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 THE ECONOMIC UTILIZATION 
 OF HISTORY
 
 The Economic Utilization 
 of History 
 
 and 
 
 Other Economic Studies 
 
 By 
 HENRY W. FARNAM 
 
 Professor of Economics, Yale University 
 
 New Haven: Yale University Press 
 London: Henry Frowde 
 Oxford University Press 
 
 MCMXni
 
 Copyright, 1913 
 By Yale University Press 
 
 Printed February, 1913, 1100 copies
 
 HJB7I 
 
 The Economic Utilization of History and 
 Other Economic Studies 
 
 Chapter Page 
 
 I. The Economic Utilization of His- 
 tory .... 
 
 II. Some Questions of Methodology 
 
 III. Economic Experimentation in the 
 
 United States . 
 
 IV. The Pathology of Progress . 
 
 V. Economic Progress and Labor Legis 
 lation .... 
 
 VI. Fundamental Distinctions in Labor 
 Legislation 
 
 VII. Purposes of Labor Legislation 
 
 VIII. Practical Methods in Labor Legis 
 lation .... 
 
 IX. Acatallactic Factors in Distribu 
 tion .... 
 
 X. A Socialized Business Enterprise 
 
 XL Social Myopia 
 
 XII. Signs of a Better Social Vision 
 
 1 
 
 18 
 
 34 
 58 
 
 68 
 
 82 
 94 
 
 104 
 
 122 
 
 138 
 165 
 
 187 
 
 ^ <^<'7>v'»J,^ /"•'
 
 PREFACE 
 
 The contents of this little volume consist 
 in the main of studies which have already 
 appeared in print. All of them have, how- 
 ever, been revised, and the greater part of 
 the first two chapters is new. Though the 
 studies have been written for special occa- 
 sions during the past four years, they all 
 represent one point of view, and the last 
 nine chapters may be considered an appli- 
 cation in the several fields of labor legisla- 
 tion, business organization, and charity, of 
 the scientific methods advocated in Chap- 
 ters I, II, and III. In order to bring out 
 better this continuity of thought most of 
 the essays have been subdivided, and new 
 titles assigned to them. 
 
 Chapters I, II, and III contain the presi- 
 dential address delivered in Washington in 
 1911 at the annual meeting of the Ameri- 
 can Economic Association. Chapters IV, 
 V, VI, VII, and VIII contain presidential 
 addresses delivered before the American 
 Association for Labor Legislation in 1909, 
 1908, and 1910. Chapters IX and X con- 
 tain an article originally published in the 
 
 vii
 
 PEE FACE 
 
 Yale Review for May, 1909, while Chapters 
 XI and XII contain the address delivered 
 in the spring of 1911 by the author as presi- 
 dent of the Connecticut Conference of 
 Charities and Correction. Acknowledg- 
 ment is hereby made of the courtesy of the 
 American Economic Association, of the 
 American Association for Labor Legisla- 
 tion, of the Yale Review, and of the Con- 
 necticut Conference of Charities and Cor- 
 rection for permission to use the matter 
 already published by them. 
 
 Henry W. Farnam. 
 
 Yale University, October, 1912. 
 
 vin
 
 THE ECONOMIC UTILIZATION 
 OF HISTORY
 
 CHAPTER I 
 
 The Economic IjTiLizATioisr of Histoky 
 
 It is a common, if not a universal, 
 assumption that economics is at a disad- 
 vantage as compared mth many of the 
 natural sciences, in that it does not admit 
 of laboratory experiments. There are two 
 considerations which support this assump- 
 tion. 
 
 In the first place economics deals with 
 human beings in their social relations. It 
 does not even deal with them as indi- 
 viduals. It must therefore consider large 
 groups, often whole states or groups of 
 states. The economist has neither the 
 power to force, nor the wealth to pay for, 
 experiments upon nations, and if he had, 
 he would in many cases be deterred by 
 moral scruples from attempting them. 
 Such a power might conceivably be exer- 
 cised by some oriental despot, and such 
 persons have existed. Herod, the son of 
 Antipater, e.g., if he had been as much 
 interested in sociology as he was in poli-
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 tics, would have made a good experimenter, 
 since he was not only able but quite \\illing 
 to put to death all of the children born 
 ■\vithin a certain time in Bethlehem. Mu- 
 hammad, the son of Tughlak, who ruled 
 Northern India from 1325 to 1351, is in the 
 same class. He has been described as 
 *' learned, merciless, religious and mad." 
 He was thus equipped morally and men- 
 tally as well as politically for trying social 
 experiments on a large scale. And he did 
 so. For we are told that he "tried to 
 replenish his treasury by the simple expe- 
 dient of coining brass in vast quantities 
 and ordaining that it should be accepted 
 as silver.'" He thus decreed that the 
 King's brass should be equal to the 
 people's silver, and doubtless introduced 
 among his people the familiar phenomena 
 which follow an inflated currency. 
 
 But Herod and Muhammad represent 
 past tjToes. The modern economist, even 
 if he were at the same time a great states- 
 man, could not deliberately experiment on 
 a nation mthout running the risk of being 
 committed either to an insane asylum or a 
 
 1 The Imperial Gazetteer of India, The Indian Empire, 
 Vol. II, 1908, p. 145.
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 jail. And yet the really important thing 
 for the economist is that experiments be 
 tried, not that he try them himself, and in 
 view of the great cost of social laboratory 
 work the economist is really fortunate in 
 having experiments tried for him without 
 expense to himself and without involving 
 him in any legal or moral liability. He 
 cannot, it is true, like Herod, kill off the 
 babies for the sake of watching the effect 
 upon population or wealth, but society 
 is constantly creating by law conditions 
 which lead to the slaughter both of inno- 
 cents and of adults, by preventable disease 
 and accident.^ In many cases this needless 
 increase of the death rate is brought about, 
 as it was in the time of Herod, because our 
 officeholders are more intent upon keeping 
 their jobs than upon earning their salaries, 
 and care more for politics than for soci- 
 ology. We have in a republic no despot to 
 force his brass into circulation, but what 
 no despot would dare do to the people, the 
 sovereign people cheerfully do to them- 
 selves. When our country was divided by 
 a civil war, the hostile sections, though 
 bitterly opposed to each other in most 
 
 2 For illustrations, see Chap. XI, pp. 168-177.
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 questions, were yet alike in that each 
 decreed to make the government's paper 
 equal to the people's gold, and tried over 
 again the experiment of an inflated cur- 
 rency which had been tried by Muhammad, 
 the son of Tughlak, and by many others 
 after him. 
 
 Thus we not only have experiments tried 
 on a large scale in modern states, but it is 
 fair to say that, the more democratic the 
 country, the more ready on the whole it 
 is to try experiments on itself. Indeed, 
 economic experimentation is not only pos- 
 sible, but it is so common that it is hardly 
 recognized as experimentation, and the 
 superabundant legislative activity of so 
 many of our advanced and radical com- 
 monwealths testifies to the mass of work 
 of this kind which is being performed 
 gratuitously for the economist. 
 
 There is a second argument against the 
 possibility of economic experimentation, 
 which is perhaps more serious than the one 
 which has been considered, and it deserves 
 more detailed treatment, since it has had 
 the support of eminent economists and 
 logicians. We are told that, even if experi- 
 ments are tried by modern governments,
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 they are tried under such conditions as to 
 have no scientific value and to permit of 
 no convincing conclusions. This was the 
 view of John Stuart Mill, at once a great 
 logician and a great economist, and it has 
 been accepted by many, if not most, of his 
 successors. Mill, after enumerating the 
 four different methods of experimentation 
 which are possible, concludes that no one 
 of them is adapted to the social sciences. 
 Take, e.g., the methods of differences and 
 of concomitant variations. In order to 
 apply the former we must have two 
 instances which tally in every particular 
 except the one which is the subject of 
 inquiry. In order to apply the latter we 
 must have a series of phenomena varying 
 together.^ 
 
 To prove the inapplicability of the 
 method of differences. Mill takes the exam- 
 ple of a protective tariff and shows that it 
 would be quite impossible to find two 
 nations which are exactly alike in every 
 respect excepting only in the presence or 
 absence of such a tariff.* 
 
 3 John Stuart Mill : A System of Logic, 9th edition,. 
 1875, Vol. I, pp. 448-471. 
 
 4 1. c, Vol. II, p. 472. 
 
 5
 
 THE ECOXOMIG UTILIZATION OF HISTOEY 
 
 The method of concomitant variations he 
 thinks equally impossible, because every 
 attribute of the social body is influenced by 
 innumerable causes. Hence the changes 
 are the effects, not of a single cause, but 
 of the combination of many causes.^ 
 
 We may concede the difficulty of apply- 
 ing the method of differences to test the 
 effect of a protective tariff upon the gen- 
 eral wealth of nations, and yet recognize 
 the possibility of experiments if applied in 
 a different way. It will be noticed that the 
 question which Mill asks is extremely 
 vague. He inquires whether or not a pro- 
 tective tariff is ''favorable to national 
 riches." That very question itself requires 
 a further explanation. What do we mean 
 by "national riches"? Do we take into 
 account the mass of wealth, or also its dis- 
 tribution, and if we take account of its 
 mass only, do we mean the total mass or 
 the wealth per capita? We might con- 
 ceivably have two states each of 30,000,000 
 inhabitants, with an average wealth of 
 $1,000 per inhabitant or a total of $30,000,- 
 000,000. Let us suppose that at the end of 
 the experimental period one of our states 
 
 6 1. c, Vol. II, p. 475.
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 has a population of 45,000,000 with the 
 same per capita wealth as at the beginning, 
 or a total of $45,000,000,000, while the 
 other has the same population as at first, 
 but an average wealth of $1,500 per capita, 
 which would give the same total as that of 
 the first state. Shall we conclude that the 
 two states are equally well off, or shall we 
 award the prize to the one which has the 
 larger population and a smaller per capita 
 wealth, or to the other one? Apart from 
 the vagueness of the question, it is clear 
 that the tariff is only one of the many 
 factors determining the wealth of nations, 
 and that, moreover, the effect of the tariff 
 in one country must depend, not simply 
 upon factors affecting that country, but 
 also upon the tariff policy of other coun- 
 tries with which it trades. In other words, 
 the example taken by Mill is of such a com- 
 plicated character, that it could hardly be 
 solved by the experimental method in one 
 of the simpler sciences permitting of a full 
 laboratory equipment. In chemistry, e.g., 
 we should have an analogous case, if we 
 were to ask, whether oxygen or hydrogen 
 is the more useful element in the economy 
 of nature. In order to apply the experi-
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 mental method to economic questions, we 
 must apply it as it has been applied suc- 
 cessfully to the natural sciences. Now the 
 greatest achievements in science have been 
 attained, not by putting such general ques- 
 tions as that instanced by Mill, but by mak- 
 ing the questions more and more specific, 
 taking into account only a limited number 
 of phenomena at a time. 
 
 The science of medicine illustrates in its 
 history this tendency of scientific method. 
 The skilled physician no longer asks for 
 the general effect on the total well-being 
 of the human body of certain drugs or a 
 certain diet, but he tries to isolate his 
 phenomena and study them in detail. For 
 example, people often ask the questions. 
 Is it better to drink alcoholic liquors or to 
 abstain? Is it better to eat both meat and 
 vegetables or to chew vegetables and 
 eschew meat? Now it is clear that general 
 observations are not absolutely convincing 
 on these topics. The friend of alcohol can 
 produce plenty of instances of drinkers 
 who have lived to a hale and hearty old 
 age, and plenty of abstainers who have 
 died young. The same can be done vnth 
 regard to a meat diet. But the physiol-
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 ogist can study the question of alcohol in 
 detail and, by experimentation, can ascer- 
 tain what its effects are upon digestion, 
 upon the tissues, etc., and he can thus iso- 
 late its effects from the many other effects 
 which go to produce the total well-being of 
 the body.*' Even in the practice of medi- 
 cine physicians are tending more and more 
 to give but a single drug at a time, in order 
 the better to observe its effects, instead of 
 a combination of drugs compounded with a 
 view to producing general results. 
 
 If the question which the economist 
 desires to have answered is properly 
 framed, and if he has at his command 
 proper observations as to results, then it 
 is not necessary to postulate a number of 
 different nations exactly alike in all par- 
 ticulars but one, any more than in studying 
 the effect of drugs upon human beings it 
 is always necessary to have a number of 
 patients exactly alike. By applying or 
 not applying a certain agency to the same 
 person, we may often observe the effects 
 of the policy with all of the certainty which 
 
 6 As an example of this method, see Physiological 
 Aspects of the Liquor Problem, 2 vols., Houghton, Mifflin 
 and Company, 1903. 
 
 9
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 goes with a laboratory experiment. The 
 same is true of nations, where most of the 
 circumstances may be assumed to continue 
 essentially the same throughout a consid- 
 erable period, and where allowances can 
 be made for such changes in circumstances 
 as are inevitable. Thus, while it may well 
 be impossible to trace the effect of a pro- 
 tective tariff upon the general wealth of 
 the country, it is not so difficult to trace 
 its effect on the separate factors entering 
 into that wealth, such as the distribution 
 of wealth between different classes, the 
 prices of protected commodities, the con- 
 servation of the natural resources of the 
 country, the growth of monopoly, etc. 
 
 Mill's prepossession in favor of the 
 deductive method may not unreasonably be 
 attributed to the state of the natural 
 sciences in his day. It certainly seemed at 
 that time as if astronomy, the most ancient 
 and dignified of the sciences, had reached 
 the enviable position of commanding gen- 
 eral principles, which enabled it to predict 
 by means of deduction what would happen 
 in particular cases. It was not unnatural 
 to assume that the sister sciences would 
 in succession enjoy a similar authority 
 
 10
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 and be able to promulgate, ex cathedra, a 
 few general laws, from which details 
 could be deduced. But the progress of 
 science has taken a course which could 
 hardly have been anticipated. Astronomy 
 itself has been applying observation on 
 a scale which could not have been imagined 
 fifty or sixty years ago. The use of 
 photography and of the spectrum analysis, 
 in such studies of the composition of the 
 sun as those which have been made by 
 Dr. Hale and his colleagues in the Mount 
 Wilson Observatory of the Carnegie Insti- 
 tution of Washington, have opened up 
 entirely new fields of investigation and 
 have given us facts of which deduction 
 would be clearly incapable. Geology and 
 zoology, which were formerly, in the main, 
 sciences of observation, have become ex- 
 perimental. The geologist no longer con- 
 tents himself with observing the stratifi- 
 cations of the earth's crust, and drawing 
 conclusions from them. In the geophysical 
 laboratory he actually fuses rocks and 
 reproduces in his microcosm the process by 
 which the earth's crust was formed. The 
 zoologist is able, as in the Laboratory of 
 Experimental Evolution of the Carnegie 
 
 11
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 Institution, to study the laws of heredity 
 under controlled conditions. 
 
 Such changes as these are doubtless due 
 to the fact that the apparatus of experi- 
 mentation has attained a range and perfec- 
 tion formerly unknown. The methods by 
 which the great medical discoveries of 
 recent years have been made are familiar 
 illustrations of this progress in our 
 instruments of observation. 
 
 If economics is to profit by the example 
 of the natural sciences, it must take 
 account of what they have done since the 
 days of John Stuart Mill Instead of 
 treating deduction as its goal, it must 
 consider it as its starting point. Deduc- 
 tion can undoubtedly give us certain gen- 
 eral laws based upon our inner conscious- 
 ness of motives and impulses, but these, 
 by their nature, must be general and true 
 in proportion to their vagueness. The 
 next step beyond deduction must be 
 description and observation, and this 
 phase has been amply illustrated by the 
 great contributions to our monographic 
 literature made by the historical school 
 in Germany, and by scholars in other 
 countries who have been more or less 
 
 12
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 inspired by it. Purely descriptive work, 
 however, whether historical or statistical, 
 is not the goal of science. Our next step 
 is to apply experimental methods, that is, 
 not merely to describe, but first to analyze, 
 and then to apply such methods as that of 
 concomitant variations, and to measure 
 the results as far as they are capable of 
 numerical expression. 
 
 In claiming for economic phenomena the 
 value which we attach to experimentation, 
 it should be understood that we are not 
 dealing with mere observation as applied 
 by the geologist, or the astronomer, or the 
 zoologist. Most economic experiments, 
 though they may not be made with an 
 avowed scientific purpose, are yet made on 
 the basis of a definite theory, and the fact 
 that this theory often enjoys the complete 
 confidence of the legislator does not alter 
 the fact that it is in its essence experimen- 
 tal, inasmuch as its results are prob- 
 lematical. The zoologist, who observes 
 animals in a state of nature, studies varia- 
 tions which occur without any reference 
 to any theory that he may have in his mind. 
 But in social phenomena, especially in 
 modern countries, the variations are 
 
 13
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 always due to a deliberate purpose, and 
 that purpose is generally based, either con- 
 sciously or unconsciously, upon a certain 
 social or economic theory. 
 
 Francis Place, e.g., thought that the 
 excesses of trade unions were due to the 
 restrictions of the law and that, if these 
 were removed, industrial peace would pre- 
 vail. His agitation brought about the 
 repeal of the English combination laws in 
 1824, but the great increase in strikes 
 and other disturbances which promptly 
 followed, completely disproved his theory. 
 
 Some thirty-five years ago many econo- 
 mists thought that the alternating demand 
 for gold and for silver which would result 
 from international bimetallism would keep 
 the ratio of exchange between the two 
 metals constant. As the agreement neces- 
 sary to such a policy could not be carried 
 into effect, our country endeavored to 
 raise the price of silver by increasing the 
 governmental demand for it, and first the 
 Allison Act of 1878 and then the Sherman 
 Act of 1890 were passed with this theory 
 in view. The steady fall in the price of 
 silver, in spite of that demand, went far 
 towards proving the limitations of the 
 
 14
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 bimetallic theory. The so-called "Anti- 
 Trust Law" of the United States, which is 
 being so much discussed at the present 
 time, is based upon the theory, commonly 
 accepted from Adam Smith down to the 
 last quarter of the nineteenth century, that 
 free competition is the best cure for the 
 abuses of trade. Many are now reaching 
 the conclusion that our experience with 
 that law is showing up many important 
 limitations upon that theory. 
 
 Not only do economic experiments rest, 
 as a rule, upon some hypothesis, but they 
 often rest upon the theories of the econo- 
 mists themselves, which, though they may 
 be derided or ignored in the beginning, 
 slowly filter from the text-books through 
 the magazines and newspapers into the 
 popular mind and influence public opinion, 
 at times, in the next generation. The 
 economist has at least one attribute of 
 divinity in that his mills, like those of the 
 gods, grind slowly. In 1882 Jevons wrote : 
 "If it can be shown by unquestionable 
 statistics and unimpeachable evidence of 
 scientific men that such working with 
 phosphorus leads to a dreadful disease, 
 easily preventable by a small change of 
 
 15
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 procedure, then I hold that the Legislature 
 is prima facie justified in obliging the man 
 to make this small change. The liberty of 
 the subject is only the means towards an 
 end; it is not itself the end."' But thirty 
 years elapsed before the Congress of the 
 United States passed the phosphorus bill, 
 and even then prominent members of both 
 parties opposed it, not on practical 
 grounds, but for the purely abstract, 
 pseudo-philosophical reasons referred to 
 by Jevons. 
 
 John Stuart Mill advocated taxing the 
 unearned increment in the value of land 
 as far back as 1848.^ Though some Ger- 
 man cities began to tax this increment in 
 1905,® and indeed, the same principle had 
 been applied in the German colony of 
 Kiao Chau in 1898, many of Mill's country- 
 men appeared to be quite unconscious of 
 it, sixty years after he had enunciated it. 
 Thus, when the parliamentary agitation 
 
 7 W, Stanley Jevons: The State in Eelation to Labour, 
 1882, pp. 12-13. 
 
 8 First edition of Principles of Political Economy, Vol. 
 II, 1848, p. 361. 
 
 9 See article by Robert C. Brooks on The German 
 Imperial Tax on the Unearned Increment, Quart. Jour, 
 of Economics, August, 1911, pp. 682-709. 
 
 16
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 began wliicli led to the enactment of the 
 law of 1910, the proposition impinged upon 
 the Tory mind with the painful shock of a 
 new idea. 
 
 17
 
 CHAPTER II 
 
 Some Questions of Methodology 
 
 These illustrations of some of the topics 
 to which the experimental method may be 
 applied, suggest the desirability of answer- 
 ing two more general and fundamental 
 questions which lie at the very basis of all 
 economic study. One is, What is the 
 nature of the material with which the econ- 
 omist has to deal? The other is, What 
 kind of results should he try to obtain? 
 
 As regards the first question, we should 
 recognize that the material is not homo- 
 geneous. Much confusion results from a 
 failure to realize this fact. As hinted by 
 Professor von Schmoller,^ our material is 
 drawn from three distinct kingdoms. First 
 of all, we have the human mind with its 
 impulses and wants. This is the element 
 emphasized by the deductive school. Then 
 we have the physical world, or what we call 
 in general nature, that world w^hich we 
 
 1 See his ar':iele: Volkswirtschaft, Volkswirtschafts- 
 lehre und -methode. Handworterbuoh der Staatswissen- 
 schaften, 3d edition, 1911, Vol. VIII, p. 457. 
 
 18
 
 SOME QUESTIONS OF METHODOLOGY 
 
 know by our sense impressions.^ Finally, 
 we have the social organism, including 
 laws, institutions, and customs, which we 
 may be said to know partly through our 
 inner consciousness, inasmuch as we our- 
 selves participate in the social life about 
 us and share the feelings of our fellow 
 men, and partly by indirect sense impres- 
 sions derived often through the medium of 
 writers of books, or through oral tradition. 
 In this case, the minds of other persons 
 serve as the medium through which the 
 facts of the outside social world reach us. 
 This combination of factors may be illus- 
 trated by almost any familiar economic 
 phenomenon, such as a strike. In the great 
 anthracite coal strike of 1902, the course 
 of events was influenced not only by the 
 simpler economic impulses, such as the 
 desire of the miners to get as much as pos- 
 sible, and of the employers to pay as little 
 as possible. It was also conditioned by 
 purely geological data, such as the thick- 
 ness and dip of the seams of coal, which 
 determined different methods of payment 
 in different parts of the coal fields. 
 
 2 See Karl Pearson : The Grammar of Science, 3d 
 edition, 1911, Chap. II, 
 
 19
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 Finally, it was influenced by social institu- 
 tions such as the trade union with its dis- 
 cipline and its traditions, by the joint stock 
 company mth its legal rights and inner 
 organization, by the law of the land, which 
 forbade violence, by the press, and by 
 the moral pressure of the commission 
 appointed by the President, etc. 
 
 Now it is clear that, while economists 
 have to study the resultant of a combina- 
 tion of three elements, each of them is sub- 
 ject to influences of its own. The psychical 
 element is influenced by education, by reli- 
 gion, by race, etc. The material world is 
 influenced by geological processes, by the 
 seasons, by the operation of evolutionary 
 forces, etc. The social world is influenced 
 by laws, by diplomatic and military events, 
 in short, by what we call history. The 
 economist must, therefore, look for uni- 
 formity, not so much in the general 
 result as in the individual elements which 
 enter in to make that result. He is, in a 
 sense, like the meteorologist, who has to 
 study that familiar but very complex 
 phenomenon which we call the weather. 
 This obviously depends upon a number of 
 entirely distinct things. It depends pri- 
 
 20
 
 SOME QUESTIONS OF METHODOLOGY 
 
 marily upon the position of the earth with 
 reference to the sun, but, beyond this 
 fundamental astronomical fact, we also 
 have the complicated physical and chemi- 
 cal conditions on which depend the density 
 of the atmosphere, the movements of the 
 air, the temperature, the currents of the 
 ocean, and other things. Now it is futile to 
 expect to predict the weather of any day 
 from the weather of the past, excepting as 
 we may indulge in such obvious prognosti- 
 cations as that it will be hot in summer and 
 cold in winter. But the meteorologist 
 knows the tendency of each of the elements 
 taken separately, and by studying their 
 combination at a given time he may pre- 
 dict with a fair degree of approximation 
 what the weather is likely to be in the 
 immediate future. 
 
 What kind of results are we as scientific 
 economists to aim at in our study of this 
 material? It may be best to approach this 
 subject by first asking what we do not aim 
 at. If economics is a science, we are not 
 content with mere description of economic 
 processes, however great the utility of 
 description as a preliminary phase of our 
 work may be. Nor can we stop at the nar- 
 
 21
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 ration of economic events, or at a classifi- 
 cation of economic elements, or even at 
 their statistical enumeration. Our aim is 
 to obtain those generalizations commonly- 
 called scientific laws. According to a 
 recent English writer on this subject, law 
 in the scientific sense is a ''description in 
 mental shorthand of as wide a range as 
 possible of the sequences of our sense- 
 impressions."^ Practically the same idea 
 is expressed by a recent German author 
 with special reference to economics, when 
 he says, that the task of the economist is 
 "Beschreiben unseres Systemes und seiner 
 
 Bewegungstendenzen Die Satze, 
 
 aus denen die Beschreibung besteht, nen- 
 nen wir dann 'okonomische Gesetze.' "* 
 
 Both of these authors imply that we are 
 concerned with changing, not stationary, 
 phenomena. "It deserves special note," 
 says Pearson, "that the sequences with 
 which we are dealing are all reducible to 
 descriptions of motion, or of change."^ 
 We must, therefore, distinguish scientific 
 
 3 Karl Pearson, 1. c, Chap. IV, p. 112. 
 
 4 J. Schumpeter: Das Wesen und der Hauptinhalt der 
 theoretisc'hen Nationalokonomie, 1908, p. 29. 
 
 6 1. c, p. 133. 
 
 22
 
 SOME QUESTIONS OF METHODOLOGY 
 
 laws from so-called statistical laws, such 
 as "Engel's law" regarding the items of 
 expense in family budgets. These differ 
 from scientific laws in that they record, 
 as far as they really do record the truth, 
 a state of things and not a sequence.** 
 
 We must also distinguish between eco- 
 nomic laws and so-called historical laws. 
 These, to be sure, record changes, but they 
 deal with such a complex mass of events 
 that any exact duplication of them is in 
 a high degree improbable and, indeed, has 
 never been experienced. At best, we may 
 postulate certain general and indefinite 
 tendencies such as that expressed by 
 Aristotle in his famous cycle of govern- 
 mental changes. In order to obtain scien- 
 tific laws, that is to say, sequences which 
 shall have any high degree of uniformity, 
 we must isolate our factors and consider by 
 themselves the sequences which apply to 
 each one. We must thus eliminate, either 
 by actual experiment or by the application 
 of the scientific imagination, the many 
 other factors which, when combined, con- 
 stitute the phenomena as they present 
 themselves to us in real life. 
 
 8 On statistical law compare von Schmoller, 1. c, p. 485. 
 
 23
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 The analysis of phenomena is particu- 
 larly important in economics, on account 
 of the difference in the three principal 
 elements which, as explained above, enter 
 into our field of study, and the unequal 
 part which they play in its different divi- 
 sions. Though all three occur in combina- 
 tion in practically all of the different topics 
 commonly treated in a text-book of eco- 
 nomics, it seems as if the material world 
 and its laws were particularly prominent 
 in the subject of production. The law of 
 diminishing returns, e.g., is a factor of 
 nature rather than of the mind of man.^ 
 The social element, on the other hand, 
 determines to a large extent the distribu- 
 tion of wealth. For instance, the legal 
 status of labor, the legal privileges of, or 
 restrictions on, capital, the system of land 
 tenure, the incidence of taxation, etc., all 
 play a prominent part in distribution. In 
 consumption, finally, the will of man seems 
 to be the important factor. Whether, e.g., 
 a nation will spend its surplus income on 
 liquors and tobacco, or on jewelry and 
 fine clothes, or on houses, or on babies, will 
 
 7 See von Schmoller, 1. c, p. 485. 
 
 24
 
 SOME QUESTIONS OF METHODOLOGY 
 
 depend upon its psychology, though this 
 may be affected secondarily by environ- 
 ment and social institutions. 
 
 There is ample opportunity for the appli- 
 cation of the experimental method in 
 studying all of these standard subjects in 
 economics. But there is one topic to which 
 no other method can be successfully 
 applied. I refer to what we may call 
 economic pathology. This may be defined 
 as a condition in which organs are dis- 
 eased, that is to say, in which they fail to 
 perform their normal functions. Now in 
 economics this may mean: (1) Some form 
 of human degeneracy, which in turn may 
 be either physical or mental. Examples of 
 the former are disease, sterility, physical 
 weakness. Examples of the latter are 
 indolence, dishonesty, immorality, drug 
 habits. (2) A pathological state of our 
 economic system may result from the defi- 
 ciencies of nature, such as the exhaustion 
 of the soil or other natural resources, the 
 denudation of woodlands, the lack of rain- 
 fall. These are sometimes the results of 
 bad legal institutions, and therefore in- 
 directly caused by man, but they are 
 primarily physical, and in many cases, as 
 
 25
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 in changes in humidity, they seem to be 
 attributable mainly to physical causes. 
 (3) The disease may be in the social 
 system. China, e.g., has vast unused 
 resources, and an intelligent, industrious 
 population, but bad government has re- 
 tarded the utilization of its powers. 
 
 Now mere generalization with regard to 
 the economic man gives us no help in study- 
 ing economic pathology. AVe must get 
 our facts at first hand. We cannot draw 
 from our inner consciousness the causes 
 of economic disease, any more than we can 
 discover by metaphysics the microbes that 
 infest the human body. 
 
 The idea of economic experimentation 
 is not in itself new. Newmarch referred 
 to it in his address as president of Section 
 F of the British Association for the 
 Advancement of Science as long ago as 
 1861,^ and actually claimed that economics 
 had then reached the experimental stage. 
 Jevons, in 1880, wrote an essay on "Ex- 
 perimental Legislation and the Drink 
 
 8 Journal of the Eoyal Statistical Society, December, 
 1861, pp. 451-467. See quotation from Newmarch 's 
 address, given by Henry Ludwell Moore: Laws of Wages, 
 1911, p. 170. 
 
 26
 
 SOME QUESTIONS OF METHODOLOGY 
 
 Traffic," in which he advocated the enact- 
 ment of laws applicable to limited areas 
 only for the express purpose of testing 
 them.^ Similar views were expressed by 
 Mm in his book on ' ' The State in Relation 
 to Labour." Professor Ely, after quoting 
 the plan of Jevons just referred to, stated 
 that the German historical school ' ' claimed 
 that the whole life of the world had neces- 
 sarily been a series of grand economic 
 experiments, which, having been described 
 with more or less accuracy and complete- 
 ness, it was possible to examine."^" 
 
 A decade later Keynes conceded the pos- 
 sibility in certain cases of economic experi- 
 mentation;" and still more recently Pro- 
 fessor von Schmoller, an economist who 
 combines in a rare degree philosophical 
 training, historical knowledge, practical 
 experience in legislation, and familiarity 
 
 9 This essay was originally printed in the Contem- 
 porary Eeview, for February, 1880. It was reprinted in 
 Methods of Social Eeform, 1883, pp. 253-276. 
 
 loEichard T. Ely: The Past and Present of Political 
 Economy, Johns Hopkins University Studies, Series 2, 
 No. 3, 1884, p. 45. 
 
