To secure a route the roads must be good, and provision made for keeping them clear in winter. The route must be not less than twenty-five miles in length, and must serve no fewer than one hundred families. The route must be arranged so that the carrier has not to travel over the same ground twice during one day. The patrons of the route must put up boxes, obtained from approved makers, a list of whom is furnished by the Department. These boxes come under the protection of the United States Government.

There has been nothing, as Hon. Perry S. Heath has declared, in the history of the postal service of the United States, so remarkable as the growth of rural free delivery, which can be so universally extended. Wherever established the following results prove the success of the service: (1) Increased postal receipts. Quite a number of routes have already become self-supporting. (2) The value of farm lands reached by the service has been materially enhanced. (3) A marked improvement in the roads traversed by the carriers. (4) Better prices obtained for farm products, the producers being brought into daily touch with the markets. (5) The social condition of the rural classes greatly ameliorated, the monotony of an isolated existence immeasurably relieved, the literature of the day placed within easy reach, and the rapid dissemination of important news secured.

Thus a greater contentment with life is engendered. So much may this condition improve in the future, that rural life may come, more and more, to be sought as the ideal existence, and no small share in attaining such a welcome result will be traceable to Rural Free Delivery, with all that it will necessarily bring in its train. CAMPBELL AULD.

RAILROADS, GERMAN SUSPENSION. --The German towns of Barmen and Elberfeld now have a successful line of transportation upon which the cars are hung from the structure instead of running upon it.

It runs through the valley of the River Wupper, and for the greater part of its length is immediately above the water. The massive girders are mostly V shaped with a flat top, but in the town of Vohwinkel, these have been superseded by structures which are shaped like an inverted U, one side of the flat topped arch standing on either side of the street, thus giv

THE WUPPER VALLEY RAILWAY. CARS PASSING OVER THE RIVER AT BARMEN.

THE LOSCHWITZ SUSPENDED RAILWAY, NEAR

DRESDEN, GERMANY.

ing a clear space for traffic underneath. In running around a curve there is very little oscillation of the cars. When conducting experiments along this line the engineers placed vessels of water on the floors of the carriages, and though they inclined from perpendicular when running at a high rate of speed not a drop of water was spilled.

The cars here used are nearly forty feet in length and over six feet wide. They are fashioned after the American pattern, with an aisle in the center, and about fifty persons can be accommodated in each compartment. They are not fastened together, but run near each other, making two stops in a mile. The weight of the two carriages, including the passengers and electric motors, is about twenty-eight tons, making a total carriage weight of nearly 618 pounds per passenger.

The power which is used is supplied by the extensive electrical works which have recently been built at Elberfeld. The cost of this railway was about $275,000 per mile. The system was devised by Eugen Langen, a German engineer of Cologne.

The successful operation of the first line being assured another was built on the same plan and has just been opened for traffic. The new railway runs on the banks of the River Elbe, connecting the village of Loschwitz with the heights of Rochmitz. Its length is less than 1,000 feet, with 32 per cent. grade. There are thirty-three steel piers, which carry the rails from which the cars are hung. Only two carriages are used; they are of ordinary size and are connected by a cable, which is driven by a steam engine at the upper terminals. One of them is always coming down, while the other is going up. It is probable that the Langen system will be widely adopted in Germany and it will be found especially applicable in short lines to a mountainous country like Switzerland.

The polyphase electric railway near Berlin, which was mentioned on pp. 447-9, has been tested with the result of a maximum speed of 93.2 miles per hour, which is considered the practicable limit with the present equipment. The anticipated difficulty of getting the powerful current into the car was overcome; and the air resistance proved less formidable than was expected, being 16.7 pounds per square foot.

