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About Morning Oregonian. (Portland, Or.) 1861-1937 | View Entire Issue (Dec. 4, 1907)
THE JJIOKMAU OKliUOMAX. WEDNESDAY, . DECEMBER 4. 1907. PRESIDENT ROOSEVELT'S MESSAGE IS READ TO THE SIXTIETH CONGRESS 1 WASHINGTON. Doc. 5. -The annual message of President Roosevelt was mail today In both houses of Congress, and practically no business was attempted by cither body beyond listening to the message. The galleries of both Senate and Hnuso were crowded at the begin ning of the session of each body, but as the reading progressed the attendance limlnished PomewhHt. In the main, however, It was well maintained until the last sentences of the document had fallen from the lins of the official read ers. Senators and members were sup plied with printed, copies of the message, and many of them followed the reading clerk carefully. The reading consumed about two and a quarter hours in both houses. The House did not follow up the lead vt yesterday in the matter of introduc tion of many bills, but :some measures were presented. In the Senate so far no bills have been introduced, but there is scarcely a Senator whose desk Is not well covered with Iheso documents, and It is probable that the flood will break out In that body tomorrow. Speaker Cannon treated the House to a surprise in naming the leadership of l he committee on banking and currency. This advance formation of that commit tee led to the conclusion on the part of manj; that It was his intention to press financial legislation, but those who are close to the Speaker tay that his only purpose was to afford a depository for petitions and letters bearing upon the currency question. The membership of the committee was Increased by the addition of one Demo crat, making seven members of that party on it, instead of six, as during the 59th Congress. This is in accordance with the request of the minority loader, Williams, but it is not to be taken as an indication that this request will be complied with in all other committees. Both the Senate and House adjourned Hlmost immediately after the conclusion of the reading of the message. The House adjourned until Thursday, when It is probable that It will again adjourn for tho week. Following is the full text of the mes sage: To the Senate and House of Representatives: No nati n lias greater resources than tours, and I flick It run bo truthfully said that the citizens of no nation posses greater energy and industrial ability. In uo na tion are the fundamental business condi tions sounder than In ours at this very moment; and it is foolish, when such is the rase, for peoph to hoard money instead of keeping it In sound honks; for It is such hoarding that Is the Immediate occasion t( mony stringency. Moreover, as a rule, Fhe business of our people is conducted with honesty and probity, and tills applies alike to farms r.nd factories, to railroads and franks, to all our legitimate commercial en terprises. 1 In any large body of men, however, there ore certain to be some who are dishonest, and If the conditions are such that these men prosper or commit their misdeeds with Impunity, thdr rxamplc Is a very evil thing for the community. Where these men are business men of great sagacity and of tem perament both unscrupulous and reckless, and where the conditions are such that they act without supervblnn or control and at first without effective check from public opinion, they diudc many Innocent people hi to making investments or embarking In hinds of business that are really unsound. When the misdeeds of these successfully dishonest men are discovered, suffering ?omes not only upon them, but upon tho Pnnocent men whom they have misled. Il ls a painful awakening, whenever It oc rurs: and, naturally, when it does occur those who suffer are apt to forget that the longer It was deferred the more painful it would be. In the effort to punish the guilty it l F'oth wise and proper to endeavor so far as possible to minimize the distress of those who have been misled by the entity. Yet It Is not possible to refrain because of such distress from striving to put an end to the misdeeds that are the tilt Imate causes of the suffering, and. as a means to this end, where possible to punish those responsible for them. There may be honest differences of outnton as to many governmental poli cies; hut. nurcly there can be no such dif ferences as to the need of unflinching per severance in the war against successful dis honesty. Quote I'rom Former Mesnoge. In my message to the Congress on De cember 5, nto.'t. I said: If the folly of man mars the general well being, then those who are Innocent of the folly will have to pay part of t he penal tv Incurred hy these who are guilty t.f th-j tolly. A panic brought on hy the specula tlve folly of part of the business communi ty would hurt the whole business com munity ; but such stoppage of welfare, though It might be severe, would not bo fasting. In the long run, the one vital fac tor In the permanent prosperity of the country is the high individual character of the average American worker, the average American citizen, no matter whether his work be mental or manual, whether it be farmer or wage-worker, business man or professional man. .In our Industrial and social system the Interests of all men are no closely inter ( nined that In the Immense majority of rases a straight -dealing man. who by bis fticlency. by his It. genu! ty and Industry, vent? fits himself, must also -benefit others. Normally, the man of great productive ca- (lactty, who becomes rich by guiding the ahor of many other men does so hy en abling them to produce more than they could produce without his guidance; and both he and they share In the benefit, which comes also to the public at large. The superficial fact that the sharing may be unequal must never blind us to the un derlying fact that there Is this sharing, and that the benefit comes In some degree to each man concerned. Normally, tho vageworker. the man of smaM means, and the average consumer, as well as the aver age producer, are all alike helped by mak ing conditions such that the man of ex ceptional business ahlllty receives an ex ceptional reward for his ability. Re train Evil, Help Good Trusts. Something can be done by legislation to help the general prosperity ; but no such help of a permanently beneficial character tan be given to the less able and less for tunate save as the results of a policy which shall Inure to the advantage of all industri ous and efficient people who act decently; and this is only another way of saying that any benefit which "comes to the less uble and less foi tunale must of necessity come even more to the more able and more fortunate. 1 f. therefore, the less fortunate man la moved by envy of his more fortunate hroth rr to strike ut Hie conditions tinder whit n t hey have both, t hough unequally, pros pered, the result will assuredly be that while :1a mage muy come to the one struck at, it will visit with an even heavier load the one who st rikes the blow. Taken as a n hole, wc must all go up or go dow n to rn her. Wt while not merely admitting, but In fixing upon this. It Is also true that where There Is no governmental restraint or super vision some of th" exceptional men use their energies, not In ways that are for the com mon good, but in ways which tell against this common good. The fortunes amassed through corporate organization are now s j targe and ves-t such power in those that wield them, as to make It a matter of nect sslty to give to the so ereign that Is, to the Government, which represents the people as a whole some effective power of t-upervlion over their corporate use. In or der to mure a healthy social and industrial If" every big corporation should be held rer.ioiijs1hlr by. and be accountable to. some tovercign t.trong enough to control Its, con duct. I am In no sense hostile to corpora ions. This Is Jin age of combination, and iny effoi t to prevent all combination will I'V not only useless, but in the end vi rions, because of the contempt for law which the failure to enforce law Inevitably pi truces. We should, moreover, recognize ;u coriiiMl and ample fashion the Immense giwd effected by corporate agencies In a country such as ours, and the wealth of iniellect, energy and fidelity devoted