Nationalism

Democrats

Fortunately, the Democratic and the party is becoming nationalistic. This country would have been in a fearful plight during the European war, but for the Republican policy which undertook to diversify our domestic industries in order that we might not be wholly dependent upon European markets to take our raw materials and upon European mills and shops to supply our textiles and other necessary articles of manufacture. Already the European countries have bound themselves in trade alliances looking to the future. Doctrinaire free trade is wholly forgotten. Our trade policy, like our naval policy, will have to reckon with the facts of the world in which we live. Otherwise, we shall be isolated.

Need of a Policy Board for Advice

It seems to be the rule to work out our policies through special boards and advisory councils. We have frequently noted in these pages the tendency to bring broad experience to the Government service through these methods. Thus the Federal Reserve Board and the Federal Trade Commission are examples of the new method, and we are soon to have a Tariff Board on similar lines. The Department heads have so much to do, now that the Government business committed to them has become so enlarged, that they no longer have the time, as once they did, to perform the larger functions of a cabinet council. In a period like this, when foreign problems are so numerous and so acute, the Department heads are not the group to advise the President on such matters; neither are the tech

nical officials in the State Department. There is great need of a standing council of some kind-the personnel depending wholly upon the pleasure of the President-whose knowledge and experience should be at the disposal of the Government. The Democratic party has such men of wisdom as Mr. Olney, Judge Gray, and Mr. Judson Harmon, to mention only a few. The Republicans have at least three men who have served as Secretary of State-namely, Mr. John W. Foster, Mr. Elihu Root, and Mr. Robert Bacon (Mr. Knox is Senator-elect). Such a board

would not weaken the Constitutional authority of the President and the Senate, but would help to lift foreign policy above partisanship, and to give it consistency through successive Presidential terms.

Preparing

An illustration of the new methat Last od of utilizing the services of semi-official boards and councils was given by the plans of the recently constituted National Council of Defense, which became active last month. A railroad president in this Council heads a committee on transportation. A great engineer and manufacturer leads in the organization of industry for munition-making and other industrial needs. One of the greatest merchants of the world undertakes to aid the Government in obtaining supplies, such as food and clothing. The utilization of scientific research is a matter of vast importance, and finds suitable leadership in the person of a great expert in engineering and technical education. On February 13, the House passed a Naval bill providing a total of $369,000,000, by a vote of 353 to 23. The sum of a million dollars

was voted for purchase of basic aeroplane patents. The President was authorized to take over all private shipyards and munition plants in case of a "national emergency arising prior to March 1, 1918." Extraordinary efforts were entered upon last month to enlist recruits for the navy. It may prove easier to build and equip the ships than to find their crews. Especial inducements will be necessary.

New Crisis

Much apprehension was felt lest Belgium in the the American break with Germany should interrupt the work of Belgian relief. Mr. Herbert Hoover, the chief organizer of that relief work, had recently come to the United States to arouse fresh interest and secure larger funds. It is not generally known in the United States that the English and French Governments, recognizing the inestimable services rendered to them by Belgium, are very properly providing, through stated monthly advances, for the greater part of the work carried on by Mr. Hoover and his agents. Americans might well have given more, but their voluntary offerings have been on a generous scale.

Mr. Brand Whitlock will probably have had to leave Brussels, and in many ways the change of America's official attitude toward Germany will be unfortunate for the suffering Belgians, as it will be for a vast number of other interests in different parts of the world, including the belligerent capitals.

Results of

The only phase of the European U-Boat Cam- war that was prominent last paign month was the submarine campaign that we have been discussing. Our paragraphs, however, have been occupied more especially with the relationship of the United States to the new German policy. We have in preceding pages intimated our view that the campaign would be a failure. In the first half-month, somewhat more than a hundred vessels were sunk, nearly twothirds of them being British, almost a third being neutral, and a very few belonging to other belligerents. The tonnage of these vessels was somewhat in excess of 200,000. The Germans had declared that they would destroy 1,000,000 tons a month, and thus end the war in two or three months by creating a famine in England. In the middle of February, Berlin official statements expressed confidence, not so much on the ground of the ships actually destroyed, as upon that of the vessels kept in port through fear. But there were, on the other hand, significant indications that the zone of terror was being navigated by the English with diminishing risk, and that the plan of convoying merchant ships would be successful. Meanwhile, England has been studying and applying schemes of food economy, and planning for increased agricultural production at home.

