of exchange, balances between nations are, in the final analysis, discouraged by the flow of commodities and manufactures. Therefore one of two things must happen-either we must advance Europe the means with which to continue her purchases here, or she will be forced to liquidate as rapidly as possible her debt to us through the single medium now available, namely, the sale to us of the necessities and luxuries which by reason of the tariff and lower costs she can place here cheaper than we can produce them. The most likely course is that the next year or two will witness large emissions here of foreign securities that will compete for a rather limited supply of capital, made so by reason of the next government loan, the unpaid balances on previous loans that are still being carried by the banks or the Federal Reserve institutions, and high income-taxes. Improvement in the Railroad Outlook

All of which leads us to the very foundation of national economic and financial vigor. This is the railroad structure. The carriers

are the largest single peace-time customers of the mills and factories, and their purchases necessarily cannot be large if they are completely divested of their credit. When the Government took over the railroads they had lived off the final ounce of fat accumulated in the days of profitable business. Hence their present distressed condition-a condition that would mean prostration in every direction if they were returned at once to their private owners. But here is where another hopeful sign is to be seen. The Railroad Director is on record to the effect that relinquishment of control should not occur until the rails are adequately prepared for it. What is more, railroad executives who have been called to Washington for consultation are beginning to note beneath the surface an attitude of sympathy that contrasts most strikingly with that of the past. There seems to be a sincere effort to treat the subject intelligently and constructively. A half-dozen plans are under consideration, from which one should develop that will be satisfactory to all parties.

STOCK QUOTATIONS EXPLAINED

I am enclosing several clippings from United States and foreign newspapers showing the usual tables of security quotations and would thank you to explain briefly the meaning of the various headings of these clippings.

In the clipping headed "New York Stock Sales," the columns headed "High," "Low" and "Close" record the highest, lowest and closing prices at which actual transactions were made on the New York Stock Exchange for the day in question. The column headed "Net Change" records the differences between the closing prices of the day in question and the closing prices of the previous day. We might add that the actual trading period on the New York Stock Exchange is between the hours of ten o'clock A. M. and three o'clock P. M., except on Saturday, when it is between the hours of ten o'clock A. M. and twelve o'clock noon. Prices on the New York Stock Exchange, moreover, represent dollars per share. To know their full significance, therefore, it is necessary for one to know the par values of the stocks that are quoted. Some issues are made without any par value at all. In the cases of others, par values range all the way from $1 per share to $100 a share. Take, for example, some of the issues listed in the enclosed clipping to which we are referring Alaska Gold Mining and Alaska Juneau stocks quoted, respectively, at 134 and 1%, have a par value of $10 per share; American Zinc & Lead, quoted at 13%, has a par value of $25 per share; Cerro De Pasco Copper, quoted at 311⁄2, has no par value. Most of the other stocks have a par value of $100 per share.

Quotations in the other two clippings from American newspapers also represent dollars per share. In clipping headed "Local Bid and Asked," the quotations are what are called "Nominal Quotations," which means that they do not represent prices at which actual transactions were made. The column headed "Bid" records the prices which buyers are prepared to pay, and the column headed "Ask" records the prices which sellers are willing to take. These quotations as you will note, are of the same character as those indicated in pounds, shillings and pence in the records of the Brisbane market, shown on still another one of your clippings.

In the market for stocks where the bid and asked prices are recorded, it is not always neces sary for buyers to pay all that the sellers ask. Bargaining enters into these transactions, and depending upon the strength of the supply or the demand for the stocks, transactions are made accordingly. For example, take a stock like Buffalo & Susquehanna preferred, quoted in the clippings at 59 bid, 61 asked: It is altogether probable that a buyer under normal conditions would find it possible to bargain with the seller for the stock at an average price of 60. If there was a considerable amount of the stock for sale it might even happen that the buyer would be able to get what he wanted by bidding just a little over 59. That in a rough way is how the market operates. It is possible nowadays for one to buy even a single share of standard stocks, although the unit of transactions on the New York Stock Exchange, where the basic prices are established, is a hundred shares.

VOL. LIX

Our Great

Although welcome troop ships Armies Still are arriving almost every day in Europe with young Americans eager to be at home after their part in the World War, it must be remembered that we are still represented abroad by more than a million and a half of our men in army uniform. Many topics are occupying the skilful headline writers and are agitating the minds of those people to whom all public matters appear in a controversial aspect. But it is well to keep in mind the central fact, and to bring the various topics of the day into some relationship to the situation as a whole.

