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diff --git a/28284.txt b/28284.txt new file mode 100644 index 0000000..7cff2b1 --- /dev/null +++ b/28284.txt @@ -0,0 +1,16714 @@ +The Project Gutenberg EBook of The Evolution of Modern Capitalism, by +John Atkinson Hobson + +This eBook is for the use of anyone anywhere at no cost and with +almost no restrictions whatsoever. You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: The Evolution of Modern Capitalism + A Study of Machine Production + +Author: John Atkinson Hobson + +Release Date: March 9, 2009 [EBook #28284] + +Language: English + +Character set encoding: ASCII + +*** START OF THIS PROJECT GUTENBERG EBOOK THE EVOLUTION OF MODERN CAPITALISM *** + + + + +Produced by Jeannie Howse, Peter Vachuska, David Edwards +and the Online Distributed Proofreading Team at +http://www.pgdp.net + + + + + + + * * * * * + + +-----------------------------------------------------------+ + | Transcriber's Note: | + | | + | Inconsistent hyphenation in the original document has | + | been preserved. | + | | + | Bolded text has been bracketted with ='s, =like so=. | + | Greek text has been transliterated and bracketted with | + | +'s, +like so+. | + | | + | Obvious typographical errors have been corrected. For | + | a complete list, please see the end of this document. | + | | + +-----------------------------------------------------------+ + + * * * * * + + + + +_THE CONTEMPORARY SCIENCE SERIES._ +EDITED BY HAVELOCK ELLIS. + + + + +EVOLUTION +OF MODERN CAPITALISM. + + + + +THE EVOLUTION + +OF + +MODERN CAPITALISM + +A STUDY OF MACHINE PRODUCTION. + + +BY +JOHN A. HOBSON, M.A., +AUTHOR OF "PROBLEMS OF POVERTY." + + +THE WALTER SCOTT PUBLISHING CO., LTD., +PATERNOSTER SQUARE, LONDON, E.C. +CHARLES SCRIBNER'S SONS, +153-157 FIFTH AVENUE, NEW YORK. +1902. + + + + +PREFACE. + + +In seeking to express and illustrate some of the laws of the +structural changes in modern industry, I have chosen a focus of study +between the wider philosophic survey of treatises on Social Evolution +and the special studies of modern machine-industry contained in such +works as Babbage's _Economy of Manufactures_ and Ure's _Philosophy of +Manufactures_, or more recently in Professor Schulze-Gaevernitz's +careful study of the cotton industry. By using the term "evolution" I +have designed to mark the study as one of a subject-matter in process +of organic change, and I have sought to trace in it some of those +large movements which are characteristic of all natural growth. + +The sub-title, _A Study of Machine-Production_, indicates a further +narrowing of the investigation. Selecting the operation of modern +machinery and motors for special attention, I have sought to enforce a +clearer recognition of organic unity, by dwelling upon the more +material aspects of industrial change which mark off the last century +and a half from all former industrial epochs. The position of central +importance thus assigned to machinery as a factor in industrial +evolution may be--to some extent must be--deceptive, but in bringing +scientific analysis to bear upon phenomena so complex and so +imperfectly explored, it is essential to select some single clearly +appreciable standpoint, even at the risk of failing to present the +full complexity of forces in their just but bewildering interaction. + +In tracing through the Business, the Trade, and the Industrial +Organism the chief structural and functional changes which accompany +machine-development, I have not attempted to follow out the numerous +branches of social investigation which diverge from the main line of +inquiry. Two studies, however, of "the competitive system" in its +modern working are presented; one examining the process of +restriction, by which competition of capitals gives way to different +forms of combination; the other tracing in periodic Trade Depressions +the natural outcome of unrestricted competition in private capitalist +production. + +In some final chapters I have sought to indicate the chief bearings of +the changes of industrial structure upon a few of the deeper issues of +social life, in particular upon the problem of the Industrial Town, +and the position of woman as an industrial competitor. + +A portion of Chapters VIII., IX., and X. have already appeared in the +_Contemporary Review_ and in the _Political Science Quarterly Review_, +and I am indebted to the courtesy of the editors for permission to use +them. + +I have also to acknowledge most gratefully the valuable assistance +rendered by Dr. William Smart of Glasgow University, who was kind +enough to read through the proofs of a large portion of this book, and +to make many serviceable corrections and suggestions. + + JOHN A. HOBSON. + + + + +CONTENTS. + + +CHAPTER I. + + PAGE +INTRODUCTION 1 + +Section. + 1. Industrial Science, its Standpoint and Methods of Advance. + 2. Capital as Factor in Modern Industrial Changes. + 3. Place of Machinery in Evolution of Capitalism. + 4. The Monetary Aspect of Industry. + 5. The Literary Presentment of Organic Movement. + + +CHAPTER II. + +THE STRUCTURE OF INDUSTRY BEFORE MACHINERY 10 + + 1. Dimensions of International Commerce in early Eighteenth + Century. + 2. Natural Barriers to International Trade. + 3. Political, Pseudo-economic, and Economic Barriers-- + Protective Theory and Practice. + 4. Nature of International Trade. + 5. Size, Structure, Relations of the several Industries. + 6. Slight Extent of Local Specialisation. + 7. Nature and Conditions of Specialised Industry. + 8. Structure of the Market. + 9. Combined Agriculture and Manufacture. + 10. Relations between Processes in a Manufacture. + 11. Structure of the Domestic Business: Early Stages of + Transition. + 12. Beginnings of Concentrated Industry and the Factory. + 13. Limitations in Size and Application of Capital--Merchant + Capitalism. + + +CHAPTER III. + +THE ORDER OF DEVELOPMENT OF MACHINE INDUSTRY 44 + + 1. A Machine differentiated from a Tool. + 2. Machinery in Relation to the Character of Human Labour. + 3. Contributions of Machinery to Productive Power. + 4. Main Factors in Development of Machine Industry. + 5. Importance of Cotton-trade in Machine Development. + 6. History refutes the "Heroic" Theory of Invention. + 7. Application of Machinery to other Textile Work. + 8. Reverse order of Development in Iron Trades. + 9. Leading Determinants in the General Application of + Machinery and Steam-Motor. + 10. Order of Development of modern Industrial Methods in the + several Countries--Natural, Racial, Political, Economic. + + +CHAPTER IV. + +THE STRUCTURE OF MODERN INDUSTRY 88 + + 1. Growing Size of the Business-Unit. + 2. Relative Increase of Capital and Labour in the Business. + 3. Increased Complexity and Integration of Business + Structure. + 4. Structure and Size of the Market for different + Commodities. + 5. Machinery a direct Agent in expanding Market Areas. + 6. Expanded Time-area of the Market. + 7. Interdependency of Markets. + 8. Sympathetic and Antagonistic Relations between Trades. + 9. National and Local Specialisation in Industry. + 10. Influences determining Localisation of Industry under + World-Competition. + 11. Impossibility of Final Settlement of Industry. + 12. Specialisation in Districts and Towns. + 13. Specialisation within the Town. + + +CHAPTER V. + +THE FORMATION OF MONOPOLIES IN CAPITAL 117 + + 1. Productive Economies of the Large Business. + 2. Competitive Economies of the Large Business. + 3. Intenser Competition of the few Large Businesses. + 4. Restraint of Competition and Limited Monopoly. + 5. Facilities for maintaining Price-Lists in different + Industries. + 6. Logical Outcome of Large-Scale Competition. + 7. Different Species of "Combines." + 8. Legal and Economic Nature of the "Trust." + 9. Origin and _Modus Operandi_ of the Standard Oil Trust. + 10. The Economic Strength of other Trusts. + 11. Industrial Conditions favourable to "Monopoly" + + +CHAPTER VI. + +ECONOMIC POWERS OF THE TRUST 143 + + 1. Power of a Monopoly over earlier or later Processes in + Production of a Commodity. + 2. Power over Actual or Potential Competitors. + 3. Power over Employees of a Trust. + 4. Power over Consumers. + 5. Determinants of a Monopoly Price. + 6. The Possibility of low Monopoly Prices. + 7. Considerations of Elasticity of Demand limiting Prices. + 8. Final Summary of Monopoly Prices. + + +CHAPTER VII. + +MACHINERY AND INDUSTRIAL DEPRESSION 167 + + 1. The external phenomena of Trade Depression. + 2. Correctly described as Under-production and + Over-production. + 3. Testimony to a general excess of Productive Power over the + requirement for Consumption. + 4. The connection of modern Machine-production and Depression + shown by statistics of price. + 5. Changing forms in which Over-supply of Capital is + embodied. + 6. Summary of economic relation of Machinery to Depression. + 7. Under-consumption as the root-evil. + 8. Economic analysis of "Saving." + 9. Saving requires increased Consumption in the future. + 10. Quantitative relation of parts in the organism of + Industry. + 11. Quantitative relation of Capital and Consumption. + 12. Economic limits of Saving for a Community. + 13. No limits to the possibility of individual Saving--Clash + of individual and social interests in Saving. + 14. Objection that excess in forms of Capital would drive + interests to zero not valid. + 15. Excess is in embodiments of Capital, not in real Capital. + 16. Uncontrolled Machinery a source of fluctuation. + + +CHAPTER VIII. + +MACHINERY AND DEMAND FOR LABOUR 220 + + 1. The Influence of Machinery upon the number of Employed, + dependent on "elasticity of demand." + 2. Measurement of direct effects on Employment in Staple + Manufactures. + 3. Effects of Machinery in other Employments--The Evidence of + French Statistics. + 4. Influence of Introduction of Machinery upon Regularity of + Employment. + 5. Effects of "Unorganised" Machine-industry upon Regularity. + 6. Different Ways in which modern Industry causes + Unemployment. + 7. Summary of General Conclusions. + + +CHAPTER IX. + +MACHINERY AND THE QUALITY OF LABOUR 244 + + 1. Kinds of Labour which Machinery supersedes. + 2. Influence of Machine-evolution upon intensity of physical + work. + 3. Machinery and the length of the working day. + 4. The Education of Working with Machinery. + 5. The levelling tendency of Machinery--The subordination of + individual capacity in work. + + +CHAPTER X. + +THE ECONOMY OF HIGH WAGES 261 + + 1. The Economy of Low Wages. + 2. Modifications of the Early Doctrine--Sir T. Brassey's + Evidence from Heavy Manual Work. + 3. Wages, Hours, and Product in Machine-industry. + 4. A General Application of the Economy of High Wages and + Short Hours inadmissible. + 5. Mutual Determination of Conditions of Employment and + Productivity. + 6. Compressibility of Labour and Intensification of Effort. + 7. Effective Consumption dependent upon Spare Energy of the + Worker. + 8. Growth of Machinery in relation to Standard of Comfort. + 9. Economy of High Wages dependent upon Consumption. + + +CHAPTER XI. + +SOME EFFECTS OF MODERN INDUSTRY UPON THE WORKERS AS CONSUMERS 285 + + 1. How far the different Working Classes gain from the Fall + of Prices. + 2. Part of the Economy of Machine-production compensated by + the growing Work of Distribution. + 3. The Lowest Class of Workers gains least from + Machine-production. + + +CHAPTER XII. + +WOMEN IN MODERN INDUSTRY 290 + + 1. Growing Employment of Women in Manufacture. + 2. Machinery favours Employment of Women. + 3. Wages of Women lower than of Men. + 4. Causes of Lower Wages for Women. + 5. Smaller Productivity or Efficiency of Women's Labour. + 6. Factors enlarging the scope of Women's Wage-work. + 7. "Minimum Wage" lower for Women--Her Labour often + subsidised from other sources. + 8. Woman's Contribution to the Family Wages--Effect of + Woman's Work upon Man's Wages. + 9. Tendency of Woman's Wage to low uniform level. + 10. Custom and Competition as determinants of Low Wages. + 11. Lack of Organisation among Women--Effect on Wages. + 12. Over-supply of Labour in Women's Employments the + root-evil. + 13. Low Wages the chief cause of alleged Low "Value" of + Woman's Work. + 14. Industrial Position of Woman analogous to that of + Low-skilled Men. + 15. Damage to Home-life arising from Women's Wage-work. + + +CHAPTER XIII. + +MACHINERY AND THE MODERN TOWN 324 + + 1. The Modern Industrial Town as a Machine-product. + 2. Growth of Town as compared with Rural Population in the + Old and New Worlds. + 3. Limits imposed upon the Townward Movement by the Economic + Conditions of World-industry. + 4. Effect of increasing Town-life upon Mortality. + 5. The impaired quality of Physical Life in Towns. + 6. The Intellectual Education of Town-life. + 7. The Moral Education of Town-life. + 8. Economic Forces making for Decentralisation. + 9. Desirability of Public Control of Transport Services to + effect Decentralisation. + 10. Long Hours and Insecurity of Work as Obstacles to + Reforms. + 11. The Principle of Internal Reform of Town-life. + + +CHAPTER XIV. + +CIVILISATION AND INDUSTRIAL DEVELOPMENT 350 + + 1. Imperfect Adjustment of Industrial Structure to its + Environment. + 2. Reform upon the Basis of Private Enterprise and Free + Trade. + 3. Freedom and Transparency of Industry powerless to cure the + deeper Industrial Maladies. + 4. Beginnings of Public Control of Machine-production. + 5. Passage of Industries into a public Non-competitive + Condition. + 6. The _raison d'etre_ of Progressive Collectivism. + 7. Collectivism follows the line of Monopoly. + 8. Cases of "Arrested Development:" the Sweating Trades. + 9. Retardation of rate of Progress in Collective Industries. + 10. Will Official Machine-work absorb an Increasing + Proportion of Energy? + 11. Improved Quality of Consumption the Condition of Social + Progress. + 12. The Highest Division of Labour between Machinery and Art. + 13. Qualitative Consumption defeats the Law of Decreasing + Returns. + 14. Freedom of Art from Limitations of Matter. + 15. Machinery and Art in production of Intellectual Wealth. + 16. Reformed Consumption abolishes Anti-Social Competition. + 17. Life itself must become Qualitative. + 18. Organic Relations between Production and Consumption. + 19. Summary of Progress towards a Coherent Industrial + Organism. + +INDEX 385 + + + + +THE EVOLUTION OF MODERN CAPITALISM. + + + + +THE EVOLUTION OF MODERN CAPITALISM. + + + + +CHAPTER I. + +INTRODUCTION. + + Sec. 1. _Industrial Science, its Standpoint and Methods of Advance._ + Sec. 2. _Capital as Factor in Modern Industrial Changes._ + Sec. 3. _Place of Machinery in Evolution of Capitalism._ + Sec. 4. _The Monetary Aspect of Industry._ + Sec. 5. _The Literary Presentment of Organic Movement._ + + +Sec. 1. Science is ever becoming more and more historical in the sense +that it becomes more studiously anxious to show that the laws or +principles with whose exposition it is concerned not merely are +rightly derived from observation of phenomena but cover the whole +range of these phenomena in the explanation they afford. So likewise +History is ever becoming more scientific in the sense that facts or +phenomena are so ordered in their setting as to give prominence to the +ideas or principles which appear to relate them and of which they are +the outward expression. Thus the old sharp line, of distinction has +slipped away, and we see there is no ultimate barrier between a study +of facts and a study of the laws or principles which dominate these +facts. In this way the severance of History and Science becomes less +logically justifiable. Yet it is still convenient that we should say +of one branch of study that it is historical in the sense that it is +directly and consciously engaged in the collection and clear +expression of facts or phenomena as they stand objectively in place or +time without any conscious reference to the laws which relate or +explain them; of another branch of study that it is scientific because +it is engaged in the discovery, formulation, and correct expression of +the laws according to which facts are related, without affecting to +give a full presentment of those facts. The treatment in this book +belongs in this sense to economic science rather than to industrial +history as being an endeavour to discover and interpret the laws of +the movement of industrial forces during the period of the eighteenth +and nineteenth centuries. + +It cannot, however, be pretended that any high degree of exactitude +can attach to such a scientific study. + +Two chief difficulties beset any attempt to explain industrial +phenomena by tracing the laws of the action of the forces manifested +in them. The first is that only a limited proportion of the phenomena +which at any given time constitute Industry are clearly and definitely +ascertainable, and it may always be possible that the laws which +satisfactorily explain the statical and dynamical relations of these +may be subordinate or even counteracting forces of larger movements +whose dominance would appear if all parts of the industrial whole were +equally known. + +The second difficulty, closely related to the first, is the inherent +complexity of Industry, the continual and close interaction of a +number of phenomena whose exact size and relative importance is +continually shifting and baffles the keenest observer. + +These difficulties, common to all sciences, are enhanced in +sociological sciences by the impossibility of adequate experiment in +specially prepared environments. + +The degree of exactitude attainable in industrial sciences may thus +appear to be limited by the development of statistical inquiry. Since +the collection of accurate statistics, even on those matters which are +most important, and which lend themselves most easily to statistical +description, is a modern acquirement which has not yet widely spread +over the whole world, while the capacity for classifying and making +right use of statistics is still rarer, it is held by some that in a +study where so much depends upon accurate statements of quantity +little advance is at present possible. + +And it is, of course, true that until the advance of organised +curiosity has provided us with a complete measurement of industrial +phenomena over a wide area of commerce and over a considerable period +of time, the inductive science of Economics cannot approach +exactitude. + +But a study which cannot claim this exactness may yet be a science, +and may have its value. A hypothesis which best explains the generally +apparent relation between certain known phenomena is not the less +science because it is liable to be succeeded by other hypotheses which +with equal relative accuracy explain a wider range of similar +phenomena. It is true that in studies where we know that there exists +a number of unascertained factors we shall expect a more fundamental +displacement of earlier and more speculative hypotheses than in +studies where we know, or think we know, that most of the phenomena +with which we are concerned are equally within our ken: but the +earlier scientific treatment, so far as it goes, is equally necessary +and equally scientific. + +In modern industrial changes many different factors, material and +moral, are discernibly related to one another in many complex ways. +According as one or other of the leading factors is taken for a +scientific objective the study assumes a widely different character. + +For example, since the end of Industry is wealth for consumption it +would be possible to group the industrial phenomena accordingly as +they served more fully and directly to satisfy human wants, or as they +affected quantitatively or qualitatively the standard of consumption, +and to consider the reflex actions of changed consumption upon modes +of industrial activity. Or again, considering Industry to consist +essentially of organised productive human effort, those factors most +closely related to changes in nature, conditions, and intensity of +work might form the centre of scientific interest; and we might group +our facts and forces according to their bearing upon this. These +points of view would give us different objective scientific studies. + +Or, once more, taking a purely subjective standpoint, we might search +out the intellectual expression of these industrial changes in the +changing thought and feeling of the age, tracing the educative +influences of industrial development upon (1) the deliberate judgments +of the business world and of economic thinkers as reflected in +economic writings; (2) politics, literature, and art through the +changes of social environment, and the direct stimulation of new ideas +and sentiments. The deeper and more important human bearings of the +changes in industrial environment might thus be brought into +prominence as well as the reaction by which, through the various +social avenues of law, public opinion, and private organised activity, +these intellectual forces have operated in their turn upon the +industrial structure. + +The crowning difficulty of an adequate scientific treatment consists in +the fact that each and all of these scientific objects ought to be +pursued simultaneously; that is to say, the whole of the +phenomena--industrial, intellectual, political, moral, aesthetic--should +be presented in their just but ever-changing proportions. + +This larger philosophic treatment is only named in order that it may +be realised how narrow and incomplete would be even the amplest +fulfilment of the purpose indicated in the title of this book. + +Sec. 2. Industrial science has not yet sufficiently advanced to enable a +full treatment of the objective phenomena to be attempted. + +The method here adopted is to take for our intellectual objective one +important factor in modern industrial movements, to study the laws of +its development and activity, and by observing the relations which +subsist between it and other leading factors or forces in industry to +obtain some clearer appreciation and understanding of the structure of +industry as a whole and its relation to the evolution of human +society. This central factor is indicated by the descriptive title +peculiarly applied to modern industry, Capitalism. A clear view of the +phenomena grouped together under the head of the Industrial Revolution +cannot fail to give prominence to the changes that have taken place in +the structure and functional character of Capital. Whatever +transformations have taken place in the character of land, the raw +material of industrial wealth, and of labour, or those abilities and +faculties of man which operate upon the raw material, have occurred +chiefly and directly through the agency of the enlarged and more +complex use of those forms of material wealth which, while embodying +some element of human effort, are not directly serviceable in +satisfying human want. + +Writers upon Political Economy have brought much metaphysical acumen +to bear upon definitions of Capital, and have reached very widely +divergent conclusions as to what the term ought to mean, ignoring the +clear and fairly consistent meaning the term actually possesses in the +business world around them. The business world has indeed two views of +Capital, but they are consistent with one another. Abstractly, money +or the control of money, sometimes called credit, is Capital. +Concretely, capital consists of all forms of marketable matter which +embody labour. Land or nature is excluded except for improvements: +human powers are excluded as not being matter; commodities in the +hands of consumers are excluded because they are no longer marketable. +Thus the actual concrete forms of capital are the raw materials of +production, including the finished stage of shop goods; and the plant +and implements used in the several processes of industry, including +the monetary implements of exchange. Concrete business capital is +composed of these and of nothing but these.[1] In taking modern +industrial phenomena as the subject of scientific inquiry it is better +to accept such terminology as is generally and consistently received +by business men, than either to invent new terms or to give a private +significance to some accepted term which shall be different from that +given by other scientific students, and, if we may judge from past +experience, probably inferior in logical exactitude to the current +meaning in the business world. + +Sec. 3. The chief material factor in the evolution of Capitalism is +machinery. The growing quantity and complexity of machinery applied to +purposes of manufacture and conveyance, and to the extractive +industries, is the great special fact in the narrative of the +expansion of modern industry. + +It is therefore to the development and influence of machinery upon +industry that we shall chiefly direct our attention, adopting the +following method of study. It is first essential to obtain a clear +understanding of the structure of industry or "the industrial +organism" as a whole, and of its constituent parts, before the new +industrial forces had begun to operate. We must then seek to ascertain +the laws of the development and application of the new forces to the +different departments of industry and the different parts of the +industrial world, examining in certain typical machine industries the +order and pace of the application of the new machinery and motor to +the several processes. Turning our attention again to the industrial +organism, we shall strive to ascertain the chief changes that have +been brought about in the size and structural character of industry, +in the relations of the several parts of the industrial world, of the +several trades which constitute industry, of the processes within +these trades, of the businesses or units which comprise a trade or a +market, and of the units of capital and labour comprising a business. +It will then remain to undertake closer studies of certain important +special outcomes of machinery and factory production. These studies +will fall into three classes. (1) The influences of machine-production +upon the size of the units of capital, the intensification and +limitation of competition; the natural formation of Trusts and other +forms of economic monopoly of capital; trade depressions and grave +industrial disorders due to discrepancies between individual and +social interests in the working of modern methods of production. (2) +Effects of machinery upon labour, the quantity and regularity of +employment, the character and remuneration of work, the place of women +in industry (3) Effects upon the industrial classes in the capacity of +consumers, the growth of the large industrial town and its influences +upon the physical, intellectual, moral life of the community. Lastly, +an attempt will be made to summarise the net influences of modern +capitalist production in their relation to other social progressive +forces, and to indicate the relations between these which seem most +conducive to the welfare of a community measured by generally accepted +standards of character or happiness. + +Sec. 4. Since every industrial act in a modern community has its monetary +counterpart, and its importance is commonly estimated in terms of +money, it will be evident that the growth of capitalism might be +studied with great advantage in its monetary aspect. Corresponding to +the changes in productive methods under mechanical machinery we should +find the rapid growth of a complex monetary system reflecting in its +international and national character, in its elaborate structure of +credit, the leading characteristics which we find in modern productive +and distributive industry. The whole industrial movement might be +regarded from the financial or monetary point of view. But though such +a study would be capable of throwing a flood of light upon the +movements of concrete industrial factors at many points, the +intellectual difficulties involved in simultaneously following the +double study, in constantly passing from the more concrete to the more +abstract contemplation of industrial phenomena, would tax the mental +agility of students too severely, and would greatly diminish the +chance of a substantially accurate understanding of either aspect of +modern industry. We shall therefore in this study confine our +attention to the concrete aspect of capitalism, merely indicating by +passing references some of the direct effects upon industrial methods, +especially in the expansion and complexity of markets, of the +elaborate monetary system of modern exchange. + +Sec. 5. The inherent difficulty which besets every literary presentation +of the study of a living and changing organism is here present in no +ordinary degree. A book of physiology is necessarily defective in that +it can neither present the just simultaneity of phenomena which occur +together, nor the just sequence of phenomena which are successive. +Diagrams may serve effectively to set forth tolerably simple +simultaneity, but a complex diagram inevitably fails of its object; +for it confuses the sight of one who seeks to simultaneously grasp the +whole, and thus compels a successive examination of different parts +which is generally inferior to skilled narration, in that it affords +no security of the fittest order of examination of the parts. For +certain simple relations between the movements of a few definite +objects a working model may be serviceable; but when complex changes +of shape, pace, and local relations exist, when intricate interaction +takes place, and when new phenomena arise affecting by their presence +all former ones, little can be effected by such visual presentment. +Still less can a succession of diagrams assist us to realise the +continuity of the working of such shifting forces as are presented in +industrial movements. + +Thus while the impossibility of adequate experimentation, the +difficulties of scientific observations of phenomena so vast in scope +and so intricate in their relations, make the student of sociological +subjects more dependent upon printed records for his material than is +the case in most other sciences, these printed records induce a +sequence of thought antagonistic to the grasp of a living and moving +unity. This cause is primarily responsible for the failure of many of +the ablest and subtlest economic treatises to impress upon the reader +a clear conception of the industrial world as a single "going +concern." Each piece of the mechanism is clearly described, and the +reader is informed how it fits into the parts which are most closely +related to it, but no simultaneous grasp of the mechanism as a working +whole is attained. When we graft upon the idea of a mechanism that +character of continuous self-development which transforms it into an +"organism," the synthesis of the changing phenomena is still more +difficult to comprehend. These difficulties can only be overcome by a +recognition that the scientific imagination must play a larger part +here than it does in those sciences whose subject-matter is more +amenable to direct observation. In the latter the chief function of +the imagination will be the increase of knowledge by means of +hypotheses which tentatively transcend the region of known facts. + +In economic science, as Cairnes has ably shown, the use of hypothesis +is much wider, serving in large measure as a substitute for +experiment.[2] But the scientific imagination has another constant +service to perform. Its exercise is constantly required by the +economist, and in general by the sociologist, to gather into true +relations of time, space, and causality those intricately connected +phenomena which, though individually amenable to sensuous +presentation, are not able to be thus presented as an aggregate in +their right organic order. + +The attempts to construct a deductive economic science upon a +piece-meal basis by framing special and separate theories of wages, +rent, value, the functions of money, and so forth, are now recognised +to be in large measure failures precisely because they involve the +fundamental scientific fallacy of supposing that the several parts of +an organic whole can be separately studied, and that from this study +of the parts we can construct a correct idea of the whole. As in +economic theory so in the comprehension of industrial history, no +detailed investigation of a number of different heaps of facts +laboriously collected by intellectual moles will suffice for our +purpose. To understand the evolution of the system of modern industry +we must apply to the heaps of bare unordered facts those principles of +order which are now recognised as the widest generalisations or the +most valid assumptions derivable from other sciences, and endeavour +without slavish conformity to the formulae of these other sciences to +trace in the growth of industrial organisms those general laws of +development which seem common to all bodies of closely-related +phenomena. + +FOOTNOTES: + +[1] Professor Marshall regards this restricted use of capital as +"misleading," rightly urging that "there are many other things which +truly perform the services commonly attributed to capital" +(_Principles_ Bk. II., chap. iv.). But if we enlarge our definition so +as to include all these "other things" we shall be driven to a +political economy which shall widely transcend Industry as we now +understand the term, and shall comprehend the whole science and art of +life so far as it is concerned with human effort and satisfaction. If +it is convenient and justifiable to retain for certain purposes of +study the restricted connotation of Industry now in vogue, the +confinement of Capital as above to Trade Capital is logically +justified. For a fuller treatment of the question of the use of the +term Capital in forming a terminology descriptive of the parts of +Industry the reader is referred to Chapter VII., and in particular to +Appendix I. + +[2] _Logical Method of Political Economy_, p. 81, etc. + + + + +CHAPTER II. + +THE STRUCTURE OF INDUSTRY BEFORE MACHINERY. + + Sec. 1. _Dimensions of International Commerce in early Eighteenth + Century._ + Sec. 2. _Natural Barriers to International Trade._ + Sec. 3. _Political, Pseudo-economic, and Economic Barriers-- + Protective Theory and Practice._ + Sec. 4. _Nature of International Trade._ + Sec. 5. _Size, Structure, Relations of the several Industries._ + Sec. 6. _Slight Extent of Local Specialisation._ + Sec. 7. _Nature and Conditions of Specialised Industry._ + Sec. 8. _Structure of the Market._ + Sec. 9. _Combined Agriculture and Manufacture._ + Sec. 10. _Relations between Processes in a Manufacture._ + Sec. 11. _Structure of the Domestic Business: Early Stages of + Transition._ + Sec. 12. _Beginnings of Concentrated Industry and the Factory._ + Sec. 13. _Limitations in Size and Application of Capital-- + Merchant Capitalism._ + + +Sec. 1. In order to get some clear understanding of the laws of the +operation of the new industrial forces which prevail under +machine-production it is first essential to know rightly the structure +and functional character of the "industrial organism" upon which they +were destined to act. In order to build up a clear conception of +industry it is possible to take either of two modes of inquiry. Taking +as the primary cell or unit that combination of labour and capital +under a single control for a single industrial purpose which is termed +a Business, we may examine the structure and life of the Business, +then proceed to discover how it stands related to other businesses so +as to form a Market, and, finally, how the several Markets are +related locally, nationally, internationally so as to yield the +complex structure of Industry as a whole. Or reversely, we may take +Industry as a whole, the Industrial Organism as it exists at any given +time, consider the nature and extent of the cohesion existing between +its several parts, and, further, resolving these parts into their +constituent elements, gain a close understanding of the extent to +which differentiation of industrial functions has been carried in the +several divisions. + +Although in any sociological inquiry these two methods are equally +valid, or, more strictly speaking, are equally balanced in virtues and +defects, the latter method is here to be preferred, because by the +order of its descent from the whole to the constituent parts it brings +out more definitely the slight cohesiveness and integration of +industry beyond the national limits, and serves to emphasise those +qualities of nationalism and narrow localism which mark the character +of earlier eighteenth century industry. We are thus enabled better to +recognise the nature and scope of the work wrought by the modern +industrial forces which are the central object of study. + +While the Market or the Trade is less and less determined or confined +by national or other political boundaries in modern times, and +nationalism is therefore a factor of diminishing importance in the +modern science of economics, the paramount domination of politics over +large commerce in the last century, acting in co-operation with other +racial and national forces, obliges any just analysis of eighteenth +century industry to give clear and early emphasis to the slight +character of the commercial interdependency among nations. The degree +of importance which statesmen and economists attached to this foreign +commerce as compared with home trade, and the large part it played in +the discussion and determination of public conduct, have given it a +prominence in written history far beyond its real value.[3] + +It is true that through the Middle Ages a succession of European +nations rose to eminence by the development of navigation and +international trade, Italy, Portugal, Spain, France, Holland, and +England; but neither in size nor in character was this trade of the +first importance. Even in the case of those nations where it was most +developed it formed a very small proportion of the total industry of +the country, and it was chiefly confined to spicery, bullion, +ornamental cloths, and other objects of art and luxury. + +It is important to recognise that in the first half of the eighteenth +century international trade still largely partook of this character. +Not only did it bear a far smaller proportion to the total industry of +the several countries than does foreign trade to-day, but it was still +engaged to a comparatively small extent with the transport of +necessaries or prime conveniences of life. Each nation, as regards the +more important constituents of its consumption, its staple foods, +articles of clothing, household furniture, and the chief implements of +industry, was almost self-sufficing, producing little that it did not +consume, consuming little it did not produce. + +In 1712 the export trade of England is officially estimated at +L6,644,103,[4] or considerably less than one-sixth of the home trade +of that date as calculated by Smith in his _Memoirs of Wool_. Such an +estimate, however, gives an exaggerated impression of the relation of +foreign to home trade, because under the latter no account is taken of +the large domestic production of goods and services which figure in no +statistics. A more instructive estimate is that which values the total +consumption of the English people in 1713 at forty-nine or fifty +millions, out of which about four millions covers the consumption of +foreign goods.[5] In 1740 imports amounted to L6,703,778, exports to +L8,197,788. In 1750 they had risen respectively to L7,772,339 and +L12,699,081,[6] and ten years later to L9,832,802 and L14,694,970. +Macpherson, whose _Annals of Commerce_ are a mine of wealth upon the +history of foreign commerce in the eighteenth century, after +commenting upon the impossibility of obtaining a just estimate of the +value of home trade, alludes to a calculation which places it at +thirty-two times the size of the export trade. Macpherson contents +himself with concluding that it is "a vast deal greater in value than +the whole of the foreign trade."[7] There is every reason to believe +that in the case of Holland and France, the only two other European +nations with a considerable foreign trade, the same general conclusion +will apply. + + [Illustration: PROGRESS OF FOREIGN TRADE IN ENGLAND.] + +The smallness of the part which foreign trade played in industry +signifies that in the earlier part of the eighteenth century the +industrial organism as a whole must be regarded as a number of +tolerably self-sufficing and therefore homogeneous national forms +attached to one another by bonds which are few and feeble. As yet +there was little specialisation in national industry, and therefore +little integration of national parts of the world-industry. + +Sec. 2. Since the breaking-down of international barriers and the +strengthening of the industrial bonds of attachment between nations +will be seen to be one of the most important effects of the +development of machine-industry, some statement of the nature of these +barriers and their effect upon the size and character of international +trade is required. + +Though considerable advances had been made by England and Holland at +the beginning of the eighteenth century in the improvement of +harbours, the establishment of lighthouses, and the development of +marine insurance,[8] navigation was still subject to considerable +risks of the loss of life and of investments, while these "natural" +dangers were increased by the prevalence of piracy. Voyages were slow +and expensive, commerce between distant nations being necessarily +confined to goods of a less perishable character which would stand the +voyage. Trade in fresh foods, which forms so large a part of modern +commerce, would have been impossible except along the coasts of +adjoining nations. With these natural barriers to commerce may be +reckoned the defective knowledge of the position, resources, and +requirements of large parts of the earth which now fill an important +place in commerce. The new world was but slightly opened up, nor could +its known resources be largely utilised before the development of more +adequate machinery of transport. We can scarcely realise the +inconveniences, costs, and risks entailed by the more distant branches +of foreign trade at a time when the captain of a merchant-ship still +freighted his vessel at his own expense, and when each voyage was a +separate speculation. Even in the early nineteenth century the +manufacturer commonly shipped his surplus produce at his own risk, +employing the merchant upon commission, and in the trade with the +Indies, China, or South America he had frequently to lie out of his +money or his return freight of indigo, coffee, tea, etc., for as long +as eighteen months or two years, and to bear the expense of +warehousing as well as the damage which time and tide inflicted on his +goods. + +Sec. 3. Next come a series of barriers, partly political, partly +pseudo-economic, in which the antagonism of nations took shape, the +formation of political and industrial theories which directed the +commercial intercourse of nations into certain narrow and definite +channels. + +Two economic doctrines, separate in the world of false ideas, though +their joint application in the world of practice has led many to +confuse them, exercised a dominant influence in diminishing the +quantity, and determining the quality of international trade in the +eighteenth century. These doctrines had reference respectively to the +construction and maintenance of home industries and the balance of +trade. The former doctrine, which was not so much a consciously-evolved +theory as a short-sighted, intellectual assumption driven by the urgent +impulse of vested interests into practical effect, taught that, on the +one hand, import trade should be restricted to commodities which were +not and could not with advantage be produced at home, and to the +provision of cheap materials for existing manufactures; while export +trade, on the other hand, should be generally encouraged by a system of +bounties and drawbacks. This doctrine was first rigidly applied by the +French minister, Colbert, but the policy of France was faithfully +copied by England and other commercial nations and ranked as an +orthodox theory of international trade. + +The Balance of Trade doctrine estimated the worth of a nation's +intercourse with another by the excess of the export over the import +trade, which brought a quantity of bullion into the exporting country. +This theory was also widely spread, though obviously its general +application would have been destructive of all international commerce. +The more liberal interpretation of the doctrine was satisfied with a +favourable balance of the aggregate export over the aggregate import +trade of the country, but the stricter interpretation, generally +dominant in practice, required that in the case of each particular +nation the balance should be favourable. In regarding England's +commerce with a foreign nation, any excess in import values over +export was spoken of as "a loss to England." England deliberately cut +off all trade with France during the period 1702 to 1763 by a system +of prohibitive tariffs urged by a double dread lest the balance should +be against us, and lest French textile goods might successfully +compete with English goods in the home markets. On the other hand, we +cultivated trade with Portugal because "we gain a greater balance from +Portugal than from any other country whatever." The practical policy +prevalent in 1713 is thus summarised by one of its enthusiastic +upholders--"We suffer the goods and merchandises of Holland, Germany, +Portugal, and Italy to be imported and consumed among us; and it is +well we do, for we expect a much greater value of our own to those +countries than we take from them. So that the consumption of those +nations pays much greater sums to the rents of our lands and the +labour of our people than ours does to theirs. But we keep out as much +as possible the goods and merchandises of France, because our +consumption of theirs would very much hinder the consumption of our +own, and abate a great part of forty-two millions which it now pays to +the rents of our lands and the labour of our people."[9] Thus our +policy was to confine our import trade to foreign luxuries and raw +materials of manufacture which could not be here produced, drawn +exclusively from countries where such trade would not turn the balance +against us, and, on the other hand, to force our export trade on any +country that would receive it. Since every European nation was largely +influenced by similar ideas and motives, and enforced upon their +colonies and dependencies a like line of conduct, many mutually +profitable exchanges were prevented, and commerce was confined to +certain narrow and artificial grooves, while the national industrial +energy was wasted in the production of many things at home which could +have been more cheaply obtained from foreign countries through +exchange. + +The following example may suffice to illustrate the intricacy of the +legislation passed in pursuance of this policy. It describes a change +of detailed policy in support and regulation of textile trade:-- + +"A tax was laid on foreign linens in order to provide a fund for +raising hemp and flax at home; while bounties were given on these +necessary articles from our colonies, the bounty on the exportation of +hemp was withdrawn. The imposts on foreign linen yarn were withdrawn. +Bounties were given on British linen cloth exported; while the making +of cambricks was promoted, partly by prohibiting the foreign and +partly by giving fresh incentives, though without success, to the +manufacture of cambricks within our island. Indigo, cochineal, and +logwood, the necessaries of dyes, were allowed to be freely +imported."[10] + +The encouragement of English shipping (partly for commercial, partly +for political reasons) took elaborate shape in the Navigation Acts, +designed to secure for English vessels a monopoly of the carrying +trade between England and all other countries which sent goods to +English or to colonial shores. This policy was supported by a network +of minor measures giving bounties to our colonies for the exportation +of shipping materials, pitch, tar, hemp, turpentine, masts, and spars, +and giving bounties at home for the construction of defensible ships. +This Navigation policy gave a strong foundational support to the whole +protective policy. Probably the actuating motives of this policy were +more political than industrial. Holland, the first to apply this +method systematically, had immensely strengthened her maritime power. +France, though less successfully, had followed in her wake. Doubtless +there were many clear-thinking Englishmen who, though aware of the +damage done to commerce by our restrictive regulations about shipping, +held that the maintenance of a powerful navy for the defence of the +kingdom and its foreign possessions was an advantage which outweighed +the damage.[11] + +The selfish and short-sighted policy of this protective system found +its culminating point in the treatment of Ireland and the American +plantations. The former was forbidden all manufacture which might +either directly or indirectly compete with English industry, and was +compelled to deal exclusively with England; the American colonies were +forbidden to weave cloth, to make hats, or to forge a bolt, and were +compelled to take all the manufactured goods required for their +consumption from England. + +The freedom and expansion of international commerce was further +hampered by the policy of assigning monopolies of colonial and foreign +trade to close Chartered Companies. This policy, however, defensible +as an encouragement of early mercantile adventure, was carried far +beyond these legitimate limits in the eighteenth century. In England +the East Indian was the most powerful and successful of these +companies, but the assignment of the trade with Turkey, Russia, and +other countries to chartered companies was a distinct hindrance to the +development of foreign trade. + +Our foreign trade at that period might indeed be classed or graded in +accordance with the degree of encouragement or discouragement offered +by the State. + +Imports would fall into four classes. + + 1. Imports forbidden either (_a_) by legislative prohibition, + or (_b_) by prohibitive taxation. + + 2. Imports admitted but taxed. + + 3. Free imports. + + 4. Imports encouraged by bounties. + +Exports might be graded in similar fashion. + + 1. Prohibited exports (_e.g._, sheep and wool, raw hides, + tanned leather, woollen yarn, textile implements,[12] + certain forms of skilled labour). + + 2. Exports upon which duties are levied (_e.g._, coals[13]). + + 3. Free exports. + + 4. Exports encouraged by bounties, or by drawbacks. + +The unnatural and injurious character of most of this legislation is +best proved by the notable inability to effectively enforce its +application. The chartered companies were continually complaining of +the infringement of their monopolies by private adventurers, and more +than one of them failed through inability to crush out this illegal +competition. A striking condemnation of our policy towards France +consisted in the growth of an enormous illicit trade which, in spite +of the difficulties which beset it, made a considerable part of our +aggregate foreign trade during the whole of the century. The lack of +any clear perception of the mutuality of advantage in foreign and +colonial trade was the root fallacy which underlay these restrictions. +Professor Cunningham rightly says of the colonial policy of England, +that it "implied that each distinct member should strengthen the head, +and not at all that these members should mutually strengthen each +other."[14] + +So, as we tried to get the better of our colonies, still more +rigorously did we apply the same methods to foreign countries, +regarding each gain which accrued to us as an advantage which would +have wholly gone to the foreigner if we had not by firmness and +enterprise secured it for ourselves. + +The slight extent of foreign intercourse was, however, partly due to +causes which are to be regarded as genuinely economic. The life and +experience of the great mass of the population of all countries was +extremely restricted; they were a scattered and rural folk whose wants +and tastes were simple, few, home-bred, and customary. The customary +standard of consumption, slowly built up in conformity with local +production, gave little encouragement to foreign trade. Moreover, to +meet the new tastes and the more varied consumption which gradually +found its way over this country, it was in conformity with the +economic theory and practice of the day to prefer the establishment of +new home industries, equipped if necessary with imported foreign +labour, to the importation of the products of such labour from abroad. +So far as England, in particular, is concerned, the attitude was +favoured by the political and religious oppression of the French +government which supplied England in the earlier eighteenth century +with a constant flow of skilled artisan labour. Many English +manufacturers profited by this flow. Our textile industries in silk, +wool, and linen, calico-printing, glass, paper, and pottery are +special beholden to the new arts thus introduced. + +Among the economic barriers must be reckoned the slight development +of international credit, and of the machinery of exchange. + +Sec. 4. These barriers, natural, political, social, economic, against +free international intercourse, throw important light upon the general +structure of world-industry in the eighteenth century. + +In this application they determined and strictly limited not only the +quantity but the nature of the international trade. The export trade +of England, for example, in 1730 was practically confined to woollen +goods and other textile materials, a small quantity of leather, iron, +lead, silver, and gold plate, and a certain number of re-exported +foreign products, such as tobacco and Indian calicoes. The import +trade consisted of wine and spirits, foreign foods, such as rice, +sugar, coffee, oil, furs, and some quantity of foreign wool, hemp, +silk, and linen-yarn, as material for our specially favoured +manufactures. Having regard to the proportion of the several +commodities, it would not be much exaggeration to summarise our +foreign trade by saying that we sent out woollen goods and received +foreign foods. These formed the great bulk of our foreign trade.[15] +Excepting the woollen goods and a small trade in metals, leather is +the only manufactured article which figured to any appreciable extent +in our export of 1730. At that time it is clear that in the main +English manufacture, as well as English agriculture, was for the +supply of English wants. The same was true of other industrial +countries. Holland and France, who divided with England the shipping +supremacy, had a foreign trade which, though then deemed considerable, +bore no greater proportion to the total industry of these countries +than in the case of England. Germany, Italy, Russia, Spain, and even +Portugal were almost wholly self-sustained. + +Regarding, then, the known and related world of that time in the light +of an industrial organism, we must consider it as one in which the +processes of integration and of differentiation of parts has advanced +but a little way, consisting as yet of a number of homogeneous and +incoherent national cells. + +This homogeneity is of course qualified by differences in production +and consumption due to climate, natural products, national character +and institutions, and the development of industrial arts in the +several nations. + +Sec. 5. This consideration of the approximate homogeneity of the national +units of world-industry gives a higher scientific value to the +analysis of a single typical industrial nation such as England, than +would be the case in modern times, when the work of differentiation of +industrial functions among the several nations has advanced much +further. + +Taking, therefore, the national industry of England as the special +subject of analysis, we may seek to obtain a clear conception of the +size, structure, and connections, of the several branches of industry, +paying special regard to the manufactures upon which the new +industrial forces were chiefly to operate. + +It is not possible to form a very accurate estimate of the relative +importance of the different industries as measured either by the money +value of their products, or by the amount of labour engaged in +producing them. Eighteenth century statistics, as we saw, furnished no +close estimate of the total income of the nation or of the value of +home industries. Since no direct census of the English population was +taken before 1805, the numbers were never exactly known, and +eighteenth century economists spent much time and ingenuity in trying +to ascertain the growth of population by calculations based upon the +number of occupied houses, or by generalising from slender and +unreliable local statistics, without in the end arriving at any close +agreement. Still less reliable will be the estimates of the relative +size and importance of the different industries. + +Two such attempts, however, one slightly prior to the special period +we are investigating, and one a little later, may be taken as general +indications of the comparative importance of the great divisions of +industry, agriculture, manufacture, distribution or commerce. + +The first is that of Gregory King in the year 1688. King's +calculation, however, can only be regarded as roughly approximate. The +quantity of combined agriculture and manufacture, and the amount of +domestic industry for domestic consumption, renders the manufacturing +figures, however carefully they might have been collected, very +deceptive. The same criticism, though to a less degree, applies to the +estimate of Arthur Young for 1769. + + [Illustration] + +If to Young's estimate of the population dependent upon agriculture we +add the class of landlords and their direct dependents and a proper +proportion of the non-industrious poor, who, though not to be so +classed in a direct measurement of occupations, are supported out of +the produce of agriculture, we shall see that in 1769 we are justified +in believing that agriculture was in its productiveness almost +equivalent to the whole of manufactures and commerce. + +In turning to the several branches of manufacture, the abnormal +development of one of them, viz. the woollen, for purposes of foreign +trade, marks the first and only considerable specialisation of English +industry before the advent of steam machinery. With the single +exception of woollen goods almost the whole of English manufactures +were for home consumption. At the opening of the eighteenth century, +and even as late as 1770, no other single manufacture played any +comparable part in the composition of our export trade. + +According to Chalmers,[16] in the period 1699-1701, the annual value +of woollen exports was over two and a half million pounds, or about +two-fifths of the total export trade, while in 1769-71 it still +amounted to nearly one-third of the whole, giving entire or partial +employment to no fewer than "a million and a half of people," or half +of the total number assigned by Young to manufacture. + +Next to the woollen, but far behind in size and importance, came the +iron trade. In 1720 England seems to have developed her mining +resources so imperfectly as to be in the condition of importing from +foreign countries 20,000 out of the 30,000 tons required for her +hardware manufactures.[17] Almost all this iron was destined to home +consumption with the exception of hardware forced upon the American +colonies, who were forbidden to manufacture for themselves. In 1720 it +is calculated that mining and manufacture of iron and hardware +employed 200,000 persons.[18] + +Copper and brass manufactures employed some 30,000 persons in +1720.[19] + +Silk was the only other highly developed and considerable +manufacture. It had, however, to contend with Indian competition, +introduced by the East India Company, and also with imported +calicoes.[20] In 1750 there were about 13,000 looms in England, the +product of which was almost entirely used for home consumption. Cotton +and linen were very small manufactures during the first half of the +eighteenth century. At the beginning of the century the linen trade +was chiefly in the hands of Russia and Germany, although it had taken +root in Ireland as early as the close of the seventeenth century, and +was worked to some extent in Lancashire, Leicestershire, and round +Darlington in Yorkshire, which districts supplied the linen-warp to +the cotton weavers.[21] As for cotton, even in 1760 not more than +40,000 persons were engaged in the manufacture, and in 1764 the cotton +exports were but one-twentieth of the value of the woollen +exports.[22] The small value of the cotton trade and an anticipatory +glance at its portentous after-growth is conveyed in the following +figures:-- + + Home Market. Export Trade. + + 1766 L379,241 L220,759 (Postletwayte) + 1819-21 13,044,000 15,740,000 } + 1829-31 13,351,000 18,074,000 } (Ellison[23]) + +The many other little manufactures which had sprung up, such as glass, +paper, tin-plate, produced entirely for home consumption, and employed +but a small number of workers. + +Sec. 6. If we turn from the consideration of the size of English industry +and the several departments to the analysis of its structure and the +relation to the several trades, we shall find the same signs of +imperfect organic development which we found in the world-industry, +though not so strongly marked. Just as we found each country in the +main self-sufficing, so we find each district of England (with a few +significant exceptions) engaged chiefly in producing for its own +consumption. There was far less local specialisation in industry than +we find to-day. The staple industries, tillage, stock-raising, and +those connected with the supply of the common articles of clothing, +furniture, fuel, and other necessaries were widespread over the whole +country. + +Though far more advanced than foreign intercourse, the internal trade +between more distant parts of England was extremely slight. Defective +facilities of communication and transport were of course in large +measure responsible for this. + +The physical obstructions to such freedom of commerce as now subsists +were very considerable in the eighteenth century. The condition of the +main roads in the country at the opening of the century was such as to +make the carriage of goods long and expensive. Agricultural produce +was almost entirely for local consumption, with the exception of +cattle and poultry, which were driven on foot from the neighbouring +counties into London and other large markets.[24] In the winter, even +round London, bad roads were a great obstacle to trade. The +impossibility of driving cattle to London later than October often led +to a monopoly of winter supply and high prices.[25] The growth of +turnpike roads, which proceeded apace in the first half of the +century, led to the large substitution of carts for pack horses, but +even these roads were found "execrable" by Arthur Young, and off the +posting routes and the neighbourhood of London the communication was +extremely difficult. "The great roads of England remained almost in +this ancient condition even as late as 1752 and 1754, when the +traveller seldom saw a turnpike for two hundred miles after leaving +the vicinity of London."[26] + +Rivers rather than roads were the highways of commerce, and many Acts +were passed in the earlier eighteenth century for improving the +navigability of rivers, as the Trent, Ouse, and Mersey, partly in +order to facilitate internal trade and partly to enable towns like +Leeds and Derby to engage directly in trade by sea,[27] and to connect +adjoining towns such as Liverpool and Manchester. In 1755 the first +canal was constructed, and in the latter part of the century the part +played by canals in the development of the new factory system was +considerable. But in spite of these efforts to improve methods of +transport in the earlier eighteenth century, it is evident that the +bulk of industry was engaged in providing articles for local +consumption, and that the area of the market for most products was +extremely narrow. + +The facile transport of both capital and labour, which is essential to +highly specialised local industry, was retarded not merely by lack of +knowledge of the opportunities of remunerative investment, but also by +legal restrictions which had the influence of checking the free +application and migration of labour. The Statute of Apprentices by +requiring a seven years' apprenticeship[28] in many trades, and the +Law of Settlement by impairing mobility of labour, are to be regarded +as essentially protective measures calculated to prevent that +concentrated application of capital and labour required for +specialisation of industry. + +Within the nation we had for the most part a number of self-sufficing +communities, or, in other words, there was little specialisation of +function in the several parts, and little integration in the national +industry. With the single exception of Holland, whose admirable +natural and artificial water communication seemed to give unity to its +commerce, the other countries of Europe, France, Germany, Italy, +Spain, Russia, were still more disintegrated in their industry. + +Sec. 7. In regarding those districts of England in which strong +indications of growing industrial specialisation showed themselves, it +is important to observe the degree and character of that +specialisation. + +We find various branches of the woollen, silk, cotton, iron, hardware, +and other manufactures allocated to certain districts. But if we +compare this specialisation with that which obtains to-day we shall +observe wide differences. + +In the first place, it was far less advanced. The woollen industry of +England, though conveniently divided into three districts--one in the +Eastern Counties, with Norwich, Colchester, Sandwich, Canterbury, +Maidstone, for principal centres; one in the West, with Taunton, +Devizes, Bradford (in Wilts), Frome, Trowbridge, Stroud, and Exeter; +and the third, in the West Riding, is in reality distributed over +almost the whole of England south of the Thames, and over a large part +of Yorkshire, to say nothing of the widespread production, either for +private consumption or for the market, in Westmoreland, Cumberland, +and indeed all the North of England. Where the land was richer in +pasture or with easier access to large supplies of wool, the clothing +manufactures were more flourishing and gave more employment, but over +all the southern and most of the northern counties some form of +woollen manufacture was carried on. + + [Illustration: INDUSTRIAL ENGLAND IN 1830.] + +The only part of England which Defoe regarded as definitely +specialised in manufacture is part of the West Riding, for though +agriculture is carried on here to some extent, the chief manufacturing +district is dependent upon surrounding districts for its main supply +of food.[29] + +Iron, the industry of next, though of far inferior importance, was of +necessity less widely distributed. But in 1737 the fifty-nine furnaces +in use were distributed over no fewer than fifteen counties, Sussex, +Gloucester, Shropshire, Yorkshire, and Northumberland taking the +lead.[30] So too the industries engaged in manufacturing metal goods +were far less concentrated than in the present day. Though Sheffield +and Birmingham even in Defoe's time were the great centres of the +trade, of the total consumption of the country the greater part was +made in small workshops scattered over the land. + +Nottingham and Leicester were beginning to specialise in cotton and +woollen hosiery, but a good deal was made round London, and generally +in the woollen counties of the south. Silk was more specialised owing +to the importation of special skill and special machinery to +Spitalsfield, Stockport, Derby, and a few other towns. In Coventry it +was only the second trade in 1727.[31] + +The scattered crafts of the wheelwright, the smith, carpenter, turner, +carried on many of the subsidiary processes of building, manufacture +of vehicles and furniture, which are now for the most part highly +centralised industries. + +When we come presently to consider the structure of the several +industries we shall see that even those trades which are allocated to +certain local areas are much less concentrated within these areas than +is now the case. + +But though stress is here laid upon the imperfect differentiation of +localities in industry, it is not to be supposed that the eighteenth +century shows England a simple industrial community with no +considerable specialisation. + +Three conditions of specialised industry are clearly discernible in +the early eighteenth century--conditions which always are among the +chief determinants. + +1. _Physical aptitudes of soil_--_e.g._, since timber was still used +almost entirely for smelting, iron works are found where timber is +plentiful or where river communication makes it easily procurable. So +the more fertile meadows of Gloucester and Somerset led these +districts to specialise in the finer branches of the woollen trade. A +still more striking example is that of South Lancashire. By nature it +was ill-suited for agriculture, and therefore its inhabitants employed +themselves largely in the cotton and woollen trades. The numerous +little streams which flowed from the hills to the neighbouring sea +gave plenty of water-power, and thus made this district the home of +the earlier mills and the cradle of machine-industry.[32] The "grit" +of the local grindstones secured the supremacy of Sheffield cutlery, +while the heavy clay required for the "seggars," or boxes in which +pottery is fired, helped to determine the specialisation of +Staffordshire in this industry.[33] + +2. _Facility of Market._--The country round London, Bristol, and other +larger towns became more specialised than the less accessible and more +evenly populated parts, because the needs of a large town population +compelled the specialisation in agriculture of much of the surrounding +country; cottagers could more easily dispose of their manufactures; +improved roads and other facilities for conveyance induced a +specialisation impossible in the purely rural parts. + +3. _The Nature of the Commodity._--When all modes of conveyance were +slow the degree of specialisation depended largely upon the keeping +quality of the goods. From this point of view hardware and textiles +are obviously more amenable to local specialisation than the more +perishable forms of food. Where conveyance is difficult and expensive +a commodity bulky for its value is less suitable for local +specialisation in production than one containing a high value in small +weight and bulk. So cloth is more suitable for trade than corn;[34] +and coal, save where navigation is possible, could not be profitably +taken any distance.[35] + +The common commodities consumed, as food, fuel, and shelter, were thus +excluded from any considerable amount of specialisation in their +production. + +Sec. 8. Turning from consideration of the attributes of goods and of the +means of transport which served to limit the character of internal +trade and determine the size of the market, let us now regard the +structure of the market, the central object in the mechanism of +internal commerce. + +The market, not the industry, is the true term which expresses the +group of organically related businesses. How far did England present a +national market? How far was the typical market a district or purely +local one? + +The one great national market town was London. It alone may be said to +have drawn supplies from the whole of England, and there alone was it +possible to purchase at any season of the year every kind of produce, +agricultural or manufactured, made anywhere in England or imported +from abroad. This flow to and from the great centre of population was +incessant, and extended to the furthermost parts of the land. Other +large towns, such as Bristol, Leeds, Norwich, maintained close and +constant relations with the neighbouring counties, but exchanged their +produce for the most part only indirectly with that of more distant +parts of the country. + +The improving communication of the eighteenth century enabled the +clothiers and other leading manufacturers to distribute more of their +wares even in the remotest parts of the country, but the value paid +for their wares reached the vendors by slow and indirect channels of +trade, passing for the most part through the metropolis. + +But while London was the one constant national market-place, national +trade was largely assisted by fairs held for several weeks each year +at Stourbridge, Winchester, and other convenient centres. At the most +important of these the large merchants and manufacturers met their +customers, and business was transacted between distant parts of the +country, including all kinds of wares, English and foreign. Thus we +had one constant and two or three intermittent avenues of free +national trade. The great bulk of markets, however, were confined +within far smaller areas. + +In the more highly developed and specialised textile trades certain +regular market-places were established of wide local importance. The +largest of these specialised district markets were at Leeds, Halifax, +Norwich, and Exeter. Here the chief local manufacturers of cloth, +worsted, or crape met the merchants and factors and disposed of their +wares to these distributing middlemen. + +It was, however, in the general market-places of the county town or +smaller centres of population that the mass of the business of +exchange was transacted. There the mass of the small workers in +agriculture and manufacture brought the product of their labour and +sold it, buying what they needed for consumption and for the pursuance +of their craft. Only in considerable towns were there to be found in +the earlier eighteenth century any number of permanent shops where all +sorts of wares could be bought at any time. The weekly market in the +market-town was the chief medium of commerce for the great mass of the +population. + +Regarding the general structure of Industry we see that not only are +international bonds slight and unessential, but that within the nation +the elements of national cohesion are feeble as compared with those +which subsist now. We have a number of small local communities whose +relations, though tolerably strong with other communities in their +immediate neighbourhood, become greatly weakened by distance. For the +most part these small communities are self-sufficing for work and +life, producing most of their own necessaries, and only dependent on +distant and unknown producers for their comforts and luxuries. + +Trade is for the most part conducted on a small steady local basis +with known regular customers. + +Outside of agriculture the elements of speculation and fluctuation are +almost entirely confined to foreign trade. Capital and labour are +fixed to a particular locality and a particular business.[36] + +Sec. 9. Turning to the structure of the several industries we find that +different employments are not sharply separated from one another. In +the first place, agriculture and manufacture are not only carried on +in the same locality but by the same people. This combined agriculture +and manufacture took several forms. + +The textile industries were largely combined with agriculture. Where +spinning was carried on in agricultural parts there was, for the most +part, a division of labour within the family. The women and children +spun while the men attended to their work in the fields.[37] Every +woman and child above the age of five found full employment in the +spinning and weaving trades of Somerset and the West Riding.[38] + +This method prevailed more largely in the spinning than in the weaving +trades, for before the introduction of the spinning-jenny the weaving +trade was far more centralised than the other. For example, a large +quantity of weaving was done in the town of Norwich while the earlier +process was executed in the scattered cottages over a wide district. +But even these town workers were not specialised in manufacture to the +extent which prevails to-day. Large numbers of them had allotments in +the country to which they gave their spare time, and many had pasture +rights and kept their cattle on the common lands. This applied not +merely to the textile but to other industries. At West Bromwich, a +chief centre of the metal trade, agriculture was still carried on as a +subsidiary pursuit by the metal workers.[39] So too the cutlers of +Sheffield living in the outskirts of the town had their plot of land +and carried on agriculture to a small extent, a practice which has +lasted almost up to the present day. The combined agriculture and +manufacture often took the form of a division of labour according to +season. Where the weaving was not concentrated in towns it furnished a +winter occupation to many men who gave the bulk of their summer time +to agriculture. Generally speaking, we may take as fairly +representative of the manufacturing parts of England the picture which +Defoe gave of the condition of affairs in the neighbourhood of +Halifax. He found "the land divided into small enclosures from two +acres to six or seven acres each, seldom more; every three or four +pieces of land had a house belonging to it--one continued village, +hardly a house standing out of speaking distance from another--at +every house a tenter, and on almost every tenter a piece of cloth or +kersie or shalloon--every clothier keeps a horse--so every one +generally keeps a cow or two for his family."[40] + +Not only were agriculture and many forms of manufacture conjoined, but +the division of labour and differentiation of processes within the +several industries was not very far advanced. The primitive tillage of +the common-fields which still prevailed in the early eighteenth +century, though the rapid enclosure of commons was effecting a +considerable, and from the wealth-producing point of view, a very +salutary change, did not favour the specialisation of land for pasture +or for some particular grain crops. Each little hamlet was engaged in +providing crops of hay, wheat, barley, oats, beans, and had to fulfil +the other purposes required by a self-subsisting community. This +partly arose from the necessity of the system of land tenure, partly +from ignorance of how to take advantage of special qualities and +positions of soil, and partly from the self-sufficiency improved by +difficulties of conveyance. As the century advanced, the enclosure of +commons, the increase of large farms, the application of new science +and new capital led to a rapid differentiation in the use of land for +agricultural purposes. But in the earlier part of the century there +was little specialisation of land except in the West Riding and round +the chief centres of the woollen trade, and to a less extent in the +portions of the counties round London whose position forced them to +specialise for some particular market of the metropolis. + +Sec. 10. As the small agriculturist on a self-sufficing farm must perform +many different processes, so the manufacturer was not narrowed down to +a single process of manufacture. A large part of the ruder +manufactures were home productions for home consumption, and the same +hands tended the sheep which furnished the wool, and spun and wove the +wool for family use. The smith was in a far fuller sense the maker of +the horse-shoe or the nail or bolt than he is to-day; the wheelwright, +the carpenter, and other handicraftsmen performed a far larger number +of different processes than they do now. Moreover, each household, in +addition to its principal employments of agriculture and manufacture, +carried on many minor productive occupations, such as baking, brewing, +butter-making, dressmaking, washing, which are now for the most part +special and independent branches of employment. + +In the more highly-developed branches of the textile and metal trades +the division of processes appears at first sight more sharply marked +than to-day. The carder, spinner, weaver, fuller in the cloth trade +worked in the several processes of converting raw wool into finished +cloth, related to one another only by a series of middlemen who +supplied them with the material required for their work and received +it back with the impress of their labour attached, to hand it out once +more to undergo the next process.[41] But though modern +machine-production will show us these various processes drawn together +into close local proximity, sometimes performed under the same roof +and often making use of the same steam power, we shall find that a +chief object and effect of this closer local co-ordination of the +several processes is to define and narrow more precisely the labour of +each worker and to make the spinner and the weaver confine himself to +the performance of a fractional part of the full process of spinning +or weaving. Thus we find that English industry in the early eighteenth +century is marked on the one hand by a lack of clear differentiation +as regards industries, and on the other hand by a lack of minute +differentiation of processes within the industry. + +Sec. 11. We must now descend from the consideration of the Industry and +the Market, or group of related businesses, to examine the character +and structure of the unit of industry--the Business. + +In a study of the composition or co-operation of labour and capital in +a Business before the era of machine-production there are five points +of dominant importance--(1) The ownership of the material; (2) the +ownership of the tools; (3) the ownership of the productive power; (4) +the relations subsisting between the individual units of labour; (5) +the work-place. + +English manufacturing industry in the first half of the eighteenth +century furnishes a variety of different forms of business of widely +different nature and complexity. The simplest form of manufacturing +industry is that in which an industrial family owning the raw material +and the requisite tools, and working with the power of their own +bodies in their own homes, produce commodities for their own +consumption. This private production for private consumption survived +largely in the eighteenth century, not merely in the case of +agriculturists who produced the more necessary articles of food for +themselves as well as for the market, but also in the case of farmers +and cottagers in the remotest parts of the country who produced their +own wool and flax, and spun and wove it for their own use.[42] + +From this primitive form which required no commerce and no industrial +organisation we may trace the growth of various forms of higher +industrial development, many of which co-existed in eighteenth century +England. + +The simplest structure of "domestic" manufacture is that in which the +farmer-manufacturer is found purchasing his own material, the raw wool +or flax if he is a spinner, the warp and weft if he is a weaver, and, +working with his family, produces yarn or cloth which he sells +himself, either in the local market or to regular master-clothiers or +merchants. The mixed cotton weaving trade was in this condition in the +earlier years of the eighteenth century. "The workshop of the weaver +was a rural cottage, from which, when he was tired of sedentary +labour, he could sally forth into his little garden, and with the +spade or the hoe tend its culinary productions. The cotton-wool which +was to form his weft was picked clean by the fingers of his younger +children, and was carded and spun by the older girls assisted by his +wife, and the yarn was woven by himself assisted by his sons."[43] + +Following as the central point the ownership of the requisites of +production, we find in the next stage that the ownership of the +material has passed from the workman into the hands of the organising +merchant or middleman, who usurps the title "manufacturer." The +workman, however, still retains the ownership of the implements of his +craft and works in his own house. The condition of the worsted trade +later in the century, about 1770, well illustrates this industrial +form. + +"The work was entirely domestic, and its different branches widely +scattered over the country. First, the manufacturer had to travel on +horseback to purchase his raw material among the farmers, or at the +great fairs held in those old towns that had formerly been the +exclusive markets, or, as they were called, 'staples' of wool. The +wool, safely received, was handed over to the sorters, who rigorously +applied their gauge of required length of staple and mercilessly +chopped off by shears or hatchet what did not reach the standard as +wool fit for the clothing trade. The long wool thus passed into the +hands of the combers, and, having been brought back to them into the +combed state, was again carefully packed and strapped on the back of +the sturdy horse, to be taken into the country to be spun.... Here, at +each village, he had his agents, who received the wool, distributed it +amongst the peasantry and received it back as yarn. The machine +employed was still the old one-thread wheel, and in summer weather on +many a village green might be seen the housewives plying their busy +trade, and furnishing to the poet the vision of contentment spinning +at the cottage door. Returning in safety with his yarn, the +manufacturer had now to seek out his weavers, who ultimately delivered +to him his camblets or russels, or tammies or calimancoes (such were +the leading names of the fibres) ready for sale to the merchant or +delivery to the dyer."[44] + +The condition of the cotton-trade in Lancashire about 1750 +illustrates most clearly the transition from the independent weaver to +the dependent weaver. So far as the linen warp of his fabric was +concerned he had long been in the habit of receiving it from the +larger "manufacturer" in Bolton or in Manchester, but the cotton yarn +he had hitherto supplied himself, using the yarn spun by his own +family or purchased by himself in the neighbourhood. The difficulty of +obtaining a steady, adequate supply, and the waste of time involved in +trudging about in search of this necessary material, operated more +strongly as the market for cotton goods expanded and the pressure of +work made itself felt.[45] It was this pressure which we shall see +acting as chief stimulus to the application of new inventions in the +spinning[46] trade. In the interim, however, the habit grew of +receiving not only linen warp but cotton weft from the merchant or +middleman. Thus the ownership of the raw material entirely passed out +of the weaver's hands, though he continued to ply his domestic craft +as formerly.[47] This had grown into the normal condition of the trade +by 1750. The stocking-trade illustrates one further encroachment of +the capitalist system upon domestic industry. In this trade not only +was the material given out by merchants, but the "frames" used for +weaving were likewise owned by them, and were rented out to the +workers, who continued, however, to work in their own homes.[48] + +Sec. 12. Two further steps remained to be taken in the transition from +the "domestic" to the "factory" system, the one relating to the +ownership of "power," the other to the work-place, (_a_) The +substitution of extra-human power owned by the employer for the +physical power of the worker; (_b_) the withdrawal of the workers from +their homes, and the concentration of them in factories and +work-places owned by the capitalists. + +Although these steps were not completely taken until the age of steam +had well set in, before the middle of the eighteenth century there +were found examples of the factory, complete in its essential +character, side by side and in actual competition with the earlier +shapes of domestic industry. + +Capitalist ownership of extra-human industrial "power" was of course +narrowly restricted before the age of steam. Water-power, horse-power, +and to a much smaller extent, wind-power, were utilised. But the most +important services water rendered to industry prior to the great +inventions were in facilitating the transport of goods, and in certain +subsidiary processes of manufacture such as dyeing. Though a +considerable number of water-mills existed early in the century, they +played no large part in manufacture. A natural force so strictly +confined in quantity and in local application, and subject to such +great waste from the backward condition of mechanical art, was not +able to serve to any great extent as a substitute for or aid to the +muscular activity of man. + +But although the economy of mechanical power was not yet operative to +any appreciable extent in concentrating labour, certain other notable +economics of large-scale production were beginning to assert +themselves in all the leading manufactures. Indeed so powerful are +some of the economies of division of labour and co-operation even in a +primitive condition of the industrial arts, that Professor Ashley +considers it not improbable that the great manufactory might have +become an important or even a dominant feature of the woollen trade as +early as the sixteenth century, if legislative enactments had not +stood in the way.[49] As it was, these earlier centralising forces, +while they drove the workers to work and live in closer and compacter +masses, did not at first dispose them in factories to any great +extent. They continued for the most part to work in their own houses, +though for material and sometimes for the implements of their craft +they were dependent upon some merchant or large master-manufacturer. +This was the condition of industry in the neighbourhood of Leeds in +1725. "The houses are not scattered and dispersed as in the vicarage +of Halifax, one by one, but in villages, and those houses thronged +with people and the whole country infinitely populous."[50] In the +more highly-developed branches of the cloth trade, however, where the +best looms were a relatively costly form of capital, the foundation of +the factory system was clearly laid. In Norwich, Frome, Taunton, +Devizes, Stourbridge, and other clothing centres, Defoe found the +weaving industry highly concentrated, and rich employers owning +considerable numbers of looms. Some of this work was put out by the +master-manufacturers, but other work was done in large sheds or other +premises owned by the master. This large organised "business," half +factory, half domestic, continued to prevail in the important West of +England clothing industry up to the close of the eighteenth century. +"The master clothier of the West of England buys his wool from the +importer, if it be foreign, or in the fleece if it be of domestic +growth; after which, in all the different processes through which it +passes, he is under the necessity of employing as many distinct +classes of persons; sometimes working in their own houses, sometimes +in that of the master clothier, but none of them going out of their +proper line. Each class of workman, however, acquires great skill in +performing its particular operation, and hence may have arisen the +acknowledged excellence, and, till of late, the superiority of the +cloths of the West of England."[51] + +So again, in the cotton industry of Lancashire, the hold which the +merchants had got over the weavers by supplying them with warp and +weft led in some cases, before the middle of the century, to the +establishment of small factories containing a score or two of looms, +in which hired men were employed to weave. A little later, though long +before steam power, Arthur Young finds a factory at Darlington with +over fifty looms, a factory at Boynton with 150 workers, and a silk +mill at Sheffield with 152 workers. Even where the final step of +substituting the factory for the home had not been taken the +subordination of the handicraftsman to the master who provided the +materials and paid the wages was tolerably complete. By the middle of +the century the free artisan was gradually passing into the condition +of a hired "hand." Improved means of communication were beginning to +expand the area of the market, enlarged businesses enabled labour to +be profitably divided, and required a more effective control over the +workers than could be obtained over a scattered population of +agricultural manufacturers. + +Sec. 13. Regarding the Business as a combination of Labour and Capital, +we perceive that one strongly distinctive characteristic of the +pre-machinery age is the small proportion which capital bears to +labour in the industrial unit. It is this fact that enabled the +"domestic" worker to hold his own so long in so many industries as the +owner of a separate business. So long as the mechanical arts are +slightly developed and tools are simple, the proportion of "fixed +capital" to the business is small and falls within the means of the +artisan who plies his craft in his home. So long as tools are simple, +the processes of manufacture are slow, therefore the quantity of raw +material and other "circulating capital" is small and can also be +owned by the worker. The growing divorcement in the ownership of +capital and labour in the industrial unit will be found to be a direct +and most important result of those improvements in mechanical arts +which, by continually increasing the proportion of capital to labour +in a business, placed capital more and more beyond the possession of +those who supplied the labour power required to co-operate in +production. + +In the middle of last century there were very few instances of a +manufacturing business in which a large capital was engaged, or in +which the capital stood to the labour in anything like modern +proportion. It was indeed the merchant and not the manufacturer who +represented the most advanced form of Capitalism in the eighteenth +century. Long before Dr. Johnson's discovery that "an English merchant +is a new species of gentleman," Defoe had noted the rise of +merchant-princes in the Western clothing trades, observing that "many +of the great families who now pass for gentry in these counties have +been originally raised from and built out of this truly noble +manufacture."[52] These wealthy _entrepreneurs_ were sometimes spoken +of as "manufacturers," though they had no claim either upon the old or +the new signification of that name. They neither wrought with their +hands nor did they own machinery and supervise the labour which worked +with it. They were, as has been shown above, merchant-middlemen. The +clothing trade being the most highly developed, evolved several +species of middlemen, including under that term all collectors and +distributors of the raw material or finished goods. + +(_a_) One important class of "factors" engaged themselves in buying +wool from farmers and selling it to clothiers, and appear to have +sometimes exercised an undue and tyrannous control over the latter by +an unscrupulous manipulation of the credit system which was growing up +in trade.[53] + +(_b_) The "clothiers" themselves must be regarded in large measure as +middleman-collectors, analogous in function to the distributors, who +still rank as one of the grades of middlemen in the cheap clothing +trade of London to-day.[54] + +(_c_) After the cloth was made three classes of middlemen were engaged +in forwarding it to the retailer--(1) travelling merchants or +wholesale dealers who attended the big fairs or the markets at Leeds, +Halifax, Exeter, etc., and made large purchases, conveying the goods +on pack-horses over the country to the retail trader; (2) middlemen +who sold on commission through London factors and warehousemen, who in +their turn disposed of the goods to shopkeepers or to exporters; (3) +merchants directly engaged in the export trade. + +With the exception of shipping and canal transport (which became +important after the middle of the century) there were no considerable +industries related to manufacture where large capitals were laid down +in fixed plant. Even the capital sunk in permanent improvements of +land, which played so important a part in the development of +agriculture, belonged chiefly to the latter years of the eighteenth +century. Almost the only persons who wielded large capitals within the +country were those merchants, dealers, or middlemen, whose capital at +any given time consisted of a large stock of raw material or finished +goods. Even the latter were considerably restricted in the magnitude +of their transactions by the imperfect development of the machinery of +finance and the credit system. In 1750 there were not more than twelve +bankers' shops out of London.[55] Until 1759 the Bank of England +issued no notes of less value than L20. + +Joint-ownership of capital and effective combination of the labour +units in a business were only beginning to make progress. The Funded +Debt, the Bank of England, the East India Company were the only +examples of really large and safe investments at the opening of the +eighteenth century. Joint-ownership of large capitals for business +purposes made no great progress before the middle of the eighteenth +century, except in the case of chartered companies for foreign trade, +such as the East India Company, the Hudson's Bay Company, the Turkish, +Russian, Eastland, and African companies. Insurance business became a +favourite form of joint-stock speculation in the reign of George I. +The extraordinary burst of joint-stock enterprise culminating in the +downfall of the South Sea Company shows clearly the narrow limitations +for sound capitalist co-operation. Even foreign trade on joint-stock +lines could only be maintained successfully on condition that the +competition of private adventurers was precluded. + +Joint-capital had yet made no inroad into manufacture, one of the +earliest instances being a company formed in 1764 with a capital of +L100,000 for manufacturing fine cambrics.[56] + +The limits of co-operative capitalism at the opening of the period of +Industrial Revolution are indicated by Adam Smith in a passage of +striking significance:--"The only trades which it seems possible for a +joint-stock company to carry on successfully, without an exclusive +privilege, are those of which all the operations are capable of being +reduced to what is called a routine, or to such a uniformity of method +as admits of little or no variation. Of this kind is, first, the +banking trade; secondly, the trade of insurance from fire and from sea +risk and capture in time of war; thirdly, the trade of making and +maintaining a navigable cut or canal; and fourthly, the similar trade +of bringing water for the supply of a great city."[57] + +In other words, the businesses amenable to joint-stock enterprise are +those where skilled management can be reduced to a minimum, and where +the scale of the business or the possession of a natural monopoly +limits or prohibits competition from outside. + +FOOTNOTES: + +[3] A. Smith, _Wealth of Nations_, Bk. iv., chap. i. + +[4] Macpherson, _Annals of Commerce_, vol. ii. p. 728. + +[5] Smith, _Memoirs_, vol. ii., chap. iii. As the approximate +calculation of a very competent business man these figures are more +reliable than the official figures of imports and exports, the value +of which throughout the eighteenth century is seriously impaired by +the fact that they continued to be estimated by the standard of values +of 1694. + +[6] Whitworth's _State_ quoted, Macpherson, vol. iii. p. 283. + +[7] _Annals_, vol. iii. p. 340. + +[8] Cunningham, _History of English Industry_, vol. ii. p. 287, etc. + +[9] Smith, _Memoirs of Wool_, vol. ii. p. 113. + +[10] Chalmers, _Estimates_, p. 148. + +[11] Cf. Cunningham, _Growth of English Industry_, vol. ii. p. 292. + +[12] Smith, _Wealth of Nations_, Bk. iv., chap. viii. + +[13] _Ibid._ + +[14] _Growth of English Industry_, vol. ii. p. 303. + +[15] Macpherson, _Annals_, vol. iii. pp. 155, 156. + +[16] Chalmers, _Estimate_, p. 208. See, however, Baines, who gives a +slightly smaller estimate, _History of the Cotton Manufacture_, p. +112. + +[17] Macpherson, _Annals_, vol. iii. p. 114. + +[18] _Ibid._, vol. iii. p. 73. + +[19] _Ibid._, vol. iii. p. 73. + +[20] Smith, _Memoirs of Wool_, vol. ii. pp. 19, 45. + +[21] Smith, _ibid._, vol. ii. p. 270; cf. also Cunningham, _Growth of +English Industry_, vol. ii. p. 300. + +[22] Toynbee, _Industrial Revolution_, p. 50. + +[23] Schulze-Gaevernitz, _Der Grossbetrieb_, p. 77. + +[24] Defoe, _Tour_, vol. ii. p. 371. + +[25] _Ibid._, vol. ii. p. 370. + +[26] Chalmers, pp. 124, 125. + +[27] Defoe, _Tour_, vol. iii. p. 9, etc. + +[28] Smith, _Wealth of Nations_, vol. i., chap. x., part 2. + +[29] Defoe, _Tour_, vol. iii. p. 84. + +[30] Scrivener, _History of the Iron Trade._ + +[31] Defoe, _Tour_, vol. ii. p. 323. + +[32] Schulze-Gaevernitz, _Der Grossbetrieb_, p. 52. + +[33] Cf. Marshall, _Principles_, p. 328. In the case of Staffordshire, +however, there existed an early trade in wooden platters dependent on +quality of timber and traditional skill. When the arts of pottery came +in, the new trade taken up in the same locality ousted the old, though +there was no particular local advantage in materials. + +[34] Smith, _Wealth of Nations_, Book III., chap. iii. + +[35] Westmoreland coal did not compete in the Newcastle +market,--_Wealth of Nations_, Book I., chap. xi. p. 2. + +[36] Adam Smith, writing later in the century, observes with some +exaggeration, "A merchant, it has been said very properly, is not +necessarily the citizen of a particular country. It is in a great +measure indifferent to him from what place he carries on his trade, +and a very trifling disgust will make him remove his capital, and +together with it all the industry which it supports, from one country +to another."--Book III., chap. iv. + +[37] Defoe, vol. ii. p. 37. + +[38] _Ibid._, vol. ii. p. 17. + +[39] _Annals of Agriculture_, chap. iv. p. 157. + +[40] Defoe, vol. iii. pp. 78, 79. + +[41] Cf. Burnley, _Wool and Wool-combing_, p. 417. + +[42] Smith, _Memoirs of Wool_, vol. ii. p. 297. + +[43] Ure, _History of the Cotton Manufacture_, vol. i. p. 224. + +[44] James, _History of the Worsted Manufacture_, p. 323 (quoted +Taylor, _The Modern Factory System_, p. 61). + +[45] Baines, _History of the County Palatine of Lancashire_, vol. ii. +p. 413. + +[46] Ure, _History of Cotton Manufacture_, vol. i. p. 224, etc. + +[47] Dr. Aikin, _History of Manchester_ (quoted Baines, p. 406). + +[48] Taylor, _The Modern Factory System_, p. 69. + +[49] _Economic History_, vol. ii. p. 237. + +[50] Defoe, _Tour_, vol. iii. p. 89. + +[51] _Report from the Committee on the Woollen Manufacture of +England_, (1806). + +[52] _Tour_, vol. ii. p. 35. + +[53] For an interesting account of the cunning devices of "factors" +see Smith's _Memoirs of Wool_, vol. ii. p. 311, etc. + +[54] Cf. Booth, _Labour and Life of the People_, vol. i. p. 486, etc. + +[55] Toynbee, _Industrial Revolution_, p. 55. + +[56] Cunningham, vol. ii. p. 350. + +[57] _Wealth of Nations_, Bk. V., chap. i., part 3. + + + + +CHAPTER III. + +THE ORDER OF DEVELOPMENT OF MACHINE INDUSTRY. + + Sec. 1. _A Machine differentiated from a Tool._ + Sec. 2. _Machinery in Relation to the Character of Human Labour._ + Sec. 3. _Contributions of Machinery to Productive Power._ + Sec. 4. _Main Factors in Development of Machine Industry._ + Sec. 5. _Importance of Cotton-trade in Machine Development._ + Sec. 6. _History refutes the "Heroic" Theory of Invention._ + Sec. 7. _Application of Machinery to other Textile Work._ + Sec. 8. _Reverse order of Development in Iron Trades._ + Sec. 9. _Leading Determinants in the General Application of + Machinery and Steam-Motor._ + Sec. 10. _Order of Development of modern Industrial Methods in the + several Countries--Natural, Racial, Political, Economic._ + + +Sec. 1. It appears that in the earlier eighteenth century, while there +existed examples of various types of industrial structure, the +domestic system in its several phases may be regarded as the +representative industrial form. The object of this chapter is to +examine the nature of those changes in the mechanical arts which +brought about the substitution of machine-industry conducted in +factories or large workshops for the handicrafts conducted within the +home or in small workshops, with the view of discovering the economic +bearing of these changes. + +A full inductive treatment would perhaps require this inquiry to be +prefaced by a full history of the inventions which in the several +industries mark the rise of the factory system and the adoption of +capitalist methods. This, however, is beyond the scope of the present +work, nor does it strictly belong to our scientific purpose, which is +not to write the narrative of the industrial revolution, but to bring +such analysis to bear upon the records of industrial changes as shall +enable us to clearly discern the laws of those changes. + +The central position occupied by machinery as the chief material +factor in the modern evolution of industry requires that a distinct +answer should be given to the question, What is machinery? + +In distinguishing a machine from a mere tool or handicraft implement +it is desirable to pay special attention to two points, complexity of +structure and the activity of man in relation to the machine. Modern +machinery in its most developed shape consists, as Karl Marx points +out, of three parts, which, though mechanically connected, are +essentially distinct, the motor mechanism, the transmitting mechanism, +and the tool or working machine. + +"The motor mechanism is that which puts the whole in motion. It either +generates its own motive power, like the steam-engine, the caloric +engine, the electro-magnetic machine, etc., or it receives its impulse +from some already existing natural force, like the water-wheel from a +head of water, the windmill from wind, etc. The transmitting +mechanism, composed of fly-wheels, shafting, toothed wheels, pullies, +straps, ropes, bands, pinions, and gearing of the most varied kind, +regulates the motion, changes its form where necessary, as, for +instance, from linear to circular, and divides and distributes it +among the working machines. These two first parts of the whole +mechanism are there solely for putting the working machines in motion, +by means of which motion the subject of labour is seized upon and +modified as desired."[58] + +Although the development of modern machinery is largely concerned with +motor and transmitting mechanisms, it is to the working machine we +must look in order to get a clear idea of the differences between +machines and tools. A tool may be quite simple in form and action as a +knife, a needle, a saw, a roller, a hammer, or it may embody more +complex thought in its construction, more variety in its movement, and +call for the play of higher human skill. Such tools or implements are +the hand-loom, the lathe, the potter's-wheel. To these tools man +stands in a double relation. He is handicraftsman in that he guides +and directs them by his skill within the scope of activity to which +they are designed. He also furnishes by his muscular activity the +motive force with which the tool is worked. It is the former of these +two relations which differentiates the tool from the machine. When the +tool is removed from the direct and individual guidance of the +handicraftsman and placed in a mechanism which governs its action by +the prearranged motion of some other tool or mechanical implement, it +ceases to be a tool and becomes part of a machine. The economic +advantage of the early machines consisted chiefly in the economy of +working in combined action a number of similar tools by the agency of +a single motor. In the early machine the former tool takes its place +as a central part, but its movements are no longer regulated by the +human touch.