TURKEY: A. D. 1909 (JANUARY-MAY).
FEDERAL PARTY.
See (in this Volume)
PHILIPPINE ISLANDS: A. D. 1901 and 1907.
FEHIM PASHA, THE FATE OF.
See (in this Volume)
TURKEY: A. D. 1908(JULY-DECEMBER), AND 1909 (JANUARY-MAY).
FEJERVARY MINISTRY.
See (in this Volume)
AUSTRIA-HUNGARY: A. D. 1905-1906.
FENGHUANGCHENG.
See (in this Volume)
JAPAN: A. D. 1904 (FEBRUARY-JULY).
FENSHUILING.
See (in this Volume)
JAPAN: A. D. 1904 (FEBRUARY-JULY), AND (JULY-SEPTEMBER).
FERRER, Professor Francisco:
His trial and execution.
See (in this Volume)
Spain: A. D. 1907-1909.
FERTILIZER TRUST:
Dissolution and indictment.
See (in this Volume)
COMBINATIONS, INDUSTRIAL: UNITED STATES: A. D. 1901-1906.
{263}
FETVA, of the Sheik-ul-Islam.
See (in this Volume)
TURKEY: A. D. 1909 (JANUARY-MAY).
FIALA ARCTIC EXPLORATION.
See (in this Volume)
POLAR EXPLORATION.
FICHTE’S PROPHECY, of a World Commonwealth.
See (in this Volume)
WORLD MOVEMENTS.
FILIPINO CATHOLIC CHURCH, Independent.
See (in this Volume)
PHILIPPINE ISLANDS: A. D. 1902.
----------FINANCE AND TRADE: Start--------
FINANCE AND TRADE: A. D. 1901-1909.
A Review of the decade.
The Sequence of Phenomena from the beginning of "the great
Trade Boom" to the Collapse of 1907, and after.
The Process of Recovery.
On the 31st of December, 1908, the New York _Evening
Post_ gave an admirably studied and clear, though succinct,
review of the sequence of phenomena in financial and
commercial affairs that could be traced through "the series of
years since the great trade boom began which collapsed in
1907," and thence to the close of 1908. By permission of the
proprietors of the _Evening Post_ a considerable part of
that review is quoted here. While it relates more especially
to conditions and events in the United States, it affords
substantially a summary of the financial history of the world
from 1901 to 1908, both inclusive:
"1901.
This was preeminently the ‘boom year’—much more legitimately
so, as events have proved, than 1905 or 1906, when
overstrained capital resources gave an atmosphere of unreality
to what seemed altogether real in the days of abundant capital
in 1901. It is first to be said of 1901 that a probably
unexampled surplus of ready capital in the United States, and
a certainly unprecedented foreign credit balance—due to our
amazing surplus of exports over imports—happened to coincide
with a period of European trade reaction which released
foreign capital from foreign industries and left it free for
use in America. Presuming the foregoing influences, the six
main causes for the phenomena of 1901 were:
(1) The series of enormous company amalgamations, beginning
with the billion-dollar Steel incorporation, and culminating
in the purchase of the British steamship lines at wildly
extravagant prices; these operations being based on issues of
securities in unprecedented quantity;
(2) Formation of ‘underwriting syndicates’ to float these
securities, one of those syndicates receiving a bonus of
$50,000,000 for one year’s use of $25,000,000, and all of them
using freely for their purposes the surpluses of life
insurance companies and the deposits of trust companies;
(3) Acquisition of control of great railway companies by
powerful millionaires, through purchase of stock of these
railways in the open market, often at extravagant prices; the
purchase-money being obtained through issue of bonds by
railways already under control of the purchasers;
(4) Wild speculation by the public;
(5) Sudden fright of Europe at our excesses, withdrawal of its
capital, and consequent severe reaction in our markets;
(6) The failure of the corn crop, which in the summer applied
a further check to this speculation, but which was itself
offset by a wheat crop larger than any harvested in this
country before or since, and sold at the highest average price
since 1897.
"1902.
This year was one both of reaction and of further expansion;
it was both a legitimate sequel to 1901 and a legitimate
forerunner of 1903. …
"Its salient phenomena were these:
(1) Abundant harvests;
(2) Overstraining of bank resources by financial ‘deals’ and
Stock Exchange speculation, exhausting the bank surplus in
September;
(3) Enormous increase in imports and decrease in agricultural
exports, along with Europe’s withdrawal of its capital;
(4) Rapid advance in cost of raw material and labor;
(5) Struggle of capitalists to so entrench themselves in
control of corporate enterprises that they could not be
dislodged.
"1903.
The year which followed was an entirely logical sequel. Its
controlling factors were:
(1) Forced liquidation by individuals and syndicates who were
tied up in new securities at a time when the investing public
withdrew from the market;
(2) Inability of great corporations to sell bonds, and their
resort to notes at a high interest rate;
(3) Abundant grain crops, but an inadequate cotton crop, with
great speculation, and famine prices;
(4) Rapid fall in the price of steel and iron;
(5) Severe contraction in profits of industrial combinations,
with reduced dividends in some, reorganization of capital in
others, and bankruptcy in still others.
"1904.
For obvious reasons, 1904 is an interesting year to compare
with 1908. Both were in a sense 'after-panic years,’ though
the strain of 1903, and the resultant financial and commercial
reaction of 1904, were trifles compared with those of the past
two years. It will be seen that 1904, which did in fact usher
in another great boom in trade, paralleled closely in some
respects the history of 1908, but in others diverged very
widely from it. Its dominant influences were:
(1) A huge surplus reserve at the New York banks, reaching in
August a height only four times exceeded in the country’s
history, and as a result a 1 per cent. call money market
during two-thirds of the year;
(2) The largest gold export movement in the history of the
country;
(3) A midsummer recovery on the Stock Exchange, with large
investment buying;
(4) A Presidential campaign, which hardly affected business;
(5) Substantial, but not very rapid, trade revivals, without
any of the extravagant optimism of 1908;
(6) Famine prices for cotton during half the year, followed by
a new crop unparalleled in history, and by a heavy fall in
prices;
(7) Virtual disappearance of our export trade in wheat, with
the smallest harvest since 1900, the highest prices since
1898, and the smallest shipment to Europe since 1872. The
Russian war, which began in February, affected our markets
only indirectly.
{264}
" 1905.
This year’s history is better understood to-day than it has
been before. The testimony of the whole financial and
commercial world now is, that the exploiting of capital in
trade and speculation, which eventually brought about the
recent panic, and the abnormal enhancement of cost of living,
which lifted the average price of commodities as much in two
years as it had risen in the eight preceding years, began in
the middle of 1905. These were the salient incidents of the
financial year:
(1) Rapid and vigorous trade revival, with industry and
production probably more active than at any previous period,
and with profits and dividends enhanced;
(2) Exposure of the use of life insurance funds by promoting
and speculating millionaires, an exposure which ended in
legislation preventing such use of them in future
speculations;
(3) World-wide money stringency, with the New York bank
surplus twice exhausted, London’s bank position the weakest
since 1890, and Berlin’s the weakest since 1897;
(4) Excited stock speculation for the rise, in this country
and in Germany, which in New York almost wholly disregarded
the abnormal strain on money.
"1906.
Neither the $400,000,000 loss at San Francisco in April, nor
the Treasury’s efforts to relieve an overstrained New York
money market in September, was a fundamental cause for the
events of 1906. They were a true sequel to 1905, and may be
summarized as follows:
(1) Enormous Volume of trade, the whole world over, with rapid
rise in price of goods, but equally rapid rise in cost of raw
material and labor;
(2) Grain harvests, as a whole, never paralleled in Volume,
and wheat crop second only to 1901;
(3) Wild speculation by all classes of the community,
particularly in land, mining shares, and Stock Exchange
securities, but not as a rule in produce, the wealthiest
capitalists in the country entering into stock speculation in
the late summer, and using most unscrupulously their power
over company finance to help along their purposes;
(4) Overstrained bank resources as a result, with five
deficits at New York, occurring in spring, autumn, and winter,
two of these deficits being the largest since 1893;
(5) Abnormally high money rates all the year, with the highest
September rate for call loans ever reached in New York, and
the highest rate for time loans and merchants’ paper reached
at that time of year since 1872;
(6) Sudden decision by Europe that American credit was
unlimited, and the consequent placing of foreign capital
unrestrictedly at our disposal;
(7) Struggle between London and New York for possession of new
gold arriving in London, resulting in our import of
$40,000,000 gold from Europe in the spring, and $45,000,000 in
the autumn, and leading to a rise of the Bank of England rate
to 6 per cent. for the first time since the Boer war panic,
and to an energetic effort on the Bank’s part to stop the
wholesale equipping of the American speculation with London
bank money.
"1907.
The panic year’s story may be told without further
introduction, summing up thus its characteristic events:
(1) Withdrawal by Europe of the capital loaned to us in 1906,
leading, early in the year, to $32,000,000 gold exports to
Europe, of which $25,000,000 went to France:
(2) Partial withdrawal of their capital from Wall Street by
interior markets, which were said to have had $400,000,000
outstanding in New York during 1906;
(3) Distress of the immensely wealthy capitalists who had tied
themselves up in the Wall Street speculation of 1906, their
forced liquidation on an enormous scale, and consequent
demoralized Stock Exchange markets in March and August;
(4) Very abnormal crop weather throughout the spring and over
nearly all the world, with a resultant shortage of the whole
world’s wheat crop, the deficit of supplies below expected
requirements being probably the largest since 1890.
"(5) Revelation of unsound banking practices at New York in
October; leading to the failure of the Knickerbocker Trust, a
formidable run on the banks, adoption of Clearing House
certificates in all the larger cities and issue of emergency
credit currency in many; to restriction of cash payments to
depositors throughout the country, to a premium on currency,
to complete demoralization of interior exchange, and to
insolvency of several large industrial companies and numerous
banks—neither, however, reaching the number which shortly
followed the panic of 1893;
(6) Import of $100,000,000 gold from Europe during November
and December, most of it bought at a premium and some of it
engaged with sight sterling at 4.91;
(7) As a result, large inroads on the Bank of England’s gold
reserve, rise in the bank rate from 4½ to 7 per cent., rapid
advance of all continental bank rates, and loan of large sums
of gold by the Bank of France to the Bank of England.
"(8) Precarious position of financial Germany throughout the
year, important failures at Hamburg, minor financial panics in
Holland, Egypt, Italy, and Chili, many of them before our own;
(9) Intervention of our Treasury, which wisely placed all its
surplus on deposit with the banks in October, and most
unwisely undertook to issue $150,000,000 bonds and notes in
November to provide basis for new bank-note circulation;
(10) Recovery in markets late in November, with slow return of
the bank situation to normal, the currency premium at New York
lasting longer than in either 1893 or 1873;
(11) Discharge of laborers from employment all over the
country, and the beginning of severe trade reaction—all this
in spite of the largest annual gold output in the history of
the world.
"1908.
Now comes the present remarkable after-panic year, of which
the salient phenomena may be thus summed up:
(1) Spasmodic and irregular recovery in trade activity,
starting from a very low level, with merchants rushing in
suddenly with orders—in February, in July, and in
November—when their shelves were almost depleted, these buying
impulses ceasing as suddenly as they had begun, leaving trade
stagnation again;
(2) Slow increase in consumption of merchandise, here and
abroad, the ratio being below 30 per cent. of normal at the
beginning of the year, and 60 to 75 per cent. on the average
at its close;
(3) Sudden shrinkage of our international commerce,
merchandise trade in eleven months falling $478,000,000 from
1907, a decline of 15 per cent., of which $326,000,000 was
imports and $152,000,000 exports, experience of European
nations being similar;
(4) Enormous increase in the unemployed, leading, at the
Atlantic ports, to an emigration 250,000 larger than
immigration;
(5) Severe contraction of railway earnings, resulting in
twenty-four railway insolvencies, involving the largest
capital of any receiverships since those of 1893, and causing
many dividend reductions, but followed, after the middle of
the year, by such enormous reduction in expenses that, in some
cases, autumn net earnings actually increased over 1907;
{265}
"(6) Sudden rush of currency into the banks, as a result,
first of removal of restrictions on depositors and next of
idle trade, with resultant change from a $20,000,000 New York
bank deficit at the end of 1907 to a surplus of $40,000,000 at
the end of January and of $66,000,000 on June 27—the latter
being second only to the $111,000,000 maximum of 1894;
(7) As a consequence, abnormally low rates for money, call
loans going at 2 per cent. before the end of January, at 1 per
cent. in eighteen weeks of the present year, and at less than
1 per cent. in three weeks;
(8) Export of $73,000,000 gold, the largest (except for 1904)
since 1895, and net export of $45,000,000, the largest in
thirteen years;
"(9) In spite of the above recited facts, a constant spirit of
optimism throughout the year, expressing itself, first in the
organization of ‘Prosperity Leagues’ which held conventions
and proclaimed that if people would only decide to be
prosperous, they would be prosperous, and second by a series
of extravagant speculative movements on the Stock Exchange, in
the course of which it was declared in February, in July, and
in November, that we were not only destined to get back into
the boom of 1906, but that we were there already;
(10) A wheat harvest which in midsummer promised to be the
second largest on record, but which turned out only of average
Volume, the quality and price for this and other cereals,
however, being so good as to enhance very greatly the wealth
of the agricultural West;
(11) A Presidential election, the result of which the markets
and all experienced people foresaw from the beginning, but of
which it was alleged, for two weeks in November, that its
outcome had totally changed for the better the entire aspect
of American business affairs."
