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THE GOVERNMENT AND THE SUGAR TRUST
An unusual amount of space has been given in this issue of The Outlook to a single article—the account of the prosecution of the American Sugar Refining Company of New York by the United States Government. This powerful and wealthy corporation has profited by a kind of stealing which in its character can only be compared to pocket-picking. If respect may ever be paid to criminals, it is given only to those criminals who run great personal risk and show great personal courage and virility in the performance of their acts. The sneak-thief is not only clapped into jail when he is apprehended, but he is treated with contempt both by society and by the more manly type of lawbreakers whose code of professional etiquette has given rise to the somewhat anomalous proverb that there is "honor among thieves." It is true that no responsible officer of the American Sugar Refining Company of New York has been convicted of dishonesty; and that the responsible officers disclaim any personal responsibility for the criminal acts for which their company has been punished in court by a fine of $134,000, and compelled to restore to the Government ilgotten gains of a million dollars more; but no one can read the article by Mr. Howland entitled "The Case of the Seventeen Holes" without feeling that, though the executive officers of the convicted company have not been convicted of criminal acts, the evidence shows that they were at least guilty of gross neglect in administering the property intrusted to them by their stockholders. Under their direction of this property, subordinates were employed of so untrustworthy a character that their stealings from the Government by sneak-thief methods have resulted in a serious financial loss to the shareholders, and in a loss of corporate character to the company which it will take many years of scrupulous life to regain. As a man is known by the company he keeps, so is a corporation known by the character of the workmen and employees which it engages in its service, and we think the time is soon coming in this country, if it has not
already come, when a self-respecting man can no more afford to have his name connected with a cheating corporation as a director than he can afford to have it connected with a disreputable club or a disorderly house. This appears to us to be the individual moral which may justly be drawn from what deserves to become a celebrated case in the history of American corporation law on its criminal side.
There are in addition two political morals which may be pointed out. The first is the need of strong and vigorous supervision of corporations. There are those who say that the only function of government is to protect life and property; that commerce and manufactures and transportation are private matters to be carried on between private citizens; that when government enters into the domain of industry it becomes meddlesome and despotic; that business in America should be "let alone." The case of the Ameriican Sugar Refining Company shows how unreasonable such talk is. To be sure, this particular case has nothing directly to do with the regulation of the relations of a corporation to the public or the consumer, and is directly concerned with the relations of such a corporation to the Government itself. But it clearly brings to light the fact that, if the great corporations are "let alone," some of them do not hesitate to stoop to the most dishonorable practices. The conscience which will let a man pick the pockets of Uncle Sam is not likely to interfere when he picks the pockets of his fellow-citizens. For our part, we are glad that there is a Government at Washington centralized enough and skillful enough to make a great American industrial corporation disgorge one million dollars which had been added to its profits by fraud. As citizens we want the power of that centralized Government so maintained and so exercised that our pockets as consumers shall not also be picked.
The second moral is that the so-called "agitation" of the last seven years of questions involved in the relations of industrial corporations to the Government, to the public, and to the wage-earner has resulted in achievements of practical efficiency. There has been something more than talk; there have been convic
tions. We do not believe it is generally known how successful the Department of Justice of the United States Government has been in its prosecution of cases against lawbreaking corporations. The daily newspapers give so much space to a sensational case like that involved in the unsuccessful imposition of the twenty-nine million dollar fine of the Standard Oil Company that a large part of the newspaper-reading public get the impression that somehow or other the corporations are always successful in evading the consequences when they commit lawbreaking acts. An examination of the last Annual Report of the Attorney-General of the United States shows that the facts warrant an exactly contrary conclusion. We have before us a list of the successful prosecutions in the Southern District of New York during the two years from October 1, 1906, to January 1, 1909. This list is a formidable one. The American Sugar Refining Company, quite apart from the present case of cheating in its payment of customs duties, was convicted in five cases of accepting rebates, and paid fines under these convictions amounting to $110,000. These fines were paid by the defendants after the American Sugar Refining Company had strenuously resisted the Government in the first case, and had employed the most eminent counsel to represent them. Five great transportation corporations, including the New York Central, the Chicago, Rock Island and Pacific, the Chicago, Milwaukee and St. Paul, the Great Northern, and the Central Vermont Railway Companies, were convicted of giving rebates and were fined sums aggregating $188,-, 000. The Erie and the New York, New Haven and Hartford Railway Companies were convicted of breaking the Federal Safety Appliance Law and fined. We We name these cases out of many others as typical of what the Department of Justice is doing and doing successfully.
The rights of property constitute a very different thing from the right to use property for the injury of society, and we believe that the most intelligent American public opinion will uphold Congress and the Courts and the Executive in enforcing those laws and regulations which will prevent thieves and sneaks from
doing in the guise of incorporated associations what the common and universal practice of society does not permit them to do as individuals.
