RURAL EDUCATION AND THE GARDEN THOSE of us who have a lingering sentiment ther emphasizes the necessity for the reorganizafor the schoolhouse by the road-the little red tion of the country school. It is divided into two schoolhouse, or the still older log one-should go sections: "The Rural Life Problem," and "The and look upon it once more, for this crude, unsani- Rural School Problem." The author considers the tary home of rural education is disappearing rap- very great changes in rural life since the beginidly under the persistent demand for better facilities ning of our national development and the effect for education in the rural districts. In the past we of these changes on our institutions. Our national have been so sure that, in this country, we pos- development he divides into four periods: the first, sessed a genius for education that we have largely up to 1830, that of subsistence farming; the second permitted education to run itself. Recently, how- period, 1830-60, a period given over to the rise of ever, we have lavished money and skill in the commerce and manufacturing; the third period upbuilding of city and town schools, and to-day that of expansion, inventions, and development, the problem uppermost in the minds of educators which brings us up to 1890; the fourth period, is the welfare of the rural schools, which are far from 1890 onwards, and which is bringing about, behind the town schools in efficiency and equip- among other changes, the urbanization of rural ment. A most instructive and readable book, life, intensive farming, new rural social organiza"Better Rural Schools," has been prepared by Mr. tion, and the reconstruction of the rural school. George Herbert Betts, whose educational work is widely known, and Otis Earle Hall, County Superintendent of Schools in Montgomery County, Indiana. In a chart which accompanies this work is shown the new center correlation in the rural school curriculum that springs from the soil of home interests and activities-the central trunk of Nature Study, Agriculture and Home Economics. From this main body of education branch the various courses of practical and of higher education. 1 Recent contributions to the already large list of books on gardening and horticulture are the first volume of Professor L. H. Bailey's "Standard Cyclopedia of Horticulture" (Macmillan), a splendidly illustrated work of fruit and vegetable growing for the amateur; "The Back Yard Farmer," by J. Willard Bolte (Chicago: Forbes & Company); "The Home Vegetable Garden," by Adolph Kruhm (New York: Orange Judd Company); "The Commuter's Garden," edited by Walter B. "Rural Life and Education," a Riverside text- Hayward (Crowell); and "Harper's Book for book, prepared by Ellwood P. Cubberly, Professor Young Gardeners," by A. Hyatt Verrill (Harof Education at Leland Stanford University, fur- pers). These are all illustrated adequately. 2 THE INDUSTRIAL SITUATION AND SOCIETY MR. WILLIAM ENGLISH WALLING, whose in Primitive Technology," "The Savage State of books, "Socialism As It Is " and "The Larger the Industrial Arts," 'The Technology of the Aspects of Socialism," are among the best expo- Predatory Culture," " Ownership and the Comsitions of the more recent phases of the subject, petitive System," "The Era of Handicraft" and has contributed to the series another volume, en- "The Machine Industry." titled, "Progressivism-And After." In this, as in his earlier volumes, Mr. Walling shows an A useful little book on "The Industrial Situaunusual ability to take a non-partisan attitude in tion" has been prepared under the auspices of the discussion of matters concerning which he, the Federal Council of Churches in America by as a Socialist, has intense convictions. His sur- Professor Frank Tracy Carlton, of Albion College. vey of the progressive movement of our day, apart In this work Dr. Carlton gives a survey of confrom the growth of Socialism as such, is, on the whole, so fair and frankly conceived that it can hardly be regarded merely as a piece of socialistic propaganda. Equally interesting will be found Mr. Walling's characterizations of leaders like Roosevelt and Wilson in their relation to the general movement. Mr. Thorstein Veblen, author of "The Theory of the Leisure Class," has written a suggestive essay on "The Instinct of Workmanship and the State of the Industrial Arts." The nature of the subject-matter of the essay is indicated by the chapter headings: "Contamination of Instincts 1 Better Rural Schools. By George Herbert Betts and Otis Earle Hall. Bobbs-Merrill. 512 pp. $1.25. 2 Rural Life and Education. By Ellwood Cubberly. Houghton, Mifflin. 367 PP. $1.50. Progressiveness-And After. Dr. William English Walling. Macmillan. 406 pp. $1.50. The Instinct of Workmanship and the State of the Industrial Arts. By Thorstein Veblen. Macmillan. $1.50. 355 PP. ditions as they existed prior to the era of modern industrialism and treats the economic and industrial developments of our own time in a concise and enlightening way, giving brief expositions of such topics as Women and Children in Industry," "Industry and the School System," "Scientific Management," "Looking for Jobs," "Labor Organizations," and various other phases of the present situation. Mr. Robert Hunter's volume on "Violence and the Labor Movement" brings out in sharp outline the differences between the actuating principles of the anarchistic groups of Europe and those of the modern Socialists. As an appeal to the Socialists themselves and an argument in favor of political action as opposed to other forms of violence, it formulates the lessons of experience in the most effective way. The Industrial Situation. By Frank Tracy Carlton Violence and the Labor Move.nent. By Robert Hun. ter. Macmillan. 