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The Commoner.
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Suggested Legislation
A Modus Vivendi, by Senator Franci 6. Ntwlands
h The unrest and business disturbance of the
mntry are due to uncertainties regarding the
iriff and the three branches of interstate com-
lerce transportation, or the railroads; trade.
tr the trusts; and exchange, or the banks. The
scord between the progressive and reactionary
tctions of the republican party preclude parti-
ra determination of these questions at this
sslon, and the division of responsibility in the
it congress the house being democratic ana
ie senate republican will preclude partisan
termination during the nest two years.
Is it not possible, therefore, to provide a
due Vivendi which will involve the immediate
Ibption of such changes in existing law .as are
inconsistent with the party principles of
ter narty. leaving to the congress and admin-
ration elected in 1912 the determination of
tely partisan considerations? In other wordd,
ia we not substitute business for partisan
rtslation during the next two years?
make the following suggestions as a basis
ci'a business-like modus Vivendi which will lead
idually and progressively to reform of exist-
abuses, without radical readjustments.
I.
THE TARIFF
f all these questions the tariff alone presents
inctiv.ely partisan considerations the basic
of the democratic party being revenue, that
the republican protection; the -former involv-
- incidental, the latter designed, protection of
rlcan industries. The republican party has
ared that the standard of protection shall
the difference in the cost of production at
ie and abroad, with a fair profit to the man-
cturer added; the democratic party favors a
dual reduction of duties to a revenue basis,
:be accomplished without risking a flood of
ign- importations to the .injury of American
istries. . It is believed that many existing -
iesiare-iar-above'-the standard -fixed by either -ty;
if so, both parties should unite in their
uction. If the revenue duty on a particular
modity would be thirty per cent, the pro-
ive duty would be forty "per cent, and the
ensting duty is fifty per cent, there is no reason
both parties should not agree to a reduction
forty per cent.
would, therefore, suggest the following:
ne Provide for a non-partisan tariff com-
ion, with powers and functions similar to
e of the interstate commerce commission,
uding the power of investigation and of
mmendation to the president and to con
s, and the power, after hearing, uppn the
plaint of importers or upon its own inltia-
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ged by the standard or rule fixed by con-
s; such standard for the present to be the
erence in the cost of production at home and
road, with a. fair profit to the manufacturer
ed.
wo Provide that when the commission
s that any duty is in excess of the standard
A fttr rtn-rtctyaaa ttntih nfir aVinll ha rrr-o Hit nll-rr
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uced to such standard by executive order in
or more annual installments. Give the
ident, upon the finding of the tariff commis-
that the effect of the lowering of any duty
been to increase importations under it ten
cent, the power to -arrest such reduction and
rt to congress, thus providing a safety brake,
h will prevent possible alarm as to a flood
mportatlons to the Injury of existing Ameri-
industries.
II.
TRANSPORTATION
Transportation is divided into two branches.
ite and interstate; the former subject to. the
'Ulation of state sovereignty, the latter of
Itional sovereignty, whether conducted by cor-
urate agents of state or national creation. The
nation of railroads, therefore, involves the
ction of two dfptinct sovereignties, and it is
ilrabie to provide ror narmomous relations in
ie exercise of their respective powers. As a
leans to this end
One Provide by national legislation for con
sultation and co-operation between the interstate
jmimercG commission and the state railroad
pmmissions.
Two Give the interstate commerce Cominte
rn the power to make a valuation of , the rail-
roatfe, aa4 to control the stock and bond issues
of all corporations engaged in Interstate trans
portation. This does not Imply the denial to tho states
of similar powers., Tho origin of tho corpora
tion, whether national or state, makes no differ
ence; It Is tho fact of agency upon which each
sovereignty operates tho national sovereignty
as to interstate transportation and tho state
sovereignty as to tho state transportation. If
a corporation, national or state, proposes to
engage in both forms of transportation, it must
yield to the direction and control of both sov
ereignties, each within Its jurisdiction. Co-operation
between the interstate and the state com-,
missions would probably result in harmonious
regulation.
Three Prevent the organization, under state
laws, of corporations or holding companies de
signed to combine state corporations for purposes
of interstate transportation. Provide for the
organization of such holding companies under
national law, subject to the approval and con
trol of the interstate commerce commission.
III.
INTERSTATE TRADE
Organize a commission of interstate trade,
with powers similar to those given to the in
terstate commerce commission for the regulation
of interstate transportation, Including tho pow
ers of examination, investigation, recommenda
tion, and condemnation. Turn over to such
commission the administration of the anti-trust
act, and provide that where competition ends
regulation shall begrn, as to all matters of in
terstate trade. Establish tho principle that all
monopolies shall be compelled in interstate trade
to sell to all at the same price and to all at a
reasonable price, and give such, commission the
power to prevent discriminations, to condemn
unreasonable prices and unfair practices, and to
enforce its decisions as to interstate trade.
IV.
