Gold need not take the form of coin, which merely loses weight by wear in circulation. It can better be stored up in the form of bricks ready for use in the arts. Gold will then be called for only as needed in the arts (a demand steadily increasing in opulent countries and which very likely will more than maintain in the future its value relative to other commodities) or to meet balances in foreign trade. And even for that purpose, United States tax free convertible 2 per cent interest bonds would probably be preferred to avoid the cost and risk of gold transportation.

It is hardly necessary to point out the well-known fact that the exchange value of gold fluctuates like that of any other commodity and that the gold dollar is not and can not be a permanent, constant measure of value, like pounds or yards or horsepower. That belief is as fallacious as the belief in the perpetuum mobile, which will never die out. It seems that it can not often enough be repeated that there can not be in the nature of things such a constant measure of value because the values of all commodities and of all things for human use are only relative, each depending upon supply and demand which differs from day to day. But gold being imperishable in substance, small in bulk for high value and universally in demand is the most convenient single denominator of value, by which all other values can be expressed at any one given time for all places on earth. This distinction of single denominator and at any one given time is very important, but is constantly ignored by the mass of the people and even by economists. If there be more than one denominator (like silver), the result is confusion, intrigue, and injustice.

It may now readily be seen that house building, railroad construction, and other work (not ordered for war purposes at inflated prices and paid for by the Government), will not be undertaken when wages for labor and interest on money are both high at the same time. Yet they would readily be undertaken in spite of high wages if money could be obtained at low rates of interest.

Business ventures promising a profit of 5 to 6 per cent on the investment are plentiful and would become attractive with money at 3 per cent; but with money at 6 per cent and higher in some parts of the country, as now, the undertaking would mean only the getting of a new dollar for an old one. No one will employ labor on that basis. Workmen in many trades go idle, yet houses and many things they can create are in great demand. It is obvious that if all labor can be fully and continually employed at good wages (and that should be the aim of statesmen), the wealth of the country must grow very much faster than otherwise. That prosperous condition can be induced through a plentiful supply of good money at low rates of interest. Government action as indicated can alone bring this about. The new price level caused by the war is then of no consequence, except to those with fixed incomes. For these adjustment always comes later, but not without suffering and sacrifice.

May I be permitted for further illustration to mention the financing of the Panama Canal. It was built with the proceeds of 2 per cent tax-free Government bonds, which carry with them the privilege that banks may use them up to 90 per cent as security for their

own bank notes on which they charge their customers 6 per cent. It should be obvious that an I OU (note) directly issued by the United States Government, the most stable Government and wealthiest in the world, with unlimited power of taxation, must be at least equal if not superior in point of security to a note of a subordinate bank which first buys credit from the United States Government as a basis for its own note issue. And yet it was made to appear by a process of specious reasoning that the services of subordinate banks are necessary for such note issues and are worth the extra 4 per cent interest over the 2 per cent of the Government bonds. It is a case of the Government acting as a wholesaler and the banks as retailers of credit, one taking his toll from the taxpayer and the other from the borrowing public.

No good reason can be given why these Government bonds should not have been made convertible at par directly into United States currency at the pleasure of the bondholder. The Government would save the 2 per cent interest during the time the currency for the bond is in circulation. The bearer would get, whenever he wants it, working capital at 2 per cent, which is the interest he loses on the bond when he exchanges it for currency.

Just when the demands of the whole world call upon us for expansion, when every acre of land should be planted, when every shop and every workman should be fully employed and producing. when housing is in great demand and rents soaring, we find large numbers of workmen unemployed and clamoring for work which they can not get because there is not enough money at low enough interest with which to pay them current wages. We see also large numbers of workmen leaving this country and returning to Europe. while we should have made every effort to employ them in producing and adding to our wealth. These men can not be replaced from our native population.

And yet we hear from our daily press and from our legislators, misled by theoretical economists and by capitalists who favor high interest on money, that there is too much money in circulation and that it must be reduced to get prices down. They seemingly can not see that when the workman commenced to reduce the purchasing power of gold by giving for $1 only two hours of work instead of formerly five hours of work, the cost of production was bound to go up rapidly and that it may go up still higher. At least it will not come down until the equilibrium between the demand of goods for human use all over the world and the supply of them has been restored. That in all probability will take 15 or 20 years, assuming that another war will not intervene.

From all of which the conclusion is justified that the quantity of the good money we have in this country requires to be increased until current interest on working capital shall not exceed 3 per cent.

I am deeply convinced, and I hope that my reasoning may convince you, dear sir, that the reconstruction of our railroads and the many improvements imperatively required for the gowing commerce can not be carried out without cheap capital obtained through the aid of the Government in the manner set out above.

Finally, it should not go unmentioned that a large proportion of the high prices and the consequent extraordinary great cost of new work on railroads will undeniably be due to the crushing taxes of

which the railroads have to pay their share, and which should be lightened. Every article sold and bought must yield its share of the six thousand million dollars collected by the Government. No one has a right to complain at the sacrifice which the war required and in which everyone must share. But the war is over, and yet it is proposed to continue the high taxes for several years to pay off Government obligations from the proceeds of taxes. It can be shown that if paid off with the proceeds of low-interest convertible bonds a large saving to the Government can be effected. There would be other great gains. Assuming that the taxes would be reduced, as they should be, three thousand million dollars per year, that would enable the banks and commerce of the country to open additional credits to European countries of about fifty thousand million dollars. The production and vast foreign trade, which thus would be nourished with our credits, would be of the greatest benefit to both ourselves and to the debtor countries. It would be wise statesmanship as well as good business and practical humanity. Our railroads could not fail to get their share of the prosperity thus induced. Very respectfully submitted.

