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Title: Business Administration - Theory, Practice and Application
Author: Various
Language: English
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      *      *      *      *      *      *


  Business Economics.
  Business Organization and Management.
  Advertising and Salesmanship.
  Trade and Commerce.
  Money, Banking and Insurance.
  Investments and Speculation.
  Auditing and Cost Accounting.
  Business Law and Legal Forms.

      *      *      *      *      *      *


Theory, Practice and Application



General Manager, The Chicago Association of Commerce,
Author, “Men Who Sell Things.”

Managing Editor


Editorial and Educational Director,
La Salle Extension University

This work is especially designed to meet the practical every-day
needs of the active business man, and contains the fundamental and
basic principles upon which a successful business is founded,
conducted and maintained. To those looking forward to a business
career, this work forms the basis for a practical and systematic
course in “Business Administration”

Published by
La Salle Extension University

Copyright, 1910,
Lasalle Extension University.


Associate Professor of Economics, University of Illinois, and Author
of Economic History of the United States; Hon. O. P. Austin, Chief of
Bureau of Statistics, Department of Commerce and Labor; and John
Bascom, D. D., LL. D., former President University of Wisconsin. It is
supplemented by the writings of recognized experts in the production,
preservation and distribution of wealth. The treatment is modern,
popular and authoritative. The volume contains many timely and
practical suggestions which can be applied with profit to any
business. It is also arranged to serve as a quick reference work, and
includes a complete table of contents, a comprehensive index and test




General Manager, The Chicago Association of Commerce.

Author of “Men Who Sell Things.”

“_The recipe for perpetual ignorance is: Be satisfied with your own
opinion and content with your knowledge._”

[Sidenote: Business a contest of wits]

This is an era of the greatest commercial activity the world has ever
known. The development of business is one of the marvels of the new
century. A few years ago science, as a factor in commerce, was little
known and less appreciated. The amazing advantages to business of
intellectual attainments were utterly without recognition. Today,
however, business has become a contest in which the quickest
perception wins, thus transforming the counting room into a battle
ground upon which brain matches brain for supremacy and success.

[Sidenote: Success-educated enthusiasm]

Ah, that enchanting word, S-U-C-C-E-S-S. It does not require a magic
key to unlock the door to business efficiency. There is nothing
mystic, nothing mysterious in the applied method of the really
resourceful men in this day of great successes, of marvelous
achievements in business enterprise. The sum total is contained in two
words, words that electrify, nevertheless. EDUCATED ENTHUSIASM.

[Sidenote: Changing conditions make opportunities]

The most formidable barrier to progress has always been the senseless
opposition of those to whom it would be of the greatest benefit.
Changing conditions are the order of the day, for enlightenment has
worked wonders. In olden times, a man of affairs was obliged to guard
his property and his loved ones by building a moat around his house
and posting sentinels in and around his estate. The time is not long
past when, because of prejudice, perversity or ignorance, many men
believed that opportunity knocked only once at any man’s door. Today,
thanks to deeper insight, most men believe that life itself is
opportunity; that the very air we breathe is opportunity; that each
new day presents broader opportunities for accomplishing more because
of better directed energy. This is not alone the accepted dogma of the
man who is making his way in the world. It is the creed, doctrine,
tenet or religion, whichever you may care to term it, of the great
captains of industry everywhere.

[Sidenote: New ideas count]

The more successful the man, the more does he think, study, plan, as a
part of his daily occupation in the development of the affairs in
which he is interested. Newer and better ways to get things done is
the business standard employed today by successful men in all lines.
Only yesterday if a man of genius advanced a new idea, he found
himself ridiculed and his innovation opposed on all sides because it
was a new idea. Today, it is different. The man of ideas counts in the
trend of affairs as he has never counted before.

[Sidenote: Must keep step with changing times]

Everything has a subjective reason. Progress is acting as a mighty
dynamic force in changing men’s viewpoint of life and things. Suppose
the stroke oar on a varsity crew, while in a race against an opposing
crew from a competitive institution, should suddenly stop rowing in
harmony with his associates and begin to row backwards-that crew
would not get very far without trouble. Suppose a lawn mower should be
reversed and forced to run backwards--there would not be much progress
made in cutting grass on that lawn. Varsity crews and lawn mowers must
move forward. Business men must advance with the times.

A great merchant in Chicago tells a good story of his youth. He was a
member of a state regiment of militia. On a certain occasion, his
company was sent out on dress parade. An old maiden aunt, with
considerable colonial blood in her veins, took much pride in her
nephew and his company. While reviewing the parade, she was suddenly
heard to exclaim: “Why, every single man in that company is out of
step excepting my nephew.” Most men who fail to get on in the world do
not realize that success lies in keeping step--in making progress with
changing conditions. They generally make the mistake of thinking that
the world and everything in it is out of harmony with themselves.

[Sidenote: New ideas worth searching for]

A business man of successful experience realizes that ideas--newer and
better principles of conducting business--are of the greatest value,
and he also knows that it pays him to search for them. The same old
way of doing things cannot longer be successfully employed month after
month and year after year as under the old regime. The business man
must be modern, up-to-date. The physician or lawyer finds that to
compete successfully he is compelled to search without ceasing in
order that he may comprehend the advancement in treatments or
procedures. “To the man who fails belong the excuses.”

[Sidenote: Demand for trained men]

President James, of the University of Illinois, was asked if there was
any demand from business houses for college-bred men. His reply was:
“The demand has been far in excess of the supply since courses in
business administration were established in our institution seven
years ago. Each year has brought many more requests than we have men
to recommend.” Ten years ago President James would have been ridiculed
for advancing this new idea for the establishment of a school of
commerce in connection with a university. Today, commercial schools
are a part of the regularly established courses of nearly all of the
great universities of our country. Men trained in the theory, practice
and administration of business will always occupy the best positions
and will always command the greatest salaries.

[Sidenote: Value of new ideas in business emergencies]

All men fail at times in the accomplishment of satisfactory results in
the various enterprises in which they are engaged, without being able
to give an explanation. The principles that have been applied
successfully for many years seem apparently to have counted for
nothing. It is frequently evident that in such cases a very
insignificant thing, a mere oversight perchance, has been the direct
cause of the failure. To be able to put the finger on the precise
cause of the lack of success in one’s method would locate the cause of
the disaster. Then it is that a real appreciation of new ideas is
fully realized.

[Sidenote: Men paid for what they know--not for what they do]

Failure is more often chargeable to a refusal to learn by mistakes how
to avoid them than it is in making them. Experience is a good teacher,
but who can deny the value to be gained in learning from the
experience of others, for we cannot all have the same experience or
the same view of similar experiences. There are many pathways to
success, but the road of individual experience is narrow and rugged.
It is a commonly accepted fact that for every ten dollars a
high-salaried man draws, he receives nine dollars for what he knows
and one dollar for what he does. On the same basis the successful
business man, employing a large force of other men, realizes that his
own greatest worth, as applied to his affairs, lies not so much in
what he can do himself as how much he can encourage his employes to
do. In either case, his own personal knowledge is the power behind the

[Sidenote: Knowledge in excess of present needs necessary]

The man who would secure the largest net return from his individual
effort in the field of endeavor, and he who would realize the greatest
possible advantage from the efforts of those under his command must,
of necessity, possess knowledge--indispensable perception far in
excess of the needs of the moment. Discernment, like a bank account,
soon runs out if it is overdrawn or if it is not continually
replenished. In business the “checking system” of knowledge is the
sort of account that pays best--not the “savings account system.”
Knowledge that is simply corked up and allowed to accumulate cobwebs
and rust can avail nothing. The sharpest vinegar is procured by
constantly replenishing the old stock with new.

[Sidenote: 90% failures vs. 10% moneymakers]

Reliable statistics prove that only about ten per cent of all people
who engage in business are successful and make money; the other ninety
per cent become insolvent and fail. That is, they do not actually
encounter the sheriff, or go into the hands of a receiver, but they
fail nevertheless to succeed in the sense of making money, and what
other possible reason can anyone have for engaging in business if not
to accumulate money?

[Sidenote: Failures due to lack of intellectual capacity]

Why do so many fail? Ask any credit man and he will tell you that it
is not because of the lack of capital, or other material resources,
but it is due primarily to a lack of intellectual capacity, the sort
of brains that dig and work and sweat until they find a way to
accomplish things; brains that go to the bottom of things; brains that
are always looking for better results; brains that never abandon a
problem until they have found a way to solve it. A friend once told me
that he inquired of the manager of a house employing some three
hundred traveling men how many salesmen they had. The manager replied,
“Three.” My friend asked, “How’s that? I am told your force of
traveling men numbers nearly three hundred.” “Ah, that is quite
different,” replied the manager; “we have two hundred and ninety-seven
traveling men, but only three salesmen.” Quite likely that manager’s
estimate was intended to be taken figuratively rather than literally,
but it serves to illustrate the fact that in this great United States
there are millions of men, young, middle-aged and old, who are content
to plod along in a mediocre sort of way, heedless or unmindful of the
fact that opportunity, knowledge, possibilities, are calling, calling,
calling to them to come up higher. There are hundreds of thousands of
other men engaged in business who sit idly by while their trade, like
the sands in the hour glass, slowly ebbs away, and eventually is
absorbed by their more progressive business neighbors.

[Sidenote: Moneymaking and business literature]

There is still another vast army of business men--salesmen, clerks and
wage-earners of all classes--who are beginning to catch a glimpse of
the dawning of a new business era, the greatest the world has ever
known, an era impregnated with possibilities and opportunities for
those who are ready with wicks trimmed and oil in their lamps. To the
earnest latter class which is really desirous of profiting by the
experience of others, there is no need of elaborating the
possibilities embodied in this course of reading in Business
Administration. This set of books, containing valuable business data
on many subjects, thousands of pages telling the story of success
illustrated by trained men whose names are respected everywhere, is
intended to reach all classes. There is absolutely nothing in print
that can even approach or can begin to compare with it in value as a
reference library for business men or excel it as a complete course of
instruction for any man desirous of making the best of his
possibilities and opportunities in the kaleidoscopic age through which
the business world is now moving.

[Sidenote: Practical ideas best]

The more practical the ideas, the better the basis for good work. Not
long since, business men generally pooh-poohed the idea of employing
in the conduct of their business anything new, which was taken from
the writings and experience of others, such as is contained in this
remarkable series, contributed to by some of the brightest minds in
the business world today. There is, however, in these days
unmistakably a hungering and thirsting for just this new sort of
literature. It fills a long-felt need--fills it exactly, completely,
satisfactorily. Being the author of a work on salesmanship which has
had a countrywide circulation, I have been literally besieged by
business men everywhere asking me to recommend books treating of
successful business methods, and have been chagrined to find how
limited was the supply. The man who formerly was prejudiced against
such sources of information must now step aside and make way for
progress or unite with the popular demand for more education and
better methods.

[Sidenote: Cannot afford vs. can afford]

Show me the man who says he has no patience for such things, and I
will show you a man, like the stroke oar and the lawn mower, who does
not believe in moving forward in progress. Show me the man who says he
has no time to read of new methods and principles, and I will show you
the one who utterly fails to perceive that familiarity with business
literature of this kind means pecuniary advancement. Show me the man
who says he cannot afford to invest in such a set of books, and I will
show you one who apparently CAN afford to waste his energy in
misdirected effort--that energy and effort which are to every
wage-earner and tradesman both his stock in trade and his invested

[Sidenote: Failures unnecessary]

Someone has said, “There are three kinds of people in the world--the
Can’ts, the Won’ts and the Wills. The first fail at everything; the
second oppose everything; the third succeed at everything.” I would
add a fourth kind--the largest class of all--the Don’t Trys, the
“Oh-what’s-the-use,” “It-doesn’t-interest-me” sort of people. Their
name is legion; their fault is lack of confidence. Knowledge is the
greatest inspiration of confidence to be found on earth. You may not
personally be held in the hope-paralyzing bondage that produces the
“Oh-what’s-the-use,” or “I’m-not-interested” germ, but if you are not,
you are exceptional. Most people are, and that is the reason that such
persons are just about what luck, good fortune or chance make them,
succeeding if fortune favors them, failing if they are left to depend
upon their own resources. Result: Nine fail where one succeeds.

It is very fortunate, indeed, for most men that so much of their
happiness depends upon success. There is nothing on earth quite so
terrible to think of as failure, especially that due to lack of
effort, unless possibly it be the failure of a man who lacks the
courage or initiative to try to make the most of himself, and thus
lets his best opportunities escape him. And this last is really the
most pitiful thing that can befall a man. It is well enough to plan
opportunities, but if we had the wisdom to take advantage of such
opportunities as naturally come to us, results would more often be
found in the balance on the right side of the ledger. And so I am of
the opinion that a clear explanation of why a very large class of
people do not succeed is found in some of these expressions--“I don’t
care,” “I can’t,” “It doesn’t interest me,” or “Oh, what’s the use.”

[Sidenote: Basis of all business success]

One of the great objects set forth in this Business Administration
series is to supply the positive energy which begets courage,
confidence, initiative and success. We want to make you feel the
necessity of doing some reading, a little plain thinking, and to make
as clear as possible the important things that are involved in the
serious but very fine game of business.

With business becoming with each succeeding day more and more of a
science, it is high time to understand what is essential to it.
Speaking of the subject of “Organized Business,” a great authority
recently said, “It is time even for business men to understand
business.” Again, the purpose of this course in Business
Administration is, if possible, to measure the power and principles of
business, to trace their ramifications, define their elements, get
hold of their vital fundamentals, and so comprehend them, both in
technical detail and as a mighty unit. And I am confident we have done
all this. I find that at the foundation, the machinery of business is
simple, but whether it is plain or complicated, all who would succeed
must make every effort to comprehend it thoroughly. All I care to
emphasize at present is the great truth that knowledge, established
and classified, is the basis of all business success. This is clearly
established in this course of reading, and I am trying to incite your
imagination in writing of its merits just as I would endeavor to
enable you to realize it if I could talk to you personally right
across my desk. The observant man can see clearly the things I am
talking about, but to most men the mind’s eye perceives not by
observation, but only when the imagination is stimulated. So I would
stir all men to look earnestly into these things, with a view to their
personal betterment.

[Sidenote: Business axioms simple to understand]

Business is far more than business as it is commonly understood. It is
a science, and it is the eager, practical minds of business men that
we shall endeavor to convince first of that fact, and our reasons for
addressing those principally concerned are especially good. Why? I
have found that in writing about business whenever I was able to make
the principles so plain that business men understood them, everybody
else did, so it is to be expected that if business axioms can be made
simple enough for business men to understand them, everyone will
apprehend them. Everybody. And it is everybody that we are attempting
to reach.

[Sidenote: Knowledge is power]

For nearly thirty centuries men have recognized the concrete wisdom of
Solomon’s proverb: “A wise man is strong; yea, a man of knowledge
increaseth in strength.” Yet we have been slow in making its
application universal to the race. But we are beginning to understand
that the power inherent in knowledge applies as well to commercial and
industrial as to scholastic, political and social life, as well to the
counting room as to the pulpit, as well to the shop as to the
university, as well to the farm as to the bar. Knowledge is power and
is the only source of real intellectual sovereignty that the Creator
has ever entrusted to men.

In conclusion, I would say that these words are addressed to the
business men of America, and this designation includes the banker and
his clerks, the farmer and his sons, the lawyer and the law student,
the financier and the man who sells bonds and stocks, the merchant and
his clerk, the accountant and the bookkeeper, the manager and his
assistants--the ambitious young men of the Twentieth Century type,
contemplating the pursuit of any business, trade or occupation.



  Practical Economics.

  By ERNEST LUDLOW BOGART                                          1

      I. THE MODERN INDUSTRIAL SYSTEM--                            1
         The English Manor--Institution of Private Property--
         Competition Defined--Development of Industrial
         Liberty--Domestic System of Industry--Factory System
         of Industry--The State as a Regulator of Industrial

         The Land Policy of the United States--Irrigation--
         Dry-Farming--Farm Ownership--Decline of the
         Agricultural Population--Character of Agriculture in
         the United States--Forest Resources--Fisheries.

         The Problem Connected with our Mineral Resources--Steps
         Taken to Remedy the Evil--Coal--Petroleum--Iron--Precious
         Metals--Copper--Water Power and Its Use.

     IV. CAPITALISTIC PRODUCTION--                                29
         The Rapid Industrial Development and Its Causes--Factory
         Defined--Division of Labor--Use of Labor-Saving
         Machinery--Specialization and Localization of
         Industry--Large-Scale Production--System of

      V. TRUSTS AND MONOPOLIES--                                  39
         Phases of Combination for Fixing Prices--Classes of
         Industrial Establishments--The Trust
         Movement--Causes and Effects of Industrial
         Combinations--Evils of Combination--Legislative

     VI. SPECULATION AND CRISES--                                 51
         Risks of Modern Business--Function of the Speculator--
         Legitimate and Illegitimate Speculation--The
         Occasion of a Crisis--“Hard Times”--Theories as to
         the Causes of Crises.

    VII. THE MODERN WAGE SYSTEM--                                 60
         Beneficial Results of the Factory System--Abuses of
         the Factory System--The Existence of a Wage-Earning
         Class--The Wage System--Historical Systems of
         Labor--Modifications of Individualism--The Bargain
         Between the Employer and the Laborer--Necessity of
         Protective Legislation.

         Growth of Labor Organizations in the United
         States--Knights of Labor--American Federation of
         Labor--Objects and Methods of Labor Organizations--
         Restrictions Limiting the Output of Labor--Collective
         Bargaining--Boards of Conciliation and Arbitration.

     IX. WOMEN AND CHILDREN AT WORK--                             80
         Evils of Early Factory System--Expansion of Woman
         Labor--Why Women are Paid Lower Wages than Men--
         Desirability of Employment of Women--Child Labor--
         Labor Legislation.

      X. UNEMPLOYMENT AND INSURANCE--                             90
         Number of Unemployed in Modern Industry--Classification
         of the Unemployed--Causes of Unemployment--Insurance
         against Accident, Sickness and Old Age in the United
         States; in Germany.

     XI. MACHINERY AND INDUSTRIAL EFFICIENCY--                   101
         Evils of Machinery--Labor’s Complaint against
         Machinery--Industrial Education in Germany; in
         England; in the United States--Aids to Industrial
         Development in the United States.

    XII. PROFIT-SHARING AND CO-OPERATION--                       110
         Methods of Profit-Sharing--Economic Theory of
         Profit-Sharing--Objections against Profit-Sharing
         --Experiments in Profit-Sharing--Co-Operation--The
         Rochdale Society--Producers’ Co-Operation--Advantages
         and Defects of Co-Operation.

   XIII. PROBLEMS OF DISTRIBUTION--                              119
         Functional Distribution--Personal Distribution--Forms
         of Distribution Proposed--Questions Connected with
         Functional Distribution; with Personal Distribution.

    XIV. SAVING AND SPENDING--                                   127
         Expenditures for Different Purposes--Relation Between
         Saving and Spending--Desirability of Work for its Own
         Sake--Problem of Luxury--Economy in Consumption--
         Economic Evils of Intemperance.

     XV. MONEY AND BANKING--                                     137
         What Determines the Value of Money--Bimetallism--
         Monometallism--Government Paper Money--Kinds of Money
         in the United States--Problems of the Banking System
         of the United States.

    XVI. TRANSPORTATION AND COMMUNICATION--                      145
         Consolidation in the Railroad World--Question of
         Railroad Rates--The Public Nature of Railroads--
         Ownership of Railroads--Electric Interurban
         Railways--Express Companies--The Telephone--The
         Telegraph--Inland and Ocean Water Transportation--Our
         Canal System--Our Merchant Marine.

   XVII. TAXATION AND TARIFF--                                   154
         Consequences of Taxation--Adam Smith’s Rules of
         Taxation--Problems of Taxation--Sources of Revenue in
         the United States--The General Property
         Tax--Inheritance Taxes--The Question of the Tariff.

  XVIII. THE FUNCTIONS OF GOVERNMENT--                           163
         Functions of a Modern State--Anarchism--Individualism--
         Modified Individualism--Culture State Theory--State
         Socialism--Socialism--Municipalization of Local
         Public Utilities.

    XIX. ECONOMIC PROGRESS--                                     172
         Improvement in Rate of Wages and Hours or Labor--
         Advances in the Field of Production--Reasons Why
         Labor has not Profited More by the Great Increase in
         Wealth--Reduction in the Cost of Semi-Luxuries--Lines
         Along Which Reform is Needed.

         By O. P. AUSTIN                                         179

  INTRODUCTION--                                                 179
         The Hand Method of Manufacturing--The Factory Method--
         Chief Producers by each Method--Exchanges of the
         World--Relation of Development of Manufactures to

         Their Development During the Last Two Centuries--The
         Waterfall as a Source of Power--Development of Steam
         Power--Enlargement of the Use of Machinery Following
         the Application of Power--The Factory Town--Results
         of the Application of Steam Power to
         Transportation--Electricity as an Aid in

     II. THE USE OF MACHINERY IN MANUFACTURING--                 193
         The Spinning Wheel--The Loom--Kay’s Flying Shuttle--
         Hargreave’s Spinning Jenny--Arkwright’s Water
         Frame--Crompton’s Spinning Mule--Machinery in the
         Iron and Steel Industry--Growth in Manufacturing
         Following the Application of Machinery to the Leading
         Industries--Effect of Machinery upon the Employment
         of Men--Effect upon Employment of Capital--Effect
         upon Prices of Labor, of Raw Materials, of Finished
         Products--Effect upon Commerce--Effect upon the
         Quality of Manufactures Produced.

    III. DEVELOPMENT OF THE FACTORY SYSTEM--                     203
         Growth of the Factory System in England--Causes of the
         Recent Growth of the Manufacturing Industries in the
         United States--Estimates of the Value of Manufactures
         in the Principal Countries of the World--Net and
         Gross Valuations of Manufactures in the United States.

     IV. CAPITAL IN MANUFACTURING--                              214
         Capital a Growing Factor in Manufacturing Industries--
         Manufacturing in Great Establishments and under
         Expert Management a Favorite Investment for
         Capital--Effect of Increase in Gold Production--
         Investments of Capital and Use of Machinery Increase
         more Rapidly than Employment of Labor--United States
         Statistics of Investment and Production Superior to
         those of Other Countries.

      V. TRUSTS AND COMBINATIONS--                               222
         Reasons for Co-Operation--The Pooling System--The
         Company--The Corporation--Trusts and Other
         Combinations--Causes of the Transformation from the
         Company and the Corporation to the Trust--Effect of
         Trusts upon Production, Prices, Wages and Employment.

     VI. THE IRON AND STEEL INDUSTRY--                           230
         Pig Iron the Basis of all Iron and Steel Manufacturing--
         Pig Iron Production of the World in 1800 Compared
         with 1907--Fall in Prices of Iron and Steel a Result
         of the Application of Modern Methods of Manufacture--
         History of Iron Manufacture; Development in England
         and Germany--History of Iron-Making in the United
         States--Transformation from the Charcoal Method to
         that of Coal and Coke--The Earlier Methods of
         Manufacturing Steel Contrasted with those of Today--
         Rival Claims of the English and the American
         Inventors, Bessemer and Kelly, to the Modern System
         of Steel Manufacturing--Description of the Process of
         Manufacturing Steel under American Methods--The Use
         of Powerful Machinery and Lessening Proportion of
         Work Performed by Man Power--The Railway and
         Steamship in Relation to the Steel Industry--Great
         Combinations of Iron and Steel Manufacturers--Description
         of the Process of Transforming Iron into Steel by the
         Bessemer Process.

    VII. THE TEXTILE INDUSTRY--                                  247
         Growth of the Textile Industry from the Hand Industries
         to Use of Machinery and the Factory System--Great
         Britain, the Greatest Cotton Manufacturing Country of
         the World in Proportion to Population--The United
         States the World’s Greatest Producer of Raw
         Cotton--Contrast of Manufacturing Methods in the
         United States and Europe--Great Britain the World’s
         Principal Cotton Manufacturer for Exportation--The
         United States a Large Manufacturer but Chiefly for
         her Own People--Light Grades of Cotton Manufactured
         in Europe--History of the Textile Industry--Description
         of the Manufacture of Textiles--Cotton Manufacturing
         has Outgrown that of Other Textiles--History of its
         Manufacture in India, in Asia Minor, in America, and,
         in Recent Years, in Japan--Other Oriental Countries
         Manufacture by the Hand Processes--Growth of the Use
         of Machinery in Cotton Manufacturing, from the
         Spinning Wheel and Spinning Jenny to Modern Machine
         Methods--The Textile Industry of the United States.

         The United States the World’s Greatest Manufacturer--
         Its System Developed More Recently than that of
         Europe--Has Utilized Modern Methods in Combination
         with Large Sums of Capital--The United States the
         Only Nation Taking a Census of Manufactures--The
         Gross and Net Value of Manufactures as Reported by
         the Census--Relation of the Gross and Net Figures to
         Those of Other Countries--Acceptance of the Lowest
         Estimate of Manufactures in the United States Places
         her Products Far in Excess of Those of any Other
         Nation--Growth of Manufacturing has Outgrown
         Consuming Power of the People and Resulted in Rapid
         Growth in Exportation--Manufactures Form a Growing
         Share of Exports--Principal Manufactured Articles
         Exported and Principal Countries to which Sent.

     IX. STATISTICS OF MANUFACTURING--                           289
         Production of Manufacturers’ Materials--Development
         of Transportation Facilities--Distribution of
         Manufactures--World’s Production of Gold, 1492 to
         1908--Enlargement of Capital Invested in
         Manufacturing--The Various Classes of Manufactures
         Produced in the United States--The Value of Each
         Group at Recurring Censuses from 1880 to
         1905--Distribution of the Manufacturing Industries in
         the Various Sections of the United States--Share
         which Manufactures Form in the Imports and Exports of
         the United States--Share which Manufactures Form in
         the Imports and Exports of the Principal Countries of
         Europe--Estimated Value of Manufactures Produced in
         the Principal Countries of the World, 1780 to
         1905--Commerce of the World, 1780 to 1905--Number of
         Persons Engaged in the Principal Manufacturing
         Industries of the United States--Cotton Spindles of
         the World--Cotton Production of the World--Growth of
         Population, Commerce, Transportation Facilities, and
         in Production of Certain Articles Required in
         Manufacturing, 1800 to 1908.

  Concrete and Steel.
         By J. F. SPRINGER                                       322

  Chemistry and the Industries.
         By BENJAMIN BALL FREUD                                  341

  The Close Relation of the Producer-Gas Power Plant to the
           Conservation of our Fuel Resources.
         By ROBERT HEYWOOD FERNALD                               352

  Efficiency in Shop Operations.
         By H. F. STIMPSON                                       370

  The Bridge Between Labor and Capital.
         By JOHN MITCHELL                                        380

  The Unemployed.
         By JOHN BASCOM                                          384

  Quiz Questions                                                 403

PRACTICAL ECONOMICS.                                                       1


[Born Yonkers, N. Y., 1870; A. B., A. M., Princeton University, 1890,
1896; Ph. D., University of Halle, 1897; Graduate Student, University
of Halle, 1894, 1896-7, University of Berlin, 1894-5, Princeton
University (Fellow), 1895-6, Columbia University, 1897-8. Assistant
Professor Economics and Social Science, Indiana University, 1898-1900;
Professor Economics and Sociology, Oberlin College, 1900-1905;
Assistant Professor Economics, History and Politics, Princeton
University, 1905-9; Associate Professor Economics, University of
Illinois, 1909. Author of Economic History of the United States
(Longmans Green & Co., 3rd edition, 1909), and several monographs and
periodical articles.]


In the preparation of this text the author has endeavored to apply the
principles of economic science to some of the more important problems
of the modern industrial world, and especially those now confronting
the people of the United States. He has attempted in doing this above
all to make the text practical. The student or teacher of economics
will recognize at once that the sections are arranged into groups
corresponding with the traditional divisions of economic text-books
into production and distribution (land, capital and organization, and
labor), consumption, exchange, and the relation of the government to
the individual. It is hoped that the text may not be without profit
and interest to the general reader as well as the students of the La
Salle Extension University.


We shall probably get the clearest idea of the complexity of our
modern industrial society if we contrast it briefly with the simpler
state of social organization which preceded it. For this purpose we
may take the English manor of the eleventh century. At that time
England was a purely agricultural country, and the whole country           2
was divided into manors, of which the lord was regarded as the owner,
under feudal conditions, while those who cultivated the land were his
tenants. These tenants--villeins and cotters--worked on the lord’s
land two or three days in the week, and the rest of the time
cultivated their own holdings. The whole of the land of the manor,
both that of the lord and that of the tenants, was cultivated on an
elaborate system of joint labor. The land was divided into strips of
about half an acre each, and a man’s holding might consist of a dozen
or more of these strips scattered about in different parts of the
manor. This was done in order to secure equality in the fertility and
location of each man’s land. At that time the prevailing method of
agriculture was known as the three-field system, in which one field,
comprising about one-third of the manor and containing a portion of
the scattered strips of the lord and every tenant, was planted with
wheat, a second field comprising another third of the cultivated land
was planted with barley or oats, while the third field was left
fallow. The second year saw the second stage of this three-year
rotation, one-third of the manor lying fallow each year to recuperate
from this exhausting method of cropping; artificial manures were

Now the significant characteristics of such a manorial society were
three. First, it was economically self-sufficient, that is,
practically everything that was needed or was consumed on the manor
was produced there. There was no need of intercourse with the outside
world and there was little contact with it. Salt, iron, and millstones
were almost the only things that the inhabitants of such a manor had
to buy from outsiders. Consequently there was no production of goods
for a market, little money, and almost no trade. The few things that
were purchased were paid for at prices fixed by custom. Secondly,
agriculture was carried on under a system of joint labor, and
under customary methods which did not change from generation to            3
generation. It is clear that as long as all the land of the manor was
thrown together, for purposes of cultivation, into fields on which
were planted wheat or barley or which lay fallow, no one individual
could cultivate his land differently from his neighbors. Indeed, the
holdings of the different tenants were not even separated by fences,
but only by ridges of grass. On the land which lay fallow the cattle
were turned out to graze; if any man had attempted to plant a new crop
the third year, his neighbors’ cattle would have devoured it under
such a system. Production was regulated absolutely by custom, and no
opportunity was given for the development of the inventiveness or
initiative of the progressive individual. Thirdly, the tenants were
personally unfree, that is, they did not have the liberty of moving
freely from place to place, but were bound to the soil which they
cultivated. A man could not freely choose either his occupation or his
residence. There was no mobility or freedom of movement. Labor was
wholly or partly compulsory, and on terms rigidly fixed by custom or
by superior authority.

Such a society differs from that of today in almost every point, and
offers a startling proof of how far we have progressed in the past
eight or nine hundred years. For many of these characteristics,
however, we do not need to go back to the English mediaeval manor; the
plantation of the South two generations ago, with its system of slave
labor, furnishes an illustration more familiar to most of us. With
such a condition of industrial development we may now profitably
contrast our own of the twentieth century. The chief characteristics
of the modern industrial system are the institutions of private
property, of competition, and of personal liberty.

The institution of private property is so familiar to us and so
fundamental in modern economic life, that we commonly regard it as
a natural right. Nevertheless, private property, like most other           4
economic institutions, is the result of a long evolution. Primitive
man can hardly have had the conception of private property, and when
it did begin to emerge, it was at first confined to movables. Indeed
we may say that on the mediaeval English manor the private ownership
of land did not yet exist in the modern sense. It was found however
that, when each cultivator was permitted to fence in his holding and
to call it his own, he cultivated it much more carefully and produced
much more. Inclosure led to private property in land and to individual
freedom in its use. Today in the United States the possession and
transfer of landed property is almost as easy as that of movables.
Private property must be justified on the ground of social utility,
because under this method of control so much more is produced than
under any system of commercial ownership yet tried. But there are not
wanting objectors who contend that limits should be placed upon this
institution, and that the right of use, of bequest, and possibly of
unlimited acquisition should be brought under social control. The
beneficence of private property turns largely upon the existence of
competition and individual liberty and to these we must now turn.

Competition is defined as “the act of seeking or endeavoring to gain
what another is endeavoring to gain at the same time.” But competition
in modern industrial life is not merely a struggle to appropriate an
existing good. The very contest, as over the control of a market, may
and probably will lead to cheaper and larger production, and thus to
the benefit of society. Competition is a selective process in our
modern economic society, and through it we have the survival of the
fittest. “Competition,” so runs the proverb, “is the soul of trade.”
There is, to be sure, a dark side to the picture, for economic
competition involves the defeat of the weaker party, but this does not
necessarily mean his destruction, for his very failure may sharpen         5
his faculties and secure his ultimate success, or at worst he may find
employment under his successful rival. But here again it is being
urged that competition is brutal and that we should go back to the
mediaeval method of regulation by custom, or resort to combination and
monopoly. We are now witnessing experiments in both directions, but
competition still remains the controlling force of modern economic
society, and bids fair to continue so. It should however be the
function of society to raise the ethical level of competition.

Industrial liberty has been developed even more slowly and painfully
than the institution of private property, and has in some instances
not yet been wholly won. Slavery and serfdom have given way before the
higher and more beneficent conception of freedom or liberty. We
believe today that a man generally knows what is best for him and will
utilize his opportunities to the best advantage; that by giving him a
maximum of freedom the welfare of society will at the same time be
best promoted. Consequently, in our modern industrial society, a man
is given not only social and religious liberty, but is free to move,
to choose his occupation, to produce and to trade, to associate with
his fellows, and to expend his income as he will. But here again,
while the prevailing rule is liberty, society has found it necessary
to lay restrictions upon the abuse of this liberty. It is not enough
even to regard the industrial world as a great game in which each may
act as he pleases provided only he observes the rules of the game. A
higher conception of responsibility and duty must accompany freedom of
action if we are to secure the best results.

The term “industrial society” has already been frequently used and
needs a somewhat fuller explanation. About the year 1760 there took
place in England what is usually called the Industrial Revolution. A
number of inventions were made which rendered it possible to use           6
steam-driven machinery in the manufacture, first of textile and then
of other goods. Manufactures were removed from the home, where they
had hitherto been carried on, to the factory. Capital began to be used
in large masses, machinery displaced hand tools, and the laborer
ceased to own the implements with which he worked. Men, machines, and
capital were massed in the factory and organized under the management
of a new set of industrial organizers for the purpose of producing
goods for a world market. The development of such an industrial
society has been attended by the minute division of labor, by a
growing separation of classes, by concentration of the population in
urban centers, by the increasing cost and complexity of machinery, by
the development of improved methods of transportation and of credit,
by the combination of labor and of capital, by the enormous increase
of production, and by the growing concentration of wealth.

The introduction of power manufacture completely revolutionized
industry. The independent workman with his own tools was superseded by
the factory, the small producer has given way in turn to the trust.
With the introduction of expensive machinery it became necessary to
organize capital on a large scale. Corporations with limited liability
were organized for the manufacture of goods, the exploitation of
mines, the building of railroads, and the carrying on of trade. As
methods of production improved industry became more and more
concentrated, and finally huge trusts took over the operation of
combined plants. The business unit has grown increasingly larger, and
the need and power of capital have become increasingly important.
Capital has played a role of growing significance and has become more
and more powerful in modern economic life. Indeed the name
“capitalistic production” has been applied to modern industry because
of the predominant importance of capital in all lines of wealth            7
production. Impersonal, growing by sheer force of its own momentum,
capital is often thought of as intensely selfish and even cruel.
Abuses which have arisen in the development of modern capitalistic
industry must be remedied, but attacks upon capital itself are
misguided and rest upon a mistaken analysis of methods of production.

Before the introduction of the factory system, under the so-called
“domestic” system of industry, the laborer carried on his work in his
own home, where he provided the raw material, owned his own tools,
furnished the motive power--his muscles--and was his own master. Today
every one of these conditions is changed--the work is carried on in
the factory, the raw material, the tools, the motive power are all
provided by the capitalist, the laborer contributing only his own more
or less skilled labor, while the conditions under which he carries on
his work are largely determined for him. He is no longer his own
master. To protect himself against the growing power of capital the
worker has organized with his fellows into trade unions. These seek to
meet the monopolistic power of capital by exerting a monopolistic
control over labor. While they realize that modern productive
processes cannot be carried on without capital, they also insist that
labor is equally essential. They claim that capital has received more
than its fair share of their joint production and has exploited labor;
consequently they insist that labor must now demand its just reward
and enforce the claim by strikes and by raising wages. To enforce
their monopoly, the policy of the closed shop is often enforced. The
interests of capital and labor have thus often been made to appear
antagonistic instead of complementary to one another. Frequently in
their struggles the interests of the consumer have been entirely lost
sight of.

These conflicts in the productive processes of modern economic society
have led many people to look to the state as the regulator of industry     8
and to invoke state aid or state interference along many lines.
Maladjustments in the labor contract, mistaken production, leading
perhaps to speculation and financial panics, abuses of power by
corporate interests, discriminations by railroads, and similar
irregularities are made the excuse for an appeal to state authority.
Some would even go so far as to have the state take over and manage
all productive enterprises; but socialism is as yet a protest rather
than a constructive force. In the last analysis the state is the
regulator of all industrial undertakings, for they all concern
society. The state must hold the balance even and see that fair play
is given to all groups and all classes; but the greatest amount of
freedom compatible with economic justice must be sought for. It is a
difficult question how far the state must interfere in the conduct or
management of industrial enterprises in order to secure social
justice. There is a decided tendency at present to a strengthening of
the regulative power of the state for the protection of the weaker
classes of society. And yet on the whole the institution of private
property, free competition, and a maximum of individual liberty remain
the fundamental conditions of our economic life.

But while under the system of individualism, industrial activities
have been multiplied, wealth has been enormously increased, and human
progress has been greatly advanced, many abuses and evils still
remain. Many practical economic problems still await solution. Some of
these have already been suggested in the preceding paragraphs; others
remain to be presented. It is the purpose of this text to apply to
some of the more important practical current problems of our modern
industrial life the principles of economic science, and to endeavor to
reach fair and just conclusions on controverted points.


The land area of the United States, exclusive of Alaska and our island
possessions, is a little less than 3,000,000 square miles, or an area
somewhat less than the whole of Europe (3,700,000 square miles). Of
this about 840,000 square miles, or a little more than one-fourth,
still remains in the possession of the Federal Government and
constitutes the public domain. The rest belonged to the original
thirteen states, has been given to railways or to the states for
educational purposes, or has been sold and given away to individual
settlers. The policy of the Government in the disposition of the
public domain has, on the whole, been to place it as rapidly as
possible in the hands of cultivators, and also to use it as a fund to
promote internal improvements and education. About 200,000,000 acres
had been granted to railroads down to 1871, at which time land grants
were discontinued, to secure their early construction. This policy has
often been bitterly condemned, and it has been contended that the land
should have been saved for actual settlers. It may however be said
that without such grants the railroads would not have been built at as
early a date as they actually were, and that without railroads the
land was practically worthless, as it was too far removed from any
navigable waterway to have access to a market. Moreover, the Federal
Treasury lost nothing, for the sections of land alternating with those
granted to the railroads were sold to settlers for $2.50 an acre
instead of $1.25, the customary price for the public lands.

The grants of land for educational purposes have been generally
approved. Upon such grants rests the establishment of our state
agricultural colleges.

The unique and characteristic feature of the land policy of the United
States has been the granting of land to the settler upon actual
residence and cultivation for five years. Such a grant of 160 acres       10
is called a “homestead,” and since 1862 has been made to any citizen
who is the head of a family or above the age of twenty-one years. In
this way over 230,000,000 acres have been placed without cost in the
possession of the actual cultivators. The newer public land states are
peopled by proprietors, and there has never grown up in the United
States a large class of rich land owners whose land is cultivated by a
tenant peasant class, such as exists in England and parts of Europe.
For this we must thank not only our land policy, but also the vast
extent of unoccupied land that might be had almost for the asking.

Now, however, the public lands available for agriculture have been
exhausted; practically all that remains is situated in the arid zone,
and needs systematic irrigation before it can be made available for
any use except that of grazing. There are still about 100,000,000
acres of choice land in Indian reservations, and as a consequence of
the pressure upon this resource and also because of the unwisdom of
the old reservation system, the policy has now been adopted of
dividing these lands among the Indians in individual ownership, under
careful safeguards, and of assimilating the Indians to the rest of the

The exhaustion of the fertile and well-watered lands of the
Mississippi Valley has forced the later comers to have recourse to the
arid soils in the almost rainless region west of the one hundredth
meridian of longitude. The character of farming under such climatic
conditions must of necessity be very different from what it is in the
rainy districts, and the versatility and adaptability of the American
farmer is well illustrated by the development which has taken place
there. The first effort at the solution of the problem was in
irrigation, a method which had been early practised by the Pueblo
Indians, and later and most successfully by the Mormon settlers in
Utah. By 1900, according to the census, 7,539,545 acres were under        11
irrigation. While most of the work up to that time had been done by
private initiative, a demand arose for irrigation at government
expense, in response to which Congress in 1902 provided for the
building of irrigation works out of the proceeds of the sales of
public lands. Regulation and conservation of the limited water supply
by governmental authority, either state or national, is indeed
essential to the success of irrigation and will probably be the policy
of the future.

A second and even more interesting development of American agriculture
is the so-called dry-farming which is being successfully introduced
into the semi-arid regions. Carefully selected seeds and plants of
crops especially adapted to these climatic conditions are used, and
then a very careful and intensive method of tillage is followed. The
soil is plowed deep and thoroughly pulverized so that the roots can
strike down to the deeper levels and absorb all the moisture
available. Extraordinary results have already been attained, and the
region that the older geographies labeled “The Great American Desert”
bids fair to become one of the most flourishing districts in the

That part of the area of the United States which has already been
reduced to private ownership is divided into 5,700,000 farms. As
almost half of the land in these farms is uncultivated, being forest,
waste land, or pasture, it is evident that there is still room for a
great increase in the agricultural production of the United States
without bringing additional land into the field. The average size of
these farms is 146 acres, which looms large indeed when compared with
the 20-acre farms of France and the 60-acre farms of Great Britain.
The difference is of course due to the difference in the methods of
agriculture and the character of the crops, the European conditions
demanding intensive cultivation while our methods are still largely

A more important question even than the number and size of farms, from    12
an economic point of view, is that of ownership. In 1880, when for the
first time the federal census collected the statistics of farm tenure,
the gratifying result was announced that three-quarters (74.5 per
cent) of the farms in the United States were cultivated by their
owners. The last census however showed that the proportion had fallen
to 64.7 per cent in 1900, and alarm has been expressed that our
democratic conditions of land ownership are giving way to a system of
tenantry, that the ownership of our farms is being concentrated in
fewer hands, and that methods of large-scale production in agriculture
are crushing out the independent farmer as effectively as they have
crowded out the small manufacturer and retailer in other fields.
Correctly interpreted, however, the statistics seem to indicate that
the growth of the tenant class marks the endeavor of farm laborers and
farmers’ sons to establish themselves as independent farmers rather
than the fall of former owners to the rank of tenants. The great
majority of the young men are laborers, the majority of those in
middle life are tenants, while the older men are for the most part
owners of farms. There seems to be a healthy progress upward in the
advancement of wage laborers and farmers’ children, first to tenancy,
and finally, with increased ability and capital, to farm ownership.
Moreover most of the rented farms are hired by negroes, the change in
whose status from slave to tenant marks a great advance.

Another change in our farming population that has been viewed with
considerable misgiving is the movement from the farm to the city and
the decline in the proportion of the agricultural population to the
whole. Indeed the change has been startling, as the United States has
passed from a primitive agricultural stage of development to a highly
organized manufacturing and commercial stage. From 86.3 per cent of
the population in 1820 the percentage of those engaged in agriculture     13
fell steadily until it reached 35.7 per cent in 1900. Many persons
have thought that such a movement indicated the desertion of our farms
owing to the greater attraction of the cities, and the disappearance
of a healthy agricultural population. It has indicated rather a great
improvement in the arts of agriculture, whereby one person today,
working with improved machinery and better knowledge, can produce
nearly three times as much as his grandfather did. The labor set free
has gone to the cities--cities of over 8,000 inhabitants now contain
one-third of our population as compared with one-thirtieth one hundred
years ago--and there produces the thousand and one things which
contribute to our modern well-being. A smaller number can now raise
all the food necessary to feed the population; that the rest are free
to do other things must certainly be counted again, though the
conditions under which work in the factory and life in the city are at
present constructed leave much to be desired.

Writing about 1865 an eminent English traveler, Sir S. Morton Pets,
apologized for calling the United States an agricultural country;
today he would be spared this worry, for the Census of 1900 gave the
net value of products of the farm as $3,764,000,000 and of pure
manufactures as $5,981,000,000. Indeed since 1890 the value of the
manufactures of the country has been larger than of the farm products,
and the United States now ranks as one of the leading manufacturing
nations of the world. Nevertheless the value and amount of the
agricultural products are stupendous; the United States leads all
countries in the production of dairy products, corn, and wheat, and
the greater part of the lumber, meats, tobacco, and cotton which enter
into the world’s trade come from her forests and fields.

While the territory of the United States is well adapted by nature to
the cultivation of a great variety of agricultural products, as a         14
matter of fact only four branches of agriculture showed a total
product in 1900 of more than one million dollars. These were the
raising of live stock, and the production of hay and grain, cotton,
and dairy produce. The regional distribution of these products was
fairly well marked, over half of the live stock and of the hay and
grain farms being situated in the North Central States, nearly half of
the dairy farms being located in the North Atlantic division, while
practically all the cotton is confined to the southern zone; the same
may also be said of tobacco and sugar. The semi-arid region of the
West is given over almost exclusively to stock-raising. Iowa and
Illinois lead as agricultural states.

The character of agriculture in the United States, as in all new
countries, has hitherto been extensive, that is, a small amount of
labor and capital has been applied to a relatively large amount of
land, and only the cream of the soil has been skimmed off, as it were.
Where labor is dear and land is cheap this is the most economical
method for the farmer; and, although European critics have severely
criticized our system of “earth butchery,” whereby the fertility of
the soil has been exhausted by constant cropping, with no effort to
restore the exhausted properties by fertilizing, the practice has been
justified by the conditions which produced it. Already the practical
exhaustion of the free public domain has had the effect of raising the
price of lands in the Middle West, and this in turn will cause a more
careful and intensive system of cultivation. In other words, as our
social and industrial conditions approach those of Europe more
closely, we may expect our agricultural methods to do so also. One of
the most serious practical problems now confronting the American
farmer is the change from the old, wasteful, extensive methods to the
new, careful, intensive methods of farming. Those who cannot make the
change will complain of the unprofitableness of agriculture, but to
those who successfully meet the new conditions the future offers          15
much greater rewards than even the era of free land could produce.

It has been said that the year 1887 marked the beginning of a new
stage of development in American agriculture--that of reorganization--
because in that year Congress passed the Experiment Station Act. This
marked the application of the principles of experimental science to
agriculture on a more comprehensive and systematic scale than had ever
been attempted before. Stimulated by the increased activity of the
government experiment stations, the agricultural colleges have
expanded their work. They are offering practical courses to the
farmers, and in co-operation with the railroads, some of them have
recently been sending out special lecturers, with moving laboratories,
to bring the teachings of science as close home to the producers as
possible. Finally, the wonderful work being done by Burbank and others
in selecting and crossing, by travelers for the federal Agricultural
Department in securing plants from all over the world suited to our
varied climatic conditions, and by the experiment stations and
agricultural colleges in spreading the new knowledge among the farmers
and putting it into actual practice--all these departures promise to
revolutionize agriculture, and to make it, as one writer has said, a
learned profession.

The production of cereals is the most important branch of agriculture,
comprising corn, wheat, oats, barley, rye, buckwheat, and rice. Since
the building of the trunk railroads, by which the western territory
was given access to a market, the progress of cereal production has
been extremely rapid, nor does there seem to be any observable
slackening. With the introduction of improved varieties of spring
wheat, cereal production is being pushed further up into British
Canada and our own Northwest. The center of cereal production has
moved steadily westward, from eastern Indiana in 1860 to eastern Iowa
in 1900. With the practical exhaustion of unoccupied land suitable
for grain-raising in the United States, it is clear that the future       16
extension of the industry depends rather upon improvements in the
methods of agriculture than upon the addition of new lands. The very
practical problem here presented to the American farmer if he wishes
to maintain his supremacy in the world’s markets is being nobly and
successfully met by the agricultural experiment stations. They are
teaching the farmer how to increase his yield of wheat, for example,
by scientific seed selection and more careful methods of tillage, from
an average of 12.5 bushels per acre for the whole country in 1900 to
treble that amount.

Of the separate crops corn is by far the most important, representing
60 per cent of the total value of all cereals produced in 1900. Most
of the corn is fed to stock throughout the so-called “corn belt” and
comes to market in the form of pork and beef. Although corn is very
nutritious and is a favorite article of diet in this country in
various forms, astonishingly little of it is exported. The development
of a foreign market still awaits the enterprise of the American farmer
and food manufacturer.

The production of live stock is essentially a frontier industry, and
while it will probably always be carried on in the semi-arid grazing
districts of the West, which can be reclaimed for agriculture only at
considerable expense, it already shows a relative decline. Owing to
the great growth of the population the domestic demand now consumes
almost all the meat produced and the exports are declining. This is
one of the reasons for the recent rise in the price of meat. The
industry is extensive. Quite the opposite is true of the dairy
industry, which is intensive, being carried on for the most part in
the vicinity of large cities where land is expensive. The changing
character of agriculture and the fact that it is itself a business
enterprise demanding a knowledge of market conditions and business
methods is well illustrated by the nature of the dairy industry.          17
Dairies are inspected and must conform to certain standards, the milk
must be sterilized and shipped, often by special trains, to the
cities. Over a third of the butter and practically all of the cheese
is now made in factories instead of on the farm, so that it is a
question whether the latter at least should not be classified as a
product of manufacture rather than of agriculture.

Of the last of the four important branches of agriculture, namely
cotton-raising, there is not so much to be said. Owing to the
intensive nature of its cultivation, machinery has never been applied
on a large scale to its production, as was done in the case of hay and
grain. The wasteful methods that prevailed before the Civil War in the
South have been largely corrected, and the tendency to sterility of
the soil has been met by the increased use of fertilizers. The
statistics of cotton crops for the past thirty years do not indicate
any decrease in productiveness, and show that the point of diminishing
returns has not yet been reached. A peculiar and interesting feature
about cotton production is that it is largely in the hands of tenants.
The old slave plantations of the South have been broken up into small
holdings and many of these are operated by tenants, negroes and
whites, who are too poor or too improvident to buy the land outright.
The main problems connected with cotton culture are labor problems;
and the question has often been anxiously asked whether the free negro
will produce as much as the former slave. This can now be confidently
answered in the affirmative, though it yet remains to be seen whether
he can be made as efficient a producer as his white competitor. Upon
the answer to that question depends not merely the future of cotton
production, but the economic salvation of the negro himself. The
constantly expanding use of cotton goods assures a brilliant future to
the cotton-growing states of the South, for not merely is there an
assured market in America and Europe, but the primitive peoples of
Asia and Africa may be depended upon to absorb increasing quantities      18
of cotton fabrics.

Hand in hand with the heedless extensive methods of agriculture in the
past went wasteful use and even destruction of our forest resources.
The annual cut of lumber in the United States is today about forty
billion feet board measure; at this rate of consumption it is
estimated that the present available supply will last only 35 to 50
years. It will doubtless surprise most readers to learn that about
three-quarters of the annual wood cut is consumed as fuel, probably
half of our population still depending upon wood instead of coal for
fuel. The rapid exhaustion of our forest supplies, with the attendant
effects upon moisture, floods, etc., has brought the question of
forest preservation to the front as a practical economic problem. We
have been squandering the heritage of our children and efforts are now
being made to repair some of the loss before we are declared bankrupt.
In 1898 the Federal Government began practical work in the
introduction of forestry; this received a great stimulus in 1905 when
the care of the national forest reserves, embracing over 60,000,000
acres, was put under the control of the Forest Service. Over 150
trained foresters are employed, who manage the forests on the public
lands and co-operate with private owners in the introduction of
scientific forestry. Several states have taken up the movement, and
there is every indication that scientific methods of culture such as
prevail in Prussia and other European states, will supplant our
destructive denudation of the land. That it is high time to devote
attention to the better conservation of this natural resource is made
evident by the high and increasing price of lumber.

There is one other natural resource the conditions of whose supply
resemble those of forestry and of agriculture in general; this is the
fisheries. With careful use, providing for depreciation, and restoring
the elements destroyed, all of these should prove inexhaustible and       19
should continue to furnish man with food and lumber for all time. But
as in the case of the other two industries, so with the fisheries, we
have been using up our capital and declaring enormous dividends at the
expense of the future. The value of the annual catch of fish is
$40,000,000, which is exceeded only by that of Great Britain. The
problem of the better conservation of this resource has been taken in
hand by the Federal Government, through the Fish Commission, and much
has been done to repair our early prodigality by restocking lakes and
streams with fish. More stringent fish and game laws have also been
passed by most of the states, designed to prevent the extermination of
the supply.


The natural resources of any country may be divided into two broad
groups, which call for different treatment and give rise to very
different problems. There are, on the one hand, resources which are
exhaustible but which can be restored again; and on the other,
resources which, once exhausted, can never be replaced again by human
agency. Under the first head come the soil, the forests, the
fisheries, and even the water power, for all of these can be made to
yield steady returns to man for thousands of years, if used
intelligently. Under the second head belong coal, petroleum, natural
gas, and all the minerals; man may discover substitutes, he may
economize in the use of these substances, but he can never augment
their supply. In the previous section we considered some of the
problems that arise in the use of the soil in agriculture, and those
connected with our forests and fisheries. For the most part they had
to do with the intelligent use of these agencies and the restoration
or repair of the elements destroyed. In this section we are met by a
very different problem, namely, the conservation of a limited supply      20
of resources and their most economical application to the needs of

We can distinguish two contrasting answers to this problem, one
careless and optimistic, and the other pessimistic and fearful of the
future. According to the former point of view we should not borrow
trouble of the future; man’s career has been one of constant progress;
when he has been confronted with a difficulty he has invariably met
it. Indeed necessity has been the most prolific mother of invention.
If our coal supplies are exhausted, man will devise means of utilizing
the heat of the sun, the force of the tides, the motion of the waves,
the stores of electrical energy in the air, all of which will yield
inexhaustible supplies of heat and energy. If our stores of iron
should fail, some enterprising inventor would surely discover a
practicable and commercially profitable method of extracting aluminum
from clay. New sources of raw materials will undoubtedly be discovered
before the old ones give out, and we may confidently expect that,
while the material bases of a high civilization may shift somewhat,
they will never crumble and fall.

The other school has sounded a louder note of alarm. At the present
rate of consumption the coal and iron deposits of Europe and America
must soon be exhausted. The supplies of copper, lead, and other metals
in favorable locations are also being consumed at an alarming rate,
and no other known supplies are in sight. Within the past century
scientific knowledge and engineering skill have combined to unlock the
storehouses of the geologic ages, and now like prodigals we are
dissipating our fortunes. To treat these exhaustible sources of supply
as permanent sources of income, without regard for the future, is
based upon unsound theory and must lead to reckless practice.

As so often in opposing counsels, there is an element of truth in each    21
of these contrasting points of view. But the safer plan is not to wait
until we have exhausted our natural resources before remedying the
evil, but to heed the warnings now. A long step in this direction was
taken in May, 1908, when a conference of the governors of all the
states, together with college and railroad presidents, business men
and others, was held at the White House upon invitation of President
Roosevelt. As a result of this gathering a National Conservation
Commission was appointed, which will make an exhaustive investigation
into the amount and rate of consumption of the natural resources of
the country and suggest measures for their better utilization and
preservation through national, state, and local action. In line with
this movement two other commissions have been established, one on
inland waterways and one on country life. As a result of the national
awakening we may expect to see a more rational use made of the gifts
of nature, and a better organization of our national life. Heretofore
the ideal of our business men has been to exploit, one might almost
say pillage, the stores of nature as rapidly as possible; it was a
pioneer stage of industry, inevitable but wasteful. From now on the
new conception must be the restoration where possible of exhausted
elements, as of the soil and the forests, and the careful use of the
non-renewable stores of wealth so that at least we shall not make them
engines of destruction, as in the case of floods and devastation
occasioned by careless hydraulic mining in the West. Let us now turn
to a more detailed consideration of the separate items in our
inventory of national wealth.

Our modern civilization may be said to rest upon coal, for upon its
possession depends man’s ability to utilize most of the other items of
his wealth. Passing over its utility as a fuel to heat our houses,
without coal it would be impossible to smelt the iron needed in all
our industries, to drive the machinery, to run our locomotives or         22
steamboats, or in a word to carry on the manifold activities of our
industrial life. According to the United States Geological Survey
there are 335,000 square miles of coal-bearing strata in this country,
but the larger part of it is too thin or impure to be useful for
industrial purposes; it serves in many localities however as domestic
fuel, as in the case of the lignite deposits of the Northwest. An
estimate of Professor Tarr places the coal-producing area in the
United States at not over 50,000 square miles. At the present rate of
consumption--over 350,000,000 tons in 1905--it has been estimated that
the anthracite coal deposits will last for only fifty years longer,
while we have only enough bituminous coal for one hundred years.

The large deposits of coal in England and their early development gave
that country a great advantage over Europe. But as long ago as 1861
Professor Jevons, a noted English economist, sounded a note of alarm:
he prophesied that because of the superior size and character of the
coal deposits of America, industrial supremacy must inevitably pass to
this country. His prediction has already been verified in the case of
coal and iron production, and will probably soon prove true of
textiles also. The coal deposits of the United States are thirty-seven
times as great as those of England, but at the present rate of mining
are threatened with exhaustion at no distant date. It has been
estimated that there are in China coal deposits capable of supplying
the world with fuel for another thousand years. But such estimates
are, in the present state of our knowledge about China, the merest
guesses, and if true would seem to point rather to the future
industrial supremacy of that country in the world’s markets.

Two-thirds of the coal mined in the United States is obtained from the
Appalachian field, extending from New York to Alabama, Pennsylvania
being the largest coal-producing state in the Union. In the iron and
steel industries most of the coal is coked, as it is better for           23
blast-furnace use in this form, giving greater heat and containing
less sulphur or other injurious substances than coal. Owing to the
smaller bulk and cost of transporting ore, most of the iron and steel
industries are situated in the vicinity of the coal supply, as in
Pennsylvania, Ohio, Alabama, etc.

Petroleum or coal-oil is closely allied to coal in its origin and
distribution and must be classed with it as a most important product,
not only for industrial uses, but also because of the contributions it
has made to the comforts of living. In its production the United
States ranks first, being closely followed by Russia; together these
two countries furnish over 90 per cent of the world’s supply of
petroleum. Enormous economies have been effected in its production and
distribution, which is done by piping the crude oil underground to the
refineries. For illuminating purposes it is the cheapest form of
artificial light; as a fuel it is supplanting coal, where the latter
is dear or its cost of carriage high, as on ocean steamers. Finally,
the construction of light and convenient gasoline motors has given it
great importance as a source of motive power. Natural gas is closely
related to petroleum, but the supply has been so reduced by rapid and
reckless use that it has but a limited economic outlook and is of
local significance only.

Of all the metals iron must be considered the most useful for man, far
surpassing the so-called precious metals in economic importance. Its
great value is so evident that its production and use have often been
taken as a criterion of the material progress of a community. Iron is
the only metal that can be welded, and is accordingly of great
significance, whether in making strong machinery, as the shafts of
ocean steamships or the framework of a twenty-story building, or, in
the form of steel, the most delicate surgical instruments or watch
springs. Judged by the test of iron ore production the United States      24
ranks high, for it turns out about four-fifths of the world’s supply;
all of this is used for domestic consumption, in its own blast
furnaces, though much of it is afterwards exported in the form of pig
iron or structural iron or steel. Though iron is universally
distributed throughout creation, it must occur in large beds or
deposits before it can be profitably mined. “The most favorable
situation of an iron ore for profitable extraction is near good coking
coal for smelting and limestone for a flux, as in the Birmingham
district of Alabama; and in such a situation even low-grade ores can
be worked profitably. Unless this is the case, iron ore cannot be
extensively mined excepting under conditions of great abundance and
economical methods of transportation, as in the Lake Superior
district, where thick and remarkably uniform beds of good ore occur in
such a position that water transportation to the market is possible.
Where these conditions do not exist, iron-mining is feasible only on a
small scale for the local market. Thus, in the Rocky Mountains there
are almost inexhaustible supplies of iron, often of a high grade,
which are at present of no value whatsoever.”[1]

The most wonderful iron-mining region in the United States and
probably in the world lies in the northern part of Michigan and
Minnesota, where five ranges or lines of hills contain immense
deposits. These lie so near the surface that they can be dug out of
open pits at a cost of from 10 to 50 cents a ton, against $1 a ton in
a shaft or underground mine. Three-quarters of the iron ore produced
in the United States is mined in this district. Its proximity to the
lake ports makes possible its transportation to the iron and steel
manufacturing centers at very low rates. Machinery has been applied on
an immense scale to the work of mining, loading and unloading the ore.
Steam shovels scoop up the ore from the open pit, filling cars at the     25
rate of almost one a minute; the work of loading this into the ore
ships at the ports is equally expeditious, only about two hours being
required to load an ore ship of 6,000 tons, while the work of
unloading is performed for the most part by an endless chain of
buckets and traveling cranes. By these means an ultra-intensive
exploitation of these magnificent deposits is taking place and it is a
question whether they will not soon be exhausted. “But the Americans,”
writes Professor Leroy-Beaulieu, a friendly but keen critic of our
industrial development, “relying on the constant good-will of nature,
are confident that they will discover either new and productive ranges
in this district, or rich deposits in other districts.”

The precious metals have received more than their fair share of
attention, for the industrial progress of the world is much less
dependent upon their presence in large and easily obtained quantities
than it is upon the more common metals. Nevertheless they are of
importance both in the arts and especially because of their use as
money. In their production the United States stands second, being
surpassed in the output of gold by the Transvaal in Africa and in that
of silver by Mexico. The production of these metals has always in the
world’s history proceeded spasmodically, and a speculative spirit has
usually been present. More recently, however, scientific geological
knowledge and improved metallurgical methods are removing the industry
of gold and silver mining from a gambling venture to a legitimate
industry. The practical problem at present confronting American
gold-mining companies is to reduce expenses, some of the principal
bearings having for some years shown signs of exhaustion, as for
instance in the Cripple Creek district of Colorado. There is always a
chance however that new gold fields may be discovered to make good the
exhaustion of the old. In the case of silver, on the other hand, the
metal is found in such abundance that the present rate of production      26
seems almost indefinitely assured; a slight increase of the price or
improvements in the art of extracting the metal will at any time bring
enlarged supplies on the market. Africa, Australia, and the United
States produce almost all the world’s supply of gold, Colorado being
the leading state in the last-named country. Mexico and the United
States together produce over two-thirds of the world’s silver, the
leading rank in this country being held by Montana.

Among the other metals copper is by far the most important. In
primitive civilizations, before the art of smelting iron had been
discovered, copper was indispensable as it was so easily malleable; in
Homeric times, for instance, armor, utensils, money, etc., were made
of copper or alloys of copper (bronze and brass). After an eclipse of
some centuries copper has again risen to the front rank by reason of
its qualities as a conductor of electricity. The new use of
electricity to transmit power and the development of electrical
industries has greatly increased the demand for this metal and has
caused a great expansion in its production. Here again the United
States holds first rank, contributing over half of the world’s copper
supply. As in the case of iron the northern peninsula of Michigan is
the most important center of copper production, with Montana a close
second and Arizona contributing most of the remainder. Like petroleum,
copper production is controlled by a small number of operators, five
mining companies alone furnishing one-half of the American supply. It
is far from being monopolized, however, as petroleum is, for new and
rich supplies lie just on the margin of profitable working and will
always be brought into the market whenever the price is artificially
raised. One reason for American pre-eminence, aside from the rich
stores of the metal, lies in the progress made in the art of refining
it by the electrolytic process, considerable foreign ore being brought
here to be treated by this method.

Nature has not blessed the United States so abundantly with the minor     27
metals, lead, zinc, and aluminum, while almost all the tin used here
has to be imported.

It is apparent from even this brief and hasty survey of the mineral
resources of the United States, comprising those extractive industries
which once exhausted can never be restored by man, that this country
is wonderfully well equipped with the material means of civilization.
Minerals and metals are remarkably abundant and accessible. The
wonderful material progress of the United States during the nineteenth
century is abundantly explained by this fact, though due credit must
also be given to the enterprise, industry, and genius of those who
developed these natural resources. The industrial supremacy of the
American nation seems well assured, founded on such a stable material
basis. We of this country have been rather inclined to boast of our
industrial progress and our material bigness, whereas it must now be
apparent that we owe much, if not most, to the bounty of nature. We
should therefore see to it, in a proper spirit of humility and
thoughtfulness, that we do not waste our heritage, but hand it on as
nearly undiminished as possible to our children.

There is one other asset in our national wealth which has already
contributed much to our progress, and is destined to play an even more
important role in the future--and that is our water power. In colonial
days, before the invention of the steam engine and the use of coal,
this was of prime importance and determined the location of many a
town, most of them being located at the “fall line” of the rivers,
where water power was obtainable. With the invention of the steam
engine and the use of steam as a motive power, industry became less
dependent upon water power and moved away from the rivers to the
vicinity of coal mines. Now again has come another swing of the
pendulum, and with the rise of electricity as a motive power and the
harnessing of our streams and waterfalls for the creation of              28
electrical energy, we are beginning to value more highly this source
of power. Here again we find the United States wonderfully blessed as
compared with other countries. “It is probable,” says Shaler, “that,
measured in horse power or by manufactured products, the energy
derived from the streams of this country is already more valuable than
those of all other lands put together.” The total amount of direct
water power used by manufacturing establishments in 1900 was 1,727,000

Prior to 1890 the largest use of water power was in its direct
application to machinery at the immediate point of development. Since
that time, however, the use of electricity as an agency whereby the
energy developed by falling water can be transformed and applied to
the driving of machinery has entirely changed the conditions under
which the power of our streams can be utilized. The practical
possibility of transmitting electrical power over long distances--for
example, over 200 miles from the Sierras to San Francisco--has removed
the necessity of building factories immediately adjacent to water
powers, but permits its utilization where most convenient and often
where the lack of coal has made the use of steam power impracticable.
The best-known example of the development and transmission of
electrical energy for industrial purposes is the case of Niagara
Falls, but more striking illustrations may be found on the Pacific
coast, while the existence of enormous opportunities on the Atlantic
seaboard give brilliant promise for the future of manufacturing in
this region. So valuable indeed are these sources of power now seen to
be that there is danger that their control may be monopolized by a few
shrewd and far-sighted individuals before the general public awakes to
a realization of their importance. It has recently been asserted in a
reputable magazine that there is a “water power trust” already
organized for this purpose. The opportunities for wealth-getting have
hitherto been so great in this country, and the great task of the         29
American people has thus far been so exclusively the task of
developing its wonderful natural resources, that we have grown
careless of our common rights and have permitted the monopolization by
private individuals of a number of limited resources of this
character. One of the great practical problems of the future is that
of securing the growing value of these natural monopolies to the whole
people, without at the same time retarding the energy and industrial
development of the American people.


Modern production is usually called capitalistic because it involves
in its processes the use of a large amount of capital. In a primitive
stage of culture man appropriated directly from nature’s bounty the
food and shelter which he required. But today man has adopted long and
roundabout methods of producing goods, involving numerous steps
between his first efforts and the turning out of the finished
articles. He invents tools and machinery to assist him in his work,
and while he multiplies the processes of production he also enormously
increases the results. Capital has become absolutely indispensable in
modern production and is yearly playing a more important role. At the
same time various problems, born of the new conditions, have arisen,
such as the growth of large-scale production, the elimination of the
small producer and the independent artisan, the growth of trusts, the
rhythmic recurrence of speculative periods and industrial crises, the
relations of labor and capital, and others similar in character.

The most striking phenomenon of the nineteenth century was the great
industrial progress of the more developed nations; this is best shown
in a table taken from Mulhall’s “Industries and Wealth of Nations,”
which follows:

  Growth of Manufactures in the Nineteenth Century.                       30

                  |       Millions of Dollars.
  Countries       |-----------------------------------
                  |  1820  |  1840  |  1860  |  1894
  United Kingdom  |  1,411 |  1,883 |  2,808 |  4,263
  France          |  1,168 |  1,606 |  2,092 |  2,900
  Germany         |    900 |  1,484 |  1,995 |  3,357
  Austria         |    511 |    852 |  1,129 |  1,596
  Other States    |  1,654 |  2,516 |  3,455 |  5,236
  Europe          |  5,644 |  8,341 | 11,479 | 17,352
  United States   |    268 |    467 |  1,907 |  9,498
      Total       |  5,912 |  8,808 | 13,386 | 26,850

Extraordinary as has been this universal growth, the development of
manufactures in the United States has been still more marvelous, both
absolutely and in relation to other branches of industry  Between 1850
and 1900 the population and the products of agriculture both trebled;
but the value of manufactured products increased twelvefold and that
of capital invested in manufactures nineteenfold The United States,
though politically younger than the countries of Europe, is
industrially one of the most advanced  The application of labor-saving
machinery and of improved and economical methods of production and
distribution has probably proceeded further here than in any other
place  Nowhere can we study to better advantage, therefore, than in
America the problems that have grown out of this advanced capitalism.

The causes of this rapid industrial development are enumerated by the
census report as five in number: the agricultural resources of the
country, the mineral resources, the highly developed transportation
facilities, the freedom of trade between states and territories, and
the absence of inherited and over-conservative ideas  We have already
considered the wonderful agricultural and mineral resources of the
country, and have seen how greatly the American people are indebted
for their industrial prosperity to the bounty of nature. The              31
magnificent system of inland waterways, comprising over 18,000 miles
of navigable rivers, and the railroad system, with over 200,000 miles
of track, facilitate a rapid and cheap exchange of products. The
enormous domestic market afforded the American manufacturer, larger in
consuming capacity than that in any other country in the world, has
permitted the economic production of goods on a large scale and a
consequent reduction in cost. Foreigners have often asked the question
why, if freedom from tariffs and trade restraints has been a good
thing within the United States, freedom of trade with other countries
would not prove equally advantageous. In answer to this, James G.
Blaine, formerly Secretary of State, wrote, “It is the enjoyment of
free trade and protection at the same time which has contributed to
the unexampled development and marvelous prosperity of the United
States.” Finally, the absence of tradition and of over-conservative
ideas handed down from a former and more primitive system of industry
has been a great boon. There have been developed traits of energy,
inventiveness, and ingenuity, which, aided by a universal system of
compulsory free education, have contributed greatly to the material
progress of the people.

The system under which the production of wealth in a modern industrial
nation is carried on is usually called the factory system, and to this
we must now turn, for it is in the factory that the utilization of
machinery and capital finds its greatest development. The term is not
easily defined, but we may adopt the description given by the late
Carroll D. Wright: “A factory is an establishment where several
workmen are collected for the purpose of obtaining greater and cheaper
conveniences of labor than they could procure in their own homes, for
producing results by their combined efforts which they could not
accomplish separately, and for preventing the loss occasioned by
carrying articles from place to place during the several necessary        32
processes to complete their manufacture.” The essential elements in
such a system are the minute division of labor, the large use of
labor-saving machinery, the increasing specialization and localization
of industry, and the concentration of production in fewer and larger
establishments with consequent increase of product and reduction of

The division of labor may mean either the separation of occupation or
the division of a process into minute parts. An illustration of
separation of occupations may be found in the manufacture of a
carriage: one factory produces hubs, another wheels, a third axles, a
fourth the body, a fifth manufactures upholstery, a sixth the
hardware, and a seventh (the carriage factory, so-called) assembles
the parts and places the completed product on the market in the form
of a carriage.

As an example of an extreme division of labor the slaughtering and
meat-packing industry offers a classical example, though in this case
the use of complex machinery is not involved. “It would be difficult,”
writes Professor Commons,[2] “to find another industry where division
of labor has been so ingeniously and microscopically worked out. The
animal has been surveyed and laid off like a map; and the men have
been classified in over thirty specialties and twenty rates of pay,
from 16 cents to 50 cents an hour. The 50-cent man is restricted to
using the knife on the most delicate parts of the hide (floorman) or
to using the axe in splitting the backbone (splitter) and, wherever a
less skilled man can be slipped in at 18 cents, 18½ cents, 20
cents, 21 cents, 22½ cents, 24 cents, 25 cents, and so on, a place
is made for him, and an occupation mapped out. In working on the hide
alone there are nine positions, at eight different rates of pay. A
20-cent man pulls off the tail, a 22½-cent man pounds off another
part where the hide separates readily, and the knife of the 40-cent
man cuts a different texture and has a different ‘feel’ from that of      33
the 50-cent man. Skill has become specialized to fit the anatomy.”

Usually, however, when the division of labor becomes as minute as that
described, the routine-like process is handed over to a machine.
Indeed Mr. John A. Hobson states as a law of machine industry the fact
that as soon as a process becomes perfectly automatic and mechanical a
machine is invented which can do the work better and more rapidly than
human hands. Hand in hand, therefore, with the subdivision of labor
goes the extension of labor-saving machinery. Labor becomes relatively
of less importance than capital in the new methods of production, and
man becomes a machine tender rather than an independent producer.
There are practical benefits and disadvantages connected with this
system. Many writers insist that the effect on the worker is narrowing
in the extreme, but Professor Marshall points out that his labor as
tender of a machine demands a higher order of intellectual development
than that of a handicraftsman, and that he has more leisure, while the
product of the present system is immeasurably greater than under the
old hand methods. The manufacture of products by machinery has in turn
required the making of machines by machinery, as the complex machines
of today could not be turned out by hand methods. A characteristic
feature of the modern factory system therefore has been the growth of
the machine trades, which supply the equipment of the new industry.

With the growing specialization of industry there has gone on an
increasing localization in some favored spot or locality. Thus most of
the collars and cuffs (85 per cent) manufactured in the United States
are made in Troy, N. Y.; 64 per cent of the oyster canning is carried
on in Baltimore; 54 per cent of the gloves are made in Gloversville,
N. Y.; 48 per cent of the coke in Connellsville, Pa.; 48 per cent of      34
the brassware in Waterbury, Conn.; and 46 per cent of the carpets in
Philadelphia. While there are undoubted advantages in such
localization and specialization in a particular industry, such as
reputation, growth of special skill, etc., there are also offsetting
disadvantages, as the complete prostration of the whole community if
the particular trade upon which it depends is disastrously affected by
trade depression or by a shifting of the industry to some other

More striking than the concentration of manufactures in particular
places has been its concentration in a few large establishments and
under the control of fewer individuals. Without entering into the
discussion, as yet, of the trust problem, we may at this time take up
the earlier and important tendency of industry to be conducted on a
large scale. This concentration into a relatively smaller number of
establishments has been going on pretty steadily since 1850 and shows
no signs of abatement at this time. In the case of the iron and steel
industries, cotton manufactures, and leather goods, the movement is
positively startling, an actual decrease in the number of
establishments having occurred in the half century. This is most
marked in the monopolized industries. At the same time there has gone
on an enormous increase in the size of the individual plant, in the
capital employed, the number of men employed, and the value of the
product. Almost the only industries which have not yet displayed this
tendency are those which are essentially local in their nature, as
grist mills, cheese and butter factories, etc. But in general it is
characteristic of manufactures in the United States. The same tendency
has been manifest in the countries of Europe, though there a system of
well-developed and fairly vigorous hand trades has resisted the
movement and made the development in this respect much less rapid than
in this country.

Large-scale production is more profitable than production on a small      35
scale in all industries which are subject to increasing returns. By
this is meant that the return in product for each additional dollar’s
worth of labor and capital employed grows greater the larger the scale
on which the enterprise is conducted. When this is true the big
enterprise will be able to undersell the little enterprises and
eventually to drive them out of business. This is true not only in the
competitive industries, but also in those which enjoy a legal or a
natural monopoly, as street railways, gas and water plants, etc., all
of which show an irresistible tendency to consolidation. Before
drawing any conclusions as to the desirability of such a movement, let
us examine some of the economies of large-scale production. The most
striking and the most important is the economy in fixed capital.
Concentration is a result of machine production. As machinery becomes
more expensive, the breaking up of the processes of manufacture into
small parts requires more complex and detailed machinery; a larger
outlay is requisite for an up-to-date plant. Thus the average amount
of capital invested in each iron and steel establishment in the United
States increased from $47,000 in 1850 to $858,000 in 1900. The head of
a steel company in Pittsburg recently testified before the Industrial
Commission that to build and equip a plant for the manufacture of iron
and steel under modern conditions would call for an investment of from
$20,000,000 to $30,000,000. It is clear that under such conditions of
expensive machine methods a small plant would have little chance of
existence. Steam railways afford another good illustration of an
industry in which enormous economies are effected by the concentration
of a number of small, independent lines under one unified control.
Every machine is utilized to the utmost; there is no needless
duplication of machinery such as would occur if several small plants
divided up the business, while expensive machines to carry on             36
relatively small processes can be profitably installed.

