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The Commoner
VOL. 13, NO. 29
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The Work of the President's Cabinet
THE TREASURY DI8PARTMRNT
'At last tlio country is to bo congratulated
upon having a man at thp head of the United
States treasury department with sufficient cour
ago and common senso to make the tons of
xnonoy in tho vaults at Washington serviceable
to tho pooplo of tho country. It seems like a
vory slmplo process when wo havo it demon
strated to us by a cloar-hoadod business man
llko Mr. McAdoo, and tho striking thing about
it all is, that nobody over thought of it or, at
least, that nobody over did it before. That,
liowovor, is not a matter of essential considera
tion just now. The fact is that tho present head
of the treasury department believes that tho
pooplo of tho United States, as a whole, aro
ontitlod to whatever benefits may be derived
from tho uso of idlo government funds at times
when funds aro needed, and ho is not content
with holding this beliof as a theory, hut has
put his theory into practice. That is the most
oncouraging and beneficial phaso of the situa
tion. Business men and bankers throughout
tho country havo, within tho last sixty days
given general expression to tho belief that tho
progressive and reassuring policy of tho treas
ury department at Washington, has saved us
from a panic toward which the money hoarders
were pressing us at every point. Three months
ago there was panic talk everywhere. Business
mon saw tho old signs of Impending troublo, and
they began to feel the painful grip of the
hoarder's hand. Then came the cheering mes
sage of guaranteed relief from Washington. Tho
men who wero running things at tho national
capital sont a message of defiance to tho panic
makers. That was enough. That was all the
honest people of tho country wanted to know.
If the men in charge of affairs at Washington
wore with them if the government would lend
them money instead of lending it to the panic
makers then the farmers, and tho factory men
tthd the merchants and tho honest bankers were
ready to snap their fingers at hard times and
go on with their work. Money at once became
more plentiful, the excessive Interest charges
wero reduced, and business conditions at once
improved. It was tho magic of confidencq.
On July 31 Secretary McAdoo sent out a mes
sage to tho country that ho proposed to transfer
from tho treasury to the national banks in tho
agricultural districts from twenty-fivo million to
fifty million dollars to facilitate the moving and
marketing of tho crops in the west and south.
That there was urgent need of available funds
for thiB purpose was evidenced by the appeals
that came from many quarters; "But," asked the
doubting farmers and shippers, "can these gov
ernment funds bo so distributed that we will
get the benefit of them without paying heavy
tribute, as usual, to the big. bankers of the
east?"
"Yes," answered tho men at Washington, "it
can be dono and it is going to be done." And
now it has been dono and $46,500,000 of the
fifty million has been allotted to tho banks of
the west and south and much of this money ia
now on the road. It was all very easy.
First the secretary of tho treasury invited all
of the big bankers from the principal crop pro
ducing centers of tho west and south to come
to Washington and familiarize themselves with
the plan. First came those from the south,
then those from tho middle west, and last, those
from the Pacific coast states. To each group
of bankers, Secretary McAdoo Bald, in brief:
"Wo hope you will co-operate with us in this
undertaking and do your part in helping busi
ness conditions of the country. You will be re
quired to pay two per cent for the use of these
funds and we shall expect you to deal liberally
"with your small correspondent banks to whom
you are to distribute the money. The terms aro,
that you must socuro this loan with ten per cent
government bonds and tho remaining ninety
per cent in high municipal bonds or other bonds
and prime commercial paper. The bonds, other
than government bonds, will be accepted at
seventy-five per cent of their market value and
tho commercial paper at sixty-five per cent of
Ub face value. All securities offered must be
accepted by the secretary of the treasury. These
funds must all be returned to the Unitod Statea
treasury before April 1, 1014."
There wero, of course, many more conditions
s looking toward tho absolute security of tho
government and for facilitating the rapid and
easy distribution of tho money. The plan was
so simple and fair to all concerned and provided
such certain relief from the great strain upon
the banks, that the bankers, almost without
exception and without criticism, gave their
warm and enthusiastic approval of the arrange
ment. One after another, bankers from the
wost and south, statod frankly they were con
vinced that the secretary's plan had averted a
panic and their praise of the governments
patriotic attitude was generous and often ex
pressed. The allotment of tho $50,000,000, thus far
made, among tho various states, is as follows:
Western States: Colorado, $1,000,000; Cali
fornia, $3,000,000; Illinois, $4,000,000; In
diana, $1,050,000; Iowa, $1,000,000; Kansas,
$550,000; Minnesota, $2,000,000; Missouri,
$5,000,000; Nebraska, $1,300,000; Oklahoma,
$750,000; Ohio, $2,100,000; Oregon, $800,000;
Washington, $1,150,000; Wisconsin, $1,000,
000. Southern States: Alabama, $1,500,000; Ar
kansas, $600,000; Florida, $1,500,000; Georgia,
$1,700,000; Kentucky, $1,650,000; Louisiana,
$2,600,000; Maryland, $2,800,000; Mississippi,
$600,000; North Carolina, $1,300,000; South
Carolina, $1,500,000; Tennessee, $1,950,000;
Texas, $2,500,000; Virginia, $1,450,000; Dis
trict of Columbia, $500,000.
Because of the immediate needs of funds for
tho cotton crop, the southern states are the first
to receive their allotments. Fifty per cent of
tho money for the south was sent out in August
and the remainder will bo shipped during Sep
tember. The money for the west will be trans
ferred to tho principal shipping points as the
maturity of tho crops demand.
THE NAVY DEPARTMENT
Taxpayers generally will be gratified to know
that, as a result of the efforts of the navy de
partment to induce broader competition for the
supply of its necessities, this department has
effected a saving of approximately $500,000 in
contracts recently awarded on materials for
Battleship No. 39. Of this amount, about $400,
000 was saved on a portion of the armor con
tracts, and $100,000 in the purchase of turbine
rotor drums.