The Bills Have to be

Paid

For example, the United States Treasury is occupied with collecting the largest tax bill ever imposed upon any nation. The mechanism established under Mr. Roper, as the supreme tax-gatherer of all historic time, is to transfer twenty million dollars a day for a year to come from current production to the public purse. The country is about to subscribe to another colossal loan, and the new Secretary of the Treasury, Mr. Glass, is doing everything in his power to awaken a spirit of confidence throughout the American business community, while also invoking the spirit of thanksgiving that will express itself anew, in the immediate future, with the actual signing of the peace treaty. These tax and loan operations, which, taken together, involve the absorption from private resources of $12,000,000,000, are to remind us that the burdens of war do not cease when the guns stop firing. The United States, Great Britain, France, and Italy are still on a war basis. All of these countries are now spending more per month for military purposes than they were in the earlier periods of actual war. After another year the financial burdens ought to show rapid reduction; but immense public debts will remain, and it will

No. 4

require an appreciable part of the productive energy of the world, for a generation to come, to amortize the accumulated costs of this desperate contest, that has compelled America to intervene in Europe in order to have security at home.

The Value of Organization

War taxes for a long time to come will warn us of the perils that beset a disorganized world. We have forty-eight States in our Union, not one of which is tempted to encroach upon the territory of one of the others. The only recent controversy of any importance between our States was a legacy of war time, and it has been settled after the lapse of fifty years. West Virginia was held by the North, and was detached from the seceded part of Virginia early in the war period. It remained a separate State, and there subsequently arose the question in what proportion West Virginia ought to share that pre-war indebted ness for which the State in its original extent was justly responsible. The Supreme Court of the United States imposes upon West Virginia a somewhat heavier burden than the people of that State have thought to be equitable, but it will be borne loyally, and there will be no need of threat to put force behind the mandate of the court. A due regard for our institutions, a proper sense of the value of law and order, and a respect for the opinion of forty-seven sister States will all have dictated to West Virginia the one possible course of proceeding. Whether West Virginia is to pay some twelve million dollars, or nothing at all, is a small matter to the quiet and peaceable citizen of that State as compared with the cost of denying the claim and subjecting the issue to the test of force. The citizen of West Virginia knows to-day that what he must pay as a result of this Supreme Court decision is a mere bagatelle in comparison with what he must pay as

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a consequence of the lack of a supreme court for the settlement of disputes in Europe. If The Hague Tribunal had possessed a mere fraction of the standing and authority of our Supreme Court, the quarrel between Austria and Serbia would not have precipitated a war that will burden every American taxpayer for a generation.

What Union

America

The creation of the federal has Meant to Union, with its working methods for maintaining harmony among the States, was a movement vital to the interests of the common American citizen. This federalizing project that has worked so well for us in the United States was bitterly opposed when under debate previous to its adoption by many public men and politicians who were so-called "leaders" in their respective States. They were fierce in their opposition to the curtailments of State sovereignty that were called for in the draft of the federal Constitution. But the plain people were wiser than these leaders. They had been through a good many years of war, and they wanted peace and security. They knew that a strong Union would keep the peace as among the big States and little States of the association itself, while also providing a wise plan for the bringing in at later times, in groups or singly, of the new States that were to grow up with the settling of the Western lands. They knew, furthermore, that the Union, while affording the best means of keeping peace here in America, was the only agency through which we could deal with Europe and the rest of the world.

Security the

Demand

Obviously, then, in the warGreat stricken periods of modern history, the common man has wanted security above all other public blessings, and has wished to have those political powers which we call "sovereignty" so distributed as to contribute most to the freedom and safety which were the supreme desideratum. The people themselves were the final authority; and if they took some power away from the States and centered it in a federal government, they were not losing anything of their own, but were merely improving the agencies through which popular government could secure the objects that it sought. The ordinary citizen was exercising much of his actual power of self-government through the authority that he conferred upon his town, village, city, or county. He chose to give authority to his State government to keep the

local sub-divisions operating peaceably within their jurisdictions under general rules. He found it beneficial to give control of foreign affairs to a higher federal government. And since all these agencies were his own-set up for purposes of the general security and wellbeing-the plain citizen was giving up nothing of his inherent political power, but was exercising it all for his own best interests.

An Example to be Followed

In creating this permanent association of States for harmony and security, we were providing the world with an example that in some measure it was bound to imitate sooner or later. The causes and consequences of our Civil War merely illustrated the value and need of the kind of union that Washington, Hamilton, and Madison advocated, and that Marshall, Andrew Jackson, Webster, Clay-and afterwards Lincoln-tried to develop and maintain. There were no questions at issue which could not have been worked out better by peaceable means, with the unwavering acceptance of the Union that had been formed, than by the appeal to force. Ours was a bitter and terrible experience and the lesson has sunk deep. The ordinary citizen knows the value of the Union for his best welfare, and he makes whatever sacrifices may be called for in the spirit of loyalty. This plain citizen has now made sacrifices beyond calculation; and he is not likely to forget that the only fitting compensation lies in some arrangement to prevent future outbreaks that would involve America.