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by Senator John F. Dryden, the president of the Prudential Company. This, however, was unfavorably reported upon by the committees to which it was referred, on the ground that insurance was not interstate business, and therefore Federal legislation regarding the same was not constitutional.

In spite of these revelations of the devious methods of modern finance, and the shock given to the credit of the financial center of the United States, the era of "flush times" still continued. The year 1906 was one of the most prosperous the country has known; there were splendid crops, wages were. advanced, new records were made for iron and steel production, the railways had more business than they could handle, dividends were paid on stock that had never before earned a cent, and money was plentiful for promoting any kind of speculative enterprise. By the end of the year, however, it was evident that affairs were taking a downward turn, resulting during March, 1907, in a general unloading of speculative securities, producing a so-called "rich man's" panic on the stock exchange. In spite of the fact that the crops were as large, and industries as active as in the previous year, values continued to decline, producing a temporary stringency in August, which was followed by a financial crisis of unusual severity on October 14, precipitated, it is said, by an endeavor of the Heinze brothers,


Charles W. Morse (later imprisoned, but pardoned), and others to corner the copper market. The collapse of this pool, the tremendous unloading of securities, and the failure of speculators to meet their obligations, produced for a while a condition of affairs that threatened to close the stock exchange. This was prevented by the act of J. P. Morgan in coming to its rescue with $20,000,000, and by the cessation of stock dealing on margin. As the men who precipitated the crisis had obtained control of a chain of banks by the questionable process of purchasing one with the funds and securities of another, the frightened public losing confidence began to withdraw its deposits from the banks in Manhattan and Brooklyn, which resulted in the suspension of the Knickerbocker Trust Company and some half dozen other banking institutions, and it was only by the most vigorous efforts on the part of Secretary of the Treasury George B. Cortelyou and the leaders of finance that more serious disasters were prevented. As it was the damage that was done was beyond calculation, and swept over the whole country, producing in every place of importance a repetition of the conditions in New York.

Various causes have been assigned for this panic, but none seem to explain why it should have occurred during one of the most prosperous years in the history of the country. One explanation is that President

Roosevelt's persecution of corporate interests was responsible; another that it was caused by the endeavor of these interests to discredit the administration, and force favorable legislation; the third theory was that it was due to vast increases in the gold supply, and the according decrease in its purchasing power, resulting in rising prices, speculation and undue expansion of business. Whatever might be the true explanation, one thing was conclusively demonstrated, this was that the currency system of the nation lacked the flexibility necessary to permit it to cope with conditions such as the 1907 panic.

Legislation had already been instituted in the Fifty-ninth Congress; two remedial systems being presented. The one that was finally passed, March 4, 1907, known as the Aldrich Bill, provided for the following modifications of the currency laws: the issuance of ten dollar gold certificates; of one and two dollar silver certificates, replacing the ten dollar silver certificates outstanding; the abolishment of the distinction between government receipts from customs and from other sources; and the giving of the Secretary of the Treasury discretion regarding the kinds of bonds to be required in securing public deposits in national banks; the publication of lists of such securities annually; the equitable distribution of deposits among States and Territories; and the increase of the amount of national bank notes that could be

withdrawn from circulation in any one month from $3,000,000 to $9,000,000.

While this plan gave the Secretary of the Treasury more freedom in dealing with situations such as the country was experiencing at the time of its passage, nevertheless it was still felt to be inadequate, and the demand for further currency legislation continued. This resulted in the presentation during the Sixtieth Congress of a number of schemes for improving the currency laws. The one that was adopted, the so-called Aldrich-Vreeland Act, provided for the issuance of additional emergency currency to the extent of $500,000,000 in times of financial stringency, the banks issuing the same to pay a tax of not more than 10 per cent. for the privilege of issuing the same, and to deposit in the treasury United States money to the extent of 10 per cent. of the emergency notes as a fund for the redemption of the notes of failed banks. The privilege of issuing these notes was given to any national bank in good standing, and the officials of the Treasury Department were authorized to determine whether this emergency currency was necessary or not.

This bill was bitterly fought by the Democratic party in Congress, with whom were united a number of Republicans who conceived that such legislation might increase the hold that the moneyed interests had upon the country. The most active oppo


nent of the bill was Senator R. M. La Follette, of Wisconsin, who conducted a filibuster against the same, during which time he held the floor of the Senate continuously for eighteen hours. His efforts, however, were unavailing, for the bill was finally passed on May 30, just before the adjournment of Congress.

In 1908 public attention was absorbed by the elections of President and Vice-President and numerous State officials. The greatest interest centered in the nominations of the Republican and Democratic parties, but more particularly the former because it was generally supposed that President Roosevelt would use his influence to insure the nomination of one who was favorable to his policies and who would carry them out to their ultimate successful completion. The first important party to hold its convention was the Populist party which at St. Louis on April 3 nominated Thomas E. Watson, of Georgia, and Samuel W. Williams, of Indiana. In May the Socialist party at Chicago nominated Eugene V. Debs, of Indiana, and Ben Hanford, of New York; on June 18 the Republicans at Chicago nominated William H. Taft, of Ohio, and on the 19th James S. Sherman, of New York; William J. Bryan, of Nebraska, and John W. Kern, of Indiana, were nominated by the Democrats at Denver on July 16; Eugene W. Chafin, of Illinois, and Aaron S. Watkins, of Ohio, were nominated by the Prohibition party


at Columbus, Ohio, on July 16; and the Independence party at Chicago on July 28 nominated Thomas L. Hisgen, of Massachusetts, and John T. Graves of New York (formerly of Georgia).