Shortly after his Induction Into office, Secre
tary Daniels became convinced that the govern
ment was paying more for armor than It should,
and when the opportunity afforded, he recom
mended In a communication to the senate com
mittee on naval affairs the desirability of look
ing into tho reason for the high cost of armor
and to inquire as to the feasibility of construct
ing a government armor plant There are but
three foundries in the country, Carnegie, Mid
vale and Bethlehem, capable of producing heavy
armor; and for some time past their bids have
been remarkably similar, varying not more than
a few dollars a ton. Yet they profess that no
combination nor understanding exists among
them, and each makes a sworn affidavit to this
effect.
When bids were first received on special treat
ment plate for Battleship No. 89, the obvious
lack of competition caused the department to
reject all. When they were re-opened, it was
revealed that tho Carnegie company had re
ligiously maintained the bid first entered. The
Carbon Steel company of Pittsburgh, however,
submitted a bid of $187.04 a ton, for 3,900 tons.
The last contract awarded on similar material
was for Battleship No. 88 (Pennsylvania.)
Then, the govornmont agreed to pay $284.03 a
ton, or $96.99 (34 per cent) more than will bo
paid under the new contract, effecting a sav
ing of $378,261.
It was therefore but natural to hope more
lively competition would result in the bidding
on the heavier armor for this ship. But such
hopes as might havo been fostered were rudely
shattered when It was found that the Carnegie,
Midvalo and Bethlehem companies had entered
precisely the same figures, and that the figures
they now submitted were identical with the last
accepted bids. Only In Class C (steel) armor
is encouragement to to found. Tho Carbon
Steel company, nnable to mannfactnro the
heavier grades, can manufacture this. Carnegie
Midvalo and Bethlehem each bid $548.00 a ton;
Carbon bid $448.00, saving the country $100.00
a ton on the limited quantity of this material re
quired. They have, been awarded this contract
but new bids have been asked on the other
grades.
It Is sincerely to be regretted that the depart
ment has been compelled to make purchases
abroad. Its policy is to favor the home manu
facturer and it will, unless he asks a price
utterly unwarranted. Consequently, it was
with the greatest reluctance that the depart
ment felt constrained to decline the bids of our
home manufacturers on turbine rotor drums,
and to accept that of John Piatt & Co., repre
senting the Cyclops Steel and Iron Works of
Sheffield, England. Only a vast difference in
bids could force such action. The difference in
volved fully justifies the award. But two firms
in this country manufacture these articles, Mid
vale and Bethlehem, who bid $160,272, and
$169,568, respectively; while John Piatt & Co.
bid $57,436, a , saving to the government over
tho lowest American bid of $102,836. Tho
Piatt bid includes the payment of import duty
by the manufacturer.
The government is confronted with a serious
situation in the matter of armor. -Are we to
continue paying exorbitant prices, or shall we
seek relief. Armor constitutes one of the
principal essentials of a modern battleship.
Since it was introduced, its importance has ad
vanced in relation to the increased penetrative
power of modern projectiles, and today it is a
ship's main element of defense against the fire
of an enemy. Its cost is likely to increase.
Surely, it can not decrease materially not at
all unless competition is established. Its manu
facture entails a large investment and excep
tional scientific treatment; few firms can or will
manufacture it, not only because of the invest
ment required, but because there is only one
consumer, the government. How, then, are we
to secure tho maximum of efficiency in armor
at the least reasonable cost? Mr. Daniels is of
the belief that the answer lies in the construc
tion of a government armor plant not a plant
to manufacture all our armor, but one adequate
to supply a good portion of it, enabling us to
maintain competition and obtain accurate
knowledge of Its cost, and yet leave work suffi
cient to justify the maintenance of home plants
that will supply material at a reasonable figure.
The logic of this view is conclusively demon
strated by our government shipyards, gun-factory
and powder-factory, institutions that effect
the saving of millions annually, but still permit
public enterprises of the same nature to com
pete with them and thrive. Can not the armor
question be treated as we have powder, guns
and ships? The secretary believes it can, and
successfully.
The secretary of the navy has made an im
portant change in the examinations for appoint
ment to the United States marine corps. On
July 14th, fifty-six young men stood the exami
nation for second lieutenants in the marine
corps. After the examination papers had been
turned in, and carefully examined by Mr.
Daniels, he felt that the tests for "adaptability
and probable efficiency" ha'd been allowed to
operate in such a way as to deny justice to some
of tho young men standing the highest examina
tion, thereby substituting the opinion of three
officers for an Impartial written test. The
adaptability tost counts 3 out of a total grad
ing of 10. The secretary issued an order to
throw out the "adaptability and probable effi
ciency" test and directed the Judge advocate
general to revise the papers so as to eliminate
tho adaptability mark and to consider the can
didates standings only on the basis of the
marks made on the written examination. This
resulted in tho elimination of four men who
had attained to places among tho 16 highest
and the elevation of four others who had re
ceived low efficiency marks but whose written
examination marks were higher than those re
ceived by tho four men whom they bad".1
placed. The number of positions to be flue
was 16. An enlisted man, John C. Foster,
chief yoeman, jumped from eighth to secc-na
place after tho elimination of tho adaptability,
test on which he had been graded very ww.
Furthermore, three former midshipmen, wjw
failed on mathematics, had been given a , iow
aptitude mark in the first examination l"J,
the marine corps examining board on tie srul
that "bilged" midshipmen were not oesirea
the marine corps. The secretary explained u
attitude in the following Interview:
"I rejected entirely tho marks i ,
board for 'aptitude and probable cnrccon.
tho ground that this was a matter of pure
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