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Bank Sc Quotation SectionRailway Earnings Section

INCLUDINGRailway 8c Industrial SectionBankers' Convention Section

Electric Railway SectionState and City Section

VOL. 95 SATURDAY, DECEMBER 14 1912 NO. 2477The Thromicit.

ii? PUBLISHED WEEKLY.Terms of Subscription-Payable in Advance

$10 006 00European Subscription (including postage)

13 00European Subscription six mouths (including postage) 7 50Annual Subscription in London (including pcstage)

22 14s.Six Months Subscription in London (including postage) 21 118.Canadian Subscription (including postage) $11 50

Subscription includes following Supplements-BANK AND QUOTATION (monthly) RAILWAY AND INDUSTRIAL (3 times yearly)IRAILWAY EARNINGS (monthly) ELECTRIC RAILWAY (3 tunes yearly)STATE AND CITY (semi.annually) BANKER' CONVENTION (yearly)

Terms of Advertising-Per Inch SpaceTransient matter per inch space (14 agate lines)

$4 20Two Months (8 times)

22 00Standing Business Cards Einiimrs f,1 NITV

29 0050 00Twelve Months (52 times)

87 00CnicAao OFFICE-Geo. M. Shepherd, 513 Monadnock Block; Tel.Harrison 4012.LONDON OFFICE-Edwards & Smith, 1 Drapers' Gardens, E. C.WILLIAM B. DANA COMPANY, Publiahers,

P.O. Box 958. Front, Pine and Depeyster Sts., New York.

For One Year For Six Months

Published every Saturday morning by WILLIAM B. DANA COMPANY,Jacob Seibert Jr., President and Treas.; George S. Dana and Arnold G. Dana,Vice-Presidents; Arnold G. Dana, Sec. Addresses of all. Office of the Company.

CLEARING-HOUSE RETURNS.The following table, made up by telegraph, &c., indicates that thetotal bank clearings of all clearing houses of the United States for the weekending Dec. 14 have been $3,839.868,961, against $3,950,612,669 lastweek and $3,367,694,639 the corresponding week last year.Clearings-Returns by 7'elegraph.

Week ending December 14. 1912.Per

1911. Cent.New York Boston Philadelphia Baltimore Chicago St. Louis New Orleans

Seven cities, five days Other cities, five days

Total all cities five days All cities, one day

Total all cities week

$1,850,522,426.134,927,187140,154,94236,753,454

269,703,77974,187,59820,185,030

$1,529,962,132147,318,826123,557,66830,344,256

256,663,66772,837,87621,331,583

+21.0-8.4+13.4+21.1+5.1+2.1-5.4

$2,526,434,416 $2,181,816,008629,487,261 566,428,737+15.8+11.1

$3,155,921,677 $2,748,244,745683,947,284 619,449,804+14.8+10.4

83,839,868,961 83,367,694,639 +14.0The full details for the week covered by the above will be given nextSaturday. We cannot furnish them to-day, clearings being made up by theclearing houses at noon on Saturday, and hence in the above the last day ofthe week has to be in all cases estimated, as we go to press Friday night.We present below detailed figures for the week ending with Saturdaynoon, Dec. 7, for four years.

Clearings at

New York Philadelphia _ _ _ _Pittsburgh Baltimore Buffalo Albany WashingtonRochester Scranton Syracuse Wilmington Reading Wilkes-BarreWheeling Trenton York Erie Chester Greensburg _Binghamton _Altoona Lancaster Montclair

Total Middle_Boston Providence Hartford New Haven _ _ _ _Springfield Portland Worcester Fall River New Bedford _ _Lowell Holyoke Bangor

Week ending December 7.

1912. 1911.Inc. orDec. 1910. 1909.

$ $ % $ $2,277,535,144 1,860,701,116 +21.8 1,876,104,729 2,171,894,527193,583,116 161,854,911 +19.6 146,165,546 1 57,574,85757,591,640 49,530,773 +16.3 48,934,075 50,026,88845,867,899 39,327,254 +16.6 25,288,103 34,956,53413,564,737 12,092,416 +12.2 10,151,214 0,448,1767,073,877 6,342,902 +11.5 6,289,447 6,069,7408,761,912 8,815,696 +1.7 8,165,306 7,761,0886,431,934 5,200,550 +23.7 4,322,716 3,884,7843,627,774 . 2,846,177 +27.5 2,597,905 2,969,2823,416,564 2,513,959 +35.9 2,140,682 2,045,0681,831,406 1,617,013 +13.2 1,384,116 1,648,1941,987,597 1,747,209 +13.7 1,434,892 ' 1,566,4492,117,515 1,720,990 +23.1 1,526,038 1,519,3922,507,605 1,801,190 +39.2 1,913,053 1,624,8902,347,385 2,668,477 -12.0 2,349,496 2,316,897944,025 1,027,447 -8.1 1,048,668 978,9431,099,553 888,738 +23.8 826,260 715,235688,427 664,006 +3.6 509,966 618,817575,000 562,387 +2.2 517,192 745,330744,700 643,200 +15.8 501,300 446,400580,819 482,639 +20.3 441,104 435,0521,733,568 986,100 +75.8 948,794 431,414 Not included in total

2,634,612,197 2,172,835,245 +21.3 2,153,560,602 2,459,246,523107,938,324 168,896,473 +17.2 162,071,713 165,765,41410,237,900 7,730,300 +32.4 8,333,800 8,182,3005,067,634 4,08,577 +13.7 3,974,040 4,140,3843,095,010 3,245,004-4.6 2,597,273 2,675,6102,706,003 2,423,438 +U.7 2,131,062 2,275,0002,387,241 2,189,581 +9.0 2,008,005 1,640,2513,083,056 2,599,481 +18.6 1,981,292 1,658,1591,492,653 1,310,058 +13.9 1,523,871 1,542,6691,193,258 990,790 +20.5 1,177,457 1,437,454573,396 569,117 +0.7 559,782 513,024625,000 591,056 +5.7 581,216 546,154603,777 535,924 +12.7

229.003.152 105.539.709 +17.1 186,915.511 190.376.419

Clearings al- Week ending December 7.

Inc. or1912. 1911. 1910. I 1909.

Chicago Cincinnati Cleveland Detroit Milwaukee Indianapolis _ _Columbus Toledo Peoria Grand Rapids_ _Dayton Evansville Kalamazoo Springfield, Ill Lexington Fort Waytte _ _ _ _Youngstown _Rockford

Canton Akron Bloomington_ Quincy South Bend Springfield, 0_ _ -Decatur Mansfield Jackson

Danville Lima Jacksonville, Ill _Lansing

Ann Arbor Adrian

Owensboro Tot.Mid. West

San Francisco_ _ _Los Angeles _ _ _ _Seattle Spokane Salt Lake City Portland Tacoma

Oakland Sacramento San Diego Stockton San Jose Fresno Pasadena North Yakima Reno Total Pacific.._

Kansas City _ _Minneapolis ____Omaha St. Paul Denver Duluth St. Joseph Des Moines Sioux City Wichita Lincoln Topeka Davenport Cedar Rapids Fargo Colorado SpringsPueblo Fremont Waterloo Helena Aberdeen Billings Hastings Tot. 0th. West

St. Louis New Orleans_ _ _ _Louisville Houston Galveston Richmond

Memphis Atlanta Fort Worth Savannah Nashville Norfolk Birmingham _Augusta Jacksonville _ _Chattanooga- Little Rock Mobile Knoxville Charleston Oklahoma Austin Macon

Wilm'ton, N. C..Vicksburg Jackson Muskogee Tulsa

Total SouthernTotal all Outside N. Y_

334,946,839 294,774,30628,356,550 27,672,55025,965,390 20,790,88024,552,992 23,176,57716,373,810 15,822,97010,179,041 9,453,8566,917,900 5,414,4005,906,150 4,530,1704,209,048 4,229,4253,445,816 3,179,1392,433,313 2,347,7762,517,394 2,324,275934,642 913,441

1,354,276 1,224,4691,363,521 1,151,6701,237,229 970,2772,393,420 1,330,259745,257 669,963

1,511,579 1,126,1842,025,000 1.326,000770,158 662,650931,264 677,201

1,682,087 574,052574,665 497,842533,492 604,183498,478 409,541641,690 512,392530,695 445,462507,808 389,419348,163 290,680410,000 400,000248,966 205,20372,260 47,868399,147 420,42/

_

485,518,040 428,538,53758,466,772 53,566,52427,560,765 19,541,65813,333,536 11,800,485*5,300,939 5,067,2809,078,891 8,196,41312,390,687 11,630,0824,387,146 4,542,7174,004,310, 3,830,7682,255,890 2,156,3643,146,283 1,748,1831,152,000 948,733862,504 706,991

1,491,500 1,107,2031,163,508 902,062561,941 498,482354,006 324,374

145,510,688

61,033,84034,686,59119,000,00012,091,38810,528,39511,325,2737,755,9035,212,1073,100,0003,756,2781,927,5211,770,4691,803,6981,819,747649,060785,359847,511321,590

1,688,8521,424,855430,000400,000234,515

126,568,319

55,472,77828,394,54915,313,64011,510,0729,365,1895,478,0657,208,1384,565,9262,747,8273,476,4181,806,6001,579,9411,918,9241,245,0511,123,165641,399839,752390,602

1,200,8061,229,151420,435275,000218,789

+13.6+2.5+24.9+5.9+3.5+7.7+27.8+31.2-0.5+8.4+3.7+8.3+2.3+10.6+18.4+27.5+80.0+11.3+34.2+52.7+16.3+37.5+193.0+15.5-11.7+21.8+25.2+19.1+30.3+20.0+2.5+21.3+51.0-5.0+13.3

$ r $273,267,123 268,199,00424,783,300 27,868,20017,810,381 17,465,47617,453,129 15,369,89114,264,412 12,783,2078,638,096 9,272,2045,774,000 7,850,1004,133,373 3,868,1363,845,423 3,641,9152,540,902 2,495,3832,119,013 2,183,7872,296,125 2,099,312785,254 691,502

