remain to the end of our National life one of its most remarkable state papers, he referred to the aspect of international relations to which I have just alluded. After deprecating alike passionate antipathies and passionate attachments between nations, he says: ""Tis folly in one nation to look for disinterested favors from another... There can be no greater error than to expect or calculate upon real favors from nation to nation. "Tis an illusion which experience must cure, which a just pride ought to discard."

Considered from the standpoint of sentiment, these words seem to have the ring of thorough pessimism; considered from the standpoint of a closer study of human relations, they carry a most significant truth. That truth is this: The representatives of a nation stand in the position of trustees. They feel themselves the defenders and conservers of the nation's rights. Standing in this attitude, they are uncompromising in their demands. As private individuals they might be willing to settle by this compromise or that, but when they hold in trust the rights or interests of a nation their very responsibility as trustees makes them exacting and uncompromising. Between two such bodies there is small chance of agreement.

Exactly the same process may be seen in our own country in the history of corporations and in the attitude of the public toward them. As long as business was conducted between individuals, it rarely happened that the full power of the law was invoked in settlement of a dispute. A higher law which took into consideration mercy as well as justice, the needs of the debtor as well as the rights of the lender, was allowed to enter. Public opinion condemned the private citizen who pressed his legal right beyond a certain point.

On the other hand, the representatives of a corporation-and on the average these representatives are men of high character—exact as officers of trust the letter of the law. Compromises which as individuals they would gladly make, they feel themselves estopped from making by their duty as officers. Much of the unpopularity of corporate as com

pared with individual dealing comes from the fact that the officers of corporations stand in a legal relation to the men with whom they deal of such a kind that they demand the letter of the law. A corporate soul has not yet been developed, nor yet an international conscience. Perhaps both may come in time.

These considerations seem to me fundamental. They have to do not with our time alone, but with generations yet unborn. The forces which are operating in the social, political, and commercial education of the races are likely to continue for an indefinite period. The whole process of civilization and of education which has gone on in the thousands of years whose history we know is likely to go on for some thousands of years in the future.

If this is true, it seems clear that for generations to come wars of greater or less frequency may be confidently expected. Except in the hopes of the most enthusiastic peace advocates, it does not seem likely that the conventions established between nations are likely to do more in the near future than to make war less probable, and, if it does come, less bloody. Our individual human nature or our international human nature is not likely to be made over again in a generation or in a century. The time is sure to come when this Nation will have to say that it will or it will not fight.

If this is true, is it, on the whole, wise for one of the great nations to adopt a policy of preparedness or of unpreparedness, and which of these two policies is the more likely to invite war?

If the general conditions which I have attempted to sketch represent the social order to-day, then these questions are practically answered by the statement of the conditions themselves. If, sooner or later, a great nation must face the question of war, then preparedness is a national duty, and unpreparedness is to invite war, an invitation all the more likely to be accepted in proportion as a nation is commercially aggressive, confident, and careless of the sensibilities of other nations.

There is another fact in this connection to be taken into account. It is

this: The people of these United States are a peaceful people, and to-day they are giving themselves perhaps too heartily to the game of business. They know almost nothing about military life. As a nation they take only the vaguest interest in the two branches of the military service. Many good people even decry and belittle a life in these services. Notwithstanding all this, the people of the United States come of a race of fighters. There is just one thing which might change their present attitude to war and turn them from a life of commerce into a life of militarism. This would be to receive a sound thrashing by some foreign power. Let this happen and there would be no dearth of appropriations for ships. The cost of our military establishment would come up by leaps and bounds, and this people would give itself as heartily to the business of war as it does to-day to the business of peace. Those who talk glibly of what might follow a Japanese victoryand a war between America and Japan ought to be absolutely impossible-do not go below the surface. Such a victory might mean the inauguration of a halfcentury of racial war such as the world has not known since the days when Roman civilization went down under the Eastern invasion.

Outside the matter of expense, the argument most commonly urged against the development of a strong navy is the plea that such a naval power would furnish opportunity to an aggressive President to involve the Nation in war.

There is little in the history of our own country or of contemporary nations to support this fear. Since England became supreme on the sea, she has had no war with a great Power. And in our own history, what President has ever by his aggressions brought the Nation to war?

Our wars came by other means than the aggressiveness of the executive. Those who were in Washington in any governmental relation during the stirring days of 1898 cannot forget the forces that then made for war, and the resistance of the chief executive to the war spirit.

It is not a President, charged with the burden and the responsibility, who is

likely to push the United States into war; it is rather the other less responsible agencies which influence our social and political being-a sensation-seeking press, emotional politicians, clashing commercial interests, inflamed public sentiment, and, underneath all, influencing all, the universal human liking for a fight. None of these, when aroused, stop to inquire if the Nation is ready. They demand war first, and think afterward.