But other economies than those in the use of capital are present in
large-scale production. A large concern can hire more expensive and
better managers, can afford to experiment with new methods, can effect
a more minute and economical division of labor, as for example in the
slaughtering business above referred to. A striking economy can also
be effected in the utilization of what were formerly waste products,
and still are in small concerns. This has been carried furthest in the
oil-refining and meat-packing industries; a recent statement of Swift
and Co., for instance, alleged that the dividends on the stock were
paid out of the by-products, such as neatsfoot oil, land fertilizer,
glue, fats, etc. Owing, however, to the generally wasteful methods
prevailing in the United States not so much attention has been given
to this point as in England and Germany. A final economy may be
mentioned that can be secured by a large business, namely, carrying on
allied or subsidiary processes. Thus the Standard Oil Company builds
its own pipe lines, makes its own barrels, tin cans, pumps, tanks,
sulphuric acid, etc.

Such an extension in the size of the single establishment would of
course not have been possible if improvements in the arts of
communication and transportation had not at the same time immensely
widened the market. As long as the market was local, and a factory
could afford to send its goods over only a limited territory there was
of course a fixed limit to the expansion of that industry. Now,
however, when markets are often world-wide and the demand for goods
has so enormously increased, while the modern railway and steamship
can transport goods cheaply and quickly half around the globe,
enterprises can be expanded and carried on on a scale commensurate
with the expanded market and improved methods. It is clear then that
the tendency to production on a large scale is the logical result of      37
machine methods, that it secures great economies, and that in
industries of increasing returns it is absolutely inevitable.

But not only in manufacturing is this movement observable. More
recently concentration in large establishments has revolutionized the
retail trade. Department stores have supplanted the small shops
because they can buy on better terms, get transportation cheaper,
offer a greater variety to the customer at a lower price, and save
time and trouble to the customer. The growing ease of communication
with central shopping districts, the rapid changes in fashion with the
consequent large variety which only a large establishment could afford
to carry--all these factors have helped along the movement. There are
limits to such a movement, for small tradesmen will always hold the
repairing trades, and the sale of perishable goods; thus there are no
businesses so scattered as the small stores of the “butchers and
grocers.” But on the whole we may safely conclude that the small
storekeeper is doomed now just as the small manufacturer was two or
three decades ago. In the carrying trade country carriers and a few
cabmen in the cities are the only survivals of the small independent
business; the steam railroad and the electric railway have driven the
small carrier out of business. In agriculture alone, where
concentration is strictly limited by the necessity for intensive
cultivation, and in professional and personal service, where the very
nature of the business prevents it, is there little or no development
in the direction of large-scale methods.

The industrial and social effects of this development have been marked
in all countries. In the United States the main attention has been
given to the organization and development of machinery, and a
wonderful industrial advance has followed the movement. The economic
readjustments have consequently been made with comparative ease, and
the labor set free by the invention of new machines has been              38
reabsorbed in the same or other industries. Consequently the social
effects have not been so marked as to call for special emphasis; as
the same question presents itself, however, in connection with the
more recent trust movement we may profitably defer its discussion to
the next section.

There is one other characteristic feature of modern capitalistic
machine industry which deserves special mention, especially as its
development has been carried furthest in the United States. Reference
is made to the system of standardization and of interchangeable parts.
In no single feature is the contrast between modern machine methods
and those of the old hand trades greater. By standardization is meant
the production of so-called “standard products” according to some
acceptable size, form, or shape. In the manufacture of screws or iron
beams, or even ready-made clothing, for example, certain dimensions
and sizes which are best adapted for general use, are selected as
standard sizes and these are then turned out in large quantities by
automatic machinery. The advantages of such a system, in cheapness,
quickness of delivery, ability to replace a single broken part, etc.,
are numerous and manifest. “The possibilities of standardization are
strikingly shown in a recent international incident. The Egyptian
Government desired a bridge for the Atbara at the earliest possible
moment; inquiry was made of the English bridgemakers, but no promise
of prompt delivery could be secured. Within twenty-seven days after
the tender of the contract was made to an American firm the bridge was
ready for shipment. The feat, not a remarkable one, was due to the
standardization of bridge material. This in itself was a guarantee of
quick delivery and construction.”[3]

Standardization was followed by the system of interchangeable parts,
according to which each part of an intricate machine or product is        39
made exactly like the same part in every other machine. The parts can
thus be turned out in large quantities and “assembled” at a single
operation. From the standpoint of the consumer or user of the machines
thus made, the great merit of the system lies in the fact that he can
quickly and at small expense duplicate any broken part. It is today
applied to almost every product of large consumption, from
agricultural implements and steam engines to watches and nails. By
producing machinery on this plan it has been possible for American
manufacturers to extend their trade very materially in foreign lands.
It was recently reported in the newspapers that Mr. E. H. Harriman had
expended $65,000,000 in standardizing the equipment on his railroad
systems; while this sum is enormous, it will undoubtedly be justified
by the increased economy of repairs and operation.


We have already seen how production upon a large scale has superseded
production upon a small scale in most important branches of
manufactures. We have now to inquire whether production upon a large
scale is in turn to be supplanted by single consolidated enterprises,
by those combinations of capital known as trusts. Under one of these
three conditions industry must be carried on; few people wish to
revert to the stage when production was carried on in small
establishments, but warm controversy and difference of opinion still
exist as to whether centralized management by a single company or
combination offers superior advantages to production by independent
competing establishments. The concentration of production in a few
large establishments has been followed by the consolidation of these
larger units into a single whole. Since the days of Adam Smith capital
has tended to combine for the purpose of fixing prices, and these         40
combinations have passed through several phases. The earliest form is
the agreement of independent concerns to fix prices, as was done by
the American railroads in their early traffic agreements. The next
step was to divide the field, as has been done by the French railways
and the American express companies. A third phase of combination was
the pool, which attempted to regulate the output rather than to fix
the price or divide the field. Railway, whisky, beam, and other pools
were organized for this purpose, but all broke down because of the
difficulty of enforcing the agreement and the temptations to each
member to break it secretly for the sake of the large profits
obtainable. By this time it had become clear that if a real permanent
consolidation of interests was to be secured by the competing
enterprises some closer form of combination must be devised which
could not be broken at will by any member. An industrial union and not
a loose confederation must be attained. Accordingly the next step was
taken in 1882 by the formation of the Standard Oil Trust, so called
because the constituent concerns handed over their business to the
complete control of a central board of trustees, receiving in return
trust certificates which entitled them to dividends. Similar “trusts”
were formed in the whisky, sugar, and other industries, but were
speedily declared illegal by the federal Supreme Court. By this
decision the form of combination was changed, but the movement was not
at all checked. The next phase and the last was the establishment of
holding corporations, which are organized to buy up and hold the stock
of a number of individual corporations, which still retain their
corporate existence. In this way unity of control is secured, to which
is added a certain flexibility; but it is really the trust under
another legal form. Where pooling and combination by means of holding
companies have been forbidden by law, as in the case of railroad
companies, actual consolidation has often taken place, though when        41
trusts are spoken of the other form of combination is more often
meant. From the point of view of business organization the holding
company is simply an extension of the principle of the corporation,
and to a consideration of this we must therefore turn.

There are three classes of establishments by which industry is carried
on--those that are the property of an individual, those which belong
to partnerships or firms of unlimited liability, and those belonging
to corporations of limited liability. The usefulness of the individual
system is of course limited to small undertakings, where but little
capital and credit are necessary; this form of organization still
dominates the field in agriculture, in the small retail trade, and in
the repairing industries. The partnership is a joint undertaking by
two or more individuals, and makes larger enterprises possible, but as
each individual is liable for all obligations of the firm or his
partners his personal liability is greatly increased. While it is well
adapted to certain undertakings, as moderate mercantile establishments
and professional firms, owing to a certain elasticity in the
contractual relations of its members, it is not suited to large
industrial ventures, both because of the excessive personal liability,
and because of the necessity of dissolving the partnership upon the
death, withdrawal, or insolvency of any member. The advantage of the
corporation lies in the fact that it has a continuous existence, and
that the liability of the shareholders is limited to the amount of
capital actually contributed by each; it is well adapted to modern
enterprise because it permits the summation of large amounts of
capital from a number of small savers and centralizes the use of this
capital in the most economical manner. There may thus be concentration
of management without concentration of ownership. The federal census
of manufactures in 1905 showed that, although less than one-quarter of
the manufacturing establishments were organized as corporations, yet
they produced three-quarters of the total manufactures in money           42
value. In the field of transportation, corporations are in almost
exclusive control, most banks and insurance companies are organized
under this form, while mercantile and industrial undertakings are
being more and more generally organized as corporations. Not merely
are most of our business enterprises being conducted under corporate
form and organization, but most recently, as has been already pointed
out, there has been a movement to combine individual corporations into
larger concerns, or trusts. The trust is usually thought of as a
monopoly and, while not necessarily so, it usually does exercise
monopoly control; but for the present we shall consider the trust
problem from the standpoint of business organization, deferring to the
end of the section the discussion of monopoly.

The trust movement may be said to have begun with the formation of the
Standard Oil Trust in 1882, but down to 1898 its progress was slow.
Beginning with the revival of prosperity in 1898, however, there
ensued a veritable stampede of business managers to enter into
combinations. During the next three years 149 large combinations, with
a capital of over $3,000,000,000, were formed. The movement spent most
of its force by 1902, though it is by no means at an end yet, as the
recent floating of the Dry Goods Trust indicates. A few figures from
reliable authorities will make clear the extent of the movement.
According to the New York Journal of Commerce, industrial (i.e.,
manufacturing and commercial) and gas trusts were organized in the
United States between 1860 and 1900, not including combinations in
banking, shipping, railroads, etc., as shown in the accompanying

Another more recent list by John Moody[4] gives the number of
“industrial” trusts organized down to Jan. 1, 1904, as 318; these have

  -----------------+------------+---------------                          43
      Decade.      |   Number   | Total Nominal
                   | Organized. |    Capital.
      1860-69      |       2    | $   13,000,000
      1870-79      |       4    |    135,000,000
      1880-89      |      18    |    288,000,000
      1890-99      |     157    |  3,150,000,000
   Total, 40 years |     181    | $3,586,000,000

acquired or control 5,288 plants, and have a total nominal capital of
$7,246,342,533. A movement so general and widespread, and of such
gigantic proportions, must have had some powerful and intelligible
causes behind. For it was not confined to the United States, but was
equally observable in such industrial diverse countries as England,
France, Germany, Russia, and other European nations.

The most important and general cause was the desire to secure the
legitimate economies of large-scale production. A combined or
federated industry may secure even greater economies than a single
large factory. These have been concisely stated as follows[5]: “The
cost of management, amount of stock carried, advertising, cost of
selling the product, may all be smaller per unit of product. A large
aggregation can control credit better and escape loss from bad debts.
By regulating and equalizing the output in the different localities,
it can run more nearly full time. Being acquainted with the entire
situation it can reduce the friction. A strong combination has
advantages in shipment. It can have a clearing-house for orders and
ship from the nearest source of supply. The least efficient factories
can be first closed when demand falls off. Factories can be
specialized to produce that for which each is best fitted. The
magnitude of the industry and its presence in different localities
strengthens its influence with the railroads. Its political as well as
its economic power is increased.”

Many of these economies of production are not new to these trusts, but    44
have been secured equally by large-scale manufacturing establishments.
Some of the savings, especially in buying raw material and marketing
their products, are peculiar to the trusts and mark a more efficient
mode of organization than mere concentration of industry in single
large establishments. Thus, it has been found possible to dispense
with a great number of traveling salesmen, of whom it was said that
30,000 lost their positions in the year 1898 alone. When the whisky
trust was formed only twelve of the eight distilleries entering into
the combination were kept running, but as these were the largest, best
located and best equipped, and were run at their full capacity, they
were able to turn out as much as all had done before and at an immense
economy. The saving of cross freights by having an order filled from
the plant most conveniently located is considerable; Mr. Gates
estimated the saving of the American Steel and Wire Company in this
single point at $500,000 a year. Such an economy could not be secured
by a single establishment, no matter how well organized or on how
large a scale. The specialization of particular factories to do
special processes is well illustrated by the organization of the
United States Steel Corporation.

The growth of this latter combination is an example not only of
consolidation, but of the integration of industry, that is, the
grouping together under one control of a whole series of industries.
From the mining of the ore and coal, through the processes of carrying
it to the furnaces, coking the coal and making the pig iron,
manufacturing the latter into the finished forms of iron and steel
products, and down to the marketing of the latter, every step is
carried on under the control of the United States Steel Corporation.
The assets of the company were stated as follows soon after its
organization, and illustrate the magnitude and scope of its operations:

  Iron and Bessemer ore properties          $ 700,000,000                 45
  Plants, mills, machinery, etc.              300,000,000
  Coal and coke fields                        100,000,000
  Railroads, ships, etc.                       80,000,000
  Blast furnaces                               48,000,000
  Natural gas fields                           20,000,000
  Limestone properties                          4,000,000
  Cash and cash assets                        148,251,000
      Total                                $1,400,281,000

In addition to economies due to improvements in methods of
organization, production and marketing, another cause for the sudden
and vigorous outburst of trust promotion in the years 1898-1902 may be
found in the profits to be secured by promoters and organizers. After
the successful launching of the first few trusts, with their undoubted
economies and advantages, the movement was taken in hand by
professional promoters, who organized combinations, often with the
help of underwriters, in every branch of industry where there was any
promise of profit. That many of these were artificial or premature is
evident from the financial results: of the 183 industrial combinations
enumerated by the census in 1900, one-third paid no dividends whatever
after their formation and another one-third paid no dividends to the
holders of common stock. As an indication of the profits obtained by
the successful trust promoter may be cited the testimony given before
the Industrial Commission in the case of the Tin Plate Trust stating
that this promoter realized from $2,000,000 to $3,000,000 profit from
the undertaking. When to this is added the profit obtained by the
owners of the constituent plants, which were usually taken over by the
trust at an exorbitant valuation, it is clear that the stimulus of
financial gain was probably stronger in many cases than that of
economy in production. The bill was of course paid in most cases by
the investing public, which absorbed large amounts of industrials in
the years of their active promotion.

Other causes have sometimes been adduced to explain the growth of         46
combinations, such as the tariff and railroad freight discriminations,
but these are too local in their influence to explain adequately the
world-wide movement toward combination. Trusts exist in free-trade
England, and in Germany where freight discriminations on the
state-owned railroads are practically unknown. It is, however, true
that in the United States both these factors have been of decisive
importance in building up certain powerful trusts. “There can be no
doubt,” said the conservative report of the Industrial Commission,
“that in early times special favors from railroads were a prominent
factor, probably the most important factor, in building up some of the
largest combinations. The receipt of discriminating favors from
railroads has been conceded repeatedly by representatives of the
combinations themselves.” The Standard Oil, beef, coffee, steel, and
other trusts may be cited as illustrations. In the matter of the
tariff Mr. Havemeyer’s statement that “the mother of all trusts is the
customs tariff law” may be set down as the rather peevish utterance of
a disappointed beneficiary; but there is no doubt that combination has
been made easier behind the tariff wall. Instance the sugar trust
itself, the leather, steel, tin plate, and others.

Let us now turn to some of the effects of industrial combinations,
which we may classify according as they bear upon competitors and
producers of raw materials, labor, and consumers. As the number of
competitors is reduced the fierceness of competition among those
remaining in the field is greatly increased, for the value of the
prize to the successful enterprise is correspondingly greater. It is
not surprising therefore that at times this rivalry should have
assumed unethical if not actually illegal forms. The practice by some
trusts of fixing prices below cost at some strategic point in order to
crush out a troublesome competitor, and then correspondingly raising
them elsewhere so as not to sustain any loss, is serious because so       47
subtle. Prof. John B. Clark regards this as so serious an evil that he
would have the Constitution amended in order that power might be given
the Federal Government to prevent it. The producers of raw materials,
as cattlemen, crude oil and coal producers, sugar and tobacco growers,
and others, complain that the prices at which they sell their products
are dictated to them by the trusts, which are practically the sole
purchasers of what they have produced. They claim that prices are
depressed to the lowest point possible and that every gain from
increase of demand goes into the pockets of the trust managers. It may
of course be answered that the trust cannot depress prices below the
point at which a living profit can be secured by the producer of the
raw material or he will stop producing, but there is no doubt but that
the monopoly power possessed by the trust in such cases will sometimes
be used to the disadvantage of those whose product it alone buys.

The effects upon labor of the organization of capital in combined
industries and under centralized control are more complex. As trusts
have superseded single corporations because this mode of industrial
organization was more economical, we must expect to find that one of
the economies was the displacement of labor. The discharge of
traveling salesmen has already been spoken of; with the consolidation
of various plants under one control other high-priced men were let
go--managers, superintendents, etc. The same thing was true at the
other end of the industrial scale and thousands of workmen, usually
the least efficient and capable, were deprived of work. The natural
consequences of these combinations and economies were not clearly
apparent at the time, because they were happily coincident with a
period of business expansion and prosperity which reabsorbed into the
industrial organism most of the displaced workers. Another phase of
the relation between trusts and labor is that of their effect upon

In general it may be said that there are only two sources out of which    48
an increase of wages can be paid, and these are the profits of the
business organizer and manager or the increased product of the
business itself, and of these two only the latter can serve as a
permanent source of higher wages. Now it is pretty evident that labor
has not been in a position to force the trust magnates to forego their
profits. On the other hand, wages in industries carried on by
industrial combinations have risen, and it must therefore have been
because there was more produced and consequently more to be divided.
If the inefficient workers were discharged and only the best ones
retained by the trusts, here is one explanation why they could afford
to pay high wages--they paid more because they got more done. As yet
labor has not admitted that it is unable to cope with these industrial
combinations; it has however demanded that it be allowed to combine on
a national scale and to bargain collectively for united labor with
combined capital.

The discussion of the effects of trusts upon the consumer leads at
once to the discussion of their effects upon prices, for it is through
the agency of price that the trust touches the ordinary man. The
advantages claimed by trust organizers are economies of production and
lowered cost; but the vital question to the consumer is whether
lowered cost increases profits or reduces prices. On this point the
Industrial Commission reaches the following conclusion: “that in most
cases the combination has exerted an appreciable power over prices,
and in practically all cases it has increased the margin between raw
materials and finished products. Since there is reason to believe that
the cost of production over a period of years has lessened, the
conclusion is inevitable that the combinations have been able to
increase their profits.” Moreover the power over prices was greatest
during certain periods when the control of the combinations was
greatest. The problem therefore resolves itself into the question,        49
are trusts monopolies? While a categorical answer cannot be given to
this, it may safely be affirmed that all trusts try to be monopolies.
Nor is it necessary to control the production, sale, or purchase of a
commodity absolutely in order to exercise monopoly power; the control
of 50 or 60 per cent may suffice to secure virtual monopoly. The
purpose of a monopoly is so to fix the price that it will obtain the
maximum net profit. It is conceivable that this result may be attained
by lowering the monopoly price below the point of the competitive
price, but this is unusual. In general a monopoly price has meant a
high price, and a high price has meant a restriction of the output.
Where that has been the result of trust control, society has been
injured, for not only has it not shared in the economies of production
but it actually gets less and has to pay more than it would have done
under competition. It may be said, however, that even in the case of
the greatest monopoly there is always the specter of potential
competition threatening its profits, while the possibility of
substituting some other commodity for the monopolized article protects
the consumer from too great extortion and keeps the price within
limits. Absolute control over price is never exercised by any
monopoly. Nevertheless, we may fairly conclude, in the words of Henry
D. Lloyd, that “monopoly is business at the end of its journey,”
control over prices is the object of combination.

There remains to be considered another charge of monopoly which has
been brought against the trust, the monopoly of opportunity or the
suppression of individual initiative. It is no longer possible, it is
claimed, for the man of small means, even with good talents, to engage
in business for himself: he must accept some subordinate position in a
corporation where his individuality is checked and his power of
initiative does not find free play. So far as this is true it would
seem to be the result not so much of the trust movement as of             50
large-scale production. We have seen that the tendency of machine
production is to enlarge the business unit and to call for the
investment of constantly larger amounts of capital in up-to-date
establishments. Some writers even point out that the average business
man who engages in business on his own account fails, and that he
should therefore be grateful if more efficient producers offer him a
remunerative and steady salaried position. Without insisting upon this
point it may still fairly be noted that there are large fields of
enterprise that lie outside the area of monopolistic control.
“Large-scale production is best adapted to articles that can be turned
out in large quantities according to uniform patterns and standards;
individual initiative is still free in those lines of production that
call for artistic ability or appeal to individual tastes, or which,
like agriculture, are dependent upon variable conditions.”[6]

There are, however, other evils connected with trust organization and
management that are more easily remediable and that call for
legislative regulation. “The evils of combination, remedied by
regulative legislation,” concludes the report of the Industrial
Commission,[7] “come chiefly from two sources: (1) the more or less
complete exercise of the power of monopoly; (2) deception of the
public through secrecy or false information.” Various remedies have
been suggested to meet the first class of evils, those of monopoly,
generally in the direction of strengthening the powers of the Federal
Government. We have however no lack of legislation on this subject
already: thirty-four states and territories have passed anti-trust
laws, and the federal Anti-Trust Law of 1890 explicitly provides that
“every contract, combination in the form of a trust or otherwise, or
conspiracy in restraint of trade or commerce among the several states,
or with foreign nations, is hereby declared illegal.” The severe          51
restrictive measures of the states have been largely nullified by the
loose legislation of three or four “charter granting” states, in which
95 per cent of all the trusts have accordingly been chartered, while
the federal enactments have been found very difficult to enforce. It
is not easy to define or to prove monopoly or conspiracy in restraint
of trade. The second class of evils has been met by statutes requiring
publicity and more definitely fixing the responsibility of corporation
officials. Such measures of control must be the first step toward
intelligent regulation, and are to be commended as thoroughly
reasonable. The establishment of the federal Bureau of Corporations
with power to “investigate” industrial corporations engaged in
interstate commerce has already led to the publication of some
valuable reports. We must first proceed along the lines of publicity
and intelligent information before we attempt more drastic remedies.


An unavoidable element of risk enters into all modern business. In the
old handicraft stage of industry goods were made upon order; demand
preceded supply very definitely, and there was little possibility of
mistakes in production. Nowadays, as we have seen, production is for a
distant and often uncertain market. It is carried on by machine
methods and roundabout processes; sometimes the result is a very
remote one and the uncertainty of success is correspondingly great.
Production is not based upon order, but upon a forecast of the
possible demand, upon a future market. Chance and change are
inseparable from productive enterprise--natural chances from the
elements, political changes, as war or unfavorable legislation,
industrial mistakes or sickness or death of oneself or others, and
economic changes, as the invention of a new machine or a change in
fashion. These are the unavoidable incidents in industry and are not      52
under the control of the individual business. Some of them, however,
are so regularly recurrent that they can be foretold on a large scale
for any industrial society, and can be guarded against by insurance.
Everyone recognizes the desirability of having such risks as those of
fire, shipwreck, lightning, death, etc., assumed by certain
individuals or companies who make a business of such risk-taking. A
small premium is paid by the individual for protection, and he is
freed from anxiety from mischance and is able to devote his whole
energies and capital to his business; the insurance company has
specialized in this one department and by equalizing the chances over
a wide field has practically eliminated them. In doing this it
performs a service of recognized and undoubted social value.

There is another kind of risk-taking the social utility of which is
not at first sight so clear. Among the chances of productive
enterprise are those due to the rise and fall in the prices of the raw
materials, the labor, and the finished product between the time when
the process of production is begun and the time when it is completed.
Every farmer, every manufacturer, every student even who invests
capital in his own education, is to some extent a speculator. Along
certain lines he can protect himself by insurance, but that is not
possible in all. Is there no way, then, by which he can guard himself
against price fluctuations and assure himself of the legitimate gains
of his business? This, it may be answered, is the function of the
speculator in modern business, and in performing this service he is
benefiting society in much the same way that the insurance company
does. We must, however, clearly distinguish between legitimate and
illegitimate speculation; we are discussing only the former.

One way in which the speculative risk attaching to price fluctuations
is reduced for the manufacturer and assumed by the speculator is by
the establishment of a continuous open market, as the stock and           53
produce exchanges. If a miller, for instance, engages to deliver flour
a year hence and expects to begin milling in six months, he must know
at what price he can buy his wheat when he needs it, or his
anticipated gain may be turned into a loss by an unexpected rise in
the price of wheat. He is able, however, to buy a “future” in wheat on
the produce exchange from some broker who makes a specialty of this
business. He buys his needed wheat now for delivery six months hence,
and on the basis of this price is able to accept an order for his
flour a year from now, allowing himself a fair profit as a miller but
wholly eliminating the speculative risk of price fluctuations. Or a
building contractor, before making an estimate of the cost of erecting
a structure, will secure options at definite prices from dealers on
the materials he will require. So, too, in the iron and steel business
it is customary for manufacturers to contract in advance for materials
at the same time that they accept orders for the delivery of the
finished products. In all these cases the business of dealing in
futures is assumed by a particular class, who have developed a special
skill and ability in forecasting price variations, and who can do so
very accurately. It is not a matter of luck or chance, but the result
of wide knowledge and careful study. “To foretell the price of wheat
one must know the rainfall in India, the condition of the crop in
Argentina, must be in touch as nearly as possible with every unit of
supply that will come into the market.” Sometimes the speculators make
mistakes, but they are certainly less apt to do so than men who are
without their special talent and training.

The social value of this service lies in the equalization of demand
and supply between the present and future that is thereby effected.
Let us take as an illustration the case of the miller cited above. If
at the time he accepts the order for flour the price of wheat is high,
he will be inclined to charge a high price. But the wheat broker,
foreseeing that there is going to be an abundant crop six months          54
hence, engages to sell him his wheat for future delivery at a low
price, and he is thereby enabled to sell his flour at a lower price.
At the same time the price of the wheat on hand at the present time,
instead of being held and sold at famine prices, is consumed for
present needs at moderate prices. The operations of the wheat brokers
in such a case have a very steadying influence on prices, preventing
the oscillation between very high prices in times of scarcity and very
low prices in times of glut. It must be admitted that dealings in
futures are highly speculative; “but it must be remembered that it is
not merely the dealings in futures, but the future itself, that is
uncertain. If such dealings can be confined to the men most competent
to make accurate predictions, their tendency will clearly be to lessen
the uncertainties of business.”[8] But closely connected with
legitimate speculation or risk-taking by a specialized and trained
class, there is, as our stock and produce exchanges are actually
conducted, a large amount of illegitimate speculation, and to this we
may now turn for a brief consideration.

The facilities offered by the open markets on the exchanges and the
practice of dealing in futures are taken advantage of by many who,
without any special training or opportunities of knowing the market,
simply bet on the price movements. Brokers are willing to buy and sell
produce or stocks for their customers if the latter will put up with
them a margin of about 10 per cent to protect them from loss. It is
therefore possible for a person with little capital and no knowledge
to speculate on a margin, buying what he does not want and selling
what he does not own. In practice it is impossible to distinguish
between those dealings in which actual delivery is intended
(legitimate speculation) and those in which no such delivery is
contemplated (gambling), and consequently most efforts to regulate        55
transactions on the exchanges have failed to accomplish their purpose.
The purification of their methods would seem to lie with the members
of such exchanges themselves. The contention has often been made that
these fictitious transactions in such commodities as wheat or corn or
cotton create an artificial reduction in prices, since the
professional gambler usually sells short or “bears” the market, and
that this injuriously affects the farmer. This is manifestly
untenable, since every fictitious sale must be balanced by a
fictitious purchase. What actually takes place is simply a bet between
the two parties to such a transaction on the actual course of prices
and of itself does not affect prices, except in the unusual case of a
“corner.” There is, however, great possibility of evil in the presence
of a crowd of uninformed speculators, for they can greatly increase
the power of an unscrupulous operator who can persuade them to follow
his lead. Their presence, too, increases the temptation to such a man
to rig the market. Under present conditions the abuses of speculation
are more in evidence than the economic advantages. How to confine
speculation to the small group of risk-takers who have special
training and aptitude for it, and to prevent gambling on the stock and
produce exchanges is one of the economic problems of the day.

One of the most striking phenomena of modern industry is the frequent
and violent convulsions of business known as crises. They are
characteristic of all commercially advanced countries and are
generally most marked in those countries which are most advanced. They
are a product of modern methods of capitalistic production and are
essentially a phenomenon of the nineteenth century. A crisis in its
last analysis is the result of a lack of adjustment between production
and consumption, due primarily to mistakes in production. It is
significant that crises usually occur in periods of business
prosperity when credit is easy, prices high, and employment general.      56
Such a period of business prosperity and rising credit may have been
begun by a series of good harvests. The demand for manufactured
commodities increases, prices rise, manufacturers enlarge their
factories or engage in new enterprises, wages and profits go up. Many
speculators, seeing the rise, and thinking it will continue, borrow
money to buy goods with the expectation of selling again at a profit.
Credit operations are expanded to a dangerous extent, and when at last
a shock to confidence occurs the house of cards collapses and a
painful liquidation and readjustment of industry ensues. The state of
trade, in the words of Lord Overstone, “revolves apparently in an
established cycle. First we find it in a state of quiescence--next
improvement, growing confidence, prosperity, excitement, over-trading,
convulsion, pressure, stagnation, distress, ending again in

The immediate occasion of a crisis is always a shock to credit or
confidence. Such a shock, begun perhaps by the failure of a bank or
merchant, creates a demand for ready money. No one is sure that his
neighbor will remain solvent. Everyone accordingly tries to secure
himself against loss by enlarging his cash reserve and thus lessens
the supply for others. Now modern industry is carried on by means of
credit. There is at no one time enough money in the country to meet
all obligations expressed in terms of money. Considerably over
three-fourths of the larger commercial transactions in the United
States are carried on by means of credit. If everyone tries at the
same time to get actual cash, there is simply not enough money in the
country to go around. This increase of demand and diminution in the
supply of money forces up the interest rate on short-time loans.
Money--actual cash--is needed by many people to meet immediate
engagements and they are willing to pay almost any price for it. In
the last panic the rates for call money went up to over 100 per cent      57
and in many cities in the United States clearing-house certificates
and other substitutes for money were issued for use in ordinary retail
trade. But even at high rates money can often not be borrowed. Many
merchants and manufacturers are compelled to sell their goods at a
sacrifice in order to obtain it. Vast quantities of goods and
securities are thrown on the market just when investors and consumers
feel least able to purchase. The result is a fall in prices. Such a
fall in prices lowers profits. Enterprises have been started and
engagements made on the supposition that prices would continue at the
old high level. When they fall it is impossible to pay interest out of
current earnings. Foreclosures and readjustments take place. There is
a general liquidation and reorganization of industry. When interest
contracts have been adjusted, then the effect on wages begins to be
felt. As long as a manufacturer is struggling to maintain his credit
he will keep his factory going, but when he has failed and perhaps
been foreclosed, then the factory stops. Men are thrown out of work,
and wages--the price of labor--fall. Labor troubles usually mark the
end of such a period of readjustment.

This stage marks the end of the crisis and the beginning of a period
of depression or “hard times,” which continues for a longer or shorter
period. The panic of 1893 was followed by a long-continued depression
which lasted until 1897, a period which was marked by low prices and
slack work. In 1898 began a revival of business and an era of marked
prosperity set in which continued for almost ten years, interrupted
only slightly by a “Wall Street panic” in 1903. In October, 1907, a
severe crisis occurred, recovery from which, however, has been
remarkably rapid. The periodicity which has attended crises in the
past is so marked--occurring as they have at intervals of about ten
years--that many writers consider them inevitable. As the easiest way
to answer this question we may take up three main theories as to the      58
causes of crises.

A much quoted, but now generally discredited, theory is that of W. S.
Jevons, a noted English economist, who ascribed crises to sun-spots.
Every ten years and a fraction there occur outbursts of electrical and
heat energy on the sun, which we call sun-spots. These result in
increased heat waves, which affect the crops on the earth, causing
enlarged harvests in Europe and the United States and drought and
famine in India and the tropics. The large harvests and good prices
start a wave of prosperity and speculation, which culminates
inevitably in a panic and depression, until a recurrence of the heat
phenomenon starts the cycle again. The theory states some undoubted
facts, but no causal connection between sun-spots and crises can be
traced, as the latter are too irregular and the two do not always
coincide. Were this theory true crises would be beyond human control.

A second theory, or group of theories, are those which attribute
crises to over-production. Under modern conditions of industry a small
group of men direct industry and determine what shall be produced.
They try to estimate future demand and to adjust production to
consumption, but they often make mistakes. They divert capital into
unproductive industries, they produce the wrong things and create a
comparative glut in certain lines, and when they cannot sell their
goods at a profitable price they fail and precipitate a crisis.
Industry must then be reorganized and frequently control be put in the
hands of other men. A variation has been given this theory by the
socialists, under the leadership of Rodbertus, who insist that the
reason that there is over-production is because of the institution of
private property. Since the capitalists own all the tools of
production they pay the laborers only starvation wages. The latter
cannot possibly buy all that is produced and commodities consequently
heap up in the warehouses until they are thrown upon the market to be
sold at any price. Then a panic occurs and a readjustment of production.  59

The last of these theories regards a crisis as essentially due to a
failure of credit. It is seen that a large part of modern industry is
carried on by borrowed capital, by roundabout processes and for a
distant market and not upon order. That is, the success of a business
depends upon its ability to sell its goods when produced. Now the
aggregate volume of transactions that can be carried on in a year, so
runs the theory, depends upon the efficiency of the credit system;
that is, in general, upon the freedom with which banks are willing to
loan money to people who engage to repay it in the future out of their
ventures. If for any reason the banks reduce this accommodation the
amount of business that can be transacted upon borrowed capital is
lessened. Either some transactions must stop or prices must fall.
Either of these events causes commercial disaster. The contraction of
credit makes it impossible to get the goods into the right hands, and
so we have the phenomena of over-production in a great many lines. As
exchange and transportation have developed and markets widened, crises
have become more universal. According to this theory, they are
inseparably connected with the use of credit and can be controlled
only by a more careful granting of credit by the banks to industrial
managers. Another phase of the credit theory is presented by those who
insist that the cause of crises is the rhythmic overestimation of the
profits to be secured out of certain lines of production, or their
over-capitalization. The new enterprises are financed by the banks on
the basis of this mistaken over-capitalization, their organizers
engage to pay rates of interest which they cannot earn, and the crash
inevitably follows. This is often called the over-capitalization
theory, and is essentially psychological in its character.

There is no doubt as to the truth contained in this last theory. It
helps to explain the rhythmic periodicity of crises. After every          60
period of business depression confidence revives and hope is renewed;
overestimation of the success of new ventures is inevitable. Then
follows a mistaken investment of capital in certain lines of
production, as in railroads in 1884, and a relative over-production at
profitable prices of certain commodities. The true explanation seems
to be found in a combination of the over-production and
over-capitalization theories.

The practical problem that presents itself in this connection is the
question as to whether it is possible to prevent the recurrence of
crises. In view of the explanation just given it would seem that they
must be regarded as unpreventable as long as industry is carried on
under the competitive capitalistic system of production and the modern
credit system. Moreover, crops differ in amount from year to year and
probably always will. Human production and human genius are unequal.
Crises may be regarded as the price a progressive society pays for its
advance, and they may be expected to recur pretty regularly at
periodic intervals. Their disastrous effects may, however, be greatly
lessened by wise currency legislation, by greater care in granting
credit, and by greater wisdom in the direction of individual effort.


We have already characterized the modern system of industry as
capitalistic, that is, as involving the use of expensive and complex
machinery in factories under the control of the capitalist managers of
industry. As we have seen, such a system has caused an enormous
increase in the production of wealth; it has also raised the general
standard of comfort and the level of wages, and has relieved labor to
a considerable extent of the deadly strain of hard manual toil that
was characteristic of preceding systems. The factory system, under
which capitalistic production is now carried on, may also fairly be
credited with other beneficial results: as steadiness and punctuality     61
are essential, it has on the whole led to increased sobriety and
temperance; the work in general is healthier, being performed under
better sanitary conditions than under the old domestic system; the
intellectual status of the workingman has been raised, as vastly more
intelligence is required of a skilled machine operator than of the
old-time hand laborer; and finally the general well-being of the
working class has been improved, as they have shared in the larger
production made possible by machine methods. But, on the other hand,
the new processes and methods have been accompanied by great abuses,
though never so great in this country as in England. Long hours, the
employment of women and children, the weakened economic position of
the laborer, fluctuations in production, liability to be without
employment, industrial accidents, the abolition of personal ties
between employer and employe, the crowding of workmen into a small
space to work by day and their concentration in city tenements by
night--these are some of the problems for which the factory system
must be held responsible. The condition and position of labor have
been vitally affected. So far we have considered mainly the problems
connected with the organization and use of capital. We must now take
up the various questions connected with the relation of labor to
capital and to the capitalistic system of production.

One of the most vital factors in the situation--which we must frankly
admit at the start--is the existence in modern industrial society of a
distinct wage-earning class. It is perfectly obvious that under
present conditions of production great capital or great ability is
necessary in order to become the manager of an industrial enterprise.
Most laborers do not possess either the one or the other of these, and
although there are fortunate examples of industrial leaders who have
risen from the ranks, the general rule is, once a wage-earner always a
wage-earner. The number of those who can achieve industrial               62
independence is moreover growing smaller as business becomes more
specialized and centralized. The laborer therefore belongs to a class,
which is rapidly developing what the German socialists call
class-consciousness, that is, the feeling that he belongs to a
distinct industrial group with interests different from and often
antagonistic to those of other groups or classes. In his struggles
with employers over wages this antagonism of immediate aims obscures
the deeper mutuality and interdependence of their really complementary
interests and not infrequently leads to a feeling of hostility,
finding expression in strikes and labor agitation.

In the transition to the factory system Mr. John A. Hobson[9] points
out that the position of the laborer has been one of increasing
dependence in the following five important points: (1) The ownership
of material--at first the worker owned this and made it into the
finished product, but now he has only a passing interest in a small
part of the process of working it up. (2) Ownership of tools--he
retained these up to the time of the introduction of machinery, but
now seldom owns them. (3) Control of productive power--with the
displacement of hand labor and muscular power by steam-driven
machinery, he no longer owns even this. (4) Relations between workers
and employers--they were formerly on an equality; under the guild
system the master and the apprentice had the same social position; now
the laborer has sunk in the scale, or the employer has risen, until
the only bond between them is, as Carlyle said, the “cash nexus.” A
case was recently instanced where a workingman who had been working in
a factory met his employer for the first time at the end of seventeen
years. (5) Workplace--until the establishment of the factory system
this had always been the home; now it is the factory, and there is a      63
complete divorcement between work and the home.

Another characteristic of modern industry from the labor point of view
is the existence not merely of a wage-earning class, but, more
fundamental, of the wage system. “It is characteristic of the modern
industrial system,” writes President Hadley,[10] “that a laborer who
owns no capital, though nominally free to do what he pleases, must
actually find some property owner who will give him enough to keep him
alive during the period which must elapse between the rendering of the
labor and the sale of the finished product. Under such circumstances,
the laborer almost inevitably submits to the direction of the property
owner in deciding how his labor shall be applied. Laborers without
capital must necessarily work on this basis; even those who have small
amounts of capital habitually do so. Such advances of capital are
known as wages.” Here we have the essence of the wage system in a nut
shell. The laborer sells his labor to an employer for a stipulated
wage. He has a commodity, his labor, consisting of a certain amount of
strength and skill, which he is free to dispose of on the market to
the best advantage, as the owner of any other commodity might do.
Legally, labor is property. Owing, however, to the fact that all
modern production requires capital, the only buyer of his labor is a
capitalist, who directs the way in which the labor shall be applied.
Such a condition, as well as some peculiarities of the commodity labor
leave the laborer, indeed, only “nominally” free. In theory the labor
contract is a perfectly free contract, entered into voluntarily by
both employer and wage-earner, and the courts have generally insisted
that this theoretical freedom must be maintained. In practice various
modifications of the theory have taken place: legislation has been
passed protecting laborers from bargaining away their rights, and         64
trade unions have been formed to bargain collectively for a group of
laborers. In the last analysis, however, the laborer must support
himself by the sale of his labor; society guarantees him neither a
living nor even the right to work. He is a bargainer in a competitive
industrial world and he must assume the responsibility of providing
for himself and his family by securing work. Just what is involved in
such a statement is perhaps best brought out by comparing the modern
wage system with previous systems of labor.

The first historical system of labor, aside from that in the family,
was that of slaves. In this case the labor was forced, and being given
under coercion was probably very inefficient; but the laborer was at
least assured of a minimum of food, clothes and shelter. Slavery was
the main source of manual labor in the ancient world, and did not
disappear in England until the eleventh century. The feudal system of
the Middle Ages was characterized by serfdom, according to which the
laborer was bound to the soil and was compelled to render his lord
certain services. Gradually serfdom was broken down and the wage
system took its place, although remnants of serfdom remained in
England until the eighteenth century. Four centuries before this,
however, the disintegration of the feudal society had already begun,
the serfdom of the agricultural laborer was commuted into regular
money payments, and the artisan bought or otherwise secured his
freedom from feudal exactions. In the towns industry was regulated by
the guilds, and while at first they were distinctly beneficial, in
time they became monopolistic and oppressive. Power was lodged in the
hands of the wealthy traders and merchants and they legislated in
their own behalf against the growing class of laborers, as did the
wealthy land owners against the agricultural laborers. The Statute of
Laborers and other acts sought to fix wages and to prevent the freedom
of the laborer in moving about or choosing his own occupation. Not        65
indeed until the nineteenth century were the last of these old
regulative laws repealed and the modern labor contract recognized in
law and practice as a free contract. “The growth of labor,” says
Brentano, has been “from the system of authority to the system of
contract.” The system of authority, by which rates of wages, length of
apprenticeship, and other details of industry were fixed by some
superior authority, was found to be restrictive, uneconomic and
unjust, and it gave way to the principle of economic freedom.
According to the newer theory, first given effective voice by Adam
Smith, in 1776, the individual should be left to himself, as he knows
his own interest better than does the most enlightened government. The
freest scope was given to the powers of individuals and each was to be
the unlimited master of himself and his possessions.

It has since been found necessary, however, to modify both the theory
and practice of this extreme individualism in order to protect the
interests of various classes of society, especially the laborer. The
legal theory still is that “today the labor contract is perfectly
free: either side may make whatever contract he can get the other side
to sign. Not only this, but either side may freely combine to demand
any form of contract from the other side, as mere combinations alone
are now made perfectly legal.”[11] In practice, however, this complete
freedom has been greatly modified by factory acts, acts restricting
the hours and conditions of employment of women and children,
anti-truck acts, laws providing for weekly payments, guarding of
machinery, limiting the hours of labor, and on the other hand
prohibiting intimidation and molesting. For the most part these laws
have applied to women and children, who are thought less capable of
guarding their own interests, and to a much less degree to labor          66
contracts made by men, who have been considered better able to make
equal contracts with employers. But concerning certain conditions of
employment it has been realized that even adult males are not capable
of securing equitable bargains, and along these lines the nominal
freedom of the labor contract has been decidedly abridged. The
attitude of the courts toward such legislation shows that they have
declared many laws unconstitutional on the ground that they infringe
upon the right of free contract, but in the long run seem inclined to
uphold as much of this restrictive legislation as seems necessary to
obviate the undoubtedly evil results that flow from this real
inequality of employer and laborer.

It is a very vital and important practical economic problem that
presents itself in this connection. How far shall we carry this
regulative principle, or how far shall we insist upon the principle of
freedom? Many labor leaders are again asking for an effectual control
of the labor contract, not by the action of trade unions, but by the
direct legislation of the state. What shall be our attitude to this
demand? Before we can fairly answer this question we must consider
somewhat more fully the character of the bargain that takes place
between an employer and an individual workman, and the nature of the
commodity that the laborer has to sell.

It has already been stated that the commodity which the laborer brings
upon the market is his labor, that is, himself, his time, and his
energies. But these wares are peculiar and differ in several important
respects from ordinary marketable commodities. In the first place,
labor is like a perishable commodity which must be sold at once if the
owner is not to incur loss. The laborer has usually little if any
capital by which to support himself in case he cannot find work, and
may be compelled to make a forced sale of his labor, that is, to
accept unduly low wages. In this respect then he is at a disadvantage     67
in bargaining with his employer. A second peculiarity of the sale of
labor is that the laborer and his work are inseparable. The seller of
an ordinary commodity disposes of it absolutely when he makes a sale.
“It matters nothing to the seller of bricks whether they are to be
used in building a palace or a sewer; but it matters a great deal to
the seller of labor, who undertakes to perform a task of given
difficulty, whether or not the place in which it is to be done is a
wholesome and a pleasant one, or whether or not his associates will be
such as he cares to have.” The person who buys this labor necessarily
directs the application of it to the task in hand, and thus controls
very largely the place, the sanitary and social conditions, the hours,
the character, and safety of the work. In the third place, the
superior knowledge and intelligence of the employers gives them an
advantage in bargaining with their employes, while the reluctance of
employers to “spoil the labor market” often prevents that freedom of
competition which is supposed to secure to the laborer his full share
of the product he helps to produce.

In view of these facts we may fairly conclude that workmen are
inferior to employers as bargainers and that protective legislation is
necessary in order to put them on a real equality. “When laborers have
to make a forced sale of their labor, their freedom of contract is
more nominal than real. When women and children stand individually
before the manager of hundreds of thousands of capital, it is possible
that there may be little freedom and less equality in the contract by
which they sell their services.”[12] It is clear that between two
parties of such unequal knowledge, resources and ability as a laborer
and his employer the labor contract cannot be entirely free and equal.
While trade unions, by combining isolated workmen into formidable
and unified groups, have immeasurably increased their bargaining          68
strength, yet legislation has also been found necessary to remedy the
disadvantages already enumerated. It is realized that “there is no
greater inequality than the equal treatment of unequals.” In the
opening section of this text attention was called to the fact that
economic freedom or liberty was one of the corner stones of our modern
industrial society. But freedom can best be secured by securing
equality and responsibility. Factory legislation and labor laws are
designed to correct the inequalities imposed by nature or involved in
the very nature of capitalistic production. Direct interference by the
state in the freedom of contract is justified as leading to a more
real and certain equality and liberty. But while we may thoroughly
approve the principle of labor legislation it is difficult to know at
what point we should stop. A leading American authority on the law of
labor has stated[13] that “the industrial laborer at least is
beginning to be a privileged class in the law.” On the other hand, it
was possible for Disraeli to say as late as 1875, after the passage of
the Employers and Workmen Act by the British Parliament, “for the
first time in the history of this country employer and employed sit
under equal laws”--so recently were the legal disabilities removed
under which the English workmen had suffered up to this time.[14] The
pendulum has swung so rapidly and so far in labor’s direction in the
last generation that it is a fair question how far it will--or
should--continue to go.


As modern capitalistic production caused the growth of a distinct
wage-earning class and brought about a sharp separation between
employers and laborers, and as the latter were thrown upon their own      69
resources under the prevailing theories of free competition and free
contract, it was inevitable that they should organize to secure their
interests as a class. The growth of labor organizations has been
greatest in those countries where the laborer has been forced to
depend mostly upon his own efforts for protection and improvement,
namely, in England and the United States. On the continent of Europe,
on the other hand, where the individual has been accustomed to look to
the government for the redress of industrial grievances, there has
been a much less vigorous and spontaneous development of such
organizations. They are a product of the nineteenth century and had
their origin in modern machine production.

The growth of labor organizations in the United States has proceeded
hand in hand with the industrial development of this country, and has
been especially rapid since the Civil War. Two distinct types of trade
unions may be noted--the local and the national (or international)
unions. The former, which comprises members who live and work in the
same locality, is the primary unit, and dates back to the beginning of
the century. Each local union, even when subordinate to a national
organization, is a self-governing unit, and is absolutely democratic.
Its relation to the national body has been well compared to that of
one of our states to the United States. The first national union was
not formed until 1850, but now these far surpass the locals in
importance. Their government is representative, as they are made up of
local unions. The great majority of the national trade unions are
bound together in the powerful federal organization, the American
Federation of Labor. The membership of this body numbers considerably
over 1,000,000, while the railroad unions, which are not connected
with it, claim about 125,000 more. Probably not far from 1,500,000
persons in the United States belong to labor organizations, which is
about 10 per cent of the total working population or about 15 per         70
cent of those engaged in trade and transportation, manufacturing and
mechanical pursuits. While this does not seem a very large proportion
and is not as large as the membership of British trade unions, yet it
must be remembered that they constitute on the whole the elite of the
labor world and exercise an authority and power out of proportion to
their numbers. Many other workmen, who do not themselves belong to the
unions, follow their lead and are directly affected by their actions.

Historically the two most important national organizations in this
country have been the Knights of Labor and the American Federation of
Labor, and they represent such different principles that it will be
worth while to describe them. The Knights of Labor was organized in
1869 as a local union of seven garment cutters and had a meteoric
career, counting a membership of 730,000 in 1886, the year of its
greatest strength. It was a national amalgamation of mixed local
assemblies composed of workers of all trades who lived in the same
locality. It held the theory that the interests of all members of the
laboring class are identical and must be cared for at the same time,
if possible, by political action, by co-operation, and by education.
In 1886, however, it entered upon a series of disastrous strikes;
later it came into conflict with trade unions which had not joined its
ranks and were opposed to its policies; and finally it became
entangled in politics. As it lost in influence and strength its place
was taken by the American Federation of Labor, which was its very
opposite in organization and government. This latter body is a
“confederation of trade and labor unions,” each trade being organized
separately into local unions which are given great autonomy, these
unions alone being represented in the national body. Only matters of
general interest come before it, all local trade matters being left to
the local unions. In 1903 it claimed a membership of 1,745,000.

More important than the history of labor organizations is a knowledge     71
of their objects and methods. The primary purpose is of course to
control the conditions of labor and to substitute the principle of
collective bargaining for individual contract. As one of the most
effective ways to secure this result they aim at a more or less
complete monopoly of the labor market. This they may do by bringing
all workers in a trade within the union or by preventing non-union men
from working. The first of these is called the inclusive method,[15]
and if successful makes the union the sole seller of the kind of labor
controlled by its members. It is a monopoly of the laborers against
the employers and is sought to be enforced by inducing men to join the
union either by persuasion or coercion, the latter finding expression
in the strikes against the employment of non-union men and the
insistence upon the “closed shop.” The other form of monopoly consists
in the exclusion of new members from the trade and in a control of
employment; this is a monopoly of a small group against their
fellow-workmen. It is enforced by regulating the entrance to the
trade, making it difficult or expensive, or by limiting the number of
apprentices. Sometimes, as in the Chicago Building Trades in 1900,
they have united with their employers by means of “exclusive
agreements” to raise wages and prices of the finished products at the
same time, and thus jointly to mulct the public. Such efforts to
monopolize the labor market have their counterparts in the
organization of capital, as we have seen. In practice such a labor
monopoly has sometimes been used to improve and elevate conditions,
just as sometimes a capitalistic monopoly has reduced prices below the
competitive point. In general, however, we must condemn monopoly on
principle in the competitive field and insist that freedom and
opportunity be given to all on as equal terms as possible. Of the two     72
forms of trade union monopoly, the former alone, which endeavors to
make it all comprehensive and to enforce generally union conditions,
can be economically justified.

“The establishment of a standard rate of wages may perhaps be said to
be the primary object of trade union policy. Without the standard rate
the trade union, such as it is, could have no existence.”[16] The
purpose of the union is to substitute collective bargaining for
individual agreements and thereby to improve the condition of its
members. But if a single bargain is to determine the pay of a large
number of men, there must be a common standard. In every employment on
a large scale the men are necessarily grouped together and their pay
is determined by a common rule. This is true even in non-union shops.
It is generally assumed that the standard rate of labor organizations
means a uniform wage for each member, but this is not the case; it
means rather a uniform rate of pay to all for the same performance. In
the case of piece work, it could manifestly not mean anything else;
but a large number of labor leaders object to piece work. They insist
that a standard wage means a minimum wage, and that by the
establishment of such a minimum the whole standard of efficiency and
the plane of competition are raised, as the employers cannot then
afford to hire any but competent workmen. The question immediately
presents itself as to what is to become of the older or partially
disabled men, who are no longer able to earn the standard or minimum
wage? In England they are practically guaranteed a subsistence by the
union; in this country the union not infrequently exempts them from
the provisions as to the standard wage. When the rule is enforced
there is certainly a real hardship for these men. But from the
employers there comes the more serious complaint that the effect of       73
the standard wage is to reduce to a dead level the efficient and the
inefficient; that it is a maximum wage and that the efficient and
industrious are prevented from earning more than a fixed amount. There
is undoubtedly a great deal of truth in this charge; the man who
hastens the pace is said to be taking “blood money,” and sometimes a
maximum wage is set which the members are forbidden to exceed. On the
other hand, it may fairly be said that while the union regulation of
wages does tend to produce greater uniformity, the union rate is
usually higher than the competitive rate would be, that is, wages are
leveled up, not down; and finally, that territorial variations make
the local rate conform to local conditions.

A reduction in the hours of labor has been even more strenuously urged
by progressive labor leaders in the United States than an increase in
wages. “Organize and control your trade and shorten your hours,” is
their contention, “and wages will take care of themselves.” Their
arguments in favor of a general shortening of the working day are
twofold. In the first place, owing to the intensity and strain of work
under modern machine methods, the worker cannot work efficiently more
than eight or nine hours a day. The work is too exacting and the
strain on the attention too great; it is a noticeable fact that most
of the accidents in industrial establishments occur in the last hour
or two of the working day. Not only that, but the laborer is entitled
to his share of industrial progress in the form of more leisure,
giving him time for a better family and social life, affording
opportunity for intellectual improvement, and permitting the
development of more rational and higher wants. With the improvement in
the condition of the laboring classes, will go the elevation of
society as a whole.

The second argument in favor of shorter hours put forward by the trade
unionist, is economic rather than social. He argues that a “reduction     74
of hours will diminish the supply of labor in the market, and so will
raise its price. It will make room for the unemployed, and so will
remove the depressing influence of their competition.” There is
involved in this contention the familiar lump-of-labor argument of the
trade unionist: there is just so much work to be done, and if some men
do each a little less there will be more for others. By shortening the
hours of labor of everybody employment will be made more general, and
the work will be better distributed. Now the economists in general
have supported the trade unions in their demands for a shorter working
day, but they have done so because they believed that the product of
industry would not thereby be diminished. They have seen that when the
hours of labor were reduced the laborer was less rapidly worn out
physically, that he could work more rapidly for a short time, and that
his increased leisure and pay, if rationally used, made him a more
intelligent and efficient worker. In other words, a reduction in the
hours of labor from 15 a day to 12, to 10, and even in some cases to
8, was not attended by a parallel reduction in the output, but the
latter remained about the same. This is the great economic
justification of the shorter working day, and as long as this can go
on without materially affecting the product of industry it must be
approved. If, however, the latter is decreased there will be less to
divide and then the relative disadvantages of a smaller dividend must
be weighed against the advantages of increased leisure. Of course the
point to which the number of hours can be reduced without lessening
the product can only be determined by experiment, and will differ in
different trades, but it is inevitable that until this point is
reached the pressure of the trade unions for shorter working days--or
for more holidays or half-holidays--will not be successfully resisted.

Turning now from theory to fact, we find that there has been a great      75
improvement in the condition of labor in this respect. At the
beginning of the nineteenth century the almost universal working day
was, as McMaster tells us, from sun to sun. As factories grew up the
habits of agricultural labor were carried over into industrial
occupations, and working days of 16 and 18 hours were not uncommon. In
1903 the average length of the working day in the United States was
9.6 hours. This great reform may fairly be credited to the efforts of
organized labor itself, for without their insistence and struggles it
is unlikely that it would have been voluntarily granted by employers.

The limitation of output results almost necessarily from the
above-mentioned practices of the unions: reduction of hours,
prohibition of piece work, and the standardization of wages all tend
to restrict the output of the individual worker. But some of the
unions have gone further and have directly limited the amount that
could be produced during a given period by the laborer. This has been
particularly true of British unions and is the subject of common
complaint by English employers and writers, but illustrations may
easily be found in the United States. Thus in Chicago in 1900 “the
lathers limited a day’s work to twenty-five bundles of lath, for which
they received $3; they had formerly done thirty-five bundles for a
daily wage of $1.75. Plasterers were limited to thirty square yards a
day; the steam fitters were permitted to lay only ninety feet of steam
pipe per day; but the plumbers had the most objectionable rules and
restricted materially the amount of work that could be done in a
day.”[17] These rules were defended by the unions on the ground that
they were necessary in order to secure careful work and to prevent the
“rusher” for setting the pace for a fair day’s work. The practice         76
has not been uncommon, especially in the sweated trades, for an
unscrupulous employer to pay a few particularly able workmen to put
extra speed into their work and so set a pace that the other workmen
would be compelled to maintain. This was especially objected to by the
unions in the case of team work. They claimed that when all the
workmen had come up to the new standard, particularly in piece work,
the wages were reduced so that even by working at the higher rate of
speed, they could only make a fair wage. One of the rules of the
Chicago carpenters’ union provided that “any member guilty of
excessive work or rushing on any job shall be reported and shall be
subject to a fine of $5.” Whatever the excuse it is clear that such
limitations cannot be economically justified. Not only does such
dawdling undermine the industrial efficiency of the worker, but it is
unfair to the employer. If the latter bargains for the union rate of
wages and the normal working day, he is entitled to a full return of
the laborer’s best efforts. Otherwise there is no fairness in
collective bargaining. “So far as labor leaders are concerned,” said
Mr. John Burns, the English trade unionist, “we are all strongly
opposed to the restriction of production; we are all in favor of
better and more conscientious work.”

Laboring men have never been quite able to divest themselves of their
old antipathy to labor-saving machinery. They generally regard the
introduction of a new machine as a displacer of men, a creator of
unemployment, a depresser of wages. Some unions have successfully
resisted the introduction of machinery into their trades, as the stone
cutters in Chicago,[18] but in general they have recognized the
impossibility of this attitude. In general they now demand that when
machinery is introduced it shall be operated by union men and their
wages shall be fixed so as to give the workers a share of the             77
increased production.

The policies and methods of the trade unions thus far discussed are
those of a militant nature, but the fraternal objects of these
associations, though less conspicuous, are none the less important.
Labor organizations generally; have insurance and benefit features, by
which sick, injured, or unemployed members are assisted. This is
particularly true of the English organizations, which developed these
features before the rise of the militant new unionism. They often
possess large funds and have been rendered thereby more conservative
and responsible. The educative effect of trade unionism among the
members is marked; some of them possess libraries and all of them
promote discussion and thought upon economic problems, while the
administration of their affairs often gives valuable training. The
older unions did much to encourage co-operation among their members,
but today the tendency is to limit their activities to the essential
one for which they are organized, namely, collective bargaining.

Intelligent unionists realize that they can secure the various objects
for which they strive only by substituting collective bargaining for
contracts between employers and individual laborers. Where this plan
is accepted by employers, representatives of the two sides agree upon
wage scales, usually for a year; during this period the chief task of
union officials is to see that the agreement is lived up to, and if
possible to add to their membership and strengthen the union. In the
United States relatively few trades have adopted this method as a
general practice, the employers still being able to dictate wages and
conditions of employment in most of them, while the unions are still
struggling for recognition, if not for existence. Employers insist, in
refusing to make collective bargains with the unions, that, as they
run all the risks, they must be permitted to manage their business as
they see fit and without interference from the business agent of the      78
union. In reply the unions insist that hours, wages, and conditions of
employment are as much their business as that of the employer. The
latter also urges that the trade unions as at present organized are
too irresponsible and before they ask for collective bargaining should
be incorporated, so that they could be sued for breach of contract if
guilty of such. As yet, however, the unions have preferred their
present position of irresponsibility and immunity and have almost
invariably refused to be incorporated.

“In the minds of a large section of the public,” writes President
Hadley,[19] “labor unions are chiefly associated with strikes. It is
believed by many who ought to know better, that such organizations
exist for the purpose of striking, and that if the organizations were
suppressed, industrial peace would be secured. The first of these
ideas is a distorted one; the second is wholly unfounded.” Strikes
are, however, a necessary concomitant of collective bargaining. If the
representatives of a union cannot come to terms with an employer, they
may compel their members to refuse to sell their commodity, labor;
such a concerted refusal to work is a strike. The “right to quit work”
has been regarded as a sacred one by trade unionists, but it involves
social consequences of great importance. For the workingman, it means
loss of wages and demoralizing idleness; to the employer, idle
capital, loss of profits, and depreciation of plant; and to the
consuming public, inconvenience and annoyance together with curtailed
production. Quite aside from all acts of violence and lawlessness, by
which they are too often accompanied, there is involved an enormous
money waste. According to a report of the Department of Labor, losses
from strikes and lockouts in the United States from 1881 to 1900
amounted to $449,342,000 or an average loss per establishment involved
of about $3,500.

The public is awakening to the realization that it suffers the            79
greatest injury as the innocent third party to every industrial
dispute, and is insisting that the industrial peace be kept or more
reasonable methods of settling differences be found than a strike or
lockout. Such a method is found in conciliation and arbitration. In
the older and more strongly organized unions strikes are infrequent
and methods of joint discussion and agreement are increasingly
resorted to. Boards of conciliation are often provided for, which
endeavor by means of conference and concession to prevent a dispute
from arising; they succeed best where both employers and employes are
organized. Should the dispute come to a head, however, provision is
usually made for its reference to a board of arbitration, which may be
selected by the disputants themselves or may be created by the state;
in the latter case the acceptance of the award may be voluntary or
compulsory. In the United States most of the successful boards have
been those selected by the parties to the dispute; the state boards
have usually the power only of investigating the causes of the
trouble, but this in itself has proved of considerable value in more
than one instance, notably in the case of the Anthracite Coal
Commission. Compulsory arbitration is being given a thorough trial in
Australasia and seems to be meeting with success there. In this
country, however, the trade unions are strongly opposed to compulsory
or enforced governmental arbitration. Writing of Great Britain, Mr.
and Mrs. Webb assert that the principle of arbitration, having been
found inconsistent with collective bargaining, is fast going out of
favor. It would seem from the experience of both England and the
United States that the chief virtue in these methods lies in the habit
of joint conference and conciliation between the representatives of
labor and capital.

IX. WOMEN AND CHILDREN AT WORK.                                           80

While women and children have always assisted in the work of the home,
it was not until the development of the factory system that they began
to work for wages outside of the family. From the earliest days the
preparation of food, spinning and weaving and making up of garments,
and other branches of domestic economy had been the peculiar tasks of
the housewife. With the removal of the textile industries from the
home to the factory and the invention of light-running machinery, many
women followed them and employment was found also for young children.
Thus with the inception of the modern factory system and machine
production there arose the problem of woman and child labor. In
England the evils of the early factory system were incredibly bad.
“The beginning of the present century,” wrote President Walker,[20]
“found children of five, and even of three years of age, in England,
working in factories and brickyards; women working underground in
mines, harnessed with mules to carts, drawing heavy loads; found the
hours of labor whatever the avarice of individual mill owners might
exact, were it thirteen, or fourteen, or fifteen; found no guards
about machinery to protect life and limb; found the air of the factory
fouler than language can describe, even could human ears bear to hear
the story.” Conditions were never so bad in this country as in England
owing to the later development of the system and prompter legislation
against its evils, and especially to the scarcity of labor which
compelled employers to make the conditions of labor more attractive.

The field of employment for women has been a constantly expanding one.
When Miss Harriet Martineau visited the United States in 1840 she
found only seven occupations open to women, namely, teaching,
needle-work, keeping boarders, work in the cotton mills, type-setting,    81
book-binding, and domestic service. Since that time the area has
widened until there is scarcely an occupation in which women are not
found except those closed to her by law or by physical inability. The
number of females 10 years of age and over engaged in gainful
occupations was 2,647,000 in 1880 or 14.7 per cent of the total female
population; this number more than doubled in the next twenty years,
being 5,319,000 in 1900 or 18.8 per cent of all. The largest number
employed was in domestic and personal service, and next to that in
manufacturing and mechanical pursuits, though even in that branch they
were most numerous in the traditional branches of woman’s work, as
dressmakers, seamstresses, etc. It is nevertheless in the
manufacturing industries that the most serious evils connected with
woman and child labor are found. The problems differ greatly in
different sections of the United States: in the Atlantic states the
greatest proportion of women as compared with men find employment and
give rise to special problems of women’s work; in the South child
labor is more conspicuous; while in the West both woman and child
labor are of relatively small importance.

An interesting question suggests itself at this point: Is the increase
in the employment of women at the expense of men? Are the women
crowding the men out of their occupations and taking their places? At
first inspection the statistics of occupations would seem to lead to
an affirmative answer, for the percentage of women breadwinners
increased from 13.5 per cent of all such in 1880 to 16.6 per cent in
1900, while that of the men fell from 80 to 77.3 per cent, and that of
the children remained about the same. The cause of the change in the
proportion of the sexes was not due, however, to any falling off in
the number of men, but to the great influx of women into the ranks of
wage-workers. In some lines of employment, like those of bookkeepers,
stenographers, typewriters, clerks, etc., there has undoubtedly been      82
an encroachment and men have been displaced. But on the other hand,
many occupations have been opened to men during the last fifty years
that were unknown before. Such have been the expanding fields of
railroad construction and operation, the steel industry, the
utilization of electricity, and other similar lines. In most of these
the muscular effort involved or the character of the work have kept
women out, but in other lines where special rapidity or lightness of
touch are required the women outnumber the men, as in the manufacture
of cotton goods, hosiery, hats and caps, etc. The development and
improvement of machinery has of course favored the employment of
women. Mr. John A. Hobson[21] asserts that “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.” He concludes that if the exploitation of these forms of
cheap labor had not been prevented by factory legislation and by
public disapproval, “the great mass of the textile factories of this
country [England] would have been almost entirely worked by women and
children.” As a matter of fact one of the reasons for the great
expansion of woman labor in the United States as well as England is
because it has been found cheaper than man’s labor. We are thus
brought face to face with a fundamental question in the discussion of
the problem--why are women paid lower wages than men?

As to the fact there is no doubt; one comparison taken from the Census
of 1900 will be sufficient to illustrate it: the annual average
earnings of men in mechanical and manufacturing industries were $490,
and of women $272 per annum. The more important question is why this
difference exists. A number of reasons suggest themselves at once. In
the first place women are less efficient than men and produce less;       83
hence they are paid less. In some industries, particularly those
requiring physical strength, women cannot compete successfully, and
those are usually the highest paid employments. Other well-paid
industries are regarded by men as essentially their own and social
pressure is applied to keep women out. Then, too, woman’s ambition to
attain industrial efficiency is not so great, owing to her expectation
of marriage and release from industrial life. Women are more often
absent from work owing to sickness and domestic claims upon their
time; this irregularity of employment tends to reduce their
efficiency. But even in employments where the efficiency of men and
women are admittedly equal the women receive lower wages in the
majority of cases. According to a report of the Bureau of Labor, out
of 100 cases where the women did the same work as the men and did it
as well, they received lower wages than the men in 80. This leads to
the consideration of a second group of causes, which have to do with
woman’s standard of living. One reason why she receives less is
because she is able and willing to live on less. Physiologically, Dr.
Atwater has said, man needs one-fifth more nutriment than woman.
Women’s wages are less because of their somewhat lower cost of
subsistence. But even aside from this fact, the frequent partial
dependence of women upon other members of their family for support
makes them willing to accept less and consequently reduces their
wages. The average American workingwoman is young, only about
twenty-two and a half years old, and after the age of twenty-five is
reached the number declines rapidly. That is to say, working girls
regard their employment as a temporary affair, remaining only about
five years on the average in the store or factory; during this time
they often live at home with their parents and are content to receive
a wage much smaller than a man would require as head of a household.

The third reason is, however, the most important, because it explains     84
at the same time the low economic position which woman occupies in the
industrial world. The narrowing of the field within which women can
readily find employment has the effect of greatly intensifying the
competition within that field. There is also a great reserve army of
potential women wage-earners, whom a slight increase of wages or force
of circumstances--loss of employment by the male members of the
family--will bring into the field as competitors. There is, in other
words, a constant over-supply of labor in most women’s industries,
which does not exist in any men’s industries except the most
unskilled. Women exhibit, furthermore, a comparative lack of mobility
from one industry to another, as well as from one locality to another.
According to Professor Smart, women are so unready to leave home that
their pay on one side of narrow Scotland is 50 per cent lower than on
the other side. In the same way, the flow of labor from one occupation
to another, which tends to equalize the advantages and rates of pay of
different employments, is far feebler among women than among men.
Finally, there is little organization among women. Their
individualistic, almost jealous, attitude to one another prevents
their combination and united action, while their submissive acceptance
of what is offered leads to apathy. They have only infrequently formed
unions and endeavored to substitute collective bargaining for
individual action. Women are therefore industrially in much the same
situation as unskilled, unorganized male laborers, and the remedy in
both cases would seem to be the same--education and organization.

The presence of a large supply of cheap woman labor undoubtedly has a
depressing effect upon men’s wages, and consequently upon the standard
of life of the whole laboring class. George Gunton[22] is authority
for the statement that “in proportion as the wife and children
contribute to the support of the family the wages of the father are       85
reduced.” The family wage tends to remain the same whether it is
earned by the father alone, or by the father with the assistance of
his wife and children. It is, however, not quite clear in most cases
whether the men’s wages are low because the women and children work,
or whether the women and children work because the men’s wages are
low. It may fairly be concluded, however, that the evil effects of low
wages for women are not confined to themselves but are felt by all
with whom they come in competition.

What conclusion shall we draw then, in view of all these facts, as to
the desirability of employment of women? The fact of their low wages
and industrial dependence is not sufficient to lead one to condemn it.
These are transitional phenomena and can be remedied. Women have
always worked--on the farm, in the home, in making household supplies.
When this work was taken over by the factory woman became a
wage-worker in the modern sense. “The census records in respect to the
labor of women, therefore, read in the light of collateral facts, are
a history of industrial readjustment rather than a record of the
relative extent of the employment of women, and it is impossible to
say, so far as the census figures are concerned, whether a larger
proportion of women are actively engaged in labor today than formerly
or not. The one fact which is clear is that factory or shop work is
displacing home work, and that this readjustment of industrial
conditions is leading to the employment of women outside the home in
constantly increasing numbers.”[23] The effect of this readjustment
has been to increase greatly the production of wealth. The production
of household supplies was removed from the family to the factory when
it was handed over to machinery and done better and more cheaply. If
the work of women thus released were expended for no useful purpose
society would gain only in the increased leisure of the women. But if     86
these then took up other new lines or set men free from old
employments so that they could turn to still different ones, then the
production of goods could be greatly increased. “Without women’s
help,” says Mr. George L. Bolen,[24] “their work in stores and offices
would be done by men taken from other employment. The latter’s present
work would have to be stopped to that extent, lessening the quantity
of goods produced by men. The effect would be the same as if a farmer
had to stop plowing two hours before noon to go to the house and cook
his dinner…. Women behind the counter, and at the typewriter,
release men for work that women cannot do.” From the standpoint of
woman herself, industrial independence must be regarded as a great
gain. Set free from the necessity of contracting marriage for the sake
of a home, and of depending upon mere sex attraction to attain that
end, she will develop her capacities more fully and when she does
enter upon marriage will do so as a result of mutual attraction. The
entrance of women into gainful occupations must be regarded as an
essential step in their own progress and the improvement of society.

Quite different must be our attitude towards child labor, which can
only be condemned as a waste of labor power and as stunting the
development of the children. The Census of 1870 stated for the first
time the number of children at work in the United States; there were
739,164 between the ages of 10 and 15 years, of whom 114,628 were
employed in manufactures. During the next decade the number increased
over 58 per cent to 1,118,356 children at work in all occupations. The
disclosure of such an undesirable tendency called forth restrictive
legislation in most of the states and the number declined materially
by 1890. Since 1890 however there has been a reversal of this tendency
back to the conditions of 1880, owing chiefly to the industrial           87
development of the South, where almost no factory legislation exists
as yet. In 1904 there were 1,752,187 children at work between the ages
of 10 and 15 years, or almost one-fifth of all the children of those
ages. The evils connected with child labor are the long hours--usually
11 or 12 hours a day where no restrictive legislation exists--and the
exhausting and often dangerous work. The effect on the health of the
children of monotonous and exhausting toil before their muscles are
set and their frames knit up is thoroughly bad; they are stunted and
deformed and prematurely aged. Many of the occupations, too, in which
child laborers are most numerous, are dangerous or injurious, as tin
can factories, saw mills, paper box factories, type foundries, and
tobacco establishments. Second only to the physical effects of child
labor is the mental and moral injury suffered not merely by the child
but also by society in depriving these youthful laborers of a thorough
education. While it is well that children should be kept busy, there
is no compensating reward either in money wage or preparation for
adult life in such monotonous, profitless drudgery. The influence of
the competition of children upon wages is leveling, and their
employment indicates either a willingness on the part of employers and
parents to exploit this cheap and defenseless form of labor, or a
backward state of civilization. Such an evil can be cured only by
determined public opposition, by the passage of laws forbidding all
labor by children under a certain age, say 15 (except possibly in
agricultural or housework), compelling school attendance, and
providing for careful inspection. Most of all is needed an aroused
public conscience.

Labor legislation is the most effective method of improving the
conditions of employment, and to a consideration of this subject we
must devote the remainder of this section. We have already seen that
the fundamental principle of our modern wage system is freedom of
contract. This is guaranteed in our federal and state constitutions       88
as both a personal and a property right. As a result of this fact the
courts have generally declared unconstitutional any legislation,
designed to protect the interests of labor, that seemed to abrogate
this freedom of contract or that savored of class legislation. Efforts
to improve the condition of labor by legislation have therefore met
with especial obstacles in this country. On the whole, however, means
have been discovered of evading these constitutional restrictions when
it has seemed clearly demanded by the welfare of society, and the
history of labor legislation in this country is one of fairly steady
progress. The early laws were practically confined to imprisonment for
debt, mechanics’ liens, the hours of education of children employed in
factories, and similar matters. Nothing noteworthy was accomplished
until 1866 when Massachusetts passed an eight-hour child labor law for
children under fourteen; in 1874 she passed a ten-hour law for women
and children under eighteen, engaged in manufacturing establishments,
and in 1877 enacted the first factory inspection act, which has since
been copied in about twenty-four states, and without which mere
legislation is of little avail.

The factory acts may be divided into two classes, those that endeavor
to secure the safe or healthful manner of conducting a business, and
those that attempt to limit the occupations, the hours, and the
methods of payment of the workers. Under the first head come such
matters as fire protection, ventilation, guarding of machinery,
inspection of boilers and mines, etc. Such legislation and inspection
have in many states been extended to churches, schoolhouses, hotels,
theaters and public buildings. The second group includes those laws
which are usually meant when factory acts are referred to. In England
there has been a very steady development and extension of such
legislation, beginning in 1802, when Peel’s Act tried to protect the
health and morals of the pauper apprentices in the cotton mills; this     89
was extended to all young people in textile industries in 1833, to
women in 1844, then to all large industries in 1864, and to smaller
ones in 1867, and finally in 1878 these various provisions were
codified into a complete factory act, regulating the health and safety
of the laboring people generally. In the United States the movement
was considerably later and has not been so uninterrupted. But today
laws limiting the number of hours of labor to eight have been passed
by the Federal Government and fifteen of the states for all those
engaged on public works. Attempts to fix the hours of labor of adult
male workers have usually been declared unconstitutional, for the
reasons stated above, except in especially dangerous or unhealthful
occupations, as bakeries, mines, smelters and similar lines.
Consequently the men have been forced to rely largely upon their own
efforts for the redress of industrial grievances; in this fact lies
one explanation of the growth and strength of labor organizations in
this country. On the other hand, legislation in behalf of women and
especially children--wards of the state--has usually been held
constitutional by the courts, and has had a more extended application.
About twenty of the states have regulated the length of the working
day for women and children. Special child labor laws limit the age
below which employment is illegal, usually between ten and fourteen
years of age; and provide for a minimum of education before a child
can be employed. About half the states provide for factory inspection
to see that the provisions of the various acts are lived up to. In
general we may conclude that by the passage of such legislation
society has definitely decided that there are some conditions of
employment that cannot be safely left to free contract or to
collective bargaining between employer and employe, but that they must
be regulated by society itself on the broad grounds of social welfare.

