LIBRARY UNIVERSITY OF CALIFORNIA. U'K Digitized by the Internet Archive in 2007 with funding from IVIicrosoft Corporation http://www.archive.org/details/distributionofprOOat.kirich THE Distribution of Products OR THE MECHANISM AND THE METAPHYSICS OF EXCHANGE three essays What Makes the Rate of Wages? What is a Bank? The Railway, the Farmer, and the Public PY EDWARD ATKINSON FIFTH EDITION. 'TJSI7ERSIT 'XPOIl.^ G. P. PUTNAM'S SONS NEW YORK LONDON ay WEST TWENTY -THIRD STREET 24 BEDFORD STREET, STRAND Vsit ^nicherbochrr ^km 1892 ^^t CorVRIGHT, 1885 BY EDWARD ATKINSON T Elecirotyped, Printed, and Bound by tlbc Itnickerbocker Press, t^ew ]t?orf{ C. P. PfTNAM's Sons '^^ 0? THR 'TJinVERSITT; m%t^ GENERAL PREFACE. It may happen that one whose life from very early years has been of necessity mainly devoted to active business and to prac- tical affairs, will be found as well qualified to treat the mo- mentous questions which are the subjects of the following essays as students or practised writers whose pursuits are far removed from the actual work of providing for the material wants of men. But if this do not prove to be the case, yet the business man who puts the results of his observations into a simple form, easy of comprehension, may yet aid those who are more competent than himself in evolving a knowledge of the higher laws upon which the very existence of society depends. A true commercial and economic history of nations, or even of the English-speaking people, remains to be written. " How did these people get their living ? " is the question which every practi- cal man asks when reading about the struggles of dynasties, the narrative of wars and battles^ and the records of debates of legis- lative bodies, which constitute the chief material of history. Even when he reads such history with intelligent comprehension, he can- not fail to observe that no matter how each great struggle has be- gun^ whether incited by religious enthusiasm, by personal ambi- tion, or by the uprising of an oppressed people, in the end it has almost always been the commissariat that has controlled events. Power has fallen not so much to the strongest battalions and to the heaviest guns, as to those who could sustain the battalions longest, and support them with bread and meat as well as with powder and iron. On the other hand, one who reads even the history of our own country from the commercial standpoint may well believe that fv GENERAL PREFACE, had Adam Smith's " Wealth of Nations " been written fifty years earlier, it might have exercised as profound an effect on the com- mercial policy of England during the fifty years preceding 1776 as it did in the fifty years subsequent to that date, in which case the colonies of America might have separated from the mother country by peaceful methods, and the War of the Revolution might have been spared. Only the present can be called a specifically commercial cen- tury, and one of its phases has been the abuse of the power of credit. Only in a commercial era could national debts have been incurred in the way they have been during the last fifty years, and now these debts threaten the very existence of the nations which are burthened by them. Since the beginning of the present century, the public debt of Europe has risen from $2,600,000,000 to over $22,000,000,000. This debt has been accompanied in many States by the issue of paper substitutes for money, which have depreciated, and either by that method, or in some more summary way, the repudiation of a large part of it may become a necessity before the end of the century. There are two kinds of national debt. One consists of debts imposed upon the property and products of the people by a dy- nasty, or by a privileged class of legislators, without the consent of the governed, and generally for the prosecution of wars by which the people were oppressed rather than made free. So long as such a debt exists it works a false distribution of wealth and of product, and it has even been said by one of the greatest living statesmen of England, that her " national debt is the chief cause of her pauperism." The other kind of national debt is one incurred by the consent of the governed for the purpose of establishing personal liberty and equal rights. Such is our debt. It will all, or nearly all, be paid within one generation from the date when it was incurred, or at least within the present century ; and it will have fallen to a democratic nation, founded upon manhood suffrage, to be the first among nations to redeem a substitute for money, put into use as GENERAL PREFACE. V money under an act of legal tender for the purpose of collecting a forced loan, in the true coined money named in the promise. We shall also be the first to pay our debt without discount or de- preciation. When our faith in democracy fails us, let us think of this and again take courage. But if I can add nothing to the science of history by putting these practical treatises within the reach of students, I may yet offer them to my business friends and associates with the assur- ance that even if they may serve no other purpose, such studies lighten the necessary drudgery of our daily life, lend a phase of imagination to our work, bring friends and sympathy among men of science and literature, and render life far better worth living than it would be if it could only be measured by the mere dollars which we earn. To the Directors of the Corporations with which I am now con- nected and by whom my own daily work is supervised and aided, I dedicate this volume, in testimony of the cordial friendship by which business men may become united, even when differing widely in their views upon great questions, of public policy. EDWARD ATKINSON. Brookline, Oct. 4, 1884. WHAT MAKES THE RATE OF WAGES ? A TREATISE PREPARED BY EDWARD ATKINSON Of Boston, Mass., U. S. A. AND SUBMITTED AT THE MEETING OF THE BRITISH ASSOCIATION FOR THE ADVANCEMENT OF SCIENCE, HELD IN MONTREAL, CANADA, AUGUST 28, 1884 ; ALSO PRESENTED BY TITLE AT THE MEETING OF THE AMERICAN SOCIAL SCIENCE ASSOCIATION, HELD IN SARATOGA, SEPTEMBER, 1 884 ** In proportion to the increase of capital the absolute share (of a givei product) falling to capital is augmented, but the relative share is diminished on the other hand, the share falling lo laoor is increased, both absolutely an< relatively. " — Bastiat. PREFACE. The only time which the writer could devote to the dic- tation of this treatise and to the computations which have been necessary in its preparation, has been in the short inter- vals of active business, and in the few evenings which could be spared after the duties of the day were over. The treatise therefore takes a somewhat unsuitable form, consisting of introduction, the treatise proper, notes and ex- planations which have been added, and the various appen- dices sustaining the main argument, — many of which ad- denda are entitled to more consideration in the United States than they would have on the part of the British Association for the Advancement of Science, before whom the treatise proper was first read. If time sufifiiced, all these detached portions might well be re-written and condensed in the treatise itself. But this is impossible. I submit the essay with the hope that it will give a direction to a thorough and complete official investigation, if the method is found to be a suitable one ; or to a continuation of the study on the part of competent economists who have more time than I have to devote to such work, rather than with any expectation of its being accepted as final and conclusive. All persons with whom I have conferred agree upon the paramount importance of the main question presented. All men who have studied the phenomena of wages are somewhat appalled by the indications of the contest which 2 PREFACE. seems to be approaching in every civilized state. This struggle takes the aspect in one place of a contest between the landlord and tenant ; in another between landowner and peasant ; in another between mill-owner and operative ; in another between privileged class and proletariat ; in another between rich and poor; and in another between the needy and the well-to-do, whether the latter be rich or only well- off. These are all different phases of the same question ; all rest for their conclusion upon the simple problem : *' What Makes the Rate of Wages ? " Entirely subordinate to these great divisions between classes may be found the minor questions of State inter- ference with the hours of labor; State regulation of the railway service ; protection and free trade ; usury laws ; the employment of women in factories ; and other labor ques- tions so-called. In this treatise I have avoided, as far as possible, any reference to these minor questions in order to keep its main purpose distinct and separate. I trust that an attempt to present, if not to determine, a fundamental principle underlying all these various questions will be as welcome to the advocate of protection as it may be to the advocate of free trade ; as welcome to the believer in cooperation, as it may be to one who trusts in competi- tion ; as welcome to the person to whom the wrongs of the poor seem most urgent, as it may be to the man of wealtli who considers his property a trust — involving duties as wel! as rights. Edward Atkinson. Brookline, Mass., U. S. A., September \%, 1884. UFI7ERSIT7] INTRODUCTION. The purpose of the following treatise is to consider the forces to which both employer and employed are subjected in determining what rates of wages can be paid in money and which control the bargains made between them. It is not denied that an employer who is in the possession of large capital may agree to pay a certain rate of wages for a time, irrespective of any other conditions than his own will. But his power to do so will be limited by the amount of capital previously earned which he is willing to spend in anticipation of being able to recover the sums which he may agree to pay from the sale or use of the product upon which the work is done. Sooner or later the rate of wages is de- termined by conditions over which neither the employer nor the employed have any control. It is these forces which will be considered. The purpose of this treatise is to determine the rate of wages expressed in terms of money. The distinction must be made between absolute wages and money wages. Abso- lute wages consist of the food, fuel, shelter, and savings if any, which are the true incentive to work. Money is merely the instrument wherewith absolute wages are obtained. Money serves to measure the work done, provided it be true money. If it be *'mock money," as inconvertible paper money has been rightly called, it will serve to meas- ure the work done, and in addition thereto the loss suffered by the workman, who is subject to the risk of the fluctua- 3 4 IN TROD UC TIOX. tion in the purchasing power of the rate of his wages, which always ensues when inconvertible paper or mock money is forced into use in place of true money. Before any intelligent consideration can be given to the determination of what makes the rate of wages, an absolute definition needs to be given to the word money. One of the great benefits which ensues from the study of economic questions is this necessity for the careful choice of words, for accurate definition, and for precision in the use of lan- guage as an instrument of thought or for the naming oi things. The Supreme Court of the United States has lately lent itself to the dangerous and fraudulent theory Q>i fiat money The Justices, save only one, have found in the sections oi the Constitution which give Congress power to pass laws tc enable the Executive " to coin money," or " to borro\^ money," reasons for yielding to Congress the power to coii paper and to make it lawful money. This decision is great!} to be regretted. It is replete with danger, and may ye cause much disaster to the people of the United States Upon such a question as this, which is something more thai a mere question of statute law, students and business mei may rightly express an opinion, even if it is contrary to th( dictum of the Court. Great judges make precedents, and do not blindly follov them without consideration of the fundamental principle which must underlie all statutes, if justice is to be done b] lesal methods. When Mansfield declared that no slave couh tread the soil of England, all precedents were against hi decision. When Parsons ruled that none but free mei could breathe the air of Massachusetts, he created a prece dent, but he did not search for one. When Camden rulet that '* general warrants " were inconsistent with Englis] INrRODUCTION. , 5 liberty, he went against the precedents of the courts for generations before. Yet, in making these decisions, these great judges brought the law of the land to the high level of the principle of human freedom, without regard to prece- dent. What had not been law until they so decided, be- came the accepted principle of law which no mere statute could afterward contravene. Had our Supreme Court but sought to give a true definition to the word inoncy^ they might have ruled that neither under the provisions of the Constitution for coining money nor for borrowing money could Congress or Court find authority for coining paper into money ; or, in other words, for attempting to make something out of nothing. Had they given any considera- tion to the question. What is money ? they would not have rendered a decision which, economically considered, is ab- surd, and by which they have substantially declared that the promise of a thing is the thing itself. Under this decision the people in this country have no rights which the Supreme Court is bound to sustain, if knaves or fools in these or other times pass Acts of Congress for stealing their wages or earnings from them by an issue of legal-tender fiat money. There were many ways open to the Court for sustaining the legality of a forced loan, without debasing the science of law or forcing an interpretation to the cases cited in the opinion, when these very cases, if rightly interpreted, are at variance with the decision in this case. It may be true that students differ, and that the definitions of economists are at variance with each other upon this question of what is money. The more reason for a Court of competent juris- diction to give a definition consistent with right and justice, and to force all students or others who treat questions re- lating to money also to define the word in such a way that the substance cannot thereafter be confounded "''^-h the ^ 6 INTRODUCTION. shadow — the thing for the promise of the thing carrying no obHgation for the performance of the promise. In this very question — the subject of this treatise — " What makes the rate of wages?" this recent decision of the Court must be ignored as if it had not been rendered, because it vitiates every form of statement which can be submitted. If the standard by which the rate of wages is established is liable to be changed at the instance of an accidental ma- jority in any Congress, it ceases to be a standard. No scientific treatment of this or of any of the great economic questions now pending could be made consistently with such conditions ; nor can any sound or permanent conclusions be reached consistently with this decision. So long as it stands, all acts of fiscal legislation will be of a purely em- pirical nature. If the opinion given by Justice Gray on behalf of the majority of the Court is to be accepted, that a national lie — a promise which implies no obli- gation to maintain it, is lawful ; in other words, if a lie and a statute law can be consistent with each other, then truth, justice, history, and science alike reject and condemn the opinion by which such a conclusion has been reached. It would be out of place for an economist to venture to com- ment on the legal or technical grounds on which this opinion rests. Suffice it that in three trials the Court has been divided, and that there is as much weight of authority on one side as on the other, while outside the court it is difficult to find a lawyer of any high repute who sustains the present decision. In this treatise it will therefore be assumed that no money is entitled to the name except standard coin, containing a fixed weight of precious metal. Between two kinds of coin there may be a distinction. One may be good money, the other may be bad money ; witness our gold dollar and our IN TROD UCTION. 7 base silver dollar of light weight ; but both kinds of coin are money, while no kind of paper promise can be money. Paper can only serve as a substitute for money. The stan- dard by which we now work is the standard of gold coin ; but in the course of the treatise, many variations from this standard will have to be referred to, because during the period in which the country was subjected to the depreci- ated greenback currency, the rates of wages paid in terms of money served as no true guide to the absolute wages for which the work was done, as the purchasing power of this substitute for money varied with its own fluctuations, or in the ratio which it bore to the standard of gold coin. Among the minor evils of a vitiated currency is the uncertainty which is imparted to the statistical statements of the period in which it is used. Even a reduction of the currency prices of the war to a gold standard will only partially remedy this fault. I am well aware that many economists of repute have adopted such a definition of the word money as to include any instrument of exchange which may serve the purpose. In so doing it may perhaps be held that they have given some foundation for the charge that political economy is not a science. In the following treatise I have endeavored to prove the paramount importance of the question which serves as its title. Of what use would it be to treat the subject at all, or to attempt to analyze the forces which make the rate of wages, if there is no definite and established meaning to the word money in which the wages are rated ? Edward Atkinson. Boston, Mass., U. S. A., July, 1884. INTRODUCTION TO SECOND EDITION. The first edition of this treatise was pressed to comple- tion rather hastily, with a hope that it might have some influence on the legislation of the present Congress in respect to Railroads and Silver Coinage. A few errors have been pointed out by friendly critics, mainly owing to the slightly different results which arc reached in reducing very large sums to rates of earnings per week or per day, without carrying out the decimals to such a point as would confuse the reader. None of these apparent errors affected the conclusions, and they have been corrected. But it will be observed that only approximate accuracy can be claimed when the attempt is made to reduce the huge figures of estimated national production to the unit of what each person can enjoy each day. Suffice it that even if the estimate of annual products be varied for possible error by ten per cent., or $1,000,000,000 (one thousand million dollars), the corresponding change in the share which each person may enjoy on the average each day would be only five cents worth more or less. It has, perhaps, been a mistake, not to make a more com- plete separation of the theory of diminishing profits and increasing wages, from the statistics by which the theory is sustained ; but as the work grew upon the writer's hands from what was intended to be a short essay, suitable for presentation at the meeting of the British Association for the Advancement of Science, into a treatise of many pages, the theory and its application became so interwoven that the writer himself could hardly have separated them in any greater measure. Edward Atkinson. Brookline, Mass., Feb. ig, 1885, 8 WHAT MAKES THE RATE OF WAGES? The phenomenal circulation, in England, of Henry- George's book, entitled " Progress and Poverty," and the statement that it has already been translated into every civilized language although it made little impression in the United States, draws attention to the fact that all other questions have become relatively insignificant compared to the problems which relate to the distribution of wealth. The premises which Henry George assumes are without substantial foundation in fact and his conclusions are there- fore without warrant. The production of what constitutes wealth or welfare is no longer at issue. Modern science and modern instrumentalities of production are adequate to produce what would sufifice for a good subsistence for every man, woman, and child in any and all countries. The whole question at issue is the distribution of this substance after it has been produced. Production and distribution are but two phases of the same work. Land, capital, and labor are the three factors in producr tion, but even when these three factors are worked in the most hearty co-operation, the world is always within a year or less of starvation. The main question, therefore, is : How is the annual product distributed ? because it is upon the distribution of the annual product that subsistence depends, rather than upon the ownership of land or of the products of labor which have been saved in a concrete form, and which have become capital. The capital or labor saved in 9 lO WHAT MAKES a concrete form never exceeds in value the sum of two or three years production, even in the richest state or nation, and is more apt to be less than the product of a single year. In the work of production and of distribution, by far the largest portion of the people of the so-called civilized world work for wages in one form or another, — that is to say, they are at any given time in the position of the employed rather than that of employers. They change from one class to the other, according to their relative abilities or opportunities. It follows of necessity that the paramount question — the one which is of prime importance to the vast majority of the people of civilized lands, is, What makes the rate of wages ? because it is by means of the money which they receive from their employers as wages, that their share of each year's annual product is obtained and is measured. This being admitted, the practical question at once arises, are those who labor for wages receiving in each year a less and less pro- portion of the annual product, while capitalists are securing for themselves a larger share, or the reverse ? Are the rich growing richer, while the poor become poorer ? or, are nations themselves becoming poorer as a whole, rich and poor alike securing a decreasing share of a decreasing and, perhaps, insufficient product ? In treating this question, two definitions become neces- sary. What is production ? It is not simply the primary process of bringing forth grain, timber, and metals in their crude form, from the field, the forest, or the mine ; it is not simply carrying these products through the mill, the furnace, or the forge, into their secondary form, called man- ufactures ; but the word must include all that is indicated by its etymology — pro duco — pro-duce-ing — leading forth and directing the forces of nature to the final use of, ok con- sumption by, man. This covers distribution, as well as what THE RATE OF WAGES? II is commonly called production. The word wages may, therefore, be defined so as to include all earnings of persons in the employment of others. The larger part of the work, in many directions, being done by the piece, the wage is an uncertain quantity, varying with the skill and capacity of the laborer. In this treatise the word wages will stand for the sum of money which is earned by factory operatives, farm laborers, machinists, mechanics, railroad employees, laborers, clerks, salesmen ; in fact, by each and every class of those who are employed by others in what is commonly called production or distribution : those who agree in ad- vance to work for a fixed payment, either by the piece or by the day, month, or year. The true wage which the workman seeks is the food, fuel, shelter, and other means of subsistence with which the sum of his wages will supply him. If we look to the derivation of the word itself, his wage is the measure of the expectation of subsistence, against which his labor is staked, wagered, or hazarded. It is not customary to in- clude the salaries of the clerical or administrative force, nor the payments which are made for purely mental work under this term, although they are of the same nature. For the purpose in hand, we will limit the application of the word wages to the sum of money earned by persons who engage in the actual work of producing or distributing material substances ; who either work with their hands or direct ma- chinery to these ends ; who are in the employment of other persons upon terms stipulated in advance and who are sub- ject to be discharged with or without notice, as the case may be, at the will of the employer. In this category will be found by far the largest portion of the people of this country who are old enough to become wholly or in part self-supporting. 12 WHAT MAKES This great class consists in very large measure of persons who depend almost wholly upon their daily work for their daily bread, — whose accumulations are small, — slowly and painfully made or saved, and sufficient only to relieve them from the necessity of work for the last few years of old age, if perchance adequate for that without the aid of their chil- dren. The welfare of the vast majority of the people of this country, and of every other country, therefore, mainly depends upon the adequacy of the rate of their wages and upon the purchasing power of the money in which their wages are paid. It follows that there can be no more im- portant social question than the wage question, — none in which error will be more fatal. If, under the existing conditions of employer and em- ployed, — of capitalist and laborer, — of wage-payer and wage- receiver, — in other words, if by way of competition the rich only grow richer because the poor grow poorer ; — if greater progress under present laws and customs is only consistent with greater poverty; — if the profits of capital can only be increased by diminishing the wages of labor; — if ''wealth accumulates only when men decay," — then socialism may be justified, even nihilism may be right ; the capitalist may be the enemy of the laborer. If such is the truth, Henry George only goes half way in his remedy, when he merely proposes to nationalize or confis- cate land. The remedy for these great apparent wrongs may, in such event, be found only in dynamite and the dagger. If even the change in institutions or in the title to land which can be secured by legislation is insufficient, then dynamite and the dagger may be the only adequate remedy, as Wendell Phillips hinted, but even he dared not say so, in his Phi Beta Kappa oration. The very existence of modern society is the major issue which is bound up in the simple THE RATE OF WAGES? 1 3 and apparently minor question, ** What makes the rate of wages?'' Compared with this ail problems relating to the collection of revenue, the function of banks, the hours of labor, etc., sink into relative insignificance. If the funda- mental question is. What makes the rate of wages ? — these minor questions are merely the froth and turmoil upon the surface, which manifest to the eye and ear the great under- current which may rend modern society in twain. What are the facts? Upon the continent of Europe, ancient forms of society, customs, laws, and institutions of many kinds, from which we in this country are substantially free, are being actually rent and destroyed, and the whole socialistic tendency of legislation at this time, in Great Britain, France, Germany, and elsewhere, is but an attempt to solve the apparently simple question. What makes the rate of wages, or of the earnings of those who depend upon their daily work to meet their daily wants? By socialistic tendency is meant such acts of legislation as the Land Acts relating to Ireland lately passed by the Parliament oTf Great Britain ; the acts for f compulsory life or annuity insurance which have been pro-V posed by Bismarck; the attempts which have been made in France to own and control the whole railway system and to maintain national workshops; and many other measures of like kind which have been either proposed or attempted in different parts of Europe. The issue is made more diflfi- cult by the existence of conditions in Europe to which we have nothing analogous. The question there is not only : What makes the rate of the wages of the factory operative, the mechanic, or the artisan ? but. What makes the rate of earnings of the Irish cottier, or the rack-rented farmer, or of the English tenant farmer working leased land ; or of the French or German peasant confined tg^j^aii^taaents which J^-S^ OF THE ^f^ |UNI7EEoIT7| 14 WHAT MAKES have been mainly established by the compulsory division of land on the Continent, and which have become so small by frequent subdivision that modern agricultural machinery can- not be applied to them in any great measure ; on which the crops are therefore made by the exertion of the max- imum amount of manual labor with the minimum of product per man ? An example may be here cited of the vast difference, in different places, in the productive efificiency of one man, working one year. I cannot give the exact measure per man in bushels of grain or barrels of flour of foreign agriculture, but the German or French peasant makes but a very small crop, who, with arduous toil with the spade and hoe, plants a little strip of grain, harvesting it with the sickle, and thrashing it with the flail ; every one can conceive how small a quantity of grain must be the product under these conditions, yet these are the conditions under which a considerable, if not the larger portion, of the grain crops of Europe are made. On the other hand, let us consider an extreme ex- ample of the application of capital to great areas of land in this country. By division of labor and by the ap- plication of machinery upon the great farms of Dakota, such enormous abundance is secured that when we con- vert bushels of grain to the equivalent of one man's work, working 300 days in one year, we find that in an average year, on land producing twenty bushels of wheat to the acre, 5,500 to 5,600 bushels of wheat are made for each man's work. Retaining enough for seed, this quantity suf- fices to make 1,000 barrels of flour. It can be carried through the flour mill and put into barrels, including the labor of making the barrel, at the equivalent of one other man's labor for one year; and at the ratio of the work done to each man employed upon the New York Central Rail- THE KATE OE WAGES? 15 road, the 4,500 bushels of wheat can be moved from far Dakota to a flour mill in Minnesota, and thence the 1,000 barrels of flour can be moved to the city of New York, and all the machinery of the farm, the mill, and the railroad can also be kept m repair at the equivalent of the labor of two more men ; so that the modern miracle is, that 1,000 bar- rels of flour, the annual ration of 1,000 people, can be placed in the city of New York, from a point 1,700 to 2,000 miles distant, with the exertion of the human labor equivalent to that of only four men, working one year in producing, mill- ing, and moving the wheat. It can there be baked and dis- tributed by the work of three more persons ; so that seven persons serve one thousand with bread. Before we proceed further in the consideration of this and other related facts, let me say that there appears to be an almost unacknowledged belief, even among well-read stu- dents, that the so-called principle which Malthus first pro- pounded is true ; or at least that it contains such an element of malignant truth, if one may use such an expression, that it is unpleasant to face it, lest one's faith in the Power that makes for righteousness should be disturbed. If the dogma of Malthus is true, that population tends to increase faster than the means of subsistence, there is no escape from the conclusion that all our efforts at progress, so-called, are worse than useless ; for instance, when we attempt to save the life of children by the improved sewerage of our cities ; when we provide pure water and better dwellings for the poor, when we teach sanitary science to enable each and every member of the community to attain present bet- ter conditions of comfort and welfare and a longer life, we are merely building up our present prosperity in order that the adversity of a future day may affect a greater number of peoole. If population increases faster than the means l6 WHAT MAKES of subsistence, the rate of wages must always tend to become a less and less proportion of a decreasing product and their purchasing power rnust at last become so low as not to assure even the necessary subsistence ; because there would not be substance enough to sustain life to be pur- chased by any wages which could be paid. In such a view of life all our humanitarian efforts are criminal if successful, because they cause a more rapid increase of population and only hasten the evil day when, in spite of every effort or of any measure of intelligence, our mother Earth will fail to provide for the wants of her children. They must then slay each other or die in myriads by famine and pestilence, in order that only the fittest may survive. Even then, when those only have survived for whom there is enough for the moment, the evil cycle would begin once more and so go on forever. It is upon the seeming truth which is contained in this abhorrent and atheistic dogma that many false theories have been presented, many bad acts of legis- lation have been justified, and that it has become a wide- spread conviction that there is a war, or constant struggle and antagonism between capital and labor, — between rich and poor. It seems to be the conviction of great masses of people that with ever increasing wealth there is and must be ever increasing poverty, and this formula is working in special places in the most active and pernicious manner at the present time. Again we may ask, what are the signs of the times? Russia struggling with nihilism; Vienna under martial law, for fear of socialism ; Germany and Austria dreading what may come when Bismarck dies ; the commune of Paris kept down only by fear and bayonets ; even England, gravely disturbed by a single book which attacks her land system, is coping with Irish destitution by acts of Parliament whicli are but socialism disguised and THE RATE OF WAGES? 1/ which would be overruled, if enacted by the Congress of the United States, the moment they were presented to the Supreme Court. These dangers to the body politic are signs that the struggle for life has indeed become urgent among great masses of people in special and limited places. They indicate that even in the present day the horrors of the Reign of Terror might be repeated ; that want is law- less ; that hunger and destitution will incite to violence in any land ; and they also prove that the more the attempt is made to suppress these dangers by force of arms, the greater the danger will become. It would be as dangerous to disband the armies of Europe as it is impossible to sus- tain them, because the habit of government by force cannot be overcome except after many years. Yet, as I have said, in the world there is always enough. Production is ample to give good subsistence to every man, woman and child, especially in the civilized world, and the mechanism of dis- tribution is also fairly adequate. The whole question is one of the method of distribution of each year's product, and inasmuch as this distribution is mainly effected by way of the payment of wages, the paramount question is again presented : WHAT MAKES THE RATE OF WAGES? If we glance again at the condition of tjie nations which have been named, we cannot help observing, for instance, that Germany is poor in fact; the soil of large portions of her territory will barely sustain the people who dwell thereon, and although there has as yet been no absolute famine, the people of many parts of Germany are always on the very edge of want. We must therefore explain to ourselves the conditions of danger to which the best instructed people ot Europe have been brought, by the consideration of other 1 8 WHAT MAKES matters. The people of Germany must be subsisted either upon what her own soil will produce, or upon the food for which her own manufactures will exchange. Her own annual product, at its exchangeable value in money, must be the source of her own profits, wages, and taxes. When we utter the last word, may we not touch one secret of her poverty ? There are money taxes and also blood taxes. One man in every twenty in Germany is a soldier in camp or bar- racks, and one other man in every other twenty must be em- ployed in sustaining the idle soldier, while every man w^astes a considerable part of his life in preparation for this destruc- tive art and is liable to be called away from productive work at a moment's notice. Under such conditions, before either profits or wages can be paid to those who do the work, at least ten per cent, must be assigned to the wasteful and de- structive although generally passive war which is the condi- tion in which all the nations of Europe now exist. How is this army maintained ? There is room enough else- where, and to spare, for Germany to relieve herself of the population which cannot live upon her soil, except on the edge of starvation ; there is room enough even in our own land and here they would be welcome. But every German boy who reaches the age of eighteen is enrolled for service in the army at a future day, and if he dares leave the country after he is enrolled, he expatriates himself, renders any property which may be devised to him liable to confiscation, and can never return, even though he may have become an American citi- zen, except at the risk of being treated as a deserter, and forced to render his three year's service in camp or barracks. Under such conditions as these it follows that neither the poverty of Germany, France, Austria, Italy, nor any other country, can be attributed to any real antagonism between labor and capital, but must be attributed in part to the THE RATE OF WAGES? 1 9 poverty of the soil, in part to artificial systems in the division of the land which are enforced by statute and in part to privileges and to the burdens of standing armies of which we have no counterpart. These dangers to the body politic are but signs that the struggle for life has indeed become urgent among masses of people who number too many for the limited area in which they are, but where they are kept by force, the natural law of distribution by which they might spread them- selves over the earth being obstructed. Much of this is done under the pretext that the right to property can only be permanently sustained by force, while the rights of man are denied. We may also observe that almost all modern dangers of war are dangers connected with the distribution of wealth, or from national jealousy in respect to commerce which is but another name for the distribution of the annual pro- duct of the world. This jealousy is mainly caused by the continued prevalence of the false idea that in international commerce what one nation gains another loses. Hence we find nations endeavoring to establish and maintain colonies, in order to control their commerce, at a cost to themselves of more than the whole commerce is worth. No one fights to-day for a religious dogma, unless it be an Arab or a Sepoy. None are armed merely to maintain a dynasty. It is the Chancellor rather than the Emperor on whose fate the Empire of Germany may depend. The question as to who shall control the Suez C^nal endangers the peace of Europe, yet this canal is but a spout through which Europe exchanges clothing for food; it is a mere instrumentality of distribution. All modern questions of any importance relate to the means of subsistence ; the distribution of the means of subsistence is finally brought about by the payment of wages. The first 20 • WHAT MAKES question which England has met in endeavoring to promote good government in Egypt, is the debt incurred by a despotic power but imposed on the people who were op- pressed. Whether the repudiation of such debts is not the first condition precedent to the common welfare of those upon whom the debt has been imposed without their consent, is one of the many questions about to be forced to an issue in other countries than Egypt. If one half the product of Egypt is absorbed by the debt, will the other half suffice even for subsistence? Can the sum of wages be more than what is left of her own product? Must not the annual product of each country be the source of its own wages? As I have said, when we attempt to solve this question, we find that there need be no fear of want because there is not enough for all. Enough there is, and to spare. The only question is, Where is it ? Distribution is limited or restricted in part only by want of proper mechanism, i. e., by the lack of railways, the lack of ships, and the like ; in part by legal obstruction, in part by national jealousies, but yet more by obstacles to free exchange, even where the mechanism suffices. I do not limit the term free exchange to the narrow question which is at issue between the advo- cates of free trade and protection ; that is a minor question. I mean the obstacles to free exchange which are mainly caused by that ignorance and incapacity which stands in the way of mutual service, even among the people of the same country. The farmer of our own land may have his barns running over with the abundance of his product, and may desire a hundred things for which he would be willing to exchange ; but if, on the other hand, those who desire to share his abundance are ignorant, incapable, or vicious, who cannot or will not work upon the things the farmer wants, there can be no mutual service : they may starve while his THE RATE OF WAGES?} 21 crops decay. It is mainly the imperfect or restricted dis- tribution of what there is ready for use, which is caused by the ignorance or incapacity of those who need it, that creates want in the midst of plenty, not only in Europe, but in the heart of the great cities of our own land. We waste enough in this country to support all our poor in luxury ; yet were we to give this excess to them in mere charity, what we waste, thus consumed, would forever convert the poor into paupers. Charity or alms-giving cannot remove pauperism ; it may only increase it. The common laborer, so called, is the one who suffers most in times of depression ; and he usually is and remains a common laborer merely be- cause neither his hand nor his head have been trained to- gether so as to enable him to do work requiring skill, which kind of work is everywhere and at all times waiting to be done, and by doing which he might become entitled to a share of existing abundance. We are attempting, in this country, to cope with these problems by legislative methods. In Europe the attempt is made both by legislative methods and by force combined. Neither method can permanently succeed. Neither wealth, welfare, nor common subsistence can be permanently imposed from above, or instituted from without. Neither masses of men nor individual men can be permanently helped who cannot or will not help themselves. The final remedy for these wrongs can only come by the development of individual manhood from within. Indi- vidual intelligence and integrity, sustained by public justice, constitute the sole condition und^r which permanent pros- perity can become the rule among men. Then life and lib- erty will be the only common factors, making for the wel- fare of each and all. It may be a far-off day, which none of us living may live to see, when this shall be accomplished ; but the potential agency in promoting this end is the ad* vancement of science. 22 WHAT MAKES With the chemical or physiological question which under- lies the abhorrent dogma of Malthus, I may not attempt to deal. Subsistence is but a conversion of forces — a chemical process ; whether or not the proportion of force or energy which constitutes material life, and which takes the form of the body in which man lives awhile on this earth, may find a limit without recourse to war, pestilence, or famine to check its undue development, is not yet a practical question. When it arises, it may be time enough to meet it, in some far away period. The absurdity of the attempt, as yet, to measure the power of subsistence and to declare it to be limited can be demonstrated in two or three simple ways suitable to the use of a statistician like myself : First, no man yet knows the productive capacity of a single acre of land anywhere in respect to food. Second, the whole existing popu- lation of the globe, estimated at. 1,400,000,000 persons, could find comfortable standing-room within the limits of a field ten miles square. In a field twenty miles square they could all be seated, and by the use of telephones in sufifi- cient number they could all be addressed by a single speaker. Third, the average crop of wheat in the United States and Canada would give one person in every twenty of the population of the globe a barrel of flour in each year, with enough to spare for seed ; the land capable of produc- ing wheat is not occupied to any thing like one twentieth of its extent. We can raise grain enough on a small part of the territory of the United States to feed the world. The great American desert has gradually disappeared. The *' bad lands" of Montana prove to be the best grazing ground of the Northwest, and in the heart of the Eastern States the mountain section of the South waits for a popu- lation equal to that of Great Britain, who can there find THE RATE OF WAGES? 23 potentialities in agriculture or in mining equal to those of any similar area on this or any other continent. As yet, therefore, the doctrine of Malthus has found only a limited application, where some local or temporary congestion of human force has gathered. As I have said, in the world there is somewhere and always enough. The only question is, Where is it ? When found, the next question arises. How to get it ? The first method which obtained in the world, was to grab it — the age of force. The second method was to give it — the era of conqueror and conquered, of master and slave, of lord and vassal, of giver and taker, not of employer and wage-earner. The third method is to exchange for it. < Under this third method commerce has arisen, men have become sorted as capitalists and laborers, as employers and employed, as wage-payers and wage-receivers; service for service is the common rule of life; the exchange of product for product is the practice of commerce. All States have, or may become interdependent, and then " the ships that pass between this land and that will be like the shuttle of the loom, weaving the web of concord among the nations." And again we meet the apparently simple question. What makes the rate of wages by which the greater part of these services are measured and under which the greater part of the distribution is effected ? I have had but little time for the reading of books or the consideration of theories of wages; biit I believe we must pass from the English orthodox system of political economy to France, in order to find the first true statement of the relations of the wage-receiver and the wage-payer, of em- ployer and employed, of laborer and capitalist, or of labor and capital. Many years ago a single phrase in Bastiat's " Harmonies of Political Economy " became engraved upon 24 IVHAT MAKES my mind, and by its application I have been enabled to ob- serve the phenomena of wages in the course of my business life with much clearer insight. It is this : '' In proportion to the increase of capital^ the absolute share of the total product falling to the capitalist is atigmented, but his relative share is diminished ; while on the contrary, the share of the laborer is increased both absolutely and relatively y Among English writers, Thornton exposed the fallacy of the old wage-fund theory, the theory that all wages are paid out of a fund of capital previously accumulated and will be high or low as the ratio of that fund may be great or small, in proportion to the number of persons employed. Professor Cairnes propounded the true theory of wages in one of his latest books, in terms so nearly identical with some of those which the writer had used in this treatise, that the writer would have suspected himself of unconscious plagiarism had he not found his own records antedating the published works of Professor Cairnes on this subject. In this country, Professor Francis A. Walker has presented the true theory of wages in the most effective manner and has probably done more than any other writer to clear the sub- ject of obscurity. It has been a matter of great satisfaction to me, that my practical observations are so fully consistent with the theories of these authors. Giving due credit to all these writers, my own conclusions have been based almost wholly upon facts and deductions from business ex- perience rather than from books, although my attention was first attracted and a direction was given to my observa- tions by the paragraph which I have quoted from Bastiat. The two forces which are engaged in the production of the substances which constitute food, fuel, means of shelter, or the materials which may be converted into additional capital, are of course, labor and capital. Land itself is but THE RATE OF WAGES? 