of

RECIPROCITY AND THE RECENT CONVENTION AT WASHINGTON, D. C., THE.The recent meeting at Washington of a convention of some two hundred representatives of the chief manufacturing interests of the country for the sole purpose discussing reciprocal trade agreements with foreign countries has served to emphasize the importance which this subject has assumed, and to make evident the fact, if evidence is needed, that this is to be one of the special questions which the present Congress will have to consider. The high protectionists are in control both in the House and in the Senate, but that they will be called upon to meet a variety of attacks upon present high tariff rates is well known. Especially in the West there seems to be a growing discontent in Republican ranks owing to a feeling that, in order to protect certain eastern manufacturers, western products are being deprived of foreign markets which legitimately should be theirs. Even in the East, the opinion is more or less current that existing custom rates are unnecessarily high. In a very considerable measure this demand for tariff revision has taken the form of an advocacy of treaty arrangements with foreign powers whereby, in return for special concessions granted by them to our exports, certain reductions from our import duties shall be given their manufactured goods. In favor of this policy it is claimed that not only will new markets thus be opened to our manufactures, but that we shall be thereby rendered secure against such future discriminations against us, as European countries, frightened at the increasing competition of our goods, may be led to adopt.

Generally speaking, reciprocity in tariff matters is not a new idea. As a principle it was stated by Jefferson when Secretary of State

under Washington, and as a policy it was put into practice in 1854 in a treaty with Great Britain regulating our trade in certain commodities with Canada. Under the McKinley Tariff Act of 1890 a series of similar arrangements was entered into with different countries, which remained in force until the passage of the Wilson Act of 1894. The subject, however, entered upon a new and more important phase when in 1896 the Republicans definitely declared themselves in favor of the policy, and in fulfilment of that pledge inserted in the Dingley Tariff Act of 1897 reciprocity provisions. Section three of that act provides that "for the purpose of equalizing the trade of the United States with foreign countries and their colonies producing and importing to this country," certain specified articles, the President is authorized "to enter into negotiations with the governments of those countries....with a view to the arrangement of commercial agreements in which reciprocal and equivalent concessions may be secured in favor of the products and manufactures of the United States; and whenever the government of any country or colony producing and exporting to the United States the above-mentioned articles, or any of them, shall enter into a commercial agreement with the United States, or make concessions in favor of the products or manufactures thereof, which, in the judgment of the President, shall be reciprocal or equivalent," he shall by proclamation grant certain reductions in our import duties, which the act goes on to mention. Further, the section goes on to empower the President to revoke such concessions, "whenever he shall be satisfied that any agreement in this section mentioned is not being fully executed by the government with which it shall have been made;" and, also, to remove from the free list certain

NELSON A. DINGLEY. Author of Dingley Tariff Act.

specified articles, whenever he shall be satisfied that the countries exporting them to this country are imposing "duties or other exactions upon the agricultural, manufactured or other products of the United States," which, in view of the free introduction into the United States of the commodities before mentioned, "he may deem to be reciprocally unequal and unreasonable." Under this section reciprocity agreements have been made with France, Germany, Portugal and Italy, which are now in force.

More important, however, than section three is the next paragraph of the act. This reads as follows:

"Sec. 4. That whenever the President of the United States, by and with the advice and consent of the Senate, with a view to secure reciprocal trade with foreign countries, shall, within the period of two years from and after the passage of this act, enter into commercial treaty or treaties with any other country or countries concerning the admission into any such country or countries of the goods, wares, and merchandise of the United States and their use and disposition therein, deemed to be for the interests of the United States, and in such treaty or treaties, in consideration of the advantages accruing to the United States therefrom, shall provide for the reduction during a specified period, not exceeding five years, of the duties imposed by this act, to the extent of not more than twenty per centum thereof, upon such goods as or merchandise as may be designated therein of the country or countries with which such treaty or treaties shall be made as in this section provided for; or shall provide for the transfer during such period from the dutiable list of this act to the free list thereof of such goods, wares, and merchandise, being the natural products of such foreign country or countries and not of the United States; or shall provide for the re

tention upon the free list of this act during a specified period, not exceeding five years, of such goods, wares, and merchandise now included in said free list as may be designated therein; and when any such treaty shall have been duly ratified by the Senate and approved by Congress, and public proclamation made accordingly, then and thereafter the duties which shall be collected by the United States upon any of the designated goods, wares and merchandise from the foreign country with which such treaty has been made shall, during the period provided for, be the duties specified and provided for in such treaty, and in none other."

