The Nation

256

[Vol. 121,No. 3139

Correspondence
Class Justice in Germany
OF THE
I n your issue of June 3 Mr. Louis Fischer says that
Hitlerspent six months in a palace prisonand
wasthen
released.
I was in prison a t Sandberg a.S. thirteen months in all.
special decree on April 1, 1924, deprived meof
all previous
privileges. All privileges theretofore
granted
the
prisoner
were either abridged or wiped out. Count Arco was still benefited by these alleviations.
UfinF,
28

liars. The Russian experiment interests me, although I regard

it as preposterous, and I would like t o see it worked out, but
I object to basing attacks on Germany on bolshevlst sources
and on caricatures from the Pravda. Let us have fair play.
June 23
S. MILES
BOUTON

To T m

OF THE
SIR:I n the face of appalling difficulties the sound core of
the German people has been working for years t o restore honest
government, t o revive generally those virtues which we Ameriqua
for everyorderly,
cans a t home regard
the
self-respecting commonwealth. Encouragingprogress has been
made despite bitter opposition, on the one hand, fromwarprofiteers and certain groups of financial and industrial interests whose idea of liberty is the liberty to make money in any
way they please; on the other hand, against the opposition of
those interesting persons who, ignorant of political history and
psychology, believe it possible t o establish a government which
shall not be, in their jargon, a class government.
Suchprogress has been made also in the face of a continuing aspersion by most of the American press of the deeds
and motives of those that achieved it. In this campaign Germany has been measured with false measures and with double
standards.
A striking instance of all this is Louis Fischers article
from Berlin in
Nation of June 3. Once more E.
Gumbel
and his painfully exact and detailed book about Four Years
of Political
are wheeled up into position to discredit
the present efficient and honest government of Germany. Four
weeks after Mr. Fischer mote, the philosophical faculty of the
University of Heidelberg, t o which Gumbelbelongs, attested
of him, with but a single dissenting vote, that his personality
gives the impression ofa pronounced demagogic nature, and
that in his political activities not the slightest trace of scientificqualities is t o be found.
thecontrary, alongwith a
very low intellectual niveau objectively and stylistically.a
complete lack of objectivity is his mostprominent characteristic. I note in passing t h a t despite this bitter condemnation
it was decided that the principle of academic Iiberty required
that
retain his p o s G a n example that ought to shame
most American university authorities.
Mr. Fischer complains t h a t the leaders of the Munich
soviet regime were more severely punished than the leaders of
the KappPutsch.
Does he know nothingabout
the brutal
butcheriescarried out by and at the orders of thesemen in
coldblood, and that the only victims of the Kapp Putsch fell
under circumstances which, even if they had been committed
by a private individual, would, under Germanys humane penal
code, make of them merely manslaughter in low degree, punishable with very light sentences? I would rather go through
a dozen Putsche from the Right than one from the Left.
The German republic hasnever
proclaimed a general
amnesty, complains Mr. Fischer, and while he wrote the draft
of an amnesty bill was under consideration. And when did the
American republic proclaim a general amnesty? ,In republican
Germany political prisoners receive no privileged treatment.
What sort of treatment do they receive in republican America?
I have never belonged, except f o r a very brief period in
1918, tothegreat
and ungoodly company of anti-bolshevist

has received several letters protesting against

Mr. Fischers Class Justice in Germany. Most of them, we
believe, derive from a too intense loyalty. Germany has been
maligned;
all criticism is unjustified. A similar psychology reigns among some of thefriends of Soviet Russla.
We believe that Mr. Flschers allegations-excepting one o r
two minor errors-withstand
criticism. I n particular we
should like t o pay our tribute t o E. J. Gumbel, t o whom bot13
Messrs. Bouton andFischer refer. We arefamiliar with hls
work andwith
the contemptible action of his colleagues
the Heidelberg faculty.
They did not attempt t o disprove
his charges; and they felt forced t o admit that he believes in
his cause, pacifism, and in his mission. Passionately
full of
hate he opposes whatever appears t o him as force, nationalism,
o r promotion of a future war.Where
this idealism is concerned, he has courage-not only the courage to say what he
thinksbutthe
courage t o risk his life. Yet
political
reasons these professors-as irrationally a s the famous ninetythree of 1914called Gumbel a n unscientific demagogue. In
so doing they were a disgrace t o Germany and to scholarship.THE

Do the People Realize?