[59] The more highly evolved modern machinery generally +represents an orderly sequence of processes by which mechanical unity +is given to the labour once performed by a number of separate +individuals, or groups of individuals with different sorts of tools. +But the economy of the earlier machines was generally of a different +character. For the most part it consisted not in the harmonious +relation of a number of different processes, but rather in a +multiplication of the same process raised sometimes to a higher size +and speed by mechanical contrivances. So the chief economic value of +the earlier machinery applied to spinning consisted in the fact that +it enabled each spinner to work an increased number of spindles, +performing with each the same simple process as that which he formerly +performed with one. In other cases, however, the element of +multiplication was not present, and the prime economy of the machine +consisted in the superior skill, regularity, pace, or economy of power +obtained by substituting mechanical direction of the tool for close +and constant human direction. In modern machinery the sewing-machine +illustrates the latter, as the knife-cleaning machine illustrates the +former. + +The machine is inherently a more complex structure than the tool, +because it must contain within itself the mechanical means for working +a tool, or even for the combined working of many tools, which formerly +received their direction from man. In using a tool man is the direct +agent, in using a working machine the transmitting mechanism is the +direct agent, so far as the character of the several acts of +production is not stamped upon the form of the working machine itself. +The man placed in charge of a machine determines whether it shall act, +but only within very narrow limits how it shall act. The two +characteristics here brought out in the machine, complexity of action +and self-direction or automatic character, are in reality the +objective and subjective expression of the same factor--namely, the +changed relation of man towards the work in which he co-operates. + +Some of the directing or mental effort, skill, art, thought, must be +taken over, that is to say, some of the processes must be guided not +directly by man but by other processes, in order to constitute a +machine. A machine thus becomes a complex tool in which some of the +processes are relatively fixed, and are not the direct expression of +human activity. A machinist who feeds a machine with material may be +considered to have some control over the pace and character of the +first process, but only indirectly over the later processes, which are +regulated by fixed laws of their construction which make them +absolutely dependent on the earlier processes. A machine is in the +nature of its work largely independent of the individual control of +the "tender," because it is in its construction the expression of the +individual control and skill of the inventor. A machine, then, may be +described as a complex tool with a fixed relation of processes +performed by its parts. Even here we cannot profess to have reached a +definition which enables us in all cases to nicely discriminate +machine from tool. It is easy to admit that a spade is a tool and not +a machine, but if a pair of scissors, a lever, or a crane are tools, +and are considered as performing single simple processes, and not a +number of organically relative processes, we may by a skilfully +arranged gradation be led on to include the whole of machinery under +tools. This difficulty is of course one which besets all work of +definition. + +But while it is not easy by attention to complexity of structure +always to distinguish a tool from a machine, nothing is gained by +making the differentia of a machine to consist in the use of a steam +or other non-human motor. + +A vast amount of modern machinery is of course directed not to +combining tools or series of productive processes upon which the +productive skill of man is closely engaged, but to substituting other +motors for the muscular power of man. But though certain tools as well +as certain forms of human effort are here replaced by machines, these +tools are not commonly embodied in the machinery for generating and +transmitting the new force, so that the mere consideration of the +different part played by the worker in generating productive force +does not assist us to distinguish a machine from a tool. A +type-writer, a piano, which receive their impulse from the human +muscles, must evidently be included among machines. It is indeed true +that these, like others of the same order, are exceptional machines, +not merely in that the motive power is derived more essentially from +human muscles, but in that the _raison d'etre_ of the mechanism has +been to provide scope for human skill and not to destroy it. But +though it is true that a high degree of skill may be imparted to the +first process of the working of a piano or type-writer, it is none the +less true that the "tool," the implement which strikes the sound or +makes the written mark, is not under immediate control of human touch. +The skill is confined to an early process, and the mechanism as a +whole must be classed under machinery. Nothing would indeed be gained +in logical distinctness if we were to abandon our earlier differentia +of the machine and confine that term to such mechanical appliances as +derived their power from non-human sources--the fact which commonly +marks off modern from earlier forms of machine production. For we +should find that this substitution of non-human for human power was +also a matter of degree, and that the most complex steam-driven +machinery of to-day cannot entirely dispense with some directing +impulse of human muscular activity, such as the shovelling of coal +into a furnace, though the tendency is ever to reduce the human effort +to a minimum in the attainment of a given output. + +This consideration of the difficulties attending exact definitions of +machinery is not idle, for it leads to a clearer recognition of the +nicely graded evolution which has changed the character of modern +industry, not by a catastrophic substitution of radically different +methods, but by the continuous steady development of certain elements, +common to all sorts of industrial activity, and a corresponding +continuous degeneration of certain other elements. + +Sec. 2. The growth of machine-industry then may be measured by the +increased number and complexity of the processes related to one +another in the mechanical unit or machine, and by a corresponding +shrinkage of the dependence of the product upon the skill and volition +of the human being who tends or co-operates with the machine. Every +product made by tool or machine is _qua_ industrial product or +commodity the expression of the thought and will of man; but as +machine-production becomes more highly developed, more and more of the +thought and will of the inventor, less and less of that of the +immediate human agent or machine-tender is expressed in the product. +But it is evidently not enough to say that the labour-saving machine +has merely substituted the stored and concentrated effort of the +inventor for that labour of the handicraftsman which is saved. This +would be to ignore the saving of muscular power due to the +substitution of forces of nature--water, steam, electricity, etc., for +the painful effort of man. It is the thought of the inventor, plus the +action of various mechanical and other physical forces, which has +saved the labour of man in the production of a commodity. The further +question--how far this saving of labour in respect of a given +commodity is compensated by the increased number of commodities to +which human labour is applied--is a consideration which belongs to a +later chapter. + +In tracing the effect of the application of modern machinery to +English industry there appear two prominent factors, which for certain +purposes require separate treatment--the growth of improved mechanical +apparatus, and the evolution of extra-human motor power. + +We speak of the industry which has prevailed since the middle of the +eighteenth century as machine-production, not because there were no +machines before that time, but firstly, because a vast acceleration in +the invention of complex machinery applied to almost all industrial +arts dates from that period, and secondly, because the application +upon an extensive scale of non-human motor powers manifested itself +then for the first time. + +One important external effect and indication of the momentous +character of these changes is to be found in the quickening of that +operation, the beginning of which was observable before the great +inventions, the substitution of the Factory System for the Domestic +System. + +The peculiar relation of Machinery to the Factory System consists in +the fact that the size, expensiveness, and complexity of machinery on +the one hand, and the use of non-human power on the other hand, were +forces which united to drive labour from the home workshop to the +large specialised workshop--the Factory. + +"The water frame, the carding engine, and the other machines which +Arkwright brought out in a finished state, required both more space +than could be found in a cottage, and more power than could be applied +by the human arm. Their weight also rendered it necessary to place +them in strongly-built walls, and they also could not be +advantageously turned by any power then known but that of water. +Further, the use of machinery was accompanied by a greater division of +labour, and therefore a greater co-operation was requisite to bring +all the processes of production into harmony and under a central +superintendence."[60] Hence the growth of machine-production is to a +large extent synonymous with the growth of the modern Factory System. + +Sec. 3. Man does his work by moving matter. Hence machinery can only aid +him by increasing the motive power at his disposal. + +(1) Machinery enables forces of man or nature to be more effectively +applied by various mechanical contrivances composed of levers, +pulleys, wedges, screws, etc. + +(2) Machinery enables man to obtain the use of various motor forces +outside his body--wind, water, steam, electricity, chemical action, +etc.[61] + +Thus by the provision of new productive forces, and by the more +economical application of all productive forces, machinery improves +the industrial arts. + +Machinery can increase the scope of man's productive ability in two +ways. The difficulty of concentrating a large mass of human force upon +a given point at the same time provides certain quantitative limits to +the productive efficiency of the human body. The steam-hammer can +perform certain work which is quantitatively outside the limit of the +physical power of any number of men working with simple tools and +drawing their motor power from their own bodies. The other limit to +the productive power of man arises from the imperfect continuity of +human effort and the imperfect command of its direction. The +difficulty of maintaining a small, even, accurate pressure, or a +precise repetition of the same movement, is rather a qualitative than +a purely quantitative limit. The superior certainty and regularity of +machinery enables certain work to be done which man alone could not do +or could do less perfectly. The work of the printing machine could not +be achieved by man. Machinery has improved the texture and quality of +certain woollen goods;[62] recent improvements in milling result in +improved quality of flour and so on. Machinery can also do work which +is too fine or delicate for human fingers, or which would require +abnormal skill if executed by hand. Economy of time, which Babbage[63] +accounts a separate economy, is rightly included in the economies just +named. The greater rapidity with which certain manufacturing +processes--_e.g._, dyeing--can be achieved arises from the superior +concentration and continuity of force possible under machinery. All +advantages arising from rapid transport are assignable to the same +causes. + +The continuity and regularity of machine work are also reflected in +certain economies of measurement. The faculty of self-registering, +which belongs potentially to all machinery, and which is more utilised +every day, performs several services which may be summed up by saying +that they enable us to know exactly what is going on. When to +self-registration is applied the faculty of self-regulation, within +certain limits a new economy of force and knowledge is added. But +machinery can also register and regulate the expenditure of human +power. Babbage well says:--"One of the most singular advantages we +derive from machinery is in the check which it affords against the +inattention, the idleness, or the knavery of human agents."[64] This +control of the machine over man has certain results which belong to +another aspect of machine economy.[65] + +These are the sources of all the improvements of economies imputed to +machine-production. All improvements in machinery, as applied to +industrial arts, take therefore one of the following forms:-- + +(1) Re-arrangement or improvement of machinery so as to utilise more +fully the productive power of nature or man. Improvements enabling one +man to tend more spindles, or enabling the same engine at the same +boiler-pressure to turn more wheels, belong to this order of +improvement. + +(2) Economies in the source of power. These will fall under four +heads-- + + 1. Substitution of cheaper for dearer kinds of human power. + Displacement of men's labour by women's or children's. + + 2. Substitution of mechanical power for human power. Most + great improvements in the "labour-saving" character of + machinery properly come under this head. + + 3. Economies in fuel or in steam. The most momentous + illustration is the adoption of the hot blast and the + substitution of raw coal for coke in the iron trade.[66] + + 4. The substitution of a new mechanical motor for an old one + derived from the same or from different stores of + energy--_e.g._, steam for water power, natural gas for + steam. + +(3) Extended application of machinery. New industrial arts owing their +origin to scientific inventions and their practice to machinery arise +for utilising waste products. Under "waste products" we may include +(_a_) natural materials, the services of which were not recognised or +could not be utilised without machinery--_e.g._, nitrates and other +"waste" products of the soil; (_b_) the refuse of manufacturing +processes which figured as "waste" until some unsuspected use was +found for it. Conspicuous examples of this economy are found in many +trades. During the interval between great new inventions in machinery +or in the application of power many of the principal improvements are +of this order. Gas tar, formerly thrown into rivers so as to pollute +them, or mixed with coal and burnt as fuel, is now "raw material for +producing beautiful dyes, some of our most valued medicines, a +saccharine substance three hundred times sweeter than sugar, and the +best disinfectants for the destruction of germs of disease." "The +whole of the great industries of dyeing and calico-printing have been +revolutionised by the new colouring matters obtained from the old +waste material gas tar."[67] These economies both in fuel and in the +utilisation of waste material are largely due to the increased scale +of production which comes with the development of machine industry. +Many waste products can only be utilised where they exist in large +quantities. + +Sec. 4. If we trace historically the growth of modern capitalist +economies in the several industries we shall find that they fall +generally into three periods-- + + 1. The period of earlier mechanical inventions, marking the + displacement of domestic by factory industry. + + 2. The evolution of the new motor in manufacture. The + application of steam to the manufacturing processes. + + 3. The evolution of steam locomotion, with its bearing on + industry. + +As these periods are not materially exclusive, so also there are close +economic relations subsisting between the development of machinery and +motor, and between the improvements in manufacture and in the +transport industry. But in order to understand the nature of the +irregularity which is discernible in the history of the development of +machinery, it is essential to consider these factors both separately +and in the historical and economic relation they stand to each other. +For this purpose we will examine two large staple industries, the +textile and the iron industries of England, in order that we may trace +in the chief steps of their progress the laws of the evolution of +modern machinery. + +The textile industry offers special facilities to such a study. The +strongest and most widespread of English manufactures, it furnishes in +the early eighteenth century the clearest examples of the several +forms of industry. To the several branches of this industry the +earliest among the great inventions were applied. This start in +industrial development has been maintained, so that the most advanced +forms of the modern factory are found in textile industry. Moreover, +the close attention which has been given to, and the careful records +which have been kept of certain branches of this work, in particular +the Lancashire cotton industry, enable us to trace the operation of +the new industrial forces here with greater precision than is the case +with any other industry. As Schulze-Gaevernitz, in his masterly study, +says of the cotton industry--"The English cotton industry is not only +the oldest, but is in many respects that modern industry which +manifests most clearly the characteristics of modern industrial +methods, both in their economic and their social relations."[68] + +The iron industry has been selected on the ground of its close +connection with the application of steam-driven machinery to the +several industries. It is in a sense the most fundamental industry of +modern times, inasmuch as it furnishes the material environment of the +great modern economic forces. Moreover, we have the advantage of +tracing the growth of the iron manufacture _ab ovo_, for, as we have +seen, before the industrial revolution it played a most insignificant +part in English commerce. + +Lastly, a study of the relations between the growth of the iron and +the textile industries will be of special service in assisting us to +realise the character of the interaction of the several manufactures +under the growing integration of modern industry.[69] + +Sec. 5. In observing the order of inventions applied to textile +industries, the first point of significance is that cotton, a small +industry confined to a part of Lancashire, and up to 1768 dependent +upon linen in order to furnish a complete cloth, should take the lead. + +The woollen trades, in the first half of the eighteenth century, as +we saw, engaged the attention of a vastly larger number of persons, +and played a much more important part in our commerce. The silk trade +had received new life from the flow of intelligent French workers, and +the first modern factory with elaborate machinery was that set up for +silk throwing by Lombe. Yet by far the larger number of the important +textile inventions of the eighteenth century were either applied in +the first instance to the cotton manufacture and transferred, +sometimes after a lapse of many years, to the woollen, worsted, and +other textile trades, or being invented for woollen trades, proved +unsuccessful until applied to cotton.[70] + +Although the origin and application of inventive genius is largely +independent of known laws, and may provisionally be relegated to the +domain of "accident," there are certain reasons which favoured the +cotton industry in the industrial race. Its concentration in South +Lancashire and Staffordshire, as compared with the wide diffusion of +the woollen industries, facilitated the rapid acceptance of new +methods and discoveries. Moreover, the cotton industry being of later +origin, and settling itself in unimportant villages and towns, had +escaped the influence of official regulations and customs which +prevailed in the woollen centres and proved serious obstacles to the +introduction of new industrial methods.[71] Even in Lancashire itself +official inspectors regulated the woollen trade at Manchester, +Rochdale, Blackburn, and Bury.[72] + +The cotton industry had from the beginning been free from all these +fetters. The shrewd, practical business character which marks +Lancashire to-day is probably a cause as well as a result of the great +industrial development of the last hundred years. + +Moreover, it was recognised, even before the birth of the great +inventions, that cotton goods, when brought into free competition with +woollen goods, could easily undersell them and supplant them in +popular consumption. This knowledge held out a prospect of untold +fortune to inventors who should, by the application of machinery, +break through the limitations imposed upon production by the +restricted number of efficient workers in some of the processes +through which the cotton yarn must pass. + +But the stimulus which one invention afforded to another gave an +accumulative power to the application of new methods. This is +especially seen in the alternation of inventions in the two chief +processes of spinning and weaving. + +Even before the invention of John Kay's Fly Shuttle, which doubled the +quantity of work a weaver could do in a day, we found that spinners +had great difficulties in supplying sufficient yarn to the weavers. +This seems to have applied both to the Lancashire cotton and to the +Yorkshire woollen manufactures. After the fly-shuttle had come into +common use this pressure of demand upon the spinners was obviously +increased, and the most skilful organisation of middleman-clothiers +was unable to supply sufficient quantities of yarn. This economic +consideration directed more and more attention to experiments in +spinning machinery, and so we find that, long before the invention of +the jenny and the water-frame, ingenious men like John Kay of Bury, +Wyatt, Paul, and others had tried many patents for improved spinning. +The great inventions of Hargreaves and Arkwright and Crompton enabled +spinning to overtake and outstrip weaving and when, about 1790, steam +began to be applied to considerable numbers of spinning mills, it was +no longer spinning but weaving that was the limiting process in the +manufacture of woollen and cotton cloths. + +This strain upon weaving, which had been tightening through the period +of the great spinning improvements, acted as a special incentive to +Cartwright, Horrocks, and others to perfect the power-loom in its +application, first to woollen, then to cotton industries. Not until +well into the nineteenth century, when steam power had been fully +applied by many minor improvements, were the arts of spinning and +weaving brought fully into line. The complete factory, where the +several processes of carding, spinning, weaving (and even dyeing and +finishing), are conducted under the same roof and worked in +correspondence with one another, marks the full transition from the +earlier form of domestic industry, where the family performed with +simple tools their several processes under the domestic roof.[73] + +Sec. 6. The history of these textile inventions does a good deal to +dispel the "heroic" theory of invention--that of an idea flashing +suddenly from the brain of a single genius and effecting a rapid +revolution in a trade. No one of the inventions which were greatest in +their effect, the jenny, the water-frame, the mule, the power-loom, +was in the main attributable to the effort or ability of a single man; +each represented in its successful shape the addition of many +successive increments of discovery; in most cases the successful +invention was the slightly superior survivor of many similar attempts. +"The present spinning machinery which we now use is supposed to be a +compound of about eight hundred inventions. The present carding +machinery is a compound of about sixty patents."[74] This is the +history of most inventions. The pressure of industrial circumstances +direct the intelligence of many minds towards the comprehension of +some single central point of difficulty, the common knowledge of the +age induces many to reach similar solutions: that solution which is +slightly better adapted to the facts or "grasps the skirts of happy +chance" comes out victorious, and the inventor, purveyor, or, in some +cases, the robber is crowned as a great inventive genius. It is the +neglect of these considerations which gives a false interpretation to +the annals of industrial invention by giving an irregular and +catastrophic appearance to the working of a force which is in its +inner pressure much more regular than in its outward expression. The +earlier increments of a great industrial invention make no figure in +the annals of history because they do not pay, and the final increment +which reaches the paying-point gets all the credit, though the +inherent importance and the inventive genius of the earlier attempts +may have been as great or greater. + +There is nothing fortuitous or mysterious in inventive energy. +Necessity is its mother, which simply means that it moves along the +line of least resistance. Men like Kay, Hargreaves, Arkwright, +Cartwright, set their intelligence and industry to meet the several +difficulties as they arose. Nearly all the great textile inventors +were practical men, most of them operatives immersed in the details of +their craft, brought face to face continually with some definite +difficulty to be overcome, some particular economy desirable to make. +Brooding upon these concrete facts, trying first one thing then +another, learning from the attempts and failures made by other +practical men, and improving upon these attempts, they have at length +hit upon some contrivance that will get over the definite difficulty +and secure the particular economy. If we take any definite invention +and closely investigate it, we shall find in nearly every case it has +thus grown by small increments towards feasibility. Scientific men, +strictly so-called, have had very little to do with these great +discoveries. Among the great textile inventors, Cartwright alone was a +man leading a life of thought.[75] When the spinning machinery was +crippled in its efficiency by the crude methods of carding, Lees and +Arkwright set themselves to apply improvements suggested by +common-sense and experience; when Cartwright's power-loom had been +successfully applied to wool, Horrocks and his friends thought out +precisely those improvements which would render it remunerative in the +cotton trade. + +Thus in a given trade where there are several important processes, an +improvement in one process which places it in front of the others +stimulates invention in the latter, and each in its turn draws such +inventive intelligence as is required to bring it into line with the +most highly-developed process. Since the later inventions, with new +knowledge and new power behind them, often overshoot the earlier ones, +we have a certain law of oscillation in the several processes which +maintains progress by means of the stimulus constantly applied by the +most advanced process which "makes the pace." There is nothing +mysterious in this. If one process remains behind in development each +increment of inventive effort successfully applied there brings a +higher remuneration than if applied to any of the more forward +processes. So the movement is amenable to the ordinary law of "Supply +and Demand" enforced by the usual economic motives. As the invention +of the fly-shuttle gave weaving the advantage, more and more attention +was concentrated upon the spinning processes and the jenny was +evolved; the deficiency of the jenny in spinning warp evolved the +water-frame, which for the first time liberated the cotton industry +from dependence upon linen warp: the demand for finer and more uniform +yarns stimulated the invention of the mule. These notable improvements +in spinning machinery, with their minor appendages, placed spinning +ahead of weaving, and stimulated the series of inventions embodied in +the power-loom. The power-loom was found to be of comparatively little +service until the earlier processes of dressing and sizing had been +placed on a level of machine development by the efforts of Horrocks +and others. Not until after 1841 was an equilibrium reached in the +development of the leading processes. So likewise each notable advance +in the machinery for the main processes has had the effect of bringing +an increase of inventive energy to bear upon the minor and the +subsidiary processes--bleaching, dyeing, printing, etc. Even now the +early process of "ginning" has not been brought fully into line in +spite of the prodigious efforts, made especially in the United States, +to overcome the difficulties involved in this preparatory stage of the +cotton industry. + +The following schedule will serve to show the relation of the growth +of the cotton industry as measured by consumption of raw cotton to the +leading improvements of machinery. + + Cotton Imported. Inventions &c. + lbs. +1730 1,545,472 1730 Wyatt's roller-spinning (patented + 1738). + 1738 Kay's fly-shuttle. +1741 1,645,031 1748 Paul's carding-machine (useless until + improved by Lees, Arkwright, + Wood, 1772-74). +1764 3,870,392 1764 Hargreave's spinning-jenny (patented + 1770), for weft only. + 1764 Calico-printing introduced into + Lancashire. + 1768 Arkwright perfects Wyatt's + spinning-frame (patented 1769), + liberating cotton from dependence on + linen warp. +1771 } + to } 4,764,589 1771 Arkwright's mill built at Cromford. +1775 } + 1775 Arkwright takes patents for carding, + drawing, roving, spinning. + 1779 Crompton's mule completed (combining + jenny and water-frame, producing finer + and more even yarn). +1781 5,198,775 + +1785 18,400,384 1785 Cartwright's power-loom. + Watt and Boulton's first engine for + cotton-mills. +1792 34,907,497 1792 Whitney's saw-gin. +1813 51,000,000 1813 Horrocks' dressing-machine. +1830 261,200,000 1830 The "Throstle" (almost exclusively + used in England for spinning warp). +1832 287,800,000 1832 Roberts' self-acting mule perfected. +1841 489,900,000 1841 Bullough's improved power-loom. + Ring spinning (largely used in U.S.A., + recently introduced into Lancashire). + +From this schedule it is evident that the history of this trade may be +divided with tolerable accuracy into four periods. + +(1) The preparatory period of experimental inventions of Wyatt, Paul, +etc., to the year 1770. + +(2) 1770 to 1792 (_circa_), the age of the great mechanical +inventions. + +(3) 1792 to 1830, the application of steam power to manufacture and +improvements of the great inventions. + +(4) 1830 onward, the effect of steam locomotion upon the industry +(1830, the opening of the Liverpool and Manchester railway). + +If we measure the operation of these several industrial forces within +these several periods, as they are reflected on the growing size of +the cotton industry, we shall realise the accumulative character of +the great industrial movement, and form some approximately accurate +conception of the relative importance of the development of mechanical +inventions and of the new motor-power. + +Sec. 7. The history of the cotton industry is in its main outlines also +the history of other textile industries. We do not possess the same +means of measuring statistically the growth of the woollen industries +in the period of revolution; but since, on the one hand, many of the +spinning and weaving inventions were speedily adapted into the woollen +from the cotton industry, while the application of steam to +manufacture and the effects of steam locomotion were shared by the +older manufacture, the growth of the trade in the main conforms to the +same divisions of time. The figures of imported wool are not so +valuable a register as in the case of cotton, because no account is +taken of home-produce, but the following statistics of foreign and +colonial wool imported into England serve to throw light upon the +growth of our woollen manufactures. + + +STATISTICS OF WOOL IMPORTED INTO ENGLAND. + + lbs. lbs. + 1766 1,926,000 | 1830 32,305,000 + 1771 1,829,000 | 1840 49,436,000 + 1780 323,000 | 1850 74,326,000 + 1790 2,582,000 | 1860 151,218,000 + 1800 8,609,000 | 1870 263,250,000 + 1810 10,914,000 | 1880 463,309,000 + 1820 9,775,000 | 1892 743,046,104 + +In the silk industry the influence of machinery is complicated by +several considerations especially affecting this manufacture. Although +the ingenuity and enterprise of the Lombes had introduced complex +machinery into silk throwing many years before it was successfully +applied to any other branch of textile industry, the trade did not +grow as might have been expected, and the successive increments of +great mechanical invention were slowly and slightly applied to the +silk industry. There are special reasons for this, some of them +connected with the intrinsic value of the commodity, others with the +social regulation of the trade. + +The inherent delicacy of many of the processes, the capricious +character of the market for the commodities, the expensive production +of which renders them a luxury and especially amenable to the shifts +of taste and fashion, have preserved for artistic handicraft the +production of many of the finer silk fabrics, or have permitted the +application of machinery in a far less degree than in the cotton and +woollen industries. + +Moreover, the heavy duties imposed upon raw and thrown silk, which +accompanied the strict prohibition of the importation of manufactured +silk goods in 1765, by aggravating the expenses of production and +limiting the market at the very epoch of the great mechanical +inventions, prevented any notable expansion of consumption of silk +goods, and rendered them quite unable to resist the competition of the +younger and more enterprising cotton industry, which, after the +introduction of colour-printing early in the nineteenth century, was +enabled to out-compete silk in many markets. + +Even in the coarser silk fabrics where weaving machinery was +successfully applied at an early date, the slow progress in "throwing" +greatly retarded the expansion of the trade, and after the repeal of +the duty on imported silk in 1826 the number of throwing mills was +still quite inadequate to keep pace with the demands of the +weavers.[76] Subsequent improvements in throwing mills, and the +application of the ingenious weaving machinery of Jacquard and later +improvers, have given a great expansion to many branches of the trade +in the last fifty years. + +But the following statistics of the consumption of raw and thrown silk +from 1765 to 1844 indicate how slight and irregular was the expansion +of the trade in England during the era of the great inventions and the +application of the steam-motor, and how disastrously the duties upon +raw and thrown silks weighed upon this branch of manufacture. + +AVERAGE IMPORTATION.[77] + + lbs. lbs. + 1765 } | 1823 2,468,121 + 1766 } 715,000 | 1824 4,011,048[78] + 1767 } | 1825 3,604,058 + 1785 } | 1826 2,253,513 + 1786 } 881,000 | 1827 4,213,153 + 1787 } | 1828 4,547,812 + 1801 } | 1829 2,892,201 + to } 1,110,000 | 1830 4,693,517 + 1812 } | 1831 4,312,330 + 1814 2,119,974 | 1832 4,373,247 + 1815 1,475,389 | 1833 4,761,543 + 1816 1,088,334 | 1834 4,522,451 + 1817 1,686,659 | 1835 5,788,458 + 1818 1,922,987 | 1836 6,058,423 + 1819 1,848,553 | 1837 4,598,859 + 1820 2,027,635 | 1838 4,790,256 + 1821 2,329,808 | 1839 4,665,944 + 1822 2,441,563 | 1840 4,819,262 + +In the linen industry the artificial encouragement given to the Irish +trade, which, bounty-fed and endowed with a monopoly of the British +markets, was naturally slow to adopt new methods of production, and +the uncertain condition of the English trade, owing to the strong +rivalry of cotton, prevented the early adoption of the new machine +methods. Although Adam Smith regarded linen as a promising industry, +it was still in a primitive condition. Not until the very end of the +eighteenth century were flax spinning mills established in England and +Scotland, and not until after 1830 was power-loom weaving introduced, +while the introduction of spinning machinery into Ireland upon a scale +adequate to supply the looms of that country took place a good deal +later. + +We see that the early experimental period in the cotton industry +produced no very palpable effect upon the volume of the trade. Between +1700 and 1750 the manufacture was stagnant.[79] The woollen +manufacture, owing largely to the stimulus of the fly-shuttle, showed +considerable expansion. The great increase of cotton production in +1770-90 measures the force of the mechanical inventions without the +aid of the new motor. The full effects of the introduction of steam +power were retarded by the strain of the French war. Though 1800 marks +the beginning of a large continuous expansion in both cotton and +woollen manufactures, it was not until about 1817, when the new motor +had established itself generally in the large centres of industry and +the energy of the nation was called back to the arts of peace, that +the new forces began to fully manifest their power. The period 1840 +onwards marks the effect of the revolution in commerce due to the +application of the new motor to transport purposes, the consequent +cheapening of raw material, especially of cotton, the opening up of +new markets for the purchase of raw material and for the sale of +manufactured goods. The effect of this diminished cost of production +and increased demand for manufactured goods upon the textile trades is +measured by the rapid pace of the expansion which followed the opening +of the early English railways and the first establishment of +steam-ship traffic. + +Sec. 8. The development of the textile trades, and that of cotton in +particular, arose from the invention of new machinery. This machinery +was quickened and rendered effective by the new motor. The iron trade +in its development presents the reverse order. The discovery of a new +motor was the force which first gave it importance. The mechanical +inventions applied to producing iron were stimulated by the +requirements of the new motor. + +In 1740 the difficulty of obtaining adequate supplies of timber, and +the failure of attempts to utilise pit-coal, had brought the iron +trade to a very low condition. According to Scrivener, at this time +"the iron trade seemed dwindling into insignificance and +contempt."[80] + +The earlier steps in its rise from this degradation are measured by +the increased application of pit-coal and the diminished use of +charcoal. + +The progress may be marked as follows:-- + +(1) The application of Watt's earlier improvements upon Newcomen's +engines, patented 1769, was followed by a rise in the average output +for furnaces worked with charcoal. The average output of 294 tons in +1750 was increased to 545 tons in 1788. + +(2) The substitution of coke for charcoal proceeding _pari passu_ with +improved methods of smelting yielded an average output for coke-fed +furnaces of 903 tons in 1788. To this epoch belong also Cort's +inventions for puddling and rolling (patented 1783-84), which +revolutionised the production of bar-iron. + +(3) The introduction of Watt's double-power engine in 1788-90. In 1796 +the production of pig-iron was double that of 1788, and the average +output per furnace raised to 1048 tons. + +(4) The substitution of hot for cold blast in 1829, effecting an +economy of coal to the extent of 2 tons 18 cwt. per ton of cast-iron. + +(5) The adoption of raw coal instead of coke in 1833, effecting a +further reduction of expenditure of coal from 5 tons 3-1/2 cwt. to 2 +tons 5-1/4 cwt. in producing a ton of cast-iron. + +These were the leading events in the establishment of the iron +industry of this country. The following table indicates the growth of +the production of English iron from 1740 to 1840:-- + + Year. No. of Furnaces. Average Output. Total Produce. + Tons. Tons. + 1740 59 294 17,350 + 1788 77 909 coke } 61,300 + 545 charcoal} + 1796 121 1048 125,079 + 1806 133 1546 258,206 + 1825 364 2228 703,184 + (261 in blast) + 1828 365 2530 + (277 in blast) + 1839 378 3592 1,347,790 + +Here we see that economy of power rather than improved machinery is +the efficient cause of the development of industry, or more properly, +that economy of power precedes and stimulates the several steps in +improvement of machinery. + +The substitution of coke for charcoal and the application of steam +power not merely increased enormously the volume of the trade, but +materially affected its localisation. Sussex and Gloucester, two of +the chief iron-producing counties when timber was the source of power, +had shrunk into insignificance by 1796, when facilities of obtaining +coal were a chief determinant. By 1796, it is noteworthy that the four +districts of Stafford, Yorkshire, South Wales, and Salop were to the +front. + +The discovery of the hot blast and substitution of raw coal for coke +occurring contemporaneously with the opening of railway enterprise +mark the new interdependence of industries in the age of machinery. + +Iron has become a foundation upon which every machine-industry alike +is built. The metal manufactures, so small in the eighteenth century, +attained an unprecedented growth and a paramount importance in the +nineteenth. + +The application of machinery to the metal industries has led to an +output of inventive genius not less remarkable in this century than +the textile inventions of the eighteenth century. + +"In textile manufacture it was improved machinery that first called +for a new motor; in metal manufacture it was the new motor which +rendered necessary improved machinery.... For all modern purposes the +old handicraft implements were clearly obsolete. The immediate result +of this requirement was the bringing to the front a number of +remarkable men, Brindley, Smeaton, Maudsley, Clements, Bramah, +Nasmyth, etc., to supply mechanism of a proportionate capacity and +nicety for the new motive-power to act upon and with, and the ultimate +result was the adoption of the modern factory system in the larger +tool-making and engineering workshops, as well as in metal +manufactories proper. Thus there gradually grew up," says Jevons, "a +system of machine-tool labour, the substitution of iron hands for +human hands, without which the execution of engines and machines in +their present perfection would be impossible."[81] + +In the later era of machine development an accumulative importance is +attached to the improvements in the machine-making industries. The +great inventions associated with the names of Maudsley and Nasmyth, +the cheapening of steel by the Bessemer process, and the various steps +by which machines are substituted for hands in the making of +machinery, have indirect but rapid and important effects upon each and +every machine-industry engaged in producing commodities directly +adapted to human use. The economy of effort for industrial purposes +requires that a larger and larger proportion of inventive genius and +enterprise shall be directed to an interminable displacement of +handicraft by machinery in the construction of machinery, and a +smaller proportion to the relatively unimportant work of perfecting +manufacturing machinery in the detailed processes of each manufacture +engaged in the direct satisfaction of some human want. + +A general survey of the growth of new industrial methods in the +textile and iron industries marks out three periods of abnormal +activity in the evolution of modern industry. The first is 1780 to +1795, when the fruits of early inventions are ripened by the effective +application of steam to the machine-industries. The second is 1830 to +1845, when industry, reviving after the European strife, utilised more +widely the new inventions, and expanded under the new stimulus of +steam locomotion. The third is 1856 to 1866 (_circa_), when the +construction of machinery by machinery became the settled rule of +industry. + +Sec. 9. Bearing in mind how the invention of new specific forms of +machinery in the several processes of manufacture proceeds +simultaneously with the application of the new motor-power, we find +ourselves quite unable to measure the amount of industrial progress +due to each respectively. But seeing that the whole of modern industry +has thus been set upon a new foundation of coal and iron, it is +obvious that the bonds connecting such industries as the textile and +the iron must be continually growing closer and stronger. In earlier +times the interdependency of trades was slight and indirect, and the +progress in any given trade was almost wholly derived from +improvements in specific skill or in the application of specific +mechanical invention. The earlier eighteenth century did indeed +display an abnormal activity in these specific forms of invention. For +examples of these it is only necessary to allude to Lombe's silk mill +at Derby, the pin factory made famous by Adam Smith, Boulton's +hardware factory at Soho, and the renowned discoveries of Wedgwood. +But all increased productivity due to these specific improvements was +but slight compared with that which followed the discovery of steam as +a motor and the mechanical inventions rendering it generally +applicable, which marked the period 1790 to 1840. By this means the +several specific industries were drawn into closer unity, and found a +common basis or foundation in the arts of mining, iron-working, and +engineering which they lacked before. + +From these considerations it will follow that the order in which the +several industries has fallen under the sway of modern industrial +methods will largely depend upon the facility they afford to the +application of steam-driven machinery. The following are some of the +principal characteristics of an industry which determine the order, +extent, and pace of its progress as a machine industry:-- + +(_a_) _Size and complexity of Structure._--The importance of the +several leading textile manufactures, the fact that some of them were +highly centralised and already falling under a factory system, the +control of wealthy and intelligent employers, were among the chief +causes which enabled the new machinery and the new motor to be more +quickly and successfully applied than in smaller, more scattered, and +less developed industries. + +(_b_) _Fixity in quantity and character of demand._--Perfection of +routine-work is the special faculty of machine-production. Where there +is a steady demand for the same class of goods, machinery can be +profitably applied. Where fashion fluctuates, or the individual taste +of the consumer is a potent factor, machinery cannot so readily +undertake the work. In the textile industries there are many +departments which machinery has not successfully invaded. Much +lace-making, embroidery, certain finer weaving is still done by human +power, with or without the aid of complex machinery. In the more +skilled branches of tailoring, shoe-making, and other clothing trades, +the individual character of the demand--_i.e._, the element of +irregularity--has limited the use of machinery. A similar cause +retains human motor-power in certain cases to co-operate with and +control complex machinery, as in the use of the sewing-machine. + +(_c_) _Uniformity of material and of the processes of +production._--Inherent irregularity in the material of labour is +adverse to machinery. For this reason the agricultural processes have +been slow to pass under steam-power, especially those directly +concerned with work on the soil, and even where steam-driven machines +are applied their economy, as compared with hand labour, is less +marked than in manufacturing processes. To the getting of coal and +other minerals steam and other extra-human power has been more slowly +and less effectively applied than in dealing with the matter when it +is detached from the earth. + +(_d_) _Durability of valuable properties._--The production of quickly +perishable articles being of necessity local and immediate demands a +large amount of human service which cannot economically be replaced or +largely aided by machinery. The work of the butcher and the baker have +been slow to pass under machinery. Where butchering has become a +machine-industry to some extent, the direct cause has been the +discovery of preservative processes which have diminished the +perishability of meat. So with other food industries, the facility of +modern means of transport has alone enabled them gradually to pass +under the control of machinery. Until quite recently cakes and the +finer forms of bakery were a purely local and handicraft product. + +(_e_) _Ease or simplicity of labour involved._--Where abundance of +cheap labour adequate to the work can be obtained, and particularly in +trades where women and children are largely engaged, the development of +machinery has been generally slower. This condition often unites with +(_b_) or (_c_) to retain an industry in the "domestic" class. A large +mass of essentially "irregular" work requiring a certain delicacy of +manipulation, which by reason of its narrowness of scope is yet easily +attained, and which makes but slight demands upon muscular force or +intelligence, has remained outside machine-production. Important +industries containing several processes of this nature have been slower +to fall into the complete form of the factory system. The slow progress +of the power-loom in cotton and wool until after 1830 is explained by +these considerations. The stocking-frame held out against machinery +still longer, and hand work still plays an important part in several +processes of silk manufacture. Even now, in the very centre of the +factory system, Bolton, the old hand-weaving is represented by a few +belated survivors.[82] + +(_f_) _Skilled Workmanship._--High skill in manipulation or treatment +of material, the element of art infused into handicraft, gives the +latter an advantage over the most skilful machinery, or over such +machinery as can economically be brought into competition with it. In +some of the metal trades, in pottery and glass-making there are many +processes which have not been able to dispense with human skill. In +these manufactures, moreover, more progress is attributable to +specific inventions than to the adoption of the common machinery and +motor-power which are not largely available in the most important +processes. + +From these considerations it will appear that where an industry is +large and regular in character, it falls more readily and completely +under the control of machinery, where it is small and irregular it +conforms more slowly and partially to the new methods. Most of the +extractive industries of agriculture, stock-raising, fishing, mining, +hunting, are irregular by reason of the nature of their material and +its subjection to influences, geological, chemical, climatic, and +others which are but slightly under calculation or human control. The +final processes by which commodities are adapted to the use of +individual consumers necessarily partake of the irregularity or +variety of human tastes and desires. We shall therefore find most +regularity in the intermediate processes where the raw materials, +having been extracted from nature, are being endowed with those +qualities of shape, position, etc., which are required to enable them +to satisfy human wants. The manufacturing stages where machinery finds +fullest application are in nearly all cases intermediate stages of +production. Even where machine-production seems directly to satisfy +some human want, there are commonly some final processes required +which involve individual skill. Almost all products which satisfy the +desires of man pass through a large number of productive processes +which may be classed as extractive, transport, manufacturing, and +distributive. These are, of course, not in all cases clearly +distinguishable. Mixed with the extractive processes of mining and +wheat-raising are several processes of transport and manufacture: the +various stages of manufacture may be broken by stages of transport: a +final process of manipulation or manufacture may precede the final act +of distribution, as in the sale of drugs to the consumer. But, +generally speaking, these four kinds of productive processes mark four +historic stages in the passage from raw material to finished +commodity. + +The two middle stages of transport and manufacture have fallen far +more fully under the control of steam-driven machinery than the +others, and it is in the elaboration of older manufacturing and +transport processes and the addition of new processes that we trace +the largest effects of the evolution of modern industrial methods. + +The following list of the divisions under which workers engaged in the +production of material wealth are classified for purposes of the +census may serve to bring out more clearly this proportionate +development of machinery. The figures appended give the numbers +engaged in the several occupations in 1891, and serve to approximately +indicate the relative importance of the several principal branches of +industry:-- + + Agriculture 1,311,720 + Fishing 25,225 + Mining 561,637 + Stone, clay, road-making 209,972 + Transport-- + (_a_) Railways 186,774 + (_b_) Roads 366,605 + (_c_) Canals, rivers, seas 208,443 + (_d_) Messages and porterage 194,044 + Houses, furniture, and decorations 820,582 + Food and lodgings 797,989 + Iron and steel 380,193 + Other metals 146,550 + Ships and boats 170,517 + Carriages and harness 108,780 + Machines and implements 342,231 + Textiles 1,128,589 + Dress 1,099,833 + Earthenware and glass 90,007 + Chemicals and compounds 56,047 + Books 135,616 + Animal substances (manufacture) 76,566 + Vegetable substances (paper, etc.) 196,889 + General mechanics and labourers 805,105 + Commercial-- + (_a_) Merchants and agents 363,037 + (_b_) Dealers in money 21,891 + (_c_) Insurance 31,437 + Engineers and surveyors 15,441 + +In glancing down this list of the chief industries engaged in the +production of commercial wealth, it will be recognised at once that +the manufacturing and transport industries are those to which +steam-power and the economies of large production have been especially +applied. Though, historically, the first industrial use of steam-power +was in coal-mining, it remains true that the extensive application of +modern machinery to agriculture and the other extractive industries is +of comparatively recent growth, while the work of retail distribution +has hitherto made but trifling use of machinery and steam-power. Only +within the last few years have a few gigantic retail distributive +businesses shown a tendency to apply steam and electricity to +mechanical contrivances for purposes of distribution. + +Sec. 10. The new industrial forces first applied to the cotton spinning +of South Lancashire, and rapidly forcing their way into other branches +of the textile manufactures, then more gradually transforming the +industrial methods of the machinery, hardware, and other staple +English manufactures, passed into the Western Continent of Europe and +America, destroying the old domestic industry and establishing in +every civilised country the reign of steam-driven machinery. The +factors determining the order and pace of the new movement in the +several countries are numerous and complex. In considering the order +of machine-development, it must be remembered that the different +nations did not start from an equal footing at the opening of the age +of great inventions. By the beginning of the eighteenth century +England had established a certain supremacy in commerce. The growth of +her colonial possessions since the Revolution and the drastic and +successful character of her maritime policy had enabled her to +outstrip Holland. In 1729 by far the greater part of the Swedish iron +exported from Gothenburg went to England for shipbuilding +purposes.[83] At the close of the seventeenth century Gregory King +placed England, Holland, and France at the head of the industrial +nations with regard to the productivity of their labour.[84] Italy +and Germany were little behind in the exercise of manufacturing arts, +though the naval superiority and foreign possessions of the +above-named nations gave them the commercial superiority. By 1760 +England had strengthened her position as regards foreign commerce, and +her woollen industry was the largest and most highly-developed +industry in the world. But so far as the arts of manufacture +themselves were concerned there was no such superiority in England as +to justify the expectation of the position she held at the opening of +the nineteenth century. In many branches of the textile arts, +especially in silk spinning and in dyeing, in pottery, printing, and +other manufactures, more inventive genius and more skill were shown on +the Continent, and there seemed _a priori_ no reason why England +should outstrip so signally her competitors. + +The chief factors in determining the order of the development of +modern industrial methods in the several countries may be classified +as natural, political, economic. + +NATURAL. (1) _The structure and position of the several +countries._--The insular character of Great Britain, her natural +facilities for procuring raw materials of manufacture and supplies of +foreign food to enable her population to specialise in manufacture, +the number and variety of easily accessible markets for her +manufactures, gave her an immense advantage. Add to this a temperate +climate, excellent internal communication by river (or canal), and an +absence of mountain barriers between the several districts. These +advantages were of greater relative importance before steam transport, +but they played a large part in facilitating the establishment of +effective steam transport in England. Extent of sea-board and good +harbourage have in no small measure directed the course of modern +industry, giving to England, Holland, France, Italy an advantage which +the levelling tendency of modern machinery has not yet been able to +counteract. The slow progress of Germany until recent years, and the +still slow progress of Russia, is attributable more to these physical +barriers of free communication, internal and external, than to any +other single cause that can be adduced. Inherent resources of the +soil, quality of land for agriculture, the proximity of large supplies +of coal and iron and other requisites of the production of machinery +and power rank as important determinants of progress. The machine +development of France in particular has been retarded by the slow +discovery of her natural areas of manufacture, the districts where +coal and iron lie near to one another in easily accessible supply. The +same remark applies to Germany and to the United States. At the close +of last century, when the iron trade of England was rapidly advancing, +the iron trade of France were quite insignificant, and during the +earlier years of the nineteenth century the progress was extremely +slight.[85] + +(2) _Race and National Character._--Closely related to climate and +soil, these qualities of race are a powerful directing influence in +industry. Muscular strength and endurance, yielding in a temperate +climate an even continuity of vigorous effort; keen zest of material +comfort stimulating invention and enterprise; acquisitiveness, and the +love of external display; the moral capacities of industry, truth, +orderly co-operation; all these are leading factors determining the +ability and inclination of the several nations to adopt new industrial +methods. Moral qualities in English workmanship have indisputably +played a large part in securing her supremacy. "A British trade-mark +was accepted as a guarantee of excellence, while the products of other +countries were viewed with a suspicion justified by experience of +their comparative inferiority."[86] The more highly civilised nations +have thus gained by this civilisation, and have widened the distance +which separates them from the less civilised. England, France, +Germany, Holland, and the United States are in wealth and in +industrial methods far more widely removed from Spain and Russia than +was the case a hundred years ago. + +(_b_) POLITICAL.--Statecraft has played an important part in +determining the order and pace of industrial progress. The possession +of numerous colonies and other political attachments in different +parts of the world, comprising a large variety of material resources, +gave to England, and in a less measure to France, Holland, Spain, a +great advantage. The tyrannical use these nations made of their +colonies for the purpose of building up home manufactures enabled +them to specialise more widely and safely in those industries to which +the new methods of production were first applied. Even after the North +American colonies broke loose, the policy of repression England had +applied to their budding manufactures enabled her to retain to a large +extent the markets thus created for her manufactured goods. + +The large annexations England made during the eighteenth and early +nineteenth centuries gave her a monopoly of many of the finest markets +for the purchase of raw materials and for the sale of manufactured +goods. The large demand thus established for her textile and metal +wares served not only to stimulate fresh inventions, but enabled her +to utilise many improvements which could only be profitably applied in +the case of large industries with secure and expanding markets. + +But the most important factor determining the priority of England was +the political condition of continental Europe at the very period when +the new machinery and motor-power were beginning to establish +confidence in the new industrial order. When Crompton's mule, +Cartwright's power-loom, Watt's engines were transforming the industry +of England, her continental rivals had all their energies absorbed in +wars and political revolutions. The United States and Sweden were the +only commercial nations of any significance who, being neutral, +obtained a large direct gain from the European strife. Yet England, in +spite of the immense drain of blood and money she sustained, under the +momentum of the new motor-power far outstripped the rivalry of such +states. Though she had to pay a heavy price for her immunity from +invasion, she thereby secured an immense start in the race of modern +machine-production. Until 1820 she had the game in her own hands. In +European trade she had a practical monopoly of the rapidly advancing +cotton industry. It was this monopoly which, ruthlessly applied to +maintain prices at a highly remunerative rate, and to keep down wages +to starvation point, built up, in an age of supreme and almost +universal misery for the masses, the rapid and colossal fortunes of +the cotton kings. Not until peace was established did the textile and +other factories begin to take shape upon the Continent, and many +years elapsed before they were able to compete effectively with +England. Switzerland was the first continental country to actively +adopt the new methods. The large supply of water-power stood her in +good stead, and the people took more willingly to the factory system +than in other countries.[87] France was slower in her development, in +spite of the strong protective system by which she strove, though not +very successfully, to exclude English cotton goods. The fall of +English prices and profits in the cotton trade between 1820 and 1830 +marks clearly the breakdown of the English monopoly before the cheap +labour of Alsace and the cheap raw material of the United States, now +organised in the factory system with the new machinery.[88] In this, +the most advanced trade, the world-competition which now is operative +in a thousand different industries, measuring and levelling economic +advantages, first clearly shows itself, and in 1836 Ure finds the +continental nations and America competing successfully with England in +markets which had hitherto been entirely her own. + +(_c_) ECONOMIC CONDITIONS.--The transformation of English agriculture, +the growth of large farms, drove great numbers of English peasants +into the towns, and furnished a large supply of cheap labour for the +new machinery. + +This movement was accelerated by the vices of our land tenure. In +France and Germany, where the agricultural workers had a stronger +interest and property in their land, they were less easily detached +for factory purposes. But in England, where the labourer had no +property in the land, reformed methods of agriculture and the +operation of the Poor Law combined to incite the large proprietors and +farmers to rid themselves of all superfluous population in the rural +parts and accelerated the migration into the towns. Here the +population bred with a rapidity hitherto unknown. The increase of +population in England and Wales during the thirty years from 1770 to +1800 is placed at 1,959,590, or 27-1/10 per cent., while during the +next thirty years, 1800 to 1830, it amounted to 5,024,207, or 56-3/5 +per cent.[89] This large supply of cheap labour in the towns enabled +the Lancashire and Yorkshire factories to grow with startling +rapidity. The exhaustion left by the Napoleonic wars, the political +disorder and insecurity which prevailed on the Continent, retarded +until much later the effective competition of other European nations +who were behind England in skill, knowledge, and the possession of +markets. The American manufactures which had sprung up after the +revolution had made considerable strides, but the conquest and +settlement of vast new areas of land, and the immense facilities +afforded for the production of raw material, retarded their rate of +growth until long after the opening of this century. It was, indeed, +not until about 1845 that the cotton manufacture made rapid strides in +the United States. During the twenty years previous the progress had +been very slight, but between 1845 and 1859 a very substantial and, +making allowance for fluctuations in the cotton crops, a very steady +growth took place.[90] + +Another great economic advantage which assisted England was the fact +that she, more than any other European nation, had broken down the old +industrial order, with its guilds, its elaborate restrictions, and +conservative methods. Personal freedom, security of property, liberty +to work and live where and how one liked, existed in England to an +extent unknown on the Continent before the French Revolution. The +following account of the condition of the cotton manufacture in +Germany in the eighteenth century will serve to indicate the obstacles +to the reformed methods of industry:--"Everything was done by rule. +Spinning came under public inspection, and the yarn was collected by +officials. The privilege of weaving was confined to the confraternity +of the guild. Methods of production were strictly prescribed; public +inspectors exercised control. Defects in weaving were visited with +punishment. Moreover, the right of dealing in cotton goods was +confined to the confraternity of the merchant guild: to be a +master-weaver had almost the significance of a public office. Besides +other qualifications, there was the condition of a formal examination. +The sale also was under strict supervision; for a long time a fixed +price prevailed, and a maximum sale was officially prescribed for each +dealer. The dealer had to dispose of his wares to the weaver, because +the latter had guaranteed to him a monopoly of the export trade."[91] + +Under such conditions the new machine-industry could make little +advance. Excepting in the case of the woollen industries, England had +for the most part already shaken off the old regulations before 1770. +In particular, the cotton trade, which was in the vanguard of the +movement, being of recent growth and settling outside the guild towns, +had never known such restrictions, and therefore lent itself to the +new order with a far greater facility than the older trades. Moreover, +England was free from the innumerable and vexatious local taxes and +restrictions prevalent in France and in the petty governments of +Germany. Although the major part of these foolish and pernicious +regulations has been long swept away from Germany and other +continental nations, the retarding influence they exercised, in common +with the wider national system of protection which still survives, +kept back the cotton industry, so that in Germany it still stands half +a century behind its place in England.[92] + +The following figures show how substantial was the lead held by +England in the cotton manufacture a little before the middle of the +century. + +NUMBER OF SPINDLES WORKING IN COTTON MILLS IN 1846.[93] + + Spindles. + England and Wales 15,554,619 + Scotland 1,727,871 + Ireland 215,503 + Austria and Italy 1,500,000 + France 3,500,000 + Belgium 420,000 + Switzerland 650,000 + Russia 7,585,000 + United States 3,500,000 + States of the Zollverein 815,000 + ---------- + 35,467,993 + +The development of the cotton industry in 1888 in the chief industrial +countries, as indicated by the consumption of raw cotton, is expressed +in the accompanying diagram. + +Lastly, the national trade policy of England was of signal advantage +in her machine development. Her early protective system had, by the +enlargement of her carrying trade and the increase of her colonial +possessions, laid the foundation of a large complex trade with the +more distant parts of the world, though for a time it crippled our +European commerce. While we doubtless sacrificed other interests by +this course of policy, it must be generally admitted that "English +industries would not have advanced so rapidly without Protection."[94] +But as we built up our manufacturing industries by Protection, so we +undoubtedly conserved and strengthened them by Free Trade--first, by +the remission of tariffs upon the raw materials of manufacture and +machine-making, and later on by the free admission of food stuffs, +which were a prime essential to a nation destined to specialise in +manufacture. France, our chief national competitor, weakened her +position by a double protective policy, not merely refusing admittance +to foreign manufactures in her markets, but retaining heavy duties +upon the importation of foreign coal and iron, the foundational +constituents of machine-production. This protective policy, adopted by +nations whose skill, industry, and natural resources would have +rendered them formidable competitors to English manufacturers, has +hindered considerably the operation of those economic forces which +impel old and thickly-peopled countries to specialise in manufacture +and trade, and so has retarded the general development of modern +machine-production. But while protective tariffs indisputably operate +in this way, it is not possible to determine the extent of their +influence. In a large country of rich resources a high degree of +specialisation in manufacture is possible in spite of a protective +policy. The pressure of high wages is an economic force more +powerfully operative than any other in stimulating the adoption of +elaborate machinery.[95] Both in the textile and the iron industries +the United States present examples of factory development more +advanced even than those of England. Certain processes of warping and +winding are done by machinery in America which are still done by hand +labour in England.[96] The chain and nail-making trades, which employ +large numbers of women in South Staffordshire and Worcestershire, are +made more cheaply by machinery in America.[97] Moreover, the high +standard of living and the greater skill of the American operatives +enables them to tend more machines. In German factories a weaver tends +two, or rarely three looms; in Lancashire women weavers undertake +four, and in Massachusetts often six looms, and sometimes eight.[98] + + [Illustration: CONSUMPTION OF RAW COTTON, 1887-88. (Millions + of lbs.)] + +Thus we see how the new industrial forces were determined in the order +of their operation by the character and conditions of the several +countries, their geographical position and physical resources, the +elements of racial character, political and industrial institutions, +deliberate economic policies, and, above all, by the absorbing nature +of the military and political events contemporary with the outburst of +inventive ingenuity. The composition of these forces determined the +several lines of less resistance along which the new industry moved. + +The exact measurement of so multiform a force is impossible. The +appended tables and diagrams may, however, serve to indicate the +progress of the several industrial nations as measured by (i.) +development of railway and merchant shipping; (ii.) consumption of +coal and iron; (iii.) application of steam-power; (iv.) estimated +annual value of manufactures:-- + +I. COMPARATIVE MILEAGE OF RAILWAYS, 1840 TO 1890. + + 1840. 1850. 1860. 1870. 1880. 1890. + United Kingdom 800 6,600 10,400 15,500 17,900 19,800 + Continent of Europe 800 7,800 21,400 47,800 83,800 110,200 + United States 2,800 9,000 30,600 53,400 93,600 156,000 + India -- -- 800 4,800 9,300 16,000 + Australia -- -- 200 1,200 5,400 10,100 + Rest of the World -- -- 2,800 5,500 18,400 42,300 + +RAILWAY MILEAGE IN RELATION TO AREA AND POPULATION. + + Density of Railway + Population per Mileage + Square Square Mile (1888). + Area. Miles. (1890). + United Kingdom 120,849 320 19,810 + France 204,092 184 20,900 + Germany 208,738 233 24,270 + Russia 1,902,227 42 17,700 + Austria 240,942 166 15,610 + Italy 110,623 260 7,830 + Spain 197,670 86 5,930 + Portugal 34,038 136 1,190 + Sweden 170,979 28 4,670 + Norway 124,495 16 970 + Denmark 15,289 133 1,220 + Holland 12,648 350 1,700 + Belgium 11,373 530 2,760 + Switzerland 15,976 190 1,870 + Greece 25,041 88 370 + Turkey 65,909 73 900 + U.S.A. (excluding + Alaska and Indian + territory) 1,175,550 21 156,080 + Japan 145,655 274 910 + India 964,992 229 15,250 + Australia 3,030,771 1.20 10,140 + Canada 3,315,647 1.45 12,700 + Egypt (cultiv. area) 12,976 638 1,260 + + [Illustration: TONNAGE OF MERCHANT SHIPPING.] + + [Illustration: COMPARATIVE TABLE OF CONSUMPTION OF COAL AND + IRON PER INHABITANT IN DIFFERENT COUNTRIES.] + + [Illustration: STEAM POWER OF EUROPEAN COUNTRIES.] + + [Illustration: STEAM AND OTHER POWER IN DIFFERENT COUNTRIES.] + + [Illustration: ESTIMATED ANNUAL VALUE OF MANUFACTURES.] + +FOOTNOTES: + +[58] Karl Marx, _Capital_, p. 367. + +[59] Marx points out how in many of the most highly evolved machines +the original tool survives, illustrating this from the original +power-loom. (_Capital_, p. 368.) + +[60] Cooke Taylor, _History of the Factory System_, p. 422. + +[61] Cf. Babbage, p. 15. + +[62] Burnley, _Wool and Wool-combing_, p. 417. + +[63] _Economy of Machinery_, p. 6. + +[64] _Economy of Machinery_, p. 39. + +[65] _Vide infra_, p. 249. + +[66] Scrivener, _History of the Iron Trade_, pp. 296, 297. + +[67] Sir Lyon Playfair, _North American Review_, Nov. 1892. + +[68] _Der Grossbetrieb_, p. 85. + +[69] The important part which the cotton and iron industries play in +the export trade of England entitles them to special consideration as +representatives of world-industry. Out of L263,530,585 value of +English exports in 1890, cotton comprised L74,430,749; iron and steel, +L31,565,337. + +[70] Cunningham, chap. ii. p. 450. + +[71] Schulze-Gaevernitz, _Der Grossbetrieb_, p. 34. + +[72] Ure, _The Cotton Manufacture_, p. 187. + +[73] Modern economy now favours the specialisation of a factory and +often of a business in a single group of processes--_e.g._, spinning +or weaving or dyeing, both in the cotton and woollen industries. This, +however, is applicable chiefly to the main branches of textile work. +In minor branches, such as cotton thread, the tendency is still +towards an aggregation of all the different processes under a single +roof, both in England and in the United States. + +[74] P.R. Hodge, civil engineer--evidence before House of Lords +Committee in 1857. + +In Germany a spinning-wheel had been long in use for flax-spinning, +which in effect was an anticipation of the throstle (cf. Karmarch, +_Technologie_, vol. ii. p. 844, quoted Schulze-Gaevernitz, p. 30), and +machine-weaving is said to have been discovered in Danzig as early as +1579. + +[75] Cf. Brentano, _Uber die Ursachen der heutigen socialen Noth; Der +Grossbetrieb_, p. 30. + +[76] Porter, _Progress of the Nation_, p. 219. + +[77] Selected from Porter, p. 218. + +[78] In 1824 Mr. Huskisson introduced the principle of free trade, +securing a reduction of the duties on raw and thrown silks, and in +1825, 1826, considerable further reductions were made. (Cf. Ure, +_Philosophy of Manufactures_, p. 454, etc.) But protection of English +silk manufactured goods was maintained until the French Treaty of +1860. + +[79] Cf. Ure, _History of the Cotton Manufacture_, vol. i. p. 223. + +[80] Scrivener, _History of the Iron Trade_, p. 56. + +[81] Cooke Taylor, _Modern Factory System_, p. 164; cf. also Karl +Marx, _Capital_, p. 381. + +[82] Schulze-Gaevernitz, p. 140. + +[83] Yeats, _The Growth and Vicissitudes of Commerce_, p. 284. + +[84] The average income for England in 1688 he puts at L7 18s; for +Holland, L8 1s. 4d.; France, L6--p. 47. Such an estimate, however, has +little value. + +[85] + + In 1810 the total produce was 140,000 tons. + " 1818 " " " 114,000 " + " 1824 " " " 164,000 " + +(Scrivener, _History of the Iron Trade_, p. 153.) + +[86] Yeats, _Growth and Vicissitudes of Commerce_, p. 285. + +[87] Schulze-Gaevernitz, _Der Grossbetrieb_, p. 48. + +[88] Ellison, _History of the Cotton Trade_, presents the following +interesting table (yarn, 40 hanks to the lb.):-- + + 1779. 1784. 1799. 1812. 1830. 1882. + s. d. s. d. s. d. s. d. s. d. s. d. + + Selling price 16 0 10 11 7 6 2 6 1 2-1/2 0 10-1/2 + Cost of Cotton + (18 oz.) 2 0 2 0 3 4 1 6 0 7-3/4 0 7-1/8 + ----- ----- ---- ---- -------- --------- + Labour & Capital 14 0 8 11 4 2 1 0 0 6-3/4 0 3-3/8 + +[89] Porter, _Progress of the Nation_, p. 13. Eighteenth century +figures are, however, not trustworthy. The first census was in 1801. + +[90] Ure, _Philosophy of Manufactures_, p. 531. + +[91] Schulze-Gaevernitz, _Der Grossbetrieb_, p. 34. + +[92] In 1882 42 per cent. of the German textile industry was still +conducted in the home or domestic workshop, while only 38 per cent. +was carried on in factories employing more than 50 persons. More +weavers were still engaged with hand-looms than with power-looms, and +the latter was so little developed that the hand-loom could still hold +its own in many articles. Knitting, lace-making, and other minor +textile industries are still in the main home industries.--(_Social +Peace_, p. 113.) "While in England in 1885 each spinning or weaving +mill had an average of 191 operatives, each spinning mill in Germany +in 1882 employed an average of 10 persons only."--(Brentano, _Hours, +Wages, and Production_, p. 64.) + +[93] Ure, _Philosophy of Manufactures_, p. 515. + +[94] Toynbee, _Industrial Revolution_, p. 79. + +[95] The highly elaborate American machine industry of watch-making is +a striking example of this influence of high wages. Cf. +Schulze-Gaevernitz, _Social Peace_, p. 125. + +[96] Schoenhof, _Economy of High Wages_, p. 279. + +[97] _Ibid._, pp. 225, 226. + +[98] Schulze-Gaevernitz, p. 66 (note). This six and eight-loom weaving +is, however, at a lower speed. + + + + +CHAPTER IV. + +THE STRUCTURE OF MODERN INDUSTRY. + + Sec. 1. _Growing Size of the Business-Unit._ + Sec. 2. _Relative Increase of Capital and Labour in the Business._ + Sec. 3. _Increased Complexity and Integration of Business + Structure._ + Sec. 4. _Structure and Size of the Market for different + Commodities._ + Sec. 5. _Machinery a direct Agent in expanding Market Areas._ + Sec. 6. _Expanded Time-area of the Market._ + Sec. 7. _Interdependency of Markets._ + Sec. 8. _Sympathetic and Antagonistic Relations between Trades._ + Sec. 9. _National and Local Specialisation in Industry._ + Sec. 10. _Influences determining Localisation of Industry under + World-Competition._ + Sec. 11. _Impossibility of Final Settlement of Industry._ + Sec. 12. _Specialisation in Districts and Towns._ + Sec. 13. _Specialisation within the Town._ + + +Sec. 1. Turning once more to the unit of industry, the Business, and +thence to the Trade and the Market, or area of competition, it is +necessary to examine the structural and functional changes brought +about by the action of the new industrial forces. + +In considering the effect of modern machine-production upon the +Business, the most obvious external change is a great increase in +size. The typical unit of production is no longer a single family or a +small group of persons working with a few cheap simple tools upon +small quantities of material, but a compact and closely organised mass +of labour composed of hundreds or thousands of individuals, +co-operating with large quantities of expensive and intricate +machinery, through which passes a continuous and mighty volume of raw +material on its journey to the hands of the consuming public. + +The expansion in mass of labour and capital composing the industrial +unit does not, however, proceed at the same pace in the different +industries. + +The largest growths are found in two classes of industry. First, those +which close dependence on monopoly of land, or other privilege +conferred by state or municipal government, has placed outside +competition. The size here is determined by that amount of capital +required to achieve the most profitable equation of supply and demand +prices under terms of monopoly.[99] In this class are placed such +large businesses as railways, gas, or water companies. Second, those +industries where the net advantages of large-scale production over +small scale in competitive industry are greatest. Generally speaking, +those industries where the most expensive machinery is employed come +under this head, or where, as in banking and financial business, a +large capital is managed more economically, and enjoys a monopoly of +certain profitable kinds of work. + +In retail trade, where neither of these forces is so powerfully +operative, the increase in mass of capital and labour is not so great, +though here too the economies of large-scale production are giving +more and more prominence to the Universal Provider, and a large number +of local shops are falling into the hands of companies. Large +syndicates of capital at Smithfield are owning butchers' shops in most +large towns, the drapery, jewellery, shoe trade are more and more +passing into the hands of large companies, while an increased +proportion of tobacconists, publicans, grocers, and other retailers +are practically but agents of large capitalist firms. In such branches +of agriculture as have lent themselves most effectively to new +machinery the same movement is visible in the prevalence of large +farming. This is seen everywhere where land is placed on the same +property footing as other forms of capital. Though small farms are for +some purposes still capable of yielding a large net as well as gross +product, it is for the most part the legal, customary, and +sentimental restrictions on free transfer of land that impede the +tendency towards large farming. + +It is, however, in the manufacturing and transport industries that we +trace the most general and rapid growth of the unit of production. And +here machinery is the chief external cause. Gigantic railways and +steamship companies are the successors of stage coach businesses and +small shippers. The size and value of the modern cotton factory, iron +works, sugar refinery, or brewery are incomparably greater than the +units of which these industries were composed a century and a half +ago. In certain highly-machined industries the size of the unit is so +enlarged that the number of businesses engaged in turning out the +ever-growing output is actually diminishing. Among textile industries +the spinning mills of England and Wales show a marked diminution in +numbers between 1870 and 1890, while a similar movement in weaving +mills is only retarded by the capacity of small sweating masters to +compete with the more developed factories in certain minor branches, +such as tape manufacture, and by the survival of the home worker +owning his loom and hiring his power in such trades as the ribbon +weaving of Coventry.[100] + +The following statistics[101] of the cotton and woollen industries in +Great Britain serve to illustrate the growing size of the unit of +production in the representative branches of textile work:-- + +KEY: +A: Spinning. +B: Weaving. +C: Spinning and Weaving. +D: Others. +E: Total. +F: Spinning. +G: Doubling. +H: Power-Looms. + + COTTON. + NO. OF MILLS. NO. OF SPINDLES. + A B C D E F G H + 1870 1108 693 532 150 2483 33,995,221 3,723,537 440,676 + 1890 935 990 438 175 2538 40,511,934 3,992,885 615,714 + + WOOLLEN. + 1870 648 109 860 212 1829 2,531,768 160,993 48,140 + 1890 494 124 895 280 1793 2,107,209 299,793 61,831 + +This increase of the number of spindles and looms in the average +textile mill is more significant when the "speeding up" of modern +machinery is taken into account. The increased size of the unit of +industry as measured by productivity is even greater than appears from +the statistics above quoted. + +Schulze-Gaevernitz points out that in the thirty years between 1856 +and 1885, while the factories in cotton spinning and weaving only +increased from 2210 to 2633, the number of spindles increased from +28,010,217 to 44,348,921, the number of looms from 298,847 to 560,955, +and that since both spindles and looms worked much faster in 1885 than +in 1856, the output has increased in still greater proportion.[102] + +Turning to another highly-developed machine industry, that of milling, +we find a similar movement. Flour mills are diminishing in number both +in England and in the United States. The period 1884-86 showed a +diminution in the number of flour mills in the United States from +25,079 to 18,267, though the total productive power of the smaller +number was greatly increased. Mr. Wells finds a similar tendency in +the general manufacturing industry of the United States:--"Between +1850 and 1860 the number of manufacturing firms and corporations in +the United States increased from 123,025 to 140,433, and the value of +manufactured products increased from $1,019,106,616 to $1,885,861,876, +so that in that decade there was an increase of 17,408 establishments, +to an increase of $866,755,060 in the value of products. In 1870 there +were 252,148 firms and corporations so employed, producing +$4,232,325,442 in manufactured products; or an increase of 111,715 +establishments in the decade of 1860 to 1870 gave an increase of +$2,346,463,766 in the value of products. In 1880 the number of +manufacturing establishments was returned at 253,852, producing +articles valued at $5,365,579,191, or an addition of only 1704 firms +and corporations was accompanied with an increase of product of +$1,133,537,749. Here then is a demonstration that the average product +of a manufacturing establishment in the United States in 1880 was just +60 per cent. greater than it was in 1860."[103] + +Sec. 2. While the mass of capital and labour which constitutes a business +is growing, the latter grows less rapidly than the former. That is to +say, capital is in point of size becoming more and more the dominant +factor in the business. With the effect of this upon the economic +character and conditions of labour we are not here concerned. The +subject requires a separate treatment. Here it suffices to recognise +the quantitative change that has taken place. Under domestic industry +the value of the implements used was, as a rule, equivalent only to a +few months' wages. In 1845 McCulloch estimated that the fixed capital +in well-appointed cotton mills amounted to about two years' wages of +an operative.[104] In 1890 Professor Marshall assigns a capital in +plant amounting to about L200 or five years' wages for every man, +woman, and child in a fully-equipped spinning mill.[105] In the +typical modern industry, that of cotton-spinning and weaving, the +increasing size is both continuous and rapid. The average number of +spindles and looms to the single factory in 1850 and 1885 are as +follows:-- + + Spindles. Power-Looms. + + 1850 10,858 155 + 1885 15,227 213 + +Even these figures do not fully represent the facts, for they include +considerable numbers of mills of the older sort, where spinning and +weaving are carried on together. Taking the more highly specialised +spinning mills in the Oldham district, the average is stated at +65,000, while the largest mills have as many as 185,000 spindles. So +also the average number of power-looms in the North Lancashire +district is placed at 600, the largest number in a single business +amounting to 4500.[106] + +"Again, the cost of a steamship is perhaps equivalent to the labour of +ten years or more of those who work her, while a capital of about +L900,000,000 invested in railways in England and Wales is equivalent +to the work for about twenty years of the 400,000 people employed on +them."[107] + +This growth in the unit of capital is, as we perceive, largely due to +the establishment of large and expensive machinery and other plant as +a leading feature in modern production. The fact that modern methods +are largely instrumental in increasing the quantity of products might +lead us to suppose that the growth of the raw material or circulating +part of the capital of a business would correspond with the growth of +fixed forms of capital. This, however, is not the case. In the most +highly organised machine industry an increasing proportion of the +economy goes into the improved methods of manipulating material so as +to prevent waste, and by improved quality of work and elaboration of +manufacture to get a larger net amount of product out of a given +quantity of raw material. + +In cotton-spinning, for example, since 1834 the waste of raw material +has been reduced from 1/7 to about 1/10; inferior material, once +useless, is now mixed with better stuff; and more important still, +modern machinery has, by adapting itself to the spinning of finer +yarn, effected great saving in the quantity consumed by each spindle. +In many other industries we shall find this same process going on, +whereby the proportion of capital which consists of raw material is +reduced, and the proportion which consists in machinery and other +fixed capital enhanced. + +The growth of the unit of capital in the developed modern +manufacturing business entails also a growth in the unit of labour, +though not a corresponding growth. The number of employees in a +business is larger in proportion as the business passes into the stage +of highest industrial organisation. In the United States in 1880 it +was estimated that the average number of employees in a manufacturing +business for the whole country was a little less than 11, but in the +chief manufacturing states of Massachusetts, Connecticut, and Rhode +Island it was about 25, while in Pittsburg, the great centre of iron +industry, it was more than 33. + +Sec. 3. In addition to increased size we find increased and +ever-increasing complexity of structure in the business-unit. This has +proceeded in two directions, horizontally and laterally--that is to +say, by subdivision and accession of processes on the one hand, and by +an increased variety of products, and therefore of processes, upon the +other hand. The constantly growing specialisation of fixed capital and +of labour in our factories and workshops is a commonplace. Adam +Smith's famous pin manufactory, with its ten separate processes, has +been left far behind. In a modern shoe factory in the United States +there are sixty-four distinct processes. Grain, in the elaborate +machinery of a steam flour mill, passes through a score of different +stages, cleaning, winnowing, grinding, etc. The American machine-made +watch is the product of 370 separate processes. The organisation of a +modern textile factory provides a dozen different processes +contributing to the spinning or weaving of cotton or silk. New +processes of cleaning, finishing, and ornamenting are continually +being added. The subsidiary process of packing, the manufacture of +packing cases, the printing of labels, etc., are taken on in many +factories.[108] Many branches of production which were formerly +carried on in separate places and as separate business-units are +grouped together under the factory roof, or if still separated +locally, and executed by separate machinery and power, are related as +forming part of the same business, and are under the same management. +So in the woollen manufactures the preliminary processes of sorting +and cleansing, carding or combing, as well as the main processes of +spinning and weaving, fulling, dyeing, and finishing, each of which +was once committed to a separate and independent group of workers, are +now frequently found going on simultaneously in a single factory.[109] +Thus a number of small simple business-units representing the various +stages in the production of a commodity, come to group themselves into +a large complex unit. + +This complexity is further increased by constant demand for variety in +size, quality, and character of goods to meet the growing variety of +demand in a market of increasing area. Special classes of goods must +be manufactured for Australia, for Egypt, for Burmah. Less civilised +customers, including such countries as China and Persia, insist upon +their imported goods being made up and packed in some familiar form +long after the use or convenience of this form has passed away. The +exigencies of close competition require constant experiment in new +lines of goods to benefit the fancy of a newly-opened market, or to +get away the trade of some competitor. Moreover, the increasingly +important part which is played by advertising in the trades where +competition is keenest is followed by a very singular result, which +seems at first sight to contravene the growing specialism or +differentiation of function that marks modern trade. Finding that +goods advertise one another, manufacturers are frequently induced to +add new departments to their business, expanding the scope and variety +of their productions. In retail trade this tendency is widely +operative. The modern grocer sells tinned meats, cakes, wine, +tea-pots, and Christmas cards, the draper sells every sort of +ornamental ware, the stationer, the oil shop, the china shop set out +an increasing and miscellaneous number of differing wares, moving +towards the position of a general dealer. The Stores and the Universal +Providers represent the culmination of this movement in the retail +business, returning to an enlarged and more complex form of the +primitive little "general shop" of the village. But this same economy +is strong enough in certain classes of manufacture to overpower the +advantages of an expansion of business in the older form. Up to a +certain point the economies of production upon a large scale will make +it advantageous to a manufacturer to employ all the capital at his +command in producing increased quantities of the same class of goods. +But after the market for these goods is fairly supplied it may pay +better to appeal to a variety of wants by new species of goods of the +same generic character, than by attempting to force new markets, or to +effect an increased sale in the old markets at such reduced prices as +the increased scale of production may permit. The business of Messrs. +Huntley & Palmer is a striking example of this enterprise, issuing in +a large variety of products and of processes which, though generically +related, cover a widening range of food luxuries. The new products +which are taken on will of course not only reap the advantage of being +effectively advertised by the earlier products, but consisting +largely of new adaptations of the same kind of raw material, the +economies of purchase and transport will be almost as great as attend +an increased production of the same goods, while much of the machinery +of management, and even of manufacture, can be utilised for the new +processes. This tendency not merely to multiply processes in the +manufacture of a single commodity, but to increase the variety of +commodities turned out by analogous processes in a single business, is +also operative in certain textile and metal industries, where an +increasing proportion of the expensive machinery and skilled labour is +engaged, not in narrowly specific processes of manufacture, but in +generating power and in transmitting it for a number of later uses to +be governed by specific machinery. There is in many factories an +increasing facility to take on new processes, and to transfer a large +portion of the plant from the manufacture of one class of goods to +another class. + +"Most of the operatives in a watch factory would find machines very +similar to those with which they were familiar if they strayed into a +gun-making factory or sewing-machine factory, or a factory for making +textile machinery. A watch factory, with those who worked in it, could +be converted without any overwhelming loss into a sewing-machine +factory."[110] Thus in the evolution of the modern business we see not +only a number of processes in the production of a commodity, each of +which constituted a separate business-unit in the earlier division of +labour, growing together into a large complex whole, but a growing +together of analogous processes in the production of different +commodities, a lateral aggregation of processes. So we recognise that +the growing complexity of the business-unit, whether we regard it from +the point of view of capital or of labour, arises in large measure +from an increased integration of productive processes. The +business-unit is larger, more heterogeneous, and more highly +integrated. + +Sec. 4. Ascending from the business-unit to the larger unit in the +structure of industry, the Market, or groups of directly competing +businesses, we find similar changes have taken place. In considering +these changes the relation between Market and Trade should be clearly +grasped. The mere fact that two persons or groups of persons in +different places are engaged in similar processes of production, that +is to say, belong to the same trade, has no significance for us. The +trade or aggregate of productive units of a particular sort receives +industrial unity only in so far as there is competition of the units +in buying the raw materials, tools, and labour for carrying on their +trade, and in selling the results of their activity. Weavers of cotton +goods in Central China belong to the same trade as weavers in +Lancashire, and conduct their craft with similar implements to those +which still prevail in the cottage industries of France and Germany, +but such competition as may exist between them is so indirect and +slight that it may be neglected in considering industrial structure. +It is in the competition of a market that businesses meet and are +vitally related. In a trade there may be several markets whose +connection is distant and indirect. Market is the name given to a +number of directly competing businesses. "Economists understand by the +term market not any particular market-place in which things are bought +and sold, but the whole of any region in which buyers and sellers are +in such free intercourse with one another that the prices of the same +goods tend to equalise easily and quickly."[111] + +A single competitive price is then the essential feature and the test +of a market. Businesses in such close relation with one another that +the prices at which they buy and sell are the same, or differ only by +reason of and in correspondence with certain local advantages or +disadvantages, are members of a single market. The money market is a +single market throughout the world. The price of money in London, +Rome, Rio de Janeiro, may differ, but this difference will correspond +to certain differences of risk. There will be a tendency towards a +single price, or, putting the case in other words, wherever in the +world L100 of money represents the same commodity the same price will +be paid for its use, while any difference in its value as a commodity +will be accurately reflected in the difference of price. + +Absolute freedom of intercourse is not essential to the establishment +of a common market. Market tariffs and other advantages and +disadvantages may place the competitors on an unequal footing. +Moreover, in order to form part of a market as helping to determine +the price, a business need not actively enter the field of +competition. Fear of the potential competition of outsiders often +keeps down prices to a level above which they would rise were it not +for the belief that such a rise would bring into active, effective +competition the outsider. England had until recently a monopoly of the +market for cotton goods in certain Eastern countries, but the price at +which she sold was determined by the possibility of rival French or +German merchants, as well as by the direct competition of the several +English firms. In certain commodities the market is conterminous with +the trade, that is, we have a world-market. This is the case with many +of the forms of money, the most abstract form of wealth, and the most +highly competitive. + +Dealers in Stock Exchange securities, in the precious metals, are in +active, constant competition at all the great commercial centres of +the world. Other staple commodities, whose value is great, durable, +and portable, such as jewels, wheat, cotton, wool, have to all intents +and purposes a single market. + +This world-market represents the fullest expansion due to modern +machinery of transport and exchange, the railway, steamship, +newspaper, telegraph, and the system of credit built up and maintained +by the assistance of these material agents. + +The market-area for various commodities varies with the character of +these commodities, from the world-market for stock exchange securities +down to the minimum market consisting of a few neighbouring farmers +competing to sell their over-ripe plums or their skim-milk. The chief +qualities which determine the market-area are-- + +(_a_) _Extent of demand._--Things in universal or very wide demand, +which are at the same time durable, such as money, wool, wheat, +compete over very wide areas. Things specially accommodated to the +taste or use of a particular locality or a small class of individuals +will have a narrow market. This is the case with clothes of a +particular cut, and with many kinds of fabrics out of which clothes +are made. The market for certain classes of topographical books will +be confined to the limits of a county, though the book market for many +books is a world-market. + +(_b_) _Portability._--Even where the demand is far from a general one, +the market-area may be very wide where high value is stored in small +bulk. Smoking tobacco and more highly valued wines and liqueurs are +examples of this order. The market for common bricks is local, though +Portland marble finds a national market. + +(_c_) _Durability._--Durable objects and objects which can easily be +brought within reach of modern means of rapid transport have a wide +market. Perishable goods, as, for example, many fruits and vegetables, +have for these reasons a narrow market. + +Sec. 5. Modern machinery has in almost all cases raised the size of the +market. The space-area of competition has been immensely widened, +especially for the more durable classes of goods. It is machinery of +transport--the transport of goods and news--that is chiefly +responsible for this expansion. Cheaper, quicker, safer, and more +calculable journeys have shrunk space for competing purposes. Improved +means of rapid and reliable information about methods of production, +markets, changes in price and trade have practically annihilated the +element of distance. + +Machinery of manufacture as well as of transport has a levelling +tendency which makes directly for expansion of the area of +competition. As the spread of knowledge places each part of the +industrial world more closely _en rapport_ with the rest, the newest +and best methods of manufacture are more rapidly and effectively +adopted. Thus in all production where less and less depends on the +skill of the workers, and more and more upon the character of the +machinery, every change which gives more prominence to the latter +tends to equalise the cost of production in different countries, and +thus to facilitate effective competition. + +Sec. 6. Modern methods of production have also brought about a great +expansion in the time-area of the market. Competition covers a wider +range of time as well as of space. Production is no longer directed by +the quantity and quality of present needs alone, but is more and more +dependent upon calculation of future consumption. A larger proportion +of the brain power of the business man is devoted to forecasting +future conditions of the market, and a larger proportion of the +mechanical and human labour to providing future goods to meet +calculated demands. This expansion of the time-market, or growth of +speculative production, is partly cause, partly effect of the improved +mechanical appliances in manufacture and in transport. The +multiplication of productive power under the new machinery has in many +branches of industry far outstripped the requirements of present known +consumption at remunerative prices, while increased knowledge of the +widening market has given a basis of calculation which leads +manufacturers to utilise their spare productive power in providing +against future wants. So long as industry was limited by the labour of +the human body, assisted but slightly by natural forces and working +with simple tools, the output of productive energy could seldom +outstrip the present demand for consumable goods. + +But machinery has changed all this. Modern industrial nations are able +to produce consumables far faster than those who have the power to +consume them are willing to exercise it. Hence there is an +ever-increasing margin of productive power redundant so far as the +production of present consumptive goods is concerned. This excess of +productive power is saved. It can only be saved by being stored up in +some material forms which are required not for direct consumption but +for assisting to increase the rate at which consumables may be +produced in the future. In order to make a place for these new forms +of saving it is necessary to interpose a constantly increasing number +of mechanical processes between the earliest extractive process which +removes the raw material from the earth and the final or retailing +process which places it in the consumer's hands. New machinery, more +elaborate and costly, is applied; special workshops, with machines to +make this machinery--other machinery to make these machines; there is +an expansion of the mechanism of credit, the system of agents and +representatives is expanded, new modes of advertising are adopted. +Thus an ever-widening field of investment is provided for the spare +energy of machine-production. The change is commonly described by +saying that production is more "roundabout."[112] A larger number of +steps are inserted in the ladder of production. This increased +complexity in the mechanism of production is not, however, the central +point of importance. We must realise that the change is one which is +essentially an increase in the "speculative" character of commerce. +The "roundabout" method of production signifies a continual increase +in the proportion of productive forces devoted to making "future +goods" as Now future goods, plant, machinery, raw material of +commodities, are essentially "contingent goods": their worth or waste +depends largely upon conditions yet unborn: their social utility and +the value based upon it depend entirely upon the future powers and +desires of those unknown persons who are expected to purchase and +consume the commodities which shall come into existence as results of +the existence and activity of these future goods. + +The actual time which elapses between the extractive stage and the +final retail stage of a commodity may not be greater and is in many +cases far less under the new methods of industry. The raw cotton of +South Carolina gets on the wearer's back more quickly than it did a +century and a half ago. But when we add in the time-elements involved +in the provision of the various forms of intricate plant and machinery +whose utility entirely consists in forwarding these cotton goods, and +whose existence in the industrial mechanism depends upon them, we +shall perceive that the "roundabout" method signifies a great +extension of the speculative or time-element in the market.[113] + +Sec. 7. The growing interdependency of trades and markets, the ever +closer sympathy which exists between them, the increased rapidity with +which a movement affecting one communicates itself to others, is +another striking characteristic of modern trade. This interdependency +is in large measure one of growing structural attachment between +trades and markets formerly in faint and distant sympathetic +relationship. Formerly, agriculture was the one important foundational +industry, and from the feebleness of the transport system the vital +connections and the unity it supplied was local rather than national +or international. Now the agricultural industries no longer occupy +this position of prominence. The coal and iron industries engaged in +furnishing the raw material of machinery and steam-motor, the machine +manufacture, and the transport services, are the common feeders and +regulators of all industries, including that of agriculture. They form +a system corresponding to the alimentary system of the human body, any +quickening or slackening of whose functional activities is directly +and speedily communicated to the several parts. Any disturbance of +price, of efficiency, or regularity of production in these +foundational industries is reflected at once and automatically in the +several industries which are engaged in the production and +distribution of the several commodities. The mining and metal +industries, shipbuilding, and the railway services are recognised more +and more as furnishing the true measure and test of modern trade; +their labour enters in ever larger proportion into the production of +all the consumptive goods. + +Besides the general integration or unification of industry implied by +the common dependency of the specific trades upon these great +industries, there are other forces engaged in integrating groups of +trades. Foremost is the "roundabout" method of production, to which +our attention has been already directed. Not merely does this +capitalist system bring a number of trades and processes under the +control of a single capital, as a single complex business, but it +establishes close identity of trade-life and interests among +businesses, trades, and markets which remain distinct so far as +ownership and management are concerned. + +Sec. 8. If we take the mass of capital and labour composing one of our +staple productive industries, we shall find that it is related in four +different ways to a number of other industries. + +(1) It has a number of trades which are directly co-ordinate--_i.e._, +engaged in the earlier or later processes of producing the same +consumptive goods. Thus the manufacture of shoes is related +co-ordinately to the import trades of hides and bark, to tanning, to +the export trade in shoes, and to the retail shoe trade. A common +stream of produce is flowing through these several processes, and +though from the point of view of ownership and management there may be +no connection, there is a close identity of trade interest and a quick +sympathy of commercial life at these several points. + +(2) Each important manufacturing industry has a number of industries +which in their relation to it are secondary, although in some cases, +having similar relations to a number of other trades, they may in +themselves be large and important. In the large textile centres are +found a number of minor industries, planers, sawyers, turners, +fitters, smiths, engaged in irregular work of alteration and repairs +upon the plant and machinery of the textile factories. The same holds +of all important manufactures, especially those which are closely +localised. + +A somewhat similar relation appertains between those manufactures +engaged in producing the main body of any product and the minor +industries, which supply some slighter and essentially subsidiary +part. In relation to the main textile and clothing industries, the +manufacture of buttons, of tape, feathers, and other elements of +ornament or trimmings may be regarded as subsidiary. In the same way +the manufacture of wall-papers or house paint may be considered +subsidiary to the building trades, that of blacking to the shoe +manufacture. These subsidiary trades are related to the primary one +more or less closely, and are affected by the condition of the latter +more or less powerfully in proportion as the subsidiary elements they +furnish are more or less indispensable in character. The fur and +feather trades are far more dependent upon direct forces of fashion +than upon any changes of price or character in the main branches of +the clothing trade. On the other hand, any cause which affected +considerably the price of sugar would have a great and direct +influence on the jam manufacture, while the rise in price of tin due +to the M'Kinley tariff caused serious apprehension to the Chicago +manufacturers and exporters of preserved meats. + +(3) The relations between one of the great arterial industries, such +as coal-mining, railway transport, or machine-making, and a specific +manufacture may be regarded as auxiliary. The extent to which the +price of coal, railway rates, etc., enters into the price of the goods +and affects the condition of profits in the trade measures the +closeness of this auxiliary connection. In the case of the smelting +industries or in the steam transport trades, even in the pottery +trades, the part played by coal is so important that the relation is +rather that of a primary than an auxiliary connection--_i.e._, +coal-mining must be ranked as co-ordinate to smelting. But where heat +is not the direct agent of manufacture, but is required to furnish +steam-motor alone, as in the textile factories, the connection may be +termed auxiliary. + +(4) The relationship between some industries is "sympathetic" in the +sense that the commodities they produce appeal to closely related +tastes, or are members of a group whose consumption is related +harmoniously. In foods we have the relations between bread, butter, +and cheese; the relation in which sugar and salt stand to a large +number of consumables. Some of these are natural relations in the +sense that one supplies a corrective to some defect of the other, or +that the combination enhances the satisfaction or advantage which +would accrue from the consumption of each severally. In other cases +the connection is more conventional, as that between alcohol and +tobacco. The sporting tastes of man supply a strong sympathetic bond +between many trades. The same is true of literary, artistic, or other +tastes, which by the simultaneous demand which they make upon several +industries, in some proportion determined by the harmonious +satisfaction of their desires, throw these industries into sympathetic +groups.