INTERSTATE EXCHANGE
The national government has the same power
over interstate exchange, as a branch of inter
state commerce, as it has over interstate trans
portation, whether conducted by corporations of
state or national creation. So far, therefore, as
interstate exchange is concerned, it has the
power to regulate both state banks and national
banks, with a view to the maintenance of an
unimpeded and uninterrupted exchange between
the states. Many of the banks of the country
have lost sight of their primary function, which
is to promote exchange, and have turned them
selves Into mere agencies of promotion and.
speculation. This is pre-eminently true of the
great banks of New York, state and national,
which have been accustomed to draw to them
"selves the reserves of country banks, use them
in promotion and speculation, and then refuse
their return when needed for such high national
purposes as the movement of crops. This prac
tice has been the fruitful source of stringencies
and panics, which have arrested the commerce
and transfers of products between sections and
states. The nation has as perfect a right to ar
rest this pernicious practice upon the part of
both state and national banks as it would have
the power to arrest the practice, if it existed, of
the railroad corporations of New York drawing
to that region the freight .cars of other sections,
utilizing them as storage warehouses, and then
refusing their return to the various sections and
states when needed for the purposes of carrying
products. It is necessary, therefore, that na
tional regulation as to such matters should be
imposed upon both' state and national banks.
The- failure of a state bank may at any time
impair a link in the chain of exchange and may
lead to a general paralysis of exchange between
the states. The national , government should,
therefore, see to it that all agents of interstate
exchange, whether incorporated by the nation
or the states, should have adequate capital and
adequato reserves, so as to guard against the
paralysis of interstate exchange.
Business legislation, therefore, can be devised
with reference to these two questions, as well
as to a method of unionizing all the banks for
mutual protection in time of stress. Such legis
lation need not be either auxiliary to or proven t
ful of future legislation relating to a central
bank. It leaves that question to be determined
in the future according to party view and party
supremacy.
With a view, therefore, to business legisla
tion, the following suggestions are made:
"One Establish at least one reserve city in
each state in the union.
Two Provide that reserve city banks, na
tional or state, engaged In Interstate exchange
shall maintain a reserve of twenty-five per cent
of their doposits. Require them to keep in their
vaults at least two-thirds of such reserve, giving
them tho powor to deposit one-third only In cen
tral reservo city banks. Instead of one-half as at
present. Tho increase In such cash reserves to
bo made gradually, within a period of flvo years,
under the direction of tho comptroller of tho
currency.
Three Similarly require tho country banks,
national or state, engaged In Interstate exchange,
to maintain a reservo of fifteen per cent of their
deposits, and require them to keep In their
vaults at least two-thirds of such reservo, in
stead of two-fifths as at present.
Four Require all banks engaged In interstate
exchange, whether national or state, to have anil
maintain adequate capital, equal to at least
twenty per cent of deposit obligations.
Five Provide for a national currency asso
ciation in each state, in which every bank, na
tional or state engaged in interstate exchango,
shall bo a stockholder, giving such association
tho power to examino tho banks composing its
membership, and to enter Into mutual arrange
ments for protection, and power to Issue emer
gency currency, upon which such a rate of in
terest shall bo paid tho government as will com
pel its retirement when the emergency Is over.
Six Provide that such national currency as
sociations shall each select a represontativo to
a bankers convention, to be held annually, which
convention shall select an advisory banking com
mission of flvo members, to bo chosen from tho
several sections; such commission to meet, and
organize at Washington, with a chairman and a
secretary, and to havo tho powor of advice and
recommendation to the president and tho con
gress of tho United States.
V.
ECONOMICAL AND EFFICIENT CIVIL AD
MINISTRATION Divide tho government account ander two.
heads administration and construction and
separate both the estimates and tho appropria
tions under these two heads, so that the oper
ating expenses of tho government can be sep
arated from capital account.
VI.
ECONOMICAL AND EFFICIENT ADMINISTRA
TION OF THE ARMY AND NAVY
As the great want In time of war" is a suffi
ciency of trained officers to put into shape newly
recruited troops, and as the average annual cost
of a soldier Is about $1,000 and that of an officer
is about $2,500, and' as the efficiency of a trained
officer in the mobilization of an army In case
of war is vastly greater than that of a trained
soldier, diminish the number of soldiers and
increase largely the number of officers to be
trained at West Point. Utilize such officers after
graduation in training the militia, and hold them
in reserve at moderate salaries for active service
during war.
Similarly increase the appointments to the
naval academy, and utilize tho officers not need
ed on the fighting ships in the training of tho
naval repjrves.
Create a well proportioned navy by diminish
ing temporarily tho construction of fighting
ships, wholly inefficient in timVof war without
th auxuliary ships, such .as transports, col
lieries, and scouts, and build as a part of the
navy such auxiliary ships to be used in time
of war to support the fighting ships, and to be
used In time of peace as training schools for the
naval reserves, leasing such ships, manned in
part by the naval, reserve, In time of peace to
commercial companies for tho purpose of open
ing up new routes of commerce for American
products. This as a substitute for proposed
ship subsidies.
VII.
WATERWAYS, CO-OPERATION WITH STATES
Authorize the president, by the appointment
of a board or boards, to bring into co-operation
with the engineer corps of the army the various
scientific and constructive services of the United
States in the formation of plans for tho develop
ment and control of the rivers and waterways
of the United States for every useful purpose,
including, in addition to navigation, the reclama
tion of arid and swamp lands, the prevention of
floods, ,the regulation of flow, tho utilization of
water power, the prevention of erosion and soil
waste, the preservation of forests and forest
(Continued on Page 11.)
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