2$ an instrument, being useless and valueless unless labor and capital are employed upon it. By the co-operation of these two forces, an annual product is made. The true function of capital is that of a force put to use in order to increase pro- duction, rather than a substance to be immediately divided and consumed. Fixed capital, so called, although the name is hardly a suitable one, may be likened to the foundation, boiler and engine, and quick capital to the fuel with which the boiler is supplied: the one is very slowly, the other very quickly con- sumed, yet neither works directly to the subsistence of men, but indirectly both work to the vast increase of the actual substances with which men are fed, clothed, and sheltered ; these substances constitute the annual product which is divided among them. The term annual fits the case, because the year represents the course of the four seasons and the succession of crops. A small part of each year's annual product, commonly called " quick " or *' active capital," must be carried over to start the next year's work upon, as a small part of last year's product had been brought over to start this year's work upon ; one proportion balancing the other. The fixed capital seldom exceeds in value two year's pro- duction. It therefore follows that all profits, all wages, all taxes, in fact all consumption whereby existence is main- tained, must be substantially drawn from each year's product ; it is therefore in the division of these substances produced within the year, that true profits and real wages are to be found. But, in order that this product may be distributed and consumed, since no man lives, economically speaking, for himself alone, the various products of the year must all be exchanged by purchase and sale, and therefore must all be measured in and reduced to terms of money, — except that part of the annual product which is consumed upon the 26 WHA T MAKES farm by the farmer and his family without being sold. With this exception, it therefore follows, that substantially the whole product of each year must be converted into terms of money. I think it escapes common observation, that in all departments of industry, except agriculture, few men now produce any thing which they use themselves ; and even in farmers' families, domestic consumption is now limited to a small part of the farm product, all else is procured by ex- change ; all men are interdependent. The sum of money represented by this conversion is and must be vastly greater than the sum of real or actual money which is used as the instrument of exchange, hence the necessity for true money. The greenback fallacy can only deceive those who fail to comprehend the function of money. Inconvertible paper money is a fraud, and the burthen of proof rests upon its advocates to justify the honesty of their intentions by the weakness of their intellects. In this process of conversion into terms of money by way of purchase and sale, a part of the value of the annual product is sorted on the one side as profit, rent, interest, or by whatever name the share of the owner of capital may be designated ; and, on the other side, another and vastly greater part constitutes the share of those who do the work, and is named wages. In the subdivision of this latter share into individual parts, the rate of each persons wage is established in terms of money. It would not be consistent with the general purpose of this treatise to attempt at this point to give precise details in respect to the value of the annual product of a normal year in money. The general conclusion at which I have arrived is, that in the year 1880, the census year, when the population of the United States numbered a little over 50,000,000, the annual product had a value of nearly or quite $10,000,000,000 at the points of final consumption, includ- -M^ yrf.^ TJ/E RATE OF WAGES? 27 ing, at market prices, that portion which was consumed upon the farm but which was never sold. . Omitting that con- sumed upon the farm, it was about $9,000,000,000. What portion of this product constitutes the average share of the capitalist at the present time cannot be substantially proved. In a normal year, under normal conditions I am of the pro- found conviction that not exceeding ten per cent, can be set aside as either rent, interest, profit, or savings ; and that nine tenths constitutes the share of the laborer, which, by subdivision, becomes expressed in terms of personal wages. During recent years, the increased efficiency of the railway service, and the consequent elimination of two thirds of the cost of distributing commodities in bulk, has undoubtedly augmented for a time the amount falling to the capitalist, but without in any measure reducing the amount previ- ously falling to the laborer ; on the contrary, greatly promot- ing the laborer's interest as well as that of the capitalist. The great fortunes of the railway magnates (aside from one or two conspicuous and notorious thieves who have stolen franchises and defrauded their stockholders) have consisted of but a small portion of what they have saved to the community. The main work of railway capitalists has been to reduce the cost of distribution ; their true function ought not to be prejudiced by the fact that a judge of one of the courts of a neighboring State was impeached and disqualified from holding any office of trust or honor for '^ corrupt practices " with a notorious railway official. The corrupt judge is dead — the corruptor of the judge still lives a base and dishonored life, probably continuing to exist physically because he is mentally and morally in- capable of conceiving the turpitude of his existence or of feeling the loathing and contempt of the community. But even the railways which he has constructed will continue to 28 WHAT MAKES serve some Useful purpose after the corruption which he has engendered has been buried with him in a nameless grave. In treating this question of the rate of wages, it must constantly be kept in mind that money is but the instru- ment of exchange, that real wages are what the money will buy, and there cannot be more real wages than the whole product, less the share of capital. If then, we can even approximate the value of the product and divide by the known number of persons employed, we then approximate the annual measure or average rate of wages in terms of money. At the risk of repetition this point must be further con- sidered, as it is the key to this treatise. The population of the United States, in the census year, consisted of a little over fifty million persons, or about ten million families of five each. Substantially one in every three was engaged in some kind of gainful occupation. Agriculture was and is the leading occupation. Upon small farms, a large portion of the produce is consumed by the farmer, his family, and his laborers. Upon large farms, the greater part of the produce is sold. In the families of coun- try mechanics, much productive work is done which in cities is procured by purchase. We can only approximate in a general way the value of the domestic consumption. If one tenth of the consumption of the country is of the nature of purely domestic production and consumption, which is never converted into terms of money by purchase and sale, the total sum which would represent such domestic consump- tion would be $20 to each person, $100 to each family, or $i,ooo,cxx),ooo total value. Of this the census enumerator would find no trace in the figures of commerce. This is a large estimate, undoubtedly, of the domestic consumption of articles which might be or might have been procured by THE RATE OF WAGES? 29 purchase, but which were in fact produced and consumed without purchase or sale. The remainder of the annual product, at whatever sum of money it may be finally val- ued when sold for the last time and distributed for final consumption, constitutes the value of the product converted into terms of mon'by, from which sum all money profits, all money wages, and all money taxes must be derived. There can be no other source. Each bargain for a sale or a pur- chase is and must be made in terms of money. The manu- facturer, the merchant, and the shopkeeper take their toll of profit in money, not in kind. The assessor levies a tax payable in money. When this tax is levied upon a pro- ducer or a distributor, it is charged to the cost of the busi- ness, and is thus distributed among those who buy the goods for consumption. The laborer receives his wages in money, seldom in kind, except the farm laborer ; he then converts his money into his share of the annual product by the consumption of which he sustains life. The total sum of money which represents the value of all that is produced, at its point of final consumption, is and must be the final measure of that part of the annual product which is bought and sold. Therefore, all profits, wages, and taxes constitute a portion of this lump sum ; in order to ascertain what the rate of profit, the rate of taxation, or the rate of wages may be, we must ascertain what this lump sum is, and how it is divided. On the other hand, by ascertaining what the total sum of taxes, the sum of all wages, and the sum of all profits may be, we can again approximate the total value of the annual product. No absolute results can be reached by either method, but approximate results can be fairly set off, one against the other. This is what the writer has endeav- ored to do. The principle which I have attempted to sustain in this 30 WHA T MAKES treatise may be considered without any regard to its appli- cation to the existing figures of the present date. I have given these figures, howev^er, in the way of an illustration They will be more fully treated in appendix I. The principle might be stated in algebraic symbols. For instance, given the question, " What is the value of the an- nual product of the year 1884?" It would consist of the following elements : First, the wear or consumption of fixed capital previously accumulated ; the proportion of the quick capital or product of the year 1883 brought over to and consumed in the year 1884, in order to begin work. Let these two elements be called a. To them would be added the actual product of the year. Let this be called b. From this product a certain proportion would be carried over, to begin the work of the year 1885. Let this be called c. The formula could then be stated in the following terms: a-\-b — r = jr, the annual product which is subject to sub- division and to consumption. Let profits be called //, sum of all wages r, persons en- gaged in gainful occupation for a given rate of wages, f, and the average rate of wages i. The complete formula would then be as follows : a-\-b — c-=.x If i be the average of all there is, one wage earner will earn less, another more, according to relative capacity and opportunity, and by competition each with the other : but these earnings, differing each with the other, will be ab- solutely within the limit of / / while i itself will annually stand for an increasing share of an increasing product, if my premises are sustained. In a computation of what makes the total accumulated wealth of the United States, which was made by the Census THE RATE OF WAGES? 31 Department, one half the value of the product of mines, oil wells, and the like, was taken as being on hand at a given time, constituting a part of the accumulated wealth, together with three fourths of the annual product of agriculture and manufacturing. Working from these data, it appears that the census estimate of the value of the annual product of the United States for the census year was from $8,200,000,- 000 to $8,500,000,000, not including domestic consumption- There appears to be no actual computation of the value of the annual product in the census, but the figures used in the computation of wealth yield these approximate results. The writer had reached his own conclusions by very differ- ent methods from those used by the Census Department, and had satisfied himself that if there be added to that part of the annual product which is sold, and which is, therefore, reduced to terms of price in money in the markets of the world, the domestic consumption upon farms and in families, the total value of the annual product would not exceed $10,000,000,000 in the census year, at the retail prices for final consumption. If the census estimate be divided by the population of substantially 50,000,000 people, we reach S 1 60 to $170 per year as the sum representing the average annual product for each person, or a fraction less than fort>'- four to forty-seven cents per day for 365 days. That is to say, when the products or services of each person were brought into competition in the markets of the world, the money value of the entire commercial product in the census year was measured by the average sum of forty-four to fort}-- seven cents' worth to each person. My own computation gives a little under $200 to each person, including the domestic consumption of farmers, or a little under fifty-five cents' worth per day. That is to say, the average product of each person may be estimated by any one who will go 32 WHAT MAKES into the market, hire shelter, procure food and clothing, and save something out of what fifty-five cents a day will pay for for each member of a family. If no more is pro- duced, no more can be had. What there is may be bought and sold ten times over ; it only wastes a little each time ; it does not increase. Paper may be substituted for true money, and the rate of paper wages may be apparently doubled, but then it will take $i.io in paper to buy what fifty-five cents gold now buys. There cannot be any more shelter, food, fuel and clothing sold than there is produced, and the value in money of all that there is produced is the final measure of all profits and wages. The subdivision of all there is produced, therefore, makes the rates of both profits and wages. If, again, we call $ i ,ooo,ooo,0(X) the domestic consump- tion, and value the salable portion at $9,000,000,000, and then divide by the whole number of persons in productive work (excepting soldiers and minor Government employes), to wit, 17,300,000, we reach an average of $520 as the annual measure of the productive services of each person thus engaged in useful work, each one at work sustaining two others. This computation may be proved to be substan- tially correct by a comparison with the actual wages or earnings of all classes, which were treated separately in the census, giving due consideration and applying judgment to the relative value of the work done. (See appendix I. for exact comparison.) It may, therefore, be assumed that the average value of the gross product of each person who was engaged in any lucrative or productive employment in the United States in 1880, can be fairly established in the census year at a sum closely approximating $520. If such is the measure in money of all that was produced, then all wages, profits, THE RATE OF WAGES? 33 taxes, and all savings or additions to capital must have been derived from such a sum. There can be no other source for either, unless the country incurred a foreign debt, which it did not in any great measure. It paid more debt in the census year than it incurred. If such is the gross sum, let us see what the net sum free from taxes, may have been. In the same census, the gross sum of all National, State, county, and municipal taxation, was computed in round figures at over $700,000,000, or over %Ap per capita of all persons engaged in gainful occu- pations. If we apply this rate to the average share of the product which fell to each person who was occupied in gainful occupation, we reach the following result : Gross product, $520 ; taxation a little under 8 per cent., $40.00 ; net share of the annual product, free of taxes, valued at $480. Now it will be apparent if only one in 2.90 persons is em- ployed in gainful or productive occupations, then 2.90 per- sons must be subsisted upon what $480 per year, or $1.32 per day, will purchase, or 45^ cts. worth to each person ; if it be considered also that from this sum must be set aside profits or additions to capital which take precedence of wages or earnings, then it will at once appear that by far the larger part of each year's product must be consumed ; that is to say it must enter into the cost of production. In point of fact each year's work barely suffices for each year's wants and but little can be saved or added to capital be- cause it is evident at a moment's consideration that not much can be saved out of what 45 cents will buy for each person each day. There is no absolute method of determin- ing the exact proportion of the annual product which can be set aside as profit or addition to capital, nor of ascertain- ing that part which constitutes the actual wages or earn- ings. All that can be said is this : If 10 per cent, of the 34 ^^A T MAKES gross product can be set aside in a normal year, for the maintenance or increase of capital, that is to say, $48.00, out of each person's net share of the whole, then the aver- age rate of wages or earnings of all the people of this country engaged in gainful occupation, is at the rate of $432.00 per annum, $1.19 per day or $1.44 per working day. This result, again, fairly approximates to the disclosure of the census, if it be compared with the specific ascertained earnings of persons engaged in special branches of industry. If any thing, it is a large estimate rather than a small one.' If the foregoing premises be admitted, it follows of ne- cessity that so far as those who work for wages are con- cerned, the relative or proportionate rate which each one or each class may receive cannot be in any very large measure affected by the sum which is set aside as profit or increase of capital, but must be mainly affected by the competition of laborer with laborer and will be finally determined by the relative efficiency of each person within the limit of the average proportion which his class receives out of the annual product. That is to say, the relative condition of each class of laborers must be determined by the variation from a standard or average which is determined by the quantity and price of the aggregate product of that class, i. e., in that special branch of industry. The general rate of wages can therefore only be raised by an increase of product coupled with a wider market commensurate with such in- crease, so that the price may be maintained. Absolute wages may be increased although the rate in money may not, by an increase in the product, accompanied by a decrease in the price, so that the same or a less rate of wages may buy more commodities. The gross product may be increased by two methods only ; first, by the intel- ' See table of earnings or wages in appendix. THE RATE OF WAGES? 35 ligent use of the increase of capital ; and second, by the more intelligent co-operation of labor with capital. Con- tention or antagonism can only result in diminished rates both of profits and of wages. Prices and rates of wages can only be maintained by enlarging the market as labor becomes more effective and a greater quantity of things is produced by a decreasing number of persons. When a greater quantity of any given product is made by an improvement in machinery or a new invention, and men who have before been employed in that art are no longer wanted — then a wider market must be found for products which remain within their capacity to produce. Hence, those nations which apply machinery in greatest measure, and thus increase the quantity of their product while di- minishing the cost as well as the number of persons em- ployed, possess the greatest power of competition in supply- ing other nations in which all the arts are mainly handicrafts. For instance, England and the United States compete with each other in supplying China with a portion of the cotton fabrics needed by the Chinese (supplying perhaps ten per cent, of the cotton fabrics which are consumed in China) in exchange for tea, silk, etc., etc. The cultivation and pre- paration of tea and silk being of necessity handicrafts, this exchange would occur even if no climatic condition entered into the case. The exchange of fabrics made by machinery for tea and silk, yielding each nation what it needs with the least effort, although the quantity of labor varies greatly. It therefore follows that the power to control commerce with the non-machine using races, who constitute more than three fourths of the population of the globe, rests with that nation which applies machinery most effec- tively to the greatest natural resources, and whose pro- duct is least diverted from being applied to profits and ^TrntJ 36 WHA T MAKES wages by destructive taxation, such as the support of a great standing army or costly navy. The invention of machinery creates commerce. If we re- vert to the former conditions of life in the different sections of the United States, may we not find an explanation of the vast increase in the domestic commerce of the country, in the greater interdependence of each section of the country upon each other section, as well as in the greater interdependence of individuals upon each other. Exchanges of product for product have widened and increased, perhaps in greater measure than the aggregate product itself. If we recall the conditions of life of the New England farmers and artisans in the early part of the century, a very small money income sufficed them, because they lived mainly upon what they produced themselves, and because many of their exchanges were made without the intervention of any money. They swopped or bartered services in the erection of their dwell- ings and in harvesting ; they raised, spun, and wove their own wool ; they packed their own pork ; they raised their own corn and paid for grinding it by a toll in kind ; they cut their own fuel. These primitive conditions can even now be observed in the mountain sections of the Southern States. But even under such conditions, the consumption of food and fuel of each person may not have varied greatly in quantity or weight from that of the present time. It differed greatly in kind and in quality, and also in the method by which it was attained ; but the quantity of food in ounces, which is the final standard, cannot greatly vary in one period as compared to another. We waste a great deal more now than we did in those early days, but our actual consumption of food per person cannot have increased in any very large measure. In the primitive days, under these primitive methods, the labor was so arduous and the THE RATE OF WAGES? 37 hours of work were so continuous that only the strongest survived. The figures representing commerce were very- small and when wages were paid at all, they were at very low rates for long hours of merely manual labor. Under the mod- ern method of extreme subdivision, and the application of adequate machinery, i, e,, capital, the labor is less toilsome, the hours of work are shorter, the weakest can find some- thing to do, each serves the other, and in the process of manifold exchanges, the figures representing commerce rise to almost incomprehensible millions; yet the actual quan- tity consumed, as I have said before, may not have varied in any great measure, so far as food and fuel are concerned. So far as clothing is concerned, production and consumption have increased enormously. The end of all this vast system of exchange is, however, that, in one way or another, each person may secure about three pounds of food per day, a few yards of cotton or woollen cloth each year, two or three tons of coal or five or six cords of wood a year, and a given number of cubic feet of space, sheltered by a roof. They needed as much per person of the absolute necessaries of life fifty or a hundred years since as they do now, but they obtained them only by working twice or thrice as hard. They were more independ- "eht, less interdependent. There was far less capital, and much more arduous and excessive labor. The conditions of life were more equal, but it was the equality of sordid, continuous, excessive manual labor, aided neither by the factory nor by the railroad ; neither by the more modern in- ventions of the masters of science, nor by the administrative and organizing power of the great capitalists, without whose potential work all modern progress would have been sub- stantially impossible. The fortunes which those great di- rectors' of industry have made for themselves bear but the 38 WHAT MAKES proportion of a small fraction to the labor which they have saved their fellow-men. I will repeat again what I have said before : the late Cornelius Vanderbilt may be taken as an example of a com- munist in a true sense. He was the greatest communist of his age. He consolidated and perfected the railroad service in such a way that a year's supply of meat and bread can be moved one thousand miles, from the western prairies to the eastern workshops, at the measure of cost of a single day's wages of a mechanic or artisan in Massachusetts — that is to say, if the mechanic or artisan of the East will give up one holiday in a year, he removes one thousand miles of dis- tance between himself and the main source of his supply of necessary food.^ * I have cited the late Cornelius Vanderbilt as the great communist of his age for the reason that he may be said to have first invented the consolidation of a through line of railway from the prairies of the West to the markets of the East, with a consequent reduction in the cost of bread and meat to the dense popula- tion of the Atlantic seaboard. By this consolidation and effective service, one thousand miles of distance have been substantially overcome at such a small cost as to have rendered the choice of position, at any point within that range, a matter of so little moment in respect to the supply of Western food as to be practically out of consideration. For instance, the value of the product of five hundred operatives in a coarse cotton factory in Massachusetts is over one million dollars — all the western flour and meat which these operatives need in a year can be moved from Chicago to Lowell at a cost of $600, and sometimes for less. It is sometimes urged that such great fortunes as that of Vanderbilt and a few others are against the public interest, and that some method ought to be de- vised for limiting their accumulation. This ungrounded prejudice has mainly arisen from the jealousy rightly caused by the great fortunes which were accu- mulated by expert gamblers under the malignant system of the greenback or legal-tender paper money before these notes had been made redeemable in gold coin. It is very true that the most of the fortunes which were made out of the fluctuations of the currency were speedily lost, but the foundations of a portion of the most conspicuous existing fortunes were laid under these bad conditions. It is hoped, and may be believed, that advocates of paper money will THE RATE OF WAGES? 39 Having attempted to estimate the main factors which de- termine the general or average rate of wages at a given time, we may now consider the subdivision or the forces which affect the subdivision of the true wages fund. Why is the average rate of wages in a given occupation two dollars a day in one place, and one dollar a day in another, within the same country at the same time ? Or, why has the rate of wages in the same place been one dollar a day at one period, never again be enabled to impose such a malignant instrument of fraud upon the community. Other fortunes which rightly excite jealousy, and which might, perhaps, have been prevented by legal measures, are those which have been made by fraud and by the abuse of trust in corporations on the part of a very few conspicuous or notorious railway promoters and speculators. They need not be named because, fortunately for the welfare of the community, the number of persons who have successfully stolen the property of those who trusted them is very limited ; hardly more than one name will come to the mind of any person as the chief exponent of this nefarious class at the present time. But in regard to such persons it may be said that they are in the nature of monstrosities ; they are the spawn of a corrupt period ; in one way or another, the man who corrupts a court will be abated in some way as a public nuisance, if death does not fortunately remove him, or ruin does not overtake him. The great fortunes of those who have fairly earned them by their capacity to direct and use great masses of capital in the most efficient way, cannot be a sub- ject of jealousy, suspicion, or distrust. As well might large steam-engines be a cause of distrust and a clamor be raised for the substitution of a number of little ones. I have endeavored to show how both the rate of wages and the purchasing power of the wages depend wholly upon the abundance, ready distribution, and ' quick sale of the joint product of capital and labor. It is now constantly affirmed by certain enthusiasts and sentimentalists, who are sustained by cranks and demagogues, that, inasmuch as all production rests ultimately upon labor, therefore laborers are entitled to the first consideration and the remuneration of capital ought equitably to be subjected to the prior claims of labor. This extreme position is the exact reverse of the conception of the relations of labor and capital which prevailed during the first half of the present century, when the science of political economy first became a matter of real study. At that time capital received the first consideration and labor was 40 WHAT MAKES and two dollars a day at another, at different times ? Third, why is it that one true dollar will buy more in one place than two true dollars will buy in another ? Why do abso- lute wages vary, as they do and have varied, in such propor- tions as are indicated by the rates in money ? And why do the rates of wages vary even when the prices of commodi- ties are the same? In answer to such questions as these we deemed subordinate, or subject, we might say, to capital. One extreme posi- tion is as utterly false as the other ; both are mischievous ; but, if injustice is done in either direction, it is the laborer who suffers most and the capitalist who suffers least. Perhaps the greatest measure of suffering to laborers who are nominally free will be caused when capital and capitalists are subjected to un- just restrictions and injudicious discrimination. The main purpose of this treatise has been to bring into most conspicuous view the great fact that capital is a force which may be applied to the increase of production axidi yfhich. ^ro7?iotes abundance \n the greatest measure; but that it is not a substance to be divided, on the division of which the wages of the laborers depend. Now, every great force requires the most intelligent and careful direction ; the greater the force, the greater the measure of the intelligence and care re- quired. For instance, since the introduction of the steam-engine, or the appli- cation of gunpowder to the purposes of mining, no force has been applied with such general benefit to humanity as the railroad whereby the products of the richest sections of the world's surface are distributed over the widest area. So long as the railway service between the East and the West constituted de- tached sections, several of which existed betwean Albany and Buffalo, as well as elsewhere between New York and Chicago — each section being worked un- der a different administration more or less effective — the general service was ineffective and costly. It required a man of positive genius in the use of capital and of the greatest administrative power to bring into effect the consolidation of this single line. It matters not what the motive of the late Cornelius Vanderbilt may have been. It matters not what may have been the motives of those who consoli- dated that most wonderful organization of all, the Pennsylvania system of rail- ways. It matters not what may have been the motives of those who have laid out the several great systems which are scattered over the country, since Van- derbilt set the example and led the way. The general result of all this work has been a reduction of the railway charge for moving merchandise through- out the United States to the lowest possible point consistent with leaving any THE RATE OF WAGES? 4I are often answered with the orthodox expression : " Supply and demand determine such points." But this is no con- clusive answer until we know under what law the supply- has been assured, and under what law the demand exists. These terms, supply and demand^ are commonly used as if each were absolutely certain to induce the other ; but such incentive of profit sufficient to induce the great masters of the subject to continue their work. This work is not that of the laborer in the sense in which that word is used by so-called labor reformers. It is not labor in the common acceptation of the term, yet it is an effort of the human mind of such a quality that except capital had thus come under the control of these men all the efforts of laborers would have utterly failed to promote the general welfare. The farmers of the West would have "smothered in their own grease," and would have continued to burn their Indian corn for fuel, while the workman of the East might have starved or would have been compelled to labor long and arduously on the sterile soil of New England, in order to obtain a mere subsistence. The true function of capital and of the capitalists is of the utmost beneficence. It cannot be exerted in the present condition of the world except by way of the ownership of land and of capital, subject to the limitations and to the duties which are implied by existing laws. That the relations of labor and capital may be measurably changed and perhaps improved by changes in legislation es- pecially in respect to taxation, may not be denied ; but the fundamental prin- I ciples of individual ownership subject only to the right of eminent domain and ' to the payment of taxes are essential to that abundant production and ready dis- tribution which makes for the general welfare. As human nature is now constituted the individual control of capital is essential to its adequate use. Corporations are of the nature of artificial persons, and even they never succeed unless there is some one man capable of becoming the head or chief officer, sustained by as many able assistants as the case requires. Even the successful co-operative shops in Great Britain exert the closest com- petition in purchasing their goods and pay very high salaries to the persons who do this part of their work — else they would surely fail. Every co-operative factory is under the personal control of a well-paid superintendent. "The tools to him who can use them." Capital is a tool which cannot be used except to the mutual benefit of capitalist and laborer. Service for ser- vice is its necessary law — the only open question is the ratio which each service bears to the other, and, if my observations are sustained, the law of competition \ is that the ratio of profits diminishes while the rate of wages steadily increases. ill 42 WHAT MAKES is far from being the truth, except it may be after a long interval of time. Capital may become so effective by the improvement of the machinery in which it consists that a few laborers may be able to supply an article of the utmost necessity in such rapid and excessive measure as to keep the quantity beyond the purchasing capacity of those who need it ; the need may exist, but the demand — that is to say, the purchasing capacity — is limited not only by outside conditions, but by personal mental capacity and manual ability of consumers. We may assume, for instance, a com- munity consisting of cotton growers, who raise and pick cot- ton as a handicraft, and of cotton spinners and weavers who have, also, spun and woven the cotton fibre as a handicraft upon spinning wheels and hand-looms. These two classes now exist side by side in the mountain sections of the South. Up to a given date these two sets of persons may have ex- changed services with each other in the ratio of one spinner and one weaver to four growers of cotton ; or, in order that we may be able to eliminate those who are displaced by an improvement in machinery, we will assume greater num- bers ; say in the ratio of one hundred spinners and weavers to four hundred growers. But suddenly capital, in the form of a cotton factory, takes the place of hand spinning and hand weaving ; the capacity of a single person operating the machinery of a modern factory being sixty- to one hundred- fold the capacity of a hand worker, and the outside market for the cotton fabric being only among the cotton growers, one hand in the factory exchanges with them, taking their cotton and furnishing them with cloth, and ninety-nine hand spinners and weavers are displaced. They may know no other art. They demand cotton fabrics to cover their nakedness, but they can no longer exchange cloth for cotton. The cotton growers may be able to increase their THE RATE OF WAGES? 43 product in some measure, but they cannot or will not ex- change with the hand spinners and weavers when they can exchange on better terms with the factory. The cotton growers and the factory operative may each have more than they had before, and may each prosper ; but until the ninety-nine hand spinners and weavers who have been dis- placed can qualify themselves to do some other service for the cotton growers, or until the cotton growers have devel- oped a want for something else than hand spinning and weaving, there may be no equality in the distribution of the greater supply of cotton fibre and of cotton fabric ; there may be want in the midst of plenty. The hard and fast rules of supply and demand must therefore be varied according to the capacity of the persons on whose wants supply and demand are predicated. We heard a great deal about over-production during the long depression between 1873 and 1879, and we are hearing the same cry of over- production at the present time of depression in 1884. Why is this ? Over-production simply means an excess of food, fuel, and means of shelter ; in other words, it means supply of capital. It cannot be said that the people of this coun- try all have so much food, fuel, and shelter that there is no demand for any more. On the contrary, want exists ; the need is urgent, but the demand does not become potential because something is wanting to bring supply and demand to the terms of an exchange. It takes two to make an ex- change. One may have what the other wants, but if the other cannot serve the one, both suffer — one from over- production, the other from under-consumption. We may perhaps find a clue to this apparent paradox by a consideration of one single branch of industry — to wit, the construction of railways. A railroad is, to all intents and purposes, a product of handicraft. The work done in the con- 44 WHAT MAKES struction of a railroad mainly consists in positive, direct hu- man labor, in levelling the way, filling up the valleys, pierc- ing the hills, working in mines and in blast furnaces. Every mile of railroad added to our existing measure stands for the work of about fifty-six men, mostly common laborers, working one year. In 1882 we constructed over 1 1,500 miles of new railroads. In 1884 we shall construct less than 5,000 miles. More than 400,000 common laborers have been dis- charged from work by this change in this one branch of constructive enterprise. They want food, fuel, means of shelter, and clothing now as much as they did in 1882 ; they represent need or potential demand. Over-production, on the other hand, represents supply; but until other work within the capacity of com,mon laborers is found, the wants or demand of these men will not be met, and the over-pro- duction or excess of supply will not be consumed. The final end of such a condition is, of course, that pauperism ensues unless an adjustment of labor can be made, and the over-production or excess will then be distributed by the noxious method of alms-giving or State aid. The only true remedy is to develop the individual capacity of each common laborer and to render him capable of performing more than one kind of service. To use a Yankee expression, we must evolve "■ gumption," which is a purely personal quality, in order that there may be neither over-production nor under- consumption. Let us now return to the direct question : What makes the rate of wages ? I will now challenge your attention by sub- mitting certain paradoxical propositions which I will pres- ently prove by examples. Although subject to exceptions and to temporary interruptions, they take the form of rules of substantial and uniform application if time be given them to work. In any given country like the United States, where THE RATE OF WAGES? 45 the people are substantially homogeneous, where the means of inter-communication are ample, where there are no hereditary or class distinctions, and where there is no artificial obstruction to prevent commerce, high rates of wages in money will be the natural and therefore necessary result of low cost of production in labor. That is to say, the two forces of capital and labor being combined in the production of any given commodity, the greatest quantity of that commodity will be produced where the conditions are most favorable and where the least number of persons is therefore required to do the work. To that point, the best workmen and the most adequate capital will surely tend. This product, whatever it may be, will then fall into the general market of the country, to be converted into terms of money by sale, and will there meet other commodities of like kind which have been produced elsewhere under less favorable conditions or by less skilful persons, with the application of less adequate capital, i. e., poor machinery. That portion which has been produced under the best conditions, will therefore be the representative of the work of the smallest number of persons ; and that which is produced under the least favorable conditions, of relatively the larger number of persons. Equal quantities from each source being sold, the sum of money recovered from the sale will be the same, and it will of course yield on the one hand to those most favorably situated, large profits and high wages to the small number employed ; and on the other hand small profits and low wages to the larger number less favorably placed. These relative conditions may continue for very many years, as it is not easy to change the place either of capital or of large forces of laborers. All will not go to the most favorable place, because there are many other things than mere money which control the disposi- 46 WHAT MAKES tion of population. For instance, I have given some figures relating to the production of wheat on the great plains of the far northwest. The wheat there produced is greater in quan- tity in ratio to the capital and to the number of laborers em- ployed, than in any other part of this country, and wages are very high in the harvest season ; but it does not follow that every person who has been engaged in raising wheat in Central New York will leave his farm, whether he be owner of the farm capital, or laborer. There are many conditions of life in Central New York which will keep men there in preference to migrating to Dakota, even though both profits and wages be less. Hence it follows, that although the total production of any given thing may not be concentrated at the very best point, it will yet be found to be true that where the conditions are the best, the cost measured in terms of days of labor will be lowest, and the wages measured in terms of money per day will be the highest ; the high money wages being the necessary consequence of the low labor cost. Con- versely, low rates of money wages are the natural and neces- sary result of a high labor cost of production. This rule mainly affects such products as are made by handwork, or which of necessity remain handicrafts, i. e., work in which the hand is assisted only by very simple tools of which each opera- tion is guided by the hand. In such cases both the materials worked upon and also the product may bear a very high price ; but the work upon them, not being aided by effec- tive machinery, the quantity of labor will be very large, and the result of the sale may therefore leave but a very small sum to be divided among very many laborers after the cost of materials has been set aside. All mere handicrafts are quickly overcrowded, except such as call for artistic or original power of design. For instance, after the pattern is drawn it takes merely manual dexterity to make Brussels THE RATE OE WAGE.";? 47 lace. The material which is used in this branch of industry- is fine and costly cotton thread, which is converted into lace by- hand without the aid of any- machinery whatever, but merely by the use of two or three simple tools ; the lace-makers of Brussels are among the poorest of the poorer classes of European operatives. They work at the very lowest rates of wages, which will barely keep them in existence, but their product is of very high cost in money. The very best Lyons silks and German velvets are other examples. They are made upon hand-looms of the most primitive kind. Beet- root sugar is another example. Beets require constant hand work in weeding. We cannot afford the time or labor for such work so long as we can exchange wheat raised by machinery for money and with the money buy our sugar. In all handicrafts the quantity of labor is very great, but even at the high prices which such products bring, the total sum of money recovered from the sale leaves but a very low rate lof wages to be divided among.those who have performed the work. /^•-W i\< JXy tjiy^^^}lJL ^ <.-<^<^*-^ ^^^ ■' It thus becomes /arf-^a^p^f^ff^^ must be determined by wh'at the product will bring in the market, from which must be deducted materials and profits. The total annual product may be converted into a lump sum of money, which will represent the combined result of the sale of each particular part of the annual product, each part .of which has been separately converted into a definite sum A of money by sale. From the gross sale of the whole the \\ general rates of wages and profits are, and must be derived ; and from the sale of each particular part the rate of wages and the rate of profit on that part i. e., in that branch of industry, must be measured and defined. So long as we consider the total product of the United States as a unit or single subject of division, the conception 4^ WHAT MAKES of that division may be limited to the two objective points of profits and wages. Reverting to the algebraic formula, a simple statement serves : x being the value of the annual product, the for- mula is : X — a (profits) = b (the sum of the wages of all persons employed). But when we take up any special art the proposition becomes a very complex one, and it is extremely difficult to separate the various elements of a given cost, except by the measure in money in which such elements of cost are usually expressed. Each part of the work must be considered separately in order to prove that the rate of wages of each body of workmen who are en- gaged in each part of the work constitutes a remainder over, and is a result or consequence, rather than an element or measure of cost, as it is usually considered. We may perhaps solve this problem by an example, and for this purpose a cotton fabric may best be taken, because it is an example of production to which the highest art in the application of machinery is necessary in one department, as well as the lowest-priced manual labor, but little aided by machinery in another. The elements of a cotton fabric are : 1st. Cotton, including the profit of the cotton farmer, the wages of the cotton laborer, and the wear and tear of the capital or tools used in the production of the fibre. 2d. Other materials, which need not be considered sepa- rately, as the same principles which govern the supply of cotton also govern these. 3d. The transportation or movement of the cotton to the factory. 4th. The wear and tear or depreciation of the factory resulting both from use and from the invention of better machinery. THE RATE OF WAGES? 49 5th. The wages or earnings of those who do the work. 6th. If taxes are levied upon machinery, the capitalist will also assure himself that he can charge the taxes as a part of the money cost of the goods before he builds the mill, and thus distribute them upon consumers, but they do not of necessity enter into this consideration. With respect to cotton, no attention need be given to any assumed value of land in the southern United States, con- sidered merely as land. The area of cotton cultivation has never yet equalled three acres in one hundred of the area of the cotton States, and if the same measure of intelligence were applied to cultivation in all the States which was given to cotton production by the late Parish Furman, of Georgia, the whole commercial cotton crop of the world, including that of the United States, India, Egypt, and South Amer- ica, could be produced on one fifteenth part of the area of the single State of Texas. The price of cotton, therefore, yields profits to the farmer and wages to the laborer; as time goes on, the two are be- coming more and more identified. The price of the cotton is determined by competition in the great markets of the world — in Liverpool, Havre, and New York. When the cost of transportation has been set aside and the profit of the cot- ton farmer has been realized the remainder over, although it is but a small sum per pound, yet sufifices to pay the laborers upon the cotton farms of the United States the highest rate of wages earned by the cotton cultivators of the world — a far higher rate than can be attained by the ryots of India, the fellahs of Egypt, or the peons of South America. The purchasing power of the wages of the negro of the southern cotton field is also very high when measured by his wants; he prefers bacon and corn — ** hog and hominy " — with a little molasses, to any other food ; his week's ration consists 50 WffA T MAKES of three and a half pounds of bacon and one peck of meal, and this can be furnished him at fifty to seventy cents per week, according to the season and to the abundance of the western crops, or at seven to ten cents per day. The food of the rice-fed races of India costs less nominally, but if con- sideration be given to the force concentrated in and repre- sented by the food, there is probably no other laboring force in the world which can be subsisted at so low a cost, either measured in labor or in money, as the freed negroes of the South. The price of raw cotton being thus determined, the place at which it may be converted into cotton cloth must next be determined. Into this question many conditions enter : 1st. The use of water or steam power. 2d. Climatic conditions. 3d. The density of the population and the capacity of the separate members of the population to do the work. 4th. The proximity of the factory to the market in which the principal demand exists. 5th. The consuming power of the community in the midst of which the factory is placed, and their ability to buy the products for which the cotton fabrics made in excess of their own wants are exchanged. Omitting all consideration of fine cotton fabrics, which perhaps depend upon the relative or constant humidity of the atmosphere in the choice of the place where they are to be made, but which are of little relative consequence in the supply of clothing, — and limiting our attention to pure cot- ton fabrics of heavy or medium weight, which constitute the most important portion of the supply of such fabrics, it ap- pears that the lowest cost of production has been attained in some of the principal factories of New England, of which the specific data are given in the appendix. The fabrics THE RATE OF WAGES? 5 1 hiade in these factories meet those of other countries in China, India, Africa, and South America, and are there sold in competition. The price received has thus far sufficed to defray the cost of the materials, the transportation of the cotton from the southern field to the northern factory, the heavy local taxes, a reasonable rate of profit to the owners, and the remainder over has sufficed to give the operatives the highest rate of wages earned in this art in any part of the world. Whether this superiority can be maintained by New England in competition with the Piedmont section of the Southern States is now considered an open question by some observers. In this treatise it will suffice to call atten- tion to two facts by which the propositions herein submitted are fully sustained. 1st. That in this art the rate of profit in a given product has steadily diminished, and the rate of wages (or of the re- mainder over) has as steadily increased. 