[114] These four bonds mark an identity of interest between +different industries. + +The relationship is sometimes one of divergency or competition of +trades. Where the same service may be supplied by two or more +different commodities the trades are related by direct competition. +Oil, gas, electricity, as illuminants, are a familiar example of this +relationship. Many trades which produce commodities that are similar, +but far from identical in character, feel this relationship very +closely. The competition between various kinds of food, which with +different kinds and degrees of satisfaction may produce the same +substantial effects, between fish and meat, between various kinds of +vegetables and drinks, enables us to realise something of the +intricacy of the relations of this kind. In clothing we have +antagonism of interests between the various fabrics which has led to +great industrial changes. The most signal example is the rise of +cotton, its triumph over woollen clothes by the earlier application of +the new machinery, and over silk by the early superiority of its +dyeing and printing processes.[115] So in recent years in the conflict +among beverages, tea, and in a less measure cocoa, have materially +damaged the growth of the coffee industry so far as English +consumption is concerned. Where such rivalry exists, an industry may +be as powerfully and immediately affected by a force which raises or +depresses its competitor as by a force which directly affects itself. + +Sec. 9. The growth of numerous and strongly-built structural attachments +between different trades and markets related to different localities +implies the existence of a large system of channels of communication +throughout our industrial society. By the increased number and +complexity of these channels connecting different markets and +businesses, and relating the most distant classes of consumers, we can +measure the evolution of the industrial organism. Through these +channels flow the currents of modern industrial life, whose pace, +length, and regularity contrast with the feeble, short, and spasmodic +flow of commerce in earlier times. This advance in functional activity +of distribution is thus expressed by Mr. Spencer:--"In early English +times the great fairs, annual and other, formed the chief means of +distribution, and remained important down to the seventeenth century, +when not only villages, but even small towns, devoid of shops, were +irregularly supplied by hawkers who had obtained their stocks at these +gatherings. Along with increased population, larger industrial +centres, and improved channels of communication, local supply became +easier; and so frequent markets more and more fulfilled the purpose +of infrequent fairs. Afterwards, in chief places and for chief +commodities, markets themselves multiplied, becoming in some cases +daily. Finally came a constant distribution, such that of some foods +there is to each town an influx every morning; and of milk even more +than once in the day. The transition from times when the movements of +people and goods between places were private, slow, and infrequent, to +times when there began to run at intervals of several days public +vehicles moving at four miles an hour, and then to times when these +shortened their intervals and increased their speed, while their lines +of movement multiplied, ending in our own times, when along each line +of rails there go at full speed a dozen waves daily that are +relatively vast, sufficiently show us how the social circulation +progresses from feeble, slow, irregular movements to a rapid, regular, +and powerful pulse."[116] + +The differentiation of function in the several parts of the industrial +organism finds a partial expression in the localisation of certain +industries. As there is growing division of labour among individuals +and groups of individuals, so the expansion of the area of competition +has brought about a larger and larger amount of local specialisation. + +Roughly speaking, the West of Europe and of America has specialised in +manufacture, drawing an ever larger proportion of their food supplies +from the North-West States of America, from Russia, the Baltic +Provinces, Australia, Egypt, India, etc., and their raw materials of +manufacture from the southern United States, South America, India, +etc., while these latter countries are subjected to a correspondent +specialisation in agriculture and other extractive arts. If we take +Europe alone, we find certain large characteristics which mark out the +Baltic trade, the Black Sea trade, the Danube trade, the Norwegian and +White Sea trade. So the Asiatic trade falls into certain tolerably +defined divisions of area, as the Levant trade, the Red Sea trade, the +Indian, the Straits, and East Indian, the China trade, etc. The whole +trade of the world is thus divided for commercial purposes.[117] +Though these trade divisions are primarily suggested by +considerations of transport rather than of the character of +production, the geographical, climatic, and other natural factors +which determine convenient lines of transport are found to have an +important bearing on the character of the production, and convenience +of transport itself assists largely to determine the kind of work +which each part of the world sets itself to do. + +The establishment of a world-market for a larger and larger number of +commodities is transforming with marvellous rapidity the industrial +face of the globe. This does not now appear so plainly in the more +highly-developed countries of Europe, which, under the influence of +half a century's moderately free competition for a European market, +have already established themselves in tolerably settled conditions of +specialised industry. But in the new world, and in those older +countries which are now fast yielding to the incursions of +manufacturing and transport machinery, the specialising process is +making rapid strides. + +Improved knowledge of the world, facile communication, an immense +increase in the fluidity of capital, and a considerable increase in +that of labour, are busily engaged in distributing the productions of +the world in accordance with certain dominant natural conditions. +Those industrial forces which have during the last century and a half +been operative in England, draining the population and industry from +the Southern and Eastern counties, and concentrating it in larger +proportions in Lancashire, the West Riding, Staffordshire, and round +the Northumbrian and South Wales coal-fields, specialising each town +or locality upon some single branch of the textile, metal, or other +industries for which its soil, position, or other natural advantages +made it suitable, are now beginning to extend the area of their +control over the whole surface of the known and inhabited globe. + +As large areas of Asia, South and Central Africa, Australia, and South +America fall under the control of European commercial nations, are +opened up by steamships, railways, telegraphs, and are made free +receptacles for the increased quantity of capital which is unable to +find a safe remunerative investment nearer home, we are brought nearer +to a condition in which the whole surface of the world will be +disposed for industrial purposes by these same forces which have long +been confined in their direct and potent influence to a small portion +of Western Europe and America. This vast expansion of the area of +effective competition is beginning to specialise industry on the basis +of a world-market, which was formerly specialised on the more confined +basis of a national or provincial market. So in England, where the +early specialisation of machine-industry was but slightly affected by +outside competition, great changes are taking place. Portions of our +textile and metal industries, which naturally settled in districts of +Lancashire, Yorkshire, and Staffordshire, while the area of +competition was a national one,[118] seem likely to pass to India, to +Germany, or elsewhere, now that a tolerably free competition on the +basis of world-industry has set in. It is inevitable that with every +expansion of the area of competition under which a locality falls the +character of its specialisation will change. A piece of English ground +which was devoted to corn-growing when the market was a district one +centred in the county town, becomes the little factory town when +competition is established on a national basis; it may become the +pleasure-ground of a retired millionaire speculator if under the +pressure of world-competition it has been found that the manufacture +which now thrives there can be carried on more economically in Bombay +or Nankin, where each unit of labour power can be bought at the +cheapest rate, or where some slight saving in the transport of raw +material may be effected. + +Sec. 10. The question how industry would be located, assuming the whole +surface of the globe was brought into a single market or area of +competition, with an equal development of transport facilities in all +its parts; or in other words, "What is the ideal disposition of +industry in a world-society making its chief end the attainment of +industrial wealth estimated at present values?" is one to which of +course no very exact answer can be given. But since this ideal +represents the goal of modern industrial progress, it is worth while +to call attention to the chief determinants of the localisation of +industries under free world-competition. The influences may be placed +in three groups, which are, however, interrelated at many points. + +(1) The first group may be called Climatic, the chief influences of +which are astronomical position, surface contour, prevalent winds, +ocean currents, etc. Climatic zones have their own flora and fauna, +and so far as these enter into industry as agricultural and pastoral +produce, as raw materials of manufacture, as sustenance of labour, +they are natural determinants of the localisation of industry. In +vegetable products the climatic zones are very clearly marked. "The +boreal zone has its special vegetation of mosses, lichens, saxifrages, +berries, oats, barley, and rye; the temperate zone its peas, beans, +roots, hops, oats, barley, rye, and wheat; this zone, characterised by +its extent of pastures, hop gardens, and barley fields, has also a +distinctive title in the 'beer and butter region.' The warm temperate +zone, or region of 'wine and oil,' is characterised by the growth of +the vine, olive, orange, lemon, citron, pomegranate, tea, wheat, +maize, and rice; the sub-tropical zone, by dates, figs, the vine, +sugar-cane, wheat, and maize; the tropical zone is characterised by +coffee, cocoa-nut, cocoa, sago, palm, figs, arrowroot, and spices; and +the equatorial by bananas, plantains, cocoa-nut, etc."[119] + +(2) The second group is geographical and geological. The shape and +position of a country, its relation in space to other countries, the +character of the soil and sub-soil, its water-supply, though closely +related to climatic influences, have independent bearings. The +character of the soil, which provides for crops their mineral food, +has an important bearing upon the raw materials of industry. The shape +and position of the land, especially the configuration of its coast, +have a social as well as climatic significance, directing the +intercourse with other lands and the migrations of people and +civilisations which play so large a part in industrial history. + +(3) Largely determined by the two groups of influences named above are +the forces which represent the national character at any given time, +the outcome of primitive race characteristics, food supply, speed and +direction of industrial development, density of population, and the +various other causes which enter in to determine efficiency of labour. +The play of these natural and human forces in world-competition leads +to such a settlement of different industries in different localities +as yields the greatest net productiveness of labour in each part. + +Sec. 11. But this world-competition, however free it may become, can lead +to no finality, no settled appointment of industrial activity to the +several parts of the earth. Setting aside all political and other +non-economic motives, there are three reasons which render such local +stability of industry impossible. + +There is first the disturbance and actual loss sustained by nature in +working up the mineral wealth of the soil, and the flora and fauna +sustained by it, into commodities which are consumed, and an exact +equivalent of which cannot be replaced. The working out of a +coal-field, the destruction of forests which reacts upon the +elementary climatic influences, are examples of this disturbance. + +Secondly, there is the progress of industrial arts, new scientific +discoveries applicable to industry. There is no reason to believe that +human knowledge can reach any final goal: there is infinity alike in +the resources of nature and in the capacity of the development of +human skill. + +Lastly, as human life continues, the art of living must continually +change, and each change alters the value attached to the several forms +of consumption, and so to the industrial processes engaged in the +supply of different utilities. New wants stimulate new arts, new arts +alter the disposition of productive industry, giving value to new +portions of the earth. Ignoring those new material wants which require +new kinds of raw material to be worked up for their satisfaction, the +growing appreciation of certain kinds of sport, the love of fine +scenery, a rising value set upon healthy atmosphere, are beginning to +exercise a more and more perceptible influence upon the localisation +of certain classes of population and industry in the more progressive +nations of the world. + +Sec. 12. The same laws and the same limitations which are operative in +determining the character and degree of specialisation of countries or +large areas are also seen to apply to smaller districts, towns, and +streets. Industries engaged in producing valuable, durable material +objects in wide demand are locally specialised; those engaged in +providing bulky perishable non-material goods, or goods in narrow +demand, are unspecialised. England, where internal intercourse has +been most highly developed, and where internal competition has been +freest and keenest, shows the most advanced specialisation in several +of its staple industries. The concentration of cotton spinning in +South Lancashire is an example, the full significance of which often +escapes notice. From the beginning South Lancashire was the chief seat +of the industry, but it is now far more concentrated than was the case +a century ago. Several of the most valuable inventions in spinning +were first applied in Derbyshire, in Nottingham, at Birmingham, and in +Scotland. Scotland then competed closely in weaving with Lancashire. +Now the Scotch industry is confined to certain specialities. In spite +of the enormous growth of the manufacture, the local area it covers is +even narrower than last century. Within Lancashire itself the actual +area of production has shrunk to some 25 square miles in the extreme +south, while the two great cities are further specialised--Liverpool +as the market for cotton, Manchester for yarn and cotton cloths. + +Moreover, the localisation of various departments of the trade within +Lancashire is still more remarkable. Not only have the old mills in +which spinning and weaving were carried on together given way before +division of labour, but the two processes are mostly conducted in +different districts, the former in the towns immediately around +Manchester, the latter in the more distant northern circuit. Nor is +the specialisation confined to this. Spinning is again divided +according to the coarser and finer qualities of yarn. The Oldham +district, with Ashton, Middleton, and other towns south of Manchester +are chiefly confined to the medium numbers. Bolton, Chorley, Preston, +and other northern towns undertake the finer numbers. In weaving there +is even more intricate division of labour, each town or district +specialising upon some particular line of goods.[120] Moreover, it +must be borne in mind that the substitution of the factory for the +domestic system and the continual enlargement of the average factory +indicates an important progressive concentration. So the cotton +industry does not in fact cover nearly so large a local area as when +it was one-hundredth the size. The same is true of the other chief +branches of the textile and metal industries. Nor is it only in the +manufactures that towns and districts are closely specialised. The +enormous increase of commerce due to machinery of manufacture and of +transport requires the specialisation of certain towns for purely +commercial purposes. London, Liverpool, Glasgow, and Hull are more and +more devoted to the functions of storage and conveyance. Manchester +itself is rapidly losing its manufacturing character and devoting +itself almost exclusively to import and export trade. The railway +service has made for itself large towns, such as Crewe, Derby, +Normanton, and Swindon. Cardiff is a portentous example of a new +mining centre created when the machine development of England was +already ripe. + +The specialisation of function in a large town is, however, qualified +in two ways. The strong local organisation of a staple trade requires +the grouping round it of a number of secondary or auxiliary trades. In +large textile towns the manufactures of textile machinery, and of +subsidiary materials, are found. The machine-making of Manchester is +one of its most important industries, furnishing the neighbouring +textile towns. Leeds is similarly equipped for the woollen trade. This +is one of the respects in which the superior development of the +English cotton industry over the continental ones is indicated. In +Alsace alone of the continental centres has the concentration of +industry advanced so far as to furnish a local machine industry +specially devoted to cotton machinery. Germany is still mainly +dependent upon England for her machines.[121] So likewise with regard +to co-ordinate trades, there is an advantage in the leading processes +being grouped in local proximity, though they are not united in the +same business. Thus we find dye-works and the various branches of the +clothing trade largely settled in the large textile towns, such as +Leeds, Bradford, Manchester, Bolton. The unit of local specialisation +is thus seen to be not a single trade, but a group of closely allied +trades, co ordinate, dependent, and derivative. + +Round some large industries in which men find employment minor +parasitic industries spring up stimulated by the supply of cheap +abundant labour of women and children. In metal and machine towns such +as Birmingham, Dudley, Walsall, in Newcastle-on-Tyne, and other +shipbuilding towns, where the staple industries are a masculine +monopoly, textile factories have been planted. The same holds of +various mining villages and of agricultural villages in the +neighbourhood of large textile centres. There is in the midland +counties a growing disposition to place textile factories in rural +villages where cheap female labour can be got, and where the +independence of workers is qualified by stronger local attachments and +inferior capacity of effective trade union organisation. As textile +work passes more and more into the hands of women,[122] this tendency +to make it a parasitic trade thriving upon the low wages for which +women's labour can be got where strong and well-paid male work is +established, will probably be more strongly operative. + +Sec. 13. The specialisation of certain districts within the town, though +far less rigid than in the mediaeval town, is very noticeable in the +larger centres of industry. Natural causes often determine this +division of localities, as in the case of the riverside industries, +brick-making and market-gardening in the outer suburbs. Round the +central station in every large town, for convenience of work and life, +settle a number of industries related to the carrying trade. Every +trade, market, or exchange is a centre of attraction. So the broking, +banking, and the general financing businesses are grouped closely +round the Royal Exchange. Mark Lane and Mincing Lane are centres of +the corn and tea trades. In all town industries not directly engaged +in retail distribution there are certain obvious economies and +conveniences in this gregariousness. Agents, travellers, collectors, +and others who have relations of sale or purchase with a number of +businesses in a trade find a number of disadvantages in dealing with a +firm locally detached from the main body, so that when a district is +once recognised as a trade centre, it becomes increasingly important +to each new competitor to settle there. The larger the city the +stronger this force of trade centralisation. Hence in London, +untrammelled by guild or city regulations, we find a strong +localisation of most wholesale and some retail businesses. In retail +trade, however, the economic gain is less universal. Since retail +commodities are chiefly for use in the home, and homes are widely +distributed, the convenience of being near one's customers and away +from trade competitors is often a predominating motive. Shops which +sell bread, meat, fish, fruit, groceries, articles which are bought +frequently and mostly in small quantities, shops selling cheaper +articles of ordinary consumption, such as tobacco, millinery, +stationery, and generally shops selling articles for domestic use, the +purchase of which falls to women, are widely dispersed. On the other +hand, where the articles are of a rarer and more expensive order, when +it is likely that the purchaser will seek to compare price and +character of wares, and will presumably be willing to make a special +journey for the purpose, the centralising tendency prevails in retail +trade. So we find the vendors of carriages, pianos, bicycles, the +heavier articles of furniture, jewellery, second-hand books, furs, and +the more expensive tailors and milliners clustering together in a +special street or neighbourhood. + +Effective competition in retail trade sometimes requires +concentration, sometimes dispersion of business. But the most +characteristic modern movement in retail trade is a combination of the +centralising and dispersive tendencies, and is related to the +enlargement of the business-unit which we found proceeding everywhere +in industry. The large distributing company with a number of local +branch agents, who call regularly at the house of the consumer for +orders, is the most highly organised form of retail trade. In all the +departments of regular and general consumption the movement is towards +this constant house-to-house supply. The wealthier classes in towns +have already learned to purchase all the more perishable forms of food +and many other articles of house consumption in this way, while the +growing facilities of postage and conveyance of goods enable them to +purchase from a large central store by means of a price-list all other +consumables into which the element of individual taste or caprice +does not largely enter. This habit is spreading in the smaller towns +among the middle classes, so that the small dispersed retail +businesses are becoming more and more dependent upon the supply of the +needs of the working classes, and of such articles of comfort and +luxury as may appeal to the less regular and calculable tastes of the +moneyed classes. Just as in towns we have a constant automatic supply +of water and gas instead of an intermittent supply dependent on a +number of individual acts of purchase, so it seems likely that all the +routine wants of the consumer will be supplied. + +How far mechanical inventions may be applied to increase the facility +and cheapen the cost of this distribution it is difficult to say. The +automatic machine for distributing matches and sweetmeats is adaptable +to most forms of routine consumption. In the larger stores many kinds +of labour-saving machinery are already applied. As steam or electric +power is adopted more widely in the local transport services the +retail distribution of goods from a large single centre is likely to +proceed apace, and a displacement of human labour by machinery similar +to that which is taking place in manufacture will take place in +distribution. So far as the wants of large classes of the public +become regular and their consumption measurable in quantity, machinery +will unquestionably take over the labour of distribution, especially +in the large towns which are absorbing in a way convenient for +mechanical distribution a larger proportion of the consuming public. +With each new encroachment of machinery into the domain of the +distributing trades the characteristics of machine-industry, enlarged +mass of the business, increased area of the market, increased +complexity of relations to other trades, increased specialisation of +local activity will be clearly discernible. + +We thus see in the several departments of industry, under the pressure +of the same economic forces, an expansion of size, a growing complexity +of structure and functional activity, and an increased cohesion of +highly differentiated parts in the business, the market, and in that +aggregation of related trades and markets which forms the +world-industry. The physical instrument by which these economic forces, +making for increased size, heterogeneity, and cohesiveness,[123] have +been able to operate is machinery applied to manufacture and transport. +Moreover, each new encroachment of machinery upon the extractive and +the distributing industries brings into prominence within these +processes the same structural and functional characteristics. + + [Illustration: COMPARATIVE VALUE OF FOREIGN TRADE IN EUROPEAN + COUNTRIES.] + +FOOTNOTES: + +[99] Cf. Chap. VI. for a discussion of this equation of maximum +profit. + +[100] _Report to Labour Commission on Employment of Women_ (1893), p. +125. + +[101] _Statistical Abstract_, 1878-92, p. 182 + +[102] _Social Peace_, p. 126; cf. also Brentano, _Hours, Labour, and +Production_, p. 60. + +[103] _Contemporary Review_, 1889, p. 394. + +[104] Porter, _Progress of the Nation_, p. 216. + +[105] _Principles of Economics_, 2nd edit., p. 282. + +[106] Schulze-Gaevernitz, _Der Grossbetrieb_, p. 90. + +[107] Marshall, _Principles of Economics_, 2nd edit., p. 283. + +[108] The works of Messrs. Colman, at Norwich, comprise among others +the following subsidiary departments:--Coopery, engineering shop, saw +mills, box-making, packing, paper-making, printing, laboratory. To the +most highly developed businesses of pottery and machine-making schools +of art and design are not uncommonly attached. + +[109] A good deal of the cleansing and combing in the cloth and +worsted trades is, however, done separately on commission by large +firms such as Lister's. Cf. Burnley, p. 417. + +[110] Marshall, _Principles of Economics_, 2nd edit., p. 517. + +[111] Cournot, _Recherches sur les Principes Mathematiques de la +Theorie des Richesses_ (quoted Marshall, _Principles of Economics_, p. +384). + +[112] It ought, however, to be kept in mind that the application of +the "roundabout" method is only economically justified by a continual +increase in consumption. So far as a given quantity of consumption is +concerned the result of the "roundabout" method is to diminish the +quantity of capital which assists to produce it. + +[113] Professor Boehm Bawerk shows this increased time of production to +be the essential characteristic of capitalist production. Cf. +_Positive Theory of Capital_. + +[114] For a full and valuable treatment of these harmonious relations, +from the point of view of consumption and production, see Patten's +_Economics of a Dynamic Society_. + +[115] Cf. Porter, _Progress of the Nation_, pp. 177-206. + +[116] _Principles of Sociology_, vol. i. p. 500 (3rd edit.). + +[117] For a detailed account of the national trade divisions, cf. Dr. +Yeats, _The Golden Gates of Trade_. + +[118] Foreign competition with English textiles, though comparatively +modern so far as the more highly developed machine-made fabrics is +concerned, was keenly felt early in the century in hand-made goods. +Schulze-Gaevernitz points out that the depression in work and wages of +the hand-loom workers in 1820 was due more to foreign competition than +to the new machinery. (_Der Grossbetrieb_, p. 41.) + +[119] Yeats, _The Golden Gates of Trade_, p. 12. (Philip & Son.) + +[120] Cf. Schulze-Gaevernitz's minute investigation of this whole +subject, _Der Grossbetrieb_, pp. 98, 99, etc. + +[121] Schulze-Gaevernitz, p. 110. + +[122] For the gain of female over male employment in textile +factories, cf. Chap. xi. + +[123] In a free application of Spencer's formula of evolution to +modern industry I have not included the quality of "definiteness," +which close reflection shows to possess no property which is not +included under heterogeneity and cohesiveness. + + + + +CHAPTER V. + +THE FORMATION OF MONOPOLIES IN CAPITAL. + + Sec. 1. _Productive Economies of the Large Business._ + Sec. 2. _Competitive Economies of the Large Business._ + Sec. 3. _Intenser Competition of the few Large Businesses._ + Sec. 4. _Restraint of Competition and Limited Monopoly._ + Sec. 5. _Facilities for maintaining Price-Lists in different + Industries._ + Sec. 6. _Logical Outcome of Large-Scale Competition._ + Sec. 7. _Different Species of "Combines."_ + Sec. 8. _Legal and Economic Nature of the "Trust."_ + Sec. 9. _Origin and "Modus Operandi" of the Standard Oil Trust._ + Sec. 10. _The Economic Strength of other Trusts._ + Sec. 11. _Industrial Conditions favourable to "Monopoly."_ + + +Sec. 1. The forces which are operating to drive capital to group itself +in larger and larger masses, and the consequent growth of the +business-unit, require special study in relation to changes effected +in the character of competition in the market and the establishment of +monopolies. The economies which give to the large business an +advantage over the small business may be divided into two +classes--economies of productive power, and economies of competitive +power. + +In the first class will be placed those economies which arise from +increased sub-division of labour and increased efficiency of +productive energy, and which represent a net saving in the output of +human energy in the production of a given quantity of commodities, +from the standpoint of the whole productive community. These include-- + +(_a_) The effort saved in the purchase and transport of raw materials +in large quantities as compared with small quantities, and a +corresponding saving in the sale and transport of the goods, +manufactured or other. Under this head would come the discovery and +opening up of new markets for purchase of raw materials and sale of +finished goods, and everything which increases the area of effective +competition and co-operation in industry. + +(_b_) The adoption of the best modern machinery. Much expensive +machinery will only "save labour" when it is used to assist in +producing a large output which can find a tolerably steady market. The +number of known or discoverable inventions for saving labour which are +waiting either for an increase in the scale of production or for a +rise in the wages of the labour they might supersede, in order to +become economically available, may be considered infinite. With every +rise in the scale of production some of these pass from the "unpaying" +into the "paying" class, and represent a net productive gain in saved +labour of the community. + +(_c_) The performance of minor or subsidiary processes upon the same +premisses or in close organic connection with the main process, the +establishment of a special workshop for repairs, various economies in +storage, which attend large-scale production. + +(_d_) Economies consisting in saved labour and increased efficiency of +management, superintendence, clerical and other non-manual work, which +follow each increase of size in a normally constructed business. These +are often closely related to (_b_), as where clerical work is +economised by the introduction of type-writers or telephonic +communication, and to (_c_), as by the establishment of more numerous +and convenient centres of distribution. + +(_e_) The utilisation of waste-products, one of the most important +practical economies in large-scale production. + +(_f_) The capacity to make trial of new experiments in machinery and +in industrial organisation. + +Sec. 2. To the class Economies in Competitive Power belong those +advantages which a large business enjoys in competing with smaller +businesses, which enable it either to take trade away from the latter, +or to obtain a higher rate of profits without in any way increasing +the net productiveness of the community. This includes-- + +(1) A large portion of the economy in advertising, travelling, local +agents, and the superiority of display and touting which a large +business is able to afford. In most cases by far the greater part of +this publicity and self-recommendation is no economy from the +standpoint of the trade or the community, but simply represents a gain +to one firm compensated by a loss to others. In not a few cases the +"trade" may be advantaged to the damage of other trades or of the +consumer, as when a class of useless or deleterious drugs is forced +into consumption by persistent methods of self-appraisal which deceive +the public. + +(2) The power of a large business to secure and maintain the sole use +of some patent or trade secret in machinery or method of manufacture +which would otherwise have gone to another firm, or would have become +public property in the trade, represents no public economy, and +sometimes a public loss. Where such improvement is due solely to the +skill and enterprise of a business man, and would not have passed into +use unless the sole right were secured to his business, this economy +belongs to the productive class. + +(3) The superior ability of a large business to depress wages by the +possession of a total or partial monopoly of local employment, the +corresponding power to obtain raw material at low prices, or to extort +higher prices from consumers than would obtain under the pressure of +free competition, represent individual business economies which may +enable a large business to obtain higher profits. + +Sec. 3. Now all these forces operative in trades which are said to be +subject to the law of increasing returns tend to increase the size and +to diminish the number of businesses competing within a given area. In +some industries the expanding size of the market or area of +competition keeps pace with this movement, so that the total number of +the larger competitors within the market may be as great as before. +But in most of the markets the growing scale of the business is +attended by an absolute diminution in the number of effective +competitors, or at any rate by an increase which is very much smaller +than the increase in the amount of trade that is done. + +So long as we have merely the substitution of a smaller number of +large competing businesses for a larger number of small ones, no +radical change is effected in the nature of industry. So long as +every purchaser is able to buy from two or more equally developed and +effectively competing firms he can make them bid against one another +until he obtains the full advantage of the economies of large-scale +production which are common to them. So long as there remains +effective competition, all the productive economies pass into the +hands of the consumer in reduction of price. Nay, more than this, a +competing firm cannot keep to itself the advantages of a private +individual economy if its competitor has another private economy of +equal importance. If A and B are two closely competing firms, A owning +a special machine capable of earning for him 2 per cent. above the +normal trade profit, and B owning a similar advantage by possession of +"cheaper labour," these private economies will be cancelled by +competition, and pass into the pocket of the consuming public. + +There is every reason to believe that with a diminution in the number +of competitors and an increase of their size, competition grows keener +and keener. Under old business conditions custom held considerable +sway; the personal element played a larger part alike in determining +quality of goods and good faith; purchasers did not so closely compare +prices; they were not guided exclusively by figures, they did not +systematically beat down prices, nor did they devote so large a +proportion of their time, thought, and money to devices for taking +away one another's customers.[124] From the new business this personal +element and these customary scruples have almost entirely vanished, +and as the net advantages of large-scale production grow, more and +more attention is devoted to the direct work of competition. Hence we +find that it is precisely in those trades which are most highly +organised, provided with the most advanced machinery, and composed of +the largest units of capital, that the fiercest and most unscrupulous +competition has shown itself. The precise part which machinery, with +its incalculable tendency to over-production, has played in this +competition remains for later consideration. Here it is enough to +place in evidence the acknowledged fact that the growing scale of the +business has intensified and not diminished competition. In the great +machine industries trade fluctuations are most severely felt; the +smaller businesses are unable to stand before the tide of depression +and collapse, or are driven in self-defence to coalesce. The borrowing +of capital, the formation of joint-stock enterprise and every form of +co-operation in capital has proceeded most rapidly in the textile, +metal, transport, shipping, and machine-making industries, and in +those minor manufactures, such as brewing and chemicals, which require +large quantities of expensive plant. This joining together of small +capitals to make a single large capital, this swallowing up of small +by large businesses, means nothing else than the endeavour to escape +the risks and dangers attending small-scale production in the tide of +modern industrial changes. But since all are moving in the same +direction, no one gains upon the other. Certain common economies are +shared by the monster competitors, but more and more energy must be +given to the work of competition, and the productive economies are +partly squandered in the friction of fierce competition, and partly +pass over to the body of consumers in lowered prices. Thus the +endeavour to secure safety and high profits by the economies of +large-scale production is rendered futile by the growing severity of +the competitive process. Each big firm finds itself competent to +undertake more business than it already possesses, and underbids its +neighbour until the cutting of prices has sunk the weaker and driven +profits to a bare subsistence point for the stronger competitors. + +So long as the increased size of business brings with it a net +economic advantage, the competition of ever larger competitors, whose +total power of production is far ahead of sales at remunerative +prices, and who are therefore constrained to devote an increased +proportion of energy to taking one another's trade, must intensify +this cut-throat warfare. The diminishing number of competitors in a +market does not ease matters in the least, for the intensity of the +strife reaches its maximum when two competing businesses are fighting +a life or death struggle. As the effective competitors grow fewer, not +only is the proportion of attention each devotes to the other more +continuous and more highly concentrated, but the results of success +are more intrinsically valuable, for the reward of victory over the +last competitor is the attainment of monopoly. + +Sec. 4. To keen-eyed business men engaged in the thick of large-scale +competition it becomes increasingly clear that good profits can only +be obtained in one of two ways. A successful firm must either be in +possession of some trade secret, patent, special market, or such other +private economy as places it in a position of monopoly in certain +places or in certain lines of goods, or else it must make some +arrangement with competing firms whereby they shall consent to abate +the intensity or limit the scope of their competition. It will +commonly be found that both these conditions are present where a +modern firm of manufacturers or merchants succeeds in maintaining +during a long period of time a prosperous or paying business. The +firm, though in close competition over part of the field of industry, +will have a speciality of a certain class of wares, at any rate in +certain markets, and it will be fortified by a more or less firmly +fixed rate of prices extending over the whole class of commodities. +Both of these forces signify a restriction upon competition. + +To the older economists, who regarded free competition as the only +safe guarantee of industrial security and progress, it appeared +natural that capitalists continually engaged in the maximum +competition would yet secure a living rate of profit, for if this were +not the case, they ingenuously urged, capital would cease to remain in +such a trade. With the fallacy involved in this theory we shall deal +in a later chapter. It is sufficient here to observe that where keen +competition is operative in modern machine industries the average rate +of profits obtained for capital is generally below that which would +suffice to induce new capital invested with full knowledge to come +into the trade. + +In highly organised trades, where the natural effects of free +competition have been fully manifested, we find that the hope of a +profitable business is entirely based upon the possibility that a +trade agreement will so mitigate competition as to allow a rate of +selling prices to obtain which remains considerably higher than that +which free competition would allow. + +As the field of competition is narrowed to a comparatively few large +competitors, there arises a double inducement to suspend or mitigate +hostilities; as the competition is fiercer more is gained by a truce; +as the number of combatants is smaller, a truce can be more easily +formed and maintained. In most machine-using countries each branch of +a staple industry endeavours to protect itself from free competition +by a combination of masters to fix a scale of prices. This is the +normal condition of trade in England to-day. These combinations to fix +and maintain prices are not equally successful in all trades, but they +are always operative to a more or less extent in modifying or +retarding the effects of competition. Where trade unions of operatives +are strong, well-informed, and resolute, or where outsiders have large +facilities for investing capital and dividing the trade, the +endeavours to maintain prices and to secure a higher than the +competitive rate of profits are unsuccessful. The joint operation of +both these conditions in the cotton-spinning trade explains why the +Lancashire spinners have been unable to check the effects of +cut-throat competition. But throughout all branches of textile, metal, +pottery, engineering, and machine-making trades strong and persistent +endeavours are made by co-operative action of capitalists to limit +competition by fixing a scale of prices which should not be underbid. + +Where competing railways fix a tariff of rates for carriage, or +competing manufacturers fix a scale of prices for their goods, their +object is to secure to themselves in higher profits a portion or the +whole of the productive and competitive economies attending +large-scale production, instead of allowing them by unrestricted +competition to pass into the hands of their customers. Suppose that a +number of steel rail manufacturers freely competing would drive down +the selling price to L1 a ton, but that by a trade agreement they +maintain L1 10s. as the minimum price, 10s. per ton represents the +economies of production which they divert from their customers into +their own possession by a limitation of the competition. Part of the +10s. may represent the actual saving of the labour which would have +been spent in competition as prices fell from L1 10s. to L1. Part may +represent a taking in higher profits of some of the economies of new +machinery or improved methods of production common to the competing +firms, and which would inevitably have led to a fall of price if the +competitive process had been allowed free play. + +The prices thus fixed are monopoly prices--that is to say, they are +determined by the action of a number of competing capitals which at a +certain point agree to suspend their conflict and act as a single +capital; when the bidding is above a certain figure they are many, +when it is below that figure they are one. The condition in such a +trade is one of limited monopoly. The prices fixed by such trade +agreements will generally be different from those of a single firm +with the absolute monopoly of a market, whose prices are arranged to +yield the maximum net profit on the capital engaged. For since the +economies of competition and some of the economies of production would +be far greater for a single producing firm with a monopoly, the +schedule of supply prices measuring the expenses of producing the +different quantities of goods will be different, and this difference +will be reflected in a different scale of non-competitive market +prices from that which would issue from a trade agreement. Moreover, a +loose voluntary compact between trade rivals yields a monopoly of a +far feebler order than does the unity of a single capital. If a scale +of prices were fixed which would yield a considerably higher profit +than the market rate, the temptation to secure a larger share of trade +by secret underbidding through commissions, drawbacks, or otherwise, +or even by an open cutting of rates, is very powerful. Moreover, the +ability of a number of firms with conflicting interests to secure this +monopoly by quick and vigorous repression of the attempts of outside +capital to come in either for the purpose of sharing the higher +profits, or of being bought out, is far less than in the case of a +single monopolist firm. So the scale of prices fixed by a number of +competing firms will generally be nearer to the competition prices +than would be the case with the prices of a single monopolist. + +Sec. 5. The recognition of the advantages of limiting competition by +price tariffs, and the experience of the difficulty of maintaining +such tariffs, lead competing businesses to take further steps in the +curtailment of competition. Where a powerful trade opinion can be +focussed on an offender against the scale, where he can be boycotted +or otherwise subjected to punishment, and where outsiders can be +prevented from intruding into the trade, a common scale of profitable +prices can often be maintained with the verbal or even the tacit +consent of those concerned. This is the case in many manufactures +where the fixed and well-known character of the goods makes a close +price-list possible. Retail dealers in local markets are often able to +keep a close adherence to a rigid scale by the pure force of _esprit +de corps_. The price of bread, meat, milk, coals, and other articles +sold locally by well-known measures, is seldom, if ever, regulated by +free competition among the vendors. In articles where more depends +upon the individual quality of wares, and where a rigid tariff is less +easily fixed and less easily maintained, as in the case of vegetables, +fruit, fish, and groceries, trade agreements are less easy to +maintain. Still more difficult is it to maintain a tariff for articles +of dress or adornment of the person or the house, and in other +articles where the consumer is less confined to a narrow local market. + +The general experience of manufacturing and mercantile businesses, +where each firm is closely confronted by other firms of similar +capacity and equipment at every point in the market, indicates an +increasing difficulty in maintaining prices at a profitable level. +Everywhere complaints are heard of a reckless use of the productive +power of machinery, of over-stocked markets, of a cutting of prices in +order to get business, and of a growing inability to make a living +rate of profit. + +Sec. 6. The endeavour of a number of individual businesses in a trade to +fix and maintain a certain profitable scale of prices is constantly +frustrated. The introduction of new machinery enabling certain firms +to make a profit at prices below the tariff induces them to utilise +their full productivity, cut prices, and still sell at a profitable +price; others involved in the meshes of speculative production are +compelled to cut prices and effect sales even at a loss; the +difficulty of finding safe investments drives new capital into the +hands of company-promoters, who fling it with criminal negligence into +this or that branch of production, underbidding the tariff to win a +footing in the market. All these forces render loose agreements to +limit competition more and more inadequate to secure their purpose. +Frequent experience of the impotence of these partial forms of +co-operation drives trade competitors to seek ever closer forms of +combination. An issue of this necessity is the Syndicate and the +Trust. By raising the co-operative action so as to cover the whole, +and by thus reducing the competition to zero, it is hoped that a union +may be formed strong enough to maintain monopoly prices. Thus the +Trust is seen as the logical culmination of the operation of economic +forces which have been continually engaged in diminishing the number +of effective competitors, while increasing their size and the +proportion of their energy devoted to the competition. + +At each stage in the process the smaller competitors are eliminated, +and the larger driven to increase their size so that the whole may be +illustrated by a pyramid, the base or first stage of which consists of +a larger number of small units, and each higher stage of a smaller +number of larger units, with a Trust or Monopoly Syndicate for its +apex. + +Sec. 7. The motive which induces a number of businesses hitherto +separate, or associated merely for certain specific actions, such as +the fixing of prices or wages, to amalgamate so that they form a +single capital on which a single rate of interest is paid, is a +double-edged one. There is, on the one hand, the desire to protect +themselves against excessive competition and cutting of rates, and on +the other hand a desire to secure the advantages which arise from +monopoly. The way in which Syndicates and Trusts are regarded depends +very much from which of these two aspects they are regarded. Those who +consider these business "combines" as arbitrary and high-handed +interferences with freedom of commerce, undertaken in order to place +in the hands of a few persons a power to rob and oppress the consuming +public by legalised extortion, regard the motive of combination to be +monopoly. On the other hand, the combining firms represent themselves +as the victims of circumstances, bound in self-protection to combine. +Our analysis of the operations of commercial competition enables us to +see that these two forces are not really separate, but are only two +ways of looking at the same action. Every avoidance of so-called +"excessive" competition is _ipso facto_ an establishment of a +monopoly. The tariff of prices established a weak and partial +monopoly. The "combine," whether it takes the name of "ring," +"syndicate," or "trust," succeeds, in so far as it establishes a +stronger and more absolute monopoly. + +In their economic aspect these terms are somewhat vague, the vagueness +arising in some degree from the changing and secret shapes these +combinations often find it convenient to adopt in order to preserve +the appearance of competition, or to avoid public obloquy or legal +interference. "Combine" is probably the generic term which covers all +these operations. A syndicate of capitalists are said to form a +"combine" with the view of controlling prices so as to pay a +profitable interest. If they apply their capital not to the +acquisition of the plant and machinery of manufacture with the view of +regulating production, but directly and mainly to the planning of some +speculative stroke or series of strokes in the produce market, +obtaining temporary control of sufficient goods of a particular kind +to enable them to manipulate prices, they are said to form a "corner" +or "ring." Such forms of combined action are generally of short +duration. Technically they consist in an artificial diversion[125] of +a particular class of goods from the ordinary channel of a number of +competing owners into a single ownership, so that they may be held and +placed upon the supply market at such times and in such ways as to +enable the owner to obtain a famine price. The following description +of a wheat "corner" will serve to exemplify this method of +"combine":-- + +"The man who forms a corner in wheat, first purchases or secures the +control of the whole available supply of wheat, or as near the whole +supply as he can. In addition to this he purchases more than is really +within reach of the market by buying 'futures,' or making contracts +with others who agree to deliver him wheat at some future time. Of +course he aims to secure the greater part of his wheat quietly, at low +figures; but after he deems that the whole supply is nearly in his +control, he spreads the news that there is a 'corner' in the market, +and buys openly all the wheat he can, offering higher and higher +prices, until he raises the price sufficiently high to suit him. Now +the men who have contracted to deliver wheat to him at this date are +at his mercy. They must buy their wheat of him at whatever price he +chooses to ask, and deliver it as soon as purchased, in order to +fulfil their contracts. Meanwhile mills must be kept in operation, and +the millers have to pay an increased price for wheat; they charge the +bakers higher prices for flour, and the bakers raise the price of +bread. Thus is told by the hungry mouths in the poor man's home the +last act in the tragedy of the corner."[126] + +These "corners," of which in various forms and degrees the speculative +business on the stock and produce markets largely consists, are +attempts to substitute for a time a high monopoly price for a +competitive price by "rigging the market." Since the calculations upon +which these "corners" are based are essentially hazardous, attempted +corners frequently break down. One of the most special examples of the +collapse of a powerful corner in recent years is that of "La Societe +Industrielle Commerciale des Metaux," commonly known as the "Copper +Syndicate." A body of French capitalists, for the most part not owners +of mines or metal merchandise, but speculators pure and simple, placed +a sum of money with the intention of cornering the supply of "tin." +Before completing this design they were induced to undertake a larger +speculation in the "copper market." In 1887 they entered into +contracts with the largest copper-producing companies in various +countries, agreeing to buy all the copper produced for the next three +years at a fixed price of 13 cents per pound, with an added bonus +equivalent to half the profit from their sale of the same. In 1888 the +Syndicate sought to extend its contracts with chief mining companies +to cover a period of twelve years, arranging with them also to limit +the output of copper. For some time they held the market in their +grip, and prices advanced considerably. But partly owing to a failure +to complete their contracts securing a restriction in production, and +partly from inability to meet their current liabilities, the "corner" +was broken down in 1889, and the artificially inflated prices fell. +Not only are the makers of "corners" liable to these miscalculations, +but they are liable to be overthrown by counter combinations of +capitalists or of operatives. The breakdown of a formidable attempt +to "corner" cotton in Lancashire in 1889 was due to the prompt action +of the Trades Unions, who undertook to unite with their employers in a +stoppage of work for such length of time as was requisite to force the +collapse of the "ring." + +In the same year a formidable flour syndicate broke down before the +firm attitude of the co-operative flour mills.[127] + +But though the speculative character of modern commerce, assisted by +the abundant use of credit, has lent special facilities to the +formation of "corners" and "rings," it is hardly necessary to say that +commerce has never been free from them. The celebrated "corner" in +grain which Joseph organised on behalf of the King of Egypt was one of +the largest and most successful. The commercial law of the Middle Ages +is full of provisions against engrossers, forestallers, and regrators, +all of whom were engaged in artificially raising prices to the +consumer by obtaining some sort of monopoly. Organised rings to secure +a monopoly of the food supply of some great city have been frequent +throughout history. Cicero informs us of the celebrated ring of +capitalists under Crassus to raise food prices at Rome. A +closely-formed combination of northern coalowners continued to +restrict output and impose monopoly prices upon London consumers for a +considerable time in the middle of the eighteenth century.[128] + +In modern times these "corners" are essentially of brief duration so +far as they consist in narrowing the stream of commerce at a +particular point so as to check its free flow. Most of them are +confined to goods which are dealt with upon commercial exchanges, and +are amenable to the operations of skilled speculators. The "deal" must +be upon a scale large enough to enable a big net profit to be secured +in a short time. The stimulation which artificially inflated prices +apply to the early productive processes, the activity of other +speculators, and the check given to consumption by high prices, +generally preclude the possibility of a "corner" lasting long. The +strength of the copper "corner," had it succeeded, would have lain in +the hold it would have obtained over the early extractive stage, +preventing the operation of the natural stimulus of high prices to +increase production. If the Copper Syndicate had established its hold +upon the mining companies, it would have been able to hold the market +for an indefinite period, passing from the state of a "corner" into +the more durable and established position of the Trust. + +Sec. 8. A Trust may be regarded from an economic aspect, or from a legal +aspect. Economically, the term Trust is applied to a class of +syndicates which have established a partial or total monopoly in +certain productive industries by securing the ownership of a +sufficient proportion of the instruments of production to enable them +to control prices. Legally, a Trust is a form of business +association--"a trust of corporate stocks by means of which a body of +men united in interest are enabled to carry on business through +separate corporate agencies."[129] It is a company of companies, under +which, while the formal structure of the original companies is +maintained, they are incorporated as single cells in the larger +organism which directs their activity. The constitution of the Trust +is best explained by a description of its origin in the industry of +the United States. The owners of a majority of the shares in a number +of corporations hitherto separate in their constitution (though they +may have been acting in agreement with one another, or have been +largely owned by the same persons) agree to place their shares of +stock in the full control of a body of persons called trustees. These +trustees may or may not be shareholders or directors of the several +corporations. They "act under an agreement that they will cast the +votes represented by the stock so held for the perpetuation of the +trust during the time agreed upon, and in furtherance of its purposes: +will elect the officers provided for by law in each of the +corporations, and in behalf of all of them manage the business of all, +except, it may be, in small matters of detail." "Each shareholder, +upon surrendering his corporate stock to the board of trustees, +receives a certificate entitling him to an interest in all the +property and earnings of all the corporations of the trust."[130] + +These certificates are believed in many cases to certify a money value +far in excess of the real value of the stock surrendered at the time +when the Trust was formed. The Report of the New York Chamber of +Commerce for 1887-88 estimates the "certificates" given by the Sugar +Trust to the shareholders of its constituent corporations as bearing +"water" to the amount of 200 per cent., so that the nominal dividend +of 10-1/2 per cent. paid during the year represented a real net profit +of 31-1/2 per cent. Such statements cannot, however, be verified, +since it is the interest of the only persons who actually know to keep +secret such an arrangement. + +It is asserted by many, and several State courts have sustained the +position, that a Trust is in America an illegal association, because +it implies on the part of its constituent corporations a violation of +the conditions under which they received the powers and privileges +conferred in their charters by the government of the several States. +Their illegality consists, it is held-- + +(1) In surrendering the power to manage and control their business to +some persons other than those legally authorised. + +(2) In engaging, through the Trust, in kinds of business not +authorised by the charter. + +Sec. 9. It is, however, the economic character and powers of the Trust, +and not its legal position, which concern us here. + +The following short history of the origin and _modus operandi_ of the +Standard Oil Trust, the largest and in some respects the strongest of +these organisations, will serve to give distinctiveness to the idea of +the Trust:-- + +Petroleum began to be an article of extensive commerce about the year +1862. The wells from which the crude petroleum oil was drawn were in +Pennsylvania, and the work of boring the wells with machinery and +extracting the oil grew to be a considerable business. The crude oil +was sold to various refiners, who set up factories in Cleveland +(Ohio), in Pittsburg, and in several other cities. By 1865 these +factories had become pretty numerous, and in that year a private +refinery at Cleveland, owned by a few partners, obtained a charter +forming it into a corporation entitled the Standard Oil Company, with +a capital of $100,000. Until 1870 the progress of the company was +comparatively slow. In order to increase their hold upon the sources +of production in Pennsylvania, and to expand their trade, they began +to purchase stock in corporations already existing in that State, and +succeeded in establishing others, with which they worked in close +alliance. A Standard Oil Company was organised at Pittsburg, the stock +of which passed into the hands of the owners of the Cleveland Company. +They then proceeded to establish agencies in other States, primarily +for the sale of their goods, but when these businesses were firmly +planted they obtained for them from the several States charters +incorporating them as companies for refining oil. In 1872 the +shareholders of the Standard Oil Companies at Cleveland, Pittsburg, +and Philadelphia organised another corporation called the South +Improvement Company, obtaining a charter from the State of +Pennsylvania. This corporation, which was in fact though not in legal +form the "Standard Oil Companies," then entered into contracts with +the New York Central and Hudson River Railroad Company, the Erie +Railway Company, and several other lines which traversed the +oil-producing country, for the shipment of petroleum. The South +Improvement Company agreed to ship over these railways all the +petroleum products. In return the railway companies agreed to carry +their goods, not upon the terms open to other customers, but with a +system of rebates, paid not only upon the oil shipped by the company, +but upon that shipped by any other competing companies. "In one +locality the railroad companies were to charge oil shippers as freight +not exceeding $1.50 per barrel, and pay a rebate to the South +Improvement Company of $1.06 per barrel, whether it was the shipper of +the oil or not, so that under these contracts the Standard Oil Company +members would pay no more than 44 cents per barrel as freight to the +carrier, while their competitors would pay $1.50, and of this last sum +the railways were to pay back to the combination $1.06 per +barrel."[131] + +Though this monstrous conspiracy was quickly unmasked, and the South +Improvement Company lost its charter, secret negotiations with the +railway companies enabled the Standard Oil Companies to strengthen +themselves by this system of rebates paid out of the pockets of their +business rivals. Chiefly by means of these and other discriminating +contracts they were enabled to enlarge their sphere of activity, and +making full use of their growing capital, succeeded in destroying or +absorbing their competitors, until, as early as 1875, they held a +practical monopoly of the refineries of the interior. No fewer than +seventy-four refineries are stated to have been bought up, leased, or +bankrupted by the Standard Oil Company in Pennsylvania alone in the +course of its career. + +Until about 1878 the chief source of power of the company seems to +have been the alliance with the railroads and the local monopolies +obtained by buying up or crushing rival businesses. But the president, +Mr. Rockefeller, and his associates were men of keen business ability, +who understood how to make use of the inventive genius of the abler +employees who passed into their service, and of the improvements in +method of production and distribution of oil which were suggested. In +the next few years the company were enabled to effect enormous +economies in the storage and conveyance of oil. Pipe lines were laid +down connecting New York, Philadelphia, Baltimore, Buffalo, Pittsburg, +Cleveland, and Chicago, and a network of feeding lines joining the +sources of supply. Thousands of huge tanks were erected for holding +surplus stores; a large number of agencies were established along the +sea-shore with storage attached. Further considerable economies were +effected by the undertaking of the manufacture of barrels and cans and +other subsidiary articles required in the trade. At the close of 1881 +the owners of the entire capital of fifteen corporations and parts of +the stock of a number of others, the latter chiefly trading companies, +established the Trust. The number of shareholders thus associated was +forty, and they placed their stocks in the hands of nine of their +number as trustees, who continued to administer the whole business, +paying interest upon the certificates which represented the stock of +the several shareholders until March 1892, when the Trust was legally +dissolved. The legal dissolution of the Trust has not, however, +materially impaired its economic unity and power; on the contrary, it +has extended in the United States its monopolic control of the +market, and has already established a strong control over several +European markets for the sale of oil, and over the chief natural +sources of supply. Although a practical monopoly in many parts of the +interior had been acquired at a tolerably early date, there continued +to be active competition in all branches of the petroleum business +until 1884, when the war of rates, which had been waged for some time +with a formidable Canadian competitor, the Tidewater Company, ceased, +an alliance being formed between the rivals. From that time the +Standard Oil Trust has held a practical monopoly over the greater part +of the country. It has introduced new economies in the machinery of +refining, has found profitable uses for naphtha and other waste +products, and has vastly increased its output and the machinery of +distribution. Not content with controlling the market for crude oil, +it has during the last few years obtained the possession of larger and +larger portions of the oil-producing country, forming companies to +acquire mining rights, sink wells, and oust the private producers from +whom it had previously been content to purchase the raw material at +their own prices. + +Bearing in mind the fact that the actual unification of businesses +took place a good many years before the formation of the Trust, there +is nothing in the account given above inherently inconsistent with the +following explanation afforded by the Standard Oil Trust of their +proceedings:-- + +"The Standard Oil Trust offers to prove by various witnesses that the +disastrous condition of the refining business, and the numerous +failures of refiners prior to 1875, arose from imperfect methods of +refining, want of co-operation among refiners, the prevalence of +speculative methods in the purchase and sale of both crude and refined +petroleum, sudden and great reductions in price of crude, and +excessive rates of freight; that these disasters led to co-operation +and association among the refiners, and that such association and +co-operation, resulting eventually in the Standard Oil Trust, has +enabled the refiners so co-operating to reduce the price of petroleum +products, and thus benefit the public to a very marked degree."[132] + +So far as this furnishes an explanation of the motives leading to the +earlier growth of the Company, the consolidation of rival companies, +no doubt it contains a considerable element of truth. The Standard Oil +Trust, however, differs from most others in that it was not directly +formed by the union of a number of leading rival businesses, but was +merely a reorganisation upon a firmer basis of a single complex +business. The motive of self-protection, though it might be operative +in the early history of the Company, cannot be adduced as the true +motive of the formation of the Trust. + +Since the claim of the Standard Oil Trust to be a public benefit rests +upon the fall of price to the customer, resulting from the various +economies and improvements adopted by the Trust, it may be well to +append a diagram showing the actual fall of prices during the twenty +years 1870 to 1890. + +In this diagram we note that from 1870 to 1875 there was a rapid +reduction of price in consequence of the fact that these were years of +keen competition with other Pennsylvanian businesses. 1875, which +marks the establishment of a monopoly of the interior trade in the +hands of the Standard Oil Trust, also marks a sharp rise of prices. +The expansion of their business brought them into contact with new and +more distant competitors, and a fall of price continued until 1879, +while prices continued to oscillate until 1881, the year of the +formation of the Trust. From the time of the formation of the Trust +the fall of price has been only half a cent. The moral is obvious. So +long as there is competition, in spite of the expense of conducting +the strife, prices fall; when the competition is suspended, and there +is a saving of friction, the public gains no further reduction. + +The reason why, even after the complete monopoly had been attained, +the price of oil was not put up again will be apparent when we come to +examine the economic limits of the power of a Trust. + + [Illustration: FLUCTUATIONS OF PRICES OF STANDARD OIL, 1870 TO + 1890.] + +Sec. 10. A large number of these Trusts, similar in their constitution to +the Standard Oil Trust, and with the same object of maintaining a +scale of prices based upon monopoly, have been founded in the United +States. Some have undoubtedly owed their establishment to the +prevalence of low profits in a trade where close competition has led +to a constant cutting of prices, and their foundation has been +leniently regarded as an act of self-defence. To this order belong the +Whisky Trust, the Cotton Oil Trust, the Cotton Bagging Trust, and +others. Indeed, one well-informed writer upon the subject holds that +this is the normal origin of the Trust. "With the exception of the +Standard Oil Trust, and perhaps one or two others that rose somewhat +earlier, it may be fairly said, I think, that not merely competition, +but competition that was proving ruinous to many establishments, was +the cause of the combinations."[133] + +This condition of ruinous competition must be recognised as the normal +condition of all highly-organised businesses where modern machinery is +applied, and which are not sheltered by some private economy in the +shape of special facilities in producing or in disposing of their +goods. Even the Standard Oil Company, as we saw, claimed that a policy +of consolidation was forced upon it by the conditions of the market. +But this claim is not a refutation, but an admission of the statement +that the object of a Trust is to obtain monopoly prices; for these +ruinously low prices and profits are the result of free competition, +and the only alternative to this free competition is monopoly. Hence +it is a legitimate conclusion that the economic object of a Trust is +to substitute monopoly for competitive prices, and to do this more +effectively than can be done by the mere acceptance of a common +price-list by the separate firms engaged in a branch of production. In +order to attain this object it is not necessary that the Trust shall +comprise all the capital engaged in an industry. Even when the +Standard Oil Trust was firmly established, and was, according to its +own admission, paying 12-1/2 or 13 per cent. on its highly-watered +stock, there appears to have existed no fewer than 111 smaller +independent companies competing with it directly or indirectly at some +point within the area of its market.[134] But the Standard Oil Trust +was able to control prices, as the producer of some 75 per cent. of +the total product, and the practical monopolist over the main area of +its market. Similarly the Sugar Refineries Trust in 1888 had a firm +grip over prices by its possession of 80 per cent. of the sugar +refining capacity of the Atlantic Coast, or 65 per cent. of the sugar +consumed in the United States.[135] There are other cases where a +formally constructed Trust is for a time engaged in close effective +competition, either with another Trust, as was the position of the +Standard Oil Trust over a portion of its markets in the period 1881 to +1884, or with powerful companies not organised as Trusts. This is what +Mr. Gunton appears to consider the normal condition of a Trust, one in +which competition takes place between a few large bodies of capital +instead of between many smaller bodies.[136] Certain Trusts have +certainly been compelled to struggle for the retention of their +monopoly power over the market. A notorious example is that of the +Sugar Trust, which, after a most successful start in 1888, found +itself in 1890 face to face with a new and formidable competitor in +the shape of the Claus Spreckles refineries of Philadelphia and San +Francisco, and was compelled to forego the high profits it had been +making and fight for its existence under terms of keenest competition. + +But in so far as a Trust stands in this position it has failed to +achieve its industrial end of checking "ruinous competition" and the +"cutting of prices." It is not in the possession of the chief +economies of a Trust so long as it remains at warfare, for it is +compelled to expend all that it gains from the enlarged scale of +business and from the cessation of competition among its constituent +companies upon the strife with its single antagonist. A Trust in this +inchoate condition has no special economic character distinguishing it +from other large aggregates of competing capital. It is with +fully-formed trusts which are able to control prices and regulate to +some degree production and profits that we are concerned. An economic +Trust has its _raison d'etre_ in monopoly. It may not have eliminated +all actual competitors, and is generally limited in its power by the +possibility of outside opposition, but so far as its power extends it +must be able to regulate prices upon non-competitive lines. + +Sec. 11. A large number of different articles have at some stage in +their production fallen under the monopoly of a Trust.[137] + +As is the case with "corners" and "rings" in the produce market, +certain classes of commodities lend themselves more readily than +others to the monopoly of Trusts. + +There are three classes of industry which more easily than others +permit the formation of effective trusts. + +(1) Industries connected with, or closely dependent on, the nature and +properties of land. When the whole or a large proportion of the raw +material required for producing any class of goods is confined within +a restricted area, the possession of that land by a single body of +owners will give a strong monopoly. It was not essential to the +Standard Oil Trust in its earlier years to own the sources of the oil +provided they could possess themselves of the stream after it had left +the source. But they have strengthened this monopoly lately by +securing the ownership of the oil lands in Pennsylvania. The most +striking example, however, is the monopoly of the anthracite coal +region in Pennsylvania by the shareholders of the Pennsylvania and +Reading Railway. The tendency of a Trust to strengthen its industrial +position and at the same time to find a profitable investment for its +surplus profits by fastening upon an earlier process of production or +a contiguous industry, and drawing it under the control of its +monopoly, is one of the most important evidences of the rapid growth +of the system in America. The rapidity with which the whole railway +system is passing into the hands of the two great monopolist +syndicates with the necessary result of stifling competition is in +some respects the most momentous economic movement in the United +States at the present time. The magnificent distances which separate +the great mass of the producers of agricultural and other raw products +from their market makes the railway their only high-road, and the fact +that except between a few large centres of population there is no +competition of rival railways, places the producer entirely at the +mercy of a single carrier, who regulates his rates so as to secure his +maximum profit. Indeed, so fast is the amalgamation of railway capital +proceeding that even between large cities there is little genuine +competition. The same is true of the telegraph and the supply of such +things as water and gas, which, by reason of their relation to land, +and the power thus conferred upon the owner of the first and most +convenient means of supply, are "natural" monopolies. Where such +industries are left, as in most cities of America, to private +enterprise, they form the objects of a monopoly which is commonly so +strong as to crush with ease attempts at competition where such are +legally permissible. Jay Gould's Western Union Telegraph Company is an +example of an absolute monopoly maintained for many years without the +possibility of effective competition. The purchase of Western lands in +order to hold them for monopoly prices has been a favoured form of +syndicate investment during the last forty years. + +(2) Articles which for economy of transport and distribution require +to be massed together in large quantities are specially amenable to +monopoly. Grains produced over a wide area have often to be collected +in large quantities to be re-assorted according to quality, and to be +warehoused before being placed in the market. So the produce of +thousands of competing farmers passes into the hands of a syndicate of +owners of grain elevators at Chicago or elsewhere. The same is true of +meat, fish, fruit, vegetables, dairy produce. All these things, raised +under circumstances which render effective co-operation for purposes +of sale well-nigh impossible, flow from innumerable diverse places +into a common centre, where they fall into the hands of a small group +of middlemen, merchants, and exporters. Even the retail merchants, as +we have seen, are able to make effective combinations to maintain +prices in the case of more perishable goods. + +In England the combination of retail merchants commonly takes the form +of a trade regulation of prices restricting competition. But in the +United States regular Trusts have been in some cases established in +retail trade. The Legislative Committee of New York State, in its +investigations, discovered a milk trust which had control of the +retail distribution in New York City, fixing a price of three cents +per quart to be paid to the farmer, and a selling price of seven or +eight cents for the consuming public. + +Hence it arises that the prices paid by the consumer for farm produce +are picked pretty clean by various groups of monopolists or restricted +competitors before any of them get back to the farmers or first +producers. + +The farmer, from his position in the industrial machine, is more at +the mercy of Trusts and other combinations than any other body of +producers. In the United States he is helpless under the double sway +of the railway and the syndicate of grain elevators and of +slaughterers in Chicago, Kansas City, and elsewhere. In England, in +France, and in all countries where the farmer is at a long distance +from his market, farm produce is subject to this natural process of +concentration, and we hear the same complaints of the oppressive rates +of the railway and the monopoly of the groups of middlemen who form +close combinations where the stream of produce narrows to a neck on +its flow to the consumer. The position of the American farmer, crushed +between the upper and the nether mill-stone of monopoly, is one of +pathetic impotence. + +(3) In those industries to which the most elaborate and expensive +machinery is applied, and where, in consequence, the proportion of +fixed capital to labour is largest, the economies of large-scale +production are greatest. Here, as we have seen, the growing strain of +the fiercer competition of ever larger and ever fewer capitals drives +towards the culminating concentration of the Trust. Where, owing +either to natural advantages, as in the case of oil and coal, or to +other social and industrial reasons, a manufacture is confined within +a certain district, and is in the hands of a limited number of firms +in fairly close commercial touch with one another, we have conditions +favouring the formation of a Trust. In most of the successful +manufacturing Trusts some natural economy of easy access to the best +raw material, special facilities of transport, the possession of some +state or municipal monopoly of market, are added to the normal +advantages of large-scale production. The artificial barriers in the +shape of tariff, by which foreign competition has been eliminated from +many leading manufactures in the United States, have greatly +facilitated the successful operation of Trusts. Where the political, +natural, and industrial forces are strongly combined, we have the most +favourable soil for the Trust. Where a manufacture can be carried on +in any part of the country, and in any country with equal facility, it +is difficult to maintain a Trust, even though machinery is largely +used and the individual units of capital are big. + +Each kind of commodity, as it passes through the many processes from +the earth to the consumer, may be looked upon as a stream whose +channel is broader at some points and narrower at others. Different +streams of commodities narrow at different places. Some are narrowest +and in fewest hands at the transport stage, when the raw material is +being concentrated for production, others in one of the processes of +manufacture, others in the hands of export merchants. Just as a number +of German barons planted their castles along the banks of the Rhine, +in order to tax the commerce between East and West which was obliged +to make use of this highway, so it is with these economic "narrows." +Wherever they are found, monopolies plant themselves in the shape of +"rings," "corners," "pools," "syndicates," or "trusts." + +FOOTNOTES: + +[124] There still survive in certain old-fashioned trades firms which +do business without formal written contracts, and which would be +ashamed to take a lower price than they had at first asked, or to seek +to beat down another's price. + +[125] There need, of course, be no actual diversion of goods into the +possession of the Ring: the essence of the monopoly consists in the +control, not in the possession of goods. + +[126] Baker, _Monopolies and the People_, p. 81. + +[127] Cf. Miss Potter, _The Co-operative Movement_, p. 199. + +[128] Porter, _Progress of the Nation_, pp. 283-285. + +[129] C.S.T. Dodd, "Ten Years of the Standard Oil Trust," _Forum_, May +1892. + +[130] "The Standard Oil Trust," Roger Sherman, _Forum_, July 1892. + +[131] Roger Sherman, "The Standard Oil Trust," _The Forum_, July 1892. + +[132] Argument of Standard Oil Trust before the House Committee on +Manufactures, 1888 (quoted Baker, _Monopolies and the People_, p. 21). + +[133] J.W. Jenks, _Economic Journal_, vol. ii. p. 73. + +[134] _Report to the Commission of the Senate of New York State_, p. +440. + +[135] _Economic Journal_, vol. ii. p. 83. + +[136] "The Economic and Social Aspect of Trusts," _Political Science +Quarterly_, Sept. 1888. + +[137] Baker, writing 1890, names fifty-nine articles which have at +various times formed the material of Trusts, ranging in importance +from sugar and iron rails to castor-oil, school slates, coffins, and +lead pencils. + + + + +CHAPTER VI. + +ECONOMIC POWERS OF THE TRUST. + + Sec. 1. _Power of a Monopoly over earlier or later Processes in + Production of a Commodity._ + Sec. 2. _Power over Actual or Potential Competitors._ + Sec. 3. _Power over Employees of a Trust._ + Sec. 4. _Power over Consumers._ + Sec. 5. _Determinants of a Monopoly Price._ + Sec. 6. _The Possibility of low Monopoly Prices._ + Sec. 7. _Considerations of Elasticity of Demand limiting Prices._ + Sec. 8. _Final Summary of Monopoly Prices._ + + +Sec. 1. It remains to investigate the actual economic power which a +"monopoly" possesses over the several departments of an industrial +society. Although the "trust" may be taken as the representative form +of monopoly of capital, the economic powers it possesses are common in +different degrees to all the other weaker or more temporary forms of +combination, and to the private business which, by the possession of +some patent, trade secret, or other economic advantage, is in control +of a market. These powers of monopoly may be placed under four heads +in relation to the classes upon whose interests they operate--(_a_) +business firms engaged in an earlier or later process of production; +(_b_) actual and potential competitors or business rivals; (_c_) +employees of the Trust or other monopoly; (_d_) the consuming public. + +(_a_) The power possessed by a monopoly placed in the transport stage, +or in one of the manufacturing or merchant stages, to "squeeze" the +earlier or less organised producers, has been illustrated by the +treatment of farmers by the railways and by the Elevator Companies +and the Slaughtering Companies of the United States. The Standard Oil +Trust, as we saw, preferred, until quite recently, to leave the oil +lands and the machinery for extracting crude oil in the hands of +unattached individuals or companies, trusting to their position as the +largest purchasers of crude oil to enable them to dictate prices. The +fall in the price paid by the company for crude oil from 9.19 cents in +1870 to 2.30 in 1881, when the Trust was formed, and the maintenance +of an almost uniform lower level from 1881 to 1890, testifies to the +closeness of the grip in which the company held the oil producers; for +although improvements in the machinery for sinking wells and for +extracting oil took place during the period, these economies in +production do not at all suffice to explain the fall. Indeed, the +method of the company's transactions with the oil producers, as +described by their own solicitor in his defence of the Trust, is +convincing testimony of their control of the situation:--"When the +producer of oil puts down a well, he notifies the pipe line company (a +branch of the Trust), and immediately a pipe line is laid to connect +with his well. The oil is taken from the tank at the well, whenever +requested, into the large storage tanks of the company, and is held +for the owner as long as he desires it. A certificate is given for it, +which can be turned into cash at any time; and when sold it is +delivered to the purchaser at any station on the delivery lines."[138] +In similar fashion the Sugar Trust, before the competition of the +Spreckles refineries arose, controlled the market for raw sugar. Nor +was this power exercised alone over the producers of raw sugar. It +extended to dictating the price at which the wholesale grocers who +took from them the refined sugar should sell to their customers.[139] +This power of a monopoly is not merely extended to the control of +prices in the earlier and later processes of production and +distribution of the commodity. One of the most potent forms it assumes +in manufactures where machinery is much used is a control over the +patentees and even the manufacturers of machinery. Where a strong +Trust exists, the patentee of a new invention can only sell to the +Trust and at the Trust's price. Charges are even made against the +Standard Oil Trust and other powerful monopolies to the effect that +they are in the habit of appropriating any new invention, whether +patented or not, without paying for it, trusting to their influence to +avoid the legal consequences of such conduct. There is indeed strong +reason to believe that the irresponsible position in which some of +these corporations are placed induces them to an unscrupulous use of +their great wealth for such purposes. + +Sec. 2. (_b_) Since the prime object of a Trust is to effect sales at +profitable prices, and prices are directly determined by the +quantitative relation between supply and demand, it is clearly +advantageous for a Trust to obtain as full a power in the regulation +of the quantity of supply as is possible. In order to effect this +object the Trust will pursue a double policy. It will buy up such +rival businesses as it deems can be worked advantageously for the +purposes of the Trust. The price at which it will compel the owners of +such businesses to sell will have no precise relation to the value of +the business, but will depend upon the amount of trouble which such a +business can cause by refusing to come into the Trust. If the +outstanding firm is in a strong position the Trust can only compel it +to sell, by a prolonged process of cutting prices, which involves +considerable loss. For such a business a high price will be paid. By +this means a strongly-established Trust or Syndicate will bring under +its control the whole of the larger and better-equipped businesses +which would otherwise by their competition weaken the Trust's control +of the market. A smaller business, or an important rival who +persistently stands out of the Trust, is assailed by the various +weapons in the hands of the Trust, and is crushed by the brute force +of its stronger rival. The most common method of crushing a smaller +business is by driving down prices below the margin of profit, and by +the use of the superior staying power which belongs to a larger +capital starving out a competitor. This mode of exterminating warfare +is used not merely against actually existing rivals, as where a +railway company is known to bring down rates for traffic below cost +price in order to take the traffic of a rival line, but is equally +effective against the potential competition of outside capital. After +two or three attempts to compete with Jay Gould's telegraph line from +New York to Philadelphia had been frustrated by a lowering of rates to +a merely nominal price, the notoriety of this terrible weapon sufficed +to check further attempts at competition. In this way each +strongly-formed Trust is able to fence off securely a certain field of +investment, thus narrowing the scope of use for any outside capital. +This employment of brute force is sometimes spoken of as "unfair" +competition, and treated as something distinct from ordinary trade +competition. But the difference drawn is a purely fallacious one. In +thus breaking down a competitor the Trust simply makes use of those +economies which we have found to attach to large-scale businesses as +compared with small. Its action, however oppressive it may seem from +the point of view of a weaker rival, is merely an application of those +same forces which are always operating in the evolution of modern +capital. In a competitive industrial society there is nothing to +distinguish this conduct of a Trust in the use of its size and staying +power from the conduct of any ordinary manufacturer or shopkeeper who +tries to do a bigger and more paying business than his rivals. Each +uses to the full, and without scruple, all the economic advantages of +size, skill in production, knowledge of markets, attractive +price-lists, and methods of advertisement which he possesses. It is +quite true that so long as there is competition among a number of +fairly equal businesses the consuming public may gain to some extent +by this competition, whereas the normal result of the successful +establishment of a Trust is simply to enable its owners to take higher +profits by raising prices to the consumer. But this does not +constitute a difference in the mode of competition, so that in this +case it deserves to be called "fair," in the other "unfair." + +It is even doubtful whether such bargains as that above described +between the Standard Oil Company and the Railways, whereby a +discriminative rate was maintained in favour of the Company, is +"unfair," though it was underhand and illegal. In the ordinary sense +of the term it was a "free" contract between the Railways and the Oil +Company, and in spite of its discriminative character might have been +publicly maintained had the law not interfered on a technical point. +The same is even true of the flagrant act of discrimination described +by Mr. Baker:--"A combination among manufacturers of railway +car-springs, which wished to ruin an independent competitor, not only +agreed with the American Steel Association that the independent +company should be charged $10 per ton more for steel than the members +of the combine, but raised a fund to be used as follows: when the +independent company made a bid on a contract for springs, one of the +members of the Trust was authorised to under-bid at a price which +would incur a loss, which was to be paid out of the fund. In this way +the competing company was to be driven out of business."[140] These +cases differ only in their complexity from the simpler modes of +underselling a business rival. Mean, underhand, and perhaps illegal +many of these tactics are, but after all they differ rather in degree +than in kind from the tactics commonly practised by most businesses +engaged in close commercial warfare. If they are "unfair," it is only +in the sense that all coercion of the weak by the strong is "unfair," +a verdict which doubtless condemns from any moral standpoint the whole +of trade competition, so far as it is not confined to competing +excellence of production. + +The only exercise of power by a Trust or Monopoly in its dealings with +competing capital which deserves to be placed in a separate category +of infamy, is the use of money to debauch the legislature into the +granting of protective tariffs, special charters or concessions, or +other privileges which enable a monopoly company to get the better of +their rivals, to secure contracts, to check outside competition, and +to tax the consuming public for the benefit of the trust-maker's +pocket. Under this head we may also reckon the tampering with the +administration of justice which is attributed, apparently not without +good reason, to certain of the Trusts, the use of the Trust's money to +purchase immunity from legal interference, or, in the last resort, to +buy a judgment in the Courts. + +How far the more or less definite allegations upon this subject are +capable of substantiation it is beyond our scope to inquire, but +certain disclosures in connection with the Tweed Ring, the Standard +Oil Company, the Anthracite Coal Trust, and other syndicates induce +the belief that the more unscrupulous capitalists seek to influence +the Courts of Justice as well as the Houses of Legislature in the +pursuance of their business interests. + +Sec. 3. (_c_) The more or less complete control of the capital engaged in +an industry, and of the market, involves an enormous power over the +labour engaged in that industry. So long as competition survives, the +employee or group of employees are able to obtain wages and other +terms of employment determined in some measure by the conflicting +interests of different employers. But when there is only one employer, +the Trust, the workman who seeks employment has no option but to +accept the terms offered by the Trust. His only alternative is to +abandon the use of the special skill of his trade and to enter the +ever-swollen unskilled labour market. This applies with special force +to factory employees who have acquired great skill by incessant +practice in some narrow routine of machine-tending. The average +employee in a highly-elaborated modern factory is on the whole less +competent than any other worker to transfer his labour-power without +loss to another kind of work.[141] Now, as we have seen, it is +precisely in these manufactures that many of the strongest Trusts +spring up. The Standard Oil Company or the Linseed Oil Trust are the +owners of their employees almost to the same extent as they are owners +of their mills and machinery, so subservient has modern labour become +to the fixed capital under which it works. It has been claimed as one +of the advantages of a Trust that the economies attending its working +enable it to pay wages higher than the market rate. There can be no +question as to the ability of the stronger Trusts to pay high wages. +But there is no power to compel them to do so, and it would be pure +hypocrisy to pretend that the interests of the labourers formed any +part of the motive which led a body of keen business men to acquire a +monopoly. One of the special economies which a large capital possesses +over a small, and which a Trust possesses _par excellence_, is the +power of making advantageous bargains with its employees. + +It is possible that a firm like the Standard Oil Trust may to some +limited extent practise a cheap philanthropy of profit-sharing in +order to deceive the public into supposing that its huge profits +enrich many instead of few. But there is no evidence that the +employees of a Trust have gained in any way from the economies of +industrial monopoly, nor, as we see, is there any _a priori_ +likelihood they should so gain.[142] + +But the practical ownership of its employees involved in the position +of a monopoly is by no means the full measure of the oppressive power +exercised by the Trust over labour. Since the means by which Trust +prices are maintained is the regulation of production, the interests +of the Trust often require that a large part of the fixed capital of +the companies entering the Trust shall stand idle. "When competition +has become so fierce that there is frequently in the market a supply +of goods so great that all cannot be sold at remunerative prices, it +is necessary that the competing establishments, in order to continue +business at all (of course, under perfectly free competition many will +fail), check their production. Now an ordinary pool makes provision +for each establishment to run in one of the two ways suggested. +Manifestly a stronger organisation like the Trust, by selecting the +best establishments, and running them continuously at their full +capacity, while closing the others, or selling them, and making other +use of the capital thus set free, will make a great saving. The most +striking example of this kind in the recent history of the Trusts is +furnished by the Whisky Trust. More than eighty distilleries joined +the Trust. Formerly, when organised as a pool, as has been said, each +establishment ran at part capacity, one year at 40 per cent., one year +at only 28 per cent. A year after the organisation of the Trust only +twelve were running; but these were producing at about their full +capacity, and the total output of alcohol was not at all lessened. The +saving is to be reckoned by the labour and running capital which had +formerly been employed in nearly sixty distilleries. It must be borne +in mind that on the product of these twelve distilleries good profits +were made on the capital represented in more than eighty plants. All +the greater Trusts, such as the Standard Oil, the Cotton Oil, the +Cotton Bagging, and the Sugar Trust, have followed this plan of +closing entirely the weaker establishments and running only the +stronger, thereby effecting a saving in capital and labour."[143] + +Here we see a Trust exercising its economic power of regulating +production. That power, as we shall see below, is not merely confined +to closing the inferior mills in order that the same aggregate output +may be obtained by a full working of the more efficient plant. Where +over-production has occurred it is to the interest of the Trust to +lessen production. With this end in view it will suddenly close half +the mills, or works, or elevators in a district. The owners of these +closed plants get their interest from the Trust just as if they were +working. But the labour of these works suddenly, and without any +compensation for disturbance, is "saved"--that is to say, the +employees are deprived of the services of the only kind of plant and +material to which their skilled efforts are applicable. It is probable +that one result of the formation of each of these larger trusts has +been to throw out of employment several thousands of workers, and to +place them either in the ranks of the unemployed or in some other +branch of industry where their previously acquired skill is of little +service, and where their wages are correspondingly depressed. From the +account given above of the changes in organisation of production under +the Trust it might appear that the effect upon labour was not to +reduce the net employment, but to give full, regular employment to a +smaller number instead of partial and irregular employment to many, +and that thus labour, considered as a whole, might be the gainer. An +industrial movement which substitutes the regular employment of a few +for the irregular employment of many is so far a progressive movement. +But it must be borne in mind first that there is usually a net +reduction of employment, a substitution not of 50 workers at full-time +for 100 at half-time, but of 30 only. For not only will there be a +net saving of labour in relation to the same output, the result of +using exclusively the best equipped and best situated factories, but +since the Trust came into existence in order to restrict production +and so raise prices, the aggregate output of the business will be +either reduced or its rate of increase will be less than under open +competition. The chief economy of the Trust will in fact arise from +the net diminution of employment of labour. As the Trust grows +stronger and absorbs a larger and larger proportion of the total +supply for the market, the reduction of employment will as a rule +continue. Of course, if the scale of prices which the Trust finds most +profitable happens to be such as induce a large increase of +consumption, and therefore to permit an expansion of the machinery of +production, the aggregate of employment may be maintained or even +increased. But, as we shall see below, there is nothing in the nature +of a Trust to guarantee such a result. The normal result of placing +the ordering of an industry in the hands of a monopoly company is to +give them a power which it is their interest to exercise, to narrow +the scope of industry, to change its _locale_, to abandon certain +branches and take up others, to substitute machinery for hand labour, +without any regard to the welfare of the employees who have been +associated with the fixed capital formerly in use. When to this we add +the reflection that the ability to choose its workmen out of an +artificially made over-supply of labour, rid of the competition of +other employers, gives the Trust a well-nigh absolute power to fix +wages, hours of work, to pay in truck, and generally to dictate terms +of employment and conditions of life, we understand the feeling of +distrust and antagonism with which the working classes regard the +growth of these great monopolies on both sides of the Atlantic. + +The following is a short summary of the findings of a Committee of +Congress with reference to the relations existing between the railroad +and coal companies which control the anthracite coal-fields in +Pennsylvania and the coal-miners:--"Congress has found (Document No. +4) that the coal companies in the anthracite regions keep thousands of +surplus labourers in hand to underbid each other for employment and +for submission to all exactions; hold them purposely ignorant when the +mines are to be worked and when closed, so that they cannot seek +employment elsewhere; bind them as tenants by compulsion in the +companies' houses, so that the rent shall run against them whether +wages run or not, and under leases by which they can be turned out +with their wives and children on the mountain-side in mid-winter if +they strike; compel them to fill cars of larger capacity than agreed +upon; make them buy their powder and other working outfit of the +companies at an enormous advance on the cost; compel them to buy coal +of the company at the company's price, and in many cases to buy a +fixed quantity more than they need; compel them to employ the doctor +named by the company and to pay him whether sick or well; 'pluck' them +at the company's store, so that when pay-day comes round the company +owes the men nothing, there being authentic cases where 'sober, +hard-working miners toiled for years, or even a lifetime, without +having been able to draw a single dollar, or but few dollars in actual +cash,' in 'debt until the day they died;' refuse to fix the wages in +advance, but pay them upon some hocus-pocus sliding-scale, varying +with the selling price in New York, which the railway slides to suit +itself; and most extraordinary of all, refuse to let the miners know +the prices on which their living slides, a 'fraud,'" says the report +of Congress, "on its face" (pp. 71 and 72). The companies dock the +miners' output arbitrarily for slate and other impurities, and so can +take from their men 5 to 50 tons more in every 100 than they pay for +(p. 76). In order to keep the miners disciplined and the coal market +under supplied, the railroads restrict work, so that the miners often +have to live for a month on what they can earn in six or eight days, +and these restrictions are enforced upon their miners by holding cars +from them to fill, as upon competitors by withholding cars to go to +market. (Document No. 4, p. 77.) + +Labour organisations are forbidden, and the men intentionally provoked +to strike to affect the coal market. The labouring population of the +local regions, finally, is kept "down" by special policemen, enrolled +under special laws, and often in violation of law, by the railroads +and coal and iron companies, practically when and in what number they +choose, and practically without responsibility to any one but their +employers, armed as the Corporation see fit with army revolvers or +Winchester rifles, or both; made detectives by statute, and not +required to wear their shields, provoking the public to riot (pp. 9 +and 93-98), and then shooting them legally. "By the percentage of +wages," says the report of Congress, "by false measurements, by rents, +stores, and other methods the workman is virtually a chattel of the +operator."