actions, which are rapidly and enormously augmented at these two periods of the year, an additional volume of universally circulating currency or money tokens is needed. If a time of financial panic happens to come at the same period, the circulating currency of the country, instead of expanding, actually contracts because of the hoarding by banks and individuals. There are many well-authenticated instances of Western cattle-breeders who declined as late as last December to supply Chicago packinghouses with the animals necessary to the packing business because they could not get in payment money tokens guaranteed by the United States Government and were unwilling to take other forms of promises to pay, although the packers' credit was gilt-edged. If the plan proposed by Senator Aldrich had been in operation then, the packers could have taken their approved bonds to the banks, the banks could have taken them to the United States Treasury, and the farmers would gladly have taken the Governmentguaranteed notes which the packers could thus have given them. The Aldrich Bill seems to us simple, sensible, and effect ive. As it leaves wide discretion in the hands of three responsible Treasury officials, with a final veto power to be exercised by the Secretary of the Treasury, it cannot be claimed that the bill is framed in the interest or for the special advantage of the banks. It is a nonpartisan measure, and, in our judgment, in substantially the present form should be passed at once. This will then leave the way clear for the appointment of a National Currency Commission to consider whether the currency, banking, and treasury system of the United States needs any fundamental and permanent modification.

this occasion spoke, not to a political association, but to an audience of the People's Institute-an audience composed, in a very large degree, of wageworkers and others in close sympathy with labor unions. In accordance with the custom of these meetings of the People's Institute, Mr. Taft followed his address by three-quarters of an hour of extemporaneous answers to written and verbal questions presented to him by the audience. There is hardly a platform in this country which puts a speaker to so good a test of his frankness, his quickness of mind, and his innate sympathy with justice and human rights. Mr. Taft met the test to the entire satisfaction of the audience. The great hall was packed, hundreds of people finding it impossible to get even standing room. Capital and labor, said Mr. Taft, are not enemies, but colleagues. They absolutely need each other. "What I am anxious to emphasize is that there is a wide economic and business field in which the interests of the wealthiest capitalist and of the humblest laborer are exactly the same." He defended the right of the laborer to strike, and peacefully to persuade his fellow-laborer to strike. But he attacked the employment of violence by laborers in strikes, and reasserted his belief that injunctions may properly be employed by capital to prevent a resort to violence by labor. He, however, expressed his belief that this method of prevention by injunction had been abused in this country, and proposed to remove this abuse by returning to the original Federal law, which provided that no temporary injunction should be issued until the person or persons to be enjoined had been given notice and an opportunity to state their case. The courage

with which he maintains the belief that he put into practice as a judge and the fairness to labor with which he now proposes an amendment to the law of injunction, in order to insure equal justice to labor and to capital, will, in our judgment, meet with the ultimate approval of organized labor throughout the country. His position appears to us to be logical, human, and practical. In his answer to questions Secretary Taft displayed his characteristic good humor, common sense,

and thorough knowledge of the principles of law. Sometimes his answers were vigorously in favor of capital, sometimes as vigorously in favor of labor. The New York Sun, comparing this bout of question and answer to a boxing match, gives the following graphic little picture of the contest:

"Now," said Mr. Taft, "I don't know exactly the rules of the game." There was a general roar at this, and he went on: "But I understand that your questions must all be germane to the subject under discussion.. Is that one of your rules, or am I wrong?" "That's right!" shouted a score of voices. "Very well, then we'll start in," said the Secretary. But the questions covered about every department of public life and thought before they got through handing them up. So it went for the better part of an hour. There were many questions that couldn't be answered for lack of time, but it was the general verdict that the Secretary was entitled to the referee's decision, and when the gong rang the crowd swarmed into the ring to grasp the victor's hand.