When one weighs fairly the fundamental influences which still operate in our social order, and considers at the same time the influences, uncontrolled by the Executive, which may make for war, he will, in my judgment, conclude that Theodore Roosevelt, in advocating the policy of a strong navy, sets forth a sound doctrine, and one which looks no less to the preservation of peace than to the upholding of our dignity and integrity as a Nation. The difference in view-point between those who oppose and those who favor the maintenance of a strong navy lies, not in the end sought to be accomplished, but in the process by which this end is to be gained. From the one point of view, this end is to be wrought by specific conventions which shall quickly do away with armies and navies. From the other view-point, the. way to National disarmament lies along the same path we have already traveled. Those who advocate the latter method mistrust the value of any short cut to international peace which runs ahead of the education of the age.

If I understand the philosophy which underlies the teachings of Jesus Christ, it pointed to exactly this treatment of all such questions. In his day the evils of intemperance were as manifest as they are to-day; the abuses of human slavery affected the entire body politic; the social order was at the mercy of the military power, and his own people groaned under its burdens. And yet he preached temperance, not total abstinence; he urged master and slave alike to carry out their duties to each other honorably and faithfully, but he made no crusade against the institution of slavery; he taught the soldier to lead the soldier's life in mercy and in justice,

but he made no effort to abolish militarism. Since his day we have made progress in just such proportion as we have followed this method. The profound wisdom of this philosophy can be realized only as one studies the failures which have resulted when any human organization has sought to substitute for it its own moral and religious specifics. Men who admit the facts of racial history and of human progress to which attention was first called, and who accept as well the philosophy of life to which I have just alluded, believe that the next step forward in civilization does not lie in the abolition of armies and navies, but in the making of these necessary organizations training-schools of the highest professional proficiency, but training-schools at the same time in national self-restraint, national justice, national respect for law and order and for the rights of others. They believe that in proportion as a nation gives itself generously, unselfishly, patriotically to the training of an army and a navy in this spirit, it helps in the most practical and direct way to prepare the world for a civilization under which armies and navies shall be international police and the preservers of international peace.

If this position is right, then the question of efficiency in the naval service is a true national question, and one more far-reaching in its effects than we generally realize, for it is a question, not only of naval efficiency, but of national efficiency as well.

A nation cannot create and maintain a naval service of high order by merely handing out a large sum of money. Lowell was right when he said that the true giver is he who gives himself with his gift. The principle is true of nations as well as of individuals. If the United States is to maintain such a service upon a high plane of efficiency, there must be put into its making not only money, but thought. We must give to it not alone appropriations for battle-ships, but sympathetic interest and intelligent supervision.

The real efficiency of the naval service and its potential energy are measured by the efficiency of the officers who make up the service.

How are these officers trained? Is their education thorough, well rounded, and wisely adapted to develop the qualities called for in the widely varying branches of the service, or is that education superficial and one-sided? Are the spirit and morale of the service subject to intelligent examination? Are those in the service able to use the equipment which the Nation supplies to its full capacity?

These are fundamental questions if our navy is to be efficient, but they are questions with which neither the country nor Congress and rarely a President is really concerned. It is true that Congress appoints a board of visitors to inspect the Naval Academy each year, but there is no more solemn farce enacted by the Government than the proceedings of this board of visitors. It is composed partly of Senators and Representatives, partly of estimable men generally chosen by reason of some personal acquaintance with high officials of the Government. The board visits Annapolis after all the work of the year is completed, and is shown a series of exercises and entertainments which occupies every hour of its stay. At the end of all this it writes a report which is carefully pigeonholedon the whole, probably the best use to which it could be put.

The responsibility for the right kind of questioning must in the end rest on the President, the Secretary of the Navy, and the naval officers themselves. In the past there has been little of it. It is, in fact, not easy to secure that sort of study of a specialized service which leads to the recognition of the weak places and their betterment. No service like that of the navy can be judged with entire fairness wholly from the standpoint of the outsider. On the other hand, no such service can secure its highest efficiency if left to develop solely from the influences which lie within its own lines.

The ideals of the naval service and the qualities of the men who make that service efficient or inefficient are determined in large measure by the character of the training received at Annapolis. Congress has supplied the money for most complete buildings and equipment

for the Naval School. In extent and in cost they are beyond those supplied by any other nation. This is well, but it is vastly more important to know whether the moral, intellectual, and professional training which is to be given in these buildings looks toward the highest type of manly life and of professsional service. As compared with the men of other nations, the American is alert, resourceful, and superficial. Alertness and resourcefulness are great qualities, but

alone they do not win, in the long race, against thorough training and intelligent preparation. Those who have to do with education need to set their faces resolutely toward those things which make for simplicity, sincerity, and thoroughness; and in no school can such training count for more in the Nation's well-being than in the one which fits for the Nation's navy. The race for national and for naval leadership is a race between schools.

