THE STORY OF THE WAR:
RUSSIA STILL RETREATING

The Russian armies are now somewhat behind the positions which it was originally planned would be their first line of defense on the outbreak of the war a year ago. These positions for many miles follow the line of the Niemen and Bug Rivers. The defense of the Vistula frontier, which the fall of Warsaw finally made untenable, was undertaken only at the behest of the Czar's allies, who protested that for him to fall back to the Bug and Niemen would be playing into the Kaiser's hands by giving the latter valuable days for the campaign against France before he was forced to deal with Russia.

Nevertheless, present indications are that the Russians are soon likely to find even the Niemen-Bug line untenable. As this is written, Kovno, on the Niemen, has fallen, and Brest-Litovsk, the keystone of the positions on the Bug, is hard pressed, and the military critics of the allied nations are trying to discount the importance of the German gains. It is a mistake to do this. The loss of Kovno is likely to be particularly serious to the Grand Duke Nicholas, for it apparently opens the way for the German left to cross the Niemen and threaten the flank and rear of the Russian right.

One feature of the Grand Duke's strategy has set all military experts to wondering. This is the abandonment of the garrison of Novo Georgievsk to its fate. This fortress is now a Slavic island beaten upon by the angry waves of a flooding Teutonic sea. It is difficult to understand the Grand Duke's policy in leaving a large garrison in this fortress to be isolated and cut off, unless he is very confident that the tide of battle is about to turn and that the garrison of Novo Georgievsk by stabbing sorties can hamstring the German armies in their retreat. The fate that fell on the cooped-up army of Marshal Bazaine at Metz in 1870 was a lesson to all commanders in the dangers of holding too long to a fortified position which the enemy is slowly enveloping.

The Germans have at last reached and

cut the Warsaw-Petrograd railway where it meets the road from Lukow to Ostrolenka. But the cat was out of the bag before the strings were pulled, and only a few kittensthe Russian garrisons and small roving forces left near the Vistula front and in the old Warsaw salient-will be found when the bag is searched.

GERMANY AND THE BALKANS

Although there is no evidence of any diminution in the strength of the Teutonic blows on Russia, the bombardment of Belgrade has given rise to the suspicion that the Austro-Germans will direct their next offensive at Servia, which for several months has had little to fight but pestilence—a formidable enough foe in all conscience. Rumania, which recently reiterated her refusal to let German ammunition pass through her territory to Turkey, feels the impending peril hardly less than Servia, and is reported to have called out four new divisions of reserves. Bulgaria is still waiting for a reply to her offer of aid to the Allies in return for grants of Macedonian territory by Greece and Servia. Politics are at the boiling-point in Greece, where former Premier Venizelos has been asked to form a new Cabinet following the King's acceptance of the resignation of the Gounaris anti-war Ministry. In fact, the growing tension in the Balkans was the outstanding feature of the week. This situation is treated extensively in an article elsewhere in this issue of The Outlook.

The sinking of the British transport Royal Edward by a German submarine in the Ægean Sea is not in itself very important, although the thousand men who were drowned were wanted immediately as reinforcements to the hard-worked Twentyninth Division, which has been on the Gallipoli Peninsula since the first landing there by the expeditionary force of British. The moral aspects of the Royal Edward's loss outweigh the material. The feat of the under-sea boat is a great blow to the prestige

of the British navy, which up to this event had not acknowledged the loss of a single transport, although more than seven hundred thousand men have been shipped from England into France, to say nothing of the large number that have crossed the seas from Canada, Australia, India, and New Zealand, and that have been sent out to the Dardanelles, Egypt, and South Africa.

The success of this German submarine may divert the attention of other Unterseeboten from the hunting of merchant ships to the pursuit of transports, which falls properly within the scope of submarine activity.

THE GERMAN CAMPAIGN AGAINST
AMERICAN NEUTRALITY

More dramatic than any intrinsic development of the war during the week was the exposure of the systematic campaign conducted in this country by agents of the German Government to upset the neutrality of. this country, hamper the efforts of the Allies to get supplies here, and secure control of important munitions manufactories in America for the Fatherland. For this timely revelation of the unscrupulous and colossal machinations of Germany the public can thank the New York "World," whose acquisition and publication of the alleged facts of the conspiracy, after efforts that must have partaken of the nature of the activities of a secret service bureau, illustrate the vast scope and enterprise of modern journalism.

