The measure passed by Congress in June, while accepting fully the theory that the ships should be operated by private owners as soon as is consistent with a disposition of them on favorable terms of sale, guards carefully against any forced sale at all, or any hurry in the dispersal of the Government fleet. Or it would be more correct to say that the Ship

ously reported as in forced flight into the mountains and as probable leader of a new police force to maintain order throughout the country)

Americans. Procedure under this article drew a protest from President Wilson in 1918. Confiscation of private property is threatened by this obnoxious provision of the constitution, and a modification of it would contribute to a better understanding between the two nations. The Republicans at Chicago, while demanding the protection of American rights and lives in Mexico, expressed the nation's good-will and friendly desire for the welfare of the Mexican people.

The National Mercantile Marine Act

The most important piece of constructive legislation enacted by Congress in its last session was the National Merchant Marine measure, passed just before adjournment after all night sessions and a vast deal of conference work in reconciling the views of the Senate and the House. The bill provides for the disposition of the ships now owned by the nation and for the development of a great American Mercantile Marine. It effects the settlement of two aggressively opposing views as to the proper course of the Government with respect to the enormous tonnage of ships now owned by the nation. One plan, strongly urged by Mr. Hurley, would have sold the ships to private operators at once, the Government going out of the shipping business without delay. Such advisers felt that we were on the verge of a falling market so far as ships and pretty much everything else was concerned, and that a forced sale at figures near current quotations for ocean better business for the Governtake the chances of having to

1

against forced-sale prices or any kind of sacrifice. For the act gives enormous power and responsibility to the Shipping Board, simply instructing it to go ahead within certain defined limits and eventually to get rid of the fleet by any means it would adopt if it were acting for the best interests of private stockholders. The Shipping Board is increased to seven members, each to receive compensation of $12,000 a year, and the Emergency Fleet Corporation, the operating branch of the Board, has its life indefinitely prolonged-until the last ship has been sold to private owners.

Details of the

Act

The ships are to be sold only to corporations in which a majority of the stock is held by American citizens, when engaged in overseas trade, and in the case of vessels disposed of for coastwise traffic the purchasing corporation must be owned to the extent of seventy-five per cent. of its stock by American citizens. Purchasers can pay for vessels in fifteen annual instalments, with rates of interest on the deferred payments fixed by the Board. A "revolving fund" of $25,000,000, recruited from the funds received from sales or the operation of vessels, is set up for five years to enable the Board to establish shipping routes where it may deem necessary in case private capital refuses to embark in such lines, and to make loans to private owners attempting to carry out the Shipping Board's instructions as to the establishing of new routes. It is obvious that the success or failure of the measure will to a peculiar degree depend on the seven men who make up the Board. The nation virtually turns over to them these enormous

assets and tells them not to sacrifice any values and to make a success of the sale and operation of ships any way they can as long as purchasers and operators are American.

Improvement

in the

The rather dismal reports in May from the Department of Crop Outlook Agriculture, due to bad crop weather and shortage of labor, were somewhat qualified for the better in the later estimates of June 8. The month of May brought an improvement of 19,000,000 bushels in the winter wheat crop and spring wheat promised 68,000,000 bushels more than last year. Even so, the June indications were for a total harvest this year of only 781,000,000 bushels, as against 941,000,000 bushels actually harvested last year. With the revised estimates, however, we can now look forward to a crop only five per cent. smaller than the five-year average from 1914 to 1918, which included three record-breaking harvests.

The Strain

on Credit

At the conference in Washing ton last May of the bankers of the country with the Federal Reserve Board, there were emphatic warnings as to the growing strain on credit due to advancing prices and wages, curtailed production and expanding loans. Governor