X. UNEMPLOYMENT AND INSURANCE.                                            90

The greatest problem in modern industry as well as the
greatest curse to the laboring classes, is unemployment. While
unemployment has always existed under all systems of labor, it assumed
added significance when the introduction of the wage system threw
every worker upon his own resources and made him responsible for the
care of himself and his family. Modern industry is sensitive and
unstable and its delicate mechanism, very likely to get out of order;
credit and fashion, to mention no others, are factors that make for
instability, and these are essentially modern. Professor Marshall is
of the opinion that the factory system has not increased inconstancy
of employment, but has simply rendered it plainer by localizing it.
But whether more or fewer than in earlier times, the number of the
unemployed in modern industry is appallingly great. It is not easy to
estimate correctly the extent and amount of this evil and we
accordingly find considerable variations in the statistical
presentations of fact. In 1885 two investigations of the amount of
employment were made, one by Carroll D. Wright, in his report as
United States Commissioner of Labor for 1886, and the other by the
Massachusetts Bureau of Labor in its report for 1887. Mr. Wright
defines the unemployed very narrowly as “those who under prosperous
times would be fully employed, and who, during the time mentioned,
were seeking employment”; using the term in this restricted sense he
concluded that 7½ per cent of the working population engaged in
manufacturing and mechanical pursuits, and trade and transportation
were idle during the year, which moreover he considered one of extreme
depression. The Massachusetts statistics, on the other hand, were
presented as indicative of general conditions in normal years and may
safely be regarded as such. According to this report, 30 per cent of
the total number of breadwinners in the state had been unemployed at      91
their principal occupations on an average of 4.11 months in the year
covered; some of these found work at other or secondary occupations.
But the net result of the investigation was well put in the terse
statement of the report, that “about one-third of the total persons
engaged in remunerative labor were unemployed at their principal
occupation for about one-third of the working time.” At the lowest
estimate the whole working population lost on the average almost
one-tenth of their working time. The loss of such a proportion of the
community’s productive force, with all the demoralization attendant
upon irregular or no labor, is evidence of a problem of grave import.

Unemployment is such a broad term and covers so many different ideas
that it will be well to classify the unemployed before proceeding
further. They may be logically divided into the following classes: I.
The temporarily unemployed, who comprise (a) those certain of work
again, as efficient workmen who are temporarily out of work owing to
seasonal variations, shut downs, etc.; (b) those without such
prospect, a group which again divides into two groups, namely, (1)
efficient and industrious workmen who have been thrown out of work by
a change in fashion, the introduction of new machinery, foreign
competition, a prolonged depression, etc., and (2) those whose work is
essentially fluctuating and casual in its nature, as casual day
laborers, charwomen, etc. II. The permanently unemployed, consisting
in turn of (a) the “won’t-works,” as tramps, and (b) the
“can’t-works,” or the defective and dependent classes generally. Such
a classification renders much easier the analysis both of the causes
and of the cure of unemployment.

The first question that presents itself in any discussion of the
causes of unemployment is whether it is due primarily to personal
causes, as inefficiency or intemperance, or to industrial causes over
which the individual has no control. “Personal causes are those           92
mental, moral, and physical defects which show themselves either in
the inability and inefficiency of the workman or in his unwillingness
to work. Here are included all the varieties of personal inaptitude,
ranging from idiocy, intemperance, and vice to old age, sickness, and
accident.”[25] Such a comprehensive definition includes many cases, of
course, where no blame can be attached to the individual, and yet each
one of these causes is personal, that is, it does not affect at the
same time a whole group, as an industrial depression would do. Persons
included in this group are always on the margin of employment; in bad
times the first to be discharged, in good times they are the last to
be employed. Nor is the cause of their lack of employment always easy
to give; it may be itself the result of industrial accident or
unhealthful occupation, or the result of heredity, evil habits and
associations, and defective education. We may present two tables
giving briefly the causes of poverty and unemployment. The first gives
the causes of poverty ascribed by the charity organization societies
of New York, Boston, and Baltimore to applicants for relief:

  Causes of poverty: charity organization society records.[A]

               Cause.              |     Per cent.
  Drink                            |  13.7   |
  Shiftlessness and inefficiency   |   7.5   |
  Other moral defects              |   2.1   |
        Total, Character           |         |   23.3
  No male support                  |   5.0   |
  Lack of other normal support     |   3.6   |
        Total, Support             |         |    8.6
  Lack of employment               |  23.5   |
  Insufficient employment          |   8.1   |
  Poorly paid, etc.                |   3.3   |
        Total, Employment          |         |   34.9
  Sickness and death in family     |  21.1   |                            93
  Insanity and physical defects    |   4.1   |
  Old Age                          |   3.9   |
  Other incapacity                 |   3.2   |
        Total, Incapacity          |         |   32.3
                                   | 100.    |  100.

  [A] Warner, American Charities, Rev. Ed., 53.

The first group of causes indicates misconduct, as the last group
indicates misfortune; the other two shade off into industrial causes,
though lack of employment--the largest single cause--may in turn be
ascribed to any one of several remoter causes according to the bias of
the investigator. This table is a record of the causes of failure on
the part of those who have fallen behind or dropped out altogether in
the race of life. At the other end of the scale stand the members of
labor organization, on the whole, the elite of the labor world. The
following table gives the causes of unemployment of 31,339 cases at
the end of September, 1900, as reported to the New York Bureau of
Labor Statistics:

  Causes of idleness, members of trade unions, 1900.

          Cause        | Per Cent
  No work              |    75.5
  Bad weather          |      .5
  Strike or lockout    |    13.0
  Sickness             |     4.7
  Superannuation       |     1.6
  Other causes         |     4.7
        Total          |   100.0

This table emphasizes very strongly the industrial causes of
unemployment, three-fourths of which is ascribed to lack of work. In
some cases, as the iron and steel workers, where there is a regular       94
two months’ shut-down to make repairs, and the building trades where
the inclemency of the weather usually prevents work during the winter,
the lack of employment may be regarded as a vacation rather than a
hardship, for the rates of pay are high enough during the remaining
months to offset those of idleness. In other cases, however, as in
coal-mining, there is a large reserve army of workers on hand and
employment is secured for only one-half to two-thirds the time. In
1900, when the average number of days of employment was larger than it
had been in ten years, the bituminous miners were employed only 234
days and the anthracite miners only 166 days in the year. This
indicates a very bad organization of the industry. The same thing was
formerly true of the London dockyards, where there was a reserve army
of some 4,000 surplus workers. Of course the effect of this is to
depress wages. The clothing trade is subject to seasonal fluctuations
and the caprice of fashion, and offers very irregular employment.
Machinery and improved processes were frequently spoken of by
witnesses before the Industrial Commission as the leading cause of
unemployment. If the general conditions of business are good at the
time of the first introduction of machinery the displaced laborer is
reabsorbed again and the hardship is not so noticeable. But if it
coincides with a period of business depression the introduction of
machinery appears to be the cause of a large displacement of labor,
which might more truly be ascribed to industrial depression. This last
cause is responsible for enormous suffering among the laboring
classes, for the method oftenest resorted to by industrial enterprises
to reduce expenses is the wholesale discharge of laborers, who are
thus made to bear the burden of industrial disorganization. This was
well illustrated by the economies effected by the railroads in the
year 1908, in their general reduction of the labor force and of wages.
But even in good years the inconstancy of employment is startling. In     95
the four years 1897-1900 the men in trade unions in New York State
lost 16.2 per cent of their time from unemployment, which is almost
exactly one day in every week. And these, it must be remembered, were
skilled and efficient workers in organized trades. Finally, strikes
are given as a cause of unemployment in the table; these are a
peculiar feature of modern industry, and do not call for further
discussion, except to point out that they are not as important as
often represented.

The foregoing analysis of the causes of unemployment shows that they
are deep-seated in the nature of modern industry, and that it would be
unjust to the workingman to attribute them in any large measure to his
incapacity or indisposition to labor. The care of the unemployable
must of course be undertaken by society, and such persons prevented as
far as possible from depressing the wages of competent labor by their
competition. Exceptional periods of distress may and should be met by
temporary relief measures. But what we may call the normal
unemployment in modern industry, which amounts to 2-2½ per cent of
the labor force, cannot be overcome by direct methods. The remedy for
this lies “in a better organization of employers and employes, more
steady expansion of trade, and greater stability of industry and of
legislation affecting industry. These are not problems directly of
unemployment, but rather of taxation, currency, monopoly, immigration,
over-production, and technical advances in industry. Their treatment
must be undertaken, not primarily as measures of providing for the
unemployed, but as measures for improving the conditions of
business.”[26] The problem of unemployment would thus seem to be a
permanent one, bound up in the very nature of a dynamic society; it
may be regarded as the price of progress. But the question may fairly
be raised as to whether the laboring classes should foot the bill,        96
or whether the cost might not fairly be borne by society as a whole.
This has suggested, as a solution of the problem, insurance of
workingmen against unemployment, a discussion of which, however, must
be deferred to the end of the section. Some methods of alleviation, if
not of abolition, of the evils of unemployment may be suggested. Free
public employment bureaus and agencies, national in scope and well
integrated, would do much to secure a better adjustment of demand and
supply in the labor market, and secure a better distribution of the
labor force and greater mobility of labor. Better organization and
mutual understanding on the part of both employers and employes is
needed, to prevent the loss through strikes and lockouts. And finally,
improved industrial and technical education is essential, whereby the
loss in skill through the introduction of new inventions and machinery
may be minimized, and the productivity of the laboring class be

Among the measures of relief for unemployment due to accident,
sickness, and old age, none is more important or more deserving of a
hearing in the United States than that of insurance against these
evils. The earnings of the average male wage-earner are so small--half
of the number earn annually less than $436, and half of the adult male
factory workers earn less than $400 a year--that the unemployment,
sickness, disablement, or old age of the breadwinner must throw a
large proportion of families so afflicted into a condition of periodic
poverty. Any remedies that will alleviate the miseries caused by
fluctuations in employment, industrial accidents, diseases incident to
industry, etc., deserve a respectful hearing.

No adequate statistics of industrial accidents exist in the United
States, but a recent estimate by F. L. Hoffman[27] gave the number of
fatal accidents among occupied males in 1908 as between 30,000 and
35,000. An analysis of the reports of the New York Bureau of Labor        97
Statistics from 1901 to 1906, shows that of the total number (39,244)
of industrial accidents reported in that state a little over 2 per
cent were fatal, almost 17 per cent resulted in permanent disablement,
and 81 per cent resulted in temporary disablement. More than half of
the accidents in industry are the result of machinery in motion. Mr.
Hoffman calculates that “it should not be impossible to save at least
one-third or perhaps one-half by intelligent and rational methods of
factory inspection, legislation, and control.” Prevention of accidents
rather than compensation to the workingman after they occur should be
the aim of society, in order to avoid the wasteful loss of productive
power, not to mention the suffering and misery entailed by such
accidents. “Immunity, not compensation,” has been the demand of the
British trade unions. Of first importance then is careful factory
legislation, safeguarding of machinery, and factory inspection. But
here we are interested primarily in the question of responsibility and
compensation. In the United States, legislatures and the courts have
taken the position that the workingman was responsible unless he could
prove the employer responsible for his injury. How impossible such
proof is and consequently how intenable such a position, is clear from
the following table, compiled by the German Government for purposes of
accident insurance:

  Accidents in German industries traceable to different causes.

             Causes.            | Agriculture | Industry | Mining
                                |   (1891)    |  (1887)  | (1887)
  Fault of employer             |     18.2    |   19.8   |    1.3
  Fault of injured workman      |     24.4    |   25.0   |   29.8
  Fault of both                 |     20.1    |    4.4   |
  Fault of third person         |      2.8    |    3.3   |    4.3
  Unavoidable or indeterminable |     34.5    |   46.9   |   64.6
      Total                     |    100.0    |  100.0   |  100.0

Statistics from both Germany and Austria show that a full half or         98
more of all industrial accidents are due to causes for which neither
employers, injured workmen, nor fellow employes are responsible, but
which are incidental to the nature of the industry itself. But besides
the danger of injury from machinery, there are numerous specially
dangerous or injurious trades, in which injury by poisoning, disease,
etc., is almost unavoidable as trade processes are at present
conducted. These have been classified as follows: trades in which lead
is a poisonous element, trades which produce other chemical poisons,
trades in which lockjaw is an incident, trades in which the danger
arises from injurious particles in the air, or from dust, processes
that require a sudden change from heat to cold and vice versa, and
those that require artificial humidity, and trades in which accidents
are so frequent as to demand special legislation. Before we try to
decide who in justice should bear the cost of sickness or injury
arising from these causes, let us inquire as to the practice in the
United States and in other countries, so as to have the data necessary
for a fair conclusion.

The original legal doctrine regarding liability for accident in
England and America, which is still practically unmodified in the
latter country, was based on the principle of individual
responsibility for acts of negligence. Briefly stated the common law
doctrine is that an employer must provide reasonably safe conditions
of employment, and that then the employe assumes the risks incident to
the occupation, or arising from the carelessness of fellow-servants;
moreover, even if the employer has been remiss, the employe cannot
collect damages if he has been guilty of contributory negligence.
These three doctrines--assumption of risk, doctrine of the
fellow-servant, and contributory negligence--have been used
practically to free the employer from all responsibility in cases
where injured employes have sought to secure damages. Moreover, as
has been shown above, many cases exist where it is impossible to fix      99
the blame on either employer, employe, or a third party, and in such
cases no compensation could be secured for injury under the law. The
full rigor of the common law, which has worked out so unfairly for the
workingman in modern machine production, has been modified in about
twenty-seven states by statutes defining more exactly the duties of
the employer, and repealing the fellow-servant doctrine in regard to
railway employes and in a few states in regard to all mechanical
industries. With these exceptions, however, the law of employers’
liability has not been changed, and compensation for industrial
accidents must be sought by injured employes through a suit for
damages against the employer. In 1906 and again in 1908 Congress
passed a federal employers’ liability act, limited to common carriers,
which, however, represents only development along the lines of
negligence law. That is, we are still proceeding upon the assumption
that in every accident which occurs somebody is to blame. We shall
have to look to foreign countries for a practical application of the
principle that the cost of accidents in modern industry should be made
a charge upon the industry itself, and ultimately be incorporated in
the higher price of the article produced.

Germany was the first country to introduce the principle of compulsory
accident insurance in 1884. Employers are there organized into
associations and sections and are compelled to bear the expense of
granting to injured workingmen compensation, which amounts to about
two-thirds their average wages. England in 1897, by the passage of the
Workmen’s Compensation Act, adopted the principle “that a workman is
entitled for all accidents of occupation to a moderate and reasonable
compensation.” Twenty-three countries, or practically all the advanced
industrial nations of the world except the United States, have passed
laws to compensate sufferers for all accidents of industry, thus         100
placing the burden of industrial accidents upon the industry as such
and not upon the laborer.

As we have seen, sickness and old age are still more usual causes of
poverty and unemployment than accident. All the arguments for
compulsory insurance therefore apply with redoubled force to these
evils. Germany was again the pioneer in the establishment of these
forms of insurance. In 1883 sickness insurance was organized, being
made compulsory for all persons with incomes under $500; the expense
is borne one-third by the workers and two-thirds by employers, the
main purpose being to secure a sufficient relief--amounting to
one-half the wage--for a period of thirteen weeks. In 1889 invalidity
and old-age insurance was introduced for the same class; contributions
are made in equal proportion by employe and employer, the state
contributing about $12 a year to each annuity. Pensions are granted
after thirty years of payment or to those over seventy. In 1908 Great
Britain passed a still more comprehensive measure, providing for
pensioning all citizens of seventy years or over, who have been
residents for twenty years, in accordance with a sliding scale based
upon private income, the pensions ranging from five shillings weekly
down to one shilling. The pensions were expected to cost $35,000,000
the first year, but will probably entail double that amount. Finally,
insurance against unemployment was tried in Switzerland in 1893 to
1897, but was finally abolished, owing to abuses and difficulty of

There are probably no more important practical economic problems than
those connected with unemployment and workingmen’s insurance. Slowly
the conviction has spread that under present conditions of industry
workingmen cannot fairly be held responsible for industrial accidents,
and that with prevailing wages they cannot be expected to save enough
to maintain themselves in sickness and old age. It therefore becomes
the duty of society so to organize industry and legislation that the     101
terrors of accidents, sickness, and old age, shall be reduced to a


So far in the discussion of modern capitalistic production and of the
various labor problems to which it has given rise we have not treated
in detail the question of machinery and its effects on labor. We
cannot, however, leave this subject without taking up this phase of it
with considerable care. The advantages of machinery have been more
often emphasized than the evils, so that we may profitably begin with
the darker side of the picture. President Hadley[28] enumerates three
evils which are charged against machinery, as now managed and
operated: “1. That it displaces a large amount of human labor, thus
taking income away from employes and giving it to employers. 2. That
when it does not actually drive human labor out of use, it employs it
in circumstances unfavorable to efficiency, health, and morals. 3.
That under the best conditions it deprives the workman of
independence, making him a specialized machine instead of a
broad-minded man.” We cannot do better than take up these points one
by one.

In answer to the first charge President Hadley flatly denies that
machinery has displaced labor, but insists that “there has been a most
conspicuous increase of employment in those lines where improvements
in machinery have been greatest,” giving the expansion of railroads as
an illustration. But it is not possible to generalize from this case
without further analysis. The immediate effect of improved machinery,
especially if suddenly introduced, is practically always to throw men
out of employment. The extent to which this will occur depends on the
suddenness and extensiveness of the change, but fortunately, as
Professor Nicholson points out, new inventions seldom come suddenly or
are introduced all at once on an extensive scale. It took almost a
generation, for example, for American machine methods to displace        102
Swiss hand labor in the making of watches. But when such a change does
occur it hits hardest the least efficient and older men, those just on
the margin of employment, for a man past middle life can rarely learn
a new trade. The effect of displacement in causing suffering will also
depend somewhat upon the mobility of labor, both the knowledge of new
opportunities and the capital to make possible a change of location or
industry, and improvements in the means of transportation. It can
easily be shown that as a general principle the lump-of-labor theory
is erroneous, namely, that there is just so much work to be done and
that if machinery is introduced there will be less work for men to do.
But there is this element of truth in it, that the question whether
men will be reabsorbed in the same industry depends upon the fact as
to whether the market for the goods produced by the new machine can be
expanded. If the demand is elastic, that is, can be largely extended
because of the fall in price brought about by the cheaper production,
as in the case of cotton goods, then the displaced laborers will
probably be re-employed to produce an enlarged supply. If, however,
the demand is inelastic, that is, will not be expanded by reason of a
fall in price, as in the case of salt or coffins, then the displaced
labor will not be reabsorbed in the same industry but must look
elsewhere for employment.

The elaborate investigation of the Department of Labor in 1898
regarding the relative merits of hand and machine labor shows clearly
the effect on the displacement of labor by the introduction of
machinery. A few cases will serve as illustrations (see table on next

These cases, chosen at random, all show an increase in the number of
different men employed, and an immense saving in time and in labor
cost. Nothing is indicated however as to the total amount of
employment. Optimistic writers like Carroll D. Wright claim that if

  Hand and Machine Methods Compared.                                     103

     Year    |                      | Different  | Different |
      of     |   Article produced   | operations |  workmen  +
  production |                      | performed  | employed  |
    1829-30  | Wheat (hand)         |      8     |      4    |
    1895-96  | Wheat (machine)      |      5     |      6    |
             |                      |            |           |
    1859     | Boots (hand)         |     83     |      2    |
    1895     | Boots (machine)      |    122     |    113    |
             |                      |            |           |
    1850     | Carpet (hand)        |     15     |     18    |
    1895     | Carpet (machine)     |     41     |     81    |
             |                      |            |           |
    1891     |Loading ore (hand)    |      1     |           1    |
    1896     |Loading ore (machine) |      3     |     10    |
     Year    |                      |   Time worked. |
      of     |   Article produced   +-------+--------+ Labor
  production |                      | Hours | Minutes| Cost
    1829-30  | Wheat (hand)         |    61 |    5   |  $3.55
    1895-96  | Wheat (machine)      |     3 |   19   |    .66
             |                      |       |        |
    1859     | Boots (hand)         |  1436 |   40   | 408.50
    1895     | Boots (machine)      |   154 |    5   |  35.40
             |                      |       |        |
    1850     | Carpet (hand)        |  4047 |   30   |  20.24
    1895     | Carpet (machine)     |   509 |    1   |    .29
             |                      |       |        |
    1891     |Loading ore (hand)    |   200 |    0   |  40.00
    1896     |Loading ore (machine) |     2 |   51   |    .55

machinery has displaced labor in one direction it has created more
employment for them in others. He shows for instance[29] that the per
capita consumption of cotton in this country in 1830 was 5.9 lbs.,
while in 1890 it was 19 lbs., and gives similar figures for iron and
steel, and railroad traffic. It will be noticed that all of his
examples are chosen from industries in which the demand is elastic.
Mr. J. A. Hobson, a more careful and conservative writer, draws less
optimistic conclusions from a study of Great Britain. He says: “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 labor in those 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.”[30] It
must be said, however, in modification of Mr. Hobson’s inferences,
that it may be accounted as a social gain if the demand for
manufactured commodities can be met by the labor of a smaller            104
proportion of the population, since the energies of the rest are then
set free for professional or artistic or similar pursuits. A study of
the census reports of Great Britain seems to show that this is what
has happened in that country.

The amount of labor is not the only factor to be considered; the
regularity of employment, as we saw in the last section, is of hardly
less importance. “Another danger of an entirely opposite kind,” says
Professor Nicholson[31], “lurks in this immense power of machinery,
which is continually showing its reality and remedies for which will,
it is to be feared, be the fruit of long years of tentative adaptation
to the new environment. What all sensible workingmen desire, what the
advocates of the trade unions say is their chief object, is to get a
“steady sufficient wage,” but it has been proved inductively that
great fluctuations in price occur in those commodities which require
for their production a large proportion of fixed capital. These
fluctuations in price are accompanied by corresponding fluctuations in
wages and irregularity of employment. But fluctuations in wages and
discontinuities in employment are two of the greatest evils which can
befall the laboring classes.” We have already seen how modern
capitalistic methods of production may lead to over-production and to
a crisis. We now see how machine methods may cause unemployment or
irregular employment. The men displaced directly by new machinery,
those thrown out of work by industrial depression resulting from
over-production in machine industries, and finally those irregularly
employed in the new occupations supplying luxuries--all of these may
fairly attribute their suffering in large measure to machine methods.

“The second great charge made against the factory system is that it
displaces a higher grade of labor by a lower grade; sometimes            105
substituting the work of women and children for that of men; sometimes
substituting work under conditions physically or morally unhealthful,
for work under healthful conditions; sometimes substituting
specialized and mechanical work for diversified occupation which
contributes to general intelligence.” The point as to the labor of
women and children has already been discussed. The charge that factory
labor is physically unhealthful may in general be denied. Mr. Wright,
in an elaborate defense of the factory system in the Tenth Census,
concluded that the conditions of work in the modern factory are much
more conducive to good health than those under the preceding domestic
system, while morally they are far superior. The qualities demanded by
the machine production of the modern factory are punctuality,
steadiness, reliability, and sobriety, and it therefore makes against
intemperance and immorality. So far as these exist in factory towns,
they are the result of town life rather than of manufacturing. It
must, however, be said that while the factory system is not inherently
unhealthful, the high pressure at which operatives of steam-driven
machinery are compelled to work, particularly in this country, may and
often does wear him out prematurely. This again is partially offset by
a shortening of the hours of labor.

The final charge against the factory system is monotony of work. Many
writers, from Adam Smith down, take the view that it is more
stupefying to make a small part of an article, say the sixty-fourth
part of a shoe, than to make the whole article. Professor Marshall,
who has considered the subject carefully[32], concludes that while it
takes away manual skill, it substitutes higher or more intellectual
forms of skill. “The more delicate the machine’s power the greater is
the judgment and carefulness which is called for from those who see
after it.” But after all there is less danger from monotony of work      106
than from monotony of life, and the cure for this would seem to be in
an increase of machinery rather than in its abolition.

Let us now try to summarize our conclusions on this intricate
question. The first effects of the introduction of labor-saving
machinery is to displace particular laborers; these suffer real
injury, though they are often reabsorbed in the industrial organism.
The social gain is undoubted, for the improved methods lead to lower
prices and thus to an increase in the real wages of labor. To the
improvement and wider use of machinery we must indeed look for the
ultimate relief of the human race from exhausting toil. Says a
socialist writer: “On mechanical slavery, on the slavery of the
machine, the future of the world depends…. All unintellectual labor,
all monotonous, dull labor, all labor that deals with dreadful things,
and involves unpleasant conditions, must be done by machinery.
Machinery must work for us in coal mines, and do all sanitary
services, and be the stoker of steamers, and clean the streets, and
run messages on wet days, and do anything that is tedious or
distressing.” If labor today has a complaint to make against the use
of machinery, it is that labor has not shared sufficiently in the
improvements thus far effected. But the evil here is connected with
the inequitable distribution of wealth, not with the methods of its
production. In justice labor should share in the technical
improvements which characterized the nineteenth century and will
revolutionize to a still greater extent the industries of the
twentieth. The practical question in this connection is as to the best
method for labor to secure its claim to a share in the increased
production. One answer, to which we will turn next, is by increasing
its efficiency through better industrial education and training.

The subject of industrial education has recently been receiving
considerable attention in the United States and the needs and
shortcomings of our country in this regard have been described. Under    107
modern methods of production, with their extreme specialization of
labor and extended use of machinery, it is practically impossible for
a worker to secure an adequate knowledge of a trade in the actual
practice of it. In former days boys acquired training in their trades
by the system of apprenticeship under the immediate charge of a master
of the craft. The system of apprenticeship has today almost
disappeared; boys are taken into shops as helpers, not as apprentices,
and receive practically no systematic instruction in their trade,
especially in a modern large establishment. In consequence of these
facts it is insisted that school instruction should be given to make
good the absence of shop practice; that a general system of industrial
education should be developed to give our workingmen systematic
training in the various trades. The superiority of the opportunities
for industrial education on the continent of Europe, especially in
Germany, have been frequently emphasized, and their industrial advance
has been credited in large measure to this fact. We can probably not
approach the subject better than by explaining the systems in these
other countries and then comparing them with that of the United

Beginning with Germany as the country in which industrial education
has received the greatest attention, we find there three different
kinds of schools, which we may call the lower, middle, and higher. The
lower group includes artisan and specialized trade schools, and is
intended to be a substitute for the apprenticeship system. While they
have an important influence on the general industrial efficiency of
the nation, they concern chiefly the small handicrafts. The middle
group comprises the trade schools (gewerbeschulen), of which the most
famous are the weaving and dyeing schools at Chemnitz; other branches
taught are soap-boiling, milling, building, pottery, etc. These are
the schools that provide technical instruction for the large             108
manufacturing industries, and are consequently of great importance;
they train the foremen, superintendents, managers, and heads of
establishments rather than the workingmen. The higher group is formed
of the technical high schools or technological institutes, where are
trained the scientific experts. The importance of the German system
lies in the development of the last two groups rather than in
provision for the training of the workmen. Germany’s recent industrial
advance must be credited to the training of the officers, not the rank
and file, in the industrial army, to the development of managerial
ability rather than of manual skill.

In England the last twenty years have seen a marvelous development in
industrial education, brought about in part by the “made in Germany”
agitation. The English system differs from the German in educating
working-class boys, while at work in the mill or at the forge, into
foremen, managers, etc., mainly by means of evening classes in trade
or technical schools. The German system, on the other hand, trained
men who already had a superior general education. These schools are
regarded as stepping stones for the more ambitious and intelligent
young workingmen. They give a practical grasp of the subjects, but do
not teach actual processes of manufacture, owing to trade union
objections. They thus come between the lower and middle schools in
Germany. The higher technical schools also exist and have recently
been greatly expanded.

The system of industrial education in the United States may be said to
resemble that of Germany more than England in that it supplies
industries from above rather than from below, but it is in a very
chaotic state as yet. The most important schools are institutes of
technology and the technical departments of the universities, but
these train men only for the highest positions. Provision for the
industrial training of the workingman is almost lacking except in a      109
few manufacturing centers. Thus there are a few trade schools
resembling somewhat those in the Middle German group, as the textile
schools at Philadelphia, Lowell, and a few other cities. Lower trade
schools are found in New York City, but hardly anywhere else. That
there is a distinct need of and demand for instruction of this
character is shown by the enormous expansion of correspondence
schools, a peculiarly American institution, which endeavor to give the
training afforded by the English schools to the more ambitious young

So far in their industrial development the people of the United States
have been immensely aided by two factors: the rich natural resources
of the country, and the high quality of the labor. But as we have
already seen, the natural resources are being either rapidly exhausted
or monopolized. As to the character of the second factor, we may quote
from the testimony of a recent careful observer, Dr. A. Shadwell[33]:
“The American method of work in the industrial sphere is distinguished
by the following features: enterprise, audacity, push, restlessness,
eagerness for novelty, inventiveness, emulation, and cupidity.
Employers and employed have exhibited the same qualities in their
degree.”… But they suffer “from the national defect of want of
thoroughness, which arises from the craving for short cuts.” Now that
American industries are entering the markets of the world in
international competition, it becomes important to correct any faults
that will cause us to fall behind. So far the movement for better
industrial education through the establishment of trade schools has
met two obstacles in this country. The first is the hostility of the
trade unions, which fear to see their control of the labor market
disturbed by the annual turning out of hundreds or thousands of
workers from the trade schools without any especial sympathy with
trade union methods or policies. The other difficulty lies in the        110
satisfaction with prevailing methods, the belief that the American
workman without training possesses skill superior to that of his
European competitors, and a naïve national self-conceit in all things
American. Now that we are for almost the first time in a hundred years
measuring our industrial efficiency in foreign markets against our
European competitors, we shall be compelled to take stock of all the
items that make for industrial supremacy. There seems to be little
doubt that when once this is fairly done, the need of a better system
of industrial education will be recognized and met.


Among the reforms suggested for remedying some of the evils incident
to the modern wage system those of profit-sharing and co-operation
occupy a prominent place. The separation of the community into
capitalists and laborers, classes different in conditions and ideals,
constitutes a menace to the peace and progress of industrial society.
The wage system moreover is thought by many to have broken down the
former intimate relation of employer and worker, and some scheme is
needed to correlate their interests again and to bind them together.
To secure this result profit-sharing is advocated. As defined by the
International Co-operative Congress in 1897 this is “the agreement,
freely entered into, by which the employe receives a share, fixed in
advance, of the profits.” It is not a change from the present wage
system, but simply a modification of that system according to which
the laborer receives a share in the profits in addition to his wages.
The purpose is to identify the interests of the employes with those of
their employer and thus to give him some of the same motives for
energy, care, and thrift in the conduct of the business. Three
principal methods of profit-sharing may be mentioned, though the
variations are manifold. The favorite method in England and the United
States is the payment of a cash bonus at the end of a fixed period,      111
as a year. A second plan, which is the rule in France, is a deferred
participation by means of a savings bank deposit, provident fund, or
annuity, for the purpose of providing for old age and disability. The
third plan, which has recently grown in favor in this country, is the
payment in shares of stock of the company.

The economic theory of profit-sharing is that by inducing greater care
and diligence on the part of the employe he will himself create the
fund from which he is paid. It is claimed by its advocates that it
increases both the quantity and the quality of the product and that it
promotes greater care of implements and materials, thus reducing the
cost at the same time that it increases the output. The classic
example of this is the case of the original profit-sharing scheme, the
Maison Leclaire, in Paris; the result of the first six years’
experiment was a dividend on wages of $3,753 a year, derived entirely
from the increased economy and care of the workers. In some cases,
however, the object of the employers is to secure immunity from
strikes and other labor disturbances and a greater permanence of the
labor force; and participation in profits is conditioned on the men
abstaining from joining a trade union, or on uninterrupted service. In
these cases the deferred participation plan is used. The advantages
claimed for the system are not merely the increase in product already
spoken of and the greatest efficiency of the worker, but also the
improvement in his material and moral standards, and the promotion of
industrial peace by lessening discontent and friction. The main basis
for the system, since it is economic and not philanthropic in its
nature, must of course be the increase in production brought about by
its adoption.

More weighty, however, appear the objections against profit-sharing,
which seem to have had sufficient force to cause the failure of a
number of ventures in this direction. In the first place, the            112
relation between the increased effort of a single workman and the
success of a general business is so remote, especially in our
complicated modern industry, that it is unlikely to act as a very
powerful stimulus. But even if it should, the savings thus effected
might be swept away by the poor business management of the employer.
“It is quite possible that the workman who, in the hope of earning
‘bonus to labor,’ has done work 10 per cent in excess of the normal
standard, may, even under a liberal scheme, find that, instead of
receiving an addition to his normal wages of, say, 7 per cent, the bad
management of his employer has reduced his bonus to so low a level
that he has to be content with a supplement equivalent to only 2 per
cent on his wages, or that, as has been the case in a large proportion
of the schemes … no bonus whatever is forthcoming.”[34] It is
undesirable to make the earnings of the laborer dependent in any way
upon the fluctuations of business or the ability of the employer. The
ordinary wage system has at least the merit that the reward of the
laborer is made dependent only on his own efforts. The lot of the
modern worker is too unstable and employment too unsteady to add a new
element of uncertainty in wages. If the laborer has really earned the
premium, say labor leaders, why not add it to his wages instead of
adopting this roundabout method. The sliding scale, or a system of
premiums or bonus payments for increased output, would be better than
profit-sharing, and is rapidly spreading.

This leads to the second objection, which is that profit-sharing
paralyzes the efforts of the laborers to better their own conditions
through trade unions, strikes or other methods. The trade union
attitude was vigorously stated by President Gompers of the American
Federation of Labor in his testimony before the Industrial

“There have been few, if any, of these concerns which have been even     113
comparatively fair to their employes…. They made the work harder,
longer hours, and when the employes of other concerns in the same line
of trade were enjoying increased wages, shorter hours of labor, and
other improvements, tending to the material progress of the worker,
the employes of the concern where so-called profit-sharing was the
system at the end of the year found themselves receiving lower wages
for harder work than were those who were not under that beneficent
system.” As long as the system is viewed with suspicion by the laborer
or used as a weapon in industrial bargaining by employers, the plan is
foredoomed to failure. But even were it managed in the proper spirit,
it is after all applicable to only a comparatively few industries,
those, namely, in which labor makes up the largest part of the cost of
production. In most modern industries capital plays such an important
role as compared with labor that the field for this plan is
comparatively limited.

In the actual practice of profit-sharing there have been many
interesting experiments, and not a few failures. It may be said to
date from 1842, when M. Leclaire, a Parisian painter and house
decorator, introduced it into his business, and has since spread over
France and England; it has met with little success in the rest of
Europe. In the United States the movement has also been more recent
and of smaller proportions. The reason for this is suggested by
President Hadley as follows[36]: “Where the laborers under the old
wage system are not working up to a high standard of efficiency, there
is more chance for the success of profit-sharing. This seems to be the
reason why it works better on the Continent than in England, and
better in England than in America.” It was estimated in 1900 that
there had been in the entire world some 500 experiments in
profit-sharing, of which about 400 were still in existence: a more       114
conservative estimate would place the latter number at about 300.

More radical than profit-sharing, which involves only a change in the
method of payment of wages, is co-operation, which involves a change
of management as well. Its final goal, in the minds of its advocates,
is the radical modification if not ultimate abolition of the present
wage system. While profit-sharing is paternalistic and is directed to
an increase of production, co-operation may be said to be democratic,
and to aim at a more equitable distribution. Under this plan the
laborers hope to divert to themselves the large amount of profits
which they now see going into the possession of their employers. By
eliminating the manager or enterpriser they hope to save his profits
for themselves. Two different kinds of co-operation are usually
distinguished--distributive or consumers’ co-operation, and producers’
co-operation--which we may profitably take up in turn.

Successful consumers’ co-operation may be said to have originated in
Great Britain when twenty-eight Rochdale workingmen founded their
famous society of Equitable Pioneers. The success and growth of this
remarkable experiment, starting with a capital of £28, to a great
system of 8,000 members with a capital of £200,000 in 1874, is a most
romantic story. It was largely imitated and retail co-operative stores
sprang up all over England. In 1864 the English Co-operative Wholesale
Society was started, for the purpose of the joint purchase of supplies
for the retail co-operative stores on better terms than these could
secure singly from ordinary wholesalers. It effected large economies
and was successful from the beginning; by 1901 it had a capital of
£2,500,000 and acted as purchaser for over 1,000 retail societies.
From buying, the society soon passed to making its own goods and now
manufactures directly a long list of commodities. In 1868 the Scottish
Wholesale Society was inaugurated upon practically the same plan.        115
Consumers’ co-operation has met with considerable success in Europe
also. In the United States, however, experiments of this kind have in
general had only a brief existence. It is impossible to say how many
such societies exist today as no adequate statistics on the subject
exist. Trade union stores in New England, the grange stores of the
Patrons of Husbandry and later similar ones of the Sovereigns of
Industry, and a few sporadic movements since in different parts of the
country, show what has been attempted. The reasons for the lack of
success in this country are not hard to find. Co-operation requires a
willingness to take considerable trouble for small economies, which
American workingmen, with their generally high wages, have not yet
been willing to take. It also requires a considerable degree of
homogeneity in thought and interests on the part of a people, which is
naturally less present in the United States with its large admixture
of foreign population than in England or the countries of Europe.

The methods of the Rochdale Society will serve as an illustration of
the way in which the savings effected by co-operation are distributed
among the members. Any one might become a member upon payment of one
shilling and was then entitled to trade at the store. The prices
charged were those current in the town, but purity of goods was
assured; cash payments were an essential feature. At the end of the
year the profits were divided among the members in proportion to the
amount of their purchases. On the other hand, it may be noted that no
attempt was made to, introduce profit-sharing with the employes, who
are paid ordinary but good wages only. Other forms of consumers’
co-operation are those which undertake to supply insurance, or credit,
like the co-operative insurance companies, banks, and building and
loan associations. The latter especially have had considerable success
in the United States and have helped many a laborer or man of small      116
means to the ownership of a home.

Producers’ co-operation differs from that just described in that it is
a union on the part of laborers to do away with the employer and to
secure for themselves the profits. The object of the first is to lower
prices for the co-operators as consumers; the object of the second is
rather to secure higher prices for themselves as producers by
eliminating the profits of the industrial manager. They hope to
perform his function by their collective effort, and to manage as well
as labor; indeed, by diminishing friction and strikes they even hope
to increase the profits. Examples of successful co-operation of this
sort are not numerous, as it has great difficulties to contend with.
Most of the experiments have failed, though recently it would seem
that the movement is making substantial though slow progress,
especially in France and England. Most of those in the latter country,
however, seem to be of simple industries, as agriculture and
dairy-farming. The most notable example of successful productive
co-operation in the United States has been furnished by the coopers of
Minneapolis, who organized a shop of their own in 1868 and have
steadily increased their business since that time. Other instances
often cited are the wood-workers in St. Louis and boot and shoe
companies in Massachusetts. More recently there has been a
considerable extension of co-operative creameries, cheese factories
and similar businesses of a simple kind.

The advantages of co-operation are summed up as follows by President
Walker.[37] From the laborer’s point of view: “First, to secure for
the laboring class that large amount of wealth, which … goes
annually in profits to the employer. Second, to secure for the laborer
the opportunity to produce independently of the will of an
employer…. In addition to these, the political economist beholds in
cooperation three sources of advantage. First, co-operation would,       117
by the very terms of the case, do away with strikes…. Second, the
workman would be incited to greater industry and to greater
carefulness in dealing with materials and with machinery. Third, in no
small degree frugality would be encouraged.” To these may be added
other advantages, mostly realizable, however, in consumers’
co-operation. Saving in store-room, clerk hire, advertising,
book-keeping, etc., is effected, while above all, the practice of cash
payments saves all loss from bad debts. The initial success of the
Rochdale pioneers was in large part due to the economy in this line,
as a system of long credits burdened the retail trade of England at
the time they began. In this country the large department stores have
introduced this system and have thus been able to give their customers
lower prices, and by so much have lessened the motive for consumers’
co-operation. The educative effects of successful co-operation upon
the participators in developing habits of thrift, careful management
and a knowledge of business principles, is one of the chief advantages
of the system. The ultimate ideal of enthusiastic co-operators does
not, however, stop short of a mere saving in price. The goal is stated
as follows by the Right Relationship League of America, which has
several co-operative stores in the Northwest: Consumers’ co-operation
is merely the first step which “will lead next to co-operative
production, next to public ownership of natural resources and finally
to complete industrial and economic equality, social and political
right relationship--the Kingdom of God on Earth.”

The defects of co-operation have already been suggested in the account
of their failure. In the first place, the importance and need of
intelligent and efficient management are usually underrated by
workingmen. They are unwilling to pay high salaries and as a
consequence lose the best men and secure inefficient service.
Co-operation has therefore succeeded best in retail trade where the
processes are comparatively simple, or in those branches of production   118
where industry counts for most and management for least. But even if
it were possible to secure an efficient and progressive manager for a
co-operative shop, it is found very difficult for a man chosen by the
workmen to enforce discipline among them. A second disadvantage is the
difficulty of securing capital. Where, as in many branches of
large-scale manufacturing today, the average investment of capital
amounts to more than $1,000 per employe, the impossibility of
obtaining this by the contributions of the workers is obvious. Nor are
capitalists usually willing to lend to such organizations, as the
risks are too great. To meet this difficulty Ferdinand Lassalle, a
German socialist, proposed that the state should advance the necessary
capital to associations of workmen. But the experience so far with
productive co-operation would seem to suggest that the social benefits
would not equal the waste of public capital. There is danger also that
if successful the co-operative associations would tend to become
monopolies; they are profit-seeking societies and would probably not
differ materially in their methods from ordinary joint stock

It seems impossible, therefore, to expect from co-operation a final
solution of the labor problem, such as John Stuart Mill, for instance,
hoped for. Where successful, it has succeeded in distributing profits
among a larger number of persons than would otherwise have received
them. Its educative and moral effects, moreover, in the appeals which
it makes to higher motives and to character, are of the highest value.
But as an industrial system of enterprise it cannot supplant the
present system as long as the manager of industry is needed. Today he
performs a useful social service and profits are his pay therefor. If
he is to be eliminated, society must first be raised to a higher plane
of efficiency, intelligence, and morality. But just because it makes
these high demands upon the members of the laboring class, attempts      119
at co-operation should receive all reasonable encouragement.


So far we have discussed for the most part those economic problems
that center round the production of wealth, such as the use of natural
resources, large-scale production, trusts and monopolies, labor
organizations, unemployment, industrial education and co-operation.
Now we shall consider briefly a few of the problems that are connected
with the distribution of wealth. Professor Blockmar[38] says that the
three great problems of economic society are: “First, how to create
the largest amount of utilities or wealth; second, how justly to
divide this amount; and third, how to make the product minister to the
permanent rather than to the transient well-being of society.” The
first problem we have already discussed; the second forms the subject
of the present section; while the third will be taken up in the next
section. Within the last century the center of interest in the
practical application of economic principles has decidedly shifted
from production to distribution. The earlier writers in economics, as
shown in the mercantile lists of the seventeenth and eighteenth
centuries, even Adam Smith, were chiefly interested in methods of
increasing a nation’s wealth. With the introduction of the factory
system and the opening up of vast natural resources by improvements in
mining and transportation, the production of wealth has enormously
increased, and now the question of the method of its distribution or
division is felt to be more pressing.

Under the term distribution two different processes are included,
which should be distinguished before going further. The first is
called functional distribution, and concerns the distribution of the
product of industry or the income of society, among the different
factors of production. That is to say, land, labor, capital and          120
managerial ability have contributed in varying degrees to the
production of a certain amount of current wealth, and the problem of
functional distribution is to ascertain how the net product resulting
from these joint efforts is divided. How much goes to rent, how much
to wages, how much to interest and how much to profits? The second
kind of distribution is the division of the wealth of society among
individuals or families; this is personal distribution, and raises the
question of poverty and great wealth. In discussing these problems,
however, we must remember that wealth production and distribution
takes place in modern society under conditions imposed by the social
order in which we live; these were defined as competition, private
property and personal liberty. If any modifications of the processes
of distribution were desired, it would undoubtedly be necessary to
alter these fundamental institutions.

John Stuart Mill held that production was governed by natural laws,
which could be ascertained and stated, but that distribution was
artificial and hence that it was not possible to discover constant and
certain laws governing it. Beginning mainly with Mill, the ethical
question has been more and more asked as to what share each factor in
production ought to get, not merely what he does receive. “Hence the
question is rising more and more as to what should be the basis of
division, and many proposals have been made. It is proposed that
laborers combine to get a larger share. Hence we have trade unions,
Knights of Labor, etc. It is proposed that capitalists and landlords
give a larger proportion of the produce to the laborers than they are
able to secure by mere private struggle. Hence we have proposals for
profit-sharing and various charities. It is proposed that laborers
combine to be their own capitalists and landlords; hence we have all
sorts of co-operative and communistic experiments. It is asserted that
the wealthy classes have so much power in their hands that private       121
co-operation cannot succeed in competing against them, and hence it is
proposed that all the people, through government (municipal, state,
and national), secure all the means of production (capital and land,
so far at least as land is used for production), and operate them
collectively for the equitable good of all, the people thus being
their own employers, capitalists, and landlords. Hence we have
municipalism, nationalism, socialism. It is claimed that capitalists
and landlords have been able to secure, and are today able to
maintain, their large share in distribution, only through the
favoritism of the Government. Hence we have proposals for free trade,
the single tax,… the extreme proposals of the very great minimizing
of the state in individualism, or the abolition of the Government in
anarchism.”[39] In view of this very imperfect list it is not too much
to say that most of the economic problems that are stirring society
today are connected with the distribution of wealth.

The first question that suggests itself in the discussion of
functional distribution is as to whether it is actually governed by
natural law, so-called. It is observable that the amounts which go to
rent, to wages, to interest, and to profits are regularly quite
constant. What determines this? The socialists contend that natural
distribution is the only just method and insist that the state should
regulate this just distribution; they are not clear, however, as to
what this natural method is. Henry George uses the same phrase when he
says, “the just distribution of wealth is manifestly a natural
distribution of wealth, and this is that which gives to him who makes
it and secures to him who saves it.” All such statements beg the
question for they all turn on the use of the word natural. Many modern
economists are inclined to assert that the question of distribution is
not an ethical one, not a question of what ought to be but of what       122
is. Thus Professor Tetter says[40]: “Distribution in economics is the
seasoned explanation of the way in which the total product of a
society is divided among its members. It is a logical question and not
an ethical one.” And Professor Clark writes, “There is, in short, a
deep-acting natural law at work amid the confusing struggles of the
labor market.” It will not be possible, in the brief limits of this
section, to take up all the theories as to the way in which this
distribution is effected among the claimants to a share of the
product, but a few of the more important practical results may be
stated. We shall take up the four different factors in turn.

Rent is usually defined as the return for the use of natural objects
and agencies. Rent has usually been low in the United States because
of the large amount of land and other natural agents available. In
general it may be said that when any factor of production is
relatively abundant in comparison with the other factors, its share of
the product will be small.[41] Henry George, however, argues that as
the amount of land is limited and is now practically all taken up, the
future will see a constantly increasing demand for land, and hence the
landlords will absorb most of the future income of society. This is
true of most of land and other natural agents especially in demand, as
choice sites in our cities, anthracite coal mines, etc. The practical
problem that suggests itself is, do we wish private property in land?
The socialists answer no, but the individualists insist that the best
use has been and can be made of land only by reducing it to private
ownership. In practice, however, even in modern individualistic
societies, the absolute and unregulated use of land by the owner is
restricted in various ways.

Interest is the amount paid for the use of capital. From the time of     123
the church fathers in the Middle Ages down to the present-day
socialists, interest and the private ownership of productive capital
have formed favorite objects of attack. The justification of interest
lies in the fact that men prefer present goods to future goods--a bird
in the hand is worth two in the bush--and interest is the difference
in value between the two at the present moment; it is time value. The
justification of private property, on the other hand, lies rather in
its expediency than in any inherent and unalterable law of nature. It
has developed with civilization and has been, without question, a
fundamental cause of material progress. But moderate individualists
even, as John Stuart Mill, have attacked the institution of
inheritance while leaving the main edifice of private property
untouched. They would limit absolutely the amount of bequest or, as
President Roosevelt advocated, would use inheritance taxes as a means
of breaking up large fortunes.

Profits are the reward which the manager of a business receives for
his services in organizing and superintending the business. This share
of the social income was the last to be recognized by economists, and
its rightfulness is even yet denied by the socialists. They insist
that profits are really the earnings of labor which have been withheld
from the laborer by the superior skill and economic strength of the
capitalist manager; they are institutional robbery, the exploitation
of labor. It is not possible to take up the arguments on this point,
but it may be said in a word that the manager of business contributes
a needed service to the work of society just as truly as the laborer
does, and receives his earned reward in the form of profits.

Wages are the reward of labor. It is often assumed that wages are
lower than they should be, that the laborer in some way is deprived of
a portion of what he has rightfully earned. It is worth while
inquiring briefly how the share of labor in the distribution of the      124
social income is determined. Various theories have been developed to
explain the distributive process, of which we may notice three. The
oldest in point of time and the most pessimistic theory held that
wages were fixed by competition and the growth of population at the
bare subsistence minimum, a bare starvation level. If by some happy
chance wages were raised above this point, then the population would
speedily multiply and the increased competition thus brought about
among the laborers would depress wages again to the lowest amount
sufficient to support a family. Under the name of the “iron law of
wages,” this theory is still put forth by the socialists as the
explanation--together with the institution of private property--of
wages. Historically, however, this theory has happily been proven
untrue, as the advance in the standard of living among the working
class during the past century testifies. It has now been almost wholly
superseded by the so-called productivity theory,[42] which asserts
that wages depend upon the productivity of labor; that the laborer
gets what he produces, and that this share is assured him by the
working out of the competitive process under free competition. If this
theory is true, there can be no ethical question raised; if labor is
dissatisfied with its share, then it must increase its productive
efficiency. As a matter of fact wages have always been high in the
United States because labor has been relatively scarce compared with
land and capital, and consequently its marginal productivity has been
high. The third theory says that wages are a result of bargaining, of
competition in the labor market, a question of supply and demand.
Under these circumstances it is largely a question of economic
strength between labor and capital, and if labor is well-organized,
alert, and able to drive a good bargain, then wages will be high;
otherwise they will be low. While there is an element of truth in
the last theory, the second one seems the truest explanation of          125
general wages; certain it is that no monopoly power of labor, however
great, could permanently maintain wages at a level higher than the
actual produce of labor. The element of truth in the first theory is
that wages can never, for any length of time, fall below the cost of

Of more practical interest are questions connected with the personal
distribution of wealth. In this connection arise such problems as the
increase of large fortunes, the causes of poverty, and similar
questions. The boast of our Republic has long been that here
opportunity was open to all, that wealth was widely diffused, and that
such inequalities of fortune as characterized the nations of the Old
World were happily lacking. In the fifty-five years, 1850-1904, the
per capita value of all property in the United States exactly
quadrupled; how has this increase been distributed? Unfortunately we
have no complete statistics on this point, yet reliable estimates by
authoritative writers all tell the same story--of great concentration
of wealth in the possession of a comparatively few rich families. In
1893 Mr. George K. Holmes concluded from a study of the statistics of
farm and home ownership in the United States that “91 per cent of the
families of the country own no more than about 29 per cent of the
wealth, and 9 per cent of the families own about 71 per cent of the
wealth.” A more accurate and satisfactory statement can be drawn from
the income-tax returns for Prussia, which tells almost the same story
with regard to income. The table on the following page is condensed
from an article by Professor A. Wagner:

According to these figures over two-thirds of the persons--heads of
families or single adults--had only one-third of the income, while
3½ per cent had another third. Another striking fact shown by the
table is the large proportion of persons receiving incomes of less

  Distribution of Income in Prussia, 1902                                126

                |  Per cent  |  Per cent
      Income    | of persons |  of income
  Below $214    |    70.7    |    33.0
  $214 to $714  |    25.8    |    34.9
  Over $714     |     3.5    |    32.1

than $214 a year, the minimum taxable income. It shows the poverty of
the mass of the people as well as the concentration of wealth among
the few rich. In the United States, where the natural resources have
been so much richer than in Germany, a similar table would probably
show a much smaller proportion under the Prussian minimum, but on the
other hand it would probably show a greater concentration of income in
the hands of a few. Europe has as yet no billionaire. The great
fortunes of the United States have been made possible by the unrivaled
opportunities for the exploitation of rich natural resources, the
appropriation of natural monopolies, and to special privileges and
opportunities in manufactures and transportation. The importance of
monopoly privileges in the distribution of wealth is well shown by the
results of an investigation made in 1892 by the New York Tribune into
the sources of the fortunes of millionaires. It was undertaken to show
that protection was not the main cause; but while it proved this, it
showed clearly that most of them were built up on monopoly. “Of the
4,047 millionaires reported, only 1,125, or 28 per cent, obtained
their fortunes in protected industries…. About 78 per cent of the
fortunes were derived from permanent monopoly privileges, and only 22
per cent from competitive industries unaided by natural and artificial
monopolies…. Furthermore, if the size of fortunes is taken into
account it will be found that perhaps 95 per cent of the total values
represented by these millionaire fortunes is due to those investments    127
classed as land values and natural monopolies, and to competitive
industries aided by such monopolies.”[43] It is essential to the
stability of our democratic institutions that all special privileges
be absolutely prohibited, and that monopoly be brought under strict
government control and regulation. Improper methods of wealth
accumulation should certainly be prevented.

The opposite question of poverty has already been discussed and some
of the causes of poverty pointed out. It will be sufficient here to
try to answer the question which has often been asked: Are the rich
growing richer and the poor poorer? Though the first part of the
question has just been affirmed, the second part may be denied. The
nineteenth century has witnessed a vast improvement in the condition
of the laboring man, who has shared in the increasing wealth which he
has helped to produce. Wages have steadily increased, the hours of
labor have been reduced, and the material well-being of the
wage-earner is greater today than it has ever been before. It has more
than once been pointed out by writers on this subject that with an
equal distribution of wealth no one would be well-to-do, while many
others insist that inequality in itself is a desirable thing. Greater
diffusion of wealth can come about only by very slow processes, and
permanent plenty can be secured only by a great increase in the
accumulations of capital and the efficiency of each worker. Any
suggested reform, therefore, that would weaken the motives to thrift
and industry must be rejected.


The goal and purpose of all economic activities is the satisfaction of
human wants. The object of production is consumption. We work because
we desire and need various things which we can get only if we produce
them or earn the money to buy them. In this section we take up some      128
of the problems connected with the rational use or consumption of the
wealth which is continually being produced. We have seen something of
the conditions under which it is produced, and the manner in which it
is distributed; we must now study the not less important subject of
its application to human needs and desires. The great question is, how
can we get the largest and most rational return for a given
expenditure? Before trying to answer this question, it will be helpful
to present a summary statement of actual expenditures in different

  Expenditures for Different Purposes.

       Items     | United | New York |  Great  | Prussia | Average
                 | States |   City   | Britain |         |
                 |  1903  |          |         |         |
  Food           |  43.1  |    43.4  |   51.4  |   55.0  |   48.2
  Clothing       |  13.0  |    10.6  |   18.1  |   18.0  |   14.9
  Rent           |  18.1  |    19.4  |   13.5  |   12.0  |   15.8
  Fuel and light |   5.7  |     5.1  |    3.5  |    5.0  |    4.8
  Miscellaneous  |  20.1  |    21.5  |   13.5  |   10.0  |   16.3
    Total        | 100.0  |   100.0  |  100.0  |  100.0  |  100.0

From this table it is seen that practically half of the income of
average working-class families is expended for food, and five-sixths
of it goes for the bare necessaries. It is therefore of the utmost
importance that this be spent wisely. The remaining one-sixth,
included here under the head “miscellaneous,” comprises such items as
education, care of health, comfort, mental and bodily recreation, etc.
It is manifest that this group can be expanded in only one of two
ways: either by enlarging the total income, or by economizing on the
other items by a wiser and better-ordered expenditure. The former
question has already been discussed; here we are concerned only with
the latter. Dr. Frederick Engel, a Prussian statistician, laid down
certain laws with regard to consumption: as the income of a family
increases a smaller percentage is spent for food and a larger            129
percentage for education, health, recreation, etc.; while the
percentage spent for clothing, rent, fuel and light remains
approximately the same. A higher civilization and culture for the mass
of the people can only be secured by expanding the group of culture
expenditures. As long as these remain unsatisfied for the ordinary
family we cannot claim to have attained our economic goal. The author
of a recent study of conditions in New York City, where the cost of
living is high, concludes that a “fair living wage for a workingman’s
family in New York City should be at least $728 a year, or a steady
income of $14 a week.”[44] The actual earnings are certainly below
this figure.

One of the problems which has often proved very puzzling is the
relation between saving and spending. At what point should one stop
spending in order to save? If the satisfaction of our wants is the
object of production, why should we save at all? This is the point
urged by the author of a specious little book called “The Fallacy of
Saving.” The problem can be most easily solved by a more careful
analysis of terms. In the popular view, saving involves the withdrawal
of goods or money from use, while spending means putting them to
immediate use. The spendthrift is proverbially popular. “If the rich
do not spend, the poor die of hunger,” said Montesquieu. Saving may
take the form of hoarding or withdrawing things from use, but nowadays
this is practised only by misers; saving ordinarily takes the form of
investment in some productive enterprise, either directly or through a
bank. In this way a demand is created for goods just as truly as
though the money had been spent for a dinner or a suit of clothes.
Saving is spending, but it is spending for the future rather than the
present; it usually causes the production of permanent material goods
rather than transient or immaterial pleasures. Another cause of the
confusion of ideas on this subject is that we always speak of money      130
and thus lose sight of the acts of production and consumption that lie
back of the money transfer. We see that money is transferred by
spending and think that it increases trade. Consequently, when a
prodigal spends his money foolishly, it is excused on the ground that
it makes employment and puts money in circulation. We forget that it
would have been “put in circulation” just as effectively if he had not
spent it, but had placed it in a bank. If we look back of the money
transfer, we see that usually there has been a foolish or wasteful
expenditure, sometimes an absolute destruction of wealth. A fire which
burns down valuable buildings is an absolute social loss, even though
employment be given to masons and carpenters in putting them up again.

A third confusion of ideas that exists in the popular mind is due to
an over-emphasis of the desirability of work for its own sake. The man
who “makes work” is thought to be doing a desirable thing, even though
this results from the unnecessary destruction of useful things. Now
the real goal of all rational economic endeavor is not production for
its own sake, but consumption; not work, but the gratification of
wants. Every destruction of durable commodities which lessens the
power to gratify wants is a loss to a community and no juggling with
words can make it anything else. If it gives employment to labor, that
means that the labor has been diverted from the production of other
things to which it would have been devoted. Edward Atkinson several
years ago calculated that every year fires destroyed property in the
United States to the amount $150,000,000.[45] That workmen are
employed to reproduce the buildings, etc., can surely not be reckoned
as a social gain. There is great danger in a commercial age like ours
of forgetting that work is not an end in itself, but simply a means to
an end. But it may be argued that unless these men had been given        131
employment of this sort, they would have starved. It is conceivable
that during or after a revolution industry would be so interrupted
that ordinary employments would not be open. But in ordinary times
such a statement is simply an assertion of the fallacious
lump-of-labor theory, that there is just so much work to be done and
no more. New wants are continually pressing for satisfaction, waiting
only for the prior ones to be satisfied before they urge their claims.
So soon as the old ones are satisfied, additional employment is
provided in meeting the newer desires. The aim of society is to expand
continually the circle of gratified desires. As durable goods and
agents are accumulated by the process of saving, this becomes
increasingly possible in every progressive society. Useless
destruction involves sheer waste and cannot be justified on any

On the other hand, saving is socially necessary in every industrially
developed community in order to furnish the requisite capital for the
continued production of wealth. Professor Marshall has estimated that
every year one-fifth of the wealth of a nation is used up in the
processes of manufacture and production; just to keep machines,
factories, railroads, and other instruments of production up to the
point of efficiency and restore loss and depreciation would therefore
require considerable saving. If the nation is to grow wealthier and is
to accumulate additional capital, manifestly still more must be saved.
This is done in all progressive countries. Saving is carried on by
individuals, however, and not by nations, and the motives that lead to
it are personal. The most important is probably the desire to provide
for wife and children or other relatives; next to that is the wish to
lay by sufficient for one’s old age. In our individualistic society,
where each family forms an independent unit and is assumed to be
self-supporting, it is very desirable that habits of thrift and saving
be developed. Both from a social and a personal point of view            132
therefore saving must be approved, though it is undesirable that it
should proceed so far as to prevent spending for the gratification of
essential present needs.

But what shall we say about expenditures for luxuries? Here the
spending is for the gratification of a want, though it may be out of
proportion to the results. What shall be our attitude to it? This
question is not so easy to answer as the other. Three different
schools have given as many answers to the problem of luxury: the first
condemns it utterly; the second approves it wholly; and the third
takes an intermediate position between the two extremes. Luxury is
condemned by the first school from three points of view: as a question
of individual morals, it is regarded as debasing and enervating, thus
preventing the highest development of the human faculties; as a
question of economics it is condemned as wasteful; and as a question
of right and justice it is incompatible with an equitable distribution
of wealth. It is upon this last point that the opponents of luxury lay
the greatest emphasis. As the quantity of existing wealth is
insufficient to satisfy even the primal wants of the large majority of
our fellow-creatures, we should endeavor to increase this available
store as much as we can, and should refrain from drawing upon it in a
reckless manner in order to gratify superfluous wants. Furthermore,
the productive powers that we can use are, as a matter of fact,
limited; and therefore, if the wealthy classes divert a portion of
these forces towards the production of articles of luxury, there will
be so much the less available for the production of those staple
articles that the masses require for their consumption. In the case of
a Robinson Crusoe this would be perfectly clear: if he devoted several
months to the polishing of a diamond for ornament, he would have to go
without a house or other improvements he might have made in that time.
Or, if he forced his man Friday to spend half his time polishing         133
diamonds for him, Friday might be compelled to go without sufficient
clothing or food or housing. The same thing is true of organized
society, only the truth is hidden by the phenomena of exchange. It has
been estimated[46] that the annual consumption of wealth in the United
States is divided somewhat as follows: necessaries, six billion
dollars; luxuries, three and one-half billion (of which $900,000,000
go for liquor and $500,000,000 for tobacco); capitalistic uses, three
and three-quarter billion. It is manifest that if the expenditure for
luxuries was curtailed or abandoned, there would be more to devote to
the other categories.

The opposite school replies to these arguments that luxury is an
indispensable stimulus to progress; that really all economic progress
is first manifested in the form of a need of luxury, and that luxury
therefore is a necessary phase of its development. Since luxury is
wholly relative, every want or need is, on its first appearance in the
world, regarded as superfluous; first, because no one has hitherto
wanted it, and secondly, because its production probably requires a
considerable amount of labor, on account of man’s inexperience and the
inevitable gropings in the dark that attend all beginnings. The
decencies of life today and even the necessities were once regarded as
luxuries--chimneys in houses, shoes, forks and knives, linen for the
body, bath tubs, etc. If all luxury had always been sternly suppressed
when it made its appearance, all the needs that constitute
civilization would have been nipped in the bud, and we should still be
in the condition of our ancestors of the Stone Age. Civilization
depends on the multiplication of wants. Economic progress is a process
of converting superfluities into conveniences, and conveniences into

The attitude taken by practically all economists today is intermediate
between these two extremes. Moderate luxury is justified, but lavish     134
and indiscriminate luxury is disapproved of. This justification of
luxury rests upon purely economic grounds. In so far as personal
consumption is the objective point of production, the prohibition of
luxury would act as an impediment to enterprise. If the desire to
enjoy luxuries stimulates the productive powers of economically
important members of society, it is justifiable as a necessary motive
force. The introduction of luxuries and the consequent raising of the
standard of living seems often the only way to secure progress. If the
mass of the people live on the minimum of cheap food, multiply as long
as cheap food is to be had, and spend little for comforts and
luxuries, then most of the labor of such a community must be spent in
obtaining food for the masses. Such is the condition in India and
China. But if a large part of the community has a higher standard of
living, it will exercise self-restraint in the increase of its
numbers, and the whole level of intelligence and comfort will be
raised, as in France or Switzerland or New England. On the other hand,
it is urged that “failure on the part of any family to secure the
necessaries of life is injurious, not only to it, but to the whole
community. Under-consumption means under-nutrition and loss in
industrial efficiency. If permitted to continue it must inevitably
undermine the standards which make a family self-supporting and
self-sufficient and reduce its members to dependency. The general
interest requires, therefore, acceptance of the maxim: the consumption
of luxuries should be deferred until all are provided with
necessaries…. This suggests that no one is justified in spending
income for a luxury for himself or his family that will afford less
happiness than would the same income spent for someone else.”[47]

But the difficult question at once suggests itself: How can the
surplus incomes of the rich be used so as to provide for the needs       135
of the poor, without undermining their independence or permanently
lowering their earning power? It has been suggested that there should
be a socialization of luxury; that the rich should use their wealth
for the construction of public art galleries, libraries, parks, baths,
etc., which would thus gratify as great a number as possible. The
feeling is growing in the United States and in the world that wealth
is a social trust, and that the ownership of wealth imposes upon a
person certain moral obligations. While every man has a legal right to
spend his surplus income as he pleases, he is morally bound to spend
it in such a way as to increase the welfare of the whole community.

Let us now finally take up the problem of economy in consumption. It
is said that an American family will waste enough food for a French
family to live on. The farmer who leaves his implements out in the
rain or his cattle without proper shelter, is guilty of waste. We all
waste clothing by frequent changes in fashion. Such waste is as much
due to a lack of knowledge and training as to carelessness. The single
example of the consumption of food will illustrate this point. “If we
place the average income of an American family at $500--and it will
not greatly exceed that figure--then nearly $250 of this amount is
expended each year for food. Waste occurs in any or all of the
following ways: (1) needlessly expensive foods containing little real
nutriment are used; (2) there is a failure to select the foods best
suited to the needs of the family; (3) a great deal is thrown away
which ought to be utilized; (4) bad preparation of the food causes it
to lose much of the nutriment which it does contain; (5) badly
constructed ovens diffuse heat, instead of confining it, and cause
enormous loss of fuel. We shall state less than the truth if we
estimate that fully one-fifth of the money expended for food is
absolutely wasted, while the excessive expenditure often fails to        136
provide adequate nutrition.”[48] The remedy for such a waste as this
clearly lies in the teaching of domestic science in our public schools
to the daughters and future wives of the workingmen. As the ordinary
household expenses, as shown above, absorb from 80 to 90 per cent of
the ordinary income, the training of the housewife, under whose
control they fall, is almost as imperative as that of the wage-earner.

The economic evils of intemperance have already been partially stated
in the objections to luxury. There is, however, one additional
objection to the excessive use of intoxicating liquor which is not
true of most indulgences: it diminishes a man’s productive powers. It
is harmful in its effects upon both consumption and production. Other
items of consumption appear, however, not so clearly under the
immediate control of the consumer. The housing accommodations in many
of our large cities have often been unsanitary and unworthy of being
called homes. Legislation has been necessary to compel the erection of
better tenements and prevent the exploitation of helpless people. So
too it has been found necessary to legislate against loan-sharks, in
order to protect people against their own improvidence and ignorance.
In addition to legislation against positive evils, we must of course
look to education as the great remedy of waste in consumption.

There is one other phase of the subject of consumption that may well
be mentioned before leaving this subject. Owing to the constant
pressure of the consuming public for cheap goods, many articles are
produced under conditions dangerous to the health, morality and
well-being of the operatives, as in the case of the “sweated trades.”
To remedy these evils consumers’ leagues have been started in many
places, the members of which pledge themselves not to buy goods or to
trade in stores where the conditions of work are not up to certain
prescribed standards.

They realize that as consumers they owe a duty to other members of       137
society not to exploit them. While this method has proven a fairly
effective method of protest in some cases, it cannot be looked to as a
solution of this evil. But it emphasizes the fact that the interests
of all members of society as producers and consumers are closely
interdependent, and that the progress of society requires the
improvement of the condition of all.


Probably on no subject has there been such confused thinking or have
such widely varying views been held as on that of money. There is,
however, substantial unanimity of opinion on the important points
among economists today, though in practice there still remain many
unsolved problems. The modern industrial system has already been
characterized as one of capitalistic production, of large-scale
enterprises with extended use of machinery. Not less fundamental are
the processes of valuation and exchange made possible by the use of
money and credit; and also by the machinery for the geographical
distribution of goods, our railroads and steamship lines. The modern
stage of economic development has been described by Hildebrand as one
of “credit economy,” as opposed to those of barter and money economy,
which preceded. It is inconceivable that the modern complex system of
exchange could be maintained without the extended use of money and
credit. Without attempting to define these terms or to trace their
historical development, we may proceed at once to state some of the
problems to which they have given rise.

The first question that suggests itself is, what determines the value
of money? The generally accepted answer may be briefly stated: it is,
that the value of money depends, other things remaining the same, upon
its quantity. According to the quantity theory an increase in the
supply of money will cause a fall in the value of each unit, just as     138
an increase in the supply of wheat or cotton will cause a fall in the
value of each bushel or bale. Conversely, a decrease in the quantity
of money will cause a rise in the value of money. It is simply an
application of the general law of value to money. The phrase “other
things remaining the same” is however an important one, for it assumes
that the amount of business and the methods by which it is conducted
will remain substantially unchanged. Of course if an increase in the
amount of money is accompanied by an equivalent expansion of trade,
the one may offset the other and the value of money remain unchanged.
Now, inasmuch as the prices of all goods and services are measured and
expressed in terms of money, it is clear that a fall in the value of
money means a rise of general prices; the value of each commodity is
now expressed in terms of a larger number of less valuable units or
dollars. Prices will be high if the quantity of money in circulation
in a country is large; they will be low if the quantity is small. To
the question, which is better for a country, high prices or low
prices, it may be answered that it is a matter of indifference,
provided only that there is enough money to do the work of exchange
efficiently and that fluctuations are prevented. Just how much
constitutes enough is, however, a matter of contention. In the
undeveloped sections of our country, where capital is scarce and
banking facilities undeveloped and where most of the people are
debtors, there has always been a demand for cheap and abundant money.
Capital and money have been confused and the need of one has led to a
demand for the other.

It is not a matter of indifference, however, whether prices be rising
or falling, that is, whether inflation or contraction of the currency
is taking place. A period of falling prices means hardship and
injustice to debtors and producers of goods, as farmers,
manufacturers, etc. Having contracted obligations and engaged in the     139
production of commodities with the expectation of a given price, they
find their goods worth less when ready for the market and themselves
confronted with a loss instead of the anticipated profit. Under such
circumstances a contraction of the currency and falling prices means
lessened production of wealth. Consequently many writers, and even so
good an economist as President Walker, have urged that a slow steady
inflation of the currency would promote trade and “give a fillip to
industry.” The monetary history of the United States is filled with
attempts to realize this in practice: colonial and revolutionary bills
of credit were first issued; when these were forbidden by the new
Constitution resort was had to issues by state banks. When the Federal
Government began the issue of greenbacks and restricted the use of
state bank notes, the inflationists looked to this source for
assistance. After the defeat of the Greenback party, they turned
finally to the coinage of silver, which was now falling in price, and
the question of bimetallism in the United States was made a practical
political issue.

Down to 1870 practically all the nations of Europe and America had the
system of bimetallism at ratios of 15½ or 16 to 1. About that date
the great increase in the supply of gold and the fall in the value of
silver led one country after another to abandon the latter and to
adopt the system of gold monometallism. This was vigorously resisted
by many persons and several fruitless efforts made to secure a system
of international bimetallism. Failing that, the friends of silver in
this country endeavored to secure independent action by the United
States alone, and were ultimately successful in obtaining the purchase
by the Federal Government of practically the entire silver output of
the country during the years 1878-1893.