2d. That in the most important division of this art, to wit: the manufacture of coarse and medium fabrics from cotton unadulterated with clay, the highest rate of wages (or remainder over) is realized where the cost of production is lowest, i. e., in New England. In treating this subject it matters not whether this result has been reached by means of a protective tariff, or in spite of one. It is admitted that special rates of wages in a par- ticular art may be raised by the exclusion of a foreign product of like kind, so long as the price of the domestic product is maintained above what it would otherwise be; but this is exceptional. I have selected examples of pro- ducts of which the price is determined both by domestic and by foreign competition, in order that the main question may not be confused by any prejudice for or against any special policy. Reference will be made hereafter to the 52 WHA T MAKES conditions under which the poHcy of protection may or may not be expedient. ' * In this connection the writer may venture to express an opinion as to the place in, or section of, the United States where the cotton manufacture will be gradually concentrated. It has been submitted that the most ample capital and the most skilful labor will tend to the most favorable place, because at that place the remainder over of which wages consist will be the greatest proportion recoverable from the sale of the product. Steam having substantially displaced water as the motive power of the factory, the climatic or atmospheric conditions in which the cotton fibre can be most successfully spun and woven have become perhaps the most important elements in determining the place of conversion. In England there is a steady and con- stant trend of the spinning mills to the points where the deposition of moisture is most uniform, and where the humidity of the atmosphere is most constant. There is scarcely a spindle left in Manchester and there are eleven million spindles in Oldham, a town which has grown from insignificance to this importance in a very few years. It is about 800 feet above the level of the sea, on the edge of the level moors at a point where the deposition of moisture is constant. In this country it may perhaps happen that cotton spinning will be concentrated more and more along the coast of the southeastern part of Massachusetts, in Rhode Island, and along the coast of Connecticut, where the influence of the Gulf Stream is most apparent, and where cotton and fuel can be laid down at the least proportionate cost of transportation. It will be observed that in the annual expenses of families living upon an income of $500 to $800 per year the cost of mere subsistence is sixty per cent, of the whole expenditure. In the section designated the staple articles of western food — grain and meat — can be deliv- ered at a cost of $5 per ton for over 1,000 miles of distance, and one ton suffices for a years' ration of grain and meat for four or five persons. On the other hand, this section has a positive advantage over almost any other in respect to groceries and in the supply and preservation of vegetables, while its distance from the cotton field is fully offset by its greater proximity to the principal mar- kets for goods. The colder climate of winter gives a necessary stimulus to in- dustry, and is more readily qualified than the excess of heat in the southern summer. Hence it may happen that at this point, or in this section, the highest wages will always be the remainder over from the manufacture and sale of staple cotton fabrics. In this section the population will also be likely to remain more dense, and also more capable of great diversity of employment and subdivision of labor. These are very important considerations, since the margin of profit is becoming THE RATE OF WAGES? 53 • Wages are held to be a consequence — a result — a remain- W der over after capital has received such profit as will have induced it to undertake the work ; the rate of wages cannot titer ef ore be considered a true measure of the cost of pro- duction. Wages are a consequent result, and their measure or rate is, and must be, determined, in the long run, by what the product will bring, and not by what the capitalist may either promise or be willing to pay for a given time. He may not be able to forecast the future in such a man- less and less. It may almost be said that in all the great arts the profit is found in the utilization of the waste or of the secondary product of the factory, and in the facility with which the machinery can be kept up without the necessity of maintaining a large force of spare hands under constant pay. Hence the iso- lated cotton mill, which is far away from the paper mill on the one side and the machine shop on the other, is at a relative disadvantage which tells against it in the close competition under which a quarter of a cent on the yard of cloth is equal to four or six per cent, on the capital invested. This tendency of partic- ular arts to become fixed in particular places calls for more attention than has yet been given to it, in order that the reasons may be fully comprehended and their influence on wages considered. It would be a matter of curious interest to study the forces or influences which made gloves the chief product of Gloversville in New York, and gave the town its name ; why card clothing is made chiefly in Leicester and Worcester, Mass.; why men's heavy boots are made in Spencer and Brookfield, and women's boots and shoes in Lynn ; why brass work of certain kinds is con- ducted so largely and exclusively in a few towns in Connecticut; etc., etc. There are, of course, very obvious reasons why primary work of many kinds should be found in special places, but the reasons for the concentration of sec- ondaiy work are not so plain, and a study of the causes might yield most valu- able results, especially in their effect upon the remainder over which makes the rate of wages in these arts. The time has been when fine cotton yarn has been spun in England, sent to France to be woven, to Germany to be dyed, and brought back to England to be sold. The best flour of Minneapolis is even now in some small measure sent to London to be baked into biscuit, and is brought back to Boston and New York to find a market. If profits and wages were not recovered from these movements in greater measure, they would not occur. What are the subtle causes of such commerce ? 54 ^^A T MAKES • ner as to be able to carry out a single promise which he has made in advance of the sale of his product. The sum but not the rate of the wages in any given quantity of products may serve as a means of comparison of the money cost when persons who are engaged in the same branch of busi- ness desire to compare their conditions ; but the rates of wages constitute no measure of comparison unless the con- ditions under which the work is done, — that is to say, unless the quality and kind of machinery, the materials used, the advantage of position, the hours of labor, and other elements of the real cost, are absolutely identical. I have said that in a country which is inhabited by a homogeneous people, the rate of wages will be highest where the conditions of production are most favorable, because the quantity or intensity of the labor will there be least and the N^ product will there be greatest. In like manner when ex- changes are made between two different countries, each country will exchange with the other some portion of its own product, which it can make under the most favorable conditions, or in excess of its own needs. The two products being each converted into terms of money will be exchanged as equivalents, without any regard to the proportion or quantity of labor which each represents. We may exchange one day's labor in a Lowell factory in the manufacture of drills, for one hundred days of labor in China in the prepara- tion of. tea. It matters not what the rate of wages of the Lowell operative had been, or what the earnings of the Chinamen handling tea had been ; their product is conver- ted into terms of money, and is exchanged at certain prices which represent a given number of yards of drills for a giv- en number of pounds of tea. Each is an equivalent to the other. No one asks what the rate of wages or the quantity of labor in each has been. The wages are the result, not the antecedent, THE RATE OF WAGES? 55 When the exchange is continued — it proves that each party makes a profit by the transaction. The Lowell operative could not have produced the tea, the Chinaman could not have produced the American drill ; when the exchange is made, the tea sells in America for more than the equivalent of the drill there, and the drill sells in China for more than the market price of the tea there ; therefore there is a cer- tain sum of money, or result of labor expressed in terms of money, to be divided among the laborers in each country, in excess of what there would have been had not the ex- change been made. The final result of the labor of the Lowell operative is the number of dollars which the tea brings, less the cost of transportation ; that sum is more than the drills would have brought at home, else they would not have gone to China. Try this on a little larger scale. We now import into the United States, annually, materials which are free of duty to the value of $ 2 cx), 000,000, and we exchange for them, at this measure in terms of money, the surplus of our cotton which we could not now spin ourselves, — the surplus of our oil which we could not now burn ourselves, — and the surplus of our wheat which we could not now eat, even if every man had every day all the bread he could possibly consume. What we send out is our surplus, our excess, a part of our over-production which could not be converted into terms of money at any price, or which would have reduced the price of the whole product if it were retained ; if retained at home it would yield nothing to divide in terms of money as the equivalent of such excess, among those who did the work. But the substances for which we have exchanged this excess having been brought into the country where they do pos- sess a value of $200,000,000 or more, there is that additional sum to be converted into terms of money and subdivided $6 WHAT MAKES in profits and wages. In the use of this foreign material, much of which enters directly into the work of domestic manufactures, all wages are therefore, by so much higher than they would have been otherwise. There is so much more to be divided in terms of money, because so much has been added to the quantity of things which could be used ; while the cotton, oil, and wheat sent out from the country could not have been used. Now, it matters not what may have been the rate of wages paid in the production of the cotton, wheat, or oil ; and it matters not what may have been the rate of wages paid in raising the wool of Australia, in making the tea of China, or in saving the hides of South America. We may receive the work of ten men for one day at twenty cents a day, for the work of a single man working one day for two dollars. By so much as the quantity of labor in our exportable commodities is less than the labor in those which we import, will the rate of wages be higher to our home labor as the necessary result of the exchange, because so much additional substance has been added by import from abroad to the quantity of things for which a home market could be found. This import has been received in exchange for home productions, for which there is no market, because they are in excess of home wants. There can be no continuous commerce unless there is a continuous service or profit to both parties. It follows that the nation which has diminished the quantity of human labor in greatest measure by the applica- tion of machinery, produces goods at the lowest cost, and by exchange with the hand-working nations, who still con- stitute the majority of the people of the world, are, by way of such exchange, enabled to pay the highest rate of wages in money, because their goods are made at the lowest labor cost. This is the secret of English commerce. THE RATE OF WAGES? ^y The rates of wages are higher in England than in any country with which she makes large exchanges, except the United States. She buys largely from us in spite of our higher wages, because by way of high wages we make grain, cotton, meat, oil, and many other articles necessary to her use at a lower cost in money than any other nation. Having thus attempted to present the principle at issue in this matter, let us now consider its application. The only problems of any great importance which are now presented to the people of this country for their determination, consist of the various problems in regard to the collection of the revenue, to the banking system, to the quality and kind of coin which shall be a legal-tender in the settlement of debts, and other fiscal questions. The tariff, the currency, the bank- ing system, and the coinage are the only political questions of any moment. Fortunate for us that it is so, and that we are free from the complications of other countries. Strange it is, and true it is, that the most difficult political question to be dealt with by the people of the United States is, kow to get rid of a surplus revenue. Neither one of these problems can even be stated without immediate reference being made to their bearing upon the rates of wages of the people of this country. Aside also from questions of revenue, banking, and coinage, the relations of men to each other cause discus- sion, — the hours of labor, the respective duties and rights of employers and employed, competition and cooperation, and all the other subjects which are customarily sum- marized under the general term of "the labor question." Not one or all of these questions can ever be discussed without an immediate consideration of the rate of wages. In every speech, in every essay, and in every conversation by the way, upon any of these subjects, the rate of wages 58 WHAT MAKES comes at once to the front, and, as a rule, one or the other of the following propositions is almost invariably assumed, all of which are the very reverse of being true, and all of which are inconsistent with the law of wages which I have attempted to propound. All such discussion serves but to confuse the mind, simply because no distinction is made between the rate of wages and the sum of wages, and be- cause it is assumed that all laborers or operatives are equally efficient. I again desire to express the hope that the form of these propositions may not prejudice any one, be he an advocate of protection or of free trade. The so-called principle of laisser faire is by no means implied in this trea- tise. The welfare of laborer and capitalist rests upon many other conditions than the rate of profits or wages, but the forces which determine these rates must be fully considered before any intelligent discussion of any social qnestion can be undertaken. It is to these forces that I have endeavored to limit this treatise. I will state these fallacious proposi- tions in order, as follows : POPULAR FALLACY NO. I. The cost of production of any given article can be ascer- tained by finding out and comparing the rates of wages paid in its production in different places, here or elsewhere. POPULAR FALLACY NO. 2. Low rates of wages are necessary to low cost of produc- tion ; high rates of wages can only be paid consistently with high cost of production. POPULAR FALLACY NO. 3. Inasmuch as laborers work for wages, wages enter THE RATE OF WAGES? 59 directly into the cost of production, therefore cheap labor can only be assured by the payment of low rates of wages. POPULAR FALLACY NO. 4. An employer must of necessity be able to hire laborers at low rates of wages in order to make goods at low cost. Now if one asks any employer which workman is the first one to be discharged in a period of depression, — the workman who, being employed by the piece, earns the lowest rate of wages for himself, or the one who earns the highest, — unless some other question than the mere cost of goods enters into his consideration he will reply: *' Why, the poor workman will be discharged first, of course, — he who earns the lowest rate of wages." Each employer understands perfectly well in his own busi- ness that the cheapest man, — that is, the man who does the most work for the least money is the one who works the greatest amount of machinery with least stops, i.e., the most effective workman ; in manual labor it is the strongest ; in a handicraft it is the one who possesses the greatest manual dexterity; in the operation of machinery it is the one who understands the machine best and can get the most work out of it. The very man who may have taken part in a dis- cussion in which he has assumed that the popular fallacies which I have recited are unanswerable truisms, will never conduct his own business consistently with them, and if he did he would be sure to fail sooner or later. The true cost of any given article is the quantity of labor or the human effort expended in its production ; now, if we consider a human being as an automatic machine, similar to any other mechanical power or force, the true cost is the quantity of food and fuel expended in the conversion of a given amount of material substance into human force. 60 WHAT MAKES How true this is has been proved by Brassey in his coi parison of the cost, even in money, of the labor of the English navvy as compared to the Hindoo or any other of the rice-fed people of the world. This human effort is measured or converted into terms of money, and it is the sum of the wages, not the rat e^ which constitutes the money costj_ to this sum the rate of wages may bear a large or a small proportion. Wages in money are the instrumentalities for procuring food, fuel, and shelter ; and the worker is practically the more effective, the more money he can earn, or, in other words, the more money he can spend in a judi- cious manner for a good subsistence. The English navvy may be instanced again as being worth twice as much, either in the measure of his work, or by converting the measure of his work into wages, as the rice-fed coolie. He earns more, he spends more, he eats more, and he does more than double the work. Therefore, although he attains a high rate of wages, the result of his labor will be a lower cost of production. Again, the skilful weaver who can tend six looms, and keep each loom moving, being paid by the piece or according to the quantity of cloth woven, earns higher wages than the unskilful weaver who only tends four looms, and has one stopped a large part of the time ; the sum of the wages of the six-loom weaver is the least in proportion to the quantity of cloth produced. The high wages represent the low cost. Not very long since, a German steamer, on the way to New York, was very much damaged, so that very extensive repairs became necessary. It was decided to do the work of repairing in New York, as it appeared diflficult to send her back to Bremen ; but the agents were instructed to report in Bremen, day by day, the number of men employed and the rates of wages; which report they THE RATE OF WAGES? 6l made. When the first report was received in Bremen, a telegraphic message was returned, ordering the steamer back to Bremen for the completion of the repairs, for the reason that the owners of the line said that they could not afford to pay such high rates of wages, being well assured that the cost of repairs would be more than what they would of necessity expend in Bremen. But it was too late ; the work had been begun and it was necessary to finish it in New York. When the final account of the sum of wages was sent to Bremen, it proved to be a less amount than the same repairs would have cost in Bremen. Since then there has been no reluctance to repair these German steamers in New York. Again, the rates of wages may be precisely the same in two factories in the same place, and yet the cost of produc- tion will vary so much that one mill will prosper while the other will fail, because the quantity of product will vary, and the profit or loss of any textile factory rests mainly upon the quantity of yarn spun and of the goods woven. There may be many reasons for this difference : in one mill the machinery may be old, in the other new ; in one the mate- rial may be well selected, in the other badly ; in one the goods may be well sold, in the other badly sold ; in one the goods may meet the fashion, in the other they may be out of date, although better in quality. Under all these vary- ing conditions, the source of wages being the money pro- duced by the sales, high wages may have been paid consis- tently with low cost of production in one factory ; and low wages may have been paid, notwithstanding the high cost of production, in the other ; or, if the cost of production be the same, the goods of one mill being well sold and those of the other ill sold, the sum left to be divided might amply suffice for high profits and wages in the one case, and be 62 WHA T MAKES deficient in the other. Thus, difference in management will alter results, in the same place, at the same time, in the use of similar machinery. The same management will yield different results, both in profits and wages, on dif- ferent machinery. The same management and similar machinery will yield high wages in one place, and the reverse in another, at the same time, because the condi- tions vary in other respects. I have submitted these several propositions under the name of popular fallacies. It will be apparent that a very large part of the discussions in respect to hours of labor, in respect to taxation, and to all other matters connected with the so-called labor question, are commonly based upon them, and the common conclusions are as fallacious as the propo- sitions. A true theory of the source of wages and their actual re- lation to productive industry is therefore necessary to any intelligent discussion of any of the questions now before the country. The wage question must be treated from four points of view. First. — What individual effort is required to earn a given sum of money in a given time ? Second. — What is the purchasing power of that money ? Third. — What are the relative efforts, as well as relative sums of money earned in the form of wages, by those who compete in a given product in the same or in different countries ? Fourth. — What is to be considered in addition to the cost of materials and the rate of wages, in placing the goods pro- duced at the point of consumption ? The fallacies which have been previously submitted may be met by counter propositions, all of which can be sub- THE RATE OF WAGES? 63 stantially sustained ; exceptions being readily designated, and the reason for such exceptions being readily found. First. — The rate of wages constitutes no standard even of the money cost of production ; which cost must be made up by adding together the sum of all wages and dividing by the product, in order to establish a unit of cost in money by way of a unit of measure — whether by the yard, barrel, or pound. Second. — Low rates of wages are not essential to a low cost of production, but on the contrary usually indicate a high cost of production, — that is to say, a large measure of human labor and a large sum of wages at low rates. Con- versely, high rates of wages may, and commonly do, indi- cate a low cost of production, — that is to say, a small proportion of human labor and a small proportionate sum of wages at high rates in a given quantity of product. Third. — Cheap labor, in a true sense, and low rates of wages are 7iot synonymous terms, but are usually quite the reverse. Fourth. — An employer is not under the necessity of se- curing labor at low rates of wages in order to make cheap goods, but he may and commonly does pay high rates of wages, for the very purpose of assuring the production of goods at the lowest cost, — that is, in order to be able to sell them on the lowest terms, or " cheap " in the popular sense. The abuse of the word cheap leads to more mischievous fallacies than any other abuse of language. The cheapest labor is the best-paid labor ; it is the best-paid labor applied to machinery that assures the largest product in ratio to the capital invested. If these propositions can be sustained, it may be submitted that the more the capitalist increases his wealth and applies it to reproduction, the more the welfare of the laborer is 64 WHAT MAKES assured. The competition of capital with capital tends constantly to a decrease in the ratio of the profit of capital to the total production, and of necessity tends also to a con- stant increase in the rate of wages of the laborer; thereby more than counteracting the tendency of the competition of laborer with laborer to diminish wages. I will now attempt to prove these apparently paradoxical propositions by one of many examples by means of which this theory can be sustained. It will be taken from the records of the cotton manufacture, not only because this branch of indus- try is most familiar to myself, but because it was almost the first of those which were brought under the factory system by division of labor, and under this system factory accounts have been kept in the same way from the very beginning. In 1830, when the first statistics in my possession are dated, the average earnings of all the operatives in a large cotton-mill, who then worked thirteen hours or more a day, and among whom were comprised a much larger proportion of men than at the present time, while the women were older and there were fewer children, were $2.50 to $2.62 per week. The quantity of machinery which each hand could tend was much less ; the production of each spindle and loom was less ; the cost in money of the mills per spindle or loom much greater, while the price of cloth was at times more than double the price at which it can now be sold with a reasonable profit. The average earnings of all the female operatives in what purports to be the same factory, at the present time, on the same fabric, working ten or eleven hours a day, under vastly better sanitary conditions, both in the factory and in their dwelling-houses, are $5 per week, and in some cases even $6 — or more to the most skil- ful. That is to say, women only now earn about twice as much in ten hours as men and women combined averaged THE RATE OF WAGES? 65 in thirteen hours a little over forty years ago/ Between these two dates, subject to various fluctuations from tem- porary causes, the course of events in this branch of indus- try has been as follows : A continuous reduction in the hours of labor, coupled with an increase in the earnings per hour ; a diminution in the money value of the machinery, — that is, in the ratio of capital to production, coupled with an increase in its productive efificiency ; a constant increase in the supply of cotton fabrics per capita, coupled with a de- crease in the price ; a continuous increase in the purchasing power of gold dollars in respect to almost all articles of necessary subsistence, a few articles only having advanced in price, mainly meat and timber. In all these points the cotton manufacture is not excep- tional, but the same facts can be proved in respect to all other branches of industry where the accounts have been kept upon a uniform system.' After making all necessary corrections in the data respect- ing cotton fabrics, on account of the variations in the price of raw cotton, it therefore appears that the apparently paradoxical propositions which I have submitted — the re- verse of those which are commonly accepted — are fully sustained. First. — The rate of wages paid has not been a true meas- ure of the cost of production. Second. — The lowest rates of wages have been paid when the cost in money was the highest, and the highest rates of wages are now paid when the cost in money is lowest. Third. — Low wages and cheap labor have not been sy- nonymous terms. That labor has, in fact, proved to be cheapest by which the largest product for each dollar ex- ^ See appendix. Graphical statement of two factories. ' Appendix. — Wages of various kinds compared. (£ WHAT MAKES pended was assured, and that has been the highest paid labor. Fourth. — The employer has not been under the necessity of paying low v;ages in order to make low-priced goods. The goods now made at the rate of $5 to $6 per week being sold at less than one half the price, in many instances, of those which were formerly made at the rate of $2.50 to $2.62 per week. Not only is the capital in the cotton-mill now less than one half wh^t it was in 1830 even when measured in terms of money, in ratio to the value of the product, but the average rate of profit which capital now rests satisfied with is less than half on each dollar invested what it was in 1830. Hence the competition of capital with capital has in- creased the quantity of cotton cloth at a decreased rate of profit. On the other hand, the competition of labor with labor has not prevented the continuous rise in the rate of wages, and these wages have more than doubled in the pur- chasing power of each dollar, by comparison with the cotton cloth in the making of which they have been earned. In respect to some kinds of cotton cloth, such as printed cali- coes, the actual weekly wage of to-day will buy four or five times as much as the weekly wage of forty years ago. In this branch of industry, at least, all interests have thus been harmonious. The increase of wealth in the cotton manu- facture has been accompanied by a yet greater increase in the welfare of the cotton operative, while both have been accompanied by a vastly greater supply of cotton fabrics, and by their increased consumption at lower and lower prices. These data have been compiled from the accounts of cer- tain factories which have never become bankrupt — whose stock has never been reduced in its par value, and which have paid a fair average dividend to their stockholders. THE RATE OF WAGES? 6/ from time to time, since they were established to the present day. I have taken as examples coarse fabrics, the common wear of the million. During this period, from 1830 to 1884, this branch of industry, like all others, has been sub- jected to over thirty changes in the tariff ; to the suspension of specie payments in 1837 and 1857, brought about by purely commercial crises ; to the suspension of specie pay- ments at the beginning of the war, brought about by the imposition of the Legal-Tender Act ; to a variation in the price of cotton from five cents a pound to $1.83 per pound ; to the weary depression from 1873 to 1879 '•> ^^ several minor commercial crises. They have also been sub- jected to numerous acts of interference on the part of the State Legislature in the conduct of their affairs. If con- stant vacillation and change in acts of legislation, in respect to the tariff, currency, banking, bankruptcy, taxation, hours of labor, and other acts which are now deemed of present permanent interest to legislators, could have killed these establishments, they would have long since been very dead. May not this prove that we depend much less upon gov- ernments and upon statutes than we think we do? We are almost forced to accept the dogma of Buckle, that the greatest service of modern legislators is to repeal the ob- structive statutes of their predecessors. The same progress and improvement in the condition of the operative have occurred in England during the same peril od ; only the change has been greater there than it h.3 been here, because the English operatives started from a much lower plane and have now nearly attained an equality with the condition of our own in many departments. We may now recur to the question. What makes the rate of wages? In other words. Why are the average wages ex- pressed in terms of money in the same factory nine to ten 68 WHAT MAKES cents an hour to-day, against three and a half to four cents an hour forty or fifty years ago, while the rate of interest or profit on capital, when invested in the safest possible securi- ties, is now only three to four per cent, against six, eight, or even ten per cent, then? In order to bring out the point of this argunnent with yet greater clearness, having already compared one period of time with another in the same factory, we may now com- pare one mode of work in this art with another in the same country in two different places, to wit : Let us compare the homespun fabric of Western North Carolina with the fac- tory cottons of New England. It is computed by men who have had much experience, and whose observations are en- titled to credence, that there are two or three million persons living in the heart of the United States, in the mountain sec- tion of the South, who are still clad in homespun fabrics of cotton and of wool. I have myself been among them, and have examined the conditions of the art of making cotton goods as it there exists. Two carders working with hand cards, two spinsters operating spinning-wheels, one weaver working a hand-loom — five adult persons in all — convert four to five pounds of cotton into eight yards of cloth in ten hours ; the cloth is heavy, rough, and unsightly, very durable, and worth in the neighborhood, when sold, about twenty cents a yard. If the value of the cotton be deducted, the five persons might possibly earn twenty cents a day, the total value of this product being $i.6o. The capital inves- ted in the hand machine can hardly be computed, because the only thing purchased would have been the two hand- cards ; but if the hand labor expended in the construction of the spinning-wheels and hand-looms were computed in money, the whole investment might come to $ioo. The proportion of capital used, in its ratio to the annual product, THE KATE OF WAGES? 69 would therefore be very small, and the ratio of labor, even at twenty cents a day, be very large. In New England, $5,000 worth of capital, operated by five persons, male and female, averaging each one dollar per day in wages, will suffice for the conversion of three to five hundred pounds of cotton into eight hundred yards of the same kind of coarse cotton cloth ; the cloth softer, more sightly, and not quite as durable ; when sold as low as even seven or eight cents a yard, yielding money enough to pay for the cot- ton and other materials, profit enough to pay ten per cent, on the capital, and yet leaving as the result for the wages of the operatives one dollar a day as their share of the product. Between these two extremes every phase of the progress of a century in the art of cotton-spinning and weaving can even now be observed, in a journey of a week, from Boston to North Carolina and back. The. small mill, like that of 1828, fitted with old, heavy, slow-moving machinery, still exists, in which twice or thrice as many Southern operatives, work- ing thirteen hours a day, at two thirds the rate of earnings made in Lowell, get off a less product of cloth at a far higher cost. As we journey back toward the North, the mill be- comes larger and more effective, until we arrive at the great factories in New England, where the highest wages are paid and the lowest cost of production is assured. The same or even greater extremes may be found by comparing India and China with England; while the cotton-mills of England, when compared with the factories of Germany and Italy, al- though the machinery may have been made by the same makers, yet show the same rule — a larger number of per- sons, less effective work, lower rates of wages, and higher cost, as we go away from England to Germany, to Austria and to Italy. It would therefore appear that wages are a remainder *J0 WHAT MAKES over from the sale of the product, and are determined by the sum of money which that product will bring in the markets of the world. From this sum of money must be assigned : First. — A portion or sum sufficient to restore the depreci- ation of the capital used, — in other words, to keep the machinery in effective condition. Second. — A sum equal to the average rate of profit on capital invested in the very safest securities, and, in addition to that rate, as much more as is necessary to compensate the owner for the greater risk of one branch of work as com- pared with another. Third. — The cost of the materials. Fourth. — The sum needed to secure the very best ad- ministration. Fifth. — The proportion of the national. State, and munici- pal taxes which are collected from the consumers of the goods through the instrumentality of the person , firm, or corporation owning the property ; which taxes enter into the money-cost of the product and must be recovered from the sales. Lastly. — The remainder over constitutes the wages or earnings of the laborer, whatever that remainder may be. Profits, taxes, and wages are therefore alike derived from the sale of the joint product of capital and labor. Unless one branch of industry yields the average of all branches, due regard being given to the greater or less risk of each as compared with the other, it will not be under- taken ; or, if undertaken, it will not long continue to be pur- sued. Wages therefore are apparently deferred to profits ; but, on the other hand, wages constitute all that there is left, and under the inexorable law of competition of capital with capital, the profits of capital are constantly tending to a minimum, while the rate and purchasing power of wages THE RATE OF WAGES? 7 1 are both constantly tending to a maximum. Capital is al- ways ready to take the risk and to become the guaranty or insurance fund for the recovery from sales of goods of higher and higher wages for any kind of skilled labor which is capable of increasing the product of any given quantity of machinery. From the sale of this increased product, in the first instance, capital gains. More of the same machinery is then added, and, as it becomes greater in quantity and more effective in use, the rate of profits diminishes, although the aggregate may increase ; in other words, capital secures a less and less proportion of the constantly increasing result, while labor receives all that there is left over. That is, the remainder over is constantly becoming a larger and larger proportion of an increasing product. There are of course temporary fluctuations; but both observation and experi- ence, combined with statistics, confirm this rule both in this country and in England. In other words, the rule laid down by Bastiat is sustained by experience; the aggregate profit of capital is augmented but the relative profit is diminished while the wage of labor is increased both absolutely and relatively. I had been engaged in this examination and compilation before I even knew that Mr. Robert Giffen was engaged in the same work. His results and my own, covering a period of fifty years, are identical. Having thus attempted to answer the general question, What makes the general rate of wages? now let us give a few moments to the particular question, What makes the rate of wages higher in this than in any other country? In order to give an intelligent reply to this question, we must treat the annual product of the United States as a whole, and consider only the general rate of wages in this country. In some particular branches of manufacture, or in some 72 WHA T MAKES hereditary or national arts, other nations may still apply machinery more effectively than we do ; and in some special branches of agriculture, such as wine, olives, sugar, and the like, other countries may either possess better conditions or for the time being greater skill. On the whole, however, the people of the United States are in the possession of more ample and varied natural resources, and of the most effective capital in the form of machinery ; they are also endowed with greater facility in the adaptation of machinery both to agriculture and to manufacturing ; they possess more effective mechanical instrumentalities of distribution by rail and river ; they enjoy a continental system of unrestricted commerce between the States; they have a fairly complete system of common education ; but lastly, they are subjected to the least diversion of any part of their annual product to purposes of destructive taxation^ — that is, to the support either of standing armies or of privileged classes. I do not recite our advantages in a boastful way but in order merely to bring out the salient point, that while other Nations prepare for War we prepare for Work. Our only great war has been fought in the interest of labor — in order that labor might be free. It gave such an incentive to invention in the North that all our principal crops increased during this period even though a million men were taken away from their work. It opened the way for the Southern States to such conditions that the South itself is to-day richer and more prosperous than in the palmi- est days of slavery. Our national debt in 1866 was $83 per head of population. It is now but $25 per head, and will soon be wholly paid. When two simple principles shall have become a part of the common knowledge of the people of the United States, the end of all standing armies in the civilized nations of the world will have come. THE RATE OF WAGES? 73 These two principles are : First, — All nations are interdependent, and in all com- merce both parties gain in welfare. Second. — In all arts which are not mere handicrafts high wages in money are the necessary result of low cost of labor of production. In the grand competition for the commerce of the world which now turns on a cent a bushel, a quarter of a cent a yard, or a fraction of a penny on a pound of iron or steel, no nation which bears the burden of standing armies like those of Germany, France, Italy, Austria, and Russia, can hope to enter into successful competition with England or the United States, when the whole English-speaking people take advantage of their position and serve the nations of the world with goods at low cost, in which all who have joined in the work have made higher wages than can be earned in any of the countries named. The commerce of the army-burthened nations with others will be destroyed by its own restrictions. Nations can only be ruined by their own burdens; — then what may come? Their own re- sources will not suffice to sustain their armies, but with the burden of their armies upon them they cannot engage in competition with England or America; their product will be small and insufficient ; their wages very low in their rate, barely capable of buying enough to sustain life — if even for that, — while their cost of production as a whole must be very high. It is difficult to foresee the course of events. These ar- mies are as impossible to be disarmed as they are incapable of being sustained, without revolution and destructive war. What will be the end no man can tell ! In contrast with these adverse and costly conditions, the English-speaking people may well rejoice in the relative free- 74 ^^A T MAKES dom of Great Britain and the absolute freedom of the United States. In addressing the British Association it may not be un- suitable to call attention to the position of the United States, provided it is not done in a boastful spirit. In deal- ing with the potentialities of the future it is almost impos* sible to prevent the imagination from running riot, but since the Chairman of our Section, Sir Richard Temple, has spread before you in his address the magnificent picture of the British Empire, I may perhaps be permitted to dwell upon the resources of the United States, and by analogy, of Canada also, in a few paragraphs. With respect to my own country, I may venture to say that in addition to the advantages I have recited our taxes are, on the whole constructively expended. The necessary result ensuing from our conditions is a larger annual product in ratio to the number of persons employed in making it, measured either by quantity, or, when brought into competition with the world, by price or the sum of money which is received for it, than can be elsewhere attained. It is also, as a rule, of better quality, because of the more intelligent methods ap- plied to its production. If we consider production as a whole, our annual product comes into competition for sale, with other products of the world of like kind, and its price as a whole, is determined, directly or indirectly, by this world-wide competition. From this determination of its price, its value is converted into terms of money. Quantity and quality alike tend to increase the sum of money recov- ered from the sale, and this sum of money is the sum which is to be divided between capital and labor. Large general profits and high general rates of wages are the necessary result. It is therefore proved to have been absolutely true in THE RATE OF WAGES? J^5 this country that, in proportion to the increase of capital, the absolute share of the value of the annual product falling to capital has been augmented, but its relative share has been diminished ; while, on the other hand, the share that has fallen to labor has been increased, both absolutely and relatively. The generally high rate of wages, expressed in terms of money, in the United States, is the necessary con- sequence or result of the generally low labor cost of produc- tion, — that is, of the smaller quantity of labor by which the production is assured ; which less quantity of labor suffices because of the application of the most effective machinery, i. e.y of capital, to the work. Let me give two or three salient examples proving this rule. Man does not live by bread alone, but bread is the staff of life. What people gain their bread with so little exertion of human labor as the people of this country? If we convert the work done in the direction of machinery upon the great bonanza farms of far Dakota into the yearly work of a given number of men, we find that the equivalent in a fair season, on the best farms, of one man's work for three hundred working days in one year is 5,500 bushels of wheat. Setting aside an ample quantity for seed, this wheat can be moved to Minneapolis, where it is converted into 1,000 bar- rels of flour, and the flour is moved to the city of New York. By similar processes of conversion of the work of milling and barrelling into the labor of one man for a year, we find that the work of milling and putting into barrels 1,000 barrels of flour is the equivalent of a man's work for one year. By a computation based upon the trains moving on the New York Central Railroad, and the number of men engaged in the work, we find that 120 tons, the mean be- tween 4,500 bushels of wheat and 1,000 barrels of flour, can be moved 1,700 to 2,000 miles under the direction of one 'jti WHA T MAKES man working eighteen months, equal to one and a half men working one year. When this wheat reaches New York City, and comes into possession of a great baker, who has established the manufacture of bread on a large scale, and who sells the best of bread to the working people of New York at the lowest possible price, we find that i,ooo barrels of flour can be converted into bread and sold over the counter by the work of three persons for one year. Let us add to the six and a half men already named the work of another man six months, or half a man one year, to keep the machinery in repair, and our modern miracle is that seven men suffice to give i,ooo persons all the bread they cus- tomarily consume in a year. If to these we add three for the work of providing fuel and other materials to the rail- road and to the baker, our final result is that ten men work- ing one year serve bread to one thousand.* ^ It may not be assumed from this analysis of the production of wheat upon what are known as the great " Bonanza Farms" of the Northwest, that any in- ference is to be drawn from these facts either for or against the large holdings of land as distinct from small farms or " peasant proprietorship " so called. If consideration be given to the kind of crop which is to be raised, it will be apparent that a certain proportion of the products of agriculture may rightly be raised upon the largest allotments of land to which machinery may be applied in the greatest measure, by which method the largest production will be as- sured at the least cost. "Wheat is essentially a crop of this kind. It contains the maximum of nutri- ment in the least bulk. It can be moved over long distances at low cost, and it is a prime necessity of life. It may, therefore, well be produced in largest quanlity at the lowest measure of cost, even though this method may for a time injure the condition and impair the prosperity of the small farmer who cannot adopt machinery in so great a measure, or who has not the capital neces- sary for extensive cultivation. Maize or Indian com, on the other hand, containing less value in the same bulk, may well be raised upon smaller allotments of land nearer the places of con- sumption, if it is to be used in the form of meal ; but maize may also be consid- ered one of the crops subject to the application of large capital, and to being raised in the most economic manner on large farms when it is to be fed to .cattle or hogs, and thus concentrated into a removable form. THE RATE OF WAGES? J'J Again, iron lies at the foundation of all the arts. At an average of 200 pounds per head in the United States, the largest consumption of iron of any nation, we yet find that the equivalent of one man's work for one year, divided be- tween the coal mine, the iron mine, and the iron furnace, But although the wheat and com crop constitutes so large a factor in the subsistence of the people, there are yet very many other products of agriculture which can only be raised in part by hand labor or with less application of machinery, and upon small farms more economically than they can be upon large ones. Hence it follows that in districts like the central part of the State of New York, which was formerly the great centre of wheat production of the United States, as soon as the competition in the sale of grain of the great Western farms began to be severe, the land being under no restriction either of lease or settle- ment or other artificial condition, was immediately converted to other crops, such as fruit and vegetables, which will bear transportation over short distances only, or of seeds and the like ; while the land in closer neighborhood to the great cities, which under former conditions and in the absence of cheap trans- portation was of necessity devoted to the coarser or more staple crops, is now devoted to market gardening. Thus it has happened that while the large farmers prosper the small farmers prosper yet more, not being under the necessity of applying themselves to a few coarser staples, but adapting their land to any demand which may happen to exist in their immediate neighborhoods. The production of wheat in the central part of New York is about as large as it ever was when it was the great wheat centre of the country, yet it is now a very insignificant factor in wheat production, and the farmers in this section have attained vastly greater prosperity by diversity in their production, and by the application of improved tools combined with hand labor, than they ever obtained under the former method. The secret of success in agriculture, as in many other matters, therefore, lies in the freedom of the land from the artificial restrictions of leases, settlements, and the like — by which English land is now so much encumbered, and the reason why the agriculture of the Eastern and Middle States has advanced in method and prosperity in the face of Western competition, is to be found in the absolute freedom in the purchase, sale, and use of land, which is the rule in this country. Land is itself a tool or instrumentality, and under our laws and customs the tools ultimately fall to him who can use them best ; or it may be considered as a laboratory rather than a mine, in which the product is in ratio to the intel- ligence which is applied to its use. 78 WHA T MAKES suffices for the supply of 500 persons. One operator in the cotton factory makes cloth for 250, in the woollen fac- tory for 300 ; one modern cobbler (who is any thing but a cobbler), working in a boot and shoe factory, furnishes 1,000 men, or more than 1,000 women, with all the boots and shoes they require in a year. So it goes on ; and the more effec- tive the capital, the higher the wages, the lower the cost, the more ample the supply. But in the consideration of this or any other theory of wages, it must always be remembered that these natural laws which govern the actions of men in the conduct of the processes of industry, work very slowly, and are sub- ject to variable causes or interruptions which may suspend, retard, or even reverse their normal action for a considera- ble period. For instance, the process of making iron, be- ginning with the mining of the coal and of the ore and end- ing with the conversion of the materials in the furnace, calls for the use of a very large capital, and for the highest scientific attainments in the heads of departments and in the administration of the work. It also requires special skill on the part of a small portion of the workmen, but the larger part of the work is not of the kind that calls for any great measure of intelligence, and is, in fact, mainly hand- work. It might therefore happen that the country which first engaged in this branch of industry on a large scale would obtain a paramount control of all markets and might be able, for a long period, to prevent the building up of com- petitive works elsewhere. In fact, so long as the only fuel with which iron was smelted was charcoal, the colonies of America were able to supply themselves, and even to ex- port large quantities of iron to Great Britian. But when a method was invented for the application of coal to the smelting of iron, the supremacy of Great Britain in this THE RATE OF WAGES? 