Evening Star Newspaper, December 18, 1932, Page 27

EDITORIAL SECTION he Sunday Star. Part 2—8 Pages WASHINGTON, TECHNOCRACY IS OFFERED AS CURE FOR DEPRESSION Rule of Technicians Would Be Substi- tuted in Social, Political and Economie Fields—Planning DY MARK SULLIVAN. HIS article is going to talk, not 100 dogmatically, about the de- pression—specifically about how the depre: be expected to end and what will com: | clary nocracy,” about which much print and tal I suspect, everyk shortly. It even more alluring as an ide taking hold on people S comet, A little whil New York whic over the count from a Pacif * *Technocrac thing in the United St & thousand wo! on it.” To the head of the newsgathering and feature-supplyir anization in New / “technocracy” meant no more any other new word that hasn't rto the dictionary yet. He had r heard of it. No one in his office eard of it. After some milling found a Writer with nothing r the moment and sent him out to coliect as much information abot “technocracy” as would consume a thousand words. Way Out of Slump. | “Technocr according to the pro- rs of the idea—and they are very men of high standing— we are going to get out of According to them. the And *technoc- t. It is a ne d political organ! tion whick vocates claim. gomg to disp r present systen displace it utterly, and very soon. | The writer of this article wishes, at | the outset, to disavow belief in tech- | or any interest in il except | one of those novel ideas W | tic-sounding name which sweep the country once in so of N 15 going to end Is tha end in the good old as previous dep: have ended, without any_reve 1 think this 1 end in due’ course and > a new y recci c” Ceast ed is the biggest Please wire this de- v will ashioned way, just | Howard Scott men still livi 0 were active in L 1870s, and lived thr sion 0§ the 1870s was like, and v it _ended. To those to perience and w in Tsation, published book al ers of bus , which w same purpose. Mr. Burton Hendrick’s biography of Andrev negie, _tells what h: Carnegie in the 1870 d to Henry m are not available there is a t some ¢ 1 Carnegie Bought Iron Mills. The panic of 1873 and the six years it lasted 3 everybody salvagi else, di rously. much of his f ted it to buying i ess of acquiring an iron 1 time could hardly be called ;. As it was put by Carnegies James A. Reed (father of pres- tor David A. Reed of Pennsyl- 1 1873 and 1874 you couldn't 2 iron mill away.” But in 188) such a furious market for iron and steel that all the m in ica were unable to supply the de- And Carnegie was a very rich Similarly, Henry Clay Frick. Frick. when the panic of 1873 struck the v was carning S1,000 a year as sper in the famous Overholi south of Pittsburgh. Frick, sta coal money to speak of. Wherever Fr could borrow $100 from a friend or rela- | tive he did ever he could ge he did that. | without land Peni ot be s was insufficien $5 a ton in 1881. very rich man All this is recited merely to say that the conviction of the writer article is that the present de will come to an end about the sa and that it will be followed b burst of prosperity, extremely busin and rising pr cally, somewhere in the there are men, now unknown, buying up varicus commodities at present prices, who will emerge as the Fricks and Carnegies and Mellons of the nest riod of | r = who will be ts 0 meet t And Frick was a hort, the present writer t ression will end in m ; as the one of the 18 one preceding that did, every one since that did—with ation. to be sure, and with dedly without ial or economic, eve other- vated in the as the world of thought. From soon after t , prophets of n manv, advo: of revolution, be jtability of revol s depression be- revolution have of the necessity in the inev- A year or two prediction was i cently embarked upon a “five. nomic plan” and in America r ceptible minds were infected jdea. “America must have a pla tame almost a slogan. There was an eruption of magazine articles about “planning,” and books and newspaper Stems and lectures about it. Just now the new wave of talk, drop- ing the “plan” idea, is about “tech- Dissects “White Rabbits.” T do not want to jeer at the new idea. £ am conscious of a prejudice in the Mirection of skepticism about new fdeas in this field, a bias toward belief that the old repeats itself. My skep- ticism about the untried is explainable. For som> three years certain relation- ships I have in Washington have put me in the role of a kind of unofficial dissector of “white rabbits.” “White Fabbit,” because of its association with Bmagicians, has been the name we have | come to give all sorts of devices guar- nteed by their inventors to cure the epression. ‘The more pretentious ones ave aimed to bring about a new form f organized society. ‘The new devices have poured into the “wh thy | € om Mr. Mellon's ex- | ¢ Is Main Theme. Washington by mail. in the fevered Leads of clated inventors who could only explain their inspired ideas in per- | son, and in the pockets of Congress- men. Many were inspired by, and par- the Fascism of Italy the Communism of Russia. Many been original—very original. They ave been coming to Washington from | West and East, from North and South. The devices have become increasingly numerous and the people have become easingly liable to entertain them. country is in a mood to “try some- * The counsel of desperation A very recent caller upon tho writer of this article was a who is a director and official of important corporations, banks ncial institutions. After we had sed and dismissed a dozen sug- gestions