  Development of the Manufacturing Industries in the United States,

        |          |         Wealth.        |           |           |
        |          +---------------+--------+           |           |
  Fiscal|          |               |        |           |           |
   Year,|Population|               |        | Production| Raw wool  |
  ending| June 1.  |               |  Per   |   of      | imported. |
   June |          |     Total.    |capita. |  wool.[B] |           |
   30-- |          |               |        |           |           |
        |          |               |        |           |           |
        |          |               |        |           |           |
        |          |   Dollars.    |Dollars.|  Pounds.  |  Pounds.  |
        |          |               |        |           |           |
   1800 | 5,308,483|      --       |   --   |     --    |     --    |
   1810 | 7,239,881|      --       |   --   |     --    |     --    |
   1820 | 9,638,453|      --       |   --   |     --    |     --    |
   1830 |12,866,020|      --       |   --   | 35,802,114|    669,883|
   1840 |17,069,453|      --       |   --   | 52,516,959|  9,898,740|
   1850 |23,191,876|  7,135,780,000|  307.69|     --    | 18,695,294|
   1851 |23,995,000|      --       |   --   |     --    | 32,607,315|
   1852 |24,802,000|      --       |   --   |     --    | 18,343,218|
   1853 |25,615,000|      --       |   --   |     --    | 21,616,035|
   1854 |26,433,000|      --       |   --   |     --    | 20,228,035|
   1855 |27,256,000|      --       |   --   |     --    | 18,599,784|
   1856 |28,083,000|      --       |   --   |     --    | 14,778,496|
   1857 |28,916,000|      --       |   --   |     --    | 16,505,216|
   1858 |29,758,000|      --       |   --   |     --    |     --    |
   1859 |30,596,000|      --       |   --   | 60,264,913|     --    |
   1860 |31,443,321| 16,159,616,000|  513.93| 75,000,000|     --    |
   1861 |32,064,000|      --       |   --   | 90,000,000|     --    |
   1862 |32,704,000|      --       |   --   |106,000,000| 42,131,061|
   1863 |33,365,000|      --       |   --   |123,000,000| 73,931,944|
   1864 |34,046,000|      --       |   --   |142,000,000| 90,464,002|
   1865 |34,748,000|      --       |   --   |155,000,000| 43,877,408|
   1866 |35,469,000|      --       |   --   |160,000,000| 67,918,253|
   1867 |36,211,000|      --       |   --   |168,000,000| 16,558,046|
   1868 |36,973,000|      --       |   --   |180,000,000| 24,124,803|
   1869 |37,756,000|      --       |   --   |162,000,000| 39,275,926|
   1870 |38,558,371| 30,068,518,000|  779.83|160,000,000| 49,230,199|
   1871 |39,555,000|      --       |   --   |150,000,000| 68,058,028|
   1872 |40,596,000|      --       |   --   |158,000,000|122,256,499|
   1873 |41,677,000|      --       |   --   |170,000,000| 85,496,049|
   1874 |42,796,000|      --       |   --   |181,000,000| 42,939,541|
   1875 |43,951,000|      --       |   --   |192,000,000| 54,901,760|
   1876 |45,137,000|      --       |   --   |200,000,000| 44,642,836|
   1877 |46,353,000|      --       |   --   |208,250,000| 42,171,192|
   1878 |47,598,000|      --       |   --   |211,000,000| 48,449,079|
   1879 |48,866,000|      --       |   --   |232,500,000| 39,005,155|
   1880 |50,155,783| 43,642,000,000|  850.20|240,000,000|128,131,747|
   1881 |51,316,000|      --       |   --   |272,000,000| 55,964,236|
   1882 |52,495,000|      --       |   --   |290,000,000| 67,861,744|
   1883 |53,693,000|      --       |   --   |300,000,000| 70,575,478|
   1884 |54,911,000|      --       |   --   |308,000,000| 78,350,651|
   1885 |56,148,000|      --       |   --   |302,000,000| 70,596,170|
   1886 |57,404,000|      --       |   --   |285,000,000|129,084,958|
   1887 |58,680,000|      --       |   --   |269,000,000|114,038,030|
   1888 |59,974,000|      --       |   --   |265,000,000|113,558,753|
   1889 |61,289,000|      --       |   --   |276,000,000|126,487,729|
   1890 |62,622,250| 65,037,091,000|1,038.57|285,000,000|105,431,285|
   1891 |63,844,000|      --       |   --   |294,000,000|129,303,648|
   1892 |65,086,000|      --       |   --   |303,153,000|148,670,652|
   1893 |66,349,000|      --       |   --   |298,057,384|172,433,838|
   1894 |67,632,000|      --       |   --   |309,748,000| 55,152,585|
   1895 |68,934,000| 77,000,000,000|1,117.01|272,474,708|206,033,906|
   1896 |70,254,000|      --       |   --   |259,153,251|230,911,473|
   1897 |71,592,000|      --       |   --   |266,720,684|350,852,026|
   1898 |72,947,000|      --       |   --   |272,191,330|132,795,202|
   1899 |74,318,000|      --       |   --   |288,636,621| 76,736,209|
   1900 |76,303,387| 88,517,306,775|1,164.79|302,502,328|155,928,455|
   1901 |79,003,000|      --       |   --   |287,450,000|166,576,966|
   1903 |80,372,000|      --       |   --   |291,783,032|177,137,796|
   1904 |81,752,000|107,104,211,917|1,310.11|295,488,438|173,742,834|
   1905 |83,143,000|      --       |   --   |298,915,130|249,135,746|
   1906 |84,216,433|      --       |   --   |298,294,750|201,688,668|
   1907 |85,817,239|      --       |   --   |311,138,321|203,847,545|
   1908 |87,189,392|      --       |   --   |     --    |125,980,524|

        |          |               Manufactures of cotton.               |
  Fiscal|    of    | Thousands of spindles in |  Thousands of bales of   |
   Year,|cotton.[B]| operation on Sept. 1st.  |  domestic cotton taken   |
  ending|          |                          |        by mills.         |
   June | (500-lb. +--------+--------+--------+--------+--------+--------+
   30-- |  bales,  |   In   |   In   |  Total |   In   |   In   |  Total |
        |  gross   |Southern|Northern| United |Southern|Northern| United |
        | weight.) |States. | States.| States.| States.| States.| States |
        |  Number. | Thou-  | Thou-  | Thou-  | Thou-  | Thou-  | Thou-  |
        |          | sands. | sands. | sands. | sands. | sands. | sands. |
   1800 |    73,222|   --   |   --   |   --   |   --   |   --   |   --   |
   1810 |   177,824|   --   |   --   |   --   |   --   |   --   |   --   |
   1820 |   334,728|   --   |   --   |   --   |   --   |   --   |        |
   1830 |   732,218|   --   |   --   |   --   |   --   |   --   |   --   |
   1840 | 1,347,640|    181 |  2,104 |  2,285 |     71 |    166 |    237 |
   1850 | 2,136,083|    265 |  3,733 |  3,998 |     78 |    497 |    575 |
   1851 | 2,799,290|   --   |   --   |   --   |     60 |    404 |    464 |
   1852 | 3,130,338|   --   |   --   |   --   |    111 |    588 |    699 |
   1853 | 2,766,194|   --   |   --   |   --   |    153 |    650 |    803 |
   1854 | 2,708,082|   --   |   --   |   --   |    145 |    592 |    737 |
   1855 | 3,220,782|   --   |   --   |   --   |    135 |    571 |    706 |
   1856 | 3,873,680|   --   |   --   |   --   |    138 |    633 |    771 |
   1857 | 3,012,016|   --   |   --   |   --   |    154 |    666 |    820 |
   1858 | 3,758,273|   --   |   --   |   --   |    143 |    452 |    595 |
   1859 | 4,309,642|   --   |   --   |   --   |    167 |    760 |    927 |
   1860 | 3,841,416|    324 |  4,912 |  5,236 |     94 |    751 |    845 |
   1861 | 4,490,586|   --   |   --   |   --   |    153 |    650 |    803 |
   1862 | 1,596,653|   --   |   --   |   --   |   --   |   --   |   --   |
   1863 |   449,059|   --   |   --   |   --   |   --   |   --   |   --   |
   1864 |   229,372|   --   |   --   |   --   |   --   |   --   |   --   |
   1865 | 2,093,658|   --   |   --   |   --   |   --   |   --   |   --   |
   1866 | 1,948,077|   --   |   --   |   --   |    127 |    541 |    668 |
   1867 | 2,345,610|   --   |   --   |   --   |    150 |    573 |    723 |
   1868 | 2,198,141|   --   |   --   |   --   |    168 |    800 |    968 |
   1869 | 2,409,597|   --   |   --   |   --   |    173 |    822 |    995 |
   1870 | 4,024,527|    328 |  6,804 |  7,132 |     69 |    728 |    797 |
   1871 | 2,756,564|   --   |   --   |   --   |     91 |  1,072 |  1,163 |
   1872 | 3,650,932|   --   |   --   |   --   |    120 |    977 |  1,097 |
   1873 | 3,873,750|   --   |   --   |   --   |    138 |  1,063 |  1,201 |
   1874 | 3,528,276|   --   |   --   |   --   |    128 |  1,192 |  1,320 |
   1875 | 4,302,818|   --   |   --   |   --   |    130 |  1,071 |  1,201 |
   1876 | 4,118,390|   --   |   --   |   --   |    134 |  1,220 |  1,354 |
   1877 | 4,494,224|   --   |   --   |   --   |    127 |  1,302 |  1,429 |
   1878 | 4,745,078|   --   |   --   |   --   |    151 |  1,345 |  1,496 |
   1879 | 5,466,387|   --   |   --   |   --   |    186 |  1,375 |  1,561 |
   1880 | 6,356,998|    561 | 10,092 | 10,653 |    189 |  1,382 |  1,570 |
   1881 | 5,136,447|   --   |   --   |   --   |    225 |  1,713 |  1,938 |
   1882 | 6,833,442|   --   |   --   |   --   |    287 |  1,677 |  1,964 |
   1883 | 5,521,963|    860 | 11,800 | 12,660 |    313 |  1,759 |  2,072 |
   1884 | 5,477,448|  1,050 | 12,250 | 13,300 |    340 |  1,537 |  1,877 |
   1885 | 6,369,341|  1,125 | 12,250 | 13,375 |    316 |  1,437 |  1,753 |
   1886 | 6,314,561|  1,150 | 12,250 | 13,400 |    381 |  1,781 |  2,162 |
   1887 | 6,884,667|  1,200 | 12,300 | 13,500 |    401 |  1,687 |  2,088 |
   1888 | 6,923,775|  1,250 | 12,300 | 13,550 |    456 |  1,805 |  2,261 |
   1889 | 7,472,511|  1,360 | 12,700 | 14,060 |    480 |  1,790 |  2,270 |
   1890 | 8,562,089|  1,570 | 12,814 | 14,384 |    539 |  1,979 |  2,518 |
   1891 | 8,940,867|  1,740 | 12,900 | 14,640 |    613 |  2,027 |  2,640 |
   1892 | 6,658,313|  1,950 | 13,250 | 15,200 |    684 |  2,172 |  2,856 |
   1893 | 7,433,056|  2,100 | 13,450 | 15,550 |    723 |  1,652 |  2,375 |
   1894 |10,025,534|  2,200 | 13,500 | 15,700 |    711 |  1,580 |  2,291 |
   1895 | 7,146,772|  2,400 | 13,700 | 16,100 |    852 |  2,019 |  2,871 |
   1896 | 8,515,640|  2,850 | 13,800 | 16,650 |    900 |  1,605 |  2,505 |
   1897 |10,985,040|  3,250 | 13,900 | 17,150 |    999 |  1,793 |  2,792 |
   1898 |11,435,368|  3,550 | 13,900 | 17,450 |  1,254 |  2,211 |  3,465 |
   1899 | 9,459,935|  3,950 | 14,150 | 18,100 |  1,415 |  2,217 |  3,632 |
   1900 |10,266,527|  4,368 | 15,104 | 19,472 |  1,523 |  2,350 |  3,873 |
   1901 | 9,675,771|  5,500 | 11,700 | 20,200 |  1,583 |  1,964 |  3,547 |
   1902 |10,827,168|  6,400 | 15,000 | 21,400 |  2,017 |  2,066 |  4,083 |
   1903 |10,045,615|  6,900 | 15,100 | 22,000 |  1,958 |  1,966 |  3,924 |
   1904 |13,679,954|  7,650 | 15,200 | 22,850 |  1,889 |  2,046 |  3,935 |
   1905 |10,804,556|  7,631 | 16,056 | 23,687 |  2,140 |  2,139 |  4,279 |
   1906 |13,595,498|  8,995 | 16,255 | 25,250 |  2,373 |  2,536 |  4,909 |
   1907 |11,375,461|  9,528 | 16,847 | 26,275 |  2,411 |  2,574 |  4,985 |
   1908 |13,587,306| 10,201 | 17,304 | 27,505 |  2,187 |  2,352 |  4,539 |

        |           |           |           |
        |           |           |           |
  Fiscal|           |           |  Unmanu-  |
   Year,|           |           |  factured |  Imports
  ending|  Exports. |  Imports. |    silk   |  of crude
   June | (domestic)|           | imported. |  rubber.
   30-- |           |           |           |
        |           |           |           |
        |           |           |           |
        |  Dollars. |  Dollars. |  Pounds.  |   Pounds.
        |           |           |           |
   1800 |     --    |     --    |    --     |     --
   1810 |     --    |     --    |    --     |     --
   1820 |     --    |  7,812,326|    --     |     --
   1830 |  1,318,183|  5,774,013|    --     |     --
   1840 |  3,549,607|  6,504,104|    --     |     --
   1850 |  4,734,424| 20,781,346|    --     |     --
   1851 |  7,241,205| 22,164,442|    --     |     --
   1852 |  7,672,151| 19,689,496|    --     |     --
   1853 |  8,768,894| 27,731,363|    --     |     --
   1854 |  5,535,516| 33,949,503|    --     |     --
   1855 |  5,857,181| 17,757,112|    --     |     --
   1856 |  6,967,309| 25,917,999|    --     |     --
   1857 |  6,115,177| 28,685,726|    --     |     --
   1858 |  5,651,504| 18,584,810|    --     |     --
   1859 |  8,316,222| 26,976,381|    --     |     --
   1860 | 10,934,796| 33,215,541|    --     |     --
   1861 |  7,957,038| 25,271,382|    --     |     --
   1862 |  2,946,464|  8,890,119|    --     |  2,125,561
   1863 |  2,906,411| 14,121,589|    --     |  5,104,650
   1864 |  1,456,901| 14,341,501|    407,935|     --
   1865 |  3,451,561|  9,223,686|    288,286|     --
   1866 |  1,780,175| 27,502,194|    567,904|     --
   1867 |  4,608,235| 19,302,005|    491,983|     --
   1868 |  4,871,054| 17,335,406|    512,449|  8,438,019
   1869 |  5,874,222| 20,481,312|    720,045|  7,813,134
   1870 |  3,787,282| 23,380,053|    583,589|  9,624,098
   1871 |  3,558,236| 29,876,640|  1,100,281| 11,031,939
   1872 |  2,304,330| 35,307,447|  1,063,809| 11,803,437
   1873 |  2,947,528| 35,201,324|  1,159,420| 14,536,978
   1874 |  3,095,840| 28,193,869|    794,837| 14,191,320
   1875 |  4,071,882| 27,738,401|  1,101,681| 12,035,909
   1876 |  7,722,978| 22,725,598|  1,354,991| 10,589,297
   1877 | 10,235,843| 18,923,614|  1,186,170| 13,821,109
   1878 | 11,438,660| 19,081,037|  1,182,750| 12,512,203
   1879 | 10,853,950| 19,928,310|  1,889,776| 14,878,584
   1880 |  9,981,418| 29,929,366|  2,562,236| 16,826,099
   1881 | 13,571,387| 31,219,329|  2,790,413| 20,015,176
   1882 | 13,222,979| 35,719,791|  3,549,404| 22,712,862
   1883 | 12,951,145| 38,036,044|  4,731,106| 21,646,320
   1884 | 11,885,211| 29,074,626|  4,284,888| 24,574,025
   1885 | 11,836,591| 27,197,241|  4,308,908| 24,208,148
   1886 | 13,959,934| 29,709,266|  6,818,060| 29,263,632
   1887 | 14,929,342| 28,940,353|  6,028,091| 28,649,446
   1888 | 13,013,189| 28,917,799|  6,370,322| 36,628,351
   1889 | 10,212,644| 26,805,942|  6,645,124| 32,339,503
   1890 |  9,999,277| 29,918,055|  7,510,440| 33,842,374
   1891 | 13,604,857| 29,712,624|  6,266,629| 33,712,089
   1892 | 13,226,277| 28,323,841|  8,834,049| 39,976,205
   1893 | 11,809,355| 33,560,293|  8,497,477| 41,547,680
   1894 | 14,340,886| 22,346,547|  5,902,485| 33,757,783
   1895 | 13,789,810| 33,196,625|  9,316,460| 39,741,607
   1896 | 16,837,396| 32,437,504|  9,363,987| 36,774,460
   1897 | 21,037,678| 34,429,363|  7,993,444| 35,574,449
   1898 | 17,024,092| 27,267,300| 12,087,951| 46,055,497
   1899 | 23,566,914| 32,054,434| 11,250,383| 51,063,066
   1900 | 24,003,087| 41,296,239| 13,073,718| 49,377,138
   1901 | 20,272,418| 40,246,935| 10,405,555| 55,275,529
   1902 | 32,108,362| 44,460,126| 14,234,826| 50,413,481
   1903 | 32,216,304| 52,462,755| 15,270,859| 55,010,571
   1904 | 22,403,713| 49,524,246| 16,722,709| 59,015,551
   1905 | 49,666,080| 48,919,936| 22,357,307| 67,234,256
   1906 | 52,944,033| 63,043,322| 17,352,021| 57,844,345
   1907 | 32,305,412| 73,704,636| 18,743,904| 76,963,838
   1908 | 25,177,758| 68,379,781| 16,662,132| 62,233,160

  [B] Calendar years.

  Development of the Manufacturing Industries in the United States,

       |                       |            |
       |     Production of     | Exports of |
       |                       |  domestic  |
       +------------+----------+  copper &  +
  Year.|            |          |  manufac-  |
       |  Coal.[C]  |Copper.[C]|    tures   |
       |            |          |    of.     |
       |            |          |            |
       |            |          |            |
       |    Long    |   Long   |  Dollars.  |
       |    tons.   |   tons.  |            |
       |            |          |            |
   1800|     --     |     --   |      --    |
   1810|          20|     --   |      17,426|
   1820|       3,080|     --   |      18,547|
   1830|     285,779|     --   |      36,601|
   1840|   1,848,249|      100 |      86,954|
   1850|   6,266,233|      650 |     105,060|
   1851|   7,798,683|      900 |      91,871|
   1852|   8,764,879|    1,100 |     103,039|
   1853|   9,437,757|    2,000 |     108,205|
   1854|  10,698,841|    2,250 |      91,984|
   1855|  11,541,672|    3,000 |     690,766|
   1856|  12,095,469|    4,000 |     534,846|
   1857|  11,910,883|    4,800 |     607,054|
   1858|  12,477,213|    5,500 |   1,985,223|
   1859|  13,958,192|    6,300 |   1,048,246|
   1860|  13,044,680|    7,200 |   1,664,122|
   1861|  14,721,439|    7,500 |   2,375,029|
   1862|  15,612,353|    9,000 |   1,098,546|
   1863|  19,034,877|    8,500 |   1,026,038|
   1864|  21,076,003|    8,000 |     251,272|
   1865|  21,243,012|    8,500 |     991,746|
   1866|  25,896,056|    8,900 |     143,761|
   1867|  27,432,520|   10,000 |     474,110|
   1868|  29,341,036|   11,600 |     479,488|
   1869|  29,378,893|   12,500 |     355,274|
   1870|  29,496,054|   12,600 |     504,741|
   1871|  41,861,679|   13,000 |     188,218|
   1872|  45,940,535|   12,500 |     185,983|
   1873|  51,430,786|   15,500 |      88,711|
   1874|  46,969,571|   17,500 |     356,758|
   1875|  46,739,571|   18,000 |   1,085,688|
   1876|  47,571,429|   19,000 |   3,441,939|
   1877|  54,019,429|   21,000 |   2,913,943|
   1878|  51,728,214|   21,500 |   2,319,901|
   1879|  60,808,749|   23,000 |   2,831,053|
   1880|  63,822,830|   27,000 |     793,455|
   1881|  76,679,491|   32,000 |     824,896|
   1882|  92,456,419|   40,467 |     658,941|
   1883| 103,310,290|   51,574 |   1,404,243|
   1884| 107,281,742|   64,708 |   2,664,964|
   1885|  99,250,263|   74,052 |   5,447,423|
   1886| 101,500,381|   70,430 |   2,602,869|
   1887| 116,652,242|   81,017 |   2,033,523|
   1888| 132,731,837|  101,054 |   3,812,798|
   1889| 126,097,779|  101,239 |   2,348,954|
   1890| 140,866,931|  115,966 |   2,349,392|
   1891| 150,505,954|  126,839 |   4,614,597|
   1892| 160,115,242|  154,018 |   7,226,392|
   1893| 162,814,977|  147,033 |   4,525,573|
   1894| 152,447,791|  158,120 |  19,697,140|
   1895| 172,426,366|  169,917 |  14,468,703|
   1896| 171,416,390|  205,384 |  19,720,104|
   1897| 178,776,070|  220,571 |  31,621,125|
   1898| 196,407,381|  235,050 |  32,180,872|
   1899| 226,554,636|  253,870 |  35,983,529|
   1900| 240,789,310|  270,588 |  57,852,960|
   1901| 261,874,836|  268,782 |  43,267,021|
   1902| 269,277,178|  294,423 |  41,218,373|
   1903| 319,068,229|  311,627 |  39,667,196|
   1904| 314,121,784|  362,739 |  57,142,081|
   1905| 350,820,840|  402,637 |  86,225,291|
   1906| 369,783,284|  409,735 |  81,282,664|
   1907| 428,895,914|  387,945 |  94,762,110|
   1908|     --     |    --    | 104,064,580|

       |                                           |                      |
       |                Production of              |   Iron and steel     +
       |                                           |    Manufactures.     |
  Year.|          |          |          |          |          |           |
       | Natural  |   Iron   |   Pig    | Steel.[C]| Imports. | Exports   |
       | gas.[C]  |  ore.[C] | iron.[C] |          |          | (domestic)|
       |          |          |          |          |          |           |
       |          |          |          |          |          |           |
       | Dollars. |Long tons.|Long tons.|Long tons.| Dollars. |  Dollars. |
       |          |          |          |          |          |           |
       |          |          |          |          |          |           |
   1800|    --    |    --    |    --    |    --    |    --    |     52,144|
   1810|    --    |    --    |    53,908|    --    |    --    |     91,914|
   1820|    --    |    --    |    20,000|    --    |    --    |     46,552|
   1830|    --    |    --    |   165,000|    --    | 6,346,287|    322,747|
   1840|    --    |    --    |   286,903|    --    | 8,157,923|  1,127,877|
   1850|    --    |    --    |   563,755|    --    |20,145,067|  1,953,702|
   1851|    --    |    --    |    --    |    --    |22,439,297|  2,336,587|
   1852|    --    |    --    |    --    |    --    |23,568,649|  2,368,384|
   1853|    --    |    --    |    --    |    --    |34,944,002|  2,541,554|
   1854|    --    |    --    |   657,338|    --    |35,456,143|  4,249,959|
   1855|    --    |    --    |   700,159|    --    |28,693,979|  3,803,706|
   1856|    --    |    --    |   788,515|    --    |29,050,101|  4,256,613|
   1857|    --    |    --    |   712,640|    --    |30,743,649|  4,959,238|
   1858|    --    |    --    |   629,548|    --    |20,171,007|  4,843,592|
   1859|    --    |    --    |   750,560|    --    |22,379,743|  5,577,748|
   1860|    --    |    --    |   821,223|    --    |26,158,235|  5,870,114|
   1861|    --    |    --    |   653,164|    --    |21,160,235|  6,039,149|
   1862|    --    |    --    |   703,270|    --    |11,451,707|  4,732,348|
   1863|    --    |    --    |   846,075|    --    |16,152,843|  6,681,417|
   1864|    --    |    --    | 1,014,282|    --    |23,822,876|  7,541,967|
   1865|    --    |    --    |   831,770|    --    |16,660,991| 11,227,294|
   1866|    --    |    --    | 1,205,663|    --    |25,598,147|  4,006,180|
   1867|    --    |    --    | 1,305,023|    19,643|31,630,519|  9,351,062|
   1868|    --    |    --    | 1,431,250|    26,786|30,346,768| 10,950,275|
   1869|    --    |    --    | 1,711,287|    31,250|38,213,717| 10,938,492|
   1870|    --    | 3,031,891| 1,665,179|    68,750|40,273,682| 13,483,163|
   1871|    --    |    --    | 1,706,793|    73,214|53,024,075| 21,189,692|
   1872|    --    |    --    | 2,548,713|   142,954|67,852,616| 11,463,880|
   1873|    --    |    --    | 2,560,963|   198,796|74,302,102| 13,655,087|
   1874|    --    |    --    | 2,401,262|   215,727|46,786,469| 15,098,248|
   1875|    --    |    --    | 2,023,733|   389,799|31,432,380| 19,534,215|
   1876|    --    |    --    | 1,868,961|   533,191|23,197,417| 15,449,846|
   1877|    --    |    --    | 2,066,594|   569,618|19,320,927| 16,501,638|
   1878|    --    |    --    | 2,301,215|   731,977|18,987,130| 16,053,571|
   1879|    --    |    --    | 2,741,853|   935,273|19,594,608| 15,133,493|
   1880|    --    | 7,120,362| 3,835,191| 1,247,335|71,266,699| 14,716,524|
   1881|    --    |    --    | 4,144,254| 1,588,314|60,604,477| 16,608,767|
   1882|   215,000|    --    | 4,623,323| 1,736,692|67,976,897| 20,748,206|
   1883|   475,000|    --    | 4,595,510| 1,673,535|58,495,246| 22,826,528|
   1884| 1,460,000|    --    | 4,097,868| 1,550,879|40,147,053| 21,909,881|
   1885| 4,857,200|    --    | 4,044,526| 1,711,920|33,610,093| 16,592,155|
   1886|10,012,000|    --    | 5,683,329| 2,562,503|37,534,078| 15,745,569|
   1887|15,817,500|    --    | 6,417,148| 3,339,071|49,203,164| 15,958,502|
   1888|22,629,875|    --    | 6,489,738| 2,899,440|48,992,757| 17,763,034|
   1889|21,097,099|14,518,041| 7,603,642| 3,385,732|42,377,793| 21,156,077|
   1890|18,792,725|16,036,043| 9,202,703| 4,277,071|41,679,591| 25,542,208|
   1891|15,500,084|14,591,178| 8,279,876| 3,904,240|53,544,372| 28,909,614|
   1892|14,870,714|16,296,666| 9,157,000| 4,927,581|28,928,103| 28,800,930|
   1893|14,346,250|11,587,629| 7,124,502| 4,019,995|34,937,974| 30,106,482|
   1894|13,954,400|11,879,679| 6,657,888| 4,412,032|20,925,769| 29,220,264|
   1895|13,006,650|15,957,614| 9,446,308| 6,114,834|23,048,515| 32,000,989|
   1896|13,002,512|16,005,449| 8,623,127| 5,281,689|25,338,103| 41,160,877|
   1897|13,826,422|17,518,046| 9,652,680| 7,156,957|16,094,557| 57,497,872|
   1898|15,296,813|19,433,716|11,773,934| 8,932,857|12,626,431| 70,406,885|
   1899|20,074,873|24,683,173|13,620,703|10,639,857|12,100,440| 93,716,031|
   1902|30,867,863|35,554,135|17,821,307|14,947,250|27,180,247| 98,552,562|
   1903|35,807,860|35,019,308|18,009,252|14,534,978|51,617,312| 96,642,467|
   1908|    --    |    --    |15,936,018|    --    |27,607,909|183,982,182|

       |      Prices of staple commodities.     |
       +-------------------+---------+----------+   Washed
       |    Per ton.[C]    |         |          |Ohio fleece
       |---------+---------+ Middling| Standard | wool, per
  Year.|         | Steel   | cotton, |sheetings,| lb., in
       | Pig iron| rails,  |   per   |  per     | eastern
       |  No. 1, |standard |pound.[C]| yard.[C] |  m’k’ts,
       | foundry.|sections.|         |          |  July 1.
       |         |         |         |          |  Medium.
       | Dollars.| Dollars.|  Cents. |  Cents.  |    Cents.
       |         |         |         |          |
       |         |         |         |          |
   1800|    --   |    --   |   --    |    --    |      --
   1810|    --   |    --   |   --    |    --    |      --
   1820|    --   |    --   |   --    |    --    |      --
   1830|    --   |    --   |   --    |    --    |      50
   1840|  27.88  |    --   |   --    |    --    |      39
   1850|  20.88  |    --   |  12.34  |    7.87  |      37
   1851|  21.38  |    --   |  12.14  |    7.08  |      42
   1852|  22.63  |    --   |   9.50  |    6.96  |      38
   1853|  36.13  |    --   |  11.02  |    7.92  |      53
   1854|  36.88  |    --   |  10.97  |    7.96  |      37
   1855|  27.75  |    --   |  10.39  |    7.64  |      40
   1856|  27.18  |    --   |  10.30  |    7.50  |      42
   1857|  26.34  |    --   |  13.51  |    8.90  |      50
   1858|  22.19  |    --   |  12.23  |    8.25  |      37
   1859|  23.33  |    --   |  12.08  |    8.50  |      40
   1860|  22.70  |    --   |  11.00  |    8.73  |      50
   1861|  20.26  |    --   |  13.01  |   10.00  |      30
   1862|  23.92  |    --   |  31.29  |   18.55  |      47
   1863|  35.24  |    --   |  67.21  |   36.04  |      70
   1864|  59.22  |    --   | 101.50  |   52.07  |     100
   1865|  46.08  |    --   |  83.38  |   38.04  |      73
   1866|  46.84  |    --   |  43.20  |   24.31  |      67
   1867|  44.08  |  166.00 |  31.59  |   18.28  |      49
   1868|  39.25  |  158.46 |  24.85  |   16.79  |      45
   1869|  40.61  |  132.19 |  29.01  |   16.19  |      48
   1870|  33.23  |  106.79 |  23.98  |   14.58  |      45
   1871|  35.08  |  102.52 |  16.95  |   13.00  |      60
   1872|  48.94  |  111.94 |  22.19  |   14.27  |      70
   1873|  42.79  |  120.58 |  20.14  |   13.31  |      48
   1874|  30.19  |   94.28 |  17.95  |   11.42  |      53
   1875|  25.53  |   68.75 |  15.46  |   10.41  |      49
   1876|  22.19  |   59.25 |  12.98  |    8.85  |      35
   1877|  18.92  |   45.58 |  11.82  |    8.46  |      44
   1878|  17.67  |   42.21 |  11.22  |    7.80  |      36
   1879|  21.72  |   48.21 |  10.84  |    7.97  |      38
   1880|  28.48  |   67.52 |  11.51  |    8.51  |      48
   1881|  25.17  |   61.08 |  12.03  |    8.51  |      44
   1882|  25.77  |   48.50 |  11.56  |    8.45  |      45
   1883|  22.42  |   37.75 |  11.88  |    8.32  |      41
   1884|  19.81  |   30.75 |  10.88  |    7.28  |      34
   1885|  17.99  |   28.52 |  10.45  |    6.75  |      31
   1886|  18.71  |   34.52 |   9.28  |    6.75  |      33
   1887|  20.93  |   37.08 |  10.21  |    7.15  |      37
   1888|  18.88  |   29.83 |  10.03  |    7.00  |      39
   1889|  17.76  |   29.25 |  10.65  |    7.00  |      39
   1890|  18.41  |   31.78 |  11.07  |    7.00  |      37
   1891|  17.52  |   29.92 |   8.60  |    6.83  |      35
   1892|  15.75  |   30.00 |   7.71  |    6.50  |      34
   1893|  14.52  |   28.12 |   8.56  |    5.90  |      26
   1894|  12.66  |   24.00 |   6.94  |    5.11  |      21
   1895|  13.10  |   24.33 |   7.44  |    5.74  |      21
   1896|  12.95  |   28.00 |   7.93  |    5.45  |      18
   1897|  12.10  |   18.75 |   7.00  |    4.73  |      23½
   1898|  11.66  |   17.62 |   5.94  |    4.20  |      29
   1899|  19.36  |   28.12 |   6.88  |    5.28  |      31½
   1900|  19.98  |   32.29 |   9.25  |    6.05  |      31½
   1901|  15.87  |   27.33 |   8.75  |    5.54  |      26
   1902|  22.19  |   28.00 |   9.00  |    5.48  |      26¾
   1903|  19.92  |   28.00 |  11.18  |    6.25  |      31½
   1904|  15.57  |   28.00 |  11.75  |    7.13  |      32½
   1905|  17.88  |   28.00 |   9.80  |    7.00  |      39
   1906|  20.98  |   28.00 |  11.50  |    7.25  |      37
   1907|  23.89  |   28.00 |  12.10  |    7.62  |      36
   1908|  17.70  |   28.00 |  10.62  |    6.75  |      38

  [C] Calendar year.

The arguments in favor of bimetallism are as various as the motives of
its advocates, but two or three of the more important ones may be        140
briefly stated. It is urged because it would give a more stable
measure of value than either silver or gold alone could do; and the
evil effects of fluctuations in the value of gold since 1873 are
pointed out to illustrate this contention. Monometallists answer this
by asserting that most of the price changes can be accounted for by
improvements in production; that even if they were caused by a
contraction of the currency, this was simply one of the risks of
business; and finally, that the evil effects of falling prices are
offset by a corresponding reduction in interest rates. A second
argument of the bimetallists was the alleged insufficiency of gold on
which to do the world’s business. As this has been practically met by
the phenomenal increase in gold production in the last decade,
especially since the gold discoveries in Alaska, it is not necessary
to dwell upon this argument. On February 1, 1909, the per capita
circulation of money in the United States reached $35.00, the highest
point in our history. A final argument of the bimetallists concerns
foreign trade: it would facilitate this by establishing a fixed
par-of-exchange between all countries. While the weight of this may be
admitted, it has been practically deprived of all force by the
adoption of the gold standard by virtually all the industrially
developed nations of the world. This last fact shows that the question
has now been actually settled by the logic of events and today the
issue of bimetallism has only an academic interest.

Another problem connected with money which has been removed from the
arena of oratory to that of calm discussion is that of government
paper money. It is urged, with much truth, that if a nation issued
paper money instead of gold or silver, it would save all the expense
of mining these metals. It would resemble, as Adam Smith said, the
discovery of wagon roads through the air in the realm of
transportation. Another argument advanced in favor of government paper
money is that it would be possible by a scientific adjustment of the     141
issues to regulate the amount of money in circulation and so to
prevent all fluctuations in prices. Both contraction and inflation
would be prevented and a cheap and yet ideal system of money would
exist. Still others see in this form of money an instrument for the
creation of wealth; this last argument simply results from a confusion
of ideas and need not be dealt with. A sufficient answer to the other
two is an appeal to the lesson of history: no government which has
embarked upon the issue of paper money has ever been able to restrict
the issues within reasonable limits; often it has led to national
bankruptcy and the repudiation of the entire issues. The experience of
the United States with the greenbacks has been more fortunate than
that of many countries, but does not tempt to further experiment.

The monetary situation in the United States today may be regarded as
fairly well settled. Although we have a very heterogeneous assortment
of different kinds of money, a fairly distinct sphere is allotted to
each, and as the basis for all, the gold standard has been definitely
established by law. Money of large denominations consists of gold and
gold certificates (lowest denomination, $20), of greenbacks and
national bank notes (lowest denomination, $10, though one-third of
bank notes may be $5); the needs of retail trade are met by the issue
of silver certificates and silver dollars, and of fractional currency.
The system would be much simplified by the retirement and destruction
of the $346,000,000 in greenbacks, but as there is now a fifty-per
cent reserve in gold back of them, little danger need be apprehended
from their presence. Many people have regarded the existence of some
$500,000,000 worth of silver dollars as a menace to the goodness of
our money supply, but as the amount of gold in circulation increases
the silver will form a constantly smaller percentage of the whole. It
is a cumbersome and not very valuable asset of the Government, but       142
is now almost powerless for good or ill.

Important as is the subject of money and essential as is the need of a
standard of undoubted goodness, it is overshadowed in practical
significance by the problems of banking and credit. An investigation
by the Comptroller of the Currency some years ago showed that over 90
per cent of the receipts of the national banks consisted of credit
instruments, while probably 60 per cent of the trade of the country
was carried on by credit rather than by cash transactions. A credit
transaction is a transfer of goods or money for a future equivalent;
the element of time is introduced. This makes possible an enormous
increase in the number of exchanges and obviates the necessity, to a
large extent, of using money. Most of us enjoy personal credit, which
is limited only by our ability to persuade other people to trust in
us. But this power of purchasing things without immediate payment must
be made readily available if the ordinary business man is to make use
of it. This is done through the medium of a bank, whose business it is
to discount the notes of its customers, which in turn is based upon
confidence in their prospective earnings. The bank credit thus
obtained may be transferred by means of checks to other persons and to
other banks. It is the most fluid and volatile means of payment yet
devised, and is subject to dangers and abuses. In the last analysis
business based upon such a system of credit rests upon confidence in
the honesty of individuals and in the enforcement of the law governing
contracts, and also in the ability of those who have pledged
themselves to future payment to make good their obligations. In times
of panic credit fails and resort is had to money.

The fundamental institution in our credit economy is the bank, and it
is therefore essential that it be thoroughly safe and responsive to
the needs of the business world. A bank may furnish its customers        143
with the ready means of payment they need in exchange for their future
promises either in the form of bank notes or bank credit. The former
are more largely used on the continent of Europe and in rural
districts in this country, the latter by England and the United
States, especially in the cities. The preference for one or the other
seems to be a matter of geography. The issue of bank notes has been
very carefully safeguarded since the establishment of the national
banking system in 1863. They are based upon the purchase of government
bonds and are absolutely safe. They lack, however, one essential
quality of good bank money in that they are quite inelastic. That is
to say, the amount of bank notes in circulation does not vary
according to the needs of business, increasing to meet an increased
demand, and then declining again when the demand has passed. Being
based upon government bonds and not upon the value of business assets,
they vary in amount only with the price of the former and not at all
with the volume of the latter.

The main practical problem connected with our banking system is,
therefore, to find some other basis for the issue of bank notes,
especially as it is not desirable to maintain a permanent bonded
indebtedness solely for this purpose. Various suggestions have been
made, as the establishment of a central bank with sole power of issue,
like the government banks in European countries. This is a favorite
proposal with the big bankers, but is unlikely to be adopted as it is
directly contrary to the spirit of the existing system. The Canadian
system is held up as a model, with its system of branch banking and 5
per cent safety fund for the redemption of the notes of failed banks.
Curiously enough this was copied after the system in operation in New
York State, which was nipped in the bud by some early mistakes and by
the development of the national banking system. It works admirably in
Canada and is well worth careful study. The plan of asset currency       144
is another suggestion, according to which bank notes should be issued
up to a certain percentage of the resources of the bank, but without
pledging any specific property for their redemption as is done in the
case of the national banks at present. It has finally been urged that
our present bond deposit system should be modified by substituting
state, municipal, railroad, or industrial bonds for those of the
Federal Government, but that in other respects the system should be
left intact. We may look for legislation along one or another of these
lines in the next few years, as the subject is an urgent one whose
solution cannot long be postponed.

Another problem is connected with the money reserves that the banks
are required by law to keep on hand in order to meet demand
liabilities. Under the national system in the United States the
country banks may deposit three-fifths of their lawful reserves with
banks in reserve cities, and these banks in turn may deposit one-half
of their reserves in banks in central reserve cities (New York,
Chicago, and St. Louis). Thus there is a massing, under this system,
of the bank reserves of the country in the city of New York, and
within that city in some twenty banks. While there is great economy in
such a system the concentration of reserves is certainly attended by
great dangers, not the least of which is its use by speculative
influences in the New York money market, as a great part of it is
loaned out to speculators on call.

Still another practical problem connected with the monetary and
banking system of the United States is that of the independent
treasury system. The Federal Government is to a large extent its own
banker; it collects, disburses its revenue and keeps its money in its
own vaults; it even, as we have seen, issues paper money and keeps a
reserve therefor. By its action in withdrawing large amounts of money
from use, or on the other hand making large disbursements, it can and    145
does affect the money market vitally and sometimes disastrously. While
it is permitted to deposit funds in selected national banks and has
recently made increasing use of this privilege, thus correlating in a
measure the reserves of the Government and the needs of the business
community, it is held by most students that the independent treasury
system should be abolished, and that the banks should act as the
intermediaries between the Government and the people in the collection
and expenditure of its funds.

So far we have been discussing commercial banks, but there is another
kind of institution which goes by the same name but serves quite a
different purpose, namely, the savings bank. The essential and almost
the only requirement of such an institution is safety. As we have
seen, it is not only desirable for personal reasons to inculcate
habits of saving and thrift in individuals, but it is also necessary
to secure the accumulation of capital needed in modern industry. It is
therefore important that such institutions should be widespread,
accessible, and thoroughly trusted. These requirements seem to be best
fulfilled by the postal savings banks in England and elsewhere, which
have led to a great increase in savings on the part of the people. The
introduction of such a system in the United States is greatly to be


Almost as important for the conduct of modern industry as machine
methods and credit are the rapid means of transportation and
communication furnished by our railroad, steamship, express, post
office, telegraph and telephone systems. Indeed the development of
industry on a national scale and its integration under centralized
control has been made possible only by these improvements. But not
only have these businesses rendered the centralization of industry
possible; they themselves exhibit on a national scale concentration      146
of control. They are all industries of increasing returns and lend
themselves naturally to monopolistic control. At the very beginning of
railroad construction one of the most far-sighted managers enunciated
the doctrine that “where combination is possible competition is
impossible.” For years competition was regarded as the regulator of
rates, pooling between railroads was forbidden, canals were advocated
as competitors, and by every possible device it was sought to
stimulate it. We are at last beginning to recognize the monopoly
character of the railroad industry and to regulate it accordingly.

Consolidation in the railroad world is not a new phenomenon nor is it
confined to that industry, but it has proceeded further there than in
any other line of business. The first form which combination took was
that of pooling, according to which the traffic was “pooled” and the
earnings then divided among the companies entering into the pool
according to some previous agreement. This was forbidden by the
Interstate Commerce Act in 1887 and even more stringently by the
Anti-Trust Act of 1890, and accordingly railroad managers next
resorted to actual consolidation of competing lines. Where this has
not been possible or desirable, virtual combination has been secured
by the so-called “community of interests” arrangements, based on the
acquisition by one road of enough stock in competing lines to secure
representation on their boards of directors. Today some eight or nine
groups of capitalists control over two-thirds of the railway mileage
of the United States, and according to a recent widely-published
statement the late Mr. E. H. Harriman was credited with controlling,
directly or indirectly, a system aggregating over 67,000 miles. These
great consolidations have followed mainly the territorial groupings of
railroads; the United States has now been districted out by a few
large transportation companies, much as France, Italy, England and
other European countries had previously been divided up. Consolidation   147
has in many instances resulted in increased convenience to the public
and in economies in management and operation, but it places a
dangerous amount of power in the hands of a few men, which has not
infrequently been abused, and should clearly be under strict
government control.

The primary economic problem connected with railways is always the
question of rates. This has been called in a recent book “the heart of
the railroad problem.” The first fact that strikes the student of the
subject is the great reduction in rates and fares in the past
twenty-five years, especially in freight rates. From 1.24 cents in
1882 the average revenue per ton mile received by railroads in the
United States has decreased to .748 cents in 1906. Freight rates,
especially through rates for bulky traffic, are considerably lower in
this country, and passenger fares somewhat higher, than in Europe. But
the vital problem connected with rates is not as to their relative
cheapness or extortionateness; it concerns rather the granting of
discriminating rates. Discriminations may be of three kinds: those
between different classes of goods, those between localities, and
those between persons. The first group is based upon the
classification of freight and rests upon differences in cost of
shipment, in bulk, in risk, etc. If reasonably employed, this kind of
discrimination is justifiable. Local discriminations, that is,
charging different rates to different localities for substantially the
same service, is not only unwarranted in most cases, but is
short-sighted as well. Where superior facilities or especially keen
competition exists, lower rates may be permitted for favored
localities, but the arbitrary exercise of such powers by railway
officials is thoroughly unjustifiable. Even less defensible is the
practice, now happily less frequent, of granting discriminatory rates
to favored individuals or corporations. They have been given by means    148
of secret rates and rebates, by under-billing and under-classification,
by free passes, etc. Both of these latter evils have been forbidden or
greatly restricted by the passage of the Interstate Commerce Act in
1887 and subsequent legislation.

The public nature of railroads is now fairly well recognized in our
law and is beginning to be understood by the people at large.
Railroads enjoy peculiar privileges in the grant of corporate
franchises and charters, in the right of eminent domain, and in
enormous grants of land and money which have been made to them in this
country. Moreover in the functions they perform the social character
of their duties is emphasized, and they are under the necessity of
maintaining a constant service open to all. Though they are owned by
private investors and managed as private enterprises, they are
essentially public enterprises as to their privileges, functions, and
duties. Consequently most of the states have now undertaken, through
commissions, to regulate the railroads in the public interest. Some
thirty-one have appointed commissions, which probably control
four-fifths of the traffic originating and ending in a single state.
These state commissions differ in power, those of the Mississippi
Valley and the South usually having mandatory powers, that is, power
to prescribe and enforce maximum rates. In the eastern and central
states commissions with supervisory powers merely, of investigation
and report, have been created. The only exceptions are found in the
Far West where the need of improved transportation facilities is more
pressing than regulation, and in five eastern states whose
legislatures are controlled by the railroad interests. While the state
commissions have done and are doing valuable service, it is clear that
the growth of giant railroad combinations which traverse several
states necessitates federal control. The appointment of the Interstate
Commerce Commission in 1887 established the principle of federal
regulation, but the application of the principle in active practice has  149
been slow and has been impeded by the courts. The final control of
rates has not yet been given to the Commission.

Owing to the individualistic character of our institutions and law,
public ownership of railroads does not exist in the United States,
which thus forms, together with England, almost the sole important
exception to the world’s practice in this regard. On the continent of
Europe government ownership is the rule. Public control through either
ownership or regulation by commission is essential to secure an
equitable adjustment of public and private rights and to prevent the
abuse of monopoly power inherent in the very nature of railroads.
Public ownership has many advantages and has given satisfactory
results in Europe. But for the United States the principle of private
ownership with stricter governmental regulation has been definitely
laid down; the problem of the future is simply how far that control
shall go.

The discussion of our steam railroads does not exhaust the subject of
transportation. A recent and important development is the growth of
electric interurban railways, which are opening up districts untouched
by the more expensive steam roads and exercising a marked influence in
rural districts upon business and social life. A more significant
problem, both because of its close relations to the railroads and its
monopoly character, is offered by the express companies. Organized at
a time when railroads were new and undeveloped they took over the safe
and expeditious delivery of small and valuable articles. They have
since grown in importance and power; six large companies now control
over 90 per cent of the business. Since they are generally in the form
of partnerships and not of corporations it has not been possible to
bring them under legal control, and their rates are extremely
high--three or four times as much as freight rates. In some cases the
railroads, in order to gain the profits from these high rates, have
themselves organized express companies to operate over their lines,      150
immune from interference by the Interstate Commerce Commission. Even
where that is not done, the express companies are performing a service
which could as well be performed by the railroads themselves and at
lower rates. These facts have lent great strength to the demand for
the establishment by the Federal Government in connection with the
post office of a parcels post, such as exists in England and in most
European countries. By the extension of the maximum limit of mail
packages to ten or fifteen pounds the usefulness of the post office
could be immensely increased without any loss in rates. So far,
however, the express companies have been strong enough to resist the
introduction of this reform, though it is warmly advocated by the
present Postmaster-General. A recent important improvement in our
postal service has been the extension of rural free delivery to the
farming districts, thereby breaking down to a great extent the
isolation of country districts. This and the rural telephone have been
of great social value.

The importance of the telephone and telegraph in our modern industrial
life cannot be overestimated. As means of transmitting intelligence
they have served to bring the most distant parts of the world into
almost instant touch, and have made possible the modern centralization
of business. Both offer the same problems of monopoly that we have
seen exist in other parts of this field, the telegraph business being
completely monopolized by two large companies, the telephone business
by one, all strongly entrenched behind patents. The desirability of
public ownership of these utilities rests upon stronger grounds than
in the case of railroads and is strongly urged by many conservative

Although attention has usually been centered upon the railroads in any
discussion of the transportation question in the United States, there
are important practical problems connected with both the inland and      151
the ocean water transportation. The questions of constructing
artificial inland waterways and of subsidizing our foreign merchant
marine are vital political and industrial issues. The United States is
probably better provided with internal navigable natural waterways
than any other country. Her navigable rivers comprise some 18,000
miles. Affording access to the very heart of the continent both from
the Atlantic coast and from the Gulf. They form a cheap and convenient
means of transportation, especially for bulky and cheap articles;
30,000,000 tons a year are carried on the streams of the Mississippi
Valley alone, though much of the former traffic has been diverted to
the railroads. On the northern border of the country the Great Lakes
form an unrivaled series of inland seas. The traffic on these shows a
great increase every year, amounting now to over 60,000,000 tons
annually. The Federal Government has performed useful service in
improving the conditions of navigation along these natural waterways,
and is now considering a comprehensive scheme for their further

A very different problem is offered by our canal system. During the
period 1820-1840 many canals were constructed by the states to connect
existing waterways and provide an outlet for produce from the
interior. The best examples of these were the Erie and the Ohio
canals. After the development of the railway, however, traffic began
to be steadily and then rapidly diverted from the canals to these
quicker avenues of transportation. Many of the canals were bought up
by their rivals and permitted to fall into disuse, while those
retained by the state governments remained mere shallow ditches,
unimproved and ill-adapted to modern needs. The recent appropriation
by the people of New York State of over $100,000,000 for the
improvement of the Erie Canal, and the construction of the Panama
Canal by the Federal Government have brought the question of the         152
rehabilitation of our neglected canal system to the front again. It
seems wasteful not to connect the separate links in the magnificent
system of natural waterways already provided by nature, and this will
probably be the first step taken. And indeed a beginning has already
been made by the construction of the Hennepin Canal, the Des Plaines
Canal, and others, and a company has been formed to connect Pittsburg
with Lake Erie and to cut through Cape Cod. It must, however, be borne
in mind that there are two distinct types of canal: those which are
simply short connecting links between navigable waterways and which
permit the passage of vessels used on those waters; and those canals
which are shallow, have extensive lockage, and permit the use of only
small boats, thus necessitating the transshipment of freight. One
might well advocate the construction and enlargement of the first
type, and yet hesitate to approve of the second. As yet, however,
owing in part to the opposition and clamor of railroad interests, the
question of canals has not received the attention it deserves in the
United States.

The ocean merchant marine comprises two widely different branches, the
coastwise and the foreign trade. The former is open only to vessels
flying the American flag, and has shown a very steady growth;
five-sixths of our ocean merchant marine today is engaged in this
branch of commerce. Coal, lumber, cotton, and similar bulky
commodities constitute the chief items entering into the coastwise
trade. The tonnage of American vessels engaged in the foreign trade,
on the other hand, has shown a steady decline ever since the outbreak
of the Civil War. Foreign vessels today carry fully 90 per cent of the
foreign commerce of the United States. The causes of this decline are
economic rather than political, for American legislation has on the
whole been very liberal to the shipping interests. At the time the
western part of our country began to be opened up and its great
resources exploited, our merchant marine was one of the best in the      153
world. But now the other opportunities for the investment of capital
were so profitable and alluring, and the need of it so great, that all
the available labor and capital of the American people began to be
devoted to the development of their internal resources. A nation
cannot do everything with equal advantage at the same time any more
than an individual can. Accordingly we began to withdraw our capital
from shipping and devote it to agriculture, mining, manufacturing,
transportation, and similar more profitable enterprises. Foreigners
could build vessels and run them more cheaply than we could and it
paid us to hire them to do it. Recently, however, and especially since
the recent awakening of a national consciousness after the
Spanish-American War, the patriotism of many individuals has been hurt
by the thought that we had to depend upon foreign vessels for the
carriage of our foreign commerce, while in the minds of others a
comprehensive naval program demanded the building up of a native
merchant marine. Two questions suggest themselves here: Do we wish to
stimulate this growth artificially? And, if we do, what means shall we
adopt? On the second point the Merchant Marine Commission of 1904
recommended for the United States a general bounty on all shipping,
such as France has, and the subvention of certain lines of steamers
over ten specified routes, following the example of Great Britain,
Germany, and Japan. Without committing ourselves on this point, it may
be suggested that on political, geographical, and economic grounds we
may expect in the near future to see the natural development of an
American merchant marine. With the growth of our foreign trade, the
accumulation of capital at home, and the building up of a strong navy,
the conditions for American shipbuilding and shipping will become
steadily more favorable, and we may expect to see American enterprise
engage in this as in other lines of industry. Eventually we are          154
destined to become a maritime nation.


In no way does the State affect the interests of its citizens more
vitally than in the sphere of taxation. The State in modern society is
the people organized for certain collective purposes, as for the
public defense, the preservation of domestic peace, and the
furtherance of the social and industrial welfare. To carry out these
objects money is needed and the State has therefore to collect from
its citizens sufficient revenue to defray its expenditures. John Fiske
has tersely defined taxes as “portions of private property taken for
public purposes.” Taxation thus implies a certain degree of
compulsion; by it the Government interferes with the free choice of
the individual and expends a part at least of his income for him in
ways that he himself might not have chosen. The social and industrial
consequences of a system of taxation may also be far-reaching and
important. As Professor R. T. Ely says: “Taxation may create
monopolies, or it may prevent them; it may diffuse wealth, or it may
control it; it may promote labor or equality of rights, or it may tend
to the establishment of tyranny and despotism; it may be used to bring
about reform, or it may be used to aggravate existing grievances and
foster dissensions between classes.” It is evident therefore that the
utmost care should be exercised in framing a system of taxation.

Certain canons or rules of taxation were laid down by Adam Smith over
a hundred years ago and have been generally endorsed by economists
ever since. One was that taxes ought to be certain and not arbitrary,
as to amount, time and manner of payment; another was that taxes ought
to be levied in the manner most convenient to the tax-payer; and a
third, that taxes ought to take as little as possible out of the
pockets of the tax-payer over and above what is paid into the public     155
treasury. These three maxims--certainty, convenience, and
economy--have been generally accepted, but less general agreement
exists in regard to the fourth, which states that the subjects of
every state ought to contribute to the support of the Government as
nearly as possible in proportion to their respective abilities. This
rule has given rise to two problems: first, is ability the most just
basis of taxation; and secondly, if so, how is ability to be measured?
The theory of justice generally accepted by legal writers and by the
American courts is expressed in the maxim that taxes should be
proportioned to benefits received. The benefit theory affords a good
rule in the assessment of local property taxes, but fails utterly in
the domain of national and state affairs. Who can measure the benefits
to each individual of an appropriation for a new war ship or for a
state penitentiary or for the public school system? Probably the
benefits are in inverse proportion to the income or wealth of the
individual, and the heaviest taxes would then have to be apportioned
to those least able to pay. Most economists today agree that taxes
should be apportioned according to “faculty” or ability to pay. It
satisfies better our sense of fairness and is more readily applicable
than the benefit theory. In the last analysis, of course, it may be
said that taxation in general must confer real benefits upon society
or it will not be tolerated. Here, however, we are concerned with a
rule of apportionment.

The second practical problem encountered is when we attempt to apply
the faculty principle in practice; how is ability to be measured?
Three measures have been suggested: expenditure, income, and property.
Expenditure is open to the objection that it would place an unduly
large proportion of the tax burdens on the poor, whose expenditures
are larger in proportion to their means than those of other classes of
society. Property is objected to because large classes of society,       156
including professional men with large incomes, would then escape
taxation largely or altogether. Income on the surface seems the
fairest measure of ability, but is objected to because the incomes of
different individuals, both on account of source and size, really
indicate unequal and not similar abilities. In practice, however, all
three methods are employed in all advanced states, so it is not
necessary to decide which is theoretically the fairest.

Still another practical question confronts us after we adopt the
ability theory: Shall the rate of taxation be the same no matter what
the amount of the property or income, or shall it increase as the
amount grows larger? In other words, shall taxation be proportional or
progressive? In general the advocates of the ability theory also
support progression, though there are many exceptions to this
statement. Three main arguments have been urged in support of this
method. First, progression is advocated in order to secure equality of
sacrifice; it is argued that each dollar of a $10,000 income affords
less gratification to the owner than each dollar of a $1,000 income,
and that consequently in order to equalize the sacrifices of the two
individuals a larger proportion of the first income should be taken
than of the second. Objection is made to this, that wants expand even
more rapidly than incomes and therefore the initial assumption is
untrue. Progression is urged, in the second place, by those who desire
to use taxation as a method of introducing social reforms or of
bringing about a more equitable distribution of wealth, as by the
breaking up of large fortunes. It seems inadvisable, however, to use
the machinery of taxation for such purposes. Other writers urge that
the ability to earn or produce wealth increases at an accelerating
rate, and that taxation should therefore keep pace with it. “It is the
first thousand that counts.” The objection is made here that it would
penalize ability and energy. In general, while the arguments are not     157
conclusive, progression certainly secures a nearer approach to the
ideal of the ability theory than does proportional taxation. The
practical application, after we accept it, is still a difficult
matter. It should be applied to the revenue system as a whole by the
careful selection of special taxes. As a matter of fact we have just
the opposite system in the United States, for the poor man undoubtedly
pays out a larger proportion of his income in taxes--principally on
articles of consumption--than do his wealthy neighbors.

In the main there has been a clear division in the United States
between the sources of income of the Federal Government on the one
hand and those of the state and local governments on the other. The
Federal Treasury has derived its revenue almost entirely from indirect
taxes--excise and customs--while the other governments have depended
chiefly upon direct taxes upon persons, property, business,
corporations, and inheritances. The division rests upon the
constitutional allotment of powers, but it also corresponds very
closely to the industrial and political functions of each in their
relations to the individual citizens. The chief duty of the Federal
Government is that of national defense and foreign intercourse,
relations which are national in extent but which affect the individual
only remotely; so, too, its taxing area is national and its exactions
are felt only distantly. Few persons, it has been said, taste the tax
in their tea or their whisky, yet over one-third of all the taxes
collected in the United States are derived from either customs or
excise duties. Whisky and tobacco contribute most of the internal
revenue, while import duties are levied on practically everything
brought into the country which could compete with any home product.
These two sources yield over $500,000,000 a year to the Federal
Treasury. During the Civil War these sources of revenue were
supplemented by a federal income tax, but as such a tax was later
declared unconstitutional by the Supreme Court, further recourse to      158
this in the near future seems improbable. From a purely economic and
financial point of view this is very regrettable, for the Federal
Government should unquestionably have at its command the means of
quickly raising large additional revenue with as little disturbance to
industry as possible. Such a means would be afforded by the income
tax, which moreover can be administered only by the Federal
Government, as it must be national in its operations to be fair.

The main reliance of the state and local governments in this country
is the general property tax, which amounted in 1902 to over
$700,000,000 or almost half of all the taxes collected. This really
consists of two very distinct parts, which present quite different
problems, namely, the tax on real property and that on personal
property. Under our peculiar system, by which property is assessed
locally, and upon the basis of that assessment its share of the state
taxes distributed to each locality, there is every incentive offered
to the local assessor to under-value the land in his jurisdiction,
thereby escaping part of the state burdens. This evil of inequality
between localities could be obviated by the simple expedient of
relieving real estate of all state taxes and leaving it solely to the
counties and cities for purposes of taxation. In the case of personal
property the great evil is evasion. Much of our modern wealth exists
in the form of securities, stocks, bonds, mortgages, etc., and this is
practically undiscoverable by assessors except by the voluntary
declaration of the tax-payer, which is only truthfully made by
trustees and a few conscientious persons. Most of our laws have been
directed to the discovery of this intangible property, as it is
called, but without avail. In a few of the most progressive states the
effort has at last been recognized as futile, and the attempt is now
being made to reach these sources of income indirectly, by taxes on
corporations, on business, franchises and other tangible evidences of

Not only are corporation, business, license and similar taxes being      159
developed, but increasing resort is had to inheritance taxes, over
thirty states now making use of this form of taxation. They are more
frequently imposed on collateral than direct inheritances, and in many
states are progressive, both as to amount and as to nearness of
relationship. Thus in Wisconsin the rates advance from one per cent
for bequests under $25,000 to husband, wife, or lineal relation, to 15
per cent for sums over $500,000 to very distant relatives or
strangers. These various forms of taxation are necessary to secure the
needed revenues for the state governments, especially if these forego
further resort to taxation of realty. The tendency is now sufficiently
marked to make it possible to indicate with some certainty the future
of taxation in this country. To a certain extent, however, this must
be regarded as the expression of an ideal rather than the description
of an existing system. The Federal Government should have customs and
excise duties, supplemented by an income tax. The state governments
should have corporation and inheritance taxes. The cities and minor
civil divisions should have taxes on realty, and license and franchise
taxes. Such a division is logical and avoids duplication of taxation
of the same source by two or more grades of government. In view of the
pre-emption of the field of corporation taxation by the states, it is
therefore doubly regrettable that the Federal Government should now
(August, 1909) have adopted a tax on income of corporations for
federal purposes.

Other problems connected with finance are suggested in connection with
the universal tendency to increase in governmental expenditures and in
public debts. The former is an expression of the growth and expansion
of state functions, which will be discussed in the next section. The
latter is due in part to this same fact, in part also to the
development of credit and the creation of a market for the sale of       160
public and other securities, and finally to the growth of
constitutional government, which has made the people willing to
entrust their capital to a government which they themselves as
citizens really control.

The question of the tariff involves such important economic as well as
financial consideration that it seems best to discuss this form of
taxation somewhat more fully. For it has been used not merely as a
means of raising revenue but also as an instrument to develop
particular industries and prevent foreign competition. Any detailed
discussion of this subject therefore involves a statement of the pros
and cons of protection and free trade. It should be said, however, in
advance that the real issue is not free trade, for that is demanded by
only a few doctrinaires, but freer trade through an intelligent
revision of the tariff downward. The system of protection has
prevailed in the United States for virtually one hundred years, and
could not be suddenly changed and abolished if one would. From the
financial standpoint, too, import duties are absolutely essential to
the support of our Federal Government; the question here is not
absolutely free trade, but the choice of articles for revenue
purposes. Shall they be those which are not produced in this country
or those which enter into competition with domestic products? If
financial considerations alone prevailed, the former would undoubtedly
be selected as the more convenient, certain, and economical. But in
the determination of the tariff policies of the United States economic
considerations have been paramount and to an examination of these we
must now turn.

Historically the following arguments have played the main role in
support of protection at different times in the United States. The
infant industries argument was advanced by Hamilton in his celebrated
Report on Manufactures in 1791 and has always been important until
recently when the infants had grown to be so lusty that it was evident
that other reasons for protecting them must be discovered. This was      161
found in the plea for diversified production, which was necessary for
a well-rounded economic development; the need of creating a strong
national government and national spirit also played their part. In
order to win over the farmers the home market argument was early
urged; this has taken various forms. In the first place it was urged
that the building up of manufacturing centers and the consequent
increase in population would give the farmers a better market than the
fluctuating foreign one. As set forth by Carey, it would keep within
the country the elements taken from the soil. It would also save the
freights on the transportation of goods back and forth across the
ocean. Each of these arguments has lost force with the development of
the country and the decrease in the cost of transportation. More
important today is the wages argument; at first protection was urged
because wages were high in the United States and the manufacturer
needed to be protected against his foreign competitor who employed
cheap labor. Today it is argued that protection has raised wages and
must be continued in order to protect the laborer against the pauper
labor of Europe. Curiously enough, in France protection is urged for
French workmen against the highly paid and efficient American. The
effect of the tariff on wages has been greatly exaggerated; wages are
high in the United States because the productivity of labor is high.
Indeed so far as the tariff raises prices it may be argued that the
real wages of labor are lowered. More generally accepted as defensible
grounds for protection are the political arguments that a nation
should be able to produce its own military armaments and supplies, and
that it should be able to use the tariff as a retaliatory measure.
Recently this latter has received considerable force from the practice
of “dumping,” by which is meant the occasional sale of products abroad
at prices lower than those charged at home. Domestic manufacturers in
the country thus treated are of course seriously injured and have        162
insisted upon protection against this procedure which has been
authorized in Canada.

In answer to these various arguments the free traders, or those
desiring a modification of present high rates, make their main appeal
to the doctrine of comparative costs. Briefly stated this asserts that
nations, like individuals, can do some things better than others. Like
the individual lawyer therefore who pays to have his boots blacked
while he devotes himself to the law, the nation should produce the
things it is best fitted for and pay others to produce other things
which it can do less well. In this way each will obtain the largest
possible return. Protection, which interferes with this natural
international division of labor, simply diverts labor and capital from
more into less profitable industries. Practically, this purely
abstract economic argument has had little influence on the commercial
policy of nations, which have been moved more by political and
industrial considerations. Today, however, there is no question but
that the freer movement of capital and industry throughout the world
would be advantageous. In answer to the home market argument it is
pointed out that with the growth of large-scale production the
profitable area of manufacture has greatly widened and now in many
cases transcends national boundaries. As home producers seek foreign
markets, as they are beginning to do, they themselves will demand a
reduction of the tariff, especially in the matter of raw materials.
Free traders also deny the need of artificially diversifying industry
in a country as large and varied as the United States, or of building
up infant industries. Indeed, on the latter point, they urge that many
of our trusts are the result of the tariff, and that the attempt to
grant legislative favors has resulted only in wholesale demoralization
and a debauching of our national politics.

In conclusion it may be said that under certain conditions the           163
policy of protection is relatively defensible; that it has undoubtedly
hastened the industrial development of the United States, though it
has not caused it; and that, on the other hand, it is responsible for
not a few evils in our political and industrial life. The struggle of
particular interests during the framing of the Payne bill shows the
impossibility of deciding this issue upon academic grounds. It may be
prophesied, however, that as our manufacturers reach out more
seriously after the foreign markets the tariff will be modified so as
to make this possible; but he would be a rash prophet who should
predict a sudden or great change in our tariff policy within the
present generation.


In the course of the preceding pages we have repeatedly referred to
the necessity or desirability of governmental action, and have
emphasized the important part which it plays in our economic life
today. Every practical economic problem that confronts us calls in
some degree for the exercise of state activity. It is necessary for us
then, if we are to render sound judgment on these questions, to have a
clear opinion as to the proper sphere of government action, as to how
far the State should interfere in the economic activities of private
individuals. We cannot do better than to state first the main
functions of a modern state. The modern industrial system, as we saw
in the first section, is based upon certain fundamental
institutions--personal liberty, competition, and private property. The
first function of government is to guarantee to every individual the
rights of freedom, property, and contract; this involves the
maintenance of peace and order. These are often spoken of as “natural
rights”; rather they are rational rights, based upon expediency and
human welfare, and are created and maintained by society. Without the
constant support and intervention of government they would possess       164
little reality or significance. But in addition to guaranteeing these
fundamental institutions, modern governments grant individuals certain
privileges, as patents, copyrights, trade-marks, franchises, etc.,
designed to stimulate the economic activity of individuals.

A second group of functions undertaken by the modern state is
regulative. As we have seen, laws are made regulating the freedom of
contract, the conditions of labor, the conduct of business, methods of
banking and transportation, etc. The terms under which competitive
business may be conducted are laid down, and while freedom of industry
prevails for every individual it is only on condition that he conforms
to the rules of the game thus prescribed. But the conditions are not
merely restrictive; sometimes they are designed to promote enterprise,
as in the case of gifts, subsidies, protective duties, etc. In all
these ways the State interferes with the action of perfectly free
competition for the purpose of securing better or more equitable
conditions. A third group of functions embraces the direct
participation in industry by the Government itself, as the
post-office, gas, electric, and water works, canals, roads, sewers,
parks, etc. In other countries, when the functions of government are
more extended than in the United States, it conducts railroads,
telegraph and telephone systems, tenements, pawn shops, theaters,
industrial insurance, or various other activities. The line which
divides public from private enterprise varies greatly in different

This raises the general question, how far is it desirable that the
economic functions of government should extend? As to the necessity of
state activity in some form there can be no doubt. Production,
exchange, distribution, and to a smaller extent consumption, are all
social processes; they concern the whole of society, and must be
brought under social control. Montesquieu laid down the proposition
in the middle of the eighteenth century that taxes invariably            165
increase with the growth of liberty. Historically this has been
verified: the development of freedom in government and industry has
meant the realization of self-restraint by the imposition of
regulative law. But the modern State has gone further than this: it
has realized the necessity of taking an active part in modern
industrial life, for the equalization of the terms of competition, the
redress of grievances, and the furnishing of utilities, either because
it could do it better or because it was the only agency capable of
acting. The standpoint of this treatise has been one of moderate
individualism, believing in free competition and individual
initiative, but not frightened off by the bogey of socialism, if at
any point the interference of government seemed desirable or
necessary. To present the matter clearly it will be well to state
briefly the main theories that have been held as to the proper
function of government, arranging them in their logical, though not in
their historical, order.

At one extreme stands anarchism, which must be thought of not as
anarchy and riot, but as a philosophical theory of society. Scientific
anarchism contemplates an ideal state of perfect freedom, in which the
State, the coercive exercise of authority by man over man, would not
exist. According to this theory only the individual has rights; there
is no more divinity of right in a majority than there is in kings.
Government is an invasion of the right of the individual to do as he
will, and should be abolished; with its abolition would vanish the
various moral, social, and industrial evils to which it has given
rise, and human society would develop on a higher plane. Stated in its
extreme form anarchism is evidently too ideal for frail human nature
as at present constituted. Of more practical importance has been the
theory of extreme individualism as set forth by Herbert Spencer--a
view designated by Huxley as the night-watchman theory of the State.
According to this the functions of government should be limited to       166
the protection of life and property and the enforcement of contracts,
but should not include such things as education, regulation of
industry, local improvements, charities, coinage, etc. Private
initiative and competition are trusted to supply these things, while
the economic harmony of the interests of each individual with those of
society will prevent any wrong from being done. The keynote of the
whole theory lies in the view that government is an evil, though a
necessary one, and should consequently be restricted. Adam Smith’s
system of “national liberty” went somewhat further, as it added to the
three functions named above, the construction of public works and
buildings, etc.; but it excluded such activities as education and the
civil courts, which we regard as most suited to government management.
This theory had its origin in the reaction against the undue
interference with industry by the Government under mercantilism and
had thus a historic justification and value.

The theory most generally held by economists and writers in the United
States is probably the modified individualism set forth by John Stuart
Mill. According to him, freedom of industry or “laissez faire should
be the general practice; every departure from it, unless required by
some great good, is a certain evil.” Industry, he said, should be left
to individuals and the Government should never interfere unless there
is an antagonism between social and private interests. Individuals
following their own interests will always conduct business better than
the Government, which is inefficient, corrupt, and can fall back on
taxation to cover its mistakes. Individualism should therefore be the
rule and governmental action the exception. But Mill himself admitted
that there was no theoretical limit to the extension of governmental
functions, and in so doing is said to have opened the door to
socialism. Nevertheless, the basic idea is still that government is
an evil and an extension of its activities is on the whole undesirable.  167

Opposed to this view is the culture state theory, enunciated by
Roscher and very generally held in Germany, which regards the State as
a beneficent, positive and constructive force in our industrial life.
The advocates of this theory point out that the functions of the
Government change with progress, and that in our complex modern
industrial life it should seek to improve conditions positively, and
not leave the people to the mercies of a blind competitive struggle;
practically, it should regulate industry, conditions of work, housing,
etc., and should manage all public utilities which affect the life or
well-being of the citizens, as railroads, telegraphs, industrial
insurance, etc. Still further in the same direction goes the view
known as state socialism, of whom the best-known advocate is Professor
Wagner. This advocates individualism, but insists that it is
responsible for many injustices and evils, which it is consequently
the duty of the State to redress. For instance, the State should
correct the inequalities of wealth brought about by the distribution
of the social income under the present competitive system; this should
be done by the progressive taxation of inheritances and incomes, the
limitation of inheritance and bequest, the government ownership of
public utilities, as railroads, telegraph, telephone, coal mines, etc.
This theory stops just short of socialism, but enlarges the functions
of the State to the largest degree compatible with individualism.
Beyond this, and at the farthest extreme from anarchism, stands
socialism, which, however, demands a more careful examination than the
other views have received because of its present prominence.

Socialism may be briefly defined in the words of Professor Ely[49] as
“that contemplated system of industrial society which proposes the
abolition of private property in the great material instruments of       168
production, and the substitution therefor of collective property; and
advocates the collective management of production, together with the
distribution of social income by society, and private property in the
larger proportion of this social income.” Four features are involved
in this definition, namely, common ownership, production,
distribution, and private incomes. The cardinal and distinctive
element in socialism is the collective or social ownership of the
means of production, that is, of the land and capital. Instead of
having these owned privately as today, they would be owned by the
people as a whole, by the State, and used by them for production.
Socialists do not oppose capital, as is often said, but only the
private ownership of capital. But under such a system private business
as we know it today, individual enterprise for the sake of profit,
could not exist. It is often urged that socialism means a “grand
divide,” and that in such an event the shrewder and more thrifty would
shortly have the wealth of the idle or stupid members of society. But
just that is guarded against under socialism, for there would be no
private ownership of capital, and hence no one could get his
neighbor’s share; it would all be held under collective ownership.
With the abolition of private capital, there would disappear of course
all the economic institutions that have grown up around it, as credit,
banking, lease, hire, the stock and produce exchanges, etc.

Socialism also means the collective or social organization and
management of industry. Socialists criticise severely our present
methods of production, which they call planless and wasteful. They
point to the constant recurrence of crises as an evidence of mistakes
of the competitive system, which they say could be obviated under a
well-organized comprehensive scheme. They also urge the wastes of
modern capitalism, in the duplication of plants, advertising (which
amounts to $500,000,000 a year in the United States and serves little    169
useful purpose), traveling salesmen, multiplication of small stores,
etc. Finally, an artificial disharmony between the interests of
society and private individuals is promoted by our system of private
property and profit: a coal trust limits the supply, farmers rejoice
over small crops, and planters burn part of their cotton, in short the
bounty of nature is regarded as a calamity. Some truth may be admitted
in these criticisms, but in answer it may be said that some of them
are being corrected under individualism, while as to those that remain
the remedy offered is worse than the disease. The first and
fundamental question is the effect of socialism on the amount
produced, for as we have seen any diminution would mean a worse
economic condition of society, even though it were offset by a more
equal distribution. Under individualism the appeal to industry and
thrift is the self-interest of the individual, and under the stimulus
of this motive the production of wealth has been increased enormously.
It is doubtful whether the motives of altruism, desire for social
approbation, and similar ones suggested by the socialists would
promote industrial activity as efficiently as the individualistic
desire for pecuniary gain.

Moreover the difficulties of organizing and managing all industries
would be enormous. According to the socialist plan, statistics of
consumption would be gathered in advance, the idle changes of fashion
would of course disappear, and production could be accurately
calculated. But aside from the problem of securing an honest and
efficient administration, the work of organizing industry from a
centralized bureau would probably prove insurmountable. The
distribution of the labor force among various employments suggests
another difficulty. Under individualism the necessary distribution
takes place through the agency of wage payments and the choice of an
occupation is left free to the individual. As the wage-system would
disappear with the abolition of private capital, some other means        170
would have to be devised, as allotment by the Government. But more
important would be the selection of the managers of industry;
competition provides a process whereby the inefficient are eliminated
and the able put in charge. As socialism would be an industrial
democracy the selection of the captains of industry under that system
would probably be made by election. Is it likely that the voters would
place over themselves the ablest, that is the strictest, most
economical, and most energetic man? Taking men as we find them today,
this may well be doubted.

But it is as a scheme of distribution that socialism has been most
warmly urged. The inequalities and injustices of present methods are
pointed out and a more just system demanded. Socialists themselves,
however, are not agreed as to what constitutes justice. Needs and
merits have both been urged as bases of distribution, but suffer from
vagueness and difficulty in administration; most socialists today
agree that equality of income would best meet the requirements of
justice. They claim that talented persons have been endowed by nature
with their abilities and should use them as a trust for society and
not expect greater rewards than their less talented brothers. To this
individualists answer that the practical question is, how to secure
the greatest exercise of these gifts, and that is now done by
appealing to the motive of self-interest. Some writers even go further
and assert that the desire for inequality is the chief stimulus to
invention and enterprise. A crucial point in every socialistic scheme
is the determination of value under such a system; most socialists
follow Marx and say that this should be determined by the “socially
necessary labor time” required for the production of an article. Such
a measure leaves out of account entirely the aspect of utility or
demand, and would clearly be inadequate. Prices would be fixed by the
State and would be calculated in labor time, which would probably be     171
represented by labor checks, which would constitute the media of
exchange of the socialistic society.

Finally, in the definition given above, it was stated that private
property would exist in the larger proportion of the social income
after it was divided. There is no reason why this should not be true,
for, though private capital would be abolished, the State would not
interfere with the individual in the use of his income after it was
earned. If one man preferred fine clothes and another pictures and
books, it would be possible for the latter person to accumulate such
articles of enjoyment or consumption. He could even have tools for
private carpentering or a horse for riding, but under no circumstances
would he be permitted to use these for production or as instruments of
private gain. Socialism must stand or fall as a system of production
and distribution; it is not necessary to criticise minor points. On
these broad grounds it must be rejected, although it may fairly be
admitted that socialists have often proved themselves keen and useful
critics of existing institutions.

Many persons in this and other countries, who do not approve of
socialism, nevertheless believe in the extension of state ownership or
activity along particular lines. Thus Henry George, though in other
respects an individualist, did not believe in the private ownership of
land. Land is limited in quantity and yields, because of its monopoly
character, an “unearned increment” or rent, quite apart from the
return due the owner for improvements. He proposed that the Government
should confiscate this unearned increment by levying a single tax on
all land equal to it. He thought that this would provide revenue
sufficient for all government needs without resorting to other forms
of taxation; in this he was undoubtedly mistaken, but the main
interest in the scheme for us is economic, and not financial. The
reason for the scheme was that land, being a limited monopoly, would
be increasingly in demand as society progressed, and that consequently   172
the landlords would absorb in their increased rents most of the
enlarged production of the future. This assumes that rents always
increase and never decrease, which is historically untrue. Nor does
the growth and progress of society necessarily increase the demand for
land; it may be directed to other things, while improvements in the
arts of agriculture may actually decrease this demand. We must,
however, admit that there are many instances of unearned increments,
not only in the case of ground rents, but also of monopoly profits
from various sources; these might very properly be secured to society
by means of special and heavy taxes.

The municipalization of local public utilities has been advocated by
many persons who are not socialists, except in so far as they desire
an extension of governmental activity along these lines. They urge
this because the utilities in question--gas, water, electricity,
telephone, street railways, etc.--are by their very nature monopolies,
and because under private control they are often inefficiently or
dishonestly managed. A less drastic remedy for these abuses might of
course be found in regulation. Unrestricted private control of
municipal monopolies is advocated by few; the real issue is between
public regulation and public management. And this issue will depend in
the last analysis upon the question which can give the best results to


At the conclusion of a study of this character we are inevitably led
to summarize our conclusions and to try to answer the question as to
what the lessons of the past have taught us. In what direction are the
forces of economic life taking us? The conclusion of this text is that
they are making for economic progress, and it will be worth while to
justify as far as possible this belief. It is, however, impossible       173
to do this except in very general terms, for definite data for
measuring this improvement do not exist, and economic progress itself
is a somewhat vague conception. Even such comparatively simple facts
as the rate of wages or the hours of labor can be stated only very
generally. But both of these show a decided improvement in the
condition of the working class. A careful investigation for Great
Britain by Mr. A. L. Bowley[50] shows that if wages for the decade
1890-1900 be represented as 100 then the course of wages during the
nineteenth century would have run somewhat as follows:

   Decade  | Relative Wages ||  Decade   | Relative Wages
   1800-10 |      55-65     ||  1850-60  |       65
   1810-20 |      65-70     ||  1860-70  |       75
   1820-30 |        65      ||  1870-80  |       95
   1830-40 |        60      ||  1880-90  |       90
   1840-50 |        60      || 1890-1900 |      100

Without investigating the validity of the figures too closely, it may
safely be affirmed that the movement of wages has been distinctly
upward, and that the rise was certainly not less than 50 per cent. For
the United States the increase has not been so great, probably because
wages started at a higher level. According to the Aldrich report, if
wages and prices in 1860 in the United States be taken as 100,
relative wages in 1840 were 82.5 and relative prices 98.5; in 1880,
they were respectively 143 and 103.4; in 1903, they were 187 and 103.
That is to say, relative wages showed a marked advance and real wages,
owing to the fact that general prices remained almost stationary, an
even greater improvement. So, too, the hours of labor appear to have
been shortened in Great Britain about two hours a day (from 10 to 14
hours to 8 to 12), and in the United States probably as much, the
average length of the working day in certain employments decreasing      174
from 10.3 hours in 1880 to 9.6 hours in 1903.

In the field of production the most dramatic and striking advances
have been achieved. The application of steam and more recently of
electricity as the motive power for the newly invented and constantly
improved machinery has permitted an enormous expansion of production,
which has been made still greater by the opening up of new mines and
new lands and improvements in the machinery of transportation and
exchange and in the organization of business. Especially in the United
States where the natural resources were especially rich and the people
energetic and ingenious, has the growth of wealth been marvelous. And
yet almost a century after the beginning of the Industrial Revolution
in England, Mill alleged that labor-saving inventions had not
lightened the toil of any human being; they have only enabled a
greater number to live the same life of drudgery and imprisonment.
What answer can we make to this indictment today? Why is it that the
working class still has so little of this vast increase of wealth and
still lives so close to the border line of poverty?

To answer this question thoroughly would require an analysis of the
subject of distribution, but a few reasons may be briefly
suggested.[51] While the social income has been greatly increased by
these improvements the amount paid in rent to owners of land, water
powers, etc., has also grown. If we approve of private property in
land as best adapted to stimulate its use for society, then we must
admit the justice of rent, and of its payment to present land owners.
Similarly, too, the payment of interest to the owners of capital has
absorbed a large part of the increased income of society, though the
proportion going to this factor is probably growing smaller owing to
the fall in the rate of interest. But as we have seen, modern industry
is essentially capitalistic, that is, it depends upon the use of         175
capital for its operations. Since we allow private property in capital
and believe that to be the best method yet devised for securing its
accumulation, we must justify interest. Profits in general are fairly
earned by industrial organizers and others who manage our businesses,
and are necessary to enlist their services. Probably in most cases
society does not overpay these leaders of industry. But some forms of
profit, as those derived solely from monopoly, especially from the
monopoly of limited natural resources, are both too large and socially
unearned. These society should clearly control and absorb.