388 pp. $1.50. FINANCIAL NEWS FOR THE INVESTOR ARE BOND PURCHASES Now OPPORTUNE? POSSIBLY the question which heads this interest which borrowers had to pay and article is the most important one of a consequently depressed prices of old securifinancial nature at the present time. The ties. Back of these evident causes the theostudy of commercial and financial history rists maintain that an unprecedented increase indicates, if not a complete cyclical theory in the production of gold had lowered the of price changes, at least the fact that prices purchasing power of a given unit of gold. of commodities, stocks, and bonds do move In the year 1913 less fundamental factors largely in cycles. There has been a long were at work, such as the fear of general declining swing in bond prices and an up- European war, unsettlement because of a ward swing in commodities. Is the move- change in administration in this country, ment about to be reversed? Are we at the with a consequent reduction of the tariff, beginning of a period of continued improve- and finally the fear so widespread last ment in the bond market? June and July that we might be enter To answer these questions is less simple ing a real financial panic or at least a than to ask them. But recent events and depression. tendencies are significant. Last month in We did pass the peak of a sort of silent this column the advantages and popularity panic last July. Fortunately the European of short-term notes were fully recounted. skies wholly cleared and a new tariff law For a number of years past it has seemed brought no immediate disaster. Moreover, as if corporations would never again be trade throughout the world had slackened able to sell anything but short-lived notes, and released vast quantities of both capital so difficult did they find it to sell long- and money for investment. Gold producterm bonds at other than almost ruinously tion stopped increasing as fast as before, low prices. All manner of gloomy fore- and it became evident that if the bidding bodings attended the constant repetition of up of interest rates went much farther the one-, two-, and three-year-note issues, an breaking point would be reached. The sayapparent deferring, so it seemed, of the ing that no tree can grow quite to Heaven evil day. applies to the financial world. In other In December, 1913, and to nearly the words, the end of a cycle seemed to be at same extent in July of the same year, bond hand. prices struck as low a pitch as in the panic The highest-grade bonds had suffered the of 1907, and far lower than in the little panic worst fall, relatively, and they were first of 1901. The highest-grade railroad bonds, to recover. Bonds of cities and municipalilegal for savings-bank investment, sold to ties had long been abnormally low. City yield 4.60 per cent. in several cases, where after city had literally been unable to sell but a few years before such bonds could bonds at any price. In certain respects the not be had to return more than 31⁄2 per breaking point had been most nearly reached cent. The first-mortgage bonds of the in civic finance. Some cities had been restrongest industrial companies (manufactur- duced to asking help to market their obligaing, merchandising, etc.) sold on a 6-per- tions from department stores and newscent. basis, and all investment precedents papers. Others depended upon the generappeared to be set at naught by the extraor- osity of one man. The tree had almost dinarily high yields which public-utility grown to Heaven, and only a slight happenbonds afforded. ing was needed to check it. For several reasons bonds had been de- The new federal income tax exempted clining since 1908-9. Primarily the heavy municipal bonds from taxation, and this little demands upon capital for wars, new indus- fillip was just enough to turn the tide. Intries, unrestrained expenditures for unpro- vestors suddenly began to realize that city ductive purposes, and individual extrava- and town bonds were wonderfully good segance and luxuries drove up the rate of curities and were selling unusually low. Then came a sale of $51,000,000 New York State a uniform, well-known security, instead of bonds, the largest amount ever put out at first this and then that, is sure to fare best. one issue, and the price received was 106.077, "If a company has any credit," says George or an income basis of 4.208 per cent., as B. Caldwell, president of the Investment compared with 4.87 per cent. for an issue Bankers' Association of America, "such mortof eight-months' notes the preceding June. gage bonds under clearly drafted measures If prevailing prices for other issues of New as to the purposes for which they are issued, York State bonds had been the criterion, a should net far better prices than any attempts bid of 104 or 105 would have taken the to use miscellaneous forms of security issues new issue, but imperceptibly sentiment had which have nothing to commend them but been growing better. the