dren between the ages of six and twelve years, would be required. We should not flinch, however, from the fixing of a rate that will meet the requirements of a constructive street railway policy as here outlined. It might be desirable to incorporate in the franchise a sliding scale of rates to be readjusted automatically, in a manner similar to that set forth in the settlement ordinance that is now being tried out in Cleveland. Continuity of operation is so fundamental a requisite in street railway service, that every necessary means should be taken to insure it. On this account the relations between Arbitration the company and its employees whenever they are such as to threaten interruption or disintegration of service, become a matter of paramount interest to the city. I would therefore stipulate in the granting of any street railway franchise that the company shall bind itself to submit any questions of dispute arising between it and its employees to arbitration when requested to do so by the city. There are two methods of determining the price at which a public utility may be taken over by the city or its licensee. According to one method, the property is appraised at the time of purchase. According to the other method, the value of the property is agreed upon in the franchise itself or at the time of construction. The uncertainties attendant upon appraisal at some indefinite time in the future are so great that I believe the city's interests will in general be better conserved if the purchase price is based upon the cost of construction less the amount of capital amortized, than by any other plan. It seems to me, therefore, that when a street railway franchise is granted, a definite valuation should be agreed upon for the existing plant, or in the case of a new system, careful provision should be made for the deter Capital Account and Purchase Price mination of the cost of construction at the time the railway is built. The approval of the city should be required for all construction contracts, and the proper city department should have supervision both of plans of construction, materials used, and the actual performance of the work. No leeway should be given for padding the construction account. Every extension or betterment should be treated as original construction, and the actual cost, audited and approved by the city authorities, should be added to capital account, provision being made for the payment of interest on additional investment and for amortization charges, the same as in the case of original construction. If the franchise is a renewal grant, and a valuation can be agreed upon that takes into account the necessary diminution of value through normal wear, it will not be necessary to make provision for the amortization of that portion of the original investment represented by the part of the property that has disappeared, never to return. In most cases, however, under existing franchises the companies have made no provision whatever for the amortization of this or any other portion of their capital account. I am convinced that in order to get a scientific street railway franchise policy actually established, a city may well afford, if necessary, to accept a valuation of an existing plant, properly maintained, that would include this element of capital representing property that has disappeared. Under such circumstances, the same provison would have to be made for amortization as if the plant were new. In closing this paper, I desire to quote a brief passage from an article by Mr. Charles V. Weston, President of the South Side Elevated Railway Company of Chicago, published in the Electric Railway Journal of October 14, 1910. I have been particuuarly impressed with the remarks I am about to quote, for the reason that they seem to indicate a recognition on the part of a practical railroad man of the necessity for the application of at least one of the fundamental principles which I have outlined. Mr. Weston says: "Referring specifically to the matter of speculation, if the street railways are to be recognized and tolerated as legitimate business enterprises, in which the owners and the people have a mutual and equally important interest, these enterprises must be permanently removed from the field of stock manipulation, which has for its sole purpose the drawing out of the people's money in payment for that which does not represent intrinsic value." The Grafter at Work in American Cities. By HAROLD J. HOWLAND, NEW YORK, Of the Editorial Staff of "The Outlook." A distinguished traveler recently returned from making the grand tour" through the countries of Europe. The high official position which he had formerly held, combined with the still more powerful factors of his own personality and achievements, made him the sought-for guest of the most influential and the most intelligent in every country through which he passed. On his return to America he said: Everywhere I went in Europe I was impressed with two contrasting views of our country which were widely held. The first was admiration of the United States as the land of freedom and equality and opportunity, the land where every man has a chance to show what is in him and to develop to the limit of his capabilities. The other was distrust of the future of the United States because it is the land of graft. This European view of the two sides of our national shield is essentially true. We have achieved the highest