[144] + +Sec. 4. (_d_) Those who admit that a Trust is in its essence a monopoly, +and that it is able, by virtue of its position, to sell commodities at +high prices, sometimes affirm that it is not to the interest of a +Trust to maintain high prices, and that in fact Trusts have generally +lowered prices. We have here a question of fact and a question of +theory. Of these the former presents the greater difficulty. It seems +a simple matter to compare prices before and after the formation of +the Trust, and to observe the tendencies to rise or fall. This +comparison has been made in a good many cases, with the result that +some Trusts seem to lower prices, others to raise them. The growth of +the Standard Oil Company and the strengthening of its power was +attended, as we saw, by a considerable fall of price. So also we are +told respecting the Cotton Seed Oil Trust, formed in 1883, that +"during these four years the price of cotton seed oil fell more than +eight times as much as it did during the five years before the Trust +was formed."[145] The rates of the most absolute monopoly, the Western +Union Telegraph Company, are very little higher than those which +prevail in England, where the Government works the telegraph system at +a considerable loss each year. The Sugar Trust, on the other hand, +directly it was formed, raised prices considerably. The same is true +of several of the other most conspicuous combinations. + +Now, it is argued, if it be admitted that prices have in fact fallen +under the administration of some of the strongest Trusts, it cannot be +maintained that Trusts have a tendency to raise prices. In reply, it +is pointed out that in almost all highly-organised modern industries +improved methods of production are rapidly lowering the expenses of +production and prices, and that therefore the statement that Trusts +tend to maintain high prices is quite consistent with the fact of an +absolute fall, the question at issue being whether the fall of prices +under the Trust was as great as it would have been under free +competition. Moreover, a comparison of dates appears to indicate that +the Trust's prices, as we saw in the Standard Oil Company, fluctuate +with the degree of their monopoly, falling rapidly under the pressure +of actual or threatened competition, rising when the danger is past. +Finally, opponents of the Trust allude to certain Trusts which, in +spite of the greater economies of production they possess, have raised +prices. + +Excepting by the inverse and questionable method of arguing that the +high profits distributed by a Trust are themselves proof that prices +have not fallen as they would have fallen under free competition, it +is not possible to build a very convincing condemnation of the Trust +from statistics of price. And even when profits are high it is open to +the defenders of the Trust to maintain that they only represent the +saving of the cost of competition, and that if competition were +introduced the profits would be squandered in the struggle instead of +passing into the consumer's pocket. + +It is only from a deductive treatment of the subject that we are able +to clearly convict the Trust of possessing a power over prices +antagonistic to the interests of the consuming public. + +A Trust, or other company, or a single individual who has a complete +monopoly of a class of goods for which there is a demand, will strive +to fix that price which shall give him the largest net profit on his +capital. The question with him will be simply this, "How many articles +shall I offer for sale?" If he offers only a small number the +competition of more urgent wants among the consumers will enable him +to sell the small number at a high price. Assuming, for the moment, +that the production of these articles was subject to the law of +constant returns--_i.e._, that a few things were produced relatively +as cheaply as many, this small sale would give the highest rate of +profit on each sale, for the "marginal utility" of the supply would be +high and would enable a high price to be obtained for the whole +supply. But if he possesses large facilities of production it may pay +him better to sell a larger number of articles at a lower price with a +lower rate of profit on each sale, because the aggregate of a larger +number of small profits may yield a larger net profit on his whole +capital. How far it will pay him to go on increasing the supply and +selling a larger number of articles at a lower price will entirely +depend upon the effect each increment of supply exercises upon demand, +and so upon prices and profits. Everything will hinge upon the +"elasticity of demand" in the particular case. If the object of the +monopoly satisfies a keen, widely-felt want, or stimulates a craving +for increased consumption among those who take off the earlier supply, +a large increase in supply may be attended by a comparatively small +fall in prices. Sometimes a large increase of supply at a lowered +price will, by reaching a new social stratum, or by forcing the +substitution of this article for another in consumption, so enlarge +the sale that though the margin of profit on each sale is small, the +net profit on the whole capital is very large. In all such cases of +great elasticity it may pay a monopolist to sell a large number of +articles at a low price. + +Where the article belongs to that class in which the law of increasing +returns is strongly operative--_i.e._, where great economies in +expenses of production attend a larger scale of production, this +increase of supply and fall of prices may continue with no assignable +limit. On the other hand, where there is little elasticity of demand, +where an increase of supply can be taken off only at a considerable +fall of price, it will probably pay a monopolist to restrict +production and sell a small number of articles at a high price. It is +this motive which often induces the destruction of tons of fish and +fruit in the London markets for fear of spoiling the market. These +goods could be sold at a sufficiently low price, but it pays the +companies owning them to destroy them, and to sell a smaller number +which satisfies the wants of a limited class of people who "can afford +to pay." Now, when free competition exists among sellers, as among +buyers, this can never happen. It will always be to the interest of a +competing producer or dealer to lower his price below that which would +yield him the largest net profit on his capital were he a monopolist. +If he is a monopolist he will only lower his prices provided the +elasticity of demand in the commodity in question is so great that the +increased consumption will be so considerable as to yield him a larger +net profit. But if he is a competing dealer he does not look chiefly +to the consumption of the community, but to the proportion of that +consumption which he himself shall supply. The elasticity of demand, +so far as his individual business is concerned, is not limited to the +amount of the increased consumption of the community stimulated by a +lowering of prices, but includes that portion of the custom of his +rivals which he may be able to divert to himself. Hence it arises that +under free competition it will be the tendency of the several +competitors to drive down the prices to the point at which the most +advantageously placed competitors make the minimum profit on their +capital. + +Sec. 5. It is all important to an understanding of the subject to +recognise that a monopoly price and a competitive price are determined +by the operation of an entirely different set of economic forces. The +loose opinion that it must be to the interest of a Trust or other +monopoly to sell at the same price as would be fixed by competition is +quite groundless. + +Let us look more closely at the determinants of a monopoly price. +Suppose we are dealing with a Trust owning a large amount of fixed +capital, some of it more and some less favourably ordered for +production, and having an absolute monopoly in the market for steel +rails, cotton bagging, or other manufactured articles. First look at +expenses of production. A very small output, though produced by the +exclusive use of the very best machinery and labour, would not be +produced very cheaply, because the economies attending large-scale +production would be sacrificed. Each successive increment in output +would involve a decreased expense per unit of production so long as +the most favourably situated plant was employed. If the output grew so +large that worse material or works fitted with inferior plant, or less +favourably placed, were called into requisition, the economies of an +increased scale of production would be encroached upon by this +lowering of the margin of production. Taking the Trust's capital at a +fixed amount, there would necessarily come an increment of output +which it would not pay to produce even if sold at the price fetched +by the previous increment. The ton of steel or of cotton bagging which +would only yield a bare margin of profit, if sold at the price fetched +by the last ton, limits the maximum output of the business. Under the +pressure of free competition this marginal ton will be actually +produced. But though, considered by itself, it yields a margin of +profit, it will rarely if ever be produced as part of the actual +output of a Trust. The actual output of a Trust, we shall find, will +be determined at any point between the first unit of output and this +marginal increment. The expenses of production will not increase in +any close correspondence with the growth of the output, but will +represent the fluctuating resultant of the several economies of +production at the several points. + + [Illustration: CURVE OF PROFIT IN TRUST.] + +In the figures A and B the perpendicular line _ai_ represents a number +of increments of production. The expense of producing a supply of 100 +will be measured by the line _bb'_, that of producing 200 by _cc'_, +and so on. But never in actual industry will the lines of growing +expense be regular in their relation to the increase of production, as +would be the case in the figure A; they will always be irregular, as +in the figure B. The curve of expense _ai'_ in the figure B will be +determined by the resultant of the various forces which make for +increasing and diminishing returns for each new increment of the +requisites of production required to produce the new portion of +output. When the increased scale of production makes some new +application of machinery economically possible, or where recourse must +be had to some decidedly inferior land for the raw material, a large +sudden irregularity may show itself in the curve of expense. + +When we turn from expenses of production to the aggregate takings from +the sale of the several quantities of supply, we shall find a similar +irregularity of increase. Elasticity in demand, as tested by the +stimulus given to consumption by a fall of price, differs not merely +in different commodities, but at different points in a falling scale +of prices. A number of equal decrements in price, according as they +stimulate the satisfaction of weaker wants of earlier consumers, or +strike into new classes of consumers, or supply new kinds of wants, +will have widely different effects in increasing the aggregate +takings. + +We have then two widely fluctuating and highly irregular gradations of +money terms, representing expenses of production and the aggregate +price of the various quantities of supply, each determined by a wholly +different class of considerations. But the interest of a Trust, as we +see, lies in fixing supply at the highest net profits. Now the net +profits of producing and selling any specified quantity of supply are +ascertained by deducting the expenses of production from the aggregate +takings. The relation between the growth of expenses of production and +of aggregate takings will yield a different net amount of profit at +each increment of supply. The diagram opposite will illustrate the +nature of these relations. + +AL is the line indicating at the several points, B, C, D, etc., +proportional increments in supply. If the monopoly be a steel rail +trust, B marks the millionth ton, C the two millionth ton of output, +and so on. A'L' is a curve indicating, by its diminishing distance +from AL, the diminishing expense of producing each unit of the +increased output, so that the expense of producing the first ton, if +only one is produced, is AA', that of the millionth ton, if one +million are produced, BB', and so on. The expenses of producing one +million tons will thus be represented by the figure ABB'A', those of +two millions by the figure ACC'A'. Further, let the curve _al_ +represent, by its diminishing distance from AL, the diminishing price +at which the several additions to supply can be sold, so that the +first ton sells at A_a_, the millionth at B_b_, and so on, the +aggregate price of the first million tons being AB_ba_, that of the +first two millions being AC_ca_. + + [Illustration: DIAGRAM OF TRUST PRICES.] + +Assuming that the Trust is planning a new business and determining the +most profitable output, it will limit that output not necessarily at +the point where the selling price gives the widest margin of profit +upon the expenses of production, as might be the case at the point B +in the diagram, but at the point F, where the margin of profit bears +the largest proportion to the expenses of production, or in other +words, where the area of absolute takings shows the largest surplus +over the area of aggregate expenses. Thus it will here be to the +interest of the Trust to produce and sell six millions (limiting +production at F) with an aggregate expense AFF'A' and an aggregate +takings AF_fa_, yielding an aggregate net profit A'F'_fa_. They will +not produce five millions because the figure AE_ea_ bears a smaller +proportion to AEE'A' than does AF_fa'_ to AFF'A'. For a similar reason +they will not produce seven millions. + +Since the fluctuations in the curve of expenses and in that of selling +price or "demand" are determined by an entirely different set of +forces, it will be evident that there may be several points in AL +where the proportions between the area of expenses and that of profits +may be the same. So there may be several maxima at which Trust prices +may be indifferently fixed. The figure upon F'_f_ may have the same +quantitative relation to the figure upon FF', as that upon H'_h_ to +that upon HH'. In such a case it will be a matter of indifference to +the Trust whether it sells five million tons at a price 100s. per ton, +or seven millions at 90s. + +We have seen that the causes which determine expenses at the several +points in A'L' have no relation to the causes which determine the +selling price at the various points, except to furnish a minimum below +which the price cannot fall. Above this limit expenses of production +in no sense help to determine monopoly prices; the true determinants +are entirely in the region of demand, and are measured by the marginal +utility or satisfaction afforded to consumers by the several +quantities which constitute supply at any given time. + +Since expenses of production always enter into the determination of +competition-prices, which are fixed by the interaction of expenses and +money estimates of utility--_i.e._, by supply and demand, it is +evident that the curve of monopoly prices has no assignable relation +whatever to the curve of competition prices, and that the most +profitable output and prices of Trust-made goods are in no way +identified with the most profitable output and prices in a +competitive trade. In competition the curve of selling prices tends to +follow closely the curve of expenses, and consequently the areas of +profits and expenses tend to bear the same proportion to each other at +different points of increment in the trade. For if at any point great +increases in economy of production are achieved, while the large +elasticity of demand maintains a price nearly the same as before, the +wide margin of profit which might fix the actual price at that point +for a monopolist only serves to stimulate such increased output on the +part of trade competitors as will continue until the flexibility of +demand weakens, and prices are lowered to such a point as will yield +the normal margin or market rate of profit. + +There is, therefore, nothing in common between competition prices and +monopoly prices for different quantities of supply, nor anything to +secure that the actual quantity of supply and the price shall be the +same in the two cases. + +Sec. 6. It is, however, conceivable that in a certain commodity where a +genuine monopoly holds the market, the price should be as low as under +free competition. This may be illustrated by the following curves of +expense and price:-- + + [Illustration] + +where the economies of increased production continue to be very great, +while the flexibility of demand is also high. In other words, it may +pay the Trust better to make very large sales at a low price when the +expenses of production are low, than to sell a smaller quantity at a +higher price and with a higher expense of production. In this case the +consumer may get a part of the advantage of large-scale production +along with the saving of expense of competition. There is, however, no +guarantee to society that low prices will be fixed. In the vast +majority of cases it will probably pay the Trust better to limit +production and sell at higher prices. + +In the illustration above we have assumed that a monopoly was starting +_de novo_. Where a Trust is formed, as is commonly the case, by an +amalgamation of existing capitals largely embodied in plant and +machinery of production, it will probably not pay to limit production +to a very small output, even though the largest proportionate margin +of profit might seem to stand there. For the interest upon the closed +mills and other idle capital should be reckoned among the expenses of +production for the purposes of determining the profitable price. Thus +where large means of production are owned by a monopoly it will seldom +pay to sell a very small supply at a very high price. + +So far we have treated of absolute monopolies, eliminating all +consideration of competition. We have found that the supply and the +price of an article of absolute monopoly is determined by the relation +between expenses of production and flexibility of demand. Although a +new invention or a wide expansion of market may alter so considerably +the expenses of production of the several quantities of supply as to +materially affect monopoly-supply and prices, it is the latter +influence, that of flexibility of demand, that directly in each +specific case determines whether a Trust's prices shall be high or +low. When we find the Standard Oil Trust maintaining a low level of +prices, or the Western Union Telegraph Company charging low rates, we +shall find the explanation in the character of the public demand for +oil and telegraphic messages. + +Sec. 7. A number of considerations relating to "demand" limit the +economic power of monopolies to charge high prices. + +A monopoly price, as we have seen, exactly measures the marginal +utility of the supply, as indicated by the quantity of money which the +purchaser of the last increment of supply is just willing to pay for +it. When this marginal utility sinks fast with an increase of supply +the monopoly price will be high for it, and it will pay the monopolist +better to restrict the output and sell the limited supply at a high +price, because a large reduction of price will not stimulate a +proportionably large increase of consumption. So where the marginal +utility sinks slowly, it will pay to increase the supply and lower the +price, for each fall of price will stimulate a large increase of +consumption. + +Since the marginal utility of a number of increments of supply will +not be the same in the case of any two commodities, it is evident that +the determination of monopoly prices is a very delicate operation. + +It is not possible to present even an approximately accurate +classification of commodities in relation to the powers of a Trust or +Monopoly. But the following considerations will assist us to +understand why in some cases a Trust appears to raise prices, in +others to keep them as they were, and in others even to lower them:-- + +(_a_) The urgency of the need which a commodity satisfies enables the +monopolist to charge high prices. Where a community is dependent for +life upon some single commodity, as the Chinese on rice, the +monopolist is able to obtain a high price for the whole of a supply +which does not exceed what is necessary to keep alive the whole +population. Thus a monopolist of corn or rice in a famine can get an +exorbitant price for a considerable supply. But after the supply is +large enough to enable every one to satisfy the most urgent need for +sustenance, the urgency of the need satisfied by any further supply +falls rapidly, for there is no comparison between the demand of famine +and the demand induced by the pleasures of eating. + +A monopoly of a necessity of life is therefore more dangerous than any +other monopoly, because it not merely places the lives of the people +at the mercy of private traders, but because it will generally be the +interest of such monopolists to limit supply to the satisfaction of +the barest necessaries of life. + +Next to a necessary in this respect will come what is termed a +"conventional necessary," something which by custom has been firmly +implanted as an integral portion of the standard of comfort. This +differs, of course, in different classes of a community. Boots may now +be regarded as a "conventional necessary" of almost all grades of +English society, and a monopolist could probably raise the price of +boots considerably without greatly diminishing the consumption. Half a +century ago, however, when boots were not firmly established as part +of the standard of comfort of the great mass of the working classes, +the power of a monopolist to raise prices would have been far smaller. + +As we descend in the urgency of wants supplied we find that the +comforts and luxuries form a part of the standard of life of a smaller +and smaller number of persons, and satisfying intrinsically weaker +needs, are more liable to be affected by a rise of price. + +(_b_) Closely related to this consideration, and working in with it at +every point, is the question of the possibility of substituting +another commodity for the one monopolised. This everywhere tempers the +urgency of the need attaching to a commodity. There are few, if any, +even among the commodities on which we habitually rely for food, +shelter, clothing, which we could not and would not dispense with if +prices rose very high. The incessant competition which is going on +between different commodities which claim to satisfy some particular +class of need cannot be got rid of by the monopoly of one of them. +This is probably the chief explanation of the low prices of the +Standard Oil. As an illuminant, oil is competing with gas, candles, +electricity, and unless the monopoly were extended laterally so as to +include these and any other possible illuminants, the Trust's prices +cannot be determined merely by the pressure of the need for artificial +light. Though to a modern society artificial light is probably even +more important than sugar, a Sugar Trust may have a stronger monopoly +and be able to raise prices higher than an Oil Trust, because the +substitutes for sugar, such as molasses and beetroot, are less +effective competitors than gas, candles, and electricity with oil. + +The power of railway monopolies largely depends upon the degree in +which their services are indispensable, and no alternative mode of +transport is open. Sometimes, however, they miscalculate the extent of +their power. The high railway rates in England have recently led in +several quarters to a substitution of road and canal traffic in the +case of goods where rapidity of conveyance was not essential. So also +in other cases sea-transport has been substituted. + +The stronger monopoly of American railways consists partly in the fact +that distances are so great, and the sea-board or other water +conveyance so remote, that over a large part of the Continent the +monopoly is untempered by alternative possibilities of transport. + +The reverse consideration, the possibility of substituting the article +of monopoly for other articles of consumption, and so securing a wider +market, has quite as important an influence on prices. The possibility +of substituting oil for coal in cooking and certain other operations +has probably a good deal to do with the low price of oil. A Trust will +often keep prices low for a season in order to enable their article to +undersell and drive out a rival article, a competition closely akin to +the competition with a rival producer of the same article. When +natural gas was discovered in the neighbourhood of Pittsburg, the +price was lowered sufficiently to induce a large number of factories +and private houses to give up coal and to burn gas. After expensive +fittings had been put in, and the habit of using gas established, the +Gas Company, without any warning, proceeded to raise the rates to the +tune of 100 per cent. When we ascend to the higher luxuries, the +competition between different commodities to satisfy the same generic +taste, or even to divert taste or fashion from one class of +consumption to another class, is highly complicated, and tempers +considerably the control of a Trust over prices. + +The power of a company which holds the patent for a particular kind of +corkscrew is qualified very largely not only by competition of other +corkscrews, but by screw-stoppers and various other devices for +securing the contents of bottles. The ability to dispense with the +object of a monopoly, though it does not prevent the monopolist from +charging prices so much higher than competition prices as to extract +all the "consumer's rent," of the marginal consumer, forms a practical +limit to monopoly prices. + +(_c_) Lastly, there is the influence of existing or potential +competition of other producers upon monopoly prices. Where prices and +profits are very high a Trust is liable to more effective competition +on the part of any surviving independent firms, and likewise to the +establishment of new competitors. This ability of outside capital to +enter into competition will of course differ in different trades. +Where the monopoly is protected by a tariff the possibility of new +competition from outside is lessened. When the monopoly is connected +with some natural advantage or the exclusive possession of some +special convenience, as in mining or railways, direct competition of +outsiders on equal terms is prohibited. Where the combination of large +capital and capable administration is indispensable to the possibility +of success in a rival producer, the power of a monopoly is stronger +than where a small capital can produce upon fairly equal terms and +compete. If the monopoly is linked with close personal qualities and +with special opportunities of knowledge, as in banking, it is most +difficult for outside capital to effectively compete. + +Sec. 8. These considerations show that the power of a Trust or other +monopoly over prices is determined by a number of intricate forces +which react upon one another with varying degrees of pressure, +according as the quantity of supply is increased or diminished. But a +Trust is always able to charge prices in excess of competitive prices, +and it is generally its interest to do so. It will commonly be to the +interest of a Trust or other monopoly to maintain a lower scale of +prices in those commodities which are luxuries or satisfy some less +urgent and more capricious taste, and to maintain high prices where +the article of monopoly is a common comfort or a prime necessary of +life for which there is no easily available substitute. + +FOOTNOTES: + +[138] S.C.T. Dodd, _The Forum_, May 1892. + +[139] "Trusts in the United States," _Economic Journal_, p. 86. + +[140] Baker, _Monopolies and the People_, p. 85. + +[141] Cf. Chapter ix. + +[142] Mr. George Gunton, in writing upon "The Economic Aspect of +Trusts" (_Political Science Quarterly_, Sept. 1888), claims a rise in +wages as one of the advantages of Trusts, but Mr. Gunton throughout +his argument assumes that a Trust is a large competing capital and not +a monopoly. If a Trust were a competing capital its formation would be +an economic and social advantage, tending, as he says, "to increase +production, to lower prices, and to raise wages." But as a Trust is +not a competing capital it does none of these things. + +[143] J.W. Jenks, "Trusts in the United States," _Economic Journal_, +vol. ii. p. 80. + +[144] H.D. Lloyd, Essay on "Trusts," reprinted in _Boston Daily +Traveller_ (June 16, 1893). + +[145] G. Gunton, _Political Science Quarterly_, Sept. 1888. This +statement, however, appears in contradiction to the "Report of the +Committee on Investigations relative to Trusts in the State of New +York," p. 12. + + + + +CHAPTER VII. + +MACHINERY AND INDUSTRIAL DEPRESSION. + + Sec. 1. _The external phenomena of Trade Depression._ + Sec. 2. _Correctly described as Under-production and + Over-production._ + Sec. 3. _Testimony to a general excess of Productive Power over the + requirement for Consumption._ + Sec. 4. _The connection of modern Machine-production and Depression + shown by statistics of price._ + Sec. 5. _Changing forms in which Over-supply of Capital is embodied._ + Sec. 6. _Summary of economic relation of Machinery to Depression._ + Sec. 7. _Under-consumption as the root-evil._ + Sec. 8. _Economic analysis of "Saving."_ + Sec. 9. _Saving requires increased Consumption in the future._ + Sec. 10. _Quantitative relation of parts in the organism of Industry._ + Sec. 11. _Quantitative relation of Capital and Consumption._ + Sec. 12. _Economic limits of Saving for a Community._ + Sec. 13. _No limits to the possibility of individual Saving--Clash of + individual and social interests in Saving._ + Sec. 14. _Objection that excess in forms of Capital would drive + interest to zero not valid._ + Sec. 15. _Excess is in embodiments of Capital, not in real Capital._ + Sec. 16. _Uncontrolled Machinery a source of fluctuation._ + + +Sec. 1. The leading symptom of the disease called Depression of Trade is +a general fall of wholesale prices, accompanied by a less than +corresponding fall of retail prices. Whatever may be the ultimate +causes of a trade depression, the direct and immediate cause of every +fall of price must be a failure of demand to keep pace with supply at +the earlier price. So long as those who have goods to sell can sell +all these goods at the price they have been getting, they will not +lower the price. The efficient cause then of any fall of price is an +actual condition of over-supply at earlier prices. A very small +quantity of over-supply will bring down prices in a business, or in a +whole market, provided the competition between the businesses is keen. +Where such a fall of prices quickly stimulates demand so that the +over-supply is carried off and the rate of demand is equated to the +rate of supply at the lower price level, the condition is commonly +described as a "tendency to over-supply." But it is important to bear +in mind that in strictness it was not a "tendency" but an actually +existing quantity of over-supply which brought down the price. + +Where any fall of price thus brought about quickly stimulates a +corresponding increase of demand, stability of prices follows, and +there will be a full, healthy production at the lower prices. + +The mere fact then that prices are generally lower than they were five +or ten years ago is no evidence of depressed trade. Depressed trade +signifies not merely low prices but relaxed production: more has been +produced than can be sold at the lowest profitable prices, and markets +are congested with stock, but less is being produced than could be +produced with existing means of production. The fact which faces us in +a period of depression is an apparent excess of productive power. If +this excess were of labour alone it might be explained with some +plausibility as due to the displacement of labour by machinery. For it +has been admitted that the first and immediate effect of introducing +labour-saving or labour-aiding machines may be a diminution in the +demand for labour, even when the labour of making and repairing the +machines and of distributing the increased product which finds a sale +is taken into consideration. The simultaneous application of a number +of new forms of machinery attended by other general economies in the +organisation of industry might seem to explain why for a time there +should be a general redundancy of labour in all or most of the chief +industries of a country. Such an over-supply of labour would result +from the accumulated action of "first effects." When the cheapening +influences of machinery had time to exercise their full natural +influence in stimulating consumption the labour temporarily displaced +would be again fully utilised; for the moment, past labour saved and +stored in forms of fixed capital would do a great deal of the work +which would otherwise be done by present living labour. But such an +explanation is wholly negatived by the fact that in a depressed +condition of trade there is an excess of forms of capital as well as +of labour. There exists simultaneously a redundancy of both factors in +production. Labourers are out of work or are in irregular employment, +mills and factories are closed or working short time, the output of +coal and metals is reduced, and yet with this relaxed production the +markets are glutted with unsold goods unable to find purchasers at a +price which will yield a minimum profit to their owners. To this must +be added, in the case of the extractive industries, agriculture, +mining, etc., the exclusion from productive use of land which had +formerly found a profitable employment. + +Sec. 2. To this condition of industry the antithetical terms, +over-production and under-production, may be both correctly applied, +according as one regards production as a state or as a process. The +state of trade in a depression is one of over-production--the +industrial body is congested with goods which are not drawn out for +consumption fast enough. This plethora debilitates the industrial +body, its functional activities are weakened. The slackness of trade +thus induced is rightly described as under-production. + +It is commonly said by English writers upon economics that the state +of over-production, the redundancy of capital and labour, though found +in one or two or several trades at the same time, cannot be of general +application. If too much capital and labour is engaged in one industry +there is, they argue, too little in another, there cannot be at the +same time a general state of over-production. Now if by general +over-production is meant not that every single industry is supplied +with an excess of capital, but that there exists a net over-supply, +taking into account the plethora in some trades and the deficiency in +others, this assertion of English economists is not in accordance with +ascertained facts or with the authority of economists outside of +England. + +Sec. 3. If a depression of trade signified a misapplication of capital +and labour, so that too much was applied in some industries, too +little in others, there would be a rise of prices in as many cases as +there was a fall of prices, and the admitted symptom of depression, +the simultaneous fall of price in all or nearly all the staple +industries, would not occur. The most careful students of the +phenomena of depressed trade agree in describing the condition as one +of general or net excess of the forms of capital. They are also agreed +in regarding the enormous growth of modern machinery as the embodiment +of a general excess of producing power over that required to maintain +current consumption. + +Lord Playfair, writing on this subject in 1888, says, "It matters not +whether the countries were devastated by war or remained in the +enjoyment of peace; whether they were isolated by barriers of +Protection or conducted these industries under Free Trade; whether +they abounded in the raw materials of industry or had to import them +from other lands; under all these varying conditions the machine-using +countries of the world have felt the fifteen years of depression in +the same way, though with varying degrees of intensity." His +conclusion is "that the improvements of machinery used in production +have increased the supply of commodities beyond the immediate demands +of the world."[146] In support of this position he adduces the +authority of continental writers such as Dr. A. von Studnitz, Piermez, +Jules Duckerts, Laveleye, Trasenster, Annecke, and Engel. In the +United States, Carroll Wright, David Wells, and Atkinson are foremost +in upholding this to be the explanation of depression of trade. Mr. +Carroll D. Wright, Commissioner of Labour at Washington, is emphatic +in his assertion of the fact. "So far as the factories and the +operatives of the countries concerned are to be taken into +consideration (England, the United States, France, Belgium, Germany), +there does exist a positive and emphatic over-production, and this +over-production could not exist without the introduction of +power-machinery at a rate greater than the consuming power of the +nations involved, and of those dependent upon them, demand; in other +words, the over-production of power-machinery logically results in +the over-production of goods made with the aid of such machinery, and +this represents the condition of those countries depending largely +upon mechanical industries for their prosperity."[147] The Reports of +the English "Commission on the Depression of Trade and Industry" make +similar admissions of an excess of producing power as distinct from a +mere miscalculation in the application of capital and labour. The +Majority Report, defining "over-production" as "the production of +commodities, or even the existence of a capacity for production at a +time when the demand is not sufficiently brisk to maintain a +remunerative price to the producer," affirms "that such an +over-production has been one of the prominent features of the course +of trade during recent years, and that the depression under which we +are now suffering may be partially explained by this fact...."[148] +The Minority Report lays still stronger stress upon "systematic +over-production," alleging "that the demand for commodities does not +increase at the same rate as formerly, and that our capacity for +production is consequently in excess of our home and export demand, +and could, moreover, be considerably increased at short notice by the +fuller employment of labour and appliances now partially idle."[149] + +The most abundant information regarding the excess of the machinery of +production in the several branches of industry has been given by Mr. +D.A. Wells, who regards machinery as the direct cause of depressed +trade, operating in three ways--(1) increased capacity of production, +(2) improved methods of distribution, (3) the opening up of new +abundant supplies of raw material. Thus production grows faster than +consumption. "In this way only is it possible to account for the +circumstances that the supply of the great articles and +instrumentalities of the world's use and commerce have increased +during the last twelve or fifteen years in a far greater ratio than +the contemporaneous increase of the world's population or of its +immediate consuming capacity."[150] + +The earlier inventions in the textile industries, and the general +application of steam to manufacture and to the transport services, +have played the most dramatic part in the industrial revolution of the +last hundred years. But it should be borne in mind that it is far from +being true that the great forces of invention have spent themselves, +and that we have come to an era of small increments in the growth of +productive power. On the contrary, within this last generation a +number of discoveries have taken place in almost all the chief +industrial arts, in the opening up of new supplies of raw material, +and in the improvement of industrial organisation, which have +registered enormous advances of productive power. In the United +States, where the advance has been most marked, it is estimated that +in the fifteen or twenty years preceding 1886 the gain of machinery, +as measured by "displacement of the muscular labour," amounts to more +than one-third, taking the aggregate of manufactures into account. In +many manufactures the introduction of steam-driven machinery and the +factory system belongs to this generation. The substitution of +machinery for hand labour in boot-making signifies a gain of 80 per +cent. for some classes of goods, 50 per cent. for others. In the silk +manufacture there has been a gain of 50 per cent., in furniture some +30 per cent., while in many minor processes, such as wood-planing, tin +cans, wall-papers, soap, patent leather, etc., the improvement of +mechanical productiveness per labourer is measured as a rise of from +50 to 300 per cent. or more. The gain is, however, by no means +confined to an extension of "power" into processes formerly performed +by human muscle and skill. Still more significant is the increased +mechanical efficiency in the foundational industries. In the +manufacture of agricultural implements the increase is put down at +from 50 to 70 per cent., in the manufacture of machines and machinery +from 25 to 40 per cent., while "in the production of metals and +metallic goods long-established firms testify that machinery has +decreased manual labour 33-1/3 per cent." The increase in the +productive power of cotton mills is far greater than this. From 1870 +to 1884 the make of pig-iron rose 131 per cent. in Great Britain and +237 per cent. in the rest of the world.[151] "In building vessels an +approximate idea of the relative labour displacement is given as 4 or +5 to 1--that is, four or five times the amount of labour can be +performed to-day by the use of machinery in a given time that could be +done under old hand methods."[152] + +In England the rise in productiveness of machinery is roughly +estimated at 40 per cent. in the period 1850 to 1885, and there is no +reason to suppose this is an excessive estimate. In the shipping +industry, where more exact statistics are available, the advance is +even greater. The diminution of manual labour required to do a given +quantity of work in 1884 as compared with 1870 is put down at no less +than 70 per cent., owing in large measure to the introduction and +increased application of steam-hoisting machines and grain elevators, +and the employment of steam power in steering, raising the sails and +anchors, pumping, and discharging cargoes.[153] In the construction of +ships enormous economies have taken place. A ship which in 1883 cost +L24,000 can now be built for L14,000. In the working of vessels the +economy of fuel, due to the introduction of compound-engines, has been +very large. A ton of wheat can now be hauled by sea at less than a +farthing per mile. Similarly with land haulage the economy of fuel has +made immense reductions in cost. "In an experiment lately made on the +London and North Western Railway, a compound locomotive dragged a ton +of goods for one mile by the combustion of two ounces of coal."[154] +The quickening of voyages by steam motor, and by the abandonment of +the old Cape route in favour of the Suez Canal, enormously facilitated +commerce. The last arrangement is calculated to have practically +destroyed a tonnage of two millions. The still greater facilitation of +intelligence by electricity did away with the vast system of +warehousing required by the conditions of former commerce. These +economies of the foundational transport industries have deeply +affected the whole commerce and manufacture of the country, and have +played no inconsiderable part in bringing about the general fall of +prices by lowering the expenses of production and stimulating an +increased output. + +Excessive production of transport-machinery, especially of railways, +has played an important part as an immediate cause of modern trade +depression. The depression beginning in 1873 and culminating in 1878 +is described as having its origin "in the excessive lock-up of capital +in the construction of railways, especially in America and Germany, +many of which, when built, had neither population to use them nor +traffic to carry; in the wild speculation that followed the German +assertion of supremacy on the Continent; in the exaggerated armaments, +which withdrew an inordinate amount of labour from productive +industry, and over-weighed the taxpayers of the great European +nations; and in over-production in the principal trades in all +European countries."[155] + +Mr. Bowley points out that "after each of the great railway booms of +the century, for instance in England about 1847, in America before +1857 and 1873, in India in 1878, and on the Continent in 1873, the +collapse has been very violent; for the materials are bought at +exaggerated prices; the weekly wage during construction is enormous; +no return is obtained till the whole scheme, whose carrying out +probably lasts many years, is complete." + +A great deal of this railway enterprise meant over-production of forms +of transport-capital and a corresponding withholding of current +consumption. In other words, a large part of the "savings" of England, +Germany, America, etc., invested in these new railways, were +sterilised; they were not economically needed to assist in the work of +transport, and many of them remain almost useless, as the quoted value +of the shares testifies. It is not true, as is sometimes suggested, +that after a great effort in setting on foot such gigantic +enterprises, a collapse is economically necessary. If the large +incomes and high wages earned in the period prior to 1873, when +capital and labour found full employment in these great enterprises, +had been fully applied in increased demand for commodities and an +elevated standard of consumption, much of the new machinery of +transport, which long stood useless, would have been required to +assist in forwarding goods to maintain the raised standard of +consumption. This argument, of course, assumes that ignorance or fraud +have not caused a misdirection of investment. There is no evidence to +indicate that the vast sums invested in 1869-72 in railway enterprise +could have found any safer or more remunerative investment. It is the +overflow of "savings," after all capital economically needed to carry +on the work of production to supply steady current wants has been +secured, that flows into the hands of speculative company-promoters. +Such savings are not diverted from safe and useful forms of +investment, they are "savings" which ought never to have been +attempted, for they have no economic justification in the needs of +commerce, as is proved by results. + +Sec. 4. The direct causal connection between the increased productive +power of modern machinery and trade depression clearly emerges from a +comparison of the fluctuations in the several departments of industry +in different industrial countries. As modern machinery and modern +methods of commerce are more highly developed and are applied more +generally, trade fluctuations are deeper and more lasting. A +comparison between more backward countries largely engaged in raising +food and raw materials of manufacture for the great manufacturing +countries is sometimes adduced in support of the contention that +highly-evolved industry is steadier. But though Mr. Giffen is +undoubtedly correct in holding that depressions are often worse in +countries producing raw materials than in manufacturing +countries,[156] this is only true of raw-material producing countries +which produce for export, and which are therefore dependent for their +trade upon fluctuations in demand for commodities in distant markets +whose movements they are least able to calculate or control. +Irregularity of climate, disease, and other natural causes must be a +constant source of fluctuation in the productivity of agriculture. But +those non-manufacturing countries which are little dependent upon +commerce with manufacturing nations, and which are chiefly +self-supporting, will of necessity retain a larger variety of +agriculture and of other primitive industries, and will therefore be +less at the mercy of some climatic or other injury than a country more +specialised in some single crop or other industry. The specialisation +impressed upon a backward country by commerce with advanced industrial +countries, confining it to growing cotton or wheat or sheep or wine, +exaggerates the irregularity imposed by nature upon its productivity, +by making it subservient to the fluctuating demands of distant and +wholly incalculable markets. The fluctuations brought about by +irregular consumption and uncontrolled production in highly-evolved +industrial countries are thus reflected with terrible force upon the +more primitively-ordered parts of the industrial world. Thus does the +character of modern machine-industry impress itself on the countries +which feed it with raw materials. + +If we turn to investigate the several departments of industry in the +more highly-evolved communities, where statistics yield more accurate +information, we have most distinct evidence that so far as the +world-market is concerned, the fluctuations are far more extreme in +the industries to which machine-production and high organisation have +been applied. An investigation of changes of wholesale prices +indicates that the most rapid and extreme fluctuations are found in +the prices of textile and mineral materials which form the foundation +of our leading manufactures. A comparison of the price changes of food +as a whole, and of corn prices with textiles and minerals, shows that +especially during the last thirty years the fluctuations of the latter +have been much more rapid and pronounced. (See following diagrams.) + + [Illustration: COURSE OF AVERAGE PRICES OF GENERAL + COMMODITIES.] + + [Illustration: CORN PRICES.] + +Sec. 5. It ought to be clearly understood that the real congestion with +which we are concerned, the over-supply, does not chiefly consist of +goods in their raw or finished state passing through the machine on +their way to the consumer. The economic diagnosis is sometimes +confused upon this point, speaking of the increased productive power +of machinery as if it continued to pour forth an unchecked flood of +goods in excess of possible consumption. This shows a deep +misunderstanding of the malady. Only in its early stages does it take +this form. When in any trade the producing power of machinery is in +excess of the demand at a remunerative price, the series of processes +through which the raw material passes on its way to the consumer +soon become congested with an over-supply. This, however, need not be +very large, nor does it long continue to grow. So long as the +production of these excessive wares continues, though we have a +growing glut of them, the worst features of industrial disease do not +appear; profits are low, perhaps business is carried on at a loss, but +factories, workshops, mines, railways, etc., are in active operation; +wages may be reduced, but there is plenty of employment. It is when +this congestion of goods has clogged the wheels of the industrial +machine, retarded the rate of production, when the weaker +manufacturers can no longer get credit at the bank, can no longer meet +their engagements, and collapse, when the stronger firms are forced to +close some of their mills, to shut down the less productive mines, to +work short hours, to economise in every form of labour, that +depression of trade assumes its more enduring and injurious shape. +The condition now is not that of an increasing glut of goods; the +existing glut continues to block the avenues of commerce and to check +further production, but it does not represent the real burden of +over-supply. The true excess now shows itself in the shape of idle +machinery, closed factories, unworked mines, unused ships and railway +trucks. It is the auxiliary capital that represents the bulk of +over-supply, and whose idleness signifies the enforced unemployment of +large masses of labour. It is machinery, made and designed to increase +the flow of productive goods, that has multiplied too fast for the +growth of consumption. This machinery does not continue in full use, a +large proportion of it is not required to assist in producing the +quantity of consumptive goods which can find a market, and must of +necessity stand idle; it represents a quantity of useless forms of +capital, over-supply, and its unused productive power represents an +incomparably larger amount of potential over-supply of goods. Economic +forces are at work preventing the continuation of the use of this +excessive machinery; if it were used in defiance of these forces, if +its owners could afford to keep it working, there would be no market +for the goods it would turn out, and these too would swell the mass of +over-supply. + + [Illustration: GENERAL FOOD PRICES.] + + [Illustration: MINERAL PRICES.] + +Sec. 6. The general relation of modern Machinery to Commercial Depression +is found to be as follows:--Improved machinery of manufacture and +transport enables larger and larger quantities of raw material to pass +more quickly and more cheaply through the several processes of +production. Consumers do not, in fact, increase their consumption as +quickly and to an equal extent. Hence the onward flow of productive +goods is checked in one or more of the manufacturing stages, or in the +hands of the merchant, or even in the retail shop. This congestion of +the channels of production automatically checks production, depriving +of all use a large quantity of the machinery, and a large quantity of +labour. The general fall of money income which has necessarily +followed from a fall of prices, uncompensated by a corresponding +expansion of sales, induces a shrinkage of consumption. Under +depressed trade, while the markets continue to be glutted with unsold +goods, only so much current production is maintained as will +correspond to the shrunk consumption of the depressed community. +Before the turn in the commercial tide, current production even falls +below the level of current consumption, thus allowing for the gradual +passage into consumption of the glut of goods which had congested the +machine. After the congestion which had kept prices low is removed, +prices begin to rise, demand is more active at each point of industry, +and we see the usual symptoms of reviving trade. + + [Illustration: TEXTILE PRICES.] + +This is an accurate account of the larger phenomena visible in the +commercial world in a period of disturbance. When the disease is at +its worst, the activity of producer and consumer at its lowest, we +have the functional condition of under-production due to the pressure +of a quantity of over-supply, and we have a corresponding state of +under-consumption. + +Sec. 7. Machinery thus figures as the efficient cause of industrial +disease, but the real responsibility does not rest on the shoulders of +the inventor of new machinery, or of the manufacturer, but of the +consumer. + +The root-evil of depressed trade is under-consumption.[157] If a +quantity of capital and labour is standing idle at the same time, in +all or in the generality of trades, the only possible reason why they +remain unemployed is that there is no present demand for the goods +which by co-operation they are able to produce. + +English economists, most of whom, ever since the time of J.B. Say, +have denied the possibility of the condition of general over-supply +which is seen to exist in depressed trade, are contented to assume +that there can be no general over-supply because every one who +produces creates a corresponding power to consume. There cannot, it is +maintained, be too much machinery or too much of any form of capital +provided there exists labour to act with it; if this machinery, +described as excessive, is set working, some one will have the power +to consume whatever is produced, and since we know that human wants +are insatiable, too much cannot be produced. This crude and +superficial treatment, which found wide currency from the pages of +Adam Smith and McCulloch, has been swallowed by later English +economists, unfortunately without inquiring whether it was consistent +with industrial facts. Since all commerce is ultimately resolvable +into exchange of commodities for commodities, it is obvious that every +increase of production signifies a corresponding increase of power to +consume. Since there exists in every society a host of unsatisfied +wants, it is equally certain that there exists a desire to consume +everything that can be produced. But the fallacy involved in the +supposition that over-supply is impossible consists in assuming that +the power to consume and the desire to consume necessarily co-exist in +the same persons. + +In the case of a glut of cotton goods due to an increased application +of machinery, the spinners and manufacturers have the power to consume +what is produced, while a mass of starving, ill-clad beings in Russia, +East London--even in Manchester--may have the desire to consume these +goods. But since these latter are not owners of anything which the +spinners and manufacturers wish to consume or to possess, the exchange +of commodities for commodities cannot take place. But, it will be +said, if the Lancashire producers desire to consume anything at all, +those who produce such articles of desire will have the power, and +possibly the desire, to consume more cotton goods, or at any rate the +desire to consume something produced by other people who will have +both power and desire to consume cotton goods. Thus, it will be said, +the roundabout exchange of commodities for commodities must be brought +about. And this answer is valid, on the assumption that the Lancashire +producers desire to consume an equivalent of the goods they produce. +But let us suppose they do not desire to do so. The reply that since +human wants are insatiable every one with power to consume must have +desire to consume, is inadequate. In order to be operative in the +steady maintenance of industry the desire to consume must be a desire +to consume _now_, to consume continuously, and to consume to an extent +corresponding with the power to consume. + +Let us take the Lancashire trade as a test case. Evidently, there +could be no superfluous capital and labour in Lancashire trade if the +cotton-spinners, manufacturers and their operatives, increased their +own consumption of cotton goods to correspond with every increase of +output. + +But if they do not do this, they can only make good and maintain +their capital and labour in employment by persuading others to +increase their consumption of cotton goods. How can they do this? If, +instead of desiring to consume more cotton goods, the Lancashire +employers and operatives desire to consume, and do actually consume, +more hardware, houses, wine, etc., then the increased consumption of +these things, raising their prices and so stimulating their +production, and distributing a larger purchasing-power among the +capitalists and operatives engaged in producing the said hardware, +houses, wine, etc., will enable the latter to consume more cotton +goods, and if these desire to do so, their effective demand will +maintain the new capital and labour employed in Lancashire trade. + +But if, instead of taking this course, the Lancashire capitalists and +operatives want not to consume either cotton or anything else, but +simply to _save_ and put up more mills and prepare more yarn and +cloth, they will soon find they are attempting the impossible. Their +new capital, and the fresh labour conjoined with it, can only be +employed on condition that they or others shall increase their +consumption of cotton goods. They themselves _ex hypothesi_ will not +do so, and if the capitalists and operatives engaged in setting up the +new cotton-mills, etc., will consent to do so, this only postpones the +difficulty, unless we suppose a continuous erection of new mills, and +a continuous application on the part of those who construct these +mills of the whole of their profits and wages in demanding more cotton +goods--a _reductio ad absurdum_. In short, cotton capitalists and +operatives can only effect this saving and provide this increased +employment of capital and labour on condition that either those +engaged in erecting and working the new mills shall spend all their +income in demanding cotton goods, or that other persons shall diminish +the proportion of their incomes which hitherto they have saved, and +shall apply this income in increased demand for cotton goods. + +Now if the same motives which induce Lancashire capitalists and +workers to refuse to increase their present consumption _pari passu_ +with the rate of production are generally operative, it will appear +that capital and labour lie idle because those who are able to consume +what they could produce are not willing to consume, but desire to +postpone consumption--_i.e._, to save. + +Sec. 8. The process of "Saving" has received but scant attention from +economic writers. Jevons appears to have held that superfluous food +and other necessary consumptive goods, in whosoever hands they were, +constituted the only true fund of capital in a community at any given +time. Sidgwick also holds that all "Savings" are in the first instance +"food." That this is not the case will appear from the following +example:--A self-sufficing man produces daily for his daily +consumption a quantity of food, etc., denoted by the figure 10. 5 of +this is necessary and 5 superfluous consumption. This man, working +with primitive tools, discovers an implement which will greatly +facilitate his production, but will cost 4 days' labour to make. Three +alternatives are open to him. He may spend half his working day in +producing the strictly necessary part of his previous consumption, 5, +and devote the other half to making the new implement, which will be +finished in 8 days. Or he may increase the duration of his working day +by one quarter, giving the extra time to the making of his new +implement, which will be finished in 16 days. Or lastly, he may +continue to produce consumptive goods as before, but only consume half +of them, preserving the other half for 8 days, until he has a fund +which will suffice to keep him for 4 continuous days, which he will +devote to making the new implement. If he adopts the first +alternative, he simply changes the character of his production, +producing in part of his working day future goods instead of present +consumptive goods. In the second he creates future goods by extra +labour. In the third case only does the "saving" or new "capital" take +as its first shape food. In the same way a community seeking to +introduce a more "roundabout" method of production requiring new +plant, or seeking to place in the field of industry a new series of +productive processes to satisfy some new want, may achieve their +object by "saving" food, etc., or by changing for awhile the character +of their production, or by extra labour. Thus new capital, whether +from the individual or the community point of view, may take either +"food" or any other material form as its first shape. + +Since "savings" need not take the shape of food or any article capable +of immediate consumption, Adam Smith and J.S. Mill are clearly wrong +when they urge in terms almost identical[158] that what is saved is +necessarily consumed, and consumed as quickly as that which is spent. +The antithesis of saving and spending shows these writers, and the +bulk of English economists who follow them, are misled, because they +regard "saving" as doing something with money, and do not sufficiently +go behind the financial aspect of putting money into a bank. + +A closer analysis of saving yields the result that, except in one of +the simple cases taken in our example above, where "saving" implied +withholding consumable goods from present consumption, every act of +saving in a complex industrial society signifies making, or causing to +be made, forms of capital which are essentially incapable of present +consumption--_i.e._, future or productive goods. + +Each member of an industrial community receives his money income as +the market equivalent of value created in goods or services by the +requisites of production, land, capital, labour which he owns. For +every L1 paid as income an equivalent quantity of material or +non-material wealth has been already created. + +Let A be the owner of a requisite of production, receiving L500 a year +as income in weekly payments of L10. Before receiving each L10 he has +caused to come into existence an amount of wealth which, if material +goods, may or may not be still in existence; if services, has already +been consumed. It is evident that A may each week consume L10 worth of +goods and services without affecting the general condition of public +wealth. A, however, determines to consume only L5 worth of goods and +services each week, and puts the other L5 into the bank. Now what +becomes of the L5 worth of goods and services which A might have +consumed, but refused to consume? Do they necessarily continue to +exist so long as A is credited with the money which represents their +"saving"; if so, in what form? In other words, what actually takes +place in the world of commerce when money income is said to be saved, +what other industrial facts stand behind the financial fact of A +depositing part of his income in the bank as "savings"? + +To this question several answers are possible. + +(1) B, a spendthrift owner of land or capital, wishing to live beyond +his income, may borrow from the bank each L5 which A puts in, +mortgaging his property. In this case B spends what A might have +spent; B's property (former savings perhaps?) falls into A's hands. A +has individually effected a "saving" represented by tangible property, +but as regards the community there is no saving at all, real or +apparent. + +(2) C, a fraudulent promoter of companies, may by misrepresentation +get hold of A's saved money, and may spend it for his own enjoyment, +consuming the goods and services which A might have consumed, and +giving to A "paper" stock which figures as A's "savings." Here A has +individually effected no saving. + +From the point of view of the community there is no real saving (C has +consumed instead of A), but so long as the "stock" has a market value +there is an apparent saving. To this category belongs the "savings" +effected if A lends his money to a government to be spent on war. From +the standpoint of the community there is no saving (unless the war be +supposed to yield an asset of wealth or security), but A's paper stock +represents his individual saving. A's "saving" is exactly balanced by +the spending of the community in its corporate capacity, A receiving a +mortgage upon the property of the community.[159] + +(3) D and E, manufacturers or traders, engaged in producing luxuries +which A used to buy with his L5 before he took to saving, finding +their weekly "takings" diminished and being reduced to financial +straits, borrow A's "savings" in order to continue their business +operations, mortgaging their plant and stock to A. So long as, with +the assistance of A's money, they are enabled to continue producing, +what they produce is over-supply, not needed to supply current +consumption, assuming the relation between spending and saving in the +other members of the community remains unaltered. This over-supply is +the material representative of A's "savings." So far as real capital +is concerned there is no increase by A's act of saving, rather a +decrease, for along with the net reduction in the consumption of +luxuries on the part of the community due to A's action, there must be +a fall in the "value" of the capital engaged in the various processes +of producing luxuries, uncompensated by any other growth of values. +But by A's "saving" new forms of capital exist which bear the +appearance of capital, though in reality they are "over-supply." These +empty forms represent A's saving. Of course A, with full knowledge of +the facts, would only lend to D and E up to the real value of their +mortgaged capital. When this point was reached D and E could get no +further advances, and their stock and plant would pass into A's hands. +From the point of view of the community A's action has resulted in the +creation of a number of material forms of capital which, so long as +the existing relations between the community's production and +consumption continue, stand as over-supply. + +(4) A may hand over his weekly L5 to F on security. F by purchase +obtains the goods which A refused to consume, and may use them (or +their equivalent in other material forms) as capital for further +production. If F can with this capital help to produce articles for +which there is an increasing consumption, or articles which evoke and +satisfy some new want, then A's action will have resulted in "saving" +from the point of view of the community--_i.e._, there will be an +increase of real capital; forms of capital which would otherwise have +figured as over-supply have the breath of economic life put into them +by an increase in general consumption. No real difficulty arises from +a doubt whether the goods and services which A renounced were capable +of becoming effective capital. The things he renounced were luxurious +consumptive goods and services. But he could change them into +effective capital in the following way:--Designing henceforth to +consume only half his income, he would deliberately employ half the +requisites of production which furnished his income in putting extra +plant, machinery, etc., into some trade. Whether he does this himself, +or incites F to do it, makes no difference; it will be done. In this +way, by establishing new forms of useful capital, A can make good his +saving, assuming an increase of general consumption. These are the +four possible effects of A's saving from the point of view of the +community-- + + (1) Nil. + (2) Bogus or "paper" saving. + (3) Over-supply of forms of capital. + (4) Increase of real capital. + +It appears then that every act which in a modern industrial society is +"saving," from the standpoint of the community, and not a mere +transfer of "spending" from one person to another, consists in the +production of a form of goods in its nature or position incapable of +present consumption. + +This analysis of "saving" convicts J.S. Mill of a double error in +saying, "Everything which is produced is consumed; both what is saved +and what is said to be spent; and the former quite as rapidly as the +latter." In the first place, by showing that "saving," from the point +of view of the community, generally means producing something +incapable of present consumption, it proves that even if what is +"saved" is consumed, it is not consumed as quickly as what is spent. +Mill seemed to think that what was "saved" was necessarily food, +clothing, and so-called finished goods, because "saving" to him was +not a process, but a single negative act of refusing to buy. Because a +man who has "saved" has command of an extra stock of food, etc., which +he may hand over to labourers as real wages, he seems to think that a +community which saves will have its savings in this form. We see this +is not the case. Even where in a primitive society extra food is the +first form savings may take, it belongs to the act of saving that this +food shall not be consumed so soon as it was available for +consumption. In short, Mill's notion was that savings must necessarily +mean a storing up of more food, clothing, etc., which, after all, is +not stored, but is handed over to others to consume. He fails to +perceive that a person who saves from the social as opposed to the +individual point of view necessarily produces something which neither +he nor any one else consumes at once--_i.e._, steam engines, pieces of +leather, shop goods. A "saving" which is merely a transfer of spending +from A to B is obviously no saving from the point of view of the +community to which both A and B belong. If A, who is said to save, +pays wages to B, who makes a machine which would otherwise not have +been made, when this machine is made something is saved, not before. + +Though Mill does not seem, in Bk. I. chap, v., to regard increased +plant, machinery, etc., as "savings," but rather as something for +which "savings" may be exchanged,[160] the more usual economic view of +"savings" embodies part of them in plant and raw material, etc., and +considers the working up of these into finished goods as a +"consumption." But though industrial usage speaks of cotton yarn, +etc., being consumed when it is worked up, the same language is not +held regarding machinery, nor would any business man admit that his +"capital" was consumed by the wear and tear of machinery, and was +periodically replaced by "saving." The wearing away of particular +material embodiments of capital is automatically repaired by a process +which is not saving in the industrial or the economic sense. No +manufacturer regards the expenditure on maintenance of existing plant +as "saving"; what he puts into additional plant alone does he reckon +"savings." It would be well for economists to clearly recognise that +this business aspect of capital and saving is also the consistent +scientific aspect. "Saving" will then be seen to apply exclusively to +such increased production of plant and productive goods as will +afterwards yield an increased crop of consumptive goods, provided the +community is willing to consume them. "Saving" is postponed +consumption--_i.e._, the production of "future goods," plant, +machinery, raw materials in their several stages, instead of +commodities suitable for immediate consumption. + +Sec. 9. There are, in fact, two distinct motives which induce individuals +to continue to produce, one is the desire to consume, the other the +desire to save--_i.e._, to postpone consumption. It is true that the +latter may be said also to involve a desire to consume the results of +the savings at some indefinitely future time, but the motive of their +production at present is a desire to reduce the quantity of the +present consumption of the community, and to increase the quantity of +postponed consumption. + +It is this consideration which gives the answer to the single sentence +of J.S. Mill, which has been sometimes held to offer a complete +refutation of the notion of an existing state of over-supply. "The +error is in not perceiving that, though all who have an equivalent to +give _might_ be fully provided with every conceivable article which +they desire, the fact that they go on adding to the production proves +that this is not actually the case."[161] Here the present desire to +consume either what is produced or its equivalent is assumed to be the +only motive which can lead an individual to produce. The fact that +people go on producing is regarded as proof that they are not "fully +provided with every conceivable article they desire." If this were +true it would be a final and conclusive refutation of the idea of +over-supply. But if saving means postponed consumption, and the desire +to save, as well as the desire to consume, is a _vera causa_ in +production, then the fact of continued production affords no proof +that such production must be required to supply articles which are +desired for consumption. Ultimately a belief that some one will +consent to consume what is produced underlies the continued production +of "a saving person," but, as we shall see presently, the belief of a +competing producer that he can get a market for his goods, even when +justified by events, is no guarantee against excessive production in +the whole trade. + +If, then, those who have the power to consume in the present desire to +postpone their consumption they will refuse to demand consumptive +goods, and will instead bring into existence an excess of productive +goods. + +Sec. 10. The diagram on next page may serve more clearly to indicate the +quantitative maladjustment of Consuming and Saving which constitutes +under-consumption, and exhibits itself in a plethora of machinery and +productive goods. + + [Illustration: MECHANISM OF PRODUCTION.] + +A, B, C, D, E represent the several stages through which the raw +material obtained from Nature passes on its way to the position of a +consumer's utility. The five stages represent the five leading +processes in production--the extractive process, transport, +manufacture, wholesale and retail trade. The raw materials extracted +at A, the wheat, skins, iron, timber, cotton, etc., obtained from +various quarters of the globe, are gathered together in large +quantities into places where they undergo various transformations of +shape and character; they are then distributed by wholesale and retail +merchants, who hand them over to persons who consume them as bread, +boots, kettles, chairs, shirts. The extractive, transport, +manufacturing, and merchant stages may of course be subdivided into +many complex processes, as applied to the history of the more +elaborately-produced commodities. But at each point in the process of +production there must stand a quantity of plant and machinery designed +to assist in moving the productive goods a single step further on the +road towards consumption. This fixed capital is denoted by the black +circles placed at the points A, B, C, D, E. But each machine, or +factory building, or warehouse is itself the ultimate product of a +series of steps which constitute a process similar to that denoted by +the main channel of production. Consisting in raw material extracted +from nature, the machinery and plant are built up by a number of +productive stages, which correspond to A, B, C, D, E, into the +completed shapes of fixed capital, adjusted to the positions where +they can give the proper impulse to the main tide of production. Each +productive stage in the production of plant or machinery requires the +presence of other plant and machinery to assist its progress. Each of +these secondary forms of fixed capital situate at _a_, _b_, _c_, _d_, +_e_, has of course a similar history of its own. To represent the full +complexity of the mechanism of industry thus suggested would be +confusing and would serve no purpose here. It is sufficient that we +recognise that at each point A, B, C, D, E, and at each of the points +_a_, _b_, _c_, _d_, _e_, upon the perpendicular lines, stands a +quantity of forms of fixed capital which are gradually worn out in the +work of forwarding quantities of A to B, and quantities of B to C, and +so on. Now if we turn to the point F, where goods pass out of the +productive machine into the hands of consumers, who destroy them by +extracting their "utility or convenience," we shall find in this flow +of goods out of the industrial machine the motive-force and regulator +of the activity of the whole machine. + +Let us take an illustration from a single trade, the shoe trade. The +number of boots and shoes purchased by consumers at retail shops and +drawn out from the mechanism at the point F, determines the rate at +which retailers demand and withdraw shoes from wholesale merchants, +assuming for the sake of simplicity that all shopkeepers deal with +manufacturers through the medium of merchant middlemen. If the number +of sales effected in a given time by retailers increases, they +increase their demand from the merchants, if it falls off they lower +their demand. The quantity of goods which retailers will in normal +conditions keep in stock will be regulated by the demand of +consumers.[162] Thus the flow of shoes from D to E, and the quantity +of shoes which at any given time are at the point E, are determined by +the demand of consumers--that is to say, by the quantity or pace of +consumption. If, owing to miscalculation, a larger number of shoes +stands in the retail shops than is required to satisfy current +consumption, or if the flow from D to E is faster than the outflow +from E, this excess ranks as an over-supply of these forms of capital. +Now just as the demand of consumers determines the number of shoes +which stand at E and flow from D to E, so the demand of the retailer +determines the number of shoes which at any time constitutes the stock +of the merchants at D, and the size and number of the orders they give +to the manufacturers at C. Similarly with the earlier processes of +production; the flow of leather from the "tanners" and the quantity of +leather kept in stock are likewise determined by the demand of the +manufacturers; and the transport of hides and bark, and the demand for +these materials of tanning, will be regulated by the demands of the +tanners. So the quantity of stock at each of the points A, B, C, D, E, +and the rate of their progress from one point to the next, are +dependent in each case upon the quantity demanded at the next stage. +Hence it follows that the quantity of productive goods at any time in +stock at each of the points in the production of shoes, and the +quantity of productive work done and employment given at each point, +is determined by the amount of consumption of shoes. If we knew the +number of purchases of shoes made in any community by consumers in a +given time, and also knew the condition of the industrial arts at the +different points of production, we should be able to ascertain exactly +how much stock and how much auxiliary capital was required at each +point in the production of shoes. At any given time the flow of +consumption indicated by F determines the quantity of stock and plant +of every kind economically required at each point A, B, C, D, E. What +applies to the shoe trade applies to trade in general. Given the rate +or quantity of consumption in the community, it is possible to +determine exactly the quantity of stock and plant required under +existing industrial conditions to maintain this outflow of consumptive +goods, and any stock or plant in excess of this amount figures as +waste forms of capital or over-supply. F then is the quantitative +regulator of A, B, C, D, E.[163] Nor is the accuracy of this statement +impaired by the speculative character of modern trade. Speculative +merchants or manufacturers may set up business at D or C and provide +themselves with stock and machinery to start with, but unless they +meet or create a growing demand of consumers their capital is waste, +or else if they succeed in getting trade it is at the expense of other +members of the trade, and their capital is made productive by +negativing the capital of other traders. + +Sec. 11. The truth here insisted on, that an exact quantitative relation +exists between the amount of stock and plant, severally and +collectively, required at the different points A, B, C, D, E, and that +the amount economically serviceable at each point is determined by the +quantity of current consumption, would seem self-evident. But though +this has never been explicitly denied, the important results following +from its recognition have been obscured and befogged by several +conceptions and phrases relating to capital which have found +acceptance among English economists. + +Chief and foremost among these errors is the framing of a definition +of capital so as to exclude the clear separation of productive goods +and machinery, the economic means, from consumptive goods, the +economic end. So long as a definition of capital is taken which +includes any consumptive goods whatsoever, two results follow. One is +a hopeless confusion in the commercial mind, for in commerce +everything is capital which forms the stock or plant of a commercial +firm, and nothing is capital which does not form part of such stock or +plant. Secondly, to include under capital the food in the possession +of productive labourers or any other consumptive goods is an +abandonment of the idea of consumption as the economic end and a +substitution of production. + +If we follow Boehm-Bawerk and the Austrian economists in definitely +refusing to include the consumptive goods of labourers as +capital,[164] we get a conception of capital which is at once in +accordance with the universal conception of commercial men, and which +enables us to realise the vital relation between capital and +consumption. We now see Capital in the form of stock and plant at each +point in the industrial machine deriving its use and value from its +contribution to the end, Consumption, and dependent for its quantity +upon the quantity of Consumption. We have seen that a demand for +commodities is the true and exact determinant of the quantity of +capital at each industrial stage. It is therefore the determinant of +the aggregate of wealth which can function as useful forms of capital +in the industrial community at any given time. The aggregate of plant +and stock which constitute the material forms of capital at the points +A, B, C, D, E must in a properly adjusted state of industry have an +exact quantitative relation to the consumption indicated by F. If F +increases, the quantity of forms of capital at A, B, C, D, E may +severally and collectively increase; if F declines, the useful forms +of capital at each point are diminished. Since we have seen that the +sole object of saving from the social point of view is to place new +forms of capital at one of the points A, B, C, D, E, it is evident +that the amount of useful saving is limited by the rate of +consumption, or financially, by the amount of "spending." Where there +is an improvement in the general productive power of a community, only +a certain proportion of that increased power can be economically +applied to "saving"--_i.e._, to the increase of forms of capital; a +due proportion must go to increased spending and a general rise in +consumption. + +Sec. 12. This will hardly be disputed, except by those who still follow +Mill in maintaining that the whole of the current production could be +"saved," with the exception of what was required to support the +efficiency of labour, a doctrine to which even he could only give +passing plausibility by admitting that the increased savings which +resulted from an attempt to do this would take the shape of luxuries +consumed by the said labourers--that is to say, would not be "savings" +at all, but a transfer of "spending" from one class to another.[165] +If capital be confined to commercial capital, and "saving" to the +establishment of the forms of such capital, no one will deny that the +quantity of "saving" which can be effectually done by a community at +any time depends upon the current rate of consumption, or that any +temporary increase of such saving must be justified by a corresponding +future increase in the proportion of spending.[166] + +This will be generally admitted. But there are those who will still +object that production just as much limits and determines consumption +as consumption does production, and who appear to hold that any +increase in present saving, and the consequent increase of amount of +plant and stock, has an economic power to force a corresponding rise +of future consumption which shall justify the saving. This they urge +in the teeth of the fact that in a normal state of industry in +machine-using countries there exists more machinery and more labour +than can find employment, and that only for a brief time in each +decennial period can the whole productive power of modern machinery be +fully used, notwithstanding the increasing blood-letting to which +superfluous saving is exposed by the machinations of bogus companies, +in which the "saving" done by the dupes is balanced by the "spending" +of the sharps. Ignoring the fact that the alleged power of increased +saving to stimulate increased consumption is not operative, they still +maintain that there cannot be too much "saving," because the tendency +of modern industry is to make production more and more "roundabout" in +its methods, and thus to provide scope for an ever-increasing quantity +of forms of capital. + +Under modern machinery we see a constant increase in the number of +direct and subordinate processes connected with the forwarding of any +class of commodities to its completion. A larger proportion of the +productive labour and capital is employed, not upon the direct +horizontal line, but upon the perpendicular lines which represent the +making of subsidiary machinery. More and more saving may be stored up +in the shape of machines to make machines, and machines to make these +machines, and thus the period at which the "saving" shall fructify in +consumption may be indefinitely extended. + +Some of the labour stored and the capital established in the +construction of harbours, the drainage of land, the construction of +scientific instruments, and other works of durable nature and indirect +service, may not be represented in consumptive goods for centuries. +Admitting this, it may be urged, can any limits be set to present +"saving" and its storage in forms of capital, provided those forms be +selected with a due regard to a sufficiently distant future? The answer +is that only under two conditions could an indefinitely large amount of +present "saving" be justified. The first condition is that an unlimited +proportion of this "saving" can be stored in forms which are practically +imperishable; the second condition is that our present foresight shall +enable us to forecast the methods of production and consumption which +shall prevail in the distant future. In fact neither of these conditions +exists. However much present "saving" we stored in the most enduring +forms of capital with which we are acquainted--_e.g._, in the permanent +way of railroads, in docks, in drainage and improvement of land, a large +proportion of this "saving" would be wasted if the consumption it was +destined to subserve was postponed for long.[167] Neither can we predict +with any assurance that the whole value of such "savings" will not have +disappeared before a generation has elapsed by reason of changes in +industrial methods. + +The amount of present "saving" which is justified from the point of +view of the community is strictly limited. We cannot forecast the +demand of our twentieth generation of descendants, or the industrial +methods which will then prevail; we do not even know whether there +will be a twentieth generation; there are certain large inevitable +wastes in postponed consumption by reason of the perishability of all +material forms of wealth, or the abstraction of them by others than +those for whose use they were intended. Moreover, we do not believe it +would be good for our descendants to have the enjoyment of excessive +wealth without a corresponding personal effort of producing, nor would +it be good for us to exert effort without some proximate and +corresponding enjoyment. The limits of individual life rightly demand +that a large proportion of individual effort shall fructify in the +individual life. + +Thus there are practical limits set upon the quantity of "saving" +which can be usefully effected by extending the interval between +effort and enjoyment. If the right period be exceeded the risk and +waste is too great. The analogy of gardening adduced by Ruskin is a +sound one.[168] By due care and the sacrifice of bud after bud the +gardener may increase the length of the stem and the size of the +flower that may be produced. He may be said to be able to do this +indefinitely, but if he is wise he knows that the increased risks of +such extension, not to mention the sacrifice of earlier units of +satisfaction, impose a reasonable limit upon the procrastination. The +proportion of "saving" which may be and is applied to establish +late-fructifying forms of wealth, differs not only with the different +developments of the industrial arts, but with the foresight and moral +character of the race and generation. As our species of civilisation +advances, and the demand for complex luxuries and the arts of +supplying them advance, a larger amount of "roundabout" production +becomes possible, and as regard for the future generations advances, +more capital will be put into forms which fructify for them. But at +the present in any given community there is a rational and a +necessary limit to the quantity of "saving" which can be applied to +such purposes. + +Secondly, we find that in fact the surplus "saving" over and above +what is needed to provide the necessary forms of capital to assist in +satisfying current consumption is not absorbed in making provision for +distant future consumption by more "roundabout methods." Much of it +goes into a mere increase of the number of existing forms of capital +whose _raison d'etre_ lies in the satisfaction of present or +immediately future wants. The multiplication of cotton-spinning-mills, +of paper-mills, of breweries, ironworks, has gone on far faster than +the growth of current consumption. This increase of productive +machinery has not in fact been able to force such an increase of +consumption as gives adequate employment to these new forms of +machinery and to the labour which is at hand to work them. + +Sec. 13. It is not therefore correct to say that the rate of production +determines the rate of consumption just as much as the rate of +consumption determines the rate of production. The current productive +power of capital and labour places a maximum limit upon current +consumption, but an increase of productive power exercises no +sufficient force to bring about a corresponding rise in consumption. +Just as in a particular trade--_e.g._, the Lancashire cotton trade, an +excess of "saving" may be applied to the establishment of mills and +machinery which cannot be kept working because there is no market for +their output, so it is with trade in general. It is not true that the +inflation of capital in the Lancashire trade is due to a misdirection +which implies a lack of capital in some other branch of industry. In a +period of depression like the present every other important branch of +industry displays the same symptoms of excessive plant, over-supply of +stock, irregular and deficient employment of labour, though not to the +same extent. Nor is there any _a priori_ reason why there should not +be from time to time such general maladjustment. If ignorance and +miscalculation leads to the investment of too much capital in, say, +the cotton and iron industries, it is not unreasonable to suppose that +in a complex industrial society there should be such general +miscalculation of the right proportion between saving and spending +that too much should be saved at certain periods. That is to say, +turning again to the diagram of industry, just as it is admitted that +miscalculation may induce too much capital to be placed at A or B or +C, and too little at one of the other points of production, disturbing +the harmonious ordering of the parts of capital, so likewise there may +be a maladjustment of the proportion between A, B, C, D, E, the +aggregate of forms of capital, and F, the aggregate of consumption, +between "saving" and "spending." Now if it be admitted that such +maladjustment is possible, the balance can only lean one way. There +cannot be too little saving to furnish current consumption, taking the +industrial community as a whole, for it is impossible to increase the +rate of consumption, F, faster than the increase of the rate of +current production: any increase of the purchase of shop-goods by +raising prices and circulating more money down the paths of production +stimulates and strains the sinews of production, and if the existing +machinery of production is inadequate it supplies a motive-power to +increase "saving." In no case can a community consume faster than it +produces. An individual can do so by living on his capital, a nation +may do so for a time by living upon its capital, giving to other +nations by means of an increased debt a lien upon its future wealth. +But a whole industrial community can never live upon its capital, can +never in the literal sense of the term "spend too much." This +statement requires a single qualification. While a community can never +by "spending" deplete its capital, while it cannot increase its +"spending" without at the same time increasing its real capital,[169] +it will doubtless be profitable to a progressive community to reduce +its consumption for a while below the normal proportion in order to +fully utilise new discoveries in the industrial arts which shall +justify in the future increased consumption. + +But with this necessary qualification it is true that a community +cannot exceed in the direction of spending. But the balance may lean +the other way. A community may "save too much," that is to say, it may +establish a larger quantity of productive machinery and goods than is +required to maintain current or prospective consumption. What is to +prevent a community consisting of a vast number of individuals with no +close knowledge of one another's actions, desires, and intentions, +making such a miscalculation as will lead them to place at each of the +points A, B, C, D, E, and in all or most branches of industry, a +larger quantity of forms of capital than are required? + +It is said that the harmony which subsists between the social interest +and the self-interest of individuals will prevent this, or, in other +words, that individuals would find that if they attempted to unduly +increase the aggregate of capital beyond what was socially +advantageous in view of the community's consumption, it would not pay +them to do so. Is this true? + +An individual working entirely for himself, whose capital lay in his +tools and his raw or unfinished commodities, would never increase the +latter unduly. A socialist community properly managed would never add +to its stock of machinery or increase the quantity of its raw +materials or unfinished goods, so as to leave any machines unused or +half used, or any goods unnecessarily occupying warehouse room and +deteriorating in quality. But when competition of individual interests +comes in there is no such security. + +It may pay individuals to build new factories and put in new machinery +where it would not pay the community to do so, were it the sole owner +of the means of production. + +The knowledge that enough capital is already invested in an industry +to fully supply all current demands at profitable prices has no power +to deter the investment of fresh capital, provided the new investors +have reason to believe their capital can be made to displace some +existing capital owned by others. If the new-comer can, by superior +business address, by successful advertising, by "sweating" his +employees or otherwise, get hold of a portion of the business hitherto +in the hands of other firms, it will pay him to build new factories +and stock them with the requisite machinery, and to begin the process +of manufacture. There may be in existence already more bicycle works +than are sufficient to supply the consumption of the community. But +if a would-be manufacturer thinks he can withdraw from other makers a +sufficient number of customers, he will set up works, and make new +machines, though his methods of production and the goods he turns out +may be no better than those of other makers. The same holds at every +stage of production. In wholesale or retail distribution the fact that +there are sufficient warehouses and shops in existence to adequately +supply the current demand does not prevent any one from embarking new +savings in more warehouses or shops, provided he believes he is able +to divert into his own firm a sufficient amount of the business +formerly held by others. In a district two grocers' shops may be quite +sufficient to supply the needs of the neighbourhood, and to secure +adequate competition. But if a third man, by an attractive shop-front +or superior skill in the labelling or adulteration of his wares, can +procure for himself an adequate share of the custom, it will pay him +to put the requisite plant and stock into a shop, though the trade on +the one hand and the community on the other is no gainer by his +action. + +There is indeed much evidence to show that it may be to the advantage +of individuals to increase the machinery of production, even though +there is no reasonable prospect of this machinery being worked at a +profit. It is the unanimous testimony of business men that the +Lancashire trade has been congested with mills and machinery in this +way. As a result of an excessive desire to postpone consumption there +are considerable sums of money which cannot find a safe remunerative +investment. Here is the material for the company promoter. By means of +the specious falsehoods of prospectuses he draws this money together; +with him work a builder and an architect who desire the contract of +putting up the factory; the various firms interested in manufacturing +and supplying the machinery, the boiler-maker and fitters of various +kinds, the firm of solicitors whose services are requisite to place +the concern upon a sound legal footing, or to establish confidence, +take up shares. It is to the interest of all these and many other +classes of persons to bring into the field of production new forms of +capital, quite independently of the question whether the condition of +a trade or the consumption of the community have any need for them. + +Sec. 14. These operations, which imply a conflict between the interests +of individuals and those of the community, pervade all modern +commerce, but are more prevalent in businesses where complex machinery +plays a prominent part, or where specious advertising gives the +outsider a larger chance of successful entry. + +In each and all of these cases it is to the interest of the individual +to place new "savings" in new forms of capital in branches of industry +where sufficient capital already exists to assist in supplying the +current demand for consumptive goods. So far is it from being true +that the self-interest of individuals provides an economic check upon +over-supply, that it is possible that at each of the points of +production, A, B, C, D, E, and in all or the majority of industries at +the same time, there should be an excess of forms of capital as +compared with that which would suffice for the output, F. The +automatic growth of bubble companies and every species of rash or +fraudulent investment at times of depressed trade is proof that every +legitimate occupation for capital is closed, and that the current rate +of saving is beyond that which is industrially sound and requisite. +These bubble companies are simply tumours upon the industrial body +attesting the sluggish and unwholesome circulation; they are the +morbid endeavours of "saving" which is socially unnecessary, and ought +never to have taken place, to find investments. When one of these +"bubble" companies collapses it is tacitly assumed by unthinking +people that those who invested their money in it were foolish persons +who might have sought and found some better investment. Yet a little +investigation would have shown that at the time this company arose no +opportunity of safe remunerative investment open to the outside public +existed, every sound form of business being already fully supplied +with capital. + +At first sight it might appear that Consols and first-class railway +and other stocks were open, and that the folly of the investors in +bogus companies consisted in not preferring a safe 2-1/2 per cent. to +a risky 5 or 10 per cent. But this argument is once more a return to +the unsound individualistic view. It was doubtless open to any +individual investor of new savings to purchase sound securities at +2-1/2 per cent., but, since the aggregate of such soundly-placed +capital would not be increased, this would simply mean the +displacement of an equal quantity of some one else's capital. A could +not buy Consols unless B sold, therefore the community to which A and +B belong could not invest any fresh savings in Consols. Any widespread +attempt on the part of those who plunged into bogus companies to try +first-class investments would obviously have only had the effect of +further reducing the real interest of these investments far below +2-1/2 per cent. The same effect would obviously follow any effective +legal interference with company-promoting of this order. The fact that +Consols and other first-class investments do not rise greatly at such +times is, however, evidence that the promoters of unsound enterprises +succeed in persuading individual investors that their chance of +success is not less than 2-1/2 per cent. In many instances the +investor may be acting wisely in preferring a smaller chance of much +higher profits, because a secure 2-1/2 per cent. may be quite +inadequate to his needs. For it must be borne in mind that a knowledge +that the new bank or new building society is unnecessary, because +enough banks and building societies already exist, does not make it +impossible or necessarily improbable that the new venture will +succeed. + +The objection, then, which takes the form that over-saving cannot +exist, because the worst investments made with open eyes must be +productive of more than that which could be obtained by investing in +Consols, is not a valid one. It would only be valid on the supposition +that capital were absolutely fluid, that the quantity of +soundly-placed investments were indefinitely expansible, and that new +forms of capital had in no case the power to oust or negative the use +of old forms of capital. But this we have seen is not the case. If +there existed absolute fluidity of competition in all forms of +capital, the fact that interest for new investments stood above zero +would be a proof that there was not excess of forms of capital. +Capital appears to have this fluidity when it is regarded from the +abstract financial point of view. A man who has "saved" appears to +hold his "savings" in the form of bank credit, or other money which he +is able to invest in any way he chooses. But, as we have seen, the +real "savings," which represent his productive effort plus his +abstinence, are of necessity embodied in some material forms, and are +therefore devoid of that fluidity which appears to attach to them when +reflected in bank money. + +Sec. 15. The evils of trade depression, or excessive growth of the forms +of capital beyond the limits imposed by consumption, are traced in +large measure directly, but also indirectly, to the free play of +individual interests in the development of machine-production. The +essential irregularities of invention, the fluctuations of public +taste, the artificial restrictions of markets, all enable individual +capitalists to gain at the public expense. The added interests of its +individual members do not make the interest of the community. All +these modes of conflict between the individual and the public interest +derive force from the complexity of modern capitalist production. + +In fastening upon the uncontrolled growth of machinery the chief +responsibility for that depression of trade which is derived from an +attempt to devote too large a proportion of the productive power of +the community to forms of "saving," two points should be clearly +understood. + +In the first place, it is the forms of capital and not real capital +which are produced in excess. If there are 500 spinning-mills in +Lancashire where 300 would suffice, the destruction of 200 mills would +no whit diminish the amount of real capital. If 200 mills were burnt +down, though the individual owners would sustain a loss, that loss, +estimated in money, would be compensated by a money rise in the value +of the other mills. The quantity of real capital in cotton-spinning is +dependent upon the demand for the use of such forms of capital--that +is to say, upon the consumption of cotton goods. If 300 mills are +sufficient to do the work of supplying yarn to meet the demand of all +manufacturers, the value of 500 mills is no greater than of 300; +assuming that the 500 mills equally distributed the trade, it would +simply mean that the real capital was thinly spread over 500 mills, +which could only work a little over half-time without producing a glut +of goods, instead of being concentrated upon 300 mills fully occupied. + +Turning once more to the diagram, + + [Illustration] + +_f_ (the current rate of consumption) determines the quantity of real +productive power of capital that can be effectively employed at each +point, _a_, _b_, _c_, _d_, _e_. The condition of the arts of industry, +including the rates of wages and other conditions of the labour +market, determines how many forms of capital (mills, warehouses, +ironworks, raw material, etc.) at any given time are socially +requisite to embody this capital. But though _f_ has an economic power +to force into existence the requisite minimum of these forms of +capital, it has no power to prevent the pressure of individual +interests from exceeding that minimum and planting at _a_, _b_, _c_, +_d_, _e_ more forms of capital than are required. + +Secondly, over-production or a general glut is only an external phase +or symptom of the real malady. The disease is under-consumption or +over-saving. These two imply one another. The real income of a +community in any given year is divisible into two parts, that which is +produced and consumed, that which is produced and not consumed--_i.e._, +is saved. Any disturbance in the due economic proportion of these two +parts means an excess of the one and a defect of the other. All +under-consumption therefore implies a correspondent over-saving. This +over-saving is embodied in an excess of machinery and goods over the +quantity economically required to assist in maintaining current +consumption. It must, however, be remembered that this over-saving is +not measured by the quantity of new mills, machinery, etc., put into +industry. When the mechanism of industry is once thoroughly congested, +over-saving may still continue, but will be represented by a +progressive under-use of existing forms of capital, that unemployment +of forms of capital and labour which makes trade depression. + +An increased quantity of saving is requisite to provide for an +expected increase of consumption arising from a growth of population +or from any other cause. Such increased saving is of course not +over-saving. The proportion, as well as the absolute amount of the +community's income which is saved, may at any time be legitimately +increased, provided that at some not distant time an increased +proportion of the then current income be consumed. If in a progressive +community the proportion of "saving" to consumption, in order to +maintain the current standard of living with the economic minimum of +"forms" of capital, be as 2 to 10, the proportion of saving in any +given year may be raised to 3 to 9, in order to provide for a future +condition in which saving shall fall to 1 to 11. Such increased +"saving" will not be over-saving; the forms of capital in which it is +embodied will not compete with previously existing forms so as to +bring down market prices. The efforts which take the form of permanent +improvements of the soil, the erection of fine buildings, docks, +railways, etc., for future use, may provide the opportunity to a +community of increasing the proportion of its savings for a number of +years. But such savings must be followed by an increased future +consumption without a correspondent saving attached to it. The notion +that we can indefinitely continue to increase the proportion of our +savings to our consumption, bounded only by the limit of actual +necessaries of life, is an illusion which places production in the +position of the human goal instead of consumption. + +Sec. 16. Machinery has intensified the malady of under-consumption or +over-saving, because it has increased the opportunities of conflict +between the interests of individuals and those of the community. With +the quickening of competition in machine industries the opportunities +to individuals of making good their new "savings" by cancelling the +old "savings" of others continually grow in number, and as an ever +larger proportion of the total industry falls under the dominion of +machinery, more and more of this dislocation is likely to arise; the +struggles of weaker firms with old machinery to hold their own, the +efforts of improved machinery to find a market for its expanded +product, will continue to produce gluts more frequently, and the +subsequent checks to productive activity, the collapse of businesses, +the sudden displacement of large masses of labour, in a word, all the +symptoms of the malady of "depression" will appear with increased +virulence. + +It must be clearly recognised that the trouble is due to a genuine +clash of individual interests in a competitive industrial society, +where the frequent, large, and quite incalculable effects of improved +machinery and methods of production give now to this, now to that +group of competitors a temporary advantage in the struggle. It was +formerly believed that this bracing competition, this free clash of +individual interests, was able to strike out harmony, that the steady +and intelligent pursuit by each of his own separate interest formed a +sure basis of industrial order and induced the most effective and +serviceable disposition of the productive powers of a community. + +It now appears that this is not the case, and that the failure cannot +in the main be attributed to an imperfect understanding by individuals +of the means by which their several interests may be best subserved, +but is due to the power vested in individuals or groups of individuals +to secure for themselves advantages arising from improved methods of +production without regard for the vested interests of other +individuals or of society as a whole. + + +APPENDIX I. + +ARE GOODS IN THE POSSESSION OF CONSUMERS CAPITAL? + +The question whether food, clothing, etc., which are "capital" so long +as they form part of the stock of a shopkeeper, are to be regarded as +ceasing to be capital when they pass into the possession of consumers +has seldom been definitely faced by English economists. Jevons was +perhaps the first to clearly recognise the issues involved. He +writes:--"I feel quite unable to adopt the opinion that the moment +goods pass into the possession of the consumer they cease altogether +to have the attributes of capital. This doctrine descends to us from +the time of Adam Smith, and has generally received the undoubting +assent of his followers. Adam Smith, although he denied the +possessions of a consumer the name of capital, took care to enumerate +them as part of the stock of the community." (_The Theory of Political +Economy_, 2nd edit., p. 280.) + +As a historical judgment this is very misleading. Adam Smith, chiefly +impressed by the necessity of separating consumptive goods from goods +used as a means of making an income--_e.g._, commercial capital, quite +logically severed revenue from capital as a distinct species of the +community's stock. His "followers," however, differed very widely, and +usually expressed themselves obscurely. Generally speaking, the +English economists of the first half of this century inclined to the +inclusion of certain consumptive goods in the possession of labourers +under capital. Ricardo, for example, thus expresses himself:--"In +every society the capital which is employed in production is +necessarily of limited durability. The food and clothing consumed by +the labourer, the buildings in which he works, the implements with +which his labour is assisted, are all of a perishable value. There is, +however, a vast difference in the time for which all these different +capitals will endure. A steam engine will last longer than a ship, a +ship than the clothing of the labourer, and the clothing of the +labourer than the food which he consumes." (_Principles of Political +Economy_, 1817, p. 22.) The last sentence is conclusive in its +inclusion under capital of goods in the possession of labourers. +McCulloch again regrets Smith's exclusion of "revenue" from capital, +insisting that "it is enough to entitle an article to be considered +capital that it can directly contribute to the support of man or +assist him in appropriating or producing commodities," and he would +even go so far as to include "a horse yoked to a gentleman's coach," +on the ground that it was "possessed of the capacity to assist in +production." (_Principles of Political Economy_, Part I., chap. ii. Sec. +3.) + +Malthus does not, so far as I can ascertain, face the question. James +Mill alone, among the earlier nineteenth century economists, +definitely excludes labourers' consumptive goods from capital. +(_Principles of Political Economy_, chap. i. Sec. 2.) J.S. Mill is not +equally clear in his judgment. In Bk. I., chap. iv. Sec. 1, food +"destined" for the consumption of productive labourers apparently +ceases to be capital when it is already "appropriated to the +consumption of productive labourers." This position, however, is not +consistent with his later position regarding the unlimited character +of saving, which can only be justified by regarding real wages when +paid as continuing to be capital. Fawcett is vague, but he is disposed +not only to include under capital food which is in the possession of +consumers, but to exclude food which is in the possession of dealers. +"If a man has so much wheat, it is wealth which may at any moment be +employed as capital; but this wheat is not made capital by being +hoarded; it becomes capital when it feeds the labourers, and it cannot +feed the labourers unless it is consumed." (_Manual of Political +Economy_, Bk. I., chap, iv., p. 29.) Among later English writers, +Cairnes, like all holders of the "Wages fund" doctrine, does not +clearly meet the question, "Does the food, etc., forming the real wage +fund which is one part of capital, cease to be capital when it is +actually paid out in wages?" He plays round the question in _Leading +Principles_, Part II., chap. i. Bonamy Price includes consumptive +goods. "It is to be remarked of all this capital, these materials, +implements, and necessaries for the labourers, that they are consumed +and destroyed in the process of creating wealth, some rapidly, some +more slowly. Thus the very purpose of capital is to be consumed and +destroyed; it is procured for that very end." (_Practical Political +Economy_, pp. 103, 104.) Since, he adds a little later, "an article +cannot be declared to be capital or not capital till the purpose it is +applied to is determined," it would appear that flour in the dealer's +hands is not capital, but that it only becomes capital when handed +over to persons who productively consume it. Thorold Rogers appears to +take the same view, holding the food of a country to be part of its +capital irrespective of the consideration in whose hands it is. +(_Political Economy_, p. 61.) Professor Sidgwick appears to regard +"food" consumed by productive labourers as capital. "On this view it +is only so far as the labourer's consumption is distinctly designed to +increase his efficiency that it can properly be regarded as an +investment of capital." (_Principles of Political Economy_, Bk. I., +chap. v.) + +General Walker apparently holds that stored food used to support +productive work is capital in whosoever hands it lies. (_Political +Economy_, 2nd edit., Sec. 87.) He is, however, concerned with +illustrations from primitive society, and possibly might hold the food +ceased to be capital if paid over by one person to another as wages. + +Hearn, on the contrary, definitely excludes consumptive goods. "The +bullock, which when living formed part of the capital of the grazier, +and when dead of the butcher, is not capital when the meat reaches the +consumer." (_Plutology_, p. 135.) + +Professor Marshall defers to the commercial usage so far as to apply +the term Trade Capital to "those external things which a person uses +in his trade, either holding them to be sold for money, or applying +them to produce things that are to be sold for money." But turning to +the individual, he insists upon speaking of the necessaries he +consumes to enable him to work as "capital." "Some enjoyment is indeed +derived from the consumption of the necessaries of life which are +included under capital; but they are counted as capital because of the +work for the future which they enable people to do, and not on account +of the present pleasure which they afford." (_Principles_, 2nd edit., +p. 125.) + +These instances show that Jevons is wrong in attributing to English +economists a general acceptance of the belief that goods cease to be +capital when they come into the possession of consumers. They also +serve to explain the source of the conflict of judgment and the +confusion of expression. Economists who take it to be the end of +industrial activity to place in the possession of consumers goods +which shall satisfy their desires, regard "capital" as a convenient +term to cover those forms of wealth which are a means to this end, and +are thus logically driven to exclude all consumers' goods from +capital. This view of capital coincides with the ordinary accepted +commercial view which regards capital not from its productivity side +but from its income-yielding side. Those economists, on the other +hand, who actually, though not avowedly, take production to be the end +of industry, regard as "capital" all forms of material wealth which +are means to that end, and therefore include food, etc., productively +consumed by labourers. If work considered as distinct from enjoyment +be regarded as the end, it is reasonable enough that some term should +be used to cover all the forms of material wealth serviceable to that +end. It is, however, unfortunate that the term "capital" should be +twisted from its fairly consistent commercial use to this purpose. + +Dr. Keynes,[170] who seems to think the sole difficulty as regards the +definition of capital arises from the difference in the point of view +of the individual and of the community, suggests the use of two terms, +"revenue capital" and "production capital." But these terms are doubly +unsatisfactory. In the first place, the "productive consumption" +economist might fairly claim that as his food, etc., enabled the +workman to obtain his wages or revenue, they belonged to revenue +capital. On the other hand, regarding it as essential to distinct +terminology to sever entirely consumptive goods from productive goods, +I should insist that the "production capital" of the community was +synonymous with its "revenue capital," and that although the +individual view of capital is not always coincident with the +community's view, that difference cannot be expressed by the +distinction of "revenue capital" and "production capital." + +Moreover, the consumptive-production economists, to be consistent and +to preserve the continuity of the conception of economic activity, +would do well to abolish labour-power as a separate factor, and to +include the body of the labourer with its store of productive energy +as a species of capital. For it is urged (_e.g._, by Professor +Marshall) that the fact that the food consumed by labourers enables +them to earn an income entitles it to rank as capital. In that case +the "wages" which form that income should rank as interest upon the +capital. Again, there is no reason for breaking the continuity of the +capital at the time when the "food" is actually eaten. The food is not +destroyed, but built up into the frame of the labourer as a fund of +productive energy. If consumptive goods are once admitted as capital, +the labourer's body must be likewise capital yielding interest in the +shape of wages. If the other factor "natural agents" be still retained +(an unnecessary proceeding, since all land, etc., which is +productively serviceable is so by reason of the application of some +element of stored labour, and may therefore be called "capital"), +labour could be resolved into natural agents (the infant body) and +capital (the food, etc., used to strengthen and support the body). +Wages could then be reckoned partly as rent, partly as interest. It is +difficult to understand why "productive-consumption" economists, some +of whom have evidently contemplated the change of terminology, have +refused to take a step which would at any rate have the merit of +imparting consistency to their terminology. It is, of course, true +that no "productive-consumption" economist would straightly admit +production not consumption to be the economic goal, but his +terminology can only approximate to consistency upon this supposition. + +Mr. Cannan, in his able exposure of Adam Smith's mixed notions upon +Capital, inclines to an extended use of the term which shall include +"the existing stock of houses, furniture, and clothes" on the ground +that they are "just as much a part of the surplus of production over +consumption, and therefore the result of saving, as the stock of +warehouses, machinery, and provisions."