The

There has been less general war Situation at news than during any previous Large month since August, 1914. Many minor actions on the fighting fronts have not affected the main lines. Both sides have been preparing on a prodigious scale for what is expected to be the final test of strength when spring opens. The European winter has been one of unusual severity. Military operations on a large scale have been impossible, on account of the weather conditions. The political reorganizations in European countries that were so much discussed a few weeks ago are now accepted as established facts. Mr. Lloyd George and his colleagues are strongly supported in England, where a tremendous popular campaign for subscriptions to the new war loans has

MR. HERBERT C. HOOVER

(Head of the Belgian Relief Commission who has been in the United States for some weeks securing further aid for the Belgian people)

been carried on with brilliant success. Mr. Charles Johnston writes for us this month on the situation in Russia. There was some hope that Austria, Bulgaria, and Turkey might avoid the breaking off of diplomatic relations with the United States. Our Ambassador, Mr. Penfield, was anxiously awaiting events at Vienna, while the newly arrived Austrian Ambassador, Count Tarnowski, was waiting at Washington to know whether to present his credentials or not. Ambassador Elkus, at Constantinople, was seeking to safeguard American teachers, missionaries, and merchants still in the Turkish Empire. kish Empire. The reply of the Allies to President Wilson, in which they had stated their intentions regarding Austria and Turkey, had stiffened Germany's allies for resistance, and increased the prospect of intense fighting in the months to come. citement in Greece had greatly abated, so far as we know. But a rigid censorship, enforced by French officers, has shut off Athenian news.

Ex

The President on World Peace

So stirring are the times in which we live, that some new sensation obscures the thing that held public attention only a few days before. Thus President Wilson's break with Germany, and Germany's new submarine policy, had caused everybody to forget that on January 22 the President had appeared before the Senate and had delivered what in many respects was the most remarkable utterance of his entire career. It was an expression of his views regarding permanent peace, and the principles that must underlie a stable future for the nations of mankind. It had grown out of his note of the 18th of December to the belligerents, asking them to state the things for which they were fighting and the terms upon which they would make peace. The Central Powers had replied that they were fighting for national existence and would give . details as soon as they could meet their adversaries in conference. The Entente group had replied that they were fighting for the security of nations small and great, and that their program must include the rehabilitation of Belgium, Serbia, and Rumania, the cession of Alsace-Lorraine to France, the acquisition of territories desired by Italy, the fulfillment of Russia's program for Poland, the granting of Constantinople to Russia, the reconstruction of Asiatic Turkey, Balkan rearrangements favorable to Serbia and Rumania while unfavorable to Bulgaria, and so on. It was subsequently stated that the British Empire intended to retain the German colonial possessions, the inference also being that Japan would retain Germany's port and hinterland in China. President

Wilson could not well address the European powers in a further note on the subject of peace terms; but he decided to give the world his views in the form of a speech to the Senate. His essential point was that the people of the United States must “add their authority and their power to the authority and force of other nations, to guarantee peace and justice throughout the world."

made the point that there must be development of popular rights, and that there must be an end of systems which "hand peoples about from sovereignty to sovereignty as if they were property." He held, next, that "every great people" so far as possible, should have "a direct outlet to the great highways of the sea." Following this was his proposal that there must be "limitation of armaments and coöperation in keeping the seas at once free and safe." Finally, he proposed an extension of the principles of the Monroe Doctrine to the entire world. By this he meant that "no nation should seek to extend its policy over any other nation or people." The whole world was stirred by this great address. Many European statesmen endorsed its doctrines. There followed an important debate in the Senate, in which several leading Senators, while recognizing the ideal value of the President's aims, did not believe that the speech was sound from the standpoint of an immediate program of foreign policy for the United States. When the great peace conference sits, however, the President's plea for democracy, the giving up of balance-of-power alliances, and international coöperation for peace and safety, will undoubtedly have influence in the decision of more than one issue affecting the fate of some country or province.

