, in a general way, suggests how the type of center
varied according to the type of administration. Which type of
administration has the greatest natural advantages is a mooted
question which it is not the purpose of this article to discuss at any
length. But it is the purpose of the article to suggest the great
natural opportunity, even responsibility of the school, in the matter
of play and recreation among children and adults; and it may
appropriately be shown that, in the matter of administration, the
school has great and unique advantages.
Administration op Play and Recreation
Mr. Lee F. Hanmer, Director of Department of Recreation,
Russell Sage Foundation, enumerates five planks of good adminis
tration of play and recreation as follows:
1. Adequate funds
2. Competent leaders
3. Authority in proper hands in all lines of work
4. Complete control of property
5. Freedom from political, control;
To these we might add a sixth:
6. Proper co5rdination with other departments of the munici-
pality.
The School as an Agency for Administration
There is no other department of civic aflFairs which tax payers
so willingly support as the public schools. In some states, the board
of education has direct taxing power, a power seldom possessed by
other agencies concerned in the conduct of play and recreation.
Among school officials and educators are included the larger number
of those who are conversant with the needs and nature of childhood
and youth, the educational and social aspects of play and recreation,
Digitized by
Google
110 The Annals of the American Academt
and the administrative problems involved. Boards of education
have developed their organizations, differentiated their functions,
and recognized the expert equally with, if not to a greater extent
than, any other organization controlling play and recreation activi-
ties. School boards have long had complete control of property
used in educational work. School boards are not always free from
political control, but far and wide they are unquestionably more
free from bad politics than any other elective bodies of equally
wide civic influence. In the matter qf proper coSrdination with
other departments of the municipality, the board of education may
be at a disadvantage as compared to one or another of the forms
of administration mentioned; but i^ this is so, it is largely due to
the fact that hitherto the fimctions of the board of education have
not necessarily involved coordination with other departments of
municipal government to the extent that would be necessary if it
administered play and recreation. It is a weakness, if it really
exists, that is easily remedied.
Thus on the administrative side, the schools seem to hold great
natural advantages, and these advantages are more apparent from
the fact that the administration of the public schools necessarily
involves play and recreation to a large extent, whatsoever other
agencies may be doing. The school cannot do its specific work
without concerning itself with play and recreation. Moreover, the
economical administration of play and recreation requires the use
of properties under board of education control. Where play and
recreation systems have been developed apart from the public
school system, there have been unnecessary expenditures, duplica-
tions, or complications of responsibility and authority. With an
equal outlay of money, it is safe to say that the school could do very
much more, and do it very much more quickly, than any other
agency that has been tried. Another matter of importance to con-
sider is the close and intimate touch of the school with the clientele.
For generations the school has been in the midst of the people, it
has been the means of unification of the various groups, it has often
provided the most natural and suitable accommodations for civic
expression, and. has grown more dear to the hearts of the people as a
whole than any other social agency. It seems, therefore, that the
opportunity of the public school in the matter of recreation and
play among children and adults rises to a duty*
Digitized by
Google
Plat and Recreation 111
What the School Should Do
What should the school do? It is not possible in this brief
paper to suggest adequately the things the school might and ought
to do to further recreation and play among children and adults.
Some things, however, may be emphasized:
/. For Children
(1) The Recess Should be a Part of the School Program.
— The recess in this country is as venerable as the school itself, but
unfortimately in recent years, in many school systems, it has been
practically abandoned, often on the grounds that evils of a moral
and social nature attend it — evils, really, that a well conducted
recess could avert more effectively than any other single influence.
Literature suggestive of the right conduct of the recess is abimdant,^
and any teacher with the spirit to do it can successfully solve the
recess problems. If the yard is small, it is of advantage for different
classes to have their recesses in rotation. Indeed, it may be of
great advantage to do so in any case.
(2) There Should be After-School Play in the School
Playgrounds. — Many schools discourage all use of the school
playgrounds out of school hours. This is a great mistake for it
deprives children of needed play incentives and leadership, and
turns them over to the streets and vacant lots for play imder far
less desirable conditions than would attend after-school free play
on the school premises.
(3) The School Should Organize Play. — Well within the
elementary school age come the organizing tendencies of boys and
girls. It is a great mistake, however, to assume that children do or
can sufficiently organize of themselves for their play. In so far as
play is social (and it is that quite as truly as it is physical) there
lies great advantage in a ''regular team '' over a scrub team. Incen-
tives for and guidance in organization are essential for large success
in the play of elementary school children. The school is the only
agency that can see to it that all the children have opportunity for
organized play, which, we might add, is the first great step towards
national "preparedness." There should be team games for every
able-bodied boy and girl of the upper elementary grades. The
>See Johnson, G. £., Whai to Do cA Recess. Ginn & Co., Boston.
Digitized by
Google
112 The Annals of the American Academy
organizing of intra-school games is a minimum essential in our
efforts for the moral and physical education of our school children,
and some inter-school sports, even in elementary grades, are most
desirable. This will be more apparent, doubtless, if one realizes
that the number of mature and maturing boys in elementary grades
actually equals or surpasses that of mature and maturing boys in
the high schools. Adolescent needs cannot be wisely considered for
the high school period only.
(4) The School Should Promote Avocational Interests,
and may do so to greater advantage than any other existing form
of play and recreation administration. Among these may be men-
tioned the following:
(a) The school can readily stimulate those activities of children
that put them in intelligent and appreciative touch with nature,
such as gardening, animal husbandry, collection and study of ob-
jects of nature, flowers, leaves, minerals, insects, etc., "hiking,"
himting with the camera, and even outdoor life and camping. If
so disposed, in these extra school activities, the school can utilize,
if need be, volunteer help as well as any other organization, while it
has within its corps of workers, always, some who have ability and
willingness for leadership on these lines.
(b) Extra-school musical activities can readily be fostered by
the school. Great success has attended inter-school competition in
sin©ng, competition between classes, glee clubs and double quartets.
In Cambridge, Massachusetts, competition stimulated between high
schools by the director of music has been conducted with great
success under boy directors. Money earned by school orchestras
has been used to purchase instruments which have been loaned to
pupils who otherwise would be unable to learn to play.
(c) Competition in dramatics between classes in schools has
been tried with complete success. Those interests offer lines of
extra-school activities of great recreational, as well as social and
educational value. The right leadership of the dramatic interests
would do much to aid various subjects for the school curriculum,
and safeguard the emotional experiences of children and youth, so
endangered under existing conditions in many modern communities.
(d) The creative activities of boys and girls along lines of toy-
making, carpentry, mechanics, boat building, wireless telegraphy,
doll play, sewing, bead work, cooking, and many others, need but
Digitized by
Google
Play and Recreation 113
little effort on the part of the school to be tremendoiisly stimulated
to great recreational and educational benefit of the boys and girls.
In some cities, thousands of boys have competed in kite and aero-
plane making and flying, and junior expositions have awakened
great interest and discovered unsuspected talent.
These few suggestions have been made with the view of indi-
cating how the school can easily and effectively guide play and
recreation activities of children and youth; also to suggest that, in
doing so, the school is performing a great service to adult recreation;
for the best forms of adult recreation depend upon habits formed in
earlier years. Unless an interest be nurtured and developed in the
earlier years of life, there remains no adequate basis for active
• interest in later life. The problem of the recreation for adults is,
to a large extent, involved in the problem of the play of children
and youth. With this in mind we may suggest a few things that
the school might do also.
//. For Adidts
(1) The Schoob Premises Should Provide Attractive
Breathing Places for the Neighborhood. — A^ has- already been
said, they are set in the midst of the people. So far as they go, the
school yards might supply open spots for the near residents, as well
as parks and squares. If the school system is developed with con-
sideration of the play and recreational needs of the neighborhood,
opportunities for recreation may be provided at less expense than
equally satisfactory ones could be provided in any other way,
dupUcation would be avoided, and, in general, such opportunities
would be the most convenient for the pubUc.
(2) The School Buildings Should be Open for Evening
Use. — With some attention to play and recreational needs in school
architecture, the school buildings might become admirably adapted
to the recreational needs of adults. Even existing school buildings
of the older types can lend themselves, in a degree, to recreational
uses. The various recreational activities suggested for children and
youth open the way for activities for adults. The social and civic
activities of pupils might contribute directly to similar activities of
adults. The music activities and contests might serve not only as
means of entertainment, but might feed into the adult organiza-
tions year by year. Out of the musical activities might develop
Digitized by
Google
114 Thb Annals of thb Ambbican Acadbkt
the neighborhood chorals, orchestras, bands; out of the dramatic
activities might develop the neighborhood theatre; and out of these
neighborhood groups might be developed city orchestras, bands
and theatres.
In brief, the school is the great socializing agency of the com-
munity. This social preeminence it holds by virtue of tradition,
location, prestige, claims upon childhood, organization, leadership,
social outlook and command of funds. ''What you wish to appear
in the nation, you must put into the schools." The social aspects
of play and recreation, now so imiversally recognized, place upon
the school a great responsibility but glorious opportunity. To
falter, to delay, to side-step, to leave for other agencies what it
can best do itself, would be for the school a moral failure.
Johnson, What to do at Recess , Ginn & Co.
Digitized by
Google
TRAINING CHILDREN TO A WISE USE OF THEIR
LEISURE
Bt J. Georob Bbcht, Sc.D.,
Executiye Secretary of the Pennsylvania State Board of Education.
If every home were completely organized; if it could supply
books, pictures, music and play activities suited to the different
periods of a child's development, the proper employment of the
leisure hours of children would present a less difficult problem than
it now does. If parents knew how to interpret the characteristic
activities of children and had a fuller sympathy with youth and a
deeper insight into their hopes, desires and ambitions, their joys
and sorrows; and if they could give friendly counsel and advice
without nagging, there would be fewer domestic tragedies growing
out of the misunderstandings between parents and children.
If teachers were wise to the significance of the playtime of life,
and could fathom the meaning of childhood's longings and the tre-
mendous forces that struggle for expression, especially during the
adolescent period of life, there would be fewer occasions of disregard
for the constituted authority of the school.
If the community could be made to realize in a vital way that
as a community it has a responsibility in providing opportunities
for the legitimate expression of the nervous energy of children,
there would be little need for curfew laws; and disorderly conduct
on the part of the youth in town and city would be an infrequent
occurrence.
The playtime of the child is not only a preparation for subse-
quent life but it constitutes a real life experience. " We do not play
because we are young," says Goos, "but we are young that we may
play and thus receive the inheritance that comes to us through that
channel." Plato said: "the plays of children have the mightiest
influence on the maintenance of laws," and Schiller observed,
" that man is man only when he plays." Froebel declared :
Play is the highest phase of child development and the most spiritual activity
of man at this stage and at the same time typical of human life as a whole — of the
izmer hidden natural life in man and all things.
115
Digitized by
Google
116 The Annals of the American Academy
A, child that plays thoroughly will be a thoroughly determined man, capable
of sacrifice for the promotion of the welfare of himself and others. The spontane-
ous play of the child discloses the life of the man. Injure the child at this period
and you may mar his life.
We are becoming more and more conscious of the fact in our
modern civilization that life is a unity; that though there may be
"seven ages*' of man, these periods are not sharply defined, separate
existences but all tend toward and merge into a complete and unified
whole. Time was when school life, home life and community life
were considered as separate activities. At that time life was
ranged on simple lines. Then the school gave itself over to the
problem of making children literate; the home furnished endless
opportunities in useful vocational activities for the constructive
and inventive genius of the children. Community life was isolated
and individual.
But today the relationships of these once apparently separate
institutions are better understood and their significance as bearing
on the whole life problem is being closely noted. "Work-play-
study*' is the motto of the modern school, as "shorter hours of work
and time for leisure" is increasingly the cry in the business and labor
world. Modern invention and scientific discoveries, have made of
civilization a vast complex structure and to meet the needs of this,
readjustment of educational procedure is demanded. It is probable
that on the whole our philosophy of life and our philosophy of educa-
tion have changed relatively little, but too frequently we have sacri-
ficed the end and the purpose of life for the means. It is a false
philosophy of life that, would keep us ever getting ready to live with-
out enjoying life in the process of getting ready. The laboring man,
who spends twelve hours in hard and unremitting toil and at the
close of the day is so fatigued that relief comes only from spending
the other twelve in sleep, may make a good living for himself and
family but it can scarcely be said that he has any appreciation for
what Browning calls, "the wild joy of living." The great need in
American life today is a proper balance of work and leisure; and
that leisure so employed that it will minister to a continued growth
of character.
It has been well said that the great waste of ill-spent leisiu^
consists not solely in the vice that ensues; it lies more in the virtue
that was not developed. That a young man should become de-
Digitized by
Google
Training Children to Use Leisure 117
graded by spending his leisure in miscellaneous vices, thus ruining
body and soul, is only half of the disaster. The other side of it is
that the wasted hours might have been en joy ably spent in ways that
would have led to a profitable vocation and made of him a valuable
member of the community.
The agencies through which children may be trained to a wise
use of their leisure are the home, the school, the church and the
community.
The Home
"It matters little," said a great thinker, "what a people cares
for second or third so long as it cares for its home first.*' In all the
changes and moving currents of institutional life, none has held so
permanent a place in our thqught as the home. Yet notwithstand-
ing this there has been a shifting of responsibility, due to social and
industrial causes. Many of the activities in the home which offered
opportimities for proper use of leisure time have passed over into
other industrial and social agencies.
The glamour of the city street has cast its spell over the youth
of our day to such an extent, that the home is in danger of losing
its rank as first among our civilizing agencies.
Jane Addams, in her book The Spirit of Youth and the City
Streets, utters a severe indictment against modern civilization for its
neglect of the youth who are exposed to all the allurements, and
danger and evils of life in the city streets. These changes in the
social order constitute a call to the realization of increased responsi-
bility on the part of the parents to establish within the home direct
agencies for the maintenance of social ideals.
Many children do not use the leisure hours in the home wisely
because the home offers so few comforts. "Why" asks one, "do
children go out on the streets at night"? and the answer too often
must be, because the home is so unattractive. Thousands of chil-
dren live in homes wholly unsuited to ordinary living purposes.
These children have no places in the home to which they can invite
their young friends. Th^re is no provision made for employing
leisure hours in legitimate pleasures. When one thinks of the
crowded tenements, the unsightly and inhospitable looking rows of
houses with their meager equipment ; the bare floors and pictureless
walls; with nothing to awaken or encourage the esthetic sense or
Digitized by
Google
118 Thb Annals of the American Academy
satisfy the ordinary wants of childhood, we are not surprised that
children get into the habit of being constantly upon the street.
A home library may be made one of the most attractive means
for properly and purposefully employing some of the child's leisure
hours. A small bookcase and a few well selected books within
range of the child's experiences can be made the starting point.
It is important in this connection to have the ownership of books
and library equipment, however meager it may be, vested in the
child. Books should have the name of the child inscribed, or better
still, a book plate, the design of which reflects his choice and taste,
should be pasted in the book. There is a pride in the permanency
of possession which such a plan gives which may be most appropri-
. ately stimulated. To bring growing boyB and girls into vital rela-
tion with good books and reading matter is a fine art and one to
which parents and teachers may lend themselves with the assurance
that such training adds materially to the sum total of human life
and human happiness.
The public library, as a means of giving employment and profit
in leisure hours to children as well as adults, is universally discussed,
but unfortunately its worth and influence is not universally appreci-
ated. One-half of the children leave school at the age of 12. If
their education is not to stop there, the library is the chief instru-
mentality for its continuance; and for its proper use, the school and
the home need to give training. The library habit will be a means
of development all through life. It was Lowell who said that the
foundation of his literary life was laid in his father's library.
Matthew Arnold said on one of his lecture tours in this country,
that nothing he saw in America impressed him so much as the sight
of a ragged and almost shoeless little boy sitting in the reading room
of our public libraries studying his book with all the sangfroid of a
member of a West End London Club.
The library habit or the reading habit is not only a pleasant
way of using leisure, but properly guided is most uplifting.
The School
Increasingly the school is becoming conscious of the responsi-
bility placed upon it in this respect. The significant breaks in the
formal school program, as indicated in the administration of many
school systems, are hopeful signs. From the kindergarten to the
Digitized by
Google
Training Children to Usb Lbisurb 119
university^ play is coming to be recognized as one of the most im-
portant socializing factors. But it is not alone on the physical side
that the school is furnishing opportunities for the right use of leisure.
It is organizing within the system a group of collateral activities
that call into play musical, literary and other social, restful and
recreative forces. The desire for amusement is a most natural one
and youth needs only opportunity and direction in the emplo3rment
of its creative genius. Musically inclined pupils should be organ-
ized into an orchestra; those having dramatic tendencies may engage
in amateur theatricals; those having literary or forensic abilities
should be encouraged to form debating clubs. Pupils mechanically
disposed will be interested in reading such magazines as Popular
Mechanica or the Popular Science Monthly and will take keen de-
light in reproducing in the school or home the mechanisms described.
Science clubs for those who may be interested in botany, zoology
or geology and other sciences should be organized. The one great
supreme and commanding need to secure results is intelligent,
broad-minded, leadership.
No phase of the educational problem has received more atten-
tion during recent years than that involving the physical activities
of children. The multiplication of playgrounds and gynmasiums
is evidence of the fact that this thought is getting a firm hold upon
the urban as well as suburban communities. Public playgrounds
are being provided and school buildings are being erected on plots
sufficiently large to insure proper recreational faciUties. Below
the granunar school, the games are varied and play is spontaneously
diversified. It is very gravely questioned, however, whether be-
yond the grammar school period plays and games are organized
so as to train the masses of young people to engage their leisure
hours in these recreational activities. High school athletics are
narrowly and intensively organized. The game is a public, spectac-
ular affair in which the team, a small group of especially trained
persons, represents the mass of observers. The latter watch and
applaud. That such occasional exhibitions afford opportunities
for mass enthusiasm and the expression of a fine spirit cannot be
denied. Some leisure can be profitably spent in this way. But to
give one's self over wholly to watching the game or games and hav-
ing no part in recreational activities, tends to an unwise use of hours
that could be made to give profit as well as pleasure. There is
Digitized by
Google
120 The Annals of thb Ambbican Academy
great danger that the high school and the college will professionalize
athletics by highly specializing the activities. We have much to
learn from the Germans in this respect. Instead of having a few
different kinds of ball games, they have four score. These give a
wide range of opportunity for almost every degree of ability. Our
need in this direction is to awaken the interest of the individual so
that he shall take part in these varying phases of play.
The Church
Unfortunately, the church up to the present time has had very
little in the way of organization to provide for the leisure of
either children or adults. The institutional church which came into
existence some years ago has not realized the hopes of its founders.
Though the idea was well conceived and the basis of its organization
is fundamentally sound, it does not seem to have made much prog-
ress. This is due most probably to the fact that in populous centers
there are so many counter attractions, such as moving picture
shows, theatres, dance halls and public parks, that the church has
not been able to offer a social program sufficiently strong to counter-
act these influences and thus have a share in shaping the leisure life
of the community. But the decadent condition of the rural church
cannot be ascribed to the same reason, for here there is a lack of
social and recreational opportunities. Rural church surveys indi-
cate that '*the trouble with the church in the past has been that it
has been ministering to itself, seeking to run a gospel ark for its own
members, without feeling that it owed any duty of service to the
community as a whole." This attitude is largely responsible for
the lifeless condition of so many of these churches. Recent studies
show that those churches that are organizing the social life of the
community are growing while those content to follow only the old
lines of activity are rapidly losing ground. In a survey of 76
churches in one county of Indiana, it was found that among those
that were organizing the social and recreational life, 65 per cent
were found to be growing in membership while of those that were
not organizing the social and recreational life, only 12 per cent were
found to be growing. Of two hundred and fifty-six churches found
in other parts of the state where no attention was paid to the recrea-
tional life, in only one was there found any evidence of growth.
The lesson seems to be plainly written: The church that would
Digitized by
Google
Training Children to Use Leisure 121
flourish must adjust itself to this new demand and provide oppor-
tunities to satisfy the instincts and longings for social companion-
ship. Some notable instances are on record where this has been
done. Curtis in his Play and Recreation describes what was done
in an Illinois country community:
Twelve years ago a young pastor came fresh from the Seminary to a dying
country church. He first organised a smging school, which brought the young
people into the church one night a week to sing. It soon developed that there
were several good voices and out of this singing grew a boys' quartet, several
soloists and a good chorus for the church. After thb, a gospel chorus was organ-
ized which met around at the houses of the members. A considerable part of each
of these evenings was given to sociability and the program became very popular
with the young people. Sociables were planned where light refreshments were
served. These developed a spirit of good comradeship among the people. Out
of the spirit grew a missionary circle for the girls, and an athletic club for the boys,
an annual home coming and picnic and a series of extension lectures and enter-
tainments. In the twelve years of his pastorate, a ten thousand dollar church
had been completed and paid for, the pastor's salary had been raised 40 per cent
and in the last five years more than six thousand dollars had been given to outside
benevolences. Practically everyone in the country-side is a member of the
church. Though located not far from three large cities, none of its young people
have left the farms to seek city life. During the entire pastorate only one young
person in the neighborhood is known to have gone wrong.
Under wise and proper leadership, it is not difficult to organize
appropriate social activities for the leisure hours of the young
people. In many places the boys' classes have been organized into
boy scout patrols, hunting-with-camera-clubs, baseball and basket-
ball clubs and nature study hikes. Girls' classes liave taken up
definite practical projects in connection with missionary work.
In all these recreational activities the important consideration is a
definite and well-defined program. The church and the Sunday
school can ill afford to miss the opportunity to give serious consid-
eration to the development of leadership among its members so
that the force and energy of its young people may be directed to
wise, useful, social ends.
The Community
'^No Christian and civilized community can afford to show a
happy-go-lucky lack of concern for the youth of today/' declared
Theodore Roosevelt recently, '^for, if so, that community will have
to pay a terrible penalty of financial and social degradation in the
tomorrow."
Digitized by
Google
Digitized by
Google
CHILDREN, LIBRARIES AND THE LOVE OF READING
By Annie Carroll Moore,
Supervisor of Work with Children, The New York Public Library.
"Does John really read this book?"
The children's librarian looked up, from the copy of Masterman
Ready she was stamping, into the smiUng face of John's grandmother
who had stopped at the Ubrary on her way to market and now stood
waiting with market basket on her arm for John's book and card.
The grandmother replied:
Oh, dear yes, he reads it over and over. John says Masterman Ready's the
nicest book ever was. He's peculiar is John — ^he doesn't like. many things nor
folks — ^they mostly don't understand him but he's got a nice heart. Another
thing about John is that everything he takes an Interest in seems real — ^just as if
it had happened today or yesterday. I found him crying one day and at first
couldn't get him to tell what was the matter. Bye and bye he said he was crying
because he felt so awful bad about Abel's getting killed. They had had the story
of Cain and Abel in the Sunday School lesson and I don't think most of the children
did more than forget but to Johnnie it was just as if it had happened yesterday to
one of his mates. You might not know it from the looks of him nor from any-
thing he says, but if anybody's been good to John he never forgets it. He feels
comfortable in this children's library for he says nobody bothers him. He isn't
quick about reading but he's very persistent when he takes a fancy. He took a
real fancy to Masterman Ready and so he keeps at it and reads it over and over
until he gets ail the sense.
I learned to read in a queer way myself. I never went to school and after I
came to America — ^I was then twelve years old — ^I had to work pretty hard. When
I grew to be a big girl I used to read aloud to some blind folks who lived in the
block. Two of them were educated and told me how to pronoimce the words.
I used to get the books from the New York Free Circulating Library and I feel
as if that library gave me an education. When I moved to Brooklyn to live the""
first question I asked was if there was a library and I felt so glad the children could
enjoy right away a privilege that has meant so much to me and their mother.
Free libraries and free baths are the greatest benefits of ow time.
The children's librarian had wondered at the fascination of
Masterman Ready for a little German boy of ten years unable to
read with ease. She had vainly tried to interest him in something
easier until he should have gained faciUty in reading. Always
without success. John persistently chose Masterman Ready when-
123
Digitized by
Google
124 The Annals of the American Academy
ever it was to be found on the shelves. If Masierman Ready was
not to be had he would leave his card, often for weeks at a time.
On his return he would fall upon Masierman Ready and at the end
of two weeks ask to have the book renewed. This had gone on for
more than a year before his grandmother came.
It is nearly twenty years since this interview with John's
grandmother took place in the children's room of the Pratt Institute
Free Library but it loses none of its reality when applied to the work
of the children's librarian of ioAQ.y for it sums up the whole philos-
ophy of her training in the voluntary use of books with children:
Freedom in the choice of good books; respect for the reader's indi-
vidual taste; active recollection of one's own childhood.
Recent Development of Library Work with Children
Library work with children has been widely extended and
developed in America during the past twenty years and just be-
fore the war it was passing rapidly to European countries as "a
new idea in education" through photographic representations and
through the writings of educators and journalists from Norway,
'Sweden, France, Russia, Germany, Holland, Italy, Spain, China
and Japan. The late Herman Bang, the Danish author, who visited
this country in 1912 said of children's libraries:
This library work for children is amazing. I was prepared for everything else
I have seen in America but this surprises and delights me, I find it deeply interest-
ing and full of possibilities for future generations. I should like to spend a long
time in this beautiful room reading and watching the children.
Dr. Crothers in 1904 wrote:
What an interesting place to study the tastes of children, yo\ir library must
be. I have been delighted to see the way in which my two little girls insist on the
books they enjoy, resisting all attempts at substitution. Twelve year old Margery
(to whom Miss Muffet's Chrislmas Party is dedicated) insists on romance while her
sturdy matter of fact sister has been perfectly content since I introduced her to
Rollo. She takes it with all the seriousness for which it was intended.
To put one's self in touch with the individual reader at home,
in school, or in the library requires time and an active imagination
but is vastly more profitable than to interpose one's own judgment
in the selection of a book for a child. I believe it to be essential to
the development of library work for children on a large scale. A
genuine love of reading cannot be forced nor should we fail to recog-
Digitized by
Google
Children and the Love op Reading 125
nize that the mechanics of leammg to read present grave difl5culties
to loinds m which the love of "mental adventure*' and appreciation
of art f ornis may already exist in a high stage of development.
One of the most remarkable children I have ever known, a little
Scotch boy, was seemingly incapable of learning to read at school
although he had an unusual command of language, was familiar
with the great characters of legend and history, and possessed of a
rich fund of general information. Through his interest in pictures
he finally mastered the mechanics of reading at the library, quite
unconsciously, as is the experience of many a child. The first book
he read was The House that Jack Built with the Caldecott illustra-
tions. He announced triumphantly "Now I can read.what is under
the pictures in the history books." Pictures had more interest and
meaning for him than words.
Boutet de Monvel's Joan of Arc, familiarly called "the book
about the French girl," completely fascinated him. His delight
at discovering for himself that learning to read gave him the ability
to read the legends under the pictures in the histories, books of
travel and books about animals left a vivid recollection — a recol-
lection so strong as to have influenced my entire field of library
work with young or foreign born children by an enlarged use of
picture books. The books illustrated by Randolph Caldecott, Kate
Greenaway, Boutet de Monvel, Leslie Brooke and other artists
have been used as first steps in training in the appreciation of art,
to stimulate language interest, and as an introduction to the hfe of
other countries.
A solid page of printed words remained an appalling experience
to Jimmy and he turned from it with weariness to the person who
would. "tell things." Sometime after the death of this little boy
his younger sister listening to stories of Alfred the Great, whose
Millenary was being observed in the children's room, remarked
"Bling Alfred puts me in mind of Jimmy, the way he went about
learning things off folks." Every teacher or Ubrarian will recall
chUdren whose interest in reading it seemed impossible to rouse and
other children whose reading is so far in advance of the grade re-
quirements as to yield daily surprises — children who read so fast as
to hold no impressions of what they have read.
Digitized by
Google
126 The Annals of the American Academy
Testing the Child's Interests and Tastes
More and more is the modern public library becoming the test-
ing place for the reality of interests created in the school and the
home. Less dependence is placed upon graded lists as parents,
teachers and librarians come into closer human relationships and a
better understanding of the needs, the resources, and their common
aim — to foster the love of reading for its own sake. Whether the
first persistent fancy for a book is for Mother Goose, with or without
Caldecott's illustrations, for Peter Rabbit or a Brownie Book, the
Blue Fairy Book, Treasure Island or Ma^terman Ready is of small
consequence. The matter of supreme importance is that a sponta-
neous desire to read something be aroused and that the reader, what-
ever his age, and wherever he may live, be left free to enjoy to the
full his first fine joy in the discovery of a book to which he feels
related.
Only a few books make their own direct appeal to one genera-
tion of child readers after another —
The Bible Rip Van Winkle
Aesop's Fables Little Women
Mother Goose St. Nicholas (bound volumes)
The Arabian Nights The Children's Book; (a ool-
Robinson Crusoe lection of the best and most
Grimm's Fairy Tales famous stories and poems
Swiss Family Robinson in the Ekiglish language chosen
The Blue Fairy Book by Horace E. Scudder.)
Experience in the voluntary use of library books by children
will vary greatly even in the same city. It is my own experience
that, given the opportunity, children of the elementary schools read
above and beyond the supposed average.
Constructive Suggestions
How then may we hope to create and sustain such interests in
reading as will make the free use of books in libraries a more signif-
icant factor in the American life of today? Ten years of active
supervision of the children's rooms in a system of branch libraries
presenting great variety and range of experience, from the small
rural community to the richly oriented life of the East Side, has led
to these conclusions regarding the needs:
Digitized by
Google
Childben and the Love of Reading 127
(1) SELECnON AND SUPPLT OP BoOKS
There should be an inviting selection of books in good editions
familiarly known and constantly re-read and discussed by those
who are seeing the daily use of them by children and their parents.
There should be generous duplication of the most desirable titles
that a child may not have to wait months or years to read the book
his friend is reading. Companionship in reading is an incalculable
stimulus to the love of reading. There should be suflBcient variety
in the selection of titles to appeal to great diversity of taste in read-
ing.
(2) Thx Librabt AMD Readikq Room Envibonmbnt
Books should be placed in a setting which invites reading. The
furnishing and decoration of the room, the presence of growing
plants and flowers help to give this atmosphere but it is primarily
induced by the presence of books which do not circulate and which
require some introduction if they are to be very generally read. The
reading room collection should include The Odyssey, The Iliad,
Shakespeare, Dan Quixote, the Norse Sagas, the Greek Myths,
the Nibelungenlied, the Arthurian Legends, Pilgrim^s Progress,
Gulliver, Hans Andersen, Lewis Carroll, Howard Pyle, the English
and Scottish ballads, Scott, Fenimore Cooper, Dickens, Stevenson,
Kipling, Mark Twain, the collections of p)oetry and fairy tales chosen
by Kate Douglas Wiggin and Nora Smith; the folk titles of Joseph
Jacobs and the fairy books of Andrew Lang.
Reference books for children should be chosen from the simplest
and most up-to-date of the books for adults. Boys and girls may
become familiar at an early age with the resources of dictionaries,
encyclopedias^ atlases and books deaUng with literary, scientific
or mechanical subjects. Pictures to supplement books and a
variety of illustrations in books should be used freely in reference
work with children. Reading and reference collections numbering
from 200 to 4,000 volumes have proved as suggestive to parents,
teachers and librarians as to the children who are learning the re-
sources of a Ubrary.
(3) iNTBODUCnON TO BoOKS
Skillful introduction to books may take the form of story tell-
ing, leading to the reading of folk and fairy tales, poetry, stories of
adventure by land or sea, history stories or stories from the great
national epics and dramas.
Digitized by
Google
128 The Annals op the American Academy
Books may be so arranged in libraries as to invite attention
to a special subject by their own direct appeal. This method is
growing in popularity and is aided by lists in which the books are
allowed to speak for themselves by yielding direct quotations in
relation to such subjects as heroism, vacation stories, songs and
plays, Christmas, the Shakespearian festival.
Talks about books may be given by librarians, in schools or in
libraries to visiting classes of school children. The use of a library
by groups or classes may be made equally profitable to school or
library but it. will never take the place of volimtary use by the in-
dividual boy or girl who comes for his own enjoyment. Each
form of contact with the library, the group or the individual, affects
the other to the degree that spontaneous pleasure and interest in
reading is aroused in librarians, children and teachers. Systematic
group work with visiting classes from public schools in New York
was established six years ago and the results are now to be clearly
seen in the extent and variety of reference work in the children's
room. ''How much more alive to books the children are becoming
every day," is the recent comment of a sister in a parochial school.
(4) Community Needs
The library should be able to interpret and respond to the needs
and interests of the community in which it is placed. No fixed
limitation can be placed upon its service. Community movements
such as the Shakesperian tercentenary present ideal opportunities
for making books live again to large groups of children. It has been
impossible in many public libraries this year to supply the demand
for Shakespeare's plays and for books relating to the period in which
he lived.
To such good purpose did the teachers and pupils of two school
districts in New York put their minds to the life and times of Shake-
speare *that in the gymnasium of an East Side school there were re-
created pictures of Warwickshire, a model of the Globe Theatre
and another of Ann Hathaway's cottage and garden. This festival
was unique in its beauty and spontaneity and in its effect upon the
readiqg interests of 1,500 children who took part in the songs, dances,
games and drama of the Elizabethan period.
A striking contrast is presented by the reference problem of the
boy who had been assigned as a composition subject "Shakespeare's
Digitized by
Google
Children and the Love op Reading 129
children." After looking at many books and at the Shakespeare
exhibit he said: "I have looked everywhere for Shakespeare's
children. All I find is their names, Susanna, Judith and Hamnet.
Two were twins. They were all baptized and I can't find out when
they died. What good is that to write about?"
"These visits to the Ubrary are becoming as instructive to us
teachers as to the children. We are learning a great deal," was
the comment of one of the men teachers during this period of prepa-
ration. It is manifest as never before, that Ubrarians and teachers
must know and share the interests of the age in which they are
doing this work. If reading is to mean anything — if creative work
for children is to follow this war as it followed the revolutions in
France, England and America, there must be an understanding of
the potential reader and of what now exists for him in books.
There is need for informing and enlivening lectures and dis-
cussions of children's interests in books as well as of books for
children if we are to see any wide practice of that skill in the intro-
duction of books which is bom of the play of fine minds upon the
period of childhood and youth in literature and in real life. It is
the reality of child life and experience and the reality of literature
for its own sake that we seek to preserve from one generation to
another. Not lists of books to be read but the fusion of the readers'
reactions to the books they are reading will form the backgroimd
for what the European educators have called ''this new idea in
education" — the children's library.
Digitized by
Google
THE RURAL SCHOOL COMMUNITY CENTER
By L. J. Hanifan, A.M.
State Supervisor of Rural Schools, Charleston, W. Va.
In the use of the phrase social capital I make no reference to
the usual acceptation of the term capital j except in a figurative sense.
I do not refer to real estate, or to personal property or to cold cash,
but rather to that in life which tends to make these tangible sub-
stances count for most in the daily lives of a people, namely, good-
will, fellowship, mutual sympathy and social intercourse among a
group of individuals and families wto make up a social unit, the rural
community, whose logical center is the school. In community build-
ing as in business organization and expansion there must be an ac-
cumulation of capital before constructive work can be done. In
building up a large business enterprise of modern proportions, there
must first be an accumulation of capital from a large number of indi-
viduals. When the financial resources of these several individuals
have been brought together under effective organization and skilful
management, they take the form of a business corporation whose
purpose is to produce an article of consumption — steel, copper,
bread, clothing — or to provide personal conveniences — transporta-
tion, electricity, thoroughfares. The people benefit by having
such products and conveniences available for their daily needs,
while the capitalists benefit from the profits reserved to themselves
as compensation for their services to society.
Now, we may easily pass from the business corporation over
to the social corporation, the community, and find many points
of similarity. The individual is helpless socially, if left entirely
to himself. Even the association of the members of one's own fam-
ily fails to satisfy that desire which every normal individual has
of being with his fellows, of being a part of a larger group than the
family. If he may come into contact with his neighbor, and they
with other neighbors, there will be an accumulation of social capital,
which may immediately satisfy his social needs and which may
bear a social potentiality sufficient to the substantial improvement
of living conditions in the whole community. The community
130
Digitized by
Google
Rural School Community Center 131
as a whole will benefit by the codperation of all its parts, while the
individual will find in his associations the advantages of the help,
the sympathy, and the fellowship of his neighbors. First, then,
there must be an accumulation of community social capital. Such
accumulation may be effected by means of public entertainments,
"sociables," picnics and a variety of other community gatherings.
When the people of a given community have become acquainted
with one another and have formed a habit of coming together
upon occasions for entertainment, social intercourse and personal
enjoyment, that is, when sufiicient social capital has been accum-
ulated, then by skilful leadership this social capital may easily be
directed towards the general improvement of the community well-
being.
That there is today almost a total lack of such social capital
in rural districts throughout the country need not be retold in this
article. Everybody who has made either careful study or close
observations of country life conditions knows that to be true. Of
rural social surveys there have perhaps been a plenty for the pres-
ent. The important question now is, ''How may these conditions
be made better?"
A Stort of Achievement
The story which follows is a concrete example of how a rural
community of West Virginia in a single year actually developed
social capital and then used this capital in the general improve-
ment of its recreational, intellectual, moral and economic condi-
tions. The conmiunity under discussion is a rural school district
of 33 square miles, which embraces fifteen school communities,
or neighborhoods. Three of these school conmiunities are vil-
lages having graded schools; the other twelve are strictly rural,
having one-teacher schools. The total population of the whole
district is 2,180, of whom 771 are of school age, 6-21 years.
The school organization consisted of a board of education (three
members and a secretary), a district supervisor and twenty-three
teachers.
This district supervisor, Mr. Lloyd T. Tustin of Hundred,
West Virginia, was a new man in the district, coming from an ad-
joining county. He came into the district two weeks before the
date set by the board of education for the opening of the schools.
Digitized by
Google
132 The Annals of the Amebican Academy
He spent these two weeks going about the district, conferring with
the local trustees, getting acquainted with the people, and having
the schoolhouses put in order for the beginning of the school term.
On the Saturday before the Monday on which the schools were to
begin he held his first teachers' meeting. The board of education
were present. At this first meeting definite plans were made for
the year's work. Among the plans made the following are some
that were carried through to successful conclusions:
(1) Community Survey. — Each teacher made a survey of her
school community, (a) to determine the physical and human re-
sources of the people; (b) to learn the crop yield of the farms; and
(c) to find what children in the community were not attending the
schools and the reasons why they were not at school. These
individual surveys were brought together and tabulated as a survey
of the whole district. It was shown, for example, that of the 457
families 401 were taking at least one newspaper. One item of
interest was the fact that there were in the district 331 dogs and
445 cats. These items were turned to very practical account as
an argument with the people for a district high school, for it could
be shown that if each dog and each cat cost their owners one cent
a day for food, then the people were spending upon these animals
an amount which, added to what the district may receive from the
state as high school aid, would support a high school for their boys
and girls. Of course, there was no disposition upon the part of
anyone to have all the dogs and cats killed. The fact was merely
used to emphasize the small cost of maintaining a local high school.
While the high school has not yet been provided, there is very
strong probability that it will be established soon.
(2) Community Center Meetings. — This survey work proved
to be of incalculable value to the teacher both in her regular school
work and in her work for the community center. She was able to
learn at first hand the home life of her pupils and she was able to
become acquainted with their parents. Her work among the
homes aroused the interest of the patrons of the school, for no
teacher had ever shown so much interest in them before. When
she announced that there would be a meeting at the schoolhouse
for all the citizens, nearly all were interested and most of them
came.
In order to show just what the nature of this first meeting
Digitized by
Google
Rural School Community Center 133
was, I submit below the program which was offered at one of the
schools:
Song, led by the school choir.
Devotion.
Address, by the teacher.
Heading, by a pupil.
Current Events, by a pupil.
Essay, by a pupil.
Song, led by the school choir.
Reading, by a pupil.
Vocal Solo, by a local soloist.
Heading, by a pupil.
Debate.
Comet solo, by a dtisen.
Social half-hour.
Note that this first program was rendered almost wholly by
the pupils. The teacher took occasion to speak of the work of the
school and to show some of the possibilities of such meetings.
The people enjoyed this program and expressed a desire for another
meeting soon. The next program at this same schoolhouse was
primarily for the older folks. It was entitled, "Ye Old Time
School Days.'' These older citizens took great delight in relating
the school experiences of their day, and the children were inter-
ested listeners. As time went on the weekly community center
meeting was becoming more and more a feature of the regular
conamunity activities — in fact the only cooperative activity of the
community. In due time, when some social capital had been
developed, these meetings occasionally took the form of discussions
of problems of a constructive nature. The people discussed such
subjects as:
Should West Virginia have a more effective compulsory attendance law?
Should there be a small tax on oil and gas for the suppo^ of schools and
roads?
Is it more profitable to grow hogs than to grow cattle in this commimity?
Do boys and girls have better opportunities in the city than in the country?
But entertainment and discussion alone will not hold the
interest of a community indefinitely. A definite purpose common
to all must become the reason of this coming together. Fortunately,
the conamunity under discussion soon passed through the stages of
entertainment and discussion to the stage of action. The people
Digitized by
Google
1S4 The Annals of the American Academy
themselves under the leadership of their supervisor and teachers
began to look about them for something which they might do
towards personal and community improvement. The social capital
developed by means of the conmiunity center meietings was about
to pay dividends.
(3) Agricultural Fair and School Exhibit. — The first
big meeting of the year was the agricultural fair and school exhibit,
which brought together the people of the whole school district.
The local community center meetings gave the supervisor and the
teachers an opportunity to explain the purpose and the plans of
this undertaking. In October, two months after the opening of the
schools, this fair and exhibit was held at the most central school-
house in the district. The people came in large numbers. They
brought baskets of food and had a community ''spread." Prizes
were awarded for the best products of the farm and the kitchen and
for the best work exhibited by the schools. It was a great day to
everyone present. It was the ''pooling" of social capital developed
in the local community centers, the first meeting of the people of
the whole district ever held up to that time.
(4) Community History. — At each school the pupils of the
classes in United States and State History wrote up the history
of their local community — who the first settlers were and when
they came, when the first church was built and when any others
were built, when and where the first schoolhouse was built and
important changes made in the schools since then, who had first
introduced improved live stock, the silo, farm machinery and other
items of local historical interest. This work, of course, was under
the direction of the teachers. When the histories had been pre-
pared, the children of each school gave a program entitled, "History
Evening," when the community history was read by the pupils
who had written it. This proved to be a very popular program,
since most of the citizens or their ancestors were personally men-
tioned. It had a marked effect upon the pride of the people in
their home community. After these programs had been rendered,
the several histories of the local communities were compiled into a
history of the whole school district.
(5) School Attendance. — It will be recalled that one object
of the community survey was to determine what children were not
attending the schools. While visiting the homes upon that occa-
Digitized by
Google
Rural School Community Center 135
sion the teachers were able to interest a good many absentees in
going to school, or to persuade their parents to send them. Su1>
sequent visits by the teachers at the homes brought most of the
children into the schools. Then at the community center meetings,
the subject of school attendance was discussed from time to time
as a part of the programs. By means of this personal work of the
teachers in the homes and of the discussions at the community
meetings the percentage of average daily attendance was actually
increased by 14 per cent over that of the preceding year. This
increased attendance was accomplished without resort to the courts
in a single case. The parents came to realize that the schools cost
them the same whether their children attended them or not. They
came also to see more clearly than ever before what the schools
meant to the future welfare of their children and to the credit of
themselves as fathers and mothers. Be it understood, also, that
these parents were not "preached to"' about sending their children
to school. They were led into discussions of school attendance
among themselves and they arrived at their own conclusions.
(6) Evening Classes. — While making the community sur-
veys the teachers quietly learned also the number of adult illiterates
in their communities, though this information was obtained indi-
rectly, so as not to be embarrassing to anyone. When their reports
were brought together it was found that there were in all 45 adults
in the whole school district, who could not read and. write. At
first it was thought best to organize night schools of the Kentucky
"Moonlight" type for these persons alone. But in talking with
the people at the community center meetings the supervisor and
teachers came to the conclusion that what would best meet the
educational needs of the whole adult population were evening
classes for any who would attend them. Accordingly announce-
ment was made at the community centers that at certain centers
evening classes would be offered one night each week in addition
to the regular conmiunity center meetings. These centers for
evening classes were so selected that the teachers of near-by schools
could assist the local teacher in this work — in effect a consolidation
of schools for evening classes. The plan was eminently successful.
The English subjects (reading, writing, spelling), arithmetic and
agriculture constituted the course of study, not the usual textbook
study, but just the things that the people were interested in learn-
Digitized by
Google
136 The Annals op the American Academy
ing. Nothing was said about illiteracy, for that would have been
very embarrassing to those who had unfortunately failed to attend
schools when they were boys and girls. Any who could not read
and write joined the English classes and began at the very begin-
ning. They had individual instruction and, therefore, learned
very fast.
The evening classes were in themselves community center
meetings: (a) because they brought together three or four neigh-
borhoods at one of the centers, thus enlarging the circle of acquaint-
ances; (b) because the demonstration work in the agricultural sub-
jects attracted a great many who would have come out for no other
reason; and (c) because the class exercises were either preceded or
followed by a social half-hour, and in some cases followed by the
serving of refreshments provided by the families represented,
sometimes merely a basket of choice apples from one of the farms.
(7) Lecture Course. — Closely related to the work of the
evening classes was the lecture course. Now, when we speak of a
'Mecture course,'' we usually think of a series of lectures and enter-
tainments given by persons brought into the community for that
purpose and paid by the sale of tickets of admission. The lecture
course in our rural district was a very different proposition. The
lectures were free. They were given at the schoolhouses by the
teachers of other schools in the district and by citizens of the com-
munity who had messages for the people. The subjects were of a
very practical nature, dealing with improvements of agriculture,
roads, schools, sanitation, morals. For information these lecturers
drew upon the United States Bureau of Education and the
United States Department of Agriculture, the State Agricultural
College, the State Department of Schools, and the Public Health
Council. Wherever possible, bulletins of information on these
subjects were handed to the people to be taken home with them.
These lectures were in reality community center meetings. The
teachers themselves benefited greatly from them by the preparation
they made for them.
(8) National Patriotism. — In view of the military strife
abroad the time was ripe for a revival of national patriotism among
the people. Accordingly, one of the programs at each of the com-
munity centers had national patriotism as its central theme. By a
little guidance upon the part of the teachers this program led to the
Digitized by
Google
Rural School Community Center 137
placing of a flag upon every schoolhouse in the district. The people
themselves purchased the flags, cut and hauled the flag poles, and
observed "Flag Day" at the schoolhouses when the flags were
raised. This demonstration led later to the placing of a small flag
in each school room so that when "The Star Spangled Banner''
was sung, every child leaped to his feet and saluted his country's
flag — another factor of conmiunity improvement.
(9) School Libraries. — ^Another interesting outgrowth of the
community center work in this district was the raising of $282 for
school libraries. This amount was raised at box suppers, pie
socials, and public entertainments. Every school in the district
now has a small collection of books approved by the State Super-
intendent of Schools. In addition to the books purchased, the
teachers secured a large number of free bulletins upon subjects of
agriculture, roads, schools, and other subjects of interest to the
community. Here again the community center meetings were the
means of providing these school libraries.
(10) School Athletics. — As stated in the first paragraph of
this article there were in this school district three graded and
twelve one-teacher schools. The three graded schools were made
athletic centers, and to each were assigned four one-teacher schools.
At each of these three centers a baseball team was organized, the
players being chosen from among the pupils of the graded school,
and its allied four one-teacher schools. These three athletic centers
were then organized into a district school baseball league. One who
did not get information at first hand by observation could scarcely
conceive of the benefits derived from the baseball contests. The
baseball games were almost the only source of outdoor amusement
provided the people of the district. Rivalry among these three
athletic centers was keen, but yet wholesome. The activities of
the baseball league were a strong factor in the development of
community social capital. There were a good many boys who had
not been in school for two or three years, who enrolled now to play
baseball. But in his account of these baseball contests, the super-
visor sayB: "They (these older boys) stayed in school not only to
the end of the baseball season; they got a taste of books and have
been regular in attendance to the end of the year. Some who had
not been in school for over two years won their Free School Diplomas
this year and are planning to go to high school next year."
Digitized by
Google
138 Thb Annals of the American AcADEBrr
(11) Good Roads. — In two or three places I have made men-
tion of roads. The subject of unproved roads was discussed at
each of the conmiunity centers, that is, it was discussed by the
people themselves. Waste of time and money occasioned by the
bad condition of the roads of that district and the cost of improving
them were figured out, even mathematically, by the citizens at
these meetings. The crowning event of this notable year's work
was the voting of bonds in the sum of $250,000 to improve the roads
— a very large dividend paid on the social capital developed during
the year.
Conclusions
The reader may question the propriety of discussing such
subjects as community survejrs, school attendance, evening classes,
and good roads in an article whose title is "The Rural School
Community Center." I will admit that they are subjects not
generally thought of in connection with community center work.
Nevertheless, I am firmly convinced that the supervisor and teach-
ers, whose achievements I have described, have struck bed-rock in
community building. It is not what they did for the people that
counts for most in what was achieved; it was what they led the
people to do for themselves that was really important. Tell the
people what they ought to do, and they will say in eflfect, "Mind
your own business." But help them to discover for themselves
what ought to be done and they will not be satisfied until it is
done. First the people must get together. Social capital must be
accumulated. Then community improvements may begin. The
more the people do for themselves the larger will community social
capital become, and the greater will be the dividends upon the
social investment.
Bibliography
Nearing, The New Edttcationf Chicago: Row, Peterson A Company.
Ward, The Social Center, New York: D. Appleton A Co.
Carney, Country Life and the Country School, Chicago: Row, Peterson db Com-
pany.
Field, The Com Lady, Chicago: A. Flanagan & Company.
Social and Civic Work in Country. Bulletin No. 18. Department of Education,
Madison, Wisconsin.
Hanifan, A Handbook containing euggeeliona and programs for Communily Social
Gatherings at Rural Schoolhousea,
Digitized by
Google
THE NATIONAL CONGRESS OF MOTHERS AND PARENT-
TEACHER ASSOCIATIONS
By Mrs. Frederic Schoff,
President National Ck>ngres8 of Mothers and Parent-Teachers Associations;
Director Home Education Division, Bureau of Education, Washington, D. C.
The National Congress of Mothers and Parent-Teacher Asso-
ciations was the pioneer organization in studying and promoting
every phase of child welfare, and it miist ever stand at the very
heart of all child welfare movements, because without mothers'
cooperation no real betterment can be secured for children. It
was the first national movement to widen and deepen the influence
of fathers and mothers through the demand for educated parenthood
and a wider vision of childhood's needs and parental duty. To
help the home to do its best work, a practical plan for reaching
every home must be found. The Parent-Teacher Association and
the Mothers' Circle were selected as the mediums best adapted to
reach all homes. Through the well organized school system a
way was open to provide opportunities for home education for
parents, and at the same time establish sympathetic, intelligent
cooperation with the great body of teachers who were sharing with
parents the education and guidance of the children.
Neither parents nor teachers were in touch with each other,
and children suffered by lack of this mutual imderstanding — while
the work of the teachers was greatly mcreased by lack of it. The
Congress assumed the task of organizing Parent-Teacher Associa-
tions in every school. It also assumed the educational direction of
these associations, in order to make them of real value to parents,
to ensure their continuance, and to keep them true to their funda-
mental, far-reaching purpose. There had been parent associations
of various kinds, but the National Congress of Mothers and Parent-
Teacher Associations originated the movement to make them
universal, and to widen the scope of the educational system by
making the schools serve a double purpose in education, by making
it possible for parents to learn through them all that would enable
them to be better fathers and mothers. The plan included the
139
Digitized by
Google
140 The Annals op the American Academy
wider use of school buildings, opening them for reading rooms and
recreation centres wherever the need existed, and placing the
responsibility for all this in the hands of those most concerned —
the parents and teachers of the children in the schools.
A National University for Parents
The Congress, in its comprehensive plan for a nation-wide
system of providing educational help for parents, assumed the
functions of a National University for Parents with headquarters in
Washington, but radiating its educational guidance to all who could
be reached.
It was soon found necessary to establish state branches, through
which extension work could be done, carrying the message to
mothers just where they were. The interest and cooperation
of state superintendents of schools were enlisted. Every officer
gave her time and financed her work. For information a pamphlet
on "How to Organize Parent-Teacher Associations with Suggestions
for Programs'' is published by the National Congress of Mothers and
Parent-Teacher Associations, 910 Loan & Trust Bldg., Washington,
D. C. The Child Welfare Magazine, Box 4022, West Philadelphia,
gives each month a program and publishes reports of work of
Parent-Teacher Associations all over the United States.
Scope of Parent-Teacher Associations
In the organization of Parent-Teacher Associations, the follow-
ing reasons for their formation are given. Parent-Teacher Associa-
tions have three main reasons for existence:
First: To give fathers and mothers the opportunity to better educate them-
selves for intelligent home-making and child-nurture.
Second: To enable parents to learn what the schools are doing in order that
the home may offer effective codperation and that the schools may also codperate
with the home.
Third: To study conm:iunity conditions affecting the welfare of the young
with the purpose of arousing a sentiment of community responsibility.
The Parent-Teacher Association, needing for its full success
the membership of parents and teachers of all poUtical parties,
all reUgious beUefs and of many different opinions as to the right
and wrong of various movements, cannot afford to risk antagonisms
needlessly. There are other well established agencies available
Digitized by
Google
Mothers' Congress and Parent-Teacher Associations 141
for discussion and action along these lines. Let the Parent-
Teacher Association confine itself to its own single high purpose,
that of bettering conditions for "citizens in the making."
The world has no greater need than that of a wiser, better
trained parenthood; this need is not yet recognized in school and
college courses; the Parent-Teacher Association, therefore, serves
as almost the only study class open to parents who wish to learn more
of the duties of their calling. It raises the standard of home life
through the^ education of parents; and through organization gives
power for united and effective service.
Co5peration op School Superintendents
The Parent-Teacher Association has long passed its experimen-
tal stage; from leaders in education everywhere letters come asking
the help of the Congress in organizing and providing educational
programs. State superintendents of public instruction in the states
of Delaware and Washington have made it a part of their work to
request all principals to organize parent-teacher associations as
members of the National Congress of Mothers and Parent-Teacher
Associations. Valuable pamphlets on this subject have been pub-
lished by these superintendents. Hundreds of other state and
county superintendents have given invaluable cooperation. Mrs-
Ella Flagg Young, of Chicago, in a letter dated January, 1916, says:
Since the organization of the Ck>ngres8 of Mothers and of the Parent-Teacher
Aflsociations, I have known the leaders in Chicago and many of the workers in
Illinois outside of Chicago. These auxiliary associations have endeavored to work
in the spirit of the National Association. They have been invaluable in bringing
the parents into close relations with the schools. They have had a marked
influence on the administration of the schools. The barrier which had been quite
g^erally erected between parents and teachers has been removed. They have
helped revive the feeling that the public schools are the people's schools; are to
be strengthened by the people.
Mothers Study Conditions of Children
Ever since 1897 conditions of childhood outside the home have
been a subject of exhaustive study by the Congress. When it began
its work, children were in prisons and jails in every state, associated
with confirmed criminals in all court procedure and before and
after trial. No state except Michigan had assumed the responsi-
bility of providing adequately fgr its dependent or orphan cbildreo,
Digitized by
Google
142 The Annals of the American Academy
No state had, from the mother's viewpoint, provided for the all
around protection of the welfare of the children.
The first juvenile court and probation system was established in
Chicago in 1899, the bill for it being drafted by Hon. Harvey B.
Hurd. The Congress appreciated fully the advantages offered by
this new system and worked unceasingly to promote its establish-
ment in every state and in other lands, by conducting a systematic
propaganda which was successful in many states.
Detention houses instead of jails were promoted. Recognizing
that successful proba(tion work is an educational function, and can
only be successful when done with sympathetic insight into child
life, the Congress has never ceased its efforts to place probation
work under educational direction. Judge Lindsey* says: "There
is no one factor or influence among the many good influences working
for human betterment in this country that has done more to advance
Juvenile Court and Probation work than the Mothers' Congress.*'
Protection against Child Labor
The Congress in 1902 inaugurated its child labor committee, and
used its efforts to prevent the employment of little children in
mines and factories, and to insure better factory inspection, and has
ever since given its influence to promoting protection of children
in industry. It has opposed all employment of children in occupa-
tions injurious to life, health or character, and the committee has
given exhaustive study to the entire subject of work for children,
earnestly working against abuses. An investigation is being made
by the committee on the effects of child labor laws on child-life
in different states, with a view to present and future welfare of
children. Superintendents of schools and parents have called the
attention of the committee to the necessity for such investigation.
Mothers' Pensions
In a study of children coming into juvenile courts, children
who were truants and little children who were working, the children
in orphanages and institutions, the Congress saw the necessity of
* Pamphlets on " Next Steps Forward in Juvenile Court and Probation Work"
— ^Report of Ben B. Liodsey and Mrs. Frederic Schoff, Chairman and ^oe-
Chainnan Juvenile Court and Probation Dept. National Congress of Mothers
and Parent-Teacher Association. "Small Town and Rural Probation Woric,
Applicable to any County." Send to 910 Loan & Trust Bldg., Washington, D. C.
Digitized by
Google
Mothers' Congress and Parent-Teacher Associations 143
keeping the mother with her children, and in 1911 inaugurated
a nation-wide movement to secure mothers' pensions to prevent
the breaking up of the home when through poverty or death of the
father, the mother is unable to keep it.
There is an aspect to this question which has wielded its
influence in the evolution of a plan that would enable the mother
to keep a home for her children. The struggle for existence has
driven many children of tender years into the ranks of wage-earners
before they were physically able to do the tasks required of them.
Deprived thereby of any chance for the fundamental education
which would enable them to fill places where there would be op-
portunity for advancement, these children have become a source of
anxiety to all who are interested in the future of society. Some
plan must be devised that would make it possible for the home to be
sustamed without the work of Uttle children. Thus the nation-wide
movement to secure mothers' pensions has a meaning and purpose
the scope of which is not fully realized even by some of its warmest
advocates.
A working mother with the best qualifications for being a good
mother to her children, cannot exercise her powers when she is
absent most of the daylight hours and must work far into the night
to keep the roof over their heads. The state has decided that her
service to the children is more important than her service as a
wage-earner. It is safe to predict that truancy will decrease 50
per cent when the mother's pension becomes operative. Thirty-
five states have adopted this preserver of the home, and a mother's
care for the children, aud in every state the Congress has been an
active factor in securing this legislation, and in placing its adminis-
tration outside of charity. Pennsylvania and New York methods
are recommended.^
Saving the Babies
By careful tests the National Congress of Mothers and Parent-
Teacher Associations has proved that 70 per cent of babies who
die before they are a year old, can be saved by education of mothers
*"The Evolution of the Mother's Pension— Its Scope and Object." The
pamphlet used successfully in legislative campaigns in a number of states can be
supplied by application to National .Congress of Mothers and Parent-Teacher
AfiBOciations, 910 Loan k Trust Bldg., Washington, D. C.
Digitized by
Google
144 ThS Annals of f he American AcADfiai^
In infant hygiene. All the knowledge possessed by physicians and
health boards counts for nothing unless the mothers, who have the
actual care of the babies, can themselves possess the knowledge of
the proper care and feeding of babies.
The National Congress of Mothers has for years conducted a
constant campaign to awaken mothers and make them realize that
more than instinct is required to have healthy babies, and to give
them a chance to live. It has a method of learning of mothers of
babies, and sends a bulletin on The Care of the Baby. It has sent
appeals to all state and local Boards of Health to establish and
maintain Departments of Child Hygiene, to see that every new
mother is informed of all that will help her to give proper care to
her baby and furnish protection to the milk supply; to have a
Parents' Educational Bureau as a part of the equipment of every
Board of Health, and to see that every mother is given the oppor-
tunity to visit it. In Portland, Oregon, the city cooperates with the
local branch of the National Congress of Mothers and Parent-
Teacher Associations in maintenance of a most successful Parents'
Educational Bureau. Through the Child Hygiene Department,
National Congress of Mothers and Parent-Teacher Associations,
vast amount of work for baby-saving has been done in many states.
State Child Welfare Commissions
The Congress urged the appointment of an unsalaried state
child welfare commission in every state to study every phase of
child welfare, to consider existing conditions and to reconwnend
needed improvements. Oregon has compUed with the request.
Its commission, appointed by Governor West, has done fine work-
Chairman, Mrs. Robert H. Tate, 1811 E. Morrison St., Portland,
Oregon. Every state requires the work of a child welfare com-
mission, made up of broad-minded, unsalaried citizens, with the
governor as ex officio member and with reports to the legislature
that the members may have in mind the development of a system
of state protection for the physical, mental and moral development
of all its children. The Congress has done, and is doing, valuable
work in many states in the extension of kindergartens as part of
the school system in cooperation with the Kindergarten Division,
United States Bureau of Education and National Kindergarten
Association.
Digitized by
Google
MoTHEBs^ Congress and Parent-Teacher Associations 145
Federal Government Co5peration
Federal cooperation has been given the National Congress of
Mothers and Parent-Teacher Associations from the beginning, for
the relation of its work to the youth of the nation was fully appre-
ciated. Three international child welfare conferences have been
held in Washington, the invitations for all nations to participate
being sent by the Department of State. At the first of these the
President of the United States delivered the main address. Federal
cooperation with several divisions of the Department of Agriculture
has been mutually advantageous during many years.
Home Education Division Established
The National Congress of Mothers and Parent-Teacher
Associations most earnestly desired that the United States Bureau of
Education should recognize that parents are educators, and in as
great need of suggestion as teachers in schools, or as farmers in
agriculture. When recognition was given by the Commissioner of
Education to the fact that the larger part of children's education is
conducted by parents — and that possibilities for preparation and
study must be provided for them, an important step for child
welfare was taken, and an unlimited field of service to parents was
opened. The Home Education Division of the Bureau of Education
was established in September, 1913, in cooperation with the National
Congress of Mothers and Parent-Teacher Associations. The
official announcement is here given:
Department of the Interior
Bureau of Education
Washington
The Home Education Division, which has just been established, will do whatever
it can to help parents:
1. To further their own education by reconunending to them interesting
and valuable reading matter.
2. In r^^ard to the care and home education of their children, with reference
to: (a) physical care and health, sleep, food, etc.; (b) games and plays; (c) their
early mental development; (d) the formation of moral habits.
We hope to interest the boys and girls who have left school and are still at
home, and by directing their home reading and study we may be able to further
their education.
It is our intention to issue bulletins and literature, practical in their character,
which will be available to everyhome. The National Congress of Mothers and
Digitized by
Google
146 The Annals of thb American Academy
Parent-Teacher Associations has agreed to assist the Bureau of Education in this
work and can supply much literature not available through this office.
If the parents of your school district could be brought together at the school
house or any other good place, perhaps once a month, to discuss their common
problems, it would be mutually helpful. Will you let us know if you are willing
to take up this matter in your school district and make a beginning by inviting
some of the parents who are interested in such matters, and by enlisting, if possible,
the codperation of the teacher or teachers. The Bureau will send a brief form
for simple organization of a Parents' Association, if you desire it. We expect to
have a great deal of valuable matter for use of parents and teachers and for older
boys and girls.
Rightly used, the home is the most important factor in the education of chil-
dren. Through its Home Education Division, the Bureau of Education is trying
to help the home to do its best work. Your cooperation will be invaluable.
Kindly let me know if we may expect it.
Yours sincerely,
P. P. Claxton,
Cammissumer.
Work op the Home Education Division
The extension of Parent-Teacher Associations, the cooperation
of 40,000 women recommended by superintendents of schools, the
distribution of educational bulletins to mothers, the preparation of
reading courses for parents, for boys and girls who have left school,
for men and women wishing to pursue home study, the provision of
certificates for all who complete the courses, the replies to many
questions from individual mothers, have brought much appreciation
and have given a keen perception of the great need for the work of
home education. Thirteen million children under school age in
the United States are under the exclusive care of parents. Educa-
tion in physical care means life to thousands. Education in the
development of moral habits will prevent the blighting of many
lives at their beginning. The greatest educational work is done
in the first six years, and no after care can make up for neglect then.
Eighteen million children of school age spend one tenth of their
time in school, while nine tenths of their time is under parental
direction and guidance, showing the relative educational respon-
sibility of parents and teachers.
Twenty million boys and girls who have left school need en-
couragement in the continuance of education during the most
critical years of youth, when insight and sympathy can lead upward,
but when lack of it has driven many away from home influence.
Digitized by
Google
Mothers' Congress and Parent-Teacher Associations 147
The fedei:al government now considers the education of children
from infancy instead of from the age of six, and it considers their
education for twenty-four hours a day, instead of five hours, and
for twelve months of the year instead of ten months, as heretofore.
During 1915, 95,000 reading courses were sent out by request,
and over 25,000 letters were sent. Thousands of bulletins on The
Care of the Baby have been sent to mothers, while two editions of
lyOOO Good Books for Children have been published. This was
prepared by the National Congress of Mothers and Parent-Teacher
Associations.
Two joint tours of representatives of the Bureau of Education,
and officers of the National Congress of Mothers and Parent-Teacher
Associations, and National Kindergarten Association, have been ar-
ranged during 1915-16, covering the western and southern states in
the promotion of home education.
Foreign Interest
Extension of national organizations similar to the National
Congress of Mothers and Parent-Teacher Associations is assured.
The Chinese government requested the Congress to send its presi-
dent to China to aid the government in forming a National Congress
of Mothers and Parent-Teacher Associations. Japan through
private sources has also asked this help. The Marchioness of
Aberdeen has accepted the duty of organizer for Great Britain.
Cuba has already organized. Argentina has taken steps toward
national organization.
The ideals of a nation are created and inspired by the homes.
To help all homes to give true high ideals of life, of citizenship
and of duty to God and man is to lay sure and strong the foundations
for a great nation. The work of the Congress is civic work in its
highest sense, and it welcomes the cooperation and membership of
all who would give a happy childhood to every child.
Digitized by
Google
AN URBAN HOME AND SCHOOL LEAGUE
By Walter L. Philips, A.M.,
Supervising Principal of Public Schools, Lansdowne, PennBylvania.
The home and school league is an organization of those persons
interested in the education of the children, and in a larger sense of
the community. Although their history is brief, they have already
become a mighty force in bringing about the right kind of progress
in a community. They supply the means whereby the com-
munity may express itself concerning its life and activities and they
are a powerful cooperatipg force in making effective ideas that
stand for progress. The demands for a practical education have
caused remarkable changes in school curricula, especially those of
the secondary and higher schools. The home and school league
aids parents, teachers, and school officials in keeping informed of
the changes occurring. The politician, the grafter, and the unfit
are no longer tolerated in modern school circles. The home and
school league has become an effective agent in the elimination of
such persons from control. In the districts in which these associa-
tions are frowned upon or prohibited, a free expression of public
opinion is unwelcome. When managed aright they co6perate with
the legally chosen school officials when school affairs are managed
with care and discretion.
Advertising and Creating Interest
As an incentive to the formation of a home and school league
interest in the schools must be created. The school must be kept
before the people. Its needs, aims and policy must be advertised
in a legitimate manner in order to secure the cooperation a home
and school league can give. Exhibitions of school work, musicales,
art displays and contests never fail to arouse interest. The interest
of the community having been secured, the desire for a home and
school league should originate with the school administration who,
it is presumed, welcomes the cooperation of the parents. When
parents and friends realize that the school is merely a factor co-
operating with the home, there is Uttle or no difficulty in forming
148
Digitized by
Google
An Urban Home and School League 149
an organization for mutual support. Interest in educational matters
should be interpreted by the governing committee of the league,
and this can rightly form a basis for the work of the organization.
Number and Character of, Meetings
The nimiber of meetings for the school year depends upon the
needs of the community. Two meetings before December 25 and
three after that date seem to meet the needs of the league of this
district. Regular meetings are not planned for the mere entertain-
ment of members. As indicated in the foregoing statements meet-
ings are planned for the discussion of some community problem,
for the presentation to teachers and parents of some problem which
will better help them in the training of the children of the district.
It is a form of university extension brought into the school house.
Questions bearing upon the moral training of children; on activities
for the extra-school hours; the needs of the school district, etc., are
discussed. A brief list of subjects follows: The Problem of Home
Preparation of School Work; The Moral Training of Children; The
Self Realization of Pupils and Parents; The Need of a Playground;
Better School Facilities; Vocational Guidance; Some Higher
Thoughts for Teachers and Parents; The Reading Matter of Chil-
dren; The Health of the Child; Eye Strain; The Meaning of a
Flower (Parenthood). Among the most profitable meetings are
those in which the discussion of problems is carried on by the
teachers and parebts themselves. There is an exchange of ideas, a
presentation of the two points of view in the education of the child,
and a mutual understanding of the best methods to adopt in this
training.
It is well occasionally to invite those not connected with the
schools to address meetings of parents and teachers, giving them
the advantage of their more complete study and experience, along
their special lines of work. The breadth of the educational proc-
esses can often be made more evident by such formal addresses.
Local problems, however, can usually be solved best by the people
most directly affected, provided that there are men and women
with sufficient wisdom to direct the discussion toward the right end.
The purely entertainment features should not be omitted entirely.
These, however, are of secondary importance and should not divert
the time and interest from consideration of the more vital problems
Digitized by
Google
150 The Annals of thb American Academy
to be brought before parents and teachers. In this district, one
meeting a year is given to the inspection of children's work. Speci-
mens of the work of all grade school children and almost all high
school students are put into convenient places so that parents may
inspect the work and compare that of their own children with the
work of others.
Conferences of fathers and of mothers are frequently held an
hour previous to the general meetings. Questions concerning the
different sexes are discussed freely. Sentiment is created relative
to what is best for boys and for girls in education. One result of
these discussions is the further development of the physical educa-
tion department of the pubUc schools to the extent of procuring a
well trained woman of much experience for physical training work
for girls and a well trained man with successful experience for
physical training work for boys.
Community Spirit Developed
The social features of the meetings are of almost equal impor-
tance with the educational features. A community spirit is devel-
oped. Interest in the greatest institution of any district, the school,
is fostered. Civic pride and community betterment are encouraged.
Destructive criticism is unpopular. Constructive criticism enables
a community to obliterate the mistakes of the past and to create
that which endures. Sectarianism in religion finds no chance for
expression in a well administered home and school league. There
is no place for political discussions. The home and school associa-
tion meetings should not be used as an occasion on which to develop
selfish interests of any kind whatever. There is no organization in
a district that is more democratic than a home and school league.
There is no place for caste. Parents have a common interest, the
education of their children. They are searching for the best methods
and what is best for one child is likewise best, generally, for others.
The social hour, with light refreshments after the program of the
evening, offers an opportunity for the people of a community to
become acquainted with each other. Discussions among men and
women of the community develop powers of leadership not generally
known to exist. Let me emphasize the importance of wise direction
and administration of a home and school league to bring about
these results.
Digitized by
Google
An Urban Home and School Lbagub 151
The Professional Work op the Schools
The home and school league should not attempt to do the pro-
fessional work of the teachers or superintendent of the school. It
should not assimie nor usurp the authority and function of the
school board which is elected to perform certain administrative
functions and which is responsible for the financial affairs of the
school district. It is, however, possible for it to participate in
many educational activities which supplement the regular work
of teachers and school boards and thus enrich the opportunities
offered to the children and older persons of the community.
This school district, a suburban borough of approximately five
thousand people, has profited greatly by the initiative, the support
and the participation in school activities given by the home and
school league. I venture to name some of the interests of the league
of this borough which have contributed towards the development
of an educational ideal and to the material equipment of the school
plant.
(1) Procuring a public playground,
(2) Procuring a new school building,
(3) Decorations for the school building,
(4) A club house for the playground,
(5) Responsihility for supervision of evening work in the school building.
The home and school league cannot be credited with having
been wholly responsible for the success of the interests just named.
In many instances it started the movement and helped with it until
its consummation. In other cases it helped with the movement
after the starting of it by an individual or another community
interest.
Procuring a Public Playground
A committee of the league was appointed to look into the
matter of procuring available land for a public recreation field.
•Most of the apparently desirable land had been preempted and
partly built upon. A tract of three and one-half acres, well located
but ungraded and with wild growths upon it was recommended.
The purchase price was approximately six thousand dollars. The
home and school league was young and not especially influential
at the time. It recommended the formation of a Playgroimd Asso-
ciation, an organization in itself, to work out a plan for securing
Digitized by
Google
152 The Annals of the American Academy
possession of the land. Popular subscriptions were solicited amount-
ing to four thousand dollars; the school board was asked to accept
the four thousand dollars, to pay the balance on the land, and to
assume the administration and supervision of it. Knowing that
it had the support of the Home and School League representing a
majority of the parents and taxpayers, the school board proceeded
with the undertaking. Now one of the assets of the borough is a
well-graded recreation field with football and baseball fields, tennis
courts, swings, etc. A club house has been procured and recently
all of the non-sectarian organizations of the district joined in a
successful effort in the form of a country fair, raising eleven hundred
dollars towards equipping the club house with shower baths, lockers,
toilets, rest rooms, etc. The community interest in the effort to
procure and equip a club house was remarkable inasmuch as all
organizations including the home and school league joined unselfishly
in a community project. The success of the effort of the people led
an influential citizen to add to the playground ten more buildmg
lots at an expense of approximately five thousand dollars.
Procurinq a New School Building
Membership in the home and school league increased from an
original thirty-five to over six hundred in five years. The audi-
torium of the old school building would not accommodate the
growing organization. The extension of school interests encouraged
by the home and school league was prevented on account of lack
of space and facilities. A school loan was proposed. This meant
increased taxes for maintenance and liquidation of debt. The school
board requested that the home and school league discuss the problem
and furnish a means whereby the citizens might give expression to
their feelings relative to the matter. Inasmuch as the borough
council had just authorized a loan of seventy-five thousand dollars
for street improvement there was considerable doubt about the
success of another loan, of sixty thousand dollars for school uses.
Discussion of the subject left no doubt in the minds of the school
authorities of the interest in the school loan. The voters authorized
the loan and in fourteen months a new high school building, with
auditorium seating one thousand, a gymnasium ninety by forty-five
by fifteen feet and sufficient class rooms was ready for school and
community uses. By means of sliding doors and movable partitions
Digitized by
Google
An Urban Home and School League 153
the auditorium can be divided into six large class rooms. Movable
and revolving chairs permit of adjustments to suit various uses for
which the large room is adapted.
Schoolroom Decoration
The home and school league took up the matter of schoolroom
decoration. A Shakespeare evening was proposed. Local talent,
together with some outside assistance, was available to give read-
ings and interpretations of Shakespearian dramas. Members of
the league sold the tickets and attended in large numbers. Over
two hundred dollars were thereby contributed to the school decora-
tion fimd. The league also^oined with the school children in paying
off the first hundred dollars of indebtedness upon the club house.
Supervision op Evening Classes
The home and school league offered its services to the school
board in conducting evening interests in the new school building.
After the board had a complete outline of the plans of the league
it accepted the offer of the league, allowing it to proceed with the
execution of its plans for the use of the school building. Three
committees were appointed, one for evening classes, one for social
functions, and one for gymnasium activities. Classes were organized
for the study of stenography, typewriting and Spanish. A gymna-
sium class for women was established. Each member of these
classes was expected to share the expense of the tuition and janitor
service only, the school board being responsible for light, heat and
other resources of the school plant. In addition to the classes named,
a class for boys was organized for Friday evenings. The school
board paid the instructor and janitor and the home and school
league supervised the class. The nimierous social fimctions of the
people of the district made it inadvisable for the committee on
social affairs to arrange for many social functions although it was
willing and ready to do all that it had planned.
Influence Locally
There is no standard by which the influence of the home and
school league itself can be measured'. One can infer from the f ore-
gomg statements that the influence is great and good. In addition
to that which has been described the influence upon the actual
Digitized by
Google
154 The Annals of the American Academy
administration, discipline and attitude towards the school has been
marked. Teachers frequently refer to conferences they have had
with parents at the home and school meetings. Pupils understand
that parents and teachers generally are in accord in matters of
study, discipline, home study, health, care of property and respect
for authority. A spirit of co5peration has been developed. Teachers
realize that the parents' point of view is to be considered and re-
spected. Home conditions of study and work are better under-
stood. In like manner the parent is made to realize that the teacher
has rights and privileges, that she is a professional person worthy
of respect, with authority, and with unselfish motives generally.
In some cases in which teachers have failed to measure up to reason-
able expectations of parents, when a dictatorial, improfessional and
uns3rmpathetic attitude has been assumed, the teacher is made to
realize that a different attitude must be shown and that none but
teachers who are willing to act in loco parentis will be retained in
the teaching corps.
The influence of the home and schoo^ league upon the com-
munity in general is quite as marked as that upon the school in
particular. As indicated above, it has been influential in develop-
ing a community spirit; it has added to the material resources of
the community; it has aided greatly in removing the schools from
political domination; it has furnished a forum for the discussion of
problems for the educational and moral betterment of the people;
it has fostered and actually performed fimctions not the duty of
any legally constituted authorities to perform; it has unselfishly
gone about its work of doing good for children and their parents.
It is well known that school boards, town councils and other
legally constituted governing bodies can perform their duties best
where they are supported by those governed. The home and school
league, when in the right relations with the school board is an inter-
preter of community ideas relative to school matters. It can be
made an instrument of tremendous advantage to a school board
that really desires to give the people what they want educationally.
It shows the greatest lack of wisdom on the part of either organiza-
tion to antagonize the other. The writer being secretary of the
board of school directors and an officer in the home and school
association is in a position to judge of the relations existing between
the two bodies of this district. The perfect harmony existing, the
Digitized by
Google
An Urban Homb and School Leagub 155
mutual support given, and the respect each body has for the opinions
of the other, are factors contributing greatly towards the normal
school conditions of the district.
Wider Influences
The influence of a home and school association is not necessarily
confined to the home district. Associations have joined for mutual
help and codperation. They are instrumental in the formation of
associations in other school districts. They have the missionary
spirit of helpfulness and uplift. Delaware County, Pennsylvania,
early had a league of home and school associations. Two meetings
a year are held at different places in the county. Representatives
of the various local associations go to the county meetings and give
and receive ideas for betterment. The county league of associations
has a conmiittee whose duty it is to go to places where there are no
associations and encourage the formation of them. The spheres of
influence extend into other counties and other states. No educa-
tional movement of recent years has done more towards educating
the parents and teachers to the needs of the community than the
home and school associations. Their spirit is codperation, not dic-
tation. Their criticism is constructive, not destructive. Their aim
is the betterment of school conditions. They have in mind the wel-
fare of the children and their parents. They are building on broad
foundations and are building for the future.
Digitized by
Google
THE RURAL SCHOOL IMPROVEMENT LEAGUE
By Payson Smith, LL.D.,
State Superintendent of Schools, Maine.
The system under which the old time schools of New England
were managed was both a recognition of the value of local interest
in the local school and an attempt to give that interest eflSciency
of action by the imposition of local responsibilities and the granting
of local powers. All matters relating to the establishment and
conduct of the schools were under the direct control of the people of
that neighborhood in which the school was located. Generally,
the local preference for the employment of a particular teacher was
a most important factor. These conditions, naturally, brought
about a strong local interest in schools, the intensity of which
could be measured easily by the extent to which the functions and
powers of the citizens were exercised.
Contact with the world outside of the community was limited.
The modern means of transportation and communication had not
brought the rural and urban communities into close touch. The
chief items of interest were those having to do with local affairs
and local institutions. Interest in the school, its conduct and
condition was a natural sequence. The school reflected the spirit
of the community and it was improved or allowed to remain un-
improved as its patrons desired.
The teacher of the school of fifty years ago was a prominent
factor in the local social life. She was expected to visit the families
having children in school and she took an active part in all commu-
nity interests. Although parents did little "visiting schools,"
that lack of contact was more than made up when the conditions
were such that the teacher "boarded round.*' Under this long
abandoned plan the teacher took much of the school to the home
and took from the home much that would aid in binding the two
into close relationship. The older boys and girls had their re-
sponsibilities to the school additional to the preparation and recita-
tion of lessons. The floors were swept, the fires built, the grounds
kept clean, all by the pupils themselves.
156
Digitized by
Google
RURA.L School Improvement League^ 167
The school of today differs widely from the old time school in
the scope and character of the work which it had to do. Conditions
have changed, customs are dififerent, the horizon has been broadened
and with these changes the relation of the rural school to the com-
munity which it serves has not remained the same. Public sen-
timent demanded a change in the methods of conducting schools
and required that the town and the state take over responsibilities
formerly held by the district or neighborhood. Wisely were these
changes brought about but with them were lost the things that
made so easily possible a live local interest in the schools.
The Need for Cooperation
But there are vital and pressing needs of the schools of today
which cannot be met without the systematic, cooperative action
of parents, teachers and pupils. Civic duty requires that every
man and woman whose children are in schools, or who desires the
advance of society, shall make active efforts to improve the schools.
The public school is one of the most important of civic institutions
and it is one of the most important of civic duties to see that it is
made most efficient for the civic ends for which it is established.
The teacher in the school is encouraged to do her best work when
she is conscious of a vigorous interest on the part of the community
which she serves. The consciousness of such an interest is not
easily attained unless she can come in close personal contact with
the parents and citizens of the community.
To secure a personal contact with the parents a plan of home
visitation must be adopted by the teacher or some influence must
be brought to bear which will result in general parental visitation
of the schools. Unless there is some organization which creates a
natural bond between the home and the school the visit to the home
by the teacher may be interpreted wholly as the payment of a
social obligation and the visit to the school by the parent entirely as
a small matter of duty to be undertaken occasionally and when
convenient. There is needed then some well organized agency
created for the purpose of arousing and maintaining a local interest
in the local school, to unify it into an effective force for good.
Such an agency must have such intimate relation to and connection
with the local school that the school's needs and work shall be the
source and center of all the agency's action. It should have such
Digitized by
Google
158 The Annals of the American Academy
inter-relations with kindred agencies connected with other schools
of the town, that their combined action may affect the common
needs of all. Also, it should have some close connection with one
great central agency whose sphere of action should be state-wide
and whose purpose should be to crystallize all the forces of local
interest into one great central force acting upon all local agencies
and reacted upon by all of them.
The School Impbovement League of Maine
In an attempt to create such an agency the School Improve-
ment League was formed in Maine in the year 1898. The member-
ship of the School Improvement League includes teachers, pupils,
parents, school officers and citizens. The local league, with a
membership made up of those having interests in a particular school,
is affiliated with the local leagues of the town through the organiza-
tion of a town league, the membership of which is composed of
the officers of local leagues. From the state headquarters is fur-
nished material helpful in forming leagues, including handbooks,
forms for constitutions, certificates of membership, membership
badges or buttons, charters, etc. The certificates of membership
are signed by the state superintendent of public schools, the superin-
tendent of schools of the town in which the league is located and
the teacher in charge of the school. The membership badges are
simple, inexpensive and dignified in form. These features are
particularly attractive to most school children whose enthusiasm
cannot be lost on the parents.
A Typical Constitution
Constitution of the School Improvement
League.
Article 1.
This League shall be a branch of the School Improvement League of Maine.
It shall be know as the League.
Article 2. Object
The object of this organization shall be to unite the pupils, teachers and
friends of the school in an elTort to help to improve it and to make it of the
largest possible service to all the people of the commimity.
Article 3. Members
Membership in this League shall be open to pupils, teachers and friends of
the school who are willing to subscribe to the objects named in Article two.
Article 4. Officers
Sec. 1. The oflScers of this League shall consist of a President, a Vice-
President, a Secretary, a Treasurer and an Executive Committee of three, the
Digitized by
Google
RuBAL School Improvement Leaque 159
ehairman of which shall be the President. These oflBcera shall be elected by
ballot at the first meeting of each term.
Sec. 2. The duties of these officers shall be those usually required of such
officers. It shall also be the duty of the Secretary to return to the Secretary of
the Coimty League full reports of the doings of this League. If there is no
County L^Eigue such report shall be returned to the Secretary of the State League.
Abticle 6. Finance
Sec. 1. The income of the League shall be derived from such entertain-
ments as may be given by the League and from the voluntary contribution of
members and friends of the school. There shall be no required assessments.
Sec. 2. An account of the receipts and expenditures shall be rendered by
the Treasiu-er at the close of each term.
Article 6. Meetings
Sec. 1. The regular meetings of this League shall be held
Sec. 2. Specialmeetings may be called by the President.
Abticlb 7. Amendments
Alterations or amendments to this constitution may be made by a two-
thirds vote of the members present at a rep:ular meeting^ providing that notice
of such alteration or amendment has been given at a previous regular meeting.
In the main the efforts of the School Improvement League are
directed to make the local school the center of local community
interest, to improve physical conditions and to help to provide
school libraries, pictures and supplementary equipment. With
the accomplishment of the first aim, the improvement of physical
conditions and the addition of equipment can usually be secured.
The extent of local interest may be measured somewhat by the
physical improvements made. Upon the teacher herself rests the
greatest responsibility for the success or failure of a league. The
success of a league means much to her, its failure indicates her
failure, her efforts are for the league.
Definite Accomplishments
A review of changes made in school conditions indicates that
much has been accomplished through the activity of the School
Improvement League. School grounds have been made objects
of pride. Old school buildings have been renovated and brought
into keeping with their improved surroundings or have yielded
place to new ones of more modern and pleasing architecture.
Schoolrooms have been beautified and made attractive through
the purchase of pictures and casts or through the organized plan
of systematic cleaning and decoration. Libraries have been
purchased, a few volumes at a time. Apparatus has been secured
which has added much to the comfort and convenience of the school.
Changes in methods of heating and ventilation have been brought
Digitized by
Google
160 The Annals of the Amebic an AcAbBBCY
about. The organization of the noon hour lunch and of organized
play under the direction of the teacher — these and many other
things owe their institution in numberless schools to the efforts of
the School Improvement League.
Public meetings of the leagues in the form of entertainments
and exhibitions given to raise funds for carrying forward the various
lines of work set for them to do have made a strong appeal to the
interest and encouragement of parents and friends of the children
of the league. In matters in which the action of the school authori-
ties have been involved parental and local influences have been
crystallized in the interest of the school. Broader, more intelligent
and more liberal policies of education and of educational needs and
a wider view and greater respect for the rights of others have re-
sulted from the closer acquaintances with the local school and its
needs.
The leagues have had a potent influence on teachers. To
successfully direct the league's operations has required thought,
study and reading alojig lines new to many and consequently a
large intellectual and professional growth has been encouraged.
The many new ways in which teachers have been brought into close
relations with the parents of their pupils have served to give them
increased importance in public estimation and have served to
bring them and their work under more intelligent and kindly
consideration. They have been enabled to realize the accession of
parental confidence and have increased their powers by securing
a stronger hold upon the respect, confidence and good will of those
served by the school. From all of these things has resulted an
increased power of control within and without the school.
But the ultimate purpose of all agencies acting upon schools
is the largest good to the children in them. For this reason they are
given prominence in the membership and work of the league. For
this reason also much of the work of the league is made to hold
close relation to the regular work of the school and many of the
means employed in helping the league to secure needed funds are
distinctly educational in character. The improvements secured
through the work of the league are improvements of the type that
directly affect the school environment and exert a direct educa-
tional force upon the children. In the preparation for regular and
special league exercises the children s^cur^ a kpowledge of history^
Digitized by
Google
RuBAL School Impbovement League 161
biography and literature which the school through its routine
program would find it difficult to give. In the business meetings
of the league the children acquire a knowledge of and practice in
methods of procedure common in deliberative bodies that may
prove useful to them in after life. As they take part in the dis-
cussions which necessarily arise in determining the work to be
done by the league they acquire the power to think and express
thought in a consecutive and orderly way and they gain the power
of self-command. By attending public meetings in which they
take so active a part they learn to respect the requirement that such
meetings demand courteous and orderly behavior and respect for
the opinions of others. If the league had no other duties to perform
than this direct and positive educational function, they would do
for the children a very important and much needed work.
To the communities which they serve the leagues have been
an ever increasing power for good. More than any other agency
the School Improvement League of Maine has successfuUy made
the school a real community center in many localities. Through
the improvement of the school building and its surroundings has
resulted the improvement of the farm building and its surroundings.
To the wholesome influence of the league may be traced an improved
bit of road, a better tilled field, a more active interest in canning
farm products, and many other things. The inspiration and help
of the league cannot be contained within the four walls of the
schoolroom.
The entire plan is simple and practical. Its results are direct
and desirable. It does not demand an involved piece of machinery
for its oi>eration. Started in a small way it is capable of expansion
to an agency strong in its power for school improvement.
Digitized by
Google
SCHOOL CREDIT FOR HOME WORK
By L. R. Alderman, B.A.,
Superintendent of Schools, Portland, Oregon.
When I was a young high school principal in McMinnville,
Oregon, I found in my class a girl whom I shall call Mary. She was
a healthy, happy-go-lucky, careless girl, who did very little work
at school and still less at home. She spent her afternschool hours on
the streets, and in going to the post office and to see the train come
in. I wondered what kind of a mother Mary had and what kind of
a home she had. I wished that I might talk with Mary's mother,
but as I had no solution for the Mary problem I did not go to see her.
One day as I was going home, the teacher with whom I was walking
said to me, "There is the mother of your Mary." I turned back
and crossed the street that I might see Mary's mother. A glimpse
at her told me the whole story. She looked weary, overworked, dis-
couraged. I did not speak to her, for I had nothing to say.
After she had passed by I found myself growing indignant, and
then thoughtful; then I became excited, for I felt that I was in the
presence of a real problem that had not been solved. Maybe I
could find the solution! I knew that the working out of it was
worth while. Here was Mary, missing her life's opportunity by
her hard-hearted indifference to her mother; and here was I, 9up-
posed to be helping Mary, but limited by tradition to helping her
with such things as quadric equations, the Punic wars, and the
nebular hypothesis! What was I to do?
Assignment op Real Work
By the next morning I had worked out a plan. Before we took
up our books I asked the girls in the algebra class, " How many of you
helped with the housework this morning before coming to school?"
Some hands were raised, but not Mary's. "How many of you
helped make any of the clothes you are wearing?" Hands again,
but not Mary's. *' How many of you know how to make bread?"
Some hands, but still not Mary's. ''Now," I said, "I shall assign
as usual ten problems for you to report upon at this hour tomorrow,
162
Digitized by
Google
School Credit for Hobie Work 163
but five of them are to be from the algebra book and five outside
of the book. The five outside of the book, for the girls, are to be:
1. Helping get supper.
2. Helping with the kitchen work after supper.
3. Preparing breakfast.
4. Helping with the kitchen work after breakfast.
5. Putting a bedroom into order.
I thought if the boys remained at home they might at least be
exposed to their lessons, so I told the boys that they would be
credited with three for remaining at home all the evening, and with
two more for bringing in wood and doing their regular chores.
At this announcement the class showed the enthusiasm that
always comes with anything new in school, but they also showed
signs of an awakening conviction that the things asked of them were
really worth while. The look on their faces, from that day forward,
gave me the feeling that I had struck something vital. It was as if
I were handling wires that had connection with a great dynamo.
The next day I ask^d those who had done the problems in
home helping to raise their hands. Every hand went up, amid much
enthusiasm. Then I asked for those who had done the algebra
problems, and again all raised their hands. As I looked my ap-
proval all hands came down, that is, all hands but Mary's. "What
is the matter with yoiu* hand, Mary?" I asked. "I worked five
problems in advance," she said with sparkling eyes. "I worked all
that you gave me, and five more from the book.*'
Classroom Cbedits for Home Work
Since that day I have been a firm believer in giving children
credit at school for work done at home. We did not work home
problems every day that year, but at various times the children were
assigned lessons like the one mentioned, and scarcely a day passed
that we did not talk over home tasks, and listen to the boys and
girls as they told what each had achieved. The idea that washing
dishes and caring for chickens was of equal importance with algebra
and general history, and that credit and honor would fequently be
given for home work, proved a stimulus to all the children, and
especially to Mary. She had gained something — a constructive
frame of mind — a habit of success. She became three times as
good a worker at school, ten times as good a worker at home and
Digitized by
Google
164 The Annals 61f t&b American AcademIT
a hundred times happier girl both at school and home. Needless
to say her mother ^was happy as her heavy household cares were
in part assumed by her healthy daughter. When graduation time
came Mary's mother spoke to me, and she made no attempt to
conceal her pride. "Mary is such a good girl," she said.
The next fall I became county superintendent and encouraged
home work through a "school fair" where every year the children
of the county exhibit their handiwork and garden products.
The Spread op the Movement
It was not until I had begun teaching in the .University of
Oregon that it occiu-red to me to set forth my plan of giving class-
room credit for home work, for the consideration of other teachers
and of parents. I wrote a short article on the subject, and had it
published in most of the Oregon papers in June, 1910. A year later
the idea began to bear fruit; three home-credit schools were es-
tablished in the winter of 1911-1912, soon to be followed by others.
I quote from the article :
How can the school help the home? How can it help the home establish
habits in the children of systematic performance of home duties so that they wiU be
efficient and joyful home helpers? One way is for the school to take into account
home industrial work and honor it. It is my conviction, based upon careful
and continuous observation, that the school can greatly increase the interest the
child will take in home industrial work by making it a subject of consideration
at school. A teacher talked of sewing, and the girls sewed. She talked of iron-
ing, and they wanted to learn to iron neatly. She talked of working with
tools, and both girls and boys made bird houses, kites, and other things of
interest
The school can help make better home-builders. It can help by industrial
work done in the school. The plan I have in mind will cost no money, will take
but little school time, and can be put into operation in every part of the state at
once. It will create a demand for expert instruction later on. It is to give
school credit for industrial work done at home. The mother and father are to
be recognized as teachers, and the school teacher put into the position of one who
cares about the habits and tastes of the whole child. Then the teacher and the
parents will have much in common. Every home has the equipment for industrial
work and has some one who uses it with more or less skill.
The school has made so n^any demands on the home that the parents have in
some cases felt that all the time of the child must be given to the school. But an
important thing that the child needs along with school work is established habits
of home-making In my opinion it will be a great thing for the child
to want to help his parents do the task that needs to be done and to want to do
it in the best possible way. The reason why so many coimtry boys are now lead-
Digitized by
Google
School Credit for Home Work 166
ing men of afifairs is becaiise early in life th^ had home responsibilitieB thrust
upon them. I am siire that the motto '' Everybody Helps'' is a good one.
But one BAya : ' ' How can it be brought about? How can the school give credit
for industrial work done at home?" It may be done by sending home printed
slips asking the parents to take acco\mt of the work that the child does at home
under their instruction, and explaining that credit will be given for this work on
the school record. These slips must be used according to the age of the child, for
it must be clearly recognized that children must have time for real play. The
required tasks must not be too arduous, yet they must be real tasks. They must
not be tasks that will put extra work on parents except in the matter of instruction
and observation. They may well call for the care of animals, and should include
garden work for both boys and girls. Credit in school for home industrial work
(with the parents' consent) should count as much as any one study in school.
To add interest to the work, exhibitions should be given at stated times so
that all may learn from each other and the best be the model for all.
Definite School Credits for Home Work
Since that time dozens of interesting printed record cards have
been devised, yet many schools still use the simple plan of daily
notes from the parent to the teacher. Daily or weekly reports are
found more successful than less frequent ones. The lists of home
tasks^ issued by various teachers and superintendents include
everything ''from plowing to washing the baby for breakfast."
The incentives vary, too; some schools have a contest for credits,
with prizes at the end of the year, but the large number give marks,
usually totals of credits, to all the students. Some schools give
holidays as rewards, some add a few credits to the study in which the
child most needs credit (with the frequently observed result that
the child works hard for real proficiency in that study) while others
find it sufficient to mark home work as one study on the report card.
One of our most successful Portland teachers merely issues the home
work cards and receives them when filled, and registers the fact that
they are filed in a record book, yet by her attitude of encouragement
she has had most of her pupils doing home work faithfully for three
years. The important thing seems to be the valuation put upon the
children's out-of-school efforts by the teacher. Many boys are
glad to get credit for household tasks, when the work is considered
honorable and the other boys are doing it. ''Every boy should
know how to sew, just as every girl should know how to whittle.
'For complete home-credit plans see the author's book School Credit for Home
Work, Houghton, Mifflin & Co., New York.
Digitized by
Google
166 The Annals op the Abherican Academt
Every boy should know how to cook, just as every girl should know
how to swim. Skill in the elemental arts is a form of what Hender-
son calls human wealth. All should participate."
Some cards made out for city schools give a large place to
hygiene, to care of books, clothes, etc., to getting lessons on time,
going to bed on time and going to school on time "without constant
urging." Others give such urban tasks as "sweeping sidewalk,"
" driving delivery wagon," " carrying a paper route." Some schools
encourage children to do the things that boy scouts and camp fire
girls do.
Some of the high schools have very complete arrangements
for home work as a part of the practice in manual training, agri-
culture, cooking, sewing, or the commercial studies, and take ac-
count of vacation work, too. Music lessons, under accredited
teachers; and Bible study, tested by an examination given by the
school, are credited in many high schools. The maximum credit
allowed for industrial work is usually two units out of the fifteen
or sixteen required for graduation.
Digitized by
Google
THE SPREAD OF THE SCHOOL MANSE IDEA
By George E. Vincent, LL.D.,
President of the University of Minnesota.
The essentials for an efficient school are: (1) competent
teachers, (2) expert supervision, (3) adequate housing and (4)
proper equipment. In these four respects American rural schools
have been outclassed by town and city systems. Of late progress
has been made toward improved education in the country districts.
Consolidation solves admirably the problem of housing and equip-
ment. The county-unit, the appointee superintendency and the
supervisory corps offer hopeful prospects of a stimulating adminis-
tration. Better salaries and higher requirements for certification
are slowly drawing a more competent class of teachers into rural
service. One of the chief obstacles, however, to this movement
is the absence, in country communities, of satisfactory living con-
ditions for teachers. The problem of rural education will never be
solved until this issue has been clearly recognized and squarely met.
The older countries of Europe have long recognized that the
proper housing of teachers is as much a duty of school authorities
as the provision of class rooms, laboratories and gymnasia. In
Denmark every rural school has its teachers' house with kitchen
garden and flower garden. The schoolmaster and his assistants
live on the school grounds. The institution is not a place de-
serted for all but a few hours in the day; it is rather a permanent
residence of community leaders. Little wonder that the Denmark^
schoolmaster holds his place year after year. It is not unusual for
a principal to devote his whole life to one or two communities.
Throughout Germany practically the same system prevails with
the same results in educational efficiency and community leader-
ship. In France every rural teacher is provided at public expense
with living quarters. The same system is well established and is
spreading in Sweden, Norway and Finland.
In various parts of the United States significant experiments
in providing houses for teachers have been made. In Hawaii one-
»See Rural Denmark and Its Schools, Harold W. Foght, New York: The
MaomiUan Co., 1915.
167
Digitized by
Google
168 The Annals of the American Academy
third of the schools have cottages built at public expense. In the
state of Washington notable progress has been made in furnishing
living quarters for teachers. North Dakota has twenty-two
schools equipped in this way. Mississippi, North Carolina, Illinois,
Tennessee and Oklahoma have made promising experiments. In
St. LfOuis County, Minnesota, twenty-five rural school teachers live,
in groups of two and three, in cottages built and completely furnished
^.t public expense.
A teachers' house or school manse is peculiarly necessary to
the success of the consolidated rural school which, it is now agreed,
is to be the typical country school of the future. There should be
built, in connection with the consolidated school on the same grounds
with the school building and heated by the same plant, a permanent
house for the use of the teaching staff. This buildipg should contain
a wholly separate apartment for the principal and his family,
living room and bed-rooms for the women teachers, laundry,
kitchens, etc. It should be equipped with a view to providing in
the community a model of tasteful and economical domestic furnish-
ing and decoration. The rentals and other charges should be so
regulated as to provide for the maintenance, insurance, repairs
and renewals of equipment, but not for a sinking-fund. The house
should be regarded as a part of the school plant and included in
the regular bond issue for construction. A privately owned manse
in Illinois is netting 8 per cent on an investment of $10,000.
The manse has a bearing in several ways upon the educational
work of the school. Flowers and vegetable gardens are natural
features of school premises which are also residence quarters. The
domestic science work of the school can be connected in valuable
ways with the practical problems of manse management. The
cost accounting offers a capital example of bookkeeping. The use
of the school as a community center is widened and its value en-
hanced. The school as an institution takes on a more vital character
in the eyes of the countryside.
Most important of all is the effect upon the teacher. Comfort-
ably heated, well-lighted quarters, comradeship with colleagues —
and at the same time personal privacy — a satisfying, cooperatively
managed table, independence of the petty family rivalries of a
small conununity, a recognized institutional status, combine to
attract to the consolidated rural school manse teachers of a type
Digitized by
Google
The Spread of the School Manse Idea 169
which will put the country school abreast of the modern educational
movement. It is futile to preach the gospel of sacrifice for the
cause of rural education. There is no reason why rural teachers
should be called upon to sacrifice themselves. They ought not to
do it, and they will not do it. The school manse is not a fad, nor a
luxury; it is a fundamental necessity.
Digitized by
Google
CONTINUATION SCHOOLS
By Arthur J. Jones, Ph.D.,
Aflflifltant Professor of Secondary Education, School of Education, University of
Pennsylvania, Philadelphia.
The term ''continuation school" as used in this country is still
indefinite and does not refer to any one type of school. It was first
generally used as a translation of the German term ForibUdungsschu-
len which refers to a particular type of school established in Germany
for the benefit of young people v^^ have passed the compulsory
school age and are at work, but who still need the help of the school.
These schools, while primarily vocational, often give training along
general lines. In this country the term has been used in an even
more general sense. Roughly speaking, all schools of any t3rpe
which offer to people, young or old, while they are at workj opportun-
ity for further training or education may be considered continua-
tion schools. The work offered may be in fundamentals; it may be
cultural or it may be vocational, or all of these; the essential con-
dition seems to be that those enrolled shall actually be at work
during the major part of the time.
Classification
According to this definition there are many types of schools now
offering continuation work. The following brief classification
may serve to give a general idea of the scope of the movement in
this country and of the several types of schools:
(1) Private and philanthropic schools.
(a) Classes in connection with the Young Men's and Young Women's
Christian Associations and other organizations of a similar nature.
(b) Correspondence courses.
(c) University extension.
(d) Evening classes in colleges and universities.
(e) Special institutions, such as Cooper Union, Pratt Institute, Spring
Grarden Institute, etc.
(2) Apprentice schools, such as those in connection with the General Electric
Company, etc.
(8) Schools in connection with various mercantOe establishments.
170
Digitized by
Google
Continuation Schools 171
(4) Public schools.
(a) Evening schools.
(b) Codperative schools.
(c) Part time or ''continuation schools."
More recently there has been a definite tendency to restrict
the term ''continuation. schools'' to those public schools established
especially for minors between the ages of fourteen and sixteen years
or older who are already at work.
Description op Types op Schools
The present article will attempt to give merely a general
description of the work given in some private and philanthropic
schools and in the apprenticeship schools and a more detailed
account of that done under public auspices in the evening schools,
the part-time schools, and the cooperative schopls.
(1) Privatb and Philanthbopic Aqsncieb
(a) Young Men's and Young Women's Christian Association
classes. During the past twenty-five years there has been a tremen-
dous development in the purely educational work of these two
organizations. Rural associations emphasize the social features,
while those in the large cities place special emphasis upon definite
instruction in a wide variety of subjects.
By no means all associations have this work well organized.
In those cities where the work is well organized the classes are con-
ducted in the following general lines: (1) commercial, including
arithmetic, bookkeeping, stenography, business law, typewriting,
etc.; (2) political, including civil government, social economics,
history, etc.; (3) industrial, including such subjects as drawing,
carpentry, etc.; (4) scientific, including algebra, geometry, physics,
chemistry, etc.; (5) language and miscellaneous, including English,
German, French, music, first aid to the injured, etc.; (6) special
courses, such as law, art, automobile, etc. In addition to these
there is the boys' department, which offers various special courses
to employed boys. These classes are, for the most part, in the
evening and attract men of all ages from twelve to sixty. The
teachers employed are usually strong in their speieial lines and the
work is made very profitable. One of the most powerful factors in
dk^iitinfi an4 unifying the educational activities of the various
Digitized by
Google
172 The Annals op the American Academy
associations is the educational department of the international
committee. This occupies only an advisory relation, but has
proved itself of great value in strengthening the work. An expert
secretary is employed who gives his whole time to the study of the
educational activities and to visiting the associations. Every year
the international conmiittee publishes a carefully prepared prospec-
tus of all courses of study together with suggestions as to methods
of improvement. In this way the efforts are unified, growth i&
promoted, weak associations are encouraged, and the whole work
strengthened.
Another agency that strengthens and unifies the work is the
system of international examinations. The questions are carefuUy
prepared by a board of examiners composed of men eminent in
their specialties, and are given to the students under very strict
regulations. The international examiners also look over and
pass upon all papers. There can be no question that the stu-
dents passed in these examinations are as well prepared in the
particular subjects as the majority of students in universities who
pursue the same subjects. This is shown in the increasing recogni-
tion of the international certificates at their face value by the
different colleges and universities. Inasmuch as all students are
required to join the association and in addition to pay a fee for the
course, the opportunities appeal only to those who have some ready
money and do not reach the very poor. Nevertheless, the classes
are of great importance especially in the larger cities.
The educational work of the Y. W. C. A. has been organized
more recently than that of the Y. M. C. A., and is not yet so varied
in character. Courses are offered in typewriting, stenography,
commercial branches, languages, salesmanship, cooking and sewing,
dressmaking, millinery, domestic science, and other related subjects.
While much of the work is given in the evening, a considerable part
is offered during the day.
(6) Correspondence schools. Correspondence schools are con-
ducted in connection with various educational institutions and as
purely commercial enterprises. The former types are described in
the article by Dean Reber on page 182 and the latter in the article
by Professor Galloway on page 202. The experience of educational
institutions with regard to correspondence courses is varied.
Many have found them unsatisfactory and unprofitable, while
Digitized by
Google
Continuation Schools 173
others, as the University of Chicago, are now operating them
successfully. In no case, however, are they accepted as an entire
substitute for resident work. The plan is undoubtedly meeting
with considerable success, and many are reached who would not or
could not take regular work in residence. The correspondence
schools established for commercial reasons are in many cases entirely
successful as financial enterprises. It is somewhat more difficult
to estimate their value as educational institutions. In spite of
the evident commercial element there can be no doubt that this
type of school is doing a needed service in the education of the
more ambitious of the working people. The very energy of the
solicitors brings the opportunity to many a man and to many a
woman who otherwise would not think such a thing possible for
them.
(c) University extension. A complete account of this work is
given in the article by Dean Reber found on page 182 of this volume
and need not be described here.
(d) Evening classes in colleges and universities. The gradual
enlargement of the idea of public service by colleges and universities
is still further represented by the introduction of special evening
classes to meet the needs of those who are at work. There are
many institutions throughout the country now conducting such
classes. Among them may be mentioned the University of Penn-
sylvania and Temple University, of Philadelphia, Northwestern
University and New York University.
While nearly every type of work is offered in various institutions,
the work in the Evening School of Accounts and Finance at the
University of Pennsylvania represents fairly well the aim and pur-
pose of such work in general. Courses are now offered in Prep-
aration for Business, Accounting, Advertising, Salesmanship,
Business Correspondence, Brokerage, Insurance, Economics and
Real Estate. The work is given by the regular staff of the Wharton
School of Finance and Commerce, supplemented by special lectures
by business men and technical experts. Applicants must be at least
eighteen years of age and have had the equivalent of at least three
years in a standard secondary school or have had extended business
experience. Upon the completion of twenty-four units of pre-
scribed work, a certificate of proficiency is granted to the student.
{e) Special schooU. There are various educational institutions,
Digitized by
Google
174 The Annals of the American Academy
philanthropic and semi-philanthropic in their character, which
reach the working classes to a greater or less degree. Some of them
such as the Franklin Institute in Philadelphia, the People's In-
stitute in Boston, and Cooper Union and the Mechanics' Institute
in New York City, have been established expressly for the training
and instruction of yoimg men and women who are at work. Others,
like the Liewis Institute in Chicago, the Drexel Institute in Phila-
delphia, and the Pratt Institute in Brooklyn, are more distinctly
scientific or technical schools of high grade, and aim to give thorough
courses leading to a degree or certificate. Nearly all the institutions
of this kind also have evening classes for the benefit of those who
are at work. The great variety of courses offered and the diversity
of organization make it impossible to give anything like an adequate
description of the work done. There can be no doubt, however, that
the service rendered by these institutions to young men and women
who are at work and who can avail themselves of the opportimities
is very great indeed, notwithstanding they can reach only a com-
paratively small part of those who need help.
(2) AppBENnc£smp Schools
For many years employers have realized that there must be
some plan devised by which the deficiencies in the training of appren-
tices could be overcome. Many factories and business houses have
attempted to solve the problem by organizing within their own
establishments schools which have for their purpose the training
of the apprentice. Sometimes, in addition to the training along
specific lines, a general training is given. There are many of
these schools throughout the ^country, among them such well
known ones as those of the General Electric Company of Lynn,
Massachusetts; the New York Central Lines and other railways;
Southern Bell Telephone Company of Atlanta, Georgia; the Yale and
Towne Manufacturing Company of Hartford, Connecticut; and the
National Cash Register Company of Dayton, Ohio. These schools
are all imder the direct control of the corporations concerned, and
the type of training given, while extremely varied, is all in the
direction of a definite training along the specific lines of the industry
concerned. The instruction is usually given by master-workmen,
by engineers, foremen, etc., chosen from the regular staff of work-
men, and is narrowly vocational, supplementing and amplifying the
Digitized by
Google
Continuation Schools 175
practical work'of the shop. The apprentices usually receive the
r^ular pay of apprentices i^rhile attending this school.
(3) Schools for Cl£rks
A variant from the type of school just described is furnished by
the schools conducted by various mercantile establishments for the
benefit of their clerks. The needs of this class of workers are
obviously harder to meet than those of apprentices. Many, if not
the majority, of the larger mercantile establishments now have their
-welfare departments, but not so many have definite provision for
educational classes. Some firms, after years of experiment, have
abandoned them, partly because of the increasing value of the
public evening schools and partly because the returns did not seem
to justify the time and money spent upon the school. Two of the
most successful schools of this type are those of John Wanamaker of
Philadelphia and of Sears, Roebuck & Company of Chicago. In
the Philadelphia establishment of John Wanamaker a complete-
and well organized plan has been worked out by which the young
employes receive educational and commercial training which aims
to make them more eflScient. The name recently given to the
higher department of this school is the American University of
Trade and Applied Commerce.
(4) Public C^ontintjation Schools
There are in general three principal classes of schools under
public auspices which offer opportunity for further education to
those who are at work: evening schools, cooperative schools and
part-time schools. No hard and fast line can be drawn between
these classes of schools, for each varies widely and shades insensi-
bly into the other. The general purpose and plan of each will
be explained and the extent of its influence and significance dis-
cussed.
(o) Pvblic evening schools. This type of school has existed in
the "United States since the middle of the past century, but it is
only within the past twenty-five years that it has been taken
seriously, and the greatest development has been in the last ten
or fifteen years. The total enrollment in evening schools reported to
the United States Bureau of Education since 1890 is as follows:
1890—160,770; 1900—190,000; 1905—292,319; 1910—374,364;
Digitized by
Google
i76 The Annals of the American Academy
1914 — 614,068. While these figures are not entirely comparable
and are undoubtedly incomplete, there can be no question that
the enrollment during the past decade has increased nearly if not
quite 100 per cent. In a few states, cities of a certain size are com-
pelled by law to establish evening schools, while in the majority
of Btat'^ the establishment of such schools is permissive or
COmt)ulsory on the petition of a certain number of parents or
citizens.
The classes of pupils in the evening schools are: (1) Those who
are deficient in the rudiments, or who have not had- an education
equivalent to that of our elementary schools. Probably 85 per cent
of the total number of pupils are of this class. This class is com-
posed of native Americans and of foreigners. In cities which
receive large nmnbers of immigrants the percentage of the foreigners
in the evening schools is very large, while in other cities it is much
smaller than the percentage of native Americans. (2) The second
class is made up of those young people who have passed through the
elementary grades or even partly through the high school, and
who wish to continue their education. The needs of this class
are as varied as their occupations. Some wish to prepare for
entrance to college or university. The greater part, however, wish
to prepare themselves for higher positions, for greater eflSciency in
the occupations in which they are engaged. From these has come
an increasing demand for technical and trade work, and it is very
largely this class which is found in our few evening trade and
technical high schools. (3) Another class, more or less distinct
from the last, consists of men in business who wish help along
special lines. There are very few opportunities for such training
in our public evening schools. The Evening School of Trades, in
Springfield, Mass., meets this need in a way, and sometimes the
classes of the Y. M. C. A. in a few cities.
The nature of the work offered in these schools varies widely
with the classes of pupils enrolled. For foreigners who need to
learn to use the English language as quickly as possible special
text books and a special technique have been developed in some of
our cities, and the results are for the most part fairly satisfactory.
It is riiuch more diflScult to meet the needs of the second class — those
who have completed their elementary school work. For these,
evening high schools have been established in many cities, industrial
Digitized by
Google
Continuation Schools 177
land technical courses are maintained and the work has become
widely diversified.
It has become increasingly apparent, however, that there are
distinct limitations to the usefulness of the evening school. The
amount of time given is very small compared with that of the day
school. The usual time is two hours per evening for four evenings
a week and twenty weeks a year, making a total of only one hundred
and sixty hours altogether. Add to this the fact that the pupil
has practically no time for study, that he is tired and sleepy, and
we begin to realize how meagre are these educational opportunities
at best. The conviction is growing that work which presupposes
mental alertness, such as technical work, drawing, mathematics,
science, history, languages, and other studies pursued for the purpose
of distinct achievement, can not profitably be given in the evening
to mature pupils. The kind of work which can be pursued to
advantage must be more recreative and broadly cultural such as
lectures, music, drama and general informational courses as well
as gymnastics, swimming, dancing and games.
Two of the principal difficulties met with in the administration
of evening schools are irregular attendance and lack of proper
teachers. The percentage of attendance on enrollment is very low,
ranging from 20 to 60, or a little lower. Various methods have been
employed to counteract this irregularity. The most common plan,
and one that is fairly successful, is to charge a nominal fee, $1 or
more, a term. This is refimded at the end of the term in case a
certain standard of attendance has been attained. Several states
now have laws compelling pupils of certain ages not attending
other schools to attend evening schools. Many of the difficulties
would be solved if suitable teachers could be secured. It still con-
tinues the custom in many places to employ as teachers in the
evening schools any persons — clerks, young lawyers, students and
others ,who need a little extra money. Some schools employ the
regular day school teachers, but this is only one step better. It is
doubtful whether a regularly employed day school teacher should
attempt to do additional regular work in an evening school. Again,
evening school work calls for a different kind of ability than that
of the day school. Before the evening school can be truly successful
we shall need to have teachers specially adapted to this particular
kind of work and specially trained for it.
Digitized by
Google
178 The Annals of thb American Academy
Several interesting modifications of evening schools have been
tried in various cities. Camp schools are authorized by law in at
least two states — California and New York. These are for the
special purpose of teaching English to foreigners, both adults and
minors, who are not readily reached by the regular evening schools
and are held in the labor camps. In the larger cities there is a
definite movement for the introduction of larger social and re-
creational features, such as lectures, entertainments, social gather-
ings, debating leagues, dancing, gymnastics and the like. The
movement is thus closely linked with that for the wider use of the
school plant, the socializing of the school. Just what the develop-
ment of these types of schools will be is somewhat problematical,
but they are now firmly established as a part of our school systems,
and it only remains to demonstrate what their greatest field of
usefulness will be. As a substitute for consecutive work, of an
intensive character, they are wholly inadequate; as a supplement
to such work they have large possibilities.
(6) Cooperative schools. These schools are merely modifica-
tions of apprenticeship schools where the school is operated and
financed by the public and the shop work is under the charge of the
factory or other industrial establishment. The general plan is
much the same. A cooperative agreement is entered into between
the Board of Education and the employer. In many instances this
agreement includes also the apprentice and his parent or guardian.
In accordance with the agreement the boys are arranged in two
shifts or alternates. One student apprentice works at the shop
one week while his alternate attends the school; the next week the
first one takes his place in the school and the alternate works in
the shop. Each receives the wages of an apprentice while engaged
in the shop, and both usually work in the shop full time on Saturdays
and during school vacation.
In the co5perative plan in operation in connection with the
University of Cincinnati, the work in the university consists of the
regular courses in engineering, and while some attempt is made to
make a direct connection between the shop work and that of the
regular courses they do not supplement one another so closely as in
most of the other cooperative schools. The course at the University
of Cincinnati is planned for six years and leads to the regular degrees.
Digitized by
Google
Continuation Schools 179
In the cooperative schools organized in connection with the regular
public schools the work is more distinctly industrial in character.
The shop work and the class room work are very closely related.
The mathematical problems are taken from the problems of the
shop or are directly related to them. The aim is to make the entire
class work as practical as possible and at the same time give cultural
elements and so to broaden the horizon of the young apprentice.
Such schools are now successfully maintained in Cincinnati, Ohio;
Providence, Rhode Island; Fitchburg and Beverly, Massachusetts;
Hammond, Indiana; Rochester and Buffalo, New York and many
other cities. They have many obvious advantages over evening
schools. Among these advantages are: (1) close correlation
between shop work and class work; (2) more favorable time for
study; (3) possibility of self-support; (4) wider and more general
training.
The principal difficulty is the same as that of the evening
schools — suitable teachers. The ordinary public school teacher
knows nothing about shop work and cannot adapt the class work
to the needs of the shop. On the other hand, the master-workmen
or the mechanic does not usually know how to teach and frequently
does not care to do so. A new type of teacher is urgently needed
for these schools, one who has had shop experience and who also
has studied widely and knows how to teach.
(c) Part time or *^ continuation schools.'* During the past few
years there has been a decided movement in the direction of es-
tablishing part time schools for apprentices and other employees
between the ages of fourteen and sixteen years to whom this instruc-
tion shall be given during the day. This follows closely the present
German plan which was adopted after years of trial of evening
schools and Simday schools. These schools are in the experimental
stage in this coimtry as yet and vary greatly in their organization.
The general features common to the majority are: (1) they are for
boys and girls from fourteen to sixteen years or older who are
regularly employed; (2) they are planned for from four to eight
hours a week between 8 A. M. and 6 P. M. At least nine states
now provide by law for such schools. The tendency seems to be
to allow the local authority to compel attendance at such schools
between the ages of fourteett and sixteen for those employed and
Digitized by
Google
180 The Annals of the American Academy
who are not attending other types of schools. As yet this com-
pulsory feature is not general. In Pennsylvania the state law
which went into effect January 1, 1916, forbids the employment of
any minor between the ages of fourteen and sixteen who does not
attend such a school or one giving equivalent instruction.
These schools are as yet in the experimental stage and, in
consequence, have no well defined aim nor course of study, nor have
they developed any methods specially adapted to the needs of the
pupils. They have been established because of a conviction that
the boys and the girls between fourteen and sixteen or older who
are at work still need further school training. Whether this training
shall be along general lines, supplementing the fundamental work
of the elementary school, or whether it shall be in the direction of
supplementing, broadening and intensifying the industrial, com-
mercial or other work in which they are engaged has not yet been
determined; it may well be both. It must in addition provide
for a study of different occupations with a view to a more intelligent
choice of vocations. The obstacles met with in the establishment
of these schools are much the same as those in the other types of
schools already described: (1) lack of properly qualified teachers;
(2) limited time, eight hours a week which is at best a small fraction
of the time needed; (3) the tremendously varied needs of the pupils
in each school, making it extremely difficult to outline any course
of study which is adequate. An initial difficulty often met was the
refusal of the employer to cooperate and a threat to discharge
any young employee who should go to such a school, but this is
due largely to lack of understanding and in most cases has been
successfully overcome. These schools bid fair to accomplish much
that is worth while for the young worker, and present experience will
show ways in which they can be modified to meet more fully the
needs of the young people reached.
These varying types of continuation schools illustrate clearly
the double purpose of education as it is seen in this country: (1) to
give every individual that education and training which will furnish
him equality of opportunity; (2) to educate and train every in-
dividual in such a way as to provide for the safety and for the
development of the state. The gradual assumption by the state
of the organiz^^tipn and support of such work shows the develop-
Digitized by
Google
Continuation Schools 181
ment and enlargement of our educational ideal and the widening
of our educational horizon. It is a reasonable inference that at no
very distant time the state will be compelled to assume larger
responsibility for all those forces that train and educate not only
the immature but also the adult.
BiBLIOQRAPHT
Sadler, M. £. CanHnttation Schools in England and EUewkere. (Manchester,
1908.)
Jones, Arthur J. The ConUnuation School in the United States, United States
Bureau of Education, Bulletin 1907, No. 1.
Digitized by
Google
UNIVERSITY EXTENSION
By Louis E. Rbbbb, D.Sc,
Dean of University Extension Division, University of Wisconsin.
The phenomenal growth of University Ebctension in the United
States in the past ten years may be looked upon as indicative of
a new interpretation of the legitimate scope of university service.
Nevertheless, it is still maintained in many of our learned institu-
tions that higher education should be removed from any possible
intimacy with the common things of life. These institutions
repudiate the idea that organized extension of their services may
become a worthy function among their acknowledged activities-
worthy not only in enabling them to reach greater numbers than
the few who may assemble within their gates, but essentially so
in its influence upon their own life and growth. Though with
these, as with the more liberal, pursuit of the truth is the fundamental
and all-embracing object of existence, they apparently fail to
realize that truth does not belong to the cloister more than to the
shops and homes or to the streets and fields, but is inseparably of
them all.
The return of power to the institution is not, however, the
main justification of University Extension. Such justification
exists primarily in the fact that the university is the one great
source and repository of the knowledge which the people — all, not
merely a few, of the people— need in order to reach their highest
level .of achievement and well-being.
Is it not a very uncharacteristic view of the field of the univer-
sity which seems to limit its functions to those of a sealed store-
house with facilities for giving out its invaluable contents only
to the few who may be able to learn the cabalistic passes that
unlock its doors? More in keeping with the modern spirit is the
new slogan of unlimited service which lays upon the university a
command to retrieve to the world its losses from undiscovered talent
and undeveloped utilities and to give freely to humanity the
pleasures and profits of which so many are deprived by ignorance
of the work of the masters of art and learning, and of the laws of
sane living. For such purposes as these the university, in the full-
Digitized by
Google
Univbbsity Extension 183
ness of its possessions and powers, must inevitably be acknowledged
to be, in the words of President Van Hise, "the best instrument."
What is Univbbsity Extension?
University Extension may be defined as an agency of popular
education by which the benefits of the university are extended to
the entire population without other prerequisite on the part of this
large student body than the desire to learn and the ability to make
use of the service. This does not imply a new or original philosophy
of education, but presents a practical and proportionate method by
which are met the requirements of a democratic form of government,
a form which theoretically, at least, rests upon the principle that
the vigor and permanence of the nation depend upon the intelligence
of its whole people. .
In England, as early as 1850, an expression was used that has
since become a by-word in the language of University Extension.
"Though it may be impossible," said an early advocate of the
movement, "to bring the masses requiring education to the univer-
sity, may it not be possible to carry the university to them?"
This phrase, "carry the university to them" (the people), expresses
very simply the underlying purpose of extension. Another phrase
of earlier date points to the need for "the taking of a definite part
by the university in the education of persons who had not been
matriculated." Thus over half a century ago and under the more
aristocratic circumstances of English life, the university was called
upon to take a part in the spread of education among the masses
and the name. University Extension, even at that time, was added
to terms already familiar in educational nomenclature. The words
intramural and extramural also came into use at this time as applied
to work taken at the institution and outside of or beyond its walls,
and later the. words resident and non-resident were used as applied
to students and courses of study. These terms explain themselves
in a general way but have slowly grown to connote certain definite
relations in modem education, the significance of which will appear
in the following accoimt of the development of extension.
HiSTOBT OF UnIVEKSITY EXTENSION
The old English system of University Extension which grew
out of the deliberations and experiments made in the middle of the
nineteenth century consisted in lecture courses accompanied by
Digitized by
Google
184 1?HB Annals of the American Academy
syllabi, with assignments of collateral reading and, finally, written
examinations. The work was conducted by university professors,
who through the agency of local committees or by personal solicita-
tion formed classes in circuits of non-university communities.
This method depended for its success almost wholly upon the
superficial gifts and personality of the lecturer, who in order to hold
his classes together must possess the faculties not only of a scholar,
but also of a teacher, a social leader, and an orator. So versatile
a professor was seldom found and yet for a time this form of ex-
tension met with an encouraging reception. The weaknesses of the
method developed soon and modifications were adopted which
led to the establishment of the present tutorial system. These
changes were accomplished through the agency of an administrative
board comprising representatives of both the capitalistic and the
laboring classes. Extension methods became in this evolution leas
severely academic and more serviceable to persons who must
study without interrupting the ordinary interests and occupations
of their lives.
When in 1887 University Extension, its more aristocratic form
as yet unmodified, was brought to America, its liberal promise of
educational opportunity in exact keeping with democratic ideals,
at once gained for it many friends. The method was first described
at a library conference, in Albany, N. Y., and almost inmiediately
beginnings of University Extension were made in the cities of
Buffalo, Chicago, and St. Louis, as a form of library service.
In 1889, Columbia University announced through Teachers
College elementary courses in science for the benefit of school
teachers in New York City and its environs.
In 1890, the American Society for the Extension of University
Teaching, supported by private subscription, was organized in
Philadelphia.
In 1891, the first state appropriation for University Extension,
$10,000, was made by the state of New York.
In 1891, Chicago organized a privately endowed society which
in 1892 was taken over by the University of Chicago. In the latter
year, the University of Wisconsin also began its organized work
of extension.
In December, 1891, a national congress on University Exten-
sion was held in Philadelphia. This meeting brought together
Digitized by
Google
Univbbsity Extension 185
representatives of colleges and universities, libraries and privately
supported extension society. The reports showed a remarkable
growth. Between 1857 and December, 1891, barely four years,
twenty-eight attempts to introduce University Extension had been
made, a few of them with, but the greater number without, financial
support. The delegation to this congress displayed great en-
thusiasm, but the subsequent history of extension in the United
States gives rise to the belief that some, at least, of those present were
visionary theorists, rather than experienced and practical educators.
This was. the last gathering in the interest of University Extension
for many years; a rapid decline in the progress of the work began
aknost at once.
The period of depression in the extension movement may be
attributed to the difficulty met in securing financial provision for
an educational departure at once so radical and so Uttle understood,
also, no doubt, to the almost impossible requirements in the qual-
ifications of the instructors, and very considerably to lack of
appreciation to the extent even of dislike for the method within the
institution, a condition which led to much open criticism and
deliberate efforts to check its growth. Above all, however, the
decline must be attributed to the inadequacy of the plan as an
adaptation of university service to the special needs and cir-
cumstances of a non-resident student body.
After ten or more years of fluctuation recovery came as the
result of a truer interpretation of the ends to be gained and a clearer
recognition of the difficulties to be overcome. With the adoption
of more suitable methods, it became possible to demonstrate the
value of the work and to convince legislators that this service as
offered by the state institution, at least, is in reality an extension
of opportimity to their constituents, and worthy, therefore, of the
legi^tive support indispensable to its continuance.
From this time, about 1906, the growth of extension was assured
particularly in the state institutions, which, as will be seen, form
a majority among those extending their services beyond the tra-
ditional campus.
"The tight little idea that education is the concern of child-
hood and certain rigid formalities of place and plan has broken
down," said a student of extension, "and hundreds of agencies
more or less organized are carrying whatever instruction people
Digitized by
Google
186 * The Annals of the American Acadbmt
want, directly to the people who want it, wherever they may be
found." University Ebctension which includes and epitomizes all
of these agencies, the same writer calls "a deeply significant move-
ment to saturate the whole people with the upward tendencies and
convictions of education."
In 1910 some inquiries were made with respect to the status,
at that time, of extension in the United States. From letters sent
to seventy-five institutions, sixty-five replies were received and
fifty-four of these reported some form of University Extension;
twenty-three were state institutions; the work of fifteen was well
organized under the management of a dean, director or Extension
conmiittee; twenty-two offered credit courses, eleven by correspond-
ence-study; in the larger cities classes similar to those conducted
at the university but away from it and at hours convenient for
workers were meeting a need; lecture courses with class features
had been largely, not wholly, superseded by more popular courses
of the lyceum type; and many institutions were using extension
merely as an aid to elementary school teachers in improving their
preparation and standing. Financial provision was reported as
inadequate or wholly lacking.
Three years later, in 1913, a questionnaire was sent to several
hundred institutions, as foundation for the bulletin published, the
following year, by the United States Bureau of Education. Ex-
tension activities were now reported by 103 institutions, in fifty-
one of which the work was described as organized and more or less
adequately supported by legislative appropriations — ^thirty-seven of
these fifty-one offering single lectures or courses; thirty-five conduct-
ing local classes in elementary, collegiate or advanced subjects,
credit or non-credit; thirty-two giving correspondence-study courses,
twenty of these including both credit and non-credit work; eighteen
offering assistance to elementary schools notably in the establish-
ment of continuation, vocational and industrial branches, seventeen
assisting in the formation of debating clubs and supplying library
aids; twenty-eight engaging in municipal and community service
of many types.
A more recent inquiry made in order to bring the statistics of
extension up to date for the National University Extension Associa-
tion, shows certain definite advances: first, in the number of
institutions offering one or more forms of Extension service; second.
Digitized by
Google
University ExtbnsioK 187
in the number of students enrolled in classes or in correspondence-
study courses, particularly the increase in numbers studjring for
credit; third, in the variety of types of Extension activity due in
part undoubtedly to the growing demand for the many divisions
of state, mimicipal and conmiunity service; and fourth, in the
enormous total increase in expenditure.
The three universities, Columbia, Chicago, and Wisconsin,
and the Philadelphia Society mentioned as inaugurating extension
service between the years 1889 and 1892 are conspicuous in having
continued their work consistently from the beginning. Though,
as in the case of other early attempts, the course of their develop-
ment experienced fluctuations, and though /rom time to time
their methods were changed either in form of service or in adminis-
tration, yet they remained in existence and are now acknowledged
leaders among the institutions in which extension has become an
organic function.
It may seem remarkable that institutions of private endow-
ment should form a majority among the earliest leaders in this
popular movement but it must be remembered that its original
form did not present the strong features of practical value that
were introduced later. Today institutions of state foundation are
greatly in the lead in numbers and in their estimate of the impor-
tance of the extramural work. These institutions look upon
Extension not only as a duty to the state from which they derive
support, but also as an interpreter of themselves to the people
and of the people to them, an essential source of strength to both.
Before closing this statistical review of the growth of University
Extension some account must be given of the large amount of this
service that is oflFered by institutions with no organized extension
but which are doing work along extension lines. Analysis of the
several questionnaires from which data are taken shows fully as many,
probably more institutions extending their service without definite
organization than are shown with this provision. Among these
roughly estimated, about 50 per cent are sending out lecturers
from among members of the faculty to give single addresses or
courses of lectures, with or without remuneration; 15 per cent
offer lectures and entertainments, musical, dramatic or one or
both combined with lectures; 10 per cent offer correspondence-study
conducted by members of the faculty, usually covering the same
Digitized by
Google
188 The Annals of the American Acadebit
subject matter as that oflfered in classes at the University; 10
per cent offer courses to teachers adapted to their varjdng require-
ments; 10 per cent oflfer informational service to the governing
bodies of small towns; also institutes, exhibits, and library and
other aids to civic and social betterment. The remaining fraction
perform any service they can when opportunities arise. The unor-
ganized service, as a whole, ranges from definite courses offered
for university credit, to such undefined service as is laconically
reported in one instance, as '^Saloons driven out."