The Panic: Its Industrial Aspects

In his Cooper Union speech Secretary Taft made the following compact but entirely adequate statement of the causes of the recent financial panic: We are suffering now from a panic. It was brought on, in my judgment, by the exhaustion of free capital the world over, by the lack of an elastic system of currency, and also by a lack of confidence in our business fabric produced in Europe through the revelations in certain great corporations of business dishonesty, corruption, and unlawfulness.

The acute stage of the panic has passed, but it has left certain industrial and commercial conditions in its train which it is wise at this time carefully to survey in order to determine what course to pursue in the future. With the bursting of the Heinze United Copper corner in October, and the runs on and suspensions of banks and trust companies in New York, Brooklyn, and Providence, began the acute money scarcity or famine, which before it had run its course caused the shutdown or the curtailment of operations of a vast number of the country's industrial plants--just how many would need a National census to determine. Another and most serious development of the currency shortage in its effect on

the agricultural community, hitherto little affected by the year-long stringency, was the practical suspension for several weeks of the buying of grain, particularly of wheat and cotton. The farmer, used to cash payments for his products, for a time refused checks tendered, and the movement of the crops fell to very small proportions. Western coal-miners, mostly in Indiana and West Virginia, refused checks in payment of wages and even struck against accepting them. As November advanced the use of clearinghouse certificates of small denominations, emergency currency as it really was, became well-nigh universal, but this was more generally used at large industrial centers, and in the West than at the East. As the working out of the system of protection by clearing house certificates. developed, each city became walled off from the rest of the country, as it were, and the system of domestic exchanges collapsed. That is, it became impossible, because of the high cost of exchange, to remit money in payment for debts, and collections for account of merchandise already delivered fell to a very low point. Cases are well known of drafts between Western cities and New York costing $9 to $10 per thousand, and there were instances where New York exchange was practically unobtainable. Here was where the strain struck the average business house or manufacturing concern hardest. With little or no money coming in, with help to be paid, supplies to be purchased, and bank accommodation restricted, there ensued a curtailing tendency and a cancellation of orders which threatened to bring all business to a standstill. Fortunately, some large concerns took the position that they would accept deferred shipment of orders but would not take cancellations, and this prevented the panicky feeling from going too far. With the advent of December the feeling became more cheerful, though the shutting-down tendency in the iron and steel line was perhaps more marked, and the output of the cruder forms of iron in that month was cut to only about one-half that of October. This, of course, does not necessarily mean that the number of persons employed was at once reduced sev

enty-five per cent. The dullness in new demand in December was more noticeable than for many years past, and the pessimism in all lines, coupled with the difficulty of getting ready money, undoubt edly caused a falling off in the volume of late December trade, which also felt the effect of the rather mild weather upon ordinary retail demand for seasonable goods. Many department stores tried to, offset this money scarcity by agreeing to give credit to purchasers of goods who could show that they had money in savings banks, affected by withdrawal clauses. Some of these department stores were, however, reported as discharging help just before the holiday trade began. In industry there were some very sharp reductions. For example, steam coal consumption in the Chicago district was reported to have fallen off fifty per cent from the average ruling before the last quarter, railway traffic fell enormously, and retrenchment and a general scaling down began, which was estimated to have reduced the number of workers in that city alone by 175,000.

on the Year 1907

If the immense, The Panic: Its Effect almost feverish, activity of the early part of 1907 had been continued to the close of the year, all records of mine output, mill production, railway traffic, and consumption must have been broken. The rush of the first nine months, however, found a counterbalance as to production in the last quarter. Hence a rather irregular showing for the full year, where complete returns are available. Early immense iron ore output more than made up for decreases later, and the gain in 1907 over 1906 was easily ten per cent. Pig iron production felt the sharp reduction of November and December, but still fractionally exceeded 1906 in total output, after being at one time far ahead. Expenditures for new buildings throughout the country fell seven per cent from 1906, the record year in this respect. Other lines showing shrinkage were those of shoe shipments, with a decrease of seven per cent; steel rail output fell below 1906, and railway building decreased five per