to their evvlcf, and therefore normally to the serv ice of the public, by their officers and di rectors. The corporation has come to stay, hi-t a the trade union has come to stay. Kach can do and has done great good. Kach ihould e favored so long as It does good Hut ea-rh rhould he sharply checked when U act against law and Justice. Asiwrt National sovereignty. . The makers of our National Con volution provided especially that the regu lation of Interstate commerce should come w lihin the ryhere of the general Govern ment. The arguments in favor of their tak ing this stand were even then overwhelm ing. But thf y are fax stronger today. In view of the enormous development of great business agencies, usually corporate In form. Experience has shown conclusively that it uftiM to try to get any adequate regu lation and supervision of these great cot -poratfons by state action. Such regulation and supervision can only be effectively ex ercised by. a sovereign whose Jurisdiction is coextensive with the Held of work of the corporations that Is. by the National Government. I believe that this regulation and supervision can be obtained by the en actment of lew by the Congress, our steady aim should be by legislation, cautiously and carefully undertaken, but icsolutely persevered In. to assert the sov ereignty of the National Government by affirmative action. This is only fit form an innovation. Tn substance it is merely a restoration; for from the earliest time such regulation of Industrial activities has been recognized in the action of the lawmaking bodies; and oil that I propose is to meet the changed conditions In such manner as will prevent the common weal t h abdicating the power it has always possessed, not only in this country, but also in England before and since this country became a separate Nation. It has been a misfortune that the Na tional laws on this subject have hitherto been of a negative or prohibit ive ra t her than an affirmative kind, and still more that t hey have in part sought to prohibit what could not be effectively prohibited, and have in part In their prohibitions con founded what should be allowed and what should not he allowed. It Is generally use less to try to prohibit all restraint on com pel It ion. whether this restraint be reason able or unreasonable ; and where it is not useless it Is generally hurtful. . . . Tho successful prosecution of one device to evade the law immediately develops another devb e to accomplish the same purpose. What Is needed is not sweeping prohibition of every arrangement, good or bad, which may tend to restrict competition, but such adequate supervision and regulation as will prevent any restriction of competition from being to the detriment of the puhlic, as wen as sucii supervision ana regulation as will prevent other abuse 3 In no way con nected with restriction of competition. I have called your attention in these quo tations to what T have already said because I am satisfied that it is the- duty of the National Government to embody in action the principles thus expressed. Control of K:iHronds. No small part of the trouble t hat we have comes from carrying to an extreme the National virtue of self-reliance, of in dependence In initiative and action. It Is wise to conserve this virtue and to pro vide for its fullest exercise, compatible with seeing that liberty does not become a lib erty to wrong others. Unfortunately, this is the kind of liberty that the lack of all effective regulation inevitably breeds. The founders of the Constitution provided that the National Government should have com plete and sole control of interstate com merce. Th:re was then practically no in terstate business save such as was con ducted by water, and this tr.e National Gov ernment at once proceeded to regulate in thoroughgoing end effective fashion. Con ditions have now s?o wholly changed that the Interstate commerce by water is in significant compared with the amount that goes by land, and almost all big business concerns are now engaged in Interstate commerce. As a. result. It can be but par tially and Imperfectly controlled or regu lated by the action of any one,of the sev eral states; such action inevitably tending to be either too drastic or else too lax, and In either case ineffective for purposes of Justice Only the National Government can In thoroughgoing fashion exercise the need ed control. This does not mean that there should be any extension of Federal author ity, for such authority already exists un der the Constitution In amplest and most far-reaching form, but it does mean that there should be an extension of Federal activity. This Is not advocating centraliza tion. It is merely looking facts in the face, and realizing that centralization in business has already come and cannot be avoided or undone, and that the public at large can only protect Itself from" certain evil effects of this business centralization by providing better methods for the exercise of control through the authority already centralized In the National Government by the Con stitution Itself. Legalize Traffic Contracts. There must be no bait in the healthy constructive course of action which this Nation has elected to pursue, and has stead ily pursued, during the last six years, as shown both in 1 he legislation of the Con gress and the administration of the law by the Department of Justice. The most vital need :s In connection 'with the railroads. As to these. In my Judgment there should . now be either a National incorporation act or a law licensing railway companies to engage in interstate commerce upon cer tain conditions. The law should be so framed as to give to the -Interstate Com merce Commission power to pass upon the future Issue of securities, while ample means should be provided to enable the commission, whenever in its Judgment it Is necessary, to make a physical valuation of any railroad. As i stated In my message to the Con gress a year ago, railroads should be given power to enter into agreements, subject to these agreements being made public In minutest detail and to the consent of the Interstate Commerce Commission being first obtained. Vntll the National Government assumes proper control of Interstate com merce, in the exercise of the authority it already possesses. It will be impossible either to give or to get from the railroads full Justice. The railroads and all other great corporations will do well to recognize that this control must come; the only question Is as to what governmental body can most wisely exercise It. The courts will deter mine the limits within which the Federal authority can exercise it, and there will still remain ample work within each state for the railway commission of that state; and the National Interstate Commerce Com mission will work In harmony with the several state commissions, each within Its own province, to achieve the desired end. Trusts Have Come to Stay. Moreover, tn my judgment there should be additional legislation looking to the proper control of the great business con cerns engaged in Interstate business, this control to be exercised for their own benefit and prosperity no less than foe the protec tion of investors and of the general public. As I have repeatedly said in messages to the Congress and elsewhere, experience has definitely shown not merely the unwisdom but the futility of endeavoring to put a stop to all business combinations. Modern Industrial conditions are such that combi nation is not only necessary but inevitable. It is so in the world of business Just as it Is so in the world of labor, and It Is as idle to desire to put an end to all corpora tions, to all big combinations of capital, as to desire to put an end to combinations of labor. Corporation and labor union alike have come to stay. Each If properly man aged is a source of good and not evil. Whenever in either there Is evil, it should be promptly held to account; but It should receive hearty encouragement so long as It is properly managed. It Is profoundly immoral to put or keep on the statute books a law. nominally in the Interest of public morality, that really puts a premium upon public immorality, by undertaking to forbid honest men from doing what must be done under modern business conditions, so that the law itself provides that its own infrac tion must be