[171] Moreover, whether in +merchants' or consumers' hands they produce a real income, in the +latter case consisting of the comforts and conveniences which attend +their consumption. But if this view be accepted all forms of wealth +must rank as capital; the distinction between those which have been +saved and those which have not loses all meaning; so long as a piece +of wealth which has been made exists, it has been saved, and is an +"investment" which will, at any rate in the satisfaction due to its +consumption, yield a real income. But this extension, though logically +defensible, must be rejected on grounds of convenience. When +economists can be got to recognise the necessity of measuring all +"incomes," as indeed all "outputs," in terms of human satisfaction and +effort, then it may be well to recognise that all forms of wealth +which have figured as producers' capital continue to exist as +consumers' capital, yielding an income of satisfaction until they are +consumed. To place the consumptive-goods on a common level with forms +of productive capital, it would of course be necessary to make the +usual provision against wear and tear and depreciation before +reckoning income. There would be no justification for reckoning the +total use of a coat worn out and not replaced as income from capital. + +As matters now stand, the only logically accurate correlation of +economic activities which shall enable us to give a clear and separate +meaning to capital and labour-power involves the distinct recognition +of unproductive consumption--_i.e._, consumption considered as an end +and not as a means to further production of industrial wealth, as the +final object of economic activity. In other words, it is the benefit +or satisfaction arising from the destruction of forms of industrial +wealth that constitutes the economic goal. Life not work, unproductive +not productive consumption, must be regarded as the end. The +consideration that a good and wholesome human life is identified with +work, some of which will be industrial in character, so that many +forms of industrial wealth will be destroyed under conditions which +enable them to render direct service in creating new forms, does not +impair the validity of this conception. The inability of most economic +thinkers to clearly grasp and to impress on others the idea of the +industrial organism as a single "going concern," has arisen chiefly +from the circular reasoning involved in making "production" at once +the means and the end, and the inconsistent definitions required to +support this fallacy. + + +APPENDIX II. + +"OVER-CONSUMPTION" CONSIDERED AS CAUSE OF DEPRESSION. + +It is of course quite possible that a temporary over-production in one +or several trades may be explained by a correspondent under-production +in others--that is to say, there may be a misplacement of industrial +enterprise. But this can afford no explanation of the phenomenon +Depression of Trade, which consists in a general or net over-supply of +capital, as evidenced by a general fall of prices. + +In like manner it is possible to explain a commercial crisis in a +single country, or part of a commercial community, as the reaction or +collapse following an attempt to increase the quantity of fixed +capital out of proportion to the growth of the current national +income, by a reckless borrowing. This attempt of a single country to +enlarge its business operations beyond the limits of the possible +savings of its own current income, Mr. Bonamy Price and M. Yves Guyot +speak of under the questionable title of Over-consumption. Since they +tender this vice of over-consumption as the true and sufficient +explanation of commercial crises, it is necessary to examine the +position. + +Professor Bonamy Price applied the following analysis to the great +crisis in the United States of 1877:-- + +"We are now in a position to perceive the magnitude of the blunder of +which the American people were guilty in constructing this most +mischievous quantity of fixed capital in the form of railways. They +acted precisely like a landowner who had an estate of L10,000 a year, +and spent L20,000 on drainage. It could not be made out of savings, +for they did not exist, and at the end of the very first year he must +sell a portion of the estate to pay for the cost of his draining. In +other words, his capital, his estate, his means of making income +whereon to live was reduced. The drainage was an excellent operation, +but for him it was ruinous. So it was with America. Few things in the +long run enrich a nation like railways; but so gigantic an +over-consumption, not out of savings, but out of capital, brought her +poverty, commercial depression, and much misery. The new railways have +been reckoned at some 30,000 miles, at an estimated cost of L10,000 a +mile; they destroyed three hundred million of pounds worth, not of +money, but of corn, clothing, coal, iron, and other substances. The +connection between such over-production and commercial depression is +here only too visibly that of parent and child. But the disastrous +consequences were far from ending here. The over-consumption did not +content itself with the wealth used up in working the railways and the +materials of which they were composed. It sent other waves of +destruction rolling over the land. The demand for coal, iron, engines, +and materials kindled prodigious excitement in the factories and the +shops; labourers were called for from every side; wages rose rapidly; +profits shared the upward movement; luxurious spending overflowed; +prices advanced all round; the recklessness of a prosperous time +bubbled over; and this subsidiary over-consumption immensely enlarged +the waste of the national capital set in motion by the expenditure on +the railways themselves. Onward still pressed the gale; foreign +nations were carried away by its force. They poured their goods into +America, so over-powering was the attraction of high prices. They +supplied materials for the railways, and luxuries for their +constructors. Their own prices rose in turn; their business burst into +unwonted activity; profits and wages were enlarged; and the vicious +cycle repeated itself in many countries of Europe. Over-consumption +advanced with greater strides; the tide of prosperity rose ever +higher; and the destruction of wealth marched at greater speed."[172] + +Now, in the first place, our analysis of saving and the confinement of +the term consumption to direct embodiments of utility and convenience +forbid us to acknowledge that the action of the United States or the +analogy of the improving landowner is a case of over-consumption at +all. If the landowner borrowed money on his estates in order to live +in luxury for a season beyond his income, or similarly, if a State +raised loans in order to consume powder and shot, the term +over-consumption rightly applies. But where the landowner borrows so +much money to improve his land that he is unable to hold out till the +improvements bear fruit, and must sell his land to pay the interest, +he is not rightly accused of over-consumption. His reduced consumption +later on while practising retrenchment is simply a process of "saving" +which, when complete, is to take the place of an amount of "saving" +previously made by some one else and borrowed by him. What happened +was simply this. A, wishing to drain his land, had not "saved" enough +to do it; B has saved, and A, borrowing his "saving," holds it for a +time in his shape of drainage. If he can continue to pay interest and +gradually "save" to pay off the capital, he will do so; if not, as in +the case supposed, B, the mortgagee, will foreclose and legally enter +upon his savings in the shape of "drainage" which he really owned all +along. But even if A in this case were rightly accused of +over-consumption, this over-consumption must be considered as balanced +by the under-consumption of B, so that as regards the community of +which A and B are both members there is no over-consumption. + +Now, precisely the same line of reasoning applies if for the +individual A we take the country of the United States. If it tries to +increase its factories, machinery, etc., in excess of its ability to +pay, it can only do so by borrowing from other countries; and if it +cannot pay the interest on such loans, the "savings," in the shape of +fixed capital which it has endeavoured to secure for itself, remain +the property of the other countries which have effected the real +saving which they embody, assuming them to have a value. If the action +of the United States be called over-consumption, it is balanced by an +under-consumption of England, France, or other countries of the +commercial community. Mr. Price sought to avoid this conclusion by +saying nothing about the individual from whom the landowner or the +country from which the United States borrowed in order to increase the +fixed capital. But as the landowner and the United States, _ex +hypothesi_, did not make their improvements out of their own savings, +they made them out of somebody else's savings, and that conduct which +is styled over-consumption in them is balanced by an equal quantity of +under-consumption in some other party. If thus we look at the +individual landowner or the single country of the United States, we +might say, accepting Price's view of consumption, that he and it were +guilty of over-consumption, and that this was the cause of the +commercial crisis. But since this over-consumption is absolutely +conditioned by a correspondent under-consumption of some other member +of the industrial community, it is not possible to conclude with +Professor Price that over-consumption can even for a time exist in the +community as a whole, or that such a condition can be the explanation +of a crisis commonly felt by all or most of the members of that +community. + +What actually happened in the case of United States railways was that +a number of people, either in America or in Europe, under-consumed or +over-saved: their excessive saving could find no better form to take +than American railways, which, _ex hypothesi_, were not wanted for +use. A number of persons who might have made and consumed three +hundred million pounds' worth more of corn, clothing, coals, etc., +than they actually did consume, refused to do so, and instead of doing +so made a number of railway lines, locomotives, etc., which no one +could consume and which were not wanted to assist production. What +occurred was a waste of saving power through an attempt to make an +excessive number of forms of capital. + +Even if, some years later, many of these forms obtained a use and a +value, none the less they represent an excess or waste of "saving" to +an extent measured by the normal rate of interest over that period of +time which elapsed before they fructified into use. In a word, what +had happened was not over-consumption, but under-consumption. + +M. Guyot appears to think that in the community as a whole too much +saving can be put into the form of "fixed" capital and too little into +circulating capital, and that such a condition of affairs will bring +depression. "Fixed capital," he says, "cannot be utilised if there is +no available circulating capital. Ships and railways are useless if +there are no commodities for them to convey; a factory cannot be +worked unless there are consumers ready to buy its products. If, then, +circulating capital has been so far exhausted as to take a long time +replacing, fixed capital must meanwhile remain unproductive, and the +crisis is so much the longer and more severe."[173] + +To this there are two sufficient answers. The prevalence of low prices +for goods of various kinds as well as for plant in a time of +depression, the general glut of goods which forms one phase of the +depression proves that the crisis does not arise from storing too much +saving in plant and too little in goods. Where there exists +simultaneously a larger quantity of plant, raw material, finished +goods, and labour than the industrial society can find use for, no +assertion of maladjustment, either as between trade and trade, country +and country, fixed and circulating capital, will afford any +explanation. Secondly, M. Guyot gives away his entire position by +admitting "a factory cannot be worked unless there are consumers ready +to buy its products." A "consumer" here can logically only mean one +who buys finished goods for personal use, and if this be generally +applied it amounts to a clear admission that under-consumption is the +reason why there appears to be a glut of capital, fixed or other. + +FOOTNOTES: + +[146] _Contemporary Review_, March 1888. + +[147] _Report on Industrial Depressions_, Washington, 1886. + +[148] Report, pars. 61-66. + +[149] Report, par. 106. + +[150] _Contemporary Review_, July 1887. + +[151] _Contemporary Review_, March 1888. + +[152] _Report of the Commissioner of Labour_, Washington, 1886, pp. 80 +to 88. + +[153] D.A. Wells, _Contemporary Review_, August 1887. + +[154] Lord Playfair, in the _Contemporary Review_, March 1888, gives a +number of interesting illustrations of recent economies in transport +and manufacture. + +[155] _Statist_, 1879, quoted Bowley, _England's Foreign Trade in the +Nineteenth Century_, p. 80. + +[156] _Essays in Finance_, vol. i. p. 137, etc. + +[157] For the view that over-consumption is cause, see Appendix II. + +[158] "What is annually saved is as regularly consumed as what is +annually spent, and nearly in the same time too; but it is consumed by +a different set of people." (_Wealth of Nations_, p. 149_b_, +McCulloch.) "Everything which is produced is consumed; both what is +saved and what is said to be spent, and the former quite as quickly as +the latter." (_Principles of Political Economy_, Book I., chap. v., +sec. 6.) + +[159] An able analysis of the nature of "paper savings" is found in +Mr. J.M. Robertson's _Fallacy of Saving_. (Sonnenschein.) + +[160] Chap. v. Sec. 5. + +[161] Bk. III., chap. xiv. Sec. 3. + +[162] The stock of a small retailer will not, however, in all cases +vary proportionately with the aggregate sales of all classes of goods. +A small shopkeeper, to retain his custom and credit, is often required +to keep a small stock of a large variety of goods not often in +request. If he sells them rather more quickly, he does not necessarily +increase his stock in hand at any particular time. + +[163] It likewise determines the quantity of plant and stock at _a_, +_b_, _c_, _d_ down each of the perpendicular lines, for the demand at +each of these points in the production of plant and machinery is +derived from the requirements at the points A, B, C, D, E. The flow of +goods therefore up these channels, though slower in its movement +(since in the main channel only goods flow, while fixed capital is +subject to the slower "wear and tear"), is equally determined by and +derived from the consumption at F. The whole motive-power of the +mechanism is engendered at F, and the flow of money paid over the +retail counter as it passes in a reverse current from F towards A, +supplies the necessary stimulus at each point, driving the goods +another stage in their journey. + +[164] Boehm-Bawerk, _Positive Theory of Capital_, p. 67. See Appendix +I. for conflict of opinion among English economists. + +[165] _Principles of Political Economy_, Bk. I., chap. v. Sec. 3; see +also Bk. III., chap. xiv. Sec. 3. + +[166] It should be noted that an increased amount of consumption in +the future does not necessarily compensate for a disturbance of the +current balance of saving and spending, for an _increased proportion +of future income_ will have to be spent in order to compensate. + +[167] It must be borne in mind that many articles of utility and +enjoyment must in their final processes be produced for immediate +consumption. The "saving" of perishable goods is confined to a saving +of the more enduring forms of machinery engaged in their production, +or in some few cases to a storing up of the raw material. So likewise +that large portion of productive work termed "personal services" +cannot be antedated. These limits to the possibility of "saving" are +important. No amount of present sacrifice in the interest of the next +generation could enable them to live a life of luxurious idleness. + +[168] Ruskin, _Unto this Last_, p. 145. + +[169] This does not necessarily imply a stimulation of new saving. A +fuller vitality given to existing forms of capital will raise the +quantity of real capital as measured in money. Mills and machinery +which have no present or future use, though they embody saving, have +no value and do not increase real capital. + +[170] _Scope and Method of Political Economy_, p. 162. + +[171] _Production and Consumption_, chap. iv. Sec. 2. + +[172] _Contemporary Review_, May 1879. + +[173] _Principles of Social Economy_, p. 245. (Sonnenschein.) + + + + +CHAPTER VIII. + +MACHINERY AND DEMAND FOR LABOUR. + + Sec. 1. _The Influence of Machinery upon the number of Employed, + dependent on "elasticity of demand."_ + Sec. 2. _Measurement of direct effects on Employment in Staple + Manufactures._ + Sec. 3. _Effects of Machinery in other Employments--The Evidence + of French Statistics._ + Sec. 4. _Influence of Introduction of Machinery upon Regularity of + Employment._ + Sec. 5. _Effects of "Unorganised" Machine-industry upon Regularity._ + Sec. 6. _Different Ways in which modern Industry causes Unemployment._ + Sec. 7. _Summary of General Conclusions._ + + +Sec. 1. In discussing the direct influences of machinery upon the +economic position of the labourer we must distinguish its effects upon +(1) the number of workers employed; (2) the regularity of employment; +(3) the skill, duration, intensity, and other qualities of labour; (4) +the remuneration of labour. Though these influences are closely +related in complex interaction, it is convenient to give a separate +consideration to each. + +(1) _Effects of Machinery upon the number of Employed._--The motive +which induces capitalist employers to introduce into an industry +machinery which shall either save labour by doing work which labour +did before, or assist labour by making it more efficient, is a desire +to reduce the expenses of production. A new machine either displaces +an old machine, or it undertakes a process of industry formerly done +by hand labour without machinery. + +In the former case it has been calculated that the expenses incurred +in making, maintaining, and working the new machines so as to produce +a given output will be less than the corresponding expenses involved +in the use of the old machines. Assuming that the labour of making and +working the new machines is paid at no lower rate than the labour it +displaces, and that the same proportion of the price of each machine +went as wages and as profits, it must follow that the reduction of +expenses achieved signifies a net displacement of labour for a given +quantity of production. Since the skilled labour of making new +machines is likely to be paid higher than that of making more old +machines, and the proportion of the price which goes as profit upon a +new invention will be higher than in the case of an old one,[174] the +actual displacement of labour will commonly be larger than is +represented by the difference in money price of the two machines. +Moreover, since in the case of an old manufacturing firm the cost of +discarding a certain amount of existing machinery must be reckoned in, +the substitution of new machinery for old will generally mean a +considerable displacement of labour. + +Similarly, when a new process is first taken over by machinery the +expenses of making and working the machines, as compared with the +expenses of turning out a given product by hand labour, will, other +things being equal, involve a net diminution of employment. The fact +that the new machinery is introduced is a proof that there is a net +diminution of employment as regards a given output; for otherwise no +economy would be effected. + +What then is meant by the statement so generally made, that machinery +gives more employment than it takes away--that its wider and ultimate +effect is not to diminish the demand for labour? + +The usual answer is that the economy effected by labour-saving +machinery in the expenses of production will, through competition of +producers, be reflected in a lower scale of prices, and this fall of +prices will stimulate consumption. Thus, it is urged, the output must +be greatly increased. When we add together the labour spent in +producing the machinery to assist the enlarged production, the labour +spent in maintaining and working the same, and the labour of conveying +and distributing the enlarged production, it will be found that more +labour is required under the new than under the old conditions of +industry. So runs the familiar argument. + +The whole argument in favour of the gain which machinery brings to the +working classes hinges upon the contention that it increases rather +than decreases the amount of employment. Now, though we shall find +reason to believe that machinery has not caused any net diminution of +employment, there is nothing to support the rough-and-ready rule by +which the optimism of English economists argues the case in its +application to a single trade. + +The following is a fair example of the argument which has passed +current, drawn from the pages of a competent economic writer:-- + +"The first introduction of machinery may indeed displace and diminish +for a while the employment of labour, may perchance take labour out of +the hands of persons otherwise not able to take another employment, +and create the need of another class of labourers altogether; but if +it has taken labour from ten persons, it has provided labour for a +thousand. How does it work? A yard of calico made by hand costs two +shillings, made by machinery it may cost fourpence. At two shillings a +yard few buy it; at fourpence a yard, multitudes are glad to avail +themselves of it. Cheapness promotes consumption; the article which +hitherto was used by the higher classes only is now to be seen in the +hand of the labouring classes as well. As the demand increases, so +production increases, and to such an extent that, although the number +of labourers now employed in the production of calico may be immensely +less in proportion to a given quantity of calico, the total number +required for the millions of yards now used greatly exceeds the number +engaged when the whole work was performed without any aid of +machinery."[175] + +Now, turning from the consideration of the particular instance, which +we shall find reason to believe is peculiarly unfortunate when we deal +with the statistics of the cotton industry, it must be observed that +economic theory makes dead against this _a priori_ optimism. Ignoring, +for the sake of convenience, the not improbable result that an economy +of production may, at any rate for a time, swell profits instead of +reducing prices, it will be evident that the whole value of the +argument turns upon the effect of a fall of price in stimulating +increased consumption. Now the problem, how far a given fall in price +will force increased consumption, we have found in our discussion of +monopoly prices to involve extremely intricate knowledge of the +special circumstances of each case, and refined calculations of human +motives. Everything depends upon "elasticity of demand," and we are +certainly not justified in assuming that in a particular industry a +given fall of prices due to machine-production will stimulate so large +an increase of consumption that employment will be given to as many, +or more persons than were formerly employed. On the contrary, if we +apply a similarly graduated fall of prices to two different classes of +goods, we shall observe a widely different effect in the stimulation +of consumption. A reduction of fifty per cent. in the price of one +class of manufactured goods may treble or quadruple the consumption, +while the same reduction in another class may increase the consumption +by only twenty per cent. In the former case it is probable that the +ultimate effect of the machinery which has produced the fall in +expenses of production and in prices will be a considerable increase +in the aggregate demand for labour, while in the latter case there +will be a net displacement. It is therefore impossible to argue _a +priori_ that the ultimate effect of a particular introduction of +machinery must be an increased demand for labour, and that the labour +displaced by the machinery will be directly or indirectly absorbed in +forwarding the increased production caused by machinery. It is alleged +that the use of steam-hammers has displaced nine of the ten men +formerly required, that with modern machinery one man can make as many +bottles as six men made formerly, that in the boot and shoe trade one +man can do the work five used to do, that "in the manufacture of +agricultural implements 600 men now do the work which fifteen or +twenty years ago required 2145, thus displacing 1515," and so +forth.[176] Now in some of these cases we shall find that the fall of +prices following such displacements has led to so large an increase of +demand that more persons are directly engaged in these industries than +before; in other cases this is not the case. + +The following quotation from a speech made at the Industrial +Remuneration Conference in 1885 will present the most effective +criticism upon Professor Leone Levi's position:-- + +"In carpet weaving fifty years ago the workman drove the shuttle with +the hand, and produced from forty-five to fifty yards per week, for +which he was paid from 9d. to 1s. per yard, while at the present day a +girl attending a steam loom can produce sixty yards a day, and does +not cost her employer 1-1/2d. per yard for her labour. That girl with +her loom is now doing the work of eight men. The question is, How are +these men employed now? In a clothier's establishment, seeing a girl +at work at a sewing machine, he asked the employer how many men's +labour that machine saved him. He said it saved him twelve men's +labour. Then he asked, 'What would those twelve men be doing now?' +'Oh,' he said, 'they will be much better employed than if they had +been with me, perhaps at some new industry.' He asked, 'What new +industry?' But the employer could not point out any except +photography; at last he said they would probably have found employment +in making sewing machines. Shortly afterwards he was asked to visit +the American Singer Sewing Machine Factory, near Glasgow. He got this +clothier to accompany him, and when going over the works they came +upon the very same kind of machines as the clothier had in his +establishment. Then he put the question to the manager, 'How long +would it take a man to make one of these machines?' He said he could +not tell, as no man made a machine; they had a more expeditious way of +doing it than that--there would be upwards of thirty men employed in +the making of one machine; but he said 'if they were to make this +particular kind of machine, they would turn out one for every four +and a half days' work of each man in their employment.' Now, there was +a machine that with a girl had done the work of twelve men for nearly +ten years, and the owner of that machine was under the impression that +these twelve men would be employed making another machine, while four +and a half days of each of these men was sufficient to make another +machine that was capable of displacing other twelve men." + +In cases like the above we must, of course, bear in mind that a +diminution in employment in the several manufacturing processes +directly and indirectly engaged in forwarding an industry, is not of +itself conclusive evidence that the machinery has brought about a net +displacement of labour. If the output is increased the employment in +the extractive, the transport, and the various distributing processes +may compensate the reduction in making goods and machinery. + +Sec. 2. The industrial history of a country like England can furnish no +sufficient data for a conclusive general judgment of the case. The +enormous expansion of production induced by the application of +machinery in certain branches of textile industry during the first +half of this century indisputably led to an increased demand for +English labour in trades directly or indirectly connected with textile +production. But, in the first place, this cannot be regarded as a +normal result of a fall of prices due to textile machinery, but is +largely attributable to an expansion in the area of consumption--the +acquisition of vast new markets--in which greater efficiency and +cheapness of transport played the most considerable part. Secondly, +assuming that the more pressing needs of the vast body of consumers +are already satisfied by machine-made textile goods, we are not at +liberty to conjecture that any further cheapening of goods, owing to +improved machinery, will have a correspondent effect on consumption +and the demand for labour. If England had been a self-contained +country, manufacturing only for her own market, the result of +machinery applied to textile industries would without doubt have been +a considerable net displacement of textile labour, making every +allowance for growth of population and increased home consumption. The +expansion of English production under the rapid development of +machinery in the nineteenth century cannot therefore be taken as a +right measure of the normal effects of the application of machinery. + +What direct evidence we have of the effect of machinery upon demand +for labour is very significant. Mr. Charles Booth, in his _Occupations +of the People_, presents an analysis of the census returns, showing +the proportion of the population engaged in various employments at +decennial points from 1841 to 1881. To these may be added such +statistics of the 1891 census as the present condition of their +presentation allows us to relate to the former censuses.[177] If we +turn to manufactures, upon which, together with transport, machinery +exercises the most direct influence, we find that the aggregate of +manufactures shows a considerable increase in demand for labour up to +1861--that is, in the period when English wares still kept the lead +they had obtained in the world market--but that since 1861 there is a +positive decline in the proportion of the English population employed +in manufactures. The percentages up to 1881 run as follows:-- + + 1841[178] 27.1 per cent. + 1851 32.7 " + 1861 33.0 " + 1871 31.6 " + 1881 30.7 " + +If we take the staple manufactures, employing the largest number of +workers, we shall find that for the most part they show a rising +demand for labour up to 1861, a stationary or falling demand when +compared with the population after that date. The foundational +industries--machinery and tools, shipbuilding, metal working--whose +demand for labour during the period 1841-61 increased by leaps and +bounds, still show in the aggregate an increased proportion of +employment, largely due to the rise since 1861 of a large export +trade in machinery. But while the machine-making industries continue +to grow faster than the population in the employment they give, +increasing from 209,353 in 1881 to 262,910 in 1891, and shipbuilding +also gives a proportionate increase, it is noteworthy that the steel +and iron trades, which up to 1871 grew far faster than the population, +began to show signs of decline. In 1881 the number of steel and iron +workers was 361,343, in 1891 it had increased to 380,193, a growth of +only 5.3 per cent. as compared with a growth of population amounting +to 11.7 per cent., and a growth of the number of occupied persons +amounting to 15.3 per cent. + +Fuel, gas, chemicals, and other general subsidiary trades show a +steady advance in proportionate employment. The textile and dyeing +industries, on the other hand, showing an increased proportion of +employment up to 1851, by which time the weaving industry was taken +over by machinery, present a continuous and startling decline in the +proportion of employment since that date. A considerably smaller +proportion of the employed classes are now engaged in these trades +than in 1841. The dressmaking industries give the same result--a +continuous decline in proportion of employment since 1851, though in +this case the 1891 figures indicate a slight recovery. The following +are the percentages:-- + + Textile and + Dyeing. Dress. + 1841 9.1 7.8 + 1851 11.1 10.3 + 1861 10.2 9.8 + 1871 9.3 8.5 + 1881 8.2 8.1 + 1891 7.6 8.3 + +The failure of demand for labour to keep pace in its growth with the +growth of population in the main branches of the spinning and weaving +industries is emphasised by Mr. Ellison. Comparing 1850 with 1878, he +says:--"In spinning-mills there is an increase of about 189 per cent. +in spindles, but only 63 per cent. in hands employed; and in weaving +mills an increase of 360 per cent. in looms, but only 253 per cent. in +operatives. This, of course, shows that the machinery has become more +and more automatic or self-regulating, thus requiring the attendance +of a relatively smaller number of workers."[179] When the subsidiary +branches of textile industry are added the results point still more +conclusively in the same direction. + + No. of Spindles. No. of Looms. No. of Operatives. + 1850 20,977,817 249,627 330,924 + 1878 44,206,690 514,911 482,903 + +More recent statistics show that the relative diminution of employment +in textile industries traceable since 1851, became a positive +diminution after 1871, though the statistics of 1891 indicate a +certain recovery. + + 1841 618,509[180] + 1851 603,800 + 1861 934,500 + 1871 970,000 + 1881 962,000 + 1891 1,016,100[181] + +The significance of these figures in relation to the demand for labour +receives further emphasis when the large and rapid displacement of +male by female labour is taken into account. In the dress trades it +may be observed that the absolute increase which every census, save +that of 1871, discloses, is absorbed by the tailoring and millinery +branches, where machinery plays a relatively unimportant part, and +that in the boot and shoe trade, where there has been a greatly +increased application of machinery, there has been not only a +proportionate but an absolute fall-off of employment in the twenty +years following 1861, though the 1891 census again brings up the +absolute numbers of the boot and shoe trade to a little above the +level of 1851.[182] + +The branches of manufacture which show a large increase in the +proportion of employment they give in 1891 as compared with 1861 are +machinery and tools, printing and bookbinding, wood furniture and +carriages, fuel, gas, chemicals, and unspecified trades (chiefly +connected with machinery). Machinery and tools alone, among the larger +manufactures, yield a large proportionate increase of employment, +amounting, according to the Census Report, to 27.7 per cent. between +1881 and 1891, though dealers are included in this estimate as well as +makers. + +From these facts two conclusions may be drawn regarding the direct +effects of machinery. First, so far as the aggregate of manufactures +is concerned, the net result of the increased use of machinery has not +been to offer an increased demand for labour in these industries +commensurate with the growth of the working population. Second, an +increased proportion of the manufacturing population is employed +either in those branches of the large industries where machinery is +least used, or in the smaller manufactures which are either subsidiary +to the large industries, or are engaged in providing miscellaneous +comforts and luxuries. + +Sec. 3. When we turn from manufactures to other employments, we perceive +that while mining and building employ an increasing proportion of the +working classes since 1851, agriculture offers a rapidly diminishing +employment, descending from 20.9 per cent. in 1851 to 11.5 per cent. +in 1881, and 9.9 in 1891.[183] + +It is, however, to the transport trades, to the distributing or +"dealing" trades, and to industrial service that we must look for the +notable increase of employment. All of these departments have grown +far faster than the population since 1841. + + Transport. Dealing. Industrial + Service. + 1841 2.1 5.3 5.4 + 1851 4.1 6.5 4.5 + 1861 4.6 7.1 4.0 + 1871 4.9 7.8 6.0 + 1881 5.6 7.8 6.7 + +The statistics of 1891 still further emphasise this movement. The +transport services show an enormous rise upon 1881, yielding a +proportionate employment of 7.4 per cent. The dealing classes show +likewise a great increase. Merchants and agents increase from 285,138 +to 363,037, dealers in money are about 30 per cent. more numerous, +while insurance employs more than double the number employed in 1881, +and six times the number of 1871. Taking drapers and mercers as +indicative of the dealing class in a staple trade, we find an increase +from 82,362 to 107,018, or 29.9 per cent. The numbers of those +employed in thirteen representative retail trades have increased +between 1881 and 1891 by not less than 27.9 per cent. + + [Illustration: DIAGRAM (COMPARISON OF ENGLISH EMPLOYMENTS).] + +When we look at these figures there can be no doubt that one indirect +result of the increased production due to the application of machinery +has been increased employment in the distributing and transport +industries. This increased employment in transport is by no means +confined to the new services of steam locomotion by land and sea. The +earlier apprehensions that railways would destroy road traffic is not +justified by experience. Though employment on railways has of course +grown very fast, road traffic has increased almost in the same ratio. + + Railways. Roads. + 1841 .03 .7 + 1851 .3 .9 + 1861 .5 1.1 + 1871 .8 1.2 + 1881 1.2 1.5 + 1891 1.4 2.8 + +The census returns for the United States show clearly that carts and +horses have not been displaced by railways, or, more strictly +speaking, that railways have made more cartage work than they have +taken away. In 1850 the manufacture of carriages and waggons employed +15,590 men, in 1870 it employed 54,928. During the same period of +railway growth the number of horses in the country increased from +4,336,717 to 7,145,370. In fact, while the population grew 66 per +cent., the number of carriage and cart makers, in spite of the +increased use of labour-saving machinery in their manufacture, grew +more than 200 per cent. + +It must, however, be clearly recognised that the direct effect of +machinery upon the transport industries also is to cause a diminished +proportionate employment of labour. A comparison of the two chief +branches of steam locomotion will bring this home. + +Machinery occupies a very different place in the railway from that +which it occupies in steam transport by sea. The engine only +indirectly determines and regulates the work of the majority of +railway men. Most of them are not tenders of machinery. Engine-driver, +stoker, and guard are alone in close direct association with the +machine. To them must be added those engaged in construction and +repair within the workshops. Pointsmen and certain station officials +come next in proximity to the machine; shunters and porters are also +"tending" machinery, though their work is more directly dominated by +general business considerations. But are we to say that the army of +platelayers, navvies, etc., engaged along the line is serving +machinery instead of using tools?[184] The work of ticket clerks and +collectors is only governed by the locomotive in a very indirect way. +Though the steam-engine is the central factor in railway work, the +bulk of the labour is skilled or unskilled work in remote relation to +the machine. This explains why the growth of the railway industry, +after the chief work of construction has been done, is not attended by +a diminishing proportion of employment. On the contrary, we find that +railway employment increases faster than mileage and railway capital. +The following statistics of railways in the United Kingdom illustrate +this fact:-- + + Year. Mileage. Capital (paid up). Operatives. + 1851 ... ... 25,200 + 1861 10,865 L362,327,338 53,400 + 1871 15,376 L552,661,551 84,900 + 1881 18,175 L745,528,162 139,500 + 1891 20,191 L919,425,121 186,700 + +But when we turn to the shipping trade, where a much larger proportion +of workers is directly concerned with the tending and direction of +machinery, and trace the effect upon employment of the application of +steam, the result is very different. + + Sailing Vessels Steamers Men on Men on + (Tonnage). (Tonnage). Sailing-ships. Steam-ships. + 1850 3,396,359 168,474 142,730 8,700 + 1860 4,204,360 454,327 145,487 26,105 + 1870 4,577,855 1,112,934 147,207 48,755 + 1880 3,851,045 2,723,488 108,668 84,304 + 1890 2,907,405 5,037,666 84,008 129,366[185] + +If we take the period 1870-90, during which there is an absolute +shrinkage of sailing tonnage, we find that this shrinkage is +accompanied by a less than corresponding diminution of employment. On +the other hand, the tonnage of steamships in this period increased +more than fourfold, but brought with it an increase of employment +which is less than threefold. + + [Illustration: TONNAGE OF SHIPS IN RELATION TO EMPLOYMENT OF + SEAMEN.] + +French statistics during the last half century indicate the same +general movement so far as employment is concerned, though the +movement is less regular. + +There is the same decline in the proportion of those engaged in +agriculture, though less rapid than in England, the same shrinkage of +the proportion engaged in manufacture, and generally in "making" +industries, and the same notable expansion of the "dealing" classes. A +rapid growth of the professional and public services is common to +England and France. The following percentages mark these movements in +France:--[186] + + 1856. 1861. 1866. 1872. 1876. 1881. 1886. +Agricultural + classes 52.9 53.2 51.5 52.5 53.0 50.0 47.8 +Industrial 29.1 27.4 28.8 24.1 25.9 25.6 25.2 +Commercial 4.5 3.9 4.0 8.4 10.7 10.5 11.5[187] +Professional, } + public service, } + persons living } 9.1 9.2 9.5 11.1 10.3 10.2 11.1 + on their incomes } + +These facts and figures seem to support the following conclusions:-- + +(1) That along with the increased application of machinery to the +textile and other staple manufactures there has been in these +industries a decrease of employment relative to the growth of the +working population. + +(2) That in the transport industries the increase of employment is in +inverse proportion to the introduction of machinery into the several +branches as a dominating factor. + +(3) That the considerable diminution of agricultural employment is not +compensated by any proportionate increase of manufacturing employment, +but that the displaced agricultural labour finds employment in such +branches of the transport and distributive trade as are less subject +to machinery. + +In the rough estimate of the effect of machinery upon employment, its +influence upon English agriculture has been left untouched by reason +of the inherent complexity of the forces which are operative. But it +must not be forgotten that by far the most important factor in the +decline of English agricultural employment is the transport machinery +which has brought the produce of distant countries into direct +competition with English agricultural produce. + +So far, therefore, as the statistics of employments present a just +register of the influence of machinery upon demand for labour, we are +driven to conclude that the net influence of machinery is to diminish +employment so far as those industries are concerned into which +machinery directly enters, and to increase the demand in those +industries which machinery affects but slightly or indirectly. If this +is true of England, which, having the start in the development of the +factory system, has to a larger extent than any other country +specialised in the arts of manufacture, it is probable that the net +effect of machinery upon the demand for labour throughout the +industrial world has been to throw a larger proportion of the +population into industries where machinery does not directly enter. +This general conclusion, however, for want of exact statistical +inquiries conducted upon a single basis, can only be accepted as +probable. + +Sec. 4. (2) _Effects of Machinery upon the Regularity of +Employment._--The influence of machinery upon regularity of employment +has a twofold significance. It has a direct bearing upon the +measurement of demand for labour, which must take into account not +only the number of persons employed, but the quantity of employment +given to each. It has also a wider general effect upon the moral and +industrial condition of the workers, and through this upon the +efficiency of labour, which is attracting increased attention among +students of industrial questions. The former consideration alone +concerns us here. We have to distinguish--(_a_) the effects of the +introduction of machinery as a disturbant of regularity of labour; +(_b_) the normal effects of machine-production upon regularity of +labour. + +(_a_) The direct and first effect of the introduction of machinery is, +as we have seen, to displace labour. The machinery causes a certain +quantity of unemployment, apart from the consideration of its ultimate +effect on the number of persons to whom employment is given. Professor +Shield Nicholson finds two laws or tendencies which operate in +reducing this disturbing influence of machinery. He holds (1) that a +radical change made in the methods of production will be gradually and +continuously adopted; (2) that these radical changes--these +discontinuous leaps--tend to give place to advances by small +increments of invention.[188] + +History certainly shows that the fuller application of great +inventions has been slow, though Professor Nicholson somewhat +over-estimates the mobility of labour and its ability to provide +against impending changes. The story of the introduction of the +power-loom discloses terrible sufferings among the hand-weavers of +certain districts, in spite of the gradual manner in which the change +was effected. The fact that along with the growth of the power-loom +the number of hand-looms was long maintained, is evidence of the +immobility of the hand-weavers, who kept up an irregular and ill-paid +work through ignorance and incapacity to adapt themselves to changed +circumstances.[189] In most of the cases where great distress has been +caused, the directly operative influence has not been introduction of +machinery, but sudden change of fashion. This was the case with the +crinoline-hoop makers of Yorkshire, the straw-plaiters of +Bedfordshire, Bucks, Herts, and Essex.[190] The suddenly-executed +freaks of protective tariffs seem likely to be a fruitful source of +disturbance. So far as the displacement has been due to new +applications of machinery, it is no doubt generally correct to say +that sufficient warning is given to enable workers to check the +further flow of labour into such industries, and to divert it into +other industries which are growing in accordance with the new methods +of production, though much suffering is inflicted upon the labour +which is already specialised in the older method of industry. + +Moreover, the changes which are taking place in certain machine +industries favour the increasing adaptability of labour. Many machine +processes are either common to many industries, or are so narrowly +distinguished that a fairly intelligent workman accustomed to one can +soon learn another. If it is true that "the general ability, which is +easily transferable from one trade to another, is every year rising in +importance relatively to that manual skill and technical knowledge +which are specialised in one branch of industry,"[191] we have a +progressive force which tends to minimise the amount of unemployment +due to new applications of specific machinery. + +Professor Nicholson's second law is, however, more speculative and +less reliable in its action. It seems to imply some absolute limit to +the number of great inventions. Radical changes are no doubt generally +followed by smaller increments of invention; but we can have no +guarantee that new radical changes quite as important as the earlier +ones may not occur in the future. There are no assignable limits to +the progress of mechanical invention, or to the rate at which that +progress may be effected. If certain preliminary difficulties in the +general application of electricity as a motor can be overcome, there +is every reason to believe that, with the improved means of rapidly +communicating knowledge we possess, our factory system may be +reorganised and labour displaced far more rapidly than in the case of +steam, and at a rate which might greatly exceed the capacity of labour +to adjust itself to the new industrial conditions. At any rate we are +not at liberty to take for granted that the mobility of labour must +always keep pace with the application of new and labour-disturbing +inventions. Since we are not able to assume that the market will be +extended _pari passu_ with the betterment in methods of production, it +is evident that improvements in machinery must be reckoned as a normal +cause of insecurity of employment. The loss of employment may be only +"temporary," but as the life of a working man is also temporary, such +loss may as a disturbing factor in the working life have a +considerable importance. + +Sec. 5. (_b_) Whether machinery, apart from the changes due to its +introduction, favours regularity or irregularity of employment, is a +question to which a tolerably definite answer can be given. The +structure of the individual factory, with its ever-growing quantity of +expensive machinery, would seem at first sight to furnish a direct +guarantee of regular employment, based upon the self-interest of the +capitalist. Some of the "sweating" trades of London are said to be +maintained by the economy which can be effected by employers who use +no expensive plant or machinery, and who are able readily to increase +or diminish the number of their employees so as to keep pace with the +demands of some "season" trade, such as fur-pulling or artificial +flowers. When the employer has charge of enormous quantities of fixed +capital, his individual interest is strongly in favour of full and +regular employment of labour. On this account, then, machinery would +seem to favour regularity of employment. On the other hand, Professor +Nicholson has ample evidence in support of his statement that "great +fluctuations in price occur in those commodities which require for +their production a large proportion of fixed capital. These +fluctuations in prices are accompanied by corresponding fluctuations +in wages and irregularity of employment."[192] In a word, while it is +the interest of each producer of machine-made goods to give regular +employment, some wider industrial force compels him to irregularity. +What is this force? It is uncontrolled machinery. In the several units +of machine-production, the individual factories or mills, we have +admirable order and accurate adjustment of parts; in the aggregate of +machine-production we have no organisation, but a chaos of haphazard +speculation. "Industry has not yet adapted itself to the changes in +the environment produced by machinery." That is all. + +Under a monetary system of commerce, though commodities still exchange +for commodities, it is an essential condition of that exchange that +those who possess purchasing power shall be willing to use a +sufficient proportion of it to demand consumptive goods. Otherwise the +production of productive goods is stimulated unduly while the demand +for consumptive goods is checked,--the condition which the business +man rightly regards as over-supply of the material forms of capital. +When production was slower, markets[193] narrower, credit less +developed, there was less danger of this big miscalculation, and the +corrective forces of industry were more speedily effective. But modern +machinery has enormously expanded the size of markets, the scale of +competition, the complexity of demand, and production is no longer for +a small, local, present demand, but for a large, world, future demand. +Hence machinery is the direct material cause of these great +fluctuations which bring, as their most evil consequence, irregularity +of wages and employment. + +How far does this tend to right itself? Professor Nicholson believes +that time will compel a better adjustment between machinery and its +environment. + +"The enormous development of steam communication and the spread of the +telegraph over the whole globe have caused modern industry to develop +from a gigantic star-fish, any of whose members might be destroyed +without affecting the rest, into a +mega zoon+ which is convulsed in +agony by a slight injury in one part. A depression of trade is now +felt as keenly in America and even in our colonies as it is here. +Still, in the process of time, with the increase of organisation and +decrease of unsound speculation, this extension of the market must +lead to greater stability of prices; but at present the disturbing +forces often outweigh altogether the supposed principal +elements."[194] + +The organisation of capital under the pressure of these forces is +doubtless proceeding, and such organisation, when it has proceeded far +enough, will indisputably lead to a decrease of unsound speculation. +But these steps in organisation have been taken precisely in those +industries which employ large quantities of fixed capital, and the +admitted fact that severe fluctuations still take place in these +industries is proof that the steadying influences of such organisation +have not yet had time to assert themselves to much purpose. The +competition of larger and larger masses of organised capital seems to +induce heavier speculation and larger fluctuations. Not until a whole +species of capital is organised into some form or degree of +"combination" is the steadying influence of organisation able to +predominate. + +Sec. 6. But there is also another force which, in England at any rate, +under the increased application of machinery, makes for an increase +rather than a diminution of speculative production. It has been seen +that the proportion of workers engaged in producing comforts and +luxuries is growing, while the proportion of those producing the prime +necessaries of life is declining. How far the operation of the law of +diminishing returns will allow this tendency to proceed we cannot here +discuss. But statistics show that this is the present tendency both in +England and in the United States. Now the demand for comforts and +luxuries is essentially more irregular and less amenable to +commercial calculation than the demand for necessaries. The greatest +economies of machine-production are found in industries where the +demand is largest, steadiest, and most calculable. Hence the effect of +machinery is to drive ever and ever larger numbers of workers from the +less to the more unsteady employments. Moreover, there is a marked +tendency for the demand for luxuries to become more irregular and less +amenable to calculation, and a corresponding irregularity is imposed +upon the trades engaged in producing them. Twenty years ago it was +possible for Coventry ribbon-weavers to "make to stock" during the +winter months, for though silk ribbons may always be classed as a +luxury, certain patterns commanded a tolerably steady sale year after +year. Now the fluctuations of fashion are much sharper and more +frequent, and a far larger proportion of the consumers of ribbons are +affected by fashion-changes. Hence it has become more and more +difficult to forecast the market, less and less is made to stock, more +and more to order, and orders are given at shorter and shorter notice. +So looms and weavers kept idle during a large part of the year are +driven into fevered activity of manufacture for short irregular +periods. The same applies to many other season and fashion trades. The +irregularity of demand prevents these trades from reaping the full +advantages of the economies of machinery, though the partial +application of machinery and power facilitates the execution of orders +at short notice. Hence the increased proportion of the community's +income spent on luxuries requires an increased proportion of the +labour of the community to be expended in their production. This +signifies a drifting of labour from the more steady forms of +employment to those which are less steady and whose unsteadiness is +constantly increasing. A larger proportion of town workers is +constantly passing into trades connected with preparing and preserving +animal and vegetable substances, to such industries as the hat and +bonnet, confectionery, bookbinding, trades affected by weather, +holiday and season trades, or those in which changes in taste and +fashion are largely operative. + +Thus it appears there are three modes in which modern capitalist +methods of production cause temporary unemployment. (1) Continual +increments of labour-saving machinery displace a number of workers, +compelling them to remain wholly or partially unemployed, until they +have "adjusted" themselves to the new economic conditions. (2) +Miscalculation and temporary over-production, to which machine +industries with a wide unstable market are particularly prone, bring +about periodic deep depressions of "trade," temporarily throwing out +of work large bodies of skilled and unskilled labour. (3) Economies of +machine-production in the staple industries drive an increasing +proportion of labour with trades which are engaged in supplying +commodities, the demand for which is more irregular, and in which +therefore the fluctuations in demand for labour must be greater. + +Most economists, still deeply imbued with a belief in the admirable +order and economy of "the play of economic forces," appear to regard +all unemployment not assignable to individual vice or incapacity as +the natural and necessary effect of the process of adjustment by which +industrial progress is achieved, ignoring altogether the two latter +classes of consideration. There is, however, reason to believe that in +an average year a far larger number of the "unemployed" at any given +time owe their unemployment to a temporary depression of the trade in +which they are engaged, than to the fluctuations brought about by +organic changes in the economic structure of the trade. + +The size and importance of the "unemployment" due primarily to trade +depressions is very imperfectly appreciated. The following statistics +of the condition of the skilled labour market in the period 1886-92, +based upon the reports of twenty-two trades unions, have an important +bearing on this point:-- + + Year. Percentage out of work. + 1886 10.1 per cent.[195] + 1887 8.6 " + 1888 4.4 " + 1889 1.8 " + 1890 2.6 " + 1891 4.45 " + 1892 7.33 " + 1893 7.9[196] " + +When it is remembered that these figures apply only to the +well-organised trades unions, which, as a rule, comprise the best and +most highly-skilled workers in the several trades, who are less likely +than others to be thrown out in a "slack time," that the building and +season trades are not included in the estimate, and that women's +industries, notoriously more irregular than men's, are altogether +ignored, it will be evident that these statistics very inadequately +represent the proportion of unemployment for the aggregate of the +working classes at the several periods. The _Report on Principal and +Minor Textile Trades_ deducts 10 per cent. from the normal wages to +represent unemployment, though the year 1885, to which the figures +refer, is spoken of as "fairly representative of a normal year."[197] + +The injury inflicted upon the wages, working efficiency, and character +of the working classes by irregular employment is, however, very +inadequately represented by figures indicating the average of +"unemployment" during a long period. In the first place, in such an +estimate no allowance is made for the "short time," often worked for +months together by large bodies of operatives. Secondly, in measuring +the evil of "unemployment," we must look rather to the maximum than to +the mean condition. If a man is liable to have his food supply cut off +for a month at a time, no estimate showing that on the average he has +more than enough to eat and drink will fairly represent the danger to +which he is exposed. If once in every ten years we find that some 10 +per cent. of the skilled workers, and a far larger percentage of +unskilled workers, are out of employment for months together, these +figures measure the economic malady of "unemployment," which is in no +sense compensated by the full or excessive labour of periods of better +trade. + +Sec. 7. Our reasoning from the ascertained tendencies of +machine-production points to the conclusion that, having regard to the +two prime constituents in demand for labour, the number of those +employed, and the regularity of employment, machinery does not, under +present conditions, generally favour an increased steady demand for +labour. It tends to drive an increased proportion of labour in three +directions. + +(1) To the invention, construction, and maintenance of machinery to +make machines, the labour of machine-making being continually +displaced by machines, and being thus driven to the production of +machines more remote from the machines directly engaged in producing +consumptive goods. The labour thus engaged must be in an +ever-diminishing proportion to a given quantity of consumption. +Nothing but a great increase in the quantity of consumption, or the +opening of new varieties of consumption, can maintain or increase the +demand for labour in these machine-making industries. + +(2) To continual specialisation, subdivision, and refinement in the +arts of distribution. The multiplication of merchants, agents, +retailers, which, in spite of forces making for centralisation in +distributive work, is so marked a feature in the English industry of +the last forty years, is a natural result of the influence of +machinery, in setting free from "making" processes an increased +proportion of labour. + +(3) To the supply of new forms of wealth, which are either (_a_) +wholly non-material--_i.e._, intellectual, artistic, or other personal +services; (_b_) partly non-material--_e.g._, works of art or skill, +whose value consists chiefly in the embodiment of individual taste or +spontaneous energy, or (_c_) too irregular or not sufficiently +extended in demand to admit the application of machinery. The learned +professions, art, science, and literature, and those branches of +labour engaged in producing luxuries and luxurious services furnish a +constantly increasing employment, though the supply of labour is so +notoriously in excess of the demand in all such employments that a +large percentage of unemployment is chronic. + +So long then as a community grows in numbers, so long as individuals +desire to satisfy more fully their present wants and continue to +develop new wants, forming a higher or more intricate standard of +consumption, there is no evidence to justify the conclusion that +machinery has the effect of causing a net diminution in demand for +labour, though it tends to diminish the proportion of employment in +the "manufacturing" industries; but there is strong reason to believe +that it tends to make employment more unstable, more precarious of +tenure, and more fluctuating in market value. + +FOOTNOTES: + +[174] Against this we may set the possibility of a fall in the rate of +interest at which manufacturers may be able to borrow capital in order +to set up improved machinery. Where an economy can be effected in this +direction, the displacement of labour due to the introduction of +machinery may not be so large--_i.e._, it will pay a manufacturer to +introduce a new machine which only "saves" a small amount of money, if +he can effect the change at a cheap rate of borrowing. (Cf. Marshall, +_Principles of Economics_, 2nd edit., pp. 569, 570.) + +[175] Leone Levi, _Work and Pay_, p. 28. + +[176] Statement by Mr. Shaftoe, President of the Trades Union +Congress, 1888; cf. Carroll D. Wright, _Report on Industrial +Depressions_, Washington, 1886, pp. 80-90. + +[177] The merging of retail dealers with the "making" classes, the +classification of merchants with those engaged in transport +industries, and certain departures from precedent in the mode of +classification, render a full use of the 1891 figures impossible at +present. + +[178] In the years 1831-41 there was an enormous increase of the +factory population. Between 1835 and 1839, according to Porter, the +increase amounted to 68,263, or a rise of 19.2 per cent. (_Progress of +the Nation_, p. 78.) + +[179] T. Ellison, _Cotton Trade of Great Britain_, p. 74. + +[180] Only 349,452, or 56.8 per cent. in factories. (Porter, p. 78.) + +[181] This increase since 1881 is chiefly explained by the feverish +expansion and over-production of the cotton industry. The census +return for 1891 is reduced to correspond with the earlier estimates in +Booth's _Occupations of the People_. + +[182] The 1851 census gives 235,447, that of 1891 gives 240,000 (with +an estimated deduction for clog and patten-makers). + +[183] The enormous fall between the census of 1861 and 1871 is partly +attributable to changes in classification. (1) Female relatives of +farmers, included in 1861, were excluded in later censuses; (2) +certain changes were made in the treatment of "retired" persons. + +[184] The "steam-navvy" is, however, making digging a machine +industry. Thirteen men with a machine-navvy can do the work of between +60 and 70 human navvies. + +[185] The aggregate effect of the change upon employment of seamen is +traced by the following figures, in which the tonnage of sailing and +steam vessels is massed together:-- + + Tonnage. Men. + 1850 3,564,833 151,430 + 1860 4,658,687 171,592 + 1870 5,690,789 195,962 + 1880 6,574,513 192,972 + 1890 7,945,071 213,374 + +[186] M.S. Levasseur, _La Population Francaise_. Paris, 1889. + +[187] From 1876 the transport services, which in 1886 amounted to 2.8 +per cent. of the income-receiving population, were included under +commercial. Taking this into consideration, a comparison of the +industrial and the commercial population of 1866 and 1886 shows that +while the former falls from 28.8 to 25.2, the latter rises from 4.0 to +8.7. + +[188] J.S. Nicholson, _Effects of Machinery on Wages_, p. 33. + +[189] Babbage, _Economy of Manufactures_, p. 230. + +[190] Cf. Thorold Rogers, _Political Economy_ (1869), pp. 78, 79. + +[191] Marshall, _Principles of Economics_, p. 607; cf. Cunningham, +_Uses and Abuses of Money_, p. 59. See, however, _infra_ Chap. ix. + +[192] _Effects of Machinery on Wages_, p. 66. + +[193] An increase in the space-area of a market may, however, in some +cases make a trade more steady, especially in the case of an article +of luxury subject to local fluctuations of fashion, etc. A narrow silk +market for England meant fluctuating employment and low skill. An open +market gave improved skill and stability, for though silk is still the +most unsteady of the textile industries, it is far less fluctuating +than was the case in the eighteenth century. (Cf. Porter, p. 225.) + +[194] _Op. cit._, p. 117. + +[195] _Board of Trade Journal_, November 1892. + +[196] For twenty-six societies. + +[197] Page xii. + + + + +CHAPTER IX. + +MACHINERY AND THE QUALITY OF LABOUR. + + Sec. 1. _Kinds of Labour which Machinery supersedes._ + Sec. 2. _Influence of Machine-evolution upon intensity of physical + work._ + Sec. 3. _Machinery and the length of the working day._ + Sec. 4. _The Education of Working with Machinery._ + Sec. 5. _The levelling tendency of Machinery--The subordination of + individual capacity in work._ + + +Sec. 1. In considering the influence of Machinery upon the quality of +labour--_i.e._, skill, duration, intensity, intellectuality, etc., we +have first to face two questions--What are the qualities in which +machinery surpasses human labour? What are the kinds of work in which +machinery displaces man? Now, since the whole of industrial work +consists in moving matter, the advantage of machinery must consist in +the production and disposition of motive power. The general economies +of machinery were found to be two[198]--(1) The increased quantity of +motive force it can apply to industry; (2) greater exactitude in the +regular application of motive force (_a_) in time--the exact +repetition of the same acts at regulated intervals, or greater +evenness in continuity, (_b_) in place--exact repetition of the same +movements in space.[199] All the advantages imputed to machinery in +the economy of human time, the utilisation of waste material, the +display of concentrated force or the delicacy of manipulation, are +derivable from these two general economies. Hence it follows that +wherever the efficiency of labour power depends chiefly upon the +output of muscular force in motive power, or precision in the +regulation of muscular force, machinery will tend to displace human +labour. Assuming, therefore, that displaced labour finds other +employment, it will be transferred to work where machinery has not the +same advantage over human labour--that is to say, to work where the +muscular strain or the need for regularity of movement is less. At +first sight it will thus seem to follow that every displacement of +labour by machinery will bring an elevation in the quality of labour, +that is, will increase the proportion of labour in employments which +tax the muscles less and are less monotonous. This is in the main the +conclusion towards which Professor Marshall inclines.[200] + +So far as each several industry is concerned, it has been shown that +the introduction of machinery signifies a net reduction of employment, +unless the development of trade is largely extended by the fall of +price due to the diminution in expenses of production. It cannot be +assumed as a matter of course that the labour displaced by the +introduction of automatic folders in printing will be employed in less +automatic work connected with printing. It may be diverted from +muscular monotony in printing to the less muscular monotony of +providing some new species of luxury, the demand for which is not yet +sufficiently large or regular to justify the application of +labour-saving machinery. But even assuming that the whole or a large +part of the displaced labour is engaged in work which is proved to +have been less muscular or less automatic by the fact that it is not +yet undertaken by machinery, it does not necessarily follow that there +is a diminution in the aggregate of physical energy given out, or in +the total "monotony" of labour. + +One direct result of the application of an increased proportion of +labour power to the kinds of work which are less "muscular" and less +"automatic" in character will be a tendency towards greater division +of labour and more specialisation in these employments. Now the +economic advantages of increased specialisation can only be obtained +by increased automatic action. Thus the routine or automatic +character, which constituted the monotony of the work in which +machinery displaced these workers, will now be imparted to the higher +grades of labour in which they are employed, and these in their turn +will be advanced towards a condition which will render them open to a +new invasion of machinery. + +Since the number of productive processes falling under machinery is +thus continually increased, it will be seen that we are not entitled +to assume that every displacement of labour by machinery will increase +the proportion of labour engaged in lighter and more interesting forms +of non-mechanical labour. + +Sec. 2. Nor is it shown that the growth of machine-production tends to +diminish the total physical strain upon the worker, though it greatly +lessens the output of purely muscular activity. As regards those +workers who pass from ordinary manual work to the tending of +machinery, there is a good deal of evidence to show that, in the +typical machine industries, their new work taxes their physical vigour +quite as severely as the old work. Professor Shield Nicholson quotes +the following striking statement from the _Cotton Factory Times_:--"It +is quite a common occurrence to hear young men who are on the best +side of thirty years of age declare they are so worked up with the +long mules, coarse counts, quick speeds, and inferior material, that +they are fit for nothing at night, only going to bed and taking as +much rest as circumstances will allow. There are few people who will +credit such statements; nevertheless they are true, and can be +verified any day in the great majority of the mills in the spinning +districts." + +Schulze-Gaevernitz shows that the tendency in modern cotton-spinning +and weaving, especially in England, has been both to increase the +number of spindles and looms which an operative is called upon to +tend, and to increase the speed of spinning. "A worker tends to-day +more than twice or nearly three times as much machinery as his father +did; the number of machines in use has increased more than five-fold +since that time, while the workers have not quite doubled their +numbers."[201] With regard to speed, "since the beginning of the +seventies the speed of the spinning machines alone has increased about +15 per cent."[202] + +We are not, however, at liberty to infer from Schulze-Gaevernitz's +statement regarding the increased number of spindles and looms an +operative tends, that an intensification of labour correspondent with +this increase of machinery has taken place, nor can the increased +output per operative be imputed chiefly to improved skill or energy of +the operative. Much of the labour-saving character of recent +improvements, especially in the carding, spinning, and intermediate +processes, has reduced to an automatic state work which formerly taxed +the energy of the operative, who has thereby been enabled to tend more +machinery and to quicken the speed without a net increase of working +energy. + +In the carding, slubbing, intermediate, roving, and spinning machinery +there is in every case an increase in the amount of machinery tended. +But carding machinery has been revolutionised within the last few +years; the drawing frame has been made to stop automatically when +there is a fault, thus relieving the tender of a certain amount of +supervision; in the slubbing, intermediate, and roving frames certain +detailed improvements have been effected, as is also the case in the +spinning mules and sizing machines. + +To some extent the increased quantity of spindles, etc., and increased +speed may be regarded as set off by relief due to these improvements. +Moreover, though there has no doubt been some general speeding up, any +exact measurement is hardly possible, for the speed of machinery is +very often regulated by the amount of work each process is made to do; +for example, if a roving frame makes a coarse hank, the speed of the +spindles does not require to be so great as when the hank is finer; in +that case the mule draws out the sliver to a greater extent than when +the roving is finer, or, in other words, the mule in one case does the +work of the roving frame to a certain extent. + +The general opinion seems to be that in the spinning mills, roughly +speaking, 75 per cent. of the increased output per operative may be +imputed to improved machinery, 25 per cent. to increased intensity of +labour in regard to quantity of spindles or "speeding up." + +In the weaving processes more specific measurement is possible, though +even there much depends upon the quality of yarn that is used. Here a +reduction in the working day is followed by an increase in speed +without any labour-saving improvements. Previous to the Factory +legislation of 1878, the speed of looms was generally from 170 to 190 +picks per minute during the ten hours' day. In the course of about two +years after the reduction of hours (6 per cent.) the general speed had +become 190 to 200 picks, without change in machinery or raw material, +a growth which must have proportionately increased the intensity of +the work of weaving. A deterioration in the quality of the raw +material used for producing cotton cloth is also commonly assigned as +a fact involving more care on the part of the weaver, and increased +danger and disagreeability of work owing to the heavy sizing and +steaming it has brought into vogue. It is not easy to argue much +respecting increased intensity of labour from the increased average of +looms attended, for, as was recently admitted in evidence before the +Labour Commission, everything depends upon the class of looms and of +goods they are manufacturing. "It is quite as easy to drive five looms +of some classes as two of others."[203] But the prevalence of the +"driving" system, by which the overlookers are paid a bonus on the +product of the looms under their charge, has admittedly induced, as it +was obviously designed to do, an increased intensity of labour. + +Summing up the evidence, we are able to conclude that the shortening +of working hours and the improvements in machinery has been attended +by an increased effort per unit of labour time. In the words of an +expert, "the change to those actually engaged in practical work is to +lessen the amount of hard manual work of one class, but to increase +their responsibility, owing to being placed in charge of more +machinery, and that of a more expensive kind; while the work of the +more lowly skilled will be intensified, owing to increased production, +and that from an inferior raw material. I mean that to the operative +the improvements in machinery have been neutralised by the inferior +quality of raw material used, and I think it is fair to assume that +their work has been intensified at least in proportion to the increase +of spindles, etc." + +The direct evidence drawn from this most highly-evolved machine +industry seems to justify the general opinion expressed by Professor +Nicholson, "It is clear that the use of machines, though apparently +labour-saving, often leads to an increase in the _quantity of labour_, +negatively, by not developing the mind, positively by doing harm to +the body."[204] + +Sec. 3. When any muscular or other physical effort is required it is +pretty evident that an increased duration or a greater continuity in +the slighter effort may tax the body quite as severely as the less +frequent or constant application of a much greater bodily force. There +can be no question but that in a competitive industrial society there +exists a tendency to compensate for any saving of hard muscular, or +other physical effort afforded by the intervention of machinery in two +ways: first, by "forcing the pace"--_i.e._, compelling the worker to +attend more machines or to work more rapidly, thus increasing the +strain, if not upon the muscles, then upon the nerves; secondly, by +extending the hours of labour. A lighter form of labour spread over an +increased period of time, or an increased number of minor muscular +exertions substituted for a smaller number of heavier exertions within +the same period of time, may of course amount to an increased tax upon +the vital energy. It is not disputed that a general result of the +factory system has been to increase the average length of the working +day, if we take under our survey the whole area of machine-production +in modern industrial communities. This is only in part attributable to +the fact that workers can be induced to sell the same daily output of +physical energy as before, while in many cases a longer time is +required for its expenditure. Another influence of equal potency is +the economy of machinery effected by working longer hours. It is the +combined operation of these two forces that has lengthened the average +working day. Certain subsidiary influences, however, also deserve +notice, especially the introduction of cheap illuminants. Before the +cheap provision of gas, the working time was generally limited by +daylight. Not until the first decade of this century was gas +introduced into cotton-mills, and another generation elapsed before it +passed in general use in manufactories and retail shops.[205] Now a +portion of nature's rest has been annexed to the working day. There +are, of course, powerful social forces making for a curtailment of the +working day, and these forces are in many industries powerfully though +indirectly aided by machinery. Perhaps it would be right to say that +machinery develops two antagonistic tendencies as regards the length +of the working day. Its most direct economic influence favours an +extension of the working hours, for machinery untired, wasting power +by idleness, favours continuous work. But when the growing pace and +complexity of highly-organised machinery taxes human energy with +increasing severity, and compresses an increased human effort within a +given time, a certain net advantage in limiting the working day for an +individual begins to emerge, and it becomes increasingly advantageous +to work the machinery for shorter hours, or, where possible, to apply +"shifts" of workers.[206] + +But in the present stage of machine-development the economy of the +shorter working day is only obtainable in a few trades and in a few +countries; the general tendency is still in the direction of an +extended working day.[207] The full significance of this is not +confined to the fact that a larger proportion of the worker's time is +consumed in the growing monotony of production. The curtailment of his +time for consumption, and a consequent lessening of the subjective +value of his consumables, must be set off against such increase in +real wages or purchasing power as may have come to him from the +increased productive power of machinery. The value of a shorter +working day consists not merely in the diminution of the burden of +toil it brings, but also in the fact that increased consumption time +enables the workers to get a fuller use of his purchased consumables, +and to enjoy various kinds of "free wealth" from which he was +precluded under a longer working day.[208] So far as machinery has +converted handicraftsmen into machine-tenders, it is extremely +doubtful whether it has lessened the strain upon their energies, +though we should hesitate to give an explicit endorsement to Mill's +somewhat rhetorical verdict. "It is questionable if all the mechanical +inventions yet made have lightened the day's toil of any human being." +At any rate we have as yet no security that machinery, owned by +individuals who do not themselves tend it, shall not be used in such a +way as to increase the physical strain of those who do tend it. "There +is a temptation," as Mr. Cunningham says, "to treat the machine as the +main element in production, and to make it the measure of what a man +ought to do, instead of regarding the man as the first consideration, +and the machine as the instrument which helps him; the machine may be +made the primary consideration, and the man may be treated as a mere +slave who tends it."[209] + +Sec. 4. Now to come to the question of "monotony." Is the net tendency of +machinery to make labour more monotonous or less, to educate the +worker or to brutalise him? Does labour become more intellectual under +the machine? Professor Marshall, who has thoughtfully discussed this +question, inclines in favour of machinery. It takes away manual skill, +but it substitutes higher or more intellectual forms of skill.[210] +"The more delicate the machine's power the greater is the judgment and +carefulness which is called for from those who see after it."[211] +Since machinery is daily becoming more and more delicate, it would +follow that the tending of machinery would become more and more +intellectual. The judgment of Mr. Cooke Taylor, in the conclusion of +his admirable work, _The Modern Factory System_, is the same. "If man +were merely an intellectual animal, even only a moral and intellectual +one, it could scarcely be denied, it seems to us, that the results of +the factory system have been thus far elevating."[212] Mr. Taylor +indeed admits of the operative population that "they have deteriorated +artistically; but art is a matter of faculty, of perception, of +aptitude, rather than of intellect." This strange severance of Art +from Intellect and Morals, especially when we bear in mind that Life +itself is the finest and most valuable of Arts, will scarcely commend +itself to deeper students of economic movements. The fuller +significance of this admission will appear when the widest aspect of +the subject is discussed in our final chapter. + +The question of the net intellectual effects of machinery is not one +which admits of positive answer. It would be open to one to admit with +Mr. Taylor that the operatives were growing more intellectual, and +that their contact with machinery exercises certain educative +influences, but to deny that the direct results of machinery upon the +workers were favourable to a wide cultivation of intellectual powers, +as compared with various forms of freer and less specialised manual +labour. The intellectualisation of the town operatives (assuming the +process to be taking place) may be attributable to the thousand and +one other influences of town life rather than to machinery, save +indirectly so far as the modern industrial centre is itself the +creation of machinery.[213] It is not, I think, possible at present to +offer any clear or definite judgment. But the following distinctions +seem to have some weight in forming our opinion. + +The growth of machinery has acted as an enormous stimulus to the study +of natural laws. A larger and larger proportion of human effort is +absorbed in processes of invention, in the manipulation of commerce on +an increasing scale of magnitude and complexity, and in such +management of machinery and men as requires and educates high +intellectual faculties of observation, judgment, and speculative +imagination. Of that portion of workers who may be said, within +limits, to control machinery, there can be no question that the total +effect of machinery has been highly educative. + +The growing size, power, speed, complexity of machinery, undoubtedly +makes the work of this class of workers "more intellectual." Some +measure of these educative influences even extends to the "hand" who +tends some minute portion of the machinery, so far as the proper +performance of his task requires him to understand other processes +than those to which his labour is directly and exclusively applied. + +So likewise consideration must be taken of the skilled work of making +and repairing machinery. The engineers' shop and other workshops are +becoming every year a more and more important factor in the equipment +of a factory or mill. But though "breakdowns" are essentially erratic +and must always afford scope for ingenuity in their repair, even in +the engineers' shop there is the same tendency for machinery to +undertake all work of repair which can be brought under routine. So +the skilled work in making and repairing machinery is continually +being reduced to a minimum, and cannot be regarded, as Professor +Nicholson is disposed to regard it, as a factor of growing importance +in connection with machine-production. The more machinery is used, the +more skilled work of making and repairing will be required, it might +seem. But the rapidity with which machinery is invading these very +functions turns the scale in the opposite direction, at any rate so +far as the making of machinery is concerned. Statistics relating to +the number of those engaged in making machinery and tools show that +the proportion they bear to the whole working population is an +increasing one; but the rate of this increase is by no means +proportionate to the rate of increase in the use of machinery. While +the percentage of those engaged in making machinery and tools rises +from 1.7 in 1861 to 1.8 in 1871 and 1.9 in 1881, 2.0 in 1891, the +approximate increase of steam-power applied to fixed machinery and +locomotives shows a much more rapid rise,--from 2,100,000 horse-power +in 1860 to 3,040,000 in 1870 and 5,200,000 in 1880.[214] Moreover, an +increased proportion of machinery production is for export trade, so +that a large quantity of the labour employed in those industries is +not required to sustain the supply of machinery used in English work. +In repairs of machinery, the economy effected by the system of +interchangeable parts is one of growing magnitude, and tends likewise +to minimise the skilled labour of repair.[215] + +Finally, it should be borne in mind that in several large industries +where machinery fills a prominent place, the bulk of the labour is not +directly governed by the machine. This fact has already received +attention in relation to railway workers. The character of the machine +certainly impresses itself upon these in different degrees, but in +most cases there is a large amount of detailed freedom of action and +scope for individual skill and activity. + +Though the quality of intelligence and skill applied to the invention, +application, and management of machinery is constantly increasing, +practical authorities are almost unanimous in admitting that the +proportion which this skilled work bears to the aggregate of labour in +machine industry is constantly diminishing. Now, setting on one side +this small proportion of intelligent labour, what are we to say of the +labour of him who, under the minute subdivision enforced by machinery, +is obliged to spend his working life in tending some small portion of +a single machine, the whole result of which is continually to push +some single commodity a single step along the journey from raw +material to consumptive goods? + +The factory is organised with military precision, the individual's +work is definitely fixed for him; he has nothing to say as to the plan +of his work or its final completion or its ultimate use. "The constant +employment on one sixty-fourth part of a shoe not only offers no +encouragement to mental activity, but dulls by its monotony the brains +of the employee to such an extent that the power to think and reason +is almost lost."[216] + +The work of a machine-tender, it is urged, calls for "judgment and +carefulness." So did his manual labour before the machine took it +over. His "judgment and carefulness" are now confined within narrower +limits than before. The responsibility of the worker is greater, +precisely because his work is narrowed down so as to be related to and +dependent on a number of other operatives in other parts of the same +machine with whom he has no direct personal concern. Such realised +responsibility is an element in education, moral and intellectual. But +this gain is the direct result of the minute subdivision, and must +therefore be regarded as purchased by a narrowing of interest and a +growing monotony of work. It is questionable whether the vast majority +of machine workers get any considerable education, from the fact that +the machine in conjunction with which they work represents a huge +embodiment of the delicate skill and invention of many thousands of +active minds, though some value may be attached to the contention that +"the mere exhibition of the skill displayed and the magnitude of the +operations performed in factories can scarcely fail of some +educational effect."[217] The absence of any true apprenticeship in +modern factories prevents the detailed worker from understanding the +method and true bearing even of those processes which are closely +linked to that in which he is engaged. The ordinary machine-tender, +save in a very few instances, _e.g._, watchmaking, has no general +understanding of the work of a whole department. Present conditions do +not enable the "tender" to get out of machinery the educational +influence he might get. Professor Nicholson expresses himself +dubiously upon the educational value of the machine. "Machinery of +itself does not tend to develop the mind as the sea and mountains do, +but still it does not necessarily involve deterioration of general +mental ability."[218] Dr. Arlidge expresses a more decided opinion. +"Generally speaking, it may be asserted of machinery that it calls for +little or no brain exertion on the part of those connected with its +operations; it arouses no interest, and has nothing in it to quicken +or brighten the intelligence, though it may sharpen the sight and +stimulate muscular activity in some one limited direction."[219] + +The work of machine-tending is never of course absolutely automatic +or without spontaneity and skill. To a certain limited extent the +"tender" of machinery rules as well as serves the machine; in seeing +that his portion of the machine works in accurate adjustment to the +rest, the qualities of care, judgment, and responsibility are evolved. +For a customary skill of wrist and eye which speedily hardens into an +instinct, is often substituted a series of adjustments requiring +accurate quantitative measurement and conscious reference to exact +standards. In such industries as those of watchmaking the factory +worker, though upon the average his work requires less manual +dexterity than the handworker in the older method, may get more +intellectual exercise in the course of his work. But though economists +have paid much attention to this industry, in considering the +character of machine-tending it is not an average example for a +comparison of machine labour and hand labour; for the extreme delicacy +of many of the operations even under machinery, the responsibility +attaching to the manipulation of expensive material, and the minute +adjustment of the numerous small parts, enable the worker in a watch +factory to get more interest and more mental training out of his work +than falls to the ordinary worker in a textile or metal factory. +Wherever the material is of a very delicate nature and the processes +involve some close study of the individual qualities of each piece of +material, as is the case with the more valuable metals, with some +forms of pottery, with silk or lace, elements of thought and skill +survive and may be even fostered under machine industry. A great part +of modern inventiveness, however, is engaged in devising automatic +checks and indicators for the sake of dispensing with detailed human +skill and reducing the spontaneous or thoughtful elements of tending +machinery to a minimum. When this minimum is reached the highly-paid +skilled workman gives place to the low-skilled woman or child, and +eventually the process passes over entirely into the hands of +machinery. So long, however, as human labour continues to co-operate +with machinery, certain elements of thought and spontaneity adhere to +it. These must be taken into account in any estimate of the net +educative influence of machinery. But though these mental qualities +must not be overlooked, exaggerated importance should not be attached +to them. The layman is often apt to esteem too highly the nature of +skilled specialist work. A locomotive superintendent of a railway was +recently questioned as to the quality of engine-driving. "After twenty +years' experience he declared emphatically that the very best +engine-drivers were those who were most mechanical and unintelligent +in their work, who cared least about the internal mechanism of the +engine."