cent from the year before, but gross railway earnings increased twelve per cent over 1906. Foreign trade touched new high levels in 1907, and it might be added that the collapse of prices of commodities caused by the panic rather benefited our export trade, which, indeed, in November surpassed all records, while imports, particularly of luxuries, were very sharply reduced. There were fewer strikes and strikers in 1907 than for many years past. With the passing of the year 1907 and the completion of the large annual dividend payments, there ensued a period of much easier money, the banks of many cities resumed payments in currency, emergency checks and scrip began to be retired, and the end of the first week of January saw money easy, financial affairs pretty much on an even keel, a consequent improvement in the tone of trade, many previously canceled orders reinstated, and collections considerably better. However, business, as a whole, is still rather restricted, new orders are small, railway earnings are declining, thousands of empty cars are on sidings, where a year ago there was an actual scarcity, and industry, despite numerous resumptions, is reported dull in comparison with recent years, and in a condition of quiet not approached since the depression of 1903-4.

There are, of course, no The Panic: Its statistics of idleness in Effect on Labor mill and factory forces comparable with, say, the depressed time 1903-4. That the number of those idle is enormously larger than at any other time in the past three or four years seems certain, despite the emigration which is estimated to have taken 500,000 persons out of the country since the autumn of 1907. On every side one finds evidence of reduced production, and presumably the number of persons unemployed is very large. One estimate, for instance, of the number idle in the building trades at New York is 50,000 out of 100,000 usually employed. In addition, there are said to be 100,000 unemployed union men in the greater city. In the Connellsville coke region only one-third of

the ovens are in operation, and presumably there are 12,000 out of 20,000 men in this industry idle. If the number of persons employed in the iron. and steel trade and allied metal-working trades had been restricted correspondingly as the pig iron output was reduced in the last quarter of 1907, one might easily estimate 300,000 out of 600,000 employees idle; but, as above intimated, this system of applying proportions of tonnage idle to persons employed is misleading and really futile. In bituminous coal the production is being restricted, but no figures of employment of the 300,000 persons in this line are to be had. The lumber industry, which employed 475,000 persons in 1905, is very much depressed, the number of men in the woods is smaller this winter than for many years, and the Southern output of yellow pine and cypress is greatly cut down. So the story goes throughout the entire roll of the country's industries, and no real approximation of idleness in trade and industry is possible; but the encouraging fact may be easily deduced that the suspension is not so widespread as it was in the period of trade and industrial paralysis in November and December. There is another after-effect of the panic and succeeding paralysis that as yet can only be spoken of as largely in the future. That is the inevitable readjustment of wages of labor forced by changed conditions of cost of manufacture and of subsistence and by the increase in the floating supply of labor. So far, few announcements of reductions of wages are reported, but it might be noted that a quiet movement along individual lines and to meet individual cases has been in progress for over a month. Just at present the lowering tendency in wages is perhaps best illustrated in the iron and steel, coke, and kindred lines. Compensations are found, however, in the more healthful and sane attitude of the country towards general business. Over-production, overtrading, over-sanguine promotion, and feverish speculation have ceased. Reasonable caution and economy have been introduced. With a proper regulation of corporations and finance The Outlook expects that after this panic there will

follow a period of more general and genuine prosperity than the country has known for some time.

Merit or Political Patronage in the Census?

