most successful is the Cleveland Bank, of which Mr. Warren Stone, head of the Locomotive Engineers' Brotherhood, is President. The Locomotive Brotherhood Bank at Cleveland, and all the other labor banks, differ not at all under the law from banks generally, but they are introducing some rather novel and interesting methods. The Cleveland Bank, for example, has disturbed some of its competitors in that prosperous city by paying a larger rate of interest for city and county funds than the other banks had agreed to. The result is said, by a well-informed correspondent of The Outlook, to be that the Locomotive Brotherhood bank, although it has a capital of one million dollars and a surplus of one hundred thousand dollars, and is a member of the Federal Reserve System, is not a member of the Cleveland Clearing-House. The Cleveland Bank, 51 per cent of the stock belonging to the Locomotive Brotherhood as an association and 49 per cent being owned by individual members of the Brotherhood, proposes to pay a dividend to stockholders of not over ten per cent when earned, and to distribute its sur plus earnings over that amount to depositors in an increased interest rate. This is somewhat of a novelty in banking, and is raising some discussion in Cleveland. We imagine, however, that the depositors are not objecting.

One law

Every believer in thrift and prosperity must welcome the creation and successful administration of these labor banks. The Outlook certainly welcomes them. But they confirm its opinion that trade unions ought to be put under the operation of the Sherman Anti-Trust Law, exactly like unions of capital. for all is what has made the American Federal Reserve banking system a success and what has enabled these labor banks to spring into being. The trade unions which have wisely organized these labor banks should be held as responsible to the law when they combine to restrain trade, as they should be protected by the law when they combine to promote thrift.

of the returns; for we do not believe that those who voted for a modification of the law, so as to permit the consumption of beer and light wines, realize what their vote actually meant.

The Constitution now forbids the manufacture, sale, or importation of intoxicating beverages. The Volstead Act defines as an intoxicating beverage any beverage containing more than one-half of one per cent of alcohol. If the Volstead Act is so modified as to permit the consumption of beer and light wines, which would require at the very least a ten per cent alcoholic content, the coun try will inevitably have a return of the saloon problem. Beer and light wines must be sold if they are to be consumed. Even if they were not sold for consumption on the premises and the sale were limited to "bottle trade" at groceries or other similar places there would rise triumphant in all its glory the old backroom-grocery barroom-one of the worst phases of the American saloon. If the 40.8 per cent of the "Digest's" voters who want "light wines and beer" had been fairly presented with the indisputable fact that the legal sale of beer and light wines means the revival of the saloon problem, we do not believe it is extravagant to assume that at least half of them would have voted against the saloon.

If our assumption is correct that onehalf of those in the "Digest's" poll who voted for modification would have voted against the return of the saloon, the real significance of the poll is that at least sixty per cent of the balloting was in favor of prohibition-prohibition, at least, of the liquor saloon as it used to exist in this country, and as it still exists as a terrible social sore in Great Britain.

In spite of the reports in the daily press of bootlegging, deaths from wood alcohol, and the violation of the law in the clubs and restaurants of the large cities, scientific and impartial statistics prove, we think, that the social and economic results of the operation of the law so far are beneficial. The "Manufacturers' Record," of Baltimore, has issued an exceedingly interesting report of a country wide inquiry it has made of the effects of prohibition on American industry. An overwhelming majority of the leaders of industry favor it. Postal Savings Bank deposits as well as deposits in regular savings banks, especially in industrial centers, have grown. Crimes and convictions due to drunkenness have decreased. Hospitals report a marked falling off in cases of alcoholism and secondary diseases due to alcoholism. These social and economic gains are not matters of guesswork but of carefully compiled statistics. The "Scientific

Temperance Journal," of Boston, pub

lished in June a complete, elaborate, and impartial survey of the situation in Massachusetts, and quotes Dr. Charles W. Eliot, of Harvard, a man of scientific type of mind who weighs his words, as saying to the Massachusetts Legislature: "Evidence has accumulated on every hand that prohibition has promoted public health, public happiness, and industrial efficiency. This evidence comes from manufacturers, physicians, nurses of all sorts, school, factory, hospital, and district, and from social workers of many races and religions laboring daily in a great variety of fields. This testimony also demonstrates beyond a doubt that prohibition is actually sapping the terrible force of disease, poverty, crime, and vice. These results are obtained in spite of the imperfect enforcement in some communities of the Eighteenth Amendment to the Federal Constitution."