[220] Yet engine-driving is far less mechanical and monotonous +than ordinary tending of machinery. + +So far as the man follows the machine and has his work determined for +him by mechanical necessity, the educative pressure of the latter +force must be predominant. Machinery, like everything else, can only +teach what it practises. Order, exactitude, persistence, conformity to +unbending law,--these are the lessons which must emanate from the +machine. They have an important place as elements in the formation of +intellectual and moral character. But of themselves they contribute a +one-sided and very imperfect education. Machinery can exactly +reproduce; it can, therefore, teach the lesson of exact reproduction, +an education of quantitative measurements. The defect of machinery, +from the educative point of view, is its absolute conservatism. The +law of machinery is a law of statical order, that everything conforms +to a pattern, that present actions precisely resemble past and future +actions. Now the law of human life is dynamic, requiring order not as +valuable in itself, but as the condition of progress. The law of human +life is that no experience, no thought or feeling is an exact copy of +any other. Therefore, if you confine a man to expending his energy in +trying to conform exactly to the movements of a machine, you teach him +to abrogate the very principle of life. Variety is of the essence of +life, and machinery is the enemy of variety. This is no argument +against the educative uses of machinery, but only against the +exaggeration of these uses. If a workman expend a reasonable portion +of his energy in following the movements of a machine, he may gain a +considerable educational value; but he must also have both time and +energy left to cultivate the spontaneous and progressive arts of life. + +Sec. 5. It is often urged that the tendency of machinery is not merely +to render monotonous the activity of the individual worker, but to +reduce the individual differences in workers. This criticism finds +expression in the saying: "All men are equal before the machine." So +far as machinery actually shifts upon natural forces work which +otherwise would tax the muscular energy, it undoubtedly tends to put +upon a level workers of different muscular capacity. Moreover, by +taking over work which requires great precision of movement, there is +a sense in which it is true that machinery tends to reduce the workers +to a common level of skill, or even of un-skill. + +"Whenever a process requires peculiar dexterity and steadiness of +hand, it is withdrawn as soon as possible from the cunning workman, +who is prone to irregularities of many kinds, and it is placed in +charge of a peculiar mechanism, so self-regulating that a child can +superintend it."[221] + +That this is not true of the most highly-skilled or qualitative work +must be conceded, but it applies with great force to the bulk of +lower-skilled labour. By the aid of machinery--_i.e._, of the +condensed embodiment of the inventor's skill, the clumsy or weak +worker is rendered capable of assisting the nicest movements on a +closer equality with the more skilled worker. Of course piece-work, as +practised in textile and hardware industries, shows that the most +complete machinery has not nearly abolished the individual differences +between one worker and another. But assuming that the difference in +recorded piece wages accurately represents difference in skill or +capacity of work--which is not quite the case--it seems evident that +there is less variation in capacity among machine-workers than among +workers engaged in employments where the work is more muscular, or is +conducted by human skill with simpler implements. The difference in +productive capacity between an English and a Hindoo navvy is +considerably greater than the difference between a Lancashire mill +operative and an operative in an equally well-equipped and organised +Bombay mill. + +But this is by no means all that is signified by the "equality of +workers before the machine." It is the adaptability of the machine to +the weaker muscles and intelligence of women and children that is +perhaps the most important factor. The machine in its development +tends to give less and less prominence to muscle and high individual +skill in the mass of workers, more and more to certain qualities of +body and mind which not only differ less widely in different men, but +in which women and children are more nearly on a level with men. It is +of course true that considerable differences of individual skill and +effort survive in the typical machine industry. "Machine-weaving, for +instance, simple as it seems, is divided into higher and lower grades, +and most of those who work in the lower grades have not the stuff in +them that is required for weaving with several colours."[222] But the +general effect of machinery is to lessen rather than to increase +individual differences of efficiency. The tendency of machine industry +to displace male by female labour is placed beyond all question by the +statistics of occupations in England, which show since 1851 a regular +and considerable rise in the proportion of women to men workers in +most branches of manufacture. Legal restrictions, and in the more +civilised communities, the growth of a healthy public opinion, prevent +the economic force from being operative to the same degree so far as +children are concerned. + +Those very qualities of narrowly restricted care and judgment, +detailed attention, regularity and patience, which we see to be +characteristic of machine work, are common human qualities in the +sense that they are within the capacity of all, and that even in the +degree of their development and practice there is less difference +between the highly-trained adult mechanic and the raw "half-timer" +than in the development and practice of such powers as machinery has +superseded. It must be recognised that machinery does exercise a +certain equalising influence by assigning a larger and larger relative +importance to those faculties which are specific as compared with +those which are individual.[223] "General ability" is coming to play a +more important part in industry than specialised ability,[3] and +though considerable differences may exist in the "general ability" of +individuals, the differences will be smaller than in specialised +abilities.[224] + +The net influence of machinery upon the quality of labour, then, is +found to differ widely according to the relation which subsists +between the worker and the machine. Its educative influence, +intellectual and moral, upon those concerned with the invention, +management, and direction of machine industry, and upon all whose work +is about machinery, but who are not detailed machine-tenders, is of a +distinctly elevating character. Its effect, however, upon +machine-tenders in cases where, by the duration of the working day or +the intensity of the physical effort, it exhausts the productive +energy of the worker, is to depress vitality and lower him in the +scale of humanity by an excessive habit of conformity to the automatic +movements of a non-human motor. This human injury is not adequately +compensated by the education in routine and regularity which it +confers, or by the slight understanding of the large co-operative +purposes and methods of machine industry which his position enables +him to acquire. + +FOOTNOTES: + +[198] Cf. _supra_, chap. iii. Sec. 2. + +[199] Karl Marx ranks the chief economies of machinery under two +heads--(1) Machinery supersedes the skill of men working with tools. +"The machine, which is the starting-point of the industrial +revolution, supersedes the workman, who handles a single tool, by a +mechanism operating with a number of similar tools, and set in motion +by a single motive power, whatever the form of that power may be." (2) +Machinery supersedes the strength of man. "Increase in the size of a +machine, and in the number of its working tools, calls for a more +massive mechanism to drive it; and this mechanism requires, in order +to overcome its resistance, a mightier moving power than that of man." +(_Capital_, vol. ii. pp. 370, 371.) + +[200] _Principles of Economics_, 2nd edit., pp. 314, 322. + +[201] _Der Grossbetrieb_, p. 120. + +[202] _Ibid._, p. 117. + +[203] Evidence given by Mr. T. Birtwistle. + +[204] _Op. cit._, p. 82. Babbage, in laying stress on one of the +"advantages" of machinery, makes an ingenuous admission of this +"forcing" power. "One of the most singular advantages we derive from +machinery is the check it affords against the inattention, the +idleness, or the knavery of human agents." (_Economy of Machinery_, p. +39; cf. also Ure, _Philosophy of Manufactures_, p. 30.) + +[205] Porter, _Progress of the Nation_, p. 590. + +[206] Cf. Schulze-Gaevernitz, p. 115. + +[207] For a fuller treatment of this subject, see the next chapter. + +[208] Cf. Patten, _The Theory of Dynamic Economics_, chap. xi. + +[209] _Uses and Abuses of Money_, p. 111. + +[210] _Principles_, p. 315. + +[211] _Ibid._, p. 316. + +[212] Page 435. + +[213] A similar difficulty in distinguishing town influences from +specific trade influences confronted Dr. Arlidge in his investigation +into diseases of employments. "It is a most difficult problem to +solve, especially in the case of an industrial town population, how +far the diseases met with are town-made and how far trade-made; the +former almost always predominates." (_Diseases of Occupation_, p. 33.) + +[214] Mulhall, _Dictionary of Statistics_, p. 545. + +[215] Cf. Marshall, _Principles of Economics_, vol. i. p. 315. + +[216] D.A. Wells, _Contemporary Review_, 1889, p. 392. + +[217] Taylor, _Modern Factory System_, p. 435. + +[218] Cf. the comparison of conditions of town and country labour in +Adam Smith's _Wealth of Nations_, Bk. I., chap. x., part 2. + +[219] _Diseases of Occupations_, pp. 25, 26. + +[220] _The Social Horizon_, p. 22. + +[221] Ure, _Philosophy of Manufactures_, chap. i. p. 19. + +[222] Marshall, _Principles of Economics_, p. 265. + +[223] Cf. chap. x. + +[224] Cf. Marshall, p. 265. + + + + +CHAPTER X. + +THE ECONOMY OF HIGH WAGES. + + Sec. 1. _The Economy of Low Wages._ + Sec. 2. _Modifications of the Early Doctrine--Sir T. Brassey's + Evidence from Heavy Manual Work._ + Sec. 3. _Wages, Hours, and Product in Machine-industry._ + Sec. 4. _A General Application of the Economy of High Wages and + Short Hours inadmissible._ + Sec. 5. _Mutual Determination of Conditions of Employment and + Productivity._ + Sec. 6. _Compressibility of Labour and Intensification of Effort._ + Sec. 7. _Effective Consumption dependent upon Spare Energy of the + Worker._ + Sec. 8. _Growth of Machinery in relation to Standard of Comfort._ + Sec. 9. _Economy of High Wages dependent upon Consumption._ + + +Sec. 1. The theory of a "natural" rate of wages fixed at the bare +subsistence-point which was first clearly formulated in the writings +of Quesnay and the so-called "physiocratic" school was little more +than a rough generalisation of the facts of labour in France. But +these facts, summed up in the phrase, "Il ne gagne que sa vie," and +elevated to the position of a natural law, implied the general belief +that a higher rate of wage would not result in a correspondent +increase of the product of labour, that it would not pay an employer +to give wages above the point of bare sustenance and reproduction. +This dogma of the economy of cheap labour, taught in a slightly +modified form by many of the leading English economists of the first +half of the nineteenth century, has dominated the thought and +indirectly influenced the practice of the business world. It is true +that Adam Smith in a well-known passage had given powerful utterance +to a different view of the relation between work and wages:--"The +liberal reward of labour as it encourages the propagation so it +encourages the industry of the common people. The wages of labour are +the encouragement of industry, which, like every other human quality, +improves in proportion to the encouragement it receives."[225] But the +teaching of Ricardo, and the writers who most closely followed him in +his conception of the industrial system, leaned heavily in favour of +low wages as the sound basis of industrial progress. + +The doctrine of the economy of low wages in England scarcely needed +the formal support of the scientific economist. It was already +strongly implanted in the mind of the eighteenth century "business +man," who moralised upon the excesses resulting from high wages much +in the tone of the business man of to-day. It would be scarcely +possible to parody the following line of reflection:-- + + "The poor in the manufacturing counties will never work any + more time in general than is necessary just to live and + support their weekly debauches. Upon the whole we may fairly + aver that a reduction of wages in the woollen manufactures + would be a national blessing and advantage and no real injury + to the poor. By this means we might keep our trade, uphold our + rents, and reform the people into the bargain." (Smith's + _Memoirs of Wool_, vol. ii. p. 308.) + +Compare with this Arthur Young's frequent suggestion that rents should +be raised in order to improve farming.[226] So Dr. Ure, half a century +later, notwithstanding that his main argument is for the "economy of +high wages," both on the ground that it evokes the best quality of +work and because it keeps the workman contented, is unable to avoid +flatly contradicting himself as follows:-- + + "High wages, instead of leading to thankfulness of temper and + improvement of mind, have, in too many cases, cherished pride + and supplied funds for supporting refractory spirits in + strikes wantonly inflicted upon one set of mill-owners after + another throughout the several districts of Lancashire for the + purpose of degrading them into a state of servitude." + (_Philosophy of Manufactures_, p. 366.) + +So again (p. 298):--"In fact, it was their high wages which enabled +them to maintain a stipendary committee in affluence, and to pamper +themselves into nervous ailments by a diet too rich and exciting for +their indoor occupation." + +The experiments of Robert Owen in raising wages and shortening +hours in his New Lanark mills failed utterly to convince his +fellow-manufacturers that a high standard of comfort among the workers +would bring a correspondent rise in working efficiency. + +The history of the early factory system, under which rapid fortunes +were built out of the excessive toil of children and low-skilled adult +workers paid at rates which were, in many instances, far below true +"subsistence wages," furnished to the commercial mind a convincing +argument in favour of "cheap labour," and set political economy for +half a century at war with the rising sentiments of humanity.[227] +Even now, the fear frequently expressed in the New World regarding the +"competition of cheap labour" attests a strong survival of this +theory, which held it to be the first principle of "good business" to +pay as low wages as possible. + +Sec. 2. The trend of more recent thought has been in the direction of a +progressive modification of the doctrine of the "economy of low +wages." The common maxim that "if you want a thing well done you must +expect to pay for it" implies some general belief in a certain +correspondence of work and wages. The clearer formulation of this idea +has been in large measure the work of economic thinkers who have set +themselves to the close study of comparative statistics. The work in +which Mr. Brassey, the great railway contractor, was engaged gave him +an opportunity of making accurate comparison of the work and wages of +workmen of various nationalities, and his son, Sir Thomas Brassey, +collected and published a number of facts bearing upon the subject +which, as regards certain kinds of work, established a new relation +between work and wages. He found that English navvies employed upon +the Grand Trunk Railway in Canada, and receiving from 5s. to 6s. a +day, did a greater amount of work for the money than French-Canadians +paid at 3s. 6d. a day; that it was more profitable to employ +Englishmen at 3s. to 3s. 6d. upon making Irish railways than Irishmen +at 1s. 6d. to 1s. 8d.; that "in India, although the cost of dark +labour ranges from 4-1/2d. to 6d. a day, mile for mile the cost of +railway work is about the same as in England;" that in quarry work, +"in which Frenchmen, Irishmen, and Englishmen were employed side by +side, the Frenchman received three, the Irishman four, and the +Englishman six francs a day. At those different rates the Englishman +was found to be the most advantageous workman of the three." Extending +his inquiries to the building trades, to mining, and to various +departments of manufactures, he found a general consensus of opinion +among employers and other men of practical experience making for a +similar conclusion. In France, Germany, and Belgium, where wages and +the standard of living were considerably lower than in England, the +cost of turning out a given product was not less, but greater. In the +United States and in a few trades of Holland, where the standard of +comfort was as high or higher than in the corresponding English +industries, more or better work was done. In short, the efficiency of +labour was found to vary with tolerable accuracy in accordance with +the standard of comfort or real wages. + +In his introduction to his work on _Foreign Work and English Wages_, +Sir Thomas Brassey gives countenance to a theory of wages which has +frequently been attributed to him, and has sometimes been accepted as +a final statement of the relation of work and wages--viz., that "the +cost of work, as distinguished from the daily wage of the labourer, +was approximately the same in all countries." In other words, it is +held that, for a given class of work, there is a fixed and uniform +relation between wages and efficiency of labour for different lands +and different races. + +Now, to the acceptance of this judgment, considered as a foundation of +a theory of comparative wages, there are certain obvious objections. +In the first place, in the statement of most of the cases which are +adduced to support the theory reference is made exclusively to money +wages, no account being taken of differences of purchasing power in +different countries. In order to establish any rational basis, the +relation must be between real wages or standard of living and +efficiency. Now, though it must be admitted as inherently probable +that some definite relation should subsist between wages and work, or, +in other words, between the standard of consumption and the standard +of production, it is not _a priori_ reasonable to expect this relation +should be uniform as between two such countries as England and India, +so that it should be a matter of economic indifference whether a piece +of work is done by cheap and relatively inefficient Indian labour or +by expensive and efficient English labour. Such a supposition could +only stand upon one of two assumptions. + +The first assumption would be that of a direct arithmetical +progression in the relation of wage and work such as would require +every difference in quantity of food, etc., consumed by labourers to +be reflected in an exactly correspondent difference of output of +productive energy--an assumption which needs no refutation, for no one +would maintain that the standard of comfort furnished by wages is the +sole determinant of efficiency, and that race, climate, and social +environment play no part in economic production. The alternative +assumption would be that of an absolute fluidity of capital and +labour, which should reduce to a uniform level throughout the world +the net industrial advantages, so that everywhere there was an exact +quantitative relation between work and wage, production, and +consumption. Though what is called a "tendency" to such uniformity may +be admitted, no one acquainted with facts will be so rash as to +maintain that this uniformity is even approximately reached. + +Sec. 3. There is, then, no reason to suppose that wages, either nominal +or real, bear any exact, or even a closely approximate, relation to +the output of efficient work, quantity and quality being both taken +into consideration. But, in truth, the evidence afforded by Sir T. +Brassey does not justify a serious investigation of this theory of +indifference or equivalence of work and wages. For, in the great +majority of instances which he adduces, the advantage is clearly shown +to rest with the labour which is most highly remunerated. The theory +suggested by his evidence is, in fact, a theory of "the economy of +high wages." + +This theory, which has been advancing by rapid strides in recent +years, and is now supported by a great quantity of carefully-collected +evidence, requires more serious consideration. The evidence of Sir T. +Brassey was chiefly, though by no means wholly, derived from branches +of industry where muscular strength was an important element, as in +road-making, railway-making, and mining; or from the building trades +where machinery does not play a chief part in directing the pace and +character of productive effort. It would not be unreasonable to expect +that the quantitative relation between work and wages might be closer +in industries where freely expended muscular labour played a more +prominent part than in industries where machinery was a dominating +factor, and where most of the work consisted in tending machinery. It +might well be the case that it would pay to provide a high standard of +physical consumption to navvies, but that it would not pay to the same +extent to give high wages to factory operatives, or even to other +classes of workers less subject to the strain of heavy muscular work. + +In so far as the tendency of modern production is to relieve man more +and more of this rough muscular work, it might happen that the true +economy favoured high wages only in those kinds of work which were +tending to occupy a subordinate place in the industry of the future. +The earlier facts, which associated high wages with high productivity, +low wages with low productivity, in textile factories and ironworks, +were of a fragmentary character, and, considered as evidence of a +causal connection between high wages and high productivity, were +vitiated by the wide differences in the development of machinery and +industrial method in the cases compared. In recent years the labours +of many trained economists, some of them with close practical +knowledge of the industrial arts, have collected and tabulated a vast +amount of evidence upon the subject. A large number of American +economists, among them General F.A. Walker, Mr. Gunton, Mr. Schoenhof, +Mr. Gould, Mr. E. Atkinson, have made close researches into the +relation between work and wages in America and in the chief industrial +countries of Europe. A too patent advocacy of tariff reform or a +shorter working day has in some cases prevented the statistics +collected from receiving adequate attention, but there is no reason to +doubt the substantial accuracy of the research. + +The most carefully-conducted investigation has been that of Professor +Schulze-Gaevernitz, who, basing his arguments upon a close study of +the cotton industry, has related his conclusion most clearly to the +evolution of modern machine-production. The earlier evidence merely +established the fact of a co-existence between high wages and good +work, low wages and bad work, without attempting scientifically to +explain the connection. Dr. Schulze-Gaevernitz, by his analysis of +cotton spinning and weaving, successfully formulates the observed +relations between wages and product. He compares not only the present +condition of the cotton industry in England and in Germany and other +continental countries, but the conditions of work and wages in the +English cotton industry at various times during the last seventy +years, thus correcting any personal equation of national life which +might to some extent vitiate conclusions based only upon international +comparison. This double method of comparison yields certain definite +results, which Dr. Schulze-Gaevernitz sums up in the following +words:--"Where the cost of labour (_i.e._ piece wages) is lowest the +conditions of labour are most favourable, the working day is shortest, +and the weekly wages of the operatives are highest" (p. 133). The +evolution of improved spinning and weaving machinery in England is +found to be attended by a continuous increase in the product for each +worker, a fall in piece wages reflected in prices of foods, a +shortening of the hours of labour, and a rise in weekly wages. The +following tables, compiled by Dr. Schulze-Gaevernitz, give an accurate +statement of the relations of the different movements, taking the +spinning and weaving industries as wholes in England:-- + +SPINNING. + + ----------+-----------+-------------+---------+---------+------------ + | Product | Number of | Product | Cost of | Average + | of yarn | workers | per | labour | yearly + | in | in spinning | worker | per lb. | wages. + | 1000 lbs. | mills. | in lbs. | | + ----------+-----------+-------------+---------+---------+------------ + | | | | s. d. | L s. d. + 1819-21 | 106,500 | 111,000 | 968 | 6 4 | 26 13 0 + 1829-31 | 216,500 | 140,000 | 1546 | 4 2 | 27 6 0 + 1844-46 | 523,300 | 190,000 | 2754 | 2 3 | 28 12 0 + 1859-61 | 910,000 | 248,000 | 3671 | 2 1 | 32 10 0 + 1880-82 | 1,324,000 | 240,000 | 5520 | 1 9 | 44 4 0[228] + ----------+-----------+-------------+---------+---------+------------ + +WEAVING. + + --------+------------+-----------+------------+---------+------------ + | Products | Number of | Product | Cost of | Average + | in | workers. | per worker | labour | yearly + | 1000 lbs. | | in lbs. | per lb. | income. + --------+------------+-----------+------------+---------+------------ + | | | | s. d. | L s. d. + 1819-21 | 80,620 | 250,000 | 322 | 15 5 | 20 18 0 + 1829-31 | 143,200 | 275,000 | 521 | 9 0 | 19 18 0[229] + 1844-46 | 348,110 | 210,000 | 1658 | 3 5 | 24 10 0 + 1859-61 | 650,870 | 203,000 | 3206 | 2 9 | 30 15 0 + 1880-82 | 993,540 | 246,000 | 4039 | 2 3 | 39 0 0 + --------+------------+-----------+------------+---------+------------ + +The same holds good of the growth of the cotton-weaving industry in +America, as the following table shows:-- + + +------+-------------+-----------+-------------+ + | | Yearly | Cost of | Yearly | + | | product | labour | earnings | + | | per worker. | per yard. | per worker. | + +------+-------------+-----------+-------------+ + | | Yards. | Cents. | Dollars. | + | 1830 | 4,321 | 1.9 | 164 | + | 1850 | 12,164 | 1.55 | 190 | + | 1870 | 19,293 | 1.24 | 240 | + | 1884 | 28,032 | 1.07 | 290 | + +------+-------------+-----------+-------------+ + +Of Germany and Switzerland the same holds. Every improvement of +machinery increasing the number of spindles or looms a worker can +tend, or increasing the pace of the machinery and thus enlarging the +output per worker, is attended by a higher weekly wage, and in general +by a shortening of the hours of labour. + +A detailed comparison of England, the United States, and the +Continent, as regards the present condition of the cotton industry, +yields the same general results. A comparison between England and the +United States shows that in weaving, where wages are much higher in +America, the labour is so much more efficient as to make the cost of +production considerably lower than in England; in spinning, where +English wages are about as highly paid, the cost of production is +lower than in America (p. 156). A comparison between Switzerland and +Germany, England, and America, as regards weaving, yields the +following results (p. 151):-- + + ---------------------+-------------+-----------+----------+-------- + | Weekly | | | + | product | Cost | Hours of | Weekly + | per worker. | per yard. | labour. | wage. + ---------------------+-------------+-----------+----------+-------- + | Yards. | | | s. d. + Switzerland and | | | | + Germany | 466 | 0.303 | 12 | 11 8 + England | 706 | 0.275 | 9 | 16 3 + America | 1200 | 0.2 | 10 | 20 3 + ---------------------+-------------+-----------+----------+-------- + +The low-paid, long-houred labourers of the Italian factories are +easily undersold by the higher paid and more effective labour of +England or America. So also a comparison between Mulhausen and the +factories of the Vosges valleys shows that the more highly-paid labour +of the former is the more productive. + +In Russia the better-paid labour in the factories near Petersburg and +in Esthland can outcompete the lower paid labour of the central +governments of Vladimir and Moscow. + +Schulze-Gaevernitz goes so far as to maintain that under existing +conditions of low wages and long hours, the Indian factories cannot +undersell their Lancashire competitors, and maintains that the +stringent factory laws which are demanded for India are likely to +injure Lancashire,[230] instead of giving her an advantage. The most +vital points of the subject are thus summarised, after an elaborate +comparison of the cotton-spinning of England and of those parts of +Germany which use English machinery:-- + + "In England the worker tends nearly twice as much machinery as + in Germany; the machines work more quickly; the loss as + compared with the theoretic output (_i.e._, waste of time and + material) is smaller. Finally, there comes the consideration + that in England the taking-off and putting-on from the + spindles occupies a shorter time; there is less breaking of + threads, and the piecing of broken threads requires less time. + The result is that the cost of labour per pound of + yarn--especially when the work of supervision is taken into + account--is decidedly smaller in England than in Germany. So + the wages of the English spinners are nearly twice as high as + in Germany, while the working day occupies a little over 9 + hours as compared with 11 to 11-1/2 in Germany." (P. 136.) + +Sec. 4. From the evidence adduced by Schulze-Gaevernitz, modern +industrial progress is expressed, so far as its effects on labour are +concerned, in seven results: (_a_) Shorter hours of labour. (_b_) +Higher weekly wage. (_c_) Lower piece-wage. (_d_) Cheaper product. +(_e_) Increased product per worker. (_f_) Increased speed of +machinery. (_g_) Increased number and size of machines to the worker. + +All these factors must be taken into consideration before a full +judgment of the net results of machinery upon the worker can be +formed. The evidence above recorded, conclusive as it is regarding the +existence of some causal connection between a high standard of living +and high productivity of labour, does not necessarily justify the +conclusion that a business, or a federation of employers, may go ahead +increasing wages and shortening hours of labour _ad libitum_ in sure +and certain expectation of a corresponding increase in the net +productivity of labour. + +Before such a conclusion is warranted, we must grasp more clearly the +nature of the causal relation between high standard of living and +efficiency. How far are we entitled to regard high wages and other +good conditions of employment as the cause, how far as the effect of +efficiency of labour? The evidence adduced simply proves that _a_ _b_ +_c_, certain phenomena relating to efficiency--as size of product, +speed of workmanship, quantity of machines tended--vary directly with +_d_ _e_ _f_, certain other phenomena relating to wages, hours of +labour, and other conditions of employment. So far as such evidence +goes, we are only able to assert that the two sets of phenomena are +causally related, and cannot surely determine whether variations in +_a_ _b_ _c_ are causes, or effects of concomitant variations in _d_ +_e_ _f_, or whether both sets of phenomena are or are not governed by +some third set, the variations of which affect simultaneously and +proportionately the other two. + +The moral which writers like Mr. Gunton and Mr. Schoenhof have sought +to extract, and which has been accepted by not a few leaders in the +"labour movement," is that every rise of wages and every shortening of +hours will necessarily be followed by an equivalent or a more than +equivalent rise in the efficiency of labour. In seeking to establish +this position, special stress is laid upon the evidence of the +comparative statistics of textile industries. But, in the first place, +it must be pointed out that the evidence adduced does not support any +such sweeping generalisation. The statistics of Mr. Gould and Mr. +Schoenhof, for instance, show many cases where higher money and real +wages of American operatives are not accompanied by a correspondingly +larger productivity. In such cases the "cheap" labour of England is +really cheap. + +Again, in other cases where the higher wages of American workers are +accompanied by an equivalent, or more than equivalent, increase of +product, that increased product is not due entirely or chiefly to +greater intensity or efficiency of labour, but to the use of more +highly elaborated labour-saving machinery. The difference between the +labour-cost of making and maintaining this improved machinery, and +that of making and maintaining the inferior machinery it has +displaced, ought clearly to be added in, where a comparison is made +between the relation of net labour-cost to product in different +countries, or in different stages of industrial development in the +same country. The omission of this invalidates much of the reasoning +of Schulze-Gaevernitz, Brentano, Rae, and other prophets of "the +economy of high wages." The direct labour-cost of each commodity may +be as little, or even less, than in England, but the total cost of +production[231] and the selling price may be higher. Lastly, in that +comparison between England and America, which is in many respects the +most serviceable, because the two countries are nearest in their +development of industrial methods as well as in the character of their +labourers, the difference of money and of real wage is not commonly +accompanied by a difference in hours of labour. + +The evidence we possess does not warrant any universal or even general +application of the theory of the economy of high wages. If it was +generally true that by increasing wages and by shortening working +hours the daily product of each labourer could be increased or even +maintained, the social problem, so far as it relates to the +alleviation of the poverty and misery of the lower grades of workers, +would admit of an easy solution. But though it will be generally +admitted that a rise of wages or of the general standard of comfort of +most classes of workers will be followed by increased efficiency of +labour, and that a shortening of hours will not be followed by a +corresponding diminution in output, it by no means follows that it +will be profitable to increase wages and shorten hours indefinitely. +Just as it is admitted that the result of an equal shortening of hours +will be different in every trade, so will the result of a given rise +in standard of comfort be different. In some cases highly-paid labour +and short hours will pay, in other cases cheaper labour and longer +hours. It is not possible by dwelling upon the concomitance of high +wages and good work, low wages and bad work, in many of the most +highly-developed industries to appeal to the enlightened self-interest +of employers for the adoption of a general rise in wages and a general +shortening of hours. Because the most profitable business may often be +conducted on a system which involves high wages for short intense work +with highly evolved machinery, it by no means follows that other +businesses may not be more profitably conducted by employing low-paid +workers for long hours with simpler machinery. We are not at liberty +to conclude that the early Lancashire mill-owners adopted a +short-sighted policy in employing children and feeble adult labour at +starvation wages. + +The evidence, in particular, of Schulze-Gaevernitz certainly shows +that the economy of high wages and short hours is closely linked with +the development of machinery, and that when machinery is complex and +capable of being worked at high pressure a net economy of high wages +and short hours emerges. In this light modern machinery is seen as the +direct cause of high wages and short hours. For though the object of +introducing machinery is to substitute machine-tenders at low wages +for skilled handicraftsmen, and though the tireless machine could be +profitably worked continuously, when due regard is had to human nature +it is found more profitable to work at high pressure for shorter hours +and to purchase such intense work at a higher price. It must, of +course, be kept in mind that high wages are often the direct cause of +the introduction of improved machinery, and are an ever-present +incentive to fresh mechanical inventions. This was clearly recognised +half a century ago by Dr. Ure, who names the lengthened mules, the +invention of the self-acting mule, and some of the early improvements +in calico-printing as directly attributable to this cause.[232] + +But, admitting these tendencies in certain machine industries, we are +not justified in relying confidently upon the ability of a rise of +wages, obtained by organisation of labour or otherwise, to bring about +such improvements of industrial methods as will enable the higher +wages to be paid without injuring the trade, or reducing the profits +below the minimum socially required for the maintenance of a privately +conducted industry. + +Our evidence leads to the conclusion that, while a rise of wages is +nearly always attended by a rise of efficiency of labour and of the +product, the proportion which the increased productivity will bear to +the rise of wage will differ in every employment. Hence it is not +possible to make a general declaration in favour of a policy of high +wages or of low wages. + +Sec. 5. The economically profitable wages and hours will vary in +accordance with many conditions, among the most important being the +development of machinery, the strain upon muscles and nerves imposed +by the work, the indoor and sedentary character of the work, the +various hygienic conditions which attend it, the age, sex, race, and +class of the workers. + +In cotton-weaving in America it pays better to employ women at high +wages to tend six, seven, or even eight looms for short hours, than to +pay lower wages to inferior workers such as are found in Germany, +Switzerland, or even in Lancashire. But in coal-mining it appears that +the American wages are economically too high--that is to say, the +difference between American and English wages is not compensated by an +equivalent difference of output. The gross number of tons mined by +United States miners working at wages of $326 per annum is 377, +yielding a cost of 86-1/2 cents per ton, as compared with 79 cents per +ton, the cost of North Staffordshire coal produced by miners earning +$253, and turning out 322 tons per head.[233] So also a ton of +Bessemer pig iron costs in labour about 50 cents more in America than +in England, the American wages being about 40 per cent. higher.[234] + +It is, indeed, evident from the aggregate of evidence that no +determinable relation exists between cost in labour and wages for any +single group of commodities. + +Just as little can a general acceptance be given to the opposite +contention that it is the increased efficiency of labour which causes +the high wages. This is commonly the view of those business men and +those economists who start from the assumption that there is some law +of competition in accordance with whose operation every worker +necessarily receives as much as he is worth, the full value of the +product of his labour. Only by the increased efficiency of labour can +wages rise, argue these people; where wages are high the efficiency of +labour is found to be high, and _vice versa_; therefore efficiency +determines wages. Just as the advocates of the economy of high-wages +theory seek by means of trade-unionism, legislation, and public +opinion to raise wages and shorten hours, trusting that the increased +efficiency which ensues will justify such conduct, so the others +insist that technical education and an elevation of the moral and +industrial character of the workers must precede and justify any rise +of wages or shortening of hours, by increasing the efficiency of +labour. Setting aside the assumption here involved that the share of +the workers in the joint product of capital and labour is a fixed and +immovable proportion, this view rests upon a mere denial of the effect +which it is alleged that high wages and a rise in standard of comfort +have in increasing efficiency. + +The relation between wages and other conditions of employment, on the +one hand, and efficiency of labour or size of product on the other, is +clearly one of mutual determination. Every rise in wages, leisure, and +in general standard of comfort will increase the efficiency of labour; +every increased efficiency, whether due directly to these or to other +causes, will enable higher wages to be paid and shorter hours to be +worked. + +Sec. 6. One further point emerges from the evidence relating to +efficiency and high wages. According to Schulze-Gaevernitz's formula, +every fall in piece wages is attended by a rise in weekly wages. But +it should be kept in mind that a rise in time wages does not +necessarily mean that the price of labour measured in terms of effort +has been raised. Intenser labour undergone for a shorter time may +obtain a higher money wage per unit of time, but the price per unit of +effort may be lower. It has been recognised that a general tendency of +the later evolution of machinery has been to compress and intensify +labour. In certain classes of textile labour the amount of muscular or +manual labour given out in a day is larger than formerly. This is the +case with the work of children employed as piecers. In Ure's day +(1830) he was able to claim that during three-fourths of the time +spent by children in the factory they had nothing to do. The increased +quantity of spindles and the increased speed have made their labour +more continuous. The same is true of the mule spinners, whose labour, +even within the last few years, has been intensified by increased size +of the mule. Though as a rule machinery tends to take over the heavier +forms of muscular work, it also tends to multiply the minor calls upon +the muscles, until the total strain is not much less than before. What +relief is obtained from muscular effort is compensated by a growing +strain upon the nerves and upon the attention. Moreover, as the +machinery grows more complex, numerous, and costly, the responsibility +of the machine-tender is increased. To some considerable extent the +new effort imposed upon the worker is of a more refined order than the +heavy muscular work it has replaced. But its tax upon the physique is +an ever-growing one. "A hand-loom weaver can work thirteen hours a +day, but to get a six-loom weaver to work thirteen hours is a physical +impossibility."[235] The complexity of modern machinery and the +superhuman celerity of which it is capable suggest continually an +increased compression of human labour, an increased output of effort +per unit of time. This has been rendered possible by acquired skill +and improved physique ensuing on a higher standard of living. But it +is evident that, where it appears that each rise in the standard of +living and each shortening of the working-day has been accompanied by +a severer strain either upon muscles, nerves, or mental energy during +the shorter working day, we are not entitled to regard the higher +wages and shorter hours as clear gain for the worker. Some limits are +necessarily imposed upon this compressibility of working effort. It +would clearly be impossible by a number of rapid reductions of the +working day and increases of time wages to force the effectiveness of +an hour's labour beyond a certain limit for the workers. Human nature +must place limits upon the compression. Though it may be better for a +weaver to tend four looms during the English factory day for the +moderate wage of 16s. a week than to earn 11s. 8d. by tending two +looms in Germany for twelve hours a day, it does not follow that it is +better to earn 20s. 3d. in America by tending six, seven, or even +eight looms for a ten-hours day,[236] or that the American's condition +would be improved if the eight-hours day was purchased at the expense +of adding another loom for each worker. + +The gain which accrues from high wages and a larger amount of leisure, +over which the higher consumption shall be spread, may be more than +counteracted by an undue strain upon the nerves or muscles during the +shorter day. This difficulty, as we have seen, is not adequately met +by assigning the heavier muscular work more and more to machinery, if +the possible activity of this same machinery is made a pretext for +forcing the pace of such work as devolves upon machine-tenders. + +In many kinds of work, though by no means in all, an increase of the +amount of work packed into an hour could be obtained by a reduction of +the working-day; but two considerations should act in determining the +progressive movement in this direction: first, the objective economic +question of the quantitative relation between the successive +decrements of the working-day and the increments of labour put into +each hour; second, the subjective economic question of the effect of +the more compressed labour upon the worker considered both as worker +and as consumer. + +There is not wanting evidence to show that increased leisure and +higher wages can be bought too dear. + +In drawing attention to this consideration it must not, however, be +assumed that the increase of real wages and shortening of hours traced +in progressive industries are necessarily accompanied by a +corresponding increase in the compression of labour. In the textile +and iron industries, for example, it is evident (_pace_ Karl Marx) +that the operatives had obtained some portion of the increased +productivity of improved machinery in a rise of wages. Even where more +machinery is tended we are not entitled to assume a correspondent +increase in felt effort or strain upon the worker. A real growth of +skill or efficiency will enable an increased amount of machinery to be +tended with no greater subjective effort than a smaller amount +formerly required. But while allowance should be made for this, the +history of the factory system, both in England and in other countries, +clearly indicates that factory labour is more intense than formerly, +not, perhaps, in its tax upon the muscles, but in the growing strain +it imposes upon the nervous system of the operatives. + +The importance of this point is frequently ignored alike by advocates +of a shorter working-day and by those who insist that the chief aim of +workers should be to make their labour more productive. So far as the +higher efficiency simply means more skill and involves no increased +effort it is pure gain, but where increased effort is required the +question is one requiring close and detailed consideration. + +Sec. 7. Another effect of over-compressed labour deserves a word. + +The close relation between higher wages and shorter hours is generally +acknowledged. A rise of money wages which affects the standard of +living by introducing such changes in consumption as require for their +full yield of benefit or satisfaction an increase of consuming-time +can only be made effective by a diminution in the producing time or +hours of labour. When, for example, the new wants, whose satisfaction +would be naturally sought from a rise of the standard living, are of +an intellectual order, involving not merely the purchase of books, +etc., but the time to read such books, this benefit requires that the +higher wages should be supplemented by a diminution in the hours of +labour in cases where the latter are unduly long. But it is not so +clearly recognised that such questions cannot be determined without +reference to the question of intensity of labour. Yet it is evident +that an eight-hours day of more compressed labour might be of a more +exhausting character than a ten-hours day of less intense labour and +disqualify a worker from receiving the benefits of the opportunities +of education open to him more than the longer hours of less intense +labour. The advantage of the addition of two hours of leisure might be +outweighed by the diminished value attached to each leisure hour. In +other words, the excess of intense work might be worse in its effects +than the excess of more extended work. This possibility is often +overlooked in the arguments of those who support the movement towards +a shorter working-day by maintaining that each unit of labour-time +will be more productive. When the argument concerns itself merely with +alleging the influence of higher wages, without shorter hours, upon +the efficiency of labour, this neglect of the consideration of intense +labour has a more urgent importance. It may be gravely doubted whether +the benefit of the higher wages of the Massachusetts weavers is not +overbalanced by the increased effort of tending so large a number of +looms for hours which are longer than the English factory day. The +exhausting character of such labour is likely to leave its mark in +diminishing the real utility or satisfaction of the nominally higher +standard of living which the high wages render possible. Where the +increased productivity of labour is largely due to the improved +machinery or methods of production which are stimulated by high wages +without a corresponding intensification of the labour itself, the gain +to labour is clear. But the possibility that short hours and high +wages may stimulate an injurious compression of the output of +productive effort is one which must not be overlooked in considering +the influence of new industrial methods upon labour. + +Sec. 8. Duration of labour, intensity of labour, and wages, in their +mutual relations, must be studied together in any attempt to estimate +the tendencies of capitalist production. Nor can we expect their +relations to be the same in any two industries. Where labour is +thinly extended over an inordinately long working-day, as in the +Indian mills, it is probable that such improvements of organisation as +might shorten the hours to those of an ordinary English factory day, +and intensify the labour, would be a benefit, and the rise of wages +which might follow would bring a double gain to the workers. But any +endeavour to further shorten and intensify the working-day might +injure the workers, even though their output were increased. Such an +instance, however, may serve well to bring home the relativity which +is involved in all such questions. The net benefit derived from a +particular quantitative relation between hours of labour, intensity, +and earnings would probably be widely different for English and for +Indian textile workers. It would, _a priori_, be unreasonable to +expect that the working-day which would bring the greatest net +advantage to both should be of the same duration. So also it may well +be possible that the more energetic nervous temperament of the +American operative may qualify him or her for a shorter and intenser +working-day than would suit the Lancashire operative. It is the +inseparable relation of the three factors--duration, intensity, and +earnings--which is the important point. But in considering earnings, +not merely the money wage, nor even the purchasing power of the money, +but the net advantage which can be obtained by consuming what is +purchased must be understood, if we are to take a scientific view of +the question. + +It should be clearly recognised that in the consideration of all +practical reforms affecting the conditions of labour, the "wages" +question cannot be dissociated from the "hours" question, nor both +from the "intensity of labour" question; and that any endeavour to +simplify discussion, or to facilitate "labour movements," by seeking a +separate solution for each is futile, because it is unscientific. When +any industrial change is contemplated, it should be regarded, from the +"labour" point of view, in its influence upon the net welfare of the +workers, due regard being given, not merely to its effect upon wage, +hours, and intensity, but to the complex and changing relations which +subsist in each trade, in each country, and in each stage of +industrial development between the three. + +But although, when we bear in mind the effects of machinery in +imparting intensity and monotony to labour, in increasing the number +of workers engaged in sedentary indoor occupations, and in compelling +an ever larger proportion of the working population to live in crowded +and unhealthy towns, the net benefit of machinery to the working +classes may be questioned, the growth of machinery has been clearly +attended by an improved standard of material comfort among the +machine-workers, taking the objective measurement of comfort. + +Whatever allowance may be made for the effects of increased intensity +of labour, and the indirect influences of machinery, the bulk of +evidence clearly indicates that machine-tenders are better fed, +clothed, and housed than the hand-workers whose place they take, and +that every increase in the efficiency and complexity of machinery is +attended by a rise in real wages. The best machinery requires for its +economical use a fair standard of living among the workers who +co-operate with it, and with the further development of machinery in +each industry we may anticipate a further rise of this standard, +though we are not entitled to assume that this natural and necessary +progress of comfort among machine-workers has no fixed limit, and that +it is equally applicable to all industries and all countries. + +It might, therefore, appear that as one industry after another fell +under machine-production, the tendency of machine-development must +necessarily make for a general elevation of the standard of comfort +among the working classes. It may very well be the case that the net +influence of machinery is in this direction. But it must not be +forgotten that the increased spread of machine-production does not +appear to engage a larger proportion of the working population in +machine-tending. Indeed, if we may judge by the recent history of the +most highly-evolved textile industries, we are entitled to expect +that, when machinery has got firm hold of all those industries which +lend themselves easily to routine production, the proportion of the +whole working population engaged directly in machine-tending will +continually decrease, a larger and larger proportion being occupied in +those parts of the transport and distributing industries which do not +lend themselves conveniently to machinery, and in personal services. +If this is so, we cannot look upon the evolution of machinery, with +its demand for intenser and more efficient labour, as an adequate +guarantee of a necessary improvement in the standard of comfort of the +working classes as a whole. To put the matter shortly, we have no +evidence to show that a rise in the standard of material comfort of +shopmen, writing clerks, school-teachers, 'busmen, agents, +warehousemen, dockers, policemen, sandwich-men, and other classes of +labour whose proportion is increasing in our industrial society, will +be attended by so considerable a rise in the efficiency of their +labour as to stimulate a series of such rises. The automatic movement +which Schulze-Gaevernitz and others trace in the typical +machine-industries is not shown to apply to industry as a whole, and +if the tendency of machine-development is to absorb a larger +proportion of the work but a smaller proportion of the workers, it is +not possible to found large hopes for the future of the working +classes upon this movement of the earning of high wages in +machine-industry. + +Sec. 9. But though the individual self-interest of the producer cannot be +relied upon to favour progressive wages, except in certain industries +and up to a certain point, the collective interest of consumers lends +stronger support to "the economy of high wages." We have seen that the +possession of an excessive proportion of "power to consume" by classes +who, because their normal healthy wants are already fully satisfied, +refuse to exert this power, and insist upon storing it in unneeded +forms of capital, is directly responsible for the slack employment of +capital and labour. If the operation of industrial forces throw an +increased proportion of the "power to consume" into the hands of the +working classes, who will use it not to postpone consumption but to +raise their standard of material and intellectual comfort, a fuller +and more regular employment of labour and capital must follow. If the +stronger organisation of labour is able to raise wages, and the higher +wages are used to demand more and better articles of consumption, a +direct stimulus to the efficiency of capital and labour is thus +applied. The true issue, however, must not be shirked. If the power of +purchase now "saved" by the wealthier classes passed into the hands of +the workers in higher money wages, and was not spent by them in +raising their standard of comfort, but was "invested" in various +forms of capital, no stimulus to industry would be afforded; the +"savings" of one class would have fallen into the hands of another +class, and their excess would operate to restrict industry precisely +as it now operates. Though we would gladly see in the possession of +the working classes an increased proportion of those forms of capital +which are socially useful, this simple act of transfer, however +brought about, would furnish no stimulus to the aggregate industry. +From the standpoint of the community nothing else than a rise in the +average standard of current consumption can stimulate industry. When +it is clearly grasped that a demand for commodities is the only demand +for the use of labour and of capital, and not merely determines in +what particular direction these requisites of production shall be +applied, the hope of the future of our industry is seen to rest +largely upon the confident belief that the working classes will use +their higher wages not to draw interest from investments (a +self-destructive policy) but to raise their standard of life by the +current satisfaction of all those wholesome desires of body and mind +which lie latent under an "economy of low wages." The satisfaction of +new good human desires, by endowing life with more hope and interest, +will render all intelligent exertion more effective, by distributing +demand over a larger variety of commodities will give a fuller +utilisation both of natural and human resources, and by redressing the +dislocated balance of production and consumption due to inequality of +purchasing power, will justify high wages by increased fulness and +regularity of work. But it must be clearly recognised that however +desirable "saving" may seem to be as a moral virtue of the working +classes, any large practice of saving undertaken before and in +preference to an elevation of current consumption, will necessarily +cancel the economic advantages just dwelt upon. Just as the wise +individual will see he cannot afford to "save" until he has made full +provision for the maintenance of his family in full physical +efficiency, so the wise working class will insist upon utilising +earlier accesses of wages in promoting the physical and intellectual +efficiency of themselves and their families before they endeavour to +"invest" any considerable portion of their increased wages. Mr. Gould +puts this point very plainly and convincingly: "Where economic gains +are small, savings mean a relatively low plane of social existence. A +parsimonious people are never progressive, neither are they, as a +rule, industrially efficient. It is the man with many wants--not +luxurious fancies, but real legitimate wants--who works hard to +satisfy his aspirations, and he it is who is worth hiring. Let +economists still teach the utility and the necessity of saving, but +let the sociologist as firmly insist that to so far practise economy +as to prevent in the nineteenth century a corresponding advance in +civilisation of the working with the other classes is morally +inequitable and industrially bad policy. I am not sorry that the +American does not save more. Neither am I sure but that if many +working-class communities I have visited on the Continent were +socially more ambitious, there would not be less danger from Radical +theories. One of the most intelligent manufacturers I ever met told me +a few years ago he would be only too glad to pay higher wages to his +working people, provided they would spend the excess legitimately and +not hoard it. He knew that in the end he should gain thereby, since +the ministering to new wants only begets others."[237] If there are +theoretic economists who still hold that "a demand for commodities is +not a demand for labour," they may be reminded that a paradox is not +necessarily true. In fact, this particular paradox is seen to be +sustained by a combination of slipshod reasoning and moral prejudice. +The growing opinion of economic students is veering round to register +in theory the firm empirical judgment from which the business world +has never swerved, that a high rate of consumption is the surest +guarantee of progressive trade. The surest support of the "economy of +high wages" is the conviction that it will operate as a stimulus to +industry through increased consumption. The working classes, +especially in the United States and in England, show a growing +tendency to employ their higher wages in progressive consumption. Upon +the steady operation of this tendency the economic future of the +working classes, and of industry in general, largely depends. + +FOOTNOTES: + +[225] _Wealth of Nations_, vol. i. p. 86. + +[226] Cf. _Northern Tour_, vol. ii. p. 86. + +[227] It is true that out-and-out defenders of the factories against +early legislation sometimes had the audacity to assert the "economy of +high wages," and to maintain that it governed the practice of early +mill-owners. So Ure, "The main reason why they (_i.e._ wages) are so +high is, that they form a small part of the value of the manufactured +article, so that if reduced too low by a sordid master, they would +render his operatives less careful, and thereby injure the quality of +their work more than could be compensated by his saving in wages. The +less proportion wages bear to the value of the goods, the higher, +generally speaking, is the recompense of labour. The prudent master of +a fine spinning-mill is most reluctant to tamper with the earnings of +his spinners, and never consents to reduce them till absolutely forced +to it by a want of remuneration for the capital and skill embarked in +his business" (_Philosophy of Manufactures_, p. 330). This does not, +however, prevent Dr. Ure from pointing out a little later the grave +danger into which trade-union endeavours to raise wages drive a trade +subject to the competition of "the more frugal and docile labour of +the Continent and United States" (p. 363). Nor do Dr. Ure's statements +regarding the high wages paid in cotton-mills, which he places at +three times the agricultural wages, tally with the statistics given in +the appendix of his own book (cf. p. 515). Male spinners alone +received the "high wages" he names, and out of them had to pay for the +labour of the assistants whom they hired to help them. + +[228] _Der Grossbetrieb_, p. 132. In regarding the advance of recent +average wages it should be borne in mind that the later years contain +a larger proportion of adults. In considering the net yearly wages a +deduction for unemployment should be made from the sums named in the +table. + +[229] Account must be taken of the depressed condition of hand-loom +weavers, who had not yet disappeared. + +[230] Here Schulze-Gaevernitz appears to strain his argument. Though +official reports lay stress upon the silver question as an important +factor in the rise of Bombay mills, there seems no doubt of the +ability of Bombay cheap labour, independently of this, to undersell +English labour for low counts of cotton in Asiatic markets. Brentano +in his work, _Hours and Wages in Relation to Production_, supports +Schulze-Gaevernitz. + +[231] Mr. Gould's general conclusion, from his comparison of American +and European production, is "that higher daily wages in America _do +not mean a correspondingly enhanced labour-cost to the manufacturers_" +(_Contemporary Review_, Jan. 1893). This he holds to be partly due to +superior mechanical agencies, which owe their existence to high wages, +partly to superior physical force in the workers. But Mr. Gould's +evidence and his conclusion here stated, taken as testimony to the +"economy of high wages," are insufficient, for they only show that +high wages are attended by increased output of labour, not by an +increase _correspondent_ to this higher wage. + +[232] Ure's _Philosophy of Manufactures_, pp. 367-369. Dr. Ure +regarded mechanical inventions as the means whereby capital should +keep labour in subjection. In describing how the "self-acting mule" +came into use he adds triumphantly: "This invention comprises the +great doctrine already propounded, that when capital enlists science +in her service the refractory hand of labour will always be taught +docility" (p. 368). + +[233] "No. 64 Consular Report" (quoted Schoenhof, p. 209). + +[234] Schoenhof, p. 216. + +[235] _Der Grossbetrieb_, p. 167. + +[236] _Vide supra_, p. 269. These wages, however, are the average of +all the labour employed in the weaving-sheds, not of "weavers" alone. + +[237] E.R.L. Gould, _Contemporary Review_, January 1893. + + + + +CHAPTER XI. + +SOME EFFECTS OF MODERN INDUSTRY UPON THE WORKERS AS CONSUMERS. + + Sec. 1. _How far the different Working Classes gain from the Fall of + Prices._ + Sec. 2. _Part of the Economy of Machine-production compensated by the + growing Work of Distribution._ + Sec. 3. _The Lowest Class of Workers gains least from + Machine-production._ + + +Sec. 1. In considering the effect of machine-production upon a body of +workers engaged in some particular industry we are not confined to +tracing the effects of improvements in the arts and methods of that +single branch of production. As consumers they share in the +improvements introduced into other industries reflected in a fall of +retail prices. Insomuch as all English workers consume bread they are +benefited by the establishment of a new American railway or the +invention of new milling machinery which lowers the price of bread; as +all consume boots the advantage which the introduction of boot-making +machinery confers upon the workers is not confined to the higher wages +which may be paid to some operatives in the boot factory, but is +extended to all the workers who can buy cheaper boots. + +How far do methods of modern capitalist production tend to benefit the +labourer in his capacity as consumer? + +Economic theory is in tolerably close accord with experience in the +answer it gives to this question. Each portion of the working classes +gains in its capacity of consumer from improved methods of production +in proportion to the amount by which its income exceeds the bare +subsistence wage of unskilled workers. The highly-paid mechanic gains +most, the sweated worker least. The worker earning forty shillings per +week gains much more than twice as much as the worker earning twenty +shillings from each general cheapening in the cost of production. +There are several reasons why this is so. + +1. Where there exists a constant over-supply of labour competing for +what must be regarded at any particular time as a fixed quantity of +employment, wages are determined with tolerably close reference to the +lowest standard of living among that class of workers, and not by any +fixed or customary money wage. This is particularly the case in the +"sweating" trades of large towns. Here such improvements in machinery +and methods of industry as lower the price of articles which fall +within the "standard of living" of this class are liable to be +speedily reflected in a fall of money wages paid for such low-skilled +work. In other words, a "bare subsistence wage" does not gain by a +fall in the price of the articles which belong to its standard of +comfort. + +Even in the lowest kinds of work there is no doubt some tendency to +stick to the former money wage and thus to raise somewhat the standard +of real wages, but where the competition is keenest this _vis inertiae_ +is liable to be overborne, and money wages fall with prices. As we +rise to the more highly skilled, paid, and organised grades of labour, +we come to workers who are less exposed to the direct constant strain +of competition, where there is not a chronic over-supply of labour. +Here a fall of retail prices is not necessarily or speedily followed +by any corresponding fall of money wages, and the results of the +higher real wages enjoyed for a time impress themselves in a higher +habitual standard of comfort and strengthen the resistance which is +offered to any attempt to lower money wages, even though the attempt +may be made at a time when an over-supply of labour does exist. + +In proportion as a class of workers is highly paid, educated, and +organised, it is able to gain the benefit which improved machinery +brings to the consumer, because it is better able to resist the +economic tendency to determine wages by reference to a standard of +comfort independent of monetary considerations. So far as the lowest +waged and most closely competing labourers have gained by the fall of +prices, it has been due to the pressure of sentiment on the part of +the better class of employers and of the public against the lowering +of money wages, even where the smaller sum of money will purchase as +much as a larger sum previously. + +2. The smaller the income the larger the proportion of it that is +spent upon commodities whose expense of production and whose price is +less affected by machinery. Machine-production, by the fall of prices +it brings, has benefited people in direct proportion to their income. +The articles which have fallen most rapidly in price are those +comforts and luxuries into which machine-production enters most +largely. The aristocracy of the working classes, whose standard of +comfort includes watches, pianos, books, and bicycles, has gained much +more by the fall of prices than those who are obliged to spend all +their wages on the purchase of bare necessaries of life. The gain of +the former is manifold and great, the benefit of the latter is +confined to the cheapening of bread and groceries--a great benefit +when measured in terms of improved livelihood no doubt, but small when +compared with the increase of purchasing power conferred by modern +production upon the Lancashire factory family, with its L3 or L4 a +week, and in large measure counterbalanced by the increased proportion +of the income, which, in the case of town operatives, goes as rent and +price of vegetables, dairy produce, and other commodities which have +risen in price. + +3. The highly-paid operatives generally work the shortest hours, the +low-paid the longest. So far as this is not compensated by an +increased intensity of labour on the part of those working short +hours, it implies an increased capacity of making the most out of +their wages. Longer leisure enables a worker to make the most of his +consumption, he can lay out his wages more carefully, is less tempted +to squander his money in excesses directly engendered by the reaction +from excessive labour, and can get a fuller enjoyment and benefit from +the use of the consumables which he purchases. A large and increasing +number of the cheapest and the most intrinsically valuable +commodities, of an intellectual, artistic, and spiritual character, +are only open to the beneficial consumption of those who have more +leisure at their command than is yet the lot of the low-skilled +workers in our towns. + +Sec. 2. If we compare the statistics of wages we shall find that the +largest proportionate rise of money wages has been in the +highly-organised machine industries, and that the benefit which +machinery confers upon the workers in the capacity of consumers falls +chiefly to the same workers. + +It must not, however, be assumed that improved methods of production +yield their full benefit through competition to the consuming public. +On the contrary, much of the economy of machine-production fails to +exercise its full influence upon retail prices. There are two chief +reasons for this failure. To one of these adequate attention has been +already drawn, the growth of definite forms of capitalist monopoly, +which secure at some point or other in the production of a commodity, +as higher profits, that which under free competition would pass to the +consumer through lower shop prices. The second consists in the +abnormal growth of the distributive classes, whose multiplication is +caused by the limitation which the economy of machinery imposes upon +the amount of capital and labour which can find profitable employment +in the extractive and manufacturing processes. A larger and larger +number of industrial workers obtain a living by a subdivision of the +work of distribution carried to a point far beyond the bounds of +social utility. For, on the one hand, when competition of +manufacturers and transporters is more and more confined to a small +number of large businesses which, because their united power of +production largely transcends the consumption at profitable prices, +are driven into closer competition, a larger amount of labour is +continually engaged in the attempt of each firm to secure for itself +the largest share of business at the expense of another firm. On the +other hand, shut out from effective or profitable competition in the +manufacturing industries, a larger amount of capital and labour seeks +to engage in those departments of the distributive trade where +new-comers have a better chance, and where by local settlement or +otherwise they have an opportunity of sharing the amount of +distribution that is to be done. Hence a fall of wholesale prices is +usually not reflected in a corresponding fall of retail prices, for +competition in retail trade, as J.S. Mill clearly recognised, "often, +instead of lowering prices, merely divides the gains of the high price +among a greater number of dealers."[238] + +Sec. 3. The wide difference between the economic position of the skilled +mechanic and the common labourer shows how fallacious is that +treatment of the influence of machinery upon the condition of the +working classes which is commonly found in treatises of political +economy. To present a comparative picture of the progress of the +working classes during the last half century, which assigns to them an +increase of money wages, obtained by averaging a number of rises in +different employments, and reduces this increase to real wages without +any reference to the different use of wages by different classes, is +an unscientific and mischievous method of dealing with one of the most +important economic questions. The influence of machine-production +appears to be widely different upon the skilled mechanic and the +common labourer considered both as producers and consumers, and tends +to a wide difference in standard of comfort between the two classes. +This difference is further enhanced by the indirect assistance which +machinery and large-scale industry gives to the skilled workers to +combine and thus frequently to secure wages higher than are +economically requisite to secure their efficient work. On the other +hand, growing feelings of humanity and a vague but genuine feeling of +social justice in an ever larger portion of the public often enable +the low-skilled worker to secure a higher standard of comfort than the +operation of economic competition alone would enable him to reach. But +after due allowance is made for this, the conclusion is forced upon us +that the gain of machine-production, so far as an increase in real +wages is concerned, has been chiefly taken by the highly-skilled and +highly-waged workers, and that as the character of work and wages +descends, the proportionate gain accruing from the vast increase of +productive power rapidly diminishes, the lowest classes of workers +obtaining but an insignificant share. + +FOOTNOTES: + +[238] _Principles of Political Economy_, Bk. ii., chap. iv. Sec. 3. + + + + +CHAPTER XII. + +WOMEN IN MODERN INDUSTRY. + + Sec. 1. _Growing Employment of Women in Manufacture._ + Sec. 2. _Machinery favours Employment of Women._ + Sec. 3. _Wages of Women lower than of Men._ + Sec. 4. _Causes of Lower Wages for Women._ + Sec. 5. _Smaller Productivity or Efficiency of Women's Labour._ + Sec. 6. _Factors enlarging the scope of Women's Wage-work._ + Sec. 7. _"Minimum Wage" lower for Women--Her Labour often subsidised + from other sources._ + Sec. 8. _Woman's Contribution to the Family Wages--Effect of Woman's + Work upon Man's Wages._ + Sec. 9. _Tendency of Woman's Wage to low uniform level._ + Sec. 10. _Custom and Competition as determinants of Low Wages._ + Sec. 11. _Lack of Organisation among Women--Effect on Wages._ + Sec. 12. _Over-supply of Labour in Women's Employments the + root-evil._ + Sec. 13. _Low Wages the chief cause of alleged Low "Value" of Woman's + Work._ + Sec. 14. _Industrial Position of Woman analogous to that of + Low-skilled Men._ + Sec. 15. _Damage to Home-life arising from Women's Wage-work._ + + +Sec. 1. Modern manufacture with machinery favours the employment of women +as compared with men. Each census during the last half century shows +that in England women are entering more largely into every department +of manufacture, excepting certain branches of metal work, +machine-making and shipbuilding, etc., where great muscular strength +is a prime factor in success. + +The following table,[239] indicating the number of males and females +employed in the leading groups of manufactures at decennial points +since 1841, clearly indicates the nature and extent of the industrial +advance of woman. + +MALE AND FEMALE EMPLOYMENT IN MANUFACTURES, 1841-91. + +---------------------------+------------------+------------------+ + | M. 1841. F. | M. 1851. F. | +---------------------------+------------------+------------------+ +Earthenware | 23,600 7,400| 34,800 11,700| +Fuel, Gas, Chemicals | 5,800 300| 16,400 1,700| +Fur, Leather, Glue | 31,600 2,400| 44,500 6,500| +Wood Furniture, Carriages, | | | +etc. | 147,500 4,900| 180,200 8,900| +Paper, Floorcloth, | | | +Waterproof, etc. | 8,900 3,200| 13,600 8,300| +Textiles, Dyeing | 346,200 257,600| 462,400 472,100| +Dress | 343,600 177,200| 397,500 471,200| +Food, Drink, Smoking | 82,700 8,000| 120,900 12,400| +Watches, Instruments, | | | +Toys | 19,600 800| 23,500 1,300| +Printing, Bookbinding, | | | +etc. | 21,100 1,800| 30,400 3,800| +---------------------------+------------------+------------------+ +TOTAL |1,030,600 463,600|1,324,200 997,900| +---------------------------+------------------+------------------+ + +---------------------------+--------------------+--------------------+ + | M. 1861. F. | M. 1871. F. | +---------------------------+--------------------+--------------------+ +Earthenware | 42,500 13,400| 49,700 17,700| +Fuel, Gas, Chemicals | 24,800 1,500| 34,900 4,100| +Fur, Leather, Glue | 47,300 8,300| 49,400 10,200| +Wood Furniture, Carriages, | | | +etc. | 202,200 14,100| 214,200 19,500| +Paper, Floorcloth, | | | +Waterproof, etc. | 14,600 10,700| 20,300 13,400| +Textiles, Dyeing | 439,700 526,500| 414,500 555,500| +Dress | 378,600 550,900| 363,300 552,700| +Food, Drink, Smoking | 133,400 15,600| 145,700 18,500| +Watches, Instruments, | | | +Toys | 32,800 2,900| 35,900 3,000| +Printing, Bookbinding, | | | +etc. | 41,300 6,200| 57,600 8,600| +---------------------------+--------------------+--------------------+ +TOTAL |1,357,200 1,150,100|1,385,500 1,203,200| +---------------------------+--------------------+--------------------+ + +---------------------------+--------------------+--------------------+ + | M. 1881. F. | M. 1891. F. | +---------------------------+--------------------+--------------------+ +Earthenware | 52,200 19,700| 64,300 23,800| +Fuel, Gas, Chemicals | 44,000 4,000| 66,400 6,300| +Fur, Leather, Glue | 49,400 13,300| 59,100 18,200| +Wood Furniture, Carriages, | | | +etc. | 221,600 18,400| 253,600 23,300| +Paper, Floorcloth, | | | +Waterproof, etc. | 24,600 23,200| 28,600 34,200 | +Textiles, Dyeing | 396,400 566,200| 430,500 585,600| +Dress | 344,700 609,300| 353,800 681,300| +Food, Drink, Smoking | 152,300 28,900| 173,100 50,200| +Watches, Instruments, | | | +Toys | 41,700 3,400| 44,600 5,500| +Printing, Bookbinding, | | | +etc. | 75,000 13,100| 102,100 19,100| +---------------------------+--------------------+--------------------+ +TOTAL |1,401,900 1,299,500|1,576,100 1,447,500| +---------------------------+--------------------+--------------------+ + +From this table we perceive that while the number of males engaged in +these manufactures has increased by 53 per cent. during the half +century 1841 to 1891, the number of females has increased by 221 per +cent. This movement, which must be regarded partly as a displacement +of male by female labour, partly as an absorption of new manufactures +by female labour, proceeded with great rapidity from the beginning of +the period up to 1881. The check apparent in the last decennium, in +which the number of males employed seems to have increased faster than +that of the females, does not, however, indicate a reversal or even a +suspension of the industrial movement. It is attributable to an +abnormal change in a single great industry--the cotton trade; +excluding this, the employment of females in each group of +manufactures has grown faster than that of males. + + [Illustration: TEXTILE WORKERS.] + +If we confine our survey to adults (excluding males and females below +fifteen) the rapid and regular advance of female employment as +compared with male is still more striking. + + [Illustration: DRESS WORKERS.] + +When we turn to the textile industries and to dress, the change of +proportionate employment among the sexes is very noteworthy. In +textiles and dyeing there was a continuous decline in the absolute +numbers of adult male workers and a continuous increase of female +workers up to 1881. In 1851 there were 394,400 men employed, in 1881 +the number had fallen to 345,900, while the women had risen during the +same period from 390,800 to 500,200. The census figures for 1891 mark +a decided check in this movement. Adult male workers show an increase +of 34,000 upon the 1881 figures in the textile industries, while the +increase of female workers is only 15,000. This is due, on the one +hand, to the feverish and disordered expansion of the cotton +industry, which offers a larger proportion of male employment than +other textile branches; on the other hand, to the alarming decay of +the lace and linen industries, which show an absolute decline of +female employment amounting to nearly 13,000. So likewise in the dress +industries 377,400 men were employed in 1851, and 335,900 in 1881, +while the number of women employed had increased from 441,000 to +589,000.[240] + + [Illustration] + +These figures chiefly indicate a displacement of male by female +labour. But the movement is by no means peculiar to the textile and +dress industries which may appear specially adapted to the faculties +of women. Wherever women have got a firm footing in a manufacture a +similar movement is traceable; the relative rate of increase in the +employment of women exceeds that of men, even where the numbers of the +latter do not show an absolute decline. Such industries are wood +furniture and carriages; printing and bookbinding; paper, floorcloths, +waterproof; feathers, leather, glues; food, drink, smoking; +earthenware, machinery, tools.[241] Women have also obtained +employment in connection with other industries which are still in the +main "male" industries, and in which no women, or very few, were +engaged in 1841. Such are fuel, gas, chemicals; watches, instruments, +toys. The only group of machine industries in which their numbers have +not increased more rapidly than those of men since 1851 are the metal +industries. Over some of these, however, they are obtaining an +increased hold. In the "more mechanical portions" of the growing +"cycle" industry, hollow-ware, and in certain departments of the +watchmaking trade, they are ousting male labour, executing with +machinery the work formerly done by male hand-workers.[242] + +From this and similar evidence relating to the statistics of +employment in modern industrial countries, the following conclusions +seem justified:-- + +(1.) That the tendency of modern industry is to increase the quantity +of wage-work given to women as compared with that given to men. + +In qualification of this tendency consideration should be taken of the +greater irregularity of women's work, and of the fact that a large +number of women returned as industrial workers give only a portion of +their working-day to industry. + +(2.) That this tendency is specially operative in manufacturing +industries. The increase of female employment in the "dealing" +industries and in "industrial service" is not larger than the increase +of male employment between 1851 and 1881. + +(3.) That in the manufacturing industries, omitting a few essentially +male industries where even under machinery the muscles are severely +taxed, the increased rate of female employment is greatest in those +industries where machinery has been most highly developed, as for +example in the textile industries and dress. + +Out of 1,840,898 women placed in the industrial class in 1891 no fewer +than 1,319,441 were engaged in textile industries and dress, though +under the latter head there is of course still a good deal of hand +industry. + +It seems evident that modern improvements in machinery under normal +circumstances favour the employment of women rather than of men. There +is some reason to suppose that machinery also favours the employment +of children as compared with adults, where the economic forces are +allowed free play. In the textile industries of the United States the +work of women and children predominates even more largely than in +England; in 1880 the number of women and children employed were +112,859 as compared with 59,685 men, while in Massachusetts out of +61,246 work-people only 22,180 were adult males. So far as legislation +and public opinion do not interfere, the tendency is strongly in +favour of employing children. Mr. Wade says, in _Fibre and Fabric_, +"The tendency of late years is towards the employment of child labour. +We see men frequently thrown out of employment owing to the spinning +mule being displaced by the ring-frame, or children spinning yarn +which men used to spin. In the weave-shops, girls and women are +preferable to men, so that we may reasonably expect that in the not +very distant future all the cotton manufacturing districts will be +classed in the category of she-towns."[243] + +Sec. 2. In modern machinery a larger and larger amount of inventive skill +is engaged in adjusting machine-tending to the physical and mental +capacity of women and children. The evolution of machinery has not +moved constantly in this direction. In cotton-spinning, for example, +the earlier machines--Hargreave's jennies and Arkwright's +water-frames--were generally worked by women and children, the women +who had been engaged in the use of the older instruments--the distaff, +spindle, hand-wheel--coming into the mills. But the growing complexity +and size of the mule made it too cumbrous for women and children, and +spinning for a while became a male occupation in England. In the +United States the difficulty of procuring male labour stimulated the +invention of the ring spinning-frame, some sixty years ago, which +could be worked by woman's labour. The limitations and imperfections +of this mode of spinning retarded its adoption in England for upwards +of half a century. But recent improvements have led to a rapid +increase of the adoption of the ring-frame in Lancashire. In the low +medium and low counts it is rapidly displacing the mule, and in +countries where fine counts are little spun it will probably be the +dominant machine.[244] In Lancashire it does not, however, seem at all +likely to be rendered capable of displacing the mule in finer counts. +The ring-frame throws spinning once more into the hands of women and +of children, who in some Lancashire towns are quickly displacing the +labour of the men. + +So far as children are concerned, the economic tendency to adjust +machine-tending to their limited strength is in some measure defeated +by the growth of strong public feeling and legislative protection of +younger children. Had full and continued licence been allowed to the +purely "economic" tendencies of the factory system in this country and +in America, there can be little doubt but that almost the whole of the +textile industry and many other large departments of manufacture would +be administered by the cheap labour of women and young children. The +profits attending this free exploitation of cheap labour would have +been so great that invention would have been concentrated, even more +than has been the case, upon spreading out the muscular exertion and +narrowing the technical skill so as to suit the character of the +cheaper labour. It is quite possible that some of the oppressive +conditions of our early factory system, the exhausting hours of +labour, the cruelty of overseers, the utter neglect of all sanitation, +the bad food, might have been found opposed to the true interests of +economy and efficiency, and that the more developed factory might have +been managed more humanely. But if we may judge by the progress made +in the employment of weaker labour where it has had free scope, it +seems reasonable to believe that, had no Factory Acts been passed, and +had public feeling furnished no opposition, the great mass of the +textile factories of this country would have been almost entirely +worked by women and children. + +We have seen already that the advantages attending efficient labour +furnish no guarantee that it will be most profitable to employ the +most efficient labour at the highest wages. The evidence of industrial +history shows that it will often be most profitable to employ less +efficient labour provided that labour can be got "cheap." The +increasing employment of women in machine-industry is in nearly all +cases directly traceable to the "cheapness" of woman's labour as +compared with man's. + +Sec. 3. Thus we are brought to the discussion of the important question +which underlies all understanding of the position of woman in modern +industry--"Why are women paid less wages than men?" + +In almost all kinds of work in which both men and women are engaged, +the women earn less than the men. Where men and women are engaged in +the same industries but in different branches, the wage level of the +woman's work is nearly always lower than that of the men. A general +survey of industry shows that the highly-paid industries are almost +invariably monopolised by men, the lowly-paid industries by women. +This applies not only to unskilled and skilled manual work, but to +routine-mental, intellectual, and artistic work,[245] wherever custom +or competition are the chief direct determinants of wages. Certain +exceptions to this rule, which readily suggest themselves, are +explained by the fact that the wages of the labour in question are +determined not by custom or competition, but by some other law. Where +the product is of the highest intellectual or artistic quality, sex +makes no difference in the price; "the rent of ability" of George +Eliot or Madame Patti is determined by the law of monopoly values. In +certain employments, as, for instance, the stage, sexual attractions +give women a positive advantage, which in certain grades of the +profession assist them to secure a high level of remuneration. So also +in a few cases governments or private employers pay women as highly as +men for the same work, though women could be got to work for less. But +even in those occupations where women would seem to be most nearly +upon an economic equality with men, in literature, art, or the stage, +the scale of pay for all work, save that where special skill, personal +attraction, or reputation secures a "fancy" price, is lower for women +than for men. + +Sec. 4. It is easy to find answers to the question, "Why are women paid +less than men?" which evidently contain an element of truth. Three +answers leap readily to the lips: "Because women cannot work so hard +or so well," "Because women can live upon less than men," "Because it +is more difficult for a woman to get wage-work." Each of these answers +comprises not one reason but a group of reasons why women get low +wages, and the difficulty lies in relating the different reasons in +these different groups so as to yield something that shall approach an +accurate solution of the problem. Setting these groups in somewhat +more exact language, we may classify the causes as-- + +_a._ Causes relating to "productivity" or efficiency of labour. + +_b._ Causes relating to "needs" or standard of comfort. + +_c._ Causes relating to character and intensity of competition. + +Sec. 5. _a._ Women do not on the average work so hard or so well as men, +so that if wages were paid with sole reference to quantity and quality +of the product of labour women would get less. This inferiority in the +net efficiency of women's labour is partly due to physical, partly to +social causes. The following are the leading factors in this +inferiority of efficiency:-- + +(1) The physical weakness of woman, as compared with man, closes many +occupations to her. In manufactures the metal industries have been +almost entirely closed to women, and most branches of the mining and +railway industries. In England and America the rougher work of +agriculture is almost wholly given over to male labour, and in several +continental countries there is a growing tendency to spare women the +kinds of labour which tax the muscular forces most severely. The +growing consideration for the duties of maternity, operating through +public opinion and legislation, favour this curtailment of woman's +sphere of activity. Further, in all employments where physical +strength is an important factor, the net productivity of woman's +labour tends to fall below man's, although in some cases superior +deftness or lightness of hand related to physical fragility may +compensate. Even in modern textile factories the superior force of +man's muscles often gives him a great advantage. In fustian and velvet +cutting, where the same piece-wages are paid to men and women, the +actual takings of the men are about double. "Every person has two long +frames upon which the cloth is stretched ready for cutting, and while +women are unable to cut more than one piece at a time, men can cut two +pieces without difficulty."[246] + +Where physical strength is not a prime factor it may enter +incidentally. So even in weaving women are under some disadvantage +through inability to work the heavy Jacquard looms, and to "tune" +their looms.[247] + +Where manual work is concerned brute strength and endurance form an +important ingredient in what is called manual skill, and affect the +quality of the work as well as the pace and regularity of the output. +Though, as we have seen, a chief object of modern machinery is to +diminish the importance of this element, it plays no inconsiderable +part in affecting the quantity of work turned out by women as compared +with men even in industries where the direct strain upon the muscles +is less severe. + +(2) But even when we take those kinds of work where skill seems least +dependent upon physical force, men have generally some advantage in +productivity, though a smaller one. There are cases in which this does +not seem to be the case, as in the weaving industries of Lancashire +and part of Yorkshire, where women not merely receive the same piece +wages, but earn weekly wages which, after making allowance for +sickness and irregularity, indicate that in quantity and quality of +work they are upon a level with the men.[248] In certain branches of +low-skilled mental work the same holds true, as in the Savings Bank +Department of the Post Office. But generally, even where the "skill" +is of a purely technical order, the man has the advantage. Where the +elements of design, resource, judgment, enter in, the superiority of +male labour is unquestioned, and in occupations which demand these +qualities women are confined generally to the lower routine portions +of the work. This is the case in the Post Offices where women are +largely used as sorting clerks and telegraphists, and in numerous +offices of private business firms. How far these defects of manual and +intellectual skill, which generally prevent women from successfully +competing in the higher grades of labour, are natural, how far the +results of defective education and industrial training, we are not +called upon here to consider. The fact stands that women do not work +so well. + +(3) The reluctance of male workers to allow women to qualify for and +to undertake certain kinds of work which men choose to regard as +"their own," though sometimes defensible when all the terms of +competition are taken into account,[249] must be held to confine and +lessen the average productivity of female labour in certain +departments of industry. Closely allied to this is the social feeling, +partly based upon the recognition of a real difference of physical and +mental vigour, partly upon prejudice, which bars women from the +highly-paid and responsible posts of superintendence and control in +industries where both sexes are employed. In a general comparison of +the male and female wage in a highly organised industry, the fact that +women are held disqualified for all posts of high emolument and +responsibility has a material effect upon the average of wages. Where +men and women work in the same industry, the women are commonly +confined to the less productive work, and where they do the same work +they seldom reach man's level in quantity and quality. + +(4) This inferior efficiency is not solely attributable to these +reasons. Woman's incentive to acquire industrial efficiency is not so +great as man's. A large number of women-workers do not enter an +industrial occupation as the chief means of support throughout their +life. The influence of matrimony and domestic life operates in various +ways upon women's industry. The expectation of marriage and a release +from industrial work must lessen the interest of women in their work. +The fact that even while unmarried a large proportion of women-workers +are not dependent upon their earnings for a livelihood will have the +same result. A larger proportion of the woman's industrial career is +occupied in acquiring the experience which makes her a valuable +worker, and the probability that, after she has acquired it, she may +not need to use it, diminishes both directly and indirectly the net +value of her industrial life; the element of uncertainty and +instability prevents the advancement of competent women to posts where +fixity of tenure is an important factor. + +Where married women are engaged in industrial work either in factories +or at home, domestic work of necessity engages some of their strength +and interest, and is liable to trench upon the energy which otherwise +might go into industry. Even unmarried women have frequently some +domestic work to do which is added to their industrial work. Thus the +incentive to efficiency is weaker in woman, her industrial position is +less stable and her industrial life shorter, while part of her energy +is diverted to other than industrial channels. + +(5) There is conclusive evidence to show that women are more often +absent from work owing to sickness and other claims upon their time +than men.[250] Though closely related to the former factors this may +be treated separately in assessing the net productiveness of women, +because it is distinctly measurable. But in touching this point it +should be remarked that weaker muscular development does not +necessarily imply more sickness. The loss of working time sustained by +women could probably be reduced considerably by more attention to +physical training and exercise and by a higher standard of diet. + +(6) Although the limitations of law and custom, which limit the hours +of labour for women in many of their industrial occupations and forbid +them to undertake night-work, cannot be reasonably held to reduce the +net efficiency of women's labour taken as an aggregate, they must be +allowed to diminish the direct net productiveness of women in certain +employments as compared with men, and either to bar them out of these +employments or engage them upon lower wages. In certain textile +factories where goods of some special pattern are woven at short +notice, and where overtime is essential, women cannot be employed. In +the Post Office, where night-work is required at certain seasons, +women are at a disadvantage, which is doubtless reflected in the lower +wages they receive. + +(7) Lastly, the inferior mobility of woman as compared with man has an +influence in reducing the average efficiency of her labour. On the one +hand, women are more liable to have the locality of their home fixed +by the requirements of the male worker in the family; on the other +hand, they are physically less competent to undertake work far from +their home. Hence they are far more narrowly restricted in their +choice of work than men. They must often choose not that work they +like best, or can do best, or which is most remunerative, but that +which lies near at hand. This restriction implies that large numbers +of women undertake low-skilled, low-paid, ineffective, and irregular +work at their own homes or in some neighbouring work-room, instead of +engaging in the more productive and more remunerative work of the +large factories. Every limitation in freedom of choice of work +signifies a reduction in the average effectiveness of labour. + +Sec. 6. These elements of inferior physique and manual skill, lower +intelligence and mental capacity, lack of education and knowledge of +life, irregularity of work, more restricted freedom of choice, must in +different degrees contribute to the inferior productivity of woman's +industrial labour. + +In regarding this influence the experienced student of industrial +questions hardly requires to be reminded that these must be regarded +not merely as causes of low wages, but also as effects. This constant +recognition of the interaction of the phenomena we are regarding as +cause and effect is essential to a scientific conception of industrial +society. Women are paid low wages because they are relatively +inefficient workers, but they also are inefficient workers because +they are paid low wages. + +While this smaller productivity diminishes the maximum wage attainable +by women as compared with men, it is evident that many forces are at +work which tend to equalise the productivity of men and women in +industry: the evolution of machinery adapted to the weaker physique of +women; the breakdown of customs excluding women from many occupations; +the growth of restrictions upon male adult labour with regard to the +working-day, etc., correspondent with those placed upon women; +improved mobility of women's labour by cheaper and more facile +transport in large cities; the recognition by a growing number of +women that matrimony is not the only livelihood open to them, but that +an industrial life is preferable and possible. These forces, unless +counteracted by stronger moral and social forces, seem likely to raise +the average productivity of women's industrial labour, and to incite +her more and more to undertake industrial wage-work. + +Sec. 7. As the maximum wage may be said to vary with productivity, so the +minimum wage is said to vary with the "wants" of the worker. Women are +said to "want" less than man, and therefore the stress of competition +can drive their wages to a lower level. It is possible that a woman +can sustain the smaller quantity of physical energy required for her +work somewhat more cheaply than a man can sustain the energy required +for his work, and that the early increments of material comfort above +the bare subsistence line may be attended by a larger increase of +productivity in the man than in the woman. If this is so, then the +minimum subsistence wage and the wage of true economic efficiency, the +smallest wage a wise employer in his own interest will consent to pay, +are lower in the case of women than of men. But this difference +furnishes no adequate explanation of the difference between the male +and the female minimum wage. The wage of the low-skilled male labourer +enables him to consume certain things which do not belong strictly to +his "subsistence"--to wit, beer and tobacco; the wage of the +low-skilled female labourer often falls below what is sufficient with +the most rigid economy to provide "subsistence." We are not then +concerned with a difference which refers primarily to the quantity of +food, etc., required to support life. The wages of the low-skilled +labourer in regular employ would, if properly used, suffice to furnish +him more than a bare physical subsistence; the wages of the +lowest-paid women workers in factories would not suffice to maintain +them in the physical condition to perform their work.[251] + +It is not then precisely with the "standard of comfort" of male and +female workers that we are concerned. The economic relation in which +men and women workers stand to other members of their family is a more +important factor. The wage of a male worker must be sufficient to +support not only himself but the average family dependent upon him, in +the standard of comfort below which he will not consent to work. When +little work is available for his wife and children, or where his +"standard of comfort" requires them not to undertake wage-work, his +minimum wage must suffice to keep some four persons. His standard of +comfort may be beaten down by stress of circumstances, his family may +be driven to take what work they can get, but in any case his wage +must be above the "subsistence" of a single man. When the man is the +sole wage-earner, or is only assisted slightly by his family, as, for +example, in the metal and mining and building industries, average male +wages are much higher than in the textile industries, where the women +and children share largely in the work.[252] + +Women workers, on the other hand, have not in most cases a family to +support out of their wages. In the majority of instances their own +"sustenance" does not or need not fall entirely upon the wages they +earn. They are partly supported by the earnings of a father or a +husband or other relative, upon some small unearned income, upon +public or private charity. Where married women undertake work in order +to increase the family income, or where girls not obliged to work for +a living enter factories or take home work to do, there is no +ascertainable limit to the minimum wage in an industry. Grown-up women +living at home will often work for a few shillings a week to spend in +dress and amusements, utterly regardless of the fact that they may be +setting the wage below starvation-point for those unfortunate +competitors who are wholly dependent on their earnings for a living. +Even where girls living at home pay to their parents the full cost of +their keep, the economy of family life may enable them to keep down +wages to such a point that another girl who has to keep herself alone +may be sorely pressed, while a woman with a family to support cannot +get a living. + +Miss Collet, in her investigation of women workers in East London, +remarked of the shirt-finishers, one of the lowest-paid +employments--"These shirt-finishers nearly all receive allowances from +relatives, friends, and charitable societies, and many of them receive +outdoor relief."[253] This is true of most of the low-paid work of +women. Even in the textile factories, with the exception of weaving, +most of the scales of wages are below what would suffice to keep the +recipient in the standard of comfort provided by the family wage. + +Sec. 8. The relation of a worker to other persons in the family is such +that, in determining the minimum wage for any member, it is right to +take the standard of comfort of the family as the basis, and to +consider the mutual relations of the several workers upon this basis. +We shall find that not merely is the wage of the woman affected by the +industrial condition of the adult male worker, but that the wage of +the latter is affected by women's wages, while the wages of child +labour exercise an influence upon each. The problem is one of the +distribution of work and wages among the several working members of a +family, how much of the family work and how much of the family wage +shall fall to each. As the children, and in many cases the women, are +not free agents in the transaction, it may often happen that they are +employed for wages which represent neither the cost of subsistence nor +any other definite amount but the prevalent opinion of the dominant +male of the family. A "little piecer" in a Lancashire mill may get +wages more than sufficient for his keep, while many a farm boy or +errand boy could not keep himself in food out of the earnings he +brings home. This element of economic unfreedom in the lives of many +women and most children must not be left out of sight in a +consideration of the comparative statistics of wages for men, women, +and children. Men workers often fail to recognise that by encouraging +their wives and driving their children to the mills or other +industrial work, they are helping to keep down their own wages. Men's +wages in all the textile industries of the world are low as compared +with those prevalent in industries demanding no higher skill or +intelligence, but in which women take no important part. If the male +textile workers used their rising intelligence and education to keep +their women and children out of the mills, men's wages must and would +distinctly rise.