the condition precedent upon business success. To aim at the accom plishment of too much usually means the accomplishment of too little, and often the doing of positive damage. In my message to the congress a year ago, in speaking of the anti-trust laws. I said: Defects In Sherman Law. The actual working of our laws has shown that the effort to prohibit all combination, gocd or bad. is noxious where it to not in effective. Combination of capital, Hke com bination of labor. Is a necessary element In our present Industrial system. It Is not pos sible completely to prevent it; and if it were possible, such complete prevention would do damage to the body politic. What we need is not vainly to try to prevent all combina tion, but to secure ich rigorous and ade quate control and supervision of the com binations as to prevent their injuring the public, or existing in such forms as inevitably to threaten injury. ... It is unfortunate that our present laws should forbid all com blnatione Instead of sharply . discriminating between thoee combinations which do good and those combinations which do evil. . . . Often railroads would like to combine for the puriiose of preventing a big ehipper from maintaining improper advantages at the ex pense of small shippers and of the general public. Such a combination. Instead of be ing forbidden by law, should be favored. . . . It Is a public evil to have on the statute books & law Incapable of full enforce ment, because both judges and Juries realize that Us fuU enforcement would destroy the business of the country; for the result Is to make decent men violators of the Jaw against tb.elr will and to put a premium on the be havior of the willful wrongdoers. Such a result in turn tends to throw the decent man and the willful wrongdoer into close association, and In the end to drag down the former to the latter's level; for the man who becomes a law-breaker In one way unhappily tend to lose all respect for law and to he willing to break !t in many ways. No more scathing condemnation could he vWtfd upon a law than Is contained in the words of the Interstate Commerce Com mission when. In commenting upon the fact that the numerous Joint traffic aevciations do -technically violate the law. they say: "The decision of the Cntted States Supreme Court in the Trans-Missouri case and the Joint Traffic Association case has produced no practical effect upon the railway operations of the country. Such associations. In fact, exist now as they did before these decisions, and with the same general effect. In Justice to all parties, we ought probably to add that It Is difficult to 6ee how our interstate rallwaya could be operated with due regard to the interest of the shipper and the railway without concerted action of the kind afforded through these association.' This means that the law as construed by the Supreme Court Is such that the business of the country can not be conducted without breaking It. As I have elsewhere said: No Hostility to Corporations as Such. All this U substantially what I have said over and over again. Surely it ought not to he necessary to say that It in no shape or way represents any hostility to corporations as such. On the contrary. It means a frank recognition of the fact that combinations of capital, like combinations of libor, are a natural result of modern conditions and of our National development. As far as In iny ability lies my endeavor is and will bo to prevent abuse of power bv either and to favor hoth eo long as they do well. The aim of the National Government Is quite as much to favor and protect honest corporations, honest business men of wealth, as to bring to jus tice those Individuals and corporations rep resenting dishonest method. Most certainly there will be no relaxation by the Govern ment authorities In the effort to get at any great railroad wrecker any man who by clever swindling devices robs investors,' op presses wage-workers, and does injustice to the general public. But any such move as this Is in the Interest of honest railway op erators, of honest corporations, and of those who. when they invest their small savings In stocks and bonds, wish to be assured that these will represent money honestly expended for legitimate business purposes. To confer upon the National Government the power for which I ask would be a check upon overcap italization and upon the clever gamblers who benefit by overcapitalizntion. But it alone would mean an Increase in the value, an Increase in the safety of the stocks and bonds of law-abiding, honestly managed railroads, and would render it far easier to market their securities. I belte-v,e In proper publicity. There has been complaint of some of the in vestigations recently carried on. but those who complain should put the blame where it belongs upon the misdeeds which are done In darknos and not upon the investigations which brought them to light. The Admin istration is responsible for turning on the light, but it Is not responsible for what the light showed. I aek for full power to he given the Federal Government, because no single state can by legislation effectually cope with these powerful corporations engaged in interstate commerce, and, while doing them full justice, exact from them in return full Justice to others. The conditions of railroad activity, the conditions of our immense Inter state commerce, are eueh as to make the Central Government alone competent to exer cise full supervision and control. Most Corporations Honest. The grave abuses In Individual cases of railroad management In the past represent wrongs not merely to the general public, but, above all. wrongs to fair-dealing and honeet corporations and men of wealth, because they excite a popular anger and distrust which from the very naturo of the case tends to include in the sweep of its resentment good and bad alike. From the standpoint of the nubile I can not too earneptiy say that as soon as the natural and proper resentment aroused by these abuse becomes indiscrimi nate and unthinking, it also becomes not merely unwise and unfair, but calculated to defeat the very ends which those feeling h. have In view. There has been plenty of dis honest work by corporal lone in the past. There wll! not be the sitgntst iet-up in tne effort to hunt down and punish every dis honest man. But the bulk of our business is honestly done. In the natural indignation the neonle feel over the d'shonestv. It Is all essential that they ehould not lose their heads and get drawn Into an indiscriminate raid upon all corporations.- all people of welrh whether thev do well or ill. Out of any such wild movement good will not come, cannot come, ana never nas come. On the contrary, the surest way to Invite reaction Is to follow the lead of either dema gogue or visionary In a sweeping assault upon property values and upon public confidence, which would work incalculable damage In the buslnees world and would produce such distrust of the agitator that in the revul sion the dliruM would extend to honest men who. In sincere and sane fashion, are trying to remedy the evils. Control, Not Abolish, Trusts. The anti-trust law should not be repealed; but It should be made both more efficient and more in harmony with actual cond'tions. It should be so amended as to forbid only the kind of combination which does harm to the general public, such amendment to be ac companied by, or' to be an Incident of, a grant of supervisory power to the Government over these big concerns engaged in inter state business. This should be accompanied by provision for the compulsory publication of accounts and the subjection of books and papers to the inspection of the Government officials. A beginning has already been made for such supervision by the establishment of the Bureau of Corporations. The anti-trust law should not prohibit combinations that do no Injustice to the pub lic, still Hes those the existence of which is on the whole of benefit to the public. But even If this feature of the law were abol ished, there would remain as an equally ob jectionable feature the difficulty and delay now Incident to its enforcement. The Gov ernment must now submit to Irksome and repeated delay before obtaining a final de cision of the courts upon proceedings in stituted, and even a favorable decree may mean an empty