Forms of Administration of University Extension
Among institutipns organized for University Extension about
one-half administer this work by a department or division devoted
specifically to this purpose. Such a department comprises all of
the machinery of an independent school or college, with dean or
director, secretaries in charge of the several types of extension,
heads of Unes of work (as, for example, English, Engineering,
Mathematics, Latin, History, etc.), instructors, lecturers, text
writers, librarians, organizers, and the necessary force of clerical
assistants. About one-fourth of the institutions doing organized
extension administer it by or in another department of the in-
stitution— sometimes The Department of Education, often that
of Sociology. Extension in the remaining fourth is divided between
administration by a committee or single member of the faculty
or by a director and committee of the faculty, the extension board
sometimes including also the president of the university and a
member or members of the board of trustees or regents.
In the administration of credit courses the association of the
extension and resident faculties is naturally intimate, it being
necessary in the interest of both that the same requirements be
stringently exacted of the non-resident as of the resident students.
Two general methods prevail by which the services of the
University are extended to the entire state. The more elaborate
of these involves a division of the state into districts in each of
which is maintained an administrative force, complete in itself,
but under the direction of the central or home organization. The
second method is by organization of local volunteer or paid workers,
who cooperate with agents of the home office in stimulating the
demand for and accomplishing the introduction of whatever service
Digitized by
Google
tJNIVBRSITY EXTUNSIOK l8d
is offered by the institution. This method varies greatly in the
degree of responsibility imposed upon the volunteer worker, the
institutions which succeed in effective work maintaining a strong
and large corps of organizers who though having headquarters at
the institution spend their time in visiting communities in every
part of the state.
Forms op Service
In reviewing the growth of University Extension the several
usual types or forms of this service have been mentioned.
Descriptions of these types must of necessity be inadequately brief.
Some of them fortunately are so generally familiar as to need little
comment beyond their eniuneration. This is true of the lecture
service, which has in recent years become so widespread and
potent an influence in disseminating knowledge and moulding public
opinion or as an enjoyable investment of leisure hours. The
contribution of the university to this work partakes in a majority
of instances of the nature of lyceum courses, two main differences
existing between the service offered by the commercial Lyceum
Bureau and that of the University. The primary difference results
from the fact that the University rarely makes this service a source
of revenue and is therefore enabled to offer to any community a
grade of instruction by lectures or of entertainments usually avail-
able only to cities. The other main difference lies in the consistent
effort made by the University to introduce as high a quality of
service sls will be accepted by the conamunity, with the end in
view of creating a demand for a better quality in the hope by this
policy of progressing from that which is as good as possible to
that which is the best possible. The lecture service may be termed
cultural rather than educational.
Extramural and Correspondence-Study Courses
Extramural classes and correspondence-study constitute an
extremely important element in University Extension. Possessing
features of uniformity they may be grouped together. Through
their instrumentality is accomplished the purely educational work
of extension — the standardized, graded, consecutive instruction
adaptable in its application but carefully controlled and regulated.
These methods of instruction are used in giving work ranging
Digitized by
Google
190 The Annals op thb American Academy
from the advanced studies taken by persons of professional or official
standing for the purpose usually of keeping up with the times,
through intermediate grades, to the more elementary courses applied
to commercial and industrial vocations.
Both methods offer opportunity for work for academic credit,
or not, as desired. Both present features of convenience to the
non-resident student in their flexibility as to time and place of
study and choice of subject. And either, contrary to the popular
notion, may produce a higher average of scholarship than is found
within the walls of institutions. A word must be said in support
of this contention. The non-resident is as a rule older and more
experienced than the resident student and seldom is actuated
mainly or solely by ambition to gain a degree. Understanding his
educational needs he takes his course for the purpose of mastering
a subject.
The prejudice that still views University Extension as a
superficial educational method and destructive to scholarship grew
up under the old regime, before its changed methods entitled ex-
tension to claim an equal rank among other legitimate activities
of educational institutions.
Correspondence-study teaching, particularly, though it has
suffered its share of obloquy, if fairly interpreted gives to the
university its broadest and most gracious opportunity, the oppor-
tunity to open its avenues of learning to all who would enter, to
graft instruction upon experience, to mould and enrich minds
already mature and thoughtful, or to rescue from oblivion undis-
covered gifts. It is a method carrying a peculiarly intimate and
responsive relation between the instructor and the pupil. To
equip for life as well as for livelihood is an ideal that may be realized
through this relation. Sympathy and intuition therefore are
almost as important among the instructor's qualifications as are
knowledge and technical skill. The best men and material re-
sources of the University are demanded for this service.
The statistics quoted show a notable increase in the use of
extramural classes and correspondence-study instruction for the
purpose of acquiring some part of a regular academic course in
abserUia. No less striking is the growth of work in conmiercial
and industrial education. The need for this service is immeas-
urably great and extension methods are practical and successful.
Digitized by
Google
University Extension 191
The pupil, however backward, cannot fail to see the value of his
studies, because they are based on the processes of his daily tasks
and though he may not always appreciate the effort made to
broaden his outlook, as soon as he realizes that he is on the way
to a higher wage he awakens to a new ambition.
For these forms of extension a large amount of special text
is prepared, it being necessary, except in credit courses, to adapt
the lessons in treatment and scope to the requirements of the
individual correspondence student or of the class. A completed
course in this original material may form the basis for a book
and as a matter of convenience such texts are collated and published
as promptly as is practicable. Curiously, a considerable demand
has developed for these volumes when placed on the market quite
outside of the field of University Extension, a fact that may be
regarded as a favorable commentary upon extension methods in
popular education.
The publication and circulation of bulletins, pamphlets, and
reports dealing with and interpreting matters of general value
and interest to the public is a common form of extension activity.
The Service Bureau
The awakening of interest in public questions by debating and
public discussion — particularly in community clubs, conmiunity
centers, and high school organizations — ^is one of the oldest methods
of extension service. To do this work many institutions are
maintaining bureaus which have the dual purpose of collecting
popularly prepared information on subjects of current interest
("package libraries")* and of forming debating leagues wherever
possible for the purpose of debating important current questions.
The method is recognized as of inestimable value in the moulding
of public opinion, although unless administered with care and
kept scrupulously free from partisan bias, it may prove a menace
to the institution promoting it.
Universities are coming to deal more and more through their
extension service with the public at large, and with public problems.
This has given rise to a distinct form of community and public
welfare work, through which the institution deals with a community
as an entity, offering technical information on community problems,
inciting public interest, and, when necessary, helping the community
Digitized by
Google
192 The Annals of the American Academy
to organize for action. In this manner are treated such group
problems as child welfare, public health, recreation, and improve-
ments and problems of municipal government. This work is done
by means of bureaus of municipal reference, health, child welfare, ,
stereopticon and motion picture service, community music, social
and civic center promotion, and through institutes, surveys, and
exhibits. The aim of this service is to enlighten and inspire, never
to infringe upon the professional field.
In March, 1895, the First National University Extension Con-
ference met at Madison, Wisconsin. Forty-five delegates were^
present at this Conference representing 24 leading colleges and
universities. The occasion led to the formation of a permanent
University Extension Association with a membership of 28 institu-
tions.
The meeting tended toward better understanding among ex-
tension workers, a clarifying of ideas as to possible standardizations
and invaluable exchanges of ideas and experience.
The printed proceedings of this conference are a remarkable
record of achievement and enthusiasm. The interpretation they
present of the university's new field of service is useful both as
an inspiration and a guide to those who are engaged in the develop-
ment of University Extension.
The new association has already more than justified its
existence.
Assuming that leadership is developed within the institution,
extension looks to the creating of an intelligent commonalty.
This is the day of socializing, the day of the common spread of
appreciation of art and literature, the day of prevention, of pre-
ventive medicine, preventive law, and preventive religion, each
in its field a measure of social safeguarding. Above all and for
all it is the day when the university uncovers its light that its rajrs
may illumine with equal power the high places and the low.^
* See Reber, Louis E. UniversUy Extension in the United States. Bulletin 19,
1914. Uiiited States bureau of JIducation, Washington, P.C,
Digitized by
Google
THE "PEOPLE'S UNIVERSITY" OF MASSACHUSETTS
By James Ambrose Moyer, Ph.D.,
Director of the Department of University Extension of the State Board of
Education of Massachusetts.
For a number of years many people in Massachusetts have had
visions of a great "People's University" where there would be
equal opportunity for all its citizens, rich and poor, men and women,
young and old. This commonwealth does not have a state uni-
versity or state college giving instruction in general and professional
subjects. It has, however, a large number of excellent universities
and colleges supported by private endowments and tuition fees
paid by students. With this large number of institutions of learn-
ing in a relatively small state, there has naturally been very much
opposition to the establishment of such a state university or
state college as should be worthy of the educational standards of
the higher institutions of learning in this state. As a partial substi-
tute for a state university the Department? of University Extension
was established in Massachusetts by an act of the General Court in
1915. Abstracts of the legislation establishing this department
are given here:
The department of university extension is hereby authorized to codperate
with existing institutions of learning in the establishment and conduct of univer-
sity extension and correspondence courses; to supervise the administration of all
extension and correspondence courses which are supported in whole or in part
by state revenues; and also, where that is deemed advisable, to establish and
conduct university extension and correspondence courses for the benefit of resi-
dents of Massachusetts.
The said department for the purposes of such imiversity extension or corre-
spondence courses, may, with the consent of the proper city or town officials or
school committees, use the school buildings or other public buildings and grounds
of any city or town within the commonwealth, and may also use normal school
buildings and groimds and, with the consent of the boards or commission in
charge of the same, such other school buildings as are owned or controlled by the
commonwealth.
According to this legislation the Department of University
Extension has practically unlimited opportunities for educational
activities, except in subjects relating to agriculture, which subjects
193
Digitized by
Google
194 Thb Annals of thb Ambbican Acadbmt
are well provided for in the State Agricultural College at Amherst.
Plans for the organization and development of this department are
intended to provide the facilities of a real People's University
which will bring education of every grade^ including college subjects
to the "doors of the people."
A University without Bthldings
To carry out these objects in their fullest development it has
seemed undesirable to provide a group of buildings in one location
such as are ordinarily associated with the conception of a state
university. When one city or town is selected for the location of
a state institution, the people living in the immediate vicinity have
unusual advantages, and these advantages are exceptionally im-
portant in the case of educational institutions in which the charges
to students for board and room rent are very large items in the cost
of an education. For these reasons, the Massachusetts Department
of University Extension has been organized without making any
provision for buildings to include recitation rooms and laboratories.
Its administrative oflSces are located temporarily in the State House
in Boston. Instruction in a great variety of subjects is now being
offered by its professors and instructors in practically every city
and town in the commonwealth where there is a reasonable de-
mand.
Massachusetts is unusually well supplied with good buildings
for public libraries and public schools. In fact all of the cities and
also all the towns except two are provided with public libraries
supported by public funds. These libraries and school buildings
have rooms well suited for the meetings of university extension
classes. The department must not, however, necessarily depend
on the use of these public buildings for its classes as the legisla-
tion provided clearly for rented oflSces and buildings as might be re-
quired for the use of the department. It is the policy of the
director to avoid, \Yhenever possible, charges for rent, janitor ser-
vices, heat, light, etc., as it seems only reasonable that the com-
munity receiving these educational advantages wholly at the
expense of the state should provide the necessary rooms . and
services. In some cases classes have been organized in shops
and factories, particularly for the accommodation of those
employed in these places. Under such circumstances the
Digitized by
Google
"People^s Univbbbity" of Massachusetts 19$
employer is expected to furnish for the classes the rooms
and services other than instruction. A beginning has been
made in the establishment of industrial classes, under such
conditions as will bring educational opportunities in practical
subjects not only to the home but also to the bench of the worker.
Arrangements have been made and provided for the employment
of a special agent of the department to give particular attention to
industrial people, as it is believed that the industrial population of
Massachusetts should receive unusual consideration. Exceptional
opportunities should be oflfered to encourage their advancement in
citizenship as well as in their trades. Similar commercial oppor-
tunities are offered in large stores and factories, particularly in
accounting and salesmanship, including class instruction and prac-
tical demonstration and research in one of the large department
stores in Boston famous for its modern methods of doing business.
Not a Competitob op Established Institutions
The educational activities of the Department of University
Extension will not be in conflict or in competition with the colleges
and universities in Massachusetts; but on the other hand it is the
object of the department to supplement the work of these institu-
tions and to cooperate with them in every possible way. Many
of the instructors and lecturers employed by the department are
secured for part time service from the faculties of these colleges and
universities.
Very satisfactory methods of cooperation have been worked
out between the colleges in the Connecticut Valley and the Depart-
ment of University Extension. By these arrangements the depart-
ment has secured the assistance of an advisory committee consisting
of official representatives of Amherst College, the International
Y. M. C. A. College, the Massachusetts Agricultural College, Mt.
Holyoke College and Smith College. This committee representing
the colleges has been vfery serviceable in suggesting courses of study
to be offered, and in securing professors and instructors from the
colleges best qualified for extension teaching. A most important
service has also been performed by this committee in establishing a
uniform rate of compensation for all teachers conducting extension
classes, irrespective of their college rank; that is, the same com-
pensation is paid to the teacher of an extension class whether he
Digitized by
Google
Id6 The Annals op the American Acadbbcy
happens to be the head of a department or a first-class instructor
particularly well qualified for the course given. Obviously, person-
ality is an important consideration in giving extension courses, and
is often as important as scholarship.
The organization of the Department of University Extension
in Massachusetts began in November, 1915, although the legislation
establishing the department was signed by the Governor in the
preceding May. Before any work of instruction was commenced,
a careful study was made of existing educational institutions in the
commonwealth to determine in what ways this new department
could cooperate with existing institutions and to discover the lines
of educatioiial activity in which the facilities of the department
could be most useful. It was necessary at the outset to give the
most careful attention in order to avoid duplication of the work of
the evening schools in the cities and towns, of state-supported
vocational schools, and of educational work planned for the benefit
of immigrants. Several months were required to work out the
details of an organization suitable for class instruction, and, there-
fore, very little teaching in classes was started before April, 1916.
Correspondence Courses
It seemed to be apparent that in conducting correspondence
courses there would be little conflict with institutions supported by
taxation in Massachusetts. Nearly all educational work of this
kind offered in this state except in subjects relating to agriculture,
has been done by universities located in other states or by private
institutions conducted primarily for profit. Large sums of money
were sent out of the state every year in payment for these corre-
spondence courses, and it was one of the objects in the establishment
of this department to keep this money in the conmionwealth and
to give residents of the state opportunities to receive education of
this kind on practially a free basis. Another important considera-
tion favoring the early development of correspondence courses
was the obvious ease in securing a necessarily large staff of in-
structors for part time services. Correspondence instruction makes
it very easy for the teachers to correct and criticize the lesson papers
at times when they are not engaged with duties following a regular
program. The State Board of Education, which has supervisory
control of the department, believes also that with the rapid de-
Digitized by
Google
'People*s Univebbity*' of Massachusetts
197
velopment of correspondence courses by the method of securing
approximately equal publicity in all parts of the state, the registra-
tion in these courses indicates in a general way what subjects are
likely to be most in demand and in what parts of the state there is
the most need for offering the educational opportunities of this
department.
The following table shows the subjects selected by a thousand
students who were first enrolled in the correspondence courses:
Elementary English 170
Spanish (C)i 87
Civil Service 85
Bookkeeping 84
Practical Applied Mathematics. . . 82
Mechanical Drawing (C) 52
Shop Arithmetic 38
English Composition A (C) ,34
Gasoline Automobiles 31
English for New Americans 26
Dietetics (C) 25
Industrial Accoimting (C) 21
Freehand Drawing 19
Elementary Algebra 18
Retail Selling 16
Plain English 15
Shop Sketching 13
En^ish Composition B (C) 13
Concrete and Its Uses 11
Industrial Management (C) 10
Commercial Correspondence 10
Economics (C) 10
Practical Steam Engineering 9
Highway Engineering (C) 8
Home Furnishing and Decoration. 8
Practical Electricity 8
Plumbing 8
Advanced Shop Mathematics. ... 7 Total.
^ Courses marked (C) are of college grade.
The first enrollments in correspondence courses were received
January 19, 1916, and this date may be considered the oflBcial open-
ing of the department for educational activities. In a few weeks
after this date the correspondence courses were well enough estab-
lished and the work was suflSciently organized to make possible the
consideration of a new development.
Advanced Algebra (C) 7
ArchitectmtJ Drawing 6
Trigonometry (C) 5
Electric Wiring 5
Strength of Materials (C) 5
Heating and Lighting for Janitors. 5
Elementary Geometry 5
Practical Mechanics 4
Practical Machine Design (C). . . . 4
Descriptive Geometry (C) 4
Stenography 4
Lumber and Its Uses 3
Reinforced Concrete (C) 3
Elements of Structures (C) 3
Materials of Construction 3
Heating and Ventilating (C) 2
. Civics for New Americans 2
Typewriting 2
Study of Fabrics 2
United States History A (C) 2
American Government (C)
Sociology (C)
Hydraulics (C)
Electric Machinery (C)
Heat
Solid Geometry
.1,000
Digitized by
Google
19B The Annals of the American Academy
The Organization op Study Groups
By this arrangement when more than ten students in a city
or town agree to meet together once a week in a suitable class or
conference room for mutual helpfulness in the study of their corre-
spondence lessons, the department arranges to send one of the
instructors in that course to meet with them at every fourth meet-
ing of the class. When the instructor is present he discusses the
difficulties which the class may have had with preceding lessons
and explains also some of the difficulties the class is likely to have
in the next three lessons. It is believed that the enrollment
of correspondence students in study groups is an important
improvement over the usual correspondence methods. Two other
matters are receiving special attention in the organizing and
conducting of these correspondence courses. Unusual efforts
are being made to make the lesson papers of exceptional interest
from the viewpoint of holding the attention of the reader.
It is the general experience of those engaged in correspondence
instruction that the ordinary type of textbooks, particularly the
kind used in colleges,' is most unsatisfactory. In the second place,
unusual attention is being given to the matter of following up the
work of students and in giving every possible encouragement to
those who appear to be losing interest or seem to have unusual
difficulties in preparing their lessons.
Another development in the methods of instruction of the
department was the organizing of class instruction which differs
from the methods adopted for the correspondence study groups in
that these classes have an instructor in the course present at every
meeting, presumably once a week. The instruction given in this
class is exactly equivalent to the work given by correspondence.
It is very necessary, therefore, that at each meeting of the class
the same subject matter should be discussed and used for recitation
that is included in a lesson as given by correspondence. When
this method is followed there is a more or less exact equivalence
between the work done in a correspondence course and by class
instruction. The same certificate can then be issued for either
type of instruction, although obviously there should be a statement
to show by what method of instruction the course is taken.
Digitized by
Google
^'PsOPLB'S UnIYBBSITT'' of MA88ACHUBBTT8 199
No Tuition Charqbd
University extension as organized in Massachusetts is unique
in that the correspondence courses as well as the class instruction
are available to all the residents of the state without charge for
instruction. These extension courses are therefore conducted upon
a basis comparable with a free public school system. In many
states there is no charge for instruction for those taking courses in
residence at the state college or university; but in practically all
these institutions there is a charge for correspondence courses and
instruction given in extension classes. The Massachusetts system
seems to be especially equitable in this respect. Those who can
afford to go to a state college or university where the total charge
is at a minimum from $300 to $400 per year, even where there is no
charge for instruction, are much better able to pay for instruction
than those who are most likely to be reached by the extension
courses whether by correspondence or in classes. The former group
of students is most likely to be representative of the fairly well-to-do
people in a community, while the latter are likely to be the sons and
daughters of the wage earners who cannot well afford the expense
of going away to college on account of the large charges incurred
for rooms and board, and who in many cases are earning their
living and studying at the same time. Of all the students receiving
collegiate instruction, obviously the extension students are least
able to pay for instruction.
Instruction Cbntbbs Well Distribxtted
In order to make the educational activities of the department
as serviceable as possible to all parts of the state, the department
arranges to establish classes in any city or town where there seems
to be sufficient demand. In the selection of locations for these
classes, precedence is given to the larger cities or towns in each of
the twenty-eight districts into which the state has been divided, as
shown in the accompanying map. This arrangement follows
the general plans for the Massachusetts College as proposed
originally by public-spirited citizens of Boston.' According to this
plan, it becomes possible for large numbers of the sons and daugh-
ters of the residents of the state to secure a collegiate education
* See AcU of the Oeneral Court of MassachuseUa of 1909, House Bill No. 1520.
Digitized by
Google
200
The Annals of the American Academy
Digitized by
Google
"People's Univebsity" op Massachusetts 201
in an educational centre near their homes and save very large items
in the cost of a college education. When it is possible for these
students to live at home, the relatively large expenses for rooms
and board are very much reduced. This method seems to be
almost ideal for bringing the state college or university to the '* doors
of the people.'' As regards the expense to the taxpayers of the
conmionwealthi there is also a great saving, as by this method, if
worked out successfully, many millions of dollars are saved that
would otherwise be spent for elaborate college or university buildings.
Digitized by
Google
CORRESPONDENCE SCHOOL INSTRUCTION BY NON-
ACADEMIC INSTITUTIONS
By Lee Galloway, Ph.D.,
Professor of Commerce and Industry, New York University.
A recent issue of a popular magazine contains the advertise-
ments of thirty schools offering instruction by correspondence. The
courses cover nearly every known human activity ranging from
raising poultry to training engineers. They include instruction in
accounting, law, electrical engineering, meter engineering, signal
engineering, wireless operating, automobile driving and repairing,
lettering and designing, drawing and cartooning, drafting, adver-
tising and selling, pubUc-speaking, watch repairing, executive man-
agement, English and even ventriloquism. A person may be made
into a traffic inspector, a detective or a musician — all by mail.
Extent of Influence
The best measure of the influence of these schools is the number
of students enrolled and the amoimt of money spent in preparing the
courses of instruction as well as in advertising them. One school
offering four main courses — accounting, law, traffic management
and business administration — has enrolled 90,000 students. A
correspondence law school has put 40,000 enrollments upon its
records within the last five years, while another school offering a
general business course for executives has enrolled over 40,000
within approximately the same time. Even those schools which
appeal to the narrower fields of highly specialized activities such as
music, credits and collections and so on, show a wide influence.
Over 260,000 persons have received instruction from one school
teaching music by mail since its establishment twenty years ago,
while the active list that follows the weekly lessons never falls
below 10,000 students.
In the same length of time, a school of design and lettering has
enrolled 9,455 students, and a correspondence collection school has
enrolled 7,236 in about ten years. Even a highly specialized field,
that of investments^ has enabled one school to keep up an average
202
Digitized by
Google
Correspondence School Instruction 203
yearly enrollment of 120. A school offering general preparatory
training in college and commercial subjects has a yearly enrollment
which would do credit in point of size to the entering class of the
average college. That the sphere of influence is not limited to any
particular class of students is shown by the records of the two most
prominent schools. The well known International Correspondence
Schools, which make an appeal largely to students of apprentice
grade, had enrolled a grand total of 1,760,441 up to Jime 1, 1915.
In one year alone, there were as many as 125,000 new enrollments.
In some respects, however, the growth of the Alexander Ham-
ilton Institute is still more significant in showing the range of in-
fluence which these schools are exercising. This institution, only
a little more than five years old, has developed an entirely new field
of correspondence instruction in its course and service for business
executives. Within five years it has enrolled over 40,000 men whose
average age is 32 years and whose average income is over $2,700 a
year.
Influence op Advertising and Salesmanship
One thing stands out preeminently in favor of the reputable
correspondence school — ^the aggressive methods of pushing the
cause of education as contrasted with the passive course of academic
institutions. The former does not depend upon inherited, ancestral
connections or "dignity" for its reputation, nor does it expect to win
students solely by the advertising route of "our loving friends."
The best correspondence schools use aggressive, business-like
methods, and with the exception of a few important particulars
they are straightforward in their advertising, and their salesmen
are clean cut, intelligent men who would look upon an instructorship
in a college as offering fewer opportunities for service than their
contact outside with men of the world.
Added to sincerity of purpose and high ideals is the influence
which goes with the extensive advertising and continuous efforts of
thousands of sales agents. A few years ago the International
Schools were spending $2,000,000 annually in creating a demand for
education. The total advertising appropriations today of the larger
correspondence schools run between four and five million dollars
per annum. Furthermore, if we take into consideration the selling
exp^ns^ of 9M of these schools as well as the advertising appro^
Digitized by
Google
204 The Annals of the American Academy
priation, the influence is increased still more. For instance, one
New York institution pays its salesmen an amoimt that closely
approaches the total money income oif the largest school of commerce
in the world.
Contrast the influence of a univeristy advertisement, which in
one inch of space announces that it offers courses in certain academic
subjects from September 15 to June 1, with that of a correspondence
school which makes a full page display in the Saturday Evening
Post, announcing ''Muscles at twenty; brains at forty!" followed
by testimonials of well known men, a list of subjects and a straight-
forward selling talk backed up with the names of the men behind the
institution. Such an advertisement cost thousands of dollars to
prepare and to distribute while the university announcement was
prepared by a clerk in the registrar's oflSce. Thousands read and
answered the correspondence school advertisement and they were
followed up, first by expensive, carefully prepared literature urging
the claims of education, and secondly, by a visit from a personal rep-
resentative of the school. The university announcement inspired
a few dozen to write for a catalogue, and thanks to a predisposition
engendered by twelve years or more of preparatory school work and
the daily reading of the sporting page of the newspapers, a few of
these were induced to go to college.
Although one school sends out over 30,000,000 pieces of printed
matter per year, the influence produced by printer's ink is small
compared to that exerted by the body of sales agents in the field.
High grade correspondence schools are as careful in selecting their
sales force as colleges and high schools are in choosing their faculties.
The standards may be somewhat different but those of the former
are in no way inferior to the Jatter. The salesmen's influence is two-
fold. They not only spread a knowledge of certain subjects of study
but they inspire thousands of men and women to undertake educa-
tional work. For instance, one school employs one hundred sales-
men of whom the most are college trained and these are frequently
welcomed in the oflSces of business men because of their wide grasp
of the subjects that they are selling. Such salesmen present on an
average five selling talks a day. This means that rf total of about
150,000 prospects have one branch of education forced upon their
attention every year by men who are able to convince them that
pdupfttion is worth whUe, By taking advantage of the prospect's
Digitized by
Google
COBBESPONDENCE SCHOOL INSTRUCTION 205
moment of strength and inspiration to train himself further, the
salesman ties him by contract to a prescribed course of study for a
period of a year or more.
Such is the influence and power for good where proper ideals
and standards are lived up to. If all the money and sales energy
were spent to develop a healthy discontent and to arouse a whole-
some ambition there would be little criticism of correspondence
school methods. But it is feared that much money and energy are
expended only to arouse futile hopes and to inspire efforts doomed
to end in disappointment.
Varieties of Correspondence Schools
Classified according to the nature of instruction offered, corre-
spondence schools fall into three groups:
1. Schools offering general training in fundamental subjects such as the Home
Correspondence School;
2. Schools offering specialised technical training, such as the "Blackstone In-
stitute for law. Pace and Pace for accounting and the American Collection Service;
3. Schools offering general commercial training, such as the AlexanderHamilton
Institute, the American School of Correspondence and the LaSalle Institute.
^ It is not necessary to describe these classes further than indi-
cated by reference to the few named above which illustrate each type.
Perhaps a more significant classification is one based on the
character of the ownership and control. Here again we find three
types as follows:
1. Public correspondence schools — ^those connected with universities (Wiscon-
sin, Minnesota, Chicago);
2. Private — such as described above;
3. Quasi-public — such as the National Commercial Gas Association and the
American Institute of Banking.
From a social and economic point of view the quasi-public
corporation school is charged perhaps with greater possibilities than
either or both of the others. Transportation systems, telephone and
telegraph systems, insurance societies, public service corporations,
such as gas and electric companies, are all showing tendencies
toward a standardization of their courses of instruction whereby
the whole industry may be benefited from the cooperative effort
as well as from the effects of integration of sentiment and policy
which common effort, foUpwing uniform instructions, always
Digitized by
Google
206 The Annals of the American Academy
induces. If space permitted, a study of the progress which the gas
companies have made in correspondence courses conducted by the
National Commercial Gas Association would be very instructive.
Starting with a preliminary course which is devoted to the fimda-
mentals of mathematics, science and English, but tied up with
practical problems of the manufacture and distribution of gas and
electricity, the course divides into five main branches corresponding
to the chief commercial activities of gas companies. These are
treated from the salesman's point of view and each covers a period
of two years. The subjects are: (1) industrial power and fuel;
(2) illumination; (3) salesmanship (general for the non-technical
man); (4) commercial management; (5) accoimting and office
practice.
Over 8,000 men have enrolled in the various courses of this
association during the past five years. The percentage of men com-
pleting a full course is unusually high — over 50 per cent. No at-
tempt is made to secure profits; the sum charged for the courses is
barely enough to cover the cost of production, distribution and
service connected with the textbooks and the marking and criticizing
of the papers which are sent into the central office from all over the
United States and Canada.
WoBK OF Correspondence Schools
This falls into two divisions: (1) the tests or lessons which are
supplemented in some cases by special lectures, "talks" and prob-
lems; and (2) the criticism or help given the student on his answers
to problems, questions and quizzes. The most recent development,
however, is the addition of a service or "encouragement" department.
This is devoted to keeping the student interested in his work and en-
couraging those who have begun to lose enthusiasm or have met
difficulties which ordinary criticism cannot remove.
The text and lesson material varies from school to school.
The larger and more prominent ones put out texts of real educational
merit. They differ from the regular school or college texts in that
the diction is extremely simple, explanations are very elaborate and
truisms are never omitted. The subjects are closely related to the
realities of practical life and are kept up-to-date. For these reasons
correspondence school texts are also popular with many prominent
colleges and universities. Fifty-three American universities are
Digitized by
Google
COBBBBPONDBNCB SCHOOL InSTBUCTION 207
using one or more of the texts of a school giving general commercial
instruction. At least six prominent colleges use the texts of a cor-
respondence course in accounting, and over 400 trade schools and
colleges use the books of the International Schools.
Keeping the courses and service up-to-date is a leading charac-
teristic of private correspondence schools as a whole. One company
spent over $1,700,000 to bring their courses up to their present
standard. Another company has revised^its volimies and all its
supplementary material six times in the five years of its existence at
a cost varying from $10,000 to $30,000 each time.
Thb Sebvicb
It is more difficult to value the service of criticizing the student
and keeping him enthusiastic, yet it is just this which differentiates
a correspondence school from a mere book-selling concern. It is
possible to put out good texts and yet have the educational results
dependent on the service severely criticized. The chief complaints
may be sunmied up as follows: (1) the work of marking papers is put
into the hands of incompetent men; (2) explanations are not com-
plete nor clear; (3) delays and neglect in returning answers destroy
interest.
Here then are some of the pedagogical difficulties which confront
correspondence schools. In order that the student may get a real
training from the criticisms of his work, he must absorb from them,
unconsciously perhaps, the knowledge or intuition of the proper
approach to J;he solution of a problem; he must acquire a feeling for
the use of analytical methods and a power to sense the strategical
point of attack in the problems presented to him. To give this
power to the student the critic himself must first possess the power.
Such critics are rare and their services are well paid. Combined
with this obstacle is the fact that the management of most corre-
spondence schools is in the hands of men who are more concerned
with selling the product than with the quality of the goods or the
service. Since business does not depend much on the ''return
orders," there is great temptation for these men to push for new
prospects and neglect the service which ties old customers to a firm.
This tendency should be looked upon with great disfavor. There
is hope, however, for the future, in the sense of saving or regaining
the confidence of the public. One school shows a steady increase
Digitized by
Google
208 The Annals of the American Academy
in service expenditure over all the others. The department is made
up almost entirely of college graduates who have had practical
experience in the line of work that they attempt to criticiae.
Poor service undoubtedly accounts for the small number of
students who complete the courses. The problem is difficult for
it must consider all sorts of men — the mature, those who never have
acquired the knack or have lost it, "motor-minded" men to whom
reflection is obnoxious, men who do not understand the hard grind
necessary to acquire an education, men "who would like to swallow
a pill and wake up to find that they were full of all the knowledge
necessary to make a fortune," as one school executive puts it.
Commercial Character of Correspondence Schools in
Relation to Educational Value
Can an institution which is in the field for profit be relied upon
to give proper attention to those phases of education which do not
yield a profit in dollars and cents? It is difficult for most educators
to see how money profits and a student's interests can be cared for at
the same time. They fail to see that commercial and business re-
lations are controlled by principles which protect the essential qual-
ities of an educational product in the same maimer that the goods of
a manufacturer are kept up to standard.
Good business policy demands that the interests of the con-
sumer stand first. In the case of the correspondence schools a
violation of this principle has brought about more than one recent
failure just as it did in the case of many large merchandizing es-
tablishments of recent memory. It is not a question of inherent
differences between the commercial and educational elements in the
composition of a correspondence school, but the universal problem
which faces every enterprise — the problem of deciding between the
long run and the short run policies of a business.
There is plenty of internal evidence both in the material of
instruction and in the organization of the better schools to prove
that the commercial character of the work does not necessarily
interfere with a broad and liberal treatment of the subjects. It is
true that the possibility of money-making attracts into the field
some men with narrow vision and hence a narrow utilitarian view
of the educational elements in his product.
However, one phase of correspondence school activities shows
Digitized by
Google
COBBBBPONDENCE SCHOOL iNSTBUCTIOi^ 20d
a tardy development. This is an element which creeps into the
advertising of even the best schools. An examination of the ad-
vertisements and circular letters reveals many objectionable fea-
tures. They bristle with special scholarships, reduced prices for
limited periods, free oflfers and the like. It is not that the schools
play up their best and strongest features but the fact that they use
the quack's methods of appealing to men's weaknesses rather than
to their strength and that their innumerable special oflfers of scholar-
ships, reduced prices, etc., are as a matter of fact practically per-
petual in one form or another. "Let me congratulate you," writes
one school in answer to my inquiry. " You have written us just
in time to get our special reduced price oflfer.'' It appears that the
author was particularly fortunate in selecting the tune he did for this
investigation for in nine cases out of ten, the school was always, for
the time being, either making a special reduced rate or oflfering a
limited number of scholarships. Underlying the special oflfers is
always the bargain lure and while it is not a dignified thing to reduce
any staple product to a bargain basis, the greatest injury comes
from that destruction of confidence of the people in what the cor-
respondence schools have to say for themselves.
A correspondence school need not be tied to an academic insti-
tution in order to be endowed with high ideals, pure motives and
professional methods, but there is still a strong prejudice against
these institutions which is based on the practices of the weak and
fraudulent schools which deliberately cater to the delusions of the
simple-minded and by misleading advertisements exploit the gul-
lible public. However, this is not the only field where business men
have been led astray by the lights of false advertising. The revolt
against it is growing stronger every day. Correspondence schools
like the common public schools will grow in number and influence
as the demand, not only for popular education increases, but also
for a continuous education which lasts far beyond the "school days"
of the active man whether he be mechanic, professional or business
man.
Digitized by
Google
EDUCATION FOR ADULTS THROUGH PUBLIC LECTURES
IN NEW YORK CITY
By Henry M. Lbipziger, LL.D.,
Supervisor of Lectures for the New York Board of Education.
With the spread of democratic ideas throughout the world
the belief in the necessity of the extension of popular education
is becoming not alone deeper, but more general. Not only repub-
lican America, but monarchical Europe, recognizes the power of
public opinion; and this deference to public opinion is the triiunph
of democracy. How important it is that public opinion should be
sound and sane, and that the- democracy that exercises this power
should wield it in obedience to lofty and pure motives! Hardly
more than a century ago education was considered the privilege of
the few. How marvelous the development during the past thirty
years — ^the rise iknd spread of the kindergarten, the increase in
the number of secondary schools, the increase in the institutions
for the liberal education of women, the state college and university,
the spread of the free library, the museum of art and science, all
having as their purpose — ^what? The emancipation of the indi-
vidual man and the individual woman.
Thb Wideb Use of School Buildings, Gbounds axd Equipment
In our great cities the extension of the public schools has
been evidenced by the addition of the evening schools, both elemen-
tary and high, the use of the school houses during the summer for
what is known as vacation schools, and the opening of school
houses during the evenings throughout the entire year for the pur-
poses of recreation and refined play. Thus the school is becoming
not only a place of instruction, but a place of general culture.
It becomes, as it should be, a social centre. The extension of
the use of the school in the ways I have mentioned provides for
those above the school age, and their popular reception is an
indication of the wisdom of their adoption.
210
Digitized by
Google
Public Lectures in New York City 211
The Free Lecture System in New York
The free lecture movement is a provision for adult education
that now forms an integral part of the educational system of New
York City, and has won its way from small beginnings until it is
now regarded by the taxpayer both as a necessity and as one of
the most judicious of civic investments. Its success has been
genuine, its growth steady. A similar system is possible in each
city of the land, so that the lecture system of New York may
seem to exemplify the true field of public school extension. Its
underlying principle is that education shall be unending^ that the
work of instruction and education begim in the elementary school
must be continued and completed. Our country's prosperity and
progress depend on the intelligence of its citizens; and, as we have
come to realize that the child is of supreme importance, so have
we also arrived slowly at the conclusion that he who from neces-
sity has remained in many respects a child in education needs
also, and in many instances actually craves, the additional knowl-
edge and education that the "free lectures" attempt to give.
Of the school population of our land but a small percentage
attend the high schools and colleges, universities and professional
schools. The great body of our citizens has but limited education
and the very persons best fitted to profit by education and who
need it most are denied its beneficeiit influence. Those most in
need of it are between 14 and 20 years, the time of adolescence,
when conscience is disturbed and character is being formed. At
that time all the safeguards of true culture must be put around
youth.
Then there is a large and growing class of mature people
who have a knowledge of practical life and who appreciate the
needs of more education most keenly and who long to fill up the
gaps in their lives. It is from such a class that the best audiences
are gathered. A lecturer on physics testified that "the questions
put by hearers were as a rule. more intelligent than are asked
inside of many a college."
That there is a large body of men and women who believe
that they are not too old to learn is proven by the figures of con-
stantly increasing attendance. They come to these lectures not
in obedience to the compulsory education act; they do not come
'' creeping like snail unwillingly to school" but they/ealize by their
Digitized by
Google
212 The Annals of the American Academy
presence the original idea of the school which is a place of recreation
and leisure, for the word "school" is from the Greek "Scola"
meaning leisure. The people are awakening to the fact that educa-
tion is a continuous performance; that the school gives the alphabet
but that the word must be formed during life. It is a movement to
give men and women whose lives are the lives of monotonous labor
a wider outlook and in the most interesting form to bring them into
touch with the principles of science and its recent discoveries;
with the results of travel; with the teachings of political science
and economics; with the lessons of history and the delights afforded
by music, literature and art.
Marvelous Growth in Attendance
The free lecture movement was begun in New York in six
school houses in the year 1888. It began as a result of the passage
by the legislature of the State of New York of an act providing that
The Board of Education is authorized and empowered to provide for the
employment of competent lecturers to deliver lectures on the natural sdences
and kindred subjects in the public schools of said city in the evenings for the
benefit of working men and working women.
The attendance during the first year was about 22,100. This
modest beginning was an epochal event, for prior to this time
the use of the schools for any purpose other than the usual routine
of the elementary day school was undreamed of as the school
house was constructed solely for its use by children. Its furniture
and equipment were for children only and the school house plant
was practically used only five days in the week, five hours each day,
for forty weeks in the year. During the year 1915 lectures were
given in 176 places to 5,515 audiences with an aggregate attendance
of 1,295,907, reaching the population of all the boroughs that
compose the City of New York. The attendance was almost
entirely of adults, and that fact is one of the most gratifying features
of this great lecture system. A well-known journalist wrote to the
writer of this article:
The education which a developed man gets and really wants he really uses.
If you can get the fathers and mothers of children interested in knowledge they
will see to it that their children take an interest, Tbev will inspire their childreq
as a school-teacher cannot do.
Digitized by
Google
Public Lectures in New York Citt 213
The Quest for Democratic Culture
And therefore it can be said that the statement of President
Eliot that "the fundamental object of democratic education is to
lift the whole population to a higher plane of intelligence, right
conduct and happiness" is exemplified today by the public lectures
in New York which have come to be regarded by many as a ''Uni-
versity for the People." It is really a university, although it has
no great university buildings, but it has all the elements of the real
university that has earnest teachers and willing students. The
Superintendent of the Newark Schools, referring to the public
lectures, said:
In scarcely another place, except it be the polling place, can men of all classes
meet on a common basis of citizenship, and even at the polls men are usually
divided into hostile camps. Anything that draws men together on a common
footing of rights, powers, duties and enjoyments is a great social and moral power
for good citizenship. Next to the public school which tends to obliterate hereditary
and acquired social and class dislinctionSy the pvblic lecture held in the public
school ho^use and paid for out of the public purse is the most thoroughly democratic
of our public institutions.
The character of the lectures and the discrimination of the
audiences indicate the serious-minded nature of the men and
women who come to the school house. The subjects include all
the great themes that are included in the realm of knowledge, —
science, art, civics,, literature, history and music. Many lectures
are given in courses of thirty. Examinations are held, a syllabus
is distributed in connection with each course.
Cooperation with the Department of Health is brought about
by lectures on sanitation and hygiene. CoSperation with the
great museums of art make known to the public the treasures.
The development of citizenship has been fostered by the scholarly
treatment of the great epochs in our national history. Music,
painting and other forms of art have been presented to the people.
The purpose is to add to the joy and value of human life by
diffusing among the mass of our citizens what someone has well
called "race knowledge."
The Character and Scope of Lectures
There are two classes of lectures, one where subjects that
appeal to large audiences can be treated, and the other more
special io nature, for those who are interested only Ux a partic-»
Digitized by
Google
214 Thb Annals of thb Ambrican Academy
ular subject. The entire winter is devoted to but one or two
subjects, and a definite course of reading and study accompany
the course.
The lectures are illustrated largely by the stereopticon, for
as President EUot has said, " Even Latin and Greek cannot be well
taught without the lantern as a means of illustration," and the
motion picture forms an additional feature, where advisable.
The scientific lectures are accompanied by adequate experiments
and the interest in scientific subjects can be shown by the fa,ct
that a course of eight lectures on "Heat as a Mode of Motion"
in the Great Hall of Cooper Institute attracted an average attend-
ance of about 1,000 at each lecture. The lecture was followed
by a class quiz which lasted about an hour and the course was
accompanied by a reading of Tyndall's " Heat as a Mode of Motion"
as a textbook.
. The character of the reading in the public library has much
improved as a result of the inquiry for the best books by those who
attend the lectures. The continuity of attendance at the lectures in
courses is one of the most gratifying signs of the influence of the
lecture system and the desire of the people for systematic instrudion.
President Wilson in Cooper Union
The character of the questions put at some of the lectures
one can judge from the words of President Wilson in his book "The
New Freedom/' in which he said:
One of the valuable lessons of my life was due to the fact that at a oomparar
tively early age in my experience I had the privilege of speaking in Cooper Union,
New York, and I want to tell you this, that in the questions that were asked there
after the speech was over some of the most penetrating questions that I have ever
had addressed to me came from some of the men in the audience who were the
least well-dressed, came from the plain fellows, came from the fellows whose
muscle was daily up against the whole struggle of life. They asked questions
which went to the heart of the business and put me to my mettle to answer them.
I felt as if those questions came as a voice out of life itself, not a voice out of
any school less severe than the severe school of experience.
At some of these discussions in a hall like Cooper Union as
many as a thousand persons remain an hour after the lecture to listen
and benefit by the open discussion. Discussions of this type have
led to the establishment in connection with the lectures of forums
where current questions of vital importance ftre di6QU3sed. This use
Digitized by
Google
PUBLIO IJBCTURBS IN NbW YoBK CiTT 216
of the 8clu)ol as a " People's Forum " will, if definitely followed, trans-
form the character of our political meetings; for where better than
in the school house shall the people come to reason together? The
main questions that are the subject of our political controversies
are at bottom educational, and for this reason it is the policy now
to educate the people in time of quiet and when reason controls and
not confine the campaign of education on economic and political
questions to the period immediately prior to an election. It is
a perfectly logical step from these weekly discussions on subjects
relating to government, given in many cases by city or state officials,
to neighborhood meetings to consider local, state and national
affairs, and then to have political meetings in these school houses.
The audiences not alone participate in the discussion but par-
ticipate in suggesting the type of lecture that is desired in any par-
ticular neighborhood. In this way a conmiunity feeling is developed
and men get to know men. As each different locality has some
predominating characteristic either in population or in vocation, the
special needs of the locality are considered and the lecture meetings
become one of the most important socializing influences in a great
city and a great counteracting influence to the loneliness which is
so apt to prevail. Family life is developed through attendance at
the lectures and interest is awakened in thousands who otherwise
would lead dull and monotonous lives.
A Wide Rangb of Subjects
While practical subjects such as first aid to the injured and
hygiene are dwelt upon yet great attention is paid to subjects such as
poetry and music, for someone has well said, that if sentiment is
eliminated from business transactions, it is of all the more importance
that it be added to recreation and leisure. The world never needed
poetry so much as now. Charles Eliot Norton once said: '' What-
ever your occupation may be, and however crowded your hours
with other affairs, do not fail to secure a few moments every day
for the refreshment of your inner life with a bit of poetry."
One of the most important portions of the population reached
by the public lecture system is the Italian and Yiddish immigrant
classes who are appealed to by lectures in their own tongues on
subjects arranged to prepare them for American life. As an
example the titles of a course are given: "We and Our Children,"
Digitized by
Google
216 The Annals of the American Academy
"Juvenile Delinquency — Its Prevention/' ''Vocational Training,"
"Household Economy," "Citizenship/' etc.
The New Type of School House
The movement for adult education not alone gives a new
interpretation to education but calls into being a new type of
school house, a school house which is to be adapted not alone to
the instruction of children but for the education of men and women,
so that there should be in each modem school house a proper
auditorium with seats for adults and equipped with apparatus
for scientific lectures and with the proper means for illustration.
The new school houses built in our city contain such auditoriums
and they become social centers, real, genuine, democratic neigh-
borhood houses. Some of these school houses are open on Simday;
if the museum and the library are open on Simday why should not
the school house also be open on Simday afternoon and in its main
hall the people be gathered Sunday afternoon or evening to listen
to an uplifting address of a biographical, jsociological or ethical
character, or to listen to a recital of noble music on the school organ.
There are five such organ recitals now being conducted on Simdays
in the New York schools.
The Widening of University Influence
Education for adults has brought about the widening of the
influence of the university. Of all the classes in a community the
most patriotic should be those who have had the benefit of a higher
education. Professor Woodbridge says:
To many it appears that the university is an institution primarily engaged
in conferring degrees rather than in the great and important business of public
instruction; but public instruction is the university's great and important business.
Current events perilously invite the imiversity to enter upon its larger oppor-
timity. Amid the wreck of so much civilization, it stands challenged as the
one human institution whose professed aim is the substitution of the empire of
man over nature through morality and intelligence for the empire of man over
man, through politics and force. Especially in a democracy the university
should be the source where public opinion is constantly renewed and refreshed,
for it Is the best means yet devised for the attainment of democracy and civilisa-
tion. Surely it is not the ideal dream of the visionary, it is not the faint hope
of the philosopher, it is the stem truth of history that only the school can save
the state!
Digitized by
Google
Public Lbctubes in New York Citt 217
The university in a great city should be one of the most power-
ful public service corporations within the state. One of the most
distinguished professors in one of our leading imiversities recently
wrote concerning his experience:
It is a genuine pleasure to leotuie to New York audiences. I am quite
sincere in saying that I lecture to none better or more responsive. Among the
impressions that I have had from New York audiences are these: That nothing
is too abstract or profound to present to them if it is presented in a fairly attractive
and altogether human fashion; that no audiences, university or otherwise, are
more accessible to ideas; that discussions need never be^nm into dogma or par-
tisanship, if the lectm-er wiU take the frank attitude that the lectures are educa-
tional, deal with principles, and are not concerned with political controversies.
Finally, my faith in democracy has been strengthened and increased by these
experiences. We need have no misgivings about the power of the people to think
straight when we see these New York audiences.
These words from the professor express the true purpose of the
teacher in a scheme for adult education whose purpose is the crea-
tion of sound pubUc opinion upon which the future of our democracy
rests.
Adult education as interpreted by the public lecture system
has broadened the meaning of the term education and formed a
continuation school in the best sense. It reaches all classes of
society for the audiences are truly democratic. It brings culture in
touch with the uncultured, adds to the stock of information of the
people and nourishes their ideals. In these days of shorter hours
and greater leisure, the toilers will find in adult education the
stimulus for the gratification of their intellectual desires, and a
larger world is given them in which to Uve. Their daily labor
will be dignified, new joy will come into their lives through associa-
tion with science, Uterature and art, and they will discover that true
happiness does not come from wealth but from sympathy with the
best things in art, science and nature.
Digitized by
Google
THE SPREAD OF THE COMMUNITY MUSIC IDEA
By Peter W. Dtkema, M.Lrrr.,
. Professor of Music, Uniyersity of Wisconsin.
The National Conference of Community Centers and Related
Problems held in Nfew York City in April, 1916, prefaced its call
to the workers in the various parts of the United States by the
following quotation from John Dewey, professor of philosophy at
Columbia University, which may well serve as the motto or imder-
lying idea of the movement for commimity music in this country:
"The furtherance of the depth and width of human intercourse is
the measure of civilization. Freedom and fullness of human com-
panionship is the aim, and inteUigent codperative experimentation,
the method."
Community Music Defined
Community music is a term that has obtained great vogue the
past three years and yet so far as I know it has never been defined.
It may be worth while, however, for the sake of definiteness in this
paper and the discussion which may ensue, to indicate one concep-
tion of a proper definition. First of all, it may be said that com-
munity music is not the name of a new type of music nor even of
musical endeavor. It does not include any particular kind of music
or any particular kind of performer. It is not so much the designa-
tion of a new thing as a new point of view. It may employ any of
the older and well tried manifestations of music and musical en-
deavor, and by means of the new spirit transform them to suit its
own purposes. Stated positively and concretely, commimity music
is sociaUzed music; music, to use Lincoln's phrase, for the people,
of the people, and by the people. Let us look for a moment at each
of these three aspects.
(1) Music fob the People
That "man shall not live by bread alone '* is a statement which
implies that while it is entirely proper that man's physical needs
be taken care of, his life is incomplete, his development stunted, if
218
Digitized by
Google
Spbead of Communitt Music Idea 219
only these needs be provided. The movement for community art
in its various manifestations is one of the responses which America
is making to this hoary dictiun. Never before have there been such
widespread efforts to give everybody the opportunity of hearing an
abundance of music. Free concerts by bands and orchestras during
the summer season; free or lowpriced concerts by bands and orches-
tras, popular priced opera, free organ recitals during the winter;
lectures on music with copious illustrations, concerts by school
organizations, open demonstrations of the wonderful 'possibilities
of mechanical music producers; the use of these same instriunents
in countless homes — these are all indications of the tremendous
development of opportunities for even the lowliest to hear all the
music he desires. Many of these developments are purely private
financial schemes for increasing revenues by obtaining a small profit
from a very large number of auditors. A surprisingly large number,
however, are either the activities of groups of public-spirited citi-
zens who furnish the entertainments, at their own expense or at cost
prices, or the direct imdertaking of the mimicipality itself. From
coast to coast, there is a chain of civic music, associations, municipal
orchestras, choruses, and organs. In Portland, Maine; New York
City; Tiffin, Ohio; Richmond, Indiana; Winona, Minnesota, and in
many other places, out to Oakland, California, are found the out-
posts of what promises to be a large army of municipally employed
musicians. Starting with Evanston, Illinois, and working east and
west has gone the movement for the establishment, in connection
with the public libraries, of a collection of records for piano-player
and phonograph which may be borrowed and taken home as though
they were books — as, indeed, they are to many whose ears must be
their eyes. A niunber of normal schools and imiversities in the
middle west are using the plan which has been so excellently devel-
oped at Emporia, Kansas, of sending upon call, even into the
remotest commimities, records with accompanying lectures or
explanations and in some cases with a phonograph or even with
lantern slides. Five of these universities have gone rather exten-
sively into the business of furnishing, at the lowest possible prices to
the commimities of their states, high class musical entertainments.
By this means small communities that heretofore have heard only
mediocre musical entertainments now are able to hear excellent
soloists and good ensemble work. The height of the latter type
Digitized by
Google
220 The AnnaLs ot thb American Academt
was reached when one town in Wisconsm with a population of 600
people, located twelve miles from a railroad, was able to become
part of a circuit formed by the university for a series of concerts by
seventeen of the best men from the Chicago Symphony Orchestra.
And not only is the quantity of music to be heard increasing;
there has also been a steady gain in the quality. The experiences
of New York under the guidance of Arthur Farwell, director of
commimity music, are typical. Band and orchestra leaders in their
popular cdncerts need only guidance and encouragement to
strengthen their desires to play the best, and tact and patience to
lead their audiences to prefer the best.
(2) Music OF THB People
But these concerts are not to be given entirely by professional
musicians. The people themselves are entering into the production
of music in entertainments. Lindsborg, Kansas, with its annual
production of the Messiah; Bethlehem with its restored Bach
chorus; New York, Boston, Cincinnati, and scores of other places
with their established and historical choruses; Worcester, Massa-
chusetts, Ithaca, New York, Ann Arbor, Michigan, Evanston,
Illinois, and other centers with their great three-day, or more,
spring festivals — these down to the thousands of towns which
support, albeit sometimes rather precariously, choral organizations,
bands, or orchestras, are typical of the demand that there be a place
for the amateur producer of music. It is a far cry from the tremen-
dous chorus that New York gets together for its open-air festival
society down to the village choral imion of twenty-five voices,
struggling to round into shape for its initial performance a presenta-
tion of the "Rose-maiden." But in each case the same impulse is
present, namely, the desire of the men and the women to use music
as an expression of the emotions and the sense of beauty.
One of the most remarkable phases of this aspect of music is
the developments that have gone on in industrial establishments.
One of the first manifestations of the so-called welfare work of the
great business houses is invariably some musical endeavor. In
Chicago, for example, Marshall Field and Company have a large
choral society; the Commonwealth Edison Company a choral
society and an orchestra; the International Harvester Company a
choral society and a band; the Bell Telephone Company an orches-
Digitized by
Google
Spread of Community Music Idea HI
tra, a band, and a glee club. In many parts of the country a number
of newspapers have bands or glee clubs. Associations of commerce,
rotary clubs, university clubs in the large cities, in fact the most
diverse organizations seem to be able to unite in their love for the
study and production of music. Movements like the People's Sing-
ing Classes of New York and extension divisions of some of the
universities devote their energies to the formation of choral organi-
zations for the definite acquirement of a certain minimum of musical
knowledge, the study of some of the larger choral works, and the
presentation of those in a rather formal way. It is certain that an
organization such as the Civic Music Association of Chicago, which
began its work by giving at low prices concerts by professional
musicians who largely volunteered their services, has found that
an increasing proportion of its work is being devoted to the forward-
ing of choruses. At its Jime, 1916, spring festival, there were in-
cluded works by eleven choruses, six of them being children's
groups, the others being adults, one of the most interesting being
the Volkslieder Verein, a group of women under the leadership of
Mari Ruef Hofer, most of whom are housewives or scrubwomen.
Likewise in Pittsburgh, one of the noteworttiy contributions which
Mr. Will Earhart has made to the music of that city has been the
development of a number of robust evening choruses and orchestras
of adults. As the democratic movement in our country slowly
elevates the standard of every individual, it is inevitable, if our
growth is steady and sane, that the people should more and more
desire to enter into a serious study of music, the most companion-
able of the arts.
(3) Music BY THE People
In this phrase, "the most companionable of the arts,'' lies the
secret of that phase of the development of community music which
has attracted most attention and which probably is most character-
istic of the democratic movement, namely, informal or community
singing. In this type of music the social element becomes so
strong that in selecting a leader for this work it is difficult to know
which is the more important attribute, the knowledge of music or
the knowledge of people. If the community music movement has
developed a new form, it is in connection with this phase of the
work. Singing by great groups of people has occurred again and
Digitized by
Google
222 The Annals of the American Acadeht
again. ' The revivalist, the militarist, and the politician, have used
it on special occasions, but never yet has it been capitalized as a
permanent social force. The community Christmas tree with its
attempts at general singing has each year started into vibration a
great wave of love, brotherliness, and community consciousness.
But in the year that intervenes before it is reinforced, these waves
have lost their force. The community music movement proposes to
keep these vibrating and to add to them the reinforcement of many
other musical attributes. This is not a movement primarily for the
study of music, or the mastering of technique; it is rather the using
of that natural love and command of music which everyone pos-
sesses and which, when rendered collectively by a large group, is
surprisingly efficient, even with comparatively difficult music. The
National Conference of Music Supervisors at its meeting in Roches-
ter in 1913 agreed upon a list of eighteen songs which were to be
used for community singing and which, in preparation for later
adult use, were to be taught to the children of the country. This
material, all of the simple folk-song type, has been sung by thou-
sands of people under hundreds of directors and, from these four
years' experience, one lesson has already emerged, namely, the
group can do things which are impossible for the individual. Mr.
Harry H. Barnhart has demonstrated, with his so-called community
choruses in Rochester and New York City, that, with an inspiring
conductor and proper accompaniment, a great group of people can
easily pass beyond such songs as " Old Folks at Home '' ; " Love's Old
Sweet Song"; "Sweet and Low"; *'How Can I Leave Thee," simple
three-part rounds, and like material which makes up the original
collection of eighteen songs, and can give with little or no rehearsal
great sweeping renderings of such great compositions as the "Pil-
grims' Chorus" from Tannhauser; "Soldiers' Chorus" from Faust;
and Beethoven's " The Heavens Resound." In the new list which
the music supervisors are about to publish, the number of songs will
be extended to fifty which vrill include the larger portion of the
simpler folk songs of the original eighteen and many others of the
same type. But there will also be included some of the massive
material for great groups with large accompaniment such as that
just mentioned. Another interesting aspect of this community
singing idea has been developed in Chicago, that city of many
nationalities, in a program called the "melting pot of music."
Digitized by
Google
Spbbad of Community Music Idba 223
Here were gathered groups of Swedish and Norwegian singers,
united Bohemian singing societies, German liederchdre, and Polish
singing groups. Each group in turn sang songs of its own nation-
ality and then from the music thrown upon the screen, one song of
each nation was sung in English translation by the entire audience.
Finally, all the elements joined in the singing of a number of Ameri-
can patriotic and folk songs.
The results of these great community sings are already having
their effect on external conditions. In Rochester, the Park Depart-
ment, under the guidance of an enthusiastic architect, went to
considerable expense and an endless amount of pains to prepare an
out-of-door auditorium for a great community chorus. In Central
Park, New York City, preparations are made to receive the 10,000
participators in the Sunday afternoon sings. At the other end of
the scale in population, but more permanent in form, Anoka, Min-
nesota, a^own of 8,000, has built a concrete stadium with a capacity
of almost 2,000. As a direct result of those community singing
gatherings, in a large number of places, the school architect is making
such a procedure unnecessary for the greater part of the year by
providing suitable auditoriums in the school building. Undoubt-
edly, however, Anoka's stadium, the great pageant grounds at St.
Louis and Philadelphia, the Greek theatres, all possess possibilities
through their being in the open air, which are closed to the indoor
auditorium.
The Heabt op It
The community music movement is measuring all musical
endeavors by the standard of usefulness for the great social body.
It is increasing the number of concerts and bettering their quality.
It is stressing the necessity of serious choral study and enlarging
the membership of choral organizations. And finally, it is giving
the opportunity to every man and woman for free and frequent
participation in music, especially in choral singing with great groups
of people. It is insisting that, while man must be fed, clothed and
housed, while his body must be properly cared for, these measures
alone will make but well groomed animals. It maintains that
man's glory lies in his intellectual and spiritual attributes and that
music aids in satisfying these longings which make life here worth
while, and points the way to those aspirations which make a life
beyond possible.
Digitized by
Google
EDUCATION THROUGH FARM DEMONSTRATION
By Bradford Knapp,
Chief, Office of Extension Work in the South, States Relations Service, United
States Department of Agriculture.
During the past twelve years a new and distinct type of ag-
ricultural education has been established in America. This new and
practical plan of disseminating information may now be regarded
as a part of the educational system of the country. It introduces
a method by which those who do not attend schools are able to learn
while they still pursue the busy work of their every-day struggle for
a living. So far as agriculture and the rural problem are concerned,
this system of education has given a new meaning to the phrase,
''Knowledge and the means of education shall be forever free." It
is rapidly giving to all rural people an equal opportunity to acquire
useful knowledge without needless sacrifice of time. While the
public school system brought some training in primary branches of
learning within reach of the masses, it required the pupil to seek the
education and confined its effort mainly to the youth of the land.
Schools, colleges and imiversities necessarily withdraw the student
from active life and from gainful occupations. Educational fa-
cilities suppUed by these necessary and useful parts of our system
are still foimd mainly within the walls of the institution. Above the
primary grades education has been, after all, a thing for the few
rather than for the masses.
Systematic teaching by demonstrations or object lessons in the
field is a distinct addition to the American system of agriculture
education. It does not take the place of nor does it interfere with
any part of the present system. It is the addition of a new part.
One of the recognized problems in agriculture is the dissemination of
inJormation. For years it has been recognized that farm practices
in general have been much below those of the best farmers. The
knowledge gained by the experiment stations and other public
institutions established for the purpose of acquiring information has
not been taken from the bulletins and put into universal practice.
This is clearly recognized in the act establishing this new system of
education when it says, —
224
Digitized by
Google
Education Through Farm Demonstration 225
That in order to aid in diflPiifling among the people of the United States useful
and practical information on subjects relating to agriculture and home economics,
and to encourage the application of the same, ....
It is the purpose of this article to trace briefly the origin and
history of the development of this system with special reference to
the most important part of it, namely, the demonstration system of
teaching through county agents, both men and women.
The first movement toward education outside of schools, so
far as agriculture is concerned, was doubtless the institute. The
early form of the institute was the neighborhood meeting. Then
came the organized efifort to instruct through the spoken word.
These forms of instruction have been improved and developed and
are still important parts of the complete system.
The publicatiQn of text books, bulletins and circulars from both
pubUc and private sources has played an important part in agri-
cultural education. These are the records from which the material
for instruction is obtained. The agricultural press has always been
an important factor in the dissemination of agricultural informa-
tion. The more the new system is developed, the more help will
farmers derive from bulletins, the agricultural press and other pub-
lications.
The Demonstration Idea
Teaching by object lessons is not a new method. Laboratories
and shops in our great institutions of learning testify to the educa-
tional importance of practical knowledge and the necessity of hand
training and experience. In the agricultural world teaching through
demonstrations has been of two kinds which should be carefully dis-
tinguished.
Long before the present system was evolved, not only the de-
partment at Washington, but many institutions and pubUc or semi-
public organizations had tried what may be called the " model farm*'
type of demonstration as a means of disseminating information
about fanning. In this plan the demonstration is a pubUc one and
the farm or demonstration is supported entirely from pubUc funds
or from funds of the organization desiring to teach the lesson. The
result is that the teacher does all of the work and sets the result of
his efifort before the people to be copied. This plan did a great deal
of good but it still required the farmer to come and view the demon-
9t^tioi^, and it Ifu^ked ^he two important elements of having th^
Digitized by
Google
226 Thb Annals of thb Ambbican Acadbmt
farmer do the work himself, and of adjusting the lesson to ordinary
farm conditions and the means of the average fanner. A very
small proportion of the farmers would go to see the model farm or
demonstration, and few of those who did adopted the methods
shown. No one was present on the average farm to assist the farmer
in applying the method to his conditions. The mere illustration
of a lecture by the instructor performing some act to show how a
thing is to be done is often called a demonstration, but should not
be confused in principle and eflfect with the demonstrations here
described.
The most important part of the present system consists of
demonstrations conducted on farms in the course of which the farmer
does all the work and furnishes land, tools and equipment, while the
instructor visits the farms regularly and assists in adapting the
principles to local conditions. The result is an object lesson within
reach of the farmer. Such a demonstration not only puts the lesson
into actual practice, but also materially assists in fostering friendly
relations of confidence and respect between the instructor and the
one receiving the lesson.
Origin and Growth of System
In 1903-04 Congress made an appropriation authorizing work
to coimteract the ravages of the Mexican cotton boll weevil in
Texas and other cotton states. This insect pest was laying waste
the cotton fields of the. southwest, leaving abandoned farms and
business failures in its wake. A small portion of the funds so ap-
propriated was devoted to a work conducted by the late Dr. Seaman
A. Knapp to enable him to trj'^ out his method of teaching by con-
ducting a large number of demonstrations on farms as described
above. Dr. Knapp was then seventy years of age. He had been
a stock farmer in Iowa in the 70*s, and afterwards Professor of
Agriculture and President of the Iowa Agricultural College. He had
come to the South in 1885 and had devoted a great deal of his time
to the development of the rice industry in Louisiana. In that work
and in some of his work in Iowa he had used simple, direct methods
of reaching farmers through practical field examples and, out of that
experience, had suggested that he be permitted to try his plan of
teaching farmers through demonstrations conducted on their own
farms.
Digitized by
Google
Education Thbough Farm Demonstration 227
The work was actually begun in January, 1904. The main
features consisted of personal visits of the department's represen-
tatives to a large number of farms scattered over the coimtry then
seriously affected. Demonstrations were carried on by these farm-
ers under the careful instruction of these representatives. At first
the work was devoted mainly to improving the cultural methods of
raising cotton in order to minimize the damage from the weevil.
However, it was soon seen that the difficulty could be met only by a
general campaign of the same character for the purpose of bringing
about a diversification of crops and better agricultural practices.
The purpose was to bring about such a change that the farmer would
not be dependent entirely upon cotton for both income and main-
tenance. Therefore, demonstrations in corn and many other crops
were instituted in the same way.
The work was almost an immediate success. Thousands of
examples or "demonstrations" were created by farmers through the
instructions of the department's agents under Dr. Knapp's
leadership. Meetings were held at the demonstrations and ex-
periences compared at the end of the season. During the first year
or two the work covered a great deal of territory. The demonstra-
tions were scattered along railroads and main highways where they
could be easily reached and seen. One agent was compelled to cover
considerable territory. However, the effect was to restore con-
fidence, and to give the people hope and something to live on while
they readjusted their agriculture to meet the new conditions.
Gradually the farmers began to imderstand that they could raise
cotton in spite of the weevil, and the full restoration of prosperity
was only a matter of time and the extension of the new type of
education.
The General Education Board of New York was, at that time,
engaged in an earnest effort to assist southern education, not only
in colleges, but in secondary schools, and even the primary rural
schools. Their attention had been called to the rural problem and
to the rural schools and the general educational needs of the coun-
try. While studying the situation with a view to greater assistance,
they came in contact with the work of the department under Dr.
Knapp. Their representatives visited Texas, met Dr. Knapp and
studied his work. They were interested and impressed with Dr.
Knapp's statement that in meeting an emergency he had found an
Digitized by
Google
228 The Annalb of the American Academy
opportunity to put into practice an idea he had worked out which he
believed to be of universal appUcation. They, therefore, offered to
furnish the necessary funds to permit Dr. Knapp to try his plan in
sections of the South far removed from the influence of the boll
weevil, if arrangements could be made with the department of
agriculture for the trial. As a result of their efifort the offer was
accepted and Dr. Knapp was furnished with funds from the General
Education Board in addition to the funds from Congress. With
the federal funds work was done in boll weevil territory and the
territory immediately in advance of the weevil, which was gradually
migrating from year to year north and east through the cotton states.
With the funds of the General Education Board work of the same kind
for the general improvement of agriculture and rural economic con-
ditions was begun in Mississippi and Virginia in 1906, and was ex-
tended to Alabama, South Carolina, Georgia and North Carolina
in 1907. The direct federal funds carried the work in Texas,
Louisiana, Oklahoma and Arkansas. As the weevil advanced east-
ward, the states were transferred in succession from the General
Education Board fund to the federal fund. The funds from both of
these sources increased from year to year as the work grew in pop-
ularity. In 1909 the federal fimds amounted to $102,000 and those
from the General Education Board to $76,500.
In 1906 and 1907 such was the demand for the work that it was
impossible to reach all who were insisting that they needed the help.
When advised that financial assistance was the limiting factor in
spreading the work, business men in some of the counties offered to
assist in the payment of the salary of an agent if his activities could
be restricted to their county. This was done. It had been fully
reaUzed by Dr. Knapp that the work would be improved by limiting
the territory served by each agent. This led to the adoption of the
title, '* Coimty Agent'' afterward so well known in the South.
Recognition By States
In 1909 the state of Mississippi took the lead in recognizing
the new type of education by enacting a law under which the county
might pay part of the salary of the agent. In the years from 1909
to 1915, every southern state having power to grant such authority
to the coimty passed some sort of law permitting the county govern-
ment to cooperate with the United States Department of Agri-
Digitized by
Google
Education Through Farm DEMONsTtiATibN 22d
culture in this work and to pay part or all the salary of the county
agent. State appropriations were made also in a number of cases,
the first in 1911 in Alabama.
The growth of the work was phenomenal. It soon became the
rule rather than the exception for the coimty to furnish at least
one-half of the money necessary for the salary and expenses of the
county agent. Of late years the financial cooperation from local
sources has practically doubled the service and met the appropria-
tions dollar for dollar or more. During the early days of the devel-
opment of the work men often served for the love of the service, and
hence the rule was rather low salaries considering the service ren-
dered. The work was always practical and direct. As it grew and
developed and the men became more expert, the whole system grad-
ually took form and certain well recognized methods were followed.
The County Agent's Work
What does a coimty agent do and how does he teach by demon-
strations? The coimty agent goes to the farm and gives his in-
struction while the farmer is at his everyday duties. The aim of the
work was and is to place in every community practical object lessons
illustrating the best and most profitable method of producing the
standard farm crops, or of animal feeding, etc., and to secure such
active participation in the demonstration on the. part of the farmers
as to prove that they can make a much larger average annual crop,
or feed or produce Uvestock more economically, and secure a greater
return for their toil. Dr. Knapp said that it might be regarded as a
"system of adult education given to the farmer upon his farm by
object lessons in the soil, prepared under his observation and gen-
erally by his own hand."
The teaching was very effective because at first it was simple in
character, direct, and limited to a few fundamental things, such as
the preparation of a good seed bed, deep fall plowing, the selection
of good seed, and shallow and intensive cultivation. In the early
stages of the work Dr. Knapp framed what he called the "Ten
Commandments of Agriculture," as follows:
1. Prepare a deep and thoroughly pulverized seed bed, well
drained; break in the fall to a depth of 8, 10 or 12 inches, according
to the soil; with implements that will not bring too much of the sub-
soil to the surface; (the foregoing depths should be reached gradu-
ally).
Digitized by
Google
230 The Annals of the American Academy
2. Use seed of the best variety, intelligently selected and care-
fully stored.
3. In cultivated crops, give rows and the plants in the rows a
space suited to the plBfat, the soil and the climate.
4. Use intensive tillage during the growing period of the crop.
5. Secure a high content of humus in the soil by the use of
legumes, barnyard manure, farm refuse and commercial fertilizers.
6. Carry out a system of crop rotation with a wintef cover crop
on southern farms.
7. Accomplish more work in a day by using more horse power
and better implements.
8. Increase the farm stock to the extent of utilizing all the waste
products and idle lands on the farm.
9. Produce all the food required for the men and animals on the
farm.
10. Keep an account of each farm product in order to know
from which the gain or loss arises.
These became very widely known in the South and formed the
basis for much of the work done by the agents.
The demonstrations were extended from crop to crop. With
the fundamental idea that it was necessary to readjust the agri-
culture of the South and make it more profitable and to make the
country life better, Dr. Knapp taught the great lesson of diversifica-
tion or a self-sustaining agriculture. The preservation of the fer-
tility of the soil and the furnishing of the living of the people on the
farm from its products, were two necessary changes if the South was
to prosper. With these things taken care of, that great section was
well supplied with cash crops which it could produce and exchange in
the markets of the world for the money with which to improve her
life and her industries. The trouble was that the South was pro-
ducing these splendid crops of cotton, tobacco, rice and sugar and
exchanging them for her living.
Reaching More People
One of the problems was to reach as many farmers as possible.
The county agent could not possibly carry on a demonstration on
every farm in the county. Two plans proved effective. The first
was to rely upon the fact that farmers, like other people, would imi-
tate what they saw tried with success. It became very evident that
one good demonstration in a neighborhood reached more people
than the farmer who carried on the demonstration. A varying
Digitized by
Google
Education Thbough Fabh Dbmonstration 231
number of the neighbors copied the practices and profited by the
lesson because it was simple, and close by where they could see it.
But some effort was also made to assist this process. Farmers
around the demonstration were notified of the agent's visit and in-
vited to come to the demonstration farm for a conference. These
informal meetings were called field meetings or field schools. Neigh-
boring farmers who were sufficiently interested agreed to carry on a
demonstration on their own farms and to obtain their instruction
from meeting the agent at the demonstration farms. These men who
were not visited were called ''cooperators/' Out of these meetings
grew neighborhood organizations of farmers or community clubs
which now form an important part of the work.
Boys' Clubs
About 1908 Dr. Knapp first began what was known as the
Boys' Com Club Movement in the South. It is true that there had
been com clubs in a number of the northern states and in one or two
of the southern states prior to that time. However, Dr. Knapp
should receive the credit for systematizing this very important and
excellent piece of work. He established it on an acre contest basis
and arranged for the giving of prizes, not on the maximum yield
alone, but upon the maximum yield at minimum cost, with a written
essay describing the work done and an exhibit of the product. The
objects of the Boys' Corn Club Work were:
1. To afford the rural teacher a simple and easy method of
teaching practical agriculture in the schools in the way it must be
acquired to be of any real service; namely, by actual work upon the
farm.
2. To prove that there is more in the soil than the farmer has
ever gotten out of it. To inspire boys with a love of the land by
showing them how they can get wealth out of it by tilling it in a
better way, and thus to be helpful to the family and the neighbor-
hood, and
3. To give the boys a definite, worthy purpose and to stimulate
a friendly rivalry among them.
The first effort in this direction was in Mississippi when Mr.
W. H. Smith, then County Superintendent of Schools for Holmes
County, did the work in cooperation with the demonstration forces.
Results of this work were extended gradually to the other states
until the Boys' Corn Club Movement as a part of the general scheme
Digitized by
Google
1^
232 The Annals of the American Academy
of education through demonstration became a very large factor in
southern agricultural work.
The Boys' Club Work was organized mainly through the schools.
The county agent was recognized as the agricultural authority and
gave the boys instruction. The school teachers generally acted as
the organizers of the clubs. The county superintendent was a good
cooperator. The state superintendent often assisted materially
with the work. Prizes were contributed by local business men;
the bankers became interested and often gave considerable money for
prizes for these contests. The local contest and the coxmty and
state contest soon became very important and interesting events.
In 1909 four state prize winners received free trips to Washington,
D. C. For a number of years these annual trips attracted much at-
tention. This plan was abandoned in 1914 for the better system of
scholarship prizes. Since then the chief annual prize in the state
has been a scholarship at the Agricultural College. Pig Clubs,
Baby Beef Clubs, Clover Clubs, etc., are but a natural evolution
which came with the ^years.
In 1911 the number of county agents had reached 583, the num-
ber of demonstrators and cooperators had feached 100,000, and
the number of boys approximately 51,000.
Girls' Clubs
In 1910 Dr. S. A. Knapp began to develop a part of the work
for women and girls. It was his belief that he had thus far planned
the work for the father and son. He desired to complete the work
by doing something for the mother and daughter. In October,
1910, he wrote:
The Demonstration Work has proven that it is possible to reform^
by simple means j the economic life and the personality of the farmer on
the farm. The Boys* Corn Clubs have likewise shown hoiw to turn the
attention of the boy toward the farm. There remains the home itself
and its women and girls. This problem can not be approcLched di-
rectly. The reformer who tells the farmer and his wife that their entire
horns system is wrong will meet with failure. With these fads in view
I have gone to work among the girls to teach one simple and straight-
forward lesson which will open their eyes to the possibilities of adding
to the family income through simple work in and aboiU the home.
Beginning in the states of South Carolina, Virginia and Missis-
sippi, there were developed that year a number of Girls' Canning
Digitized by
Google
Education Through Farm Demonstration 233
Clubs. In these clubs the girls were banded together^ each to
produce one-tenth of an acre of tomatoes on their own land, and,
when their crop was matured, they were taught to can the product
for use in winter. This work increased rapidly. The fimds de-
voted to it the first year were a little less than $5,000, the next year
$25,000.
This work for girls seemed to appeal to the people. It was
taken up with great enthusiasm. The best trained school teachers
and well educated and trained farm women were employed as agents
and instructed in the work. Home gardening and the canning of
fruits and vegetables for winter use appealed to the people as good
education and good business. Many of the girls made surprisingly
good profits from their demonstrations. They were taught to keep
an account and to put up their canned product in standard weight
cans, with full pack, and only the finest and most perfect of ripe
fruits and vegetables. The result was to give them a ready market,
a cash income for the family from a new source, and an interesing oc-
cupation. A new industry was thus established. To the canning
clubs were added the poultry clubs a Uttle later.
Two features of the Girls' Clubs should be mentioned. First,
that they developed the g&rls and made them skillful and self-reliant.
The canning club girls were the best students at school. Second,
the very idea of the club, the association of the girls together, the
meetings for canning, and all of the activities of the clubs, furnished
a much needed social life which was greatly appreciated. Many of
the meetings for actual instruction were heralded as social gather-
ings. The girls made their own aprons and caps (called uniforms)
and attracted much favorable attention.
We hear much these past few years about the "mother-daugh-
ter" movement. The mothers in the South helped the daughters
and were much interested in all that was going on in the clubs. At
every meeting of the club for its canning lesson, the mothers were
sure to be present and to take some part with their daughters. In
the home, while the girls were required to do the actual canning in
their competitions for prizes, the mothers were always watching
and adopting all that they found good in the lepsons for the girls.
In this way much of natural prejudice against such an intimate kind
of service was broken down and the woman agent found a ready wel-
Digitized by
Google
234 Thb Annals of thb American Agadbmt
come into the home and an opportunity to render service to the
mother as well as the daughter.
The Work For Women
In the first planning of the work for girls, it was expected to pave
the way for the work with women by taking up the work for their
daughters. Much help was given to the mothers before any definite
work was actually outlined for them. About the year 1914 a few
of the women agents began definite work with farm women. These
first steps were generally in the direction of labor-saving devices for
the home, such as home-made fireless cookers, etc., and the simple
preparation of the girls' canned products for the table. The next
year many of the women agents took up the work with women, and
by the spring of 1916 there were over 7,000 women in the South
demonstrating for themselves and their neighbors some new device
for the saving of labor, some new method of cooking, or some item
of home improvement.
As the club idea had succeeded so well with the girls, and as the
idea of community organizations had taken strong hold in the work
with farmers, the women were generally encouraged to organize
neighborhood clubs. The practical side' of the work was not neg-
lected. Every member of the club was doing the work at home.
Everyone of them was profiting by the lesson and putting the new or
improved method into practice. But the club brought them to-
gether occasionally. Its meetings were something to look forward
to and hence an important part of the work.
Community Organizations
In the broad development of the work as a whole the county
agents, both men and women, naturally divide their activities into
three general classes :
First: Their actual demonstrations with farmers, their wives,
and the boys and girls.
Second: The giving out of general information through speeches,
meetings, etc.
Third: Efforts to stimulate organization.
In the South organization work had proceeded mainly on a
community basis. Community interest and activity have been
often stimulated by the demonstrations, and the collecting of people
Digitized by
Google
Education Thkough Farm Demonstration 235
together at the demonstrations has furnished a ready means of
natural organization of communities. In many communities there
were ah-eady organizations such as the Farmers' Union. These
are assisted by the county agents. As a rule the community or-
ganization has some definite object in view such as the improvement
of agricultural practices, standardization of production, mainte-
nance of pure varieties of seed and standardizing the production
of various kinds of livestock. Very often, also, they have engaged
in the cooperative purchase of supplies, mainly fertilizers, and in
some cooperative marketing.
In the northern states there has grown up a type of organiza-
tion known as the County Farm Bureau, which is mainly aft organ-
ization of individual farmers who interest themselves in securing
a coimty agent and assisting in the general work in the county.
These organizations have proved quite effective in handling a large
amount of business and creating greater interest in agriculture.
In many counties in the South the type of organization for the
whole county consists in the confederation of representatives from
the community organizations to form a county association for the
general improvement of agriculture in the whole county. It is not
possible in this short article to discuss the merits of the two types
of organization. Each type has many points of merit and each seems
to be meeting the present needs of the people. The ultimate type
may be a combination of the good features of both plans.
Thus in brief we have the complete work involving the service
of an educational system for the men, women, boys and girls on the
farm. It should be fully xmderstood that the county agent, either
among the men or the women, is not left to his own fancy or whim in
the work. First there are the state agents or leaders who look after
the work in an entire state, with assistants, called by that name, or
district agents in case they are given a portion of the state.
There are also specialists to complete the work. These are
men who have been trained especially along some particular branch
of agriculture and therefore have studied and prepared themselves
to meet special problems or sets of problems. These men are en-
tomologists, agronomists, horticulturists, dairymen, pathologists,
etc. A few such specialists are employed to assist the county agents
along these special lines. There are also such men as market
experts and farm management experts who assist the county agents^
Digitized by
Google
236 The Annals of the American Academy
in their various special problems. All of these together, under a
general director, constitute what is usually known as the Extension
Work or the Extension Service of the state.
Dr. Seaman A. Knapp died in the spring of 1911 at the ripe
age of seventy-seven years. A short time before his death he wrote
the following as his conception of the work which he had inaugura-
ted:
TWO VIEWPOINTS
The Farmers' Codperative Demonstration Work may be regarded as a
method of increasing farm crops and as logically the first step toward a true up-
lift, or it may be considered a system of rural education for boys and adults by
which a. readjustment of country life can be effected and placed upon a higher
plane of profit, comfort, culture, influence and power.
Because the first feature of this demonstration work is to show the fanner
how he may more than double his crop at a reduced cost of production, it
has been regarded by some solely as a method of increasing farm crops by apply-
ing scientific principles to the problem. This would be of great value to the
world and would stand as a sufficient justification for the efforts put forth and the
expenditures involved, but such a conception would fail to convey the broader
purpose of this work.
There is much knowledge applicable and helpful to husbandry that is an-
nually worked out and made available by the scientists in the United States De-
partment of Agriculture and in the state experiment stations and by individual
farmers upon tJieir farms, which is sufficient to readjust agriculture and place it
upon a basis of greater profit, to reconstruct the rural home, and to give to coun-
try life an attraction, a dignity, a potential influence it has never received. This
body of knowledge can not be conveyed and delivered by a written message to the
people in such a way that they will accept and adopt it. This can only be done by
personal appeal and ocular demonstrations. This is the mission of the Farmers'
Codperative Demonstration Work, and it has justified its claims by the results.
It is noteworthy that the sciences adopted the demonstration method of
instruction long since. The chemist and the physicist require their students to
work out their problems in the laboratory, the doctor and surgeon must practice
in the hospital, and the mechanical engineer must show efficiency in the shop to
complete his education. The Fanners' Codperative Demonstration Work seeks
to apply the same scientific methods to fanners by requiring them to work out
their problems in the soil and obtain the answer in the crib. The soil is the
fanners' laboratory.
The demonstration method of reaching and influencing the men on the farms
is destined ultimately to be adopted by most civilized nations as a part of a great
system of rural education.
After his death the work was continued without interruption.
In these years it grew as before and its various parts were perfected
as the men engaged increased in knowledge and understanding of the
Digitized by
Google
Education Thbough Farm Demonstration 237
work they were doing. In 1911 the work had been extended to all
of the southern states with the exception of Kentucky, West Vir-
ginia and Maryland. In these states it was begun in 1913.
Co5perative Extension Work
As early as the fall of 1911, an effort was made in South Caro-
lina to bring together all the extension work in the state and to join
the federal and the state forces into one organization managed under
a cooperative agreement. The cooperative agreement was ac-
tually perfected in December, 1911, and put into operation in Jan-
uary, 1912. Under this plan the College of Agriculture of the State
and the Federal Department agreed on a joint representative to
administer the work in the state and agreed on the details and method
under which he was to carry the work along. This plan proved an
immediate success and was copied in Texas in 1912 and in Georgia
m 1913. Florida fell in line in the early spring of 1914.
Extension op Work
In 1911 some experiments in reaching farmers directly through
a resident instructor were tried in the northern states under the
direction of the Office of Farm Management of the Federal De-
partment of Agriculture. In the early part of the year 1912 the
same office was authorized to begin a systematic effort to extend this
practical direct work among farmers into the northern states. The
problems to be met were different and it required time and experience
to enable the workers to adapt the f xmdamental principles involved
m the demonstration work to the new field. North Dakota began
an independent demonstration work early in 1912, afterward uniting
with the department's general work of the same character. In ad-
dition to North Dakota, New York and Indiana were among the
first to develop the work in the northern states. In all the northern
and western work the well trained county agent was the necessary
part of the plan as in the South.
The Smith-Lever Act
Beginning in 1862 with the Morrill Act for the endowment of
the state colleges of agriculture, the Congress of the United States
had passed a series of acts to assist the states in agricultural educa-
tion and research. The Nelson Act increased the funds for teaching
Digitized by
Google
238 The Annals of the AifiERicAN Academy
agriculture in the colleges, and the Hatch and Adams Acts created
and supported the state experiment stations.
It would be impossible to say just when the colleges had first
begun to think about some act to assist them with the extension work
or direct work with farmers, but certainly a number of years before
the passage of the Smith-Lever Act the Association of American Agri-
cultural Colleges and Experiment Stations had been interested and
active in that direction. Many of the leading agricultural colleges
of the northern states, and especially of the middle western states,
had established extension departments of considerable proportions.
Their work consisted mainly of the sending out of specialists, the
conducting of institutes, movable schools of agriculture and home
economics, short courses at the colleges, and boys' and girls' club
work. Some plot work and a few demonstration farms of the kind
first referred to in the early part of this article were also a part of
the work. As already stated, the Office of Farm Management of
the United States Department of Agriculture began actual work in
the North in 1912. This work of puttijig county agents into north-
em counties grew rapidly and appropriations were increased to meet
the expense.
It is not the purpose here to trace the history of the passage of
the Lever Act. The act was finally approved by the President
May 8, 1914. It provides for the establishment of cooperative
extension work in agriculture and home economics. Each state was
to establish a division for such work at its land grant college, that is,
the college which had received the benefits of the Morrill, the Nelson,
the Hatch and the Adams Acts. The act provides that the work
shall consist of
instruction and practical demonstrations in agrictdtvre and home economics to per-
sons not attending or resident in said colleges in the several communities, and im-
parting to such persons information on said subjects through Jield demonstrationSj
publications and otherwise; and this work shall he carried on in such manner as may
be mutually agreed upon by the Secretary of Agriculture and the State Agricultural
College or colleges receiving the benefits of this Act,
The appropriations from the federal treasury, under this act,
began with $480,000 for the year ending June 30, 1915, which was
divided equally, $10,000 to each of the forty-eight states. For the
next year an additional appropriation of $600,000 was made and then
the amount increases by $500,000 per annum imtil the amount
Digitized by
Google
Education Through Farm Demonstration 239
reaches S4,100,000 in addition to the original $480,000, or a total of
$4,580,000. As to all the additional appropriation above the $480,-
000, it is provided that it shall be divided between the states in the
proportion that the rural population of each state bears to the total
rural popidation, on condition that ^'no payment out of the additional
appropriation herein provided shall be made in any year to any State
until an equal sum Aaa been appropriated for that year by the Legislor
ture of the State, or provided by State, county, college, local avihorUy,
or individiuil contribviion from within the State for the maintenance of
the cooperative agricultural extension work provided for in this act."
This means that at the end of the year 1922 there will be an annual
appropriation from the federal treasury amounting to $4,580,000,
and annual contributions from within the states amoimting to
$4,100,000 for the support of the work, or a grand total of $8,680,000.
This will be the annual expenditure in this new and important sys-
tem of agricultural education.
It should be remembered that the law itself makes this a co-
operative work. The enormous annual economic loss in the United
States by reason of soil depletion, insect ravages, diseases of crops
and animals, improper cultural methods, and lack of proper market-
ing systems has been increasing from year to year. The nation, the
states, the colleges and many public and private organizations have
been attempting to correct these evils, each in its own way and with
its own machinery and independent of the others. The resulting
effort could not be otherwise than wasteful, more oi*less inefl5cient
and often misdirected. Wrong principles were often advocated
or correct ones improperly presented. Expensive eflfort was dupli-
cated many times. Rivalries and competition were more common
than harmony and co5peration. The result of it all was doubt,
confusion and lack of confidence on the part of most of the people in
agricultural work. The new act provides for unity and cooperation.
The field force represents both the United States Department of
Agriculture and the state colleges of agriculture.
Shortly after the passage of the act the Secretary of Agriculture
put the act into effect by making an agreement with each state
which brings all the work into harmony and unity through the one
state organization representing both the state and the nation.
Within the department he established the States Relations Service,
the two divisions of which, under the director, handle the relations
Digitized by
Google
24o The Annalb op the American AcADi^Mf
with the states under this act and also administer all extension work
of the department carried out through the state extension divisions.
Under the present plans there will eventually be a coimty
agricultural agent in every county and also a coimty woman agent,
each supported in their work by a trained force of specialists and a
competent administrative staff.
So we have the new system of instruction with its full force of
instructors and its plans being worked out. A great public service
organization has been created. The effect of this great movement
can not be estimated. In the South where it has been the longest
in operation, the improvement in agriculture is most noticeable.
Thousands of commimity organizations are drawing together for
better rural life, himdreds of thousands of demonstrations are con-
ducted each year and the actual number of persons reached already
moimts into the millions. The wastes are being stopped, the bad
practices remedied, the diseases eradicated, the fertility of the soil
conserved and built up, the marketing systems improved, and
country life is beginning to take on an air of interest and attrac-
tiveness which will hold its people and draw others to the great life
of this foxmdation calling of the people. At this writing, Jime, 1916,
there are practically 3,000 persons employed in the Extension Work,
of whom 1,200 are coxmty agents, 450 are women coimty agents, and
the remainder specialists employed in the various states.
The work is yet in its infancy. With the years there will be
improvementf. What are now regarded as experiments will settle
into accepted practices. Skill, form, system, all will grow and be
developed as they have with the teaching in the schools. But the
fundamental principle of having the teacher go to the one to be
taught and to illustrate the lesson by a demonstration conducted
by the one receiving the lesson will remain the very foimdation of
the new educational system. It has already trimnphed where the
word of mouth instruction failed. The dream of the founder has
become the reality recognized and established by law.
Digitized by
Google
THE HOME DEMONSTRATION WORK
Bt Mart E. Cbeswell,
Awistant in Home Demonstration Work, States Relations Service, Department
of Agriculture, Washington, D. C.
Home Demonstration Work, as now conducted in the fifteen
southern states under cooperative agreement between the several
state colleges of agriculture and the States Relations Service of the
United States Department of Agriculture, includes the organization
of about 60,000 girls who are enrolled to make demonstrations in
canning club and poultry club work and 30,000 women who, in
rural homes throughout the South, have undertaken definite work for
the improvement and upbuilding of country life. All these demon-
strations are directed by an organization of state and county agents
who plan the demonstrations to be carried out, furnish information
and instruction and work together with such unity of purpose and
plan as to bring about each year definite results in the training of
girls and women. These agents are aided by extension specialists
who are constantly contributing information and skill in home eco-
noDoics and such divisions of agriculture as horticulture, dairying
and poultry work. The activities directed by these women repre-
sent a type of education but recently recognized, yet of such useful-
ness that it has become a part of the life of at least 75,000 southern
homes, has been given a permanent place in public school systems
and receives recognition and aid from colleges and universities of
every state.
How THE Work Is Financed
In the beginning, generous financial help from the General
Education Board — ^the corporate trustees of a fund of more than
$60,000,000 given by John D. Rockefeller for educational purposes —
made possible the free development of this work. This was soon
followed by state and county appropriations. In 1914, Congress
made appropriations to take the place of those being made by the
General Education Board and the Smith-Lever Extension Act of
1914 brought its first federal appropriations in 1915, thus giving
permanent support to demonstration work in agriculture and home
241
Digitized by
Google
242 The Annals of the American Academy
economics. The present year finds an organization of about 400
counties, supervised by 449 state, district and county agents.^
The Multiplication op Acttvitibs
Following the development of Farm Demonstration Work as
a means of practical agricultural instruction and the development
of boys' corn clubs, because many boys insisted upon being enrolled
as demonstrators, there was a very insistent demand for activities
for girls which should give them opportunity to carry on skillful
work in their homes and enter into friendly contest with one another.
The opportunity to influence and instruct adults through the in-
terests of their children was recognized from the first.
Activities which have fundamental connection with every
country home, and which involve the need for accurate information
and skill in doing, were selected. During 1910 some girls' tomato
clubs were organized in South Carolina and Virginia, with the aid
of teachers and other school officials. These girls cultivated tenth-
acre plots of tomatoes, following some simple instructions furnished
by the Office of Farm Demonstration Work, and canning their
vegetables under the instruction of one of its representatives. The
results of this experiment were made the basis during the next year
for the organization of from two to four counties each in the states
of South Carolina, Virginia and Mississippi, under the leadership of
women who were appointed to take charge of each state and with
the aid of a few county workers whose services were secured for
brief periods in the canning season. In 1912 the states with workers
in charge were increased to eleven and a total of 160 counties were
organized.
The State Leader or Organizer
In the beginning of the girls' canning club work, a state leader
or organizer was appointed. To help her in each county organ-
ized, a capable woman was secured for about two months in the year
to hold the canning demonstrations in the summer and give what
volunteer help she could in spring and fall. The clubs were organ-
1 Anyone desiring fuller information about this work can secure it in the
buUetins and publications of the States Relations Service of the United States
Department of Agriculture, and from the Extension Divisions of each of the State
Colleges of Agriculture in the South.
Digitized by
Google
Home Demonstration Work 243
md and the first instruction was given through the schools where
the girls could be met in groups. Correspondence and an occa-
sional visit from the county agent had to suffice as instruction and
supervision until the canning season opened when regular field
meetings, in way of canning demonstrations for groups of members,
were held at central points in the county. Again in autumn, the
collecting of results and the holding of an exhibit of canned products
were largely volunteer work of the county agent. The results which
these workers obtained were so notable that in a short time this
general plan was adopted permanently, the period of employment
for the county agent increasing rapidly to nine or twelve months.
The girls' canning clubs, with a tenth-acre garden as the basis
of each individual's work, have made possible a gradually evolved
four years' program of work which thousands of girls have eagerly
entered upon. Each year finds a larger per cent of these girls
continuing the program and finishing the season's activities. As
in all real demonstration work, the girl becomes a "demonstrator."
She agrees to follow instructions and use approved methods; her
work and its results being accomplished with more skill, greater
eflSciency, and showing finer quality than that which has heretofore
been known, become an object lesson for others and the center of
influence in the home and community. Each season brings its
characteristic activity of natural work accompanied by the stimulus
of individual ownership and group contests in skill and definite ac-
complishment.
A Systematic Four- Year Program op Work
Since the mastery of some definite phase of work is essential
for each year, a systematic program has been worked out. During
the first year the girls select tomatoes as their main crop, learning a
great deal about the cultivation of this vegetable and how to market
both fresh and canned products. They acquire considerable horti-
cultural skill in managing their gardens. The financial records they
keep give a good business training. For the public demonstrations
which they give for the benefit of their communities, these girls
find it necessary to make attractive uniforms, aprons, caps, towels,
holders, etc. This gives sewing a very definite place in their work.
During the second year two vegetable crops are cultivated, these
being chosen with definite regard to home needs and marketing con-
Digitized by
Google
244 The Annals of the American Academy
ditions. In addition to the canned vegetables, many clubs market
soup mixtures, sauces and special products which have been origi-
nated for them, like Dixie relish and B. S. chutney. Sewing is con-
tinued in the making of uniform dresses of attractive and appro-
priate design and material. An instance of the use of such uniforms
is given in the report of a county agent, as follows:
The meeting at Pheba was especially interesting. Sixteen Canning dub
girls in white uniform, cap and apron, gave a program with dub songs and yells.
Afterwards they served a two-course luncheon to the mothers and teachers. Tbe
latter were especially interested and announced their intention of going back to
their schools and having their club members make caps and aprons and learn the
club songs.
During the next two years, perennial gardens are started and
either small fruits or perennial vegetables, suited to the locality,
or especially attractive for market, are planted. Many girls who
have proceeded thus far are ready to make a reputation for special
products from southern fruits such as the fig, scuppemong. May haw
and guava, or to succeed admirably with the Spanish pepper for
which a great demand exists. The preparation of their vegetable
products for the table and contests in bread making are given active
place. In many instances, winter gardening is carried on exten-
sively.
The Home and School at Wobk Together
It can be easily seen that all of these activities are carried on in
the home and form an integral part of the life of the girls themselves,
but everywhere the schools are taking a very active part in promot-
ing this work. The cooperation of the teacher is always essential.
Since the girls work frequently in groups, many of their meeting?
are held at school where the girls should receive constant help in
reading bulletins, following instructions and in keeping records.
Sometimes a hot bed or cold frame is built on the school grounds and
there, under the teachers' supervision, plants are raised for the home
gardens. Club work furnishes constant opportunity to enliven
school room routine with vital interests and fine motives for study.
Many instances of the helpful reaction which these clubs have upon
the schools have been reported. In a similar way they give the
schools a better opportunity to bring influences to bear directly
upon the homes. To enmnerate a few of the results of demon-
Digitized by
Google
Home Demonstration Wobk 245
stration work among girls, will perhaps show how this work has
made possible the rapid growth of similar work among women. In
the future it will be difficult to decide just when the individual gives
up her girls' club work and; as an adult, enters upon a series of home
demonstrations.
The Impbovement op Econobhc CoNDmoNS
In addition to the educational aspect of this work, must be
recognized the economic contribution which these girls' clubs are
making. Of the 32,613 girls enrolled in the South in 1915, there
were 14,810 whose reports show a total yield of 5,023,305 pounds of
tomatoes, 1,262,953 pounds of other vegetables and fruits with a
total of 903,562 containers packed and an average profit of $24.01
per tenth acre. More than 9,000 girls did work in poultry clubs
and 3,000 undertook bread demonstrations.
One girl in boll weevil territory with the help of her father and
brother put up more than 3,000 cans of fruits and vegetables. She
had 200 cans of figs which the county agent inspected and found to
be of excellent quality. She had already sold part of her products
to a local merchant. When the county agent visited her, her father
said, "The boll weevil may eat up my cotton but it can't get inside
these cans and jars so we are sure to have plenty to eat and some
ready money."
Vocational Training and Community Leadership
These statistics indicate the vocational value which all this
work has for girls in rural homes who have heretofore found it
necessary to go into towns and cities to find any remunerative oc-
cupation. Equally significant are the many instances of fine
individual development among girls and the emphasis which this
development places upon the right training for womanhood. Not
only is individual initiative aroused, but elements of leadership are
developed in country communities where they are most needed.
As a means of developing leadership, many states are giving short
courses for prize winning club members from the various counties.
These girls have proved their eflBciency by successful work and
already possess qualities of leadership. Upon being given definite
instruction in even a few lines of work, they can be inspired to return
to their communities and extend to others the same aid. These
Digitized by
Google
246 The Annals op the American Academy
girls frequently become the officers of their clubs and the local
representatives through whom the county agent works in develop-
ing many community enterprises.
During one short course, each prize winner gave the story of her
year's work and told how she spent the money earned from her
tenth-acre garden. One girl had for two successive years paid her
expenses at the county high school out of her earnings; another was
helping her brother through college; another purchased a fine cow
and still another enabled her father to hold his cotton until spring by
making her funds available for certain family expenses. In every
instance, the business experience was one which reflected dignity
and judgment.
Labgeb Cob£munity Co5peration
Cooperation for any sort of community develo]f)ment or benefit
to the group is difficult to bring about among farming peoples.
Club members undertake it more readily than will their parents.
One enterprising girl informed her county agent that she had al-
ready booked orders for canned products to the value of $168.00.
When asked if she could fill them all, she said, "Oh! no, I expect to
have a good many more orders than this when all my letters are
answered but there are eight of us in our club and we will do it
together."
Instances of neighborly cooperation are not rare. One county
agent reported that upon visiting one little girl, named Gladys, she
found that she had been ill for two weeks and unable to set out her
tomato plants which were fast becoming too large to be trans-
planted easily. Upon the agent's visit to the next home, she re-
ported the instance and a member of the same club immediately
suggested that they get together and do the transplanting. In a
short time, six girls met at Gladys's home. The little sick girl was
able to be carried out in a chair and sit in the shade to watch the
others happy at work transplanting the tomatoes for her. Words
failed and tears came instead when she tried to thank her friends
for this kindness.
A county agent reported that the home of one of her club mem-
bers was destroyed by fire. Before she had opportunity to visit
this community, the president of the club had called a meeting and
its members had arranged to give a *' shower" of canned products to
the club member to whose family this loss .had occurred.
Digitized by
Google
Home Demonstration Wobk 247
The County Demonstbation Agent and Heb Work
It can be readily seen that the centers of influence in demon-
stration work are the farms and homes where individuals, perhaps a
modest little girl or quiet, home-loving woman, make the dem-
onstrations which teach a lesson to an entire community. This
lesson carries greater weight and is more convincing than if made
by a skilled specialist from a distant institution but it can be ac-
complished successfully only when there exists an organization
whose leaders have won permanent place in the confidence and
affection of the people with whom they work. In the organization
of home demonstration work in the South, the county agent holds
this important place. Directed by the state agent with head-
quarters at the state college of agriculture, and frequently given
technical help by specialists who come from the same institution,
the county agent becomes the personal medium through which in-
formation is furnished and by whom skillful demonstrations are
directed. The eflScient county agent must be a leader and an or-
ganizer. She must possess fine sympathy and good judgment.
Her knowledge of people and conditions in her county must be
wide and accurate. To all this there must be added good training
in home economics and a constantly increasing knowledge of the
lighter branches of agriculture such as horticulture, dairying and
poultry raising.
Demonstration work for women has made most rapid progress
where preceded by at least a year of work among girls. Definite
results are more quickly obtained among young people who have
high enthusiasm and who, fortunately, lack experiences which
suggest failure and who are without a sense of caution which pre-
vious failures suggest to the mature mind when new enterprises or
new methods are proposed. Then, too, the mother's gratitude
for training give;n to her daughter paves the way for active accept-
ance on her part of instruction and help.
Wedbr Use of Labor-saving Devices
Improvement in management of rural homes has not kept
pace with that of the farm itself, nor can it be compared to the
management of the city home from which has been taken every
creative industry. For these reasons, one line of demonstration
Digitized by
Google
548 The Annals op tiiil American Academy
which has been eagerly undertaken by hundreds of women b the
making and use of labor-saving devices and securing more labor-
saving equipment from the outside. The economic needs of women
on farms demand greater skill in the constructive activities which
are, fortunately, theirs to manage and from which the opportu-
nity for financial income and the satisfactions of creative work of
high order rightfully come. Therefore, demonstrations in poultry
raising, home dairying, etc., are among the first to be undertaken.
Demonstrations involving the preparation of food for the table,
and sanitary measures, are also popular.
Since 1916 was the first year in which formal Home Demon-
stration Work was undertaken among women, statistics are neces-
sarily incomplete and do not show the whole extent of the work.
It is interesting, however, to note that 2,181 home-made fireless
cookers have come into common use, accompanied in many in-
stances by the purchase of kerosene stoves. There have been re-
ported nearly a thousand demonstrations made in the use of a home-
made iceless refrigerator by which the problems of the sanitary
handling of milk and improvement in butter making are largely
solved. A good beginning has been made in installing home water
works systems, making inexpensive shower baths, and in improved
sewage disposal. In a nmnber of counties, demonstrations along
sanitary lines were begun with campaigns against flies which in-
volved the making of 1,423 fly traps in a short time, followed by
other active measures against this pest. The making of a few
practical devices has been a great stimulus to a large number of
people who have contributed clever ideas and useful models for
many kinds of work. County agents rapidly receive demands
for advice in arranging kitchens and adding built-in conveniences.
To meet these demands, extension specialists in farm mechanics are
devoting considerable time to assisting the county agents with
specifications and plans.
In any demonstrations undertaken, whether in the making and
use of labor-saving devices, in better utilization of farm products
for the table, management of sanitary or hygienic problems, etc.,
it must be recognized that in addition to technical information
brought from the outside, there exist in any community many ex-
cellent practices and much valuable information which are not in
common use. To find such practices and arouse individuals to a
Digitized by
Google
HoBfE Demonstration Wobk 249
«
sense of their obligation in extending them to their less fortunate
neighbors is often a valuable part of the work of the county agent.
As soon as this is undertaken or whenever a few individual women
successfully carry out definite demonstrations in their homes, active
demand arises for community organization which shall bring together
those having a common interest in some line of work and in addi-
tion give opportunity for social life and recreation. Organizations
thus developed assume permanent place in their communities.
Co5pebative Marketino op Products
A form of organization which has been found very successful
is that for the codperative marketing of products which results from
certain demonstrations. Of these some of the most successful
have been organized for the purpose of disposing of poultry products.
In one county nine egg circles sold 4,370 dozen eggs in a few months.
The products were so carefully graded that better prices were
secured for them than had been received by individuals before
carrying on the work codperatively.
Happy and Progressive Country Homes
With the initial work that has been accomplished, the fine
support and codperation given by many existing organizations and
institutions, with federal, state and county appropriations rapidly
being made, and a demand for the organization of counties far
exceeding each year's possibilities, it is safe to assimie that this
phase of extension work is permanently established. It has met
the need of the most progressive, as well as the least developed,
homes and conmiunities.
The county agent now has an avenue of approach into every
activity of the home. With increased opportunity for training,
which institutions are giving by adapting their courses for her
need, and with the opportunity for permanent service in her county,
the work of the county woman agent will continue to be the most
potent influence for progressive and happy country homes.
Digitized by
Google
THE LIBRARY EXTENSION MOVEMENT IN AMERICAN
CITIES
By Arthur E. Bostwick, Ph.D.,
Librarian St. Louis Public Library.
Library extension work may be carried on in either of two ways:
by establishing new libraries or by extending the scope of already
existing institutions. In cities the tendency now is to lessen, rather
than to increase, the number of working institutions, to consolidate
individual libraries and to operate all extension work from a central
point, through branch libraries, deposits^ or delivery stations.
Increase of a library's scope may be extensive or intensive— it
may operate by pushing out into \inoccupied territory, or it may
endeavor to carry the library's work and influence into new fields
in territory already occupied. Increase by establishing new
branches or deposit stations is usually of the former type. Work
of the library with children, with schools or with local clubs is of
the latter type.
To illustrate, we may consider a public library of the type
common fifty years ago, typified by the Astor Library in New York,
supported generally by endowment and limiting its use purely to
reference. Its influence, of a quality and value not to be minimized,
extended territorially throughout adjacent parts of the city and
beyond this in isolated spots, sometimes to a great distance. It was
confined very largely to adult students and scholars, more and more
so as it extended to a distance. If we compare the quality and
extent of this influence with that of the present New York Public
Library, we see that in the first place the sphere has been pushed
out territorially on all sides and in the second that it reaches many
more classes and many more individuals in the community. The
territorial extension has been effected by establishing branch
libraries, in some cases by consolidation with already existing smaller
libraries, by placing deposits of books in educational, commercial
and industrial institutions in regions not yet thickly enough settled
to support a branch; sometimes also by home libraries placed in
isolated families. The intensive increase has been first of all by
250
Digitized by
Google
Library Extension Movement 251
lending books out for home use instead of confining all reading to
the library, at once trebling or quadrupling the number read by
adults in any given region; second, by making special provision for
children, thus doubling again the use over any given territory; and
third by the employment of some of the devices noted above as
effective in territorial extension, namely, co5peration with all sorts
of community organizations — social, religious, industrial, educa-
tional and so on. The discovery of these subsidiary agencies, get-
ting into relations of friendship and confidence with them, and apply-
ing these relationships to the matter in hand, namely, the extension
of good reading, has occupied very much of the time and energy of
city librarians of late.
The whole extension work, it should be noted, is dependent
on a changed conception of the purposes of a collection of books as
found in a library, and of the duties of librarians. The modem
librarian is a sort of book missionary; he conceives it to be his duty,
not only to gather and conserve a collection of books, but to promote
the proper use of these books throughout the community. He i$
anxious that none of his books should remain unused and that no
citizen within his jurisdiction should fail to read. The quality and
quantity of library extension as above noted are calculated to bring
about this result.
Some of the more important agencies of extension will now be
taken up and discussed singly.
Circulation
The lending of books for home use is now one of the public
library's most important functions. In most libraries the number
of books available for lending is a large proportion of the whole;
and in many there is theoretically no obstacle to the lending of any
part of the stock, though it may be necessary to retain a consider-
able number for reference purposes. The allowed number with-
drawn at once has steadily increased of late, until in most libraries
there is little restriction in this regard. The old idea that reference
use is always serious and home-use relatively trivial is fast disap-
pearing. The open-shelf system, which makes the shelves free to
the user, is now imiversal in branch libraries and is gaining ground
in the large main libraries of cities. This in itself has been an im-
portant intensive agency.
Digitized by
Google
252 The Annals op the American AcADEMr
Children's Work
This began by an attempt to establish libraries for children
alone, but it is now carried on usually in separate rooms, wherever
there is an adult collection. In a branch system, the children's
rooms are often placed under a superintendent or supervisor so
that the whole children's work of the library is carried on consist-
ently by one department. Careful book selection, personal guid-
ance of reading, and often the stimulation of interest by such devices
as the telling of stories, are functions of such a department.
Branches
Branches are often established simply on the demand of a com-
munity, but that demand has often previously been tested by some
of the other agencies of extension, such as deposits, traveling libra-
ries or delivery stations. Owing to large donations, it has some-
times been possible for cities to lay out a considerable branch system
all at once. In such case, considerations of population and area
and also the existence of old community centers have governed the
locations chosen. A branch is a complete library in itself, having
its own building, staff and permanent stock of books.
Deposits
A deposit is a collection of books, generally for circulation, to
be changed at intervals. Small deposits are often called traveling
libraries. Such collections are sent to schools, churches, clubs,
industrial and commercial houses or to any place where they will be
properly cared for and used. Very small deposits sent to a private
house to be used by a local group of children under the care of a
neighborhood worker are called ''home libraries." Some deposits
are intended to be used only by the employes of the business house,
the pupils of the school or the members of the club to which they are
sent; others are for the use of the public in the neighborhood.
The small deposits known as traveling libraries are of two types:
fixed and fluid. The former prevailed at first, each "library" con-
sisting of a fixed collection of books which circulated as a unit. The
tendency now is to allow much freedom of selection on the part of
the beneficiary, so that the collection is made to order, instead of
ready made, as formerly. The made to order traveling libraries
Digitized by
Google
LiBRART Extension Movement 263
are called in many places "open-shelf libraries — an unfortunate
tenn, the word being already widely used to indicate free access to
library shelves — quite a different thing.
Delivbry Stations
These are places, usually in drug stores, where books are sent
on the order of individual card-holders. There may be a deposit
of books at such a station, or a true branch may include both de-
posit and delivery features. Delivery stations are now regarded
only as necessary substitutes, in certain cases, for deposit stations
or branch libraries. They offer the user practically no opportunity
for selection, but they do give this opportunity to the library author-
ities themselves, which is not a bad thing. The book ordered at a
station is often not immediately available and another is substi-
tuted for it. This gives the librarian an opportimity to control
reading that may be productive of good when advantage is taken
of it with tact.
Work with Schools
This includes not only the use of the school for a branch, or a
deposit station, but also efforts to assist teachers by furnishing them
with professional literature and offering books for class-room read-
ing, and efforts to see that pupils make use of their neighborhood
libraries. Classes are often instructed in the proper way to use
libraries, either in the libraries themselves, or at school.
Clubs and Associations
If these have club houses or club rooms, they are given deposit
collections. If not the assembly or club rooms now included in
most library buildings may be placed at their disposal free of charge.
This tends to promote good feeling, to make the club look upon
the Ubrary as its home and to create a Uttle community center whose
focus is a collection of good books.
Foreigners
With this same end in view, libraries are adding to their stock
books in the home languages of newly arrived immigrants, espe-
cially in branch libraries surrounded by them. Large city libraries
may thus possess small collections of the literatures of thirty or forty
Digitized by
Google
254 The Annals op the American Academy
different tongues and may have a considerable circulation in each.
This course promotes Americanization instead of delaying it as some
persons once feared it would do.
Men as Readers
The users of the older libraries were almost entirely men. The
first impulse of library extension was to take in women and children
also as readers. Over-emphasis of this movement had as its results
a relative decrease of male users and the growing danger that public
libraries might come to be looked upon in the community as largely
intended for women and children. Recent efforts to restore the
balance have been in the direction of providing literature of all kinds
specially adapted to male adult readers, particularly informative
works in the various trades and industries and in the different depart-
ments of business activity, such as advertising and salesmanship;
the creation of separate departments like the applied science or
technology rooms in most large city Ubraries, and the provision of
large collections of purely business reference material, such as city
directories, maps, trade catalogues and so on. Municipal reference
libraries, modeled on the successful legislative reference libraries in
state capitals, have been opened in city halls. Altogether the exten-
sion movement seems to have regained the balance that it was once
in danger of losing.
Publicity
One of the most effective agents of library extension is well-
considered publicity. Library boards have usually objected to
paid advertising, yet even that is now being employed in many cities,
especially on particular occasions. Publicity is directed toward
informing all citizens of the library's existence, location, resources
and aims, of the fact that it is tax-supported and free to all, and of
the educational and recreational advantages of using it. These
facts may be communicated to the public by printed matter on
placards or attached to bulletins, lists, book-marks and other regu-
lar publications of the library; or they may be given orally, in talks
or addresses before clubs, associations or schools at stated or special
gatherings.
Special days or periods are often appointed to bring the claims
of the library clearly before the public, such as the Visitors' Nights
held periodically at the St. Louis Public Library, or the Library
Digitized by
Google
Library Extension Movbhbnt 255
Week held recently in Toledo, Ohio. These may have as their
object increased financial support of the library, the object being to
affect legislation or municipal appropriation. More generally, how-
ever, the aim is simply to bring about increased use of the library's
facilities by making the public more familiar with what it offers.
Keeping Track of Readers
The net increase of active readers in a library, despite all these
extension activities, is lessened everywhere by the fact that new
registrations are offset by the disuse of the library by former readers.
In connection with extension work some way of ascertaining what
becomes of these backsliders must ultimately be adopted by libra-
ries. The prevention of a loss is evidently as effective as the addi-
tion of a new reader. So far, this work has been neglected. "Fol-
low-up" experiments have been tried, both by using the mails and
by personal visitation, but the results, so far, are not encouraging.
Libraries have no uniform method of defining "active" or "live"
users; nor can they ascertain, in general, the number included in the
class, further than to know the number of holders of imexpired cards.
The expiration limit is not always the same, and the "live" holder
may have used his card only once within that limit. On the other
hand, a really frequent user may have neglected, for the moment,
to renew his expired card. Possibly a first step toward solving
this problem may be the division of card-holders into groups, based
on frequency of use or other ascertainable characteristics.
Book Selection
The extension of library use is evidently closely connected with
the provision of books that will attract new readers and hold the
old ones. The library tries to regard, in selection, both the needs
and the demands of its community. The two factors may not
closely correspond, and there is danger in neglecting either. Pur-
chase based on need alone, before that need is fully realized, may
repel instead of attract readers; while too ready compliance with an
unworthy demand may be fatal to the library's educative influence.
Adjustment must continually be made, and the librarian must also
be sure that what comes to him as a demand is really the wish of
the community and not merely the voice of a few who have learned
to press their desires with vigor.
Digitized by
Google
256 The Annals of the Amebican Academy
The general participation of a community in book-selection is
rare and usually the result of stimulation. Too large an amount
of current library book-buying is done in the dark. Librarians
welcome suggestions from readers, and are pleased when they are
made, even if immediate compliance is impossible for financial or
other reasons.
Buildings
The prevalence of extension work has vitally affected the form
and functions of the large city library building. Fifty years ago
there was little more to the internal economy of a large library than
storage space for books and room in which to read them. These
needs were often satisfied together by placing the books on wall-
shelves, or in alcoves around the reading room. The modern
building needs also assembly and club-rooms for meetings, exhibi-
tion rooms, a special collection, with its reception room, for teachers,
a clearing-house for branch and station deliveries and offices for the
heads of the various new departments necessitated by the change in
policy. The staff is greatly increased, and its personnel must be
carefully scrutinized regarding both education and personal quali-
ties. Often the Ubrary includes a school or class for training libra-
rians; and all sorts of arrangements for the personal comfort of the
staff have become conmion — ^locker rooms, lunch rooms, rooms for
rest and for recreation, and so on. Part of the building, often the
most attractive part, is set aside for the children, and the work con-
nected with home-use — open shelves, registration, reserves, over-
dues and all the related machinery — takes up a vast deal of room
which must be provided in the precise spot where it is needed. It so
comes about that the new is related to the old building somewhat as
the modern department store is related to a quiet old shop dealing
in goods of only one kind. Branch libraries also must be provided
with space for these same activities, excepting only those that de-
pend on the function of the main library building as a headquarters.
BiBUOGBAPHY
Bostwick, Arthur E. American Public Library.
"Place of the Public Library in the Administration of a City," National Munic-
ipal Review, v. 3, 672-681, Oct., 1914.
"Public Library a Social Force in Pittsburgh," 5wrtey, v. 23, 849-8^1, March,
Digitized by
Google
LIBRARY WORK IN THE OPEN COUNTRY
Bt Sarah Asksw,
Organizer, New Jersey Public Library CommisBion, Trenton.
It became apparent years ago to students of the country life
problem that some means must be devised to make books available
in rural districts. It was evident that the coimtry boy and girl,
man and woman, to compete with the city boy and girl, man and
woman, must have to an extent the same social and educational
advantages. Books seemed to be the greatest need. Without
them the country churches were not thriving, there could be no
study clubs, debating societies, reading circles or women's clubs,
and civic and social clubs stagnated. Grangers and farmer's
institutes needed books in their work, and membership and attend-
ance dealined. While men and women in the cities were helped to
become leaders in every line of business and all professions, through
use of the resources of city libraries, the people of the country had
to struggle along with the few books they could buy. As the read-
ing habit was dying out and coimtry people began to believe there
was nothing in books for them, fewer and fewer books were bought,
homes were without them, and there was nothing to relieve the
monotony of the winter evenings, or to aid parents in giving their
children ideals and in building up character. Schools were poor and
when teachers were taxed with not teaching the use of books and
developing a taste for good literature, they answered that they
could not teach the use of that which they did not have nor could
they build up a love for reading when the only books within reach
were text-books and those not of the best.
Traveling Libraries
This problem seemed preeminently one to h^ solved by states
governments through legislation and appropriation, so several
states took it up. The first means devised was a state system of
traveling libraries.
In 1893 New York state passed a law creating a system of
tr^velin^ libraries and made appropriation for the support of the
257 '
Digitized by
Google
258 The Annals of thb American Academy
same under the administration of the State Library. Soon other
states organized similar systems under the administration of either
their state libraries or library conmiissions which had previously
been created to further the establishment of free libraries and to
aid those already established. These traveling library systems
were at first all operated upon what is now termed the "fixed group
plan. " The books bought were divided into small groups of fifty
and placed in little bookcases. These groups were sent out from the
State House to communities throughout the state^ some local person
taking charge of the distribution of the books and agreeing to be
responsible for their safe return. When a community was through
with one group it was returned and another sent. A fee of five dol-
lars a year was charged, the state paid transportation and libraries
could be exchanged as often as desired. These groups were " fixed";
that is, after a group was made up, the books in it were never
changed, but when it was returned from one community it was sent
to another just as it was.
These collections were made up with the idea of having some-
thing in each for every age and every taste, and great care was
taken to maintain a supposedly ideal proportion of books on history,
religion, useful arts, etc. Many articles were written about "books
for all of the people," and many thought the problem of rural
reading was solved. Soon it began to be apparent that in a collec-
tion of fifty books something for everybody could not be included,
and if there was something for every one there was not much for
anyone.
"The books don't suit," the farmers began to complain.
"Country people have not the reading habit and won't read good
books," grumbled the managers of the traveling libraries. In
some of the states those in charge of the libraries began to wonder
whether "farmers is farmers, " and, if "farmers is farmers," whether
charcoal burners, fishermen, lumbermen, miners, Swedes, Poles,
Himgarians, Quakers, immigrants, and native sons have the same
"group" tastes in reading. Several states abandoned the fixed
group plan and began to select books for each group to meet
the needs of the individual commimity to which it was to be
sent. This was called the open shelf plan. Even those states which
retained the fixed group system — because it seemed in a large meas-
ure to meet, the needs of their more homogeneous population-
Digitized by
Google
Library Work in the Open Country 269
added an '-open shelf'' collection from which books could be drawn
to fit unusual conditions. Yearly subscription fees were made
lower. In some states no fee was charged but the communities
paid transportation. It seemed that the libraries as then con-
stituted should be satisfactory to every one but it soon became
apparent that the census report as to the character of the popula-
tion of any given community was not a reliable guide as to what
the people were going to like to read because, with a curiously human
twist, an individual lumberman as often longed for a book on geology,
or a duck farmer for a book on the relation of science to religion
as does the janitor in a twenty-story city apartment house crave
a book on poultry raising. As one old farmer said:
Seems like folks down to the State House think because I'm a farmer I want
to spend my nights reading sibout fertilizers. Bless your heart, I don't. I want
to git out and above fertilizers. I want to read something, say about them stars
I see every night. I would admire to know 'em all by name and when one of
them oomes peekin' around the com crib to say, '*Why there comes old man
Jupiter," familiar and knowing like.
Travelinq Librarians
It became evident that if the traveling libraries were to be
successful the state must employ someone to visit the communities
desiring libraries, and find out what they liked and what they needed;
and so there came into the field the traveling librarian. Now, this
librarian works under many names, but under every name she and
her work are about the same. ''She" is used advisedly, because,
like the inhabitants of Massachusetts, the traveling librarian is
mostly of the feminine gender. Someone has said that women have
a larger faith and a more boundless enthusiasm. Perhaps that is
the reason why women are chosen as traveling librarians, for these
two qualities are absolutely indispensable in the library work of
the open country.
It is the work of this librarian* to go out in the rural districts
and small towns, live among the people and get to know them, bring
to their consciousness the value of books and tell them how they
may be had, find the right person to take charge of the library
locally and the best place to locate it, keep alive the interest in
books, see that the best use is made of those sent, find out whether
the best books for that community have been sent and if they are
not being used to discover the reason and apply a remedy. Her
Digitized by
Google
260 The Annals Op the American AcADfiilt
occupations and duties are many and varied. In the morning she
meets with the school teachers and they talk over "best books for
children/' and use of books in the school. At noon she talks to
the managers of a glass factory in a forlorn little glass town where
no one lives but those who work in the factory, and those who work
for those who work in the factory. If she has a persuasive tongue
they will let her talk to the men, if she will be brief, and perhaps
one of these managers will volunteer to go along with her and
"knock the block off" any of them that want to make trouble and
won't listen.
In the afternoon she meets with a mothers' club and they dis-
cuss the value of ownership of books, and what constitutes a good
book. That night some fishermen gather in a storm-shaken hut, and
listen to a talk on books, and volunteer in their turn many curious bits
of sea lore and thoughts bred by the lonely hours at their work.
An after-dinner speech at a banquet on Saturday night is
followed by a talk in a little country church on Sunday morning
on "books in the home." A Virginia reel at a harvest home is
followed by a meeting with the coimty board of freeholders to show
them "why." The layman will never know how many of these
county freeholders do hail from Missouri.
To reach the people she must visit the most remote and out of
the way places, for the farther from the big centres the people live
and the harder they are to reach the more they need books and the
more they appreciate the work of the librarian.
Thrilling stories are told of experiences in the West with forest
fires, and forced drives through forests behind imbroken bronchos
to find a safe place to sleep. Just a part of the day's work in other
states are the drives to the county fair in the same conveyance as
the pig which is to be given as a prize to the one that can guess his
weight, and the discovery that the pig has whiled away the tedious
hour by gnawing the bottom ruffle from the librarian's new simmier
dress — and her best dress at that; and rides through the beating
snow when every feather is torn from the only winter hat.
One worker had the hall in which she was speaking literally
burned over her head. The people, although told of the fire, did
not see it and were therefore not frightened, and were so much
interested in books they would not hurry, although the chairman
kept his hand firmly planted in the middle of the librarian's back
Digitized by
Google
Library Work in the 6pbn Country i6l
and kept repeating monotonously: "You must go out quietly
but quickly!" While she, between answering questions as to how
Johnny, who only liked the " Motor Boys, " could be induced to read
something better, or how tomboy Mary could be persuaded to
read at all, was protesting that her coat was a new coat and could
not be left behind. The remainder of the story, of how no one
would stay to watch the fire, of how all adjourned down the road to
the schoolhouse to finish the discussion, will not readily be believed
by those accustomed to more indifferent audiences.
The demand for libraries grew by leaps and boimds when it
was found that an effort was being made to suit the pe6ple of each
commimity. The response to the personal work of the librarian,
contrary to the expectations and prophecies of many, was imme-
diate and gratifying.
More than any other people in the world, the people of the
open country want something better for their children than they
have had for themselves. They demanded books when it was
brought to their attention that the schools were poor without them,
and that books were needed to develop their children's minds and
build up their characters.
Demand in the Country. for Good Books
Contrary to the belief of many, it has been found that country
people like an unusually good class of books. It is much easier to
awaken in them a desire for good books than it is to interest the
city dweller. They are eager to hear of what is the best for their
children, to listen to talks about books for the schools, and quick
to respond with: "I knew there must be something wrong with the
kind of books my boy and girl were reading, but they seemed the
best I could get. "
Someone asked what books country people like. Why, the
same as the people who live in the city. The miners in the northern
part of one state read Jokai's Black Diamonds until it was held
together only by a rubber band; the fishermen in the same state
read and re-read IngersoU's Book of the Ocean until they knew it by
heart. Thirty copies of Anne of Green Gables cannot supply the
demand; almost every letter from a librarian of a traveling library
asks that something of Churchill's be put in if possible. Mrs.
Wister's translations bring comfort and pleasure to many a dear
Digitized by
Google
262 The Annals op the American Academy
old countryman and woman. Lea Miserables^is recommended by
the country ministers and becomes most popular. Leather Stocking
Tales keeps many a man reading until midnight, and his wife com-
plains it's hard to get him up to milk the cows. One small state
owns more than fifteen thousand children's books and hardly a
dozen are to be found in the office at any one time. In this same
state more than two thousand books on agricultiu*e are continually
in circulation, and the shelves on domestic economy are always
empty. Electricity, airships and child study vie as popular sub-
jects with Mexico, moving picture operation and proportional
representation. The school teachers are most ^ager for books that
will make their work better. Many a country minister testifies
that his work is easier and more efficient since he can get books.
The Place for the Traveling Library
It is one' of the duties of the traveling librarian to find the best
places in a community to station these libraries. They are sent
to general stores, grange halls, town halls, school houses, drug
stores, churches, private residences and many other places, but
every person or association in charge of one must promise that the
library will be kept open to everyone in the community.
The general merchandise store is the very best place a library
can be sent, because every one goes there at some time, and the
merchant generally welcomes the library because it helps bring
him trade. One refused, saying he had neither the time nor the
room to fool with books, but he wrote a month later asking to be
"put on to a library" because a man who had a store three miles
away had one and his customers were going there. From this
station over 4,000 books a year are circulated, and the wife of this
merchant says she buys her hats with the fines from the books that
are kept over time. He, like many other local librarians for travel-
ing libraries, has fixed up a little reading room in connection with
the library, and people can gather there and look over the books
and talk together.
Special Loans to Individuals
As soon as it was understood that books could be had on special
subjects, the demand for them was so great that there were often
not enough books of general interest in a collection to satisfy a
Digitized by
Google
LiBRABY WOBK IN THE OpBN CoXJNTBT 263
commnnity. A plan was devised of sending books wanted by in-
dividuals as special loans, without charge, in addition to general
collections. The special loan goes through the traveling library,
where there is one; where there is none the individual can write
in and the book will be sent to him direct. Since the parcel post
law has applied to books this service has become most efficient and
not expensive. Large libraries are liberal in lending books to those
in charge of traveling libraries, to be in turn loaned to country
dwellers. One man studying codperation among farmers boasted
that he had books from five libraries, and that one of these was the
Library of Congress.
This special loan work has become one of the largest factors
in the development of library work with rural districts, and enables
students and readers in the open country to get books they need
when they need them. With the inauguration of this service
traveling libraries began to be of real value and to approximate in
the country the work that was being done for cities by urban Ubra-
ries. The requests come from doctors, lawyers, teachers, farmers,
glass blowers, housewives, day laborers, politicians, and in fact from
all sorts and conditions of men and women, and the loans go to
fishing villages, liunber camps, isolated farm homes, factories,
granges, churches, schools, foreign colonies, and every kind of place
where men and women, boys and girls, live and work and have am-
bition and need help. The subjects demanded range from how to
raise bullfrogs to railroad management, from a treatise on Saint
Paul and Christianity in modem life to the origin of chickens and
how many eggs they lay in the wild state.
From a gathering of seventy-six men and boys, who sat with
unchanging faces for an hour and listened to a talk on the practical
value of books, more than forty letters were received inquiring
about books on special subjects. Were there really books on every-
day subjects? Would they really be sent to them? Could they
get books that would tell the difference between plant lice and cater-
pUlars? A foolish question that may seem, but it meant the spray-
mg and saving of a man's crop.
A boy of fifteen wrote that he was full of ambition for an
education, but he had had to leave school. He wanted a book on
"How to dance without an instructor, " one on " Raising bantams, ''
one on "What it means to be educated," and "a book that's as
Digitized by
Google
264 The Annals of the American Acadbmt
interesting as the Motor Boys, which you said wasn't no good."
Since that time he has read Widow O'Callaghan's Boys, David
Copperfield, Nicholas Nickleby, Treasure Island, Scudder's Life of
Washington, along with books on fruit growing, potato raising, and
moving picture operation. One boy wrote, "We used to think we
couldn't be nothing but farmers, but now we can get books and be
anything we want, and we think maybe it's nice to be farmers."
In the last state-wide debate contest in one state a back county
country high school stayed in the contest to the finals because, as
the principal wrote, "we could get the books we needed."
One man who was a country plumber wanted to be an illus-
trator and could not aflford to go "even into the Natural flistory
Musemn in New York, or to the Bronx Zoo to study from life,"
so he wanted books. He wanted most unusual books. He got
them, and after a year or two the librarian was startled to see a
picture by him on the cover of a magazine, so little had she really
believed that anything but pleasure to the man would come from it.
Correspondence-Reference Service
Answering reference questions for people in the country was a
sequence to sending out books on special subjects. The questions
so asked and answered settle many a country store argument,
decide many debates, and help many women make their club and
grange papers interesting.
What are some of the questions asked? Just ordinary ques-
tions as to how to make and do, and questions we all have asked
or thought of, that often come up in arguments, or that newspapers
and magazines suggest, etc. What is the meaning of the black
in the German flag? What year was there a snow in June? Does
the Constitution of Oklahoma contain the grandfather clause?