It will be noticed that this section provides that the President may negotiate only such treaties as do not call for a reduction of more than twenty per cent. of the regular rates: that these treaties shall be entered into within two years, and that they shall be approved by Congress, that is, by both the House and Senate. As to these limitations, however, it is to be remarked that under our constitution the President needs no authorization from Congress to enable him to enter into treaties with foreign powers, nor can Congress dictate to him what treaty conditions he shall agree to. The only qualification upon his power is that, when drawn up, treaties shall be ratified by a two-thirds vote in the Senate. There is, therefore, nothing to prevent the President and the Senate from now entering into any sort of reciprocal tariff arrangements with foreign powers, which they may think advisable, previous acts of Congress to the contrary notwithstanding.

In conformity with the provisions of section four, eleven treaties were drawn up, which were submitted to the Senate at its last session for approval. Six of these were favorably acted upon by the Committee of Foreign Affairs, but none of them was finally voted upon. As being neither ratified nor rejected they are still before the Senate. The most important of these treaties is undoubtedly that with France, for it is especially with that country that our present tariff relations are most unsatisfactory. The existing French tariff law provides for maximum and minimum rates. Almost without exception European countries have, by making the necessary concessions, secured for their exports the minimum duties, whereas our manufactures have still to pay the higher rates at the French ports. Partly, if not largely, as a result of this, out of a total of $117,000,000 worth of goods imported by France in 1898, less than $4,000,000 worth came from this country.

Notwithstanding the setback which reciprocity received by the non-action of the Senate during the last Congress, the late President continued his support of it as a policy. In the speech which he made at Buffalo just before his assassination, McKinley declared: "If perchance some of our tariffs are no longer needed for revenue or to encourage and protect our industries at home, why should they not be employed to extend and promote our markets abroad?....Our capacity to produce has developed so enormously and our products have so multiplied that the problem of more markets requires our urgent and immediate

attention....A system which provides a mutual exchange of commodities is manifestly essential to the continued and healthful growth of our export trade. We must not repose in fancied security that we can forever sell everything and buy little or nothing. If such a thing were possible it would not be best for us or for those with whom we deal....Reciprocity is the natural outgrowth of our wonderful industrial development under the domestic policy now firmly established....The period of exclusiveness is past. The expansion of our trade and commerce is the pressing problem. Commercial wars are unprofitable. A policy of good-will and friendly trade relations will prevent reprisals. Reciprocity treaties are in harmony with the spirit of the times; measures of retaliation are not." These views thus expressed become especially significant by the avowal of President Roosevelt of his intention of carrying out as far as possible the policies of his predecessor.

This, then, was the condition of affairs when the plan of a reciprocity convention to meet at Washington was projected. This conference was the outgrowth of the convention of the National Association of Manufacturers, held at Detroit last June. Upon that occasion so strong were the expressions of opinion that reciprocal tariff arrangements with certain countries relating to certain goods were desirable that the idea of holding a series of meetings for the sole purpose of discussing this topic suggested itself. Invitations were thereupon sent out to protectionist and free trade associations alike, and to bodies without any known political views; to manufacturing clubs, chambers of commerce, boards of trade, etc., throughout the country, urging them all to send delegates. Thus was obtained a body of men representing as nearly as possible all varieties of opinion and manufacturing interests. Mr. Theodore C. Search was chosen chairman. In his address setting forth the purposes of the meeting he said:

"The specific work that lies before us is to ascertain what the manufacturers of the United States, as represented in this gathering, think about reciprocity, and to give definite form and expression to their views. It is the duty of this convention to harmonize, as far as it shall be possible, the widely differing opinions represented in this body and to reduce to clear and forceful expression such principles as we hold in common. We are here to harmonize our views, not to emphasize our differences."

