by Senator John F. Dryden, the presi- Charles W. Morse (later imprisoned, dent of the Prudential Company. but pardoned), and others to corner This, however, was unfavorably re- the copper market. The collapse of ported upon by the committees to this pool, the tremendous unloading of which it was referred, on the ground securities, and the failure of specuthat insurance was not interstate lators to meet their obligations, probusiness, and therefore Federal legis- duced for a while a condition of af. lation regarding the same was not

fairs that threatened to close the constitutional.

stock exchange. This was prevented In spite of these revelations of the by the act of J. P. Morgan in coming devious methods of modern finance, to its rescue with $20,000,000, and and the shock given to the credit of by the cessation of stock dealing the financial center of the United on margin. As the men who precipiStates, the era of “flush times" tated the crisis had obtained control still continued. The year 1906 was of a chain of banks by the questionone of the most prosperous the coun- able process of purchasing one with try has known; there were splendid the funds and securities of another, crops, wages were, advanced, new the frightened public losing confirecords were made for iron and steel dence began to withdraw its deposits production, the railways had more from the banks in Manhattan and business than they could handle, divi- Brooklyn, which resulted in the susdends were paid on stock that had pension of the Knickerbocker Trust never before earned a cent, and Company and some half dozen other money was plentiful for promoting banking institutions, and it was only any kind of speculative enterprise. by the most vigorous efforts on the By the end of the year, however, it part of Secretary of the Treasury was evident that affairs were taking George B. Cortelyou and the leaders a downward turn, resulting during of finance that more serious disasters March, 1907, in a general unloading were prevented. As it was the damof speculative securities, producing a age that was done was beyond calcuso-called “ rich man's” panic on the lation, and swept over the whole stock exchange. In spite of the fact country, producing in every place of that the crops were as large, and in- importance a repetition of the condidustries as active as in the previous tions in New York. year, values continued to decline, pro- Various causes have been assigned ducing a temporary stringency in Au- for this panic, but none seem to exgust, which was followed by a financial plain why it should have occurred crisis of unusual severity on October during one of the most prosperous 14, precipitated, it is said, by an years in the history of the country. endeavor of the Heinze brothers, One explanation is that President Roosevelt's persecution of corporate withdrawn from circulation in any interests was responsible; another one month from $3,000,000 to $9,000,that it was caused by the endeavor of 000. these interests to discredit the admin- While this plan gave the Secretary istration, and force favorable legis- of the Treasury more freedom in lation; the third theory was that it dealing with situations such as the was due to vast increases in the gold country was experiencing at the time supply, and the according decrease in of its passage, nevertheless it was its purchasing power, resulting in ris- still felt to be inadequate, and the deing prices, speculation and undue ex- mand for further currency legislapansion of business. Whatever might tion continued. This resulted in the be the true explanation, one thing presentation during the Sixtieth Conwas conclusively demonstrated, this gress of a number of schemes for imwas that the currency system of the proving the currency laws. The one nation lacked the flexibility necessary that was adopted, the so-called Alto permit it to cope with conditions drich-Vreeland Act, provided for the such as the 1907 panic.

of additional emergency Legislation had already been insti- currency to the extent of $500,000,000 tuted in the Fifty-ninth Congress; in times of financial stringency, two remedial systems being pre- the banks issuing the same to pay sented. The one that was finally a tax of not more than 10 per passed, March 4, 1907, known as the cent. for the privilege of issuing Aldrich Bill, provided for the follow- the same, and to deposit in the ing modifications of the currency treasury United States money to the laws: the issuance of ten dollar gold extent of 10 per cent. of the emercertificates; of one and two dollar sil- gency notes as a fund for the redempver certificates, replacing the ten dol- tion of the notes of failed banks. The lar silver certificates outstanding; the privilege of issuing these notes was abolishment of the distinction be- given to any national bank in good tween government receipts from cus- standing, and the officials of the toms and from other sources; and the Treasury Department were authorgiving of the Secretary of the Treas- ized to determine whether this emerury discretion regarding the kinds of gency currency was necessary or not. bonds to be required in securing pub- This bill was bitterly fought by the lic deposits in national banks; the Democratic party in Congress, with publication of lists of such securities whom were united a number of Reannually; the equitable distribution publicans who conceived that such of deposits among States and Terri- legislation might increase the hold tories; and the increase of the amount that the moneyed interests had upon of national bank notes that could be the country. The most active opponent of the bill was Senator R. M. at Columbus, Ohio, on July 16; and La Follette, of Wisconsin, who con- the Independence party at Chicago ducted a filibuster against the same, on July 28 nominated Thomas L. during which time he held the floor Hisgen, of Massachusetts, and John of the Senate continuously for eigh- T. Graves of New York (formerly of teen hours. His efforts, however, Georgia). were unavailing, for the bill was fi- The Republican platform, beside nally passed on May 30, just before indorsing the policies of the Roosevelt the adjournment of Congress.