[254] The low wages paid to both men and women in many +branches of textile work as compared with wages in other industries on +approximately the same level of skill, goes for the most part to the +consuming public in reduced prices of textile wares. It is true the +Lancashire and certain of the Yorkshire textile operatives often enjoy +a fairly high family wage, but they give out a more than correspondent +aggregate of productive energy. + +American statistics yield some striking evidence in illustration of +the depressing influence exercised upon male wages by the labour of +women and children. "Among factory operatives, all branches taken +together, the wives and children who contribute to the support of the +family are, on an average, as one and a quarter to each family, while +among those employed in the building trades the average of wives and +children who work is only one to every four families. Hence in the +building trades the wages of the man supply about 97-1/2 per cent. of +the total cost of the family's living, while among the factory +operatives the wages of the man only supply 66 per cent., or +two-thirds, of the cost of the family's living, because the other +one-third is furnished by the labour of the wife or children. Nor is +this because the cost of living of the factory operative family is +greater than that of the labourer in the building trades, for while +the average family in the building trades contains 4-1/2 persons, that +of the factory operative contains 5-7/8 persons.[255] The total cost +of living in the former is about $50 a year more than in the latter, +and the wages of the man in the former are nearly $250 a year more +than those of the latter."[256] Similar evidence is tendered from +other trades, the gist of which is summed up in the Report of the +Labour Bureau of Massachusetts in the following words:--"Thus it is +seen that in neither of the cases where the man is assisted by his +wife or children does he earn as much as other labourers. Also that in +the case where he is assisted by both wife and children he earns the +least."[257] + +Sec. 9. But though the minimum wage of women and children is, strictly +speaking, not to be measured by any ascertainable standard of +subsistence, so far as the factory work of adult women is concerned +10s. may be said to be a standard wage. Factory wages, excepting for +cotton-weavers, seldom vary widely from this sum. Differences of +difficulty, disagreeability, or skill have little power to raise wages +much above 10s., or to depress them much below. Moreover, fluctuations +of trade and prices have very little effect upon this wage. Though +women are largely employed in industries where improvements in +machinery and methods have immensely increased the productivity of +labour, their wages are very little higher than they were half a +century ago. Since this rate prevails in many industries where an +adequate supply of women's labour cannot be drawn from married or +"assisted" women, and where the wage must be sufficient to tempt women +who have to keep themselves, 10s. may be said to be the "bare +subsistence" wage for women. The wide prevalence of this wage and its +independence of conditions of locality, time, nature of work, have +made it generally recognised as a "customary wage," and for any casual +work, or any new employment requiring ordinary feminine skill or +exertion, 10s. is regarded as sufficient remuneration for a woman. The +basis of this custom is the knowledge that women can always be induced +to work for a bare subsistence measured at 10s. or thereabouts, or for +extra comforts procurable by this sum regarded as a subsidiary +income.[258] + +It appears that the wages of bare subsistence and the wages of extra +comforts have a certain tendency to equality in some of the low-paid +factory trades of London, though accompanied by a difference in the +quality and intensity of the labour involved. + +The following diagram exhibits the uniformity of factory wages in East +End women's industries:-- + + [Illustration] + +Upon this table Miss Collet bases the following opinion:--"The most +striking feature is the uniformity of maximum wages and the difference +in the skill required, and I believe it to be the fact that the match +girls and the jam girls, who are at the bottom of the social scale, do +not have to work so hard for their money as, for example, the +capmakers and bookbinders, who, in the majority of cases, belong to a +much higher social grade. And whereas the bookfolder or booksewer who +earns 11s. a week exercises greater skill, and gives a closer +attention to her work, than the jam or match girl who earns the same +amount, that sum which would be almost riches to the dock-labourer's +daughter represents grinding poverty to the daughter of the clerk or +bookbinder, with a much higher standard of decency, if she is by any +chance obliged to depend on herself. How is it that this uniformity +prevails, and that efficiency brings with it nothing but the privilege +of working harder for the same money?"[259] + +Miss Collet's reply to the question is, that while the match and jam +girls pay the full price of home, board, and lodging, the others often +pay nothing, spending all they get upon dress and amusement. This, +taken along with the influence of the competition of home-workers in +the bookfolding and booksewing trades, explains the fact that the +harder and higher-skilled work gets no higher wages. + +Sec. 10. A knowledge of the productivity of labour as measuring the +maximum wage-level, and of "wants" or standard of comfort as measuring +the minimum wage-level, does not enable us to determine even +approximately the actual wage-level in any industry. The actual wage +may be fixed at any point between the two extremes. So far as +competition is an active determinant, everything will depend upon the +quantitative relation between supply and demand for labour. When there +is a short supply of labour available for any work, wages may rise to +the maximum; when there is more labour available than is required, +wages will fall towards the minimum. But, as we have already admitted, +competition works very slowly and inadequately in many of the +industries in which women and children are engaged. The force of +custom, assisted by ignorance of the labour market, prevents women +from taking advantage of an increased demand or a decreased supply of +labour to lift this wage above the customary level towards the level +of productivity. Women are more contented to live as they have lived +than men. As Miss Collet says, "the contentment of women themselves, +when they have obtained enough for their standard of living, is +another reason why competition is so ineffective among highly-skilled +workers."[260] + +This "contentment" or apathy, partly the result of ignorance, partly +the result of sex feebleness, enhanced by the exhausting burden of +present industrial conditions, is alluded to by the several reports of +the sub-commissioners to the Labour Commission as a chief difficulty +in the effective organisation of women workers, even when the work is +conducted in large factories. + +In other ways, woman is less of a purely "economic" creature than man. +The flow of labour from one occupation to another, which tends to +equalise the net advantages amongst male occupations, is far feebler +among women workers, notwithstanding that trade union barriers and the +vested interests of expensively-acquired skill are less operative in +woman's work. The reluctance of women to freely communicate to one +another facts regarding their wage and conditions of labour is +particularly noted as a barrier to united action. + +Those who have investigated the conditions of women workers in towns +are agreed as to the enormous influence of class and aesthetic feelings +in narrowing the competition. "The girl who makes seal-skin caps at a +city warehouse does not wish to work for an East End chamber-master, +even though she could make more at the commoner work; just as a +soap-box maker would not care to make match-boxes, even though skilled +enough to make more by it."[261] This sensitiveness of social +distinction in industrial work, based partly upon consideration of the +class and character of those employed, partly upon the skill and +interest of the work itself, is a widespread and powerful influence +among women workers. It tends to bring about that equalisation of +wages in skilled and unskilled industries which, as we have seen, +practically exists, for if there is an economic rise of wages in the +lower grades of work, it does not tempt the competition of +high-skilled workers, while a corresponding rise in the wages of the +higher grades would draw competitors from the lower grades to qualify +themselves for undertaking work which would at once give them more +money and more social respect. The lower wages often paid for more +highly-skilled work simply mean that the women take out a larger +portion of their wage in "gentility." This influence, which is +operative amongst men, reducing the wages of routine-mental labour to +the level of common unskilled manual labour, is powerful in all ranks +of women, rising perhaps in its potency with the social status of the +woman. Considerations of "gentility" enable us to obtain "teachers" +for board schools at an average "salary" of L75 per annum, as compared +with L119 for men, the fixed scale of women teachers in the same grade +being 16 per cent. less than for men. + +Thus custom, ignorance, contentment, social prejudices operate in +different ways and in different degrees to prevent women workers from +claiming in higher wages that share of the increased capacity of the +community for making wealth which men workers have been able to +procure. + +Sec. 11. The above-mentioned forces operate chiefly as barriers of free +economic competition. But women are equally at a disadvantage when and +in so far as they do compete for work, and wages. Weak, unorganised +units of labour, they are compelled to make terms with large organised +masses of capital. By the organised action of trade unionism the +majority of skilled working men have been able to raise their wages +far above the bare subsistence minimum, and to hold it at the higher +level until a firm standard of higher comfort is formed to be a +platform for further endeavour. With a few significant exceptions, +skilled women workers have been unable to do the same. Instead of +presenting a firm, united front to their employers in their demand for +higher wages, or their resistance of a fall, they are taken singly and +compelled to submit to any terms which the employers choose to impose, +or custom appears to sanction. The consequence is that in most +instances skilled women workers are paid very little higher wages than +unskilled women workers. The high value due to their skill goes +either to the employer in high profits, or, where keen competition +operates, to the consumer in low prices; the woman who puts out skill +is paid not according to her worth but according to her wants. Yet the +possession of technical skill is the basis of trade organisation. +Wherever a number of women workers possess a particular skill and +experience, and are engaged in fairly stable employment, the +requisites of effective trade organisation exist. By combination these +women can wield an economic power, measured by the difficulty and cost +of dismissing them _en masse_ and replacing them by less skilled and +experienced labour, which they can use as a lever to raise their wages +and other conditions of employment by a series of steps until they +approach the maximum limit imposed by their productivity. That such +action is feasible is proved by experience. Concerted action of +factory women in several minor trades, both in London and in the +provincial towns, has been attended with success. The examples of the +cigar-makers at Nottingham, the women at Messrs. Bryant & May's, the +rope-makers in a large East London factory, show what can be done by +determined combination, even confined to workers in a single factory. +But the crucial case is furnished again by the textile industries. In +the Lancashire weaving, where men and women are working side by side +in the same sheds, and are members of the same trades unions, we find +the one notable exception to the low wages of women. Here women's +weekly earnings are nearly the same as men's. The weaving is +unquestionably skilled work, but so also is a great deal of other +textile work not nearly so well paid. It is beyond doubt the power of +the joint union of male and female weavers that alone maintains these +wages for women. The same is the explanation of the equality of wages +paid to men and women in the Sheffield file-making. + +"But what if the Union should break down? It is as certain as anything +based on experience can be, that in a few weeks, or even days, it +would be possible for the employers to reduce the wages of the +women-weavers; that rather than lose their work, women would consent +to the reduction; that as they accepted lower wages, men would drop +off to other industries, and would cease to compete for the same +work; and that in a comparatively short time power-loom weaving would +be left, like its sister, cotton-spinning, to women workers +exclusively, and wages fall to the general level of women's +wages."[262] Where these conditions of strong combination in trades +unions do not exist we find that women's weekly wages fall +considerably below men's in the weaving trades. This is so in most of +the woollen industries of Yorkshire, and still more in the minor and +more scattered textile work in other counties.[263] In the +spinning-mills of Lancashire the women, combined in unions of their +own, are able to obtain wages considerably higher than those which +prevail elsewhere for similar work, though not so high as that of +weavers. The following table, in which spinning and weaving and other +departments are "pooled" for purposes of wages, is sufficient to +indicate the advantage Lancashire women enjoy from their strong +industrial position, as compared on the one hand with average factory +work and wages, on the other hand with the less favourably placed +worsted and linen industries, and even with the woollen. + + Weekly Wages. Average. + Cotton. Woollen. Worsted. Linen. + s. d. s. d. s. d. s. d. + Men 25 3 23 2 23 4 19 9 + Lads and boys 9 4 8 6 6 6 6 3 + Women 15 3 13 3 11 11 8 11 + Girls 6 10 7 5 6 2 4 11[264] + +Thus we see that whereas men's wages are nearly the same in the three +chief English industries, women's wages vary widely, yielding a very +great advantage to the Lancashire cotton-workers. + +Sec. 12. It cannot, however, reasonably be maintained that the whole of +this economic advantage owned by weavers and other women workers in +Lancashire is due directly to organisation. It is no doubt partly due +to the conditions which also make Trade Unionism effective, an +abundant demand for female labour in relation to the supply. In the +less concentrated woollen industries of the West of England, where a +large supply of female labour is available beyond the demand, the +difference between men's and women's wages is far greater than it is +even in those parts of Yorkshire where women are but slightly +organised. This brings us to the most vital point in the problem of +the industrial position of women. When there is an over-supply of +labour qualified to compete for any work, wages must fall to the +minimum of "wants" unless those in possession of the work are so +strongly organised as to prevent outsiders from effectively competing. +In a highly-skilled trade the workers may often have a practical +monopoly of the skill, which gives them both power to organise and +power when organised. But in a low-skilled trade, or where employers +are able to introduce unlimited numbers of girls into the trade, there +exists no such power to organise. Those who most need organisation are +least able to organise. This is the crux for low-skilled male labour, +and the great mass of women's industries are in the same economic +condition, because the kind of skill required is possessed or easily +attainable by a much larger number of competitors for work than are +sufficient to meet the demand at a decent wage. The deep abiding +difficulty in the way of organising women workers lies here. Cut out +as they are, by physical weakness, by lack of the means of technical +training, in some cases by organised opposition of male workers, or by +social prejudices, from competing in a large number of skilled +industries, their competition within the permitted range of +occupations is keener than among men: not merely in the unskilled but +in the skilled industries the available supply of labour is commonly +far in excess of the demand, for the skill is generally such as is +common to or easily attainable by a large number of the sex. To this +must be added the consideration that a larger proportion of women's +industries are concerned with the production of luxuries which are +peculiarly subject to fluctuation of trade by the elements of season, +weather, fashion, and rise or fall of incomes. Finally, a much larger +proportion of women's work is done in small factories, in workshops, +and in the home, under conditions which are inimicable to the +effective organisation of the workers. Until out-work is much +diminished, and effective inspection and limitation of hours in small +workshops drives a much larger proportion of women workers into large +factories, where closer social intercourse can lay the moral +foundation of trade organisation in mutual acquaintance, trust, and +regard, there is little prospect of women being able to raise their +"customary" wage considerably above its present subsistence level, or +to obtain any considerable alleviation of the burdensome conditions of +excessive hours of labour, insanitary surroundings, unjust fines, +etc., from which many women workers suffer. + +Women cannot in most of their industries organise effectively under +present conditions. In each trade, therefore, the workers employed are +surrounded by a permanent mass of potential "black legs" willing to +take their labour from urgent need, ignorance, or thoughtlessness, and +possessing or able to attain the small skill required. In men's +industries, save in the most unskilled, there is not a constant +over-supply of labour, in most women's industries there is. + +Sec. 13. Comparing women's wages with men's we are now able to sum up as +follows:--The smaller productivity of woman's work makes the possible +maximum wage lower; the smaller wants of women make the possible +minimum wage lower; the greater weakness of women as competitors, +arising chiefly from excess of supply of labour, makes their actual +wage approximate to the lower rather than to the higher level. + +In regarding productivity as a measure of maximum wage it is necessary +to guard carefully against one misapprehension. So far as we are +comparing the wage of men and women engaged upon the same work, the +smaller wages of the latter may easily be seen to have some relation +to the smaller product of their labour. But when productivity is +expressed in terms of the selling value of the work no such +measurement is open to us. We are thus thrown back on market value and +are told that the reason women get so little is that what they make +fetches so low a price. But the circularity of this argument will +appear on revising the question and asking, "Why do women's products +sell so cheap?" the obvious answer being, "Because the cost of labour +in them is so little,"--_i.e._, because women receive low wages. But +if we refuse to take selling prices as the measure of productivity, +what measure have we? No accurate measure of effort, skill, or +efficiency is open if we refuse the scale of the market itself. Yet if +we consider the conditions of wages and prices in such "sweated" +trades as shirt-making, we cannot but conclude that the consumer gets +the advantage of the "sweating"; that is to say, a certain portion of +the productivity of the workers passes to the consumer through the +agency of low prices. That which might have gone to the shirt-makers +in decent wages has gone to the purchaser. This criticism of course +posits a measurement of productivity at variance with that afforded by +competition, or, more strictly speaking, it discounts the abnormal +terms of the competition in the sweated industry. If we say that 1s. +11-1/2d. as the retail price of a shirt is a "sweating" or unfair +price, we mean that the skill and effort embodied in this product +would, if there were absolute equality of competition and absolute +fluidity of labour, be measured at say 3s. It is true that no such +measurement is open to us, and all such estimates are guesswork. But +the idea which underlies the sentiment against "sweating" is a true +one, although it has no exact practical embodiment so long as our only +meaning of "value" is value in exchange at present competitive rates. +It is therefore not inaccurate to represent productivity as forming +the maximum wage, though we may have no exact measure of productivity +at hand. The fact that any increase in productivity of labour is +liable under certain circumstances of competition to pass away +entirely to the consumer, is no reason for denying that an increase of +productivity has taken place which might under other circumstances of +competition have gone to the producer as higher wages. Though +productivity as a measure of maximum wages is more or less of an +unknown quantity, it is none the less true that as this "unknown" +fluctuates so the possibility of high wages fluctuates. + +Sec. 14. If the above analysis is correct it is not difference of sex +which is the chief factor in determining the industrial position of +woman. Machinery knows neither sex nor age, but chooses the labour +embodied in man, woman, or child, which is cheapest in relation to the +degree of its efficiency. Thus the causes which depress woman's +industry are chiefly the same which depress the industry of +low-skilled men and children. In each case the limits of productivity +and "wants" are lower than for skilled men workers, while the terms of +their competition keep their wages to the lower level and check the +full incentive to efficiency. Setting aside the case of children, who +are protected in some degree from the full effects of competition upon +the conditions of their employment, the industrial case of women is +closely analogous to that of low-skilled men. The physical weakness of +the one corresponds with the technical weakness of the other so far as +efficiency is concerned; in both cases the low standard of wants gives +a low minimum wage, while the excessive supply of labour, rendering +concerted action almost impossible, keeps wages close to the minimum. + +Sec. 15. The displacement of male adult labour which is going on by +female, and, when permitted, by child labour, does not necessarily +imply that women and children are doing more work and men less than +they used to do. Before the industrial revolution women were quite as +busily and numerously engaged in industry as now, and the children +employed in textile and other work were often worked in their own +homes with more cruel disregard to health and happiness than is now +the case. Even now the longest hours, the worst sanitary conditions, +the lowest pay, are in the domestic industries of towns which still +survive under modern industry. But though the regular factory women +and the half-timers are generally better off in all the terms of their +industry than the uninspected women and children who still slave in +such domestic industries as the trimmings and match-box trades, the +growing tendency of modern industry to engage women and children away +from their homes is fraught with certain indirect important +consequences. When industry was chiefly confined to domestic +handicrafts, the claims of home life constantly pressed in and +tempered the industrial life. The growth of factory work among women +has brought with it inevitably a weakening of home interests and a +neglect of home duties. The home has suffered what the factory has +gained. Even the shortening of the factory day, accompanied as it has +been by an intensification of labour during the shorter hours, does +not leave the women competent and free for the proper ordering of home +life. Home work is consciously slighted as secondary in importance and +inferior, because it brings no wages, and if not neglected is +performed in a perfunctory manner, which robs it of its grace and +value. This narrowing of the home into a place of hurried meals and +sleep is on the whole the worst injury modern industry has inflicted +on our lives, and it is difficult to see how it can be compensated by +any increase of material products. Factory life for women, save in +extremely rare cases, saps the physical and moral health of the +family. The exigencies of factory life are inconsistent with the +position of a good mother, a good wife, or the maker of a home. Save +in extreme circumstances, no increase of the family wage can balance +these losses, whose values stand upon a higher qualitative level. + +The direct economic tendency of machine-industry to take women and +children away from the home to work must be looked upon as a tendency +antagonistic to civilisation.[265] In the case of children, factory +legislation of increasing severity has been necessary to prevent the +spread or continuance of the evil.[266] The factory regulations +restricting and protecting women are directly continuous with this +policy, and may be regarded in the light of a protection of the home +against the undue encroachments of the machine. How far further +restrictions may be left to voluntary action and the growth of a saner +estimate of values, or how far further legal protection of the home +may be required, it remains for history to determine. + + +APPENDIX. + +The following Table of Factory Legislation is constructed to +illustrate the lines along which State protection of labour has +advanced in this century in England. Four laws of development are +clearly discernible:-- + + 1. Movement along the line of strongest human feeling. Weakest + workers are protected first, pauper children who are the + least "free" parties in a contract, then protection + advances to other children, young persons, women, men. + + 2. Protective legislation moves from the more highly organised + to the less highly organised structures of industry. + Cotton-mills are sole subjects of earliest Factory Acts, + then woollen, then other textile trades, trades subsidiary + to textile industries, non-textile factories, larger + workshops, domestic workshops, retail trade, domestic + service. + + 3. Growing complexity of aims and of legislative machinery. + Primarily Factory Acts aim at regulation of quantity of + labour. Reductions of the working-day forms a backbone of + this legislation. A twelve-hour day, ten, nine, eight, + covering wider classes of workers and applied to a larger + number of industries, marks the line of movement. With each + advance the basis of protection is broadened, other + considerations of machine-fencing, sanitation, education, + etc., entering more largely into the Acts. + + 4. Increased effectiveness of legislation with growth of + centralised control. Local initiative and control proves + ineffective, yields to State inspection, the number of + inspectors growing, and their power increasing. Improvements + in the mechanism of central control, an increased number of + inspectors, working men and women inspectors, are the + distinguishing features of recent State protection of + labour. + +LEADING POINTS IN THE DEVELOPMENT OF FACTORY LEGISLATION. + +-----+-------------------+--------------+------------------------+ + | | Class of | | + | Industries | Workers | Nature of | +Date.| affected. | chiefly | Regulations. | + | | protected. | | +-----+-------------------+--------------+------------------------+ +1802 | Cotton and 'other | Apprenticed | 12 Hours Day. | + | mills' (applied | Pauper | Night-work regulated. | + | exclusively to | Children. | Education, sanitation. | + | cotton). | | | + | | | | +1819}| Do. | Children | Prohibition of work | +1820}| Do. | (not | under 9 years. Young | + | | Paupers). | persons (under 16) a | + | | | 12 hour day. | + | | | Regulation for | + | | | meal-time. Amendment | + | | | of 1802 Act. | + | | | | +1825 | Do. | Do. | Shortened Saturday | + | | | labour. Penalties | + | | | provided for breach | + | | | of Factory | + | | | Regulations. | + | | | | + | | | | +1833}| All Textile | Children | 48 Hours Week for | +1834}| Industries. | and Young | Children (9-13), 69 | + | | Persons. | Hours for Young | + | | | Persons (13-18). | + | | | Prohibits night-work | + | | | for Young Persons. | + | | | Children in Silk Mills,| + | | | 10 Hours Day. | + | | | | +1842 | Mines. | Children and | No underground | + | | Women. | work. | + | | | | +1844}| | Children, | Factory Acts applied. | + to }| Printworks. | Young | 'False relay' system | +1846}| | Persons, | for children checked. | + | | Women. | 6-1/2 Hours Day for | + | | | Children. Female Young | + | | | Persons age raised to | + | | | 21. 12 Hours Day for | + | | | Women. No night-work | + | | | for women. | + | | | | +1847}| Textile Factories,| Do. | 10 Hours Day, | + to }| Printworks, etc. | | afterwards 10-1/2 | +1850}| | | Hours Day for Young | + | | | Persons and Women, | + | | | practically for Men. | + | | | | +1860 | Bleaching and | Do. | Do., with special | + | Dyeing. | | regulations for | + | | | overtime. | + | | | | +1860 | Coal and Iron | All | Restriction on male | + | Mines. | Workers. | labour under 12. | + | | | Safety, ventilation, | + | | | etc. | +1863 | Finishing | Children, |} | + | processes in | Young |} | + | Bleaching and | Persons, |} | + | Dyeing, | Women. |} | + | Bakehouses, Alkali| |} | + | Works. | |} | + | | |} | +1864 | Non-textile | Do. |} Factory Acts | + | Factories, | |} generally | + | (Earthenware, | |} applied. | + | Fustian Cutting, | |} | + | Cartridges, | |} | + | Lucifer Matches, | |} | + | Paper-staining). | |} | + | | | | +1867 | All Factories | Do. | Factory Acts Extension | + | & Workshops. | | Act. Workshops | + | | | Regulation Act, | + | | | applying to Workshops. | + | | | Factory rules affecting| + | | | hours, education, etc. | + | | | in modified form. | + | | | | +1867 | Agriculture. | Children, | Act for Suppression of | + | | Women. | Agricultural Gangs | + | | | fixing minimum age at | + | | | 8, regulating | + | | | employment of Women. | + | | | | +1870 | Printworks, | Children, | Application of chief | + | Bleaching, | Young | provisions of 1867 | + | Dyeing. | Persons, | Factory Act. | + | | Women. | | + | | | | +1871 | Brickworks and | Children and | Forbids employment. | + | Fields. | Young Female | Improved conditions | + | | Persons. | for Women. | + | | | | +1873 | Agriculture. | Children. | Minimum age raised | + | | | to 10. | + | | | | +1878 | Factories, | Children, | Consolidation of | + | Workshops, | Young | Factories & | + | Agriculture. | Persons, | Workshops Act | + | | Women, | (extending some | + | | (incidentally| provisions to | + | | Men). | agriculture). | + | | | | +1891 | Do. | Do. | Amendment of Factories | + | | | & Workshops Act. Age | + | | | for Children raised to | + | | | 11. Protection in | + | | | dangerous trades. | + | | | | +1892 | Shops. | Children, | Limits working-day. | + | | Young | | + | | Persons. | | + | | | | +1893 | Various | All | Restrictions on | + | Trades. | workers. | dangerous trades. | + | | | | + | | | | +1893 | Railways. | Adult males | Restrictions on | + | | | hours of labour. | + | | | | + +-----+---------------------+---------------- + | | + | Mode of | Effectiveness. +Date.| Administration. | + | | +-----+---------------------+---------------- +1802 | Local Justices | Virtually + | to appoint | inoperative. + | visitors. | + | | + | | +1819}| Do. | Do. +1820}| | + | | + | | + | | + | | + | | + | | +1825 | Do. | Generally + | (Millowners and | evaded. + | relatives prevented | + | from acting on the | + | Bench in reference | + | to Factory Acts.) | + | | +1833}| Government | 1 out of every 11 +1834}| Inspectors (4). | millowners convicted + | | in 1834, in spite + | | of defiant attitude + | | of magistrates. + | | + | | + | | + | | +1842 | Mine Inspectors. | + | | + | | +1844}| Government | Improved + to }| Inspectors. | administration, +1846}| | but 'false + | | relay' system + | | reestablished. + | | Fines inadequate. + | | + | | + | | + | | +1847}| Increased Staff of | Largely defied or + to }| Government | evaded for some +1850}| Inspectors. | time. + | | + | | + | | +1860 | | + | | + | | + | | +1860 | Mine | + | Inspectors. | + | | + | | +1863 | | + | | + | | + | | + | | + | | + | | +1864 | | + | | + | | + | | + | | + | | + | | + | | +1867 | Workshops Act left | Workshops Act + | at first to local | dead letter in + | authorities, | 1868-69. + | brought under | Later, fines + | Factory Inspectors, | inadequate. + | 1871. | Inspectors + | | inadequate. + | | +1867 | | + | | + | | + | | + | | + | | +1870 | | + | | + | | + | | + | | +1871 | | + | | + | | + | | +1873 | | + | | + | | +1878 | Increased | + | Staff of | + | Inspectors. | + | | + | | + | | + | | +1891 | Board of Trade | + | power to | + | schedule | + | dangerous | + | trades. | + | | +1892 | | + | | + | | + | | +1893 | Appointment of | + | working men and | + | women Inspectors. | + | | +1893 | Increased number of | + | Inspectors. | + | | + +FOOTNOTES: + +[239] The figures for the periods 1841 to 1881 are drawn from Mr. +Charles Booth's _Occupations of the People_. The figures for 1891 are +drawn from the Census Report, and arranged as nearly as possible in +accordance with Mr. Booth's classification. + +[240] Here also the figures for 1891 give a result slightly divergent +from the above. While the number of women employed continues to +increase, reaching 691,441, the number of men employed are greater +than in 1881, amounting to 408,392, a large proportionate increase, +though less than that of the women. + +[241] The recent statistics of tailoring and shoemaking, which are +becoming more and more machine industries, mark this movement +strongly. In the tailoring trade, while male workers increase from +107,668 in 1881 to 119,496 in 1891, female workers increase from +52,980 to 89,224. In the boot and shoe trade, while men increase from +180,884 to 202,648, women increase from 35,672 to 46,141. In +Leicestershire and Northamptonshire, where boots and shoes are a +machine-industry, 40 women are employed to 100 men, though the +proportion for the whole industry is only 23 women to 100 men. + +[242] _Report to Commission of Labour on Employments of Women_, pp. +142, 146. + +[243] Quoted Wells, _Contemporary Review_, 1887, p. 392. + +[244] Marsden, _Cotton Spinning_, p. 296, etc. S. Andrew, _Fifty Years +Cotton Trade_, p. 7. + +[245] This fourfold classification--(1) manual, (2) routine-mental, +(3) artistic, (4) intellectual--is a serviceable suggestion of Mr. +Sidney Webb in his paper upon woman's wages (_Economic Journal_, vol. +i., 1881). + +[246] _Report to Commission of Labour on Employment of Women_, p. 141. + +[247] Webb, _Economic Journal_, vol. i. p. 658. + +[248] I am informed, however, in Lancashire, that the strongest and +ablest male workers will not undertake weaving, finding it tedious and +monotonous. + +[249] Women sometimes abuse the superior competitive powers contained +in their lower standard of subsistence, and the smaller number of +those dependent on them, to undersell male labour. In Sheffield +file-making, where women are paid the same list of prices as men, it +is said that they practise sweating in their homes to the detriment of +male workers. So in carpet-weaving at Halifax; recently when the men +struck against a reduction upon their wage of 35s., women took the +work at 20s. (Lady Dilke, "Industrial Position of Women," _Nineteenth +Century_, Oct. 1893.) In watch-making, "the hand-work for which men +were paid about 18s. a-week is now done by women with machinery for +about 12s." (_Report to Labour Commission on Women's Employments_, p. +146.) + +[250] Dr. Bertillon (_Journal de la Societe de Statistique de Paris_, +Oct.-Nov. 1892) shows that among the Lyons silkworkers (1872-89) and +in the Italian Societies (1881-85) the sickness of women is +considerably greater than of men. In Lyons 9.39 days as compared with +7.81 for men; in Italy 8.5 as compared with 6.6. + +[251] This holds, for example, of many branches of the fur, trimmings, +stays, umbrella, match-box trades, and the "finishing" departments of +the trousers and shirt trades in East London. Cf. Miss Collet in +_Labour and Life of the People_, vol. i. + +[252] In the United States the general standard of money wages for +working women in cities is considerably higher than in England. The +average wage throughout the country was recently estimated to amount +to $5.24 per week, or just under 21s. But the divergences from this +average are much wider than in England. The lowest wages fall almost +to the lowest English level, for some 3 per cent. of the number +averaged were earning less than 8s. a week. About 20 per cent. were +earning between 14s. and 19s. per week. The earnings in the chief +textile industries show wide variations, yielding, however, a rough +average of about 20s. weekly wages in cotton mills, and about 22s. in +woollen mills. A general comparison would yield a standard of some +15s. as the customary wage corresponding to the 10s. in England +(_Report of the Commissioner of Labour_, 1888, chap. iii. and Table +xxix.). Some allowance, however, must be made for the more expensive +living in American cities. However, in spite of the fact that +organised action is almost unknown among women workers in America, the +real wages are higher than in England. This is partly owing to the +general insistence upon a higher standard of consumption, partly to +the fact that a larger number of employments are open to women than in +England, and partly to the higher skill and intelligence they put into +their work. Thus the maximum wage, measured by productivity, is +higher, the minimum, measured by "wants," is higher, while the terms +of competition do not so generally keep down actual wages to the +minimum. + +[253] _Labour and Life of the People_, vol. i. p. 410. + +[254] It must, however, be borne in mind that the results of such a +policy followed by Lancashire, or any other single part of the textile +industry of the world, would be qualified or even negatived if the +example was not followed by their competitors. + +[255] This effect of industrial opportunities for women and children +in promoting early and more fruitful marriages is also illustrated in +Lancashire; the average family of the factory operative is +considerably higher than the average for the working classes as a +whole. + +[256] Gunton, _Wealth and Progress_, p. 169. + +[257] _Report of the Statistics of Labour_, p. 71. + +[258] Dr. Smart has a valuable treatment of the subject in his +pamphlet, _Women's Wages_, pp. 22-25. + +[259] _Labour and Life of the People_, vol. i. p. 469. + +[260] _Labour and Life of the People_, vol. i. p. 460. + +[261] _Ibid._, vol. i. p. 459; cf. also p. 469. + +[262] Smart, _Woman's Wages_, p. 23. + +[263] In some cases where women are found getting the same rate of +wages as men, the industry is a woman's industry in which a few +lower-skilled or inferior male workers are employed. The woman's scale +dominates, the men who are employed descending to it. This is the case +in some weaving trades where men work still almost entirely with +hand-looms, leaving women with a practical monopoly of power-loom +work. (_Report of Woollen Manufactures in Miscellaneous English +Towns_, pp. 98, 99.) Where both men and women are freely engaged in +the same class of work, the men are always (save in the area of the +Lancashire trade unions) paid at higher rates: where the same rates +are paid they are determined upon the woman's scale. The comparison +between Huddersfield and other cloth-making towns in Yorkshire +establishes this point. "In the cloth mills of these three districts, +Bradford, Huddersfield, and Leeds, men and women engaged upon the same +work at the looms receive the same pay. In the Huddersfield district +the proportion of men to women among the weavers is much greater than +it is in the districts of Bradford, Halifax, or Leeds, and in the +Huddersfield districts alone there is a weaver's scale, according to +which women are paid from 15 to 50 per cent. below men. The proportion +of women is, however, rapidly increasing; and I found many firms where +the scale is not in operation. At some places men and women were paid +alike _upon the woman's scale_. At other firms men were paid at a +slightly higher rate than women, the women's scale being the basis of +calculation for all classes of work." (Miss Abraham in _Reports on +Employment of Women to the Labour Commission_, p. 100.) + +[264] _Report on Principal Textile Trades_, p. xxv. + +[265] The evidence adduced by Dr. Arlidge in his _Diseases of +Occupations_ regarding the effects of factory life upon the physique +of children is conclusive. See p. 38, etc. + +[266] See Appendix on Factory Legislation. + + + + +CHAPTER XIII. + +MACHINERY AND THE MODERN TOWN. + + Sec. 1. _The Modern Industrial Town as a Machine-product._ + Sec. 2. _Growth of Town as compared with Rural Population in the Old + and New Worlds._ + Sec. 3. _Limits imposed upon the Townward Movement by the Economic + Conditions of World-industry._ + Sec. 4. _Effect of increasing Town-life upon Mortality._ + Sec. 5. _The impaired quality of Physical Life in Towns._ + Sec. 6. _The Intellectual Education of Town-life._ + Sec. 7. _The Moral Education of Town-life._ + Sec. 8. _Economic Forces making for Decentralisation._ + Sec. 9. _Desirability of Public Control of Transport Services to + effect Decentralisation._ + Sec. 10. _Long Hours and Insecurity of Work as Obstacles to Reforms._ + Sec. 11. _The Principle of Internal Reform of Town-life._ + + +Sec. 1. In the last few chapters we have examined some of the influences +of modern machine-production upon men and women in the capacity of +producers, in relation to character, duration, intensity, regularity +of employment, the remuneration of labour, and the economic relations +which subsist between workers and employers. It remains to give +special consideration to one factor in the environment of modern +industrial life, which is of paramount importance upon the public, +both in its working and living capacity. + +The biggest, and in some respects the most characteristic of +machine-products is the modern industrial town. Steam-power is in a +most literal sense the maker of the modern town. When the motive-power +of industrial work was chiefly confined to the forces stored in man, +the economy obtained by collecting larger numbers of men to work in +close proximity to one another was comparatively small, and was +commonly outweighed by the difficulty of securing for them a +sufficient supply of food and other commodities, and by the greater +immobility of labour at a time when fixed local associations were a +strong binding force, and transport was slow and expensive. When the +earlier machinery drew its motive-power chiefly from water, the local +attachment and wide distribution of this power prevented the +concentration of industry from advancing very far. Only in proportion +as steam-power became the dominating agent did the economies of +factory-production drive the workers to crowd ever more densely in the +districts where coal and water for generating steam were most +accessible, and to throng together for the most economical use of +steam-power in industry. + +This rapid appreciation of the economies of centralised production, +heedless of all considerations, sanitary, aesthetic, moral, found a +hasty business expression in these huge hideous conglomerations of +factory buildings, warehouses, and cheap workmen's shelters, which +make the modern industrial town. The requirements of a decent, +healthy, harmonious individual or civic life played no appreciable +part in the rapid transformation of the mediaeval residential centre, +or the scattered industrial village into the modern manufacturing +town. Considerations of cheap profitable work were paramount; +considerations of life were almost utterly ignored. So swift, +heedless, anarchic has this process been, that no adequate provisions +were made for securing the prime conditions of healthy, physical +existence required to maintain the workers in the most profitable +state of working efficiency. Only of recent years in a few of the +larger manufacturing towns has some slow revival of the idea of civic +life, as distinct from the organised manipulation of municipal affairs +for selfish business purposes, begun to manifest itself. The typical +modern town is still a place of workshops, not of homes. + +Transport-machinery, the railway and the steamship, have been almost as +important factors in the making of towns as manufacturing-machinery. By +easily, quickly, and cheaply bringing food from a distance, they make +town work and town life upon a large scale possible; by imparting +increased fluidity to capital and labour, they continually increase the +economic advantages of highly concentrated industry. In the opening up +of new countries like the United States and Australia, the railway is +the literal maker of the town, in older countries it is the chief +alimental channel. + +The pace at which this concentration of population in large towns +proceeds is the most serviceable measurement of the progress which the +various parts of the industrial world are making in machine-industry. + +There are changes other than those of industrial method which help the +townward movement. The spirit of curiosity and enterprise stimulated +by education and the newspaper press, a desire for freer and more +varied social intercourse, a love of sensation and amusement, a +seeking after culture and intellectual development, in some cases the +mere promptings of idleness, discontent, or even criminal desires, +drive an increasing proportion of the younger rural population towards +the towns. But it is the combination of industrial changes in which +machinery plays the central part--the increased application of +machinery to agriculture reducing the demand for agricultural labour, +the development of manufacturing industries in towns, the labour of +transport and distribution requiring centralised machinery--that makes +this movement physically and economically feasible. The shift in the +proportionate demand for labour in towns and in country attributable +to machine-production is a principal direct agent in the movement. + +Sec. 2. In England, _par excellence_ the manufacturing country, the +growth of the town as compared with the country is strongly marked +during the last thirty years. + + 1861. 1871. 1881. 1891. + + Urban Population[267] 62.3 64.8 66.6 71.7 + Rural " 37.7 35.2 33.4 28.3 + +During the decennium 1881-91 there was a considerable check in the +immigration from the country into the large towns, though the +proportion of townsfolk to country folk grew even more rapidly than in +the preceding ten years.[268] + +In Holland and Belgium, notwithstanding a large migration to foreign +lands, the towns grow far quicker than the total population. Thus in +Holland in the period 1870-79 the towns increased 17.25, while the +rural districts only increased 6.8. In Belgium, where the emigration +across the border is still larger, there is a tide of migration of the +parochial or country population continually setting towards Antwerp, +Brussels, and Liege.[269] + + [Illustration: GROWTH OF FRENCH POPULATION.] + +This flow of population to the towns is not affected to any +considerable extent either by the rate of growth of the population +itself or by the small stake in the land possessed by the bulk of the +agricultural population in such a country as England. For in France, +where the growth of population during the last half century has been +extremely slow, and where the majority of the agriculturists have a +definite stake in the soil, the growth of the town population is most +remarkable. In Germany also, where peasant-proprietors are very +numerous, the towns continually absorb a larger proportion of the +population. In 1871 the urban population of the empire was 36.1 per +cent. of the total, in 1885 it was 41.8 per cent. In Austria, Hungary, +Sweden, Italy, a similar movement is clearly traceable. The above +diagram relating to movements of French population indicates that +Paris has been growing more rapidly than other French towns. In other +industrial countries also it is found that the pace of growth varies +for the most part directly with the size of the town. In England, it +is true that the largest cities show during the last decennium a +certain slackening in the pace of growth. But the towns between 20,000 +and 100,000 are still growing far more rapidly than those between +5,000 and 20,000, while those below 5,000 fail to keep pace with the +general rise of population. This fact obtains the clearest recognition +in the preliminary report of the census of 1891.[270] "The urban +population increases then very much more rapidly than the rural +population. And not only so, but the larger, or rather the more +populous the urban districts,[271] and the more decided therefore its +urban character, the higher, generally speaking and with many +individual exceptions, is the rate of growth." + +The movement is then not merely to town life, but to large-town life. +The following diagram shows the rate of growth of the chief European +centres of population during the present century:-- + + [Illustration] + +The figures relating to Germany are peculiarly instructive upon this +point:-- + +GERMANY--RATE OF INCREASE OF GOVERNMENT DISTRICTS.[272] + ++-----------+------------------------------------+ +| | Times in which such rate occurred. | +| Per Cent. |-----------------+------------------+ +| | Town Districts. | Rural Districts. | ++-----------+-----------------+------------------+ +| Increase. | | | +| 30 | 3 | -- | +| 25-30 | 2 | -- | +| 20-25 | 10 | 1 | +| 15-20 | 33 | 2 | +| 11-15 | 65 | -- | +| 9-11 | 55 | 4 | +| 5-9 | 50 | 35 | +| 3-5 | 8 | 69 | +| 1-3 | -- | 56 | +| 0-1 | 1 | 28 | +| Decrease. | | | +| 1-0 | 1 | 18 | +| 3-1 | -- | 22 | +| 5-3 | -- | 3 | +| 0-5 | -- | 4 | ++-----------+-----------------+------------------+ + + --------------------+------------+------------+------------------ + German Empire. | 1871. | 1886. | Rate of Increase. + --------------------+------------+------------+------------------ + Towns over 100,000 | 1,968,000 | 3,327,000 | 69 per cent. + " " 20,000 | 3,147,000 | 4,147,000 | 31 " + " " 5,000 | 4,588,000 | 5,694,000 | 24 " + " " 2,000 | 5,086,000 | 5,734,000 | 12 " + Rural Population | 26,219,000 | 26,318,000 | 3 " + --------------------+------------+------------+------------------ + +But the movement is by no means confined to the densely-populated +countries of Europe. If we turn to the "new world" we find it +illustrated still more remarkably. In the United States of America, +long before the population approached its present height, and while +large tracts of fertile land still remained to be parcelled out, the +towns began to absorb more and more of the population. The following +diagram will show this movement to have been continuous, and with a +gathering momentum as the century moved on:-- + + [Illustration: GROWTH OF CITY POPULATION IN THE UNITED STATES.] + +What holds of the United States holds also of the newly settled +countries with small populations, as New South Wales, Victoria, +Canada, and even Manitoba,[273] Argentina, and Uruguay. Nearly +one-third of the whole population of New South Wales is resident in +Sydney, and a fourth of the population of Queensland in Brisbane. +Victoria presents the most striking case. In 1881 its four largest +towns contained more than two-fifths of the whole population, +Melbourne alone holding one-third. + +In Canada there is the same diminution of rural and growth of town +population. New Brunswick contains 14 counties; in the decade 1871-81 +only one of these showed a slight diminution, but not less than 7 in +the decade 1881-91. The 18 counties of Nova Scotia all showed an +increase in 1871-81, 8 showed a decrease in 1881-91. Quebec contains +61 counties, 10 of which showed a decrease in 1871-81, 26 in 1881-91. +Ontario has 48 counties, only 4 of which showed slight decrease in +1871-81; 20 showed a much more rapid decrease in 1881-91. + +The following table shows that the accelerating decrease of the rural +parts is accompanied by a correspondingly accelerating increase of the +chief towns:-- + + ----------------+----------+----------+---------- + | 1871. | 1881. | 1891. + ----------------+----------+----------+---------- + Kingston[274] | 12,407 | 14,091 | 19,264 + London | 15,826 | 26,266 | 31,977 + Ottawa | 21,545 | 31,307 | 44,154 + Hamilton | 26,717 | 35,961 | 48,980 + Toronto | 56,092 | 96,196 | 181,220 + ----------------+----------+----------+---------- + | 132,586 | 203,821 | 325,595 + ----------------+----------+----------+---------- + +The portentously rapid growth of the largest cities is of course not +wholly attributable to economic causes. To form the capital cities of +the New World, political and social influences have co-operated with +industrial. Nor can these causes be ignored in explaining the rapid +growth of certain European capitals, especially Berlin, Paris, +London, and Vienna. But the effective operation of these forces is +largely dependent on the modern machinery of transport, and in the +main these great centres must be regarded as manufacturing and +commercial towns. + +Though the lack of any common statistical basis prevents us from being +able to trace with exactitude the comparative pace of this movement in +different countries, we know enough to justify the general conclusion +that this centralising tendency varies directly with the degree of +material civilisation attained in the several countries by the mass of +the population. In England, France, United States, Australia, where +steam engines, electric light, newspapers, and all the most highly +elaborated mechanical contrivances are available in towns, the growth +of town life is most rapid; in Russia, Turkey, India, Egypt, where +mechanical development is still far behind, the townward march is far +slower. As the area of machine-industry spreads, so this movement of +population will become more general, and as towns grow larger so it +would appear that this power to suck in the rural population is +stronger and more extensive. + +Sec. 3. These facts and figures do not, however, of themselves justify +the conclusion that a larger proportion of the world's population is +moving into towns. In all the advanced industrial countries a smaller +proportion of the population is engaged in those extractive and +domestic industries which belong to rural life, a larger proportion in +the manufacturing and distributive industries which belong to towns. +But this movement is made possible by the fact that an increasing +proportion of the food and the raw materials of manufacture used in +these countries is drawn from the labour of the more backward +countries. The increase of the area of the industrial world is +effecting such a division of labour as hands over an ever-increasing +proportion of the agricultural work to the inhabitants of those +countries which do not rank as civilised industrial countries. The +known growth of certain large trading centres in India, China, Egypt, +South Africa, etc., does not justify us, in the absence of careful +statistical inquiry, in assuming that an increased proportion of the +inhabitants of these and other more backward portions of the globe is +passing into town life. Unless agricultural machinery and improved +agricultural methods are advancing more rapidly in these great +"growing areas" than we have a right to suppose, it would seem that +there must be some increased demand for agricultural and other rural +labour which shall, partially, at any rate, compensate for the +diminished demand for such kinds of labour in the more advanced +industrial communities. For although a large number of the industries +subsidiary to agriculture, the making of tools, waggons, gates, +fencing, etc., have now passed from the country to the towns, while +the economies of machinery and improved cultivation have advanced so +far that it is alleged that three men working on soil of average +quality can raise food for one thousand, still the growth of +population with a constantly rising standard of material consumption +seems likely to prevent any net diminution in the proportion of labour +engaged upon the soil in the industrial world. So long as modern +methods of production and consumption in civilised countries require +an ever-increasing quantity of raw materials, it would seem _a priori_ +unlikely that a smaller proportion of the whole industry of the world +should be devoted to agricultural and other extractive industries, and +a larger amount to the manufacturing and distributive industries, +where the chief economies of machine-production are so largely +applied. + +Since this growth of town population is quicker in the advanced +industrial communities, slower in the less advanced, so it may well be +the case that, in the countries which are but slightly and indirectly +affected by modern industry, it does not exist at all. There exist, +however, no satisfactory data upon which a judgment may be formed upon +this point. + +Sec. 4. The effects of this concentration of population upon the +character and life of the people are multifarious. For convenience in +grouping facts, these effects may be considered in relation to (_A_) +physical health, (_B_) intelligence, (_C_) morals, though it will be +evident that the influences placed under these respective heads act +and react upon one another in many intricate and important ways. + +(_A_) The best test of the effect of town life upon the population is +afforded by a comparison of the rates of mortality of town and country +population respectively. + +DEATH-RATE IN TOWN AND COUNTRY DISTRICTS OF ENGLAND, 1851-90.[275] + + --------+------------------------------+------------------- + | Annual Deaths per 1000. | Deaths in Town + +----------+--------+----------+ Districts to + Years. | England | | | 100 Deaths in + | and | Town. | Country. | Country in equal + | Wales. | | | numbers living. + --------+----------+--------+----------+------------------- + 1851-60 | 22.2 | 24.7 | 19.9 | 124 + 1861-70 | 22.5 | 24.8 | 19.7 | 126 + 1871-80 | 21.4 | 23.1 | 19.0 | 122 + 1881 | 18.9 | 20.1 | 16.9 | 119 + 1882 | 19.6 | 20.9 | 17.3 | 121 + 1883 | 19.5 | 20.5 | 17.9 | 115 + 1884 | 19.5 | 20.6 | 17.7 | 117 + 1885 | 19.0 | 19.7 | 17.8 | 111 + 1886 | 19.3 | 20.0 | 18.0 | 111 + 1887 | 18.8 | 19.7 | 17.2 | 115 + 1888 | 17.8 | 20.9 | 17.4 | 114 + 1889 | 17.9 | 19.3 | 16.4 | 118 + 1890 | | 20.9 | 17.4 | 120 + --------+----------+--------+----------+------------------- + +But as matters stand at present the statistics above quoted do not +mark the full extent of the difference of healthfulness in town and +country. When allowance is made for age and sex distribution in town +and country population, the difference in death-rate appears much +greater. For in the towns are found (_a_) a much larger proportion of +females; (_b_) a larger proportion of adults of both sexes in the +prime of life; (_c_) a much smaller proportion of very aged +persons:[276] hence if conditions of health were equal in town and +country, the town death-rate would be lower instead of higher than +that of the country. The _Report of the Census of 1881_[277] calls +special attention to this point, which is commonly ignored in +comparing death-rates of town and country. "If we take the mean +(1871-80) death-rates in England and Wales at each age-period as a +standard, the death-rate in an urban population would be 20.40 per +1000, while the death-rate in the rural population would be 22.83. +Such would be their respective death-rates on the hypothesis that the +urban districts and the rural districts were equally healthy. We know, +however as a matter of fact that urban death-rates, instead of being +lower than rural death-rates, are much higher. The difference of +healthiness, therefore, between the two is much greater than the +difference between their death-rates." + +The same facts come out in comparing Paris with the rest of France. At +each age the death-rate for Paris is higher than for France. + + Age.[278] Paris. France. + 1886. 1877-80. + + 0 to 1 year 230? 170? + 1 to 5 years 58.2 28 + 15 to 20 " 9.1 6 + 30 to 40 " 13.6 10 + 60 to 70 " 51.2 41 + +The English statistics indicate a slight and by no means constant +tendency towards a diminution of the difference between town and rural +mortality, due no doubt to improvements in city sanitation and to some +general elevation of the physical environment and standard of living +among a large section of the working classes. The same slight tendency +is visible in France. During the period 1861-65 the urban death-rate +was 26.1, as compared with 21.5, the rural death-rate; during the +period 1878-82 the rates were respectively 24.3 and 20.9.[279] + +Such indications of hygienic progress in our towns are not, however, +sufficient to justify any expectation that the life of industrial +towns will be made as healthy as that of the country. It is not +possible to ignore the fatal significance of the continuous flow of an +increasing proportion of the younger, healthier, and more vigorous +part of the country population into town life. Dr. Ogle, who has +collected much evidence upon this subject, sums up as follows:--"The +combined effect of this constantly higher mortality of the towns, and +of the constant immigration into it of the pick of the rural +population, must clearly be a gradual deterioration of the whole, +inasmuch as the more energetic and vigorous members of the community +are consumed more rapidly than the rest of the population. The system +is one which leads to the survival of the unfittest." + +Sec. 5. Not only is life on an average of shorter duration in the towns, +but it is of inferior physical quality while it lasts. The lowering of +the townsman's physique not merely renders him less able to resist +definite assaults of disease but injures his general capacity of work +and enjoyment. This progressive deterioration of physique accounts for +the unceasing flow of fresh country blood into the towns. In spite of +the advantage of possession and knowledge of the town, the townsman +cannot hold his own in the competition for town work; the new-comer +jostles the old-comer from the best posts, and drives him to depend +upon inferior and more precarious occupations for a living. Economic +conditions, acquired social tastes, and impaired powers of physical +labour prevent the feeble town blood from flowing back into the +country to recruit its vigour. Hence the _impasse_ which forces +problems of town poverty and incapacity ever more prominently upon the +social reformer. + +In dealing with the diseases of occupations, Dr. Arlidge says, "It is +a most difficult problem to solve, especially in the case of an +industrial town population, how far the diseases met with in it are +town-made and how far trade-made; the former almost always +predominate."[280] + +It is not indeed possible to clearly distinguish the two classes of +effects. Since machinery makes the industrial town, it makes it as a +place to work in and a place to live in, and though certain trade +conditions will operate more directly upon the inhabitants as workers, +their effects will merge with and react upon the life-conditions of +the town. The special characteristics of town work which cause +ill-health and disease are-- + + (_a_) The predominance of indoor occupations, involving + unwholesome air. + + (_b_) The sedentary character of most work in factories or + workrooms, or otherwise the lack of free play of physical + activities. + + (_c_) The wear and tear of nerve fibre (_e.g._, in + boiler-making, weaving sheds, etc.). + + (_d_) The wearisome monotony and lack of interest attending + highly specialised and sub-divided machine-industry, producing + physical lassitude.[281] + + (_e_) Injuries arising from dust fumes, or other deleterious + matter, or from the handling of dangerous material or tools. + +Much valuable work has been done of recent years by French, German, +and English physicians and statisticians, throwing light upon the +specific diseases appertaining to various industries, and giving some +measurement of their extent. But though certain specifically +industrial qualities have a considerable place in swelling the +mortality of towns, Dr. Arlidge is fully justified in his opinion that +in industrial centres more of the diseases are town-made than +trade-made. The statistics of infant mortality are conclusive upon +this point. In comparing the death-rates for town and country, the +difference is far wider for children below the industrial age than for +adults engaged in industrial work. Mr. Galton has calculated that in a +typical industrial town the number of children of artisan townsfolk +that grow up are little more than half as many as in the case of the +children of labouring people in a healthy country district.[282] The +figures quoted above from M. Levasseur relating to France point to a +similar conclusion. Many of the evils commonly classified as belonging +to specific industries, in particular the foul atmosphere, imperfect +sanitation, and overcrowding, which are found in many factories and +most city workshops, are rightly regarded as town-made rather than +trade-made, for they are the normal and often the necessary +accompaniments of a congested industrial population. In qualification +of this, having regard to the effects of machine-development, we must +remember that the worst hygienic conditions of town work are found in +those branches of industry which have lagged behind in industrial +evolution, while the best hygienic conditions are found in the most +highly-organised branches of textile industry. "Generally speaking, +the more elaborate and costly the machinery, the more excellent the +architecture. Thus in textile works machinery acquires its maximum of +importance, and by its dimensions necessitates commodious shops, +buildings of great size, and well-ordered arrangements to facilitate +the performance of the mutually dependent series of operations carried +on."[283] + +Legal restrictions upon unhealthy and dangerous employments, shorter +working hours, adequate inspection, the stimulus given by such +measures to a more rapid application of highly-developed machinery, +may succeed in reducing considerably the physical evils directly +arising from town industries. But the town will still remain a more +unhealthy place to live in than the country, and as on the one hand +the fundamental and paramount importance of a healthy physical +environment receives fuller recognition, and on the other hand larger +leisure and opportunities of enjoyment and development make life more +valuable to the mass of the workers than it is at present, the +pressure of this problem of town life will grow apace. + +Sec. 6. (_B_) That town life, as distinguished from town work, is +educative of certain intellectual and moral qualities, is evident. +Setting aside that picked intelligence which flows to the town to +compete successfully for intellectual employment, there can be no +question but that the townsman has a larger superficial knowledge of +the world and human nature. He is shrewd, alert, versatile, quicker, +and more resourceful than the countryman. In thought, speech, action, +this superiority shows itself. The townsman has a more developed +consciousness, his intelligence is constantly stimulated in a thousand +ways by larger and more varied society, and by a more diversified and +complex economic environment. While there is reason to believe that +town work is on the average less educative than country work, town +life more than turns the scale. The social intercourse of the club, +the trade society, the church, the home, the public-house, the +music-hall, the street, supply innumerable educative influences, to +say nothing of the ampler opportunities of consciously organised +intellectual education which are available in large towns. If, +however, we examine a little deeper the character of town education +and intelligence certain tolerably definite limitations show +themselves. School instruction, slightly more advanced than in the +country, is commonly utilised to sharpen industrial competition, and +to feed that sensational interest in sport and crime which absorbs the +attention of the masses in their non-working hours; it seldom forms +the foundation of an intellectual life in which knowledge and taste +are reckoned in themselves desirable. The power to read and write is +employed by the great majority of all classes in ways which evoke a +minimum of thought and wholesome feeling. Social, political, and +religious prejudices are made to do the work which should be done by +careful thought and scientific investigation. + +Scattered and unrelated fragments of half-baked information form a +stock of "knowledge" with which the townsman's glib tongue enables him +to present a showy intellectual shop-front. Business smartness pays +better in the town, and the low intellectual qualities which are +contained in it are educated by town life. The knowledge of human +nature thus evoked is in no sense science, it is a mere rule-of-thumb +affair, a thin mechanical empiricism. The capable business man who is +said to understand the "world" and his fellow-men, has commonly no +knowledge of human nature in the larger sense, but merely knows from +observation how the average man of a certain limited class is likely +to act within a narrow prescribed sphere of self-seeking. Town life, +then, strongly favours the education of certain shallow forms of +intelligence. In actual attainment the townsman is somewhat more +advanced than the countryman. But the deterioration of physique which +accompanies this gain causes a weakening of mental fibre: the +potentiality of intellectual development and work which the countryman +brings with him on his entry to town life is thwarted and depressed by +the progressive physical enfeeblement. Most of the best and strongest +intellectual work done in the towns is done by immigrants, not by +town-bred folk. + +Sec. 7. (_C_) This intellectual weakness of town life is best expressed +in terms which show the intimate relation between intelligence and +morals. A lack of "grit," pertinacity of purpose, endurance, +"character," marks the townsman of the second generation as compared +with the countryman. As the intellectual powers of the townsman, +though quantitatively impaired, are more highly developed than those +of the countryman, so it is with his "morals." In positive +attainments of conscience, virtue, and vice, the townsman shows +considerable advance. This point is commonly misunderstood. The annals +of crime afford irrefutable evidence of the greater criminality of the +towns. London, containing less than one-fifth of the population of +England and Wales, is responsible for more than one-third of the +annual number of indictable crimes.[284] In France the criminality of +the urban population is just double that of the rural population.[285] +In 1884-86, out of each 100,000 city population sixteen were charged +with crimes; out of each 100,000 rural population only eight. It is +indeed commonly recognised in criminology that, other things being +equal, crime varies with the density of population. There is no +difficulty in understanding why this should be so. The pressure of +population and the concentration of property afford to the +evil-disposed individual an increased number of temptations to invade +the person or property of others; for many sorts of crime the +conditions of town life afford greater security to the criminal; +social and industrial causes create a large degenerate class not +easily amenable to social control, incapable of getting regular work +to do, or of doing it if they could get it. + +If the town were a social organism formed by men desirous of living +together for mutual support, comfort, and enjoyment in their lives, it +might reasonably be expected that a wholesome public feeling would be +so strongly operative as to outweigh the increased opportunities of +crime. But, as we have seen, the modern town is a result of the desire +to produce and distribute most economically the largest aggregate of +material goods: economy of work, not convenience of life, is the +object. Now, the economy of factory co-operation is only social to a +very limited extent; anti-social feelings are touched and stimulated +at every point by the competition of workers with one another, the +antagonism between employers and employed, between sellers and buyers, +factory and factory, shop and shop. + +Perhaps the most potent influence in breaking the strength of the +_morale_ of the town worker is the precarious and disorderly +character of town work. That element of monotonous order, which we +found excessive in the education afforded by the individual machine to +the machine-tender, is balanced by a corresponding defect in +machine-industry taken as a whole. Town work, as we have seen, is more +irregular than country work, and this irregularity has a most +pernicious effect upon the character of the worker. Professor Foxwell +has thus strikingly expressed the moral influences of this economic +factor: "When employment is precarious, thrift and self-reliance are +discouraged. The savings of years may be swallowed up in a few months. +A fatalistic spirit is developed. Where all is uncertain and there is +not much to lose, reckless overpopulation is certain to be set at. +These effects are not confined to the poorer classes. The business +world is equally demoralised by industrial speculation, careful +prevision cannot reckon upon receiving its due return, and speculation +of the purest gambling type is thereby encouraged. But the working +class suffers most."[286] + +The town as an industrial structure is at present inadequate to supply +a social education which shall be strong enough to defeat the +tendencies to anti-social conduct which are liable to take shape in +criminal action. The intellectual training given by town life does +not, as we have seen, assist in stimulating higher intellectual and +moral interests whose satisfaction lies above the plane of material +desire. There is indeed some evidence that the meagre and wholly +rudimentary education given to our town-dwellers is, by reason of its +inadequacy, a direct feeder of town vices. The lower forms of +music-hall entertainment, the dominant popular vice of gambling, the +more degraded kinds of printed matter, owe their existence and their +financial success to a public policy which has confined the education +of the people to the three R's, making it generally impossible, always +difficult, for them to obtain such intellectual training as shall +implant higher intellectual interests with whose pursuit they may +occupy their leisure. But, in taking count of the criminality and vice +of large towns it is not just to ignore a certain counter-claim which +might be made. If our annals of virtue were kept as carefully as our +annals of vice, we might find that town life stood higher in the one +than in the other. There are more opportunities to display positive +goodness and positive badness in the town; life is more crowded and +more rapid, and it is likely that acts of kindness, generosity, +self-denial, even of heroic self-sacrifice, are more numerous in the +town than in the country. The average townsman is more developed +morally as well as intellectually for good and for evil. That the good +does not more signally predominate is in no small measure due to the +feeble social environment. Public opinion is generally a little in +advance of the average morality of the individuals who compose the +public. Here is a mighty lever for raising the masses. But where the +density of population is determined by industrial competition, rather +than by human-social causes, it would seem that the force of sound +public opinion is in inverse proportion to the density of population, +being weakest in the most crowded cities. In spite of the machinery of +political, religious, social, trade organisations in large towns, it +is probable that the true spiritual cohesiveness between individual +members is feebler than in any other form of society. If it is true +that as the larger village grows into the town, and the town into the +ever larger city, there is a progressive weakening of the bonds of +moral cohesion between individuals, that the larger the town the +feebler the spiritual unity, we are face to face with the heaviest +indictment that can be brought against modern industrial progress, and +the forces driving an increased proportion of our population into +towns are bringing about a decadence of _morale_ which is the +necessary counterpart of the deterioration of national physique. + +So far as we are justified in regarding the modern town and the +tendency to increased town life as results of machinery and industrial +evolution, there can be little doubt of the validity of these +accusations. The free play of economic forces under the guidance of +the selfish instincts of commercial individuals, or groups of +individuals, is driving an increased proportion of the population of +civilised countries into a town life which is injurious to physical +and moral health, and provides no security for the attainment of an +intellectual life which is worth living. + +Sec. 8. But powerful as these centralising forces have been during the +last century and a half, we are not justified in assuming that they +will continue to operate with gathering momentum in the future, and +that the results which are assigned to them will increase in +magnitude. Such an assumption would ignore two groups of counteracting +forces which are beginning to manifest themselves in the more advanced +industrial communities. + +The first of these groups consists of a number of directly +counteracting or decentralising forces. + +As a town grows in size the value of the ground on which it stands +grows so rapidly that it becomes economically available only for +certain classes of industrial undertaking, in which the occupation of +central space is an element of prime importance. In all large +commercial cities the residential quarters are driven gradually +farther and farther away from the centre by incessant encroachments of +business premises. The city of London and the "down town" quarter of +New York are conspicuous examples of this displacement of residential +buildings by commercial. The richer inhabitants are the earliest and +quickest to leave. As the factory or the shop plants itself firmly +among the better-class dwelling-houses, these inhabitants pass in +large numbers to the outskirts of the town, forming residential +suburbs which, for some time at any rate, are free from the specific +evils of congestion. This encroachment of the factory and the shop at +first has little effect, if any, in thinning the residential +population of the district. While the shopkeepers and their employees +live in the neighbourhood, and the factory workers can afford to pay +the rent for houses or lodgings near their work, the central +population will grow denser than before. But as the city grows in size +and commercial importance, an increasing number of the most central +sites will pass from manufactory premises and shops into use for +warehouses and business offices, and for other work in connection with +distribution and finance. The workers on these premises will, in the +case of the wealthier, be unwilling, in the case of the poorer be +unable, to live near their work; where factories and shops remain, the +great mass of the employees will not be able to afford house-rents +determined by this competition of a more valuable commercial use of +land. So we find that the number of inhabitants of the city of London +diminishes in each recent census, and the same is true as regards the +most valuable portions of Paris, New York, and other large cities. +This decentralising force is, however, only in full operation in the +very centre of the largest cities. The first effect of the competition +of commercial with living premises is to raise house-rents and to +drive the poorer population into narrower, less commodious, and less +sanitary dwellings. Where ground landowner and builder have a free +hand the market value of central ground for small, lofty, cheap-built +slums can be made to hold its own for a long time with the business +premises which surround them. Even when ground value has risen so high +as to displace many of these slums, the tendency is for the latter to +spring up and thicken in districts not far removed from the centre. +Thus in London the densest population is found in Whitechapel and St. +George's in the East. Indeed, there is evidence that these districts +have already reached "saturation point," that is to say, the pressure +of business demands for ground, the increased competition of the +dwellers themselves, and the growing restrictions imposed by law and +public opinion upon the construction of the most "paying" forms of +house property, prevent any further growth of population in these +parts. As this saturation point is reached in one district, the growth +of dense population goes on faster in the outlying districts, and, +with forms which vary with local conditions, the same economic forces +manifest themselves with similar results over a wider area. The poorer +population shifts as short a distance as it can, and then only when +driven by a rise of rents. Even when it moves somewhat farther out it +seldom gets far enough to escape the centralising forces. Residential +working-class districts like West Ham become rapidly congested by the +constant flow of population from more central places. Moreover, the +same decentralising forces are set up in the large suburban districts, +by the planting there of factories and other industrial works designed +to take advantage of a large supply of labour close at hand, and land +procurable at a lower rental. This applies also to many of the suburbs +originally chosen as residential quarters of the well-to-do classes. +The whole western district of London, comprised by Kensington, Notting +Hill, Hammersmith, etc., contains large and designed areas of dense +poverty and overcrowding. So far as the mass of poorer workers in +London and other large cities are concerned, it would appear that +their endeavour to escape beyond the limits of congested city life has +hitherto been unavailing: the decentralising forces of rising ground +rents, uncomfortable and insanitary dwellings, are ever at work, but +the centralising forces set up by any large number who seek an outlet +in the same direction, with close spacial limitations to their +migrating tendency, are too strong. High rents, a fuller appreciation +of the hygienic advantages of more space, and of proximity to country +air and country scenes, have induced an increasing number of the +"middle" classes, and even of those who, in a pecuniary sense, form +the upper working class, to incur the expenditure of time, trouble, +and railway fares involved in living sufficiently far from the centre +to avoid the centralising pressure. The most important practical +problem of social reform to-day is how to secure this option of +extra-city life for the mass of city workers. If the economies of low +ground rent and slightly cheaper labour were sufficiently large to +induce the establishment of manufactories at considerable distances +from large centres of population, we might look in time to see the +large industrial town give place to a number of industrial villages, +gathered round some single large factory or "works." The growing +facilities of communication with large towns at increased distances, +afforded by recent expansions of railway service, and by improvements +in telegraphic and telephonic media, have done something towards this +form of decentralisation. Round Manchester and other larger northern +manufacturing towns an increasing number of factories are springing +up; in the United States the same phenomenon is still commoner. +Smaller rents, cheaper living, lower wages, especially in textile +mills where women are largely employed, and lastly, more submissive +labour, are everywhere the economic stimuli of this decentralisation +of manufacture. Assuming that some more cheaply and easily +transmissible motor-power can be found for manufacture, and that a +cheap and readily available transport service by steam or electricity +is widely spread, it seems not unlikely that the economies of +decentralised manufacture may widely or even universally outweigh the +primary centralising economies which created our great manufacturing +towns. Whether a wide diffusion of industrial villages, which might be +of a size and structure to reproduce in a somewhat less virulent form +many of the physical and moral vices of the larger towns, and which +possibly might retard or nullify some of the educative and elevating +influences springing from the organisation and co-operative action of +large masses of workers, can be regarded as a desirable substitute or +remedy for our congested city life, is open to grave doubt. A whole +country like England, thickly blotched at even intervals by big +industrial villages comprised of a huge factory or two with a few +rectangular streets of small, dull, grimy, red-brick cottages, and one +or two mansions standing inside their parks at the side remote from +the factories, would, from an aesthetic point of view, be repulsive to +the last degree; and out of a country, the whole of which was thus +ordered for pure purposes of industrial economy, it is difficult to +believe that any of the higher products of human effort could proceed. +But the possibility of some such outcome of the decentralising forces +already visible must not be ignored. It is even likely that the labour +movement, advancing as it does more rapidly in large manufacturing +centres than elsewhere, may, by increasing the freedom and power of +labour associated upon a large scale, apply an additional stimulus to +the _entrepreneur_ to place his business undertakings so as to make +strongly combined action of labourers more difficult. American +manufacturers are distinctly actuated by this motive in selecting the +locality of their factories, and have been able in many cases to +maintain a despotic control over the workers which would be quite +impossible were their factories planted in the middle of a large +city.[287] + +Sec. 9. This method of partial decentralisation depends in large measure, +it is evident, upon such progress in the transport services for +persons, goods, and intelligence as shall minimise the inconvenience +of a less central position, rendering the location of the business a +matter of comparative indifference. But it is to improved transport +services that we may look to facilitate a kind of decentralisation, +the net gain of which is less dubious than that arising from the +substitution of a large number of industrial villages for a small +number of industrial towns. Is it not possible for more town-workers +to combine centralised work with decentralised life--to work in the +town but to live in the country? May not this advantage, at present +confined to the wealthier classes, be brought within the reach of the +poorer classes? Some small progress has been made of recent years +towards the realisation of this ideal. Three chief difficulties stand +in the way of success: the length of the working-day, which makes the +time required for travelling to and from a distant home a matter of +serious consideration; the defective supply of convenient, cheap, and +frequent trains or other quick means of conveyance; the irregularity +and uncertainty of tenure in most classes of labour, which prevents +the establishment of a settled house chosen with regard to convenient +access to a single point of industry. Some recent progress has been +made in large cities, such as Vienna, Paris, and London, in providing +workmen's trains and by the cheapening of train and 'bus fares; but +such experiments are generally confined within too narrow an area to +achieve any satisfactory amount of decentralisation, for the interests +of private carrying companies demand that the largest number of +passengers shall travel from the smallest number of stations. It would +appear that considerable extension of direct public control over the +means of transport will be required, in order to secure to the people +the full assistance of modern mechanical appliances in enabling them +to avoid the mischief of over-crowded dwellings. For such purposes the +railway has now replaced the high-road, and we can no more afford to +entrust the public interest in the one case to the calculating +self-interest of private speculation than in the other case. A firm +public control in the common interest over the steam and electric +railways of the future seems essential to the attainment of adequate +decentralisation for dwelling purposes. Private enterprise in +transport, working hand in hand with private ownership of land, will +only substitute for a single mass of over-crowded dwellings a number +of smaller suburban areas of over-crowded dwellings. The bicycle +alone, among modern appliances of mechanical speed, can safely be +entrusted to the free private control of individuals, and, if one may +judge by the remarkable expansion of its use, it seems likely to +afford no trifling assistance to the decentralising tendencies. + +Sec. 10. The removal of the other two barriers belongs to that joint +action of labour organisation and legislation which aims at building +up a condition of stable industrial economy. One of the most +serviceable results of that shortening of the working-day, upon which +public attention is so powerfully concentrated, would be the +assistance it would render to enable workmen and workwomen to live at +a longer distance from their work. So long, however, as a large +proportion of city workers have no security of tenure in their work, +are liable at a day's or a week's notice, for no fault of their own, +to be obliged to seek work under another employer in a distant +locality, or if employed by the same master to be sent to a distant +job, now to find themselves without any work at all, at another time +to have to work all hours to make up a subsistence wage, it is evident +that these schemes of decentralisation can be but partial in their +application. An increased stability both in the several trades and in +the individual businesses within the trade is a first requisite to the +establishment of a fixed healthy home for the industrial worker and +his family. + +Sec. 11. It is, however, unlikely that any wide or lasting solution of +the problem of congested town life will be found in a sharp local +severance of the life of an industrial society which shall abandon the +town to the purposes of a huge workshop, reserving the country for +habitation. The true unity of individual and social life forbids this +abrupt cleavage between the arts of production and consumption, +between the man and his work. It is only in the case of the largest +and densest industrial cities, swollen to an unwieldy and dangerous +size, that such methods of decentralisation can in some measure be +applied. In these monstrous growths machinery of decentralisation may +be evoked to undo in part at any rate the work of centralising +machinery. In smaller towns, where the circumference bears a larger +proportion to the mass, a spreading of the close-packed population +over an expanded town-area will be more feasible, and will form the +first step in that series of reforms which shall humanise the +industrial town. The congestion of the poorer population of our towns, +and the struggle for fresh air and elbow-room which it implies, is +the most formidable barrier to the work of transforming the town from +a big workshop into a human dwelling-place, with an individual life, a +character, a soul of its own. The true reform policy is not to destroy +the industrial town but to breathe into it the breath of social life, +to temper and subordinate its industrial machine-goods-producing +character to the higher and more complex purposes of social life. An +ample, far-sighted, enlightened, social control over the whole area of +city ground, whether used for dwellings or for industrial purposes, is +the first condition of the true municipal life. The industrial town, +left for its growth to individual industrial control, compresses into +unhealthily close proximity large numbers of persons drawn together +from different quarters of the earth, with different and often +antagonistic aims, with little knowledge of one another, with no +important common end to form a bond of social sympathy. The town +presents the single raw material of local proximity out of which +municipal life is to be built. The first business of the municipal +reformer then is to transform this excessive proximity into wholesome +neighbourhood, in order that true neighbourly feelings may have room +to grow and thrive, and eventually to ripen into the flower of a fair +civic life. "A modern city," it has been well said, "is probably the +most impersonal combination of individuals that has ever been formed +in the world's history."[288] To evoke the personal human qualities of +this medley of city workers so as to reach within the individual the +citizen, to educate the civic feeling until it take shape in civic +activities and institutions, which shall not only safeguard the public +welfare against the encroachments of private industrial greed, but +shall find an ever ampler and nobler expression in the aesthetic beauty +and spiritual dignity of a complex, common life--all this work of +transformation lies in front of the democracy, grouped in its +ever-increasing number of town-units. + +FOOTNOTES: + +[267] According to Arthur Young, in 1770 half the population was +already urban. But though the townward drift, owing in large measure +to the land-hunger of the aristocracy and wealthy merchant class, and +the labour-saving economy of large farming, was clearly visible before +the development of machine-industry, it is probable that Young's +estimate goes beyond the facts. + +[268] Mr. Cannan points out that this is due on the one hand to the +healthier conditions of the towns whose natural increase is larger; on +the other hand, to an increased migration from the rural parts to +foreign countries. ("The Decline of Urban Immigration," _National +Review_, January 1894.) + +[269] Ravenstein, _Statistical Journal_, June 1889. + +[270] _Preliminary Report_ (c. 6422), p. 23. + +[271] It is often pointed out that an Urban Sanitary District is not +always a town. But if rural areas are sometimes classed as towns, many +large outskirts of towns, practically partaking of the character of +the towns, are not included. The figures cited above may therefore be +regarded as a fairly accurate account of the growth of town life. + +[272] Longstaff, "Rural Depopulation," _Journal of Stat. Soc._, Sept. +1893. + +[273] Cf. Longstaff, _Studies in Statistics_, p. 157. + +[274] These Canadian statistics are quoted from Dr. Longstaff's paper +in _Journal of Statistical Society_, Sept. 1893. + +[275] _Report of Commissioners, etc._, vol. XXX. p. 65. + +[276] Newsholm, _Vital Statistics_, p. 137. (Sonnenschein.) + +[277] Vol. iv. p. 23. + +[278] Levasseur, vol. ii. p. 402. + +[279] _Ibid._, vol. ii. p. 155. + +[280] _Diseases of Occupations_, p. 33. + +[281] Dr. Arlidge, pp. 25, 26. + +[282] Quoted by Professor Marshall, _Principles of Political Economy_, +p. 258. Cf. also _Statistical Society_, March 1873, for U.S.A. +statistics. + +[283] Dr. Arlidge, p. 30. + +[284] W.D. Morrison, "The Study of Crime," _Mind_, vol. i. N.S., No. +4. + +[285] Levasseur, vol. ii. p. 456. + +[286] _Claims of Labour_, p. 196. + +[287] One of the specific advantages in America has been the absence +of any serious endeavour on the part of legislation to put down Truck. +The grossest abuses of Truck appear in country manufacturing towns of +the United States. + +[288] J.S. Mackenzie, _An Introduction to Social Philosophy_, p. 101. + + + + +CHAPTER XIV. + +CIVILISATION AND INDUSTRIAL DEVELOPMENT. + + Sec. 1. _Imperfect Adjustment of Industrial Structure to its + Environment._ + Sec. 2. _Reform upon the Basis of Private Enterprise and Free Trade._ + Sec. 3. _Freedom and Transparency of Industry powerless to cure the + deeper Industrial Maladies._ + Sec. 4. _Beginnings of Public Control of Machine-production._ + Sec. 5. _Passage of Industries into a public Non-competitive + Condition._ + Sec. 6. _The "raison d'etre" of Progressive Collectivism._ + Sec. 7. _Collectivism follows the line of Monopoly._ + Sec. 8. _Cases of "Arrested Development:" the Sweating Trades._ + Sec. 9. _Retardation of rate of Progress in Collective Industries._ + Sec. 10. _Will Official Machine-work absorb an Increasing Proportion + of Energy?_ + Sec. 11. _Improved Quality of Consumption the Condition of Social + Progress._ + Sec. 12. _The Highest Division of Labour between Machinery and Art._ + Sec. 13. _Qualitative Consumption defeats the Law of Decreasing + Returns._ + Sec. 14. _Freedom of Art from Limitations of Matter._ + Sec. 15. _Machinery and Art in production of Intellectual Wealth._ + Sec. 16. _Reformed Consumption abolishes Anti-Social Competition._ + Sec. 17. _Life itself must become Qualitative._ + Sec. 18. _Organic Relations between Production and Consumption._ + Sec. 19. _Summary of Progress towards a Coherent Industrial Organism._ + + +Sec. 1. Modern industrial societies have hitherto secured to a very +inadequate extent the services which modern machinery and methods of +production are capable of rendering. The actual growth of material +wealth, however great, has been by no means commensurate with the +enormously increased powers of producing material commodities afforded +by the discoveries of modern science, and the partial utilisation of +these discoveries has been attended by a very unequal distribution of +the advantages of this increase in the stock of common knowledge and +control of nature. Moreover, as an offset against the growth of +material wealth, machinery has been a direct agent in producing +certain material and moral maladies which impair the health of modern +industrial communities. + +The unprecedented rapidity and irregularity of the discovery and +adoption of the new methods made it impossible for the structure of +industrial society to adjust itself at once to the conditions of the +new environment. The maladies and defects which we detect in modern +industry are but the measure of a present maladjustment. + +The progressive adjustment of structure to environment in the +unconscious or low-conscious world is necessarily slow. But where the +conscious will of man, either as an individual or as a society, can be +utilised for an adjusting force, the pace of progress may be +indefinitely quickened. A strongly-rooted custom in a man yields very +slowly to the pressure of changed circumstances which make it useless +or harmful, unless the man consciously recognises the inutility of the +custom and sets himself to root it out and plant another custom in its +place. So the slowness of this work of industrial adjustment has been +in no small measure due to the lack of definite realisation by the +members of modern communities of the need and importance of this +adjustment. A society which should bring its conscious will to bear +upon the work of constructing new social and industrial forms to fit +the new economic conditions, may make a progress which, while rapid, +may yet be safe, because it is not a speculative progress, but one +which is guided in its line of movement by precedent changes of +environment. + +Regarding, then, this conscious organised endeavour, enlightened and +stimulated by a fuller understanding of industrial forces in their +relation to human life, as a determinant of growing value in the +industrial evolution of the future, it may properly belong to a +scientific study of modern industry to seek to discover how the forces +of conscious reform can reasonably work in relation to the economic +forces whose operations have been already investigated. + +In other words, what are the chief lines of economic change required +to bring about a readjustment between modern methods of production and +social welfare? The answer to this question requires us to amplify our +interpretation of the industrial evolution of the past century, by +producing into the future the same lines of development, that they may +be justified by the appearance of consistency with some rational +social end. The most convenient, and perhaps the safest way to meet +this demand is to indicate, with that modesty which rightly belongs to +prophecy, some of the main reforms which seem to lie upon the road of +industrial progress, rendered subordinate to larger human social ends. + +Sec. 2. So far as the waste of economic maladjustment consists in the +excessive or defective application of various kinds of productive +force at different points of industry, upon the existing basis of +individual initiative and control, the reforms which are desirable +must be considered as contributing to the more complete establishment +of "free" competition in industry. + +The complete breakdown of all barriers which impede the free flow of +commerce and the migration of capital and labour, the fullest and +widest dissemination of industrial information, are necessary to the +attainment of the individualistic ideal of free trade. Perfect +transparency of industrial operations, perfect fluidity of labour and +of wealth would effect incalculably great economies in the production +of commercial wealth. The free-trader, in his concentration upon the +achievement of the latter economy, has generally failed to do full +justice to the importance of the former. He has indeed to some limited +extent recognised the value of accurate and extended industrial +information as the intellectual basis of free trade. But, in common +with most economists, he has failed to carry this consideration far +enough. It is generally admitted that the increased publication of +accounts and quotations of stock, springing out of the extension of +joint-stock enterprise, the growth of numerous trade journals, the +collection and dissemination of industrial facts by government bureaux +and private statisticians, are serviceable in many ways. But the +extreme repugnance which is shown towards all endeavours to extend the +compulsory powers of acquiring information by the state, the extreme +jealousy with which the rights of private information are maintained, +show how inadequately the true character of modern industry is +grasped. In the complexity of modern commerce it should be recognised +that there is no such thing as a "self-regarding" or a private action. +No fact bearing on prices, wages, profits, methods of production, +etc., concerns a single firm or a single body of workers. Every +industrial action, however detailed in character, however secretly +conducted, has a public import, and necessarily affects the actions +and interests of innumerable persons. Indeed it is often precisely in +the knowledge of those matters regarded as most private, and most +carefully secreted, that the public interest chiefly lies. Yet so +firmly rooted in the business mind is the individualistic conception +of industry, that any idea of a public development of those important +private facts upon which the credit of a particular firm is based, +would appear to destroy the very foundation of the commercial fabric. +But, although in the game of commerce a single firm which played its +hand openly while others kept theirs well concealed might suffer +failure, it is quite evident that the whole community interested in +the game would gain immensely if all the hands were on the table. +Many, if not most, of the great disasters of modern commercial +societies are attributable precisely to the fact that the credit of +great business firms, which is pre-eminently an affair of public +interest, is regarded as purely private before the crash. As industry +grows more and more complex, so the interest of the public and of an +ever-wider public in every industrial action grows apace, and a +correspondingly growing recognition of this public interest, with +provision for its security, will be found necessary. So far as the +natural changes of industrial structure in the private business fail +to provide the requisite publicity, the exercise of direct public +scrutiny must come to be enforced. The reluctance shown alike by +bodies of employers and of workers to divulge material facts is in +large measure due to the false ideas they have conceived as to the +nature of industrial activity, which education can do something to +remove, but which, if not removed, must be over-ruled in the public +interest. + +Sec. 3. It must not, however, be supposed that the most thorough +transparency of industry, any more than the removal of the political +barriers which prevent Free Trade, would tend to bring about the +desirable adjustment between the healthy social organism and the +environment of machine-production. Full free trade would supply, +quicken, and facilitate the operation of those large economic forces +which we have seen at work: the tendency of capital to gravitate into +larger and fewer masses, localised where labour can be maintained upon +the most economical terms: a correspondent but slower and less +complete organisation of labour in large masses: the flow of labouring +population into towns, together with a larger utilisation of women and +(where permitted) children for industrial work: a growing keenness of +antagonism as the mass of the business-unit is larger, and an +increased expenditure of productive power upon aggressive commercial +warfare: the growth of monopolies springing from natural, social, or +economic sources, conferring upon individuals or classes the power to +consume without producing, and by their consumption to direct the +quantity and character of large masses of labour. + +The complete realisation of full free trade in all directions has no +power whatever to abate the activity of these forces, and would only +serve to bring their operation into more signal and startling +prominence. + +For the waste of periodic over-production visible in trade depression, +for the sufferings caused by ever larger oscillations in prices and +greater irregularity of employment of capital and labour, for the +specific evils of long hours or excessive intensity of labour, +dangerous and unwholesome conditions of employment, increased +employment of women and children, and growth of large-city life, +freedom of trade conjoined with publicity of business operations can +furnish no remedies. + +It has been seen that these injuries to individuals and groups of +individuals, and through them to society, arise naturally and +necessarily from the unfettered operation of the enlightened +self-interest of individuals and groups of individuals engaged in +obtaining for themselves, by the freest use of industrial means +available, the largest quantity of money. + +So far as these evils are in form or in magnitude the peculiar +products of the last two centuries, they are in large measure +traceable to methods of production controlled by machinery, and to the +social estimate of machine-products which gives machinery this +controlling power. + +If this is so, such progress as shall abate these evils and secure for +humanity the uses of machinery without the abuses will lie in two +directions, each of which deserves consideration: (i) an adequate +social control over machine-production; (2) an education in the arts +of consumption such as may assign proper limits to the sphere of +machine-production. + +Sec. 4. That machinery subject to the unrestricted guidance of the +commercial interests of an individual or a class cannot be safely +trusted to work for the general welfare, is already conceded by all +who admit the desirability or necessity of the restrictive legislation +of Factory Acts, Mines Regulation Acts, and the large growth of public +provisions for guarding against economic, hygienic, and other injuries +arising from the conditions of modern industrial life. + +These provisions, whether designed directly to secure the interests of +a class of employees, as in the case of Factory Acts, or to protect +the consuming public, as in the case of Adulteration Acts, must be +regarded as involving an admission of a genuine antagonism between the +apparent interests of individuals and of the whole community, which it +is the business of society to guard against. + +All this legislation is rightly interpreted as a restriction of the +freedom of individual industry under modern methods of production, +required in the public interest. Uncontrolled machine-production would +in some cases force children of six or eight years to work ten hours a +day in an unhealthy factory, would introduce suddenly a host of +Chinese or other "cheap" workers to oust native labour accustomed to a +higher standard of comfort, would permit an ingenious manufacturer to +injure the consumer by noxious adulteration of his goods, would force +wages to be paid by orders upon shops owned or controlled by +employers, would oblige workers to herd together in dens of +infection, and to breed physical and moral diseases which would injure +the body politic. The need of a growing social control over modern +machine-production, in cases where that production is left in the main +to the direction of individual enterprise, is admitted on every side, +though the development of that control has been uneven and determined +by the pressure of concrete grievances rather than by the acceptance +of any distinct theory of public responsibility. + +Other limitations upon individual freedom of industry imply a clearer +recognition of the falsehood of the _laissez faire_ position. The +undertaking by the State or the Municipality, or other units of social +life, of various departments of industry, such as the railways, +telegraphs, post-offices, is a definite assertion that, in the supply +of the common services rendered by these industries, the competition +of private interests cannot be relied upon to work for the public +good. + +Sec. 5. The industries which the State either limits or controls in the +interest either of a body of workers or of the consuming public may be +regarded as passing from a private competitive condition to a public +non-competitive condition. If therefore we wish to ascertain how far +and in what directions social control of modern production will +proceed, we shall examine those industries which already exhibit the +collective character. We shall find that they are of two kinds--(1) +industries where the size and structure of the "business" is such that +the protection afforded by competition to the consuming public and to +the workers has disappeared, or is in frequent abeyance, (2) +industries where the waste and damage of excessive competition +outweighs the loss of enterprise caused by a removal or restriction of +the incentive of individual gain. As we have seen in the analysis of +"trusts," these two characteristics, wasteful competition and +monopoly, are often closely related, the former signifying the process +of intense struggle, the object and ultimate issue of which is to +reach the quiet haven of monopoly. Generally speaking, social control +in the case of over-competing industries is limited to legislative +enactments regarding conditions of employment and quality of goods. +Only those industries tend to pass under public administration where +the monopoly is of an article of general and necessary consumption, +and where, therefore, a raising of prices considerably above the +competition rate would not succeed in evoking effective competition. +Since the general tendency of industry, so far as it falls under +modern economies of machinery and method, is either towards wasteful +competition or towards monopoly, it is to be expected that there will +be a continual expansion of State interference and State undertakings. +This growing socialisation of industry must be regarded as the natural +adjustment of society to the new conditions of machine-production. As +under the economies of machine-production the business-unit, the mass +of capital and labour forming a single "firm" or "business," grows +larger in size and more potent in its operations, the social +disturbances which it can occasion by its private activity, the +far-reaching and momentous results of its strain of competition, the +probability of an anti-social exercise of "monopolic" power over the +whole or part of its market-area, will of necessity increase. The +railway and shipping industries, for example, in countries like +England and the United States, have already reached a stage of +industrial development when the social danger arising from an +arbitrary fixing of rates by a line or a "pool" of lines, from a +strike or lock-out of "dockers" or railway men, is gaining keener +recognition every year. The rapidly growing organisation of both +capital and labour, especially in the fundamental industries of coal, +iron, and machine-making, in the machine-transport industries, and the +most highly evolved manufactories, gives to a body of employers or +employed, or to a combination of both, the power at any moment to +paralyse the whole or a large portion of the entire trade of a country +in pursuit of some purely private interest or resentment, or in the +acquisition of some strategical position, which shall enable them to +strengthen their competing power or gain a monopoly. Although the +organisation of masses of capital and of labour may, as is often +urged, make industrial strife less frequent, the effects of such +strife upon the wider public, who have no opportunity of casting a +vote for war or peace, are more momentous. Moreover, as these private +movements of capital and labour proceed, the probability of combined +action between employers and employed in a particular industry, to +secure for themselves some advantages at the public expense, will be +a factor of increasing importance in industrial evolution. + +The Trade Union movement and the various growths of Industrial +Partnership, valuable as they are from many points of view, furnish no +remedies against the chief forms of economic monopoly and economic +waste; they can only change the personality and expand the number of +monopolists, and alter the character, not the quantity, of economic +waste. Society has an ever-deepening and more vital interest in the +economical management of the machinery of transport, and this interest +is no whit more secure if the practical control of railways and docks +were in the hands of the Dockers' Union or the Amalgamated Society of +Railway Servants, or of a combined board of directors and trade union +officials, than it is under present circumstances. On the contrary, an +effective organisation of capital and labour in an industry would be +more likely to pursue a policy opposed to the interests of the wider +public than now, because such a policy would be far more likely to +succeed. + +Sec. 6. When it is said that modern industry is becoming essentially more +collective in character and therefore demands collective control, what +is meant is that under modern industrial development the interest of +the industrial society as a whole, and of the consuming public in each +piece of so-called private enterprise, is greater than it was ever +before, and requires some guarantee that this interest shall not be +ignored. Where the industry is of such a kind, and in such a stage of +development, that keen competition without undue waste survives, this +public interest can commonly be secured by the enactment of +restrictive legislation. Where such partial control is insufficient to +secure the social interest against monopoly or waste, State +management, upon a national, municipal, or such other scale as is +economically advisable, must take the place of a private enterprise +which is dangerous to society. This necessity becomes obvious as soon +as the notion of a business as being purely "private" or +"self-regarding" in its character is seen to be directly negatived by +an understanding of the complex social nature of every commercial act. +So soon as the idea of a social industrial organism is grasped, the +question of State interference in, or State assumption of, an industry +becomes a question of social expediency--that is, of the just +interpretation of the facts relating to the particular case. In large +measure this social control is to be regarded, not as a necessary +protection against the monopolic power of individuals, but as +necessary for the security of individual property within the limits +prescribed by social welfare. Modern machine-evolution, as is seen, +permits and encourages the wanton invasion and destruction of forms of +capital by the competition of new savings employed in an anti-social +way. It likewise tends to the frequent destruction of the value of +that labour power which is the sole property of the mass of workers. +"The property which every man has in his own labour, as it is the +original foundation, so it is the most sacred and inviolable."