CONTENTS

The Mohonk Conference 219 The Standard Oil Report 220 A Civil Pension List.... 220 The New York Utilities Bill.... 221

Measures in Contrast.... 223 Industrial Legislation... 224

The Man Under the

225

The Negro and Civic

Yoke. By Nicholas V. Lindsay..

The Presbyterian Assembly..

226

The Japanese in the San Francisco Schools. By George Kennan...... Industrial America : Berlin Lectures of 1906 (Laughlin)... Comment on Current Books.... 254 Letters to The Outlook.. 259

246

252

An Old Denomination Newly Organized...... 227 Canadian Readers and American Periodicals.. 228 Military China... 229 The Irish Councils Bill.. 229 The subscription price of The Outlook is Three Dollars a year, payable in advance. Ten cents a copy, Postage is prepaid by the publishers for all subscriptions in the United States, Hawaiian Islands, Philippine Islands, Guam, Porto Rico, Tutuila (Samoa), Shanghai, Canal Zone, Cuba, and Mexico. For Canada $1.20 should be added for postage, and for all other countries in the Postal Union $1.56 should be added for postage.

Change of address: When a change of address is ordered, both the new and the old address must be given. The notice should be sent one week before the change is to take effect. Copyright, 1907, by the Outlook Company. Entered as second-class matter in the New York Post-Office.

The thirteenth Annual Meeting of the Lake Mohonk Conference on International Arbitration held last week (May 21-25) was in its personnel the most notable of the series. Fifty-two commercial and business organizations were represented by regularly appointed delegates. There were present ten judges of the higher courts, State and Federal, eight well-known college presidents, fourteen college professors, eight editors of journals and periodicals of National importance, three Commissioners of Education, and half a score of men who have occupied or are now occupying positions of prominence in public life, including two Ministers from foreign countries and three American ex-Ministers to foreign countries. One session was devoted to reports from business men which gave an encouraging account of the active interest taken in business circles in this movement to substitute law for war as a means for the settlement of international

difficulties.

Price $3 a year 10 cents a copy

Another session was devoted to a discussion of the relation of the schools and colleges to this movement. It elicited, on the one hand, a general opinion among educators, especially in the secondary schools, that special education respecting international law or arbitration is not practicable; on the other hand, a frank recognition of the fact that more might be done to teach fundamental ethical principles and to inspire in the young a spirit of universal fraternalism. Two Intercollegiate Peace Associations have been organized during the year, and an interesting account was given of one school celebration of the anniversary of the first Hague Conference, in which over forty thousand school-children participated. The general sentiment of the Conference was clearly in favor of pushing forward the more immediate and practical measures rather than in discussing more distant ideals, a spirit which was expressed by the platform adopted. This platform, after a preliminary declaration of gratification in the progress already made, summed up the judgment of the Conference as to "the next steps" to be taken. in the following succinct declaration :

We urge as the more immediate and important action to be taken by this [Hague] Conference the following provisions:

(1) A provision for stated meetings of the Hague Conference.

(2) Such changes in the Hague Court as may be necessary to establish a definite judicial tribunal, always open for the adjudication of international questions.

tlement of international disputes. (3) A general arbitration treaty for the set

(4) The establishment of the principle of the inviolability of innocent private property at sea in time of war.

(5) A declaration to the effect that there should be no armed intervention for the collection of private claims when the debtor nation is willing to submit such claims to arbitration.

After some discussion, the Conference also adopted a resolution commending,

"in accordance with our resolution of last year, the consideration by the Hague Conference of a plan for the neutralization of ocean trade routes."