1909.
The following, from the New York _Evening Post_ of
December 31, 1909, continues the review:
The noteworthy characteristics of "the year which ends to-day,
… so far as they can now be discerned, have been as follows:
(1) Rapid industrial recovery, beginning with the steel
trade’s reduction of prices, leading in September to the
largest monthly output of iron and steel in the history of the
country, and to heavy demand from consumers, but contrasting
singularly with the copper market, where signs of
overproduction were visible throughout the year;
(2) Very rapid increase in cost of necessaries of life,
affecting chiefly food, clothing, and rent, leading in the
autumn to bitter complaint and to numerous strikes for higher
wages, notably on the railways;
(3) Along with reviving trade, a speculation of great
magnitude on the Stock Exchange, ascribed to the initiative of
very powerful finance houses, and converging in a most
peculiar way on United States Steel common shares, whose
dividend was twice advanced, notwithstanding the fact that
quarterly earnings had not recovered to the magnitude of 1906
or 1907, when the dividend had been maintained at the old
rate;
(4) Largely as a result of the tying-up of capital in this
speculation, severe autumn strain on bank reserves, turning a
New York surplus of $34,000,000 on July 10 into one of only
$1,600,000 on October 2, driving Wall Street to probably
unprecedented borrowings from interior banks and from London,
which latter market, under the influence of the Bank of
England, threw back great amounts of these New York loans
during October;
"(5) Call money rates kept down by such expedients, 6 per
cent. being the maximum up to the two closing days of
December;
(6) a wheat corner in June, in the course of which the New
York cash price rose to $1.51 in June, the highest price since
the Leiter corner of 1898, followed by a new wheat crop
unsurpassed in magnitude except for 1901, yet with high prices
continued in later autumn, despite an abundant crop in Europe
also;
(7) A very short crop of cotton, driving the price from 9½
cents a pound, early in the year, to 16 cents in December, the
latter being the highest December price since paper inflation
days, and less than one cent below the highest price in the
corner of 1904;
(8) Import of foreign merchandise wholly unparalleled for
magnitude in our history, causing, in June, July, and August,
an excess of imports over exports for the first time since
1897, and resulting, in the eleven first months of the year,
in a total excess of exports over imports $340,000,000 less
than in 1908, and very much the smallest of any year since
1897;
(9) As a partial consequence, the largest export of gold of
any year in the country’s history, and the largest net export
except for 1894 and the paper money days.
"The prolonged tariff debate in Congress, which high financial
authority declared would hold back financial activity, but
which gave no evidence of doing so, can hardly be classed as a
fundamental influence of the year. Whether Mr. Harriman’s
death in September, with the resultant realignment of forces
in high finance, deserves to be so classed, is a question
which can hardly be passed upon as yet."
FINANCE AND TRADE:
America: Proposal of an International American Bank.
See (in this Volume)
AMERICAN REPUBLICS.
FINANCE AND TRADE: Asia; A. D. 1909.
Disturbance of Trade by the Fall in Silver Exchange.
The following is a Press telegram from Ottawa, Canada,
June 23, 1909:
"The serious check to American exports to the Orient resulting
from the great fall in the silver exchanges last year is
attracting increasing attention on the Pacific Coast. A League
which describes itself as the Fair Exchange league has been
organized in Ottawa to keep the issues before the Dominion
parliament. It advocates the adoption of the Goschen plan of
1891 jointly by the British empire and the United States with
open mints in India as before 1893. The new movement has
secured a qualified endorsement from J. J. Hill of the Great
Northern railway. Mr. Hill says: ‘We must await the proposals
of the monetary commission at Washington. The silver problem
is full of difficulties. I wish it were possible to ignore it.
But our consuls in Asia warn us that at the present rate of
silver exchange Asia has ceased to import our wheat or flour
or lumber; that the Shanghai merchants who eighteen months
since bought the sovereign or five gold dollars with five
taels, must now pay near eight taels; the result is disaster;
he no longer buys.’"
FINANCE AND TRADE: British Empire: A. D. 1909.
Imperial Congress of Chambers of Commerce.
See (in this Volume)
BRITISH EMPIRE: A. D. 1909 (SEPTEMBER).
FINANCE AND TRADE: England: A. D. 1909.
The Budget of Mr. Lloyd-George.
See (in this Volume)
ENGLAND: A. D. 1909 (APRIL-DECEMBER).
{266}
FINANCE AND TRADE: Germany: A. D. 1901-1902.
Industrial Crisis and Period of Depression.
The extraordinary industrial development of Germany between
1895 and 1900 had its usual sequel in a sudden collapse,
followed by a period of depression and slow return to
productive activity. According to Dr. Braun, writing in the
_Yale Review_ of May, 1902, "the cause of the crisis lay
undoubtedly in extreme overproduction, which had continued for
a long time without its significance having been discovered by
any one. Enormous quantities of commodities had been
accumulated, numberless new industrial undertakings had come
into being, or were about to be started, and every one was
counting on further development of production by leaps and
bounds. But a feeling of uncertainty, which should pass into a
crisis, was bound to arise the moment certain unhealthy
conditions of German economic life, which had been covered up
during the period of prosperity, made their appearance.
"The conditions which did arouse this widespread feeling in
German capitalistic circles lay far from the industrial market
itself. Great losses suddenly appeared in the field of
mortgage investments, whose securities had been accepted by
the public as, next to government bonds, the safest form of
investment, and the freest from speculation. These
developments caused a panic among the investing public. This
feeling of panic began, according to my view, at the time when
the authorities found themselves forced to arrest two
directors of the Pomeranian Mortgage Bank (Pommersche
Hypothekenbank), who occupied the highest social position. …
The extraordinary result of the action of the authorities
against the leaders of certain mortgage banks is explained
only by the facts that at the end of 1900, six and two-third
billion marks of mortgage debentures were in circulation, and
that within ten years the amount invested in such debentures
had increased by three billion marks. The great majority of
the small and middle-class capitalists, who wished to invest
their money in safe securities, had put it into mortgage
debentures of this kind. The greatest confidence had been
placed in them, and now, for the first time, the eyes of the
public were open to the fact that great losses could also
ensue from such investments. The five principal offending
banks had at the end of 1900, 692,670,950 marks of mortgage
debentures in circulation. Every one had invested in these,
from the smallest capitalist to the German Empress. The public
and pretentious piety of the directors of the Prussian
Mortgage Stock Bank, who were later placed under arrest, had
induced even church-building associations to place their money
in these debentures."
"Then came the failure of the Dresdener Kreditanstalt, which,
with a capital of 20,000,000 marks, had loaned a single
industrial company, the Dresden Electrical Company, 9,000,000
marks; and this failure was followed by that of the famous
Leipsic Bank, which had loaned 84,000,000 marks to a concern
which had used up its own capital, and was paying fraudulent
dividends of 50 per cent. These two failures frightened the
public into a general withdrawal of deposits from banks of
every class."
FINANCE AND TRADE: Japan: A. D. 1909.
State of the War Debt and its Payment.
See (in this Volume)
JAPAN: A. D. 1909 (JULY-SEPTEMBER).
FINANCE AND TRADE: Mexico: A. D. 1905.
Currency Reform.
Cessation of Free Coinage of Silver.
See (in this Volume)
MEXICO: A. D. 1904-1905.
FINANCE AND TRADE: United States: A. D. 1908.
The Emergency Currency Act.
What is known as the Emergency Currency Act was passed by
Congress in May, 1908, and received the approval of the
President on the 30th of that month. It is a temporary
measure, for exigencies that may repeat the monetary
experience of 1907 before an adequate reform of the banking
and currency system of the country is effected, and will
expire by limitation on the 30th of June, 1914. It does not
disturb the present National bank note currency of the
country, based on Government bonds, but provides a means by
which an additional Volume, amounting to a total of
$500,000,000, if necessary, may be issued by the National
banks in case of a currency stringency.
There are two ways in which emergency circulation may be
issued. A bank may make an application through the Currency
Association of which it is a member, or, where State and
municipal bonds are offered as security, the application may
be made directly. A Currency Association may be formed by ten
or more banks having an aggregate capital and surplus of at
least $5,000,000. Only one may be formed in any city, and no
bank may belong to more than one. It must be formed by banks
located in territory as contiguous as convenient.
All applications for emergency currency are to be passed upon
by the Secretary of the Treasury after recommendation by the
Comptroller of the Currency. The Secretary will also determine
whether business conditions in the locality warrant the
issuance of such circulation. The distribution of the notes is
likewise left to him. Where application is made through an
Association, the securities are deposited with it; where a
direct application is made, they are deposited with the
Treasurer or any Assistant Treasurer of the United States. All
the members composing an Association are jointly and severally
liable to the United States for the redemption of all
emergency circulation taken out by its members.
FINANCE AND TRADE: A. D. 1908.
Banking and Currency Questions in the Party Platforms.
See (in this Volume)
UNITED STATES: A. D. 1908 (APRIL-NOVEMBER).
FINANCE AND TRADE: A. D. 1909.
The "Wall Street Investigation."
Report on the Operations of the Stock Exchange and other
Exchanges of New York City.
In December, 1908, a Special Committee of nine experienced
gentlemen, having Mr. Horace White for its chairman, was
appointed by Governor Hughes, of the State of New York, to
investigate and report "what changes, if any, are advisable in
the laws of the State bearing upon speculation in securities
and commodities, or relating to the protection of investors,
or with regard to the instrumentalities and organizations used
in dealings in securities and commodities which are the
subject of speculation." On the 7th of the following June the
Committee submitted to the Governor an extended report,
describing and discussing the organizations, the
instrumentalities and the methods employed in the dealings
with which their inquiry had to do. The following excerpts
from this important report (known commonly as the "report on
Wall Street") may suffice, perhaps, to convey the main matters
of information afforded by it and the more valuable
conclusions at which the Committee arrived:
{267}
"In law, speculation becomes gambling when the trading which
it involves does not lead, and is not intended to lead, to the
actual passing from hand to hand of the property that is dealt
in. … The rules of all the exchanges forbid gambling as
defined by this opinion [of the New York Court of Appeals,
case of Hurd vs. Taylor, 181 New York 231; but they make so
easy a technical delivery of the property contracted for, that
the practical effect of much speculation, in point of form
legitimate, is not greatly different from that of gambling.
Contracts to buy may be privately offset by contracts to sell.
The offsetting may be done, in a systematic way, by clearing
houses, or by ‘ring settlements.’ Where deliveries are
actually made, property may be temporarily borrowed for the
purpose. In these ways, speculation which has the legal traits
of legitimate dealing may go on almost as freely as mere
wagering, and may have most of the pecuniary and immoral
effects of gambling on a large scale.
"A real distinction exists between speculation which is
carried on by persons of means and experience, and based on an
intelligent forecast, and that which is carried on by persons
without these qualifications. The former is closely connected
with regular business. While not unaccompanied by waste and
loss, this speculation accomplishes an amount of good which
offsets much of its cost. The latter does but a small amount
of good and an almost incalculable amount of evil. In its
nature it is in the same class with gambling upon the
race-track or at the roulette table, but is practised on a
vastly larger scale. Its ramifications extend to all parts of
the country. It involves a practical certainty of loss to
those who engage in it.