GUSTAV LINDENTHAL.

P. S. Since writing the above letter, I have received from Judge Lovett, president of the Union Pacific Railroad, his paper on Railroad Reconstruction, of which no doubt you also have a copy. Judge Lovett's good judgment and eminence in the railroad world are so well known that any views from him on railroad affairs command deservedly the highest consideration and respect.

I do not agree with him that Government ownership is beyond discussion and that the public does not want it. I fear and can see the probable evils of Government ownership as well as anyone who wishes for the railroads the highest possible development. Many of his thoughts are excellent, and I see no difficulty in combining them with my plan.

But what the public in the United States wants, the public itself does not as yet know. The question is, To whose arguments and pressure will it yield? Those of labor or those of capital? I am inclined to think that the masses, rightly or wrongly, will go over to the views of the labor leaders. Such has been the tendency for many years and it has become intensified by the war.

Because having this feeling, I have written you as above and as briefly as the weighty matter permitted. I believe it points to a solution, just to every interest.

DEAR SIR: The Fulton branch of the Southern Interior Traffic Association, consisting of all the leading business men of this city, most

earnestly insists that legislation be enacted that will force the equalization of freight rates between the water and interior points before the railroads are returned to their owners.

We heartily favor the long-and-short-haul law as expressed in Senate bill 360 and urge is passage.

We further insist that the following three amendments to the commerce law proposed in the Esch-Pomerene bill be retained in the bill and enacted into law:

1. Declaring water carriers common carriers.

2. Putting all water carriers under the control of the Interstate Commerce Commission.

3. Giving the Interstate Commerce Commission the authority to fix both the minimum and maximum rates for all water and rail carriers.

We are asking for this legislation because it is not just and fair that the rates to water points, on account of water competition or for any other reason, should be made so low that the cost of moving the traffic is not paid for by these points and not only the loss but the profit taxed upon the interior points because they have no way of resisting it.

We think it is the duty of every conscientious lawmaker to give this subject most serious consideration and make every possible effort to enact laws that will rid us of this injustice so long imposed

upon us.

Thanking you for the attention which we know you will give this matter,

Very truly,

W. R. BUTT, District Director.

LETTER SUBMITTED BY NATIONAL COUNCIL OF FARMERS' COOPERATIVE ASSOCIATIONS.

Hon. JOHN J. ESCH,

OMAHA, NEBR., August 12, 1919.

Chairman Interstate and Foreign Commerce Committee, Washington, D. C. DEAR MR. ESCH: I thank you for your letter of the 8th instant in regard to your report on the Cummins bill.

If there is anything that we can do to assist you in the passing of this legislation we will be pleased to do it. On the other hand I wish to assure you that personally I do not think that our people would at all favor the so-called Plumb railroad bill.

Thanking you for your interest in my former communication. I am

Very truly, yours,

J. W. SHORTHILL, Secretary.

LETTER SUBMITTED BY MR. S. T. BLEDSOE.

THE ATCHISON, TOPEKA & SANTA FE RAILWAY Co.,

Hon. JOHN J. ESCH,

OFFICE OF GENERAL COUNCIL, WASHINGTON, D. C., August 13, 1919.

Chairman House Committee on Interstate Commerce,

Washington, D. C.

MY DEAR SIR: Examination of H. R. 4378, lines 6 and 7, page 11, discloses that authority is conferred upon the Interstate Commerce Commission to require a carrier to extend its line or lines of railroad beyond the termini fixed in its charter.

I do not believe this is a wise provision from either the standpoint of the public or the carriers. It will add greatly to the burden of securing funds for railroad construction, extension, or improvements if the parties furnishing the money may be required to extend their line beyond the charter termini to suit the convenience of some one else. I am also of the opinion that such requirement is beyond the constitutional authority of Congress to impose.

For your consideration in this respect I am inclosing a memorandum which I dictated shortly after first reading H. R. 4378. This letter is written and memorandum transmitted with a sincere desire that it may be helpful as affecting both the public interest and the welfare of the roads.

Sincerely, yours,

S. T. BLEDSOE.

(The memorandum referred to by Mr. Bledsoe is as follows:) Memorandum in relation to constitutionality of the provisions of H. R. 4378, authorizing the Interstate Commerce Commission to compel a railway company to extend its lines.

Under the laws of most States every corporation organized to construct, own, or operate a railway property is required to designate the termini of its line or lines. The limitation of the obligation of the corporation to construct a line or lines between such termini is of vital importance to the parties supplying the moneys for construction purposes. They investigate and decide that a certain line of railroad will be profitable and are willing to invest their funds in the construction of that line and not some other line or some extension of that line. Their charter obligation is completely discharged when the line designated in their charter is constructed. If public authorities can order the extension of a line no security holder or stockholder can have any assurance that his money will be expended for the purpose for which it was advanced to the corporation. Section 2 of H. R. 4378, lines 6 and 7, page 11, undertakes to confer authority upon the Interstate Commerce Commission to require any carrier to extend its line or lines. Perhaps no greater impediment can be imposed upon the securing of funds for railroad construction than a provision of this character, denying the people who put up the money the right to determine where the railroad in which they have invested shall be constructed.

The courts have practically unanimously held that it is not within the constitutional power of a State to impose such requirement. These decisions in principle are applicable to the protection extended against Federal legislation by the fifth amendment to the Federal Constitution.

In the case of the Atchison, Topeka & Santa Fe Railway Co. v. Railroad Commission of California, reported in 160 Pacific, page 828, the Supreme Court of California holds that "To compel a railroad company to apply its property to the construction and operation of a line of railroad which it does not desire to