Chapter 1

THE ARENA.

EDITED BY JOHN CLARK RIDPATH, LL. D.

VOL. XVIII

JULY TO DECEMBER, 1897

PUBLISHED BY THE ARENA COMPANY BOSTON, MASS. 1897

COPYRIGHTED, 1897 BY THE ARENA COMPANY.

SKINNER, BARTLETT & CO., 7 Federal Court, Boston.

CONTENTS.

PAGE

The Citadel of the Money Power: I. Wall Street, Past, Present, and Future HENRY CLEWS 1 II. The True Inwardness of Wall Street JOHN CLARK RIDPATH 9 The Reform Club's Feast of Unreason Hon. CHARLES A. TOWNE 24 Does Credit Act on Prices? A. J. UTLEY 37 Points in the American and French Constitutions Compared, NIELS GRÖN 49 Honest Money; or, A True Standard of Value: A Symposium. I. WILLIAM JENNINGS BRYAN 57 II. M. W. HOWARD 58 III. WHARTON BARKER 59 IV. ARTHUR I. FONDA 60 V. Gen. A. J. WARNER 62 The New Civil Code of Japan TOKICHI MASAO, M. L., D. C. L. 64 John Ruskin: A Type of Twentieth-Century Manhood B. O. FLOWER 70 The Single Tax in Operation Hon. HUGH H. LUSK 79 Natural Selection, Social Selection, and Heredity, Prof. JOHN R. COMMONS 90 Psychic or Supermundane Forces CORA L. V. RICHMOND 98 The American Institute of Civics HENRY RANDALL WAITE, Ph. D. 108 An Industrial Fable HAMILTON S. WICKS 116 Plaza of the Poets: Reply to "Locksley Hall Sixty Years After," BARTON LOMAX PITTMAN 122 John Brown COATES KINNEY 125 Demos W. H. VENABLE, LL. D. 126 The Editor's Evening: Leaf from My Samoan Notebook (A. D. 2297); _Vita Longa_; Kaboto (a Sonnet) 128 A Stroke for the People: A Farmer's Letter to THE ARENA 134 Evolution: What It Is and What It Is Not Dr. DAVID STARR JORDAN 145 Has Wealth a Limitation? ROBERT N. REEVES 160 The Battle of the Money Metals: I. Bimetallism Simplified GEORGE H. LEPPER 168 II. Bimetallism Extinguished JOHN CLARK RIDPATH 180 The Segregation and Permanent Isolation of Criminals, NORMAN ROBINSON 192 How to Increase National Wealth by the Employment of Paralyzed Industry B. O. FLOWER 200 Open Letter to Eastern Capitalists CHARLES C. MILLARD 211 The Telegraph Monopoly: Part XIII. Prof. FRANK PARSONS 218 The Provisional Government of the Cubans THOMAS W. STEEP 226 A Noted American Preacher DUNCAN MACDERMID 232 The Civic Outlook HENRY RANDALL WAITE, Ph. D. 245 "The Tempest" the Sequel to "Hamlet" EMILY DICKEY BEERY 254 The Creative Man STINSON JARVIS 262 Plaza of the Poets: The New Woman MILES MENANDER DAWSON 275 Under the Stars COATES KINNEY 275 The Cry of the Valley CHARLES MELVIN WILKINSON 276 A Radical ROBERT F. GIBSON 277 The Editor's Evening: Our Totem; _Vive La France! Le Siècle_ (a Sonnet) 278 The Concentration of Wealth: Its Causes and Results: Part I, HERMAN E. TAUBENECK 289 The Future of the Democratic Party: A Reply DAVID OVERMYER 302 The Multiple Standard for Money ELTWEED POMEROY 318 Anticipating the Unearned Increment I. W. HART 339 Studies in Ultimate Society: I. A New Interpretation of Life LAURENCE GRONLUND 351 II. Individualism _vs._ Altruism K. T. TAKAHASHI 362 General Weyler's Campaign CRITTENDEN MARRIOTT 374 The Author of "The Messiah" B. O. FLOWER 386 Open Letter to President Andrews THE EDITOR 399 Plaza of the Poets: The Onmarch FREEMAN E. MILLER 403 The Toil of Empire JOHN VANCE CHENEY 404 The