1,108,198 1,116,0561,134,719 1,120,0241,082,343 1,023,1171,351,666 1,124,332710,164 685,911925,009 730,238908,173 934,320643,529 502,630736,156 560,776582,700 547,535560,489 440,460416,892 488,328454,081 406,680350,000 318,503414,563 407,138337,767 314,545324,804 348,543300,000

203,402 215,60030,729 52,997

450,499 375,000390,726,414 385,545,740

+9.2 45,249,641+41.0 17,459,936+13.0 10,731,852+4.6 5,000,000+10.8 8,289,567+6.5 11,171,860-3.4 4,419,600+4.5 3,560,298+4.6 1,730,583+80.0 1,320,000+21.5 759,061+22.1 532,413+34.7 917,330+27.8 862,799+12.6 527,139+9.3 328,107+15.0 113,560,386

+10.0+22.1+24.1+5.0+12.4+106.7+7.6+14.2+12.8+8.1+6.7+12.1---6.0+46.1-42.2+22.5+0.9

-17.6+40.7+15.9+2.3+45.5+7.2

182,592,952

85,679,15027,576,75315,330,45325,089,55611,755,0009,315,35012,512,66618,193,28010,761,0517,445,5898,625,1775,048,9213,100,0002,942,4033,670,1443,254,8392,956,3071,754,5632,021,3832,655,5182,392,7632,696,4814,546,565850,000513,1984/5,087

1,096,2051,117,238

273,375,640

156,422,223

79,643,21224,998,43914,858,48720,890,74010,575,0009,123,45111,519,39619,101,3118,732,5507,394,1546,304,2114,600,3052,823,7322,998,6393,655,1082,479,8242,613,8941,500,4362,027,4062,120,7332,359,4613,205,1605,181,109839,048460,262815,692

1,035M/0901,913

250,468,773

51,472,30823,079,51715,305,50913,085,0059,265,0463,760,6606,347,4473,733,7132,796,9423,724,1751,608,7691,552,2691,976,0171,271,034940,659645,529915,459322,979

1,117,058928,492536,704149,644219,385

4-16.7 144,754,320

4-7.6 77,792,297+10.3 24,412,9674-3.2 12,538,768

4-20.1 15,669,1494-11.2 9,895,5004-2.1 7,005,2624-8.6 9,832,091--4.8 16,541,593+23.2 8,432,3184-0.7 7,456;120

4-36.8 4,400,1414-9.7 4,270,3344-9.8 2,714,641--1.9 3,631,2864-0.1 2,875,763

4-31.3 2,094,8904-13.1 2,513,3234-16.9 1,653,483--41.3 1,514,0014-25.2 2,692,5354-1.4 2,600,000

---15.9 1,706,893---12.2 1,600,0004-1.3 912,139

4-11.5 542,275---7.9 700,000i-5.9

+23.9

41,168,23416,176,96012,070,5615,290,8617,736,2278,852,8725,780,6931,990,3131,301,9131,100,000680,952588,009712,803575,000508,205273,193

103,806,796

47,581,94221,041,70513,059,07410,230,5049,272,2374,903,6416,136,5243,395,8632,551,8702,858,3721,360,5661,300,7241,462,1341,387,9161,186,235874,597564,620249,044915,951800,983468,320231,374

133,834,196

70,366,57124,823,58215,422,33415,058,6587,915,5008,513,9877,579,481

13,768,5968,636,8296,332,0064,094,3943,770,1652,521,0282,694,5072,252,9611,695,7702,072,5861,424,3311,645,8522,042,4002,298,2371,033,6151,300,0911599,488400,653500.000

+9.1 225,996.069 208,763,48413,950,612,669 3,330,372,836 +18.6 3,214,842,7021,673-,O77,5251 1,460,671,7201 +14. 1,338,735,973

3,479,572 248'rot. New Eng.Note.-For Canadian Clearings see "Commercial and Miscellaneous News.", 1,307,678,621

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1566 THE CHRONICLE [voL. Lxxxxv.

THE FINANCIAL SITUATION.

It is noteworthy that, notwithstanding the up-heaval on the Stock Exchange, which has been ofunusual character the present week, there has not

been the least sign of tension in money. As amatter of fact the money market has been in adecidedly placid condition'. At the very close ofNovember there was a spurt in the call-loan rate, itwill be 'remembered, to 20%, but this was the resultOf an dnusual dombination of circumstances, and aneasier state of things speedily followed. On the firstbusiness day of December (Monday of last week,Dec. 2) the rate again went high, an extreme of 16%being reached, but thereafter there was a quick de-cline, the maximum Dec. 3 being 93.1%, Dec. 483/2%, Dec. 5th 7% and Dec. 6th 63/2%. The presentweek the highest rate was 6%, and yesterday therange was 4@4%%. As a matter of fact, these call-

loan rates are of little significance, anyway, as indi-

cations of monetary conditions. They are the rates

ruling on the Stock Exchange, where speculation

predominates, and of and by themselves a,re not

necessarily to be deplored. A temporary strain in

that branch of the market might even be beneficial in

checking speculative operations, which, except for

the restraints imposed by high call loan rates, mightbe carried to such extremes as to endanger the money

requirements of legitimate trade. Of course tensionin the call-loan branch might be symptomatic of deep

underlying trouble permeating the whole money

market, but on the present occasion there is nothing

to betoken anything of the kind. There is no evi-dence that mercantile borrowers have not been ableto obtain all the accommodation they needed for

the legitimate conduct of their business.The absence of a pinch in money at this time is

fortunate in view of the determined efforts which have

been' made to induce the Secretary of the Treasury

to extend aid by increasing Government deposits in

the banks. Of course in panicky times it is the duty

of the Treasury Department to put its available cash

at the disposal of the banks, but at other periods

:sound judgment dictates that the Secretary shouldkeep his hands off. This is on the supposition that

he is not draining the channels of trade of their

=money supplies through Treasury absorptions heavily

in excess of the disbursements. It illustrates the

unfortunate operation of our Sub-Treasury laws that

this latter state of things has arisen a number of

times in the history of the country since the resump-

tion of specie payments, and on such occasions the

Treasury Department had no option of course but

to undertake to get the money back into trade chan-

nels, and was justified in employing for that purposeevery legitimate expedient that could be devised.

No such situation, however, exists at the present

time. The importunities to which Secretary Mac-

Veagh is being subjected are based on a two-foldmisconception: first, on the erroneous notion that

the public is clamoring for Government deposits,

and, secondly, on the equally mistaken notion that

Treasury absorptions in recent periods have been

unusually heavyhave, in fact, been proceeding at

such a rate as to denude the money market of enor-

mous supplies of cash. There is not the slightest

foundation for this latter supposition.

We would not refer to the matter except thatCongressman Levy from this State last week intro-duced a resolution in the House of Representativesdirecting the Secretary of the Treasury "to use theauthority vested in him by law to relieve the con-tinued.stringency in the money market by depositingin the national banks throughout the country theSum of $50,000,000 out of the balance in the generalfund in the Treasury of the United States." It isto be said of this proposal, in the first place, that it isbased on false premises. There is no "continuedstringency," and has, in fact, been no stringency atall. There is firmness in the money market, butno more than is natural in a period of great trade ac-tivity, and no more so than is healthful in keepingthe too venturesome under wholesome restraint.There is the further observation to make that wewill have reached a very sorry plight when Congres-sional meddling is allowed to dictate Treasury policyin the matter of money affairs. If the Secretary isto be told arbitrarily to put $50,000,000 of cash atthe command of the banks, then we will soon haveas the next impending step a repetition of the numer-ous episodes that marked the country's paper moneyera when Congress was passing resolutions directingthe issue of more greenbacks, a calamity which, onone occasion, was averted only by the exercise of aPresidential veto.

It seems desirable to emphasize the point thatthere has been no very large in-drain into. the Treas-ury within recent periods. It seems also desirableto indicate how the erroneous impressions in thatregard have arisen. Congressman Levy's resolutionhas a preamble containing some figures bearing uponTreasury withdrawals, but they do not furnish awarrant for the distribution of even half the $50,-000,000 named. The reason for the erroneous im-pressions which prevail in respect to Treasury with-drawals is found in the fact that the Sub-Treasuryfigures in this city, as given out each Friday, almostinvariably show large losses to the banks fromTreasury operations. This is the result week afterweek and month after month. There was a time agreat many years ago when these Sub-Treasuryfigures furnished a reliable index of the results ofSub-Treasury operations upon the banks. To-daythese figures afford no indication whatever of theeffect of Sub-Treasury operationsthat is, theyfurnish no information as to whether the Sub-

Treasury, as a result of its own operations, is gaining

cash or losing cash. The misleading character of the

Sub-Treasury statements has not yet become gener-

ally known, and consequently the Sub-Treasury fig-ures given out are accepted as conclusive on thepoint whether or not the Government is takingmoney away from the banks, while they are really abso-lutely worthless for the purpose. As an indicationof how these New York Sub-Treasury figures attimes deceive even the very astute, we take the fol-

lowing extract from the issue of the Boston NewsBureau for Nov. 27, a publication which deservedlyoccupies a high place in the financial world:

"One particular aspect of the recent situationforcibly suggests the long-suffered need for currencyreform. On Monday the New York banks lost tothe Sub-Treasury $3,479,000, and since Friday last$6,834,000. Reviewing the ten weeks prior toFriday, we find that the aggregate loss reached$68,338,000, which leaked from bank till intoGovernment vault. During that period the net cash


DEC. 14 1912.] THE CHRONICLE 1567

losses of the banks totaled only $15,118,000. Hadthere been no drain to the Sub-Treasury, the move-ments to and from the interior and of gold in and outwould have actually strengthened the metropolitanbanks by $53,220,000."And this anomaly has occurred precisely in the

season when the task of crop-moving was moststrenuous, and when expected foreign aid was sud-denly precluded. Part of this loss to the Sub-Treasury represents, of course, the commercialtransfer of funds to other sections; but the greatershare is merely the large tax toll that Uncle Samreaps in prosperous times."