 11 John Neville Keynes: The Scope and Method of 
 Political Economy, 2d edition, 1897, pp. 188-190, and 
 275-279. 
 
 27
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 with economic literature, in summarizing 
 the latest conclusions of a long life, 
 has expressed his general concurrence in 
 these views of Keynes/^ Nor is it un- 
 common in more popular writings to find 
 legislation referred to as experimental. 
 The Hon. Samuel W. McCall, e.g., in a 
 recent article says that the people of 
 Oregon "are heroically subjecting them- 
 selves to political vivisection in the testing 
 of governmental experiments.'"^ 
 
 We seem to be confronted here with a 
 case in which the same word is used by 
 different authors with quite different con- 
 notations. Newmarch, Jevons, and Con- 
 gressman McCall were apparently think- 
 ing of experiments in social policy, more 
 particularly in certain forms of social 
 legislation, rather than experiments de- 
 signed to test or discover general economic 
 laws, and it is significant that Jevons' most 
 original contribution to economic science 
 lay in the field of economic abstraction. 
 The point of view of the early writers of 
 the German historic school seems to differ 
 
 12 See article Volkswirtschaft, Handworterbuch der 
 Staatswissenschaften, 3d edition, Vol. VIII, p. 480. 
 ^3 Atla7itic Monthly, October, 1911, p. 459. 
 
 28
 
 SOME QUESTIONS OF METHODOLOGY 
 
 even more widely from that which is pre- 
 sented here. Many of them not only did 
 not expect to discover general economic 
 laws by the historical method, but denied 
 that such laws existed. The aim of Knies, 
 who is commonlv considered the founder of 
 this school, seems to have been rather to 
 trace laws of historical development, while 
 Roscher, one of its most prolific and widely 
 read representatives, used history more 
 for the purpose of illustration than of 
 proof. It may be said in general that the 
 vast and valuable monographic literature 
 brought into existence during the past half 
 century under the stimulus of this school 
 of thought emphasizes the historical rather 
 than the theoretical element. As Professor 
 Amonn says : 
 
 Die methodisch-kritischen Ansichten der his- 
 torischen Schule in bezug auf den logischen 
 Charakter einer Wissensehaft von der Volks- 
 wirtschaft fiihren in iliren extremen Formulier- 
 ungen und deren letzten Konsequenzen zu einer 
 volligen Negation der theoretischen National- 
 okonomie und zur Proklamierung der Allein- 
 berechtigung einer rein historischen Betrach- 
 tungsweise, d. h. es wird geleugnet, dass es ein 
 theoretisches Erkenntnisobjekt in bezug auf die 
 Volkswirtschaft iiberhaupt geben konne, und 
 
 29
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 lediglich ein solehes mit historischem Charakter 
 anerkannt/* 
 
 Similarly a recent French author, in 
 referring to the publications of the histori- 
 cal school, says : 
 
 Les institutions du moyen age et de I'anti- 
 quite, les doctrines anciennes, I'histoire sociale, 
 la statistique, la description de I'organization 
 economique des nations modernes forment I'ob- 
 jet essentiel de ces travaux. L 'economic politi- 
 que est comme fondue ou noyee dans 1 'etude des 
 institutions et dans I'histoire economique.^^ 
 
 Keynes and von Schmoller seem to refer 
 to the experimental method as a means of 
 obtaining scientific laws more in the sense 
 of this essay, but to treat it as on the whole 
 exceptional and limited in its scope. 
 
 Within recent years, however, not a few 
 authors have begun to apply, each in his 
 own field, the method here advocated. 
 Mathematical processes and notation are 
 used by many of them, such as Professor 
 Irving Fisher, Professor H. L. Moore, and 
 
 14 Alfred Amonn : Objekt imd Grimdbegriflfe der 
 Theoretischen Nationalokonomie, Wiener Staatswissen- 
 schaftliche Studien, 10 Band, Erstes Heft, 1911, p. 44. 
 
 15 Charles Rist in Gide et Rist: Histoire des doctrines 
 economiques depuis les Physiocrates jiisqu'^ nos jours, 
 1909, p. 446. 
 
 30
 
 SOME QUESTIONS OF METHODOLOGY 
 
 the group of Italian economists referred to 
 by Mm in his Laws of Wages. ^"^ That 
 a similar method may be used without 
 mathematical apparatus and in a more 
 strictly historical subject, is shown by Dr. 
 Woods, who has even invented the term 
 ''historiometry" to designate it/^ The 
 purpose of the present study is to empha- 
 size three considerations. 
 
 1. The need of a systematic and con- 
 certed extension of this method. It in- 
 volves collecting a large number of data in 
 order to distill from them a few generali- 
 zations. The individual investigator is 
 usually able to command but a limited field, 
 and even then is often obliged to draw his 
 material from different places and periods 
 with loss of accuracy in his conclusions. 
 We need more team work. We need a 
 closer co-operation between the universi- 
 ties, the governments, and the various soci- 
 eties and institutions devoted to economic 
 research. In short, we need the principles 
 
 16 1. c, pp. 173, 174. 
 
 IT See Frederick Adams Woods : Mental and Moral 
 Heredity in Eoyalty, 1906. A New Name for a New 
 Science, Science, November 19, 1909; Historiometry as 
 an Exact Science, Science, April 19, 1911. 
 
 31
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 of "scientific management" applied to 
 economic science. 
 
 2. The scientific value of historical 
 facts, even when they are not expressed 
 statistically. Mathematicians have hither- 
 to been the most effective exponents of the 
 experimental method, and our ideal must 
 be to express in numerical form the gen- 
 eralizations of economics, since no ''short 
 hand," to use Professor Pearson's expres- 
 sion, is so concise and so precise as that of 
 mathematics. At the same time it is only 
 within a very recent historical period that 
 we have had any extensive body of sta- 
 tistics to draw upon, and even now it must 
 be conceded that this handmaiden of 
 science has been known to do her work in 
 a slovenly fashion and to make a show of 
 perfection hardly warranted by the reality. 
 In undue reliance upon inaccurate figures 
 even mathematicians are tempted to push 
 the refinement of their formulae beyond the 
 accuracy of their data. "VVe need to bridge 
 over the gap between the history of the 
 past with its broad but fairly well-authen- 
 ticated facts, and the statistics of the 
 present wdih their elaborate but often 
 confusing and misleading detail. 
 
 33
 
 SOME QUESTIONS OF METHODOLOGY 
 
 3. The importance of utilizing the great 
 amount of economic material contained in 
 the history of our own country. An 
 attempt will be made in the following 
 chapter to point out some of the peculiar 
 advantages afforded by the United States 
 for this kind of research. 
 
 33
 
 CHAPTER III 
 
 Economic Expekimentation in the United 
 
 States 
 
 One of the most salient facts in the early- 
 history of the United States is the great 
 importance of, and the attention paid to, 
 economic interests. Such interests are 
 potent in the history of all nations, but if 
 we compare our country mth Europe since 
 the Middle Ages, we must recognize that 
 there are two forces very prominent in 
 determining the history of Europe, which 
 were absent from our country. One is 
 dynastic ambition, which could not exist in 
 a country without kings or princes. The 
 other is religious zeal. It is true that the 
 desire to worship God in their own way led 
 the Pilgrims first to settle in New England, 
 but it is fair to say that we have never had 
 in our country those great disturbances 
 which have been caused by the wars of reli- 
 gion in Europe. Thus in the very nature 
 of the case economic considerations were 
 predominant. 
 
 84
 
 EXPEEIMENTATION IN THE UNITED STATES 
 
 Another factor entering into European 
 history, though it has existed in our coun- 
 try, has also played a much less important 
 part. I refer to racial prejudice. It is 
 true that we have not been free from this 
 curse, but fortunately we have been thus 
 far spared wars of races and great racial 
 antagonisms, such as are constantly aris- 
 ing to pit the Teuton against the Latin or 
 the Slav or the Magyar in Europe. 
 
 Economic forces have had a wonderfully 
 free play in our country on account of its 
 newness and the consequent absence of 
 institutions and traditions which resist a 
 change in older communities. Hence if we 
 look at many of our early laws, such as the 
 Massachusetts Body of Liberties, we shall 
 see that they deliberately adopt certain 
 economic ideals which they endeavor to 
 make the rule of conduct in the common- 
 wealth. 
 
 In New England generally feudal land 
 tenures were avowedly discarded in favor 
 of the simpler freehold. The rule of pri- 
 mogeniture was abandoned, and instead a 
 system was adopted under which, in case 
 of intestacy, the land was divided among 
 the children, the oldest in some cases 
 
 35
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 merely having a double portion. As 
 clearly stated by Governor Talcott, this 
 was done in order to encourage the 
 younger sons to stay upon the land and 
 cultivate it/ 
 
 If economic questions were prominent in 
 the settlement of our country, they have 
 gained in prominence throughout our de- 
 velopment. Most of our political questions 
 have turned upon economic interests or 
 economic ideals. I need but refer to the 
 slavery question with its many ramifica- 
 tions and complications, resulting in the 
 Missouri Compromise, the Fugitive Slave 
 Law, the Compromise of 1850, and the Civil 
 War, or consider the debates about the 
 United States Bank, the endless contro- 
 versies about the tariff, the currency, the 
 public lands, and, more recently, regarding 
 immigration, the organization of labor, and 
 the regulation of corporations, to show 
 what an important part economic questions 
 have played in our internal development. 
 
 Other countries have, it is true, their 
 own economic problems which they are 
 trying to solve by legislation. But the 
 
 1 C. M. Andrews: The Connecticut Intestacy Law, Yale 
 Review, November, 1894, p. 268. 
 
 36
 
 EXPERIMENTATION IN THE UNITED STATES 
 
 United States has the transcendent advan- 
 tage as an experiment station of being 
 composed of a group of States, each of 
 which legislates upon a very large range 
 of topics. To a certain extent it shares 
 this peculiarity with other modern federal 
 states, whose constitutions are more or less 
 modelled upon ours, such as the Swiss 
 Eepublic, the German Empire, Canada, the 
 Australian and South African common- 
 wealths. But we have the advantage over 
 the British colonies of a longer history, 
 and over the European nations of fewer 
 historical institutions and racial antago- 
 nisms, which interfere with the strictly 
 economic effects, while, as compared with 
 any one of these states, we have the advan- 
 tage of a larger number of units and there- 
 fore of a broader application of the method 
 of differences. Thus we have in the frame- 
 work of our government the very condi- 
 tions which Jevons would have introduced 
 into England, in order to test experimen- 
 tally the operation of different kinds of 
 liquor laws.^ Economically our country 
 may be likened to a hospital with fifty 
 general wards, each under separate medi- 
 
 2 Jevons : Methods of Social Eef orm, p. 265. 
 
 37 
 
 M ris^T'''-' ^ '
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 cal direction, and a large central ward for 
 certain selected cases, while a number of 
 outlying pavilions and annexes under still 
 different systems are loosely connected 
 with the central institution. What an 
 opportunity this offers the economist who 
 will carefully study the results of the dif- 
 ferent kinds of treatment ! 
 
 It is not only in official experimentation 
 through legislation and administration 
 that our country is rich. It has also been 
 the happy hunting-ground of social Uto- 
 pias. In many cases it has been their 
 burying-ground as well. Many of these 
 communities, such as the Mormons, the 
 Shakers, the Perfectionists, etc., have had 
 a religious or moral ideal. Others, like 
 Brook Farm, New Harmony, the short- 
 lived Euskin Colony, the Fairview Colony 
 of Single Taxers, have been based upon 
 social or economic ideals. Each of these 
 communities represents on a small scale a 
 voluntary experiment in some department 
 of economics. The ease with which such 
 Utopias spring up in our country is illus- 
 trated by the fact that within two years of 
 the publication of Looking Backwards 
 more than 50 Bellamy Clubs with a mem- 
 
 38
 
 EXPERIMENTATION IN THE UNITED STATES 
 
 bership of about 3,000 are said to have been 
 established in Cahfornia alone.^ 
 
 The organization of ideal communities, 
 which was so popular in the first part of 
 the nineteenth century, seems to be suc- 
 ceeded in the first part of the twentieth 
 century by an equally enthusiastic activity 
 in the formation of societies designed to 
 promote some reform in our public policy. 
 Some of them relate to taxation, some to 
 the regulation of the liquor traffic, some to 
 labor legislation, some to conservation, 
 some to land tenure. Each one is a stimu- 
 lus, urging the legislatures to test by actual 
 experiment the ideas for which they stand. 
 
 Apart from the idealists, we have a 
 great mass of experiments tried in the 
 self-interest of those who themselves are 
 engaged in production. Our business men 
 and lawyers have been peculiarly ingenious 
 in evolving new forms of industrial organi- 
 zation. Our public service corporations 
 are testing new methods of adjusting their 
 charges, until the study of rates has become 
 almost a science by itself.* 
 
 3 Ira B. Cross: Co-operation in California, American 
 Economic Review, September, 1911, p. 536. 
 
 4 J. Maurice Clark : Rates for Public Utilities, Ameri- 
 can Economic Review, September, 1911, pp. 473-487. 
 
 39
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 Likewise the wage receivers are trying 
 all kinds of methods of improving their 
 own condition. Every strike may be said to 
 represent an experiment relating directly 
 to the important question of economic 
 theory : what determines the rate of wages. 
 
 In all of this experimentation we have 
 the great advantage in our country of 
 carrying it on under conditions described 
 by that favorite phrase of the economist, 
 ' ' other things being equal. ' ' By this I do 
 not mean that we have been able to try 
 different things under absolutely identical 
 conditions, such as might be created in a 
 laboratory, but, as compared ^vith the con- 
 ditions under which economic history has 
 developed in other parts of the world, we 
 may claim for our own country that these 
 experiments have been conducted under 
 three exceptionally favorable conditions : 
 
 1. They fall within a limited period, so 
 that no great or fundamental changes have 
 taken place in the cultural standards of 
 civilization or the mores of the people 
 such as characterized the change from the 
 mediaeval to the modern period in Europe. 
 
 2. The experiments have been carried 
 on ^nthin an area of political uniformity, 
 
 40
 
 EXPERIMENTATION IN THE UNITED STATES 
 
 SO that, although there are great differ- 
 ences in latitude and longitude, climate and 
 soil, between the different parts of our 
 country, yet the general legal and social 
 environment is very nearly the same. 
 
 3. These experiments have been carried 
 on among a people, which, if not homo- 
 geneous in its ethnic makeup, is at least 
 remarkably uniform in its heterogeneity. 
 Our country is like a good mince pie ; any 
 one slice contains many ingredients, yet 
 specimens from different parts of the 
 whole are made up of nearly the same ele- 
 ments, varying mainly in their relative 
 prominence. Thus everywhere we have 
 the common basis of the English language 
 and, with the exception of Louisiana, of 
 English law. Everywhere too, we have a 
 greater or less admixture of different 
 European races, of Africans, and occa- 
 sionally of Mongolians. While, of course, 
 the percentage of the different races varies 
 widely in different parts of the country, it 
 cannot be said that any one race except 
 the Anglo-Saxon exerts in any section a 
 purely racial predominance upon our 
 institutions.^ Even in the South, in com- 
 
 5 The word Anglo-Saxon is to be taken in its broadest 
 
 41
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 munities in which the blacks outnumber 
 the whites twenty-seven to one, the insti- 
 tutions are essentially Anglo-Saxon and 
 not African. While, therefore, we have not 
 the absolute control over our conditions 
 that is enjoyed by the chemist, and while 
 the elements are vastly more complicated 
 than those entering into the ordinary labo- 
 ratory experiment, we have conditions 
 relatively favorable for obtaining good 
 results. 
 
 The temptation is strong to enumerate, 
 at least in part, some of the many fields of 
 economic experimentation which are to be 
 found in the history of the United States, 
 but to do so at length would expand a 
 chapter into a monograph and is, there- 
 fore, out of the question. Some of these 
 departments of study, such as those relat- 
 ing to currency, to prices, to the rate of 
 interest, have already yielded valuable 
 results to the investigator. Some of the 
 more practical questions, such as those 
 relating to land tenure and the methods of 
 agriculture, as well as the purely govern- 
 
 sense to cover the whole Low German stock, without any 
 reference to the relative strength of the English and 
 Dutch element in New England institutions. 
 
 42
 
 EXPERIMENTATION IN THE UNITED STATES 
 
 mental questions involved in taxation and 
 the management of public debt, still remain 
 to be studied intensively, in spite of a con- 
 siderable amount of work already put upon 
 them. Less, on the whole, has been done 
 with the problems relating to labor, 
 methods of remuneration, the rates of 
 wages, the efficiency of labor, etc. We have 
 tried many experiments in this department 
 of economics. We have had free labor, 
 indentured labor, and complete slavery. 
 We have made a sudden transition from 
 slavery to freedom, so sudden as to bring 
 with it many undesirable results, but per- 
 haps for that reason the more interesting 
 as an economic experiment. In the appli- 
 cation of free labor we have likewise had 
 experiences of great value. We have had 
 labor both organized and unorganized, 
 native-born and foreign, and we have had 
 trade unions of many types and represent- 
 ing many stages of development. We have 
 tried many systems of wages. We have 
 developed, particularly in the South, vari- 
 ous methods of applying labor to land, 
 which represent gradations ranging from 
 free tenancy to a system verging on 
 peonage. 
 
 43
 
 THE ECONOMIC UTILIZATION OF HISTOKY 
 
 Though considerable attention has been 
 given to this topic, many of its compli- 
 cated problems have been barely touched 
 upon. The economist often inquires about 
 the effect of labor on production, but he 
 seldom asks, "What is the reaction of 
 wealth upon the efficiency of labor ? ' ' 
 
 According to the observations made by 
 Mr. Frederick W. Taylor, it does not pay 
 to increase wages too rapidly. Indeed, he 
 has endeavored to give a mathematical 
 expression to the possible rate of economi- 
 cal increase and says that, if wages are 
 increased up to 60 per cent beyond the 
 wages usually paid, this increase tends to 
 make the men more thrifty and better in 
 every way, but that, when the rate goes 
 beyond 60 per cent, many of them tend to 
 work irregularly and to become more or 
 less shiftless, extravagant, and dissipated.® 
 
 Economists have done little in the study 
 of this phase of the labor problem, since 
 Ricardo laid down the pessimistic view 
 that the population tends to increase with 
 an increase in wages. Yet it is a common- 
 place that, while an efficient population 
 
 e See F. W. Taylor : The Principles of Scientific Man- 
 agement, 1911, p. 74. 
 
 44
 
 EXPEEIMENTATION IN THE UNITED STATES 
 
 may be seriously handicapped by the 
 <■ ' niggardliness of nature, ' ' a country with 
 large natural resources may be likewise 
 held back, because the inhabitants either 
 will not or can not utilize them, or because 
 they do not apply sufficient intelligence and 
 energy in international competition. 
 
 It is a matter of common observation 
 that wealthy families in our country often 
 contain a number of parasitic members, 
 that is, members who derive a large income 
 from society without rendering any appre- 
 ciable economic or public service in return. 
 
 Mr. Andrew Carnegie gives expression 
 to a common view when he says : ' ' There is 
 nothing so enervating, nothing so deadly 
 in its effects upon the qualities which lead 
 to the highest achievement, moral or intel- 
 lectual, as hereditary wealth.'" But we 
 have no figures to tell us with any accuracy 
 how numerous these drones are, or what 
 proportion they bear to the more useful 
 members of the same families. It seems 
 very probable that the public have an 
 exaggerated notion of their vices, because, 
 as Dr. Woods points out, ''the vices of the 
 
 7 Andrew Carnegie : The Empire of Business, 1902, 
 p. 126. 
 
 45
 
 THE ECOXOMIC UTILIZATION OF HISTORY 
 
 aristocracy are always made the most of 
 by the polychrome daily press,"® and in 
 the absence of an aristocracy, multimil- 
 lionaires furnish good copy. But even 
 granting that we know a little of their 
 moral shortcomings, we know practically 
 nothing of their economic efficiency. Little 
 account is made on the one hand of the 
 many men and women of means who live 
 conscientious, industrious lives, devoting 
 themselves to some form of production or 
 of pubUc service ; or, on the other hand, of 
 those whose energies are dulled by the pos- 
 session of a competency, and who, ^\ithout 
 being actually vicious, are mere ciphers as 
 far as any economic usefulness is con- 
 cerned. Yet we ought to have reliable 
 facts, if we are to judge correctly of the 
 reaction of prosperity on the human mind, 
 and of the conditions which determine it. 
 Intensive studies of hereditv in families, 
 such as those made by Sir Francis Galton 
 in England and Dr. Frederick K. Woods 
 and Dr. C. B. Davenport in our country, 
 are of great value, but need to be supple- 
 mented by a study of the economic re- 
 
 8 1. c, p. 261. 
 
 46
 
 EXPEEIMENTATION IN THE UNITED STATES 
 
 actions. In the case of animal life, the 
 inherited characteristics are all-important, 
 and the breeder can reasonably expect to 
 utilize the good qualities of the parent in 
 the offspring. But if cows had the power 
 to deliberately choose a life of celibacy, we 
 should find many a pedigreed Guernsey, 
 with ancestors in the advanced register, 
 chewing her cud in idleness on the hillside 
 and yielding no milk whatsoever, just as we 
 often find sons of distinguished parents 
 displaying real ability, when put to some 
 academic test, and yet, for lack of proper 
 incentive, doing nothing to make their 
 lives either useful or distinguished. 
 
 Our country should give exceptional 
 facilities for studying parasitism in the 
 ''leisure class," because here wealth is not 
 subject to the social pressure of the feudal 
 system, inherited in the older countries of 
 Europe from the time when wealth meant 
 land ownership, and land ownership of 
 necessity involved public duties. Many of 
 this class walk our streets, eloquent 
 but unconscious arguments for socialism, 
 terrible examples for the moralist, living 
 texts for sermons, rich material for the 
 problem novelist, but still comparatively 
 
 47
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 neglected by the economist, the sociologist, 
 and the statistician. We gather the 
 budgets of working men but not of club 
 men; we collect the statistics of involun- 
 tary unemplojTQent but not of voluntary 
 idleness ; our study of social conditions on 
 the East Side has not been extended to the 
 West Side. Yet it is obviously of the great- 
 est importance to a nation, as it is to a 
 cattle breeder, to reproduce and utilize the 
 strong and dominant types, and we must 
 know why so many of these members be- 
 come atrophied, if we would understand 
 the causes of national decadence, the great 
 and perennial question of history as well 
 as of practical politics. 
 
 Parasitism is, however, but a part of the 
 general subject of economic pathology, 
 which has been altogether too much neg- 
 lected by economists in the past. Or, if 
 we pass beyond the strictly economic ques- 
 tions to those broader questions of social 
 policy, what vast materials have we in our 
 country bearing upon the mixture of races. 
 What a splendid opportunity to test the 
 theories of the philosophical anarchist, 
 who holds that the ills of society are due to 
 the law, and who may study in the history 
 
 48
 
 EXPEEIMENTATION IN THE UNITED STATES 
 
 of Alaska the effect of allowing a common- 
 wealth to grow up almost without law. 
 
 It is not necessary, in this brief survey 
 of the opportunities which our country 
 offers for economic induction, to make an 
 elaborate enumeration of topics or to show 
 in detail how the material may be secured. 
 Attention should, however, be called in 
 fairness to some of the defects in condi- 
 tions which make laboratory methods 
 difficult, and which must be taken into 
 consideration before any piece of work is 
 undertaken. 
 
 In the United States experimentation is 
 constantly interrupted by the power of our 
 courts to nullify laws. Thus experiments 
 may be overthrown on grounds which are 
 quite extraneous to their essence. It is as 
 if a biologist were to suddenly find his 
 laboratory invaded and wrecked by an 
 over-zealous anti-vivisectionist. 
 
 The economist has the further disadvan- 
 tage that the subjects of his study and 
 experiment are men like unto himself, with 
 opinions, emotions, and voices. Hence 
 every experiment is accompanied by a 
 babel of sound, which seems to confuse the 
 whole subject. The physiologist, working 
 
 49
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 in Ms quiet laboratory, is apt to think 
 the very subject-matter of economics ill 
 adapted to scientific study. If the human 
 body were the seat of a republic in which 
 all of the microbes that infest it and the 
 ferments that endanger it were vocal, the 
 investigator would have to put wax in his 
 ears to keep his mind free from disturb- 
 ance. Imagine the bacilli of consumption 
 and of typhoid holding periodical elections 
 to see which should for the next four years 
 control the state of health of the patient, 
 with a lot of insurgents in the shape of 
 pyaemia and dyspepsia striving, if not to 
 govern, at least to hold the balance of 
 power ! 
 
 Another equally serious defect lies in the 
 inadequacy of our records. The amount 
 of economic material buried in the archives 
 of our States is enormous. The material 
 buried in the records of corporations, of 
 labor unions, of voluntary societies, may 
 be even greater. The mere index of State 
 economic documents which is being com- 
 piled for the Carnegie Institution of Wash- 
 ington fills a portly quarto for each one of 
 the older States. The cream of contempo- 
 rary evidence available for the Docu- 
 
 60
 
 EXPERIMENTATION IN THE UNITED STATES 
 
 mentary History of American Industrial 
 Society, recently published by Professor 
 Commons and his collaborators, fills eleven 
 volumes. But in spite of this vast material, 
 we still have to contend with the imperfec- 
 tion of many of our records and with the 
 difficulty of accurate mensuration. Profes- 
 sor Dewey, in his able presidential address 
 delivered before the American Economic 
 Association in 1909, enlarged upon the 
 inaccuracies of economic observation, and 
 all serious economists must recognize the 
 truth of what he then said. But it is the 
 task of the economist to overcome diffi- 
 culties, not to shrink from them, and he can 
 best do this by helping his successors to 
 obtain a trustworthiness in their material 
 which is not always available for him. It 
 is encouraging that the Federal authorities, 
 and the State governments as well, are 
 relying more and more upon trained econo- 
 mists to record economic facts in the form 
 of statistical or monographic studies. But 
 we should remember that such studies are 
 not the only output of a governmental kind 
 to which we must turn. Every law affect- 
 ing economic relations must be treated as 
 an experiment, the recording of whose 
 
 51
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 results should be provided for in the law 
 itself. How much futile discussion and 
 how many errors would be avoided, if we 
 were able from year to year to put our 
 hands on the results of the operation of 
 laws bearing upon economic relations! 
 Just as modern hospitals not only provide 
 physicians and nurses but also laboratories 
 and records, so every legislature should 
 have its economic annex, in which not 
 merely the text of laws but also their 
 results may be made available both for the 
 legislature and for the student. 
 
 The conception of history as an economic 
 laboratory is quite different from the 
 common conception of economic history. 
 History is in the main descriptive. It seeks 
 to give us a picture of the past. If it goes 
 beyond that, it seldom attempts more than 
 to trace general causes, or to lay down a 
 philosophy of history or a theory of his- 
 torical evolution. The economic utilization 
 of history is almost the antithesis of the 
 economic interpretation of history, since 
 the latter is seeking a law of history and 
 the former, laws of economics. The econo- 
 mist undoubcedly owes a debt of gratitude 
 to historians, and particularly to economic 
 
 53
 
 EXPEKIMENTATION IN THE UNITED STATES 
 
 historians, for the material which they 
 have put at his disposal, and the brilliant 
 address on ''Social Forces in American 
 History," delivered in 1910 by the presi- 
 dent of the American Historical Associa- 
 tion, is an indication of the increasing 
 interest which historians are taking in 
 social and economic elements. The con- 
 trast, however, between their point of view 
 and the economic point of view cannot be 
 better illustrated than by quoting from 
 this address. Professor Turner says that 
 he has undertaken his survey for two pur- 
 poses : "First, because it has seemed fitting 
 to emphasize the significance of American 
 development since the passing of the fron- 
 tier, and, second, because in the observa- 
 tion of present conditions we may find 
 assistance in our study of the past. ' '^ The 
 economist, while fully appreciating the 
 value and the necessity of studying history 
 from this point of view, must yet go a step 
 further and must use the records of the 
 past as a means of disclosing the operation 
 of economic forces. 
 
 9 Frederick J. Turner : Social Forces in American 
 History, American Historical Beview, Vol. XVI, No. 6, 
 p. 225. 
 
 53
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 The difference between description and 
 science may be illustrated by an example 
 taken from the history of physics. The 
 lamp hanging in the cathedral of Pisa 
 might be described in every artistic detail 
 by a traveler. The history of the designer 
 and the story of its construction might be 
 told in full, without adding in the least to 
 our knowledge of physics. It took the 
 mind of a Galileo, at once analytical and 
 constructive, to recognize in the apparently 
 meaningless oscillations of the lamp a con- 
 stantly acting force, and thus to discover 
 the law of the pendulum. So the economist 
 must recognize beneath the events of 
 history the constantly acting economic 
 impulses in the mind of man. 
 
 This view of economic history as a 
 series of experiments is not in conflict with 
 the evolutionary conception of history. 
 Indeed, it is really necessary to explain it 
 rationally, for, unless we are willing to 
 accept a blind fatalism, according to which 
 history moves on without being controlled 
 by human volition, we must recognize that 
 what seems to us the orderly development 
 of institutions is rational and orderly, pre- 
 cisely because men have been constantly 
 
 54
 
 EXPEEIMENTATION IN THE UNITED STATES 
 
 trying new expedients and have deliber- 
 ately retained those institutions and prac- 
 tices which stand the test of experience. 
 The very expression, "survival of the 
 fittest," implies in human history a con- 
 stant testing of new variants, as it does in 
 the animal world, with this difference, 
 however, that in the animal world the 
 changes are brought about by the so-called 
 forces of nature, which is another way 
 of saying that, like Topsy, ''they just 
 growed," while in history most of the 
 changes have been produced by a conscious 
 effort of the human mind to bring about 
 results. This is none the less true, because 
 few individuals at the time have a suffi- 
 ciently broad grasp of what is happening 
 and a sufficiently profound knowledge 
 of the world to know whither they are 
 tending. 
 
 Economic science, after a period of 
 public favor in which its generalizations 
 enjoyed considerable confidence, seems to 
 have gone through two rather distinct 
 phases. When it found itself unable to 
 grapple with many of the problems of the 
 day, it was derided as the ' ' dismal science ' ' 
 by impatient reformers. More recently, 
 
 55
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 since it has begun to interest itself more in 
 practical questions, it seems to be enjoying 
 a popularity, especially in the United 
 States, which is not without its dangers. 
 It attracts large classes in our universities ; 
 it is being studied in our theological 
 schools and by our churches ; large sums of 
 money are being spent by our governments 
 in the interest of economic investigations. 
 The economist must be on his guard 
 against allowing this present popularity 
 to encourage dilettantism. Our age is 
 growing more and more critical. The busi- 
 ness world is appMng rigorous tests to 
 ascertain results. The educational world 
 is stud^dng methods of efficiency. The 
 economist is liable to go through another 
 period of discredit, unless he realizes that 
 he must apply to his study the patience, the 
 exactitude, the devotion to truth by which 
 the great conquests of natural science have 
 been obtained. He needs all of these quali- 
 ties in a larger degree even than the stu- 
 dent of nature, because of the long period 
 through which his observations have to 
 extend, and the great complexity of the 
 phenomena '\vith which he is dealing. But 
 if he can apply these qualities in the reali- 
 se
 
 EXPERIMENTATION IN THE UNITED STATES 
 
 zation that the world of economic change is 
 his laboratory, and that it is his task to 
 interpret its lessons, he will have his 
 reward, in helping to solve the great 
 human problems which have vexed man- 
 kind since the dawn of history. 
 
 57
 
 CHAPTER IV 
 
 The Pathology of Progress 
 
 The world of nature, if left to itself, is 
 generally in a state of more or less perfect 
 equilibrium. Those plants and those ani- 
 mals survive which are best adapted to 
 their environment; the others perish. 
 Each species has its enemies which prevent 
 any one of them from monopolizing the 
 earth and which, in turn, are held in check 
 by their own enemies. As soon as civilized 
 man steps upon the stage, however, this 
 harmony of nature is disturbed, and the 
 intruder may be positively destructive of 
 those forms of life which are not able to 
 adapt themselves to him or to minister 
 directly to his wants. A good illustration 
 of this is given by Theodore Roosevelt, in 
 his Hunting Trips of a Ranchman, with 
 regard to the buffalo. 
 