What is the story of the song "Loch Lomond"? Why is New
Jersey said not to belong to the Union? What is the Christ of the
Andes? What causes the slides in the Culebra cut? Is the water
higher on the Pacific side of the canal than on the Atlantic side?
Did Cleopatra have red hair? Were the scarabs worn by the ancient
Egyptians petrified beetles? How can we clean oil paintings?
Do deer lose their horns in the winter? What does Armageddon
mean and where did the word originate? How can you make tomato
jelly jell?
Digitized by
Google
Library Work in the Open Country 265
Township Centers
In some states the traveling librarian assembles the librarians
of the traveling libraries of one township or one district and talks
to them about books, finds out what they are doing and what they
think should be sent to their communities. This led in one town-
ship to the books being all sent to the central village and distributed
from there to the other communities. There is a reading room
and collection of reference books and a head librarian in the central
library. There is a local Ubrarian in each of the other communities.
The librarian for the branch selects the books for her community
from the main collection, with the aid of the head Ubrarian. These
books are changed from time to time so that the local collection is
kept fresh. They say nearly every one who comes to the village
•that has the main library visits it, and as this village is the trading
centre most of the people in the township come there weekly.
This brings the whole township together and, as the minister
wrote, "the Kbrary in this township is the main occupation now in
the evenings and it is bringing about a community spirit." A
township clubhouse, where dances and sociables were held, was
soon the outcome. This township contains 56 square miles.
Many townships are following its lead.
County Libraries
Li large states, county Ubraries are being estabUshed. The
smaller the unit the better the work is done, as the people can
come more directly and more often in contact with the librarian
and the main collection of books.
Book Wagons
In some counties and even in some states book wagons have been
routed. These wagons, are loaded with books and cover a regular
route. Stops are made at farmhouses, where there is much pleasant
conversation, and books for each member of the family are chosen
and requests made for books to be sent on the next trip. This
service has met with much success.
Co5peration
Large city and town libraries are helping solve the problem of
country reading by sending books to small communities immediately
surroimding them. The ideal condition is that there shall be a
Digitized by
Google
266 The Annals of the American Academy
library and reading room within the reach of every citizen, therefore
large libraries are being encouraged to so serve villages near them.
The efficiency of traveling libraries when administered by
granges called attention to the fact that rural libraries, to accom-
plish their object should cooperate with other agencies for rural bet-
terment; so traveling librarians began to study these agencies and
work through and with them, — the state department of agriculture,
the state experiment station, the extension department of the state
college of agriculture, the grange, the state board of health, and the
state department of education.
The teachers' institutes afford a great opportunity for getting
in touch with the rural school teachers and farmers' institutes are
one of the very best means of reaching country people as a whole
as institute workers are very ready to help and anxious to cooperate..
The county agricultural agent becomes in many places a real library
agent advising and introducing the librarian and seeing that people
get the books. So through codperation the traveling library system
develops into a real factor in country life.
Some one has asked the object of all this work.
It is that ''each man and woman, boy and girl, shall have his chance and that
the state shall maintain a library which can be used by all of the people who desiie
books for reading or study, for recreation, inspiration or information, and shall
offer a library service that shall make it possible for the most remote oonmiunity,
the most isolated workers, to have books to use as freely as they would have if
they were living in the city." It is the goal of the library workers in the open
country that every man, woman and child in the rural communities shall get the
book that is to help them individually, and that the rising generation shall have
the reading habit and demand these things for themselves.
Digitized by
Google
THE HOME READING COURSES OF THE UNITED
STATES BUREAU OF EDUCATION
Bt Ellen C. Lombard, B. S.,
Special Collaborator, United States Bureau of Education.
The Home Reading Courses of the United States Bureau of
Education have been established to meet a well-defined need for
systematic reading, not only among those familiar with the classics, '
but among many who have heretofore not had the opportunity to
read good books under helpful direction. Through these courses
it is hoped that acquaintance with good literature may be promoted.
The great books of literature are those which represent the
ideals and tendencies of the people of whom they are written.
They are mirrors in which are reflected the thoughts and feelings
and aspirations of a race, an age or a civilization. They live
through the centuries because they are taken from lile.
All people may read the world's greatest literature with pleas-
ure and profit. In some quarters the impression has prevailed
that certain books of literature could not be read without the aid
of an instructor or, at least, of an outline. It is a fact that so much
instruction has sometimes been given about these great books, that
a distaste for the books has been created in the readers' minds.
Schools have the best opportunity to create in boys and girls
a desire for reading and to teach them to discriminate between good
and bad literature. They set the standard. Teachers may so
establish the reading habit that boys and girls who leave school
at an early age will be satisfied with nothing less than the best
literature and will supplement their school work by much reading
in after life. More concentrated reading may be done in the
home than in the school, where the attention is distracted by
recitations and the confusion incident to school-room life.
Thousands of boys and girls are leaving school yearly before
they have finished the grammar grades. Thousands of men and
women testify to their need of further education. To meet this
need the United States Commissioner of Education, Dr. P. P.
Cli^rton, has inaugurated the National Reading Circle.
207
Digitized by
Google
268 The Annals of the American Academy
The plan already includes ten reading courses as follows:
1. Great Literary Bibles. 6. Thirty Books of Great Fiction.
2. Masterpieces of the World's Literature. 7. The World's Heroes.
3. Riding Course for Parents. 8. American Literatiu^.
4. MisceUaneouB Coiuse for Boys. 9. History.
5. Miscellaneous Course for Girls. 10. Biography.
Seven courses are now ready for distribution. Courses seven,
nine and ten are in preparation at present.
The first two courses include such books as the Iliad, the Odys-
sey, the Divine Com^y pf Dante, the Aeneid of Virgil and the
NibelungerUied. Among the books chosen for parents' reading
are a few relating to the physical care of children, their moral and
spiritual training and a few books on domestic economy and recent
fiction.
The preparation of some of the courses has been in the hands
of a committee composed of Professor William Lyon Phelps of
Yale University, Professor Charles Alphonso Smith of the Uni-
versity of Virginia, Professor Charles Forster Smith of the Univer-
sity of Wisconsin and Professor Richard Burton of the University
of Minnesota.
A course in United States history is now in preparation. The
committee working on this course in cooperation with the Bureau
of Education consists of Professor William Starr Myers of Prince-
ton University, Professor Wilbur F. Gordy of Hartford, Conn.,
Professor Franklin L. Riley of the Washington and Lee University
and Professor William H. Mace of Syracuse University.
Over three thousand men, women, boys and girls have enrolled
in the National Reading Circle and are reading the books selected
for the courses. The readers represent all walks of life — school
principals, teachers, students, business men and women, physicians,
lawyers, ministers, librarians. School principals, teachers and libra-
rians are assisting by forming small circles for reading. House-
wives are forming reading circles among their neighbors.
The requirements are simple. Each reader is asked to send
to the Bureau of Education a notification when each book is begun
and finished, and to send a summary of every book read. All
courses are to be read once, at least, except the first course which
is to be read twice.
When a course is completed, test questions are sent to the
Digitized by
Google
Home Reading Courses 269
reader. When these are answered satisfactorily, a certificate, signed
by the Commissioner of Education, is given.
State library commissions and traveling library commissions
are giving their aid, placing the books at the disposal of the readers.
Local libraries are cooperating by placing the books in the courses
on the shelves. Library officials in all parts of the country report
that the demand for serious books of this sort has never been so
insistent as at the present time.
Upon application to the Home Education Division, U. S.
Bureau of Education, Washington, D. C, full information and the
reading courses will be sent.
It is difficult to measure the full extent of this new work. In
addition to the large number of persons already on the rolls of the
bureau who are taking the courses regularly, there are many others
who have been stimulated directly or indirectly by the bureau's
efforts to give national attention to the importance of better read-
ing. In this respect the reading courses are but one of a number
of evidences of the federal government's newly awakened interest
in the long-neglected field of home education.
Digitized by
Google
VISUAL INSTRUCTION IN NEW YORK STATE
By Alfred W. Abrams,
Chief of Division of Visual Instruction, State Department of Education,
New York.
Approximately 300,000 lantern slides were lent to schools,
libraries and organizations of New York state by the division of
visual instruction of the state education department during the
school year ending June 30, 1916. It is a conservative estimate
to say that on the average at least a hundred persons gave more or
less intensive study to each of these slides. This is the equivalent
of one person studying 30,000,000 different pictures. The pictures
lent in the form of slides are also furnished as mounted photographic
prints which are widely circulated. Beside^, art instruction is
encouraged by the lending of large framed reproductions of standard
works of art for wall decoration, and schools are encouraged by
state aid to buy such pictures.
New York is the pioneer state in the field of organized visual
instruction, having begun nearly thirty years ago the preparation
of pictorial aids to instruction for its normal schools and larger
commimities. . Since that time more than half a million dollars
of' state money has been expended in the preparation and circulation
of pictures.
The Selection op Pictures
In 1911 the fire in the state capitol destroyed the entire collec-
tion of negatives, slides, prints and equipment that had been accumu-
lated up to that time. The loss was a heavy one, but it offered the
opportimity in the reestablishment of the collection to put into
effect such ideas of visual instruction and such plans of administra-
tion as previous experience had shown to be desirable. Many of the
earlier practices in collecting and organizing material were aban-
doned and higher standards established. The pictures of the
new collection are superior to the earlier ones in quality, are selected
more closely with reference to subject value, and represent a
much wider range of subjects. Travel views are relatively less
numerous and more attention is being given to art, literature,
270
Digitized by
Google
ViwAL Inbtbuciion 271
history and the sciences. The relatively rapid increase in loans
during the last few years is a convincing evidence that a more
scientific and pedagogical attitude toward pictures as a medium of
expression is being encouraged.
The following are some of the|ideas|and]practices underlying
the selection, organization and distribution of pictures at the
present time. While entertainment is a proper purpose in the
use of pictures, a state collection should be made primarily with
a view to serious study and instruction. A collection increases
in value as pictures of relatively little importance, of temporary
interest and of inferior quality are kept out. Selection, of course,
means elimination and in the case of pictures elimination needs
to be rather drastic. Pictures are accepted for their authenticity,
their truthfulness and their expressiveness. These essential quali-
ties go far toward making pictures attractive, which is another
necessary featiu*e. •
Classification op Pictures
A scientific basis of classification similar to that used in
libraries has been adopted rather than an arrangement by fixed
"sets," in which slides are numbered consecutively. Provision is
thus made for accessions and for the selection of pictures by many
classes of borrowers in the widest possible range of combinations.
All pictures of the collection are made from original negatives owned
by the division. Half-tones are never reproduced. Many special
drawings and maps are prepared. A full title is given each picture
to indicate not only what is shown in the picture, but also the
source, place and time of the negative. Study notes and bibliog-
raphies are furnished, but no "lectures'' accompany the pictures.
The work of the bureau is conducted on the theory that the
basis of all true visual instruction is real observation. Impressions
must go farther than the physical eye; the mind must analyze a
picture before there can be real visualization. Unless there is some
mental reaction to the pictures presented, no educational results
are acquired. As the reaction becomes more vigorous and better
directed, the visualization becomes more perfect. Pictures should
be used not merely to entertain and impart interesting information,
but even more to train the mind to make accurate observations,
intelligent discriminations and correct judgments. In short, visual
Digitized by
Google
272 The Annals of the American Academy
instruction is an old inductive process and involves a strict adherence
to well-recognized principles of inductive study.
A Form op Educational Extension
But while the collection is being made and organized primarily
with a view to serious class instruction in the schools, it is for that
reason none the less adapted for educational extension work. A
very large proportion of the loans are made for use by all sorts of
lopal organizations — study clubs, civic societies, churches, etc.
Slides used by the schools for class instruction are also presented to
parents and others by teachers and pupils in' evening exercises.
Public libraries not only keep catalogues of the state collection on
hand and borrow slides and photographs for the use of local organi-
zations, but also themselves use freely the mounted prints on bul-
letin boards and reference tables.
The general aim is to make the collection a great storehouse
of excellent pictures of things that are of large and permanent in-
terest, to organize the pictures scientifically, and to make them
readily available for the use of anyone within the state for strictly
free instruction.*
^SeeAhnxna, A. W. "Visual lostruction and Its Management," American
School Board Joumalf July, 1914.
Digitized by
Google
THE UNITED StATES BUREAU OP EDUCATION AND
THE IMMIGRANT
H. H. Wheaton, J.D.,
Specialist in Immigrant Education, Bureau of Education, Washington, D. C.
The Americanization of the alien is a process of adjustment to
American conditions. Five factors contribute, or should contribute,
to this process.
The first of these factors is the protection of the alien from
exploitation and defraudation by private bankers, steamship ticket
agents, employment agents, padroni and a host of those who feast
upon the ignorant and helpless. Such protection by the state
impresses upon the alien a higher ideal of American citizenship and
eventually makes him a better citizen.
The second factor is the proper employment of the immigrant.
A substantial proportion of those immigrating annually are farmers
or unskilled laborers. Coming from farms or rural communities,
they go into our complex industrial system — ^into our factories,
our shops, our mines. Not equipped by nature or training, not
drilled by experience, they enter into a new field of human activity
with handicaps which subsequently mean their physical and in-
dustrial decline. The failure of America to direct these men into
suitable occupations is responsible for many labor difficulties and
industrial tribulations disturbing to our American commonwealth.
A closely related factor is that of distribution. In fact, voca-
tional direction of the newly arrived alien is the point of departure
for a national system of distribution. Any eflfort to divert or direct
immigrants from "foreign colonies'' in our large cities, exerts a
powerful influence on their ultimate assimilation by increasing the
multiplicity of contacts t^th Americans. As colonization mini-
mizes contact with outside influences, so obversely does distribution
enhance association with American citizens, institutions, forces and
ideals.
Education, however, is the most potent force toward inculcating
American ideals and impulses. The English language and a knowl-
edge of the civic forces of the country are indispensable to the
273
Digitized by
Google
274 The Annals of the American Acadbmt
alien in adjusting himself to America. Through our common
speech comes understanding. Without it the pages of our news-
papers are meaningless and ordinary matters of business with
Americans must be transacted through the medium of an inter-
preter. Only by overcoming inability to speak English, by elimi-
nating illiteracy among aliens, and by instilling the ideals, attitudes
and habits of thought of America, can we hope to make real Ameri-
can citizens of the strangers within our gates.
Naturalization is the last factor in Americanization, and it is
less important. It is merely the legal procedure applied after the
other factors have exercised their full influence upon the alien.
Being the final step, however, it is necessary that the standard of
qualification should be high and that the technicalities of admission
to citizenship be reasonable, in order that the process of American-
ization actually be contributed to, not hindered.
The education of children of immigrants in the day schools
has always been considered a primary and essential function of the
school system. But the training of adults in English and civics
has not been generally so considered. Evening schools, through
which only can adults be reached effectively, have usually been
regarded merely as adjuncts to the day-school system, and hence
are maintained when funds can be spared or eked out. Adequate
facilities for the adult are rarely organized and maintained as an
organic part of the educational system with a specific appropriation
and \mified supervision. In fact, education of immigrants has
been left too largely to the well-intentioned but sporadic interest
and effort of private organizations and individuals. The provision
of public facilities may, therefore, be treated at present and for some
time to come as a legitimate extension activity for educational
systems.
It is with this latter conception in mind that the United
States Bmreau of Education has for a considerable period been
actively engaged in promoting the extension of facilities for the
education of immigrants over the compulsory attendance age.
Authority to undertake this extensive program is derived from the
organic act creating the bureau in 1867 and from various acts of
Congress making appropriations for the purpose of promoting
industrial and vocational training, the elimination of illiteracy and
the cause of education generally.
Digitized by
Google
Bureau of Education and Immigbant 275
From the very beginniiig a definite, well-articulated procedure
has been pursued: (1) to carry on a searching nation-wide inquiry
into the entire field of immigrant education; (2) to formulate,
compare, and interpret the data thus obtained; (3) to devise stand-
ards and methods based upon the experience and practices of those
dealing with the subject first-hand; (4) to promote the organization
and maintenance of facilities wherever possible; and (5) to develop
and shape national, state and city policies in the education of
immigrants.
Activity along these lines was made effective by the organiza-
tion of a Division of Immi^ant Education with a staff of experts
and assistants specializing in the subject in hand.
Investigation into Conditions
Examination of the Census reports disclosed some astounding
facts in 1910. No fewer than 2,896,606 foreign-born whites fifteen
years of age and over could not speak the English language. Fre-
quently this handicap was compounded with illiteracy, for 1,636,677
could not read and write in any language. The two closely allied
problems thus presented, when taken in connection with the annual
immigration from countries in southern and eastem^Europe and in
Asia, whose varied peoples are not only non-English-speaking but
largely illiterate, directly affect the continued existence and stamina
of the ideals, institutions and democracy of America.
Nor are these problems substantially diminished by attend-
ance upon school. Only 138,253 foreign-born whites over fifteen
years of age were attending school in 1910. As attendance is
volimtary for those over sixteen years of age with but two or three
exceptions, no appreciable decrease in illiteracy and inability to
speak English will occur unless unusual efforts are put forth to extend
educational facilities and to induce or compel the attendance of
non-English-speaking and illiterate persons upon such facilities.
Inadequate Facxuties and Appbopbiations
To verify the suspicion that schools and classes for adults were
not adequate, a representative made a tour of the country in 1914,
visiting most of the important cities where aliens were congregated
in large numbers. The information thus secured, together with
returns upon several thousand questionnaires sent to all city and
Digitized by
Google
276 The Annals op the American Acadebtt
county superintendents of schools, demonstrated conclusively that
the facilities for educating the immigrant cannot cope with the
present problem. Appropriations for evening-school work were
found to be omitted in many instances, or wholly neglected in others.
Even in states and cities having an extremely large foreign-bom
population, sums appropriated were surprisingly low. This fact
greatly handicaps school authorities by making it impossible to
centraUze supervision of immigrant education and by preventing
the appointment of teachers specially trained and adapted to this
kind of teaching. Superintendents are also unable to pay salaries
sufficiently attractive to make it possible for teachers to devote
their entire time to evening-school instruction, and are, therefore,
obliged to use day-school teachers in the evening schools to the
physical detriment of the teachers and consequent loss to the
pupils. Inadequate appropriations also shorten the evening-school
terms which with a very few exceptions are entirely too short, not
only to obtain the best results, but to cover the period of heaviest
immigration in the late spring. Similar considerations prevent
the proper advertising of schools, classes, and subjects, and the
carrying on of well organized publicity campaigns to increase the
attendance of foreigners upon evening schools.
Constitutional and LEQiSLATnrB Handicaps
A more surprising legal aspect of the situation was disclosed.
Not only do few state constitutions provide for school facilities for
adults, but many of them, either by limitation as to years or as to
state aid for the maintenance of classes for pupils over twenty-one
years, place a heavy handicap upon the organization of f aciUties for
adults. This is the €ase in no fewer than fifteen state constitutions.
In few states again do school laws make the estabUshment of evening
schools mandatory upon local school boards, while only eleven
states grant financial aid in support of such schools. Thus, without
the encouragement of federal aid and frequently even without state
assistance, it is not surprising that facilities for the education of the
immigrant population are insufficient, especially when it is con-
sidered that much of this population is of a transitory nature and
communities naturally hesitate to assume the entire financial
burden of maintaining schools for the benefit of many who may
subsequently remove to another locaUty.
Digitized by
Google
Bureau op Education and Immigrant 277
Promotion op Facilities
As an immigrant child, through attending our American
schools, does much toward Americanizing its parents, it is important
that each immigrant child, immediately upon arrival in this country,
be placed in the proper school and grade. Owing to the desire of
the immigrant parents, who generally come to this country in
impecunious circumstances, that their children from thirteen to
sixteen years of age should work, many children of school age are
placed in unlawful employment and frequently taught to conceal
their correct ages.
FACILTTATINa ATTENDANCE OF AlIEN CHILDREN
To reduce the seriousness of this condition a co5perative
arrangement was developed between the United States Bureau of
Education and the United States Bureau of Immigration whereby
the names, prospective addresses, ages and other items of identifica-
tion of all alien children of school age entering our ports are sent
to the respective superintendents of those communities to which
such children are destined. This plan was put into general opera-
tion last fall, and school superintendents have already begun to
report that this information supplied by the federal government
has materially aided them in locating alien children before they
became unlawfully employed, and in ascertaining the correct ages
of those who attempt evasion of the compulsory attendance laws.
"America First" Campaign
Immigrants generally are not aware either of the existence or
nature of eveningnschool facilities. Annual advertising in the
American press by school authorities does not serve to secure the
attendance of those who do not speak English or who do not read.
An aggressive campaign of publicity by means of posters, handbills,
dodgers and newspaper articles in the foreign-language press is
necessary. For its psychological effect upon aliens and local com-
munities an "America First" poster was distributed during the fall
and winter, 1915-16. Attractively lithographed in red, white and
blue, it bore upon its face the unusual invitation in eight languages:
Learn English; Attend Night School; It Means a Better Opportunity and a
Better Home in America; It Means a Better Job; It Means a Better Chance for
Your Children; It Means a Better America; Ask the Nearest Public School about
Digitized by
Google
278 The Annals of thb American Academy
Classes; If there is none in your town, write to the United States Bureau of
Education, Washington, D. C:
A figure of Uncle Sam in the foreground, extending the hand of
welcome to an immigrant workingman and pointing with the other
to a school, lends to the poster a touch of patriotism and fellowship.
Over one hundred thousand posters were sent to school super-
intendents, post offices, industrial establishments, chambers of
commerce, newspapers, private organizations and individuals.
The ''America First'' idea appealed to the imagination of the
country and the prompt requests for posters, coming from all parts
of the United States and even from abroad, very shortly exhausted
the supply.
As a result of the awakening caused by this campaign the
bureau has been called upon to answer requests from school super-
intendents, principals, teachers, industries, organizations and
interested individuals for suggestions in organizing classes for
immigrants, for bulletins, publications and statistics, for methods of
instruction and for cooperation in a variety of ways. A large
number of industries and chambers of commerce immediately
expressed a desire to cooperate with the bureau in getting employes
to attend classes in English and civics. Several distributed circulars
among employes urging attendance; others offered a wage increase
to those in regular attendance; some made attendance compulsory;
while still others established a rule that in making promotions the
English-speaking employe would be given preference over the non-
English-speaking. Private organizations expecially became active,
and while every service possible has been rendered them, they have
been uniformly urged to place all educational facilities organized or
contemplated under the general supervision of local school officials,
in order to avoid dupUcation of effort and useless expenditure of
time and money.
IionQRANTB Petition fob Niqht Schooi^
The most significant outgrowth of the "America First" cam-
paign is seen in the large number of letters and petitions received
from foreigners and written in their native languages. By far the
greater number of these was received from communities where no
evening scbppl? bad been previously maintained. The tenor of
Digitized by
Google
BUBEATT OF EdXJCATION AND IMMIGRANT 279
these communications may be gathered from the following petition
signed by sixty-five Lithuanians:
To THE Honorable Board op Education, Washington, D. C: —
The iinderBigned citizens of the United States, of Lithuanian parentage,
residing in Mebroee Park, Cook County, Illinois, do respectfully petition your
Honorable Body to install a free night school in our locality for the purpose of
the education of the Lithuanian-American citizens in the English language.
There is at present in our locality no free night school offering any opportimity
for foreign bofn citizens to become educated in the English language, although
there are approximately three thousand (3,000) foreign bom American citizens in
the village of Melrose Park, and surrounding territory.
This and similar requests signed by a large number of foreigners in
other communities have been taken up officially with the respective
school authorities in communities where the petitioners resided,
with the result that suitable classes have been organized in several
places where such facilities had never before existed. Where a
lack of funds made it impossible for local school boards to respond
to these requests, the active cooperation of industries was solicited
and classes organized in some communities with private support.
Practical considerations, such as increased efficiency, diminution
of accidents, and reduction of the cost of supervision, rather than a
desire to engage in welfare work for employes, were the motives
actuating industrial establishments in conducting, or contributing
to the support of, classes in EngUsh and civics.
Training of Teachers for Immiqrant Classes
Training of teachers is an important factor in the education of
aliens. Without teachers having known ability to teach immigrants,
a knowledge of foreign types and the best methods of teaching them,
satisfactory progress cannot be made by a class of adults. Hence,
school officials have been encouraged to conduct training courses in
immigrant methods. A very notable course was conducted by the
New York State Department of Education in codperation with the
bureau for teachers in several cities in the vicinity of Albany, N. Y.
Interest and attendance were so unusual that the department
organised a permanent course in the New York State Teachers'
College at Albany, while Buffalo and Rochester Boards of Education
were also inspired to arrange and conduct similar training courses
for teachers in their respective sections of the state. The United
States Bureau of Education has also cooperated with Boston and
Detroit by furnishing a lecturer for similar institutes.
Digitized by
Google
280 The Annals op the American Acadebiy
While local efforts in the training of teachers are direct and
efficient for local purposes, it is necessary to look to the colleges,
universities and normal schools for that general training which will
produce a teacher or social worker of ability, insight, and vision.
Inquiry disclosed that only fourteen such institutions, out of one
hundred forty-seven reporting, had special courses in "Inunigra-
tion,'' and even these courses were treated in a purely academic
manner. Sixty-nine conducted lectures in connection with courses
in economics, history, and sociology, while sixty^hree reported no
attention whatever to the subject of immigration or the training
of students for service among immigrants. To stimulate activity a
"Professional Course for Service Among Immigrants'' was prepared
for use in colleges and other higher institutions of learning. A
circular letter directed to the heads of such institutions tendered
cooperation in the introduction of the course. In response thirty-
four institutions have expressed the possibility of adopting the
course in whole or in part. By special arrangement a training
course of fifteen lectures was given by a representative of the Bureau
in Yale University this spring for which elective credits were given.
The experience thus gained will provide the basis for a revision of
the published course.
Although the immigrant woman is no small factor in the
"Americanization" program, but little attention has been given her
in the past. The duties of the home and objections on the part of
husbands and fathers make it a difficult task to enroll foreign women
and girls in the evening schools. The initial responsibility for
making points of contact for the immigrant mother and daughter
with Americans rests primarily upon American women and upon
their clubs and organizations. A program of work for women's
organizations has been prepared for general distribution, covering
a study and promotion of night school facilities, library facilities,
home education, and improvement of living conditions, together
with a variety of other activities for the amelioration of the condi-
tions of immigrant women.
Formulation op Standards and Methods
One of the most important functions is the formulation of
standards and methods. "Standards," however, does not mean
"standardization," but the statement of policies, practice, or
Digitized by
Google
Bureau of Education and Immigrant 281
methods of the most advanced and approved kind. As the bureau
has no administrative authority over the schools of this coimtry,
it can promote standards only by the presentation of facts, experi-
ence and reasoning, and by demonstration of their efficiency and
merit.
For the purpose of paving the way to approved standards and
methods in immigrant education, a tentative schedule has been
prepared, dealing with recommended legislative action, organization
and administration of educational facilities, factors and agencies
for training, and content and methods of instruction.
Constructive state legislation is urged looking toward com-
pulsory attendance of non-English-speaking and illiterate persons
under twenty-one years, and a general requirement that classes in
English and civics be maintained in all communities where twenty
or more aliens are affected by the provisions of the suggested com-
pulsory attendance law or where that number formally petition for
evening schools.
A National, State and City Program
No extension propaganda can be ultimately successful unless
it grow out of a constructive program. To insure the constructive
nature of any program, the most approved practices must be con-
sidered in connection with needs and conditions. Such considera-
tion has developed the following national; state and city program,
which because of its intimate bearing upon the various extension
activities of state and local school systems is set forth at length at
this point:
National Program
(1) Formulate standards and methods in the education of
immigrants and plan and prepare standard courses in English and
civics.
(2) Continue the sending of names and other facts of identifi-
cation of alien children admitted at ports of entry, to proper school
oflScials at points of destination in order to aid enforcement of labor,
compulsory attendance, and other school laws. Place in the hands
of each child of school age suitable material regarding educational
opportunities in the United States.
(3) Publish and distribute an educational handbook for aliens
Digitized by
Google
282 The Annals of the American Academy
dealing with evening schools, libraries, compulsory attendance laws,
colleges and other educational opportunities and information.
Program for States
(1) Amend the education laws to necessitate compulsory
attendance of non-English-speaking and illiterate minors between
the ages of fourteen and twenty-one years, fixing the standard of
literacy as equivalent to that necessary to completion of the fifth
grade in the public schools. Make this effective by amending the
labor laws to prohibit the employment of such minors unless weekly
reports of regular attendance are presented to employers.
(2) Require all communities, where twenty or more aliens
affected by the amendment proposed in (1) above, or where twenty
or more petition formally, to establish and maintain evening schools
or other appropriate facilities in which English and civics are
taught throughout a period of at least one hundred sessions in
communities of less than 100,000 population and of at least one
hundred twenty sessions in communities of over 100,000 population.
(3) Multiply media for educating foreigners, such as camp
schools, industrial and vocational schools, continuation and part-
time schools.
(4) Develop traveling libraries of foreign-language books, and
books in English suitable to foreign-born readers, and place such
libraries in evening schools where foreigners are receiving instruc-
tion.
(5) Grant state aid, subject to appropriate requirements, to
cities and school districts compelled to establish or maintain facilities
pursuant to the operation of the compulsory attendance amendment
above referred to.
(6) Centralize general control and supervision over classes
in the state department of education.
(7) Prepare bulletins and syllabi for local use and standardize
classes, terms and courses.
(8) Provide free textbooks or authorize city and district school
boards to provide them in evening schools and classes.
Program for Cities
(1) In large cities concentrate all immigrant educational
activities for persons above compulsory attendance age imder one
supervisor appointed by the superintendent of education with
Digitized by
Google
Bureau of Education and Immigrant 283
powers to coordinate classes, courses, methods and subject matter,
and otherwise organize the education of aliens as a unit.
(2) Appoint teachers of English on the basis of known ability
to teach immigrants, experience, training and knowledge of foreign
types.
(3) Conduct teachers' training courses for the purpose of
demonstrating the best methods of teaching English and civics to
immigrants, and for establishing standards in subject-matter and
methods.
(4) Lengthen the evening-school term to cover the spring period
of heavy immigration, giving three nights of instruction per week,
one and a half hours per evening.
(5) Establish branch or deposit stations of the city library in
all schools where students are taught, selecting books with the
assistance of committees from foreign societies made up of the
better educated foreigners, and also securing from the state traveling
library books in English and foreign languages suitable to adults.
(6) Develop the use of schools as neighborhood centers for
meetings of foreigners' societies and parents' associations.
(7) Advertise evening-school facilities in foreign-language
newspapers; distribute circulars and posters in the principal foreign
languages throughout the foreign quarters; post notices in factories
where aliens are employed; send letters to foreign organizations
requesting coSperation; and appoint committees of foreigners to
procure attendance of adult immigrants.
(8) Ascertain the type of educational work for foreigners being
conducted by private agencies, and solicit the co5peration of such
organizations.
The cooperation of all interested public and private agencies
has at all times been solicited by the United States Bureau of
Education in order that all may work together in a complete educa-
tional program of Americanization. Only through such mutual
assistance can any national, state, or city program be effectively
carried out. Standards depend for their maintenance upon the
support of the public. Needed legislation will be secured only when
interested individuals and organizations unite in demanding its
passage. The national publicity campaign now being organized to
extend facilities and to increase the attendance of immigrants will
demand the interest and cooperation of every patriotic American.
Digitized by
Google
EDUCATION THROUGH OPPICIAL PUBLICITY
By William H. Allen,
Director Institute for Public Service, New York.
The extra-curricular influence of schools is far wider than their
extra-curricular activities.
The influence of every strong teacher upon his pupil when
teacher and child are separated is more important than the influence
of direct contact with the child. It is the same with the school's
oflScial publicity. Its indirect effects are of wider range and deeper
import than its direct effect.
School publicity affects for good or ill all other oflScial pubhcity.
If it is lifeless, insincere, boastful, unconvincing, slovenly edited,
it is a low-water mark with which every other city department will
tend to find level. If, on the other hand, it is alive, informative,
direct, frank — educative — other departments will tend to compete
in these respects.
A school superintendent told me recently that his report had
been so different from the reports of other town oflScers that it was
necessary for other oflScial reporters to notice the difference. He
had used blocked headings in effective black face type, interesting
diagrams and photographs, the short paragraph method of listing
achievements and recommendations, and the square facing of tax-
payer doubt with school fact. Other reporters could not laugh
him out of town meeting if they would. They decided to imitate
instead.
More than half their time our twenty odd million school chil-
dren are out of school.. Four fifths of our whole population are not
attending school any of the time. If out-of-school'time is to be used
consciously for educational purposes it must be through other means
than the school curriculum and extra activities. Because all em-
ployers, all parents, all ''bosses,'' all salesmen are in a teaching
relation, it becomes of the utmost importance to see that what's
in the air — i.e. what is done to affect teaching outside of school —
will directly supplement teaching in school.
Official publicity is not only the most effective form of pubhcity
284
Digitized by
Google
Education Through Official PublicitIt 285
but it is one of the most important factors in publicly organized
education. It concerns most men. In fact it concerns all men. It
is the only thing which does concern the whole public. The reader
of a paper listens to what a distinguished private citizen says with-
out feeling that it is part of his own responsibility. When he reads
what a public official says he instinctively feels that he is reading
about himself and speaking to himself about his own work. There
are at least
Five Kinds of Official Publicity
1. Formal addresses such as at commencement and inaugural exercises, or
reports to annual meetings
2. Incidental or informal addresses at public meeiings, banquets, women's
dubs, chambers of commerce, etc.
3. Verbal interviews or matter sent to newspapers whether initiating with
the newBDaper or with the school official; current reports of school activities
4. Exhibits
5. Annual reports
These five forms are found together in many places. Impor-
tant educational work is done through each. The exhibit method is
found also as part of each of the four other methods. For example,
President Godfrey of Drexel Institute uses the graphic method in
presenting monthly reports to his board of trustees. William Mc-
Andrew, associate superintendent of New York City, employs the
graphic method even in writing letters to school commissioners.
Dr. Leonard Ayers gives chalk talks and chart talks to teachers'
associations.
Formal addresses not only offer occasions for testing public
interest and capacity for growth, but bring pressure to bear upon
part of the public through the rest of the public and upon officials,
including teachers, through the general public. President Finley,
of the University of the State of New York and commissioner of
public education, makes effective use of the formal address.
The incidental or informal address is in many ways more im-
portant than the formal address. The after-dinner or special-
occasion speaker finds an audience off its guard and susceptible,
particularly if his remarks are to the point, brief, and breezy.
School men are using these occasions extensively. Because their
work is vital and full of concrete material they are welcome con-
tributors to local and state meetings of women's clubs, merchants'
Digitized by
Google
286 The Annals op the American Academy
associations, bankers, lawyers, etc. In many cities the school
superintendent is the toastmaster paramount. Probably no one
has done more to educate through official publicity than President
Vincent, of the University of Minnesota, or Mrs. Josephine C. Pres-
ton, state superintendent of public education in Washington.
Informal, cumulative publicity like the interview, either
grudgingly given on the insistence of a live newspaper or consented
to by the editor upon the insistence of a live superintendent, is
playing a more important r61e each year. Until quite recently
the interview was shunned by cautious superintendents chiefly be-
cause it was given a bad reputation by the inveterate self -advertiser.
School men are realizing, however, that in order to insure community
protection against stampedes they must insure continuous education
of the public and must muke it easier for newspapers to print the truth
and essentials than to print non-truths and non-essentials. Hence
we find today the weekly or monthly bulletins printed by univer-
sities such as that of North Carolina, and by state departments and
normal schools such as Wisconsin's. Then there are written "re-
leases'' or notices given out by city superintendents, sometimes
through composition classes. The short stories are used, sometimes
as features, sometimes as editorials, and sometimes as fillers by news-
papers. In some cities — ^for example, Decatur, Illinois and Madison,
' New Jersey — ^from one to five items a week, and from one to three
columns are given to school news. Superintendent Albert Leonard
of New Rochelle, New York, prepares items sometimes attributed
to the superintendent, frequently published as newspaper discover-
ies. These releases from educational headquarters are today
directly educating more individuals than does the educational
system itself.
The current report to the board of trustees is not given to
newspapers as much as it might be, but is being increasingly used.
No month goes by without its own interesting events. It is simply
a question whether the newspaper shall be offered a digest of worth
while facts or be left to stumble and search for school news.
The exhibit and the annual report are two forms of publicity
which involve all the technique and principles of the three other
forms, and which disclose all their deficiencies, plus several others.
Special attention, therefore, is here given to publicity as expressed
through the annual report and formal, cumulative exhibit.
Digitized by
Google
Education Thbough Official Publicitt 287
Education through Exhibits
Education through exhibits has become a popular form of edu-
cation— and of diversion! Four kinds are increasingly used by-
educators — special, current, traveling, report.
Special exhibits bring to mind the kind of thing which was done
at the Panama Pacific Exposition in San Francisco and which is
being done by book companies and school systems at meetings of
state and national education associations. As part of state fairs
we have annual exhibits of school work including ''high spots''
in domestic science, handwriting, corn growing, etc., selected from
competitive school tests first in villages and then in counties. Dur-
ing its recent centennial celebration Indiana made its state house at
Indianapolis an extensive and live exhibit of contrasts and advances,
largely contributed by counties.
The current exhibit is of special interest because it changes and
grows from month to month as improvements are brought to light.
Many principals keep a running exhibit of the best work of their
schools, on class blackboards, in hallways, and in the principal's
oflSce. Superintendents are beginning to keep bulletin boards
which are current exhibits of the best material from outside the
city and from within.
The traveling exhibit is not yet famiUar in the school field. Few
exhibits have been circulated. That is, they have been exchanged,
but even within cities where central exhibits are held, it is not cus-
tomary as it should be to circulate at least miniature exhibits to all
schools — as was done in New York with dental and tuberculosis
exhibits. It is as true of exhibits as of any form of merchandise
that the exhibit must go to the patron and not wait for him to come
to it. There is greater reason for having an "education train" sent
at public expense from place to place than for sending a grain car
or a health car. What would happen to schools if we sent a "high
spot" car or an exhibit of best things in education, including moving
pictures, victrolas, cooking and shop work, to every railroad station?
The moving picture has not been adapted as extensively as must
soon be done. Films are available without cost to show industrial
processes. Routine work of schools must be filmed. Shortly all
schools and classes must have what many now have — movable
photograph apparatus for moving pictures.
Digitized by
Google
288 The Annals of the American Academy
One by-product of the exhibit method has not yet been worked
out systematically enough — i.e. the opportunity to give children and
students live problems to work out in arithmetic, percentage, cost
and drawing. College men and women still pick dry leaves and
measure widths and breadths in order to learn the meaning of aver-
ages, norms, and medians! How much more profitable it would be
to spend their time measuring empty rooms, finding the unit costs of
instruction, diagramming improvements in scholarship, listing
alumni achievements and university needs-not-met, the University
of Wisconsin's biennial exhibit by students indicates. For the
Sh^,kespeare tercentenary elementary and high school pupils
throughout the land devised and made costiunes, gardens, stages,
etc.
The Educational Repobt
A large number of reports have been read recently by the In-
stitute for Public Service at the request of school superintendents
and presidents of colleges and universities. Among evidences
noted that the educational opportunity has not been capitalized
by official reporters are these:
1. Unattractive cover
2. Delay in addressing the audience — ^reports come too late and reportets
take too many pages getting started
3. Crowded page or chart
4. Too small type
5. Absence of photographs, or too few
6. Lack of graphic illustration
7. Failure to list advance steps
8. Failure to list needs
0. Failure to make recommendations
10. Failure to state how much the carrying out of recommendations would
cost
1 1 . Failure to base recommendations on facts or to relate them to facts
12. Failure to support recommendations by facts and interpret actions
13. Using generalization rather than concrete facts, often when concrete
facts are available
14. Too much is placed on charts, in correcting which the Child Federation
of Philadelphia has made special progress in exhibits which can be found described
in pamphlets issued upon request
15. Chart material, etc., has been elaborated too little orally at exliibite.
The best chart work possible can be made much more effective if supplemented
by a live interpreter. In reports on the other hand charts are explained too much
and need too much explanation. Obviously tfl^e pur^o^e of a diagram is to help
Digitized byVjOOQlC
Education Through Official Publicity 289
carry the load — ^it adds to the load if its story needs interpretation — as moving
pictiire concerns quickly leaml
16. live exhibits have been used too little, such as children in relay races
In arithmetic, or giving demonstrations of trade work, or doing regular classroom
work
17. Cartoons and humor are too rare — the Russell Sage Foimdation has "le-
gitimised" them in its reports on Cleveland schools
18. Too much is told at a time. Reports must be issued in installments as
by New York City and the Cleveland school survey
19. Interest is exhausted by too many salutations from subordinates to chief,
and by allowing deans or division heads to "ramble, ramble." Requiring brief
lists of advance steps, studies made, obstacles and needs will help cure this defect
20. There is too much writing to dead predecessors or distant professional
colleagues and too little writing to those who furnish the children or students and
pay the bills. That accounts largely for the rareness of self-study, autonstudy,
analytical comparative review of what education is costing and how its product
compares with its opportimity
The best annual reports are the livest, freshest, strongest ma-
terial available on education. They are a decade or a generation
ahead of books. Long before bookmakers crystallize the best ex-
perience for the help of isolated administrators many of those iso-
lated men and women have been expressing doubt or demonstrat-
ing improvements in their annual reports. The General Education
Board's book pictures, 1916, of the Rural School of Tomorrow and
The Modem School (which may be procured upon request, 61
Broadway, New York City) read like ancient history to the van-
guard of rural and urban educators.
So much does education of the public depend upon official pub-
licity that the report broker must soon come to be as usual as the
play broker or the consulting engineer. In addition to attending
colleges of education to hear how schools should be administered
from those who never administered schools educational reporters
will take a summer perhaps by correspondence in the study of their
own reports and other official publicity. At any rate it will soon be
generally true that educators will recognize two essentials to pro-
gressive growth:
1. Official publicity is the educator's greatest opportunity
2. Preparedness for official publicity will more and more require such daily
working, daily analyzing, and daily recording as will erect the structure of which
official publicity at its best is only the reflection.
Digitized by
Google
290
Thb Annals of thb American Acadbmt
ElemCTtaiY School bmmlO
We PlAy Foot 5&II
We tit^ Do
W« Prac^ic< Jn School Yand
Vk Prdchice in Hie PhrK
Mfc I^Khce on Vacant Loh aR/cnHie^h
_^/^^^r
COMPARISON OF FINANCIAL GROWTK
I ^ AND SCHOOL COSTS. DETROIT
ElSl
TOTAL TAX
LEVY
ASSESSeO
VALUATION
7DTA
SCHOOL TAX
096 1900 I90S BIO 1915
CHRISTMAS , ___,^. , -J
DRWnNC fMCHINl&li FACTO^^
POUND IN 1 LIFC
SHOPS ' '=i^
HOW ONE ACTIVITY MAY RELATE TO MANY SUBJECTS
NOBTH ATTUDBOBO, ICAttk, ■CBOOL BBPOBT
PERCENTAGE OF CHILDREN
ACCORDING 1t)AGE GROUP
DAYTON^ OHIO
AT TIME OF ENTERING
GRADE I 1913-14
IN WHOLE SCHOOL SYSTEM
1913-14
II UNDER NORMAL AGE
l^g^ NORMAL AGE
IHH OVER NORMAL AGE
120%
110%
100%
90%
60%
70%
60%
50%
40%
W%
20%
10%
/
/
/
f
(
J
b*
A
/f
}.
i
/
/
>
/
/
y
/
<r^
^
gsS
^
-tsT
p
l90e-7 l907-« 1906-9 i909HO I9I0^I 00-12 "I9IW5 «CH4
COMPARISON OF THE GROWTH
OF O^Y HIGH SCHOOLS AND AU DAY SCUOaS BT PBCCNTAflES
IN NEW YORK CITY
Digitized by
Google
THE PUBLIC SERVICES OF THE COLLEGE AND
UNIVERSITY EXPERT
By Cltdb Lyndon King, Ph.D.,
Asaistant Profeesor of Politipal Science in the Wharton School of the University
of Penm^lvania
The vast sums of money invested in the property of our higher
institutions of learning, and the millions paid out annually for
salaries come directly or indirectly from the public's resources.
If the trustee of material wealth is under obligation to employ
his means for human betterment, the trustee of specialized informa-
tion is surely imder equal obligation to so use or disseminate his
information as to make it of service to society at large. The general
acceptance of this fundamental social obligation has made a society
out of twentieth century individuals.
The old axiom that the best teaching is in the doing is as sound
for the university or college professor as for the kindergartener.
Those teach best who have learned what they would teach at least
in part from practical experience. The wizened pedagogue of
tradition is yielding place to the teacher who through practical con-
tacts has a sense of human and social values. The most effective
teaching in that field of thought which is social and useful is condi-
tioned upon practical contacts with the world of affairs. Such
contacts are particularly indispensable in modern imiversity life.
The dependence of the college and the imiversity upon the
public for such financial resources as are necessary to carry on their
work constitute the superficial, and the possibility of improving
the quality of college and university teaching by the fulfillment of a
social obligation furnishes the real reason for making available to
the public the services and specialized knowledge of the college and
university expert.
The Obligation of Public Service
The obligation of public service is now generally accepted by
and for at least two of the professional groups in the university
circle: the professors of education and medicine. That the depart-
291
Digitized by
Google
292 The Annals op the American Academy
ment of education should be a practical department with training
classes is universally recognized in normal schools and is coming to
be quite generally accepted in universities. Through conferences
on city and rural educational programs, through lectures, through
consultations with teachers, through special bulletins and through
practical teaching work, the instructors in this department have
rendered increasing public service. And with what definite results
in better university teaching, in the reorganization of curricula
and in the better coordination of our educational system, the educa-
tional progress of the last decade bears golden witness!
No tribute to the self-eflfacing, community-making spirit of
twentieth century men is more inspiring than the work of the medical
fraternities in their willingness to put community health before
individual health. The ideal of a generation ago — ^the family
doctor — has given away through the work of the profession itself
to the commimity doctor. For in stamping out the sources of
disease the physician has thinned his own ranks and lessened his
own income. And among physicians none has done this work more
nobly as a rule than the medical faculties of our universities.
More than this, in these two professions, the general standard
now is that no one should have the nerve to teach or be allowed to
teach who is not in practical touch with his source material: the
child or the school room; the patient or the laboratory.
Other groups in our imiversities feel that these same standards
and these same high tests should now be applied to their teaching
and to their research work. As usual in such movements the
yoimger men at least are already pushing their standards toward
these ideals. Daily more abimdant grows the evidence that the
spirit of real service is touching the professions of law and of engi-
neering. But it is particularly with the group of social scientists—
the economists, the sociologists and the political scientists-^that
this paper has to do.
In the group of social scientists the first real need Is for practical
cooperation with public officials or others concerned with the ex-
pert's specialities. The National Association of Urban Universities
exists in part in order to give national expression to the desire of the
university officials and university teachers for closer codperation
between university experts and the representatives of the public
whether they be public officials or officers or members of civic as-
Digitized by
Google
PxjBLic Services op the College £xpbbt 293
sociations. The value of this service to the university and to the
specialist is thus recognized.
Appabbnt Dippicultibs
But this recognition does not mean that there are not certain
diflSculties to be overcome before this type of codperation can find
its best and fullest fruition. These difficulties, however, are of
such a nature as to disappear when clearly understood and frankly
stated. They center about the fact that these sciences are neces-
sarily very closely related to current ''politicar' problems and
"party" issues; though it must be at once obvious that herein
lies their chief value to the student who is to become the business
man of the future.
It has been urged that this relation may lead to two regrettable
tendencies: first, that the imiversity use its experts solely in that
way and for that purpose which it is hoped will attract income, and
second, that the party leaders will ask for the cooperation of the
university expert not with the thought that the services of that
expert may prove valuable or his advice be taken but solely in order
that the university's name and prestige may thus in a nominal way
be put back of a given political movement. It has been held that
there lurk in both these tendencies grave dangers to the scholarship
in and to the integrity of America's higher educational institutions.
But merely to state these presumed difficulties is to be suf-
ficiently entrenched against them. Certain ethical standards will
maintain scholarship while keeping that scholarship wholesome and
effective. Those imiversity experts particularly who wish to render
service to the public or to public officials can adopt certain ethical
standards comparable to the ethical standards adopted by the
lawyers, engineers and physicians, — ethical standards that will
safeguard both their institutions and themselves. These ethical
standards can be reduced to five:
Proposed Ethical Standards for Co5perating Experts
First. The work done for public officials should be as carefully
and a« thoroughly done — unth indications as to sources and nature of
the material — as would a monograph prepared for a scientific journal.
The expert, moreover, should indicate all the available sources
of material and if the data presented in any of those sources are at
Digitized by
Google
294 The Annals of the American Academt
variance with the facts presented, or with the conclusions reached,
the degree of reliability of the facts or conclusions in such sources
should be clearly stated. All of these principles will be adopted by
any scholar as a matter of course.
Second. The expert should segregate his condusions or recom-
mendations as clearly as possible from his facts.
Many times, no doubt, it is as much the judgment of the expert
that the official desires as his facts. Indeed that expert whose judg-
ment is not sound will have little hearing before the average public
official. But the report should be so framed that the conclusions can
fall without involving the integrity of the facts.
Third. While this matter is before the public official or up for
public consideration the expert who drew up the report should refrain
from any public discussion of it.
It must be assumed that the public official who asks for this
kind of coSperation from the university expert will have the privi-
lege, or, if the reputation of the university or expert or city is at
stake, assume the responsibility for printing in full the expert's
report. This report ought then to speak for itself. There should
be no occasion for this particular expert to go about the city or state
urging its adoption or publicly discussing it. It is not to be as-
sumed that the expert is at once the official adviser and the advocate
who will persuade the community to agree to what he recommends
to the public official. This division of duties will safeguard all
parties concerned: the public official from having to disagree with
the public recommendations of his expert; the expert from having
to appear to be urging the adoption of his own advice; the university
or college from appearing to 'Hake sides'' officially in controverted
matters. We could not expect an attorney to take the stump against
his client nor should we except the client to use his position to dis-
credit the attorney. The expert's opinion once made and amply
supported must be assumed to be solely for adoption or rejection
by the public official.
Fourth. The college or university expert should reserve at aU
times the full right to enter into public discussion of any matter whcii-
soever other than the particular matter referred to above.
Unless American professors wish to alienate themselves from
public usefulness, their right to take part in public affairs as do
other citizens will have to be most carefully preserved and protected
Digitized by
Google
Public Sebyiobs of thb Collbgb Expbbt 295
at whatever cost. Not to do so is to nullify completely the good that
will come from co5peration between public officials and college or
university experts; not to do so is to make impossible the socializa-
tion of the specialized knowledge and services of these experts.
Without this right the professor is put into the class of the third
American sex having — ^and deserving — the contempt of all.
Fifth. The chief purpose of practical work by the college or
university expert is to assure better teaching.
Good teaching! This is one quality which students, parents
and public must demand. The best teaching particularly in the
social sciences will usually be by the teacher who has the practical
contacts necessary to make a man of action rather than a man of
straw. Neither can there be good teaching when all or a major
portion of one's energies go for research, or for that matter into
public service. The clear recognition that first and foremost the
business of the university teacher is to teach will prevent many an
awkward situation for all parties concerned.
Othbb Public Sbbvicbs
The above has to do particularly with the practical codperating
work of the expert in social, economic and political science whether
in codperation with public officials or groups of citizens or expressed
in other ways. There is still another method of socializing the
knowledge of the university expert and that is through popular
lectures, books, magazine articles and newspaper stories. The
chief obstacles here lie within the traditions of the profession itself.
One of these traditions is that the written output of the professor
should be stupid and useless to all save other xmiversity professors
who have to read their printed pages in order to "keep up with the
literature. " The phrases accepted by the profession for expressing
this idea are that these works should be " scientific " and " scholarly,"
as though that meant that they could not as well be lucid and hu-
manly interesting. The result is the lack of the ability or the desire
to so state learned truths that he who nms may read. Or perhaps
if simply stated many learned social "norms" would turn out to be
simple (and therefore valuable) folklore. But given practical
contacts, the college or imiversity professor will soon master the
means of humanizing technical knowledge.
This socializing of the specialized knowledge of the university
Digitized by
Google
296 The Annals of the American Academy
expert does not assume that the university professor has some
special gifts from on high that need but translation to be of benefit
to the ''lower classes/' It means that each science has its own
phrases with an exact meaning only to those accustomed to them.
It means that human limitations make it easier for the expert to
slide along in well worn grooves. It means, of course, that technical
phrases must be used in standard technical works. It also means,
however, that good teaching and good work and better social ^nd
institutional standards will all be furthered by at least a greater
effort to put the conclusions of scientific scholarship into simple
lucid language with homely illustrations.
It is not that other people perish for want of the knowledge of
the university expert — ^though this has actually happened in too
many cases; death itself has too often come from the want of popular
knowledge of what is commonplace to the expert. But for his
own growth and development the university expert must be enticed
out of the institutionalism that occasionally enmeshes him. Nor
is it necessary that all yield to this enticement; a bare 20 per cent
will suffice.
Better teaching and better human beings for both the teacher
and the taught are in this movement for the greater public service
of the college and university expert.
Digitized by
Google
BOOK DEPARTMENT
GENERAL WORKS IN ECX)NOMICS
Fbttbb, Frakk a. Economic Principles. (Volume I.) Pp. x, 523. Price,
$1.76. New York : The Century Company, 1916.
Professor Fetter's latest work is remarkable for the logical consistency of
its theoretical structure. Beginning with a discussion of value, he abandons the
tenninology of the hedonistic, "marginal utility'' treatment for one in which
choice, baaed on considerations of varying desirability among goods, is fundamen-
tal Margins, however, still mark equilibrium points, and the new terminology is
really less vital in the changes it affects than might seem at first glance. But
this does not affect the coiu^e of the general argument. The starting point is
with the consumer. He sets into motion "waves of value." At a middle point
stands the enterpriser. Consumers express through him their estimates of
indirect goods and services, which get their prices from those of expected products.
Rent is the direct payment for an instrumental use. Wages are a payment for
services, direct or indirect. The rate of payment is a reflection of the value of
these services to the purchaser of the ultimate product. This usually involves
anticipated rather than immediate values. The enterpriser is intermediary in
the estimate-making process. Interest is the outcome of time preference, and
the rate of interest is an index of marginal preference. Costs never determine
prices or values, but values do determine whether or not costs shall be incurred.
An enterpriser's costs determine whether or not he can make a profit. Profits are
consequently a residual, variable, "non-contractual" share of final values. Such
are some of the essential conclusions of Fetter's static analysis. It does much to
clear up theoretical ambiguities and inconsistencies, but to a beginner it will
doubtless be forbidding. There is a quality of simplicity about the whole treat-
ment that suggests ease of assimilation on the part of a student. But this sim-
plicity is more seeming than real. It results from an abstruseness of treatment
and a use of distinctions often so broad as to give to the student or general reader
the impression that economics is a discipline both unreal and impractical.
The fijial book (Part VI), dealing with economic dynamics, shows a different
trend. Real problems of vast social import are discussed in an absorbing way.
The handling of diminishing returns (which are not), and of the Malthusian doc-
trine of population (which functions not) is admirable in the telling distinction,
that are made; and the last chapter, which deals essentially with the relations of
theory to progaganda, affords an admirable summary of economic backgroimds.
Professor Fetter's coming volume will be awaited with interest. It will com-
plete what is indeed a magnum opu8.
R. C. McCbba.
Columbia Univeraity.
297
Digitized by
Google
298 Thb Annals of thi American Acadsmt
Stamp, J. C. British Incomes and Property. Pp. xv, 537. Price, 128. 6d.
London: P. S. King and Son, 1916:
This income study is the latest in the series of monographs by writers con-
nected with the London School of Economics and Pohtical Science. It is de-
scribed in the author's own words as 'Hhe application of official statistics to
economic problems.'' The author has taken great pains to compile the official
figures dealing with property income, and to interpret them in terms of the
problems in which he is particularly interested. He deals successively with
Real Property, Income from the Use of Land, The Income Tax, Income from
Securities, Business Profits, and Salaries of Officials. He then makes some
apphcation of the official statistics in his discussions of land values and the
taxable capacity of Ireland, the national capital, the national income, the dis-
tribution of income among persons, and among income classes. Particular
interest must attach to this work in the United States, first because of the thorough
manner in which the study is presented, but chiefly because of the immediate
application that this study must have to the problem of income and land taxes
in the United States. The student who is acquainted with the sources of in-
formation available in the American government reports on the collection of the
income tax is astonished at the wealth of material presented in the British reports.
Furthermore, the author shows quite conclusivdy that tax dodging under the
British Act has been largely eliminated. Although there have been a number
of private endeavors to discover the income of the people of the United States,
the government has made no serious effort to meet this situation, nor has it
attempted to secure the maximum results in pubUcity by issuing a full stat^nent
of income tax figures. This study of the excellent British data furnishes an
example that America ultimately must follow.
S. N.
GEOGRAPHY
HuNTiNQTON, Ellbwobth. CivUizotion and ClimoU, Pp. xil, 333. Price, $2.50.
New Haven: Yale University Press, 1915.
How would you make a map of civilization and the degrees thereof? One
man of whom I asked this question said he would base it upon the industrial
productivity of the people. But the more I pursued him for details the less he
thought of his method, and he finally abandoned it entirely. I have repeated
this experience several times and always with the same result. There are too
many modifying circumstances.
We are continually talking about civilization and never defining it. Defi-
nitions or measures of civilization that run into quantitative terms nearly alwa3r8
test out badly, yet, despite this fimdamental difficulty. Dr. Huntington has made
a map of civilization; but this was not his only recourse. In the absence of a
definite basis of measurement he fell back on a consensus of opinion, expert
opinion. This he obtained before the outbreak of the Great War from persons of
wide knowledge living in nearly all civilized coimtries. These select^ persons
gave their answers to a series of questions, and Dr. Huntington merely tabulated
and mapped the results, giving a map of civilization of great interest. Then he
applied certain quantitative tests to this opinion map.
Digitized by
Google
Book Depabtmbnt 299
If we cannot define civilization we can perhaps agree that it is a function
of energy — ^human energy, aided, of course, by a certain amount of economic
resource. The vital thing then becomes human energy; what causes itt Dr.
Huntington's great contribution is that he gives us an answer to this question
based upon evidence, not opinion. He measures human energy by human out-
put— the results of labor. After handling an appalling array of figures he finds
a close relation between work and weather conditions. Girls and men in New
Kngland and in Florida factories work their best when the out-of-doors tem-
perature is about 57° F. They hold that pace with little change til 70° is reached
and then, with increasing heat, output declines. Most of us would have expected
something like this but, a few, I think, had previously come to the opposite
conclusion, namely that very cold weather produces a similar result. This means
that central Siberia is to languish under a cold curse just as central Africa is to
languish under a hot one.
Brain work, as measured in the mercilessly accurate marks of Annapolis and
West Point, shows the same curve with the maximum about 38° F. Even low
forms of animal life and the wheat plant show a similar curve.
The above mentioned collections of human data showed that change of
temperature was a stimulus to greater action. Within limits, a change of tem-
perature either way makes us more active, but the change must not be too great
for after about 8° or 10°, the change becomes enough to depress. This means that,
in addition to the changeable seasons, which had been generally regarded as the
basal factor in higher human dynamics, we have the cyclonic storm — this cyclonic
storm that dominates our weather in the Eastern United States and Northwestern
Euroi>e and of which we so chronically and so bitterly complain. This much
berated thing is, according to Huntington, the greatest dynamo of civilization
upon this earth. Superimpose these changes upon an average temperature, like
that of England, Holland, Northern France and Germany and we have a per-
fectly simple explanation of the unexampled displays of human energy there
manifested. It is not by mere accident that little Britain has been so big in
history.
In his daring attempt to map the unmappable and compare things difficult
of comparison. Dr. Huntington often lays himself open to the flaw picking critic,
but perhaps the flaws would balance. We are more inclined to this view when
we note the striking resemblance of his map of human energy as made by applying
the work data to the facts of climate, with the civilization map as made up from
expert opinion.
If we follow his conclusions to their logical limit, it means that, pending
some change of climate, the dominance of the earth is to remain where it now is,
in Northwest Europe and in North Central North America with a possible rival
in China and Japan.
This is a book that should receive the attention of all economists, historians
and sociologists and particularly those of missionary spirit. We have cast too
many ethnic jewels into places where the prospect was less than that of the
pearls before swine, for swine do not hurt pearls.
J. RussBLL Smith.
Unwertity of Pennsylvania.
Digitized by
Google
300 The Annals op the American Academy
AGRICULTURE, MINING, FORESTRY AND FISHERIES
Adams, Frederick Upham. The Conqiie^ of the Tropice, Pp. xii, 368. Price,
$2.00. Garden City: Doubleday, Page and Company.
If some experienced writer should go to the Standard Oil Company, get
from it a collection of facts about its development and the life history of its
founders, he could make a very interesting story of the development of the oil
industry and the great economic services it has rendered.
Doubtless, certain ethical, legal, political and social matters of common
knowledge and great interest would be omitted from the narrative.
Keeping the above facts in mind, one interested in the development of the
tropics, of the banana industry, or in mere stories of achievement, will find much
interesting reading in Mr. Adams' "Conquest of the Tropics*' which is nothing
more than the history of the United Fruit Company, its enterprise^ and founders,
from data furnished chiefly by themselves. Mr. Adams doesn't emphasize the
fact that it is often called the "Banana Trust" but he does lay stress on the
point that the enterprisers needed great rewards for the risks they ran.
When one starts out to judge this company as a social or political phenomenon
he should remember that the comparison should be made not with the absolute,
whatever that may be, but with what would otherwise have prevailed. The
United Fruit Company's political and economic achievement in the lands of a
dozen Diazes and Carranzas and Villas is a conmianding achievement as a type
of the tropic industry of the future. It needs to be studied and Mr. Adams has
given us some very interesting material with which to start.
It is suggestive to see how these Yankee enterprisers sent to the Orient for
scientists and physicians, how they started an American university to studying
tropic diseases, how they were the pioneer sanitarians of the American Tropics
and how their costly researches at sugar making in Cuba promise to supply the
world with cane' fiber paper and spare our forests a heavy drain. An enterprise
that employs 60,000 men in a dozen different countries might be classed as one of
the Powers. In the lands along the Carribean it is more than that in the opinion
of some travellers. This book shows the economic basis of that power.
J. Russell Smith.
University of Penneylvania.
Harris, Franklin S. and Stewart, Georqe. The Principles of Agronomy-
Pp. xvi, 451. Price, $1.40. New York: The Macmillan Company, 1915.
The purpose of the book as laid down in the introduction, is to ''give the
beginner in agricultural study a general idea of the successful production of crops
and to furnish him a basis of study in other branches of agriculture."
Dr. Harris and Mr. Stewart have divided their material under the four
main headings — the plant, the soil, the field crops, and field management.
Under the first heading, there is a general discussion of the plant and its
environment, including the factors of growth. Then there follows a rath^
detailed description of plant structure setting forth the use of each of the parts
described, and a description of the various plant functions. With these factors
Digitized by
Google
Book Department 301
brought outy there comes a chapter drawing a rather happy analogy between
the plant and the factory, showing how the plant manufactures the three chief
elements of the food of men and the lower animals, viz., proteids, carbohydrates
and fats.
The next section deals with soil. The origin and fonnation of soils are taken
up, including a description of the rocks from which soils are made and the different
tyi>e8 of formative agents. The physical properties of the soil are considered,
and a rather detailed analysis of the methods of the control of water is given,
particular emphasis being laid on irrigation and dry farming. The plant food
of the soil, soil bacteria, manures and fertilizers, and tillage and crop rotation
each receive a share of attention. The last chapter is given over to a discussion
of special problems such as erosion, acidity, etc., and methods of dealing with each
problem are recommended.
Crops is the title of the third main division. Wheat, com and other cereals
such as barley, rye and oats, and their varieties are described, and some time is
devoted to the methods of planting, the factors of production, the care of the
crop and something of the climatic requirements of each. Root crops, grasses,
sori^um and millets, the fibrous crops are treated separately, and various other
crops are mentioned. The general plan of discussion for the latter groups is the
same as for the cereals.
Under the caption of Field Management, the amount of planning, the
kind of crops to grow and farm equipment are each taken up in turn. The book
closes with a brief summing up of the factors that go to make for crop success,
making the customary suggestions which are undeniably good but so seldom fol-
lowed.
This work lays down an excellent foimdation for a high school coiu'se or
even, perhaps, for an elementary first-year course in college. Excellent sup-
plementary readings are suggested at the end of each chapter. Furthermore,
parts of the book such as the chapter on specific soil problems and the recom-
mendations in regard to them, the section on dry farming and irrigation, have a
practical every-day value.
As a piece of literature the book is open to some criticism. In a great many
places there is a lack of balance. For example. Chapter 10, part II, on the
control of soil water, covers some twenty pages, while the discussion of plant
food of the soil, seemingly of equal importance, is accorded but six. Again,
it might perhaps be better to lay more stress on climatic conditions required for
the growth of various crops, giving more specific illustrations.
The arrangement, too, while excellent in the main, is not ideal. The need
of the chapter entitled. What Soil Is is not entirely clear. The chapter devoted
to potatoes precedes the one on root crops, and as a result there is some confusion
as to whether the potato is to be classified as a root crop or not. Again, a dis-
cussion of pastures, meadows and soiling systems (24, part III) is put between
the chapter on grasses and that on sor^um and millets. A discussion of pastures
might well follow grasses, but in that case, by putting these two last, the matter
would be clarified in the mind of the reader.
J. 8. Keib.
Unwersiiy of Pennaylvanian
Digitized by
Google
302 Thb Annals of thb American Acadbbct
Robinson, Edwin Van Dtke. Early Economic CondUiona and ihe Deodopmtnl
of Agriculture in Minnesota, Pp. y, 306. Price, $1.50. Minneftpolis:
Univenity of Minnesota Press, 1915.
This big folio volume of 300 pages is a cross between a census report and the
work of a German scholar. It is a storehouse of knowledge for the student of
economic history, economic geography and agriculture. Its character is well
indicated by its evolution. It started out to be a statistical atlas but the in-
creasing realization that these maps, charts and graphs needed to be explained
caused the author to dig and delve into contemporary publications, correspond
with many of the men who had pushed along the developments, and thus he
added many thousand words of text. Even the chinch bug has a map, as have
practically all of the factors of agricultural development at each census period.
Climatic data are also carefully mapped. The book is one that must be consulted
by almost every person venturing to speak of Minnesota in any careful way.
It is a matter of great regret that this is the last work of Professor Robinson
who died a few months after the book appeared.
J. R. S.
MANUFACTURING INDUSTRY
Ntstbom, Paul H. Textiles, Pp. xviii, 335. Price, $1.60. New York: D.
Appleton and Company, 1916.
This book presents in concise form the essential facts regarding the ordinary
textiles of commerce, with especial attention to the leading members of this group;
namely, linen, wool, cotton and silk. The chapters deal with the sources of the
raw material, the methods of marketing and manufacture, the tests to determine
quality, and the economic aspects of textiles.
The author states in his preface that he intended to interest retail and whole-
sale salespeople, housewives, educational institutions and the general public. It
is an exceedingly difficult task to write a book for an audience so diverse as this
and have the work profitable to all its readers upon all its pages, and Dr. Nystrom
has not mastered the complications of lus undertaking; hence no one who picks
up the book will be completely satisfied with it.
Furthermore, the author touches upon so many topics that it is inevitable
that his work will contain not a few inacciu^cies; such as, confusing vxhjI with
hair J and declaring that cotton comes from the seed of the cotton plant, or drawing
the inference that because labor is minutely subdivided in the manufacture of
fthoes and men's clothing that it is equally specialized in all industries. From
the closeness with which Dr. Nystrom follows standard authorities upon the chief
textiles, we are at liberty to suppose that he himself is none too familiar with his
subject; and moreover he limits himself to statements of facts with almost no
explanation of the factors of causation behind those facts, a flaw most noticeable
in the chapters on the Geography of the Cotton Trade and the Geography of
Wool Production.
While writing, the author must have had most prominently before his mind
the retail salesgirl portion of his audience for the literary style of the book no-
where advances beyond the intelligence of such a person.
Digitized by
Google
Book Department 303
Notwithstanding these objections to the book, it may be of real service as
a class room text, for it simmiarizes most of the important facts -in regard to tex-
tiles; retail and wholesale salespeople and housewives, also, would profit greatly
by giving it a careful study.
Malcolm Esib.
Univerniy of Pennsylvama.
CX)MMERCE AND TRANSPORTATION
KiBLBB, Thomas L. The CammodiHea* Clause. Pp.178. Price, $3.00. Wash-
ington: John Byrne and Company, 1916.
Professor Eibler presents a brief but adequate history of the attempts of
transportation companies in the United States to engage in the business of mining
and manufacturing commodities to be transported by their own lines; and of the
attempts to prevent such combination of interests. He takes a strong and effec-
tive stand against combinations of this kind.
T. W. V. M.
McFall, Robbbt Jamkb. Railway Monopoly and Rate Regulation. Pp. 223.
Price, $2.00. New York: Columbia University Press, 1916.
A discussion of the various theories of railroad rate making, with an argu-
ment in favor of the cost-of-service theory. Dr. McFall points out the advance
made in recent years in the use of cost as a basis for the determination of reason-
able rates, and endeavors to show that the proportion of costs which can be defi-
nitely allocated is larger "than many would have us suppose." It is interesting
to note, however, that in concluding his argument for an extension of the cost
principle the author says that "the greater divisions of the service should have
their contributions to total cost divided as far as possible on the basis of cost,
but that the rates on minor divisions of the service should be differentiated not
only on the principle of cost but also on the principle of demand." After all
this is the position taken by the hardened traffic official who is guided by the
principle of "what the traffic will bear."
In attributing virtually a complete monopoly power to the railroads Dr.
McFall gives too little consideration to such factors as water competition (poten-
tial or active) and industrial and commercial competition — factors which often
compel and justify the neglect of the cost-of-service principle.
The most valuable and interesting portion of this study is that dealing with
valuation of railway property. The author's conclusions as to the value to be
attributed to a railroad in considering the question of a "fair return" seem emi-
nently sound.
T. W. V. M.
Pbatt, Edwin A. The Rise of Rail Power in War and Conquest. Pp. xii, 406.
Price, 78. 6d. London: P. S. King and Son, Ltd., 1915.
In this instructive and timely work the author traces the beginnings and
subsequent development of the use of railways in war. In this use no other
nation has gone as far or proceeded with the scientific accuracy of the Germans.
Digitized by
Google
304 The Annals of the Amebican Academy
This it is the evident intention of the author, an F.tiglialimRn^ to prove. The
entire work is in fact a carefully developed thesis showing how Germany has
advanced step by step from a skeptical and tardy beginning imtil at the breaking
out of the present war, passing far beyond the question of how its railways might
be most efficiently used for its defense, it had constructed military lines not
only to all the frontiers of its European empire, but to the important frontiers
of its African colonies and to the most important trade and strategic points in
Asiatic Turkey with the evident intent to use them for conquest.
A good deal of space is necessarily devoted to the American Civil War be-
cause that war was practically the first in which there was an extended and
scientific use of railways, and because many of the problems connected with such
use were either started in the United States or actually worked out there, precedent
being established and examples set which the rest of the world had simply to
follow, adopt or perfect.
It will surprise many to learn that the total mileage of the lines taken over
by the federal government during the coiu*se of the war exceeded 2,100 miles;
that in ils operation of these lines it laid or relaid 641 miles of track, and that the
lineal feet of its bridge construction was equal to 26 miles. It was this war, says
the author, that was to elevate railway destruction and restoration into a science
and to see the establishment, in the interest of such science, of an organisation
which was to become a model for European countries and influence the whole
subsequent course of modem warfare.
T. W. V. M.
Smith, J. Russell. Commerce and Industry. Pp. viii, 596. Price, |t.40. New
York: Henry Holt and Company, 1916.
This book is an abridgement of the large volume IndtLstrial and Commercial
Oeography which has proved so successful as a college text. There are three parts.
Part one deals with the United States by classes of commodities and industries,
as the cereals, animal industries and so on, and covers a little more than half the
text. P£Lrt two covers all the other countries, very briefly, necessarily, as only
two hundred pages are devoted to them. Brazil, for example, has about four
pages and Germany about seven pages. Part three, world conmierce, is devoted
mainly to the law of trade and trade routes.
The book is very readable; is effectively illustrated with halftones, maps and
diagrams; and some useful statistics are collected in the appendix. Barring
questions which hinge on difference of opinion about method and material, the
only adverse criticism must be based on the many inaccuracies of statement con-
cerning details, which probably do not seriously affect its usefulness as a high
school text.
W. S. T.
Spbars, John R. The Story of the American Merchant Marine. Pp. xxvii, 340.
Price, 11.50. New York: The Macmillan Company, 1915.
The second edition of Mr. Spears' volume on The Story of the American Mer*
chant Marine differs mainly from the first edition of 1910 in that it contains a
lengthy introduction which gives a statement of recent events in the shipping
Digitized by
Google
Book Dbpartment 305
industry. Brief mention is made of the effects of the European War on ocean
rates, tonnage and shipbuilding, of the ship purchase bill, the free shipping clause
of the Panama Canal Act of 1912, the registry Act of 1914, and the La Follette
Seaman's Act of 1915.
The text of the book, aside from the introductory chapter, contains a series
of stories rather than a connected story of the American merchant marine. It
is written in popular style and contains nimierous interesting accounts of specified
American vessels, captains and shipping enterprises. It does not contain a com-
plete, well organised history of the merchant marine, but gives many accounts
of early shipping history which are of interest both to the general reader and to
those who wish to make a more detailed study.
G. G. H.
AC5CX)UNTING, BUSINESS METHODS, INVESTMENT AND THE
EXCHANGE
GuENTHSB, Louis. Investment and Speculation (New and Revised Edition).
Pp. xi, 289. Price, $2.00. Chicago: LaSalle Extension Company, 1916.
Under the author's broad definition of the terms '^investments" and ''specu-
lation,'' an adequate consideration of the subject of the volume within the space
at his disposal is a physical impossibility. It would seem to have been better
poUcy to have modified the title and restricted the scope of the book to security
investments, omitting chapters 3, 4 and 5, dealing with real estate investments.
More criticism may be indulged in regarding these three chapters, also, than prob-
ably any other three in the book. The statement is made (p. 17) that loans on
agricultmral lands have proved the most satisfactory. Probably illustrations of
individual investors might be furnished where this is correct. On the other hand
instances might be cited of particular investors, and large ones, who can show
very constant returns and losses of almost no consequence on bonds. The state-
ment is probably intended to apply to investors as a whole, but we have no statis-
tics by which to judge of its accuracy in this respect. On page 18 occurs the state-
ment that "our small interior banks are by far the largest lenders of capital on
farm mortgages." The report of Mr. R. L. Cox to the Association of Life Insur-
ance Presidents shows by detailed figures that on June 30, 1914, to quote him,
"life insurance companies, collectively, are very much the largest owners of farm
mortgages in this country, their holdings exceeding by about 20 per cent the total
farm loans held by the 26,765 banks of this country." On page 28 a renewal of
a second mortgage on a home at a bonus of $100 during the panic of 1907 is stated
to be "fairly indicative of the element of risk that capital considers it assimies
on such obligations." On page 9 the author considers the laws enacted by various
states governing the character of savings bank investrdents as an example of the
"law of averages." It would rather seem to be an instance of the apphcation of
selection, similar to the rejection of undesirable applicants by life insurance
examiners.
In chapter 6 it is intimated to the reader that the classification of bonds
will be according to (1) security, (2) purpose of issue, (3) manner of pajrment,
(4) conditions of redemption, and (5) nature of the issuing company. This manner
Digitized by
Google
306 The Annals of the Amebican Academy
of treatment, probably first adequately worked out in Chamberlain's PrindpUs
of Bond IfwestmerUf is very satisfactory in results, but after having mentioned the
plan the author proceeds to discuss government bonds, railroad bonds, public
service corporation bonds, miscellaneous bonds, etc., which is certainly a departure
from the above idea. The nature of the bond itself, its security, is the primary
factor, generally speaking; the others are secondary. In the chapter on govern-
ment bonds it is stated, regarding the high interest rates on bonds of certain
governments, ''This does not at all reflect upon them; it merely fixes the position
of their credit in the money capitals of the world.'' An opinion could hardly be
more significantly expressed than by ''fixing the position of their credit." No
description of the position of a stockholder and the characteristics of a share of
stock is given; the chapter dealing with guaranteed stocks contains seven pages
devoted to enumerating examples of guaranteed stocks, full descriptions of which
are contained in manuals, and which enimieration conveys no principles to the
student; no description is given of the various types of preferred stocks.
When chapter 14 is reached all plans of treatment are seemingly thrown
aside and chapters on amortization and sinking funds, bonds for women and
estates, valuation of bonds, character of an enterprise, science of speculation,
efforts to prevent speculation, mystery of a balance sheet, the nature of exchanges,
etc., follow each other without any attempt at arrangement.
In brief, this volume seems to suffer from three great defects (1) lack of ar-
rangement of topics, (2) carelessness regarding details and (3) too much attempted
in the available space.
It would be unfair not to mention some characteristics worthy of praise.
It has the advantage often lacking in books on financial subjects of being capable
of comprehension by the average reader. The greater part also has the very good
feature of being quite interesting reading, likewise not very common in financial
books. The portions treating of the dealings on exchanges are perhaps the best,
although here also inaccuracy of statement is sometimes apparent. For instance,
in describing contract trading on produce exchanges it is stated (p. 221), "All
deliveries must be made on the last day of the month," whereas what is intended
to be said is " AU deliveries must be made on or before the last day of the month."
The statement as it stands conveys the idea that the seller has no option as
regards the time of delivery.
Each chapter is accompanied by from foiu: to fourteen questions for the
student, generally designed to test his memory and comprehension of the material
in the chapter and the book closes with a satisfactory index of seven pages.
Robert Rieqel.
Univernty of Pennsylvania.
MoNTOOMBRT, R. H. AudiHng: Theory and Practice, (Second edition, revised
and enlarged.) Pp. xxvi, 889. Price, S6.00. New York: The Ronald
Press Company, 1916.
The Annals of May 1913 contained a review of the first edition of this work.
The revised edition eliminates some portions of the material contained in the
first edition, notably reference to English cases and chapters on the Corporation
Digitized by
Google
Book Department 307
Excise Tax Law, as being non-essential or out of date. The English decisions have
been replaced by a number of American decisions which are more clearly repre-
sentative of Accounting matters in this country, while the discussion of the
Corporation Excise Tax Law has been superseded by about one hundred pages
on the Federal Licome Tax Law of October 3, 1913, in its application to individ-
uals as well as to corporations.
Li this revised edition Mr. Montgomery, by keeping his material "down to
the minute," still retains his preeminence as an authority on the subject of Audit-
ing in this country. The mechanical make up of the book is worthy of comment,
it being printed on thin paper and bound in flexible leather, whereby its use as a
ready reference work is greatly enhanced. « « * ,
E. P. M.
Rathond, W. L. American and Foreign Investment Bonds, Pp. x, 324. Price,
$3.00. Boston: Houghton, Mifflin Company, 1916.
The niunber of texts dealing with American bond issues and the principles
of bond investment is still so small that any worthy accession should receive a
welcome. William L. Raymond of Boston has just issued through the Houghton,
Mifflin Company a valuable contribution under the title American and Foreign
Investment Bonds.
The general structure of this book follows the natural divisions of the material
already established by Raymond's predecessors, except that, as the title implies,
considerable attention is given to the history of foreign debt and to foreign bonds.
Since the broad outlines of the relatively new "apphed science" of bond invest-
ment have been established and a critical analysis of the principles of investment
and of the leading types has been made, the next logical development is this we
now have — a presentation of historical material and concrete cases.
The difficulty of approaching a relatively new science by the case method is
that writer and reader, by surfeit of fact, are liable to mental indigestion. One
is inclined to nod over oft-repeated pages of tables in fine print, and lose the
perspective. If, to quote our friend Life, it is a case of " Aut Scissors Aut Nullus,"
let us have the dippings; but it is a real task, to compress them into their proper
place in a book covering world bond finance in 300 pages, especially when the
index is inadequate.
Nevertheless the fact remains that there is in this book a fulness of detail,
not otherwise accessible under one cover, regarding government, mimicipal and
corporation obligors and issues, which will suggest reference to this work by
students, dealers, and investors.
L. C
LABOR PROBLEMS
MoTB, Cabl H. Industrial Arbitration, Pp. 351, xlv. Price, $1.50. Indian-
apolis: The BobbS'MerriU Company, 1916.
As the sub-title suggests, this book is a world-wide survey of agencies for
the promotion of social justice and industrial peace. The first half of the chapters
deals with English, Grerman, French and Australasian experiments, the remaining
half with a more detailed discussion of problems and attempted solutions in the
Digitized by
Google
308 The Annals of the American Academy
United States. The following conclusion is suggestive of the author's viewpoint:
"Neither voluntary nor compulsory arbitration will work with any conspicuouB
degree of success in this country until the worker has been set free economically;
until he is given a compelling voice against his employer as to his wages, hours
and working conditions." _ _ . -^^
K. Lf. McO.
Nbarinq, Scott. Anthracite. Pp. 251. Price, $1.00. Philadelphia: John C.
Winston Company, 1915.
Hearing's latest volume is not likely to receive an especially sympathetic
treatment from many reviewers. In the first place the viewpoint of the author
is not always understood and few people are inclined to sympathize with his
radical social views. Nearing is interested in labor, the low standard of living
of the labor force and also in the general social well being. In consequence
Anthracite is primarily a treatment of the coal problem from the standpoint of
both labor and the general social effect of monopoly.
Nearing's general social theory is equality of opportunity. He therefore
resents not only the monopoly of natural resources with the enormous profits
of a few thereunder, but also the low wages paid in the industry which prevent
the attainment of more than a comparatively low standard of living and deprive
many of the opportunity for individual development. Anthracite must therefore
be considered bearing these two points in mind.
The line of argument which is pursued by the author may be outlined some-
what as follows: The system of private ownership of natural resources has placed
the most valuable of them in the hands of a small number of individuals who col-
lect returns from the balance of the conunimity. The fate of this system depends
in the long run on how it will affect the general social well being. AnihracUe is
a particularly good example of natural resource monopoly and the people are
compelled to pay a price for this commodity representing "all that the traffic
will bear.'' In spite of the large returns obtained in this industry, the anthracite
workers are no better paid than those in any other industry requiring a similar
grade of labor, while the owners ape reaping enormous profits. The increased
burden of the monopoly upon consimiers and the unsatisfactory position of the
worker thereunder represents with some degree of acciuticy the results of monop-
oly in general. So long as monopoly exists the consumers will pay the bill, whOe
the worker can expect no better treatment than he receives in the most highly
competitive occupation. Among the three classes, i.e., the monopolists, the
workers and the general public, the monopolists alone will benefit by the continu-
ation of this system.
All persons believing in the sacredness of private property will naturally
resent this viewpoint. On the other hand nearly every one with any appreciable
social bias is likely to have at least some sympathy with Nearing's attitude. No
one nowadays, least of all Nearing himself, believes that all men are equal, but
the desirability of equality in opportimity has many advocates. At least must
it not be admitted that Nearing's view is sound to the extent that he sets up the
general social well being as the final test of monopoly? «r xx « «
W. H. S. Stbvbns.
Tulane Univernty,
Digitized by
Google
Book Department 309
Robinson, Maurice H. Organizing a Btmneaa. Pp. vi, 269. Price, $2.00.
Chicago: LaSalle ExtenBion University, 1915.
This book deals primarily with the corporation inasmuch as more than half
its pages treat that subject. Dr. Robinson tells what a corporation is and how
it is formed; the main features of charters and by-laws; the rights and obligations
of bondholders, stockholders and creditors; and the nimiber, names and duties of
oflBcers. The leading forms used in corporate management are set forth in minute
detail and at great length.
In addition to the corporation, the author devotes a small fraction of his
space to other forms of organization; for example, three pages — constituting one
chapter — are given over to a discussion of the advantages and disadvantages of
Individual Proprietorship, and another chapter similarly concise, treats the sub-
ject of Partnership. Business combinations and Trusts and the comparative
efiBciency of various types of organization are also touched upon.
Since Dr. Robinson did not see fit to preface his work with a statement of his
purposes, we must base our opinion of the object he hoped to attain from the text
itself. We would think the work was intended f ol: a treatise on business law if it
were not for the fact that the series of which this work constitutes one member,
already contains two volimaes under the title Business LaWy so we suspect that
Organizing a Business was intended for the guidance of (very) young men living
in rural communities, and about to enter business for the first time.
We must admit, however, that the book has an attractive cover.
R. M. K.
MONEY, BANKING AND FINANCE
pRATo, Giuseppe. Documenti Finanziari degli Stati deUa Monarchia. Pp. xiii,
315. Price, L. 20. Torino: Societa Tipografico, 1916.
SOCIOLOGY AND SOCIAL PROBLEMS
Bab, Carl Ludwig von. A History of Continental Criminal Law. Pp. Ivi, 661.
Price, $4.00. Boston: Little, Brown and Company, 1916.
The science of Criminology cannot stop with a study of crime and the crim-
inal. Criminal law and procedmre as well as penology must be considered. In
the reconstruction now going on in these fields new light must be sought from his-
torical sources in order to avoid the repetition of error on the one hand and to
determine methods of effectiveness on the other. Hence the value of such his-
torical study OB von Bar has made in his History of ContinerUal Criminal Law,
Roman and Germanic so\u*ces are particularly rich in their influence on later
codes. After a study of these sources, the author adds chapters dealing with
France before the revolution, Scandinavia, Switzerland and The Netherlands.
Then follows several chapters dealing with the period of the French Revolution
and the changes produced in France, Germany and other countries. A division
of the work is devoted to the modem period comprising chiefly the nineteenth
century. The last division. Part II, comprises a history of the theories of criminal
law. ''To disentangle and trace all the aspects and details of modem criminal
Digitized by
Google
310 The Annals of the Ajcbrican Academy
law in their development amidst the congeries of law, morals, religion and custom
in successive past epochs, is a huge and delicate task, which might well make the
boldest historian halt.'' This task the author has performed so well that his woik
will be invaluable not only to students of the subject but to practical legislatora
who seek to draft codes that will remedy some of the glaring defects of American
criminal procedure.
J. P. LiCHTENBERQEB.
University of Pennsylvania.
BiQHAM, J. A. (Ed. by). Sdect Discussions of Race Problems: A CoUedion of
Papers qf Especial Use in Study of Negro American Problems, with the Pro-
ceedings of the Twentieth Annual Conference for Study of Negro Problems hdd
at Atianta University, May H, 1916. Pp. 108. Price, 50 cents. Atlanta:
The Atlanta University Press, 1916.
BoNGBB, William Adrian. Criminality and Economic Conditions. (Trans, by
Henry P. Orton.) Pp. xxix, 706. Price, $5.50. Boston: little, Brown and
Oompany, 1916.
The author of this volume is probably correct in the assumption that the
English-speaking countries have been influenced greatly by the work of the
Italian School of Cnminology and that the hereditary aspects of the subject have
been overemphasized, but he is mistaken, we think, in his further assumption
that his ideas about the ethology of crime will be unwelcomed by American schol-
ars. On the contrary, any rational theory of causation appeals to the American
mind and this masterful presentation of the economic factors of criminality will
be accepted as a most valuable complement to the factors stressed by the Italian
School. That which will be called In question is the contention that economic
factors alone are sufficient to explain the phenomenon of crime. This the author
does more by implication than by definite statement. With due allowance tot
this predisposition, no work has appeared in English of greater value in a genera-
tion. Beginning with a description and criticism of the various groups of writen
which he designates as the Precursors, the Statisticians, the Italian and French
Schools, the Bio-Socialists, the Spiritualists, etc., the author proceods to his own
explanation of the causes of crime which are inherent in ova present Economic
System. By a wealth of statistics and an analysis of social causes including a
study of sex and the family, etc., he has in a most convincing Tw^nnAr revealed
the effects of environment in producing crime. Elements neglected or sli^ted by
previous authors are given their proper significance. The American Institute of
Criminal Law and Criminology has rendered an invaluable service to the science
of criminology by placing this book before the English-reading world. It ou^t
to stand on the shelf beside Lombroso, Grarofalo and Aschaffenberg in every
collection of criminological literature in the country.
J. P. LiGHTENBEROSE.
University of Pennsylvania.
Digitized by
Google
Book Dbpartment 311
Fleznsb, Abbaham and Bachman, Frank P. EdueaHan in Maryland. Pp. zii,
176. Free on Request. New York: The General Education Board, 1916.
A report to the Governor by a commission authorized by the Legislature in
1914 ''to make a comprehensive study of the public school 83rBtem of the State
of Maryland, of the state-aided elementary and secondary schools and of the
higher educational institutions of the state with a view to correlating and coor-
dinating the different institutions wholly or partially supported by state appro-
priations."
This report embodies, however, only a survey of the elementary and secondary
schools of the counties. The Commission oontemplates a subsequent survey of
the higher institutions of the state if continued in office. The study thus far made
and reported in this volume was made by four educational experts who constitute
a part of the survey force of the Geneoral Education Board, New York, which
Board had been invited to co5perate with the Commission. Dr. Frank P. Bach-
man, who had had a prominent part in the recent survey of the New York City
school system, spent much of his time during a period of two years in inspecting
schools in all parts of Maryland — ^personally visiting 16 per cent of the white
teachers and 10 per cent of the colored teachers.
The pictures in this report are well chosen, the graphic illustrations are numer-
ous and effective, the report is admirably organized and abounds in definite and
constructive suggestions for improvement in administration, organization, equip-
ment, the subject-matter and method of instruction, etc.
A. L. S.
GooDSBLL, WiLLTSTiNS. A History of the Family as a Social and Educational
InsiUtUion. Pp. xiv, 588. Price, $2.00. New York: The MacmiUan Com-
pany, 1915.
The growing demand for text books on social subjects is one of the most
significant indices of the changes taking place in modem education. Increasing
interest centers in "the proper study of mankind." The present volume is one
of the most useful and valuable contributions in this lengthening series. The
author very happily has combined scholarship with facility of expression in a
way to midce the work at the same time informing and interesting. Beginning
with a short chapter on The Historical Study of the Family he proceeds to discuss
The Primitive Family, The Patriarchal Family of the Hebrew, Greek and Roman
Types and The Influence of Christianity upon Marriage and Family Custom in
the Roman Empire. Then he describee the family in the Middle Ages, during
the Renaissance, the English Family in the Seventeenth and Eighteenth Centu-
ries and in the American Colonies. Then follows a chapter on The Effects of
The Industrial Revolution on the Family, the Family during the Nineteenth
Century, and The Present Situation, and concludes with a chapter on The Current
Theories of Reform.
Practically every phase of family life is considered. Marriage customs and
ceremonies, changes in the status of women, the position and training of children,
property rights, the influence of religion, influences that destroy the family, the
problem of divorce and a score of similar subjects are treated under each stage of
lamily development.
Digitized by
Google
312 The Annals op the American Academy
The book adds nothing to our present knowledge of the subject, but it does
present the latest views and theories, together with an abundance of concrete
information in a comprehensive manner. Judged by the standards of a text book
it is a splendid achievement and is destined to an extended use.
J. P. LiCHTBNBERQSB.
University of Pennsylvania,
North, Cecil Clare. The Sociological Implicationa of Ricardo'a Economics.
Pp. iii, 65. Price, 50 cents. Chicago: University of Chicago Press, 1915.
OsBORN, Henry Fairfield. Men of the Old Stone Age, Pp. xxvi, 545. Price,
$5.00. New York: Charles Scribner's Sons, 1915.
Parkyn, Ernest. An Introduction to Prehistoric Art, Pp. xviii, 349.
Price, 13.25. New York: Longmans, Green and Company, 1915.
The bewildering succession of archaeological discoveries in Western Europe^
especially since the establishing of the InstittU of de PalSontologie Humaine, has
80 far resulted in little more than confusion in the lay mind. Facts were abundant
in the fields of geology, anthropology, archaeology, climatology, paleobotony,
zodlogy, etc., for a synthetic study of gigantic proportions. This ta^ the author
has undertaken and performed. How well he has succeeded we can determine
only after a scrutiny of the work has been made by specialists in the several fields
covered. The author recognizes the difficulties involved in any attempt "to
place this long chapter of prehistory on an historical basis," but is convinced of
its value, hence this work. Further study and criticism of material, and especially
new discoveries, may result in modifications of conclusions reached, but the
method of the work we beheve is sound. In every case the age of "finds" has
been estimated in reference to the geologic strata, the flora and fauna, the arts
and industries. Geologic changes in land formation and climatic conditions with
their bearing upon the distribution of vegetation and animal life are always con-
sidered.
Some of the more general conclusions are: That there have been at least
four ice ages; that man has had continuous residence in the region of France
for 100,000 years; that this is one of the oldest centres of human habitation;
that "men with faculties like our own, but in the infancy of education and tra-
dition, were living in this region 25,000 years ago"; that this is not the region of
origin but that men migrated here from the east; that the various types as the
Heidelberg, Piltdown, Neanderthal, Cro-Magnon, were not differentiated hoc
but represent separate migrations; that the Cro-Magnon race is probably the
immediate precursor of the modem European and that he belongs to the species
Homo sapiens; that in the region of Dordogne and a few other localities the
Cro-Magnon survives and composes a large element of the present population—
the oldest hving race in Western Europe. The book is illustrated with 8 plates
and 268 figures and drawings. It is a masterpiece of synthetic analysis and is
destined to stand high in the list of really great books of modem science. Pub-
lished in November 1915, it is now in its second edition.
Unlike the preceding volume the work of Parkjrn is purely descriptive. While
the author states in the introduction that "works of art reflect the social condi-
Digitized by
Google
Book Department 313
tioDsand mental endowments of those who produced them/' such conclusions are
almost wholly wanting in the text. For the student of society, however, such a
descriptive narrative is of great value. It is a valuable mine which needs only
to be worked. The material is organized under the three ages — Stone, Bronse
and Iron. Under palaeolithic art, stone implements, carvings in bone and ivory
are described together with the mural decoration of caves. Neolithic art includes
polished stone with incised designs in pottery. The character of Bronze Age
pottery is next presented together with a study of the use of gold, amber and
jet, for decorative purposes. The Iron Age spans the period from the earliest
uses of iron including work in enamel and coral down to the late Keltic period
concluding with a study of the origin of late Keltic ornament. The work will
serve as a convenient cyclopedia of primitive art for those who have neither time
nor opportunity to consult the widely scattered original sources. The book is
profusely illustrated and well indexed. , « ,
J. P. LiCHTENBERQER.
Unioernty cf Pennaylvania,
Phelps, Enrra M. (Compiled by). Selected Artidea an Woman Suffrage. (Third
edition.) Pp. xlvi, 274. Price, $1.00. White Plains: The H. W. Wilson
Company, 1916.
Strbiqhtofp, Frances Doan and Streightoff, Frank Hatch. Indiana:
A Social and Economic Swrvey. Pp. 261. Price, $1.25. Indianapolis:
W. K. Stewart Company, 1916.
An admirably planned and well executed work describing the resources and
industries of Indiana, the ssrstem of state and local government, and the work of
the various agencies for social betterment. ^ ^ ^ ^
Walunq, Wm. E.; Stokes, J. G. P.; Huqhan, Jessie Wallace; Laidlbr, Harrt
W. The Socialism of Today, Pp. xvi, 642. Price, $1.60. New York:
Henry Holt and Company, 1916.
Socialism is both a theory and a movement. Socialist literature first em-
phasized theory; but for about fifteen years past it has dealt primarily with
socialism as a movement, and theory has become mere froth on the wave of the
movement. Partisanship has colored most of this literature. The present work
aims to present in a rigidly impartial way a docimientary description of the
socialist movement. No such comprehensive source-book has yet appeared.
£v^ Central and South America, China and South Africa are included in the
documentary presentation. Invaluable as a work of reference, it removes any
excuse for ignorance of what organized socialism stands for.
R. C. McC.
Wood, Francis. Suffering and Wrong. Pp. x, 368. Price, $1.75. New York:
The Macmillan Company, 1916.
This book is designed to awaken popular interest in the problem of the elimina-
tion of suffering and wrong. Its main premise is that these are due in the main
to "custoiAal" wrong; i.e., to human action and are preventable by the same
Digitized by
Google
314 The Annals of the American Acadeact
•
means. Suffering is described under the captions, Inebriety, Female Degradation
and Subjection, War, Poverty, The Prison System and Flesh-Eating. Christianity
is indicated as the ally of Customal Wrong and thus is powerless to help. The
book ends with a plea for a new religion of humanity that will devote itself to the
problem of prevention and elimination. The main contentions are socially sound,
notwithstanding certain extreme views with which many social students will not
agree.
J. P. L.
POLITICAL AND GOVERNMENTAL PROBLEMS
Hill, John Philip. The Federal Executive. Pp.viii,269. Price, $2.00. Boston:
Houghton, Mifflin Company, 1916.
This book is the outgrowth of a series of lectures, delivered by the author
in several colleges. Its aim is to "assist in the understanding of the creation,
development, organisation, and functions of the federal executive," using the
latter term to include the President and the executive departments. After a
general survey of the position of the executive in the federal government, the
establishment and growth of the various departments are traced. The status of
the heads of departments as a cabinet and the present organization of the separate
departments are next considered. A brief chapter indicates the influence of some
of the presidents upon the executive departments, and a concluding chapter
suggests probable future developments. The author recommends the establish-
ment in the near future of departments of Education, of Transportation, and of
Interstate Trade,»together with considerable co5rdination of the present somewhat
chaotic distribution of functions. For some reason he fails to note the need for a
department of Colonial affairs. The book, while adding little that is new, is a
valuable compilation of information. Like most books of its kind, howev^,
it fails to give any adequate idea of the actual working of the administration.
R. G. G.
Index Digest qf State Conatitutione, (Prepared by Legislative Drafting Research
Fund.) Pp. vii, 1646. New York: New York State Convention Com-
mission, 1915.
MuNBO, W. B. Principlea and Methode of Municipal Administration. Pp. li,
491. Price, $2.25. . New York: The Macmillan Company, 1916.
This volume is intended to supplement the author's Gooemment cf Amerioan
Cities which dealt with the organization of city government in the United States.
The present volume deals with functions rather than frame work. It aims to
show how various city departments are organized, what work they have to do
and what problems Uiey usually encounter in getting things done. After an
introductory chapter the author considers the following branches of administra-
tion: City Planning, Streets, Water Supply, Waste Disposal and Sewenfs^
Public Lighting, Police Administration, Fire Prevention and Fire Protection,
School Administration, Municipal Finance.
In his method of treatment the author has tried to steer a middle course
between a general survey of the most elementary character, and a technical
Digitized by
Google
Book Department 315
treatise oovering in great detail some single branch of municipal work. In this
purpose the author has succeeded admirably, as well as in his desire to provide a
means whereby public opinion may be educated to the point of understanding the
underlying questions of policy, principle and method involved in the various
branches of administration discussed. The volume is weU written and would
make interesting and valuable reading for every dtisen, and especially for evefy
municipal officer.
The principal defect of the book lies in its omissions. The reader in looking
through the table of contents is at once struck by the omission from the list of
subjects of a treatment of public health, social welfare activities, and public
utility regulation. These are certaioly among the most fundamental of the
problems of mimicipal administration today and among those on which the
public and the officials alike are most in need of enlightenment. The author
does indeed admit that the book does not touch upon every phase of dty ad-
ministration, but it is doubtful whether his assertion that it includes a substantial
part of the entire field can be interpreted to mean the main or most important
part. A discussion of the three omitted subjects mentioned on the scale adopted
for those included might have increased the size of the volume beyond the desires
of the publishers. But in that case the treatment of some of the subjects dis-
cussed might with profit have been condensed or omitted altogether to make
room for what seem to be more fundamental matters. For instance, by com-
bining the chapters on police and fire administration into one chapter and the
chapters on streets and public lighting into one chapter, public health and social
welfare might each have been given a place.
These omissions are particularly unfortunate from the point of view of
text-book use. There is still wanting a text-book on municipal functions which
covers substantially the entire field of municipal administration in the admirable
way in which Professor Mimro covers the subjects treated by him.
Hebman G. Jambs.
University of Texas.
INTERNATIONAL QUESTIONS
Abbott, James Francis. Japanese Expansion and American Policies, Pp.
viii, 267. Price, $1.50. New York: The Macmillan Company, 1916.
This lucid and interesting book is, firstf a brief history of the modem evolution
of Japan, showing how the magnanimous treatment of the country by the early
American diplomats and missionaries gained its confidence; then, the gradual
separation of interests as Japan matured and found a divergent field, a separation
encouraged by our own imfriendly attitude in California; and, finally , a considera-
tion of the results likely to follow this separation.
In dealing with "the yellow peril" he advises the adoption of some such
policy as that proposed by Dr. Sidney L. Gulick of admitting from each foreign
country a percentage of the immigrants from that country already here, which
general rule would offend no one, and yet render assimilable all who come. This
would reduce yellow immigration to very small dimensions.
As to the chances of war he considers them negligible. America is the only
Digitized by
Google
316 The Annals op the American Academy
nation that buys more of Japan than she sells. Under present oondltions it would
be suicidal to put an end to this, and the success of Japan in a war would be so
doubtful that her wise statesmen, imless goaded by American injustice, would
never risk it.
He would have America recognize a Monroe Doctrine for the far East under
the guidance of Japan, thus ensuring her friendship for us, an open door in China,
and the beet interest of Asia.
Under present conditions of excitement and suspicion it would be most
wholesome for this book to have large reading.
I. S.
Adler, Felix. The World Crisis and lU Meaning, Pp. 232. Price, $1.50.
New York: D. Appleton and Company, 1916.
The eight chapters in this book comprise the subject-matter of a series of
public addresses by the author. It is interesting to one whose training has been
economic and sociologic to read this keen analysis of present problems from an
ethical viewpoint. *'The war," Dr. Adler says, "is a demonstration of the
insufficiency of our ethical concepts." In our defence of nationalism we have
failed to see "that the nationalism of one people is consistent with that of others"
and that there must be created "a deep sense of the worth of different types of
civilization."
This ethical idea permeates the entire book. We have been suffering und^
the illusion, he says, in the chapter on international peace, that there is a quick
remedy for war and have not sufficiently noticed such factors as world unrest
or differences in the stage of civilization reached by different nations. The
engine to create peace is good will, and he proposes an international conference
composed of representatives from the laboring classes, manufacturers, agricul-
turists and universities, and not of diplomats alone as a means of averting war.
An ideal to be sure, but deserving of serious consideration by those who are
seeking a way out.
The chapter on Civilization and Progress in the Light of the War is one of the
most interesting in the book. An ethical society is the ideal and civilization only
the means. That civilization has not produced a society morally acceptable,
there are three proofs: (1) a highly civilized society may coexist with internal
moral decay; (2) the benefits of civilization are yet available only to a minority;
and (3) civilized peoples show the most flagrant conduct toward uncivilized.
The failure of most "programs" is due to a defective philosophy, a philosophy
which neglects elements vital to any solution. It is probably because most of us
are narrow and cannot see a problem in its wider relations. Dr. Adler has done
a great service in this book by giving us the larger view.
B. D. M.
Baty, T. and Morgan, J. H. War: lis Conduct and Legal Residts, Pp. xxviii,
. 578. Price, 10s. 6d. London: John Murray, 1915.
This work is an authoritative conmientary on British policy during the
present war rather than a general treatise on the law of war. The three divisions
into which the book is divided deal with The Crown and the Subject (Part 1),
Digitized by
Google
Book Dbpaktment 317
The Crown and the Enemy (Part 2), The Crown and Its Treaty Obligations
(Part 3), The Subject and the Enemy (Part 4) and The Crown and the Neutral
(Part 5). In a final subdivision (Part 6), the authors deal with the legal effects
of the moratorium and a number of miscellaneous topics that do not fit into the
preceding ix>rtions of the work. A valuable appendix contains the text of British
legislation, Orders in Council and Proclamations of the Crown since the outbreak
of the war.
Of the long series of essays and treatises that have appeared since the out-
break of the war this volume will be one of the most valuable to the student of
international law, for in it he will find the docimientary material which will
enable him to follow step by step the development of British policy, and to test
the principles of that policy by the traditional and accepted principles of Inter-
national Law. It must not be supposed that the authors have simply formulated
a defense of British policy. Throughout the work they show not only independ-
ence of judgment but a readiness to criticize British policy.
The most illuminating portions of the work are the chapters dealing with
measures of internal policy, especially the so-caUed ''Defense of the Realm"
Acts. They show to what an alarming extent military commissions have sup-
planted the regular civil tribunals. The far-reaching powers granted to the British
executive under these Acts stand in marked contrast with the constitutional
limitatbns to which the American executive, both state and federal, is subjected.
While the British plan undoubtedly contributes toward executive efficiency,
there is involved a serious danger to the fundamental civil rights of the citizen.
This fact is brought out with great deameas.
L. S. R.
CyOLDsmith, Peteb H. a Bri^ Bibliography of Books in English, Spanish and
Portuguese relating to the Republics commonly called Latin American; with
comments. Pp. xix, 107. Price, 50 cents. New York: The Macmillan
Company, 1915.
HuBBBiCH, Chables Hbnrt and King, Richabd. The Prise Code qf the German
Empire, Pp. xxiii, 177. Price, $2.50. New York: Baker, Voorhis and
Company, 1915.
The translators and editors of this little volume have done a real service in
placing before students of international law an authoritative compilation of The
Prize Code of the German Empire, There have been so many conflicting state-
ments with reference to German law and German practice that considerable
confusion has arisen in the minds both of students and publicists. To American
students the value of this volume is considerably enhanced by the appendix in
which the editors have reprinted the treaties of 1785, 1799 and 1825 between the
United States and Prussia, all of which contain important provi^ons applicable
to our present relations to the European conflict.
L. S. R.
Phelps, Edith M. (Compiled by). Seleded Articles on the Monroe Doctrine,
(8€K»nd and enlarged edition.) Pp. xxxiii, 337. Price, $1.00. White Plains:
The H. W. Wilson Comi>any, 1916.
Digitized by
Google
318 The Annals of thb American Academy
RoHBBACH, Paul. Oerman World PoUdes, (Trans, by Edmund von MacL)
Pp. xi, 243. Price, $1.25. New York: The MacmOlan Company, 1915.
This book under its German title, Der Deutsche Gedanke in der WeUj is said
to have inspired more Germans than any other book published since 1871 because
of the true picture it presents of the way the Germans had resolved to go. Written
in 1912 by one of the most popular German authors of books on politics, it calls
on government and people to spread by all possible means the German national
idea throughout the world in the manner of the Anglo-Saxon, but for a "service
for mankind" greater than that of any other country. Intensely idealistic and
nationalistic, and in a style whose fervor is not lost in translation, the author
preaches a veritable crusade against English foreign policy and influence ^ose
chief effect and aun he clearly believes is to stifle and destroy the rising G^man
competition. For illustrating the viewpoint of the more peaceful prophets of the
German mission in the world the book is one of the clearest and most readable
that has appeared. r r% n
J. O. 15.
Scott, Jambs Bbown (Ed.). The Hague Conventione and Dedaraiiona qf 1899
and 1907. Pp. xxx, 303. Price, $1.00. New York: Oxford University
Press, 1915.
Although a number of volumes have been published relating to the Hagoe
Conventions, we have hitherto lacked a carefully worked out comparison bet?reen
the Conventions and Declarations of 1899 and 1907. In furnishing such a com-
parison. Dr. Scott, Director of the Division of International Law of the Carnegie
Endowment for International Peace, has performed a service to students of inter-
national law, which will be appreciated not only by special students of the subject
but by all those interested in the maintenance of law and order in international
relations.
The compilation is preceded by an illuminating introduction by Dr. Scott
The text of each Convention and Declaration is followed by a carefully compiled
list of ratifications, adhesions and reservations. As regards reservations, each
country is treated separately, so that it is possible to ascertain with little difficulty
the precise attitude of each country toward such treaty or convention. Dr.
Scott's work places before everyone interested in international affairs a dear
picture of the present status of the treaties and conventions adopted at the Hague
Conventions of 1899 and 1907. t o r»
Woods, Frederick Adams and BAi;rzLET, Alexander. la War IXminiahinf/t
Pp. xi, 105. Price, $1.00. Boston: Houghton, Mifflin Company, 1915.
A lengthy introduction exhibits the futility of either militarists or pacifists
to interpret the factors that produce war. There follows a critical study of the
history of the chief countries of Europe for approximately one thousand yean
to ascertain by an examination of the actual years of war and peace in each nation,
not whether war ought to diminish but whether it U diminishing. No startling
discovery is made. It is refreshing amidst the hundreds of volumes now being
written from the emotional, personal and subjective points of view to find one of
this dispassionate and criticfd temper. t n t
J. F. L.
Digitized by
Google
Book DsPABTiiBNT 319
MISCELLANEOUS
CsESBT, Edwabd. An OuOine cf Indxutrial History. Pp. xiv, 364. Prioe,
$1.10. New York: The Macmillan Company, 1915.
This 18 an admirable little book both in what it proposes to do and in what-
it does. It is offered as a supplement to smaller histories and as an introduction
to the larger ones which trace the growth of industry and commerce primarily
from the standpoint of English developmeiit. The scientific or technological
basis of industry is emphasized. The various fields of economic enterprise are
described in a succession of chapters. Political activity in certain phases and
economic thought in its main outiines are treated in parallel chapters.
R. C. McC.
FiBHEB, Abne (trans, and edited by). The MaihemaHcal Theory of Probabiliiies
and lU Application to Frequency Curves and Statistical Methods. Pp. xx, 171.
Price, $2.00. New York: The Macmillan Company, 1915.
A statement of modem studies in probability in a volume available to Eng-
lish readers. Mr. F. W. Frankland, well known actuary and member of actuarial
snd statistical societies in the United States and Great Britain, writes an intro-
duction to it and declares it to be the finest book in the English language on the
sobject.
B. D. M.
HuDDBBS, E. R. Indexing and Filing, Pp. xii, 292. Price, $3.00. New York:
Ronald Press Company, 1916.
Each office has filing needs peculiarly its own, and yet after all there is a
striking uniformity in the fundamentals underlying the filing and indexing of
correspondence and material. In this work, Mr. Hudders has completely de-
scribed, in a dear and concise style, the various forms of filing systems. Some
of the chapter headings will serve to indicate the nature of the material set forth:
rules for writing indexes, filing of papers, direct alphabetic filing, alphabetic-
numeric filing, information and data files, catalog and pamphlet filing, purchase
records, sales records, credit records, filing of sales invoices, filing in lawyers'
offices, architectural filing, files of an accountant, etc. The work will prove of
value not only to those who are anxious to establish a filing 83rBtem that is accurate,
comprehensive and expansive, but also to those whose already established filing
systems seem not to provide for expansion adequate to the incoming material
A» £• R«
PkOadeljMa.
Exura, J. SooTT (Ed.). The Statesman's Year Book, 1915. Pp. Ixxxiv, 1536.
Price, $3.50. New York: The Macmillan Company, 1915.
In qyite of the unusual difficulties involved in the preparation of the States-
man's Year Book for 1916 ^ the publication has lost none of its interest and value.
The difficulties involved in securing recent data with reference to the countries
of Westom Europe have not in any way detracted from the value of the work.
Digitized by
Google
320 The Annals op the Ajcbrican Academy
Furthermore, the material relating to the Far East, eepedaUy that relating to
China, has been considerably enlarged. In view of the conditions under which this
publication has been issued the editors are to be congratulated on the oont^t
of the 1916 edition.
L. S. R.
Newell, Fbbdbbick Hatnes. Irrigaium ManagemerU, Pp. x, 306. Price,
$2.00. New York: D. Appleton and Company, 1916.
The fundamental problem connected with irrigation is not concerned with
concrete and the digging of ditches. The main question and the real difficulty
really arise when the dams are built and the water is stored behind them. To
properly utilize the irrigation litems and to get fair returns from the land irri-
gated are the vital problems to be solved.
With this as his thesis, Mr. NeweU treats some of the specific difificulties which
grow out of it. Thus he discusses the methods of operation, operation oiganisa-
tion, the legal aspect, and various other problems.
The book contains a great deal of valuable information for the man actually
engaged in the work. In this connection, it might be suggested that a few more
illustrations would not be amiss. For college work, it should form an excdlent
basis for class discussion.
Much of the material in the book has been put forth before in one foim or
another. But the book strikes one or two new notes, as for instance, in the chapter
on the importance of the human factor. As a whole it forms a collection of in-
structive data, rather well arranged.
J. 8. K.
RiPLBT, WnjAJiM Z. TruaUf PooU and CorparaHant (Revised). Pp. zxxiii, 872.
Price, $2.75. Boston: Ginn and Company, 1916.
Since the publication of the first edition of this work in 1905, there have been
many important changes in the organisation and regulation of industrial com-
binations. The decisions of the Supreme Court in the Standard Oil Company
and the American Tobacco Company suits, the application of the principle laid
down in these cases, and the enactment of the Clayton law and the Trade Com-
mission law have been the outstanding features of a new and important period.
In this edition Professor Ripley presents the leading documentary and other
descriptive material concerning both the earlier and the recent phases of the
"trust" problem.
T. W. V. M.
Robinson, Charles M. City Planning: trith special reference to the Planning
qf Streets and Lots, Pp. xiii, 344. Price, $2.50. New York: G. P. Put-
nam's Sons, 1916.
Town planning has acquired the distinction of being both the art and science
of laying out cities to serve the business requirements, convenience, health and
comfort of the public. Mr. Robinson's book teaches the methods of town plan-
ning. It not only carries the merit of creating within the reader a stronger desiie
I
Digitized by
Google
Book Dbpabtment 321
far a more beautiful and efficient dty, but f urniahfis in technical detail the means
wherry desires may be made realities.
lite author gives primary concern to the problem of street planning. The
iesBon we must yet learn in constructing highways is the importance of knowing
the real uses and functions the proposed streets are to give. Realising this, a
largBT pcurt 6L the book gives consideration to showing just how the laying out of
streets may be made to serve actual needs.
The latter part of the book deals with legislation necessary for improved
city plamiing. The problem of remnants, street widening and soning are treated.
The many illustrations and charts not only carry interest, but clarify the issues
and problems the author wishes to portray.
C. R.
WiCKWABB, Francis G. (Ed.). The American Year Book, 1916. ^ Pp. xviii, 862.
Price, $3.00. New York: D. Appleton and Company, 1916?
With each year the plan of the American Year Book is enlarged and its value
to students increased. It is but natural that the edition of 1916 should give special
attention to our international relations. These are dealt with in three compre-
hensive sections: Section I, American History; Section III, International Rela-
tions; Secti<m IV, Foreign Affairs.
While each one of the thirty-three sections into which the work is divided
contains material of much value to students of current affaurs, these three sections
are indicative of the care and thoroughness with which the work of compilation
is conducted. It would be difficult to find a clearer presentation of American
foreign rdations than that contained in the three sections above referred to. It
is but sue years since the publication of the American Year Book was begun, but
in this short time it has acquired a position which assures to it a definite and
important place in the c(»npilations which students are accustomed to use in
keeping in touch with current events. The editors have gained for themselves
the confidence of the public in the accuracy of the material presented.
L. S. R.
Digitized by
Google
INDEX
Abrams, Alfred W. Visual Instnio-
tion in New York State, 270-272.
Adults, school facilities, 276.
Adui/ts, Education for, through
Public Legturbs in New York
Cmr. Henry M. Ldpsiger, 210-217.
Advertising, influence, 203-205.
Aesthetic appreciation, development, 3.
opportunity, bar to, 2.
Agricultural education: 237-238; an-
nual expenditure, 239; demonstra-
tions, 225; new tyi)e, 224; recogni-
tion, 228-229.
fair, 134.
research, 237-238.
Agricultiure: improvement, 228, 235;
problems, 224; ten commandments
of, 229-230.
Alderman, L. R. School Credit for
Home Work, 162-166.
Allen, Willl^m H. Education
Through Official Publicity, 284r-290.
''America First" campaign, 277-278.
American Cities, The Librart Ex-
tension Movement in. Arthur £.
Bostwick, 250-256.
Americanisation: factors, 273-274; of
immigrant, 273; promotion, 254.
Art: appreciation, 8-9, 125; in farm
home, 84.
Art, Appreciation or Music, Ltferp
ATURE AND, AS A SOCIAL AlM. A.
Duncan Yocum, 1-12.
Askew, Sarah. Library Work in the
Open Country, 257-266.
Authority, centralisation, xxi.
Babies, saving, 143-144.
Barnard, J. Ltnn. Training in the
Schools for Civic Efficiency, 26-33.
Becht, J. George. Training Children
to a Wise Use of Their Leisure, 115-
122.
BLAffWHCTj., Thomas C. Educatkm for
ParenUiood, 47-53.
BoNBER, Frederick G. Edueatioo
for life Work in Non-ProfessioDal
Occupations, 64-76.
Book wagons, 265.
Books: demand for good, 261-262;
introduction, 127-128; ownenfaip,
260; selection, 127, 255-256; supper,
127.
Bostwick, Arthxtr E. The Ltbniy
Extension Movement in American
aties, 250-256.
Boys' clubs: 231-232; objects, 231;
organization, 232.
Brewer, John M. Vocational Guid-
ance in School and Oooupation, Si-
Centralization: advantages, xxi; d»-
advantages, xxi.
Charlestown, Mass., Hig^ School, his-
tory, 16-18.
Child labor: opportunities, 67; protec-
tion against, 142.
welfare, promotion, 139.
commissioDS, state, 144.
conferences, international,
145.
Children: activities, 115; oonditiooB,
141-142; exceptional, xiv-xvii;iDta^
ests and tastes of, 126; library woik
with, 124; physical activities, 119.
Children, T.mwARnaft and the Loti
or Reading. Annie Carroll Moore,
123-129.
Children, The Moral TRAonNo or.
Edward Howard Griggs, 34-^.
Children, Training, to a Wibb Uai
or Their Leibxtre. J. George
Becht, 115-122.
Christian Associations, educational
work, 171.
822
Digitized by
Google
Indbx
323
Churches, organization of social life by,
120.
Citizenship: development, 213; respon-
sible, 65; test of good, 26.
City life, preference for, 93.
Civic education : aim, 29; in elementary
schools, 28-31.
Civic Efficienct, Training in the
Schools for. J. Lynn Barnard,
26-33.
Civic obligations, 26.
training: aim, 31; steps iii, 28.
virtues, fundamental, 29.
Civics: activities included in, 31 ; defini-
tioD, 28; instruction in, 2&-27; old
and new, 26-27; theory of new,
27-28.
Class work, socializing, 17.
Club work, opportunities, 244.
College and University Expert,
The Public Services of the.
Clyde Lyndon King, 291-296.
Colleges: evening classes, 173; home
making, 45.
Commerce, problems, 54.
Community: history, 134; needs, 128-
129; relation of rural school to, 157;
types, 27.
Community Center, the Rural
School. L. J. Hanifan, 130-138.
Community center meetings: 132-134;
evening classes as, 136.
codperation, larger, 246.
leadership, 245-246.
music: definition, 218; movement,
223; results, 223.
Community Music Idea, The Spread
OF the. Peter W.Dykema, 218-223.
Community orgahizations: 234-236;
codperation, 251; objects, 235.
spirit, development, 150.
welfare, elements, 30.
Continuation schools: classification,
170-171; definition, 170; diflficulties
encountered, 180; features, 179;
public, 175-181.
Continuation Schools. Arthur J.
Jones, 170-181.
Cooperation: democratic, 24; federal
govanment, 145; methods, 195;
need, 157; neighborly, 246; social,
15.
Cooperative extension work, 237.
marketing, 249.
schools: advantages, 179; teach-
ers, 179.
Correspondence courses: 196-197; con-
ducted by gas companies, 206;
development, 196; subjects, 197.
reference service, 264.
school activities, 208-209.
Correspondence School Instruc-
tion BY Non-Academic Institu-
tions. Lee Galloway, 202-209.
Correspondence schools: advertising,
203-204; commercial character, 208-
209; disadvantages, 207; educational
value, 208-209; influence, 202-203;
students enrolled, 202-203; varie-
ties, 205-206; work, 206-207.
Country, potential leadership, 90-92.
Country, Library Work in the
Open. Sarah Askew, 257-266.
Country homes, progressive, 249.
life: creed, 85-86; development,
82.
County agents: activities, 234; work,
229-230.
Creswell, Mary E. The Home Dem-
onstration Work, 241-249.
Crocheron, B. H. Manual Labor and
the Achievement of National Ideals,
77-81.
Culture^ democracy, 12.
Curriculum, many-sided, xvii-xix.
Democracy: eflScient, 76; furtherance,
4; national, ix; of educational system,
x; true, xix.
Democracy, The Educational Pro-
gram OP A. Ambrose L. Suhrie,
ix-xxiv.
Digitized by
Google
324
Index
Democratic culture, quest, 213.
Demonstration agent, county, 247.
system: growth, 226-228; origin,
226-228.
work: centers of influence, 247;
women, 247.
Domestic science, teaching, 48.
Dramatization, a means of apprecia-
tion, 4.
Drawing, value, 9.
Dtkema, Peter W. The Spread of
the Conmiunity Music Idea, 218-
223.
Eastern High School, Detroit, English
in, 18-19.
Economic conditions, improvement,
245.
Education: adult, 217; agricultural, 80,
224; aims, 104; business of democ-
racy, xxiv; claims, 204; commercial,
190-191; democracy in, 2; demo-
cratic, 213; democratic concept, xv;
department of, 291-292; efficient,
49; essentials, xvii; formal, 78;
further, 267; health promotion and,
102-103; home, 269; in post-school
period of life, xxii-xxiii; industrial,
190-191; interpretation, 216; mod-
ernized, 69; moral, 34; moral import,
34; of immigrants, 274; of public,
289; organized, 285; pedantry, 79-81 ;
policies, 160; popular, 210; post-
school, xxii; professional, xviii; prog-
ress, 292; progressive growth, 289;
province, 78; public, 3, 75; purpose,
180; rural, 167; secondary, xi, 67-68;
southern, 227; through exhibits, 287-
288; tradition, 79-81; value of, 56;
worth while, 60.
Education foe Adults through
Public Lectures in New York
City. Henry M. Leipziger, 210-217.
Education for Home Life on the
Farm. Jessie Field, 82-86.
Education for Life Work in Non-
Professional Occupations. Fred-
erick G. Bonser, 64-76.
Education for Parenthood. Thomafi
C. Blaisdell, 47-53.
Education, The Home Reading
Courses of the United States
Bureau of. Ellen C. Lombard,
267-269.
Education, The United States Bu-
reau OF, AND THE IMMIGRANT. H.
H. Wheaton, 273-283.
Education through Farm Demon-
stration. Bradford Knapp, 224-
240.
Education through Official Pub-
licity. William H. Allen, 284-290.
Educational activities, opportunities,
193.
agency, clubs as, 83.
conditions, improvement, xxi.
eflSciency, 167.
extension, 272.
hygiene: problems, 102; special
phases, 104-105.
leaders, duties, 81.
opportunity: capitalization, 288;
equality, x, xvii.
policies, execution, xx.
procedure, readjustment, 116.
Educational Program of a Democ-
racy, The. Ambrose L. Suhrie, ix-
xxiv.
Educational report, 288-290.
systems: ix; democracy, x; scope,
139.
Educative agency, valuable, 13.
EflSciency: development, 65; social, 76;
test of, 31-33.
Efficiency and SITrvice, Health as
A Means to Happiness. Louis W.
Rapeer, 97-106.
Efficiency, Training in the Schoou
FOR Civic. J. Lynn Barnard, 26-33.
Elementary schools: civic education,
28-31; home making in the, 45;
training in, 50.
Digitized by
Google
Index
325
Employment, problems, 61-62, 63.
Ethical instruction, direct, 35-36.
Evening schools: difficulties encoun-
tered, 177; enrollment, 175-176;
facilities, 277; modifications, 178;
pupils, 176; teachers, 177; useful-
ness, 177; work, 176-177.
Examinations, international, 172.
Exhibits: current', 287; education, 287-
288; special, 287; traveling, 287.
Fakm, Education for Home Life ow
THE. Jessie Field, 82-86.
Farm Bureau, County, 235.
demonstration: features, 236; ex-
tension, 237.
Fakm Demonstration, Education
THROUGH. Bradford Knapp, 224-
240.
Farm home: art in, 84; equipment of
modem, 82-83; literature in, 84;
music in, 84.
Field, Jessie. Education for Home
Life on the Farm, 82-86.
Galloway, Lee. Correspondence
School Instruction by Non-Academic
Institutions, 202-209.
Gillette, John M. Training for
Rural Leadership, 87-96.
Girls* clubs: 232-234; features, 233.
Grammar schools, training, 50.
Griqos, Edward Howard. The Moral
Training of Children, 34-39.
Group activities: characteristics, 17:
outside of classroom, 21-24.
control, educational value, 14.
Hanifan, L. J. The Rural School
Community Center, 130-138.
Happiness, Efficiency and Service,
Health as a Means to. Louis W.
Rapeer, 97-106.
Health, preservation, 65.
Health as a Means to Happiness,
Efficiency and Service. Louis W.
Rapeer, 97-106.
Health achievements, recent, 101-102.
problem, our, 98-99.
program, indifference, 97-98.
progress, lOQ-101.
promotion, education and, 102-
103.
science, advancement, 101.
High schools: extension, xiii; growth,
290; home making in the, 45; over-
socialized, 23-24; senior, 72-74;
student activities, 15; training in,
50; vocational education and junior,
71-72; vocational years, 69.
History, moral value, 35.
Home: as civilizing agency, 117; co-
operation between school and, 156^
164; country, 83; relation of school
and, 244r-245.
and school league : accomplish-
ments, 151; administration, 150;
definition, 148; democracy, 150;
influence, 153-155; interest in, 148-
149; meetings, 149-150; spirit, 155.
Home and School League, An
Urban. Walter L. Philips, 148-155.
Home demonstration work: activities,
242; financing, 241-242; program,
243-24^.
Home Demonstration Work, The.
Mary E. Creswell, 241-249.
Home economics: growth of, 46; move-
ments in, 41.
department: curriculum, 43-
44; equipment, 43.
education division: 145-146;
work, 145-147.
library, advantage, 118.
life: education, 83; training, 82.
Home Life on the Farm, Education
FOR. Jessie Field, 82-86.
Home making : in the elementary school,
high school and college, 45; school
and, 40-41; standard courses, 44-45;
teachers of, 42-43.
Home Making, The Science and Art
OF. Carrie Alberta Lyford, 40-46.
Digitized by
Google
326
Index
Home Reading Courses, The, or
THE UmTED States Bureau of
Education. Ellen C. Lombard,
267-269.
Home work: classroom credits for, 163-
164; definite, school credit for, 165-
166.
Home Work, School Credit for. L.
R. Alderman, 162-166.
Housekeeper, responsibilities, 40-41.
Human life, conservation, 99.
Immigrant, The United States Bu-
reau OF Education and the. H.
H. Wheaton, 273-283.
Immigrant children, school attendance
of, 277.
classes, teachers for, 279-280.
education : city program, 282-283;
division of, 275; national program,
281-282; standards and methods,
280-281; state program, 282.
Immigrants: Americanization, 273;
children, 274; conditions, 275-276;
educating, 273-274; employment,
273; facilities for educating, 275-276;
petitions, 278-279; vocational direc-
tion, 273.
Industrial art work, effects, 11-12.
classes, establishment, 195.
establishments, music in, 220-221.
training, promoting, 274.
Industries: cooperation, 279; problems,
54.
Infant mortality, reduction, 47.
Institutions, Correspondence
School Instruction by Non-
Academic. Lee Galloway, 202-209.
Instruction centers, distribution, 199-
201.
Johnson, George E. Play and Rec-
reation, 107-114.
Jones, Arthur J. Continuation
Schools, 170-181.
Kindergartens, extension, 144.
King, Clyde Lyndon. The Public
Services of the College and Univer-
sity Expert, 291-296.
King, Irving . Social Training through
School Group Activities, 13-25.
Knapp, Bradford. Education through
Farm Demonstration, 224-240.
Labor: conditions, 61; need of manual,
78; saving, 234; social significance of
manual, 78.
Labor, Manual and the Achieve-
ment OP National Ideals. B. H.
Crocheron, 77-81.
Labor-saving devices, use, 247-249.
turnover, reduction, 61.
Leader, functions, 88-90.
Leadership, meaning, 88.
Leipziger, Henry M. Education for
Adults through Public Lectures in
New York City, 210-217.
Leisure, use, 65.
Leisuhe, Training Children to a
Wise Use op Their. J. George
Becht, 115-122.
Librarian: duties of traveling, 262;
traveling, 259-261; work of travel-
ing, 259-260.
Libraries: books, 255; branches, 252;
buildings, 256; children's work, 252;
circulation, 251; city, 257; co5pera
tion of local, 269; county, 265
demand, 261; efficiency of traveling,
266; foreigners in, 253-254; free, 258
territorial extension of influence,
250-251; traveling, 252-253, 257-
259; use of, by men, 254; work with
schools, 253.
Libraries and the Love of Read-
ing, Children. Annie Carroll
Moore, 123-129.
Library : claims, 254; environment, 127;
object of traveling, 266; place for
traveling, 262; readers, 255.
Digitized by
Google
Index
327
Library extension: agents, 254; meth-
ods, 250; publicity, 254-255.
LiBRABT Extension Movement, The,
IN American Cities. Arthur E.
Bostwick, 250-256.
Library work: development, 263; with
children, 124.
LiBRABT Work in the Open Country.
Sarah Askew, 257-266.
Lincoln Nebraska High School, club
activities, 22.
Literary societies, organization, 18.
Literature: in farm home, 84; love of,
5; moral value, 35.
LmSRATURE AND ArT, APPRECIATION
OF Music, as a Social Aim. A.
Duncan Yocum, 1-12.
Lombard, Ellen C. The Home Read-
ing Courses of the United States
Bureau of Education, 267-269.
Ltford, Carrie Alberta. The Science
and Art of Home Making, 40-46.
Maine, School Improvement League,
158-161.
Massachusetts, Department of Uni-
versity Extension in, 193.
Massachusetts, The " People's Uni-
versitt'' of. James Ambrose
Moyer, 193-201.
Men, use of libraries by, 254.
Moore, Annie Carroll. Children,
Libraries and the Love of Reading,
123-129.
Moral education, value, 35.
Moral Training of Children, The.
Edward Howard Griggs, 34-39.
Mothers' pension, 142-143.
Mothers and Parent-Teacher As-
sociations, The National Con-
gress of. Mrs. Frederic Schofif,
139-147.
MoTER, jABfES AMBROSE. The '*Peo-
ple^s University" of Massachusetts,
193-201.
Music: appreciation, 7; by the people.
221-223; for the people, 218-220;
history, 7; in farm home, 84; love of,
5-7; of the people, 220-221; teaching
of vocal, 7.
Music, Literature and Art, Appre-
ciation OF, AS A Social Aim. A.
Dimcan Yocum, 1-12.
Music Idea, The Spread of the
Community. Peter W. Dykema,
218-223.
National Ideals, Manual Labor
and the Achievement of. B. H.
Crocheron, 77-81.
National patriotism, revival, 136-137.
Reading Circle: readers enrolled,
268; reading courses, 268; require-
ments, 268.
unity, furtherance, 1.
New England, schools, 156.
York, free lecture system, 211-
212.
New York City, Education for
Adults through Public Lectures
in. Henry M. Leipziger, 210-217.
New York State, Visual Instruc-
tion IN. Alfred W. Abrams, 270-272.
Occupation, Vocational Guidance
IN School and. John M. Brewer,
54-63.