Our contemporary finds, it will be observed, thatin ten weeks there was an aggregate loss reaching$68,338,000 "which leaked from bank till intoGovernment vaults" while the net cash loss of thebanks during the same ten weeks totaled only$15,118,000. Hence, had there been no drain intothe sub-Treasury, the banks, instead of $15,118,000loss, would have shown $53,220,000 gain. If thefigures given are reliable, the conclusion follows asa matter of course. But they are not reliable. Wemade some computations two years ago, and whichwe then presented for the consideration of our readers,showing very clearly, as we thought, that the NewYork Sub-Treasury figures are wide of the markas. guides for determining the effect of Governmentoperations on the banks. The truth is, as alreadystated, the Sub-Treasury figures almost invariablyshow osses to the banks, and large losses at that,and if they truly reflected the course of Governmentoperations, all the money in the country must longsince have lodged in Treasury vaults. As the bestway of showing this and of demonstrating beyondperadventure that the Sub-Treasury statementsare utterly at variance with the facts, we bringtogether in the following table the figures for eachweek of the last two years.WEEKLY LOSS OR GAIN TO BANKS FROM SUB-TREASURY

OPERATIONS.Week ending 1912. 1911.

January 5 Gain $6,262,000 Gain $2,157,00012 Gain 3,660,000 Gain 7,808.00019 Gain 6,120,000 Gain 4,455,00026 Loss 3.460,000 Loss 138,000

February 2 Loss 1,032,000 Gain 3,979,0009 Loss 9,529,000 Gain 88,00016 Loss 4,295,000 Loss 356,00023 Loss 7,704,000 Gain 852,000

March 1 Loss 8,802,000 Loss 237,0008 Loss 5,299,000 Loss 3,245,00015 Loss 9,033,000 Loss 4,867,00022 Loss 6,222,000 Loss 5,370,00029 Loss 8,238,000 Loss 7,206,000

April 5 Loss 4,385,000 Loss 1,190,00012 Loss 3,627,000 Loss 1,263,00019 Loss 625,000 Loss 145,00026 Loss 9,795,000 Loss 4,676,000

May 3 Loss 3,485,000 Loss 3,994,00010 LOSS 6,732,000 Loss 878,00017 Loss 789,000 Loss 251,00024 Loss 3,055,000 Loss 3,181,00031 Loss 5,174,000 Loss 3,038,000

June 7 Loss 4,317,000 Loss 1,397,00014 Loss 5,614,000 Gain 2,531,00021 Loss 4,913,000 Loss 1,983,00028 Lass 15,150,000 Loss 16,777,000

July 5 Loss 15,651,000 Gain 30,114,00012 Loss 7.225,000 Loss 9,704,00019 Loss 1,862,000 Loss 4,533,00026 LOSS 2,711,000 Loss 6,098,000

August 2 Loss 4.586,000 Lass 3.019,0009 Lass 2,376.000 Loss 2,576,00016 23

LossLoss

3,146,00074,0009,244,000

Lossai n2,312,000

30 Loss 6,410,000 Loss 5,519,000September 6 Loss 5,030,000 Loss 8,338,000

13 Loss 6,539,000 Loss 3,866,00020 Loss 5,957,000 Loss 2,140,00027 Loss 6.345,000 Loss 3,277,000

October 4 Loss 5.627,000 Loss 3,667,00011 Loss 2,314,000 Loss 1,933,00018 Gain 668.000 Loss 3,214,00025 Loss 11,616,000 Loss 5,177,000

November 1 Loss 5,476,000 Loss 5,559,0008 Loss 2,981,000 Loss 3,987,00015 Loss 5,073,000 LOSS 5,393,00022 Loss 4,203,000 Loss 9,609,00029 Loss 10,423,000 Lass 6,854,000

December 6 Loss 7,970,000 Loss 9,122,00013 Loss 6,551,000 Loss 4,566,00020 Loss 722,00027 Less 2,986,000

Let the reader note that sincelthe third week ofJanuary there has been only a single week showinga gain to the banks, notwithstanding that Treasurypayments have at times been exceedingly heavy.Let him note also that the result during the calendaryear 1911 was much the same, except that in the weekending July 5 1911 a gain in the large sum of $30,-114,000 was reported. This was the time whenpayment was made for a new issue of Panama Canalbonds and if the sub-Treasury statements accuratelyportrayed the situation, the gain should have beenvery much larger, as $50,000,000 bonds were soldand the proceeds aggregated over $51,000,000.

According to the Sub-Treasury figures gatheredtogether in the above table, the Clearing-Housebanks lost for the fifty weeks of the current year todate no less than $253,881,000 and for the fifty-twoweeks of 1911 they lost $122,305,000, making$376,186,000 together. We would have to go backonly three or four years more to get an aggregate lossof $1,000,000,000. Of course this is absurd, and wepresent the figures for the purpose of showing howerroneous is any proposition founded MI the same.If Government operations had taken $376,000,000out of the banks the last two years and stored themoney in Treasury vaults, out of the channels ofcirculation, the results would have been appalling.As a matter of fact, Treasury holdings of cash, asdisclosed by the official returns at Washington, wereonly $2,000,000 larger on Dec. 1 the present yearthan on Aug. 11911,. On June 1 of last year Govern-ment cash had got down to an unusually low basis,and it was this that made necessary the sale of$50,000,000 Panama Canal bonds. The amount forAug. 1 1911, therefore, shows the holdings after theyhad been replenished in that way, and may be takenas about what the normal aggregate should be. Inthe following we give the amount of cash held by theTreasury on Aug. 1 last year, on Aug. 1 the presentyear and for each month since then. It is proper toadd that the holdings are usually drawn down gradu-ally between October and June and are then replen-ished in June with the large receipts from the tax oncorporation incomes.GOVERNMENT MONEY HOLDINGS ACCORDING TO WASHING-

TON OFFICIAL RETURNS.

August 11011 $370,530,717 October 1 1912 $369,623,572August 1 1912 373,020,869 November 1 1912 370.379,573September 1 1912 373.297,214 December 1 1912 372.590.703

Thus Treasury money holdings Dec. 1 were actuallysomewhat less than on Sept. 1 or on Aug. 1, and henceGovernment operations during that period did notaffect the position of the banks in any way. Inview of the misleading character of the Sub-Treasurystatements, and in view of the embarrassment occa-sioned thereby to the Treasury Department in con-veying the mistaken notion that the banks are beingdepleted of their supplies of money, would it not bewell for Secretary MacVeagh to give the New YorkSub-Treasury statement his personal attention andhave it re-cast in a form where it will be actuallyenlightening for the purpose for which it is issued?The public is entitled to know at least once a week,

if not daily, how the Sub-Treasury operations in thiscity are affecting the Clearing-House banks. Thesubject is one of great, of vital, importance to everyone, and in this era of publicity regarding Govern-mental affairs no valid excuse can be offered for with-holding the information. A very brief form of re-

Total Loss $253,881,000 Loss $122,305,000


1568 THE CHRONICLE [VoL. Lxxxxv.turn will suffice for the purpose. Let the Sub-Treasury officials show what the Treasury on itsown operation has taken from or added to the moneysupply in the banks, and then give separately the loss-es or gains by other operations through the Sub-Treasury (particularizing the items) and as regardswhich the latter has acted simply as a medium forthe banks. If Mr. MacVeagh wants to link hisname with a genuine reform, let him devote a coupleof hours to the task of preparing a statement for theSub-Treasury in this city which shall furnish anaccurate portrayal of the situation.

The cotton-crop estimate of the Department ofAgriculture, issued on Thursday, leaves no reasonto doubt that the current season's yield of the stapleis a large one, even though it falls below the phenom-enal production of last year. In fact, the estimateas issued, indicates that the crop of 1912-13 (actualgrowth as distinguished from the commercial crop,or amount marketed between September 1 andAugust 31) will reach 6,612,335,000 pounds of lint(not including linters), the equivalent of 13,820,000bales of 500 pounds gross weight each. To thistotal, as it stands, there must be added upwardof half-a-million bales to cover linters, making theagregate yield not far from 143/i million bales orsome three-quarters of a million bales in excess ofany former crop except that of last season. Butwhen we consider the fact that almost invariablythe Department's estimates have been below theCensus Bureau's figures (linters excluded in bothcases), quite largely at times, and have shown an evengreater deficiency when compared with the commer-cial crop totals, there seems reason for counting ona yield quite a little in excess of the figures given.In other words, there is a general inclination to lookupon these estimates as minimum approximationsvery likely to be well exceeded unless the late pickingseason should be conspicuously adverse. Goingover the Department's estimate in detail, it is seenthat all States except Texas, Oklahoma and Louisianaare given a smaller production than last year. Thisis rather in line with general opinion, but the verydecided falling off indicated in Georgia, South Caro-lina and Alabama naturally attracts attention.Particularly is this true of the first named, in whichit is estimated the yield will be over one millionbales (or nearly 40%) less than last year, as reportedby the Census Bureau, and but little, if any, largerthan in 1906-07, when acreage was fully 20% lessvirtually a crop failure in Georgia.The Census Bureau report on amount of cotton

ginned to December 1 having also made its appear-ance this week (on Monday) opportunity is affordedto see what portion of the crop remains to be put incondition for marketing in order to reach the De-partment estimate. The Census report shows that,excluding linters, 11,844,432 running bales (of asomewhat greater average weight than 500 lbs.gross) had been ginned to the date mentioned, but anamount about a million bales less than in 1911 buta million-and-three-quarter bales greater than in

1910 and 836,000 more than in 1908the 13,828,346-bale year. Thus, to reach the Department's estim-ate there remained to be ginned after December 1less than 2 million bales, as against 2% million lastyear (1911-12), over 2 million in 1908-09 and closeto 3 million in 1906-07. With the crop, however,expected to ,be of adequate dimensions to meet any

pemands upon it without encroaching upon reservesupplies, especially with better result anticipatedin India and Egypt, little thought is given to theamount to be ginned hereafter..