for ending the depression, this ctly conservative business man posed that the Government should buy up excess stocks of cotton, wheat and corn, and sink them in the sea, or burn them, in order to raise the price of the remainder. When a suggestion like that comes from such a source as that, one feels that the country, the masses who are less informed economi- | cally, are willing to “try anything.” Because many of the devices have had to do with currency, and because the writer of this article once com- posed a chapter on currency and on the currency fight of the 1890s, which became a text in colleges, and for some other reasons, it came about that some 2 0 Washington began to steer cd enthusiasts with new ideas toward my office. I suspect it was at first a time-saving device: later became a bit of friendly humor. At events, T have had to dissect a good “white rabbits.” This experience, coupled with finding most of them stuffed with sawdust, has now made me unduly skeptical about new ideas, whether ones in the field of currency or proposals for the reorganization of society. May Be “White Elephant.” wish to damn ssifying it with Technocracy may be a white horse or a white lion. And one must include the possibility that if we sh dopt it, it might turn out to elephant. The proposers of “technocracy” are men of the highest standing and most ], intelligenco—engineers ssociated with Columbia The principal one is a ively young engineer, named The chief current source of information about “technocracy” is e Outlook, the magazine edited by in the November mbers Y | with y just what Mr. “Al” 1f thir about a mew device 1 proposes to wipe out of existence everyihing We now know as politics. Smith has one of the best brains in the current world; most sincerely I culd like to know whether he really ks that two or three years from America will be governed by ) id that the two Outlock explain” “technocracy.” They fully. I have read them pains- ziy, and I am still not zble to vis- st what is to be the form of and political organization in the d States in a year or two after has done away with all form of government. That goes with the “ocracy” part of the word. Just as i cy means government by the nd aut-ocracy government by parently does “technocracy” means government by the technical ex- perts, the technologists, the men who | understand machine production, the of machinery. here are a good many men in the United States who understand ma- chinery, What I can't gather is just of them are going to run itry, which one of them is to be in_the White House, which one in the Speaker's chair. I assume that these institutions, the presidency and ress. are to be preserved—though ding of the authoritative Out- ticles leaves me a little in doubt about that, too. There is an implica- tion thit the function of running the country is to be taken over by the pre- cise group of engineers, some 36 in all, who, during the last 10 years have been working out, so to speak, the technique of “technocracy.” all up there in the Columbia University laboratory, ready and waiting to tike over the Government. Well, I hope to be in Washington on the day when the | “technocrats” turn Jack Garner out of the Vice President's chair, and Frank- lin Roosevelt out of the White House, and Hiram Johnson out of his Senate seit—how Hiram will roar! That alone ;\All be worth coming far to see and hear. U. S. Has Too Much Machinery. I seem still to be jeering at “tech- nocracy,” though I wish not to. Per- /' haps we can make a more serious ap- proach by trying to explain what the new kind of government is to be. The fundamental idea is that there is more | than enough machinery in the United States, vastly more than enough, to make all the goods we can possibly use. What is needed, therefore, is a gov- | crmment which shall say just what goods chall be made and who shall make them, and how they shall be dis- tributed. The Outlook article de- clares that “100 men in modern plants, working steadily, could produce all the | bricks the country nceds.” So, appar- ently, “technocracy” would name the 100 men, and tell every one else to desist from making bricks. ‘echnocracy” is to be, apparently, a superpower which shall figure out how many shoes we need, or how many we ought to be allowed to have; just how many hats and houses and automobiles. “Technocracy” will have that many made and ‘“technocracy” will decree | where they shall be made and how they shall be distributed. Incidentally, “technocracy” says that owing to the advance of zutomatic ma- chinery, all the goods we need can be made by each man working four hours a day for four days a week. But what if some stubborn devil, some modern Sam Adams or Patrick Henry, insists on going ahcad and working five hours a day? What will “technocracy” do to him? Echead him, presumably. | The ggestions are confessedly in- | adequate, very inadequate, as an ex- | position of what “technocracy” is. On that side, the affirmative, constructive | side, the authoritative statement of | “technocracy” seems itself unclear. But about one thing “technocracy” is in no doubt. “Technocracy” is going to do away utterly with everything we now know of political organization, so- cial organizetion, business organization. I quote a few passage: New Type of Social Control. | “Technocracy” is to be “a new type | of social control. * * * Our present | system is it only for the same museum n which are housed the pathetically inadequate political and economic (Continued on Third Page.) Smith | One gathers they are | BY CARTY RANCK. Author of ““The Weakest Link," “Blind Mice,” “We, the People,” etc. HO is this man Howe that [13 Franklin Roosevelt is go- ing to take to the White House with him as his Chief adviser? Never heard of him. Did you?” That is the way many American voters have been talking since election night, when President-elect Roosevelt ac his headquarters in the Hotel Bilt- more stated that the Democratic vic- tory was made possible by two men— Louis McHenry Howe and “Big Jim” Farley. Everybody had heard of Far- ley. chairman of the Democratic Na- tional Committee, but mighty few had heard of Howe. Even when interested | ons looked him up in “Who's Who,” | they couldn’t find his name. Leals McHenry Howe is the mystery man of the last Democratic national | compaign. _He a President-maker extraordinary; a man of quiet, simple { ways who gets important things done in an unspectacular manner; a man who avoids the spotlight as assiduously as a prima donna seeks it; a “half-pint” man in stature but big enough to push his friend, Franklin Roosevelt, into the White House. That's the sort of little guy Louis Howe is. Not since Col. Edward M. House entered the arena as the close friend and adviser of Woodrow Wilson has there appeared in national politics such an astute little man as this level- headed Louis Howe. Long Acquaintance. | More than 20 years ago Howe, as| Albany correspondent for the New York Herald. met a fledgling State Senator named Franklin D. Roosevelt, | who was trying his political wings for the first time. They became as mag- | net and steel. and soon it was “Frank- | lin” and “Louis.” It is still “Franklin” | and “Louis,” and it will be that way when Mr. Roosevelt is addressed as | “Mr. President.” “You are awfully familiar with the next President of the United States,” a | friend recently said to Howe, after the {little man had disagreed with some- thing that Gov. Roosevelt had stated, The small man grinned rather impishly. “Well,” he said quietly, “I'll talk that | way when he's President and hell | like it.” | This was not said boastfully, but as one understanding friend would speak | of another. And, as a matter of fact, when Howe talks “that way” President Roosevelt does like it. Roosevelt knows that Howe is the soul of sincerity. “Better be a thorn in the side of your friend than his echo,” said Emerson. | Louis Howe is neither a thorn in the side of his friend nor has he ever been an _echo. During his long friendship the President-elect Howe has never invaded the “yes” man's terri- tory; frequently he has been found in “no” man's land. Like Mark Antony, he is a plain, blunt man and loves his friend too well to truckle to him. “No” is a little word but it takes a big man to say It, and it is one of Louis Howe's favorite words. Opposed to Titles. He may be small in stature, but he is 1 big in friendship. He dislikes titles and merely smiles when he is referred to as Franklin Roosevelt's alter ego. But he | {is proud to be called Roosevelt's closest friend, because in Howe's lexicon “friend” is the best title a man can | wear. | Howe makes a wry face when any one calls him “Colonel” Howe, with the unctuous intonation that professional politiclans employ when they use this | title. The “Colonel” was wished on Mr. | Hewe last spring by Governor Laffoon | | of Kentucky—and “Colonel” it has been ever since. | don't think that any one has a | iright to a military title unless he has |earned it as a real soldier,” said “Mis- | |ter” Howe. shrugging his shoulders wearily, “but what is one to do about it? The darned thing sticks like a burr | and I can't shake it off.” “Governor Roosevelt called you ‘Colonel’ the night of the election,” I reminded him. | “Franklin was kidding me,” replied | Mr. Howe. “I don’t mind friends josh- | ing me and calling me ‘Colonel,’ but I | don't like it said pontifically by persons | a benediction.” Hard-Boiled Idealist. ‘That remark is typical of the humor that bubbles up in this little man who | is as full of surprises as @ stage ma- gician. His face is thin and leathery looking, but it is constantly breaking into crinkles of mirth, from which peer a big nose and friendly brown eyes. His eyebrows are shaggy and his ears are large and faun-like. The man's chin and jaw show resolution and force of character which are not belied by a single weak line in the smooth-shaven face. Louis. Howe could play the role of a cynical newspaper man in a Broad- way play without makeup. Yes, like many seasoned newspaper men, he is a hard-boiled idealist and his cynicism is largely a protective covering. At first glance one might think that here was a ruthlessly efficient man—a sort of cold-blooded thinking machine— the master mind type. When I first stepped into his office and met his steely stare I found myself thinking of G. W. “One could see that his brain was work- ing as if packed in ice”” Howe's brain works that way when he is concentrat- inz upon a problem, but once the prob- lem is solved the ice is soon thawed by a natural geniality that makes the man warmly human. Sense of Humor. Probably Louis Howe's keen sense of humor has made him avoid many of the pitfalls that beset the feet of king- makers and president-makers. This humor frequently leavens his conversa- tion. For instance, in a recent maga- zine article it was stated that when Franklin Roosevelt was installed inthe White House Mr. Howe probably would be found in a cubby hole “exerting a wholesome influence over the Presi- dent.” This tickled Howe’s risibility. “I called Franklin's