victory. Moreover, to at tempt to control these corporations by law suits meai.s to impose upon both the De partment of Justice and the courts an Impos sible burden; It is not feasible to carry on more than a limited number of such suits. Such a law to be really effective must of course be administered by an executive body, and not merely by means of lawsuits. The design should be to prevent the abuses in cident to the creation of unhealthy and Im proper combinations, Instead of waiting until they are in existence and then attempting to destroy them by civil or criminal proceedings. Trusts We Should Prohibit. A combination should not be tolerated if it abuse the power acquired by combination to the public detriment. No corporation or assoclation of any kind should be permit ted to engage in foreign or interstate com merce that Is formed for the purpose of, or whose operations create, a monopoly or general control of the psoduction, sale, or distribution of any one or more of the prime necessities of life or articles of gen eral use and necessity. . Such combinations are against public policy; they violate the common law", the doors of the courts are closed to those who are parties to them, and I believe the Congress can close the channels of interstate commerce against them for Its protection. The law should make Its prohibitions and permissions as clear and definite as possible, leaving the least possible room for arbitrary action, or allegation of such action, on the part of the executive, or of divergent Interpreta tions by the courts. - Among the points to be aimed at should be the prohibition of unhealthy competition, such as by render ing service at an actual loss for the pur pose of crushing out competition, the pre vention of Inflation of capital, and the pro hibition of a corporation's making .exclusive trade with itself a condition of having any trade with itself. Reasonable agreements between, or combinations of, corporations should be permitted, provided they are first submitted to and approved by some appro priate body. ' Federal Charters for Corporations. The Congress has the power to charter corporations to engage in Interstate and for eign commerce, and a general law can be enacted under the provisions of which ex isting corporations could take out Federal charters and new Federal corporations could be created. An essential provision of such a law should be a method of predetermining by some Federal board or commission whether the applicant for a Federal charter was an association or combination within the restrictions of the Federal" law. Provision should also be made for com plete publicity in all matters affecting tho public and complete protection to the in vesting public and the shareholders In the matter of Issuing corporate securities. If an Incorporation law is not deemed ad visable, a license act for big interestate cor porations might be enacted; or a combina tion of the two might be tried. The super vision established might be analogous to that now exercised over National banks.- At least, the antitrust act should be supple mented by specific prohibitions of the meth ods which experience has shown have been of most service in enabling monopolistic combinations to crush out competition. The real owners of a corporation, shoulbe com pelled to do business In their own name. The right to hold stock in other corpor- I- at Ions phould hereafter be denied to Inter state corporations, unless on approval by the proper Government officials, and a pre requisite to such approval should be the list ing with the Government of all owners and btockholders, both by the corporation own ing such stock and by the corporation in which uch stock is owned. "To confer upon the National Government, in connection with the amendment I advo cate in the antitrust law, power of super vision over big business concerns engaged in interstate commerce, would benefit them as It has benefited the National banks. In the reeent business crisis It Is noteworthy that the Institutions which failed were insti tutions which were not under the supervision and control of the National Government. Those which were under National control stood the test. National control of the kind above advo cated would be to the benefit of every well managed railway. From the standpoint of the public there is need for additional tracks, additional terminals, and improve ments in the actual handling of the rail roads, and all this as rapidly as possible. Ample, safe, and speedy transportation fa cilities are even more necessary than cheap transportation. Therefore, there is need, for the Investment of money which will pro vide for all these things while at the same time securing as fap as is possible better wages and shorter hours for their employes. Therefore, while there must be- Just and reasonable regulation of rates, we should be the first to protest against any arbi trary and unthinking movement to cut them down without the fullest and most careful consideration of all interests con cerned and of the actual needs of the situ ation. Only a special body of men acting for the National Government under au thority conferred upon it by the Congress Is competent to pa38 Judgment on such a matter. K fleets of Food Inspection. Those who fear, from any reason, the ex tension of Federal activity will do well to study the history not only of the Na tional hanking act but of the pure food law, and notably the meat Inspection law recently enacted. The pure-food law was opposed so violently that its passage was delayed for a decade: yet it has worked unmixed and immediate good. The meat Inspection law was even more violently as sailed; and the same men who now de nounce the attitude of the National Govern ment In peeking to oversee and control the workings of interstate common larrlers and business concerns, then asserted that we were "discrediting and ruining a great American industry." Two years have not elapsed, and already It has become evident that the great benefit the law confers upon the public is accompanied by an equal benefit to the reputable packing establish ments. The latter are better off under the law than they were without It. The bene fit to Interstate common carriers and busi ness concerns from the legislation I advo cate would be equally marked. Incidentally, in the passage of the pure food law the action of the various state food and jiairy commissioners showed in strik ing fashion how much good for the whole people tesults from the hearty co-operation of the Federal and state officials in secur ing a given reform. It is primarily to the actitn of these state commissioners that we owe the enactment of this law; for they aroused the people, first to demand the en actment and enforcement of state laws on the subject, and then the enactment of the Federal law, without which the state law: were largely ineffective. There must be the closest co-operation between the National and state governments in administering these laws. Need of Elastic Currency. In my message to the Congress a year ego I spoke as follows of the currency: I especially call your attention to the con dition of our currency laws. The National bank act has ably served a great purpose In aiding the enormous business development of th country, and within ten years there has been an Increase In circulation per capita from $21.41 to $3.08. For several years evidence has been accumulating that additional legislation Is needed. The re currence of each crop season emphasizes the defects of the present laws. There must soon be a revision of them, because to leave them :is they are means to incur liability of business disaster. Since your body adjourned there has been a fluctua tion in the interest on call money from 2 per cent to 30 per cent, and the fluctuation was even greater during the preceding six months. The Secretary of the Treasury had to step in and by wise action put a stop to the most violent period of oscillation. Even worse than such fluctuation is the advance in- commercial rates and the un certainty felt in the sufficiency of credit even at high rates. All commercial inter ests suffer during each crop period . .Ex cessive rates for call money in New York attract money from the interior banks into the speculative field. This depletes the fund that would otherwise be available for com