One reason then why labor has not profited more by the great increase
in wealth is that the other factors in production have laid claim to
their shares also. There is good reason for believing, however, that
the share of labor has been steadily growing greater all the time, and
that it today gets a larger proportion of the social income than ever
before. This fact is obscured by the great growth in population, which
has more than doubled in the last hundred years in Europe and has
shown a twentyfold increase in the United States. The larger income is
divided among more people, and though each today gets more than his
grandfather, there is not yet enough produced to make all rich.
Indeed, if the wealth of the United States were divided equally, it
would not provide a competence for anybody. The difficulty is not
merely that there is inequality in distribution, but that the need of
a much greater production of wealth must also be met. Inequalities may
be adjusted by such measures as progressive inheritance taxes, but
resort to this or similar methods must not be so severe as to weaken
the motives for the accumulation of capital. That must form one of the
strongest reasons for rejecting the drastic proposals of socialism.

Improvements in production have, however, not merely increased the
total output; they have greatly reduced the cost of many articles        176
and have brought within the reach of the poorest consumers others
which a century ago would have been unattainable. Improvements in
transportation have served to bring an ever-increasing variety of
products to market. The material progress of a people can be gaged
fairly well by their consumption of certain semi-luxuries, such as
tea, coffee, sugar, tobacco, beer, etc.; these show a steady increase
during the past century. “Thus in the United States between 1871 and
1903 inclusive, the per capita consumption of coffee increased from
7.91 to 10.79 pounds, that of sugar from 36.2 pounds to 71.1 pounds,
that of malt liquors from 6.1 gallons to 18.04 gallons, that of wheat
and flour from 4.69 bushels to 5.81 bushels.”[52] A similar
investigation for Great Britain shows an average increase in a
considerably larger list of the same character of 40 per cent between
1860-64 and 1895-96. It must be admitted that there is much lack of
economy in present consumption; there is often wasteful and positively
injurious consumption, an illustration of which would be found by many
persons in the increased consumption of malt liquors cited above. From
a purely economic standpoint the enormous waste of war and the
burdensome cost of military and naval armament must also be condemned.

The task of prophecy is usually a fruitless one, but at least it is
now possible for us to indicate some of the lines along which reform
is needed, and the goal towards which the future of progress will
probably move. The natural resources of the nation must be more
carefully conserved and reckless destruction prevented; at the same
time the monopolization of limited resources by private individuals or
corporations must be rigidly restricted. The growth of trusts seems
but the last step in a steady growth in size of the business unit and
may be accepted as an economical method of industrial organization,
but the evils of corporate financial management must be carefully
guarded against. The growth of labor organizations, on the other         177
hand, must be admitted to be equally logical and desirable. While they
often display monopolistic tendencies, yet our main reliance must be
placed upon these agencies to secure bargains for laborers on terms of
equality with their employers. But on behalf of wage-earners not
easily organized we must resort to state interference by means of
factory and labor legislation in order to secure equitable labor
contracts. Free competition which exposes women and children to the
greed of unscrupulous employers is defended by no one today, and it is
clearly recognized that legislation along these lines must be further
extended, as for instance in the direction of industrial insurance,
old age pensions, adequate care for the unemployable, etc.

Reforms in our banking and currency laws, an extension of banking
facilities to the working classes, the more careful regulation of
railroad rates, reforms in methods of taxation, and a reduction in the
tariff--all are called for by the development and readjustment of
industry. On the other hand, much remains to be done in the education
of the mass of the people to habits of rational living and enjoyment.
In the great cities housing conditions should be effectively
regulated, sweatshops suppressed, intemperance discouraged, and where
possible a love of art and outdoor life promoted. A more rational use
of income would increase the material well-being of the people
considerably. Problems of distribution are still more insistent. No
one who has the welfare of the laboring classes or of our democratic
society at heart can view with approval the existence of widely
separated classes, with disproportionate political and economic power.
Greater equality in fortunes--a leveling up of incomes--must certainly
be regarded as a sound social ideal. On the other hand, we have seen
reason to reject the drastic remedies of socialism as a cure for the
injustices of present methods of distribution or production.
Improvement must come by conservative reform along the lines of our      178
past development. In the last analysis all attempts to improve
conditions permanently depend upon the character and capacity of the
individual. Because of this fact education assumes great
importance--education not merely in the art of production but also in
that supreme art, the art of living.

  [1] Tarr, Economic Geology of the U. S., pp. 7, 119.

  [2] In Quarterly Journal of Economics, Vol. XIX, p. 3.

  [3] McVey, Modern Industrialism, p. 145.

  [4] The Truth About the Trusts, p. 469.

  [5] Tetter, Principles of Economics, p. 321.

  [6] Bogart, Economic History of the U. S., p. 412.

  [7] XIX, 645.

  [8] Seager, Introduction to Economics, 176.

  [9] Evolution of Modern Capitalism, 35.

  [10] Economics, 121.

  [11] F. J. Stimson, Labor in its Relation to Law, 51.

  [12] Bullock, Introduction to the Study of Economics, 428.

  [13] Stimson, op. cit., 71.

  [14] A. H. Ruegg, Law of Employer & Workman in England, 99.

  [15] Rep. of U. S. Ind. Com., XVII. 1.

  [16] Rep. Ind. Com., XVII, xlii.

  [17] E. L. Bogart, The Chicago Building Trades Dispute, in Pol. Sci.
       Quart., XVI., 134; also in Commons, Trade Unionism & Labor
       Problems, p. 107.

  [18] Bogart, op. cit., p. 137.

  [19] Economics, 353.

  [20] Political Economy, 381.

  [21] Evolution of Modern Capitalism, 297.

  [22] Wealth & Progress, 171.

  [23] Report Industrial Commission, XIX, 926.

  [24] Getting a Living, 475.

  [25] Report Industrial Commission, XIX, 746.

  [26] Ind. Com., Rep: XIX, 757.

  [27] Bull. of U. S. Bur. of Lab., Sept., 1908, p. 418.

  [28] Economics, 337.

  [29] Industrial Evolution of the United States, ch. 28.

  [30] Evol. of Mod. Cap., 229.

  [31] The Effects of Machinery on Wages, 65.

  [32] Principles of Economics, I, 315.

  [33] Industrial Efficiency, II, 451.

  [34] Schloss, Methods of Industrial Remuneration, 305.

  [35] Report, VII, 644.

  [36] Economics, 377.

  [37] Political Economy, 344, 345.

  [38] Economics, 133.

  [39] Bliss, Encyclopedia of Social Reform, art. Distribution, p. 501.

  [40] Economics, 360.

  [41] Stated technically, its marginal productivity is small and
       hence its reward is also small.

  [42] More truly, the marginal productivity theory.

  [43] J. R Commons, the Distribution of Wealth, 252.

  [44] More, Wage-earners’ Budgets, 269.

  [45] Today the loss is probably double this sum.

  [46] Gide, Political Economy, Rev. Ed., 663.

  [47] Seager, Introduction to Economics, 73.

  [48] Bullock, Introduction to Study of Economics, 106.

  [49] Socialism and Social Reform, 19.

  [50] Wages in the United Kingdom in the Nineteenth Century.

  [51] Acknowledgment should be made at this point of indebtedness
       to the excellent final chapter in Prof. H. R. Seager’s
       Introduction to Economics.

  [52] Adams and Sumner, Labor Problems, 523.

MANUFACTURING.                                                           179


[Chief of Bureau of Statistics, Department of Commerce and Labor.
Native of Illinois. Engaged in newspaper work on arriving at manhood,
and so continued in Chicago, Cincinnati and Washington, as reporter,
editor and Washington correspondent, until appointed Chief of the
Bureau of Statistics in 1898. Author of many official monographs,
including: “Commercial Orient,” “Commercial Porto Rico, Hawaii and
Philippine Islands,” “Commercial Alaska,” “American Commerce,”
“Submarine and Land Telegraphs of the World,” “Transportation Routes
and Systems of the World,” “National Debts of the World,” “Great
Canals of the World,” “Colonies of the World and Their Government,”
“Colonial Administration,” “Territorial Expansion of the United
States,” etc., etc. Also author of publications for instruction of
youth in national and international affairs. Member of American
Academy of Political and Social Science, American Association of
Geographers, American Economic Association, International Union for
Comparative Jurisprudence and Political Economy, Central Statistical
Commission of Belgium, Associate Editor National Geographic Magazine;


The production of manufactures for the requirements of the world’s
population is conducted in a comparatively small section of its land
surface. Just as the manager of a great estate devotes one section of
his estate to the production of certain articles, and other sections
to certain other articles, so the great business instinct which rules
the business of the world carries on in its various sections the
varied industries best suited to the physical, ethnological and
financial conditions of its various sections.

The people of western Europe and eastern United States are, for
various reasons better able to produce the manufactures required by
the world than are those of South America, Africa or the Orient;
while, on the other hand, the people of South America, the Orient,
Australia, Canada, the western part of the United States or the
eastern part of Europe are better able, for various reasons, to
produce the raw materials of manufacturing and the food supplies
required by those engaged in the manufacturing industry than are the
people of western Europe or eastern United States. South America and
Australia produce wool in large quantities; Africa and the Amazon
Valley produce the chief supply of india rubber; the Malayan peninsula
and adjacent islands produce the bulk of the world’s tin; India
produces jute; the Philippines, Manila hemp; Mexico, sisal; China and    180
Japan, the bulk of the world’s silk; Egypt, India and the United
States, the world’s cotton; Russia, Austria-Hungary, India,
Australasia, South America, Canada, the central and western parts of
the United States produce the bulk of the world’s wheat, corn and
meats, at least the bulk of that in excess of the requirements for
local consumption; Europe, the West Indies, the East Indies and the
tropical sections of India, China and Central and South America
produce the bulk of the world’s sugar.

The manufacturing industries of the world--confining this term for the
moment to those industries in which the great proportion of the work
is performed by machinery--are conducted chiefly in, it might almost
be said confined to, western Europe and eastern United States. True,
the exclusive application of the word “manufactures” to that portion
of the world’s product of this character made by the use of machinery
in conjunction with large sums of capital--the factory method--carries
one beyond the original meaning of the word “manufactures,” which
primarily meant, of course, made by the hand (from manus, the hand;
and facere, to make); but the industrial habits of the world have also
passed beyond that stage in which manufacturing for the masses is
carried on by hand methods.

It must not be understood from this that all of the world’s
manufactures are produced in western Europe and eastern United States,
or produced by modern machine methods in conjunction with the
investment of great sums of money--the factory system. On the
contrary, large quantities of manufactures are still produced by hand
in various parts of the world other than those in which manufactures
by modern machine methods are a leading characteristic of the
occupations of the people. Nor must it be assumed that the areas
designated as the non-manufacturing sections are entirely dependent
upon the manufacturing sections for their manufactures. On the
contrary, large quantities of manufactures are still produced in the     181
Orient, in Africa, South America, Australia and the islands of the sea
by those simple processes which prevailed in Europe and the United
States prior to the development of the modern methods less than two
centuries ago. The industrious population of China, of India, of
Japan, the millions of people in Africa, in South America and in the
islands of the sea produce by simple methods large quantities, and in
many cases a large proportion, of the simple manufactures which they
require for their daily life. The cloth with which they cover their
bodies, the simple requirements of household life and of agriculture
are, in many cases, largely of their own production and made in
keeping with the original meaning of the word “manufacture”--made by

But the statement is still true, that the great manufacturing areas of
the world--the areas which give their chief attention, or the
continuous attention of a large part of their population, to the
production of those requirements of man other than the natural
products and do this through the application of power, machinery and
capital, and the operations thereof under the factory system, are
western Europe and the eastern part of the United States, though the
systems which prevail there are gradually extending to other parts of
the world--eastern Europe, central, southern and western United
States, Japan, India, Australia, Canada and South America.

As to the relative share of the world’s manufactures now produced by
the use of machinery, power and capital--the factory method--and by
the hand process, respectively, no exact statement can be made; nor
are there facilities for even offering an intelligent estimate of the
relative production by these two methods. There is reason to believe
that two-thirds of the cotton cloth consumed in China is still made by
the hand process, and if this be true it may be estimated that perhaps
two-thirds of the other manufactures consumed in that country are        182
still made by hand; while in those other sections of the world in
which railroads and the other methods which the people of the Occident
are pleased to term “modern” do not yet prevail, a large proportion of
the simple manufactures of the people, are still those produced by
hand methods. The fact, however, that the sections which produce
manufactures by modern methods are also supplied with modern
facilities of transportation--the railroad and the steamship; and of
communication--the telegraph, and also supplied with ample sums of
capital and that other important quality born of long experience and
the energy supplied by a temperate zone climate and the judicious
admixture of the most energetic populations of the world--Europe and
the United States--has enabled them to distribute their factory
products in great quantities to those sections not producing by the
factory method, and whose peoples are willing to exchange their
natural products, food and raw materials, for the finished products of
the factory.

This brings us to a consideration of the exchanges of the world--the
exchanges of natural products for the products of the factory. This
exchange, as already intimated, occurs chiefly in the requirements of
the manufacturing section--raw materials and food--for manufactures.
Western Europe, the great manufacturing section of that grand
division, does not produce cotton, jute, or a sufficient supply of
wool, silk, or hemp. For its india rubber, its tin, its copper and the
numerous articles of tropical production required for manufacturing,
it is dependent wholly or chiefly upon other parts of the world. The
United States, while producing a large share of the world’s cotton and
copper and iron, and a considerable supply of wool, must rely upon
other parts of the world for its hemp and jute and sisal and india
rubber and silk and many other of its tropical requirements. As a
result the Orient exchanges its raw silk, its jute, its Manila hemp,
its tin, and numerous less important articles, for the factory           183
products of Europe and the United States. Australia exchanges its
wool, its meats and its gold for the products of the manufacturing
sections. Africa sends its india rubber, its ostrich feathers, its
gold and diamonds in exchange for factory products of those sections
in which the manufacturing system has developed. South America offers
as its exchangeable products wool, wheat, corn, meats, coffee and
india rubber. Canada gives in exchange for her factory requirements
timber, ores, wheat and other agricultural products.

Thus the business intelligence that rules the world, adapting one to
another those various conditions which prevail in its varying
sections, has built up in certain sections of its great area--Europe
and the United States--a great factory system, operated by the great
supplies of power (coal) which there exist in conjunction with the
wealth, the intelligence, the climatic conditions and the quality of
population, which system, besides supplying its own six hundred
millions of people with their own requirements, sends to the other ten
hundred millions of people in other parts of the world its surplus
products and takes in exchange the natural products, the manufacturing
material and food required by its own people and its own industries.

George J. Chisholm, in the Introduction to Bartholomew’s Atlas of the
World’s Commerce, outlines the history of the development of
manufactures and the relation thereof to commerce as follows:

     “In the latter part of the eighteenth century there took place in
     England a number of inventions which have brought about a change
     in the conditions of manufacturing industry and of commerce, and
     an acceleration of the rate of the economic development of the
     world, to which all previous history presents no parallel or
     approach to a parallel. It is a change that has affected the
     entire world, bringing about an entirely new trade with the New
     World and the antipodes, and completely altering the character      184
     of the trade with the East, depriving spices of the peculiar
     value which they held in commerce for so many centuries, and
     developing a trade of incomparably greater magnitude with the
     East than was at one time ever dreamt of, and largely in
     commodities of a bulky character yielding comparatively little
     profit on small quantities. The revolution was inaugurated by the
     inventions in connection with the cotton industry between 1769
     and 1785 and the concurrent improvements in the steam engine by
     James Watt, who thereby first made this a generally serviceable
     machine. These were followed by the introduction of steam
     locomotion by land and water in the first quarter, and the rapid
     extension of these modes of transport in the remainder of the
     nineteenth century. The result of these inventions was to give a
     new value to the stores of coal and iron in the United Kingdom,
     and ultimately a new value to undeveloped land in new countries.
     It was railways that first made it possible to fill great ships
     with bulky produce like grain drawn from the far interior. The
     remarkable expansion of commerce thus brought about greatly
     increased the commercial advantages of Great Britain due to its
     situation and local facilities for shipping. In so far, however,
     as the unexampled development of British manufacturing industry
     and commerce in the period immediately following the Industrial
     Revolution was due not to geographical conditions but merely to
     the fact that the great inventions originated there and
     consequently the resources of Great Britain for carrying on
     manufactures by the new methods were developed first, the
     expansion of British manufactures and commerce was bound to be
     affected by the development of similar resources elsewhere; and
     the more rapid growth of manufactures in some rival countries
     resulting from this cause, and partly, it may be, from other
     causes, has been one of the marked features of recent economic

I. MODERN MANUFACTURING SYSTEMS OF THE WORLD.                            185

The manufacturing systems of the world have developed from mere hand
and household industries to those of the machine and factory in less
than two centuries. For thousands of years the simple requirements of
men--of clothing, of domestic life, of agriculture and of
transportation--were met with articles produced by hand labor,
performed for the greatest part in the household or in simple
workshops adjacent thereto. Then, in the latter half of the eighteenth
century, man discovered that he could harness the power of the
waterfall and, by making the wheels which it turned turn other wheels,
could utilize that power in performing many tasks which he had
hitherto performed laboriously by hand. The turning wheels twisted the
wool and flax and cotton into threads stronger and finer and better
than his wife had been accustomed to twist with the spinning wheel and
distaff, and produced in a single day as much of this yarn as a
hundred industrious women could produce in a week or a fortnight. By
gearing the wheels to operate a loom he could weave the yarn into
cloth with a small fraction of the labor and time which had been
required to weave it by the hand loom and obtain better results.

Thus arose the custom of manufacturing by machinery operated by the
power of the waterfall the cloth which had hitherto been manufactured
by hand labor in the household; this was the beginning of the modern
manufacturing industry.

To do this, however, it was necessary to plant the machines beside the
waterfall and bring to them the raw material and the persons necessary
to operate them, for the machine was unable to perform its task unless
assisted by the intelligent labor and guidance of experienced men and
women. Thus arose the system of performing in a single workshop, with    186
the aid of a considerable number of people and machines, the
manufacturing which had been hitherto performed by many people in many
households and with many machines of simpler form and operated by
human power--the factory system.

This new system developed new occupations. The buildings in which the
work was carried on must be constructed. The machinery required for
operating the factory must be made and kept in repair, and new
machines made to take the place of those worn out. So there came
occupation for mechanics and skilled machinists in manufacturing and
repairing the machines, and for others skilled in operating them. The
material used in manufacturing the cloth must be transported to the
factory, instead of being used at the place where it was grown as
formerly; and the cloth must again be transported to the consumer; and
thus there were new occupations for man and beast in transportation
and in constructing and maintaining the roads over which the material
was transported. Still another, and equally important, industry
developed was that of supplying the food and other requirements of the
men and women engaged in the factory, and this gave new activity to
the agricultural industries near the factory and further occupation to
those engaged in transportation.

To supply the wants of those employed in the factories, who were so
busily engaged that they could not find time to grow their own food,
or make their own clothing, other enterprising men and women
established themselves near the factory to sell the required food and
household supplies, to supply the fuel with which they cooked their
daily food, to buy small portions of the cloth made in the factory and
turn it into clothing to sell to the operatives, to shave their rough
beards and occasionally trim their hair--and thus arose the factory

So the factory system, which at first threatened to take away the        187
occupation of thousands who had formerly devoted their time to making
yarn and cloth by hand labor, developed new occupations and new
industries, and brought portions of the hitherto scattered people into
groups, and these groups in time developed better accommodations for
themselves and their families in homes, in comforts of life, in
educational facilities, and in hours of labor; and in doing this they
also supplied the masses with cloth at a less cost of labor than they
had formerly expended in obtaining it.

Meantime man was learning another important lesson, one which was to
develop even more rapidly the art of manufacturing. He found through a
long series of experiments that power could be generated by heating
water until it turned into an expansive vapor which he called steam,
and that this expansive force could be controlled in such manner as to
put in operation a machine which he called the steam engine, which
could in turn transmit its power to that machinery formerly operated
exclusively by the power of the waterfall.

This discovery again revolutionized the manufacturing industry, which
had hitherto been limited in the scope of its operations by the supply
of water power so located that the raw material could be transported
to it and the finished products in turn transported thence to market.
With this new force, steam, by which the manufacturing machinery could
be made entirely independent of the waterfall, the factories were
located at points convenient to the natural supply of fuel and
manufacturing material or to the market for the finished products.
Where this was not practicable the factories were located at places to
which the materials could be readily and cheaply carried by water
transportation, either on some navigable stream or the sea-coast.

Another important contribution made by steam power to the development    188
of the manufacturing industry was the decrease in cost of
transportation. Before the development of the railway and the
steamship the material of manufacture, unless produced within a short
distance of some navigable water, canals, rivers, lakes or oceans, was
of comparatively little value. It was not always practicable to plant
the factory in the section which most readily produced the wool or
cotton or flax or hemp or silk, or to place it alongside the iron or
copper mine; and even if this were done the manufactured material was
valueless unless it could be transported to those requiring it. Even
the lighter articles of manufacture, such as wool or cotton or fibers
or silk, could not be transported any considerable distance without
greatly increasing the cost to the manufacturer, and thus
proportionately advancing the cost of the manufactured article. But
when, in the middle of the nineteenth century, the railways began to
penetrate the continents and the steamships began to cross the ocean
and extend their tours to the commercially undeveloped sections of the
world, the manufacturers found new sources of supply open to them and
quantities of raw material reaching them from distant lands at such
comparatively low cost as to enable them to enlarge their output,
increase the variety of their productions and reduce the cost of both
the necessities and conveniences and luxuries which they were offering
to the public. The railways of the world grew from 25,000 miles in
1850 to 500,000 miles in 1900 and 600,000 in 1909. The tonnage of
steam vessels on the navigable waters of the world grew from less than
one million tons in 1850 to 24 million in 1909; and the carrying power
of the sail and steam vessels of the world, measured in sail tons,
grew from 15 million tons in 1850 to 100 million in 1909. The general
reduction in freight rates meantime is illustrated by the fact that
the price of transporting wheat from Chicago to New York by rail         189
fell from 33½ cents per bushel in 1872 to 10 cents per bushel in
1900, and the charge for transporting wheat from New York to Liverpool
fell from 17 cents per bushel in 1875 to 3 cents per bushel in 1905;
and similar reductions were made in the charges for transporting
manufacturers’ materials.

Thus the application of steam to manufacturing and transportation
multiplied the power of production. The area over which it could be
performed was greatly enlarged, the cost of materials was reduced
through cheaper transportation, new devices and processes were
developed as a result of the competition, cheaper raw material was
obtained from countries where plentiful supplies and cheap labor give
low prices, and the opportunity of locating the factory near the place
of production or at some convenient meeting point between the various
places of production--all these contributed to reduction of cost and
increase of supplies of material of manufacture. The great iron and
steel works of western Pennsylvania, and northern Ohio, Indiana and
Illinois, for example, are located not at the iron mines or the coal
fields, but at places between these two fields to which these
materials can be cheaply carried from their respective places of
production. The iron ore is chiefly produced in the Lake Superior
region and carried at a very low cost by vessels especially
constructed for this purpose to the southern shores of Lake Erie. The
coal is chiefly produced in western Pennsylvania and central Ohio,
Indiana and Illinois. The cost of transporting the coal from the mine
to the lake shore, or the ore from the lake shore to the mine, or both
coal and ore to some mutually convenient meeting point by river or
canal or railroads constructed for this purpose across a comparatively
level country, is extremely small, less in many cases than that of
carrying material to the waterfall which is not infrequently located
at places difficult of access. The vessels carrying the manufactures
of the United States or the manufacturing countries of Europe to         190
South America, Africa and the Orient, bring back at a very low cost
the india rubber, the tin, the fibers, the wool, the silk, the
Egyptian cotton of those distant countries; and the manufacturer who a
century ago was limited in his supply of raw materials to the
immediate vicinity of his factory may now bring his material from all
parts of the world, while the area in which he may sell his products
has been correspondingly enlarged.

One very recent contribution to the convenience and cheapness of
manufacture is found in the transmission of power in the form of
electricity. Formerly the machines of the factory were operated by
power obtained from the steam engine or the water wheel through lines
of shafting, gearing, belts, friction pulleys, etc. This made it
necessary that the factory operated by water power be placed alongside
the waterfall, or at least within a comparatively short distance of
the source of power. Recent inventions have made it possible to
transform power into electricity, carry that electricity hundreds of
miles on a wire, and transform it back into power for the operation of
the machinery of the factory or the transportation of the raw material
or the finished product. This has increased greatly the value of the
world’s water power in its relation to manufacturing. Formerly only a
small part of the waterfalls of the world were used at all, largely
because of their comparative inaccessibility and the cost of
transporting the raw material to them and the finished product from
them. Now that power, generated at any point, however inaccessible for
freight handling, may be transmitted in the form of electricity on a
simple piece of wire to any convenient point within a hundred or even
two hundred miles of the place of production, and by a simple process
applied to the operations of machines small or large, simple or
complex, the possibilities of the waterfall in supplying power for the
manufacturer are greatly enlarged.

Not only is this true of the waterfalls now in existence but of those    191
which may be brought into existence, for now that man has found a way
to use the power thus generated he may readily increase the number of
waterfalls by constructing dams at many places, and using the water
over and over again in its flow from the place of origin to the ocean
level. The great quantities of water stored up in the form of snow and
ice in the mountain ranges of the world, and gradually liberated by
melting may supply almost untold quantities of power as they flow down
the mountain sides used not merely once but many times. The
manufacturing power of Italy, Switzerland and southern France is now
being greatly augmented by this process.

Another possibility of the use of this new distributor of power,
electricity, is the multiplying of workshops and the return in some
instances and certain articles to household or small shop manufacture.
It is now so easy to introduce the electric wire and a small electric
motor into the household or the shop adjoining the household and to so
operate small machines for the various processes in many of the
manufacturing industries, that this new use of electricity for the
transmission of power is already making visible changes in the factory
systems of the world, and promises still greater changes. In many
lines of manufacture in which the machinery occupies small space and
requires little power and the quantity of material handled is not
great, such as watch and clock making, the manufacture of clothing,
boots and shoes, toys, etc., a part or all of the work can now be
performed in the household or small shop through the power generated
miles away and brought into the workman’s home on a simple piece of

On the other hand the use of electricity in the great factory or
manufacturing establishment is equally important. Instead of
transmitting the power of the engine to the various classes of
machinery by belts, shafting and gearing, much of it is now              192
transmitted and applied in the form of electricity. Great cranes which
handle many tons of material are operated by the electric motor
without the intervention of the costly shafting, belting and gearing;
and the great magnet, made such by electricity, picks up its ton of
steel rails with the same ease that the toy magnet picks up the
needle, and is managed with no greater physical exertion than the

Cassier’s Magazine, an accepted authority on engineering matters,
publishes with favorable editorial comment, in its issue of September,
1909, a statement by Sylvester Stewart that “we could take out in
regions where water power is needed at least a hundred times as much
water power as is now employed, furnishing a safer and cleaner power
than steam, at a lower cost, and thus prolong the existence of our
coal fields. * * * A running stream may be compared to an endless
driving belt only awaiting connection to the machinery it is capable
of driving, but it has not been appreciated because we have become so
familiar with it; if it had suddenly been discovered, doubtless it
would have been harnessed immediately. Coal is passing away, but water
flows continuously. A hundred thousand horsepower may be taken from a
river and its place is still filled, but the coal vein once emptied is
emptied forever.” Mr. Stewart adds that probably not one-thousandth
part of the water power of the world is now utilized, and that while
the greater part of this power is not at present available, because of
its existence in out-of-the-way places, or in rivers so deep and
sluggish that the energy obtainable from them would cost more than
steam power, at least a hundred times as much water power as is now
used could be, under present conditions, utilized in a manner to
supply it at less than the cost of coal at present prices.

II. THE USE OF MACHINERY IN MANUFACTURING.                               193

The statements made in this discussion that the great expansion in the
production of manufactures came with the adoption of machinery for
manufacturing must not be understood as meaning that no machinery was
used in manufacturing prior to the period of expansion. Machines have
been used in manufacturing for many centuries.

The spinning wheel, used many hundred years ago, was a machine, and so
was the hand loom, by which the threads spun by the wheel were woven
into cloth. Flax and wool were originally turned into thread by the
use of the distaff, a stick to which the spinner attached a small
portion of the fiber, and by revolving the stick against his body
twisted the fibers into a thread. Then by letting the end of the stick
drop downward he drew out the thread, and with another roll of the
stick against his body again twisted the fibers and lengthened the
thread, which he then wound around the distaff. After many years of
this process it occurred to somebody that by setting the distaff in a
frame and passing a cord or a piece of rawhide around it and also
around a large wheel and turning the wheel he could get a much more
rapid and regular revolution of the distaff. This was the beginning of
the use of the “machine” in the making of yarn, for the spinning wheel
was a machine, of a crude type, to be sure, but a machine. This served
many generations of men and women for the manufacture of thread and
yarn, from flax, from wool and from cotton.

To turn this thread or yarn into cloth another “machine” was used, the
loom, which, by fixing the thread on certain frames and passing other
threads back and forth as the frames were raised or lowered, formed
the cloth. But this “machine,” the loom, was operated by human power,
as was that other machine, the spinning wheel. The women and children
spun the thread or yarn, the father and sons operated the loom,          194
chiefly in the winter months in which they had no occupation in the
fields. If a man chose to give his time to weaving and became a weaver
by trade he lightened his heavy labors at times by attention to the
garden surrounding his workshop, performing the necessary work for the
production of his food supply. “The workshop of the weaver,” says Ure
in his History of the Cotton Manufactures, “was a rural cottage from
which, when he was tired of the sedentary labor, he could sally forth
into his little garden and with the spade or hoe attend to his
culinary products. The cotton 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.” In the manufacture of woolen goods
conditions were similar. “The work,” says James in his History of the
Worsted Manufactures, “was entirely domestic, and its different
branches widely scattered over the country. The manufacturer had to
travel on horseback to purchase his wool among the farmers or at the
great fairs or markets, and the wool, after being sorted and combed,
was distributed among the peasantry and received back as yarn. The
machine used by them was still the old one-thread spinning wheel, and
in summer weather on many a village green might be seen the housewives
plying their busy trade. Returning with his yarn the manufacturer had
to seek out his weavers, who ultimately delivered to him his camelets
or russells or calimancoes ready for sale to the merchant or delivery
to the dyer.”

These are pictures of the manufacturing industry in England as late as
1770. “Machines” were in use, but of the simplest type, and all
operated by the power of the man or woman using them, or at the best
by human or animal power, and in most cases the work was performed in
the household or a small shop adjoining the household.

The transformation to the “machine method” or factory system began       195
when some power greater than that of man or beast was applied to the
operation of the machines, and the machines themselves were so
enlarged as to multiply their producing power. “In tracing the effect
of the application of modern machinery to English industry,” says
Hobson in his Evolution of Modern Capitalism, “there appear two
prominent factors, 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 extended
scale of non-human motor powers manifested itself then for the first
time.” “The water frame, the carding engine, and the other machines
which Arkwright brought out, in a finished state,” says Cooke Taylor
in his History of the Factory System, “required both more space than
could be found in a cottage and more power than could be applied by
the human arm. Their weight required them to be placed in strongly
built walls, and they 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 labor, and therefore a greater
co-operation was necessary to bring all the processes under a central

The new and enlarged machines which were thus operated by water power
and brought together in factories had been invented chiefly during the
eighteenth century. John Kay, in 1738, invented what was known as the
flying shuttle, which doubled the amount of weaving which could be
performed by one man in a given time. Hargreaves, in 1764, invented      196
the spinning jenny, a machine which operated a number of spindles for
spinning yarn, and so did many times as much as one spinner with a
spinning wheel could do. Arkwright, a few years later, devised the
water frame, by which the spinning jenny could be operated by water
power. Crompton, a little later developed the “spinning mule,” which
combined the important qualities of the spinning jenny and the water
frame. Before the end of the century the steam engine began to supply
power and was utilized in many cases where water power was not
available. Then, in 1792, came Whitney’s cotton gin, by which the
seeds were readily extracted from the cotton, and that valuable fiber
rendered much more available for manufacturing purposes.

The effect of the development of the machine and factory system,
through the devices of these thoughtful men, enormously increased the
manufacturing industries of England and later of the other parts of
the world. The importations of cotton into England prior to the
invention of the spinning jenny averaged less than 2 million pounds
per annum. With the invention of the spinning jenny and the water
frame the importation of cotton and cotton manufacture quickly doubled
and trebled and then grew at such rapid rate that by 1800 the
importation was about 40 million pounds, by 1830, 260 million pounds
and by 1840 over 400 million pounds. The importation of wool grew from
less than 2 million pounds in the latter part of the eighteenth
century to 150 million pounds in 1860 and over 700 million pounds in
1890, though in this article of manufacture the growth in importation
was less strongly marked than in cotton because of the fact that much
of the wool used in manufacture was produced at home, while all of the
cotton used was imported.

In the iron and steel industry the growth in the use of machinery was
even more closely connected with the great development of recent years
than in that of textiles. It was quite natural that man should seek      197
the use of machinery in the iron and steel industry. The material to
be handled was of such great weight that it could not be handled in
quantities without the aid of extra-human power, and the fact that it
must be manipulated while at an intense heat necessitated the use of
devices of some sort for its handling. Yet a long time, a very long
time, elapsed after the beginning of the manufacture of iron and steel
before men developed the machinery which has resulted in such a
wonderful development in the manufacture. The slow rate of growth in
the earlier centuries, and the rapid rate in the past century may be
measured in some degree by the world’s production of pig iron, the
basis of all iron and steel manufactures. Mulhall estimates the
world’s production of pig iron in the year 1500 at 60,000 tons, in
1700 at 100,000 tons, and in 1800 at 460,000 tons. Then the increase
began to be more sharply defined, the production reaching 1 million
tons in 1820, 2½ million in 1840, 7 million in 1860, 18 million in
1880, 40 million in 1900 and nearly 60 million in 1907. The increase
in the eighteenth century was about one third of a million tons, and
that of the nineteenth century was 39½ million tons, or more than
100 times as much as that of the eighteenth century. The great
development in the transformation of iron into steel did not come
until the second half of the nineteenth century, the world’s
production of steel in 1850 being, according to Mulhall, 71,000 tons,
in 1870, 540,000 tons, in 1880, 4 million tons, in 1890,12 million, in
1900, approximately 20 million, and in 1907 about 40 million. The
growth in production of pig iron and steel was more rapid in Europe
than in the United States in the earlier part of the nineteenth
century, but in the latter part of that century the United States
outstripped all her rivals, and her production of iron and steel is
now more than that of any other two countries of the world.

These wonderful developments in the production of iron and steel were    198
even more dependent upon the development of machinery for transporting
the material and handling it in the factory than was the case with the
textiles. Pig iron cannot be made without having in immediate
conjunction three natural materials, iron ore, limestone and some
material to produce intense heat. The iron is only found in the form
of “ore,” being iron mixed with rocks, earth or other matter which
must be removed in order to use the iron. To do this the ore must be
heated. Formerly this was done by placing small quantities of charcoal
in a hole in the ground and placing the iron on top of it, and then
more charcoal on top of the ore. By fanning the burning charcoal or
blowing the fire from the lungs through a reed the heat was increased
and the ore was softened, and by hammering it while hot the useless
material was worked out. Then by further heatings it could be hammered
into such form as desired. After a while it occurred to men to build a
wall of stones and mud and place the ore and charcoal in this, and to
make a bellows of the skin of some animal (the prototype of those
which blacksmiths and other workers in metals now use), and so force
the air into the bottom of the mass of charcoal and iron. With this
the iron could be so heated that it actually melted and ran to the
bottom of the furnace, and when cooled was ready for the finer
processes by which it was made into the desired articles. After a time
the walls of the furnace were built higher and if it could be located
near to a waterfall the shaft of the water wheel was so adjusted as to
operate the bellows and keep the stream of air flowing into the fire,
for the heat of the burning charcoal was not sufficient to melt the
iron without this forced draft.

This was the process by which men made iron for many generations. But
it was a very expensive process, for the quantity of wood which must
be used to produce the charcoal was so great that the forests were       199
soon depleted, especially in England, where iron making became active.
Efforts were made to use coal instead of charcoal, but the weight of
the iron ore was so great that it crushed out the fire in the coal
which softened as it burned. Then after a time it occurred to somebody
to treat the coal in a manner somewhat similar to that by which the
wood had been transformed into charcoal, and coke was produced and
successfully substituted for charcoal in heating the iron ore and
making iron.

In the United States the charcoal process was used until a period much
later than that of its abandonment in England, for the supplies of
timber were very great and men who were clearing the land for use in
agriculture were glad to turn the wood into charcoal and find a market
for it. The simple charcoal furnace and forced draft by a simple
process furnished the iron-making systems of the world until the early
part of the nineteenth century. As a result there were hundreds of
small furnaces, simply operated, and turning out small quantities of
iron, in various sections of the United States. Meantime somebody
discovered that if the air which was forced into the furnace was
heated before being sent into the fire it would greatly increase the
heat-giving power of a given quantity of charcoal or coke, and the hot
blast became a part of the larger furnaces. Then it was found that the
anthracite coal of the United States was hard enough to bear the
weight of the ore and would produce a heat sufficiently intense to
melt it; and so a great iron industry developed in the anthracite
region of the United States. Then it was found that certain bituminous
coal in western Pennsylvania would make excellent coke for the
manufacture of iron, and the Connellsville coke became a successful
competitor of anthracite coal, and later other cokes were also used.
Later came the natural gas discoveries and they contributed to iron
making and working. Meantime railways were built to carry the ore to     200
the coal or the coal to the ore or both the ore and coal to some
convenient meeting point, and machinery began to be introduced for
handling the ore and the coal along the railway and at the furnace.
This led to the devising of other machinery for handling the iron
after it left the furnace and of rollers for rolling the iron into
bars and for giving it the sort of manipulation that the hammer of the
earlier iron maker had given it when produced in the primitive
furnaces. Then great deposits of iron ore, the richest known to the
world, were discovered in the Lake Superior regions; and steam-driven
machinery was devised to scoop it up from the beds in which it was
found, place it in cars, which in turn carried it to the water’s edge,
and dumped it into great receptacles from which it could run by the
force of gravity into the hold of the steamer. Then other machinery
operated by steam was devised to take it from the hold of the steamer
and load it again on the cars which transported it to the furnace
where it met the coal or the coke, produced, transported and handled
by similar machine processes, and was turned into iron to also be
handled by great machines.

While all this was happening--indeed long before the later happenings
above mentioned--workers in iron had found that the pig iron coming
from the furnaces contained so much carbon that it could not be
successfully worked. So they managed to get rid of the carbon, by
melting the iron in an open hearth and passing flames over it, and as
the carbon is combustible it was gradually burned out. This made soft
malleable iron, but not of the consistency to have the required
strength or serve the purposes that are now served by steel. To bring
it to the proper condition it was necessary to reintroduce a very
small quantity of carbon so evenly that both the quantity and the
distribution could be determined. This was done for many years by
placing the bars of iron in a crucible or other closed receptacle        201
surrounded by charcoal, and subjecting them to intense heat for
several hours or days. So the making of steel was a slow and expensive
process until about the middle of the nineteenth century. Then Sir
Henry Bessemer, an Englishman, discovered that by forcing air into the
bottom of a great retort containing molten iron the oxygen of the air
would combine with the carbon of the iron and in a few minutes the
objectionable carbon would be all burned out, and that by then
reintroducing in this molten mass of pure iron the required amount of
carbon in the form of spiegel iron or ferro manganese, steel could be
made much more cheaply and quickly than before. William Kelly, an
American, also devised a similar process about the same time. Thus
began the process of modern steel making, which has in a single half
century increased tenfold the world’s consumption of steel and thus of
iron, for a very large proportion of the iron now utilized in the
world is transformed into steel before being applied to the service
which it is to perform for men.

In all the processes by which iron and steel making have been
transformed from the simple methods of a century or two centuries ago
to the present system by which a single establishment may now make in
a week or month or year as much iron or steel as the whole world then
made in an equal length of time, machinery and capital have been the
great causes of the development--machinery for digging iron and coal,
for transporting them to the place of manufacture, for handling the
material in the natural state, for handling it in the furnace, for
handling it in the molten state, for rolling and shaping it after it
passes from the molten state to that in which it begins to take the
form of the finished product, and capital to purchase this machinery
and the great quantities of material required. “The very richness of
our resources,” says J. Russell Smith in The Story of Iron and Steel,
“has made such a wealth of opportunity for occupation in the United
States that labor is and has been scarce. As a consequence the           202
American iron industry has been driven over to a machine basis, and
its very success has arisen from the fact that a scarcity of labor has
compelled the introduction of machinery which has surpassed the dreams
of its inventors. In the iron and steel industry of America man does
little more than touch levers, while the balance is done by steam and
electricity. Four large Bessemer converters, holding 15 or 20 tons of
molten iron do their work by an air blast driven through the molten
material by the force of an engine. The electric cranes swing the
20-ton charges and the heavy converters as easily as a schoolboy
swings his dinner pail, and pours the new made steel into a metal mold
which stands on a tram ready to take it to the hydraulic machine which
draws the mold off the red-hot ingot. The manless way in which this
great steel ingot is turned into a useful piece of steel never ceases
to be a marvel. The great machines are seen but the plant seems to be
deserted. Then there arises a rumble and roaring noise and the great
piece of red-hot metal is seen to travel with all the independence of
a serpent across a lot of black rollers and dive into the jaws of the
rollers which squeeze it into flatter shape. Then it stops, turns over
and dives again through the same rollers, which flatten it still more.
After this has been repeated a few times you discover, standing on a
high platform, a man or two pulling the levers which start the
machinery of the six or seven thousand horsepower engines that drive
the knowing rollers which are crushing and rolling the ingot into the
shapes which man can use.”

“Perhaps the greatest difference between English and American steel
works,” said an English writer on this subject, “is the absence of
laborers in the American mills. The large and growing employment of
propelling and directing machinery is responsible for this. In a mill
rolling three thousand tons of rails in a day not a dozen men are to     203
be seen on the mill floor. To witness in such a mill the conversion in
a half hour of a red-hot steel ingot weighing several tons into
finished stamped steel rails ninety feet long, and all this perfectly,
by the agency of unseen hands, is to gain new ideas of the
possibilities of mechanism, of the subservience of matter to mind.”

These are some of the steps by which the systems of the manufacturing
world have been, in the past 150 years, transformed from household
work, or that of the small shop, into that of the factory--and the
factory developed into enormous establishments through the investment
of great sums of money in the purchase and installation of
ever-improving machinery, more ingenious, more productive, more
costly, but turning out more and better of the finished product with
each new device and new investment of capital.


The inventions by which the manufacturing of the world was transformed
from the household and the workshop to the great factory were the
result of years, generations indeed, of study of conditions one by one
as they arose. “No one of the inventions which were greatest in their
effect,” says Hobson, “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. This is the history of most inventions. The pressure
of industrial circumstances directs the intelligence of many minds
toward the comprehension of some single 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 comes out
victorious, and the inventor, purveyor or in some cases the robber is
crowned as a great inventive genius.”

England was the earliest scene of the development of the factory         204
system, the bringing together of great buildings and centers of great
masses of machinery operated by water or steam power and manned by
great numbers of people--for however ingenious the machine a certain
amount of human intelligence is necessary for its management and the
conduct of the work which it is to perform. The reasons for the
earlier development in England are not difficult to find. It had its
colonies in all parts of the world, from which to draw the raw
material and in which to market the manufactures, for it for many
years discouraged or prohibited manufacture in the colonies; it had
great shipping facilities for transporting its products to all parts
of the world, and to bring raw material and food supplies to its
workers at home; the ownership of its lands in great estates had a
tendency to send to the cities and manufacturing centers that part of
the population which under other circumstances would have employed
itself in agriculture; the laboring population yielded more readily to
the methods of the manufacturing interests than in other countries
where trade guilds determined more definitely the occupations and
methods of occupation of the working classes; and the comparative
freedom from wars permitted a more rapid growth than that of other
countries in which disturbances of this character were more frequent
and more liable to frequency than in an insular country, England.
“When Crompton’s mule, Cartwright’s power loom and Watt’s engines were
transforming the industry of England,” says Hobson, “her continental
rivals had all their energies absorbed in wars and political

Much of the wool and flax required in the English industries was
produced at home. The colonies supplied the other fibers; the ships
returning from their voyages to the colonies brought the raw silk; the
absence of mountains to separate the country and the people into
districts and classes enabled the interchange of labor and materials;
the early development of rivers and canals gave cheap transportation;    205
the plentiful supply of coal encouraged the development of steam
power; and the proximity of iron ore and coal aided in developing that
other great manufacturing industry, iron and steel. Mr. Mulhall, the
celebrated statistician, estimates the value of the manufactures of
the United Kingdom in 1780 at 177 million pounds sterling, France 147
million, Germany 50 million, Austria 30 million, Russia, Italy and
Spain 10 million each, and the United States 15 million. In 1896 he
estimated the value of the manufactures of the same countries as
follows: United Kingdom, 876 million pounds sterling; France, 596
million; Germany, 690 million; Austria, 328 million; Russia, 380
million; Italy, 190 million; Spain, 121 million; and the United
States, 1,980 million. According to his estimate the gain in the 116
years, from 1780 to 1896, was: United Kingdom, from 191 to 876 million
pounds sterling; France, from 115 to 596 million; Germany, from 50 to
690 million; Austria, from 30 to 328 million; Russia, from 10 to 380
million; and the United States, from 15 to 1,980 million. Mr.
Mulhall’s estimates put the total value of the manufactures of
continental Europe in 1780 at about 1½ times those of the United
Kingdom; in 1896 at about 3 times those of the United Kingdom. His
estimates put the value of manufactures in the United States in 1870
at about 3⅓ per cent that of all Europe; in 1896 at about 55 per
cent that of all Europe.

It must not be supposed, however, that this transformation was, by any
means, instantaneous. It was, in fact, a matter of slow growth, even
in the older countries, and still more so in those countries which had
not yet developed their natural products or their agricultural
industries. In the case of the United States, for example, the
transformation from the hand to the machine methods did not come until
many years after that of the leading countries of Europe. The reason
for this slow movement on the part of the United States is not           206
difficult to understand. Her people were chiefly engaged in
agriculture, in felling the trees and clearing the lands in the
eastern part of the country, and in opening farms on the prairies of
the great West. Those who had capital to invest in enterprises other
than that of agriculture gave their attention to the construction of
methods of transportation, first, toll roads, stage coaches and pack
trains, then, canals, and finally railways. This occupied the
attention of the people of this new country for a generation after the
people of Europe and especially England were engaged in developing
their manufacturing industries.

So it is not surprising to see that Mr. Mulhall’s figures show that
English manufactures in 1820 were nearly 6 times as much as those of
the United States, and in 1840, 4 times as much as those of this
country; and even in 1860, considerably exceeded our own. But in the
next twenty-year period there came a great change. The Civil War in
the United States, with the home demands in the manufacturing section,
the North, rapidly developed the manufacturing industries, and the
development thus created continued after the close of that unhappy
period. So his figures indicate that in 1888, the next date which his
table touches, that our manufactures were 1¾ times as much as those
of the United Kingdom, and in 1896, 2¼ times as much in value as
those of the United Kingdom and half as great as those of all Europe.
Accepting the figures of Eugene Parsons, elsewhere referred to, for
the European countries in 1904, and accepting the official figures of
the United States for that same year, we find that the figures of the
value of manufactures in the United States are nearly 3 times those
accredited to the United Kingdom and but little less than those of all

It is proper to say, however, that these statements, whether of
Mulhall, Parsons, or other authorities on this subject, are liable to
be extremely misleading unless carefully and intelligently               207
considered. The reason of this is found chiefly in the fact that the
official figures of the United States are made up on a materially
different basis from those of the other countries in question. To be
sure, the figures of the United States are official and therefore may
be considered reliable as to the facts which they purport to show, but
in fact some of the things which they purport to show are presumably
quite different from those quoted for the other countries included in
these estimates--for they can be only estimates for the other
countries, since no country other than the United States takes a
census of manufactures (England is taking one as this text is being
issued, but has not yet completed it), and the figures quoted
regarding their manufactures are necessarily estimates. Generally
speaking, it may be said that the census of the United States includes
certain articles which are not usually classified as manufactures in
other countries, such as products of slaughtering, canning, the
milling industry, etc. Aside from this it must also be remembered that
the usually quoted figures of the United States’ manufactures include
many duplications, due, as elsewhere explained, to the fact that the
total so quoted is merely an aggregation of the product of all
factories; and as the product of one factory often becomes the
manufacturing material of another, its value is again reported by the
manufacturer who reports merely the total value of his products. These
duplications are so numerous and prevail in such important and costly
articles that the census estimates the net or true value of our
manufactures at but about two-thirds as much as the usually quoted
figures of gross products. It would appear, therefore, that the
usually quoted figures of “manufactures in the United States,” when
compared with the estimate of manufacturing in other countries, should
be reduced about one-third to make them properly comparable with those
usually quoted for the other countries of the world. Even if this        208
were done, however, it would show the value of the United States’
manufactures probably about twice as great as those of the United
Kingdom and probably little less than those of continental Europe.

Taking Mulhall’s figures for the other countries which he includes, as
presented in a table on another page of this text, it will be seen
that the chief growth in manufacturing during the 116 years covered by
the table under consideration has occurred in the last third of the
period. English manufactures, he says, grew from 177 million pounds
sterling to 290 million in the 40-year period from 1780 to 1820; from
290 to 577 million in the next 40 years, from 1820 to 1860; and from
577 to 976 million in the 36 years from 1860 to 1896--a growth of 113
million pounds sterling in the first 40 years, of 287 million in the
second 40 years, and of 400 million in the third period of 36 years.
Germany showed a more rapid growth in the third period; the growth in
the first 40-year period being from 50 million pounds sterling to 85
million; in the second 40-year period, from 85 to 310 million; and in
the third period, of 36 years only, from 310 to 690 million. France
has not made as rapid a gain as Germany, the figures showing her
products in 1780, 147 million pounds sterling; in 1840, 220 million;
in 1860, 380 million; and in 1896, 596 million.

The total of Mulhall’s table, including the somewhat over-estimated
figures of the United States, and relating chiefly to the products of
Europe and the United States, show total manufactures of all the
countries named, in 1780, 480 million pounds sterling; in 1820, 865
million; in 1860, 2,404 million; and in 1896, 5,710 million, again
indicating that the chief growth has occurred in the last third of the
period under consideration, the period of transformation from the hand
industries to those of machine production in conjunction with vast
sums of capital and plentiful transportation facilities for collecting
the raw material and distributing the finished product.

When we consider nations or groups of people and their use of modern     209
methods of manufacturing, we may properly say that the principal
manufacturing sections of the world are western Europe and the United
States, and that, as above indicated, the bulk of the world’s
manufactures by the factory process are now produced in those two
sections of the world. Manufacturing by machinery may perhaps be said
to have originated in England, spreading thence to France, to Germany,
and westward to the United States. More recently it has extended in a
somewhat limited form into Canada in the west and India and Japan at
the extreme east. India has utilized modern methods of manufacture,
especially in cottons and certain other industries, for more than a
score of years, while the one other country of the Orient which has as
yet entered the field of machine manufacture, Japan, though somewhat
later in adopting machine methods, has been more active and extended
modern manufacturing to a much greater variety of industries than have
the people of India.

While certain of the European countries were earlier in the
manufacturing field than the United States, the larger population, the
greater supply of natural materials, the larger supplies of fuel for
cheap power, the ingenuity of the American workman, and the enormous
domestic demand of an active and prosperous people, have brought the
United States clearly to the head of the list of manufacturing
nations. It may safely be said that the value of manufactures produced
in the United States is approximately twice as great as that of any
other manufacturing nation, and that the stated value of our
manufactures is nearly as great as the estimated value of the
manufactures of all Europe. The latest official figures on the value
of the manufactures of the United States are those of the Census
Bureau, which put the value of manufactures produced in the calendar
year 1904, as recorded by the Census of 1905, at 16,867 million
dollars, including in this an estimate of a little more than 2           210
billion dollars’ worth of manufactures classed as “mechanical and
neighborhood industries,” which were included in all former census
reports, but not recorded by the Census of 1905, which was by law
merely a census of manufactures produced under “the factory system.”

No other country than the United States takes a periodic census of its
manufactures. The United Kingdom is at the present time about taking
for the first time a census of its manufactures, but no figures with
reference thereto are as yet available. As a consequence all
statements regarding the value of manufactures of European countries,
or indeed of any country other than the United States, are estimates
and estimates only. True, they are based upon certain known facts of
quantities of raw materials consumed in manufacturing, values of
manufactures exported, and the estimated proportion which these form
of the total manufactures; but in no other country than the United
States are there available official statements of the total value of
manufactures produced in the country in question. Therefore the
estimates of the value of the manufactures produced by European
countries which are quoted from time to time and which are presented
elsewhere in this text, must be accepted as merely estimates. A
comparatively recent estimate, and one which has been given wide
publicity, and appears to have been generally accepted, is that of
William J. Clark, published in The Engineering Magazine in 1904, which
put the value of the manufactures of the United Kingdom at 5 billion
dollars, Germany 4,600 million, France 3,450 million, Austria-Hungary
2 billion, Russia 1,980 million, Italy 1,700 million, Belgium 750
million. These estimates, if accepted, would bring the value of the
manufactures of the countries enumerated to a figure slightly in
excess of that officially reported by the Census Office as the value
of the product of all manufacturing establishments of the United
States in 1904. The figures above quoted for certain European countries  211
present however no estimate of the value of the product of
Switzerland, Spain, Holland and the Scandinavian countries, so that it
probably might be said with greater accuracy that the stated value of
the manufactures of the United States is about equal to the estimated
value of continental Europe, and about three times as great as the
estimated value of the manufactures of the United Kingdom.

It is proper, however, before leaving this question of the relative
value of the manufactures of the various countries, to again call
attention to the fact that the official figures of the value of
manufactures produced in the United States include certain articles
not classed in certain other countries as manufactures, and in
addition to this contain many duplications due to the fact that the
products of one manufacturer frequently become the raw material of
another, and thus the grand totals which merely combine the stated
value of the product of each manufacturer necessarily include a second
and in some cases a third valuation of the products thus utilized. The
manufacturer of yarn, for example, reports to the Census Office the
full value of the product of his factory. The manufacturer of cloth,
who utilized that yarn, also reports the full value of the product of
his factory, and thus includes in that valuation the value of the yarn
purchased by him but already reported by the manufacturer of yarn. The
manufacturer of clothing, in stating the value of the product of his
factory, includes the sums which he paid for the cloth already
reported by the manufacturer of clothing and included in his
statement. Thus many duplications occur in our census statement of the
gross value of the products of the manufacturing industries of the
United States. “This gross value,” says the Census Report of 1900,
page cxxxix, “does not represent the final value of the manufactured
products of the country. It does fairly represent the total value of     212
commercial transactions involved in manufacturing enterprises…. As
the finished products of one branch of manufacture are constantly used
as materials in other branches, in the ascending scale of modern
industry, it follows that they are counted over and over again,
swelling in this manner the gross total value of products. Thus in
cotton manufacture, the product of the yarn mill, manufacturing yarn
for sale as the material of the cloth mill, and the product of the
cloth mill as the material for the manufacturer, so that by the time
the aggregate is made the value of the yarn has been counted three
times and the value of the cloth twice…. Duplications and
re-duplications of this sort run all through the total value of
products as reported by this (the Census) office. * * * The net or
true value of the products is found by subtracting from the gross
value the cost of all materials purchased in a partially manufactured
form. In 1900 the cost of these manufactures was $4,633,804,967 and”
(subtracting this sum from the gross value, $13,004,400,143), “the net
value of products was therefore $8,370,595,176.”

When it is further considered that the Census of Manufactures in the
United States includes in its list of manufactures all products of
slaughtering and meat-packing establishments wholesale, valued in 1905
at 112 million dollars, the product of printing and publishing
newspapers and periodicals only, valued at 309 million, and the
product of canning and preserving fish, oysters and vegetables, valued
at over 100 million--it will be seen that an effort to determine even
approximately the share of the world’s manufactures produced by the
United States or by the various manufacturing nations of the world is
a difficult--an impossible--task.

It may safely be asserted, however, that the United States is the
world’s greatest manufacturing nation, and that the value of our
manufactures exceeds those of any other country. This is due, as
already indicated, to the fact that our supply of raw materials is       213
greater than that of any other country, our supply of materials for
producing power also greater than that of any other country, our use
of machinery for manufacturing far in advance of that of any other
nation, the activity of our inventors and the skill of our workmen
quite equal to those of any other part of the world, and the demands
of our home population upon our own manufacturers far in excess of
those of any other country, both by reason of the large population and
high purchasing power of a people prosperous and active in all lines
of industry--agriculture, transportation, manufacture. The country
which produces three-fourths of the world’s cotton, twice as much iron
and steel as any other single nation, as much copper as all of the
remainder of the world combined, more of wood suitable for use in
manufacturing than any other country, more wool than any other of the
manufacturing nations, and a population much larger than that of any
other country actively engaged in the manufacturing industries, has
quite naturally and almost necessarily become the leading manufacturer
of the world.

The growth of the manufacturing industry in the United States has been
phenomenal. Stated in the methods of valuation followed by the census
above referred to--the gross valuation--the value of manufactures
produced in the United States has been, speaking in round terms, in
1850, 1 billion dollars, in 1860, a little less than 2 billion, in
1870, 4¼ billion, in 1880, 5⅓ billion, in 1890, 9⅓ billion,
in 1900, 13 billion, and in 1905, a little less than 17 billion,
though the figures usually quoted for 1905 are 14.8 billion, owing to
the fact that the Census of 1905 only included factory products, and
added parenthetically an estimate of 2 billion as the probable value
of the “mechanical and neighborhood industries,” thus bringing up to
nearly 17 billion the total properly comparable with the totals of       214
earlier periods, which in all cases included the mechanical and
neighborhood industries.

That this rapid growth in the value of manufactures has been far in
excess of the consuming capacity of the home population is evidenced
by the growth in exportation of manufactures, which aggregated in
1880, 122 million dollars, in 1890, 179 million, in 1900, 484 million,
and in 1908, 750 million. Manufactures formed in 1880 but 15 per cent
of the total exports, in 1890, 23 per cent, in 1900, 35 per cent, and
in 1908, 41 per cent of the total merchandise exported from the United


Another factor which entered into the modern system of production, and
a very important one, was that of capital. The factory could not be
established or operated without considerable amounts of money or its
equivalent, credit. The machinery which transformed the raw material
into the finished product, the material itself, the very buildings in
which the work was performed, the payment for the transportation which
brought it together, the wages of the men and women engaged in the
work, all required capital, and in large sums. The accumulation of
this capital, its management, the keeping of accounts of cost of
material and labor and of the finished product, required financial
skill and acquaintance in the markets in which this capital could be
obtained; for often the sums required were in excess of the quantity
possessed by the individual who had invested his all in the buildings
and machinery, and must needs borrow of some other capitalist the
additional sums required for purchasing material and paying the wages
of his workmen. Sometimes the owner of the capital preferred to supply
it and take a proportionate share in the earnings of the factory, and
thus developed the company. Then, as the business grew and the
investments of various men in a single establishment increased, it
became necessary for them to take an active share in the management      215
either in person or by representatives who became known as the
“directors” of the work.

Thus arose the successors of the individual manufacturer, the company,
and the corporation. Man must die and the death of an individual
manufacturer, or the manager of a manufacturing firm or partnership,
must affect disadvantageously the interests of the factory and its
employes. Thus the importance of organizations which would continue
unchanged in form and general management in case of the absence or
death of any individual. This was one of the reasons for the
establishment of the corporation. More important than this was the
facility which it offered to holders of capital in sums large or small
to invest their money in manufacturing without being compelled to give
their individual attention to the industry in which the money was
invested. The board of directors, which the investors might choose,
managed the business either by personal attention or by the selection
of competent and experienced persons for that service, and the
investor felt assured that his money would be properly managed by the
competent business men forming the board of directors and the experts
whom these directors might employ to manage the details. Hence the
corporation, under which the manufacturing establishments grew to
enormous proportions, employing thousands and tens of thousands of
people, and bringing material from the places in which it could be
most cheaply obtained, investing money if need be in facilities for
transporting and even producing the raw material, and cheapening the
cost of production.

Another step which increased the importance of capital as a factor in
the great manufacturing industries of the world came in more recent
combinations of great corporations, in which a number of great
manufacturing establishments agree to operate under one general
management, thus adjusting production in the various lines of            216
manufacture to the general demand, existing supply and prospective
consuming power of the markets, establishing systematic methods for
exploiting and selling the finished product, and so further minimizing
cost of production and distribution. This last combination, the
corporation of corporations, is generally known as the “trust” or
“combine,” and under it the great manufacturing industries of the
world have reached their greatest development, the cost of production
has been minimized, the field for the selection of the materials has
been enlarged, and the area in which the products are offered for sale
also greatly extended.

While these great organizations, made up by placing under one general
management a number of great establishments manufacturing articles of
like character, are doubtless able to reduce the cost of production
and distribution and prevent production in excess of probable demand,
it is also true that they are in many cases able to exercise a greater
control over prices of labor, of material and of finished product than
when operating singly.

Meantime the world’s supply of money for investing in manufacturing,
and the industries which contribute thereto, greatly increased. The
world’s gold production in the decade ending with 1840 averaged but
13½ million dollars per annum. Then, owing to the gold discoveries
in California and a little later in Australia, the production so much
increased that the annual average in the decade ending with 1860 was
135 million dollars per annum, or ten times as much as on the average
in the decade ending with 1840. For the next 35 years the production
averaged about 125 million per annum. Then, suddenly, through the
discoveries of great gold deposits in Africa and Alaska, the
production began to exceed 200 million per annum, then 300 million,
and in 1906, 1907, 1908 and 1909 averaged more than 400 million per      217
annum, or as much in a single year as in the 40 years from 1800 to

Gold, unlike most other productions prized by man, is not consumed. It
has enduring qualities; and the facility with which it can be
transformed without material loss from one form for use to any other
required form enables man to retain and accumulate a large part of the
products of a long period. The wheat produced in one year is eaten
before the next year is ended. The cotton crop of one summer is turned
into clothing and worn to rags by the time another crop is ready for
the factory and workshop. But the gold is conserved and utilized as
money or the basis of money, and the accumulations of the recurring
years merely increase the stock of that generally accepted medium of
exchange. To be sure a small share, perhaps one-fifth, is used in
manufacturing and the arts, and a small percentage lost in various
ways; but probably three-fourths of the gold product enters
circulation in the form of money or its equivalent, and thus increases
very rapidly the world’s money supply.

Meantime the systems built up in the business world by which business
is performed with mere pieces of paper which represent the gold and
silver accumulations have greatly multiplied the available stock of
money; and the ease with which it may be transferred from place to
place, from country to country, and from continent to continent also
adds to its availability and frequency of use in the world’s
transactions. The supply of that article which the manufacturing and
business world terms “money,” whether in the form of gold, silver,
paper, credits, instruments of exchange, or otherwise, has increased
beyond accurate computation. The world’s stock of gold has, according
to the estimates of experts, doubled in the last 25 years; and it is
probable that the supplies of other forms of currency; which serve as
money; have increased quite as rapidly.

All of this increase in the world’s supply of money has increased the    218
amount available for investment in manufacturing, and the increased
use of machinery meantime in that industry has required great
increases in the investment. While there are no ways of accurately
measuring the world’s investments in manufacturing, it is practicable
to do so in the case of the United States, the only country which
regularly takes a census of its manufacturing industries. Its figures
for the census years from 1850 to 1905, as to number of
establishments, persons employed, wages paid, capital invested and
value of product, are as follows:

        |          |         |           | Wages  | Cost of |Value of
  Census|Establish-| Capital,|  Wage-    | Paid,  |Material,|Product,
   year.| ments,   | million |  earners, |million | million |million
        | number.  | dollars.|  number.  |dollars.| dollars.|dollars.
   1850 |  123,025 |     533 |   957,059 |   237  |    555  |  1,019
   1860 |  140,433 |   1,010 | 1,311,246 |   379  |  1,032  |  1,886
   1870 |  252,148 |   2,118 | 2,053,996 |   776  |  2,488  |  4,232
   1880 |  253,852 |   2,790 | 2,732,595 |   948  |  3,397  |  5,370
   1890 |  355,415 |   6,525 | 4,251,613 | 1,891  |  5,162  |  9,372
   1900 |  512,254 |   9,817 | 5,308,406 | 2,322  |  7,345  | 13,004
   1905 |  533,769 |  13,872 | 6,157,751 | 3,017  |  9,498  | 16,867

It will be seen from a study of this statement, which compares
conditions in the manufacturing industries at each recurring census
from 1850 to 1905, that while the number of establishments in 1905 was
four and one-third times as many as in 1850 the number of wage-earners
was six and one-half times as many, the wages paid twelve and
one-third times as much, the value of the product sixteen and one-half
times as much and the capital employed twenty-six times as much.

This gives at least a suggestion as to the growth of investment in
manufacturing. So far as relates to the United States, the only
country for which we have statistics on this subject, the enormous
increase in the use of costly machinery in manufacturing has increased
the sums required for carrying on the industry, and machinery has in a
marked degree been substituted for man in the factory operations.        219
The number of wage-earners employed increased, it will be seen, a
little more than fivefold while the capital employed increased
twenty-fivefold. The tendency to bring the manufacturing industries
into large establishments is also shown in some degree in the fact
that while the number of establishments increased but about threefold
the number of employes increased fivefold and the value of the
manufactures turned out increased twelvefold.

Even these figures do not, however, give a complete view of the
relative growth in the number of large manufacturing establishments,
the capital invested and the product turned out, because of the fact
that the census enumeration of “manufacturing establishments” includes
hand and household industries, such as blacksmith shops, wheelwright
and wagon repair shops, boot and shoe repairers, harness makers,
tailor shops, dress making, millinery, carpenter shops, custom, saw
and gristmills, etc., etc., in all of which the capital invested or
the product per establishment at this time averages probably little
more than formerly. It is in the greater establishments, the
factories, that the increase in investment and in producing power per
factory has occurred. The Census of 1905, which was by law confined to
manufacturing establishments conducted under the factory system, and
that exclusive of neighborhood and mechanical industries, found that
the number of establishments manufacturing for the general market and
not merely for local orders or neighborhood consumption, and which
could thus be considered as manufacturing establishments conducted
under the factory system, was but 216,262, while under the former
method of including hand and neighborhood industries the number of
establishments would, it is estimated by the census, have been in
1905, 533,769. The 216,262 establishments enumerated as “conducted
under the factory system” employed $12,686,000,000 capital and
5,470,321 wage-earners, or an average of 25 each, and turned out         220
$14,802,000,000 worth of manufactures; while the 317,506 smaller
establishments, the “hand and neighborhood industries” formerly
included in the general census returns, are estimated as having
employed $1,186,000,000 of capital and 687,430 wage-earners, or an
average of about 2 employes each, and turned out $2,066,000,000 worth
of manufactures.

It will thus be seen that the larger manufacturing establishments,
those “conducted under the factory system producing articles for the
general market as distinguished from the product made upon order for a
customer,” are those proper to be included in a study of the
development, capital invested, persons employed, wages paid, material
used and value of the product turned out. Unfortunately a study in
this form cannot be extended over any considerable term of years,
because of the fact that the United States census only began in 1905
to make this distinction or separation of the true “factory” from the
great mass of establishments turning out manufactured products. It
did, however, present in 1905 an estimate for the year 1900 of the
number of establishments properly comparable with those enumerated in
the factory census of 1905. This estimate puts the total number of
“establishments conducted under the factory system” in 1900 at
207,562, and in 1905 at 216,262, an increase of but 4.2 per cent in
the number, while the capital employed in 1900 was $8,979,000,000, and
in 1905, $12,686,000,000, an increase of 41.3 per cent; the
wage-earners in 1900, 4,715,023, and in 1905, 5,470,321, an increase
of 16 per cent; wages paid in 1900, $1,736,000,000, and in 1905,
$2,266,000,000, an increase of 30.5 per cent; materials used in 1900,
$6,578,000,000, and in 1905, $8,504,000,000, an increase of 29.3 per
cent; value of product in 1900, $11,411,000,000, and in 1905,
$14,802,000,000, an increase of 29.7 per cent.

It will thus be seen that even in the recent period, 1900 to 1905, the
percentage of growth in “capital invested” was greater than in any       221
other important branches of the industry, the increases being: in
capital 41.3 per cent, in wages paid 30.5 per cent, in value of
product 29.7 per cent, and in number of wage-earners 16 per cent,
while the number of establishments increased meantime but 4.2 per
cent. It is thus apparent that although the tendency of the past
thirty years has been distinctly toward an enlargement of the factory
through the increase in capitalization rather than an increase in the
number of establishments, that tendency still continues as the most
distinctly marked characteristic of the development of the period 1900
to 1905.

Unfortunately the facilities for comparing the capitalization,
product, etc., in 1905 with that of earlier years only extends, in its
relation to all the factory industries, to the Census of 1900. In a
few of the important industries, however, it is possible to compare
conditions in 1900 with those of earlier censuses. The Census of 1900
shows that the number of boot and shoe factories in the United States
fell from 1,959 in 1880 to 1,600 in the year 1900, while the
capitalization increased from an average of $21,957 per factory to
$63,622 per factory, the number of wage-earners from 57 to 89 per
factory, the wages paid from $21,951 to $36,985 per factory, and the
value of the year’s product turned out from $84,763 per factory to
$163,142 per factory. In cotton goods the number of establishments in
1880 was 1,005, and in 1900, 1,055, the capital per establishment in
1880, $218,412, and in 1900, $442,882, the number of wage-earners in
1880, 185 per establishment, and in 1900, 287, the wages paid in 1880,
$45,387 per establishment, and in 1900, $80,180, the value of product
in 1880, $209,901 per establishment, and in 1900, $362,349. In iron
and steel the number of establishments was in 1880, 699, and in 1900,
668, average capital per establishment in 1880, $294,652, and in 1900,
$858,371, wage-earners per establishment in 1880, 197, and in 1900,
333, wages paid per establishment in 1880, $78,020, and in 1900,         222
$180,869, value of product turned out per establishment in 1880,
$418,583, and in 1900, $1,203,545. In woolen goods the number of
factories fell from 1,990 in 1880 to 1,035 in 1900, the capital per
establishment increased from $48,289 in 1880 to $120,180 in 1900, and
the value of the product increased from $53,755 per establishment in
1880 to $114,425 in 1900.

It will be seen from the figures above presented that in these four
great industries the tendency from 1880 to 1900 was distinctly in the
direction of reduction of the number of factories, and a greater
increase in capitalization than in that of persons employed, wages
paid or in value of product turned out; while the figures covering the
operations of the entire factory system for the period 1900 to 1905
also show a continuation of this same tendency toward a greater growth
in capital than in persons employed, wages paid or value of product
turned out.


The great increase in the size of the manufacturing establishment and
of the capital invested in the manufacturing industry which
necessarily followed the adoption of expensive machinery for
manufacturing purposes was followed by a tendency toward co-operation
and mutual agreements among the great organizations engaged in similar
lines of work, the purpose being to reduce expenses, increase profits
and control prices. Originally the persons, firms or companies engaged
in manufacturing disposed of their products as best they could and in
direct competition with others in their own line of manufacture. If
the market for their product was good they demanded higher prices. If
there was an oversupply they sold for whatever profit they could get,
or if necessary at cost or even lower than cost, in order to prevent
accumulations of stocks or the closing of their factories. The
competition thus grew intense. In order to dispose of their goods they
must put many salesmen into the field, they must advertise freely,       223
and often their orders came from such distances that the cost of
delivery formed a large percentage of the cost of the goods by the
time they reached the purchaser.

This competition of one manufacturer with another making the same line
of goods was not only expensive but resulted in working at cross
purposes in many ways, and in loss of energy and money. So certain of
the companies or corporations engaged in like industries began to make
agreements among themselves by which they could co-operate in
distributing their supplies to a given field and reduce the expenses
of supplying that field. It was argued that the people of any section
would only use a given amount of any standard product, and that the
expense which the various manufacturers were incurring in competing
among themselves for their respective shares in that trade might be
materially reduced by an agreement through which the extraordinary
efforts to sell in competition with each other should be abandoned and
each manufacturer receive the share of the sales to which his
proportion of production would entitle him. Not only would this reduce
unnecessary expenses but it would in some degree render possible the
maintenance of prices as they might be mutually agreed upon.

The first steps in combinations or agreements of this sort are known
as “pools.” “This form of agreement,” says J. Russell Smith, “provides
that each of the makers of a certain material for a certain territory
should make a stipulated proportion of the product to be sold at an
agreed price. If a factory made more than its share the owner made a
cash payment to the pool and the money went to some manufacturer who
had made less than his share. The weak spot of these pools was their
absolute lack of power of coercion and that no member had faith in the
others.” Often members took advantage of technicalities to violate the
spirit of the agreement, and the agreements were short-lived. The        224
system, while it is still working satisfactorily in Germany under the
name of the “cartel,” failed to give satisfactory results in the
United States, and also met with disaster in the fact that the courts
held it to be a combination in restraint of trade and therefore

To overcome these defects and create a system of division of
production, control of prices and distribution of profits in
proportion to the value of the plants co-operating, a new form of
agreement was devised. It provided that the companies or corporations
entering the agreement for mutual operation and proportionate
distribution of profits should transfer the shares of their respective
properties to a new corporation with full powers to manage the same,
receiving in lieu thereof certificates which should entitle the holder
to his proportionate share of the net earnings of the new corporation.
“Under this form of organization,” says the Universal Encyclopedia,
“the stockholders of each of the separate companies assigned their
stock to a few trustees, giving thus an irrevocable power of attorney.
In lieu of the stock assigned the trustees issued stock certificates
to the stockholders of the separate companies and upon these trust
certificates profits were divided. All of the earnings of the
different members of the company were pooled and each manufacturer
received his proportionate share as evidenced by the certificates,
regardless of the question whether his establishment was running or
closed. The trustees, having in their hands the voting power of all
the stockholders, elected whatever persons seemed to them best as
officers of the separate companies. In this way the management was
absolutely unified and the interests of all parties concerned became
as one. The courts finally holding that this trust agreement was
illegal, the plan was later adopted of organizing a new company which
should buy up all of the separate plants of the different companies
entering the combination, so that in this way a unified management was
secured within the law. In order that a more convenient form of          225
handling the properties of the different companies might be secured, a
third form of organization was later adopted in which a new company is
organized as a stockholding company. This company then buys up all, or
a large proportion of, the stock of each of the companies coming into
the organization and controls these stocks. The officers of the
central organization are thus in a position, by voting the stocks of
different companies, to elect the directors and officers of those
companies and thus control their policy.”

The advantages of this combination over competition are summed up by
the Encyclopedia Britannica, in its 1902 edition, as follows: (1) The
cost of selling may be greatly lessened; (2) the salaries of
commercial travelers and their traveling expenses can be largely
reduced; (3) if different manufacturing establishments, scattered
throughout the country, are brought under one management it will be
possible for orders for goods to be distributed so that goods can be
dispatched to customers in each case from the nearest establishment
and freight expenses reduced; (4) when several establishments are
combined the most skillful of the managers can be selected for the
general manager; (5) each business manager is likely to have some
special excellence in his methods of management, and by combining the
establishments it is possible to so distribute this managerial skill
as to give to each branch of the work the man best suited to its
conduct; (6) it is also possible to distribute the various branches of
the manufacturing to the various mills or factories of the combination
best suited for that particular branch of the work; (7) the advantages
of unifying in one establishment the machinery of selling the product
of all; (8) the ability of an establishment to fill large orders on
short notice gains and retains business; (9) the great financial and
business strength and skill of the combined organization gives it
special facilities for pushing its goods into foreign markets, as is
shown by the success abroad of the Standard Oil Company, and the         226
American Tobacco Company; (10) better facilities for dealing with
credits and thus aiding the business community.

Whether trusts, through their control of prices of the particular
commodities which they manufacture, have actually advanced the selling
price to the consumer, has been and is still the subject of much
discussion. It has been urged that the mere reduction of the cost of
production and distribution which results from the combinations would
enable them to realize larger profits than formerly, even if the
manufactures are sold at former prices, and that although their
profits have doubtless been large it has not been accomplished through
an actual advance in prices to the public, but rather through
economies of production and sale. Nelson’s Encyclopedia, issued in
1908, discussing this subject, says, “The weight of evidence indicates
that, judged from the margin between price and finished product and
cost of raw materials, prices are increased somewhat by the existence
of trusts. It is a fair conclusion that the actual prices of goods
have as a rule been somewhat increased by trusts, although not in the
measure that was anticipated at the inception of the trust movement.”
The Encyclopedia Britannica of 1902 in discussing this subject says,
“Experience seems to show beyond question that whenever the
combinations are powerful enough to secure a monopolistic control it
has usually been the policy to increase the prices above those
obtained during the period of competition which preceded the formation
of the combination.”