attention to this alarming suggestion,” he said with his quiet smile, “and warned him that he might expect me to be his chloride of lime man after March 4. We had a good laugh over that. “The first requisite for health and happiness in public life is a sense of humor,” he says. “No man can have successful personal relations with other men unless he has humor. It does not pay to take either yourself or the other man too seriously.” Loathes Bunk. Some of Mr. Howe's pet hates are dispensers of bunk, blah and soft soap and woe betide the Uriah Heeps of the political game who try to put anything over on this astute veteran of hard- fought campaigns! He is familiar with shell games ands knows every time where the little ball lies. His knowl- edge of political chicanery and skull- duggery is going to amaze many wise gentlemen at Washington when they t him in March. s Howe ke old elothes and oid| vho sound as if they were pronouncing | I LOUIS M. Special Articles D. C, SUNDAY MORNING, DECEMBER 18, 1932. The President-Maker This Is Louis McHenry Howe, Advisor to Franklin D. Roosevelt and Mystery Man in His Campaign decision 1s usually a failure. So when Howe is wrestoag with & problem ke takes a detecttve story to bed with hime instead of said problem, which is “off the record”—a favorite expression - of his. The next morning he finds that his subconscious mind has been work- ing for him and the problem is solved. Works Cross-Word Puzzles. He also uses cross-word puzzles 8s sort of counter irritant when he finds himself obsessed by an _important problem. Like the fictional old man who knotted and unknotted cords while concentrating on a crime prob- lem, Louis Howe works out & cross- word puzzle, and by the time it is fin- ished his real problem has evaporated. During the pre-convention came paign, when the hullabaloo and hoo were at their height and hardened politiclans were running around in circles yapping at one another, a small man in rumpled clothes, and mum as & mummy, was hidden away in an office just across the street from national headquarters in Chicago. Here he was sought by the wise and otherwise, and while some of the so-called Democratic leaders became hectic and excited over the outcome Louis Howe was as calm as Flatbush. That uncanny sixth sense of ‘his told him that the friend for whom he had been working for 22 years was going to get the nomination and the presidency as well. “I am no master mind or anything like that” he said deprecatorily. “I have just ordinary common sense, that’s all. These master minds are usually too intellectual to convince any one but themselves, and, being so su- perior, they never get the viewpoint of the man in the street. That is why they are such bad prophets. But I have a sort of knack for sensing the other fellow's reaction. For instance, when President Hoover made his re- marks about gold during the recent campaign I felt intuitively that he had, to use a slang expression, ‘pulled a | boner'—and later I was not surprised HOWE. —Drawn for The Sunday Star by Leonebel Jacobs. | friends, and Smokes cigarettes that| were popular when grandfather was in is prime. His clothes usually look as if he had slept in them, and not even his wife can prevent him from wearing & tall, stiff collar. “God gave me a neck like a swan, he says, “and a swan's neck is very beautiful—on a swan. But if you ever saw me in a low collar you would know why I prefer a high one.” He said with a smile that he intend- ed to send some of his friends around to Mrs. Leonebel Jacobs, who has been painting his portrait, and have her certify to them that he is every bit as good looking as she has painted him. Race for Ugliest Picture. “By the way.” he said with his like- able grin, “Mrs. Franklin Rooscvelt and myself are running a race to see which one of us can find the ugliest picture of ourselves. The world’s worst pic- tures are made of her and me,” he chuckled, “but up to date I am two laps ahead.” Speaking of photographs, Howe is an excellent photographer, having han- dled a camera since he was elght years old. “I suppose I have an inferiority com- plex,” said Mr. Howe mildly. “I must have,” he continued, “or I'd give more thought and attention to things that many persons consider _important. Politics has always interested me as a side-lines than play myself. big kick out of looking on.” “Don't yod want a political job?” I asked hi; he I get a im. he replied emphatically, “do you? “No,” T replied, just as emphatically. “There you are,” he said philosoph- ically. “Newspaper men don't like po- litical jobs, but try to make some of the wise politicians believe that.” Howe doesn't care a hoot for political preferment. but he has had the thrill of a lifetime in seeing the man he coached for the presidency 22 years agc kick the goal and win the game. Like a master chess player he planned the moves, and, while “Big Jim" Far- ley, as the political manager of Frank- in Roosevelt's campaign since 1928, has bulked large in the limelight, it was Louis Howe who picked Farley for the job. He, before any one else, saw the possibilities of the big Irishman and recommended him to Roosevelt as a “go-getter” extraordinary. ' | with President It was Howe, also, who called Gov. Roosevelt’s attention to the out- standing abilities of Prof. Raymond Moley, of Columbia University, who was the Governor's sole companion at the /recent precedent-making conference Hoover over the for- eign debts problem. As a member of the National Crime Commission Louis |Howe had come into frequent contact ,with Prof. Moley, who was greatly |interested in the work, and the two men had become fast friends. Moley. quiet and efficient like Howe, already has made himself almost as indispens- |able to the President-elect in regard to | problems of government as is Howe in i the handling of practical politics, and {he will undoubtedly accompany Mr. | Roosevelt to Washington as one of his expert advisers when the new Presi- dent enters the White House. | Crime interests Louis Howe enor- | mously. As assistant to J. Weston | Allen, chairman of the National Crime Commission, he has made investigations of the many criminal rackets that have sprung up like poisonous toadstools since prohibition opened a Pandora box of | evils upon this country—and he is con- | vinced that if something is not done | about it. the Government itself will be !menaced by these plunder-drunken racketeers of the underworld. Will Fight Racketeers. Some means must be devised by the | game, but I wouldJather stand on the Government to end these rackets, says Mr. Howe, and he believes that Frank- lin Roosevelt is going to find these means. The problem, Howe feels, has | become far graver to our country than the payment of foreign debts, and | President-elect Roosevelt is keenly in- terested in its solution. No one loves a good detective story mere than Louis Howe—but it must be good. He has studied crime and Ameri- |can police systems so much that he | can no longer read an American detec- tive yarn—he knows from first-hand | experience that the characters and | methods of procedure are usually im- possible. But he knows little of Scot- |land Yard and its methods and can |read and enjoy English thrillers. He | averages three a week. Howe has always been troubled with | insomnia. This is probably because his mind is so active that when he goes to bed he is like a parked car with | the engine still running. He says if you go to bed with a problem and do not get it off your mind, your ultimate When " They're Cheap BY BRUCE BARTON ERE is a wise old gentleman in Chicago who has been a comfort to me during the past three years. He has not made the common mistake of thinking that because he has lost some money the world is coming to an end. He never lets his own shadow blur his clear view of the facts. He does not consult many eople or listen to much advice. He sits in his chair and thinks, and by that activity, and the courage to back his judgment with his money, he has done well. Some weeks ago when wheat and corn were selling at the “record low of all time,” he handed me a bunch of clip- pings from Middle West newspapers. : “They are burning corn for fuel in Towa,” he said. “Farmers are heating their houses with it. One of those clippings tells about a county court building in Southern Illinois whose coal bins have been filled with corn. Even down there beside the coal fields corn is cheaper than coal. “Well, I have been buying myself a few thousand bushels of corn,” he continued. “I am going to take on quite a bit more. I remember back in the 90s corn got so cheap that many farmers burned it. But a few farmers who were able to put their corn in cribs and hold it a couple of years sold it at 70 cents a bushel instead of 10.” Then he added, philosophically: “A good deal of money has been made in the world by buying things when they were cheap.” The story is told about-one of the Rothschilds during the French Revolution. He was visited by an excited young man who had inherited some money and was afraid to invest it in anything. “What shall I do?” he exclaimed. g “Buy French rentes,” Rothschild replied. “French rentes,” the incredulous young man exclaimed. “Why, the streets of Paris are flowing with blood.” “That’s why you can get them at 50 per cent discount,” Rothschild said. This is not a financial column; it is not a tip. I am not buying corn or advocating it. I am merely telling about a wise old man in Chicago who has lived through several of these depressions and who has insisted to me right along that they ar¢ “all alike.” He has refused to be worried; he fully expects to have more money before he dies than he had in 1929. And it would not surprise him greatly to see, within the next couple of years, a wheat or corn shortage instead of a surplus. That's the way things go, he says; up and down, back and forth, ebb and flow. Never permanently up; never permanently down. Not in the past, and not now! (Copyright, 1933.) 2 |at Wall Street's reaction to those re- | marks." | Seeks Rest at Seashore. When this highly original little man wants rest he goes to the seashore, The quietude of mountains, which soothes most persons, g-ts on his nerves; and he has found by experience that the | great activity of the ocean has a quiet- |ing effect upon him when he can lie {on the shore and listen to the pound- ing of the waves. He is like the New | York boy who couldn't sieep in_the country because it was too quiet. This love for the sea is strong in him today |and he has a place on the shore be- | tween New Bedford and Fall River | To this retreat he goes every Friday I night and stays until Sunday night. | When re goes to Washington in March to live in the White House, his family | will continue to live in Massachusetts, | (and he will commute for week ends, | perhaps flying back and forth. “The ocean rolls directly from Spain te my place on the shore of Massachu- setts,” he said poetically. As a matter of fact. Howe is very | fond of poetry, real poetry, and admits unblushingly that he has written it himself. But he won't tell what sort of poetry it is. Nor will he have any of it published. In his youth, Howe wanted to be an artist, and has con- tinued drawing and etching for his own amusement. He likes to work with his hands, and has a settled conviction that a man’s mind works better when he does things with his hands. For this reason he has a grudge against a col- | lege education, although his own son 1s at Harvard. 