Occupations: guidance in, 60-63; prog-
ress, 54; relation of schools to, 78;
study of, 55.
Occupations, Education for Life
Work in Non-Professional. Fred?
erick G. Bonser, 64-76.
Parent-Teacher Associations: foreign
interest, 147; reasons for, 140; scope,
140-141.
Parent-Teacher Associations, The
National Congress of Mothers
AND. Mrs. Frederic Schofif, 139-147.
Parenthood: duties, 49; need of train-
ing for, 51.
Digitized by
Google
328
Index
Parenthood, Education for.
Thomas C. Blaisdell, 47-53.
Parents : educational responsibility,
146; home education, 139; knowl-
edge of, 49-50; national university
for, 140; reading course for, 52.
Parker School experiments, 16.
'* People's University," The, of
Massachusetts. James Ambrose
Moyer, 193-201.
Philips, Walter L. An Urban Home
and School League, 148-155.
Pictures: classification, 271-272; pur-
pose, 271; selection, 270; technical
analysis of, 10-11.
Play: a socializing factor, 119; educa-
tional value, 107; effects, 115-116;
government and discipline, 37-39;
moral value, 36-37; organization,
111. See Recreation.
Plat and Recreation. George E.
Johnson, 107-114.
Playground, procuring a public, 151-
152.
Products, cooperative marketing, 249.
Public education: 289; ministry, xxii-
xxiii.
institutions, types, xvi.
lectures: attendance, 212-213;
character, 213-214; scope, 213-214;
subjects, 213, 215-216.
Public Lectures, Education for
Adults through, in New York
City. Henry M. Leipziger, 210-217.
Public library, influence, 250.
—. — officials, university experts and,
293.
opinion, power, 210.
schools: importance, 157; physical
education, 150; social and industrial
groups in, xv.
service, obligation, 291-293.
Public Services, The, of the Col-
lege and University Expert.
Clyde Lyndon King, 291-296.
Publicity: campaign of, 277; five kinds
of official, 285-286; indirect effects
of official, 284; informal, 286.
Publicity, Education through Of-
ficial. William H. Allen, 284^290.
Rapeer, Louis W. Health as a Means
to Happiness, Efficiency and Service,
97-106.
Reading, Children, Libraries and
the Love of. Annie Carroll Moore,
123-129.
Reading habit, establishment, 267.
Reber, Louis E. University Exten-
sion, 182-192.
Recreation: administration, 109; agen-
cies promoting, 108; commercialized,
107; economical administration, 1 10;
health surveys, 101; increased inter-
est, 107; school an agency in admin-
istration of, 109-110; work of schools
in furthering, 111-114. See Play.
Recreation, Plat and. George E.
Johnson, 107-114.
Recreation centers, types established,
108-109.
commissions, creation, 108.
Recreational facilities, proper, 119.
Roads, improved, 138.
Rural districts, books, 257.
homes, management, 247.
leaders, migration of, to city, 93.
leadership: importance, 87; need,
93-94; requisites, 88, 89-90; training,
94-96.
Rural Leadership, Training for.
John M. Gillette, 87-96.
Rural population, problems, 87.
school, relation of, to community,
157.
Rural School Community Center,
The. L. J. Hanifan, 130-138.
Rural School Improvement League,
The. Payson Smith, 156-161.
Salesmanship, influence, 203-205.
ScHOFF, Mrs. Frederic. The Na-
Digitized by
Google
Index
329
tional Congress of Mothers and
Parent-Teacher Associations, 139-
147.
School accommodations, inadequate,
xi.
activities, educational signifi-
cance, 14.
School and Occupation, Vocational*
Guidance in. John M. Brewer,
54-63.
School athletics, 137.
buildings; new, 152-153; wider
use, 210.
community, survey, 132.
School Community Center, The
Rural. L. J. Hanifan, 130-138.
School control, central and local, xx-
xxii.
credit, definite for home work,
165-166.
School Credit for Home Work. L.
R. Alderman, 162-166.
School exhibit, 134.
government, student participa-
tion, 25.
group activities, valuable results,
13.
School Group AcnvrriES, Soctal
Training through. Irving King,
13-25.
School house. New type, 216.
Improvement League: accom-
plishments, 159-161; constitution,
158-159; efforts, 159; influence of,
on teachers, 160; membership, 158;
of Maine, 158-161.
School Improvement League, The
HxTBAL. Payson Smith, 156-161.
ScsooL League, An Urban Home
and. Walter L. Philips, 148-155.
Sebool libraries, establishment, 137.
— manse, advantages, 168-169.
ScBooL Manse Idea, The Spread of
THE. George E. Vincent, 167-169.
School program, recess a part of, 111.
School reorganization, vocational needs
and, 57-58.
room, decoration, 153.
superintendents, codperation, 141.
Schools: accessibility, x-xiv; appren-
ticeship, 174-175; attendance, 134-
135; cooperation between home and,
156, 164; codperative, 178-179; cor-
respondence, 172-173; country, 83;
dental crusade in, 100; domestic
science in, 48; educational work, 168;
evening classes, 135-136, 153; even-
ing use, 113-114; essentials for
efficient, 167; for clerks, 175; health
data, 99-100; home making and the,
40-41; ideal for, ix; lecture course,
136; library work with, 253; medical
supervision in, 103; music in, 3;
music in public, 6; neighborhood
centers, 113; New England, 156;
official control, xx; opportunity,
103-104; part-time, 179-181; phono-
graphs, 7-8; physical education in,
103; professional work, 151; promo-
tion of avocational interests, 112-
113; public continuation, 175-181;
public evening, 175-178; recreation,
111-114; relation of, to occupation,
78; relation of home and, 244-245;
reluctance of, in vocational guidance,
54; responsibility, 103-ld4, 118-120;
socializing agency, 114; special,
173-174; types, 171.
Schools, Continuation. Arthur J.
Jones, 170-181.
Schools, Training in the, for Civic
Efficiency. J. Lynn Barnard,
26-33.
Scientific management, value, 61.
Segregation, advantages, xvii.
Service, Health as a Means to
Happiness, Efficiency and. Louis
W. Rapeer, 97-106.
Service Bureau, aim, 192.
Shortridge High School, Indianapolis,
composition work in, 19-20.
Digitized by
Google
330
Index
Sioux City High School, student organ-
izations, 22-23.
Smith, Patson. The Rural School
Improvement League, 156-161.
Smith-Lever Act, passage, 238.
Social activities, organization, 121.
aim, meaning, 4.
Social Aiiki, Appreciation op Music,
Literature and Art as a. A.
Duncan Yocum, 1-12.
Social capital: community, 131; defini-
tion, 130.
classes, segregation, xix.
education, process of, 14.
ideals, maintenance, 117.
training, organization for, 14-16.
Social Training through School
Group Activities. Irving King,
13-25.
Socialization, of classroom work, 15-21.
Student activities, benefits of, 24-25.
Students, social activities, 15.
Study groups, organization, 198.
Suhrie, Ambrose L. The Educational
Program of a Democracy, ix-xxiv.
Teachers: cooperation, 244; housing,
167; training, 280.
Teaching: better, 296; object, 27.
United Spates Bureau op Educa-
tion, The, and the Immigrant.
H. H. Wheaton, 273-283.
United States Bureau op Educa-
tion, The Home Reading Courses
OF the. Ellen C. "Lombard, 267-
269.
Universities: evening classes, 173; in-
fluence, 21^217; services of, to
state, 188-189.
University expert: cooperation, 293;
ethical standards, 293-295; public
officials and, 293; socializing knowl-
edge, 295.
University Expert, The Pubuc
Services of the College and.
Clyde Lyndon King, 291-296.
University extension: 173; administra-
tion, 188-189; correspondence-study
courses, 189-191; definition, 183;
department of, in Massachusetts,
193; depression, 185; educational
activities, 195; extramural courses,
189-191; growth, 185; history, 183-
188; method, 191; object, 195; pur-
pose, 183; service, 189; status in
1910, 186; status in 1913, 186; tui-
tion, 199; unorganized, 187-188.
University Extension. Louis E.
Reber, 182-192.
University service, scope, 182.
Vincent, George E. The Spread of
the School Manse Idea, 167-169.
Visual instruction: basis, 271; organ-
ized, 270.
Visual Instruction in New York
State. Alfred W. Abrams, 270-272.
Vocational activities, early introduc-
tion, 68.
courses, 72.
education: development, 74; ele-
ments, 65; implications, 67-71; in-
terest, 64; junior high school and,
71-72; non-professional, 65-67; op-
portunities in, 75-76; private insti-
tutions for, 74-75; public support,
64; tendencies in, 75-76; vocational
guidance and, 59-60.
extension work, 70-71.
guidance: commerce and indus-
try and, 54; curricula aids in, 58-59;
dangers, 62; effective, 55; effici^t,
63; importance, 54; reluctance of the
school in, 54; scientific study, 63;
vocational education and, 59-60.
Vocational Guidance in School and
Occupation. John M. Brewer,
54-63.
Vocational needs: school reorganiza-
Digitized by
Google
Index
331
tion sskdf 57-58; studies adapted to,
56-57.
Vocational problems, 70.
survey, functions, 30-31.
training: 245-246; promoting,
274.
Vocations: entrance to, 67; non-pro-
feesional, 65-66.
Wheaton, H. H. The United States
Bureau of Educatbn and the Immi-
grant, 273-283.
Women: economic needs, 248; liberal
education, 210; work for, 234.
Work: assignment, 162-163; govern-
ment and discipline, 37-39; moral
value, 36-37.
Workers: efficiency, 75-76; exploita-
tion, 67; young, 60-61.
YocuM, A. DxTNCAN. Appreciation of
Music, literatiure and Art as a
Social Aim, 1-12.
Digitized by
Google
Digitized by
Google
AMERICA'S CHANGING
INVESTMENT MARKET
Volume LXVIII November, 1916
Editor: CLYDE LYNDON KINO
AasuTAMT Edctob: E. M. PATTERSON
Amociact Edztob: JOSEPH H. WILLIT3
Editor Book Dbpt.: C. H. CRENNAN
Editorial CoxmctL: J. C. BALLAGH, THOMAS CONWAY, Jr., C. H. CRENNAN,
a 8. HUEBNER. CARL KELSEY. CLYDE LYNDON KING. J. P. LICH-
TENBERGER, ROSWELL C. McCREA, SCOTT NEARINQ,
E. M. PATTERSON. L. S. ROWE, ELLERY C. STO-
WELL. T. W. VAN METRE. P. D. WAT-
SON. JOSEPH H. WILLITS
EdUar in Charge of this Volume
E, M. PATTERSON Ph,D.,
Aeeietani Professor of EconomicSy Wharton School
University of Pennsylvania
Thb Amkeican Academy op Political and Social Science
36th and Woodland Avenxtb
Philadblphll
1916
Digitized by
Google
Copyrii^t, 1016, by
American Aoadbmt or Poutigal and Social Scibnob
All rights reserved
EUROPEAN AGENTS
England : P. S. King & Son, Ltd., 2 Great Smith St., Westminster, London, 8. W.
France : L. L&rose, Rue Soufflot, 22, Paris.
Germany : Mayer & Mtdler, 2 Prinz Louis Ferdinandstrasse, Berlin, N. W.
Italy : Giomale Degli Economisti, via Monte Savello, Palazzo Orsini, Rome.
Spain : E. Dossat, 0 Plata de Santa Ana, Madrid.
Digitized by
Google
CONTENTS
FOREWORD vii
Editor in Charge of Volume.
INTRODUCTION
THE THEORY OF FOREIGN INVESTMENTS 1
Edwin Walter Eemmerer, Profeaaor of Economics and Finance in
Princeton University.
THE PROSPECTS FOR ECONOMIC INTERNATIONALISM 10
T^^lliam English Walling.
PABT I'-INTERNATIONAL INVESTMENTS BEFORE THE EURO-
PEAN WAR
BRITISH OVERSEA INVESTMENTS, THEIR GROWTH AND IM-
PORTANCE 23
C. K. Hobson, London, England; Author of The Export of Capital,
THE AMOUNT, DIRECTION AND NATURE OF FRENCH INVEST- 36
MENTS
Yves Guyot, Editor, Journal des EeonomitU, Paris.
THE NATIONAL DEBT OF CHINA— ITS ORIGIN AND PIS SECU-
RITY 66
Charles Denby, Former United States Consul General in China.
PART II'-INFLUENCE OF THE EUROPEAN WAR
THE BRITISH TREASURY AND THE LONDON STOCK EX-
CHANGE 71
W. R. LawBon, Author of BrUiah War Finance, London, Eng.
THE AMERICAN SECURITY MARKET DURING THE WAR . . 93
S. S. Huebner, Professor of Insurance and Commerce, University of
Pennsylvania.
SHORT-TERM INVESTMENTS AS A STABILIZING INFLUENCE
IN INTERNATIONAL FINANCE. 108
Elmer H. Youngman, Editor, Bankere Magazine^ New York.
THE EFFECT OF THE WAR ON NEW SECURITY ISSUES IN
THE UNITED STATES 118
Gordon Blythe Anderson, A.M., Wharton School of Finance and Com^
meroe, University of Pennsylvania.
iS
Digitized by
Google
iv Contents
FINANCING AMERICAN WAR ORDERS 181
Thomas Conway, Jr., Professor of Fiiianoe, Wharton School of Finance
and Commerce, University of Pennsylvania.
FOREIGN EXCHANGE DURING THE WAR 151
George Zimmer, Manager, Foreign Exchange Department, Franklin
National Bank, Philadelphia.
PART III-<!APITAL NEEDS OF THE NEAR FUTURE
NEEDS FOR CAPITAL IN LATIN AMERICA— A SYMPOSIUM.. 161
INTRODUCTION 161
William H. Lough, Prendent, BuBiness Training Corporation; Formerly Special
Agent, United States Department of Commerce.
ARGENTINA 165
Joseph Wheless, Attorney at Law, St. Louis, Mo.
BOLIVU 167
J. C. Luitweiler, Foreign Trade Department, National City Bank, New York.
BRAZIL 168
Andrew J. Peters, Assistant Seeretaiy of the Treasury, Washington, D. C.
CHILE 160
G. L. Duval, Of Wessel, Duval A Company, New York City.
COLOMBIA 171
Edward H. Mason, Qlenooe. Illinois.
COSTA RICA 172
Walter Parker, General Manager, New Orleans Association of Commerce; Chair^
man Permanent Committee on Costa Rica, Pan American FinancialjConf erenoe.
CUBA 174
A. G. Robinson, Washington, D. C.
DOMINICAN REPUBLIC 176
Jacob H. Hollander, Professor of Political Economy, Johns Hopkins University.
ECUADOR 177
F. I. Kent, Vice-President, Bankers Trust Company, New York.
EL SALVADOR 178
Frederick F. Searing, Pateraon, N. J.
GUATEMALA 181
John Clausen, Manager, Foreign Department, The Crocker National Bank of
San Francisco.
HONDURAS 185
W. S. Valentine, President of the New York and Honduras Rosario Mining Com-
pany, New York City.
NICARAGUA 186
W. L. Saunders, Chairman, Board of Directors,' Ingersoll-Rand Company, New
York.
PANAMA. 188
A. G. Ciapham, President, The Commercial National Bank, Washington, D. C.
PARAGUAY 189
William Wallace White, Consul General of Paraguay, New York City.
PERU 191
John H. Fahey, Publisher, Boston, Mass.
URUGUAY 192
H. A. Wheeler. Vice-President, Union Trust Company, Chicago, 111.
VENEZUELA 194
Francisco J. Y&nes, Assistant Director of the Pan American Union.
Digitized by
Google
Contents v
KfEXICO 196
James J. Shirley, M.E.E.E., New York aty.
RUSSIA'S FUTURE NEEDS FOR CAPITAL 207
Samuel McRoberts, Vice-President, National City Bank, New York
aty.
CANADIAN CAPITAL REQUIREMENTS 216
O. D. Skelton, Professor of Economics, Queen's University, Kingston,
Ontario.
THE FUTURE OF PUBLIC UTILITY INVESTMENTS 226
Delos F. Wilcox, Franchise Expert, New York City.
THE RURAL CREDITS ACT AND ITS EFFECT ON THE IN-
VESTMENT MARKET 236
Roger W. Babeon.
PART IV— THE UNITED STATES IN THE INVESTMENT MARKET
THE RATE OF INTEREST AFTER THE WAR 244
Irving Fisher, Professor of Economics, Yale University, New Haven,
Conn.
THE NATIONALIZATION OF CAPITAL 252
Dr. M. J. Bonn, New York City.
LONDON AND NEW YORK AS FINANCIAL CENTERS 264
E. L. Stewart Patterson, The Canadian Bank of Commerce.
OUR GOLD RESERVES AFTER THE WAR 278
Frank A. Vanderlip, President, National City Bank, New York City.
AMERICA'S ABILITY TO MAKE FOREIGN INVESTMENTS... 287
Hon. George E. Roberts, National City Bank, New York.
THE RELATION OF GOVERNMENT TO FOREIGN INVEST-
MENT 2^
Himtington Wilson, Formerly Assistant Secretary of State.
IX)LLAR DIPLOMACY AND FINANCIAL IMPERIALISM UNDER
THE WILSON ADMINISTRATION 312
Frederic C. Howe, Commiasioner of Immigration at the Port of New
York.
BOOK DEPARTMENT 321
INDEX 336
Digitized by
Google
vi Contents
BOOK DEPARTMENT
GENERAL WORKS IN BOONOMIGB
Cass— Capital Today (C. ReiteU) 321
Chu— T^ Tariff Problem in China (A. A Osborne) 321
Young— T^ Single Tax Movement in the United States (E. M. Pfttterson). . 322
AGRICULTURE, MINING, FORESTRY AND FISHERIES
CASwa^-Selected Readings in Rtaral Economics (L. D. H. Weld) 323
Leake — Means and Methods of Agricidltaral Education (J. R. Smith) 323
WnAJB—AgricuUure in the Tropics (G. B. Roorbach) 323
MANUFACTURING INDUSTRY
Allen— r^ Shoe Industry (M. Keir) .' 324
GowiN— T^ Executive and His Control cf Men (J. H. Willita) 324
Profit Sharing by American Employers (J. H. Willita) 325
COMMERCE AND TRANSPORTATION
Bbows— Transportation Rates and Their Regulation (T. W. Van Metre) . . 325
Ferguson— iStote Regulation of Railroads in the South (T. W. Van Metre) 326
LABOR PROBLEMS
Frankfurter and GoLDMARK^TAe Case for the Shorter Work Day (A.
Fleisho*) 826
Groat— An Introduction to the Study of Organieed Labor in America (A
Fleiahcr) 327
MONEY, BANKING AND FINANCE
Hepburn — A History of Currency in the United States (E. W. Kemmerer) 327
&C(yrT— Money and Banking (E. M. Patterson) 328
POLITICAL AND GOVERNMENTAL PROBLEMS
Alexander— History and Procedure of the House qf Representatives (H. G.
James) 328
Eruger — Oovemment and Politics of the German Empire (C. H. Mazson) . . 329
Macy and Gannaway — ComparaHoe Free Oovemment (C. H. Mazson) . . . 329
Taft— T^ Presidency: Its Duties, Its Powers, Its Opportunities (R. G.
Gettell) , 330
ThTt—Our Chief Magistrate and His Powers (R. G. Gettell) 830
INTERNAL QUESTIONS
Colby— TAe New International Year Book for 1916 (C. H. Crennan) 831
Crandall— TrcottM, Their Making and Enforcement (E. C. Stowell) 331
Hart — The Monroe Doctrine: an Interpretation (L. S. Rowe) 332
Hull — The Monroe Doctrine: National or Intemationalt (L. S. Rowe) ... 332
&BXBBSLL^Modemiting the Monroe Doctrine— (JBL F. Qeiser) 333
Stowell and Munro — International Cases — VcL I: Peace (A. Hersh^).. . 334
MISCELLANEOUS
WiLLBON— r^ Life of Lord Strothcona and Mount Royal (C. Ct ]iai|ies). . . 884
Digitized by
Google
FOREWORD
Among the most important of the consequences of the Em'opean
War has been its effect upon the world's investment markets. An
organization that existed for many years has been violently dis-
rupted. Changes have occurred that under other circumstances
would have been delayed for many years or perhaps never have oc-
curred at all. Whether the results are permanent or only temporary
may be a matter for dispute but they have brought numerous prob-.
lems that are important and serious.
A picttu^ of these changes and the results in their main outlines
is the purpose of this volume. As a preliminary to an analysis of the
subject it is important to understand certain matters that are treated
in the introduction. Among them is the real nature of fpreign
investments which are but superficially understood by most of us
(see Kemmerer, page 1). Moreover^ this world catastrophe may
usher in a new economic internationalism that will perforce modify
all our public policies^ national and international (see Walling,
page 10),
An analysis of what has occurred may be conveniently divided
into^four parts. Prior to the war investments were made along
well-defined lines. Certain creditor countries such as England
(see Hobson, page 23) and France (see Guyot, page 36) furnished
enormous amounts of capital to the different parts of the world. On
the other hand the debtor countries such as China (see Denby,
page 55) borrowed this money under specified terms and conditions.
When the war broke out a number of disturbing influences were
injected into this established system. The London Stock Exchange
(see Lawson, page 71) experienced conditions entirely new while
the American security markets (see Huebner, page 93) were in a
similar manner upset, later recovering their former^ activity and
even entering upon several periods of wild speculation. In addition
to the long-term bonds and the stocks whose markets were thus
disturbed, short-time investments were important (see Youngman,
page 108). Through their assistance many problems were raised
and many others were solved. Another significant effect of the
war was the violent upsetting of the foreign exchanges. The efforts
made by European countries to stabilize the exchanges and thus to
secure more effectively the commodities needed for the prosecution
vii
Digitized by
Google
Vlii J^OREWORD
of the war are extremely interesting and instructive (see Zimmer,
page 151). The stupendous task of financing war orders (see Con-
way, page 131) with the consequent effect upon business in the
United States and the tremendous volume of new security issues
(see Anderson, page 118) would be unbelievable to us if we had not
so recently gone through the experience.
In the near future there will be important demands for capital
from many parts of the world. An accurate forecast of their amount
and the sources from which the capital will be drawn is of course
not practicable but much that is of value is to be found in a summary
of the possibilities. Among the most important demands will be
those from the Latin American countries (see Symposium, page 161).
Special emphasis should be given to Mexico (see Shirley, page 196).
Aside from these Latin American coimtries there will be demands
from our neighbor on the north, Canada (see Skelton, page 216),
from Russia (see McRoberts, page 207) and from China (see Denby,
page 69). Demands will come not merely from other countries but
in an increasing volmne from our own. Our public utilities are
one of the best illustrations of this and their demands under the
new standards that we are requiring of their management are among
the most prominent (see Wilcox, page 226). Calls for capital are
also coming from new sources as time passes and one of the most
interesting recent illustrations of this is the probable effect of the
rural credits act (see Babson, page 235).
Many are optimistic enough to believe that the United States
will be the leader in world financing. Just what part the United
States will play in the investment market is considered in the last
section of this volume. The relative position of London and New
York as financial centers is a matter on which there may be some
differences of opinion although probably the best informed students
of finance agree that London's supremacy has not been entirely
taken away (see Patterson, page 264). The ability of New York
City and of the United States, however, to maintain what they have
gained during the war will be determined in the immediate future by
our control of our gold reserves (see Vanderlip, page 278) and in the
long run by our ability to purchase foreign securities (see Roberts,
page 287). Another factor will be the level of the rate of interest
which has so much to do with the movements of capital (see Fisher,
page 244), and whether or not we shall have more international credit
Digitized by
Google
Foreword ix
or, as Dr. Bonn suggests, enter upon a period of nationalization of
capital (page 252).
But the problem is not merely one of having^capital and of send-
ing it where interest rates are highest. The attitude of our govern-
ment and the whole question of "dollar diplomacy" is involved.
That the United States government should give assurances of pro-
tection to American investors ^in foreign countries is the view of
some (see Wilson, page 298). To others, however, such a policy
seems full of danger. Many feel that to give such governmental
aid is an abandonment of all of the democratic principles for which
our country has announced that it stands, that it is a menace to
small weak countries and a means by which we may become
involved in war (see Howe, page 312).
There are thus a number of aspepts to the discussion. Capital
movements are followed by movements of goods. This trade move-
ment which went in certain channels prior to the war has been upset
and though many may exaggerate the extent of the changes they
will nevertheless be of significance. The effects of the war will be
permanent. A routine formerly taken for granted has been broken
up. Few venture to speak with confidence of the details of the
future but already a few of its main features are beginning to appear.
Confused views are being clarified and new policies are being
formed. Economic theories that we thought were obsolete are
being eagerly seized upon, although many of them are crude expres-
sions of half-truths while others are entirely fallacious. The war
has disorganized not only our material relations with other countries
but our channels of thought. In the midst of this confusion, the
difficulties of clear thinking are most apparent to those whose vision
is broad rather than narrow, whose outlook is international rather
than provincial. Our leaders in politics, commerce and finance to-
day find it difficult to analyze accurately the thoughts and wishes of
the American people, and the industrial needs and conditions of the
future.
There is no thought that the articles in this volume offer final
solutions for all of our problems. The variety of opinions expressed
is in itself evidence that this could not now be accomplished. The
editors believe, however, that the articles will be of assistance not
only to those seeking information but also to those who are trying
to think clearly and to interpret accurately.
E. M. Patterson, Ph.D.,
Editor in Charge of Volume.
Digitized by
Google
Digitized by
Google
THE THEORY OF FOREIGN INVESTMENTS
By Edwin Walteb Kemmerer,
Professor of Economics and Finance in Princeton University.
By the term theory of foreign investments we do not mean a
congerie of unverified hypotheses concerning investments in foreign
comitries, but rather certain basic principles which represent the
application of broad economic laws to a special field of economic
activity.
Basic Principlbs of Foreign and Domestic Investments
THE Same
The basic principles of foreign investments are essentially the
same as those of home investments. The chief motive power that
drives the machinery of both is financial profit. The principal
criteria by which the goodness of a foreign investment is judged
are the same as those by which a domestic investment is judged,
viz., income-yield, safety of principal, and marketability. In both
markets the investor desiring these qualities must pay for them.
If he wishes a high rate of income he must pay for it by sacrificing
in safety or marketabihty or both; if he wishes a high degree of
safety he must sacrifice in rate of income or marketability or both;
and if he wishes a high degree of marketability he must sacrifice in
one or both of the other quaUties. Whether in the home market or
the foreign one, each of these constituting qualities of a good invest-
ment has its own conditions of demand and supply. Sometimes one
is in particular demand, e.g., safety in times of business imcertainty,
and sometimes another. The market price of each in terms of the
other two in both markets is the i-esultant of the interaction of the
forces of demand and supply, it is the price at which demand and
supply in the particular market are equilibrated.
There is, however, a glamor about the word foreign which often
blinds the eyes to the fundamental likeness of foreign investments
and home investments; and, just as a few bilUon dollars' worth of
foreign trade receives more newspaper headlines, editorials and
political oratory than several himdred billion dollars' worth of
domestic trade^ so when American capitalists turn a few miUion
1
Digitized by
Google
2 The Annals of the American Academy
dollars into investments in Europe or Latin America, it is heralded
as a great event, although the investment by these same capitalists
of many times this amount in Texas, California or Alaska, places
perhaps an equal or greater distance from our financial metropolis,
is looked upon as commonplace. The word foreign is a political
term, but the word investment is an economic one, and political
boundaries do not obstruct the operation of economic law. Ob-
viously there is not much difference in motive or in principle between
the investment of a million dollars by a citizen of the United States
in a paper factory in Ontario and one in New York. It is the like-
nesses, therefore, rather than the differences, that should be em-
phasized in comparing the principles of foreign investments with
those of domestic investments. None the less, there are differences,
and it is with them that we are chiefly concerned in this paper.
These differences may be subsumed under the heads: (a)
"Internationally political"; (b) Monetary; (c) Social.
"Internationally Political" Aspects of Foreign
Investments
A factor of great importance in the study of foreign investments
is international political rivalry. National territorial aggression
has probably been a dominating factor in a far larger proportion of
foreign investments than most people think. A little over a genera^
tion ago in Egypt, and more recently in Korea, China and Latin
America, many millions of dollars were invested under condi-
tions that seem explainable only by the motive of territorial ag-
grandizement on the part of the nation or nations whose citizens
have made the investments. Recent history has shown that the
steps are often short ones from private investments, say in railroad
building, in weak countries by the nationals of strong countries,
to spheres of influence for those strong countries with extra-terri-
torial privileges; from spheres of influence to political control as
regards foreign relations; and from political control in foreign affairs
to political control in domestic affairs; thus bringing the aggrandiz-
ing nation into complete control of the weaker and once independent
state. Sometimes private investors are the tools of the aggrandiz-
ing government, but more often probably the government uses
ivate investments, which have been made by its nationals from
u-ely economic motives, as an excuse for political usurpation.
Digitized by
Google
Theory of Fobbign Investments 8
MoNSTABT Differences between Foreign and Domestic
Investments
A second difference between domestic investments and foreign
ones relates to the currencies in which these investments are made
and the monetary units in which their values are expressed.
Domestic investments are usually made in the domestic standard
of value and the domestic monetary unit, eg,, the gold standard
and the dollar in the United States, the silver standard and the peso
in HonduraSi and a fiduciary paper standard and the milreis in
Brazil. Foreign investments, on the other hand, are often made in
different standards of value, and are usually made in different
monetary units, than those of the home country. This is not an
essential difference between domestic and foreign investments, since
in times of peace the great majority of the leading countries of the
world are on the gold standard, and there are numerous instances in
which several countries have the same monetary unit. The modern
trend of foreign investments, however, is strongly in the direction
of the less developed countries like those of Latin America and con-
tinental Asia, and most of these countries do not possess an estab-
lished gold standard nor de facto monetary units identical with those
of any of the more advanced countries.
Even in those cases, where the monetary standard in the coun-
try where the investments are being made is the same as that of the
country from which the capital is coming, differences in the unit of
value are to a small extent obstacles to the ready flow of capital.
Foreign units, like the bolivar of Venezuela or the colon of Costa
Rica, even when on a gold basis, speak a foreign language. The
capitalist can translate it by an effort, but it is not a language in
which he thinks. He can mathematically compute the equivalents
in terms of his own money, but he does not feel them when prices
are quoted.
This difficulty, however, is a small one compared with the one
arising from differences in the standard of value itself. The wide
fluctuations in the gold value of silver during recent years, e.g,, 33
per cent in 1907 and nearly 40 per cent so far in 1916 (i.e., to Septem-
ber 15), are familiar to students of economics, Ukewise the even
greater fluctuations in the paper-money units of fiduciary-standard
countries. When the gold value of a silver-standard peso or of a
fiduciary-standard milreis depreciates, say, 20 per cent as measured
Digitized by
Google
4 The Annals of the AifERicAN Academy
by foreign exchange rates, it does not mean that local prices in terms
of silver or paper-money units will at the same time rise 20 per cent.
Price changes respond very slowly, and sometimes imperceptibly,
if at all, to changes in the gold values of the monetary units of
countries not on a gold standard. Short-time fluctuations in the
gold values of these units have little or no effect on local prices,
and the long-time swings make their influence felt on the prices of
the majority of goods very slowly. This fact is of great significance
to the foreign investor.
From the standpoint of the currency problem, foreign invest-
ments divide themselves into two classes; in the first class the in-
vestor becomes a proprietor, in the second, a creditor.
The "proprietor investments" are represented by the ownership
of stocks in foreign corporations and by individual or partnership
ownership of unincorporated enterprises. In these cases profits
are realized and paid in the foreign money, and upon the shoulders of
the foreign investor are placed the risks incident to a fluctuating
exchange. When, for example, the gold value of the foreign unit,
say the haikwan tael of China, rises, the American investor receives
more United States dollars for each 100 taels of profit; when it
falls, he receives less. If it falls heavily and he wants to sell out
and withdraw his capital, he is likely to find that the market price
of his property in terms of silver has not risen anything like so
rapidly as the gold va'ue of the tael has fallen and that^ so far as
gold values are concerned, he must sell at a sacrifice. On the other
hand, if silver rises rapidly he may realize a net gain because the
local value of his property is not likely to decline in proportion to
the advance in the gold value of the tael. For this reason pro-
prietorship investments in silver-standard and fiduciary-standard
coimtries impose large speculative risks on the foreign investor —
risks which must be compensated for by prospects of attractive
profits.
In the second class of foreign investments the investor becomes
a lender. He advances a sum of money in return for a promise
from the borrower to pay back the principal at the end of a specified
period — sometimes there is no specific matiuity mentioned — ^and to
pay a definite rate of interest at regular intervals. The best ex-
amples of this second class of investments are corporation and gov-
ernment bonds. Investments of this class may be made payable:
Digitized by
Google
ThBOBY op t'OBBIGN INVESTMENTS 5
(1) in local currency, or (2) in a foreign currency, usually in the gold-
standard currency of an important foreign country. In the former
case the risks due to fluctuations in the gold value of the local
monetary unit fall upon the foreign investor, as in the case of the
proprietorship investments. In the second case, however, as for
example when the investor buys corporate bonds that are payable
principal and interest in poimds sterling or United States dollars,
the immediate risks incident to the fluctuations in exchange are
shifted to the local borrower, i.e., the corporation or, more narrowly,
the owners of the corporation stock. I say the immediate risk is
shifted to the stockholders, for even here the bondholders do not
escape entirely, since a substantial depreciation in the local mone-
tary imit is likely to lessen the gold value of the plant which is
security for the bonds, and may also lessen the gold value of the
corporation's products, especially if they are sold to a large extent
locally, for, as we have seen, local prices do not advance at once
proportionately to the depreciation in the gold value of the local
monetary unit.^
Social Diffebbnces between Domestic and Fobeign
Investments
The third important class of diflferences between a domestic
investment and a foreign one we have called (for want of a better
name) social diflferences. These are of a miscellaneous character,
and it will be sufficient merely to mention them. There is the
difference of language, which is often an impediment to the ready
flow of capital from the cheaper to the dearer market, through pre-
venting a thorough knowledge of foreign conditions and leading to
annoying misunderstandings in the negotiation of capital contracts
and the conduct of current business. Then there are unfamiliar
systems of government, of jurisprudence, and of taxation; and there
are business, political and social customs which are difficult for the
^If the products are sold largely in gold-standard ooimtries the deprecia-
tion of the local monetary unit may increase the corporation's profits and,
through their capitalization, even the gold value of the plant itself, because
the corporation will receive more local units, e.g., taels, pesos, or milras, for
each foreign unit obtained for its products, while local expenses, especially
wages, will be constant or at least rise slowly. Of course the situation would
be the opposite in case the local monetary unit appreciated in value.
Digitized by
Google
6 The Annals ot teqd AMSBtcAN Academy
foreigner to understand — ^all^of which serve as barriers to keep capi-
tal from flowing into foreign fields.
It^is only when the attractiveness of large immediate or future
returns becomes great enough to surmount these barriers in addition
to overcoming the natural conservatism of capitalists who prefer
to see where their money is working, that capital moves out of the
home-land for permanent investment abroad.
How Capital Reaches the Foreign Field
Superficially viewed, capital is transferred from one country to
another chiefly by the mechanism of bank drafts and commercial
bills of exchange. Such credit instruments, however, obviously do
little more than transfer ownership of capital goods already located
in the country in which the foreign capital is being invested, or of
goods about to be shipped to that coimtry. The credit instruments
are evidences of an outward movement of more substantial things
which constitute the real investment. These substantial things
may be divided into three groups: (1) merchandise (using that
term in its broad sense); (2) services; (3) international money.
Merchandise. The investment of foreign capital in undevel-
oped coimtries usually means the building and equipment of rail-
roads and factories, and the opening up of various kinds of planta-
tions and mines.
Much of the capital equipment for these enterprises must come
from abroad. Inasmuch as the investing capitalists are most
familiar with the products of their own country, are naturally prej-
udiced in favor of their own nationals, and are often themselves
directly or indirectly interested in the production of the capital
goods needed abroad, they will usually buy this capital equipment
in their own home markets rather than abroad, if they can do so at
anything like as favorable prices — a fact which is largely responsible
for the slogan ** trade follows the investment. " This is true whether
the investment is a proprietorship investment (such as the purchase
of corporation stock or of an individual or partnership interest in
an unincorporated business) or a creditor investment, i.e., a loan
(such as the purchase of bonds, debentures and the like). In the
former case the investor may exercise direct control over the pur-
chase of equipment through the power to vote the stock or otherwise
to manage the business. In the latter case he exercises an indirect
Digitized by
Google
Theory of Foreign Inybstmbnts 7
control, but often a very efiFective one, through the pressure that
investors and particularly investment bankers nowadays exercise
over concerns in which they are interested. The principal form
then in which foreign capital is transferred to a new field is through
the exportation of capital goods to that field, and this may be
directly from the investing capitalist's own country or indirectly
through the mediation of trade with one or more other countries.
There are strong forces, however, which tend to cause the capital
goods to be shipped directly from the country of the investing
capitalists. New countries in process of development, usually for
a long time, therefore, show a heavy excess of merchandise imports
over exports, an excess which consists chiefly of foreign capital in
process of investment.
Services, The second form in which transfers of capital are
made is that of services. Here the goods exported are of an im-
material kind and do not figure in trade statistics. They include
such items as the services of engineers, chemists and financial
experts, who are sent out to do pioneer work in the planning and
development of the new enterprises, and whose services often repre-
sent an important part of the new capital investment. Under this
head also come the value of the transportation services in shipping
the capital goods, marine-insurance services rendered by concerns
outside of the importing country, and similarly legal and financial
services. These services of course may be furnished by the con-
cerns of other countries than that of the investing capitalists through
a triangular (or even quadrangular) trade, country A shipping goods
or rendering services to country B in compensation for services
country B renders to country C, but, as in the case of the transfer
of capital goods, there are forces which strongly encourage the
securing of these services from the nationals of the investing
capitalists.
International money. The third form in which foreign capital
is transferred to a country is international money, i.e., gold bullion
and gold coins (usually by weight) and, to a limited extent, silver
bullion and certain silver coins with an international circulation
like the Mexican and British dollars. Strictly speaking, money is
a form of merchandise, and is exported for the same reasons that any
other merchandise is exported, i.e., because a certain quantity of it
is more valuable abroad than it is at home by enough to pay shipping
Digitized by
Google
8 The Annals of the American Academy
expenses and yield an adequate profit. But international money is
the most highly marketable of all kinds of merchandise, and this
high degree of marketability makes it the great equilibrator in
international trade movements, i.e., an article whose shipment
"pays trade balances," and is particularly useful in helping main-
tain a world equilibrium of prices.
The exportation to a new country of capital goods and capital
services for investment, and the contemporaneous development of
new enterprises causes an expansion of business in the coimtry
receiving the capital and an increased demand for media of exchange.
Temporarily this may be met by a straining of credit, and, to some
extent, by a more rapid turnover of bank deposits and of money in
circulation. The demands, however, for additional media of ex-
change to carry on the country's growing business soon make them-
selves felt in inadequate bank reserves, insufficiency of loanable
bank fimds, higher interest rates on short-time loans, and a down-
ward tendency in the prices of the more sensitive securities and
commodities; exchange moves to the gold (or silver) import point,
and enough international money is imported to bring the country's
credit and currency circulation up to the amoimt necessary to carry
on, without undue financial strain, its expanded business, at a price
level which is in equilibrium with those of the other coimtries of the
world.
Capital Investment and Trade
This investment flow of foreign merchandise, services and
international money may continue for many years. During aU
this time the country in which the foreign investments are being
made — we need an expression "investee country" — carries on its
regular import and export trade. But its visible imports contin-
ually exceed its visible exports, and this excess consists largely of
the foreign capital being invested in the country. The foreign
capitalists take their pay in titles to ownership {e.g., stocks and
deeds) of this foreign property, or in liens on the property {e.g., bonds
and debentures) from all of which they expect to receive sooner or
later a regular income.
When the income is realized it may be brought home or left
abroad and reinvested. To the extent that it is brought home it
tends to turn the balance of trade against the "investee coimtry,"
for the interest, dividend and other profit payments on capital
Digitized by
Google
Thbobt op Foreign Invbstmbnts 9
inyested are paid back chiefly in the form of merchandise exports.
In so far as these profits are not brought home but are reinvested
abroad they serve to build up still further the foreign capital equip-
ment of the "investee coimtry." Sooner or later, however, the
foreign investor expects to bring home his profits. The periodic
return to the investor of profits realized abroad and the return from
time to time of parts of the capital fund in the course of time offset
the amounts of new foreign capital being invested and cause the
country's visible exports to exceed continually its visible imports,
thus compensating for the heavy excess of imports which char-
acterized the period of the original foreign investments.
The investment then of foreign capital, the payment of profits
realized upon that capital and the repayment of the principal either
gradually or in lump sum, are effected through the mechanism of
the export and import trade, the chief item of which is the move-
ment of merchandise. Trade follows the investment, and the flow
of investment capital together with the return flow of investment
profits are substantial items in the foreign trade of an economically
new country.
Digitized by
Google
THE PROSPECTS FOR ECONOMIC INTERNATIONALISM
Bt William English Walling
The French and British governments have solemnly bound
themselves to put into effect the program for a trade war elaborated
by the Entente Economic Conference. The American press is
unanimously against the new policy even after it is too late to pro-
test. Some papers profess to find it too mad for belief. Others
plan retaliation, and even suggest — ^in case it is actually carried out
— an economic alliance with Germany.
It is a condition and not a theory that confronts us. The
Entente statesmen have declared that their purpose is the economic
defense of the Entente, the economic independence of the world, to
employ an expression of one of the three British delegates, Hughes
of Australia. And it is certain that the proposal of an economic
alliance of Germany and Austria and Central Europe gained the
adhesion of the leading parties of Germany before the similar plan
of the Entente powers had secured the support of public opinion in
Great Britain. But while Germany has begun to draw back at the
prospect that she might get the worst of such an economic war, the
idea had obtained a constantly increasing popularity in Great
Britain for the same reason. Von Gwinner, President of the
Deutsche Bank, confesses that ''the one thing that Germany's
highly developed industry cannot stand is that we should, by grant-
ing one-sided preferences to our friends, quarrel with the whole
world. " Indeed the German Minister of the Interior, Von Jagow,
has practically admitted that Germany would be beaten in a purely
economic struggle, when he says that Germany will not lay down her
arms until the Entente has conceded her the same economic position
as she held before the war.
To this demand for a return to the economic staius quo the
French have made the following answer: It was Germany which
forced upon France in 1871 — by her military superiority — the "most
favored nation clause.'' This clause forbids France to make either
the tariff treaties and economic alliances which are to her economic
interest or those which might strengthen her military position. Thus
10
Digitized by
Google
Economic Internationalism 11
France was for forty-three years, to this degree, economically
dependent upon Germany. She now declares her economic inde-
pendence.
1. The Wab After The War
The responsibility for "the war after the war" may then be
placed on the shoulders of either group of belligerents. It is like the
question of the responsibility for the war of fleets and armies; the
problem is too complicated for a satisfactory and simple answer,
and at the present moment it has become of secondary importance.
For the Entente is preparing for the coming economic war as sys-
tematically and relentlessly as the central powers prepared for
the military conflict.
Whether we like it or not we are involved in this economic
"war. " Surely the greatest and ihost practical nation in the world
will henceforth confine its attention to this overshadowing fact.
Until the new world war was actually declared, there was still some
excuse for our protest that we opposed it. That position may have
been due to a blind and selfish nationalism or to ignorance or indif-
ference as regards world affairs; it may have been incredibly im-
practical in view of the fact that there was no practical reason why
the Entente should not undertake this kind of war against its
enemies and no practical means by which the United States could
prevent, deter, or even moderate such action. Still as long as the
new war had not been declared we might please ourselves with the
hope that it would not be. That hope cost us nothing more than
our state of mental unreadiness to meet the issue when it was pre-
sented. We refused to face the situation until it was completely
developed. We must face it now.
The phrase, "the war after the war," implies not only that the
military war will have been finished, but that another war is to be
added to it. On the contrary the only ground upon which the
economic "war" was or could have been suggested was that it will
act largely as a substitute for military war. The longer the military
struggle the shorter the economic struggle and vice versa. Indeed
this fact is recognized by the Paris correspondent of such a consis-
tent low tariff paper as The New York Evening Post, which points out
that the economic conferences of the Allies may help "to neutralize
the aggressiveness of Germany which otherwise might lead to a new
war after a few years of peace." The correspondent continues:
Digitized by
Google
12 The Annals op the American Academy
''That an economic war of some kind is bound to prolong the war of
soldiers and guns, nobody in his senses can deny. This was the
inevitable risk of war and Germany took the risk.*' He sa3r8 that
Americans should remember that Germany had secured by treaties
(partly compelled by war or the threat of war) a position "favored
and privileged above that of the United States."
Nor is the new policy of the Entente in reality an economic war
— except in the figurative sense in which all competition is war. In
this sense most of the industry of each nation is in a state of war, and
every nation is at present in economic war against every other
nation. In competition one does not necessarily aim, even gradu-
ally, to reduce one's rival to relative impotence, though competition
does often lead to economic war in this sense, especially when the
stage of great combinations is reached. Perhaps this is the ulti-
mate stage in all private industry. But if we do decide to call the
economic competition of nations economic war, if we declare with a
New York Times editorial that "the world has not yet advanced be-
yond the stage of war in economics," then we cannot avoid two
conclusions with regard to the new policy of the Entente. We must
admit that the "war after the war" is pn no different fundamental
footing than "the war before the war." And we must admit also
that the proposed mutual lowering of tariffs within the Entente may
conceivably mean an increase in the area and degree of trade-peace
greater than the proposed increase of this previously existing trade-
war with the central powers. The economic prosperity of the United
States is acknowledged to be largely due to the non-existence of tariff
walls within our vast area; the success of the present German Em-
pire was largely due to the preceding ZoUverein. Yet Herr Ballin,
Director of the Hamburg American Line, says that one of the main
objects of Germany in the present war is to prevent the British
Empire from adopting a policy of preferential tariffs, and hitherto
most Americans have seemed to sympathize with him.
Let us admit that the world has hitherto been in a state of
permanent economic war. Few practical statesmen would deny
that it is this war chiefly, if not almost exclusively, that has pro-
duced military conflicts. We must aim above all, then, at economic
peace. Is it surprising that the chief means of attaining this
peace, and the steps by which it is to be reached, are proving to be
more and more of an economic order? Even military war now rests
Digitized by
Google
Economic Internationalism 13
more upon industrial power than upon numbers of men or purely
military organization. Is it not the natural course of world evolu-
tion that economic war should gradually replace military war
altogether — even as a means of compelling the minority of the
nations to accept the plans of the majority as to international
economic relations and world organization?
In one sense, and one sense only, is the new policy strictly
comparable to war. It does not aim to set up an economic balance
of power, nor at two permanent hostile alliances. It has a definite
object, the same as the object of the present war. It proposes to
compel the minority among the nations to enter into the new com-
bination, to accept the will of the present majority as to boundaries,
and the will of a future and constantly changing majority as to all
other economic questions. Like the American trusts, it does not
aim to destroy its rivals, but tends to force them to come into the
combination, not at their own figure, but at a figure that yields a
handsome profit all round.
But it is not to be a policy directed primarily against any
nation. An Entente arrangement "for fostering trade among them-
selves" that results "to the disadvantage of Germany" (the excel-
lent characterization of The New Republic) combined with a similar
arrangement of the Central powers does not amount to "a mutual
boycott, " as the correspondent of the Associated Press states. This
correspondent answers himself when he says that while an actual
"war after the war" may not eventuate, "statesmen in both Euro-
pean groups are discussing how they may use treaties and tariffs
to get the upper hand in commerce" and he refers to the Germanic
powers as having taken the initiative in this activity with their pro-
posed Central European ZoUverein. The New York Evening Post
also remarks editorially that the Entente plan "strikes a note of
mutual aid rather than injury to the common enemy." But the
mutual aid of a limited group under conditions of competition between
nations means the relative loss of those nations outside the new
alliance.
The equally staunch British organ of low tariffs. The Man-
chester Guardian, is more constructive. It urges that Germany also
must be admitted into the "union of nations" as soon as her people
"give up their faith in war and agree to work with other nations for
world peace and for the common good of all." The very object of
Digitized by
Google
14 The Annals of the American Academy
the new combination is to bring Germany to realize this necessity.
But The Guardian realizes that this may require some time. It
continues:
A union of States is to be set up against another union of States. Such
proposals challenge our enemies to continue an economic war after this war is
finished. If Germany shows no repentance for her plot against the world's
freedom; if she manifests no change of mood, then this painful thing might have
to be. If Germany uses her commercialism as the cat's paw of her militarism,
then we must fight her conmiercialism, for the whole spawn of militarism is
poisoned with the evil of its origin. So if the German nation were sullen after
this war over being beaten, but not convinced of the wrong of militarism, and if
the nations set out to prepare for a permanent war, why, then such proposals
might become necessary.
The Guardian is a free trade organ and advocates the proposed
tariff union exclusively as an emergency measure. But the new
policy is also the result of a natural evolution. Suppose Great Brit-
ain enacted a tariff about half as high as those of Germany and the
United States. Would this constitute an indefensible trade war?
Suppose she then secured, by reciprocal treaties, reductions — as
far as she is concerned — of the tariffs of Canada and Australia,
and also of France and other allies. Certainly that would not be
an increase of trade warfare. Suppose she used the same means
to secure a reduction of American and other neutral tariffs against
her. Would not the total result be a net reduction from the present
tariff levels?
The key to the whole situation lies in the fact that Great Britain
is the only important free trade nation. All the other great powers
are not only protectionist but have very high tariffs. Therefore, by
temporarily abandoning her free trade principle she has something
to offer all nations. If she uses this advantage for any other pur-
pose than to secure a reduction of their tariffs, the total world result
will be a reaction towards a net intensification of existing trade wars.
But if she uses it exclusively to secure tariff reductions there will be
a net gain for trade peace, provided she enters into reciprocity
treaties with nations having the larger part of the world's trade.
Now the foreign trade of Great Britam's colonies and allies is far
greater than the foreign trade of Germany and Austria. And this
is natural since the Entente has considerably more than twice the
wealth, income, and industrial power of the Germanic powers,
Digitized by
Google
Economic Internationalism 15
several times their population and many times their land area — ^to
say nothing of the Entente's commercial predominance at sea.
But it will be to the interest of Great Britain to enter into
reciprocity treaties with the neutrals also, especially the United
States — and all the plans of the new economic union provide for
such a policy. It would, furthermore, pay Great Britain, ij she were
a separate unit, to enter into a tariff treaty with Germany. If such
a treaty seems at present unlikely it is because Germany herself, as
well as Great Britain's allies, would probably not consent to very
radical reductions.
But while Great Britain has this choice of action with all the
nations, the high tariff nations, whether British colonies, France,
Germany, or the United States, do not have any such option as to
tariffs among themselves. These countries have already put their
tariffs as low as they believe their national economic interests permit.
They have reduced these tariffs by treaty whenever the ruling
economic classes felt they could secure a corresponding advantage.
Germany cannot retaliate against England except at her own cost,
nor can the United States. Germany and the United States cannot
enter into a radically different treaty with one another in order to
satisfy a spirit of revenge against England without paying a heavy
price. For they have already reduced their tariffs wherever it has
paid their ruling classes to do so. Germany might be willing to
make the sacrifice demanded in order to injure a military enemy.
The United States will scarcely go beyond a business view of the
situation.
Nor would the United States be content to rest long in a condi-
tion of economic isolation. In this war Great Britain and Germany
have both recognized that military and naval isolation is no longer
feasible, and all American students of international affairs have
learned the lesson. The new international economic groupings, no
matter how partially and incompletely their union is worked out,
show that the day of relative economic isolation, of national self-
sufficiency, is also past. Who doubts the quickening, as a result of
this war, of the economic interdependence of the component parts of
the British Empire, of Germany and Austria, of Great Britain,
France, and Italy? It is true that the United States has the wealth
and position to remain independent for a certain period, but only at
a high cost, at the risk of falling into an inferior position, and by
Digitized by
Google
16 The Annals of the American Academy
endeavoring to hold the economic balance of power between the two
groups and using its position for its own aggrandizement without
regard to the effect of this policy in keeping alive the danger of
another world war. But such an aggressive international policy
will not long be profitable for America after the new economic union
gets into working order. And if America can see that far ahead,
why can we not see also that it is to our national interest to pro-
mote this economic league to enforce peace now and to do our part
in setting at work forces that will ultimately put an end to the
present dangerous and costly organization of the economic world on
a predominantly national scale?
German public men, apparently without an important exception,
outside of the small group of extreme Socialists, desire to see the
economic world remain divided into antagonistic national units
unless— tOt, as the extremists put it, untU — Germany is able to exer-
cise a share of world power at least equal to all other nations com-
bined. Even majority Socialists, like Quessel, advocate nationd
self-sufficiency as against international interdependence. But the
nation that pursues the policy of economic nationalism and con-
tinues to pursue it, is bound to retrogress relatively. And when the
German economist avows this policy he surrenders his right of com-
plaint against the protective measures of the other nations. Eco-
nomic nationalism is the cause of Germany's failure — ^in so far as
there has been a failure.
Great Britain, on the contrary, is the classic land of interna-
tional finance. She has more money invested in the United States
than in her next most profitable field, Canada — ^which is almost as
independent politically as the United States — and she has nearly four
times as much in Canada and other self-governing colonies as in
crown colonies like India. She has almost as much invested in
South America as in Canada, and similar proportions applied to her
annual investments right up to the present war. Privileges and
concessions undoubtedly exist that are based upon her colonial and
naval power, but they evidently account for only a very small part
of her income from foreign investments.
The proportion of British trade due to special national privi-
leges was notoriously even less than the proportion of her investmenU
due to this cause. Moreover, she was absorbing a constantly and
decidedly smaller proportion of the trade of her own colonies from
Digitized by
Google
Economic Intbbnationalism 17
year to year, while Gennany's world trade was increasing more
rapidly than England's, even though there was no probability that
she would replace the latter in the British colonies.
The same general tendencies apply to France also. France
retains very important tariff privileges as well as investment privi-
leges with her colonies. Yet French investments in Russia were
many times more important than her investments in all her colonies
put together. Germany, Russia's neighbor, her chief customer and
provider, was certainly at liberty to fill the position taken by
France and without making Russia a political colony. But she
preferred a hostile attitude as shown by her tariff treaty with Russia.
Similarly even the Belgians were deeply interested in the great
British and French railway syndicates of China. If Germany had
surplus capital, and had accepted the position of minor stockholder
(like Belgium) she would doubtless have been welcome there. Yet
the deliberate intention of her dominant capitalists not to enter into
international finance as individuals, but only as a nation, led her to
slight all these opportunities.
A similiar situation exists as to international trade. German
economists, not satisfied with complaining of the free trade or low
tariffs between England and France and their colonies, also com-
plain of the similar policy of Russia with her new territorial acquire-
ments, which are contiguous, and so part and parcel of the country.
They might as well protest against the greater free trade area of the
United States — or the superior climate of Australia.
2. An Economic League to Enfobce Peace
Permanent peace requires a certain degree of world organiza-
tion. The degree of organization needed to make war altogether
impossible will not be attainable at a smgle step. And it is further
recognized that, no matter how incomplete the first step may be, it
will probably fail to secure the endorsement of all the nations during
a certain transition period. A bare majority of nations would not
constitute a sufficient force even to begin with any of these plans.
But a considerable majority, including nations that represent say
two-thirds of the world's industrial and military power, would be
quite sufficient. Even a somewhat smaller proportion might suffice,
as part of the nations remaining outside might be in no way hostile
to the dominant combination, but only too weak to feel able to make
Digitized by
Google
18 The Annalb of the American Academy
their financial contribution to its world program or to be certain of
enjoying a full share of its benefits.
The final aim of all peace plans is and must be complete world
organization. In every plan a negative automatic pressure is to be
exerted on all outside nations to draw them in. And in case a hostile
nation or group of nations aims to break up the dominant combina-
tion, this pressure becomes positive.
Sea power is by its very nature indivisible; a nation or group of
nations which controls any considerable part of the sea controls it
all. Therefore, as mtemational organization develops it will almost
of necessity gain the support of the sea powers before it has the sup-
port of the land powers. The sole important economic function of
the sea is to serve as an international trade route, while this is only
a secondary economic function of the land. The development of
sea-trade tends to tie the sea powers together, land interests keep
the land powers apart (except as they unite temporarily the better
to wage war). The half-way step to the internationalization of all
international trade routes must thus be the predominance of sea
powers, and not of land powers.
A sufficient volume of international trade would so bind the
nations together as to make war highly improbable. Indeed they
would soon become so interdependent economically as to make it
almost impossible. This end would be secured by a world-wide
system of reciprocal tariff treaties. H. N. Brailsford, one of the
leading British pacifists, in his last book, reaches the conclusion that
peace can be made secure only by such a ZoUverein. But suppose
that the central powers, representing less than one-sixth of the
world's trade and hardly a fifth of the world's wealth, income and
productive ability refuse to enter into such a ZoUverein, unless on
terms unacceptable to the other powers. Should its formation be
indefinitely postponed, or should it not be hastened by the fact that
automatic economic pressure would then force the minority parties
all the sooner to enter into the combination?
Another promising recommendation of the Allies' economic
conference is international governmental action ''for the establish-
ment of direct and rapid services of transportation by land and sea
at reduced rates. " The war has already brought a high degree of
international operation of the shipping of the Entente. This new
policy would be a first step in international government ownership
Digitized by
Google
Economic Intbbnationalism 19
or international state socialism. All outside powers would suffer
negatively from such a powerful shipping combination. But would
it not be the first step towards a world-wide organization of shipping?
If a League to Enforce Peace ever comes into existence at all
it will be an Economic League. Along purely political lines such an
international organization is altogether impracticable. Any defi-
nite political organization would at once bring up the insoluble
question of relative voting power. Is Montenegro to have one vote,
the same as Russia or France? The question proved to be insoluble
at the Hague and authorities like John Bassett Moore believe it to
be permanently insoluble. Yet the problem cannot be avoided.
The cost of an international police or national armaments held in
readiness for international use, would have to be distributed. And
many other equally diflScult international economic problems would
have to be faced.
Such international organization is unthinkable unless sufficient
economic unity is already present among the combined nations to
assure a common attitude on the most vital issues. Moreover,
where an opposition did exist on a vital issue means would have to
be at hand for exerting a pressure to prevent secession. Some day
international trade may have so developed as to bring about the
necessary degree of unity among a large part of the nations and to
furnish the means of restraining seceding minorities. But inter-
national trade has not reached that point today, unless between the
United States and Canada, and between Germany and Austria and
their smaller neighbors.
However, there is another unif 3ang economic force, international
investment. Great Britain has invested a fifth of her wealth in
foreign lands. If we add to this her shipping and shipbuilding
interests and the expenditures of colonists and foreigners visiting or
residing in Great Britain, a very large part of her income is due to
foreign investment. France is in a similar situation, and many
other nations are deeply involved, either as borrowers or lenders, in
the web of international finance. In so far as governments are the
expression of financial interests of this character, none of the prob-
lems of a widespread international economic league need prove
insoluble. The financiers of the smaller nations would maintain
the same attitude to those of London and Paris as in private affairs
at the present time. Provided they are guaranteed an approxi-
Digitized by
Google
20 The Annals of the American Academy
mately just share in the profits, they yield control to the larger
financial powers. An international conference of financiers, already
engaged in common undertakings of a private character and mutu-
ally interdependent, would manage to reach compromises where a
conference of diplomatists would reach a deadlock.
If a League to Enforce Peace comes into existence, it will be a
league that concerns itself from the first with constructive economic
problems and not merely with international law, justice, or morality.
It will be neither judicial nor legislative but administrative in the
sense that financiers administer a nation's industry. International
governmental conferences directly or indirectly controlled by finan-
ciers would be as far as possible from leaving the economic or politi-
cal organization of the world in the statu quo ante. They would
respond at once to the change in economic conditions and relations
due to the constant development of new forms of transportation and
new trade routes, the discovery of new resources and new industrial
processes and the appearance of new human needs. Nor need they
represent large capital alone. In France, some of the great banks,
under governmental control, try with a certain measure of success
to serve the small investor, and the same is true of several other
countries where middle-class governments are powerful. Financial
plunder continues, but the proportion of the total capital of the
country that goes in this way is relatively small. And finally, when
the governmental control reaches the point it has attained in
Australia, even the interests of the small farmer and artican are
consulted.
A League to Enforce Peace, if controlled by such financial
interests and economic purposes, would assume a business-like
attitude and not an attitude of hostility to nations outside the
League. It would endeavor to bring the other nations into the
combination, to the greater profit of both parties — ^just as the great
industrial combinations did with their rivals. For this purpose it
would always find economic pressure more economical than military
force — unless the outside powers become exceptionally aggressive
or menacing.
The United States Chambers of Commerce have already en-
dorsed the League to Enforce Peace and the use of economic pressure,
where possible, as a substitute for war. They are in favor of a boy-
cott against any nation that ' ' goes to war ' ' without arbitration. Such
Digitized by
Google
Economic Intbbnationalism 21
an improvised boycott would not only be too late to be effective, it
would also be impossible of execution. As the opposition in the
chambers of commerce pointed out, the cost of a boycott would almost
certainly fall more on one nation of the league than on another, and
the more burdened nation would refuse its consent. If, in quiet
periods, when there is plenty of time and no crisis is at hand, it is so
diflScult to arrange a reciprocity treaty between two countries, how
much more difficult it would be to arrange an international boycott
in an emergency. Moreover such a boycott would be applied only
for a relatively short time and at the moment when it would be least
effective against the aggressive nation, already entered on its way-
ward course. To be effective, economic pressure must be applied
steadily, S3n3tematically, and throughout a long period. It need
not go by as far as a boycott in the methods employed, but it must
go further than a boycott in its objective. It must aim, not merely
to enforce the will of the great majority of nations in an emergency,
but to compel the definite acceptance of the principle of majority
rule.
As soon as the league succeeds in establishing majority rule
among the nations — in fact in order to reach this point — it must
proceed in the direction of removing the economic causes of war. It
must make partial world arrangements as to trade routes and ship-
ping and a partial series of reciprocal tariff treaties. This is not trade
war, except incidentally. It is rather a lessening of trade war and a
gradual enlargement of the areas of trade peace, a process which is
the prime fact in all economic history, the chief secret of the success
of Germany and the United States, as well as the British Empire.
The enlargement of trade areas, like the enlargement of industrial
units, is the very measure of progress, and is widely accepted as such.
This system of international reciprocity treaties, embracing
trade with one nation after another until gradually all foreign trade
is included, is equally remote both from free trade and from protec-
tion along national lines. Yet the principle of reciprocity is already
accepted by a majority in both high and low tariff camps. The
opposition comes not from finance, capital, or business as a whole,
but from particular interests which are operated on the basis of the
practical prohibition of imports at the cost of other industries which
might develop exports far more profitable to the business of the home
country considered as a whole. Before the war these parasitic
Digitized by
Google
22 The Annals of the American Academy
interests were so entrenched that there was little hope of uprooting
them, even in order to secure valuable new markets. But now
Great Britain will compel us to reconsider the whole reciprocity
question. And surely in reaching a decision we shall consider the
fact that the future peace of the world is also at stake. Even aside
from the cost of a possible war or preparation for a war in which we
ourselves may be involved, the certain disturbance of world trade
from another world struggle should have some weight.
The issue is clear — it is economic nationalism against economic
internationalism. Is the United States to aim solely to increase
its economic self-sufficiency, or is it to enter consciously into the path
that leads towards the economic interdependence of nations, the
increase of the dependence of other nations on the United States and
of the dependence of the United States on other nations? Up to the
present there has been a steady if slow gain of interdependence
throughout the world, especially during the last century — which
marks the rise of modem science, industry and democracy. In
spite of the eflforts of Germany, France, and other nations, this be-
neficent economic tendency continued even after 1870. Shall the
United States further this tendency? Shall it set its face towards
the future by adopting a policy of economic internationalism as fast
as conditions permit? Or shall it set its face towards the eighteenth
goal of economic self-sufficiency?
Digitized by
Google
BRITISH OVERSEA INVESTMENTS, THEIR GROWTH
AND IMPORTANCE
By C. K. Hobson,
London, England; Author of Th$ Export qf Capital.
In the great European struggle, it may well be that the finan-
cial resources of Great Britain are destined to play a decisive part.
The magnitude of the economic efiforts which have been put forth
by the British people is generally recognized. It may be recalled
that within two years, means have been discovered to organize and
fully equip a new army numbering millions of men; while at the
same time the foundations of British power at sea have been greatly
strengthened; and in addition it has been found possible to place
at the disposal of the AUied governments gigantic sums for the
purchase of munitions and warlike stores. An official estimate
puts the amount of loans and advances by Great Britain to the
Allies at no less than £1,500,000 daily on an average during the
current financial year. Who can doubt that this financial assistance
has been of inestimable service to the Allied cause? It is clear, for
example, that the recovery of Russia after her prolonged misfor-
tunes in the summer of 1915 was greatly facilitated by British assist-
ance in the provision of military equipment. Again, it is largely
British finance that has enabled the Belgian and Serbian armies to
remain in the field as an effective military force.
Great Bbitain's Aid to Heb Allies
The financial assistance that Great Britain has rendered to the
Allied governments, has largely taken the form of paying for their
external purchases. It is true indeed that vast quantities of muni-
tions and equipment have been manufactured in the United King-
dom and exported to France, Russia and other Allied countries at
the cost of the British government. On the other hand, the Allied
governments have desired to obtain large quantities of ammuni-
tion, arms and supplies in other countries, e. g., in America or in
Japan, and have in many cases called upon Great Britain to meet
the cost of these purchases. This has been one of the most difficult
problems which British finance has had to meet. France and Russia
23
Digitized by
Google
24 The Annals of the Ambbigan Academy
have, it is truCi obtained loans in America and elsewhere, and to
that extent the financing of purchases which they were themselves
unable to pay for at the moment has been shifted onto shoulders
other than those of the British government. It has, however,
rested with the British government to finance a very great amount
of the foreign purchases made by the Allied governments. Great
Britain has been in a position to do this largely in consequence of
the enormous quantities of capital which she has loaned to the
citizens and governments of foreign countries, or invested in British
companies carrying on business abroad, in years gone by. She has
been able to call in foreign credits and maturing obligations and to
realize by sale or by using them as coUcUeral for loans, vast amounts
of American and other securities which have been accumulated in
time of peace.
Never has the magnitude of the financial pull which London
has become able to exercise over the rest of the world been so clearly
manifested as during the present upheaval. The mere threat of
war was sufficient to cause all the foreign exchanges to move vio-
lently in favor of London, and the machinery of payments broke
down because a crowd of foreign borrowers was trying to transmit
money to London in payment of obligations falling due, and scarcely
anybody was trying to transmit money the other way. The vast
purchases of stores and munitions which had to be paid for, both on
account of the British war services and on behalf of the Allies,
coupled with a great falling off in the export trade from the United
Kingdom, caused the foreign exchanges to move gradually against
Great Britain soon after the outbreak of war. But even after two
years of war, during which hundreds of millions sterling have been
withdrawn or borrowed from abroad and lent to the Allies, the
foreign exchanges on London are much nearer to the normal than
are the exchanges of any other belligerent country. This is a clear
testimony to the substance and credit of the British nation. The
task of finding so many miUions to make payments abroad has,
however, proved no easy one. The British government has had to
act boldly and drastically, especially in connection with the schemes
for mobilizing American and other foreign securities. On the whole,
however, it is probable that the limits of the Allied purchases abroad
have hitherto been fixed rather by shortage in the supply of goods
and equipment of the kinds required than by inability to foot the bill.
Digitized by
Google
British Oversea Investments 26
This rough estimate of the value of British foreign investments
to the British nation, and to the Allied cause generally, during the
present war, is given by way of introduction to what is the main
purpose of this article, namely a discussion of the nature of British
investments ^ prior to the war, of their growth, distribution and
extent.
Early British Investments
British foreign investments have been built up gradually and
somewhat unostentatiously during a century past. It is hard to
fix a date at which foreign investment began, for traces may be
found in the sixteenth and seventeenth centuries and even earlier.
The sums involved, however, were very small according to modern
notions, and the same was true even in the eighteenth century. A
considerable capital was indeed represented in the East India Com-
pany, and investment in the West Indian plantations and in the
American colonies attained a certain importance. It appears prob-
able, however, that during the eighteenth century Great Britain
was on balance a debtor rather than a creditor country. The de-
mand for capital which accompanied the industrial revolution, and
the large government borrowings necessitated by prolonged wars,
attracted to Great Britain a considerable amount of Dutch capital
for investment in the national debt, in Bank of England stock, and
in other enterprises.
The commencement of a rapid development of British foreign
investments may be dated at the year 1815. During the Napoleonic
wars, very little had been done in the direction of extending foreign
investments. Accumulations of capital were absorbed in financing
the war; in paying subsidies, amounting altogether to some £46,-
000,000 in cash, exclusive of a large amount supplied in kind, to
continental allies; and to some extent in industrial development at
home. When the war stopped, surplus energy found vent in a
marked extension of British investments abroad and a reduction of
foreign investments in Great Britain. Large loans were made to
impoverished continental governments, while considerable foreign
holdings of British stocks were bought back from Dutchmen and
others. A big boom, culminating in 1825, was characterized by
speculation in every kind of foreign venture, conspicuous among
them befing South American jnines and South American government
^ A fuller account is given in my book, The Export of Capital, (Constable) 1914.
Digitized by
Google
26 The Annals of thb American Academy
loans. During this period, too, there was apparently some invest-
ment in United States bonds; and at a somewhat later date substan-
tial amounts of American canal, state and railway bonds began to
be bought by British investors. The advent of the railway indeed
opened up a new era to the investor, and from the '30's onwards
large and increasing siuns were placed by British investors in
American railways. Some companies, indeed, were controlled from
the beginning by British capital. Rails and materials were to a
large extent sent from Great Britain, payment being made in bonds.
In Europe, British capital also became actively engaged in the estab-
lishment of manufacturing industries, and later, in construction of
railways, many of the Belgian and French lines being largely
financed in London.
These two fields of investment, the United States and Europe,
took for a time the great bulk of British capital invested abroad.
Other outlets, however, gradually increased in importance. Invest-
ment on the continent of Europe was on occasions checked by
political considerations,, notably by the disturbances of 1848; and
at a later date the growing wealth of France and other continental
countries led British investors to seek more profitable openings for
their capital elsewhere. America continued to provide attractive
openings for British capital, although the amount invested fluc-
tuated according to industrial and commercial circumstances from
year to year, and the outbreak of the Civil War gave a set back to
investment from which it took some years to recover. The British
colonies, including Canada, Australia and India, began to attract
more of the investor's attention, and at a somewhat later date South
America, South Africa and the Far East became prominent as fields
for investment.
Variations in the Amount and Nature of Investments
Capital flowed out, on the whole in increasing quantities, in
spite of great variations from year to year. Scarcely ever did a
year pass, without some addition being made to the quantity of
British investments abroad. One of the few exceptions was
during the early 70's. For two or three years British holdings of
capital abroad appear to have been actually diminished, by with-
drawal of capital. This was during the period of depression which
followed the boom of 1872-3. That boom had been preceded and
Digitized by
Google
Bbttish Ovbbsba Investments 27
accompanied by vast issues of foreign government loans and of all
kinds of other bonds and shares on the London market. During
the world-wide depression which ensued, numerous governments
defaulted in their interest payments, and railway companies went
into the hands of receivers. Confidence in foreign investments was
therefore for some years shaken, and investors sought openings for
their money at home rather than abroad.
In the early '80's conditions again became favorable- for in-
vestment. The fields which came perhaps most prominently into
favor were Australia, and during the later part of the decade South
America. The securities of railways in the United States were also
readily absorbed, as they had been during each period of expansion
since the beginning of the railway era. In Canada, this was the
time of the construction of the Canadian Pacific Railway. In
South Africa, the gold and diamond discoveries of 1884-5 resulted
in the flotation of hundreds of mining companies. The boom, how-
ever, was accompanied by a good deal of injudicious speculation,
and culminated during the early '90's in a series of crises in
various parts of the world which checked the export of capital for
a number of years. A collapse in Argentina in 1890-1 was followed
by a slump in South African mining shares and paralysis in Aus-
tralia. The business position in the United States also became very
unsatisfactory, largely as a result of the uncertainties connected
with the free silver agitation; and many railways went into the
hands of receivers. Consequently, the '90's were a period during
which comparatively little British capital flowed abroad. There
was, indeed, a not unimportant movement to withdraw capital
from America by selling bonds held in England back to New York.
This, however, was only temporary; for at a later date the movement
of British capital to America was resumed, though the flow in that
direction became smaller than before relatively to the flow in other
directions.
The export of British capital showed signs of recovery in
the late '90 *s, but the movement was stopped short by the South
African War, which absorbed much capital that would otherwise
have been available for investment. Two or three years after the
close of the war, however, the outflow of capital began rapidly to
increase, and the volume of investment soon attained unprecedented
proportions.
Digitized by
Google
^8 The Annals of the American Academy
Rapid Growth in the Present Century
The vast extent of the export of capital during the opening
years of the present century is indicated by the following figures
of new capital issues for investment in the colonies and abroad
compiled from tables pubUshed in the Economist:
£ £
1901 27,907,000 1908 142,152,000
1902 57,126,000 1909 163,676,000
1903 63,691,000 1910 207,143,000
1904 72,926,000 1911 165,614,000
1905 120,497,000 1912 165,514,000
1906 81,906,000 1913 160,586,000
1907 90,560,000
These figures cannot be taken as an exact measure of the
export of capital, since there is a large amount of private invest-
ment abroad, and securities are continually being bought from
abroad and sold abroad. Nevertheless, the figures sufficiently
indicate the vastness of the outflow of British capital for some
years before the present war.
It is of interest to analyze the statistics of capital issues accord-
ing to countries of destination. This has been done in the Econ-
omist for a few years back, and the figures are here reproduced.
It will be seen that the new issues for investment in foreign
countries have been, on the whole, somewhat larger than the issues
for investment in British possessions. The most prominent indi-
vidual country, however, has almost without exception been Canada.
The United States has followed next in order of importance, and
behind have come Argentina, Australasia and Brazil. Less capital
was raised for India and Ceylon during the second three years than
during the first three; but for Russia, on the other hand, more was
raised in 1911-3 than in 1908-10.
The Aggregate Investment and Its Geographical
Distribution
The amount and geographical distribution of the aggregate
capital publicly invested by British citizens in the colonies and in
foreign countries are estimated by Sir George Paish* to have been
as follows, at the end of December, 1913:
s See The Statist of February 14, 1914.
Digitized by
Google
British Oversea Investments ^ 29
Dbshnation of New Capital Pubuclt Issued
Amoimtsi
n £1,000'
B
1908
1909.
1910
1911
1912
1913
British Possessions
India and Ceylon
13,146
15,336
17,992
5,171
3,708
3,824
South Africa
6,210
11,292
3,379
4,387
3,863
6,295
Canada
27,827
26,814
36,882
41,215
46,983
44,119
Australasia
4,028
11,380
13,385
3,333
13,462
18,629
Other British Pos-
sessions
7,439
9,936
20,740
10,889
4,626
3,271
Total British Pos-
sessions
58,650
74,758
92,378
64,995
72,642
76,138
Foreign Countries
Russia
3,810
9,472
3,919
5,208
10,490
8,956
Finland
2,328
143
970
. .
Denmark
2,12i
488
1,089
2,425
Sweden
2,940
881
200
485
.
381
60
3,009
633
2,402
United States
21,472
15,905
39,590
21,314
23,635
18,746
Brazil
12,992
9,219
11,814
19,211
14,353
15,093
Arraitina
CluQe
15,013
21,738
22,865
16,677
20,110
11,990
1,299
4,098
4,685
8,271
2,252
2,699
Mexico
8,113
9,110
5,087
2,650
4,086
10,642
Central America
15
1,592
35
291
1,017
415
Other S. American
Republics
4,226
2,616
3,141
2,414
100
525
China
5,031
740
1,610
7,434
5,950
6,883
Japan
2.920
4,723
3,231
Austria Hungary
f 4,098
1,654
40
108
Bulgaria
3,604
216
. .
. .
Greece
1,572
687
35
, ,
France
900
245
692
Turkey
1,431
300
Germany and Pos-
3,550
5,626
sessionB
794
223
176
Dutch East Indies
4,383
568
153
1,498
Cuba
1,916
6,501
838
891
Philippine Islands
404
713
Other Foreign
Countries
1,635
2,576
2,656
2,403
Total Foreign
Countries
83,502
88,917
114,765
100,619
92,872
84,449
Total British Pos-
sessions and For-
eign Countries
142,152
163,675
207,143
165,614
165,514
160,587
Digitized by
Google
30 The Annals of the Ambbican Academy
India and Colonies £
Canada and Newfoundland 614,870,000
Australia 332,112.000
New Zealand 84,334,000
South Africa 370,102,000
West Africa -. 37,305,000
India and Ceylon 378,776,000
Straits Settlements 27,293.000
Hong Kong 3,104.000
British North Borneo 6,820,000
Other Colonies 26,189.000
Total India and Colonies 1,779,995,000
Foreign Countries £
United States 754,617,000
Cuba 33,075,000
Philippines 8,217,000
Argentina 319,565,000
BrazU 147,565,000
Mexico 99,019.000
Chile 61,143 000
Uruguay 36.124.000
Peru 34.173,000
Miscellaneous American 25,538.000
Russia 66.627,000
Egypt 44,912,000
Spain 19,057,000
Turkey 18,696,000
Italy 12,440,000
Portugal 8,136,000
France 8,020,000
Germany 6,364,000
Miscellimeous European 54,580,000
Japan 62,816,000
China 43,883,000
Miscellaneous Foreign 69,697,000
Total Foreign 1,934,264,000
Grand Total 3,714,259,000
This total does not include a large amount of capital privately
invested abroad, and Sir George Paish estimates that, were thia
added, the total^British investments in the colonies and abroad
would amoimt to £4,000,000,000. While it must be remembered
Digitized by
Google
Bbitish Oversba Investments 31
that capital publicly subscribed in London may, and to a consider-
able extent does, actually belong to foreigners, and Sir George
Paish's estimate to that extent possibly overstated the amount of
British investments, at the end of 1913, it is probable that by the
end of July, 1914, a further £100,000,000 had been added to the
amount of British investments, whatever the figures might have
been at the end of 1913. The annual income accruing from these
investments at the time of the outbreak of war can hardly therefore
have been very far short of £200,000,000 per annum. This income
is derived in the main from railway bonds and stocks, and from
foreign and colonial government securities. Sir George Paish
estimates that of the capital publicly invested in the colonies and
abroad no less than £1,521,014,000 was invested in railways and
£959,523,000 in government securities. The principal other items
are mines £272,789,000; finance, land and investment companies
£244,187,000; municipal loans £147,547,000; commercial and
industrial securities £145,332,000; tramways £77,790,000; and
banks £72,909,000.
Causes and Effects of This Wide Disteibution.
The wide geographical distribution of British investments, as
shown in the table above, is worth studying. By far the largest
sums have been invested in the United States, Canada, India,
South Africa, Australia and Argentina; but more or less important
amounts have been invested in practically every other country.
On the whole, investments on the continent of Europe are small.
Sir George Paish's figures show that for all European countries
together the amount is less than £200,000,000, which is only about
5 per cent of the total investments. This has been a very fortunate
circumstance for Great Britain in the present war, for it has meant
that British investment interests in the principal area of disturb-
ance have been small. The homeward flow of interest on invest-
ments in other quarters of the world has continued practically
unhindered, while enemy states have not been able to put obstacles
in the way of sales of securities to foreigners in payment for muni-
tions and supplies. The cases of France and Germany have been
very different. A large part of the foreign investments of both
countries are in Europe, and especially in Russia. The suspension
of most of the Russian export trade, as a result of the war, made it
Digitized by
Google
32 The Annals of the American Academy
difficult to effect payment of interest on capital invested there, and
to some extent it has only been possible to obtain interest payments
by making further advances. In the case of Germany, the utility
of her investments in Russia was, of course, nil, and the same applies
to the not inconsiderable investments made by Germans in the
British colonies. No interest or dividends are paid to Germans
during the war, and transfer to neutrals is stopped.
The causes of the wide distribution of British investments must
be sought in the history of British trade relations and British colo-
nial expansion. It was natural that trade should be directed largely
to the colonies, which a common language and common institutions
tended to draw close to the mother country. Despite political
disagreements, identity of race and language has been a potent
influence also in encouraging intercourse between Great Britain and
the United States. The importance of the British mercantile ma-
rine also facilitated trade with other countries in distant parts of the
world. Out of trade developed investment, and thus gradually was
built up the imposing structure of British overseas investments.
The Different Nature of French and German
Investments
Very different have been the circumstances of French and Ger-
man investors. The development of France industrially and finan-
cially took place at a considerably later date than that of Great
Britain, and the siuns invested abroad at the outbreak of the pre-
sent war were correspondingly smaller, amounting perhaps to
£1,800,000,000. French overseas trade too has always been much
smaller than that of Great Britain, while the course of events in the
eighteenth centiuy deprived her of most of her large colonies in Asia
and America. The Frenchman, therefore, has exhibited a marked
tendency to concentrate his investments in Europe, in Egypt, and in
his North African colonies, though French interests in other parts,
notably in South America, Mexico and the Transvaal, are consider-
able, and were, at any rate so far as concerns South America, grow-
ing in importance for some years before the war.
German investments abroad also began at a much later date
than British investments, and have grown more slowly. At the out-
break of the present war they did not perhaps greatly exceed £1,-
000,000,000 in amount, and were to some considerable extent offset
Digitized by
Google
British Oversea Investments 33
by investments in Germany on the part of foreigners. Germany,
like France, had mitil recently no large field for investment in the
colonies, and her overseas trade is quite a recent growth. Con-
sequently Germans were inclined to make their investments in
neighboring European countries rather than far afield. As in the
case of French investments, an important part is represented by
holdings of Russian bonds, railway and industrial securities. Ger-
many also has important interests in Austria Hungary, Italy,
Roumania and the Balkans. Though German investments are pre-
dominantly represented by European securities, German holdings
of American railway and other bonds and stocks are (or at any rate
were before the war) considerable in amount, as are also her holdings
of South American stocks and South African mining securities.
There is another feature of British investments which may also
most conveniently be indicated by contrasting it with French and
German investments. This distinction depends upon the great
differences which exist between coimtries in regard to the distri-
bution of the ownership of capital among different classes. In
Great Britain, the ownership of capital is distributed more imevenly
than in either France or Germany. Investors represent a com-
paratively small section of the community. The control of large
amounts of capital is thus vested in comparatively few hands. In
Germany, and to an even greater extent in France, the small in-
vestor controls a relatively large part of the total capital available for
investment. The French peasant is proverbial for his thrift and the
number of accounts open at the savings banks and the entries in the
Grande Livre of the French national debt alike testify to his finan-
cial importance.
It is difficult to form an opinion as to what has been the effect
upon investment policy of the uneven distribution of the owner-
ship of capital in Great Britain. No doubt concentration of capital
in a few hands facilitates the promotion of large schemes of invest-
ment in distant parts of the world. The wealthy investor is, on
the whole, better educated in financial affairs than the small in-
vestor, and it is probable that he is able to select his investments in
distant fields with more discretion than the small investor, and to
obtain a higher return on his capital without running undue risks.
The characteristic of the small French investor is his caution; he
prefers government securities or debentures yielding a low fiifed
Digitized by
Google
34 The Annals of the Amebican Academy
interest. On the other hand, the small British investor, whose
psychology is different, is somewhat apt to allow himself to be car-
ried away by golden promises and to lose his capital in speculative
ventures. It must, of course, also be borne in mind that very large
holdings of foreign securities are in the hands of banks, insurance,
finance and trust companies, etc., which accumulate and control
the capital of individuals, many of whom may be comparatively
poor. Many millions of the American securities which have been
sold in New York or deposited as collateral for loans with American
bankers during the present war belonged to institutions of this kindL
The Effects of the Wab
In concluding this survey of British foreign investments a few
words may perhaps be said about the future. The European war
has wrought great changes in the sphere of investments, as in other
spheres. From the point of view of Great Britain, the main factors
have undoubtedly been the extensive realizations of the more liquid
and saleable assets in various parts of the world and the vast loans
which have been granted to the Allied governments. The principal
result of the former movement has been a vast pouring back into
the United States of American securities slowly accumulated during
the past century. Of the latter movement, the details are less
fully known, but it may safely be asserted that some hundreds of
millions sterling withdrawn from the United States have been lent
to Russia. No doubt the sums lent to the other Allied governments
are considerably smaller.
It may be presumed that the amounts lent to the Allied govern-
ments will remain after the war as a debt due. It appears not un-
likely, however, that the ownership of the debts due from the Allies
will be transferred from the British government to individual in-
vestors by the issue of loans on the London capital market, the pro-
ceeds of which will be handed over to the British government.
This, however, would be largely in the nature of a bookkeeping
transaction from the national point of view. The opinion may
further be hazarded that the war will have to a considerable extent
a permanent influence upon the distribution of British investments.
It appears certain that the financial position of America will be much
strengthened both absolutely and relatively to other countries.
Even before the war the United States was becoming less dependent
Digitized by
Google
British Oversea Investments 36
upon Europe for its supplies of capital, and was even investing
abroad in Canada and in South America. The inference appears
to be warranted that the British investor will not fully regain the
position which he held in the United States before the war. Doubt-
less there will be a partial recovery both by the repurchase of Ameri-
can securities, and especially by the repayment of money borrowed
upon collateral securities deposited in America, but it will probably
not be complete. The future of the British investor in Canada and
in South America appears to be better assured, although even in
those fields there may be more competition from the United States
than before the war. /
Another effect which the war appears likely to exercise upon the
distribution of British capital is to encourage investment in Russian
Doubtless Russia will for many years have to borrow in order to pay
the interest on the huge debt which she will owe. It appears prob-)
able that British interest in Russia, increased by the war, will be
widened to embrace a keen desire for the development of the coun-
try, resulting in extensive investments of British capital in Russian
railways, municipal loans, mines, manufacturing industries, etc.
The likelihood of such a movement appears to be enhanced by the
fact that for some years before the present war the flow of British
capital to Russia had been increasing.
With regard to the general question of the amoimt of British
capital exported after the war, it does not seem likely that this will
be permanently affected. The general conditions which have made
Great Britain a creditor country will remain substantially unaltered.
It is possible that the amount of capital exported may for a time be
small as compared with what it was before the war, but there is na
reason to doubt that the flow will sooner or later recommence in
large volume. If, as there is cause to expect, new habits of economy
and thrift have been acquired during the war by various sections of
the population, it may well be that the accumulation of capital in
Great Britain and the outflow for investment overseas will speedily
attain new records.
Digitized by
Google
THE AMOUNT, DIRECTION AND NATURE OF
FRENCH INVESTMENTS^
By Yves Gittot,
Editor, Journal de$ EeonomisU, Paris.
It has been the fashion, in official speeches, in parliamentary
reports and debates, to state that " France is the great banker of the
world, that she is creditor everywhere and nowhere debtor"; and
at the same time to say: "There is no capital left in France for
French undertakings. " M. Briand, President of the Council (Prime
Minister), speaking in 1909, stated: "French gold streams over
the entire world. If we may be allowed to express anxiety or
regret, it is because none remains in the coimtry itself." M.
Raymond Poincar6, then Minister of Finance, now President of the
Republic, said: " France is an indefatigable creator of wealth. She
works, she produces, she economizes, and that is why her market is
always the biggest reservoir of capital in the world." And he
added: "Perhaps it might be better that the largest portion of this
wealth be employed in commercial and industrial undertakings."
For the authority of these important personages I regret to
state that before uttering such words they should have studied the
facts. It is not exact that France is "the greatest reservoir of
capital," or "the greatest banker of the world." A glance at the
London market suffices to set aside such an assertion. The flota-
tions of securities on the London market are far more important than
those of the Paris market. British investments in the colonies and
abroad are, according to Sir George Paish, estimated at 100 billion
francs; those of France at 40 billions. The London Bank deposits
were three or four times as great as those of Paris. Finally we have,
as international currency, the draft on London whose prestige is due
^Principal r^erenoes. Annuaire dea valewra eoiSi d la Boune de Pari$,
public par la Chambre Syndicale des agents de change. (N'a pas pani depuis la
guerre.) LaSlatistiqueirUernaHonaledeavaleiarsmobilihnB. X* rapport pr^^nUau
nam du comiU des finances de VlnsHttU international de staHstiquej par Alfred Ney-
marck, k la session de Vienne» 1913. (Public en 1916).— Le Marchi Financier par
Arthxir Raffalovioh, 23d ann^ 1913-1914 (public en 1915) et annto pr6o6dentes.
36 ,
Digitized by
Google
t^NCH iNVBStMBNTS 37
to free trade, to the liberty of the London market and to the gold
standard which has been established there since 1816.
According to the Census of Prodiuiion of 1907, drafted for the
United Kingdom by Mr. W. Flux, and published in 1911, the
available capital at the close of the year amounted that year to
340 to 400 milUons of pounds, or about 8 and a half billions of
francs. In France, the yearly scope of savings was estimated at
about 3 billion francs.
How were these available funds distributed? MM. Briand
and Poincar^ were acting as the spokesmen of the financial protec-
tionists when they denounced the investment of capital out of
France. A publicist named M. Letailleur, writing under the name
"Lysis," directed a violent campaign against the large discounting
houses which he denounced for "draining French capital away to
foreign countries, and depriving trade and industry at home there-
of." A professor of political economy at the University of Nancy,
Mr. Brocard, repeated: "By acting in this manner, we behave
like a manufacturer who, having available capital, allows his com-
petitors to make use of it, and lets his own business run to seed, for
lack of funds."*
In such words as we have quoted above, we notice two mis-
takes. The first is brought about by a fault, too common among
Frenchmen, and which foreigners are well acquainted with: French
vanity. "The foremost banker of the world," "the great reservoir
of capital!" The phrase was flattering to the audience. Political
speakers repeated it, therefore, without troubling to first ascertain
its degree of veracity. And among the audience, many who had
never seen millions except in the columns of newspapers, proudly
reflected:
Aht yee, we are the richest nation of the earth; and if I, personally, am not
rich, it is because there are persons who turn these riches off towards foreign
countries, whereas a part of them should belong to me. The big financiers grow
wealthy at my expense I Proper laws must be made to prevent such a state of
things, and to give me back my share of those millions!
Ministers and deputies promised to see to it; and in truth,
they have adopted some measures of the kind, which I will mention
later on.
* Conference at the £ooles des Sciences Politiques, 1912.
Digitized by
Google
38 The Annals of the American Academy
Then the assertion that French savmgs were all turned off to-
wards foreign countries was not exact. It will be seen further on
that 63 per cent of the negotiable securities on the French market
and the property of Frenchmen are French securities; and to these
must be added capital which does not figure on the markets, and
which play a considerable part in the economic activities of France.
Money Markets in France and Negotiable SEcxTRmss
1 . The Official Market of the Paris Bourse. — ^The official market is
the Paris Bourse. The 70 stockbrokers, appointed by decree, are
alone entitled, by virtue of article 76 of the Commercial Code, to
negotiate public and other securities which they have inscribed on
their stock-list, and they alone are qualified to establish the prices.
The government since 1880 and especially during the last years
intervenes to admit such and such a security on the official quotation
list, or to reject it. In this manner the government sets itself up as
master of the market. Under the influence of the French metal-
lurgists, it thus caused, in 1909, the ordinary shares of the United
' States Steel Corporation to be refused admission to the French
market, and it compelled admission of a Turkish loan in 1914.
The following list gives the number of securities and certificates
negotiable on the official market of the Paris Bourse, at ten years'
interval:
nn TVw. ai Number of Number of oertifiostai
UnL>eo.81 aecuritiee miUioiie
1902 1,078 148.6
1912 1,456 135^
Million francs
MmrkeiTalne
Nominal capital acoordinc to quo-
tation oiDee. 31
1902 130,303 130,119
1912 145,332 142,198
The increase from 1902 to 1912 was in nominal capital 15 billions,
or 1,500 millions per annum; the increase in market value was 12
billions, making a loss of 3 billions.
Of these 142 billions of securities, 100 billions in round figures, or
more than 71 per cent, are composed of government stock and fixed
interest securities.
Digitized by
Google
French Investments
39
Securities Negotiable on the Official Market of the Paris Bourse in
December 1902 and 1912
In millions of franca
Nominal capital
1902
1012
Capital at prices of
Dec. 31
1902
1912
Proportion of
each group
in 1912»
percent
French securities
French state stock
State railway bonds
Treasury bonds
Colonies and protectorates
City of Paris
Departments and towns . .
Insurance companies
Crddit Foncier
Banks, credit establish-
ments
Canals
Railroads: East, Lyons,
Midi, Orleans, West
Railroads and tram-lines.
Docks
Water
Electricity
Spinning-mills
Gss
Fori^, foundries
Coal mines
Metallurgical mines
Phosphates, manure, chem-
ical products
Ports
Transports
Various securities
Foreipn securities
Russian state stock
Various state stock
Banks, insurances
Railways ,
Miscellaneous securities . .
Total
Grand Total
25,929
'ioo
467
2,002
208
108
4,312
1,370
144
17,962
1,970
138
254
394
19
364
518
320
107
23
552
2,569
60,132
11,323
50,080
819
7,113
836
70.172
130,304
25,310
298
214
1,030
2,275
126
118
5,033
2,707
499
18,605
3,089
133
252
970
52
505
783
147
205
251
231
641
798
64,597
13,607
51,779
3,685
9,765
1,898
80,735
145,332
25,850
ioo
438
1,984
210
729
4,231
2,268
1,611
19,612
1,787
133
413
363
22
639
677
1,136
270
24
392
1,139
64,027
11,305
47,487
1,105
4,927
1,269
66.093
130,120
22,749
303
214
870
1,977
115
943
4,612
5,258
2,439
18,175
2,842
129
435
1,272
71
581
1,692
1,713
732
682
256
584
1,454
70,105
12,569
44,237
5,065
7,102
3,120
72,094
142,199
32.45
0.43
0.31
1.24
2.82
0.17
1.34
6.58
7.50
3.48
24.93
4.06
0.18
0.62
1.81
0.10
0.83
2.41
2.44
1.04
0.98
0.37
0.83
2.08
100.00
17.43
61.36
7.03
9.85
4.33
100.00
100.00
In 1912, the proportion of French negotiable securities was 42.27 per cent,
while that of foreign securities was 57.73.
Digitized by
Google
40 Thb Annals of the Ambbican Acadsmt
2. Departmental Bourses. — These 142 billions do not represent the
total amount of negotiable securities in France; to them must be
added the total of the negotiable securities in the departmental
bourses of Lille, Lyons, Marseilles, Bordeaux, Toulouse, Nantes;
but care must be taken not to duplicate: the securities proper to
the departmental markets may be estimated at 5 billions.
3. Bank Market. — But, in addition to the securities listed on the
official bourses, there are securities negotiable at the bank. On
December 31, 1902, the securities negotiable for the account and
in full, represented 7,092 million francs, securities negotiated in full
represented 8,056 million francs, a total of 15,148 million francs.
From 1903 to 1912 securities were introduced on the market,
amounting to 19,654 million francs: this gives us therefore a total
amount of about 35 billions.
But Mr. A. Neymarck considers that numerous variations of
prices may have altered the estimated value of securities as of 1902
and the value of the securities since introduced; that these se-
curities may in some cases have disappeared, while others have been
admitted to the official stock-list, and hence, Mr. A. Neymarck
writes down as 20 or 25 billion francs, the amount of securities
negotiable at the bank.
Total of the Three Markets. — The figure of securities negotiable
in France at the close of 1912 can be estimated in the following
manner:
BfllkMM
of f raiMt
Paris Bourse, ofiBcial market 142
Bank market 23
Departmental market 5
170
Which amounts to this: that 170 billions of securities are negotiable
in France; many of these, like the British Consolidated and the
state funds of the various countries are negotiable on several mar-
kets. These 170 billions are therefore not the exclusive property of
the French market and still less of Frenchmen.
The French Part
What share in these 170 billions does the property of Frenchmen
represent? According to official statistics of the Registration,
Digitized by
Google
Fbbnch Intbstmbnts 41
Estates and Stamp Office, the duties and products secured during
the year 1911 on the revenue of personal securities was 109,695,000
francs. This amount of duty on personal securities applies to
French securities, except the French government stock and foreign
government stock which are not subject to the tax. The following
is the statement:
FmiM
French aecuriHes:
Companies' shares 48,098,000
Interest shares 826,000
Limited liabilities 1,865,000
Bands and Loans
Commmies (rural districts) 2,850,000
Departments 115,000
PubUo establishments 1,832,000
Companies 35,460,000
Total for French securities 91,046,000
Foreign securUiea:
Companies' shares 9,352
Bonds 8,221
Companies owning property in France 1,130
Total for foreign securities 18,703
These 110 millions correspond to a total figure of 2,844 millions
of francs of taxed revenue, which may be divided up in the following
manner:
MOIion franoi
For the French securities 2,371
For the foreign securities 473
2,844
After certain deductions, amounting to 102 millions are made,
the remaining securities from which this revenue is derived is 2,742
millions which, taxed at the rate of 4 per cent, represent the 110
millions of duties noted above.
It will be seen that the French securities of varying income,
shares, etc., furnish more than 50 millions of the revenue, a figure
exceeding that from the fixed revenue securities; the same applies
to the foreign companies.
The income received by the owners of these French securities,
of varying return, according to the 4 per cent tax is 1,250 millions;
Digitized by
Google
42 The Annalb of the Ahebican Academy
that received from the foreign companies' shares is 225 millions;
we have, therefore, a revenue of 1,475 millions out of a total taxed
revenue of 2,844 millions, or more than half. It is not exact, there-
fore, to say that the French invest their capital only in fixed revenue
securities.
But the government stock, both French and foreign, then free
from the 4 per cent tax, is not included in this estimate; they would,
however, give a majority to the fixed revenue securities. M. Ney-
marck estimates French investments in foreign government stock
at 25 to 30 billions.
The income received from French and foreign securities owned
by Frenchmen is estimated at the close of 1912 to be:
Fnnoi
1. Total amount of taxed inoome from French securities, deduc-
tion being made of prizes and repa3rment premiums 2,275,000,000
2. Income from French 3% and 3% redeemable funds 760,000,000
3. Income from 30 to 32 billions foreign government stock, not
subject to income tax of 4% 1,600,000,000
4. Income from foreign sectu-ities, deduction being made of pre-
miums and prizes for reimbursement 346,000,000
5. Premiums and prizes on French and foreign securities 102,000,000
5,083,000,000
In round figures the income received from government stock
and French securities amounts to 3,100 millions; the foreign state
funds and securities to 2 billions. To these figures should be added
the income from the foreign government stock and securities pur-
chased abroad and remaining deposited abroad until the day when,
as a consequence of some public action, or by reason of a legacy or a
division of property, they make their appearance, but it is not pos-
sible to give any reliable estimate of this item.
Mr. A. Neymarck estimates the capital which may be repre-
sented by these yearly incomes at 115 billions; but he does not indi-
cate the elements used for such an estimate.
If we take the rate of 4 per cent for the shares, we reach a figure
of 31,250 millions which must be included in the first item of the
following table:
BiUioM
Treasury notes and bonds, state railroad bonds, colonial funds 50
French state 3% and 3% redeemable funds 23
Foreign government funds 7
French and foreign "lottery" securities 6
Total "is
Digitized by
Google
Fbbngh Investmxntb 43
We may deduct 10 per cent for the French state funds, and
securities which may be owned by foreigners, or about 7 billions.
There then remains 108 billions forming the capital in personal
securities of French capitalists, which would yield a revenue of 5
billions of francs.
In the next table is given the progression followed by the said
capital in personal securities:
BDUona of franoi
Amount of capital Of which the fordim
in French portfolio aecuritiefl (state funds
included) represent
Cao8eofl850 9
1860 31
1869 33 10
1880 66 16
1890 74 20
1902 from 87 to 90 from 25 to 27
1904 90 to 93 27 to 30
1906 97 to 100 30 to 32
1908 103 to 105 32 to 35
1910 106 to 110 38 to 40
1912 108 to 115 40 to 42
Out of the 40 to 42 billions of foreign securities, we may estimate
that there are 30 to 33 billions in foreign funds, 10 to 12 in shares and
bonds. The foreign securities would thus represent 37 per cent of
the French capitalist's portfolio. It is, therefore, not correct
to state that all French savings are drained outside the country.
The proportion of investments abroad in 1890 was 27 per cent. It
would thus have increased by 10 per cent since that date.
The causes of the increase may be summed up as follows:
1. The conversion of the 3 per cent French stock diminished
their yield and Frenchmen, anxious to have an income sufficient
to ensure the style of life they choose to live, looked abroad
for higher returns. Hence, the fall of state stock, and of the
"gilt-edged'' securities. This phenomenon is not confined
to France.
2. The fiscal threats of the income tax led to the exporta-
tion of a certain amount of capital and its investment in foreign
securities.
3. While, in Parliament, the statesmen groaned over the
exportation of capitals to foreign lands, for political reasons
they encouraged investments of capital in Russia and in other
Digitized by
Google
44
The Annals of the Ahebican Acadbmt
countries; in 1914 Mr. Caillaux made use of all the influence
which can be exercised in France by a Minister of Finances, on
the official market, and with the discounting houses, to bring
about the flotation of a first block of 500 millions of Turkish
loan.
The French Mabkbt in 1912 and 1913 and the
Ministers of Finance
The following are the admissions and introductions of securities
in 1912:
French Securities
Bfiffions of fnuM
Number of Nominal ValoeAt Value at priet
oeitifioatee ralue finiqaot*- quoted in
tio& I>eeember
State and town funds 1,326,001 519.1 512.9 505.8
Shares 2,011,810 458.6 917.6 895.8
Bonds 3,293,772 1,746.5 1,121.7 1,087.1
Parts 23,000 SJ TA
Totals 6,654,583 2,724.2 2,560.7 2,496.1
Foreign Securities
Funds — ^provinces and
towns 1,212,080 539.5 519.0 502.1
Shares and bonds 1,448,268 638.0 902.9 909.3
Parts 1,145,440 533.3 505.0 490.1
Totals 3,805,788 1,710.9 1,927.0 1,901.5
In 1913, the admissions and introductions were less important:
French Securities
MflUons of franea
Number of Nominal Value at first Value at
oertificateB value quotation December
quotatioB
State funds, departments
and towns 310,987 155.5 151.6 151.8
Shares 1,904,320 479.2 894.9 854.3
Bonds 2,168,871 1,066.4 1,023.4 1,015.2
Parts 18,000 22.8 22.4
Total 4,402,178 1,701.1 2,092.7 2,043.9
Foreign Securities
State funds, departments
and towns 1,291,833 649.3 624.5 647.8
Shares 880,137 323.9 474.6 461.7
Bonds 1,263,246 631.6 598.6 598.1
Totals 3,435,216 1,604.9 1,697.7 1,707.6
Digitized by
Google
Fbbnch Investments 45
The following is a comparison between those two years and the
three preceding ones:
BfiUions of fraaof
Number of Nominal Valu* Vahieat
oertifioatef ralue tA first end of
(French and qnoUtlon Deoember
foreign)
1909 9,369,731 3,397 3,473 3,712
1910 12,110,949 6,068 4,740 4,764
1911 9,265,393 3,739 4,088 4,068
1912 10,460,371 3,835 4,487 4,398
1913 7,837,394 3,306 3,790 8,751
The value at the close of December is lower during the past
three years. The figure of admissions and introductions in 1913
was inferior to that of any of the preceding years.
The case was the same on the Bank market.
Bfinionfmnee
Number of Nominal Value at Value at end
certificatea value firrt quotation of Deoember
1909 11,487,680 791 1,642 1,636
1910 9,444,124 973 1,386 1,310
1911 7,640,271 736 888 837
1912 12,766,380 869 1,202 1,203
1913 6,361,460 609 1,041 930
The intervention of the government is not without responsi-
bility in this connection. On December 21, 1912, M. Klotz,
Minister of Finance, speaking at the Chamber of Deputies stated:
In 1910 the admiasioD to the quotation-list of foreign seourities amounted to
3,829 millions and the admissions to the quotation-list of French securities were
731 millions. In 1911 there were only 2,784 millions of foreign and 620 millions
of French securities admitted. In 1912, only 1,666 millions of foreign securities
against 1,782 millions of French securities were admitted to the quotation list,
French undertakings.
The Minister of Finance exulted at the decrease of the market,
while quoting figures which do not agree with the official figures
which we have just given. And that same minister had not failed
to say also: "France is creditor everjrwhere and debtor nowhere.*'
The arbitrary intervention which the Minister of Finance
boasted that he had introduced on the market, could only have one
result: the decrease of French credits abroad. The Ministers of
Finance have resolutely striven, since 1897, to decrease the impor-
tance of the French market. In 1897 they reinforced the monopoly
Digitized by
Google
46 Thb Annals of thb American Acadsmt
of the 70 stockbrokers. Since then, in 1907 by threats relating to
the tax on state fund, they have shaken French credit and have
contributed to lower the "rente."
The repercussion of the Balkan war caused a fall at the Paris
Bourse which, for the 162 principal securities, may be figured out as
follows: their normal value was 57,534 million francs; on December
31, 1912, 56,260 millions; on June 30, 1913, 53,843, or a fall of 2,417
millions. This fall amounted in the case of the French state funds
to 1,346 millions; for French railroad bonds to 554 millions; for
industrial companies' shares to 287 millions; and 228 millions for
the bonds of the City of Paris and the Credit Foncier.
The reduction of the working hours in the railroad companies
led to new expenses for extra staff, the law of July 21, 1909, con-
cerning pensions for workmen and employes of the railroads caused
a fall not only of the shares, but of the bonds which, after the French
state funds, composed the majority of the stock of French invest-
ment; the Northern Railway 3 per cent bond which was worth
453.50 in 1908 had fallen to 420 francs in 1913 and at some time
during that year it even got down to 402 francs.
The law of March 29, 1914, aggravated, from July 1, 1914, the
regime of foreign state funds. They were to pay, at the time of
their flotation, a stamp duty fixed at 2 per cent of the capital. Their
coupons, until July 1, 1914, were exempt from the income tax.
From July 1, 1914, they were subjected to a 5 per cent tax. The
Treasury first desired to establish it on the nominal gross revenue,
without taking into account the taxes which they could be subjected
to in their own country. Finally the treasury consented to collect
the tax only on the net coupons.'
Colonial funds, free from taxes, are subjected to the income
tax. The colonies will have to pay, for they have undertaken to
bear the taxes imposed by the metropolis.
The law of March 29, 1914, aggravated the charges which bur-
dened the market of Paris, and yet, Mr. Jacques Gunzberg had no
difficulty in showing that they were heavier in Paris than in London.
The cost of a flotation varied between 4 and 4} per cent to be thus
distributed: expenses of the guarantee syndicate from If to 2 per
cent; cost of "guichet" IJ per cent; advertising costs § per cent;
these were about the same conditions as for the London market,
^ee A. Raffalovich, Le March^ Financier, 1913-14, T. 23, p. 387.
Digitized by
Google
French Investments 47
But the Treasury altered this similarity of conditions. Where-
as in England, on the funds certificates and public securities, the
Treasury collected only a stamp-duty cash, of 1 per cent, in France
the Treasury collected a duty of 3 per cent after 1913.
The same goods therefore cost 5§ per cent in London and 7i per
cent in Paris. Hence, the issue of a Belgian loan in London and
not in Paris. Why should Belgium have given preference to the
London market? The English banks took a margin of 3 per cent
between the guaranteed price and the issue price, underwriting at
74 that which they sold at 77. The Belgian state paid besides the
1 per cent of the English tax. It therefore received 73 net. All
included, its expenses amounted to 4 per cent. In France, paying
8 per cent to the Treasury, the Belgian state would only have col-
lected 71 francs, the expenses being 6 per cent in Paris instead of
4 per cent in London. An Argentine loan, which had been nego-
tiated by a French syndicate, was also floated in London.
Much trouble was taken to ** nationalize" certain American
securities, as though the very advantage of these international
securities were not to retain that nature, — confining their market,
one could not increase their price. When the war came, we realized
the mistake which had been made. The present Minister of Finance
is too glad to obtain the loan of securities of neutral powers to seek
to improve French exchange in the United States. Were it not for
the measures taken on the Paris market against foreign securities,
he would have at his disposal a greater quantity than he has been
able to procure. We do not know the exact figure, but at the close
of July, mention was made of one billion francs.
Under these conditions France could not be "the foremost
banker of the world'' and those who gave her that title were doing
all in their power to restrict her market. Commercial protectionism
has for its object to prevent the entry of goods: financial protec-
tionism aims to prevent the exit of capital.
A decree of August 10, 1916, has just raised the commissions
of stockbrokers. The report which precedes this decree, signed by
the Minister of Finances, states that "the net product, deduction
being made of expenses, far from increasing with the development
of personal fortune, has decreased by more than 20 per cent in ten
years." In 1914, on the eve of the mobilization, tlie stockbrokers
suspended payment of recharges, which entailed the moratorium
Digitized by
Google
48 Ths Annals of the Ambbican AcADBift
suspending reimbursement of the bank deposits. We had to wait
till September 30, 1915, for the Syndical Chamber to agree, for the
purpose of settling all differences, to a loan, in 6 per cent notes, of
75 millions, "an appreciable fraction of which, says the report, will
no doubt remain on its hands."
The decree raising the tariff gives the Minister of Finance the
right to modify it "without it being necessary to subject such ini-
tiative to a previous proposition of the Syndical Chamber." It is
probable that, in a few years from now, it will be necessary to
reorganise the Paris bourse. Before the war, the average daily
transactions for cash, were about 23 millions; at present they
amount to 14 millions, 6 millions of which are for the 5 per cent
rente.
Capital Unbspresbntbd by Sbcuritibs
The negotiable securities handled on the markets are far from
representing the capital of France and especially that part of the
capital engaged in industrial and commercial undertakings. The
ministers whose words I have quoted do not seem to realize the
importance of cryptogamous finance. Thus on twenty coal mines,
which in 1908 produced 29 millions of tons of coal, there are eight:
Aniche, Auzin, Dourges, Lens, Noeux, Montrambert, Grand' Combe,
Carmaux, whose capital has no nominal value.
The capital of Bruay is 3 millions, on which, in 1852, 1,040,000
francs were paid. Its shareholders built up the capital with their
profits instead of dividing them as they arose. In proportion to
the tonnage produced, Bruay must represent a capital of 120 millions
of francs, its dividend being 13 millions. It works out at something
over 11 per cent and is the highest rate for French coal-works.
The Company of Lens was founded the same year with a capital
of which 900,000 francs were paid. According to the 1910 report,
the total figure of the accumulated but undistributed funds of the
company, thanks to the funds built up year by year on the profits,
has risen to more than 123 millions of francs. The report of 1911
estimated the capital at 141 millions to which should be added 17
millions of supplies of all kinds, giving 158 million francs. The
dividend of 12,600,000 francs is 8 per cent of this.
The financial markets have never registered these phases of
the mines capital. It is only during the last twenty years that they
Digitized by
Google
lE^RENCH iNYBSTliENTS 49
issue bonds, and they only issue them for the necessary balancing
of their accounts with the Public Works Office.
The 1912 balance sheets of the great metallurgical establish-
ments indicate the presence of reserve funds and provisions of
considerable importance, but which are far from showing up all the
amortizations and reserves which have been effected previously with
the purpose of suppressing accounts. These companies do not
need financial assistance, they do not issue securities on the market;
when they require capital, they ask it from their shareholders who
subscribe it and keep it. None of these establishments complain
that "Capital is lacking for French undertakings."
As regards the textile industry, the case is the same, if we be-
lieve the investigations made by the Chamber of Deputies between
1902-1906, and by the paper Finance-Univers in 1913, to which 2,500
heads of establishments responded. In the North, direct manage-
ment by private individuals, the owners of factories, is the most
usual form adopted. When limited companies are formed, it is,
as a rule, to facilitate family divisions of property; but the shares
remain in the hands of their members. For cottons and for silks
everywhere the same replies are given: " Capital is so far from being
scarce that certain firms have too much interest to pay because they
have capital belonging to relations and friends on deposit."
"As regards the silk trade," says Mr. Isaac, president (honor-
ary) of the Chamber of Commerce of Lyons, **Lyons is, with
Milan, the largest silk market. Lyons finances Milan in many
instances."
And we find the same replies for the wool trade; the syndicate
of mill-owners of Tourcoing says: "The increase which has occurred
in the wool trade results from the importance of the owners' families;
they must find work for all their children." All the wool centers
have made similar assertions.
Mr. Seydoux, the great wool manufacturer, states:
Wool and silk are costly raw materials; consequently the trades employ a
great deal of capital and proportionately distribute few salaries. If, therefore^
the wool and silk trades can export, it is because they have at their disposal cheaper
capital than abroad. ''And that which tends to confirm this view," added he, *' is
that much capital goes abroad and helps to found establishments where silk and
wool are dealt with — therefore the remuneration of capital is smaller in France
than abroad." And he showed that, in the wool trade, ''it was the articles which
need less work and most capital which are beet adapted for exportation."
Digitized by
Google
50 The Annals of the American Academy
M. Louis Gu^rin, president of the flax and hemp mills syndicate,
states: ''Capital is abundant in the North. It has been built up
by accumulation of successive profits. " As for tulles and laces, M.
Henon, president of the Chamber of Commerce at Calais, said:
''Capital is not lacking on our market for men of experience and
energy."
In 1910 I examined a statistical work including 98 textile
companies of France. Each of these owned capital. exceeding 500,-
000 francs. Together their capital represented 247,954,000 francs.
The capital of the companies which publish no balance sheet was
147,462,000 francs. They had not issued any bonds, but they re-
ceived loans which increased their capital in lesser or greater pro-
portion. A part of the profits which was used to repay these loans
was thus dissimulated by book entries. This b a legitimate book-
keeping artifice, no one being forced to increase tax receipts to his
own detriment.
As regards the electrical industries, MM. Eschewege and
Legouet estimated their capital in 1912 at 1,600 millions of francs.
MM. Poincar6 and Briand were therefore wrong to speak of a
lack of capital for trade in France. And Mr. E. Lemberger, director
of the " Wiener Lombard et Escompte Bank," showed his ignorance
of the condition of France when he said, in the Neue Freie Presse, on
April 22, 1916: "Credit for national trade b a quite unknown thing
in France for more than thirty years past.'* But an Austrian may
be excused for ignoring that which French ministers ignore; and
these latter may even be excused; for the fecundity of trade capital
is not manifest. It is cryptogamous capital.
Geographical Distribution of French CapitaIj
The distribution of French investments in foreign countries
could only be approximately established by the Registration Office.
That office does not publish its information. In 1902, the Minister
of Foreign Affairs published an "evaluation abroad of the French
investments in all forms, including loans, companies securities,
industrial and commercial transactions.'' The total figure was 30
billions: but that table has never been regarded as an authority.
Among the quoted securities, the various state funds were es-
timated on December 31, 1912, at 44,237 million francs and those
of the Russian state at 12,569 millions, or a total of 57 billions. We
Digitized by
Google
Fbbnch Investments 51
have seen that the amount owned by French people was estimated
at 30 billions. Russian funds fill their portfolios for a figure of
several billions, but not for the total amount written on the quota-
tion list. Considerable quantities of Russian securities were ab-
sorbed by the Russians, following good crops which had led to im-
portant exportations of wheat. It is true that this figure did not
include the whole Russian debt, which at that time amounted to
8,841 million roubles, but Mr. A. Raffalovich, agent for the Ministry
of Finance of Rusisa, in Paris, was able to declare: "The share of
Russian capitalists in the ownership of securities of the national
debt is very important and must come near to half the entire
amount."
The Italian State fund whose biggest stock was in France has
been transferred to its own land. A portion of the Spanish debt
has also gone back to Spain.
At the time of the Balkan war (Oct. 1912) it was calculated
that the share of France in the capital placed in Turkey was 2,500
millions of francs, that of Germany 900 millions and that of Great
Britain 750 millions. More than 55 per cent of the Ottoman debt
belonged to Frenchmen, 30 per cent to Germans and 5 per cent to
Englishmen. The distribution of French money invested in Turkey
was as follows: State funds, 1,500 million francs; railroads, 375
millions; banks and' credit establishments, 87 millions; land prop-
erty, 100 millions; mining and industrial enterprises, 62,500,000;
commercial establishments, 56,250,000 francs; shipping, 50,000,000
francs. France owned four-fifths of the foreign capital employed in
credit enterprises in Turkey.
On April 9, 1914, Franco-Turkish agreements were signed with
a view to the issue of an 800 million franc Turkish loan in exchange
for railroad and port concessions. A first block of 500 million francs
was issued at 93.25. It was a 5.36 per cent investment, without
counting the reimbursement premium. The public took up 350
millions of francs and 100 millions remained to the account of the
syndicate which made an advance of 80 per cent; 50 millions had
been taken up by a financial group. This loan, imposed by the
French government on the Paris market, burdened it at the time
of the war.
The second Balkan war had an effect which proved disastrous
for the funds of the Balkan nations and a strain on nearly all of the
Digitized by
Google
52 Thb Annals of thb American Academy
great European banks because they were burdened with Treasury
notes or short-time securities subscribed by the belligerents and not
paid for at date; but it was not only the French banks which were
hit.
On February 2, 1914 a convention was signed between the
Greek and the French governments relating to a loan of 500 million
drachmas (francs). On a first block of 250 millions, 175 were re-
served for the French market.
In 1914 Servia issued a 250 million franc loan in Paris, 75
millions of which were taken up by a group of bankers in repayment
of advances recently granted and 175 millions were offered to the
public. It was guaranteed by the receipts of the Monopolies ad-
ministration, whose net receipts of 43,907,000 francs showed an
excess of 11,513,000 francs.
The French have invested several billions in the Argentine
Republic and in Brazil, but we have no documents allowing us to
state a figure. It has been said that the French investments in the
United States amounted to 5 billions. The transactions to which
the rate of exchange has given rise, prove that the figure is exagger-
ated.
I might have covered the paucity of this information regarding
the geographical distribution of French capital by copying out some
items from the Bourse quotation list; but they cannot give any
precise indications as to the distribution of French investments
abroad.
The Distribution op Capital in France and Financial
Optibhsm
There are somewhat over 8 million owners of lands and houses
in France. If we multiply the number of members of the family
by 4, a very moderate estimate, we find that more than 32,000,000
persons are interested in the ownership of a house or some ground,
generally both.
Personal estate is no less divided. The capital of the Bank of
France is very much broken up itself; its 182,000 shares belong to
32,700 shareholders; the 450,000 shares of the Credit Foncier be-
long to 43,850 shareholders. The Soci6t6 G^n^ale has more than
100,000 shareholders; those of the Credit Lyonnais, of the Comp-
toir d'Escompte, can be counted by tens of thousands.
Digitized by
Google
Fbench Inybstmbnts 53
On January 3, 1913, the 657 millions of 3 per cent state funds
were thus divided between 4,443,000 inscriptions:
Number Amount of
rents
Nominatiye InBoriptions 1,345,576 461,913,675
Mixed inscriptions 92,181 7,446,329
Bearer inscriptions 3,006,347 188,306,519
The most numerous among the bearer inscriptions are those of
30 francs, numbering 663,747; then the 20 francs, numbering 395,-
613; then 50 francs, numbering 278,109. The 300 francs number
only 79,932; the 1,000 francs 19,457, and the 3,000 francs 7,924.
The railroad companies' bonds also belong to a great number of
small bearers.
Once the French small capitalist has got the income he has
decided upon for his needs, he feels great delight in reinvesting
the surplus. If he receives payment of a bond, he hastens to use
the sum for a new investment. Out of the 3 or 4 billions available
at the close of each year, several hundred millions are used for re-
pairs, constructions, rural, urban or industrial improvements.
Some hundreds of millions may be invested in mortgage loans and
in insurance premiums; we may consider that 1,500 millions to 2
billions remain available for security purchases.
At the end of two years of war, financial optimism in France
is equal to the political and military optimism. If anyone had
predicted at the beginning of the war that at the end of September,
1915, the French government would have opened credits to the
amount of more than 55 billion francs ($10 billions); that those
credits would probably amount at the end of December to 73
billion francs ($14 billions), he would have been considered a mad-
man and that opinion would have been supported by a quantity
of arguments founded on facts. Nevertheless those expenses have
been borne and the country is ready to bear others.
The experience of 1870 had not been favorable for the issue
of treasury notes. It was considered that they were reserved for a
special and very restricted clientele. Nevertheless the government
has been able to issue about 10 billions of treasury notes ($2 billions)
and continues to be able to place them easily. Persons who own
capital and wish to keep it available willingly take up those notes.
They have had far greater success than the bonds of the National
Defence of which about 3 billions of francs have been placed.
Digitized by
Google
64 The Annals of the Ahebican Academy
When appeal was made to persons owning gold to come and
exchange it for bank notes or National Defense notes, it was thought
that in this manner 250 million francs ($50 millions) might perhaps
be collected; the most optimistic doubled the figure. The amount
collected has reached nearly 1,400 million francs ($270 millions).
And yet there is some in reserve. A solicitor was telling me
about a farmer's wife, whose business he knows very well and who
is always pleading poverty; he said that she must have in her house
from 7,000 to 8,000 francs, probably in gold and silver. I know an
old cook who has no direct heirs and hence no interest to enconomiae
and who has a little hoard to which she has added about 2,000
francs since the beginning of the war. She will listen to no talk
about National Defence notes or 5 per cent rentes. She hoards up
gold, silver, and bank-notes and is not the only one.
A financier who has imported a great quantity of foreign
securities to France thus summed up the result of his experience:
It is not true that France is the foremost baidcer of the world and owns as
much capital as Great Britain or the United States. But it is the country where
there is the most available capital. The capital of Great Britain is absorbed by
her colonies, her navy and her trade, also her foreign enterprises. In France,
there is a large amount of latent capital awaiting an opportunity.
The greater part of this latent capital has borne the effort
of the war. Some yet remains. It is true that the war will have
made a terrible rent in the fortune of a number of Frenchmen. There
will be much to repair, to rebuild, to effect. Yet there is a
certain tendency to exaggerate the damages caused by the war.
There is only about 3 per cent of the surface of France which is
occupied by the Germans. Men of all categories will be wanting.
We do not know what will be the economic capacity of the surviv-
ors after more than two years spent in the trenches. Yet pessimists
are rare. Plans are being made, and I hope our poilus will manifest
in time of peace, the same energy that they have shown during the
war.
Digitized by
Google
THE NATIONAL DEBT OF CHINA— ITS ORIGIN AND
ITS SECURITY
By Charles Dbnby,
Fonner United States Counsul General in China.
The public indebtedeness of China has been incurred almost
entirely during the past twenty-five years — practically all from
foreign bankers, governments, and firms. In spite of her enormous
national resources and gigantic wealth, the people of China have
never been called upon to float a government loan, and hence only
an insignificant portion of China's indebtedness is in the hands of
Chinese investors. In fact China has not fiurnished much even of
the capital that enters into companies operated within her borders.
Such undertakings as railways, mines, land development
companies, traction companies, waterworks, electric light plants,
etc., have usually been initiated by foreigners, have been established
by foreign capital, and participation therein on the part of the
Chinese, has been limited.
Reasons for Bobrowing Abroad
The reasons are not far to seek. In the first place, the Chinese
have for centuries distrusted their officials, and any undertaking
of an official character has appealed in vain for private capital.
As a rule it is only when foreigners are interested in the control of
a venture that the Chinese capitalist cares to invest. This is the
main reason why that country with its great natural resources,
large domestic trade and keen conmiercial instinct has such a low
standard of wealth.
Wealth to the Chinese has meant lands, houses, cattle and
accumulations of silver. When a merchant made more money he
bought more lands and houses, and stored more silver bullion.
Chinese capitalists have not become accustomed to capitalizing
their lands and their business undertakings, and issuing share
certificates against them. This they have only lately learned from
their asBOciation with foreigners, and this together with the distrust
56
Digitized by
Google
66 Thb Annals of thb American Academt
of government undertakings, above alluded to, goes far to account
for the small holdings of Chinese securities within the borders of
China itself.
The loans of China are expressed in taeU, or Chinese ounces
of pure silver, and in nearly all cases the rate of exchange is fixed in
sterling for payment, so as to avoid the fluctuations in the value
of silver. The tael, consisting of a weight of silver uncoined, is the
unit of value throughout China. The tael is cast into "shoes"
as they are called, or blocks of silver, weighing 1, 10, 25, and 50
ounces. The Chinese ounce is about 1^ English oz. av., but varies
in different localities. There exists a variety of taels, for example
— ^the Haikuan or "customs" tael, in which the duties are paid;
the Kuping or "treasiuy" tael, in which all government accounts,
except duties, are tabulated, and the taels of various markets such
as the Peking tael, and the taels of Tientsin, Shanghai, Canton,
Hankow, and other cities — all varying slightly in weight from one
another.
The exchange value between the more important taels are as
follows:
100 Haikuan (or customs taels) -"101.64295 Kuping taels
105.215 Tientsin taeb
111.400 Shanghai taels
The Euping, or treasury tael, is the standard usually adopted
for foreign loans, though the Boxer indemnity of 1900, hereafter
referred to, was set in Haikuan taels.
The tael is not usually offered in ordinary commercial tran-
sactions, but payments are made in bank notes issued by native or
foreign banks, expressed in taels, or in Mexican dollars, which have
an approximate though sometimes variable tael value in every
market. The banks, however, pay in the settlement of their ac-
counts large masses of bar silver by weight, and the traveler in the
inland districts often finds it necessary to take a "shoe" of so many
taels of silver to the local banker, and have a portion of it cut off
with a large chopper, which portion is exchanged for copper or for
silver coinage.
Wab and Indemnity Loans
The present outstanding foreign indebtedness of China with-
out exception began to be incurred within the last twenty-five
Digitized by
Google
National Debt op China 57
years, namely, just before the war with Japan in 1894-1895. The
oldest existing loan of China is in fact for taels 10,000,000 — equal
to l,635;0OO pounds sterling, incurred from the Hongkong-Shanghai
Banking Corporation, to prosecute the war against Japan. At
the termination of the war Japan exacted from China an indemnity
of taels 230,000,000, which was used to place her currency on a
gold basis. This loan was entirely raised from foreign sources,
namely, from British, German and French banks, and from foreign
governments. The total amount of these Japanese war loans,
including the Japanese indemnity of taels 230,000,000, was £54,455,-
000, of which £36,345,777 was outstanding in 1914, requiring
annually for interest and amortization, nearly £3,000,000.
Since the Japanese war of 1894-1895 China has been free from
foreign war, that is, war actually declared against a foreign power.
But in 1900, a domestic rebellion in China, known as the Boxer
uprising, involved that unfortunate government in the heaviest
indebtedness that it has ever incurred. The Boxer uprising began
in the spring of 1900, as a Chinese uprising primarily directed
against the Manchu dynasty, but taking the form in June, 1900,
of an anti-foreign movement, abetted by the Manchu imperial
family. AU of the foreign powers, namely — ^the United States with
France, Germany, Great Britain, Italy, Japan, and Russia, des-
patched troops to North China to protect their nationals there
resident. The officially declared view of the United States gov-
ernment in taking this action was that it was aiding the Chinese
government to put down a domestic* rebellion. The facts are,
however, that the expeditionary corps of all the above powers found
themselves an invading army in open warfare with the armies of
China, as well as with the hordes of Boxers, congregated under their
own banners.
After the restoration of order the Chinese government was
called upon to pay the entire cost of the expeditions, as well as to
reimburse foreigners of all nationalities in China for their losses
through the uprising. The total amount of this indemnity was
taels 450,000,000 which converted into sterling at three shillings
per tael amounts to £67,500,000.
The annexed table shows the nations participating in this
mdemnity. (See Table A.)
Digitized by
Google
O
o
pa
<
S
pa
^161 -lO} (ri<lpaud pw
•CT61 'VI8 "J^a
*9a|pirB^A^no [vdpizu j
€161 *vie •o«a <n
jgo pivd psopou J
•CI61 JOJ
(pBdpaud) aSovqQ
•ei6I JOj
'uoi^doiopai
JO uuax
•»i«a
•ajBOA
'^aauiajdAOO aeauiqj
Xq poApoaj ^unuiny
'anasi jo aouj
'9nao Jdd ^soja^o]
'^onomv [vdpnuj
•»»«a
^ i i § II i
i § i
M 2 S
^i'-i i i
S $ S 8
r« r* o 5
«0 V M
c"2 S *
S CO M
i § II
eo I*
i
11
8 8
s s
«
§ 3
: S
§ :
5"
3 S
s s
^^ CO «-4 «H
2^ <*) c*l <(|
^ I
H
81
«0 <D
5 3
I ii ;i ^i
•a ^i if li
J i's -"a
a .a . *'7i^ ■
Chino-JapaseBe
War Indemnity.
00 00 00 00
§ «D 00
00 OD OD
Digitized by
Google
•OOQOO
a
<
OOOOO ^lO
SS8SS
I I I I I
slillliL
«§§§§§ ^11
8SSSS8
.s
5
e^OW ^I^^O 30 t>^» cc o -f ^
3-"
3 2WfaA,QPn«^«^H^>^PH«mm
£ >3 :
.a ».^
JS lO o> c% .-o o CM «o N 5 -« S -5 aS 30
'3 a>oo
»'^Ot*t»OOJOaoaoeoa»c4<-4
1-t^ d no
Digitized by
Google
60 Thb Annais o^ TfiB Ambbicak AcADBirr
Thb Boxbr Indbmnttt
This debt China agreed to pay in a term of 39 years, with
interest at 4 per cent. The amortization began January 1, 1902,
to finish at the end of 1940.
A single bond for the entire sum was issued to the Doyen of the
diplomatic corps at Peking, then the German minister, Mr. von
Mumm. This bond was subsequently converted into fractional
bonds and payments on these bonds are now made to an interna-
tional commission of bankers at Shanghai which divides such pay-
ments among the interested parties. These payments are made
by the Chinese government according to the table which was made
a part of the Peace Protocol of 1901. The total charges for this
indemnity — principal and interest, are £112,961,212, 10 shillings,
and the fixed charge for 1916 was taels 24,483,800, or £2,772,500.
The security pledged for the '* Boxer indenmity," as it is called,
and for the Japanese war and indemnity loans above referred to is
the revenue of the Imperial Maritime customs, supplemented in
some cases by likin or internal revenue taxes, salt taxes, and the
octroi of cities.
This leads to an inquiry as to what these various pledged
revenues consist of.
The Revenues op the Chinese Government
The imperial maritime customs constitute the chief, and until
the reorganization within the last three years of the government
salt tax, the most reliable source of income of the Chinese govern-
ment. The maritime customs service is organized under foreign
administration, and is charged with the collection of all of the
imports duties, levied by China on goods imported from abroad,
and certain other taxes on foreign ships and goods. This customs
service had its origin in 1853, when the city of Shanghai was men-
aced by the great Taiping rebellion, and the local government
ceased to function. The consuls of the United States and of Great
Britain collected the import duties on account of the central gov-
ernment. From that time on the '' customs service, " as it is known,
has continued to collect all import duties, and its scope has been
further enlarged by charging it with the collection (1) of duties
on goods carried in foreign bottoms in the coast trade; (2) tonnage
Digitized by
Google
National Debt of China 61
duties on shipping; (3) all duties on goods imported which are
carried further inland and are subject to fixed duties on the way;
(4) the likin or special tax on imported opium. This service col-
lects an annual revenue of taels 40,000,000, equal at the approxi-
mate present rate of taels for United States dollars, to about $30,-
000,000. The actual rate varies daily with the quotation for bar
silver.