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The revelations are based on a number of letters and other documents which the "World" has published. Unless the signatures on these papers are forgeries, it has been proved that through agents, including personages of importance in this country and Germany (names and photographic facsimiles of letters are printed, without so far any evidence to prove their falsity), the German Government sought to promote sedition and pro-German sentiment in the United States, secretly buy up and control newspapers and magazines in America to further the interests of Germany by "subtlety of representation," bring about strikes in plants turning out munitions for the Allies by the free distribution of money among labor leaders, and gain control of several factories making munitions of war, including three that produce practically the entire American output of liquid chlorine, for shipment to Germany through secret channels.

Among the documents in evidence pub

lished by the "World" is correspondence between Dr. Heinrich F. Albert, chief financial agent of the German Government in this country, and George Sylvester Viereck, editor of the " Fatherland," a weekly magazine published in New York which was established soon after the beginning of the war with the open intention of presenting Germany's case to the American people. This correspondence makes it apparent that Germany had begun steps toward securing the control of the "Fatherland" with the idea of determining the entire policy of the paper. Mr. Viereck was apparently to receive $1,750 a month, for in his letter to Dr. Albert dated June 29 he says, "As I have already received $250 this month, I inclose a statement for $1,500 for June." Dr. Albert's letter in reply says that "from the moment when we guarantee you a regular advance I must1. Have a new statement of the condition of your paper. 2. Practice a control over the financial management." Mr. Viereck says these proposals were rejected.

THE INFLUENCE OF GERMAN GOLD

Another interesting exhibit is a communication from the Imperial German Chancellor through his Foreign Office to Count von Bernstorff, which the Count forwarded to Captain Franz von Papen, the military attaché of the German Embassy, in which it is made plain that the German Government paid the expenses of Mr. Edward Lyall Fox, an American journalist, during the course of a visit by Mr. Fox to Germany a few months ago, and in which it is urged that the "German Information Service" make an additional outlay of "between 5,000 and 6,000 marks" for another German trip by this writer, so great was his previous "benefit to us by reason of his good despatches." There is also evidence that the Germans were trying or had tried to purchase or control the New York "Evening Mail," the American Press Association, the Bridgeport Projectile Company, the Wright aeroplane factories at Dayton, Ohio, and other manufactories of munitions of war and of public opinion not here enumerated.

More important, however, is evidence that, while Germany was openly protesting against the British blockade which interfered with trade between the Fatherland and the United States, she was secretly engaged in holding up imports to the United States from Ger

many in order that in their inconvenience American business men might bring pressure to bear on their Government which would lead to a protest by the United States against the British Orders in Council.

More damaging to Germany's repute in America than any of these things is evidence that seems to prove the correctness of the intimations of Mr. Samuel Gompers, President of the American Federation of Labor, and others, to the effect that German capital was being used in efforts "to corrupt men for the purpose of having strikes inaugurated." A German agent named C. Dencker is alleged to have written to his Embassy at Washington urging the necessity of calling "into being a strike in the munitions factories of Detroit, Cleveland, and Cincinnati,” which," according to our estimates. could be done for about $50,000." With this note the agent of the Kaiser forwarded a letter from an alleged labor leader in Detroit, who signed himself "C. W. M'Lane," in which the writer inquired if the Germans would be interested in a plan for precipitating a general strike of all the automobile workers, including the allied industries in this city."

NOT AMERICAN TREASON
BUT GERMAN STUPIDITY

It is reported that the patience of the Washington Administration has given way at last before the cumulative irritation of the unneutral propaganda of Germans and German-Americans in this country, and that the Department of Justice is considering the feasibility of bringing action against some of the agents of the Kaiser for violation of the neutrality laws and possibly of other statutes. It seems doubtful, however, whether the evidence that has been thus far brought to light furnishes sufficient basis for criminal prosecution of anybody. Certainly it is a mistake to accuse any one connected with the German propaganda of treason, as some newspapers have done. The New York 66 Sun" has done well to point out the distinction between treason and sedition or disloyalty. Constitution of the United States expressly says:

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"Treason against the United States shall consist only in levying war against them, or in adhering to their enemies, giving them aid or comfort."

It is certain that none of the acts recounted by the "World" constitute treason.