The winter-wheat report of the Department ofAgriculture for December 1, issued on Monday,indicates a higher condition of the cereal than usualon the date mentioned, but with the area somewhatreduced. The acreage planted in the United Statesthis fall is estimated by the Department as 2.5%(or 828,000 acres) smaller than that put under.winter wheat the previous year, the present areabeing stated at 32,387,000 acres. This total, how-ever, is 174,000 acres greater than the estimatepromulgated a year ago, the Department havingrevised the area it then con idered to have beenplanted by adding 1,002,000 acres. Changes inarea in individual States this year have been quitegeneral and in localities of largest production de-creases have been the rule, but, with one or twoexceptions, small. Kansas shows a falling off of 4%,Missouri %, Indiana 6%, Ohio 3% and Illinois 10%.On the other hand, an addition of 10% is to be notedin Washington, 1% in Nebraska and Oklahoma and2% in Pennsylvania.In the condition of the crop on December 1 an

improvement of 6.6 points as compared with 1911 isindicated-93.2, contrasting with 86.6. The con-dition, moreover, is very much above that of 1910 and3.3 points better than the ten-year average. Illinoisreports a marked improvement this year over last-94, comparing with 79; in Oklahoma 92, contrastswith 78; in Nebraska 96 with 92; in Ohio 95 with 83;California 91 with 75; in Washington 100 with 91;Indiana .93 with 82 and Missouri 95 with 85. Inalmost all the other States the situation is betterthan in 1911. There is nothing special, however,to be deduced from this report except that at themoment the outlook is more favorable than usual.That, of course, is very encouraging, but the vicissi-tudes of the winter have yet to be faced. Privateadvices fully confirm the official report, as theyindicate a highly favorable status of the plant, theonly prejudicial influence to which they refer havingbeen dry weather over a limited territory. Inact, the opinion of experienced grain men as ex-pressed by one recently returned from the Westseems to be that "wheat goes into the winter withsuch an excellent start and fine root developmentthat it can bring to bear more than ordinary powersof resistance to the rigors of winter."

Immigrant arrivals during October 1912, accordingto the official statement, exceeded those for thecorresponding month of all earlier years except 1907,and fall only nominally below that. The movementin November, too, as unofficially compiled, wascomparatively larger, and the same is true of theelapsed portion of December. With this the situa-tion, less is heard of lack of unskilled laborers, butwe are now, of course, at the period when the amountof work in progress or projected for which theirservices are required is less urgent than in the springand summer. The feature of the October immi-gration statement, as well as of the returns that havepreceded it in the current calendar year, is the largeinflux of Greeks. Month by month, almost withoutexception, the arrivals from the small Mediteraneankingdom have been anywhere from double to nearly


DEC. 14 1912] THE CHRONICLE - 1569

five-fold the movement of the preceding year andmuch in excess of the arrivals from either England,Ireland or the Scandinavian countries. But whilethe inward movement of Greeks has been in 1912very much larger than ever before, the efflux latterlyhas been of huge proportions, the call to the colorsto take part in the war in the Balkan Stateshaving been freely and promptly responded to.The outward flow of Bulgarians, Italians andTurks also has been considerablely swelled as aresult of the war, but as the present outlook isfavorable to a peace agreemen , further importantdepartures are not looked for.The number of aliens of all classes who entered

the United States during October was 128,588 (ofwhich 108,300 immigrant and 20,288 returning, ornon-immigrant, aliens), this total comparing with86,888 a year ago, 100,334 in 1910 and 129,664 in1907. For the ten months of 1912 the inwardmovement reached 1,025,935, against 791,680 and1,068,535 and 1,295,714, respectively, in 1911, 1910and 1907, the latter the record for the period.Departures of steerage passengers in October wereslightly less than in the month last year, but for theten months January 1 to October 31 they reacheda greater aggregate than in any year except 1911 and1908, totaling 428,916, against 467,167 a year ago,only 343,101 in 1910 and but 260,668 in 1909.Deducting the outflow from the arrivals we havefor the ten months of 1912 a net gain in foreign-bornpopulation of 597,019. This compares with a netinflux of only 324,513 last year. In 1910, however,the net number of the foreign-born added to ourpopulation in the ten months was 725,434 and in1907 no less than 935,639.

The long-expected protest of Great Britain againstthe Panama Canal Act was filed with Secretary ofState Knox on Tuesday by Ambassador Bryce.Sir Edward Grey, who signs the document, concedesthe right of the United States to subsidize its coast-wise trade at its discretion, but urges that a re-mission of the tolls to coastwise shipping mayreasonably be assumed to make necessary increasedcharges to other vessels, and is, therefore, a violationof the Hay-Pauncefote Treaty. Great Britainrecedes from its former attitude to a considerableextent, particularly in the matter of granting sub-Sidles, and in furtherance of the desire of amicablesettlement, the British Secretary for Foreign Affairssaid: "Animated by an earnest desire to avoid pointswhich might in any way prove embarrassing to theUnited States, His Majesty's Government have'confined their objections within the narrowestpossible limits, and have recognized in the fullestmanner the right of the United States to controlthe Canal." Again, he says, "it is only with greatreluctance that His Majesty's Government have feltbound to raise objections on the ground of treatyrights to the provisions of the Act." He states his"perfect readiness" to submit the questions in dis-pute to arbitration.

Sir Edward first recounts the whole course andunderstood intent of the negotiations leading up tothe Hay-Pauncefote Treaty. In this respect hesays: "The Hay-Pauncefote Treaty does not standalone. It was the corollary of the Clayton-BulwerTreaty of 1850. The earlier treaty was, no doubt,superseded by it, but its general principle, asembodied in Article 8, was not to be impaired.

The object of the later treaty is clearly shown by itspreamble. It was to 'facilitate the constructionof a ship canal to connect the Atlantic and Pacificoceans by whatever route may be deemed expedient,and to that end to remove any objection which mayarise from the Clayton-Bulwer treaty to constructionof such canal under the auspices of the Governmentof the United States, without impairing the generalprinciples of neutralization, established in Article 8of that convention.' It was upon that footing, andupon that foot ng alone, that the Clayton-Bulwertreaty was superseded. Under that treaty bothparties had agreed not to obtain any exclusive controlover the contemplated ship canal, but the importanceof the real project was fully recognized, and, there-fore, the construction of the canal by others was tobe encouraged, and the canal, when completed, wasto enjoy a special measure of protection on the partof both the contracting parties." Referring, par-ticularly to the word "neutralization," Sir EdwardGrey says further: "It certainly was not the intentionof His Majesty's Government that any responsi-bility for the protection of the canal should attachto them in the future. Neutralization must, there-fore, refer to the system of equal rights." Speakingof Article 3 of the treaty, the English protest declaresthat it provides for the United States adopting asa basis of the neutralization of the canal certainrules substantially as embodied in the Suez CanalConvention. The word "neutralization" he saysimplies subjection to the system of equal rights.The note further furnishes intimation that another

protest will be forthcoming from Great Britain if it isheld by the Government of the United States thatBritish or Canadian vessels are included in thedisbarment from .the use of the canal of ships inwhich any railroad under the jurisdiction of theInter-State Commerce Commission has an interestand ships whose owners may be adjudged guiltyof violating the Sherman Anti-Trust Law. Thenote states that the British Government now assumesthat these two clauses do not apply to or affectBritish ships. In regard to arbitration it is statedthat the British Government has taken cognizanceof the fact that many persons of note in the UnitedStates "whose opinions are entitled to great weight"hold that the Act of Congress in question does notinfringe the treaty obligations of the United States,and, therefore, it is declared, the British Governmentis perfectly willing to submit the question to arbi-tration if the United States prefers. This significantsentence is added, however: "A reference to arbi-tration would be 'rendered unnecessary if the Govern-ment of the United States should be prepared totake such steps as would remove the objections tothe Act which His Majesty's Government havestated."

Sir Edward Grey hastens to deny that the BritishGovernment is attempting to deny the right of theUnited States to grant subsidies to its shipping andthus deprive it of the rights enjoyed by other nationswhich will send subsidized vessels through thePanama Canal. It is declared that in advancingthis argument, President Taft in his memorandumof August 27 evidently misunderstood the meaningof Mr. Innes's first note of protest. It is carefullystated, however, that the British Government doesnot concede the right of the United States to favorby subsidy a special class of American shipping insuch a way as to place such shipping at an advantage


1570 THE CHRONICLE \Tot- Lxxxxv.

in the use of the canal as compared with Britishshipping.In brief, the British argument is based on two

points: the first is that, in interpreting the Hay-Pauncefote treaty of 1901, the Clayton-Bulwertreaty of 1850, which it superseded, must be con-sidered with it. The second main point is that ifany American ships are granted the free use of thecanal, British ships using the canal will be forcedto bear more than a proper share of the burden of thecost of the upkeep of the canal and interest chargeson its cost of construction. This, it is claimed, is inviolation of the Hay-Pauncefote treaty.

The meeting of the peace delegates in the BalkanWar controversy, which will formally begin in Lon-don on Monday, promises to be the last step towardssettling the war against Turkey. While Greece hasstill refused to sign the armistice under which themeeting of delegates was assured, it is understoodthat she will probably do so at the peace meetingsand thereby place herself on the same footing as Bul-garia, Montenegro and Servia. Indeed, the Turkishdelegates have been instructed by the OttomanGovernment to decline to meet Greek delegates untilGreece has signed the armistice. The basis of thedeliberations will, it is said, be the renunciation byTurkey of all the territory conquered by the troopsof the allied Balkan nations and certain mattersrelating to pious foundations and crown landsin European Turkey. According to this arrange-ment, Adrianople, not being conquered territory,will remain in Turkish hands, and the frontier ofthe future Ottoman Empire in Europe will runfrom that fortress eastward to Media by way ofVisa and from Adrianople southward along therailroad to Dedeaghatch, on the Aegean Sea.With this conference of delegates of the lesser Euro-pean countries in session, what may prove to be astill more important meeting will be begun within afew days in Paris, of Ambassadors of the EuropeanPowers. This meeting seems to be fully assured, andwhile it is not expected that the Ambassadors willreach any decisions relative to pending purely Balkanquestions, they will make a study of them and willaid materially toward making European peace anassured fact. Any peace arrangements entered intoby the delegates of Turkey and the Balkan nations inthe London conference will presumably have tobe ratified by the Ambassadors of the great Powers,who will meet first in London prior to the Parisconference.