mercial uses, and commercial borrowers are forced to- pay abnormal rates, so that each Fall a tax, in the shape of increased Interest charges, is placed on the whole commerce of the country. The mere statement of these facts show that our present system is seriously defec tive. There Is need of a change. Unfortu nately, however, many of the proposed changes must be ruled from con sideration because they are complicated, are not easy of comprenension. and tend to dis turb existing rights and interests. We must also rule out any plan which would ma terially impair the value of the United States 2 per cent bonds now pledged to secure cir culation, the issue of which was made under conditions peculiarly creditable to the Treas ury. I do not press any especial plan. Vari ous plans have recently been proposed by expert committees bankers. Among the plans which are possibly feasible and which certainly should receive your consideration is that repeatedly brought to your attention by the present Secretary of the Treasury, the essential features of which have been ap proved by many prominent bankers and business men. According to this plan Na tional baiiks should be permitted to issue a specified proportion of their capital in notes of a given kind, the issue to be taxed at so high a rate as to drive the notes back when not wanted In legitimate trade. This plan would not permit the issue of currency to give banks additional profits, but to meet the emergency presented by, times of strin gency. Not Bankers Alone Interested. I do not say that this Is the right system. I only advance it to emphasize my belief that there is need for the adoption of some system which shall be automatic and open to all sound banks, so as to avoid all pos sibility of discrimination and favoritism. Such a plan would tend to prevent the spasms of high money speculation which now obtain In the New York market; for at present there Is too much currency at cer tain seasons of the year, and its accumula tion at New York tempts bankers to lend it at low rates for speculative purposes, where as at other times when the crops are being moved there is urgent need for a large but temporary Increase in the currency supply. It must never be forgotten that this question concerns business men generally quite as much as bankers; especially is this true of stockmen, farmers and business men in the West ; for at present at certain seasons of the year the difference in interest rates be tween the East and the West is from 6 to 10 per cent, whereas in Canada the corre sponding difference is but 2 per cent. Any plan, must, of course, guard the interests of Western and Southern bankers as care fully as it guards the interests of New York or Chicago bankers, and must be drawn from the standpoints of the farmer and the merchant no less than from the standpoints of the city banker and the country banker. Cannot Prevent Folly. I again urge on the Congress the need of Immediate attention to this matter. We need a greater elestlclty In our currency ; provided, of course, that we recognize the even greater need of a safe and secure cur re nee y There must always be the most rigid examination by the National authori ties. Provision should be made for an emergency currencv. The emergency issue should, of course, be made with an effective guaranty, and upon conditions carefully pre scribed by the Government. Such emer gency' issue must be based on adequate se curities approved by the Government, and must be issued under a heavy tax. This would permit currency being issued when the demand for it was, urgent, while se curing its retirement as the demand fell off. It Is worth Investigating to determine whether officers and directors of National . banks should ever be allowed to loan to themselVes. Trust companies should be subject to the same supervision as banks; legislation to this effect should be enacted for the District of Columbia and the terri tories. Yet we must also remember that even the wisest legislation on the subject can only accomplish a certain amount. No legisla tion can by any possibility guarantee the business community against the results of speculative folly any more than it can guarantee an Individual against the results of his extravagance. When an individual mortgages his house to buy an automobile he invites disaster; and when wealthy men, or men who pose as such, or are unscrupu lously or foolishly eager to become such, in dulge in reckless speculation especially if it is accompanied by dishonesty they jeop ardize not only their own future but the fu ture of all their innocent fellow-citizens, for they expose the whole business community to panic and distress. Demand for Tariff Revision. The income account of the Nation Is in a most satisfactory condition. For the six fiscal years ending with the first of July last, the total expenditures and revenues of the National Government, exclusive of the postal revenues and expenditures, were, in round numbers, revenues, $3,405,000,000 and expenditures, $3.273. 000. OOh. The net excess of income over expenditures, including in tne latter the $30,000,000 expended ror the Panama Canal, was $100,000,000 for the six years, an average of about $31,000. 000 a year. This represents an approximation be tween Income and outgo which it would be hard to Improve. The satisfactory working of the present tariff law 'has been chiefly re sponsible for this excellent showing. Never theless, there Is an evident and constantly growing feeling among our people that the time Is rapidly approaching when our system of revenue legislation must be revised. This country is definitely committed to the protective system and any effort to uproot It could not but cause widespread indus trial disaster In other words, the principle of the present tariff law could not with wis dom be changed. - But In a country of such phenomenal growth as ours It is probably well that every dozen years or so the tariff laws should be carefully scrutinized so as to see that no excessive or Improper bene fits are conferred thereby, that proper reve nue Is provided, and that our foreign trade Is encouraged. There must always be as a minimum a tariff which will not only allow for the collection of an ample revenue, but which will at least make good the difference in cost of production here and abroad; that Is. the difference in the labor cost here and abroad, for the well-being of the wage worker must ever be a cardinal point of American policy. The question snould be approached purely from a business stand point; both the time and the manner of the change being such as to arouse the minimum of agitation and disturbance in the business world, and to give the least play for selfish and factional motives. The sole considera tion should be to see that the sum total of changes .represent tho putt lie good. This means that the subject cannot with wisdom be dealt with in the year preceding a Presi dential election, because as a matter of fact experience has conclusively shown that at such a time it is impossible to get men to treat it from the standpoint of the public good. In my Judgment the wise time to deal with the matter is immediately after such election. Income and Inheritance Tax. "When our tax laws are revised the ques tion of an Income tax and an inheritance tax should receive the careful attention of our legislators. In my Judgment hoth of these taxes should be part of our system of Federal taxation. I speak diffidently about the Income tax because one scheme for an income tax was declared unconstitutional by the Supremo Court; while in addition it is a dlfffcult tax to administer In Its practical working, and great care would have to be exercised to see that It was not evaded by tbe very men whom It was most desirable to have taxed, for If so evaded it would, of course, be worce than no tax at all; as the least desirable of all taxes Is the tax whlen bears heavily upon the honest as compared with the dishonest man. Nevertheless, a graduated Income tax of the proper type would be a desirable feature of Federal tax ation, and it -Js to be hoped that- one may be devised which the Supreme Court wllf declare constitutional. The inheritance tax, however. Is both a far better method of tax ation and far more important for the pur pose of having the fortunes of the country