TO

THE
SIR: The two main purposes of Wall Streetaretoput
securities up t o unreasonablyhighpricesand
unload them on
the public and thentoregain
these securities at the lowest
possible prices. At the present time the public are the^ holders
of more of Wall Streets wares than ever before.
is
always the case when stocks are selling at high prices. The
heavy speculation of the past few months has been in public
utility andrailroad stocks. Great super-power systems a r e in
the making, to the end that eventually there will be few but
enormous corporations supplying electric power to the public.
The moving factor in this linking into a few ,super-power
systems all of the present public utilities is the Electric Bond
and Share Company, the stock of which was recentlydistributed
share
share t o the stockholders of the General Electric Company. This means thatthe ownership of Electric Bond and
Share is stillwith
stockholders of the GeneralElectric,
which is the dominating influence in this whole super-power
undertaking.This
is the reason why GeneralElectric stock is
selling, including the Electric Bond and Share gift, a t around
$326 per share-at a time when the company is showing earnings of only about $20 and paying dividends of only $13 per
share.
Two recent incidents may be cited as showing lthe inflated
prices which are being paid for existing public-utility companies.
It is these inflated values which should be of vital interest to
the people, for it will beon overcapitalization of these inflated
values that the various State public-utility commissions will be
asked to base rates for current that the people will ,have t o pay,
and the rates asked for will have to be high enough t o show
large earnings on the capital supposed to be invested.
The report was published a few days ago that Stone and
Webster had purchased the Gould controlling interest in the
VirginiaRailwayand
Power Company, presumably acting, as
far as the power property is concerned, for the Electric Bond
and Share Company. The price paid was not stated, but it is
generally understood to have been not f a r from $140 per share.
This for a stock which before the rumors of this consolidation

Sept. 2,19251

257

The Nation

werestartedhadnever
sold above $75 pershareand
whose
average sellingprice had been around $40. By thetimethis
stocks equivalent is passed on t o the public the price wlll be at
least $200 pershare.
It is on justsuch inflated valuesthat
rates will be applied for, thus making the cost of electric current higher thanit ought t o be.
The other incident is the acquisition by the Electric Power
and Light Company ( a corporation under the supervision of the
Electric Bond and Share Company) of the Utah Securities Corporation, which owned theUtahPowerandLight
Company.
The payment for each share of the Utah Securities
Company
stock was $10 in cash and four shares of the common stock of
theElectrlcPowerandLight
Company. Atthetime
of the
announcement of this offer Utah Securities was selling around
$70 per share. The highest
previous price that this stock ever
sold at was $46 in 1924, and in 1923 this stock sold as low as
$14 per share. The common stock of Electric Power and Light
was on this announcement selling around $17 per share. SubsequentlyUtahSecurities
sold at $157 pershareandElectrlc
Power and Light a t $37.
Wall Street knows thatnothing inflames the public and
makes them buy stocks as does merger talk, and the above is a
typical example of unloading on the public securities at high
prices. Thus the public utilities are starting on the same career
therailroadshave
followed for thirty years, and are playing
into the hands of the Wall Street bankers.
The St. Paul receivership is the direct result
of the Wall
Street bankers pyramiding methods of financing. Whenever a
railroad had t o bring out a refunding bond through some Wall
Street banking house there was an 8 t o 12 per cent loss. Take
a refunding operation. A new bond is offered to take
the
maturing bond. Thesenew bonds are offered t o the public at
prices ranging from $92 to $96 per $100 of bond. Out of these
prices the bankers collect their commission of $3 t o $5. Thus
the railroad company receives a net amount of $88 t o $92, and
assumes therefor an obligation t o pay $100.
is
Thisrefunding process is repeateduntilthe,railroad
staggering under a capital structure that it is impossible to pay
interest on. If this vicious method is continued sooner OY later
every railroad of the country will have to go through receiverthe past thirty years, and
ship just as they have been doing
this is mainly due to the financing methods of the Wall Street
bankers. It is on a receivership and consequent reorganization
of a railroad that these Wall Street bankers
clean up millions
milked dry on refunding
from a railroadtheyhavealready
operations.
Takesuchcomparativelyrecentexamples
as the Wabash
and Missouri Pacific. When theserailroads broke underthe
load of pyramided refunding operations their respective stocks
were selling for a few dollars per share. These two roads were
reorganized, their capital structure scaled down, and the stockholdersassessed.
Now these stocks, countingtheassessment,
are selling a t double and treble the receivership prices and the
public are again buying them.
When the St. Paul stocks wererecently selling at their,
lowest price of $3.50 per share for the common and $7 f o r the
preferred, it was stated that the big Wall Street banks were
the buyers. Of course they were.Who
else would buy them?
Thesebankers know what they a r e going to do with the St.
Paul. It will be just the same as they have been dolng with
railroad receiverships f o r the past generation.
Theresult of all khese WallStreet methods of financing
is terrific overcapitalization, and
it is on such inflated capital
that rates are applied
which the public will have t o pay.
These WallStreetbankersare
a clever lot. A t present
they are passingon t o t h epublic these securities-these already
inflated securities-at
high prices, in this way hoping the public, being the temporary owners of these corporations who will
beseeking rates from the
public utility commissions, will be