This revenue is honestly collected and actually devoted to the
purpose for which it is supposed to be devoted. It is largely appro-
priated at present for the service of the loans and indemnities above
referred to, and it is also charged with the maintenance of the foreign
diplomatic and consular service of China. As, however, these loans
are being gradually wiped out by amortization, and as the revenues
of the customs service will increase with the normal increase in
trade, the customs service could ofifer excellent security for any
future loans, the requirements of which should not exceed its revenue.
The likin or internal revenue tax is far less satisfactory as a
security 'for loans. This was originally a war tax devised by the
Chinese government to meet its emergencies during the Taiping
rebellion. It is a tax levied at barriers established at places through-
out the interior through which goods in transit must pass. It is
subject to great abuse and corruption. It is usually wholly or in
part evaded — often it is unjustly increased — ^and the proceeds are
rarely properly accounted for. Hence the foreign powers have long
insisted that the likin tax be abolished, and China has repeatedly
undertaken that this should be done. The tax, however, continues
among the sources of Chinese revenue. It was estimated that in
1912 it produced about taels 24,389,337, something over $18,000,-
000, at the rate of $.75 gold per tael.
In spite of the general foreign disapproval of the likin taxes,
they are not infrequently included in the revenue pledged for rail-
way and other general loans. The inclusion of these taxes as
security for the Boxer indemnity is believed to have a special ex-
planation; the foreign powers having probably exacted a pledge
of this revenue with a view to controlling it, for the purpose of
eventually suppressing it.
The octroi or levy of taxes on merchandise upon its introduc-
tion into Chinese cities is subject to the same criticism as the likin
taxes. Neither can be regarded as satisfactory security for a loan
Digitized by
Google
62 The Annals of the American Academy
of any duration, and it is certain that upon the reform of China's
general scheme of taxation, which the commercial world hopes for,
both will be abolished. Much favorable comment was excited by
the declaration of the Republic of China upon its coining into
existence in 1913, that the likin taxes should be abolished.
Chinese Railways Loans
The second large group of Chinese government debts covers
the railway loans of China, which amounted up to 1914 to £52,-
157,000, of which £1,402,892 have been repaid, leaving somewhat
over £50,000,000 outstanding. All of these loans with the excep-
tion of £2,300,000 contracted in 1898, of which nearly £600,000
has been repaid, and the Belgian loan of 1898 for £4,500,000, which
has been repaid in full, were contracted since 1900.
The annexed table taken from the China Year Book of 1914,
the last edition published, gives the details of these loans. (See
Table B.)
Redemption payments on these began or will begin at various
times from 1914 to 1920. It is to be noticed that the security
pledged for these railways loans is the railway itself with the gov-
ernment's guarantee, and in some cases, certain taxes in addition.
As a matter of fact, the railways of China have been found to be
ample security. The figures for six months ending December 31,
1914, show that China's fourteen main railway lines all were run
at a profit, showing a total net revenue of $2,300,000 — this in spite
of the depressing influence of the Eiu'opean war, which has greatly
cut down the carriage of ocean-borne goods. The 1914 revenues
were much lower than in the preceding year. These roads all pay,
and if discreetly managed will continue to pay. It b probable that
the accuracy of control of finances demanded by the foreigners who
have advanced money on them has compelled a careful management
— at variance with the usual Chinese pratice. There is no know-
ing how soon the principle of "squeeze," the arch enemy of Chinese
finance, would bring about disorders, were it not for severe foreip
auditing.
An Injury to Amertcan Prbstigb
Among the railway loans of China we must note one of pa^
ticular interest to Americans; the Hankow-Canton railway contract
Digitized by
Google
National Debt op China 63
for £1,100,000. The circumstances which gave rise to this loan
were as follows:
An American syndicate had secured the contract to build a
line from Hankow to Canton, a distance of 700 miles; the first sur-
vey had been made, the road promised in every way to be profitable,
and the American holders of the stock found opportunities to sell
part of their holdings abroad. Among others the King of Belgium,
whose nationals had signed a contract to build a line from Hankow
to Peking, became a heavy buyer. It is probable that he was in-
fluenced to buy by the natural desire to have some standing in the
control of a road destined to be so closely connected in operation
with the Belgian owned line.
It seems, however, that the government of the British colony
at Hongkong had never been pleased with the prospect of railway
construction in the vicinity of that colony falling into the hands of
Americans, and the Hongkong authorities represented to the
Chinese that the sale of shares to the King of the Belgians was a
violation of the American contract which provided that the line
should not be ceded to other than Americans. The Chinese gov-
ernment probably had no feelings whatever on this subject, but it
suited the purpose of the Hongkong government, backed by some
Chinese of influence, to represent that there was such bitter feeling
in the country traversed by the road over the bad faith of the
American concessionaries that the Americans would not be per-
mitted to continue the construction thereof. This representation
coupled with an offer of a handsome profit on the outlay led Ameri-
can capitalists to sell back their concession to the Chinese. When
it was realized that the money which China paid was actually
provided by Hongkong, the true nature of the transaction became
apparent. The American holders of the concession had given up
a valuable franchise because British policy conflicted with it, and
incidentally American prestige received a blow from which it has
not yet recovered.
Up to the present time China has not tried to finance her roads
by the selling of shares. She has always borrowed on mortgage
bonds, which she hastens to pay up, thus eating up the earnings
and showing small profits on operation. With the actually large
earning power of the Chinese railways, large stock dividends could
easily be declared, which would increase the value of the stock so
Digitized by
Google
•fiieiJOjdwdpupdpwi
I I
§ § I
I I
i § i
•CI6I "VIC o^a
*J90 pnKi i«d]oafi<i
«4 ».-
i
fJO) 99.
(pidpnpd) tfUvqQ
1
i I
si
s s
§ I
'aopdmapoj
|0 fuiox
•«»«a
i i § § ill
•«j^o^
w w 8 ^ w
£q paAfooai ^onouiv
S S S S S a» S
S 3
•ana>| JO aoiij
& 8 :
8
*^aao jod ^soio^ai
lO lO lO
I II
'^iinoiEra pMl|oiif2j
§* I I
I
ft
I
I
J5
II
r
J ■"
1 mhPA
••»«a
§ § i i § I
Digitized by
Google
I
I
I
Digitized by
Google
66 The Annals of the American Academy
that it could be sold at par or above, and thus meet the needs for
capital on better terms than selling mortgage bonds, and without
the necessity of periodic redemption.
General Loans of China
The general loans of China comprise a variety of issues with a
variety of securities. Section C of the annexed table gives the dates
and details of some of these loans. In addition there must be noted
a long list of small loans obtained from the domestic market, through
Chinese official banks, and through various ministries, etc. These
loans are short-term debts, to be dealt with in the course of current
business, and can scarcely by regarded as part of China's national
debt.
The total of these debts according to a table compiled by the
Minister of Finance in 1913 was:
Domestic short tenn debts, due by the Central Govemment
Mexican $47,475,145
Foreign short term debts due by Central Government
Mexican $28,890,153
Total Mexican $76,365,208
which at $.50 per Mexican dollar equals $38,182,649.
These short-term debts are generally unsecured and are pay-
able out of the revenues of the Chinese govemment, not other-
wise applied, such as the land tax, shop taxes, and other direct
taxes.
It is difficult to obtain reliable data as to the revenues of the
Chinese govemment from these various kinds of taxation. There
is reason to believe, however, that large as these revenues are, if
honestly collected and accounted for, they would produce enormous
sums above the present retums. One of the most important of
these sources which has recently been pledged as security for loans
by foreigners is the salt tax. In 1912 the Chinese govemment
negotiated with a group of foreign bankers, English, German,
French, Russian, Japanese, and American, a reorganization loan
agreement to handle practically all of China's indebtedness. This
group was known as the "Six-Power group," until the American
bankers withdrew at the beginning of the Wilson administration,
leaving a "Five-Power group." The loans made by this group
were secured not only by the revenues of China not otherwise
Digitized by
Google
Digitized by
Google
68 The Annals of thb American Academy
applied, but it was expressly stated that the salt revenues should
serve the loan, and that the Chinese government should reorganize
the salt administration for this purpose. To this end the collection
of the salt tax was placed under foreign control. The results have
been astounding. The net receipts from the salt taxes in 1914 were
over $29,000,000 United States currency, and exceeded the total
revenue of the Imperial Maritime customs. Heretofore one third
of this sum would have been considered as exaggerated, but it is
confidently expected the salt revenue will even exceed these figures
for the future.
The salt tax of China requires some explanation. The pro-
duction of salt is controlled by the Chinese government, which
issues permits to produce salt to a group of salt merchants, to each
of whom it is permitted to produce a certain specified quantity,
and for this privilege he pays to the government a heavy tax. The
consumption of salt in China is not per capita larger than in other
countries, and the supply from the mountains and the sea is practi-
cally unlimited, but the price rules high because the quantity per-
mitted to be marketed is limited. Under the old Chinese r^me
many abuses crept into the collection of the salt tax. Producers
marketed more than their allotment, and paid short duties thereon.
Likewise, the clandestine production enormously increased. Under
the severe scrutiny of the agents of the bankers, who had loaned on
this revenue, these abuses were corrected, and to this only is the
greater income from the salt tax to be attributed.
The Land Tax op China
The land tax of China has received heretofore not much atten-
tion as possible security for foreign loans. It is estimated that in
1912 the actual receipts from this source by the government were
in excess of taels 52,000,000 (which at $.75 per tael equalled nearly
$40,000,000), but the actual amount collected from the people was
seven or eight times that sum. For an American loan now under
consideration it has been proposed that the seciuity shall be the
land tax, and that this tax, as in the case of the salt tax, shall be
collected by foreigners. There is no doubt as to the enormous
increase in China's revenue if this could be done, but there will be
great difficulty in inducing Chinese officialdom to part with the
control of a source of income so fruitful in illicit gain.
Digitized by
Google
National Debt of China 69
FUTUBB NbBDS fob CAPITAL
The needs of China for capital must increase as her internal
resources^ means of communication, etc., are further developed.
Additional capital will be needed for railway development, and for
other interior means of communication. There were at the end of
1914 in China, about 6,000 miles of railroads in operation, 2,300
miles under construction, and about 9,000 miles further projected.
This in effect will provide only the main lines of China. The
immense local development of railroad construction to connect
localities with the main line, and the main lines with one another,
must be anticipated.
Highways in China are also destined in the next two decades
to demand great development, and this will call for, in fact, is al-
ready calling for foreign loans. Outside of the^five cities of Shang-
hai, Tientsin, Peking, Hankow, and Tsingtau, there are no roads
suitable for automobile traffic. There are in Shanghai about 150
miles of automobile roads, about 20 miles in Peking, 60 miles in
Tientsin; in the suburbs of Tsingtau some miles of country road
have been constructed under German influence, and at Peking a
motor road, about 12 miles long, connects the city with the summer
palace. It is to be noted that for suburban road construction in
Peking, two American groups, of which the writer controls one,
have contracted with the Chinese government to advance the needed
money. This one item of road construction promises a great de-
mand for foreign loans, which will approximate that created by the
railways. Motor roads through fertile populous areas will afford
good security for foreign loans, especially if the major part of the
cost of construction is borne by local taxation as the Chinese au-
thorities propose.
Road construction will lead inevitably^to a wide internal
development, which will call for heavy foreign advances. If China
could borrow for this development as much as she owes for war
loans, and indemnities, stupidly incurred, she could put her people
far along the road to prosperity.
There is one feature of China's loans that has escaped general
attention. China is going to need foreign money in a pronounced
d^pree after the war. To secure this money, she is going to offer
favorable contracts, concessions, etc., to representatives of foreign
banks and industrial groups. The past financial history of China
Digitized by
Google
70 Thb Annalb of thb Amseican Academy
leads to the belief that these representatives will be chiefly from
those countries now at war in Europe. England, France, Italy,
Belgium, Germany, will have no money to lend, but to hold their
standing in China, they will neglect no means of finding it. Europe
will not readily allow a status in China which it has taken half a
century to create to be menaced by a lack of fimds. The United
States will be called upon to provide these funds. It will then be
the duty of American financiers to consider whether to lend money
to Europeans to enable them to exploit the China field, or whether
it would not be wise to exploit that field themselves.
. China afifords a brilliant future for the merchant and for the
contractor, if they come sufficiently backed financially. The re-
turns will be certain. China in all cases can give satisfactory
security for all she borrows. Back of all is the guarantee — ^better
than security — the good faith of the Chinese government which has
never yet repudiated a debt.
Digitized by
Google
THE BRITISH TREASURY AND THE LONDON STOCK
EXCHANGE
By W. R, Lawson,
Author of BrUUh War Financ$, London, Eng.
In after years the effects of the European war will be thor-
oughly discussed from many different points of view. Its military,
its political and its financial bearings will be vehemently canvassed
by critics of many opposite opinions and sympathies. For most of
these controversies the proper time has not yet arrived — ^it is hardly
even in sight. Some of them may not assume definite form for
years to come. Prolonged and trying as the war has been, the
reconstruction of a ruined Europe which has to follow may be an
even more tedious task. As yet the orgy of war havoc has not run
its course and Heaven alone knows when or where it is to stop.
Gloomy as the outlook is, the financiers may at least congratu-
late themselves that they can see a little f luther ahead than either
the soldiers or the politicians. What the armies of the future are
to be, the most advanced military experts have not yet begun to
speculate. What the politicians of the future are to be is too be-
wildering a theme for the ordinary electioneer. He feels sure that
they will be in many respects the antipodes of the present genera-
tion. But important as these questions may be, there are others
which will have to take precedence. The most urgent of all will be
the financial problems. Nowadays, finance is the beginning and
the end of war. Within forty-eight hours after the British Cabinet
declared itself at war with Germany a huge vote of credit was asked
of the House of Commons and a vote of credit will probably be the
closing act of the world tragedy.
Financial Effects of War
The financial effects of war develop much more rapidly and
distinctly than the military or the political effects. They begin on
the threshold and they go on developing continuously to^the end.
London has been the center of these, as of all ordinary^ financial
developments. It says much for the elasticity and adaptability of
71
Digitized by
Google
72 The Annals of thb Amebican Acadbmt
London's financial machinery that they should have proceeded so
smoothly and quietly. For more than two years the city has been
undergoing a noiseless form of earthquake. The pre-war organiza-
tion has fallen to pieces bit by bit and substitutes have had to be
improvised for the broken parts. Lombard Street gradually wound
up its normal business in conunercial paper and diverted the greater
part of its floating capital into British government securities.
From bankers' bills and acceptances it turned its attention to
treasury bills, exchequer bonds and war expenditure certificates.
Even its nightly balances were no longer lent in the street but paid
into the Bank of England to the government account.
Side by side with the monetary revolution and interwoven
with it a widespread commercial and industrial transformation has
been going on. As mimition works, factories, shipbuilding yards,
steamers, hotels and going concerns of every kind were taken over
by the government, the normal circulation of capital became more
and more disturbed. A thousand streams hitherto separate and
distinct became merged into one great river. Thousands of firms
previously doing their own financing and pursuing their own line of
business were converted by a stroke of the pen into state contractors.
They had to place themselves at the beck and call of government
officials and to act as agents of the Admiralty, the War Office, the
Ministry of Mimitions or some other public department. Mr.
Lloyd George, when Minister of Munitions, boasted quite truth-
fully that he was by far the largest employer of labor in the United
Kingdom.
The Pboblem of Fobeign Exchange
Every one of these innumerable changes had a corresponding
efifect on the financial machinery of the coimtry. Some of them
lightened the strain upon it, but most of them increased it. Home
trade and foreign trade each produced its own problems and diffi-
culties all converging, however, into the grand problem of foreign
exchange. How to maintain the stability of the pound sterling
was now the supreme question for British bankers and financiers.
Quite naturally, though very unexpectedly even to banking experts,
this became the crux of British war finance. If Mr. Lloyd George
or Mr. McKenna had many sleepless nights at the Treasury, as
doubtless both of them had, it will be safe to say that more of them
Digitized by
Google
British Tbbasubt and London Stock Ecxhanqb 73
were due to sterling exchange than to either war loans or war taxes.
The latter gave them much less trouble than might have been ap-
prehended. The first two war loans were triumphs of patriotic
enthusiasm and lavish advertising. The treasury bills, exchequer
bonds, war expenditure certificates, and "£ for 15/6" cards were
taken up by himdreds of millions sterling. But useful as they
were for meeting domestic expenditure they had the great draw-
back of not being available for foreign liabilities — unless of course
at an increasing discount.
This dilemma, though it was one of the most certain incidents
of war finance, had not been foreseen either at the Treasury or in
the city. So utterly unexpected was it that in the first months of
the war exchange were very much against New York and in favor
of London. The most Gilbertian mission from one financial center
to another ever known was that which the British Treasury sent
to the United States in the autunm of 1914 to arrange for the re-
habilitation of the dollar. From purely temporary causes — ^New
York blamed chiefly the British moratorium while London protested
that the moratorium was never strictly enforced against American
credits — ^the dollar had dropped to an alarming discount in relation
to sterling. There was no real occasion for the British Treasury to
trouble itself on that score. It might from the beginning have been
left — as it had to be at the end — ^to the American bankers who were
responsible for it and imderstood it much better than any foreign
visitor could possibly do.
It is perfectly clear now that in the exchange scare of 1914 the
British Treasury should have done exactly the reverse of what it
did. Instead of concerning itself about a slump in the United States
dollar, which the progress of the war was boimd to remedy and
possibly drive to the opposite extreme, it should have taken the
utmost advantage of the rare opportunity thus offered of buying
or borrowing from the United States on the most favorable terms.
As it happened it did its best to turn the American exchange against
itself and then discovered that it must make huge loans and pur-
chases when the dollar had risen from a considerable discoimt to an
equally considerable premium. This deplorable lack of foresight
had the most varied and far-reaching consequences. It not only
made an enormous addition to the war burdens of the unfortunate
British taxpayer, but it upset tne whole course of business between
Digitized by
Google
74 The Annalb of thb American Acadeict
the two countries. Nor did it stop at ordinary business. In the
end the British Treasury was forced by it into a roundabout sys-
tem of forced loans for which financial history offers no parallel.
Mobilization of Secubitibs
This was the commandeering of investments — at first American
dollar securities and then Canadians. Dark hints have been
thrown out that the operation may be carried still further and that
no class of British investment can be considered safe from it. Ob-
viously, this is a panic policy which nothing less than the safety
of the state would justify. It is abo a one-ideaed policy. For the
moment nothing is thought of by its authors but the maintenance
of sterling exchange. The reaction which must inevitably follow
when hundreds of millions' worth of dollar securities have been
transferred from London to New York, and when the financial
relations of the two cities have been turned right around — London
becoming the debtor and New York the creditor center — ^is com-
pletely ignored. Foreign exchange dealers will find it very difficult
to realize that a great stream of interest and dividend payments no
longer flows eastward from New York, while a new stream of such
payments has started flowing from London westward.
In the entire history of international finance there has never
before been such a wholesale migration of negotiable securities from
one country to another as that which the British Treasury has been
at work upon for the past two years. As yet we can only see its
preliminary effects. That it has been the principal means of steady-
ing sterling exchange will not be disputed. Compared with the
hundreds of millions sterling which have crossed the Atlantic in the
form of securities, the shipments of gold from Canada to New York
have been a mere flea bite. Nevertheless, the combined effect of
both gold and securities has merely sufficed to hold up exchange at
its reduced level of $4.76. Apparently that was all the financial
experts in charge of the operation thought it advisable to attempt.
They have had to shut their eyes to the thought of what may hap-
pen when their dollar securities are exhausted.
PBiBfARY Effects op the Treasury PoLicnss
In attempting to forecast the ultimate effect of this wholesale
exodus of dollar securities we are checked on the threshold by the
Digitized by
Google
BBinsH Tbbasubt and London Stock Exchange 75
profound uncertainty which prevails in the city as to its actual
magnitude. The Treasury always professes to be agreeably sur-
prised at the great volume of bonds and stocks sent in, but never the
slightest indication is given of its actual amount. The only clues
to it ever forthcoming — and they are the vaguest kind — ^we owe to
the New York press. Occasionally we read in a New York cable of
an Atlantic liner arriving with $25,000,000 of securities. At other
times we are told that Wall Street has been weak on apprehensions
of selling on behalf of the British Treasury. But about the migra-
tion as a whole we are allowed to know as little as about the fabulous
munition contracts which the dollar securities are intended to pay
for. An all roimd game of secrecy is being played by the Treasury
and its city advisers.
There are, however, some effects which cannot be kept secret.
It is impossible to conceal the fact that our American market has
been nearly killed by losing the best part of its stock in trade.
The banks, the trust companies, the insurance offices and private
investors who used to be always turning over their American stocks
have been forced out of them into war loans. Treasury bills, ex-
chequer bonds or some other form of government credit. They
have been driven out of what was for years the largest and freest
market in the House into a practically new and imtried market.
Politicians continue to speak about the consol market as if it were
still the same gilt edged institution as of old, but seen from the inside
it is something very different. It has risks and vicissitudes before
it which old-fashioned consol dealers never dreamed of. There is
no saying what games the politicians may play with it, or how long
it may be able to bear up against their emergency expedients.
Still less can we foresee how our future war taxes are to hamper
for generations to come the competitive power of the nation in inter-
national trade, or how far the hybrid socialism which the war has
imposed upon us is afterwards to be carried. An early re-
turn to pre-war conditions is out of the question. It is not even
expected that the state will stand still where it is today. A further
advance in the direction of nationalization is considered inevitable,
and every fresh step taken on that slippery path will mean a new
outpouring of state securities. The railways will probably be kept
for some time imder the existing war regime and out of it may
emerge a new administration on the lines of the Port of London
Digitized by'
Google
76 Thb Amnalb ov thb Ambrioak Aoadsmt
Authority. If the railways go the collieries are pretty sure to follow
and with the two key industries nationalized the state will be the
principal owner as well as principal debtor. All British securities
will be directly or indirectly socialized. As to whether or not that
is to improve their quality there may be many different opmions.
At the close of the war it will be found that the British market
has produced not only the largest quantity but the greatest variety
of war loans on record. Its unf imded debt in particular will be a
lasting wonder for the financial world. That over 1,200 millions
sterling of short term securities could be sold over the counter as it
were within half a year will seem to future ages incredible. But
a much greater feat has yet to be accomplished — ^namely, the funding
of this enormous mass of floating debt. When that tremendous
task has been accomplished the three regular war loans— two
British and the Anglo-French issue — ^will have to be renewed in
some form or another. Evidently the British Treasury has several
years of tough work ahead of it.
The Ultimatb Effects
So much for the primary effects of the war on British invest-
ments. But there will be secondary and still more remote effects
to consider also. How, for example, is British credit likely to come
through the severe ordeal confronting it? On this point London
bankers appear to be universal optimists. British credit, they say,
stands as high as it ever did and doubtless in a superficial sense it
does. But that is not the whole question. Not the quality but the
strength of the national credit is what will tell in after the war reor-
ganization. Will the financial resources of the country, viewed in
their largest and broadest sense, be unimpaired? Only the most
inveterate optimists can think so. Even unimpaired strengtii
would not suffice for the new situation with its enormously increased
strains and burdens. There will not be real maintenance of power
unless it has grown equally with the work to be done.
Every belligerent nation and some neutrals as well will emerge
from the war in a severely damaged financial condition. In the
process of pulling themselves together they will have to create in-
calculable quantities of new securities which will have to be very
cautiously handled. It will be impossible to raise them all at once
to the pre-war level of gilt edged securities. There will be many
Digitized by
Google
British Trbasitrt and London Stock Exchange 77
readjustments to make and many reorganizations to carry through
before any approach to pre-war conditions becomes possible. In
this purgatorial period investment values may be held down by dear
money, new loans and higher working costs. Material damage has
been done during the war to nearly every financial system in Europe
and in some cases it may be very prolonged. So many unexpected
emergencies had to be faced and so many novel devices had to be
tried that all kinds of dislocations followed. These not only afifected
the conduct of the war but they are leaving behind them the seeds
of future trouble.
By a not unusual irony of fate it may turn out that the damage
done has been greatest where the greatest pains were taken to avert
it. London, recognizing its exceptional position in the financial
world and the responsibilities which such a position entailed on it,
did its level best to foresee aU possible dangers and provide against
them. Whether in its excessive zeal and its over-anxiety it always
acted wisely is now generally questioned. No human government
could possibly have solved offhand all the financial and commercial
problems which crowded in on the Asquith Cabinet from the moment
that war was declared. But the ministers being for the most part
lawyers had unlimited confidence in themselves and no difficulty
came amiss to them. Very soon they had so many puzzling ques-
tions on hand that while they were grappling with a comparatively
unimportant one something much more serious was allowed to drift
into disaster. One case in point which American readers may easily
recall is the belated Anglo-French loan of 1915 which was put off
imtil a phenomenal slump in sterling exchange rendered it doubly
difficult to negotiate.
The War and thb Investment Mabkets
In attempting to answer the question which has been put to
me by the editors of this war number of The AnndU as to the in-
fluence of the war on the investment market, I should first of all
premise that a broad view must be taken of war finance. It varied
widely both among neutrals and belligerents. It was handled very
diflferently in various countries and by various governments. The
financial conditions in Great Britain which had world-wide liabilities
to protect not only for itself but for half a dozen Allies were neces-
sarily far hei^vi^ ihm tbow of the Allied states which Great Britain
Digitized by
Google
78 The Annals of the American Academy
helped to finance. It needs no argument that the British task
was in this respect the heaviest of all. Any finance minister, how-
ever skillful and courageous, might well have shrunk in despair from
the innumerable risks and perils which Mr. Lloyd George had to
face at the outset of the war. It has been sardonically remarked
that his comparative ignorance of city conditions in those fateful
dajB saved him from losing his head. Had he known more he might
have been less ready with his Treasury guarantees to the bill market,
the banks and other institutions.
The sensational measures with which the financial campaign
opened, however, were justified by success and that may be held
to exempt them from fiuther criticism. What is of practical inter-
est now is the complete reversal that afterwards took place in the
official policy. From excessive freedom and liberality the govern-
ment rushed to the opposite extreme of restriction and prohibition.
This later policy was afterwards pursued right along with very little
relaxation but rather with increasing severity. The ostensible
object of it was twofold— first, to conserve our financial resources for
the service of the war; and second, to prevent money or securities
reaching the enemy. The fact of its having been belated may ac-
count to some extent for the feverish eagerness with which it was
at last applied. Its principal victim was the stock exchange.
Effects of Closinq the Stock Exchange
From July 29, 1914, when the stock exchange was closed until
the following January when it was reopened business had to be
carried on in the street. Uncomfortable and inconvenient as that
was, especially in the cold and wet winter months, it had its com-
pensations. Dealings were practically free and a considerable
amount of business was done between offices by telephone or mes-
senger as well as in the street. The committee issued new regula-
tions almost daily but they were not as a rule restrictive. They
were generally intended to solve difficulties or to remove obstacles
that were always turning up. Many of the old rules had to be
altered or modified to suit the new conditions. Far, however, from
being obstructive, much less prohibitive, the new rules were in-
tended to facilitate business. Members were urged by the com-
mittee to close up their accounts as far as possible. (Those who had
stocks to deliver w^r^ f^dvi^ed either to deliver or to close them.
Digitized by
Google
British Treasury and London Stock Exchanqb 79
Those who had stocks to receive were asked to take them up and
pay for them as soon as they could. There was no suggestion of
stopping business and arbitrage operations were in fact increasingly
active.
All went fairly well for the first three months. Between the
beginning of August and the end of October considerable progress
was made with the closing of pre-war accounts. A general
stock taking then made at the request of the committee showed
that the outstanding liabilities of the House amounted to about
eighty or ninety millions sterling. A scheme was now evolved for
avoiding forced liquidations during the war and the Treasury ap-
peared for the first time on the scene. It joined the clearing house
committee of the banks and the stock exchange committee in a tri-
partite agreement "with a view to avoiding forced realization on a
large scale of securities held as cover for account to account loans."
The clearing banks had previously agreed in consideration of
the currency facilities given them by the government to continue
their stock exchange loans imtil the end of the war and for twelve
months thereafter at a fixed rate of five per cent. To enable other
banks and lenders of money to continue their loans for a correspond-
ing period it was arranged with the Bank of England to advance to
them 60 per cent of the value of the securities held by them " against
any loans which they had outstanding on the 29 July, 1914, such
securities to be valued for the purpose of the advance at the making
up prices of the 29 July, settlement." The Bank of England was to
have the right when any security reached its end of July price to call
on the borrowers for a repayment to the extent of its value. Fail-
ing compliance it was to have a right of sale at not less than the
settlement price.
These were all the concessions that the Treasury made to the
stock exchange and such as they were it was much more for the sake
of the banks than of the stock exchange they were granted. More-
over, a very substantial quid pro quo was exacted for this nominal
service. Excuses have been offered for the Treasury that it was
still confronted by many novel and puzzling financial problems
arising out of the war, and was justifiably cautious in consequence.
The banking problems it met fairly and up to a certain point success-
fully, thanks to the sound advice it received from the principal
banking authorities who had loyally placed themselves at its serv-
Digitized by
Google
80 The Annals of the American Academy
ice. Unfortunately no opportunity was given for an equally good
understanding between it and the stock exchange.
The Politicians and the Stock Exchange
The professional politicians have alwa3rs been shy of Capel
Court. Many of them look askance at it for moral reasons and
many more pretend to share these scruples. The average member
of the House of Commons speaks respectfully of Threadneedle
Street and Lombard Street, but he is given to sneering at the stock
market. He may think that by treating it as a "glorified gambling
shop" he commends himself to his more strait-laced constituents.
Or, possibly like the ministerial victims of the Isaac Marconi scandal
he may not have been very lucky in his speculations. Whatever
the reason, there has long been an undercurrent of parliamentary
suspicion and prejudice against stock exchange men. The year
before the war broke out this had been intensified by the action of
the stock exchange committee in frustrating the attempt of the
House of Commons to whitewash the ministers implicated in the
American Marconi gamble. After the collapse of the whitewashing
committee and the adoption of a condoning resolution by the
friends of the government the stock exchange had instituted an
independent inquiry into the flotation of the American shares.
The result was a severe condemnation of the transaction and various
terms of suspension for the members implicated. Then the public
had the remarkable paradox presented to them of a higher standard
of morality being recognized by stock jobbers than by our law
makers. But the ministers and their henchmen had not long to
wait for their revenge. The war and the financial crisis into which
it plunged the city placed every trader and financier in the country
at the mercy of the government. With none too delicate taste Mr.
Lloyd George and Lord Reading assumed control of the stock
exchange. They practically superseded the committee which,
however, was no great misfortune as very few of its members were
men equal to the emergency.
Moreover, the few strong men among them were under heavy
obligations to the banks which completely tied their hands. They
could offer no efifective opposition to the edicts of the Treasury
endorsed as these invariably were by the banks. When at last the
stock exchange was permitted to reopen on the fourth of January,
Digitized by
Google
British Treasury and London Stock Exchangb 81
1915, the permission was to a large extent a mockery. All that it
really gained was shelter from the weather imder its own roof and
at its own expense. What it had to give up was not merely its
liberty but the best part of its business. Arbitrage operations were
absolutely stopped — an interdict which cut ofiF at a stroke three of
its best foreign markets — ^American, French and Dutch. It was
forbidden to do any business after three o'clock, the precise hour at
which New York cables begin to come in. It could not deliver any
bonds or bearer shares which had not been in the ph3rsical possession
of the vendor in the United Kingdom since a certain date in the
preceding September (1914). It could not transfer any registered
shares which did not comply with a similar condition. It could not
take part in the issue of any new shares or in the raising of fresh
capital for an existing company without the express sanction of a
special committee of the Treasury appointed to act the part of
watch dog. It could not deal either privately or publicly in any
new issue without the authority of the Treasury conveyed through
the stock exchange committee. It could not enter into any time
bargains and all dealings had to be for cash.
The Imposition of Minimum Prices
As if that catalogue of ''don'ts" were not long enough to reas-
sure the parliamentary lawyers against all the financial perils they
could conjure up, minimum prices were affixed to the greater part
of the official list. The '^ making up" prices of July 27, 1914, were
adopted as a sort of legal bed rock below which stocks were not to be
allowed to fall. This edict was not strongly objected to at the time
nor in fact was there much open opposition of any kind. The
official description of them as '' Temporary Regulations for the Re-
opening of the Stock Exchange'' disarmed criticism at the outset.
But if members had had the slightest suspicion how long the mini-
mum prices were to be retained they might have been much less
submissive. No important relaxation of them took place imtil after
the successful floating of the McEenna loan in June, 1915. This
enabled the joint stock banks to unload their heavy lines of consols
by the indirect process of converting them into "McKennas."
Then they were allowed to flop about ten points and pass into cold
storage.
The next set of minima to be released was colonial government
Digitized by
Google
82 Thb Annals of the Ambbican Academt
stocks. The joint stock banks had never been very large holders of
these, so they did not risk much in having the peg taken out. They
were chiefly held in the House by dealers in the consol and colonial
markets and before the war the public absorption of them had been
so persistent that very little floating stock remained. There was
thus little risk in letting them stand on their own feet. The group
of securities which sufifered most imder the minimum regime was the
preference and debenture stocks of the home railwajrs. For some
inscrutable oflScial reason these were himg up for nearly a year and
a half. After many fake alarms the pegs were taken out on the
fifteenth of May, 1916, and a slump of ten to twenty-three points
at once took place: surely a rare experience for gilt edged securities
without a trace of wild cat about them. Before the war they had
been our most favored trustee investments — ^more favored even
than consols. They were held to be quite as safe as consols and
they yielded a somewhat larger return which conmiended them
strongly to middle class trustees. The small investor was also
partial to them and so were provident societies including even trade
unions.
Why this particular market should have been shut down for
nearly eighteen months defies explanation. None in fact was ever
attempted. From the first the stock exchange committee disclaimed
any responsibility for the closure though they could give no informa-
tion as to the responsible authors. All they could say was that the
order came from the Treasury and in the public interest had to be
obeyed. Whether the order was issued by a Treasury clerk or by
the Chancellor of the Exchequer could not be ascertained. After
much importunity a reluctant reception was given to a deputation
of private members who desired information on various knotty
points. When the deputation arrived it found the Chancellor of
the Exchequer entrenched in a small crowd of bankers and financial
authorities including Mr. Lloyd George's fidus Achates^ Lord Read-
ing. Polite sympathy was all they got. Not a single shackle was
removed imtil long after.
Obstinacy op the Tbbasubt and thb Results
Even when the Treasury found that the boycotting of home
railway prior charge stocks was recoiling on itself it would not
yield. Like Pharaoh^ it hardened its heart and would not let the
Digitized by
Google
British Treasury and London Stock Exchange 83
Israelites go. Deceased estates came tumbling into Somerset
House (the headquarters of the Inland Revenue Department)
nearly every one of them containing minimum priced securities
for which there was no market. No jobber would buy them at the
official minimum which was the pre-war price calculated on a yield
of say four per cent. As the war had knocked down all correspond-
ing stocks to a five per cent level it was naturally concluded that
home railway prior charges should follow suit. By keeping them
pegged up at impossible prices, the Treasury was unable to have the
necessary valuations made for its death duties. In the course of a
few months millions of securities accumulated with which it could
not deal.
Duties ranging up to 20 per cent of the gross value of a deceased
estate could not without rank injustice be levied on arbitrary
valuations ten or fifteen points above market level. On the other
hand, the liquidation of these estates could not be blocked indefi-
nitely. At last the Treasury offered what it doubtless considered
a generous alternative, namely a discoimt of 7} per cent from the
official minimum. It thereby created a Gilbertian situation. Stocks
could be dealt in privately with the Treasury but not publicly in
the stock exchange. Then there were two minimum prices — the
stock exchange minimum which was ten or twelve points above the
market and the Treasury minimum which was only four or five
points above the market. Nor was this an insignificant case of
a few exceptional stocks. Hundreds of separate securities and two
or three hundred millions of money were involved in it.
During the boycott the writer was informed by one dealer that
out of a himdred and fifty stocks on his book he could deal only in
half a dozen. Holders of the other 144 stocks were absolutely tied
up with them for eighteen months, and not a word of explanation
could be got anywhere or a hint as to how long the senseless boy-
cott was going to be maintained. In the end it was taken oB quite
suddenly and at a few days' notice. Then another Gilbertian re-
sult happened. After the first slump had landed prices at bed rock
a recovery at once set in and within a few days average gains of
three or four points were recorded. If the Treasury had appre-
hended a rush of sellers it must have been agreeably disappointed
for buyers were chiefly in evidence. The dealers had very little
stock on their books — a surprise which abo occurred in other mar-
Digitized by
Google
84 The Annals of the American Academy
ketSy colonial stocks especially. These boycotted markets had in
fact been nearly sold out before the boycott was put on.
Then the Treasury had another surprise. The Chancellor of
the Exchequer had talked early and often about our patriotic duty
to conserve our financial resources for carrying on the war. Ap-
parently he thought that by bottling up existing investments he
would be laying up money for future war loans. But his policy
worked the other way. While the regular investment markets
were bottled up his principal war loan — ^the McKenna loan of 1915—
declined from par to under 95 or fully five points. As soon as his
boycott was removed both the war loans and gilt edged securities
generally lifted their heads again and the stock exchange had the
best week in its experience since it was reopened. The credit of this
welcome revival must be shared, however, with Wall Street. It
gave Capel Court a vigorous lead and Capel Court played up to it.
For the first time in the war London and New York were both com-
paratively buoyant.
Thus we have double proof that the Treasury boycott was a bad
blunder. While it was in force, the stock exchange languished and
was dying by inches. The moment it was removed a sharp rally
took place and healthy markets appeared where there had been
universal stagnation and despondency. The success of the home
railway release was so marked as to impress even the Treasury
pessimists. They were emboldened by it to unlock the last of the
remaining shackles — those on local loan stocks, Indias, and munici-
pals (classed in London as "Corporation Stocks")- If anything
could have been more puzzling than the boycott itself it would have
been the extension of it to India.
The Botcott and the Indian Mabket
The Indian market was the last that should have been boycotted
for much depended upon it. Political order and security had to be
preserved by every possible means. Our financial as well as our
military prestige had to be maintained. The utmost use had to be
made of the capacious market which India offered for our exports.
As a safeguard against exchange troubles securities and credit paper
of every available kind should have been kept in active circulation.
A living stream and not a dead pool was what the emergency re-
quired. But the lawyer financiers at the Treasury could not grasp
Digitized by
Google
British Treasury and London Stock Exchange 85
that fundamental principle of business. They could not trust
business men to take care of themselves and to do their duty by
the country. So they wove round them a network of prohibitions
and restrictions which hampered them at every turn. An untold
amount of help which might have been obtained from India was
thus deliberately sacrificed. The greatest of our oversea domin-
ions, instead of being drawn closer to us by the war as all our other
dominions and colonies were, was rather held at arm's length. The
minimizing of India stocks was not the least of the Treasury's mis-
takes.
The American Market
There were a few markets which fortunately for themselves the
Treasury could not "minimize" or doubtless it would have been
done. The largest and most important of these was the American
market. It would have been useless for the Treasury to attempt
to control prices which nowadays are made in New York rather
than in London. The only possible effect of such a policy would
have been to drive American business out of the House and into the
hands of foreign firms over whom the Treasury could have little
or no control. At all events it did not attempt to exercise any, and
often orders which could not be executed in the official market
were quite practicable in some Jewish resort across the street. The
Treasury v«to on arbitrage transactions, its three o'clock closing
edict and the disqualification of all shares which had not been in
physical possession in the United Kingdom since September, 1914,
were sufficiently hard on holders of American securities without sub-
jecting them to the further hardship of minimum prices.
The beneficial effects of this comparative freedom were speedily
apparent. From the day that the New York stock exchange re-
opened prices took an upward turn. This enabled British holders
of American stocks to liquidate gradually. During the prolonged de-
moralization which preceded the war, prices had got down to bed rock
and the upward turn in accordance with its usual rule followed very
sharply. Between August, 1914, and the special settlement in the
followipg November a very considerable rally took place — thanks
almost entirely to Wall Street. But for it the great reduction in
the stock exchange account which occurred during these four months
would have been impossible. Had there been minimum prices
Digitized by
Google
86 ^ The Annals of the American Academy
fixed on all American stocks London would have been shutting it-
self out from that opportune boom. The reopening of the London
stock exchange in January, 1915, was made the occasion of another
bull performance. The ''munitions boom" as it was called, became
fast and furious, but London had very small interest in it. One or
two Canadian companies which had obtained large contracts hap-
pened to have a small market here which flared up for a few weeks
and then died down. However, even these few crumbs from the
trans-Atlantic table put fresh heart in the half-ruined Capel Court
The Munitions Boom
The next notable episode in the American market was a very
curious one. The "munitions boom" in New York grew out of our
own shrapnel scare in May, 1915, which precipitated the formation
of the Coalition Cabinet, the creation of a Munitions Department
and the huge shell contracts showered on American manufacturers in
the succeeding months. These special additions to our already
huge imports from the United States and Canada upset sterling
exchange so completely that even Downing Street optimism was
no longer proof against it. The ordinary remedies — gold shipments
and a few turns of the bank rate screw — would have given only
momentary relief. The crisis demanded more heroic and durable
remedies. The banking experts could suggest only two — ^the
first, a large loan in New York, and the second a wholesale return
of our American dollar securities to their native country. This
was another chance for the Treasury. It began by employing
dealers and brokers in the American market to buy up all they could
get of the bonds that could be most easily gathered in. This went
on for several weeks, bull prices being paid for every obtainable
bond. A direct appeal was next made by the Treasury to the pub-
lic to sell their American bonds which many of them did. But
ih a Moloch was the sterling exchange at twenty points under
ity that a second appeal had to be made to public patriotism for
ids on loan. All very unique incidents indeed, in war finance.
London differs from most other financial centers in possessing
;reat variety of markets. The continental bourses depend on a
r large groups of securities — government stocks, railways, mines
i metallurgical works. Their industrials are generally on a
ger scale than ours, but more limited in number. American
Digitized by
Google
Bbttish Tbbasxtby and London Stock Exchange 87
industrials are both numerous and gigantic but even they lack some
of the peculiar features of the British stock market. For example,
they have no tea and rubber group. They have few if any colonial
groups. They have no exploration companies like the British
South Africa (alias ''Chartered"}) the Tanganyika, the British
Borneo, etc. They have not as yet — ^though apparently they hope
to have soon — ^international corporations destined to extend Ameri-
can trade and finance to the remotest comers of the globe. London
was rich in these oversea reserves, second strings to her bow as it
were, and they did good service when the war strain wm greatest.
In the first year of the Treasury regime, when all the
investment markets were ''minimized," the stock exchange lived
mainly on rubber and oil shares. Both commodities were in de-
mand for war service, and well managed companies were able to
show handsome profits. A rubber and oil boom gradually developed
and a comparatively small volume of operations produced important
psychological results. They showed that there was still some bot-
tom left in at least two of our markets. The fact that free dealing
survived in one or two corners of the House had also an encouraging
influence. Even the Treasury had to recognize the necessity of
giving a free hand to rubbers, oils, Kaffirs and shares of that class.
Any attempt to throttle them in Capel Court would only have forced
them to find a new outlet elsewhere. Tea shares might have
migrated wholesale to Mincing Lane while Johannesburg and Cape
Town would have snapped up the Kaffir Circus.
Secrecy in British Finance
The bondage which the stock exchange for nearly two years had
to endure at the hands of the Treasury and its promiscuous experts
may seem incredible to American readers unfamiliar with the tradi-
tions of British politics and finance. These have no counterparts
in New York and some of them are the exact opposites of American
ideas on the same subjects. Publicity is the keynote of American
finance. Secrecy is the British kejmote. In the House of Com-
mons, in public departments, in the banks, in the stock exchange and
throughout the city the historical motto is " Mind your own business
and keep it as much as you possibly can to yourself." Anyone
who takes the trouble to glance at the questions put to ministers in
Parliament and the evasive answers which ministers give to them
Digitized by
Google
88 Thb Annals of the Ambrican Acadbmt
will very correctly conclude that m3rstification is a parliamentary
fine art. It is almost equally cultivated in the city.
What would be thought of the oldest bank in the United States
if it had never in all its long life made a detailed report to its share-
holders or submitted to them a working balance sheet? But that is
literally true of the Bank of England. It is the one great inter-
national bank which never takes down its shutters. Every half
year the shareholders assemble in the board room to hear the amount
of the ''rest" or divisible balance and to be told what dividend they
are going to get. Beyond that all is twilight and secrecy. Share-
holders in the joint stock banks are rather better treated but not
much. They get a few details of their position, the meagreness of
which is atoned for by an oracular address from the chairman re-
viewing the financial condition of the world at large. This high
example is followed more or less closely by all joint stock chairmen.
To make shareholders believe that they are getting valuable infor-
mation when they are only having their ears tickled with platitudes
is one of the most useful secrets of British joint stock directors.
When officials and business men take to playing the secrecy
game on each other the officials generally come off best. That is
what happened in the city with most of the special war measures
that had to be adopted. Quietly, stealthily and sometimes even
craftily the Treasury and the board of trade gathered up the strings
of nearly all kinds of business and pulled them this way or that as
the necessities of the crisis demanded. They appointed advisory
committees, ex(>ert committees, special committees and sham com-
mittees. They dissolved them, reorganized them, renamed them,
and turned them over from one job to another indiscriminately.
They set lawyers to investigate the management of the aircraft
service and at the most critical stage of the war the Chancellor of
the Exchequer deserted the Treasury in order to oi^anize a new
Mimitions Department.
Political Dictation to Business
Had Lord Reading and Mr. Lloyd George really been the
heaven bom financiers their friends considered them to be, the last
thing they would have dreamed of would be to control the city
from a dark room in Downing Street. Such, however, was the
r^me under which the city had to languish for months. While all
Digitized by
Google
British Treasury and London Stock Exchange 89
branches of commerce were ''regulated'' the stock exchange was
practically strangled. Today it is simply a shadow of its former
self. The American market has suffered so seriously that its re-
covery will be a question of years. The older and more despondent
members begin to doubt if it will ever recover at all. Many of them
have retired from business and others have migrated to less dam-
aged markets. There have been not a few deaths among the
"fathers of the House" accelerated, p)erhaps, by the "temporary
r^ations."
Altogether the contrast between Capel Court and Wall Street
on this occasion is sad and by no means flattering to British self
esteem. It may be objected that no fair comparison can be drawn
between a stock market saddled with a great war and one which
is enjoying all the advantages of a neutral. But no one would for a
moment have expected Capel Court to right itself after the first
shock of the war as quickly and easily as Wall Street did. Making,
however, all reasonable allowance for its much heavier task the fact
remains that it floundered and blundered much more than it need
have done had its management been in wiser hands. No one con-
nected with it now doubts that it would have got over the crisis
much more quickly and with less damage had it been more left to
itself. An entirely free hand it could not and did not expect, but
the Treasury yoke was unnecessarily heavy and galling.
Better Methods Adopted in Wall Street
In a former work, the writer has paid an admiring tribute to the
skill and success with which the war crisis was handled at the outset
by the committee of the New York stock exchange. In describing
the sensible methods they adopted he said:
A Committee of five was appointed with absolute power not only to make
emergency rules but to see theon carried out. They started with a complete
suspension of business and then granted partial resumptions as the market re-
oovered and could be trusted with a freer hand. In this way the embargo was
gradually removed and within six months Wall Street was again on a normal
footing.^
One reason for the greater smoothness and speed with which the restoration of
Wan Street was effected has been already given — ^namely, its simpler and more up
to date machinery of settlement. Another and more important one has now to
^BriHgh War Finance, p. 131.
Digitized by
Google
90 Thb Annals of thb American Agadbmt
be added. It was the different spirit in whidi the two operations weie ccmdncted*
Wall Street was allpwed to reorganise itself. Its Committee of Five had only the
stock market to consider and their one duty was to set it as speedfly as possible
on its feet again. They had not to guard it against war risks or enemy aliens or
other political dangers. All its operations and arrangements had to be regarded
primarily from the stock market point of view and not as in London from the
point of view of the Treasury and the banks.*
Eighteen eventful months have passed since these words
were written but time has not diminished in the slightest degree
their force and significance. On the contrary, it has greatly intensi-
fied the contrast drawn between the British and American stock
markets. Americans themselves appear to have a very vague and
inadequate appreciation of the superior freedom and independence
which their investors enjoy. Even broad-minded and widely
informed authorities like Mr. Otto Kahn have fallen into strange
misconceptions as to the relative positions of politicians and busi-
ness men in the old and the new worlds. In an address which he
delivered in April, 1916, to the American Newspaper Publishers
Association, he said:
Everywhere else throughout the civilized world in matters of national polides
as they affect business the representatives of business are consulted and listoied
to with respect, which is due to expert knowledge. It is only in America that the
exigencies of politics not infrequently — ^I might almost say habitually — are given
precedence over the exigencies of business. When scolded, browbeaten, maligned,
and harassed, finance may well turn upon its professional fault-find^s, and
challenge comparison.
That flattering picture of the business expert who is consulted
and listened to with respect may be in a limited sense true of Mr.
Kahn's native country, Germany, but in few other parts of Europe
would it be recognizable, least of all on British soil. Nowhere is
the professional politician so overbearing and the business man so
overborne as in the British House of Commons. This unnatural
and unhealthy condition had its origin twenty years ago in the ad-
vent of labor democracy. Before the war it was rapidly becoming
intolerable. Labor and* capital were steadily drifting toward a
life and death struggle. The war found a lawyer cabinet in control
not only ignorant of business but jealous of business men and much
less ready to work with them than to work against them.
A generation ago Mr. Kahn might have found in London some
^British War Finance, p. 133.
Digitized by
Google
Bbttish TRBAsmtr and London Stock Exchange 91
traces of his ideal world in which representatives of business were
listened to with respect even by popular politicians but these days
had long departed before the war. The relations between politics
and business had undergone an almost revolutionary change. The
investor had been even more unfortunate than the man of business
for his center of gravity had been changed not merely once but two
or three times. The value of money had shifted backwards and
forwards. Investment values had followed the upward and down-
ward movements of money. In addition to their own proper risks
investors had had to suffer all the chances and changes of politi-
cal finance. A rapid succession of Chancellors of the Exchequer
with different ideas and policies became a chronic danger to them.
They began to realize that the Treasury and the House of Commons
were their natural enemies.
Conclusions
The reader must draw his own conclusions from the foregoing
description of the Treasury regime in Capel Court. With modifica-
tions a similar picture might be drawn of the great grain market at
the Baltic, of the Metal Exchange, Mincing Lane, Lloyd's and other
national marts in the city. One and all of them were — not ''de-^
mocratized" as electioneering dupes had been led to expect, but
"bureaucratized" — quite a different thing. The defence of the
Realm Act and its many amendments gathered the whole of them
into an ofl&cial net which was drawn closer and closer as the war
proceeded. Mr. Otto Eahn was therefore under a strange delusion
when he professed to envy British men of business for the homage
paid to them by the politicians. The two classes have been at
daggers drawn all through the war. So far the politicians have
had the upper hand and they have not hesitated to use it.
This will be one of the main issues of the next general election
which the Coalitionists will put off till the end of the war if they
possibly can. But the House of Commons is confessedly moribund
and its unpopularity may become so strong as to render any
further extension of its life impossible. Whether the inevitable
appeal to the people comes soon or late, it will be a crucial event for
aU the complex interests of the city and especially for the stock
exchange. The future of British investments is wrapped up in a
huge combination of political, industrial and fiscal problems.
Digitized by
Google
92 Thb Annals of thb American Academy
Before stock values or indeed any kind of values can regain their
normal level the struggle of the politician and the business man Ion
mastery will have to be decided once for all. Before industrial
harmony can be reestablished capital and labor will both have to
give up their class selfishness and consider what is best for the com-
munity.
Until some of these bed rock problems are settled the British
investor will have a very precarious and uncertain outlook. The
restoration of British supremacy will demand gigantic efforts on
the part of its rulers, its financiers, its industrialists and its traders.
Whether people who have hitherto worked chiefly for their own
hands and who know very little about the higher forms of coordi-
nation and codperation can be induced to close their ranks at a
moment's notice is none too sure. It is certain, howev^, that
nothing less will rehabilitate the badly battered and now heavily
mortgaged British Empire. A tremendous increase of earning
power combined with drastic economy both public and private can
alone repair the financial havoc which the war is leaving behind it
That calls for loyal and reasonable labor as well as for freedom of
capital and a minimum of political dictation.
Digitized by
Google
THE AMERICAN SECURITY MARKET DURING
THE WAR^
By S. S. Hubbner,
Professor of Insurance and Commerce, Uniyersity of Pennsylvania.
Business in the United States is admittedly on a war basis
today, and the security market is simply reflecting that abnormal
condition. Preceding historic booms in the stock market have
usually had as their principal cause some one central idea. An over-
worked public imagination, obsessed with some widely advertised
idea, has usually been responsible for a rise in price levels far beyond
the limits of reason. In 1899 the public mind was inflamed by the
prospect of large gains from industrial combinations at greatly in-
flated prices for the constituent companies. In 1901 the possibil-
ities of railway mergers proved to be the moving spirit. In 1906
it was the prospect of greatly increased dividends. In 1909 the
alluring bait was "melon cutting" and the distribution of accumu-
lated assets. At present it seems to be belief in the prosecution of
the world's greatest war for some time to come, with the prospect of
continued fabulous war profits.
Wab Ordbbs thb Basis of Our Pbospbrity
That the war has immensely increased American business along
certain lines, especially in those industries that produce the raw
materials or finished products that go to fill the war orders of the
Allies, cannot be disputed. Pig iron production in the United
States during the last twelve months has increased nearly 58 per
cent as compared with the preceding twelve months. For August,
1916, production took place at the rate of 3,204,000 tons as compared
with only 1,995,000 tons during August, 1914; while the price of
No. 2 Southern at Cincinnati has increased from $13.25 to $17.90
in January and $16.90 in August, 1916. The unfilled tonnage of the
United States Steel Corporation averaged 9,310,561 tons for the
^ In the preparation of this article the author is indebted for many of the
statistics presented to the monthly compilations prepared from authentic sources
by R. W. Babson, and issued periodically in Babson'a Desk Sheet of Tablee an
Barameirie Figures far Business CondiHons.
Digitized by
Google
94 The Annals op the Amebican Academy
first eight months of this year, or nearly twice the corresponding
averages for 1915 and 1914. Unfortunately, no reliable figures on
copper production are available for this year, but press reports
indicate large shipments to the Allies and huge orders for future
delivery, and the price of the metal has advanced from a monthly
average of 12.31 cents (August, 1914} to 28 cents (September, 1916).
Probably no less than half of this country's metal output, it has
been estimated, is now going for war purposes. Automobile sales
during the first six months of the year, we are told, were smaller than
the entire 1915 output by only 15 per cent. The shipbuilding
industry is also enjoying an unprecedented prosperity, attributable
chiefly to war conditions, and the number of steel merchant vessels
under construction in American yards is reported to be five times as
great as a year ago.
Foreign trade returns ako show the large part played by war
orders in our present prosperity. Exports of merchandise during
the first seven months of this year amounted to the unprecedented
total of $2,926,280,815, and exceeded the imports by $1,468,561,-
241. Again, for the year 1915 exports amounted to $3,546,000,000,
an increase over 1914 of $1,433,000,000 and an excess over 1915
imports of $1,768,000,000. Although our foreign trade balance of
$961,000,000 for the first seven months of 1915 was the subject <rf
endless comment, being considerably more than twice that for the
corresponding period of any previous year, it is noteworthy that
the balance for the first seven months of 1916 is even larg^ by
nearly $500,000,000. Yet, the impetus towards even greater ex-
ports seems to be gaining strength. In fact, the balance of trade of
$262,838,972 during July of this year (the latest month for which
full data are available) are more than twice that of July, 1915, when
the balance was $125,223,965.
A further analysis of our foreign trade returns shows two im-
portant features, both emphasizing the importance of war condi-
tions. The first relates to the great increase in exports to Great
Britain, France and Russia. On the one hand Great Britain alone,
between January 1 and the present, has contributed nearly one-4iaif
our balance of trade. In strong contrast to this situation stands
the fact that, excluding blockaded Germany, Austria and Belgium,
no less than seventeen out of twenty-one important countries have
sent larger imports to the United States during the first half of
Digitized by
Google
American Security Market 95
this year than they did during the corresponding period of last year.
The second feature to bear in mind is the greatly increased im-
portance which certain articles play in our export trade. A recent
tabulation' (issued last August) shows that exports of fourteen groups
of articles, during the past ten months, amounted to nearly $1,798,-
000,000, as contrasted with only $498,000,000 for the ten months
preceding the war. The comparison shows that exports of six of
these groups — ^mules and horses, brass, bronze, etc., automobiles
and parts, chemicals, zinc, etc., and explosives — comprised a total
of nearly $810,000,000 for the past ten months against $57,000,000
for ten months preceding the beginning of hostilities, an increase of
nearly fifteen-fold.
The Response of the Stock Market
The foregoing figures are given to show the important relation
between war orders and our present prosperity. Since the essential
function of organized exchange markets, aside from furnishing a
convenient market place, is to discount future business conditions,
it is only natural that with the re-opening of the markets in Decem-
ber, 1914, there should have developed almost immediately a vio-
lent upward price movement in stocks, representing munition, iron
and steel, metal, shipping, motor, textile, and other industries which
shared direcly or indirectly in huge profits derived from exceedingly
* Babeon's Report of August 29, 1915, shows the following:
Exports Past ten Tton montlM
months before war
Mules and Horses $73,000,000 $3,500,000
BraaB, Bronze, etc 155,000,000 6,000,000
Automobiles and Parts 116,000,000 20,000,000
Raflway Cars 21,000,000 10,000,000
Aeroplanes 6,300,000 196,000
Cbemicals 93,000,000 22,000,000
Motorcycles 2,700,000 900,000
Cotton Goods 88,000,000 43,000,000
Iron and Steel 472,000,000 212,000,000
Shoes and Leather 120,000,000 47,000,000
Canned Goods, Meat and Dairy Products 231,000,000 124,000,000
Wool and Woolen Goods 47,500,000 3,900,000
Zinc, etc 36,800,000 328,000
Explosives 336,000,000 6,000,000
Total $1,798,800,000 $497,823,000
Digitized by
Google
96 The Annals of the American AcADEirr
large orders for war materials at extraordinarily high prices. In
fact the stock market of the past two years has been largely one of
"specialties." As regards shares of corporations of the non-war-
serving type, the rise in prices, although influenced somewhat by
increased traffic or business growing out of the war, has been mode^
ate and not excessive. But as regards the so-called ''war stocks/'
the stock market witnessed a speculative craze, probably without a
parallel in history. Alluring possibilities of fabulous war profits were
the central idea. All other factors that usually play a prominent
part, such as unsettled labor conditions, rapidly rising commodity
prices, a crop failure in the Northwest together with heavy losses
in corn and cotton, and the destructive effects of the great War itself,
seem to have been forgotten.
Not only did the shares of many "specialties" increase several
hundred per cent in price within a year, a phenomenon to be dis-
cussed more fully later, but the volume of sales also reached record-
breaking proportions. During 1915 shares traded on the New York
exchange totaled 173,070,962 as compared with 47,899,668 and
83,470,693 in 1914* and 1913. This year's transactions are even
greater, total sales for the first eight months amounting to nearly
109,000,000 shares as contrasted with less than 97,000,000 for the
corresponding months of 1915. At the time of writing (September
23) the New York market has just had its fifteenth consecutive day,
excluding the two-hour Saturday sessions, in which the trading far
exceeded a million shares, and approximately averaged a million
and a half total. It is also worthy of note, as indicating the direc-
tion of speculative activity, that many stocks which formerly played
only a relatively minor part in the volume of transactions on tiie
New York exchange have suddenly become very prominent. One
may point to a recent instance, for example, where for an entire
week the sales of eleven war stocks — ^American Smelting, Anaconda,
Baldwin Locomotive, Central Leather, Crucible Steel, Inspiration
Copper, International Mercantile Marine common. International
Mercantile Marine preferred. International Nickel, Kennecott
Copper, and Maxwell Motors — ^represented over one-third of Ac
total sales on the New York exchange.
* Note should be made of the fact that the stock exchange was closed f(ff
nearly four months during 1014.
Digitized by
Google
American Security Market 97
Influence op Low Money Rates
Another phenomenon of the present market is the prevailing
low rate for money. It is an axiom of the street that low money
rates encourage higher stock prices and, vice versa, that great ac-
tivity in the stock market at inflated prices causes money stringency
and higher interest rates. Today, however, after nearly two years
of stock market boom, we have the spectacle of brokerage houses
getting all the credit they want at 2f per cent, while prime commer-
cial paper can be discounted at 3f per cent. Crop-moving de-
mands, record-breaking business at high prices and several weeks of
million-share days on the exchange seem to have not the slightest
eflfect on money rates. There can be no doubt that present abun-
dance of credit is largely responsible for maintaining stocks so long
at unusually high prices.
Such an unusual situation is chiefly the result of two principal
factors, viz., England's policy of sending gold to this country and the
new Federal Reserve Act. England's wishes are manifestly to
liquidate at highest prices such American securities as she may hold
and wish to sell, and to effect loans in the United States at the lowest
possible rates of interest. With easy money rates and firm stock
market prices large loans can certainly be distributed to better ad-
vantage. England has also entered upon a policy of mobilizing
American securities with a view to using them in this country as
pledges for loans. Her advantage in carrying out this policy cer-
tainly lies in keeping the price of her collateral as high as possible.
Moreover, high prices are also advantageous to England and her
Allies for the actual sale of American holdings of securities. In
fact, such sales since the beginning of the war have been an im-
portant factor in keeping down the price of many leading American
issues.
Yet in all probability the sales would have been effected at
lower and declining prices had it not been for the strong upward
movement in other quarters of the market. In other words, se-
curities act more or less in sympathy with one another and rising
prices in one quarter of the market often enable free liquidation at
steady prices in another. From every point of view, therefore, it
is clear that England is vitally interested in the maintenance of
relatively low interest rates in New York, as well as a high and firm
security market. To accomplish these purposes she has found it
Digitized by
Google
98 The Annals op the American Academy
advantageous to pay for a great share of her purchases here with
gold. As a means to the end just indicated, over $700,000,000 of
gold has come to the United States since the beginning of hostilities.
In addition to this factor mention should be made of the Federal
Reserve Act as a cause of inflation. Again and again we see it
stated that warnings concerning the present market should not be
taken too seriously. The new banking law, providing much greater
credit facilities than the law it supplanted, will take care of the sit-
uation— so go ahead! It would be well to bear in mind that the
present surplus reserve of the New York Clearing House banks, so
frequently characterized in the newspapers as "very comfortable,"
would not exist today under the old reserve requirements; instead
there would be a large deficit.
Rise in the Price Level op Industrials
Nothing has happened in the security market since the beginnmg
of the war which in any way compares with the speculation in m-
dustrial stocks, and particularly those benefiting directly or in-
directly from war orders. In discussing market movements since
the beginning of hostilities a clear distinction must be made be-
tween industrial stocks and the rest of the market. The latter has
thus far enjoyed only a modest appreciation; the former present
the picture of fabulous war profits and an unprecedented appetite
for stocks at enormously increased prices. The situation is all the
more noteworthy in view of the fact that it has occurred in the face
of the heaviest foreign liquidation to which the American market
has ever been subjected. During 1915 the amount of United States
Steel common owned in Europe is reported to have decreased
41.6 per cent. Yet, during that year, the price of the stock rose
from 48 to 89^, and since that time reached 120|. Every reader
is familiar with the flight of Bethelem Steel from 33} on July 30,
1914, to 600, and of General Motors from 78 to 760. In fact,
nearly every week has had its sensation in the industrial list and
many issues might be mentioned which increased from 200 to 400
per cent in the short space of a year.
The use of averages, however, will present a fairer picture of the
situation. Thus, taking forty-seven leading industrials^ listed on
the New York Exchange, representative of all important types of ao-
« See Appendix.
Digitized by
Google
Amebican Security Market 99
tivity, it appears that on July 30, 1914 (closing prices) one share in
each of these corporations could have been purchased at an aggre-
gate cost of $2 J86. Using the highest price attained during 1915,
these same shares would have brought a total of $6,045, thus show-
ing an appreciation of 117 per cent within about a year. By Sep-
tember 8, 1916, however, the total price had dropped to $5,202,
an appreciation of 87 per cent over the price of July 30, 1914.
Selecting next a list of twenty-seven leading industrials,' which
have figured largely in the newspaper accounts of war orders, the
appreciation has been even greater. On July 30, 1914, one share in
each of these corporations could have been purchased at a total cost
of $1,178. At the highest prices of 1915 these same shares repre-
sented an aggregate price of $3,882, an appreciation of 229 per cent.
By September 8, 1916, the price had declined to $3,111, an appre-
ciation of 164 per cent as compared with the price of July 30, 1914.
Even greater has been the rise in the price level of leading
"ordnance stocks." Unfortunately, averages cannot well be ob-
tained here, partly because few of these stocks were quoted on July
30, 1914, and partly because quotations have been so frequently
changed by increasing the stock or by shifting old securities into
new. The combined price of nine of these stocks, however (compar-
ing the quotations for July 30, 1914, with those of December 31,
1915), shows an appreciation of 311 per cent. Copper stocks, like-
wise, owing to large war orders and an increase in the price of the
metal at New York within the past year from 17.75 cents to 28.38
cents, have shown large advances. Babson's average price for
twenty active copper stocks stood at 54.1 for September of this
year as compared with 31.9 for December, 1914.
Promotion of New Enterprises
Intense activity on the stock exchanges, accompanied by rap-
idly rising prices and an abundance of newspaper comment on large
profits and the placing of huge orders, almost invariably prepares
the public for participation in new ventures and thus furnishes the
opportunity the promotor wants to distribute his wares. Prob-
ably never before were rumors of immense orders and prophecies
of unheard-of profits so persistently paraded before the reading
public day after d ay. It is, therefore, not at all surprising that the
* See Appendix.
Digitized by
Google
100 The Annals of the American Academy
last four months of 1915 and all of*1916, up to the time o( writing,
should furnish abundant evidence of the avidity with which the
public absorbed new security issues.
New incorporations in the eastern states with an authorized
capital of one million dollars or over are reported as aggregating
$1,803,000,000 during the first eight months of 1916 as contrasted
with only $606,000,000 and $618,000,000 for the correspondmg
months of 1915 and 1914. For the past twelve months (September,
1915, to August, 1916, inclusive) new incorporations aggregated
the extraordinary total of $2,624,000,000, or almost three times the
amount reported for the preceding twelve months. New securities
issued by existing corporations totaled $1,617,000,000 during the
first eight months of 1916 and $2,151,000,000 for the twelve months
from September, 1915, to August, 1916, inclusive. These figures
are respectively 1.7 and 1.9 times as large as those for the first eight
months of 1915 and for the twelve months from September, 1914,
to August, 1915. These totals are all the more significant when we
reflect that since the opening of hostilities abroad we havelo/tned
over $1,500,000,000 to foreign borrowers, and have reduced our
indebtedness abroad by about $1,800,000,000 through the repur-
chase of American securities held in the belligerent countries.
The flotation of motor, munition, steel, chemical and engineer-
ing stocks, particularly along the lines profiting from war orders,
constitutes a large part of the totals given. It may be added that
an examination of the most active of this type of new stocks issued
during the past year shows that most of them reached their highest
price level during the period of flotation, and that in the great
majority of instances present price levels are much below the quo-
tations prevailing at or shortly after the period of flotation. The
aggregate underwriting price of fifteen representative and important
stocks (of the type indicated and floated during the past year)
was $882. The aggregate "highest price" of these same stocks
(attained in ten out of the fifteen instances during the month of
flotation) was $1,259, or an increase of 42.5 per cent over the under-
writing price. Last August the price was down to $777, a decline
of over 38 per cent as compared with the highest price and of nearly
12 per cent as compared with even the underwriting price.
li
Digitized by
Google
American Security Market 101
Railroad and Public Service Stocks and Bonds
As already stated, a discussion of our subject involves a clear
distinction between the market movements of "war stocks," or of
industrial and mining stocks benefiting indirectly from war orders,
and the rest of the market. As a general proposition the balance
of the market has not followed the war stocks in their erratic up-
ward movement. This is notably so with respect to the large group
of railroad stocks. Despite excellent gross and net earnings during
the past year, nearly all the standard railroad stocks have persis-
tently failed to keep company with the rapidly rising price level of
industrial issues.
Using twenty-two leading railway stocks as a basis,' repre-
senting every section of the country, the average price per share was
80f on July 30, 1914; the highest price during 1915 was 95 J; the
highest price during 1916 was 96^; while on September 8, 1916, the
price stood at only 89f . In other words the highest average price
for these representative railroad stocks since the beginning of the
war shows an appreciation of only 19.5 per cent over the price level
of July 30, 1914, while by September 8, 1916, this appreciation was
reduced to only 11.14 per cent. Contrast these percentages with
117 per cent and 87 per cent for our list of industrials (including war
stocks) and 229 per cent and 164 per cent for our list of strictly
war stocks!
Public service corporation stocks have shown a tendency similar
to that exhibited by the railroads. Using ten leading and repre-
sentative issues, listed on the New York and Philadelphia exchanges,
the average price per share was 68| on July 30, 1914; the highest
price during 1915 was 81t; the highest price during 1916 was 83^;
while on September 8 of this year the price was 80J. The highest
price level, as compared with the price on July 30, 1914, represents
an appreciation of only slightly over 23 per cent, while at the time
of writing this appreciation has been reduced to 16.73 per cent.
In the case of standard bond issues the price level has also
• Atch., Topeka & Santa Fe, Baltimore & Ohio, Canadian Pacific, Chesa-
peake & Ohio, Chi., Milw, & St. Paul, Chicago & Northwestern, Erie, Great
Northern, Illinois Central, Kansas City Southern, Lehigh Valley, Louisville &
Nashville, Missouri Pacific, New York Central, N. Y. N. H. & Hartford, Norfolk
and Western, Northern Pacific, Pennsylvania, Reading, Southern Pacific, South-
ern Railway, Union Pacific.
Digitized by
Google
102 Thb Annals of trb American Academy
changed but slightly. Babson's average price of ten leading and
representative bonds gives 89.5 as the average price for July 30,
1914, and 91.6 as the average price for September, 1916, thus show-
ing an appreciation of less than 2.4 per cent. The September
price compares with 91.8 for January, 1916, 89.2 for January, 1915,
92.6 for January, 1914, 96.0 for January, 1913, and 101.8 for Jan-
uary, 1909. The volume of bond sales on the New York exchange,
it is true, seems large, amounting to over $700,000,000 for the first
eight months of 1916 as contrasted with only 524 milUons and 425
millions for the corresponding months of 1915 and 1914. But these
figures are apt to be misleading. Owing to the closing of the New
York Exchange following July 30, 1914, there were practically no
bond sales for four months of that year, and during 1916 trading
in foreign bonds constituted over one-third of the total transactions.
Apathy op Railroad Stocks
That bonds, with their fixed interest rate, should not appreciate
materially is logical enough. We need only consider the present
temptation to investors and speculators to divert the flow of capital
to stock issues which permit of participation in the large profits that
are now being made or are expected in the future. The rapidly
increasing cost of living, the rising tendency of long-term money
rates, the general feeling that interest rates, as a consequence of the
war, will be materially higher for years to come, and the flotation of
large foreign war issues in this country on a 5^ and 6 per cent basis
with the prospects of further issues, also constitute in their combined
effect a powerful deterrent to any upward movement in bond is-
sues yielding only a moderate rate of interest and having a number
of years to run before maturity. The resale to us of large blocks of
American bonds held abroad, and the temptation to many to invest in
foreign securities owing to their low price and the favorable rates of
exchange, are additional factors that just now weigh heavily upon tiie
price level of existing American bond issues. But that the common
stocks of railroads should not have responded better is not so clear
and is today a subject of widespread discussion. As the Commerdd
and Financial Chronicle states in its comprehensive review of rail-
road gross and net earnings for the first half of 1916:'
^Commercial and Financial ChronicUf September 9, p. 887.
Digitized by
Google
American Sbcxtbitt Mabkbt 103
The year 1916 will always remain memorable for the magmfioent way in
which the great transportation systems of the United States were able to enlarge
both their gross and Uieir net income. The year stands unique for the imposing
nature of the gain in gross and net alike. In this these transportation agencies,
of course, simply reflect the wonderful expansion in trade and industry generally
as the result of the demands upon the United States arising out of the gigantic
conflict, being waged between the leading countries of Europe. Prior to the pres-
ent expansion in revenues, which had its inception about September or October
last year, the railroad industry had for many years been languishing. Indeed, it
was in a bad way, as cost of operations was rising and traffic and revenues failed
to expand in a conmiensurate way. But under the stimulus to industry afforded
by the present world war, they have now retrieved the past and at one bound re-
gained all they had previously lost, and, advancing to new heights, are now sur-
passing by far the best records of the past.
Available records clearly show the correctness of the foregoing
statement. Instead of an average net surplus of 217,186 cars, as
reported by the American Railway Association for the year 1915
(idle cars reached the large total of 327,084 on April 1, 1915), the
net surplus for 1914 to September 1, amounts to only 21,145, while
on that date there was an actual net shortage of over 14,000 cars.
Babson's statement for ten leading railway systems shows gross
earnings for the first seven months of 1916 20 per cent larger than
for the corresponding months of 1915. For the last twelve months
these earnings exceeded those of the preceding year by over 16
per cent. For the same two periods net earnings show an increase of
approximately 35 and 26 per cent. The Commercial and Financial
Chronicle's tabulation for 249,249 miles of road shows that:
As compared with the six months ending June 30, 1915, the gross earnings of
United States railroads for the six months of 1916 increased no less than $328,-
012,578, the total rising from $1,403,448,334, to $1,731,460,912. As against this
large improvement in gross revenues there was an augmentation in expenses in the
substantial sum of $161,861,191, but this still left a gain in net in the satisfactory
amount of $166,151,387, or 42.26 per cent, the total of the net for the first six
months of 1916 being $559,376,894, against $393,225,507 in the first six months
of 1915.
Explained by thb Uncertainty op the Future
Such an apparently phenomenal showing makes it somewhat
difficult to explain the mediocre market advance of our list of rep-
resentative railway stocks. Manifestly, the significance of present
earnings is largely lost when we reflect that the comparison is with
very unfavorable returns for 1915 and most of the years immediately
Digitized by
Google
104 Thb Annals of thb Amebican Academy
preceding. Heavy foreign liquidation of American railway stocks,
no doubt, has also exerted its influence. The stock market is con-
cerned chiefly with the future, and the discounting of an unfavorable
railroad situation in the future has probably been more responsible
than any other factor for the failure of railway stocks to keep com-
pany with industrials in their violent upward market movement.
Greatly increased traflSc necessarily means increased equipment and
enlarged terminals. But rolling stock, other equipment and build-
ings now cost more than ever before. Moreover, the labor problem
has for over a year loomed threateningly over the railroads and is
likely soon to be even more serious. Skilled labor has already ag-
gressively pushed its demands and the claims of unskilled labor will
probably soon follow. In all probability the market also regards the
huge traffic prevailing just now, traceable very largely to the war,
as purely temporary. With the return of normal peace conditions
it is probably felt that the railroad troubles of recent years will again
prevail. It should not be overlooked that the price of what the
railroads sell is regulated by law, while the prices of what they must
buy — equipment, terminals and labor — have been steadily rising and
are not thus regulated.
Average Price Level of All Stocks
The foregoing considerations serve to show the importance of
distinguishing between war stocks and the balance of the market.
We are too apt, owing to lurid newspaper accounts, to regard the
unprecedented rise that has occurred in a limited number of stocks
as a characteristic feature of the entire market. A greater mistake
could not be made. Considering the stock market as a whole, a
substantial rise in prices has occurred, but the average rise is not
out of proportion to that which has taken place in some former bull
markets. Moreover, if we exclude the war "specialties" in which
sensational price increases have occurred, the average price level of
the balance of listed stocks will show only a moderate advance.
The AnnalisVs table, ^ giving the market value of all listed stocks
on the New York Exchange on September 16, 1916, and at the out-
break of the war, shows (1) that "no less than $3,044,226,000 has
been added to the market value of the securities (shares)* which
• The Aniialist, Sept. 18, 1916, p. 357.
* Words inserted by the author.
Digitized by
Google
American Security Market 106
were listed on the New York exchange at the outbreak of the War,"
and (2) that "including the accessions (of new shares)' to the list the
total market value today is $4,199,157,000 above the aggregate
market value of listed issues at the outbreak of the war." The value
of listed shares on July 30, 1914, is given as $9,225,813,000. The
rise of $3,000,000,000 in value thus indicates an increase of 33 per
cent. But even this average, it should be noted, includes all the
listed war industrial and mining stocks.
The foregoing general average is quite in keeping with the actual
improvement of American business as a whole during the past two
years. Here again we are too apt to regard the unprecedented
business boom enjoyed by certain corporations as prevailing in all
industries. This again is an exaggerated view to take. Bank
clearings of the country, excluding New York,^^ probably constitute
the best barometer of general business conditions. These amounted
to $62,750,000,000 during the first eight months of 1916 as con-
trasted with 47 billions and 49 billions for the same period in 1915
and 1914, thus showing an increase over 1914 of approximately 28
per cent. But bank clearings are naturally affected by rising com-
modity prices. Hence the foregoing increase of 28 per cent must be
viewed with this factor in mind, and Bradstreet's Index Number
for commodity prices, it should be noted, has increased from 9.8495
on August 15, 1914, to an average of 11.4414 for August, 1916.
Just as war conditions have shaped the course of the stock
market during the past two years, so it is now the consensus of
opinion that the same situation will govern it in the immediate
future. All manifestly depends upon the duration of the war.
War stocks can scarcely be appraised without knowing when the
war will end, and this is admittedly everyone's own guess. Many
stocks are certainly too high if the war should stop within the next
few months. But should the war and present war orders and profits
continue for a year or two more, it is argued by many that present
prices will be justified. Judging from the present volume of sales
*• Total bank clearings, including New York City, are affected materially by
deaUngB on the New York exchange. For the first eight months of 1916 total
bank clearingB of the United States amounted to $158,674,000,000 as against 112
billions and 110 billions for the corresponding months of 1915 and 1914. This
would seem to show an imusual increase. But the total for 1916 is accounted for
very largely by the heavy transactions on the New York exchange.
Digitized by
Google
106 Thb Ankalb of thi Ambrican Acabemt
and the firmness of prices, Wall Street is evidently proceeding on
the theory that peace is still remote and that the belligerent nations
will continue the gigantic struggle for another year or two at least
APPENDIX
Industrials
July 80,
1914
Allift-ChalmerB 7i
American Agricultural Chem 501
American Beet Sugar 21i
American Can 22}
American Car & Foundry 46}
American Hide k Leather 3}
American linBeed 8
American Locomotive 23
American Steel Foundry 27 J
American Sugar 102)
American Telephone k Teleg 116}
American Tobacco 221
American Woolen 12
Baldwin Locomotive 42
Bethlehem Steel 33}
Central Leather 31
Colorado Fuel k Iron 23}
Crucible Steel 14}
Distillers' Securities 12}
General Chemical 171
General Electric 140}
General Motors 78
Goodrich 23
Int. Harvester of N. J 100
Int. Mer. Marine 2}
Lackawanna Steel 30
National Biscuit 125
New York Air Brake 60
North American Co 70}
Pittsburgh Coal 17}
Press Steel Cai» 38}
Pullman Company 154
Sears Roebuck kCo 180
Sloss-Sheffield Steel k Iron 21
Studebaker Corp 28
Texas Company 123
United Fruit Comity 186
nchuifi
Highainoe
Septa,
Jan. 1. 1916
Itlt
49i
331
23}
74J
72*
791
721
94*
9U
68i
66*
641
98
78
631
Hi
12
«l
31*
26*
m
741
881
781
74J
61*
S«
119}
116*
109
130i
131*
133*
262i
209}
223}
56
65*
46*
154*
118}
82)
600
550
492
61i
57
m
66*
53
m
109*
99*
83}
50*
64*
45*
360
350
310
185*
178*
171*
558
560
580
80*
80
72}
114
119}
117
20*
29*
m
94J
86
80J
132
126}
m
1641
153*
138
81
75
68
42*
36}
39
78*
65*
55
170*
171}
165
209*
188
210i
661
63*
51
195
16T
124i
237
336*
199*
168
160*
IWI
Digitized by
Google
Amebican Security Market
107
United States Rubber Co 521
United States Industrial Alcohol 20
United States Cast Iron Pipe & Foundry 9
United States Steel 55i
VirginiarCarolina Chem 241
Western Union Telegraph 66i
Westinghouse Eleotric Mfrs 731
Winys<>verland 86
Woolworth g2i
Total 2,786
Wab Stocks
JuhrSO,
W14
AlUa-Chahners 7 J
American Can 22f
American Car k Foundry 46J
American Steel Foundry 27|
American Woolen Co 12
Ammcan Locomotive 23
American Zinc Lead k Smelt 121
Baldwin Locomotive 42
Bethlehem Steel 33i
Crucible Steel 14J
Distillers' Securities 12|
Elec. Stor. Battery 47
General Chemical 171
General Electric 140i
General Motors 78
Int. Mer. Marine 2\
Lackawanna Steel 30
New Yoric Air Brake 60
National Lead 41i
Pressed Steel Car 38J
8tudd)aker 28
Tennessee Copper 29
United States Steel 66J
Virginia-Carolina Chem. Co 24 J
WillysOverland 86
Westinghouse Elec. & Mfg. Co 731
United States Industrial Alcohol 20
Total 1,178
74i
88J
58»
131}
170i
114
311
26i
201
89J
89
100}
52
51
421
90
96}
96i
741
711
61}
N268
N325
46}
120i
139i
137}
6,0451
5,859 5,2021
High 1915
Hichaiiiee
Sept. 8,
Jan. 1. 191S
191S
49*
33}
23*
68*
651
641
98
78
63}
74*
61*
56
56
55*
46*
74i
88f
78*
71*
97f
38
154*
118{
82*
600
550
492
109f
99*
83}
50*
54*
45*
60
66*
66*
360
350
310
185*
178*
171*
558
560
580
20*
29*
491
94i
86
80*
164i
153*
138
70i
73f
64*
78*
65*
55
195
167
124*
70
66*
26}
89*
89
lOOf
52
51
421
N268
N325
46*
74f
711
611
131i
170*
114
3,882
3,809
3,111
N«par $100 per share.
Digitized by
Google
SHORT-TERM INVESTMENTS AS A STABILIZING
INFLUENCE IN INTERNATIONAL FINANCE
Bt ElBIER H. YoUNQMANy
Eklitor, Bankers Magazine^ New York.
I. Bills of Exchange
Primarily, the value of holding foreign bilb as an element in
stabilizing the condition of the international money market rests
upon the same principle that applies when a bank goes into the
domestic market and buys commercial paper. The principle is
this, that should the bank find it necessary suddenly to replenish
its reserves and to curtail loans as the readiest means of doing so,
this curtailment, if made wholly in the bank's own locality, might
not only occasion serious distress but possibly might result in partial
failure of its object. Moreover, a bank naturally feels more dis-
posed to exercise leniency toward its local dealers than to those
outside, and will therefore consider itself under little or no obh-
gation to renew paper bought in the open market. There is,
of course, another and even stronger reason which operates to
cause banks, when having surplus funds, to seek an outlet in the
general markets of the country, namely, that in so doing the bank
may virtually make selection from the best offerings of commercial
paper emitted by firms of established credit and offered for sale by
brokers of known reputation. These same principles, in substance,
are those which render the foreign bill a high grade form of invest-
ment. These instruments, when carefully chosen, are of the very
choicest quality of commercial paper; their payment at maturity
may be demanded, and the bank holding them is, as a rule, under
no obligation to renew. In calling for payment, in the ordinary
course, the bank occasions no strain on the American market; but,
on the contrary, through the operation, which gives conamand of
gold or foreign credit, any existing strain may be relieved.
Securities Compared with BiUa of Exchange
These statements are, of course, subject to some qualification,
because, so closely are the great international money markets
related, that extraordinary demands made by one upon another
108
Digitized by
Google
Short-term Investments 109
may react to the disadvantage of the one making the demand/
We have seen how, in providing for the stabilizing of European
exchange, the vast volume of American securities returned here has
been sent in driblets. Had this not been done, the capacity of
America to repurchase its securities from Europe might have been
glutted and thus our ability to be of financial assistance in the
European crisis would have been greatly lessened. The normal
operations of trade and finance do not contemplate that debts be all
paid at once (some of them are scarcely ever paid), and in the case
of the securities returned from Europe, most of them were not in
the form of obligations, payable either on demand or after a short
time, but they were stocks which represented merely the shares of
foreign investors in our railway or industrial enterprises, or bonds
generally not payable for many years. There was, therefore, no
legal or moral obligation on the part of America to redeem these
stocks or bonds in cash. All that could be rightfully expected was
that facilities be provided for their sale in the open market at such
prices as they would bring and the holders of the securities were
willing to take.
It is here that, on the score of immediate availability, the bill
of exchange offers superior advantages.^ It is a direct obligation
^ The gradual restriction on lending which follows a rise in the discount rate
of the Bank of England is thus referred to by Sonne {The City) :
"It is rather a slow proceeding and one which practically has an equal result
all over the world, as England is not in a position to demand of one individual
country immediate repayment of the whole or part of the fimds, lent out in this
manner, but she must either definitely decline to renew such short loans, or agree
to renew them only at a higher rate. ... It has therefore naturally been
doubted whether this more defensive method would achieve its aim, and be suffi-
ciently sharp in a crisis like this, and whether it would not have been desirable to
have an additional line of defence, a third, consisting of a big portfolio of short
bills drawn on and accepted by foreign banks. By throwing such a portfolio of
short bills on one individual country into the market, it would be possible quickly
to turn the exchanges of that particular country in our favor, without at the same
time considerably altering the position in relation to other trade centres. It was
thought that this method — ^with which French financiers are especially familiar—
in addition to the supply of English bills, would be desu-able, and might be useful
for the purpose of meeting in case of need, as a sort of counter attack, a drain on
our gold stock from any particular source.''
> "It was due to the circumstance that France had placed nearly all her capital
in the shape of long loans, that — although she is one of the richest nations of
Europe— her financial position was at first rendered very difficult."— r^ CUy,
H. C. Sonne.
Digitized by
Google
110 Thjb Annals of the American Academt
for the payment of money, either at sight or after the lapse of a
short time — usually thirty, sixty or ninety days. Payment is not
dependent upon the state of the market for its sale, as in the case
of stocks or bonds, but merely upon the solvency of the drawer or
acceptor. In other words, under normal conditions, the payment of
the bill in accordance with its tenor may be relied upon absolutely.
BiUa of Exchange at the Ouibreak of the War
The outbreak of the great European War in the summer of
1914 showed, however, that the bill of exchange, though possessed
of the advantages just enumerated, was nevertheless not without
its imperfections. In other words, th&t the most perfect part of
the delicate mechanism of international finance succumbed to the
shock of war.
Not only did the temporary closing of the stock exchanges in
Europe and America at the outset of the war stop for the time
being the market for stocks and bonds, but moratoria in most of
the leading European countries and in South America as well
suddenly congealed the most liquid instrument of international
finance — ^the bill of exchange. No other course was practicable.
The credit mechanism, upon whose smooth workings the continued
successful utilization of this important financial instrument depends,
had broken down. Cover to meet maturing bills could not be pro-
vided.*
Disarrangement of the mails, closing of frontiers between
belligerent countries, and temporary interference with neutral ship-
ping owing to prohibitive rates of marine insurance, all added to
the confusion. American tourists, liberally provided with funds of
one kind or another, found them unavailable, and the government
finally sent over a gold-bearing cruiser to relieve their embarrass-
ment. Extraordinary deposits of gold were made to the credit of
* " The laat days of July [1914] were certainly very difficult, and the organisa-
tion of the banks, ao far-reaching in its ramifications, passed through a severe
trial, which it surely would have been able to surmount without any break in its
machinery, if it had only been possible to receive the remittances due fhun
abroad. It was the non-appearance of these which resulted in an actual money
crisis. The sensitive discount market collapsed, as the accepting houses would
soon be unable to pay their— on foreign account — accepted bills, because their
customers did not send cover." — The City, Sonne.
Digitized by
Google
Shobt-term Investments 111
the Bank of England in Canada, by New York bankers, to meet a
large volume of maturing New York City bonds.
Governmental Protection to Bank of England
The most telling remedy invoked in this extraordinary crisis
was the act of the British government in agreeing to indemnify the
Bank of England against loss in discounting bills accepted prior to
August 4. Immediately, the bills, which had been a dead weight in
the hands of their holders, were thrown upon the Bank, whose
"Other Securities" rose from £65,351,656 on August 7 to £121,-
820,692 on September 2. This and other measures were so effectual
that it has been estimated^ that of the £350 to £500 million of
bills running at the outbreak of the war only about £50 million
would remain unpaid at the end, chiefly because the debtors be-
longed to hostile countries, and on this unpaid sum a substantial
recovery is not improbable.
Various devices were resorted to in disentangling the situation
in the respective countries, government intervention being relied
on chiefly. In Russia an arrangement was made whereby mer-
chants were able to buy sterling at a fixed rate, the funds being
provided by the sale of Russian Treasury bonds in London.
Foreign Bills a Profitable Bank Investment
From the pure banking standpoint the object of handling these
bills is the profit derived from the discounts or commissions charged.
They constitute a prime type of banking paper, even the so-called
'' finance bills" being usually drawn against adequate collateral and
by houses of established standing. But in addition to the protec-
tion afforded to the exchange rate, and to the gold stock of a country,
these bills constitute a form of international currency of great serv-
ice in carrying on the world's trade.* This service is performed
without converting into fixed capital the commitments it requires,
the most liquid form of credit known being employed.
« Soime, The City.
* "The justification of the English accepting houses and biJl brokers and
banks (in so far as they engage in this business), is the fact that they are assisting
trade and could not live without trade, and that trade, if deprived of their services,
would be gravely inconvenienced and could resiune its present activity only by
making a new machinery more or less on the same lines." — IrUemaiional Finance,
HarU^ Withers.
Digitized by
Google
112 The Annals of the American Academy
Additional to the influences already recorded, the holding of
a choice Une of foreign bills constitutes a ready means of enlarging
the lending powers of a bank. Indeed, it has come to be the custom
of some banks to regard bills of this character as virtually consti-
tuting a part of their reserves. Theoretically this may be going too
far, but in practice a bill immediately convertible into cash does
constitute at least a secondary form of reserve. This quaUty of the
foreign bill stamps it as a most important element of the financial
mechanism, by whose judicious use great flexibility can be assured
in a bank's lending operations or even in those of the banks of an
entire country, where a central bank or some other specially-de-
signed piece of financial machinery acts as a monitor of the inter-
national money market.
The enormous benefit that may accrue by the accumulation of
short-time obligations was shown most strikingly in the case of the
payment of the war indemnity exacted by Germany from France
at the close of the Franco-Prussian War. More than 6,315,000,000
francs were paid and only 275,000,000 francs in French coin left
the country.
When heavy payments are to be made abroad, the work of
accumulating exchange is sometimes spread over considerable
periods so as not to cause disturbance and occasion a rise in price.
The payment of $50,000,000 by the United States for the rights of
the French Company in the Panama Canal was at least partly
made in this way.
Another useful purpose of accumulated trade credits is shown
in the following statement:*
The Japanese purchase of approximately $30,000,000 British Treasuiy bills,
paying for them in American funds on deposit here, is one of the interesting devd-
opments of war financing. Japan has huilt up a credit in this coimtry by balance
on her trade with us — ^by selling us more goods than we have sold her. The moat
important item in this trade was raw silk, of which we took from her this yetf
169,000 bales— an increase of 20,000 bales over 1913-14. At>out $50,000,000 of
this favorable balance is said to have been on deposit in New York, and out of
this the $30,000,000 was paid to Great Britain, hut the amount did not leave this
country and is being used to pay us for purchases by Great Britain.
Attack on Our Odd Reserves After the War
In Europe the practice of accumulating foreign bills in the
possession of the great central banking institutions is quite common.
• The Bache Renew, New York, Aug. 19, 1916.
Digitized by
Google
Short-tbkm Investments 113
These bills are bought when the rates are low and disposed of when
they are high, thus tending to counteract the conditions leading to
the exportation of gold. It is in this respect that the great New
York banks, and perhaps the Federal Reserve Board, will doubtless
find it advantageous, as opportunity offers, after the close of the
war, to gather up a large volume of foreign bills for use in parrying
the attack on America's gold reserves which many regard as sure
to follow the closing of the war. There are some who fear this
attack may be so severe as to endanger the maintenance of the gold
standard itself. They base this fear upon several factors:
First. — The character of the various forms of "money" avail-
able as bank reserves, under the law.
Second. — The nature of the Federal Reserve Act, which places
the direction of the larger affairs of banking and finance in the
hands of men appointed by the President, and therefore under some
political restraints which might prevent them from acting as freely
or effectually as a private bank.
Third. — That following the war, in order to build up their
shattered industries, to reduce their currencies more nearly to a
metallic basis, and to effect a general reconstruction of their dis-
ordered finances, the European belligerents will enter into a des-
perate struggle for the world's gold.
Fourth. — That the United States will most likely undergo a
sharp change in its economic position in the near future, losing
much of its newly-gained foreign trade other than that represented
by the export of war materials (the latter trade being cut off alto-
gether), and experiencing a severe recession in domestic business
activity.
The Probable Effects
Taking up the latter contention first, while it undoubtedly
contains considerable truth, it ventures too far into the realm of
prophecy to be accepted as an accurate representation of what will
happen. It would be quite as good a guess to say that we shall
retain a very considerable share of our new foreign trade, and that
domestic business, influenced by a succession of good crop years,
will continue active.
As to the struggle for gold, it will probably take place, and it
is difficult to see how America can retain its present stock. No ope
expects that anything like the current abnormal balance of exports
Digitized by
Google
114 Thb Annals of thi Ambrican Academy
can be maintained. On the other hand, we shall not for a long time,
if ever, pay as much to Europe on account of principal and interest
on our securities. Tourists' expenditures, and some other items
which enter into the international financial balance, will be as large,
and perhaps larger, than heretofore. If Europe can produce and
sell cheap enough to menace our domestic industries through
''dumping," this difficulty will no doubt encounter a tariff barrier.
Europe still holds a large amount of our securities, and may find it
advisable to part with more of them than have already been sent
over.
The objection to the semi-political composition of the Federal
Reserve Board may or may not be valid. That can only be deter-
mined by time. Presumably, even from the standpoint of politics,
the Board will endeavor to shape its policy wisely and for the
public good. A central bank could not do more than that, although
it might be a little more prompt and vigorous in its application of
remedies and a little less sensitive about criticism.
The first factor may prove the one of greatest importance.
This country has not yet adopted the sound economic policy of
establishing its banking credits upon gold alone. There are now
available as bank reserves the following forms of "money," in sub-
stantially the amounts named: Legal-tender notes, $346,000,000;
national bank notes, $682,000,000; silver, $568,000,000; Federal
Reserve notes, $190,000,000— a total of more than $1,700,000,000.
The legal tenders and the silver may be counted as part of the
lawful money reserves of the national banks, while these and all
the other forms of currency named are quite generally used for the
reserves of the more numerous state banks. In the face of a severe
world-wide struggle for gold, such as some people are expecting
when the war ends, it becomes a question, particularly should trade
and enterprise slacken here, whether Gresham's law would not
become operative and deprive us of a large part of our gold stock.
II. Shobt-Term Obligations
A form of investment practically new to our money market
has come into being since the beginning of the war — ^the short-
term obligations of foreign governments. Prior to the European
crisis we had made some loans to Canada and a few to several
foreign countries, but these latter were of a somewhat spectacuUr
Digitized by
Google
Short-term Investments 115
and temporary character. They were subscribed for more or less in
a spirit of financial bravado — ^to show London what we might do if
once we took the notion. But having thus gratified our financial
vanity, we were quite content to dispose of the loans allotted us.
The loans made to Europe in the last two years are of an entirely
different character. They have been made in all seriousness.
France and Great Britain have needed our financial help. Other
countries, long in the habit of borrowing from these financial giants,
were compelled to turn here to make fresh loans or to renew old
ones. But we ourselves were virtually compelled to make these
loans, or to see American export trade seriously curtailed.
Our InvestmenU in Short-Term Obligationa
To what extent we have already entered upon the policy of
investing in foreign short-term obligations may be seen from the
accompanying statement:
An^Prench five-year 6e $500,000,000
British Government two-year 6e 250,000,000
British Bank loan 50,000,000
French three-year loan 100,000,000
French one-year notes 30,000,000
French special credit 55,000,000
Canadian Government 120,000,000
Canadian municipalities 120,000,000
Italian Government one-year notes 25,000,000
German Government notes 35,000,000
Swiss Government notes 15,000,000
Swedish Government notes 5,000,000
Norwegian Government notes 8,000,000
Arg^tine Government notes and bonds 75,000,000
Panama, Bolivia, and Costa Rica Government notes 4,500,000
Yucatan Government bonds 10,000,000
Russian Government acceptances , . . . 25,000,000
Russian Government credit 50,000,000
Chilian Government bank loan 10,000,000
Greece 7,000,000
Ptmama 3,000,000
Newfoundland notes 5,000,000
Total $1,502,500,000
Since this compilation was made, some additional loans or
credits have been reported, and it may reasonably be expected that
the above total will soon rise to $2,000,000,000.
Digitized by
Google
116 The Annals of the American Academy
The chief benefit flowing from loans of this character, unte
normal conditions, consists in the conmiand they give the lending
nations over goods they need for consumption or for raw materials
which enter into the manufacture of goods either to meet the home
demand or for export. It need hardly be explained that capital is
exported chiefly in the shape of goods, and that the principal and
interest of capital borrowed are returned largely in the same mann^.
In other words, goods are wanted, not gold. Or, as recently mi by
Sir George Paish:^
Our aocumulated wealth for the greater part consists of the machmeiy of
production, using the term in its broadest sense, of use for the purpose of prodae-
tion, but unavailable for any other purpose than production. Beyond the wealth
we have built up at home in this manner, we have invested abroad a very large
sum of money, and for all practical purposes this is the only part of our accumu-
lated wealth that we are able to turn into consmnable goods in order to supple-
ment the nation's own productive power and income.
Their Use in Emergencies
But there may come a season when the shipment of goods to
a country may be satisfied for the time being. There may exist an
"adverse" trade balance which cannot be liquidated in merchan-
dise. Gold will therefore flow out. It is at such a juncture that the
possession of foreign bills, arising out of previous favorable condi-
tions of trade, or possibly "finance" bills drawn against such an
emergency, or short-term, foreign bonds, notes or credits, will serve
a most useful purpose. They will fill the gap and prevent the expor-
tation of gold, for they must either be paid or renewed.
The value of investing in short-term foreign loans has been
thus clearly stated:*
We may invest in short-term foreign loans that can be converted into credits
to check a gold demand. We have already done some of that and will probably
do a good deal more. There have been bankers so short-sighted as to object to
our making any loans abroad, but I believe the day will come when you will find
that those loans, convertible into credits, as they will be, will check gold with-
drawals and form one of the most important safeguards of our gold stock.
The advantages of becoming a lending nation are well iDus-
trated in the financial and commercial history of France and Great
Britain. Such a policy has made their wealth cumulative. A most
^ "War Finance," Journal of Royal Statistical Society ^ May, 1916.
' Som& Elements of National Foreign Trade Policy, Frank A. Vanderlip.
Digitized by
Google
Short-term Investments 117
striking witness of the value of having large foreign investments was
given by the recent British loan placed in our markets. Under the
extraordinary conditions now existing Great Britain could not have
borrowed here at a favorable rate, if at all, without collateral. That
collateral was offered, in abundance and of unquestioned character,
because British investors had accumulated large holdings of the
world's choicest securities.
By investing abroad the United Statea will greatly aid in the
work of reconstruction after the war, and will also help in supplying
nations not engaged in the strife with capital they would otherwise
have obtained from the belligerents. Furthermore, we shall lay
a basis for materially enlarging both our exports and imports, for
capital exported will go to a large extent in the shape of the goods
the borrowing countries require, just as the interest returns on our
loans will come to us in the shape of goods we need and do not
produce ourselves. Most of all, if we are to have the great attack
upon our gold stock which many foresee, a goodly volume of foreign
bills and short-term obligations in our possession will serve as a
shield against such an assault.
Whether we are yet ready to share permanently in the field of
international financial operations on any large scale is a matter
which time alone will determine. But there can scarcely seem a
doubt of the wisdom of safeguarding the near future by judicious
short-term foreign investments.
Digitized by
Google
THE EFFECT OF THE WAR ON NEW SECURITY ISSUES
IN THE UNITED STATES
Bt Gobdon Bltthb Andbbson, A.M.,
Wharton School of Finanoe and Commeroe, Uniyensity of PeonsyWania.
The European war has thrown a tremendous burden upon
the investment markets of the United States. In addition to the
problem of making a place for new security issues of established
corporations and of financing new enterprises, American invest-
ment bankers and their customers have been face to face with
the necessity of purchasing an enormous aggregate of securities
of American corporations heretofore held in foreign countries, and
of absorbing over one billion dollars of the bonds of belligerent
governments.
There is a limit to the amount of securities which the investors
of a country can absorb. This limiti in the last analysis, is deter-
mined by the aggregate savings of business and professional men,
added to the reinvestment of income derived from dividends and
interest. It is an axiom of finance that when the supply of securi-
ties offered exceeds this amount a portion of them cannot be
marketed. These undigested securities, as they are frequently
termed, remain in the hands of underwriters and promoters, or
clog up the collateral loans of banks, frequently laying the
foundation for panics and other serious financial disturbances.
When the investment market shows signs of an over-supply of
securities, those least favored or offered on the most unfavorable
terms, are passed by. The promotion of new enterprises is cur-
tailed. Corporations postpone entering the financial market for
new capital to finance extensions and improvements. In brief,
the output of securities is diminished until the market is able to
absorb a larger supply.
VOLUMS OF SSCUBITIBS IbSUED DX7BINa*THJB WaR
Has the output of securities in the United States been de-
creased as a result of the European war? The record of new
118
Digitized by
Google
Effect of Wab on New Sbcurity Issues
119
security issues for six years preceding the beginning of the European
struggle and since that time, so far as available, follows:^
New SscxTRinss Issxtsd in thb UNirBD States
(In thoiuanda of doUan)
Tmt
Gorpomt0
Mtinieipal't, eto
Total
1906
$2,684,396
$313,797
$2,898,194
1909
3,247,609
339,424
3,687,034
1910
3,486,890
320,036
3,806,926
1911
3,676,919
396,869
3,973,778
1912
4,648,769
386,661
4,936,311
1913
3,179,990
403,246
3,683,236
1914 (Jan.-June)
1,680,460
366,998
1,936,469
1914 (July-Dec.)
761,004
110,376
861,381
1914 Total
2,331,466
466,376
2,797,840
1915 (Jan.-June)
1,336,721
320,394
1,666,116
1916 (July-Dec.)
1,626,887
167,667
1,793,464
1916 Total
1,961,609
487,961
2,449,671
1916 (Jan.-June)
2,807,066
276,740
3,082,796
1916 (July-Dec.)
613,780
67,739
671,620
1916 Total
8,420,837
333,480
3,764,317
The security market was slow in recovering from the effects
of the panic of 1907, and we, therefore, find a steady and rather re-
markable increase in the volume of securities floated in the years
1908, 1909 and 1910. The maximum security output was reached
in 1912 when nearly $5,000,000,000 of securities were floated. At
this point the security market suffered a curtailment, and in 1913
security issues aggregating only $3,500,000,000 were brought out.
The record from that date is significant as reflecting the influence
of general business conditions on the security market. In the first
six months of 1914 a little less than $2,000,000,000 of securities were
marketed. During the last six months of the same year, after the
outbreak of the war, financing fell off to $861,000,000 making a
total of considerably less than $3,000,000,000 for the year. It is
true, however, that in normal times, the last half of the year is less
^The figures for corporate securities were compiled from Babson's Desk
Chart. The data conoeming municipal issues were compiled from the Commercial
and Financial Chronicle. The above computation takes no account of the repur-
chase of American securities held abroad, of the government loans effected by the
European belligerents since August, 1914, or of issues of new corporations outside
of the eastern states.
Digitized by
Google
120 The Annals op the American Academy
active in this line than the first half. During the first six months of
1915, or the second half-year of the war, there were issued over
$1,600,000,000 of securities. In the second half of 1915 nearly
$1,800,000,000 were brought out, the steady increase being due to
the revival of business, caused by the industrial activity created by
enormous war order;? placed by foreign powers. During the first
six months of 1916 we find the security market extremely active,
over $3,000,000,000 of seciuities being issued. July and August of
1916 reflect the same conditions as prevailed in former years with
new financing slightly decreased. During August the flotation of
motor stocks constituted a large part of the new financing. It must
be remembered that the figures given on page 119 are not complete,
for it is impossible to cover all new issues of securities. While a
prophesy is dangerous and in most cases fruitless, yet unless there
is a distinct change in financial conditions, the output of new
securities in 1916 will closely approximate, if it does not exceed,
the high water mark of 1912.
A review of the above comparison shows, in brief, that the first
shock of the war radically curtailed the volimie of new security
issues, but under the stimulating influences which have existed
since the advent of war orders and the return of industrial prosperity,
the power of absorption of new securities is as great as in any pre-
vious period of our history. This record is all the more astonishing
when we consider that since August, 1914, American investors have
been called upon to absorb in addition over $1,740,000,000 of
European war loans and approximately $1,300,000,000 of American
securities formerly held abroad.
American Securities Returned to Our Market
Let us first take up the resale of American securities by foreign
investors in the American market. The only accurate information
at hand concerning foreign holdings of American securities is that
compiled by President Loree, of the Delaware and Hudson Com-
pany.
Mr. Loree's figures give the par value of American railroad
securities held abroad at different dates. Industrial or American
municipal securities are not included in the figures submitted. One
hundred and thirty-six railroad companies reported securities held
abroad. On January 31, 1915, $2,704,402,364 in par value of
Digitized by
Google
Effect op War on New Becueity Issues 121
AMERICAN RAILROAD SECURITIES HELD ABROAD ON AUGUST 1, 1916.
Par value Market value
Claas of accurities
July 31, 1916
July 31, 1915
Jan. 31, 1915*
July 31, 1916
July 31, 1915«
Preferred atock. . .
$120,597,760
$163,129,850
$204,394,400
$93,816,715
$117,863,393
Second pref . stock
4.858,650
5,608.850
5,558.150
2,060,256
2,115,415
Common stock . . .
336.761.704
511.437.356
573.880.393
234,154,103
342^25,958
Notes
9,070,955
24,632.292
58,254.390
6,844,240
22,574,284
Debenture bonds.
74,796.900
160,288,700
187,508.310
69.858,284
141.444,593
Coll'tl trust bonds
85.166.470
180,590,850
282.418,415
66,526,692
136,422,186
Mortgage bonds. .
774,793,834
1,150,339,130
1,371,156,851
628,183,797
962,081,613
Equip, trust bonds
7,788,300
25,253,201
20.233,455
7,015,683
24,480,410
Car trusts
836,000
29,000
681,320
29,060
Receivers* oertifi's
958,000
2,201,000
998,000
958.000
2,201,000
Total $1,415,628,563 $2,223,510,229 $2,704,402,364 $1,110,099,090 $1,751,137,912
> Market value as of August 2, 1916.
* No market value determined for first compilation.
American railway securities were held by foreigners. By July 31
of the same year the amount so held was reduced to $2,223,510,229,
showing that approximately $500,000,000 were disposed of during
these six months. The last figures obtainable, as of July 31, 1916,
show that all but $1,415,628,563 have been liquidated. From a
study of these figures we see that nearly one-half of the railroad
securities held by foreigners have come into American hands dur-
ing the last eighteen months. If account is taken of industrial
securities, municipal bonds and railroad securities owned abroad
but standing in the name of American bankers holding them as
agents, it is estimated that between $1,500,000,000 and $1,750,000,-
000 of American securities have been returned from abroad since
the outbreak of the war, two years ago.
New Foreign Loans Floated Here
The American investment market has been called upon to
absorb between $800,000,000 and $1,000,000,000 of foreign-held
securities a year. In view of the large output of new securities by
domestic corporations, this record is most remarkable. But even
this tremendous volume of securities does not measure the extent of
the market which has prevailed during the last two years, for it
does not take into consideration the floatation of the various loans
in. the United States by Canada, the Latin Americas, or the
belligerent nations of Europe. The record of such financing, in so
far as ascertained, is as follows:
Digitized by
Google
122 Thb Annalb or the American Academy
Europe $1,300,000,000
Canada and Newfoundland 336,000,000
Latin America 106,000,000
Total $1,740,000,000
This estimate indicates that there has been floated in the United
States since the outbreak of the European war over $1,740,000,000
of foreign public loans.
Has the foreign liquidation and the financing of the belligerents
curtailed the financing of American corporations and municipali-
ties? From the available data, the question must be answered in
the negative, for the records show that more securities have been
issued than was the case in the year preceding the war. It might
be urged that a comparison based on the total issues of securities
of all kinds, such as has been used, is not a fair index of the extent
of the security market or of the degree to which the war has affected
those securities which are entitled to rank as investments. A large
proportion of the total capitalization represented in the above table
is of a speculative nature. This portion represents the securities
of new industrial corporations which have not established them-
selves as business enterprises, and where the capitalization is,
therefore, in large part nothing but a claim to a share of anticipated
profits, and to a good will of unknown value. If we separate rail-
roads and industrial security issues and compare them by six-
months' periods, we find that no facts are disclosed which impeach
the conclusion that the security market has been one of large capac-
ity.
The following table compiled by The Journal of Commerce
classifies the financing of railroads and industrials for the six months
(actual issues) and gives comparisons with a year ago.
Railroads
1910 1916 Chanp
Bonds $270,281,300 $331,475,300 -$61,194,000
Notes 209,206,000 135,708,800 +73,496,200
Stocks 26,203,400 6,485,000 +20,718,400
Total $606,689,700 $472,669,100 +$33,020,600
Digitized by
Google
Effect of War on New Security Issues 123
Indttstbial Cobporatkonb
1010 1915 Chance
Bonds $300,232,300 $169,194,500 +$141,037,800
Notes 160,286,100 84,468,500 + 76,817,600
Stocks 368,373,100 51,842,600 +316,630,600
Total $828,891,500 $296,606,600 +$633,386,000
Grand total $1,334,681,200 $768,174,600 +$666,406,600
The real effect of the European war upon the sale of securities
by established American corporations has been to compel a higher
interest rate. Large corporations have been compelled to compete
for money with the foreign governments, which have been constantly
increasing the rate which they will pay. With European war loans
selling on a 5} per cent basis or better and with Canadian loans
marketed at prices yielding the investor above 5 per cent, it is obvi-
ously difficult, if not impossible, to market railroad bonds on a 4
per cent or 4i per cent basis. As a matter of fact the most notice-
able feature of American corporate borrowing has been the higher
yields offered to the investing public. There is nothing in the
situation at the present time which would support the conclusion
that the end of this movement has been reached.
The Disposition of These Securities
Have the investors of the United States absorbed the additional
capital issues of American corporations and municipalities, the
European liquidation of American securities and the foreign war
loans floated in this country? If such absorption has occurred the
general investment situation must be regarded as sound, but if, on
the other hand, a considerable proportion of one or all of these
groups remains imabsorbed, the situation must be regarded as un-
healthy. Securities are not really marketed until they are actually
sold to the investor. So long as they are in the hands of the under-
writers or investment bankers they constitute an element which may
prove dangerous in case of financial disturbance. In most cases
securities in the hands of bankers and underwriters are pledged with
national, state or private banks as collateral for loans, which is
another way of saying that the money to purchase them from the
corporations has been largely borrowed. An undue expansion of
collateral loans would, therefore, be r^^ded as an unfavorable
Digitized by
Google
124 The Annals op the American Academy
symptom and indicative of the fact that the American investing
public are being fed with secm-ities faster than they can be absorbed.
Unfortunately data concerning collateral loans of the national and
state banks are not available for a later date than June 30, 1915.
There is no way of telling at the present moment what expansion
has occurred in this class of loans during the succeeding fifteen
months.
Collateral Loans of Our Banks
The collateral loans of the state banks for the year ending
June 30, 1915 (covering the first ten months of the war) expanded
$133,000,000 over the loans reported in the previous year. The
collateral loans of the national banks on June 30, 1914, aggregated
$2,409,805,178, of which $1,036,976,740 were demand loan? and
$1,372,828,438 were time loans. On June 30, 1915, the total collat-
eral loans aggregated $2,633,326,003. The increase occurred en-
tirely in time loans, which would lead to the assumption that there
was a larger "carry" of securities by investment bankers. It is
not safe to presume, however, that the collateral loans entirely
represent securities being thus carried. A large proportion of these
loans represent the borrowing of business men and others for the
purpose of financing their enterprises. Collateral loans of the
national banks increased in volume from June, 1913 to June, 1914
some $241,000,000. The increase in collateral loans in the year
ending June, 1915 was $224,000,000. It is reassuring to know that
there was no unusual or abnormal increase in this year.
Much speculation is heard as to whether collateral loans have
unduly expanded in the twelve months ending June, 1916. It is
likely that there has been considerable expansion. An analysis of
this expansion would to a large extent indicate whether America was
carrying an unusual amount of undigested securities.
Their Investment Holdings
In this connection it is interesting to analyze the investment
holdings of our banking institutions. National and state banks,
trust companies, private and savings institutions constitute one of
the largest classes of bond buyers. If we group the banks outside
of the national banking system, that is to say, the state, mutual
savings banks, private banks, and loan and trust companies, we
Digitized by
Google
Effect of War on New Security Issues 125
find that over a period of five years ending June, 1915, their holdings
of state, county, municipal, railroad, public utility and other
bonds — except United States bonds — have increased from $1,112,-
553,992 in 1911 to $1,346,613,857 in 1915. It is impossible to
say what changes have occurred in this account for the year ending
June 30, 1916.
The national banks in June, 1913, held $1,050,587,650 of bonds,
other than United States bonds. According to the last statement
preceding the outbreak of the war, June, 1914, the bond holdings
aggregated $1,015,981,900. A year later the total bond holdings
were $1,191,128,000. In June, 1916 the bond holdings were $1,528,-
832,000, an increase in twelve months of $337,704,000. In the
same period deposits increased $1,500,000,000 and the total resources
of national banks increased $2,100,000,000. Certainly it could not
be contended that an increase in bond investments of the amount
indicated above is excessive, in view of the tremendous growth in
deposits and resources of national banks.
The War and Financial Conditions
With this general review of the statistical progress of the se-
curity market we turn to a more detailed examination of the effect
of the war upon investment conditions. It will be remembered that
the first important effect after the outbreak of the war and continu-
ing for practically all of the last five months of 1914 was the paral-
ysis of the investment market which did not resume any activity
until after the opening of the stock exchange on November 28.
Foreign commerce was demoralized. It was not until one power
controlled the sea that we find it again on the upward trend. The
foreign exchange situation became very acute and developed to a
point where the American dollar had greatly depreciated in terms
of the English pound. This situation was greatly relieved by the
operation of the $100,000,000 gold pool and the exportation of gold
in large quantities from the United States to England and Canada.
This embarrassing foreign exchange situation was brought about
by the falling off in our exports and also by the effect of the mora-
toria declared by the various belligerent nations. Americans were
forced to pay debts abroad which were due, but on the other hand
were not receiving remittances of debts due by foreign merchants.
i Later the foreign exchange situation was reversed. Even though
ii
Digitized by
Google
126 Thb Annalb of the Ambbican Academy
the moratoria in some cases were extended, the large exports of
American goods called for payments which the foreigner was not
meeting with the shipment of commodities, but was forced to meet
with shipments of gold. England and France were very unwilling
to release any large part of their gold holdings for it reduced their
ability to extend credit, and finance war obligations in their own
country. Hence English and French merchants were forced to pay
a very high price for bills of exchange with which to settle their
debts in the United States.
The situation became serious. Although the United States was
the recipient of large importations of gold, even this did not check
the fall in sterling exchange, and it was not until the flotation of the
$500,000,000 Anglo-French loan in this country that sterling ex-
change recovered to any extent. Even at this time the Ei:^h
pound is greatly depreciated in terms of the American dollar, but
due to further credits arranged with American bankers, the pound
sterling has not fluctuated widely. Even though quotations do not
resemble normal times, the difference does not lie wholly in the
visible balance of trade.
Following the close of the London and New York stock ex-
changes and the paralysis of our foreign commerce, we find a com-
plete disorganization of American business. Bankers were not
prone to encourage extensive business operations at this time, nor
was the business man anxious to increase his facilities, for in many
cases he found himself with large stocks of goods on hand and little
work for his plant because of cancelled orders. This condition
necessarily led to unemployment and a consequent flooding of the
labor market. Manufacturers were not making money and busi-
ness suffered a depression which is sometimes referred to as the
depression of 1914. In this depression many companies lowered
and in some cases suspended their dividends. This destroyed the
basis of financing new issues.
Effect on the Markets
The bond market reflected this condition. It is very difficult
to determine to what extent the prices of securities fell, because of
the '^ pegged" quotations during the suspension of stock exchange
operations. Generally the tone was not optimistic. With the
placing of large war orders business was revived in certain industries,
Digitized by
Google
Effect of War on New SEcimiTY Issues 127
and soon acted as a general stimulus to all trade. The manufacturer
found himself in the position where he could sell at his own price,
instead of at a bargain, and this situation necessarily meant larger
profits. The labor market was directly affected, for the demand
for labor was steadily increasing, and the growing assurance that
America could withstand the strain and irregularities caused by the
European struggle brought about a return of public confidence.
The opening of the stock exchanges marks the end of the period of
fear and distrust. The banks had large surplus reserves and money
was very cheap, so that the American manufacturer was able to
finance his operations at a low cost, so far as short-term loans were
concerned. When the foreign exchange situation turned in our
favor, that is when sterling exchange crossed the par point, it signi-
fied that our commerce was moving in suflScient volimie to liquidate
our indebtedness and that we were able to realize on goods which
had been tied up temporarily and also on new goods which were
being manufactured on foreign order.
At this time the investor was looking for bargains in securities.
He anticipated heavy European liquidation of standard securities
at low prices, and even though banks were making short-term loans
at low rates, it was very difiicult for the railroads of the United
States to float long-term issues. Therein comes the distinction
between floating and permanent or fixed capital, for while the banks
were lending at comparatively low rates tlie investment market was
looking for a higher yield, which prevented normal issues of new
capital from being sold. The railroads were not strongly bidding for
investment funds because the business depression was still continu-
ing to a diminishing extent, and they had not as yet shared in the
prosperity which had afifected but few industries. Judging from
the idle car figures, and also from earnings, the railroad situation
was becoming worse from month to month as the war continued.
It was not until the early summer of 1915, according to the fore-
going barometers, that they began to share to any appreciable ex-
tent in the activity of American commerce. Since that time, with
the exception of. the month of June, the number of idle cars has
decreased until at the present writing figures indicate that a car
shortage is imminent.
Digitized by
Google
128 The Annals of the American Academy
RailboadS; Public Utilitibs and Municipalities
The fact that the raihroads had a great many idle cars also
signified that their terminal and track facilities were not wholly
used and hence they did not need new capital in large amounts to
extend such facilities. Operations under construction at the begin-
ning of the war were in many instances discontinued or curtailed.
Generally new propositions were not undertaken for two reasons:
first, because of the period of uncertainty; and second, because of
the inability to get capital on favorable terms, since the American
investor was holding off to wait for bargains in American securities
held by foreigners rather than buy new securities issued for the
extension of work in the United States.
Practically the same situation existed in the public utility
field. Street railway earnings were lagging which is usually the
case during any period of unemployment. The working man was
not riding as frequently, and the earnings of electric light and gas
companies were directly affected because the public was economiz-
ing. This is especially true in certain localities particularly the
middle west. These factors stunted the demand for new capitiJ
to be used for additions and extensions in this field. However
certain standard properties, of which the Detroit-Edison is an ex-
ample, successfully disposed of securities during the period. In
most cases these securities had a vogue due to the established busi-
ness of the issuing company.
The market in municipals was slow. This market is largely
an institutional market and quickly reflects general business con-
ditions. In periods of depression there is a falling off in savings
and a hesitancy to invest in a falling bond market. With the
improvement in labor conditions and an increased prosperity in the
industrial field we find this market improving.
During the year 1915 the United States was called upon to
finance foreign governments. Canada, which theretofore had dis-
posed of practically all of its securities in England, turned to us in
order to sell its public bonds. The proposition which they offered
was very attractive, because of the high interest rates. American
bankers also took Argentine loans aggregating $79,000,000.
War orders had given tremendous impetus to American business.
The Allies were buying at a rate of which the public had no con-
ception. It will be remembered what a sensation the size of the
Digitized by
Google
Eppbct op War on New Security Issues 129
Anglo-French loan caused, for it disclosed in part the huge opera-
tions which America was conducting for the allied powers. Con-
tinuous liquidation of foreign-held American securities kept the
prices of railroad stocks and bonds down. These foreign security
holdings were very attractive, first, as to price, and second, because
the railroads were now showing a better margin of earnings, and
therefore, were a safer investment than heretofore.
The continued importation of gold increased the lending
power of our banks enabling the easy money market to continue.
The industrial boom meant profits to the manufacturer and it may
be safely assumed that the business man absorbed a great many
securities, for the business man's investments are determined by
his profits. The Anglo-French loan was underwritten with appar-
ent ease, but the syndicate could not liquidate fast enough without
beating down the price of these securities. K the syndicate had
been any less powerful, the loan probably would not have been
absorbed so quickly. The underwriters took their shares at once,
gradually disposing of the bonds as a market could be found for
them among individual investors and later we find part of the loan
being disbursed as dividends by manufacturers of explosives.
Absorption op Securities A Serious Problem
Experience showed that the American investor was slow to
take the securities of foreign governments, for he feared repudiation,
and, moreover, expected collateral security which has been the
basis for issuing some of the later loans.
Tremendous speculation in industrial shares, especially in
stocks of manufacturers of munitions and automobiles, brought
into being industrial combinations and new companies. This
marked a period of increasing prices in stocks, but a careful study of
our general security market reveals the fact that with the exception
of the "war stocks'* the rise has not been as general as people have
been made to believe. The year 1916 opened with a continued
good bond market lasting throughout the first six months. Early
in 1916 the municipal bonds and public securities generally were
very popular because of the income tax regulation exempting them
from taxation. Bank interest rates were higher than before the
war. Continued European liquidation did not seem to afifect the
market for new securities. The period is also marked by additional
Digitized by
Google
130 The Annaxs of the American Academy
financing of European powers. The later foreign loans and the
liquidation of foreign-held American securities have bad to compete
with new issues of railroad, public utility and other corporate securi-
ties issued at higher rates of interest, which absorbed a large part
of the investment fund of the United States.
As to the future no one can prophesy what will happen in the
investment market. War orders are continuing, but increased
wages and the forcing of shorter hours upon American business
have increased the cost of production and doubtless decreased
profits. An increased demand has raised the cost of raw materials^
therefore directly affecting the situation. Nevertheless, the coun-
try is very prosperous and the investment fund necessarily large.
If the European liquidation goes on to the end it may stunt the
market for new securities of railroads and public utilities, but in
view of the increased business in the United States we have reached
the point where we must have new fixed capital in these industries,
therefore, increasing competition between these two groups of
securities may be expected. It is very likely that a large part of the
current sluggishness in the American security market, if it can be
called sluggish, is due to labor troubles. This situation makes the
investor pessimistic and leads to market uncertainty. Large in-
vestment bankers avoid commitments fearing that market conditions
may radically change before they can sell that which they have
bought. The writer has purposely omitted any discussion of the
Mexican situation and also the national political situation as in-
fluencing the marketing of new securities in the United States.
In conclusion several effects may be noted. American corpora-
tions have lost the investment fund of foreign countries. The
United States is practically dependent upon the investment demands
of its own people. In addition to financing local necessities we
doubtless must absorb securities formerly owned by foreign investors.
As this is accomplished we are gradually converting our country
into a creditor nation. The railroads have suffered, because of the
competition which their securities have had to meet, at certain
periods during the war. It is possible that this class of security
will have to be offered on a more attractive basis. In the long run
it should be comparatively easy to finance American enterprises
entirely with American capital.
Digitized by
Google
FINANCING AMERICAN WAR ORDERS
By Thomas Conway, Jr., Ph.D.,
Professor of Finance, Wharton School of Finance and Commerce,
University of Pennsylvania.
War orders have revolutionized America's position in inter-
national affairs. In point of age and development, the United
States is a young country. It is scarcely two generations since
the west was settled. We have needed large amounts of capital —
more than could bye provided from the savings of our people. Our
natural resources, favorable climate and energetic population have
furnished a combination which has been attractive to investors of
all nations. The great commercial nations of Europe, especially
England, France and Germany, have in the past years invested
enormous amounts of money in this country. America, therefore,
might be compared to a thriving, growing industrial plant for the
construction of which large amounts of money had to be borrowed
and on which there still remains a large mortgage. The plant
has earned large profits, enabling it not only to pay interest upon
the borrowed money but to return handsome dividends to its
stockholders. War orders are enabUng America to pay off rapidly
the mortgage on the plant. We are ceasing to be a debtor nation
and are approaching the position where we will become one of the
great creditor nations of the world.
Whatever may be the merits of the question as to whether the
United States is preserving neutrality in selling munitions of war
to one set of belligerents, the other being debarred because of the
blockade, there can be no doubt that, from an economic stand-
point, America is one of the strongest factors in the Allies' struggle.
Without her material assistance, the chances of success for the
Allies would be perhaps hopelessly reduced. The workshops of
America have turned out an enormous supply of goods of every
character directly or indirectly employed in warfare. Every
American workman engaged in such work is taking the place of a
citizen of a belligerent country who would otherwise have to remain
at home in the factories in order that the necessary munitions
131
Digitized by
Google
132 The Annals op the American Academy
might be produced. American workmen, in this sense, therefore
may be regarded as substituting for European soldiers. It is not
the purpose of this article, however, to deal with the international
aspects of the mimitions business. The question is one for deter-
mination according to the principles of international law. How-
ever, it is important for us to imderstand the reason why the Allies
turned to the United States, just as the central powers would have
done were they able to control the seas — for supplies of munitions.
The Immense Volume op Wab Matebla.ls Exported
It is almost impossible to determine the exact extent of the
war orders which have placed in America. They surpass in volume
anything imagined prior to the European conflict. The sudden
outbreak of war paralyzed American business. A large proporticm
of the English merchant marine was requisitioned for military
purposes. German shipping was driven from the seas. What in
substance amounted to a blockade was established around Germany,
cutting off one of our largest foreign customers. Thousands of
men were out of employment. Relief committees and other phi-
lanthropic organizations were swamped with demands for assistance
to the unemployed. The paralysis of international exchange, the
closing of the stock exchanges throughout the entire world, and the
dislocation of trade relations affecting most of the civilized coun-
tries profoundly depressed all forms of business enterprise. Fac-
tories were running on part time or were completely shut down.
These conditions were peculiarly favorable to the nations urgently
in need of war mimitions of every character. American manu-
facturers were anxious to do business; work upon orders could be
imdertaken at once. Thus it happened that within a few weeks
after the outbreak of the war, America's industrial condition]^began
to be revivified by the injection of war business which has since
become the outstanding feature of our commercial and industrial
life.
The extent of war orders^and^the influence which they have
exerted upon industrial conditions in this country can be under-
stood if we set down for comparison the amount of goods of this
character which had been exported prior to and since the outbreak
of the war. We will first make a comparison of the exportations
of those articles which are obviously used in military operations:
Digitized by
Google
FiNANCiNO Amxbican Wab Obders
133
Twelve Months Ending June
1014
1016
(Value.)
1016
$3,388,819
$64,046,534
$73,631,146
690,974
12,726,143
22,946,312
98,835*
2,001,258*
2,136,079*
226,149
1,541,446
7,002,006
33,198,806
68,107,818
120,000,866
3,606,267
4,963,270
17,936,227
51,676,222
85,108,341
167,742,608
6,272,197
41,476,188
467,081,928
4,039,590*
7,416,389*
23,909,209*
17,867,234
24,696,795
47,134,810
786,455
17,460,519
7,529,720
3,442,297*
9,474,947*
18,066,485*
1,494,888
4,979,044
3,621,888
Artielee Exported
Horses
Mules
Horse shoes
Aeroplanes and parts of
Automobiles and parts of (not
including engines and tires) . . .
Automobile tires
Raflway cars, carriages, motor
cycles, bicycles, wheelbar-
rows and hand trucks
Explosiyes
Barbed wire
Boots and shoes
Harness and saddles
Firearms
Surgical appliances, including
instruments
$118,900,590 $324,645,367 $933,632,002
*In footing the totals, duplications, indicated above by (*), have been avoided.
In passing it should be noted that war broke out in Europe
on July 28, 1914. By comparing the value of exports of each of
the articles enumerated above for the twelve months ending June
30, 1914, with the amount exported in the two succeeding years,
the extent of the stimulus which war has imparted to those indus-
tries can be measured. It will be seen that whereas in the year
ending June 30, 1914, the total value of the above mentioned arti-
cles exported was $118,900,590, the amount exported in the year
ending June 30, 1915, w^ $324,545,357; while in the year ending
June 30, 1916, they aggregated $933,632,000.
Exports op Indirect Military Value
War orders are variously defined and according to the defini-
tion the volume of such business will vary. If a narrow con-
struction is applied, the term being used to include merely those
articles which are used directly and unmistakably in military
operations, their volume would be compassed within the above
table. But an accurate construction of the term would involve
the inclusion of a large number of articles which are not directly
Digitized by
Google
134
Thb ANNAts 6f the Ambrican Academy
employed in military operations. War involves the destruction
not only of men but of a large amount of property which, in times
of peace, would be used in gainful occupations. It involves the
demoralization of labor forces, for the places of those taken to the
front must be filled by inexperienced men, or in many cases remain
vacant. Modern war has for its background a tremendous and
Herculean business organization engaged in the production of food,
clothing, anmiimition, weapons and supplies of every character
necessary to effective operations of armies numbering millions of
men. Industries of every great belligerent have been largely re-
made. Factories which have produced cloth, for example, have
been ripped out and converted into metal working shops. Other
textile factories have, through changes in machinery and methods,
been adapted to the production of uniforms, in which work special
requirements must be met. Thus it follows that America has
furnished not only an enormous quantity of goods directly useful
in war, but she has been called upon to furnish a large amount of
machinery and equipment of every kind which is necessary for the
reconstruction of European industry or for substitution for goods
which in peaceful times were produced by one or the other of the
belligerents.
One of the most easily imderstood illustrations is foodstuflFs.
When France called miUions of men to the colors, she depopulated
her farms. It became necessary, therefore, to import a larger
supply of foodstuffs than had theretofore been necessary. If we
compare the exports of articles which are indirectly used in warfare,
we will find that there has been an enormous expansion in this
portion of the export business of the United States, which must be
classified as a part of our war orders:
Twelve months ending June
ArtideB exported 1914 1915 1910
(value)
Brass, articles made from $3,966,645 $12,819,373 $128,331,820
Breadstuffs 165,302,385 573,823,676 435,696,629
Copper and manufactures of
(except ore) 146,222,556 99,558,030 173,946,226
Manufactures of cotton 51,467,233 71,974,497 112,053,127
Metal working machinery 14,011,359* 28,162,968* 61,315,032*
Total iron and steel and manu-
factures of 251,480,677 225,861,387 621,209,453
Meat products 143,261,846 205,785,468 266,796,608
Digitized by
Google
Financing Ambrican Wab Ordbbb 135
Twehre montlii endinc June
ArtidM exported 1014 1016 1016
(value)
Zinc and manufactures of (ex-
cept ore and dross) $406,208 $21,243,935 $45,867,156
Wool and manufactures of (in-
cluding wearing apparel) 4,790,087 27,327,451 53,983,655
Cotton wearing apparel ......... 10,767,448* 29,660,090* 34,226,664*
$766,897,637 $1,238,393,817 $1,838,324,012
* In footing the totals, duplications, indicated above by (*), have been avoided.