"The problem, wherever speculation is strongly rooted, is to
eliminate that which is wasteful and morally destructive,
while retaining and allowing free play to that which is
beneficial. The difficulty in the solution of the problem lies
in the practical impossibility of distinguishing what is
virtually gambling from legitimate speculation. The most
fruitful policy will be found in measures which will lessen
speculation by persons not qualified to engage in it. In
carrying out such a policy exchanges can accomplish more than
legislatures. …
"The New York Stock Exchange is a voluntary association,
limited to 1,100 members, of whom about 700 are active, some
of them residents of other cities. Memberships are sold for
about $80,000. The Exchange as such does no business, merely
providing facilities to members and regulating their conduct.
The governing power is in an elected committee of forty
members and is plenary in scope. The business transacted on
the floor is the purchase and sale of stocks and bonds of
corporations and governments. Practically all transactions
must be completed by delivery and payment on the following
day. The mechanism of the Exchange, provided by its
constitution and rules, is the evolution of more than a
century. …
"The Volume of transactions indicates that the Exchange is
to-day probably the most important financial institution in
the world. In the past decade the average annual sales of
shares have been 196,500,000 at prices involving an annual
average turnover of nearly $15,500,000,000; bond transactions
averaged about $800,000,000. This enormous business affects
the financial and credit interests of the country in so large
a measure that its proper regulation is a matter of
transcendent importance. While radical changes in the
mechanism, which is now so nicely adjusted that the
transactions are carried on with the minimum of friction,
might prove disastrous to the whole country, nevertheless
measures should be adopted to correct existing abuses.
"It is unquestionable that only a small part of the
transactions upon the Exchange is of an investment character;
a substantial part may be characterized as virtually gambling.
Yet we are unable to see how the State could distinguish by
law between proper and improper transactions, since the forms
and the mechanisms used are identical. Rigid statutes directed
against the latter would seriously interfere with the former.
The experience of Germany with similar legislation is
illuminating.
See (in this Volume)
GERMANY: A. D. 1908.
But the Exchange, with the plenary power over members and
their operations, could provide correctives, as we shall show.
"Purchasing securities on margin is as legitimate a
transaction as a purchase of any other property in which part
payment is deferred. We therefore see no reason whatsoever for
recommending the radical change suggested, that margin trading be
prohibited. … In so far as losses are due to insufficient
margins, they would be materially reduced if the customary
percentage of margins were increased. The amount of margin
which a broker requires from a speculative buyer of stocks
depends, in each case, on the credit of the buyer; and the
amount of credit which one person may extend to another is a
dangerous subject on which to legislate. Upon the other hand,
a rule made by the Exchange could safely deal with the
prevalent rate of margins required from customers. In
preference, therefore, to recommending legislation, we urge
upon all brokers to discourage speculation upon small margins
and upon the Exchange to use its influence, and, if necessary,
its power, to prevent members from soliciting and generally
accepting business on a less margin than 20 per cent.
"‘Pyramiding,’ which is the use of paper profits in stock
transactions as a margin for further commitments, should be
discouraged. The practice tends to produce more extreme
fluctuations and more rapid wiping out of margins. If the
stock brokers and the banks would make it a rule to value
securities for the purpose of margin or collateral, not at the
current price of the moment, but at the average price of, say,
the previous two or three months (provided that such average
price were not higher than the price of the moment), the
dangers of pyramiding would be largely prevented.
"We have been strongly urged to advise the prohibition or
limitation of short sales, not only on the theory that it is
wrong to agree to sell what one does not possess, but that
such sales reduce the market price of the securities involved.
{268}
We do not think that it is wrong to agree to sell something
that one does not now possess, but expects to obtain later.
Contracts and agreements to sell, and deliver in the future,
property which one does not possess at the time of the
contract, are common in all kinds of business. The man who has
‘sold short’ must some day buy in order to return the stock
which he has borrowed to make the short sale. Short-sellers
endeavor to select times when prices seem high in order to
sell, and times when prices seem low in order to buy, their
action in both cases serving to lessen advances and diminish
declines of price. In other words, short-selling tends to
produce steadiness in prices, which is an advantage to the
community. No other means of restraining unwarranted marking
up and down of prices has been suggested to us. …
"A subject to which we have devoted much time and thought is
that of the manipulation of prices by large interests. This
falls into two general classes:
(1.) That which is resorted to for the purpose of making a
market for issues of new securities.
(2.) That which is designed to serve merely speculative
purposes in the endeavor to make a profit as the result of
fluctuations which have been planned in advance.
The first kind of manipulation has certain advantages, and
when not accompanied by ‘matched orders' is unobjectionable
_per se_. …
"The second kind of manipulation mentioned is undoubtedly open
to serious criticism. It has for its object either the
creation of high prices for particular stocks, in order to
draw in the public as buyers and to unload upon them the
holdings of the operators, or to depress the prices and induce
the public to sell. There have been instances of gross and
unjustifiable manipulation of securities, as in the case of
American Ice stock. While we have been unable to discover any
complete remedy short of abolishing the Stock Exchange itself,
we are convinced that the Exchange can prevent the worst forms
of this evil by exercising its influence and authority over
the members to prevent them. When continued manipulation
exists it is patent to experienced observers.
"In the foregoing discussion we have confined ourselves to
_bona-fide_ sales. So far as manipulation of either class
is based upon fictitious or so-called ‘wash sales’ it is open
to the severest condemnation, and should be prevented by all
possible means. These fictitious sales are forbidden by the
rules of all the regular exchanges, and are not enforceable at
law. They are less frequent than many persons suppose. … There
is, however, another class of transactions called ‘matched
orders,’ which differ materially from those already mentioned,
in that they are actual and enforceable contracts. We refer to
that class of transactions, engineered by some manipulator,
who sends a number of orders simultaneously to different
brokers, some to buy and some to sell. These brokers, without
knowing that other brokers have countervailing orders from the
same principal, execute their orders upon the floor of the
Exchange, and the transactions become binding contracts; they
cause an appearance of activity in a certain security which is
unreal. Since they are legal and binding, we find a difficulty
in suggesting a legislative remedy. But where the activities
of two or more brokers in a certain securities become so
extreme as to indicate manipulation rather than genuine
transactions, the officers of the Exchange would be remiss
unless they exercised their influence and authority upon such
members. …
"The subject of corners in the stock market has engaged our
attention. The Stock Exchange might properly adopt a rule
providing that the governors shall have power to decide when a
corner exists and to fix a settlement price, so as to relieve
innocent persons from the injury or ruin which may result
therefrom. The mere existence of such a rule would tend to
prevent corners."
Speaking in a general way, it may be said that the Committee
holds the directorate of the Stock Exchange responsible for
evils connected with the operations that are centralized by
it. "It has almost unlimited power over the conduct of its
members," says the report, "and it can subject them to instant
discipline for wrongdoing." As a voluntary organization it is
more free in the exercise of this power than it would be if
incorporated and brought under the authority and supervision
of the State and the process of the courts. Hence the
Committee refrains from advising the incorporation of the
Exchange; but it does so only on the assumption that it "will
in the future take full advantage of the powers conferred upon
it by its voluntary organization." In the past it has failed
to do so.
At the same time, the Committee corrects an erroneous public
notion that Wall Street and the Stock Exchange are one and the
same thing. "An investigation was made of the transactions on
the Exchange for a given day, when the sales were 1,500,000
shares. The returns showed that on that day 52 per cent. of
the total transactions on the Exchange apparently originated
in New York city, and 48 per cent. in other localities."
The operations of the various other trading exchanges in New
York,—the Consolidated Stock Exchange, "the Curb," so called,
and the several "commodity exchanges," where dealings in
produce, cotton, coffee, etc., are centered,—are discussed in
the report, with disapproval of some. The abuses which find
their opportunity in the unorganized Curb market,—carried on
within a roped-off section of Broad Street,—are set forth with
distinctness, and are traced clearly to the tolerance and
encouragement afforded to them by the Stock Exchange. "About
85 per cent, of the business of the Curb," says the report,
"comes through the offices of members of the New York Stock
Exchange, but a provision of the constitution of that Exchange
prohibits its members from becoming members of, or dealing on,
any other _organized_ Stock Exchange in New York.
Accordingly, operators on the curb market have not attempted
to form an organization. The attitude of the Stock Exchange is
therefore largely responsible for the existence of such abuses
as result from the want of organization of the curb market.
The brokers dealing on the latter do not wish to lose their
best customers, and hence they submit to these irregularities
and inconveniences. Some of the members of the Exchange
dealing on the curb have apparently been satisfied with the
prevailing conditions, and in their own selfish interests have
maintained an attitude of indifference toward abuses. We are
informed that some of the most flagrant cases of discreditable
enterprises finding dealings on the curb were promoted by
members of the New York Stock Exchange. The present apparent
attitude of the Exchange toward the curb seems to us clearly
inconsistent with its moral obligations to the community at
large."
{269}
On the much debated question, whether dealing in
"futures,"—the selling of agricultural products for future
delivery,—should be prohibited or otherwise interfered with,
the report of the Committee is strongly in favor of letting it
alone. It says, "The subject was exhaustively considered by
the Industrial Commission of Congress which in 1901 made an
elaborate report (Volume VI.), showing that selling for future
delivery, based upon a forecast of future conditions of supply
and demand, is an indispensable part of the world’s commercial
machinery, by which prices are, as far as possible, equalized
throughout the year to the advantage of both producer and
consumer. The subject is also treated with clearness and
impartiality in the Cyclopedia of American Agriculture, in an
article on ‘Speculation and Farm Prices’; where it is shown
that since the yearly supply of wheat, for example, matures
within a comparatively short period of time, somebody must
handle and store the great bulk of it during the interval
between production and consumption. Otherwise the price will
be unduly depressed at the end of one harvest and
correspondingly advanced before the beginning of another.
Buying for future delivery causes advances in prices; selling
short tends to restrain inordinate advances. In each case
there must be a buyer and a seller, and the interaction of
their trading steadies prices. Speculation thus brings into
the market a distinct class of people possessing capital and
special training who assume the risks of holding and
distributing the proceeds of the crops from one season to
another with the minimum of cost to producer and consumer."
FINANCE AND TRADE: A. D. 1909-1910.
The "Central Bank" Question.
In Boston, at the outset of President Taft's tour of the
country in the fall of 1909, he made a speech on financial
subjects which touched the old question of the need in the
country of a Central Bank of Issue, as an instrument for the
automatic or natural regulation of its currency, in quantity
and distribution. This gave the opening to a revival of
discussions which have been seldom heard since Jackson’s time.
A clear, succinct statement of the banking conditions which
have revived this question, with explanations of what it
involves, appears in the following, borrowed from a monthly
financial letter sent out in November by the National City
Bank of Chicago:
"The creation of a Central Bank of Issue as a cure for the
defects of our financial system is of such importance that a
brief review of the proposition may be of interest to our
clients:
"The business of banking is probably as sound in this country
as in any other. Our individual banks are, as a rule,
prudently, honestly and capably managed. During normal times
they deserve and enjoy the confidence of the public which they
efficiently serve. Yet only two years ago they practically
suspended because the system—that is the relation of one bank
to all the others—had collapsed. This occurred while there was
more gold in the country than existed in several of the other
leading commercial nations combined, and while nearly all of
the twenty or more thousand banks in the United States were
sound, solvent, and in normal condition. With over
$900,000,000 of gold in the United States Treasury, and
several hundred millions more in the country, we imported at
great cost about $100,000,000 chiefly from the coffers of the
Bank of England, which itself only held $105,000,000.
"The loss on investments and to general business by such a
panic as that of 1907 is beyond computation. When we consider
that we have had several such panics within the memory of
living men, and that other and poorer countries possess the
means of avoiding such conditions, we naturally ask what is
wrong or lacking in our financial system as compared to
theirs?
"In times of trouble our reserves scatter. Theirs are massed.
Our currency is rigid and cannot be quickly expanded to meet
an emergency. Their currency is capable of instantaneous
expansion. Our chief gold reserves are in the United States
Treasury unavailable as a basis for such expansion. Their
reserves are in great central banks—immediately available for
currency expansion. Besides, under our national banking
system, a bank in a non-reserve city with deposits of, say
$1,000,000, keeps six per cent, or $60,000 in its own vault,
and nine per cent, or $90,000, to its credit with a reserve
city bank. In the reserve city bank, however, the $90,000 is
merely a deposit against which it keeps an actual reserve of
about $20,000. When trouble comes, therefore, and the bank in
the non-reserve city decides to increase its cash reserves
from six to eight per cent it calls upon its reserve agent for
$20,000 cash, and when the reserve city bank has forwarded
that amount, it has parted with all the actual reserve it has
belonging to the non-reserve city bank, and it still has a
deposit liability on its books of $70,000 against which it
holds no reserve whatever.