As to the effect of trusts upon wages it may be said that up to the
present time no very strongly marked change is perceptible in the
matter of rates of wages paid by the trusts as compared with other
employers in the same line. Doubtless the combinations of numerous
establishments under one general management have reduced the numbers
of employes in certain lines, but in those lines in which the trusts     227
require labor for the carrying on of their work no marked changes in
the rates of wages have been developed as a result of the
combinations. In steadiness of employment for the men and women
engaged in the work of the establishments it seems probable that the
trusts or great combinations of this character offer certain
advantages, since their business is less liable to fluctuations than
that of the smaller, and even in the absence of orders they are more
likely to continue work accumulating stocks for future use than is the
small manufacturer with limited capital or credits. In the matter of
relations with the labor organizations certain of the trusts have made
long time agreements with the labor organizations, thus adding to the
steadiness of employment, though in some cases the trusts have
declined to recognize the demands of labor organizations.

An example of the causes and methods of the combination of kindred
manufacturing interests under one general central organization is
found in the United States Steel Corporation as described by J.
Russell Smith, in his “The Story of Iron and Steel.” No industry, he
says, is naturally so uncertain and consequently so competitive as the
steel industry. The demand for the product is fitful and uncertain
because most of it goes into new constructions and new enterprises,
and these are notorious for the spurts and depressions of demand which
affect them…. The uncontrolled iron and steel market can make wild
rises unknown to many commodities, because it is difficult to suddenly
increase the amount of manufactures in response to sudden demand. A
wave of prosperity sends a thousand industries which must have iron
and steel clamoring, begging for steel. When the industrial sky
darkens purchases of iron and steel cease as suddenly as they began
and the price must tumble if the output is sold. These were the normal
conditions through which all steel makers lived down to the depression
of 1893-98. The numerous independent manufacturers thought that if       228
they could get together and agree upon prices they could improve their
condition. Attempts to achieve this in the form of pools provided that
each of the makers of a certain material should make a stipulated
proportion of the product to be sold at an agreed price, and if a
factory made more than its share, the owner made a cash payment to the
pool. The weak part of these pools was their absolute lack of power of
coercion, and the further fact that no member had faith in the other.

The failures in the attempt at price control resulted in the
consolidation of many companies, formerly rivals, under one control.
The chief companies which later became members of the United States
Steel Corporation formed two distinct groups, each group classified
according to the product. One group included the manufacturers of
unfinished steel, such as ingots, billets, plates and slabs, and
included the Carnegie Steel Company, the Federal Steel Company, and
the National Steel Company. Other companies which purchased the
product of these manufacturers of unfinished steel and turned it into
the finished state included the American Tin Plate Company, the
National Tube Company, the American Steel and Wire Company and others.
The first thought which came to the minds of this finishing group when
hard times compelled them to cut down costs was to cheapen their raw
material (such as pig iron, steel ingots, billets, etc.) by becoming
manufacturers of their own pig iron. The Carnegie Steel Company had
already done this and had obtained facilities for transporting the ore
to the coal fields of Ohio and Pennsylvania and facilities for
transforming the ore into the classes of material which it supplied.
The Carnegie Steel Company thus became independent of other companies
in the supply of its fuel, its ore, and the transportation of the
same, and all of the requirements of operation. When the finishing
companies announced their purpose to also supply themselves with the     229
same facilities for producing their own raw material through the
ownership of ore lands, transportation, facilities for smelting,
manufacture of pig iron and the steel which they themselves required,
the raw materials group could not view this operation with unconcern.
It meant the loss of their market and necessity of seeking new markets
in the United States or in foreign countries. As a consequence, the
companies designated as the raw materials group, making pig iron,
steel billets, etc., announced that they would establish their own
finishing plants and thus compete directly with the group of companies
which had formerly occupied the field without interference by the
great organizations transforming the ore into the earlier processes of
pig iron and steel billets. Mr. Carnegie announced that he would build
a finishing mill in northern Ohio at the end of his ore railway which
would eclipse anything that the world had ever seen and would be in
equipment without a rival in the world. The Federal Steel Company
increased its holdings of ore and coal, of upper-lake railways, and of
lake steamers, and prepared to establish its plants for turning out
finished products. Thus was threatened a doubling of the capacity of
production of iron and steel in all of its stages, a capacity already
far beyond that of the markets of the United States. Pools had failed,
and the earlier trusts, aiming at monopolizing each line of the iron
trade, had in the first temporary depression come face to face with
the immediate prospect of ruinous competition among themselves. Then
came the supreme effort at controlling prices through the creation of
the most stupendous corporation that man has yet dared to launch--the
United States Steel Corporation. This combination included most of the
companies of both groups referred to--the producers of unfinished
steel and those transforming the same into the finished product. The
combination formed under the leadership of Mr. J. Pierpont Morgan        230
controlled two-thirds of the steel output of the country.

The new company began business in April, 1901, and a comparison of
prices since that date with those of earlier years shows regularity
and steadiness of prices rather than any marked decline or advance.
“This price-steadying,” says J. Russell Smith, “is of incalculable
benefit to the independent manufacturer (as well as to the
combinations) even when it limits the heights to which a price spurt
will go. Rapidly rising prices start a feverish, intoxicated condition
of the market very pleasant while it lasts, but followed by a more
unpleasant reaction; therefore the Trust tries to keep sober and keep
its little brothers sober also, and all are profiting by the new
temperance…. Despite its efforts at control, the Trust is not as
near monopoly as it was the day it began. The four full years of its
operation, 1902-1905, inclusive, did not indicate any increased share
of production. The bulletin of the American Iron and Steel Association
shows that during these four years there was an almost universal
decline in the percentages of iron and steel products made by the


The history of the iron and steel industry of the world forms an
excellent example of the recent advance in manufacturing. The
manufacture of iron and steel has made perhaps a more rapid advance
than have many others, and its development is due in such a marked
degree to the use of machinery and the investment of large sums of
capital in the industry that a detailed study of the history and
causes of its development seems justified.

Pig iron is the basis of all iron and steel manufacturing, in whatever
form, and the record of production of this single article gives at
least a suggestion of the growth in the other lines of the industry,
the growth in production of the finished articles ready for              231
consumption. The pig iron production of the world in 1800 is estimated
at 460,000 tons; in 1850, 4,422,000 tons; in 1895, 29,300,000 tons,
and in 1903, 46,381,000 tons. The product of 1850 was thus nearly ten
times as much as in 1800, that of 1895, 63 times as much, and that of
1903, 100 times as much as in 1800, while the figures for the year
1907, give a total of 50 million tons or 109 times as much as in 1800.

Great Britain was the world’s greatest pig iron producer in 1800 and
in 1850. In 1800 she produced 41 per cent of the world’s pig iron, and
in 1850, 50 per cent. By 1895, however, she had begun to take second
place, the United States standing at the head of the list of pig
iron-producing countries at that time, the product of Great Britain
forming 27 per cent of the world’s total and that of the United States
32 per cent. In 1903 the United States showed a still greater lead in
this industry, producing in that year 39 per cent of the world’s total
product; while Germany, which held a low rank as a producer in 1800
and 1850, actually exceeded Great Britain in 1903, producing 22 per
cent of the world’s total, while Great Britain produced but 19 per
cent of the total. Great Britain’s production grew from 190,000 tons
in 1800 to 8,935,000 tons in 1903; Germany, from 40,000 tons to
10,085,000 tons; the United States, from 40,000 tons to 18,009,000
tons; and all other countries, from 190,000 tons to 9,352,000 tons. In
1800 the United States produced but 9 per cent of the world’s pig
iron; in 1903, 38 per cent; and in 1907, 41 per cent.

It will be seen from these figures that the greatest growth in the
world’s pig iron production has occurred in the United States.

Turning from the comparison of growth in pig iron production in the
leading iron-producing countries of the world and comparing the growth
of the iron industry in the United States with that of other
manufacturing industries, we find that the development in this line      232
has been greater than that of other leading industries. The census
figures show that the value of the product of the blast furnaces,
steel works and rolling mills of the United States, combined, grew
from 297 million dollars in 1880 to 906 million in 1905, having thus
more than trebled in value in that period, while the value of the
cotton manufactures grew from 211 million to 250 million, having
little more than doubled; that of the woolen and worsted manufactures,
from 194 million to 308 million; lumber and timber products, from 234
million to 580 million; boots and shoes, from 166 million to 320
million; leather, from 200 million to 253 million; and flour and
gristmill products, from 505 million to 713 million in the same time.
In the various branches of iron and steel manufacturing there was also
a remarkable growth. Foundry and modern ship products grew in value
from 215 million dollars in 1880 to 800 million in 1905; structural
iron work, from 3½ million to 91 million; and wire and wire work,
from 19 million to 71 million.

This increase in value of the various classes of iron and steel
products does not by any means show the actual increase in quantity
produced, because of the fall in prices meantime. Practically all of
the important classes of iron and steel products have fallen greatly
in price as the quantity produced has increased. Pig iron, for
example, averaged $33 per ton in 1870, and $18 per ton in 1908; steel
rails, $107 per ton in 1870 and $28 per ton in 1908; bar iron, rolled,
$79 per ton in 1870 and $38 per ton in 1908; and cut nails, 4.4 cents
per pound in 1870 and 2.2 cents in 1908. The iron ore production in
the United States grew from 3 million tons in 1870 to 52 million in
1907; pig iron, from 1.6 million tons to 26 million; and from 69
thousand tons in 1870 to 23 million tons in 1907.

Another characteristic of modern manufacturing is exemplified in the     233
study of the iron and steel industry and the relation of capital,
labor and product, as is also the concentration of industries into
great establishments and groups of establishments. As has already been
noted, the value of the product of the iron and steel blast furnaces,
steel works and rolling mills grew from 297 million in 1880 to 906
million in 1905, having thus a little more than trebled in that time.
In the same period the capital invested in these same establishments
increased from 231 million dollars to 936 million; the capital having
quadrupled while the product was trebling in value. During the same
time the same establishments increased the number of their employes
from 140,978 to 242,640, the number of employes having therefore
increased but about 75 per cent while the capital was increasing 300
per cent and the value of the product about 200 per cent. The wages
paid to the employes increased from 55 million dollars in 1880 to 141
million in 1905; the total wages paid having increased 156 per cent
while the number of employes increased 73 per cent, indicating a
marked increase in wages paid per individual.

The tendency to concentrate the production of manufactures into great
establishments is also strikingly shown in the record of the iron and
steel industry in the past few years. The census figures show the
number of establishments in the United States in the group, “Iron and
steel, including blast furnaces, steel works and rolling mills” at
1,005 in 1880, 645 in 1890, 668 in 1900, and 605 in 1905. The 1,005
establishments in 1880 produced 297 million dollars’ worth of the
product; the 645 establishments in 1890 produced 431 million dollars’
worth; the 668 establishments in 1900 produced 804 million dollars’
worth; and the 605 establishments in 1905 produced 906 million
dollars’ worth of the product. Thus the average production per
establishment was, in round terms, in 1880, $296,000 worth; in 1890,     234
$668,000 worth; in 1900, $1,200,000 worth, and in 1905, practically
$1,500,000 worth. This gives an average product in 1905 of 5 times as
much value per establishment as in 1880, while the fact that prices of
1905 were less than those of 1880 indicates that the growth in product
per establishment was even greater than the above figures of value
would suggest. Prices of pig iron, for example, which averaged for
“No. 1 foundry” $28.48 per ton at Philadelphia in 1880, averaged but
$17.88 per ton in 1905; bar iron, rolled, $62.04 in 1880 and $38.49 in
1905; steel rails, $67.52 per ton in 1880 and $28.00 per ton in 1905;
and cut nails, $3.68 per keg of 100 pounds in 1880 and $2.00 per keg
in 1905. It will be seen from these figures that prices in 1905 were
little more than half as much as in 1880 and that the figures which
give an average of five times as much value of product per
establishment in 1905 as in 1880 therefore really indicate an average
product of probably ten times as much in quantity per establishment in
1905 as in 1880.

That the iron and steel industry is especially suited to production in
large establishments is indicated by the fact that the value of the
product of the steel works and rolling mills of the United States in
1905 averaged nearly four times as much per establishment as that of
those engaged in cotton manufacturing.

Even these figures of value of product per establishment at the
various dates and in the various industries do not, by any means,
measure the degree of concentration of the industry which has come in
recent years, because of the fact that under the most recent methods,
many of the establishments are managed in groups, many large mills or
factories which were considered by the census as separate
establishments being, in fact, combined under one management, as is
shown in another part of this work in which trusts and combinations
are discussed.

This tremendous growth of the iron and steel industry of the United      235
States--of the world, in fact, but more especially of the United
States, seems to justify a somewhat detailed historical and
descriptive account of iron and steel making, ancient and modern.

The manufacture of iron and steel is older than history. The material
is so widely distributed over the surface of the globe that man in
every part of the world and in nearly every stage of civilization long
since learned its value. There is evidence that it was known to the
Egyptians, the Assyrians, the Chaldeans, the Babylonians, the
Israelites, the Greeks, the Persians, the Romans. Caesar found the
Britons in possession of iron weapons which they had made, and the
Scandinavians of that period were also acquainted with its
manufacture. The people of Spain seem to have been early and
successful workers in iron and steel, if the wonderful stories about
the swords and other weapons of the early history of that country are
to be believed.

Iron, wherever found in the native condition, is so mixed with rock,
dirt and other foreign matter that it can only be utilized by heating
and hammering or rolling until the pure iron is separated from the
foreign substances. Originally the method seems to have been to heat
the ore in fires built on the ground until it became softened, and by
hammering it in this condition work out the foreign substances. Then
man found that by building the fire in a hole at the top of a hill and
leaving an opening at the bottom so that air could be forced into it,
the heat could be intensified. Then he learned to build up a wall of
mud and stones with an opening at the bottom, and by placing in it
alternate layers of charcoal and iron ore and forcing in air at the
bottom with rude bellows similar to those now used by blacksmiths, he
was able to heat the ore until the iron melted and ran together into a
mass which he worked into the steel with which the famous “Toledo
blades” and other weapons of that early day were made. Later, the        236
Germans, by building the walls higher and getting a greater mass of
the fuel and ore, were able to melt it so that it ran in liquid form
into little ditches at the bottom of the furnace. This furnace, which
came to be known as the “stuckofen” and “blow oven,” was the precursor
of the blast furnace. Meantime the English were developing the
process, and before the year 1700 were manufacturing considerable
quantities of iron in furnaces in which charcoal supplied heat
sufficient, when a blast of air was introduced, to melt the iron. This
method of manufacturing iron continued in the European countries
during all of the seventeenth century and until the early part of the
eighteenth century. Meantime the forests of England were being rapidly
destroyed in the sections which produced the iron ore. Prior to that
time it had not been found practicable to use coal in smelting the
ore, because the weight of the ore was so great that the fire was
extinguished as the coal grew soft from the heat. Then, in the early
part of the eighteenth century, somebody tried the experiment of
treating the coal in a manner similar to that by which wood is turned
into charcoal, and coke was produced and found available for smelting
the iron ore, the coke being substituted for charcoal. And so the
manufacture of iron in Europe went on, developing most rapidly in
England which had ore, timber from which to make charcoal, and coal
from which to make coke.

Meantime the making of iron began to develop in the United States. The
early colonists found ore in Virginia and New England. Small
quantities of pig iron were made in Virginia within a few years after
the settlement of Jamestown, and in the latter half of the century New
England began manufacturing iron from bog ore and charcoal made in the
forests which were then so plentiful. Most of these early iron
furnaces were “bloomaries,” merely heating the iron so that it formed
a lump of 100 to 200 pounds weight at the bottom of the furnace,         237
called a “bloom,” though there were some furnaces which heated the ore
until the iron ran into little channels at the bottom and became “pig
iron.” Before the year 1800 the State of Massachusetts alone had some
75 iron works, chiefly furnaces, making small quantities of iron. A
little later there was built in that state a furnace then declared to
be “the finest in America,” having two bellows twenty feet in length
and operated by a water wheel. During the next century the size of the
furnaces grew slowly and before the year 1800 there were furnaces
capable of making two to three tons of iron per day each.

The history of the early iron industry in Massachusetts is not
materially different from that of others of the colonies and early
settlements. Connecticut, New York, New Jersey, Pennsylvania,
Maryland, Delaware, Virginia, and the Carolinas all had numbers of
small furnaces capable of making from a half ton to two or three tons
of iron per day. They used charcoal altogether as the fuel, and it was
estimated in Virginia and Maryland that for one furnace of average
size four square miles of woodland and 100 slaves were required. The
fact that there were then no means of transportation other than pack
trains and that iron was too heavy to transport any considerable
distances, encouraged every neighborhood to sustain its furnace and
forge, and from these local factories of pig iron and iron bars the
local blacksmith and others who aided him in supplying local wants
drew their supplies. It is probable that the number of furnaces and
forges in the United States at the beginning of the nineteenth century
was much greater than at the end of the century, though the product of
1800 was but 40,000 tons of pig iron, against 14,000,000 tons in 1900
and 26,000,000 tons in 1907.

Meantime the English iron manufacturers had learned to smelt the ore
with coke instead of charcoal. The quantity of wood required to make
charcoal for smelting the ore had been so great that the forests of      238
England were being rapidly destroyed, and a series of experiments had
developed the fact that by heating coal in a pit or oven, in a manner
similar to that by which charcoal was produced from wood, the charred
coal, called coke, could be used as a substitute for charcoal in iron
furnaces. This substitute for charcoal did not come into use in the
United States until much later, however, for the reason that the
people of the eastern part of the United States were still anxious to
get the timber off their lands to use them for agricultural purposes,
and so were glad to turn it into charcoal and dispose of it to the
iron furnaces at a low cost. In time, however, the supply of charcoal
began to run low and the Americans began to cast about for a
substitute. After a series of experiments it became evident that the
anthracite coal of Pennsylvania could be used for iron smelting, as it
was hard enough to bear the weight of the iron ore piled upon it, and
also made a much more intense heat than did the bituminous coal which
grew soft as it was heated and was useless in the furnace. By 1840 the
making of pig iron with anthracite coal became an established industry
and by 1854 the quantity of iron made by the use of anthracite was as
great as that from charcoal, about 350,000 tons for each. But as the
supply of anthracite was limited to a comparatively small area, those
sections which had no anthracite and had run short of the timber
supply for making charcoal began to cast about for a substitute, and
hearing of the success of the English, with “charred coal,” or coke,
began its use in the United States; and by 1856 there were more than a
score of furnaces making pig iron by the use of coke. It was also
found that if the air which was forced into the furnace was heated
before entering a much more intense heat could be obtained and the use
of the hot blast was soon established.

With iron being made by the use of anthracite coal and coke made from
bituminous coal, the people began to realize that the destruction of     239
the forests to produce charcoal should not continue longer, and the
making of charcoal iron rapidly decreased. Meantime the railways began
to develop and were able to carry coal and coke to the places where
the ore could be easily obtained, or to which it could be easily
brought. Such a place was Pittsburg, for example. Iron ore was
produced in certain parts of Pennsylvania and on the northern shores
of the Great Lakes. Coal of a suitable quality for making excellent
coke was produced at Connellsville, in western Pennsylvania. Limestone
is required in great quantities in smelting iron ore, as the alkaline
quality of the limestone neutralizes the acid of the waste matter
forming a part of the iron ore and makes it melt at a lower
temperature, the melted limestone also carrying off the impurities in
the form of “slag,” and limestone was also plentiful near Pittsburg.
Some of these materials could be floated down the rivers or on the
Great Lakes, at least a part of the way from the place of production
to the place at which they were combined, and for the remainder of the
distance railways carried them over comparatively level or down-grade
routes at small cost.

So, with the advent of the railway and the steamship the methods of
iron making changed. The railway and the river or lake steamer could
carry the finished product at such low cost that it was no longer
necessary that each county should make its own iron, and more than
that, they could carry the ore and the limestone and the coal or coke
to any place convenient for assembling these necessary materials and
distributing the finished product.

This combination of the raw materials and the manufacture of the iron
in a few great establishments instead of many small ones encouraged
the use of machinery in manufacturing. Machines were wanted for
handling the ore, for handling the coal, for handling the limestone,
for handling the molten material which issued from the furnace, and
for turning it into the finished form, sometimes accomplishing this      240
without allowing the material to grow cold and harden at any point
between the time it trickles from the blast furnace and its completion
as a steel billet, a rail for the railway, or a roll of barbed wire
for the ranchero of South America.

The iron as it leaves the blast furnace is not in a condition in which
it can be used for manufacturing. It contains so much carbon and other
impurities that it is brittle and breaks easily. This condition is
similar to that of the “blooms,” or chunks of metal which came from
the early furnaces and which had to be refined by laborious processes
of reheating and hammering until the impurities were worked out.

Before the year 1800 it had occurred to somebody in England that if
flames could be forced across the surface of the molten iron and the
iron kept in a state of constant agitation the flames would burn out
the carbon. This was accomplished by making an open hearth to contain
the molten material and “puddling” the iron as the flames were forced
across the surface. Then a series of grooved rollers was devised,
between which pieces of partially cooled iron could be passed and
repassed, and this machine process worked out the “slag” and other
impurities which had been formerly worked out with hammers. This
puddling and rolling began in England before the year 1800 and “the
puddle and the grooved roll,” says J. Russell Smith, “closed the era
of the blacksmith’s supremacy and opened the era of machine
manufacture.” It was an adaptation of these methods and combination of
them with the concentration of the material at convenient centers that
proved the beginning of the machine-manufacturing methods in the
United States at a considerably later period than in England.

The most notable step in developing the use of iron, however, was that
by which it was quickly and cheaply turned into the reliable form
known as “steel.” As already explained, the iron when it leaves the      241
blast furnace contains such quantities of carbon, silicon, sulphur,
phosphorus, and other impurities that it is brittle and unreliable as
to tensile strength, flexibility, or the qualities which make it
available for edged tools. The puddling process already described
deprived it of the carbon and sulphur, but left it too soft for
immediate use. It required a small and fixed amount of carbon to give
it the qualities of steel and this was replaced by reheating it in
air-tight receptacles in combination with powdered charcoal. By this
process steel was made, but it was a slow and expensive process. About
the middle of the last century, William Kelly, of Pittsburg, conceived
the idea that by forcing air through the molten iron as it came from
the furnace the oxygen of the air would combine with the carbon of the
iron and burn out the carbon, leaving the remainder pure iron. A
series of experiments proved the accuracy of his theory, and he made
steel by this process. About the same time Sir Henry Bessemer, of
England, devised a similar process and it was put into practical
operation in England and later in the United States. By this process,
developed almost simultaneously in America and England by these two
men, the transformation of iron into steel in a brief space of time
and at a small cost was established, and the manufacture of steel
developed with wonderful rapidity. The quantity of steel manufactured
in the United States in 1870 was but 69,000 tons; in 1880, 1,247,000
tons; in 1890, 4,277,000 tons; in 1900, 10,188,000 tons; and in 1907,
23,363,000 tons. With this great development in manufacturing came a
great development in the use of machinery for handling not only the
finished steel itself but the pig iron from which it was manufactured,
the iron ore from which it was produced and the coal and limestone
used in its production. With this growing use of machinery in the
manufacture and the great increase in the quantity used in the
industries of the world have come the enlargement of the establishments  242
and the increase in the capital invested described at the opening of
this section.

This process of burning out the carbon and other impurities from the
molten iron by forcing air and thus combining the oxygen of the air
with the carbon of the iron, although it seems to have been devised
almost simultaneously by Kelly in the United States and Bessemer in
England, is usually denominated the “Bessemer process,” and while
Kelly obtained certain patents and a half million dollars for his
invention, Bessemer also obtained other patents and it is said ten
millions of dollars for his.

The process of transforming iron into steel by the Bessemer process is
described by Herbert N. Casson in “The Romance of Steel,” as follows:

     “A converter is a huge iron pot twice as high as a man. It is
     swung on an axle, so that it can be tilted up and down. Although
     it weighs as much as a battalion of five hundred men, it can be
     handled by a boy. About thirty thousand pounds of molten iron are
     poured into it; and then, from two hundred little holes in the
     bottom, a strong blast of air is turned on, rushing like a
     tornado through the metal. Millions of red and yellow sparks fly
     a hundred feet into the air.

     “The converter roars like a volcano in eruption. It is the
     fiercest and most strenuous of all the inventions of man. The
     impurities in the iron--the phosphorus, sulphur, silicon and
     carbon--are being hurled out of the metal in this paroxysm of
     fury. The sparks change from red to yellow; then suddenly they
     become white.

     “‘All right!’ shouts the grimy workman in charge.

     “The great pot is tilted sideways, gasping and coughing like a
     monster in pain. A workman feeds it with several hundred pounds
     of a carbon mixture, to restore a necessary element that has been
     blown out. Then it is tilted still farther; its lake of white
     fire is poured into a swinging ladle and slopped from the ladle
     into a train of huge clay pots, pushed into place by a little       243
     locomotive. The converter then swings up and receives another
     fifteen tons of molten metal, the whole process having taken only
     a quarter of an hour…. Today there are more than a hundred
     Bessemer converters in the United States, breathing iron into
     steel at the rate of eighteen billion pounds a year. It is well
     worth a visit to Pittsburg to see one of these tamed Etnas in
     full blast. Nothing else in the world is like it.”

Discussing the importance of the discovery of the method by which
common iron is thus cheaply and quickly transformed into steel, J.
Russell Smith, in his “The Story of Iron and Steel,” says:

     “Archaeologists and ethnologists agree that before the dawn of
     datable history a milestone of progress was marked when our
     ancestors had, at enormous cost, won a pound or so of iron per
     capita and begun the iron age. The keen analyst of the present,
     seeing our railways, our ships, our cannon, our sky scrapers, has
     erected another milestone, and this he calls the Age of Steel.

     “The close of the Civil War found the iron-making world in full
     possession of the Bessemer process of converting that metal into
     steel…. The variety of uses for this metal is absolutely beyond
     enumeration…. Within the space of a generation we have
     increased our iron consumption fourfold…. This is the age of
     power. Man has changed his economic and social conditions in that
     he has harnessed the forces of nature to make them do his work.
     Our main dependence, thus far, has been upon fuel, chiefly coal.
     The power in the form of the steam generated in the boiler is
     kept imprisoned in iron pipes until released in the steel
     cylinder, where a steel piston drives forward a steel rod, which
     communicates the force to a steel fly wheel, turning on a steel
     shaft, and sending the power away to various places where man
     wishes to use it.

     “Portable engines, entirely made of iron and steel, are drawn
     about the country, or move themselves and carry loads…. The       244
     dynamo rests upon a heavy iron frame and swings its iron arms and
     iron magnets through space, whence it mysteriously winds out
     power…. The second of the great iron uses is to be found in the
     machines driven by the power that man has learned to harness….
     Transport is the third member of the mechanical trinity which
     goes with power and machines to make the present epoch. For a
     long time the railways consumed half of man’s total iron product.
     The street railway of the city is also a heavy consumer. The
     elevated railway is nothing but a bridge spanning the city in all
     directions, and the subway, its latest rival, is but a steel
     tunnel burrowing beneath the ground. In the country, the erection
     of the trolley lines is now giving us a second set of railways,
     and even the poles are coming to be made of iron. Half a century
     ago iron ships began to be common, a quarter of a century ago the
     ship-builder turned to steel, and now there is almost nothing
     else afloat upon the high seas…. Our structures are becoming
     more and more dependent upon the products of the blast furnace
     and the steel mills. Our fathers contented themselves with brick
     and stone and wood. The limitation of wooden beams and the
     cheapness of Bessemer steel caused that material to be used in
     heavy structures in a limited way, and as wood increased in value
     and knowledge of the use of steel increased, we now see the
     modern sky scraper in which wood is eliminated and steel the
     absolute essential….

     “It is therefore natural to expect that the blast furnace should
     be among the most thoroughly organized and most highly developed
     pieces of mechanism yet devised. It is certainly the most fearful
     of all man’s creations, and considering the character of the
     process which goes on within it and its unapproachable heat, it
     is under a wonderful degree of control. At the present time, the
     blast furnaces are a hundred feet high, consist of a great iron
     stack lined with some nonfusible material, and when in operation
     are filled from top to bottom with roaring fire. Into their         245
     fiery throats are fed alternately small carloads of coke and iron
     and limestone, and from the bottom there flows away at intervals
     two molten streams--one the precious iron upon which our
     civilization rests; the other the useless slag, to be got rid of
     in the cheapest possible way…. The burning of this modern
     furnace takes place under a forced draught of air blast from
     eight to twenty pounds per square inch. This pressure serves to
     drive the air upward through the hundred-foot mass which burns
     within the furnace. Otherwise, the fire would smother. The gas
     which results from the imperfect combustion within the furnace is
     a most valuable by-product and serves a valuable purpose in
     promoting the furnace operation, and sometimes leaves a product
     to sell. A part of the gas is taken to the boilers, where it
     generates power for the blowing engines. Another part of it is
     used in the so-called stoves to heat the air blast on its way to
     the furnaces.”

The iron obtained by this Bessemer process, by which the carbon and
other impurities are burned out, is, when it leaves the converter and
cools, merely soft, malleable iron, and to transform it into steel
there must be re-inserted a small but fixed and definitely determined
amount of carbon. “Steel,” says J. Russell Smith, “is simply a mixture
of iron with a small amount of carbon, very intimately and evenly
associated in its mass. The carbon content of steel varies from .40
per cent to 1.50 per cent. Steel making is, therefore, a process of
mixing carbon and iron in proper proportions. Inasmuch as it cannot be
made satisfactorily in a puddling furnace, by reducing the carbon to a
proper point and then stopping the furnace, it has been found
necessary to burn the carbon all out, making wrought iron, and then
working it back to steel by recarbonizing under such conditions that
the carbon can be controlled. The iron, after having all of its carbon
and other impurities burned out by the Bessemer process, is raised to
steel by having thrown into it spiegel iron or ferro manganese. Both     246
are rich in manganese and carbon. As the iron content of the Bessemer
converter is known and the content of the spiegel iron is known, the
carbon in the steel is under perfect control. The workman watching the
flames cuts off the blast at the moment when the changing color tells
him the carbon is gone. The carbon of the added material makes steel,
and the manganese gives to the steel a toughness needed to make it
stand the strain of being rolled into desired shapes while red-hot,
without breaking….

     “The steel for the greater industries is shaped in a rolling
     mill. It comes from the Bessemer or open-hearth converter molded
     into a great billet like a piece of a large wooden beam, and this
     billet is carried red-hot to a so-called soaking pit, where the
     tongues of a flame from a gas-fire keep it heated until it is
     ready to start on its journey through the mills. This soaking pit
     is the starting point of many roads through the mill. It goes off
     in one direction, and successive rollers squeeze it, crush it,
     and lengthen it into steel rails, in which form it emerges a
     thousand feet away. Other sets of rolls make the billet into flat
     beams for bridges or elevated railways. A third set of rolls,
     also starting near the soaking pits, send the product out of the
     distant door of the steel mill in the form of great flat plates
     to make the boiler of a locomotive, or a marine engine, or the
     sides of a steamship, and yet other sets of rollers will make
     square rods which finally pass under heavy shears and are chopped
     into pieces called billets or blooms. These pieces of steel are
     the raw material for other mills which may make wire, nails, or
     manufacture steel of any other of a thousand forms. Some billets
     are as big as cord wood, some no larger than lead pencils--thus
     it passes out into the manifold world of manufacture.”

VII. THE TEXTILE INDUSTRY.                                               247

Cotton manufacturing is an important illustration of the growth in the
textile industries of the world during the period in which the use of
machinery has multiplied the producing power of man in the industrial
lines. In all lines of textile manufacture the growth has been rapid,
but especially so in cotton, which has made greater gains in the work
of supplying man with the necessary requirements of life, in clothing
for his body and the comforts of life, than other branches of the
textile industries and than many other branches of manufacture.
Mulhall estimates the consumption of cotton by all nations at 303
million pounds in 1800 and 5,900 million pounds in 1896; wool, 460
million pounds in 1800 and 2,400 million pounds in 1896; flax, 600
million pounds in 1800 and 200 million pounds in 1896; silk, 30
million pounds in 1800 and 50 million pounds in 1897. It will be seen
from these estimates that the growth in consumption of cotton has been
far in excess of that of any other of the important fibers. Cotton
consumption in 1896 was, according to these figures, 5,900 million
pounds, against 303 million in 1800, or practically 20 times as much
in 1896 as in 1800, while wool consumption is set down at 2,400
million pounds in 1896, against 460 million in 1800, or only about 5
times as much in 1896 as in 1800; while in the other materials used in
textile manufactures the growth has been much less than that of

Before entering upon a discussion of the growth in cotton
manufacturing and the causes thereof, it is proper to say that the
value of all textile manufactures in the principal countries of Europe
has, according to Mulhall, grown from £96,000,000 in 1800 to
£660,000,000 in 1896, and in the United States, from £3,000,000 in
1800 to £188,000,000 in 1896, the value of textile manufactures
produced in Europe having thus increased about sixfold in the period
in question, and in the United States about sixtyfold. It is apparent
from these figures that the growth in the manufacture of cotton          248
during the last century has far outstripped that of any other of the
textiles. It is also quite apparent that the capital invested in
cotton manufacturing is much greater than that in other textiles. The
United States Census reports the capital invested in the manufacture
of cotton goods in 1880 at 320 million dollars; in 1905, 613 million;
the value of the products of these manufacturing establishments in
1880, 211 million dollars, and in 1905, 450 million dollars. Even
these figures of increased production--from 211 million dollars’ value
in 1880 to 450 million in 1905--do not fully indicate the increase in
quantity of products, since prices in 1905 were materially less than
those of 1880. The average price of standard sheetings in the New York
markets was quoted at 8½ cents per yard in 1880 and 7 cents per
yard in 1905; of standard drillings, 8½ cents per yard in 1880 and
7 cents per yard in 1905; of New York mills bleached shirtings, 12¾
cents per yard in 1880 and 9 cents per yard in 1905; of standard
prints, 7.4 cents per yard in 1880 and 4¾ cents per yard in 1905;
and of 64 by 64 printing cloths, 4½ cents per yard in 1880 and 3.6
cents per yard 1905. This indicates that the increased valuation in
cotton products from 211 million dollars in 1880 to 450 million
dollars in 1905, fails to fully reflect the increased quantity
produced in 1905, and suggests that the quantity produced in 1905 was
probably approximately three times as great as in 1880.

The disposition to increase production through enlargements of
existing factories rather than by the establishment of new ones, or
the combination of existing factories as an offset to the
establishment of new ones, is indicated by the fact that the total
number of establishments, which was reported in 1880 at 1,005, was, in
1905, but 1,154, an increase of about 12 per cent in the number of
establishments, while capital was increasing nearly 200 per cent, the
value of product more than 100 per cent, and quantity of product         249
probably nearly 200 per cent.

Great Britain is in proportion to population the greatest
cotton-manufacturing country of the world. She was earliest in the
field as a manufacturer, developing that industry while the countries
of continental Europe were engaged in wars and while the United
States, now the leading producer of cotton, was developing her
agricultural industries and had scarcely as yet entered upon the
development of her manufacturing possibilities. The United States, by
far the largest producer of raw cotton, ranks second as a manufacturer
of cotton goods.

Accurate estimates of the relative standing of the various countries
in the manufacture of cotton are difficult, almost impossible,
especially in view of the fact that no country other than the United
States takes a periodic census of its industries. There are, however,
three ways by which the production of cotton manufactures in the
various countries can be approximately measured: first, by the number
of spindles in cotton mills; second, by the quantity of cotton used;
and, third, a method which has been suggested in some quarters, a
measurement of the quantity or value of cotton goods exported. This,
however, would not give at all an accurate picture of the quantity
produced, since the population of the cotton-manufacturing countries
varies so greatly and, what is more important, the habits of life, the
climatic conditions, and therefore the quantities of cotton cloths and
cotton manufactures of various sorts used by their respective
populations renders the third method of estimate of little value. Even
the first and second methods mentioned--the determination of the
number of spindles and the determination of the quantity of cotton
used--do not, by any means, give an accurate picture of the relative
quantity or value of cotton goods manufactured. In the United States,
where cotton is plentiful, much larger quantities of cotton are used
per spindle than in the European countries, and greater quantities       250
of cotton are also used for each 100 yards of cotton manufactured than
is the case in other countries. This is due, in part, to the fact that
the manufacturers of the United States are producing cotton goods for
their home population, living in a temperate zone climate and
requiring, therefore, heavy cottons; while many of the factories of
Europe are manufacturing for exportation to tropical countries, where
cottons of very light weight are required. As a consequence, the
European manufacturers use a less quantity of cotton per spindle and a
less quantity of cotton per square yard of product than is the case
with the manufacturers of the United States. The number of spindles in
cotton mills in Great Britain is estimated at 44½ million in the
season 1896-7 and 52 million in 1906-7, an increase of 16¾ per
cent; in continental Europe, 30⅓ million in 1896-7 and 35¾
million in 1906-7, an increase of 18 per cent; in the United States,
17¼ million in 1896-7 and 25¾ million in 1906-7, an increase of
50 per cent; and in India, 4 million in 1896-7, and 5⅓ million in
1906-7, an increase of 33 per cent. The annual consumption of cotton
in cotton mills is estimated, in Great Britain, 3¼ million bales of
500 pounds net in 1896-7, and 3-9/10 million bales in 1906-7, an
increase of 21 per cent; in continental Europe, 4⅓ million bales in
1896-7, and 5½ million bales in 1906-7, an increase of 44 per cent;
in the United States, 2¾ million bales in 1896-7, and 4-5/6 million
bales in 1906-7, an increase of 77 per cent; and in India, 1 million
bales in 1896-7, and 1½ million bales in 1906-7, an increase of 50
per cent.

It will be noted that although the number of spindles in the cotton
mills in the United States was but 25¾ million, against 52 million
in Great Britain, or about half as many in the United States as in
Great Britain, the quantity of cotton used in the United States was
greater than in Great Britain, being 4,822,000 bales, against            251
3,915,000 bales in Great Britain.

The textile industry of the United States, according to census
reports, represented in 1900 investments amounting to 1,043 million
dollars, employed 661,000 wage-earners, paid 209 million dollars per
annum of wages, used 521 million dollars’ worth of materials, and
turned out products valued at 931 million dollars. The number of
establishments was 4,312. Cotton manufactures formed a larger share of
these enormous totals, both as to investment, wages paid, and value of
products, than did any other of the manufacturing industries included
under the general term of textiles. The value of cotton manufactures
in 1900 was 339 million dollars, while that of wool manufactures was
297 million; silk manufactures, 107 million; hosiery; and knit goods,
95 million; and flax, hemp and jute manufactures, 48 million. Adding
to this 45 million for dyeing and finishing of textiles, the value of
the combined textiles in 1900 is set down at $931,494,566.

“Textiles,” or “textile fabrics,” may be properly described as stuffs
made by weaving together of threads of any sort to produce a material
with a nearly solid surface. “A fishing net,” says the Encyclopedia
Americana, “is not a textile, because the cords which compose it are
not woven together but merely cross one another at equally distant
intervals and are strongly knotted at those points. But
mosquito-netting is a textile, although very open, because the threads
are merely held by their own friction.” Textiles in the usual sense
are made of the twisted fibers spun into thread of flax or linen,
cotton, hemp, jute, silk or wool, woven together by the use of a loom.
“The general nature of a loom,” says the above quoted authority, “is
that the threads of the warp are divided into two sets, one of which
is thrown upward, while the other is thrown down, and at the same
moment a shuttle carrying a thread of the woof is driven through
between the two sets of warp threads. The next movement of the loom      252
reverses the two sets of warp threads, throwing the upper one down and
the lower one up, compressing and drawing tight the woof thread into
the loops which show on the surface of the stuff and go to form the
surface, and the shuttle is driven through again in the opposite
direction. The constant repetition of this forward and backward
movement of the shuttle gives a strip of woven fabric which constantly
grows: and as each movement of the shuttle is made, an appliance
drives the last thread of the woof back against the others, so that
this growing strip of woven stuff is kept at a uniform state of
firmness and solidity. It is in this way that the simplest fabrics of
linens and cottons are made. If it be desired to produce a somewhat
more elaborate weave, this is done by raising two threads of the warp
and dropping one; or by raising three threads of the warp and dropping
one, and so on. In this way the threads of the woof are seen lying in
loops, or what seems to be stitches longer than those of the simplest
weave…. If we take a step further and use three or four warp
threads, say, of red, while the rest remain white, and do the same
thing with the woof threads, we produce stripes and where these
stripes cross one another there will be a little square of the solid
color of the three or four threads, while the stripes elsewhere remain
of the half-way tint…. In such weaving of patterns it is here
assumed that the threads are dyed before the weaving is begun. The
matter of printing colors upon calico, thin silk, or the like, is
entirely apart from consideration of the textile fabric. Printing is
done from blocks (or rolls) with color almost exactly as if the
material receiving the pattern were paper instead of a woven stuff.”

The above description of the method of producing textiles is
sufficiently elaborate for a study of this character. The methods of
producing brocades, satins, velvets and other elaborately figured
textiles of any sort may be studied more in detail by reference to       253
any standard encyclopedia or work of this character.

The fact that cotton is, as has been already shown, the most important
of the textile industries, utilizing larger sums of capital, turning
out greater values of product, distributing its products over a wider
area and to a larger number of people than any other of the textiles,
justifies a somewhat more elaborate discussion of this industry and
its development during the period in which the manufacturing
industries of the world have been transferred from hand labor to that
of machines, and in which capital has come to form so important a
factor in production.

The manufacture of textiles from cotton is, like that of iron and
steel, “older than written history.” The art of cotton spinning and
weaving is believed to have been practised in India, still a great
cotton-producing section of the world, from 20 to 30 centuries ago.
From India the production of cotton and manufacture of cotton goods
moved westward into Persia, thence to the area immediately east of the
Mediterranean, then to Egypt, and even southern Europe. The Moors are
said to have introduced the cultivation and manufacture of cotton into
Spain during their control of that section of Europe, but the
cotton-manufacturing industry which existed at Seville, Cordova and
Grenada fell into decay after their expulsion from Spain and was only
resumed after the British, followed by the French and Germans, had
developed the art of manufacturing cotton goods by machine methods.
While the manufacture of yarn or threads from cotton declined in
Spain, it later made its appearance in Italy in the fourteenth century
and in Germany, Prussia, the Netherlands and England in the sixteenth
century, and France in the seventeenth century, but it was not thought
practicable to manufacture cloth exclusively from cotton until toward
the close of the eighteenth century, the cotton yarn being used only
for woof, while the warp used in conjunction therewith was either        254
wool, flax, or silk. The so-called “Manchester cottons” of earlier
date were composed in part of cotton and in part of wool or linen. The
first acquaintance of western Europe with cloths made entirely from
cotton seems to have been in those brought from Calcutta, India (and
therefore called calicoes); but the calicoes made in Europe at that
time and for more than a century after were made, in part at least, of
wool or linen.

Prior to the latter part of the eighteenth century all cloths, whether
of wool, cotton, silk, or flax, were manufactured by hand labor. The
natural fabrics were, as described elsewhere in this work, spun into
threads by the use of the simple spinning wheel, chiefly by the labor
of women who were termed “Spinsters.” The threads thus obtained were
made into cloth by the use of a loom upon the general principles above
described, but of extremely simple design and operated solely by human
power. Up to this time the making of threads or yarn and their
transformation into cloth by the weavers, chiefly men, kept pace
fairly with one another, the supply of thread or yarn being about
equal to the demand by the weavers. “One good weaver,” says Dr. Ure,
“could keep three active women at work spinning weft. In operating the
loom, the shuttle which carried the thread back and forth between the
raised and lowered sections of the warp was thrown back and forth with
the hand, which required a constant extension of the hands to each
side of the warp. In 1738 John Kay, an Englishman, devised a system by
which the shuttle was thrown back and forth by means of strings
attached at opposite ends of the lathe in which the shuttles ran,
enabling a weaver to double the amount of cloth which he could
manufacture within a given space of time, thus making the demand for
yarn in excess of the supply.” “It was no uncommon thing,” says a
writer on that subject, “for a weaver to walk three or four miles in a
morning, and call on four or five spinners, before he could collect      255
weft to serve him for the remainder of the day.”

This stimulated active minds in those industries to devise some method
for increasing the facilities for turning the wool or cotton or flax
into the needed yarn, and James Hargreaves, a weaver, devised about
1764 a machine which he called the “spinning jenny,” in which were set
eight spindles in a frame put in motion by a single wheel, and by
moving backward and forward a moveable carriage containing a
horizontal clasp to hold the material being twisted into threads, the
quantity of yarn which one person could produce in a given length of
time was greatly increased. Subsequently the number of spindles in the
frame was increased to 20 or 30, and in time to more than 1,000.
Hargreaves kept this invention secret for a time, using it merely to
manufacture yarn for his own weaving, but it finally became known and
the spinners of the neighborhood, believing that it would throw many
out of employment, broke into his establishment and destroyed the
machine. He, however, retired to Nottingham, erected a small mill and
took out a patent for the “spinning jenny,” and in time it became to
be an established method of manufacturing yarn and in a more elaborate
form is the principal factor in the manufacture of cotton yarns in the
great factories today, the number of spindles which a modern machine
of this character now uses being often in excess of 1,000, instead of
the 8 utilized by the original spinning jenny.

Meantime another method was being utilized and brought into operation,
by which a stronger yarn could be produced. It seems to have been
originally devised by John Wyatt, of Birmingham, England, and operated
upon a system entirely different from that of the jenny. “The method
adopted,” says Ellison, in his “Cotton Trade of Great Britain,” “was
to pass the cotton through pairs of small grooved rollers placed
horizontally, the upper and lower roller of each pair revolving in       256
contact, the sliver of cotton, after passing through these rollers,
being caught by another pair of rollers placed immediately in front
which revolve with three, four, or five times the velocity of the
first pair and therefore draw out the sliver of cotton into three,
four, or five times its former length and degree of fineness. After
passing through this second pair of rollers it was attached to a
spindle, the rapid revolutions of which twisted it into a thread and
at the same time wound it upon a bobbin.” This method, devised by
Wyatt in 1730 and patented in 1738, was perfected by Arkwright 30
years later and was known as the “spinning frame,” but since it was
operated by water power, received the name of the “water frame.” By
the use of this process the cotton yarn was made of sufficient
strength to permit its use for the warp as well as for the woof, and
thus, for the first time, the making of cloth entirely from cotton
became practicable.

“With the invention of the jenny and water frame,” says Ellison,
“commenced a new era in the history of the cotton trade; in fact, so
far as Europe is concerned, it may be said that the history of the
cotton manufacture, as a separate and distinct industry, began with
the invention of these two machines; for until the introduction of
Arkwright’s contrivance for spinning by rollers, it was impossible to
produce a piece of cloth composed wholly of cotton.”

Still another important device for use in the manufacture of cotton
cloths was the “carding machine.” Originally the raw cotton was
prepared for spinning by the use of brushes made of short pieces of
wire instead of bristles, the wire being stuck into a sheet of leather
at a certain angle, the cotton being spread upon one piece and combed
with another until the fibers were laid straight, when it was ready
for the use of the spinner. In 1748 a carding machine was devised to
supersede the hand process, but it was not until toward the close of     257
the century that carding machines took such form as to become an
important factor in the cotton-manufacturing industry. Even in the
closing quarter of the eighteenth century the prejudice on the part of
hand laborers against machines was so great that for several miles
around Blackwell every spinning jenny containing more than 20 spindles
was destroyed, while a mill erected by Arkwright near Chorley was
destroyed by a mob. A little later another machine was invented by
Samuel Crompton, which he designated the “spinning mule,” which
combined the drawing rollers of Arkwright and the jenny of Hargreaves;
and it was looked upon as an improvement upon the machines of
Arkwright and Hargreaves. These devices--the spinning jenny of
Hargreaves, the water frame of Arkwright, and the combination of those
principles in the spinning mule of Crompton--revolutionized the
cotton-manufacturing industry and the principles thus embodied are
still the chief factors in the great cotton-manufacturing
establishments of the world today.

Another device which added greatly to the manufacturing possibilities
with reference to cotton was the invention by Eli Whitney in America
of the cotton gin, a machine for stripping the cotton fiber from the
seeds and technically called the “gin,” probably a contraction of the
word engine. It performs its work through the operation of a series of
revolving saws which come in contact with the cotton through openings
sufficiently narrow to prevent the passing of the seeds but permitting
the fibers torn therefrom to pass downward into a receptacle, while
the seeds, freed from the fiber, pass through another opening and are
subsequently utilized in the manufacture of oil; though this
utilization of the seeds did not develop until long after the cotton
gin had become an important factor in the cotton-manufacturing
industries of the world.

Through the application of these machines--the spinning jenny, the       258
water frame, the spinning mule, and the cotton gin, driven by power
generated by water or steam, and in more recent years applied, in some
cases in the form of electricity--the cotton manufacturing of the
world has been transferred from hand work to that of machines, and the
world’s consumption of cotton today is many times as much as that of
the period in which these machines were being perfected, while the
quantity of cotton goods produced from a given amount of cotton is,
through the refinement of machine processes, much greater than
formerly. The quantity of cotton cloth produced at the present time
through the development of machinery and the encouragement which its
use has given to production of cotton and consumption of cotton goods
multiplies many times that of the period in which the transformation
from hand to machine production began, and has made cotton the leading
textile material of the world.

True, other branches of the textile industry have also benefited by
the application of machine methods of spinning and weaving similar to
those above described; but no other important textile has seen such a
remarkable growth under the stimulus of machine production as has
cotton. Even as late as 1830 the cotton consumed by those sections of
the world for which statistics are available only amounted to about
500 million pounds, against 8,500 million in 1907, while, as already
indicated, a pound of cotton under present conditions of manufacture
produces probably twice as much of a given line of manufactures as a
century ago. When it is remembered that the population of the world
has only doubled since 1830 and the consumption of cotton is 17 times
as great as at that time, the relative growth of cotton consumption to
population will be seen to have been very great.

The above figures relating to consumption of cotton and to comparison
of present consumption with that of a century ago relate chiefly to      259
Europe and the United States. Statistics of consumption are available,
in addition to Europe and the United States, for India and Japan, and
a few communities in which the consumption is small, such as Canada,
Mexico and Australia. In addition to this, however, it must be
remembered that large quantities of cotton goods are still being
manufactured in certain parts of the world by the crude processes
which prevailed in Europe and the United States before the adoption of
the machine methods above described. In China, for example, large
quantities of cotton are turned into yarn by hand spinning, and into
cloth by hand weaving, and there is reason to believe that the
quantity of cotton cloth manufactured in China by hand weaving, partly
from yarns spun by hand and partly from yarns manufactured by machine
methods, is greater than that manufactured by modern machinery. In
many of the oriental countries, in large portions of South America, in
large sections of Africa, and in the islands of the Pacific, millions,
hundreds of millions of people are still clothed with textiles--cotton,
wool, silk, or fibers--manufactured by hand processes or by simple
machines operated by man power. In Europe and the United States,
however, the system has been completely transformed, and machinery and
money, in combination with a steadily decreasing percentage of human
labor, now manufacture the cotton goods worn not only by their own
people, but by large sections of the inhabitants of the oriental
countries and the continents of Africa, South America and Australia.

The relative growth in the manufacture of cotton in recent years by
the principal countries in which this industry has developed is
indicated by the fact that the quantity of cotton consumed in Great
Britain in 1887 was 2,955,000 bales and in 1907, 3,900,000 bales; that
of the continent of Europe, in 1887, 2,912,000 bales, in 1907,
5,460,000 bales; in the United States, in 1887, 1,939,000 bales, in      260
1907, 4,950,000 bales; in India, in 1887, 569,000 bales, in 1907,
1,600,000 bales; in Japan, in 1892, the first year for which
statistics are available, 99,000 bales, and in 1907, 925,000 bales;
and in all other countries for which figures are available, in 1891,
106,000 bales, and in 1907, 171,000 bales.

With this elaborate use of machinery and increase of cotton
production, manufacture and consumption, has come great reduction in
cost of production and in prices. “In the last half of the nineteenth
century,” says S. N. D. North, late Director of the Census, in the
Encyclopedia Americana, “there was an increase in value of textile
products in the United States of about six times and not less than ten
times if it were possible to measure this product by quantity instead
of by value. Even the largest figures convey an inadequate idea of the
relative importance of our textile mills in the industrial economy of
the nation, for those mills supply the materials for a great group of
subsidiary factory industries, such as the wholesale clothing
manufacture, etc. When we aggregate these, and add to them the value
of the products of the linen, jute, hemp, and bagging mills of the
country, we find that the product of our textile mills is larger in
value than that of any single line of related industries, iron and
steel excepted. The decrease in the cost of goods during the last half
of the century has been one of the most striking phases of the
development. This decrease is due--in some measure, of course, to the
decreased price of the raw materials, but in even larger measure to
the remarkable advance in methods of manufacture--to the new and more
perfect machinery employed, in the invention of which American
mechanical genius has contributed certainly as much as that of any
other people, and perhaps more. All the fundamental inventions in
spinning-machinery were of English origin. The French and Germans have
also done much in the invention of labor-saving textile machinery,
but the American record may be shown to have surpassed them all.         261
The wool-carding machinery of all countries owes its chief improvement
over the machines of a century ago to the invention of John Goulding,
of Worcester, Mass. The modern cotton spindle, making 10,000
revolutions a minute, is an evolution of our own mechanics, and the
saving effected by new forms of spindles invented and adopted in the
United States since 1870, when 5,000 revolutions per minute was the
average speed, has been more than equal to the capacity of all the
warp-spinning machinery in use in this country in that year. In
structural equipment, the modern American mill,” continues Mr. North,
“is, in some respects, superior to the average foreign mill. It is not
so massive a structure, nor so solidly built, brick being used here
while the English usually use stone; and in the lightness and airiness
of its rooms, in economy of arrangement and general completeness of
equipment and care for the comfort and convenience of the operatives,
it is usually superior. While many parts of the machinery required for
the equipment of our textile mills are still necessarily imported from
England because not made, or less perfectly made, in the United
States, our machine manufacturers have been advancing as rapidly in
recent years as the textile mills themselves, and the time cannot now
be far distant when every new mill built in America will be equipped
throughout with American-made machinery. The American textile mills
now supply practically every variety of fabric made in the world, with
the exception of linens and the very finest grades of other fabrics.”

The Census of 1905 shows the value of cotton manufactures of the
United States in 1850, 62 million dollars; in 1860, 115 million; in
1880, 192 million; in 1900, 331 million; and in 1905, 442 million; the
capital invested in 1850, 75 million dollars; and in 1905, 605
million; the wages paid in 1860 (no figures for 1850), 24 million
dollars; in 1905, 94 million; the number of wage-earners in 1850,        262
122,000; in 1905, 310,000; the number of spindles, in 1860, 5¼
million; in 1905, 23 million; the number of looms, in 1860, 126,313;
in 1905, 540,910; the cotton consumed, in 1860, 423 million pounds; in
1905, 1,873 million pounds.

A marked characteristic of the cotton industry of the United States in
recent years has been the gradual movement of the industry away from
New England, where it was originally established, toward the
cotton-producing section, the South. The number of cotton-manufacturing
establishments in the New England States fell from 439 in 1880 to 308
in 1905, while those in the South increased from 161 to 550 in the
same time. The number of spindles as shown by the Bureau of Statistics
of the Department of Commerce and Labor, in the Northern States as a
whole, increased from 10 million in 1880 to 17⅓ million in 1908, while
those in the Southern States increased from a little over a half
million in 1880 to over 10 million in 1908. In the principal
cotton-manufacturing countries of the world the increase in spindles
during the last decade has been as follows: Great Britain, from 44½
million in 1897 to 52 million in 1907; continental Europe, from 30⅓
million in 1897 to 36 million in 1907; the United States, from 17
million to 25¾ million; India, from 4 million to 5⅓ million; and
Japan, from a half million to a little over 1½ million. The 36 million
cotton spindles in continental Europe are, according to Ellison,
distributed as follows: Germany, 9 million; Russia and Poland, 7
million; France, 6 million; Austria-Hungary, 3¾ million; Italy, 3
million; Spain, 2¾ million; Switzerland, 1½ million; Belgium, 1⅓
million, and the remainder distributed among Switzerland, Holland,
Portugal and Greece.


The fact that this story of the world’s manufactures is intended
primarily for the information of people of the United States, coupled
with the further fact that the United States is itself the world’s
largest producer of manufactures, seems to justify a somewhat detailed
study of the manufactures of this country, the growth of the
manufacturing industry, and especially the part which they bear in our
foreign commerce. Originally the United States, like all new
countries, devoted its attention chiefly to agriculture. The products
of the soil are man’s first requirements. He must have food. When he
obtains food his next thought is of clothing, but that he can obtain
temporarily from the skins of the beasts whose bodies supply him with
food. So the production of manufactures was of secondary importance in
the early development of that part of the North American Continent
which is now known as the United States. The eastern part of the area
being densely wooded, the work of the first and second and third
generations of our forefathers was to fell the trees and prepare the
ground for agriculture for the production of the wheat and corn and
other foodstuffs which they must have to sustain life. If there came
as a result a given quantity of potash and pearlash and leather and
other manufactures of this crude type which could be utilized by the
people or exported to foreign countries they accepted this thankfully,
but made no special effort to develop the manufacturing industry.
During the colonial days little effort was made in the development of
manufacturing, except to supply the household requirements. The
housewife spun and wove the wool and flax into threads and cloth, and
a large part of the population was clothed in “linsey-woolsey,”
produced in this manner. Even during the period of the Confederation,
which immediately followed the Revolutionary War, conditions in the      264
manufacturing industries did not materially change and nobody seems to
have thought them of sufficient importance to justify any governmental
attention or action. Shortly after the adoption of the Constitution,
however, Alexander Hamilton, the first Secretary of the Treasury,
submitted to the Congress of the United States, in 1791, a “Report on
Manufactures,” which pictured manufacturing conditions in this country
at that day. He enumerated some 17 industries which had “grown up and
flourished with a rapidity which surprises, affording an assurance of
success in future attempts.” These 17 industries were as follows:

1.  Skins.--Tanned and tawed leather, dressed skins, shoes, boots and
slippers, harness and saddlery of all kinds, portmanteaus and trunks,
leather breeches, gloves, muffs and tippets, parchment and glue.

2.  Iron.--Bar and sheet iron, steel, nail rods and nails, implements
of husbandry, stoves, pots and other household utensils, the steel and
iron work of carriages, and for shipbuilding, anchors, scale beams and
weights, and various tools of artificers, arms of different kinds;
though the manufacture of these last has diminished for want of a

3.  Wood.--Ships, cabinet wares and turnery, wool and cotton cards and
other machinery for manufacture and husbandry, mathematical
instruments, coopers’ wares of every kind.

4.  Flax and hemp.--Cables, sail cloth, cordage, twine and pack

5.  Bricks and coarse tiles and potters’ wares.

6.  Ardent spirits and malt liquors.

7.  Writing and printing paper, sheathing and wrapping paper,
pasteboard, fullers’ or press papers, paper hangings.

8. Hats of fur and wool and mixture of both, women’s stuff and silk      265

9. Refined sugars.

10. Oils of animals and seeds, soap, spermaceti and tallow candles.

11. Copper and brass wires, particularly utensils for distillers,
sugar refiners and brewers; andirons and other articles for household
use, philosophical apparatus.

12. Tinware for most purposes of ordinary use.

13. Carriages of all kinds.

14. Snuff, chewing and smoking tobacco.

15. Starch and hair powder.

16. Lampblack and other painters’ colors.

17. Gunpowder.

In addition to the industries above enumerated, which were carried on
as regular trades in many localities, Mr. Hamilton went on to
describe--“a vast scene of household manufacturing, which contributes
more largely to the supply of the community than could be imagined
without having made it an object of particular inquiry--” and he

     “Great quantities of coarse cloths, coatings, serges and
     flannels, linsey-woolseys; hosiery of wool, cotton and thread;
     coarse fustians, jeans and muslins; checked and striped cotton
     and linen goods; bed ticks, coverlets and counterpanes; tow
     linens; coarse shirtings, sheetings, toweling and table-linen,
     and various mixtures of wool and cotton, and of cotton and flax
     are made in the household way and, in many instances, to an
     extent not only sufficient for the supply of the families in
     which they are made, but for sale, and even, in some cases, for
     exportation. It is computed in a number of districts that
     two-thirds, three-fourths and even four-fifths of all the
     clothing of the inhabitants are made by themselves. The
     importance of so great a progress as appears to have been made in
     family manufactures within a few years, both in a moral and         266
     political view, renders the fact highly interesting. Neither does
     the above enumeration comprehend all the articles that are
     manufactured as regular trades. Many others occur, which are
     equally well established, but which, not being of equal
     importance, have been omitted. And there are many attempts, still
     in their infancy, which, though attended with very favorable
     appearances, could not have been properly comprised in an
     enumeration of manufactories already established. There are other
     articles, also, of great importance, which, though, strictly
     speaking, manufactures, are omitted as being immediately
     connected with husbandry, such as flour, pot and pearl ashes,
     pitch, tar, turpentine and the like.”

The “manufactories carried on as regular trades,” and included in Mr.
Hamilton’s category, says the U. S. Census Report of 1900, comprised
such as would naturally spring up in a new country to supply the
immediate necessities of the inhabitants, together with those whose
materials were most abundant and inviting. Agricultural implements and
other tools of industry were made in quantities fully equal to the
demand. Firearms were also made. The dressing of skins, especially
tanning, had become an important industry, and was carried on both in
establishments exclusively devoted to the purpose, and by many
shoemakers and farmers as a subsidiary occupation. The number of
brewers and distillers was remarkable, and nearly the entire domestic
demand for beverages was supplied by home production. Sawmills,
gristmills, brick kilns, wool-carding mills, and fulling mills existed
in great number, but always on a small scale, supplying only local
needs. The manufacture of paper, which had been a successful colonial
industry, also supplied the domestic requirements, and several glass
works existed. “Iron works have greatly increased in the United
States,” said Mr. Hamilton, “and are prosecuted with much more
advantage than formerly.” The shipbuilding industry was particularly     267
well developed and widespread. In 1793 the tonnage of the United
States exceeded that of every other nation except England. In the
main, however, the people had confined themselves to such manufactures
as could not be imported to advantage. Foreign goods, chiefly
textiles, were largely imported in exchange for agricultural products.

Such was the general condition of our manufactures at the opening of
the nineteenth century. Although some progress in this direction has
been made, the occupations of the people were chiefly agricultural;
commerce was becoming a factor of constantly increasing importance in
the development of the industrial resources of the country, while
manufactures occupied the third and subordinate position.

In 1810 Albert Gallatin, Secretary of the Treasury, in response to a
resolution of the House of Representatives of June 7, 1908, made a
report which is an admirable summary of the condition of American
manufactures at that date. Secretary Gallatin estimated that in 1809
the value of the products of American manufactures exceeded
$120,000,000. Tench Coxe’s estimate, based upon the returns obtained
at the Census of 1810, was $198,613,471. The censuses of 1810, 1820,
1830 and 1840 gave certain figures on the manufacturing industries of
the United States, but they did not approach the completeness of the
censuses of recent years, and the figures of those earlier records
must be accepted only with this view of their incompleteness. Tench
Coxe, as already shown, estimated the real value of the manufactures
of 1810 at a little less than 200 million. The censuses of 1820 and
1830 were confessedly incomplete and their showing of manufactures
does not compare favorably with the Coxe estimate for 1810. In 1840
the value of the manufactures was put at about 500 million dollars; in
1850, at one billion; in 1860, a little less than 2 billion; in 1870,
4¼ billion; in 1880, 3⅓ billion; in 1890, 9⅓ billion; in 1900, 13        268
billion; and in 1905, 16 billion--a sum three times the estimated
value of manufactures of the next great manufacturing nation, the
United Kingdom.

It must be remembered, however, that these figures of the value of the
manufactures of the United States are “gross values,” or, in other
words, contain many duplications, as explained elsewhere, and that the
net or real value of the manufactures of the country was but
two-thirds of the figures above named. Even this estimate which puts
the net or true value of the manufactures of the country at about
two-thirds of the census gross valuation still leaves the United
States so far in the lead that there can be no doubt that it is the
greatest manufacturing nation of the world. Tables printed elsewhere
in this text show that her production of manufactures is, even under
an acceptance of the “net” value and an exclusion of certain articles
not classed as manufactures by other countries, far in excess of that
of any other country.

The growth by industries cannot be shown in detail in a work of this
character. Suffice to say that every line of manufactures is now
produced in the United States, save only those in which the work is
wholly, or chiefly, performed by hand labor. The growth of the more
important industries, such as iron and steel, textiles, etc., is
pictured in sections devoted to those industries, and an outline of
the growth in the principal articles is shown in the table on another
page which presents official figures of the number of factories,
persons employed, capital invested and product turned out in the
principal manufacturing industries of the country in 1880, 1890, 1900,
and 1905.

The increase in the production of manufactures in the United States,
far in excess of home requirements, has forced our manufacturers to
seek markets in other parts of the world for their surplus product.
The result has been a rapid increase in the exportation of
manufactures. The total value of manufactures exported from the United   269
States has grown from less than 8 million dollars in 1820 to 23
million dollars in 1850, 48½ million in 1860, 70 million in 1870, 122
million in 1880, 179 million in 1890, and 485 million in 1900, since
which time the annual total has not fallen below the 400-million-dollar
line, while in the year 1908 the total exceeded 750 million dollars.
In the fiscal year 1908, the latest period for which detailed figures
of the exports by countries are available, the exports of manufactures
were valued at 750 million dollars, of which 368 million dollars’
worth went to Europe, 188 million to North America, 72 million to
South America, and 71 million to Asia, while the remainder was divided
between Oceania and Africa.

That this growth has been especially marked in recent years is shown
by the fact that the actual increase by decades in exports of
manufactures has been as follows: During the decade ending with 1830,
1.8 millions; 1840, 5.8 millions; 1850, 7.8 millions; 1860, 25.2
millions; 1870, 21.6 millions; 1880, 51.8 millions; 1890, 57.2
millions; 1900, 305.9 millions; and during the eight years ending with
1906, 265 millions. Thus the growth of exports of manufactures in the
eighteen years following 1890 was practically three times as great as
that of the entire seventy years preceding that year.

Exports of manufactures from the United States now exceed 750 million
dollars per annum and have doubled in value in a single decade. Not
only has the exportation of manufactures doubled in a decade, but the
share which products of the factory form of the total exports is
steadily increasing. In 1880 manufactures formed but 15 per cent of
the total exports of domestic products; in 1890 they formed 21 per
cent, in 1900, 35 per cent, and in 1908, 41 per cent.

With the rapid increase of population in the United States, and
therefore of the consumption of natural products, the quantity of        270
food and raw materials remaining for distribution to other parts of
the world has not increased proportionately; and with the development
of manufacturing facilities and the trend of population to the
manufacturing centers, production of manufactures has rapidly
increased, and the surplus of these manufactures which may be spared
for foreign markets has also increased. Foodstuffs, which in 1890
formed 42 per cent of the total exports of domestic products, formed
in 1908 but 28 per cent of the total; articles in a crude condition
for use in manufacturing, which in 1890 formed 36 per cent of the
totals, formed in 1908 but 30 per cent; while manufactures, as already
indicated, increased their share in the exports from 21 per cent in
1890 to 41 per cent in 1908.

In the decade ending with 1905 exports of manufactures from the United
States increased 198 per cent, while those from Germany increased 75
per cent, those from the United Kingdom 40 per cent, and those from
France 25 per cent. This rapid increase in the exports of manufactures
from the United States has brought her to the third rank in the list
of the world’s exporters of manufactures. The four greatest producers
of manufactures for exportation and the value of manufactures exported
by each of them in 1906 are as follows: The United Kingdom, 1,400
million dollars; Germany, 1,000 million; the United States, 700
million; and France, 500 million.

To Europe the exports of manufactures from the United States in 1892
was 76 million dollars, in 1901, 213 million, and in 1908, 368
million. To North America the exports of manufactures from the United
States in 1892 were 33 million dollars, in 1908, 189 million; to Asia
and Oceania the total was 25 million dollars in 1892 and 112 million
in 1908; to Africa, in 1892, less than 4 million dollars, in 1908,
more than 10 million; to South America, in 1892, 17 million, in 1908,
72 million. Considering the distribution by principal countries, it
may be said that the total exports of manufactures from the United       271
States to the United Kingdom was, in 1892, 40 million dollars, in
1902, 100 million; to British North America, in 1892, less than 10
million, in 1902, over 54 million; to Germany, in 1892, 14 million, in
1902, 30 million; to Mexico, in 1892, less than 8 million, in 1902,
over 26 million; to British Australasia, in 1892, less than 9 million,
in 1902, over 23 million; and to China, in 1892, 5½ million, in 1902,
more than 23 million.

Considering the exports by great articles or groups of articles, it
may be said that manufactures of iron and steel as a group form the
largest item in the exports of manufactures, having grown from 52
thousand dollars in 1800 to 322 thousand in 1830, 1 million dollars in
1850, about 6 million in 1860, 13 million in 1870, 25 million in 1890,
121 million in 1900, and 184 million in 1908. Mineral oils form the
second largest item among the groups of manufactures, having grown
from 30 million in 1870 to 98 million in 1908. Copper manufactures
rank third, the total exports having grown from 1½ million dollars in
1860 to 2⅓ million in 1890 and 104 million in 1908. Leather and its
manufactures have increased their exportations from 1½ million in 1860
to 6¾ million in 1880, 12 million in 1890, 27 million in 1900, and 41
million in 1908. Exports of agricultural implements have grown from 1
million dollars in 1870 to 4 million in 1890, 16 million in 1900, and
24 million in 1908. Thirty articles or groups of articles exceeded 1
million dollars in the value of their respective exports in the fiscal
year 1908. Of these thirty groups now exceeding 1 million dollars each
in value annually, not one aggregated as much as a million dollars in
1820, and only three groups exceeded 1 million in 1850; in 1860 eight
groups exceeded each 1 million; in 1880 the number of groups exceeding
1 million in value was 13; in 1890, 20; and in 1908, as already
indicated, 30 exceeded 1 million each in the value of their annual

The causes of the rapid growth in the exports of manufactures from       272
the United States are not difficult to determine. The growth as
already indicated, has occurred chiefly since 1880, and especially in
the last decade. From 1790 to 1880 the growth was a hundred million in
ninety years’ time. This was a period which was devoted to the
development of the agricultural resources of the country and to the
construction of railroads. The value of agricultural products exported
grew in this period from 19 million dollars to 686 million, an
increase of 667 million, while exports of manufactures were increasing
100 million. From 1880 to 1900 agricultural exports showed a gain of
206 million dollars and those of manufactures 330 million. Thus the
development of domestic exports from the United States has occurred in
definitely rounded periods: The first, a long period of growth of
agricultural products; the second, a shorter and more recent period,
in which the largest growth, and especially the largest proportionate
growth, has been in exports of manufactures.

A study of the production in the United States of a few of the great
articles which form the basis of manufactures and the manufacturing
industries offers ready explanation of the great increase in the
production of manufactures and the consequent marked increase in the
exportation of manufactures. Six great articles supply the principal
requisites for manufacturing, viz, iron, copper, wood, cotton, wool,
and coal as the material which supplies the power by which they are
first assembled and afterwards converted into manufactures. The
production of pig iron in the United States which up to 1880 had never
reached 4 million tons, was by 1890, 9 million; in 1900, 13½ million,
and in 1907, 25 million. Of steel, the production in the United States
in 1880 for the first time exceeded 1 million tons; in 1890 it
exceeded 4 million tons; in 1900, more than 10 million, and in 1907,
more than 23 million. Of copper, for which the demands of the world
are now great, the United States produced in 1880, 27 thousand tons,     273
in 1890, 116 thousand tons, and in 1906, 409 thousand tons. The total
value of the mineral products of the United States was in 1880, 369
million dollars; in 1890, 619 million, and in 1908, 2,069 million, or
5½ times that of 1880. The cotton production of the United States was
in 1880, 5½ million bales, in 1890, 7½ million, and in 1908, over 13½
million. In 1880, American mills took 31 per cent of the total
American production of cotton, and in 1907 they took 32 per cent of
the greatly increased total. Of wool, the production of 1880 was 232½
million pounds; of 1890, 276 million, and that of 1908, 311 million.
Of coal, which has an important relation to manufactures, both in
supplying the motive power for the assembling of materials and heat
for smelting ores and other features of manufacturing work, as well as
the power for operating the machinery of manufacture, the production
in 1880 was 64 million tons; in 1890, 141 million; in 1900, 241
million; and in 1907, 428 million.

Of the six great articles here enumerated as the chief requisites of
manufacturing, the United States is the world’s largest producer of
all except wool. Of cotton, the United States produces three-fourths
of the world’s entire supply; of copper, fully one-half; of pig iron
and steel, the United States produces 40 per cent of the world’s
entire supply; and in 1907 produced more than Germany, the United
Kingdom, and Belgium combined, these three countries being, in the
order named, the world’s next largest producers of pig iron. Of timber
and wood suitable for use in manufacturing, the United States is the
world’s largest producer at the present time. Of wool, the United
States is only exceeded in its production by Australasia, Argentina
and Russia, its total product being in 1901, 302 million pounds
against 360 million in Russia, including Poland, Argentina, 370
million, and Australasia, 510 million.

In transportation, for assembling these great natural products for       274
use in manufacturing, the facilities in the United States by far
surpass those of any other country. The railroads have grown from 30
thousand miles in 1860 to 53 thousand miles in 1870, 93 thousand miles
in 1880, 166 thousand miles in 1890, and 240 thousand miles in 1908,
giving to the United States two-fifths of the entire railway mileage
of the world; while in transportation upon the Great Lakes the
registered tonnage of vessels passing through the Sault Ste. Marie
Canal alone in 1907 was 44 million tons, or practically three times as
much as the tonnage passing through the Suez Canal in the same year.

Proportionately the growth in exports of manufactures has been even
greater than that in production of manufactures. The census figures
show that the gross value of manufactures produced in 1850 was, in
round terms, 1 billion dollars, and in 1905, nearly 17 billion, so
that the product of 1905 may be said to be about seventeen times as
great as that of 1850; while the exportation of manufactures, which in
1850 was $17,580,456, was in 1908, $750,000,000, or forty-two times as
great as in 1850, indicating that the percentage of growth in
exportation has been more than twice as great as that in the
production of manufactures.

Of the articles which form the great and growing export trade of the
United States, those grouped under the term “manufactures” number over
two hundred distinct articles, though many of these are included
within the special groupings, such as agricultural implements, iron
and steel manufactures, mineral oils, leather and its manufactures,
etc. The group agricultural implements, for example, is subdivided
into mowers and reapers, plows and cultivators, and “all other,” the
latter term including numerous articles which are not of sufficient
value to justify at present a separate statement. The group cotton
manufactures includes cloths colored and uncolored, wearing apparel,
waste cotton, and all other. The group iron and steel includes pig       275
iron, bar iron, wire rods, billets, ingots and blooms, hoop, band and
scroll iron, rails for railways, tin plates, structural iron and
steel, wire, locks, hinges, saws and tools, car wheels, castings,
table cutlery, firearms, cash registers, electrical machinery, laundry
machinery, metal-working machinery, printing presses, pumps and
pumping machinery, shoe machinery, locomotives (stationary and
railway), typewriters, nails (cut and wire), pipes, safes, scales,
stoves and ranges, each of which is separately stated, and following
these a class “all other,” which includes the less important articles
not separately enumerated. Under the group leather and its
manufactures are included sole leather, glazed, kid, patent, split,
and other upper leather, boots and shoes, harness and saddles. Under
the general title of refined or manufactured mineral oils are included
naphthas, illuminating oil, and lubricating and heavy paraffin oil.
Under the general title of musical instruments are included organs,
pianos, and all other. Paper and its manufactures include paper
hangings, printing paper, writing paper, envelopes, and all other.
Manufactures of tobacco include cigars and cigarettes, plug tobacco,
and all other. Wood manufactures include doors, sash and blinds;
furniture; hogsheads and barrels; trimmings, moldings and other house
finishings; woodenware, wood pulp, and all other. Wool manufactures
include carpets, dress goods, flannels and blankets, wearing apparel,
separately stated, and all other.

Taking up the various groups or classes, and with them the articles
which are not subdivided, it may be said that thirty general articles
show a total exceeding $1,000,000 in the exports of recent years.
Exports of iron and steel manufactures as a whole amounted in 1908 to
184 million dollars; manufactured or refined mineral oils, 99 million;
copper manufactures, 100 million; cotton manufactures, 25 million;
leather and its manufactures, 27 million; agricultural implements,       276
24 million; chemicals, drugs and dyes, 21 million; cars and carriages,
22 million; paraffin, 8 million; paper and its manufactures, 8
million; tobacco manufactures, 5 million; scientific instruments, 11
million; fiber manufactures, 5 million; india-rubber manufactures, 7½
million; books, maps and engravings, 6 million.

Tracing the more important of these articles through the period from
1790 to 1908 it may be said that iron and steel manufactures, which
began their record in 1790 with a total exportation of $117,060, did
not reach $1,000,000 until 1840, when the total export was $1,127,877.
Even in 1850 it was only $1,953,702, but by 1860 was $5,870,114; in
1870, $13,483,163; in 1880, $14,716,524; in 1890, $25,542,208, and in
the decade from 1890 to 1900 it increased nearly fourfold, the total
for 1908 being $183,982,182 against $25,542,208 in 1890. The growth in
the exportation of manufactures of iron and steel has been more
strongly marked than that in any other important article of export
except copper. It has been coincidental with the development of the
great iron mines of the United States and the production of pig iron
and steel.