THE WHEAT CORNER
Two weeks ago the price of wheat in the Central West advanced to $1.50. year ago the price was about a dollar. The farmers are not benefited; for most of the wheat has left the farmers' hands. The millers are not benefited; they cannot get wheat; some of the mills are already shut down. The community is not benefited; for the bakers have in some cases been compelled to cut the size of their loaves. The chief persons benefited are some of the speculators, while others of the speculators are bankrupted. What has caused this extraordinary rise in the price of wheat? If it were due to the fact that there has come an extraordinary loss of supply, the result would have to be reckoned with other casualties which the skill of men cannot avert-such as earthquakes, cyclones, and droughtsbut this is not the case. Last year's crop
in the United States was 664,000,000 bushels; for the preceding five years the average was 656,000,000. There is evidently no great deficiency in the United States. Last year's world crop is estimated at 3,172,000,000; the average for the last five years, 3,248,000,000. The deficiency in the world crop and the increase in the world's demands are not sufficient to account for a rise in price of forty per cent. That rise is due to speculation.
What is speculation? And how does it differ from legitimate business?
A miller knows in the fall that next summer he will need a million bushels of wheat. He studies the wheat conditions throughout the world, forms the best judgment he can as to the probable supply and demand, the prospective market price, then sends out his agents to contract with the farmers to give him next summer the wheat he will need at the price he is willing to pay. This is a legitimate business transaction, advantageous to both miller and farmer. It is advantageous to the miller because he knows he has secured wheat to grind, and can arrange before
THE WHEAT CORNER
hand for the grinding of the wheat and the sale of the flour. It is advantageous to the farmer because he knows that he can sell his wheat at a fair price, and has to run only the risks of the weather, and the added risks of the market. The fact that the miller may miscalculate and may find that he has paid too much or too little for the wheat, and has accordingly made an unexpected profit or suffered an unexpected loss, does not make the transaction a speculation.
him, and thus he can largely determine
But this speculator is not alone. There
A broker, who has no mill and has no use for any wheat, makes a similar calculation; he sends out his agent, buys in the fall of the farmers at an agreed price to be paid on delivery the next summer, expecting to sell the wheat in turn to the millers. This may be a legitimate business transaction. To the farmer it affords the same advantage as the purchase direct by the miller. To the miller it may be an advantage to have the work of calculating prices and buying the wheat done by some one else. The value of the farmer and the miller to the community is perfectly clear. The value of the broker in such a transaction is somewhat more problematical. But in modern complicated business his service is often indispensable.
A speculator makes a somewhat similar investigation of probable supply and demand. He knows that the average crop of the United States for the last five years was 656,000,000 bushels; of North America, including Canada, 770,000,000 bushels. He knows that there is an increasing demand for wheat as a food product all over the world; that in sections of Ireland wheat is displacing potatoes; that in Scotland the oatmeal cake is giving place to wheat bread; that in Asia it is sharing the market with rice; that even in Russia the proportion of wheat bread to black bread has increased. He gets together some cash and more credit, and plans to buy up the whole wheat supply in the United States; if necessary the whole wheat supIf he can succeed in ply of America. doing this, he will have a monopoly of wheat in the United States, and can indefinitely increase the price. This is not quite so impossible as it may seem at first sight. He does not have to buy all the wheat; if he owns most of it, he can trust the owners of the rest not greatly to undersell
of May. The amount of the bet to be paid depends on the difference between the actual market price on the first of May and the stipulated dollar a bushel. If the reader asks, How can a bet between two dealers affect the price of wheat? the answer is, It cannot. But when hundreds of men are excitedly offer
ing to buy wheat to be delivered in thirty days, and other hundreds are as excitedly offering to sell wheat to be delivered in thirty days, and these offers to buy and
sell include millions of bushels of wheat
that have no existence, and the bets upon the price of wheat reach millions of dollars, the result is to create an artificial demand
and an equally artificial supply, which de
termine the market price of such wheat as is already stored in the warehouses.
This transaction is of no benefit to any one except the successful gambler. It does not benefit the farmers; for they are interested in having a steady price for their wheat, not a fluctuating price, which promises a great profit to-day and threatens a serious loss to-morrow, and
compels them to study the gambler's throttle the gambling.
market if they would get the benefit of the prices, a study for which they have neither the time nor the facility. It does not benefit the millers, who might judge what the prices of next season's wheat will be, if it were dependent on supply
The historic importance of Trinity Par
and demand as regulated by natural ish in the history of New York, its great causes, but cannot judge if it is made wealth, the distinction of many of its
dependent on the tricks and chances of a great gambling operation.