Harding, of the Board, estimated the expansion of banking credit properly attributable to the war at $11,000,000,000, while money in circulation had increased $1,900,000,000. Liberty bonds had fallen so far in current quotations that certain issues were selling on a basis of no less than 6.30 per cent. return. It was made clear that either credit must be reduced more rapidly than production is diminished, or production must be increased at a rate greater than the expansion of credit. Following these warnings came on May 29 a drastic vertical raise in the Federal Reserve Bank's discount rate. The New York institution established its discount rate at 7 per cent., the fourth consecutive increase since last November in the campaign to put the brakes on inflation. On all commercial papers, except bankers' acceptances, member banks of the Federal Reserve system must now pay 7 per cent., as against 54 per cent. last November, when the rate increases began. The rate on advances secured by Liberty bonds has been raised from 5 to 6 per cent. and those on United States treasury certificates from 5 to 51⁄2 per cent. In some

other sections of the country, the Dallas and Kansas City regions, a different method is being used to slow up the expansion of credit. Here there are varying discount rates increasing as any individual borrowing bank increases its discounts, thus penalizing those who borrow beyond a certain limit.

What Are

Worth?

Some interesting testimony was the Railroads introduced in the rate hearings last month before the Interstate Commerce Commission as to the actual physical value of the railroads. It will be remembered that it is a basic premise of the advocates of the Plumb plan that the roads are probably really worth some $8,000,000,000 less than the figures of their "property accounts" show. As the Esch-Cummins bill provides for rates to produce 51⁄2 or 6 per cent. on the actual fair value of the railroads, this question of a genuine appraisal of the properties becomes all-important at present and really the deciding question between the sufficiency or insufficiency of the rates prescribed in the legislation now to be tried. The Government has been engaged for seven years in working out the true physical value of the roads and has spent $30,000,000 already in the task, but until the present rate hearing nothing has been heard of the results of this investigation sufficiently broad and representative to be of service.

Some

Real Evidence

In the testimony presented to the Commerce Commission last month, however, an officer of the carriers' valuation committee made public the Government's determination of the value of fifty railroad systems, aggregating 51,853 miles, showing that their cost of reproduction even at 1914 prices would be $3,203,782,543, while their property investment accounts showed $3,158,275,156 carried on the books of the companies. On the basis of present prices of construction instead of those obtaining six years ago the current valuation of their properties would obviously be many billions greater. The spokesman for the carriers said that railway experts believe the completed valuation report will show the properties to be worth at least $2,000,000,000 in excess of their capitalization and $6,000,000,000 more than the present market value of their stocks and bonds. The aggregate railway investment claimed by the carriers in these hearings is $20,616,000,000.

PROCEEDINGS IN CONGRESS

May 18.-The Senate receives a report stating that oil reserves are not expected to last twenty years, 40 per cent. of the fields being exhausted.

May 19.-The House, voting 209 to 106, refuses approval of State federalization of the National Guard, and in sending the Army bill back to conference requests no change of pre-war status of the Guard.

May 20.-The Senate adopts the Borah resolution for investigation of pre-convention campaign expenditures by presidential candidates.

May 21.-The House adopts the Knox peace resolution, 228 to 139, 19 Democrats voting with the Republican majority.

May 24.-In the Senate, testimony before an investigating committee reveals the expenditure of $414,984 for Governor Lowden for the Republican presidential nomination.

May 25.-Senate committee testimony shows a $62,185 fund for Mr. Hoover's campaign for the Republican nomination.

The Senate passes the annual Pension bill of $279,000,000.

May 26.-The Senate learns that General Wood's campaign fund was nearly $1,000,000.

The Senate reconsiders the Nolan-Johnson $3 a day minimum bill for Government employees, on motion of Mr. Thomas (Dem., Colo.), and rescinds its passage.

May 27.-In the Senate, an investigating committee learns that Senator Harding's campaign fund was $113,109; Governor Coolidge's $68,375; and Dr. Butler's $40,550.

The House passes a bill authorizing the Treas

ury to make final settlement of $1,000,000,000 back taxes.

May 28. In the House, the Knox peace resolution fails, in a vote of 219 to 152, to obtain a two-thirds majority for passage over the President's veto. . . . The conference report on the Army Reorganization bill is approved, 236 to 106.

May 29. In the Senate, the Armenian mandate comes up for debate. . . . The investigation of campaign expenditures shows a fund for General Wood of $1,180,043; Senator Johnson's was more than $200,000. . . . A pension bill for SpanishAmerican War veterans is passed, granting $12 to $30 a month for incapacitation.