79 art was assured for a long period. A dense population gathered round her mines, skilful enough for this work, but otherwise unintelligent, uninstructed, and irremovable, or practically incapable of meeting the conditions necessary for beginning this work in other countries. Under such condi- tions as these, the British employers of labor in making iron were in a position which enabled them to keep wages down, and to keep prices and profits up for a long period, as in fact they did. Under such relative conditions the competi- tion with all other countries, especially a country like the United States where population was very sparse and capital was very limited, was of necessity long delayed, even though our deposits of iron and coal are so placed as to be more easily worked. And even though a ton of iron made in the United States now represents a much less quantity, or less number of days of labor, than a ton of iron produced in Great Britain, it was not always so. It therefore became a mere question of expediency whether or not to interpose a temporary protective duty in order to overcome certain artificial conditions. It was held that a country should render itself substantially independent of all other coun- tries in the making of iron, because iron is one of the essen- tial articles of war. These arguments were entitled to all the consideration which they may deserve. No opinion need here be expressed upon them. The same retardation in the working of natural laws also occurred in respect to the inventions of Arkwright and others in cotton-spinning. England succeeded for a long time in retaining control of these inventions, which were of prime importance, by making it a penal offence to carry drawings or models to any other country. By this joint control of the processes of making iron and the application of machinery to the cotton manufacture, England obtained 8o WHA T MAKES the supreme control for a time of this latter art, and fairly succeeded in preventing these modes of work from being carried to this or any other country for very many years. The cotton manufacture was not established in this country until Samuel Slater succeeded in building machinery from memory, having been unable to bring plans from Eng- land ; of course such an undertaking was at a great disadvantage. In this case, again, the main question as to the development of textile establishments by means, of a protective duty became one of expediency only. The expediency of these protective duties was sustained upon the ground that although the people were for the time subjected to the necessity of paying higher prices for their iron and for their textile fabrics than they would otherwise have paid, an ultimate reduction of cost and of price to a much lower plane was thereby assured, and has doubtless been accomplished. These two examples are cited in order to show that this theory of wages does not of necessity carry with it the laisser faire idea of legislation. It is not denied that special branches of industry may be promoted by legislation of this sort. It is not denied that wages in that special branch may be temporarily raised, because by means of the ob- struction to foreign import which the duty interposes, the price of the domestic fabric is for a time maintained at a higher point than it would otherwise be ; and since the sum from which wages and profits are alike derived is the value of the joint product, it follows that, in these particular arts, so long as the protective duty serves to keep up the price, there may be more money to be divided in rates of wages to the operatives who do this special work. But, it will be observed that such additional profit or ad- ditional wage is at the cost of the consumer in the same THE RATE OF WAGES? 8l country, and that there can be no material effect upon the general rate of wages because the number of persons now en- gaged in any branch of industry which could be subjected to foreign competition is very small in ratio to the whole number of persons engaged in gainful occupation. Such duties may be expedient or not. That is not the question at issue in this treatise. I cite these cases in order that the true theory of wages may not be prejudiced in the mind of any one by any apparent antagonism to the protective theory, which may be justified on entirely independent grounds. In the judgment of the writer the source of wages and the law by which they are determined fail to be com- prehended, both by the advocates of protection and free trade, and this failure leads to much useless and bitter con- tention. If the honest advocate of protection were once convinced that when an industry had become fairly estab- lished the rate of wages determines itself according to the general average of wages in other work of analogous kind, and that the wages thereafter tend to the share of the la- borer becoming greater and greater, he would be less averse to considering the date when the protective duty could either be reduced or removed. No one but the most confirmed doctrinaire can deny that the argument in respect to wages and to their maintenance which is presented on behalf of a protective tariff, is conscientiously presented in the interest of labor on behalf of those who adhere to it. On the other hand, if the equally sincere advocate of free trade could once be convinced that the continued imposi- tion of the duty does not of necessity involve the continued taxation of the many for the benefit of the few ; if he could admit that it might even be expedient, under certain cir- cumstances, for the State to grant a special privilege to 82 WHA T MAKES some special branch of work for a certain period of time, much foolish talk, bitter contention, and absurd misrepre- sentation would be avoided. The tariff question, the protection of women and children in factories from overwork or from injury, and other like subjects of legislation, are questions of expediency, varying with the time and circumstances of each country. They are not like slavery or inconvertible paper money, moral questions, upon which no compromise can be tolerated ; but, on the contrary, they are subjects for reasonable considera- tion and for reasonable compromise among honest and fair- minded men. When the whole direction of domestic in- dustry has been in some measure altered by the continued imposition of high duties upon foreign imports which were the necessity of war, nothing could be more injudicious than to adopt revolutionary changes. It may have been bad policy to impose the high duties, but it does not follow that it would be good policy to remove them all at once, or that he is a spoliator who asks time to adjust his capital and the labor which he employs to other conditions. I have recited the various changes which have affected a single textile art. Periods of prosperity and adversity af- fect all commercial and manufacturing countries alike. They are more intense in one country than another ; sometimes most intense in a country which, like Great Britain, depends upon the widest foreign commerce, sometimes in a country which, like the United States, depends mainly upon domestic commerce. Statutes in regard to the collection of revenue, the hours of labor, and the like, may make these fluctuations a little more, perhaps a little less intense, but in the long run they have and can have no permanent effect. Competition adjusts itself to all conditions, and, in the long run, wages or earnings will be the highest in that country in which THE RATE OF WAGES? 83 capital and labor cooperate to the fullest extent, thereby as- suring the largest production at the lowest labor cost. The progress of the United States has been uniformly onward, despite all the vacillations and changes in her finan- cial policy. Our greatest dangers and most serious disasters have arisen from bad money rather than from bad methods of taxation. The danger now before us, growing out of the continued coinage of a silver dollar of light weight, is per- haps the most serious one. Next to that comes the danger growing out of the enormous excess of our national revenue ; but even this enormous excess of revenue will itself force upon us a change in our method of taxation. In that again comes a danger, because next to the evil which may be in- flicted upon a country by the imposition of heavy taxes, is the evil which may come from an injudicious method in re- moving them after the industry of the country has adjusted itself to them. I have endeavored to separate the fundamental principle of wages from all such side issues, and to prove, with as much scientific accuracy as may be possible, that the inter- ests of the employer and the employed are absolutely identical, and that progress and poverty are not of necessity evolved together under the existing customs of the English- speaking people. I have referred to the admirable address of Mr. Robert Giffen, proving a similar progress to that of this country in Great Britain, and from similar data. I had not read that treatise until after the substance of this essay had been compiled. Let me refer finally and but a moment to one great cause of disturbance in the relations of men to each other. The inventor, the man of science, is the great disturber of exist- ing conditions. He renders worthless great masses of cap- ital which had been valuable ; he takes away the hereditary 84 ^^A T MAKES occupation of vast numbers of laborers who may be capable of doing no other kind of work. In the process of adjust- ment to these new-conditions many hardships arise, but the end is progress, both in wealth and in the alleviation of poverty. The only accumulation which has any permanent value consists in that experience and versatility, in that habit and capacity of applying brains and hand alike to any kind of work which is waiting to be done, whereby men are enabled to prosper under any and all conditions. The only capital of any importance, which can be transmitted from one generation to another is this power of applying brain and hand together to useful work, whatever may be the chang- ing conditions under which the work of each generation must be done. Poverty may for a time ensue, as the consequence of in- vention and the consequent displacement of labor; but it will be observed that this poverty does not ensue either frora the accumulation of capital or from the private ownership of land, so much as it does from the destruction of capital and in taking away the value from land. The jenny and the mule destroyed the spinning-wheel ; the power-loom destroyed the hand-loom ; the railroad is destroying the canal ; the railroad is reducing the value of land in one place and increasing it in another. The discov- ery of coal oil would have destroyed the candle market, were it not that a demand for the altars of the Catholics continued to sustain a few candle works. The gas engine is destroying the small stationary steam-engine in England, and will soon do so here. Sir Henry Bessemer has taken from the English landowner all power to collect any rent from land devoted to wheat. With each of these changes the few suffer for a time, but the many gain in welfare With each of these changes the proportion of capital neces. THE RATE OF WAGES? 85 sary to a given production is decreased ; great fortunes are lost, unless the owners of such fortunes can adapt their ma- chinery to all the changing conditions ; but while some fortunes are thus destroyed, others are gained. At the present time, or we may say for the last three years, half the iron works in the United States have been out of blast, and many will never come into blast again ; but during the same three years the production and consumption of iron has been greater than in any other three years since the con- tinent was settled. True prosperity may be guaged by the consumption of iron in all the arts of life, about as surely as by any statistical method. The loss of fortune to a few produc- ers of iron is of no consequence except to themselves, if more iron be provided for consumption. Most of these changes come gradually ; some of them come suddenly. What are called hard times induce the grestest progress. The great crops in this country increased every year during the war, such was the incentive to invention, which became almost compulsory in consequence of the withdrawal of a million men from productive industry. I have compared the cotton-mill of 1830 with that of 1883, in the same mill-yard ; but there is little left of the factory, either mill or machinery, of 1830; and if there were it would be almost useless. The saving in the cost of mov- ing merchandise over existing railroads, comparing one year with the next preceding, that is, over the railroads existing in each year, has far more than equalled the cost of building all the new railroads constructed in the subseqent year for fifteen years, from 1865 to 1880. In other words, the reduc- tion in the charge on existing railroads each year, computed on the quantity of merchandise moved in that year, has amounted to a sum equal to the sum expended in the ex- tension of railroads in the next year, for each and every year since 1865. 86 IVffA T MAKES We have been treating only a question of material wel- fare: What makes the rate of wages ? One answer at least we may surely give. When head and hand are rightly trained together so that a man can do the work which is always waiting to be done, whatever the rate of wages may be, it will sufBce for the purchase of good subsistence. He who combines the greatest skill of head and hand in useful work will make that exact progress in the accumulation of wealth which will be the just measure of the services which he renders to his fellow-men. In the last analysis the rate of wages rests wholly on character and capacity and under such conditions, the advancement of science is but another name for progress in human welfare. I am well aware that there is nothing original in the statement of the fact that the application of machinery to production has a tendency to increase the wages of the workman, and at the same time increase the purchasing power of the money in which wages are paid. This is a truism, but how seldom is it comprehended ! Apparently never, in the ordinary discussions. Neither employer nor em- ploy^ can regulate the rate of wages which is to be paid in money, by any bargain or agreement covering a long period. If one employer agrees to pay a higher rate than his com- petitors, it will only be a question of time when his business will become unprofitable and he must become bankrupt, un- less he uses more effective machinery, and thus assures a larger product from a less number of laborers. If any con- siderable number of employers secure the work of laborers at a less rate of wages than others in the same kind of oc- cupation, unless there is some compensating advantage to the workman in their special establishments, the mere fact that the laborer is willing to work at such less rate proves him to be incapable or inefificient, and therefore his work will be of high cost. THE RATE OF WAGES? %J I have attempted to demonstrate that in all productive employment the rate of wages which can be paid in money must depend on the sum of money which is received from the sale of the product. Inasmuch as those who work for wages in strictly productive occupations constitute by far the largest portion of wage receivers, the rates of wages for personal services, which are only indirectly productive, are gauged by the same standard. All profits and wages must come out of the gross product. Furthermore, all profits, wages, earnings, or other income, must be substan- tially derived from each year's product, because the year corresponds to the series of seasons in which one crop is made. A part of the product of each year is carried over to start the work of the next year upon ; but a part of the product of the present year was brought over from the previous year to start the work of this upon. Therefore the measure of what there is to be divided by the measure of money must, in the long run, depend upon what each year's product will bring in money. If, then, the annual product is large, because the resources are great, because capital is ample, because labor is effective, because the army is but a border police, — then the sum of money derived from the sale will also be large, for the reason that in spite of all natural obstructions between one nation and another, the product of one nation, as a whole, comes directly or in- directly, into competition with the product of the world. If the propositions submitted in this treatise can be sustained — to wit : that wages are a constantly increasing remainder over after lessening rates of profit have been set aside from an increasing product, it follows that the ability of a very productive country to find a market for its excess, especially of farm products, is a most important factor in determining the price of the whole product, and therefore 88 WHAT MAKES in determining the general or average rate of wages and profits which can be recovered from the sale of the whole. Hence arises the importance of our foreign export of the products of agriculture. Even though the quantity ex- ported be but a tithe of the whole, yet the sale of this part determines the price of the whole, and it therefore becomes a prime factor in the general rate of wages. If this latter statement be questioned, it will only need a moment's consideration to determine it. If the surplus or over-production for domestic use, of our oil, grain, cotton, meat, cheese, butter, lard, etc., could not be sold in or ex- changed for the products of other countries, what should we do with it? We could not now consume it ourselves; we could not move people from other countries here in suf^cient number to consume it in any one year. We can- not establish manufactures more rapidly because goods are already in excess. We must exchange our excess for tea, coffee, sugar, hides, wool, and the like, and in the process of this exchange the price of all our crops is determined by what this excess will bring ; the remainder over from these sales establishes the standard of farm wages, by, or in comparison with which, all other wages are in the main de- termined. Hence the average rate of domestic wages rests in a very great degree, under our present conditions, on our finding a foreign market for the excess of our products of agriculture ; if this market is limited or reduced, the pur- chasing power of our farmers, numbering one half our population, is reduced, and this re-acts on the demand for domestic manufactures. Thus it is, that directly or indi- rectly the value of our total production is determined by a world-wide competition. What would be the effect of the competition of the laborers who now engage in the produc- tion of that which we export if they were forced into other work for domestic use only? THE RATE OF WAGES? 89 The number of persons engaged in each specific crop is not given separately in the census, and can only be inferred by deducing relative numbers from the proportion which the value of each crop bears to the value of the whole. The total number of farmers and farm laborers listed in the census was 7,670,493. On the bases of relative values, about two and a half per cent., or less than 200,000, were employed in the production of sugar, wool, swamp-rice, hemp, barley, and a few other articles which may be in part imported from foreign countries. On the other hand, on the maximum estimate of the total value of all the products of agriculture or of the pas- ture, over seventeen and a half per cent, was the declared value of the export of farm products. From which it may be inferred that over 1,300,000 farmers and farm laborers were employed in meeting this foreign demand. May it not therefore be said that all commerce, both domestic and foreign, is a process of liquidation, by means of which the respective shares of capital and labor are deter- mined, each becoming a larger share of a larger sum recovered from such sales, the wider the exchange of product for pro- duct, and the greater the service which each renders the other, whether capitalist or laborer. Finally, the rate of wages, measured in terms of money, can only be determined by dividing this remainder over, after capital has received its compensation, among the laborers who do the work ; the respective share of each laborer is then rated only by his or her individual skill, industry, and integrity. In the end character and capacity determine the! relative rates of wages of those who do the work. I may conclude by again referring to the proposition of Frederick Bastiat, which is the motto of this essay : All 90 THE RATE OF WAGES. interests are harmonious. '* In proportion to the increase of capital the absolute share (of the product) falling to capital is augmented, but the relative share is diminished, while the share of the laborer is increased both absolutely and relatively." APPENDIX I. This appendix will be very uninteresting except to students. A summary of its contents may, therefore, be given for the benefit of readers who do not care to go over its dry details, as follows : Approximate estimate of the value of annual product of the census year ........ $10,000,000,000 Domestic farm consumption estimated .... 1,000,000,000 Commercial product ..... 9,000,000,000 Estimated profits of capitalists . $450,000,000 Estimated savings of other classes . 450,000,000 900.000,000 Wages fund 8,100,000,000 Number of persons engaged in all gain- ful occupations in round figures . 17,400,000 Deduct soldiers, marines, and persons engaged in subordinate positions in the Government service , . . 100,000 Remainder . . . 17,300,000 Administrative force i. e., mental rather than manual work 1,100,000 Working force, i. e,, wage-earners or small farmers . . l6, 200,000 Average remuneration of the administrative force, per year $1,000 Average wages or earnings of the working force, per year $432 Gross amount of national, State, and municipal taxes in census year over $700,000,000 or eight per cent, of the commercial product. Each worker is one of a group of 2.90 persons ; therefore each average person in a workman's family must find shelter, sub- sistence, clothing, and pay taxes out of what forty to forty-five cents a day will buy. Each five cents' worth added to each person's share, or each fifteen cents added to each workman's wages per day, implies, at the present time (i884)an additional product and sale of commodities worth one thousand million dollars a year, which is 91 ^2 ^^^ T MAKES about the present value of our wheat product, of our pig-iron product, and of all our textile fabrics of cotton, wool, and silk combined. In the text of this treatise I have presented certain estimates of the value of the annual product of the United States in the cen- sus year ; also estimates of the gross amount of the profits of capital ; and, finally, estimates of the gross amount of wages, which, divided by the number of persons engaged in all occupa- tions, yielded certain rates. The treatment of this subject in exUnso belongs more to the science of statistics than to the science of political economy. For very many years this branch of work has been a subject of very great interest to me, and many years since I analyzed the returns of the Massachusetts census of 1875, which census remains to this day a model of accuracy of its kind. Upon the basis of the facts developed in that census, I have endeavored to continue the treatment of the subject, and to con- sider the larger figures of the census of the United States. In all such undertakings, he who accepts the actual figures, without change or alteration, will be sure to be misled. I concur fully with the opinion of other special census experts with whom I have consulted, as to the qualifications which are necessary to be made in making use of many of the tables of the United States census. I cannot give these qualifications in better words than in those of Mr. Joseph D. Weeks, the special expert who investi- gated the general subject of wages in the manufacturing industries. His views are as follows : " The census year was in many indus- tries a year of remarkable prosperity. The number of persons employed in certain industries at the close of that year was very much in excess of the number of persons employed at the begin- ning. In most instances the census gave, not the average num- ber of persons employed in a given establishment during the year, but the number of persons employed at the close of the year. Now it will be manifestly unjust to divide the amount of THE RATE OF WAGES? 93 wages received in that industry for the whole year by the number of persons employed at the close of the year, and say that was the average earnings of the workmen engaged in that industry. The wages are for the whole year, and the number of employes very much in excess of the average for the year. We have also found, as the result of experience, that when workmen do not secure work in their own occupation, they go into others, working in many cases for themselves. For example, our coal miners on the Monongahela River have worked on the average only eight or nine months in the year. The idle time is generally in the sum- mer. Many of them own little farms, and during the slack season for coal mining they are engaged in working their farms ; while others, not having farms, seek employment with the farmers of the neighborhood." In the census figures which I shall adduce, in sustaining the averages of earnings which I have reached by other and very dif- ferent methods, this qualification will be applied according to my own judgment, or in accordance with the information which I have received from other special experts ; and I think all who are accustomed to make judicious use of statistics will concur in the opinion that approximate accuracy has at least been attained. For instance, in the production of a little less than 4,000,000 tons of pig-iron in the census year, according to the figures given by Mr. Jas. M. Swank and Prof. R. Pumpelly, two of the most competent special experts, the number of men and boys employed was as follows : In coal mines producing that part of the coal which was used in iron furnaces, about ..... 20,000 In iron mines ........ 31,668 In blast furnaces 41,875 Total 93,543 The sum of the wages of this force was $28,458,822 or $305 each, on the average. This appears to be an excessively low rate. But there is little doubt that this payment covered the work of 94 WHAT MAKES substantially nine months only, and in order to reach a true statement of the average wages in the production of pig iron in the census year, we must add about one third, thus giving an average in all the several departments of the work of $400 per year, again sustaining my computation of the general average, which is given hereafter at $400 nett for each person employed in any kind of gainful occupation. I have assumed in the body of the treatise that $520 repre- sents, on the average, the full measure of all that is produced by each person engaged in gainful occupation in the United States, and which comes into the market for sale or exchange. I have also assumed that ten per cent, of all that is produced may be set aside, in a normal year, for the maintenance and for the increase of capital, but the larger part of this profit is enjoyed by but a small portion of those who do the work. The greater part of the wage-earners save but little. I have assumed an estimate of the value of the annual product as $10,000,000,000. I have set aside one tenth part for the domestic consumption of farmers and their families. In the list of the occupations of the people of the United States, which is probably one of the most accurate of the enumerations, a little less than one half of the number of males employed in any gainful occupa- tion are listed as farmers and farm laborers, numbering 7,670,- 493 persons out of a total of 17,392,099, but as those who are engaged in agriculture are mostly men, this force prob- ably sustained at least one half the population, or 25,000,000 per- sons. The estimate of $1,000,000,000, as the domestic consump- tion of this half of the population, therefore assigns $40 a year to each agricultural person as the value of the product consumed upon the farm, which is not included in any commercial or census estimate of the value of the annual product. The remainder of the annual product is $9,000,000,000 in value by my estimate, which would constitute the annual value of the commercial pro- duct, or that part of the product which is bought and sold. The next question is, What part of this remainder accrues to THE RATE OF WAGES? 95 capitalists or to owners of land, in the form of profits, interest, or rent ? I have set aside five per cent, upon the annual product which comes into the market, — that is to say, $450,000,000 as the possible share of capitalists. The remainder of the commercial product is $8,550,000,000. I now set aside five per cent, more upon the commercial product, to represent the profits of business and the savings of working people, $450,000,000. Again we have a remainder of $8,100,000,000, which is subject to division in the way of salaries, wages, or the earnings of small farmers. Before we compute the sub-division of this remainder, it will be necessary to devote a few paragraphs to national wealth, and to the national profits or savings which are possible ; that is, to the increase of the national capital. I feel less assurance in respect to the estimate of that part of the annual product of the United States which can be set aside for the maintenance and increase of capital than in respect to the general estimate of the portion which goes to those who do the work. I have estimated the savings or addition to capital at $900,000,000 in the census year. It will be observed that the measure of the savings of the nation is something quite different from the measure of that which would constitute the profits of individuals ; for instance, the manufacturer or merchant may make a very considerable profit out of his work, but he then distributes a very large portion of this profit in his family expenses, thereby sustaining a large number of persons who are included among the so-called work- ing classes or wage earners. The final end or contribution to the capital of the nation is therefore a very much less sum than the apparent profit which accrues either from the rent of real estate or from the income derived by the individual owners of manufacturing, railroads, or other investments, or from business. There are very few data available to an individual student whereby even an approximate estimate of the net savings of the nation can be determined. 96 IVffA T MAKES My deduction from many methods of analysis is that the normal proportion which can be set aside for the maintenance or increase of the capital of the nation can not exceed ten per cent, of its annual production, and is probably less. It would perhaps be useless to give examples of the various methods by which I have attempted to determine this point : one will suffice. The officials of the Census Department have made a very care- ful investigation in respect to the total amount of property assessed for taxes in the United States, and have extended this sum so as to cover the absolute wealth of the country. The total valuation made by the local assessors for purposes of local taxa- tion was as follows, for the year of which a return was made in the census of 1880 : Value of real estate $13,036,766,925 Value of personal estate 3,866,226,618 Total $16,902,993,543 which sum divided by the population gives $337 per capita, but the valuation for purposes of assessment varies greatly in different States, and a very large proportion of actual property is either exempted — such as a large part of the railway system — or else it escapes taxation. The census valuation of the actual or absolute wealth of the United States is as follows : IN MILLIONS. Farms $10,197 Residence and business real estate, including water-power . . 9,881 Railroads and equipment ........ 5-536 Telegraphs, shipping, and canals 419 Live stock, whether on or off farms, and farming tools and machinery, 2,406 Household furniture, paintings, books, clothing, jewelry, household supplies of food, fuel, etc. ........ 5,000 Mines (including petroleum wells) and quarries, together with one half the annual product reckoned as the average supply in the hands of the producers or dealers ........ 781 Three quarters of the annual product of agriculture and manufactures, and of the annual importation of foreign goods, assumed to be the average supply in the hands of the producers and dealers . . 6, 160 THE RATE OF WAGES? 9/ Churches, schools, asylums, public buildings of all kinds, and other real estate exempt from taxation ....... 2, OCX) Specie ............ 6i2 Miscellaneous items, including tools of mechanics .... 650 Total ($43, 642, 000, OCX)) . $43,642 It will be observed that in this estimate of wealth the value of land is included. It is computed that four fifths of the valuation of the farms consists of the land, and from one half to two thirds of the es- timate of the residence or business real estate also consists in the value of land. It will also be observed that the estimate includes household furniture, paintings, books, household supplies and the like, as well as churches, schools, asylums, and public buildings, and that the estimate of the value of railroads is taken at the normal amount of stock and bonds issued, the true cost and real value being much less. If we separate from this estimate that part of the valuation which consists in the mere value of land, and also setting aside churches, asylums, and the like, which represent wealth con- sumed rather than reproductive capital in the ordinary use of that term, the total amount would be reduced to at most twenty- five thousand millions, and perhaps to a less sum, and this would represent the actual capital or labor saved for purposes of repro- duction during the whole period of the existence of the States and colonies of America, thereby sustaining the commonly ac- cepted proposition, that the value of the actual capital of the richest state or nation can bear a ratio to the value of its annual production of only two to threefold. The invaluable part of the capital of a nation is that portion which has become a part of the coinmon wealthy for the use of which no price can be charged, — such as the opening of the com- mon ways, the removal of obstructions to the navigation of water- ways, the clearing of arable land, and other results of labor of the same kind ; but yet more potent in reproductive enterprise is 9S IVHA T MAKES the immaterial capital which ensues from our increasing command over the forces of nature, and our power of directing them to the service of man. It is admitted by all statisticians of repute that all valuations of national wealth which are made in terms of money, like the foregoing, must be used with great caution, and are very liable to mislead, especially when made use of to compare one period with another. Such comparisons, when honestly made, are rather an indica- tion of ignorance or incompetence in the use of statistics, than of any thing else. For instance, witness the census data : over assessed value In i860 the assessed value of all the property of the U. S. was given as being . True valuation, estimate Excess of so-called true valuation In 1870 the assessed value was True valuation, estimate Excess of so called true valuation In 1880 the assessed value was True valuation, estimated . Excess of so-called true valuation $12,084,560,005 16,159,616,068 34 per cent. 14,178,986,732 30,068,518,507 112 per cent. 16.902.993.543 43.642,000,000 158 per cent. It is perfectly well known that a great deal of attention was given to the attempt to ascertain the true valuation of 1880, and very little in i860 ; while the figures of 1870 are vitiated and rendered almost worthless by the depreciation of the currency at that date. Hence, any one who should attempt to picture the progress of the nation by a statement that we have gained thirty thousand million dollars (I) in wealth in twenty years, or fifteen hundred million dollars (!) a year, would be obliged to defend the honesty of his purpose by an admission of his utter ignorance of the sub- ject. In the first place, the statements are wholly misleading, because the value of land is included, and therefore the increase in its value forms an element in the case. THE RA TE OF WAGES t 99 Second, unless such increase in the valuation of land, and of capital placed upon the land, has been accompanied by a greater proportionate increase in the annual product of both, out of which the people may be subsisted — then an increase of wealth on the part of the few who own the land would only be evidence of an increase of want on the part of the many who consume its products. Third, because the data of i860 were absolutely incomplete and almost worthless. Such estimates and comparisons of wealth have their use, but their use is only or mainly in their connection with annual pro- duction and distribution. It is doubtless true that this country has made greater progress during the last twenty years, both in wealth and in productive capacity, than ever before. The rea- sons are plain — three of the principal causes may be cited : 1. The abolition of slavery. 2. The application of machinery to agriculture. 3. The extension and unification or consolidation of the railway system. It may possibly be true that one half the apparent difference in wealth between i860 and 1880 represents an actual addition to the productive capital of the country. One half would be $1,500,- 000,000, or $750,000,000 per year. During this period the average population of the country has been 40,000,000 persons, and there- fore such a gain would be at the rate of $18.75 to each person in each year. When viewed in this aspect, the statement in hundreds of mil- lions is reduced to terms of easy comprehension, and the result indicates the very slow rate at which capital can be accumulated and maintained, rather than the reverse. It must also be remem- bered that whatever the gain in wealth may be, it is enjoyed by a very small portion of the population. On the other hand, the taxes which have been imposed during this period have been little below $18.75 per head, if we take into view only the actual assessed taxes during and since the 100 WHAT MAKES war. In the census year, the aggregate of national, State, and municipal taxation was over $700,000,000, or over $14 per cap- ita, and if the war taxes be computed in their ratio to the popu- lation of that date, the sum of all the taxes imposed upon the people of this country since i860 has without question been equal to at least eighty per cent, of the whole sum which has been added to our productive capital during the same period. In this light the importance of a correct estimate of the value of our annual product, of the possible profit thereon, the method of its distribution, and the incidence of taxation, become apparent. I have made use of the census estimates of national wealth only for the purpose of rendering the importance of this latter investigation more apparent, and not because I attach much value to statements of accumulated wealth when measured in terms of money. In pursuance of the main subject, it appears that the sum of national taxes which have been imposed by the Government of the United States upon the people during the last twenty years has been over $7,200,000,000. The amount of State, county, and municipal taxes for the year reported in the census was over $300,000,000, or $6 per capita. This is at a less rate than for a few years preceding, and at a less rate than was imposed during the war and the years immediately subsequent thereto. If this rate of $6 per capita be applied to the average population for twenty years, the gross amount of such taxes has been not less than $4,800,000,000. The total amount of taxes, therefore, including national. State, county, and municipal, in twenty years, has been $12,000,000,000, or at the rate of $600,000,000 per year. This sum bears the ratio, for the whole period, of eighty per cent, to the sum which I have computed as the true addition to the capital of the nation during twenty years, yet, in spite of this burthen, we have prospered, and have gained in general welfare as well as in national wealth. At the risk of wearying the reader by repetition let me state THE RATE OF WAGES? lOI this in another form, admitting that there has, without question, been an abnormal increase in the capital of the United States since the end of the war, the chief factor of which abnormal in- crease has been the saving in the cost of moving commodities by railway, can we measure this single force in any way ? In a treatise upon " The Railroad, the Farmer, and the Public," reprinted herewith, I have clearly proved the fact that had the merchandise, one half of which consisted of crude farm products, which was moved in the year 1883, been subjected to the average charge per ton per mile which was charged on the whole railway service of the United States from 1866 to 1869 inclusive, the sum of such charge in 1883 would have been between twelve and fourteen hundred million dollars, in place of an actual charge of five hundred and fifty million dollars. Between these two periods the value in terms of gold of the principal farm products of the United States, which constitute at least one half the substance moved by the railway, has varied in very slight measure ; hence it follows that by far the greater part of the actual saving of labor which has been brought about by the extension and effective working of the railway system, had inured to farmers up to that time. This addition to our wealth has been in very great measure applied to an increase of capital in railroads, to improvements upon farms and farm buildings, and to various arts and manu- factures which must of necessity be carried on near to the farmers upon whom they depend for a market. Again, I have set aside, by the estimate of the census year, nine hundred million dollars, or ten per cent, of the commercial product, as the probable proportion of the annual product which could be applied to the maintenance, improvement, or increase of capital in that year. This was at the rate of f 18 per capita of the popu- lation of that year. The population of the United States has averaged forty mil- lion for the whole term from i860 to 1880, or substantially that number. Multiply forty million by $18, and we have the average 102 WHA T MAKES sum of seven hundred and twenty million dollars each year, cor- responding to my estimate of the census year of nine hundred million dollars. Multiply seven hundred and twenty million dol- lars by twenty years, and we reach the sura of fourteen thousand four hundred million dollars, set aside from the production of the twenty years, for the maintenance and increase of capital. Deduct fourteen thousand four hundred million dollars from twenty-five thousand million dollars, which appears to be the utmost part of the census estimate of total wealth in 1880 which can be considered the work of man, and we leave only ten thou- sand six hundred million dollars as the saving of the nation through its whole previous history. This may perhaps lead to the conclusion that my estimate of ten per cent, now set aside as capital, is a reasonable or perhaps excessive estimate of that part of the annual product which, in a normal year, can be set aside for its maintenance or increase ; $900,000,000 being ten per cent, of an estimated salable product of $9,000,000,000. If, during the last few years, there has been an abnornal increase of capital at the rate of more than $18 per capita, it has not been at the cost of the laborer, but it has been only a small part of that which the capitalists have themselves saved to the people in the extension of the railway system, and in the erection of factories, mills, and works of various kinds of the most productive and effective sort. This abnormal increase of capital has now ceased, and the prices of farm products are now falling. It is now probable that the great forces which I have re- cited have in some measure, or for the time, become exhausted, and that the present period of depression indicates a great change or adjustment of prices on a lower plane and of a permanent char- acter, which will be ultimately beneficial, but which in its progress is disastrous to many and very hard to be borne by all ; because in such a period constructive enterprises are checked, and the ex- isting population lives from hand to mouth, anxious as to what each day may bring forth. In such a period excessive taxation becomes an intolerable THE RATE OF WAGES? IO3 burden. This burden is to be measured by the ratio which the sum of all the taxes bears to the possible sum of all the savings of the community, rather than by its ratio to the gross value of all products ; in other words by its ratio to net income rather than by its ratio to gross income. It will be borne in mind that, with very few if any exceptions, all taxes are distributed, wherever they may be first imposed, and ultimately fall on all consumers in almost the exact ratio of their consumption. If imposed upon dwellings, they are charged to occupants with their rent, or their rent is enhanced so as to cover them. If imposed upon machinery or other instrumentalities of pro- duction, they are charged to the cost of goods and are recovered from the sales. If imposed upon railroads, warehouses, shops, or other instru- mentalities of distribution, they are charged to the cost of dis- tributing goods. If imposed upon the goods or wares themselves, whether under a tariff or an excise, they are added to the price and recovered from the sales. Taxation falls on rich and poor according to their consumption, while profits or savings are sorted under a very different law ; hence even the ratio of gross taxation to the net savings of the nation gives no true measure of its burden, but only brings its weight into prominence. To the rich a tax constitutes more of an annoyance than a heavy burden ; to the man of moderate income it merely causes a slight decrease of comfort or a small reduction in savings ; from the skilled workman it may take half of what he might have saved ; from the laborer it takes even the small pittance that might have served to mitigate the poverty of his later years ; and from the poor it takes a part of what is necessary to existence and reduces them to pauperism. No class of men have so grave an interest in an honest and economical government and in the reduction of taxation than those who possess no property of their own, but who depend wholly upon their daily work for their daily bread. 104 WHAT MAKES It is for these reasons that while we may rejoice in the pros- perity which has enabled us to reduce our national debt and to put it in the way of final payment within the present century, we may now protest against the excess of taxation which finds men poor, keeps them poor, and will leave them poor, unless it is re- moved. Therefore the great issues of the hour are measures not men, and whatever may be the result of the elections now pending, every man chosen will be held to a stern account, and no glitter- ing generalities about the increase of national wealth will serve to meet the demand for relief from the intolerable burden of ex- cessive taxation (Novr., 1884). Having thus treated the probable profits or savings in the census year, and assuming that my estimates are approximately correct, and that there remained in the census year $8,100,000,000 worth of product to be divided in terms of money between the mental and manual workers, or between the administative and the executive force, in the form of salaries, wages, or earnings, the next problem is the subdivision of this sum. We can reach a close estimate of the mode of this subdivision by a consideration of the details of the census in respect to the occupations of the people and the ascertained rates of wages in special classes ; qualifying the figures by such additions to the rates given in the census as may be called for in each case, as before stated. We find in the list of all persons engaged in gainful occu- pations, 1,100,000 persons, under the following classification : Clergymen 64,698 Lawyers 64,137 Physicians and Surgeons 85,671 Teachers and Scientific Persons ....... 