rectors, and the local pride in St. John's Chapel as an example of post-Colonial
Gambling with breadstuffs is a great architecture, have combined to attract
attention to the controversy which has
deal worse than gambling with cards or
dice; the gambling carried on in the arisen from the proposal of Trinity Parish
to consolidate the congregation of the
Produce Exchange than that carried on in
in the Casino at Monte Carlo. Private led to a sharp arraignment of some the gambling hells of New York City or chapel with another congregation, has
the housekeeper. There is not a reader of these lines in America but may have suffered some injury from the gamblers in the Chicago wheat-market; and the whole country looks on at the gigantic game,
and hundreds of thousands of fascinated spectators are demoralized by the spectacle. These gamblers are not robbers,
for they are not taking our property by violence, but they are taking it without our consent and without giving us any return for it. The Produce Exchange is better than Monte Carlo because legiti
mate business is done in the Produce Exchange, and no legitimate business is done at Monte Carlo. How to conserve that legitimate business and put an end to the illegitimate gambling is a difficult problem. The millers and the bakers ought to take up that problem. They are the ones who should understand it. If they do not take it up, they will have themselves to blame if it is taken up by reformers who do not understand it, and who may in consequence inflict serious injury on the legitimate business in their determination to
A NEW POLICY FOR
those immediately connected with them, many years past, and has recalled the and it demoralizes the few hundreds of severe criticism of the condition of some occasional onlookers. The private gambler of the tenement-house property owned by gets the money of his fellow-gamblers for Trinity and of its attitude toward reformagives his fellow-gambler in return a chance the Rev. Dr. William T. Manning, the nothing, and, if the game is honestly played, tory measures. During this controversy
rector of Trinity, has remained silent;
to get his own money for nothing.
the property of their wholly innocent fel- cism of the parish, chiefly, and wisely, by the public gamblers play their game with but he has now met the many-sided criti
a definition of the lines of action which he
low-citizens. They gamble with the wheatfields of the farm.
e flour-barrel of the proposes to follow in the administration the baker and of the great fund and the conduct of the
miller, the br
great work of Trinity in the future. Accepting the call of the parish only a year ago, the storm of criticism broke before he had the opportunity of outlining his policy. This he has now done. His statement covers practically every point at which criticism has been directed.
Trinity Parish, its rector declares, has adopted the policy of publicity; has already issued a full public statement of its financial affairs, showing not only its annual income and expenditure, but presenting a full report of its assets and liabilities, including income-producing property of every kind owned or controlled by the parish. This full statement of its affairs was part of the policy of the present rector when he took his position; and it is to be the permanent policy of the parish for the future. This is a long step in advance; for publicity is a prime element in the management of great trust funds. Trinity Parish has taken up, as a regular and definite part of its work, evangelistic services and street preaching, thus bringing a church of the most conservative traditions, committed by its history and conventions to stately services, into direct personal touch with even the most casual life of the city. The Rev. Mr. Wilkinson, who is well known as a street preacher, is to be the evangelist of Trinity. He will give his whole time to this work, endeavoring to reach men who need religious ministry of any kind in the city. He is also to conduct evangelistic services regularly in St. John's Chapel, an announcement doubly welcome as indicating that Trinity, long intrenched in a conservative position, is about to adopt an aggressive policy, and as assuring the continuance of services and the permanent preservation of St. John's Chapel.
The right of Trinity Parish to plan its work with reference to the highest efficiency in dealing with the entire city, and to readjust its methods from time to time, is beyond question; but the proposal to close St. John's, even though made in the interest of efficiency, was very unfortunate in the manner of its decision and announcement. The parishioners of St. John's ought to have been taken into the councils of the vestry. They constituted a considerable congregation; they were accustomed to worship in a building to
which they have become attached; they had the ties and sentiment which grow up in a permanent organization. Any change affecting their place of worship and their religious privileges ought to have been made only after full consultation with them. If Trinity had been dealing with Trinity Chapel, would it have proceeded as it proceeded with St. John's Chapel? This brings to light an attitude on the part of the churches which is fundamentally wrong; and this criticism applies not to Trinity only, but to nearly every church of every name. There is in the mind of nearly every church a certain distinction, often unconscious, between the well-to-do and the poor; a traditional feeling that the poor to whom a church ministers can be dealt with on a different basis from the well-to-do. This feeling explains to a considerable extent the attitude of the working people toward various churches. The time has come when the whole Church must change its attitude on this matter, and the unfortunate controversy between Trinity and its parishioners in St. John's Chapel is an object-lesson which all churches ought to study. That St. John's is to remain will give great satisfaction to a host of people who love the old building, and who value not only its religious but its architectural and historic interest.
Dr. Manning declares that the moral conditions of the tenements owned by Trinity are now unusually good; that the property consists largely of small, old-fashioned houses, none built by the parish, but reverting to it on the expiration of leases. These houses are occupied by two or more families. The condition of much of this property is good; the condition of none of it as bad as has been asserted, according to the rector; but there are to be important improvements; and the gist of the whole matter is put in a paragraph : "I say unhesitatingly that, as propertyowners, our responsibility for the condition of any dwelling-house property owned by the parish is the most vital and fundamental, and one of the most sacred of all the obligations resting upon us, and that we are bound to do everything in our power to meet this responsibility." The long leases under which much of the property has been held are now expiring, and