The next article in the order of its magnitude in our exportations is
refined mineral oil, which only became an article of export after the
great oil discoveries in the decade 1860-1870. Its first appearance in
the list of exports was in 1864, in which year the total amounted to
$6,918,502, the small quantities exported in preceding years not
having separately enumerated in the list of articles exported. The
value of the exportations of mineral oil increased very rapidly, the
total for 1864 being slightly less than 7 millions; for 1865, nearly
10 millions; 1866, over 18 millions; 1867, 22 millions; 1870, 30
millions; 1880, 34 millions; 1890, 44 millions; 1900, 68 millions,
and 1908, 99 millions.

Copper, which forms the third article in rank in the exports of          277
manufactures, is of recent date as an article of importance in the
export trade. The existence of large copper deposits in the United
States had been known for many years, but it was only upon the greatly
increased demand for copper owing to the developments in the use of
electricity as a motive power that the world began to demand copper in
greatly increased quantities; and to this demand the mines of the
United States promptly responded. The copper production of the United
States had never reached as much as 20,000 tons prior to 1877. By 1887
it was 81,000 tons; by 1897, 220,000 tons; and in 1907, 410,000 tons.
The most strongly marked increase occurred during the period of
1890-1907, the production of 1890 being 115,000 tons, and in 1907,
410,000 tons. The growth in exportation was coincidental with the
growth in production. The value of copper manufactures exported in
1890 was but $2,349,392; in 1891, it was $4,614,597; in 1892,
$7,226,392; in 1895, $14,468,703; in 1896, $19,720,104; in 1897,
$31,621,125; and in 1908, $104,064,580 or nearly fifty times as much
in 1908 as in 1890.

Leather and manufactures thereof grew from 1½ million in 1860 to 6½
million in 1880, 12½ million in 1890, 27 million in 1900, practically
30 million in 1902, and 42 million in 1909. Agricultural implements
have also shown a rapid increase in exportation. In 1870 they amounted
to only 1 million dollars in value; in 1880, to a little over 2
million; in 1890, nearly 4 million; in 1900, 16 million; and in 1902,
16¼ million.

Chemicals, drugs, dyes, etc., formed the largest single item of
exports in 1790, pot and pearl ashes being then the principal article
in the list, and have slowly but steadily increased, reaching a
million dollars in 1830, 2½ million in 1870, 5½ million in 1890, 12
million in 1902, and 21 million in 1908. It is proper to add that in
the later years patent medicines, which are included under this general
classification of chemicals, etc., have formed a considerable            278
proportion of this increase, the total value of patent medicines
exported being in 1902, 3 million dollars out of the total of 12
million. The chemical industry of the United States has not made as
rapid gains either in the relative value of its products, in the
supply of the home market, or in the distribution of exports as
accomplished by many other industries. The total value of the chemical
productions of the country, according to the census, was in 1880,
$38,640,458; in 1890, $59,352,548; and in 1900, $62,676,730, having
less than doubled the value of the product from 1880 to 1900, the
increase being but 60 per cent, while manufactures as a whole
increased 142 per cent.

Considering the grand divisions and countries to which we send this
$750,000,000 worth of manufactures exported from the United States, it
may be said that literally every country of the world is a purchaser
of American manufactures. In each grand division and in every country
of the world the manufactured products of the United States are being
consumed in steadily increasing quantities and varieties; and this
consumption of the products of the manufacturing establishments of the
United States by other parts of the world is a voluntary one, and not
an “invasion” in the ordinarily accepted sense of the term. The growth
in the consumption of American manufactures in other parts of the
world is quite as voluntary as is the consumption of American flour,
or meat, or cotton. This is illustrated by the fact that, while the
iron and steel manufacturing establishments have been unable to meet
the orders of the home consumers, and, therefore, have made little
effort to “invade” other markets, more than $184,000,000 worth of iron
and steel manufactures was exported in 1908, presumably, in most
cases, to fill orders from other parts of the world. The fact that the
home demand for iron and steel manufactures was in 1907 so great as to
more than double the importation of iron and steel manufactures in a
single year, shows clearly that the condition of a home market was       279
such that the iron and steel manufactures of the United States needed
make no effort to “invade” the markets of other parts of the world,
and that whatever sales they made in those lines outside of the United
States were, as a rule, in response to calls from the countries to
which these classes of merchandise are sent. The exportations of iron
and steel manufactures from the United States in the fiscal year 1908,
were: To Europe, 47 million dollars; North America, 72 million;
Oceania, 14 million; South America, 22 million; Asia, 25 million; and
Africa, 3 million. Of American copper the purchases by Europe were, in
1891, $4,433,015 in value, and in 1908, $97,324,230. For agricultural
implements the home demand is large and active, yet the exportation of
agricultural implements, presumably all or nearly all orders, was in
1908, to Europe, 13 million dollars; to North America, 2½ million; to
South America, 5 million; to Oceania, over 1 million; and to Asia and
Africa, 13 million. The railroads of the United States were in 1906
and 7, according to repeated statements, unable to obtain cars in
sufficient number to meet their requirements, yet the exportation of
cars for steam railways in the fiscal year 1908 amounted to about

The large share which manufactures form in the exports of the United
States is shown by an analysis by the Bureau of Statistics of the
Department of Commerce and Labor of the trade, by articles and groups
of articles, with every country and grand division of the world. These
figures show that manufactures formed 86 per cent of exports to South
America in 1906, 85 per cent of the exports to Oceania, 75 per cent of
the exports to Asia, 66 per cent of the exports to Africa, 62 per cent
of the exports to North America, while even to Europe manufactures
formed 27 per cent of the total domestic merchandise sent in the
fiscal year 1906.

This general group, “manufactures,” upon which the above percentages     280
are based, includes both manufactures ready for consumption and
manufactures for further use in manufacturing. The first group
includes all manufactures in the fully completed form and ready for
immediate use. The second is made up chiefly of chemicals, leather,
naval stores, lumber, copper in pigs, bars, and ingots, and various
grades of iron and steel which have passed through a process of
manufacture but are to be further used in manufacturing, such as steel
bars, billets, ingots, blooms, sheets and plates, tin plate, wire
rods, and pig iron.

Of the 75 million dollars’ worth sent to South America, 72.4 per cent
was manufactures ready for consumption and 14.02 per cent manufactures
for further use in manufacturing. Of the 105 million dollars’ worth
sent to Asia, 65.79 was manufactures ready for consumption and 9.14
per cent manufactures for further use in manufacturing. Of the 35
million dollars’ worth sent to Oceania, 72.97 per cent was
manufactures ready for consumption and 11.78 per cent manufactures for
further use in manufacturing. Of the 20 million dollars’ worth sent to
Africa, 58.79 per cent was manufactures ready for consumption and 6.85
per cent manufactures for further use in manufacturing. Of the 295
million dollars’ worth exported to North America, 50.46 per cent was
manufactures ready for consumption and 11.37 per cent manufactures for
further use in manufacturing. Of the 1,189 million dollars’ worth of
domestic merchandise sent from the United States to Europe in 1906,
12.72 per cent was manufactures ready for consumption and 14.06 per
cent manufactures for further use in manufacturing.

Thus, more than one-half of the domestic merchandise sent out of the
United States to each grand division except Europe goes in the fully
manufactured form, ready for consumption; in the case of South America
and Oceania practically three-fourths, in the case of Asia practically
two-thirds, and in the case of North America practically one-half        281
goes in the fully manufactured form.

Taking up the principal countries, the figures of the Bureau of
Statistics show that 11.85 per cent of the exports of the United
Kingdom was manufactures ready for consumption and 11.22 per cent
manufactures for further use in manufacturing. Of the exports to
Germany, 10.98 per cent was manufactures ready for consumption and
12.96 per cent manufactures for further use in manufacturing. To
France, 12.67 per cent of the exports was manufactures ready for
consumption and 18.44 per cent manufactures for further use in
manufacturing. To Canada, 48.8 per cent of the exports was
manufactures ready for consumption and 13.1 per cent manufactures for
further use in manufacturing. To Mexico, 58.77 per cent was
manufactures ready for consumption and 11.61 per cent manufactures for
further use in manufacturing. To Cuba, 45.94 per cent of the exports
was manufactures ready for consumption and 9.31 per cent manufactures
for further use in manufacturing. To Argentina, 79.93 per cent of the
exports was manufactures ready for consumption and 18.67 per cent
manufactures for further use in manufacturing. To Brazil, 72.9 per
cent of the exports was manufactures ready for consumption and 10.24
per cent manufactures for further use in manufacturing. To Chile,
74.82 per cent of the exports was manufactures ready for consumption
and 10.71 per cent manufactures for further use in manufacturing. To
China, 85.12 per cent was manufactures ready for consumption and 10.65
per cent manufactures for further use in manufacturing. To Japan,
45.89 per cent of the exports was manufactures ready for consumption
and 10.28 per cent manufactures for further use in manufacturing. To
the Philippine Islands, 59.75 per cent of the shipments was
manufactures ready for consumption and 9.13 per cent manufactures for
further use in manufacturing. To Australia, 76.48 per cent of the
exports was manufactures ready for consumption and 12.26 per cent        282
manufactures for further use in manufacturing.

Foodstuffs and manufacturers’ material form the larger share of the
merchandise sent to Europe and a considerable percentage of that sent
to North America, while to the other grand divisions neither
foodstuffs nor raw material for manufacturing form any considerable
per cent of the total. To Europe, foodstuffs (chiefly wheat flour,
corn and meats) formed 36.3 per cent of the total merchandise sent in
1906, while raw materials for use in manufacturing (chiefly cotton)
formed 36.83 per cent of the total, the remainder being, as above
indicated, manufactures ready for consumption or manufactures for
further use in manufacturing. To North America, foodstuffs formed
20.23 per cent of the total and manufacturers’ raw material 16.12 per
cent. To South America, foodstuffs formed 13.32 per cent of the total
and manufacturers’ raw material less than 1 per cent. To Asia,
foodstuffs formed 13.83 per cent and manufacturers’ raw material 11.2
per cent, this larger percentage of the raw material being due chiefly
to sales of raw cotton to Japan. To Oceania, foodstuffs formed 9.65
per cent of the total and manufacturers’ raw material 4.96 per cent.
To Africa, foodstuffs formed 28.39 per cent of the total exports and
manufacturers’ raw material 5.86 per cent.

Taking up the analysis of exports to other parts of the world, the
figures show that of the exports to the United Kingdom 34.07 per cent
was crude materials for use in manufacturing; 27.29 per cent
foodstuffs partly or wholly manufactured, including in this group
flour, meats, dried and preserved fruits, etc.; 15.46 per cent
foodstuffs in a crude condition, and food animals; 13.1 per cent
manufactures for further use in manufacturing, and 11.85 per cent
manufactures ready for consumption. Of the exports to Germany, 48.28
per cent was crude materials for use in manufacturing; 19 per cent
foodstuffs partly or wholly manufactured; 8.65 per cent foodstuffs in
a crude condition, including food animals; 12.96 per cent manufactures   283
for further use in manufacturing, and 10.98 per cent manufactures
ready for consumption. In the case of France, 55.38 per cent of the
total was crude materials for use in manufacturing; 5.52 per cent
foodstuffs partly or wholly manufactured; 7.96 per cent foodstuffs in
a crude condition; 18.44 per cent manufactures for further use in
manufacturing, and 12.67 per cent manufactures ready for consumption.
In the case of Canada, 24.39 per cent was raw materials for use in
manufacturing; 4.74 per cent foodstuffs partly or wholly manufactured;
6.23 per cent foodstuffs in a crude condition, and food animals; 13.1
per cent manufactures for further use in manufacturing and 48.8 per
cent manufactures ready for consumption.

Summing up this study of the share which manufactures formed of the
exports of the United States to the principal countries and grand
divisions in 1906, the figures show that 151 million dollars’ worth of
manufactures ready for consumption went to Europe, 149 million
dollars’ worth to North America, 69 million dollars’ worth to Asia, 54
million dollars’ worth to South America, 26 million dollars’ worth to
Oceania, and 11 million dollars’ worth to Africa; while of the
manufactures for further use in manufacturing 167 million dollars’
worth went to Europe, 33 million to North America, 10 million to South
America, 10 million to Asia, 4 million to Oceania, and a little over 1
million dollars’ worth to Africa. Thus while manufactures formed but a
comparatively small percentage of the exports to Europe because of the
large quantities of foodstuffs and raw material demanded by that
country, they actually aggregated a greater sum than the manufactures
sent to any other of the grand divisions, though in the other cases
the percentage which manufactures formed of the total was much larger
than in the trade with Europe.

Even with this large production of manufactures in the United States
it may safely be said that less than one-tenth of our manufactures       284
are exported, while those imported equal in stated value about
one-twentieth that of the home product. This statement is the result
of a comparison of the figures of production, exportation, and
importation of manufactures in the United States presented by the
Statistical Abstract of the United States, issued by the Bureau of
Statistics of the Department of Commerce and Labor.

The Census of 1905 shows the gross value of the factory product of
manufactures in 1904 at 14,802 million dollars, and estimates the
value of all other manufactures, mechanical and neighborhood, at about
2 billion, making the gross value of all manufactures produced in the
United States in 1904, 16,867 million dollars. This gross valuation,
however, includes many duplications, because the products reported by
one manufacturer often become the manufacturing material of another,
who also includes their cost in the report of the value of the
products of his factory. By deducting from the gross valuation the
value of this manufacturing material used in a partly manufactured
form, the Census Office states the net or true value of the
manufactures of the country in the census year. This process reduced
the valuation of the factory product of 1904 from the gross figure of
14,802 million, to a net valuation of 9,821 million; and an
application of the same method of reduction to the non-factory
manufactures would place the net value of all manufactures in 1904 at
10,892 million dollars. The Census of 1900, which reported the gross
value of all manufactures in 1899 at 13,014 million dollars, places
the net value for that year at 8,371 million.

The Bureau of Statistics’ figures show that the exportation in the
year ending June 30, 1905, of all articles classed by the census as
manufactures, amounted in value to 895 million dollars, a sum which
equals 8.2 per cent of the 10,892 million estimated as the net value
of all manufactures in 1904. The imports in the year ended June 30,      285
1905, of all articles similar to those classed by the census as
manufactures, were valued at 576 million dollars, which equals 5.3
per cent of the net value of the domestic manufactures of 1904.

Even these figures, which show that the valuation of manufactures
exported equals 8.2 per cent of the valuation of the manufactures
produced, and that the valuation of the manufactures imported equals
5.3 per cent of the valuation of the manufactures produced, are,
however, only approximate, in an attempt to determine the true
relation of imports or exports of manufactures to the home production.
The valuation of manufactures, supplied to the Census Office, by the
various manufacturers, states the value of the product at the place of
production; while the Bureau of Statistics’ figures of exportations
state the wholesale market value of the article at the port from which
exported. Thus the stated values of the articles exported are
doubtless in most cases higher than the stated values of the same
articles at the place of production since the cost of transportation
and dealers’ profits are presumably added in the valuations at which
the domestic merchandise in question is wholesaled at the various
ports whose current prices determine the valuation placed upon the
articles when exported. On the other hand, the values of the imported
articles quoted by the Bureau of Statistics are by law “the actual
market values or wholesale prices of such merchandise in the principal
markets of the country whence imported,” and if freights and profits
are added to this figure the valuation at the point where it actually
enters the United States would be somewhat in excess of that quoted.
Thus the value of manufactures produced are those of the place of
production, the figures of exports are those of the wholesale markets
of the port from which exported, and those of importation are those of
the wholesale market of the country whence imported. Could production,   286
exports, and imports be brought to a common basis of valuation, the
percentage which exports bear to the total production would be
slightly reduced and that which imports bear to the total production
be slightly increased; and the percentages which exports and imports,
respectively, bear to the total production would become more nearly
identical than those above quoted, of 8.2 per cent on the export side
and 5.3 per cent on the import side.

The share exported of the manufactures of the country seems to have
slowly but steadily increased. The gross valuation of manufactures
produced was, speaking in very round terms, in 1850, 1 billion
dollars; in 1860, 1¾ billion; in 1870, 4¼ billion; in 1880, 5⅓
billion; in 1890, 9⅓% billion; in 1900, 13 billion; and in 1905, 16¾
billion. Reducing these gross valuations to net value at the same
ratio as that indicated by the census reduction of 1900, the net value
of manufactures in 1850 would stand at ⅔ of 1 billion dollars, in
1860 at 1¼ billion, in 1870 at 2¾ billion, in 1880 at 3½ billion, in
1890 at 6 billion, in 1900 at 8⅓ billion, and in 1905 at a little less
than 11 billion. The exportation of all articles now classed by the
census as manufactures was in 1850, 43 million dollars; in 1860, 87
million; in 1870, 160 million (currency values); in 1880, 315 million;
in 1890, 404 million; in 1900, 803 million; and in 1905, 895 million.
These figures of net products and exports, when compared
statistically, show that the exports equalled in 1850, 6.6 per cent of
the figures of net production; in 1860, 7.2 per cent; in 1870, 5.9 per
cent; in 1880, 9.1 per cent; in 1890, 6.7 per cent; in 1900, 9.6 per
cent; and in 1905, 8.2 per cent. That the exportation has grown even
more rapidly than the production is also apparent from a comparison of
the figures of 1905 with those of 1850, since the production of
manufactures in 1905 was practically seventeen times as great as that
of 1850, while the exportation of manufactures in 1905 was twenty-one    287
times as great as in 1850.

On the import side the ratio of imports of manufactures to production
has steadily fallen. Imports of all articles now included by the
census classification of manufactures amounted in 1850 to 143 million
dollars, in 1860 to 267 million, in 1870 to 433 million (currency
values), in 1880 to 426 million, in 1890 to 481 million, in 1900 to
470 million, and in 1905 to 576 million. The percentage which imports
of manufactures bore to production of manufactures was, in 1850, 21.8
per cent; in 1860, 22 per cent; in 1870, 15.9 per cent; in 1880, 12.3
per cent; in 1890, 8 per cent; in 1900, 5.6 per cent; and in 1905, 5.3
per cent.

It is proper to add that the figures above cited as representing the
exportation of articles classed by the census as manufactures do not
coincide with the usual statement of “Manufactures Exported,” as
issued by the Bureau of Statistics from month to month and year to
year, but includes many articles classed as manufactures by the
census, but ordinarily classed by the Bureau of Statistics as
“Foodstuffs Partly or Wholly Manufactured.” The Bureau of Statistics
in its import and export statements groups under one title of
“Manufactures Ready for Consumption” all articles completely
manufactured and ready for use, such as boots and shoes, cars and
carriages, and illuminating oil; under another head, “Articles for
Further Use in Manufacturing,” all articles in a partially
manufactured state, but requiring further processes before ready for
final use, such as pig copper, pig iron, pig tin, lumber, etc.; while
the group “Foodstuffs Partly or Wholly Manufactured” includes food
articles which have undergone certain processes of preparation for
use, such as salted meats, canned fruit and vegetables, dried fruits,
flour, sugar, and other articles usually classed by the great
importing and exporting nations under the general title of foodstuffs.
The two groups, “Manufactures Ready for Use,” and “Manufactures for      288
Further Use in Manufacturing,” are usually included by the bureau in
its statements of exports of manufactures, while the third group,
“Foodstuffs Partly or Wholly Manufactured,” is not usually so classed.
In the above statement, however, in which the attempt is made to
compare imports and exports with the census figures of manufactures,
the third group, “Foodstuffs Partly or Wholly Manufactured,” is
included under the general title of manufactures, in order to make the
import and export figures comparable with the census figures of

Turning to the individual articles forming the great mass of
manufactures produced or exported, the percentage of the product
exported varies greatly with the various articles or groups of
articles. Comparing the Bureau of Statistics’ figures of exports for
the fiscal year 1905 with the census figures of production in the
calendar year 1904, the percentage which the export figures bear to
those of production are, in the case of agricultural implements 18.5
per cent, bicycles and tricycles 26.8 per cent, cash registers 20.6
per cent, sewing machines 29.3 per cent, and typewriters 44.6 per
cent; while in a large proportion of articles the percentage is very
much less--boots and shoes 2.5 per cent, carriages and wagons 2.7 per
cent, structural iron 4 per cent, furniture of wood 2.6 per cent,
flour and gristmill products 5.6 per cent, and automobiles 8.3 per

IX. STATISTICS OF MANUFACTURING.                                         289

Approximate Annual Value of Manufactures Produced in the Principal
Manufacturing Countries at dates named, 1780 to 1900.

                  | 1780. | 1800. | 1820. | 1840. |
     Countries.   +-------+-------+-------+-------+
                  |      Millions of Dollars.
  United Kingdom  |   861 | 1,119 | 1,411 | 1,883 |
  Germany         |   243 |   292 |   414 |   730 |
  France          |   715 |   925 | 1,071 | 1,285 |
  Austria-Hungary |   146 |   243 |   389 |   691 |
  Russia          |    49 |    73 |    97 |   195 |
  Italy           |    49 |    73 |   122 |   195 |
  Belgium         |  .... |  .... |  .... |   292 |
  Spain           |    49 |    97 |   146 |   219 |
  United States   |    73 |   122 |   268 |   467 |
  Various         |   151 |   219 |   292 |   438 |
        Total     | 2,336 | 3,163 | 4,210 | 6,395 |

                  | 1860. | 1888. | 1896. | 1900.
     Countries.   +-------+-------+-------+-------
                  |      Millions of Dollars.
  United Kingdom  | 2,808 | 3,991 | 4,263 | 5,000
  Germany         | 1,509 | 2,837 | 3,358 | 4,601
  France          | 1,849 | 2,360 | 2,900 | 3,450
  Austria-Hungary |   973 | 1,231 | 1,596 | 2,000
  Russia          |   754 | 1,767 | 1,849 | 1,980
  Italy           |   389 |   589 |   925 | 1,700
  Belgium         |   438 |   496 |   574 |   750
  Spain           |   292 |   414 |   589 |   615
  United States   | 1,908 | 7,022 | 9,636 |13,004
  Various         |   779 | 1,767 | 2,097 | 2,317
        Total     |11,699 |22,474 |27,787 |35,417

Note.--The figures (Mulhall’s estimates prior to 1900) here given for
the United States are those of gross values. The relation of “gross”
to “net” value of the manufactures of the United States is explained
at page 211.

Approximate Annual Value of Manufactures Produced In the Principal
Manufacturing Countries at dates named, 1780 to 1900.

                  | 1780. | 1800. | 1820. | 1840. |
     Countries.   +-------+-------+-------+-------+
                  |      Millions of Dollars.
  United Kingdom  |   861 | 1,119 | 1,411 | 1,883 |
  Germany         |   213 |   292 |   414 |   730 |
  France          |   715 |   925 | 1,071 | 1,285 |
  Austria-Hungary |   146 |   243 |   389 |   691 |
  Russia          |    49 |    73 |    97 |   195 |
  Italy           |    49 |    73 |   122 |   195 |
  Belgium         |  .... |  .... |  .... |   292 |
  Spain           |    49 |    97 |   146 |   219 |
  United States   |    48 |    81 |   179 |   311 |
  Various         |   151 |   219 |   292 |   438 |
        Total     | 2,311 | 3,122 | 4,121 | 6,239 |

                  | 1860. | 1888. | 1896. | 1900.
     Countries.   +-------+-------+-------+-------
                  |      Millions of Dollars.
  United Kingdom  | 2,808 | 3,991 | 4,263 | 5,000
  Germany         | 1,509 | 2,837 | 3,358 | 4,601
  France          | 1,849 | 2,360 | 2,900 | 3,450
  Austria-Hungary |   973 | 1,231 | 1,596 | 2,000
  Russia          |   754 | 1,767 | 1,849 | 1,980
  Italy           |   389 |   589 |   925 | 1,700
  Belgium         |   438 |   496 |   574 |   750
  Spain           |   292 |   414 |   589 |   615
  United States   | 1,272 | 4,681 | 6,426 | 8,371
  Various         |   779 | 1,767 | 2,097 | 2,317
        Total     |10,063 |20,133 |24,577 |30,784

Note.--Figures are those of Mulhall, except for 1900, the figures of
gross manufactures for the United States having been reduced to net on
the basis of net equal to 66⅔ per cent of gross; figures for 1900,
estimate of Wm. J. Clark, in Engineering Magazine, May, 1904.

Importation of Manufactures into United Kingdom and United States,
respectively, at quinquennial years, 1870 to 1908.

[From official statistics of the respective governments.]

            | Into the United   | Into the United
            |     Kingdom.      |     States.
   Year[D]  | Millions dollars. | Millions dollars.
    1870    |        277        |         229
    1875    |        354        |         241
    1880    |        405        |         307
    1885    |        406        |         261
    1890    |        478        |         348
    1895    |        483        |         296
    1900    |        630        |         337
    1905    |        707        |         430
    1907    |        754        |         638
    1908    |        696        |         528

  [D] For United States, fiscal years; for United Kingdom, calendar years.

Commerce of the United States, the United Kingdom and Germany, from      290
1875 to 1908. Showing exports of domestic merchandise, and exports of
domestic manufacture from each country named.

         |         Imports of merchandise.         |
         |    United   |             |    United   |
   Year. |   Kingdom.  | Germany.[E] |  States.[F] |
         |   Dollars.  |   Dollars.  |   Dollars.  |
   1875  |1,819,779,000|  839,590,000|  533,005,000|
   1880  |2,001,251,000|  670,945,000|  667,955,000|
   1885  |1,805,316,000|  699,067,000|  577,527,000|
   1890  |2,047,298,000|  990,023,000|  789,310,000|
   1895  |2,027,822,000|  980,719,000|  731,970,000|
   1900  |2,545,544,000|1,372,216,000|  849,941,000|
   1901  |2,540,264,000|1,290,254,000|  823,172,000|
   1902  |2,571,416,000|1,340,178,000|  903,321,000|
   1903  |2,642,054,050|1,424,080,000|1,025,719,000|
   1904  |2,681,629,000|1,514,660,000|  991,087,000|
   1905  |2,749,669,000|1,696,660,000|1,117,513,000|
   1906  |2,958,289,000|1,909,210,000|1,226,562,000|
   1907  |3,143,293,000|2,046,187,000|1,434,421,000|
   1908  |             |             |1,194,342,000|

         |    Exports of domestic merchandise.     |
         |    United   |             |    United   |
   Year. |   Kingdom.  |  Germany.   |  States.[F] |
         |   Dollars.  |   Dollars.  |   Dollars.  |
   1875  |1,087,497,000|  593,052,000|  499,284,100|
   1880  |1,085,521,000|  688,500,000|  823,946,353|
   1885  |1,037,124,000|  680,551,000|  726,682,946|
   1890  |1,282,472,000|  791,717,000|  845,293,828|
   1895  |1,100,453,000|  789,660,000|  793,392,599|
   1900  |1,417,086,000|1,097,509,000|1,370,763,571|
   1901  |1,362,729,000|1,054,685,000|1,460,462,806|
   1902  |1,379,283,000|1,111,008,000|1,355,481,861|
   1903  |1,415,179,000|1,113,313,000|1,392,231,302|
   1904  |1,463,412,000|1,242,987,000|1,435,179,000|
   1905  |1,605,053,000|1,364,131,000|1,491,745,000|
   1906  |1,827,737,000|1,513,449,000|1,171,953,000|
   1907  |2,074,125,000|1,634,803,000|1,853,718,000|
   1908  |             |             |1,834,786,000|

         |    Exports of domestic manufactures.
         |    United   |             |   United
   Year. |   Kingdom.  |  Germany.   |  States.[F]
         |   Dollars.  |   Dollars.  |  Dollars.
   1875  |  978,886,000|  ........   | 101,962,000
   1880  |  970,681,000|  460,279,000| 121,818,000
   1885  |  913,353,000|  504,623,000| 150,256,000
   1890  |1,118,657,000|  511,096,000| 178,982,000
   1895  |  953,800,000|  518,723,000| 205,058,000
   1900  |1,142,603,000|  709,806,000| 484,846,000
   1901  |1,110,131,000|  688,409,000| 465,778,000
   1902  |1,127,606,000|  735,182,000| 453,865,000
   1903  |1,163,812,000|  780,925,000| 467,898,000
   1904  |1,204,359,000|  819,196,000| 523,320,000
   1905  |1,322,851,000|  910,017,000| 611,426,000
   1906  |1,523,699,000|1,046,938,000| 686,023,000
   1907  |1,690,038,000|   No data.  | 740,123,000
   1908  |             |             | 750,576,000

  [E] Imports for consumption.

  [F] Years ending June 30.

Exportation of Manufactures from United Kingdom and United States,       291
respectively, at quinquennial years, 1870 to 1908.

[From official statistics of the respective governments.]

           |   From the United  |   From the United
           |       Kingdom.     |      States.
   Year[G] |  Millions dollars. |  Millions dollars.
    1870   |         888        |         70
    1875   |         979        |        102
    1880   |         965        |        122
    1885   |         915        |        150
    1890   |       1,112        |        179
    1895   |         941        |        205
    1900   |       1,126        |        485
    1905   |       1,329        |        611
    1907   |       1,694        |        740
    1908   |       1,445        |        751

  [G] For United States, fiscal years; for United Kingdom, calendar

Coal Production of the World by Principal Countries, at quinquennial
periods from 1870 to 1895 and annually since that date.

[From reports of the United States Geological Survey.]

         |            |            |            |           |
         |  United    |   Great    |            |           |
   Year. |  States.   |  Britain.  |  Germany.  |  France.  |
         |            |            |            |           |
         | Short tons.| Short tons.| Short tons.|Short tons.|
   1870  |  33,035,580| 123,682,935|  37,488,312| 14,530,716|
   1875  |  52,348,320| 149,303,263|  52,703,970| 18,694,916|
   1880  |  71,481,570| 164,605,738|  65,177,634| 21,346,124|
   1885  | 111,160,295| 178,473,588|  81,227,255| 21,510,359|
   1890  | 157,770,963| 203,408,003|  98,398,500| 28,756,638|
   1895  | 193,117,530| 212,320,725| 114,561,318| 30,877,922|
   1896  | 191,986,357| 218,804,611| 123,943,159| 32,167,270|
   1897  | 200,229,199| 226,385,523| 132,762,882| 33,938,987|
   1898  | 219,976,267| 226,301,058| 144,283,196| 35,656,426|
   1899  | 253,741,192| 246,506,155| 149,719,766| 36,215,026|
   1900  | 269,684,027| 252,203,056| 164,805,202| 36,811,536|
   1901  | 293,299,816| 245,332,578| 168,217,082| 35,596,536|
   1902  | 301,590,439| 254,346,447| 165,826,496| 33,286,146|
   1903  | 357,356,416| 257,974,605| 179,076,630| 38,466,873|
   1904  | 351,816,398| 260,319,665| 186,785,378| 37,663,349|
   1905  | 392,722,635| 264,464,408| 191,576,074| 38,951,360|
   1906  | 414,157,278| 281,195,743| 222,350,526| 37,828,931|

         |                | Per
         |Total production| cent
   Year. |     of the     |  of
         |     world.     | U. S.
         |   Short tons.  |
   1870  |     234,850,088| 14.07
   1875  |     308,479,177| 16.97
   1880  |     369,413,780| 20.62
   1885  |     447,783,802| 24.82
   1890  |     563,693,232| 27.99
   1895  |     644,177,076| 29.98
   1896  |     664,001,718| 28.92
   1897  |     697,213,515| 28.72
   1898  |     738,129,608| 29.80
   1899  |     801,976,021| 31.63
   1900  |     846,041,848| 31.88
   1901  |     870,711,044| 33.69
   1902  |     888,453,950| 33.95
   1903  |     972,195,531| 36.76
   1904  |     983,527,562| 35.78
   1905  |   1,034,156,604| 37.98
   1906  |[H]1,106,478,707| 37.43

  [H] Latest available figures are used in making up totals for 1906.

Note.--The use of coal for the production of power for use in
manufacturing has such an important relation to that industry that the
presentation of this table in this study seems justifiable.

World’s Production of Cotton.

[From Latham, Alexander & Co.’s “Cotton Movement & Fluctuation,” 1902-7.]

     Countries.  | 1902-3.  | 1903-4.  |  904-5.  | 1905-6.  | 1906-7.
                 |  Bales.  |  Bales.  |  Bales.  |  Bales.  |  Bales.
  United States  |10,511,020| 9,841,671|13,420,440|11,048,000|13,346,000
  East Indies[I] | 2,737,577| 2,734,400| 2,952,720| 2,983,370| 3,482,000
  Egypt          | 1,148,700| 1,275,754| 1,244,968| 1,152,516| 1,350,000
  Brazil[J]      |   329,390|   307,516|   325,928|   476,667|   400,000
      Total      |14,726,687| 4,159,341|17,944,056|15,660,553|18,578,000

  [I] Includes India’s exports to Europe, America and Japan, and mill
      consumption in India increased or decreased by excess or loss of
      stock at Bombay.

  [J] Receipts into Europe from Brazil, Smyrna, Peru, West Indies,
      etc., and Japan and China cotton used in Japanese mills.

Estimated Number of Cotton Spindles at Work on the Continent of          292
Europe, Sept. 30, 1907.

[From Alfred B. Shepperson’s “Cotton Facts,” December, 1907.]

  Russia and Poland         7,000,000
  Germany                   9,000,000
  Austria                   3,700,000
  France                    6,200,000
  Spain                     2,800,000
  Switzerland               1,550,000
  Italy                     3,000,000
  Belgium                   1,300,000
  Sweden, Norway, etc.        550,000
  Holland                     420,000
  Portugal                    210,000
  Greece                       70,000
      Total                35,800,000

Annual Consumption of Cotton in Cotton Mills.

[From Alfred B. Shepperson’s “Cotton Facts,” December, 1907.]

         |          |          | Northern | Southern | Total of |
  Season |  Great   | Continent| States of| States of|  United  |  India.
    of   | Britain. |  Europe. |   U. S.  |   U. S.  |  States. |
         |                   In bales of 500 pounds net.
  1896-7 | 3,224,000| 4,368,000| 1,771,000|   946,000| 2,717,000| 1,041,000
  1897-8 | 3,432,000| 4,628,000| 1,771,000| 1,151,000| 2,922,000| 1,185,000
  1898-9 | 3,519,000| 4,784,000| 2,218,000| 1,364,000| 3,582,000| 1,340,000
  1899-  | 3,334,000| 4,576,000| 2,163,000| 1,524,000| 3,687,000| 1,162,000
  1900-1 | 3,269,000| 4,576,000| 1,909,000| 1,526,000| 3,435,000| 1,087,000
  1901-2 | 3,253,000| 4,836,000| 1,996,000| 1,912,000| 3,908,000| 1,384,000
  1902-3 | 3,185,000| 5,148,000| 1,980,000| 1,910,000| 3,890,000| 1,362,000
  1903-4 | 2,977,000| 5,148,000| 1,980,000| 1,795,000| 3,775,000| 1,368,000
  1904-5 | 3,572,000| 5,148,000| 2,112,000| 2,063,000| 4,175,000| 1,473,000
  1905-6 | 3,766,000| 5,244,000| 2,364,000| 2,239,000| 4,603,000| 1,587,000
  1906-7 | 3,915,000| 5,444,000| 2,460,000| 2,362,000| 4,822,000| 1,562,000

World’s Supply and Distribution of Cotton.

[From Latham, Alexander & Co.’s “Cotton Movement & Fluctuation,” 1902-7.]

            |           |              Crops.              |
            |           |                                  |
            |Visible and+-----------+----------+-----------+
            | Invisible |           |          |           |
            | Supply at |   United  |   All    |   Total.  |
    Year.   | beginning |   States  |  Others. |           |
            | of year.  |           |          |           |
            |           Bales of 500 pounds each.
   1884-5   | 1,550,000 |  5,136,000| 2,101,000|  7,237,000|
   1885-6   | 1,343,000 |  5,984,000| 2,234,000|  8,218,000|
   1886-7   | 1,441,000 |  5,960,000| 2,577,000|  8,537,000|
   1887-8   | 1,473,000 |  6,400,000| 2,309,000|  8,709,000|
   1888-9   | 1,291,000 |  6,463,000| 2,632,000|  9,095,000|
   1889-90  | 1,119,000 |  6,820,000| 2,933,000|  9,753,000|
   1890-1   | 1,077,000 |  8,137,000| 3,039,000| 11,176,000|
   1891-2   | 1,742,000 |  8,640,000| 3,001,000| 11,641,000|
   1892-3   | 2,818,000 |  6,435,000| 3,296,000|  9,731,000|
   1893-4   | 2,258,000 |  7,136,000| 3,314,000| 10,450,000|
   1894-5   | 2,128,000 |  9,640,000| 2,978,000| 12,618,000|
   1895-6   | 3,203,000 |  6,912,000| 3,421,000| 10,333,000|
   1896-7   | 1,931,000 |  8,435,868| 3,438,000| 11,873,868|
   1897-8   | 1,923,636 | 10,890,000| 3,316,290| 14,206,290|
   1898-9   | 3,241,158 | 11,078,000| 3,694,934| 14,772,934|
   1899-1900| 3,999,364 |  9,137,000| 3,092,897| 12,229,897|
   1900-1   | 2,456,489 | 10,218,000| 3,414,454| 13,632,454|
   1901-2   | 2,673,027 | 10,380,380| 4,038,569| 14,413,949|
   1902-3   | 2,672,068 | 10,511,020| 4,215,661| 14,726,687|
   1903-4   | 2,921,061 |  9,841,671| 4,317,670| 14,159,341|
   1904-5   | 2,770,244 | 13,420,440| 4,524,000| 17,944,056|
   1905-6   | 5,172,638 | 11,048,000| 4,612,553| 15,660,553|
   1906-7   | 4,504,382 | 13,346,000| 5,232,000| 18,578,000|

            |            |  Balance of Supply
            |            |     End of year.
            |   Total    +----------+----------
            |   Actual   |          |
            |Consumption.| Visible. |Invisible.
    Year.   |            |          |
            |            |          |
            |     Bales of 500 pounds each.
   1884-5   |  7,444,000 |   984,000|   359,000
   1885-6   |  8,120,000 |   968,000|   473,000
   1886-7   |  8,505,000 |   999,000|   474,000
   1887-8   |  8,891,000 |   772,000|   519,000
   1888-9   |  9,267,000 |   682,000|   437,000
   1889-90  |  9,795,000 |   846,000|   231,000
   1890-1   | 10,511,000 | 1,315,000|   427,000
   1891-2   | 10,565,000 | 2,310,000|   508,000
   1892-3   | 10,291,000 | 1,903,000|   355,000
   1893-4   | 10,580,000 | 1,792,000|   336,000
   1894-5   | 11,543,000 | 2,185,000| 1,018,000
   1895-6   | 11,605,000 | 1,231,000|   700,000
   1896-7   | 11,880,332 | 1,295,636|   628,000
   1897-8   | 12,888,768 | 1,905,158| 1,336,000
   1898-9   | 14,014,728 | 2,371,364| 1,628,000
   1899-1900| 13,772,772 | 1,071,489| 1,385,000
   1900-1   | 13,415,916 | 1,549,027| 1,124,000
   1901-2   | 14,414,908 | 1,306,068| 1,366,000
   1902-3   | 14,477,694 | 1,177,677| 1,743,384
   1903-4   | 14,310,158 | 1,085,237| 1,735,007
   1904-5   | 15,541,667 | 2,501,469| 2,671,164
   1905-6   | 16,328,804 | 1,702,485| 2,801,897
   1906-7   | 17,005,640 | 2,215,497| 3,861,245

Stocks of Money in Thirteen Principal Countries of the World in 1873,    293
1896 and 1906.

Relative increase in use of gold, silver and paper money illustrated.

                  |               Stock of Gold.               |
  Countries.      +--------------+--------------+--------------+
                  |     1873.    |     1896.    |     1906.    |
  United States   |  $135,000,000|  $696,300,000|$1,593,300,000|
  Great Britain   |   160,000,000|   584,000,000|   486,700,000|
  France          |   450,000,000|   772,000,000|   926,400,000|
  Germany         |   160,200,000|   654,500,000| 1,030,300,000|
  Russia          |   149,100,000|   586,900,000|   939,400,000|
  Italy           |    20,000,000|    96,900,000|   215,500,000|
  Belgium         |    25,000,000|    35,000,000|    31,100,000|
  Netherlands     |    12,000,000|    21,900,000|    45,900,000|
  Austria-Hungary |    35,000,000|   178,500,000|   306,400,000|
  Australasia     |    50,000,000|   132,100,000|   125,000,000|
  Denmark         |     4,100,000|    15,400,000|    22,600,000|
  Sweden          |     1,800,000|    10,600,000|    22,600,000|
  Norway          |     7,600,000|     7,500,000|     8,300,000|
  Total           | 1,209,800,000| 2,791,600,000| 5,753,500,000|

                  |               Stock of Silver.             |
  Countries.      +--------------+--------------+--------------+
                  |     1873.    |     1896.    |     1906.    |
  United States   |  $  6,150,000|  $364,500,000|  $698,700,000|
  Great Britain   |    95,000,000|   121,700,000|   116,800,000|
  France          |   500,000,000|   443,900,000|   411,100,000|
  Germany         |   306,235,000|   212,800,000|   219,700,000|
  Russia          |    18,600,000|    74,200,000|    77,900,000|
  Italy           |    23,000,000|    45,400,000|    31,700,000|
  Belgium         |    15,000,000|    57,000,000|    24,700,000|
  Netherlands     |    37,300,000|    56,100,000|    52,600,000|
  Austria-Hungary |    40,000,000|    63,700,000|   105,300,000|
  Australasia     |     3,000,000|     7,000,000|    10,000,000|
  Denmark         |     7,500,000|     5,400,000|     6,100,000|
  Sweden          |     4,300,000|     4,900,000|     7,700,000|
  Norway          |     1,600,000|     2,000,000|     3,100,000|
  Total           | 1,057,685,000| 1,728,600,000| 1,765,400,000|

                  |              Uncovered paper.              |
  Countries.      +--------------+--------------+--------------+
                  |     1873.    |     1896.    |     1906.    |
  United States   |  $749,445,000|  $397,000,000|  $610,800,000|
  Great Britain   |    59,800,000|   112,100,000|   116,800,000|
  France          |   385,300,000|   119,200,000|   269,200,000|
  Germany         |    90,800,000|   123,800,000|   267,100,000|
  Russia          |   618,400,000|   467,200,000|     No data. |
  Italy           |    87,800,000|   161,000,000|   150,600,000|
  Belgium         |    35,100,000|    72,500,000|   125,800,000|
  Netherlands     |    15,300,000|    37,900,000|    57,800,000|
  Austria-Hungary |   265,800,000|   177,600,000|   119,300,000|
  Australasia     |   .......... |    22,500,000|     No data. |
  Denmark         |     6,500,000|     6,400,000|    10,700,000|
  Sweden          |     6,000,000|    19,000,000|    34,800,000|
  Norway          |     2,300,000|     3,800,000|     7,000,000|
  Total           | 2,322,545,000| 1,720,000,000| 1,769,900,000|

                  |        Total money in countries named.
  Countries.      +--------------+--------------+----------------
                  |     1873.    |     1896.    |       1906.
  United States   |  $890,595,000|$1,727,800,000|  $2,902,800,000
  Great Britain   |   314,800,000|   817,800,000|     720,300,000
  France          | 1,335,300,000| 1,335,100,000|   1,606,700,000
  Germany         |   557,235,000|   991,100,000|   1,517,100,000
  Russia          |   786,100,000| 1,128,300,000|[K]1,017,300,000
  Italy           |   130,800,000|   303,300,000|     397,800,000
  Belgium         |    75,100,000|   164,500,000|     181,600,000
  Netherlands     |    64,600,000|   115,900,000|     156,300,000
  Austria-Hungary |   340,800,000|   419,800,000|     531,000,000
  Australasia     | [K]53,000,000|   161,600,000|  [K]135,000,000
  Denmark         |    18,100,000|    27,200,000|      39,400,000
  Sweden          |    12,100,000|    34,500,000|      65,100,000
  Norway          |    11,500,000|    13,300,000|      18,400,000
  Total           | 4,590,030,000| 7,240,200,000|   9,288,800,000

  [K] Exclusive of uncovered paper, for which no data is available.

Note.--The great increase in the use of capital in the manufacturing
industries in recent years seems to justify the presentation of this
table showing the general growth of money in the manufacturing

Annual Average Gold Production of the World.                             294

      Period.   | Gold--million ||    Period.   | Gold--million
                |    dollars.   ||              |    dollars.
   1493 to 1700 |       5.4     || 1901 to 1905 |     322.1
   1701 to 1850 |      13.1     ||         1906 |     400.3
   1851 to 1890 |     120.2     ||         1907 |     410.0
   1891 to 1900 |     210.1     ||(estim.) 1908 |     444.0

The World’s Production of Pig Iron from 1800 to 1907.

[In gross tons of 2240 lbs.]

   Year.|   United       |   Great         |  Germany.  |
        |   States.      |  Britain.       |            |
        |   Tons.        |   Tons.         |   Tons.    |
   1800 |     40,000     |    190,000      |     40,000 |
   1810 |     55,000     |    250,000      |     46,000 |
   1820 |     20,000     |    400,000      |     90,000 |
   1830 |    165,000     |    680,000      |    120,000 |
   1840 |    287,000     |  1,390,000      |    170,000 |
   1850 |    564,000     |  2,250,000      |    402,000 |
   1860 |    820,000     |  3,830,000      |    530,000 |
   1870 |  1,665,000     |  5,960,000      |  1,390,000 |
   1880 |  3,835,000     |  7,750,000      |  2,730,000 |
   1885 |  4,050,000     |  7,420,000      |  2,690,000 |
   1889 |  7,603,000     |  8,250,000      |  4,530,000 |
   1895 |  9,446,000     |  7,703,000      |  5,465,000 |
   1896 |  8,623,000     |  8,660,000      |  6,271,000 |
   1897 |  9,652,000     |  8,796,000      |  6,771,000 |
   1898 | 11,773,000     |  8,610,000      |  7,196,000 |
   1899 | 13,620,000     |  9,421,000      |  8,013,000 |
   1900 | 13,789,000     |  8,960,000      |  8,384,000 |
   1901 | 15,878,000     |  7,929,000      |  7,754,000 |
   1902 | 17,821,000     |  8,680,000      |  8,395,000 |
   1903 | 18,009,000     |  8,935,000      |  9,860.000 |
   1904 | 16,497,000     |  8,694,000      |  9,899,000 |
   1905 | 22,992,000     |  9,608,000      | 10,703,000 |
   1906 | 25,307,000     | 10,109,000      | 12,099,000 |
   1907 | 25,781,000     |  9,924,000      | 12,672,000 |

   Year.|  France.       | Various.       |    Total.
        |                |                |
        |   Tons.        |   Tons.        |     Tons.
   1800 |    60,000      |   130,000      |      460,000
   1810 |    85,000      |   180,000      |      616,000
   1820 |   140,000      |   385,000      |    1,570,000
   1830 |   220,000      |   480,000      |    2,677,000
   1840 |   350,000      |   640,000      |    4,426,000
   1850 |   570,000      |   270,000      |      920,000
   1860 |   900,000      | 1,100,000      |    7,180,000
   1870 | 1,180,000      | 1,710,000      |   11,905,000
   1880 | 1,730,000      | 2,090,000      |   18,135,000
   1885 | 1,630,000      | 2,310,000      |   18,100,000
   1889 | 1,720,000      | 3,060,000      |   25,163,000
   1895 | 2,006,000      | 4,247,000      |   28,867,000
   1896 | 2,302,000      | 5,001,000      |   30,857,000
   1897 | 2,444,000      | 5,267,000      |   32,930,000
   1898 | 2,485,000      | 5,808,000      |   35,872,000
   1899 | 2,537,000      | 6,464,000      |   40,055,000
   1900 | 2,671,000      | 6,686,000      |   40,490,000
   1901 | 2,351,000      | 6,886,000      |   40,798,000
   1902 | 2,367,000      | 6,876,000      |   44,139,000
   1903 | 2,796,000      | 6,677,000      |   46,277,000
   1904 | 2,927,000      | 7,322,000      |   45,339,000
   1905 | 3,028,000      | 7,569,000      |   53,900,000
   1906 | 3,267,000      | 7,360,000      |   58,142,000
   1907 | 3,532,000      | 7,591,000      |[L]59,500,000

  [L] Preliminary estimate.

Note.--Official figures of the respective national statistical offices
of the United States, the United Kingdom, Germany and France. Figures
for all other countries taken from the French and Swedish Mineral

Commerce of the World since 1830.

[Aggregate of imports for consumption and domestic exports in millions
of dollars.--Mulhall’s figures prior to 1890.]

           Country.       | 1830. | 1840. | 1850. | 1860. | 1870. |
                          |       |       |       |       |       |
  United Kingdom          |   422 |   547 |   811 | 1,800 | 2,625 |
  France                  |   197 |   317 |   456 |   801 | 1,089 |
  Germany                 |   220 |   249 |   336 |   624 | 1,017 |
  Russia                  |   134 |   158 |   192 |   230 |   494 |
  Austria-Hungary         |    72 |   105 |   139 |   225 |   398 |
  Italy                   |    96 |   144 |   182 |   249 |   317 |
  Spain                   |    33 |    48 |    53 |   120 |   197 |
  Portugal                |    14 |    19 |    24 |    38 |    48 |
  Holland and Belgium     |   144 |   216 |   293 |   413 |   653 |
  United States           |   105 |   197 |   297 |   653 |   702 |
  Spanish America         |   168 |   230 |   336 |   451 |   648 |
  India                   |    48 |    96 |   144 |   249 |   408 |
  British colonies, other |    43 |   101 |   211 |   494 |   614 |
  Other countries         |   264 |   323 |   326 |   853 | 1,200 |
        The world         | 1,960 | 2,750 | 3,800 | 7,200 |10,500 |

           Country.       | 1880. | 1890. | 1897. | 1903. |  1907.
                          |       |       |       |       |
  United Kingdom          | 3,350 | 3,552 | 3,389 | 4,056 |    5,217
  France                  | 1,627 | 1,493 | 1,450 | 1,747 |    2,237
  Germany                 | 1,411 | 1,761 | 1,996 | 2,621 |    3,681
  Russia                  |   629 |   566 |   618 |   867 |[M][N]834
  Austria-Hungary         |   513 |   441 |   609 |   813 |      949
  Italy                   |   437 |   451 |   438 |   652 |   [M]821
  Spain                   |   240 |   283 |   301 |   257 |   [M]325
  Portugal                |    67 |    86 |    73 |    97 |   [O]100
  Holland and Belgium     | 1,137 | 1,488 | 1,915 | 2,614 | [M]3,010
  United States           | 1,478 | 1,536 | 1,815 | 2,453 |    3,318
  Spanish America         |   768 |   797 |   826 |   965 |    1,802
  India                   |   518 |   629 |   440 |   761 |   [B]913
  British colonies, other |   974 | 1,430 | 1,550 | 2,292 | [O]2,169
  Other countries         | 1,351 | 2,287 | 3,020 | 2,866 | [P]3,733
        The world         |14,500 |16,800 |18,500 |23,061 |   29,109

  [M] 1906.

  [N] Trade over the European frontier only.

  [O] 1904.

  [P] Various years, 1904 to 1906.

Imports and Exports of Manufactures into and from the Principal          295
Countries of the World and the Share Which Manufactures Formed of
their Total Commerce.

The Bureau of Statistics of the Department of Commerce and Labor
published in 1903 a series of tables showing the imports and exports
of manufactures of the principal countries of the world and the share
which manufactures formed, respectively, of the imports and exports of
each of the countries named. The following is a summarization of that

                                  |                       |
                                  |    Iron and Steel.    |
                                  |                       |
             Countries.           +-----------+-----------+
                                  |  Import.  |  Export.  |
  Austria-Hungary (1901)          |$13,942,000|$10,667,000|
  Belgium (1902)                  | 19,083,000| 46,144,000|
  Denmark (1901)                  |  9,415,000|  1,711,000|
  France (1902)                   | 31,336,000| 42,238,000|
  Germany (1901)                  | 42,186,000|207,951,000|
  Italy (1901)                    | 31,318,000|  1,523,000|
  Netherlands (1901)              | 92,446,000| 58,045,000|
  Portugal (1902)                 |  6,431,000|    249,000|
  Russia-European frontier (1901) | 48,538,000|    818,000|
  Spain (1902)                    | 19,448,000|    955,000|
  Sweden (1902)                   | 11,916,000| 15,402,000|
  Norway (1901)                   | 11,672,000|    963,000|
  Switzerland (1902)              | 17,366,000| 10,704,000|
  United Kingdom (1902)           | 74,685,000|298,945,000|
  United States (1903)            | 51,617,000| 96,642,000|
  Canada (1902)                   | 34,727,000|     --    |
  Mexico (1901)                   | 18,457,000|     --    |
  Argentina (1902)                | 18,343,000|     --    |
  Brazil (1901)                   |  7,034,000|     --    |
  China (1902)                    |  4,721,000|     --    |
  Japan (1902)                    | 13,878,000|     --    |
  India (1902)                    | 54,302,000|     --    |
  Australia (1901)                | 36,066,000|     --    |
  New Zealand (1900)              | 12,088,000|     --    |
                                  |                       |
                                  |       Textiles.       |
                                  |                       |
             Countries.           +-----------+-----------+
                                  |  Import.  |  Export.  |
  Austria-Hungary (1901)          |$34,696,000|$27,659,000|
  Belgium (1902)                  | 21,652,000| 41,722,000|
  Denmark (1901)                  | 12,699,000|    245,000|
  France (1902)                   | 44,611,000|188,338,000|
  Germany (1901)                  | 65,290,000|204,789,000|
  Italy (1901)                    | 17,116,000| 36,399,000|
  Netherlands (1901)              | 41,172,000| 29,668,000|
  Portugal (1902)                 |  7,253,000|  1,171,000|
  Russia-European frontier (1901) | 23,728,000|  9,942,000|
  Spain (1902)                    | 11,032,000|  6,977,000|
  Sweden (1902)                   | 13,306,000|    796,000|
  Norway (1901)                   |  8,886,000|    257,000|
  Switzerland (1902)              | 27,205,000| 76,447,000|
  United Kingdom (1902)           |175,194,000|547,325,000|
  United States (1903)            |146,202,000| 39,641,000|
  Canada (1902)                   | 10,060,000|     --    |
  Mexico (1901)                   | 10,294,000|     --    |
  Argentina (1902)                | 28,700,000|     --    |
  Brazil (1901)                   | 14,032,000|     --    |
  China (1902)                    | 79,580,000|     --    |
  Japan (1902)                    | 15,380,000| 31,729,000|
  India (1902)                    |125,356,000|     --    |
  Australia (1901)                | 54,540,000|     --    |
  New Zealand (1900)              | 12,821,000|     --    |
                                  |                        |
                                  |   Other Manufactures.  |
                                  |                        |
             Countries.           +-----------+------------+
                                  |  Import.  |   Export.  |
  Austria-Hungary (1901)          |$65,350,000|$149,038,000|
  Belgium (1902)                  | 63,475,000|  90,974,000|
  Denmark (1901)                  | 17,741,000|   1,926,000|
  France (1902)                   |136,645,000| 278,227,000|
  Germany (1901)                  |259,193,000| 411,311,000|
  Italy (1901)                    | 53,305,000|  37,451,000|
  Netherlands (1901)              |108,121,000| 143,797,000|
  Portugal (1902)                 | 10,302,000|   1,946,000|
  Russia-European frontier (1901) | 85,900,000|  45,309,000|
  Spain (1902)                    | 27,463,000|  33,398,000|
  Sweden (1902)                   | 26,613,000|  23,221,000|
  Norway (1901)                   | 13,037,000|  10,863,000|
  Switzerland (1902)              | 48,478,000|  47,960,000|
  United Kingdom (1902)           |478,821,000| 294,861,000|
  United States (1903)            |369,310,000| 654,860,000|
  Canada (1902)                   | 67,719,000|  18,076,000|
  Mexico (1901)                   | 18,170,000|   9,178,000|
  Argentina (1902)                | 20,674,000|     704,000|
  Brazil (1901)                   | 21,954,000|      43,000|
  China (1902)                    | 56,239,000|     --     |
  Japan (1902)                    | 39,637,000|  28,173,000|
  India (1902)                    | 74,123,000|     --     |
  Australia (1901)                | 65,598.000|  13,754,000|
  New Zealand (1900)              | 16,732,000|     970,000|
                                  |                         | Percent which
                                  |   Total Manufactures.   | manufactures
                                  |                         | form of total.
             Countries.           +------------+------------+-------+-------
                                  |   Import.  |   Export.  |Import.|Export.
  Austria-Hungary (1901)          |$113,988,000|$187,364,000| 32.63 | 48.35
  Belgium (1902)                  | 104,210,000| 178,840,000| 23.72 | 49.89
  Denmark (1901)                  |  39,855,000|   3,882,000| 37.47 |  4.96
  France (1902)                   | 212,592,000| 508,803,000| 24.95 | 62.22
  Germany (1901)                  | 366,669,000| 824,051,000| 28.42 | 78.13
  Italy (1901)                    | 101,739,000|  75,373,000| 30.68 | 28.50
  Netherlands (1901)              | 241,739,000| 231,510,000| 29.54 | 33.27
  Portugal (1902)                 |  23,986,000|   3,366,000| 39.96 | 10.96
  Russia-European frontier (1901) | 158,166,000|  56,069,000| 56.37 | 14.45
  Spain (1902)                    |  57,943,000|  41,330,000| 37.60 | 29.04
  Sweden (1902)                   |  51,835,000|  39,419,000| 42.08 | 41.61
  Norway (1901)                   |  33,595,000|  12,083,000| 43.46 | 28.78
  Switzerland (1902)              |  93,049,000| 135,111,000| 42.72 | 80.07
  United Kingdom (1902)           | 728,700,000|1141,131,000| 27.92 | 82.70
  United States (1903)            | 570,129,000| 791,143,000| 55.58 | 56.83
  Canada (1902)                   | 112,506,000|  18,076,000| 57.26 | 10.47
  Mexico (1901)                   |  46,921,000|   9,178,000| 75.11 | 27.78
  Argentina (1902)                |  67,717,000|     704,000| 68.13 |   .41
  Brazil (1901)                   |  43,020,000|      43,000| 44.87 |  --
  China (1902)                    | 140,540,000|     --     | 71.36 |  --
  Japan (1902)                    |  69,895,000|  59,902,000| 51.73 | 47.05
  India (1902)                    | 253,781,000|     --     | 88.15 |  --
  Australia (1901)                | 156,204,000|  13,754,000| 76.35 | 10.23
  New Zealand (1900)              |  41,641,000|     970,000| 83.82 |  1.72

The Manufacturing Industry of the United States, 1850 to 1905, showing   296
Value of Product, Capital Invested, Wage-Earners Employed, Wages Paid,
and Number of Establishments in each census year in the period under

[From official records of the United States Census Office.]

                                           |       Date of Census.       |
                                           |              |              |
                                           |     1850     |     1860     |
                                           |              |              |
  Number of establishments                 |       123,025|       140,433|
  Capital                                  |  $533,245,351|$1,009,855,715|
  Salaried officials, clerks, etc., Number |      [S]     |      [S]     |
  Salaries                                 |      [S]     |      [S]     |
  Wage-earners, average number             |       957,059|     1,311,246|
  Total wages                              |  $236,755,464|  $378,878,966|
    Men, 16 years and over                 |       731,137|     1,040,349|
      Wages                                |      [S]     |      [S]     |
    Women, 16 years and over               |     2,225,922|       270,897|
      Wages                                |      [S]     |      [S]     |
  Children, under 16 years                 |      [S]     |      [S]     |
      Wages                                |      [S]     |      [S]     |
  Miscellaneous expenses                   |      [U]     |      [U]     |
  Cost of materials used                   |  $555,123,822|$1,031,605,092|
  Value of products, including             |              |              |
    custom work and repairing.             |$1,019,106,616|$1,885,861,676|
                                           |        Date of Census.      |
                                           |              |              |
                                           |     1870     |     1880     |
                                           |              |              |
  Number of establishments                 |       252,148|       253,852|
  Capital                                  |$2,118,208,769 $2,790,272,606|
  Salaried officials, clerks, etc., Number |      [S]     |      [S]     |
  Salaries                                 |      [S]     |      [S]     |
  Wage-earners, average number             |     2,053,996|     2,732,595|
  Total wages                              |  $775,584,343|  $947,953,795|
    Men, 16 years and over                 |     1,615,598|     2,019,035|
      Wages                                |      [S]     |      [S]     |
    Women, 16 years and over               |       323,770|       531,639|
      Wages                                |      [S]     |      [S]     |
  Children, under 16 years                 |       114,628|  181,921     |
      Wages                                |      [S]     |      [S]     |
  Miscellaneous expenses                   |      [U]     |      [U]     |
  Cost of materials used                   |$2,488,427,242|$3,396,823,549|
  Value of products, including             |              |              |
    custom work and repairing.             |$4,232,325,442|$5,369,579,191|
                                           |        Date of Census.          |
                                           |                 |               |
                                           |      1890       |    1900.[Q]   |
                                           |                 |               |
  Number of establishments                 |       355,475   |        512,254|
  Capital                                  |$6,525,156,486   | $9,817,434,799|
  Salaried officials, clerks, etc., Number |       461,609[R]|        396,759|
  Salaries                                 |  $391,988,208[R]|   $403,711,233|
  Wage-earners, average number             |     4,251,613   |      5,308,406|
  Total wages                              |$1,891,228,321   | $2,322,333,877|
    Men, 16 years and over                 |     3,327,042   |      4,110,527|
      Wages                                |$1,659,234,483   | $2,016,677,789|
    Women, 16 years and over               |       803,686   |      1,029,296|
      Wages                                |  $215,367,976   |   $279,994,396|
  Children, under 16 years                 |       120,885   |        168,583|
      Wages                                |   $16,625,862   |    $25,661,692|
  Miscellaneous expenses                   |  $631,225,035   | $1,027,775,778|
  Cost of materials used                   |$5,162,044,076   | $7,345,413,651|
  Value of products, including             |                 |               |
    custom work and repairing.             |$9,372,437,283   |$13,004,400,143|
                                           |Date of Census.|
                                           |               |
                                           |     1905.     |
                                           |               |
  Number of establishments                 |        588,769|
  Capital                                  |$13,872,035,371|
  Salaried officials, clerks, etc., Number |        566,175|
  Salaries                                 |   $609,200,251|
  Wage-earners, average number             |      6,152,443|
  Total wages                              | $3,014,389,372|
    Men, 16 years and over                 |      4,792,874|
      Wages                                | $2,629,747,837|
    Women, 16 years and over               |      1,194,083|
      Wages                                |   $356,992,855|
  Children, under 16 years                 |        167,066|
      Wages                                |    $29,228,667|
  Miscellaneous expenses                   | $1,651,603,535|
  Cost of materials used                   | $9,497,619,851|
  Value of products, including             |               |
    custom work and repairing.             |$16,866,706,985|
                                           |Per cent of Increase.
                                           | 1850 | 1860 | 1870 |
                                           |  to  |  to  |  to  |
                                           | 1860 | 1870 | 1880 |
  Number of establishments                 | 14.1 |  79.6|  0.7 |
  Capital                                  | 89.4 | 109.3| 31.7 |
  Salaried officials, clerks, etc., Number |  --  |  --  |  --  |
  Salaries                                 |  --  |  --  |  --  |
  Wage-earners, average number             | 37.0 |  56.6| 33.0 |
  Total wages                              | 60.0 | 104.7| 22.2 |
    Men, 16 years and over                 | 42.3 |  55.3| 25.0 |
      Wages                                |  --  |  --  |  --  |
    Women, 16 years and over               | 19.9 |  19.5| 64.2 |
      Wages                                |  --  |  --  |  --  |
  Children, under 16 years                 |  --  |  --  | 58.7 |
      Wages                                |  --  |  --  |  --  |
  Miscellaneous expenses                   |  --  |  --  |  --  |
  Cost of materials used                   | 85.8 | 141.2| 36.5 |
  Value of products, including             |      |      |      |
    custom work and repairing.             | 85.1 | 124.4| 26.9 |
                                           |Per cent of Increase.
                                           |  1880  |  1890  | 1900
                                           |   to   |   to   |  to
                                           |  1890  |  1900  | 1910
  Number of establishments                 | 40.0   | 44.1   |  4.2
  Capital                                  |133.9   | 50.5   | 41.3
  Salaried officials, clerks, etc., Number |   --   | 13.9[T]| 42.7
  Salaries                                 |   --   |  3.0   | 50.9
  Wage-earners, average number             | 55.6   | 24.9   | 15.9
  Total wages                              | 99.5   | 22.8   | 29.8
    Men, 16 years and over                 | 64.8   | 23.5   | 16.6
      Wages                                |   --   | 21.5   | 30.4
    Women, 16 years and over               | 51.2   | 28.1   | 16.0
      Wages                                |   --   | 30.0   | 27.5
  Children, under 16 years                 | 33.6[T]| 39.5   |  0.9
      Wages                                |   --   | 54.3   | 13.9
  Miscellaneous expenses                   |   --   | 62.8   | 60.7
  Cost of materials used                   | 52.0   | 42.3   | 29.3
  Value of products, including             |        |        |
    custom work and repairing.             | 74.5   | 38.8   | 29.7

  [Q] Includes, for comparative purposes, 85 governmental
      establishments in the District of Columbia having products
      valued at $9,887,355, the statistics of such establishments for
      1890 not being separable. Totals for 1900 and 1905 are exclusive
      of statistics for governmental establishments and for Hawaii.

  [R] Includes proprietors and firm members, with their salaries;
      number only reported in 1900, but not included in this table.

  [S] Not reported separately.

  [T] Decrease.

  [U] Not reported.

Manufactures in the U. S.: Gross and Net Values of Products, Census      297
Years 1900 and 1905, by Industry Groups.

The gross value of manufactures as reported by the census contains
many duplications because the finished products of some factories
frequently become the material for other factories. In this way not
only one but several duplications of the cost of materials often
occur. The net value of productions eliminates these duplications by
deducting from the gross value the cost of all materials which have
undergone any process of manufacture covered by the census reports on
manufactures. For further explanation of the relation of “gross” and
“net” values, see page 211.

[From reports of the Bureau of the Census, Department of Commerce and Labor.]

                                    |                 1900.[V]               |
                Group.              |       Gross.       |       Net.        |
                                    |    Value.    |Rank.|   Value.    |Rank.|
                                    |   Dollars.   |     |  Dollars.   |     |
  Food and kindred products         | 2,273,880,874|   1 |1,750,811,817|   1 |
  Textiles                          | 1,637,484,484|   3 |1,081,961,248|   2 |
  Iron and steel and their products | 1,793,490,908|   2 |  983,821,918|   3 |
  Lumber and its remanufactures     | 1,030,695,350|   5 |  547,227,860|   6 |
  Leather and its finished products |   583,731,046|   9 |  329,614,996|  11 |
  Paper and printing                |   606,317,768|   8 |  419,798,101|   7 |
  Liquors and beverages             |   425,504,167|  12 |  349,157,618|  10 |
  Chemicals and allied products     |   552,797,877|  10 |  372,538,857|   8 |
  Clay, glass, and stone products   |   293,564,235|  13 |  245,447,118|  14 |
  Metals and metal products,
    other than iron & steel         |   748,795,464|   7 |  371,154,446|   9 |
  Tobacco                           |   283,076,546|  14 |  264,052,573|  12 |
  Vehicles for land transportation  |   508,524,510|  11 |  250,622,377|  13 |
  Shipbuilding                      |    74,578,158|  15 |   42,492,518|  15 |
  Miscellaneous industries          | 1,004,092,294|   6 |  638,191,538|   5 |
  Hand trades                       | 1,183,615,478|   4 |  721,104,859|   4 |
        Total                       |13,000,149,159|  -- |8,367,997,844|  -- |
                                    |                  1905.
                Group.              |       Gross.       |        Net.
                                    |    Value.    |Rank.|    Value.    |Rank.
                                    |   Dollars.   |     |   Dollars.   |
  Food and kindred products         | 2,845,234,900|   1 | 2,176,489,626|   1
  Textiles                          | 2,147,441,418|   3 | 1,397,009,940|   2
  Iron and steel and their products | 2,176,739,726|   2 | 1,239,490,273|   3
  Lumber and its remanufactures     | 1,223,730,336|   4 |   805,315,333|   4
  Leather and its finished products |   705,747,470|   9 |   401,011,414|  10
  Paper and printing                |   857,112,256|   8 |   596,872,350|   7
  Liquors and beverages             |   501,266,605|  11 |   431,735,208|   9
  Chemicals and allied products     | 1,031,965,263|   5 |   714,489,549|   5
  Clay, glass, and stone products   |   391,230,422|  12 |   334,971,057|  11
  Metals and metal products,
    other than iron & steel         |   922,262,456|   7 |   442,912,699|   8
  Tobacco                           |   331,117,681|  13 |   307,100,175|  13
  Vehicles for land transportation  |   643,924,442|  10 |   324,109,901|  12
  Shipbuilding                      |    82,769,239|  14 |    46,707,258|  14
  Miscellaneous industries          |   941,604,873|   6 |   602,990,604|   6
  Hand trades                       |      [W]     | [W] |       [W]    | [W]
        Total                       |14,802,147,087|  -- | 9,821,205,387|  --

  [V] The figures of production for 1900 exclude 10 lumber
      establishments reported for Alaska with products valued at

  [W] “Hand trades” not included in the Census of 1905.

Manufactures: Percentage Distribution, by Groups of States, Census       298
Years 1850 to 1905.

[From reports of the Bureau of the Census, Department of Commerce and

                       |          |        | Wage-earners. |
   Group of States and |Establish-|Capital.+-------+-------+
   census years.[X]    |  ments.  |        |Average|       |
                       |          |        |number.| Wages.|
                       |    Per   |   Per  |  Per  |  Per  |
                       |   cent.  |  cent. | cent. | cent. |
                       |          |        |       |       |
   New England States: |          |        |       |       |
     1850              |   18.3   |  31.1  |  32.7 |  31.8 |
     1860              |   14.7   |  25.5  |  29.9 |  27.5 |
     1870              |   12.8   |  23.1  |  25.7 |  27.2 |
     1880              |   12.4   |  22.4  |  23.7 |  23.9 |
     1890              |   13.6   |  18.0  |  19.3 |  19.0 |
     1900              |   10.9   |  16.8  |  18.1 |  18.3 |
     1905              |   10.3   |  14.7  |  17.2 |  16.8 |
   Middle States:      |          |        |       |       |
     1850              |   43.9   |  44.2  |  43.9 |  44.3 |
     1860              |   37.9   |  43.1  |  41.6 |  40.2 |
     1870              |   34.7   |  42.7  |  39.2 |  41.4 |
     1880              |   35.3   |  42.1  |  41.7 |  42.8 |
     1890              |   35.2   |  39.2  |  38.5 |  40.8 |
     1900              |   34.1   |  40.7  |  36.6 |  38.4 |
     1905              |   33.6   |  39.5  |  36.7 |  37.3 |
   Southern States:    |          |        |       |       |
     1850              |   16.7   |  12.6  |  11.5 |   9.5 |
     1860              |   17.2   |  11.5  |  10.1 |   9.2 |
     1870              |   15.4   |   6.6  |   9.1 |   5.8 |
     1880              |   14.6   |   6.9  |   8.2 |   5.6 |
     1890              |   13.1   |   7.8  |   9.7 |   7.1 |
     1900              |   15.1   |   9.0  |  13.3 |   9.2 |
     1905              |   15.3   |  11.0  |  14.0 |  10.7 |
   Central States:     |          |        |       |       |
     1850              |   20.2   |  11.8  |  11.5 |  12.7 |
     1860              |   23.4   |  17.1  |  14.2 |  14.9 |
     1870              |   33.5   |  24.4  |  23.8 |  22.6 |
     1880              |   32.3   |  25.1  |  23.6 |  24.1 |
     1890              |   31.8   |  29.7  |  28.2 |  27.6 |
     1900              |   32.0   |  27.8  |  27.4 |  28.3 |
     1905              |   31.3   |  28.2  |  27.0 |  28.4 |
   Western States:     |          |        |       |       |
     1850              |    [Y]   |   [Y]  |   [Y] |   [Y] |
     1860              |     .5   |    .4  |    .3 |    .4 |
     1870              |    1.5   |   1.0  |    .8 |   1.1 |
     1880              |    2.6   |   1.0  |   1.0 |   1.1 |
     1890              |    3.2   |   2.0  |   1.8 |   2.2 |
     1900              |    3.9   |   2.9  |   2.0 |   2.5 |
     1905              |    4.2   |   3.2  |   2.1 |   2.7 |
   Pacific States:     |          |        |       |       |
     1850              |     .9   |    .3  |    .4 |   1.7 |
     1860              |    6.3   |   2.4  |   3.9 |   7.8 |
     1870              |    2.1   |   2.2  |   1.4 |   1.9 |
     1880              |    2.8   |   2.5  |   1.8 |   2.5 |
     1890              |    3.1   |   3.3  |   2.5 |   3.3 |
     1900              |    4.0   |   2.1  |   2.6 |   3.2 |
     1905              |    5.2   |   3.3  |   3.0 |   4.1 |
   Alaska:             |          |        |       |       |
     1890              |    [Y]   |   [Y]  |   [Y] |   [Y] |
     1900              |    [Y]   |    .1  |   [Y] |    .1 |
     1905              |     .1   |    .1  |   [Y] |   [Y] |
                       |         |         |
   Group of States and | Miscel- | Cost of |  Value
   census years.[X]    | laneous |materials|   of
                       |expenses.|  used.  |products.
                       |   Per   |   Per   |   Per
                       |  cent.  |  cent.  |  cent.
                       |         |         |
   New England States: |         |         |
     1850              |    --   |   27.6  |   27.8
     1860              |    --   |   23.8  |   24.8
     1870              |    --   |   24.3  |   23.8
     1880              |    --   |   19.4  |   20.6
     1890              |   15.7  |   15.3  |   16.0
     1900              |   12.2  |   13.8  |   14.6
     1905              |   11.5  |   13.1  |   13.7
   Middle States:      |         |         |
     1850              |    --   |   47.9  |   46.4
     1860              |    --   |   43.1  |   42.5
     1870              |    --   |   41.7  |   41.8
     1880              |    --   |   41.1  |   41.3
     1890              |   36.3  |   38.1  |   38.9
     1900              |   39.1  |   37.6  |   38.1
     1905              |   38.7  |   37.0  |   37.3
   Southern States:    |         |         |
     1850              |    --   |    9.5  |    9.9
     1860              |    --   |   10.6  |   10.3
     1870              |    --   |    6.5  |    6.6
     1880              |    --   |    6.3  |    6.3
     1890              |    8.2  |    7.4  |    7.5
     1900              |    9.1  |    8.6  |    8.9
     1905              |   10.1  |   10.2  |   10.5
   Central States:     |         |         |
     1850              |    --   |   14.5  |   14.3
     1860              |    --   |   19.5  |   18.1
     1870              |    --   |   24.9  |   24.9
     1880              |    --   |   29.4  |   28.0
     1890              |   34.7  |   32.5  |   31.4
     1900              |   35.6  |   31.4  |   30.9
     1905              |   34.3  |   30.7  |   30.5
   Western States:     |         |         |
     1850              |    --   |     .1  |     .1
     1860              |    --   |     .2  |     .4
     1870              |    --   |    1.0  |    1.1
     1880              |    --   |    1.4  |    1.4
     1890              |    2.4  |    3.6  |    3.0
     1900              |    1.9  |    5.2  |    4.3
     1905              |    2.4  |    5.3  |    4.3
   Pacific States:     |         |         |
     1850              |    --   |     .4  |    1.5
     1860              |    --   |    2.8  |    3.9
     1870              |    --   |    1.6  |    1.8
     1880              |    --   |    2.4  |    2.4
     1890              |    2.7  |    3.1  |    3.2
     1900              |    2.1  |    3.4  |    3.2
     1905              |    2.9  |    3.7  |    3.7
   Alaska:             |         |         |
     1890              |    [Y]  |    [Y]  |    [Y]
     1900              |    [Y]  |    [Y]  |    [Y]
     1905              |     .1  |    [Y]  |    [Y]

  [X] New England States: Maine, New Hampshire, Vermont,
      Massachusetts, Rhode Island, Connecticut. Middle States: New
      York, New Jersey, Pennsylvania, Delaware, Maryland, District of
      Columbia. Southern States: Virginia, West Virginia, North
      Carolina, South Carolina, Georgia, Florida, Kentucky, Tennessee,
      Alabama, Mississippi, Arkansas, Louisiana, Indian Territory,
      Oklahoma, Texas. Central States: Ohio, Michigan, Indiana,
      Illinois, Wisconsin, Minnesota, Iowa, Missouri. Western States:
      Montana, Idaho, Wyoming, North Dakota, South Dakota, Nebraska,
      Nevada, Utah, Colorado, Kansas, Arizona, New Mexico. Pacific
      States: Washington, Oregon, California.