While the efforts to formally end the Balkan Warare under way and the Powers' Ambassadors arediscussing general peace, it appears, however, thatAustria and Servia, who have been on the verge ofwar, are closely approaching the critical point atwhich an actual clash is probable. This is a situa-tion that has been the source of great nervousnesson the European bourses this week. Austria con-tinues to show extreme hostility to the action of Ser-via in taking a seaport on the Adriatic and the Serviandemand for the whole of North Albania as her fruitsof the Balkan War victory. Servia, on the otherhand, has remained firm in her attitude, and hasreached such a state of preparedness for war thatevery reserve has been ordered to be in readiness foraction within 24 hours' notice. The attitude of Aus-tria in mobilizing nearly 500,000 men in five differ-ent points near the Servian frontier and the activ-

ity with which she has continued to push prepara-tions for war have caused much uneasiness, andhave resulted in a disturbance of commerce and in-dustry. Servia, on the other hand, is firm and fear-less, relying on the backing of the Triple EntenteFrance, Great Britain and Russia. So sure is Ser-via that her part in any war will be upheld by thethree friendly nations that Stojan Novakovitch,former Servian Premier and peace delegate to theLondon conference, said: "I have the conviction thatthe just claims of Servia will be firmly and effica-ciously supported by the Powers belonging to theTriple EntenteFrance, Great Britain and Russia.We are resolved to insist on the possession of a porton the Adriatic Sea. We consider this claim as aduty, for it amounts, not to a conquest, but to arecovery of what belonged to us from the tenth tothe fifteenth centuries. Moreover, a maritime out-let is indispensable to the vitality and future ofServia. I am surprised at the enigmatic and dis-quieting attitude of Austria. In spite of these men-aces, however, Servia is leaving her troops in theterritory she has conquered."As if to strengthen her position in case of war,

General von Auffenberg, Austrian Minister of War,and. Field Marshal Schemua, Chief of the Austro-.Hungarian General Staff, resigned on Monday. Menwho are avowedly more able in time of war were ap-pointed to fill the vacancies, and the resignationsare praised as a show of patriotism on the part of thetwo men. The two men appointed by the aged Em-peror as successors are believed in their own countryto be the ablest military strategists in the dual empire.General von Krobatin, Under Secretary of War,becomes Austrian Minister of War and Baron vonHoetzendorf becomes Chief of the General Staff.

Servia took drastic action on Thursday, when,according to press dispatches, M. Simies, the ServianMinister to Austria, was recalled peremptorily. Nosuccessor was announced and the action of Servia wasconstrued as a formal breaking off of diplomaticrelations with Austro-Hungary. Later dispatches,however, cast doubt upon the reported withdrawalof the Servian Minister. The greater Powerswatch these bickerings with thoughts concentratedon efforts to keep the peace at any cost. But theirattitude is not one of dissolving any ties which bindeach coalition. Italy, it was announced semi-offi-cially, has reached an agreement with her ally, Aus-tria, by which it is expected that Servian ambitionsfor an Adriatic port will be forestalled. The Am-bassadors of these two countries are expected to pressa vigorous demand at the Paris conference that allAlbania be declared neutral territory. Germany,the other member of the triumvirate, which will beagainst Servia in case of war, has remained silentduring the past week. Her attitude, however, iswell known through speeches two weeks ago by theGerman Chancellor, in which he made firm declara-tions of friendship for Austria and almost open at-tack against Russia.

We are able to state with authority that tentativenegotiations have been resumed with the Six-Powergroup of bankers by China for an additional loanThe amount under consideration is $125,000,000payable in installments extending over a period ofat least two years. The English bankers participatingin the loan will, in addition to those originally con-cerned, include the Barings and J. Henry Schroeder


DEC. 14 1912.] THE CHRONICLE 1571

& Co., as well as several other London financial in-terests. It is understood that the loan of $50,000,000recently arranged by the Crisp syndicate will be takencare of in the new negotiations, although this loanwill not become an official part of the new one. Onlyone-half of the Crisp loan has thus far been offered forpublic subscription. The result of that offering wasnot favorable, and the strained situation that hassince taken possession of the world's money markethas discouraged the offering of the second half ofthe loan. The contract for the loan of $125,000,000will be secured by the salt gabelle. The draft of thecontract, it is understood, provides for a settlementwith the Crisp syndicate, it prectically eliminatesany monopoly, and in a substantial way modifiesthe objectionable feature (to China) of foreign super-vision over China's expenditures. China asks for$50,000,000 on account within three months. Chinaagrees that the administration of the salt gabelleshall be subdivided into ten centres, each being con-trolled by Chinese and foreign co-directors, workingunder a committee of control which shall include aforeigner acting piactically as managing director.Conferences between representatives of the Six-Powergroup as newly constituted and the Chinese Minis-ter of Finance are now in progress in London, buthave not yet resulted in a formal agreement on theexact proposition that is to be made to China.American interests in the conference are representedby Morgan, Grenfell & Co.

The proposition of Premier Borden of Canada tomake a $35,000,000 gift to England to build threeDreadnoughts is meeting decided opposition in theCanadian Parliament, under the leadership of theformer Premier, Sir Wilfrid Laurier. Members ofthe Opposition have voted unanimously to carry onwhat press dispatches term the "most memorablefight ever seen in the Canadian Parliament." TheOpposition will insist that Canada should not give upthe idea of a Canadian'built and owned navy, and theplan of continuing the navy training school at Hali-fax. The Canadian House adjourned yesterdayuntil early in January, when the fight will be re-sumed, and it is suggested that the effect may be tobring on a general election, in which not only theGovernment's huge gift to England will be reviewed,but the rapidly growing demand for a drastic down-ward revision of the tariff may be taken up. In'opening the naval debate on Thursday, Sir WilfridLaurier attacked Premier Borden's bill all along theline, denying that there was any emergency and quot-ing the memorandum furnished by the Admiraltyto Mr. Borden to prove his assertion. He declaredthat the only thing Canadian about the proposedships would be the Canadian names. He offeredan amendment to the bill, providing for a Canadiannavy of two fleet-units, to be immediately con-structed. At the conclusion of his speech, Sir Wil-frid's followers rose and cheered, and sang the na-tional anthem with great enthusiasm.

The Home Rule Bill passed its committee stage inthe British House of Commons on Wednesday night,showing the ability of the Government to keep in con-trol of the situation. The House of Commons im-mediately adjourned, and Premier Asquith and hisMinisters received an ovation as they left theChamber.

While the New 'York stock market, as a resultof influences in great measure peculiar to itself,has been under severe pressure this week, theLondon Stock Exchange i,nd the Continentalbourses have, as a result of the political tensionin Europe, also ruled weak and nervous. Inthe British centre railway labor troubles have beena contributing factor. But the chief weakness hasresulted from active selling of securities by the Conti-nent that was either stimulated by the absence offavorable progress in the European political situation(to which we refer elsewhere) or was the natural re-sult of the protracted period of strain in financialand business circles. A cable dispatch from Parisdeclares that Russia, which hitherto has been re-sisting the weakness of financial markets, has finallybecome affected and is now selling heavily in theFrench capital. This is causing enormous fluctua-tions in the speculative Russian industrials at thatcentre. The report was confirmed by a St. Peters-burg's dispatch of Dec. 11, which stated that priceson the Bourse there had been dropping daily andthat there had been a heavy fall on Wednesday,owing to reports of a critical tension between Russiaand Austria. A large failure was reported in St.Petersburg and troubles of some importance were alsorumored at Paris and Vienna. The chief trouble ap-pears to be the position of Austria. "It is not known,"according to one dispatch from Paris, "what Austriareally wants." The latter has this week negotiateda loan of $25,000,000 jointly in New York and athome. This loan has been arranged on full assur-ances of peace and not war; but it is feared thather demands will at least be pressed very close to thebreaking point before compromise becomes possible.

British Consols closed yesterday at 7414, whichcompares with 75% a week ago, while French Rentes(in Paris) were cabled at 89.60 francs, comparingwith 90.323/ francs a week ago. On the LondonExchange State funds of countries interested in theBalkan troubles showed continued irregularity.Russian 4s closed last evening at 893/2, whichcompares with 9032 a week ago. Turkish 4sare M point lower at 85. Bulgarian 6s finished at103, against 1013; Greek Monopoly 4s are un-changed at 54, and Servian Unified 4s also withoutchange at 81. German Imperial 3s closed 1 pointlower at 76. British railways as a rule closed frac-tionally lower, the Great Eastern finishing at 603/2,against 61% a week ago; the Great Western at 117,against 118 the London & Northwestern at 132,against 1333, and Southeastern deferred shares at643., comparing with 67%. Money in London closedat 3%@4% and in Berlin at 5@6%.

Although an advance in the Bank of Franceofficial discount rate was confidently predicted inFrench banking circles on Wednesday, it did notoccur. There were also quite free expectations thatthe Bank of England would feel impelled to advanceits rate, and it would have done so, according toreports received from very high authorities in Lon-don by prominent New York bankers, had New Yorkinsisted on taking gold either at the Bank or at theweekly auction of South African gold on Monday.Dispatches from London announced that, of the800,000 of South African gold offered on Monday,250,000 had been laid aside for America, thoughthe date of shipment was uncertain. No definitedate for shipment was later announced, however,


1572 THE CHRONICLE Lxxxxv.

and as yet no arrangements have been made, so faras can be learned, on this side to receive it. TheBank, according to its weekly statement, lost thelarge sum of 2,169,246, and London bankers advisetheir correspondents here that the Bank wouldtherefore be not unlikely to consider purchases ofgold in the open market of London by New Yorkas equivalent to taking gold from the Bank itself,as Threadneedle Street at the present time must lookto the outside market to replenish its 'own gold re-serves. Germany secured 300,000 of Monday'soffering of the South African gold and India100,000.There were no changes in the official European

bank rates, however, except that the Bank of Bom-bay raised its rate on Friday from 6% to 7%,but open market rates ruled firm. Short billsin London closed at 4 15-16@5%, against 4%%a week ago, and 90-day bankers' acceptancesfinished at 474@5%, as cabled at the close yesterday,comparing with 43/2% a week ago. There is nodifference at the present time in the rates for spotbills and those to arrive. A week ago the forwardbills required a premium of about A%. In Paristhe private bank rate was advanced WI% to 4% forall maturities of commercial bills, while finance billsrequire 438%. The Berlin rate for all maturtiesclosed at 6% for spot and 63i% for bills to arrive,which is a fractional advance. Brussels closed with-out change at 4%% and Amsterdam remains nomi-nally at 3%%, although there is virtually no dis-count market for American bills at the Dutch centreat the moment. Vienna closes unchanged for theweek at 6%the Bank rate. The official bank ratesat the leading foreign centres are: London, 5%;Paris, 4%; Berlin, 6%; Vienna, 6%; Brussels, 5%;Amsterdam, 4% Bombay, 7%, and Bank of Ben-gal, 7%.