"As it is a very natural and prudent thing for banks in
non-reserve cities to increase their cash reserves by at least
two per cent when trouble threatens, nearly all try to do so
at the same time, and the result is that the threatened
trouble becomes a reality. In short, when financial trouble
threatens in any other great country the _system_
provides relief and the danger is avoided, whereas,
unfortunately, with us every step we take increases the
trouble and helps it along until it is beyond control.
"Financial stringency existed in all the leading countries in
1907. Suspension of specie-payments and actual panic occurred
only in the United States. They stopped abruptly at our
borders, and Canada and even Mexico knew nothing of them.
Manifestly, we need something! There is little difference of
opinion on that score. But when we begin to discuss the remedy
we have a wide divergence of views.
"Many favor asset or credit currency similar to that
prevailing in Canada. The Canadian System of asset currency is
excellent when joined to the branch banking system. But it is
felt that it would be almost impossible to apply it to a
system containing thousands of individual banks. The
difficulty is that of providing adequate redemption
facilities, without which the danger of currency inflation
could scarcely be avoided. Several schemes to meet this
difficulty have been suggested, but the best of them seem
rather unwieldy.
{270}
"The proposal which seems to be gaining most ground is to
establish a great semi-government bank to be added to our
present system. To this bank would be transferred at once the
government deposits now in national banks, and later a large
part of the reserves of the banks in the central reserve, and
possibly also the reserve cities. Like everything else, the
bank would have to be an evolution. Years would pass before it
would work into its proper position and exercise its full
powers. Gradually, it is hoped, the United States Treasury
could be done away with, and the government taken out of the
banking business. Then all government funds would be deposited
with the Central Bank. Its branches would take the place of
our Sub-Treasuries. It would be a bank of banks, where other
banks could re-discount their bills, or borrow on securities,
receiving therefor currency to be issued by the Central Bank.
This currency would be partly secured by a gold reserve, and
partly by the general assets of the bank.
"If the $900,000,000 gold in the United States Treasury in
1907, held against an equal amount of notes, had been in a
Central Bank it would have formed a sufficient basis for the
issue of an additional $900,000,000 of currency, for fifty per
cent reserve against currency would be ample. For such
additional issue the Central Bank would, of course, receive
acceptable banking assets. A far smaller amount, however, than
$900,000,000 would have averted the panic. It seems clear that
such an institution would provide the elasticity to our
currency which we so much need, not only in times of stress,
but every crop-moving season.
"There are many details which would require careful study, but
to many competent to judge, the Central Bank idea seems to be
the correct solution of the difficulty. The fact that all the
other important countries of the world have adopted it ought
to give it weight. Even little Switzerland came to it four
years ago, and Japan, after adopting a system copied from
ours, has established a Central Bank patterned after the
Imperial Bank of Germany.
"Most of the objections raised seem to be largely based on
sentiment rather than on argument. It is said to be
‘un-American,’ or that it would be ‘used by Wall Street.’ or
that ‘it would get into politics.’ It would seem to us that if
the system is the best, it should not be ‘un-American’ to
adopt it, and that an illegitimate use of it by ‘ Wall Street’
could easily be guarded against in its organization. To say
that we cannot trust our government to properly use, and not
abuse, the powers of a Central Bank is to say that it is
inferior to the governments of Europe which have wisely used
such powers for generations.
"There seems some danger that the bank would not pay unless it
entered into competition with existing banks for regular
commercial business; but we must remember that Central Banks
are not expected to earn large dividends.
"We predict a long campaign of discussion before the right
course appears clear to the American people; but it seems to
us that the arguments advanced for a Central Bank are well
worthy of the most earnest study."
FINANCE AND TRADE: A. D. 1909-1910.
Powerful Combination of Banking Interests by J. P. Morgan & Co.
Early in December, 1909, the powerful banking house of J. P.
Morgan & Co. obtained control of the Guaranty Trust Company
and the Equitable Life Assurance Company, which latter
controls the Equitable and Mercantile trust companies. In the
former case it purchased the holding of the Harriman estate,
and in the latter that of Thomas Ryan. At the beginning of the
following month, by another deal with Mr. Ryan, the same firm
acquired the Morton and the Fifth Avenue trust companies. The
combined assets of the Guaranty, Morton, and Fifth Avenue
trust companies were reported to be $259,000,000. Joined to
the vast resources of the Equitable Life Assurance Company and
to those previously controlled by the Morgan Company, the
financial combination seems overpowering.
FINANCE AND TRADE.
See,(in this Volume),
TARIFFS, AND COMBINATIONS.
----------FINANCE AND TRADE: End--------
FINLAND: A. D. 1901.
The Russianizing of the Finnish Army.
Resistance to the Violation of Constitutional Rights.
Despotic measures of the Tsar.
M. de Plehve’s defence.
The shameful overthrow, in 1899, by the present Tsar of
Russia, of the ancient constitution of Finland, which had
preserved its distinct nationality ever since it came, in
1809, under the Russian crown, is related in Volume VI. of
this work. Among the measures then undertaken for Russianizing
Finland—reducing it substantially to the status of a Russian
province—the most serious was the practical incorporation of
the Finnish army with the Russian, the law for accomplishing
which had not been fully carried through when the account of
events in Volume VI. was closed. It was opposed very
strenuously by M. Witte, then rising to influence in the
councils of the Tsar, and seemed not unlikely to be put aside.
But the worse influences prevailed in the end over the wiser,
and the proposed measure became law on the 11th of July, 1901.
It placed all Finnish troops under the orders of the Russian
commander in Finland, authorized the putting of Finnish
conscripts into the Russian regiments stationed in Finland,
and subjected Finnish regiments to service, when required,
outside of Finland, from which service they had been
constitutionally exempt hitherto.
The resistance to this gross violation of time-honored rights
was universal and determined. Conscripts refused to answer the
call to military service, subjecting themselves to the
penalties for desertion, and practically the whole population
stood ready to protect them. Extensive movements of emigration
to America and elsewhere were begun. At the same time the
Tsar’s authority, as the common sovereign of Finland and
Russia, was used in many ways as autocratically in his
constitutional realm as in that where his absolutism knew no
bounds. The powers of the Russian Governor-General of Finland
were enlarged; the Finnish archives were removed to St.
Petersburg; Cossacks were sent into the abused country with
their knouts to quell resistance to the army law; but the
resistance went on, taking presently a more passive form.
Communes refused to elect the conscription boards which the
law prescribed for carrying out the levy of recruits, and
heavy fines were imposed on them without effect. In November,
1902, a convention of delegates from all parts of Finland,
composed largely of peasants and workmen, resolved to
"continue everywhere, unswervingly, and until legal conditions
are restored to the country, the passive resistance against
all measures conflicting with, or calculated to abolish, our
fundamental laws."
{271}
An elaborate defence of these Russianizing measures in Finland
was addressed, in August, 1903, by the Russian Minister of the
Interior, M. dePlehve, to Mr. W. T. Stead, editor of the
_English Review of Reviews_, by way of reply to an "open
letter" to himself on the subject, by Mr. Stead, published in
the _Review_ of that month. Concerning the military law,
M. Plehve wrote:
"This law, in its application to the new conscription
regulations, has alleviated the condition of the population of
Finland. Contrary to the information you have received, the
military burden laid on the population of the land has not
been increased by 5,000 recruits annually, but has been
decreased from 2,000 men to 500 per annum, and latterly to
280. As you will see, there is in reality no opposition
between the will of the Emperor of Russia as announced to
Finland in 1899 and his generous initiative at The Hague
Conference." At the end of a long exposition of the principles
of Russian imperial policy, which left it far from clear, the
Minister said: "I shall give the following answer to your
entreaty to put an end to the present policy of Russia in
Finland, which you are pleased to call the policy of General
Bobrikoff. First of all, it is incorrect to connect the
present course of Russian policy in Finland with the name of
the present Governor-General of Finland alone, for, as regards
the fundamental purpose of his labors, all the advisers and
servants of his Imperial Majesty who have to do with the
government of Finland are at one with him in their firm
conviction that the measures now applied in Finland are called
for by the pressing requirements of our state. With regard to
the essence of the question, I repeat that in matters of
government temporary phenomena should be distinguished from
permanent ones. The incidental expression of Russian policy,
necessitated by an open mutiny against the government in
Finland, will, undoubtedly, be replaced by the former favor of
the sovereign toward his Finnish subjects, as soon as peace is
finally restored and the current of social life in that
country assumes its normal course. Then, certainly, all
repressive measures will be repealed. But the realization of
the fundamental aim which the Russian Government has set
itself in Finland,—i. e., the confirming in that land of the
principle of imperial unity,—must continue, and it would be
best of all if this end were attained with the trustful
cooperation of local workers under the guidance of the
sovereign to whom Divine Providence has committed the
destinies of Russia and Finland."
FINLAND: A. D. 1904.
Assassination of Governor-General Bobrikoff.
On the 15th of June, 1904, Governor-General Bobrikoff, who had
been the executor of the Russianizing policy in Finland, and
was hated accordingly, was shot by a Finnish member of the
Parliamentary opposition.
FINLAND: A. D. 1905.
Successful Revolt against the Russianizing Oppressions.
The Tsar’s Concessions.
Restoration of Ancient Liberties.
Taking advantage of the situation in Russia, which tied the
hands of the Autocrat (see (in this Volume) RUSSIA: A. D.
1904-1905), the Finns, by a sudden general rising, drove out
the Russian officials in their country, took possession of the
military posts and Government building, and forced the
Governor, Prince John Obolenski, to send to the Tsar their
demand for a restoration of their ancient constitutional
rights which he had taken away (see, in Volume VI. of this
work, FINLAND: A. D. 1898-1901). The helplessness to which
their Russian master had been reduced was signified by the
prompt amiability of his response, in successive manifestoes,
the first of which bore the following command:
"By the grace of God, we, Nicholas II., etc., command the
opening at Helsingfors, December 20, of an extraordinary Diet
to consider the following questions.
"_First_.
The proposals for the budget of 1906-1907, provisional taxes,
and a loan for railway construction.
"_Second_.
A bill providing, by a new fundamental law, a parliament for
Finland on the basis of universal suffrage, with the
establishment of the responsibility of the local authorities
to the nation’s deputies.
"_Third_.
Bills granting liberty of the press, of meeting, and of
unions."
A subsequent manifesto announced:
"We have ordered the elaboration of bills reforming the
fundamental laws for submission to the deputies of the nation,
and we order the abrogation of the manifesto of February 15,
1899; the ukase of April 15, 1903, concerning measures for the
maintenance of public order and tranquillity; the imperial
ukase of November 23, 1903, according exceptional rights to
the gendarmerie in the grand duchy; Article 12 of the ukase of
July 13, 1902, on Finnish legislation; the ukase of September
21, 1902, on the reform of the Senate and the extension of
powers of governors; the ukase of April 8, 1903, on
instructions for the governor-general and the assistant
governor of Finland; the law of July 25, 1901, on military
service; the ukase of August 13, 1902, on the duties of civic
officials in Finland; the ukase of August 27, 1902, on the
resignation of administrative officials and judicial
responsibility for offenses and crimes of officials, and the
ukase of July 15, 1900, on meetings.
"We further order the Senate to proceed immediately with the
revision of the other regulations enumerated in the petition,
and we order the immediate suppression of the censorship.
"The Senate should prepare bills granting liberty of speech,
of the press, of meeting, and of union; a national assembly on
the basis of universal suffrage, and the responsibility of the
local authorities as soon as possible, in order that the Diet
may discuss them.
"We trust that the measures enumerated, being dictated by a
desire to benefit Finland, will strengthen the ties uniting
the Finnish nation to its sovereign."
An article quoted from a Danish magazine tells in a few words
how the bloodless revolution was accomplished:
"The weapon used for the purpose of paralyzing the government
was the general strike. It may be questioned to which class
belongs the chief part of honor in this struggle. A marvelous
unity characterized the whole movement. While post, telegraph,
and railroad traffic was stopped the entire light supply was
cut off. The strike extended even into the private kitchen,
and this was one of the reasons which hastened the departure
of the Russian officials. In the meantime the question was not
only should Russian guns be directed on Helsingfors, but also
should personal safety be maintained. That so few
transgressions of the law occurred with the whole police force
on strike is a splendid testimony for the Finnish people. The
revolution in Finland stands hence as an unparalleled example
of a popular upheaval."