 The most striking characteristics of the buf- 
 falo [he says], and those which had been found 
 most useful in maintaining the species until the 
 white man entered upon the scene, were its 
 phenomenal gregariousness, .... its massive 
 bulk, and unwieldy strength Its tough- 
 
 68
 
 THE PATHOLOGY OF PROGEESS 
 
 ness and hardy endurance fitted it to contend 
 with purely natural forces : to resist cold and the 
 winter blasts, or the heat of a thirsty summer, 
 to wander away to new pastures when the feed 
 on the old was exhausted, to plunge over broken 
 ground, and to plough its way through snow 
 
 drifts or quagmires 
 
 But the introduction of the horse, and shortly 
 afterwards the incoming of white hunters carry- 
 ing long-range rifles, changed all this. The buf- 
 faloes' gregarious habits simply rendered them 
 certain to be seen, .... their speed was not 
 such as to enable them to flee from a horseman ; 
 and their size and strength merely made them 
 too clumsy either to escape from or to contend 
 with their foes/ 
 
 This is the first effect of civilized man, 
 but not the last. The book in question was 
 written over a quarter of a century ago, 
 when the buffalo seemed to be on the point 
 of extermination. Fortunately, as man 
 becomes more enlightened, lie begins to 
 realize that, in his struggle for the suprem- 
 acy over nature, he may carry the contest 
 too far for his own good. We now find that, 
 somewhat tardily, civifized man is trying 
 to save from extinction the few scattered 
 specimens of the bison that have survived, 
 and even by skillful crossing to endow 
 
 1 Theodore Roosevelt : Hunting Trips of a Raneliman, 
 1885, pp. 244-245. 
 
 59
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 domestic cattle with some of those good 
 qualities of their wild cousins which have 
 enabled them to cope successfully mth the 
 climate of the plains through so many gen- 
 erations. Thus the stage of domestication 
 follows the hunting stage of civilization, 
 and the crude and wasteful processes of 
 natural selection are replaced by those of 
 artificial selection. 
 
 Like Orlando in the Forest of Arden, 
 civilized man begins the struggle for exist- 
 ence with a drawn sword and a threat. 
 
 He dies that touches any of this fruit 
 Till I and my aJQfairs are answered. 
 
 In time experience teaches him, in the 
 the words of the Banished Duke, that 
 
 Your gentleness shall force 
 More than your force move us to gentleness.^ 
 
 The course of man's dealings with 
 nature is paralleled in his dealings with his 
 fellow men. Almost every new invention, 
 almost every new process, creates a power 
 which is susceptible of abuse, or leads to 
 changes in conditions which may be injuri- 
 ous to certain classes or certain interests. 
 
 2 As You Like It, Act II, Scene 7. 
 
 60
 
 THE PATHOLOGY OF PROGKESS 
 
 The pioneers of industry have much in 
 common with the pioneers of the frontier. 
 Even those improvements which seem alto- 
 gether good may bring in some incidental 
 evil, which, while not by any means 
 counterbalancing the good, yet makes itself 
 felt as something to be removed. A good 
 example of this is seen in the homespun 
 industry of some of the Scotch isles. The 
 island of Harris has long been famous for 
 the quality of its tweeds. The climate is, 
 however, very wet, and the sheep have been 
 so subject to disease that it has been the 
 custom to rub them with tar and grease to 
 protect them from the cold. More recently 
 an improved breed of sheep has been intro- 
 duced, which is able to resist the climate, 
 but it is now found that the grease which 
 protected the sheep also improved the 
 quality of the wool, so that the newer 
 fabrics are not as good as the old ones.^ 
 This is a common experience, not only in 
 the history of inventions, but in the his- 
 tory of man's efforts to introduce higher 
 forms of economic life and a higher kind of 
 civilization. 
 
 3 United States Consular Eeports, November, 1909, p. 
 223. 
 
 61
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 The most important step upwards from 
 savagery is to substitute the law of con- 
 tract for the law of conquest. But as soon 
 as violence is put down, there is danger 
 that the physical strength and the courage 
 which were essential to existence in the 
 ruder age will be lost or impaired. New 
 dangers are also possible. If the law 
 decrees that wealth shall be distributed, 
 not as the result of brute force, but through 
 free bargaining among producers, there is 
 a possibility that the advantage will go, not 
 to the man who produces the most, but to 
 the man who is most unscrupulous in driv- 
 ing a hard bargain. It then becomes neces- 
 sary to set up a new standard and to 
 prohibit, not only positive fraud, but also 
 all contracts which may be so unequal in 
 their operation as to discourage industry 
 and promote trickiness. Without violence, 
 it is possible so to frame a labor contract, 
 that the worker shall become virtually the 
 bondsman of the employer. Thus slavery 
 and peonage have to be prohibited as con- 
 trary to public policy. But al^olish slavery, 
 and you abolish, with the right of exploita- 
 tion, the obLgation of the master to care 
 for the worker in sickness and in old 
 
 62
 
 THE PATHOLOGY OF PKOGEESS 
 
 age. Docility and trustfulness, which may 
 have been useful characteristics of the 
 slave, are converted in the free man into 
 that disregard of the future which we call 
 improvidence, and the superannuated or 
 sick worker, who has made no savings and 
 has no family to care for him, constitutes 
 a new problem. Relieve the sick and the 
 aged by means of private charity or public 
 relief, and you run the risk of developing 
 the institutional pauper and the tramp, 
 those sorry by-products of civilization, who 
 will not support themselves, but whom 
 charity will not suffer to starve, and who 
 may not be put to forced labor without a 
 violation of the constitutional prohibition 
 of involuntary servitude. 
 
 These evils, which are observed so 
 frequently in connection mth efforts to 
 improve social institutions, lead different 
 minds to quite opposite conclusions. Some, 
 exaggerating the incidental evils of pro- 
 gress, decry all efforts at betterment, and 
 long for the good old times when there 
 were no reformers. Others, realizing 
 strongly the evils which grow up without 
 regulation, think that reform has not been 
 carried far enough and advocate some 
 
 63
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 extreme remedy such as socialism. In 
 view of the difficulties which seem to attend 
 both action and inaction, we naturally ask 
 if there is no principle, based upon experi- 
 ence, which will enable us so to steer the 
 ship of state as to avoid both the Scylla 
 of conservatism and the Charybdis of 
 radicalism. 
 
 In seeking such a principle, the first 
 thing to realize is that we are living in a 
 highly dynamic period of the world's his- 
 tory. We are so accustomed to change, 
 that we sometimes do not realize all that 
 it means, or the great contrast which exists 
 between the rate of change of the present 
 day and any rate which has existed in any 
 previous period of the known history of 
 the world. These changes are seen, not 
 only in the endless improvements in 
 mechanical processes with which the great 
 inventions of the eighteenth and nineteenth 
 centuries have made us familiar. More 
 recently this spirit of progress has taken 
 hold of what throughout history has been 
 the most conservative of callings, and agri- 
 culture is now stimulated and vitalized by 
 the applicaaon of science. New tyi^es of 
 plants and animals are introduced in order 
 
 64
 
 THE PATHOLOGY OF PEOGRESS 
 
 to meet peculiar conditions; new methods 
 of farming are devised by which dry lands, 
 which have hitherto been considered infer- 
 tile, are impressed into the service of an 
 increasing population. The really signifi- 
 cant thing with regard to these and other 
 improvements is not that they are numer- 
 ous and far-reaching, but that they are 
 being deliberately planned. They are no 
 longer the happy inspiration of the casual 
 man of genius, they are often the outcome 
 of a course of study deliberately under- 
 taken ^\T.th a definite end in view. Such 
 establishments as the Carnegie Institution 
 of Washington and the Sage Foundation, 
 the agricultural experiment stations of the 
 several States, and many departments of 
 our universities and schools of agriculture, 
 are not only pushing forward our knowl- 
 edge of nature and her processes, but deter- 
 mining in advance the lines on which 
 progress shall be made. 
 
 An interesting illustration of the ten- 
 dency to anticipate discoveries is seen in 
 the recent history of polar exploration. 
 For centuries the difficulties of reaching 
 the North Pole seemed almost insurmount- 
 able. One expedition after another had 
 
 65
 
 THE ECONOMIC UTILIZATION OF HISTOKY 
 
 been undertaken only to add a new chapter 
 to the history of failures. When, during 
 the summer of 1909, it was announced that 
 two explorers had independently succeeded 
 in accomplishing this feat, it was also dis- 
 closed that each had contracted in advance 
 Avith certain newspapers for the exclusive 
 right to publish an account of the dis- 
 covery, which, at the time of making the 
 contract, was still problematical. Two 
 things are significant in this episode : the 
 first is the eagerness mth which discovery 
 is pursued ; the second, the readiness to use 
 a still unmade discovery as the basis of a 
 property right. And if, as has since been 
 proved, one of these expeditions was partly 
 fictitious, this only makes the illustration 
 more striking, as shomng the impalpable 
 foundation upon which a property right 
 may be built up. When the art of aerial 
 navigation was still in its infancy, an insur- 
 ance company advertised itself as pre- 
 pared to underwrite aerial risks. Every 
 one of the fifty or sixty thousand patents 
 applied for in our country in a single year 
 represents a desire on the part of someone 
 to effect a change in methods of production 
 and to use it as the basis of some property 
 
 66
 
 THE PATHOLOGY OF PROGRESS 
 
 right. It also represents tlie possibility of 
 some dislocation of our industrial system, 
 or some new menace to certain interests. 
 
 67
 
 CHAPTER V 
 
 Economic Pkogkess and Labor Legislation 
 
 Professor J. B. Clark, in his sugges- 
 tive study of Economic Theory as Ap- 
 plied to Modern Problems, enumerates 
 five elements as characteristic of a 
 dynamic society: (1) An increase in 
 population. (2) An increase in capital. 
 (3) Changes in the methods of produc- 
 tion. (4) Changes in the methods of 
 organization. (5) Changes in consumers' 
 wants. ^ 
 
 Each of these five features of economic 
 progress involves some new problems 
 affecting labor. Many of these, fortu- 
 nately, solve themselves; many others do 
 not, and the experience of a century has 
 proved that in, at least, many cases some 
 form of legislation is necessary in order to 
 prevent the incidental evils of progress 
 from being perpetuated and aggravated. 
 Let us take them up seriatim. 
 
 1 John Bates Clark : Essentials of Economic Theory, 
 1907, pp. 203-206. 
 
 68
 
 PEOGRESS AND LABOE LEGISLATION 
 
 1. The increase in population often 
 involves a crowding in industrial centers 
 with an increase in disease, which must be 
 dealt mth by tenement-house laws and 
 sanitary measures. The increase of popu- 
 lation combined mth modern methods of 
 transportation leads to the amazing migra- 
 tion of modern times, which, in turn, 
 creates new difficulties. To prevent the 
 spread of contagious diseases, to prevent 
 the abuse of the newcomers, some restric- 
 tions have to be placed by law, not to stop, 
 but to control, this flood of immigration. 
 
 2. An increase in capital tends to make 
 large aggregations of wealth, which by 
 their very size weaken the personal ele- 
 ment involved in the relation of employer 
 and employed. The simple, almost patri- 
 archal, expression "master and servant," 
 which served as the rubric of the law on 
 these subjects in the time of Blackstone 
 and, indeed, was not superseded in Eng- 
 land as a legal term until 1875, is no longer 
 applicable to modern industry, nor are old 
 methods of bargaining satisfactory. New 
 machinery must be devised to facilitate 
 collective bargaining and to mitigate the 
 effects of collective disagreement. 
 
 69
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 3. Changes in the methods of produc- 
 tion, involving, as they do, more powerful 
 and more complicated machines, bring 
 many evils. In the early days of the fac- 
 tory system, the displacement of skilled 
 labor by unskilled was the most obvious 
 injury felt by the workers. At the present 
 time we are more concerned, because better 
 acquainted, with the remoter and indirect 
 effects of the age of machinery. We see new 
 causes of accident, new kinds of industrial 
 diseases, combined with a greater difficulty 
 of securing the individual worker against 
 the effects of accident and disease. Long 
 experience has shown that these particular 
 difficulties do not correct themselves, and 
 one of the greatest problems in labor leg- 
 islation at the present time is, on the one 
 hand, to diminish accidents and disease, 
 and on the other, to provide some form of 
 compensation or some form of insurance 
 for those who are their victims. Still 
 more important, if possible, is the effect 
 of machinery upon the children and 
 therefore upon the workers of the future, 
 and this, being comparatively remote and 
 not realized for one or two generations, is 
 the most difficult problem for the individ- 
 
 70
 
 PEOGRESS AND LABOR LEGISLATION 
 
 ual to solve. Government intervention 
 seems the only agency sufficiently power- 
 ful and sufficiently general to save a coun- 
 try from the deterioration of its human 
 capital. 
 
 4. Changes in organization tend on the 
 whole to give a new advantage to capital. 
 It is now possible for a single company 
 or combination of companies to be spread 
 out over many states or many continents. 
 This, while it makes for efficiency, also 
 creates a power which may be abused and 
 results in a demand for laws putting upon 
 capital new responsibilities in the inter- 
 ests of its employees. It, above all, points 
 to the necessity of interstate and interna- 
 tional labor legislation. With the aid of the 
 International Association for Labor Leg- 
 islation, a number of international treaties 
 of great importance have been made, one 
 of the more recent of which is a treaty 
 between France and Great Britain, giving 
 the workers of those countries reciprocal 
 advantages in obtaining compensation for 
 accidents. 
 
 5. Changes in consumers' wants create 
 an artificial instability of business, which 
 shows itself in alternating periods of 
 
 71
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 activity and stagnation. The one tends 
 to produce overexertion, the other, unem- 
 ployment, and each demands legislation. 
 
 It will be noticed that in each of these 
 five cases the main purpose of the legisla- 
 tion in question is to prevent some injury 
 to the human beings for whose sake eco- 
 nomic progress exists, and on whose effi- 
 ciency its continuance depends. We should, 
 therefore, add to the five elements of a 
 dynamic society which have been enumer- 
 ated, a sixth, which has been comparatively 
 neglected in the past, but which may prove 
 in the future to be the most important of 
 all. I refer to an improvement in the qual- 
 ity of the population itself. This is not 
 altogether a dream. The average duration 
 of the human life has within a century been 
 decidedly lengthened in many of the lead- 
 ing countries of the world. In England 
 and Wales, e.g., the average duration of 
 fife among males in the period 1838 to 
 1854 was 39 ^lo years, in 1891 to 1900, 
 44 Yio. In Sweden the average duration 
 has increased from 39 %o in 1816 to 1840, 
 to 50 %o in 1891 to 1900. Our statistics do 
 not enable us to make general statements 
 for the United States as a whole, but in 
 
 72
 
 PROGEESS AND LABOE LEGISLATION 
 
 several of the States the same tendency 
 shows itself.^ 
 
 Many diseases and many accidents are 
 now recognized as clearly preventable. 
 There is every reason to believe that by 
 proper care human life can be lengthened, 
 disease and accidents diminished, and the 
 physical strength of the population im- 
 proved; but, in order to bring about this 
 most important element of progress, the 
 state itself, which alone has an interest 
 extending beyond that of the individual 
 lifetime, must intervene, in order to pre- 
 vent well-recognized causes of retrogres- 
 sion and also to promote those elements 
 which make for improvement. 
 
 In this process, mistakes are pretty sure 
 to be made. Eugenics has not yet reached 
 the position of an exact science. All legis- 
 lation that is passed with good intentions 
 does not produce the desired results. The 
 point to be emphasized is that economic 
 progress in itself involves inevitably in 
 each of its elements some form of labor 
 legislation. As long as change continues, 
 we must expect that labor legislation mil 
 
 2 Irving Fisher: Report on National Vitality, 1909, 
 pp. 18, 19. 
 
 73
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 be necessary. If the laws of the Medes 
 and Persians were immutable, it was be- 
 cause their economic life was stagnant. 
 We should not forget, however, that the 
 oriental politicians who are responsible 
 for introducing this tradition into litera- 
 ture invoked the immutability of the law 
 on behalf of a brand-new measure of their 
 own devising, the purpose of which was to 
 check reform by casting the reformer into a 
 den of lions. For according to the prophet 
 Daniel, ''All the presidents of the king- 
 dom, the governors, and the princes, the 
 counsellors, and the captains, have con- 
 sulted together to establish a royal statute, 
 and to make a firm decree, that whosoever 
 shall ask a petition of any God or man for 
 thirty days, save of thee, king, he shall 
 be cast into the den of lions. Now, king, 
 establish the decree, and sign the writing, 
 that it be not changed, according to the 
 law of the Medes and Persians, which 
 altereth not.'" At the present day, there 
 are no more ardent advocates of the immu- 
 tability of the law, none who more zeal- 
 ously urge that things be left alone, than 
 those the value of whose property rights 
 
 8 Book of Daniel, vi. 7, 8. 
 
 74
 
 PEOGEESS AND LABOE LEGISLATION 
 
 rests upon some comparatively recent law, 
 such as a liberal charter or a high import 
 duty. 
 
 This conception of labor legislation, if 
 it could be generally entertained by our 
 legislators and the public, would lead to 
 certain important, practical results. 
 
 1. Labor legislation would be less in 
 quantity and better in quality. A measure 
 adopted for what seems an emergency is 
 almost always hastily drawn and soon 
 requires amendment. As soon as it is rec- 
 ognized that a certain type of legislation 
 results from permanent conditions, more 
 care will be bestowed upon it, and the 
 changes will be fewer. 
 
 2. Legislation would also on the whole 
 be more prompt. Certain general effects 
 of industrial progress are well known by 
 the experience of other states. These are 
 often not corrected until they have become 
 so flagrant that they are taken up by phi- 
 lanthropists or trades unions, and correc- 
 tive measures are then passed under 
 pressure without due study. Legislation is 
 often so afraid of crossing its bridges 
 before it comes to them, that it does not 
 keep them in decent repair. 
 
 75
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 3. Laws would be more uniform, if 
 labor legislation were recognized as result- 
 ing from certain general economic condi- 
 tions which are universal, or nearly so. 
 More care would be taken to secure har- 
 monious action between different countries 
 and different States in the same federa- 
 tion. 
 
 4. Labor laws would be less frequently 
 the expression of class feeling. Many bills 
 which excite prejudice on this ground 
 would be recognized as being really in the 
 general interest. The courts, too, might 
 perhaps find it easier to distinguish be- 
 tween enactments which are really class 
 legislation and as such condemned by con- 
 stitutional principles, and those laws 
 which, while applying to certain definite 
 groups, are in reality passed for the 
 benefit of all. 
 
 5. The recognition of labor legislation 
 as a permanent feature of our statutes 
 would make it more consistent, because the 
 very thought of adapting it to changes in 
 economic conditions would force us to 
 think more of those economic ideals which 
 underlie subconsciously most social legisla- 
 
 76
 
 PROGRESS AND LABOR LEGISLATION 
 
 tion, but are not always recognized or 
 steadily followed. 
 
 Each great period of the world's history 
 has had some such economic ideal, which, 
 whether or not formulated in words, has 
 become a part of the mores of the time and 
 country and has guided the law in its main 
 features. Under the feudal system, soci- 
 ety was divided into horizontal strata, 
 based mainly on their relation to land, and 
 involving specific duties as well as rights. 
 The guild system dovetailed quite prop- 
 erly with this system, although not 
 strictly a part of it, since under it the 
 mechanics of the cities were classified and 
 their places definitely determined, the 
 crafts themselves being more or less hered- 
 itary. Whatever the merits or demerits 
 of this system, it was one of order rather 
 than one of freedom, one of conservatism 
 rather than of progress. 
 
 The economic ideal of the United States 
 is very different from this. It may not be 
 easy to define it in a few words, but its 
 most concise expression is perhaps found 
 in that part of the preamble of the Federal 
 Constitution which states, after enumerat- 
 ing certain political purposes, that its 
 
 77
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 object is *4o promote the general welfare 
 and secure the blessings of liberty to our- 
 selves and our posterity." Our ideal is 
 clearly not a caste system, nor even a hier- 
 archy of functions such as existed under 
 the feudal system. It is a system of free- 
 dom which implies equality of opportunity 
 for all. This does not mean anarchy, for it 
 is a liberty which brings blessings. It is 
 not the paper liberty of a phrase. It is, 
 moreover, a liberty of the race, not of the 
 individual. All this implies, therefore, a 
 liberty so regulated as to prevent one indi- 
 vidual or one group from abusing their 
 liberty to the harm of others. 
 
 This policy, though unfortunately not 
 always realized, is seen in many typical 
 pieces of legislation, both Federal and 
 State. The public land policy of the 
 United States is based upon the idea of 
 putting the land into the hands of small 
 farmers, and therefore preventing its 
 monopolization by a few. The homestead 
 exemption laws of our States interfere 
 with freedom of contract in the interest of 
 the family. The Federal government intro- 
 duced within the first few years of its 
 existence a system of caring for seamen 
 
 78
 
 PEOGRESS AND LABOR LEGISLATION 
 
 of the merchant marine in case of sickness 
 by means of what would now be called 
 compulsory sick insurance.* This remark- 
 able piece of labor legislation, enacted in 
 1798, anticipated by nearly ninety years 
 the introduction of general compulsory 
 sick insurance by Germany, showing that, 
 even in those early days of weakness and 
 decentralization, the United States was 
 ready to practice social politics, when the 
 practicability and the necessity of it were 
 apparent. If a few years earlier Alex- 
 ander Hamilton advocated a protective 
 tariff, partly on the ground that it would 
 introduce the factory system and thus 
 secure the employment of children ''of a 
 tender age,'" this was not because of any 
 desire to break down the health of the 
 population, but simply because the evils 
 of the factory system were not appreciated, 
 as were the dangers of the sailor's life. 
 
 We are fortunate in this country in hav- 
 ing an ideal clearly expressed and pretty 
 
 4 For a full history of the Marine Hospital Service the 
 writer is indebted to a still unpublished monograph on 
 the subject, written by Dr. A. M. Edwards for the 
 Carnegie Institution of Washington. 
 
 5 Report on Manufactures, 1791, p. 87 of reprint of 
 1837. 
 
 79
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 generally accepted, and it is this ideal 
 which must give consistency to labor leg- 
 islation. But it is a consistency of pur- 
 pose, not of words, that we must aim at. 
 A navigator might seem vacillating to a 
 landlubber who observed that he sailed 
 now on the port tack and now on the star- 
 board tack and constantly changed his 
 helm. But through all of the apparent 
 changes he is working steadily against the 
 wind toward his port. Labor legislation 
 must likewise adapt itself to the particular 
 exigencies of the times, maintaining always 
 as its final purpose in the United States, 
 ''to secure the blessings of liberty to our- 
 selves and our posterity." Its very prohi- 
 bitions are in the interest of a greater 
 liberty, just as the traffic regulations of a 
 great city put restrictions upon the indi- 
 vidual driver for a time, in order to secure 
 a freer circulation for the traffic as a 
 whole. 
 
 The movement for more intelligent labor 
 legislation is but a part of the great move- 
 ment for the conservation of our natural 
 resources. But in the construction of the 
 irrigation works which are already re- 
 claiming so many square miles of territory 
 
 80
 
 PEOGRESS AND LABOE LEGISLATION 
 
 and turning bad lands into fertile farms, 
 the first step is the building of a dam. 
 There are few persons now so short- 
 sighted as to suppose that these dams are 
 intended to prevent the water from reach- 
 ing the arid plains. Every one knows per- 
 fectly well that they are the very first 
 condition of an adequate water supply. 
 Likewise some restrictive legislation as 
 applied to labor is often the condition of 
 real economic freedom. It means that 
 man is at last learning to apply to him- 
 self those principles of domestication, 
 preservation, and improvement which he 
 applied to his live stock, when he emerged 
 from the hunting stage of existence. 
 
 81
 
 CHAPTER VI 
 
 Fundamental Distinctions in Labor 
 Legislation 
 
 In the scholarly presidential address, 
 which he delivered at the first annual meet- 
 ing of the American Association for Labor 
 Legislation, Professor Ely dealt with the 
 relations of labor legislation to economic 
 theory. He showed that most of the early 
 economists were on principle opposed to 
 legislation, which seemed to them to be a 
 futile interference with economic laws, but 
 that their successors gradually changed 
 their views, until at the present day there 
 are very few who would condemn labor 
 legislation as such. If, however, we no 
 longer hold that all labor legislation is un- 
 scientific and futile, neither do we believe 
 that all that goes under that title is scien- 
 tific and effective. Still less do we believe 
 that everything that is demanded in the 
 name of labor is going to accomplish what 
 is expected of it, even when we approve of 
 
 82
 
 DISTINCTIONS IN LABOR LEGISLATION 
 
 its general aim. And while the doctrine 
 of laissez faire no longer ranks as an 
 infallible principle of statecraft, it may 
 still serve the useful purpose of the slave 
 who stood behind the triumphant Roman 
 general to remind him that he was still a 
 man. We, too, need occasionally to be 
 reminded that, though legislation has 
 accomplished much, it has also frequently 
 failed ; that it is apt, even when successful, 
 to produce unexpected results ; and that we 
 cannot be too careful to study, with all of 
 the statistical and administrative material 
 at our disposal, the complex operation of 
 past laws before advocating new ones. We 
 prefer to let evils work their own cure, if 
 they can, and we must always balance the 
 ''ills we have" against those ''we know not 
 of." We have thus reached the point at 
 which the emphasis should be laid, not on 
 negation, nor on agitation, but rather on 
 discrimination. 
 
 The general term labor legislation em- 
 braces at the present day a heterogeneous 
 mass of enactments which impinge upon 
 the individual in very different ways, and 
 which really fall into three quite distinct 
 classes, if we group them with reference 
 
 83
 
 THE ECONOMIC UTILIZATION OP HISTOEY 
 
 to their immediate bearing on economic 
 processes. 
 
 In the first class, which is also the oldest, 
 we have what is commonly termed protec- 
 tive labor legislation. Familiar types are 
 laws limiting the age of employment of 
 children, limiting the hours of employment, 
 prohibiting certain kinds of employment to 
 women or children, requiring the use of 
 safety appliances in connection with ma- 
 chinery, limiting migration, etc. They 
 determine the conditions under which labor 
 must be performed, but do not directly 
 affect the terms of exchange. They oper- 
 ate like dykes, which confine a river to a 
 certain bed but do not change the flow or 
 general course of the water. 
 
 In the second class we have legislation 
 which aims not so much at excluding cer- 
 tain unfavorable conditions of labor as at 
 the direct bestowal of pecuniary benefits. 
 This legislation may not inappropriately 
 be called distributive or positive legisla- 
 tion. Compulsory insurance laws which 
 require the employer or the state to con- 
 tribute a part of the funds would come 
 under this head, as well as employers' lia- 
 bility laws, old age pension laws, laws pro- 
 
 84
 
 DISTINCTIONS IN LABOE LEGISLATION 
 
 viding for the fixing of wages by wage 
 boards or compulsory arbitration, etc. 
 These laws require certain positive contri- 
 butions on the part of the public, the 
 employer, or the wage receiver, or of sev- 
 eral of them combined. They directly 
 affect the terms of exchange by supple- 
 menting or modifying the wage contract. 
 In the third class we have legislation 
 which is designed to encourage or promote 
 certain institutions, but which neither con- 
 tains a prohibition nor an injunction, and 
 may therefore be called permissive. Most 
 of these laws in their application to labor 
 involve the use of certain forms of self- 
 help. In this group we should include, 
 therefore, laws permitting and regulating 
 labor organizations, benefit societies, co- 
 operative associations, voluntary arbitra- 
 tion boards, joint boards for collective 
 bargaining, etc. 
 
 The attitude of the law-giver towards 
 the citizen in these three classes may be 
 tersely expressed as follows: laws of the 
 first class are mainly prohibitive and say 
 ''thou shalt not"; laws of the second class 
 are mainly mandatory and say ''thou 
 
 85
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 slialt"; laws of the third class are mainly 
 permissive and say 'Hhou mayest." 
 
 It would carry us too far to attempt any 
 statistical study of the way in which the 
 laws of these three classes have operated 
 in practice, but their influence upon eco- 
 nomic forces may be explained by an anal- 
 ogy drawn from another and less debat- 
 able department of economics. While on 
 many topics economists are still at vari- 
 ance, the experience of the world in dealing 
 with money has been so long, and it has 
 been the subject of such careful study, that, 
 in spite of differences of opinion regarding 
 certain points of monetary policy, there is 
 a pretty general agreement regarding the 
 laws of monetary circulation. One of the 
 most important aims of all monetary legis- 
 lation is to establish a definite standard of 
 value. For centuries the world's stand- 
 ards were steadily deteriorating. For 
 many years after Sir Thomas Gresham had 
 formulated his famous law, according to 
 which bad money drives out good money, 
 no means had been discovered of coun- 
 teracting what seemed to be an inevitable 
 law of monetary degeneracy. Just as soon 
 as one metal depreciated in value, just as 
 
 86
 
 DISTINCTIONS IN LABOK LEGISLATION 
 
 soon as the government issued coins of 
 light weight, or dishonest people sweated 
 or clipped the coins, the inferior coins 
 tended to remain in circulation, while the 
 better ones were melted down or hoarded. 
 The competition of those w^ho had money 
 to sell — that is, who wished to buy goods — 
 took the form of offering the poorest 
 money that the other party to the bargain 
 could be induced to accept. Gresham's 
 law was, however, not an inevitable law of 
 nature. Like all economic laws it expressed 
 a tendency; therefore, it expressed what 
 will happen under conditions favorable 
 to that tendency. It did not say that 
 the tendency could not be neutralized by 
 changing the conditions. And as soon as 
 the government decreed that coins below 
 a certain weight and fineness should not 
 be received as legal tender, and provided 
 for the retirement of light coins, the profit 
 on using cheap money disappeared. The 
 question was no longer, How bad a coin 
 can be palmed off for a certain kind of mer- 
 chandise? but. How much merchandise 
 shall be given for a standard coin? 
 
 Now there is a close analogy between 
 the condition of things in the world of 
 
 87
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 money down to the end of the eighteenth 
 century, and in the world of labor during 
 a good part of the nineteenth. In the 
 wholesale and impersonal demand for 
 labor which grew up with the factory 
 system there was a natural tendency to 
 employ those who would work for the 
 longest hours and at the lowest wages. 
 The result of employing this cheap labor 
 was in the end to also make labor less 
 efficient, and therefore worth less to the 
 employer. It was practically impossible 
 for the individual to fight against this 
 tendency. An employer who deliberately 
 paid higher wages in the expectation of 
 getting more efficient labor was in the posi- 
 tion of a person who should endeavor to 
 raise the standard of the coinage by always 
 paying out the best instead of the poorest 
 coins that passed through his hands. He 
 would have his trouble for his pains, and 
 others would reap the benefit of his liberal- 
 ity. When laws were passed against child 
 labor, limiting the hours of emplojmient, 
 limiting the age of employment, etc., and 
 enforcing them by inspection, a new stand- 
 ard was created. The buying and selling 
 of labor did not cease. The demand and 
 
 88
 
 DISTINCTIONS IN LABOR LEGISLATION 
 
 supply acted as before. But the conditions 
 under which they acted were changed. A 
 child of ten years was no longer legal 
 tender in the labor market. A day of 
 thirteen hours was no longer a legal stand- 
 ard of time wages. The government did 
 for labor what it had done for money, by 
 providing that certain kinds of service 
 should be as illegal as were certain kinds 
 of money. The intervention of the State 
 established a standard, changed the condi- 
 tions of competition, and made it impos- 
 sible for the employer to employ labor 
 below a certain grade. 
 