As already stated, a still further decrease in goldand bullion holdings of 2,169,256 was shown inthe weekly statement of the Bank of Englandon Thursday and a loss of 1,940,000 in the reservebrought the proportion to liability down to 48.07%,comparing with 50.08% a week ago and 49.40%a year ago. The market slightly increased its loansat the Bank (by 101,000) while 658,000 in publicdeposits were released. Ordinary deposits de-creased 1,203,000. The loans (other securities)now aggregate 39,985,000 and compare with 28,-799,516 one year ago and 27,386,903 two yearsago. The bullion holdings are 34,245,556, compar-ing with 35,954,031 one year ago and 35,088,033in 1910. The reserve shows totals of 24,321,000,comparing with 25,713,211 a year ago and 25,-538,723 two years ago. Our special correspondentfurnishes the following details of the gold movementinto and out of the Bank for the Bank week: Imports,109,000 (of which 54,000 from India, 40,000 fromEcuador and 15,000 bought in the open market);exports, 1,322,000 (of which 500,000 to Brazil,300,000 to France, 422,000 to India and 100,000to miscellaneous destinations), and shipments of956,000 net to the interior of Great Britain.

The return of the Bank of France issued onThursday was favorable from the standpoint of areduction in liabilities although a decrease of 205,000francs in gold holdings was shown and of 298,000francs in the silver holdings. Discounts were

reduced 64,800,000 francs, while there was also adecrease of 5,625,000 francs in the Bank's advances.Note circulation wa's decreased by the large amount of115,575,000 francs. Both treasury deposits andgeneral deposits showed large reductions, the formerof 233,525,000 francs and the latter of 54,700,000francs. Comparing with the figures of last year, thegold item of 3,310,029,000 shows an increase of98,029,000 francs. Silver, however, registers areduction from 806,225,000 francs in 1911 to 732,-995,000 francs in Thursday's report. Note circu-lation has increased to 5,357,913,000 francs from5,254,004,480 francs a year ago and 5,192,225,245two years ago. Discounts have increased from 1,-257,539,095 francs in 1911 to 1,640,969,000 francs.General deposits show a healthy .increase over lastyear and the year before, being 747,881,000 francs,as compared with 560,639,875 francs in 1911 and556,629,766 francs in 1910.

Further decreases in the holdings of gold and silverwere recorded in the weekly statement of the ImperialBank of Germany, issued on Tuesday. The goldstock registered a contraction of 21,478,000 marks andgold and silver combined of 28,327,000 marks.Meanwhile there was the large decrease of 53,-819,000 marks in note circulation. Loans and dis-counts also showed decreases, the former of 35,-518,000 marks and the latter of 10,626,000 marks.Comparing the returms with totals for last year, aloss of 74,243,000 marks is indicated in the Bank'sstock of cash (gold and silver), the total now being1,009,237,000 marks. Loans, discounts and notecirculation register large increases in the year'scomparison. The loans and discounts are now312,999,000 marks in excess of last year and notecirculation is 253,087,000 marks higher. The aggre-gate of loans and discounts is 1,513,259,000 marks,comparing with 1,200,260,000 marks in 1911. Theoutstanding circulation is 1,956,167,000 marks, com-paring with 1,703,080,000 marks a year ago and1,557,660,000 marks in 1910.

The local money situation has shown a distincttendency toward an easier condition. This, notunnaturally, has been more pronounced in the in-stance of demand loans, though there has also beena better supply of time money, especially for thedistant maturities, March money, for instance,having loaned quite freely at 532%. There is noexpectation in local banking circles, however, of anydecisive reductions in money rates. Really cheapmoney is out of the question so long as the high dis-counts continue abroad, with such an evident tendencytowards rising rates. The news of a loan to Austriaby New York banks on 432% Treasury notes forboth eighteen months and two years came as some-what of a surprise. The rate paid to the bankers,we understand, was about 97, which would makethe cost to Austria 6% for the two-year notes and63/2% for the shorter maturity. It is possible thatthere was an additional commission concerned ofsome character which, of course, Would add frac-tionally to the cost of the loan to Austria. A con-siderable misconception of the character of this loanis contained in the printed accounts that have ap-peared in the daily press. It has been quoted as a$25,000,000 New York transaction. As a matter offact, the New York bankers, namely Messrs. Kuhn,Loeb & Co. and the National City Bank, have under-


DEC. 14 1912.]

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THE CHRONICLE 1573written only one-half of this amount$12,500,000and the proceeds are to be remitted in four equalmonthly amounts beginning Dec. 14. Thus eachremittance will amount to only about $3,000,000,and will not therefore be likely to materially affectsterling exchange. The loan was taken by the NewYork bankers in conjunction with an Austrian group,including the Imperial Austrian Postal SavingsBank, the firm of S. M. von Rothschild, the AustrianCredit Anstalt and the Austrian Laenderbank.The disposition in banking circles in the New York

market is to expect a fairly comfortable situationin money until the close of the year. Then it is notunlikely that there will be another period of tempo-rary strain due to the preparations for the new yeardividend and coupon payments. There will, how-ever, be a very large volume of capital set free, bothat home and abroad, after the new year begins, and,while the world's demands for funds will continueactive, there seems no special reason why any pro-nounced stringency should result. At home herethe agricultural demand for funds is continuingbeyond the usual time, one reason being the more orless general indisposition on the part of farmers tomarket their corn crop freely. They find the priceavailable is unattractive when compared with theprofitable figures of a year ago, and thus a move-ment that has assumed considerable headway is inprogress to feed corn to cattle and hogs and thusultimately secure profits from live-stock instead sell-ing the corn at present prices. This, of course, is asuggestion that we are to have cheaper provisionsand meat in the course of the next year. It alsomeans that the farmers are going to require continuedbanking facilities. They are not paying off theirloans to the banks as rapidly as would otherwisebe the case, and the Western banks in turn are notforwarding funds to New York. However, New Yorkbank officers have assured bankers of the corn Statesthat they will have ample funds with which to re-new loans for such legitimate transactions.The weekly statement of the Clearing House on

Saturday last showed a restoration of the cash sur-plus above legal requirements to $3,015,200. Thiscompares with a deficit on the Saturday precedingof $5,057,950 and with a surplus of $11,696,250 ayear ago. These figures include the banks and trustcompanies. Two years ago the Clearing-Housebanks alone held a surplus of $5,711,800, the trustcompanies not at that time being members of theClearing House.So far as call money rates this week are concerned,

they represent a return to what may be termed nor-mal conditions. The highest rate which was touchedon Monday was 6%. The lowest figure that dayand also for the week was 4%, with 6% Monday'sruling quotation. On Tuesday the range was4@53/2%, with the higher figure the renewal basis;Wednesday's maximum was 5%, minimum 4% andrenewal rate 43/1%; on Thursday 43@5% were theextreme figures, with 434% again the ruling quota-tion; Friday's highest was 434%, lowest 4% and re-newal rate 43/1%. Time money rates are frac-tionally lower than a week ago. As already noted,March money has loaned in fair volume at 53/2%.Closing quotations are 6% for 60 and 90 days,534@6% for four months and 53/2% for five andsix months. Mercantile paper remains withoutchange at 6% for 60 and 90-day endorsed bills re-ceivable and also for four to six months' single names

of choice character. Names not so well known arestill quoted at 63/2%

Sterling exchange during the week has shown ahardening tendency, which is not unnatural in viewof the firmer discounts abroad and the reactionarytone in the money market at home. We are, ofcourse, at the point where the seasonal remittancesare necessary for the new year dividend and interestpayments on American securities. Internationalbankers do not await the actual development of suchtransactions as these, but make their preparationswell in advance. Furthermore, the $3,000,000 permonth which, beginning with to-day, it is necessaryto remit on account of the Austrian loan for fourmonths will necessarily have some influence on theforeign exchanges, although, as we have already inti-mated, the amount is not sufficiently large toconstitute an important factor. Germany has beentaking gold from London and the Bank of Englandhas in fact been called upon to satisfy heavy outsidedemands for the precious metal during the week.Sterling exchange rates have now advanced wellabove the gold-import point. It was reported bycable that 250,000 of the South African gold offeredin the open market on Monday last had been reservedfor America. However, no direct engagement ofthe precious metal was made for shipment, and inview of the sharp advance in sterling exchange, itis not likely that any actual shipment will take placein the near future. Furthermore, very strong inti-nations have been received at this centre that anyinsistence by New York for gold either from the Bankof England or in the open market would provokea 6% rate by the Bank. British trade continuesextremely active and is requiring a correspondinglylarge banking ability. For the month of November,according to the monthly trade statement of theBritish Board of Trade, the imports into Great Brit-ain increased 5,601,000, while the exports increased2,372,000 over the corresponding figures of a yearagoitself a very active period. An idea of theremarkable activity that has ruled in British tradeduring the current calendar year may be gainedfrom the fact that the importations have aggregated670,942,503, against 615,454,822 in 1911, whilethe exports have reached 445,974,577, comparingwith 415,710,581. The excess of imports over ex-ports this year to date is 224,967,926, against199,744,241.Compared with Friday of last week, sterling

exchange on Saturday was unchanged with demandagain quoted at 4 8450@4 8460, cable transfers at4 85@4 8510 and sixty days at 4 8030@4 8040.On Monday the market was dull and inactive; afterearly firmness, a slight reaction set in, althoughquotations for demand and cable transfers wereunchanged from Saturday's closing figures; sixtydays declined to 4 8020@4 8030. Rates were firmeron Tuesday, but the market continued quiet; therewas an advance of 10 points through speculativeoperations to 4 8060@4 8470 for demand, 4 85104 8520 for cable transfers and 4 8030@4 8040 forsixty days. A further advance was witnessed onWednesday with more active trading and a fairlyextensive demand in preparation for the Londonsettlement; the range was at 4 8475@4 8485 fordemand; 4 8525@4 8535 for cable transfers and4 8035@4 8045 for sixty days. Sterling moved upvery sharply on Thursday, advancing about 45


1574 THE CHRONICLE [VOL. ixxxxv.

points on the higher English discounts and heavydemands for remittances in connection with thecoming holidays and the year-end settlements dueabroad; demand rose to 4 8510@4 8520, cabletransfers to 4 8560@4 8570 and sixty days to 4 8070@4 8080. On Friday the market ruled nervous,and quotations at the close showed declines of 10points for sixty days, of 5 points for demand billsand an advance of 5 points for cable transfers.Closing rates were 4 8060@4 8070 for sixty days,4 8505@4 8515 for demand and 4 8565@4 8575 forcable transfers. Commercial on banks closed at4 789@4 803/b and documents for payment at4 803/@4 81. Cotton for payment ranged from4 80@4 803; grain for payment from 4 80% to 4 81.