Combining the totals in the two preceding tables, we find that
the volume of exports of those articles now directly or indirectly
used in warfare had amounted to $885,798,227 in the year ending
Jime 30, 1914. In the year ending June 30, 1915 — the first year
of war the total was $1,562,939,174 while in the year ending June
30, 1916 the total was $2,771,956,014. The increases in the amount
thus exported in the last two years over the exports for the year
ending June 30, 1914, is a rough measure of the war orders which
America has filled:
Tear endinc June 30
1916 $677,141,000
1916 1,886,158,000
$2,563,299,000
The increase in America's export trade has been almost en-
tirely confined to the articles enumerated above. The value of all
other classes of merchandise, not specifically enumerated above,
exported from the United States in the two years of war, as com-
pared with the year preceding the outbreak of the war, was as
follows:
Year ending June 30
1914 $1,443,886,798
1916 1,153,239,291
1916 1,500,441,760
Under ordinary conditions, the British blockade would have
resulted in a material reduction in American export trade because
it would have cut off Germany and her allies, numbered among
our largest customers. As a matter of fact, the tremendous ex-
pansion of American trade is all the more remarkable because it
Digitized by
Google
136
The Annals of the American Academy
occurred in the face of the loss of the trade of the central powers.
The comparative exports of all classes from the United States to
the two groups of belligerents during the year preceding the out-
break of the struggle and the first two years of war are as follows:
Value or Expobtb or Mbbchandisb
Tw«1t« monihs endiiic Jans
1014 1916 1016
CerUrcU Powers:
Austria-Hungary $22,718,258 $1,238,669 $152,929
Bulgaria 326,734 12,490 44,223
Germany 344,794,276 28,863,354 288,851
Turkey 3,328,519 994,120 42,169
Totals $371,167,787 $31,108,633 $528,172
The AUies:
Belgium $61,219,894 $20,662,315 $21^44,638
France 159,818,924 369,397,170 630,672,504
Italy 74,235,012 184,819,688 270,489,922
Russia 31,303,149 60,827,531 313.515,364
United Kingdom 594,271,863 911,794,954 1,518,046,263
Totals $920,848,842 $1,547,501,658 $2,754,568,691
The Allies' blockade has practically isolated the Central
Powers. Their exports have fallen to a negligible point. On the
other hand, the purchases of the Allies from us have nearly trebled.
The problem of financing war orders in America, therefore, relates
almost entirely to the purchases of the Allies.
International Financing Before the War
An imderstanding of the financial problems involved in paying
for American war orders depends upon a comprehension of the
general principles underlying the payment of debts between citizens
of different countries. It is an axiom of business that international
indebtedness, whether public or private, is settled almost entirely
by the exchange of goods, giving rise to banking credits. Whatever
balance there may be after these credits are exhausted is liquidated
through the shipment of gold. The account of the United States
with the rest of the world may be illustrated by reproducing the
comparison made by Sir George Paish for our National Monetary
Commission some years ago:
Digitized by
Google
Financing American War Orders 137
FoBBiGN Tradb or THE Unitbd States, lOOS-9
Merehandue:
Exports—
Domestic . . $1,638,000,000
Foreign 25,000,000
Total $1,663,000,000
Imports 1,312,000,000
Excess of merchandise exports over imports $351,000,000
Gold:
Exports $92,000,000
Imports 44,000,000
Excess of gold exports over imports $48,000,000
Siher:
Exports $56,000,000
Imports 44,000,000
Excess of silver exports over imports $12,000,000
Total excess of merchandise, gold and silver exports over
imports $411,000,000
Eemittances far interest, etc,:
Interest $250,000,000
Tourist expenditures 170,000,000
Remittances to friends 150,000,000
Freight 25,000,000
Total remittances 595,000,000
Excess of sum remitted for interest, tourists, to friends,
and for freight over trade balance $184,000,000
Sir George Paish estimated that the above balance of $184,-
000,000 was liquidated or settled by permanent or temporary
investments made by citizens of other coimtries in the United
States. A word of explanation concerning the above tabulation
may be helpful. America, for a generation, has been exporting
much more than she has imported, resulting in what is known as a
"favorable balance of trade." This favorable balance of trade or
excess of exports over imports, which in the year under considera-
tion amounted to some $411|000|000y is eaten up through payments
Digitized by
Google
138 Thb Annals op the American Academy
which citizens of this country must make to foreigners for various
purposes. The first item represents interest payments on foreign
capital invested in this country, amounting to some $250,000,000.
To this must be added the tourist expenditures of our citizens who,
in peaceful times, went abroad for the summer. The excess of their
expenditures over those of Europeans visiting this country was
estimated at $170,000,000. The item "remittances to friends"
represented assistance given by American immigrants to their
relatives in the mother country. Inasmuch as most of America's
oversea trade is handled in ships fl3ring other flags, it follows that
we must pay some $25,000,000 a year for freight.
The situation which Sir George Paish depicted in his com-
parison for the year 1908-09 is generally representative of the
conditions which prevailed at the outbreak of the war. The trade
balance of the United States, that is to say the excess of exports
over imports, including not only merchandise but gold and silver,
in succeeding years, was as follows:
Yatf endinf June 80
1910 S273,330;267
1911 489,809,443
1912 677,289,769
1913 691,790,307
1914 540,791,780
According to the best estimates, America's fixed charges pay-
able to Europe, representing remittances for goods purchased,
tourist expenditures, remittances from Americans to friends residing
abroad, remittances for freight, insurance, etc., remained in the
neighborhood of $600,000,000 per annum. This sum might be
termed the United States' fixed charges which every year must be
Uquidated by an excess of merchandise exports over imports.
When this excess has been less than $600,000,000, the deficiency
has been made up through the exportation of gold from this countiy
or the sale of additional American securities to European investors.
When the balance of trade of the United States exceeds $600,-
000,000, Europe must either ship us gold or sell securities in our
markets. As a matter of fact under normal conditions, as we have
seen, the balance of trade corresponds very closely to what we have
termed the fixed charges of the United States.
Digitized by
Google
Financing American Wab Ordebs 139
Changes Brought About by the Wab
With the advent of war orders, the situation was entirely
revolutionized. The following comparison will show how abnor-
mal became our trade relations with the rest of the world:
Yearendms Merchandise Ezoees of exports
June 30 Merchandise exports imports over imports
1914 $2,364,579,148 $1,893,925,657 $470,653,491
1915 2,768,589,340 1,674,169,740 1,094,419,600
1916 4,333,658,865 2,197,883,510 2,135,775,355
To settle this abnormal excess of exports over imports, total-
ing in the two years of war in the neighborhood of $2,300,000,000
(a sum roughly equal to the exportations of mimitions of war),
constitutes the financial problem of paying for American war
orders. There are three methods by which a nation may settle
an unfavorable balance in account with the rest of the world. The
first is the exportation of gold, for gold is the international money
of conmierce. The second method is through the sale of securities
in the markets of a creditor nation, the proceeds of which may be
used to Uquidate the balance of debt owing to that nation. The
third method is to borrow a sum equal to the remaining indebted-
ness in the creditor country or in some other country from which
the proceeds of the loan may be transferred to the creditor country
to settle the indebtedness. All of these methods have been em-
ployed for many years. They have been used to an extent here-
tofore undreamed of in financing American war orders.
In view of the fact that Germany was cut off from America
by the blockade, the problem of financing war orders concerns
almost entirely the purchases of England for herself and her allies.
It should be noted that at an early date England, by arrangement
with her alUes, assumed control of the matter of financing American
purchases. Most of the financial operations have been carried on
through the firm of J. P. Morgan & Company, acting as fiscal agents
for the British government.
The Procedure Followed in War Financing
The procedure followed in financing American war orders can
be divided into certain phases, each of which is more or less clearly
defined, although in point of time overlapping. Immediately fol-
lowing the declaration of war, American bankers were embarrassed
Digitized by
Google
140 The Annals of the Ambrican Academy
by the necessity of providing gold for exportation to Europe in
settlement of American debts. America for years had been in the
habit of making short-time loans in foreign money markets during
the spring and sunmier, to be repaid through the sale of cotton and
other staples exported in the fall and early winter. It has been
estimated that such borrowings were usually in the neighborhood
of $400,000,000. Pressed as they were for funds, European bankers
demanded repayment of these loans, while at the same time the
uncertainty at the beginning of the struggle for command of the
sea drove British and German ships alike to seek the safety of the
most convenient harbors. Our foreign trade was paralyzed.
Grain, cotton and freight of every character piled up at the sea-
board and congested railway yards and terminals throughout the
coimtry. American bankers found themselves in the position of
having loans to repay without being able to avail themselves of the
proceeds of our customary export trade which would normally
move at that season of the year. The only alternative which was
open to them — for European and American stock exchanges were
closed and hence the sale of securities could not be resorted to—
was the exportation of gold. During the first few weeks following
the outbreak of the war, gold moved to Europe in large quantities.
The net loss to this country from August 1 to December 31, 1914,
amounted to $81,720,000.
As a matter of fact, the outflow of gold was checked somewhat
prior to the close of the year 1914. The reestablishment of ocean
commimication and the lessening of the rigors of the British mora-
torium made available sufficient credits, shortly after the first of
November, to enable American bankers to meet their obligations
without the exportation of gold. Sterling exchange reached
$4.86| on November 12, indicating practically normal conditions.
In the meantime, Europe had been placing enormous wsr orders
in America. The financial requirements necessary to meet these
commitments and the realization that Europe's purchases of food-
stuffs and raw materials would be greater than ever, led American
bankers to believe that the worst was over, in so far as preserving
a stable financial equilibrium was concerned. Accordingly, on
November 28, 1914, the stock exchange was opened, with limitations
upon trading designed to prevent wholesale liquidation at ruinous
prices. These limitations were shortly thereafter removed.
Digitized by
Google
Financing A»iBRicAN War Orders 141
PXTRCHASES IN AMERICA AND ThEIR EFFECTS
The enormous purchases of the Allies in America speedily
turned the tables, so that instead of having to export gold and face
a sterling exchange rate of $5, America was in a position where
British exchange sold down to imheard of levels, touching the low
point at $4.49 on September 4, 1915. An enormous importation of
gold occurred. From surface indications one might have concluded
that financial Elngland was dangerously near a state of demorali-
zation in handling the exchange problem. Apparently there were
no adequate means of creating the necessary credits in America.
In the absence of any authentic explanation, various reasons have
been given for England's apparent lack of poUcy controlling the
exchange markets. One explanation which has been offered is that
England over-estimated the extent of the liquidation in the New
York market by foreigners of American securities owned by them.
As a matter of fact, whatever may be the real reason, the fact re-
mains that the inflow of gold continued in very large quantities,
reducing the reserve at the Bank of England to a point which in
peace times would have been considered dangerous. It was evident
that the Allies must devise other methods to finance their American
purchases.
It should be added parenthetically that the importation of
gold has continued at irregular intervals throughout the entire
period since the outbreak of the war. Gold has moved to this
country whenever other methods of financing American purchases
have been insufficient, and it is reasonable to suppose that we have
not yet reached the end of such gold importations. The record
of gold imports and exports, together with the net loss or gain
throughout the period of war compares as follows:
Gold Imports and Exports
iOOOOmiUed)
Net moyement
Time Ezporto Imports + or —
Aug. 1914 to Dec. 31, 1914 $104,973 $23,263 $-81,720
Jan. 1, 1915 to July 2, 1916 .... 6,266 146,960 +140,694
Jul. 2, 1916 to Dec. 31, 1916. . . . 24,727 304,996 +280,268
Jan. 1, 1916 to June 30, 1916 . . . 67,291 190,149 +122,858
Net increase $462,100
Digitized by
Google
142 The Annals op the Amebican Academt
The net addition to the gold stock of the United States from
the outbreak of the war to June 30, 1916, was $462,100,000.
In point of aggregate amount, the shipment of gold to the
United States in settlement for war purchases was the least impor-
tant method employed. By far the larger part of the tremendous
balance which the aUied nations owed us has been paid through the
sale of securities in American markets, creating credits which could
be utilised in payment of these enormous debts. The securities
sold in this market consisted of two classes: (1) the sale of govern-
ment bonds and other obligations created by the belligerent nations
to finance the war; and (2) the re-sale in America of European
holdings of our securities.
Flotation op Foreign Government Loans
The flotation of foreign government loans in America has been
accomplished imder conditions not altogether favorable. American
investors have a natural prejudice against putting their money into
projects located at a distance. The average bond buyer prefers
the security of a corporation situated near his home to one conduct-
ing business in a distant part of the country. When he is asked
to put his money into some enterprise in a^oreign land, he has
shown little enthusiasm for the project. It was, therefore, a rather
difficult matter to make a market for large amounts of European
government securities. During the period when large gold ship-
ments were being made to America, European bankers had effected
short-time credits with American financial institutions. As the
maturity of these short-time loans approached, it became impera-
tive that they should be funded by some more permanent method
of financing. J. P. Morgan & Company, as the fiscal agents of the
Allies, after extended negotiations, formed a syndicate which
floated $600,000,000 of bonds representing the joint obligations
of the English and French governments, bearing 5 per cent interest
and maturing within five years. These bonds were offered at 98.
Looked at from a strictly technical viewpoint, the loan was only
moderately successful. The bonds have never sold up to the
issuing price. A great deal of hard work was necessary to get the
investing public to absorb them. However, in view of the un-
familiarity of American investors with foreign loans and the prej-
udices which existed, the success of the loan was probably as good
as could be expected.
Digitized by
Google
Financing American War Orders
143
The Anglo-French loan was followed by the sale of a number
of smaller issues and the creation of short-time credits. The New
York Journal of Commerce has prepared the following summary of
the foreign loans effected in America from the outbreak of the war
to June 30, 1916:
EuROPBAN Loans Neootiatbd in the United States
August 1, 1914 to June SO, 1916
Ang^o-French governments 5 % 5-year bonds $500,000,000
British banking credit for six months at 4| %, renewed for 12
months at 5 % 50,000,000
F^^ench government:
Treasury notes, 5 % one year (paid) 10,000,000
Treasury bonds, 5 %, one year (paid) 30,000,000
CoEMnercial credit 20,000,000
CoUateral loans made through Rothschild's and secured by
Penna. R. R. and St. Paul R. R. bonds (paid) 30,000,000
Acceptance credit for one year 15,000,000
Additional acceptance credit 15,000,000
Russian government:
Credit, 6 J %, 3 years 50,000,000
Acceptances (paid) 25,000,000
Credit to Russian- Asiatic bank 25,000,000
Treasury notes 5 %, one year (paid) 10,000,000
Banking credits, private arrangements 7,000,000
Italian government bonds, 6 %, 1 year 25,000,000
German government:
Notes, 5 per cent, 9 months (paid) 10,000,000
Notes (6 % basis) due April, 1917 10,000,000
Banking credit (estunated) 6,000,000
Swiss government, notes 5 %, 1, 3 and 5 years 15,000,000
Greek government, loans negotiated with banks 7,000,000
Swedish government, notes, 6 %, 2 years 5,000,000
Norwegian government:
Bonds, 6 %, 7 years 5,000,000
Notes, 6 %, 2 and 3 years 3,000,000
Miscellaneous loans and banking credits (estimated) 27,000,000
Total $900,000,000
The aggregate face value of the loans negotiated in America
(presuming that the statement of the Journal of Commerce includes
all of the loans negotiated) is $900,000,000. If we add to this total
the excess of gold importations in America over exportations from
this country of $462,100,000, we have a total of $1,362,100,000.
Digitized by
Google
144 The Annals of the American Academy
Comparing this with the abnormal trade balance of $2,500,000,0009
representing Europe's war bill due this country, we see that there
remains to be financed payments aggregating some $1,200,000,000.
Unless there had remained to the Allies some other method of
effecting such payments, they would of necessity have been com-
pelled to restrict their war purchases to the total sum indicated.
EuBOPEAN Holdings of American Securities
The greatest resource which the allied nations possessed in
meeting their bills was their ability to sell American securities,
held by their citizens, in our markets, thereby creating credit
balances which could be used in the settlement of debts owing to
us. The extent of European holdings in American securities has
been the subject of much speculation. The most authoritative
statement which we possess is that prepared by Sir George Paish
for our National Monetary Commission in 1910:
Great Britain possesses about $3,500,000,000 of American securities. To this
sum has to be added the considerable amounts invested by the continent. Larg^
amounts of German, Dutch, and French capital are embarked in American under-
takings, principally railways. A statement drawn up in 1902 at the instance of
the French Minister of Finance from reports supplied by French diplomatic agents
and consuls in various parts of the world placed the total amoimt of French capital
invested at that time in the United States at 600,000,000 francs, or $120,000,000,
but this figure appears to have been an underestimate. It is true that few issues
of American securities are publicly quoted on the Paris Bourse, but relatively
large amounts have been purchased privately by French investors in London and
in New York. The French investments in the United States, including the Penn-
sylvania Raiboad and other loans placed in Paris since 1902, amount to nearly
2,500,000 francs, or $500,000,000.
Estimates of the amount of capital invested by Germany in the United States
were made in 1905 by the German Admiralty and pubUshed in a work entitled
Die ErUwicklung der Deutschen SeeirUeressen im letzten JarhzehrU. These esti-
mates placed the amoimt of German capital in the United States and C^uiada in
1904 at from 2,500,000,000 marks to 3,000,000,000 marks, say, $625,000,000 to
$750,000,000. Since 1904, considerable additional sums of German capital have
been invested in the United States. German bankers place the amount of the
German investments in American securities at about $1 ,000,000,000. The amount
of Dutch capital in the United States is about $750,000,000. American securities
are also held in Belgium, Switzerland, and in other countries. In the aggregate the
amount of European capital invested in "permanent" securities in the United
States is approximately $6,000,000,000.
Digitized by
Google
Financing American War Orders 145
It is generally believed that no great change occurred in the
volume of European investments in America from the date of this
estimate to the outbreak of the European war. What proportion
of these investments can be re-sold is a matter concerning which
no definite information is at hand. A very considerable proportion
of the total is represented by the ownership of land, small manu-
facturing enterprises and unlisted securities for which no ready
market exists and which therefore must be disposed of slowly and
by individual bargain. The most readily available portion of
European holdings consists of American railroad stocks and bonds
and of the securities of certain great industrials listed on the stock
exchange and for which an active market ordinarily exists. No
authoritative computation has been made of the extent of such
industrial investments.
The only data which we have concerning the extent of Euro-
pean liquidation relate to the holdings of railroad securities. Mr.
L. F. Loree, President of the Delaware and Hudson Company,
kas made three inquiries since the outbreak of the war of some 144
railroads — being fJl of the roads in the United States over 100
miles in length — as to the amount of their securities standing in the
names of foreign owners. The results of his three inquiries are as
follows:
American Railboad Secukitubs Held Abboad
CUu9 €f •ecmity Jan. 81, 1916 JvJ^ 81, 1916 July 81, 1916
Preferred stock $204,394,400 $163,129,850 $120,597,750
Second preferred stock 5,558,150 5,608,850 4,858,650
Common stock 573,880,393 511,437,356 336,761,704
Notes 58,254,390 24,632,292 9,070,955
Debenture bonds 187,508,310 160,288,700 74,796,900
Collateral trust bonds 282,418,415 180,590,850 85,166,470
Mortgage bonds 1,371,156,851 1,150,339,130 774,793,834
Equipment trust bonds 20,233,455 25,253,201 7,788,300
Car trusts 29,000 836,000
Receivers' certificates 998,000 2,201,000 958,000
Total $2,704,402,364 $2,223,510,229 $1,415,628,563
A perusal of the above table indicates the extent to which
Europe has sold her American securities in order to finance her
extraordinary purchases in this country. It should be noted that
Digitized by
Google
146 The Annals of the American Academy
this comparison only partially reveals the extent of European
liquidation. It deals only with bonds and stocks in the names of
foreign holders. It does not cover the sale of foreign owned se-
curities which have stood in the names of American bankers, brokers,
or institutions and which are generally believed to aggregate an
enormous total, nor does it take into consideration the sale of
listed industrial securities or of securities issued by small industrial
concerns. Without considering the additions which would be
represented by these unknown elements, the total is nevertheless
staggering:
Reduction in Holdings
Reduction: > In par value In market value
Jan. 31, 1915 to July 31, 1915 .... $480,892,135 Not stated
July 31, 1915, to July 31, 1916. . . . 807,881,666 $641,338,822
Total $1,288,773,801 ?
Presuming for the moment that foreign holders receive, on the
average, par for securities sold, which is unlikely, and adding the
total par value of the railroad securities disposed of to the face
value of government bonds sold in this country and to our net
importations of gold, we find that we have accounted for the
$2,500,000,000 of abnormal purchases arising out of the war:
Net import of gold $462,000,000
Foreign government and bank loans made in America 900,000,000
European securities resold in America 1,288,773,000
$2,650,873,000
Mobilizing These Secubitibs
As a matter of fact, the mad rush of war expenditures in
America exceeded the rate of liquidation of foreign-owned American
securities. In spite of the necessities of European business men
who must deplete their strong boxes in order to liquidate the losses
and repair the crippling effects of war, in spite of the forced sales
of American investments by foreign families left without sufficient
income while their bread-winners were at the front, and the sale
of securities by widows and orphans in closing estates or financing
their needs, the stream of liquidation must needs be quickened by
governmental pressure. With the American market displaying un-
mistakable signs of a limited capacity for European governmental
Digitized by
Google
Financing Ambrican War Orders 147
loans, and faced with the prospect of undermining foreign bank-
ing systems through continued withdrawals of gold, the allied
nations were forced to use pressure to accelerate the disposal of
American securities owned by their citizens. Out of this necessity
was bom the British mobilization plan in January, 1916. The
plan in brief provided for the mobilization, or concentration in the
hands of the British government, of American securities owned
by its subjects. The holders of such securities are given several
options. The first option provides for the sale of American
securities to the British government, payment being made in
British exchequer bonds at specific prices fixed from time to time
by the government. The second option makes provision for hold-
ers of American securities who, for any reason, are not prepared to
sell them. From such the British Treasury is willing to accept
the securities on deposit subject to a right of purchase on certain
contingencies. The government in effect borrows the securities
for a period of two years. While on deposit, the lender of the
securities is to receive the interest and dividends paid in respect to
them, and also, by way of consideration for the loan, a payment at
the rate of i or 1 per cent per annum, calculated on the face value
of the securities.
The securities acquired through the British mobilization plan
can be used for two purposes: first, to sell in the American market
in order to build up banking credits. Doubtless nmny securities
have been so used. Such sales have been made quietly and
unobtrusively, and it is impossible to measure their extent.
Second, American securities thus acquired are pledged for loans in
America, made either by banking institutions or through the
flotation of bonds and notes by investment bankers. Numerous
short-time credits with American bankers have been made by
foreign banks or governments using such securities as collateral.
Other Recent Devices
Of late, subsequent to the period covered by our inquiry, Eng-
land and France have taken to financing themselves on an extensive
scale through the aid of these securities. The French plan is the
creation of an American corporation known as the American Foreign
Securities Company, which has issued a collateral loan of $100,000,-
000, represented by 5 per cent three-year gold notes of the corpora-
Digitized by
Google
148 Thb Annals of thb Ambbican Academt
tion secured by the pledge of $120,000,000 of securities made up as
follows:
Approximatb Valxte at Preyailtno Prices and Then Existing Excmanqe
Rates
Government of Argentina $20,500,000
Government of Sweden 8,725,000
Government of Norway 3,290,000
Govenmient of Denmark 6,380,000
Government of Switzerland 12,080,000
Government of Holland 1,475,000
Government of Uruguay 3,443,000
Government of Egypt 20,200,000
Government of Brazil (Funding Loan) 1,181,000
Government of Spain 12,600,000
Government of Spain guaranteed railroad bonds 8,000,000
Province of Quebec 275,000
Suea Canal Co. shares 11,600,000
American corporate issues 3,700,000
$113,449,000
The British government in August, through a syndicate headed
by J. P. Morgan A Company, floated a $250,000,000 5 per cent two-
year loan representing the direct obligation of the British govern-
ment and further secured by the deposit of $300,000,000 of collateral
to be made up as follows:
Group 1, Stocks, bonds and other securities of American corpora-
tions of the aggregate value of not less than $100,000,000
Group 2, Bonds or other obligations of the Government of the Do-
minion of Canada, either as maker or guarantor, and stocks, bonds
and other securities of the Canadian Pacific Railway Co., of the
aggregate value of not less than 100,000,000
Group 3, Bonds or other obligations of the several following govern-
ments, either as maker or guarantor, to wit: of Argentina, Chile,
Norway, Sweden, Switzerland, Denmark and Holland, of the
aggregate value of not less than 100,000,000
Two significant tendencies are to be noted in these loans: first,
the constantly more favorable basis as regards price and interest rate
at which succeeding financing is done. This tendency will doubt-
less continue in future financing. Second, the recognition by the
foreign governments of the necessity of pledging collateral in order
to attract American investors — ^a distinct departure in methods of
Digitized by
Google
FiNANCiNO American Wab Obdbbs 149
war financing. It is important to note that a large proportion of the
collateral pledged is itself not readily salable in American markets.
There is no American market, generally speaking, for the bonds ci
Chile, Norway, Sweden, Denmark or Holland. It would be even
more difficult to sell advantageously in American markets the securi-
ties issued by the governments of Uruguay, Egypt or Spain.
By pledging this collateral, however, with a sweetening of from
3 per cent to 33} per cent of American securities, England and her
allies are postponing the day when they will be face to face with the
exhaustion of this most precious method of financing war purchases.
England is jealously husbanding her American collateral. She is
paying it out as a miser might do, foreseeing that she must finance
war purchases from us for a long period of time. The sale of loans
secured by collateral, which in itself would be unsalable, postpones
the day of exhaustion of her supply of standard securities which
might thus be sold. It requires no mathematician to see that if
the liquidation of American securities by Europe continues at the
rate heretofore prevailing, these resources will be exhausted before
January 1, 1918. The happening of this contingency prior to the
termination of the war opens up a financial problem the contempla-
tion of which is not pleasant to English bankers.
America is rapidly getting out of debt. It would have required
generations for us to have accomplished what is occurring in a few
brief months. We are like a family who, through fortuitous cir-
cumstances, is enabled to pay off the mortgage on a hou^. It will
soon be unnecessary for us to send abroad merchandise and conmiod-
ities of various kinds, exceeding our purchases by some $250,000,000
per annum, in order to pay the interest upon our indebtedness. The
effect of this situation upon our future international trade does not
fall within the scope of this discussion. It should be pointed out
that England has been undermining at an appalling rate her tre-
mendous financial strength. As Mr. Francis Hirst, for many years
editor of the London Economist and one of the leading financial au-
thorities of England, has pointed out, it is doubtful whether, in the
long run, England would have gained had she been unable to effect
such enormous war purchases in America. Mr. Hirst advances the
opinion that England has done Germany a real service by block-
ading her. She has forced the Teutonic allies to be self-sufficient;
to go in debt to themselves rather than to foreign nations to produce
Digitized by
Google
150 The Ankalb of the American Academy
the materials of war. History will demonstrate whether this view
is correct.
The Significance of What Has Occurred
The significance of the liquidation of England's holdings of
American securities can be briefly stated. England and her allies
cease to have the right to share in the productive capacity of Amer-
ica. As the holder of mortgage bonds, entitled to a fixed rate of re-
turn, or a prior share in the profits of American production, and as
the owners of stock in American corporations, they have enjoyed for
years the right to draw upon this country for a large share of our
annual production. These earnings have been in part reinvested,
so that for many years the amount of goods which had to be exported
to European owners and creditors steadily increased. Today Euro-
pean investors have exchanged the right to a large share of the pro-
duction of America for the promises of their own governments to
pay principal and interest. Instead of receiving countless shiploads
of grain, cotton, meat and manufactured articles in payment of m-
terest upon these investments, the annual returns must be raised by
taxation of themselves. Looked at from the broadest economic
viewpoint, England and her allies are shooting away, upon the fields
of France and Belgium, their claim to an imperial share in the rail-
roads, steel mills and other productive plants of the western world.
Digitized by
Google
FOREIGN EXCHANGE DURING THE WAR
By George Zibimer,
M&nager, Foreign Exchange Department, Franklin National Bank, Philadelphia.
One of the many difficult problems facing the belligerent na-
tions in Europe during the past two years, certainly the most
far-reaching one as far as the foreign commerce of the allied nations
— ^England especially — ^is concerned, has been the supporting of
the foreign exchange rate as near as possible to par, and if this was
impracticable, at least near a certain level.
Conditions at the Beqinninq of the War
In order to fully appreciate the importance of this consequence
of an economic disturbance, which compelled the whole financial
world to face new and imtried conditions, it is necessary to go back
to the beginning of the war. When, in the latter part of July, a
settlement of Austrian demands on Servia proved futile and the
spectre of a huge world war loomed threateningly on the European
horizon, its influence was immediately reflected in the foreign
exchange situation. It was a commonly known fact that America,
at the outbreak of the war, was a debtor to Europe of about
$450,000,000. The city of New York, alone, owed $80,000,000 in
London and Paris which matured during the most critical period.
Past experience has shown that our grain and cotton shipments in
the fall largely offset such balances as may have been created
against us during the summer months. The sudden withdrawal,
however, of most ocean going vessels made the shipping situation so
acute that some of the railroads had to put an embargo on export
shipments; this, of course, was followed by a dearth of commercial
bills in the market and caused a violent upward movement in de-
mand sterling, which on July 21 stood at 4.8725, practically normal
for that time of year. It rose by leaps and bounds in an unprece-
dented manner imtil on August 3 quotations of 16.00 and $7.00 per
pound were not infrequent. Marks had risen to $1.04 and francs
were almost unobtainable, fcs. 3.25 being asked for on a dollar.
151
Digitized by
Google
152 The Annals of the American Academt
This unexpected phenomenal rise naturally worked great hard-
ship on the importer, who had to pay for his bills from his English
and Continental friends at an exorbitant rate, while it proved a
boon to the exporter who secured, at times, 50 per cent over and
above his merchandise profit by selling his exchange in the open
market. This situation became so chaotic, especially in view of the
large settlements which had to be made at that time, that the promi-
nent banks in New York got together and fixed an arbitrary rate of
$5.00 for sterling and $1.00 for five francs and four marks. This
arrangement, of course, was only temporary and could not prove an
effective means for the support of American exchange in London.
After some preliminary conferences, a committee was appointed by
the leading banks and trust companies, consisting of prominent
foreign exchange men and bankers, to discuss relief, which finally led
to the establishment of a $100,000,000 gold fund, to which a number
of prominent national banks, state banks and trust companies con-
tributed a part. This gold fimd was to be considered part of the
Bank of England gold reserve and was to eliminate the hazard of
gold shipments abroad; insurance premium on gold coin or bars at
times being quoted at between two and three per cent. A subse-
quent arrangement between bankers on this side and the British
government provided that deposits of gold could be made with the
depositors of the Bank of England in Ottawa, the Canadian Minister
of Finance, the equivalent of which at 4.90 would be made available
in the depositor's London account immediately.
The Effect of the Gold Pool
It may readily be seen what an effect these measures had on
the course of the foreign exchange rates. They imparted a feeling
of security to the market, for the banker could at least rest assured
that he could obtain the exchange at a reasonable figure by shipping
gold without risk, providing always the latter could be obtained,
which was very doubtful at times. This measure, however, coupled
with the increasing exports of foodstuffs and cotton, made possible
by the prompt measures taken by the United States Treasury
Department in creating a war risk insurance bureau, soon brought
exchange back to the normal level.
The end of 1914 saw exchange on London and Paris at practi-
cally normal, rates being quoted at 4.85) and 5.16 respectively.
Digitized by
Google
Foreign Exchange
153
The rate on Germany, however, was quoted at 88}, being a discount
of about 8 per cent from par. This can, of course, be readily ex-
plained by the difficulty experienced by Germany in paying her debts
in merchandise, due to the inability of her merchant marine to
resume activities in face of the allied blockade, which proved one of
the main factors of the downward trend of German exchange. The
central empires, in this connection, are in about the same position
as Russia whose foreign trade had practically ceased after the clos-
ing of the Dardenelles, and who, in order to establish at least a
somewhat stable basis for exchange, had to resort to the two other
alternatives — shipment of gold and raising of loans. These reme-
dies, however, were largely offset by the tremendous importations
of war materials into Russia, which by providing a continuous flow
of exchange, had a very depressing influence on the market.
The Phenomenal Growth in Oub Exports
While up to the period just mentioned, the bankers of this
coimtry had to exert their power in order to prevent American
exchange from declining in London, the new year saw spectacular
changes in the foreign financial situation of this coimtry. Coupled
with the large shipments mentioned above, the demand for war
materials kept the exports of this country at a high mark, while
imports were considerably less than in the same period during the
previous year, which may be seen from the following figures:
BXPOBTB FBOM U. 8. ▲.
1915 1914
January 267,900,000 204,067,000
February 299,800,000 173,920,000
March 296,600,000 187,499,000
April 294,700,000 162,600,000
May 274,200,000 161,700,000
June 268,600,000 167,100,000
IMPOSTS INTO U. B. A.
1916 1914
January 122,148,000 164,743,000
February 125,123,000 148,046,000
March 158,040,000 182,556,000
April 160,600,000 173,800,000
May 142,300,000 164,300,000
June 167,700,000 157,600,000
Digitized by
Google
154 The Annals of the Amebican Academy
EXCESS BXPOBTB OYER IMPOSTS
1915 1914
January 146,700,000 49,324.000
February 174,600,000 28,875,000
March 136,000,000 4,944,000
April 134,170,000 11,209,000 x Importo
May 131,933,000 2,649,000 x "
June 110,866,000 467,000 x "
It can readily be seen from the above figures, that while in
normal years the balance of trade in favor of the United States kept
dwindling down during the first six months of the year, with a neces-
sary stiffening of rates on Europe, the enormous imports of England,
due to her added requirements on account of the war, built up a
balance in favor of America which her diminishing exports could not
overcome. It must, however, be said that in spite of this handicap
the exchange rates on London were very steady. It must be
remembered that the usual summer exodus of American tourists to
Europe could not take place on account of the war. It is estimated
that expenditures of Americans abroad during a year amounted, as
a rule, to over $300,000,000, most of which was settled through
London banks, and this sum always contributed very largely
towards offsetting an unfavorable balance of trade. England, and
London especially, has always been the center of the foreign ex-
change market, exchange on the Continent being largely dealt in
there, and it proved its sustaining influence even in these troubled
times. Both sterling and francs maintained their position exceed-
ingly well, but Italian lires declined very rapidly, being quoted at
5.46i on February 1 and declining precipitately to 5.90 on March 1.
In the second half of February sterling and francs, being unsup-
ported, began to decline to 4.80 and 5.28 respectively.
No further adverse development took place in the market
until the latter part of May when francs suddenly developed a pro-
nounced weakness. Sterling began its downward course in tJie
latter part of June and was quoted at 4.74, a discount of about 2
per cent. It continued at about that level until the beginning of
August, when a very panicky drop took place, which carried sterling
to the lowest point it ever sold at, 4.48i, showing a discount of about
8 per cent. This fall was mainly attributed to the fact that some
houses in London, who had been largely interested in the importa-
Digitized by
Google
FoRBiQN Exchange l55
tion of war material and commodities for the month of September,
were trying to cover their forward commitments; when the enormous
smns to be settled for in New York became known, the rates gave
away completely. The decline in exchange, however, was only
temporary as almost every one owning American securities sought
to take advantage of the premium in London on New York ex-
change, amounting to about 7 per cent, and several millions of
dollars of these were thrown on the market. This naturally had
a rallying effect on the rates, which in the next few days rose again
to 4.71, or a discoimt of 3i per cent.
Conditions Precedent to the Anglo-French Loan
This very disastrous fluctuaton in sterling rates brought home
to the British bankers the necessity of not only a more widely en-
forced policy of economy, but also the need of an adequate machinery
which would act as a steadying factor in the foreign exchanges.
There is no doubt that the rumor of an Anglo-French loan, which
appeared in the market at that time, contributed very largely
towards the sudden upward movement of sterling: before its reali-
zation, however, the selling of American securities in the financial
centers of the Entente Allies continued, and large amounts found
their way back to the United States. The selling, to a certain
extent, came from English holders who wished to subscribe to the
second British war loan, which was issued at that time. It must
also be mentioned that at that time the French bankers entered
the field as borrowers for the purpose of strengthening their exchange
rate, which had fallen to 6.10. The so-called Rothschild loan,
based upon a pledge of Pennsylvania 3f per cent and St. Paul Rail-
way bonds netted $43,000,000. The loan, floated by Brown
Brothers & Co., based on collateral in the form of acceptances of
Paris bankers, produced $25,000,000; these sums were suflScient to
steady francs, temporarily at least. They rallied to 5.79.
It must be borne in mind that not only the warring nations,
but also the United States, were vitally interested in the plan to
keep the rates at a certain level, and it was with this idea in mind
that the English and French Commission arrived in New York in
September, 1915. A credit had to be negotiated, for a moderate
premium of 2 or 3 per cent would not, in the long run, induce the
English investors to part with their American securities, and it was
Digitized by
Google
166 Thb Annalb of thb American Acadbmt
at that time certain that few realized the need for selling from
patriotic motives. The now famous Anglo-French loan of $500,-
000,000 was negotiated on September 28, 1915. The plan contem-
plated the issue of $500,000,000 five year 5 per cent bonds, which
were a direct obligation of the British and French governments.
These bonds were repayable at the end of five years, or convertible
at the option of the holder into 4} per cent bonds of the two govern-
ments, repayable not earlier than fifteen and not later than twenty-
five years, by both governments. The bonds which the imderwriters
received at 96, were dealt out to the public at 98, yielding about 5J
per cent. A special clause stipulated that the proceeds were to be
used exclusively for purchases in the United States. It provided
sufficient fimds to keep sterling at around 4.76 ^/m and francs at
an average of 5.90 for the next three and a half months. Contribu-
tions were to be paid in instalments as needed, the first payment
being made on November 13; by the end of November 45 per cent,
or almost half, had been paid to the National City Bank ot New York
as central depository; by January 3, three-quarters of the entire
loan had been called for; the last payment was made on March 4,
when the remaining 15 per cent were drawn against.
It is, of course, clear that this enormous amount of available
funds gave to the market a steadiness it had not enjoyed since the
beginning of hostilities. Instead of drawing on the purchaser of
American goods in London or Paris, and selling his bill in the market,
the exporters could go to New York where, after being visdd by the
representatives of the respective governments, his claim was
promptly paid in United States dollars. This took an enormous
amoimt of exchange out of the market, which factor was the main
reason for the steadiness of sterling exchange, which in fact, as
already mentioned, remained at aroimd 4.76 ^/m for about three
months.
Mobilizing Securities to Support Exchange
It must, however, not be supposed that France and England
remained idle during that period. Arrangements were made by
England in December, 1915, under which a credit of $50,000,000
was granted by a syndicate of American bankers, to a group of
eight leading joint stock banks, for the facilitating of private transac-
tions. This credit was secured by a deposit of British government
Digitized by
Google
FoBBiGN Exchange 167
securities and was availed of in the form of acceptances bearing 4}
per cent interest, and running six months. This provided payment
for about $50,000,000 of American exports, and contributed largely
to keeping the market at the above mentioned level. Efforts were
made as early as the summer of 1915, to mobilize the holding of
French and English investors in American securities, in order to
prepare for the eventual secured loan, which later events showed
was inevitable if the alUed governments wished to secure financial
help in the United States, or have securities in hand which might
be used as an immediate remedy should a fall in exchange become
inevitable. The British government, after various appeals to the
patriotism of its people, resorted to taxation as a means of compel-
ling English investors to dispose of their securities. A special tax
of two shillings per pound sterling was levied on all securities which
were included in the mobilization plan, which meant an extra tax
of 10 per cent. It may be said that even this tax did not induce
all the large investors to part with their American securities, and
considerable amounts are, undoubtedly, held in Europe. The
purpose of the measure was to create an eventual offset to the enor-
mous imports of the Entente nations in the above stated manner.
The French government followed the example of her ally and made a
special appeal to the patriotism of her citizens to lend it their foreign
securities for one year, with an option of the government to retain
them from year to year for three years. Negotiable receipts were
given in exchange, dividends were paid as usual and a bonus of J of
per cent of the regular income was given, or, to illustrate, a 5 per
cent bond would bring a return of 6i per cent.
The Large Importations op Gold
When the proceeds of the Anglo-French loan were used up in
payment for exports from this country, a temporary resort was had
to selling of American securities. For the evident reason that a
selling by private holders of American securities in the open market
to America would have the very much desired effect of steadying
the exchange situation, no obstacle was put in the way of such
liquidation and it seemed rather to receive the full sanction of the
government. The amounts realized from such sales, together with
gold shipments of, however, no abnormal size, and the very ready
ability of the agents of the British government to come to the sup-
Digitized by
Google
168 The Annalb of the American Academy
port of the market, helped exchange over the critical period when
deposits on the Anglo-French loan began to ebb in April of this year.
A very interesting story may be learned by comparing the gold
imports into the states during the first seven months of 1916.
1916 MiUioM cf
DoOara
January 15.080
February 6.016
March 9.776
April 6.121
May 17.321
June 122.734
July 62.107
It will be seen from these figures that, while fimds were still
available from the loan, gold imports were practically insignificant;
when, however, other remedies were imperative for the steadjdng of
exchange a sudden increase in gold importations took place, jump-
ing from six millions in April to twenty-seven millions in May. In
Jime the record-breaking gold imports contributed largely toward
keeping the rates at the desired level, and in July, while not nearly
reaching the dimensions of June, the imports of the precious metal
were large enough to support the market. There is also no doubt
that the rumors about a new fully secured loan to be floated in
August for both the French and British governments had a reassur-
ing effect on the market. These rumors developed into actuality
when on August 1 the American Foreign Securities Company was
organized with a capital $100,000,000 paid in full. It was arranged
with the government of the French republic to lend them the sum of
$100,000,000, for which it was to hold the obligation of the Freuch
government to repay the principal in three years, together with
interest more than sufficient to cover the company's note issue.
This loan is so far very interesting as it is the first officially sanctioned
government loan for which the French republic had to put up collat-
eral, and which netted them only $94,500,000 in actual cash. The
collateral used for this loan was collected under the mobilization
scheme and consisted almost entirely of government securities of
neutral countries, of about $11,600,000 Suez Canal Company's
shares and about $4,700,000 American securities. An English loan
of $250,000,000 followed shortly afterwards, to bear 5 per cent and
Digitized by
Google
Foreign Exchange 159
running two years, also fully secured and offered by J. P. Morgan A
Co., as syndicate managers. The list of securities which was made
public is divided into three classes each aggregating $100,000,000,
the first consisting of American railroad, industrial and mimicipal
securities, the second of bonds of the Dominion of Canada and the
third of government bonds of neutral countries. These loans
served the same purpose as all the others, and to such an extent has
the American foreign exchange man become accustomed to the
idea that the allied governments — ^unforeseen disasters excepted —
will be able to keep up the rates, that the announcements of these
relief measures hardly cause a ripple on the market.
Other Expedients Employed
While in the foregoing we have reviewed the principal measures
of the Entente nations to support their exchanges by exports and
creation of credits, the very urgent appeal for economy, made
finally in the form of embargoes on certain articles, both for import
and export, should not remain unmentioned. The exportation of
such articles was, of course, prohibited from national motives, but
the embargoes on imports had certainly a rallying influence on the
exchange as they lessened the supply of commercial bills in the
market.
It may be mentioned, in connection with the above, that
Russia and Italy, the other large economic factors on the Entente
side, employed the same means as their Allies for the steadying of
their exchange; their loans, however, mostly took the form of bank
loans except the $50,000,000 loan recently raised here by Russia,
which embodies some very remarkable features, especially designed
to assure the investor of a part in the profits which may be realized
from a rise in rouble exchange.
Reports have been published here, that some of the most
powerful German joint stock banks, aided by the Reichsbank, had
endeavored in the beginning of this year to control the exchange
market by fixing the buying and selling rate of marks each day and
arranging that all bills sold were to be closely scrutinized, in order
to prevent speculation. While such a measure might, with the
necessary financial backing, steady the rate of exchange, it may be
considered as useless and fallacious for the purpose of raising the
rate at a time when payments in gold cannot be used in settlement
Digitized by
Google
160 The Annals of the Ahebican Academy
of foreign debts and when the export of merchandise is practically
crippled. There is no doubt that the financial leaders of the great
German banking institutions were fully aware of this.
In looking back over the financial history of the last two years,
the main and the only measures which were taken by the various
governments, may be summed up in three classes: shipping gold,
selling foreign securities and paying debts with credit. How long
this modus operandi can continue is a matter of conjecture. A
pyramid of credit must have a sound foundation and, while there is
little doubt that the British government will be able to finance her
own and her AUies' purchases, signs are not wanting that credits to
be secured for such purposes will find the neutral investor more and
more exacting as time goes on and as the wealth destroyed in the
present unprecedented struggle grows to gigantic proportions. The
history of the loans to be raised from now until the end of the war
for the purpose of steadying exchange, while not creating new prob-
lems will, without doubt, present some very interesting featiu-es.
Digitized by
Google
NEEDS FOR CAPITAL IN LATIN AMERICA:
A SYMPOSIUM
Introduction
By William H. Lough,
President, Business Training Corporation; Formerly Special Agent, United States
Department of Commerce.
For a period of years prior to 1912-13 the east coast of South
America was liberally financed by England, France, Belgium and
Germany, with some contributions of capital from other countries.
There is a question, indeed, as to whether this European financing
was not over-liberal. There are numerous instances in Brazil and
Argentina of costly public buildings, beautiful parkways and avenues,
railroad lines extending into undeveloped country, and other memo-
rials of the expenditure of capital far beyond the commercial needs
of the territory. Commercial and financial rivalry between the
European nations placed the borrowing countries during these years
in an especially advantageous position. The tightening financial
market of 1912-14 reduced the free outflow of European capital;
and the outbreak of the war suddenly cut it off altogether.
The results were naturally unpleasant. Brazil was unable to
maintain her stock of gold and Brazilian currency became inconvert-
ible and unstable. The Brazil railways, as well as other important
enterprises, found the burden of paying interest (due in gold) with
a depreciated currency more than could be sustained and went into
bankruptcy. In Argentina and Uruguay there was a serious panic.
Other sections of South and Central America have not been so
much favored by investments of European capital. For this very
reason, they suffered less of a shock at the outbreak of the European
war. However, the foreign commerce of practically all of them
has been more or less dislocated; consequently, governmental
revenues have been greatly reduced and the exchange values of
their currencies have fallen. This has not been the universal
experience, but it is typical of the situation in most of these countries.
Throughout South and Central America, merchants, bankers,
organizers of transportation and other enterprises and governmental
officials have all idike turned hopefidly to the United States as a
161
Digitized by
Google
162 The Annals op the American Academy
possible source of capital to tide over the difficulties occasioned by
the war. Nor have they looked wholly in vain. The governments
of Argentinai Uruguay and Chile have secured substantial loans.
Some large mining and other developmental enterprises have been
in whole or in part financed. Yet, on the whole, the result has been
disappointing and there have even been traces of some bitterness of
feeling against the bankers and investors of this country.
There is probably little sound reason for this feeling. Apart
from the undeniable ignorance and indifference of American inves-
tors in relation to foreign securities, the European cataclysm has
brought with it uncertainties in all lines of business and has made
investors more than usually chary of conmiitting themselves through
the purchase of long-period obligations. It has seemed to the writer,
at times, that in some of the more isolated countries the wide-reach-
ing influence of the war on financial affairs is not fully appreciated.
It is not reasonable to expect that capital will flow from this country
into South and Central American countries except under one of two
conditions: either the investment must be for a short period and
secured beyond all probable question; or some exceptional induce-
ment must be offered.
The chief capital requirements of South and Central American
countries may be grouped under these heads:
1. Loans to govermnents to enable them to meet current expenses;
2. Loans to mimicipalities to be expended on port improvements, the pro-
vision of public utilities, paving, and the like;
3. Loans to railroads and other transportation companies;
4. Share investments in banking and loan companies;
5. Share investments in mining companies;
6. Share investments in agricultural and pastoral enterprises.
The tendency in general, it may safely be said, has been to carry
public improvements about as far as the population and resources of
each country justify. It is doubtful whether governmental loans
can be obtained or — ^in an economic sense — are really needed, except
to tide over the emergency created by the war; in that event they
should obviously be short-time and well-secured. It is doubtful,
also, whether there are many railroad enterprises projected which
can be expected to show profit in the near future.
On the other hand, there are probably many opportunities for
highly profitable speculative mvestments in mines, lands, cattle.
Digitized by
Google
Needs for Capital in Latin America 163
financing concerns, and the like. The difficulty here lies in the fact
that such investments require close personal attention; no sensible
investor will put his money into them unless he is thoroughly con-
vinced by his own investigation of the soundness of the project and
of the efficient character of the management. Inasmuch as very
few Americans, relatively, are willing to live abroad, there is com-
paratively little scope in this country for promoting enterprises of
this nature. This attitude may in the course of time change, and
the American market may in this respect come to resemble more
closely the English market; but that remains to be seen.
It would seem from this foregoing review that there is very
little chance of American investment on a large scale in South and
Central American countries. However, there is another possibility
to be considered. In many cases the pioneer risk has already been
taken by European investors and enterprises have now reached the
stage where they may be regarded as dependable profit-makers. At
the same time, the depreciation of security values in European mar-
kets makes it possible to obtain shares and debentures of these enter-
prises at attractive prices. Practically all the securities of South
American national governments, muncipalities, railroads, land mort-
gage companies, and the like, which are traded in on the London
exchange, may be had today at prices far below those prevailing in
normal times. This would seem to open the most natural and safest
method of investing American capital in the enterprises of our
southern neighbors.
This method, however, has not been utilized as largely as was
expected by some observers a few months ago. Argentine rails have
been advertised, it is true, in the New York market, and it is reported
that there has been a considerable volume of transactions, but other
South American securities (apart from the Argentine governmental
loans floated in this country) are as yet little better known in this
country than they were three years ago. There may be a number
of causes for the unwillingness of the American investor to place his
money in foreign securities, but the basic cause is undoubtedly the
simple fact that these securities are not yet offered at prices which
make them truly attractive. Judged by European standards of
safety and income which prevailed before the war, many of them are
genuine bargains; judged by American standards, they are no more
attractive than hundreds of well-known domestic securities.
Digitized by
Google
164 The Annals op the American Academy
If the war continues, it may well be that financial necessity will
drive the prices of these South American securities in the London
market down to a level that will make them readily transferable to
American investors. If this condition is not reached during the war,
it may be reached during the period of rebuilding and scarcity of
capital which may be expected to follow the war. There may also
be financial reorganizations of South American enterprises which
will create attractive opportunities for investment. In the mean-
time, in the absence of exceptionally good offers, it is to be pre-
siuned that American capital will, for the most part, be profitably
employed at home until the financial bargain day for international
securities arrives.
This brief paper has necessarily dealt only with the most general
features of the situation. The specific opportunities offered in each
of the Latin-American countries will be more fully presented in the
pages following. It should be borne in mind that many of the specific
opportunities may be unusually promising and may attract capital,
even though there is no strong tendency toward American invest-
ment south of our own border. In Cuba, for example, the conditions
are much more favorable, and are also much better known in this
country, than are the conditions in most other Latin-American
countries.
Making these reservations, our general conclusion must be:
1. There is little probability of investment of fresh capital from this country
in South American countries on a large scale in the immediate future;
2. The time does not seem to be ripe for our purchase on a large scale o
South and Central American securities now held in Europe.
Both these conclusions are subject to modification as the general
financial situation changes; ix)ssibly in a year from now both of them
may require complete revision.
Digitized by
Google
Needs for Capital in Latin America 165
ARGENTINA
By Joseph Whbless,
Attorney at Law, St» Louis, Mo.
A recent editorial in La Prensa, the great daily of Buenos
Aires, summed up the situation as it exists not only in Argentina
but in all the continent, saying: '^ Immigration and capital are the
keys which will open the doors of the great treasure which is in
South America." The reasons behind this aphorism will be exposed
in brief paragraphs.
Population. The Argentine is as large as the United States
east of the Mississippi, plus the first tier of states on the west, its
area being 1,153,419 square miles. The population, according to
the new census of 1914, is 7,885,237. The "density of population"
is thus seen to be very attenuated, about 6.8 for the whole country.
But of the total population quite one-fifth is concentrated in the
single city of Buenos Aires, while maybe as many again inhabit
other of the larger cities of the republic; thus materially reducing
the average of rural density. These data synthesize the economic
situation of Argentina: millions of acres of vacant and cultivable
lands, with millions too few of people to occupy and develop the
land. Hence, one of the first needs of Argentina is capital to be
used in attracting immigration, inducing an increase of population
to cultivate and make productive the extensive areas of land now
lying idle and barren because of the dearth of hands to till it. The
requirements and the opportunities in this field of investment are
unlimited.
Government revenues. The governments, national and provin-
cial, are in constant need of borrowed capital to meet the deficien-
cies of their own revenue. Referring to the national government
alone, La Nacidn, a foremost journal of Buenos Aires, in a study
of national finance on August 15, 1915, made this remarkable
summary :
A complete statement of all the national revenues from every source, and of
all the expenditures of every kind by the government, between 1864 and 1913,
shows the enormous deficit of $757,657,127 gold. There is not a single budget
since the beginning of the national government, which has closed with a surplus;
and it can be stated as a rule that the government has always spent twenty per
cent more than the product of its revenues.
These constant deficits have always been met by new loans and
by a continued increase in the scope and rate of taxation. Argentine
foreign loans have mostly been floated in England, with a couple of
Digitized by
Google
166 The Annals of the American AcADSMt
recent experimeuts in the United States. The national public debt
on January 1, 1915, amounted to $545,023,470.14, gold, of which
amount the foreign debt was $312,423,556.54. The figures of the
provincial and municipal debts are not at hand, but they are rela-
tively large. Argentina has not defaulted in the service of its public
debt for many years, and met it faithfully during the crisis pre-
cipitated by the European war. The estimated national revenues
in the 1916 budget were approximately $300,000,000, paper pesos,
equal to about $126,000,000 United States gold.
Railroad development. The railroads are another great con-
sumer of capital, with ever increasing needs as the system is devel-
oped and extended, a process which the comparatively level surface
of the country, and its constant development, render both necessary
and comparatively easy. The present mileage of the republic is
about 35,000 kilometers or 21,700 miles, representing a capital of
some $1,210,475,331 gold pesos. Several of these lines are owned
by the government, but the greater part represents foreign, and
mostly English, capital. Investments in railroads in theArgentine
are considered safe and sure of good returns.
Shipping and foreign markets. Besides internal conmiunica-
tions, as represented by the railroads, Argentina is endowed by
nature with an incomparable network of "flowing roads" {los
camino8 que caminan) in the happy phrase of President Sarmiento.
Great works have been and are being carried out by the national
and provincial governments for the improvement of their rivers and
harbors, the creation of great ports, both fluvial and maritime, the
building of canals, and the development of the great foreign com-
merce of the nation. Argentina is wholly dependent upon Europe
and America for the market for the sale of its products and for the
purchase of its manufactured supplies of every kind. The country
produces only ''bread and meat," the products of its broad farms
and cattle-ranges; it must purchase and import nearly all the other
necessaries of life. Therefore, it needs great capital to develop its
every means of communication, from the inland to the seaboard,
and from the seaboard to the markets of the world. Adequate
shipping facilities are acutely needed, and greatly increased bank-
ing capital is required, to handle its exports and imports and to
develop its commerce abroad as well as at home. In all these
activities there is great and growing need for foreign capital.
Industries, As indicated, Argentina has but small and wholly
insufficient industries other than those connected with agriculture
and meat products. General manufactures are almost entirely
wanting. One of the prime needs of the Argentine for capital, as
expressed by its delegation to the Pan-American Financial Con-
ference at Washington, is for the attracting to the country of foreign
manufacturers, and the establishment of plants for the manufacture
Digitized by
Google
Needs fob Capital in Latin America 167
of all classes of manufactured necessaries, as well as for the develop-
ment of such as now exist in the country. As part of the industrial
development of the country, will be the need for a great extension
of the telegraph and telephone systems, requiring heavy investments
of capital.
In a word, the Argentine is an almost virgin field for the em-
ployment of capital, and great are the rewards awaiting American
enterprise and industry in helping Argentina to realize her destiny
as the foremost of South American States.
BOLIVIA
By J. C. LXHTWEILEB,
Foreign Trade Department, National City Bank, New York.
It is difficult to outline Bolivia's needs for capital for the next
ten years, since its economic condition is so dependent upon the
success of the mining industry which constitutes the whole life of
the coimtry. Mines may be developed that will bring the country
unforeseen wealth and prosperity and will make possible a more
ambitious program of development than at present possible. As-
suming, however, that its development will simply continue its
normal course of former years, its needs may be grouped as follows:
Railroads. The program of the government includes the com-
pletion of one road now under construction and the building of three
new lines: (1) Oruro-Cochabamba road, tapping a rich agricultural
country, almost finished and lacking only 28 miles. The Bolivia
Railroad is building this line, but the work is now at a standstill.
They estimate that approximately $1,000,000 is needed to com-
plete it. (2) La Paz-Yungas line, which is to extend from the
country's capital (altitude, 12,500 feet) down into the tropical re-
gion (several thousand feet lower). The government is trying to
secure a loan of $2,500,000 to go ahead with its construction, though
a much larger amount will doubtless ultimately be needed, since
100 miles must be built to reach important coimtry and the con-
struction is most difficult. (3) Potosi-Sucre road, 110 miles long,
to give a railroad outlet to Sucre, the former capital of Bolivia and
a city of 40,000 people. A loan of $10,000,000 is sought for this
road. (4) Atocha-Tupiza road. It will be a short stretch of 60
miles. When built it will connect with the Tupiza-Quiaca line,
now imder construction, and will thus link the Argentine railroad
83rstem with Bolivia's, giving through connections between La
Paz and Buenos Aires in a trip of five days. It will be most difficult
construction. As it is now imder concession to the Bolivia Railroad
Digitized by
Google
168 Thb Annals of the American Academy
Company and it is not known whether that company expects to
undertake it during the life of its concession, no recent steps have
been taken looking to its construction.
Public UtiUHes. The government has had studies made by an
English engineer of water and sewage systems for four of the princi-
pal cities, namely, La Paz, Cochabamba, Oruro and Potosi, to
cost approximately $4,500,0()0. Another work of importance is the
construction of an irrigation system for the Cochabamba Valley,
a rich farming country capable of supplying food products for the
whole country if it were irrigated. No estimate of the cost of this
work has been made.
Private Industries. There is little chance of Bolivia's doing
anything in an industrial way. The market in the country is
relatively small and high freight rates to the coast make most
export business unprofitable. The development of hydro-electric
power for the mines and an electric smelter for tin and other ores
are needed, if they can be built and operated on a business basis.
Undoubtedly foreign capital will become interested in the mining
industry, and in proportion as it does, the rest of the above program
will become feasible.
BRAZIL
By Andrew J. Peters,
Assistant Secretary of the Treasury, Washington, D. C.
Hardly any portion of the world is so richly endowed with
natural resources as is Brazil, but they are often diflScult to reach and
to convey to their proper destination. Thus the primary need for
capital in Brazil would seem to be railroad expansion. The com-
pletion of the great road between Cuyabi and Santarem, the link-
ing up of the state of Matto Grosso with eastern BoUvia, the
Madeira Valley, and eventually of the Rio Negro and southern
Venezuela and Colombia will have results as important as those of
any transcontinental railroad ever constructed. Less tremendous
in extent, and, of course, in consequences will be the further raihroad
development of southern and of northeastern Brazil. Southern
Brazil will be one of the world's cattle regions, but its successful
development in this direction will largely depend upon adequate
transportation facilities. Northeastern Brazil, from Pari to
Recife, faces a similar situation and will remain with its resources
hardly scratched until a comprehensive and constructive raihoad
program is realized.
Railroad construction on this scale (and the main lines indicated
would furnish relatively less mileage than has Argentina) would
Digitized by
Google
Needs for Capital in Latin America 169
be extremely costly. The Cuyabi-Santarem railroad will probably
cost about twenty-five million dollars, and the roads through more
difficult territory correspondingly more. Perhaps two hundred and
fifty million dollars is the minimum amount needed during the next
two decades for railroad construction absolutely indispensable to
the full economic development of Brazil.
In this respect, of course, Brazil differs only in the size of her
problems and, perhaps, in the abundance of the return upon the
investment, from her American neighbors. As in other countries
the confidence necessary to warrant investment on this scale can
be secured only by the healthy development of BraziUan conmierce
as at present conditioned, by sound public finance and by a correct
understanding of the responsibility of the state for the stability
of credit. Brazilian commerce is eminently satisfactory if one
considers the complete dislocation of some of the chief currents of
trade for the Republic's great staples — coffee and rubber. The
future gives every promise of a brisk demand for all that Brazil
can sell in these fields and in many others for which the market will
probably exist in the United States and in Europe. The present
alert Minister of Finance proposes to send to this country a delega-
tion precisely for the purpose of studying the possibility of creating
here a steady and dependable market for other Brazilian commodi-
ties than rubber and coffee.
CHILE
By G. L. Duval,
Of Weasel, Duval db Company, New York City.
A slender strip of land 2,600 miles long, in some parts scarcely
more than a ledge, separating the Cordillera from the sea, Chile
enjoys a variety of climate and products but is essentially a mineral
estate. Divisible into three zones — semi-tropical, temperate and
rugged — its northern limit is a species of oasis, bordering a vast
desert which is nevertheless the most prolific contributor to the
national wealth by reason of immeasurable deposits of nitrate of
soda, furnishing a monopoly of that commodity.
The late Sir WiUiam Crooks, renowned physicist, declared that
the future of the world's food supply depends on Chilean nitrate.
Although the largest demand is for fertilizing piu*poses, it is a
requisite in the manufacture of acids and high explosives. Germany
and her Allies, deprived of supplies, have exploited a synthetic
substitute (nitrogen from the air) which is unlikely to be a serious
competitor after the war when the inexpensive Chfiean nitrate will
Digitized by
Google
170 The Annals op the American Academy
not be surcharged with the high ocean freights now prevaiUng. In
any case, consumption increasing progressively, with new areas of
demand, will imdoubtedly give an outlet for supplies from aB
sources.
The central section of Chile is highly cultivated and in normal
years supplies the country's food requirements, with a surplus for
export. An extended system of irrigation from waters now running
to waste would enlarge the area and product, and with shorter ocean
transport, via Panama, make the famous Chilean fruit known in
distant markets, give impetus to the canning industry and encour-
age immigration to a region where soil and climate leave little to be
desired. Coal mines in the central provinces furnish a large part of
the internal needs with a product 75 per cent as efficient as the best
grades shipped from the United States, Great Britain and Australia.
In the southern section forests and fisheries bring us down to the
Straits of Magellan, where Patagonia and Tierra del Fuego are now
among the important sources of the world's wool supply. The Cor-
dillera, flanking the entire length of Chile, is a bed of minerals-
copper predominating.
The credit of the government is independent of its tax-levying
power. The trunk lines of railway, the vast nitrate domain held in
reserve and released for operation as required to meet a demand for
its product, and the major part of the sheep-grazing lands m the
south, are all held in fee by the state.
It is unlikely that the government will undertake any large pub-
lic improvements in the near future unless money is in more plenti-
ful supply than at present indicated, so its requirements for capital
will probably be to meet any of its loans that may be maturing.
American capital meeting this requirement will partake of the good-
will that has attended earlier accommodations and brought much
good business in its train. Such resourceful interests as are already
enlisted in mining industries assure an abimdance of capital for
their development. Manufacturing enterprises generally, all of
which are encouraged by law and many of them favored by local
conditions, especially the canning industry, already adverted to,
will doubtless make attractive appeals to Ainerican capital in the
ensuing period.
The growth of our commerce with Chile has been phenomenal—
$10,000,000 in the year ending June 30, 1900, contrasts with $43,-
000,000 June 30, 1914, which latter will probably show a further
advance of 50 per cent in the ciu-rent year. About 40 per cent of the
total represents exports. How far we shall be able to hold the recent
increase of shipments due to the European war will be a problem on
the retiu-n of peace, when competition is restored. It is probable
that our advantage can be held only by the methods originally em-
ployed by Eiu-opean countries in securing the trade: all the ele-
ments of commerce — manufacturer, merchant and banker — ^working
Digitized by
Google
Nbbds for Capital in Latin Amsbica 171
together, each helping himself by helping the others. Under
American practice there has been no esprit de corps — each factor in
commerce striving for itself regardless of, and often to the dis-
paragement of, the others, disdaining, moreover, the slower and
securer methods of developing business for the quicker way of
doubtful tenure. The chief grievance of commerce is against the
financial element, which when disposed to assist at all usually favors
its newly created agencies or affiliated interests, ignoring and losing
the invaluable experience acquired by older and established organ-
izations.
COLOMBIA
By Edward H. Mason,
Qlencoe, lUmois.
While the needs for capital in Colombia in the near future are
not materially dififerent from what they have been in the years just
prior to the European war, there has been a great change in the
method and direction of getting these needs satisfied.
Heretofore, on account of a variety of reasons which need not
be dwelt on here, the Colombian capital seeker usually went to the
European market and the American capitalist on his side seemed
quite willing to have these applications pass on to London or the
continent. Now the realization that the United States is the prin-
cipal source of supply still open to the partly developed countries of
South, but more especially the interested and sympathetic treat-
ment given Colombian projects here, instead of the perfunctory
consideration of a few years ago, has turned their capital seekers
decidedly to this market.
For convenience we may divide Colombia's capital needs into
those of the national government, the departments or states, the
cities, and those of private concerns. The national government
needs capital primarily to finance the substitution of a gold secured
currency for the present non-redeemable paper money system.
After this the great need of the country is for capital for the con-
struction of public works, and of these the national government
considers of first importance the improvement and sanitation of
some important sea-ports. This work the government will probably
handle (Urect and finance it with its own securities. The extension
of existing railroad lines and the building of some others in the
development of a general plan for a national railway system make
the next great need for capital, and the national government,
although directly interested by reason of its railway subsidies and
its rights of reversion in the various properties when the periods of
Digitized by
Google
172 The Annals of the American Academy
their concessions have expired, may here limit its activities to
cooperating with the existing private companies, or, as in the case
of two concessions for needed railways authorized lately, may offer
them first to the departments in which the lines are located, and
departmental loans will have to be sought to carry through the work.
Up to recent years no attempt has been made by the larger
cities of Colombia to finance their growing needs by the issuance of
municipal bonds, and their public improvements have been of very
slow growth in consequence. The last few years, however, have
seen a great change in public opinion in this respect, and a number
of the larger cities are realizing the necessity of putting in adequate
modem water service with proper sewerage and street paving, are
planning to build or are acquiring their street railway S3rstems, and
will be in the market for the necessary financing for these improve-
ments.
As regards capital for private uses, the lack of straight banking
capital in Colombia is a great handicap to the coimtry, and there is
much need of capital for long-term mortgage loans on city and farm
property. At present banking capital is limited and discount rates
very high. This limits conmiercial enterprise and is prohibitive for
real estate loans, as is also the fact that it is difficult to secure any-
thing but short-term accommodations. Loans on real estate at any-
thing like reasonable rates and for longer terms would stimulate
building operations of a much needed character in the cities and
would enable many a cattle raiser to better his stock or to put some
of his big grazing tracts to a more profitable use.
COSTA RICA
By Walter Parker,
General Manager, New Orleans Association of Commerce; Chairman Perman^t
Committee on Costa Bica, Pan American Financial Conference.
An abundance of water power, imdeveloped mines of great
wealth, agricultural possibilities of wonderfiil potentiality and
adequate shipping facilities should enable Costa Rica to assume a
mortgage far beyond the power of the average Central American
republic. The natural wealth of the republic has hardly been
touched.
The effect of the European war is similiar to that felt by the
other republics. One of the results is the hastily formed Banco
InternacionaJ, foimded by the government to meet the imusual
financial conditions created. This is a bank of issue, having a
capital consisting of Costa Rican treasury bonds. The reserve
Digitized by
Google
Needs for Capital in Latin Abherica 173
required by law for banks of issue is 40 per cent gold. Present rates
on commercial loans are high, running all the way from nine to
twelve^ per cent. It is said to be the desire of the President of the
republic to convert the Banco Intemacional into a general mortgage
bank, and induce the three or four commercial banlS to combine and
form one commercial bank. It is believed that this will increase
the total banking power of the republic, decrease rates of interest
and provide for the extension of rural credits. By inaugiu-ating
this plan the combined capital of five Costa Rican banlS would
approximate less than $5,000,000.
The most urgent need of the Costa Ricans is adequate credit
facilities. We must become fully cognizant of this need before we
attempt anything. It is now possible, through the agency of the
Federal Reserve Act, for the national banks of this country to
cooperate more fully.
Heretofore the merchants of Costa Rica have availed them-
selves of the extremely favorable terms of the European markets.
The rates of interest were almost invariably more liberal than those
to be had in the United States. Now that the bankers of this
country can give their acceptance to longnsight drafts arising from
exports and imports, a means is at hand to in part overcome this
obstacle. Having grown accustomed to paying his bills every six
months, it is a difficult matter for a merchant in Costa Rica to
adapt himself to the rapid ways of American business, but it does
not necessarily mean that he is trying to evade payment of his
obligations.
Even if the United States goes after and gets its proportion of
the business of Costa Rica, there still would be something left to be
done. The republic needs more than the mere influx of American-
made-goods; it needs American capital and brains as well. Under
prevailing conditions, the railway situation, with some improve-
ments, would be about adequate. There will be need for more
railways when the other development necessary has proceeded, but
at present there is scant need for more transportation improvement.
The mining and agricultural features of Costa Rica should make
an irresistible appeal to the American investor. When these have
b^n taken in hand and are producing their proper percentage of
the country's wealth, there will be less dependence upon the custom
bouse.
Any casual investigation of the opportunities in Costa Rica
cannot help but reveal the wonderful openings to be had there by
American capital. But it is well to look into every angle of the
situation before attempting investments. Nothing that has ever
been written about the mines, water power and the agricultural ex-
tent of the repubUc, can be made to convey the idea that is only to
be had through personal investigation. And the man who under-
takes to seek out the best forms of investment in Costa Rica must
Digitized by
Google
174 The Annals of the Amebican Academy
go into the country free of prejudice or set opinion. He will en-
counter one surprise after another, and in some instances he will be
amazed to learn the progress Costa Rica has made in certain direc-
tions.
The people of the United States are now looking forward to the
establishment of rural credit banks. There can be no doubt but
that these institutions will exert a wonderful stimulus on agriculture
in the United States. But the idea is not new to Costa Rica.
Rural banks to aid the farmers in getting money under favorable
conditions have been in operation for over a year. This system is
under the management and control of the govemmenti through
the agency of the Banco Intemacional. A mortgage department
now is contemplated with a capital of 500|000 colones/or approxi-
mately $200,000.
Practically every essential element favorable to the investment
of capital may be found in Costa Rica. The money that is used
in developing its resom*ces must be invested with an eye to the fu-
tm*e of the country, and not for quick exploitation and immediate
return. A steadily increasing wave of resentment is becoming
apparent in Latin America against the evanescent effects of the
exploiter. The people realize their own deficiencies for want of
money, and will go more than half-way to welcome and assist
the honest, well-intentioned American capitalist. It would help
greatly were the national debt refinanced in the United States.
CUBA
By a. G. Robinson,
Washington, D. C.
We may safely assume that Cuba will want money in the im-
mediate or early future, but a wide difference stands between wants
and actual needs. There, as in other lands, the gratification of
wants is limited by the ability to pay for them without an unwise
stretch of borrowing power. In Cuba's case, a special limitation
appears in that appendix to its Constitution, commonly known as
the Piatt Amendment, imposed by the United States at the time of
the transfer of government to Cuban hands, in May, 1902. In
Article II, that instriunent declares:
That the Government of Cuba shall not assume or contract any public debt,
to pay the interest upon which and to make reasonable sinking-fund provision
for the ultimate discharge of which, the ordinary revenues of the Island, after
defraying the current expenaee of government, shall be inadequate.
Digitized by
Google
Needs fob Capital in Latin America 175
Upon a Cuban Congress inclined to any substantial increase
in Cuba's present national debt, the government of the United
States would, in all probability, lay a restraining hand unless it was
fully assured of Cuba's ready ability to carry out the provisions of
this clause in its fundamental law. Many Cubans, like many
Americans, want improved highways in the region of their particular
interest. Many want new official buildings and schoolhouses.
But the need of roads and public buildings is not, in most cases,
imperative, and the exceptions should be met from the current
revenues, now far greater than ever before in the history of the
island.
Cuba's industrial enterprises are at present represented chiefly
by the production of sugar and tobacco. An important part of the
output in both lines is now controlled by American investors.
Encouraged by the present enormous profits in the sugar-raising
industry, due to the abnormal price enhancement caused by the
suppression or derangement of a large part of the European beet
sugar industry, an organization has recently bought established
mills and plantations in the island, to the amount of approximately
$509000,000 in actual cash A large part of this was American
money. More millions have been invested by other Americans
in the improvement and extension of sugar properties already owned
by them; in the purchase of mills from Cuban or other owners; and
in the erection of new mills and the cultivation of new areas.
The percentages have been somewhat changed by the abnormal
price of sugar, for the last two years, but the place held by that
commodity in Cuba's industrial life, under normal conditions, is
shown by the fact that it ordinarily represents nearly three-quarters
of the total exports. Tobacco, in various forms, represents nearly
one-fifth, and the remainder is accounted for by various products
such as iron ore, copper ore, and manganese; by timber, animals
and animal products, sponges, beeswax, and others. The iron
deposits of the eastern part of the island, of American ownership,
are certain to become of large importance. The railway systems,
at present fairly meeting the needs of the coimtry, are largely of
British ownership.
In summary, it may be said that there appears no present
prospect of important money demand from Cuba in the near future*
Digitized by
Google
176 Thb Annals of the American Academy
DOMINICAN REPUBLIC
By Jacob H. Hollander,
Professor of Political Economy, Johns Hopkins UniTeraity, Baltimore, Maryland.
The Dominican Republic, like the imperfectly developed
states of Central and South America, is in urgent need of economic
enterprise and financial investment. The land is rich in natural
resources that await only the touch of energy and capital to pour
forth streams of wealth for the enrichment of the island and the
betterment of the world. The primary requisites are, of course,
stable government, political qmet and social tranquillity. The
history of the last ten years shows immistakeably that these are
possibilities definitely within reach, and that the coming decade is
likely to witness a final passing of the old turbulence and disquiet.
Beyond these primary requisites one of the essential needs of
the republic is an improved system of currency. The currency
situation in the Dominican Republic is unlike that of any other
country in Central or South America. The only money in circu-
lation is United States currency. This is at once the medium of
exchange, the measure of value, and the standard of deferred pay-
ment. In years past, various forms of Dominican currency,
metallic and paper, were emitted, but all of these have been de-
monetized and withdrawn from circulation. Certain banking
institutions have been vested with powers of note-issue, but the
conditions attending the creation and activity of these institutions
have not been such as to secure public confidence in the notes and
it has been practically impossible to put them into circulation.
The currency problem of the Dominican Republic is thus
largely one of inelasticity, the sources of supply bemg the United
States or Porto Rico. It is inconvenient, expensive and inadequate
to meet the varying currency requirements of an agricultural coun-
try by remittances back and forth.
The sufficient remedy for this condition would be the estab-
lishment of a branch of a member bank of the Federal Reserve
banking system in Santo Domingo city with agencies in three or
four of the other large cities of the republic. The note-issuing
power of such a member bank would make it possible for the cir-
culation of the Island to be expended at crop moving time and to
be contracted thereafter. It would stabiUze exchange between
the Dominican Republic and the United States, as well as with
other foreign countries. Finally, it would prove of great con-
venience to the United States customs receivership in making re-
mittances to the United States pursuant to the terms of the con-
vention of 1907.
Digitized by
Google
Nebds fob Capital in Latin America 177
ECUADOR
By. F. I. Kent,
Vice-President, Bankers Trust Ck>mpany, New York.
The government of Ecuador has very small outstandmg obliga-
tions outside of its guarantee of the sinkmg fimd and interest of the
bonds of the Guayaquil & Quito Railway. Such bonds outstanding
at the moment amount to $12,712,000, and as the railway has never
paid anything upon its obligations, the government of Ecuador has
been obliged to carry the whole burden. On February 1, 1916, the
government was in arrears in payment of interest on the Guayaquil
& Quito bonds $1,878,975, and it had issued bonds in payment of
interest that had previously accumulated for $636,480, on which
the interest in arrears is $38,189, so that it was actually behind in
interest payments under its guarantees $2,553,644. The only
other external debt of Ecuador is the "Condor Bonds," which
represents the balance outstanding of the Debt of Independence,
and amounts to $387,342. Since the war the government has
defaulted on all it& interest payments. This has been due to the
decrease in revenue that occurred because of the stoppage of the
foreign trade of the coimtry after the declaration of war. As
Ecu£ulor depends largely for its revenue upon customs duties and
expK>rt taxes, as is true in the case of many other South and Central
American coimtries, the temporary stoppage of its foreign trade was
seriously felt. It had to increase its internal borrowings, which
were mostly from Ecuadorian banks, and they have reached a total
of $7,165,000. The foreign trade of the coimtry is now picking up,
but in the meantime Ecuador has been left with a large floating
debt and past due obligations.
The country has wonderful natural resources, and with proper
development should be able to increase its foreign trade very materi-
ally. Before it can do so, however, it will be necessary to have
the sanitation of the port of Guayaquil completed. While this
port is at present much more free from disease than is generally
supposed, yet because of past epidemics, ships entering Guayaquil
are quarantined before being allowed to approach other Pacific
ports. This of necessity hampers the foreign trade of Ecuador very
considerably, but there are good grounds for believing that once
Guayaquil is recognized as a clean port, the revenue of the coimtry,
due to the increased foreign business that it is reasonable to suppose
would ensue, should increase very materially. Unless Ecuador is
able to obtain a loan of considerable size, it will not be possible to
complete the sanitation work of Guayaquil, except by piecemeal
from year to year, as funds can be spared from the revenue. This
Digitized by
Google
178 Thb Annals op the American AcAofeirr
wfll carry the necessary improvements over such a period of years,
during which time the foreign trade of the country will be seriously
affected, that it is most important for the interests of the people of
Ecuador that the government obtain the money to do the needed
work at once.
Certain parts of the coimtry are still without proper railroad
facilities, even taking into consideration their present undeveloped
state, and if a comparatively few miles of road could be built, it
should prove of great benefit to the people. In order to refimd all
outstanding obligations, complete the sanitation of Guayaquil and
make the railroad system thoroughly effective, it is figured that
Ecuador will be obliged to borrow about $30,000,000.
EL SALVADOR
Bt Frederick F. Searing,
Patenon, N. J.
The area of Salvador is 7,225 square miles; it is about the size
of^the state of New Jersey which has an area of 7,525 square miles
and has a population of 1,250,000. Its density of population per
square mile is just about one-half that of the state of New Jersey.
Almost all of the available surface of the country is under cultiva-
tion. Nature seems to have assembled and combined all of the
various elements that are necessary to the successful production of
coffee, about 65,000,000 pounds of coffee being exported each year.
Salvador has the best record of any of the Central American
republics for looking after its credit. Its public finances heretofore
have been in charge of the English, the only foreign loan that Sal-
vador ever issued having been floated in London in 1908. This
loan amounted to £1,000,000, sterling. It bears interest at the
rate of 6 per cent per annum and a sinking fund is provided, con-
sisting of 2} per cent of the principal amount of the bonds, redeem-
able in each year. The loan was floated by the London Bank of
Mexico and South America and Messrs. Chalmers, Guthrie & Co.
of London. It was listed at once on the London stock exchange
and has been regularly traded in on that board ever since. Pay-
ments of the interest and sinking fund on accoimt of this loan were
regularly made from the date of its issue until the month of August,
1915, when, owing to the decrease in the revenues derived from
duties on imports and exports occasioned by the war in Europe,
the Minister of Finance made a proposition to the holders of the
bonds that they deposit their coupons representing four years'
interest on the principal of the loan with the trustees for the loan
Digitized by
Google
Needs for Capital in Latin America
179
in London, who would issue certificates of the government repre-
senting' the coupons so deposited, bearing 7 per cent interest.
This proposition was accepted by the holders of the bonds and was
formally put into eflfect in the month of December, 1915.
The progress of Salvador is efifectually shown by the following
figures:
1899, total revenues from all sources, $4,435,695 silver.
1900
(t
tt
" " " 6,297,274
1906
U
(
" " " 8,636,443
1910
It 1
(
" " " 10,620,866
1912
U 1
<
" " " 14,445,731
1913
( i
t
" " " 13,734,133
1914 '
t i
(
" " " 12,423,752
1916 '
t 1
I i
" " " 10,625,173
It will be noted that in the year 1899 the total revenues of the
government from all sources amounted to $4,435,695 silver,
and in the year 1912 the revenues of the country had increased to
$14,445,731 silver. It will also be noted that the revenues
for the year 1916 amounted to $10,625,173 silver, the decrease
having been occasioned by the outbreak of the European war.
During the present year the turning point was reached and at the
present time the revenues of the coimtry are gradually increasing.
The best opportunity for the employment of capital in Salva-
dor at the present time is in the establishment of a government
bank. There are three chartered banks of issue in the republic,
and their notes form the paper currency of the country. The
government does not issue any paper money. Aside from this,
the money is silver coin. The value of the silver dollar or peso is
about 42| cents American gold. The National Assembly granted
a charter for an agricultural bank in the year 1914. The present
banking facilities of Salvador are insufficient, and if a new institution
were established it would have the hearty support of the government
and would unquestionably do a very profitable business. Banking
in Salvador is based on the movement of merchandise in and out
of the country. This is the safest kind of banking. Rates of in-
terest are good, being greater than those prevailing in the United
States, and the security for loans is the best in the world.
Salvador also needs more railways. There are three railways
now operating within the republic. The Salvador Railway, which
runs from the port of Acajutla to the capital city, San Salvador,
with a branch to the city of Santa Ana, in all having a total trackage
of about one hundred and fifty kilometers, was built in the year
1899 by an English company. It will be noted by the foregoing fig-
ures that in the year 1899 the total revenues of Salvador amount^
to but $4,435,695 silver, yet in that year the government imdertook
to pay the English Company an annual cash subsidy of £24,000
Digitized by
Google
180 The Annals of the American Academy
sterling for a period of eighteen years, and this pledge the govern-
ment has regularly and faithfully kept. On the strength of this
agreement on the part of the government the English Company
was enabled to float its own securities in London. The raihoad
has been operating successfully ever since. At the present time
another railway is in process of construction, running from the port
of La Uni6n, on the Gulf of Fonseca at the eastern end of the
repubUc, entirely across the central portion of the country to
Guatemala. This railway is one of the links in the Ferrocanil
Intemacional which is designed to run ultimately all the way to
Panama. At the present time about one himdred and fifty kilo-
meters of this line have been finished and are now in operation.
The only other railway in the republic is a short line built by local
capital, between the capital city, San Salvador, and the city of
Santa Tecla, a distance of about fifteen kilometers.
A concession was granted in the year 1914 by the government
for the construction of a railway between the capital city, San
Salvador, and the port of La Libertad on the Pacific coast, a dis-
tance of about fifty kilometers. This railway is really a govern-
ment enterprise. The government issues bonds to the extent of
$1,500,000 gold, the proceeds of which are to build the railway.
The distance by the English railway from the city of San Salvador
to the port of Acajutla is one hundred and five kilometers. The
new line will aflford a much shorter route to the coast. La Libertad
is the natural port of entry for the city of San Salvador, and the
construction of this railway will open up a very rich territory and
will be of great benefit to the government.
The mineral resources of Salvador have been scarcely touched.
There are several English mining companies and one or two Ameri-
can ones that have been operating successfully for a great many
years in the eastern part of the republic; but there are vast mineral
resources in the mountains to the north bordering on the Hondu-
rean frontier which have not been developed.
Deposits of petroleum in the eastern part of the republic have
recently been discovered. A great deal can be done in Salvador
by developing the water powers of the country. There are several
of these within the republic.
An opportunity is open to enterprising American contractors
for the paving of the streets of the principal cities. The city of
San Salvador has spent a great deal of time and money in the prep-
aration of plans and details for the paving and sewering of the
capital city, and it was about ready to go ahead with this work
when the European war broke out.
Salvador occupies a very strategic position among the five
Central American republics. The Gulf of Fonseca, wluch is the
only land-locked harbor between San Francisco and Panama, is
Digitized by
Google
Needs for Capital in Latin America 181
situated at the eastern end of the republic. On the Nicaraguan
shore of this gulf the United States government purposes to estab-
lish a naval base. The islands within the Gulf of Fonseca belong
to Salvador and that of Meanguera commands the entrance to the
Gulf. The President of the republic is anxious to see established
on this Island a free port similar to that on the Island of CuraQao,
oflf the coast of Venezuela. His idea is that, if warehouses, dry
docks and coaling stations for ships were erected on this island,
the merchants of foreign countries could ship their goods in bulk to
this port, where they would be entered free of duty. By such
an arrangement wholesale stocks could be carried in this central
place and the different countries supplied from that point. In-
asmuch as three of the republics border on the Gulf of Fonseca,
the transshipment of goods in small quantities to the respective
countries could easily be accomplished. A concession for the
establishment of such a port was granted by the National Asembly
in the year 1914.
The opportunity is open to American merchants to capture
the entire Pacific trade of Central America by establishing them-
selves at this time in Salvador. The country has been singularly
free from revolutions, the last outbreak of this nature having
occurred as far back as 1895. The republic has a stable govern-
ment which changes every four years by the ballot instead of the
bullet. The people are industrious and the climate is salubrious.
There is an entire absence of the fevers peculiar to the countries
in the latitude of Salvador on the Atlantic side. This is chiefly
because the coimtry is hilly and well drained; also on account of
an absence of low-ljdng marshy lands.
To conclude, Salvador is well worthy of a visit and the serious
consideration of American capitalists who may be contemplating
investing in Latin American coimtries.
GUATEMALA
By John Clausen,
Manager Foreign Department, The Crocker National Bank of San Francisco.
The Republic of Guatemala, situated East of Mexico, covers
an area of about 50,000 square nules, with an estimated population
of 2,120,000 inhabitants — ^the largest of any Central American
country — of which 125,000 reside in the capital, Guatemala City.
The name "Guatemala" is probably of Aztec origin and is said to
mean "Land of the Eagle." The bulk of its people are located in
that half of the RepubUc bordering on the Pacific with few settle-
Digitized by
Google
182 The Annals op the American Academy
ments on the North or on the Atlantic side. Its mountain ranges,
with very little exception, give the country an elevation of from
4,000 to 11,500 feet. The Pacific slope is very fertile and produces
large crops of coffee, com and sugar; while on the Atlantic side there
is found very little agricultural wealth except from the cultivation
of bananas in the lowlands and near the coast. The production of
coffee, however, is the principal money crop of the country — amoved
largely upon funds that have been advanced for that purpose — and
to its marketing, therefore, depends much of the prosperity of the
Republic.
According to the report of the Secretary of Finance of the
government of Guatemala, made under date of April 14, 1915, its
debt amounted to $13,304,759.79 United States gold, made up
as below:
English debt $11,785,314.39
Internal debt 1,519,445.40
Their external obligation consists of what is called the English
debt of 4 per cent which was not contracted by the present admin-
istration but dates back from the time when aU Central America
was one Federation of Republics, or in other words, since the inde-
pendence of Guatemala which was established in the year 1821.
Upon the breaking up of the Federation three-fourths (J) of
this obligation fell to Guatemala, while the remainder, but one-
fourth (J), was allotted to the other four republics. Subsequent
administrations increased the debt by additional loans and de-
linquent interest, until it reached the aforementioned figure. No
new foreign loans have been contracted by the present government,
although it is learned that negotiations have recently been opened
towards the plaeing of an additional $3,000,000 United States
gold for municipal improvements in the City of Guatemala.
Only during the last few years has Guatemala effected a mar
terial settlement with its English creditors in resuming pa3anent
of interest. The services of the English debt require only $300,-
000 United States gold annually for interest, which are conveniently
cared for as the republic has a favorable trade balance of approxi-
mately $3,500,000 United States gold and a net internal revenue of
$1,000,000 to $2,000,000 United States gold. In naming these
figures, however, it must necessarily be taken into consideration
that the European war, together with prevailing inadequate trans-
portation facilities, will tend to decrease the government revenues
as also customs taxes which as has been stated represents the larger
portion of their income. The internal indebtedness has b^
found diflicult to liquidate with the result of constantly increasing
the obligation by delinquent interest payments.
The English loan, however, in spite of the expenditure of large
sums on public works and charitable institutions of the country,, has
Digitized by
Google
Needs for Capital in Latin America 183
received its interest in advance and this feature is being very favor-
ably commented upon by British capitalists. These bonds have
been quoted during the greater part of the year at 40 to 41, netting
the holders nearly 10 per cent per annum. Unlike many other
Latin American republics, the municipalities of Guatemala have
no bonded indebtedness and their temporary advances from local
banks are automatically repaid from taxation.
Authorities affirm that it would take approximately $12,000,-
000 in gold to place and maintain the country on a gold basis.
The yield of the public revenue in 1915 was $85,007,704.74
G/P pesos, as against $82,399,924.55 G/P pesos in 1914.
Public expenditures for 1915 were $67,841,283.64 G/P pesos, which
exceeded the amount estimated by $7,778,643.65 G/P pesos.
The total value of trade in 1915 was $16,369,061.99 gold as
against $22,085,141.48 gold in 1914. On the other hand between
the imports amounting to $5,072,473.03 gold i and exports aggre-
gating $11,566,585.96 gold, there was left a favorable trade bal-
ance for Guatemala of $6,494,109.93 gold.
Two causes especially aflfect Central American trade and
finance, the loss of the usual markets in Europe and the inadequacy
of transportation facilities. The Republic of Guatemala in partic-
ular lost its normal outlet for cofifee, the largest of its export
commodities.
A very cordial feeling has been developed in Guatemala to-
wards the United States and while a good portion of their imports
originate in this country, a much larger percentage of business
transactions should be exploited as a result of the favorable oppor-
tunities at present. To make our appeals forcible it becomes
necessary to invest more capital in the republic, to extend more
liberal credits, to improve banking facilities for export trade and
to make more direct and personal efforts in their markets. At
present they need financial assistance and shipping facilities per-
haps more than other Latin American coimtries. It is essential
for the maintenance of the foreign purchasing power of Guatemala
to lend help in developing and marketing their products abroad.
The comparative tables which follow show the importance of
our trade relations with that republic:
ExpoBTS from Guatemala to —
Germany $5,412,580.30
United States 4,874,379.19
England 1,476,706.48
France 34,186.75
$11,797,851.72
Other countries 956,184.89
$12,764,036.61 U. 8. gold.
Digitized by
Google
184 The Annals of the American Academy
Imports into Quatemala from —
United States $4,879,200.04
Gennany 1,842,738.04
England 1,389,646.00
France 317,631.11
Japan and CMna 221,462.55
$8,650,676.74
Other coimtries 680,438.13
$9,331,114.87 U.S. gold.
There are at present about five hundred miles of railway in
the republic. The system includes a transcontinental line from
San Jose on the Pacific Coast to Puerto Barrios on the Atlantic,
considered the best built railway of any of the Central American
lines with the possible exception of the Panama Railway. The
Atlantic side of the republic is webbed with 200 miles of rail, 270
on the Pacific side and 30 for the interior. These roads are practi-
cally all owned by American interests and represent in a measure the
only investment in that RepubUc of North American capital.
German and English investments predominate in all other under-
takings, principally that of coflfee-growing.
To develop mining the government has granted the privilege
of free duty on machinery and other implements necessary for the
exploitation of that industry.
Ores of iron, lead, zinc, silver, lignite of very good quality,
sulphur and rock salt are found in abundance. Prospecting for
petroleum has recently been undertaken and the opinion exists that
the search will be successful. The greatest obstacle, however, to
a rapid progress of these enterprises is capital to adequately ex-
ploit the vast mineral deposits.
Grazing has also had considerable development, but there is
little outgo of meat products, most of the cattle being consumed in
the country with only the hides for export. There is much talk at
present of developments in cattle raising and the government
seems disposed to lend assistance to any proper venture of this kind.
It seems easier for the Central American to live on the prod-
ucts of his own country than for most other people and this particu-
larly is true of Guatemala which is primarily an agricultural
country with comparatively little manufacturing and scarcity of
capital for its development.
Digitized by
Google
Needs for Capital in Latin America 185
HONDURAS
By W. S. Valentine,
President of the New York and Honduras Rosario Mining Co., New York City.
Honduras, a country of scarcely half million population, in a
territory covering some fifty thousand square miles, with the only
safe ports on both the Atlantic and Pacific, between Panama and
Mexico, has remained in statu quo, practically since its independence,
because from a capitalist's standpoint, it has not been " on the map."
The main causes of this have been : —
(a) Its internal and internecine struggles, very much exagger-
ated, but sufficient to preclude it as a field for investment.
(b) Its enormous foreign debt, created in 1864 in London and as
stated by the Select Committee of Parliament, London, 1872,
"Born in the Cardinal Sin of, and carried out by, our own people
in the same Cardinal Sin." This debt with interest now reaches
over $125,000,000.00. Although many attempts at settlement
have been made, it has never been accomplished, and imtil it is, the
credit of the country will be nil. Here is an excellent opportunity
for capital.
Government Needs. In spite of its heavy burdens, the govern-
ment has managed to scrape along, paying its way in its internal
budget. The eight years of political quiet, and the enlightened
statesmanship of its youthful President, Dr. F. Bertrand, have
assisted materially in its fiscal progress. The government really
needs no direct financial help.
The flexible silver basis is a serious problem, and "capital"
will have to find a way for the introduction of the gold standard.
This will come when its great natural wealth is fully appreciated.
Railroads. The heavy debt of the country was created for
railroad purposes. The country has never received anything for it,
except a badly built 37 miles of road. Since then practically no
construction has been attempted. There are a few banana roads,
built by private corporations. Railroads are a prerequisite of the
coimtry; they are what is needed for the development and extrac-
tion of the vast latent riches. The government will grant most
liberal franchises to American capitalist's constructing them. A
line for an interoceanic road has been found feasible. It would be
about two hundred miles long. This road would run from the mag-
nificent Bay of Puerto Cortes, on the Atlantic, to the Gulf of Fon-
seca, on the Pacific. It would not only be a success financially, but
is of imperative necessity to the government of the United States,
since it has now virtually obtained control of the Gulf of Fonseca for
Digitized by
Google
186 Thb Annals op the American Acaobht
a naval and coaling station through the recent Bryan-Chamorro
Treaty, signed with Nicaragua.
Varuma Loans. There are no specific requirements for loans
of general character. Honduras requires development by the in-
vestment of capital. Thus development of the latent wealth will
follow.
The climatic conditions are such as to allow everything in the
agricultural line to be raised, from beans to cotton and wheat. The
great forests of mahogany and cedar, of pine, oak and all building
lumber are virgin, and grazing lands for cattle exist by the mile.
The rivers are rich in gold whUe veins of ore are abundant in gold,
silver, copper and iron, awaiting development. The laws of Hon-
duras are very liberal for the immigrant.
The commercial interests are in the hands of a few foreigners.
The "zone of conmiercial influence" has been the standard of Eng-
land for many years, but in recent years, strongly fought by the
Germans, while the American manufacturer has b^n dormant.
The credit on long terms is one that must be appreciated by the
American manufacturer. The risk is minimum and in forty years of
experience, only one failure has been noted. American goods have
met with great favor since the war, and the field is now open for
permanent trade; it can be held if the two salient points are con-
sidered, i.e., credit and proper packing.
There is a large field for banking institutions as at present but
one bank of any importance is in operation. It has only recently
been established, the interests being mixed Hondurenian and Ameri-
can capital, and it is doing a flourishing business.
NICARAGUA
By W. L. Saundebs,
Chairman, Board of Directors, IngersoU-Rand Company, New York.
Nicaragua is the largest republic of Central America, its area
being about equal to that of the state of New York. Columbus
discovered Nicaragua in his fourth and last voyage. European
settlers are known to have located there before the era of immigra-
tion to the United States, yet the country has never been developed,
its natural resources remaining in a virgin condition, except in ^e
coflfee industry, which has not yet been extended to the limit of its
possibilities. Thousands of acres of good coffee raising land exist
in the highlands, where the natural conditions are favorable for
raising high grade coffee, yet these lands remain uncultivated.
Coffee production on a large scale requires capital for the purchase
Digitized by
Google
Needs for Capital in Latin America 187
of machinery and plant, but the industry when properly equipped
and managed is one of the surest for large returns on the investment.
The chief reason why capital has not developed Nicaragua is
because of internal revolutions and political troubles. These have
existed in the past with great violence and frequency, but indica-
tions now point to stabiUty of government, which, taken with the
settlement of financial conditions in the country, offers promise of
the investment of capital and the development of natural resources.
The monetary system of Nicaragua, which for many years was
aQver, though actually based upon inconvertible paper, has during
recent years been reorganized and is now on a stable gold basis.
In 1912 a firm of American bankers negotiated an arrangement
whereby the interest on the foreign bonded loan of Nicaragua was
reduced from six to five per cent, an operation very favorable to the
republic. Recently the United Stated Senate has ratified a treaty
with Nicaragua by which the United States agrees to pay three
million dollars for a naval station on the coast of Fonseca and a
perpetual right to build the Nicaragua Canal. This will add much
to the financial strength of the government, enabling it to pay off
a portion of its outstanding bonded debt and to settle claims for
damages which have resulted from former periods of political dis-
turbance.
Low grade gold exists in many districts, and is now being profit-
ably mined at half a dozen mines. Thousands of cabinet-wood
trees are uncut. This industry is receiving some attention, but the
operators are greatly hampered by lack of capital. Under normal
modem conditions, this industry, as most others, must be under-
taken on a somewhat large scale to make it profitable.
Many new regions fit for banana cultivation, and untouched by
the banana disease, remain fallow for capital and attention. Even
the lands where the banana disease has appeared have been demon-
strated to be resourceful for sugar cane and for citrus fruits. There
exists a chance and a need for capital. Sugar is produced very
profitably already, and there is room for more.
Wild rubber is a sufficient industry to show that cultivated
rubber is possible. Thousands of cocoanuts are already being
shipped, proving that there is an opportunity for investment, both
for the nuts and for copra and oil. Another possibility requiring
attention is dye-woods, already shipped in some quantities. One
of the biggest resources of Nicaragua is its cattle and cattle ranges.
It possesses one of the very few regions of cattle lands in the extent
of coimtry from northern Mexico far down into South America —
a resource that some day will be made much of.
AU these resources, besides others such as cacao, tobacco and
cotton, which are being raised in sufficient degree, profitably, to
prove their possibilities for further attention from capital, need
transportation. With their development will come a growing de-
Digitized by
Google
188 Thb Annals of thb Ahbrican Acadbiit
mand for carrying facilities, and here is a demand for further capital.
This applies to both railroads in the interior of Nicaragua and steam-
ships for the exterior.
The present railway system of Nicaragua is confined chiefly
to the Pacific coast and the Lake region. This comprises some 191
miles of track. Of these, 171 are the property of the government,
though at present they are partly owned by New York bankers.
The rolling stock on the railways is of American manufacture.
We have in Nicaragua a country somewhat resembling Nevada,
rich in possibiUties and now firmly on a gold basis, needing only the
stimulus of capital to give it healthy and profitable development.
PANAMA
By a. G. Clapham,
President, The Commercial National Bank, Washington, D. C.
Due to the Panama Canal there is scarcely a country that has
been so advertised all over the world as has the Republic of Panama.
On the other hand there are but few countries of which so little is
known regarding the natural resources and the needed capital for
development.
In my opinion the greatest opportunity for development and
quick results is in the sugar, cocoanut and cattle business. The land
is very fertile and sugar-cane is well adapted to the climate and will
yield from 15 to 20 tons per acre more than the cane lands of Cuba;
but at the present time there is very little to encourage people to
raise cane as there are practically no sugar-mills and most of the
cane is used in making rum or syrup for home consmnption.
I was especially interested in the opportunity for the develop-
ment of the cattle business. There are many thousands of acres
that would make excellent grazing land and as soon as the land is
cleared it runs into grass which improves by grazing. There are
come very good ranches at present in Panama but the business is
in its infancy and there are comparatively few cattle there compared
to the demand and opportunities. I was, however, surprised to see
what good grades of cattle are raised there. Many of the cattle
owners are endeavoring to improve the quality of their cattle by
getting bulls from the states and Jamaica. The supply of cattle
at this time is not sufficient for the local demand. In the past year
the United States government bought thousands and thousands
of animals in Colombia and Costa Rica and shipped them to
Cristobal to be used in the government conunissary, and to supply
the ships that pass through the Canal. This trans-isthmian alup-
Digitized by
Google
Needs for Capital in Latin America 189
ping alone creates a great demand for beef — and it is not one-third
now what it will be when the war in Europe is over.
The cocoanut business is much smaller; but with increased
demand for cocoanut it can be made very profitable — this with
comparatively little work as the trees begin to bear at the age of
seven and eight and they live to be seventy-five to one hundred
years old.
There are several sections of Panama admirably adapted to
growing coffee of very excellent quality. Experiments with cotton
have produced a staple of much finer quality than we raise in the
states. It is of a very long and silky appearance, closely resembling
Peruvian cotton.
The natural resources of this little republic are almost entirely
undeveloped. The opportunities there are much greater for big
returns with fewer privations and less suffering than one encounters
in an effort to develop the resources of many of our western states
and Alaska.
There are many other industries besides the ones mentioned
awaiting capital for development. Many people fear and are prej-
udiced against the climate; but the worst thing about it is the lack
of seasonal changes. The people I met there on my several visits
seemed and looked as healthy as they do in the states. TJie govern-
ment of Panama welcomes capital and is liberal in granting con-
cessions for legitimate enterprises.
PARAGUAY
By William Wallace White,
Consul General of Paraguay, New York City.
In his message to the Fifty-Sixth Congress in April of the
present year, Don Eduardo Schaerer, President of the Republic of
Paraguay, said:
The European war has appreciably modified our commerce, creating new
relations in our international traffic. The closing of various of the great markets
having relations with South America, the difficulties in intemationid commimica-
tion, and other reasons that it is unnecessary to enumerate, have produced a
visible shifting of the import and export movement, directing it in great part to
the United States. The growth of relations in this direction has plainly shown
the need of some means tending to encourage it.
In other words, the Paraguayan government is not only willing,
but anxious, to cultivate commercial relations with the United
States.
Digitized by
Google
190 The Annals op the American Academy
Situated in the interior of South America, away from the
usual routes of travel, Paraguay is not known in the United States
as are its neighbors. ''The Garden of South America," as it is
called, with a healthful and salubrious climate and abundant rain-
fall— similar in many respects to the southern United States—
with forests rich in construction-, cabinet-^ dye-, and tanning-
woods, with broad prairies suited today for hvenstock, and tomor-
row for agriculture, the country is only awaiting the introduction
of capital to make it one of the richest spots in the world for pro-
ducing the staple necessities that are today becoming scarce. With
its cattle it bids for packing plants; with its hides and tanning
extracts it should have its own tanneries; its abundant and cheap
timber yields railroad and shipbuilding material that will endure
for generations, and cabinet-woods for the rarest uses, with com-
mercial woods for the carriage-builder and tool-maker, and pulp
for the paper mill. Sugar, tobacco, cotton, maize, rice, yerba mate,
and all the California or West Indian fruits and vegetables thrive
on its soil, and canneries and preserving plants might be established
with profit.
The general need of the country is internal improvement, and,
recognizing this, the government is offering every inducement to
settlers, particularly to those that intend to remain, rather than to
the large land holder who invests with a view to speculation. The
public lands are being surveyed, and are being taken up as rapidly
as they are opened.
For the full development of the coimtry, perhaps the greatest
need is improved and cheaper transportation facilities, by rail)
water and highway. Transportation today between local points
and to the seaboard ports is, with the exception of the Paraguay
Central Railway System, carried on largely on the various rivers
bounding and traversing the country. In many cases it would be
profitable to dredge certain of these rivers, and it might be of ad-
vantage to inaugurate a system of swift, light-draft, steam barges to
carry the products of certain localities imtil the permanently estab-
lished character of their productions shall warrant the construction
of railroads.
As to the possibilities for loans and investments in Paraguay,
each proposition must be judged on its own merits. It will be wdl
to remember that in any undertaking wherein the public weal is
concerned, the government, through its appropriate departments,
will do everything to facilitate the relations between the parties.
American investors will have diflSculty in finding greater natural
and legal inducements for legitimate undertakings than are yet
open in Paraguay — opportunities that are being recognized more
and more by capitalists of the coimtries l3dng contiguous to the
republic, who are investing in the cheap lands and establishing
commercial and banking connections in every part of the countiy.
Digitized by
Google
Needs for Capital in Latin America 191
PERU
By John H. Fahbt,
Publisher, Boston, Mass.
Peru's most important demand for capital in the United States
has been for government purposes. Efforts have been made re-
cently to secure in this country a loan of $15,000,000 to cancel
various debts and pay the interest and amortization of old loans;
notably that previously obtained in the United States through the
W. R. Grace Syndicate. Efforts to negotiate such a loan have
been abandoned for the present, since the Peruvian government
and American bankers were unable to agree upon arrangements.
The government has, therefore, suspended negotiations imtil later
and is to apply the surplus, accumulating as a result of present
economies, to settlement of interest and amortization on the debt.
The first year of the war caused a large decline in government
income, and at once a program of rigid economy was adopted. This
is proving successful. Sooner or later the Peruvian debt will un-
questionably be financed in some form, and the matter will again
be taken up with bankers in this coimtry. The total debt of the
country is about $29,000,000, or about $6.50 per capita.
It is almost impossible to say what the capital needs of Peru
are at present, for municipal and public work. A number of com-
munities are anxious to improve their water supplies and are ready
to grant concessions and guarantees for the necessary capital.
Railroad extensions and new lines are also projected. These enter-
prises would undoubtedly call for an expenditure of $25,000,000 or
$30,000,000, if obtainable on a reasonable basis. It is probable,
however, that most of these developments will be delayed imtil the
terms on which the capital may be obtained are much better than
at present.
Investigations of various industrial proposals, as well as rail-
roads and public works, are being made on behalf of American
capitalists at present, but as yet there is no information available
as to the aggregate capital requirements involved. If a government
loan is arranged in this coimtry within the next year or two it will
undoubtedly aid the Peruvian situation very much from a capital
standpoint and stimulate the investment of North American money
in industrial and other enterprise.
Digitized by
Google
192 Thb Annals of the American Academy
URUGUAY
By H. a. Whbeleb,
Vioe Ptendenty Union Trust Company, Chicago, IlL
While Uruguay is one of the smallest of the South American
republics, it constitutes a veiy interesting and fruitful field for com-
mercial and financial operations. The people are almost entirely
white people, the Indian and Negro strains being almost wholly
eUminated. The principal sources of wealth are stock raising and
agriculture, and the per capita wealth is increasing very rapidly.
The government is in many respects a nearer approach to a pure
democracy than any of the South and Central American nations.
There are no separate states, and while the country is divided into
nineteen geographical departments, the federal power is general and
complete with a tendency to control, and in time to monopolize,
many activities which in other coimtries are carried on by private
persons or corporations.
Uruguay is for aU practical purposes a gold standard coimtry.
It coins a limited amount of silver for fractional currency, but coins
no gold, using chiefly the gold coins of Great Britain, United States,
and Argentina. Its note issue is entirely in the hands of the Bank of
the Republic, and must be protected by a gold reserve of, at least,
40 per cent.
At the close of 1914 the public debt of Uruguay was $143,-
000,000, largely held in England, France and Belgium. This debt,
which represents a per capita of $107, seems rather large, but it
should be borne in mind that it is the accimiulation of old debts
refunded and being paid by modem Uruguay although created
under policies of government which today would not be tolerated.
Whatever increase in national debt has been made during the past
generation has been more than oflFset by productive properties and
important public improvements. The debt of Uruguay is secured
by an assignment of customs duties sufficient to guarantee interest
and amortization.
At the outbreak of the European war, great imeasiness was
felt with respect to the administration of pubUc revenues since the
customs duties must be seriously affected and the contracts for
public improvements then under way must be carried out. The
government set itself to strengthen its financial position, and offered
an internal loan, first, of $4,000,000, and later of $6,000,000, to
bridge the period of readjustment. This internal loan was readily
absorbed in Uruguay, and, together with economies introduced by
the government, and new internal taxes created to replace the
losses in customs duties, brought about a prompt reaction and has
Digitized by
Google
Needs fob Capital in Latin America 193
made Uruguay singularly able to take care of herself during the
past two years.
A progressive country like Uruguay wiU, of course, need to be
financed, and ought to be financed in the United States. The
internal loan of $10,000,000 will be converted into a foreign loan at
such time as may be deemed wise. Beyond this, the increase in
public debt will be solely for the acquisition of productive properties,
or the completion of important public improvements. It will be
necessary to increase the capital of the Bank of the Republic, of the
Mortgage Bank, which has to do with loans upon farm property,
and of the Insurance Bank, which ultimately will give the govern-
ment a monopoly of the insurance business. Port development
must proceed, for Uruguay's chief port, Montevideo, will in the
years after the war be increasingly a port of entry, through which
goods will come for distribution to all bordering countries. While
Uruguay is ahready a country of good roads, these will have to be
ejctaided and large expenditures made during the next decade.
Since the franchises for electric lighting and power are entirely in
the hands of the government, these must be extended, and other
public utilities will, under the progressive policy of Uruguay, be
acquired. Broad plans are now being made in connection with
sanitation and contracts have recently been entered into looking
toward full realization of these plans. Finally, the policies of the
government seem to point toward ownership of railroads. Already
a beginning has been made in the purchase of one short line, to be
hereafter extended, and since the government is now guarantor of
interest return on all railroad investments, there is a growing inclina-
tion to absorb all of the railroad properties and operate them as a
government monopoly.
While the general plans of Uruguay may appear somewhat
ambitious, and the program for development may occupy many
years, it is a program that should be carried out, and if moderately
undertaken, can be successfully financed. It is extremely important
that interests in the United States keep closely informed regarding
developments in Uruguay. The two countries have much in com-
mon and are in no wise competitive, in fact, in so far as the packing
industry is concerned, our principal packing houses are already
thoroughly established and successfully in operation in Uruguay.
Friendship to Uruguay on the part of the United States and
its financial interests will involve a willingness to assist not only in
financing productive improvements, but also in cautioning against
a development which would too rapidly increase the tax rate of the
country.
Digitized by
Google
194 The Annals op the Amebican Academy
VENEZUELA
By Francisco J. YXnes,
AsBiBtant Director of the Pan American Union.
Venezuela is a land of unlimited yet undeveloped natural
wealth, and, like all other agricultural countries, it needs capital to
create or develop its natiu^jd industries.
The geographical position of Venezuela is unexcelled, as it lies
in the northern portion of the South American continent, on the
route to and from the Panama Canal. Its population is only about
2,800,000, while its area is about 394,000 square miles, consisting of
three distinct belts or zones: the mountain belt, which separates the
coast from the inland plains and plateaus, a region rich in timber and
other forest products; the belt of the plains, where millions of cattle
could graze and thrive; and the forest belt, a veritable storehouse of
all the products of the forest, precious and dye woods, gmns, resins,
tonka beans, etc. The river system of Venezuela affords all the
irrigation needed for the cultivation of the land, and also navigable
waterways into the interior. The climate is healthful, the people
hospitable, and the soil rich.
The principal products of consmnption and export are coffee,
cocoa, sugar, corn, cattle, rubber, hides and skins, tobacco, balata,
tonka beans, gold, copper ore, iron, asphalt and heron plumes. As
there are no manufacturing industries, Venezuela is compelled to
import cotton goods, machinery of all kinds, agricultural imple-
ments, kerosene, drugs, canned goods, wheat flour, lard, butter, etc.
Venezuela has been called a land of revolutions, but this word
does not mean the same in Venezuela as in the United States. Any
movement of imrest, any mass meeting to protest against a govern-
ment measure, any riot, any strike of railroad or street-car men or
miners, is at once dignified by the cable or telegraphic messages by
the name of revolution. It is the constant dread of these so-called
revolutions and political unrest that has always prevented the
entrance of foreign capital into the coimtry, for fear of complications,
loss of the money invested or lengthy and vexatious international
claims, which, in the majority of cases, grow out of bad faith on the
part of concession seekers.
All fear of any such danger is at present imwarranted. Peace
and prosperity seem to be assured in Venezuela; its foreign and
domestic debts are being paid with promptness, and foreign claims
against the country have all been settled without delay. Trade
has not suffered as much as was expected at the beginning of the
European war, and no moratorium has ever been resorted to. The
customs receipts, which make up the bulk of national revenues,
Digitized by
Google
Needs fob Capital in Latin America 195
have notably increased, and American trade with Venezuela is now
in a flourishing condition.
The peculiar topographic conditions of the country, its great
area of fertile lands, its scanty population, have made certain phases
of progress lag. Venezuelan railways and river shipping are pros-
perous, but the country needs new industries, new capital to create
or develop new necessities. The present administration, among
other works of real benefit to the nation, has built excellent high-
ways for automobiles connecting some of the principal centers of
production with the home markets, in order to encourage traflSc and
agricultural development, since railroad building, because of the
character of the coimtry, is very expensive.
The credit of Venezuela is today unimpeachable, its finances
are in such excellent condition that it is one of the few countries
that are not in any foreign market for a loan, and it has a surplus
or reserve in gold amoimting to about $50,000,000.
Digitized by
Google
MEXICO
Bt James J. Shirley, M. E. E. E.,
New York City.
Without considering present disturbed political conditions in
Mexico which must be looked upon in the nature of evolutionary
rather than revolutionary and which conditions will adjust them-
selves as all other political movements have done elsewhere—
Mexico, by reason of its geographical relation to the United States,
must be considered as the logical heir over all other fields for Ameri-
can enterprise, energy and capital.
Mexico has long enjoyed railroad advantages. There are
already seven gates into Mexico along the United States border,
giving access to a net of over sixteen thousand miles of modem
railroad, penetrating into practically every state in the republic
of Mexico — and built for the most part by American enterprise.
This system of railroads enables, in normal times, an eflBcient inter-
course between the United States and Mexico, on a scale and with a
faciUty that no other Latin American country can ever hope to
attain.
This system of transportation is all the more efficient because
of the fact that 90 per cent of it is of standard gauge construction.
In normal times there may be seen, almost as far south as the Guata-
malan border, cars of the Canadian Pacific, Grand Tnmk, Great
Northern, and almost every other tnmk line north of the Rio
Grande. The PuUman Company operates its sjrstem throughout
the republic, and normally, railroad traveling in Mexico is as rapid
and comfortable as the traveling in the United States.
Taking the Canadian, American and Mexican railroad sys-
tems as a unit, what other territory of similar extent anywhere can
compare in efficiency with this remarkable steel net?
The Railroad Situation in Mexico
The railroad situation in Mexico is not generally understood.
The National Railways of Mexico, comprising about eight thousand
miles, are Mexican only in name. It is true the government owns
a trifle over 50 per cent of the stock of said railways. The govem-
196
Digitized by
Google
Mexico 197
menty however, acquired this interest in the system by issuing its
direct securities in the form of bonds, and which are guaranteed as
to principle and interest, not by the physical property of the rail-
ways, but by the direct obligation of the government the same as
any other national security. It may be further stated, that not one
of these bonds so far as known is owned in Mexico either by the
government or individually. The interest on these bonds as on all
other government obligations has defaulted for over three years.
Nearly every railroad in Mexico — whether National Rail-
ways or otherwise — ^is a physical wreck from every point of view*
Stations and freight yards everywhere have been burnt, blown up
and wrecked, bridges and track ruthlessly dynamited, thousands of
cars and locomotives utterly destroyed and untold damage caused
in every conceivable way. Why, then, it may be asked, cannot the
Mexican authorities urge the bondholders of the National Railways
to foreclose on the property?
This, however, cannot be done. There was embodied a clause
in the railway laws covering the relation of government and rail-
ways providing that if the government should at any time take over
the possession and administration of the railways (as it has actually
done for miUtary and other reasons), the properties could not be
returned without an indemnification equivalent to a yearly amount
based on the average returns for the previous three years of opera-
tion preceding the seizure, as weU as the devolution of the property
in the same physical condition it was in at the time of taking posses-
sion of it.
It happens that the three years prior to the seizure were the most
prosperous in the history of the roads. The Mexican government
not only has no money or means with which to repair and rehabili-
tate the lines, but has absolutely no credit under present conditions
to pledge. For these reasons the bondholders are in the peculiar
position of being able to refuse to foreclose, and yet be ab-
solutely guaranteed against loss, provided Mexico ever reestablishes
its credit.
The representative bondholders of the National Lines are com-
posed of syndicates whose status in international finances is such
that, when the time arrives to discuss and arrange for the credit
and rehabilitation of Mexico, they will have a very strong voice
aroimd the coimcil table.
Digitized by
Google
198 1!^ Annals of thb Ambrican Acadbmt
Political Commissions Can Do Little
At this time there are commissions !rom the United States and
Mexico in session for the purposes of first adjusting international
political misunderstandings (which for the purposes of this article
need not concern us) and second of devising, if possible, ways and
means for the financing and rehabilitation of Mexico.
The only way that the United States as a nation can bring
about the second and most important of these requirements is by
pledging its credit, which in the first place would require the sanction
of our legislative houses, which we can discount as being an exceed-
ingly remote possibility.
The only alternative is to seek the help of financial interests.
It can be taken for granted that no syndicate or group of bankers
will consider any financing in Mexico, which will not have as a
guarantee the systematic and complete rehabilitation of the National
Railways of Mexico. This means, briefly, that the administration
of the property must be turned over to such parties as the represen-
tative bondholders may appoint, and not to a purely Mexican ad-
ministration. What the bondholders will demand, therefore, is
practically a receivership without foreclosure, — ^the terms and con-
ditions of which this article cannot treat.
For these and other reasons it is almost impossible to conceive
of Mexico's economical problems being solved by commissions of a
purely political character in which representatives of industry are
not even consulted.
It is well to emphasize the fact here, that Mexico's problems are
purely economic and savor but slightly of the political. Despite
opinion to the contrary, there is no longer revolution in Mexico*
A revolution is an internal or family war, usually between two fac-
tions, each upholding some certain principle.
The Southern Pacific op Mexico Railroad
There is one railroad system in Mexico that is little known,
which, though 1,500 miles in extent, is not at present in any way
correlated with the railroad net in the rest of the republic.
This is the Southern Pacific of Mexico, extending from Nogales,
Arizona to Topic and paralleling the Gulf of California and the
Pacific Ocean. This recently constructed road has opened up some
of the most beautiful country on this continent, whose development
Digitized by
Google
Mexico 199
and settlement cannot remain dormant when normal conditions are
retetablished.
The west coast of Mexico as far south as Colima is literally
at the foot of the Sierras and, for this reason, very little of its area
is swampy or unfit for use. Little is heard of this garden spot, but
acre for acre, it is no exaggeration to say, that minerally, as well as
for cattle raising and farming purposes, it would be diflScult to find
an area as rich in potential possibilities elsewhere or a territory where
as little would have to be invested to obtain a given return, as in
this almost perfect sunny region, opened up by the courage, enter-
prise and foresight of Harriman. If one half the capital and energy
were to be expended on the west coast of Mexico as there has been
in California alone, the world-famed development and beauties of
the latter would pale in comparison.
In conclusion it may be said that the railroad situation in
Mexico is such, on account of the peculiar conditions governing it,
that it offers no immediate attractions from the new investor's point
of view. The possibilities on the other hand are unlimited, but it
is probable that except to connect existing systems and to complete
the Southern Pacific from Tepic to Guadalajara and possibly to the
City of Mexico, that there will not be seen any new railroad devel-
opment of importance for some years to come.
While taking account of the railroad situation, it must not be
forgotten, that Mexico with its triangular shape, the apex at the
south and two sides bounded respectively by the Gulf of Mexico
and the Pacific Ocean, has an enormous coast line ideally situated
with respect to the Atlantic, Gulf and Pacific coasts and ports of the
United States. While in normal times both coasts hitherto have
had excellent service not only with the United States but maybe even
better with Europe, it is probable that this means of transportation
will be greatly increased.
The opening of the Panama Canal has doubled and trebled the
number of ships pljdng along the Mexican coasts — especially the
Pacific. Mexico unfortunately, through no fault of its own,
posseses hardly any natural harbors of commercial value, and no
deep rivers. Artificial ports have, however, been constructed at
enormous costs and which give ample protection and economical
means of handling freight. In this respect the ports on the Gulf
are not only more numerous but they are better equipped.
Digitized by
Google
200 The Annals of the American Academy
Mexican Resoubces But Sughtlt Developed
Regardless of the fact that there are invested in Mexico over
two billions of doUars of foreign capital, of which the United States
(despite official assertions to the contrary) is second in the list of
subscribers, the resources of Mexico, whether mineral, agricultural
or commercial, have hardly been touched.
The oil fields of Mexico, probably the most extensive in the
world, cover practically the entire Gulf region of the country.
Millions of dollars have been profitably invested in this industry,
and the largest individual wells in the world are here situated.
Figures of the Geological Survey prove the above assertion,
and it is a remarkable fact, that though the world's output of petro-
leum diuing the last year was the greatest in the history of the
industry by over twenty million barrels — ^and despite the abnormal
conditions in Mexico, this country was, nevertheless, third on the
list of producers with close to thirty-three million barrels, and this
amount would have been greater if tank ships had been available.
It is an interesting fact not generally known, that the British Navy
has depended during this war to a great extent for its oil supplies,
on the oil fields of Mexico.
Enormous as this oil area is, its development has hardly com-
menced. As an indication of the inexhaustible nature of its wells,
it can be stated that wells in the region from Tampico to Tuxpam—
some of which have been flowing for years, and are the largest in the
world — ^are giving as great an output as when "brought in" with
apparently no diminution in sight.
The California and Yukon gold rushes do not begin to compare
in importance or magnitude with the wealth being produced and
the development taking place, even in these turbulent times, in the
Mexican oil fields. Only present disturbed conditions obscure it
from more general attention and sensational notice.
Rich Mineral Deposits
For its area, Mexico is without a doubt the richest mineral
country in the world, of which gold, silver, iron, copper, lead, zinc
and antimony head the long list. Its mines worked in primitive
ways yielded millions since before the time of Cortez. Even now,
mineral deposits without ownership are to be found throughout,
which in the United States would be considered valuable, but which,
Digitized by
Google
Mexico 201
for{lack of transportation facilities and because of other deposits of
superior value surrounding them, at present remain unclaimed.
The immensity of Mexico's silver output hitherto can better
be understood when it is realized that one-third of aU the silver in
the world at present in use has come from its mines. The gold
production is almost as great in value. The coal and iron deposits
of which latter there are literally mountains in the northern part
of Mexico are exceeded probably only by the deposits in the United
States and China. Mexico is truly the El Dorado of mineral wealth !
Mexico enjoys among its other attributes, every climate con-
ceivable, from, tropical to arctic due to the varied altitude of its
terrain, ranging from sea level to heights of eighteen thousand feet.
Is it any wonder then that within its borders are foimd coffee,
vanilla, precious woods of every kind, fruits of every description,
hemp, cotton and in fact most every product depending on varied
climatic condition till the pines and the tractless regions of eternal
snows are reached!
It is of interest to know that many sections of railroad in
Mexico have ties of mahogany and ebony, and that miles of track
are ballasted with silver ore — ^valuable now, but too costly to work
by old processes. Houses are beamed and constructed with these
precious woods and mines are similarly timbered! It is truly a
nation capable of self support as no other country in the world.
Commercial Possibilities
Pages may be written about commercial possibilities. Mexico
has always imported practically every manufactured product she
uses even to the majority of manufactured cotton, although she
raises quantities of this staple and for some time has possessed very
modem cotton factories.
In connection with cotton it is worthy of note that whereas
prior to the conquest Mexico was producing nearly one hundred
and twenty million poimds, since about 1882 when the industry was
revived (aiter being completely destroyed by the Spaniards), the
production has never been much in excess of fifty million pounds —
an amount entirely inadequate to the needs of the country.
Food products, including such important staples as corn
and wheat, have likewise always been imported in enormous
quantities.
Digitized by
Google
202 Thb Annals of thb American Academy
It is a remarkable fact to contemplate and which goes to em-
phasize the extraordinary potential possibilities of the country,
that the fiscal year ended in June disclosed the fact that the trade
returns between the United States and Mexico were the greatest in
the history of Mexico, surpassing any previous record even during
boom times preceding the present troubles.
The United States' imports from Mexico for the fiscal year
were close to the colossal figure of $100,000,000, while the exports of
this coimtry to Mexico were close to $50,000,000. The figures for
our imports from Mexico establish a record, but our exports were
much below the average of normal times. To further accentuate
these remarkable facts it is well to draw attention to the fact that
the above figures on importations do not include those of the precious
metals which if taken into accoimt would further increase the
remarkable record of the year.
MiLITABY PbOBLEMS
One of the greatest problems for solution — equalled in impor-
tance only by the adjustment of claims and the rehabilitation of
transportation lines — ^is going to be the redemption of the present
innumerable issues of paper currency, issued arbitrarily and in un-
limited amounts. An approximate estimate is probably about
$750,000,000. Mexico has reached a point of development, and
its international obligations and commerce are such, that it must, for
its prosperity and economical purposes, maintain a metallic basis.
This metalic basis was created by law, and conditions would under
no circumstances permit its abrogation. Its operation, therefore,
will return with the adjustment of affairs.
The nullification of the present fiat currency should not present
a very serious economic problem, for the reason that it has not
(except for inmiediate urgent purposes) been accepted by legitimate
business, and when so accepted has in most cases been almost
immediately converted. Internal commerce has been almost com-
pletely paralyzed and external commerce has been at all times on
a gold standard. The fiat currency has been used in most cases for
military purposes, to pay oflf compulsory military services, military
requirements and supplies, and may well be defined as '^ military
currency."
Making a drastic statement of it, it may be said that the arbi-
Digitized by
Google
Mexico 203
trary and summary cancellation of all existing paper issues (other
than bank notes which existed prior to the governmental issues of
recent years) would likely work no national and probably very little
personal hardship.
The justification for any step which would create as quickly
as possible a metallic currency is better understood if it is borne in
mind that the great majority of investments of an industrial nature
in Mexico, including the railroads, have been made by foreigners
and that the investment of this capital has been on a gold basis.
Such of these industries as are bonded are likewise bonded on a gold
basis, and the absurdity of receiving revenues in paper currency not
backed metallically, and having to meet obligations and pay interest
on a gold basis, is at once evident, and hence no semblance of sta-
bility can exist till this problem is successfully met. Just what
form this elimination will take and by what means it can be brought
about, only future developments can decide.
EUBOFEAN InTBBBSTS IN MSXICO
Europe, despite its handicap of distance as compared with
the United States, has consistently retained much of the commerce
of Mexico which logically belongs to this coimtry. Many reasons
may be advanced to explain this. Briefly, however, the principal
contributing cause has been the lack of American banking facilities
as compared with those dominated by European influence. In fact
no comparison can be made because there are no American banks
with which to make a comparison. It can truly be said that the
banking business in Mexico is entirely in the hands of Europeans.
Apart from some purely local state institutions, there are no banks
in Mexico capitalized, owned or conducted by Mexicans.
The great pillars of finance and credit in Mexico, such as the
National Bank of Mexico and the Bank of London and Mexico,
were capitalized and have always been controlled in Europe and
are managed and directed by Europeans. The two leading banks
of Canada, i.e., the Bank of Montreal and the Canadian Bank of
Commerce have each branches in Mexico. On the other hand,
there is not a single American controlled banking institution doing
nternational business in the whole of Mexico!
Mexico — like other Latin American countries whose initial
progress has been due to European enterprise — has been accustomed
Digitized by
Google
204 Thb Annals of thb American Academy
to obtain its credit in Europe in customary European wa3rs. While
present world events may tend to modify these conditions somewhat,
we, as a nation, through our institutions of credit, must meet our
would-be commercial partners half way, and not, as heretofore, in
somewhat arbitrary style. We must, in other words, study their
problems and conditions. Mexico must likewise adjust itself to
the new conditions as other nations — and indeed the world at large
— is doing.
A "Short Term Obligation" in Latin America prior to the war
was a thing unknown. This class of obligation, however, has been
found the only practical one to use by the peculiar conditions pre-
vailing in the United States, for the reason, that the American in-
vestor has not hitherto had either the desire or the necessity to
invest in foreign securities or look to foreign fields for investment,
and it is not to be expected that he would take kindly to long term
obligations abroad.
But even in this country we are undergoing an industrial evolu-
tion of which most of us are hardly conscious and will not realize
till we waken up to find it. While isolated cases may be shown, it
can truly be stated that, as a nation, we had never, up to two years
ago, acted as bankers for the world. Inside of this time, however,
we have loaned abroad close to a billion dollars — ^not a dollar of
which has been other than in the form of a short term issue.
Mexico, like many other countries, is not a banker nation and has
little money or capital to develop its resources, but it has the equiva-
lent— and in almost imlimited amounts — i.e., realizable assets, the
foundation of sound credit.
Plans for the Future
Great enterprises are already planned to be carried out as soon
as a readjustment takes place. These include the rebuilding and
building of railroads, construction of ports and harbors, erection
of great irrigation systems and great commercial enterprises, in-
cluding the construction of colossal hydro-electric systems, the
opening up of great bodies of ore, the erection of large manufactur
ing enterprises of all kinds, etc.
The keynote of our successful commercial conquest, not only
in Mexico but throughout Latin America, will be our willingness
and ability to absorb the public securities of these countries when
they are soundly created and to construct and develop the above
Digitized byVjOOQlC
Mexico 205
mentioned enterprises. Their education by Europeans has been
along these lines, and we must endeavor as far as possible to follow
until in the process of time we can undertake and carry on a method
of our own.
In the larger undertakings involving great investments of
capital, it is not compatible with the best results to encourage too
much competition. Here again we can profitably learn from our
European cousins. Restraint of trade should not be tolerated, but
neither should cut-throat competition prevail. Circumstances
alter cases, and as the foreign fields present different problems, so
we should devise a different method of solution.
Such undertakings as the Trans-Andean Railroad, the Trans-
Isthmian Railroad at Tehauntepec in Mexico, the sanitation and
harbor improvements at Vera Cruz and the improvements being
undertaken in Valparaiso, Chile, at an approximate expenditure of
$15,000,000 have all been undertaken and carried out with con-
structive cooperation rather than with destructive competition,
thereby assuring efficiency and permanency in pioneer fields.
General Conclusions
It may, therefore, be stated in conclusion that, eliminating
present political conditions in Mexico as being transitory and to be
followed by a long and permanent peace, Mexico must no longer be
looked upon as a country of pioneer conditions. The network of
railroads covering the country from the United States border to
Guatemala and the Gulf to the Pacific as well as its adequate arti-
ficial harbors, highly developed hydro-electric systems, modem
municipal improvements, its' splendidly and modemly equipped
and operated mines and smelters for gold, silver, lead, copper, zinc,
iron, etc., are all indications that the path is blazed and even paved.