The Standard Oil Report

In considering the Standard Oil monopoly, three features stand out conspicuously--its general restraint of competition, its particular restraint by means of pipe lines, and the much-mooted question of the cost to the consumer. When Commissioner of Corporations, Mr. Garfield, now Secretary of the Interior, performed a notable service for the Administration in investigating the Standard Oil Company and in furnishing information to the Government, the basis for recent and present action in the courts. Last week Mr. Garfield's successor, Mr. Herbert Knox Smith, formerly Deputy Commissioner, submitted to President Roosevelt his first report on the subject. In accordance with the President's instructions, part of it has been made public, but that part has been withheld which might interfere with the prosecution of the Government's suits against the Standard Oil and its subsidiary companies. Mr. Smith's very lucid report has to do mainly with pipe lines, and is noteworthy as the first official statement since the passage of the act making pipe lines common carriers, and also since the conviction at Chicago of the Standard Oil Company, secured on nearly fifteen hundred counts, of violations of the Inter-State Commerce Act. The report contains the net results of Mr. Garfield and Mr. Smith's study of the petroleum business during the year 1904. As they have shown, the Standard's monopoly has never rested on ownership of the source of supply of crude oil, for not over one-sixth of the total amount produced comes from wells owned by its interests. Its growth and present power rest primarily on its control of transportation facilities. In 1904, for instance, the Standard refined over 84 per cent. of the crude oil run through the refineries, and showed a similar dominance in the export trade. It transported through its pipe lines nine-tenths of Pennsylvania, Ohio, and Indiana crude

oil, and no less than 98 per cent. of the crude oil of Kansas and the Territories. These pipe lines aggregate forty thousand miles in extent, and the Company has been able, it is alleged, to prevent any extensive construction of rival lines. Mr. Smith estimates that twenty cents per barrel from the Lima field to seaboard would cover transportation cost and yield a return of ten per cent. on the investment. But the pipe line rate

is 532 cents. Now, under the InterState Commerce Act, as amended last June, the pipe line company, henceforth classified as a common carrier, is put under the control of the Inter-State Commerce Commission. It is therefore within the Government's power to force the Standard to treat all shippers alike. In that way, independent refiners should be put upon a basis of equality with the combination. But the independent refiners and producers allege that the Standard refuses to transport their oil, and that it has neglected to file schedules of rates, required by law of common carriers, or has done so in such manner as to reduce its apparent compliance to an absurdity. It is in our opinion debatable whether pipe lines should have been made common carriers, but they have been made common carriers and are therefore amenable to the supervision of the Inter-State Commerce Commission. It is within the power of the Commission to determine whether the pipe lines are actually accepting shipments without discrimination and carrying them at a reasonable rate.

A Civil Pension List

President Roosevelt's expectation as to the ultimate necessity of some sort of a Civil Pension List is being emphasized in the modernization of the Department of the Interior. For many years this Department has been a kind of dumpingground for inadequately equipped persons-both men and women-in search of a "job." Particularly has this been noted as affected by the famous "P. D." or per diem system. When Civil Service Reform finally triumphed over most of the old spoils system, disappointed Congressmen created the "P. D." roll. In

Dend

pary

Tent

contrast to the permanent positions filled by success in the Civil Service Commission's examinations, an applicant might be appointed to the "P. D." roll as an extra daily helper in one of the Departments. Of course the "P. D.'s," appointed without examination as to fitiness, have made the more glaring any signs of inadequacy and incompetence in the personnel of the classified service. When he assumed his present office last March, Secretary Garfield found certain unnecessary divisions or sub-bureaus in the various bureaus composing his dempartment. He has already done away

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with those divisions; they were presumably created simply to accommodate a of larger number of Congressional favorites. But Mr. Garfield also found himself shconfronted with the inability of many employees to keep pace with modern methods. In order to show every possible consideration to those appointed eir long ago under the old spoils system, he directed his heads of bureaus not to discharge employees if their efficiency was equal to positions of less responsibility and less salary, but to transfer them to such positions. If employees displayed manifest inefficiency, he indicated a certain average of excellence, which, if unattained in a month's time, should be followed by dismissal. Inveterately bad habits and patently gross incompetency formed, of course, sufficient grounds for instant dismissal. In accordance with the above, and with the Secretary's approval, Judge Ballinger, the new Land Commissioner in the Department, dismissed last week no less than seventeen employees who had outlived their clerical usefulness. In so doing the Commissioner carried into effect for the first time an enactment of Congress now ten years old! It provides that typewriting must be substituted for longhand in the writing of patents and in the keeping of records. But the copies were still being made in the old way, and not always accurately. With the installation of typewriters, however, not only can each employee perform three times the former work, but the increased legibility is a safeguard against error. Hence the Commissioner deemed it his duty to install the writing-machines, and