Day Love Came THEODOSIA PICKERING 405 The Question JULIA NEELY-FINCH 405 Triolet CURTIS HIDDEN PAGE 406 The Cry of the Poor JOHN CLARK RIDPATH 407 The Editor's Evening: A Knotty Problem; A Case of Prevision; Concerning Eternity; A. L. (a Sonnet) 419 The New Ostracism Hon. CHARLES A. TOWNE 433 The Concentration of Wealth: Its Causes and Results: Part II, HERMAN E. TAUBENECK 452 The Rights of the Public over Quasi-Public Services, Hon. WALTER CLARK 470 Prosperity: the Sham and the Reality JOHN CLARK RIDPATH 486 Jefferson and His Political Philosophy MARY PLATT PARMELEE 505 The Latest Social Vision B. O. FLOWER 517 The Dead Hand in the Church Rev. CLARENCE LATHBURY 535 Hypnotism in its Scientific and Forensic Aspects, MARION L. DAWSON, B. L. 544 Suicide: Is It Worth While? CHARLES B. NEWCOMB 557 Plaza of the Poets: Old Glory IRONQUILL 562 _Vita Sum_ JUNIUS L. HEMPSTEAD 563 Gold CLINTON SCOLLARD 564 Richard Realfe REUBIE CARPENTER 565 The Dreamer HELENA M. RICHARDSON 565 The Editor's Evening: The Greatest Lyric; "Thrift, Thrift, Horatio;" The Pessimist; The Physician's Last Call (a Sonnet). 566 Freedom and Its Opportunities: Part I Hon. JOHN R. ROGERS 577 "The Case Against Bimetallism" Judge GEORGE H. SMITH 590 The Initiative and the Referendum ELIHU F. BARKER 613 The Telegraph Monopoly: Part XIV Prof. FRANK PARSONS 628 The Laborer's View of the Labor Question: I. How the Laborer Feels HERBERT M. RAMP 644 II. Up or Down? W. EDWARDS 654 III. The Farm Hand: An Unknown Quantity WILLIAM EMORY KEARNS 661 Practical Measures for Promoting Manhood and Preventing Crime, B. O. FLOWER 673 The Demand for Sensational Journals JOHN HENDERSON GARNSEY 681 Is History a Science? JOHN CLARK RIDPATH 687 Plaza of the Poets: Our Brother Simon ANNIE L. MUZZEY 707 Thou Knowest Not HELENA M. RICHARDSON 708 Optim: A Reply GEORGE H. WESTLEY 709 The Murdered Trees BENJAMIN S. PARKER 709 The Hidden Flute MINNA IRVING 710 Retroensetta CURTIS HIDDEN PAGE 710 The Editor's Evening: Tantalus and His Opportunities; The Man in Bronze; Franklin (a Sonnet) 711 Idylls and Ideals of Christmas: I. What I Want for Christmas ROBERT G. INGERSOLL 721 II. Christmas, the Human Holiday Rev. MINOT J. SAVAGE, D.D. 722 III. Santa Claus: A Poem JAMES WHITCOMB RILEY 726 IV. The Aryan at Christmas JOHN CLARK RIDPATH 727 A Séance With Eusapia Paladino: Psychic Forces CAMILLE FLAMMARION 730 The Influence of Hebrew Thought in the Development of the Social Democratic Idea in New England CHARLES S. ALLEN 748 Priest and People E. T. HARGROVE 772 Immigration, Hard Times, and the Veto JOHN CHETWOOD, Jr. 788 The Founder of German Opera B. O. FLOWER 802 The Truly Artistic Woman STINSON JARVIS 813 Poor "Fairly Rich" People HENRY E. FOSTER 820 Shall the United States be Europeanized? JOHN CLARK RIDPATH 827 Hawaiian Annexation from a Japanese Point of View, KEIJIRO NAKAMURA 834 A Political Deal: A Story ELIZA FRANCES ANDREWS 840 Plaza of the Poets: Glad Tidings MARION MILLS MILLER 849 The Yule Log CLINTON SCOLLARD 852 How to Get an Article in a Magazine THE EDITOR 853 The Editor's Evening: Sir Thomas Kho on Education; Journey and Sleep (a Sonnet) 855