227.710 Actors 4,812 Architects 3,375 Artists, or Teachers of Art 9,104 Authors, Lecturers, and Literary Persons . . . . . . 1,131 Chemists, Assayers, and Metallurgists ...... 1,969 Dentists ............ 12,314 Railroad Builders and Contractors ....... 1,206 Civil Engineers 8,261 THE RATE OF WAGES? I05 Officials of Railroad Companies 2,069 Traders and Dealers 481,450 Bankers and Money Brokers • • .15,180 Officials of Banks 4.421 Officials of Insurance Companies 1.774 Manufacturers and Officials in Mfg Cos 52,217 Hotel Keepers 32,453 Journalists . 12,308 Total 1, 086,260 This classification is only fairly accurate. If it were possible to get the number, superintendents and foremen should be sub- stituted for about two thirds of the teachers who are in the lower grades. This class of persons represents those whose work is more mental than manual, more administrative than executive. In round numbers they amount to 1,100,000. The remainder of those who are listed as being engaged in gainful occupations con- stitute the actual working force — mechanics, artisans, clerks, fac- tory operatives, small farmers and farm laborers, domestic servants, common laborers, express men, conductors, and all others, whose work possesses a commercial value, and whose rate of wages constitutes the measure of their share of the annual product. Now, then, the last remainder of the assumed annual product amounted to $8,100,000,000. The total number of the actual working force in the list, aside from the administrative force, and recited as above in the census year, was 16,200,000. If to each one of these be assigned a rate of wages upon the average of $432 — being the sum which when subjected to the average per cent, or rate of national. State, and municipal taxation, would leave $400 net each per year, — the sum of all their wages would amount to $6,998,400,000. There would then remain $1,101,600,000 to be divided among the 1,100,000 persons of the first class, to wit : those engaged in the mental work, or in the work of administration ; and this sum would yield to each one of these annually $1,000. It will be observed that these conclusions were reached a priori^ before any consideration or attention had been given to actual rates of wages as disclosed in the census Io6 WHAT MAKES being deduced from an estimate of the annual product reached in the manner previously described. Before testing these results by the actual data of the census, the total of persons occupied should be considered. It is as fol- lows : Agriculture, males 7.075.983 females 594. 5io Professional and Personal Service, males 2,712.943 females 1.361,295 Trade and Transportation, males 1,750.892 '• " '* females 59.364 Manufacturing, Mechanical, and Mining, males .... 3,205,124 " .. .• •« females . . . 631,988 Total of all classes 17,392,099 Total, aside from Agriculture 9,721,606 Deduct Civil and Military Employes of the Government in subor- dinate or minor positions, say 92,000 Total, in round figures, of all persons engaged in any gainful pro- ductive occupation ........ 17,300,000 Deduct administrative and mental work ..... 1,100,000 Total in the actual work of production or distribution, who are substantially the wage-earners 16,200,000 The first test by which the approximate accuracy of this esti- mate of about $432 average earnings may in some measure be determined will be found in the exhaustive treatise of the census, upon Transportation, compiled by the special agent, Mr. A. E. Shuman. This compilation is based upon the actual returns from existing railroads, for specific periods of twelve months, corresponding to the making up of their accounts in the year immediately preceding the census Now, it is well known that the accounts of railroad operations are of necessity kept in the most accurate manner. Hence these returns may be considered as more closely approximating the actual earnings of the em- ployes than any other returns of the census. It will also be ob- served that railroad employes are almost wholly men, and that among these men are represented the highest-paid officials, and also the lowest-paid laborers. They number as follows : THE RATE OF WAGES? lo/ General officers 3.375 Clerks 8,655 Station men 63,380 Engineers 18,977 Conductors . 12,419 Other train men 48,254 Machinists 22,766 Carpenters , 23,202 Other shop men . 43,746 Track men 122,489 All other employes ..,.51 ,694 Total 418,957 The clerks being counted in the work of administration, and the large proportion of well paid engineers and conductors carry- ing up the executive average of earnings. The sum of their earnings was $195,350,013, averaging to each person for the year $466. But, upon a further analysis, it ap- peared that the average earnings of officers and clerks — three per cent, of the total number — amounted to $1,015.44 each ; the av- erage wages of all the others — ninety-seven per cent, of the total number — were $450 each. If I am right in assuming that these railroad employes are a fairly representative class of all men em- ployed in gainful occupations, bearing in mind the less rate of earnings of women, these figures, both of the higher grade of ad- ministrative work and the lower grade of executive work, fairly correspond to the averages of my assumed figures covering all persons occupied within the limits of the country. We will next consider another class of persons, chiefly men and boys, to wit : all who are listed as being employed in mining the non-precious metals — iron, copper, lead, and zinc. In a special report upon this industry, it appears that the total number returned is 220,475 > the sum of salaries and wages paid, $71,- 992,502 ; an average to each person of $327. But all the census experts concur in the opinion that this sum did not represent over three fourths of a full year. Many new mines were opened during the census year, of which the returns covered only a part of the year ; and, as has been stated by Mr. Weeks, work is not I08 WHA T MAKES continuous, even in mines at regular occupation. If, then, we increase the sum of $327 by the addition of one third, thereby- converting the term into a full year's payment, provided these men find employment in other occupations, we reach an aver- age of $436 as the income of each person employed in this arduous work. The proportion of those who are engaged in the work of administration being less than in the railroads, a fair ap- proximation is made to the income of the wage-earners of $400 per year (see previous figures on iron). The next mode of comparison may be with the average earn- ings of all persons who are listed in the census under the head of manufacturing. That comprised 2,019,135 men, 531,639 wo- men, and 181,921 children, — a total working force of 2,732,695. The sum of their earnings or wages was $947,953,795, — giving an average to each person of $346. But this result again must be subjected to very important qualifications. The list of occu- pations listed under the term of manufactures includes brick- making, which can only be followed six months in the year ; lumber-men's work, generally limited to six months in the year. Other branches of industry, which are continuous, are again subjected to the qualification named by Mr. Weeks. The writer was one of the special experts employed in taking the cen- sus of the cotton manufacture. He began among the first, and gave a construction to the directions which he received, which led him to omit from the number of persons and sum of wages in the cotton manufacture those who were engaged as agents or superintendents in charge of the work. In all other branches of the census he has been informed that the administrative force was included. The wages in the cotton manufacture appear to be only $245 each per year, by far the larger portion of those employed being women and children ; but in his judgment this sum should be raised to at least $280 and, including administra- tive force, perhaps to $300 per year, in order that it may be made to correspond to full year's work of those who were con- tinuously employed. THE RATE OF WAGES? IO9 In general, it may be said that the necessary qualifications by which the average wages disclosed by the census, in respect to all manufactures, should be governed, would lead to the conclu- sion that $346 represented not over ten months' work. And if then we add one fifth of $346, to make up for the two months, we reach a general average, including the administrative force, of $415 each, — again substantially corresponding with the conclu- sions of the writer, and again substantially corresponding to the railway figures giving due consideration to the lower wages of women and children. Subject to these qualifications, the following specific data from the census are given, in respect to branches of manufacture which may be considered substantially continuous. Each branch may be qualified, according to the judgment or knowledge of the reader. It should be noticed that those who are listed under the head of carpentry are only the carpenters who are engaged in manufacturing establishments of which the product exceeded ^500 a year ; and it does not include miscellaneous carpenters, who are much more numerous. In all the textile arts the figures should probably be raised at least one fourth, in others more or less according to the special conditions of each case. Men. Women. Children. Total. Wages. Avge. Agricultural Implements, . 38,313 73 1,194 39,580 $15,359,610 $388 Book Binding and ) Blank-Book Making, \ 5,127 4,831 654 10,612 3,927,349 371 Boots and Shoes, 104,021 25,946 3,852 133.819 50,995,144 381 Bread and Bak- ery Products, 18,925 2,210 1.353 22,488 9,411,328 419 Carpentry, 53.547 77 517 54.138 24,562,077 454 Cars, — Railroad ) and Street, \ 13.885 13 334 14.232 5,507.753 388 Carriages and Wagons, 43.630 273 1,491 45.394 18,988,615 400 Men's Clothing, 77.255 80,994 2.504 160,753 45.940,353 286 Foundries* and Machine Shops, 140,459 675 4.217 145.351 65,982,133 454 Furniture. 45.180 917 2,620 48.717 20,388,794 41S Jewelry, 10,050 1,998 649 12.697 6,44[.688 507 Leather Currying, 10,808 77 168 11.053 4.845.413 438 Leather Tanning, 23.287 188 337 23.812 9,204.243 387 Malt Liquors, 27,001 29 190 26,220 12,198,053 46S no WffA T MAKES Men. Women. Children. Total. Wages. Arge. Marble and Stone, 21,112 23 336 21,471 10.238,885 $477 Paper, 16,133 7,640 649 24,422 8,525,355 349 Printing and Publishing, 45,880 6,759 5,839 58,478 30,531,627 522 Tobacco, Cigars, ) and Cigarettes, 40,099 9.108 4.090 53.297 18,464.562 347 Hardware, 14,481 814 1,506 16,801 6,846,913 407 Cotton Goods, 64,107 91,148 30,217 185,472 45,014.419 245 Cutlery and Edge Tools, 9.458 380 681 10,519 4,447,349 422 Glass, 17.778 741 5.658 24,177 9,144,100 379 Hats and Caps, 11.373 5,337 530 17,240 6,635,522 385 Hosiery and Knit Goods, 7.517 17,707 3.661 28,885 6,701,475 232 Mixed Textiles, 17.471 20,520 5.382 43,373 13.316,753 308 Musical Intruments. 6,449 57 69 6.575 4.603,193 692 Woollen Goods, 46,978 29.372 10,154 86,504 25,836,292 300 No data exist by which the earnings of agricultural laborers can be positively converted into terms of money, owing to the fact that by far the larger portion receive a part of their wages in kind, and not in money. By the courtesy of Mr. J. R. Dodge, the statistician of the Agricultural Department, I am enabled to submit the following table of wages of agricultural laborers in the year 1882. Due consideration being given to the domestic consumption of the farmer, I think they substantially sustain my assumed average of the subdivision of the annual product. Many of these men are engaged in the winter as lumbermen or other occupations, or as stated by Mr. Weeks, in mining, they making up their rate to the full average for the year. No census data exist by means of which the average earnings of persons engaged in trade or commerce can be estimated. The average of those who are engaged in other kinds of transporta- tion than by rail, to wit, upon rivers, expressmen, and wagoners, may be considered in the ratio which these occupations bear to the railway service. The men who are employed in these other branches of transportation are continually changing, sometimes being engaged upon the railway, sometimes in the other branches of the work. The average earnings of persons in domestic service can only be established by their known ratio to the work of the factory operative, or of other persons engaged in analogous employ- ments. THE RATE OF WAGES? Ill FARM WAGES IN 1882.^ By the Month, and by the Day, in Harvest ; with payment in Cash, and also in Money supplemented by Bpard. Monthly Wages Transient Wages States By the Year. During Harvest, per day. and Territories. Without With Without With Board. Board. Board, Board. Maine $24.75 $16.75 $1.52 $1.22 New Hampshire . 25-25 16.72 I.71 1-35 Vermont .... 2337 16.00 1.75 1.35 Massachusetts . 30.66 18.25 1.75 1-35 Rhode Island . 27-75 17.00 1.60 1.30 Connecticut . 27.90 17-37 1.65 1.33 New York . 23.63 15-36 1.89 1.47 New Jersey . 24.25 14.20 2.09 1.74 Pennsylvania . 22.88 14.21 1-73 1.30 Delaware 18.20 12.50 1.60 1.25 Maryland 16.34 9.89 1.52 I.15 Virginia . . 13.96 9.17 1.27 .99 North Carolina 12.86 8.80 1.20 .85 South Carolina 12.10 8.10 1.08 .78 Georgia . . 12.86 8.70 1. 10 .80 Florida . . 16.64 10.20 1. 12 .80 Alabama . . 13-15 9.09 1.05 .80 Mississippi . 15-10 10.09 1.23 .95 Louisiana 18.20 12.69 1. 10 .85 Texas . . . 20.20 14.03 1.39 1.08 Arkansas . . 18.50 12.25 1-34 1.02 Tennessee . 13-75 9.49 1.30 1. 00 West Virginia 19.16 12.46 1.30 1. 00 Kentucky 18.20 11-75 1.54 I.18 Ohio . . . 24-55 16.30 1.79 I.4I Michigan . . 25.76 17.27 2.13 1.76 Indiana . . 23 14 15-65 1.89 1.58 Illinois . . 23.91 17.14 1.91 1.54 Wisconsin . 26.21 1790 2.50 2.10 Minnesota . 26.36 1775 2.61 2.16 Iowa . . . 26.21 17-95 2.25 1. 81 Missouri . . 22.39 13-95 1.59 1.23 Kansas . . 23.85 1587 1.70 1.35 Nebraska 2445 16.20 1-95 1-57 California 38.25 23.45 2.30 1.86 Oregon . . 33-50 2475 1.92 1.50 Colorado . . 36.50 27.08 2.21 1.80 J. R. Dodge, Statistician. * It will be observed that the foregoing list only cov—rs the rates of wages of 112 WHAT MAKES The average pay of common laborers in the census year varied from $1 to $1.50 for the working days of the year ; but it is well known that the daily rate cannot be considered as a continuous rate throughout the year. The average earnings of common laborers could not have been more than $400 a year ; but it may perhaps be admitted that they fairly approximated that sum, again sustaining my assumed figures. It therefore follows that if the value of the annual product ap- farm laborers. The larger part of the whole number of persons listed as being engaged in agriculture are listed as fanners, and not fami laborers. The total number employed in agriculture is ; Male 7.075.983 Female 594,510 Total 7,670,493 It is probable that each one of these persons stands at the head of a somewhat larger group than the average group of 2.90 in all arts, and that not less than one half the population, or 25,000,000 persons, were wholly dependent upon this agricultural portion of the working force in the census year. The primary value of the farm product of 1879 (subject to moderate increase in 1880), as given in the census, is $2,212,540,927, but the census experts point out the necessity of adding materially to this sum, to cover the home con- sumption of the farms. I have ventured to add $1,000,000,000 to this computation of the primary value, in order to cover the domestic consumption of the agricultural popula- tion, which never appears in the commercial tables, but which should be com- puted and added to the agricultural product, as well as other almost necessary omissions in the census which should be added in order to show the relation which the work of each person devoted to agriculture bears to the work of each person engaged in other branches of industry. This was also an a priori conclusion, but if we add to the census valua- tion $2,212,540,927, the sum of $1,000,000,000, for domestic consumption, and divide by the number of persons occupied, 7,670,493, we get an average pro- duct of a fraction less than $419 each, again fairly corresponding to my assumed average. It will be observed that the total number of farms was 4,008,907, averaging substantially seventy acres of improved land each. There were substantially one farmer and one laborer to each farm, and it therefore appears that the average farmer can be assumed to earn but a moderate sum above that of the farm laborer. THE RATE OF WAGES? II3 proximated $10,000,000,000, the average wages of earning people must have approximated $432 a year ; and upon what this sum would purchase nearly three (2.90) persons were on the average sustained. This gives $147 per year, or 40 cents a day to each person. That is to say, each person on the average was sub- sisted, sheltered, and clothed on what 40 cents a day would buy from that part of the commercial product available for wages. If such was the measure in money of all that was produced, which could be made subject to division or commercial distribu- tion, then it will be apparent that there could be no greater sum or money's worth to be divided. If any less part of the product had been set aside for profits or increase of capital than that which I have assigned hitherto, then the increase of capital would have been checked, and the production of the next and of ensuing years, in ratio to the number of existing persons, would have suf- fered. There can be no general rise in the rates of wages, except by means of an increase in the quantity of things produced, coupled with the maintenance of the prices at which such products can be sold. There may be an increase in the general welfare, by way of an increase in the quantity of things produced, coupled with a decrease in price, which shall not affect the gross value of the whole, so that the rate of wages may buy more commodi- ties ; or, in other words, may represent a larger quantity of things. There may be increase in the general welfare brought about by the increase in quantity and decrease in price, coupled with a decrease in the money rate of wages, if such a decrease in the rate of wages does not go below the decrease in prices. I have before referred to the burthen of excessive taxation, but this point cannot be too often pressed. So far as the proceeds of taxation are expended for just administration, for a good government, wisely and honestly administered ; or in mu- nicipal affairs, so far as the avails of taxation are expended in the maintenance of good highways, of sewers, in providing an adequate water supply, and in sustaining the common schools, — 114 WHAT MAKES taxation cannot be considered a burden, but is a distribution of a part of the annual product, for the common welfare and for the general benefit. But so far as the proceeds of taxation are wasted or misspent, then taxation becomes an intolerable bur- den, and it must be gauged, not by its ratio to the gross product of the country, but by its ratio to the net income, or to the possible savings of each person. The conviction of the writer is that all taxation ultimately falls upon consumers, in the ratio of their con- sumption, no matter where the taxation is first laid, whether it be a direct tax upon real estate, or an indirect tax upon certain speci- fied articles. If a tax is laid upon real estate occupied for com- mercial purposes, it becomes a charge upon the distribution of the goods. If it is levied upon land used for agricultural pur- poses, it enters into the money cost of production. If it be ad- mitted that taxes are borne in the ratio of consumption, and that producers are merely the agents for their collection, even very heavy taxes may constitute no real burden upon persons who are in the possession of large property or large incomes. They may be but a light burden upon persons of moderate means or mod- erate income ; but when they either restrict the consumption of the necessaries of life, or take from working people the little mar- gin which might be saved, they become intolerable, — if they are either unjust or unnecessary. If the estimate of the salable or exchangeable value of our annual product which I have assumed in this treatise is even ap- proximately correct, then eight per cent, upon such exchangeable value, aggregating $9,000,000,000, is distributed by way of taxa- tion, — the aggregate of the National, State, County, City, and Town taxes in the census year having exceeded $700,000,000 If I have set aside a sufficient sum to represent profits, to wit : ten per cent, of the total product, half being assigned as the prof- its of capital, and half being assigned as the savings of those who perform the work of distribution or production, $900,000,000 in all, then the taxes of 1880 bore the ratio of eighty per cent, to the probable savings of the country. If it may have been possible THE RATE OF WAGES t II5 in some one extremely prosperous year since the war, to set aside fifteen per cent., or $1,450,000,000, still the actual taxes bore the ratio to this sum of fifty per cent. Now, if it be true that nine tenths or more of all who are engaged in gainful oc- cupation must subsist, save, and pay taxes out of an average income of $400 to $500 a year, and if of this sum $32 to $40 must be set aside to meet the heavy taxation of this country, it follows that such a burden may not only deprive a very large portion of the working people of this land of the op- portunity to save any thing, but may even take from very many of them a part of that which is necessary even for a com- fortable subsistence. It follows that the man upon whom the burden of taxation falls heaviest is he who possesses no property whatever. It finds him poor, it keeps him poor, and it may even reduce him to pauperism ; yet he may never know the cause of his poverty, and may resist the very changes in the system of taxation which would benefit him most. The writer is of the profound conviction that whenever the subject of taxation is re- duced to a science, taxation on real estate will become the source of nearly all taxes. A tax on real estate cannot be evaded ; it dif- fuses itself with unerring certainty ; it forces unoccupied land into productive use ; it compels the most conservative class in the community to take an active part in true politics, and to watch the expenditures of the Government, whether national. State, or municipal, with the closest scrutiny. Such a tax may perhaps be supplemented by taxation on railways, gas companies or other franchises which are somewhat restricted in their nature and by an excise on spirits collected from the producer ; but this opens a broad subject outside the scope of this treatise. I am aware that some observers compute the value of our an- nual product at a larger sum than I do, but on the basis of the population of 1880 and the data of that year, I can find no trace of larger earnings or greater profits than my computation would have yielded. No one can be more aware than the writer of the huge difficul- Il6 WHAT MAKES ties which occur in computing the accumulated wealth of the country or the value of the annual product, in terms of money. It can only be by bringing these vast aggregates to individual units that an estimate can be made with even approximate ac- curacy. Attention has often been called in the treatises upon political economy to the small proportion which the aggregate value of accumulated wealth necessarily bears to the money value of the annual product. Owing to the method of taxation, to the various official returns of the States and cities, and to the great skill of Mr. Carroll D. Wright, by whom the census of 1875 was taken, the actual money value both of land and of the capital which has been placed upon the land in the State of Massachu- setts can be ascertained with almost absolute certainty. So, also, the value of the annual product of Massachusetts can be approxi- mated with almost absolute certainty. By these figures, it appeared that the absolute value of all the capital of the State of Massa- chusetts in 1875, /. e.y of the mills, workshops, railroads, dwell- ings, goods, and wares, which had been converted into form for human use by human work, did not exceed three years' annual production. If the data of the census of the United States could be treated in the same exhaustive way, and the value of the land could be deducted from the gross sum of $44,000,000,000, given as the estimate of wealth, it would without doubt appear that the actual capital of the country could not exceed twice or twice and a half the value of its annual product. When the complaint is made that a good subsistence and an adequate shelter can barely be obtained by each three persons upon an average income of only $400 to $500 a year, at the retail value of all they consume of their own production, or procure by purchase or exchange for the three, the only remedy which can be provided is to increase the product. If such is the present measure of all there is, then such is the measure of the utmost that all can have. How difficult and how slow such an increase must be, may be comprehended by a very simple statement : Assuming the maximum of $10,000,000,- 000 given in this treatise as the present value m the census year, or THE RATE OF WAGES? WJ about 11,500,000,000 — now then over $1,000,000,000 worth of pro- duce must be added in a year and the prices must be maintained where they are, in order that each person of our present population may have five cents a day more than they now do, or in order that each person engaged in any kind of gainful occupation may be able to obtain an increase in the rate of wages of fifteen cents a day. Upon such small fractions must subsistence depend, and when political leaders present magnificent pictures of national progress, summed up in thousands of millions of wealth or pro- duct, these facts may well be recalled. Even if our progress has been great and our conditions are relatively prosperous compared to other nations, yet the average person, including capitalists, landowners, employers and em- ployed must have been sustained and sheltered, must have paid taxes and saved profits, out of what fifty cents a day would buy in the census year, because such was apparently the measure of all there was produced which could be bought and sold or exchanged. APPROXIMATE SUMMARY. Total product of the U. S. $10,000,000,000, worth per day to each person as estimated . . . . . .55 Domestic production, consumed without purchase or sale . 5 50 cts. Share of capitalists 2\ Savings of the people ....... 2^ National, State, and Municipal taxes . . . . sf Cost of mental or administrative work . . . . I^ Average to each wage earner 40 50 cts. For each error of five cents a day in this estimate, — if the reader finds one or believes that there may be an underestimate — add one thousand and fifty-eight million five hundred thousand dollars to my gross estimate and divide the proceeds among the 58,000,- 000 persons who will probably constitute our population on the ist Jan., 1885. APPENDIX 11. THE LAW OF COMPETITION : IN ANY GIVEN PRODUCT, PROFITS DIMINISH, WAGES INCREASE. The following deductions have been made from the accounts of two New England cotton factories, both constructed prior to 1830, and operated successfully and profitably since that date, mainly on standard sheetings and shirtings — No. 14 yarn. The figures given, from 1840 to 1883 inclusive, are absolute, being taken from the official accounts of mills, of which the sole pro- duct has been a 36-inch standard sheeting. The figures of 1830 are deduced from a comparison of the data of two mills. The figures of 1884 are deduced from nine months' work in 1883-4. WAGES PER OPERATIVE PER YEAR. 1830 164. gold. 1840 175- gold. 1850 jgo. Rold. J 860 J97. gold. 1870 275- cur. 1870 240. gold. i£8o 259. gold. 1883 287. gold. 1884 290. gold. PROFIT PER 1830 8.400. gold. J 840 1. 181 gold. 1850 1. 110 gold. ,860 .638 gold. 1870 .760 cur. 1870 .660 gold. 1880 .481 gold. 1883 •434 gold. 1884 .408 gold. PROFIT PER YARD NECESSARY TO BE SET ASIDE IN ORDER TO PAY lO PER CENT. ON CAPITAL USED. THE RATE OE WAGES, 119 YARDS PER OPERATIVE PER YEAR. .830 ■♦.3«i t840 9,607 1850 12,164 )86o 21,760 ■ 870 19,293 1S80 28,000 1883 26,641 .884 28,032 1830 lOoog-old. 1840 1.832 gold 1850 1.556 gold i860 .905 gold 1870 1.425 cur. 1870 1.240 gold 1880 .930 gold 1883 1.080 gold 1884 1.070 gold Changes in the ma cbinery affected productioD. COST OF LABOR PER YARD. COMPARISON OF 1840 WITH 1883-4. This comparison will not show the full reduction in the coaw of labor per yard which may be expected in 1884-5, because changes have been in progress which, when completed, will in- crease the capacity of the mill about 15 per cent., and it is a well- understood rule that, while such changes are being made, the current work of production is done at a disadvantage. I 840-1 884. I.— Capital . . II.— Fixed capital III.— Active capital IV.— Spindles . . V. — Looms . . VI.— Fixed capital per spindle V'll.— No. of opera. tives emp, VIII.— Operatives per 1,000 spindles 1840 1883 1840 1883 1840 1883 1840 1883 1840 1883 1840 1883 1840 1883 1840 1883 $600,000' $600,0001 $310,000 « $310,0001 $290,000 1 $290,000 ■ 12,500 • 30,824 « 425" i,ooo< $23.20 1 $io.c6 ■ 530- 527" 42 4-10 ■ x^ aoxoo ■ i Same. (Same. Same. ( Increase, I 146 per cent- [ Increase, I 13s per cent. [ Decrease, I 57 per cent. I Same. Decrease, 60 per cent. 120 IVffA T MAKES IX.— Lbs. per spin- 1840 0.456 ^——■^■——— -^^^ < Increase die per day . 1883 0.556 ■— — — — ■ \ 22 per cen X.— Lbs. per oper- 1840 10 76-100 —i^"^—^^^ ( Increase ative per day 1883 31 20-100 a^i^^^— 1— — ■— i^— ■^— ^^^-^^^^i^ ) 190 per ce XL— Hours work 1840 + 13 ■^-■— — ^"'■■■" ( Decreast per day . . 1883 11 -■— — — ^ 1 15 per cer XIL— Lbs. per oper- 1840 0.83 1^—^—— i Increase ative per hour 1883 2.83 — — ^— — j 240 per ce XIII.— Wages per op- 1840 $175 -1— i^— r increase erative pr. y'r 1883 $287 ■■«— ^-^——^^^—i — ^^-^ \ 64 per cer XIV.— Wages per op- 1840 4.49 cts. — — — — ^— ^^^ ■ Increase erative pr. h'r 1883 8.80 cts. ■^■^— 1 96 per cer XV.— Wages per y'd 1840 1.82 cts Dccrea 1883 1.08 cts. ------------------------- 41 per ce XVI.— Profit per y'd 1840 1.18 cts. ^^^^^^^-^i^^— ^^^b^^— i Decreas< 10 per ct. on capital 1883 0.43 cts. ^^^^^^— 1 63 per cer XVII.— Price of goods 1840 g.04 cts. —— ■^^^— ^^^n^^^^— i» i Decreas cost cotton same 1883 7.04 cts. ^"i^i—i""™— ■—■—■« \ 22 per ce COMPARISON OF 1830 WITH 1884. In this comparison the statements are based in part upon the figures of each mill. Both appear to have cost about $40 per spindle, including dwellings for operatives. More than one kind of goods were made in each for a time, but the figures have been adjusted to standard sheetings, an average having been computed by the yard and pound Fixed capital 1830 $332,000 ,gammmmmmmmm^m^m^mmmmi^^m^^mmmmm^tmmmmt^mm DccrcaS 1884 $310,000 mimmmmmmmmmmmmmmmmmi^mmmm^mmm^^m^^mmmmmmm, 37 per CC Spindles . 1830 8,192 ^wm^^hb Increas( 1884 30,824 mi^^m^i^mmmm^m^mimmmm^amm^a^mi^m^^^^mm 276 per C« Fixed capital per spindle 1830 $40.50 ^mmam^mtmmmam^mmmmmmmmmmm^ Decrea£ 1884 $10.07 ■""■"■ 75 per cc Operatives per 1,000 spindles 1830 49 „,__,.„,„_,_,__._i.,,aaaMHM Decrea< 1884 172-10 ^m^^m^mmam 64 per C( Pounds per operative per 1830 9.94 mmmmmm^mmm^^^ Increasi day 1884 31.22 mmmmim^mmmmmmmmmmmmm^^mmm^immm^mi^t^t^mmii/^^^tXCf. The hours of labor in most of the factories in 1830 were 14 per day. Wages per operative per 1830 $164 aMHHMMBMHHH^B^^^B Increas year 1884 $290 a-MiBiaiBBBM^iMBBBBiBiHaaH^aMaHMi. 77 per C( The wages per hour in 1884 are more than double those of 1830. Wages per yard 1830 1.90 cts. ^mmmmmmm^^mmmimm^mmmam^mm Decrea! 1884 1.07 cts. ^mmmma^^mm^mmm 44 per C( Profit per yard at lo per . . 1830 2.40 cts. tmam^^^^^^^^^mmmmmmmmmmtmmmmm Decrea! cent, on capital .... 1884 .41 cts. mmm^mm 83 per c< THE RATE OF WAGES? 121 lii the mountain section of the southern United States the peo- ple are still clad in homespun fabrics. Five women — two carders, two spinsters, and one weaver — can produce eight yards per day. Product of s per- soijs I year in 2,400 North Carolina yds. ■■ Product of 5 per- sons in New 140,000 England . . . yds. m^^^^^^^mmmm^mmmmmmmmi^mmm^^^m^mmmmm^mi^m^i^mmmmmmmimmmmm^mm Wages in New England at 1.80 cents, per yard .... $287.00 ^i^^-^— — i^^^^^^— i«— ^-^■^^— — i— -— — ■ Wages as they would be in N. Carolina at 1.08 cents, per yard .... $5.19 " Cost per yard in New England at $287 per year each operative 1.08c. ■■ Cost in N'th Car- olina at $287 per year each operative . . 58.49c. wi^^^^mmmmmmmmmmmmmmmmmmmmmmmmmmmimm^^mmmmmm^m^^^mmmmmmB^^m,^ The rule of diminishing rates of profit and increasing rate of wages, of neces- sity ensuing from ihe progress of invention, is fully sustained by these tables. As the capital is increased both in its quantity and in its effectiveness, the abso- Ilute share of product falling to capital is increased, but the relative share is diminished. On the other hand, the share of the laborer is increased, both abso- lutely and relatively. Labor takes of necessity a constantly increasing propor- • tion of an increasing product. In this example, the wages of the operatives have increased, since 1840, 64 per cent, per day and 96 per cent, per hour ; since 1880, 77 per cent, per day and + 100 per cent, per hour. High wages in money hr.ve ensued as the necessary result of the low cost of labor. It will be observed that in 1840 the price of standard sheetings being 9 cents a yard it required 1.18 cents to be set aside for profits, or 13 per cent, of the price, in order to pay 10 per cent, upon the capital. Next it required 1.83 cents to be set aside, being 20 per cent, of the whole price, to pay wages at the aver- age rate of only $175 a year to each operative. In 1S84, the price being 7 cents a yard, it required less than 6 per cent, of the gross sales, 0.40 cent a yard, to beset aside in order to pay 10 per cent, upon the capital, while 1.07 cents being *iet aside as the share of labor, or a fraction ovc* ".5 per cent, of the gross sales, 122 WHAT MAKES yielded to the operative $290 in gold. The goods cannot now be sold at 7 cents, and there is little or no profit for the time being. But while 10 per cent, was a moderate rate of profit in 1840 it is an excessive, rate in 1884. The busi- ness would extend with great rapidity if there were a positive assurance of 6 per cent, upon the capital, or a quarter of a cent a yard and less than 4^ per cent, of the gross amount of sales. But it may be said, having assigned 0.40 cent to profits, and 1.07 cents to labor out of 7 cents a yard gross value, there remain 5.53 cents a yard to be accounted for. This of course represents the money cost of cotton, fuel, starch, oil, supplies, taxes, cost of administration, transportation of the goods to market, and the cost of selling them at wholesale. Does this all go to labor, or is there also a profit to be set aside on these elements ? Our space would not suffice to treat each one of these subjects, but it may be said : First, the cotton is substantially all labor ; there is no large margin of profit at the present time in raising cotton, which is mostly produced by small farmers. Second, the other items constituting the materials, form a very small part of the total cost, and are subjected to profits in small measure only in respect to fuel and oil. The cost of transportation yields to the railroads less than an average of 5 per cent, on the capital invested, and cotton fabrics pay but a small fraction of their value even for very long distances. The cost of administration constitutes a very small part of the cost of the goods, and in a general treatise on wages belongs in a class by itself rather than to be considered as profits. The charge for selling staple plain cotton goods at wholesale does not exceed i per cent, to \\ percent., and a large part of this is distributed among the clerks and salesmen who do the work. If the subject is analyzed, first, as a whole, and, second, in each department, it will appear that at the present time the proportion of profit which can be set aside from the sale of coarse cotton goods sufficient to cover profits in all the various departments of the work, is less than 10 per cent, of the wholesale market value of the product, and 90 per cent, is the absolute share of the laborers who do the work both in respect to materials used and to the finished product. It is also necessary to remember, in respect to the cotton factory, that the value or proportion of capital to a given product is greater than in almost any other branch of industry ; the proportion of capital to product being $[ of capital to each $1 or $1.50 of product, according to the weight of the fabric and the quantity of cotton used. In the boot and shoe factory, on the other hand, the ratio of capital to product is about $1 to $3; therefore in the boot and shoe busi- ness a much less proportion of the gross sales needs to be set aside as profit on the business, to induce its being established. THE RATE OF WAGES? 1 23 On the whole, so far as the manufactures of New England are concerned, the average of capital to the gross value of the products is one dollar capital to two dollars product ; therefore three per cent, of the gross sales set aside as profit will yield six per cent, per annum upon the capital invested in the buildings and machinery which are applied to the conversion of raw or half manufact- ured material into finished forms ready for final consumption. The foregoing charts have been prepared on the basis of tables giving the actual facts in respect to the machinery, the product, and the wages of two successful cotton-mills, manufacturing what are known as standard sheetings, in New England. Technically these goods are known as 36-inch sheetings. No. 14's. In point of fact, the number of the yarn is a little coarser. The data have been combined so as to cover the entire period from 1830 to the present date, a part of them having been furnished from one mill and a part from the other. I have in my possession the accounts of many other cotton factories, and the statistics of the wages, covering a great variety of fabrics, during the last fifty years ; but I have carefully chosen the data of two factories which have been uniformly successful, in which the capital stock has never been reduced, and of which the product has, to a large extent, been sold for export. This selection has been made in order that the data might not be affected in any measure beyond that of other occupations than cotton-spinning, by the many changes in the tariff which have been made since 1830. In the main treatise of which this is an appendix, I have at- tempted to sustain the proposition that the rate of wages cannot be taken as a standard for determining the cost of production, even in money ; but, on the contrary, that wages are a remainder over, or result of production, recovered from the sale of the goods, and subject to the prior claim for payment of the cost of materi- als and the profits of capital. Wages will vary in rate in the same country, at different peri- ods, in the same place ; at the same period in different places ; in different countries at the same time, — being determined by the distance of the factory from the source of the materials, by the t24 WHAT MAKES intelligence and skill of the people who do the work, by the incidence of taxation, (the laws of different States varying on this point) and by many other elements which enter into the problem. On the other hand, although wages are deferred to profits, and are a remainder over, subject to deduction of profits from the sales, yet the competition of capital with capital not only always tends to a minimum of profit, but also to an increase of the product in ratio to the amount and effectiveness of the capital. Hence, while profits tend to a minimum, wages tend to a maxi- mum. It therefore follows that, under these conditions, wages constitute an increasing proportion of an increasing product, pro- vided markets can be found to take the increase without a reduc- tion in price corresponding to the reduction in the labor which constitutes the true cost. In point of fact, very few nations have learned to apply machinery to the arts of life, — a larger portion of the population of the world is clad in homespun than in mach- ine-made or factory-made fabrics. I have lately read a notice of a recent report, made in Manchester, to the effect that nearly 1,000,000,000 persons, out of a computed total of 1,400,000,000, may be considered as non-machine using nations, clad in hand- made fabrics, so far as they are clothed at all. In the United States, machinery is applied, on the whole, more effectively than anywhere else. Hence, although prices have diminished, they have not diminished as fast as the labor cost of production has been reduced. Consequently, wages have not only risen in rate, but also in purchasing power. All of this is proved by the figures of the charts which have been given above. Between the two extreme dates which I have covered in the chart, 1830 and 1884, the cost in money for manufacturing a coarse cotton fabric has been reduced more than one half. In the same period, the rate of profit on each dollar invested, which sufficed to induce the construction of the factory, has also been reduced one half. In the same period, each unit of the machinery itself has become so much more effective, that one operative will perform three and a half times the work in eleven hours that one THE RATE OF WAGES? 1 2$ Operative could perform, from 1830 to 1840, in thirteen hours. Thus it has happened that, while capital may now be satisfied with one quarter part as much money derived from the sale of the product as it formerly secured, wages have doubled per day, and more than doubled per hour, in the period named. From 1830 to 1840 inclusive, it was necessary to take fourteen per cent, from the gross sales of goods in order to pay ten per cent, on the capital of the factory. From 1880 to 1884 inclusive, six per cent, of the gross sales would suffice to pay ten per cent, upon the capital, while six per cent, profit would now be more nearly a normal rate. In these charts I have treated the art of spinning and weaving cotton by machinery, upon what are called the self-acting mules, spinning-frames, and power looms. We may contrast the con- ditions of the same art, at the present time, in different parts of this country. In the heart Of this country, upon the hill-sides and in the valleys of the great Allegheny region, in Virginia, in Kentucky, in Tennessee, and in the Carolinas, there is a popula- tion of two millions or more of people, who are even to this day chiefly clad in homespun fabrics, of which the yarn is spun upon the hand spinning-wheel, and woven upon the hand-loom. These people have been kept in isolation by the surrounding pall of slavery, until a very recent period. Their country is now being opened by railroads, and the art of making homespun fabrics will soon be a lost art among them. The capacity of five of these persons — to wit, two carders, two spinsters, and one weaver, in a day of eleven hours, is eight yards of coarse fabric, heavier, but of more open texture, and therefore more quickly woven by machinery than the standard sheeting. Five operatives in a modern factory would spin and weave one hundred-fold as much, or eight hundred yards a day. But we will limit the comparison to the actual product of standard sheetings, and we will as- sume that the home spinners could make eight yards of standard sheeting in a day. This would give them 2,400 yards as the pro- duct of a year, against 140,000 yards in the northern factory. 126 THE RATE OF WAGES. The cost of spinning and weaving the standard sheeting in the northern factory in 1883 was 1.08 cents per yard. If the south- ern operatives were obliged to sell their product in the open mar- ket at the same rate of wages — that is, at the wages which could be derived from 1.08 per yard, the total earnings of the five in one year would be $25.92, or a trifle over $5.00 each. If they were content with the profit on each yard which yields to the northern capitalist ten per cent, a year, it would be .43 of a cent a yard, or upon 2,400 yards f 10.32. The total wages and profits of the five southern operatives, working by hand for one year, at the standard of cost and profit of the northern cotton-mill, would therefore amount to $36.24. On the other hand, in order that the earnings and profits of the southern operatives should be equal to those of the northern operatives and owners of the factories, it would be necessary that the homespun fabric should sell in the open mar- ket at about ninety cents a yard. It therefore follows that the high wages of the northern operatives are the result of the low cost of production, and that if the southern people now engaged in the art of homespun work can find other work to do, in dealing with the abundance of timber, in saving the wild fruits, in agricul- ture, or in the many other branches of work which their climate and soil open to them, but which are not open to the inhabitants of the Northern States, they will save both time and labor by an exchange of product, and by becoming inter-dependent, rather than by remaining isolated and independent. And this is what is now occurring. As soon as the incubus of slavery was removed and an exchange of products between the two sections of the country fairly began, each found that it could serve the other and and that slave-grown cotton was no longer king. APPENDIX III. In order to test the rule of the advance in the rates of wages which accompany improved methods of work and the substitu- tion of machinery more or less automatic for hand work, I have compared the wages of two branches of industry employing men almost exclusively in special arts requiring a high degree of skill, to wit : the manufacture of pianos and the manufacture of edge tools. In one piano factory of the highest reputation the rates of wages of five classes of workmen averaged In 1843 $562 per year. In 1880 824 •• •• In another larger factory, the rates of wages of twelve classes of workmen have been as follows : 1853 $11-33 per week gold. i860 12.23 " " 1866 14.75 " " currency. 1872 18.00 " 1878 1466 '• " 1880 17.50 " •' gold. In one establishment making table cutlery, eight classes of workmen averaged 1859 $1.50 per day. 1880 2.15 " In another on edge tools, ten classes of workmen averaged 1850 • . . $1.60 per day. 1880 2.26 " " In these examples the law of increasing wages is demonstrated, but there is no such unit in these arts as the standard sheeting, and I am unable to show how much the ratio of profit has di- minished. 