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dismissed such employees as could not measure up to the standard. In making dismissals every consideration has been shown to those who have a real claim upon the country's regard, as in the case of one man who in the Civil War had given practically everything but his very life to his country. On the other hand, no consideration, we are glad to say, has been shown to those employees having mere political influence. One of the men dropped was President Roosevelt's classmate at college, and others were relatives and close friends of Congressmen. If the work of the executive departments is to be done accurately and expeditiously, other bureaus than the Land Office may have an overhauling. In the opinion of most of the heads of the important administrative bureaus, a Civil Pension List should be created by Congress to provide for those employees who have given their lives to the Government service, but who, in order to maintain efficiency, must be removed from active work when affected by the disabilities of age. The humane principle of providing in some degree for the old age of worthy workers is finding increasing recognition by legislators throughout the world.

The New York

Utilities Bill

By the passage of the Public Service Commissions Bill-or, as it is. popularly known, the "Utilities Bill ". the Legislature of New York has committed the State to a most comprehensive policy concerning corporations engaged in the public service. It is comprehensive in two respects-it affects not only such common carriers as railways and street railways, but also gas companies and electric light and power companies; and it affects almost every sort of activity in which such companies can engage. The very comprehensiveness of the bill has been the chief cause for the attacks upon it. Not merely corporation managers, but even commercial bodies, have been troubled by the attempt of the State, through a single instrumentality, to regulate not only the rates, but also the capitalization, the issue and transfer of stock, the franchises.

the appliances, the labor conditions, the equipment, and the character of the service of public service corporations. The chief argument against the bill has been that men appointed by the Governor, who have no financial interests at stake in these corporations, are given powers so great that they will practically supersede the boards of directors of such corporations. Great calamity has been predicted as a necessary consequence of the enactment of the bill. The opposition has been persistent and sincere. As The Outlook has reported, this bill creates two Com missions which between them share control of the public utilities of the State, each exercising jurisdiction over one of the two districts into which the State is

divided for the purpose. The attacks have been directed principally to the power of removal which is given to the Governor and to the lack of any provision in the bill for reviewing in the courts the reasonableness of the Commissions' administrative acts. The principal provisions of the bill have already been outlined in The Outlook. In certain particulars the bill, while in committee, was amended. Some of the amendments adopted affect only administrative details and questions of technical procedure. The other more important amendments have made the bill more equitable, consistent, and in some respects even more rigorous. The two most important changes in the bill since we last reported it are those which alter the salaries of the Commissioners from $10,000 to $15,000, and which require the Governor, in removing a Commissioner, to confront him with charges, allow him a hearing, and file the record of the proceedings. In spite of the attacks against it, the bill last week passed the Assembly by a unanimous vote, and the Senate by the overwhelming vote of 41 to 6. It will undoubtedly survive the expected veto of the Mayor of New York City (who opposes it chiefly because it puts the appointing power of the New York City Commission in the hands, not of the Mayor of the city, but the Governor of the State), and will receive the signature of Governor Hughes. Beyond all question this measure presents the most important part cf

Governor Hughes's programme. With it his name will remain associated. Its passage is his triumph. He has succeeded because he has had the insight to understand the will of the people and the ability to embody that will in a practical form.