bear in proportion to their increase in size a corresponding increase and burden of taxa tion. The Government has the absolute right to decide as to the terms upon which a man shall receive a bequest or devise from an other, and this point in the devolution of property is especially appropriate for the imposition of a tax. Uaws imposing such taxes have repeatedly been placed upon the National statute books and as repeatedly de dared constitutional by the courts; and these laws contained the progressive prin ciple, that is, after a certain amount is reached the bequest or gift, In life or death. Is increasingly burdened and the rate ot taxation is increased In proportion to the remoteness of blood of the man receiving the bequest. These principles are recognized already In the leading civilized nations of the world. In Great Britain all the estates worth $5000 or less are practically exempt from death duties, while the Increase is such that when an estate exceeds $5,000,000 in value and passes to a distant kinsman or stranger in b lood the govern ine n t rec e I ves all to id an amount equivalent to nearly a fifth of the whole estate. In France so much of an in heritance as exceeds $ 10,000,000 pays over a fifth to the state If it passes to a distant relative. The German law is especially inter esting to us because it makes the inheritance tax an imperial measure while allotting to the individual states of the empire a portion of the proceeds and permitting them to im pose taxes in addition to those imposed by the Imperial Government. Small Inheritances are exempt, but the tax Is so sharply progres sive that when the Inheritance is still not very large, provided it is not an agricultural or a forest iHnd, It is taxed at the rate of 25 per cent if It gots to distant relatives. There Is no reason why in the United States the National Government should not impose Inheritance taxes In addition to .those im posed by the states, and when we last had an inheritance tax about one-half of the states levied such taxes concurrently with the Na tional Government, making a combined max imum rote, in some cases as high as 25 per cent. Reason for Graduad Taxes. The French law has one feature which is to be heartily commended. The progressive principle is so applied that each higher rate is imposed only on the excess above tne amount subject to the next lower rate: so that each Increase of rate will apply only to a certain amount above a certain maximum. The tax should. If possible, be made to bear more heavily upon those residing without the country than within it. A heavy progressive tax upon a very large fortune Is in no way such a tax upon thrift or industry as a like tax would be on a small fortune. No ad vantage comes either to the country as a whole or to the individuals Inheriting the money by permitting the transmission in their entirety ot the enormous fortunes which would be affected by such a tax; and as an incident to Its function of revenue rakflng, Buch a tax would help to preserve a measureable equality of opportunity for the people of the genera tions growing to manhood. We have not the slightest sympathy with that socialistic Idea which would try to put laziness, thriftlessness and inefficiency on a par with industry, thrift and efficiency; which would strive to break up not merely private property, but what is far more important, the home, the chief prop upon which our whole civilization, stands. Such a theory, if ever adopted, would mean the ruin of the entire country a ruin which would bear heaviest upoo the. weakest, upon those least able to shift for themselves. But proposals for- leg islation such as this herein advocated are di rectly opposed to this class of socialistic theories. Our aim is to recognize what Lin coln pointed out: The fact that there are some respects in which men are obviously not equal; but also to insist that there should be an equality of self-respect and of mutual respect, an equality of rights before the law, and at least an approximate equality in tho conditions under which each man obtains the chance to show the stuff -that Is in him when compared to bis fellows. Obstacles to Enforcing Law. A few years ago there was loud complaint that the Jaw could not be Invoked against wealthy offenders. There is no such com plaint now. The course of the Department of Justice during the last few years has been such as to make it evident that no man stands above the law, that no corporation Is so wealthy that it can not be held to ac count. The Department of Justice has been as prompt to proceed against the wealthiest malefactor whose crime was one of greed and cunning as to proceed against tho agitator who incites to brutal violence. Everything that can be done under the existing law. and with the existing state of public opinion, which so profoundly Influences both the courts and Juries, has been done. But the laws themselves need strengthening in more than one important point; they should be made more definite, so that no honest man can be led unwittingly to break them, and so that the real wrongdoer can be readily punished. Moreover, there must be the pubfic opinion back of the laws or the laws themselves will be of no avail. At present, while the average Juryman undoubtedly wishes to see the trusts broken up, and Is quite ready to fine the corporation Itself, he is very reluctant to find the facts proven beyond a reasonable doubt when It comes to sending to jail a member of the business community for in dulging In practices which are profoundry unhealthy, but which, unfortunately, the business community has grown to recognize as well-nigh normal. Both the present con dition of the law and the present temper of juries renders It a task of extreme diffi culty to get at the real wrongdoer in any such case, especially by Imprisonment. Yet It Is from every standpoint far preferable to punish the prime offender by imprisonment rather than to fine the corporation, with the attendant damage to stockholders. The two great evils in the execution of our criminal laws today are sentimentality and technicality. For the latter the remedy must come from the hands of the legisla ture, the courts and the lawyers. The other must depend for its cure upon the gradual growth of a sound public opinion which shall insist that regard for the law and the demands of reason shall control all other Influences and emotions in the Jury box. Both of these evils must be removed or pub lic discontent with the criminal law will continue. Abuse of Injunction. Instances of abuse in the granting of in junctions in labor disputes cc-Allnue to oc cur, and the resentment In the minds of those who feel that their rights are being in vaded and their liberty of. action and of speech unwarrantably restrained continues likewise to grow. Much of the attack on the use of the proress of injunction is wholly without warrant; but I am con strained to express the belief that for some of it there Is warrant. This question is becoming more and more one of prime im portance, and unless the courts will them selves deal with it in effective manner, it is certain ultimately to demand some form of legislative action. it would be most un fortunate for our social welfare if we should permit many honest and law-abiding citi zens to feel that they had just cause for re garding our courts with hostility. I earnestly commend to the attention of the Congress thin matter, so that some way may be de vised which will limit the abuse of injun tions and protect those rights which from time to time it unwarrantably invades. Moreover, discontent is often expressed with the use of . the process of Injunction by the courts, not only in labor disputes, hut where state laws are concerned. I refrain from discussion of tills question as I am Informed 'that it will soon receive the consideration of the Supreme Court. The Federal courts must of course , decide ultimately what are the respective spheres of state and Nation in connection with any law. estate or National, anil they must decide definitely and finally in matters affecting in dividual citizens, not only as to the rights and wrongs of labor, but as tn the rights and wrongs of capital; and the National Govern ment must always see that the decision of the court is put Into effect. The process of injunction Is an