137 128 THE RATE OF WAGES. In fact, no other standard can be found like the standard sheet- ing, as it has been manufactured in precisely the same way since it was first introduced more than fifty years ago. Even the statistics of the cost in money of the standard sheet- ing fail to show the true progress of the operatives. In 1830 and 1840 the machinery was much less automatic than it is now, and its operation called for a high grade of intelligence. From 1830 to 1850 the larger portion of the factory operatives were well-bred American women, graduates of the common schools, capable of writing the articles in the Lowell Offering. But to them the factory gave opportunity for progress, even though the hours of work were 13 to 14 per day and the work itself was arduous and continuous. The operatives who now earn nearly twice as much per day of 10 to 11 hours and more than twice as much per hour are, through no fault of their own, less instructed and less capable of doing work which requires versatility and individual capacity. They are mostly foreign-born. American women have gone up into more congenial employments at higher wages, which have been opened to them by the application of machinery to many arts which were mere handicrafts a few years since, and they have thus made room in the textile factories for the Cana- dian, Irish, English, and German immigrants, who now constitute the greater portion of the operatives. Yet it will be observed that notwithstanding all these changes in the quality of the operatives, the improvement in the quality of the machinery has caused the share of the laborer to increase as steadily as the share of the capitalist has diminished ; and this progress has continued in spite of all the chances and changes of meddlesome legislation. APPENDIX IV. Since this treaties was completed the invaluable report of the statistics of labor in Massachusetts for 1884, compiled by Carroll D. Wright, has been published. It gives me another opportunity to prove the accuracy of my deductions. In my treatise I worked from an a priori estimate of the value of the total product of the United States. I deduced a value not exceeding ten thousand million dollars in the census year ending June 30, 1880, by estimating the sev- eral crops in quantity and in money. First. — By converting that portion of the wheat crop which is consumed in the United States into bread, and a large portion of the com into meat ready for final consumption, and to this secondary or final form I applied the average retail prices. I also ascertained as nearly as possible the ultimate value of dairy products and the like. Second. — I converted the known quantity of textile fibres consumed within the limits of the United States, into fabrics, and I then estimated these fabrics at their value in finished clothing at the average prices which are charged by shopkeepers. Third. — J I converted the known production of metals into machinery and ^ other forms ready for final use, and valued them. Fourth. — I "^ valued the timber product as furniture, dwelling-houses, and the like. Fifth. — I converted the sum of our imports into a value at its final point of consumption by estimating the cost of distribu- tion and by other similar methods. Of course this method is one which could not be made abso- lutely correct, especially by a private person working only in the intervals of active business. The conclusion was warranted in 129 130 WHAT MAKES my own judgement by deductions from such facts as I could as- certain. I should not however have ventured to make use of this estimate in a scientific treatise, except its conclusions could be sustained by induction from the facts taken in detail. By dividing my final estimate by the ascertained number of persons who were engaged, my a priori conclusion was that the average group of three persons, there being one person occupied for gain including the administrative as well as the executive force in each 2.90, would come into the possession of substance not exceeding in value $523, from which sum all profits, taxes, and wages must be derived. Upon a further analysis, a subdivision of this average sum which included ten per cent, estimated to be consumed directly upon the farms without going into the commercial stage, I found reason to assign to each one of those engaged in the work of administration, that is in the mental rather than the manual work, an income averaging between $1,000 and $1,100 a year, which being deducted left an average to each person engaged in the actual executive work of the country of between $430 and $450 a year. It being assumed that each one of the latter class represented ^iW persons, each person could enjoy only what $147 a year would buy, or in the last analysis what 40 cents a day will buy ; that is to say, if my estimate were correct, each member of a work- ing man's family must find shelter, subsistence, clothing, and fuel on what 40 cents a day will buy, because such is the measure of the total product after setting aside five per cent, as the annual profit of the capitalist, and five per cent, more representing the small savings of the working people. In other words my deductions a priori were, that the average share of the total product falling to each woman and child in the United States in the census year, including the domestic con- sumption of farmers' families, could not exceed what 55 cents a day would buy. Of this sum I assumed that 5 cents worth would be the domestic consumption of the agricultural population, leav- THE RATE OF WAGES? I3I ing 50 cents a day as the average to each from that part of the pro- duction which was bought, sold, or exchanged. Five per cent, or 2j cents a day set aside as the profits of capitalists, and five per cent, more or 2\ cents a day as the savings of the people, left 45 cents per day to be divided among the working people and the administrative force. Again subdividing this, and the apparent share falling to the family of each member of the administrative force seemed to be 90 cents to $1.00 per day, leaving to each member of each working man's family 40 cents. All these computations were antecedent to any examination or test by consideration of actual rates of wages. They were de- duced as the necessary result of the division of a total annual product estimated by entirely different methods than by compu- tation of actual wages. If, then, 40 cents a day be the average of the whole country, the proportion falling to the agricultural population, especially of the South and parts of the West, would be less. The proportion falling to the manufacturing population of the North would be greater. What then were the facts ? I have shown how far these figures coincided with the statistics of the average wages given in the United States census, and now have the satisfaction of comparing them with the facts elicited by Mr. Wright in the manufacturing State of Massachusetts. Omitting common laborers, domestic servants, and the like, he has ascertained the average income of all persons engaged in various branches of manufacture to which machinery is applied in largest measure, or which require special skill. The list of oc- cupations comprises the making of agricultural implements, of tools, boots and shoes, clothing, textile fabrics, furniture, persons engaged in the building trades, in the making of liquors, ma- chinists, printers, makers of wooden-ware, and some other minor branches. He finds the average wages of these persons in 1883, when they were somewhat higher than in the census year, to have been $10.31 per week, or $536.12 per year. 132 WHAT MAKES It will be observed that this list does not include the domestic servants, common laborers, or persons engaged in agriculture, even in Massachusetts itself, whose wages would bring down the average of the whole if they were included. His results, even to this extent, may therefore be considered as fairly corresponding with the deductions made by myself, but the most conclusive proof of the accuracy of my deductions will be found in the treatment of what he calls the " budgets " of nine- teen selected families assumed to represent the average of skilled workmen ; the expenditures of 400 families having been analyzed in the preceding year with which these " budgets " correspond. These families comprise ninety-nine persons, of whom forty-one are engaged in some kind of gainful occupation — /. ^., earning wages. Each working member of this small force therefore repre- sented a group of 2.17, as against the average of 2.90 in the whole country. The average income of each one of these persons was $372 a year, somewhat less than the average which I have as- signed to each person in my estimate, but when we convert the $372 per year into so much a day for each person, the result gives forty-seven cents a day, in Massachusetts, in arts conducted mainly by machinery, against my estimate of forty cents for the average of the whole country, the group 2.17 being smaller. It therefore follows that by every method of computation, and by every test which can be applied, my deductions are sustained. It appears that even in the most prosperous State, the average in- come on which each person must subsist, find shelter, pay taxes, and make savings, even in arts requiring a high grade of skill, is less than fifty cents a day. If half the people of this country must live on what fifty cents a day will buy, the other half must live on what thirty cents a day will buy, since forty cents is the meas- ure of all there is which can be assigned to their support ; yet, at this rate, Mr. Wright reports his conclusion that the standard of living of the workingmen of Massachusetts is in the ratio of 1.42 to I in Great Britain. He does not treat the condition of European continental laborers, but all students are well aware THE RATE OF WAGES? 1 33 that the British workingman is better than his continental com- petitor in similar ratio. The conclusion which can be drawn from these data, in my own judgment, would be this : Great Britain produces within its own limits but a moderate portion of the food of its people, and scarcely any of the materials used in its manufactures with the exception of iron, and is therefore forced to import by far the larger portion of its materials, and a large part of its food, and to pay the cost of freight thereon. The various elements of her manufactures — in moderate part produced at home, and in large part brought from other countries — are then combined into an annual product of a certain value, out of which rents, profits, taxes, and wages must be derived. Under present conditions the remainder over, left to the British workingmcn, as compared to the Massachusetts workingmen, is in the ratio of about two to three, /. ^., the Massachusetts working man or woman is fifty per cent, better off than the British working man or woman. Upon the continent, where the resources of the several countries themselves are even less in ratio to the number of persons to be sustained, the value of the annual product is less in proportion than it is in Great Britain ; while the labor exerted is very much greater than it is either in Great Britain or in in this country. Consequently the remainder over, after paying for the enormous cost of standing armies, and after being subjected to the with- drawal of one man in twenty from the productive work, is less ^probably by one half than it is in this country, and by one third than it is in Great Britain. As a natural consequence large masses of people in Italy, in Germany, and in some parts of France and Belgium, barely exist upon the edge of starvation. It seems almost a necessity to bring this matter down to the unit of the individual, in order that the people dwelling upon the continent of North America may in some measure comprehend the advantage of the position, and of their freedom from vested 134 WHAT MAKES wrongs under which their fellows are suffering in countries of so- called older civilization. Another branch of the subject to which I have as yet given little attention, needs to be explored, in order to show that 40 cents worth is enough for moderate comfort, if it is used with moderate intelligence ; for instance, the jail of the county in which I live is admirably conducted. The prisoners are adults, boys and girls being sent to reformatories. The food of these prisoners consists of bread made from the best flour, and the meat consists of the remainder of the carcass of the best beeves and other animals after the fine cuts have been taken off for the first class hotels. These persons are served with a moderate quantity of tea, with rye coffee, with such vegetables as are suit- able ; in short, with an abundance of food, and it is probably better cooked than in the average family of common laborers, and yet the prime cost of the provisions required by each pris- oner, delivered at the jail, is but a trifle over 12 cents per day ; of course it is prepared by prisoners. Now it appears, both from Mr. Wright's investigations and from those of Dr. Engel, of Berlin, that the cost of subsistence of a workman's family, earning from $300 to $750 a year, is sixty per cent, of his whole expenditure. If, then, an abundant supply of nutritious food for an adult can be procured in Massachusetts at a cost of J50 a year, and the same economy could be used in respect to other items of expense, an income of $90 a year to each person would suffice for whole- some conditions, while $100 a year would amply provide for the excess of rent which working people in Massachusetts are obliged to pay above their competitors in England. This latter assignment of $100 a year to each person, — which was the average of 20 or 30 years ago, — would be a fraction un- der 28 cents a day. There can be little doubt that the rate of wages has advanced in this ratio, /. ^., from 28 to 40 cents per day for each person during the last twenty years, and that each dollar has also greater purchasing power. THE RATE OF WAGES? I35 If, then, the margin be narrow and if want treads still close upon the steps of welfare — courage may yet be taken as to the future under the application of the law of diminishing profits and increasing wages. , In conclusion, at the risk of repetition, let me again call atten- tion to the fact, that in order that each person of the present population of the United States, computed at this date at fifty- eight million, may enjoy five cents worth per day more than the average assumed in this treatise, it would be necessary that the production of each person should be increased $18.25 per year ; or, in other words, that each person in a group of three engaged in gainful occupation should produce $55 worth more than each one now produces, and find a market for the increasing product without diminishing prices. Now, $18.25 per person, multiplied by fifty-eight million, gives an aggregate of $1,058,500,000. This sum is twice and a half the value of the present wheat crop of the United States, ten times the value of the pig-iron produced in the United States, about double the value of all the textile fabrics ; or, to put it in another way, the people who are now at work, numbering at the propor- tion which the working force of the census year bore to the whole, about twenty million, must add to the present product the value of our wheat crop, say $350,000,000 ; to the value -of our pig-iron product, say $90,000,000 ; to the value of all our pro- duction of textile fabrics, say $650,000,000, total, $1,050,000,000, and must find a market for the sale of the increased product, in order that each one of their number may earn fifteen cents a day more than they now do, and that each one of a group of three may be able to consume more than they do now by what five cents a day more will buy. In this view of the matter, progress in material welfare is and must be very slow. This problem is commended to all who expect to improve the welfare of the people by changes in respect to land tenure, or by creating paper money, or " fiat money," or by compulsorily short- 136 WHAT MAKES ening the hours of labor, and by other methods of meddlesome interference, by statute, with customs which have been gradually evolved during the last two centuries. May we not respectfully suggest that such progress can be ac- complished only by the advancement of science, beginning in the common schools, with manual and technical instruction as well as with mental work. Increased production and a wider market constitute the only sources from which the money can be obtained by which the rate of wages can be advanced. On the other hand, there must be this increase of production, in order that even if the rate of wages is not advanced, each unit of the wages will buy as much as it now does. The true function of commerce must be fully comprehended in order that such an advance may be speedily reached. It cannot be reached until the present fallacies in regard to wages have been given up, nor until the principle shall be accepted that high rates of wages, expressed in terms of money, are the result of low cost of labor, expressed in hours or efforts. In the great competition under which service for service is rendered, those nations which apply machinery to the fullest ex- tent, and to the most adequate resources, make the largest product at the least cost of labor. In their exchanges with what are called the barbarous or hand- working states of the world, or with those nations in which ma- chinery has been applied to the arts in least measure, they gain the most for themselves, while rendering the greatest service to those with whom they deal. This is the secret of English wealth. This is the secret of the higher wages of the English-speaking people. This is the secret which the people of the United States have yet but half comprehended, because the abundance of their pro- duct is so great, that no stress of want has yet compelled atten- tion to be given to the science of political economy, and to the THE RATE OF WAGES? 1 37 methods by which the burdens of taxation can be most easily borne. This subject is a vast one ; it includes not only the tariff ques- tion, but also the much more complex and difficult question of local or municipal taxation, in respect to which there is no uni- form system or practice in the United States. If I have succeeded in calling attention to the fundamental principles which must be considered before we can even begin to deal intelligently with these vast social questions, I shall have accomplished my purpose. It will have been apparent to the reader that in this treatise and its appendices, two separate lines of investigation have been followed. In the first place the principle has been laid down that by way of, or by force of, competition, there is a tendency in the rate of profit, interest, rent, or by whatever name or designation the share of the capitalist is defined, to diminish. On the other hand, there is a tendency in the rate and pur. chasing power of wages to increase. These tendencies are subject to variation in short periods of time, owing to short crops, war, or other similar causes, but in any long period of time they become rules. Furthermore, in any country inhabited by a substantially homo- geneous people, high wages both in rate and in purchasing power are the necessary consequence or result of the low labor cost of production. This rule will also apply between different countries subject to variation arising in the practice of hereditary arts, or from the imposition of customs duties and other like causes. This rule is also subject to temporary variation — but in a long period of time may be considered absolute in its working. These positions have been sustained historically and by the citation of facts growing out of existing conditions in the United States, and they form the main purpose of the treatise. The second subject — or division of the main subject as it might 138 THE RATE OF WAGES. perhaps better be called — consists in the attempt to measure the annual product of the United States in terms of money, and thereby to determine the possible share or remainder enuring to those who do the work, by which measure the average rate of wages in the United States at a given time or at the present time may be established. This part of the subject is sustained by such testimony as may be available from official documents, but must be considered as only approximate in its terms ; suggesting a method whereby these facts may be hereafter determined rather than a conclusive trea- tise upon present conditions which it would be impossible for a private person to work out in an absolutely certain manner. It may be readily conceived that the Government Bureau of Statistics, or the officers of the next census could make a very accurate computation of value of our annual product by first ascertaining the value of grain, cotton, metals, timber, wool, and other fibres and the like, and then tracing each subject through its various conversions to the point of ultimate consumption, as bread, clothing, shelter, machinery, etc., etc. — the value of that portion exported being very easily computed separately. Of course there would be some errors and omissions, but they •would balance each other, and the result in cents per day per person, or dollars per year per family, would be but little affected by the sum of all probable errors. APPENDIX V. My attention having been called to a computation of the value of the annual product of the census year, which is included in the report of Mr. Joseph Nimmo, Jr., Chief of the Bureau of Statistics, for 1884, I have requested him to give me the data upon which he reached his conclusions in the matter, and I have the satisfaction of submitting his letter herewith. Bureau of Statistics, Washington, D. C, October 21, 1884. Dear Sir : — Your letter of the 17th inst. has been received, and I will reply as follows in regard to the total value of our annual product : The estimate of $3,600,000,000 for the product of agriculture was given to me by Mr. J. R. Dodge, a year ago, as the result of a series of careful investigations, and he firmly adheres to that estimate. Mr. Dodge had charge of the census agricultural statistics, and I regard him as the best authority in the United States upon that subject. The following is a foot-note upon this subject, which appears in my article on " American Manufactures," contributed to the North American Review^ of June, 1883, and is taken from a mem- orandum upon the subject given to me by Mr. Dodge : " This is an estimate made by Mr. J. R. Dodge, Statistician of the Department of Agriculture, and Special Agent of the Census for the Collection of Statistics in regard to Agriculture. The census gives $2,213,402,564 as the estimated value of farm pro- ductions. This, however, does not include the increased value of live stock, nor the value of the products of pasturage on the 130 I40 WHAT MAKES public lands. It also omits to a very large extent products of horticulture." All the other values, in making up the aggregate, are directly from the Census Office ; so that my total of $9,817,900,652 in the foot-note on page 40 of my annual report was made up as follows : Agriculture $3,600,000,000 Manufactures 5,369,579,191 Illuminating gas (partly estimated) 30.000,000 Mining 236.275,408 Forestry (partly estimated) 455.000.000 Fisheries 43,046.053 Meat production and wool clip of ranches (estimated) . 40,000.000 Petroleum — manufactured product ..... 44.000,000 Total (materials out) $9,817,900,652 I conferred very fully with the Acting Superintendent of the Census, Mr. Geo. W. Richards, an exceedingly intelligent and able man, who appears to have a thorough understanding of the whole census figures. Regarding the total value of the products of manufacture, he stated to me that while there are some dupli- cations in it, the omissions amount to very much more. It is certain that the values are, on the average, below the actual values ; and that there is a considerable amount overlooked ; besides, the census did not take into account the products of any establishment the value of which products was less than $500.00. I have no doubt that the total value of the products of all industries was over rather than under $10,000,000,000, perhaps in very considerable measure, but of course there are no exact data beyond those given in the census. We may safely say on the basis of the census data that the total value of the products of all industries in the United States was at least ten thousand million dollars. I am, sir, Very respectfully yours, Jos. NiMMO, Jr., Chief of Bureau. THE RATE OF WAGES? 141 This computation, it will be seen, is almost identical with my own, except that Mr. Nimmo uses the expression "at least," where I have said that the annual product in the census year was " at most," $10,000,000,000.* * It is, of course, impossible to bring such a problem as this to very exact terms by an unofficial investigation ; but if. however, we assume an error of five per cent, in the computation of the gross value of the annual product, such an addition would be substantially two and a half cents a day to each person, and would amount to the gross sum of $500,000,000 a year on the average popula- tion of the last four years. Such an addition would fully cover the point in respect to which there are n^ actual data in the census or elsewhere, but which must be treated wholly as i matter of observation and judgment, to wit : the steadily increasing proportiotf of prosperous persons who may be economically called the well-to-do, or in common speech the forehanded men ; such as prosperous shopkeepers, able fore- men in the mechanic arts, farmers whose principal tools are their own brains, capable women taking part in occupations formerly controlled wholly by men, small manufacturers who own and control their own works, — and the like. In the sorting which I have previously made on a broad and general scale, I have, perhaps, left no place for this class of persons, but by adding five per cent, to the assumed product of $10,000,000,000 in the census year full provision would be made for them in the following classification : Total production as first computed $10,000,000,000 Domestic consumption on farms and domestic product of families which is not exchanged or does not come into the commercial product i, 000,000.000 Commercial product $9,000,000,000 Share of capitalists, 5 per cent. . . . $450,000,000 Savings of the people, 5 per cent. . . 450,000,000 Addition to the capital or wealth of the nation . . . 900,000,000 Wages Fund ......... $S, 100.000,000 Share of r, 100,000 persons who are assumed to be engaged in mental and administrative work, computed at $i.ooo each, including 227,210 teachers and scientific persons. This class may be subdivided as follows : 200,000 teachers in the lower-grade schools, scientists, authors, artists, young lawyers and clergymen, or other persons THK ■gHIVERSITTi 14^ IVHA T MAKES Attention may be called to the proof which is to be found in Mr. Nimmo's excellent annual report of the actual and necessary preponderance of domestic as compared to foreign commerce. It will be very apparent to any one who considers the statistics of these classes at $550 — $1 10,000,000. 900.000 mer- chants, tradesmen, officials or others in the higher work of administration at $1,100 each — $990,000,000 . . $1,100,000,000 16,200,000 farmers, laborers, mechanics, artizans, operators, clerks, dress-makers, and other wage-earners, $432 each 7,000,000,000 $8,100,000,000 Total assumed product thus accounted for as above . $10,000,000,000 Add 5 per cent upon this gross product in order to account for the larger consumption of well-to-do farmers, fore- men, prosperous country tradesmen or shopkeepers, and other classes, of whom there may be one million, and to each of whom $500 each above the average might be assigned. Such an assignment would give five per cent, of the farmers, or 200,000, a cash income of $932 each, in place of an average of $432, and would bring 800,000 of those who have been classed as tradesmen, mechanics, operatives, clerks, etc., from $432 up to $932 each . $500,000,000 Total $10,500,000,000 If any larger product should be assumed it would be difficult to trace it either in the form of greater savings or in larger consumption. No evidence can be found of any larger addition to capital than has been given, and no trace of higher wages so far as the census returns cover rates of wages ; but the incomes of what may be called the prosperous middle class, to whose consumption the possible additional product has been assigned, are not to be found in any statistical returns. If such an addition ought to be made, then the average product of each person in the census year was 57^ cents per day, and the addition of 2\ cents to each person per day is to be added to the previous computation of 55 cents. This reasoning is based upon the position taken in this whole treatise, to wit : that the progress of the few is not at the cost of the poverty of the many ; but, on the contrary, the ever increasing abundance which has been produced or brought forth to the use of men in recent years, may be shared by all classes according to the relative capacity, integrity, and industry of the respective THE RATE OF WAGES? I43 of domestic agriculture and manufactures, that only a very small portion of the products of agriculture could be imported from any other country — mainly consisting of sugar, rice, a portion of our necessary supply of wool, and a very few other articles, — while of necessity a very considerable portion of agricultural products are raised within each State itself. It is also true that by far the greatest proportion of the mechanical and manufactur- ing arts exist from necessity and not from choice, within the limits of particular sections of the country and even in particular States. Reference has been made in the body of the treatise to the way in which special arts have become rooted or centralized in particular places, sometimes without any apparent reason, except that groups of population have become habituated to the prac- tice of such arts, so that they have become hereditary. Under such conditions the law of decreasing relative profits and in- creasing relative wages can be observed in the clearest manner, as well as the rule of high rates of wages accompanying or re- sulting from low labor cost of production, because in such places all the subsidiary employments have gathered around the chief centre, and every possible facility exists for making the largest product by means of the work of the least number of persons. The interdependence of agriculture and of the manufacturing and mechanical arts, and the necessary proportion of each in every prosperous State, are proved in a very skilful manner, by Mr. J. R. Dodge, the able Statistician of the Department of Agri- culture of the United States, by means of a series of diagrams contained in the Agricultural Report for 1883, showing the man- ner in which the values of farms and farm products are influ- enced by the establishment of various branches of the mechanic arts and of the lesser manufactures in their immediate proximity. members of each class ; provided the functions of the legislators are limited to such acts as may leave the principle of competition in the use of land and of all its products as free to work out its just results as the protection of the young, the ignorant, or the incapable from injustice will permit. In other words compelition leads of necessity to the most effective and bene- ficient system of co-operation among men. 144 WHA T MAKES 00 ^ to fa {/3 in 1^ h w < fa D o O" fa a 'I- C<^ O O M M N en -t- M vC c^ TOO CO co' c> a n c> r-^ ^ O CI O^ o •-■ o CO Oco O en O O -f O vO T O* t^vO O en rj" i-i w O^ en o CO en r* CO* en o "? u-1 vO o en o en •^ •^ T N M O tMh r^ i-i Ti" ir> in en T -r o w « « CO o' >r) i-T vO* "-"^ -t M CO vO r^ r^ CO o en r^co en CO \r\ in i-i O r>. N O O 0» mO ino CT>0 en O^ en l^O m O \0 t^ O^ in in r>. en i^ en O O O N l^ O M O^ \rt ■rt fr^ f^ M enco* r-^ r^ rC i-T Oco in en o ►-• en m -tco CO ooo M T <> r^ C> en i-T o in in o <-i Tj- 1-1 M r* T rt w O^ en r» en o M mvo O co'oo" o" in r>> o^ Tj- en m CO invO CO Tt rJ-vC r>i -1- G^ M T lO T CO in r^ r^ N vO CO O* in o' N T M o' CO eno r^ o O^ "^ vO O i-i C^ I"^ M in l_, QO CO vO o i-i c r^ CO o -t N vO in in *^ t^ O enco u) O Tj- H-i m O^co rt in O ^ Tco tT (>co* N cr* M* c> m en en in OO T CO O t-> O r~« rfvo' O'vC <> in vO C^^O M O O ^ O T m o CO CO N T e^ CO CO o^ w en t>. O^ iH enco CO O cT T en <-' in i-T rC O O T O N r^\0 r>. M o M oo in '-' CO O O ^ l/i CA s - ::2 O cd a, bA OJ y <« h r. w S = ^ ""^ ^ p. d . C S <« a, ^ -?| 4) .-a • O u . . . s . . . .2 w «« '- y w u c 5 3 o ii iuT o cS 2 " ,^ fv THE RA TE OF WAGES 145 O CO o r-sco o 00 00 rf 00 1- O r^co O IT) O 10 00' -f O o' vO en O^ ir> O CO 00 O x^co CO r^vO vo ^ U-) d^ m" m M, r^ 00 m M 0^ CO M 00 CO ON M CO a VO IT) M CO CO CO N CO cn ^ t^ M r^ i-< CO r^vO rf CO N CO N CJ CO Q r^ CO u^ CT> CO r^ vO inco CO coo t^ 00 -^ vO vO r^ CO r^ VO ^ CO 00 M W CJ c^ M c^ CO 000 O in O w O c^ N i-i CO M CO CO r^O r^ O '^ O CO O c< c^ O c^ co'o* CO Tt o" CO r^ r^ r^ •^ O^ •^ M 10 10 rj- r^ i^ in in pj t}- M r^ O m M CO o O in C> r->. M i-i t^ N O^ CO r^ 1^ ■<^ Ti- >-r r^ o N CO -^ C> rf 00" CO CO •- CO N r^ r^ vO CO ^ O NO c> -^ -^ m' M* rf in rt CO c^ t^ N N x^ 0000 CO Tj- vd" d CO rf Tj- d HH "^ ■^ M in in i-i c> M t^ M 0> ■^■ t-i Tl- c^ C^ c< t^o CO M VO m Tt vO M CO CO C> CO vO CO vO r^ COO 1 00 ^ - ON in c< r^ CO CO W T^ g^^ CO M ino CO ON r>i » O ON p< CO in 00 ON ■- in CO d^ d^ CO On r^o" CO M O ■<1- 0^0 N 1-1 c? t-^ in CO On O CO in O O ON Tt CO O^ T}- hH m' 6 -^ 6 t^ Q t^ (^ CO O t^ t-» O 00 O rfoo CO O M c« r^ rtCC M r^ r^ c^ Cl N CO O rJ-O W 'a t> c -o rt - - - c -= cj Sj&M CU i *J a • • w &• • • £ ^- K 2 a. ^. d t£ 5^3 • 13 M rtcA) 2 ^c^^gc^- ^ (U "^ 3 1, >s g Cj § ^ C3 uSucAiSffi 'O c -a c ^ o c 3 - ■" s o • o Oh p. c o a, CO ,2 ^ C/3 U^ffi rt 2 O 146 WHAT MAKES By the courtesy of Mr. Dodge, I am enabled to give his cor- rected estimate of the value of farm products for the year covered by the census returns. It will be observed that his esti- mate somewhat exceeds my own, even though he does not in- clude the domestic farm consumption of fruit and vegetables, but inasmuch as a very considerable part of the hay and corn' crops are converted into meat and dairy products, a fair allow- ance for this duplication would bring the two estimates almost to an exact agreement. The great increase both in quantities and in values between the years 1859 and 1879 will be observed, but although the farm value was greater for the same quantities in 1879 than in 1859 it by no means follows that consumers at a distance paid more for grain or dairy products ; the advance in prices at the places of produc- tion, so far as it can be traced, is less than the reduction which was made between those two dates in the charges for moving those products by railway from producer to consumer. The ex- tension of the railways to new lands first made production and sale possible ; then as production increased the reduction in the railway charge occurred, so that it has not been until the present year, 1884, that any material reduction of price has been felt by farmers, and even in this year this reduction has only occurred in any great measure with respect to wheat and wool. (See next essay on the Railway, the Farmer, and the Public.) But this increase of the products of agriculture has been ac- companied by an extension of manufacturing and the mechanic arts. It is, of course, impossible that any community can long exist which is exclusively devoted to agriculture, except under a system of slavery. The artisan must accompany the farmer almost from the beginning of the settlement of any section ; next, or almost at the same time, comes the minister, lawyer, doctor, shop- keeper, domestic servant, and laborer ; soon after, or in the later years, even before the farmer, comes the railway with its em- ployes, and presently the factory of some kind, each following a THE RATE OF WAGES? 1 47 natural order and sequence, except when interfered with by restrictive statutes limiting the freedom of labor as in the days of slavery, or indirectly preventing commerce between the States. The most perfect example of the working of this law is to be found in the rapid growth of various branches of manu- facturing industry in the Southern States since the statutes impos- ing slavery upon that section were removed. Here was a section almost wholly agricultural : its people were dependent upon the North even for pots and pans ; for clumsy " nigger " hoes and other rude and heavy implements of agriculture, fit only for slaves to use ; for wagons ; for all their iron ; and also even for hay, corn, and bacon. Yet the moment the burthen of slavery was removed, all the arts sprang into existence, — some of them, perhaps, prematurely. In many branches of industry the tide of commerce is reversed : the largest single tannery in the country gets itself established in Tennessee, and sends its leather to New York ; Alabama discovers the imperial deposit of iron and coal of the world among her pine woods, and sends her product to New England ; the mountain section sends its hard woods in various half-manufactured forms all over the North and West ; and in every direction the interdependence of agriculture, manufacturing, and commerce, asserts itself as the natural out- come of lih-^rty. But in the so-called farming States of the West, the necessary and almost simultaneous growth of all the arts of life is most ap- parent. As an example of the evolution of industrial society, no better example can be taken than the State of Ohio, lying mid- way between East and West. Within a generation Ohio was rated as almost exclusively devoted to agriculture. Even as late as 1869 nearly one half of the small traffic on her railways was merely through traffic, in which the State itself had little interest. In 1883 a vast change had occurred which may be pictured as follows : Ohio lies midway between East and West. In 1883 it contained 6,897 miles of railroad, against 3,324 in 1869. In 1869, the actual 148 WHAT MAKES tons moved over all the railways reporting in the State numbered 14,559,704, of which fifty-five per cent, represented local traffic and forty-five percent, through traffic. In 1883, 63,683,643 tons were moved, of which 66\ per cent, represented local traffic and O'^ly 33| per cent, through traffic, showing how the local trafft( gains, both absolutely and relatively. The charge per ton pe? mile in 1869 ^^as 2.446 cents ; in 1883, only .875 cents per ton per mile. Graphically the Ohio Railroad traffic may be repre- sented in this way : 1869 TONS MOVED. I4'559.704 Local Through 1883 63,683,643 Local Through CHARGE PER TON PER MILE. 1869 2,446 1883 .875 " The actual freight charge on all the railroads reporting in Ohio in 1883 was, in round figures, $67,000,000. Had this traffic been subjected to the charge of 1869 the sum would have been $201,800,000. " The difference between these two sums is, in currency, $134- 800,000 ; in gold, $89,400,000. Now since two thirds of this traffic was local traffic, the saving in rates to the people of Ohio since 1869, on their local traffic only, was, in currency, $90,000- 000 ; in gold, $60,000,000." — From "The Railway, the Farmer, and the Public," reprinted herewith. The saving which ensued in a single year growing out of the application of capital to railways, therefore, either added sixty million dollars to profits and wages or else it saved as much labor as would be represented by that sum in the work of subsisting, clothing, and sheltering the people of the State. Now what have been the forces that have worked this great change ? What caused the railways to be built, and what new THE RATE OF WAGES? 1 49 conditions have the railways brought into existence ? How do these new conditions themselves react in sustaining the railways by giving them this extraordinary increase in local traffic ? In order to understand this matter fully it would only be necessary for an acute observer to compare the relative condi- tions of the people of Ohio with an equal number who now exist in Eastern Kentucky and Tennessee and in Western North and South Carolina under conditions similar to those of a century ago in other parts of the country. But in the absence of such actual observations we must again resort to statistics which prove the beneficent law of interdepen- dence as compared to the independence and isolation of the mountaineers. For this purpose the four principal subdivisions of the census should be increased to seven. Table of all persons occupied in gainful occupations by the census of 1880 : Class I. — Persons engaged in agriciilture, including farm laborers . 7,670,493 Class 2. — Professional and personal service, omitting laborers not specified ... ....... 2,215,015 Class 3. — Trade and transportation ...... 1,810,256 'Class 4. — Pursuits which are mechanical rather than manufacturing, according to common custom in classifying them . . . 2,397,112 Class 5. — Pursuits which are of the nature of manufacturing rather than mechanical, according to common custom in classifying them, by estimate ......... 1,200,000 Class 6. — Mining and pursuits immediately connected therewith, separated by estimate ........ ^40,000 15,532,876 Class 7. — Laborers not specified, who are doubtless distributed in the service of the various arts or occupations included in the last five classes — agricultural laborers having been separately enumerated — but doubtless many laborers pass from one to another class as occasion may require ..... 1,859,223 [7,392,099 ' Judgments will vary in making this subdivision. I have classified machin- ists, for instance, numbering 101,130, as being in the factory division, and I have placed milliners, dress-makers, and sempstresses, 285,401, as well as tailors and tailoresses, 133,756, on the mechanical side, although much of the I50 WHAT MAKES Perhaps we may account more fully for the progress of Ohio by considering the ratio which each class of occupations of the people now bears to the other in that State. For this purpose we may sort them according to the census of 1880. The population in that year numbered 3,198,062, of whom 994,475 were engaged in some kind of gainful occupation, comprising i in 3.22 as follows : Agriculture ........... 397.495 Professional and personal service 250,371 Trade and transportation . . . . . . . . 104,315 Manufacturing, mechanical, and mining ..... 242,294 994.475 The principal subdivisons of the latter class will be found in * the following lists, and it will be observed that by far the larger part of these arts exist in Ohio in the nature of things ; they have grown out of the rxecessary diversity of occupations which has ensued from the application of science and invention to all the arts of life. Tailors, dress-makers, and seamstresses 33,212 Carpenters and joiners ......... 29,770 Blacksmiths ........... 14,623 work of making clothing is now done in workshops which might well be des- ignated as factories. These latter classes differ however from textile factories in this respect : that workshops for the manufacture of clothing by women are apt to be established at centres where large numbers of men are congregated who are engaged in other work, as in Chicago and other Western cities in recent years. If all those whose occupations tend to concentration in factories were classed as manufacturing operatives, including clothing factories, hat factories, metal- goods factories, textile factories, and the like, the proportion classed as manu- facturing would probably be about even as compared to those engaged in the mechanic arts — i. e. , in round figures : Manufacturing ........ 1,800,000 Mechanical ......... 1,800,000 Laborers taken over from personal service as auxiliaries in these arts, say 400,000 Total 4,000,000 rHE RATE OF WAGES? 151 Iron- and steel- workers 1 3.4 19 Painters and varnishers 11,458 Boot- and shoe-makers 10,964 Brick and stone masons and stone-cutters . , . . . 10,713 Machinists ........... 7i49S Carriage, car, and wagon makers 7,020 Engineers and firemen 5. 860 Butchers . . . .^ . . . . . . . 5,7i3 Cabinet-makers and upholsterers 5.^15 Miners ............ 5.575 Coopers ...........* 5-357 Cigar makers and tobacco workers 5.297 Printers 4.658 Saw-mill operatives 4. 14S Millers 3.9^9 Manufacturers and Officials' Manufacturing Cos . . . . 3,8 n Harness, saddles, and trunks ........ 3. 661 Apprentices ........... 3,525 Brick and tile makers ......... 3,355 Tinners 3-331 Bakers 2,983 Cotton, wool, and silk ......... 1, 818 Brewers and malsters ......... 1.744 Gold, silver, and jewelry . i ..... . 1,260 Wheelwrights 1,028 "oy ..^-.:, Of-.^ 211,335 Unenumerated, or less than 1,000 each ...... 30, 959 242,294 It needs but a glance over the titles of these manufacturing and mechanical occupations to see that, given a considerable area of fertile land and an intelligent and free system of agriculture, nearly all the other occupations in this list must of necessity fol- low or accompany agricultural development ; while most of these occupations, especially those of mechanical industry, must not only exist within the State itself, but must concentrate in and around every populous centre of the State, because the work is of such a kind that it cannot be imported from any other place except at a greater cost. Towns and cities grow — they are not made, — and few men can even foresee by a few years where they must exist ; but where they have grown they serve the agricultural population around them and are served by them. Out of this exchange comes in- 152 WHAT MAKES creased welfare, and both city lots and country farms increase in value as the result of the facility which is given by their prox- imity for attaining the best conditions of life with the least effort, /. e.^ a less quantity of labor and a greater quantity of products resulting in lower cost of production and higher rates of wages. The diagrams given by Mr. Dodge furnish a very interesting proof of this necessary co-existence in every State, of agriculture and the special mechanical and manufacturing arts which give em- ployment to the largest number of persons and which must ac- company agriculture. It will be observed that in Ohio the proportionate occupation of the people is as follows : Agriculture .......... 41 per cent Professional and personal service . . . . . . 25 " Trade and transportation . . . . . . . 10 " Manufacturing, mechanical, and mining . . . . . 24 " 100 If we apply this analysis to one of the youngest of our States, which is assumed to be devoted almost exclusively to agriculture — Oregon — we again find an example of diversity of occupation which proves how necessary all the arts are to any State, even it there are no great factories within its limits. The population of Oregon in 1880 was 174,768, of whom 67,343 were occupied in gainful work in the following proportions, or I in 2.60 : Agriculture ...... 27,091 . 40.3 per cent. Professional and personal service . . 16,645 24.7 " Trade and transportation .... 6,149 • 9 " Manafacturing, mechanical, and mining . 17,458 • 26 67,343 100 Another example may be found in Kansas, another young State, as yet devoted mainly to agriculture : Population in 1880, 996,096. Occupied, 322,285, or i in 3.09. Agriculture 206,080 . 63.94 per cent Professional and personal service . . • 53,507 . 16.60 " Trade and Transportation . . . 26,379 . 8.19 " Manufacturing, mechanical, and mining . 36,319 . 11.27 " 322,285 100. 7,670,493 44 4,074,238 23-5 1,810,256 10.5 3.837,112 22 THE RATE OF WAGES? 1 53 In this State the railroad opened the way, or preceded agricul- ture, and the true balance of occupations has not yet become adjusted, but when families increase and the true balance of population is attained the same proportions will doubtless be reached as in Illinois and Indiana or other prairie States. In the whole United States the proportions were as follows : Agriculture 7,670,493 44 per cent. Professional and personal .... Trade and transportation .... Manufacturing, mechanical, and mining 17,392,099 100 In the great States in which diversified industry has been devel- oped most freely and fully, like Ohio, Indiana, Illinois, and Wisconsin, the proportions of the occupations of the people substantially agree with the average of the whole country ; while in the South, where all diversity was forbidden by slavery, a rude kind of agriculture was until lately the rule, and the true diversity of free civilization is just beginning to assert itself. On the other hand, on the sterile soil of the Eastern States, in a climate in which indoor or factory occupations are most consistent with comfort and welfare, the manufacturing and the mechanic arts assume the preponderance that agriculture possesses elsewhere, while what little good arable land there is possesses the highest value. By these subdivisions of labor the quantity of labor is dimin- ished, and the quantity of product is increased ; then, as trans- portation becomes less and less costly exchanges cover a wider area. Each State, and each section of a State, therefore, takes up the work for which its soil and its people are best adapted, and in that State or section in which the best conditions are to be found, the sum recovered from the sale of its products will yield the largest profit and the highest wages, corresponding to the low cost in the labor in the work done. If each State could be content to work out its just results in this way, there would be less contention ; but, unfortunately, the 154 WHAT MAKES representatives of a few very much concentrated interests arro- gate to themselves an importance which becomes somewhat lu- dicrous when subjected to comparison with others that excite little attention. For instance, the whole country is now disturbed : commerce, both national and international, is adversely affected ; construc- tive enterprise is checked ; large numbers of people are thrown out of employment, while wages are consequently depressed,— ^ simply by the continued coinage of light-weight silver dollars under the present act of coinage. The purchase of silver bullion for this coinage is continued at the instance of what are known as the silver-producing States, in order to sustain the so-called " silver interests " of the country. The value of the silver produced during the last few years, measured by comparison with the standard of gold has been about forty million dollars a year. Under an act of Congress, more than half this product of silver is purchased by the Treasury in the form of silver bullion, and is coined into light-weight dollars, which are not wanted for use, and which are stored in costly vaults. The average tax which is imposed upon each person for this purpose is a little over forty cents a year ; each voter's proportion is about two dollars and a half a year. Perhaps the voters of this country are too busy to pay much attention to so small a perversion of the powers of Congress, or to remedy a wrong that only costs twenty- four million dollars a year, and which is imposed upon them in order to support a private interest. It may, however, be well to assign a ratable proportion of this tax to some of the towns and cities of the country, in order to show their share of this burthen : New York City pays about $560,000 Philadelphia «« «« 400,000 Chicago «« i< 240,000 Boston an 160,000 My own little town of Brookline, Mass., pays about . . . 4,000 THE RATE OF WAGES? 1 55 ' This purchase of silver at the cost of the taxpayers, stimulates a product which is not wanted and which it would be desirable to leave to the working of the natural laws of trade, in order that the true ratio of silver to gold, i. e.^ the true value of silver in terms of gold, may be determined. This cannot happen so long as the United States Government "bulls the market," if one may use the slang of the street. This measure is as obnoxious to the bi-metallist as it is to the advocate of the single standard of gold. If the dangerous nature of our present course cannot be forced upon public attention by argument, it may be well to try another method. Let us measure the importance of the silver interest, so-called, by a comparison with some of the other products of our mines and of our agriculture, and for this purpose we will first compare the relative importance of the silver mines and of the hen yards of the country. The census valuation of eggs and poultry was far below that of the experts who compile the annual data of our poultry and dairy products, but assuming that our hen population has increased in the same ratio as our human population, our annual supply of eggs is over five hundred million dozen, which at the low price of sixteen cents a dozen would be worth $80,000,000. The product of what we may call our " hen industry " is there- fore twice that of our silver mines, and it is immeasurably more important, because the proceeds of the sales are enjoyed by the least wealthy portion of our farming population, while the pro- ceeds of the silver mines have in great measure gone to build up a few "bonanza fortunes," or have been wasted in vain attempts to increase an excessive and comparatively useless pro- duct of the same metal. The most competent judge in this country of the cost of silver, the owner of the largest silver-ore reduction works in the world, (who never owned but one silver mine, in which he lost every cent which he put into it,) lately gave me his deliberate opinion that every dollar's worth of our present silver product cost the country not less than two dollars in gold. 1 56 WHA T MAKES But let us compare with another metal. Iron lies at the foun- dation of all the arts — it is immensely more important than silver The producers of iron are struggling under adverse conditions with no such purchaser as the United States, of two million dollars' 'worth a month to sustain their n^^rket ; but the value of the product of our iron mines is more than double that of silver, and may be computed in this year of depression at not less than $90,000,000. Why not buy $2,000,000 worth of pig-iron per month and store it in some other vaults ? ' Wool, again, is one of our lesser farm products ; it, like silver, has been stimulated by legislation to the point of an apparent excess of production of those varieties which can be raised in this country, so that the price is very low, but the clip of this year, which now comes to market mostly in an unwashed condi- tion, is yet worth fifty per cent, more than the silver product, the clip of 1884 being computed at 320,000,000 lbs., which at 20 cts. is worth $64,000,000. Why not buy $2,000,000 worth of wool per month at the cost of the tax payers and thus stop the slaughter of sheep ? The estimates of our dairy products adopted by Mr. J. R. Dodge of the Department of Agriculture give the value of milk, butter, and cheese at $350,000,000, or about nine times the value of silver. But perhaps the impudence of the demand of the silver interest can be pictured best by a graphical illustration, which will bring the relative importance of the respective products which I have cited into clearest view. I will give my own computation of the value of the products of the hen yards in 1884 based on the census of 1880, and also the commercial valuation of poultry and eggs adopted by Mr. Dodge, which are now computed at over $180,000,000 per year. The parallelogram on the next page, enclosing separate graphi- cal comparisons of these several products, represents the value of the annual product of 1884 on the basis of the previous computa- tions for 1880, estimated at $11,400,000,000. The respective values of silver, pig-iron, wool, and dairy products are drawn on the same scale as the outer parallelogram. APPENDIX VI. No treatise upon wages could be considered in any measure complete, without some reference being made to the great varia- tion in the purchasing power of money. With wages at the same or nearly the same rate in the same place, one family will thrive upon an income on which another will almost starve. The reasons are not far to seek, but in order that the case may be fully comprehended, attention should ^rst be given to the ex- cellent and varied subsistence which may be procured at an ap- parently very small cost. To that end I will first submit an analysis of the cost of food in a large factory boarding-house which is maintained by Messrs. Wm. E. Hooper & Sons, owners of some of the best cotton-mills in Maryland. This house was built to meet the wants of many women who came to work in the village where they had no rela- tives, and who were compelled to board in insufficient quarters, sometimes four in a room, or were in other ways subjected to injurious conditions. As such statements as this possess a permanent value, being very difficult to obtain in a reliable form, I will give the cost in all its detail of the food of these adult women for six months. EXPENSE ACCOUNT, JAN. 1ST TO JULY 1ST, 1884. Groceries. AVERAGE PRICE. Flour . . 