There is needed only the establishment of large and sound American
international banks, similar to those splendid and solid British
institutions found throughout South America, which are the solid
foundations of British domination in commercial lines throughout
the world.
The policy of such institutions, while conservative, should be
judiciously liberal to meet the requirements of the situation, and
should not merely fiunish a medium of exchange or act as commercial
** pawnshops." We must in the great development of those coun^
Digitized by
Google
206 Thb Annals of the Amsbican Acadsmt
tries, most of which must be done primarily through codperation
with their govenunents, learn to absorb their securities under
certain guarantees as they are issued and to create industry and
improvements thereby augmenting the security as well as the
revenue.
Hitherto the tendency in the United States has been to look
upon the would-be investor in Latin America as an adventurer
rather than as a practical business man. He is, however, far from
deserving this stigma, any more than such pioneers as Harriman,
Hill and others. The strength of the British Empire, as demon-
strated in this present Eiu^opean War, is the direct result of its
investments and commerce abroad. Great Britain has invested
in Brazil about $760,000,000, in Argentine about $1,500,000,000,
in Chile about $325,000,000, and in other coimtries in proportion.
The mobilization of her resoiu-ces during this war has clearly demon-
strated the power of foreign investments when effected along sound
lines.
Mexico, more than any other country, is literally beckoning
us to aid her and incidentally to profit by it. Are we going to take
advantage of the opportimity or are we going to let some one else
usurp our right?
Digitized by
Google
RUSSIA'S FUTURE NEEDS FOR CAPITAL
Bt Samubl McRobbbts,
Vice Preeident, National City Bank, New York City.
No individual or collection of individuals can undergo a great
test of strength and come out of it the same as before the ordeal. If
the draft upon the vitality is too great, the result is a lower order of
life, or even death. On the other hand, if there is sufficient strength
to successfully meet the crisis, the contest brings added physical
ability and a quickened spirit. The great war in Europe has set all
minds to considering the effect upon civilization, and the utility, if
there is any, of war in the abstract. Whether it is an unmitigated
evil, to be borne as one of the defects in human affairs, or an evil that
must be endured that good may result, is a question that will con-
tinue to be debated. When we see the high civilization of England
being cut down from the top, or Germany's peaceful conquest of the
world abandoned for a military conquest, war takes on the aspect of
disease and a menace to the constructive forces of civilization.
When we turn to the case of Russia, the matter is not so clear.
Dean Swift once said, in reference to his critics, that unless the asses
ate oflf the ground leaves of certain plants, they would never grow
tall, and certainly Russia has had a tendency to sprawl. Occup3dng
onenseventh of the land of the globe, she includes a wide diversity of
people, and is not entirely a homogeneous nation. National spirit
has been lacking, her circulation has been slow. Individualism and
personal initiative in the great mass of her population have been at
a low ebb. It is idle to attribute this condition to the character of
its government, for no government has failed to reflect the status
of its people for any great length of time. This internal condition of
Russia has been improving, very rapidly so during the last ten years,
but the effects already observable seem to indicate that the war is
going to accomplish for Russia within the few years of its duration
what would have ordinarily required many years. Already the
greatest social evil in Russia, drunkenness, has disappeared, with
startling effect upon the economic and moral status of the people.
The Russians are united in this titanic struggle, and a genuine
207
Digitized by
Google
208 The Annals of the American Academy
national spirit is in evidence. Old customs are being broken up,
and a new experience brought to every individual in the Empire.
No final judgment can be formed at this time, but it would appear
that the quickening of the spirit of Russia may eventually be con-
sidered worth its terrible cost.
Russia's Problem in Financing the War
In 1914, at the commencement of the war, Russia had a rafudly
increasing foreign trade, which produced a credit balance for
meeting the service of her foreign loans. Her pubUc debt was
decreasing, and was largely offset by revenue-producing property
owned by the state. Direct taxation throughout the Empire was
declining year by year. The financial position was sound.
The government debt, considered on a per capita basis, was the
lowest of any European coimtry, and if considered in relation to its
natural resources, presented an even more favorable comparison.
This advantageous financial position and the latent wealth of her
resources did not save Russia, however, from the severest possible
difficulties in financing the war. Internal loans were promptly
forthcoming for internal needs, which were the greater part of the
demands of the war, but her ports were closed and commercial inter-
course with the world practically cut off. Not being able to export
goods, and not owning foreign securities, Russia foimd herself prac-
tically without foreign resources. The unprecedented character of
the war imperatively demanded huge expenditures of materials,
which her own manufacturers were unable to supply, even if the raw
products could be obtained within her own borders. The enormous
depreciation of the rouble exchange, inevitable under these circum-
stances, intensified the difficulties in many ways. The situation
could be met only by foreign loans. Russia and the basis of her
credit were Uttle known or imderstood in the United States, and
therefore her requirements have been financed by England as a war
measure, excepting negligible amounts furnished by this coimtiy
and Japan. It thus turned out that the one country in Europe best
able to stand the strain of a great war, both as regards men and
natural resources, was for its immediate needs in the weakest finan-
cial position. This has all made a deep impression in Russia. What
individual economists and thoughtful business men have been think-
ing and sa3dng has suddenly become the conviction of the entire
Digitized by
Google
Russia's Needs for Capital 209
country. The people are united in the purpose to develop, com-
pletely and as rapidly as possible, the natural resources of their
country.
The public debt has increased from $4,600,000,000 in 1914 to
about $12,000,000,000 at the present time, and the annual debt
charge from $218,000,000 to about $600,000,000. These figures will
continue to increase until the end of the war. Russia faces the
necessity of raising immensely greater revenues than she had ever
contemplated as necessary. To do this the wealth of the nation
must be rapidly increased, and the ability of the individual to pay
taxes, greatly augmented.
These three factors in the Russian situation — ^the quickening of
the Russian spirit, the realization of the economic follies of the past
and the importance of commercial and financial independence, and
the spur of necessity — are combining to bring about a great program
of development throughout the Empire. It is everywhere being dis-
cussed and advocated where thoughtful Russians congregate. It is
presented in the reports of the ministers, made the topic of speeches
in the Council of the Empire and the Duma, and is a recurring sub-
ject in the daily press. The government has announced that it
receives almost daily from all parts of Russia, from members of the
legislature, from noblemen, priests, peasants, civil service employes,
officers, merchants, physicians, lawyers, workers, etc., suggestions as
to how Russia should solve her financial problems after the war and
that all these suggestions breathe lofty patriotism and faith in the
strength and splendid future of the country. Plainly the signifi-
cance of industrial development for the future of the country is felt
and appreciated everywhere throughout Russia.
The Extent and Importance op Her Natural Resources
The basis, in the way of natural resources, for Russia's economic
development is very broad. The population is officially stated to be
174,000,000, the largest of any country, except China and India, with
a normal increase of about 3,000,000 per year. The land area is
four times the area of Europe and about three times the area of the
United States and includes every variety of territory, from the
highest mountain ranges to the most fertile of alluvial plains. The
climate ranges from arctic to the semi-tropical of Turkestan, Trans-
Caucasia and the Crimea. The country can produce within its own
Digitized by
Google
210 The Annals of the American Acadbmt
area ail the essentials to modem civilisation. For agriculture, it has
the most extensive acreage of first-class farm land anywhere found
on the globe. It has about fifty per cent of the timber north of the
equator. It has.large known deposits of iron, manganese, coal, oil,
copper, platinum, gold and silver; while minerals of lesser impor-
tance, such as asbestos, graphite, lead, mercury, salt, tin and zinc,
are being produced. Eighty-five per cent of the population live in
the country. The remaining 15 per cent make up the population of
the cities, of which there are over two hundred in the Empire. Sixty-
five of these cities have a population of over fifty thousand, and
twenty-four a population in excess of one himdred thousand. One
hundred and fifty-three million of the 174,000,000 inhabitants live
in Russia in Europe, which in area is only onensixth of the Empire.
Twenty-one million occupy Siberia and Central Asia. Siberia,
more than one-half of the Empire, has only ten million of people.
In many ways Russia, today, presents an enlarged picture of the
United States at the close of the Civil War, with its population then
occup3dng the territory east of the Mississippi River, and with a
great unoccupied and undeveloped public domain lying beyond.
Just as the United States then turned to the development of its
public lands and mineral deposits in the West, and to the organisa-
tion of industries in the East, Russia is now taking stock of her great
timber resources, her fertile imoccupied lands, the hidden treasures
of her mountain ranges, and turning her attention to the organization
of industries in her more thickly populated sections, for only in this
way can she produce the greatly increased wealth which will be neces-
sary to enable her to meet her war obligations and give her an in-
creasingly greater position in world affairs. The increase of grain
production by the opening up of new farms and more intensive culti-
vation, will require capital, but not more than the surplus wealth of
the present agriculture will supply. The basis for this extension is
made apparent by the fact that in 1913 Russia planted to cereals
alone over 216,000,000 acres. Of this, 82,600,000 acres were planted
in wheat, yielding 1,024,000,000 bushels. The average yield for
winter wheat was 15} bushels per acre, and for spring wheat 11}
bushels per acre. This was a good year in Russia, and might be
compared with the same year in the United States, when there were
planted 49,601,000 acres, producing 15.2 bushels per acre, or a total
of 753,000,000 bushels.
Digitized by
Google
Russia's Needs for Capital 211
These figures demonstrate that there are ample financial
resources for the extension of Russia's agriculture, such as the
opening up of new territory, the improving of live-stock, the plant-
ing of orchards, the developing of fertilizers, and all those things
directly incidental to a larger acreage and more scientific cultiva-
tion; but there are incidental tasks which will require large units of
capital that cannot be taken directly from the agricultural com-
munity. The country has insufficient faciUties for the economical
transportation and storage of grain; and up to the present time the
losses from this source have been on a tremendous scale. However,
at the outbreak of the war the government had under way a con-
struction-program for eighty-one elevators, of a capacity of 34,860,-
000 bushels; and an additional program of seventy-seven elevators,
with a capacity of 37,650,000 bushels, has been agreed upon and
authorized. But even as now planned, the elevator system is by no
means adequate, and the whole system of grain handling and trans-
portation will need radical reformation.
Cotton Fruits and Meat Products
Russia today is producing in Central Asia more than two-thirds
of the cotton required by Russian spindles. To grow her total
requirement, and develop an export industry, necessitates the exten-
sion of the irrigated territory in Turkestan. The climate, soil and
water are there, and even the engineering has been done to a large
extent, so that all that will be required to make Russia independent
of foreign production will be capital for the extension of an existing
and successful industry. Even when this is accomplished, the need
for capital will be only increased, as Russia will occupy a geographi-
cally favorable position for supplying the great cotton textile
demands of Central Asia; and if sufficient cotton can be produced,
there is no economic reason why her textile industry should not be
correspondingly extended. This reasoning applies also to the other
textiles. Today large quantities of flax and wool are exported in the
raw state. To convert the export of these raw materials into manu-
factured products will eventually call for large expenditures.
The Crimea, the Caucasus and Turkestan are in every way
adapted for the growing of all kinds of fruits, but the fruit industry
cannot be extended and the products marketed without the estab-
lishment of refrigeration service, which is today practically non-
Digitized by
Google
212 Thb Annals of thb Ambbican Academy
existent in Russia. This would also apply to the dairy and poultry
industries of Siberia. The raising of food animals is an important
activity throughout the Empire; and Russia has more sheep and
goats than the United States, nearly as many cattle, and about one-
fourth as many hogs. Recently much attention is being given to
scientific breeding, and some progress has been made in feeding for
food results, but there is no organization of the industry beyond the
farms. Australia can put mutton on the market in Russia cheaper
than the home-grown product can be obtained, because in Russia
all animals are sent as live freight to the point of slaughter; the
economies from centralized slaughtering plants and the hand-
ling of the dressed product under cold storage having not been yet
introduced.
Opportunities in Lumbering and Mining
Russia is practically the only country in Europe having a^^
excess of timber over and above its own requirements. While
Sweden, Norway and Austria-Hungary still have a surplus; of
recent years it has become so small as to be almost negligible.
Russia is the great timber reserve of Europe, and while in 1913
she exported timber to the amount of $84,000,000, she still has
not begun to realize upon the possibilities in her timber trade. The
Englishman's definition to the effect that timber was "an excres-
cence growing upon the earth, chiefly useful for paying off the debts
of one's ancestors,'' will be particularly applicable to the Russian
forests. The demand for timber in Europe following the war must
necessarily be greatly in excess of normal. It is stated that after
the earthquake in Messina, in 1913, Italy's timber import increased
22 per cent over the average for the previous five years. If this is
any indication, Russia will have a wonderful opportunity to realixe
the latent wealth of its forests. This will mean an enormous outlay
of capital for the building of railroads, port facilities, steamships,
sawmills, pulp mills, and all of those things incidental to the manu-
facture and transportation of timber products.
Russia has already taken steps to attract foreign capital to the
mining industry, by reforming its taxation laws and granting more
liberal concessions, and by facilitating, as well as granting govern-
ment aid to, the importation of improved mining machinery. She
will necessarily continue to stimulate in every way the production
Digitized by
Google
Russia's Needs for Capital 213
of gold and the other precious metals. Her known copper deposits
make her practically independent of international production, and
the best authorities agree that her mineral fields have not begun
to be exploited.
The Need for More Railways
One of the chief essentials underlying the whole problem of
economic progress and realization of national energy and labor is
the expansion of the railway net of Russia. An adequate railway
system is absolutely indispensable for bringing out the natural
resources of any country, and the extension of the railway S3rstem
of Russia cannot be economically accomplished without a full
development of her metallurgic industries. Even before the war
there was a growing feeling in Russia that her railway system was
not commensurate to the economic needs of the country; and since
that time this has become too self-evident to be questioned. The
total railroad mileage in Russia is 47,000 miles. An idea of what
this means, in the way of unserved territory, can be obtained by
comparing it to the railway mileage of the United States, which
country, while only one-third as large, has 260,000 miles of road.
This means that Russia, on the basis of square miles, has only 5 per
cent, and on the basis of population, only 10 per cent, of the railway
mileage of the United States. This has been fully discussed, and
its importance understood, in Russia; and it seems to be considered
as the initial problem to confront the country at the close of the war.
The government commission has already examined and sanctioned
the building of a total of 16,776 versts, at an estimated cost of
1,466,000,000 roubles, and at the beginning of the present year this
program was further enlarged by the sanctioning of an additional
3,000 versts, at a cost of 266,000,000 roubles. So the country is
already officially pledged to the construction of about 20,000 versts,
or 13,333 miles, while projects are under consideration for official
action that will bring this up to about 17,000 miles, at an estimated
cost of over a billion dollars.
It is the declared purpose of the government, provided capital
can be obtained from the international money markets, to enter
upon a policy of construction that would produce approximately
5,000 miles per year. It is highly improbable that any such exten-
sive program can be carried out, with the result that only those
Digitized by
Google
214 The Annals op the American Academy
projects presenting the most attractive opportunities to capital
will be taken up. What this means to the steel industry in Russia
is apparent when we consider that each mile of road requires approx-
imately two himdred tons of metal. Furthermore, the existing
railroads, while well constructed, are designed to bear only a light
imit of transportation. With long hauls and heavy traffic, Russia
is being forced to the large unit of transportation adopted in this
country, which will require re-laying the existing roads with heavier
rails and the strengthening of all right-of-way structures. It will
be prohibitively expensive for Russia to import railway metal,
owing to the high cost of transportation, therefore the pace of her
railway development will be determined not only by the readiness
with which capital is obtained, but by the extent and speed of the
enlargement of the steel industry. The country is fairly well sup-
plied with coal, and it has iron ore in very great abimdance. At
the present time the development of both coal and iron is by unre-
lated and comparatively small units; adequate and economical
results will not be obtained until the whole industry is organized
along comprehensive lines and the raw materials linked together by
special transportation facilities.
The Steel and Coal Industries
In addition to soft coal, which Russia is seeking to conserve for
the steel industry, the largest anthracite deposits in Europe are
located in European Russia. The production of anthracite has
been comparatively small. During the year ending July, 1914,
the output was only about five million tons, although there was a
shortage of fuel at Moscow, but 650 miles distant. The production
of these coal fields has been by one-shaft mines, by small companies.
There is no resident mining population, the work being done almost
entirely by farmers coming to the mines at the season of the year
when they are not employed upon their farms. As a result the cost
of producing anthracite is about twice what it is in this country.
The government has recently adopted the policy of conserving soft
coal for the steel industries, and to that end has made regulations
requiring the use of anthracite for all industrial boilers and raihx)ad8,
after a certain date. This will greatly stimulate the use of anthra-
cite and necessitate the placing of the mining upon a more compre-
hensive and economical basis.
Digitized by
Google
Russia's Needs fob Capital 215
The foregoing are simply isolated illustrations of the needs for
capital in Russia. There are other important ones, such as hydro-
electric development, municipal and interurban transportation,
harbor works, canals and ship-building, and possibly still more
important is the additional general working capital necessary to
finance the incidental commerce and trade that is a part of a great
progressive movement.
The New Russia
Whether this program of industrial development will be under-
taken or carried out, of course, depends primarily upon the temper-
ament and capacity of the Russians themselves. It might be said
that, being to some extent Oriental, they do not have the same atti-
tude towards business as do Americans or other Europeans; that
the status of the laws, their adherence to communal practices, and
the restrictions upon individual activity, will be insurmountable
barriers. This is not borne out by observation in Russia under the
present conditions. They are a far-North people, and have the
characteristic vigor and activity of all European races. They are
breaking up community of ownership and getting away from the
socialistic doctrines that we in this country are reacting to from
a too intense individualism. While the citizens of all countries
are very much prone to look upon themselves as different from,
and incidentally better than, the people of other lands, the real fact
remains that all peoples are essentially the same and respond in
similar manner to physical and ethical influences. The conditions
in Russia are much the same as those that preceded the great in-
dustrial rise in this country, and for the same reasons that it occurred
here, we may confidently expect an era of individualism and mate-
rialism to be inaugurated in Russia.
Digitized by
Google
CANADIAN CAPITAL REQUIREMENTS
By 0. D. Skblton,
Profeesor of EoonomicB, Queen's University, Kingston, Ontario.
With half a continent held in trust, its resources little known
and less developed, Canada must for many a year be a seeker of
capital. In the past fifteen years it has absorbed four or five
billions in railroad construction, in developing mine, forest and
farm, in securing adequate manufacturing equipment, and in the
municipal expansion required to serve the needs of the rapidly
growing cities. Today, in addition to a more moderate rate of
expenditure upon these objects, the Dominion has to meet its
heavy share of the cost of a great war, and to finance the munitions
manufacturing which has taken first place among its industries.
Tomorrow, the need will continue for capital, to fund the short-term
borrowings of the war period, to finance the railway reorganization
which is inevitable, and to continue the normal industrial develop-
ment.
In the past, Canada sought the capital required from three
sources — the United Eangdom, the United States and in the
Dominion itself. French, Dutch and German investors supplied
a steadily increasing amoimt of capital before the war, but it made
up a very small fraction of the whole. It is in the English-
speaking world that Canada has found her capital in the past and
must for the most part find it in the future.
Growth op Canadian Borrowing
Until the war, the United Kingdom was Canada's chief banker.
The interest of British investors in Canada had been a comparatively
recent development. It is true that it was largely British capital
which built the Grand Trunk and to a less extent the Canadian
Pacific, that many an early Canadian mining venture found trusting
investors in London, and that the federal and the provincial govern-
ments went to the same market for their borrowings. Yet until
1900 the total thus borrowed was not great. The United States
Australia and the Argentine far outranked Canada in British favor.
216
Digitized by
Google
Canadian Capital Requirements 217
Then came the opening of the West, the newly quickened confidence
of Canadians themselves in their own country, and the immigration
of hundreds of thousands of United States farmers. The en-
thusiasm proved contagious, and British purse strings were loosened,
until Canada took first place among Britain's outside fields of
investment. At the end of 1910, according to the London stock
exchange totals, compiled by the Economist, Canada had out-
ranked all other parts of the Empire, attaining a total of £365,000,-
000;* the three and a half years which followed, to the outbreak of
the war, added £190,000,000 to this amount. In 1913 these
borrowings reached their maximum. In that year, according to
The Statist's compilation, Canadian flotations in London amounted
to £47,000,000 out of a total of £245,000,000 capital subscriptions
made in the United Kingdom, or nearly one-fifth of the whole.
This movement continued to the very eve of the war: in the first
six months of 1914 over £37,000,000 British capital found the
same outlet. Including capital not listed on the London exchange,
the total amount of Canadian borrowings from Britain was estimated
at this time, by Sir Frederick Williams-Taylor of the Bank of
Montreal, to be approximately $2,500,000,000.
The chief r61e of the British investor has been to finance the
constructions of the two new transcontinental railways, either by
direct loan, or by loan to the governments which built or subsidized
them or guaranteed their bonds. A surprisingly small, if latterly
increasing, fraction of the British capital went into industrial
development.
United States Investments in Canada
With the United States, the case was quite otherwise. The
total amoimt of American capital invested before the war was only
about one-fourth of the British supply. To a still greater extent
than in the case of the United Kingdom this investment was a very
1 London Stock Exchanqe Official List, Dbc. 28, 1910
(Mining and RrMer FloiaHans as Given in Matkie8on*8 Lists)
Dominion of Canada £366,368,800
India and Ceylon 350,758,200
Australasia 327,000,600
South Africa 256,603,200
Other parts of the British Empire 102,827,800
£1,402,558,600
Digitized by
Google
218 Thb Annals of thb American Academy
recent development. The distinguishing feature, however, was
the preference of American investors for industrial rather than
railroad or government issues. In other words, the United States
investor was seeking profits, the British investor interest. The
United States investor put his money into factories, timber limits,
mines, land deals, keeping control, taking the risks and taking
the profits or losses. The British investor bought the bonds of the
governments or of railways controlled (except, to a lessening extent,
the Grand Trunk) in Canada.
Careful, detailed and authoritative summaries of United States
investments in Canada have been compiled by Fred W. Field, for
the Monetary Times. These estimates show how recent and rapid
has been the growth of American interest in Canadian opportunities.
The latest estimate, given in somewhat greater detail, shows the
overwhelming industrial and speculative character of these invest-
ments, up to 1914.
Esumatb op Unttbd States Investments in Canada
{Monetary Times Anniudf 1914)
1909 $279,075,000
1911 417,143,221
1913 636,903,952
Following is a summary of United States investments in
Canada in 1913:
SUMMABT OP UnFTBD StATBS INVESTMENTS IN CANADA, 1913
450 branch companies, with average investment of $300,000 $135,000,000
Investments in British Columbia mills and timber 70,000,000
Investments in British Colimibia mines 62,000,000
Land deals in prairie provinces 40,000,000
Investments in lumber and mines, prairie provinces 10,500,000
Theatrical enterprises 3,000,000
Packing plants 6,750,000
Agricultural implements distributing houses 9,255,000
Land deals, British Columbia 60,000,000
Investments of United States life and fire insurance companies . . . 67,831,497
Miscellaneous industrial investments 12,225,000
Purchase of city and town property 20,725,000
Investments in the Maritime Provinces 13,125,000
Fox farm investments, Prince Edward Island 1,000,000
Purchase of government, municipal and corporation bonds, 1905-
1913 123,742,455
Total $636,903,952
Digitized by
Google
Canadian Capital Requirements 219
Especially significant is the list of branch manufacturing
estabUshments, covering agricultural implementSy motor-cars,
typewriters, hardware, scales, cash registers, brass goods, cereals,
tobacco and scores of other commodities. Usually these establish-
ments began as distributing or assembling branches, and later
expanded into full-fledged factories
Foreign Trade of Canada
In connection with the capital Investments of the United
Kingdom and the United States, in Canada, it is important to
recall the Dominion's trade relations with the same countries.
In brief, Canada found its chief market in the United Kingdom,
and did its buying chiefly in the United States. In the last fiscal
year before the war, the year ending March 31, 1914, the United
Kingdom took 50 per cent of Canadian exports, the United States
37 per cent and other countries 13 per cent. Of the imports of
Canada, on the other hand, the United Kingdom provided only 21
per cent, the United States 64 per cent and other coimtries 16
per cent. The figures for the preceding decade reveal substantially
the same relations.
Impobts of Canada fob Homb Consuhftion Exports of Merchandisb,
THE Produce of Canada
(In mtUions of dollars) (In miUions of dollars)
Fisoal Other Other
Tetf From— U.K U.S. Ckmntries Total To— U.K. U.S. Countries Total
1905 60 152 39 251 97 70 23 190
1906 69 169 45 283 127 84 24 236
1907 (9moe.) 64 148 37 249 99 62 19 180
1908 94 204 53 351 126 91 30 247
1909 71 170 47 288 126 85 31 242
1910 95 217 57 369 139 104 36 279
1911. 110 275 67 452 132 104 38 274
1912 117 330 74 521 147 102 41 290
1913 139 436 95 670 170 139 46 355
1914 132 395 91 618 215 163 53 431
In 1913, for example, Canada bought goods from the United
Kingdom to only half the amount of the capital she borrowed, while
she bought from the United States probably four times as much
as she borrowed. In other words, Canada borrowed her capital in
the United Eangdom and used it to make her purchases in the
United States. In spite of Canada's tariff preference to Great
Digitized by
Google
220 The Annals of the American Academy
Britain, of their cloee political relations, and of the fact of the
furnishing of the capital itself, the mother country secured less
than a third as much of Canada's trade as did the United States.^
The third source of capital before the war was the Dominion
itself. In spite of its small population, of the lack of accumulated
capital, and of the absence of European habits of thrift, the Domi-
nion was able to provide the bulk of the money needed for the
ordinary commercial and industrial undertakings of the country.
The discounts of the chartered banks, which obtain their capital
almost wholly within the country, rose rapidly from $279,000,000
in 1900 to $1,111,000,000 in 1913. Between the census years of
1901 and 1911 the capital employed in manufacturing grew from
$353,000,000 to $1,247,000,000, 90 per cent of it provided in the
Dominion itself. The capital required for railway building, how-
ever, and for government purposes, came for the greater part from
without. Municipal debentures alone found an important share
of their takers in Canada.
Increased Borrowing During the War
This was, in brief, the capital situation at the outbreak of the
war in August, 1914. ' At first it was believed that with the war
there would come an almost entire cessation of borrowings. The
reaction after the boom period of 1900-1912 had already brought a
halt in industrial expansion and in the land speculation which
accompanied it. London was beginning to tighten its purse strings.
The needs of the war, it was felt, would absorb all surplus British
capital. Canada would have to cut its coat to suit its smaller cloth.
These expectations, natural as they were, were not borne out
by facts. The issue of Canadian bonds never reached as high a
total as in 1915, and 1916 bids fair to record a higher level. Railway
construction, it is true, fell* off with the approaching completion
of the great tnmk lines, and municipalities slackened in their
programmes of road and sewer and ppwer plant construction.
Yet a steady flow of municipal securities has been maintained, the
provinces have borrowed more extensively than usual, the Dominion
* For interesting summaries of the relation between Canada's borrowing and
her foreign trade, see the article by Dr. James Bonar on "Canada's Balance of
Trade," Proceedings Canadian PolUical Science A$90ciaiion, 1918, and the analysis
by R. H. Coats in the Report cf the Cost oj Living Commiseicn, 1916.
Digitized by
Google
Canadian Capital Requibementb 221
has found it necessary and possible to float one large loan after
another to meet its internal and its war requirements, and a small
amount of railway and industrial issues has been placed.
The United Eangdom, as was expected, found it necessary to
confine its capital resources to war purposes. No Canadian issues
were made in London in 1914, after the outbreak of the war. In
1915, two railway loans were sanctioned, note issues of the Grand
Trunk and Canadian Northern amounting to $16,175,000. In
March of the same year the Dominion government made its first
and only public sale of bonds in London since the war, $25,000,000
in five- and ten-year bonds at 4^ per cent; the issue was largely
oversubscribed. This completes the list of public issues in over
two years. No provincial, municipal or industrial bonds have been
sold in London in that time.
The United Kingdom, however, did, at first, aid substantially in
providing for the war expenditure of the Dominion. From Septem-
ber, 1914, to July, 1915, $10,000,000 a month was advanced by the
British to the Canadian government, some $100,000,000 in all.
Since that time the Dominion has been able to meet its share of the
war expenditure out of its own resources, so far as that greater part
of it which takes place in Canada itself, is concerned — ^including
separation and part pay allowances, and amounting to perhaps
three-quarters of the million dollars a day that the war is costing
Canada. The expenditure on the Canadian forces in Great Britain
and at the front is still provided for by borrowings from the British
treasury. Arrangements have recently been made for funding these
temporary advances. The Canadian government is issuing to the
British government dollar bonds bearing the same rate of interest
as the British government is required to pay on the loans from
which it made the advances. The hundred millions advanced in
the first year of the war are met by the issue of dollar bonds maturing
in 1928 and 1945, and bearing 31 and 4§ per cent interest. These
bonds are not being sold by the British treasury, but are used as
collateral to assist its purchases of munitions and supplies in the
United States and Canada. Offsetting these loans by Britain to
Canada, there have been heavy loans by Canada to Britain; the
Canadian chartered banks have financed the great bulk of the
purchases made here by the Imperial Munitions Board.
With the British market thus cut off except for war loans, it
Digitized by
Google
222
Thb Annals of thb Ambbican Acadbmt
became necessary to find new resources. The striking features
of the war period have been, first, the rapid expansion of United
States investments in Canada, and second, the discovery by the
Canadian people of their own financial resources.
Loans Floated in the United States
During the first two years of the war, Canada's borrowings
in the United States slightly exceeded $300,000,000. The Dominion
government has been the largest borrower. In July, 1915, it
issued in New York $25,000,000, 5 per cent one-year notes, and
$20,000,000 two-year notes, both convertible into 5 per cent twenty-
year bonds: the first loan was repaid on maturity in August last.
In March, 1916, a loan of $75,000,000 in five-, ten- and fifteen-year
bonds was made in the same market, at a price to 3rield on the
average 5.36 per cent to the investor. The reception given this
issue was such as to justify the comment of Sir Frederick Williams-
Taylor, that, "no other foreign country in the world could borrow on
such favourable terms in the United States."
It was not, however, only the Dominion which now for the first
time has turned to the United States for capital. In the two years
of war the provinces have borrowed $65,000,000 and the munici-
palities $60,000,000 in the United States. In 1915 every one of
the nine provinces except Prince Edward Island floated a New
York loan. The municipal debentures were issued in large part
through bond houses in Boston, Chicago, Cleveland and other
centers. In addition, corporation issues, chiefly railway and public
utility bonds and notes, were placed to the amount of $66,000,000.'
In this connection, the outstanding facts as to the changes in
trade relations may be reviewed. Canadian imports have fallen off
slightly since 1913, though this present year bids fair to exceed all
previous records. The falling off was chiefly in the imports from
« Canadian Borrowtngs in the Unffbd States, Aug. 1914-Aitg. 1916.
{Monetary Times Record)
1014 1016 1016
(Auc. 4 to Deo. 81) (Jan.-Deo.) gan. l-Aog. 1)
Dominion government $45,000,000 $75,000,000
Provincial governments $1,000,000 35,877,000 18,450,000
Mimidpal 6,900,000 32,456,000 20,763,000
Corporations 18,690,000 30,640,000 17,022,000
Total $26,590,000 $143,972,000 $131,235,000
Digitized by
Google
Canadian Capital Requibements 223
the United Kingdom, and from the other belligerents^ both allies
and enemies. The imports from the United States decreased
slightly at the outset, but are now larger than ever, amounting to
five times the importations from the United Kingdom. Canada is
still, as she was before the war, the third best customer of the
United States, the only difference being that France has displaced
Germany as the second largest. It is interesting to note that this
past year Canada took more United States goods than all Asia
and South America combined.*
Enobmous Increase in Canadian Expobts
While imports, to the surprise of most observers, have thus
maintained practically their old levels, exports have followed a still
more surprising course. In spite of the fact that 350,000 men have
been withdrawn from their ordinary occupations, the production
of wealth has been maintained and exports tremendously in-
creased, more than doubling in the past three years. Much of this
increase, of course, is nominal, reflecting higher prices, and a large
part of the manufacturing exports consist of munitions and other
temporary war supplies, but the figures of exports of forest, field,
and mine show the country's permanent possibilities.*^ The figures
for the first few months of the fiscal year 1916-17 show still more
rapid growth. Of last year's $741,000,000, the United Kingdom
took $463,000,000 and the United States $320,000,000, as compared
^ United States Exports (Fiscal Ybabs Ending June 30)
(In millions of dollars)
1914 1916
United Kingdom 694 1,618
Germany 344.79 .2
Canada 344.71 466
France 159 630
Asia 113 278
South America 124 180
•Exports of Canadian Produce (Exclxtding Coin and Buluon, and
Reexports)
(Fiscal years ending March SI, in millions)
Year Mine FWierie. Forert ^^ Agricultural Manu- Miscd- ^^
produce produce faotures laneoua
1913 57 16 43 44 150 43 . . 366
1916 66 22 51 102 249 242 6 741
Digitized by
Google
224 The Annals of the American Academy
with $177,000,000 and $167,000,000 respectively three years previ-
ous. The United Kingdom bought from us nearly six times as
much as it sold us: the United States bought about 75 per cent
as much as it sold us. When it is considered that three years ago
the United States bought only about 40 per cent as much as it sold,
the surprising fact appears that just in the period when the invest-
ments of United States capital have been growing most rapidly,
the excess of United States exports to Canada over imports has been
decreasing. The explanation of this paradox is found in the changed
relations of both countries with the third factor in the settling of
our international balances, the United Kingdom.
Large Loans Floated at Home
The other source of Canadian capital has been the Dominion
itself. Not only have the banks continued to finance the ordinary
commercial needs of the country and in addition aided the establish-
ment of large war supplies industries, but a considerable share of
the municipal issues of the two years has been absorbed in Canada
and two war loans of $100,000,000 each have now been taken up.
The first Dominion loan was issued in November, 1915, and netted
5.48 per cent to the investor; the second, in September, 1916, nets
him 5.30 per cent — a significant index of the maintenance of
Canadian credit and of popular confidence. It has taken war
exigencies to reveal to the people the efficiency and flexibility of their
banks and other credit mechanism, and to stimulate saving. It
cannot be said that there is as yet a great increase in thrift and
economy; some improvement is observable, but on the whole the
prosperity of the country has been too great and the proportion of
direct taxes imposed too small to necessitate any startling change
in our habits of living. Not that new taxes have not been imposed;
federal, provincial and municipal authorities alike have prudently
made provision for meeting a share of any increased war-time
outlay out of current revenue. The Dominion has raised tariff
and excise duties, imposed small stamp taxes, and levied a tax on
war-time profits, and at the same time ordinary expenditures have
somewhat lessened, with the result that there has been a substantiiJ
surplus to apply to war financing. In the present fiscal year, at
the present rate of income and of outgo, after paying all ordinary
^nd capital expenditures and meeting the interest on the previous
Digitized by
Google
Canadian Capital Requirements 225
war loans, there will probably be a surplus of forty or fifty millions
to apply to the principal of the war expenditure The amount of
the federal revenue is thus very satisfactory, though there is room
for criticism in the small, though increasing, proportion of it levied
by direct taxation.
The success of the domestic loan issued in September, 1916,
has given proof of the extent of the resourses which are now being
tapped for the first time. The $100,000,000 offered was more than
twice subscribed. The $50,000,000 subscribed by the chartered
banks was not accepted, but was instead advanced to the British
government as the basis for futher purchases of supplies in Canada.
Future Needs
After the war, the United Kingdom will once more be prepared
to finance colonial and foreign enterprises, though on a smaller
scale. It is probable, however, that so far as Canada is concerned,
the war-time tendency to rely more on United States and on home
financing will continue. The Dominion is finding itself. The
extent of its resources has long been known or guessed. In the
past decade it acquired in great part the railway, factory, muni-
cipal plant required for their development. During the war it is
attaining an eSiciency in organization, a confidence in its own possi-
bilities, and a variety and independence in capital resources not
enjoyed before. The United States, meanwhile, has been growing
immensely in wealth and in credit facilities. It seems certain that
a large part of the surplus capital of the United States will continue
to find investment on a large scale in the country which, in virgin
opportunities, in soundness of financial and government conditions,
in similarity of commercial methods, in the extent of trade rela-
tions, and in the opportunity for personal investigation which its
geographical closeness offers, has the strongest appeal to the Amer-
ican investor.
Digitized by-
Google
THE FUTURE OF PUBLIC UTILITY INVESTMENTS
By Delos F. Wilcox,
Franchise Expert, New York City.
The expansion of public utilities and the enormous increase in
public utility investments during the past twenty-five years have
been among the most remarkable economic developments of a re-
markable period in the nation's history. Street railways, electric
light and power plants and telephone systems have multipUedinnum-
ber and increased in size out of all proportion even to the rapid in-
crease of urban population during this period. The development of
gas plants has been more steady, but water works, representing for
the major part municipal investments, have necessarily developed
with great rapidity, since the growth of cities, and especially their
crowding together in the more densely populated sections of the
country, increases both the relative difficulty and the relative expense
of securing adequate water supplies. In attempting to forecast the
developments of the next ten, twenty or thirty years, we are met by
many uncertainties. Assumptions must be made. The easiest
ones to make are that the increase of the total population and the
relative increase of the urban population will continue in the future
to go along as they have in the immediate past and that the devel-
opment of public regulatory policies will hold the even tenor of its
way, regardless of war's alarms and the expected truculencies of the
new breed of powder-and-shell millionaires created by the war.
These are rather violent assumptions, but for the purpose of this
discussion I shairmake'them, with the hope that any conclusions
reached may be subject to easy modification by other people who
think themselves in a position to make different and wiser hypoth-
eses.
Extent and Causbs op UTiiirrY Investments
The total nominal investment at the present time in what are
ordinarily described as public utilities, in which I include street and
interurban railways, artificial and natural gas plants and pipe lines,
electric light and power systems, including water power develop-
ments, local and long-distance telephones, water works, central
226
Digitized by
Google
FuTUBB OP Public Utility Investments 227
beating plants, electrical conduitSi etc., must be about twelve bil-
lion dollars. The average annual increase in these investments
during the past decade must have been about five hundred million
dollars. How much of the grand total and of its annual increments
is inflation, nobody knows. But in the city of New York alone, the
actual investments in water works and rapid transit lines during the
decade from 1907 to 1917 will have been more than half a billion
dollars, to say nothing of the additional investments in surface
street railways, lighting plants, telephones, etc. Upon the
assumptions already made, it seems safe to estimate that the de-
mand for additional capital for public utilities in this country will
continue to be about half a billion dollars a year; it may be con-
siderably more.
The fundamental causes which have hitherto brought about the
rapid increase in public utility investments may be briefly analyzed.
Public utilities are urban phenomena; they are the instruments by
which the economic advantages of city life are multiplied and its
disadvantages lessened or removed. Their development up to the
full realization of their economic value under the prevailing con-
ditions of human knowledge and skill is inevitable. It is readily
observed that the larger an urban conmiunity becomes, the more
dependent are its inhabitants upon public utility services. Fur-
thermore, in the case of the leading utility, transportation, along with
this increasing dependence goes the necessity for a larger quantity
of service per capita. This is well illustrated in the development
of urban transit in New York. Over a period of fifty years the
number of street railway fares annually paid per capita increa ed
from 43 in 1860 to 321 in 1910. Even after the electric trolley sys-
tem had been fully developed, the increase for the decade from 1900
to 1910 was 75 rides per capita, or more than 30 per cent. More-
over, in a rapidly growing community, public utility investments
tend to lag behind the demand for them and therefore, even when a
city's growth slackens or stops entirely, the demand for public
utility expansion still continues until the community has spread
itself out, provided itself with all the necessary conveniences of
modem life and settled down into a static condition.
Just so long as the population of a city continues to press out
into outlying districts or to shift from one district to another, even
though there may be no actual increase in the aggregate number of
Digitized by
Google
228 The Annals op the American Academy
people or in the quantity of utility service required, new invest-
ments will be necessary; since existing investments in pipes, wires,
tracks and other street fixtures cannot readily be moved from one
place to another to follow the shifting population. We may revert
again to New York for an illustration. Here through a long period
of years the old city grew to the north, developing the superlative
congestion that has come to be characteristic of Manhattan Island.
Within the period of fifteen years from 1904 to 1919, the number of
continuous transit tracks crossing the East River by bridge or
tunnel will have increased from four to thirty-eight, with the in-
evitable result that a great shifting of population from the crowded
districts of Manhattan Island to the nearby but hitherto sparsely
settled districts of Long Island will take place. If we assume no
total increase in the population of the city, this transfer from one
section to others, without releasing any of the existing public util-
ity investments required for the service of the old congested dis-
trict, will necessitate large additional investments in the new dis-
tricts.
Other Reasons for EJxpansion
A further increase in the demand for utility services comes as a
result of the general advance in the arts and the general rise in the
standards of living of the people, both of which are concomitants of
a developing civilization. I may cite as illustrations the eflfect of
modern plumbing upon the amount of water used and the increase
in the use of gas and electricity for heat and power as a result of the
installation of modern appliances for lessening the drudgery of
housekeeping. But even more important in its effect upon the
development of public utilities is the increasing use of gas and electric
current for power in connection with the processes of industrial life.
Another reason for the expansion of public utility investments is
the more complex organization of social and industrial life, which is
largely the result of improved facilities for transportation and com-
munication and which in turn necessitates a continual increase in
these facilities. It seems obvious that the relative importance of
transportation and communication necessarily increases with the
growing complexity of social organization. This is particularly
true of the telephone as a primary means of communication for
social and business purposes, and of course applies with equal or
Digitized by
Google
iFuTURE OF Public Utility Investments 229
greater force to facilities for the transportation of food products
and other commodities. But these latter facilities are primarily
furnished by the railroads of the country and do not fall within the
class of public utilities as here defined except to a limited extent in
connection with suburban and interurban railways.
There still remain to be considered two important factors in the
expansion of public utility investments. I have referred to public
utilities as urban phenomena, yet the fact is that the characteristics
of urban life are fast becoming the characteristics of life throughout
the country. In other words, the surburban and rural districts
are rapidly becoming urbanized and the extension of pubhc utility
services beyond the limits of urban communities is the essential
means by which this process is being carried on. It is the telephone,
the trolley, the electric light and running water that herald the ad-
vance of urban civilization and comfort into the rural districts.
Indeed we might properly refer to these utilities as the promoters or
sales agents of the economic and social advantages hitherto char-
acteristic of urban life. This territorial expansion of utility services
means generally an even greater investment in proportion to the
population served than the investment required for strictly urban
service. The other factor to which I wish to call attention is the
development of natural resources as the basis for these public utility
services. It has been only a comparatively few years since water
power became an important element in the electrical industry, and
the development of water power is believed to be still in its infancy.
The whole problem of the conservation and development of these
natural resources, though it is regarded as in large measure, if not
primarily, a problem of the federal government, is in effect a munic-
ipal problem, namely, how best to bring to the people in their
urban communities the resources which nature has provided in the
wilderness. The same is true of the development of natural gas
fields and the construction of interstate and intercity pipe lines.
But while water power is as everlasting as climate, there is great
uncertainty as to the time when the reservoirs of natural gas hidden
away in the bowels of the earth will become exhausted. Therefore,
it would be unsafe to make any prediction as to the probable de-
mands for additional capital in the development of the natural
gas supply and its transmission to the urban communities where it
can be used. '
Digitized by
Google
230 Ths Annals of thb Ambrican Acadbiit
Enormous SpBcxTi«ATnrB Gains
Up to the last few years, public utility investments were re-
garded as properly speculative. It is hard now to realize how val-
uable a street car franchise in a great city was supposed to be in the
last two decades of the nineteenth century, the period during which
the Broadway franchise was bribed through the New York CSty
board of aldermen and the inverted p3rramid of the Metropolitan
Street Railway system was formed. A perpetual franchise on Man-
hattan Island was supposed to be an inexhaustible gold mine.
Many of the large fortunes built up in different parts of the country
were the direct results of the manipulation of public utility securities
and the sale of public utility franchises that had been acquired for a
song. By men of substance it was regarded as perfectly proper,
and by the common rabble as almost so, for the owners of a public
utility to take millions out of it. Competitive franchises were
granted in the vague and vain hope on the part of the public that
thereby monopoly would be scotched, service improved, public
revenues increased and in some cases rates reduced. These com-
peting franchises were sought with fair promises on the lips of the
promoters, but with greedy purposes in their hearts. They were
sought chiefly for the purpose of being sold at the Blackmailers'
Auction. Fixed rates, monopoly privileges, universal necessity and
rapidly increasing urban population, made promoters willing to
accept short-term franchises where they could not get long-term or
perpetual ones and to invest enormous sums of other people's money
in plants whose status at the expiration of the franchises was wholly
imsecured except by the necessity that the service be continued and
byjbhe hope that renewals could be had at the same public bargain
counter where the originals had been procured. While it is prob-
able that more fortunes have been made out of street railway fran-
chises than out of any other kind, speculation and profit-taking
were by no means confined to this utility. In the early days gas
and water franchises and later electric light and telephone grants
were involved in the same riot of speculation.
Taxation Only A Partial Remedy
The first attack upon franchise privileges was by means of
increased taxation, on the theory that the public, having contrib-
uted the rights of way for the tracks, pipes, wires and conduits,
Digitized by
Google
FuTUBB OF Public Utilitt Investments 231
ought to have a larger share in the profits. Unquestionably tax-
ation, in so far as it takes new forms and becomes more drastic,
will have the effect of decreasing the profits of the utility owners
and thereby of reducing the value of their franchises without giving
any direct relief to the consiuners. The amount of actual capital
invested in public utilities is not directly affected one way or the
other by taxation, but as long as franchise and other intangible
values make up a large part of the backing for utility securities
and represent a large share of the so-called ''investment/' taxation,
and still more taxation, will have a tendency to reduce or destroy
these intangible values and knock the props out from under the
securities. The copiousness and continuity of the stream of gold
that pours into the lap of a public utility makes it a shining mark for
the tax gatherer, with the result that in spite of the tremendous
political power of the utility owners, they have been compelled
more and more to submit to additional exactions in the form of
higher assessments and special taxes, until at the present time their
groanings assault the ears of every official who has an3rthing to do
directly or remotely with taxation or the control of public utilities.
It is evident, however, that unless public utility rates are irrevocably
fixed, the burdens of taxation, after it has destroyed intangible
values, and often before that time if the utility managers are strong
and cunning, will be shifted to the patrons of the utility in the form
of higher rates or poorer service.
Rate Regulation More Effective
When division of profits through the instrumentality of tax-
ation had been tried for a while, the public began to attack the
problem more directly through rate regulation. The rate payers
revolted against being exploited for the relief of the taxpayers.
When the theory of the regulation of rates and services by means of
permanent local or state commissions came into vogue, it struck
a body blow at the philosophy of speculation in utility investments,
but however bankrupt their philosophy became, the owners of
utility securities were impelled by all the primary incentives of self-
preservation to resist step by step to the bitter end the encroach-
ments of the state upon their privileges. It is the theory of rate
regulation that the investment in a public utility is affected with a
public interest and that the owners of the utility are entitled to earn
Digitized by
Google
232 The Annals op the American Academy
a fair rate of return and no more upon their capital prudently and
usefully invested in the public service. This theory, if consistently
and unflinchingly applied, would eliminate most of the speculative
element in utility investments and reduce them to an approximate
parity with municipal investments, where the security is nearly
perfect and the rate of return is low.
The Present Contest of Vital Significance
We are now in a transition stage, striving to put into eflfect this
new theory and being met at every stage by the strong entrench-
ments of vested privilege. It is still too early to determine the
outcome of this great war. If democracy, overflowing the land,
gradually isolates and smothers the citadels of privilege and suc-
ceeds in establishing the theory that public utilities shall be op-
erated as public business, and public utility investments shall be
secure and by virtue of such security low-paid, we may at least
expect that the conquered will react upon and modify the character of
the conquerors. The great struggle now going on throughout the
United States is to establish the recognized value of pubUc utility
and railroad investments. The owners are driving hard for the
legal recognition of enormous values based upon physical structures
supplemented by ancient privileges and fertile imaginations. They
are doing their best to embalm the fat carcasses of old speculations
lest they be decomposed and pass to final dissolution. They say
that regulation and scientific franchise principles are all right for
the future, but for the Lord's sake, do not disturb the past; well
knowing that unless we succeed in disturbing the past, the future
will be theirs.
At this stage of the struggle it is not easy to forecast the con-
ditions under which public utility investments will actually be made
during the next twenty years. The public pressure for a reduction
of rates through the exercise of the police power is a continuing
force tending to the elimination of the speculative element in public
utility investments. At the same time this force, if it is not supple-
mented by measures calculated to give security to the investment,
will tend to drive capital into other fields and to induce stagnation
in the development of public utilities. Such a result would be
most unfortunate^ as in the long run it would involve enormous
urban discomforts. There is nothing more vital to the wel-
Digitized by
Google
Future op Public Utility Investments 233
fare of growing cities than the free and anticipatory expansion of
public utility services. When these cease to expand, a city be-
comes like a foot that has outgrown its shoe. If, however, security
follows as a hand-maiden upon rate reduction, unless the latter goes
altogether too far, the attractiveness of pubUc utility investments
will not be diminished; they will merely appeal to another class of
investors, namely, to those who are willing to accept a low return
with security.
Facts the Public Must Recognize
The idea that private investments in utilities represent capital
temporarily loaned in aid of public credit is the logical conclusion
of the non-speculative theory, but many important changes in pubUc
policy, as yet hardly initiated, will be necessary before this theory and
this conclusion can be fully crystallized into practice. On the one side
the public must definitely learn that it cannot eat its cake and have it
too. Public service corporations, if they are recognized as a nec-
essary though intermediate agency for the satisfaction of urban
needs, must not be harassed by demands that are financially im-
possible. The public hires them to perform certain services for it
and it cannot hope to get these services at less than cost. The first
and most fundamental corollary of the philosophy of public regu-
lation of rates and service is the security of the investment and the
assxwance of a fair and constant return upon it. This security re-
quires the giving up of many long-cherished illusions on the part of
the public.
In the first place the fancied protection of maximum or abso-
lute rates fixed by franchise contract for a long term of years must be
surrendered. It must be frankly admitted that rate regulation
involves the possibiUty of the increase as well as of the decrease of
rates, whenever justice demands it. Especially, it must be frankly
recognized that if the standards of service are to be raised year by
year, the people who receive the improved service will have to pay
for it. The public will also have to reconcile itself to the allowance
of adequate depreciation funds out of which the physical plant can
be safely maintained at the highest practicable degree of operating
efficiency. The public will also have to give up once and for all its
lingering fancy for competition in public utilities. It will have to
recognize the principle that public regulation of rates and services
Digitized by
Google
234 Thb Annals of ths Ambbican Agadbmt
is adapted to monopoly and is inconsistent with competition. It
will also have to accept the bm'den of the risk in public utility in-
vestments and forego the sweet pleasures of the ward politician and
the cart-tail demagogue who would grant franchises for short pe-
riods without imposing upon the city any obligation to protect the
property at the expiration of the franchise period.
The let-them-take-a-chance policy will have to be definitely dis-
carded. All these changes in public sentiment and public policy
will be more or less costly, either in money or in political feelings or
in both. In return for this cost, however, the public will receive
certain great and definite advantages. It will enlist the steadily
responsive codperation of capital that in its timidity seeks only
self-preservation and a diet of herbs. It will secure the recognition
of the characteristic obligation of monopoly, namely, to extend its
services to satisfy and even to anticipate the reasonable needs of the
community. It will secure the codrdination of public utility
services with the other services of government and establish a sure
and steady control over the uses of the public highways. It will
ultimately escape from the burden which it has been called upon to
bear as a result of the capitalization of the increment in the value
of land used for public utiUty purposes. Most important of all,
it will gradually rid itself of the political poison inherent in the
''grabbing" of franchises and the regulation of public affairs by
utility corporations.
Under all the circumstances, it seems reasonable to anticipate
that the need of additional capital to be invested in the expansion of
public utility plants will go on in the future much as it has in the
past, say, at the rate of half a billion dollars a year in this country;
that for some time to come, in spite of this need, capital will hesitate
about going into public utilities in those communities where its
chance of speculative profit is removed and no compensating security
given; that, ultimately, through the full triumph of the theory of
public service, there will be a free flow of nonnspeculative capital into
public utilities to the extent that the consuming public is able and
willing to pay for the expansion of the service.
Digitized by
Google
THE RURAL CREDITS ACT AND ITS EFFECT ON THE
INVESTMENT MARKET
By Roger W. Babson.
Although nearly everyone realizes that the farm products of
the United States are one of the chief sources of our wealth, and
many people even believe that our whole prosperity depends on
good crops, still there are comparatively few investors who are
willing to put their money into the farm loans which are being issued
today. Moreover, those who do invest in them are able to exact
anywhere from 5 per cent to 12 per cent and in some cases even
much higher interest rates on such funds. Why is this so? The
answer is that the farmer has never put up his securities in the right
kind of a package, and he has failed to advertise. Consequently,
his loans have had only a narrow market and have not commanded
the terms to which the farmers' credit has really entitled him.
These are the things the new Rural Credits Act proposes to do.
There was a time about thirty-five years ago when farm'loans
were the rage. It was during the period when the Middle !West
was booming and speculators had pushed land prices way beyond
their real value. At that time the loan and trust companies han-
dling the accoimting of farm purchases had loaned up to two-thirds
of those inflated prices. Then came the wild scramble for the new
lands farther west. Ea^stem holdings fell to half their mortgage
face value, and throughout the late '80's and early '90*8 they were
practically unsalable. Then in the far west the same wild cat financ-
ing soon took place. Many investors who had lost in the local
eastern trusts and loans tried to recoup themselves in these new
western ventiu^, and were caught again in the collapse caused by
the panic of 1893.
Present Distribution op Farm Loans
Although the memories of those days have never been entirely
wiped out, the status of our rural credits has since then been almost
reversed, and farm mortgages, as a whole, during the late years have
really come to rank among the safest iBV^me^t8, This fact ig
235
Digitized by
Google
236 The Annals of the American Academy
shown by the great interest taken in these loans by banks, insm^
ance companies, and similar institutions which have practically
a monopoly of this business at the present time. In this connec-
tion some figures compiled by Mr. C. W. Thompson of the United
States Department of Agriculture are exceedingly interesting. Mr.
Thompson estimates the total farm mortgage debt of the United
States as about $3,600,000,000. Of this amount the banks appear
to furnish from their own funds approximately $740,000,000 or
more than one-fifth. This proportion of course varies in the
different sections of the country, and in certain states is very
much larger than one-fifth. For instance, in California the farm
mortgages held by banks represent 45 per cent of the estimated
total farm mortgage debt; in Louisiana 45 per cent; in Indiana
and Michigan nearly 40 per cent and in Mississippi and South Caro-
lina more than 36 per cent.
Life insurance companies are of almost equal importance in
this field. Of the total, they supply approximately $700,000,000
which is nearly one-fifth of the total amount of farm mortgage capi-
tal of the United States. The insurance companies have confined
their operations largely to the four states of Iowa, Missouri, Kansas
and Nebraska, practically one-half of the total amount of insurance
money being invested in these four states. Iowa alone holds over
$150,000,000 of such investments by insurance companies. In
Nebraska the insurance companies have over 40 per cent of the
business; in South Dakota 33 per cent; in Kansas 35 per cent;
in Indiana 37 per cent; in Oklahoma 40 per cent and in Georgia
over 50 per cent. These life insurance companies either have their
own farm mortgage loans department through which they receive
and pass on all applications for loans, or they purchase farm mort-
gages outright in the commercial market.
The latter practice is generally limited to the smaller msur-
ance companies, their volume of business in this field not being
sufficient to warrant the maintenance of separate machinery for
the selection of farm mortgage securities. Nearly all the larger
companies, however, have well organized departments through
which they carry on a regular farm mortgage loan business. Ordi-
narily these companies receive applications from their local agen-
cies or banks. The application blanks and legal papers used by
these companies have been carefully standardized and adapted to
Digitized by
Google
Rural Credits Act 237
the conditions of the various states of which loans are made.
Really the system has been worked out in excellent shape and for
the most part the insurance companies which have such an organ-
ization are at the present time giving the farmers very good service.
While some of the companies show a tendency to charge high rates,
insurance companies as a rule represent a conservative class of
investors in the farm mortgage business.
Figures are not at hand to show the amount of capital invested
in farm mortgage loans by mortgage companies, -but these com-
panies are all prominent in nearly all parts of the country, and there
are a number of foreign mortgage companies who are heavily in-
terested in the West, South, Central, Rocky Moimtain and Pacific
States. It is also impossible to tell just how much capital is sup-
plied by private investors. In certain states, however, such as
New York, Pennsylvania, Michigan and Wisconsin, the amounts
of such capital are relatively large. I have quoted these statistics
simply to give some idea of the situation as it now stands. Gen-
erally speaking the farmers have been receiving good service in
their financing; but many of them have had to pay very dearly for it.
High Rates op Interest Paid by Farmers
In short, the matter of interest rates charged on farm loans is
really the cause of the Rural Credits Bill. Of course conditions
vary with the different sections of the country. In New England
and the Middle Atlantic states and a few of the Middle Western
states a considerable part of the farm loans carry as low as 5 or 5 J
per cent interest; but in certain of the western and southern states,
10 and 12 per cent, and even much higher rates have been exacted
by lenders. As we have tStated above, the fault has not been en-
tirely with the mortgage companies or other institutions who bought
farm loans, but rather with the farmers, who failed to mobilize
their credit so that the rank and file of investors could interest them-
selves in their securities.
Certainly from an investment standpoint, these farm loans
have been an excellent proposition for any investor or institution
that had the proper facilities for selecting and purchasing them.
On the other hand, the average investor could not take the risk of
lending his money to a farmer he had never seen, nor did he feel
^ny safer in taking as security a mortgage on property he knew
Digitized by
Google
238 The Annals of thb American Academy
absolutely nothing about. Moreover, as farm loans are not listed
on any of the exchanges, it has been difficult for him to purchase
such loans if he cared to, imless he happened to live in a farmmg
commimity. These are the difficulties which the Rural Credits
Act aims to correct.
The Revolxttionabt Natubb op the New Law
Really this is one of the most revolutionary pieces of legisla-
tion ever enacted in this coimtry. In a nut shell, the new plan is
this: First the cotmtry will be divided into twelve districts, each
of which will have a farm land bank. These banks will be operated
much the same as any other bank with a president, and all the usual
banking machinery. Farmers who wish to obtain loans will form
local associations through which they may make application to
the farm loan bank of their district. This bank will take the mort-
gages on their farms as security for the desired loans. It will then
turn over these mortgages as collateral to the Federal Farm Loan
Board at Washington, which has supervision over the entire sys-
tem, and from it will receive authority to issue bonds to cover the
loans which it has made. These bonds are the crux of the whole
plan. They will be in denominations of $25, $50, $100 and $1,000
and will probably be listed on the New York Stock Exchange- Al-
though the rate of interest will not exceed 5 per cent per annum,
and will probably be considerably less, still they will be exempt
from all taxation and their security should be above question.
These features should guarantee for them a good demand.
The Main Featubes of the Plan
The above is simply the bare skeleton of the plan, but m order
to appreciate the status of these new securities and their probable
eflfect on other investments, we must first know more about the
organization and detail of the system. There are really five parts
of this big money loaning machine. These parts may be briefly
described as follows:
(1) National Farm Loan Associations. These are local asso-
ciations which may be formed by any ten or more farmers in a good
locality who are already, or about to become, land owners and who
wish to borrow an aggregate of $20,000. They are really little
combinations of borrower? wbp bwd tbemselyw together for the
Digitized by
Google
Rttral Credits Act 239
purpose of securing money. Each ajssociation will have a board
of not lesa than five directors, and the directors will elect a presi-
denty vice-president, secretary-treasurer and a loan conunittee of
three members.
The organization of the farm loan associations is such that the
farmers will have a direct interest in their successful operation.
Each association has capital stock valued at $5 a share, of which
each member must buy an amoimt equal to 5 per cent of his loan.
Moreover, in case the association should default, this stock carries
a double liability, the owner being obliged to fmrnish an amount
equal to the value of his stock, as in the case of the national banks
stocks. It is evident, therefore, that each member of the associa-
tion will see to it that no bad loans are made. Their loan com-
mittee will appraise each property and each loan must be approved
by their board of directors, all of whom are members and own stock
in the association. Each member will therefore be well protected
against bad loans. The secretary-treasmrer, who handles all fimds,
will be under surety bond. Moreover, no loans will be made to
exceed 50 per cent of the value of the land, or 20 per cent of the
value of the buildings, which is an exceptionally wide margin. It
is evident that these farm loan associations are really the corner-
stone of the whole system.
(2) The Federal Land Banks, As soon as practicable, the coim-
try will be divided into twelve districts known as federal land bank
districts. Each district will be given a number. They will be
arranged with proper regard to the farm loan needs of the country,
but no district will be a fractional part of any state. In some con-
venient city of each of these twelve districts there will be located
a Federal Land Bank. Moreover, this bank may have branches
in other parts of this district. Each federal land bank will have
a capitalization of at least $750,000, in shares of $5 each, which
may be subscribed for and held by individual firms or corporations,
or by the government of the United States. No stocks will have
any voting rights, except shares owned by the United States and
by the national farm loan associations (above described), but all
stock except that held by the United States will share in any divi-
dend distribution.
While this stock will be oflfered to the public, it is not expected
to receive a very enthusiastic reception. Dividends, at least for
Digitized by
Google
^40 The Annals of the American Academy
a time, will probably be small and the stock carries no voting power
when held by the individual investor. The intention is to have
this stock eventually held by the farm loan associations. When
a farm loan association makes application to a land bank for a loan,
it must accompany the same with a subscription for stock of the
land bank equal to 5 per cent of the value of the loan desired. This
of course really means that the individual farmers will own the
stock, but all of the dealings of the federal land bank are with the
association as a body. No transactions whatever take place be-
tween the land bank and the farmers individually. In case of
default, it is the association and not the individual which is held
responsible by the land bank. This is an important feature, greatly
increasing the security of the system.
In their functions these land banks will occupy a position simi-
lar to that of the Federal Reserve banks. All applications for loans
will be made by the farm loan associations to their respective land
banks. The bank will then verify the report of the loan conmiittee
of the association (mentioned above) by having an appraisal made
by its own appraisers. If the security appears to be satisfactory,
it then forwards its check for the amoimt of the loan to the associa-
tion. In order to obtain cash to make these loans, the federal land
banks have the power to issue bonds against the first mortgages
which they have taken as surety for the loans to the associations.
These bond issues, however, must first be approved by the Farm
Loan Board.
(3) Federal Farm Loan Board. At the head of the federal
farm loan banks will be a Federal Farm Loan Board. This board
will have its headquarters at Washington. The Secretary of the
treasury and four others appointed by the President of the United
States make up this board. The men who have been chosen for
these positions are Charles E. Lobdell, Republican, of Great Bend,
Kansas; George W. Norris, Democrat, Philadelphia; Capt. W. S.
A. Smith, Republican, of Sioux City, Iowa; and Herbert Quick,
Democrat of Berkeley Springs, West Virginia. Mr. Lobdell has
been a farmer, a lawyer and a banker. Mr. Norris is a director of
the Philadelphia Reserve bank. Captain Smith is a farmer. He
has been connected with the Department of Agriculture and is an
expert in that line. Mr. Quick, formerly editor of Farm and Fire-
side, has devoted himself to the study of rural credits and other
Digitized by
Google
tluRAL Credits Act ^41
problems connected with farming. The Farm Loan Board in this
system corresponds to the Federal Reserve Board in the new bank-
ing system. Besides passing on all applications for farm loan bonds,
the board has charge of all mortgages, notes, etc., held as surety
for outstanding bond issues, and has general supervision over the
whole system.
(4) Joint Stock Land Banks. The above three wheels make
up the machinery. In addition, however, two substitute wheels
have been provided, for use in emergencies. The first of these is
the joint stock land bank. In order to be fair to certain land com-
panies and banks which have already been established to loan
money to farmers, a provision to take care of such banks has been
made in the law. By this provision, farmers who do not want to
form an association and become a part of the big machine, may go
to a private institution (to be known as a joint stock land bank)
and there borrow their money. These joint stock land banks will
be somewhat the same as national banks, each independent and
privately operated.
To borrow money from a joint stock land bank, it will not be
necessary to be a member of a farm loan association. Moreover,
such a joint stock land bank can issue bonds more freely than a
federal land bank and is not so restricted in many ways. The
bonds which these joint stock banks will issue will be taxable, but
they will not be so fully secured as the farm loan bonds above
mentioned. Therefore, while they will pay a higher rate of
interest, they will probably not be so attractive as the farm loan
bonds above mentioned. Of course, if something unforeseen hap-
pens so that the big federal machine does not work smoothly, there
will be an opportunity for these private joint stock land banks, but
otherwise their growth will be slow.
(5) Federal Land Bank Agents. If after the system has been
in effect one year it is found that a national farm loan association
has not been formed where it is needed, the Farm Loan Board may
then appoint some bank, trust company or mortgage company in
that locality to act in the capacity of such an association. To my
mind this is a very important feature of the law and should insure
against its failure. The only weakness here is that the local bank
must guarantee the loan, although it receives only one half of one
per cent per annum on the unpaid balance for so doing.
Digitized by
Google
242 Thb Annals of thb Ambbican Acadsmt
ATTRACnVBNBSS OF THB FaBM LoAN BoNDS
Analyzing the new system as we have above, it is evident that
ever3rthing has been done to make the farm loan bonds absolutely
safe and as attractive as a low 3delding bond can be. There are
four features to these bonds which are especially important: (1)
The bonds are secured to at least their face value by first mortgages
on farm property; (2) They are secured to the extent of 10 per
cent by the land bank stocks owned by the associations in the dis-
trict in which a default may occur (these stocks are held by the
land banks all the time) ; (3) They are the obUgation of all of the
other land banks, which are liable for all farm loan bonds issued,
whether by them or by some other land bank; (4) Provision is
made for the repayment of farm loans on an amortization plan, so
that the security behind the farm loan bonds is gradually strength-
ened. Viewed from all sides, it is evident that these bonds are
better secured than even government bonds. Another point which
will add greatly to the attractiveness of these bonds is that they
are exempt from all taxation. This means a great deal nowadays,
as is evident from the tremendous amount of trading in municipal
bonds and other non-taxables.
Regarding the effect which these new bonds will have on the
bond market, there is a great diversity of opinion. Some claim
that there will not be enough farm loan bonds offered to have any
definite influence. They beUeve that most farmers will continue
to borrow from the same sources that they have in the past, rather
than bother with the new system. Personally I should not be sur-
prised if this were the case at first, but as soon as the farmers realize
the great advantages which the new credit system offers them, there
should no longer be any lack of applications for loans. I feel espe-
cially sure of this in view of the monetary situation in this country.
Just now, credit, — that is, for short terms, — ^is the most plentiful
thing we have, but as soon as the war stops we are likely to see an
entirely different turn in money rates. Then there will be plenty
of use for all of the credit machinery we can bring into play. More-
over, this year's poor crops should also operate toward the same end,
especially in sections which have been most severely affected.
Statistics show that at the present time the farmers in at least
22 states are paying an average of 8 per cent or more for money,
while in fully 6 states they are paying 10 per cent and 12 per cent,
Digitized by
Google
Rural Cbedits Act 243
or even more. Out of the total of about $3,600,000,000 of farm
loans there are about $900,000,000 drawing 8 per cent or more in
interest. Under the rural credits system, the highest rate of inter-
est which can be charged on these loans is 6 per cen^, and it is very
unlikely that more than 5 per cent interest will be asked. This
means that on perhaps a fourth of farm loans, which are now out-
standing the farmers can make a saving of from 40 per cent to 100
per cent, or even more in interest charges by joining the new system.
Frankly, I do not believe that it will take these farmers long to
wake up to the new plan.
Their Effect on the Bond Market
What does this mean to the bond market? First, I believe
it means that all of our low-3rielding, high-grade bonds will find a
sharp competition in the new farm loan bonds. Institutions, trus-
tees and individual investors who have been accustomed to buy low-
yielding railroad bonds because of their safety, will find in the new
farm loan bonds an equal degree of safety coupled with exemption
from all federal, state, mimicipal and local taxes. The result must
be a considerable scaling down in prices of the low yielding railroad
issues. In fact, these new farm loan bonds will be rivals to United
States government, state government and municipal bonds, and
their appearance may have a depressing influence on these issues
also. At least, the trend should gradually be in that direction.
Another result of the new system will be, ultimately, to make
good farm mortgages practically extinct, and the holders of the
mortgages will gradually turn to other investments yielding from
6 per cent to 6 per cent. For the most part I do not believe that
the interests who are now holding farm mortgages will buy the new
farm loan bonds, as they are obliged to seek a higher interest return.
This demand should tend to stimulate the prices of good high-jrield-
ing securities. Of course I do not believe that these changes will
come about immediately. The new system will probably not be
put into operation imtil next spring, and as above suggested, it will
doubtless be some time after that before it becomes very popular.
On the other hand, I do believe that the principle of the new]^plan
is sound, and that eventually it will displace our present system, or
systems, of handling farm credits. Wise are the investors who
prepare for the changes which will take place,
Digitized by
Google
THE RATE OF INTEREST AFTER THE WAR
By Ibving Fisher,
Professor of Economics, Yale University, New Haven, Conn.
There are so many unknown or imperfectly known elements in
the world-war and so many others which lie in the uncertain future
that it would be impossible to make any very definite predictions
concerning the rate of interest after the war. Much depends on
whether the United States will be drawn into the conflict, on whether
the European nations will repudiate their debts, on what will be the
character of taxation after the war, on whether banking sjrstems
will collapse, whether the issues of paper money will be increased,
whether emigration from Europe will be large or small, whether the
tides of international trade will abstract gold from this country,
whether new inventions, stimulated by the war, will materially
aflfect industry, and on other possibilities beyond the ken of man.
All that we can do at present is to make arbitrary assumptions
as to such unknowns, — to assume, for instance, that the United
States will still remain out of the conflict, that the paper money
situation will not grow much worse, if at all, that emigration from
Europe will not constitute any considerable exodus, that national
bankruptcies will, for the most part, be avoided, that taxation,
after the war, though heavy, will not be comparable to the sacrifice
of current income during the war, that no great influences on inter-
national trade, beyond those which are already obvious, will come
forward, and that inventions will grow out of the war which will be
of great use in industry and will require the investment of much
capital.
The Determinants of the Rate op Interest
I have stated in The Rate of Interest what I believe to be the
true principles on which the rate of interest depends. I shall not
try here to summarize these principles further than to say that the
rate of interest expresses the degree of human impatience for future
dollars (or dollars* worth of enjoyable goods) as contrasted with
present dollars (or dollars' worth of enjoyable goods). It relates
to the terms on which present dollars will exchange for future
244
Digitized by
Google
The Rate of Interest After the War 245
dollars. In such an exchange present dollars are at a premium, and
the premium is the rate of interest. If all dollars, present and future,
are supposed to have the same purchasing power over goods, the
premium on present dollars, registering our impatience or prefer-
ence for the present over the future, will depend on the relative
abundance (as seen in the present) of present and future dollars, or
of the present and future enjoyable goods which dollars will buy.
Thus, the premium which we put on present dollars will be enhanced
if present dollars are scarce. It is the man and the nation which is
pinched today that will wish to borrow and will be willing to pay
high rates for the accommodation. If, under ordinary circum-
stances, a man is willing to promise to pay $105 next year for the
sake of securing $100 at once, he may be willing to pay a much higher
price than said $105 if he is now in serious straits from which he
expects to be relieved in the future. In other words, if the rate of
interest is ordinarily 5 per cent, it will be more than 5 per cent if the
present income of the world is temporarily reduced. The rate of
interest depends largely on the distribution in time of the income
stream.
The basic fact, therefore, on which any prognostications con-
cerning the rate of interest must be determined is the expected
stream of income to those concerned in determining the rate of
interest. When, in general, the income stream of a nation is rising,
that is, when it is increasing in time, the rate of interest will be high.
Thus, in new countries, with great expectations, people feel safe in
promising large amounts out of future expectations in return for
relatively small amoimts in hand at once.
Effects of the War on Incomes
Now the most salient economic fact of the war is that the na-
tions engaged in it are suffering an immense reduction in the income
of their people. It is estimated that the people of Great Britain,
France and Germany had an aggregate income before the war of
approximately $80,000,000 a day and that the current cost of the
war to these three countries is now about $60,000,000 a day or three
quarters as much. This cost includes only the official expenditures
of the three governments. It does not include the destruction of
private property nor the loss of productivity. Most of the $60,-
000,000 a day. (four-fifths in England) comes, in the first instance,
Digitized by
Google
246 The Annaxs of the Amebican Acadsmt
from loans, that is, from the accimiulated wealth of the world,
mostly of the belligerent countries. Exactly what the reduction
in real current incomes has been {i.e., from taxes, destruction of
goods and lessened consumption) no one knows, but it is imdoubt-
edly a very large percentage. It is estimated that the annual
interest charge on war loans will, after the war, equal or surpass
the total national budgets before the war.
But, as soon as the war is over, the thoughts of all will be
directed to reconstruction and all Europe will be in the position of
a new coimtry, poor in immediate comforts but (relatively) rich in
future expectations.
Such a condition will make for a high rate of interest. The
spirit of Europe will be one of eagerness and impatience, just as is
the spirit during the up-building of a new coimtry; and this eager-
ness and impatience will be registered in a high rate of interest as
they were while our forefathers were making America.
It is conceivable that curious things may happen to complicate
this result. If the war continues much longer the government
bondholders will be the virtual owners of Europe for years to come.
The income tax for the rich may reach 50 per cent. The taxes on
the poor may be equally oppressive. Rather than pay such tribute,
for a lifetime, to the bondholder — who may not then be so popular
as he is today! — ^the taxpayers may, by the wholesale, emigrate to
the United States. Wealthy people, of more foresight than patriot-
ism, after taking good care to sell out any holdings in government
bonds, may change their residence to where taxes will not seem to
be confiscation. The fate of European nations would then be simi-
lar to that so common to ''assessment" insurance companies, which
after gaily loading themselves up with obligations, lose their pay-
ing membership and go into bankruptcy.
But even such an outcome, or others which might be imagined,
would not substantially alter the main result, namely that the
owners, whoever they are, of Europe after the war will, during the
re-building period, be eager borrowers and will lift up the rate of
interest.
I am quite aware that many business men believe, on the
contrary, that the rate of interest will be low. . Those who reach
this conclusion reason along what I believe to be fallacious Imes,
in some cases even falling into that ancient pitfall of thought, the
Digitized by
Google
The Rate of Intbbbst After the War 247
" money fallacy'* of interest, according to which the rate of interest
is supposed to be inversely related to the amount of money in circu-
lation. This and other fallacies I have discussed in The Rate of
Interest and shall not discuss them here.
It is worth noting that what has been said concerning the fu-
ture rate of interest applies from the moment peace is in sight. It
does not fully apply before that tune. Diuing the war itself the
rate of interest has been, as I predicted that it would be, in
the New York Times, August 30, 1914, extremely variable, owing
to the fitful fluctuations of numerous changing conditions. In the
world as a whole, it has been somewhat higher than before the
war and tending during the war to grow higher in Europe and
lower in the United States.
Long-Term vs. Short-Term Loans
There should be noted, however, an important distinction
between short-term and long-term loans and this distinction is
especially important during war. When, in war time, a business
man makes a loan to run for a time so short that repa3nnent is
expected to occur before the comparative opulence of peace, the
contrast between the needy present, when the loan is contracted
and the stiU needy future when it is repaid is not as great as in the
case of a long-term loan, the repayment of which is expected to be
made after peace and prosperity have come. One is willing to
repay more liberally after the crisis is over than during it. It has
thus come about, as we should expect, according to the principles
laid down, that the rate of interest on long-term loans has, in general,
risen more as well as fluctuated less than that on short-term loans.
As soon as peace is in sight or within a few weeks thereafter,
long- and short-term loans wiU be more normally related, that is,
the rate of interest on the two classes will be more nearly equal.
For both, the rate will, I believe, rise immediately or soon after
assurance of peace, the rate on short-term loans rising most, so as to
catch up with the rate on long-term loans.
It should be noted that we are here speaking of pure interest
and not of interest with the alloy of insurance against risk. The
test of the correctness of our results must be made, therefore, by
reference to industrial securities rather than to loans of governments
engaged in war. Undoubtedly the annoimcement of peace will
Digitized by
Google
248 Thb Annals of the Ahsbican Academy
raise the price of govemmerU bonds, at least of the victorious coun-
trieSy because of increased confidence in the solvency of these coun-
tries. But such a phenomenon means a lower risk and not a lower
rate of interest properly so called.
The Influence of Patriotism
Additional reasons for these conclusions concerning a high rate
of interest after the war are to be found in other directions.
During the war patriotic fervor keeps the pure rate of interest
below what it would be if the war loans were made on a strictly
business basis. In fact, it is probably true that most of the sub-
scriptions to government loans are made^ not so much for invest-
ment purposes, as "to help the cause." As soon as the war is over
this element tending to keep the rate of interest down will vanish,
or at any rate, greatly diminish. Governments will have to renew
their loans at real market rates.
Thus far, I have spoken chiefly of the psychologic causes oper-
ating on the rate of interest, but these psychologic causes are con-
ditioned on objective physical conditions. I have spoken of the
war as cutting down the income stream of society and leaving at
the end of the war, therefore, a prospect of a rapid ascent out of the
depression.
The rate and manner of ascent, however, are not rigidly pre-
scribed. There will be many different opportunities open to the
survivors of the war from which to choose and the nature of this
range of choice will be an important factor in fixing the rate of inter-
est. Those who have the task of reconstructing Europe will be
confronted with alternative methods and degrees of possible recon-
struction. The manner in which the existence of many different
optional methods of production and therefore of investment, enters
into the determination of the rate of interest, is very subtle, but
very important.
A land owner in the devastated regions of France or Belgium,
may find that to re-build, re-stock, re-plant and fertilize his farms
in a certain specific manner and degree will offer returns in the
future out of all proportion to the required sacrifices in the present.
That is, contrasting what he can expect from prompt and full re-
pairs with what he can expect without them, he notes a vast gain in
the future for a small cost in the present. A present outlay on his
Digitized by
Google
The Ratb of Intsbsst Aftsb thb Wab 249
land of $10,000 may oflfer a return in future years equivalent to,
say S2,000 a year, making a rate of return on sacrifice of 20 per cent.
If, therefore, by mortgaging his land, he can borrow the desired
$10,000 even at a high rate, indeed at any rate less than 20 per cent,
he will be glad to do so. He will be an eager borrower because he
has a great opportunity. Such great opportimities for large re-
turns on small investments from the rapid re-building of Europe,
the reconstruction of her cities, ships, warehouses, factories, rail-
ways, roads, bridges, the re-stocking of dealers, will presumably be
in evidence almost everywhere. The existence of such opportuni-
ties,— that is, of large possibilities of future returns on present
sacrifices, — will make men impatient, impel them to borrow and
tend to raise the rate of interest.
Effect of Inventions on Investment
The rare opportunities for investment which will present them-
selves soon after the end of the war will probably be further enhanced
by a number of technical inventions to which war always stimulates
the mind of man. Inventions originally made for military purposes
often have industrial uses, while, in addition, blockades and other
interruptions of ordinary industry and commerce, lead directly to
industrial inventions. An example of the first type may be seen in
commercial submarines and aeroplanes, as by-products of military
submarines and aeroplanes. Examples of the other type are also
before us. American watch and clock manufacturers formerly
imported their crystals but, the supply having been cut oflf by the
war, and "necessity being the mother of invention," they have
devised new and improved methods of making crystals themselves.
How many and how important may be the commercial inventions
growing out of the war no one yet knows. I shall be surprised if in
the aggregate the influence of new inventions is not considerable.
Inventions, by oflfering big future returns for comparatively small
present sacrifices in developing the inventions, tend to raise the rate
of interest.
Credit Will Rapidly Expand
Finally, one important result of the ending of the war will al-
most certainly be a rapid expansion of credit which will tend to
create a period of rising prices and a high rate of interest which
Digitized by
Google
250 The Annals of the American Acadekt
usually goes with such ^^boom" periods. In order to conserve
gold, European nations are trying to get the public more used to the
check system. Such a change, which has long been overdue on the
continent, will probably, after the war, go on by leaps and bounds.
The French government, for instance, is urging the people of France
to practice deposit banking in order to '^ mobilize the national
cash," i.e., to draw it out of French stockings into French banks.
The bank of France is distributing a pamphlet of explanation and
instruction in the American system. If this prognostication proves
to be correct, the credit expansion will lead to a continued rise in
prices, except so far as this result may possibly be checked by the
resumption of specie pa3rments, by a policy of contraction and by
the cancellation of paper money. But, up to the present time,
paper money inflation has not progressed far. According to Pro-
fessor Whitaker, whose figures relate to the close of 1915, the paper
poxmd sterling had depreciated relatively to gold, as measured by
foreign exchange rates against the American dollar, only about 2}
per cent, the French franc only about 12 per cent, and the German
mark about 21 per cent. Moreover, it is not likely that these
depreciations will be rapidly diminished in view of historical prece-
dents after the Napoleonic wars, after the civil war, etc.
Even if a policy of rapid resumption of specie payments should
be adopted, I have little doubt, assuming that the inflation at the
close of the war is not much more than at present, that, for many
years after the war is over, there will be a general rise in prices, a
general period of expansion and with it a high rate of interest, such
as almost invariably accompanies boom periods. It would not
siu-prise me if, within a year after the close of the war, the general
rate of interest in England, France and Germany should average
7 per cent or above.
Interest Rates in the United States
What has been said applies primarily to the warring European
coimtries and not to the United States. So far as the United States
is concerned, the effect will, I believe, be in the same general direc-
tion but not so pronounced. The credit relations connecting the
two sides of the Atlantic will be reversed, we becoming lenders to
Europe instead of borrowers from Europe.
The level of interest rates in Eiu-ope has hitherto been below
Digitized by
Google
The Rate op Interest After the War 251
ours and therefore tended to draw ours down. Hereafter it will be
above ours and will tend to draw ours up. We have already bought
hundreds of millions of European securities or bought back American
securities held by European owners. Mr. Loree, President of the
Delaware and Hudson Railroad, estimates that a half billion of
dollars' worth of United States railroad securities alone were re-
turned to this coimtry from abroad inside of six months.
It should be added that the present low level of the rate of
interest in the United States is abnormal. Owing to the very sud-
den increase in our gold reserves, which could be utilized by the
banks only by extending their credits, these banks have extended
their credit by offering low rates until their deposits become the
requisite multiple of the reserve. The low rate is simply a tempo-
rary incident connected with the adjustment in the loan machinery.
When the present readjustment is complete I anticipate that the
rate of interest in the United States will be considerably higher than
at present, quite irrespective of the ending of the war.
The foregoing are some of the reasons why I cannot share the
opinion of those who believe the rate of interest after the war will be
low. It has been argued that Eiu-ope will be so crippled after the
war as not to have much borrowing power. Now it may well be
that the borrowing power of Europe will be smaller if the war is
prolonged than if it were to end today. But the important point is
that Europe, whether she be a big borrower or a little one, will be a
borrower instead of a lender. Moreover, an outlet for American
fimds seeking investment will be foxmd in those outlying countries
formerly accustomed to borrowing in Europe. The Argentine and
other South American countries and the Orient will tend to borrow
hereafter in the United States. This result will also tend to raise
the rate of interest in the United States.
In closing, I would repeat that I realize the existence of im-
foreseen elements and the fact that those which can be foreseen are
unknown in their relative importance. This fact makes such a
forecast as I have attempted only a very tentative affair. While
I feel considerable confidence that the rate of interest in Europe,
for many years after the ending of the present war, will tend to rise
and that this coimtry will feel some effects of the rising tendency,
no quantitative prediction as to the magnitude of this result can
be other than a guess.
Digitized by
Google
THE NATIONALIZATION OF CAPITAL
By Dr. M. J. Bonn,
University of Munich.
I The Growth op International Investments
In the half century preceding the war there was a decided
trend towards international finance. Capital flowed from some of
the old countries notably England, Germany, France, Switzerland,
Belgium or Holland into the newer countries. It was not a mere
export of capital as it is commonly called, by which capital — what-
ever meaning we may give to that somewhat multicolored term-
migrated from one country to the other. The characteristic fea-
ture of the movement was that though the capital itself emigrated
its owners remained at home, drawing interest on their foreign
investments and pocketing profits from their enterprises abroad —
wherever such profits were made. In other words credits were
given by the citizens of one nation to those of another nation on an
ever increasing scale.
Some of these credits took the form of short-term advances
repayable within a few months. They were used mostly for the
movement of goods from one country to another. As such move-
ments recurred periodically the advances had to be renewed over
and over again. They were a kind of international revolving credit.
The older countries, England and Germany for example, were
in the habit of paying cash for their imports of raw material. Their
citizens no doubt used instruments of credit in their individual
transactions. They paid the producers of copper and cotton by
drafts on their bank. By selling these drafts inunediately the pro-
ducer got cash. Though the purchaser himself took up the draft
only after it fell due, the banks had advanced the money for discount-
ing it abroad, either through branch banks or through foreign cor-
respondents. Broadly speaking imports were paid in cash, while
through the same system of bank accommodation abroad exports
were sold on credit, of three to twelve months' duration. A con-
siderable share of the capital of England, and to some degree of Ger-
many, was thus engaged in short-term credits to foreign nations.
252
Digitized by
Google
Nationalization of Capital 253
A much larger share was permanently invested abroad, bear-
ing interest or bringing dividends. The cost of transportation, the
cheapness of raw material, the building up of protective tariffs, or
the requirements of some patent law, forced manufacturers to start
branches abroad.
The German chemical industry, for example, had branches
established in Russia, because import duties on their products were
very high. They started some in England on accoimt of the neigh-
borhood of the greatest consumers, the British textile industry. A
German candy making .concern of international fame started
branches in some countries, because the tariff made imports from
Germany impossible. They went to England because the cheap-
ness of sugar and of raw materials enabled them to hold their own
on the British market, and to avoid hostile tariffs in foreign countries.
Direct industrial investment was but .one form of the inter-
national advance of capital. Far greater were the sums of money
loaned by one nation to another by means of issuing stocks, shares
and bonds, through the different stock exchanges. Huge sums of
foreign government loans were subscribed in Europe. They had to
compete with bonds and shares of corporations which raised their
capital in markets where the rate of interest was low. North and
South America railroad corporations; South African gold mines;
Near and Far Eastern enterprises vied with each other in competi-
tion for the foreign market. Germany participated largely in these
international credit operations. Her foreign investments before the
war have been variously calculated at seven to eight bilUon dollars.
It has been estimated that her investments in hostile countries alone
were nearly five hundred million dollars. D\u*ing the year preced-
ing the war, the total amount of issues offered to subscribers upon
the German exchanges reached six himdred million dollars of which
about sixty-three million dollars were for foreign ventures.^
II Intricacies op International Finance
International financial (credit) relations were not restricted to
loan transactions between groups of advanced countries and of new
^ In many cases the amount of stock issued is offered at the same time on
several stock exchanges. It cannot be estimated how many of the subscribers
are Gennans. Moreover, it is not known to what amount German capitalists
subscribe to loans in foreign stock exchanges.
Digitized by
Google
254 Thb Annals of thb Ahbrican Academy
coxintries. Countries were not coupled together in pairs of creditors
and debtors: Germany, for example, had no monopoly of lending
money to Turkey. She shared in these transactions with France,
England and other coxmtries. Finance was not merely what might
be called bi-national; of late it had really become international.
The creditor coxmtries, England, Germany, France and others who
loaned money to weaker states were tangled up among themselves
as creditors and debtors. Their financial relations had become so
close and intimate, they depended on each other to such a d^ree,
that many a competent observer denied the possibility of a big war
on accoxmt of that financial interrelation. A kind of international
clearing house had grown up, and a kind of international stock
exchange had been developed. Liondon had become the center of
international business.
England's geographical position made her the half-way house of
central and eastern Europe for trade over sea. It made her safe
apparently from foreign invasion. Her history and her institutions
guaranteed the safety of private property from injudicious govern-
ment action. She was the heart of the British Empire which pro-
duced a large percentage of the world's raw materials. She had
imported huge quantities of them while the rest of the world was yet
satisfied to live on its own produce. She had evolved an excellent
trading organization. Her banking system was peculiarly well
adapted for the granting of short loans essential to trade. She kept
a much larger share of her capital for that purpose than any other
nation. Quite naturally she became the market, the clearinghouse
and the banker of her own colonial empire. Hers was the greatest
merchant marine and she did much of the carrying for other nations.
She controlled the insurance systems of many countries. She had
invested huge sums of money abroad, the interest on which had to
be remitted. She owned the greater part of the world's gold-produc-
ing areas, from which a stream of gold converged in London. She
received freightage, bank commissions and insurance premiums from
all the world. Her colonial empire oflfered far greater f aciUties in the
near futiu-e than any other place in the world: she attracted men
from all countries to her colonies. And to London she called the
financial genius of many lands, especially from Germany, by wise
hospitality and the ofifer of splendid chances.
Digitized by
Google
Nationalization of Capital 256
England as the World Center
A triple result followed. England became the staple place for
many imports. With a population of but forty-six millions, her
imports were 3.7 billion dollars; while those of Germany, with a pop-
ulation of sixty-seven million were 2.7 billion dollars. In the four
years preceding the war, England's reexports of foreign goods were
well over five hundred million dollars. England enjoyed a better
market organization than her competitors. Dealing in futures, for
example, was possible on a big scale. Though the consumption of
copper in Germany was 260,000 tons, and the consumption in Eng-
land only 140,000 tons, the turnover at the London Metal Exchange
was 524,000 tons, whilst the turnover in Germany was 360,000 tons.
The result of this was that international payments were made
via London. International accounts were cleared in London. The
exporters in South America and North America, as well as in the
British colonies, were paid in bills accepted directly or indirectly by
London banks. There was an enormous demand for those bills,
and the poxmd sterling was the currency of the world. It has often
been said that a draft on London was as good as gold. Up to the
outbreak of the war this was true, and all the world used it for pay-
ments. For limited areas only, the mark, the franc and the dollar
were international currency.
Germany's Relations with London
Germany settled a good part of her foreign trade payments via
London. She imported large quantities of raw materials from
British colonies. She exported goods to them. It was but natural
to settle these bills via London. Non-British payments were
settled in a similar way. The German banks erected branches in
London or kept an account with Londoif banks. They deposited
with them a large amount of Germany's floating capital, for English
banks would never accept drafts for German accounts without being
sufficiently secured and compensated. What held good of Germany
held good of other countries, too, to a limited degree. They all kept
balances in London. It has been estimated by the Frankfurter
Zeitung that German credits in London were well over $500,000,000
a year.
Economic internationalism went much further. The vast
domain of the British Empire produced many raw materials which
Digitized by
Google
256 The Annals of the American Academy
Germany wanted. German trading firms had to take permanent
interests in those countries. The refining of Australian metal ores
was largely done by German concerns. German companies fur-
nished the power plants for the South African gold fields. British
textile industries would never have maintained their primacy all over
the world if it had not been for the close cooperation of the German
dyestuflf industries, which established branches in England.
There was quite an important counter-movement of this sort.
Some of the British concerns controlled German textile mills.
British capital was very strong in the German cigarette industry.
Bills on Berlin were bought in England, partly for the settlements
of eastern Europe payments, and partly for capital investmente
whenever the rate of interest was high.
These investments were overshadowed by the vast participation
of German capital in flotations on the London Exchange. The
London stock exchange had lately become the international stock
exchange. The number of securities listed there was greater than
anywhere else. It was well organized and honestly managed,
though it gave greater chances to the gambler than its German
competitor.
In Germany no issue was admitted for quotation without a
detailed prospectus. The information contained in the prospectus
was carefully checked by an official committee before quotations
were permitted. Moreover, no shares of less than $250 could be
issued. Dealing in futures was very restricted. Risky issues like
gold mines or rubber shares could not be floated. People who wanted
to risk their money in comparatively small sums had to do it in
England. Foreign shares subscribed abroad could not be traded
on the German stock exchange without paying a heavy tax. More-
over, the claims of home industries had been strong for many years.
The rate of interest in Germany was higher than in England and in
France. It was cheaper to borrow money in London and in Paris.
The best foreign securities as well as the most risky ones were quoted
there, and many a conservative German capitalist invested the bulk
of his money in good foreign securities, while he gambled with the
rest in gold shares. There was a time when the brokers handling
South African mining shares kept a small army of traveling salesmen
going all over Germany. On the other hand, first-class investments
like American railroad shares were largely subscribed in London by
Digitized by
Google
Nationalization op Capital 257
German capitalists. Moreover, most foreign bonds and shares
quoted in Germany were listed in London and Paris as well. Very
often it was more profitable to buy in London than anywhere else.
In that way a large share of Germany's permanent investments, not
only in British securities but also in other foreign securities, were
made in London. This state of affairs was openly acknowledged in
England. There was a regular influx of German brokers and finan-
ciers into the London stock exchange. They brought with them
their nimbleness of wit and their power of adaptation, and they
brought, too, a crowd of German customers. Patriotic Englishmen
have lately denounced them as "our German exploiters," forgetting
evidently that they made their money out of their German com-
patriots at home and spent it in England.
Ill Nationalization of Financb Now Unayoidablb
Long before the war, a movement against the internationaliza-
tion of capital had sprung up in Europe. This started in France
but it found an echo in Germany and in England. Protectionists
realized that the export of capital on a credit basis worked against
their policy. If new countries were quickly developed by capital
drawn from home, great quantities of competitive goods might be
cheaply raised, cheaply transported and cheaply marketed. The
development of a huge wheat-growing area Id Mesopotamia might
ofiFset the high duties on wheat in Germany, and lower the price for
the consumer. At the same time the outflow of capital to more
productive fields abroad would raise the rate of interest at home.
The margin of profits for protected interests would be decreased.
These arguments were easily answered in the days before the war:
as long as nations relied on foreign supplies, economic expansion
by means of advances to new countries is beneficial. Foreign loans
very often gave the control over foreign markets. The possession
of international securities is a great asset in time of trouble as they
can be liquidated abroad. Internationalization of payments
reduces the cost of payments and equalizes the rate of interest all
over the world. Moreover, it was thought that financial inter-
nationalism is the forerunner or a powerful ally of a permanent
world peace.
This answer wiU not be deemed sufficient today. All the world
has realized the danger of international dependence in time of war.
Digitized by
Google
1
258 The Annals op the American Academy
International communications can be cut by any power which con-
trols the sea. Since the American government has accepted the
principle that the maintenance of international trade between
neutrals in time of war is not vital, provided the damage done to
individuals is properly paid for afterwards, the sheet anchor of the
world's international communication is gone. With the oncoming of
'^ nationalization of business," the nationaUzation of finance seems
unavoidable.
IV The War's Effect on Gerbian Foreign Investments
It is very unlikely that European countries, or even groups of
coimtries, will become completely self supporting. However big
the groups and however excellent their organization may be— they
will depend upon foreign supplies. As far as Germany is concerned
she will try to get them by land, which is the real meaning of the
proposed plans of the Central European Customs Federation. But
she will not withdraw from foreign commerce oversea. She will
not rely upon them as she did before. She will use her capital for
foreign investments as she has done in the past wherever it is to her
interest to develop the resources of foreign countries. But foreign
credits will be more exclusively extended to coimtries in whose
cooperation full confidence can be placed.
The war no doubt will throw a very heavy burden on Germany.
No one can foretell what her future productive power will be. But
two features are clearly outstanding:
1. Germany has undoubtedly disposed of a considerable part
of her foreign securities, but she has retained a large share of them.
The property which is withheld from her citizens by the Allies was
estimated at $500,000,000 before Italy and Roumania declared war
on her. A large part of her neutral securities has not been sold as
there were not available markets for them. All of these sums will
be released when peace is made. No doubt Germany will have to
re-stock her stores at that date. She may have to contract short-
term foreign loans in order to prevent the eflSux of gold, her un-
touched assets are more than sufficient for such transactions.
2. Germany will remain a creditor nation. She has con-
tracted no foreign obligations during the war. However heavy
the burden may be, her people will not be compelled to pay tribute
to foreigners.
Digitized by
Google
Nationalization of Capital 259
V Decline op London's Financial Prestige
While the relations between debtor countries and creditor
countries will continue, and while Germany will partake in them,
international finance, in the sense of that close cooperation of
capital which existed before the war, will not revive for a long time.
The London money market will not be used by borrowing nations
in the future as it has been used in the past. It will not any longer
be the place where the capitalist nations of the world meet to do
their work in joint cooperation.
As far as settling international trade via London is concerned,
some vital changes are sure to occur. The old beUef that a draft on
London is as good as gold has been shattered. England was forced
to declare a moratorium. She was forced to do so because she was
the international center of the world. As soon as the interna-
tional trade machinery came to a standstill, payments to England
were difficult to make, and England was not rich enough to meet all
the demands on her. In other words, the banker of the world had
to postpone payments because many of his clients had to do so, and
because his own resources were not strong enough to carry him
through. "Lombard Street," a British author wrote, "will have
to modify its boast about the only free and open money market in
the world."
It is quite possible that this moratorium was a wise and un-
avoidable measure. It is absolutely clear that it has demonstrated
to the world, and especially to the neutrals, the danger of keeping
their bank accoimt with a coimtry mixed up in all business and in all
struggles of the world. However excellent service the international
mechanism, especially in London, may have done, the dangers in-
herent in such an international financial machinery have been clearly
demonstrated. In the near future people will be shy of such forms
of internationalism, which no doubt do cheapen business in time of
peace but lead to bankruptcy when war breaks out.
If a country could be found with all the natural and political
advantages England enjoyed, she might take the place of England,
if her neutrality were assured imder all circumstances. But even
then no coimtry would be rich enough in her own liquid resources
to pay her debts to her creditors when her own debtors failed. At
the outbreak of the war the United States paid both England and
Digitized by
Google
260 The Annals of the American Academy
France though both failed to pay her. This country could do so
because its international commitments were comparatively light.
The United States is not likely to take the place of England as
a center of international finance. Commodities en route to Europe
do not pass her shores and never will do so. Their economic policy,
their commercial policy, their corporation and stock exchange legis-
lation are far less stable than those of England. In that respect the
advantages of a free trade country are not at the disposal of a protec-
tionist country. But America is sure to do the financing of her own
trade. As she will no longer be indebted to England, there will be
no need for her to send the same amoimt of remittances to London,
and the same will hold good of other debtor countries whose bonds
England is selling to the United States. Their place in London will
be taken to a certain degree by the British Dominion and Allies.
There will be no need to finance American imports via London.
The demand for London drafts from America will be much smaller.
And it is not very likely that the payments on foreign account for
Russian and Italian product, for example, will go via London. Even
if the economic schemes of the Allies are realized, Germany certainly
will not finance her imports from Russia via London. As far as the
British colonies are concerned, she will have to do so if she chooses
to buy their goods. If the colonies refuse to do business with Ger-
many, they will facilitate Germany's financial emancipation from
London, as she can get the raw products needed from other sources.
She will pay for them either directly or via New York. Countries
or groups of coimtries will settle the payments of their exports and
imports directly. They will try to oust superfluous financial
intermediaries.
VI Permanent Eppbcts op British Policy
Far more important will be the effect of the war on permanent
investments in foreign countries. These permanent investments
may be roughly divided into two groups:
1. Establishing of commercial and industrial firms in foreign
coimtries.
2. Participation in foreign enterprises by investments abroad
in government bonds and corporation stock and bonds.
As far as those investments are concerned, the war has brought
about a very great change. To begin with, a recrudescence of the
Digitized by
Google
Nationalization op Capital i6l
protectionist spirit is visible all over the world. There will be a
cry for the creation of national industries at very great sacrifices,
as the war has shown the danger of such industries under foreign
domination. Countries will favor the influx of capital into such in-
dustries, as the Germans have done with nitrates and the English
with dyestu£Fs. They will prevent the e£9ux of capital as long as
home requirements are not fulfilled.
The investor himself will be far less eager for investments
abroad than he was before. The closing of all stock exchanges all
over the world has made it difBcult for him to realize his foreign
assets, even if they were first-class. The moratorium enacted in
nearly all countries with the exception of Germany, shows the risks
of buying foreign bills. Moreover, the foundation of the inter-
national financial fabric has been smashed deUberately.
AU Payments to England's Enemies Forbidden
In that respect, England was the leader. As early as August
5, trading with the enemy was forbidden in England. The first
proclamations which were neither clear nor stringent did not stop
the payment of debts. Later on all payments to business residents
in the enemies' country were forbidden. Dividends, interest, profit
on securities or on participations in some business belonging to
Germans and to people residing in Germany, were withheld from
them during the war. They were to be paid into the hands of a
custodian. This custodian was empowered to collect all revenues
belonging to enemy subject^. Moreover, all enemy property,
companies, corporations and private firms were handed over to a
controller who became their receiver. Transfers of enemy property
to neutrals were stopped.
In other words the capital of enemy subjects in the British
Empire was sequestered. The revenue accruing from it was with,
held from them. Their business secrets were wormed out, their
books were inspected, their property was to be managed in the
public interest and not in the interest of the party concerned. As
the object of this legislation was to damage enemy subjects, the
administration of their property was very often made as harsh as
possible. Competitors of British firms were deliberately ruined,
stocks and shares were sold without regard to the owners' interest,
collateral securities were disposed of at a loss. Not only British
Digitized by
Google
i6i The Annals op the American Academy
securities but neutral securities deposited in London were dealt
with in that way. I know of an old lady living in Germany, whose
income is derived from American seciuities listed in London. She
does not get a cent from them. I know a small pensioner in Munich
who is deprived of her pension from England. Even German
citizens living in the United States cannot get their dividends from
England.
ReUdiaUon by Germany and Austria
British legislation was inaugurated on August 5, 1914. It was
quickly copied by the Allies. As a matter of course, Germany and
Austria retaliated. At the beginning the advantage was with
England for her obligations to Germany were far lai^er than her
own investments in that coxmtry. She wanted to cripple the enemy
and did not think of future developments. She was not quite suc-
cessful in many ways. She could not stop liquidation of German
securities in neutral markets, but she seemed to be a gainer in the
beginning. The xmpaid trading debts of the central powers in
England were but one million pounds. Affairs changed quickly
with the entrance of Txu-key into the war, a coxmtry which owes
large sums to England and especially to France. Following the
Allies' example she confiscated their investments and cancelled their
concessions. The entrance of Portugal and Italy and Roumania
has restored the balance in favor of the Allies. But the economic
benefit derived from such measures must be much smaller than was
originally considered. An absolutely reliable balance between the
assets and the liabilities of the different nations cannot yet be
struck.
The Permanent Effect on Iniemational Finance
What is far more important than figtu^s is the deathly blow
dealt to the system of international finance. Before the war,
continental investors liked to spread their risks. They felt convinced
that their investments were safe. It might be doubtful whether a
government would go on paying interest on their debt to the enemy
when war broke out. Japan has done so punctiliously to her Ger-
man debtors. But private property and private obligations seemed
to be quite safe. As private property cannot be confiscated even
in occupied territory by a hostile army, there seemed to be no reason
why the possibility of confiscation should be taken into account,
where no direct military necessity was involved. England's con-
Digitized by
Google
Nationalization op Capital 263
ception of international law which is based mainly on maritime
law, aiming at the destruction of private property, did no doubt
furnish arguments for the legality of such precedents. The accep-
tance of the Declaration of London seemed to show clearly that
England was giving up her old ideas. It seemed to make investors
quite safe. They have been grievously disappointed. Whatever
conclusion lawyers may come to about the legality of such seques-
tration will be of great legal importance when the question of com-
pensation is discussed. As far as the essential financial relations
between nations are concerned, the legal learning exhibited during
the war is of little weight.
What does matter is the experience people have gone through.
They have learned that their foreign investments, whatever form
they may take, are not safe in hostile though civilized countries.
They have learned that neutral securities are not safe when listed
in such countries or when intercepted at sea even if protected by
neutral mails. They have learned that corporations or firms owned
by them but domiciled in neutral countries can be boycotted with-
out protection by friendly neutral goverments. For the most
valiant protest is no protection. They will draw their conclusions
from their experiences and nationalize their finance. If inter-
national law experts can show them that all of these acts were
lawful, so much the worse. For that would guarantee them that
such acts may be repeated without fear of punishment or hope of
compensation. No country has learned sadder lessons from the
war in that respect than Germany. She and her Allies will draw
their own conclusions. A reconstruction of economic policy all
over the world will take place, by which nations and states will be
distributed in big economic groups. They will overstep their
group boundaries wherever national interests are at stake for the
exploitation of new countries oversea. But the old unorganized flow
of capital towards the largest profits abroad, is not likely to con-
tinue. There will be a drawing apart of nations and groups in
economic life and with it a considerable setback to international
finance.
Digitized by
Google
LONDON AND NEW YORK AS FINANCIAL CENTEBS
By E. L. Stewart Pattbrson,
The Canadian Bank of Commeroe.
Since the beginning of the present European war there has been
a great deal of discussion in the financial papers and elsewhere as
to the effect of the war on London's position as the financial center
of the world and the probability of New York succeeding in assuming
and keeping the position. It is, of course, natural that the serious
interruption in shipping, commerce and exchange throughout the
world would minimize for the time being London's supremacy, es-
pecially when the stupendous task of financing not only Great
Britain's munition requirements but those of her Allies devolves
upon her.
There is no question that at the end of the war. New York's
position as an exchange and financial center will be vastly enhanced
but not necessarily at the expense of London. Sovereigns and dol-
lars are the only two important mediums of exchange that have
been at all reliable since the war commenced and this will no doubt
put both of these exchanges immeasurably ahead of the exchange of
any other country at the end of the war.
The Reasons for London's Supremacy
London has been for centuries the conmiercial clearing house
of the world. This is due not only to its central situation, its im-
mense foreign trade and its large mercantile navy, but also because,
through its highly perfected banking sjrstem, it provides facilities
of such magnitude and of such entire efficiency for the final settle-
ment of exchange operations, that drawers or negotiators of bills
in every quarter of the globe gave preference to sterling over any
other form of exchange. It has been estimated that nearly 90 per
cent of all letters of credit issued throughout the world were, prior
to the war, drawn in English money. Lloyd George, in commenting
on the unique and commanding position of Great Britain in in-
ternational trade and the consequent serious responsibility placed
upon her at the outbreak of the war, said in November, 1914:
264
Digitized by
Google
Financial Centers 265
We had not merely our own business to run; we were an essential part of the
machinery that ran the whole international trade of the world. We provided the
capital to raise the produce; we carried half the produce, not merely of our own
coimtry, but of the whole world. More, we provided also the capital that moved
that produce from one part of the world to another, not merely for ourselves, but
for other countries.
I ask anyone to pick up just one little bit of paper, one bill of exchange, to
find out what we are doing. Take the cotton trade of the world. The cotton is
moved first of all from the plantations, say, to the Mississippi, then it is moved
down to New Orleans; then it is moved from there either to Germany or Great
Britain or elsewhere. Every movement there is represented by a paper signed
either here in London or Manchester or Liverpool; one signature practically is
responsible for the whole of those transactions. Not merely that, but when the
United States of America bought silk or tea in China the payment was made
through London. By means of these documents accepted in London, New York
paid for the tea that was bought from China. We were transacting far more than
the whole of our own business; we were transacting half the business of the world
as well by means of these paper transactions. What is also important to establish
is this: that the paper which was issued from London has become part of the
currency of commerce throughout the world.
In considering the possibility of New York being a successful
rival for supremacy as the exchange and financial center of the
world, we can do no better than review some of the principal reasons
why London has hitherto held that position and, it will be realized
that New York must duplicate these conditions in great part if not
in entirety before London can be dethroned. These reasons and
conditions can be tabulated briefly under three headings, physical,
psychological and economic, those coming under the first heading
are of course unalterable, imder the second heading can be remedied
in time through education and training and under the third heading
are matters of legislation and custom.
I. Physical Conditions Favourable to London
London is situated on the threshold of Europe in the heart of
the world's commercial activities, directly opposite the estuary of the
Scheldt and nearly opposite that of the Rhine and is within a short
distance of every important exchange center in the world with the
exception of New York. This alone may be considered as an in-
superable obstacle to New York's ambition.
London has the advantage of ice and fog free water lanes to
every large port in the world with the exception of New York; the
Digitized by
Google
266 The Annals of the American Academy
climate is equable and liquids and perishable goods run little or no
danger of freezing in winter.
The restricted insular area of Great Britain, a little larger than
the state of Minnesota, is also an important factor, as it not only
affords an immense seaboard compared with its size, but concen-
trates the population. A frequent and rapid transit service makes
Great Britain practically one large city with London as the business
center. Every bank in the country has a branch or correspondent
in London, carries its reserves there and clears direct with every part
of the country through its London agent. The economy of re-
sources effected by this natural concentration of funds is seldom
realized and is worthy of study. The insular position of London
renders it comparatively free from the danger of invasion and
seizure by a hostile power and this immunity has been a factor in
making London a world depository.
The geographical situation of Great Britain, coupled with her
willingness to invest money in international utilities, has placed her
in a unique position as regards mail and cable facilities. Through
her immense mercantile navy London has direct communication by
fast steamers with every important port in the world and conse-
quently acts as a foreign mail clearing house for all other countries.
If French, German or Dutch steamers afford a faster service to any
point they can be utilized with little or no loss of time.
As Great Britain owns and operates two-thirds of the submarine
cable mileage of the world, it is natural that London should be a
great cable center with practically direct communication the world
over. This service is now supplemented by a far flung system of
wireless stations. Furthermore, under normal conditions, every
main railroad on the continent of Europe gives its best service and
equipment to its London mail train. The Trans-Siberian Railway
already gives access by rail to the Pacific and it is only a question of
time to the establishment of through connections with India, China
and South Africa.
In dealing in foreign exchange and stocks London is the center
of the world as regards time. She knows the conditions in eastern
markets before they close and is open long enough to operate in
New York before her own markets close. Her position is therefore
pivotal as regards time and distance. Time is the essence of an
exchange transaction, a day's delay may turn a profit into a loss
Digitized by
Google
Financial Centers 267
and, granting that New York has the means and enterprise to create
an efficient steamship and cable service in due course, how can she
eliminate the more serious handicap of distance by water from all
other financial centers?
II. Psychological Conditions
Perhaps a better heading than this would have been national
characteristics. Great Britain is a land of slowly acquired fortunes
and the banker and merchant there are content with small profits
and slow returns. They have long realized the fact that trade
follows the loan and have therefore been willing to invest money in
foreign countries with no prospect of recovering immediate returns
or large profits, and the financing of these loans abroad has been an
important factor in making the London money market so supreme.
It is doubtful if the American is adapted temperamentally for
operations of this kind or for the small profits of the exchange opera-
tions connected therewith. The United States has still a vast area
in proportion to its population, its natural resources are not yet
fully developed and it is a country of large and rapidly acquired
fortunes. It will, therefore, be many years before the investors and
entrepreneurs are forced to direct their attention to foreign fields.
Great Britain, before the war, invested over a billion dollars an-
nually in foreign enterprises and at the beginning of the war had
between twenty And thirty billions so invested. The United States
at the same time was a debtor nation for over six billion dollars, and
allowing that some two billions of this amount has been paid off or
absorbed in the past Wo years of the war she will still have to in-
vest nearly twenty-five billion before she is on an equal footing with
Great Britain in this connection.
The average family of Great Britain is large compared with
that of the United States and there is little room and few oppor-
tunities at home for the younger sons. This class man the army,
the navy and the mercantile marine and go abroad as clerks, etc.,
to foreign and colonial banks and commercial houses, the more
venturesome, as soon as they acquire experience, carry British trade
and prestige to new and undeveloped countries, — British subjects
are found everywhere, no matter how remote the place.
The young American, on the other hand, has so many oppor-
tunities at home that there is little inducement to venture abroad
Digitized by
Google
268 Ths Annals of ths Ambbican Acadkmt
except for pleasure. He is probably the only son of the family and
takes up his father's business or is assisted in setting up in business
for himself. If he does go abroad, he is not content with a subordi-
nate position, but wants to be his own master and strike out for
himself. Preferably he goes back home to do this. We might
instance the experience of the International Banking Corporation, a
state bank, chartered in Connecticut with foreign branches chiefly
in the Orient. This bank, though an American institution, is
manned principally by Englishmen. It will be interesting to watch
the personnel of the staff of foreign branches of the national banks
established under the Federal Reserve Act.
Sectional Jealousies in the United States
To be a world center of finance it is essential that a city must in
the first place be the imquestioned financial center of its own
country. London is indisputably recognized as the financial
center not only of Great Britain but of the British Empire. No
local jealousy is evinced by Birmingham, Liverpool, Glasgow or
other large cities as to London's supremacy in this regard. New York
is the principal financial center of the United States, but it is not
the only financial center. Chicago, St. Louis, San Francisco and
other important centers are strong competitors with New York for
domestic business and to a certain extent for foreign business.
Aside from sectional jealousy, the vast area of the United States
makes this competition inevitable. Will these cities abandon
selfish motives and aid New York in her ambition? Will not the
expansion of the country's foreign trade adcentuate rather than
diminish this competition? Chicago and Minneapolis will share
in the development of the great Canadian West, San Francisco ¥dll
become more and more important with the extention of business
with the Orient and New Orleans will benefit by the opening of the
Panama Canal and the expansion of trade with South America.
The United States is not a country but a collection of countries or
commonwealths of which New York State is only one. The tend-
ency is to minimize New York's financial supremacy rather than to
assist it. A study of the discussions on this feature preceding the
passing of the present Federal Reserve Act will bear out this state-
ment.
It is not a question of the ability and enterprise of the American,
Digitized by
Google
Financial Centbbs 269
but one of his overcoming the handicaps of temperament, environ-
ment and tradition and we might add prejudice and suspicion as the
world has not yet forgotten the frequent and serious crises in Ameri-
can financial history.
Mr. Hartley Withers in his excellent book, The Meaning of
Money, puts the case succinctly as follows:
It is a cherished ambition among Americans to see New York some day es-
tablished as the monetary center of the miiverse, and with their vast natural r^
sources and population there is no doubt that the United States can achieve any
material tasks that they choose, if they can learn the necessary lessons and develop
the necessary character. At present the oharacteristics of the typical American
business man seem to fit him to do most things better than banking. His haste
to grow rich, his eager enthusiasm and buoyant optimism followed by plunges into
apprehension and depression, his quickness and versatility, his keen sensibilities,
his craving for speculative excitement, and his genius in exaggeration — all these
qualities make him an excellent producer, a first-rate distributor, a miraculous
advertiser, an unapproachable gambler, and a somewhat questionable banker.
There are hundreds of good bankers in the United States, who take a scientific
interest in the problems of their business such as is comparatively rare among their
English brethren. But they are developed in spite of their environment, and of
the atmosphere of eager enterprise which makes it difficult to observe the humdrum
laws and limitations of banking.
London's supremacy is the cumulative result of numerous
forces, political as well as economic, spread over a long series of
years during which time the world has learned to think in terms of
British money and the bills of exchange on London have been raised
almost to the dignity of an international currency, while the safety
of the Bank of England and the value attached to the word
"sterling" have become proverbial. Sovereigns and to a great ex-
tent Bank of England notes pass current the world over without
recourse to money changers. The dollar and the dollar bill must
be made equally well-known and acceptable.
The Influence of Custom and Tradition
It must not be overlooked that, when an international business
is so long established and well centralized as the money market of
London, the world will continue to use it as a matter of convenience
rrespective of the possibly superior facilities of New York. The
financial roads to London are well defined by much travel, and busi-
ness tradition will favor the old stand; it is biunan nature the world
Digitized by
Google
270 The Annals op the American Academy
over to follow the cow track across a pasture no matter how oblique
its direction.
One of the main foundations upon which London's position rests
is the world's estimation of its credit. This credit is tried and sound,
backed by great resources, and has been reared upon the trust and
confidence in the honorable tradition of British business ethics and it
is unlikely that the world will have cause to revise its opinion after
the war is over. In a recent article in the London Bankers' Magazine
a writer (Mr. Benjamin White) says in part:
As to what will be the credit of the British Empire among the nations of the
world after the war, there is no reason to imagine that it wiU be diminished. The
burden of financing our great allied nations has fallen upon her shoulders. The
bonds of trade between the Allies wiU be forged closer, and it will be done in Great
Britain's workshops. . If the British nation were effete and decadent, there might
be some reason to fear that hands which tried in vain to snatch the trident from
its grasp might rob it of its financial crown. But the fact that four to five million
of the Birtish race have flown to arms voluntarily in order to defend their heritage
gives to such an insinuation the lie direct. The British race is still virfle and the
world will not be discouraged from leaving its balances in London when it reflects
that London's sons have shed their blood willingly in Flanders to maintAin the
honor and credit of British plighted word. British banking will not attract lees
confidence abroad when it is f oimd that the shock of the greatest war the world has
ever seen has not disturbed its equilibrium. A liner in foreign ports flying the
British flag will be none the less welcome because the British navy wiU have crushed
a revival of piracy upon the main, and by so doing will have secured the freedom
of the seas to all peaceful traders.
III. Economic Factors
The principal economic factors which tend to enhance London's
position as a financial center may be considered under the following
heads:
Free Gold Market
Liquid Discount Market
Stability of Money Rates
Inmiense Mercantile Navy
Great Foreign Export and Import Trade
Tariff
Excellent Banking System at Home and Abroad
The Numerous Branches of Foreign and Colonial Banks Established in
London
Freedom from Panics and Financial Disturbance
Free Navigation Laws
Marine Insurance, etc., and reliable Ship Registration
Digitized by
Google
Financial Centebs 271
London a Free Oold Market
Of the four great exchange centers of the world, London, New
York, Paris and Berlin, London is the only one that can always be
depended upon to meet every legitimate trade demand for gold,
which means that there is no delay or premium entailed in realizing
gold on a bill expressed in English money. It is payable in pounds
sterling which represent a definite and immutable weight of fine
gold. Great Britain adopted the gold standard unequivocally in
1816, over one hundred years ago, and has not departed from it
since, even to the extent of charging a fractional premium on gold or
by restricting its export by legal or sentimental embargoes. Even
war conditions did not deprive the Englishman of the privilege of
converting Bank of England notes into gold and, if he were willing
to take the risk of shipping it, he could pay a debt in Europe or
America without let or hindrance. Hon. Walter Runciman,
President of the British Board of Trade in speaking recently of
Britain's trade and financial power said:
It never has been necessary for us to prohibit the export of gold. We are
prepared to meet our liabilities on a free gold basis. Since August 1914 Great
Britain has exported £13,850,624 gold bullion and coin in the ordinary course of
businesSf in addition to large sums exported by the Bank of England for Govern-
ment account, and no individual is prevented from meeting his liabilities abroad
in this way if he prefers to settle by bullion transactions.
Even in normal times other nations have not assumed this
position. The Bank of France always reserves the right to pay in
either gold or silver so that in times of stress it could charge a
premium on gold. The Imperial Bank of Germany though theoret-
ically obliged to pay gold makes it very uncomfortable for any bank
or customer who has the temerity to demand gold for export purposes.
Both France and Germany, since the war, have abandoned any
attempt to maintain a gold basis.
New York, though generally willing to part with gold for export
purpK)ses, was — at least up to the establishment of the Federal
Reserve system — handicapped by the lack of machinery for the
efficient and economical mobilization and control of the gold re-
serves of the country.
England is not only committed to an undeviating policy to
maintain a free gold market but enjoys peculiar advantages in this
Digitized by
Google
272 The Annals of the American Academy
connection. Great Britain is not only the largest creditor nation of
the world but also controls and supplies, within the British Empire,
nearly two-thirds of the raw gold output of the world and has the
control automatically, independent of any exchange movements, of
over $350,000,000 newly mined gold each year. Owing to this
natural gold income Great Britain has been able to maintain her
position as a free gold market during the whole period of the war
and its bank notes and treasury notes have been and still are redeem*
able in gold at the Bank of England on presentation.
It is true that since the war London's activities as an interna-
tional gold market have been curtailed owing to the disturbances in
trade routes and difficulty and risks of ocean transportation, but,
so important is the certainty of the Elnglish monetary standard and
financial policy to the merchants and brokers of the world, that it is
unlikely that the war will cause more than a temporary recourse to
other methods of settling international obligations.
Also a Liquid Discount Market
The natural complement of a free gold market is a liquid money
market capable of absorbing bills of exchange to an almost unlimited
amount. This unique feature of the London market makes a
first-class bill of exchange on London as acceptable as gold. The
strength and broadness of the London market, apart from the natu-
ral resources of the country, lie in the ebb and flow of foreign capital
through the machinery of the branches of foreign and colonial
banks established there.
Although London does not particularly encourage the es-
tablishment of foreign banks, it, on the other hand, does nothing
to restrict the movement and allows freedom in banking privileges
to all comers of good standing. This broadminded policy though it
perhaps affects to a certain extent the individual interests of some
of the British banks is recognized as of great importance to
London and the country in general, and therefore indirectly to the
banks themselves. These branches of foreign banks, with their
network of correspondents throughout the world, in addition to
their direct influence on the exchange situation, give invaluable
assistance to the Bank of England in preserving the equilibrium of
the money market.
The policy of New York in connection with foreign banks is
Digitized by
Google
Financial Cbntbrs 273
just the reverse of that of London and is apparently based on a local
and narrow point of view. New York bankers have always dis-
couraged the establishment of foreign banks in their midst and have
evoked state legislation and other means to this end. A few foreign
banks are represented by agents, not by branches, they cannot take
deposits or discount commercial paper and their activities are
practically restricted to making call loans and dealing in foreign
exchange.
The London discount rates are controlled by a central institu-
tion, the Bank of England, and changes in the rate are not only
infrequent but seldom rise above 6 per cent. By this control of
the money market through the bank rate as it is cabled, the Bank of
England has been able to attract gold to London by raising the rate
whenever the exigencies of conmierce and the exchange situation
require it.
Reference has already been made to the ability and willingness
of Great Britain to invest its large surplus income in foreign and
colonial securities and thus provide foreign countries with the means
of paying for British merchandise and machinery. The movement
of such investments forms a large part of the so-called invisible ex-
ports and imports and is necessarily an important factor in creating
exchange and adjusting international balances.
The Mercantile Navy and Tariff
The absence of a tariff in Great Britain except on a few specific
articles is of great importance, as not only do foreign goods find a
ready market, but it permits British merchants and others to im-
port goods into Great Britain free of duty and export them at their
convenience. London and the other important seaports of Great
Britain correspond to the freight yards at railway centers, cargoes
consisting of goods of every description pour into these ports from
all parts of the world and are there sorted into mixed cargoes to be
despatched to various countries. In other words London also acts
as a clearing house for cargoes.
The United States is so irrevocably committed to a high tariff
that it is unlikely that any appreciable modification will be possible
for some time to come, though this obstacle in New York's path
might be removed in great measure by the establishment of free
ports.
Digitized by
Google
274 The Annals op the American Academy
Large amounts of British capital have been invested in the
establishment of British banks in her colonies and in foreign coun-
tries with head offices in London, and these render invaluable as-
sistance in the operation and preservation of British foreign trade
and commerce.
Great Britain possesses a mercantile navy second to none in
the world. This not only means an immense toll on the world's
commerce in the way of freight, etc., but also enables Great Britain
to govern to a great extent the destination of cargoes. Incidentally,
with her large ship owning. Great Britain is naturally interested in
marine insurance, and owing to the excellent standing of her in-
surance companies does an immense business in foreign marine in-
surance. Lloyds, an association of English underwriters of marine
insurance, collects and distributes by cable reliable maritime in-
telligence through its agencies established in every part of the globe;
it also issues Lloyds Register, giving the rating, etc., of every British
and foreign ship.
British navigation and shipping laws are liberal. A foreign ship
is in the same position as a British ship with regard to British trade,
and foreign ships engaged in the coasting trade are not si/bjected to
higher port rates than British ships (141 Custom Law Consolidation
Act 1876). British law affords equitable protection to both British
and foreign seamen, but avoids emasculating the service by undue
paternalism.
The navigation laws of the United States have always been a
serious handicap to her shipping business and the recently passed
La Follette's Seamen's Law will still further embarrass the unfor-
tunate American ship owner.
England's Enormous Foreign Trade
Under normal conditions Great Britain has an immense export
and import trade with every part of the world. This great com-
merce is not only of material benefit to the country generally but the
constant flow of inward and outward remittances forms an in-
valuable nucleus for London's foreign exchange operations, and
bills of exchange can be bought and sold in London drawn on any
place in the world, no matter how remote. For the year ending
December 31, 1913, the imports of Great Britain were £768,734,739
against exports of £634,820,326 representing shipments from and to
Digitized by
Google
Financial Centers 276
every country of the world. At the end of 1915, excluding certain
goods belonging to the British and allied governments, the figures
for which are not available, the exports were £483,444,459 against
imports of £853,756,279 a shrinkage of about 23 per cent. It is
evident that Great Britain is still able to maintain the bulk of her
export trade notwithstanding war conditions and the shortage of
bottoms.
Great Britain has a fully developed banking S3rstem, eminently
adapted to the requirements of her international trade and finance,
which has been ably and successfully conducted through a long
series of years by highly trained bankers, in whose judgment and
conservatism the British public have every confidence. Conse-
quently the country is practically immune from panics and other
financial disturbances. The banking laws are simple and impose no
unwise restrictions as to legal reserves, etc., leaving such questions
to the individual judgment of the banks themselves. Experience
has shown that good banking is obtained not so much by good laws
as by good bankers.
We have now reviewed briefly the principal reasons to which
London owes her financial supremacy and though the events of the
past two years have brought New York into a position of financial
eminence and power, it remains to be seen how much of this power
has been thrust upon her temporarily and how much she has ac-
quired permanently at the expense of London.
New York^B Present Dominance Temporary
Since the war commenced the United States has gradually
changed from a debtor to a creditor nation, principally owing to the
fact that vast exports of munitions, etc., have been made to belliger-
ent countries, thus creating an abnormal trade balance in her favor.
With this shifting of international balances, large amounts of gold
have been received from debtor nations, a considerable volume of
American securities held abroad have been absorbed by the New
York market and large loans made to the belligerent nations, as well
as to Canada and other countries of the American continents.
Owing to the position of the United States as a wealthy neutral
nation, far removed from the scene of conflict, a wide demand has
also developed for dollar exchange and dollar credits, not only in the
United States but in foreign countries. In other words, the ab-
Digitized by
Google
276 The Annals of the American Academy
normal conditions induced by the war called upon New York to
take the position of international bankers heretofore played almost
exclusively by London. This r61e was assumed by New York, not
so much of her own volition as by force of circumstances. Will
these war time opportunities, when peace is declared, be sufficient
to retain for New York the position which London with all her ad-
vantages took centuries to acquire? Before New York can do this
to any great extent the United States must learn to think inter-
nationally and not provincially. It must increase its foreign trade
tremendously and revise its navigation and alien labour laws and its
tariff, all with a due regard to the comity of nations; sound per-
manent banking and currency systems, removed from legislative
tinkering must also be established, and finally foreign banks should
be encouraged to establish branches in New York and other centers
without unnecessary restrictions as to the business they may imder-
take.
One of the leading banks in New York, the Mechanics &
Metals National Bank, has expressed itself as follows in a recent
monthly letter:
Today, to be sure, there is more trade passing in and out of the harbor of New
York than in and out of any other port of the world. Before the war, the trade
here was less than that of either London, Hamburi^ or LiverpooL But more than
60 per cent of New York's present trade is with four countries of Europe, and a
great deal of it is due to the purchase of war material for the Allies. This is a
state of affairs that cannot be enduring, or even if enduring, that is not designed
to shift away from London its historic supremacy among the woiid's money
markets.
In order permanently to fix a new place for ourselves, we must become really a
world trade center. Time will show whether we are sufficiently developed for
that. To ship to world markets and cultivate them permanently for our manu-
facturers and merchants, we must become lenders of wealth on a big scale. One of
the most familiar axioms of international trade is that commerce will flow where
capital flows; one reason for European supremacy in ov^sea trade has been the
tremendous outside investments made by England and France, and more re-
cently by Germany. Our people are not yet educated to loan money abroad in
large quantities; in spite of our apparently large loans in the past eighteen months
we cannot yet be called in a true sense an international loan market. For example,
at the present time, London, with a high interest rate, is unable to attract our
gold, while we with comparatively low rates are receiving from London more than
we want.
Abnormal conditions have for the present destroyed the power of interest
rates to direct the flow of gold, but were we an international loan market on a scal^
Digitized by
Google
Financial Centers 277
demanded, we would energetically seek a way to oyeroome those conditions.
Eventually the normal laws of economics will again assert themselves and then
will come a fairer test of our position. If then we can meet the situation in a big
way, and conduct our affairs in a manner in keeping with a world outlook, it ought
to be possible for Wall Street at least to share with Lombard Street the financial
premiership of the world, and the responsibilities that go with it.
In conclusion, I am of the opinion that the financial center of
the world will always remain in Europe, if only for geographical
and national reasons, but there is need and room for another strong
financial center in addition to London and it would always be de-
sirable that such an alternative center should not be located in
Europe, as the present European crisis has amply demonstrated.
New York is already the financial center of the new world;
she should strengthen and broaden her claim to this position and,
as a coadjutor, reUeve and assist London in her great responsibiUty
as the world center. In the reconstruction that must follow the
close of the war Great Britain and the United States will undoubt-
edly play a great part and London and New York will find it more
and more necessary to codperate in the performance of their several
functions. London is ready now. When the time comes will New
York be equally prepared and able to do her share?
New York will doubtless benefit permanently from the ad-
vantages and experience gained during the war. Great Britain will
profit also from the intimate intercourse with France, Italy and
Russia, likely to result from the war which will undoubtedly tend
to reestablish, if not strengthen London in her former position.
Great Britain has financed her Allies generously through the war and
will not only have these large amounts refunded to her in due course
but will receive collateral advantages which should more than offset
the business lost to New York.
The conditions, however, that will obtain after the war are too
much a matter of conjecture at the present stage of the conflict to
warrant an opinion of any value. No one knows how or when the
war will end and the whole world, including the United States, may
yet be involved.
Digitized by
Google
OUR GOLD RESERVES AFTER THE WAR
By Frank A. Vandbrmp,
President, National City Bank, New York City.
In these modem times the relationship of values the world
around is in terms of gold. The standard of value, outside of China
and a few unimportant countries, is gold, and local currencies are
based upon gold. Even where the domestic currencies are tempo-
rarily of paper the relationship of this paper to gold is reckoned
upon in all business transactions with the outside world. As soon
as the war is over all countries involved in it which have ambitions
in foreign trade may be expected to bring the relationship between
their paper currencies and gold back to normal at the earliest pos-
sible date, by reducing the issues of paper money and by increasing
their reserve of the standard metal. Fluctuations in the value of a
domestic currency will be an element of uncertainty, and therefore,
a handicap, in all business transactions with other countries.
With the domestic currency based upon gold resenres, it is
obvious that the entire credit system of each country is based upon
those reserves. Bank deposits, bank loans, commercial credits and
obligations of every character rest at last upon the gold reserves, and
there must be some reasonable relationship between the volume of
current credit and the available stock of gold.