The next United States census will be taken in the year 1910, and it

may seem rather early to talk about it, but in point of fact census-work is going on all the while, and an immense amount of preparation is needed before the actual taking of the census begins. It will be necessary, in addition to the large permanent force, to appoint at least four thousand employees, and the question arises, How shall these men be appointed-to please a great number of professional politicians who would like jobs for their adherents, or to secure the best possible results? Last week President Roosevelt sent a brief but cogent message to the House of Representatives, urging them to take such measures as would secure in the next census such tests of fitness for the clerical employees as would relieve the work from the "taint of the spoils system." It is not quite certain that the President has the right to require competitive examinations under the rules of the Civil Service Commission, although it is held by many that he could do so; it is certain, however, that Congress may require that the new appointments shall be made only after competitive examination under the rules of the Civil Service Commission. Nothing is needed to prove the desirability of this action beyond the President's exposition of the deplorable results of the non-competitive examination used in selecting the census officers at Washington for 1890 and 1900. Examinations, the President declares, were used only "as a cloak to hide the nakedness of the spoils system," and were useless as checks upon political patronage. The result of such examinations is summed up by the President as follows: "They prevent the most incompetent from being appointed, but they do not secure the appointment of the most competent, and they afford no check upon political appointments." The positive assertion is made, moreover, that the great majority of the clerical

employees for the last two censuses were far below average ability, and that only half of them could pass the competitive examinations under the Civil Service rules. Comment seems not needed after this statement, and The Outlook can only join in urging that Congress apply the merit system for the next census.

An Interesting Test Vote

Several months ago The Outlook reported the results of a straw ballot on the Republican Presidential nomination taken by the Chicago Tribune among Republican Congressmen, legislators, editors, and other party leaders in the Middle West. In that canvass an overwhelming majority indorsed the progressive policies of President Roosevelt; while only a slightly smaller number expressed their desire for a progressive successor. Secretary Taft received over four times as many votes for first choice for the nomination as any other candidate, while Governor Hughes showed unexpected strength as a second choice. The Tribune has now extended the canvass to the rest of the country, and publishes a summary of the preferences of about forty-five hundred Republican leaders. The majority in favor of the President's progressive policies is still enormous, over four thousand approving them, while only about three hundred and fifty disapprove. About thirty-six hundred want a progressive successor. Secretary Taft is the first choice of over twenty-five hundred voters, the second choice of eight hundred and thirty, and the third choice of nearly three hundred. His nearest competitor for first choice is Governor Hughes, with six hundred and sixty-six votes; but Mr. Hughes is the second choice of over fifteen hundred, and the third choice of seven hundred. Only one other candidate receives as many votes for first choice as Mr. Taft does for third choice-Senator Foraker, with three hundred and thirtyfive votes. Mr. Taft is not only the first choice of sixty per cent of the voters, but he is the first choice in every State except those which have a favorite son, like New York, Illinois, Indiana, and Pennsylvania, and he is, moreover, the

second choice of each of these "favorite son" States. Straw ballots generally have little real value, but this canvass was so extensive and thorough as to make its results worth reporting.

The New Jersey Railway Tax Law Sustained

A very important decision was handed down from the New Jersey Court of Errors and Appeals last week. As our readers will remember, the New Jersey Legislature a year ago or more passed, and the Governor signed, a law designed to compel the railways to pay a fair proportion of the State taxes-not upon the franchises or privileges owned by the railways, but upon their actual property situated in the State. Formerly, it is estimated that the total revenue to the State from railway taxes upon what is known as their main stems was about a million dollars a year, while under the new law the railways would pay on this class of property alone about three million dollars yearly. By the main stem is meant the strip of land owned by the railway, upon which the lines are constructed, in its entire length as contained in the State. This is real estate as truly as the farmer's wheat-field. It was proposed by some reformers that each town should tax that portion of the main stem within its own limits, just as it taxes any other property, but the Perkins Law does not go as far as this; instead, it fixes an average State tax rate on the whole main stem, and the tax is collected by the State, which in turn distributes the greater part of it to the towns for their school funds. The decision just passed upholds this legislation as regards the main stem, and the towns, which have been waiting for over a year to receive the funds already raised from this tax but withheld from them because of litigation, will now presumably be paid. Another kind of property owned by the railways is known as second class, and consists of actual property, apart from the main stem, situated in the various towns. This kind of property under the law was to be valued by the local assessors, but that provision of the law is pronounced unconstitutional by the decision