There is some reason to believe that some of them would furnish a basis for legal action under the neutrality laws. But two things are as plain as a pikestaff. The first is that in its conduct of this energetic and thoroughgoing but amazingly stupid propaganda the Germans have finally demonstrated their inability to understand the temper of the American people. The second is that, aside from all questions of the violation of the laws of America, the conduct of the German Embassy has been decidedly violative of the spirit and usages of diplomacy. Many an Ambassador has lost his diplomatic head for conduct less unfriendly, not to say unintelligent, than that which has lately marked the career of Count von Bernstorff, if the allegations of the "World" are only half true.

THE APPEAL TO MEXICO

The note sent last week to prominent military and political leaders in Mexico, under the signatures of the Secretary of State of the United States and the Ambassadors and Ministers to this country of six Central and South American countries called into conference over the Mexican question, is in substance an appeal and remonstrance. In tone it has been truly as well as humorously described by one newspaper comment as wistful;" it seems a prelude to a new era of wistful waiting rather than to combined action in the near future. Nothing further from the nature of an ultimatum could be imagined. Even Carranza, who in advance of the note's publication fulminated against any kind of outside interference in Mexican affairs, is now said to be willing to let the appeal go to the leaders in his territory.

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The note itself, "in the most sincere spirit of American fraternity," asks Mexicans to realize the " dissolving effects of strife" on Mexican safety, security, and prestige. It appeals to the leaders "to save their mother country from an abyss" and to help in " opening the way to some saving action." Specifically, it states the belief (not, one notes, demands or even asks) that the Mexican military and political leaders should meet in some place "far from the sound of cannon," and in effect talk things over, and adopt the first steps which might lead to an ultimate general and constitutional election. Finally, the signatories offer to aid, if requested, in arranging such a conference. The most drastic phrase is that in which it is stated that ten days will

All this is commendable; but, frankly, after the preliminary reports from Washington as to a new policy and as to the bringing of pressure to bear upon Mexico, one is irresistibly reminded of the proverb about the mountain and the mouse. As we write, no official replies have been received. Carranza, whatever his reply may be (if he sends one), is now as ever bitterly opposed to any American or other foreign participationmeddling" he calls it. He maintains that his faction is in the ascendency, will soon defeat utterly its enemies, and alone will proceed to establish a permanent government. Villa, as at present the "under dog" in the fight, is probably willing at least to talk about conferring; but that he is still at heart the ex-bandit is shown by his execution on August 15, according to despatches from Chihuahua, of eight prominent Mexicans, including an ex-Governor of the State of Chihuahua, Guillermo Terrazas, grandson of Luis Terrazas, once Mexico's greatest landowner, and other non-military men. Meanwhile border troubles on the American frontier increase, one or more American soldiers have been shot, the people of our States next to Mexico are perturbed, and Mexico itself is still a hotbed of revolution and lawlessness.

Whatever the present effort toward "helping Mexicans to help themselves may or may not accomplish, the fact should be recognized that, although it is commonly called the A B C plan, it is entirely different from what was originally meant by that phrase-and not only different but vastly less effective. To hold a Pan-American conference, as the newspapers are quite generally and quite incorrectly naming what has lately taken place, or a semi-Pan-American conference as it might more correctly be called, is good in so far as it recognizes a common interest of the stable American countries in a vexing and mutually important problem. But, apart from this, a conference or congress means debate, appeals, argument, whereas what is needed is moral coercion, to be followed, if necessary, by physical enforcement. If, by agreement of the three or four great Southern republics with the United States-an agreement reached by the usual diplomatic methods (whether by treaty or not is unessential) Mexico were to be informed that her factions must within a given time get together and establish, or at least take hopeful measures to

that, if they refused or failed, the work would have to be carried on from the outside, there would be a genuine "A B C" undertaking. Very likely we could not secure the consent of the A B C countries to this action. If not, the United States might have to act alone; in the opinion of many, if not most, of those who have studied the question, this country will inevitably sooner or later have to act alone. With all good wishes toward the new policy of wistful waiting, it is to be remembered that Mexican generals are not precisely the kind of people to be seriously disturbed by mild remonstrances.