[289] + +There are certain wastes of economic power involved in all +competition; there are certain dangers of monopoly attaching to all +private conduct of industry. Collective control deals with these +wastes and dangers, adjusting itself to their extent and character. + +Sec. 7. To the question how far and how rapidly may this extension of +collective control proceed, no more definite answer is possible than +this, that as a larger and larger amount of industry passes into the +condition of the most highly evolved machine-industries of to-day, and +develops along with the corresponding economies, corresponding dangers +and wastes, larger portions will pass under restrictive legislation or +State management. + +The evolution in the structure of capitalist enterprise, while it +breeds and aggravates the diseases of trade depression, sweating, +etc., likewise prepares the way and facilitates the work of social +control. It is easier to inspect a few large factories than many small +ones, easier to arbitrate where capital and labour stands organised in +large masses, easier to municipalise big joint-stock businesses in +gas, water, or conveyance. Every legislative interference, in the way +of inspection or minor control, quickens the evolution of an industry, +and hastens the time when it acquires the position of monopoly which +demands a fuller measure of control, and finally passes into the ranks +of public industry. + +Thus it would follow that, unless proceeding _pari passu_ with this +evolution there was a springing up or an expansion of other +industries not so amenable to large machine production and therefore +not prone to the dangers and wastes which appertain to it, +collectivism would absorb an ever-increasing proportion of industrial +effort. + +Sec. 8. At present it appears that there are two great classes of +productive work which have not fallen under machine-industry and +capitalism in its typical form. There is that work which machinery is +technically competent to perform, but which it cannot economically +undertake so long as large quantities of very cheap labour are +available. This class comprises the bulk of what are commonly called +the "sweating" trades, the cheap low-skilled domestic workshop labour. +The other class consists of artistic and intellectual work which +cannot be successfully undertaken by machinery. The first of these +classes is universally admitted to comprise cases of arrested +development. The irregular working of the more highly-evolved +industries, the successive supplantation of branches of skilled labour +by machinery, the blind migration of labour from distant parts, keeps +the large industrial centres supplied with a quantity of unskilled and +untrained labour, which can be bought so cheaply that in the lowest +branches of many trades it does not pay the _entrepreneur_ to incur +the initial cost of setting up expensive machinery and the risk of +working it. The social and moral progress of industrial nations +requires, as a first condition of orderly progress, that these cases +of arrested growth shall be absorbed into the general mass of +machine-industry. These problems of "the sweating system," the +unemployed, the pauper class, the natural products of the working of a +system of competition where the competitors start from widely +different lines of opportunity, can never be solved by the private +play of enlightened self-interest, unless that enlightenment take a +far more altruistic form than is consistent with the continuance of +competitive industry. This is the fundamental paralogism of that +school of reformers who find the cure of industrial maladies in the +humanisation of the private employer. A whole class of employers +sufficiently humane and far-sighted to consistently desire the welfare +of their employees (and no fewer than the whole class would suffice, +for otherwise the less benevolent will undersell and take the business +from the more benevolent) would be so highly civilised that they +would no longer be willing to compete with one another so as to injure +one another's business: they would out of pure goodwill organise into +a "monopoly," and working this monopoly for the exclusive interest of +themselves and their employees, rack-rent the consuming public; or if +their benevolence extended to all their customers they would socialise +their business, conducting it for the greatest good of all society. +Such a form of socialised industry, dependent upon the moral character +of perishable individuals, would possess all the weaknesses charged +against State socialism without any of the educative advantages or the +security and stability of that system. The "captain of industry" +remedy is a sentimental and not a scientific one. Once regard +"sweating" as a case of arrested development and the true line of +progress will be seen to lie in the absorption of these backward +industries into the main current of industrial movement, leaving them +to pass through the necessary phases of machine-production and to be +subjected to an increasing pressure of social control until they are +ripe for society to undertake. Then there will remain outside of +capitalist machine-industry only that class of work which is artistic +and therefore individualistic in character. + +Sec. 9. We now stand face to face with the main objection so often raised +against all endeavours to remedy industrial and social diseases by the +expansion of public control. Competition and the zest of individual +gain, it is urged, furnish the most effective incentive to enterprise +and discovery. Assuming that society were structurally competent to +administer industry officially, the establishment of industrial order +would be the death-blow to industrial progress. The strife, danger, +and waste of industrial competition are necessary conditions to +industrial vitality. + +How much force do these objections contain in the light of the +information provided by our study of industrial evolution? It should +be recognised at the outset that the economic individualist is not a +conservative, defending an established order and pointing out the +dangers attending proposed innovations. Our analysis of the structure +of modern industry shows the progressive socialisation of certain +classes of industry as a step in the order of events, equally natural +and necessary with the earlier steps by which machine-industry +superseded handicraft and crystallised in ever larger masses with +changing relations to one another. The indictment against social +control over industry is an indictment against a natural order of +events, on the ground that nature has taken a wrong road of +advancement. It is only possible to regard the legislative action by +which public control over industry is established as "unnatural" or +"artificial" by excluding from "Nature" those social forces which find +expression in Acts of Parliament, an eminently unscientific mode of +reasoning. + +But though this growing exercise of social control cannot be regarded +as "fighting against the constitution of things,"[290] it may be +considered by those who hold we have no guarantee of the future +development of the human race, as one of the lines of action in which +the advancing enfeeblement of man may express itself: the abandonment +of individual strife in commerce may be regarded as a mark of +diminishing vitality, which seeks immunity from effort and an equable +condition of material comfort, in preference to the risks and +excitement of a more eventful and arduous career. Order will be +purchased at the price of progress: the abandonment of individual +enterprise in industry is part of the decadence of humanity. This is +the interpretation which Dr. Pearson, in his _National Life and +Character_, places upon the socialistic tendencies of the age: the +suppression of competitive industry in order to cure poverty, physical +misery, and social injustice, will produce a society which is +"sensuous, genial, fibreless." The validity of such a judgment rests +upon two assumptions: first, that social control of industry +necessarily crushes the spirit of individual enterprise and checks +industrial progress; second, that extension of State control over +capitalist industry necessarily implies a diminished scope of +individual control in the production of wealth. + +The first assumption is open to a number of criticisms which must be +held to greatly modify its force, and which may be summarised as +follows:-- + +(1) Much individual enterprise in industry does not make for +industrial progress. A larger and larger proportion of the energy +given out in trade competition is consumed in violent warfare between +trade rivals, and is not represented either in advancement of +industrial arts or in increase of material wealth. + +(2) History does not show greed of gain as the motive of the great +steps in industrial progress. The love of science, the pure delight of +mechanical invention, the attainment of some slight personal +convenience in labour, and mere chance, play the largest part in the +history of industrial improvements. These motives would be as equally +operative under state-control as under private enterprise. + +(3) Such personal inducements as may supply a useful stimulus to the +inventive faculty could be offered in socially-controlled industry, +not merely publicity and honour, but such direct material rewards as +were useful. + +Industrial history shows that in modern competitive industry the +motive of personal gain is most wastefully applied. On the one hand, +the great mass of intelligent workers have no opportunity of securing +an adequate reward for any special application of intelligence in +mechanical invention or other improvement of industrial arts. Few +great modern inventors have made money out of their inventions. On the +other hand, the _entrepreneur_, with just enough business cunning to +recognise the market value of an improvement, reaps a material reward +which is often enormously in excess of what is economically required +to induce him to apply his "business" qualities to the undertaking. + +(4) The same charges of weakened individual interest, want of +plasticity and enterprise, routine torpidity, are in a measure +applicable to every large business as compared with a smaller. Adam +Smith considered them fatal barriers to the growth of joint-stock +enterprise outside a certain narrowly-defined range. But the economies +of the large business were found to outweigh these considerations. So +a well-ordered state-industry may be the most economical in spite of +diminished elasticity and enterprise. + +But while these considerations qualify the force of the contention +that state-control would give no scope for industrial progress, they +do not refute it. The justification of the assumption by the State of +various functions, military, judicial, industrial, is that a safe +orderly routine in the conduct of these affairs is rightly purchased +by a loss of elasticity and a diminished pace of progress. The arts +of war and of justice would probably make more advance under private +enterprise than under public administration, and there is no reason to +deny that postal and railway services are slower to adopt improvements +when they pass under government control. + +It may be generally admitted that, as the large modern industries pass +from the condition of huge private monopolies to public departments, +the routine character will grow in them, and they will become less +experimental and more mechanical. It is the nature of machines to be +mechanical, and the perfection of machine-industries, as of single +machines, will be the perfection of routine. Just in proportion as the +machine has established its dominancy over the various industries, so +will they increase in size, diminish in flexibility, and grow ripe for +admission, as routine businesses, into the ranks of state-industry. If +the chief object of society was to secure continual progress in +military arts and to educate to the utmost the military qualities, it +would be well to leave fighting to private enterprise instead of +establishing state monopolies in the trade of war. It sacrifices this +competition, with the progress it induces and the personal fitness it +evolves, in order that the individual enterprise of its members may be +exercised in the competition of industrial arts, inducing industrial +progress and evolving industrial fitness. The substitution of +industrialism for warfare is not, however, understood to imply a +diminution of individual enterprise, but an alteration in its +application. + +If, starting from this point of view, we regard human life as +comprising an infinite number of activities of different sorts, +operating upon different planes of competition and educating different +human "fitnesses," we shall understand how the particular phase of +industrial evolution we are considering is related to the wider +philosophic view of life. All progress, from primitive savagedom to +modern civilisation, will then appear as consisting in the progressive +socialisation of the lower functions, the stoppage of lower forms of +competition and of the education of the more brutal qualities, in +order that a larger and larger proportion of individual activity may +be engaged in the exercise of higher functions, the practice of +competition upon higher planes, and the education of higher forms of +fitness. + +If the history of past civilisation shows us this, there is an _a +priori_ presumption that each further step in the repression of +individual enterprise and in the extension of state-control does not +mean a net diminution in individual activity or any relaxation of +effort in self-assertion, but merely an elevation of the plane of +competition and of the kind of human qualities engaged. This is, in +fact, the philosophical defence of progressive socialism, that human +progress requires that one after another the lower material animal +functions shall be reduced to routine, in order that a larger amount +of individual effort may be devoted to the exercise of higher +functions and the cultivation by strife of higher qualities. + +To suppose that the reduction of all machine-industry to public +routine services, when it becomes possible, will imply a net +diminution in the scope of individual self-expression, rests upon the +patent fallacy of assigning certain fixed and finite limits to human +interest and activity, so that any encroachment from the side of +routine lessens the absolute scope of human spontaneity and interest. +If, as there is reason to believe, human desires and the activities +which are engaged in satisfying them are boundless, the assumption +that an increase in the absolute amount of state-control or +routine-work implies a diminution of the field for individual +enterprise is groundless. The underlying motive, which alone can +explain and justify each step in progressive socialism, is the +attainment of a net economy of individual effort, which, when it is +released from exercise upon a lower plane of competition, may be +devoted to exercise upon a higher. If the result of extending social +control over industry were merely to bring about a common level of +material comfort, attended by spiritual and intellectual torpor and +contentment, the movement might be natural and necessary, but could +hardly be termed progress. + +But such a view is based upon a denial of the axiom that the +satisfaction of one want breeds another want. Experience does not +teach the decay but the metamorphosis of individuality. Under +socialised industry progress in the industrial arts would be slower +and would absorb a smaller proportion of individual interest, in order +that progress in the finer intellectual and moral arts might be +faster, and might engage a larger share of life. To future generations +of more highly evolved humanity the peculiar barbarism of our age +will consist in the fact that the major part of its intelligence, +enterprise, genius, has been devoted to the perfection of the arts of +material production through mechanical means. If it is desirable that +more of this individual energy should be engaged in the production of +higher forms of wealth by competition upon higher planes, this can +only be achieved by the process of reducing to routine the lower +functions. Higher progress can only be purchased by an economy of the +work of lower progress, the free, conscious expression of higher +individuality by the routine subordination of lower individuality. +Industrial progress would undoubtedly be slower under state-control, +because the very object of such control is to divert a larger +proportion of human genius and effort from these occupations in order +to apply them in producing higher forms of wealth. It is not, however, +right to assume that progress in the industrial arts would cease under +state-industry; such progress would be slower, and would itself +partake of a routine character--a slow, continuous adjustment of the +mechanism of production and distribution to the slowly-changing needs +of the community. + +Sec. 10. A most important misunderstanding of the line of industrial +development arises from a conviction that all production of wealth +embodied in matter tends to pass under the dominion of machinery, that +an increasing number of workers in the future will become +machine-tenders, and that the state-control of machine-industry would +bring the vast majority of individuals into the condition of official +machine-workers. This, however, is by no means a reasonable forecast. +In competitive machine-industry, although it is to the interest of the +individual business to "save" as much labour as possible, the play of +competition causes to be made and worked a much larger quantity of +machinery than is enough to maintain the current rate of consumption, +and thus keeps in the ranks of manufacture a much larger quantity of +labour than is socially necessary. Yet in a typical manufacturing +country like England statistics show that the proportion of the +working population engaged in machine manufactures is not increasing. +If, then, by the gradual elimination of competition in the +machine-industries, the quantity of machine-work were kept down to +the social requirements of the community's consumption, the proportion +of machine-workers would be less than it is, assuming the demand for +machine-made goods continued the same. + +But what, it may be said, will become of the increasing proportion of +the workers not required by machinery? will they go to swell +indefinitely the ranks of distributors? Will the number of merchants, +jobbers, speculators, shopkeepers, agents: middlemen of various sorts, +grow without limit? Assuming that the work of distribution were left +to competitive enterprise, and that the quantity and quality of +consumption remained the same as now, this result would seem +necessarily to follow. The labour saved in manufacture would pass, as +it does now, to intensify the competition of the distributive trades +and to subdivide into needlessly small fragments the necessary but +limited amount of distributive work. But these assumptions are not +necessarily correct. If, as seems likely, the increased intensity of +competition forced the growth of strong monopolies in certain +departments of distribution, the anti-social power thus bestowed upon +individuals would necessitate the extension of state-control to them +also. The work of distribution would thus pass into routine-industry +administered by the public for the public interest. Thus the area of +socialised industry would extend until it absorbed one after another +all industries possessing the machine-character and capable of +administration by routine. It might thus appear that, after all, the +forebodings of the individualist would be verified, the work of life +would be reduced to a dull monotonous mechanism grinding out under +bureaucratic sway an even quantity of material comforts for a +community absorbed in the satisfaction of its orderly behaviour. + +This goal seems inevitable if we assume that no change takes place in +the quantity and quality of the consumption of the community, that +individual consumers save or try to save the same proportion of their +incomes as now, and apply the portion that they spend to the purchase +of increased quantities of ever-cheapening machine-made goods. + +But are we justified in considering it necessary, or even probable, +that consumption will in amount and character remain unchanged? In +proportion as the large industries pass into the condition of +monopolies, whether under private or public control, the area of safe +and profitable-investment for the average "saving" man will be more +restricted. Thus some of the useless "saving" which takes the shape of +excessive plant, machinery, and other forms of capital will be +prevented. In other words, the quantity of consumption will increase, +and this increase will give fuller employment to the machinery of +production and? to the labour engaged in working it and in +distributing the increased product. If, however, increased consumption +merely took the form of consuming increased quantities of the same +material goods as before, the gain would be limited to the rise of +material comfort of the poorer classes, and this gain might be set off +by the congested and torpor-breeding luxury of the better-to-do. A +mere increase in quantity of consumption would do nothing to avert the +drifting of industry into a bureaucratic mechanism. + +Sec. 11. It is to improved quality and character of consumption that we +can alone look for a guarantee of social progress. Allusion has been +already made to the class of artistic and intellectual work which +cannot be undertaken by machinery. It must never be forgotten that art +is the true antithesis of machinery. The essence of art in this wide +sense is the application of individual spontaneous human effort. Each +art-product is the repository of individual thought, feeling, effort, +each machine-product is not. The "art" in machine-work has been +exhausted in the single supreme effort of planning the machine; the +more perfect the machine the smaller the proportion of individual +skill or art embodied in the machine-product The spirit of machinery, +its vast rapid power of multiplying quantities of material goods of +the same pattern, has so over-awed the industrial world that the craze +for quantitative consumption has seized possession of many whose taste +and education might have enabled them to offer resistance. Thus, not +only our bread and our boots are made by machinery, but many of the +very things we misname "art-products." Now a just indictment of this +excessive encroachment of machinery is not based upon the belief, +right or wrong, that machinery cannot produce things in themselves as +fit or beautiful as art. The true inadequacy of machine-products for +human purposes arises from the fact that machine-products are exactly +similar to one another, whereas consumers are not. So long as +consumers consent to sink their individuality, to consume articles of +precisely the same shape, size, colour, material, to assimilate their +consumption to one another, machinery will supply them. But since no +two individuals are precisely similar in physical, intellectual, or +moral nature, so the real needs of no two will be the same, even in +the satisfaction of ordinary material wants. As the dominance of +machinery over the workers tends to the destruction of individuality +in work, obliging different workers to do the same work in the same +way with a premium upon the mere capacity of rapid repetition, in the +same way it tends to crush the individuality of consumers by imposing +a common character upon their consumption. The progressive utilisation +of machinery depends upon the continuance of this indiscriminate +consumption, and the willingness of consumers to employ every increase +of income in demanding larger and larger quantities of goods of the +same pattern and character. Once suppose that consumers refuse to +conform to a common standard, and insist more and more upon a +consumption adjusted to their individual needs and tastes, and +likewise strive to follow and to satisfy the changing phases of their +individual taste, such individuality in consumption must impose a +corresponding individuality in production, and machinery will be +dethroned from industry. Let us take the example of the clothing +trade. Provided the wearing public will consent to wear clothes +conforming to certain common patterns and shapes which are only +approximate "fits," machinery can be used to make these clothes; but +if every person required his own taste to be consulted, and insisted +upon an exactitude of fit and a conformity to his own special ideas of +comfort, the work could no longer be done by machinery, and would +require the skill of an "artist." It is precisely upon this issue that +the conflict of machine _versus_ hand-labour is still fought out. The +most highly-finished articles in the clothing, and boot trades are +still hand-made; the best golf-clubs, fishing-rods, cricket bats, +embody a large amount of high manual skill, though articles of fair +average make are turned out chiefly by machinery in large quantities. +These hand-made goods are produced for a small portion of the +consuming public, whose education and refinement of taste induces them +to prefer spending their money upon a smaller quantity of commodities +adjusted in character to their individual needs, than upon a larger +quantity of common commodities. + +Assuming that industrial evolution places an increasing proportion of +the consuming public in secure possession of the prime physical +necessaries of life, it is surely possible that they too may come to +value less highly a quantitative increase in consumption, and may +develop individuality of tastes which require individual production +for their satisfaction. In proportion as this happens, hand-work or +art must play a more important part in these industries, and may be +able to repel the further encroachments of machinery, or even to drive +it out of some of the industrial territory it has annexed. But +although the illustration of the present condition of the clothing +trades serves to indicate the nature of the contest between machinery +and art in the region of ordinary material consumption, it is not +suggested that social progress will, or ought to, expel machinery from +most of the industries it controls, or to prevent its application to +industries which it has not yet reached. The luxury and foppish +refinement of a small section of "fashionable" society, unnaturally +relieved of the wholesome necessity of work, cannot be taken as an +indication of the ways in which individuality or quality of +consumption may or will assert itself, in a society where social +progress is based upon equality of opportunity, and the power to +consume has some just relation to ability and merit. It seems +reasonable to expect that on the whole machinery will retain, and even +strengthen and extend, its hold of those industries engaged in +supplying the primitive needs of man--his food, clothing, shelter, and +other animal comforts. In a genuinely progressive society the object +will be so to order life as to secure, not merely the largest amount +of individual freedom or self-expression, but the highest quality. If +an undue amount of individuality be devoted to the production and +consumption of food, clothing, etc., and the conscious, refined +cultivation of these tastes, higher forms of individual expression in +work and life will be neglected. The just economy of individuality +will therefore relegate certain branches of production to machinery, +in order that the energy saved by such routine-work may be set free +for higher individual endeavour. The satisfaction of the primary +animal wants--hunger, thirst, cold, etc.--are common to all; in these +purely physical demands there is less qualitative difference in +different men; as the needs are the same the consumption will be the +same. The absence of wide individual differences of taste marks out +the commodities for routine or machine-production. As individuals are +nearest alike in their prime physical needs, so, as they gradually +develop higher material wants, and, after these are satisfied, +aesthetic, intellectual, moral wants, their individualism becomes more +and more marked. It is therefore in the most highly developed, or, as +they are sometimes called, the more "artificial" wants of man, that +the diversity of individual nature shows itself most strongly, and +demands a satisfaction peculiar to itself which only art can give. In +a highly evolved society it is likely that many physical needs, and +even some intellectual needs, will be common to all, and will engage +little individual attention. These may be graded as routine wants, and +may be satisfied by machine-made goods. As a society, safely ordered +in the supply of ordinary physical comforts, continued to develop, a +less and less diversity would show itself in the ordinary aspect of +its material civilisation, because the individuality which once found +expression there is raised to a higher plane of activity. The +enrichment and enlargement of human life in such a society would +undoubtedly manifest itself in a greater likeness between the +individual members in the lower modes of life, but the extent of +individual difference in the higher modes would be ever widening. The +object of the levelling in the lower processes of life would be that +higher individual differences might have opportunity to assert +themselves. In a progressive society thus conceived, where +socialisation and individuation grow inseparably related and reacting +on one another, there is evidently no fixed limit to the progress of +machinery. As each higher want is educated, some lower want will drop +into the position of a routine-want, and will pass into the rightful +province of machinery. But though a large proportion of material +commodities would doubtless be made by machinery, it is not signified +that art will be banished from what are commonly called the industrial +arts. On the contrary, art may be in many ways the friend and +co-operator of machinery, the latter furnishing a routine foundation +for the display of individual taste and of individual satisfaction in +the consumer. One of the most hopeful signs of the last few years is +the growing intrusion of art into the machine-industries,--the +employment of skilled designers and executants who shall tempt and +educate the public eye with grace of form and harmony of colour. In +pottery, textile wares, hardware, furniture, and many other +industries, the beginnings of public taste are operating in demand for +variety and ornament. May not this be the beginning of a cultivation +of individual taste which shall graft a fine-art upon each +machine-industry, apportioning to machinery that work which is hard, +dull, dangerous, monotonous, and uneducative, while that which is +pleasant, worthy, interesting, and educative is reserved for the human +agent? + +Sec. 12. Machinery is thus naturally adapted to the satisfaction of the +routine wants of life under social control. The character of +machine-production, as has been shown, is essentially collective. The +maladies of present machine-industries are due to the fact that this +collective character is inadequately recognised, and machinery, left +to individual enterprise and competition, oppresses mankind and causes +waste and commercial instability. In a word, the highest division of +labour has not been yet attained, that which will apportion machinery +to the collective supply of the routine needs of life, and art to the +individual supply of the individual needs. In this way alone can +society obtain the full use of the "labour-saving" character of +machinery, minimising the amount of human exertion engaged in tending +machinery and maximising the amount engaged in the free and +interesting occupations. Engaged in satisfying the steady, constant +needs of society under social regulation, machinery would no longer be +subject to those fearful oscillations of demand which are liable +unforeseen to plunge whole masses of workers into unemployment and +poverty, and to waste an infinite amount of "saving." Where the +fluctuations in consumption were confined to the region of individual +taste, the changes of taste and growing variety of consumption would +furnish the education of the artist, who will acquire skill and +flexibility by freely following and directing the changing tastes of +consumers. + +In such a forecast it is of course useless to endeavour to predict +how far art will continue to occupy itself with industry, or how far, +set free by machinery, it will be absorbed in the creation of finer +intellectual or spiritual products, or in what are now termed the fine +arts. This must depend upon the nature of the harmonious development +of human capacities of effort and enjoyment under conditions of +individual freedom, and the interaction of the free development of +individuals in a society founded upon an equality of the material +means of life. The study of the qualitative development of consumption +in modern society is only just beginning to be recognised as the true +starting-point of economic science, for although many of the older +economists did verbal homage to the importance of this branch of +study, it has been reserved for recent thinkers to set about the +work.[291] + +Sec. 13. It is hardly too much to say that the whole of social progress +depends upon the substitution of qualitative for quantitative methods +of consumption. In so far as individuals apply their growing ability +to consume in order to demand increased quantities of the same +articles they consumed before, or flash variety of fashionable goods +in no wise adjusted to individual need or taste, they extend the +dominion of machinery. In so far as they develop individual taste, +delicacy rather than quantity of satisfaction, they give wider scope +to work which embodies conscious human skill and deserves the name of +art. + +But there is another bearing of this point of equal significance. +Political economists have a dismal formula called the Law of +Diminishing Returns, which casts a dark shadow upon industrial +progress as it is commonly conceived. The more food and clothing, +fuel, and other material goods we require, the further we have to go +for the material, and the harder it is to get: we must plough inferior +lands yielding smaller crops, we must sink deeper shafts for our coal +and iron. As our population grows ever larger, and this larger number +wants more and more pieces of the earth to feed its machines and to +turn out the increased quantity of goods, the drain upon natural +resources is constantly increasing. The material world is limited; in +time Nature will become exhausted, and, long before this happens, the +quantity of human labour required to raise the increased supply of raw +material in the teeth of the Law of Diminishing Returns will far +exceed the economies attending large-scale machine-production. + +This danger will also be found to result entirely from the +quantitative estimate of human wealth and human life. + +Confining our view for the moment to that branch of production which +is engaged in providing food, to which the Law of Diminishing Returns +is held to apply with special rigour, we can see without difficulty +how, by a progressive differentiation of consumption, we can mitigate +or even utterly defeat the operation of this law. If the inhabitants +of a country persist in maintaining a single narrow standard of diet, +and use the whole of their land for growing wheat and raising sheep, +not merely do they waste all other fine productive qualities belonging +to certain portions of the cultivated or uncultivated soil, but every +increase in their narrow consumption drives them to worse soil, +obliges them to put more labour into a quarter of wheat or a sheep, +and increases the proportion of their aggregate product which goes as +rent.[292] If, on the other hand, a community cultivates a varied +consumption and seeks to utilise each portion of its soil for whatever +form of food it can grow best, instead of grading its land exclusively +according to its wheat or sheep-raising capacity, it is able to defeat +the "niggardliness of nature" which asserts itself when the community +insists upon a continual extension of the same demands. For land which +may be very bad for wheat-growing or grazing, which may even be "below +the margin of cultivation" for these purposes, may be well adapted for +producing other commodities. A large variety of alternative uses will +enable us to get the largest net amount of utilities out of Nature, +and a community which, in lieu of an extension of demand for the same +commodities, asserts its civilisation in the education of new demands +and a greater complexity in the standard of its comfort, may draw +from the land an indefinite increase of wealth without putting forth +more labour or paying higher rent. It is simply one more example of +the economy attainable by division of labour and specialisation of +function. + +Sec. 14. What applies to food will equally apply to the use of the earth +for providing the raw material of all other forms of material wealth. +A people with growing variety of consumption is ever finding new and +more profitable uses for slighted or neglected capacities of nature. +The social progress of nations must be chiefly determined by the +amount of their intelligent flexibility of consumption. Mere variety +of consumption in itself is not sufficient to secure progress. There +must be a progressive recognition of the true relations, between the +products which can be most economically raised upon each portion of +the soil, and the wholesome needs of mankind seeking the full +harmonious development of their faculties in their given physical +environment. A progressive cultivation of taste for a variety of +strong drinks, though it might provide an increased number of +alternative uses for the soil, and might enhance the aggregate +market-values of the wealth produced, would not, it is generally held, +make for social progress. That nation which, in its intelligent +attainment of a higher standard of life, is able to thoroughly +assimilate and harmonise the largest variety of those products for +which their soil and climate are best adapted, will be foremost in +industrial progress and in the other arts of civilisation which spring +out of it. + +The case is a simple one. A mere increase in the variety of our +material consumption relieves the strain imposed upon man by the +limits of the material universe, for such variety enables him to +utilise a larger proportion of the aggregate of matter. But in +proportion as we add to mere variety a higher appreciation of those +adaptations of matter which are due to human skill, and which we call +Art, we pass outside the limits of matter and are no longer the slaves +of roods and acres and a law of diminishing returns. So long as we +continue to raise more men who demand more food and clothes and fuel, +we are subject to the limitations of the material universe, and what +we get ever costs us more and benefits us less. But when we cease to +demand more, and begin to demand better, commodities, more delicate, +highly finished and harmonious, we can increase the enjoyment without +adding to the cost or exhausting the store. What artist would not +laugh at the suggestion that the materials of his art, his colours, +clay, marble, or what else he wrought in, might fail and his art come +to an end? When we are dealing with qualitative, _i.e._ artistic, +goods, we see at once how an infinite expenditure of labour may be +given, an infinite satisfaction taken, from the meagrest quantity of +matter and space. In proportion as a community comes to substitute a +qualitative for a quantitative standard of living, it escapes the +limitations imposed by matter upon man. Art knows no restrictions of +space or size, and in proportion as we attain the art of living we +shall be likewise free. + +Sec. 15. So far the consideration of reformed qualitative consumption has +been confined to material goods. But a people moving along the line of +progress, seeking ever a more highly qualitative life, will demand +that a larger proportion of their energy shall be given to the +production and consumption of intellectual goods. + +This world likewise is at present largely under the dominion of +Machinery and a Law of Diminishing Returns. By making of our +intellectual life a mere accumulation of knowledge, piling fact upon +fact, reading book upon book, adding science to science, striving to +cover as much intellectual ground as possible, we become mere +worshippers of quantity. It is not unnatural that our commercial life +should breed such an intellectual consumption, and that the English +and American nations in particular, who have beyond others developed +machine-production and the quantitative genius for commerce, should +exhibit the same taste in their pursuit after knowledge. Pace, size, +number, cost, are ever on their lips. To visit every European capital +in a fortnight, see acres of pictures, cathedrals, ruined castles, +collect out of books or travel the largest mass of unassorted and +undigested information, is the object of such portion of the +commercial life as can be spared from the more serious occupations of +life, piling up bale after bale of cotton goods and eating dinner +after dinner of the same inharmoniously ordered victuals. + +Our schools and colleges are engaged in turning out year by year +immense quantities of common intellectual goods. Our magazines, +books, and lectures are chiefly machine-products adjusted to the +average reader or hearer, and are reckoned successful if they can +drive a large number of individuals to profess the same feelings and +opinions and adopt the same party or creed, with the view of enabling +them to consume a large number of copies of the same intellectual +commodities which can be turned out by intellectual machinery, instead +of undergoing the effort of thinking and feeling for themselves. This +danger, connected with the rapid spread of printed matter, is a grave +one. Happily there are visible here also counteracting influences, +forces that tend to individualise intellectual consumption and thus to +stimulate the higher arts of intellectual production. In a progressive +community it will be more fully recognised that it is not sufficient +to induce people to give more time and attention to intellectual +consumption; they must demand intellectual goods vitally adjusted to +their individual needs. + +Sec. 16. To the increased regard for quality of life we must likewise +look to escape the moral maladies which arise from competition. For +what is the cause of anti-social competition? It is the limitation of +quantity. Two dogs are after one bone. Two persons wish to consume one +commodity at the same time. Now, even in material goods, the more +qualitative consumption becomes, and the more insistent each +individual is upon the satisfaction of his peculiar tastes, the +smaller will be the probability that two persons will collide in their +desires, and struggle for the possession of the self-same commodity. +Even in art-objects which are still bounded by matter, among genuine +lovers of art the individuality of each stands out in mitigation of +the antagonism of competition, for no two will have precisely the same +tastes or estimates, or will seek with equal avidity the same +embodiments of art. As we rise to purely intellectual or moral +enjoyments, competition gives way to generous rivalry in co-operation. +In the pursuit of knowledge or goodness the rivalry is no longer +antagonism--what one gains another does not lose. One man's success is +not another's failure. On the contrary, the enrichment of one is the +enrichment of all. Both in the production and the consumption of the +highest goods of Science, Art, and Virtue, social, not anti-social, +motives are the chief stimulus. In the highest forms of consumption, +the practice of the noblest arts of life, the enjoyment of the finest +intellectual and spiritual goods, there is no purely selfish +consumption. For though the highest individuality is then attained, +the enjoyment of one individual requires the enjoyment of others. The +attainment of the highest reaches of knowledge is impossible for the +individual without the constant and increasing aid of other minds and +the inspiring "spirit of the age"; the enjoyment of such knowledge is +in an even wider communication. The practice and enjoyment of the arts +of goodness are necessarily social, because the good life can only be +lived in a good society. Spinoza has summed up the truth in +saying--"The highest good is common to all, and all may equally enjoy +it." So it appears that the highest goods are essentially at once +individual and social, pointing once more the attainment of the higher +synthesis in which the antagonism of the "one" and the "all," which +shows itself in the lower planes of competing effort and enjoyment, +disappears. + +Sec. 17. One necessary condition of this progressive life cannot be +ignored. Human life itself must become more qualitative, not only in +its functional activities, but in its physical basis. The greatness +and worth of a community must be seen more clearly to consist not in +the numbers, but in the character of its members. If the number of +individuals in a society continually increases, no reform in methods +of consumption can prevent the constant increase in the proportion of +human energy which must be put into the production of the prime +material necessaries of physical life which are, and in spite of all +improved methods of treating nature will remain, ultimately subject to +a law of diminishing returns: so, less and less energy can be spared +for the life of varied and delicate consumption, high individuality +and intellectual and moral growth. Professor Geddes has well expressed +the importance of this truth: "The remedy lies in higher and higher +individuation--_i.e._, if we would repress excessive multiplication, +we must develop the average individual standard throughout society. +Population not merely tends to out-run the means of subsistence, but +to degenerate below the level of subsistence, so that without steadily +directing more and more of our industry from the production of those +forms of wealth which merely support life to those which evoke it, +from the increase of the fundamental necessities of animal life to +that of the highest appliances of human culture, degeneration must go +on."[293] + +Sec. 18. One final consideration remains. Modern large-scale industry has +enlarged and made more distinct an unnatural and injurious separation +of the arts of production and the arts of consumption. Work has become +more and more differentiated from enjoyment, and in a twofold way. +Modern machine-industry has in the first place sharpened the +distinction between the "working classes," whose name indicates that +their primary function is to labour and not to live, and the +comfortable classes, whose primary function is to live and not to +labour, which private enterprise in machine-industry has greatly +enlarged. The extremes of these large classes present the divorcement +of labour and life in startling prominence. But since work and +enjoyment are both human functions, they must be organically related +in the life of every individual in a healthy community. It must be +recognised to be as essential to the consumer to produce as for the +producer to consume. The attempt on the part of an individual or a +class to escape the physical and moral law which requires the output +of personal exertion as the condition of wholesome consumption can +never be successful. On the plane of physical health, Dr. Arlidge, in +his book upon _The Diseases of Occupations_, points the inevitable +lesson in the high rate of disease and mortality of the "unoccupied +class" in that period of their life when they have slaked their zest +for volunteer exertion and assume the idle life which their economic +power renders possible. The man of "independent means" cannot on the +average keep his life in his body nearly so long as the half-starved, +ill-housed agricultural labourer, from whose labour he draws the rents +which keep him in idleness. The same law applies in the intellectual +world. The dilettante person who tries to extract unceasing increments +of intellectual or aesthetic enjoyment from books or pictures or +travel, without the contribution of steady, painful intellectual +effort, fails to win an intellectual life, for the mere automatic +process of collecting the knowledge of others for personal consumption +without striving to enlarge the general stock, congests and +debilitates the mind and prevents the wholesome digestion and +assimilation. + +The same necessary evil arises from the sharp separation of the +processes of production and consumption in the individual life of the +worker. Industry which is purely monotonous, burdensome, +uninteresting, uneducative, which contains within itself no elements +of enjoyment, cannot be fully compensated by alternate periods of +consumption or relaxation. The painful effort involved in all labour +or exertion should have linked with it certain sustaining elements of +related interest and pleasure. It is the absence of this which +condemns machine-tending from the human standpoint, it is the presence +of this which distinguishes every art. Hence in a progressive society +we must look to see not the abolition of machinery, but the diminution +of machine-tending which attends the growing perfection of machinery, +in order that the arts may be able to absorb a larger share of human +exertion. + +The arts of production and consumption will, in the evolution of a +wholesome industrial society, be found inseparable: not merely will +they be seen to be organically related, but rather will appear as two +aspects of the same fact, the concave and the convex of life. For the +justly ordered life brings the identification of life, a continuous +orderly intake and output of wholesome energy. This judgment, not of +"sentimentalism" but of science, finds powerful but literally accurate +expression in the saying of a great living thinker, "Life without work +is guilt, work without art is brutality." Just in proportion as the +truth of the latter phrase finds recognition the conditions which make +"life without work" possible will disappear. Everything in human +progress will be found to depend upon a progressive realisation of the +nature of good "consumption." Just in proportion as our tastes become +so qualitative that we require to put our own spontaneity, our sense +of beauty and fitness, our vital force, into whatever work we do, and +likewise require the same elements of spontaneity and individuality in +all we enjoy, the economic conditions of a perfect society will be +attained. + +Sec. 19. This forecast of the social and industrial goal seems justified +by a thoughtful interpretation of the tendencies visible in the +development of modern industry. How fast may be the progress towards +such an ideal, or how far such progress may be frustrated or impaired +by the appearance of new or the strengthening of old antagonistic +forces, lies beyond the powers of legitimate speculation. The +endeavour to test industrial evolution by reference to the wider +movements of human life brings into prominence two great tendencies +whose operations, attested not dimly by modern history, are in close +accord with the general trend of the development of social and +individual life and the relations subsisting between the two. + +As modern industrial societies develop they disclose certain material +wants which are common to all or most members, and are less subject to +fluctuations in quantity or quality of demand than others. These +routine wants, representing that part of consumption which is common, +can be supplied most economically by highly organised machinery and +highly concentrated methods of production. But so long as the +machinery for the satisfaction of the common wants remains outside the +common control, and is worked for the benefit of sections of the +community whose interests conflict, both with one another and with the +general interest, an immense amount of waste and danger arises from +the working of the machinery, and grave social maladies are +engendered. These maladies evoke in the best ordered and most +intelligent communities an increasing pressure of public control. This +public control is strengthened and extended in proportion as the +highly evolved structure of the industry enables its administrators to +exercise powers of monopoly either in relation to the treatment of its +employees, or in relation to the price or quality of the commodities +it supplies to the public. Such industries as develop these economic +powers of monopoly in the highest degree, and in relation to the +supply of prime necessaries or comforts of common life, pass gradually +into the condition of public industries organised for the public good. +It seems likely that all the important machine industries engaged in +satisfying common routine wants will gradually develop the monopolic +characteristics which accrue to large production, and will pass by +degrees through the different phases of public control until they +become merged in public industry. + +This so-called socialistic movement in industry represents the growing +cohesiveness of modern societies. At all times there is a strong +natural tendency to supply common wants by common efforts. So long as +the common wants in their wider significance only extend to protection +of the person and of certain forms of personal property, state-work is +confined within these protective limits, and the work of producing +common wealth, so far as it exists, is left to village communities or +other small units of social organisation. As the elements of steady +common consumption grow in number, the common organisation of activity +to supply them will grow, and where the supply has at first been left +to private enterprise, the abuse of power and growing inconvenience of +competition will drive them into public industry. But since the very +_raison d'etre_ of this increased social cohesiveness is to economise +and enrich the individual life, and to enable the play of individual +energy to assume higher forms out of which more individual +satisfaction may accrue more and more human effort will take shape in +industries which will be left to individual initiative and control, +the arts in which the freedom of personal spontaneity will find scope +in the expression of physical or moral beauty and fitness and the +attainment of intellectual truth. The infinite variety which these +forms of artistic expression may assume, fraught with the +individuality of the artist, will prevent them from ever passing into +"routine" or "common" industries, though even in the fine arts there +will be certain elements which, as they become part of the common +possession, will become relatively void of individual interest, and +will thus pass into a condition of routine activity. The idea of +continuity in human progress demands this admission. But since each +encroachment of routine into the "finer arts" is motived by a prior +shifting of the interest of the consumer into forms of higher +refinement, there will be a net gain and not a loss in the capacity of +individual exercise in artistic work. In every form of human activity +the progress of routine industry will be the necessary condition of +the expansion of individual freedom of expression. But while the +choice and control of each higher form of "industry" will remain +individualistic, in proportion as the moral bonds of society obtain +fuller conscious recognition, the work of the "artist" likewise will +be dedicated more and more to the service of his fellow-men. Thus will +the balance of the social and individual work in the satisfaction of +human wants be preserved, while the number of those wants increase and +assume different values with the progress of the social and individual +life. + +FOOTNOTES: + +[289] _Wealth of Nations_, p. 110. + +[290] Spencer, _Contemporary Review_, March 1884. + +[291] Professor Jevons' work upon this branch of Economics was marred +by an attempt to treat it purely mathematically, that is to reduce +qualitative to quantitative differences--an impossibility. Among +recent writers, Professor Patten, of Pennsylvania University, has made +by far the most important contributions towards a systematic treatment +of the economics of consumption. + +[292] Patten's _Premises of Political Economy_, chap. iv. + +[293] Professor Patrick Geddes, _Claims of Labour_. Cf. _The Evolution +of Sex_, chap, xx. (Contemporary Science Series: Walter Scott). + + + + +INDEX. + + +Abraham, _Report on Employment of Women_, 315 + +Adjustment in progressive industry, 351 + +Agriculture, 32, 41, 102; + agricultural labour, 333 + +Andrew, S., _Fifty Years' Cotton Trade_, 297 + +Apprentices, statute of, 26 + +Arkwright, 50, 56 + +Arlidge, Dr., 252, 255, 320, 336, 337, 379 + +Art in industry, 371-378 + +Ashley, Professor, _Economic History_, 38 + + +Babbage, _Economy of Manufactures_, 50-51, 236, 249 + +Baines, _History of Cotton Manufacture_, 23, 37 + +Baker, _Monopolies and the People_, 128, 134, 139, 147 + +_Board of Trade Journal_, 241 + +Balance of trade, 15 + +Banking, 42 + +Bertillon, 303 + +Birtwistle, T., 248 + +Boehm-Bawerk, _Positive Theory of Capital_, 101, 196. + +Booth, Charles, _Labour and Life of the People_, 41; + _Occupations of the People_, 226, 228, 290 + +Bowley, A.L., _England's Foreign Trade_, 174 + +Brassey, _Foreign Work and English Wages_, 265-266 + +Brentano, _Uber die Ursachen der heutigen Not_, 58; + _Hours and Wages in Relation to Production_, 78, 91, 270 + +Burnley, _Wool and Wool-Combing_, 33, 51, 94 + +Business, evolution of the, 10, 35, 40, 88, 92 + + +Cairnes, J.E., _Logical Method of Political Economy_, 8; + _Some Leading Principles of Political Economy_, 211 + +Canada, town population, 331 + +Canals, 25 + +Cannan, E., _Production and Consumption_, 214; + _Decline of Urban Immigration_, 327 (note) + +Capital, meaning of, 5; + fixed, 40; + growing size of, 92-93; + excessive forms of, 170, etc.; + definitions of, 209-215; + concentration of, 117-122 + +Capitalism, 4, 40; + factors in growth of, 73-81, 101 + +Carding, 57 + +Cartwright, 58, 75 + +Census, occupations of the people, 71, 228; + town population, 328; + mortality in towns, 334 + +Chalmers, _Estimate_, 23 + +Chartered companies, 18 + +Child-workers, in domestic industry, 32; + in factory, 297, 307, 319; + legal protection of, 322-323; + child mortality, 337 + +Climate, 73, 109 + +Clothier, 39, 40, etc. + +Collet, 305, 307, 311, 312 + +Competition, 104, 108, 118, 120, etc.; + "unfair," 146 + +Consumption, insufficient quantity, 180, etc; + progressive, 284; quality of, 368 + +Concentration of industry, 38, 101 + +Cooke-Taylor, _The Modern Factory System_, 36, 37, 50, 66, 251-252, 255 + +Corner, 127, 129 + +Cotton, 24, 37, 55, 63, 105; + consumption of, 80; + machinery, 90, 247; + statistics, 228; + spinning labour, 246; + factory legislation, 322 + +Cournot, _Recherches sur les Principes Mathematiques de la Theorie + des Richesses_, 97 + +Crime in towns, 340 + +Crompton, 56 + +Cunningham, _History of English Industry_, 14, 19, 42, 55; + _Uses and Abuses of Money_, 236, 251 + +Custom, in women's industries, 311 + + +Decentralisation, 345 + +Defoe, _Tour_, 25, 28, 32, 33, 38, 40 + +Depression of trade, 171, 206, etc. + +Dilke, Lady, 301 (note) + +Differentiation, 106 + +Diminishing returns, law of, 374 + +Dodd, C.S.T., _Ten Years of the Standard Oil Trust_, 130, 144 + +Domestic industry, 35, 69, 78 + +Dress trades, 293, 294 + +"Driving," 248, 249 + + +Economy of competitive power, 118; + of high wages, 261-286 + +Ellison, T., _History of the Cotton Trade_, 76, 228 + +Europe, growth of towns, 329 + + +Factor, 41 + +Factory, 37, 39, 57; + system, 50, 319, 320; + legislation, 321-323 + +Fairs, 30, 105 + +Foreign trade, in England, 13, 73; + Europe, 20, 106 + +Foxwell, H.S., _The Claims of Labour_, 341 + +Foundational industries, 102 + +France, English trade with, 16; + machine-development, 74; + employments, 233; + town population, 328, 335; + treaty, 63 + +Free trade, 63, 79, 352-354 + + +Gas-tar, 53 + +Geddes, Professor Patrick, _The Evolution of Sex_, 379; + _The Claims of Labour_, 379 + +Germany, 79; + cotton trade in, 77-78, 81; + town population, 329 + +Giffen, R., _Essays in Finance_, 175 + +Gould, 272, 284 + +Gunton, G., _The Economic and Social Aspect of Trusts_, 138, 149, 153; + _Wealth and Progress_, 271, 309 + +Guyot, Yves, _Principles of Social Economy_, 219 + + +Hargreaves, 56 + +Halifax, 31, 33, 41, 301 (note) + +Hearn, _Plutology_, 211 + +Hodge, evidence before House of Lords, 57 + +Holland, trade of, 16, 17, 26; + towns in, 327 + + +Immigration, 19, 326-331 + +India, 108, 270, 280 + +Industrial organism, 11, 20, 105 + +International trade, 14, 75 + +Invention, "heroic" view of, 57; + by small increments, 58-59 + +Iron trade, 23, 28, 72, 84; + growth of, 64-66 + + +James, _History of Worsted Manufacture_, 36 + +Jenks, J.W., 137, 150 + +Jevons, W.S., _Theory of Political Economy_, 185, 209, 373 + +Joint-stock company, 42, 121, 353 + + +Kay, fly-shuttle, 56 + +Keynes, _Scope and Method of Political Economy_, 212 + +King, Gregory, 22, 72 + + +Labour organisations, 152, 317, 357 + +Lancashire, 29, 55, 81, 111, 183, 184, 270, 297, 314 + +Leeds, 31, 41 + +Levasseur, M.S., _La Population Francaise_, 233, 335 + +Levi, Leone, _Work and Pay_, 222 + +Linen manufacture, 24, 63 + +Lloyd, H.D., 153 + +Localisation of industry, 109, 111-115 + +Lombe, 55, 61, 68 + +Longstaff, _Rural Depopulation_, 329; + _Studies in Statistics_, 331 + + +Machinery, place of, in modern industry, 6; + definition of, 45, etc.; + evolution of, 60; + machine-making, 66, 67; + laws of application, 68-70; + relation to trade depression, chap. vii.; + productivity of, 173; + effects on demand for labour, chap. viii.; + effects on character of labour, chap. ix.; + education of, 257; + gain to workers from, 281; + machine-goods, 287; + social control over, 355; + economic limits of, 369; + intellectual, 376 + +Macpherson, _Annals of Commerce_, 12, 13, 20, 23, 32 + +Mackenzie, _Introduction to Social Philosophy_, 349 + +Malthus, _Principles of Political Economy_, 210 + +Market, 10, 96, 99; towns, 30 + +Marsden, _Cotton Spinning_, 297 + +Marshall, _Principles of Economics_, 5 (note), 29, 96, 97, 211, + 221 (note), 236, 245, 251, 254, 259, 337 + +Marx, _Capital_, 45, 46, 66, 244 + +Middleman, 41 + +Mill, J.S., _Principles of Political Economy_, 185, 189-191, 197, + 210, 289 + +Mill, James, _Elements of Political Economy_, 210 + +Money, 7, 97, 98 + +Monopolies, 89, 124, 356; + economic powers of, chap. vi.; + monopoly-prices, 156, etc.; + monopoly wages, 299 + +Morrison, _The Study of Crime_, 340 + +Motor, 45, 66, 67 + +Mulhall, _Dictionary of Statistics_, 251 + + +Navigation, risks of, 14; + acts, 17 + +Newsholm, _Vital Statistics_, 334 + +Nicholson, J.S., _Effects of Machinery on Wages_, 235, 238, 239, 249 + + +Over-consumption, 215-219 + +Over-production, 169, 171; + economic diagnosis of, 176-190 + +Over-crowding, 344 + +Owen, Robert, 263 + + +Parasitic industries, 113 + +Patten, S.N., _Theory of Dynamic Economics_, 104, 251, 373; + _Premises of Political Economy_, 374 + +Physiocrats, 261 + +Playfair, Sir L., 53, 170, 173 + +Population, English, 22, 77; + statistics of, 326-332; + population question, 378 + +Porter, _Progress of the Nation_, 62, 63, 77, 105, 129, 226, 250 + +Portugal, English trade with, 16 + +Potter, _The Co-operative Movement_, 129 + +Power, 38 + +Price, Bonamy, _Practical Political Economy_, 211, 215 + +Prices, fall of, 285; + fluctuations of, 176 + +Protection, 18, 77, 79 + +Publicity in business, 353 + + +Railways, comparative statistics, 82, 139, 140, 112, 174, 231, 232, 347 + +Ravenstein, _Statistical Journal_, 327 + +Retail trade, 114, 115, 229; + multiplication of retailers, 288 + +Ricardo, D., 210 + +Ring-spinning, 127 + +Robertson, J.M., _Fallacy of Saving_, 187 + +Rogers, Thorold, _Political Economy_, 211, 236 + +Ruskin, J., _Unto this Last_, 199 + +Russia, 73, 79, 270 + + +Saving, analysis of, 185-190, 198-201 + +Schoenhof, _Economy of High Wages_, 81, 275 + +Schulze-Gaevernitz, _Der Grossbetrieb_, 24, 29, 54, 55, 70, 76, + 78, 81, 108, 111, 247, 250, 267-270, 276; + _Zum Socialen Frieden_, 91 + +Scrivener, _History of Iron Trade_, 28, 52, 64, 74 + +Secondary industries, 103 + +Shaftoe, 224 + +Sheffield, 29 + +Sherman, R., _The Standard Oil Trust_, 130, 132 + +Shipping, 83, 173, 233 + +Sidgwick, _Principles of Political Economy_, 185, 211 + +Silk trade, 23, 55, 61-63, 238, 240 + +Smart, Dr., _Women's Wages_, 309, 315 + +Smith, Adam, _Wealth of Nations_, 11, 18, 26, 30, 32, 43, 63, + 185, 209, 255, 262, 359, 363 + +Smith, _Memoirs of Wool_, 12, 24, 35, 41, 262 + +Socialism, 356-361; + in relation to competition, 364, 365; + in relation to individualism, 370, etc. + +Specialisation, local, 28, etc., 33, 93 + +Spencer, H., _Principles of Sociology_, 106, 362 + +Spinning, 56, 57; + statistics of, 79, 268, 269; + ring-spinning, 296, 297 + +Spinoza, 378 + +Staffordshire, 29 + +Standard Oil Trust, 131-137, 144 + +_Statistical Abstract_, 90 + +Steam power, 85, 86 + +Supply and demand, 68, 162-166; + applied to invention, 59 + +Sweating 286, 307, 310, 318, 360, 361 + +Sympathy in trades, 104 + +Syndicates, 89, 126, 128 + + +Textiles, protected, 17; + domestic industry, 32, 54, 68, 112; + statistics, 228, 296; + wages, 242, 316; + men and women in, 292, 303 + +Towns, as machine-products, 324, etc.; + growth of town populations, 326-332; + mortality in, 334; + physique in, 336; + intelligence in, 338; + morals in, 339, 340 + +Toynbee, _The Industrial Revolution_, 24, 42, 79 + +Trade unions, 357; + among women, 313, 317 + +Transport, machinery of, 173, 325; + monopolies in, 139, 140; + cheapening of, 347 + +Truck, 152, 346 + +Trust, 126, 141; + definition of, 130, 131; + Standard Oil, 131-137; + conditions of, 139 etc.; + economic power of, chap. vi. + + +Under-consumption, 182, etc. + +Unemployment, 241 + +United States of America, 75, 76, 81, 91, 93, 130, 140, 141, 172, 231, + 269, 274, 275, 296; + colonial policy, 67; + women's wages in, 306 (note), 308, 309; + growth of town life, 330 + +Ure, _History of the Cotton Manufacture_, 36, 37, 55, 63, 64, 77, 79; + _Philosophy of Manufactures_, 258, 262, 263, 274 + + +Wade, _Fibre and Fabric_, 296 + +Wages, "natural," 261; + economy of low, 264, 298; + economy of high, 266-275; + women's, 299, etc. + +Walker, F., _Political Economy_, 211 + +Waste, utilisation of, 52 + +Watch-making, 94, 96, 301 (note) + +Watt, 65, 75 + +Weaving, 32, 56; + power-loom, 63; + survival of hand weaving, 70, 236; + comparative statistics of, 81, 268, 269; + labour in weaving, 248, 276; + women and children in, 297, 300 + +Webb, S., _Economic Journal_, 298, 300 + +Wells, D.A., _Contemporary Review_, 91, 171, 173, 254, 296 + +Women, employment of, 259, 290-321 + +Woollen trade, 23, 26, 34, 54-57, 61, 73; + report of committee on manufacture 39; + statistics for Great Britain, 90 + +Working classes, condition of, 289, 379; + legal protection of, 322, 323 + +Wright, Carroll D., _Report on Industrial Depressions_, 171, 224 + + +Yeats, _The Growth and Vicissitudes of Commerce_, 72, 74; + _The Golden Gates of Trade_, 106, 109 + +Young, Arthur, Tours, 22, 25, 39, 262, 326 + + + + +NEW BOOKS + +IMPORTED BY +_CHARLES SCRIBNER'S SONS_, +NEW YORK CITY. + + +GREAT WRITERS. + +A NEW SERIES OF CRITICAL BIOGRAPHIES OF FAMOUS +WRITERS OF EUROPE AND AMERICA. + +LIBRARY EDITION. + +_Printed on large paper of extra quality, in handsome binding, Demy +8vo, price $1.00 each._ + +ALPHABETICAL LIST. + +_PRESS NOTICES._ + +=Life of Jane Austen. By Goldwin Smith.= + + "Mr. Goldwin Smith has added another to the not inconsiderable + roll of eminent men who have found their delight in Jane + Austen. Certainly a fascinating book."--_Spectator._ + +=Life of Balzac. By Frederick Wedmore.= + + "A finished study, a concentrated summary, a succinct analysis + of Balzac's successes and failures, and the causes of these + successes and failures, and of the scope of his + genius."--_Scottish Leader._ + +=Life of Charlotte Bronte. By A. Birrell.= + + "Those who know much of Charlotte Bronte will learn more, and + those who know nothing about her will find all that is best + worth learning in Mr. Birrell's pleasant book."--_St. James's + Gazette._ + +=Life of Browning. By William Sharp.= + + "This little volume is a model of excellent English, and in + every respect it seems to us what a biography should + be."--_Public Opinion._ + +=Life of Bunyan. By Canon Venables.= + + "A most intelligent, appreciative, and valuable + memoir."--_Scotsman._ + +=Life of Burns. By Professor Blackie.= + + "The editor certainly made a hit when he persuaded Blackie to + write about Burns."--_Pall Mall Gazette._ + +=Life of Byron. By Hon. Roden Noel.= + + "He [Mr. Noel] has at any rate given to the world the most + credible and comprehensible portrait of the poet ever drawn + with pen and ink."--_Manchester Examiner._ + +=Life of Thomas Carlyle. By R. Garnett, LL.D.= + + "This is an admirable book. Nothing could be more felicitous + and fairer than the way in which he takes us through Carlyle's + life and works."--_Pall Mall Gazette._ + +=Life of Cervantes. By H.E. Watts.= + + "Let us rather say that no volume of this series, nor, so far + as we can recollect, of any of the other numerous similar + series, presents the facts of the subject in a more + workmanlike style, or with more exhaustive + knowledge."--_Manchester Guardian._ + +=Life of Coleridge. By Hall Caine.= + + "Brief and vigorous, written throughout with spirit and great + literary skill."--_Scotsman._ + +=Life of Congreve. By Edmund Gosse.= + + "Mr. Gosse has written an admirable and most interesting + biography of a man of letters who is of particular interest to + other men of letters."--_The Academy._ + +=Life of Crabbe. By T.E. Kebbel.= + + "No English poet since Shakespeare has observed certain + aspects of nature and of human life more closely; and in the + qualities of manliness and of sincerity he is surpassed by + none.... Mr. Kebbel's monograph is worthy of the + subject."--_Athenaeum._ + +=Life of Darwin. By G.T. Bettany.= + + "Mr. G.T. Bettany's _Life of Darwin_ is a sound and + conscientious work."--_Saturday Review._ + +=Life of Dickens. By Frank T. Marzials.= + + "Notwithstanding the mass of matter that has been printed + relating to Dickens and his works, ... we should, until we + came across this volume, have been at a loss to recommend any + popular life of England's most popular novelist as being + really satisfactory. The difficulty is removed by Mr. + Marzials' little book."--_Athenaeum._ + +=Life of George Eliot. By Oscar Browning.= + + "We are thankful for this interesting addition to our + knowledge of the great novelist."--_Literary World._ + +=Life of Emerson. By Richard Garnett, LL.D.= + + "As to the larger section of the public, to whom the series of + Great Writers is addressed, no record of Emerson's life and + work could be more desirable, both in breadth of treatment and + lucidity of style, than Dr. Garnett's."--_Saturday Review._ + +=Life of Goethe. By James Sime.= + + "Mr. James Sime's competence as a biographer of Goethe, both + in respect of knowledge of his special subject, and of German + literature generally, is beyond question."--_Manchester + Guardian._ + +=Life of Goldsmith. By Austin Dobson.= + + "The story of his literary and social life in London, with all + its humorous and pathetic vicissitudes, is here retold as none + could tell it better."--_Daily News._ + +=Life of Nathaniel Hawthorne. By Moncure Conway.= + + "Easy and conversational as the tone is throughout, no + important fact is omitted, no useless fact is + recalled."--_Speaker._ + +=Life of Heine. By William Sharp.= + + "This is an admirable monograph, ... more fully written up to + the level of recent knowledge and criticism of its theme than + any other English work."--_Scotsman._ + +=Life of Victor Hugo. By Frank T. Marzials.= + + "Mr. Marzials' volume presents to us, in a more handy form + than any English, or even French, handbook gives, the summary + of what, up to the moment in which we write, is known or + conjectured about the life of the great poet."--_Saturday + Review._ + +=Life of Hunt. By Cosmo Monkhouse.= + + "Mr. Monkhouse has brought together and skilfully set in order + much widely scattered material."--_Athenaeum._ + +=Life of Samuel Johnson. By Colonel F. Grant.= + + "Colonel Grant has performed his task with diligence, sound + judgment, good taste, and accuracy."--_Illustrated London + News._ + +=Life of Keats. By W.M. Rossetti.= + + "Valuable for the ample information which it + contains."--_Cambridge Independent._ + +=Life of Lessing. By T.W. Rolleston.= + + "A picture of Lessing which is vivid and truthful, and has + enough of detail for all ordinary purposes."--_Nation_ (New + York). + +=Life of Longfellow. By Prof. Eric S. Robertson.= + + "A most readable little book."--_Liverpool Mercury._ + +=Life of Marryat. By David Hannay.= + + "What Mr. Hannay had to do--give a craftsman-like account of a + great craftsman who has been almost incomprehensibly + undervalued--could hardly have been done better than in this + little volume."--_Manchester Guardian._ + +=Life of Mill. By W.L. Courtney.= + + "A most sympathetic and discriminating memoir."--_Glasgow + Herald._ + +=Life of Milton. By Richard Garnett, LL.D.= + + "Within equal compass the life-story of the great poet of + Puritanism has never been more charmingly or adequately + told."--_Scottish Leader._ + +=Life of Renan. By Francis Espinasse.= + + "Sufficiently full in details to give us a living picture of + the great scholar, ... and never tiresome or + dull."--_Westminster Review._ + +=Life of Dante Gabriel Rossetti. By J. Knight.= + + "Mr. Knight's picture of the great poet and painter is the + fullest and best yet presented to the public."--_The Graphic._ + +=Life of Schiller. By Henry W. Nevinson.= + + "This is a well-written little volume, which presents the + leading facts of the poet's life in a neatly rounded + picture."--_Scotsman._ + + "Mr. Nevinson has added much to the charm of his book by his + spirited translations, which give excellently both the ring + and sense of the original."--_Manchester Guardian._ + +=Life of Arthur Schopenhauer. By William Wallace.= + + "The series of Great Writers has hardly had a contribution of + more marked and peculiar excellence than the book which the + Whyte Professor of Moral Philosophy at Oxford has written for + it on the attractive and still (in England) little-known + subject of Schopenhauer."--_Manchester Guardian._ + +=Life of Scott. By Professor Yonge.= + + "For readers and lovers of the poems and novels of Sir Walter + Scott this is a most enjoyable book."--_Aberdeen Free Press._ + +=Life of Shelley. By William Sharp.= + + "The criticisms ... entitle this capital monograph to be + ranked with the best biographies of Shelley."--_Westminster + Review._ + +=Life of Sheridan. By Lloyd Sanders.= + + "To say that Mr. Lloyd Sanders, in this volume, has produced + the best existing memoir of Sheridan is really to award much + fainter praise than the book deserves."--_Manchester + Guardian._ + + "Rapid and workmanlike in style, the author has evidently a + good practical knowledge of the stage of Sheridan's + day."--_Saturday Review._ + +=Life of Adam Smith. By R.B. Haldane, M.P.= + + "Written with a perspicuity seldom exemplified when dealing + with economic science."--_Scotsman._ + + "Mr. Haldane's handling of his subject impresses us as that of + a man who well understands his theme, and who knows how to + elucidate it."-_Scottish Leader._ + + "A beginner in political economy might easily do worse than + take Mr. Haldane's book as his first text-book."--_Graphic._ + +=Life of Smollett. By David Hannay.= + + "A capital record of a writer who still remains one of the + great masters of the English novel."--_Saturday Review._ + + "Mr. Hannay is excellently equipped for writing the life of + Smollett. As a specialist on the history of the eighteenth + century navy, he is at a great advantage in handling works so + full of the sea and sailors as Smollett's three principal + novels. Moreover, he has a complete acquaintance with the + Spanish romancers, from whom Smollet drew so much of his + inspiration. His criticism is generally acute and + discriminating; and his narrative is well arranged, compact, + and accurate."--_St. James's Gazette._ + +=Life of Thackeray. By Herman Merivale and Frank T. Marzials.= + + "The book, with its excellent bibliography, is one which + neither the student nor the general reader can well afford to + miss."--_Pall Mall Gazette._ + + "The last book published by Messrs. Merivale and Marzials is + full of very real and true things."--Mrs. ANNE THACKERAY + RITCHIE on "Thackeray and his Biographers," in _Illustrated + London News._ + +=Life of Thoreau. By H.S. Salt.= + + "Mr. Salt's volume ought to do much towards widening the + knowledge and appreciation in England of one of the most + original men ever produced by the United + States."--_Illustrated London News._ + +=Life of Voltaire. By Francis Espinasse.= + + "Up to date, accurate, impartial, and bright without any trace + of affectation."--_Academy._ + +=Life of Whittier. By W.J. Linton.= + + "Mr. Linton is a sympathetic and yet judicious critic of + Whittier."--_World._ + + Complete Bibliography to each volume, by J.P. ANDERSON, + British Museum, London. + + "_An excellent series._"--TELEGRAPH. + + "_Excellently translated, beautifully bound, and elegantly + printed._"--LIVERPOOL MERCURY. + + "_Notable for the high standard of taste and excellent + judgment that characterise their editing, as well as for the + brilliancy of the literature that they contain._"--BOSTON + GAZETTE, U.S.A. + + +Library of Humour. + +_Cloth Elegant, Large 12mo, Price $1.25 per vol._ + +_VOLUMES ALREADY ISSUED._ + +=The Humour of France.= Translated, with an Introduction and Notes, by +ELIZABETH LEE. With numerous Illustrations by PAUL FRENZENY. + + "From Villon to Paul Verlaine, from dateless _fabliaux_ to + newspapers fresh from the kiosk, we have a tremendous range of + selections."--_Birmingham Daily Gazette._ + + "French wit is excellently represented. We have here examples + of Villon, Rabelais, and Moliere, but we have specimens also + of La Rochefoucauld, Regnard, Voltaire, Beaumarchais, + Chamfort, Dumas, Gautier, Labiche, De Banville, Pailleron, and + many others.... The book sparkles from beginning to + end."--_Globe._ + +=The Humour of Germany.= Translated, with an Introduction and Notes, +by HANS MUeLLER-CASENOV. With numerous Illustrations by C.E. BROCK. + + "An excellently representative volume."--_Daily Telegraph._ + + "Whether it is Saxon kinship or the fine qualities of the + collection, we have found this volume the most entertaining of + the three. Its riotous absurdities well overbalance its + examples of the oppressively heavy.... The national impulse to + make fun of the war correspondent has a capital example in the + skit from Julius Stettenheim."--_New York Independent._ + +=The Humour of Italy.= Translated, with an Introduction and Notes, by +A. WERNER. With 50 Illustrations and a Frontispiece by ARTURO FALDI. + + "Will reveal to English readers a whole new world of + literature."--_Athenaeum._ + + "Apart from selections of writers of classical reputation, the + book contains some delightful modern short stories and + sketches. We may particularly mention those by Verga, Capuana, + De Amicis.... Excellent also are one or two of the jokes and + 'bulls' which figure under the heading of newspaper + humour."--_Literary World._ + + +=The Humour of America.= Selected, with a copious Biographical Index +of American Humorists, by JAMES BARR. + + "There is not a dull page in the volume; it fairly sparkles + and ripples with good things."--_Manchester Examiner._ + +=The Humour of Holland.= Translated, with an Introduction and Notes, +by A. WERNER. With numerous Illustrations by DUDLEY HARDY. + + "Apart from the quality of humour, one is much struck by the + evidence that in Holland during the present day there is a + genial literature, of which we have known nothing at all. The + pictures, just on the verge of caricature mostly, are very + well drawn."--_The Bookman._ + +=The Humour of Ireland.= Selected by D.J. O'DONOGHUE. With numerous +Illustrations by OLIVER PAQUE. + + "A most conscientiously, exhaustively, excellently compiled + book; the editor could not have done his work better."--_The + Speaker._ + + "Does all that such a volume possibly could do for the + magnificent genius with which it grapples."--_Chronicle._ + +=The Humour of Spain.= Translated, with an Introduction and Notes, by +SUSETTE M. TAYLOR. With numerous Illustrations by H.R. MILLAR. + + "Mirth and entertainment are in the book entitled the Humour + of Spain, as well as many quaint and unexpected side-lights on + the social characteristics of an impressionable race. Miss + Taylor displays a wide acquaintance with Spanish literature + and contemporary life, and as her judgment as well as her + knowledge is considerable, the result is a charming + book."--_The Speaker._ + + "The impression of the whole book is a good one, and it is + admirably got up, and illustrated with great spirit. It should + be very largely read."--_Daily Chronicle._ + +=The Humour of Russia.= Translated, with Notes, by E.L. BOOLE, and an +Introduction by STEPNIAK. With 50 Illustrations by PAUL FRENZENY. + + "This is one of the most entertaining of the 'International + Humour' Series, since it comprises some really exquisite + examples of humour, such as Gogol's diverting little comedy, + 'Marriage,' and Ostrovsky's delightful sketch, + 'Incompatibility of Temper.'"--_Saturday Review._ + + +The Makers of British Art. + +A Series of Illustrated Monographs + +Edited by + +James A. Manson. + +Illustrated with Photogravure Portraits; Half-tone and Line +Reproductions of the Best Pictures. + +_Square Crown 8vo, Cloth, $1.25 net._ + +Nothing in the social history of the later Victorian era was more +remarkable than the growth of popular interest in Art. Doubtless this +was largely due to the spread of education, which has not only +disseminated knowledge, but also improved public taste. Nevertheless +much of the credit must be ascribed to the influence exerted by the +many Exhibitions, local as well as international, which have been held +since the inaugural Show in London in 1851. + +Extraordinary as was the development referred to, the most hopeful +sign is that it has proved to be no mere passing symptom but has +become a permanent feature of civic life. This new-birth has been +fostered by municipal and private munificence alike. The leading +corporations, such as those of the City of London, Liverpool, +Manchester, Birmingham, Newcastle, Bristol, Leeds, Sheffield, and +Nottingham in England; of Edinburgh, Glasgow, Aberdeen, and Dundee in +Scotland; of Sydney, Melbourne, and Adelaide in the Australian +Commonwealth; of New York, Boston, Philadelphia, and Chicago in the +United States, vie with each other in honourable rivalry for the +acquisition of the greatest examples of old and modern masters. + +In these circumstances it would be surprising if an irresistible +popular demand had not grown up for information, of both a +biographical and critical character, respecting the famous painters +whose work has been so generally admired and whose names have become +household words. In the case of the Old Masters this want has already +been met, but no really satisfying series exists dealing _avowedly_ +with the most typical painters of the British School. + +The Walter Scott Publishing Company, Limited, have accordingly made +arrangements for the publication of a series of volumes bearing the +title-- + +=Makers of British Art.= + +Each book will be produced in the highest style of typographical +excellence, and be illustrated with several of the choicest and most +characteristic specimens of the artist's skill. The aim of the writers +will be to narrate the life-history of the various painters in graphic +and popular language, keeping the human interest of the subject well +to the front, as well as to appreciate the men and their works. Whilst +the appeal must be made to the great body of the art-loving public, +the volumes will be commended to the student by Appendices giving in +chronological order a list of the chief examples of each painter, +together with such other relevant matter as will tend to make the +series of lasting value both for the library and as works of +reference. + +_VOLUMES READY._ + +=LANDSEER=, SIR EDWIN. By the EDITOR. + +=REYNOLDS=, SIR JOSHUA. By ELSA D'ESTERRE-KEELING. + +=TURNER=, J.M.W. By ROBERT CHIGNELL, Author of "The Life and Paintings +of Vicat Cole, R.A." + +=ROMNEY=, GEORGE. By Sir HERBERT MAXWELL, BART., F.R.S., M.P. + +_IN PREPARATION._ + +=CONSTABLE=, JOHN. By the RIGHT HONOURABLE LORD WINDSOR. + +=MILLAIS=, SIR JOHN EVERETT. By J. EADIE REID, Author of "The Schools +and Methods of Christian Art." + +=WILKIE=, SIR DAVID. By PROFESSOR BAYNE. + + +_Red Cloth, Pocket Size, Price 50 Cents._ + +NEW IDEAS ON BRIDGE. + +BY ARCHIBALD DUNN, JUN. + +The universal reception given to _Bridge, and How to Play it_, is a +sufficient proof of Mr. Archibald Dunn's fitness to give us further +views on this increasingly popular and exciting game. In this volume +the author deals with the many points of contention at present +agitating the minds of Bridge players. In particular, he advances a +novel theory as to "Declarations" and "Doubling," which is not +unlikely to revolutionise existing methods, and to result in placing +these two difficulties of the game on a thoroughly sound and solid +basis. + +CONTENTS:--Common-sense in Bridge Declarations--Science of Bridge +Declarations--Doubling and Re-doubling--Some Points of the +Game--Bridge _v_. Whist--Chaos of Bridge--Great Imperfection of +Bridge. + + + + +The Contemporary Science Series. + +Edited by Havelock Ellis. + +_12mo. Cloth. Price $1.50 per Volume._ + +I. THE EVOLUTION OF SEX. By Prof. PATRICK GEDDES and J.A. THOMSON. +With 90 Illustrations. Second Edition. + + "The authors have brought to the task--as indeed their names + guarantee--a wealth of knowledge, a lucid and attractive + method of treatment, and a rich vein of picturesque + language."--_Nature._ + +II. ELECTRICITY IN MODERN LIFE. By G.W. DE TUNZELMANN. With 88 +Illustrations. + + "A clearly written and connected sketch of what is known about + electricity and magnetism, the more prominent modern + applications, and the principles on which they are + based."--_Saturday Review._ + +III. THE ORIGIN OF THE ARYANS. By Dr. ISAAC TAYLOR. Illustrated. +Second Edition. + + "Canon Taylor is probably the most encyclopaedic all-round + scholar now living. His new volume on the _Origin of the + Aryans_ is a first-rate example of the excellent account to + which he can turn his exceptionally wide and varied + information.... Masterly and exhaustive."--_Pall Mall + Gazette._ + +IV. PHYSIOGNOMY AND EXPRESSION. By P. MANTEGAZZA. Illustrated. + + "Brings this highly interesting subject even with the latest + researches.... Professor Mantegazza is a writer full of life + and spirit, and the natural attractiveness of his subject is + not destroyed by his scientific handling of it."--_Literary + World_ (Boston). + +V. EVOLUTION AND DISEASE. By J.B. SUTTON, F.R.C.S. With 135 +Illustrations. + + "The book is as interesting as a novel, without sacrifice of + accuracy or system, and is calculated to give an appreciation + of the fundamentals of pathology to the lay reader, while + forming a useful collection of illustrations of disease for + medical reference."--_Journal of Mental Science._ + +VI. THE VILLAGE COMMUNITY. By G.L. GOMME. Illustrated. + + "His book will probably remain for some time the best work of + reference for facts bearing on those traces of the village + community which have not been effaced by conquest, + encroachment, and the heavy hand of Roman law."--_Scottish + Leader._ + +VII. THE CRIMINAL. By HAVELOCK ELLIS. Illustrated. Second Edition. + + "The sociologist, the philosopher, the philanthropist, the + novelist--all, indeed, for whom the study of human nature has + any attraction--will find Mr. Ellis full of interest and + suggestiveness."--_Academy._ + +VIII. SANITY AND INSANITY. By Dr. CHARLES MERCIER. Illustrated. + + "Taken as a whole, it is the brightest book on the physical + side of mental science published in our time."--_Pall Mall + Gazette._ + +IX. HYPNOTISM. By Dr. ALBERT MOLL. Fourth Edition. + + "Marks a step of some importance in the study of some + difficult physiological and psychological problems which have + not yet received much attention in the scientific world of + England."--_Nature._ + +X. MANUAL TRAINING. By Dr. C.M. WOODWARD, Director of the Manual +Training School, St. Louis. Illustrated. + + "There is no greater authority on the subject than Professor + Woodward."--_Manchester Guardian._ + +XI. THE SCIENCE OF FAIRY TALES. By E. SIDNEY HARTLAND. + + "Mr. Hartland's book will win the sympathy of all earnest + students, both by the knowledge it displays, and by a thorough + love and appreciation of his subject, which is evident + throughout."--_Spectator._ + +XII. PRIMITIVE FOLK. By ELIE RECLUS. + + "An attractive and useful introduction to the study of some + aspects of ethnography."--_Nature._ + +XIII. THE EVOLUTION OF MARRIAGE. By Professor LETOURNEAU. + + "Among the distinguished French students of sociology, + Professor Letourneau has long stood in the first rank. He + approaches the great study of man free from bias and shy of + generalisations. To collect, scrutinise, and appraise facts is + his chief business. In the volume before us he shows these + qualities in an admirable degree."--_Science._ + +XIV. BACTERIA AND THEIR PRODUCTS. By Dr. G. SIMS WOODHEAD. +Illustrated. Second Edition. + + "An excellent summary of the present state of knowledge of the + subject."--_Lancet._ + +XV. EDUCATION AND HEREDITY. By J.M. GUYAU. + + "It is at once a treatise on sociology, ethics, and + pedagogics. It is doubtful whether, among all the ardent + evolutionists who have had their say on the moral and the + educational question, any one has carried forward the new + doctrine so boldly to its extreme logical + consequence."--Professor SULLY in _Mind_. + +XVI. THE MAN OF GENIUS. By Prof. LOMBROSO. Illustrated. + + "By far the most comprehensive and fascinating collection of + facts and generalisations concerning genius which has yet been + brought together."--_Journal of Mental Science._ + +XVII. THE HISTORY OF THE EUROPEAN FAUNA. By R.F. SCHARFF, B.Sc, Ph.D., +F.Z.S. Illustrated. + +XVIII. PROPERTY: ITS ORIGIN AND DEVELOPMENT. By CH. LETOURNEAU, +General Secretary to the Anthropological Society, Paris, and Professor +in the School of Anthropology, Paris. + + "M. Letourneau has read a great deal, and he seems to us to + have selected and interpreted his facts with considerable + judgment and learning."--_Westminster Review._ + +XIX. VOLCANOES, PAST AND PRESENT. By Prof. EDWARD HULL, LL.D., F.R.S. + + "A very readable account of the phenomena of volcanoes and + earthquakes."--_Nature._ + +XX. PUBLIC HEALTH. By Dr. J.F.J. SYKES. With numerous Illustrations. + + "Not by any means a mere compilation or a dry record of + details and statistics, but it takes up essential points in + evolution, environment, prophylaxis, and sanitation bearing + upon the preservation of public health."--_Lancet._ + +XXI. MODERN METEOROLOGY. AN ACCOUNT OF THE GROWTH AND PRESENT +CONDITION OF SOME BRANCHES OF METEOROLOGICAL SCIENCE. By FRANK WALDO, +Ph.D., Member of the German and Austrian Meteorological Societies, +etc.; late Junior Professor, Signal Service, U.S.A. With 112 +Illustrations. + + "The present volume is the best on the subject for general use + that we have seen."--_Daily Telegraph_ (London). + +XXII. THE GERM-PLASM: A THEORY OF HEREDITY. By AUGUST WEISMANN, +Professor in the University of Freiburg-in-Breisgau. With 24 +Illustrations. $2.50. + + "There has been no work published since Darwin's own books + which has so thoroughly handled the matter treated by him, or + has done so much to place in order and clearness the immense + complexity of the factors of heredity, or, lastly, has brought + to light so many new facts and considerations bearing on the + subject."--_British Medical Journal._ + +XXIII. INDUSTRIES OF ANIMALS. By E.F. HOUSSAY. With numerous +Illustrations. + + "His accuracy is undoubted, yet his facts out-marvel all + romance. These facts are here made use of as materials + wherewith to form the mighty fabric of + evolution."--_Manchester Guardian._ + +XXIV. MAN AND WOMAN. By HAVELOCK ELLIS. Illustrated. Second Edition. + + "Mr. Havelock Ellis belongs, in some measure, to the + continental school of anthropologists; but while equally + methodical in the collection of facts, he is far more cautious + in the invention of theories, and he has the further + distinction of being not only able to think, but able to + write. His book is a sane and impartial consideration, from a + psychological and anthropological point of view, of a subject + which is certainly of primary interest."-_Athenaeum._ + +XXV. THE EVOLUTION OF MODERN CAPITALISM. By JOHN A. HOBSON, M.A. + + "Every page affords evidence of wide and minute study, a + weighing of facts as conscientious as it is acute, a keen + sense of the importance of certain points as to which + economists of all schools have hitherto been confused and + careless, and an impartiality generally so great as to give no + indication of his [Mr. Hobson's] personal sympathies."--_Pall + Mall Gazette._ + +XXVI. APPARITIONS AND THOUGHT-TRANSFERENCE. By FRANK PODMORE, M.A. + + "A very sober and interesting little book.... That + thought-transference is a real thing, though not perhaps a + very common thing, he certainly shows."--_Spectator._ + +XXVII. AN INTRODUCTION TO COMPARATIVE PSYCHOLOGY. By Professor C. +LLOYD MORGAN. With Diagrams. + + "A strong and complete exposition of Psychology, as it takes + shape in a mind previously informed with biological + science.... Well written, extremely entertaining, and + intrinsically valuable."--_Saturday Review._ + +XXVIII. THE ORIGINS OF INVENTION: A STUDY OF INDUSTRY AMONG PRIMITIVE +PEOPLES. By OTIS T. MASON, Curator of the Department of Ethnology in +the United States National Museum. + + "A valuable history of the development of the inventive + faculty."--_Nature._ + +XXIX. THE GROWTH OF THE BRAIN: A STUDY OF THE NERVOUS SYSTEM IN +RELATION TO EDUCATION. By HENRY HERBERT DONALDSON, Professor of +Neurology in the University of Chicago. + + "We can say with confidence that Professor Donaldson has + executed his work with much care, judgment, and + discrimination."--_The Lancet._ + +XXX. EVOLUTION IN ART: AS ILLUSTRATED BY THE LIFE-HISTORIES OF +DESIGNS. By Professor ALFRED C. HADDON. With 130 Illustrations. + + "It is impossible to speak too highly of this most unassuming + and invaluable book."--_Journal of Anthropological Institute._ + +XXXI. THE PSYCHOLOGY OF THE EMOTIONS. By TH. RIBOT, Professor at the +College of France, Editor of the _Revue Philosophique_. + + "Professor Ribot's treatment is careful, modern, and + adequate."--_Academy._ + +XXXII. HALLUCINATIONS AND ILLUSIONS: A STUDY OF THE FALLACIES OF +PERCEPTION. By EDMUND PARISH. + + "This remarkable little volume."--_Daily News._ + +XXXIII. THE NEW PSYCHOLOGY. By E.W. SCRIPTURE, Ph.D. (Leipzig). With +124 Illustrations. + +XXXIV. SLEEP: ITS PHYSIOLOGY, PATHOLOGY, HYGIENE, AND PSYCHOLOGY. BY +MARIE DE MANACEINE (St. Petersburg). Illustrated. + +XXXV. THE NATURAL HISTORY OF DIGESTION. By A. LOCKHART GILLESPIE, +M.D., F.R.C.P. ED., F.R.S. ED. With a large number of Illustrations +and Diagrams. + + "Dr. Gillespie's work is one that has been greatly needed. No + comprehensive collation of this kind exists in recent English + Literature."--_American Journal of the Medical Sciences._ + +XXXVI. DEGENERACY: ITS CAUSES, SIGNS, AND RESULTS. By Professor EUGENE +S. TALBOT, M.D., Chicago. With Illustrations. + + "The author is bold, original, and suggestive, and his work is + a contribution of real and indeed great value, more so on the + whole than anything that has yet appeared in this + country."--_American Journal of Psychology._ + +XXXVII. THE RACES OF MAN: A SKETCH OF ETHNOGRAPHY AND ANTHROPOLOGY. By +J. DENIKER. With 178 Illustrations. + + "Dr. Deniker has achieved a success which is well-nigh + phenomenal."--_British Medical Journal._ + +XXXVIII. THE PSYCHOLOGY OF RELIGION. AN EMPIRICAL STUDY OF THE GROWTH +OF RELIGIOUS CONSCIOUSNESS. By EDWIN DILLER STARBUCK Ph.D., Assistant +Professor of Education, Leland Stanford Junior University. + + "No one interested in the study of religious life and + experience can afford to neglect this volume."--_Morning + Herald._ + +XXXIX. THE CHILD: A STUDY IN THE EVOLUTION OF MAN. By Dr. ALEXANDER +FRANCIS CHAMBERLAIN, M.A., Ph.D., Lecturer on Anthropology in Clark +University, Worcester (Mass.). With Illustrations. + + "The work contains much curious information, and should be + studied by those who have to do with children."--_Sheffield + Daily Telegraph._ + +XL. THE MEDITERRANEAN RACE. By Professor SERGI. With over 100 +Illustrations. + + "M. Sergi has given us a lucid and complete exposition of his + views on a subject of supreme interest."--_Irish Times._ + +XLI. THE STUDY OF RELIGION. By MORRIS JASTROW, Jun., Ph.D., Professor +in the University of Pennsylvania. + + "This work presents a careful survey of the subject, and forms + an admirable introduction to any particular branch of + it."--_Methodist Times._ + +XLII. HISTORY OF GEOLOGY AND PALAEONTOLOGY TO THE END OF THE NINETEENTH +CENTURY. By KARL VON ZITTEL. + + "It is a very masterly treatise, written with a wide grasp of + recent discoveries."--_Publishers' Circular._ + +XLIII. THE MAKING OF CITIZENS: A STUDY IN COMPARATIVE EDUCATION. By +R.E. HUGHES, M.A. (Oxon.), B.Sc. (Lond.). + + + + +IBSEN'S DRAMAS. + +Edited by William Archer. + +12mo, CLOTH, PRICE $1.25 PER VOLUME. + + +"_We seem at last to be shown men and women as they are; and at first +it is more than we can endure.... All Ibsen's characters speak and act +as if they were hypnotised, and under their creator's imperious demand +to reveal themselves. There never was such a mirror held up to nature +before: it is too terrible.... Yet we must return to Ibsen, with his +remorseless surgery, his remorseless electric-light, until we, too, +have grown strong and learned to face the naked--if necessary, the +flayed and bleeding--reality._"--SPEAKER (London). + + VOL. I. "A DOLL'S HOUSE," "THE LEAGUE OF YOUTH," and "THE + PILLARS OF SOCIETY." With Portrait of the Author, and + Biographical Introduction by WILLIAM ARCHER. + + VOL. II. "GHOSTS," "AN ENEMY OF THE PEOPLE," and "THE WILD + DUCK." With an Introductory Note. + + VOL. III. "LADY INGER OF OeSTRAT," "THE VIKINGS AT HELGELAND," + "THE PRETENDERS." With an Introductory Note and Portrait of + Ibsen. + + VOL. IV. "EMPEROR AND GALILEAN." With an Introductory Note by + WILLIAM ARCHER. + + VOL. V. "ROSMERSHOLM," "THE LADY FROM THE SEA," "HEDDA GABLER." + Translated by WILLIAM ARCHER. With an Introductory Note. + + VOL. VI. "PEER GYNT: A DRAMATIC POEM." Authorised Translation by + WILLIAM and CHARLES ARCHER. + +The sequence of the plays _in each volume_ is chronological; the +complete set of volumes comprising the dramas thus presents them in +chronological order. + +"The art of prose translation does not perhaps enjoy a very high +literary status in England, but we have no hesitation in numbering the +present version of Ibsen, so far as it has gone (Vols. I. and II.), +among the very best achievements, in that kind, of our +generation."--_Academy._ + +"We have seldom, if ever, met with a translation so absolutely +idiomatic."--_Glasgow Herald._ + + +New York: CHARLES SCRIBNER'S SONS. + + + * * * * * + + +-----------------------------------------------------------+ + | Typographical errors corrected in text: | + | | + | Page 24: (footnote 20) "Memoirs on Wool" replaced with | + | "Memoirs of Wool" | + | Page 63: "Philosophy of Manufacture" replaced with | + | "Philosophy of Manufactures" | + | Page 238: mahcine-made replaced with machine-made | + | Page 250: "Progress of the Nations" replaced with | + | "Progress of the Nation" | + | Page 249: "Philosophy of Manufacture" replaced with | + | "Philosophy of Manufactures" | + | Page 262: "Memoirs on Wool" replaced with | + | "Memoirs of Wool" | + | Page 262: "Philosophy of Manufacture" replaced with | + | "Philosophy of Manufactures" | + | Page 263: "Philosophy of Manufacture" replaced with | + | "Philosophy of Manufactures" | + | Page 274: "Philosophy of Manufacture" replaced with | + | "Philosophy of Manufactures" | + | Page 388: "Philosophy of Manufacture" replaced with | + | "Philosophy of Manufactures" | + | | + +-----------------------------------------------------------+ + + * * * * * + + + + + + +End of the Project Gutenberg EBook of The Evolution of Modern Capitalism, by +John Atkinson Hobson + +*** END OF THIS PROJECT GUTENBERG EBOOK THE EVOLUTION OF MODERN CAPITALISM *** + +***** This file should be named 28284.txt or 28284.zip ***** +This and all associated files of various formats will be found in: + http://www.gutenberg.org/2/8/2/8/28284/ + +Produced by Jeannie Howse, Peter Vachuska, David Edwards +and the Online Distributed Proofreading Team at +http://www.pgdp.net + + +Updated editions will replace the previous one--the old editions +will be renamed. + +Creating the works from public domain print editions means that no +one owns a United States copyright in these works, so the Foundation +(and you!) can copy and distribute it in the United States without +permission and without paying copyright royalties. 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