F

OR the investor of small means the bonds and stocks of established and substantial corporations are excellent investments. But before investing in the obligations of any company, the investor will do well to question its responsibility, the actual market value of its material property, and its earning capacity. Safety of principal, readiness with which that principal may be converted into cash, and income from investment, these are the fundamental rules of investment. No wise investor forgets them.

Land and houses are attractive investments. Some of the greatest fortunes of the world have been built up by the intelligent purchase of real estate. But investments of that character require considerable sums. The owner of $1,000 does not usually purchase a corner lot, a railway company, or a factory site. What, then, shall he do with his savings? He confronts the alternatives of bonds, stocks, mortgages, or the savings bank. The purpose of this paper is to discuss the relative desirability of bonds and stocks as investments for moderate savings.

Bonds and stocks are simply certificates of value. They represent, fractionally, material property such as houses, land, factory sites, railway stations, steam-engines, steel rails, machin

ery, docks and terminals, etc., and also such intangible things as earning power. Corporations must operate upon borrowed money, just as a merchant does. The latter borrows from his bank for two, four, or six months, in order to finance his purchases; as security for his borrowings he gives to the bank his personal note. Sometimes he is required to give collateral security as well. Corporations borrow on a larger scale and for longer periods. The form of borrowing they employ is called a bond issue.

A bond is a written promise to repay a loan at a given date. The interest to be paid during the life of the loan is also specifically stated upon the face of the bond. The bond is secured by the pledge of some material thing, such as a railway property or a factory site. All these facts are minutely stated in a contract or mortgage, together with a detailed description of the property offered as security. This contract is deposited with some responsible person or banking institution, usually a trust company, who shall act as trustee for possible purchasers of the bond. Conservative companies issue their bonds only up to about seventy-five or eighty per cent of the actual market value of the property pledged. This leaves a satisfactory margin of safety for the prospective bondholders. If the company

fails to pay interest on the loan at the stated times, or the principal at maturity, the trustee is empowered by the clauses of the mortgage contract to sell the property and satisfy the claims of the bondholders both as to principal and as to interest. What remains after the satisfaction of the bondholders' claims goes to the stockholders.

What, then, is a stock? It represents the right to, or title to, or ownership of a property and of the earnings of that property, after running expenses and interest on debts have been paid, or, in case of foreclosure and sale, of what remains after payment of debts of every description, with principal and interest. It may stand for great value, or merely for future possibilities. A bond is a A bond is a fixed liability. So much interest must be paid annually and so much principal at the maturity of the loan, else the property offered as security is forfeited. On the other hand, the management of the company is under no defined obligation to the stockholders. The latter must take their chances. If times are good and earnings are great, they may expect large returns. When business is depressed, they must be satisfied with a decreased income, the amount being subject to the discretion of the directors. It will be seen, therefore, that the value of a stock, both actual and as to market price, is variable. The intrinsic worth of a bond, in contrast, having been practically determined before its issuance, remains relatively unimpaired, although its market value may fluctuate in sympathy with the general activity or depression of business. Also, since stocks represent ownership, while bonds do not, and since control of property is the desire of men, stocks are subject to speculative manipulation that bonds are free from.

Bonds and stocks cannot be all things to all men. What may be a perfectly legitimate investment for a shrewd banker or merchant might easily seem recklessly speculative when purchased by a minister, or teacher, or widow inexperienced in financial transactions. Indeed, no uninitiated person should attempt to decide the details of such matters unaided by expert counsel. But the essentials

he may master. vinces one that the inexperienced investor should place his savings where they need cause him no anxiety. He should be able to put his security away in his strong box, confident in the assurance of unvarying income and indestructibility of principal. He has no time to watch the gyrations of financial markets, nor knowledge wherewith to gauge them. Therefore, generally speaking, it would seem that bonds are preferable to stocks for persons of moderate means. Let it be borne in mind that the bonds and stocks discussed here represent the obligations of old and established corporations that have withstood the winds of adversity and the temptations of prosperity. The real investor should be concerned with no other class of securities. So soon as he strays from the straight and narrow path of conservatism, he becomes a speculator in a greater or less degree.

A little thought con

Stocks of some companies may be more desirable investments than bonds of others. The stocks of certain great railway and industrial corporations, for instance, have, through years of careful management and consequent steady payment of dividends, come to be regarded as being practically equivalent to fixed obligations. (Income from bond investments is called interest, that from stocks dividends, the one meaning payment to the lender for the use of his money loaned, the other signifying a division of surplus profits.) Bond investments promise a known and steady income, with relatively little likelihood of advance in market price beyond a certain point.

Stocks stand for variability in the matter of both principal and income. They may reap enormous profits, or they may return their owner nothing. In the selection of stocks as an investment, therefore, the purchaser should be even more careful than in the case of bonds. He should satisfy himself by diligent study and inquiry that the company whose stock he is about to buy has earned for a long period and is now earning a surplus far in excess of all expenses of operation, interest on bonded indebtedness, and, finally, of the dividends paid on that stock. If these facts can be