TWO HISTORICAL NOVELS: THE EPIC As ROMANCE OF FLANDERS S a setting for his historical novel, "Java Head," Joseph Hergesheimer has taken the town of Old Salem at the beginning of the great clippership era of the American merchant marine. The narrative draws us into that romantic period of mercantile development, when cargoes from the East Indies, China, and Japan were piled on the docks of our Eastern seaboard ports. In New England homesteads, one may still see the treasure trove of these voyages-furniture of Chinese teak, ivories and jades mingling with the delicate English Chippendales. The novelist introduces the exotic and the Oriental into Salem, by letting us see the arrival at the port of Salem, of Gerrit Ammiden, a Salem shipmaster who has returned from China with Taou Yuen, a Manchu wife, he has married out of an impulse of chivalry to save her life. The story seems at times no more than a frame for this exquisite aristocratic creature with her painted slightly flattened oval face, her gleaming jades, and "enigmatic black eyes under delicately arched brows." Through the vehicle of her personality, the strange, inscrutable life of the East is pitted against the life of Salem with its equally inscrutable standards. In the end Salem triumphs. Taou Youen escapes, gravely, as becomes a Manchu lady of high degree, and the shipmaster takes up his old life. Mr. Hergesheimer is a Pennsylvanian, but this novel is as truly of New England as the vignettes of Mary Wilkins Freeman, the novels of Alice Brown, and the poetry of Robert Frost. For penetrating psychology, beauty of color, vivid characterization, and careful workmanship, it is not only the best work Mr. Hergesheimer has done, but one deserving high praise in a select company of American fiction. It has the power to immerse the reader in strange, distant, and almost forgotten currents of life. Donald McElroy," a romantic novel by W. W. Caldwell, weaves into its structure incidents of the American Revolution and pictures the part played by the Scotch Irish settlers in this country, not only in the actual conflict, but in the upbuilding of the commonwealth. It is not a large canvas, but wisely so; the intensive working out of the characterization gives a power to the narrative that could not have obtained if a more pretentious novel had been attempted. The author writes with deep insight of the enmity that has existed from the early settlement of the colonies, between the Scotch Irish Protestants and the Irish Catholics. This religious difference gives intensity to the main romance of the book, the wooing of Ellen O'Neil, a devoted Catholic, by her cousin, Donald McElroy, a Scotch Irish Presbyterian. While the story is valuable for its perspective on our early national history, it succeeds as a simple and enthralling love story, one that for its unworldliness and spiritual sensitiveness will remind the reader ONE OF DELSTANCHE'S DRAWINGS FOR of Lorna Doone. The characterization of the two lovers, Donald and Ellen, is a distinct achievement, the more quickening for its complete simplicity. The first English translation of Charles de Coster's famous story of Flanders, "The Legend of Tyl Ulenspiegel," has been rendered from the original French by Geoffry Whitworth. Frankly Rabelaisian in its style, it is the epic romance of the Flemish race during the Sixteenth Century, when Belgium suffered under the yoke of Philip of Spain. Tyl is a hero of the people, the upspringing spirit of Democracy that can never die in the heart of man. Nele, the maiden beloved by Tyl, is "Mother Flanders." Caes and Soetkin, his father and mother, are the fatherhood and motherhood of Belgium. Lamme Goedzak is the great belly of the land, and the tragic Kathelene, an enigmatic figure, seems to typify the madness and suffering of Flanders under the oppression of the Spanish Inquisition. The author lived and died (1879) in obscurity. It was not until a decade after his death, that he was accorded recognition, a monument raised in his honor in Brussels, and an oration in his praise delivered by Camille Lemonnier. This edition is somewhat condensed owing to the necessities of war printing, but the continuity of incident has been maintained. The full-page illustrations are from wood cuts by Albert Delstanche. FINANCIAL NEWS I.-CREDIT POSITION OF THE TRACTION ACROSS the financial skies, as the news year dawned, there were some ominous clouds. Investors watched them develop with some forebodings. There was the cloud of desire for government ownership of railroads. This may break and the sunshine of reason and wisdom come through after some investigation of just what a twelvemonths' period of federal operation has produced. The blackest cloud of all is that enveloping the public utilities. On New Year's Eve a receivership for the Brooklyn Rapid Transit system, the main artery of urban and suburban traffic in a large portion of Greater New York, was sought and obtained by creditors. A few days before dividends had been passed on the stock of the Chicago City Railways, a corporation with a twenty-five-year-old dividend record in which payments as high as 24 per cent., and for a long period from 10 to 8 per cent., had been made. Simultaneously the stock of the Twin City Rapid Transit Company, of St. Paul and Minneapolis, sold at $32 a share, or just one-third of its price in 1917. This had long been regarded as one of the soundest traction properties in the country and had sold at a premium of from $10 to $15 over par for many years. When January first came a number of traction and light-andpower concerns in different portions of the United States found themselves without funds to meet the interest due on bonds. The Public's Attitude It has been estimated that the shrinkage of the principal of the bond and share capital and of the notes of the various traction companies in Greater New York, during 1918, was approximately $250,000,000. This meant that the equities in many stocks had been almost entirely erased, that junior bonds had fallen to the price level of lowgrade stocks, that first-mortgage bonds and notes had shrunk in market value to a basis normally represented by stocks paying moderate dividends. lic, or it might better be termed, political, sentiment, the public utilities, more