That there were views to be harmonized appeared from the very start. The chairman's address was distinctly in favor of reciprocity. The first paper read, by Mr. C. H. Clark, was, however, a strong argument against the policy. Reciprocity was declared to be equivalent to saying to foreign countries: "Let us stick a knife into some of your industries, and you may stab some of ours." "In short," said Mr. Clark, "we find certain American manufacturers who have grown to greatness under the protective system, willing to sanction partial repudiation of that system so that they may make gains for themselves in foreign markets. Like the humorist who was willing to have all his wife's relations go to the war, they will

agree to the injury or the destruction of a few American industries if they can thus obtain a chance to sell more of their fabrics....The complaint is made that our trade in manufactures is congested for want of markets. But all Europe is making that complaint, and yet it is to Europe that the Americans who present this argument are looking for relief. As a matter of fact, our manufacturers are gaining ground in Europe without the aid of reciprocity. All Europe is alarmed at this progress." In closing Mr. Clark dwelt upon the danger of a change in our present policy: "No man can tell where change will end if change shall be begun....The smallest authorized movement toward change of the tariff will introduce into business an element of uncertainty which will involve this nation in more loss than all the gains that the individuals concerned in the movement can make in years. Let the tariff alone. Let a prosperous business condition alone. Let a mighty export trade alone."

Without going further into the pros and cons of the arguments presented before the convention, it is sufficient to say that almost every variety of opinion was disclosed. Upon the whole, it was made evident that even those who were in favor of reciprocity in the abstract could not agree among themselves as to just what manufactures should come under its influence. Some there were who maintained that the principle should be applied only to those goods which are not produced in the United States. Finally, however, the convention was able to agree, with but two dissenting votes, upon the following resolution:

"Resolved, That this convention recommends to Congress the maintenance of the principle of protection for the home market and to open by reciprocity opportunities for increased foreign trade by special modifications of the tariff in special cases, but only where it can be done without injury to any of our home interests of manufacturing, commerce or farming.

"That, in order to ascertain the influence of any proposed treaty on our home interests, this convention recommends to Congress the establishment of a reciprocity commission, which shall be charged with the duty of investigating the condition of any industry and reporting the same to the Executive and to Congress for guidance in negotiating reciprocal trade agreements."

In effect, then, in this non-committal resolution, the convention, while accepting reciprocity as a principle, declared that it should be so applied as not injuriously to affect any industry represented on its floor.

Besides the above resolution, the convention unanimously adopted one favoring the establishment of a Department of Commerce and Industries, whose executive head should be a member of the President's Cabinet.

W. W. WILLOUGHBY,

Johns Hopkins University, Baltimore. SECURITIES CO., NORTHERN, THE.-In the early part of the present year persons who were dealing in shares on the stock exchange or following the movements of the speculative market began to notice that along with the general rise in the price of securities there were

certain secret forces at work affecting particularly a number of the western railways. The stocks of the Chicago, Burlington & Quincy R. R. first showed unusual strength and later and more perceptibly in June the shares of the Northern Pacific Railway advanced by leaps and bounds. This stock in September, 1900, had been as low as 454, while the highest rigure reached in that year was 861⁄2 in December. With the beginning of 1901 it began to advance more noticeably. On April 22 it was 101 and 1024, on April 26 it was 109 and on April 30-1174. This action very much surprised and mystified the market. It was taken by many, however, to indicate nothing unusual, and many persons contracted to deliver the stock at a future period at the ruling price, trusting to a decline of the market to give them a profit. That is to say, they became "bears" or went "short" on the stock, and this was done, according to the usual practice, without actually holding or purchasing the stocks they were to deliver, trusting to an opportunity to buy the stocks at a lower price later, or at least settle differences without the actual delivery of any stock. This short interest saw with growing apprehensions the continuation of strong buying, which advanced the price on May 6 to a maximum of 133; May 7-14934; and May 8 to 180. The "shorts" had already began to "cover," and on May 9 there was a general rush as the fact became clear that the stock was cornered and the pressure was becoming relentlessly severe. Buyers became more and more frantic when it was seen that, although the price rose rapidly, little stock was sold, until on this eventful day the climax was reached, when, for a single share which a year before had sold for less than $50, the sum of $1,000 was offered for immediate delivery, or $700, for delivery in the ordinary man

ner.