30 bbls. $5.40 $162.00 Corn Meal 245 lbs. .05 12.25 Buckwheat I '• .05 •05 Rice 80 " .06^ 5.00 Hominy . 2|1)US. 1.40 3.85 Crackers . 33t- lbs. .08 2.70 THE RATE OF WAGES. 59 Groceries. AVERAGE PRICE. Sugar 2,291 lbs. $0.07t»A $168.74 Syrup 69TTr gals. •30 20.79 Teas 91 lbs. •43 3913 Coffee . 540 " .12^ 67.50 Yeast Powder . 116 bottles .12 13.92 Candles . 32 lbs. .12 3.84 Soap 1,074 " .07 75.18 Soda (bicarbonate and washing) ii6f " .oii 1-75 Allspice and Cloves I '• .28 .28 Nutmeg . I " 1. 00 I. GO Mace .15 Ginger . 2 lbs. .12^ .25 Pepper . I5i" •ni 2.67 Mustard . 141" •25 3- 70 Cinnamon ^" .34 .10 Flavoring Extracts . 12 bottles. .12^ 1.50 . Hops 4 lbs. .35 1.40 Matches . |- gross. 2.50 2.00 Indigo Blue f " 2.50 1. 00 Salt if sack. 1.50 2.62 Vinegar . 32i gals. .20 6.50 Saur-kraut ibbl. 11.50 Starch . 681- lbs. .04i 3.07 614.44 Vegetables. Potatoes . ll\ bus. .49 37-75 Corn (in cans) . 33 doz. .95 31.35 Tomatoes (in cans) . 24f " .85 21.04 Beans 2of bus. 1.25 25.75 Peas 8 J " 1.25 10.25 Turnips . I " •35 .35 Parsnips . 3 " .63i 1.90 Cabbage . 307 head. .071 23.79 Onions . 17 doz. bunches. .25 4.25 Radishes . 253 " .oif 4.43 Lettuce . 330 head. .02 6.60 Rhubarb . 109 bdls. .04i 4.63 Beets 116 " .04i 4.93 Cucumbers qX boxes. .75 6.93 Cymblings 3 " 1. 12 3.36 Carrots . 25 bdls. .03 .75 $188.06 Fruits. Apples . I bu. .63 .63 i6o WHA T MAKES Fruits. AVERAGE PRICE. Berries . 1 86 boxes. 7C. $13.02 Currants . 14 lbs. 9 1.04 Raisins . II 10 1. 10 Prunes . 16^ " 7i 12.12 Fruit Butter . 68 " 7 4.76 $32.67 Meats. Salt Meat, Ham . 652 lbs. 13c. to 15c. per lb. ) " " Shoulder . 626 " 8 "II " [ 209.40 •' Breast . 288 " 10 "11 Beef, Roast . 1,034 " 10 " ^ " Steak . Soup . 1,360 " 137 " 14 " i 9 " ( 338.43 " Corned , 527 " 10 " j Pork 213 " lie. and I2C. per lb. 24.66 Lamb 97 " 12 11.64 Sausage and Pudding 446 " 10 " 44.60 Liver. 137 " 8 10.96 Scrabbles 22 " 15 3.30 Tripe . 28 " 8 2.24 Lard 434 " 10 4340 6,001 $688.63 Oysters . 4 gals. $1.11 4.44 Fish 26.42 $30.86 Butter . 462 lbs. 20C. 92.40 Cheese . 69 " 15 IO-35 Eggs 264 doz. 16 42.24 Milk 473 gals. 24 113.52 Mince Meats . 155 lbs. loi 16.27 $274.78 RECAPITULAT ION. Groceries . $614.44 Vegetables . . . 188.06 Fruits . . , 32.67 Meats . . . 688.63 Oysters and Fish . . . 30.86 Butter, Cheese, etc. . . 274.78 $1,829.44 THE RATE OF WAGES? l6l Fifty-nine women were boarded six months, an average of 26J- days each month, which gives 9,292 days' board. The cost of food was $1,829.44, or at the rate of 19^^ cents per day for each boarder. The exact number of servants is not given with this short term, but is given with the following statement, covering four years, 1880 and 1883 inclusive. If the proportionate number of servants be added for the six months covered by the foregoing details, it would doubtless reduce the cost of food per capita to about 18 cents as against 20 cents for the previous four years, giving an example of the general reduction in the cost of subsis- tence which has occurred in the year 1884. Without going into the exact details, the cost of conducting this boarding-house for the four years, 1880 to 1883, ^"^^ ^^^* ^^ given, and the proportions of the food will be shown by the graphical method. (See page 162.) It will be observed that the number of days represented by the boarders is ........ . 99,456 To which must be added for the servants . . 17,520 Total .... 116,976 which total being divided into the cost of the food, gives a result of a fraction less than twenty cents per day. Many curious points will be observed in this bill of fare. I St. Nearly every one will be surprised at the relative cost of sugar, as compared to farinaceous food. This case is not excep- tional, — such is a very common almost universal rule. 2d. The very small use of corn meal as compared to wheat flour. The use of corn meal as the principal farinaceous food appears to be confined to the black population of the South ; next to them the Yankee of New England makes the greatest use of " brown bread " and " Johnny cake." It is also apparent that two very important and nutritious articles of New England diet are wanting in Maryland, to wit : cod-fish-balls and baked beans. 3d. The quantity and variety of vegetable food. N Q. >. i2 c g •o •*» o U* t-i JS be 1 J •o •a V vS ^ o d >. •o ^0 fe •s c4 1 1 ^ l4 —————«— —« 1,450,789,000 tB^^im^armammimMc^mm^mmam^aaBammimmmmmmmmt 1,491,412.100 ^^^^m^m^^^i^^a^^^^^^^^mmmmmim^tmimm 1,629,027,600 mmmmm^matammm^i^^^^^^^K^mmmmmaammm^^a^m 1,528,776,100 ^^— ^— ^^^—» B— I II— — il^OB 1,664,331,600 ^^m^^amammmmmmi^^K^^^Bmam^mmiBnami^^i^mmmm 1,538,892,891 mmmmmmmmmammmoMmmmmmmmamm 1,455,180,200 t^^m^t^oB^^Bamiammammamm 2,032, 2'?5. 300 ^^^^a^^^m^i^mimnmm^^ 1,962,821,600 ^mt^mammi^mmm^^^mmmmmmm 2,178.934,646 — ■— — ^-' 2,302,254,950 •^^™— "I I ' "I I I ■-^— « 2,434,884,541 — — — ^ 2,448,079,181 mmB^^mmm^i^tmamMa^mmt^m^ 2,066,029,570 m^^m^mmma^mKmm^mm^amixi 2,699,394.496 ^»^— =■ 2,623,319.089 mmmmmmmm^mmmm^^mi^^mm 2,981,920,332 wamm^mmmmmma^^mmmmmtmm^ 234 THE RAILWAY, THE FARMER, AND THE PUBLIC TABLE 2. MILES OF RAILROAD IN OPERATION ON THE 1ST JANUARY IN EACH YEAR AND THE MILi ADDED IN THE YEAR ENSUING. 1865 33.908 I1I77 1866 35,085 1,716 1867 36,801 2,449 1868 39.250 2,979 1869 42,229 4.615 1870 46,844 6,070 1871 52,914 7,379 1872 60,293 5,878 1873 66,171 4,107 1874 70,278 2,105 1875 72,383 1.713 1876 74,096 2,712 1877 76,808 2,281 1878 79.089 2,687 1879 81,776 4,721 1880 86,497 7,048 I88I 93.543' 9,789 1882 103,334 ".59' 1883 114,925 6,618 X884 "1,543 4,000 188s 125,543 THE RAILWAY, THE FARMER, AND THE PUBLIC. 235 What then has happened since the year 1880 ? Railway- mileage has increased since Jan. i, 1880, over forty per cent. The crops of grain increased in 1882 ten per cent, as com- pared to 1880, and in 1883 a little over seven per cent., and yet these crops are more than ample to meet the present demand of the country; and since 1880 there has been first a rise and then a small reduction in the price of the leading farm products, as will appear by consideration of the graphi- cal tables given herewith. The thirteen tons of beef, pork, wheat, corn oats, butter, wool, and lard which have been taken as the unit in this consideration, which were worth $632.68 in gold in 1869, $631.32 in 1880, $776.13 in 1882, were worth on June 15, 1884, $621.75. That these prices have been even so well maintained at this time gives proof of the continued prosperity of agriculture in spite of adversity elsewhere. The charge for moving these products on the principal railroads has fluctuated but little since 1879; ^^ "^^y t>e at this moment a little less than at that time, but if the charge is now less it is below the cost of the service and cannot be continued. Our great production of grain at less and less cost, and our great reduction in the charge for distribution, have been met since the year 1880 by increasing crops in other countries, coupled with improved methods of distribution, not, it is true, equal to our own, but yet working a possible future change in all the conditions of agriculture in this country so far as the wheat crop is concerned. In the treatise upon "The Railroad and the Farmer" several computations were made as to the number of dollars which this reduction in the railway charge represented. It is something enormous. Had the actual quantity of mer- chandise moved by the railroad in the year 1 880 been sub- jected to the average rate per ton per mile which was 236 THE RAILWAY, THE FARMER, AND THE PUBLIC. charged from 1866 to 1869 inclusive, the difference would have amounted to at least $500,000,000 and perhaps $800,- 000,000 more than the actual charge of 1880; and yet, up to this period, the prices of leading farm products ha(i not been substantially affected by this enormous change, — that is to say, Eastern consumers of Western productions as yet received no benefit from this great reduction in the cost of distribution. But while consumers in the East may have as yet received little benefit in a direct reduction in the prices of Western produce, yet indirectly the benefit has been measureless. The grain and meat needed for a year's subsistence of one person, which would have cost a large portion of the time and labor to raise upon a comparatively sterile soil, to which agricultural machinery can be applied in least measure, is moved a thousand miles for a sum equal only to one day's wages of a common laborer. On the other hand, we import annually articles which are free of duty to the amount of $200,000,000 and one third of dutiable imports of the value of $150,000,000, which are either articles of food or crude materials which enter into all the processes of domestic industry, and these are all bought and paid for with the excess of grain, meat, and dairy products which we could not eat, the excess of cotton which we could not spin, the excess of oil which we could not burn, all of which would either be not produced or would be wasted if the low charges upon our railroads did not enable us to export them. The consolidation and more effective service of the rail- ways of the United States has been in the nature of a great and novel invention, and it has worked, as all great inven- tions work, for the time being, namely, to the immediate benefit of a relatively small part of the community, — that is to say, to the producers of particular substances. It is, THE RAILWAY, THE FARMER, AND THE PUBLIC. 237 perhaps, now working as other great inventions work in the secondary stage, namely, more to the benefit of the con- sumers. And yet even this is doubtful. The rapid in- crease in our home consumption seems to be sufficient to maintain prices, even when exports are greatly lessened. The world will, however, hereafter be less subject to local scarcity, less subject to particular famine ; and a great mass of consumers of food may hereafter be required to devote a less proportion of their own labor to procuring the great staple articles of food. The forces in action in this matter have, therefore, been vastly greater than have appeared upon the surface, and a temporary retardation in the work- ing of these forces by corners in grain and the like have been insignificant incidents of little permanent consequence. Let us now consider the influence of these changes and of other great changes in their effect upon the railroads themselves. From a compilation of the statistics given in the census of 1880, coupled with a consideration of the data contained in Poor's Railway Manual, it is manifest that the staple articles of food — corn, meat, and dairy products — constitute, at least, fifty per cent, of the tonnage moved over all the railroads of the United States. They of course constitute a much larger proportion on some rail- roads than on others. Coal and timber in its various forms constitute not less than thirty per cent, of the remainder, and probably a yet larger proportion. If we reduce bushels to tons we find that the present average grain crop of the United States weighs 75,000,000 tons. Hay weighs from 30,000,000 to 35,000,000 tons ; it is not all moved by the railway in its primary form, but if we add to the hay which is moved its product in the secondary form of meat and dairy products, we find a probable tonnage of 30,000,000 to 40,000,000 tons. It is more difficult to convert the timber 238 THE RAILWAY, THE FARMER, AND THE PUBLIC. products into tons, but approximately coal and timber to- gether amount to over 100,000,000 tons. We therefore have over 200,000.000 net tons of food, fuel, and materials for shelter to be moved by a railway, at some point or in some part of their distribution, even if they have been moved part way by water on the road from producer to consumer. On the other hand, the entire production of metals within the limits of the United States is less than six million tons, cotton less than two million, wool less than half a million ; and although these articles are con- verted into many different forms, and are moved twice, thrice, four times, or more, yet in the aggregate, after allow- ing for all duplications, they cannot amount to over twenty per cent., as compared to grain, timber, and coal, eighty per cent. From the census data and from the figures of Poor's Manual it would be difficult to make out over fifteen per cent, of miscellaneous merchandise in weight, consist- ing of metals, fibres, machinery, fabrics, and miscellaneous goods and wares, as compared to eighty-five per cent, in weight of food, fuel, timber, and other primary or crude products of the field, the coal mine, or the forest. Now, then, if the grain, hay, and meat product — that is, the food of the people — constitutes one half the substance moved by the railway, and if this product has not increased in any measure beyond ten per cent, during the last four years, in which period the railway mileage has increased forty per cent., we have a sufficient explanation of all the disturbance in railway stocks and bonds. Moreover, a very large proportion of the railway construction from 1869 to 1880 inclusive represented a very much higher actual outlay or cost than the actual outlay or cost of what has been con- structed since. The extreme example of this change is to be found in the reduction of the price of steel rails from THE RAILWAY, THE FARMER, AND THE PUBLIC. 239 over $150 a ton to less than $30 in gold, with a correspond- ing decrease in the cost of all the metal work pertaining to railways. Now, it matters not how much may be the nominal amount of the stock and bonds issued either before or since 1880. It matters not whether a half or two thirds or three fourths even of any railroad is represented by what is called watered stock or not. All these enterprises are now brought face to face with the simple question — Is there enough material to be moved^ adjacent to their respective lines, at ex- isting rates of freight , by which an income on actual cost can be earned, basing such cost upon what it would now be if the roads were constructed to-day f It may be that watered stock, so called, which was issued before the great reduction in railway charges, may now be sustained by actual intrinsic value of double-track, equipment, or connections, since paid for out of earnings ; or it may be, as in the case of the New York Central Railroad, that the right of way and terminal real estate is now worth a very large share, if not as much as all the outstanding stock and bonds; this does not alter the main question as above stated. It will presently be made apparent that the charges for moving merchandise on long-established and fully equipped roads had been reduced in 1879 to the lowest possible terms consistent with even a small profit ; therefore all new roads are met by one of three questions : First, if extensions into new sections, will the prices of possible products warrant the movement of crops except at rates which will barely sustain the road on a basis of cash cost ? Second, if parallel roads, are they capable of being sustained at all ? Third, if new roads in a section already well furnished, is there local traffic enough to pay even simple interest on a cash cost ? In other words, have we not entered upon the final period 240 THE RAILWAY, THE FARMER, AND THE PUBLIC. in the history of railroads, to wit : the period in which they must be treated by their owners on a strictly commercial basis for the purpose only of earning a moderate income on the actual cash cost ? Before pursuing the subject further, with a view to con- sidering the reasons why we may perhaps expect a speedy return of substantial prosperity after the railway system has become adjusted to these new conditions, I now submit cer- tain tables which were originally constructed for an article on the " Railroad and the Farmer," published in i88l, which tables Jiave been corrected and extended to the present date. I am indebted to the following authorities for the data on which these tables are based : The Department of Agriculture of the United States; E. H. Walker of the Produce Exchange of New York; Poor's Railway Manual; Messrs. Mauger and Avery of New York and Boston ; G. R. Blanchard of New York ; H. Sabine, Railroad Commis- sioner of Ohio ; the reports of the Iron and Steel Associa- tion ; and the United States Census of 1880. The grain crops having increased only an average of five per cent., while the railway mileage increased more than forty, a part of which extension consisted of new routes from West to East, we may naturally look for a reduction of the tonnage on any principal route between West and East, and this we find even on the Lake Shore and New York Central, as will appear by tables 3 and 4. TABLE 3. LAKE SHORE & MICHIGAN SOUTHERN RAILROAD. — ACTU/.L TONS MOVED. Tons Yr. Miles. Moved. Increase of Tons Moved '6g Consolidated in this year. '70 1,013 2,978,725 ^^— ^— ^"-^i— '71 ri073 3,784,525 — i^^^— — ^^— '7a 1,136 4,443,092 ^— — — ^^^— i— ^— i^— '73 1,^54 5iU6,66i ■^"■~'~ '74 1.17s 5.221,267 — ^— — — — — — ^-^^— '75 1 1^76 5,022,490 ^^i^^^^^™^^^"— i^^^^^i"""^™ '76 1,177 5,635, '67 ——--——— ii^^^——^— '77 1,177 5,5'3.398 ———--——--—--——--—-—— '78 1,177 6,098,445 •■"^^^^"■■-■^— ^— ^^— " '79 i,»77 7,541,294 «— -=— — --—--■^-™---—— — — ^ '80 1,177 8,350,336 — ii^— ^ '81 1,177 9,164.508— ^^-—^———■^— ^—^■—■i^^^^^^—i^ '83 1,274 9,195,528 ^™^"^^^^"— ■^^^— i^^^^^™^^l^— i^^^-UMB^ '»-j 1,340 8,478,605 a^^^^^Bi^aa^^MMaa^^^BaBiHMBM^MMHii— ■■ LAKE SHORE & MICHIGAN SOUTHERN. — TONS MOVED ONE MILE, year. Tons Moved one Mile. Increase of Traffic, Tons per Mile. 1870 574,035.571 ^— ^— ■^— ™ 1871 733,670-696 B^^^BB^^^^B 1872 924,844,140 ^^^^MiM^^^^H^BHMM 1873 1,053.927,189 i^^^^^HB^O^^l^B^^M^ 1874 999,342,041 •— >-^— ^^^1-^^i- 1875 943,236.161 — — — ^^— [^^— — 1876 1,133,834.828 «BiilB^BiHMi^H^MHHia^Ba 1877 1,080,003,561 ^IBMeBBBMBBI^M^^B^MMBaiMBIMBB 1878 1.340,467,826 "^t^^^—^^—i^^^^^^^M^iBBBM^^B* 1879 1,733-423,440 ^^— — ^^— — — — ^— ^^— ^-i— » I8S0 1,851,166,018 «^K^^H^^lMiiHB^^H^BnMHHiHBMMMMMHiBH> I88I 2,021,775,468 ^nMDBMHBHlKBBi^BBaMi^^H^^HM^BMBMMBMilHMMK 1883 1,892,868,224 II —I—— —————— —a—— 1883 1,689,512,415 B^MHHIIMi^^MB^^BMaHBB^HBHB^ilBBHl LAKE SHORE & MICHIGAN SOUTHERN. — CHARGE PER TON PER MILE. AVERAGE UPON ALL CLASSES OF MERCHANDISE. Year. 1870 187 1 1872 1873 1874 1875 1876 1877 1878 1879 1880 1881 1883 1883 Freight Receipts. DOLS. 8,746,126 10,341,218 12,R24,863 14,192,369 11,918,350 9,639,038 9.405,629 9,476,608 10,048,953 11,288,261 14,077,294 12,659.987 12,022,577 12^00,094 Charge. CTS. 504 39^ 374 335 180 010 870 864 734 642 750 617 ,638 728 Decrease of Charge per Mile. t AISLE 4 KfeW YORK CENTRAI, & HUDSON FIVER RAILROAD. — ACTUAL TONS MOVED. Tons Yr. Miles. Moved. (>9 842 3,190,840 70 842 4,122,OCX> 7t 844 4,532,056 ■7-' 850 4.393.905 '7.] 858 5522,724 '74 1,000 6,114,678 '75 1,000 6,001,984 '76 1,000 6,803,680 '77 i,oco 6.351,356 '78 1,000 7,635i4«3 •79 1,000 9,005,753 '80 I, coo 10,533,038 •81 993 11,591,379 '82 993 11,330,393 '83 993 10,892,440 NEW YORK CENTRAL & HUDSON RIVER RAILROAD. — TONS MOVED ONE MILE. 1869 589,362,849 1870 769,087,777 1871 888,327,865 1872 1,020,908,885 1873 1,246,650,063 1874 1,39^560,707 1875 1,404,008,029 1876 1,674,447,055 1877 1,619,948,685 1878 2,042,755,132 1879 2,295,827,387 1880 2. 525, 139,145 1881 2,646,804,098 1882 2,394,799,310 1883 2,200,896,780 NEW YORK CENTRAL & HUDSON RIVER RAILROAD.^^CHARGE PER TON PER MILE. AVERAGE ON ALL CLASSES OF MERCHANDISE. Decrease of Charge per MUe. ^car. Receipts. Charge. DOLS. CTS. 1869 14,066,386 2.387 1870 14,327,418 1.853 1871 14,647,580 1.649 1872 16,259,650 1.592 1873 19,616,018 1.573 1874 20,348,725 1.462 1875 17,899,702 1.275 1876 «7,593,26s 1. 05 1 1877 16,424.317 1.014 X878 19,045,830 •930 1879 18,270,250 .796 x88o 22,199.966 .879 1881 20,736,750 .783 188a 17,672,252 .738 1883 20,142,433 .910 THE RAILWAY, THE FARMER, AND THE PUBLIC. 243 It will be observed that so long as the increase of crops kept pace with the increase of railroads, and both were ac- companied by such an export demand for breadstuffs as to maintain the through traffic, the rate of charge diminished, but when the traffic diminished the rate of charge soon began to show a slight increase. This is, doubtless, caused by the change in or less proportion of through traffic. The following table shows that while the traffic on the New York Central and Lake Shore decreased in some measure in 1882 and 1883, yet the traffic on all the roads reporting in New York increased. The data hereafter given from the statistics of Ohio, in which the through and local tonnage are separated, also fully sustain this view, and show how railroads which may at first be mainly sup- ported by through traffic are ultimately supported mainly by local traffic. Table 5 shows the continued increase of traffic on all railroads reporting in the State of New York. This table includes some roads of which only a small part actually lies within the limits of the State. The following table, No. 6, gives the earnings, expenses, and profits per ton per mile on the New York Central and Hudson River Railroad in 1855, 1865, and from 1869 to 1883 inclusive. It will be manifest that when such a strong and rich cor- poration as this has been forced to do its work for the last five years at a profit of less than a quarter of a cent per ton per mile, or one fortieth of a cent profit for moving a barrel of flour one mile, there is no margin for any further reduc- tion of any moment; and it also becomes apparent that the construction of a parallel line for the purpose of sharing this work was a pure waste of capital and almost wholly a loss to the purchasers of the securities, and that the ruin of its pro- moters might have been foretold at the beginning, as it was 244 THk RAILWAY. THE FARMER, AND TJtiE PUBLIC, O' N fl IT) VO cooooooooooooooooooooooooooo THG RAILWAY, THE FARMER, AND THE PUBLIC, 245 lllllll I O m fo t^ oij •«»• c^ «^ •«■ 10 •*■ CO M ■* ro M m K C -<- ro '> < c. ^ fl I I I m tn ut tf> ' E !1 I tooo*o 'oiO'^w o •<♦• C CO M rj ©N r^ CO O On r^ 00 t^ M 6 d d oooooooocooceoooooooooSSmmM 246 THE RAILWAY, THE FARMER, AND THE PUBLIC, by more than one observer. By whom this great reduction in freight charges has been mainly or directly enjoyed will appear from the following computation of the value of thir- teen tons of staple produce, and the comparison of the freight charge thereon. It must, however, be remembered that the greater reduction has been made on the through traffic on grain and provisions than on any other class of trafific, hence the tables do not show the full benefit to the Western producers. TABLE 7. COST OF 20 BARRELS OF FLOUR, lO BEEF, lO PORK, lOO BUSHELS WHEAT, lOO CORN, 100 OATS, 100 POUNDS BUTTER, lOO LARD, AND lOO FLKECE WOOL, IN NEW YORK CITY, AT THE AVERAGE OF EACH YEAR, COMPILED BY MONTHS, IN CURRENCY AND GOLD ; COMPARED GRAPHICALLY WITH THE DECREASE IN THE CHARGE PER TON PER MILE ON THE NEW YORK CENTRAL & HUDSON RIVER RAILROAD, DURING THE SAME PERIOD. Cost in Year. Currency. In Gold. 1869 $845.58 — i^^^^— — i^— $632.68 -■— ^— m^— ■■■— I 1870 891.80 m^^mBBEM^^^mmammm^m^mm 776.02 ^m^a^^^^^t^immamm^ 1871 821.60 i— — ^— — 735.33 ^^^m^mm 1872 760.24 ' 675 92 ^"•^•^^"•'^^^^^ 1873 755-68 .— ^^^— — ■■— • 662.50 ^m^^^^mmmi^^^ 1874 831.98 -—==»=—— 748.54 — ^-^^^^^-■— ■ 1875 800.28 ^mmmmmaa-:^^^^^^^tmmm 696.40 ■■■■■iBi^^^^^i^""^ 1876 727 49 «^— ^— ^^— 651.74 ■n^^M^^naaaiB 1877 780.29 *^-^— — ^■— -^ 751-95 ^^— — ^^^—i ■- 1878 575-41 — — — — 569.81 — «^^ii^ 1879 568.34 -^— — — 568.34 ^^^^— ^— ■ x88o 631.32 ^^^^^m^mm^mm 63I.32 1^1^^— i^^^—^ 1881 703.10 •^"■-^■^■■"^^^ 703-10 —■^—^■i^^"""^"^^ 1882 776-13 —— ^^■— ^— ^^ 776.13 — ^-iii^^— ii^— ^ 1883 662.11 ^^^^"— i— i"-"— 662 II mm^^mmm^^^^^mm 1884 621.75 ^^^^— [June] 621.75 ■^— i^^^^^^— Decrease in the charge per Ton per Mile, N. Y. Decrease in the charge per Ton C. & H. R. R. R.— In Currency. per Mile, N. Y. C. & H. R. R. R.— In Gold. 1869 a.38 CtS. 1—— m^mm^mmt 1.78 CtS. . — ■.■ ■■ 1870 1.85 " ■^-^— — ^^^■^^^— 1.64 " -^-i^^^^— ■— ^» 1871 1.65 " ^■— 1.40 " •-— — 1873 1.59 " — i^— — 1.41 •' — — — — 1873 1.57 " — — — 1.38 " —— «874 X.46 " ■--^-— — 1.31 " ■^-1^— I— — 1875 X.97 " m^a^^^m^^mmm J. II *' ^mm^m^mmmm^^ THE RAILWAY, THE FARMER, AND THE PUBLIC. 247 1876 1.05 cts 1877 I.03 " 1878 .93 " 1879 .79 " 1880 .88 " I88I .78 " i88a .73 " .883 .91 " ^cts. 97 " Freight charge in year 1855, in gold, 3.27 cts Freight charge in j-ear 1865, in currency, 3.4s cts. . , '. . To whom the advantage has accrued will be made yet more clear by setting off the actual dollars of freight charges on thirteen tons moved 1,000 miles, or from Chicago to New York or Boston, at the average rates charged by the New York Central & Hudson River Railroad on all classes of trafific from 1869 to 1883, inclusive, using gold values only in respect to prices and rates. TABLE 8. PRICES IN GOLD IN THE NEW YORK MARKET OF 20 BARRELS FLOUR, EXTRA STATE, 100 BUSHKLS WHEAT, MILWAUKEE CLUB, lOO BUSHELS CORN, WEST- ERN MIXED, 100 BUSHELS OATS, 10 BARRELS MESS PORK, lO BARRELS MESS BEEF, lOO POUNDS LARD, lOO POUNDS STATE DAIRY BUTTER, lOO POUNDS MEDIUM WASHED CLOTHING WOOL, COMPARED WITH CHARGE REDUCED TO GOLD OF MOVING THE ABOVE QUANTITY, EQUAL TO I3 TONS I,000 MILES, AT THE AVERAGE RATES CHARGED BY NEW YORK CENTRAL & HUDSON RIVER RAILROAD, 1869 TO 1883, INCLUSIVE. Cost Decrease in the Charge per Ton per Mile, Prices. N. Y. C. & H. R. R.— In Gold. ■EBeaHB^B^BB T.78 CtS. mma^mmmmimimm^^^m^^^ -i^— — ^— 1.64 '^ — .^.i..._ — — 1.40 •' «— i— _^ ^^^— — 1.41 " ^mm^^mmm,mmmmmmm, — — 1.38 - .^.^__ ^^— — 1.31 " ^..i.....i.i^.i_ year. In Gold 1869 $662.63 1S7I 735-33 « IS72 675.92 1873 662.50 « 1874 748.54 1875 696.40 « 1876 65174 ' 1877 751-95 • 1878 569.81 1879 568.34 • 1880 631.32 ' 1881 703.10 . 1882 776.13 1881, 662. 11 . 1884 621.75 ■ •34 — .97 .92 •79 .88 .78 ■^ -73 .9X [June] .83 243 THE RAILWAY, THE FARMER, AND THE PUBLIC, Per cent, of Freight Dollars, 13 Tons, Charge to Value in Year, i, coo Miles, New York. 1869 231.40 36.61 I 1870 213.20 S7.47 X871 182.00 24.76 1872 183.30 27.16 1873 179.40 27.05 1874 170.30 22.73 1875 144.30 20.73 1876 » 122. 20 18.74 1877 126.10 16.76 1878 119.60 20.98 1879 102.70 i8.c8 xSSo X 14.40 x8.i2 x88i 107.40 15.27 x88a 94-90 12.22 1883 1x8.30 17.87 The above proportions of the value of the produce ab- sorbed by the freight charge should be reduced in just the measure that the rates per mile on the movement of grain and meat have been less than the average charge on the whole traffic. For instance, thirteen tons of grain have been brought from Chicago to New York at a lower charge by far than any of the above figures. This change would reduce the proportion of the charge now in greater meas- ure than in the earlier part of the period under considera- tion. But it may be said all these data are limited to the through traffic, and the local traffic is still subjected to onerous charges and unjust discrimination. In reply to which I sub- mit Table No. 9, in which the receipts, expenses, and profits of all the railroads reporting in New York are analyzed and compared, by which it will appear that in 1879 ^^^^ profit on all the traffic was brought down to less than one quarter of a cent per ton per mile, and has averaged less than that rate ever since. What it may be this year cannot yet be stated. tHE RAILWAY, THE FARMER, AND THE PUBLIC. 249 II 2 :? 10 m fO '«-rncnc« cnct roc« nm MOO 1^ ir> 0> ' I- a 2 8» II. ^51 C> -h ■* ■♦ ro -< O 8 a ON 00 2 S C o s s o o ■* >A vo r* 00 OS u t^i>.t^r^f^r^c>.t>.t^r^coooooeo ^mmooooooooooooeoooMooMM gi CO 00 M 00 S> s, OO 00 00 00 00 00 ^ ^ CO r »J ^ vg va ^ vq -J ->a ^ lo M vO 00 VI 0>iji ^ W N NO *. W M M „ M M M M M M M » ^ VO Ul o\ o\ ^ Ul 00 00 "^ ^ - -J^ r U) *• Ln o ^ Ov *. Cj w o 00 00 vb S2 U> ^ j3 tn *> so --1 03 vO ■*■ ^^ ? i;^ g s. M 03 M b vj OS ■^ O tl) " s w W •ii. f^ -^ - vO >^' J?^ t/1 00 O Ul N 00 00 00 03 00 >J V) vj vj vj vo 00 '^ a> ui VJ VJ V) M 0> 00 tn O O O »-l 0\ OOOJV) j> *■*•*• tjj WW ^Jk Ooi M OO-^-vOOJ •- vj.^v)oi4k 0\0\V0 -> UJO MOi6iCjvoCovj vlvotn MOJ 0OO\-JUl OOLn Ox-'coLnCo'ovi O 0\M 00O\vO OA O vj 4^ sC ^ » W •- N N ^ Vl Ji, ^ O U) Ul M M II 1 m 00 « tllitt t III M »9 8 M M „ 00 N O VO v» O^ v4 vj JOn 0\ Ol Ov H OJ *>) ^ Ol <£> ^ 1, :5 s g' 8 To »b Ol t3* - Ol Ol 00 8 00 w o\ 3 •^ M VO 4k »p M 00 Ol *. 4>. 4k _M j» Vp c 0^ C) - N vj "bo ON On Ol OS Ol V4 o»% ^ H VI w J^ OO Ol - Ul 00 vj CO ►H *o vj -f^ o. 00 « vo vo VI ^. N VO cr THE RAILWAY, THE FARMER, AND THE PUBLIC. 25 1 Had the rate of 1870 been charged on the traffic of 1883, the sum would have been at 1.7016 on 9,286,216,628 tons, carried one mile, $158,014,262; the actual charge was $83,464,919, making a difference of $74,549»343 saved on one year's traffic on the lines reporting in New York. But again, let us examine the traffic of the great State of Ohio, midway between the grain fields of the far West and the manufacturing States of the far East, a State in which agriculture, mining, and manufacturing are combined. The invaluable tables of her Railroad Commisioner, Mr. Sabine, separate the through from the local traffic, and these tables show how, in the course of time, all our existing railway lines, except such speculative absurdities as those which have been built close alongside other tracks, may become self-sustaining and profitable. Again we find that the average freight charge has been reduced to a little less than one cent per ton per mile, and there it has substantially rested for seven years, because it cannot go lower without stopping the traffic altogether. TABLE 12. Freight Charge. 1869 9.446 "^ 1870 1.993 — 1871 2.215 "i" 1872 X.569 i^" 1873 1.566 -^ 1874 1.334 ■— 1875 1.259 ^ 1876 1.117 ^—i 1877 .933 ^ 1878 .961 ^-« 1879 -815 — 1880 .895 ■— ■ 1881 .9x5 ^— 1882 .807 aaH 1883 .875 — Tons per mile in 1883, 8,577,357,803, at 1869 rates, 2.446 . $20i,8cx>,ooo At actual rate of 1S83, .875 67,000,000 Difference $134,800,000 252 THE RAILWAY, THE FARMER, AND THE PUBLIC, At currency rate of 1869 reduced to gold, 1.80 . . . . $156,400,000 Actual 67,000,000 Difference ..... $89,400,000 Difference on local traffic only . . $60,000,000 And once more we prove that, had the freight charge of 1869, reduced to gold, been put upon the traffic of 1883, the results would have been, in round figures, as follows: 8.577.357.803 tons moved i mile, at i.So cts. per ton per mile . $156,400,000 Actual charge 67,000,000 Difference $89,400,000 As two thirds of this was on local traffic the people of Ohio saved, in the single year 1883, $60,000,000 on their internal exchanges only. The ton mileage of New York and Ohio combined, in 1883, was as follows on all the roads reporting in each State: New York, tons I mile Ohio. Total 9,286,216,628 8.577.357.803 17.863,574.431 $74,549,343 Saving in New York as compared to gold rate of 1870 Saving in Ohio, as compared to gold rate of 1869 . . . 89,400,000 Total ...... $163,949,343 The reports of these two States covered about four tenths of the total ton mileage of the whole country in 1883, which was 42,361,068,260 tons carried one mile at a charge of $549,339,736. As great a reduction, or even greater, has been made on all roads which were in existence from 1866 to 1870, while the new roads have worked a yet greater saving, because they take the place of traffic by wagons or by rivers. At the ratable difference made on the New York and Ohio railways, the traffic of the whole country in 1883, which was done for the sum of $549,339,736, would have cost $950,000,000, or $400,000,000 more. THE RAILWAY, THE FARMER, AND THE PUBLIC. 253 As we go back to the yet higher rates of 1866, '6^^ and '68, the difference rises to $6oo,CX)0,ooo ; if we compare the gold rates now with the currency rates then, the difference is yet more — even more than $800,000,000. Again, I call attention to this as the true source of our increased power of subsistence — as the main source of our actual increase in capital, and also the source whence has come the fund for railway construction. Only a small part of this fund has been wasted ; the speculative enterprises by which parallel lines have been built too near to existing lines ever to be of any value are limited to a few which any one, who is familiar with names, can identify. By far the larger portion, even of the forty-per-cent. extension in four years* time, will ultimately justify their existence, and will be sustained with a moderate income on a cash cost ; but the day of profit on two, three, or four dollars of security issued for one paid in, has passed, let us hope, forever. These tables could be extended to almost any extent ; all the great lines show identical results, but it would be useless to multiply proofs. Suffice it, that whatever may have been the intention of the promoters of these enterprises, and to whatever extent they may have misled the investors who have risked their money in order to gain speculative profits — whatever proportion of the securities may be cash or water, — the competition not only of railway with railway but also of product with product, has forced the charge for transpor- tation to the lowest point consistent with any profit what- ever, even on the strongest lines and on those which have been called the greatest monopolies. These dry and vol- uminous statistics are presented with an assurance that they will be honestly considered, and will lead men to beware of meddlesome legislation affecting the most beneficent force by which a good subsistence is made common to all at the least cost. 254 THE RAILWAY, THE FARMER, AND THE PUBLIC, In what follows I shall be obliged to repeat some of the data already given, in order to sustain the distinct and separate purpose of the remainder of this essay. In connection with the foregoing figures I have been asked to give my views of the future immediate prospects of business in this country. What are such views worth? For any immediate application, absolutely nothing. Ask the apple-woman what apples will be worth next autumn, and her views may be worth as much for any immediate application as those of the most sagacious banker or mer- chant in the city. But a few facts may be given which have a bearing on the course of business during the next five years. I will give them for what they are worth, and every reader can draw his own deductions from them. Such facts may only be of use in estimating industrial forces covering a considerable period. The facts which caused the panic of 1873 were just as apparent in 1870 as they were during its action, but its exact date could not be foreseen. The long period of necessary depression, while the depreciation of the currency was being corrected, could be as clearly appre- hended before 1873 as it could be during its continuance until 1879. The **boom ** of 1880 was an obvious necessity, and was easily predicted in 1878 and '79. The commercial " paralysis " of 1883, ^r^^ the railway panic ensuing in 1884, were both apparent and were foretold in the winter of 1881, although no date could be established in advance. With equal certainty the commercial activity of the near future, and the exceeding prosperity which must ensue, may be predicated on existing conditions, were it not for two un- certain factors. These are : First, The silver question. Second, Uncertainty in regard to the future financial policy of the Government. THE RAILWAY, THE FARMER, AND THE PUBLIC. 255 In respect to the first there is still time to prevent the de- basement of the standard of value to the level of a dollar of light weight, worth but little more than eighty cents in gold ; but every year's delay will bring the country nearer to the inevitable disaster which must ensue from our exist- ing acts of legal tender and coinage. In respect to the second danger a few months will tell ; in the meantime, constructive enterprise will wdiit the decision of the people as to whether their policy shall be one of peace, prosperity, reduced taxation, and recuperation ; or one of uncertainty, probable aggression, possible war, and of the perversion of the functions of government to purposes of personal ambition and private gain. What effect a temporary cessation of constructive enterprise exerts will be fully treated hereafter. Assuming that both these special causes of disaster, of want of confidence, and of continued depression may be avoided, a period of great future pros- perity may be predicated on present conditions, although no man can tell when the exact turn of the tide will come. In order to comprehend the present conditions under which this country is now making greater real progress in material welfare than at almost any previous period in its history, certain elements must be considered in their rela- tive proportions ; for this purpose some figures of the census may be used. In respect to these figures it must be premised that the valuation of farms is probably under-esti- mated, that the capital in railways included the "water" which is now being squeezed out, and that the capital in manufactories was probably over-estimated. In considering the relation of proportion which these great branches of industry bear to each other we may therefore assume : First, That the proportion of the national capital in im- proved lands and farm buildings, i. e., in the instrumentality of primary production, is herein stated too low. 256 THE RAILWAY, THE FARMER, AND THE PUBLIC, Second, That the capital in manufacturing, L e., in the instrumentah'ty of conversion of crude materials into finished goods, and the capital in railways, i. e., in the chief instru- mentality for distribution, are herein stated too high ; but that the figures of the census fairly represent their relation or proportion to each other. Omitting fractions, the respective capitals in these three great departments of industry were, in 1880, as follows, as given in the census : Farm lands and farm buildings . . . . $10,200,000,000 Railways ♦. 5,200,000,000 Manufacturing (listed under 332 different heads) . 3,000,000,000 Graphically represented, the relative proportion of these capitals is as follows : Farms Railways Manufacturing^ It will be observed that the valuation of the farms in- cludes the land ; if we separate farm buildings, machinery, tools, and appliances from land — that is to say, separate all the actual capital upon the farm from the land, and add this sum to the capital in manufactures, the total productive capital, in both agriculture and manufactures, was about the same, perhaps a little more, than the single capital in rail- ways. This brings into the clearest light the relative im- portance of distribution. In this country there is always enough for all, but where is it "^ Our productive capacity is unlimited, and the main question is one of distribution. The railroad has solved a part of this problem, but there are more complex questions yet to be solved. It costs a third of the price of a baker's loaf to get a loaf of bread away from the oven, after it is baked, to the mouth of the con- sumer. [See Appendix I.] THE RAILWAY, THE FARMER, AND THE PUBLIC. 257 Such being the relative proportions of capital in farnning, manufacturing, and railways in 1880, what changes have oc- curred since, by which we may in part account for the great variations in the market value of either class of the above property ? especially the reduction in the nominal value of railway property? How can we account for the railway panic, for the great private losses, and for the redistribution of property in railways, which is now going on? How can we account for the comparative stability in the value of manufacturing property of all kinds, and for the relative and actual prosperity of agriculture, the latter the most important factor of all in the condition of the country — the one great fact on which we may forecast future pros- perity ? The reasons are not far to seek. At the foundation of agriculture lies the grain crop. Grain, or its secondary pro- ducts, meat and dairy products, constitute the principal elements in weight of the tonnage of the railways. The average grain crop, from 1866 to 1869, inclusive, was 1,400,- 000,000 bushels. The average railway mileage from 1866 to 1869, inclusive, was 39,000 miles. The average grain crop from 1877 to 1880, inclusive, was 2,341,000,000 bushels. The average railway mileage from 1877 to 1880, inclusive, was 83,000 miles. The average grain crop of 188 1 to 1883, inclusive, was 2,450,000,000 bushels. But our railway mile- age is now, or was on the 1st of January, 1884, over 121,000 miles. What are the necessary conclusions from these figures? From 1866 to 1880 one line after another was added to the great through lines from East to West ; slowly but surely, down to 1880, the railway mileage gained a little upon the grain crop, the slight excess representing nothing more than the necessary cross-roads and side-lines. The 258 THE RAILWAY, THE FARMER, AND THE PUBLIC. markets of the world also kept even pace, increasing supply of grain and meat was met by increasing demand, down to 1880 inclusive. In 1869 thirteen tons of produce, already listed, were worth in gold in the city of New York, $632.68 ; in 1880 the same quantities were worth $631.32. But in 1880 the increase of demand culminated ; exports have fallen off about as fast as the home demand has increased, yet the same quantities of the same articles are worth at this time (June 15, 1884) $621.75, or less than two per cent, reduction. Observe, however, with only five per cent, in- crease in the average crop of grain since 1880, we have more than forty per cent, increase in the railway mileage in the last four years. We have two through lines where one is needed, and the end of speculative construction is therefore plainly to be seen. We have passed through the period of railroad inception and of detached sections or lines, through the period of consolidation, through the period of needed extension, through the period of the speculative promotion of useless parallel lines by means of construction companies ; and we have 7ioiv at last reached the period of adjustment to wholesome conditions and of construction limited to the necessity for cross-roads, side-lines, and special or local roads for the use of small districts. Even this latter need will probably require this year 4,000, afterward 5,000 to 6,000 miles, to be added to our mileage every year. But while this vast extension in railway mileage has been in progress, the freight charges on all the railways of the country, and especially on the through lines, were reduced between 1869 and 1880 tzvo thirds; that is to say, the charge on the thirteen tons carried from West to East 1,000 miles, which was over $180 in 1869, was less than $60 in 1880, and has since fluctuated but little, sometimes a little less, sometimes a little more. In fact, there can hereafter THE RAILWAY, THE FARMER, AND THE PUBLIC. 259 be no further great reduction in freight charges. The bot- tom was reached in 1880; the entire profit on the whole tonnage of the New York Central and Hudson River Rail- road, in 1882, was but a trifle over one eighth of a cent a ton per mile. In exact figures it was .1370 cents per ton per mile. That is to say, at the average rate of profit on the whole trafific, grain and flour being carried at much lower relative rates, the actual profit in 1882 for moving a barrel of flour i,0(X) miles, or from Chicago to New York, was thirteen cents^ or about one third part of the cost of the barrel in which the flour is packed. In 1880 the possibility of any further permanent reduction on established lines of railway therefore ended, until some new invention shall re- duce the cost of the service. So far as parallel or competing main lines have been constructed since that date the capital expended has been utterly wasted. The elimination of what has been called " watered stock and bonds," which cannot affect the charge for transpor- tation in any manner, is, therefore, in process of accom- plishment by methods far more potent than any possible legislative acts, namely, by the triple competition to which railways are subjected : First, The competition of water- ways ; Second, The competition of one railway with an- other; Third, The competition of product with product in the great markets of the world. The charge which can be put upon the wheat of Dakota or Iowa for moving it to market is fixed by the price at which East Indian wheat can be sold in Market Lane. The railway mileage Jan. i, 1880 (when the possibility of any further reduction in freight charges covering any profit whatever commensurate with a fair but very low revenue was practically reached), was 86,- 497, represented by over $5,000,000,000 of securities. Jan. I, 1884, it was 121,542 miles, represented by over $7,000,- 26o THE RAILWAY, THE FARMER, AND THE PUBLIC, ooo,coo of securities. Since Jan. i, 1880, we have increased our population twelve a7id a half \o fourteen per cent., our grain crops five per cent., our railway mileage forty per cent. Aside from grain, the increased production of other commodities has probably not averaged a greater rate than the increase in population. Having, therefore, reached the end of construction com- panies, of speculative building, and of the issue of two, three, or four dollars of security for one dollar actually paid, we are now entering upon a period of railway adjustment; that is to say, of earnings limited to a moderate rate of possi- ble dividend on what the needed portion of the present railroad mileage would cost at the present actual prices of labor and materials, unnecessary parallel roads being deprived of all earning capacity. How much nominal property will be wiped out of exist- ence, and how many individuals will suffer, it matters not, except to the sufferers. Hereafter, the people of the United States will be served by 120,000 miles of railway, operated at the lowest possible cost, and which will be extended only so fast as prudence or necessity may require. This service, which would have cost producers or consumers $1,000,000,000 gold to $1,350,000,000 currency a year at the rates which were charged from 1866 to 1869 inclusive, is now performed for about $550,000,000 per year, a saving of $450,000,000 to $800,000,000 per year. While this revolution has been accomplished, the leading farm products, of which I have given a list, thirteen tons in all, which were worth in gold coin in the city of New York in 1869 $632.68, and which are now worth $621.75, have averaged during the whole series of years $679.50. In this period of so-called depression and disaster it therefore appears that the prices of the staple products of our Western THE RAILWAY, THE FARMER, AND THE PUBLIC. 26 1 farme and of our Eastern dairies in New York are but eight per cent, lower than the average of the last fifteen years. Upon the misfortunes of railway owners we may, therefore, predicate the past and present and also the future prosperity of the farmer ; and upon the prosperity of the farmer we may also assume the future prosperity of the manufacturer, because their interests are identical. Another fact must also be considered: during the period under consideration the mechanism of distribution has not only been increased in this wonderful, measure, accompanied by the vast increase of crops, but the increase of crop has been much greater than the increase of population. In 1869 the production of grain was about forty bushels per capita, in 1884 it was more than fifty-two bushels, an increase of thirty per cent. If the general product of agriculture may be represented by the grain crop, if follows that where the result of farm labor worth $632.68 in 1869 represented a given amount of labor, in 1884 it represented only about two thirds as much. At the risk of unnecessary repetition, let me again call attention to the salient facts in respect to the State of Ohio which are disclosed in the admirable reports of her railway commissioner. I again call attention to these points, be- cause from them the restoration of value to many lines of railroad now embarrassed, may be implied. This State lies midway between East and West. In 1883 it contained 6,897 miles of railroad, against 3,324 in 1869. In 1869, the actual tons moved over all the railways reporting in the State numbered 14,559,704, of which fifty-five percent, represented local traffic and forty-five per cent, through traffic. In 1883, 63,683,423 tons were moved, of which sixty-six and one-half per cent, represented local traffic and only thirty-three and one-half per cent, through traffic, showing how the local 262 THE RAILWAY, THE FARMER, ANt) THE PUBLIC. traffic gains, both absolutely and relatively. The clfarge per ton per mile in 1869 was 2.446 cents; in 1883, only .875 cents per ton per mile. Graphically the Ohio railroad traffic may be represented in this way : TONS MOVED. i86g »4.559,704 Local Through 1883 63^683,423 Local Through CHARGE PER TON PER MILE. 1869 2-446 X883 .875 The actual freight charge on all the railroads reporting in Ohio in 1883 was, in round figures, $67,000,000. Had this traffic been subjected to the charge of 1869 the sum would have been $201,800,000. The difference between these two sums is, in currency, $134,800,000; in gold, $89,400,000. Now since two thirds of this traffic was local traffic, the saving in rates to the people of Ohio since 1869, on their local traffic only, was, in currency, $90,000,000 ; in gold, $60,000,000. This is the difference on the work done in a single year in a single State ! The commissioner may well say in his letter to me transmitting this information, '' I am glad to say that in Ohio the people and the railways are at peace." The example of Ohio is a crucial instance of how the rail- ways have diversified the employment of the people, and how this very diversity afterward sustains the railways, as the local traffic steadily increases in its relative proportion. If such has been the gain in a single State — $60,000, 000 saved on the local traffic of a single year, as compared to the rate THE RAILWAY, THE FARMER, AND THE PUBLIC. 