 Labor laws of the second class, which I 
 have designated as ''distributive," also 
 have their analogy in monetary legislation. 
 Just as the monetary standard has some- 
 times been changed in order to benefit a 
 certain class, especially to bring about a 
 redistribution of wealth between debtor 
 and creditor, so most of these laws en- 
 deavor to bring about a redistribution of 
 wealth either between employer and em- 
 ployed, or between present and future 
 income. If the government, e.g., issues 
 paper money which is worth only 90 per 
 cent of its face value, the debtor gains a 
 
 89
 
 THE ECONOMIC UTILIZATION OF HISTOKY 
 
 hundred dollars on every transaction of a 
 thousand dollars. 
 
 Just so a law providing for compulsory 
 insurance at the expense of the employer 
 virtually says: Whenever you owe $1 in 
 wages you are obliged to pay not merely 
 the $1 stipulated, but $1 plus a certain per- 
 centage needed to pay for the cost of insur- 
 ance. Now while changes in the value of 
 money which are brought about by unfore- 
 seen variations in the value of the metal 
 may produce beneficial effects, history has 
 taught us the danger of changes which are 
 made deliberately with the intention of 
 helping one class at the expense of another, 
 and the history of labor legislation likewise 
 shows that such a danger is inherent in all 
 legislation of this kind. The danger is not 
 great enough in all cases to condemn it. 
 But there is always a risk of demoralizing 
 the class supposed to be benefited in any 
 law which produces a gratuitous distribu- 
 tion of property, unless carefully guarded 
 against abuse. This danger is seen in the 
 inheritance of millions by an irresponsible 
 heir, in the marrying of millions by a con- 
 scienceless fortune hunter, in the subsidiz- 
 ing of industry by a protective tariff, no 
 
 90
 
 DISTINCTIONS IN LABOE LEGISLATION 
 
 less than in lavish poor relief and in the 
 transfer of wealth by law to the working 
 middle class. All such laws are exposed to 
 a danger not found in laws of the first 
 class, which involve primarily a restriction 
 rather than a privilege. 
 
 Labor laws of the third class also find 
 their analogy in monetary legislation. 
 Laws providing for the chartering of banks 
 are here the counterpart of laws providing 
 for the organization of trade unions, 
 co-operative societies, and voluntary arbi- 
 tration boards. A national banking law 
 does not necessarily create national banks. 
 National banks exist only if there are 
 enterprising capitalists who desire to 
 organize themselves under the law. For 
 the same reason a law permitting the exist- 
 ence of trade unions does not necessarily 
 lead to their formation. No unions will be 
 formed, unless there are people who can 
 command the intelligent leadership and 
 interest needed to organize them. The 
 form, too, which they take will depend 
 upon the national character, the economic 
 and social habits, the prejudices, and even 
 theories of those concerned. Hence we see 
 that labor unions have taken one form in 
 
 91
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 England, but quite different forms in 
 Germany, in France, and in the United 
 States. 
 
 In distinguishing these three ijites, I do 
 not mean to assert that they are always 
 kept perfectly distinct in practice. Labor 
 legislation sometimes progresses in the 
 accomplishment of a certain end from one 
 type to the other. The small success 
 of voluntary schemes for workingmen's 
 insurance led the German government to 
 introduce compulsory insurance, thus pass- 
 ing from laws of the third type to those of 
 the second. As regards savings, this 
 matter is still regulated by laws of the 
 third type in general, but some economists 
 are now advocating compulsory saving as 
 a kind of insurance against unemployment. 
 Like^\ise the limited success of voluntary 
 arbitration boards has led in Australasia 
 to compulsory arbitration. In still other 
 cases two methods may be combined in a 
 single law. Thus in the Ghent system of 
 insurance against unemployment, there is 
 a coercive or distributive feature in that 
 the town pays out of the proceeds of taxa- 
 tion a certain sum towards the allowance 
 of those who are out of work, but it pays 
 
 92
 
 DISTINCTIONS IN LABOE LEGISLATION 
 
 this in most cases as a bonus, added to the 
 allowance made by labor organizations. 
 It thus makes use of the methods of the 
 second class to encourage institutions of 
 the third. 
 
 93
 
 CHAPTER VII 
 
 Purposes of Labor Legislation 
 
 We have thus far distinguished between 
 different types of legislation \\ith refer- 
 ence to the way in which it operates upon 
 the economic processes. If we now look at 
 the general purpose and trend of such 
 legislation, we shall see that there are two 
 main purposes which are not necessarily 
 antagonistic, but which are yet distinct. 
 
 The first purpose, which applies to all of 
 the so-called labor protective laws and 
 many of those which fall in the other two 
 classes, is the preservation of the race and 
 maintenance of its quality. The principal 
 argument for protecting children and 
 women against excessive or unhealthy 
 work is that the next generation is threat- 
 ened. The first child labor laws of Prussia 
 were inspired by General von Horn, who, in 
 1828, called the king's attention to the diffi- 
 culty of getting able-bodied recruits from 
 the manufacturing districts of the Rhine 
 province. This same purpose applies to 
 many other types of legislation. One of 
 the strongest arguments for workingmen's 
 
 94
 
 PUEPOSES OF LABOE LEGISLATION 
 
 insurance is that the burden which falls 
 upon women and children in the case of 
 industrial accidents or disease is lightened, 
 and that thus the succeeding generation is 
 brought up under more wholesome condi- 
 tions. 
 
 Quite a different purpose appears 
 when legislation aims to influence the 
 distribution of wealth between different 
 classes, when it consciously tries to raise 
 the level of the wage-receiving class at the 
 expense of the employers or of the com- 
 munity at large. These two tendencies, 
 which are really quite distinct, are often 
 confused. Many people, especially those 
 of the individualistic school, are apt to 
 group all labor legislation together as 
 socialistic; and in many cases the very 
 epithet, in the mind of those who use it, is 
 enough to condemn the movement. This, 
 however, is a superficial view. Socialism 
 is not the only antithesis to individualism. 
 If the extreme individualist is one who 
 believes in the greatest liberty of the indi- 
 vidual, he may be restrained either in the 
 interest of his contemporaries or in the 
 interest of his successors. The motto of 
 the individualist who disregards the inter- 
 
 95
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 ests of his contemporaries is, "The public 
 be damned" ; the motto of the individualist 
 who disregards the interests of his suc- 
 cessors is, "After us the deluge." Thus 
 there are two policies opposed to indi- 
 vidualism, one of which takes into account 
 contemporary relations, the other of which 
 considers the element of time. Our social 
 world, like our physical, "is a world of three 
 dimensions, not of two. From one point 
 of view individualism is justly contrasted 
 with collectivism or socialism. From the 
 other it is contrasted with a movement 
 which is in reality not new, but which is as 
 yet so little conscious of itself that nobody 
 has apparently thought of giving it a 
 name. If we may be permitted to borrow 
 a word which was, I believe, first coined by 
 Mr. Louis R. Ehrich, we may call it "pos- 
 teritism." This movement is so important 
 for the welfare and the permanent strength 
 of any society, and it is capable of so many 
 applications, that it almost implies a revo- 
 lution in our social ideals. The general 
 care for the life, intelligence, and morals 
 of the next generation, as shown in labor 
 laws, in the steps taken for the preserva- 
 tion of the national health, in the fight 
 
 96
 
 PURPOSES OF LABOR LEGISLATION 
 
 against tuberculosis, and in the creation of 
 playgrounds for children, is but part of a 
 greater movement which also includes 
 measures for preserving our forests and 
 our mineral resources, for draining our 
 swamps, and for irrigating our deserts. 
 Still another phase of it is seen in the study 
 of eugenics by our sociologists. It is not 
 difficult to interest people in the preserva- 
 tion of our natural resources, but those 
 who are far-seeing recognize that the peo- 
 ple who inhabit a country are as much an 
 asset as is its material wealth. Indeed, one 
 without the other would be of little use. 
 Protective labor legislation forms, there- 
 fore, a part, but a very important part, of 
 the general movement for posteritism. 
 
 Much of this is not new. England, the 
 states of continental Europe, and many of 
 our own States furnish us with an abun- 
 dant experience on which to base future 
 action. And yet the matter is attended, in 
 the United States, with peculiar difficulties 
 which are partly legal and institutional, 
 partly economic. 
 
 The legal difficulties arise from the very 
 framework of our government. We have 
 within the limits of the United States, 
 
 97
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 excluding Alaska and our distant depen- 
 dencies, no less than fifty-one different 
 legislative bodies which have the power to 
 pass laws for a larger or smaller territory. 
 Our country presents a more complex 
 legislative problem than all the states of 
 Europe taken together. There is, it is 
 true, no lack of labor legislation in the 
 United States. During the year 1907 alone, 
 no less than 405 measures regarding labor 
 were passed, and not all of the legislatures 
 were working that year.^ But though 
 many of our commonwealths are far ad- 
 vanced and stand on a par with the best 
 states of Europe ^vith regard to certain 
 matters, we find that even adequate laws 
 for the protection of the labor of children 
 are still lacking in many of the States, laws 
 for the protection of the labor of women 
 are often subject to attack and nullification 
 on constitutional grounds. When we look 
 at the administration of these laws, we are 
 obliged to confess that very frequently 
 they are not executed by experts, but that 
 the poison of the spoils system still neutral- 
 izes, in far too many cases, the good that 
 laws might otherwise accomplish. 
 
 1 Mass. Labur Bull., March-April, 1908, p. 69. 
 
 98
 
 PUEPOSES OF LABOE LEGISLATION 
 
 While in the world at large labor legis- 
 lation has already passed beyond the 
 national stage and has now become the 
 subject of international treaties, we are 
 still struggling with a lack of uniformity 
 both in lawgiving and in law-enforcing 
 within the limits of a single country. We 
 are not even able to command satisfactory 
 information with regard to industrial acci- 
 dents or industrial diseases in order to 
 guide future legislation. So simple a 
 matter as the registration of vital statistics 
 is still in such a state of chaos that Con- 
 gress has been obliged to request the 
 States to introduce registers and has 
 ordered a model law drawn up for their 
 guidance. If we look at the matter in all 
 frankness we must acknowledge that, while 
 our industries are noted throughout the 
 world for the inventiveness, the mechanical 
 skill, the business talent which they com- 
 mand, and while we have every reason to 
 be proud of our educational system and of 
 our standing in international relations, 
 we have apparently overlooked the art of 
 legislation. The great mass of our State 
 legislators have had no previous training 
 in the study of la^vmaking and law-enforc- 
 
 99
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 ing. We prevent them from becoming 
 skilled and responsible lawmakers by rota- 
 tion in office, by infrequent sessions, and 
 by constitutional limitations. The instruc- 
 tion which they receive from the lobby is 
 often effective, but one-sided, since it is 
 more apt to show them what is for their 
 individual interest than what is for the 
 interest of the public, present and future. 
 There are, fortunately, signs of improve- 
 ment. Expert commissions are being 
 used more and more. The development of 
 such institutions as the Legislative Refer- 
 ence Library in Wisconsin is doing much 
 to educate our lawgivers. But the fact still 
 remains that, of all the industries of the 
 United States, lawmaking is perhaps the 
 most backward. 
 
 There are also economic conditions 
 which have made it peculiarly difficult to 
 secure intelligent action on this subject in 
 our country. The exhibit of the Pittsburgh 
 Survey^ may serve as an instructive object 
 
 2 This exhibit was opened in 1908 to show graphically 
 some of the results of the intensive study of the industries 
 of Pittsburgh, which was undertaken by the Eussell Sage 
 Foundation, and the details of which were later pub- 
 lished in a series of volumes. 
 
 100
 
 PUEPOSES OF LABOE LEGISLATION 
 
 lesson. A visitor to that exhibit sees, as 
 he enters the staircase hall of the Carnegie 
 Institute, some beautiful frescoes repre- 
 senting the industries of Pittsburgh in 
 their power and energy. As he ascends, he 
 sees another series of frescoes represent- 
 ing the "ceaseless movement of the peo- 
 ple," men, women, and children passing on 
 to work or play. It is true, as we are 
 informed, that these figures are not ideal- 
 ized, but it is also true that the artist has 
 shown but one side of the medal. The 
 assets are there, but where are the liabili- 
 ties? Where is the depreciation account? 
 If we pass into the room occupied by the 
 Pittsburgh Survey, we see another frieze 
 made up of small black figures, also pass- 
 ing in an endless procession around the 
 room. Each one of these figures stands 
 for one of the 622 deaths from typhoid 
 fever which took place within a single year. 
 Each one of them represents a loss of 
 earning power to the families and a loss 
 to the community, as well as suffering and 
 weakness for those concerned. It is fair 
 to say also that at least three-fourths of 
 these were preventable, for some statistics 
 placed upon the wall show that, after the 
 
 101
 
 THE ECONOMIC UTILIZATION" OF HISTORY 
 
 introduction of a filtration plant in the 
 water supply of Pittsburgh, the cases of 
 typhoid fever were reduced by nearly 
 three-fourths in the course of a year. 
 Other figures show the deaths by accident, 
 by tuberculosis, etc. Why is it that the 
 community as a whole permitted this waste 
 of human life to go on? It is not due to 
 lack of engineering skill, for the highest 
 ingenuity is displayed in the Pittsburgh 
 mills. Nor is it due to lack of wealth, or 
 business ability. It is mainly due to the 
 fact that Pittsburgh, like the country as a 
 whole, does not breed its own workers. A 
 very large number of them are drawn from 
 abroad. That supply keeps on coming in 
 spite of typhoid fever and tuberculosis and 
 the ten thousand annual deaths by accident 
 on our railroads. A factory or a railroad 
 must allow in its accounts for the deterio- 
 ration of its machinery, or it will soon come 
 to grief. But the United States is like a 
 railroad company which can always obtain 
 new locomotives by simply paying for the 
 expense of running them. Such a company 
 could well afford to disregard its scrap 
 heap. But the human scrap heap is not so 
 easily disposed of. The premature death 
 
 103
 
 PUEPOSES OF LABOE LEGISLATION 
 
 of a worker means not simply the elimina- 
 tion from the industrial world of another 
 human machine; it often means a widow 
 and children growing up in a state of 
 poverty and want, it means a weak instead 
 of a strong worker twenty years from 
 now. Whatever the industrial structure of 
 society may be at that time, whether capi- 
 talistic or socialistic or communistic, that 
 means an economic loss. The action taken 
 by us of the present generation to prevent 
 that loss depends upon whether our social 
 consciousness is able to project itself so 
 far into the future as to be influenced by 
 considerations which will perhaps never 
 affect us personally. Socialism has em- 
 phasized the injustice of many of our social 
 institutions. Posteritism points out our 
 short-sightedness. If our motto is, "After 
 us the deluge," we shall certainly take no 
 thought for the morrow. But that was not 
 the point of view of the founders of the 
 Republic. For they framed the Federal 
 Constitution, not only to "establish jus- 
 tice," but also to "secure the blessings of 
 liberty to ourselves and our posterity. 
 
 103 
 
 M
 
 CHAPTER VIII 
 
 Peactical Methods in Labor Legislation 
 
 Blackstone says that three things are 
 requisite to government; wisdom, good- 
 ness, and power, and of these three, he 
 thinks that democracies are more likely to 
 have goodness than either of the other 
 qualities, while in aristocracies, more ms- 
 dom is to be found. A cynic might prefer 
 to express the same idea negatively, and 
 to say that democracies have even less wis- 
 dom than they have goodness, and aris- 
 tocracies, even less goodness than Avisdom. 
 Blackstone certainly does not entertain a 
 very high opinion of the British Parlia- 
 ment of his day. ''It is perfectly amaz- 
 ing," he says, ''that there should be no 
 other state of life, no other occupation, 
 art, or science, in which some method of 
 instruction is not looked upon as requisite, 
 except only the science of legislation, the 
 noblest and most difficult of any." Black- 
 stone wrote some 140 years ago, but can 
 we truthfully say that we of the United 
 
 104
 
 PEACTICAL METHODS IN LABOR LEGISLATION 
 
 States have progressed far beyond the 
 state of things then described by him? 
 How many of our State or even national 
 legislators have had any special training 
 in the art of lawmaking? Even when they 
 are la^vyers by profession, they have, at 
 best, been trained in what the law is, not 
 in what it ought to be, and the science of 
 legislation is still conspicuous by its 
 absence from the curricula of our law 
 schools. Nor do we give our legislators as 
 a whole the benefit of such rude appren- 
 ticeship as they may gain in our State 
 Capitols. A large fraction of those who 
 have had such experience are annually or 
 biennially retired to private life in order 
 to make room for others. This is true even 
 in the state which is known as the ''state 
 of steady habits." In the Assembly of 
 1909, e.g., only 28 per cent of the members 
 of both houses had had any previous legis- 
 lative experience whatever. Nearly a 
 third of them were farmers. Now farmers 
 are as a rule estimable men, individually, 
 but they do not often, in the State of Con- 
 necticut, find enough leisure in the inter- 
 vals of coaxing a scanty living from our 
 stony soil to devote themselves profoundly 
 
 105
 
 THE ECONOMIC UTILIZATION OF IIISTOEY 
 
 to tlie study of jurisprudence. The judi- 
 ciary committee is, it is true, always com- 
 posed of lawyers; but it is rather rare 
 in other departments of lawmaking to 
 find such impartial specialization as was 
 applied a few years ago to the make-up of 
 the Committee on Public Health, when two 
 physicians were re-enforced as experts by 
 two undertakers and a grocer ! 
 
 Thus the legislation of our States, which 
 is prodigious in its mass, amounting easily 
 in a single year to 16,000 enactments, is 
 mainly the product of unskilled labor. 
 Hence, when it is submitted to the trained 
 minds of our courts, it is not surprising 
 that a great deal of it is condemned. The 
 result is that, while our business men, 
 our scientists, our professional men, our 
 inventors, our philanthropists, are eagerly 
 pressing forward to conquer new fields, a 
 large part of the labor of our trained 
 jurists seems to be employed in putting on 
 the brakes. This remark must not be taken 
 to imply any disrespect for the mechanical 
 virtues of the brake. We need it in all 
 walks of life. We need it commercially 
 and socially as well as mechanically. But 
 if you apply the brakes to a part of the 
 
 106
 
 PEACTICAL METHODS IN LABOE LEGISLATION 
 
 train only, while the locomotive is under 
 full steam, something is sure to be dis- 
 located. 
 
 This is precisely what happens, when 
 new processes, new methods, new forms 
 of organization are introduced into our 
 economic life, and the legal machinery for 
 handling them is blocked in its develop- 
 ment by the tardiness or weakness or care- 
 lessness of legislation. This is what hap- 
 pens, when we try by all means to stimulate 
 our industries, but fail properly to protect 
 children and women from the effects of 
 long hours, or, having passed a law, nullify 
 it as contrary to the constitution. This is 
 the case, when we increase the hazards of 
 travel and of manufacture by increasing 
 the speed, or of coal mining by working 
 lower levels, and yet fail to require ade- 
 quate safety appliances, or refuse to give 
 to the individual who may be injured as 
 the result of these processes, any indem- 
 nity, unless he is able to prove, by an 
 expensive lawsuit, not only that someone 
 was to blame, but that that person was not 
 a fellow servant of his, and that he himself 
 was not guilty of contributory negligence. 
 Yet the principle of averaging the property 
 
 107
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 losses of a dangerous occupation such as 
 navigation is as old as the Lex RJiodia de 
 jactu. If it is in the interest of commerce 
 to apportion among the shippers the loss 
 which arises when a part of the cargo is 
 jettisoned to save the ship, is it not equally 
 in the interest of society to distribute the 
 loss when a human being is jettisoned in 
 the dangerous processes of modern in- 
 dustry? 
 
 The wastefulness and inequity of our 
 present system is at last coming to be 
 recognized, and yet, as soon as we speak 
 of substituting a better one, or introducing 
 anything like compulsory insurance or 
 workmen's compensation, we are at once 
 met with the bugaboo of unconstitution- 
 ality, and one of the first problems of the 
 various commissions now studying this 
 subject is to steer clear of this ever-present 
 danger to legislation. This is not the place 
 for a discussion of the principles of con- 
 stitutional law. They have been from the 
 beginning of our history the perennial 
 subject of debate between political parties, 
 and it is more than probable that even 
 experts would not agree in their solution 
 of all of the questions that may arise in 
 
 108
 
 PEACTICAL METHODS IN LABOE LEGISLATION 
 
 this connection. There are, however, a 
 few general principles of interpretation 
 that should be emphasized. One is that a 
 power which Congress may exercise for the 
 benefit of property, cannot consistently be 
 denied to it, when it attempts to exercise 
 it for the benefit of persons. Thus, if we 
 ask Congress to impose a prohibitory tax 
 on poisonous matches in order to protect 
 the health of the workers, we cannot be 
 charged with misusing the taxing power of 
 the government, as long as Congress can 
 impose customs duties, in order to benefit 
 owners of mines and manufactories, and 
 can tax State bank notes, in order to give a 
 bank note monopoly to the national banks. 
 We should also not forget that all of our 
 constitutions, both Federal and State, 
 make provisions for their own amendment, 
 their framers thus recognizing that a 
 change of circumstances might require a 
 change in the powers and duties of govern- 
 ment. We of the present generation are 
 not honoring the founders, but rather dis- 
 playing our own narrow-mindedness, if we 
 refuse in the name of constitutionalism to 
 make use of the power of amendment which 
 they deliberately conferred upon us. Let 
 
 109
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 US not forget that the law is made for man 
 and not man for the law. 
 
 It is true that every law which affects 
 economic and social conditions is like a 
 piece of social surgery. It may cut deeply 
 into the very arteries of industry; it may 
 sever the nerves of trade and of enterprise. 
 The recognition of this fact is often used 
 as an argument in favor of laissez faire. 
 Rather than run the risk of doing harm, it 
 is better, we are told, not to do anything 
 at all. This maxim is a wise one in a cer- 
 tain stage of development. It was perhaps 
 wise in surgery before the discovery of the 
 circulation of the blood, and of anaesthetics. 
 But increased knowledge has made surgery 
 bold. It is bold because it is instructed. It 
 is precisely because the modern surgeon 
 not only realizes the delicacy of the human 
 body, but also understands the working of 
 its different parts, that he can perform 
 with confidence operations which a few 
 years ago would have resulted in the death 
 of the patient. 
 
 Legislation is just beginning to pass out 
 of the primitive stage in which surgery 
 found itself a century ago, and it is my 
 present purpose to try to point out the 
 
 110
 
 PEACTICAL METHODS IN LABOR LEGISLATION 
 
 method by whicli its work may become 
 more effective and less dangerous. While 
 much that I say has a general bearing upon 
 all legislation, I shall, of course, speak 
 specifically of what seem to me some of 
 the requisites of labor legislation. 
 
 The first thing to emphasize is that every 
 law should be preceded by a careful inves- 
 tigation of the facts, economic, industrial, 
 and medical. Put in this way, the state- 
 ment may seem a truism, but it is a rule 
 that is often disregarded. It is, moreover, 
 a rule which it is not easy to carry out in 
 our country. In certain lines our statistics 
 are full and trustworthy, especially the 
 general statistics of population, collected 
 for the decennial census ; but our vital and 
 accident statistics are very imperfect. It 
 is clear that a legislature must work in the 
 dark when providing against accidents and 
 disease, unless it knows how prevalent they 
 are. Hence the Association for Labor 
 Legislation is working for the reporting 
 of industrial diseases by physicians, and 
 for fuller records of industrial accidents. 
 It has also appointed a committee which is 
 urging upon Congress the importance of 
 a national investigation of industrial dis- 
 
 111
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 eases. In this whole matter it is clear that 
 we must work for co-operation between the 
 sciences, especially between medicine and 
 hygiene, on the one hand, and economics, 
 sociology and statistics, on the other. 
 Medical science has made marvellous pro- 
 gress of late years in its own field, but it is 
 only just beginning to realize the social 
 side of its w^ork. The development of a 
 social service department in the Massa- 
 chusetts General Hospital and the forma- 
 tion of a society for the study of medical 
 sociology in New York, are the encourag- 
 ing beginnings of what we may hope will 
 prove a beneficent and fruitful partnership 
 between the sciences. In this field Italy 
 has set us a splendid example by the foun- 
 dation of the Hospital for Industrial Dis- 
 eases in Milan. This institution contains 
 not only the facilities for treating such 
 diseases, but also laboratories in which 
 they can be studied, and measures devised 
 for preventing and curing them. 
 
 Besides the vital and demographic facts 
 already mentioned, we need also to know to 
 what extent the purpose in view may 
 already have been attained in whole or in 
 part by existing agencies. We may 
 
 112
 
 PEACTICAL METHODS IN LABOE LEGISLATION 
 
 well profit by the example of Switzerland, 
 which, before undertaking to introduce sick 
 insurance, made an investigation of the 
 work of the benefit societies. This careful 
 statistical study showed that these societies 
 had increased rapidly in the course of 23 
 years. In 1880 they insured 7 per cent of 
 the entire population, in 1903, 15 per cent.^ 
 This is clearly a fact of the first impor- 
 tance, and it has determined the entire plan 
 of sick insurance in Switzerland, which, 
 instead of creating new organs, has simply 
 utilized those already existing. We are 
 informed that in the United States some 
 8,000,000 adult men and women are at the 
 present day insured in fraternal orders in 
 addition to 3,000,000 insured by other 
 forms of benefit societies, such as railroad 
 relief funds, trade unions, etc. If we 
 assume with Dr. Brodsky,^ that each of 
 these persons represents three others, we 
 have 33,000,000 of inhabitants, or a third 
 
 1 0. H. Jenny : The Problem of Sick and Accident 
 Insurance in Switzerland, Yale Beview, November, 1910, 
 p. 241. 
 
 2 E. J. Brodsky: Paper read at the National Fraternal 
 Congress, National Fraternal Congress Bulletin, Novem- 
 ber, 1910, p. 2. 
 
 113
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 of our entire population, benefited by these 
 voluntary associations. 
 
 Almost equally important is the study 
 of pre-existing law, and above all of the 
 legislative experience both of our own 
 country and of others. Much unnecessary 
 legislation is enacted annually for lack of 
 this care. Professor Stimson quotes, as an 
 extreme instance of it, the act passed by 
 the Legislature of Massachusetts, some 
 years ago, which virtually declared that the 
 common law was the common law !^ 
 
 It should be our purpose to enact no 
 unnecessary law. But if we find that, after 
 full consideration, there is an evil for 
 which the existing laws do not supply a 
 remedy, it is still important to find out 
 what remedies have been applied by other 
 countries, and what light is thrown by 
 experience upon the operation of the pro- 
 posed legislation. One cannot avoid the 
 feeling that when the British Parliament 
 passed the present old age pension act 
 they did not take the trouble to study the 
 German system of old age insurance, 
 based upon the principle of contributions 
 
 3F. J. Stimson: Popular Law-Making, 1910, pp. 188 
 and 357. 
 
 114
 
 PRACTICAL METHODS IN LABOR LEGISLATION 
 
 by the beneficiaries. It would also seem as 
 if they had forgotten their own unhappy 
 experience with the lavish system of poor 
 relief which was practiced only a century 
 ago, and which proved to be not only costly 
 to the taxpayer, but most demoralizing to 
 those who were intended to be benefited by 
 it. 
 
 It would seem superfluous to mention the 
 importance of careful drafting, were it not 
 so often disregarded in practice. Any- 
 body who expresses himself as opposed to 
 stealing is liable in these days to be 
 charged ^vith lack of originality, and to be 
 reminded that he is simply plagiarizing one 
 of the Ten Commandments. Likewise a 
 person who maintains that a law should 
 state the intention of the legislator, and 
 that it should be so clear that it not only 
 can be understood, but that it cannot be 
 misunderstood, is liable to be reminded 
 that very much the same thing was said by 
 Quintilian nearly two thousand years ago. 
 But as long as people persist in violating 
 these fundamental rules, not merely of law 
 but of language, so long will it be neces- 
 sary to lay stress upon them. Thus, not 
 long ago in one of the New England States, 
 
 115
 
 THE ECONOMIC UTILIZATION OF HISTOKY 
 
 a legislator undertook to change the dates 
 of the appointment to office of the members 
 of a certain city commission. When the 
 legislature had adjourned and the amend- 
 ment was printed, it was discovered that, 
 while the law distinctly stated that there 
 should be three commissioners, the dates 
 were so fixed that the law could not be 
 complied with without the appointment of 
 four. A western State, which has in gen- 
 eral a well-deserved reputation for care in 
 drafting, passed a tenement-house act 
 some years ago, which the Supreme Court 
 of the State declared impossible of execu- 
 tion. The principal reason was that it was 
 made so general as to require in country 
 districts certain appliances which could be 
 found only in cities. So flagrant are the 
 violations of this fundamental rule of writ- 
 ing that some public-spirited citizens have 
 recently organized a society whose sole 
 purpose is to attend to the careful drafting 
 of laws. 
 
 It goes without saying that the best law 
 is futile without some provision for its 
 execution. Labor laws are seldom self- 
 executory. Factory acts involve more or 
 less inspection of establishments which the 
 
 116
 
 PEACTICAL METHODS IN LABOE LEGISLATION 
 
 owners and managers do not always wel- 
 come. The factory inspector must possess 
 not only honesty but also technical knowl- 
 edge, firmness, and tact. Yet it is notori- 
 ous that in a large number, probai)ly the 
 majority, of our States, these important 
 officers are appointed, not on account of 
 their qualifications for the duties of their 
 office, but because they have earned the 
 gratitude of the appointing power by 
 political services. Such men can hardly be 
 expected to jeopardize their reappointment 
 by an unpopular severity in the enforce- 
 ment of the law. The Association for 
 Labor Legislation has published a special 
 study of the administration of labor laws 
 from which it appears that only three of 
 all our States require a civil service exami- 
 nation for factory inspectors. A few 
 require the appointment of "a suitable 
 person" or "a competent and practical 
 mechanic." Most of them place no limita- 
 tions whatever upon the appointment. The 
 International Association for Labor Legis- 
 lation is making a similar study of the 
 administration of labor laws throughout 
 the world, and a comparison of the best- 
 administered state of Europe with our own 
 
 117
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 is not flattering to our vanity. Prussia, 
 e.g., goes so far as to require of its factory- 
 inspectors three years' technical study in 
 such subjects as chemistry and mechanics 
 and, in addition, one and one-half years' 
 study of economics and public law. They 
 must also pass two examinations in a Ger- 
 man university. Such extreme require- 
 ments would be plainly impossible in our 
 country and perhaps undesirable, but they 
 at least show how seriously the Prussian 
 legislators take their labor laws. 
 
 A final requirement, which I should like 
 to emphasize, is seldom recognized, and 
 yet it is, in my judgment, of great impor- 
 tance. Every labor law should provide for 
 a record of its own operations. No hospi- 
 tal would be considered worthy of support, 
 if it did not keep a careful record of cases, 
 yet our legislators are willing to project 
 into the economic life of society a great 
 power, namely, the power of coercing indi- 
 viduals, without even taking the trouble 
 to find out how this power is operating. 
 
 A few years ago one of our graduate 
 students was working up a study of the 
 factory laws of one of our States, and all 
 of the printed statistics were in such an 
 
 118
 
 PEACTICAL METHODS IN LABOE LEGISLATION 
 
 unsatisfactory sliape that he was actually 
 obliged to organize a small statistical 
 bureau in order to make the calculations 
 needed for a comparison of the figures 
 from year to year. 
 