1l Health in Youth. When he was 16, young Howe had a |tussle with typhoid fever and was ill for a long time. That prevented his | matriculating at college, but his father took him to Europe three years in suc- cession, and over there he studied, | traveled and recovered his health. And | this, he thinks, did him more good than | a college education. But he must have a subconscious hankering after college, he says, because he put his daughter through’ college and is doing the same thing for his son. It is one of Howe's pet ambitions to start & school where children may try out every road until they find the right one. He knows that there is no royal road to learning, but he also knows that there are many Toads to ignorance and dislllusionment and he would like to see children started on the road that interests them most. Children, he thinks should do their exploring while they are young and thus discover the path that leads to individual success. “I would teach them history,” he says, “for that is essential to people who are going to take part in the world's progress. I'd begin them with Geoffrey Parson's book, ‘The Stream of History’; it would give them a bird's-eye view of the trend of mankind.” 62 Years Ol He is 62 years old, but doesn't look it. He is one of those men of indeterminate age who never seem to grow any younger or any older. He was born in Indianapolis, but was taken to Sara- toga by his father at the age of 7. Saratoga was a fashionable watering spa and a great racing mecca for the country. Here swarmed politicians, gamblers, health seekers and famous men and women from all walks of life. Young Howe's father had bought the Saratoga Sun and was also postmaster and local correspondent of the New tics as a sponge absorbs water. place as correspondent for the Her- correspondent at Albany. Tammany fist of Charley Murphy. velt's has the faith that moves mountains. two became the closest of friends and when Franklin Roosevelt in a practical manner. Howe to manage the paign. When it was all over he had the gratification of telling con- election. Held Many Department Posts. Franklin Roosevelt Assistant Secretary CANADA GOES NINE YEARS WITHOUT A BANK FAILURE Deceniralized System Grows Up Grad- ually—Branches 1 nsure Fairly Uni- form Rates Over Wide Area. ' “Banking reform™ in ths Un!: ’ Siates will be the subject of much discussion and probably of legisla- | tive action in the mext session of Congress. This article on Canada’s | Danking system is of timely interest. The record of Canada's banking sys- | tem in the depression has been an unusually fine one. BY JAMES MONTAGNES. | HERE have been no bank failures | in Canada since the start of the | present economic depression. In | fact, there have been no bank failures in the Dominion since | 1923. The one before that was in 1914, | While ~ developments in the United States usually reflect themselves in sim ilar developments in Canada, the Do- minion has not followed the path of bank failures which have been mon- tioned in the Canadian press. N Canada has 10 banks with more than 3,500 branches throughout the Do-| minion, Newfoundland, Mexico, West | Indies, Central and South America. The | only outward sign of a depression in the banking business has been the clos- | ing of some of these branches in large | cities where individual banks operate as many as 40 branch banks, this move necessitating little inconvenience on the part of depositors and being merely the transference of accounts from one branch to another in the same neigh- { borhood, entailing only clerical work. The Canadian binking system is & product of evolution, having grown up gradually, with changes made from time to time as experience directed. It is unlike the system in use in England and most European countries, where a strong central bank stands in close relation to the government treasury. It differs from the United States banking system in that it is a decentralized system, whereas regional centralization | prevails in the United States. It is made up of a number of large joint stock, commercial and industrial banks, privately owned and managed, operat-| ing under a uniform law and subject to the supervision of the Dominion | government. Competition is allowed be- | |tween the banks and takes the form !of the establishment of many branch | banks. The largest bank, the Royal | Bank of Canada, has nearly 900/ branches, while the smallest, Barclay's Bank (Canada) has 2 branches. The branch banking system is well‘ adapted to the needs of Canada with its large area and small population, especially to the requirements of the| grain and cattle trade of the West. The | system makes for a ready method shifting funds from one part country to another and from one in-| dustry to another as the occasion may | demand, and insures fairly uniform | rates over wide areas. Eight Mergers in Decade. The present 10 charter banks in the Dominion represept a larger number of | banks which havé amalgamated with or been tiken over by the stronger banks. Eight banks have merged in this way in the last 10 years. These mergers, like other banking changes, must be approved by the