essential adjunct of the court's doing its work veli; and as preventive measuree are always better than remedial, the wise use of this process is from every standpoint commendable. Hut w here It is recklessly or unnecessarily used, the abuse should be censured, above all by the very men who are properly anxious to prevent any effort to shear the courts of this necessary power. The court's decision must be final ; the protest is only against the conduct of Individual judges in needle-siy anticipating such final decision, or in the tyrannical use of what is nominally a temporary injunction to accomplish what is in fact a permanent decision. Prevent Railroad Wrecks. The loss of life and limb from railroad accidents In this country has become ap palling. It is a subject of which the Na tional Government should take super vislch. It might be well to begin by providing for a Federal inspection of Interstate rail roads somewhat along the lines of Federal inspection of steamboats, alt hough not go ing so far; perhaps at first all that it would be necessary to have would be some officer whose duty would be to investigate all accidents on interstate railroads and re port in detail the causes thereof. Such an officer should make It his business to get into close touch with railroad operating men so as to become thoroughly familiar with every side of the question, the idea being to work along the lines of the present steam boat Inspection law. Inabilities of Employers. The National Government should be a model employer. It Fhould demand the highest quality of service from each of its employes and It should care for all of them properly In return. Congress should adopt legislation providing limited but definite compensation for accidents to all workmen within the "scope of the Federal power, in cluding employes of navy -yards and arse nals. In other words, a model employers' liability act, far-reaching -and thorough going, should be enacted which should apply to all positions, public and private, over which the National Government has juris diction. The number of accidents to wage workers, including those that are prevent able and those that -are not, has become appalling in the mechanical, manufacturing and transportation operations of the day. It works grim hardship to the ordinary wage-worker and his tamily to have the effect of such an accident fall solely upon him; and, on the other hand, there arc whole classes of attorneys who exist only by Inciting men who may or may not have been wronged to undertako suits for negli gence. As a matter of fact a suit for negligence is genorally an inadequate remedy for the person injured, while it often causes alto gether disproportionate annoyance to the employer. The law should be made such that the payment for accidents by the em ployer would be automatic Instead of being a matter for lawsuits. Workmen should receive certain and definite compensation for all uccldents in industry irrespective of neg ligence. The employer is tho agent of the public and cn his own responsibility and for his own profit he serves the public. When he starts in motion agencies which create risks for others, he should take all the ordinary and extraordinary risks in volved; and the risk he thus at the moment assumes will ultimately be assumed, as it ought to be, by the general public. Only in this way can the shock of the accident be diffused, instead of falling upon the man or woman least able to bear it, as Is now the case. The community at large should share the burdens as well at the benefits of in dustry. By the proposed law, employers would gain a desirable certainty of obli gation and get rid of litigation to deter mine It, while the workman and his family would be relieved from a crushing load. With such a policy would come Increased care and accidents would be reduced in number. The National laws providing for employ ers' liability on railroads engaged In inter state commerce and for safety appliances, as well as for diminishing the hours any employe of a railroad should be permitted to work, should all be strengthened wherever in actual practice they have shown, weak ness; they should be kept on the statute books in thoroughgoing form. Bring Law I'p to Inte. The constitutionality of the em ploy era' liability act passed by the preceding Con gress has been carried before the courts. In two Jurisdictions the law has been de clared unconstitutional, and in three juris dictions its constitutionality has been af firmed. The question has been carried to the Supreme Court, the case has been heard by that tribunal, and a decision Is expected at an early date. In the event that the court should affirm the constitu tionality of the act. I urge further legis lation along the lines advocated In my message to the preceding Congress. The practice of putting the entire burden of lo&s to life or limb upon the victim or the vic tim's family is a form of social injustice In which the United States stands In unen viable prominence. In both cur Federal and state legislation we have, with few exceptions, scarcely gone farther than the repeal of the fellow-servant principle of tho old law of liability, and In some of our states even this slight modification of a completely outgrown prin ciple has not yet been secured. The legis lation of the rest of the industrial world stands out In striking contrast to our backwardness in this respect. Since 13U5 practically every country of Europe, to gether with Great Britain, New Zealand. Australia, British Columbia, and the Cape of Good Hope has enacted legislation em bodying In ene form or another the com plete recognition of the principle which places upon the employer the eniire trade risk in the various lines of industry. I urge upon the Congress the enactment of a law which will at the same time bring Federal legislation up to the standard already established by all tho European countries, and which will serve as a stimulus to the various states to perfect their legislation In this regard. Extend Eight-Honr Law. The Congress should consider the exten sion of the eight-hour day. The constitu tionality of the present law" has recently been called Into question, and the Supreme Court has decided that the existing legisla tion Is unquestionably within the powers of the Congress. The principle of the eight hour dty shculd as rapidly and as far as practicable be extended to the entire woik carried on by the Government; and the present law should be amended to embrace contracts on those public works which the present wording of the act has been con strued to exclude. The general Introduc tion of the eight-hour day should be tht goal toward which we should steadily tend, and the Government should set the ex ample in this respect. . Investigate Inbor ltihputes. Strikes and lockouts, with their attendant loss and suffering, continue to Increase. For the five years ending December 31, 1105, the number of strikes was greater than those In any previous ten years and was double the number in the preceding five years. These figures indicate the Increas ing need of providing somo machinery to deal with this class of disturbances in tbe interest alike of the employer, the employe, and the general puhlic. I renew my pre vious recommendation that the Congress favorably consider the matter of creating the machinery for compulsory investigation of such industrial cont roversles as are of sufficient magnitude and of sufficient con cern to the people of the country as a whole to warrant the Federal Government in tak ing action The need for some provision for such in vestigation was forcibly illustrated during the p.tst Summer. a, strike of telegraph operators seriously Interfered wtlh tel. graphic communication, causing great dam age to business interests and serious in convenience to the general public. Appeals were made to me from many parts of the country from city councils, from boards of trade from chambers of commerce, and from labor organizations, urging that steps be taken to terminate the strike. Kvery thtng that could with any propriety be done by a representative of the Government was done, without avail, and for weeks the pub lic stood by and suffered without recourse of any kind. Had the machinery existed and had there been authority for compul sory investigation of the dispute, the pub