administration, declared “ that the In 1908 public attention was ab- rules of procedure in the federal sorbed by the elections of President courts with respect to the issuance of and Vice-President and numerous the writ of injunction should be more State officials. The greatest interest accurately defined by statute and that centered in the nominations of the no injunction or temporary restrainRepublican and Democratic parties, ing order should be issued without but more particularly the former be- notice, except when irreparable injury cause it was generally supposed that would result from delay,” etc. The President Roosevelt would use his financial panic of 1907 was scantily influence to insure the nomination of and feebly dealt with, but promises one who was favorable to his policies were made, among other things, for a and who would carry them out to their better currency system; for a comultimate successful completion. The plete revision of the tariff by a special first important party to hold its con- session of Congress immediately after vention was the Populist party which the inauguration; for the “enforceat St. Louis on April 3 nominated ment in letter and spirit of the XIII., Thomas E. Watson, of Georgia, and XIV., and XV. amendments to the Samuel W. Williams, of Indiana. In Constitution, which were designed for May the Socialist party at Chicago the protection and advancement of nominated Eugene V. Debs, of Indi- the negro"; for the immediate adana, and Ben Hanford, of New York; mission of the territories of Arizona on June 18 the Republicans at Chi- and New Mexico as separate States; cago nominated William H. Taft, of and for free trade“ with limitaOhio, and on the 19th James S. Sher- tions " with the Philippines. man, of New York; William J. Bryan, The Democratic platform protested of Nebraska, and John W. Kern, of against allowing the government to Indiana, were nominated by the remain in the “ grip of those who Democrats at Denver on July 16; have made it a business asset of the Eugene W. Chafin, of Illinois, and favor-seeking corporations"; and deAaron S. Watkins, of Ohio, were nounced the increase of Federal nominated by the Prohibition party office-holders, the frightful extravagances ” of the party in

power,

amalgamated with our population, “ the absolute domination of the and whose presence among us would Speaker of the House, and Roose- raise a race issue and involve us in velt's interest in Taft's nomination diplomatic controversies with Orienas the “ establishment of a dynasty."

tal powers.' It demanded publicity in campaign

The result of the election was an contributions (although a law to this

overwhelming victory for Taft, who effect had been enacted two years be

received an electoral vote of 321 fore); a revision of the tariff by the

against an electoral vote of 162 for reduction of import duties and the

Bryan. Mr. Taft was inaugurated on adoption of a graduated scale to

4, , bring the tariff down to a strictly March 4, 1909, and selected the folrevenue-producing basis (as against lowing men for his cabinet: Philander the Republican plan for continued

C. Knox, of Pennsylvania, Secretary protective duties and the adoption of

of State; Franklin MacVeagh, of Illimaximum and minimum rates in or- nois, Secretary of the Treasury; der to obtain concessions from other Jacob M. Dickinson, of Tennessee, countries). It also proposed to li- Secretary of War; George von L. cense corporations doing 25 per cent. Meyer, of Massachusetts, Secretary of the business of the country in their of the Navy; Frank H. Hitchcock, of lines and to prohibit any corporation the District of Columbia, Postmasterfrom doing more than 50 per cent. of General; James Wilson, of Iowa, Secthe business. It demanded that bank retary of Agriculture; George W. deposits be guaranteed by the gov- Wickersham, of New York, Attorneyernment as a means of preventing General; Richard A. Ballinger, of panics; and hinted at the exclusion Washington, Secretary of the In

; of the Japanese by declaring the terior; and Charles Nagel, of Misparty “opposed to the admission of souri, Secretary of Commerce and Asiatic immigrants who cannot be Labor.

CHAPTER XVIII.

1909-1913

THE ADMINISTRATION OF PRESIDENT TAFT.

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 taiiffThe 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.

In the interval between election and heat and fury of the prosecutor." In inauguration — usually not so much the very first paragraph the new Presa breathing spell as a breathless prep- ident declared it to be his unequivocal aration for new duties — Mr. Taft purpose to make the maintenance and conducted himself with becoming dig- enforcement of the Roosevelt reforms nity and judicial serenity. His mid- a most important feature of his Adwinter sojourn in the South, osten- ministration. All references to prosibly for rest, meditation and Cabinet posed changes in the interstate combuilding, was nevertheless filled with merce and anti-trust laws contained duties that not only placed him in the a reassurance to business that they public eye but proved the kindly dis- “ shall conserve only stability and position toward him of the great body healthy growth.” His well-known of his fellow citizens. Probably no views on the tariff were restated as a other President has entered office conception of a “ protection equal to with so few enemies or so general a the difference in the cost of production suspension of prejudgment.

abroad and the cost of production The inauguration on March 4 oc- here," and he added: “In the makcurred with a setting of spectacularly ing of a tariff bill the prime motive bad weather conditions, but was other- is taxation and the securing thereby wise auspicious. The inaugural ad- of a revenue stopping short of dress, wise and temperate,“ had not

“ had not appending the word “only " which a word in it,” said a leading New forms the crux of the Democratic view

" to disturb the peace of of the tariff. And in the handling of mind of any honest man,

nor, re- phases of the Southern question and marked another, “ anything of the of injunctions, Mr. Taft outlined a

York paper,