{272}
FINLAND: A. D. 1906.
Political Enfranchisement of Women.
See (in this Volume)
ELECTIVE FRANCHISE: WOMAN SUFFRAGE.
FINLAND: A. D. 1908-1909.
Russian Measures for the Destruction of the
Constitutional Autonomy of Finland.
The reactionary determinations of the Russian Government,
since it mastered the revolutionary movements of 1905-1906, are
revealed in nothing else more plainly than in its steady
pursuance of measures to extinguish the degree of autonomy
which belongs to Finland, under the constitution that was
confirmed to its people by the Tsar Alexander I., after he had
taken their country from the Swedish crown.
See, in Volume IV. of this work,
SCANDINAVIAN STATES: A. D. 1807-1810.
One of the most arbitrary of the early measures in this
direction was the assumption by the Tsar, in June, 1908, of a
right to confer on the Russian Council of Ministers certain
powers of control over Finnish legislation. The protests of
the Diet and Senate of Finland against this and other attacks
on their constitutional rights led to a dissolution of the
Diet, and the election of a new representative body, early in
May, 1909. The election produced substantially the same
popular representation in the new Diet that had characterized
its predecessor, and its attitude toward the autocratic
invasion of Finnish rights was the same. The Socialists
received 79,447 votes. The party of the Old Finns which
inclines to submissiveness polled a total of 52,396. The
Constitutional parties, the Young Finns and the Swedes,
received respectively 28,711 and 15,885 votes, while the
Agrarian-Socialists got 13,648 and the Christian Workmen 6172.
The Old Finns stand alone against the other parties.
Meantime, the Tsar, in sanctioning an Act of the previous
Diet, after its dissolution, had done it in terms that were
deemed contrary to the Constitution of Finland, and the
Senate, which is composed of members appointed by the Tsar,
petitioned him for a modification of them. His reply was a
rebuke and a command that they promulgate the law, and thus
accept his misconstruction of the Constitution. Thereupon the
Vice-President of the Senate and four of its members resigned.
The remaining five, pliant to the imperial will, voted with
the presiding Governor-General for the promulgation of the
law.
In the course of the next few months other demands were made
on the Finns which even the imperial appointees of the Senate
could not yield to. In October, an Imperial rescript decreed
that military service legislation for Finland should be
withdrawn from the competence of the Finnish Diet and
transferred to the Imperial Legislature; and that until such
legislation is enacted Finland should pay into the Russian
exchequer an annual contribution of 10,000,000 marks
($2,000,000), to be increased gradually to 20,000.000 marks.
This left the Finnish Diet no voice in the appropriation. The
five members who had remained in the Senate when their four
colleagues resigned now intimated their intention to withdraw.
On the 14th of October the four vacant seats were filled by an
appointment of naval and military officers who were said to be
"technically Finnish citizens," but all of whom, save one, had
spent their lives in Russia. A month later, November 17, a
Press despatch from Helsingfors made the following
announcement: "At an all-night session which ended to-day the
Finnish Diet rejected the government bill providing for
Finland’s contribution to the Russian military appropriation.
A resolution was adopted requesting the Emperor to reintroduce
the measure in a constitutional form. The dissolution of the
Diet is expected. The Emperor has accepted the resignations of
the Finnish Senators who refused to remain in office if the
Russian demand for a big military appropriation by Finland was
pressed." The expectation of another dissolution of the Diet
by the Tsar, as the consequence of this action, was realized
the next day.
Some months prior to this time a joint committee of Russians
and Finns had been appointed to formulate rules or principles
that should apply with authority in future to legislation for
Finland. Agreement between the two constituents of this
Russo-Finnish committee appears to have been impossible from
the beginning. They were hopelessly opposed in their views of
the relation existing between the constitutional Grand Duchy
of Finland and the autocratic Empire of Russia, by virtue of
their having a common sovereign. Toward the end of November
their failure to come to any agreement was made known; and on
the 22d of December a despatch from St. Petersburg announced
that "the conclusion of the labours of the Russo-Finnish
Commission, resulting in a perfunctory majority vote of the
Russian members in favour of the reduction of the Finnish
Constitution to a provincial autonomy, is deplored by most of
the newspapers. The Finnish members apprehend a military
dictatorship."
The St. Petersburg correspondent of _The Times_ had
previously stated what the prescription of the Russian
majority of the Committee would be. They maintain, he wrote,
that "there never was a Constitution granted to Finland
binding on Russia as the Sovereign Power, and that, therefore,
a new order of procedure can be established independently of
the Finnish authorities by an Act of legislation passed by the
Russian Legislature alone. They have drawn up a list of
matters to come under the new procedure. According to this
list all legislation on such matters as the Russian language
in Finland, the principles of Finnish administration, police,
administration of justice, public education, formation of
business companies and of associations, public meetings,
Press, importation of foreign literature, Customs tariffs,
literary and artistic copyright, monetary system, means of
communication, including pilot and lighthouse service, and
many other subjects, shall be enacted by the Imperial
legislative organs. The Finnish Diet shall be entirely ignored
in such matters, while there is a provision for some cases
that the opinion of the Finnish Senate shall be taken.
"It is difficult to understand what legislative matters are to
be left for the Finnish Diet to deal with; but it seems that
the Russian members are not sure that they have covered the
whole ground, for their project contains a clause to the
effect that additions to their list may be made by means of
Imperial legislation.
{273}
"It is proposed that Finland shall be represented in the
Russian Duma by five members, one of whom shall be elected by
Russian residents in Finland who are not Finnish citizens,
whilst the Finnish Diet shall send one member to the Council
of Empire."
The first movement, probably, on these new lines of imperial
government for Finland, was that reported in a Reuter message
from St. Petersburg, December 24, as follows:
"The Cabinet has approved new regulations whereby all
documents issued by the Chancellery of the Governor-General of
Finland shall be worded in Russian without a Finnish or
Swedish translation."
FINLAND: A. D. 1910.
Fresh Elections to the Finnish Diet.
The Russian Duma assuming authority over Finland.
A new Diet, chosen at elections held early in February, 1910,
is composed as follows:
Old Finns, 42;
Young Finns, 28;
Swedish People’s party, 26;
Social Democrats, 86;
Agrarians, 17;
Christian Labor party, 1.
Fifteen women were elected, nine of them by the Social
Democrats.
Just as this matter goes into type, a despatch from St.
Petersburg, March 30, 1910, announces the introduction of a
bill in the Russian Duma assuming authority in that body over
Finland.
FINSEN, Niels Ryberg.
See (in this Volume)
NOBEL PRIZES.
FIRE, Great calamities of.
See (in this Volume)
BALTIMORE;
CHICAGO;
NEW YORK CITY;
SAN FRANCISCO;
OSAKA.
FISCAL REFORM, Mr. Joseph Chamberlain’s programme of.
See (in this Volume)
England: A. D. 1903 (May-September).
FISCHER, Emil.
See (in this Volume)
NOBEL PRIZES.
FISHER, Andrew:
Prime Minister of Australia.
See (in this Volume)
AUSTRALIA; A. D. 1908, and 1909 (MAY-JUNE).
FISHERIES:
Newfoundland.
See (in this Volume)
NEWFOUNDLAND.
FISHES, FOOD:
Convention for their Preservation and Propagation in the
Waters contiguous to the United States and Canada.
See (in this Volume)
FOOD FISHES.
FIVE CIVILIZED TRIBES:
End of their Autonomy.
See (in this Volume)
INDIANS, AMERICAN.
FLOODS.
See (in this Volume)
CHINA; A. D. 1906-1907, and
FRANCE: A. D. 1910.
FOLK, Joseph Wingate:
Prosecutor of Municipal Thievery and Corruption in St. Louis.
Governor of Missouri.
See (in this Volume)
MUNICIPAL GOVERNMENT.
FOOD FISHES:
Convention respecting their Protection, Preservation, and
Propagation in the Waters contiguous to the United States
and Canada.
The following are the articles of a Convention negotiated at
Washington and signed by Ambassador James Bryce, for the
Government of Great Britain, and by Secretary Elihu Root, for
that of the United States, on the 11th of April, 1908.
Ratifications of the Convention were exchanged on the 4th of
June:
"ARTICLE 1.
The times, seasons, and methods of fishing in the waters
contiguous to the United States and Canada as specified in
Article 4 of this Convention, and the nets, engines, gear,
apparatus, and appliances which may be used therein, shall be
fixed and determined by uniform and common international
regulations, restrictions, and provisions; and to that end the
High Contracting Parties agree to appoint, within three months
after this Convention is proclaimed, a Commission to be known
as the International Fisheries Commission, consisting of one
person named by each Government.
"ARTICLE 2.
It shall be the duty of this International Fisheries
Commission, within six months after being named, to prepare a
system of uniform and common International Regulations for the
protection and preservation of the food fishes in each of the
waters prescribed in Article 4 of this Convention, which
Regulations shall embrace close seasons, limitations as to the
character, size, and manner of use of nets, engines, gear,
apparatus, and other appliances; a uniform system of registry
by each Government in waters where required for the more
convenient regulation of commercial fishing by its own
citizens or subjects within its own territorial waters or any
part of such waters; an arrangement for concurrent measures
for the propagation of fish; and such other provisions and
measures as the Commission shall deem necessary.
"ARTICLE 3.
The two Governments engage to put into operation and to
enforce by legislation and executive action, with as little
delay as possible, the Regulations, restrictions, and
provisions with appropriate penalties for all breaches
thereof; and the date when they shall be put into operation
shall be fixed by the concurrent proclamations of the
President of the United States and the Governor-General of the
Dominion of Canada in Council.
"And it is further agreed that jurisdiction shall be exercised
by either Government, as well over citizens or subjects of
either party apprehended for violation of the Regulations in
any of its own waters to which said Regulations apply, as over
its own citizens or subjects found within its own jurisdiction
who shall have violated said Regulations within the waters of
the other party.
"ARTICLE 4.
It is agreed that the waters within which the aforementioned
Regulations are to be applied shall be as follows:
(1) The territorial waters of Passamaquoddy Bay;
(2) the St. John and St. Croix Rivers;
(3) Lake Memphremagog:
(4) Lake Champlain;
(5) the St. Lawrence River, where the said River constitutes
the International Boundary;
(6) Lake Ontario;
(7) the Niagara River;
(8) Lake Erie;
(9) the waters connecting Lake Erie and Lake Huron,
including Lake St. Clair;
(10) Lake Huron, excluding Georgian Bay but including
North Channel;
(11) St. Mary’s River and Lake Superior;
(12) Rainy River and Rainy Lake;
(13) Lake of the Woods;
(14) the Strait of San Juan de Fuca, those parts of
Washington Sound, the Gulf of Georgia and Puget Sound
lying between the parallels of 48° 10' and 49° 20';
(15) and such other contiguous waters as may be
recommended by the International Fisheries Commission and
approved by the two Governments.
It is agreed on the part of Great Britain that the Canadian
Government will protect by adequate regulations the food
fishes frequenting the Fraser River.
"The two Governments engage to have prepared as soon as
practicable charts of the waters described in this Article,
with the International Boundary Line indicated thereon; and to
establish such additional boundary monuments, buoys, and marks
as may be recommended by the Commission.
{274}
"ARTICLE 5.
The International Fisheries Commission shall continue in
existence so long as this Convention shall be in force, and
each Government shall have the power to fill, and shall fill
from time to time, any vacancy which may occur in its
representation on the Commission. Each Government shall pay
its own Commissioner, and any joint expenses shall be paid by
the two Governments in equal moieties.
"ARTICLE 6.
The Regulations, restrictions, and provisions provided for in
this Convention shall remain in force for a period of four
years from the date of their executive promulgation, and
thereafter until one year from the date when either the
Government of Great Britain or of the United States shall give
notice to the other of its desire for their revision; and
immediately upon such notice being given the Commission shall
proceed to make a revision thereof, which Revised Regulations,
if adopted and promulgated by the President of the United
States and the Governor-General of Canada in Council, shall
remain in force for another period of four years and
thereafter until one year from the date when a further notice
of revision is given as above provided in this Article. It
shall, however, be in the power of the two Governments, by
joint or concurrent action upon the recommendation of the
Commission, to make modifications at any time in the
Regulations.