small aggregate amount of the mortgage Since January 1, 1914, the bond market or indenture covering their issue." has been improving, transactions in bonds on Nor will the high returns on public-utility the New York Stock Exchange up to April 7 securities continue. The returns have been having been nearly $75,000,000 more than in high largely because the business is a new the same period in 1913. Not that there have one. "Among ten average investors in corbeen no downs as well as ups. The enthu- porate securities, perhaps not over one, cersiastic rise in January and early February tainly not over two, have as yet invested at did not keep up at the same pace in March,' all in electrical securities," was the recent but late in that month a large issue of Nor- statement of Frank A. Vanderlip, president folk & Western equipment trust certificates of the National City Bank of New York, in were sold on a 4.50-per-cent. basis, although addressing a convention of the country's last summer the best securities of this class electrical interests. "It is not easy for you, could be had to yield nearly 5 per cent. At perhaps, to realize how very recently it is this writing (April 7) the New York State that the whole field of your business has bonds brought out at 106.077 are selling at reached a point where an investor might 109.25. fairly feel that he was not entering a field of experimentation." "But the time has now come," Mr. Vanderlip went on to say, "when no man with capital to invest can longer hold back from the study of public-utility securities. It has ceased to be a business of small units, and the tendency is markedly in the direction of great capital issues, which shall have at all times a broad market." The great railroad corporations which put out such large note issues in the last few years evidently believed they would be able to replace them when due with bonds at better terms. The Great Northern, Pennsylvania, New York Central, Burlington, St. Paul, Southern, Erie, and others have made or are making plans for huge blanket mortgages, running as high as a billion dollars, to take up gradually and replace their many Without making predictions, it may be complicated smaller issues now outstanding. urged upon the thoughtful investor that Primarily to simplify and standardize, the many circumstances combine to suggest this purpose is secondarily to sell bonds at lower as a favorable time to purchase long-term rates of interest. The borrower who offers bonds. TYPICAL INQUIRIES AND ANSWERS OWNERSHIP No. 540. TELEPHONE BONDS AND GOVERNMENT upon which you appear to have acted are among In the matter of my telephone bonds, about which I the most unusual that have come to our attention have had some previous correspondence with you (the as illustrating the great confusion of thought issue of one of the Bell subsidiaries operating in the among many holders of telephone securities about West), something has come Recently I consulted with a banker in regard to them, take over this great public utility. That such up which may be new. what might happen, if the Government were to and in substance, the situation was put in this way: "We feel that the bonds are perfectly safe now, but suggestions should have come from a banker suppose the Bell sell out to the Federal Government? is astonishing. We think you must have misHow could we hold them to their guarantee? They understood. For it would be impossible for the had been turned over to the Government, distribute the company to do as he suggests. To show, shall proceeds to their shareholders, and then leave the we say the absurdity,-of it, it is necessary only bondholders the security, on which they are based, namely, the buildings, a lot of useless conduits, and to remind you that the bondholders are the credi rusty wires. What chance would we have to fight? tors of the company with claims that would have Surely a lot of expense, and a doubtful outcome." As a result I have cashed my bonds. might keep on paying interest until their working plant We are constrained to comment upon the course you have taken, because the suggestions 1 Much of the hesitancy in both the stock and bond markets in February, March, and early April was due to the importance which the financial community had attached to the postponed decision of the Interstate Commerce Commission in the railroad freight-rate case. you consider best for investment under existing condi tions? to be satisfied first of all out of the proceeds of the sale of the property; and that the shareholders, who are the partners, or proprietors, could come Our preference would be for St. Paul comin only for the residue, if there were any. It is mon, Southern Pacific, Atchison common, and inconceivable that, in a case of this kind, the Westinghouse Electric & Manufacturing. There Government would fail to recognize the bond- is a good deal of disposition to regard the present holders' claims in full. To do otherwise would New York Central dividend as a trifle "shaky," be repudiation. But aside from this, it is pretty and we think, also, that in view of the present generally believed that behind the outstanding railroad situation Baltimore & Ohio common securities of the companies in the Bell system might require considerable attention. Missouri, there are assets at least sufficient to cover them, Kansas & Texas preferred