Dominion government. Most of these mergers tock place short- ly after the last bank insolvency in Canada in 1923, the move eliminating some of the weaker banks. While 1923 saw the last Canadian | bank failure to date, there have been | other failures resulting in changes in the banking act, which have made the | | Canadian banks sounder in the public mind. Runs on banks are few in re- cent years, and these have not resulted in failures. In all, since 1867, when| the present Dominion was formed into | one couniry, there have been only 26 bank failures, and of these there were | nine since the beginning of this cen- tury. Canadian banks are allowed to issue their own notes for denominations of $5 and upward, the notes being in multiples of five. The total amount of bank note issues is limited to the paid- up capital of the bank. These bank notes are the chief means of earning | profits for the banks and are the chief circulating medium in use in Canada.| Holders of bank notes have priority in | the case of bank failures, and banks which have been declared insolvent | during the past 50 years have honored | their notes 100 per cent. ‘The Dominion government also issues notes of denominations of $1, $2, $4 and $5, as well as higher notes, from $50 to | $50,000, these latter being used exclu- | sively between banks. The Canadian bank act demands that banks carry at least 40 per cent of their cash reserves in Dominion notes, the government holding the equivalent amount in gold as custodian for the banks. Between 60 and 70 per cent of the bank reserves are carried in Dominion bonds, other reserves taking the form of gold, cash | | backed by |No bank in Canada m: valances in banks outside of Cana: call and short loans in New York an readily marketable securities Banks may extend their note circulas Jca by depositing dollar for dollar in gold or Dominion notes in the central gold reserves. During period of croq movements. war or panic, banks may extend their note issues 15 per cenf of the combined capital and re: funds, paying the government interest on the excess amount at 5 per cent To further guard against bank faile ures and the loss of money to deposi= tors and note holders, the Canadian banks pay into a bank cir demption fund on the b of 5 per cent of their average circulation not covered in gold or Dominion notes in the central gold reserves cstablished in 1913, making this sum available for the redemption of notes of failed bank: In addition, th ¥ Association was fol 190¢ to act under the authority of the Dominion Treasury Board. Through this organi~ zation co-operation of individual banks is facilitated and encouraged. The as- sociation supervises clea house transactions. appoints curators to super- vise the affairs of banks w suspended business and overs printing and Issue of notes to its mem= bers. The oldest of the present banks is the Bank of Montreal, which began busi- ness in 1817. A number cf banks fol- lowed, but of these none now remains except the Bank of N éd in 1832, Of the other banks, the Bank of Tcro charter in 1855, the Banque Pri du Canada. which began as the Ba Jacques-Cartier, in 1862 Bank of Commerce, which today has its British Empire, at Toronto, 1867; two years later the Bank of Canada was {0 fax; then came the Dominion and the other French-Canadian the Banque Canadienne Nat 1875 the Imperial Bank of Cax. formed, and the next bank granted a charter and still doi ness was Barclav's Bank (C branch of the well known Englis {of that name, which came to Ca in 1929. In recent years the banks of Canada have extended their business ¢ the country and at the begir 1982 had among them 176 br foreign countries, namely in Ne land. British and foreign West Indies, Central and South America, as wel in the financial centers of the wo | London, Paris and New York. Bank of Nova Scotia and the Royal Bank of Canada are the leaders in this movement of Uanadian banks to extend their services beyond the Do Canadian foreign trade in these countries. Branches in Remote Areas. Branch banks are to be found in the most remote parts of the Dominion, varying in architecture from small m-d- els of pretentious head offices in the larger cities to log cabins in the n°w mining towns which spring up constantly in the Canadian Northland. But each bank, whether ornate or merely in the bush, can paint on its windows the sum of its capitalization and reserve in mil- lions of dollars, since each is part of 10 vast systems spreading from coast to coast. ‘The miner in the bush and the largest manufacturer, both dealing with the same bank, though they may be thousands of miles apart. are both the full resources of their bank. This feeling of confidence and strength in the Canadian banks has been largely responsible for the lack of runs on banks when Canadian news- papers reported the failure of large banks in the United States during the last two years. Canadian banks have to be capital- ized at upward of $500.000 and half that amount deposited with the govern= ment before a charter is issued n Dominion government. The largest fi ure on bank capitalization shows close to $150,000,000 as the sum for the 10 banks. Stockholders in Canadian banks are liable to double the amount of the stock in case the bank fails. All bank employes and officers must be bonded. v make loans thus keep= accessi= with real estate as securit; ing bank resources in an ca ble condition. Reports must be made to the Dominion government at frequent periods during the year. In addition to the 10 chartered banks, theré are