 I have intentionally omitted all refer- 
 ence here to one topic which may seem to 
 many the most important of all. I refer 
 to the methods by which, when a bill is pre- 
 pared, the favorable votes of the legisla- 
 tors may be obtained. It is clear that laws 
 which are stillborn are no laws at all, but 
 the art of legislative midwifery is precisely 
 that part of the art of legislation which has 
 enjoyed a really professional development 
 in our country. Legislators come and 
 legislators go, but the lobby seems to be 
 the one stable element in our legislative 
 halls. The Association for Labor Legisla- 
 tion does not expect, nor does it desire, to 
 add to the world's knowledge of this sub- 
 ject, though its members may need to be 
 reminded, and reminded emphatically, that 
 since this art has been developed in the 
 service of private interests, those who aim 
 at the public interest are under a peculiar 
 obligation to study and apply its legitimate 
 features. 
 
 119
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 The International Association for Labor 
 Legislation exemplifies in its business 
 methods the application of these practical 
 principles. At the meeting held in 1910 in 
 Lugano, the delegates divided themselves 
 at once into five commissions. Each of 
 these commissions had a certain set of 
 topics to discuss. The work had been pre- 
 pared beforehand. One of the important 
 subjects was that of industrial poisons, 
 such as lead, mercury, etc. The association 
 had secured the preparation of an elabor- 
 ate list of industrial poisons, together mth 
 statements regarding the symptoms pro- 
 duced by them and the methods of treat- 
 ment. This list, prepared by Professor 
 Sommerfeld of Berlin, had been subjected 
 to a careful revision by Dr. Fischer. Simi- 
 lar studies had been made with regard to 
 other topics, such as the hours of work in 
 continuous industries, etc. A studv of the 
 enforcement of labor laws in the leading 
 countries of the world has been begun and 
 published in part. In order to secure a 
 much-needed uniformity, one commission 
 worked out a definition of the term eight- 
 hour shift as applied to coal mining. The 
 Bulletin issued periodically by the asso- 
 
 120
 
 PEACTICAL METHODS IN LABOR LEGISLATION 
 
 elation gives a survey of the labor legisla- 
 tion of the world. 
 
 It is by such careful preparation that 
 the work of the International Association 
 is made effective, and it is by the same kind 
 of work that the American Association 
 must justify its existence. In other words, 
 we try to apply to legislation the same 
 study of causes, of processes, and of effects, 
 that lies at the basis of our modern science. 
 We aim to utilize in our lawmaking the best 
 results of the work done in medicine, 
 hygiene, economics, sociology, and juris- 
 prudence. We offer no single, simple 
 remedy for our social ills. Social panaceas 
 we put in the same class with the philoso- 
 pher's stone and the dreams of the 
 alchemist. Avoiding indifference on the one 
 hand and sensationalism on the other, we 
 aim to secure practical results by scientific 
 methods. 
 
 121
 
 CHAPTER IX 
 
 ACATALLACTIC FaCTOES IN DISTRIBUTION 
 
 The economist who received his notions 
 of the science thirty or forty years ago 
 through the medium of the standard text- 
 books must look back with a certain regret 
 upon a time when economic processes were 
 so alluringly simple. There were three 
 main factors in production, land, labor, and 
 capital, with business direction as a possi- 
 ble fourth. The landlord received rent, the 
 laborer wages, the capitalist interest, and 
 the manager profits. The product was con- 
 ceived as being distributed among these 
 four groups according to the harmonious 
 action of self-interest, working through 
 the processes of bargaining. Indeed, 
 wages were often regarded as a simple 
 quotient, obtained by dividing the wage 
 fund by the working population, hence, like 
 other quotients, it could be raised only by 
 increasing the dividend or decreasing the 
 divisor. 
 
 The more intensive study of economic 
 facts and economic history which has taken 
 place in recent years has, however, shown 
 
 122
 
 ACATALLACTIC FACTOKS IN DISTEIBUTION 
 
 US that things are not really as simple as 
 they were assumed to be. The production 
 and distribution of wealth are influenced 
 by many forces which are not economic in 
 the usual acceptance of the term. Econom- 
 ics still lacks a suitable term to express 
 collectively those processes which are not 
 based upon free exchange, but inasmuch 
 as the term catallactics has been applied 
 by Whateley to the science of exchanges in 
 the narrower sense of the word, the term 
 acatallactic would naturally describe those 
 economic processes in which exchange is 
 lacking. 
 
 Not only is there a great deal of distri- 
 bution which takes place without reference 
 to the law of supply and demand, but a 
 careful study of economic life in different 
 countries shows us that the three elements 
 into which the national production is 
 usually divided by economists have by no 
 means a perfectly fixed connotation. Each 
 of the terms, rent, wages, and interest, may 
 mean different things, according to the 
 form in which law or custom has cast them 
 and according to the limitations under 
 which they exist. Let us consider a few of 
 the more important cases in which eco- 
 
 123
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 nomic processes may be influenced or modi- 
 fied by other, especially legal or institu- 
 tional, factors. 
 
 1. Much of the distribution of wealth 
 does not take place under the operation of 
 strictly economic forces at all, if we under- 
 stand by them the free play of self-interest 
 working through supply and demand. For 
 example, the transfer of wealth from one 
 generation to another is practically never 
 made in this way. In rare cases it may 
 happen that a person will buy a life 
 annuity of an insurance company, in which 
 case the transfer does take place through 
 an exchange of rights. But generally it is 
 gratuitous, determined by the will, some- 
 times the whim, of a testator, sometimes 
 by the dictum of law in the case of intes- 
 tacy, and always under the regulation of 
 law, which sets limitations on the whims of 
 testators and either prevents certain dis- 
 positions, such as entails, as a matter of 
 public policy, or enforces certain others in 
 the interest of heirs. Much wealth is also 
 transferred by marriage, by gifts to chil- 
 dren, relatives and others. All of these 
 taken together are important causes of the 
 unequal distribution of wealth which have 
 
 124
 
 ACATALLACTIC FACTOES IN DISTRIBUTION 
 
 nothing to do with the play of economic 
 forces as ordinarily understood. 
 
 Even in business much goes by favor, 
 sometimes degenerating into "graft." 
 The line between the two is varia)3le and 
 depends upon shifting ethical and legal 
 restrictions. The salaries paid to officers 
 of large corporations, as disclosed in the 
 insurance investigations of New York, are 
 sometimes determined, not by supply and 
 demand or the market price of their ser- 
 vices, but by the willingness of persons 
 controlling a corporation to vote them- 
 selves large salaries. What a few years 
 ago was considered a legitimate perquisite 
 is now treated as illicit and condemned 
 by public opinion. The ability which the 
 managers of great enterprises have to 
 show their friends special favors is another 
 instance of the distribution of wealth by 
 other than economic processes. A railroad 
 president who should supply his friends 
 with coal out of the coal pockets of his 
 company would doubtless be subjected to 
 criticism. Yet that same president will 
 give a free pass, which means coal trans- 
 formed by combustion into motion, with 
 apparent unconsciousness that he is giving 
 
 125
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 away the stockholders' property. Manu- 
 facturers who would scorn to ask the gov- 
 ernment to give them presents from funds 
 raised by taxation, will besiege Congress 
 for tariff duties which allow them to tax 
 their fellow citizens indirectly. More and 
 more, however, either the law or public 
 opinion is setting limits and raising the 
 standard. 
 
 2. Even where the law of supply and 
 demand has sway, there are often limita- 
 tions placed upon its unlimited action by 
 ethical standards, or by law. Let us take 
 a few random examples. 
 
 a. The rate of interest in Wall Street 
 is practically free in spite of usury laws, 
 yet the exaction of a high rate of interest 
 on the security of salaries is, as shown in 
 the investigation by the Sage Foundation 
 of the salary loan business, considered a 
 shady occupation. 
 
 b. In the determination of rent we find 
 occasional instances, as seen in the estab- 
 lishment of the City and Suburban Homes 
 Company, where o^\^lers of property delib- 
 erately restrict themselves to a certain 
 income. There is, of course, a philan- 
 thropic element here, but the point to be 
 
 126
 
 ACATALLACTIC FACTORS IN DISTEIBUTION 
 
 brought out is precisely that here philan- 
 thropy does enter into business. 
 
 c. The buying and selling of the pro- 
 duct of the mind is always, and of neces- 
 sity, dependent upon law. The pioperty 
 right in a book or an invention could not be 
 enforced without a law determining the 
 conditions. But many ideas, often most 
 valuable ones, are handed down as a tradi- 
 tion from one generation to another, and 
 often the ingenious inventor of a machine 
 or process voluntarily relinquishes the 
 right which the law would allow him, as in 
 the case of the Babcock tester. 
 
 d. Profits are often limited by public 
 opinion or law. This sometimes takes the 
 indirect form of an increased capital 
 expenditure. Let us suppose, e.g., that a 
 certain enterprise yields a net income of 
 $50,000 a year and that the investment of 
 $1,000,000 is sufficient to do the business. 
 In this case the dividend might be 5 per 
 cent. It is possible, however, that the 
 directors might vote to expend an addi- 
 tional $250,000 for beauty or ornamenta- 
 tion, in which case the stockholders could 
 get but 4 per cent. The railroad companies 
 are slowly recognizing a certain moral 
 
 137
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 obligation to build handsome railway sta- 
 tions in order to satisfy the public. They 
 probably do not increase the traffic, and 
 at best aid the finances of the company 
 indirectly by making hostile legislation less 
 likely. As far as it goes, this expenditure 
 represents, therefore, a deliberate restric- 
 tion of profits in the interest of the public. 
 The difference between the railroads here 
 and in countries like Germany or S^vitzer- 
 land, where they are under government 
 control, illustrates this point. A great 
 deal is spent in our country on luxuries, 
 such as parlor cars, sleeping cars, etc., for 
 which a direct charge can be made, but 
 comparatively little on the convenience or 
 beauty of railway stations, on which no 
 direct toll can be levied. In Germany and 
 Switzerland it is the other way. The trains 
 are not, as a rule, as luxuriously equipped, 
 but the railway stations are better planned 
 and more ornamental. It is comparatively 
 rare for a manufacturing concern in our 
 country to regard the aBsthetic element in 
 constructing its buildings, but even here, 
 where a factory is the dominating industry 
 of a small town, money is sometimes spent 
 on architecture or grounds, and to that 
 
 128
 
 ACATALLACTIC FACTORS IN DISTRIBUTION 
 
 extent it may be said that profits are 
 deliberately relinquished in the interest of 
 the general public. A corporation desiring 
 new stock may in many States issue it at 
 par to its stockholders, though the market 
 price may be 150 or 200. In Massachusetts 
 the law forces public service corporations 
 to issue the stock at a price determined by 
 a State commission. But occasionally in 
 other States, corporations, when increas- 
 ing their stock, offer it at a price above par 
 without compulsion of law. These illus- 
 trations show that, whether under pressure 
 of law, or of public opinion, or from far- 
 sightedness, public service corporations 
 are feeling a certain obligation to restrict 
 their profits, which doubtless meaps a tacit 
 recognition that some of the income is due 
 to the environment and should, therefore, 
 be shared with the general public. 
 
 e. In the determination of the price 
 paid for services there is a great deal of 
 confusion. Supply and demand hold sway, 
 doubtless, with regard to the great mass of 
 services which are paid for under the name 
 of wages. Yet even here there is probably 
 a practical minimum determined by cus- 
 tom. Most people, e.g., would hesitate, 
 
 129
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 even in hard times, to offer to employ 
 people at half the customary rate of wages, 
 though it might be for the immediate bene- 
 fit of the worker to take this low rate rather 
 than earn nothing. With regard to the 
 more skilled services of the professions 
 there are often curious contrasts. Most 
 physicians, e.g., have a fixed charge per 
 visit, whether the patient be rich or poor. 
 In the case of surgeons, however, it is very 
 common to fix the compensation by indi- 
 vidual rather than by group bargaining, 
 and literally to charge what the traffic will 
 bear. The multimillionaire, simply by vir- 
 tue of his wealth, will ask free transporta- 
 tion and other favors from a railroad, but 
 on the otter hand, if his appendix is out of 
 order, he will find that it costs much more 
 to remove a multimillionaire appendix than 
 an ordinary one. 
 
 3. Quite apart from limitations created 
 by law, or custom, or ethical standards, we 
 are learning that the actual working of the 
 machinery of production often depends 
 upon the legal form which the contract 
 takes. Let us consider — 
 
 a. The forms of capital contract. The 
 capital for large enterprises is generally 
 
 130
 
 ACATALLACTIC FACTORS IX DISTRIBUTION 
 
 obtained at the present time through some 
 kind of a joint stock company. But here 
 again we have a great variety in the con- 
 ditions under which the capital is supplied. 
 The stockholders are nominally the owners 
 and, therefore, have the control of the 
 property. And yet even among them there 
 are differences between the common and 
 preferred stock, both as regards income 
 and control. The writer happened to get 
 some of the preferred stock of a certain 
 corporation a few years ago, the common 
 stock of which was worth very little. It 
 turned out, however, that under the charter 
 the common stock was given the right to 
 vote after a certain number of years. It 
 thus became possible for some clever peo- 
 ple to buy up the common stock for a mere 
 song and, by means of the voting power, to 
 virtually force the real owners of the com- 
 pany to buy them out. This form of capi- 
 tal contract is calculated to encourage 
 trickery and discourage careful business 
 management. An illustration of the oppo- 
 site is furnished by the experience of two 
 of the smaller commonwealths of Europe. 
 The prosperity of the Island of Guernsey 
 is attributed to a considerable extent to a 
 
 131
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 form of loan upon real property, kno\\Ti by 
 the French term rented This is virtually 
 a mortgage which cannot be foreclosed, as 
 long as the borrower pays his interest, so 
 that the interest becomes a fixed charge, 
 and the profits all go to the worker. It is 
 said that many people, starting without 
 property, have through this form of loan 
 become prosperous farmers. It is inter- 
 esting to note that the new Swiss Civil 
 Code, which has recently been adopted by 
 the Swiss Confederation, provides for a 
 form of loan on land known as the Gillt. 
 The institution is very similar to the rente 
 of the Island of Guernsey, and it is said 
 that it was introduced into the Civil 
 Code of the Confederation, because it had 
 worked so advantageously in some of the 
 smaller cantons. 
 
 b. When we come to the relations of 
 labor to the employer, the variety is still 
 greater. Even under slavery, which may 
 be based upon contract as well as upon 
 force, we have many modifications of, and 
 many degrees in, unfreedom, such as serf- 
 dom, peonage, the indenture system. Even 
 
 1 H. Eider Haggard: Eural England, Vol. I, 1902, pp. 
 79-83. 
 
 182
 
 ACATALLACTIC FACTORS IN DISTRIBUTION 
 
 when slavery, pure and simple, is the rule, 
 there may be a limitation like the coarta- 
 cion, which prevailed under the Spaniards 
 in Cuba, and according to which a slave 
 might, by paying a part of his own value to 
 his master, legally limit his master's prop- 
 erty right and make it more easy to secure 
 freedom.^ 
 
 The wage system itself permits of an 
 indefinite number of variants. Some years 
 ago David Schloss enumerated, mthout 
 exhausting the subject, nine different kinds 
 of wage contracts which were common in 
 England. In certain occupations where 
 gratuities are customary, the gratuities 
 may themselves not only constitute the 
 entire income of the employee, but be 
 so large that he can afford to pay his 
 employer for the privilege of working for 
 him. This represents one extreme. A good 
 historical example of the other extreme is 
 the wage contract made between Laban 
 and Jacob, when the latter agreed to work 
 seven years for the former in order to get 
 a wife, and then received an inferior arti- 
 cle in payment, so that he had to work 
 
 2 Hubert H. S. Aimes: Coartaci6n, Yale Beview, Feb- 
 ruary, 1909, pp. 412-431. 
 
 133
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 seven years more to secure what he had 
 contracted for in the beginning. Besides 
 the indefinite number of possible wage con- 
 tracts which lie between these extremes, 
 we find that in many countries certain 
 terms are read into the contract by law. 
 This is especially the case in countries like 
 Germany, which since 1884 has provided 
 compulsory insurance for certain classes 
 of workers. This idea has spread so far, 
 that more than half of the population of 
 continental Europe west of Russia is now 
 living under laws which provide more or 
 less in the way of compulsory insurance. 
 The older wage contract may be considered 
 as in a broad sense an insurance contract, 
 in so far as the wage receiver, by drawing 
 a stipulated income, is insured against the 
 chances of loss in the business as a whole, 
 and this principle is confirmed by laws 
 which, like labor lien laws, give the wage 
 receiver a preferred claim upon the prop- 
 erty of the employer. Compulsory insur- 
 ance against accident, sickness, and inva- 
 lidity goes a step further and insures the 
 laborer against loss of his own working 
 power. In still other cases the law may 
 intervene, not simply to add compulsory 
 
 134
 
 ACATALLACTIC FACTOKS IN DISTRIBUTION 
 
 stipulations to the simple contract, but to 
 determine the terms of that contract, or 
 the methods of making it, with a view 
 either to securing what is supposed to be 
 an equitable rate of compensation or to 
 preventing disputes. The Wages Boards 
 and Compulsory Arbitration systems of 
 Australia and New Zealand are instances 
 of this. Even a purely mechanical device 
 like the taximeter may be the means of 
 avoiding disputes and save the wear and 
 tear of bargaining. Whether all or any of 
 these devices are commendable or not, is 
 not to be discussed here. They are men- 
 tioned merely to show the great extent to 
 which the complete freedom of contract is 
 hedged about by law, for the purpose of 
 preventing certain definite evils which 
 have shown themselves in the modern 
 industrial world. These laws do not abro- 
 gate competition. Supply and demand are 
 still active. Both parties are still striving 
 to get as much as they can for what they 
 give in return. But the laws do define the 
 limits within which this competition is 
 obliged to act. This function of law may 
 be compared to the effect of the channel on 
 the character of a river. One and the same 
 
 135
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 force impels Niagara and Meander. But 
 whether this force of gravity produces a 
 sluggish stream, foaming rapids, or a sheer 
 waterfall, depends upon the bed through 
 which the water moves. The legal forms of 
 the wage contract are the bed on which 
 supply and demand act, and whether eco- 
 nomic processes shall be quiet or turbulent, 
 productive or inefficient, depends in part 
 upon the legal channel to which they are 
 forced to confine themselves. 
 
 The great variety in wage contracts 
 already mentioned and the efforts which 
 are made, not only by law but also by em- 
 ployers on their own initiative, to improve 
 the relations of capital and labor, show 
 that the industrial world is feeling around 
 for a method of diminishing the evils 
 which have shown themselves in connection 
 vdth the wonderful productive efficiency of 
 the past century. Some of these efforts 
 have proved abortive, as is seen so often in 
 the history of productive co-operation and 
 profit sharing. Others contain an element 
 of paternalism, which often introduces new 
 difficulties while removing some of the old 
 ones. Among these various experiments 
 there is one which is so remarkable, not 
 
 136
 
 ACATALLACTIC FACTOES IN DISTEIBUTION 
 
 only for the careful manner in which all of 
 its provisions have been elaborated, but 
 still more for the motive and theory which 
 have inspired the inventor, that it deserves 
 a brief description. This will be presented 
 in the following chapter, not with the idea 
 that a complete solution has been found 
 here for the labor problem. Too short a 
 time has elapsed since its introduction to 
 warrant any final conclusion, favorable or 
 unfavorable, regarding its merits, and the 
 writer is of the opinion that many of its 
 features would be impossible in other 
 industries or under other circumstances. 
 It is believed, however, that an explanation 
 of its character cannot fail to be instructive 
 to all who are seeking tentatively to im- 
 prove conditions, and it is particularly 
 valuable as an illustration of the ways in 
 which the relations, both of labor and of 
 capital, to an industrial organization may 
 be modified for social purposes. 
 
 137
 
 CHAPTER X 
 
 A Socialized Business Entekprise^ 
 
 In the year 1846, a young mechanic 
 named Carl Zeiss established a workshop 
 for making scientific instruments in Jena. 
 The founder of this simple business was 
 born in 1816, in Weimar, and was the son 
 of a toy merchant, who incidentally had 
 been the instructor of the Grand Duke, 
 Karl Friedrich, in the art of lathe turning. 
 The son had studied in the gymnasium and 
 had then learned mechanics in several 
 workshops before he established himself 
 in Jena. The business, although very 
 small, was a success from the start. Sim- 
 
 1 Acknowledgment for the facts stated in this article 
 regarding the Zeiss establishment is hereby made to 
 Professors Felix Auerbach and Julius Pierstorff and to 
 Dr. Fr. Schomerus, who very courteously gave personal 
 explanations to the writer in Jena; he is also indebted to 
 the following works: Ernst Abbe: Gesammelte Abhand- 
 lungen, dritter Band; Felix Auerbach: Das Zeiss-werk 
 und die Carl-Zeiss-Stiftung in Jena; Fr. Schomerus: Das 
 Arbeitsverhaltniss bei der Firma Carl Zeiss, Jena, 3te 
 Auflage, 1909 ; Siegfried Czapski : Ernst Abbe als Arbeit- 
 geber; A. Winkdmann: Ernst Abbe. 
 
 138
 
 A SOCIALIZED BUSINESS ENTEEPRISE 
 
 pie microscopes were the chief output, and 
 some two hundred instruments of a rather 
 primitive type were sold. From simple 
 microscopes he proceeded to the manu- 
 facture of compound instruments, always 
 aiming at an improvement, but feeling the 
 difficulty of obtaining better results by 
 mere empiricism. It was fortunate that 
 Zeiss was able to secure the services at this 
 critical time of Ernst Abbe, Like his 
 partner, he also was a native of the little 
 Grand Duchy of Sachsen Weimar Eisen- 
 ach. He was born in Eisenach in 1840. He 
 was the son of a spinner, but had the 
 advantage of a scientific education, studied 
 in Jena and Gottingen, where he took his 
 doctor's degree, and finally settled in Jena 
 in 1863 as Privat Dozent. He entered into 
 partnership with Zeiss in 1866, was made 
 extraordinary professor in 1870, but de- 
 clined a full professorship in 1874 in order 
 to devote his attention to the optical works. 
 Abbe supplied the scientific mind which 
 was needed to supplement the business 
 talent of Zeiss. 
 
 It was found, however, that one great 
 difficulty in obtaining results lay in the 
 imperfect and uncertain character of the 
 
 139
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 glass. There were practically at that time 
 only two kinds of glass known, crown glass 
 and flint glass, and it was difficult to get 
 the glassmakers to experiment in the for- 
 mation of other types. This important 
 element was added by Dr. Otto Schott. 
 Stimulated by an essay of Abbe, Schott 
 began in 1881 extended experiments in 
 new combinations and moved in 1882 to 
 Jena, in order to prosecute these on a 
 larger scale. The glassworks established 
 there in 1884 were, and have continued to 
 be, a distinct establishment under a sepa- 
 rate name, i.e., Schott und Genossen, but 
 Zeiss had an interest in the business. The 
 first catalog was issued in 1886, and it 
 contained such a large number of novelties 
 that a new era in instrument building dates 
 from that year. 
 
 From this time on the optical works 
 made rapid progress. One department 
 after another was added, until the estab- 
 lishment contained six different sections: 
 (1) the microscopic; (2) the division for 
 projection and microphotography ; (3) the 
 photographic division; (4) the astronomi- 
 cal division; (5) the terrestrial telescope 
 division; (6) the division for mensuration. 
 
 140
 
 A SOCIALIZED BUSINESS ENTERPRISE 
 
 An account of the various improvements 
 and inventions which have originated in 
 these works falls within the province of 
 the physicist and need not detain the 
 economist. The most popular, perhaps, is 
 the trieder binocular, the principle of 
 which was applied as early as the seven- 
 ties by Abbe. Others are the relief binoc- 
 ular telescope, of which the two arms are 
 hinged, so that according to will one can 
 either get an exaggerated stereoscopic 
 effect, or, by placing the two arms together, 
 look over a wall or around a corner; an 
 instrument for measuring distances; huge 
 astronomical telescopes; and an epidia- 
 scope, which will project upon a screen 
 either lantern slides by transmitted light, 
 or opaque pictures by reflected light. The 
 works have steadily increased in size and 
 the employees in numbers. Beginning with 
 one assistant, Zeiss had gradually enlarged 
 his force, until he had between three and 
 four hundred in 1888. By 1900 the num- 
 ber was over a thousand, and in the spring 
 of 1908 it had touched two thousand, ex- 
 clusive of some eight hundred employed 
 in the glassworks. The simple buildings 
 have grown into a great mass, filling a 
 
 141
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 large city square and spreading out beyond 
 it. These few technical and mechanical 
 facts are given in order that the reader 
 may understand the kind of an establish- 
 ment that we are dealing with. 
 
 Carl Zeiss died in 1888, lea\dng his name 
 to the works, and recognized as an impor- 
 tant contributor to optical science by the 
 University of Jena, which gave him an 
 honorary doctor's degree in 1881. He left 
 a son, who was for a short time only con- 
 nected with the business. His withdrawal 
 in 1889 left Abbe as the virtual head of the 
 business, though supported ably by such 
 men as Siegfried CzapsM, Max Fischer, 
 and Rudolf Straubel. He retained this 
 position, however, for only about three 
 years, for in 1891 he founded the Zeiss- 
 Stiftung. As already mentioned. Abbe was 
 the son of a spinner. He had, therefore, 
 experienced the hardships of long hours 
 and small pay. He had now become the 
 proprietor and manager of a large indus- 
 trial establishment, but had not forgotten 
 the surroundings of his youth and was able 
 to realize the human side, as well as the 
 financial and scientific sides, of great enter- 
 prises. Though absorbed in his work, he 
 
 142
 
 A SOCIALIZED BUSINESS ENTEKPEISE 
 
 had found time to give a good deal of 
 thought to pubhc and social matters. His 
 essays, which were published after his 
 death, fill five good-sized volumes. Among 
 these are observations on various subjects, 
 political and social, and from these writ- 
 ings we are able to learn something of the 
 motives and reasons that guided him 
 in creating the Zeiss-Stiftung. To ade- 
 quately describe this foundation is, how- 
 ever, not easy. Its statutes alone fill sixty- 
 eight pages of the works of Abbe, and his 
 commentary upon them fifty-eight more. 
 It will, therefore, be seen that it is decid- 
 edly complicated, much more so than the 
 constitution of the United States. All of 
 the details cannot be given, and only the 
 leading features will be set forth. The 
 provisions fall into two general groups, 
 regulating (1) the ownership; (2) the 
 relations with the employees. 
 
 The conditions of ownership are so 
 peculiar as to be almost unique. The 
 foundation is neither a partnership nor a 
 joint stock company, nor is it a charitable 
 institution. It is a business corporation, 
 owning and controlling the optical works, 
 but it operates under the final control of 
 
 143
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 the state. This follows to a certain extent 
 from the statement of the purposes, which 
 are enumerated as follows : 
 
 A. Appertaining to the works. 
 
 1. The cultivation of the branches of instru- 
 ment making which are established in Jena. 
 
 2. The permanent provision for the economic 
 security of these enterprises and for the mainte- 
 nance of the labor organization which is con- 
 nected with them. 
 
 3. The accomplishment of greater social duties 
 than a personal o^Tier could permanently guar- 
 antee for the purpose of bettering the personal 
 and economic position of all of those who co-oper- 
 ate in the works. 
 
 B. Outside of the works. 
 
 1. The promotion of the general interests of 
 the mechanical arts involved. 
 
 2. Participation in institutions and measures 
 which are in the general interest of the laboring 
 population of Jena and the neighborhood. 
 
 3. The promotion of scientific and mechanical 
 studies. 
 
 It is clear that these purposes might be 
 carried out by an individual or a joint 
 stock company, but it would be difficult to 
 insure their observation under the con- 
 ditions involved in the unrestricted con- 
 trol of private owners. The foundation 
 
 144
 
 A SOCIALIZED BUSINESS ENTERPRISE 
 
 as a legal personality is represented by 
 what is called the Stiftungs-V erwaltung , 
 or governing board. For the management 
 of the business there are in addition the 
 Vorstdnde, or managing boards, one for 
 each of the works that may exist at any 
 time, and a commissioner, who represents 
 the governing board in the meetings of the 
 managing boards. The rights and duties 
 of the government of the foundation are 
 entrusted to that department of the grand 
 ducal government which has charge of the 
 University of Jena, and the permanent 
 commissioner must be a high officer as- 
 signed by the minister to this duty. The 
 enterprise is thus under the ultimate con- 
 trol of the government, subject always to 
 the terms of the trust. Each managing 
 board of a business enterprise must con- 
 sist of a group, which, however, cannot 
 contain more than four members. In the 
 case of the optical works, at least one mem- 
 ber of this board must be connected with 
 the management of the glassworks. The 
 members are appointed by the government, 
 after due consideration of the report of the 
 commissioner and of the other members of 
 the board, and no one can be appointed 
 
 145
 
 THE ECONOMIC UTILIZATION OF HISTOKY 
 
 against the unanimous vote of these mem- 
 bers. Only those persons can be appointed 
 who are experts, either in science or in 
 business, and at least one member must be 
 an expert scientist in the subjects con- 
 cerned in the business. This board prac- 
 tically manages the business interests, and 
 when the Zeiss-Stiftung was fully devel- 
 oped and its statutes adopted, which was 
 not until 1896, Abbe simply became one of 
 the three members of the board of the 
 Zeiss-Werk. The statutes provided that 
 they should not be revised for ten years. 
 At the end of that time, in 1906, some minor 
 changes were made, and the description 
 given here will apply to the statutes in 
 their present form. Elaborate provisions 
 are made, under which further amend- 
 ments may be introduced, but they are not 
 encouraged. 
 
 In describing the relations of the 
 employees to the establishment, it is impor- 
 tant to emphasize at the outset that Abbe 
 intended to maintain in the fullest sense 
 of the word the freedom of the employees 
 and, therefore, to avoid anything savoring 
 of paternalism, either in the good or bad 
 sense of the term. That is to say, he did 
 
 146
 
 A SOCIALIZED BUSINESS ENTERPEISE 
 
 not wish to have the business treat its 
 employees like a fairy godmother, nor, on 
 the other hand, to take advantage of their 
 dependence upon it in order to influence 
 either their political or their social ideas. 
 His aim was to make their relations busi- 
 ness relations, nothing more. Business, 
 however, does not necessarily mean the 
 crudest form of business. Labor contracts 
 may, as already stated, take any form from 
 the simplest to the most complex, without 
 departing from the business basis. It goes 
 without saying, therefore, that all of the 
 insurance features required by the German 
 insurance law are included in the labor con- 
 tract, and it is not surprising to find that 
 some of these features were voluntarily 
 anticipated in the works before the Zeiss- 
 Stiftung was created, and before the insur- 
 ance laws were passed, while others have 
 been elaborated beyond the requirements 
 of the law. Thus compulsory sick insur- 
 ance was introduced as early as 1875, and 
 after the passing of the imperial law, the 
 fund was converted to conform to that law. 
 In 1888, on the day of the death of Zeiss, a 
 system of old age pensions was introduced. 
 In 1892, a further step was taken in guar- 
 
 147
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 anteeing a minimum weekly compensation, 
 provision for overtime, etc., and in the 
 same year the semi-annual medical exami- 
 nation of juvenile workers and apprentices 
 was introduced as a prophylactic measure 
 against sickness. In 1893 a special savings 
 bank for the establishment was introduced. 
 Since the full establishment of the statutes 
 of the Stiftung, the labor contract includes, 
 besides the ordinary insurance features 
 already noted, many other provisions. 
 The very first article of the statutes relat- 
 ing to employees says that they must be 
 appointed without reference to race, con- 
 fession, or political party. They must also 
 be permitted to exercise their general per- 
 sonal and political rights. To take up some 
 more of the details, the regular working- 
 day is limited to nine hours; no one is 
 obliged to work overtime or on holidays, 
 excepting in the case of interruptions of 
 the works, and contracts for overtime can- 
 not be made for more than four weeks. All 
 workers over eighteen years of age are 
 entitled to a holiday of twelve working- 
 days, and if any are appointed to honorary 
 offices in the service of the empire, the 
 state, or thi town, the necessary leave of 
 
 148
 
 A SOCIALIZED BUSINESS ENTERPEISE 
 
 absence must be given for this purpose. 
 Provision is also made for committees to 
 represent the workers. 
 
