We are faced with a new orientation of our country to world problems and we have come out of the war with an accumulation of economic and social difficulties. We face a Europe still at war; still amid social revolutions; some of its peoples still slacking on production; millions starving, and, therefore, the safety of its civilization is still hanging by a slender thread. Every wind that blows carries to our shores an infection of 'social disease from this great ferment; every convulsion there has an economic reaction upon our own people. The world is asking for us to ratify long delayed peace in the hope that such confidence will be restored as will enable her to reconstruct her economic life.

Due to the failure to even provide some insurance against war by a league to promote peace and to other causes the world is steadily drifting back to a worse state of international antagonisms than existed before 1914. The naval strength of every great nation, except the enemy and Russia, has been increased during the war. Many great armies have been demobilized, yet the world is again engaged in preparedness and the actual number of men under arms today is much larger than before 1914. The world's total armament and its military expenditure is larger despite the burden of grinding debt. No moderating influences can be set up until we come to a conclusion and join the League that was created at our inspiration and upon which the entire theme of settlement-our real hope of a better world-revolves. The League cannot become a real beneficent force unless it obtains the support of all the great powers and this can only come about by our

entrance. With us out, the League is in <reat danger of developing into an or

nization for the advancement of certain national interests and we may find it an economic, if not a political, league against us, for we are the creditors of the world today.

No Government Experiments in Socialism

Out of the strain of war, weaknesses have become even more evident in our administrative organization, in our legislative machinery. Readjustments of our own industrial and economic relations lend themselves to no simple formula. We are not only afflicted with these problems themselves but also the injection of new philosophies upon social and economic life Our Federal Government is still over centralized, for we have upon the hands of our Government enormous industrial activities, which have yet to be demobilized. We are swamped with debt and burdened with taxation. Credit is woefully inflated; speculation and waste are rampant. Our own productivity is decreasing and our industrial population are crying for remedies to the increasing cost of living and aspiring to better conditions of life and labor.

There are many fundamental objections to continuation of government experiments in socialism necessitated by the war. They lie chiefly in their destruction of initiative in our people and the dangers of political domination that can grow from governmental operation. The successful conduct of great industries is to a transcendant degree dependent upon the personal abilities and character of their employees and staff. No scheme of political appointment has

ever yet been devised that will replace com. petition in its selection of ability and character. On the other hand, our people have long since recognized that we cannot turn monopoly over to unrestrained operation for profit, and that the human rights of employees can never be dominated by dividends.

Our Railroad and Shipping Problem

The return of the railroads to the owners places predominant private operation upon its final trial. If instant energy, courage and large vision in the owners should prove lacking in meeting the immediate situation we will be faced with a reaction that will drive the country to some other form of control. Energetic enlargement of equipment, better service, co-operation with employees, and the least possible advance in rates together with freedom from political interest will be the scales upon which the public will weigh results.

Our business is handicapped on every side by the failure of our transportation facilities to grow with the country. It is useless to talk about increased production to meet an increased standard of living in an increasing population without a greatly increased transport equipment. Moreover, there are very great social problems underlying our transport system; today their contraction is forcing a congestion of our population around the great cities with all that these overswollen settlements import. Even such great disturbances as the coal strike have a minor root in our inadequate transportation facilities and their responsibility for intermittent operation of the mines.

Important phases of our shipping problems should receive wider discussion by the country. As the result of war pressure, we will spend over $2,800,000,000 in the completion of a fleet of nineteen hundred ships of a total of 11,000,000 tons-nearly onequarter of the world's cargo shipping. We are proud of this great expansion of our marine and we wish to retain it under the American flag. Our shipping problem has one large point of departure from the railway problem, for there is no element of natural monopoly. Anyone with a watertight vessel can enter upon the seas today and our government is now engaged upon the conduct of a nationalized industry in competition with our own people and the world besides. While in the railroads government inefficiency could be passed on to the consumer, on the seas we will sooner or later find it translated to the National Treas

ury. If the Government continues in the shipping business, we shall be disappointed from the point of view of profits. For we shall be faced with the ability of private enterprise to make profits from the margins of higher cost of government operation alone. In this whole problem there are the most difficult considerations requiring the best business thought in the country. A National Budget System Another matter of government organization is in the matter of the national budget. To minds charged with the primary necessity of advance planning, co-ordination, provision of synchronizing parts in organization, the whole notion of our hit-ormiss system is repugnant. A budget system is not the remedy for all administrative ills; it provides a basis of organization that at least does not paralyze administrative efficiency as our system does today. Through it, the co-ordination of expenditure in government departments, the prevention of waste and overlapping in government bureaus, the exposure of the pork barrel, and the balancing of the relative importance of different national activities in the allocation of our national income can all be greatly promoted. The budget system in some form is so universal in civilized governments and in competently conducted business enterprise, (it has been adopted in thirty of our States) that its absence in our Federal Government is most extraordinary. It is, however, but a further testimoney that it is always with our citizens a far cry from efficiency in their business to interest in the efficiency of their govern

ment.

Co-operation Between Employer and
Employee

Another great national problem is that of the relationship of employer and employee in industry. In this, as in many other national problems today, we are faced with a realization that the science of economies has altered from a science of wealth to a science of human relationships to wealth, We have gone on for many years throwing the greatest of our ingenuity and ability into the improvement of processes and tools of production. We have, until recently, greatly neglected the human factor that is so large an element in our very productivity.