The New York Clearing-House banks, in theiroperations with interior banking institutions, havegained $4,023,000 net in cash as a result of the cur-rency movements for the week ending Dec. 13.Their receipts from the interior have aggregated$11,947,000, while the shipments have reached7,924,000. Adding the Sub-Treasury operationsand gold imports, which together occasioned a loss of$6,000,000, the combined result of the flow of moneyinto and out of the New York banks for the weekappears to have been a loss of $1,977,000, as follows:

Week ending Dec. 13 1912.IntoBanks.

Out ofBanks.

Net Change inBank Holdings.

Banks' interior movement 311,947,000 $7,924,000 Gain 54,023,000Sub-Tress. operns and gold imports_

Total

24,600,000, 30,600,000 Loss 6,000,000

$36,547,000 $38,524,000 Loss $1,977,0001 1The following table indicates the amount of bullion

in the principal European banks.

Banks ofDecember 13 1912. December 11 1911.

Gold. Silver. I Total. Gold. I Silver. I Total.

England. 34,245,556 34,245,556 35,954,031I 35,954,031France _ _ 128,400,720 29,319,840 157,720,560 128,480,360 32,249,080 160,729,440Germany_ 37,394,200 15,100,0001 52,494,200 39,785,900; 14,388,400 54,174,300Russian _ _ 158,374,000 6,338,000164,712,000143,702,000 6,087,000 149,789,000Ann.- Hun. 50,950,000 10,336,000 61,286,000 53,759,006 11,671,000 65,430,000Spain _ _ 17,434,00 29,539,000 46,973,000 16,713,000' 30,163,000, 46,876,000Italy _ _ 42,636,000 3,500,000 46,136,000 40,737,000; 3,560,000 44,297,000Neht'lan 13,490,000 601,400 14,091,400 11,456,000; 1,180,200, 12,636,200Nat.Belg._ 7,637,333 3,818,667 11,456,006 6,098,000, 3,049,000 9,147,000Sweden _ _ 5,576,0 5,576,000 4,733,000' 4,733,000Switelan 7,164,00 7,164,000 6,432,000, 6,432,000Norway _ 2,254,00 2,254,0001 2,154,000; 2,154,000

Total w'k505,555,809 98,552,907604,108,716'490,004,2911102,347,680 592,351,971Prey .week509,280,055 99,060,367 608,340,422,490,672,9671103,182 ,2771593,855,244

1

CONGRESS AND THE CONSTITUTION.

There was reported from Washington last weekthe following statement, ascribed to RepresentativePujo of Louisiana, Chairman of the Ways andMeans Committee and of the sub-committee nowengaged in the so-called Money Trust inquiry:"The postal laws may be invoked to exclude the ex-changes, the associations of bankers and brokersfrom use of the mails in inter-State commerce.Unless complete reorganization is made, they willbe treated exactly as the Louisiana lottery wastreated." The same threat was made in regard tothe Clearing House.When it was seen to what extent public ridicule

was bestowed upon this proposal, it was denied ina general way that any such interview had been givenout. There was certainly no serious possibilityof such absurdities being adopted by the full com-mittee. But the fact nevertheless remains thatthis absurd recourse, by way of threat or penalty,has actually been discussed by certain individuals inlegislative circles. None of them seems to have aclear idea as to how either the Stock Exchange or

the Clearing House could ever be penalized in such away. It was not stated, nor, apparently, had itbeen considered, whether only letters whose envelopeswere marked with the names of the institutions inquestion should be excluded, or whether all peopleconnected with the Stock Exchange or the ClearingHousethat is to say, practically all bankers andbrokers in New Yorkshould be denied the privi-lege of the mails.The mere statement of the proposition reduces

it to absurdity. We should ourselves have dismissedit merely with the contempt which it and its foolishauthors deserve but for the fact that this loose talkwas ncouraged in a peculiar way by actual legis-lation which slipped through Congress in the lastsession regarding penalties to be imposed undercertain circumstances upon the newspapers. Inthat legislation, which was inserted at the lastmoment of the session as a "rider" to the Post-Officeappropriation bill, and which was never at any timedebated in its present form, it was provided that allmatter for which any consideration had been re-ceived must be so labeled when published in a news-paper, and that a statement of the newspaper's capi-tal, debt, owners of its stock, bonds and notes,figures of its circulation, and so on, must be filedwith the Post-Office and must also be publishedat regular intervals in the newspaper itself; thepenalty for refusal to be exclusion of the newspaperfrom the mails.As is well known, this law has been challenged

by the newspapers and is now before the SupremeCourt on the issue of Constitutionality. Newspapersin general have not been unwilling to submit or topublish the information asked for; but they mostproperly took the position that the rights of a freepress, which are guaranteed by the Constitution,are seriously invaded when Congress prescribes,not what shall not be printed but what the news-papers must print; that, once established, theramifications' of this principle would be impossibleto predict; also that the punishment of exclusionfrom the mails, when imposed for purposes whollyalien to the functions and duties of the Post-Office,and as a penalty for no obnoxious act or criminaloffence, is whol. y repugnant to our scheme of govern-ment. Particularly, there has been cited in theargument the following highly pertinent declarationof the Court itself in an important precedent:

"It is our duty to inquire, in respect to the statutebefore us, not only whether there is a real or sub-stantial relation between its avowed objects and themeans devised for obtaining these objects, butwhether by its necessary and natural operation itimpairs or destroys rights secured by the Constitu-tion of the United States."

In due course the Court will finally and positivelydecide what are the limitations on action of this sort.The Solicitor General's recent defense of the Con-gressional legislation, in his argument before theSupreme Court, was feeble and half-hearted, andwas based upon such singular reasoning on the scopeof public authority, in the matter of using the PostOffice to serve remote and ulterior purposes, as tosuggest that the Government's law officer did notbelieve in his own case. Whatever decision theSupreme Court itself arrives at, the scope of Con-stitutional restriction will, at all events, have beendefined; also the scope of protection which individ-


DEo 14 1912 ] TIIE CHRONICLE

MP

1575

uals and associations have the right to invoke underthat Constitution.We have had this week in another quarter, how-

ever, an instande of how certain political agitatorsof the day would deal with this high function of thejudicial department of our Government, which hasin the case referred to been so necessarily appealedto. Mr. Roosevelt, in a long speech to the singularcollection of people who went to the ProgressiveConvention at Chicago last Tuesday, not onlydeclared again for all the extreme principles in theparty's platform of last August, and not only in-sisted that "if any particular legislation is declaredunconstitutional, we, the people, should have thepower to declare it Constitutional," but added:"I believe that the Progressive Party, and all good

citizens and all believers in genuine popular rule,should heartily support the proposed ConstitutionalAmendment recently introduced by Senator Bristow,to secure the people of the United States propercontrol of their own Government."

It might naturally have been asked by Mr.Roosevelt's hearersthough there was no report oftheir having asked itexactly what the Bristowamendments are. There were two of themoneproviding for the recall of U. S. Supreme Court de-cisions and their reversal by a majority public vote;the other for the conferring on the President of theUnited States of power to enact any law through di-rect appeal to the people over the head of Congress.Such utterly wild proposals were received, whenlately submitted to Congress, as the mere dream ofan excited brain; they were nowhere taken seriously.Nor, indeed, is there the remotest chance of theiradoption now or hereafter. But the fact that theyshould have been proposed, in the very face of suchepisodes as the proposal to use the Post-Office asan engine to force the newspapers to publish whatthe majority in Congress wishes published, and thefact that the proposed amendments 'are thus heartilyendorsed by Mr. Roosevelt before his convention,should be sufficiently convincing evidence, not onlyof the tendencies which the third party is showing,the very morning after its defeat, but of the para-mount necessity, at this time above all others, ofthe preservation of the powers conferred by theConstitution on our highest Court. On the whole,we think it fortunate that the more insidious pro-posals of the third party's recent nationalplatform, and the evasions with which its candidateendeavored, during the campaign, to surroundhis attack on the judiciary, should be replaced bya formal proposal which, like Mr. Bristow's, carriesthe whole crazy and revolutionary idea to its logicalconclusion. If we are to have a party in this country,organized with the purpose of promoting suchconceptions of government, by all means let thethinking public know just what the plan wouldlegitimately lead to.

UNION PACIFIC IN A YEAR OF UNFAVORABLECONDITIONS.