"ARTICLE 7.
The present Convention shall be duly ratified by His Britannic
Majesty and by the President of the United States, by and with
the advice and consent of the Senate thereof, and the
ratifications shall be exchanged in Washington as soon as
practicable."
FOOD LAWS.
See (in this Volume )
PUBLIC HEALTH: PURE FOOD LAWS.
FORESTS, Conservation of.
See (in this Volume)
CONSERVATION OF NATURAL RESOURCES.
FORMOSA:
Earthquake in.
See (in this Volume)
EARTHQUAKES: FORMOSA: A. D. 1906.
FORMOSA:
Japanese Dealing with the Opium Problem.
See (in this Volume)
OPIUM PROBLEM.
FORTIS MINISTRY.
See (in this Volume)
ITALY: A. D. 1905-1906.
FOSTER, John W.:
On the American Violation of Treaties with China.
See (in this Volume )
RACE PROBLEMS: UNITED STATES: A. D. 1905-1908.
FOSTER, Volney W.:
Delegate to Second International Conference of
American Republics.
See (in this Volume)
AMERICAN REPUBLICS.
FOUNDATION FOR THE PROMOTION OF INDUSTRIAL PEACE.
See (in this Volume)
LABOR ORGANIZATION: UNITED STATES: A. D. 1907.
----------FRANCE: Start--------
FRANCE: A. D. 1870-1905.
Increase of Population compared with other European Countries.
See (in this Volume)
EUROPE: A. D. 1870-1905.
FRANCE: A. D. 1896-1906.
Encroachments of the French Algerian Boundary on Morocco.
See Morocco: A. D. 1896-1906.
FRANCE: A. D. 1900.
Comparative Statement of the Consumption of Alcoholic Drink.
Its Increase.
See (in this Volume)
ALCOHOL PROBLEM.
FRANCE: A. D. 1902.
Purchase of Franchises and Property of the French Panama
Canal Company by the United States.
See (in this Volume)
PANAMA CANAL.
FRANCE: A. D. 1902.
Favored footing in Abyssinia.
Railway Projects.
See (in this Volume)
ABYSSINIA: A. D. 1902.
FRANCE: A. D. 1902.
French Central Africa.
Explorations.
A Land-locked Empire.
See (in this Volume)
AFRICA: FRENCH CENTRAL.
FRANCE: A. D. 1902 (April-October).
Elections to the Chamber of Deputies.
Resignation of Waldeck-Rousseau.
Formation of a Radical Ministry under M. Combes.
Enforcement of the Law of Associations.
Closing of unauthorized schools.
The first ballot in elections to the Chamber of Deputies was
cast on the 27th of April, producing 413 conclusive elections
and leaving 178 to be decided by a second vote. The new
Chamber met on the 1st of June, and elected for its president,
M. Leon Bourgeois, by a vote of 303 against 267. On the
following day M. Waldeck-Rousseau, who had been at the head of
the Ministry for three years—an exceptional term of
premiership in France—resigned, on the plea that his task was
done. A new Radical Cabinet was then formed by M. Émile
Combes, which announced a moderate programme on the 10th, and
received the declared support of 312 members, against 116 in
opposition and 149 who took neutral ground. Of the previous
Cabinet, M. Delcassé retained the portfolio of Foreign Affairs
and General Andre that of War. The session was short and
little was done.
In the following months great excitement and much disorder in
parts of the country, especially in Brittany, was caused by
proceedings taken to enforce the law concerning Associations,
passed in the previous year.
See in Volume VI.
FRANCE: A. D. 1901.
Some religious orders—teaching orders and others—had refused
or neglected to register themselves and obtain authorization,
as required by the law, and these were now to be closed. In
many cases there was resistance to the closing of the
unauthorized schools. In a few cases there was a refusal by
military officers to obey commands for the assistance of their
soldiery in enforcing the law. Magistrates, too, opposed the
government, and a majority of the councils in the departments
of France withheld their support. Nevertheless the government
proceeded firmly in the matter and the provisions of the law
were carried out. When the Chambers were reconvened in October
the burning subject came up for fierce discussion, and the
attitude and acts of the Combes Ministry were approved in the
Chamber of Deputies by 329 against 233.
FRANCE: A. D. 1902 (May).
Courtesies at the unveiling of a Monument to
Marshal de Rochambeau, at Washington.
See (in this Volume)
UNITED STATES: A. D. 1902 (MAY).
FRANCE: A. D. 1902 (October).
Strikes in the Coal Mines and on the Docks at Marseilles.
See (in this Volume)
Labor Organization:
FRANCE: A. D. 1902.
FRANCE: A. D. 1902 (October).
Treaty with Siam.
Acquisition of more territory.
See (in this Volume)
SIAM: A. D. 1902.
{275}
FRANCE: A. D. 1903.
Elections to the Senate.
Execution of the Associations Law.
Closing of Schools and Houses of the Religious Orders.
Resistance and Rioting encouraged by Magistrates.
State Monopoly of Education established.
Building new Schoolhouses.
Elections for a section of the Senate, occurring early in
January, 1903, went favorably for the Government. M. Fallières
was reëlected President of that body, while M. Bourgeois was
seated again in the presiding chair of the lower Chamber. The
Combes Ministry was strengthened in its hold of power by the
continued agitation that attended the execution of the
Associations Law as applied to the religious orders and
brotherhoods.
See in Volume VI. of this work,
FRANCE: A. D. 1901.
Its support was a shifting one, made up sometimes by one
combination of the many party divisions in the Chambers and
sometimes by another; but it did not fail throughout the year
to find somewhere a majority that would not allow a political
crisis to be brought on. Everywhere the closing of the schools
and houses of the unauthorized associations was resisted with
increasing determination, and the proceeding became too much
retarded to satisfy the supporters of the law. Objection was
raised to the separate dealing with questions of authorization
for this and that order or congregation, and the Government
was called upon to name at once to the Chambers the whole list
of institutions which it would have authorizations refused to.
In March this demand was acceded to, so far as concerned the
male congregations, and a great debate, of a fortnight’s
duration, in the Chamber of Deputies, resulted in the refusal
of authorization to all the teaching, preaching, and
contemplative orders, of Redemptorists, Capuchins,
Benedictines, Dominicans, and Passionists. A few months later
the same entire refusal of authorization to the teaching
orders of women was voted, but by a diminished majority.
The Clericals, on their side, were as energetic as the parties
of the Government, and were supported very generally by the
magistracy of the country at large, which dealt so leniently
with the resistance and rioting provoked by the enforcement of
the law that the Government was left practically dependent on
the army and the police. The army, too, was a doubtful
instrument of authority in many cases, numerous officers of
all grades resigning to escape the repugnant mandate of law.
The most threatening situation arose in Brittany, consequent
on the inauguration of a monument to Renan, which the
Catholics regarded as an insult to the Church.
One final step in the secularizing of education in France was
taken late in the year, by the passing of a bill which
practically established a State monopoly of education, by
repealing a law of 1850 that abolished such monopoly. By the
new law all members of any religious order, authorized or
unauthorized, were forbidden to engage in teaching.
The extent to which the schools of the religious congregations
were being closed involved a great expenditure for building
new schoolhouses, and the Government had difficulty in passing
an Act which laid the cost of this provision on the communes,
instead of accepting it for the state at large. It carried the
Act, however, notwithstanding the opposition of M.
Waldeck-Rousseau.
FRANCE: A. D. 1904.
Rivalry with England in the Persian Gulf.
See (in this Volume)
PERSIA: A. D. 1904.
FRANCE: A. D. 1904 (April).
The Agreements of the Entente Cordiale with England.
See (in this Volume)
EUROPE: A. D. 1904 (APRIL).
FRANCE: A. D. 1904 (June-July).
Groundless charges against the Premier.
A great public scandal was raised in June by charges against
the Premier, M. Combes, that he had tried to force the
Chartreux monks to buy the right of remaining in France.
Investigation showed that bold swindlers had attempted to
obtain money from the monks on the pretence of being able to
buy such permission for them. As the result of the
investigation the President of the Council and his colleagues
were vindicated by an almost unanimous vote of the Chamber of
Deputies.
FRANCE: A. D. 1904-1909.
General Consequences in Europe of the Weakening of Russia in
the Russo-Japanese War.
See (in this Volume)
EUROPE: A. D. 1904-1909.
FRANCE: A. D. 1905.
Action with other Powers in forcing Financial Reforms in
Macedonia on Turkey.
See (in this Volume)
TURKEY: A. D. 1905-1908.
FRANCE: A. D. 1905-1906.
The Separation of Church and State.
Preceding Contentions.
Measures and Proceedings of the Separation,
as recounted by writers of each Party.
The separation of Church and State in France involved the
nullification of the Concordat, negotiated by Napoleon I. with
Pope Pius VII. in 1802, and of what are known as the Organic
Statutes, promulgated by the French Government at the same
time.
See (in Volume IV. of this work)
PAPACY: A. D. 1808-1814.
The former was in the nature of a treaty; the latter was not.
The French Government claimed rights under both; the Roman
Church acknowledged no force in the Statutes that could be
binding on itself. This difference, which entered into much of
the controversy preceding the measures taken by the Government
to separate the State from the Church, is explained in the
first quotation below,—following which, two accounts are
given of some among those controversies, and of the
proceedings connected with the adoption and execution of the
Act of Separation,—one account written from the view-point of
the Government and the other from that of the Church:
"The Concordat consists of a preamble and seventeen statutes.
It is a reciprocal contract between the temporal and spiritual
powers, and is therefore at the same time State law and Church
law. The preamble states that the Catholic, Apostolic, and
Roman religion is that of the great majority of the French
people; it does not say that it is ‘the religion of France,’
as the Holy See would have wished, and consequently it does
not restore to the Catholic religion its former character of
being a State religion. After establishing a new distribution
of the French dioceses, it directs that the bishops shall be
‘nominated’ by the Government and ‘installed’ by the Pope. The
alienation of ecclesiastical property, effected by the
Revolution, is definitely sanctioned. In return the Government
undertakes, as had already been done by the Constituent
Assembly, to secure ‘a reasonable allowance to the bishops and
curés, whose dioceses and parishes will be included in the new
arrangement,’ and to take ‘measures to allow French Catholics
to make foundations in favour of churches if they wish.’
{276}
"As regards the Organic Statutes, promulgated at the same
time as the Concordat, 18th April, 1802, they proclaim that no
bull, pastoral letter, or writing of any kind from the Holy
See shall be published in France without the authority of the
Government; no council, general or special, shall be held
without this authority. There must be no other delegate from
Rome in France besides the Nuncio, the official representative
of the Sovereign Pontiff. Any infraction on the part of the
clergy of the provisions either of the Concordat or of French
law is referred to the Council of State, who must decide if
there has been any abuse. The Organic Statutes were equally
concerned with questions relating to discipline, doctrine, and
even dogma—which are purely spiritual questions. They
therefore not only upheld the Declaration of 1682 as a
declaration of the principles of the Gallican Church, but also
expected all the professors to teach it in the seminaries.
According to the Concordat, bishops had a right to appoint
curés; the Organic Statutes obliged them to obtain the
approval of the Government for their appointments.
"Although the Organic Statutes are, with the Concordat, part
of one and the same State law, they must not be considered to
be entirely on the same footing. The Concordat concluded
between the two powers binds them together; the Organic
Statutes, an exclusive product of the French Government, never
received the sanction of the Papal authority. They were, on
the contrary, a source of further quarrels with the Roman
Court. Even in our days, they frequently lead to conflict, the
representatives of the Church having refused, on various
occasions, to recognise the validity of decisions made in
virtue of these Statutes by the French Government."
_Jules Legrand,
Church and State in France
(Contemporary Review, May, 1901)._
FRANCE:
Measures and Proceedings of the Separation as recounted
by its Advocates.