HARD COAL: THE MINER, THE
RAILWAY, AND THE CONSUMER

By an order of the Inter-State Commerce Commission, issued the other day, the railways which carry hard coal are directed to reduce their freight rates. All the large railways which carry anthracite are affected, some more, some less, and it is estimated that, in all, their revenues will be reduced about eight million dollars a year. Naturally the roads protest; they call the order confiscatory, say that the rates for anthracite are not excessive, and urge that the Inter-State Commerce Commission in its present action is inconsistent with its recent admission that Eastern railways were entitled to a general increase in freight rates because of business conditions and the high cost of living to railways as well as to people at large. The third party to this question of anthracite is the consumer-and in the case of coal that means every one. At first the consumer read with joy of this decision; he saw in his mind's eye lower coal bills in the near future. But with singular unanimity the representatives of the railway, the large coal dealers, and the newspapers held out little hope to the consumer that he would ultimately benefit. Now, the eight million dollars cut off the freight must go somewhere; if the consumer does not get it, it will either be added to the price of the coal at the mine, or it will be absorbed by the wholesalers through a common agreement which should be impossible unless there is something very much like a tacit contract in restraint of trade, or the retail dealers will get it-which will obviously be impossible if free competition in the sale exists. In any one of these three cases there is certainly ground for the Inter-State Commerce Commission to look

closely into the situation and to guard the interest of the poor consumer-and the poorer he is the more he feels the pinch of excessive prices for coal.

The decision just rendered very plainly shows that in the opinion of the Inter-State Commerce Commission there is still such, a common interest in the mining of coal, the carrying of coal, and probably the selling of coal, that the rights of independent competitors and of consumers should be guarded. The decision speaks, for instance, of conces sions and offsets granted by the railways to their allied coal companies, and calls them in effect rebates forbidden by law; it orders the railway companies to give independent shippers a better chance to compete; it orders the railways to discontinue the practice of letting their allied companies use piers and docks at inadequate rents; it calls attention to the admission of counsel that the anthracite rates not only pay the cost chargeable to coal traffic but part of the general cost of the whole traffic; and the decision in so many words declares that the railways by their conduct admit that their tariff on anthracite is excessive.

It is significant that the decision lays stress on the fact that the coal-mining companies in many cases do not pay dividends. This brings out the crucial fact in the anthracite situation So long as the same persons or the same interests are at one and the same time in control as stockholders in the companies which mine the coal and in the companies which carry the coal, it makes not a particle of difference to them whether they get their profits, all from the mining companies, or all from the carrying companies, or partly from one and partly from the other, so long as they get profit enough. If the freights are high and the railway dividends are large (compared with a fair view of what their capitalization represents), the price of the coal at the mines may be small-and this is quite convenient when the question of adjusting wages with the working miners comes up. In short, the nature of the anthracite industry, because of the restricted limits of anthracite production, is such that it comes nearer to the possibilities of monopoly than almost any other industry. Governmental control is, therefore, obviously peculiarly needful; and it should be added that this control should be just and fair to the railway, to the producer, whether independent or not, to the dealer, and to the consumer.

THE ROCK ISLAND RAILWAY SYSTEM

The Inter-State Commerce Commission has just made a scathing report concerning the wrecking of the Chicago and Rock Island Railway Company by so-called "high finance." It is charged that the syndicate which came into the possession of the Rock Island system by devious stock speculation deals has manipulated the road into a receivership. Despite the richness of the territory traversed by the Rock Island and the enormous tonnage carried, manipulation of stock, through holding companies and otherwise, forced the company's shares down from a quotation of $200 in 1902 to $20 in 1914. Yet the earnings of the railway company proper, says the report, have increased steadily, and in 1914 were the largest in its history.

The most striking circumstances in connection with the application for receivership is that none of those who directly participated in the proceedings had any financial interest in the railway company. The real owners of the railway-the stockholders, the securityholders, and the directors, except those comprising the syndicate and in its confidencewere in ignorance of the receivership application.

Among the derelictions charged to the syndicate management are the paying of fancy salaries to officers, the payment of unexplained bonuses to favorite officials, campaign contributions, unaccounted-for miscellaneous expenses, the large upkeep of holding companies, and the manipulation of subsidiary stocks, which have cost the Rock Island many millions of dollars.

There are at least two lessons to be drawn from this disaster:

First, the above record emphasizes the need of directors who actually direct. In the Rock Island, as in most companies, there were too many passive directors who acquiesced in what was being done without knowledge and certainly without investigation. It should be realized by directors of railways that they are quasi-public officials and hence are doubly derelict if they blindly believe everything put before them by interested officials.

In the second place, the above history is only another proof of the country's need of some such legislation as was outlined years ago by President Hadley, of Yale-namely, some Government control of and limitation on the issuance of railway stocks and bonds,