As the price of the cornered stock rose the price of other securities naturally fell, for gilt-edged properties of all sorts were sold to raise the money with which to get the Northern Pacific stocks called for in contracts previously entered into. The meaning of this decline, which had been apparent for several days before the panic, was misunderstood by the banks of interior cities, which usually make large loans to the New York banks. Consequently these banks called in their loans and produced a stringency of money in New York at precisely the most trying time for the unfortunate "short" interest. It was only broken by the prompt action of Mr. Frederick D. Tappan, President of the Stock Exchange, who formed a syndicate of 15 banks of New York to loan $20,000,000 at the market rate, J. P. Morgan & Co. offered $6,000,000 at 6 per cent. This brought the price of money down from somewhere in the neighborhood of 60 per cent. The tension on the market was not relieved until the principal buyers of Northern Pacific stock, J. P. Morgan & Co. and Kuhn, Loeb & Co., agreed in consultation not to insist upon the immediate delivery of the stock. Very quickly they came to an agreement by which contracts for stock could be canceled at the rate of $150 per share. With the announcement of this arrangement excitement at once ceased and the general market recovered.

It was all over sooner than it had begun,

but it left behind many ruined speculators, whose little margins had been wiped out in a moment by rising prices. Thus was concluded one of the sharpest, shortest and most intense speculative panics Wall street ever experienced. On Friday Northern Pacific stock was highest at 160, lowest at 150. On Monday, the thirteenth, the stock ranged between 160 and 1654, Tuesday its lowest point was 150, Wednesday 139.

Some consideration of the causes of the disturbance will be in order. It had nothing to do with opinions as to the prosperity of the country or forecasts of the future course of industry. The trade of the country was in an exceptionally prosperous condition. Excitement and the consequent pressure for liquidation were, as a matter of course, increased by the fact that the entire range of prices on the market was inflated to a point higher than the dividends of industries would warrant. This was caused by the confidence and venturesomeness of the public, which had for some time been turning its attention to speculation. The market was in nervous condition and securities were in weak hands not capable of retaining them in the face of any considerable decline. But although these conditions existed, they did not give rise to the panic of May 9th. That was the result of a corner affected, for the most part unintentionally, by the eager buying of Northern Pacific stock by two contending groups of financiers, one the J. J. HillJ. P. Morgan group, represented by J. P. Morgan & Co., the other the E. H. Harriman-Gould syndicate, represented by Kuhn, Loeb & Co. To understand why these parties came to be arrayed in opposition to each other, it is necessary to consider the condition of railroad financiering in the West.

The movement toward the concentration of industries into large administrative groups has been made evident for some years in this country by the formation of trusts and large corporations. Parallel with this, and a part of the general movement, there has been going on a consolidation of railway lines into large systems. This movement, which has brought into existence such railways as the New York Central, Lake Shore and Michigan Southern, Philadelphia and Reading, Lehigh Valley, Chicago and Northwestern, Chicago, Burlington and Quincy and the Pacific lines, has recently brought into existence a number of great consolidations of systems within each of which there are alliances and understandings, or a fully developed "harmony-of-interest" policy. Thus at the present time nineteen groups of investors control about three-fourths of the railway mileage of the United States. West of Chicago three great syndicates may be recognized, the Gould lines, including the Missouri Pacific, Denver & Rio Grande, Rio Grande Western, St. Louis, Iron Mountain & Southern, etc. The Harriman syndicate controls the Union Pacific, Southern Pacific, Chicago & Alton, Illinois Central and some others. The HillMorgan interests center first of all in the Great Northern and Northern Pacific and the Erie. The Harriman syndicate has lines west from Chicago through Iowa and Nebraska by way of the Union Pacific to San Francisco, and this line connects with the North Pacific states by