Nation-wide prohibition is a magnificent and unique experiment. Time only, and a fair trial, can demonstrate whether it can be made a permanent success. But it at least deserves a fair trial, and so it seems to us that every man who wishes his family and his country well will by his vote for members of Congress this autumn sustain strict enforcement in order that the men and women of the oncoming generation may have a chance to determine from experience what the permanent policy of the country shall be regarding alcohol as a beverage. We have little doubt that, with fair play and a chance to study actual results over a reasonable period of time, the verdict of the coming generation will be against alcohol, as the verdict of our generation has been against morphine and cocaine.

THE OLD SOAK

Ο

NE of the most fertile imaginations in America is possessed by Mr. Don Marquis, now columnist for the New York "Tribune." The delightful succession of characters which have emerged from Mr. Marquis's brain and served as the vehicles for his philosophies and his antipathies constitutes a most agreeable chapter in the writings of the present day. None of his figures perhaps has yet attained the universal popularity of Mr. Dooley, but many of the creatures of his brain seem almost as much alive as the hero of Archey Road.

News that "The Old Soak," vehicle for Mr. Marquis's antipathy to prohibition and his recognition of both the vices and the imaginary quality of the so-called virtues of alcohol, was to appear on the stage made many theater-goers look for

Photograph by Abbe

HARRY BERESFORD AS THE OLD SOAK AT THE PLYMOUTH THEATER,
NEW YORK CITY

ward to the opening night with their
risibilities on the qui vive. From the
reception which was awarded the play
it is quite obvious that most of the
theater-goers were not disappointed in
their expectations. The probabilities
are that Mr. Marquis's comedy will have
a more prosperous career than that of
the Old Soak himself.

The play was in some measure a disappointment. The fertility of Mr. Marquis's imagination seemed to have exhausted itself in the creation of the chief character and in some of the dialogue. Both in plot and situation the play is almost wholly lacking in originality. The wealthy and sanctimonious banker, the wayward son, the actress who was better than she seemed-we have met their like many times before. They afford typical examples of the kind of literary characters at which Mr. Marquis himself delights in poking fun. The setting for "The Old Soak" is, in fact, so obviously ready-made that we suspect that Mr. Marquis utilized it with his tongue in his cheek. The obviousness of the setting probably will not detract from the popularity of the play for that large portion of the theatergoing public which likes to have the

occasions for a tear or a laugh pointed out well in advance. If they run across stock signals to "Smile here," or "Weep now," it makes it all the easier for them to enjoy the progress of the drama under consideration. They will find plenty of sign-posts in Mr. Marquis's dramatization of "The Old Soak."

superior right in basic and universal industries at times when "the whole Nation once every two years or less can be pushed to the precipice of want and commercial collapse; when we are brought to consideration of price-fixing against extortion in time of peace; when hundreds of thousands of workers, not only in the industry, but outside of it, are thrown into skimping and starving, and when the Nation is made to suffer the shame of Herrin and rampant crime that has followed in the train of strikes."

Later he defined what he meant by this superior right as "the right of the public to a continuous supply of its vital necessities and services upon terms fair to the employer and employee. When these various rights [collective bargaining, the National basis of unions and employers, and so on] infringe upon the public right, then the dominant right is public right."

All of this applies to other basic. industries as well as to coal. That even in the strikes just settled the public interest has not yet been guarded is indicated by the remark of Senator Cummins on the day when the Senate passed the Coal Anti-Profiteering Bill, after the strike was settled, that "Profiteering is more general now than it has been at any time since the strike. If there ever was an emergency, it is now." How such an industrial war as we have been going through works widespread injury to classes that have nothing whatever to do with inciting or settling railway and coal strikes, is shown from Mr. Hoover's view, expressed on another occasion, that the greatest loss is caused to the farmer who has to accept low prices because the railways cannot transport his crops. So, too, Governor Miller of New York has denounced the obduracy of striking railway shopmen against fair offers of set