development of democracy and popular rule that has been achieved by any great nation in the world's history. But unless we shall succeed in effacing from our national life the stains of graft and corruption, we may well find ourselves face to face with the harsh question, Can our boasted democracy endure? No more serious problem confronts us; none which we have greater need to solve. The flattering invitation of your committee to address you suggested the preparation of a "strong paper on the grafter at work in American cities." But I conceive that it will be more in accord with the purposes of the National Municipal League if the strength is not that which is stirred up by the muck-rake and which makes an assault, as it were, upon the mental nostrils. The strength should consist, it seems to me, in a frank facing of the facts and an honest attempt to deduce from the conditions which confront us some of their underlying causes. Graft has been declared by that veteran "practical" politician, George Washington Plunkitt, of Tammany Hail, in a pronouncement from his rostrum on the boot-black stand in the New York County Court House, as being of two kinds, honest graft and dishonest graft. Definition of "There's all the difference in the world between the two. Yes, many of our men have grown rich in politics. I have myself. I've made a big fortune out of the game, and I'm gettin' richer every day, but I've not gone in for dishonest graft-blackmailin' gamblers, saloon keepers, disorderly people, etc.—and neither has any of the men who have made big fortunes in politics. There's an honest graft, and I'm an example of how it works. ... Just let me explain myself. My party's in power in the city, and it's goin' to undertake a lot of public improvements. Well, I'm tipped-off, say, that they're going to lay out a new park at a certain place. "I see my opportunity and take it. I go to that place and buy up all the land I can in the neighborhood. Then the board of this or that makes its plan public, and there's a rush to get my land, which nobody cared particularly for before. "Ain't it perfectly honest to charge a good price and make a profit on my investment and foresight? Of course it is. Well, that's honest graft." Plunkitt of Tammany Hall's distinction between varieties of graft is interesting, because it is a distinction characteristic of an age that is passing, not only in the political world but in the business world. Dishonest graft is that kind of exploitation of the community, indulgence in which may get you into jail; by honest graft you may get rich at the expense of the community without living in terror of the law. So in the business world, in the era out of which we are growing, honesty was often measured less in terms of loyalty to the spirit of the moral law than in terms of observance of the letter of the penal code. But we are changing all that; and the measure of our establishment of a new standard of conduct in political and in business life is the measure of our progress toward a satisfactory answer to the crucial question, Can our democracy endure? Plunkitt's distinction no longer distinguishes. Graft is graft whether it has outrun the enactments of the penal code or no. Nevertheless there are different kinds of graft, differing not only in their methods, but in their causes and in the remedies by which we must seek to eliminate them. But before we can intelligently consider them, we must define the word graft, which in the political sense is so new that it has hardly yet reached the dictionaries. Graft is the use of public office for private gain. (The word has also a secondary meaning, the gain which comes from such use of public office, but the primary meaning is the more important one and it is the one in which I shall use the word here.) Graft is the use of public office for private gain; and it is, broadly speaking, of two kinds. In the one kind, the gain is in the form of money, in the other in the form of privilege. The two kinds are often found intertwined, and of course the ultimate purpose of what may be called privilege graft is the gaining of money; but I think a very real distinction may be made, nevertheless, between the kind of graft in which the community's loss is direct, in money from the treasury, and that in which its loss is indirect, through privilege improperly and unfairly granted. Two Kinds of Money graft is a common feature, not only of city governments but of every-day business, and indeed family life. The cook who gets a rake-off from the butcher, the chauffeur who gets a commission from the automobile repair shop, the pressman who mysteriously finds himself unable to get results with any brand of printer's ink but that of a certain maker, the buyer who accepts anything from simple entertainment to elaborate presents (or indeed a regular commission) from selling agents-all these are grafters, betraying their employers' interests for the money there is in it. An abundance of this petty kind of graft has been disclosed by the investigations of the Bureau of Municipal Research in New York City. At the budget exhibit held in New Money Graft York recently there was a "junk" table on which was displayed a motley collection of articles ticketed with the prices which the city formerly paid for them and the prices it now paid under a strict system of inspection. The differences in the two sets of prices measured the reward of the grafters |