 All must be appointed for a time wage, 
 which is fixed in advance, per week or per 
 month, and is to be paid for the holidays 
 which fall on week days, but othermse they 
 are to be paid only according to the time 
 which is spent. This pay cannot be low- 
 ered in the case of a temporary or perma- 
 nent shortening of the working-day, unless 
 the man in question is unable to continue 
 his former activity, or, for reasons which 
 lie in himself, passes over to another posi- 
 tion. In the case of piece work, the fixed 
 time wage counts as a minimum income, 
 and pay is continued during the regular 
 yearly vacation. 
 
 Important incidents of the labor contract 
 are, of course, the insurance features. The 
 sick fund cannot give the members less 
 than full allowance for a half year (since 
 extended to a year), three-fourths of the 
 average wages as a sick allowance, insur- 
 ance of the nearest family members, free 
 choice of the physicians among the certi- 
 fied physicians of the dwelling place, and 
 obligatory contribution on the part of the 
 
 149
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 management equal to the contributions of 
 the insured. Employees who have entered 
 the service before their fortieth year and 
 have worked for five years have a legal 
 claim for a pension, if they become unable 
 to work or otherwise to continue their 
 activity, except for gross faults on their 
 part, while those dependent upon them also 
 receive an allowance. In general, the pen- 
 sion amounts to 50 per cent of the nominal 
 wage for those who have worked between 
 five and fifteen years, and it increases by 
 1 per cent up to the fortieth year. The 
 total may thus become 75 per cent of the 
 wage. Nothing is said about insurance 
 against accidents, as this is regulated 
 under the general laws and is a charge 
 upon the business. One of the most pecu- 
 liar and significant features of the labor 
 contract is the provision for an indemnifi- 
 cation upon dissolution of the relation. 
 Two weeks' notice must be given on either 
 side, for ordinary workers, and six weeks' 
 for those in the business office. In addi- 
 tion to this, those who have been in the 
 service for three years, after the comple- 
 tion of their eighteenth year, have a claim 
 for indemnity, if they are dismissed with- 
 
 150
 
 A SOCIALIZED BUSINESS ENTERPRISE 
 
 out being incompetent to continue their 
 work or are guilty of some fault which has 
 led to their dismissal. This indemnity 
 takes the form of the continuation of their 
 previous wages for the six months follow- 
 ing their dismissal, and for those who have 
 a claim to a pension, the indemnity cannot 
 be less than the amount of their invalidity 
 pension for a period equal to a quarter of 
 the time of service on which it would be 
 reckoned. Thus the longer a person has 
 been in the service, the larger his indem- 
 nity. His dismissal for some serious 
 fault, such as drunkenness, dishonesty, 
 etc., causes the forfeiture of this right. 
 The reason for this peculiar provision is 
 not so much to give the men a present as 
 to bring a pressure to bear upon the man- 
 ager not to cut down the number of hands 
 unnecessarily in a period of business de- 
 pression, which in turn, of course, implies 
 not increasing them unduly in case the 
 business becomes suddenly active. The 
 aim is to maintain a certain steadiness in 
 the number of employees and thus avoid 
 violent fluctuations. 
 
 Not less important than the provisions 
 regarding the employees are those which 
 
 151
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 relate to the profits. Special clauses define 
 the statistical methods which are to be 
 applied. These may be roughly condensed 
 as follows. The yearly expenditure is the 
 sum of all expenses and obligations which 
 are due within the fiscal year, including the 
 payments for pensions, etc., which are to 
 be treated as part of the cost of produc- 
 tion. The business gain or deficit is the 
 ditference between the expenditure as just 
 defined and the total income ; the net profit 
 of each establishment is obtained by taking 
 into account a proper amount for deprecia- 
 tion and interest on the capital, which shall 
 include, besides the regular rate of interest 
 on mortgages, a premium for risk, corre- 
 sponding to the average loss of capital in 
 similar industries. This, however, is not 
 the amount available for dividends. In 
 order to secure the permanency of the 
 works, a certain sum is set aside for a 
 reserve fund, which includes among other 
 things a sum necessary to secure the vari- 
 ous demands for pensions, indemnities, 
 etc., a sum for extending the business, and 
 a sum to make good a possible loss. When 
 it has reached an amount sufficient to 
 meet these requirements, a constantly 
 
 152
 
 A SOCIALIZED BUSINESS ENTEEPEISE 
 
 diminishing sum is to be added to it. 
 After all of these demands are met, the 
 Stiftung is, according to circumstances, to 
 set aside one-half or three-quarters of 
 what remains for the purposes expressed 
 in section B, namely, the general interests 
 of the industry or of science. The final 
 disposition of the reserve fund rests with 
 the Stiftimgs-Verwaltung, or administra- 
 tion. Special provision is, however, made 
 for sharing the profits with the employees. 
 The percentage which is thus to be added 
 to wages and salaries from the profits is 
 to be determined from year to year in such 
 a way that, taking account of the fluctua- 
 tions in the activity of business, a proper 
 relation shall exist between the share of 
 the employees and the share of the founda- 
 tion, according to the specified provision 
 made for this purpose. These are defined 
 in a general way by the statement, that the 
 aim is not so much to increase the net 
 profits as the total output, and that the 
 Stiftung shall retain that part of the 
 profits which has been earned, not by the 
 laborers as individuals, but rather by the 
 organization as a whole and as a going 
 concern. 
 
 153
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 A word should be said regarding this so- 
 called profit sharing. Abbe himself once 
 delivered an address on the subject, in 
 which he took up the various arguments 
 commonly urged in favor of profit sharing 
 and rejected them all. One point that he 
 especially emphasized was that the system 
 was liable to be illusory, because there was 
 always great danger that the nominal 
 wages paid would be reduced by the 
 amount paid as a share in the profits, so 
 that the total wages would be no more than 
 before. He put no faith in the power of 
 profit-sharing devices to conciliate the dif- 
 ferences between the employer and em- 
 ployed.- Nevertheless, he introduced a 
 system of profit sharing in his foundation 
 on other grounds. The share in the profits 
 was not intended to give the worker in 
 good years more than he would ordinarily 
 receive. Nevertheless, it was important, 
 because it made it possible to establish 
 nominal wages which in bad years would 
 secure the laborer against having his earn- 
 ings pushed below a certain level. He 
 illustrates his point by a simile. In the 
 industrial organization of the optical 
 
 2 Abhandlungen, Vol. Ill, p. 109. 
 
 154
 
 A SOCIALIZED BUSINESS ENTERPRISE 
 
 works, he states, there are two beams upon 
 which the important interests of the work- 
 ing forces are supported. One is a strict 
 wage system, by which the manager is 
 pledged to certain minimum rates even in 
 bad years. The other is the financial 
 strength of the enterprise, on which the 
 execution of this wage system depends. In 
 order that these two beams may be held 
 together they are supported by a special 
 bolt, that is, the profit which in good years 
 makes the income of the workers depend 
 upon the fluctuations of business. On this 
 bolt there is a pretty rosette ; namely, the 
 pleasure which the individual gets from 
 sharing in the profits. The significant 
 thing, however, is not the rosette but the 
 bolt. In point of fact, the enterprise has 
 yielded profits enough to be divided every 
 year but one, but the amount has varied 
 considerably, ranging, except in the year 
 1902-03 when nothing was divided, from 5 
 per cent to 10 per cent.^ 
 
 The nominal working-day, as already 
 stated, was limited by the statutes to nine 
 hours. In point of fact, they have had an 
 
 3Schomerus: Arbeitsverhaltniss, p. 10. 
 
 155
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 eight-hour working-day since 1900, and the 
 manner in which this change was brought 
 about is so characteristic that a word or 
 two should be said about it. At the begin- 
 ning of 1900 the question was put to the 
 employees : ' ' Who is willing to try to pro- 
 duce as much in eight hours as hitherto in 
 nine hours?" About six-sevenths of the 
 employees voted for the experiment, and 
 the eight-hour day was introduced provi- 
 sionally for a year. The result was very 
 satisfactory. It could not be measured 
 exactly, excepting in the case of the piece 
 workers, but it turned out that here the 
 output was not only not less, but that it had 
 increased about 4 per cent. When the 
 matter was looked into more carefully, and 
 the workmen questioned, they said that in 
 the beginning they worked very hard in 
 order to keep up their production and their 
 pay, but that they found this too exacting ; 
 then they dropped into the old pace and 
 wanted a return to the nine-hour day. The 
 figures showed, however, that they had not 
 gone back to the old pace. They had given 
 up the killing pace, but had returned to 
 one which was still higher than the old 
 one and jdelded a slightly larger output. 
 
 156
 
 A SOCIALIZED BUSINESS ENTERPEISE 
 
 Abbe explained the matter in a very simple 
 way. He established an equation of human 
 exertion, according to which the daily 
 expenditure of energy must be equal to the 
 daily replacement; this expenditure de- 
 pends upon three elements : (1) the produc- 
 tion; (2) the speed; (3) the fatigue during 
 the intervals of labor, the seconds or min- 
 utes lost in driblets, while standing or 
 waiting in the noise and the bad air of the 
 factory. These driblets are worth noth- 
 ing for relaxation, but if they can be cut 
 short and the time lumped, they are valu- 
 able. The point is to gradually shorten the 
 time of labor, until the gains coming from 
 a longer period of relaxation and a smaller 
 waste of time are still greater than the 
 loss due to increased speed. The limit 
 represents the optimum. This ^\ill, of 
 course, differ according to the occupations 
 and the intelligence of the people. The 
 case could not be proved so exactly for the 
 time workers, but it was thought that here, 
 too, there was no loss of output. The con- 
 sequence is that since April, 1901, the 
 eight-hour day has been the rule. The 
 hours vary according to the season. In 
 summer they are from 7 to 11.30 and 1.30 
 
 157
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 to 5; in winter, from 7.30 to 12 and 2 to 
 5.30. Pauses for luncheon, morning and 
 afternoon, are, however, now abolished 
 and the prohibition of drinking during the 
 working hours has, doubtless, something 
 to do with the favorable results of the 
 shorter day. 
 
 Some incidental features should still be 
 mentioned. A good deal has been done for 
 the general education and benefit of the 
 people, especially in the maintenance of 
 the Volksliaus, with a fine library, reading- 
 room, etc. Baths, too, have been intro- 
 duced. The factory has even gone into the 
 business of manufacturing temperance 
 drinks to sell to the employees, and of sell- 
 ing milk to them on a large scale. Money 
 is loaned, to help people build houses, at a 
 moderate rate of interest. But there are 
 no company houses. There are schools for 
 instruction in trades, etc. The question of 
 patents is distinctly dealt with in the 
 statutes, and it is provided that such inven- 
 tions, improvements, etc., as are useful for 
 the promotion of science, shall not be pro- 
 tected by patents or similar measures. In 
 point of fact, however, the concern has 
 been obliged to take out patents in self- 
 
 158
 
 A SOCIALIZED BUSINESS ENTERPRISE 
 
 protection, and they are regarded as a 
 necessary evil/ 
 
 Not only the workmen in the ordinary 
 sense of the word, but also the officials of 
 the company have to be provided for. It 
 goes without saying that the higher offi- 
 cials receive higher compensation, on ac- 
 count of the greater responsibility put 
 upon them, but, in order that they may not 
 be tempted to unduly raise their own 
 salaries, it is provided that the highest 
 compensation shall not be greater than ten 
 times the average yearly income of all 
 persons over twenty-four years of age who 
 have been in the works at least three years, 
 according to the average of the last three 
 business years. Moreover, the members of 
 the boards of managers do not share in the 
 profits. 
 
 In the beginning mention was made of 
 the inclusion of certain public purposes in 
 the Zeiss Foundation. These have been 
 realized mainly by gifts to the university. 
 Indeed, the effect of the works has been, 
 not only to add very considerably to the 
 population and prosperity of the town, but 
 also to rejuvenate the university to an 
 
 4 Auerbach, 1. c, p. 146. 
 
 159
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 amazing degree. Thirty years ago the 
 University of Jena, although old, was small 
 and badly equipped. The profits of the 
 Zeiss works have not only been used to 
 add certain regular funds, but also to make 
 extraordinary improvements. Among these 
 are new buildings for the physical, hy- 
 gienic, and mineralogical institutions, the 
 creation of an institute for scientific micro- 
 scopy, an extension of the chemical insti- 
 tute, and the addition of a seismographic 
 institute to the astronomical observatory. 
 Otto Schott has also given large sums, 
 especially for technical physics and techni- 
 cal chemistry, out of his private means. 
 Finally, the entire scale of professorial 
 salaries has been reformed and raised.^ 
 
 One naturally asks. What are the results 
 of this elaborate arrangement? It is clear 
 that the time is not ripe for any final 
 judgment. Only about fifteen years have 
 elapsed since the foundation came into 
 complete working order. It has not been 
 subject to the test of hard times, or of a 
 change in the spirit of its management. 
 The personal respect for the founders 
 doubtless still counts as a factor in pre- 
 
 5 Auerbach, 1. c, pp. 148, 155. 
 
 160
 
 A SOCIALIZED BUSINESS ENTEEPRISE 
 
 venting friction. Moreover, it must be 
 remembered that this particular form of 
 manufacturing is exceptional. It deals 
 with mechanics of a high grade, intelligent 
 and highly paid, therefore relatively stable. 
 It turns out a product which contains high 
 value in small bulk and is, therefore, rela- 
 tively independent of questions of trans- 
 portation and local conditions. It would 
 be altogether rash to assume that its suc- 
 cess in Jena would necessarily make it a 
 model for manufacturing establishments 
 in general. The enterprise as a whole is, 
 of course, eminently successful. Its pro- 
 duct is of the highest grade, the men are 
 well paid, the average wage being about 
 1,900 marks a year,^ and the relations are 
 on the whole peaceful. They have never 
 had a strike, though such a disturbance was 
 once threatened. Dr. Schomerus is espe- 
 cially appointed to look after the relations 
 with the men, and his tact and skill are 
 doubtless of great importance. He stated 
 that the fact that the management were so 
 easily approachable led to a considerable 
 number of small explosions which pre- 
 vented discontent from gathering to create 
 
 6 Auerbach, 1. c, p. 123. 
 
 161
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 a large one. Many details in the scheme 
 are even now criticised. Some authorities 
 think that the limitation of the salaries 
 of the head men keeps them altogether too 
 low. It is clear that if the average wages 
 are 1,900 marks, the maximum for the 
 managers must be about 19,000 marks, or 
 less than $5,000. If one may judge from 
 the results, the system is hard on the brain 
 workers. Both Abbe and his successor, 
 Czapski, died comparatively young, the 
 former at sixty-five, the latter at forty-six, 
 and apparently overwork was not without 
 its influence in shortening their lives. 
 Though the conditions of employment 
 would seem to be ideal, the hours being 
 short, the wages high, the buildings clean 
 and well equipped, the insurance features 
 liberal, there are yet a good many socialists 
 among the workers. We are told that out 
 of about two thousand employees, some 
 two hundred would be classed as office men 
 and of the remaining eighteen hundred 
 about eight hundred belong to the socialist 
 unions, or Gewerhscliaften, about one hun- 
 dred and fifty to the liberal Gewerkvereine. 
 This is, of course, not necessarily a sign 
 of discontent with the conditions of em- 
 
 162
 
 A SOCIALIZED BUSINESS ENTERPRISE 
 
 ployment. When a business is increasing 
 so rapidly, it must draw a considerable 
 part of its workers from other places, and 
 they naturally do not give up the political 
 affiliations which they have perhaps cher- 
 ished for years. On the other hand, the 
 fact that they belong to a party which is in 
 its faith, if not in its works, revolutionary, 
 also indicates that they do not believe that 
 they have found an economic paradise, 
 even in Jena. It would not be strange, 
 perhaps, if all of the two thousand employ- 
 ees did not fully share the ideal aims of the 
 founder, even though they are perfectly 
 willing to share in the profits which his 
 genius has made possible, and it is said 
 that they sometimes begrudge the large 
 sums given to the university. 
 
 The interest and significance of the 
 Zeiss-Stiftung to the writer lie more in the 
 motives and ideas which it embodies than 
 in its details. Many of the results accom- 
 plished by the Zeiss-Stiftung are accom- 
 plished by great enterprises in other parts 
 of the world under a different form. When, 
 e.g., Mr. Carnegie gives ten millions of 
 steel bonds to found an institution for 
 scientific research, he is putting the United 
 
 163
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 States Steel Corporation under the obliga- 
 tion of contributing a certain part of its 
 earnings toward this purpose, very much 
 as the managers of the Zeiss-Stiftung set 
 apart some of the earnings of the works in 
 order to promote scientific study in the 
 University of Jena. Likemse when the 
 steel corporation and other companies set 
 aside some of their stock to be acquired by 
 employees, they give these holders, not 
 only a share in the profits of the business, 
 but also an interest in preserving the per- 
 manent strength of the whole enterprise, 
 as distinguished from the temporary ad- 
 vantage of one class of workers. The steel 
 corporation, however, was founded to make 
 money for its stockholders and bondhold- 
 ers. It is merely through an act of gener- 
 osity on the part of individual owners of 
 securities that it may be made to contrib- 
 ute toward scientific research or other pub- 
 lic objects, whereas the social relations of 
 capital are recognized in the very business 
 constitution of the Zeiss-Stiftung. 
 
 164
 
 CHAPTER XI 
 
 Social Myopia 
 
 In the parable of the Good Samaritan 
 we are told of a man traveling from Jeru- 
 salem to Jericho, who ''fell among thieves, 
 which stripped him of his raiment, and 
 wounded him, and departed, leaving him 
 half dead."^ The Samaritan saw his 
 plight; took him to an inn; spent the night 
 with him; and as he paid his bill on the 
 morrow said to the innkeeper, "whatso- 
 ever thou spendest more, when I come 
 again, I will repay thee." The Good 
 Samaritan showed all of the traits which 
 we still consider most valuable in the char- 
 itable at the present day. He had a lively 
 sympathy, which caused him to stop and 
 inquire into the condition of the wounded 
 man; he had the spirit of altruism, which 
 impelled him to give aid; he had practical 
 sense, which enabled him to do it in the 
 most effective manner; and he had the 
 imagination to think of the future and 
 
 iLuke X. 30. 
 
 165
 
 THE ECONOMIC UTILIZATION OF HISTOKY 
 
 provide for its needs. All of these quali- 
 ties we recognize as good, but do we always 
 apply them? Above all, do we sufficiently 
 cultivate the social imagination? 
 
 In reading the parable, one is almost 
 tempted to imagine a sequel to the story, 
 in order to more thoroughly adapt it to 
 modern conditions. Let us suppose, for 
 example, that, when the kind deed of the 
 Samaritan became known in Jerusalem, it 
 stimulated others to follow his example. 
 A number of well-meaning people united 
 themselves into a society to establish a 
 hospital on the way from Jerusalem to 
 Jericho, and equip it with doctors and 
 nurses, in order to give treatment to all 
 who might fall into the hands of thieves by 
 the way. The hospital did a large busi- 
 ness, and the demands upon it increased so 
 rapidly that one generous individual de- 
 cided to endow it with a fund, out of the 
 income of which those who lost their money 
 by robbery might be reimbursed. After 
 many years of operation, during which 
 the demands made upon it fully justified 
 its existence in the minds of the founders, 
 the Samaritan happened to come back to 
 Jerusalem and attended the annual meet- 
 
 166
 
 SOCIAL MYOPIA 
 
 ing of the society. Whereupon he arose 
 and addressed the members somewhat as 
 follows : 
 
 ''I have studied the work of this society 
 for many years, and it seems to me that 
 a large part of the money which we are 
 spending goes into the pockets of the 
 thieves. If they see a defenseless traveler 
 going to Jericho, they rob him before he 
 reaches the halfway hospital; they then 
 lie in wait for him further down the road 
 to relieve him of the money which he has 
 just been receiving. Thus, what we spend 
 is really encouraging the outlaw, and we 
 are maintaining an endless chain of char- 
 ity. I propose that, before spending any 
 more money on the hospital, we endeavor 
 to interest the authorities, and see if it 
 is not possible to so police the road that no 
 robbery will be possible upon it." 
 
 But when the Samaritan had made this 
 speech, he was charged with being no bet- 
 ter than a cold-blooded economist, and 
 requested to leave the meeting. 
 
 This modernized parable may seem like 
 a grotesque caricature of the facts. But 
 let us examine, without prejudice and 
 without fear, some of the conditions under 
 
 167
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 which charity work is carried on in our 
 country, before we say confidently that we 
 do not maintain an endless chain of our 
 own. 
 
 I shall not speak here of those elements 
 in society which prey upon the community 
 openly and avowedly, nor of the familiar 
 vices and failings of human nature which 
 are the cause of so much evil. I shall 
 refer rather to those more subtle forces, 
 which are often so fixed in our customs 
 and our institutions that we hardly recog- 
 nize them as thieves, and indeed should 
 consider it uncivil to refer to them as such. 
 As it is easy to pillory those beings which, 
 having no ears cannot hear, and ha\dng no 
 voices cannot talk back, I will mention first 
 those bandits of the body which are respon- 
 sible for most of our modern ailments and 
 which, though they do not strip us of our 
 raiment, often leave us half dead or en- 
 tirely dead by the wayside of life. These 
 bacilli, as they are commonly called, are 
 of many kinds, and I need not distinguish 
 among them. The bacillus of tuberculosis 
 enjoys perhaps the greatest reputation on 
 account of the extent of his depredations ; 
 but the bacilli of anthrax, of typhoid, of 
 
 168
 
 SOCIAL MYOPIA 
 
 scarlet fever, are active according to their 
 lights and their opportunities. 
 
 It is well known that most, if not all, 
 of these robbers of health and efficiency 
 thrive in crowded cities and houbes. It 
 is also known that they are especially 
 favored by filth. Nevertheless, our coun- 
 try, as a whole, and our cities, in particu- 
 lar, are striving with might and main to 
 increase, not the population bred from the 
 old stock, but the immigrant population, 
 and though we are well aware that this 
 congestion brings new dangers to health, 
 we make no adequate provision against 
 the spread of disease. Let us take a con- 
 crete example. 
 
 In a city, not a thousand miles removed 
 from the State of Connecticut, the robber 
 bacilli have been found to be so active that 
 a movement was inaugurated some years 
 ago to put them in jail and try at least 
 to diminish their depredations upon way- 
 faring men. In other words, it was pro- 
 posed to establish an isolation hospital. 
 The citizens were unanimously in favor of 
 the project, in the abstract, but whenever 
 it was proposed to give a local habitation 
 as well as a name to this excellent idea, 
 
 169
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 the people in the neighborhood of the pro- 
 posed site regularly rose up as one man, 
 and protested against its establishment on 
 the ground that it would lower the price 
 of real estate. The wise men of the city, 
 after having vainly tried a number of sites, 
 at last thought that they had found a solu- 
 tion of the difficulty, and decided to build 
 a modern well-equipped establishment on 
 the site of some hospital pavilions in which 
 contagious diseases had been treated for 
 years. Inasmuch as land in the neighbor- 
 hood has steadily advanced in value and 
 been embellished by the building of private 
 houses, churches, stores and saloons, it 
 was thought that the objection regarding 
 the value of real estate would not apply. 
 But the same cry arose again, and the hos- 
 pital is still unbuilt. In the meantime, the 
 demands upon voluntary charity and the 
 burden of disease to the sufferers are 
 increasing. 
 
 Let us look at a different phase of the 
 subject. As a nation, we are justly proud 
 of the development of our industries, of 
 our railroads, and of our machinerv. We 
 encourage them by law. Certain industries 
 seem so important that we lay a tax on the 
 
 170
 
 SOCIAL MYOPIA 
 
 consumer in the form of a protective tariff 
 in order to maintain them. Our patent 
 laws encourage inventions. Our corpora- 
 tion laws encourage production on a large 
 scale and give the investing capitalist the 
 benefit of a limited liability. Our railroads 
 enjoy the right of taking private property 
 for their uses, and often of using the pub- 
 lic highways. But all of these things lead 
 to accidents, and many of them to disease. 
 In the year ending June 30, 1911, our 
 railroads killed 3,519 passengers and em- 
 ployees, and injured 60,235. The employ- 
 ees naturally bore the brunt of this ; 3,163 
 of them were killed and 46,802 were in- 
 jured.^ Coal mining we know to be pecu- 
 liarly dangerous. In 1908, 2,450 coal min- 
 ers were killed and 6,722 injured in the 
 United States. One man was killed for 
 each 278 employed. We do not know how 
 many persons were killed in all of the 
 industries of the United States, but the 
 State of New York has gathered figures for 
 accidents in factories, quarries, and tunnel 
 constructions, and in the single year 1909 
 there were 15,437 accidents, of which 258 
 
 2 Interstate Commerce Commission Eeport for ]91], p. 
 77. 
 
 171
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 were fatal and 1,543 resulted in permanent 
 injury.^ One of our most careful statis- 
 ticians estimates the number of fatal acci- 
 dents, among occupied males in the United 
 States, as between 30,000 and 35,000 in a 
 single year, and thinks that half of these 
 are due to some industry.* That this rate 
 is terrible is obvious; that it is greater 
 than it should be, is seen by comparing our 
 figures with those of European countries. 
 For instance, in the United Kingdom in 
 1904, one man was killed on the railroads 
 for 1,398 employed; in the United States, 
 one man is killed for 385 employed. In 
 Great Britain, one out of every 148 may 
 expect to meet with some accident; in the 
 United States, one out of every 30. In coal 
 mining the accident rate is more than twice 
 as great as in the principal European coun- 
 tries. We kill one man for every 278 em- 
 ployed, while in Europe one for every 724 
 employed is killed.^ These accidents may 
 
 3 Gilbert Lewis Campbell: Industrial Accidents and 
 their Compensation, 1911, pp. 9, 10. 
 
 4 F. L. Hoffman : Bull, of Bureau of Labor, Washing- 
 ton, Vol. XVII, 1908, p. 418. 
 
 6 Campbell, 1. c, pp. 10, 14, 16 and 17. The coal mining 
 statistics refer for five European States to the year 1903, 
 for twenty-two States of the United States to 1908. 
 
 172
 
 SOCIAL MYOPIA 
 
 be fairly said to be the outcome of indus- 
 tries directly encouraged by law. They 
 are well known. It would seem meet, 
 therefore, that the same law which encour- 
 ages the accidents should do something 
 to diminish their prevalence. A few such 
 laws have been passed, but they have been 
 very slow in coming, and when they have 
 finally been issued, they have, in a large 
 number of cases, been found to conflict 
 with the higher law of the constitution. 
 Even when they have been sustained, it 
 has cost the injured person much time and 
 money to enforce his rights. 
 
 In 1893, Congress enacted a law requir- 
 ing railroads to use, among other safety 
 appliances, automatic couplers. On Aug- 
 ust 5, 1900, a brakeman by the name of 
 Johnson was endeavoring to effect a coup- 
 ling between a freight engine and a dining 
 car, standing on a side track, and, while 
 doing so, had his hand so badly crushed 
 that it had to be amputated at the wrist. 
 There was no question as to the intention 
 of the law or as to the fact that the man 
 had lost his hand. But there was a very 
 serious question as to whether a dining 
 car standing on a side track was engaged 
 
 173
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 in interstate commerce, and until this 
 weighty question could be settled, which 
 took until December 10, 1904, Johnson 
 could recover no damages from the rail- 
 road. Think of a man with his hand ampu- 
 tated, waiting four years for the lawyers 
 to split hairs over such a question! This 
 is not an isolated but a typical case.® 
 
 Another question occurs in connection 
 with accidents. On whom shall the burden 
 of the accident fall? An accident, by its 
 very nature, is something unexpected. 
 The individual cannot always be prepared 
 for it. In the case of property, insurance 
 has long been known as a device for 
 spreading over a large group of interested 
 persons the burden of the loss that may 
 come from fire, explosion, or other sudden 
 disasters. For a quarter of a century, peo- 
 ple in other parts of the world have begun 
 to realize the advantage, not merely to the 
 individual, but to the community as a 
 whole, of applying the same principle to 
 accidents to workers, and have introduced 
 some form of compulsory workmen's com- 
 pensation, or of accident insurance, usu- 
 ally carried in the main by the industry, 
 
 8 Johnson vs. South. Pac. Co., 196 U. S., p. 2. 
 
 174
 
 SOCIAL MYOPIA 
 
 or group of industries combined. The 
 principle is not new in our country, as 
 applied to sheep. If a farmer's sheep are 
 killed by a dog, the selectmen can cause 
 the owner of the dog to pay damages, or 
 if they cannot find him, compensate the 
 sheep's owner out of the public funds. 
 Slowly the idea has gained ground in our 
 country that a similar principle might 
 well be applied to human beings and, after 
 much discussion, a law was passed by the 
 State of New York in 1910 designed to 
 provide a moderate compensation to in- 
 jured workers, even when no blame could 
 be attached to the employers. The act was 
 very carefully drawn, with a full knowl- 
 edge of the constitutional breakers which 
 lay ahead of it. It applied only to a limited 
 number of occupations commonly recog- 
 nized as extra-hazardous. This law was 
 declared unconstitutional by a decision of 
 the New York Court of Appeals handed 
 down March 24, 1911, on the ground, 
 among others, that it violates the XlVth 
 amendment to the Federal Constitution. 
 
 As the decision was unanimous, it must 
 be considered good law, and it would be 
 foolish for a layman to express an opinion 
 
 175
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 on the legal aspects of the case. But when 
 the lawyer speaks of good law, he does not 
 mean good legislation, still less good sense, 
 or good economics. Now the economics of 
 the decision is simply this : It is not com- 
 petent for the legislature to pass a law 
 throwing the burden of an accident upon 
 the industry in which it arises, and requir- 
 ing employers to treat the cost of medical 
 attendance, sick allowance, etc., as they do 
 the losses by fire and explosion. There- 
 fore, the loss must fall either upon the 
 victim himself or, if he has insufficient 
 means, as is the common case, upon the 
 charitable public or the taxpayer. In order 
 that an obligation shall not be put upon an 
 employer, "who has committed no wrong,'* 
 a burden is laid upon those who have not 
 only committed no wrong, but have no con- 
 nection whatever with the accident, except- 
 ing as they live in the same state. Here 
 is another case of the endless chain of 
 charity work, created as the result of the 
 application of constitutional law. 
 
 We can hardly blame the courts for this 
 situation, since they are but following the 
 law as they understand it. Nor can we 
 blame the employers. As long as there is 
 
 176
 
 SOCIAL MYOPIA 
 
 any reasonable doubt of the constitution- 
 ality of a law, they are morally obliged to 
 subject every new enactment to the test of 
 a lawsuit. Moreover, the best employers 
 recognize a moral obligation far beyond 
 that which any law imposes upon them; 
 and in the whole movement for a more 
 enlightened policy, they have borne an 
 active and important part. The respon- 
 sibility really rests with the people them- 
 selves, and with their political leaders. 
 That is to say, it falls upon us all ; because, 
 rather than amend our constitutions so 
 that they will clearly state what they mean, 
 we persist in subjecting them to this con- 
 stant strain, and thus, in the words of John 
 Hays Hammond, have developed laws 
 which, ''to put it mildly, are a disgrace to 
 our country.'" 
 