I am daily impressed with the fact that there is but one way out, and that is to again re-establish through organized representation that personal co-operation be

tween employer and employee in production that was a binding force when our industries were smaller of unit and of less specialization. The attitude of refusal to participate in collective bargaining with representatives of the employees' own choosing is the negation of this bridge to better relationship. On the other hand, a complete sense of obligation to bargains entered upon is fundamental to the process itself. The interests of employee and employer are not necessarily antagonistic; they have a great common ground of mutuality, and if we could secure emphasis upon these common interests we would. greatly mitigate conflict. Our government can stimulate these forces, but the new relationship of employer and employee must be a matter of deliberate organization within industry itself. I am convinced that the vast majority of American labor fundamentally wishes to co-operate in production and that this basis of good will can be organized and the vitality of production recreated.

If union labor would adopt the definite gospel of maximum effort and skill of each individual worker and the sharing of its results with the employer, then the largest part of the friction in obtaining its other objectives-conditions of labor, proper hours, remuneration, and so forth-would disappear. It is possible for it to recreate the whole spirit of craftsmanship by cooperation to attain greater efficiency-and to make greater gains for itself than any hitherto made.

Control of Corporations

The dominant idea of establishing and. preserving an equality of opportunity has carried us on a far different road of social and political ideals from that in Europe. We have no frozen class distinctions. We have developed a far better distribution of necessities, comforts and wealth than any other place in the world. The assumption of class distinctions between labor, capital and the public is a foolish creation of false consciousness and is building for us the very same kind of foundations upon which Europe rocks today. All panaceas of socialism, syndicalism, communism, capitalism or any other "isms" are based on the hypothesis that class division necessarily exists in the United States and thence they launch into logical deductions after the acceptance of this false premise.

The combination of capital for larger unit production and distribution is in itself economically sound up to some point of expansion. It is not, however, sufficiently

recognized that overgrowth of such units leads them to bureaucratic administration and eventually renders them less efficient than smaller units. From a social point of view the moment they begin to dominate the community, either in wages or prices or production, or to prevent the growth of competition, they are in flagrant violation of the primary principle of equality of opportunity.

Distribution of Wealth and Taxation

There can be no equality of opportunity if the ownership of the tools of production and service is to become frozen to a narrow group of holders either through large combination of capital or unrestricted accumulation of wealth.

The present inheritance, income and excess profits taxes tend to a better distribution of wealth. It has been proposed to extend these taxes in larger fortunes beyond their mere purposes of revenue to accomplish better distribution and better equality of opportunity, thereby recovering to the community extrayagant gains.

The inheritance tax is theoretically a direct transfer of capital to income in the hands of the State, and thus might be criticized as stifling the increase of capital. Practically this would be answered if the State applied such receipts to the extinction of national debt or to reproductive expenditure in the improvement of the national properties in rivers, lands and so on. Such a curative of unfair distribution of wealth is no violation of the economic or social principles stated above.

The use of increase in income taxes to secure a better distribution of wealth breaks itself down at a certain point because it discourages iniative and effort more than does the use of inheritance taxes for

such purpose. Beyond a certain point in care of dependents the human animal is chiefly interested in comfort in this life.

The use of excess-profits tax for this purpose or even for revenue-except as a war emergency coupled with controlled pricesbreaks down not only from the discouragement to initiative, but worse, because it stimulates rank waste and is in the main passed on to the consumer and contributes to the high cost of living.

Curbing Speculation and Inflation

As regards control of speculation there are certain speculative undertakings which are necessary. For example, our food is produced within a few weeks and somebody must carry the risk in distribution during

the entire year. The initiation of practically any tool or production or s.rvice is a speculation. On the other hand, the individual who injects himself into the normal flow of commodities between the legitimate distinct stages of distribution is poaching on the community and returning no service for the toll he takes. Equally injurious is the individual who manufactures blue sky paper or who dips in the stock market for a rise or fall in stocks. It has been proposed that a more vivid limelight on all promotions and dealings in stocks and commodity futures would temper the ambitions of persons to be beneficiaries from speculation. It is also proposed that a better control of interest rates would in a great measure prevent the diversion of capital to these purposes from its proper field of production and distribution. But there will be little relief from profiteering and its bitter interpolation into the cost of living until our government abandons its method of war finance by way of gigantic inflation of credit and consequent stimulus to speculation.

European Credits

In reference to European credits I disagree with the statements of certain propagandists either as to the volume of European financial needs from the United States or their suggestions that the great bulk of these needs cannot be met by ordinary commercial credits and that thus our Treasury needs to be further drawi upon for new loans. Aside from

some secondary measures by our government the problem is one of ratification of peace and ordinary business processes and not one of increasing our burden of taxation. Our taxes are now 600 per cent. over pre-war rates while no one of the Allies has increased taxes

more than 400 per

cent. We simply

Adherence to National Ideals

These are but few of the problems that confront us. But in the formulating of measures of solution, we need a constant adherence to national ideal and our own social philosophy. For generations the American people have been steadily developing a social philosophy as part of their own democracy-and in these id.als it differs from all other democracies. This philosophy has stood this period of test in the fire of common sense; it is, in substance, that there should be an equality of opportunityan equal chance-to every citizen. This view that every individual should, within his lifetime, not be handicapped in securing that particular niche in the community to which his abilities and character entitle him, is itself the negation of class. Human beings are not equal in these qualities. But a society that is based upon a constant flux of individuals in the community, upon the basis of ability and character, is a moving virile mass; it is not a stratification of classes. Its inspiration is individual initiative. Its stimulus is competition. Its safeguard is education. Its greatest mentor is free speech and voluntary organization for public good. Its expression in legislation is the common sense and common will of the majority. It is the essence of this democracy that progress of the mass must arise from progress of the individual.