Hypotheken Aktien-Bank (Pommeranian Landbank, L't'd) at Berlin, and the Mecklinburg-Strelitische. HypothekenHypothekenBank (M. S. Landbank, L't'd) closely allied with the former. The results of these failures and similar earlier troubles, in the case of the now defunct "Deutsche Grundschuldbank" (German Land Mortgage Bank) and the "Preussische Hypothekenaktienbank" (Prussian Land Mortgage Bank, L't'd) was the discovery of serious abuses on the part of directors and managers vested with fiduciary powers. It was proved that the managers had violated the law of the land, as well as the charters of their banks, by issuing mortgage bonds to borrowers on property of insufficient value and by using the funds of the society for private speculative dealings in no way connected with the normal business of the institution. Among the charges which were proven against the directors of the Pommeranian Land

Bank was that of founding subsidiary banks in order to hide risky speculative undertakings, which are not tolerated by the Prussian law. The Directors of the Prussian Land Bank, L't'd were accused of falsifying on a grand scale the balance sheets for a number of years.

In the case of the other banks, which had to suspend during the critical period, crafty methods of bookkeeping for the purpose of hiding the financial relations of the bank to their leading spirits (the Directors), or actual losses resulting from their speculative dealings were proven in a large number of cases, as, for instance, in the case of the Rheinau concern in Mannheim and several provincial banks in the Rhein province.* It is a matter for congratulation that no scandals of this nature ever have been hinted at in connection with the govern ment railway administrations of any of the German states.

SWISS RAILWAY CORRUPTION.

One is perfectly safe in saying that in connection with Swiss Government Railways, there exists no such thing as graft in any of its grosser forms. Unquestionably, Swiss railway officials are human, but, just as unquestionably, the railway administration which they are giving the country is as honest and free from any taint of corruption as is any business enterprise of equal magnitude in any part of the world. This, however, it is only fair to state, is due not so much to the perfection of the machinery of their Civil Service, which in some ways is inferior to that of Prussia, as to the Swiss standard of political morality, which probably is the highest to be found in any part of the globe.

Even when Swiss railways were in corporation hands, there was surprisingly little graft, and probably there is less at the present time. What little corruption existed in connection with the old

private railways, was so frowned upon and so ruthlessly stamped out, that it had little chance of getting a foothold anywhere. An instance in point was related to Professor Frank Parsons by Professor Borgeau of the University of Geneva. "The vote of the Canton of Vaud,' "* he said was necessary to the fusion of the "Jura Berne" and the "Swiss Occidentale" under the Simplon Company. The Canton owned a lot of railway shares and nothing could be done without its vote. M. Vesser, a man of great political influence, was offered an option on a block of stock if he would carry the measure. The offer was worth about 30,000 francs to him. He took it and carried the bill, which apparantly was not against the public interest, anyway. The bribe became known, and within three days M. Vesser had to resign his office, a result "brought about by the moral pressure of his friends and the public and by the bombardment of the press, the papers of his own party joining in the attack."

"The Railways, the Trusts and the People." P. 357.

While in Lausanne, the same story was related to me, together with the additional fact that M. Vesser also had been promptly "cut" by most of his best friends, who declared that such an action on his part was unworthy of a gentleman and a citizen.

While the advantages of a good system of Civil Service examinations are

manifold, at the same time, no system or mechanism can take the place of a healthy and sensitive public conscience, which can be relied upon to be as spontaneous and as strenuous in its condemnation of crookedness in positions of public trust, as it is of crime or dishonor in the more intimate affairs of private life.

T used to be believed that a record crop meant low prices because men were taught that supply and demand regulated cost. We know now that it is only relatively true, and could not be the invariable rule unless the law of supply and demand worked automatically despite interference or restriction from man-made laws.

There has been no shortage in the wheat crop for several years, and there have been no fewer mouths craving to be filled with bread, and yet wheat has reached a record price in the market, and the hungry increase daily.

Two explanations of the presence of both these conditions at once are offered, viz: that wages are so high and general prosperity so great, that the high price of breadstuffs is but a natural result, and is not felt as a hardship by consumers. Or, that it is a purely artificial condition, caused by speculation or monopoly made possible by legal restrictions.

If it be a natural condition, then the farmers will be receiving the highest market price for their products, and will in turn set mills and factories to working over time to supply the needs of themselves and families. But this is not so. The wheat being bought and sold at such high figures was originally purchased from the farmer at a normal price, and he is getting none of the ex

tra profit. He cannot, therefore, give an impetus to the manufacturing trades; he is not purchasing freely for himself and family, because times are relatively hard with him and with all other producers, and he cannot spend what he has not got.