S

ECRETARY HERBERT HOOVER

has the reputation of being a doer rather than a talker. Yet on occasion he can put a truth of import in as clear and forcible a fashion as any speech-maker of them all. Such an instance was his affirmation of "the superior right of the public" in a recent talk before the Salesmen's Association of the American Chemical Association. He was speaking directly about the coal strikes, since composed by what many think is but a temporary truce-a truce based on realization that the industry can for the present at least furnish high wages and high profits and with precious little reference to the rights of the public for service and fair prices. In plain, round terms Secretary Hoover denounced the outrage to the public's

clare: "We must maintain our stranglehold until, not our adversary, but the public, is brought to its knees." He asserted that it was such a thing as this that he would make a serious penal offense.

It is for the people at large to declare and enforce this superior right through their elected representatives in Congress and executive office, but also through exercising their industrial intelligence to understand business and economic processes. Some of the considerations involved are discussed in this issue in an article by Mr. Edward Eyre Hunt, which includes some expression of Mr. Hoover's views as to business cycles.

In wars between capital and labor the public is not an indifferent neutral; its resources are exhausted and its rights are outraged.

T

HE other night, the "Norddeutsche Allgemeine Zeitung"-still a powerful paper-aptly quoted Bismarck's phrase regarding Russia and Austria: "Between these two states the relations can become better or worse; they cannot remain as they are."

I-GERMANY

Ever since the signing of the Treaty of Versailles, over three years ago, Germany has unceasingly endeavored to escape the terms it imposed upon her. For instance:

(1) Her real armament is greater than that to which she has a right.

(2) The trial of her war culprits, imposed by the Treaty of Versailles, has been insufficient and in some cases ridiculous.

(3) She has not delivered coal and wood as agreed.

(4) She has lowered her exports and augmented her imports, especially in articles of luxury, instead of limiting those importations to articles of necessity.

(5) In order to show an apparent bankruptcy, the Germans have sent much of their capital to other countries, a leakage estimated at from $1,000,000,000 to $2,000,000,000.

(6) With the same end in view, the German Government has greatly augmented the personnel and therefore the total of salaries in its postal and railway services.

(7) Finally, also with the same end in view, the Government has pursued a policy of lowering the exchange value of its monetary standard by enormous emissions of paper money. It has put forth such a large number of paper billions that its printers must now work their presses continually night and day in a fruitless attempt to provide themselves with an adequate medium of exchange. At present the attempt to keep up takes an incredible number of paper marks.

Hence the German Government has certainly not done all it could to in crease its receipts, to lessen its expenses, and to prevent its capital from evading the just demands upon it.

Apparently the Government adopted three rules of conduct:

has

First, it does not intend to pay for reparations a single mark more than is actually forced upon it.

Second, it seems to think it quite within its right to create deliberate bankruptcy in order to obtain easier terms from its creditors.

Third, it thinks that all its recent policy will give a prodigious boom to its industry.

Now, however, with the recent great fall in the value of the mark, the German banks can no longer finance German industries in their necessary purchases of raw materials. If there is no upward turn in the situation, there will

be an army of the unemployed. Then many stores and shops will close for want of custom. A comparatively small quantity of foodstuffs, if any, will be ordered from abroad. We may hear also of insufficient crops in Germany. There may even be some starvation.

Can the present Government withstand such a crisis? Suppose it cannot and is overthrown? What kind of a government would succeed it? A monarchist and reactionary Government? Or a communist-bolshevist affair? Either would menace not only the execution of the Versailles Treaty but also the actual peace of Europe infinitely more than does the present Government -which should be upheld wherever possible.

Certainly no nation of the Entente wants Germany to escape the punishment she merits for her culpability in starting the World War. But no country wants to reduce Germany to economic or political impotence. If any country wanted to bring about Germany's ruin, it would only have to allow those great German industrialists who have been exploiting the people to go on lowering the value of the mark; or to permit the conspirators, whether monarchists or bolshevists, to continue their daily and nightly work of trying to destroy the present republican régime. No, the Entente is not acting that way. Nor is France in particular.

II-FRANCE

It is unfortunately too easy for us in America to forget that France fought for us for three years before we entered the war, that France did deeds of heroism at the Marne and at Verdun really for us too as well as for herself.