specifically the "tractions," are to-day about where the steam carriers were in December, 1917. There is a state of mind toward them that reckons not with what they have to endure from the high costs of wages and of materials, but with what the public may have had to swallow in other days in the form of unjust franchises, stock "watering," the political dishonesty connected with "deals" in favor of the company and to the injury of the traveling public. It is significant that very little opposition has been made to the readjustment of rates for gas or electric light or power to the new expense accounts. But, where municipalities undertake to assist the street-car line by raising fares, there is apt to be the sequel of public indignation. In Denver recently it took the form of refusal to pay the new tariff and some damage to property. Then there is the obvious intent of certain municipalities to depreciate traction values by refusing higher fares and so bring the companies to a credit condition where they will be willing to sell out to the city at a very low price. This is a factor in the situation that must be recognized and reckoned with. There are signs of it in New York. There are plain suggestions of it in Chicago and in St. Paul. Managers' Failure to Get on with the Public On the other hand traction managers, even of this generation, have not well enough understood their relationship to the public. It has been a notorious fact that service on the Brooklyn Rapid Transit lines was inadequate. This was before the stock of the company ceased to pay dividends. Equipment was poor and insufficient for a growing, crowding population. Patrons who feel that they have been treated unfairly, and then have been witness to an accident that cost scores of lives, sacrificed to incompetence, are not in a mood to lift their voices for higher From the standpoint of credit and of pub fares, even though they know that what they pay five cents for costs more than six cents to produce. An understanding of the crowd psychology has not been one of the major accomplishments of the traction administrations of Greater New York. There is no service in the world that can compare with that of the Interborough Rapid Transit subway lines in Manhattan, but it has been lack of tact, rather than lack of cars and standing room that has brought public criticism of operations. The best way to resist both government ownership of railroads and public administration of city tractions is to go a considerable way along with the public thought on both questions and all the while provide service and meet public complaints with a certain amount of good nature. The Demand for Higher Fares Ex-President Taft recognized the animosity of the public toward the public utility, with its "high visibility," in an address made before the Investment Bankers' Association at Atlantic City in December. As chairman of the wage adjustment board he had observed the justice of higher fares in compensation for higher rates of pay. So have other representatives of the Government. As long ago as last spring Comptroller of the Currency Williams advocated a plan that would stabilize the credit of the public utilities of this country. Not all of this suggestion and recommendation has fallen on barren ground. Nearly 350 companies have been protected from financial trouble by higher fares. These have been allowed in a number of cities of the first class. A striking example is that of Boston, whose surface, elevated and subway lines have recently been placed in the hands of a board of trustees. The law regulating the operation of these lines provides a guaranteed return on the capital invested. If the revenue from fares does not cover this guarantee the deficit must be raised by taxation. Formerly the fare was 5 cents, as in Greater New York. Now it is 8 cents. In a considerable portion of eastern Massachusetts the Public Service Commission has granted a cash fare of 10 cents. It was found that the recommended advance from 5 to 7 cents was not sufficient to absorb the higher war costs. On the same day that the Board of Estimate of New York refused to consider the proposition of an 8-cent fare for the subway lines. of that city and annulment of the transfer on the surface roads there were a number of grants of higher fare to suburban roads in territory not many hundreds of miles distant from New York. In New Jersey, after a long fight, the Public Service Corporation, succeeded in obtaining a 7-cent flat fare, with an additional 1 cent charge for a transfer, but this did not save the dividend on the stock of the company, which had to be reduced from 8 per cent to 4 per cent. It is estimated that the par value of the electric railways of New York State, including New York City, is $1,250,000,000. This is about one-fifth of the total of the entire country. The investment in the bonds and guaranteed stock of these railways is held by institutions, estates and many small investors. For years the guaranteed 7-per cent stock of the Manhattan Elevated has been considered as a prime, or "gilt-edged" issue. It sold at one time at $175 a share or a yield basis of 4 per cent. Since the critical situation has developed in the New York traction situation it has declined under $80 a share. A great credit structure is involved in the early decisions of the New York authorities as to compensation adequate for payment of fixed charges and fair dividends. Fortunately the rest of the country has been broader-minded on this question than either the municipal or State authorities and has acted independently of them in a great many instances. Graduated Fares Based on Distance One objection that has been raised to the grant of higher traction fares now is that these will give the operating companies an undue percentage of profit when normal conditions return in wages and in costs of materials. Before the war was declared by this country against Germany the advance in costs had begun to eat into the vitals of all but the strongest of the traction lines. The tendency to allow long hauls for the five-cent fare had worked a great strain on credit. There had not been much reason shown in developing a graduated fare in which compensation was based on the distance a passenger, had to be carried. A man does not