ber President Wilson shifted to Congress the burden of determining the railroad policy. Early in January the Senate Committee on Interstate Commerce began hearings on the railroad problem. One of the most widely discussed proposals presented was that of Director General McAdoo, who opposed government ownership but advocated the extension of federal control for a period of five years to test such control during peace times, suggesting that such an extension would keep the issue out of the 1920 campaign and thus allow a more deliberate judgment on the merits of federal control. This proposal did not meet with much favor, being considered as a step toward permanent government ownership and operation. - On January 9, the Association of Railway Executives presented to the Senate committee proposals calling for the private ownership, management and operations of the railroads, under strict federal regulation. A secretary of transportation with a seat in the President's cabinet was suggested. Strikes and lockouts were to be forbidden and labor disputes settled by the government. The members of the Interstate Commerce Commission, with one exception, opposed the five-year plan and suggested that the roads be returned to private control after "a reasonable period of readjustment" and with adequate provisions for regulations.-Early in February Director General Hines, before the Senate committee, opposed government ownership but endorsed the five-year extension plan. He advocated a radically modified private ownership with strict governmental regulation, an important feature of his plan being the proposal for government representation on boards of directors.-Another proposal came from the brotherhoods of railroad employees. It recommended government ownership of the roads and their operation by a corporation, one-third of whose directors should be elected by the employees, one-third by the operating managers, and one-third appointed by the President of the United States. Under this plan working capital would be supplied by the government, "operating ability" by the corporation. All the revenues of the roads would be handled by the corporation, which would pay all expenses including wages, amounting now to a total of over 21⁄2 billions yearly. Out of the net income the government would receive its rental. A surplus of revenue above 5 per cent. would be divided between the government and the employees; but a deficit would be made up through taxation. The Interstate Commerce Commission would retain all its powers, and wage boards would be created to settle wage disputes whose deadlocks would be opened by decision of the Board of Directors.-Railroad security holders recommended private ownership and a government guarantee of 6 per cent. on the invested capital. One-third of all profits beyond this amount were to go to the employees; another third for improvements; and the last third to the roads as a reward for efficiency.-Senator Albert B.

Cummins, chairman of the Senate Committee on Interstate Commerce, has advocated as the solution of the difficult rate problem a series of consolidations which would merge the weak roads with the strong ones so that the resulting systems, from 18 to 20, might do business upon substantially equal terms. - The failure of the Sixty-fifth Congress to pass the third deficiency bill, containing an appropriation of $750,000,000 for the railroads, greatly hampered the Administration (see infra, p. 78), but the Director-General worked out a plan with prominent banking interests and the War Finance Corporation for borrowing such amounts as enabled the railroads to continue operations until the bill was passed during the following session of Congress (see infra, p. 85). The standard return for the year was given as $890,335,685, and the net income as $688,200,083, thus leaving a deficit for 1918 of over $200,000,000. During the year the operating revenue increased 21.4 per cent., the operating expenses 40.3 per cent. This great increase in expenses was due largely to substantial wage increases amounting to the enormous total of $583,000,000 and to war conditions. In the first quarter of 1919 the financial condition of the railroads became even more unsatisfactory. A deficit of $192,000,000 was accumulated. The roads took in 37 per cent. more revenue than the average for the three years preceding, but their operating expenses increased 81 per cent. Congress has as yet decided upon no definite railroad policy.-On August 1, by virtue of authority granted by Congress, the President assumed control, though the Post-Office Department, of the telegraph and telephone systems, and on November 16, of the marine cable systems. Coming as it did after the signing of the armistice, this cable "seizure" aroused considerable criticism. It was said to be necessary because of the jealousy and lack of cooperation between the cable companies and because of the pressing need of direct, certain and quick communication of diplomatic messages. On May 2 the Postmaster General returned the marine cables to their owners and on June 5 he announced the return of the "control of operations" of the other wire systems. On June 18 Congress voted to return the telegraph and telephone systems to private control. This was done on August 1.-During the war the prevention of labor disputes came to be one of the most important activities of the government. Numerous boards were established for this purpose, the most important of which was the War Labor Board created April 8, 1918. Their success is indicated by the fact that no strikes or lockouts occurred which seriously interfered with war production. Up to June, 1919, over 1,200 cases were submitted to the War Labor Board. In not every case was a decision rendered; some were settled by agreement of the parties, others dropped and still others referred to other labor agencies. But more than 500,000 employees were involved in the settlements made by the Board, and wage increases amounting to

approximately $250,000,000 per annum were awarded. The most conspicuous result of the Board's activities was the extension of collective bargaining. Though it did not have authority to enforce its findings, the power of the President to commandeer factories and to withdraw draft immunity from striking employees, powers which were actually exercised in a few cases, added to the pressure of public opinion, made its decisions practically binding. By a decision not to intervene in further disputes unless invited to do so by both employers and employees, made in December, the board recognized that its power was waning. The failure of Congress to provide funds for the continuance of its work caused a gradual curtailment in its activities.—An organization known as the War Labor Policies Board was established in June, 1918, with Felix Frankfurter as chairman, and with representatives of those branches of the government which were large employers of labor, as members. This Board had no administrative functions but was free to consider questions of labor policy to be followed by the War Labor Board and other labor agencies. It concerned itself chiefly with the difficult subject of the standardization of wages and hours, made so important because of the excessive turnover of labor. The armistice cut short an ambitious program of wage-fixing.—Upon the recommendation of this Board the President issued a statement to employers engaged in war work requesting that after August 1 labor be recruited through the United States Employment Service of the Department of Labor. From January, 1918, to the signing of the armistice this Service placed 2,400,000 men and women in war work of various kinds. From that time until March 22, 1919, when the organization was cut to 20 per cent. of its former size, on account of the failure of Congress to make financial provision for its continuance, it placed in employment returning soldiers and war workers at the rate of about 100,000 a week. On June 28 the Senate added an amendment to the Sundry Civil Appropriation Bill granting $400,000 for the continuance of the United States Employment Service.-The Bureau of Industrial Housing and Transportation in the Department of Labor administered the Housing Act.-An undertaking of far-reaching importance has been the furnishing of educational opportunities for members of the A. E. F. in France awaiting their return home. The educational plan, which was placed under the immediate supervision of General Rees, coöperating with the Y. M. C. A. Educational Commission, was comprehensive and aimed to enable the American soldier to return to his work at home more proficient than before he entered the army. The work was divided into academic, higher collegiate and vocational, elementary work being carried on in the army camps under the supervision of the Y. M. C. A. educational director. Through the cooperation of the French Ministry of Education European universities were thrown open, and many