If on the other hand, it is an unnatural condition, caused by special privilege or legal restrictions, then we shall find the few profiting largely, with the general prosperity greatly depressed, and the many suffering for work and food.

There seems to be but one conclusion to reach, reasoning from these premises, which are in accordance with the principles of political economy.

But this condition of affairs, where the powerful reap advantage from the necessities of the many, is neither new nor American. Ever since there has been a record of the human race, the privileged classes have profited from the pressing needs of the masses, and always the same monopoly has been present as a fundamental cause.

Only a year or so ago John D. Rockefeller, Jr., told his Bible Class that Joseph was "a splendid type of man," whom his hearers would do well to emulate; that he was "able, far-sighted and thrifty; that he grasped his opportunities and made the most of them.”

But the young millionaire did not tell his class that in the case of Joseph as

in his own, position and privileges secured by law gave this "splendid type of man" opportunities that his fellowmen were cut off from. He did not attempt to show that if the same opportunities were secured alike for all, there would be no chance for one to grow rich and powerful at the expense of the many.

It may be interesting to study what Joseph did that so commended him to the young Standard Oil magnate. To know who a man's heroes are is to know a man's ideals, and a man's ideals are a man's self. So to know what manner of man Joseph was is to know what manner of man young Mr. Rockefeller would be.

Joseph was really a "sharp financier," as sharp as any we have today. He made his great success in "corn" as modern "far-sighted and thrifty" men have done.

The only record we have of Joseph is that in the Bible, where we are told that Joseph knew that a famine was coming upon Egypt, and that the only way to meet it was by storing up corn in the "fat" years.

Although so recently one of the "people" himself, languishing in a jail, he did not make his knowledge generally known. He gave it only to the king and his crowd of privileged ones. To them he said, "Let them lay up corn under the hand of Pharaoh." In consequence of this sage advice, Joseph was made ruler next to Pharaoh, and he "went out over all the land," but no word of warning gave he to the common people. Centuries later it was said of one who was not "far-sighted and thrifty" that the "common people heard him gladly." But Joseph's message was for the privileged few.

In Genesis, 47th chapter, 15-16 verses we are told how Joseph took away part of the instruments of production when the first taste of the famine was being felt. The people managed to live somehow through the first year of suffering by parting with all their available wealth

and capital. But the second year found them in worse plight.

"All that a man hath," even himself, "will he give for his life," so "the common people" came to Joseph the thrifty, and said unto him, "We will not hide it from my lord, how that our money is spent; my lord hath also our herds of cattle; there is naught left in the sight of my lord, but our bodies and our lands. Wherefore shall we die before thine eyes, both we and our land? Buy us and our land for bread, and we and our land will be servants unto Pharaoh; and give us seed, and we may live and not die, that the land may not be desolate."

(It is evident from this that the oppressed Egyptians saw that land without a community dwelling upon it would lose its value.)

"And Joseph," the "splendid type of man," the first in fact to understand the land question-was much too keen to buy slaves; he "bought all the land of Egypt for Pharaoh; for the Egyptians sold every man his field, because the famine prevailed over them; so the land became Pharaoh's."

"Then said Joseph unto the people; Behold I have bought you this day, and your land for Pharaoh. Lo, here is seed for you and ye shall sow the land." In these two statements Joseph showed his understanding of the land question and the absolute power of the landlord, which he immediately proceeded to use. He saw that he who owned the land owned the people upon the land, so "he removed them from one of the borders of Egypt even unto the other end thereof.

Moreover, Joseph the far-sighted, in giving the people seed to sow in exchange for their bodies and their lands, laid the foundation of our modern system of Christian Charity, with its small doles to the masses in exchange for the rights supposedly accorded by the constitution of the country.

High-priced breadstuffs, appalling unemployment and consequent want in spite of enormous crops, are as much

the result of Josephian methods and ideals today as they were in those old days in Egypt. It might be well to temper our admiration of this "splendid type

of man" with a little consideration of the effect of Joseph's work, not upon the privileged few, but upon the oppressed many.

IN

N the year 1860, Los Angeles, Cal., then a straggling desert town of 5000 population, granted a franchise to a private water company, by which the city granted the exclusive privilege of furnishing the city's water supply for a period of thirty years, without recompense or remuneration to the city. Indeed, the little village thought itself well rid of a very troublesome proposition, and, laughing in its municipal sleeve, soon forgot the incident. Previous to the granting of this franchise the pueblo of Los Angeles had owned its water supply, under the old Mexican pueblo laws of the nineteenth century.