If we have not seen with our own eyes the devastation in France wrought by the Boches, it is difficult to comprehend that they have destroyed no less than ten French departments; that they have killed thousands and thousands of Frenchmen in battle; that they have outraged and mutilated women and children; that they have demolished buildings-churches, schools, factories, homes; that they have ruined mines, forests, orchards, vineyards. For years the Germans had been preparing for a war with France and in France so that they might devastate it to such a point as to make its rehabilitation impossible.

France has indeed suffered much more than has any of her allies. Not one of them has had so much territory devastated as she has; not one of them has lost so many men or so much material.

The difference between France and the other allies, especially England, is being continually accentuated by the talk concerning German payments. The proportion which France will receive is 52 per cent and that of England 22 per cent, a

seemingly

just proportion because, among the reparations, the Versailles Treaty included pensions. And that in spite of American opposition. It was easy to see that if pensions had not been included in the total of reparations, France would have received in the neighborhood of 75 per cent and England only about 5 per cent.

Since the war closed France has done all possible to rehabilitate herself. To repair her devastated departments she has spent millions of dollars. The total sum, though large, can repair but a small part. But the sum represents all that France can find or borrow. For the rest she asks for the execution of the Treaty of Versailles.

When the French look at their country, they see no results of reparations; they see no security.

No country has so much need of security as has France, because no country is so much threatened. In the ultimate analysis, security is not only necessary for France herself, it is the only base on which the reconstruction of Europe can rest.

Where is such security to be found? At present only in the French army. Yet, in England and America, France is blamed for wishing to maintain her present army. Instead of blaming her, she may well be excused. It is not her fault; the fault in the first place is with the English and American Governments, who have not kept their pledges with France to protect her against Germany, pledges made when the Treaty of Versailles was signed.

In view of her alarming economic situation, Germany requests a remission of debts, a so-called moratorium, until 1925. Her creditors want to do all they can to aid Germany in her distress consonant with their own self-respect. In this regard the policy of one of the Allies -France-has been characteristically French; the policy of another of the Allies-England-has become, unfortunately, Germanized.

France will not consent to accord a moratorium without the assurance, by guaranties given, that the German payments for reparations will begin again. Any other means would be, in French opinion, a denial of justice, first, toward the creditors, and, next, towards Germany herself. For a moratorium, pure and simple, would only encourage the German industrialists and profiteers in their speculations, the German Government in its obstinacy, and the German people in their illusions. For the whole world, indeed, the result would be a catastrophe if one followed this abysmal course. The only conditions on which France will consent to accord a moratorium are conditional on Germany's giving guaranties. France has wanted.to include among these German mines and forests. Other guaranties to

be demanded might be, for example, the control of import and export licenses, the establishment of a customs boundary on the Rhine, a supplementary percentage on the value of Germany's exports, a certain percentage on the receipts of dye works, and, finally, a monthly deposit of a certain quantity of gold in a foreign bank.

In all this France is convinced that she will never get anything from a Germany which is not equally convinced that, in the last analysis, France is prepared to act coercively. It is because of this conviction that Premier Poincaré acted as he did during a recent week in Alsace in expelling certain Germans. This policy, nevertheless, though based on justice, can easily go too far. M. Poincaré saw it and modified it immediately. It would be regrettable for French as well as for German interests if too rigorous measures were taken.

III-ENGLAND

What a difference between France and England! In England we see a country better prepared than ever to repel aggression, a country with no devastated provinces, a country whose commerce is ever more powerful and whose finances are so satisfactory that a beginning may be made in paying the debt to the United States. The ends which England proposed at the beginning of the war she has obtained.

England remains always "a nation of shopkeepers." She does not wish to lose any customer; certainly she does not wish to lose one of her best customers, Germany.

Hence what we sometimes call "the Keynes school" has made its way in that country. Instead of imposing very

IT

severe financial reforms on Germany (including even the nomination of an Allied counselor at Berlin, who would have the right of veto on German expenditures, a sort of impartial liquidator of no matter what Entente nationality, even American), now we see that England wants to give Germany a moratorium without any guaranties whatever! There you have a Germanized policy.

