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BETWEEN four and five in the morning, when Neville's watch had lived through thirty-three unbroken hours of the fearful grind, a shout that ended in a screaming laugh ran through the fire-room. High above the toil-crazed men a door had opened and closed. A form, seen dimly through the smoke and steam, was moving backward down the ladder. Again the door opened; another man came through. Every shovel in the room fell to the steel floor; every man in the room shouted or laughed or cried.

The engine-room door, too, had opened, admitting the chief and his assistant. Not until he had examined each mechanical

tragedy below did the chief give time to the human one above.

"Where's that man that 's hurt?" he asked as he came, slowly, from an inspection of the burned-out bearings down the shaft alley.

Neville went with him to the storeroom. Dan, sagging under fatigue, clung to the bench where Larry lay moaning.

"You can go now, Sullivan," Neville told him.

Dan raised his head, remorse, entreaty, stubbornness in his look.

"Let me be! I'll not leave him!" The chief turned to Neville. "What 's come over that drunk?" he asked.

"Ever since the Mouse got hurt, Sullivan 's acted queer, just like a woman." "Get to your quarters, Sullivan," the chief ordered. "We'll take care of this

man."

Dan's hands closed; for an instant he glared rebellion from blood-shot eyes. Then the iron law of sea discipline conquering, he turned to Larry.

"The blessed Virgin aise you, poor Mouse!" he mumbled huskily and slouched out through the door.

Ar midday the San Gardo's captain got a shot at the sun. Though his vessel had been headed steadily northeast for more than thirty hours, the observation showed that she had made twenty-eight miles sternway to the southwest. By two in the afternoon the wind had dropped to half a gale, making a change of course possible. The captain signaled full speed ahead, and the ship, swinging about, began limping across the gulf, headed once more toward Galveston.

Neville, who had slept like a came on deck just before sunset. The piled-up seas, racing along the side, had lost their breaking crests; the ship rose and fell with some degree of regularity. He called the boatswain and went to the store-room.

They found Larry in one of his conscious moments.

"Well, Mouse, we 're going to fix you

in a better place," the engineer called with what heart he could show.

"Thank you kindly, sir," Larry managed to answer; "but 't is my last voyage, Mr. Neville." And the grit that lay hidden in the man's soul showed in his paintwisted smile.

They carried him up the last flight of iron stairs to the deck. Clear of the engine-room, the boatswain turned toward the bow.

"No. The other way, Boson," Neville ordered.

The chief, passing them, stopped. "Where are you taking him, Mr. Neville?"

"The poor fellow 's dying, sir," Neville answered in low voice.

"Well, where are you taking him?" the chief persisted.

"I'd like to put him in my room, sir." "A stoker in officers' quarters!" The chief frowned. "Sunday-school discipline!" He disappeared through the engine-room door, slamming it after him.

They did what they could, these seamen, for the injured man; on freighters one of the crew has no business to get hurt. They laid Larry in Neville's berth and went out, leaving a sailor to watch over him.

The sun rose the next day in a cloudless sky, and shone down on a brilliant sea of tumbling, white-capped waves. Far off the starboard bow floated a thin line of smoke from a tug's funnel, the first sign to the crew since the hurricane that the world was not swept clean of ships. Two hours later the tug was standing by, her captain hailing the San Gardo through a megaphone.

"Run in to New Orleans!" he shouted. "I cleared for Galveston, and I'm going there," the San Gardo's captain called back.

"No you ain't neither."

"I'd like to know why I won't."

"Because you can't,"-the answer carried distinctly across the waves,—“there ain't no such place. It's been washed off the earth."

The San Gardo swung farther to the

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TH

HE European War is being run on borrowed money. That is the startling fact, of which but little is thought. In the determination of the terms of peace, however, it may be of far-reaching and impelling force. There are many altruistic and humanitarian forces addressed to effecting permanent peace, but, powerful as these forces may be, they may not be as potent in peace councils as the forces of unrest that are being generated by the accumulation of war debts, the interest charges upon which future generations. will have to pay, and which will be a heavy burden upon the incomes, and perhaps even an overwhelming encroachment upon the living wage, of the peoples of the various governments now engaged in war.

The fire of anger drifted slowly from Larry's dying gaze. The little man fell back. The Bunker Mouse went out, all man, big at the end.

BOND ISSUES FINANCE MODERN INDUSTRY AND MODERN WAR

By JOSEPH E. DAVIES1

Formerly United States Commissioner of Corporations, and now a member of the Federal Trade Commission

THIS war is the greatest business project of all times. Formerly men financed their enterprises on the immediate capital which

Peace

they could gather together. That is changed, and large modern industries are generally projected and financed to a large degree out of the funds derived from longterm bonds, which are expected to remain virtually a permanent charge upon the property. Formerly wars were financed out of current revenues. Napoleon, for instance, was able to make his wars virtually pay their way. Modern wars, however, are financed by modern methods, and the money is generally raised by loans, either direct or by paper-money issues, which are, in fact, loans forced from the people by the government that issues the money.

WAR EXPENDITURE AND CURRENT

INCOME

It is easy to spend borrowed money. Under such a financial arrangement neither the Government nor the people feel the immediate pinch of war costs. If these costs were paid out of the annual income of the warring nations, the true cost

1 This article is the personal expression of the writer, and does not in any manner purport to be the opinion of the Federal Trade Commission.

would be more nearly appreciated. The direct cost of the war to all the belligerent countries is about 110 million dollars a day, as contrasted with a daily income of approximately 130 million dollars a day. The cost is more significant when compared with the daily savings out of income. The aggregate savings of all the peoples of the warring nations have been estimated at twenty-one million dollars a day. In other words, the daily direct war cost is a sum nearly five times as great as the daily savings of these nations in peace and in times of greatest prosperity. costs were to be paid out of income, every day of the war would take the total savings of every man, woman, and child of the warring countries, and requisition in addition thereto the accumulated savings of four other days. If the direct war costs were paid out of income there would not be enough left to provide for even the physical minimum of subsistence.