favorable t o highratesandthe
contemplated mergers and
consolidations.
When all themergershave
been completed, and all the
noise and excitement aboutthemhave
passed, theseWall
Streetbankers
will takebackunto
themselves. thesesame
securities at prices $30 t o $100 per share less.
Springfield,
Julg 10
E.

and Betsy Bowen

TO

I n yourcriticism
of Lives and Times,by
Meade
Minnigerode, in the August 12issue of
N a t i o n , I feel a
guilty sense of personal responsibility for a n injustice to the
bedizened adventuressBetsy
Bowen inthematter
of the
disposition by Stephen Jumel
of his wealth, which is a reflection of my uncharitable attitude toward the lady in my book,
Jumel Mansion, Houghton Mifflin, 1916, h o r n which
Minnigerodedrew
his facts.
The transfer of the titles on WashingtonHeights,under
a power of attorney given by Stephen Jumel for another purpose,
not to dispossess him of his property but t o forestall
the French heirs, in case of his d e a t h w i t h or without a willfromsteppingin
t o inherit.Herattorney
in thetransfers
was Alexander Hamilton, 2d, who was one of the parties named
inthe deeds, and was not consciously a partytoanylegal
wrongdoing. In 1834, when the transfers were completed, his
client had married again and the name
of Alexander Hamilton appears on the deed with that of LEliza B. Burr, wife of
Aaron Burr.
InJanuary,
1834, AaronBurrwas
a social and not a
legal adviser of the lady, or perhaps by that time he was no
adviser at all. Like many a husband before and since he
got
on more smoothly with his fiancee than with his wife.
New
8
WILLIAM
Curator, Jumel Mansion

Leagues
To

OF

THE

I n his excellent and timely article in

of
We have a Science
July 22, Mr. RollinLynde Hartesays:
Leaguein America t o fight its monkeybills.
But we have
t o combat its underlying policy by founding a
asyetfailed
League to Maintain the Separation
of Church and
Thisstatementis
somewhat inerror,
since the Science
League of Americaitself has for one of its objects (Constitution, Sec. 2, Art.3) to combat anyattempt,underwhatever
guise, toreunitechurchandstate.
Since the founding of
the Science League last September we have mailed circulars
t o more than 40,000 educators,publicists,
scientists, editors,
and
molders of public opinion, callingattentiontothe
attempt of the fundamentalists to override the letter and spirit
of national
and
State
constitutions
relative
t o complete
separati0.n of church and state.
J u l y 25
President, Science League of America

1
If
want to rent a
or an
or if you have
one to rent-or
sell, advertise in the classifiedsection
of
read by desirable landlords and tenants. Rates
on applicatlon.
Special
three-time rate.
Dept.
Y. W. P.,
Nation.

.
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