is in an uncertain posidollar for dollar. It has been repeatedly, and tien at the present time. In fact, it is being rather very confidently, asserted by President Vail, of freely predicted that the directors of this road the American Telephone & Telegraph Company, may decide before long to omit the dividend on as an established fact that "the property is well the stock until conditions in the road's territory worth more than the market price of its securi- take a turn for the better. The impression that ties," that friendly and unfriendly appraisals of such action may be taken has gained ground the various properties have been made, and that considerably since the Colorado & Southern in no instance has the appraised value been emitted its first and second preferred dividends. placed below the book value. And it is per- Erie first preferred is, as you doubtless know, tinent to point out also that the principal Con- not a dividend paying stock, and is, therefore, gressional advocate of government ownership is wholly speculative. As such, however, it seems on record as follows: to have a good many friends, who look upon it as more or less promising "for a pull." Surplus earnings of the road, available for dividends last year, that is, the fiscal year ended June 30, 1913,-were equivalent to nearly 14 per cent. on "Be it said for the Bell system that it is the one great corporation in our country that has not issued tons of counterfeit capital. Its stock and bonds to-day represent the actual contributions of its shareholders in money to a great common the outstanding first preferred. enterprise, and we will not have that unfortunate circumstance to deal with in the valuation of their properties." No. 541. AMERICAN WATER WORKS & GUAR- Can you give me some advice on the American can Our analysis of the plan of reorganization has led us to the same conclusion you appear to have reached. We believe that those holders of the old preferred stock, who can afford to do so, will be better off in the end if they pay the $35 assess ment and take in exchange for their shares the new first preferred and participating preferred shares. It seems to us to be extremely likely that the new first preferred can pay dividends practically from the start of the reorganized company, and if the expectations of the new officers are realized, we should not be surprised to see the new participating preferred stock go on a dividend basis within a reasonably short time. Of course, it is not possible to make an accurate forecast of the future of the new company, but as we see the situation it appears to us as though there is a good chance for the holders of the old preferred stock to save their investments by paying the larger assessment. No. 543. EIGHT PER CENT. ON YOUR MONEY Is it true that 8 per cent. on investments in the West is as conservative a rate of interest as 5 per cent. in New England or the East? We do not so consider it. As a matter of fact, we believe that, in the selection of an 8 per cent. investment of any kind, no matter in what part of the country it may have its genesis, requires a great deal of careful discrimination,more than the average investor is in position to exercise. There are, of course, a good many people who can make their money earn as high a rate of interest as that, but they cannot do so safely without having intimate personal knowledge of the securities in which they invest. You have to consider that an investment which yields 8 per cent. to the purchaser, particularly an investment of the mortgage type, must be one on which the obligor pays certainly as much as 10 per cent, and in many cases more than that. There is, moreover, scarcely a section of the country to-day in which it is not possible for the man with the right kind of security to offer, whether it be city property or farm land, to borrow at a lower rate than 10 per cent. No. 544. SERIAL BONDS Will you kindly tell me what is meant by "serial bonds"? Are they better than other kinds of bonds? Serial bonds are those whose principal is paid off in instalments, usually annual, or semi-annual. Among the most common types issued in this way are equipment bonds, municipal bonds, and real estate bonds. Many people have a strong preference for this form of investment. The underlying security for such bonds is not affected and does not change during the life of the entire issue, granting, of course, that the property is properly maintained and that the necessary sums No. 542. COMMENT ON MISCELLANEOUS STOCKS I would like to ask your opinion of the following are set aside to take care of depreciation, etc. stocks: Missouri, Kansas & Texas preferred, Erie first So it becomes apparent that, as the early series preferred, Baltimore & Ohio common, Chicago, Mil- of the bonds are paid off, there is a correspondwaukee & St. Paul common, New York Central, South ern Pacific. Atchison common, and Westinghouse Elec- ing increase in the relative security underlying tric & Manufacturing common. Which four would the later series. Mr. Mellen at New Haven Investigation.. 657 Leading Articles of the Month 732 652 653 Kentucky and Child Labor. 653 This Year's Important Elections. 654 Will There Be a Vote of Confidence?. 654 Progressives to the Front.... 655 Pennsylvania Primaries 655 Colonel Roosevelt's Return. 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