The history of Los Angeles, from 1868 to 1898, the date of the expiration of the thirty-year franchise, is duplicated in the history of the cities of almost every state in the American Union. The first year's earnings of the private water company, with a population of 5,000, was $20,000; when the franchise expired in 1898, the population of the city was in excess of 100,ooo, and the earnings of the water corporation had increased from a miserable total of $20,000 per annum to a magnificent total of $425,000. True, the corporation was giving poor service, at an exorbitant price, but it had meanwhile acquired "vested rights," and at the expiration of its franchise demanded a renewal of its charter for an additional fifty years, on the same terms and conditions as that under which it was operating, viz: without compensation to the

city whatever. But there were those in the city who thought that a fifty-year exclusive water franchise in a city of one hundred thousand souls was of some value to the grantee, and they insisted, through the city council, on securing for the city some compensation, or at least some assurance of better service and a more adequate fire protection. But the old corporation refused to grant any concessions; it was master of the situation and determined not only to secure the franchise which it desired but to obtain it upon its own terms.

Then occurred one of the most stubbornly contested battles in the history of American municipalities. Back and forth through all the courts of the state, the contest waged; tens of thousands of dollars were spent in the ensuing three years' litigation in which the corporation involved the city. The Los Angeles water fight became an issue in state politics, for the corporation fought to control the courts of the state. Be it said to the credit of the people of the state and the state courts as well, that the city finally won the victory and it was settled that the city might impose such conditions and limitations as she saw fit in granting or in renewing franchises. Meanwhile a sentiment favorable to the city again assuming municipal ownership and operation of the water plant, had grown up; people were wearying of the tyrannical methods of the private corporation; its methods and its actions. had become intolerable, and the course

it had pursued had jeopardized the best interests of the city, indeed, had threatened the growth and future prosperity of a thriving metropolis.

Under these circumstances it is little wonder that the sentiment for municipal ownership, which had appeared early in the fight, as a cloud no larger than a man's hand in the corporation sky, now assumed the proportions of a cyclone, and when the city had won its fight for regulation, the people were ripe for municipal ownership.

The private corporation now loudly prayed for a franchise upon almost any conceivable terms which the city might name, but the city would have none of it. It was launched upon a campaign of municipal ownership and the corporation, scenting the drift of things, bowed to the inevitable and consented to submit the matter to a vote of the people. It was the last stand of a beaten and defeated public foe. The corporation named an exorbitant price ($2,000,000) for its plant, now antiquated and badly out of repair after three years of neglect. Every device and every argument known to private vested interests were used in the following campaign. The people were assured from press and forum that the water plant was a losing venture; the exorbitant price was pointed out; nor did the opponents of municipal ownership forget to point out the dilapidated condition of the plant. It would require millions of money and bankrupt the city to undertake the resurrection and reconstruction of the city's water system; only the vast credit of private enterprise was equal to SO gigantic a task. Vituperation and villification of any person in private or public life who dared to espouse the cause of public ownership was the common fate; and yet when the fateful day arrived, and the last ballot had been cast and counted, public ownership had won by a majority of five to

one.

Thus, after a three years' struggle, which began in an effort to regulate

the affairs of a private corporation and ended in actual public ownership, the people of Los Angeles found themselves once more in possession of their own. They had made the best of a bad bargain and were now in a position to verify or to refute the predictions of their corporate opponents. At least they were masters of their own destiny, with no private interests to say them nay.

The city entered upon its possession of the water plant in February, 1902, and a paragraph from the first annual report of the Board of Water Commissioners may be pertinent to this part of our story; it is as follows:

"It is not necessary, nor is it fitting that this report should attempt to deal with the merits of the controversy between the water company and the city, which arose upon the expiration of the term of the contract and was carried on for over three years, in many actions, in all the courts having jurisdiction, and involving many difficult questions of law and equity. This controversy has been terminated by the taking over of the works by the city at the agreed price of $2,000,000, and the settlement was overwhelmingly approved by the citizens, as shown by their votes of over five to one. authorizing the issue of the water bonds.

"It is well, however, to seriously consider and take to heart the unmistakable lesson taught by the whole history of this transaction, beginning with the execution of the contract in 1868 and ending with the payment of the price for the works in 1901; and that lesson is the unwisdom and the danger of yielding up for any consideration or to any person the municipal control of the waters which the city owns and has always owned."

That paragraph was written in the wisdom of past experience. How infinitely greater the truths there expressed seem, in view of the city's future seven year's experience.

Beginning with the year 1902 and ending with the last fiscal year of 1908, we get the following results, for the