a number of loan and trust companies operating throughout _the | Dominion under provincial and federal | legislation. Some of these chartered | companies also maintain savings de- posit departments. Besides these, there | are Dominion government and provin- |cial government savings offices, but | these are not commercial banks. mainspring of his character. So it was only natural that when Franklin Roosevelt was nominated for the Vice Presidency in 1920 Louis Howe should accompany him on his speaking tours. That was not a Democratic year, but Roosevelt was making friends in all sections of the country when, without warning, he was stricken with infan- tile paralysis. That was a facer, but Louis Howe at once put aside his per- sonal plans and went to live in the Roosevelt home. When Roosevelt be- gan to recover Howe urged him not to abandon his political career, prophesy- ing with uncanny clairvoyance that York Herald. In this electrically alive Roosevelt would some day “make” the atmosphere Louis Howe kept his eyes | White House. and ears wide open and absorbed poli- | miration for the sportsmanlike way ‘When | that Franklin he was only 17 he had taken his father's | game. And Howe is full of ad- Roosevelt played the “He never showed signs of discour- ald, and later became the Herald's |agement or despair,” said Mr. Howe; “he treated the entire affair as a sol- It was at Albany that he met Frank- | dier would treat a wound and made lin Roosevelt, then a new and very|his plans as if nothing had happened. green State Senator from Dutchess{I have known Franklin as well as a| County. But in spite of his greenness, | valet could and he still remains a hero Roosevelt refused to take orders from | to me.” Hall, then under the iron| Mr. Howe has a wife and two chil- Roosevelt | dren—but he carries with him no aura fought the New York organization | of domesticity. In the home of Frank- tooth and nail and Louis Howe went |lin Roosevelt he stands in loco parentis, to interview this independent young-|and his advice is sought not only by ster. From the start he liked Roose- | the President-elect and his wife, but sincerity and earnestness and|by the Roosevelt children, who have decided that this man had the mak- | the greatest affection for this quiet lit- ings of a President—a point of view |tle man with the queer clothes and big | that he never changed. Louis Howe |bump or humor. Inspires Loyalty. One may gain a clear idea of a man's | was renominated for State Senator | Character by the way his close asso- Howe had a chance to prove his loyalty | ciates Roose- | has speak of him, and Louis Howe inspired the same loyalty in his Both velt and his wife had been stricken | Co-workers that he has given to Frank- with typhoid fever and it was up to|lin Roosevelt. They all like him and Roosevelt cam- | speak of him with respect and affec- . That is probably why the Demo- cratic National Campaign Committee the valescent candidate that he had been|in the last presidential election, was returned to the Senate by a bigger ma- | credited with being the most efficient Jority than he had received in his first | in the history of the Democratic party. The team work was wonderful. But in the wings, watching the stage every minute, was a diminutive director ‘When Woodrow Wilson appointed | named Howe. He calls his co-workers “the gang, of the Navy Louis Howe went along|and refers to his office as “the with him as his secretary, but it was|He never eats lunch, but frequently | dergr not long before he was assistant to the | nibbles at an apple when his office Assistant Secre calories. He has “Mein Gott!” If Franklin Roosevelt is a hero to Louis Howe, Louis Howe is a hero to his offic2 force. I interrupted the political trend of our conversation at one point to ask Mr. Howe if he liked dogs. | _ “Oh, fairly well,” he answered, “but | I like cats better.” I was somewhat surprised. thought that most men disliked cats. “I suppose they do,” he said thoughte fully, “but I like cats because they are always themselves. Their utter in- difference makes them fascinating. Then, too, they are always laughing at us. Dogs are ‘ves’ animals, but cats are ‘no’ animals. That is why I ad- mire them.” Louis Howe has not escaped a nick- name himself. ranklin - Rg affectionate name for him is “Ludevic.” When I remarked that he was going to find it increasingly hard to stay in the background now that he had been smoked out by a barrage of publicity, he smiled wearily and shrugged his thin_shoulders. “Yes, I suppose so0,” he said. “There will be’‘close-ups’ of me and ‘intimate portraits’ and all that sort of thing— for a while—then I sincerely trust that they will forget all about me and let me_alone.” There spoke the newspaper man, and, at heart, that is just what Louis Howe still is—a newspaper man covering the big parade for his boss and friend, Franklin Roosevelt, but hoping rather wistfully that the darned thing won't last too long. Miner Retains Health After 70 Years’ Work LONDON.—Although John Rees, a coal miner in Glamorganshire, has been working underground for more than 70 years of his total span to date of 78, he is in better physical condition than many of his surface-living countrymen who are 20 years his junior. How he has remained so fit with so little acquaintance of the sun or day- light is a riddle for health experts. Rees, too, has led what might be termed a lucky working existence un< ound. He never has met with a serious accident, and has come un- scathed through a colliery explosion and ‘| pit flood.