lic would have been placed in possession of the merits of the controversy, and public opinion would probably have brought about a prompt adjustment. Kach successive step creating machinery for the adjustment of labor difficulties must be taken with caution, but we should en deavor to make progress in this direction. The provisions of the act of Isns creating the chairman of the Interstate Commerce Commission and the Commissioner of Labor a board o mediation in controversies be tween interstate railroads and their em ployes has, for the first time, been subjected to serious t-sts within the past year, and the wisdom of the experiment has been fullv demonstrated. Tbe creation of a board for compulsory investigation in cases where mediation falls and arbitration is rejected Is the next logical step in a progressive programme. J,abor of Women and Children. It is certain that for some time to come there will be a constant increase absolutely, and perhaps relatively, bf those among our citizens who dwell In cities or towns of some size and who work for wages. ThU means that there will be an ever-increasing need to consider the problems Inseparable from a great Industrial civilisation. Wheie an Immense, and complex business, especially in those branches relating to manufacture and transportation, is transacted by a large number of capitalists who employ n very much largVr number of wage-earners, the former tend more and more to combine Into corporations and the latter Into unions. The relations of the capitalist and wage-worker to one another, and of each to tho general public, are not always easy to adjust; and tj put them and keep them on a. satisfactory basis is one of the most important and on of the most delicate tasks before our whole civilization. Much of the work for the ac complishment of this end must be done by the Individuals concerned t hemselves, whether singly or in combination ; and the one fundamental fact that must never bo lost track of is that the character of tho average man, whether he be a man of means or a mm who works with his hands, is the most important factor in solving the prob lem aright. But it Is almost equally Im portant to remember that without good laws It Is also Impossible to reach the proper solution. It is idle to hold that without good laws evils such as child labor, as the over-working of women, as the failure to protect employes from loss of life or limb, can be effectively reached, any more than the evils of rebates and Btock-wateting can be reached without good laws. To fall to stop th-se practices by legislation means to force honest men into them, because other wise the dishonest who surely will take ad vantage'of them will have everything their own way. Tf the states will correct these evils, well and good; but the Nation must stand ready to aid them. No question growing out of our rapid and complex industrial development is more im portant than that of tiie employment of women and children. Tbe presence of wo men In Industry reacts with extreme direct ness upon the character of the home and upon family pfe. and the conditions sur rounding the employment of children bear a vital relation to our future citizenship. Our legislate n in thoee areas under the control of I he Congress is very much behind the legislation of our more progressive states. A thorough and comprehensive measure should be adopted at this session of the Congress relating to the employment of women and children in the District of Co lumbia and the territories. The investiga tion Into the condition of women and chil dren wage-earners recently authorized and directed by the Congress Is now being car ried on in the various states, and 1 recom mend that the appropriation made last year for beginning this work be renewed, in order that we may have the thorough and comprehensive investigation which the sub ject demands. The National Government has as an alttmate resort for control of child labor the use of the Interstate commerce clause to prevent tire, products of child labor from entering into Interstate com merce. But before using this it ought cer tainly to enact model laws on the subject for the territories under its own Immediate control. Jnslstence Upon Honesty. There is one fundamental proposition which can be laid down as regards all these matters, namely: While honesty by itself will not solve the problem, yet the insist ence upon honesty not merely technical honesty, but honesty In purpose and spirit is an essential element In arriving at a right conclusion. Vice in Its cruder and more archaic forms shocks everybody; but there is very urgent need that public opin ion should be just as severe In condemna tion of the vice which hides itself behind class or professional loyalty, or which de nies that It is vice if it can escape con viction in the courts. The public and the representatives of the public, the high offi cials, whether on the bench or in executive or legislative positions, need to remember that often the most dangerous criminals, so far as the life of the Nation is concerned, are not those who commit the crimes known to and condemned by the popular conscience for centuries, but those who commit crimes only rendered possible by the complex con ditions of our modern industrial life. It makes not a particle of difference whether these crimes are committed by a capitalist or by a laborer, by a leading banker or manufacturer or railroad man, or by a lead ing representative of a labor union. Swind ling In stocks, corrupting legislatures, mak ing fortunes by the inflation of securities, by wrecking railroads. by destroying compet itors through rebates these forms of wrong doing In the capitalist, are-far more infa mous than any ordinary form, of embezzle ment or forgery; yet it is a matter of ex treme difficulty to secure the punishment of the man most guilty of them, most re sponsible for them. The business man who condones such conduct stands on a level with the labor man who deliberately sup ports a corrupt demagogue and agitator, whether head of a union or head of some municipality, because he is said to have "stood by the union." The members of the business community, the educators, or clergymen, who condone and encourage the first kind of wrong-doing, are no more dan gerous to the community, but are morally even worse, than the labor men who are guilty of the second type of wrong-doing, because less is to be pardoned those who have no such excuse as Is furnished either by Ignorance or by dire need. Farmers and Wage-Workers. When the Department of Agriculture was founded there was much sneering as to ita usefulness. No department of the Govern ment, however, has more emphatically vin dicated Its usefulness, and none save the I'os toff ice Department comes so continually an (I intimately into touch with the people. The two citizens whose welfare is In the ag gregate most vital to the welfare of the Na tion, and therefore to the welfare of all other citizens, are the wage-worker who does manual labor and the tiller of the soil, the farmer. There are, of course, kinds of labor where the work must be purely mental, and there are other kinds of labor where, under existing conditions, very little demand indeed is made upon the mind, though I am glad to say that the propor tion of men engaged in this kind of work is diminishing. But in any community with the solid, healthy qualities which make up a really great nation the bulk of the people should do work which falls for the exercise of both body and mind. Progress cannot permanently exist In the abandonment of physical labor, but in the development or physical labor, so that It shall represent more and more the work of the trained mind in the trained body. Our school system is gravely defective in so far as it puts a premium upon mere lit erary training nnd tends therefore to train the boy away from the farm and the work shop. Nothing is more needed than the best type of industrial school, the school for me chanical Industries In the city, the school for practically teaching agriculture In the country. The calling ot the skilled tiller of the soil, the calling of the skilled mechanic, should alike be reclgnlzed as professions. Just bus emphatically as the callings of law yer, doctor, merchant or clerk. The schools should recognize this fact and it should