"The action of the Republic in suppressing the religious
orders had produced strained relations between it and the
Vatican. This was intensified by the ‘nominavit nobis’
controversy. In the Bulls instituting some bishops whom the
President had nominated, and which had to have the sanction of
the Government before they could be published and be valid in
France, the Vatican had inserted the word ‘nobis,’ implying
that the President had merely nominated the bishop to the Pope
for appointment and that the appointment was really in the
hands of the Pope. The French Government, under the guidance
of M. Combes, the Premier and Minister of Public Worship,
insisted that this word must be removed before the bull was
sanctioned, and as both sides refused to yield no bishop was
instituted. Relations were still further strained by the visit
of the President to the King of Italy. … To visit the King was
to insult the Pope by disregarding the protest made by him
against the occupation of Rome. President Loubet was the first
Roman Catholic ruler who ventured to disregard the feelings
and protests of the Pope. From the 24th to the 28th April,
1904, M. Loubet was the guest of King Victor Emmanuel, and
gave no intimation to the Pope of his intention to visit Rome,
and did not include a visit to the Vatican in his programme.
On the 28th of April, Cardinal Merry del Val sent to the
representatives of the Curia at the Courts of all the Roman
Catholic powers in the world, to be communicated to the
Governments to which they were commissioned, a protest against
the action of the French Government. … The French Government
replied by recalling its ambassador from the Vatican and
breaking off diplomatic relations with the Pope.
"In the summer of the same year the friction between the
French Government and the Vatican was increased by the cases
of the bishops of Laval and Dijon. Bishop Geay of Laval, in
his opening discourse in his cathedral, had proclaimed his
adherence to the Republic and his desire to be the shepherd of
all his flock. He denounced Orleanism and refused to support
reactionaries at the elections. … He was summoned to appear at
Rome. He submitted the summons to the Government, as he was
required by the Organic Articles to do, and he was refused
permission to leave his diocese. Subsequently, under threats
of excommunication, he went, and was immediately informed by
the Minister of Public Worship that his salary was stopped
from the day he left his diocese without permission. A similar
summons to Mgr. Le Nordez, Bishop of Dijon, led to similar
results. …
"In the month of October, 1904, M. Combes, replying to several
interpellations addressed to the Government, reviewed the
history of the relations of the Vatican to the Republic since
its foundation in 1870, and showed that there had been a
continuous disregard of the Concordat and of the Organic
Articles by the Vatican, and that clericalism had been the
most inveterate enemy of the Republic. He showed that no
stipulations could safeguard the rights of the State, which
were denied by the doctrines of the Catholic Church. The
confidence of the Chamber was expressed by a vote of 548 to
88. In November he introduced a Bill for the separation of
Church and State, which was referred to a Commission, by which
it was adopted on the 2nd December. In the middle of January,
1905, M. Combes, owing to resentment at certain incidents in
connection with the administration of the army, carried a vote
of confidence by a majority of only ten votes and resigned.
Before the end of the month a new Cabinet under the presidency
of M. Rouvier, retaining several members of M. Combes’
administration, was formed, which asserted its determination
to carry out the policy of its predecessor in its relations
with the Vatican. The Chamber of Deputies referred to a new
Commission all the Bills dealing with the question of Church
and State which had been presented to it, including that of M.
Combes. Instead of adopting any one of them, the Commission
decided to draft its own Bill, and shortly afterwards
presented to the Chamber a Bill which engaged the close
attention of the deputies for several months in the spring and
summer of the year 1905. It passed through the Chamber on the
3rd of July, and was sent to the Senate the following day. …
The Senate made no alterations in the Bill, and it became law
on the 6th of December, 1905."
_John A. Bain,
The New Reformation, chapter 17
(T. and T. Clark, Edinburgh, 1900)._
{277}
"The law of the 9th of December, 1905, which put an end to the
regime of the Concordat and substituted that of separation
between Church and State, had been promulgated on the 11th of
December, 1905. It was to come into effect a year after its
promulgation. The Protestants and the Israelites had accepted
it even before it was passed; but they represented an
infinitesimal minority, and it was not that minority that the
legislators had had in view when they framed the law of
separation. The one question in the matter was that of the
attitude that would be taken by the Catholics,—the counsels
that would come to them from Rome.
"In the French Episcopate there were two opposing currents of
opinion, one for acceptance of the law, under certain
reserves, the other for resistance. In the latter part of
November, 1905, some bishops met in Paris and agreed that
energetic efforts must be made to prevent action at Rome on
misinformation as to the situation of the Church in France and
the state of mind prevailing in it. Monseigneur Fulbert Petit,
Archbishop of Besançon, was their chosen envoy, and in the
following January he repaired to Rome. There he met other
bishops who had come to give counsels to the Pope that were
not pacific; and he met, also, the Père Le Doré, former
superior of the dissolved congregation of the Eudistes, well
known for his uncompromising opinions and his aggressive
temper, but who had been commissioned to convey to Rome the
proceedings of the meeting of French cardinals at Paris, on
the 28th of December, which showed a majority in favor of the
acceptance of the law. At the same time, an important meeting
of bishops was held at Albi, under the presidency of Monsignor
Mignot, the majority at which meeting, notably the Archbishop
who received them and the Archbishop of Toulouse, Monsignor
Germain, made no secret of their desire to adjust themselves
to the law, according to the expression of Cardinal Lecot.
"But nothing said or done drew the Pope from the silence which
he kept. Then it was rumored that the head of the Church would
reserve his decision until a general assembly of the French
episcopate, which the French cardinals had advised, could be
held, to propose a solution of the question. This, however,
was contradicted positively by the party which urged
resistance to the law.
"Such was the situation when the Government, obliged to
act,—since the period of delay fixed by the law was only a
year,—came to the first proceedings which the Act prescribed.
Article 43 of the law provided for administrative rules, of
which the part relating to inventories appeared logically the
first, that being the operation which needed consideration
before all others. The second part of the regulations had to
do with the life pensions and temporary provisions accorded to
the ministers of religion. The regulation concerning pensions
and provisions was published in the _Journal Official_ of
January 20, 1906. [Article 11 of the Act assigned to priests
or ministers of more than sixty years of age, who had been not
less than thirty years in an ecclesiastical service salaried
by the state, a yearly life pension of three-fourths of their
former stipend. To those under sixty years of age and above
forty-five, whose service had been for less than thirty years
but not less than twenty, it assigned one-half of their
previous compensation.] …
"The first executive act imposed on the Government was the
inventorying of the property, movable and fixed, belonging to
the State, to the departments or to the communes, of which the
establishments of public worship had had the use. Article 3 of
the law required this to be proceeded with immediately after
its promulgation. This article had been voted in the Chamber
and in the Senate by very large majorities, and, so to speak,
without discussion, so rational and judicial it seemed to be.
In fact, as the existence of the public establishments of
worship came to an end with the regime of the Concordat, the
succession to them was left open, and an inventory,
descriptive and estimative, of their property, was a necessary
measure preliminary to any devolution of such property,
dependent on that succession. … Being one of those
conservative measures which attack no right and leave a
continuous state of things, there was no expectation of much
feeling about it among Catholics. … Apparently, the consistent
attitude on the part of Catholics, provisionally, at least,
and until the Pope had spoken, would be one of calm, of
prudence, of expectancy. Such was the purport of the
instructions given by the bishops, even by the most combative.
These latter, while condemning the law with vehemence, did not
counsel a recourse to force against the agents appointed to
make the inventory. They required but one thing of their
priests and of the administrators of parish property, which
was that they should not coöperate in the work, and that they
should make declaration that their non-resistance did not
imply acceptance of the law.
"On the 29th of December, 1905, a first decree for regulating
the procedure was issued by the Council of State. This was
followed by a circular from the Minister of Finance which, it
must be confessed, roused a justifiable feeling among the
Catholics. From one phrase in that circular it could be
understood that the officials making the inventory were
authorized to demand the opening of the tabernacles. M.
Groussau questioned the Minister on the subject, and M. Merlou
cleared away all misunderstanding by replying that officials
were to accept the declaration of the curé of a church as to
the contents of its tabernacle; and that they had been
instructed to avoid everything that could give pain to pious
minds. The Abbé Gayraud recognized that these decisions of the
Government were in conformity with the instructions of the
Cardinal Archbishop of Paris, and the interpellation was
withdrawn.
"The inventories were begun at once after this decision of the
question of the tabernacles. At first there was no disorder.
The bishops, notably those of Toulouse, of Rouen, of Albi, of
Besançon, of Arras and Chartres, and their curés, from their
example, confined themselves to the reading of a protestation
to the receiver of the registration, after which the receiver
was left free to fulfil his mission. But soon, in some
dioceses, particularly in Paris, in the West, and in one part
of the Center, the inventorying was made the pretext for
demonstrations more political than religious, organized by
enthusiasts or by political cliques. Generally the clergy were
passively present at these demonstrations. …
{278}
These tumultuous manifestations, at the head of which the most
conspicuous personalities of the reactionary opposition were
often seen, ended by degenerating into veritable riots,
necessitating the intervention of troops, and leading finally
to bloody conflicts."
_René Wallier,
Le Vingtième Siècle Politique, Annee 1906,
pages 123-132._
It was not until the 17th of February that the silence of the
Pope on the matters that were agitating France and the Papal
Church was broken. Then the "Encyclical Vehementer," so named,
according to custom, from its first word, was published.
FRANCE:
Measures and proceedings of the separation as recounted
by opponents.
"In the first period of his premiership M. Combes was not
prepared either to denounce the Concordat or to separate the
churches from the State, simply because he found public
opinion not yet ripe for either measure. Later he thought he
saw in adopting this course a means of prolonging his official
existence, a matter of considerable importance to a country
doctor like himself without large private resources. Having
slaughtered nearly all religious congregations or prepared
their ultimate extinction, Combes appeared to seek no further
occupation for himself and to fortify his position by
attacking the Church itself, whose secular clergy he had so
recently praised and sought to protect from unfair and ‘unjust
concurrence or competition with the regulars!’ Like
Waldeck-Rousseau, Combes saw here an opportunity to ‘save’ the
Republic from ‘clerical reaction.' Throughout its whole
discreditable history this third Republic of France has only
been kept alive by being periodically ‘saved’ by some clever
politician from ‘perils’ conjured up to terrorize the
peasantry, who still recall the misery of their ancestors in
the old _régime_ and the misfortunes of France in the
downfall of the first and second Empires. … The Pope
protested, in March, 1904, against the bad faith and infamous
aggressions of the French Government in the matter of
religious education and those imparting it, and M. Delcassé,
through the French Ambassador at the Vatican, protested
against the Papal protest. In the following month M. Loubet,
as President of the French Republic, visited the King of Italy
at Rome, at the same time politely, but significantly,
ignoring the existence of the Pope and the Vatican, at which
court France then had accredited an Ambassador! Then followed
the protest of the Vatican, addressed directly to the French
Government, and the protest simultaneously sent to all the
powers where Papal Nuncios are in residence. …
"In March, 1904, had arisen the trouble in the Diocese of
Dijon, France, which culminated in students of the diocesan
seminary refusing to receive ordination from the hands of the
Bishop, Monsignor Le Nordez. The Bishop of Dijon was,
unfortunately, not the only one of the French episcopate
claiming to be a ‘victim of hatred, deceit and calumny.’
Almost from the commencement of his episcopate Monsignor Geay,
Bishop of Laval, was attacked by accusations filed at Rome,
charges which were examined into during the Pontificate of Leo
XIII., and which led the Holy Office to advise the Bishop to
resign his see. It was then (in 1900) thought at Rome that in
the local conditions actually then existing it was impossible
for Monsignor Geay to govern the diocese with the necessary
authority and efficacy. Monsignor Geay agreed to resign,
provided he received another bishopric in France. This
condition appeared unacceptable to the Vatican, but no further
action was taken in this case until May 17, 1904, when by
order of Pius X. the request for the Bishop’s resignation was
renewed, and in case it was not forthcoming within a specified
time an ecclesiastical trial was intimated as inevitable.
Notwithstanding the secret and private character of this last
letter emanating from the Holy Office, Monsignor Geay
communicated its contents to the French Government. Combes and
Delcassé, jealous of the prerogatives of the French State and
presumably caring little for the honor of the French
episcopate, notified Cardinal Merry del Val (by the acting
Charge d’ Affaires) ‘that if the letter of May 17 is not
annulled the government will be led to take the measures that
a like derogation of the compact which binds France and the
Holy See admits of.’ The Papal Nuncio at Paris explained to M.
Delcassé that this was not a threat of deposition of the
Bishop without a decision of the French Government, but an
invitation to the Bishop to meet the charges by a voluntary
resignation.
"As regards Monsignor Le Nordez and Monsignor Geay,
respectively Bishops of Dijon and Laval, their long hesitation
between the wishes of the French Government and the will of
the Holy See ended by the departure of both of them for Rome.