ride from New York to Springfield, Mass., say, on a steam road, for the same fare as he pays to ride from New York to Poughkeepsie. But, in New York City, he pays no less to ride from 23d to 34th street or half a mile than he does to ride from Brooklyn to Bronx Park, or nearly seventeen miles. There is duplication of this system all over the United States, but not on such a scale as in New York, where the socalled "nickel fetish" has been carried to the extreme. Operating Costs Will Continue High Quick readjustment of wages and prices of materials is not expected by those who have given the subject closest attention. It is doubtful if in either item there is within this generation a return to the former units of measurement. Certainly wages are not likely to return to the old basis. There was no class of labor in the country which received such an inadequate wage in pre-war times as that employed on the traction lines throughout the country. This is officially This is officially recognized. Greater efficiency may be developed, though not great enough efficiency to offset the gross increase in pay. It is not just, therefore, to base rates on the presumption that former operating costs will be in effect within a few months. The question of public-utility compensation must be settled very soon. In the March quarter of 1919 the maturing obligations of utilities are about $85,000,000 and in the June quarter over $60,000,000. For the entire year they reach $262,000,000. Interstate Commerce Commissioner Wolley, in an argument before the Senate Interstate Commerce Committee in January, for a five year extension of government rail control, mentioned these maturities as likely to be affected by unfavorable railroad credit in the event that the carriers were thrown back on their own financial resources. Legislative Action Sought The subject of supervision of public utilities is probably receiving more attention among legislative bodies than ever before. The newly elected Governor of New York State gave it much consideration in his annual message and Governor Holcomb of Connecticut, at the beginning of his third term, asked for the appointment of a special commission to inquire into the electric situation in his State. He pointed out that railways are being operated at a loss, with conditions threatening that may lead to heavy investment depreciation and suspension of service. The most difficult fact to establish in the mind of the local law-maker who refuses to grant living rates is that while he may bring about receivership by his policy he will also create conditions of travel that will be unbearable to the public. Unfortunately for security holders, financial disasters seem to be necessary before realization of the unfair conditions in the background of many of these credit collapses is shown by regulating bodies. II. INVESTORS' QUERIES AND ANSWERS CANADIAN PACIFIC BONDS Do you consider the 6 per cent. debenture bonds of the Canadian Pacific Railroad, due 1924, a safe invest ment. We have always looked upon these bonds as a safe investment and have not hesitated to recommend them to people whose circumstances demand care and conservation in the employment of their surplus funds. ADVICE ON SPECIAL VENTURES I occasionally have money that I am willing to use in speculative ventures provided there is an honest chance of making the profit corresponding to the risk taken. I must confess, however, that various moderate sums I have employed under what I believed to be were the above conditions in the past two years have mostly been lost. In these cases, however, later developments have shown that there never was any honest chance. sequently attribute my failures in the past to lack of sufficient information. I wonder if you could tell me of any ventures having an honest chance of turning out well and producing large profit. I con We are entirely unable to be of service in the way you suggest. We have never felt that we could undertake to assume the heavy responsibility involved in selecting essentially speculative securities for our readers or in any way to give specific advice about the purchase or sale of such securities. We are always glad to analyze specu lative securities as well as investment securities and to report frankly whatever conclusions we are able to form, but further than that we cannot go. ABOUT FILING OWNERSHIP Certificates wiTH BOND COUPONS Can you tell me where I can get a booklet giving information as to the proper certificate form to use in cashing bond coupons. I have had considerable trouble in this respect lately. Does a person paying the federal income tax annually use a different form of certificate than one who does not pay the tax. We do not know of any booklet that you would find of service in connection with the difficulties you have been having in cashing coupons from your bonds. In order to determine the proper form of ownership certificate to file with coupons it is necessary to know whether the companies issuing the bonds do or do not covenant to pay the normal income tax. There are records giving the status of most bonds in this respect. These records your local banker ought to have. If he does not and you will send us a list of your bond holdings we shall be glad to give you proper instruction. Determination of the proper certificate to file does not in any way depend upon whether the bond holder is or is not liable to the payment of the income tax. EDITED BY ALBERT SHAW CONTENTS FOR MARCH, 1919 Milan's Tribute to President Wilson Frontispiece The Navy's New Task.... 256 The Progress of the World BY HON. JOSEPHUS DANIELS TERMS:-Issued monthly, 35 cents a number, $4.00 a year in advance in the United States, Porto Rico, Hawaii, Cuba, Canada, Mexico, and the Philippines. Elsewhere $5.00. Entered at New York Post Office as second-class matter. Entered as second-class matter at the Post-office Department, Ottawa, Canada. Subscribers may remit to us by post-office or express money orders, or by bank checks, drafts, or registered letters. Money in letters is sent at sender's risk. Renew as early as possible in order to avoid a break in the receipt of the numbers. Bookdealers, Postmasters and Newsdealers receive subscriptions. Mar.-1 THE REVIEW OF REVIEWS CO., 30 Irving Place, New York 225 |