In the House, the soldier bonus bill is passed, 289 to 92, with less than an hour's debate under suspension of rules.

May 31.-In the Senate, the sub-committee under Mr. Fall (Rep., N. M.) reports on its Mexican investigations, stating an American loss of over $500,000,000 during the revolution, proposing financial aid for Mexico and a constitutional revision with the alternative of intervention, and suggesting the establishment of a Claims Commission for murders of Americans in Mexico.

The House, voting 233 to 58, passes a bill permitting agriculturists to combine for the sale of farm produce despite anti-trust laws, but limiting dividends to 8 per cent. a year.

June 1.-The Senate "respectfully declines" to give permission to the President to establish an American mandate over Armenia, voting 52 to 23 against the mandate.

June 2.-Conferees on the Merchant Marine bill report favorably to both Houses.

June 3.-The House votes 343 to 3 to repeal

all war laws except the Lever Act and the enemy trading act.

Both Houses pass the Postal bill, increasing aggregate pay of workers $34,375,000 a year.

June 5.-In the Senate, the Pomerene resolution to continue campaign expenditure investigations is passed.

In the House, Mr. Mondell, of Wyoming (Republican floor leader), reviewing the work of the session, declares that Congress has saved $2,374,460,917; it passed the Merchant Marine, Mineral Land Leasing, Water Power and Prohibition bills; the amended Budget and the Soldier Bonus bills fail in the Senate, and the President fails to sign the measure repealing his extraordinary war powers.

The first regular session of the Sixty-sixth Congress comes to an end.

AMERICAN POLITICS AND GOVERNMENT May 18.-Georgia Democrats, at the State Convention, repudiate Mr. Wilson's League.

The Federal Reserve Board confers with bankers, who agree to curtail "long standing, non-essential loans" and discourage unnecessary borrowing in order to reduce inflation.

May 20.-The Interstate Commerce Commission orders railroads to reroute freight to shorten the haul, make daily car deliveries to other lines, and send solid trains of empties to the West, to relieve freight congestion.

May 24.-President Wilson, in a message to Congress, requests permission to establish an American mandate over Armenia, citing the Senate resolution of sympathy.

May 25.-Governor Smith, of New York, signs a bill providing $1,000,000 as that State's share of initial construction costs for an interstate vehicular tunnel under the Hudson River.

May 26.-A federal grand jury indicts the American Woolen Companies of Massachusetts and New York for excessive profits.

May 27.-President Wilson vetoes the Knox peace resolution adopted by Senate and House.

May 28.-President Wilson approves the Virginia Democratic platform and praises the planks on the League of Nations, finance, and reconstruction.

May 29.-President Wilson nominates Mrs. Annette Adams, of San Francisco, as assistant to the Attorney-General.

May 31.-President Wilson and Homer S. Cummings, chairman of the Democratic National Committee, confer on the latter's "keynote" speech at the San Francisco Convention on June 28.

June 1.-The Supreme Court decides the Ohio prohibition referendum case, holding that ratification by a State legislature of a federal constitutional amendment is final and not subject to referendum by the people. The salaries of

the President and of federal judges are exempted from the income tax by a decision of the court.

June 4.-President Wilson vetoes the. budget bill, claiming it interferes in removal of appointees with the executive authority. . . . Mr. Wilson appoints William O. Thompson, of Columbus, Ohio, Neal J. Ferry, of McAdoo, Pa., and William L. O'Connell, of Scranton, Pa., as the Anthracite Coal Commission.

Frank L. Polk, Under Secretary of State, resigns, effective June 15, due to ill health, and 'will be succeeded by Norman Davis.

June 5.-Mr. Wilson charges Congress with failure, especially in economic measures, due to domination of political expediency.

June 7.-The Supreme Court decides that the Eighteenth (Prohibition) Amendment and the Volstead enforcement act are constitutional.

Galveston, Texas, is placed under martial law as a result of serious congestion from a longshoremen's strike.