If

The expedient of using borrowed money disguises the facts, places the burden to a large degree upon the future, relieves immediate pressure, and makes possible still greater expenditures.

INTEREST ON WAR DEBTS, TAXATION, AND PEACE

to the extent to which the burden of taxation may go. It is essential to the preservation of government itself that in the long run taxation must be confined within reasonable limitations. It is a consideration to which the statesmen of the warring nations are giving much attention.

The per capita indebtedness of the Federal Government of the United States is ten dollars and fifty-nine cents ($10.59). The per capita indebtedness of the warring nations at the present time will vary from six to forty times that amount.

SOME day, however, these debts have to be retired. The interest charges at least must be paid every year. Borrowing may go on and on, and the pressure be not much felt. When the interest charges themselves become burdensome, however, then it is that statesmen and those conducting wars begin to feel the limitation of their power. For it is generally through taxation that the money must be raised to pay the interest charges, and there is a limit to the taxation which any representative government may impose upon its subjects with safety. This is especially true in democracies, though it is also true where governments are more autocratic. The menace of military power, the shadow of the man on horseback, may hold back the social pressure arising out of the economic unrest of burdened subjects, but even under such conditions there is a limit

ENGLAND'S DEBT AND HER POLICY OF PEACE

THE Napoleonic wars lasted twenty years and added 500 million pounds to England's debt. In 1816 the interest charge on the war debt of England alone absorbed more than one half of the whole public revenues from taxation. It was doubtless this fact that gave to English statesmen pause, and then caused them to give very grave consideration to the question of the degree to which a government could withstand the strain resulting from the taxation that the payments of interest on war debts necessitated. It was probably these conditions that caused Robert Hamilton of the University of Aberdeen to write his famous "Essay on the National Debt." There is no doubt that the necessity for retrenchment in public expenditures was reflected in the manifest policy which England adopted, with a result of thirty-nine years of peace.

WAR DEBTS CHARACTERIZED BY RAPID GROWTH AND BY SLOW RETIREMENT

WAR debts grow with tremendous leaps in very short periods of time; but it is equally true that they have been retired most slowly. Following the Revolution of 1688, for a period of 128 years England alternated between periods of peace and war. During the sixty-four years of war approximately 825 million pounds were added to the national debt, and during the sixty-four years of peace the debt was reduced by only thirty million pounds. The Crimean War, lasting twenty-seven

months and seven days, added thirty-three million pounds to the public debt of England. Thirty-three months of the Boer War wiped out the savings of thirty-six years that had been applied to the reduction of the national debt. England's most brilliant statesmanship has always been addressed to the British Exchequer and to the retirement and reduction of the national debt, and yet the most remarkable achievement of her fiscal statecraft did not succeed in retiring a sum greater than eleven million pounds in any one year. Less than two days' expenditures of the present war wipes out that entire amount. All of the savings of the imperial government of the richest country in the world, from the Revolution of 1688 down to 1914, a period of 226 years, would be sufficient to finance only eighty days of the present war. The taxpayer of Great Britain to-day is still paying taxes to cover the interest on the debt incurred by his forefathers in the American Revolution, the wars of the Napoleonic era, and Queen Anne's War.

If the experience of England in the last 200 years in the retirement of national debt is to be taken as a criterion, it will probably be safe to conclude that a thousand years in the future the English people will be paying taxes to meet the interest on the debts now incurred.

Consideration of these facts makes clearer the economic significance of the present unprecedented war expenditures, with the enormous national debts which are now being piled up.

BURDEN OF DEBT IF PEACE WERE NOW DECLARED

Of the total war cost of the first two years, three fourths, or approximately forty billion dollars, were raised by loans of the warring nations. Upon the same basis it may be conservatively estimated that the combined loans of all the warring nations at the end of this, the third year of the war, will be at least ninety billion dollars. To get the aggregate indebted ness of all the nations there would have to be added the indebtedness of twenty

four billion dollars that existed at the beginning of the war. It was one of the axioms laid down by Hamilton that to the cost of the war up to the treaty of peace there would have to be added an additional year of expenditure to cover the total cost of the war. If the present war, in Europe, then, were to end within the next six months, the total war debts of the warring nations would probably approach the enormous sum of 130 billion dollars.

This is a sum greater than the total national wealth of either England or Germany; it is in excess of the national wealth of France and Italy combined. The interest charge on this sum alone would exceed the total expenditures of all the warring nations for all governmental purposes, civil and military, during the last year of peace (six billion four hundred million dollars). If to the annual interest charge which this indebtedness entails there were to be added a sum equal to the current expenses of the governments for the last year of peace, it would represent a sum to be raised by taxation which would probably exceed one fourth of the total gross annual money income of all the nations engaged in the war. However, if, in addition to this, it were necessary to resume the same degree of military expenditure as existed prior to the war, the interest on the war debt and other governmental charges would, in time of peace, take twenty-five cents out of every dollar from the income of every man, woman, and child in the warring nations. If to this annual sum that had to be raised by taxation there were to be added sums in addition for the preservation of the present armaments or naval equipment which would be in proportion to the present war footing, the burden on the taxpayers of the nations at war would be increased to an incredible amount. Even if the armaments of all the nations at war were to be abolished by the terms of peace, the additional cost to the governments arising through pensions and expenditures for social amelioration would be equal annually to, or in excess of, the sum formerly spent

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