thousands of advanced students took advantage of the opportunities offered. Those deficient in French were sent to the universities of Great Britain. On April 29 there were almost 6,000 American students in French universities. The compensation and insurance for soldiers and sailors and the allowances to their dependents (see last RECORD, p. 31) developed to enormous proportions. In November almost $37,000,000,000 of voluntary life insurance had been taken out by 4,000,000 men, the average policy being about $9,000. The War Risk Insurance Bureau in the Treasury Department had 13,000 employees and was mailing about one million checks monthly to soldiers' dependents. Since the signing of the armistice the government has strongly urged the men to keep up this voluntary government life insurance. The War Risk Bureau has recently been reorganized.—The demobilization of the American army began shortly after the armistice was signed and proceeded with remarkable rapidity. Out of almost 4,000,000 men under arms on November II less than 1,000,000 remained in the service at the end of June. On July 19 the War Department's figures showed that 2,946,804 officers and men had been discharged and almost 1,800,000 had sailed from France-358,315 during the month of June. The estimated strength of the army as of July 14 was: Europe, 282,000; United States, 372,000; Siberia, 8,500; insular possessions, 28,000; at sea, en route to United States, 91,000; total, 782,000. On June 27 Congress fixed the average size of the 1920 army at 325,000 men (see infra, p. 85). The policy of the United States in financing the war included bond issues and extremely heavy taxation (see infra, p. 77). The Fourth Liberty Loan drive was opened by President Wilson on September 27, and the campaign ended on October 20 with the $6,000,000,000 asked for oversubscribed. The bonds, which mature October 15, 1938, bear 44 per cent. interest. On April 13 Secretary Glass announced the terms of the Fifth or Victory Loan. The sum asked for was $4,500,000,000. This loan took the form of four-year notes, which may at the option of the government be paid in three years, bearing 434 per cent. interest, free of state, local and normal federal taxes. The campaign began on April 21 and closed on May 10, with the amount asked for greatly oversubscribed in practically every district of the country. Treasury officials stated that over fifteen million people had subscribed. In a public letter dated July 8, Secretary Glass announced that he did not intend to float another popular liberty loan. He thought that the expenses of the government could henceforth be met by the flotation of shortterm notes to financial institutions at 41⁄2 per cent. interest provided taxes were not curtailed and strict economy was practiced. He placed the total wartime expenditures of the government at $32,427,469,054, of which $30,177,000,000 was chargeable directly to the war. This total, however, included $9,102,000,000 of loans to the Allies. The total

revenues of the government from April 6, 1917, to June 31, 1919, amounted to $9,384,278,708, not including two unpaid instalments of the income and excess-profits taxes for the fiscal year ending June 30, 1919.

II. PEACE MANŒUVERS AND ARMISTICES

Throughout the year 1918 recurrent attempts were made to redefine the issues of the war and thus come to some understanding relative to the terms upon which peace negotiations might be conducted. In January President Wilson in an address to Congress had laid down his famous Fourteen Points (see last RECORD, p. 15) which later became the basis of peace negotiations. On July 4 he redefined the Allies' war aims in his Mount Vernon address (see last RECORD, p. 19). — Military events during July and August (see supra, p. I et seq.) provoked a new "peace offensive" from the enemy. On September 10 Baron Burian indicated his belief that a calm exchange of views among the belligerents might pave the way to a reconciliation; and on September 15 the Austro-Hungarian government suggested a confidential peace parley and proposed to the governments of all belligerent states that they send delegates to a confidential and unbinding discussion on the basic principles for the conclusion of peace, in a place in a neutral country. . . ." This proposal met with slight consideration from the Allies. President Wilson replied that the United States would "entertain no proposal for a conference upon a matter concerning which it has made its position and purpose so plain". The failure of the Austrian proposals created profound discontent and revolutionary agitation throughout the central empires which no patriotic appeals of the Kaiser or his military chieftains could allay. -On the evening of September 27 President Wilson, in his Metropolitan Opera House speech, stated that no peace could be obtained by any kind of bargain or compromise with the governments of the Central Empires because "they are without honor and do not intend justice", because they "observe no covenants, accept no principle but force and their own interest" and because "we do not think the same thought or speak the same language of agreement." He expressed his conviction that a secure and lasting peace could be accomplished only by means of a league of nations whose constitution was a part of the peace settlement itself. To make still clearer his conception of the government's interpretation of its duty in regard to peace the President laid down the following program: (1) Impartial justice must be a justice that plays no favorites and knows no standard but the equal rights of the several peoples concerned; (2) no special or separate interest of any single nation or any group of nations can be made the basis of any part of the settlement which is not consistent with the common interest of all; (3) there can be no