The government then promptly suppressed their salaries and
after they had (under virtual pressure) placed their
‘voluntary resignation’ in the hands of the Holy Father, an
allowance from the funds of the Vatican was made to each of
them. They have since lived in France in a retirement, varied
at first by interviews of Monsignor Geay with reporters that
have since happily ceased. The severance of diplomatic
relations with the Vatican was completed by a note from M.
Delcassé to the Papal Nuncio at Paris stating that in
consequence of the rupture of diplomatic relations between
France and the Vatican ‘the mission of the Nuncio would
henceforth be deprived of scope.’ In the parliamentary session
of November 26, 1904, the credit for the Embassy at the
Vatican was stricken from the budget. …
"After the downfall of Combes, through the odium attaching to
his spy system, the Minister of the Interior and of Public
Worship presented to the Chamber of Deputies on behalf of the
Rouvier Ministry a project of law to establish the separation.
If for Combes separation had signified little else than
spoliation, aggravated by oppression, the Rouvier plan sought
to render spoliation less unjust, less intolerant. The
ministerial project having been somewhat altered by the
commission, conferences were held and a final agreement having
been obtained, the proposed law was reported to the Chamber of
Deputies in March, 1905. It is unnecessary to follow the
parliamentary evolution of this immature project, forced as an
issue by two successive Premiers who had far less solicitude
for the permanent interests of their country than to assure
their own continuance in power. M. Briand, speaking for the
commission, took great trouble to throw upon the Pope the
responsibility of a law which he at the same time declared to
be perfectly good, beneficent for the Republic and honorable
for its authors! Alas! for separatists, in an unguarded moment
Combes betrayed the utter falsity and ridiculous insincerity
of this pompous and solemn pretence of the anti-religious
majority, that the Pope forced the separation upon France. In
the parliamentary session of January 14, 1905, Combes
declared: ‘When I assumed power I judged that public opinion
was insufficiently prepared for this reform. I have judged it
to be necessary to lead it to that.’
{279}
"When the law of separation, as finally adopted in the Chamber
of Deputies, was referred to the Senate, the Senatorial
commission, under ministerial pressure, adopted the law as
passed in the Chamber, without change of a single word.
Although the law was the most important of any passed in
France for a hundred years, and though it is fraught with
grave influences upon the destinies of the country, this
hastily matured, ill-framed measure, with all its unjust and
vexatious provisions, was swallowed whole by a commission of
cowardly, truckling Senatorial politicians, who disregarded
their plain duty at the dictation of Radicals and Socialists
on the outside. Separationists both in and out of Parliament
were eager to see the law become operative before the
universal suffrage of France could have an opportunity of
passing judgment upon the principle of the separation in the
parliamentary elections of May, 1906. …
"In the Papal Consistory of December 11, 1905, the Pope
pronounced an allocution protesting against the law of
separation in mild and temperate language, announcing his
intention of again treating upon the same subject ‘more
solemnly and more deliberately at an opportune time.’ The Holy
Father evidently waited for the regulations of public
administration that would indicate in what manner the
Government of France intended to administer and enforce the
law. …
"Immediately after the adoption of the law of separation the
government appointed a special commission to elaborate rules
of public administration by which the law was to be
interpreted and applied. This commission being stuffed with
the anti-religious element, its work was worthy of its
authors. … The first details of the regulations officially
promulgated governed the taking of inventories of all movable
and real property of churches, chapels and ecclesiastical
buildings, including rectories, chapter houses, homes of
retreat for aged and infirm priests (even pension endowments),
etc., ostensibly to facilitate the transfer of these
properties to such associations for the maintenance of public
worship as might be formed under the provisions of the law of
separation. These inventories were imposed upon all religious
bodies—Catholic, Protestant and Jewish—and the law was made
applicable to Algiers, where there is a large Mahomedan
population. Viewed in the abstract, the taking of inventories
was a formality necessary to an application of principles
inscribed in the law. As estimates of value such inventories
are worthless, because compiled by agents of the
administration of Public Domains or treasury agents, unaided
by experts in art, architecture and archivial paleography. The
Director General of the Register prescribed to agents taking
these inventories a request for the opening of tabernacles in
churches and chapels to facilitate completeness and accuracy.
This order aroused a storm of indignation throughout France
and the government realized that a stupid blunder had been
made, and it was announced that agents would content
themselves with gathering and incorporating into their report
declarations of the priests upon the nature and value of
sacred vessels contained in the tabernacles.
"The taking of inventories of churches and their contents
commenced simultaneously in many parts of France in the latter
part of January, 1906. Instead of the simple formality hastily
accomplished without general observation, of which separatists
had dreamed, this proceeding was characterized in various
places by scenes of the wildest disorder. When officials of
the Registry presented themselves for the taking of the
inventories, the clergy, surrounded or attended by trustees of
the building, read formal protests against what most of them
styled ‘the first step in an act of spoliation.’ … If these
protests had not been accompanied by physical violence, the
country might have been spared the shocking scenes that took
place in Paris and the provinces. In many churches free fights
took place between militant Catholic laymen, opposed to an
inventory, and police, firemen and troops, who burst open the
doors of churches or broke them down with fire axes in order
to make an inventory possible. While at the doors chairs and
fragments of broken confessionals were flying through the
air, pious women within sang:
‘We will pray God that the Church may be able to teach the
truth, to combat error which causes division, to preach to all
charity!’"
_F. W. Parsons,
Separation of Church and State in France
(American Catholic Quarterly Review, July, 1906)._
FRANCE: A. D. 1905-1906.
The Morocco Question.
Sudden hostility of Germany to the Anglo-French Agreement.
Demand for an International Conference.
The Conference at Algeciras.
The resulting Act.
See (in this Volume)
EUROPE: A. D. 1905-1906.
FRANCE: A. D. 1905-1906.
Claims against Venezuela.
See (in this Volume)
VENEZUELA: A. D. 1905-1906, and 1907-1909.
FRANCE: A. D. 1906.
President Fallières succeeds Loubet.
Fall of the Rouvier Ministry.
Rise of M. Clemenceau.
The Elections of May.
Conformity to the Separation Law prohibited by the Pope.
Sequestration of Church Property.
The Socialists and the Bourgeois.
Justice at last to Dreyfus.
Honors to Picquart.
The presidential term of M. Loubet, who had been elected on
the 19th of February, 1899, would expire on the 18th of
February, 1906. M. Loubet declined a reflection, and M.
Fallières, the chosen candidate of the various groups of
Republicans, was elected President of the French Republic at a
joint session of the two chambers of the National Assembly, on
the 17th of January, by 449 votes of a total 848. The new
President was inducted into office on the 18th of February,
and, according to usage, was offered the resignations of the
existing Ministry, under M. Rouvier, which, however, he did
not accept. M. Rouvier and his colleagues continued in office
until the 7th of March, when a vote in the Chamber of Deputies
which expressed want of confidence compelled a resignation
that could not be declined.
{280}
The new Ministry then formed, and announced on the 14th, was
nominally presided over by M. Sarrien, President of the
Council and Minister of Justice, but its real chief was known
to be M. Clemenceau, Minister of the Interior. Other important
members of this Cabinet were M. Bourgeois, Minister of Foreign
Affairs, and M. Aristide Briand, Minister of Public
Instruction and of Worship. Sarrien and Bourgeois were classed
politically as Radicals, Briand as a Socialist, and Clemenceau
as a Socialist-Radical. The Ministerial declaration read in
both chambers on the 14th was criticised as colorless, and as
indicating an incongruity of political material in the make-up
of the administration. On the burning question of the
execution of the law for the separation of Church and State
its language was:
"The law on the separation of Church and State has met, in the
execution of the provisions relating to the inventories, a
resistance as unexpected as it is unjustified. There is no one
among us who wishes to assail in any manner whatever the
freedom of religious belief and worship. The law will be
applied in the same liberal spirit in which it was adopted by
the Parliament. … But it is our duty to insure the execution
of all laws throughout the land. Under a republican government
the law is the highest expression of national sovereignty; it
must everywhere be respected and everywhere obeyed. The
Government intends to apply with all necessary circumspection,
but with inflexible firmness, the new legislation which
certain parties of opposition strive vainly to misrepresent."
On the 14th of April the Chamber of Deputies was adjourned
_sine die_, and fresh elections to it were to be held in
May. "The seventh legislature held under the Constitution of
1875 came to an end amid a domestic confusion unparalleled in
France since 1871. In the Nord and the Pas de Calais there
were miners’ strikes, at Clermont-Ferrand strikes in the
building trade; at Lorient and Toulon there was a general
strike, and there were strikes also at Alais and Bordeaux. At
Paris the compositors, the excavators and the railway men on
the Metropolitan had left work, and the postmen also had
joined the movement, though they were servants of the State.
M. Clemenceau paid two visits to Lens to treat with the
strikers; following his example and by his orders the
magistrates, officers and soldiers exhibited admirable
coolness as well as energy in controlling the excited crowds
without resorting to force. … Attempts were made to form what
were virtually revolutionary governments, and these announced
openly that on May 1, capitalism would be assailed, a general
strike proclaimed in Paris, and the Government swept away if
it showed signs of attempting to interfere. These threats set
up an unprecedented panic, which was intensified by the
measures taken by the Government to get rid of it. Troops
guarded the Metropolitan Railway workshops, the printing
establishments, the bakeries. All the cavalry and infantry
available were concentrated at Paris, and schools and empty
houses taken up for their accommodation."
_Annual Register, 1906,
page 270._
In the midst of these distractions the political canvass for a
new representation of the Republic in its legislature was
carried on, and the elections were but slightly disturbed.
They went so sweepingly in favor of the Government that only
176 seats in the Chamber, out of 589, were carried by the
opposition. The victory of the Government was more complete
and decisive than the most sanguine had expected. Said a
writer in _The Fortnightly Review:_
"It is the end of the long struggle between the Republic and
its internal enemies, those Emigres de l’intérieur as M. Paul
Sabatier has happily called them. The political power of the
Church is broken forever; the parties of reaction are finally
crushed, and their future will be that of the Jacobites after
Culloden. … It may perhaps be useful to record the relative
strength of parties in the new Chamber as compared with the
old. Precise accuracy is difficult, owing to the uncertainty
as to the exact group to which a few of the deputies should be
attributed, but the following figures are as near exactitude
as possible:—
New Chamber. Old Chamber.
Ministerialists: (The _Bloc_):--
Republicans of the Left
(Alliance Démocratique
and Gauche Démocratique) 90 83
Radicals 117 98
Radical-Socialists 132 119
Independent Socialists 20 14
Total 359 314
Unified Socialists 54 41
Opposition:—
Republicans of the Centre
(Union Républicaine and Progressists) 68 97
Nationalists 30 53
Conservatives and Clericals 78 84
Total 176 234
"But the mere figures do not bring out the full significance
of the election. Even more important than the fact that only
108 Clerical and Nationalist deputies were returned is the
fact that these 108 represent, with very few exceptions, the
most ignorant and backward districts in France. Immediately
after the election the _Matin_ published an electoral map
of France, in which the districts represented by Opposition
deputies were left white. It is an instructive document. The
whole of central France is a solid mass of black, in the north
and south the white spots are few and scattered, in the east
black very greatly predominates; only in the west is there any
conspicuous show of white."
_Robert Dell,
France, England, and Mr. Bodley
(Fortnightly Review, September, 1906)._
Manifestly the majority in France approved the severance of
religious institutions from the political organization of the
State. In recognition of the fact, the General Assembly of
French Bishops, sitting soon afterwards at Paris, petitioned
the Pope, by the vote of a large majority, to permit the
forming of Public Worship Associations under the Separation
Law. The papal reply, given late in the summer, was a new
Encyclical, formally forbidding French Catholics to form such
Associations for taking the offered use of the church
buildings and property, as provided for continued exercises of
religion by the law. A little later the prohibition was
carried farther, and French Catholics were forbidden to
conform to the Associations Law of 1891, as well as to the
Separation Law.
{281}
There seems to have been a disposition in the Government to
extend, from one year to two, the period allowed for
conformity to the latter enactment; but this attitude on the
part of the head of the Church dispelled it. Accordingly, on
the 11th of December, 1906, when the term fixed by the law
expired, sequestration of the property of the vestries was
pronounced, and buildings occupied in connection with the
churches by bishops, rectors, seminaries, etc., were ordered
to be vacated with no further delay.