 Custom is often as strong as law, some- 
 times even stronger. We are all familiar 
 with the tyranny of fashion. Women who 
 would be too squeamish to crush a fly in 
 their hands, will demand that others shall 
 kill birds, even to the extermination of a 
 species, to embellish their hats, if fashion 
 
 7 Address in Philadelphia, April 8, 1911, quoted in 
 New-Yorlc Tribune, April 9, 1911. 
 
 177
 
 THE ECONOMIC UTILIZATION OF HISTOKY 
 
 demands it. This tyranny of habit is rec- 
 ognized. It has often been the cause of 
 injury to human beings as well as to birds, 
 and the Consumers' League is organized 
 for the express purpose of educating con- 
 sumers to some thought for those who 
 serve them, or who manufacture the goods 
 that they use. Yet we have made com- 
 paratively little progress in this direction, 
 and habit is playing its part in the endless 
 chain of modern charities. 
 
 An example taken from recent expe- 
 rience vnl\ illustrate this point. It is well 
 known that white phosphorus, commonly 
 used in the manufacture of matches, is a 
 poison which is liable to produce the ter- 
 rible disease of phosphorus necrosis in 
 the workers. It has also caused the death 
 of many children who have ignorantly put 
 matches into their mouths, and has fre- 
 quently been used for criminal purposes. 
 Altogether, it is a poison the use of which 
 for many reasons it is desirable to limit 
 and, if possible, abolish. In Europe it has 
 been felt to be so dangerous that nine 
 states have entered into an international 
 agreement to prohibit white phosphorus 
 matches. A bill aiming to accomplish this 
 
 178
 
 SOCIAL MYOPIA 
 
 same purpose by a prohibitory tax was 
 introduced into the Congress of the United 
 States in 1910. The situation was pecu- 
 liar in that this bill was endorsed, not only 
 by the Association for Labor Legislation, 
 which caused it to be drafted, and by the 
 American Federation of Labor, represent- 
 ing the workers, but also by almost all of 
 the manufacturers of matches, who recog- 
 nized the danger and expressed themselves 
 as quite willing to submit to an inconven- 
 ience, or even an increased cost of produc- 
 tion, provided all were treated ahke. 
 When, however, the members of Congress 
 were approached upon the subject, it was 
 discovered that the bill was by no means 
 sure of passage, and among other objec- 
 tions one prominently mentioned was that 
 the consumers would not be satisfied with 
 the substitutes. I procured matches made 
 of sesquisulphide of phosphorus, which is 
 considered to be one of the best substitutes 
 for poisonous phosphorus, and undertook 
 to demonstrate its effectiveness to a mem- 
 ber of Congress by showing him how easy 
 it was to light the match, not only on a 
 rough surface, but even on a piece of com- 
 paratively smooth paper. He, however, at 
 
 179
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 once took one of tlie matclies and applied it 
 to the seat of his trousers. It did not ignite. 
 He had shrewdly detected the weak point 
 of the substitute, and also the strong point 
 of the opposition. For matches are used 
 chiefly by smokers, and smokers, it seems, 
 have a strong preference for lighting 
 matches on the seats of their trousers. 
 While the sesquisulphide match will light 
 on almost any surface, and indeed can be 
 lighted on the trousers seat, a good deal 
 of pressure is needed to secure results. 
 It is to be hoped that this objection may be 
 overcome. Perhaps the tailors will gal- 
 lantly come to the rescue of the girls who 
 make matches and equip the seats of our 
 trousers with a suitably roughened sur- 
 face. Perhaps the quality of the match 
 itself may be improved. Indeed, this has 
 already taken place, and a New Jersey fac- 
 tory has successfully marketed a large 
 quantity of the non-poisonous matches. In 
 the meantime, it is a fact that the objection 
 mentioned was a serious obstacle to the 
 legislation in question and helped to delay 
 its enactment until 1912. 
 
 This is not the only contribution made 
 by the habits of smokers to the endless 
 
 180
 
 SOCIAL MYOPIA 
 
 chain. We have not yet, I hope, forgotten 
 the terrible fire of 1911 in New York, in 
 which 145 workers in the Triangle shirt- 
 waist factory met a shocking death. Ac- 
 cording to statements made by the authori- 
 ties who investigated it, but one cause of 
 the fire was discovered, and that was cigar- 
 ette smoking; yet it is remarkable that, at 
 least in the newspapers which have come 
 to the attention of the writer, no blame 
 seems to be attached to the smokers, but all 
 of the blame is thrown upon the employ- 
 ers and the builders. Several fires have 
 occurred in the Yale grandstand at the 
 time of the annual football game, all due 
 to the habits of smokers, and panics have 
 been avoided only by vigilance on the part 
 of the watchmen. But here again no one 
 seemed to think that it might be possible 
 for smokers to have sufficient regard to 
 the rights of the public to extinguish their 
 matches, cigars, and cigarettes before they 
 throw them down. In New Haven in the 
 single year 1910 the fire department was 
 called out forty-nine times by fires clearly 
 attributable to smokers, apart from the 
 large number caused by matches, some of 
 which were doubtless used by smokers. 
 
 181
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 In Massachusetts 111 forest fires, involv- 
 ing a loss of $33,000, were started by smok- 
 ers in 1908, and, next to locomotive sparks, 
 tobacco was the most prolific of the ascer- 
 tained causes of forest fires in that State.* 
 
 Indeed, our custom actually raises smok- 
 ers to the position of a privileged class. 
 They are the only people who can get two 
 seats in a drawing-room car by paying only 
 one fare; and for their sake our railroads 
 must supply more seating room than they 
 can sell. 
 
 Many seem to consider the right to 
 smoke anywhere and everywhere one of the 
 fundamental rights of man. A city legis- 
 lator recently asserted his right to smoke 
 in the public sessions of the Board of 
 
 8 F. W. Rane : We Must Stop Forest Fires in Massa- 
 chusetts, 1909, pp. 7-9. Official figures regarding forest 
 fires caused by smokers are inevitably understatements, on 
 account of the difficulty of obtaining conclusive evidence. 
 Hence in a large number of cases the cause is put down 
 as ' ' unknown. ' ' Eef erring to fires caused by smokers, 
 hunters, etc., Mr. Rane says, in his Seventh Annual 
 Report as State Forester of Massachusetts : ' ' There is no 
 doubt that most of the fires labelled 'unknown' would 
 be placed in this column if they could be traced out; so 
 that we feel sure that they cause as many fires as the 
 railroads, and are more dangerous, because the smoke is 
 everywhere" (pp. 47-48). 
 
 182
 
 SOCIAL MYOPIA 
 
 Alderman. A New York newspaper has 
 called attention to the dangers which come 
 from cigarette smoking in the lobbies of 
 theaters, not on the part of red Indians but 
 on the part of men who carry gold cigar- 
 ette cases. With such examples, can we 
 wonder that shirtwaist cutters consider it 
 one of the rights of American citizens to 
 smoke when at work, and that our smoking 
 habits make no small contribution to the 
 endless chain of accidents and hospital 
 cases! 
 
 '^0 God, that men should put an enemy 
 in their mouths to steal away their 
 brains!" The robber alcohol is familiar 
 to us all, but we do not always realize the 
 extent of his robberies. Some years ago 
 a committee of fifty was formed for the 
 express purpose of studying the liquor 
 problem in its various aspects. One of its 
 sub-committees made a study of its eco- 
 nomic aspects. With the aid of a large 
 number of societies, prison wardens, and 
 other persons, it tried to find out how many 
 persons had committed crime or had fallen 
 into dependence as the direct or indirect 
 result of the use of alcohol. 
 
 The investigation was made with the 
 
 183
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 greatest care by a study of individual 
 cases, and was nothing if not conservative. 
 Yet it appeared that, of the poverty com- 
 ing within the field of charity organiza- 
 tion societies, 25 per cent could be traced 
 directly or indirectly to liquor, while in 
 almshouses 37 per cent was so traced and 
 not less than 45 per cent of the destitution 
 of children in institutions was due to the 
 liquor habits either of the parents, guar- 
 dians, or others.^ In the case of crime, a 
 distinction was made between primary and 
 secondary causes, and while in 31 per cent 
 of the convicts investigated, liquor was 
 found to be the primary cause, it figured as 
 a cause more or less important in nearly 50 
 per cent.^° There is no doubt of the 
 ravishes of this thief, who not only steals 
 away our brains, but robs wives and chil- 
 dren of their support, and fills our prisons 
 and almshouses. I am well aware of the 
 difficulty of dealing with this question. 
 The very magnitude of the liquor interest 
 makes it a powerful political agency which 
 it is not easy to overcome. And yet in Con- 
 
 9 John Koren : Economic Aspects of the Liquor Prob- 
 lem, Houghton, MiflQin and Company, 1899, pp. 21, 22. 
 
 10 1. c, p. 30. 
 
 184
 
 SOCIAL MYOPIA 
 
 necticut we put the control of this danger- 
 ous traffic into the hands of a small body of 
 persons, who are so appointed that they 
 have no direct responsibility either to the 
 electors or to any single admini^strative 
 officer, and who are practically exempt 
 from the ordinary checks and balances of 
 a republican form of government. We 
 need not wonder that a law limiting the 
 number of saloons can remain a dead let- 
 ter, and that it is not possible to make 
 anyone responsible for its enforcement. 
 
 The hospital for the confinement and 
 treatment of contagious diseases must wait 
 years for its realization, but establish- 
 ments for the distribution of liquor hold 
 what is virtually a position of privilege. Is 
 not the community as a whole contributing 
 through this policy to maintain the endless 
 chain of poverty and distress? 
 
 In calling attention to these evils, I dis- 
 claim the intention of attacking any person 
 or group of persons. The citizens as a 
 whole, and, I do not hesitate to say, more 
 particularly the property owning classes, 
 are responsible for a system which creates 
 constantly new demands upon their char- 
 ity. Like an inexperienced bicyclist breast- 
 
 185
 
 THE ECONOMIC UTILIZATION OF HISTORY 
 
 ing his first hill, who pushes with both feet 
 at once, we create ^^dth one hand the evils 
 which the other is trying to remedy. We 
 are so anxious for gain that we do not 
 realize what it costs us to conduct our busi- 
 ness. The same gold "gilds the straight- 
 ened forehead" of us all. 
 
 These illustrations, which do not begin 
 to exhaust the subject, are intended to 
 show that, while much of the distress and 
 the evil that charity tries to relieve is due 
 to human nature, heredity, and other 
 causes, which are very difficult to reach, 
 much of the work that it is called upon to 
 do is the direct result of institutions, laws 
 or customs maintained ^vith a short-sight- 
 edness that would be incredible, were we 
 not so inured to it that we are hardly con- 
 scious of any defect in our social vision. 
 But as long as an ounce of prevention is 
 worth a pound of cure, and as long as it 
 is kinder to prevent a person from falling 
 into a ditch than to pull him out after he 
 is in, so long will our work be incomplete, 
 and indeed futile, unless we realize that the 
 Good Samaritan must at the same time 
 be a good citizen. 
 
 186
 
 CHAPTER XII 
 
 Signs of a Better Social Vision 
 
 To provide altruism with social specta- 
 cles means a great deal. It means that the 
 effective charity worker will not content 
 himself with the customary methods of 
 relieving distress. He must sometimes 
 suppress the impulses of his heart, if he 
 knows that he is liable to do harm by 
 yielding to them. He must also take such 
 part in securing legislation, in influencing 
 administration and policy, and in helping 
 to guide public opinion, that the causes of 
 poverty and sickness will be undermined. 
 Fortunately we are already seeing evi- 
 dence of sporadic individual efforts made 
 in the direction indicated. What is needed 
 is to co-ordinate them, help them to pull 
 together, make them conscious of each 
 other; in short, we want more team play. 
 A few illustrations will make this clear. 
 
 Not only accidents but many diseases 
 are caused by certain industries. We are 
 just beginning the study of these matters. 
 Italy has established, in the city of Milan, 
 
 187
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 a special hospital for the treatment and 
 study of industrial diseases with the aim 
 of diminishing them. This is a branch of 
 what is called preventive medicine. It 
 points the way to the future, and I have no 
 doubt that our country will soon learn the 
 lesson that Italy and other countries are 
 teaching us, and apply it to our conditions. 
 Still other diseases are due, as we know, 
 to the conditions of living in our large 
 cities. This is particularly the case with 
 regard to tuberculosis. Some years ago a 
 student in the Yale Medical School made 
 a map of New Haven, showing the cases 
 of consumption by means of red dots, and 
 the map showed such an eruption of this 
 rash in certain streets and houses, that 
 those who were responsible for the 
 study did not dare to have it published. 
 We are slowly awakening to the im- 
 portance of air and light. The Anti- 
 Tuberculosis Association does not content 
 itself with treating cases, but aims to edu- 
 cate the public through its graduates. We 
 have but one tenement law on the statute 
 books of Connecticut, but there is a move- 
 ment to make this law more stringent, and 
 the organization, in 1910, of a National 
 
 188
 
 SIGNS OF A BETTEE SOCIAL VISION 
 
 Housing Association is calculated to give 
 intelligent direction to the movement for 
 better housing conditions which is growing 
 up all over the country. 
 
 The psychical and social causes of dis- 
 ease are at last being recognized. Under 
 the leadership of the Massachusetts Gen- 
 eral Hospital Society, a number of our 
 hospitals, including the New Haven Hos- 
 pital, have added a social feature to their 
 work. We are now realizing that it is not 
 enough to give the patient medical treat- 
 ment ; we must also try to reach the social 
 causes of disease. Modern medical schools 
 now have chairs of preventive medicine. 
 The professor who was called upon to fill 
 that chair in the new medical school of St. 
 Louis prepared himself for his work by 
 studying, not merely chemistry, physiol- 
 ogy, and anatomy, but by examining our 
 factories and our tenements, and consult- 
 ing with economists and sociologists. 
 
 An illustration of the importance of eco- 
 nomic considerations in the profession of 
 medicine was brought out recently by Dr. 
 Lyman of the Gaylord Farm Sanatorium. 
 Looking at the matter from the strictly 
 medical point of view, a patient recovering 
 
 189
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 from tuberculosis should live an out-of- 
 door life, and take up some occupation 
 which secures this. An actual study of 
 cases has shown, however, that in general 
 those patients maintain their improvement 
 best who go back to their old occupations, 
 not because these are medically desirable, 
 but because they furnish a better support 
 and are better adapted as a rule to the 
 abilities of the patients than are out-of- 
 door occupations, which usually involve 
 undue exertion or great physical strength. 
 
 New forms of public activity are being 
 developed. The social settlements, the 
 Consumers' Leagues, the George Junior 
 Eepublics, the Society for Mental Hygiene, 
 the visiting nurses and housekeepers, the 
 Boy Scouts, are examples of efforts made, 
 not to exercise, but to forestall charity. 
 
 Even our nomenclature is changing. The 
 expression ''social service" is supplanting 
 the word "charity." The magazine for- 
 merly known as Charities is now called 
 The Survey, and it was under its direction 
 that the remarkable study of industrial 
 conditions, known as the ''Pittsburgh Sur- 
 vey," was made a few years ago. People 
 who ^vish to go into social work are now 
 
 190
 
 SIGNS OF A BETTER SOCIAL VISION 
 
 receiving training in special schools, some- 
 times called schools of philanthropy, but 
 more appropriately, as in the case of the 
 Chicago school, named schools of civics and 
 philanthropy. Science and charity are no 
 longer strangers, but are working hand in 
 hand. 
 
 In short, we are beginning to realize, in 
 the words of Dr. Cabot, that, "Science 
 without humanity becomes arid and, 
 finally, discouraged. Humanity without 
 science becomes scrappy and shallow.'" 
 
 We thus need to unite all of the agencies, 
 whether philanthropic, scientific, or civic, 
 whose activity may diminish or relieve dis- 
 tress. The suggestion, made by Mr. Kel- 
 logg at the Connecticut Conference of 
 Charities and Correction held in 1910, that 
 we should have more charity organization 
 societies in Connecticut, is worthy of seri- 
 ous consideration. We not only need more 
 societies, but we need to organize them on 
 a broader basis, and to have a greater co- 
 ordination between those in different cities. 
 A preliminary step toward such a broader 
 understanding lies in a knowledge of the 
 
 1 Richard Clarke Cabot : Social Service and the Art of 
 Healing, 1909, pp. 30, 31, 
 
 191
 
 THE ECONOMIC UTILIZATION OF HISTOEY 
 
 facts. It is strange that, although so many 
 people are interested in these subjects, and 
 so much money is annually contributed, no 
 one has more than a very vague knowledge 
 as to the total amount which is spent, 
 either in the State or in any one city of 
 the State, during a given year. As a step 
 toward supplying this need, and at the 
 same time emphasizing its existence, the 
 Organized Charities Association of New 
 Haven has attempted a directory of local 
 societies, and a summary of their financial 
 condition. It is not complete, and abso- 
 lute accuracy in such matters is perhaps 
 unobtainable, but it is hoped that it will at 
 least give some facts of general interest 
 and stimulate other societies to follow our 
 example. It is significant that this piece 
 of work was planned by the directors of 
 the society and executed by a divinity stu- 
 dent under the direction of a professor of 
 political economy. 
 
 Some people are afraid that organiza- 
 tion will make charity too mechanical and 
 impersonal. There is danger of fossiliza- 
 tion in any form of public service, but it is 
 not greater in the new era, which I believe 
 to be dawning, than it has been in the past. 
 
 192
 
 SIGNS OF A BETTER SOCIAL VISION 
 
 Could anything be less personal than drop- 
 ping a copper into the hat of a beggar? 
 This form of charity is as mechanical as is 
 the "wheezer" hand organ, whose doleful 
 notes are studiously designed by the nianu- 
 facturer to work upon the sjnnpathies of 
 the passer-by. The new charity makes 
 greater demands upon the individual, be- 
 cause it requires thought and work as well 
 as sympathy and doles. It demands a 
 social imagination strong enough to appre- 
 hend not only what we see with our eyes, 
 but what we do not see. It requires us to 
 look at future as well as at immediate 
 results. It is optimistic because it hopes, 
 not without good reason, to be able to 
 diminish as well as relieve distress. It 
 demands the co-operation of many profes- 
 sions. It enlists in its campaign the law- 
 giver, the engineer, the physician, the econ- 
 omist, the statistician. It is substituting 
 the trained expert for the amateur. It is 
 insisting that philanthropy shall be far- 
 sighted as well as kind. It even expects 
 that this far-sightedness will in the future 
 influence our business activities, as well as 
 conventional charity. 
 
 193
 
 INDEX 
 
 Abbe, Ernst, birth and education, 139; founds Carl- 
 Zeiss-Stiftung, 142; Gesammelte Aihandlungen, 
 138; life shortened by overwork, 162; member 
 of board of Zeiss-Werk, 146; on eight-hour day, 
 157; on profit-sharing, 154; on relations of em- 
 ployees to establishment, 146, 147; principle of 
 trieder binocular applied by, 141. 
 
 Acatallactic, definition of 123 
 
 Accidents, burden of, 95, 174-176; caused by indus- 
 tries, 187; compensation for, 70, 71; compulsory 
 insurance for, 134; deaths from industrial, in 
 Pittsburgh, 102; encouraged by law, 173; in coal 
 mines in U. S., 171 ; in New York State, in fac- 
 tories, quarries and tunnel construction, 171; 
 insurance against, 70 ; need for fuller records of, 
 99, 111; new causes of, 70; number of, in U. S. 
 compared with Europe and Great Britain, 172; 
 on railroads in U. S., 171; preventable, 3, 73; 
 problem of labor legislation to diminish, 70; 
 social causes of, 3; treaty for compensation for, 
 71. 
 
 Administration, experimentation through 38 
 
 Aerial navigation 66 
 
 Agricultural experiment stations 65 
 
 Agriculture, application of science to, 64, 65; 
 methods of, 42 ; schools of, 65. 
 
 Aimes, Hubert H. S 133 
 
 Alaska, 98 ; instructiveness of history of, 48, 49. 
 Alcohol, crimes committed as result of, 183, 184; 
 poverty caused by use of, 183, 184. 
 
 Allison Act 14 
 
 Altruism, needs social spectacles, 187; spirit of, 165. 
 
 195
 
 INDEX 
 
 American Association for Labor Legislation, 82, 119, 
 121 ; advocates reporting of industrial diseases 
 and accidents. 111; and lobbying, 119; drafts 
 phosphorus biU, 179; study of administration of 
 labor laws by, 117. 
 
 American Economic Association 51 
 
 American Federation of Labor, endorses phosphorus 
 
 bill 179 
 
 American Historical Association 53 
 
 American History, Turner 's Social Forces in 53 
 
 American Industrial Society, Documentary History of 51 
 
 Amonn, Alfred 29, 30 
 
 Anarchist, philosophical 48 
 
 Annuities, distribution of wealth by 124 
 
 Anti-Trust Law 15 
 
 Anti-Tuberculosis Association 188 
 
 Anthracite coal strike 19 
 
 Arbitration, compulsory, 85, 135; voluntary, 85. 
 
 Aristotle 23 
 
 Artificial selection 60 
 
 Associations, co-operative 85 
 
 Astronomy and deduction 10, 11 
 
 Auerbach, Felix 138 
 
 Australia, wage boards and compulsory arbitration 
 
 systems in 135 
 
 Automatic couplers, law requiring, on railroads .... 173 
 
 Babcock tester 127 
 
 Bargaining, collective, joint boards for, 85; new 
 machinery necessary for, 69. 
 
 Bellamy Clubs 38 
 
 Benefit societies, 85; in Switzerland, 113. 
 
 Bimetallic theory 14, 15 
 
 Blackstone, on requisites to good government, 104; 
 opinion of British Parliament, 104. 
 
 Books, property right in, enforced by law 127 
 
 Boy Scouts 190 
 
 196
 
 INDEX 
 
 British Association for Advancement of Science. ... 26 
 Brodsky, K. J., insurance in fraternal and benefit 
 
 societies 113 
 
 Brook Farm 38 
 
 Brooks, Eobert C 16 
 
 Budgets, of clubmen, 48 ; family, 23 ; of workingmen 48 
 
 Buffalo, adaptation of, to environment 58, 59 
 
 Business, artificial stability of, created 71 
 
 Cabot, Dr. Eichard Clarke, "Social Service and Art 
 
 of Healing" 191 
 
 Campbell, Lewis Gilbert, on industrial accidents . . . 172 
 
 Canada 37 
 
 Capital, benefited by changes in organization, 71; 
 government intervention to save deterioration 
 of human, 71 ; increase in, 68, 69 ; law putting 
 new responsibilities upon, 71 ; legal privileges of, 
 24; legal restrictions on, 24. 
 
 Capital contract, forms of 130-132 
 
 Carl-Zeiss-Stiftung, see Zeiss- Stiftung. 
 Carnegie, Andrew, 163; on hereditary wealth, 45. 
 
 Carnegie Institute 101 
 
 Carnegie Institution of Washington 11, 50, 65 
 
 Caste system 78 
 
 Changes, in consumers' wants, 68, 71, 72; in methods 
 of organization, 68, 71 ; in methods of produc- 
 tion, 68, 70, 71. 
 
 Charities 190 
 
 Charities, directory of, in New Haven 192 
 
 Charity, 177-186; condition under which it is 
 carried on, 167, 168; demands of new, 193; 
 examples of efforts to forestall, 190; fear that 
 organization will make impersonal, 192, 193; 
 ignorance of amount spent on, 192; private, 63; 
 team work needed in, 187 ; working hand in hand 
 with science, 191. 
 Charity worker, the effective 18T 
 
 197
 
 INDEX 
 
 Chicago school of civics and philanthropy 191 
 
 Children, argument for protecting, 94; destitution of, 
 caused by liquor habits of parents, 184; effects 
 of machinery upon, 70; lack of adequate laws 
 for protection of, 98, 107; law limiting age of 
 employment of, 84, 88; law limiting hours of 
 employment of, 84, 88; playgrounds for, 97; 
 views of Alexander Hamilton on labor of, 79. 
 
 China 26 
 
 Cigarette smoking, cause of Triangle shirtwaist fire, 
 181 ; in lobbies of theatres, 183. 
 
 City and Suburban Homes Company 126 
 
 Civilization, by-products of, 63; effects of, upon 
 
 nature, 58, 59; hunting stage of, 60. 
 Civilized man and struggle for supremacy over 
 
 nature 58-60 
 
 Civics, schools of 191 
 
 Civil Service examination for factory inspectors .... 117 
 
 Clark, J. Maurice 39 
 
 Clark, Prof. John Bates, on elements of economic 
 
 progress 68-72 
 
 Coal mining, accidents in the U. S. in 171 
 
 Coartacion 133 
 
 Collective bargaining 69, 85 
 
 Collectivism 96 
 
 Colonies, British, compared with the U. S 37 
 
 Commission, President's Anthracite Coal, 20; expert 100 
 Committee of Fifty on the Liquor Problem . .9, 183, 184 
 
 Committee on Public Health 106 
 
 Common law, re-enacted in Massachusetts 114 
 
 Commons, Prof. John E 51 
 
 Compensation, workmen's, see workmen's compensa- 
 tion. 
 Competition, free, considered as a cure for the abuses 
 
 of trade, 15; limitation of, 135. 
 Compromise of 1850 36 
 
 198
 
 INDEX 
 
 Compulsory arbitration 85, 135 
 
 Compulsory insurance, 90, 108; in Germany, 79, 92, 
 134; laws regarding, 84; of sick in Zeiss- 
 Stiftung, 147, 149; see also workmen's insurance. 
 
 Concomitant variations, method of 5, 6 13 
 
 Connecticut, Conference of Charities and Correction, 
 191; control of liquor traffic in, 185; inexperi- 
 ence of legislators in, 105; isolation hospital in 
 city in, 169, 170; tenement house law of, 188. 
 
 Conquest, law of 62 
 
 Conservation, 97; labor legislation part of move- 
 ment for, 80, 81 ; societies relating to, 39. 
 Constitution, Federal, 77, 103 ; laws to diminish acci- 
 dents found to conflict with, 173; New York 
 State Workmen's Compensation act violates 
 XlVth amendment of, 175, 176. 
 
 Constitutions, amendment of 109, 177 
 
 Consumers' Leagues, 190; purpose of, 178. 
 
 Consumers ' wants, changes in 68, 71, 72 
 
 Contract, capital, forms of, 130-132; labor, 62; labor, 
 in Zeiss- Stiftung, 149, 150; law of, 62; legal 
 form of, influences machinery of production, 
 130-137; terms read into, by law, 134; wage, 85, 
 132-135. 
 
 Co-operation, productive 136 
 
 Co-operative associations 85 
 
 Corporation laws, encourage production on large 
 
 scale 171 
 
 Corporations, public service, 39; records of, 50; 
 
 regulation of, 36. 
 Courts, power of, to nullify laws interrupts experi- 
 mentation in U. S 49 
 
 Crimes, due to alcohol 183, 184 
 
 Cross, Prof. Ira B 39 
 
 Currency 36, 42 
 
 Custom, often as strong as law 177 
 
 199
 
 INDEX 
 
 Czapski, Siegfried 138, 142, 162 
 
 Davenport, Dr. C. B 46 
 
 Decadence, national 48 
 
 Deduction 10, 12 
 
 Deductive school 18 
 
 Deficiencies of nature 25 
 
 Degeneracy, human 25 
 
 Description, contrasted with science 53-54 
 
 Dewey, Prof. Davis E., presidential address of 51 
 
 Diminishing returns, law of 24 
 
 Discoveries, eagerness with which pursued, 66; readi- 
 ness to use, as basis of property rights, 66; 
 tendency to anticipate, 65, 66. 
 
 Disease, economic 25, 26 
 
 Diseases, attempt to reach social causes of, 189; 
 caused by conditions of living in cities, 188, 189 ; 
 hospital for industrial, in Milan, 112, 187, 188; 
 industrial, 70; lack of information regarding 
 industrial, 99; national investigation of indus- 
 trial, urged by American Association for Labor 
 Legislation, 111; preventable, 73; psychical and 
 social causes of, 189; study of industrial, 187, 
 188. 
 Distribution of wealth, 24; by gift, 124; by graft, 
 125; by law, 124; by marriage, 124; by wiU, 
 124; not as simple as was once assumed, 122; 
 without reference to law of supply and demand, 
 123-126. 
 Distributive or positive labor legislation, 84, 85, 89-91 
 Documentary History of American Industrial Society 51 
 
 Docimients, State economic, index of 50 
 
 Domestication, stage of 60 
 
 Drafting, necessity for careful, in legislation, 115; 
 
 society for, 116. 
 Dynamic society, Clark 's elements of 68-72 
 
 200
 
 INDEX 
 
 Economic conditions, retard good legislation 100 
 
 Economic experimentation, advantages of the U. S. 
 for, 34-42; contrasted with observation, 13; dis- 
 advantage of economist in, 49 ; ethical difficulties 
 of, 1-4, 13; favorable conditions for, in TJ. S., 
 37-42; fields of, 42-49; hindered by inadequate 
 records, 50-52; interfered with in the U. S. by 
 the courts, 49; John Stuart Mill on, 5-7; logical 
 objections to, 4-6; objections to, discussed, 6-10; 
 referred to by Ely, Keynes, and von Schmoller, 
 27; referred to by Newmarch and Jevons, 26; 
 through legislation and administration, 38 ; tried 
 in self-interest, 39; views of economists regard- 
 ing, discussed, 28-31; wage receivers and, 40. 
 
 Economic forces, operation of 53 
 
 Economic history 40 
 
 Economic ideal of U. S 77-80 
 
 Economic interests, 34; and political questions, 36. 
 Economic interpretation of history contrasted with 
 
 economic utilization of history 52 
 
 Economic laboratory, conception of history as 52 
 
 Economic laws 23, 28, 29 
 
 Economic material, 33 ; buried in state archives, 50. 
 
 Economic pathology 25, 26, 48 
 
 Economic phenomena, analysis of 24 
 
 Economic processes, influenced by legal or institu- 
 tional factors 124 
 
 Economic progress, Clark's elements of, 68-72; 
 involves labor legislation, 73; spirit of, 64. 
 
 Economic questions in the history of the U. S 36 
 
 Economic reactions, study of 46, 47 
 
 Economic results of laws, importance of recording. . 52 
 Economic science, Jevons' contribution to, 28; scien- 
 tific management applied to, 32; two phases of, 
 55, 56. 
 Economic system, pathologic state of 25 
 
 201
 
 INDEX 
 
 Economic theory, Professor Ely 's views on 82 
 
 Economic utilization of history contrasted with eco- 
 nomic interpretation of history 52 
 
 Economics, laws of, 52; of decision against New 
 York State workmen's compensation law, 176. 
 
 Economist, disadvantages of, in experimentation, 49; 
 qualities needed by, 56 ; task of, 22. 
 
 Economists, Italian, 31; point of view of, contrasted 
 with that of historians, 53; reliance of Federal 
 and State governments upon trained, 51; theories 
 of, and economic experiments, 15. 
 
 Ehrich, Louis E 96 
 
 Eight-hour day, in Zeiss- Stiftung 156, 157 
 
 Ely, Prof. Eichard T., 27 ; on relation of labor legis- 
 lation to economic theory, 82. 
 
 Employers ' liability laws, 84 ; recognize moral obliga- 
 tions, 177; relation of, to employed weakened, 
 69. 
 
 Endless chain of charity, contribution of alcohol to, 
 183, 184; contribution of habit to, 177-186; con- 
 tribution of habits of smokers to, 178-188; 
 created as result of application of constitutional 
 law, 176; responsibility for, 177, 185. 
 
 Engel 's law 23 
 
 England, 37; average duration of life in, 72; experi- 
 ence in posteritism in, 97; forms of wage con- 
 tracts in, 138. 
 
 Eugenics, 97; not yet an exact science, 73. 
 
 Europe, experience in posteritism, 97; history of, 
 compared with U. S., 84, 35; number of accidents 
 in, compared with U. S., 172; under compulsory 
 insurance laws, 134. 
 