The Republican platform, beside indorsing the policies of the Roosevelt administration, declared that the rules of procedure in the federal courts with respect to the issuance of the writ of injunction should be more accurately defined by statute and that no injunction or temporary restraining order should be issued without notice, except when irreparable injury would result from delay," etc. The financial panic of 1907 was scantily and feebly dealt with, but promises were made, among other things, for a better currency system; for a complete revision of the tariff by a special session of Congress immediately after the inauguration; for the "enforcement in letter and spirit of the XIII., XIV., and XV. amendments to the Constitution, which were designed for the protection and advancement of the negro"; for the immediate admission of the territories of Arizona and New Mexico as separate States; and for free trade "with limitations" with the Philippines.

The Democratic platform protested against allowing the government to remain in the "grip of those who have made it a business asset of the favor-seeking corporations "; and denounced the increase of Federal office-holders, the "frightful ex

travagances "of the party in power, "the absolute domination of the Speaker" of the House, and Roosevelt's interest in Taft's nomination as the "establishment of a dynasty." It demanded publicity in campaign contributions (although a law to this effect had been enacted two years before); a revision of the tariff by the reduction of import duties and the adoption of a graduated scale to bring the tariff down to a strictly revenue-producing basis (as against the Republican plan for continued protective duties and the adoption of maximum and minimum rates in order to obtain concessions from other countries). It also proposed to license corporations doing 25 per cent. of the business of the country in their lines and to prohibit any corporation from doing more than 50 per cent. of the business. It demanded that bank deposits be guaranteed by the government as a means of preventing panics; and hinted at the exclusion of the Japanese by declaring the party" opposed to the admission of Asiatic immigrants who cannot be

amalgamated with our population, and whose presence among us would raise a race issue and involve us in diplomatic controversies with Oriental powers."

The result of the election was an overwhelming victory for Taft, who received an electoral vote of 321

against an electoral vote of 162 for Bryan. Mr. Taft was inaugurated on March 4, 1909, and selected the following men for his cabinet: Philander C. Knox, of Pennsylvania, Secretary of State; Franklin MacVeagh, of Illinois, Secretary of the Treasury; Jacob M. Dickinson, of Tennessee, Secretary of War; George von L. Meyer, of Massachusetts, Secretary of the Navy; Frank H. Hitchcock, of the District of Columbia, PostmasterGeneral; James Wilson, of Iowa, Secretary of Agriculture; George W. Wickersham, of New York, AttorneyGeneral; Richard A. Ballinger, of Washington, Secretary of the Interior; and Charles Nagel, of Missouri, Secretary of Commerce and Labor.






President Taft's inaugural address

Enactment of the Payne-Aldrich tariff law Revolt of the Progressives Provisions of the new law - The tariff board and the cor oration tax Passage of the income tax bill The Ballinger-Pinchot controversy - Prosecution of the Sugar Trust - The Mann-Elkins Act - Creation of the Commerce Court and other commissions - The Wickersham bill - The Standard Oil and Tobacco Trust decisions Prosecutions of other trusts - The fisheries award - Dissatisfaction with the tariffThe overthrow of Speaker Cannon Rise of the Progressive Party - Democratic gains Defeat of tariff revision by Taft's vetoes - Defeat of the reciprocity treaty with Canada - The peace treaties with England and France Abrogation of the treaty with Russia - Other measures, investigations and events of Taft's administration · The elections of 1912.

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In the interval between election and inauguration - usually not so much. a breathing spell as a breathless preparation for new duties Mr. Taft conducted himself with becoming dignity and judicial serenity. His midwinter sojourn in the South, ostensibly for rest, meditation and Cabinetbuilding, was nevertheless filled with duties that not only placed him in the public eye but proved the kindly disposition toward him of the great body of his fellow citizens. Probably no other President has entered office with so few enemies or so general a suspension of prejudgment.

The inauguration on March 4 occurred with a setting of spectacularly bad weather conditions, but was other wise auspicious. The inaugural address, wise and temperate," had not a word in it," said a leading New York paper, "to disturb the peace of mind of any honest man," nor, remarked another, " anything of the

heat and fury of the prosecutor." In the very first paragraph the new President declared it to be his unequivocal purpose to make the maintenance and enforcement of the Roosevelt reforms a most important feature of his Administration. All references to proposed changes in the interstate commerce and anti-trust laws contained a reassurance to business that they "shall conserve only stability and healthy growth." His well-known views on the tariff were restated as a conception of a "protection equal to the difference in the cost of production abroad and the cost of production here," and he added: "In the making of a tariff bill the prime motive is taxation and the securing thereby of a revenue "-stopping short of appending the word " only" which forms the crux of the Democratic view of the tariff. And in the handling of phases of the Southern question and of injunctions, Mr. Taft outlined a

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