263 of only fourteen years since — the secret of increasing wealth, lower rates of interest on capital and increasing wages to the laborer, is not far to seek. Nor can depression or adversity long hold a place under such conditions, given only stability to the standard of value, judicious reduction of taxes, freedom from an aggressive foreign policy, and the limitations of legislative action to assuring the publicity of the accounts of public corporations, without futile attempts to control them. But to return to the adjustment of the value of railway property. Stocks and bonds, nominally representing $7,000,- 000,000 worth of property, apparently depreciated at least $1,500,000,000 within the year 1884, or, in other words perhaps $1,000,000,000 of '* water " was squeezed out, and during the process the true value of the remainder has been temporarily depressed $500,000,000, from which depression it must soon recover. Such vast changes, of which the conspicuous frauds of a few persons are but the surface indications (the greatest knaves not having even yet been ruined), could not fail to affect in a most profound de- gree all banks and other institutions of credit, and in less measure all who engaged in production and distribution. And yet no tradesman, no merchant, no manufacturer has yet failed who had not long been insolvent, and hardly a banker ; the prices of the staple farm products are almost the same as in 1869 and in 1880, the latter a year of great prosperity, and there have been few manufacturing accounts made up which showed an actual loss, while many branches of business are prosperous. There is no safer barometer than the production and consumption of iron. This branch of industry has been said to be more depressed than almost any other ; but what are the facts? According to the records of the Secretary of the Iron and Steel Association, the pro- 264 THE RAILWAY, THE FARMER, AND THE PUBLIC. duction of pig-iron in the last five years, which included the " boom " year 1879, was as follows : NET TONS. 1879 3.070.875 1880 4,295,414 I88I 4,641.564 1882 5.178,122 1883 5.146.972 Let it be observed that in the face of lower and lower prices, from 1880 to the present time, and in spite of a re- duction of nearly one half in the rails laid upon new rail- roads in 1883 as compared to 1882, the production and con- sumption of American iron in the year of so-called greatest depression, 1883, was sixty-six per cent, greater than in the " booming " year, 1879. ^^^ consumers of iron may well be satisfied with the construction of modern furnaces well placed, in which iron is made at so much lower cost that, in the face of eleven-per-cent. reduction in the price of 1880, the production of the metal which is at the foundation of all arts has increased twenty per cent. On such depression as this future prosperity may well be predicated. In 1880 the average price of anthracite foundry pig-iron, in Phila- delphia, was $28.50 per ton of 2,240 pounds ; in 1883, $22.37, and it is now about $20. The prices of 1883 were eleven per cent, less than in 1880; the production was twenty per cent, greater. Pig-iron assumes great importance as a producing inter- est, and it is often claimed that depression in this branch of industry is always accompanied by depression in all others ; but this assumption is putting the cart before the horse. When depression in the iron industry is caused by any gen- eral check to the consumption of iron, it surely indicates wide-spread depression elsewhere ; but when depression in THE RAILWAY, THE FARMER, AND THE PUBLIC. 265 particular iron districts is accompanied by such activity in others that the aggregate production increases, it merely indicates survival of the fittest — the substitution of new and well-placed furnaces for old and misplaced ones — lower cost of production, higher wages for more effective work ; in short, an adjustment to new conditions corresponding to the process which is affecting railroads. As a producing in- terest the iron industry is of very slight relative importance. The whole force of men and boys, who were employed in the census year in the production of about 4,000,000 tons of iron, consisted of about 20,000 engaged in mining coal for the use of blast furnaces, 32,000 in mining iron ore, 42,000 in blast furnaces, and perhaps enough more in sub- sidiary employments to make up 100,000 in all. In the present year, 1884, railroad construction may not exceed 4,500 miles, against 11,591 in 1882, or a falling off of 7,000 miles, which represents a reduction in the demands for rails only of about 700,000 tons, and of iron for other railroad use about 300,000, or 1,000,000 tons in all ; yet there is no falling off in the production of iron even approximating such figures, therefore the general consumption has vastly increased, while the railway consumption has decreased. The next consideration upon which future prosperity may be predicated, sooner or later, is the demand which our in- creasing population must make on existing instrumentalities of production and distribution. Agriculture is now pros- perous. The railway system is in process of adjustment to new and sounder conditions. Of manufactured goods there seems to be a moderate excess, but it is generally believed that if this stock were distributed in the usual way on the shelves of the dealers, and had not been permitted or forced to accumulate on the hands of the producers, it would bear no appearance of excess.. It is the waiting for events, the 266 THE RAILWAY, THE FARMER, AND THE PUBLIC. question, " What next ? " that has for a little time checked the customary circulation of goods, and has caused what was named, when it was predicted a year and a half since, a temporary '^commercial paralysis." This paralysis has been finally caused by what a president of one of the sound- est banks in New York has well named " a moral panic," to distinguish it from an ordinary commercial or financial panic. When will this paralysis end ? No one can tell, but we may measure the demand which our present increase of population at the rate of nearly or quite 2,000,000 persons a year must make upon the existing instrumentalities of production and distribution, and perhaps we may then, at least, venture to guess when the whole procession of the trades will move on. Let it be assumed that within a year, more or less, we shall have reached a state of equilibrium somewhat similar to that of 1880, when all existing railways were fairly well employed, all manufacturing establishments fairly well ad- justed to the then existing demand, and all farmers of in- telligence were prospering. Under such conditions, it of necessity ensues that for each child born one adult must seek a new place of shelter, and each immigrant family must be housed ; for each family of five, one new cotton-spindle must be set in motion ; a half a ton additional of iron must be made ; thirty or forty additional pounds of wool must be converted into cloth ; and all other branches of productive industry must be increased by the addition of new capital, /. e.y new machinery, new tools, and new appliances. At the same time, the railway mileage must be increased in the ratio of not less than 6,000 miles a year to serve the cross- way trafific of the existing population and to open new fields for the increase. This is the kind of constructive enterprise, having refer- THE RAILWAY, THE FARMER, AND THE PUBLIC. 267 ence to increasing and to future needs, which is subject to great variations and to vastly greater fluctuations than the .mere subsistence of an existing population. The work of subsistence must go on, and must always give constant em- ployment to by far the greater part of the population. We are always within less than one year of starvation, and within two or three years of being naked. In supplying these daily wants, work must be constant ; but constructive enterprise may vary fifty per cent, at one period compared to another, and that lesser portion of the population which must be engaged in construction in any decade may be pressed to the utmost for six to seven years, and then be half out of work for three to four, during which period of cessation the enterprising ones betake themselves to new land. We may approximately measure this constructive force. We numbered 50,000,000 in 1880. The abnormal increase by immigration added to the natural increase gives us now 57,000,000, June 30, 1884. We are probably increas- ing now at the rate of 2,000,000 a year. Let it be assumed that a condition of equilibrium may be reached January i, or by July 1, 1885, that railways are then adjusted, manufacturers fairly employed, and agriculture prospering, what construc- tion will become necessary to establish the capital necessary for sheltering, clothing, furnishing with tools, and moving the products of 2,000,000 people? It will be observed that, whatever the measure of this demand may be, it will be wholly a new demand for labor. The bricks must be made, the timber must be cut, the ore must be mined and smelted, the people must be housed and furnished with machinery and tools, before they can even begin to sustain themselves and to produce for themselves the daily subsistence which they will require. All existing capital being balanced to the need of an ex- 268 THE RAIL WA V, THE FARMER, AND THE PUBLIC. isting population, the first demand of additional population is for new capital to be saved and invested, all capital being a concrete form of labor saved for future use. We mayj therefore, convert the capital required by 2,000,000 people by way of terms of money into men's labor; that is to say, if any are now idle how soon will constructive enter- prise require all their work and a great deal more? First, Shelter. Can the average demand of each new family of five persons for shelter be fixed at any less than a house or part of a house, costing $500, to each family, or $100 per person ? The poorest New England factory tene- ment costs more than this, but in the South shelter costs less. If this is the lowest measure, the provision for the shelter of 2,000,000 people will cost $200,000,000. That is to say, this sum of money must be paid for the conversion of trees, clay, and ore into houses. The average earnings of all who are engaged in these branches of work are not less than $400 per year, at which rate this sum measures a de- mand for the work of 500,000 wood-cutters, brick-makers, metal-workers, artisans, and mechanics. If $500 per family of five persons is too much, the furnishing of the house may be included. Second, Railroads. The next great provision to be made is for the construction of new railroads. This year we may reduce to 4,000 miles, but soon the average must go up to at least 6,000 miles. If 6,000 miles a year on the average are needed, they will cost not less than $25,000 per mile in hard money for construction and equipment, or a total of $150,- 000,000. The men who do this work are laborers, miners, metal-workers, and mechanics. A fair average of their earnings would be not less than $350 per year, but to be conservative we may use $400 as a divisor, and then this sum measures a demand for the work of 375,000 men. At THE RAILWAY, THE FARMER, AND THE PUBLIC. 26c) five to the mile, which is now a fair average, 30,000 men will also be required to operate the new railroads after completion. Third, ClotJiing and Iron. In order to supply 2,000,000 with cotton and woollen cloth, boots, shoes, and hats, and with 200 pounds iron per head, an expenditure in new fac- tories and iron-works of not less than $30,000,000 will be needed, and at $400 this measures a demand for the work of 75,000 men, while 30,000 men, women, and children will be needed to operate the works after they are constructed.' How can we measure the capital which will be needed in the 330 other branches of manufactures which have not been named, in order to begin to provide for the future subsist- ence of 2,000,000 people? It cannot be done with accuracy, but already we have measured a demand for the work of 1,000,000 of the existing population ; and of this work, the provision for shelter, clothing, and iron, requiring the work of 600,000 persons, is absolutely new work in addition to any and all work now done. How many capable and com- petent workmen or workwomen are there now out of em- ployment and seeking work anywhere ? What was the greatest number in the most depressed period after 1873? Is not all the common talk of over-production the veriest nonsense, when within one or two years from any given date all that there is produced must be used in making prepara- tion for increasing wants, while, on the other hand, skilled, competent, and sober laborers never lack employment? This country cannot stop. The greater the check to con- structive enterprise now^ the greater the activity must be in one, two, or three years. Who shall say when it will begin? You may ask the apple-woman. Such are the facts of * For the average earnings of the clashes named, reference may be had to the 270 THE RAILWAY. THE FARMER, AND THE PUBLIC. the past and present. Who dare forecast the immediate future? How much will the progress of this country be hindered by distrusl of politicians who are not statesmen, and by the futile attempts of ignorant legislators to regulate railway traffic and to control great industrial forces by means of meddlesome statutes inconsistent in their own provisions, and retarding rather than promoting the welfare of the people? Who can measure the iniquity of the railway wreckers who have used their power for nefarious purposes — stolen franchises, cheated their stockholders, and per- verted the most powerful and beneficent instrumentality ever placed at the disposal of man to the basest purposes ; and who have made it possible to say that the present is ''a moral panic," caused by the want of honor and integrity among those who had secured places of highest trust and responsibility? The riots of Cincinnati had their origin in the perversion of justice in the criminal courts. The injury which has been inflicted by the perversion of the civil courts of a neighboring State, at the instance of men who can now be named, may some time culminate in a remedy equally disastrous, but by which the wrong will be remedied. When courts and judges are corrupted, men fall back upon their natural rights, and remedy their wrongs by rougher methods than those which are contemplated by law. It would, of course, have been impossible for me to have given these facts had not the railway problem possessed a certain fascination which has lately led me to continue these tables, which attracted a good deal of attention about four years since, down to the present time. These tables are now placed at your disposal,' and I think they fully sus- * This treatise was first prepared as a continuation of the testimony given by the writer before the Senate Committee on Labor, to be included in their final report. THE RAILWAY, THE FARMER, AND THE PUBLIC. 2/1 tain the position which I have taken, to wit : that railway- charges were reduced to the lowest possible terms about the year 1880, since which date they have sometimes been forced below the cost of the service; and that when the whole traffic of two great States like New York and Ohio is performed at a profit of a quarter of a cent a ton per mile, and sometimes for much less, the only effect of legislative interference would be fraught with danger, unless limited to securing publicity of accounts and a board of friendly arbitration, like the railway commission of Massachusetts, whose example in this matter has been followed in several other States. In conclusion, a few words may be added upon the gen- eral principles upon which progress in the past has been based, and upon which it may be predicated in the future. What effect have these and other changes had upon the mass of the population who labor for wages, and whose daily bread depends upon their daily work .^ All profits, wages, and taxes are and must be derived from the con- version and sale of the annual product, /. ^., from the pro- ducts of each succession of the four seasons. The money measure of this product — that is to say, its market value, is determined directly or indirectly by its competition with other like products in the great markets of the world. The world subsists by the exchange of product for product, and the balances are settled in money in the centres of ex- change, whether national or international. The rates of wages are, therefore, a result corresponding with and meas- uring the share which the workman receives from the sale or exchange of the product on which he has spent his work. In this country, the most effective machinery and the most versatile and intelligent labor are applied to the most ample natural resources possessed by any nation. A hu^e 2/2 THE RAILWAY, THE FARMER, AND THE PUBLIC, abundance, therefore, ensues from the least amount of human labor. On some of the fattest land in the West the measure of the product of one man working the best ma- chinery with a pair of horses has reached one hundred ions of corn in a single season. The aim of some of the great "bonanza wheat farmers" of Dakota has been to apply machinery so effectively that the cultivation of one full section, or 640 acres, shall represent one year's work of only one man. This has not yet been reached, but so far as the production of the grain of wheat is concerned one man's work will now give 1,000 persons enough for a barrel of flour a year, which is the average ration. One man's work for one year sufifices to supply 500 people with the largest quantity of iron consumed by any nation on the earth. The work of one operative in a wollen or cotton factory, or in the auxiliary print-works or bleachery, suffices to convert cotton and wool into textile fabrics for 250 or more of the most amply clothed people in the world. In proportion to the increase and efficiency of capital, a less number of laborers suffices for necessary work, wages increase in amount, and the purchasing power of each dollar of the earnings of the people is also augmented. The truth of the fundamental law of labor is historically sustained — to wit: that high rates of wages of the highest producing power are the necessary result or correlative of the low labor cost of production. The operative of to-day earns twice the wages in ten hours that the operative of forty years ago could earn in thirteen hours per day. By the combined force of more adequate capital working harmoni- ously with more intelligent labor, the standard of a good subsistence is raised, the cost is decreased, the hours of labor are shortened, and the struggle for life is rendered less and less severe. The time will surely come when, by the work- THE RAILWAY, THE FARMER, AND THE PUBLIC. 273 ing of these great forces of industry, intelligence, and integ- rity, even the vision of the mistaken enthusiast, who seeks to shorten the hours of work by meddlesome statutes, will be realized, and when eight hours of average work per day may suffice to produce an ample subsistence. In the mean- time, the demagogue and the quack will mislead honest but mistaken men, and will endeavor to secure position and power by cheating them with paper money, crippling the railway service by means of so-called "anti-monopoly" statutes, and by restricting the freedom of contract by meddlesome statutes affecting the hours of labor of adult men and women, which retard more than they promote the object for which they are enacted. It will be observed that the increase of population in this country is subject to a moderate variation from a uniform rate, as the immigration may be large or small; and that, conversely, immigration is retarded or stimulated by the conditions of industry and of constructive work. On the other hand, while the aggregate increase in railway mileage has been vastly greater than the increase in population since 1865, it has also been subject to very much greater fluctua- tions. On the 1st of January, 1865, the population probably numbered 34,000,000. On the ist of January, 1885, it will probably number 58,000,000. The railway mileage on the 1st of January, 1865, was 33,908. Estimating the probable construction of the present year, 1884, at not over 4,000 miles (possibly 5,000), the number of miles January I, 1885, will be a little over 125,000. The following diagrams will show the great fluctuations, or waves, as they may be called, in the construction of rail- roads and in the consequent employment of labor. Now the construction of a railroad represents in greater measure than almost any other form of capital a given and 2/4 THE RAILWAY, THE FARMER, AND THE PUBLIC. sa ^w §i * 2 1^ 2^ 5 S- ^ 8 ? Sin vo ti vo' 00 o\ rn W M « « a u Sl^l § CO ■*■ ro « M wr^oif^oooo-* mci mvo O •^^■^^.. t» O\om0 ooo ixinfiN 'rht^M t^I^t^O O ►- M •*(?»vo o MOO M w t^r^ •* VO tv lO •<«• N N W ro ■«»- t^ 0« O < ^ g •"I i S' u p^ Pi 3 D g s O u o 3 Q < ^ H S ^ g ^ Pi < hi b u c Q ^ 2; < i « < ei W S Pi < 1 o b 2 12 § '-' ^ o ^ < M Q\ b O^ D K o Z u M < <: o s K tn 2 > o W 2 o H ►J ^ g g en <: Pi ?: p< H o < Q £ w Z r- "< S" "~"~" da ss s 1 > ^ f B^ s' 1^ > > 1 > a-' S :? H H 'C '^^ 1 =y •*^ . 3 o cCl^ > hB- en 1 1 "^ ^ £ .2 1. 1^ S 1 ^* ta s i-i 1 £ o e4 H rt "O 1 Q i i Oh' 55 o 4) H in i «a^ . 4 ^ •a .fe I '' w Ou" 'S' •y. f^. "o c 55 a 1 *• p N B c4 3 c 1 " a^ 'bb "3 1 CO 1. 1 S ^ 1 w CO >, •a d 5 i c ^ u 3 ■4 to al ^ 3 Ok «o O . fO 1 C/3 fc« |_4 1. aT3 ■^ bD "u to xnti to •a p ^-3 fed l! 2 bfl H.S •£" U U C4 o S o O c 2 2 !«« ill u o 62 r/(?r/ con- cepts of many of the accepted economic writers must yield again to the methods of Adam Smith, extended over the wider ground which is now open to him who is capable of occupying it. To one who has faith, not only in *' a power that makes for righteousness," but for human welfare upon this earth as well, the study of these complex problems of modern life may become an absorbing pursuit, no matter how inadequately he may be able to treat them. In conclusion, the writer may venture to express his gratification with the fact that a second edition of this somewhat disjointed series of economic studies has been called for. He may well be satisfied with the approval indicated by many letters from men of high position, as well as of economists and students of social science ; yet the greater satisfaction has consisted in the endorse- ment of many persons, who, like himself, have been compelled to observe the relations of labor and capital, and to study the forces which make the rate of wages, in the conduct of practical affairs and in the manufacture of goods of many kinds. There may perhaps be no true or final and satisfactory solution of these complex problems until the members of the unlearned professions of the merchant, the manufacturer, or the underwriter compile the data from their own practical experience for the use of the members of the learned professions who write the books upon social science or teach political economy in the school or in the university. The one may, perhaps, perform the labor, while the other may furnish the mental capital, and from the co-opera- tion of the two the best results may be attained. Mrookline^ Feb. 23, 1885. Edward Atkinson. SUGGESTIONS TO STATISTICIANS. In the progress of this work the attention of the writer has been called to the great dearth of what may be called comparative sta- tistics, corresponding to the fifty years' history of cotton factories in all departments : and also to the lack of consecutive statements of the simplest factors in subsistence, like the four years* account of the cost of food for factory operatives. If there are in print statements corresponding to these, the writer would be under a great obligation to any reader who would call his attention .to them. It is by the use of comparative statistics that the relative con- ditions of working people may be demonstrated, and having ven- tured to suggest certain methods for rendering our consular re- ports more complete, a plan is now submitted for comparisons of the condition of laborers at home. The customary method of treating only the rates of wages and the prices of food, clothing, and rent, is inconclusive, because the proportion of each element in the cost of living varies so much in quantity as well as in value. May we not, however, establish a standard ration, — a standard supply of clothing, of fuel, light, and incidentals, and of rent, for certain specified classes of persons whose plane is substantially the same ? Working from the ration of factory operatives as given in this treatise and from other data, the expenditure might be calculated as follows : of a mechanic in Massachusetts earning $550 to $600 per year, and spending for the necessaries of life $500 per year in supporting a wife and two children, the latter counted as equal to one adult — /. e., a group of three adults corresponding in a measure to the working group of three as shown to exist by the census : 349 350 fVITA T MAKES PRO FORMA. Meat, \ lb. fresh to i lb. salt, per day, per adult (two children to one adult), g^ cents each per day Dairy products, \ pint milk, i^ oz. to 2 oz. butter, and a scrap of cheese at a fraction under 5 cents per day per adult Bread, -J to f lb. each, at a fraction over 2\ cents per day per adult Vegetables, more than one half potatoes, a little over 2 cents each per day ...... Sugar and syrup, a little less than 2 cents each per day Tea and coffee, i cent each per day . Eggs, -J cent each per day .... Fruit, green and dry, \ cent each per day Salt, spice, ice, pickles, etc. , -J cent each per day PER YEAR. PER CENT. OF THE WHOLE COST OF LIVING. $100 00 50 00 30 00 25 00 20 00 10 00 5 00 5 00 5 00 Total food . $250 00 Fuel and light . Incidentals, soap, etc. Clothing, 35 J^ cotton 45 % woollen 20 % sundries Rent Total $28 00 22 00 20 10 6 5 4 2 I I I 50 00 100 00 100 00 $500 00 50 10 20 20 ICO % This table is only an approximation, and may or may not be a true standard, but it indicates how a very accurate standard can be established. It is given as being suggestive if not conclusive. In some sections the proportions of each element would vary in very considerable measure, and in the same section the propor- tions may vary in the city and in the country ; but would it not be in the power of the Chiefs of the State Bureau of Statistics to establish a fairly accurate standard^ modelled upon this plan, in respect to three classes of persons in each State : 1. Common laborers, $400 per year, income. 2. Average mechanics, $600 per year, income. 3. Employes of railways or the like whose incomes are about THE RATE OF WAGES f 35I fifty per cent, higher than those of the average mechanic, or $900 per year. Each one of these standards being established in each State would serve as a measure for comparing one State with another,! and if the average in all States were compiled in one average on each class, a standard would be established for an accurate com- parison of the condition of one country as compared to another. Again : the relative per cent, or proportion of dollars in any given standard, which must be applied to each separate item in the cost of subsistence at the present time, being thus determined, a comparison could be made of the actual condition of laborers in the same State at a much earlier date. For instance, given a family of four persons living upon the total sum of the foregoing table, to wit, $500, it may be assumed that the workman of the same class could spend only two thirds of this sum at some pre- vious date, say in 1840. Divide the two thirds, or $333.33, in the same proportions that the present expenditure of $500 is divided by. Apply these pro- portions to the purchase of food, fuel, clothing, and rent at the prices of 1840, and then we have an exact system for the compari- son of conditions which do not now exist. We should then be in the possession of the data of wages, prices, and proportionate cost of each of the elements of subsistence. EXAMPLE. Suppose wages in 1840 to have been two thirds the present rate. The mechanic now spending $500 per year would then have spent, say $340, in same proportions as he now spends, to wit : How much would these sums buy in 1840 ? Meat 20 J^ $68 00 Of beef. ** mutton. " poultry. " salt pork. Dairy 10 jf 3400 "milk. " butter. " cheese. 352 WHAT M. 4KES Bread 6^ 20 40 How much would these sums buy in 1840? Of flour. Vegetables 5^ 17 00 " potatoes. Sugar A% 13 60 " sugar. Fuel 6^ 20 40 '• coal. *' wood. Clothing 20J^ 68 00 * ' printed calico. " standard sheeting. '* 16 oz. cassimere. " 4 oz. merino or alpaca. " woollen hose. " of boots or shoes. Rent 20jr 68 00 " rooms in a good house. Having determined quantities in 1840 and compared with the quantities yielded now for the higher wages earned with the same or less labor, we have an absolute comparison of conditions. The customary comparisons by rates of wages and prices only, fail to meet the case because of the varying proportions expended for meat, bread, sugar, etc., etc. These proportions once estab- lished, relative conditions will be easily determined. In prepar- ing this treatise I have been under the necessity of using approxi- mate estimates, because the historical and statistical basis for a true science of wages does not yet exist. The real problem is to determine what the absolute wages in food, fuel, shelter, and clothing now are in this country as compared to others, rather than to determine what the comparative rates of wages in terms of money may be. Is it true or not that the abundant product of this country yields a larger sum of money to be divided among its workmen than is possible in any other country ? Is it true or not that this sum of money represents a larger sup- ply of the necessaries of life for each dollar expended than in any other country ? If food is cheaper while clothing and shelter are dearer, what are the reasons ? If, with all our advantages of position, of virgin soil, and of THE RATE OF WAGES? 353 freedom from vested wrongs, the laborer cannot earn more and get more for his money in this than in any other land, must we not admit partial failure, and ought we not to proceed at once to correct our methods ? Even since I had prepared these si^gestions to statisticians, by the courtesy of Mr. Joseph D. Weeks, of Pittsburg, I have been supplied with the data by which I am enabled to make the follow- ing statement regarding the product of a blast furnace, which has been working in the production of pig-iron for the last twenty-five to thirty years. It is alleged that progress and poverty are correlative terms, and that as the rich grow richer, the poor grow poorer. This is a mere question of fact. Has it been true of iron ? There have undoubtedly been very profitable periods during the past thirty years, when the owners of ore beds and coal mines have secured large sums as rent or royalty from those who have worked them. There have also been periods of great profit in the conversion of ores and coal into iron, in which the rich have grown richer. We may not ask, nor expect to be informed,what these profits have been in specific cases ; but this we know — that the greater the profit, the more urgent the competition of capital with capital in opening new mines, constructing new furnaces, and producing greater quantities of metal. " Piave the poor become poorer ? " The main question can be conclusively answered without the disclosure of a single fact of a private nature, and without any inquisition to which any and every capitalist or owner might not cheerfully sub- mit. Witness this statement in regard to iron. The two periods chosen for comparison are : ist. i860 to 1864, inclusive, five years of war, paper-money, inflation, and confusion. 2d. 1875 to 1879, inclusive, the period of slow and steady recov* ery from a financial debauch, in which the solid and safe specie standard of value was restored. The furnace which gives the data used in this comparison is one for which all the materials have been purchased at current prices. The data, therefore, give the exact cost of the labor 354 WHAT MAKES required to convert the coal and ore into iron after they have been delivered. The furnace is in the eastern part of the country, and is now at a relative disadvantage in procuring material, as compared to some of the establishments m other parts of the country, and its chances of continued success must depend upon the owners over- coming this advantage by skill and intelligence, and by the prompt adoption of easy improvement or labor-saving invention ; that is to say, by the sagacious and skilful use of capital. If we consider the period from i860 to 1880 historically, it has been one of singular progress in improvements for converting ores into iron, both in the construction of furnaces and in the saving of labor. To whom the benefits of these inventions and improve- ments have enured, the table shows ; but perhaps it may not be amiss to bring the principal changes into more conspicuous con- trast, and to compare these changes under the customary classifi- cations : I St. The margin between the selling price of iron and the cost of materials and labor has decreased 2>:^ yW P^^^ cent. The share of the capital has been reduced both absolutely and rela- tively. 2d. The labor has been rendered less arduous, while the wages of the laborer have been increased 37 jVtt P^^ cent. The share of the laborer has been increased both absolutely and relatively. 3d. The price of iron to the consumer has been reduced 31 -^^ per cent. The measure in money of the gain to laborers is $133 each. For five years* work of seventy-one men, $9,433 per year, $47,215. The measure in money of the gain to consumers in five years, t $8.87 per ton, is $76,706. THE RATE OF WAGES? 355 THE LAW OF PROFITS DIMINISHED AND WAGES INCREASED BY COMPETITION, ILLUSTRATED BY THE STATISTICS OF AN IRON FURNACE USED FOR THE CONVERSION OF ORES AND COAL PURCHASED AT MARKET-PRICES, INTO PIG-IRON. PERIODS COMPARED — 1860 TO I864 (FIVE YEARS), 1875 TO 1879 (FIVE years), DESIGNATED RESPECTIVELY I. AND II. In- De- • li! X. Fixed capital 9. Product of iron, j I. tons ni. 3. Market value per J I. I. The same in each period. 58,959 86,546 S27 95 ton \\\. 19 08 ( I. $1,627,268 Value total product < TT a o I 11. 1,651,298 5. Cost materials and J I. $1,064,089 «=■ labor III. 1,556,889 — 6. Per cent, cost ma- / j^ terials and labor-< to value product ' ^^' 7. Margin for taxes, insurance, cost of selling, incident- als, administra- tion, and profitj if any R. Sum of wages . A' 9. Hands employed . ] tt' xo. Wages per hand ( I. per year . . . I II. 65.39 94.28 34.61 5-72 l:J: XX. Wages per ton xa. Per cent, of wages j I. to value. . . .III. X3. Ton product perj I. hand III. $134,214 172,491 76 71 $353 486 %-i 27 X 99 8.25 X0.44 776 1,219 crease, crease. [46 ?? 3ii*y?5 % •44iVff 83/A «^ 371^^ ■55A'» This table might well be named " The indicator of progress' from poverty of the workman and progress toward poverty of the capitalist." Another graphical method of showing these results is submitted, as follows : 356 IVHA T MAKES PIG IRON. Diagram showing the changes which have occurred in a blast furnace used for the conversion of iron ores and coal purchased at market-prices into pij^-iron. The conditions of i860 to 1864 inclusive are taken as a standard, each being called 100, and all represented by the single point at the head of the column on the left ; from this point the lines of variation diverge, and the several points in the column on the right show the resuh of these variations in the averages of product, prices, wages, etc., in 1875 to 1879 inclusive. 5 years: 1875 to 1879 inclusive. Product per hand increased from 776 tons to 1,219 tons. Total product increased from 58,959 tons to 86,546 tons. Wages increased from $353 per year in a depreciating currency to $486 per year in an appreciating currency. Gross value of total product increased from § 1,627, 268 'o $1,651,298. Number of hands employed decreased from 76 to 71. Price of iron decreased from $27.95 to $19.18 per ton. Margin between the value of the product and the cost of materials and labor, from which margin taxes, general expenses, and profits are to be derived, decreased from $9. 55 per ton to $ i .09 per ton. THE RATE OF WAGES? 357 It will be apparent that while the profits of capital may have been much more than ten per cent, in the first period, and must have been much less, if any thing, in the second ; yet such facts can seldom be correctly ascertained, and if given, would not be as useful as to assume a certain uniform rate of profit. It is an absolute rule that if profits rise above a certain rate in any art which is open to free competition, capital will be immediately applied thereto in ample measure so as to bring them down to an average at any given time. If an excess of profit is gained for any considerable period, an excess of capital will be invested, and presently what is commonly called an over-production will occur. The iron industry has been peculiarly liable to excessive fluctuations, owing to the great fluctuations in the construction of railways, for which so large a part of the product of iron and steel is used. The attention of statisticians is called to the simplicity of this form. It is merely a digest of the customary annual statements which are made up by all well-conducted corporations or co- partnerships, and any competent accountant could fill up the blanks for any year or series of years. It will be observed that the facts given disclose the progress of the workmen, and the benefit of reduction of price to consumers ; but do not disclose the profits of the business in such a way as to be objectionable to owners of works or factories. The diminishing margin between the gross market value of the goods and the combined cost of materials and labor will yet sustain the rule that the profit of manufacturing, of metal work, of transportation, and in fact in all the arts of life, now consists in economy of administration and in saving small fractions in transportation, in the cost of selling, in insurance, taxes, and all the other expenses which of necessity intervene between the primary work of production and the final consumption of all products. In fact all profit now consists in saving what was once wasted. It will be apparent to all statisticians that if we can establish the standard ration, the standard supply of clothing, and the 358 WHAT MAKES Standard price of shelter in the way previously suggested, and also secure tables similar to the analyses of cotton fabrics and of pig-iron, the actual progress of working people may be abso- lutely demonstrated. It is the purpose of the writer to attempt to procure such data in respect to boots and shoes, hats, paper, cordage, pine lumber, rolled iron, locomotive engines, and many other productions of which the accounts have probably been kept in a uniform way, and for this purpose he will be grateful for any aid which may be rendered. This is a difficult and uncertain task for an unofficial person to undertake, but even if imperfectly carried out it may yet establish a method which will ultimately lead to exact conclusions. Finally, in order that all such facts bearing upon the question " What makes the Rate of Wages ? " may be brought together for comparison and discussion, the writer invites communications, to be submitted at the meeting of the American Association for the Advancement of Science, in August, in the section devoted to political economy and statistics, of which he has the honor to be chairman. Communications from foreign countries will be grate- fully received. Any persons who are desirous to take part in the collection of such facts, or who will furnish the writer with the requisite data, may address him at No. 31 Milk Street, Boston, Mass., U. S. A. Edward Atkinson. Boston, March 30, 1885. THE RATE OF WAGES? 359 FORM OF INTERROGATORIES, BY MEANS OF WHICH THE PRICE OF LABOR 1. E., THE RATE OF WAGES, AND THE COST OF LABOR — I. E., THE SUM OF WAGES IN A GIVEN PRODUCT, MAY BE ASCERTAINED. 1 . What was a fair valuation of your* real estate and machinery at the earliest date from which you can make a consecutive statement of your business ? 2. Beginning at this date, what was the apnual product in units, such as pounds of cloth, tons of rails, pairs of boots, etc. ? 3. For each year separately to 1884, inclusive. Or for periods of five years, wide apart ; say, 1856 to i860, 1866 to 1870, 1879 to 1883 — the year 1884 separately ? 4. What was the market-price in each year of some specific unit which has been made of the same kind and same quality, or better, throughout the term ? 5. What was the gross value of the total product each year or each period of five years ? 6. What was the cost of materials and labor combined in each year or period, omitting insurance, taxes, and general expenses, and including as labor — overseers second hands, operators, mechanics, engineers, firemen, and laborers, but not including superintendent or clerk ? 7. What was the sum paid for labor as above defined in each year or period ? 8. What was the average number of laborers in each year or each period ? Consecutive statements from the earliest date to 1884, each year separately, preferred. Financial years may be given in place of calendar years. STANDARD COTTON SHEETINGS. The general tendency of wages toward a maximum and of profits to a minimum is shown by these diverging lines. There have been, of course, great fluctuations but it will be observed that even the reduction in the rate of wages in money, between 1883 and 1885, was accompanied by an increase in the purchasing power of money, so that wages measured in sheetings are now higher than ever before. I believe this is also true if wages are measured in food or woollens. In other words, all who are employed at all can get more for their work than ever before in food, clothing, and shelter. 1840 i¥3 ^85 r 208 per cent, increased effi- ciency of 1 1 )or p^rowinp out of improvi;rnents in capital, — /. e., machinery. 186 per cent, machinery. increase of 122 per cent, increased value or products. ii4i per cent, increase of \vages measured in standard sheetings. J per cent, increased w-i^es, per hour, measured in money. 54^% increased wages meas- ured in money. gj per cent, increased num- ber of operatives required for 186 per cent, increase of machinery. 17105 decrease in hours per day. 28 per cent, decrease in price of cloth. 70 per cent, decrease in pro- Eortion of products secured y capital in yarJs. 80 per cent, decrease in pro- portion of productsassigned to profit at 10 per cent., 1840 and 1883, and at 6 per INDEX. Agriculture in United States, 28, 320, 321 American Association for Advance- ment of Science, 358 Annual products, 30, 331 Appendices to "Rate of Wages": I., 91; II., 118; III., 127; IV., 129; v., 139; VI., 158; VII., 171 Appendices to " Railroad, Farmer, and Public": I., 291 ; II., 298 Arkwright, 79 Armies of Europe, 73 Austria, 16 Bagehot, Walter, quotation from, 185 Balance of trade, 201 Banks and banking, 193 " and manufactures, 217 " State, 222 Banking, elements of, 211 Bastiat, Frederick, proposition from, 23. 89 Beef for prisoners, 163 Beets, 47 Bessemer, Sir Henry, 84 Bi-metallic theory, 200 Bismarck, 13, 16 Blackburn, 343 Blanchard, G. R., 240 Boarding, cost of, 158, 163 Bonanza farms, 76 Brassey, 60 Bread, 75, 167 Bread, analysis of loaf of, 291 Bremen steamer, incident of, 60 Buckle, 67 Bureau of Statistics, 350 Burdens of Europe and America com- pared, 284 Cairnes' theory of wages, 25 Capital, 25, 188 Carey, Henry C, theory of rent, 340 Cash, 208 Census of United States, 31, 96 ** Office Reports, 140 " of Massachusetts, 92 China and India, 69 Cincinnati riots, 270 Cities, growth of, 151 " want in, America and Europe compared, 336 Cities, tendency of poor to collect in, 336 Clothing of various classes, 165 Coal, 78 Coinage of silver dollars, 315 Commercial crises, 314 Competition, 35 " in wages, 12 Conclusions on wage question, 178, 343 Congress, present, 187 Consuls, instructions to, 343 Consumption defined, 199 " in United States, 318 361 36: JAWEX. Cotton manufacture, 48, 50, 52, 68 " workers, 42 Corn meal, 161 Cost of living, 338 Crops, amount of land needed for, 335 Cunningham, W., 189 Dairy products, 156 Dakota, 14 Depression, present, 314 Distribution, 9, 346 Dodge, J. R., investigations and dia- grams of, 139, 143 Dollars, standard of gold, 319 Duties, 323 Election, result of, 181 Employes in manufactures, log " on farms, ill, 320 Employment, lack of, 313 Engel, Dr., investigations of, 134, 166, 169 England, 16, 347 English commerce, 82 " wealth, 136 Exchange, benefit of, 20, 55 " result of, 37 Factories, increase of, 313 " cessation, 313 " operatives, actual consump- tion of, 318 Factory boarding-house in Massachu- setts, 163 Factory boarding-house in Maryland, 158 Fallacies, popular, 26, 58, 62 " counter propositions to, 63 Fare, prisoners', 163 " laborers', 164 Farmers, dependent on foreign mar- ket, 305 Fibres, amount transported on rail- roads, 309 Flour of the West, 75 Food and clothing, 317 Food of workmen and prisoners com- pared, 169, Form of questions, 359 Formula of production, 48 Frelinghuysen's report, 342 Fuel, amount transported by railways per year, 309 Fundamental law of labor, 94 Germany, 16, 17, 343 German army, i8 " steamer, incident of, 61 George, Henry, 9, 12, 331 Giffen, Robert, 71, 83 Glasgow, 343 Government, proposed regulation of railroads by, 305 Grain, 22, 232, 235, 309 " crops, table of, 233 Great Britain, land question in, 227 " and her manufactures, 133 Greenback fallacies, 26 "Harmonies of Political Economy," 23 Hen industry, 155 Homespun fabric, 125 Hooper, W. E. & Sons, 158 Howe Bakery, 291 Howe, Samuel, 286 Industry, diversified, 153 Irish Land Acts, 13 Iron, 77, 84, 156, 269, 318, 353» 356 Iron and Steel Association, 240 INDEX. 3^3 Kidder, Peabody, & Co., 211 Laborers, 21, 44, 313, 315 Land and labor, need of capital for, 336 Land under national ownership, 332 Law of competition, 118 " exchange, 197 Legal-tender Acts, 197, 305 " United States notes, 221 Louisiana purchase, 203 Machinery and agriculture, 99 " effect of, in manufacture, 35. Malthus, 15, 22, 339, 345 M auger & Avery, 240 Mansfield, Judge, 4 Manufactures, mechanics, and mining, 306 Memorial Hall, system of, 164 Metals, amount transported on rail- ways, 309 Metaphysics of exchange, 189 Mexican dollars, 202 Middle States, manufacture and com- merce of, 306 Mid-Lothian, 343 Miners, 329 Minnesota, 15 Money, 26 " definition of, 28, 194, 220 " false and true, 207, 211, 221, 223 Money, fiat, 4, 135, 194 " paper, 227 Montana, improvement of, 22 National Bank, 205 " " work of, 216 " Legislature, 287 National revenue, collection of, 305, 320 Necessities of life, exchange of, 312 Newcastle, 343 New England, manufactures of, 306 Nimmo, Joseph, Jr., report of, 139, 341 North Carolina and New England, 68 Nutritious food, 164 Occupations, 104, 106, 305, 320 " summary of, 149, 310 Ohio, 147, 325 Oldham, 343 Oregon, 152 Over-production, 55, 182 Parsons, Judge, 4 People of United States, expenditures, 337 Pepper, 202 Persons engaged in production and distribution, 277 Persons affected by foreign markets, 322 Phillips, Wendell, 12 "Pillar" dollars, 202 Political economy, French system of, 23 " Poor's Railway Manual," 240, 341 Population of globe, 22 United States, 26, 28, 315 President of United States, result of choice, 181 Product, annual, in United States, 26, 95. 353 Product, division of, 70 Production defined, 9, 10 Products, tables of, 156, 317, 327 Professionals, 305 3^4 INDEX. Profits of capital, 357 *' Progress and Poverty," 9 Progress in working iron, 354 " of United States, 83 Protection of domestic industry, 320 Railroads, 27, 268 " adjustment of value of stock, 263 Railroads, capital, relation to farms and factories, 256 Railroads, change wrought by, 231 " charges, 292 " " effect on cost of meat, 295 Railroads, construction of, 43, 185, 3^5. Railroads, diagrams, 274 " Farmer, and Public, loi, . 175. 231 Railroads, freight charges, 235, 252 " local traffic, 252, 306 " New York Central, 75 " mileage, 240, 252, 257, 316 '* government regulations, 294 Railroads in Ohio, 148, 261 Railroads unnecessary, 260 " watered stock of, 239 Railway Manual, Poor's, 237 " lands, large sale of, 314 " officials and laborers, 107, 313 " panics, 1S5 '* " and commercial pa- ralysis, 254 Railway rates higher with small traffic, 309 Railway service, extension of, 99, 305 " system, 99 Raw material, 323 Reconstruction, 182 Reign of terror, 16 Religious dogma, 19 Rent, formulas of, 340 Reports of Railway Commissioners, 341 Resources of United States, 74 Resumption Act, 226, 233 Ricardian theory of rent, 340 Rogers, J. E. Thorold, 189 Russia and nihilism, 16 Sabine, H., 240 Science, advancement, 21 Ship-building on the Delaware, 330 Silver Act, 154, 305 " compared with other products, 318 Silver dollars, uncertain standard of value, 316 Slaier, Samuel, 80 Slavery, abolition of, 99 Smiih, Adam, 348 Southern States, agriculture of, 306 Speculation, 225 Spinning-jenny, 84 Standing army, 281 Statisticians, suggestions to, 349 State banks, 222 Suez Canal, 19 Sugar, 161 Summary of wealth in United States, 117 Surplus revenue in United States, 57 Tables : Average work and wages, 118-121, 127 Averages of wages, 129 Consumption of food, 159, 160, 162, 163, 165, 171, 172, 175, 350, 351 Grain crops in United States, 233, 296 INDEX. 365 Law of profits, 355 Occupations, I49-I53. 305, 3io et seq.y 325. 326, 328 Only approximately accurate, 313 Products, 157 Products, value of, compared to manufactures, 140 Railway charges, 293 " construction, 274 " employes, 277 Railways, farms, and manufactures compared, 256 Railroad mileage, 234, 241, 242, 244-252 Railway traffic, 148 Railways, tons moved by, 262 Relative burdens of Europeans and Americans, 284 Relative taxation, 154 Tariff, 82, 325 Taxes, 29, 33, 99, 180, 324 " difference between, on raw ma- terial and finished products, 323, 324 Temple, Sir Richard, 74 Theories of wages : Thornton, Caimes, Walker, 24 Timber, amount transported by rail, 309 Trade and transportation, 306 Traffic, relation of volume to rate of charge, 307 Unemployed, work for the, 279 United States, land in, 332 United States, area of, 334 " resources of, 74, 334 " Supreme Court of, 4 Value of manufactured goods, 165 Vanderbilt, Cornelius, 38 Vegetable food, 161 Vienna under martial law, 16 Wages, rate of, 9, 341 " subdivision of, 39 ** question, 62 " word defined, 70 " high rate of, in United States, 74 Wages, statistics, 130 " theory of, 24 Walker, E. H., 240, 341 " Francis A., 24 War, dangers of modern, 19 *' versus work, 72 Wealth of United States, 31, 96 •* secret of, 136 Weeks, Joseph D., 353 Western States, grain in, 306 Wheat, 14, 296 Williams, consul at Rouen, report of, 343 Wool, 156, 266, 326 Wright, Carroll D., 129, 166, 169, 341 Yorkshire, 343 if^S^ OF thb"^ UHI7BESIT7] RETURN CIRCULATION DEPARTMENT TObbi^ 202 Main Library LOAN PERIOD 1 HOME USE 2 3 4 5 6 ALL BOOKS MAY BE RECALLED AFTER 7 DAYS 1-month loons may be renewed by calling 642-3405 6-month loons may be recharged by bringing books to Circulation Desk Renewals and recharges may be mode 4 days prior to due date DUE AS STAMPED BELOW SErm ' V - • 7 / OCT P.ID JIJM 1 9 t9f " *'W»8 J982 1 BRR i*m im 1 ^ 7s5 <^ ppp 1 9 1979. nfP.AT^^S^ NOV 17 1979 *25«B5 1 i#- RECEIVED BY OCT I 2 1984 .c IRCULATION DFPT W0M'28^^°^ 'Uaa N0!lV^r'O>!D '"'■'"■' - - ' "/ ., .• I ,•--/,■■ _ 1 FORM NO. 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