The Interstate Commerce Commission announces the immediate appropriation of $125,

SENATOR HARDING IS A GOLF ENTHUSIAST

(He is photographed here with ex-Senator Bourne, of Oregon, on the links of a Washington club)

000,000 for the purchase of railway equipment and rolling stock.

In the Iowa primary, Senator Cummins (Rep.) is renominated by 25,000 plurality.

June 8.-Attorney-General Palmer, acting in the New York harbor strike, rules that the Adamson eight-hour-day law applies to all equipment used by railroads regardless of ownership.

The Republican National Convention opens at Chicago; Senator Lodge makes the keynote speech as temporary chairman.

The Louisiana Senate defeats ratification of the federal suffrage amendment, 22 to 19.

June 9.-The New York Supreme Court enjoins truckmen's unions and steamship companies from boycotting open shop companies.

Tennessee Democrats, in convention, condemn Senator Shields for opposing President Wilson's League of Nations, and instruct him to reverse his position.

Secretary Houston announces an issue of $400,000,000 Treasury certificates at 534 and 6 per cent.; reduction of national debt one billion dollars to $25,000,000,000; and reduction of floating debt from $4,000,000,000 on August 31, 1919, to $2,850,000,000.

June 10.-The Republican National Convention adopts a platform presented by its resolutions committee, read by Senator Watson (Indiana) as chairman.

June 11.-The indictment of the American Woolen Company for profiteering is quashed in al District Court on the ground that

woolen cloth is not wearing apparel under the amendment to the Lever Act.

June 12.-Senator Warren G. Harding, of Marion, Ohio, is nominated on the tenth ballot as the Republican choice for President in the National Convention at Chicago; Governor Calvin Coolidge, of Massachusetts, is unanimously nominated for Vice-President.

FOREIGN POLITICS AND GOVERNMENT

May 13.-Japanese parliamentary election returns show a victory for the Government Party, the Seiyu-kai, which wins 265 seats; the Opposition, Kensei-kai, hold 119, the Kokumin-to 29, and the Independents 39.

May 17.-In Ireland, more than 2000 British troops are landed to protect the police.

Pablo Gonzales withdraws from the Mexican presidential contest in the interest of harmony. Admiral Sah Chen-Ping succeeds Premier Chin Yun-Peng of China.

May 21.-Premier Nitti forms a new cabinet in Italy, with Vittorio Scialoia as Foreign Minister; 20,000 Italian officers refuse to obey demobilization orders.

Premier Millerand, of France, receives a vote of confidence, 526 to 90, for his stand against the railroad strikers. The General Federation of Labor calls off the strikes.

Madrid is placed under martial law.

May 22.-Venustiano Carranza, fugitive president of Mexico, is shot while asleep near Tlaxpalan by troops in his escort.

May 23.-Heavy troop patrols are established in Ireland at Dublin and other points; crime and incendiarism continue.

General Rafael Montalvo is nominated for the Cuban presidency by the Conservatives.

In Spain, many thousands of women take part in demonstrations demanding a reduction of the high cost of living.

May 24. In Mexico, General Obregon orders the arrest of Bonillas, Barragan, and others in connection with the death of President Carranza.

May 25.-The report of the commission appointed by Britain to investigate the Amritsar affair of April, 1919, in which a number of Indian natives were killed, is filed by Lord Hunter; the British majority and Indian minority agree that the shooting was necessary, but condemn General Dyer's handling of the affair.

A railroad strike of men in Ireland opposed to the shipment by England of troops and munitions succeeds in tying up traffic near Dublin.

May 26.-In Mexico, Gen. Rodolfo Herrera surrenders to General Cardenas, and is taken to the capital to tell how Carranza was killed.

The French Senate votes to tax bachelors. The German Ministry of Transport announces the delivery of 5000 locomotives to the Entente under the treaty.

The Prince of Wales arrives at Melbourne from New Zealand.

The Japanese government sends 50,000,000 yen to Yokohama to stop a run on the banks.

May 28.-Premier Millerand receives his largest vote of confidence, 535 to 68, from the French Chamber of Deputies, endorsing his policy on German treaty enforcement and the Spa conference