Carranza

First Chief Carranza has pro

and the jected himself into the field of Germans world diplomacy by a note suggesting that the United States and other neutral powers join in prohibiting the export of foodstuffs and munitions to the warring European countries. Reports of a concentration of German subjects and interests in Mexico led many Americans to interpret this Carranza manifesto as a distinctly pro-German utterance, possibly "inspired" at Berlin. Its arguments, at any rate, seemed distinctly Teutonic. There have been persistent rumors that in the event of war between the United States and Germany Mexico would be a convenient base of influence for the Central Powers. It is natural that army men and others who have watched the Mexican situation closely during the past two or three years should be concerned at these developments, but thus far the general public has no knowledge of any facts that would justify the fears expressed in pro-Ally circles. There was some stir in England over the suggestion that Carranza would try to cut off the oil supply from Tampico.

Pershing Quits

Early last month the troops composing the Pershing expediMexico tion to Mexico recrossed the international boundary at Columbus, N. M., the point from which they had started in pursuit of Villa, the raider, ten months before. That bandit chieftain is far more powerful to-day than he was ten months ago, but his activities for many weeks have expended themselves on his own afflicted land and the American border no longer suffers from his raids. Although seriously hampered, especially by inability to use the railroads of the country, the expedition was conducted, from first to last, in a way that reflected credit on American arms. The force of over 10,000 seasoned men would form the nucleus of a highly efficient army of defense in time of need. Meanwhile, the Carranza Constitutionalists are proceeding with their program of constitutional government. The Congress elected last month will meet in extraordinary session on April 15, and before that date a Presidential election will have been held. Ambassador Fletcher has taken up his residence in Mexico City and Ignacio Bonillas, a member of the Mexican-American Joint Commission, has been named as Mexico's Ambassador to the United States.

Huge Earnings of the Steel

On January 30 the financial

market was surprised, even after Corporation various optimistic advance estimates, by the report of the United States Steel Corporation's earnings for the last quarter of 1916. The gain for the three months was $106,000,000-more by $20,000,by $20,000,000 than the highest previous record for three months, which had been made in the preceding quarter. The earnings for the whole year were $333,000,000, an increase of more than $200,000,000 over the year before, while in 1914 the entire year's net income was only $71,000,000. The surplus for the year 1916 applicable to dividends on the common stock of the Corporation was equal to no less than 48 per cent. on the outstanding shares. More marvelous still, the earnings in the last months of the year were at a rate which, if maintained, would show over 100 per cent. on the common stock. These figures are printed here because they furnish the most dramatic illustration of the effect on the basic industry of the United States of the prosperity started up by war orders. They are made more dramatic by a comparison with the great steel company's condition as late as October, 1914, when, in

consequence of meager earnings, a dividend on the common stock was suspended altogether. The United States Steel Corporation has not at all entered into the business of war orders proper. In other words, it does not manufacture shells and other munitions, though it is true that it produces the steel for vast quantities of munition orders that are being filled by other companies.

Business Con

of War Talk

Many authorities in the iron and

tinues in Spite steel industry had thought the peak of high prices and earnings had been reached last year. They are now inclined to revise their opinion, for steel prices have continued to climb, and in the middle of February were higher than they had been for more than a generation. Copper, too, was at the highest price in fortyfive years. Business in general seemed to go on at the full speed it had reached in 1916, although the nation was reading every day in the papers that war with Germany was probably only a matter of hours or days. This is in curious contrast with the summer and autumn of 1914, when the fact of war thousands of miles away, with no thought whatsoever that we would be touched by it, was sufficient to paralyze the business of the United States and throw the Stock Exchange into such a panic that it had to be closed for the longest period in its history.

Railway Con

On February 15 representatives

gestion and of thirty of the most important Labor Troubles railroads of the country met at Washington and agreed to declare an embargo on all shipments for export from eastern points. This measure was made necessary by the disastrous congestion of freight traffic following on the submarine blockade and aided by the cold weather and the car shortage. The officers of the railroads estimated that more than thirty thousand cars of freight were tied up in the yards at Chicago and west of that point, and some of the freight had been held for more than a month. The failure of many trans-Atlantic liners to sail in the face of the submarine peril had made a chaotic jam of unloaded cars at Atlantic tidewater terminals, and the radical embargo measure was considered necessary in order to make sure that food products and coal could be supplied to eastern cities. Earlier in the month an ominous strike order had been voted, on certain technical grievances, by the Chicago switchmen of eighteen different railroads, the yard men