BOOK REVIEWS.

The Emperor 137 President Jordan's Saga of the Seal 284 Some Prehistoric History 426 A Bard of the Ohio 572 Critic, Bard, and Moralist 717 Guthrie's "Modern Poet Prophets" 860

ILLUSTRATIONS.

Opposite Page HON. CHARLES A. TOWNE 1 DR. DAVID STARR JORDAN 145 MULTIPLE-STANDARD TREASURY NOTE OF MASSACHUSETTS BAY 289 DR. E. BENJAMIN ANDREWS 433 GOVERNOR JOHN R. ROGERS 577 CAMILLE FLAMMARION 721 PSYCHIC SÉANCE WITH EUSAPIA PALADINO 737

THE ARENA.

Vol. XVIII. JULY, 1897. No. 92.

THE CITADEL OF THE MONEY POWER.

I. WALL STREET, PAST, PRESENT, AND FUTURE.

BY HENRY CLEWS.

I.

The twenty-seven respectable citizens of New York who, in 1792, met under a buttonwood tree in front of the premises now known as Number 60 Wall Street, and formed an association for the purchase and sale of public stocks at a fixed and unvarying commission, with a proviso of mutual help and preference, committed themselves to an enterprise of whose moment and influence in the future they could have formed no adequate conception. At that date Wall Street was a banking district, small indeed when compared with its present condition, but important in its relations to the commerce of the nation. This transaction of the twenty-seven--among whom we find the honored names of Barclay, Bleecker, Winthrop, Lawrence, which in themselves and their descendants were, and are, creditably identified with the growth of the community--added the prestige and power of the stock exchange to those of the banks, and fixed for an indefinitely long period the destinies of the financial centre of the Union.

During the earlier part of this century the banking interests of Wall Street quite overshadowed those of the stock market. The growth of railway securities was not fairly under way until the opening of the fifth decade. Elderly men can recall the date when the New York Central existed only as a series of connecting links between Buffalo and Albany, under half-a-dozen different names of incorporation; and passenger cars were slowly and laboriously hoisted by chain power over the "divide" between the latter city and Schenectady. Since there were but few railways in the entire country, there were few opportunities for speculative dealings in their shares. These shares, too, were as a rule locally held, and were more frequently transferred by executors under court orders than by brokers on the stock exchange.

Prior to 1840 and 1845, however, the members of the stock exchange were not idle. Public stocks were largely dealt in. The United States government frequently issued bonds, and the prices of these bonds fluctuated sufficiently to afford tempting chances of profits. State bonds also were sold in Wall Street in larger amounts than to-day. About the year 1850 the sales of Missouri sixes and Ohio sixes frequently amounted to millions of dollars daily. During that uncertain epoch of finance when the United States Bank was both a financial and a political power, the shares of that institution were a favorite subject of speculative dealing. The shares of Delaware & Hudson, and of the original Erie Railway, the latter laboriously constructed over a rough, barren, and thinly settled portion of the State, partly by State funds, had also become actively exchangeable in the market.

During this period a relatively enormous quantity of banking capital had located itself in and near Wall Street. The Bank of New York existed before 1800, and later, although not long after, the Street witnessed the erection of buildings of a now obsolete, and yet at that time an attractive, style of architecture, devoted to the uses of the Manhattan Banking Company, the Bank of America, the Merchants, the Union, the Bank of Commerce, and others. Were it not that land in the banking district is so valuable, and that the need of upstair offices is so great, one might be tempted to regret the demolition of the graceful money temples occupied by three of these corporations on the north side of Wall Street. In each of them the entablature rested upon two fluted stone pillars with Doric capitals, in addition to the supports of the side walls. Between the steps and the doors of the temple extended a marble-paved court which often served as a convenient place of 'change for borrowers and lenders. Entering the doors you found yourself in a large, airy, dome-lighted room, the sides of which were occupied by the clerks of the institution, guarded by high barricades from the intrusive eyes and feet of the general public. At the rear were the offices of the president and cashier. Throughout the entire building there reigned a solemn and semi-religious silence. One may witness something like this to-day in the Wall-Street end of the U. S. Treasury Building, and only there.

Up to the epoch of the rise of railway building and railway-share speculation, the main aliment of Wall-Street banks was the profit derived from the discount of commercial paper and from loans upon government and State securities. But when railway shares and bonds, based upon lines of road which were constructed through the rich regions of the Union lying between the Atlantic and the Mississippi river, came upon the market in large amounts, affording ample security for investment and loans, the great banks of Wall Street were quick to appreciate the advantages of loans made upon such undoubted values, which were at all times convertible into cash on the stock exchange. In times of pressure, commercial paper is an inferior asset for a bank, all of whose obligations are payable on demand. At such times notes become practically unsalable, and are not always paid at maturity. A failure of one firm brings down others, and renewals are urgently required from banks just when they are least able to grant them. Salable securities are on such occasions an ark of safety, and, dating from the early fifties, this class of securities has always been the basis of a large amount of the loans of the banks of Wall Street and their near neighbors of the same class in lower Nassau Street and also Broadway.

With the immense outgrowth of business consequent upon the discovery of gold in California in 1849, and the construction of the great railways of the Middle West, such as the Michigan Southern, the Northern Indiana (now the Lake Shore), the Michigan Central, the Galena & Chicago, the Rock Island, and others of like importance and real value, the banks and banking houses of Wall Street, and the stock exchange, grew into most important factors in developing the prosperity of the country. Enterprises were originated by able men acting under corporate powers, and when these were brought before the committees of the stock exchange and duly approved and listed, capital instantly flowed forth from its reservoirs in answer to the securities thus offered. And it may safely be said that but for the combined machinery of the New York banks and the stock exchange the actual developments of twenty years would have dragged laboriously through an entire century.