The Public Utilities Bill The Principles is a great measure, not of the Bill merely because it is comprehensive, but because it embodies certain fundamental principles. Briefly stated, the first of these principles is this: That government, if it is to be efficient, must control its creatures. As these creatures grow in power, the government must acquire new power; as these creatures grow in complexity, the government must forge new and more flexible instruments through which to exercise control. Cities have in recent years greatly increased in population, and urban conditions of life have extended into villages and even rural districts. This means that people have become more dependent than ever upon what we call public utilities-upon trolley lines, gas supply, electric light, electric power. Unless the people whose very livelihood depends upon the transportation, the light, the power, are to become vassals of the concerns which supply these necessities, the people themselves through their government must have the means of exercising the mastery. This is the first principle recognized in this bill. By it the people say to these corporations, You shall not be free to do wholly as you please; you shall be subject to such agents as we, through our Governor, shall select. The second principle is this: Mastery in a free government is dependent upon just dealing, and there can be no just dealing without a uniform and comprehensive policy. If the people themselves act toward their creatures despotically or whimsically, they will bring disaster upon themselves. In a monarchy or an oli garchy the government may survive the ruin of the people. Not so in a free government; there any disaster which falls upon the servants of the people falls upon the people, and thus falls upon the government which is constituted of the people. This is the second principle

embodied in the Utilities Bill. By it the commissions which act on behalf of the people are enabled not only to treat all corporations of the same kind uniformly, but also to take into consideration in any case all the factors involved— capital, equipment, wages, franchises, efficiency of management, rates of chargeswhatever they may be. The very breadth of power granted to the Commissioners is the requisite for just dealing. Whether the Commissioners use wisely and beneficially this power will depend, in this case as in other acts of government, upon the ability and integrity of the men whom the people, through their Governor, select. If the agents of the people act unjustly, the penalty will fall not only on the corporations but also upon the people. The third principle embodied in the bill is this: The control of public utilities is an administrative function, and should be intrusted to an administrative body responsible to the executive. It is not judicial, and therefore should not be laid upon the courts. For that reason a provision making the courts responsible for the wisdom and reasonableness of the acts of the Commissioners was wisely omitted from the bill. Of course the courts have and always will have the power to decide as to the legality and justness of all administrative acts. Control in detail cannot practicably be laid upon a Legislature, nor can the supervision of such control be required of so intermittent and cumbersome a body as the Legislature, or either legislative house. Therefore the provision making the Commissioners responsible to neither house of the Legislature, but solely to the Governor, was wisely included in the bill. Never, so far as we know, has any other State, or even the Federal Government, attempted to embody these three fundamental principles in one law. That is why no bill before any State Legislature has won the interest of people in other States more generally than Governor Hughes's Utility Bill; and that is why no bill has had more conspicuously within the State the emphatic support of public opinion. The actual working of this comprehensive measure will be watched with the most intense interest in New York and throughout the country.

Measures in Contrast

In contrast to the Utilities Bill stand two measures— one a law on the statutebooks of New York, the other a bill passed by the New York Legislature but not as yet signed by the Governor. The one is the so-called Eighty-Cent Gas Law, the other is the so-called Two-Centa-Mile Rate Bill. In both cases the Legislature has violated one of the principles observed in the Utilities Bill, namely, that the detailed control of public utilities is essentially an administrative, not directly a legislative, function. In both cases a legislative body, incapable as constituted of expert knowledge of all the factors in the operation of a public utility, has undertaken to determine what is a just rate for the service rendered. In the one case it reduced the rate for a thousand cubic feet of gas to eighty cents; in the other it reduced the passenger rate on all railways operating more than a hundred and fifty miles of track to two cents a mile. The constitutionality of the gas law has been argued pro and con before the courts. Recently a master in chancery of a United States Circuit Court has rendered his opinion that the law is unconstitutional. We do not now consider the grounds on which he rests his opinion; we may consider them at another time. The point here is that this law, drawn up with care after investigation, represents probably the best that a cumbersome legislative body can do in dealing with one aspect of one form of public utility. Similarly, the bill fixing passenger rates (passed, strange to say, by the same body of men that passed the Utilities Bill) deals with but one aspect of another form of public utility. No one imagines that these bills really settle justly or comprehensively the relations that these two forms of public utility bear to the people. They are attempts merely to defend the public from supposed exorbitant charges. Nothing more could be expected from a legislature. From a commission such as that created by the Utilities Bill, on the other hand, a much more effectual and equitable procedure should be expected. By such a commission the question of franchises of a gas company, which is only incidental to the issue as to rates, the equipment of trains,