Its topmost height was reached day before yesterday when the British delegate in the Committee of Reparations publicly made his confession of faith before the Commission had handed down its decision. He said that England wanted to give Germany time enough to pull herself together and to meet her engagements-so does all the world. But, he added, the only means to this end is to give her a very long moratorium and not to put any obstacle, such as rigorous guaranties, in the way of getting back her credit. Any other policy, he proclaimed, would have the result of dissipating hope of obtaining actual or eventual reparations; any other policy would ruin Germany-and not only that, it would entail an inevitable and immediate repercussion in other countries, that is to say, it would bring about a world catastrophe.

So spoke the British delegate. Suddenly and publicly he announced his personal opinion concerning the secret debates which his colleagues were still having. Such an act is like that of a judge who gives out an opinion before the court in which he is sitting has adjudged the case.

Naturally this act has encouraged the German people in their illusions, their misunderstandings, their obstinacy. Naturally, also, the act, with the implied

strength of the British Government behind it, will push the German Government more than ever to extremes. It is not surprising, therefore, that to-day we find in the telegraphed editorials from the German papers the echoes of the opinions of the people and the Government-a joyous chorus of praise for the Germanized English policy.

IV-BELGIUM

As she was at Genoa, brave little Belgium is also now particularly worthy of attention, admiration, and respect.

By virtue of her right of priority, established by the Treaty of Versailles, Belgium should receive any present German reparations. In the desire to bring about an arrangement fairly satisfactory to all the Entente Powers, the Belgian Government has made a proposal which last night the Commission on Reparations accepted. It is that, instead of the cash payments due to the end of the present year, the Allies are to accept payment of these amounts in six months' German Treasury bills, payable in gold, and guaranteed in such manner as may be agreed upon by the German and Belgian Governments. If there is default in agreement, the bills are to be guaranteed by a sufficient deposit of gold in some foreign bank acceptable to Belgium.

And yet, with guaranties twice repeated in the agreement, so worthy a paper as the London "Telegraph" actually proclaims it, as per report just here, "a defeat for France." On the other hand, to-day's "Journal de Genève" more justly concludes that "la politique française a enregistré . . . un succès indiscutable."

Geneva, September 1, 1922.

T is not solely an American riddlethis so-called business cycle which brings the United States alternately fat and lean periods, these booms and slumps that are the plague of business to-day. No industrial country is free from its influence-America least of all. Now, what is the remedy?

Lopping off the peaks of booms and filling up the valleys of slumps to make business more nearly level, by applying to the future a knowledge of the past. Business moves in a ceaseless ebb and flow, sometimes high and sometimes low, but never the same. The only normal thing about it is its continuous change. Business at an eternal sameness of level would be wholly abnormal. In fact, the idea of a normal business level has wrecked many a concern-dry rot and self-satisfaction are deadlier than fall of prices and lack of orders.

In forty years we have had five seri

ous depressions: 1883-6; 1903-4; 19078; 1914-15, and 1921. In other words, within the lifetime of the average man there have been five industrial catastrophes in which the unemployed have been reckoned by the millions and the idle capital by the billions. We are just emerging from the latest of these business horrors, when all the resources of the Government and of private persons in better position have been called upon to care for those who, through no fault of their own, have been thrown out of work because there has been simply nothing for them to do.

The time is coming when the fore handed business man is going to be able to take in sail before the storm strikes him, because his business barometer will warn him in advance.

Let us analyze a cycle, beginning, because we have to begin somewhere, with the revival of activity.

Revival at first is confined to narrow limits, but it spreads in an ever-widening circle because the more active businesses must perforce buy raw materials and supplies from other industries, which in turn buy from others, and so on and on.

As they buy they employ more labor, they borrow more money, they expand their plants. These make higher profits, increase family incomes, and widen demand. Retailers begin to buy from wholesalers, who in turn order from manufacturers, and they from producers of raw materials. All this while the sun is shining and everybody begins talking prosperity, so that orders are plentiful and prices boom, while buyers rush into the market to secure stocks before prices go even higher. Wholesale prices mount and retail prices follow. Wages rise; discount rates increase; interest rates move upward; stocks and bonds are car