Amid so much progress and activity, speculation was not idle. Those were the days of many of our greatest railway operators, daring, able, enthusiastic men, who had the rare gift of imparting confidence to their followers and the public, and realized the fable of King Midas, whose touch transmuted all things into gold. Their careers were those of conquest and accumulation, like that of Napoleon; and, like him, they underwent, with few exceptions, their retreats from Russia and their Waterloos. Of such were Jacob Little, Daniel Drew, Anthony Morse, and others, to whom now the motto of Junius applies: _Stat nominis umbra_. Merely the shadows of their names reach over to us from the horizons where their suns set so long ago.

There was an epoch too in the Wall Street of the past when gigantic and deeply considered combinations were set in motion, entitled "corners." As to corners, a word of explanation may not be amiss. There are always two factions in the stock market: the bulls, who want stocks to rise in price in order that they may sell out; and the bears, who want stocks to fall in price so that they can buy in. Contrary to the superficial belief of the public, the bulls are sellers and the bears are buyers. But in order to sell a commodity you must buy or borrow it; and in order to buy at a future date you must sell at a previous date; and thus the bull buys for the purpose of selling at a profit, and the bear sells something which he doesn't own for the purpose of buying it at a lower price. The bull therefore hopes to push prices up so that he can sell his purchase at a profit, and the bear hopes to drag prices down so that he can buy what he has sold, also at a profit.

Meanwhile, the bear has delivered the shares sold by him, and in order to deliver them, has borrowed them, and given security in money at its market price. Here he has placed himself in danger, because the owner of the shares may at any time tender him this money and demand the shares, which the bear may not be able to provide himself with, except at the price which the owners choose to set upon them.

Thus a person might be under contract to deliver the shares of some corporation which might be absolutely worthless, and yet these shares _might_ be so held that the holders could exact one thousand dollars a share. Given a railway with a share capital of ten millions, one person or knot of persons might own every certificate of its stock, and have it all loaned out to bears who had sold, borrowed, and delivered it. It is obvious that this person or club of persons could compel purchases of the shares which he or they alone possess, at whatever price he or they think proper to demand; and since such things can be done by skilful combinations under able generalship, they have been done, and were a favorite scheme during the eventful years between the sixties and the eighties. The corners in Harlem, Hudson, Erie and Northwest, in which Vanderbilt, Drew, and Gould achieved such success for themselves and their associates, have passed into history as a conspicuous portion of the great events of Wall Street. Their interest is chiefly historical, because of late years no comprehensive corners have been organized. Share capitals are so large that it is difficult for one man to control any one of them, and a divided corner is apt to fail. But in their day and generation they have offered brilliant illustrations of genius and strategic skill in financial warfare.

The system of selling short, however, which gave birth to the idea of creating corners, and which came into vogue in the fifties, has never ceased to be a leading factor on the stock exchange. It was the result of certain inflations of values which necessarily follow the construction of great enterprises. However high a valuation may be set upon any given commodity, there are always persons who expect a higher price. Early historical examples of this fact are the South-Sea shares and John Law's Mississippi shares, over which England and France respectively went crazy in the last century. The loftier the figures to which these shares mounted, the greater was the eagerness of the public to buy them. But at that period the art and mystery of selling short had not been brought into practice, and when the bubbles collapsed there were universal losers and no direct winners.

During the latter half of this century there have been periods in the history of Wall Street when the prices of railway and industrial shares have been forced enormously above the standard of actual values, and innumerable persons have parted with good money in exchange for mere phantoms of imaginary values. At such times the short sales of discernment, directing the X rays of clear-sighted criticism into the swollen and opaque mass of financial carrion that is exposed for sale in the market, are of the utmost benefit to the public. The bear is then a benefactor to the community, and when he pulls down and tears to pieces the rotten carcass of some gigantic humbug, strewing the highway with its remains, we cannot praise his work too highly.

II.

The present condition of Wall Street is one of lassitude and expectancy. The great banks have an abundance, perhaps a superabundance, of money, their own and their depositors, which they are only too glad to lend on solid and readily salable collateral at low rates of interest, approximating the prevalent rates in London and Paris, where similar accumulations of idle capital exist. A large part of this money is deposited with them by local banks in all parts of the country, which recognize New York City as the financial centre of the Union, and are content with interest of from one to two per cent upon the funds which they are unwilling or unable to use safely at home. The stock exchange is also in a condition of quietude. The public are neither buying nor selling stocks in any large amount.

This state of things is the resultant of well-known facts. Numerous over-capitalized and badly managed railways have gone into bankruptcy, and either are in the hands of receivers or have emerged from such guardianship, and are painfully toiling along on the road to prosperity on the twin crutches of assessments upon stockholders and the withholding of dividends from the same long-suffering and patient class.