The annual report of the Union Pacific RailroadCo. comes at a time when there is unusual interest inthe affairs of the company by reason of last week'sSupreme Court decision compelling the company topart with its dominating ownership in the SouthernPacific Co. There is, of course, no reference to thematter in the report, since it was written severalweeks before. It bears date Nov. 14, just a month

ago. The first thing that attracts attention in thedocument, in view of the severance of relationswhich is to take place between the two companieswithin the next three months (according to the termsof the decree of the Supreme Court) is a paragraphrelating to some financing that the Union Pacific didfor the Southern Pacific during the twelve monthsunder review.It is generally supposed that the divorce of the

two companies will prove an advantage to the-Southern Pacific Co. and that the Union Pacific Co.will come out distinctly a loser. This is based on thenotion that the Union Pacific can hardly do without,the Central Pacific line from Ogden to San Francisco,which forms part of the Southern Pacific system,and that the latter has an additional advantage inthe possession of a complete trans-continental lineof its own from California to Galveston and NewOrleans, with steamship lines running thence to theAtlantic Coast cities and to Mexico. But reflectionsuffices to show that the Union Pacific, on its part, isby no means in a helpless condition, though, ofcourse, it is desirable that its traffic arrangementsover the Central Pacific shall not be disturbed.Justice Day, in delivering the opinion of the SupremeCourt, pointed out that, entirely independent of theCentral Pacific, the Union Pacific reaches the PacificCoast over its own tracks through the control itholds of the Oregon Navigation and the OregonShort Line. The latter route terminates at Portland,but steamship lines would give connection betweenthat point and San Francisco. To this might beadded the further statement that the Union Pacificcontrols still another route to the coast in the SanPedro Los Angeles & Salt Lake RR., in the possessionof which the Supreme Court does not disturb it.Thus the situation is that the Union Pacific has aroute to the south as well as to the north, both ofwhich can be developed to the detriment of theCentral Pacific, if we imagine that anything quite sounlikely is possible as the rupture of the existingtraffic arrangement between the Central Pacific andthe Union Pacific, which, together, constitute acontinuous trans-continental line. If there is to beany sparring for positions, therefore, the pointswould appear to be about even as between the two.On the other hand, from the coming competition ofthe Panama Canal route the Southern Pacific seemsmore likely to suffer than the Union Pacific, as ithandles such a large amount of through traffic overa mixed rail and water route.In one particular, it would seem, the Southern

Pacific Co. will be distinctly a loser. The UnionPacific will no longer look after its financing. Doubt-less this is not as important as it was a decade ago,when the Southern Pacific first passed under UnionPacific control, for the Southern Pacific, thanks toUnion Pacific domination, is now on a secure divi-dend basis and possesses an established credit of itsown. In the past, however, the fact that the UnionPacific was always ready to extend unlimited aid inthe extensive financing required in the developmentof the Southern Pacific system was an advantageof the highest importance. How liberal and howextensive this aid has been will appear from a studyof the reports of the two companies during the lastten years. How carefully the Union Pacific has been inthe habit of planning for Southern Pacific's financialneeds is illustrated in the present Union Pacificreport in the paragraph to which allusion is made


1576 THE CHRONICLE VoL. Lxxxxv.

above. This tells us that the Union Pacific purchasedfrom the Southern Pacific Co. during the year$14,568,000, face value, Southern Pacific RR. firstrefunding 4s, $5,449,000, face value, SouthernPacific Co. (Central Pacific stock collateral) 4s, and$6,000,000, face value, Southern Pacific Co. SanFrancisco Terminal first 4s. The Union Pacificgave in payment its notes amounting to $23,740,362.The bonds were sold, it is stated, while the rightunder the existing law was unrestricted to assurefinancial provision for new construction and improve-ment already authorized. In other words, themanagement looked ahead. The notes were givenin order not to disturb the cash accounts of the twocompanies, except as funds should be needed. Theinterest collected on the bonds is to be applied tothe discharge of interest on the notes, and theproceeds from the sale of the bonds to the dischargeof the principal of the notes.With reference to the Union Pacific income results

for the year, it is known, of course, that conditionsduring the twelve months were unfavorable. As ispointed out in the report, there was a decrease inrevenue from a shortage of crops, with the resultantshrinkage in general traffic, and there were reduc-tions in rates made by Government Commissions,both State and inter-State. Many items of theagricultural tonnage were smaller than in the yearpreceding, and the tonnage in animal products wassmaller, as also was the manufacturing tonnage.Against this there were gains in other directions, butthe aggregate volume of the transportation servicerendered, as represented by the number of tons ofrevenue freight moved one mile, was substantiallybelow that of the preceding year, and in additionrates, as already stated, were also lower. As amatter of fact, this last would appear to have beenthe most important element in the decline in revenue.The number of tons of revenue freight carried wasactually somewhat larger than in the year preceding,though not up to that of two years ago, the figuresbeing 14,980,793 tons for 1912, against 14,807,161tons for 1911 and 15,312,211 tons for 1910. Theslight increase in the latest year follows from theaddition to length of road operated, and the averagelength of haul, owing to the crop shortage, &c., wasreduced, so the number of tons of freight moved onemile for 1912 was only 5,710,324,140, against5,803,802,346 for 1911 and 5,997,233,894 for 1910.The rate realized averaged only 0.89 mills per tonper mile in 1912, against 10.03 mills in 1911 and 10.24mills in 1910. In the late year there was also somereduction in the passenger earnings. Altogether, grossearnings were reduced $3,005,499 in 1911-12, in addi-tion to a decrease of $1,244,984 in the year preceding.

This is the first shrinkage in revenues that hasoccurred since the reorganization of the company.Starting with $32,631,769 in 1898, gross transpor-tation revenues rose steadily until they reached$90,228,092 in 1910; in the two years since thenthere has been a falling off to $85,977,609, and,considering the conditions prevailing and the ante-cedent expansion, the falling off must be regardedas relatively slight. Bearing in mind that thepresent season's crop yield is again abundant, itwould not be surprising if the whole of the twoyears' loss should be recovered during the currentor new fiscal year. Already, in the four months ofthis new year from July 1 to Oct. 31, there has beena gain in gross of $2,814,541.

The late year's loss in gross was made additionallyhard, inasmuch as it was attended by a further aug-mentation in expenses. In 1911 a loss of $1,244,984in gross came concurrently with an increase of$3,068,725 in expenses, thus causing a loss in netof $4,313,709. In 1912 a decrease of $3,005,499 ingross was coincident with an increase of $1,486,214 inexpenses, producing a loss in net of $4,491,713. Intwo years, therefore, the net from transportationoperations has been cut down from $40,024,835 to$31,219,413. Of the late year's further augmenta-tion of $1,486,214 in expenses, $904,641 was due toanother addition to the yearly tax payments. It ispointed out by Robert S. Lovett, the Chairman ofthe Executive Committee, who signs the report,that in five years payments for taxes have more thandoubled. In the year 1907 they amounted to$2,069,734, for 1912 they aggregated $4,368,788,an increase of $2,299,054, or considerably over 100%.Apart from the taxes there was an increase of$625,548 in the ordinary operating expenses of therail lines, offset by a decrease of 143,975 in theexpenses connected with the outside operations.This further rise in expenses occurred notwith-standing a diminution, as already shown, in traffic inboth the passenger and the freight departments. Inanalyzing the expense accounts, the report points outthat the increase occurred notwithstanding thatexpenses were closely watched and reduced whereverthis was possible without lowering the standard ofefficiency and service to the public.There was a decrease of $247,214 in expenses for

"maintenance" but an increase in expenses for"operations" of $872,762. The augmentation inthe latter case cannot be considered at all surprising,bearing in mind the various influences at worktending to swell the expense accounts. Additionalexpenses were imposed by the requirements of the"hours of service" and "full train crew" laws, alsoby higher wage schedules and by extra expensesincident to the strike of the shopmen. This lastwas one of the notable adverse features of the year.The reader will recall that in the summer of 1911the machinists, boiler-makers, blacksmiths, carrepairers and sheet-metal workers on the UnionPacific and Southern Pacific formed a new federationand presented demands involving an increase inwages aggregating 36% and working rules and con-ditions which, according to the officials, would haveseriously abridged the company's ability to performits duties to the public as well as to the stockholders.The employees were so informed, but at the sametime were assured that the company was willing tocontinue working agreements as theretofore with in-dividual crafts, recognizing but without discriminat-ing in favor of or against the different unions. Ageneral strike was declared Sept. 30 1911 and 3,042employees of the Union Pacific system and 5,189of the Southern Pacific system responded. Placeswere soon filled, but many unskilled workmen wereamong those first employed, and several monthselapsed before all of these were replaced and the newforce was brought up to the proper state of efficiency.In the meantime heavy expenses were incurred inhiring guards to protect the employees of the com-pany from violence and prevent damage to thecompany's property.Ilk In addition to the loss in net earnings from thetransportation operations, there was an increase of1,696,969 in the fixed charges resulting from the


100

DEC. 14 1912.j THE CHRONICLE 1577payment of a full year's interest and rentals on newlybuilt lines taken over the previous year. Altogetherthe company had unfavorable circumstances andconditions to contend against in every direction.It is indicative of the great income strength possessedby the company that, in face of all this, the incomeaccount for the year shows the 10% dividend earnedin full with a surplus of $8,393,510 left over. Ofcourse, however, this surplus reflects great shrinkageas compared with the similar surplus in the precedingyear and a still larger shrinkage as compared withtwo years before. In other words, while for 1912the surplus above the 10% dividend is $8,393,510,for 1911 this surplus on the year's operation was$14,334,445 and for 1910 was no less than $19,819,-824. The contraction has been entirely in the in-come from transportation operations. The incomefrom investments has remained substantially un-changed. For instance, $14,651,247 was receivedas dividends on stocks owned (of companies other thanthe Oregon Short Line and Oregon-Washington Rail-road & Navigation Co.) in 1912, against $14,596,701in 1911 and $15,298,078 in 1910, and $1,834,019 wasreceived as interest on bonds owned, against $1,392,-509 in 1911 and $1,263,983 in 1910.

It has been the custom heretofore to show thetransportation income and the income from invest-ments separately and to charge up 6% (out of the10% dividends paid) against the former and theremaining 4% against the investment income. Inthe present report this distinction is abandoned andno attempt at segregation made. The reason isobvious. As the loss has been entirely in thetransportation income, this last has been reducedto a point where it could no longer take care of the6% dividends with which it has been charged in thepast. With the net o

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