The Great Significance op Gold
Gold is the form of property by which the balances accruing in
the trade and financial relations of nations are finally settled, and
the effect of a flow of gold from one country to another has become
familiar to all students of finance. When the balance of payments
is against a country and gold leaves it in settlement, the effect is to
reduce the base or foundation upon which the structure of credit m
that country rests, and prudence requires that the volume of credit
be accordingly reduced or held in check. Small movements of gold,
evidently due to seasonal states of trade or other temporary condi-
tions, may be negligible, but an outflow of gold exceeding normal
proportions will receive the careful attention of financiers and busi-
278
Digitized by
Google
Gold Reserves after the War 279
ness men. It is sjrmptomatic of unhealthy conditions. It may be
that trade has lost its natural balance, that exports are falling off or
imports increasing in an abnormal degree; or it may be that the
securities of that country are being sent home, either because they
have lost favor abroad or because other countries have an emergency
need for gold to support their own credit. In any event, if gold is
steadily exported from a country there must be, eventually, a cur-
tailment of credit in that country, and higher interest charges as a
result. On the other hand, a country which is receiving additions
to its gold reserves is in position to enlarge its fabric of credit, and
that usually results. With increasing reserves the banks lower
interest rates, and encourage borrowers. Enterprise is stimulated,
new undertakings are begun, labor and materials are in demand and
what is known as a period of expansion is thus inaugurated as a
direct result of the inflow of gold.
These conditions react from one country to another, and tend
in normal times to maintain an international equilibrium. Thus,
in a country which is receiving gold there will be a stimulus to indus-
trial expansion, increased consumption of goods and materials and
higher prices, while in the country which is losing gold there is an
influence for the curtailment of consumption and for lower prices.
The former country will naturally import more and export less,
while in the latter country, these tendencies will be reversed, until
the gold movement turns over and flows the other way.
Controlling Gold Movement Through the Discount Rate
All phases of this subject have been long under observation
abroad, and particularly in London, which has been for many years
the most important international money-market. The Bank of
Elngland, as the custodian of the gold reserve of that market, has had
more experience with this problem than any other institution, and
long ago developed a scientific policy of action now confirmed and
adopted by financial authorities generally. It has been demon-
strated that under ordinary conditions the gold reserve can be con-
trolled by the discount rate. A rising rate has a tendency to curtail
borrowing, and bring about a reduction of loans, with the result that
money is paid into the bank on balance. On the other hand, lower-
ing the discount rate encourages borrowing which increases deposits
and lowers the reserve percentage even though the reserves are not
Digitized by
Google
280 The Annals of the American Academy
actually reduced. There is likely, ho^never, to be a double efifect,
for when the borrowed credit is drawn upon the bank will probably
lose money on balance.
It will be seen that'an intelligent^control of the discount rate
accomplishes the same result that is eventually worked out blindly
if no management of the gold movement is attempted. If the cen-
tral banking institution permits a growing inflation of credit and a
loss of reserves, that movement will go on until a crisis is reached,
when the bank, having reached the limit of prudence, will be forced
to suddenly raise its discount rate or refuse discounts entirely. This
action taken abruptly gives a shock to credit and may precipitate a
panic. It happened repeatedly in the history of the Bank of Eng-
land until gradually the policy of foresight and control was adopted.
As credits expanded, or reserves diminished, the bank raised the
discount rate, thus discouraging the tendency and keeping the situa-
tion in hand. In short, instead of having changes in the discount
rate follow the inflation of credit and loss of reserves as a result, the
latter-day policy makes use of the discount rate, to guide the money-
market, check undue inflation and prevent loss of reserves.
The Bank op England's Use of the Discount Rate
The principles involved in the use of the discount rate were
strikingly illustrated in the policy of the Bank of England in 1907,
when a banking panic prevailed in the United States. The banking
system of the United States at that time was without means of meet-
ing a sudden and general demand for cash, except by importing gold.
The interior banks drew heavily upon New York and other financial
centers, and the banks at these centers made every effort to procure
gold abroad, and particularly from London. Our grain, cotton,
meats and other products were exported as rapidly as possible, our
securities which had standing in foreign markets were sold at bargain
prices, and our credit was used freely for short loans. We were
literally buying gold as a manufacturer might buy coal in a time of
fuel famine to keep his factory running. We imported about $100,-
000,000 of gold in two months, and four-fifths of it came from the
Bank of England. It was impossible for the bank to stop the flow
by any ordinary means. It raised the rate of discoxmt to 7 per cent
without affecting the outward movement to the United States,
because the inducements offered here far outweighed that imusual
Digitized by
Google
Gold Reserves after the War 281
charge. But while the rate did not stop the outward flow, it started
an inward flow to the bank which practically offset the former move-
ment. The people who wanted to pick up bargains in the United
States continued to borrow, but other people who had no relations
with the United States, and who did not care to speculate in a time
of alarm, were influenced by the high rate to pay their obligations
at the bank as fast as they could do so. Ordinary business was cur-
tailed, men refrained from purchases and investments which they
otherwise would have made, and postponed new enterprises to more
auspicious times. Money flowed into the bank from the provinces
in payment of loans, and, what was more important, from all over
Europe. London is a great money market; people go there from all
parts of the world, both to lend and borrow. When its bank rate
went up to 7 per cent the borrowers upon the continent and in other
quarters hustled about at home and raised money to pay off London,
while at the same time lenders hiuried money to London to take
advantage of the high rate. And so it came about that when the
stress was over, and after London had shipped $86,000,000 of gold
to New York, the Bank of England had a higher percentage of gold
reserve than when the movement began.
Control Through a Premium upon Gold
Such is the recognized importance of the discount rate as a means
of controlling the movements of gold, that the Bank of England fre-
quently enters the London money-market as a borrower, competing
with the public, in order to raise the outside rate to the level of the
bank rate, thus getting the influence of the entire market against a
further expansion of credit, with consequent withdrawals of gold.
The discount rate is not the only means adopted to discourage
withdrawals of gold. The Bank of France has followed the policy
of charging a premium upon gold. Under the old bimetallic system
which is still maintained in France, except that the coinage of full-
tender pieces has been discontinued, the five franc pieces are still a
legal tender, and the bank has the option of paying its obligations in
silver. If it desires to discourage the exportation of gold, it exercises
this option or imposes a small charge upon gold. This charge has
the effect of an ad valorem tariff upon importations, and affects all
foreign payments in like manner. The effect is less objectionable
in France than it would be if France were not a creditor coimtry.
Digitized by
Google
282 The Annals of the American Academy
Foreign capital is seldom employed in France, and, therefore, has
not been called upon to pay this premiiun, but the charge has prob-
ably operated to the advantage of London and the prejudice of
Paris, as a world's money market. Gold will not flow freely to any
market from which it cannot be withdrawn with equal freedom.
Lack op Control in the United States
In years past there has been little appreciation in the United
States of the importance of having a banking organization able to
cope with this complex problem of the exchanges. We have had a
thoroughly decentralized banking system, composed of a great num-
ber of independent institutions, organized under different state laws
as well as under the national act. There has been no definite respon-
sibility anywhere for the regulation of the interest rate, or for thesup-
ply of gold required in the settlement of foreign balances. By rea-
son of being located at the chief port and financial center, the New
York banks have had the most intimate relations to the problem,
but the competitive conditions existing between New York and
other important cities, and between national banks, state banks
and trust companies in New York, and the absence of any special
powers for dealing with the problems, have all hampered the ability
of the New York banks to deal with the situation. As a result
there has been but little of that management or control which the
Bank of England, and the other central banks of Europe, have
continually exercised over the exchanges. We have drifted, and
suffered from the extremes of unregulated credit — expansion and
the ebb and flow of gold, just as other countries suffered before they
learned the secret of control by means of the discoimt rate. In a
period of prosperity there was no responsible authority to utter a
warning or to set a limit upon the expansion of credit, and ex-
pansion usually went on until the structure became top-heavy,
and then an outward movement of gold set in and weakened the
foimdation until a collapse resulted, followed by a period of
depression.
There were always bankers and economists in the United States
who imderstood the weakness of our banking situation, but they
were without sufiicient influence to change it. In fact it has never
been considered the proper thing in the United States to take the
advice of bankers about banking legislation. Finally, however, the
Digitized by
Google
Gold Reserves after the War 283
panic of 1907 aroused a general public interest in the subject, and the
work of the National Monetary Commission in its foreign inquiry
made the country fairly well familiar with the fundamental prin-
ciples which had been demonstrated.
The result was the establishment of the federal reserve system
in which all national banks and a few state institutions are included.
This gives an organization and cohesion to our banking system
which was lacking before. Final reserves have been set aside which
are made available to the member banks by means of rediscounts,
and the rate for these rediscounts is under the control of the Federal
Reserve Board. Although the system of twelve reserve banks is
unusual and complex, the principle sought to be put into effect is the
same as we see demonstrated in Europe. This system depends for
its effectiveness upon the authority and attitude of the Federal
Reserve Board. The sense of responsibility to the whole country
will be hard to maintain in twelve individual institutions. There is
danger that the local or district view will become habitual with the
managements, that they will tend to forget their relationship to the
system, and that, isolated as it is from actual operations, the Board
at Washington may relax its control over them. The burden of
dealing with the foreign exchanges, and of supplying gold for the
settlement of foreign balances, will fall almost entirely upon the New
York bank, but the balances themselves will be for account of the
whole country, and the policies for controlling the situation must be
participated in by all the banks. It remains to be seen whether this
relationship is clearly comprehended, and whether each of the twelve
institutions will readily make the sacrifice of revenues to itself, and
the curtailment of accommodations to its locality, which at times
will be necessary if the system is to do its work effectively. The
New York bank has been limited in territory to New York state and
snaall sections of Connecticut and New Jersey for its resources, but
it must handle the international relations of the United States.
Our Present Activity Abnormal
The Federal Reserve Board's control of rediscount rates, if
effectively used, will do much to prevent the undue expansion of
credit which usually precedes and promotes an outward movement
of gold. But the exportation of gold may result from other causes.
The great industrial activity which now exists in the United States
Digitized by
Google
284 Thb Annals of thb American Acadbmit
is not due to credit expansion, although there is constant danger
that undue credit expansion may result from it. Conditions out-
side of ourselves are responsible for this activity. An abnormal and
temporary foreign demand is driving our industries to their capacity,
and a great trade balance in our favor is pouring hundreds of millions
of gold into our vaults. This influx of gold and imperative demand
for our products is radically affecting industrial conditions m this
country in a manner unfavorable to our trade position after the war.
In normal times a state of unusual industrial activity here will bring
himdreds of thousands of laborers from abroad. The productive
capacity of the country is thus increased and the effect of the unusual
demand for labor is diffused abroad as well as at home. But at this
time little or no new labor can be had from abroad, and the efforts
to put this additional amount of capital into use are expended upon
the existing labor supply. That supply being limited, and the
amount of capital seeking to use labor rapidly increasing, the result
is that industries are bidding against industries, and employers
against employers, and wages are advancing to unheard of figures.
We have had boom periods in the United States before, but
never one when conditions were so abnormal as now. We are per-
fectly aware that they are abnormal, and cannot be maintained
when the war is over, and yet we are daily creating new relation-
ships upon this basis which cannot be readily changed. We know
that when all the men engaged in war and upon war work go back
to producing peace products the prices of all such goods will fall,
and the entire fabric of costs will have to be made over. Experience
teaches that costs can only be reorganized on a lower basis under pres-
sure, the pressure of competitors who are taking the market. We
have to expect, therefore, after the war that we will be undersold
not only abroad but at home and that a balance of trade upon
merchandise account will be created against us. If it is not so it
will be because we show a facility in readjustment which no people
have ever shown before, and the only hope of this lies in sounding
the warning continuously.
Foreign Demands for Our Gold
Furthermore, at the end of the war there will be pressing need
for capital in all the countries that have gone through the strain of
war, and for gold for use as the basis of credit. Every practicable
Digitized by
Google
Gold Reserves after the War 285
effort will be made to attract gold. If present efforts to induce the
holders of American securities to part with them do not clear the
strong boxes, further efforts may then be made. Moreover, our
government is ^ving assistance, by making our income taxes apply
to the foreign holders of our securities, something we have never
done in the past. At present rates of taxation everywhere few
people will care to be subject to taxes imder two governments.
There has never been a heavy movement of gold to this coun-
try that was not followed by a return movement, and it cannot be
expected that this extraordinary occasion will prove an exception.
The United States is acquiring far more than its share of the world's
gold, measured by any standard of distribution that has been known
in the past.
How TO Control Gold Exports
When the return movement appears there will be means of
mitigating its force, in the foreign loans that have been placed in this
country. These obligations of foreign governments, banks, corpo-
rations and individuals, falling due in one and two years as the^
mature, will count in our favor as so much gold. Evidently they
can be allowed to nm off with less disturbance than would follow the
withdrawal of gold from our bank reserves after it has been made the
basis of domestic credit. These foreign loans will be our first line
of defence, and they will be an important bulwark. After them will
come the gold holdings of the Federal Reserve Bank of New York,
and as these shrink, the supreme test of the federal reserve system
will come. Will it meet the crisis as twelve banks, or as one organi-
zation? The Federal Reserve Board has authority to call upon the
other reserve banks to rediscount paper for the New York banks,
which would effect a transfer of gold, and there is every reason to
believe that the Board as now constituted, will direct this to be done.
Even so, however, the available gold resources of the system are
not what they should be. The total stock of gold in the country is
approximately $2,650,000,000, but the holdings of the twelve reserve
banks are only $536,000,000. The United States Treasury holds
$1,466,000,000 of gold against which certificates for an equal amount
are outstanding. Excepting what is in the federal reserve banks,
and the banks of the central cities, this gold is practically out of
reach. It is a part of our wealth but it does not serve the purpose
Digitized by
Google
286 The Annals op the American Academy
of a gold reserve. The efficiency of gold is largely lost when it is
used as ordinary till money, or carried about in the pockets of the
people.
Influence op the Federal Reserve System
The Federal Reserve Board made an effort at the last session
of Congress to obtain greater freedom for the reserve banks in acquir-
ing gold, and its recommendations were logical and apparently con-
clusive, but timidity and a mistaken conservatism defeated the
proposals. The system will not be as strong as it should be, to sup-
port the business interests of the United States, until means are
adopted to place a larger proportion of the gold stock of the country
where it is available for use in time of need.
There has been some ill-advised criticism of the reserve banks
for not having made a better showing in the matter of earnings. So
far as this criticism is directed at the costly policy of creating twelve
banks when one-half that number would have answered the essen-
tial purposes of this S3rstem, there is a basis for them, but it must be
6orne in mind that when these banks extend themselves freely in
normal times they lose the power to control the situation when a
crisis comes, and this is the occasion for which they were created.
Outside of the foreign loans now^beingmade in the United States
we have no body of foreign indebtedness here upon which our domes-
tic interest rates can be made effective in a crisis. We cannot,
therefore, expect the discoimt rates of our federal reserve banks to
have the same influence upon an outward gold movement as the
Bank of England is able to exert in the London market. Our rates
can be effective only upon our own borrowings, and in keeping down
the volume of credits which may be based upon this stock of gold
upon which we have but a precarious hold. As yet the rates of the
reserve banks have been scarcely a factor in the market, owing to
the abundance of cheap money, but their function is not to make
credit cheap, but to keep credit in reserve and have on hand a stock
of gold which can be released for export with a minimum disturbance
to credit conditions in this coimtry.
Digitized by
Google
AMERICA'S ABILITY TO MAKE FOREIGN
INVESTMENTS
By Hon. George E. Roberts,
National City Bank, New York.
Looking forward to the period following the war, there is
every reason to believe that a great demand for capital will exist
the world over. Normal development is now in check, in the
countries at war and also in the neutral countries, but the forces
that make for progress, although under restraint, are gathering
weight and as soon as the war is over will make themselves felt.
Population is increasing even in the warring countries. The stress
of war conditions is favorable to the development of initiative and
enterprise. When the war is over, there will be much lost time to
be made up, and much planning to increase the productiveness of
industry in all countries.
What part will the United States be able to play in this situa-
tion? We know that in the past it has been a borrowing country,
a field of investment for the old countries of Europe. No other
country has grown so rapidly in population, and this growth, while
stimulated by the demands of capital striving to take advantage
of the opportunities present here, has in turn created an enormous
demand for capital to build the cities and the railways, and provide
the accommodations and faciUties required by a population of
100,000,000 people. The result has been that nowhere else have
the rewards of capital been so great as here, and there has been
little inducement for American investors to go away from home.
This outstanding fact of our history naturally prompts the ques-
tion whether after the war America will have any capital to spare
for investment in other countries, under the normal conditions
which prevail in times of peace.
Growth of Wealth in the United States
It is evident that this question is to be considered only as call-
ing for a comparison between the inducements that will be offered by
foreign opportunities and those which will be open at home. The
287
Digitized by
Google
288 Thb Annals of the American Academy
United States is undoubtedly accumulating wealth and increasing
its means of producing wealth at a rate never equalled by any other
country. The Census Bureau in its volumes upon Wealth, Debt
and Taxation, has estimated the total wealth of this country in 1900
at $88,517,306,776, in 1904 at $107,104,193,410, and in 1912 at
$187,739,071,090. The increase in the eight years from 1904 to 1912
was about $80,000,000,000 which alone is approximately equal to
the total estimated wealth of either Germany or Great Britain. It
is true that this includes real estate values, but the estimates of the
wealth of the other countries also include real estate. Furthermore,
an increase in the market value of land, while indeed not to be
reckoned as a productive factor in the same sense as an increase in
primary horse-power, nevertheless must be taken account of as
increasing the wealth of the individual owners. It gives them the
position of capitalists, places them in command of piu'chasing
power, and makes them a more important factor in the financial
world. A large part of the land values of the country are actually
used as the basis of credit, and as the land becomes more valuable
the indebtedness upon it increases, showing that this increment is
not idle value but is put to effective use. The man who owns a
valuable piece of ground can, by virtue of its value, buy materials,
hire labor, erect buildings upon it and make it productive.
Moreover, the census figures for the value of real estate include
all of the values that have been added to the bare land in buildings
and improvements of every kind. The new buildings erected in
cities where permits are required by the authorities have involved,
in recent years, expenditures amoimting to about $1,000,000,000
per year, as shown by compilations made by the New York Com-
merdal and Financial Chronicle. These include returns for about
250 cities or an average of about 5 for each state. Besides these,
there are the buildings erected in other cities, towns and rural
communities and upon farms, and the expenditiu'es upon land to
make it more productive, such as clearing, draining, fencing, road-
building, cultivation of orchards, etc.
The increased value assigned to " real estate " for the eight years
1904-1912 was $48,334,920,444, or about $6,000,000,000 per year.
We may estimate that one-third of this, or $2,000,000,000, would
represent outlays for buildings and improvements. Upon farms
the improvements are relatively less, but in cities the proportion
Digitized by
Google
America's Ability to Make Foreign Investments 289
is greater than this. In the four years from 1900 to 1904 the in-
crease in the value of all real estate was found to be $9,803,844,463,
or an average gain of $2,450,000,000 per year.
Outside of all property classed as "real estate" by the Census
authorities, the country's gain in wealth from 1900 to 1904 was
$8,783,042,172 and from 1904 to 1912, it was $32,300,957,236. The
average per annum for the first period was $2,195,760,543, and for
the second period, $4,037,619,654, certainly a remarkable showing.
If the estimate of one third be accepted as representing the propor-
tion of physical betterments in the total gain in real estate values,
the aggregate of new capital created would be over $6,000,000,000
per annum for the period. This is net accumulation, as shown by
the Census Bureau's calculation of values existing at the dates
named, and not counting the increment upon bare land.
This Increase Is Being Accelerated
As these figures represent the average gain per annum of the
period 1904-1912, and as such gains are cumulative, the profits of
one year increasing the capital of subsequent years, it follows that
the gains of the year 1912 were probably considerably more than
the above averages and that by this time the annual gains are more
than in 1912. There are no general census figures upon wealth
later than these for 1912, but a census of manufactures was taken
as of December 31, 1914, the results of which have been in part
made public. It shows an increase of capital invested in manu-
factures during the five year period from 1909 to 1914 of 23.7 per
cent, which is a lower percentage of increase than was made from
1904 to 1909, but calculated, of course, upon a higher base. By the
end of 1916 two years more of progress will have elapsed, and the
increase of productive wealth in these two years no doubt has been
greater than in any other two years of our history. It is safe to say
that the net gains of wealth in the United States are now normally
not less than $7,500,000,000 per annum, not including the enhance-
ment of land values, but including the fixed improvements upon
land. With the activity prevailing in 1916, the enormous excess
of exports over imports, and the very complete employment of our
people and our industries, the net gains of this year must be con-
siderably in excess of this amount.
Dr. Willford I. King, of the University of Wisconsin, in his care-
Digitized by
Google
290 The Annals op the American Academy
ful discussion of the subject, estimated, on the basis of census re-
ports, that in 1890 the gross income of the people of the United
States was $12,082,000,000; in 1900, $17,965,000,000, and in 1910,
$30,530,000,000. These increases were due in part to rising prices,
but the physical equipment for production has been enlarged and
improved very rapidly.
These are large figures in comparison with the estimates for
other countries. The gross annual income of Great Britain was
estimated before the war at about $12,000,000,000, and the annual
savings at about $2,000,000,000. Dr. Karl Helfiferich, in his study
of the wealth and production of Germany, made in 1913, estimated
the gross income of that country at 40,000,000,000 marks, or about
$10,000,000,000, and the annual savings, exclusive of imeamed
increment, at 8,000,000,000 to 8,500,000,000 marks, or $2,000,-
000,000 to $2,125,000,000. He estimated the total wealth of Ger-
many at that time at $75,000,000,000, as compared with about
$50,000,000,000 in 1895.
Can the United States Lend Abroad
It remains to be considered how much of their income the
people of the United States can afford to invest outside of this
country. This is still a developing country; its population will
continue to grow rapidly, and this will make it necessary for a large
share of its savings to be devoted to new enterprises at home.
There is not, however, the same opportunity to do primary develop-
ment here that there is in many other countries, and the question
of how much we will invest abroad will depend for answer largely
upon our inclinations. That we can spare an important amount
if we want to do so is evident from what has been done since the
outbreak of the war.
The merchandise trade balance in favor of the United States in
the two years ended June 30, 1916, including silver, was $3,277,-
600,531. Foreign balances in American banks are much above
normal, perhaps $300,000,000 larger. There would be, then,
$3,577,600,531 in the aggregate for which the rest of the world has
had, somehow, to make settlement with the United States.
The net importations of gold for the two years were $403,761,-
219. The balance against us on accoimt of interest and dividends has
been materially reduced since the war began, but probably has been
Digitized by
Google
Ambbica's Abilitt to Make Foreign Investments 291
as much as $300,000,000 in the two years. It has been understood
in the past that this income has been largely reinvested here.
There have been special inducements to take it home diuing these
years, but probably one third has remained, including what has
been invested here in the foreign government offerings.
Foreign shipping charges upon American imports were esti-
mated by Sir George Paish a few years ago at $26,000,000 per year,
after making allowance for what foreigners pay to American
shipping, and for the expenditures of foreign shipping in American
ports. They have been greater in the last two years, probably
double.
Remittances for gifts, savings and investments abroad were
estimated by competent authorities before the war at $160,000,000
per year. They have been reduce4, but probably have been
$200,000,000 in the two years.
The expenses of American travelers, normally a large sum, may
be estimated as coimterbalanced by foreigners now living or travel-
ing in the United States. These offsets, including gold, aggregate
$903,761,219, and when they are deducted from the trade balance,
leave about $2,700,000,000. According to the calculation this is
the amoimt which must have been covered by loans and the return
of American securities. The net amount of public loans to July
1, 1916, was about $1,100,000,000, and this would leave $1,600,-
000,000 to represent securities.
Foreign Investments Hebe
The most definite information about foreign holdings of Amer-
ican securities and the amount returned to this country since the war
began has been gathered by Mr. L. F. Loree, who addressed an in-
quiry to all railway companies with more than one hundred miles
of road. The first returns covered the six months from February
1, 1916, to July 31, 1916, during which the foreign holdings of
stocks, bonds and notes were reduced from $2,705,402,963 to
$2,223,670,828, or in the sum of $480,892,135, par value. The
second returns were for the year ended July 31, 1916, and showed
a reduction during the year of $807,881,666, leavmg $1,415,628,563,
par value. He calculated the market value at the latter date as
$1,110,099,090, and the market value of the purchases diuing the
year and a half as $898,390,910. These figures are for railway
Digitized by
Google
292 The Annals of the Amebican Academy
securities only, and do not include any held in this country at the
outbreak of the war in trust for foreign owners, of which there were
undoubtedly a good many. Nor do they include securities upon
which payments were not being made, as ownership was traced
through the income tax records. Moreover, they do not include
the important amoimt of securities, particularly short-time notes
which were paid off or re-purchased in the first six months of
the war.
It has been the opinion of some people in position to be well
informed that the foreign holdings in other American properties
would equal the holdings of railroads, but the' common estimates of
them is not so h-gh. The other holdings would include industrial
securities, public utilities, municipal bonds, mining property, lands
and city property, mortgages, etc. The distribution of public util-
ities, industrials and municipals abroad has no doubt been increasing
rapidly in recent years. These investments, with a few exceptions
like the stock and bonds of the United States Steel Corporation,
would not, however, come home so rapidly as railroads, for the
reason that they have not so ready a sale. They have come back,
however, in important quantities.
All things considered, it is probable that our foreign loans and re-
purchase of American interests during the last two years have been at
the rate of $1,250,000,000 to $1,600,000,000 per year. This has been
imder conditions unusually favorable. The same exports in ordin-
ary times would yield a much smaller trade balance. Our people
would naturally rather buy seasoned American secxirities than they
would foreign corporation issues. We are chiefly interested now,
however, in determining to what extent our people have the ability
to make foreign investments, and at the same time provide for the
normal capital requirements at home. During the first year of the
war, home demands were below normal. In the second year,
owing to the high prices for equipment and construction, materials
and scarcity of labor, they were below what they would be naturally
in such a period of prosperity, but outside of railway enterprises
the record of capital expenditures is high.
Our Growth in Productive Capacity
A large part of the extraordinary earnings of industry in the
last two years has been applied to an enlargement of capacity. This
Digitized by
Google
Amxrica's Abilitt to Makb Fobbiqn Inysstmsnts 293
is particularly tniejas to the steel industry, and in that case is
directly traceable to the war demands, but nearly all lines of pro-
duction have been crowded to capacity and have been putting
profits back into the business. On the whole, despite high costs,
our industrial growth has been kept up to the average of normal
requirements, and doubtless is now exceeding them. Agricultural
production does not keep pace with that of the manufacturing
industries, but in the metals, for example, from the mining of iron,
copper, lead and zinc, up through the conversion of the raw materials
into merchantable products, the organization, plant and equipment
is being rapidly developed to handle a much larger output than
ever before. It is probable that by the time the war is over these
industries will be in shape to supply the normal requirements of
this coimtry in their lines, and also a volmne of product for export
as^great in quantity, if not in price value, as they are exporting now.
There may be some question about our ability to continue
reporting agricultural products at the rate, in value, they have
been going out during the war, but I have confidence that the work
which is being done for the improvement of agricultural lands and
methods will show results in the near future. If our agricultural
exports are not maintained, it will be because a continued expan-
sion of our other industrial interests makes a rapidly growing market
at home.
Undoubtedly there should be very large expenditures upon our
railways in the near future. • A combination of influences in recent
years has caused a decline in the value of railway investments, and
railway faciUties have not kept pace with the growth of traffic.
Ebcpenditures should be made on a large scale, with a view to the
future, including a comprehensive treatment of terminals. The
expenditures upon terminals will probably include large payments
for land, but these do not lock up capital; only the outlays for con-
struction involve the fixing of capital. These, although large,
must be spread over considerable time; when we consider the
enormous amount of work which the leading companies, notably
the Pennsylvania, New York Central and some of the Pacific lines,
have done in the last fifteen years, it does not seem probable that
this record will be surpassed. These roads are not in need of the
same outlays, but even they are crippled for want of a comprehen-
sive system of terminals, including warehousing accommodations.
Digitized by
Google
^94 Ths Annals of the Ambrican Academt
From 1900 to 1914 the capitalisation of American railways,
including debt, increased from $17,136,495,327 to $31,813,842,810,
or at the rate of over $1,000,000,000 per year. All of these securi-
ties did not represent new capital, but in the aggregate they amount
to less than the new capital expended upon the roads in the fourteen
years. The premiums paid upon stock and bond issues, plus the
amount of earnings expended for caiHtal account, would exceed dis-
counts, commissions and ''water." After all of these expenditures,
we have evidence that the foreign holdings of our railway securitieB
one year ago were down to $2,223,500,000 par value.
The highest estimate by any authority upon foreign property
holdings in this country was $6,000,000,000 before the outbr^^ of
the Balkan wars. They have been moving in this direction ever
since, and at this time $3,500,000,000 par value would be a liberal
estimate. It is safe to assume that if the war continues another
year, our loans and investments abroad will equal or exceed foreign
interests in this country. This will mean that there will be no
balance against us on accoimt of interest and dividends.
A Shortage in Labor Supply
The pace at which we can go forward with construction work
in this country is limited by the available labor supply. Our
supply of capital is increasing very much more rapidly than the
supply of labor, and the effect is largely spent in an increase of
wages and prices. When everybody already has employment,
competition among employers attracts labor from one factory to
another, or from one branch of industry to another, but except as
stimulus is given to the introduction of labor-saving methods, and
as labor is concentrated where the returns are highest, production
is not increased. The industries of the cities have been attracting
labor from the farms with the result that the cost of food is made
higher for all. Obviously there must be a limit to this movement
within a single coimtry. The competitive field will broaden out
to include other countries. As the cost of production rises here,
the inducements for capital to find employment in other countries
will be greater. If there is not labor enough here to man the new
capital supplies, there is Russia where a vast supply of labor exists
with a scarcity of capital; and China, where the situation is even
more one-sided. The economic gains from the use of capital usually
Digitized by
Google
America's Ability to Make Foreign Investments 295
diminish with the higher development of industry, because the
fundamental changes come first; they accomplish more at a stroke
than do the improvements upon them. It is only as capital becomes
cheap that it pays to lower the railway grades and straighten the
curves as we have been doing in the United States since 1898.
These are the considerations that will determine whether we shall
go on making vast capital investments to accomplish small savings
at home, or send a share of our new accumulations to the more
backward countries, where the economic results are greater. In
the United States, according to the census of manufactures for
1914, the total number of persons engaged in manufactures was
8,265,426, and the total amount of capital employed was $22,790,-
880,000 or $2,787 to each person. No other country has such a
capital equipment; no other farmers in the world have as efficient
implements to work with as the farmers of the United States. We
have an all around equipment superior to that of any other country.
There is a sense, of course, in which we can always use all of
our capital at home. This will be so if we are indifferent to the
rate of return. If the returns are as good at home as abroad, no-
body will advise going abroad. But with capital increasing faster
than population, the law of diminishing returns is constantly opera-
tive, and the accumulations available for investment will decline
until they are in equilibrium with the home demand. On the other
hand, a people who go abroad for advantageous investments, and
give a hand in developing the efficiency and wealth of other peoples,
will find their own industries stimulated, and actually have more
capital to invest both at home and abroad.
Conclusions
I would repeat, then, that this question, whether we are in
position to make extensive investments abroad is one of comparative
opportunities and cosmopolitan education. We have ample capital
to allow of our making extensive investments abroad. Our own
capital equipment is greater per head than that of any other country,
and naturally there are larger profits to be made in building up the
equipment of others than in increasing our own. The chief obstacle
to our making investmenjbs abroad is the lack of experience in foreign
operations. We are not accustomed to distant investments. Even
at home our investments are chiefly local. We have spread out
Digitized by
Google
296 The Annals of thb Amsbican Acadbmt
over a great country, every part of it has been developing, and
there have been many opportunities for local investment.
Land with the improvements upon it has furnished the prin-
cipal outlet for savings. The average investor in this country likes
to be able to walk around and survey his investment occasionally.
Considering the wealth of the country, the distribution of stocks
and bonds among the people is not what it should be. Our finan-
cial fabric would be safer if bank deposits were less and the invest-
ments held by the banks were held by the people direct, but this
statement must be qualified by adding, provided the people are
qualified to select sound securities. An enormous amount of
capital is lost annually in wildcat and blue sky schemes, because
people are impatient of small returns and unable to discriminate
among the investments offered. The popularity of land invest-
ments frequently causes inflated prices, with losses resulting. This
country's ability to absorb securities would be enormous if the great
body of the people was educated to that class of investments, and
acquired the habit of bujring them and saving for them.
Our ability to increase our foreign trade depends largely upon
our willingness to assist our would-be foreign customers in their
development. If we will build railways in South America, or China,
and take stocks or bonds in payment, we can have all of that kind
of work we want to do for years to come, and have the subsequent
orders for locomotives, cars, and other equipment and supplies.
But the contractors and manufacturers cannot take these securities
in payment for their work. They must have money to pay for the
labor and other costs. The American investor must do for our
manufacturers what British and German investors have done for
the manufacturers of those countries; they must accustom them-
selves to foreign enterprises and make a world's market for securi-
ties.
It goes without saying that this cannot be done in a day, or a
year. Nobody would advise the American investor to rush out,
firedtfby a patriotic impulse, and buy the first foreign bond that is
offered. The business must be handled with exceeding care, and
only upon personal knowledge or through experienced and respon-
sible agencies. There is not the slightest danger that the business
will grow so fast as to restrict necessary American investments.
There is no probability that our foreign investments will increase
Digitized by
Google
Ahebica's Ability to Maks Fobsign Investmbntb 297
fast enough to take up even ten per cent of our increasing capital
accumulations. Argentina has been growing faster than all of the
rest of South America, and total capital investments in Argentine
railways since 1900 have averaged only $48,000,000 per year. If
Mexico was a safe field for investment, capital would flow over the
border like a flood, and its movement would give such a stimulus
there and here, and the two countries would react upon each other
so rapidly, that we would never miss what we sent. Cuba, under
the benign influence of the Piatt amendment, is receiving such a
flow, and the benefits are mutual. The difference in capital accu-
mulations when our industries are driven to capacity as at present,
compared with the gains of ordinary times, would be enough to
put us in the first rank of lending nations.
Digitized by
Google
THE RELATION OF GOVERNMENT TO FOREIGN
INVESTMENT
By Huntington Wilson,
Formerly Assistant Secretary of State.
The relation of government to foreign investment by its citi-
zens is one of correlative obligation and authority, general obliga-
tion to protect the citizens' rights, and authority to control the
citizens' course by giving great or little protection, or none at all.
In the discharge of its obligation the duty of government is to
measure the protection to be given any investment first of all by
the advantage of that investment to the nation; and secondarily to
mete out that protection in proportion to the right of the investor
to expect protection.
The authority correlated with the obligation to protect is that
involved in the power to vary, in accordance with the criteria above
cited, the degree of protection, if any, to be afforded in the case of
a given investment. Without any legislation on the subject, the
government's authority is automatically of determinative poten-
tiality in this question of foreign investment in all countries except
those of the highest credit and stability. And even in the case of
such countries, an adverse intimation from Washington would tend
to have a blighting moral effect upon a proposed investment of
American capital.
From the days of the struggles of Phoenicians, Carthaginians,
Greeks and Romans in the Mediterranean down to today, it has been
power, and above all sea power, which alone has protected foreign
trade. Even in these allegedly softer times, we must admit, now at
least, that it is only under the shadow of the great powers, those
prepared or potentially able to use great power, that small countries
like Belgium; or even relatively weak, although great, countries can,
as independent nations, carry on a big foreign trade. The govern-
mental relation to foreign investment in its authority and obliga-
tions presupposes and demands power.
298
Digitized by
Google
Government and Foreion Investment 299
The Relation of the Government to Foreign Enterprise
For the purposes of this discussion, we shall do well to consider
the relation of government to foreign trade and to all sorts of foreign
enterprises, as well as to investment in the narrower sense of shares
and bonds, because the same principles apply to all alike. It may
at first sight seem an extreme view, but one may go farther and
apply similar general principles even to the relation of government
to the presence of its citizens to reside for any purpose in any part
of the world.
The relation we are considering is one to be dealt with by the
diplomatic department. Like other questions of real and statesman-
like diplomacy, this question derives its importance and its charm
and interest from its farspread ramifications and concatenations.
It carries into the far future and it brings many sciences out of the
"conference stage'' to an entirely practical application in every day
international business. Here, as elsewhere, diplomacy becomes
everything that concerns one's country, fostered through its foreign
relations.
During the four years preceding the present administration,
when Mr. Knox, as Secretary of State, gave a new definiteness,
intelligibility and practicalness to American diplomacy, the policy
toward foreign investment was epitomized thus: "The Depart-
ment (of State) will give all proper support to legitimate and bene-
ficial American enterprises in foreign countries." This formula was
the invariable answer to the prudent investor desiring to know in
advance what would be done for him if, through no fault of his own,
he got into trouble, due, say, to oppression or failure to protect on
the part of some foreign government.
Now the government's obligation to protect a particular Ameri-
can interest abroad must, in its discharge, be measured and meted
out, as has been said, in proportion to the benefit of that particular
interest to the nation as a whole. Whatever influence or force the
government may exert in the world is the prestige and power of the
nation. Consider this collective power, moral or physical, as a
great reservoir. The executive branch of our government has con-
stitutional authority to conducfforeign relations untramelled except
by the authority of the Senate when it comes to a treaty, by the
authority of the whole Congress when it comes to an appropriation
of money, 9Jxd in some few other respects. This authority is so
Digitized by
Google
800 Ths Annals of the American Academy
appallingly broad, one may remark, that it becomes of vital neces-
sity that the United States should have fundamentals of foreign
policy that are accepted by the whole nation, to be permanent
bases of action in all specific questions of importance. Otherwise
the American people can be involved by the executive without
referendum in any folly during every four years between presidential
elections. Even party platforms about foreseen questions are no
safeguard, for we see them violated, as in the Panama Canal tolls
question with Great Britain. Now this startling breadth of execu-
tive authority in diplomacy places the executive, as trustee of the
nation's international influence, under obligations of the greatest
solemnity and weight. Therefore how much thought must the
Secretary of State take before turning the tap of the reservoir and
drawing off for the protection of a foreign enterprise a measure of
the national prestige and power entrusted by the people to his care!
"Dollar Diplomacy"
This theme and its illustration by example lead to an exposi-
tion of what has been called "Dollar Diplomacy." It might better
be described as common sense diplomacy, in contradistinction from
the diplomacy of perf unctoriness or that of whimsical sentimentality
from which the United States has suffered so much. It is submitted,
moreover, that one who will carefully study the so-called "Dollar
Diplomacy" will be fully convinced that it was a diplomacy of
common sense in the highest sense of that term, that is, a diplomacy
determined by the application of scientific principles and sound
thinking to plain facts studied and understood as they really are;
a diplomacy preferring to build for the long future, rather than to
dogmatize for the moment's expediency; preferring the truth to a
beautiful idealization not resting upon truth.
Now the national advantage of a foreign investment may con-
sist in (1) political advantage or (2) economic advantage. Service
to humanity is not mentioned separately because charity be^ns at
home; because it is America's first duty to serve America; because
America, as a government, can amply serve humanity in spheres
and in ways in which America also serves itself; and because if it
does that, the service to humanity may be considered by diplomacy,
which is not, by the way, an eleemosynary institution, as merged in
the service of America, that is, in American political advantage.
Digitized by
Google
GOTERNMENT AND FORBIGN IkYESTMBNT 301
Those who dissent from this view and jdeld to our national foible
for grandiloquent sentimentality ought to reflect that a trustee,
however admirable his private charities, would be put in jail if he
used trust funds for benefactions; and that exactly so the American
executive defrauds the nation if he uses its prestige and power in a
diplomacy directed by sentimentality to the service of humanity in
general, instead of a diplomacy seeking the political and economic
advantage of the American taxpayer, the American nation.
Political Advantages of Foreign Investment
Political advantage (1), then, comprises such factors as (a)
strengthening American influence in spheres where it ought to pre-
dominate over any other foreign influence on account of reasons of
fundamental policy, like the Monroe Doctrine, or of military
strategy or of neighborhood. Such a sphere is "Latin America,"
where our interest increases in intensity from a vanishing minimum
at Cape Horn northward to reach its maximum in the zone of the
Caribbean Sea, the neighborhood of the Panama Canal, and in
Mexico. In this category falls also, for example, the discharge of
our historic obligation to Liberia and the preservation of that little
country as a piedrd-terre in Africa, of possible potential value to us
for commerce or for the emigration of African Americans. Such
political advantage ranks highest. Next comes (b) the maintenance
of a traditional position favorable to our trade where trade may go
by political favor, as in the Chinese Empire. Other cases of political
advantage would be (c) the strengthening of our friendship with
other great powers, or (d) with countries where it is wise to preempt
a share in a dawning development, like Turkey, or (e) with coun-
tries whose markets are especially valuable. The cases merge so.
gradually into one another as to make clear cut classification diffi-
cult. This is true also of the division of political from economic
advantage. The idea is that in some cases trade is important
primarily for its political effects through mutual interest and asso-
ciation, while in others a good political relation is valued (if not
for safety and advantage in actual codperation or alliance) for its
tendency to favor trade. The student of American diplomacy will
readily enough place our relations with different countries in appro-
priate categories even without an attempt at nicer classification
th^n is ^ere intimatedf
Digitized by
Google
302 Thb Annals of thb Ambrican Acadbmy
The Economic Adyantaqbs
Inasmuch as political advantage comprises whatever touches
national security, the first place in importance, among economic
advantages, must be given to (a) those investments or enterprises
which most promote vital political interest. Next most important
in economic advantage to the nation and usually identical with (a)
are (b) foreign investments or enterprises which establish perma-
nent and valuable markets for trade while at the same time sub-
serving political strength where the policy of this country demands
that it be strong if we are to have security and tranquility. Other
cases are (c) investments or enterprises which have these same
purely material advantages while carrying with them some political
advantage as well, as, for example, in safeguarding our Chinese
trade; or (d) those investments or enterprises which serve in giving us
a commercial standing in some valuable market where development
may be preempted by others if a footing be not early obtained Qike
Turkey) ; or (e) in cementing friendship with our natural allies, as
Canada and the English speaking peoples generally; or (f) in bring-
ing profit and employment to the American people in general.
In the encouragement of foreign enterprise, diplomacy must
beware of forcing it into spheres where vexations conflict with the
special spheres of influence and interest of other countries outweighs
all commercial gain to be looked for. Every great power has some
"doctrines" that it conceives to be as vital to it as the Monroe
Doctrine is considered here. Korea and Manchuria, Persia and
Siam, come to mind as examples of territory where, while conduct-
ing ordinary trade, we should be wasting our energies to attempt
intensive developments. In return we should gradually crowd out
from our own sphere of special interest foreign interests wherever
they are predominant to an uncomfortable extent and quite beyond
the requirements of an ordinary trade outside the spheres of special
interest of the foreign governments concerned.
Qiiite aside from this common sense circiunscribing of our
spheres of greatest effort to make them comport with the facts of
world politics, it is still true that there is not enough American
capital yet available for foreign investment thoroughly to cover the
duty of consolidating our economic position in the spheres where
that necessity is most obvious. Also, there is a lack of men trained
for this WQr}c ^nd willing to reside upd^r tropic^ rain, amidst moun-
Digitized by
Google
Government and Foreign Investment 303
tain peakB, on broad savannas, and in ancient cities of manners and
ideas quite alien to our own, in order to carry it on. " God gives a
man his relatives; he chooses his friends." A nation is less fortu-
nate. The hazards of history have made us a sphere of vital inter-
est which we have to cultivate, however difficult it be.
Proper Support to Legitimate Enterprisss
Let us return to the formula. "The Department (of State)
will give all proper support to legitimate and beneficial American
enterprises in foreign countries.'' A legitimate enterprise must be
honest and fair, and just to the foreigners concerned. But it may
be legitimate so far as the interested American is concerned and
beneficial to him individually while not beneficial to the nation.
Such would be the case if the dangers of seriously involving this
country in fresh obligations outweighed any national advantage; if
the investment diverted from channels of real national advantage
money that might otherwise serve that advantage either abroad or
at home; or if the project involved offending a valued friend among
the nations. To merit the strongest governmental support, the
foreign investment or enterprise must be really beneficial to the
nation.
In the formula, the phrase "all proper support" is advisedly
indefinite. The Secretary of State must reserve the question of how
much support will be "proper" in a given case, because when the
question is asked it is a hypothetical one; because the question will
be a political question, to be affected, perhaps, by changing condi-
tions; and because, above all, it will be one involving the careful
consideration of subtle measures of national advantage, — ^which is
the first measure, as the citizens' right is the second measure, of
the government's support. The government's obligation is its duty
to the citizen, but the coefficient of that duty is its duty to the
nation.
Proper support is the discharge of the government's obligation,
limited by its variant authority or power, expressed in terms of
action, diplomatic, or in the last resort, warlike. And that proper
support is the duty to the citizen plus or minus the sum of political
and economic national advantage.
This almost mathematical expression of the theory of "Dollar
Diplomacy," to use the approbrious nickname, may assist a clear
Digitized by
Google
304 Ths Annals of ths Amsrioan Acadebtt
understanding of a subject deplorably little considered by our
countrymen. Illustration, however, will perhaps supply vividness
to a dry statement.
Appltinq "Dollar Diplomacy"
Without law, it is of course only where the citizen thinks he
may ultimately need his government's help to "pull his chestnuts
out of the fire" that he can really be controlled. He will buy Anglo-
French bonds in full faith in the honor and stability of Great Britain
and France. If he jumped into a pet private preserve of Great
Britain or France and engaged in enterprises subversive of some
policy of "protection, guidance and control" (to quote the classic
of Japanese aggression in Korea), it is not intended to imply that
his government would abandon him to his fate. It would seek
equitable damages for him, but probably not specific performance.
So it was, in principle, to give an analogous example, when the
American advisers were forced out of Persia by Russia and England.
American influence in Persia was of no account to our national
interest. An equitable adjustment doing justice in a general way
to our citizens, would in such a case be proper policy. If, on the
other hand, those advisers had been in a country where American
influence was of national importance, the American government
must have resisted their dismissal and insisted upon specific per*
formance, although the contracts were no more binding in the one
case than in the other.
The convention with Santo Domingo, the agreement with Cuba
involving certain public works, the convention of 1911 with Hon-
duras (rendered abortive by the vote of an adverse party majority
in the Senate), the old arrangement and convention with Nicaragua,
carried out after a fashion by the present administration, the loan
policy with China, which the present administration promptly
killed and now has made an unsuccessful effort to resuscitate; — all
these involved foreign investments of such great and unquestion-
able national advantage that the government was an active partici-
pant in them; and, by urging on the investors to lend themselves
as instrumentalities of foreign policy, the government clothed those
investors with rights to protection of especial dignity.
Since this is not a discussion of American diplomacy at large,
but is confined, so far as practicable, to one phase of that subject,
Digitized by
Google
Government and Foreign Investment 306
those transactions need not be described at length. Suffice it to
say that the object of the Central American policy was 'Ho substi-
tute dollars for bullets/' to create a material prosperity which
should wean the Central Americans from their usual preoccupation
of revolution. Those countries have great natural wealth. Lack
of capital, lack of skill; and still more the absence of any guarantee
against confiscation and destruction due to the frequent revolutions
when law and order are thrown overboard, prevent the development
of their natural wealth by the people themselves. The same condi-
tions throttle their export trade and destroy their purchasing power.
Attacks upon American interests, and even upon the personal safety
of American planters and others engaged in those countries, call for
our government's protection. The similar jeopardy of European
interests demands, as an unavoidable corollary of the Monroe
Doctrine, the protection of the American government. For the
frequent interventions, moral or physical, thus necessitated, we had
no convenient base. With great pertinacity certain far away Euro-
pean powers, with an effrontery engendered by the inchoate state
of American foreign policy, have been at great pains to poach upon
our preserves in the Caribbean and even on the Isthmus itself. In
Central America, as in Columbia in theory, there was the question
of an alternative inter-oceanic canal route, and that was a basis in-
conveniently open for the pre&nption of a special interest which we
could not afford to see go to others than ourselves. Trade with
Central America was retarded by the lack of railways and by
financial instability. The ports of our southern states, the logical
centers of this rich trade, were being deprived by those adverse
conditions of a profit due them from the facts of geography. It is
true that one or two of the republics of Central America are in far
better condition than the others. To cite a case where the political
and economic advantages are both of the first rank and where, there-
fore, the measure of governmental support should be at its highest,
I will refer to the policy toward Nicaragua, which illustrates only
more completely what should be the spirit of our policy throughout
the zone of the Caribbean. Indeed as now implemented our policy
in effect is the same in principle in Panama, Cuba, Santo Domingo
and Haiti.
Digitized by
Google
306 The Annals of the American Academy
oub pouct towaed nlcabaqua
In Nicaragua a New York bank of the highest standing was
induced to invest in the financial rehabilitation of the country, its
transactions giving it an interest in the railways and in the customs
revenues, which it is always desirable to remove from the reach of
revolutionary depredations. Americans were engaged as financial
advisers, as claims commissioners and in other important capacities.
A convention was signed to give the United States a naval station
in the Gulf of Fonseca, dominating three of the republics. A per-
petual option upon the Nicaraguan canal route was assured us. A
large sum of money was to be advanced Nicaragua for its most
pressing needs, but to be expended only under American supervi-
sion. The full fruition of this plan was postponed by partisan
opposition in the Senate, but it was later taken over, in a general
way, by the present administration and may now, it is hoped, meet
a kinder fate. An outstanding feature of this particular policy is its
effort to help our neighbors to help themselves and to do so in prac-
tical ways, which advance at the same time the very real and quite
legitimate and indeed the inevitable interests of our own country.
The Nicaraguan arrangements are so comprehensive that they
serve to illustrate many phases of the same policy we have seen
pursued in Cuba, in Panama, in Haiti, in Honduras. The public
revenues, especially the customs dues, must be placed out of reach
of the revolutionary robber or the dictator. Capital must be brought
in to establish peaceful husbandry and unmolested industry. Ekiu-
cation and civilization must bring justice. A guiding hand must
prevent foreign entanglements, which, under the Monroe Doctrine,
straightway involve us. Even if the Monroe Doctrine had never
been announced, common prudence would today force upon us the
same policy from our southern border throughout the zone of the
Caribbean.
The Law op National Survival
No far seeing policy, but a natural human movement, accounts
for the vast American investment in Mexico and for the penetration
of thousands and thousands of Americans into Mexican territory as
planters and miners and workers. Here a natural law and a political
theory work together, as is the case whenever the political theory
is sound. There are so many analogies between biology and inter-
Digitized by
Google
GOVERNBCBNT AND FoKEIGN InVBSTBIENT 307
national evolution that one may invoke a sort of '' international
biology." The march of civilization brooks no violation of the law
of the survival of the fittest. Neighboring countries comprise an
environment. The strongest will dominate that environment. Sen-
timental phrases about the sovereignty of weaker countries will no
more permit them to run amuck with impimity than ranting about
individual rights will permit an outrageous citizen to annoy a
municipality and escape the police. The biological law of the ten-
dency to revert to the lower type as the higher attributes are dis-
used is at work among nations; and nature, in its rough method of
uplift, gives sick nations strong neighbors and takes its inexorable
course with private enterprise and diplomacy as its instruments.
And this course is the best in the long nm, for all concerned and for
the world. The murder of two or three German missionaries in
f ar-oflf China, cost China Eaichow and practically a province. The
murder of many Americans in nearby Mexico, where by every law
of neighborhood and policy they had a special right to be and to be
protected, has cost Mexico so far — ^the reading of a gpreat many
commimications. Life is priceless; but what of the investors, great
and small? Here is a case where political and economic advantage
to the nation are at a high level, where the government's obligation
to protect connotes a great degree of support as proper. This is so
because no field of investment is more natural than that over the
border, which fact gives the citizen the right to expect support,
subject to the national interest concerned, in this case a high co-
efficient. If so much be granted, the support, it has been said, is
limited by its (the government's) variant authority or power.
Since no one doubts its power, our government's task then becomes
one of ways and means, with the evident duty of sparing so far as
possible our own blood and treasure. The seizing and holding of
revenues amply to cover all actual damages at once suggests itself
as a practical measure and one readily assimilable with the chastise-
ment and chastening due from us if we do not repudiate the duties
imposed upon us in the nature of things by laws as real as those of
biology.
This digression is perhaps excusable as anticipating the ques-
tion of ways and means of protecting foreign investments and enter-
prises in various cases which differ as widely as the one just described
differs from an economic question with a first-rate power. There,
Digitized by
Google
308 The Annals of the American Academy
t00| we bungle and are unprepared. We lack the weapon of a slid-
ing-scale tariflf, with discretion in the Executive to force justice to
our interests by the threat of effective and prompt retaliation.
The Six-Powbb Loan Policy in China
The six-power loan policy in China is in point upon this ques-
tion of how the government would protect its cithsens' investments.
Aside from the high repute of the Chinese people for conmierciai
morality, what with the turbulent conditions of the Empire and its
distance from us (except in the Philippines) one might say that the
American government could ill afford to undertake to protect its
citizens in great investments there. In China we have a traditional
position of friendly concern and a commerce that once promised
very well. But we have not the political mandate of a cardinal
principle of policy nor the natural mandate of neighborhood as we
have in Mexico.
Mr. Knox "pooled" our interests in vast railway constructions
and currency reform, involving huge investments of capital, with
the interests of five other great powers. In this way, America
secured its share in those lucrative undertakings while its share
of responsibility in protection was only one-sixth of what it other-
wise would have been.
Let us further examine that Chinese policy which the present
administration in a heat of partisanship so ruthlessly reversed, to
learn later, as it did in respect to a number of other matters, that
foreign policy is not domestic politics. We may be our "brother's
keeper" in the case of Mexico. We are certainly not China's
keeper. I do not therefore attach to the purely political aspects of
our Chinese policy quite the same importance that some do. There
is working in the Far East an "international biology" that we have
neither duty nor interest in radically interfering with. Times have
changed since Mr. Hay expressed in idealizations about the "integ-
rity" of China the good will America had always felt for that Em-
pire. However, we wanted and we still want the "open door" of
ordinary equality of commercial opportunity. Before showing how
Mr. Knox's policy served those practical ends, the political aspect
may be touched on, although it is rather one of sentiment than one
related to a policy of the first class that a nation would fight alone
for.
Digitized by
Google
Government and Foreign Investbient 309
Naturally enough, Russia and Japan have designs upon out-
lying Chinese territiory and certain Chinese provinces. Manifestly,
to concatenate great interests of theirs with great interests of four
other powers preferring to preserve China pretty well intact would
tend to create a community of interest in the preservation of China's
integrity. If two men with certain intentions were chained to four
men with other intentions, the course of the group would differ from
the untramelled progress of the first two men. Thus, without any
offensive or radical interference with other nations' natural expan-
sion, the United States, with Great Britain, France and Germany
would have had a share in the first practical arrangement ever sug-
gested to work with any effect along the lines of the rather illusory
declarations of Mr. Hay.
Significance op the Knox Policy toward China
Turning from this now more or less chimerical consideration,
we note the really brilliant statesmanship of Mr. Knox in placing
us, with no danger and with only a small share of responsibility,
and that divided with powerful partners, in a position not only of
dignified equality, but of actual leadership in the large concerns of
the Chinese Empire! To realize how important that r61e was to
our general Chinese trade one must know China. Besides indirect
effects, the Chinese arrangement gave us such economic national
advantages as these: American engineers would be appointed and
American railway materials would be used on our proportional part
of the whole railway system. That meant money to American
industry. As to the bankers' profits in the loans and the ultimate
bondholders' income, they were good for the country too, economi-
cally, but were so clearly a means to a greater end that the bankers
had to be urged into the whole transaction and, during its difficult
course, often urged to remain interested. If this had not been done,
and if American bankers had not responded with a good deal of
patriotism, the biggest transactions ever undertaken in China would
have proceeded without the least participation by the country
which had officially talked most of China's opportunities.
Reference to the direct economic advantages to the nation to
be found in the railway loans to China brings us to a few last com-
ments upon the measures of economic advantage in foreign invest-
ments. Lately a gentleman prominent among those who are at
Digitized by
Google
310 The Annals of the American Academy
last making a campaign for foreign trade spoke of Russia as a great
field for American enterprise and in doing so spoke particularly
of the opportunities for branch factories. Now this question of
''extraterritorial enterprise" is a familiar one to the practical
diplomatist. A branch factory in a foreign country may be very
profitable to the capitalist, and it will be better than nothing in so
far as it brings money into the United States; but it does not directly
pay American wages or enrich and build up American conmiunities,
as do great foreign orders to be executed in American factories at
home. Therefore the foreign branch factory is of relatively slight
national advantage and has relatively small claim on the benevolent
interest of the government. Such, by the way^ would not be the
case of an American factory established where it was especially
desired to strengthen the national influence, particularly if the
factory was not in point-blank competition with a home factory
and in that way deflecting wages from Americans to cheaper foreign
labor on the spot.
The Government Should Guide Foreign Investments
The necessity of having our exports paid for ultimately in goods
or securities (and not always in gold) makes it of interest to the
government to encourage investment in certain countries. We
cannot, for example, buy the coffee crop of all Latin America.
Indeed to encourage here, to deter there, in short, more or less to
guide foreign investment, is a proper function of government.
There should not be obligation without authority. The value of our
home investments rests, in the last resort, upon our municipal law.
The value of our foreign investments rests, in the last resort, upon
our diplomacy, the conduct of our foreign policy. The efficacy of
these depends upon our prestige and our military power, and these
last are the possession of the nation.
There would thus be a logic in a requirement of official permis-
sion to list foreign securities in our markets or to undertake certain
foreign enterprises. For the exercise of this discretion we should
need a little law. It might be vested in a small committee, for
example, of competent officials of the Department of State, of the
Treasury and Federal Reserve Board, with the Chairmen of the
Foreign Relations and Foreign Affairs committees of Congress.
It seems, after the question has been mooted for years, that
Digitized by
Google
GOVEBNMENT AND FOREIGN INVESTMENT 311
we still need a law (perhaps!) to keep the Sherman Anti-Trust law
from frightening our manufacturers and merchants out of their
right to combine to compete with Europe in foreign commerce.
Only now have our laws a little helped our bankers to establish
themselves abroad and to give our trade and enterprise the needed
facilities. We are very backward in foreign affairs, commercial,
financial, and political, and disposed to neglect all that hard ground
that lies between great visions and small details. The end of the
war will leave with the problems of foreign investment and enter-
prise and the government's relation thereto a new urgency. And
laws or no laws, if we are to deal wisely with them, the realities of
American diplomacy must become matters of conscious concern
and intelligent interest to American citizens. Only so can govern-
ment be compelled, under our system, to perform its task of leader-
ship, to make eflfective its proper relation to foreign investment and
enterprise.
Digitized by
Google
DOLLAR DIPLOMACY AND FINANCIAL IMPERIALISM
UNDER THE WILSON ADMINISTRATION
By Fredebic C. Howe,
Ck)mmi88ioner of Immigratioii at the Port of New York.
Dollar diplomacy is the name by which overseas expansion and
financial imperialism have come to be known in the United States.
It was first consciously promoted during the administration of
President Taf t by Secretary of State Knox, who entered into treaty
relationships with Central and South American states for the pro-
motion of American trade and finance to which was lent the
active support of the state department and the diplomatic service.
But dollar diplomacy is only incidentally a trade policy. It is
primarily a financial policy. And if we may judge by the interests
promoting dollar diplomacy in the United States, as well as the
forms which it has assumed in England, France, Germany, Russia
and Japan, trade as such is merely a guise for financial exploitation.
Financial imperialism or dollar diplomacy seems to me to be
the gravest menace before the American people. Underneath other
issues it is the paramount issue in the present campaign. It not
only involves the ending of the splendid isolation of the United
States from questionable relations with other peoples; it involves
the conversion of the state department and the army and navy into
collection and insurance agencies for Wall Street interests, conces-
sion seekers, munition makers, and those who would exploit weaker
peoples under the philanthropic assurance of promoting their
development.
Ruinous Demands in Six Poweb Loan to China
The most noteworthy instance of dollar diplomacy was the
Chinese six power loan; a loan which was negotiated by China
under duress. She needed $30,000,000 for the rehabilitation of her
finances and sought this sum in the financial markets of Europe.
China found all avenues of aid closed against her except certain
favored banks in each country which had the exclusive support of
312
^ Digitized by
Google
Dollar Diplomacy and Financlll Impbrialism 313
the home government. Attempts to make the loan from indepen-
dent bankers on reasonable terms were blocked by the respective
foreign offices. Ultimately China found that she could only borrow
from a syndicate of favored English, German, French, Russian,
American and Japanese bankers, who formed the six power loan.
They exacted ruinous terms. They refused to make a loan of
130,000,000, and insisted (according to the best reports obtainable)
that China should borrow $300,000,000, or ten times what China
needed. Now the financial integrity of the Chinese people is above
question. A loan of $30,000,000 could easily be carried by that
nation. The reason the banks and the countries back of the banks
insisted upon an excessive loan was that it then became possible
to exact conditions which would not have been possible under a loan
of a smaller amount. And these conditions involved the political
integrity of China. They involved an invasion of her sovereignty.
The lending powers insisted that China should turn over the ex-
penditure of the loan and the administration of the salt monopoly
to European control.
A further reason for the big loan and these exactions was the
expectation that China could not meet the interest on such a loan
and that her territory would be divided into spheres of influence in
each of which one of the lending countries could make use of the
closed door to keep out all other nations in the exploitation of the
resources, railroad building and trade of the territory. For the
closed door, the exclusive concession, ending with a protectorate,
is one of the inevitable corollaries of dollar diplomacy. The ex-
ploitation of the resources of the country, as well as the people
themselves, is far more profitable than even the making of loans, no
matter how usurious the terms of the loans may be. And China's
finances were in a bad condition. There was danger that the an-
nual charges of $42,500,000 on the foreign debt would not be met.
In addition indemnity payments were in arrears to the amount of
$15,000,000. With an added debt of $300,000,000 it was not im-
probable that China might go bankrupt^ especially as the control
of her tariffs and internal revenue systems were all to be placed in
the hands of representative of the bankers who made the loan and
who if we may judge by Egypt, Tunis, Morocco and Persia, were
not disinclined to see China go bankrupt.
Digitized by
Google
314 The Annals of the Amebican Academy
China's Protest to Oub Government
The United States was represented in the six power loan through
a group of New York banks which claimed to have been encouraged
by the Taft administration to participate in the loan. That such
encouragement was given was indicated by the J. P. Morgan C!om-
pany after President Wilson had suggested the withdrawal of the
American group from the six power loan. This action of President
Wilson was in response to a protest from the Chinese government,
which said that it could not assent to the exactions and usurious
terms, as well as the invasion of the soverignty which the six power
loan involved. This action of disapproval was taken by President
Wilson almost immediately after his inauguration m office in 1913,
the loan having been negotiated during the previous year.
As a result the American bankers withdrew from the loan.
They have ever since protested against the action of the administra-
tion. China, however, freed from the cordon of powers which was
drawn about her, was strengthened by the action of President
Wilson and succeeded in negotiating a loan that was more favorable
than that originally proposed. She finally succeeded in placing a
loan of $125,000,000 in April, 1913, into which group Japan and
Russia were admitted for political reasons. Under the terms of
this loan the control of China's affairs by European agents was
modified by the appointment of "advisers" to direct the expendi-
ture of the loan and to supervise the revenues of the country. A
British representative was placed in charge of the salt monopoly;
French and Russian advisers in charge of the audit department;
and a German adviser of the loan department.
For four years representatives of the powerful financial institu-
tions of New York, comprising J. P. Morgan and Company and the
Standard Oil group, have been quietly and openly protesting against
the refusal of President Wilson to identify the state department
with overseas finance. The demand is not made in such bald terms,
for the American people would not sanction the use of the agencies
of the government as a collection and insurance agency for Wall
Street interests. Yet stripped of accessories, that is all that dollar
diplomacy means. It means that the American banker, concession
seeker and exploiter shall be permitted to negotiate any kind of a
contract and once the contract is secured it shall have back of it
the strong arm of the government to enforce its terms. If revolu-
Digitized by
Google
1)0LLAR Diplomacy and Financial Imperialism S15
tions break out that threaten the investment, if the interest is too
heavy to be paid, the army and navy shall be dispatched to suppress
the revolution or bring about a government selected by the finan-
ciers to insure their investments; for foreign loans and concessions
are accompanied by treaties. Treaties are part of the contract of
borrowing. And under the treaties the borrowing power guaran-
tees the investments and by implication authorizes intervention
by force, if necessary, to validate contracts, if it is unable to insure
them itself.
The Origin of "Dollar Diplomacy"
European international law now sanctions this right of a lending
nation to interfere with the internal affairs of the borrowing nation.
It is a doctrine first formulated by Lord Palmerston of England
about the middle of the last century in connection with the claims
of a Portuguese Jew who said he was a British citizen. Loans had
been made by him to Greece. Their terms were not met, and
British gunboats were sent to Greece to insure its payment. This
was the beginning in modem times of the doctrine that the flag
follows the investor; that the strong arm of the government may
be used for policing weaker coimtries that fail to meet their debts.
It has since been accepted as a doctrine of international law by
England, France, Germany, Japan and all of the greater powers, and
has been used to the limit to bring defenseless people under the sub-
jection of the creditor nation. This is the ultimate meaning and
inevitable consequence of dollar diplomacy as demanded by the
financial interests of America. Some of the consequences of this
policy will be referred to later.
The President's disapproval of the Chinese loan was accom-
panied by a statement that the administration would not sanction
it because it ''did not approve the conditions of the loan or the
implications of responsibility on its own part which it (the adminis-
tration) was plainly told would be involved in the request. " " The
conditions of the loan," said the President,
seem to us to touch very nearly the administrative independence of China it-
self, and the administration does not feel that it ought even by implication to
be a party to this condition. The responsibility on its part which would be
implied by requesting the banks to imdertake the loan might conceivably go
to the Icoigth in some unhappy contingency of forcible interference in the
financial and even political affairs of that great Oriental state.
Digitized by
Google
316 Ths Annals of the Ahbrican Acadbmt
Thb Real Significance of the Wilson Policy
President Wilson's administration has drawn a definite line
of demarcation between trade and conmierce as such and dollar
diplomacy. And there is a very distinct diJBFerence. The ad-
ministration has said that it will do everything in its power to obtain
equality of opportunity for Americans in the development of foreign
trade and in the promotion of American commerce. To this end
consular and other agents may be employed. But it has insisted
that nothing shall be done that interferes with the sovereign rights
of other governments to regulate their own internal affairs. Presi-
dent Wilson has insisted on the inherent right of weak and strug-
gling peoples to work out their own internal problems free from
coercion or intervention by the American people. The adminis-
tration has refused to assume responsibility for, or to guarantee the
financial obligations of, weaker states in their dealings with Ameri-
can capitalists. And the department of state has insisted that it
will exercise its own right to decide each case independently as it
arises and upon its merits, always with the understanding that this
government is under no obligation to interfere by force or by menace
of force in the financial or political affairs of other countries.
The refusal of the United States to sanction financial imperial-
ism goes back to the famous Drago doctrine enunciated in 1902
at the time of the attempts of European powers to coerce Venezuela.
The Drago doctrine is to the effect that a public debt carries with
it no right of armed intervention or of the occupation of territory
in North or South America by any foreign power. This doctrine
was subscribed to by Elihu Root, then Secretary of State. It was
later accepted by the Hague peace conference in 1907. Yet such
acceptance has in no way interfered with the aggressions of foreign
powers in other coimtries than those protected by the Monroe
Doctrine.
Mr. Willard D. Straight, formerly of the firm of J. P. Morgan
& Company, and at the present time connected with the American
International Corporation, has challenged this doctrine on several
occasions; and inasmuch as he has aessumed to speak for the finan-
cial interests, his utterances are authoritative. In a speech before
the National Foreign Trade convention in Washington he said:
I think we will see a time when the government will stand behind foreign
loans; when it will be reoogniied that the government is the great oo5rdinating
Digitized by
Google
Dollar Diplomacy and Financial Imperialism 317
power which shall bring the banks and manufactures and the public tocsether;
and will announce that it will support such and such a loan so long as it
realizes that the proceeds thereof are to be used for the benefit of American
industry.
Enqlish Financial Conquest of Egypt
All this sounds very patriotic and reasonable. It is a policy
to which American trade and business would generally subscribe.
There is every reason, it may be said, why the government should
encourage overseas finance. The declarations of the financiers of
England, of Germany, of Russia and for France were probably just
as patriotic and just as defensible as these. Yet the history of the
world during the past thirty years is full of the most brutal crimes
committed in defense of this doctrine. Since 1880 over 100,000,000
people have been made subject to Great Britain, France and Ger-
many alone at the dictation of overseas concession holders and
financiers who paraded the flag of their country and the doctrine
of Lord Palmerston as a justification of their claims. Millions of
miles of territory have been seized, and with the exception of China
and South and Central America practically every spot on the globe
has been placed under the control of the financial interests of Europe.
The process began in 1882 with the occupation of Egypt, into which
country England went, according to Lord Cromer, at the insistence
of the financiers. Egypt was loaded with debt. A spendthrift
Khedive borrowed money at usurious rates. An indebtedness in
excess of $400,000,000 was created in a few years' time out of which
unhappy Egypt received only $100,000,000. The rest was kept
for commissions, securities and other profits of the bankers. The
interest on the debt became insecure. The natives were crushed
by oppressive taxation. Finally when further taxes could not be
squeezed from them, Alexandria was bombarded and Egypt occu-
pied. Such was the motive of the English conquest of Egypt. It
is set forth in state papers, and is portrayed at length in a remark-
able book entitled Egypt's Ruin written by Theodor Rothstein.
France, Germany and Russia Follow Sxht
The example set by Great Britain in Egypt became the model
of France, Germany and Russia. The unhappy exploitation of
Morocco by the allied powers nearly brought on the European War
in 1911. Morocco was a free state. She was governed by a weak
Digitized by
Google
318 The Annals of the American Academy
and spendthrift prince. The bankers of the allied powers forced
loans upon him and increased the indebtedness of this state from
$4,000,000 to $32,000,000 in seven years' time. Colossal commis-
sions running into the millions were taken on these loans by the
bankers. The loans were accompanied by concessions for mines,
railroads, docks, and all of the profitable industries of the coimtry.
The revenues of the state were placed under the control of foreign
advisers. The taxes were used to pay interest on the loan. Finally
the Sultan was only able to meet his needs by crushing taxes on the
peasants. The peasants protested. The protest was magnified
by the financial press of France into a revolution. It was said that
foreigners were being butchered by the Moors. France sent an
army of intervention. The country was occupied. Fez was cap-
tured. The closed door against other countries was adopted by
France. Germany protested and sent the "Panther" to Morocco.
England then joined with France, and as a result of the conflict
Europe was on the verge of war in the year 1911.
This is financial imperialism. Egypt, Tunis and Morocco are
not isolated cases. The Boer War was the result of the exactions
and demands of the gold mine owners and the diamond mine owners
in South Africa. They wanted to be free from taxes. They desired
cheap labor. They fomented local troubles. The great mining
syndicates owned or controlled portions of the English press, and
finally lured the British government into South Africa to give
greater value to the mining concessions and to subdue the natives
into willing workers at starvation wages. (Jermany plundered
Turkey and Asia Minor by the same means. She secured the
concession for the Bagdad railroad. Her bankers made $25,000,-
000 in commissions and saved $41,000,000 in construction costs.
These, however, were charged against the Turkish government.
Germany practically controlled the revenue system of Turkey; and
the Deutsche Bank, the representative of German finance, became
the real ruler of Turkey and Asia Minor, and reduced that state to
a condition of subjection through its many political and financial
ramifications.
Financial penetration reduced Roiunania and Bulgaria to the
same abject subjection to Germany. The Japanese-Russian War,
it is now admitted, was largely the result of the clamor of financial
interests seeking to exploit Manchuria.
Digitized by
Google
Dollar Diplomacy and Financial Imperialism 319
American Financial Domination op Mexico
All these powers are a unit in their desire for a strong govern-
ment in Mexico which can be controlled in the interest of the great
financiers who own the gold, silver, copper, oil and other mineral
resources of the coimtry. They own the raiboads, the public
service corporations of the cities. They have great plantations.
The combined concessions and claims of foreign financiers in Mexico
aggregate not less than $3,000,000,000, or about four times the total
wealth owned by all the Mexicans of Mexico. Many of these
grants and concessions were obtained by bribery and corruption
under the Diaz regime. Even the lands of the Mexican people
were stolen from them. The people were driven with machine guns
•from their common lands which they had occupied for centuries,
in order to force them to work in the mines at beggarly wages.
Mexico was a foreign feudatory owned by foreign financiers who
had the backing of their state departments in their support of Diaz
and later Huerta, and who are actively interested in the overthrow
of Carranza, just as they were in the overthrow of Madero. Ameri-
can concessionaires hold the largest stakes in Mexico. It is a
Mexican saying that the capital of Mexico is not Mexico City, it is
New York.
FINANCLA.L Imperialism Demanding Dollar Diplomacy
It is as a panoply for such offenses as have been committed in
Egypt, Tunis, Morocco, Turkey, Asia Minor and China that dollar di-
plomacy is being insisted on by the great financial interests of Ameri-
ca. It demands the backing of the state department, and the use
of the diplomatic and consular service. When these fail it demands
a great navy to enforce its claims, collect its debts and insure its con-
cessions. Dollar diplomacy means that American sovereignty shall
penetrate into weak states, overthrow revolutions and rebellions,
and substitute a strong privileged government for a government
by the people, if such government by the people insists on the reg-
ulation of its own internal affairs for the benefit of the state. The
financiers of America are especially insistent because America has
now become a great creditor nation. Our banks are bulging with
surplus wealth. The resources of the national banks alone are in
excess of $14,000,000,000. Interest rates at home are falling. The
Digitized by
Google
320 Thb Annals of thb American Academy
Federal Reserve Act is reducing interest still further. Wall Street
will not permit domestic investments in the things Wall Street owns,
in mines, raiboads or the great industrials like sugar, tobacco, the
packing industry, wool, cotton, and copper, for investment at home
means competition with the things Wall Street owns.
An outlet must be found for the surplus wealth of America.
It can only be found overseas. Overseas investments, however,
will only be made with the army and the navy as an insurance agency.
And this is what the new privilege, the privilege of financial imperi-
alism, is demanding. It is demanding that the United States shall
become a partner in the placing of loans with foreign governments;
that it shall aid in the securing of concessions and privileges for the
building of raiboads and the acquisition of mines; that the State
Department shall negotiate treaties with other countries securing
favored contracts for American financiers coupled with treaty pro-
visions that in case of the failure of the contracting power to live
up to its obligations the United States shall be empowered to in-
tervene and see that the terms of the contract are carried out.
Dollar diplomacy means entangling international relationships, not
on grounds of mutual political interest, not on grounds of advancing
the peace and well-being of the world, — dollar diplomacy means that
the relations of the United States with the outside world shall be
determined by the pecuniary interests of a small group of financiers
who now control the credit of the country and whose prospects are
menaced by surplus capital seeking investment at home. Dollar
diplomacy means not only these things; it means that the country
must commit itself to a great navy, to militarism, possibly to uni-
versal military service, in order that we may be ready to meet any
one of the great powers with which we may come into conflict in the
further partition of the world, in the division of which the great
powers of Europe have'heretofore had an unchallenged monopoly.
Digitized by
Google
BOOK DEPARTMENT
GENERAL WORKS IN ECONOMICS
Cahn, Hebbebt. Capital Today, Pp. x, 313. Price, $1.60. New York: G. P.
Putnam's Sona, 1915.
An attempt is made to interpret both the modem centralized control of capi-
tal and the recent modifications of the monetary system in the light of Marxian
economics. To do this, the author first clears the way by scorning economics as
now taught in universities and colleges, placing in lieu of this so-called ''controlled
economics" the Marxian ''Labor Theory of Value" as the only real and scientific
basis for economic thought to rest upon.
It is argued that the chief faults of the present economic system are traceable
to the fact that some other commodity than labor constitutes the basis of value.
This commodity is gold. Seeing that gold has definite quantitative limitations
and a qualitative universality Uie author holds that it possesses the following
powers:
First. That it has a scarcity value (which now has become a monopolistic
value) antagonistic to labor value.
Second. That gold is a commodity value set up against all other values,
and therefore labor, like all other commodity values, must suffer the effects of
exchange value with this highly controUed article — gold.
The theory as briefly outlined above is substantiated by a careful study into
the recent developments of industrial capital and the monetary system. Every-
where the author finds concentration and central organization taking place, and
he sees it pursue its final mission of clearing the way to a higher social order.
The first few chapters impress one that the book is propagating Marxian
economics; and, in fact, the definiteness and absolute assurance with which the
author accepts Marx's "Surplus Value" and "Labor Theory of Value" cannot
help but make the reader feel that the main theme of his book is built upon eco-
nomic theory which he has accepted with little or no reservation or criticisnL
C. R.
Chu,Chin. The Tariff Problem in China. Pp.191. Price,$1.60. New York:
Longmans, Green and Company, Columbia University Studies in History,
Economics and Public Law, 1916.
This is a distinct contribution to studies ahready made by Chinese students
in American universities of economic conditions in Uieir country. Dr. Chu pre-
sents in detail a view of the tariff in China, its history, underlying traditions and
administration. He does not confine himself, however, to this expository task
alone; he also capably maintains the theses that:
(1) The low duties are quite inadequate to serve as aids to China's industrial
development.
(2) Concessions from the unusually low rates are granted very liberally to
foreigners, by treaties discriminating against the Chinese.
821
Digitized by
Google
322 The Annals of the American Academt
(3) The revenue from duties on imports (and on exports) has no logical
relation with the fiscal system of the country, since the low duties do not result
in any correspondingly large volume of revenue, and the rigidity of the rates
keeps the customs revenue from serving to supplement the income of the state.
On the whole, Dr. Chu shows clearly enough that the present Chinese tariff,
in the first place, is worse than useless as a protective measure. It renders slight
service as a means of revenue. Its administration and modification through
treaties discriminate heavily against Chinese traders in favor of foreigners. In
short, concludes the author, it is only an instrument for the exploitation of Chinese
trade by foreigners, and has been so ever since the Opium War.
A. A O.
YoiTNG, Abthxtb Nichoib. The Single Tax Movement in the Umied States. Pp.
X, 340. Price, $1.50. Princeton: Princeton University Press, 1916.
Few reform movements have made a stronger appeal than has that of the
single taxers. The accuracy of many of their contentions and their enthusiasm
has deeply influenced modem economists. Their emphasis on many of the in-
justices in private ownership of land has helped to concentrate attention on the
need for reform. The effects have been far reaching. Even though no com-
munity has yet been able to apply the single tax theory in an unqualified manner
there have been noteworthy results in several directions. Although other in-
fluences are in part responsible, present-day emphasis on the exemption of im-
provements, on taxation of the unearned increment and on other modem reforms
is in part due also to the single tax movement.
An imprejudiced history of such a movement has been needed and fortunately
is now at hand in this volume by Dr. Young. Although there were many antici-
pations of the doctrine among the early economists, the modem movement orig-
inates with Henry George. The economic life of California and its effect on
George's views, the appearance of Progress and Poverty and his other works, and
his participation in politics are described in detail. The movement after the
death of George is traced in the different states and the tactics of the single taxers
is analyzed.
The volume is scholarly throughout and its style is pleasing. Although the
narrative requires careful attention to details, the accuracy of which is vouched
for by voluminous references, it is readable from beginning to end. The author
finds it impossible even in his narrative to conceal entirely his lack of sympathy
with George's doctrine but nowhere does this difference of opinion become so
pronounced as to prejudice the conclusions.
Little is said regarding the nature of the single tax and the validity of the
argument until at the end of the volmne where the last chapter treats of some of
the theoretical aspects. This discussion is not entirely satisfactory. Perhaps
because of space limitations only a part of the theoretical contentions of George
and his followers are considered and answered. This is, however, a minor objec-
tion to a volume that is intended to be primarily narrative. It is a most welcome
and valuable study.
£. M. Patissson.
UnioersUy of Pennsykania.
Digitized by
Google
Book Department 323
AGRICULTUEE, MINING, FORESTRY AND FISHERIES
Carver, T. N. Selected Readings in Rwral Economics. Pp. viii, 974. Price,
$2.80. Boston: Ginn and Company, 1916.
Issued as another of the well-known series of Sdections and Documents in
Economics, this volume presents in convenient form a collection of material on
rural economics, drawn from widely diverse sources. As the author states in his
Preface, it "is not intended to take the place of any of the manuals that are now
availableon the general subject of nural economy " In other words,
this volume is compiled mainly for the piupose of making available under one
cover numerous articles which would otherwise be difficult for the student to
reach, rather than with the aim of collecting all the best available material on the
subjects treated. The book is divided into eight parts, with selections bearing on
General Principles, Agricultiu^l History, Land Tenure, Agricultural Labor, The
Farmer's Business, Agrarian Movements in the United States, Riural Organiza-
tion and Marketing, and Agricultural Policy.
L. D. H. W.
Leake, Albert. Means and Methods of AffricvUvral Education. Pp. xxiii, 273.
Price, $2.00. Boston: Houghton, Mifflin Company, 1915.
Man's chief job, after meeting the immediate needs of food and shelter, is to
become adjusted to his environment. Few realize how big a job this is for those
responsible for the making of curricula for the common schools of America. One
gets some glimpses of this fact as he reads in Mr. Leake's book. He also appre-
ciates the impossibility of getting a good school with the unit of organization
now in such general use. The book is a good survey and shows clearly a lot
of our needs and the way out.
J. R. S.
Willis, J. C. AgricuUure in the Tropics. (2d Ed., rev.). Pp. xvi, 223. Price,
$2.25. New York: G. P. Putnam's Sons.
This revision of this valuable treatise on tropical agriculture has been slight,
consisting for the most part of minor changes in detaiL First appearing in 1909,
the book is today probably the best brief treatment of the subject it discusses.
Part I is a discussion of tiie preliminaries to agriculture, treating of land, soil,
climate, population, transport, plant acclimatisation, etc. Part II, comprising
nearly one half of the book, is descriptive of the principal cultivations of the tropics
and Part III gives an accoimt of agricultural conditions, discussing the nature and
conditions of peasant or village agriculture as compared with capitalist or estate
agricultiu-e. The book ends with a plan for agricultural organization and poUcy
in tropic countries.
0. B. R,
Digitized by
Google
324 The Annals of the Ambbican Academy
MANUFACTURING INDUSTRY
Allen, Fbbdskick J. The Shoe Industry. Pp. 327. Price, $1.25. Boflton:
The Vocation Bureau of Boston, 1916.
This book briefly traces the history of the shoe industry from hand labor to
machine operation, touches upon the art of tanning, sets forth the general divisions
of the manufacture of leather footwear, and then minutely describes the manu-
facturing operations incident to the production of shoes. The particular jobs in
each department are fully explained and their return indicated. The book con-
tains, moreover, an ezceUent glossary of terms used in shoemaldng, a short list
of representative books that may be used for reference and a full catalogue of
shoe periodicals.
The purpose of the volume is to furnish to young people about to dnxiee an
avocation the complete details of the opportunities in the shoe trades, an aim
which is thorougjily accomplished by the author. A carping critic mi^t ques-
tion Mr. Allen's ability as a historian or his sensitiveness to economic factors of
cause and result, but no <»ie could find fault with his painstaking account of the
procesBes of shoe manufacture and the consequoit demands for workers. Not
only young men and women seeking vocational guidance, but everyone connected
with the shoe business, particularly salesmen and r^aikrs, will find this treatise
helpfuL
M. K
GowiN, Enoch Bxjbton. The ExecvJtwe and HU Cofnird of Men. Pp. zv, 349.
Price, $1.50. New York: The Macmillan Company, 1915.
This book is an analsrsis of the sources and methods <^ the power of an effi-
cient, dominating executive. How and why does this man rise to leadership among
the other nine hundred and ninety-nine with whom he contended? Dr. Gowin
answers this question in a twenty-four chapter book, divided into three parts as
follows:
Parti. Individuality.
Part n. Motivating the Group.
Part in. Limits upon the Executive.
The study is, in the main, a theoretical explanation of the power of the domi-
nant manager from the standpoint of psychology and sociology. Quotations and
references from standard works on sociology and psychology occupy consider-
able space. Aptly chosen historical references ad Ubitum illustrate specific points
with the experience and practice of the leaders of the world's affairs. An interest-
ing and amusing comparative statistical analysis of the phsrsical characteristicB
of the various grades of executives is included.
The book is carefully prepared, ably analysed, and well-written. A pro-
digiously broad reading and observation have preceded writmg. One can but
wonder, however, whether a study so broadly academic in character, one which
wiU appeal to the philosophical mind, will be sufficiently specific to interest the
exeputive,~-he of the piQtor ^rpe, whose power is to him an unanal^rsed art
J. BL W.
Digitized by
Google
Book Dbpabtmbnt 325
PBonr Shabinq bt Amebican Emflotebs. Pp. 261. Price, $2.00. New
York: Welfare Department, The National Civic Federation, 1916.
During recent years numerous attempts have been made by employers to
establish schemes whereby "onployes would receive some share in the earnings
of the business in addition to their fixed regular wages These wage
additions have been indiscriminately termed 'profit sharing* and they have been
regarded by many employers and a few eminent students of industrial tendencies
as forecasting a final 'solution of the labor problem.' "
" Because of the desire of many employers for exact information on the work-
ings of these plans, and public interest in the claims made for profit sharing as a
general remedy for labor difficulties, The Welfare Department of the National
Civic Federation has made an extensive investigation and anal3r8is of more than
200 plans in the United States, embodying the idea in one form or another of
extra payments to labor."
The analysis of each of these plans is given in brief and discloses three main
types of ''profit-sharing" plans as follows:
"1. Percentage of profit plan
2. Special distributions or gratuities .
3. Stock ownership plan"
This comprehensive and complete survey of employers' experience in profit
sharing shows them to be not at all agreed in the approving of it as a means of in-
creasing efficiency and improving industrial relationships. The study contains
the opinions in considerable detail of many of the leaders of organized labor.
These opinions are almost unanimously opposed to the principle of profit sharing.
This study id open to all the criticisms that the questionnaire method of
studying a problem is subject. It is primarily a second-hand expression of em-
ployers' opinion, supplemented by more opinion by the representatives of or-
ganised labor, — ^not the opinion necessarily of those who actually worked under
the particular system in question. It may properly be asked whether more in-
tensive first-hand studies in a few of the plants where more successful profit-shar-
ing system had been installed might not have revealed more about "profit sharing
as a solution to the labor problem" than such a broad second-hand survey.
Joseph H. Willtts.
UnwenUy of Pennayhania.
COMMERCE AND TRANSPORTATION
Bbown, Habbt Gunnison. TraruporiaHon Rates and Their ReguUUion. Pp.
xii, 347. Price, $1.50. New York: The Macmillan Company, 1916.
This work presents a complete theory of transportation rates and their
regulation. Starting with the general assumptions that traffic receipts as a whole
must cover the entire cost of transportation, yielding a fair return on actual
investment, and that each item of traffic must pay a rate high enough to cover
the additional expenditure which it occasions, the author shows how the influence
of conditions of monopoly and competition in the transportation business causes
charges to have widely varying relations to the cost of the service, and discusses
Digitized by
Google
326 The Annals of the American Academy
in detail the economic justice or injustice of the various forms of discrimination
in transportation rates. A brief history of the development of rate regulation in
the United States is given and Uiis is followed by a searching analysis of principleB
followed by the Interstate Commerce Commission in their work of determining
what constitutes reasonable rates under varying circumstances. The final chapter
deals with the general question of government interferraoe with, and encourage-
ment of, transportation.
While presenting little that is new concerning the general problem of trans-
portation charges, Professor Brown has performed a service in bringing together
in compact form and presenting in a concrete manner the several phases of the
problem, and moreover he makes a distinct contribution to the literature of the
subject by appljring to all phases of the problem the test of "economy" from a
national standpoint. He does not for an instant lose sight of the fact that he is
proposing a general theory of transportation charges, and the touchstone of
validity of his conclusions is the result of their application upon the welfare of the
public, — "public" including not only those who are saved by transportation
agencies, but the transportation agencies as well. His frank and able criticism of
"government coddling" of private business by subsidies and other forms of "pro-
tection" is a timely contribution. fjy rtr -tr '^m
T. W. V. Al*
Fbbgubon, Maxwbll. State RegvlaUon cf RaOroads in the South, Pp. 228.
Price, $1.75. New York: Columbia University Press, 1916.
An historical account of the development of railroad regulation in the South-
em States. Though the present system of regulation shows a marked improve-
ment over conditions a few years ago, the author feels, in common with nearly all
other students of transportation, that because of the inherent weaknesses of rail-
road regulation by states and the ever growing problem of conflict between state
and federal regulation, the supervision of the railroad business by the states
should be supplanted and the work be entrusted for the most part to the federal
government.
T. W. V. M.
LABOR PROBLEMS
Frankfurteb, Feux, assisted by Qoldmabk, Josephinb. The Case for the
Shorter Work Day; Brief for Defendant in Error. (Franklin 0. BunHng m.
The State qf Oregon,) V^, xv, 1021. (2 vols.) New Yoric: National Con-
sumers' League, 1916.
This brief represents the defense in the case recently argued before the
Supreme Court of the United States limiting the hours of labor to ten in one day.
It follows the line of argument in similar cases, presenting the literature of fatigue
and dealing with the physical, economic and social aspects of regulation. The
brief was prepared imder the direction of Louis D. Brandeis, but was argued by
Professor Frankfurter because of the appointment of the former to the Supreme
Com*t Bench. The argument was contributed by Professor Frankfurter. Tbm
case is the first in which the statute under review has included the work of men.
A. F.
Digitized by
Google
Book Depabtmbnt 3^27
Gboat, Gbobgs G. An IrUrodveHan to the Study of Organized Labor in America.
Pp. XV, 494. Price, $1.76. New York: The Maomillan Ck)mpany, 1916.
There has been a serious gap in the literature of the labor movement. There
was no comprehensive study that was impartial and sought to present two sides.
Professor Groat has attempted to fill this need. He has sought to present the
background and present activity of the labor movement by quotations from repre-
sentative opinion of all sorts.
The study is divided into six parts: The Background, The Structure, Collec-
tive Bargaining, Political Activity, Transitional Stages and Conclusion.
In his preface the author defends the restriction of his study to organized
labor by stating that the study would have been too long if other matter had been
included. It would seem to the reader that it would have been more valuable,
however, if a smnmary of the relation of Socialism, for example, had been inserted
in the place of some of the detailed statistics on trade union strength and strikes
and lockouts that find a place. This fact is especially important when it is con-
sidered that the volume is intended primarily for use in college classes.
Except for a short introductory note of suggestions for further reading, there
is no citation of sources. This seems unfortunate. If further reading in the sub-
ject is to be encouraged, a detail-bibliography would have been of assistance even
if it were deemed inadvisable to incorporate the references as footnotes.
One other criticism should be presented. Until the conclusion is reached,
one does not feel the humanness of the labor movement. The author in his
evident attempt to be fair and to present all sides, seems to lean backward. One
is not made to feel that each development of unionism has been the attempt to
right a wrong or an imagined unfairness.
In spite of these faults of method, the book stands out as a valuable contribu-
tion that should do much to make the employes' attitude comprehensible to
employers and the latter's approach clearer to the worker. If it can do this it will
have served a useful purpose, even if its group of readers is small. It should also
serve as a useful text^book in the colleges that have courses in the labor movement.
Albxandbb Fleibhbb.
New York.
MONEY, BANKING AND FINANCE
HsPBURN, A. Babton. a History of Currency in the United States, Pp. xv, 662.
Price, $2.60. New York: The Macmillan Company, 1916.
This book is a revision of the author's The Contest for Sotmd Money , published
in 1903. The earlier work has been rewritten and supplemented so that it now
covers the entire national period and contains some introductory material on the
colonial period.
Notwithstanding its title, the book is more than a currency history. In
fact, its most valuable part is the treatment of the national banking system and
of recent developments under the Federal Reserve Law. Of this more recent
Digitized by
Google
328 Thb Annals of thx Ahbbican Acadsht
period Mr. Hepburn speaks with much first-hand knowledge gained during his
long, varied and honorable career in American finance, during which he has held
the positions of Superintendent of Banking in the State of New York, Comptroller
of the Currency, President of the New York Clearing House, Chairman of the
Board of Directors of the Chase National Bank, and Chairman of the Current
Committee of the American Bankers' Association.
The earlier* part of the book is based largely upon secondary sources and a
few of the better known pubUc documents. The discussion contains little that
is new, and the treatment is more that of a well-balanced narrative than oi a
critical analysis of American currency history. The author refers to his book as
''a busy man's library."
C W. K.
ScoiT, William A. Money and Banking. (5th Ed.) Pp. ix, 406. Price,
$2.00. New York: Henry Holt and Company, 1916.
In this edition the author has made a few changes, especially by adding a sec-
tion to Chapter X where a number of pages are devoted to a discussion of the
federal reserve system.
E. M. P.
POUTICAL AND GOVERNMENTAL PROBLEMS
Albxandbb, Db Alva Stanwood. History and Procedure of the Houee of Repre^
sentaUoee, Pp. xv, 435. Price, $2.00. Boston: Houghton, Mifflin Com-
pany, 1916.
A brief yet comprehensive treatment of the history and present status of
procedure in the House of Representatives by one who speaks with authority so far
has been lacking. This lack has been felt especially by many a teacher desiring to
acquaint his students more intimately with that important phase of practical
politics. This need ia well filled by the present volume, written by one who him-
self was a member of Congress for fourteen years. The scope of the volume can
best be briefly indicated by a statement of the eighteen chapter headings: Appor-
tionment and Qualification of Members; The Roll of Members Elect; Organiia-
tion of the House; The Speaker; The Speaker and Committee Appointments;
Other Officers and the Whip; Floor Leaders; Privileges, Pay, and Obsequies of
Members; Creating and Counting a Quorum; The Rules and the Committee on
Rules; The Order of Business; Committees and their Work; The Committee oi
the Whole; The Making of a Law; Debate and Debaters; Contested Election
Cases; Impeachment Proceedings; The President and the House.
An appendix of twenty-five pages adds interest to the book by giving the
names of former speakers, clerks, and other officers of the House and other
personal and political data.
H. a. J.
GooDNOW, Frank J. PrindpUe of ConetiHUional OovemmmU, Pp. 396. Price,
$2.00. New York: Harper and Brothers, 1916.
Digitized by
Google
Book Department 329
Ebugbr, FBm-KoNRAB. OooemmerU and PdiHes cf (he Oerman Empire, Pp.
xi, 340. Price, $1.20. New York: World Book Ck>mpany, 1915.
This handbook, the first in its series, is an excellent product of the book-
making art, both as to authorship and craftsmanship.
As this work covers much the same field as The German Empire by Howard
and as the order of chapters is strikingly similar, it may be profitable to compare
the two works. Of course the handbook is much the smaller. Howard restricts
himself to strictly legal and institutional questions; KrQger reaches into topics
which give color and action to his story, such as the physical basis of the German
Empire, the present-day methods of transportation and communication, the
parliamentary history of the country, German/s foreign policy since 1871, and
the colonial dependencies. Howard gives a closely integrated and impartial
treatise upon Germany, but KrQger gives a somewhat scrappy and frankly pro-
German accoimt of the country which he calls '^ Prussia-Germany" (p. 157),
which he declares "now demands a place in the sun" and the diplomacy of which
"cannot restrict itself for the future to defense."
Though Dr. KrQger excuses the aggressions of Prussia by appeal to the
precedent of the colonists in the United States expelling the Indians by force from
their territory, a pitiable argument since the Indians were but small bands of
savages in a practically vacant continent, yet in general he puts a proper scientific
restraint upon himself. For example, he considers that the Germans are too
pronouncedly conservative (p. 11), that the Emperor is dangerously impulsive
(p. 92), and that the bureaucratic administration of the colonies was till " Dem-
burg cleansed the Augean Stables" scandalous, and the progress since has been
slow with many bad mistakes (pp. 267, 8).
Minor inaccuracies and omissions may be noted. The term "delegates" is
used for delegations (p. 67). No mention is made of the secrecy of the meetings
of the Bundesrat. The reader is mystified by the explanation of the responsibility
of the Chancellor (p. 78), whereas the explanations of Lowell and Ogg are lucid
and satisfactory. The main objection of the reviewer is that Dr. KrUger has
conceived of the German government as a finality which is to be defended rather
than as a stage in evolution which ia simply to be explained, and that he advocates
militarism for Germany and its policy of aggreanon with no recognition of the
principle of nationality, or of consent of the governed, or of the sacredness of
treaty obligations, or of the possibility of international confederation.
C. H. Maxson.
UmvergUy of Pennayhania,
Mact, Jesse and Gannawat, John W. Comparative Free Government, Pp.
xviii, 754. Price, $2.25. New York: The MacmiUan Company, 1915.
This book is a distinct contribution to the study of comparative government
in that it brings within the compass of seven hundred pages an attractive presen-
tation not only of our own government but of the leading democracies of the
world. Nearly four-sevenths of the space is devoted to the United States and the
balance is given to foreign states. For those students whose special courses place
severe limitations upon their power of election this text-book may be regarded as
Digitized by
Google
330 The Annalb of the Ahbbican Acadeht
a very sacoesBful solution of the problem of oombining the study of our govern-
ment with foreign govemmaits in a single year. Furthermore, as an initial ooune
in Political Science the comparison of the presidential system with the parlia-
mentary system may prove illuminating to many students.
The emphasis being laid upon free government, a meager allotment of twenty-
two pages is given to the delineation of the institutions of the G^man Eknpire.
Yet as democracies must acquire the art of effective administration to justify
their form of government and even to perpetuate it, the lessons of German admin-
istration and university cooperation might well have larger recognition. The
authors round out their survey of free government by devoting thirty-three pages
to South America, a happily conceived concession to the progress of the A. B. C.
states and our rising interest in Latin America.
Our authors are to be commended for cutting short their theoretical dis-
cussion of the puzzling question of sovereignty. Better had they cut the question
out entirely, unless they abandoned the "made in Germany" doctrine of indivi-
sible sovereignty and accepted the theory of the American and Swiss constitu-
tions that sovereignty is divisible and is actually divided. The Swiss Constitu-
tion says "the Cantons are sovereign so far as their sovereignty is not limited by
the Federal Constitution." Our Federal Constitution as interpreted by the
courts is identical in this respect with the Swiss, though the document itself
does not employ the term. Darwin P. Kingaley says that "unconditioned sov-
ereignty was the fundamental error in the civilization of 1914." General Cai^
ranza seems to be obsessed by the same mad notion which the Political Scientists
have taught him. Is it not truer to facts and ideals to say that sovereignty is
divisible and that a state may attain power and prestige by surrender of part of
its sovereignty to the sisterhood of states? This applies to our commonwealths
in relation to the union and it applies to our nation in relation to a proposed
international union.
The book under review is distinctly readable and evidences the authors'
splendid grasp of the subject matter. The book ought to win a us^ul place in
the teaching of comparative government.
C. H. Maxson.
Unweraity of Pennsylvania.
Tajt, Wm. Howard. The Presidency: lis Duties^ Its Powers, Its OpporUmUies
and lis himUalUms. Pp. v, 145. Price, $1.00. New York: Charles Scrib-
ner's Sons, 1916.
Taft, Wm. Howard. Ow Chief Magistrate and His Powers. Pp. 165.
Price, $1.50. New York: Columbia University Press, 1916.
The first of these two volumes on the presidency by former-Presidait Taft
consists of three lectures delivered at the University of Virginia in 1015; the
second, of a series of six lectures given at Columbia University one year IaUt.
Both volumes cover, therefore, the same ground and follow a similar arrangement
and treatment, in some cases the phraseology of considerable portions being idosr
tical. After a general introduction dealing with the distribution of governmental
powers and the place of the executive in our constitutional system, the powers of
Digitized by
Google
Book Depabtmxnt 331
the president are discuased in the following order: the veto power, executive relar
tions with Congress, Cabinet, and Commissions, the power of appointment, the
supervision of the execution of laws, the president as commander-in-chief, execu-
tive power in foreign relations, the pardoning power. A final chapter discusses
the limitations on the president's power, chief among which are noted restraints
imposed by Congress, the supreme court, and custom. The view that the presi-
dent possesses an undefined residuum of power and the policies of former President
Roosevelt in his exercise of such powers are severely criticized. Especially inter-
esting is the chapter on the appointing power, in which the evils of the present
system of dispensing patronage, as well as certain defects in the civil-service
oystem are clearly brought out. Coming from one who has had practical experi-
ence in the things whereof he speaks, these lectures are more than usually valuable
to the student of public affairs.
R. G. G.
INTERNATIONAL QUESTIONS
CoLBT, Frank Moobb (Ed.). The New IntemaHonal Year Book for 1916. Pp.
752. Price, $5.00. New York: Dodd, Mead and Company, 1916.
Desirous of knowing at a glance who headed the National League batting
list in 1915, what relation eugenics has to the war, what States passed '* blue-sky"
laws, what was the status of world trade and industry, what were the develop-
ments of feminism, philology, or meteorology during the past year, one may com-
fortably take from his desk The New IrUemaiional Year Book. Whatever the
subject, he may be reasonably sure of finding it treated, and the general acceptance
of this annual cyclopedia, since 1907, gives it a certain authority.
The groimd covered by the Year Book takes from its value as a source book
for specialized study; it is, however, an important hand book of recent events and
contains valuable current bibliographies, statistics and biographies. The arrange-
ment of material has been altered only in that certain statistical information —
imavailable because of the war — ^has been replaced by a "comprehensive article
on the Wab of ths Nations," and this lead article may be said to defy the
multiplicity of events and confusion of reports in an effort to give a clear, con-
nected, impartial account of what has been happening in this almost overwhelm-
ing field.
C. H. C.
Cbandall, Samuel B. Treaiies, Their Making and BtiforeemenL (2d Ed.)
Pp. xxxii, 663. Price, 96.00. Washington: John Byrne and Company,
1916.
Dr. Crandall has so much enlarged the first edition of his work that it might
well be considered as a distinct treatise on the subject of treaties — ^nevertheless
it has been designated as a second edition, and as such supplements the first edi-
tion with a wealth of materiaL The subject of international treaties ia particu-
larly interesting because it touches upon some of the most important questions in
the whole field of international relations as well as of constitutional law. It
'vrould be difficult to find anyone more competent to treat the subject than Dr^
Digitized by
Google
332 The Annals of the American Academy
Crandall, who is a member of the bar of New York and the District of Goliimbia
^ and a thorough student of international law. He has had the additional advan-
tage of practical experience relative to our treaty relations while working in the
Department of State.
As regards its arrangement and subject matter, the book is practical, schol-
arly, and comprehensive. Dr. Crandall makes use of copious citations from
European and American authorities. It might perhaps be questioned whether
we have not reached the period when we may discard the unimportant comments
of many of the men of second-rate ability whose statements he thus honors. Dr.
Crandall himself could speak with much greater authority, and this clothing of his
own thoughts in the words of some judge of inferior capacity unnecessarily cramps
the study of the question. A citation from an imimportant source is apt to en-
courage the student in a waste of time in searching out the original case. Separate
compilations of extracts from judicial decisions, skilfully classified, can be placed
in a separate appendix to justify the conclusions reached, but let us break with a
method which savors of scholasticism. This very defect will render the book
more acceptable to certain of our lawyers who can only receive ideas dressed in
such a form. Dr. Crandall is very cautious also about giving us the benefit of
his learning. He avoids an application of principles to the important questions of
treaty violations which have absorbed so much attention in the last few months,
but his conservative discussion throws light on the whole field of international
treaty relations and makes of his book an authoritative treatise which every stu-
dent of international relations and every diplomat must have under his hand.
E. C. Stowbll.
Cohimbia Unweraity.
Habt, Albert Bxtbbneij^. The Monroe Doctrine: an InlerpretaHon, Pp. xiv,
445. Price, $1.75. Boston: little, Brown and Company, 1915.
Hull, William I. The Monroe Doctrine: NoHonal or IntemaHoncdt Pp.
ix, 136. Price, 75 cents. New York: G. P. Putnam's Sons, 1915.
Professor Hart's book is the most comprehensive analysis of the Monroe
Doctrine with the possible exception of the German work of Kraus. In the first
three parts he not only traces the modifications which the Doctrine has suffered
at the hands of successive Presidents, but gives a most excellent presentation of
the changing attitude of Europe and of Latin America. In Part IV he proceeds
to subject to the same critical analysis some of the cognate doctrines, such as the
Drago Doctrine, the Calvo Doctrine, the German Doctrine, and the principles
of national policy involved in our position in the Pacific. Part V is devoted to an
examination of present world conditions with a view to ascertaining whether terri-
torial and commercial relations have so changed as to call for a restatement of the
Doctrine. In Part VI the author develops what he calls the Doctrine of Per-
manent Interest, which in his view presents the most concise formulation of the
basic principles of American foreign policy. He adopts this formulation because
it emphasizes the vital interest of the United States in all distinctively American
questions, and at the same time avoids giving offence, which the use of the term
"Paramoimt Interest" would be certain to give throughout Latin America. The
Digitized by
Google
Book Dbpabtmbnt 333
author points out with great clearness and force that the Monroe Doctrine em-
bodies little more than a defensive principle, the counterpiurt of which is to be
found in other parts of the world, notably the Near East and Eastern Asia.
In the author's view, the Monroe Doctrine is likely to be put to a severe test
by some ambitious military power as a direct result of the Great War, imless
"Europe is about to enter on a new regime of international imderstanding and
good will.*' In order to maintain it the United States will be compelled to em-
bark upon a rational naval and military policy which will place the country in a
position to defend the Doctrine.
Briefly stated, the author's viewpoint is that the Monroe Doctrine embodies
a principle essential to our national safety. Whether we designate it as the Mon-
roe Doctrine or by some other name, it must necessarily form a part of our na-
tional policy.
Professor Hart has placed both the general reader and the special student
under obligations for this admirable analysis, which will serve to clarify national
thought on this perplexing and elusive problem. The value of the work is greatly
enhanced by the inclusion of a most excellent bibliography.
The httle book by Dr. Hull contains a series of three addresses; one on the
Monroe Doctrine, delivered before the Fourth National Conference of the Ameri-
can Society for the Judicial Settlement of International Disputes, a second on a
series of proposed solutions, delivered at the Eighth Annual Meeting of the
American Society of International Law, and the third on the Hague solution,
delivered at the Twentieth Annual Meeting of the Lake Mohonk Conference.
The main thesis of the three addresses is a plea for the abandonment of Pan-Ameri-
canism for the broader internationalism of a world court of arbitral justice. The
author emphasizes the distrust that has been engendered, particularly in the
countries of Latin America, by reason of the assumption of what the author
regards as a kind of tutelage over the Latin- American republics. His criticism of
the Monroe Doctrine is quite temperate but one can readily see that while he has
no objection to the Monroe Doctrine in its original form he is evidently fearful
of the broad interpretation given the Doctrine by successive Secretaries of State.
Dr. Hull's work is the clearest presentation we have as yet had of the point of
view of world internationalism as distinguished from the Pan-American point of
view.
L. S. RowB.
UfUveraity of Pennsylvania,
Sherrill, Charles H. Modernizing the Monroe Doctrine, Pp. xiii, 202. Price,
$1.25. Boston: Houghton, MifOin Company, 1916.
President Nicholas Murray Butler, in an introductory note to this volimie,
calls it '^a vigorous and stimulating discussion of some of the most interesting and
most important questions that now confront the American people." And indeed
such it may properly be called. It is novel and radical in some of its proposals,
but the two fimdamental ideas nmning through the work — adherence to the
Monroe Doctrine, modernized by co5i)eration with the South American repub-
lics, and a vigorous Pan-American policy — command attention. A part of the
Digitized by
Google
334 The Annals of the Amebican Academy
work 18 devoted to showing the importance of South America, politically and com-
mercially. This fact established, the author urges the United States to adopt a
policy which would cultivate a bett-er understanding with the southern republics,
and which would refrain from interference in European and Asian affairs; on the
other hand, our trans-oceanic policy should be directed to exclude all foreign con-
trol from every part of this hemisphere. The Philippines should be traded, if
necessary, to secure isolation of this hemisphere, Japan should be assured that we
do not intend to control in any way the destiny of China, the three foreign powers
now holding possessions in South America should be ousted, and even our treaty'
with England regarding the Panama Canal should be broken at the first oppor-
tunity to give us complete controL Such a policy would strengthen the Monroe
Doctrine, enable us to form a Pan-American Union to the mutual advantage of
all the Western republics as well as the rest of the world.
K. F. G.
Stowell, Ellbbt C. and Munbo, Henbt F. IntemaHonal Catea, VoL I.
Peace, Pp. xxxvi, 496. Price, $2.50. Boston: Houghton, Mifflin Company,
1916.
Although there is undoubted need of collections of international cases, the
difficulties in the way of making a collection sufficient for all classroom purposes
seem insuperable. For an adequate iUustration of even the more important
topics of international law many volumes would be required.
Probably the experienced teacher will prefer to make his own selection of
cases adapted to the needs of his particular class, prescribe in conjunction the
best text-book he can find, and assign such cases as he deems most useful and
available. By filling the library shelves with duplicates of Moore's Digest, Scott's
Cases, and other leading authorities and collections on International Law, he will
have a good working library.
To such a collection, this volume will prove a most valuable, indeed, an in-
dispensable addition. The cases are carefully selected and well edited. They
include judicial decisions, cases of arbitration, and numerous cases or instances
drawn from negotiation or the diplomatic practice of nations. Of the latter there
have hitherto been too few in accessible form. Perhaps the stickler for judicial
cases will find that this volume contains too few of his old favorites. But the
student of arbitration and negotiation will be pleased to find so much new and
fresh material
A K
Indiana Univernty,
MISCELLANEOUS
WiLLSON, Beckles. The Life of Lard Straiheona and Mount Royal (2 vols.)
Pp. xi, 1057. Price, $6.50. Boston: Houghton, Mifflin Company, 1915.
Based upon the papers of Lord Strathcona, the archives of the Hudson's Bay
Company and official correspondence for a period of approximately twenty years,
these volumes ^ve a very su|;|Eestive a^d intimate portrayal of the discussion an4
Digitized by
Google
Book Dbpabtment 336
settlement of some of the most important issues of the Dominion of Canada in the
eventful forty years which have just closed. By a very extensive use of quota-
tions from personal letters and public documents, Mr. Willson describes the en-
listment of Donald Smith, afterwards Lord Strathcona, in the service of the Hud-
son's Bay Company as junior clerk, and his advancement by extraordinary perse-
verance and exceptional ability to chief factor of the company. An accoimt is
given of his gradual rise into prominence in the affairs of the Dominion. His
connection with the Canadian Pacific Railway, his service as High Commissioner
for Canada at London and his interest among other matters in such important
dominion affairs as public education, charitable institutions and Canadian immi-
gration ure exhaustively treated.
The author has not attempted to prepare a critical biography and his indis-
criminate commendation of Lord Strathcona as well as his extensive use of irrele-
vant correspondence detract somewhat from the usefulness of the work. Despite
these limitations the biography constitutes a notable record of one of the greatest
characters in Canadian history.
C. G. H.
Digitized by
Google
INDEX
America : debtor to Europe at beginning
of war, 151; financial position, 34;
surplus wealth, 320.
American conmieroe, promotion, 316.
market, 86-86.
securities: mobilization, 97; na-
tionalization, 47.
Ambbican Securitt Mabkbt, The,
DxjRiNQ THE Wab. S. S. Huobner,
93-107.
Anderson, Gobdon Bltthb. The
Effect of the War on New Security
Issues in the United States, 118-130.
Anglo-French loan, 129, 155.
Argentijia: government revenues, 165;
industries, 166; loans, 162; panic, 161;
population, 165; railroads, 166; ship-
ping and foreign markets, 166.
Aboentina. Joseph Wheleas, 165-167.
Babson, Rogeb W. The Rural Cred-
its Act and Its Effect on the Invest-
ment Market, 235-243.
Bank of England, protection to, 111.
Banking system, in United States, 282.
Banks: Federal Land, 239; investment
holdings of, 124, 125; joint stock
land, 241; rural credit, in Costa
Bica, 174.
Bolivia: industries, 168; public util-
ities, 168; raikoads, 167.
Bolivia. J. C. Luitweiler, 167-168.
Bonn, M. J. The Nationalization of
Capital, 252-263.
Brazil: commerce, 169; currency of,
161; railways, 161, 168; resources,
168.
Brazil. Andrew J. Peters, 168-169.
British capital, export, 27.
finance, secrecy, 87-88.
investments: early, 25-26; effects
of war, 74-77; future, 91; wide dis-
tribution, 31-32.
Bbitibh Oversea Investmbntb, Their
Gbowth and Importance. C. K
Hobson, 23-35.
British Treasury, The, and the
London Stock EbccHANOE. W. R.
LawBon, 71-92.
Canada: borrowing by, 216, 220, 222;
foreign trade, 219; imports and ex-
ports, 219, 223; k>ans, 224; public
bonds of, 128; resources, 216; United
investments in, 217-218.
Canadian Capital Rbquirembnts.
O. D. Skdton, 216-225.
Capital: accumulation, 25; aggregate
investment, 28-30; China, 69-70;
circulation, 72; concentration, 33;
demand, 25; destination of new, 29;
distribution, 52; export, 28; freedom,
92; geographical distribution, 28-30;
in foreign field, 6-S; in public util-
ities, 234; ownership, 33; trans-
fers, 7; unrepresented by securities,
48-50.
Capital, Needs fob, in Latin Amsb-
ica: a Symposium, 161-195.
Capital, Russia's Futubb Needs
FOB. Samuel McRoberts, 207-215.
Capital, The Nationalization op.
M. J. Bonn, 252-263.
Capital investment, and trade, 8-^.
Central America, European caintal
in, 161.
Chile: American oommeice, 170; forests
and fisheries, 170; loans, 162; public
improvements, 170; resources, 169.
Chile. G. L. Duval, 169-171.
China: Amoican interests, 6^-63;
capital needs, 69-70; finances, 313;
foreign, indebtedness, 56-57; general
loans, 66-68; Knox policy towards,
309; land tax, 68; loan policy, 306;
loans, 56; political integrity, 313;
336
Digitized by
Google
Index
337
protest, 314-315; public indebted-
nesB, 55; salt tax, 66, 68; securitieB in,
56; six power loan, 312-313.
China, Thb National Debt of— Its
OaiQiN AND Its Seouritt. Charles
Denby, 55-70.
Chinese government, revenues, 60-62.
loan : conditions, 315; disapproval,
315.
railway loans, 62.
Clapham, a. G. Panama, 188-189.
CiiAxmBN, John. Guatemala, 181-184.
Colombia: capital, 171; loans — real
estate, 172; municipal bonds, 172.
Colombia. Edward H. Mason, 171-
172.
Competition, economio, 12.
CoNWAT, Thomas, Jb. Financing
American War Orders, 131-150.
Corporations, securities issued, 100.
Costa Bica: American capital, 173;
credit facUities, 173; effects of Euro-
pean War, 172; loans, 173; resources,
172; rural credit banks, 174.
Costa Rica. Walter Parker, 172-174.
Credit: abundance, 97; expansion, 249;
instruments, 6.
Cuba: industries, 175; national debt,
175.
Cuba. A. G. Robinson, 174-175,
Customs service, duties, 60-61.
Dbnbt, Chablbb. The National Debt
of China — Its Origin and Its Secu-
rity, 55-70.
Dollar diplomacy, 300; application of,
304; definition, 312, 314, 320; origin,
315.
dollab diplomact and financial
Impebiausm xtndeb thb Wilson
Administbation. Frederic C.
Howe, 312-320.
Dominican Republic: currency, 176;
Federal Reserve banking system,
176; resources, 176.
Dominican Rbpttblic. Jacob H.
Hollander, 176.
Duval, G. L. Chile, 169-171.
Economic ^mpetition, 12.
independence, France, 10-11.
Economic Intebnationalibm, The
Pbospects fob. William English
Walling, 10-22.
Economic law, operation, 2.
league, to enforce peace, 17-22.
nationalism, 16.
peace, 12.
pressure, application, 21.
prosperity, of United States, 12.
war: object, 13; permanent, 12.
Ecuador: debt, 177; natural resources,
177; railways, 178; trade, 177.
EcuADOB. F. I. Kent, 177-178.
^fSyP^f financial conquest, 317.
El Salvador, see Salvador.
El Salvadob. Frederick F. Searing,
178-181.
England: as work! centei^ 255; Bank
of, 280; foreign trade, 274.
European War: conditions at beginning
of, 151-152; effect on business, 132;
effects on Costa Rica, 172; effects on
^ financial conditions, 162; effects on
^incomes, 245; effects on Russia, 207;
i financial conditions and, 125-126.
Exchange: bills of, 108, 109, 110;
media, 8.
markets, organized, 95.
Exchanges, foreign, 159.
Export trade, Russian, 31-32.
Esqwrts: amount, 94; before and since
outbreak of European War, 133,
134, 135, 136; growth, 153.
Fahet, John H. Peru, 191.
Farm loan bonds, features of, 242.
loans, distribution of, 235.
mortgages, capital furnished by
life insurance companies, 236.
Farmers, rates of interest paid by, 237.
Federal Farm Loan Board, the, 240.
Reserve banking system, estab-
lishment of, 283.
banks, Dominican Republic,
176.
system, influence, 286.
Digitized by
Google
338
Indbx
Finance: intemation«l, 263, 262; mm-
istera of, 44; nationalisation of, 267;
ovcTBoaa, 317; war, 77.
FiNANCa, ShOBT-Ti»M iNVXSnfBNTS
AB A StABILUINQ InFLUSNCS IN
International. Elmer H. Young-
man, 108-117.
Financial imperialism: examples, 317-
318; privilege, 320; United States
and, 316.
Financial Iiipbbialibm, Dollab Di-
plomact and, undkb thb wllson
Adminibtbation. Frederic C.
Howe, 312-320.
FiSHBR, Ibyinq. The Rate of Interest
after the War, 244-261.
Foreign bills, as investments, 111,
112.
exchange, problem, 72-74.
FORBIQN EXCHANGS DUBING THB
Wab. George Zimmer, 151-160.
FOBKIGN iNVBanOGNT, ThB RELATION
OP GovEBNiCENT TO. Huntington
Wilson, 208-311.
Foreign investments: aspects, 2; classes,
4; increase, 43-44; modem trend, 3;
see investments.
FoBBiGN Investbcbntb, Ambbica's
Abiutt to Make. George E.
Roberts, 287-297.
FOBEIGN iNVEBTlfENTB, ThE ThEOBT
OF. Edwin Walter Kemmerer, 1-9.
Foreign securities, income derived
from, 42.
trade: development, 316; increase,
296; of United States, 137; paralysis
of, 140; power a protection to, 298;
relation of govenmient to, 299; re-
turns, 94.
France: a creditor nation, 281; devel-
opment, 32; distribution of capital,
52; economic independence, 10-11;
financial optimism, 53; foreign in-
vestments, 19; money markets, 38-
40; negotiable securities, 38-40.
Franchisee: competitive, 230; per-
petual, 230.
French oi4[)ital, geographieal distiilm-
tion, 60-^2.
investments, 32-34.
Fbbnch Invebtmentb, The Amount,
DiBBcnoN AND Natube OF. Yves
Guyot, 36-54.
French securities, income derived from,
42.
Gas plants, development, 226.
German investments, 32-34.
Germany: as creditor naticm, 258; ex-
changes, 159; foragn investmentSy
258; foreign securities, 258; position,
12; relations with London, 255.
Gold: discount rates and, 281; exports
of, 285; foreign demands for, 284;
importation, 129, 141, 157; imports
and exports, 141; net importatioiis
of, 290; significance of, 278.
reserves, after European War,
112-114.
Gold Rbbebves aiteb the Wab, Oub.
Frank A. Vanderlip, 278-286.
Government, intervention, 45.
Great Britain: aid to allies, 23-25;
cable mileage, 266; financial re-
sources, 23; foreign investments, 19;
free trade nation, 14; international
finance, 16; tariff, 273.
Guatemala: debt, 182; exports, 183;
imports, 184; railways, 184; re-
sources, 184; revenue, 183.
Guatemala. John Clausen, 181-184*
GuTOT, YvEB. The Amount, Direo-
tion and Nature of French Inyest-
ments, 36-54.
HoBsoN, C. K British Oversea In-
vestments, Their Growth and Iin>
portanoe, 23-35.
Hollandbb, Jacob H. Dominican
Republic, 176.
Honduras: government needs, 185;
loans, 186; railroads, 185.
HoNDUBAB. W. S. Valentine, 185-186.
Howe, Fbedbbio C. Dollar Diplo-
Digitized by
Google
Index
33d
maey and Financial Imperialism
under the Wilson Administration,
311^-320.
HusBNER, S. S. The American Se-
curity Market During the War, 93-
107.
Imports, into United States, 153.
Incomes, effect of European War, 245.
Incorporations, new, 100.
Indemnity, the Boxer, 60.
Indian market, boycott and, 84-85.
Industrial corporations, financing of,
123.
Industrials: list, 106-107; price level,
98-99.
Industries, nationalization, 76.
Industry, expansion, 103.
Interest: rate of, 244; rates of, in
United States, 250.
Intbbbst, Rate of. After the War,
The. Irving Fisher, 244-251.
International finance, history, 74.
independence, 16.
law: doctrine, 315; European, 315.
organisation, 19.
trade, competition, 75.
Internationalism, The Prospects
FOR EcoNOBac. William English
Walling, 10-22.
Inventions, investments and, 249.
Investment Market, Tms Rural
Credits Act and Its Effect on
THE. Roger W. Babson, 235-243.
Investment markets, war and, 77-78.
Investments, 1, 8-9; amoimt, 26-27;
British, 25-26; creditor, 4-5; do-
mestic, 1-2; foreign, 1-2, 290, 291,
295, 300, 301, 310; foreign bills
as, 108, 111, 112; French, 32-34; Ger-
man, 32-34; German foreign, 258;
international, 19, 252; inventions
and, 249; modem trend of foreign,
3; monetary differences, 3-5; nature,
26-27; proprietor, 4; Russia, 35;
short-term obligations as, 114-115;
social differences, 5-6.
iNVESniBNTB, AMERICANS ABILrrT TO
Make Foreign. George E. Rob-
erts, 287-297.
Investments, British Oversea, Their
Growth and Importance. C. K.
Hobson, 23-35.
Investments, Short-Term, as a
Stabiuzino Influence in Inter-
national Finance. Elmer H.
Youngman, 108-117.
Investments, The Amount, Direc-
tion AND Nature of French.
Yves Guyot, 36-54.
Investments, The Theory of For-
eign. Edwin Walter Kemmerer,
1-9.
Investor, control, 6-7.
Iowa, farm mortgages, 236.
Italy, eicchanges in, 159.
Kansas, farm mortgages, 236.
Kemmerer, Edwin Walter. The
Theory of Foreign Investments, 1-9.
Kent, F. I. Ecuador, 177-178.
Labor supply, shortage in, 294.
Latin America, Needs for Capital
IN. — ^A Symposium. Introduction.
William H. Lough, 161-164.
Latin America, Needs for Capital
in: a Symposium, 161-195.
Lawbon, W. R. The British Treas-
ury and the London Stock Exchange,
71-92.
life insurance companies, farm mort-
gage capital furnished by, 236.
Loans: Chinese railway, 62; collateral,
of banks, 124; curtailment of, by
banks, 108; foreign, 121, 142-144;
general, 66-68; indemnity, 56-59;
long-term v. short-term, 247; rail-
way, 64-65; short-term, 140; short-
term, by banks, 127; war, 56-59,
76.
London: a free gold market, 271;
economic factors enhancing position
of, as financial center, 270; financial
Digitized by
Google
340
Indbx
prostiee, 259; in financial world, 77;
poeitiony 265; reasons for supranacy,
264; relations with Germany, 255.
London and New York as Financial
Centebs. £. L. Stewart Patterson,
264-277.
London stock exchange, reopening,
86.
London Stock Exchangb, Ths Bbit-
isH Tbbasubt and the. W. R.
Lawson, 71-92.
Lough, Wiluaii H. Litroduction to
Needs for Capital in Latin America:
A Symposium, 161-164.
Lttitwbileb, J. C. Bolivia, 167-168.
Mason, Edwabd H. Colombia, 171-
172.
McRoBEBTB, Samuel. Russia's Fu-
ture Needs for Capital, 207-215.
Mexico: American investments in,
306; commercial possibilities, 201;
European interests in, 203; financial
combination, 319; harbors, 199;
military problems, 202; railroads,
196-199; resources, 200-201, 205.
Mexico. James J. Shirley, 196-206.
Missouri, farm mortgages, 236.
Money: borrowing abroad, 55; inter-
national, 7-8.
rates, low, 97-98.
National Debt of China, The — Its
Origin and its Security. Charles
Denby, 55-70.
National Farm Loan Association, the,
238.
self-sufficiency, 16.
Nationalism, economic, 16.
Nebraska, farm mortgages, 236.
New York, munitions boom, 86.
New York, London and, as Finan-
cial Centers. £. L. Stewart Pat-
terson, 264-277.
New York exchange: bond sales, 102;
shares traded, 96.
Nicaragua: industries, 187; monetary
BysbBOi, 187; railways, 188; re>
sources, 187; revolutions in, 187.
Nicaragua. W. L. Saunders, 186-188.
Panama: cattle raising, 188; oocoanut
business, 188, 189; coffee, 189;
sugar-cane, 188.
Panama. A. G. Clapham, 188-189.
Paraguay: loans and investm^its, 190;
transportation facilities, 190.
Paraquat. William Wallace White,
18^190.
Paris Bourse, negotiable securities,
38-39.
Parker, Walter. Costa Rica, 172-
174.
Patterson, E. L. Stewart. London
and New York as Financial Centos,
264-277.
Peace: aim of plans, 18; economic
league to enforce, 17-22; permanoit,
17.
Peru: industries, 191; loan, 191; na-
tional debt, 191; United States
capital in, 191.
Peru. John H. Fahey, 191.
Peters, Andrew J. Brazil, 168-169.
Political rivalry, intemational, 2.
Production, increased cost of, 130.
Public utilities, capital, 234.
PuBuc Utilitt Investments, The
Future of. Delos F. Wilcox, 226-
234.
Railroad stocks, apathy, 102-103.
Railroads: earnings, 102-103; financing
of, 122; expenditures upon, 293.
Rates, regulation of, 231.
Reciprocity, principle, 21.
Roberts, George E. America's
Ability to Make Foreign Invest-
ments, 287-297.
Robinson, A. G. Cuba, 174-175.
Rural credit banks, Costa Rica, 174.
Rural Credits Act and Its Effect
ON THE Investment Market, The.
Roger W. Babson, 235-243.
Digitized by
Google
Index
341
Ruflsia: cotton, 211; effect of European
War, 207; exchanges in, 159; finano-
ing of war, 208; foreign resources,
208; foreign trade, 208; grain pro-
duction, 210; investments, 35; lum-
bering, 212; meat products, 211;
mining, 212; public debt, 208, 209;
railways, 213; resources, 209; steel
and coal industries, 214; taxing laws,
212.
Russia's Future Needs fob Capital.
Samuel McRoberts, 207-215.
Salvador: government banks, 179; rail-
ways, 179; resources, 180; revenues,
179.
Saundebs, W. L. Nicaragua, 186-188.
Searing, Frederick F. El Salvador,
178-181.
Securities: admission, 44-45; American,
106, 109, 120-121; capital unrepre-
sented by, 48-50; disposition of, 123;
European holdings of American,
144-146; French, 41; introduction,
44-45; issued during European War,
118; limit a country can absorb, 118;
mobilization, 74, 156-157; negotiable
on Paris Bourse, 38-39; of foreign
govoimients, 129.
Security issues, absorption, 100.
Securitt Issues, The Effect of the
War on New, in the United
States. Crordon Blythe Anderson,
118-130.
Sbcuritt Market, The American,
During the War. S. S. Huebner,
93-107.
Shipping, world organization, 19.
Shirlet, James J. Mexico, 196-206.
Skblton, O. D. Canadian Capital
Requirements, 216-225.
South America: American investments
in, 163; capital requirements, 162;
European capital in, 161; financing
of, 161; public improvements, 162;
securities, 163-164.
Stock Excpanqb, Tbb British
Trbasurt and the London.
W. R, Lawson, 71^92.
Stock exchange account, reduction, 85.
exchanges: activity, 99; closing
of, 78-80, 126, 132; minimum prices
on, 81-82; politicians and, 80-81.
market, response, 95-96.
Stocks: flotation, 100; price level, 104-
106; public service, 101-102; rail-
road, 101-103; war, 107.
Street railways, increase in number, 226.
TarifiF, in United States, 273.
Tax: internal revenue, 61; land, 68; on
merchandise, 61-62; salt, 66, 68.
Taxation, franchise privileges and, 230.
Trade: British, 16; capital investment
and, 8-9; expansion, 103; inter-
national, 17.
areas, enlargement, 21.
route, international, 18.
war: program, 10; purpose, 10.
Transportation services, 18.
Treasury, obstinacy, 82-84.
Treasury, The BiunsH, and the
London Stock Exchanob. W. R.
Lawson, 71-92.
Treasury policies, effects, 74-77.
Treaties, international reciprocity, 21.
United States: a creditor nation, 275;
bank clearings, 105; business, 93;
economic isolation, 15; economic
prosperity, 121; foreign trade bal-
ance, 94; foreign trade returns, 94;
importation of gold, 98; indebted-
ness abroad, 100; prosperity, 93; six
power loan, 314; tariff, 273; war
orders, 93-95.
United States, The Effect of the
War on New SECURrrr Issxteb in
THE. Crordon Blythe Anderson,
118-130.
Uruguay: currency, 192; debt, 192;
bans, 162, 193; panic, 161; public
revenues, 192; relations ^th Ui4te4
States, 193t
Digitized by
Google
342
Index
Ubuquat. H. a. Wheeler, 19^103.
Utility investmentB, extent and causes,
226.
Valbnumb^W.S. Honduras, 186-186.
Vaiidbrlip, Frank A. Our Gold
Reserves after the War, 278-286.
Venezuela: exports, 194; railways, 195;
resources, 194.
Venezuela. Francisco J. Yines, 194-
195.
Wall Street, methods adopted, 89-91.
Waluno, William English. The
Prospects for Economic Interna-
tionalism, 10-22.
War: economic causes, 21; effects,
^4-35; financial effects, 71; in-
-^ vestment markets and the, 77-78.
War, The American Securitt Mar-
ket DURING THE. S. S. Huebuer,
9a-107.
War finance, 77.
loans, Japanese, 57.
orders, extent, 132,
War Orders, Financing American.
Thomas Conway, Jr., 131-150.
War profits, fabulous, 96.
stocks: 107; market movements,
101.
Water works, devebpment, 226.
Wealth: growth, in United States, 287;
standard, 55.
WmsBLER, H. A. Uruguay, 192-193.
Whblbss, Joseph. Argentina, 165-
167.
White, William Wallace. Para-
guay, 189-190.
Wilcox, Dblob F. The Future of
Public Utility Investmoits, 226-
234.
Wilson, Hunhnqton. The Relaticm
of Crovemment to Foreign Invest-
ment, 296^11.
Wilson Administration, Dollar
Diplomacy and Financial Impe-
rialism UNDER the. Frederic C.
Howe, 312^320.
T^^lson policy, significance, 316-317.
YXnes, Francibco J. Venesuda,
194^195.
YouNGMAN, Elmer H. Short-Term
Investments as a Stabilising In-
flu^ice in International Finance,
108-117.
ZiMMER, George. Fordgn Exchange
during the War, 151-160.
Digitized by
Google
Digitized by
Google
Digitized by
Google
Digitized by
Google
Digitized by
Google
Digitized by
Google
Digitized by
Google
Live Music Archive
Librivox Free Audio
Metropolitan Museum
Cleveland Museum of Art
Internet Arcade
Console Living Room
Books to Borrow
Open Library
TV News
Understanding 9/11