 Evils, connected with efforts to improve social insti- 
 tutions, 61-63; due to changes in methods of 
 production, 70 ; of progress, legislation necessary 
 to prevent, 68. 
 
 302
 
 INDEX 
 
 Exchange, terms of, affected by distributive legisla- 
 tion 85 
 
 Experiment station, advantage of U. S. as 37 
 
 Experimental evolution, laboratory of 11 
 
 Experimental method, see economic experimentation. 
 
 Explorations, polar, and the press 65, 66 
 
 Factories, accidents in, in New York 171 
 
 Factory inspectors, Prussian requirements for, 117, 
 
 118; qualifications for, 116, 117. 
 Factory system, 70; advocated by Alexander Hamil- 
 ton, 79. 
 
 Fairview Colony of Single Taxers 38 
 
 Family budgets 23 
 
 Fashion, tyranny of 177 178 
 
 Favors, distribution of wealth by special 125 
 
 Federal Constitution 77, 103, 173, 175, 176 
 
 Feudal system 77, 78 
 
 Fires caused by smokers 181 
 
 Fischer, Dr 120 
 
 Fischer, Max 142 
 
 Fisher, Prof. Irving 30, 73 
 
 Forces prominent in European history 34 
 
 Forest fires in Massachusetts caused by smokers . . . 182 
 
 Forests, measures for preserving 97 
 
 France, labor unions in, 92; treaty for compensation 
 for accidents between Great Britain and, 71. 
 
 Free competition, and the Anti-Trust law 15 
 
 Free passes on railroads 125 
 
 Freehold, preferred in New England to feudal land 
 
 tenures 35 
 
 Fugitive Slave Law 36 
 
 Galileo 54 
 
 Galton, Sir Francis 46 
 
 Gaylord Farm Sanatorium 189 
 
 George Junior Eepublic 190 
 
 German historical school 12, 27-30 
 
 203
 
 INDEX 
 
 Germany, compulsory insurance in, 92, 134, 147; 
 compulsory sick insurance in, 79; historical 
 school of, 12, 27-30; labor unions in, 92; rail- 
 roads of, compared with those of U. S., 128; 
 system of old age insurance in, 114, 
 Ghent, system of insurance against unemployment in 92 
 
 Gide and Eist 30 
 
 Gifts, distribution of wealth by 124 
 
 Good Samaritan, parable of, 165; sequel to parable 
 
 of, 166, 167; should be a good citizen, 186. 
 Government, intervention of, to save deterioration of 
 
 human capital 71 
 
 Graft, a cause of unequal distribution of wealth .... 125 
 
 Gratuities 133 
 
 Great Britain, number of accidents in, compared with 
 those in U. S., 172; treaty for compensation for 
 accidents between France and, 71. 
 Gresham 's law, analogy of, applied to labor problems 86 
 Guernsey, prosperity of island of, attributed to 
 
 rente 131, 132 
 
 &ult 132 
 
 Habit, contribution of, to endless chain 177-186 
 
 Hale, Dr. George E 11 
 
 Hamilton, Alexander, views of, on child labor 79 
 
 Hammond, John Hays 177 
 
 Harris tweeds 61 
 
 Hereditary wealth, Andrew Carnegie on 45 
 
 Heredity 12, 31, 45, 46 
 
 Herod 1-3 
 
 Heterogeneity of people of U. S 41 
 
 Historians, point of view of, contrasted with that of 
 
 economists 53 
 
 Historical Association, American 53 
 
 Historical facts, scientific value of 32 
 
 Historical laws .~. 23 
 
 Historical method 29 
 
 204
 
 INDEX 
 
 Historical school, German 12, 27-30 
 
 Historiometry 31 
 
 History, conception of, as economic laboratory, 52; 
 dynamic period of world's, 64; economic, 40, 54; 
 economic interpretation of, contrasted with eco- 
 nomic utilization of, 52; law of, 52; social 
 forces in American, 53. 
 History, Documentary, of American Industrial 
 
 Society 51 
 
 Hoffman, Dr. F. L., accident statistics 172 
 
 Homestead exemption laws 78 
 
 Horn, General von 94 
 
 Hospital, for industrial diseases in Milan, 112, 187, 
 
 188; isolation in Connecticut, 169, 170, 185; 
 
 Massachusetts General, 112, 189; U. S. compared 
 
 to a, 37. 
 
 Hours of labor, in Zeiss-Stiftung, 148, 155-158; laws 
 
 imiting, of children, 84, 88. 
 Housing conditions, movement for better, 189; tuber- 
 culosis caused by unsanitary, 188. 
 
 Human life, average duration of 72 
 
 Human scrap heap 102 
 
 Ideal, economic, of U. S 77-80 
 
 Idleness, voluntary 48 
 
 Imagination, scientific, 23 ; social, 166. 
 
 Immigration 36, 69 
 
 Incidence of taxation 24 
 
 Income, surplus 24 
 
 Increment, unearned, taxation of 16 
 
 Indentured labor 43, 132 
 
 Index of State economic documents 50 
 
 Individualism, not the only antithesis to socialism, 95, 96 
 Industrial accidents, see accidents. 
 Industrial diseases, see diseases. 
 
 Industrial organization, new forms of 39 
 
 Industrial poisons, list of 120 
 
 205
 
 INDEX 
 
 Insurance, accident, 70, 134; compulsory, 84, 90, 92, 
 108, 134, 147, 149; in benefit societies in the 
 U. S., 113; in Germany, 79, 114, 134, 147; in 
 Zeiss- Stiftung, 147, 149, 150; invalidity, 134; 
 investigation of, in New York, 125; of aerial 
 risks, 66; of old age in Germany, 114; of sick in 
 merchant marine of U. S., 79 ; of sick in Switzer- 
 land, 113; unemployment, 92; workmen's, 70. 
 Interest, affected by law or custom, 123 ; rate of, 42 ; 
 
 rate of, in Wall Street, 126. 
 Interests, economic, 34; and political questions, 36. 
 International Association for Labor Legislation, 71 ; 
 application of practical principles by, 119, 120; 
 Bulletin of, 120. 
 
 International treaties 71 
 
 Interpretation, economic, contrasted with economic 
 
 utilization of history 52 
 
 Intestacy 35, 36 
 
 Invalidity, compulsory insurance against 134 
 
 Inventions, encouraged by patent laws, 171; policy 
 of Zeiss- Stiftung regarding, 158, 159; property 
 right in, 127. 
 Investigations, Committee of Fifty, on Liquor Prob- 
 lem, 183, 184; New York insurance, 125; Sage 
 Foundation, of salary loan business, 126. 
 
 Irrigation 80, 81, 97 
 
 Italy, hospital for industrial diseases in ..112, 187, 188 
 Jena, University of, 145, 164 ; confers degree on Carl 
 Zeiss, 142; gifts of Zeiss-Stiftung to, 159, 160. 
 
 Jevons, W. Stanley 15, 16, 26-28, 37 
 
 Johnson vs. Southern Pacific Eailroad Company, 173, 174 
 
 Kellogg, Charles P 191 
 
 Keynes, John Neville 27, 28, 30 
 
 Kiao Chau 16 
 
 Knies, Karl 29 
 
 206
 
 INDEX 
 
 Labor, application of free, 43 ; child, 88 ; effect of, 
 on production, 44; experiments in efficiency of, 
 43; hours of, in Zeiss-Stiftung, 155-157; inden- 
 tured, 43, 132; legal status of, 24; methods of 
 applying, to land, 43; new standard of, created, 
 88; organization of, 36; problems affecting, GS; 
 reaction of wealth upon efficiency of, 44; skilled, 
 70. 
 
 Labor contract, 62; forms of, 132-134; in Zeiss- 
 Stiftung, 149, 150. 
 
 Labor laws, administration of, 117; lien, 134 ; 
 "master and servant," obsolete expression in, 
 69; necessity for recording operation of, 118; 
 number passed in U. S. in 1907, 98; Prussian 
 child, 94. 
 
 Labor legislation, aims to distribute wealth, 95 ; aims 
 to preserve race, 94; American Association for, 
 see American, etc.; analogy to monetary legisla- 
 tion, 86-92; classes of, 83-93; conservation and, 
 80, 81; consistency given to, 79, 80; distributive 
 or positive, 84, 85, 89-91; economic progress 
 involves, 73 ; grouped as socialistic, 95 ; history 
 of, shows dangers in distributive legislation, 90; 
 International Association for, see International, 
 etc. ; interstate and international needed, 71 ; less 
 frequently expressive of class feeling, 76; neces- 
 sary to prevent evils of progress, 68; necessity 
 of careful investigation of facts in. 111; number 
 of laws passed in 1907 in U. S., 98; permissive, 
 85, 86, 91, 92; problems of, 70, 71; promptness 
 of, 75; protective, 84, 86-89, 94, 97; purpose of, 
 94; recognition of, as permanent feature, 76, 
 77; requisites of. 111; societies relating to, 39; 
 subject for international treaties, 99 ; uniformity 
 of, 76; views of Professor Ely on relation of, 
 to economic theory, 82. 
 
 207
 
 INDEX 
 
 Labor organizations, laws regulating 85 
 
 Labor problems 43 
 
 Labor vmions, 91, 92; records of, 50. 
 
 Labor welfare, Zeiss- Stiftung and 158 
 
 Laboratory, economic, conception of history as ... . 52 
 
 Laboratory methods 49 
 
 Laborers, premature death of 103 
 
 Laisses faire, 83; argument for, 110; doctrine of, 83. 
 Land, methods of applying labor to, 43 ; public policy 
 
 of U. S. in regard to, 78. 
 Land tenure, 24, 42 ; societies relating to, 39. 
 Lands, public, 36; policy of U. S. in regard to, 78. 
 Law, affecting economic relations, 51, 52 ; Anti-Trust, 
 15; common, re-enacted in Massachusetts, 114; 
 distribution of wealth by, 124; endless chain 
 created as result of application of constitutional, 
 176; Fugitive Slave, 36; immutability of, 74; 
 limiting number of saloons a dead letter, 185; 
 made for man, 110; New York State work- 
 men's compensation, declared unconstitutional, 
 175, 176; of conquest, 62; of contract, 62; of 
 diminishing returns, 24; of pendulum, 54; of 
 supply and demand, operation of, limited by non- 
 economic forces, 126-136; putting new respon- 
 sibilities upon capital, 71; tenement house, in 
 Connecticut, 188; terms read into contracts by, 
 134. 
 Law schools, science of legislation absent from cur- 
 ricula of 105 
 
 Laws, administration of, 98, 117; compensation, in 
 conflict with constitution, 173, 175, 176; com- 
 pulsory insurance, 90; corporation, encourage 
 production, 171; early, economic ideals of, 35; 
 economic, 23, 28, 29, 52; employers' liability, 
 84; examples of distributive or positive, 84-86; 
 examples c f permissive, 85, 91 ; examples of pro- 
 
 208
 
 INDEX 
 
 tective, 84, 88; historical, 23; homestead exemp- 
 tion, 78; importance of recording economic 
 results of, 52; labor lien, 134; lack of, for pro- 
 tection of women and children, 98, 107 ; limiting 
 age and hours of employment, 84, 88 ; mone*"ar7 
 circulation, 86, 87; more uniform needed, 16; 
 of Medes and Persians, why immutable, 74; 
 patent, 127, 171 ; power of courts to nullify, 
 interrupts experimentation, 49 ; provision for exe- 
 cution of, 116; scientific, 22, 23; statistical, 23; 
 study of operation of past, 83; tenement house, 
 69, 188. 
 Legislation, American Association for Labor, see 
 American, etc.; compared to surgery, 110; eco- 
 nomic conditions retard good, 100; effects of 
 careless, 107; experimental, 28; experimentation 
 through, 38 ; hampered by constitution, 108, 173, 
 175, 176; lobbying for, 119; necessary to prevent 
 evils of progress, 68 ; necessity for careful draft- 
 ing of, 115; necessity for study of pre-existing, 
 114; need for, in case of overexertion and unem- 
 ployment, 72; product of unskilled labor, 106; 
 provision for execution of, 116; restrictive, the 
 condition of economic freedom, 81; social, 28; 
 see also labor legislation. 
 
 Legislative Eeference Library of Wisconsin 100 
 
 Legislators, lack of training of, in U. S. . . .99, 100, 105 
 Legislatures, need economic annex for recording 
 
 results of laws 52 
 
 Leisure class 47 
 
 Lex Ehodia de jactu 1 08 
 
 Life, average duration of human 72 
 
 Liquor, crimes committed as result of, 183, 184; 
 
 poverty caused by use of, 184. 
 Liquor interest, powerful political agency 184 
 
 209
 
 INDEX 
 
 Liquor problem, Committee of Fifty on, 9, 183, 184; 
 economic aspects of, 183. 
 
 Liquor traffic, control of, in Connecticut 185 
 
 Lobbying 119 
 
 ' ' Looking Backwards, ' ' Bellamy 's • • • 38 
 
 Lugano, meeting of International Association for 
 
 Labor Legislation in 120 
 
 Lyman, Dr., on employment of discharged tubercular 
 
 patients 189, 190 
 
 McCall, Hon. Samuel W., and experimental legisla- 
 tion in Oregon 28 
 
 Machinery, effects of 70 
 
 Man, civilized, and struggle for supremacy over 
 nature, 58-60; dealings of, with fellowmen, 60. 
 Management, scientific, applied to economic science 32 
 
 Marine Hospital Service 78, 79 
 
 Marriage, distribution of wealth by 124 
 
 Massachusetts, Body of Liberties, 35; forest fires 
 
 caused by smokers in, 182; General Hospital, 
 
 social service department of, 112, 189; law 
 
 limiting price of stocks in, 129. 
 
 "Master and servant" now an obsolete expression 
 
 in labor laws 69 
 
 Matches, non-poisonous marketed by New Jersey fac- 
 tory, 180; white phosphorus, 178-180. 
 
 Material, economic, buried in State archives 50 
 
 Medical examination in Zeiss- Stiftung 148 
 
 Medical school, of St. Louis, chair of preventive medi- 
 cine in, 189; Yale, 188. 
 
 Medical science, social side of 112 
 
 Medical sociology, formation of society for study of 112 
 Medicine, economic considerations in, 189; preven- 
 tive, 188, 189; tendency of science of, 8. 
 
 Mental Hygiene, Society for 190 
 
 Method, experimental in economics, 25, 32; historical 29 
 
 210
 
 INDEX 
 
 Methods, laboratory, 49; of agriculture, 42, 43; of 
 organization, changes in, 68, 71 ; of production, 
 changes in, 68, 70, 71 ; of remuneration, 43. 
 
 Migration, laws limiting 84 
 
 Milan, hospital for industrial diseases in . .112, 187, 188 
 Mill, John Stuart, on deduction, 10; on experimeiita- 
 tion, 5-7; on unearned increment, 16. 
 
 Missouri Compromise 36 
 
 Monetary legislation, analogy of, to labor legisla- 
 tion 86-92 
 
 Money, experience of world in dealing with, 86, 87; 
 loaning of, to employees by Zeiss- Stiftung, 158. 
 
 Moore, Prof. H. L., "Laws of "Wages" 30, 31 
 
 Mores, of the people, 40; of time and country, 77, 78. 
 
 Mormons 38 
 
 Mount Wilson Observatory 11 
 
 Muhammad, son of Tuglak 2, 4 
 
 National Housing Association, organization of, 188, 189 
 
 Natural resources, exhaustion of 25 
 
 Natural sciences 10, 12 
 
 Natural selection 60 
 
 Nature, civilized man and, 58-60; deficiencies of, 25; 
 
 in state of equilibrium, 58. 
 Necrosis, phosphorus, 15 ; international treaty to pre- 
 vent, 178; legislation against, in U. S., 179, 180. 
 New England, 34; freehold in, 35; rule of primo- 
 geniture abandoned in, 35. 
 
 New Harmony community 38 
 
 New Haven, directory of local charities in, 192; 
 fires caused by smokers in, 181; map showing 
 cases of tuberculosis in, 188. 
 New Haven Organized Charities Association, local 
 
 directory of charities made by 192 
 
 New Jersey, non-poisonous matches marketed by 
 
 factory in 180 
 
 Newmarch, William 26, 28 
 
 211
 
 INDEX 
 
 New York, accidents m factories, quarries, and tunnel 
 constructions in, 171 ; investigation of insurance 
 in, 125; Triangle shirtwaist fire, responsibility 
 for, 181; workmen's compensation law declared 
 unconstitutional in, 175, 176. 
 
 New Zealand, compulsory arbitration in 135 
 
 Observation in economics 12 
 
 Old age insurance, German 114 
 
 Old age pensions, in Great Britain, 114; introduced 
 into Zeiss-Stiftung, 147; laws, 84. 
 
 Opportunity, equality of 7° 
 
 Organization, changes in methods of, 68, 71; indus- 
 trial, new forms of, 39; of labor, 36. 
 
 Organizations, labor, laws regulating 85 
 
 Organized Charities Association of New Haven, direc- 
 tory of local charities by 192 
 
 Parasitism in ' ' leisure class " 45, 47, 48 
 
 Parliament, British, Blackstone's opinion of, 104; 
 old age pension act and, 114. 
 
 Past, records of the 5* 
 
 Patent laws, encourage inventions 171 
 
 Patents, policy of Zeiss-Stiftung regarding 158, 159 
 
 Paternalism l^^ 
 
 Pathology, economic 25, 26, 48 
 
 Pearson, Karl 19, 22, 32 
 
 Pendulum, law of 5* 
 
 Pensions, old age, Great Britain, 114; laws regard- 
 ing, 84; Zeiss-Stiftung, 147, 150. 
 
 Peonage 43, 62, 132 
 
 People, heterogeneity of, 41; responsibility rests 
 with, for endless chain of charity, 177. 
 
 Perfectionists °° 
 
 Permissive labor legislation 85, 86, 91, 92 
 
 Phenomena, analysis of 24 
 
 Philanthropy, schools of 191 
 
 212
 
 INDEX 
 
 Phosphorus, law prohibiting use of, in U. S. delayed 
 
 by habits of smokers 178-180 
 
 Phosphorus bill 16, 179 
 
 Phosphorus necrosis 15, 178 
 
 Pierstoff, Julius 138 
 
 Pioneers of frontier, compared to those of industry 61 
 
 Pisa, lamp in cathedral of 54 
 
 Pittsburgh Survey, exhibit of, 100-102; made under 
 
 direction of The Survey, 190. 
 
 Place, Francis 14 
 
 Playgrounds 97 
 
 Poisons, industrial, list of 120 
 
 Polar explorations and the press 65, 66 
 
 Policy, public land, of U. S 78 
 
 Poor relief, lavish, danger of, 91 ; experience of Great 
 
 Britain with, 114, 115. 
 
 Political questions, and economic interests 36 
 
 Population, immigrant, 169; improvement in quality 
 
 of, 72, 73; increase in, 68, 69; Eicardo's theory 
 
 of increase of, 44. 
 
 Posteritism 96, 103 
 
 Poverty, caused by use of alcohol 183, 184 
 
 Prejudice, racial 35 
 
 Preservation of race 94 
 
 Preventable disease 73 
 
 Preventive medicine, 188, 189; chair of, in St. Louis 
 
 Medical School, 189. 
 Primogeniture, rule of, abandoned in New England 35 
 Processes, economic, influenced by legal or institu- 
 tional factors, 124; mathematical, 30. 
 Production, 24; changes in methods of, 68, 70, 71; 
 
 depends upon legal form of contract, 130-137; 
 
 effect of labor on, 44 ; encouraged by corporation 
 
 laws, 171. 
 Profit sharing, 136; in Zeiss-Stiftung, 153, 154. 
 Profits, limited by public opinion or law 127-129 
 
 213
 
 INDEX 
 
 Progress, economic, Clark's elements of, 68-72; 
 
 involves labor legislation, 73; spirit of, 64. 
 Prohibitory tax to prevent use of white phosphorus 179 
 Property rights, in inventions, 127; readiness to use 
 discovery as basis of, 66. 
 
 Protective labor legislation ' 84, 86-89, 94, 97 
 
 Protective tariff, 90, 171 ; Alexander Hamilton and, 
 79; Mill and, 5-7; wealth of nations and, 6, 10, 
 Prussia, child labor laws of, 94; qualifications for 
 factory inspectors in, 117, 118. 
 
 Public, restriction of profits in interest of 128, 129 
 
 Public Health, Committee on, in Conn 106 
 
 Public lands of U. S 36, 78 
 
 Public poor relief 63 
 
 QuintUian 115 
 
 Eace, liberty of, 78; purpose of labor legislation to 
 
 maintain quality of, 94. 
 Races, materials bearing upon mixture of, in U. S., 
 48 ; wars of, 35. 
 
 Racial prejudice 35 
 
 Railroads, accidents on, in U. S., 171 ; aesthetic obli- 
 gations of, 127, 128; enjoy right of eminent 
 domain, 171 ; in U. S. compared with those in 
 Germany and Switzerland, 128; law enacted 
 requiring automatic couplers on, 173. 
 
 Rane, F. W 182 
 
 Reactions, economic, study of 46, 47 
 
 Records, imperfection of, 51; inadequacy of, 50; of 
 operation of laws, necessity for, 52. 
 
 Regulation of Corporations 36 
 
 Religion, wars of 34 
 
 Remuneration, methods of 43 
 
 Rent, affected by form of law, 123; determination 
 of, 126. 
 
 Rente, in Guernsey 131, 132 
 
 Ricardo, David 44 
 
 214
 
 INDEX 
 
 Eist, Charles 30 
 
 Eoosevelt, Theodore 58, 59 
 
 Roscher, Wilhelm 29 
 
 Ruskin Colony 38 
 
 Safety appliances, laws requiring 84 
 
 Sage Foundation, 65; investigation of salary loan 
 
 business by, 126. 
 St. Louis Medical School, chair of preventive medi- 
 cine in 189 
 
 Salaries, of oflficials of Zeiss- Stiftung 159 
 
 Samaritan, Good, and the good citizen, 186; parable 
 of, 165; sequel to parable of, 166, 167. 
 
 Savings, compulsory 92 
 
 Schloss, David 133 
 
 SchmoUer, Gustav von 18, 27, 30 
 
 Schomerus, Dr. Fr 138, 161 
 
 School, Chicago, of civics and phOanthropy, 191 ; 
 
 St. Louis Medical, 189; Yale Medical, 188. 
 Schools, law, 105; of agriculture, 65; of philan- 
 thropy, 191. 
 
 Schott, Dr. Otto 140 
 
 Schumpeter, J 22 
 
 Science, application of, to agriculture, 64, 65; con- 
 trasted with description, 53-54; "dismal," 55; 
 economic, Jevon 's contribution to, 28 ; economic, 
 two phases of, 55, 56 ; of legislation, conspicuous 
 by its absence from curricula of law schools, 
 105; working hand in hand with charity, 191. 
 Sciences, co-operation between, 112; natural, 10, 12. 
 
 Scientific economist, aim of 21, 22 
 
 Scientific imagination 23 
 
 Scientific laws 22, 23 
 
 Scientific management, applied to economic science 32 
 Scientific method, see economic experimentation. 
 
 Scrap heap, human 102 
 
 Selection, artificial, 60 ; natural, 60. 
 
 215
 
 INDEX 
 
 Serfdom 132 
 
 Sesquisulphide of phosphorus 179 
 
 Shakers 38 
 
 Sherman Act 14 
 
 Sick insurance, in Germany, 79, 134; in merchant 
 marine in U. S., 79; in Switzerland, 113; in 
 Zeiss-Stiftung, 147, 149, 150. 
 Sickness, compulsory insurance against . . . 134, 147, 149 
 
 SUver 14 
 
 Single Taxers, Fairview Colony of 38 
 
 Slavery, 36, 43, 62, 63 ; forms of, 132, 133. 
 
 Smith, Adam 15 
 
 Smokers, cause of forest fires in Massachusetts, 182; 
 contributions to endless chain of charity by, 
 180-183; fires caused in New Haven by, 181; 
 fires in Yale grandstand caused by, 181; raised 
 to position of privileged class, 182, 183; respon- 
 sible for Triangle shirtwaist fire, 181. 
 
 Social imagination, demanded by new charity 166 
 
 Social organism 19 
 
 Social policy, experiments in 28 
 
 Social service supplanting charity 190 
 
 Social Utopias 38 
 
 Socialism, 95, 96, 103 ; advocated as remedy, 63, 64 ; 
 among employees in Zeiss-Stiftung, 162, 163; 
 argument for, 47. 
 Societies, benefit, 85; to promote reform, 39. 
 
 Soil, exhaustion of 25 
 
 Somerf eld, Prof. Th 120 
 
 Southern Pacific Eailroad Company vs. Johnson 173, 174 
 
 Spaniards and coartacidn 133 
 
 Special favors, distribution of wealth by 125 
 
 Spoils system 98 
 
 State, intervention of, in labor, 89; necessary, 73. 
 Statistical laws 23 
 
 216
 
 INDEX 
 
 Statistics, imperfection of vital and accident, 111 ; 
 vital, registration of, 99. 
 
 Stiftungs-Verwaltung, of Zeiss- Stiftung 145, 153 
 
 Strike, anthracite coal 19 
 
 Stimson, F. J 114 
 
 Straubel, Eudolf 142 
 
 Struggle for existence, civilized man and 60 
 
 Supply and demand, law of, limited by public opinion 
 or law, 127-129; not affecting distribution of 
 wealth, 123-125. 
 
 Surplus income 24 
 
 Survey, The, Pittsburgh Survey made under direc- 
 tion of 190 
 
 Sweden, average duration of life in 72 
 
 Switzerland, Civil Code of, provides for Gult, 132; 
 investigation of sick insurance in, 113; railroads 
 of, compared with those of the U. S., 128. 
 
 Talcott, Governor 36 
 
 Tariff duties 126 
 
 Tax, prohibitory, on poisonous matches 109 
 
 Taxation, 43; incidence of, 24. 
 
 Taximeter, a means of avoiding disputes 135 
 
 Taylor, Frederick W 44 
 
 Team work, need of, 31 ; in charity work, 187. 
 
 Tenancy, free 43 
 
 Tenement house laws, 69; in Connecticut, 188. 
 
 Trade Unions 14, 20, 43, 75 
 
 Treaties, international, 71; legislation a subject for, 
 99. 
 
 Triangle shirtwaist fire, responsibility for 181 
 
 Tuberculosis, 97, 168; deaths from, in Pittsburgh, 
 
 102; due to conditions of living in large cities, 
 
 188; employment of patients recovering from, 
 
 190; map showing cases of, in New Haven, 188. 
 
 Tunnel constructions, accidents in New York State 
 
 in 171 
 
 217
 
 INDEX 
 
 Turner, Frederic J 53 
 
 Typhoid fever, deaths from, in Pittsburgh 101 
 
 Unconstitutionality, bugaboo of 108 
 
 Unearned increment, taxation of 16 
 
 Unemployment, insurance against, 92; statistics of 
 
 involuntary, 48. 
 United States, accidents in coal mines in, 171; 
 advantage of, as an experiment station, 37; as a 
 legislative problem, 98; average duration of life 
 in, 72; backvrardness of law-making in, 100; 
 common basis of English language and law in, 
 41; compared with British colonies, 37; com- 
 pared to hospital, 37; difficulties in movement 
 for posteritism in, 97-102; disregard of human 
 scrap heap in, 102; economic ideal of, 77-80; 
 experimentation interrupted in, 49; hetero- 
 geneity of people in, 41; history of economic 
 experimentation in, 42; history of, compared 
 with Europe, 34, 35; labor unions in, 92; 
 marine hospital insurance in, 78, 79; number 
 insured in fraternal and benefit societies in, 113; 
 number of accidents on railroads in, 171, 172; 
 number of fatal accidents in, 172; public land 
 policy of, 78; railroads in, compared with those 
 of Germany and Switzerland, 128; untrained 
 legislators in, 99, 100, 105. 
 
 United States Steel Corporation 164 
 
 Utopias, social, in the U. S 38 
 
 Visiting nurses 190 
 
 Vital statistics, registration of 99 
 
 Wage boards 135 
 
 Wage contract 85, 132-135 
 
 Wage receivers, and experimentation 40 
 
 Wage system, forms of contract of 133 
 
 Wages, affected by form of law or custom, 123; 
 fixing of, by wage boards, 85; influenced by 
 
 218
 
 INDEX 
 
 other factors than law of supply and demand, 
 129, 130; in Zeiss- Stiftung, 149; "Laws of," 
 31; observation of Mr, Taylor on, 44; rates of, 
 43; Eicardo and, 44; systems of, 43. 
 
 Wants, changes in consumers' 68, 71, 72 
 
 Wars of race, 35 ; of religion, 34. 
 Wealth, distribution of, 24, 62; distribution of, with- 
 out reference to law of supply and demand, 1^13- 
 127; hereditary, 45; increase in capital tends to 
 make large aggregations of, 69 ; irresponsibility 
 of, in U. S., 47; reaction of, upon efficiency of 
 labor, 44; transfer of, by law, 91, 124, 
 
 Wealthy families, parasitic members of 45, 47, 48 
 
 Whateley, Eichard, definition of catallaetic 123 
 
 Wills, distribution of wealth by 124 
 
 Winkelmann, A 138 
 
 Wisconsin Legislative Eeference Library 100 
 
 Women, argument for protecting, 94; failure to pro- 
 tect, 107; lack of adequate laws for protection 
 of, 98 ; laws limiting hours of employment of, 
 84, 
 Woods, Frederick Adams, 31, 46; on vices of aris- 
 tocracy, 45, 
 Worker, displacement of skilled, by unskilled, 70; 
 sick or superannuated, 63, 
 
 Workingmen, budgets of 48 
 
 Workmen's compensation, 108, 174-176; a problem of 
 labor legislation, 70; economics of decision 
 against New York State law on, 176; New 
 York State law declared unconstitutional, 175, 
 176; principle of, 174, 175; treaty for, 71, 
 Workmen's insurance, 70, 90; arguments for, 94; 
 compulsory, 108, 134; compulsory, for carrying 
 burden of accidents, 134, 174-176; see also 
 insurance, 
 Yale Medical School 188 
 
 219
 
 INDEX 
 
 Zeiss, Carl, birth and education, 138; death of, 142; 
 establishment of business, 138, 139; growth of 
 business, 141; interest of, in Schott und Genos- 
 sen, 140. 
 
 Zeiss- Stiftung, complicated nature of, 143 ; condi- 
 tions of ownership of, 143, 144; criticisms of, 
 162; employees appointed without reference to 
 race, etc., 148; founding of, 142; general sum- 
 mary of results of, 160, 161; gifts to University 
 of Jena and for public purposes by, 159, 160; 
 guarantees minimum weekly compensation, 148; 
 holidays, 148; hours of labor in, 148, 155-157; 
 indemnity to discharged employees of, 150, 151; 
 insurance features of, 147, 149; interest and sig- 
 nificance of, 163, 164; leave of absence for ser- 
 vice of Empire or state granted to employees, 
 148; medical examination of juvenile workers, 
 148; notice to be given before leaving works, 
 150; organization of, and management of, 145, 
 146; patents, 158, 159; pensions, 150; profit 
 sharing with employees, 153, 154; profits set 
 aside for interests of industry or science, 153; 
 purposes of, 144; relations of employees of, to 
 establishment, 146, 147; reserve fund of, 152; 
 salaries of officials of, 159; savings bank of, 
 148; sick fund of, 149; socialists among work- 
 men in, 162, 163; Stiftungs-Verwaltung of, 145, 
 153 ; strikes in, 161 ; under ultimate control of 
 government, 145; Vorstdnde of, 145; wages of, 
 149; welfare work of, 158. 
 
 220
 
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