  [Y] Less than one-tenth of 1 per cent.

Summary of Manufactures in the U. S., by States and Territories,         299
Census Years 1900 and 1905.

[From reports of the Bureau of the Census, Department of Commerce and Labor.]

                   |      |          |              |     Wage-earners.     |
      State or     |Census|Number of |              +---------+-------------+
     Territory.    | year.|establish-|   Capital.   | Average |    Total    |
                   |      |  ments.  |              | number. |    wages.   |
                   |      |          |              |         |             |
                   |      |          |   Dollars.   |         |   Dollars.  |
  United States    | 1900 |  207,562 | 8,978,825,200|4,715,023|2,009,735,799|
                   | 1905 |  216,262 |12,686,265,673|5,470,321|2,611,540,532|
  Alabama          | 1900 |    2,000 |    60,165,904|   52,711|   14,911,683|
                   | 1905 |    1,882 |   105,382,859|   62,173|   21,878,451|
  Alaska           | 1900 |       48 |     3,568,704|    2,260|    1,374,680|
                   | 1905 |       82 |    10,684,799|    1,938|    1,095,579|
  Arizona          | 1900 |      154 |     9,517,578|    3,126|    2,287,352|
                   | 1905 |      169 |    14,395,654|    4,793|    3,969,248|
  Arkansas         | 1900 |    1,746 |    25,384,636|   31,525|   10,184,154|
                   | 1905 |    1,907 |    46,306,116|   33,089|   14,543,635|
  California       | 1900 |    4,997 |   175,467,806|   77,224|   39,889,997|
                   | 1905 |    6,839 |   282,647,201|  100,355|   64,656,686|
  Colorado         | 1900 |    1,323 |    58,172,865|   19,498|   11,707,566|
                   | 1905 |    1,606 |   107,663,500|   21,813|   15,100,365|
  Connecticut      | 1900 |    3,382 |   299,206,925|  159,733|   73,394,062|
                   | 1905 |    3,477 |   373,283,580|  181,605|   87,942,628|
  Delaware         | 1900 |      633 |    38,791,402|   20,562|    8,457,003|
                   | 1905 |      631 |    50,925,630|   18,475|    8,158,203|
  Dist. of Columbia| 1900 |      491 |    17,960,498|    6,155|    3,022,906|
                   | 1905 |      482 |    20,199,783|    6,299|    3,658,370|
  Florida          | 1900 |    1,275 |    25,682,171|   35,471|   10,916,443|
                   | 1905 |    1,413 |    32,971,982|   42,091|   15,767,182|
  Georgia          | 1900 |    3,015 |    79,303,316|   83,336|   19,958,153|
                   | 1905 |    3,219 |   135,211,551|   92,749|   27,392,442|
  Idaho            | 1900 |      287 |     2,130,112|    1,552|      818,239|
                   | 1905 |      364 |     9,689,445|    3,061|    2,059,391|
  Illinois         | 1900 |   14,374 |   732,829,771|  332,871|  159,104,179|
                   | 1905 |   14,921 |   975,844,799|  379,436|  208,405,468|
  Indian Territory | 1900 |      179 |     1,591,953|    1,087|      379,188|
                   | 1905 |      466 |     5,016,654|    2,257|    1,144,078|
  Indiana          | 1900 |    7,128 |   219,321,080|  139,017|   59,280,131|
                   | 1905 |    7,044 |   312,071,234|  154,174|   72,058,099|
  Iowa             | 1900 |    4,828 |    85,667,334|   44,420|   18,020,653|
                   | 1905 |    4,785 |   111,427,429|   49,481|   22,997,053|
  Kansas           | 1900 |    2,299 |    59,458,256|   27,119|   12,802,096|
                   | 1905 |    2,475 |    88,680,117|   35,570|   18,883,071|
  Kentucky         | 1900 |    3,648 |    87,995,822|   51,735|   18,454,252|
                   | 1905 |    3,734 |   147,282,478|   59,794|   24,438,684|
  Louisiana        | 1900 |    1,826 |   100,874,729|   40,878|   14,725,437|
                   | 1905 |    2,091 |   150,810,608|   55,859|   25,315,750|
  Maine            | 1900 |    2,878 |   114,007,715|   69,914|   25,730,735|
                   | 1905 |    3,145 |   143,707,750|   74,958|   32,691,759|
  Maryland         | 1900 |    3,886 |   149,155,313|   94,170|   32,414,429|
                   | 1905 |    3,852 |   201,877,966|   94,174|   36,144,244|
  Massachusetts    | 1900 |   10,929 |   781,867,715|  438,234|  195,278,276|
                   | 1905 |   10,723 |   965,948,887|  488,399|  232,388,946|
  Michigan         | 1900 |    7,310 |   246,996,529|  155,800|   62,531,812|
                   | 1905 |    7,446 |   337,894,102|  175,229|   81,278,837|
  Minnesota        | 1900 |    4,096 |   133,076,669|   64,557|   29,029,190|
                   | 1905 |    4,756 |   184,903,271|   69,636|   35,843,145|
  Mississippi      | 1900 |    1,294 |    22,712,186|   26,799|    7,909,607|
                   | 1905 |    1,520 |    50,256,309|   38,690|   14,819,034|
  Missouri         | 1900 |    6,853 |   223,781,088|  107,704|   46,713,734|
                   | 1905 |    6,464 |   379,368,827|  133,167|   66,644,126|
  Montana          | 1900 |      395 |    38,224,915|    9,854|    7,376,822|
                   | 1905 |      382 |    52,589,810|    8,957|    8,652,217|
  Nebraska         | 1900 |    1,695 |    65,906,052|   18,669|    8,842,429|
                   | 1905 |    1,819 |    80,235,310|   20,260|   11,022,149|
  Nevada           | 1900 |       99 |     1,251,208|      504|      352,606|
                   | 1905 |      115 |     2,891,997|      802|      693,407|
  New Hampshire    | 1900 |    1,771 |    92,146,025|   67,646|   25,849,631|
                   | 1905 |    1,618 |   109,495,072|   65,366|   27,693,203|
  New Jersey       | 1900 |    6,415 |   477,301,565|  213,975|   95,164,913|
                   | 1905 |    7,010 |   715,060,174|  266,336|  128,168,801|
  New Mexico       | 1900 |      174 |     2,160,718|    2,490|    1,199,496|
                   | 1905 |      199 |     4,638,248|    3,478|    2,153,068|
  New York         | 1900 |   35,957 | 1,523,502,651|  726,909|  337,323,585|
                   | 1905 |   37,194 | 2,031,459,515|  856,947|  430,014,851|
  North Carolina   | 1900 |    3,465 |    68,283,005|   72,322|   14,051,784|
                   | 1905 |    3,272 |   141,000,639|   85,339|   21,375,294|
  North Dakota     | 1900 |      337 |     3,511,968|    1,358|      671,321|
                   | 1905 |      507 |     5,703,837|    1,755|    1,031,307|
  Ohio             | 1900 |   13,868 |   570,908,968|  308,109|  136,427,579|
                   | 1905 |   13,785 |   856,988,830|  364,298|  182,429,425|
  Oklahoma         | 1900 |     316  |     2,462,438|    1,294|      514,879|
                   | 1905 |     657  |    11,107,763|    3,199|    1,655,324|
  Oregon           | 1900 |   1,406  |    28,359,089|   14,459|    6,822,011|
                   | 1905 |   1,602  |    44,023,548|   18,523|   11,443,512|
  Pennsylvania     | 1900 |  23,462  | 1,449,814,740|  663,960|  296,875,548|
                   | 1905 |  23,495  | 1,995,836,988|  763,282|  367,960,890|
  Rhode Island     | 1900 |   1,678  |   176,901,606|   88,197|   35,995,101|
                   | 1905 |   1,617  |   215,901,375|   97,318|   43,112,637|
  South Carolina   | 1900 |   1,369  |    62,750,027|   47,025|    9,130,269|
                   | 1905 |   1,399  |   113,422,224|   59,441|   13,868,950|
  South Dakota     | 1900 |     624  |     6,051,288|    2,224|    1,129,787|
                   | 1905 |     686  |     7,585,142|    2,492|    1,421,680|
  Tennessee        | 1900 |   3,116  |    63,140,657|   45,963|   14,727,506|
                   | 1905 |   3,175  |   102,439,481|   60,572|   22,805,628|
  Texas            | 1900 |   3,107  |    63,655,616|   38,604|   16,911,681|
                   | 1905 |   3,158  |   115,664,871|   49,066|   24,468,942|
  Utah             | 1900 |     575  |    13,219,039|    5,413|    2,762,522|
                   | 1905 |     606  |    26,004,011|    8,052|    5,157,400|
  Vermont          | 1900 |   1,938  |    43,499,633|   28,179|   11,426,548|
                   | 1905 |   1,699  |    62,658,741|   33,106|   15,221,059|
  Virginia         | 1900 |   3,186  |    92,299,589|   66,223|   20,273,889|
                   | 1905 |   3,187  |   147,989,182|   80,285|   27,943,058|
  Washington       | 1900 |   1,926  |    41,574,744|   31,523|   17,065,140|
                   | 1905 |   2,751  |    96,952,621|   45,199|   30,087,287|
  West Virginia    | 1900 |   1,824  |    49,103,138|   33,080|   12,639,856|
                   | 1905 |   2,109  |    86,820,823|   43,758|   21,153,042|
  Wisconsin        | 1900 |   7,841  |   286,060,566|  137,525|   55,695,816|
                   | 1905 |   8,558  |   412,647,051|  151,391|   71,471,805|
  Wyoming          | 1900 |     139  |     2,047,883|    2,060|    1,209,123|
                   | 1905 |     169  |     2,695,889|    1,834|    1,261,122|
                   |      |              |  Value of
      State or     |Census|    Cost of   |  products,
     Territory.    | year.|   materials  |  including
                   |      |     used.    | custom work
                   |      |              |and repairing.
                   |      |   Dollars.   |   Dollars.
  United States    | 1900 | 6,577,614,074|11,411,121,122
                   | 1905 | 8,503,949,756|14,802,147,087
  Alabama          | 1900 |    37,998,233|    72,109,929
                   | 1905 |    60,458,368|   109,169,922
  Alaska           | 1900 |     1,762,583|     4,194,421
                   | 1905 |     3,741,946|     8,244,524
  Arizona          | 1900 |     7,876,542|    20,438,987
                   | 1905 |    14,595,057|    28,083,192
  Arkansas         | 1900 |    18,288,045|    39,887,578
                   | 1905 |    21,799,346|    53,864,394
  California       | 1900 |   164,894,269|   257,385,521
                   | 1905 |   215,726,414|   367,218,494
  Colorado         | 1900 |    60,750,784|    89,067,879
                   | 1905 |    63,114,397|   100,143,999
  Connecticut      | 1900 |   169,671,648|   315,106,150
                   | 1905 |   191,801,881|   369,082,091
  Delaware         | 1900 |    24,725,317|    41,321,061
                   | 1905 |    24,883,806|    41,160,276
  Dist. of Columbia| 1900 |     7,475,216|    16,426,408
                   | 1905 |     7,731,971|    18,359,159
  Florida          | 1900 |    12,847,187|    34,183,509
                   | 1905 |    16,532,439|    50,298,290
  Georgia          | 1900 |    49,356,296|    94,532,368
                   | 1905 |    83,624,504|   151,040,455
  Idaho            | 1900 |     1,438,868|     3,001,442
                   | 1905 |     4,068,523|     8,768,743
  Illinois         | 1900 |   681,450,122| 1,120,868,308
                   | 1905 |   840,057,316| 1,410,342,129
  Indian Territory | 1900 |     1,697,829|     2,629,067
                   | 1905 |     4,848,646|     7,909,451
  Indiana          | 1900 |   195,162,566|   337,071,630
                   | 1905 |   220,507,007|   393,954,405
  Iowa             | 1900 |    85,778,867|   132,870,865
                   | 1905 |   102,843,892|   160,572,313
  Kansas           | 1900 |   120,737,677|   154,008,544
                   | 1905 |   156,509,949|   198,244,992
  Kentucky         | 1900 |    67,406,202|   126,508,660
                   | 1905 |    86,545,464|   159,753,968
  Louisiana        | 1900 |    75,403,937|   111,397,919
                   | 1905 |   117,035,305|   186,379,592
  Maine            | 1900 |    61,210,327|   112,959,098
                   | 1905 |    80,042,090|   144,020,197
  Maryland         | 1900 |   129,354,412|   211,076,143
                   | 1905 |   150,024,066|   243,375,996
  Massachusetts    | 1900 |   498,655,033|   907,626,439
                   | 1905 |   626,410,431| 1,124,092,051
  Michigan         | 1900 |   175,966,128|   319,691,856
                   | 1905 |   230,080,931|   429,120,060
  Minnesota        | 1900 |   150,299,277|   223,692,922
                   | 1905 |   210,553,949|   307,858,073
  Mississippi      | 1900 |    16,543,029|    33,718,517
                   | 1905 |    25,800,885|    57,451,445
  Missouri         | 1900 |   184,189,030|   316,304,095
                   | 1905 |   252,258,417|   439,548,957
  Montana          | 1900 |    30,068,101|    52,744,997
                   | 1905 |    40,930,060|    66,415,452
  Nebraska         | 1900 |    95,925,178|   130,302,453
                   | 1905 |   124,051,628|   154,918,220
  Nevada           | 1900 |       662,284|     1,261,005
                   | 1905 |     1,627,776|     3,096,274
  New Hampshire    | 1900 |    60,163,380|   107,590,803
                   | 1905 |    73,216,387|   123,610,904
  New Jersey       | 1900 |   334,726,094|   553,005,684
                   | 1905 |   470,449,176|   774,369,025
  New Mexico       | 1900 |     1,998,593|     4,060,924
                   | 1905 |     2,235,934|     5,705,880
  New York         | 1900 | 1,018,377,186| 1,871,830,872
                   | 1905 | 1,348,603,286| 2,488,345,579
  North Carolina   | 1900 |    44,854,224|    85,274,083
                   | 1905 |    79,268,004|   142,520,776
  North Dakota     | 1900 |     4,150,860|     6,259,840
                   | 1905 |     7,095,986|    10,217,914
  Ohio             | 1900 |   409,302,501|   748,670,855
                   | 1905 |   527,636,585|   960,811,857
  Oklahoma         | 1900 |     3,732,618|     5,504,869                 300
                   | 1905 |    11,545,306|    16,549,656
  Oregon           | 1900 |    20,788,833|    36,592,714
                   | 1905 |    30,596,763|    55,525,123
  Pennsylvania     | 1900 |   958,301,272| 1,649,882,380
                   | 1905 | 1,142,942,707| 1,955,551,332
  Rhode Island     | 1900 |    87,951,780|   165,550,382
                   | 1905 |   112,872,261|   202,109,583
  South Carolina   | 1900 |    30,485,861|    53,335,811
                   | 1905 |    49,968,626|    79,376,262
  South Dakota     | 1900 |     6,483,677|     9,529,946
                   | 1905 |     8,696,831|    13,085,333
  Tennessee        | 1900 |    54,559,039|    92,749,129
                   | 1905 |    79,351,746|   137,960,476
  Texas            | 1900 |    54,388,303|    92,894,433
                   | 1905 |    91,603,630|   150,528,389
  Utah             | 1900 |    11,440,250|    17,981,648
                   | 1905 |    24,939,827|    38,926,464
  Vermont          | 1900 |    26,384,812|    51,515,228
                   | 1905 |    32,429,852|    63,083,611
  Virginia         | 1900 |    59,359,484|   108,644,150
                   | 1905 |    83,649,149|   148,856,525
  Washington       | 1900 |    38,276,944|    70,831,345
                   | 1905 |    66,166,165|   128,821,667
  West Virginia    | 1900 |    37,228,253|    67,006,822
                   | 1905 |    54,419,206|    99,040,676
  Wisconsin        | 1900 |   185,695,393|   326,752,878
                   | 1905 |   227,255,092|   411,139,681
  Wyoming          | 1900 |     1,369,730|     3,268,555
                   | 1905 |     1,300,773|     3,523,260

Chief Manufacturing Industries of the United States, Showing Sums Paid   301
in Wages, Number of Employes, Capital Invested and Value of Product,
1880 to 1905.

[From reports of the Bureau of the Census, Department of Commerce and

                                  |      |          |              |
                                  |Census|Number of |              +
             Industry.            |  yr. |establish-|   Capital.   |
                                  |      |  ments.  |              |
                                  |      |          |              |
                                  |      |          |   Dollars.   |
  Agricultural implements         | 1880 |   1,943  |    62,109,668|
                                  | 1890 |     910  |   145,313,997|
                                  | 1900 |     715  |   157,707,951|
                                  | 1905 |     648  |   196,740,700|
                                  |      |          |              |
  Boots and shoes                 | 1880 |   1,959  |    42,994,028|
                                  | 1890 |   2,082  |    95,282,311|
                                  | 1900 |   1,599  |    99,819,233|
                                  | 1905 |   1,316  |   122,526,093|
                                  |      |          |              |
  Bread and other bakery          | 1880 |   6,396  |    19,155,286|
    products                      | 1890 |  10,484  |    45,758,489|
                                  | 1900 |  14,836  |    80,901,926|
                                  | 1905 |  18,227  |   122,363,327|
                                  |      |          |              |
  Carriages and wagons            | 1880 |   3,841  |    37,973,493|
                                  | 1890 |   4,572  |    93,455,257|
                                  | 1900 |   6,204  |   109,875,885|
                                  | 1905 |   4,956  |   126,320,604|
                                  |      |          |              |
  Cars, shop construction and     | 1890 |     716  |    76,192,477|
    repairs by steam railroad     | 1900 |   1,293  |   119,580,273|
    companies                     | 1905 |   1,141  |   146,943,729|
                                  |      |          |              |
  Cars, shop construction and     | 1890 |      78  |     2,351,162|
    repairs by street railway     | 1900 |     108  |    10,781,939|
    companies                     | 1905 |      86  |    12,905,853|
                                  |      |          |              |
  Cars, steam and street railroad,| 1880 |     130  |     9,272,680|
    not including operations      | 1890 |      88  |    46,109,625|
    of railway companies          | 1900 |      85  |    95,939,249|
                                  | 1905 |      87  |   101,154,750|
                                  |      |          |              |
  Cheese, butter and condensed    | 1880 |   3,932  |     9,604,803|
    milk                          | 1890 |   4,552  |    16,016,573|
                                  | 1900 |   9,242  |    36,303,164|
                                  | 1905 |   8,926  |    47,255,556|
                                  |      |          |              |
  Chemicals                       | 1880 |     595  |    28,983,458|
                                  | 1890 |     563  |    55,032,452|
                                  | 1900 |     433  |    89,069,450|
                                  | 1905 |     448  |   119,890,193|
                                  |      |          |              |
  Clothing, men’s                 | 1880 |   6,166  |    79,861,696|
                                  | 1890 |   4,867  |   128,253,547|
                                  | 1900 |   5,729  |   120,547,851|
                                  | 1905 |   4,504  |   153,177,500|
                                  |      |          |              |
  Clothing, women’s               | 1880 |     562  |     8,207,273|
                                  | 1890 |   1,224  |    21,259,528|
                                  | 1900 |   2,701  |    48,431,544|
                                  | 1905 |   3,351  |    73,947,823|
                                  |      |          |              |
  Confectionery                   | 1880 |   1,450  |     8,486,874|
                                  | 1890 |   2,921  |    23,326,799|
                                  | 1900 |     962  |    26,319,195|
                                  | 1905 |   1,348  |    43,125,408|
                                  |      |          |              |
  Cooperage                       | 1880 |   3,898  |    12,178,726|
                                  | 1890 |   2,652  |    17,806,554|
                                  | 1900 |   1,694  |    21,777,636|
                                  | 1905 |   1,517  |    29,532,614|
                                  |      |          |              |
  Cordage and twine               | 1880 |     165  |     7,140,475|
                                  | 1890 |     150  |    23,351,883|
                                  | 1900 |     105  |    29,275,470|
                                  | 1905 |     102  |    37,110,521|
                                  |      |          |              |
  Cotton goods                    | 1880 |   1,005  |   219,504,794|
                                  | 1890 |     905  |   354,020,843|
                                  | 1900 |   1,055  |   467,240,157|
                                  | 1905 |   1,154  |   613,110,655|
                                  |      |          |              |
  Electrical machinery,           | 1880 |      76  |     1,509,758|
    apparatus and supplies        | 1890 |     189  |    18,997,337|
                                  | 1900 |     581  |    83,659,924|
                                  | 1905 |     784  |   174,066,026|
                                  |      |          |              |
  Flour and gristmill products    | 1880 |  24,338  |   177,361,878|
                                  | 1890 |  18,470  |   208,473,500|
                                  | 1900 |   9,476  |   189,281,330|
                                  | 1905 |  10,051  |   265,117,434|
                                  |      |          |              |
  Foundry and machine shop        | 1880 |   4,984  |   155,021,734|
    products                      | 1890 |   6,500  |   383,257,473|
                                  | 1900 |   9,316  |   663,414,323|
                                  | 1905 |   9,428  |   936,416,978|
                                  |      |          |              |
  Furnishing goods, men’s         | 1880 |     161  |     3,724,664|
                                  | 1890 |     586  |    12,299,011|
                                  | 1900 |     457  |    20,575,961|
                                  | 1905 |     547  |    28,043,584|
  Furniture                       | 1880 |   5,227  |    44,946,128|
                                  | 1890 |   1,919  |    80,780,939|
                                  | 1900 |   1,814  |   104,484,394|
                                  | 1905 |   2,482  |   152,712,732|
                                  |      |          |              |
  Glass                           | 1880 |     169  |    18,804,599|
                                  | 1890 |     294  |    40,966,850|
                                  | 1900 |     355  |    61,423,903|
                                  | 1905 |     399  |    89,389,151|
                                  |      |          |              |
  Hardware                        | 1880 |     492  |    15,363,551|
                                  | 1890 |     350  |    26,271,840|
                                  | 1900 |     381  |    39,311,745|
                                  | 1905 |     445  |    52,884,078|
                                  |      |          |              |
  Jewelry                         | 1880 |     739  |    11,431,164|
                                  | 1890 |     783  |    22,246,508|
                                  | 1900 |     851  |    27,871,924|
                                  | 1905 |   1,023  |    39,678,956|
                                  |      |          |              |
  Leather, tanned, curried, and   | 1880 |   5,628  |    73,383,911|
    finished                      | 1890 |   1,787  |    98,088,698|
                                  | 1900 |   1,306  |   173,977,421|
                                  | 1905 |   1,049  |   242,584,254|
                                  |      |          |              |
  Liquors, malt                   | 1880 |   2,191  |    91,208,224|
                                  | 1890 |   1,248  |   232,471,290|
                                  | 1900 |   1,507  |   413,767,233|
                                  | 1905 |   1,531  |   515,636,792|
                                  |      |          |              |
  Lumber and timber products      | 1880 |  25,758  |   181,465,392|
                                  | 1890 |  22,617  |   557,881,054|
                                  | 1900 |  23,053  |   400,857,337|
                                  | 1905 |  19,127  |   517,224,128|
                                  |      |          |              |
  Lumber, planing-mill products,  | 1880 |   2,491  |    38,070,593|
    including sash, doors,        | 1890 |   3,670  |   120,271,440|
    and blinds                    | 1900 |   4,198  |   118,948,556|
                                  | 1905 |   5,009  |   177,145,734|
                                  |      |          |              |
  Marble and stone work           | 1880 |   2,846  |    16,498,221|
                                  | 1890 |   1,321  |    24,041,961|
                                  | 1900 |   1,655  |    39,559,146|
                                  | 1905 |   1,642  |    66,526,724|
                                  |      |          |              |
  Paper and wood pulp             | 1880 |     742  |    48,139,652|
                                  | 1890 |     649  |    89,829,548|
                                  | 1900 |     763  |   167,507,713|
                                  | 1905 |     761  |   277,444,471|
                                  |      |          |              |
  Petroleum, refining             | 1890 |      94  |    77,416,296|
                                  | 1900 |      67  |    95,327,892|
                                  | 1905 |      98  |   136,280,541|
                                  |      |          |              |
  Silk and silk goods             | 1880 |     382  |    19,125,300|
                                  | 1890 |     472  |    51,007,537|
                                  | 1900 |     483  |    81,082,201|
                                  | 1905 |     624  |   109,556,621|
                                  |      |          |              |
  Slaughtering and meat packing,  | 1880 |     872  |    49,419,213|
    wholesale                     | 1890 |     611  |    98,190,766|
                                  | 1900 |     557  |   173,866,377|
                                  | 1905 |     559  |   219,818,627|
                                  |      |          |              |
  Slaughtering, wholesale, not    | 1890 |     507  |    18,696,738|
    including meat packing        | 1900 |     325  |    14,933,804|
                                  | 1905 |     370  |    17,896,063|
                                  |      |          |              |
  Smelting and refining, copper   | 1900 |      47  |    53,063,395|
                                  | 1905 |      40  |    76,824,640|
                                  |      |          |              |
  Smelting and refining, lead     | 1900 |      39  |    72,148,933|
                                  | 1905 |      32  |    63,822,810|
                                  |      |          |              |
  Structural ironwork             | 1880 |     220  |     1,400,197|
                                  | 1890 |     724  |    21,968,172|
                                  | 1900 |     697  |    43,442,877|
                                  | 1905 |     775  |    76,598,507|
                                  |      |          |              |
  Sugar and molasses, refining    | 1880 |      49  |    27,432,500|
                                  | 1890 |     393  |    24,013,008|
                                  | 1900 |     657  |   184,033,304|
                                  | 1905 |     344  |   165,468,320|
                                  |      |          |              |
  Tinware, copper-smithing,       | 1880 |   7,693  |    23,167,392|
    and sheet iron working        | 1890 |   7,002  |    38,434,900|
                                  | 1900 |   1,846  |    35,724,739|
                                  | 1905 |   2,366  |   124,500,133|
                                  |      |          |              |
  Tobacco, chewing and smoking,   | 1880 |     477  |    17,207,401|
    and snuff                     | 1890 |     395  |    30,841,316|
                                  | 1900 |     437  |    43,856,570|
                                  | 1905 |     433  |   178,847,556|
                                  |      |          |              |
  Tobacco, cigars and cigarettes  | 1880 |   7,145  |    21,698,549|
                                  | 1890 |  10,956  |    59,517,827|
                                  | 1900 |  14,522  |    67,660,748|
                                  | 1905 |  16,395  |   145,135,945|
                                  |      |          |              |
  Woolen goods                    | 1880 |   1,990  |    96,095,564|
                                  | 1890 |   1,811  |   130,989,940|
                                  | 1900 |   1,035  |   124,386,262|
                                  | 1905 |     792  |   140,302,488|
                                  |      |          |              |
  Worsted goods                   | 1880 |      76  |    20,374,043|
                                  | 1890 |     143  |    68,085,116|
                                  | 1900 |     186  |   132,168,110|
                                  | 1905 |     226  |   162,464,929|
                                  |      |    Wage-earners.    |  Value of
                                  |Census|--------+------------+  products,
             Industry.            |  yr. | Average|  Total     |  including
                                  |      | number.|  wages.    | custom work
                                  |      |        |            |and repairing.
                                  |      |        | Dollars.   |   Dollars.
  Agricultural implements         | 1880 |  39,580|  15,359,610|  68,640,486
                                  | 1890 |  38,827|  18,107,094|  81,271,651
                                  | 1900 |  46,582|  22,450,880| 101,207,428
                                  | 1905 |  47,394|  25,002,650| 112,007,344
                                  |      |        |            |
  Boots and shoes                 | 1880 | 111,152|  43,001,438| 166,050,354
                                  | 1890 | 133,690|  60,667,145| 220,649,358
                                  | 1900 | 141,830|  58,440,883| 258,969,580
                                  | 1905 | 149,924|  69,059,680| 320,107,458
                                  |      |        |            |
  Bread and other bakery          | 1880 |  22,488|   9,411,328|  65,824,806
    products                      | 1890 |  38,841|  19,120,529| 128,421,535
                                  | 1900 |  60,192|  27,864,024| 175,368,682
                                  | 1905 |  81,284|  43,179,822| 269,609,061
                                  |      |        |            |
  Carriages and wagons            | 1880 |  45,394|  18,988,615|  64,951,617
                                  | 1890 |  56,525|  28,972,401| 102,680,341
                                  | 1900 |  58,425|  27,578,046| 113,234,590
                                  | 1905 |  60,722|  30,878,229| 125,332,976
                                  |      |        |            |
  Cars, shop construction and     | 1890 | 106,632|  60,213,433| 129,461,698
    repairs by steam railroad     | 1900 | 173,652|  96,062,329| 218,238,277
    companies                     | 1905 | 236,900| 142,188,336| 309,863,499
                                  |      |        |            |
  Cars, shop construction and     | 1890 |   2,009|   1,411,205|   2,966,347
    repairs by street railway     | 1900 |   7,025|   4,404,593|   9,370,811
    companies                     | 1905 |  11,052|   7,012,798|  13,437,121
                                  |      |        |            |
  Cars, steam and street railroad,| 1880 |  14,232|   6,507,753|  27,997,591
    not including operations      | 1890 |  33,139|  17,168,099|  73,385,852
    of railway companies          | 1900 |  37,038|  18,938,170|  97,815,648
                                  | 1905 |  38,788|  23,087,400| 122,019,506
                                  |      |        |            |
  Cheese, butter and condensed    | 1880 |   7,903|   1,548,495|  25,742,510
    milk                          | 1890 |  12,219|   4,248,854|  60,635,705
                                  | 1900 |  12,799|   6,145,561| 130,783,349
                                  | 1905 |  15,557|   8,412,937| 168,182,789
                                  |      |        |            |
  Chemicals                       | 1880 |   9,724|   4,222,663|  38,640,458
                                  | 1890 |  15,038|   7,308,411|  59,352,548
                                  | 1900 |  19,020|   9,393,236|  62,637,008
                                  | 1905 |  24,525|  13,361,972|  92,088,378
                                  |      |        |            |
  Clothing, men’s                 | 1880 | 160,813|  45,940,353| 209,548,460
                                  | 1890 | 144,926|  51,075,837| 251,019,609
                                  | 1900 | 120,927|  45,496,728| 276,717,357
                                  | 1905 | 137,190|  57,225,506| 355,796,571
                                  |      |        |            |
  Clothing, women’s               | 1880 |  25,192|   6,661,005|  32,004,794
                                  | 1890 |  39,149|  15,428,272|  68,164,019
                                  | 1900 |  83,739|  32,586,101| 159,339,539
                                  | 1905 | 115,705|  51,180,193| 247,661,560
                                  |      |        |            |
  Confectionery                   | 1880 |   9,801|   3,242,852|  25,637,033
                                  | 1890 |  21,724|   7,783,007|  55,997,101
                                  | 1900 |  26,866|   8,020,453|  60,643,946
                                  | 1905 |  36,239|  11,699,257|  87,087,253
                                  |      |        |            |
  Cooperage                       | 1880 |  25,973|   8,992,603|  33,714,770
                                  | 1890 |  22,555|  10,056,249|  38,617,956
                                  | 1900 |  22,117|   8,786,428|  38,439,746
                                  | 1905 |  21,149|   9,485,455|  49,424,394
                                  |      |        |            |
  Cordage and twine               | 1880 |   5,435|   1,558,676|  12,492,171
                                  | 1890 |  12,385|   3,976,232|  38,812,559
                                  | 1900 |  13,114|   4,113,112|  37,849,651
                                  | 1905 |  14,614|   5,338,178|  48,017,139
                                  |      |        |            |
  Cotton goods                    | 1880 | 185,472|  45,614,419| 210,950,383
                                  | 1890 | 218,876|  66,024,538| 267,981,724
                                  | 1900 | 302,861|  86,689,752| 339,200,820
                                  | 1905 | 315,874|  96,205,796| 450,467,704
                                  |      |        |            |
  Electrical machinery,           | 1880 |   1,271|     683,164|   2,655,036
    apparatus and supplies        | 1890 |   8,802|   4,517,050|  19,114,714
                                  | 1900 |  42,013|  20,579,194|  92,434,435
                                  | 1905 |  60,466|  31,841,521| 140,809,369
                                  |      |        |            |
  Flour and gristmill products    | 1880 |  58,407|  17,422,316| 505,185,712
                                  | 1890 |  47,403|  18,138,402| 513,971,474
                                  | 1900 |  32,226|  16,285,163| 501,896,304
                                  | 1905 |  39,110|  19,822,196| 713,033,395
                                  |      |        |            |
  Foundry and machine shop        | 1880 | 145,650|  66,093,920| 215,442,011
    products                      | 1890 | 231,331| 129,282,263| 413,197,118
                                  | 1900 | 350,103| 182,096,007| 644,456,216
                                  | 1905 | 402,914| 229,869,297| 799,862,588
                                  |      |        |            |
  Furnishing goods, men’s         | 1880 |  11,174|   2,644,155|  11,506,357
                                  | 1890 |  20,773|   6,078,036|  29,870,946
                                  | 1900 |  30,322|   9,730,066|  44,346,482
                                  | 1905 |  27,185|   8,760,108|  49,031,582
                                  |      |        |            |
  Furniture                       | 1880 |  59,304|  23,695,080|  77,845,725
                                  | 1890 |  72,869|  35,068,979| 111,743,080
                                  | 1900 |  87,262|  35,632,523| 125,315,986
                                  | 1905 | 110,133|  49,883,235| 170,446,825
                                  |      |        |            |
  Glass                           | 1880 |  24,177|   9,144,100|  21,154,571
                                  | 1890 |  44,892|  20,885,961|  41,051,004
                                  | 1900 |  52,818|  27,084,710|  56,539,712
                                  | 1905 |  63,969|  37,288,148|  79,607,998
                                  |      |        |            |
  Hardware                        | 1880 |  16,801|   6,846,913|  22,653,693
                                  | 1890 |  18,495|   8,656,067|  26,726,463
                                  | 1900 |  26,463|  11,422,758|  35,846,656
                                  | 1905 |  31,713|  14,580,589|  45,770,171
                                  |      |        |           |
  Jewelry                         | 1880 |  12,697|   6,441,688|  22,201,621
                                  | 1890 |  13,880|   8,038,327|  34,761,458
                                  | 1900 |  20,468|  10,643,887|  46,128,659
                                  | 1905 |  22,080|  12,592,846|  53,225,681
                                  |      |        |            |
  Leather, tanned, curried, and   | 1880 |  40,282|  16,503,828| 200,264,944
    finished                      | 1890 |  42,392|  21,249,989| 172,136,092
                                  | 1900 |  52,109|  22,591,091| 204,038,127
                                  | 1905 |  57,239|  27,049,152| 252,620,986
                                  |      |        |            |
  Liquors, malt                   | 1880 |  26,220|  12,198,053| 101,058,385
                                  | 1890 |  30,257|  20,713,383| 182,731,622
                                  | 1900 |  39,459|  25,776,468| 236,914,914
                                  | 1905 |  48,139|  34,542,897| 298,358,732
                                  |      |        |            |
  Lumber and timber products      | 1880 | 148,290|  31,893,098| 233,608,886
                                  | 1890 | 311,964|  87,934,284| 437,957,382
                                  | 1900 | 413,335| 148,007,845| 555,197,271
                                  | 1905 | 404,626| 183,021,519| 580,022,690
                                  |      |        |            |
  Lumber, planing-mill products,  | 1880 |  37,187|  14,431,654|  73,424,681
    including sash, doors,        | 1890 |  79,923|  42,221,856| 183,681,552
    and blinds                    | 1900 |  73,510|  32,621,704| 167,786,122
                                  | 1905 |  97,674|  50,713,607| 247,441,956
                                  |      |        |            |
  Marble and stone work           | 1880 |  21,471|  10,238,885|  31,415,150
                                  | 1890 |  21,950|  15,314,598|  41,924,264
                                  | 1900 |  30,641|  16,328,174|  42,230,457
                                  | 1905 |  40,905|  25,032,725|  63,059,842
                                  |      |        |            |
  Paper and wood pulp             | 1880 |  25,631|   8,970,133|  57,366,860
                                  | 1890 |  31,050|  13,204,828|  78,937,184
                                  | 1900 |  49,646|  20,746,426| 127,326,162
                                  | 1905 |  65,964|  32,019,212| 188,715,189
                                  |      |        |            |
  Petroleum, refining             | 1890 |  11,403|   5,872,467|  85,001,198
                                  | 1900 |  12,199|   6,717,087| 123,929,384
                                  | 1905 |  16,770|   9,989,367| 175,005,320
                                  |      |        |            |
  Silk and silk goods             | 1880 |  31,337|   9,146,705|  41,033,045
                                  | 1890 |  49,382|  17,762,441|  87,298,454
                                  | 1900 |  65,416|  20,982,194| 107,256,258
                                  | 1905 |  79,601|  26,767,943| 133,288,072
                                  |      |        |            |
  Slaughtering and meat packing,  | 1880 |  27,297|  10,508,530| 303,562,413
    wholesale                     | 1890 |  37,502|  20,304,029| 433,252,315
                                  | 1900 |  64,681|  31,033,850| 697,056,065
                                  | 1905 |  69,593|  37,090,399| 801,757,137
                                  |      |        |            |
  Slaughtering, wholesale, not    | 1890 |   6,473|   4,000,947| 128,359,353
    including meat packing        | 1900 |   3,705|   2,358,403|  86,723,126
                                  | 1905 |   4,541|   3,236,573| 112,157,487
                                  |      |        |            |
  Smelting and refining, copper   | 1900 |  11,324|   8,529,021| 165,131,670
                                  | 1905 |  12,752|  10,827,043| 240,780,216
                                  |      |        |            |
  Smelting and refining, lead     | 1900 |   8,319|   5,088,684| 175,466,304
                                  | 1905 |   7,573|   5,374,691| 185,826,839
                                  |      |        |            |
  Structural ironwork             | 1880 |   1,934|     844,614|   3,410,086
                                  | 1890 |  17,158|  10,235,701|  37,745,294
                                  | 1900 |  24,903|  13,588,779|  66,927,305
                                  | 1905 |  34,276|  19,760,210|  90,944,697
                                  |      |        |            |
  Sugar and molasses, refining    | 1880 |   5,857|   2,875,032| 155,484,915
                                  | 1890 |   7,043|   2,385,654| 123,118,259
                                  | 1900 |  14,129|   6,917,829| 239,711,011
                                  | 1905 |  13,549|   7,575,650| 277,285,449
                                  |      |        |            |
  Tinware, copper-smithing,       | 1880 |  27,116|  11,243,276|  50,183,811
    and sheet iron working        | 1890 |  31,377|  15,610,265|  66,653,746
                                  | 1900 |  28,315|  13,193,307|  63,812,787
                                  | 1905 |  39,475|  20,608,179|  97,974,838
                                  |      |        |            |
  Tobacco, chewing and smoking,   | 1880 |  32,756|   6,419,024|  52,793,056
    and snuff                     | 1890 |  29,790|   6,947,158|  65,843,587
                                  | 1900 |  29,161|   7,109,821| 103,754,362
                                  | 1905 |  23,990|   6,775,325| 116,767,630
                                  |      |        |            |
  Tobacco, cigars and cigarettes  | 1880 |  63,297|  18,464,562|  63,979,575
                                  | 1890 |  87,000|  36,475,060| 129,693,275
                                  | 1900 | 103,365|  40,865,510| 159,958,811
                                  | 1905 | 135,418|  55,864,978| 214,350,051
                                  |      |        |            |
  Woolen goods                    | 1880 |  86,504|  25,836,392| 160,606,721
                                  | 1890 |  76,915|  26,139,194| 133,577,977
                                  | 1900 |  68,893|  24,757,006| 118,430,158
                                  | 1905 |  72,747|  28,827,556| 142,196,658
                                  |      |        |            |
  Worsted goods                   | 1880 |  18,803|   5,683,027|  33,549,942
                                  | 1890 |  42,978|  14,944,966|  79,194,652
                                  | 1900 |  57,008|  20,092,738| 120,314,344
                                  | 1905 |  69,251|  26,269,787| 165,745,052

The Textile Industries of the United States at Decennial Periods,        303
1850 to 1900.

[Compiled from Census Reports.]

                       |     | Number of|             |Number of|
                       |Year.|establish-|   Capital.  |  wage-  |
                       |     |  ments.  |             | earners.|
  Wool manufacture[Z]  | 1850|   1,760  | $ 32,516,366|  47,763 |
                       | 1860|   1,673  |   42,849,932|  59,522 |
                       | 1870|   3,456  |  132,382,319| 119,859 |
                       | 1880|   2,689  |  159,091,869| 161,557 |
                       | 1890|   2,489  |  296,494,481| 213,859 |
                       | 1900|   2,335  |  392,040,353| 242,495 |
                       | 1905|   2,292  |  477,525,222| 283,691 |
                       |     |          |             |         |
  Cotton manufacture[A]| 1850|   1,094  |   74,500,931|  92,286 |
                       | 1860|   1,091  |   98,585,269| 122,028 |
                       | 1870|     956  |  140,706,291| 135,369 |
                       | 1880|     756  |  208,280,346| 174,659 |
                       | 1890|     905  |  354,020,842| 218,876 |
                       | 1900|   1,055  |  467,240,157| 802,861 |
                       | 1905|   1,154  |  613,110,655| 315,874 |
                       |     |          |             |         |
  Silk manufacture     | 1850|      67  |      678,300|   1,743 |
                       | 1860|     139  |    2,926,980|   5,435 |
                       | 1870|      86  |    6,231,130|   6,649 |
                       | 1880|     382  |   19,125,300|  31,337 |
                       | 1890|     472  |   51,007,537|  49,382 |
                       | 1900|     483  |   81,082,201|  65,416 |
                       | 1905|     624  |  109,556,621|  79,601 |
                       |     |          |             |         |
  Dyeing and finishing |     |          |             |         |
    textiles           | 1850|     104  |    4,818,350|   5,105 |
                       | 1860|     124  |    5,718,671|   7,097 |
                       | 1870|     292  |   18,374,503|  13,066 |
                       | 1880|     191  |   26,223,981|  16,698 |
                       | 1890|     248  |   38,450,800|  19,601 |
                       | 1900|     298  |   60,643,104|  29,776 |
                       | 1905|     360  |   88,708,576|  35,563 |
                       |                |             |         |
  Flax, hemp and jute  | 1890|     162  |   27,731,649|  15,519 |
                       | 1900|     141  |   41,991,762|  20,903 |
                       | 1905|     133  |   54,423,531|  24,508 |
                       |     |          |             |         |
  Combined textiles    | 1850|   3,025  |  112,513,947| 146,877 |
                       | 1860|   3,027  |  150,080,852| 194,082 |
                       | 1870|   4,790  |  297,694,243| 274,943 |
                       | 1880|   4,018  |  412,721,496| 384,251 |
                       | 1890|   4,276  |  767,705,310| 517,237 |
                       | 1900|   4,312  |1,042,997,577| 661,451 |
                       | 1905|   4,563  |1,343,324,605| 739,239 |
                       |     |           |  Cost of  | Value of
                       |Year.|   Wages.  | materials.| products.
                       |     |           |           |
  Wool manufacture[Z]  | 1850|     --    |$29,246,696| $ 49,636,881
                       | 1860|$13,361,602| 46,649,365|   80,734,606
                       | 1870| 40,357,235|134,154,615|  217,668,826
                       | 1880| 47,389,087|164,371,551|  267,252,913
                       | 1890| 70,917,894|203,095,572|  337,768,524
                       | 1900| 82,292,444|232,230,986|  392,473,050
                       | 1905|102,333,548|319,154,878|  517,492,142
                       |     |           |           |
  Cotton manufacture[A]| 1850|     --    | 34,835,056|   61,869,184
                       | 1860| 23,940,108| 57,285,534|  115,681,774
                       | 1870| 39,044,132|111,736,936|  177,489,789
                       | 1880| 42,040,510|102,206,347|  192,090,110
                       | 1890| 66,024,538|154,912,979|  267,981,724
                       | 1900| 86,689,752|176,551,527|  339,200,320
                       | 1905| 96,205,796|286,255,303|  450,467,704
                       |     |           |
  Silk manufacture     | 1850|     --    |  1,093,866|    1,809,476
                       | 1860|  1,050,224|  3,901,777|    6,607,771
                       | 1870|  1,942,286|  7,817,559|   12,210,662
                       | 1880|  9,146,705| 22,467,701|   41,033,045
                       | 1890| 17,762,441| 51,004,425|   87,298,454
                       | 1900| 20,982,194| 62,406,665|  107,256,258
                       | 1905| 26,767,943| 75,861,188|  188,288,072
                       |     |           |           |
  Dyeing and finishing |     |           |           |
    textiles           | 1850|     --    | 11,540,347|   15,454,430
                       | 1860|  2,001,528|  5,005,435|   11,716,463
                       | 1870|  5,221,538| 99,539,992|  113,017,537
                       | 1880|  6,474,364| 13,664,295|   32,297,420
                       | 1890|  8,911,720| 12,385,220|   28,900,460
                       | 1900| 12,726,316| 17,958,137|   44,963,331
                       | 1905| 15,469,205| 19,621,253|   50,849,545
                       |                 |           |
  Flax, hemp and jute  | 1890|  4,872,389| 26,148,344|   37,313,021
                       | 1900|  6,331,741| 32,197,885|   47,601,607
                       | 1905|  8,580,785| 44,890,546|   62,939,329
                       |     |           |           |
  Combined textiles    | 1850|     --    | 76,715,959|  128,769,971
                       | 1860| 40,353,462|112,842,111|  214,740,614
                       | 1870| 86,565,191|353,249,102|  520,386,764
                       | 1880|105,050,666|302,709,894|  532,673,488
                       | 1890|168,488,982|447,546,540|  759,262,283
                       | 1900|209,022,447|521,345,200|  931,494,566
                       | 1905|249,357,277|745,783,168|1,215,036,792

  [Z] Includes hosiery and knit goods.

  [A] Includes cotton small wares.

Cotton Manufactures in the United States, 1870 to 1905.                  304

[From official reports of the United States Census Office.]

                          |    1870.   |    1880.   |     1890.    |
  Number of establishments|         956|         756|           905|
  Capital                 |$140,706,291|$208,280,346|  $354,020,843|
  Wage-earners, average   |            |            |              |
    number                |     135,369|     174,659|       218,876|
  Total wages             | $39,044,132| $42,040,510|   $66,024,538|
  Cost of materials used  |$111,736,936|$102,206,347|  $154,912,979|
  Value of products       |$177,489,739|$192,090,110|  $267,981,724|
  Active spindles, number |   7,132,415|  10,653,435|    14,188,103|
  Looms, number           |     157,310|     225,759|       324,866|
  Cotton consumed, bales  |     --     |   1,570,344|     2,261,600|
  Cotton consumed, pounds | 398,308,257| 759,343,981| 1,117,945,776|
                          |     1900.    |     1905.
  Number of establishments|           973|         1,077
  Capital                 |  $460,842,772|  $605,100,164
  Wage-earners, average   |              |
    number                |       297,929|       310,458
  Total wages             |   $85,126,310|   $94,377,696
  Cost of materials used  |  $178,441,390|  $282,047,648
  Value of products       |  $332,806,156|  $442,451,218
  Active spindles, number |    19,008,352|    23,155,613
  Looms, number           |       450,682|       640,910
  Cotton consumed, bales  |     3,639,495|     3,743,089
  Cotton consumed, pounds | 1,814,002,512| 1,873,074,716

Silk Manufactures in the United States, 1870 to 1905.

[From official reports of the United States Census Office.]

                          |    1870.   |    1880.   |     1890.    |
                          |            |            |              |
  Number of establishments|          86|         382|          472 |
  Capital                 |  $6,231,180| $19,125,300|   $51,007,537|
  Wage-earners, average
    number                |       6,649|      31,337|       49,382 |
  Total wages             |  $1,942,286|  $9,146,705|  $17,762,441 |
  Cost of materials used  |  $7,817,559| $22,467,701|  $51,004,425 |
  Value of products       | $12,210,662| $41,033,045|  $87,298,454 |
  Raw silk used, pounds   |     684,488|   2,690,482|    6,376,881 |
                          |    1900.    |     1905.
                          |             |
  Number of establishments|          483|          624
  Capital                 |  $81,082,201| $109,556,621
  Wage-earners, average
    number                |       65,416|       79,601
  Total wages             |  $20,982,194|  $26,767,943
  Cost of materials used  |  $62,406,665|  $75,861,188
  Value of products       | $107,256,258| $133,288,072
  Raw silk used, pounds   |    9,760,770|   11,572,783

Cotton Production and Manufacturing in the United States, also Imports
and Exports of Cotton Manufactures.

[From the Statistical Abstract of the United States.]

      |          |    Taken for home    |           |           |
      |          |     consumption.     |           |           |
      |  Total   +-------+-------+------+   Raw     |  Exports  |   Imports
      |commercial|  By   |  By   |      |  cotton   |  of manu- |  of manu-
      | crop.    |North- |South- |Total.| imported. |  factures |  factures
      |          | ern   | ern   |      |           | of cotton.| of cotton.
      |          |mills. |mills. |      |           |           |
      |          |       |       |      |           |           |
      |     In thousands of bales.      |  Pounds.  |  Dollars. |  Dollars.
 1884 |   5,713  | 1,537 |   340 | 1,877|  7,019,492| 11,885,211| 29,074,626
 1885 |   5,706  | 1,437 |   316 | 1,753|  5,115,680| 11,836,591| 27,197,241
 1886 |   6,575  | 1,781 |   381 | 2,162|  5,072,334| 13,959,934| 29,709,266
 1887 |   6,499  | 1,687 |   401 | 2,088|  3,924,531| 14,929,342| 28,940,353
 1888 |   7,047  | 1,805 |   456 | 2,261|  5,497,592| 13,013,189| 28,917,799
 1889 |   6,939  | 1,790 |   480 | 2,270|  7,973,039| 10,212,644| 26,805,942
 1890 |   7,297  | 1,780 |   545 | 2,325|  8,606,049|  9,999,277| 29,918,055
 1891 |   8,674  | 2,027 |   613 | 2,640| 20,908,817| 13,604,857| 29,712,624
 1892 |   9,018  | 2,172 |   684 | 2,856| 28,663,769| 13,226,277| 28,323,841
 1893 |   6,664  | 1,652 |   723 | 2,375| 43,367,952| 11,809,355| 33,560,293
 1894 |   7,532  | 1,580 |   711 | 2,291| 27,705,949| 14,340,886| 22,346,547
 1895 |   9,837  | 2,019 |   852 | 2,871| 49,332,022| 13,789,810| 33,196,625
 1896 |   7,147  | 1,605 |   900 | 2,605| 55,350,520| 16,837,396| 32,437,504
 1897 |   8,706  | 1,793 |   999 | 2,792| 51,898,926| 21,037,678| 34,429,363
 1898 |  11,216  | 2,211 | 1,254 | 3,465| 52,660,363| 17,024,092| 27,267,300
 1899 |  11,256  | 2,217 | 1,415 | 3,632| 50,158,158| 23,566,914| 32,054,434
 1900 |   9,422  | 2,047 | 1,597 | 3,644| 67,398,521| 24,003,087| 41,296,239
 1901 |  10,839  | 1,964 | 1,583 | 3,647| 46,631,283| 20,272,418| 40,246,935
 1902 |  10,768  | 2,066 | 2,017 | 4,083| 98,715,680| 32,108,362| 44,460,126
 1903 |  10,674  | 1,966 | 1,958 | 3,924| 74,874,426| 32,216,304| 52,462,755
 1904 |  10,002  | 2,046 | 1,889 | 3,935| 48,840,590| 22,403,718| 49,524,246
 1905 |  13,654  | 2,292 | 2,270 | 4,562| 60,508,548| 49,668,080| 48,919,986
 1906 |  11,234  | 2,335 | 2,292 | 4,627| 70,963,633| 52,944,038| 63,043,322
 1907 |  13,540  | 2,510 | 2,495 | 5,005|104,791,784| 32,305,412| 73,704,636

Iron and Steel Manufacturing in the U. S.: Comparative Summary, 1870     305
to 1905, with per cent of increase for each decade.[B]

[From the United States Census.]

                               |            Date of census.              |
                               |  1870.[C]  |  1880.[C]  |     1890.     |
                               |            |            |               |
  Number of establishments     |         808|         792|            719|
  Capital                      |$121,722,704|$209,904,965|[D]$414,044,844|
  Salaried officials, clerks,
       etc., number            |    [E]     |    [E]     |          4,325|
  Salaries                     |    [E]     |    [E]     |     $6,462,236|
  Wage-earners, average number |      77,555|     140,798|        171,181|
  Total wages                  | $40,514,981| $55,451,510|    $89,273,956|
    Men, 16 years and over     |      75,037|     133,023|        168,943|
    Wages                      |    [E]     |    [E]     |    $88,840,642|
    Women, 16 years and over   |          82|          45|             58|
    Wages                      |    [E]     |    [E]     |        $17,106|
    Children, under 16 years   |       2,436|       7,730|          2,180|
    Wages                      |    [E]     |    [E]     |       $416,208|
  Miscellaneous expenses       |    [F]     |    [F]     |    $18,214,948|
  Cost of materials used       |$135,526,132|$191,271,150|   $327,272,845|
  Value of products            |$207,208,696|$296,557,685|   $478,687,519|
  Tons of products
      (2,240 pounds each)      |   3,263,585|   6,486,733|     16,264,478|
                               |      Date of census.    |
                               |    1900.   |    1905.   |
                               |            |            |
  Number of establishments     |         669|         606|
  Capital                      |$590,530,484|$948,689,840|
  Salaried officials, clerks,
       etc., number            |       9,217|      16,566|
  Salaries                     | $11,741,788| $20,758,412|
  Wage-earners, average number |     222,607|     242,740|
  Total wages                  |$120,836,338|$141,439,906|
    Men, 16 years and over     |     219,635|     239,383|
    Wages                      |$120,157,007 $140,545,610|
    Women, 16 years and over   |       1,071|       1,455|
    Wages                      |    $266,888|    $441,967|
    Children, under 16 years   |       1,901|       1,902|
    Wages                      |    $412,443|    $452,329|
  Miscellaneous expenses       | $32,274,100| $47,164,970|
  Cost of materials used       |$522,431,701|$620,171,881|
  Value of products            |$804,034,918|$905,854,152|
  Tons of products
      (2,240 pounds each)      |  29,507,860|  34,844,933|
                               |       Per cent of increase.
                               | 1870 to| 1880 to| 1890 to| 1900 to
                               |  1880. |  1890. |  1900. |  1905.
  Number of establishments     | [D]2.0 | [D]9.2 | [D]7.0 |   9.4
  Capital                      |   72.4 |   97.3 |   42.6 |  60.7
  Salaried officials, clerks,
       etc., number            |   --   |  --    |  113.1 |  79.7
  Salaries                     |   --   |  --    |   81.7 |  76.8
  Wage-earners, average number |   81.5 |   21.6 |   30.0 |   9.0
  Total wages                  |   36.9 |   61.0 |   35.4 |  17.1
    Men, 16 years and over     |   77.3 |   27.0 |   30.0 |   9.0
    Wages                      |   --   |   --   |   35.3 |  17.0
    Women, 16 years and over   |[D]45.1 |   28.9 |1,746.6 |  35.9
    Wages                      |   --   |   --   |1,460.2 |  65.6
    Children, under 16 years   |  217.3 |[D]71.8 |[D]12.8 |   0.1
    Wages                      |   --   |   --   |[D] O.9 |   9.7
  Miscellaneous expenses       |   --   |   --   |   77.2 |  46.1
  Cost of materials used       |   41.1 |   71.1 |   59.6 |  18.7
  Value of products            |   43.1 |   61.4 |   68.0 |  12.7
  Tons of products
      (2,240 pounds each)      |   98.8 |  150.7 |   81.4 |  18.1

  [B] This summary includes only active establishments for 1880, 1890,
      and 1900; such establishments were not reported separately in
      1870. The 669 establishments in 1900 and the 606 establishments
      in 1905 include in each case 1 penal institution, the figures
      for which are not included in Parts I and II of the Report on

  [C] For explanation of the apparent discrepancies in the data for
      1870 and 1880, see remarks, page 2, Part I, Manufacturing
      Industries, 1890, in regard to the depreciated currency in 1870;
      and in regard to the inclusion of capital, employes, and wages
      relating to mining and other operations in the figures for 1880,
      see page 745, Statistics of Manufactures, 1880.

  [D] Decrease.

  [E] Not reported separately.

  [F] Not reported.

Production of Pig Iron and of Crude Steel in the United States, 1880     306
to 1907, and relation of same to Imports and Exports of Iron and Steel
Manufactures; also Prices of Representative Iron and Steel Products
during the period named.

[From official reports of Bureau of Statistics.]

           |            |              | Per cent |           |
           |            |              |    of    |           |
           |  Pig iron  | Crude steel  | domestic |   Price   |
           |  produced  |  produced    |iron used |per ton of |
    Year.  | in United  |  in United   | in home  | pig iron, |
           |  States.   |   States.    |industries|  No. 1    |
           |            |              | (fiscal  |foundry.[G]|
           |            |              |  year).  |           |
           |   Tons.    |     Tons.    |          |           |
   1880    |  3,835,191 |    1,247,335 |   78.44  |  $28.48   |
   1881    |  4,144,254 |    1,588,314 |   90.23  |   25.17   |
   1882    |  4,623,323 |    1,736,692 |   89.36  |   25.77   |
   1883    |  4,595,510 |    1,673,535 |   91.44  |   22.42   |
   1884    |  4,097,868 |    1,550,879 |   94.20  |   19.81   |
   1885    |  4,044,526 |    1,711,920 |   96.43  |   17.99   |
   1886    |  5,683,329 |    2,562,503 |   93.92  |   18.71   |
   1887    |  6,417,148 |    3,339,071 |   93.13  |   20.93   |
   1888    |  6,489,738 |    2,899,440 |   95.17  |   18.88   |
   1889    |  7,603,642 |    3,385,732 |   97.35  |   17.76   |
   1890    |  9,202,703 |    4,277,071 |   98.10  |   18.41   |
   1891    |  8,279,870 |    3,904,240 |   99.12  |   17.52   |
   1892    |  9,157,000 |    4,927,581 |   99.01  |   15.75   |
   1893[H] |  7,124,502 |    4,019,995 |   99.39  |   14.52   |
   1894[H] |  6,657,388 |    4,412,032 |   99.64  |   12.66   |
   1895[H] |  9,446,308 |    6,114,834 |   99.79  |   13.10   |
   1896[H] |  8,623,127 |    5,281,689 |   99.07  |   12.95   |
   1897    |  9,652,680 |    7,156,957 |   99.77  |   12.10   |
   1898    | 11,773,934 |    8,932,857 |   99.79  |   11.66   |
   1899    | 13,620,703 |   10,639,857 |   99.80  |   19.36   |
   1900    | 13,789,242 |   10,188,329 |   98.55  |   19.98   |
   1901    | 15,878,354 |   13,473,595 |   99.71  |   15.87   |
   1902    | 17,821,307 |   14,947,250 |   99.01  |   22.19   |
   1903    | 18,009,252 |   14,534,978 |   94.92  |   19.92   |
   1904    | 16,497,033 |   13,859,887 |   98.95  |   15.57   |
   1905    | 22,992,380 |   20,023,947 |   99.27  |   17.88   |
   1906    | 25,307,191 |   23,398,136 |   98.94  |   20.98   |
   1907    | 25,781,361 |[I]23,360,000 |   97.83  |   23.89   |
           |        |        |           |
           |        |  Wire  | Imports of| Exports of
           |Price of| nails, |   manu-   | domestic
           |  steel |  price |  factures |   manu-
    Year.  |  rails |   per  |  of iron  | factures
           |per ton.| keg of | and steel.|  of iron
           |        |100 lbs.|           | and steel.
           |        |        |           |
           |        |        |           |
   1880    | $67.52 |   --   |$71,266,699| $14,716,524
   1881    |  61.08 |   --   | 60,604,477|  16,604,767
   1882    |  48.50 |   --   | 67,976,897|  20,748,206
   1883    |  37.75 |   --   | 58,495,246|  22,826,528
   1884    |  30.75 |   --   | 40,147,053|  21,909,881
   1885    |  28.52 |   --   | 33,610,093|  16,592,155
   1886    |  34.52 | $3.51  | 37,534,078|  15,745,569
   1887    |  37.08 |  3.15  | 49,203,164|  15,958,502
   1888    |  29.83 |  2.55  | 48,992,757|  17,763,034
   1889    |  29.25 |  2.49  | 42,377,793|  21,156,077
   1890    |  31.78 |  2.51  | 41,679,591|  25,542,208
   1891    |  29.92 |  2.04  | 53,544,372|  28,909,614
   1892    |  30.00 |  1.70  | 28,928,103|  28,800,930
   1893[H] |  28.12 |  1.49  | 34,937,974|  30,106,482
   1894[H] |  24.00 |  1.11  | 20,925,769|  29,220,264
   1895[H] |  24.33 |  1.69  | 23,048,515|  32,000,989
   1896[H] |  28.00 |  2.54  | 25,338,103|  41,160,877
   1897    |  18.75 |  1.46  | 16,094,557|  57,497,872
   1898    |  17.62 |  1.45  | 12,626,431|  70,406,885
   1899    |  28.12 |  2.60  | 12,100,440|  93,716,031
   1900    |  32.29 |  2.76  | 20,478,728| 121,913,548
   1901    |  27.33 |  2.41  | 17,874,789| 117,319,320
   1902    |  28.00 |  2.15  | 27,180,247|  98,552,562
   1903    |  28.00 |  2.13  | 51,617,312|  96,642,467
   1904    |  28.00 |  1.96  | 27,028,312| 111,948,586
   1905    |  28.00 |  1.93  | 23,510,164| 134,728,363
   1906    |  28.00 |  1.98  | 29,053,987| 160,984,985
   1907    |  28.00 |  2.18  | 40,587,865| 181,530,871

  [G] Not made in commercial quantities in the United States before

  [H] Democratic and low-tariff years.

  [I] Preliminary figures.

Annual Production of Bessemer Steel Rails in the United States from      307
1867 to 1907, and their Average Annual Price at the Works in

  Years.|Gross tons.|  Price. ||Years.|Gross tons.|  Price.
   1867 |     2,277 | $166.00 || 1888 | 1,386,277 | $29.83
   1868 |     6,451 |  158.46 || 1889 | 1,510,057 |  29.25
   1869 |     8,616 |  132.19 || 1890 | 1,867,837 |  31.78
   1870 |    30,357 |  106.79 || 1891 | 1,293,053 |  29.92
   1871 |    34,152 |  102.52 || 1892 | 1,537,588 |  30.00
   1872 |    83,991 |  111.94 || 1893 | 1,129,400 |  28.12
   1873 |   115,192 |  120.58 || 1894 | 1,016,013 |  24.00
   1874 |   129,414 |   94.28 || 1895 | 1,299,628 |  24.33
   1875 |   259,699 |   68.75 || 1896 | 1,116,958 |  28.00
   1876 |   368,269 |   59.25 || 1897 | 1,644,520 |  18.75
   1877 |   385,865 |   45.58 || 1898 | 1,976,702 |  17.62
   1878 |   491,427 |   42.21 || 1899 | 2,270,585 |  28.12
   1879 |   610,682 |   48.21 || 1900 | 2,383,654 |  32.29
   1880 |   852,196 |   67.52 || 1901 | 2,870,816 |  27.33
   1881 | 1,187,770 |   61.08 || 1902 | 2,985,892 |  28.00
   1882 | 1,284,067 |   48.50 || 1903 | 2,946,756 |  28.00
   1883 | 1,148,709 |   87.75 || 1904 | 2,137,957 |  28.00
   1884 |   996,983 |   30.75 || 1905 | 3,192,347 |  28.00
   1885 |   959,471 |   28.52 || 1906 | 3,791,459 |  28.00
   1886 | 1,574,703 |   34.52 || 1907 | 3,380,025 |  28.00
   1887 | 2,101,904 |   37.08 ||      |           |

Production of Tin Plates in and Importation of Tin Plates into the
United States, 1891 to 1908, in long tons.

           |           |Importation,||        |           |Importation,
  Calendar |Production,| Long tons. ||Calendar|Production,| Long tons.
     Year. | Long tons.|            ||  Year. | Long tons.|
   1891    |      552  |   327,882  ||  1900  |  302,665  |   60,386
   1892    |   18,803  |   268,472  ||  1901  |  399,291  |   77,395
   1893    |   55,182  |   253,155  ||  1902  |  366,000  |   60,115
   1894    |   74,260  |   215,068  ||  1903  |  480,000  |   47,360
   1895    |  113,666  |   219,545  ||  1904  |  458,000  |   70,652
   1896    |  160,862  |   119,171  ||  1905  |  493,500  |   65,740
   1897    |  256,598  |    83,851  ||  1906  |  577,562  |   56,983
   1898    |  326,915  |    67,222  ||  1907  |  514,777  |   57,773
   1899    |  397,767  |    58,915  ||  1908  |    --     |   58,490

Commerce of the United States by Great Groups and Share which            308
Manufactures and Raw Material Formed of the Total, 1820 to 1909.


              |    Foodstuffs in   |  Foodstuffs partly |
  Year ending |   crude condition  |      or wholly     |
              |  and food animals. |    manufactured.   |
  June 30--   +-----------+--------+-----------+--------+
              |           | Percent|           | Percent|
              |  Dollars. |of Total|  Dollars. |of Total|
  1820        |  6,081,641|  11.15 | 10,820,814|  19.85 |
  1830        |  7,382,274|  11.77 |  9,653,971|  15.39 |
  1840        | 15,273,321|  15.54 | 15,188,845|  15.46 |
  1850        | 18,011,659|  10.38 | 21,465,776|  12.37 |
  1860        | 35,743,826|  10.11 | 53,771,067|  15.21 |
  1870        | 53,981,838|  12.38 | 96,253,561|  22.08 |
  1875        | 90,018,885|  16.89 |113,145,852|  21.23 |
  1880        |100,297,040|  15.01 |118,125,216|  17.69 |
  1881        |102,486,852|  15.95 |123,380,388|  19.20 |
  1882        |104,947,672|  14.49 |139,438,506|  19.24 |
  1883        | 93,091,358|  12.87 |142,127,926|  19.65 |
  1884        |103,010,830|  15.43 |130,778,286|  19.59 |
  1885        | 93,345,583|  16.16 |102,937,933|  17.82 |
  1886        | 91,588,644|  14.41 |112,771,436|  17.75 |
  1887        |106,362,234|  15.36 |111,714,382|  16.14 |
  1888        |116,087,107|  16.03 |111,048,075|  15.34 |
  1889        |123,130,984|  16.53 |122,254,266|  16.41 |
  1890        |128,480,142|  16.28 |133,332,031|  16.89 |
  1891        |150,639,399|  17.83 |147,721,884|  17.48 |
  1892        |175,558,861|  21.22 |139,794,773|  16.89 |
  1893        |131,663,968|  15.19 |153,739,181|  17.75 |
  1894        |133,309,989|  20.35 |155,348,824|  23.72 |
  1895        |141,377,238|  19.31 |107,026,180|  14.63 |
  1896        |130,002,310|  16.67 |118,805,703|  15.24 |
  1897        |128,379,785|  16.79 |129,244,951|  16.90 |
  1898        |103,984,608|  16.88 | 86,091,010|  13.97 |
  1899        | 98,933,256|  14.19 |123,448,135|  17.71 |
  1900        | 97,916,293|  11.52 |133,027,374|  15.65 |
  1901        |110,385,208|  13.43 |125,540,654|  15.25 |
  1902        |120,280,302|  13.31 | 95,350,256|  10.56 |
  1903        |119,202,674|  11.62 |116,620,623|  11.37 |
  1904        |132,223,895|  13.34 |118,222,862|  11.93 |
  1905        |146,130,903|  13.08 |145,355,839|  13.01 |
  1906        |134,315,448|  10.95 |140,358,114|  11.44 |
  1907        |149,747,693|  10.44 |158,656,263|  11.06 |
  1908        |145,577,427|  12.19 |147,008,870|  12.31 |
  1909        |163,921,598|  12.49 |165,028,764|  12.58 |
              |   Crude materials  |  Manufactures for  |
  Year ending |     for use in     |   further use in   |
              |   manufacturing.   |   manufacturing.   |
  June 30--   +-----------+--------+-----------+--------+
              |           | Percent|           | Percent|
              |  Dollars. |of Total|  Dollars. |of Total|
  1820        |  1,983,706|   3.64 |  4,079,064|   7.48 |
  1830        |  4,214,825|   6.72 |  5,152,486|   8.22 |
  1840        | 11,510,245|  11.71 | 11,356,196|  11.56 |
  1850        | 11,711,266|   6.75 | 26,163,152|  15.08 |
  1860        | 37,073,022|  10.49 | 23,613,395|   6.67 |
  1870        | 53,118,022|  12.18 | 54,545,306|  12.51 |
  1875        | 78,891,769|  14.80 | 63,411,606|  11.89 |
  1880        |131,861,617|  19.74 |110,779,516|  16.59 |
  1881        |114,244,631|  17.77 | 87,790,890|  13.66 |
  1882        |131,356,113|  18.13 | 98,623,766|  13.61 |
  1883        |133,612,450|  18.48 | 98,755,423|  13.66 |
  1884        |119,150,641|  17.84 | 94,698,249|  14.18 |
  1885        |106,774,553|  18.49 | 78,254,677|  13.55 |
  1886        |128,434,759|  20.22 | 91,539,244|  14.40 |
  1887        |143,361,050|  20.71 |120,079,754|  17.34 |
  1888        |155,057,432|  21.42 |121,605,094|  16.80 |
  1889        |163,548,106|  21.94 |115,079,918|  15.44 |
  1890        |170,637,250|  21.62 |116,924,080|  14.81 |
  1891        |184,175,197|  21.80 |136,446,309|  16.15 |
  1892        |188,317,595|  22.76 |112,729,303|  13.63 |
  1893        |209,277,112|  24.16 |135,608,418|  15.65 |
  1894        |130,086,011|  19.86 | 82,894,732|  12.65 |
  1895        |180,939,902|  24.72 | 96,486,622|  13.18 |
  1896        |197,646,852|  25.35 |101,070,937|  12.96 |
  1897        |196,159,371|  25.66 | 88,490,406|  11.57 |
  1898        |189,322,244|  30.73 | 79,288,417|  12.88 |
  1899        |208,565,691|  29.91 | 91,953,914|  13.19 |
  1900        |276,241,152|  32.50 |134,222,045|  15.79 |
  1901        |248,006,751|  30.13 |127,576,924|  15.49 |
  1902        |303,001,868|  33.55 |147,656,292|  16.34 |
  1903        |330,491,084|  32.22 |195,750,847|  19.08 |
  1904        |320,794,431|  32.37 |160,233,890|  16.17 |
  1905        |389,160,658|  34.82 |177,827,960|  15.91 |
  1906        |414,687,999|  33.81 |220,298,751|  17.96 |
  1907        |477,027,174|  33.25 |274,096,464|  19.11 |
  1908        |363,482,258|  30.43 |196,248,409|  16.43 |
  1909        |453,319,751|  34.55 |222,580,277|  16.97 |
              |    Manufactures    |                    |
  Year ending |      ready for     |   Miscellaneous.   |     Total.
              |    consumption.    |                    |
  June 30--   +-----------+--------+-----------+--------+-------------
              |           | Percent|           | Percent|
              |  Dollars. |of Total|  Dollars. |of Total|    Dollars.
  1820        | 30,998,900|  56.86 |    556,709|   1.02 |   54,520,834
  1830        | 35,734,837|  56.97 |    582,563|    .93 |   62,720,956
  1840        | 44,300,005|  45.09 |    630,094|    .64 |   98,258,706
  1850        | 95,312,499|  54.93 |    845,174|    .49 |  173,509,526
  1860        |199,878,690|  56.52 |  3,536,119|   1.00 |  353,616,119
  1870        |173,034,847|  39.69 |  5,024,834|   1.16 |  435,958,408
  1875        |177,891,440|  33.38 |  9,645,884|   1.81 |  533,005,436
  1880        |196,587,405|  29.43 | 10,303,952|   1.54 |  667,954,746
  1881        |203,725,925|  31.70 | 11,035,942|   1.72 |  642,664,628
  1882        |238,716,691|  32.94 | 11,556,826|   1.59 |  724,639,574
  1883        |242,945,562|  33.59 | 12,648,195|   1.75 |  723,180,914
  1884        |207,771,072|  31.12 | 12,288,615|   1.84 |  667,697,693
  1885        |182,543,076|  31.61 | 13,671,507|   2.37 |  577,527,329
  1886        |194,791,568|  30.65 | 16,310,485|   2.57 |  635,436,136
  1887        |202,800,073|  29.29 |  8,002,275|   1.16 |  692,319,768
  1888        |211,218,652|  29.17 |  8,940,754|   1.24 |  723,957,114
  1889        |212,482,518|  28.52 |  8,635,860|   1.16 |  745,131,652
  1890        |230,685,581|  29.23 |  9,251,325|   1.17 |  789,310,409
  1891        |217,577,775|  25.75 |  8,355,632|    .99 |  844,916,196
  1892        |204,543,857|  24.72 |  6,458,073|    .78 |  827,402,462
  1893        |228,764,866|  26.40 |  7,347,377|    .85 |  866,400,922
  1894        |148,798,021|  22.72 |  4,557,045|    .70 |  654,994,622
  1895        |199,543,108|  27.26 |  6,596,915|    .90 |  731,969,965
  1896        |226,639,759|  29.07 |  5,559,113|    .71 |  779,724,674
  1897        |217,843,918|  28.48 |  4,611,981|    .60 |  764,730,412
  1898        |153,025,210|  24.84 |  4,338,165|    .70 |  616,049,654
  1899        |169,516,630|  24.32 |  4,730,863|    .68 |  697,148,489
  1900        |203,126,341|  23.90 |  5,407,979|    .64 |  849,941,184
  1901        |205,505,580|  24.96 |  6,157,048|    .74 |  823,172,165
  1902        |231,420,820|  25.62 |  5,611,410|    .62 |  903,320,948
  1903        |257,757,184|  25.13 |  5,896,825|    .58 |1,025,719,237
  1904        |252,857,673|  25.51 |  6,754,620|    .68 |  991,087,371
  1905        |252,372,650|  22.58 |  6,665,061|    .60 |1,117,513,071
  1906        |307,801,154|  25.10 |  9,100,980|    .74 |1,226,562,446
  1907        |364,192,884|  25.39 | 10,700,947|    .75 |1,434,421,425
  1908        |331,617,926|  27.77 | 10,406,902|    .87 |1,194,341,792
  1909        |297,617,739|  22.69 |  9,452,095|    .72 |1,311,920,224

Commerce of the United States by Great Groups, 1820 to 1909.             309

Exports (domestic).

         |    Foodstuffs in   |  Foodstuffs partly |
  Year   |   crude condition  |      or wholly     |
  ending |  and food animals. |      prepared.     |
  June   +-----------+--------+-----------+--------+
  30--   |           | Percent|           | Percent|
         |  Dollars. |of Total|  Dollars. |of Total|
  1820   |  2,474,822|   4.79 | 10,085,366|  19.51 |
  1830   |  2,724,181|   4.65 |  9,556,992|  16.32 |
  1840   |  4,564,532|   4.09 | 15,936,108|  14.27 |
  1850   |  7,535,764|   5.59 | 20,017,162|  14.84 |
  1860   | 12,166,447|   3.85 | 38,624,949|  12.21 |
  1870   | 41,852,630|  11.12 | 50,919,666|  13.53 |
  1875   | 79,077,679|  15.84 |110,292,780|  22.09 |
  1880   |266,108,950|  32.30 |193,352,723|  23.47 |
  1881   |241,641,847|  27.34 |226,386,821|  25.62 |
  1882   |155,008,497|  21.14 |178,002,738|  24.28 |
  1883   |163,196,443|  20.29 |186,392,822|  23.18 |
  1884   |130,395,872|  17.99 |194,703,245|  26.86 |
  1885   |123,326,867|  16.97 |201,800,801|  27.77 |
  1886   |100,799,692|  15.13 |162,689,021|  24.43 |
  1887   |125,453,686|  17.85 |175,784,781|  25.00 |
  1888   | 86,368,408|  12.63 |169,872,314|  24.84 |
  1889   | 98,847,455|  13.54 |174,504,227|  23.90 |
  1890   |132,073,183|  15.62 |224,756,580|  26.59 |
  1891   |106,155,721|  12.17 |226,448,303|  25.96 |
  1892   |262,455,846|  25.84 |250,438,545|  24.66 |
  1893   |153,277,859|  18.43 |247,075,061|  29.73 |
  1894   |133,196,928|  15.30 |249,846,142|  28.77 |
  1895   | 99,051,108|  12.49 |219,125,531|  27.62 |
  1896   |128,550,669|  14.90 |219,413,574|  25.41 |
  1897   |181,420,814|  17.58 |235,051,930|  22.79 |
  1898   |305,108,915|  25.21 |284,879,827|  23.54 |
  1899   |232,903,066|  19.35 |304,754,736|  25.31 |
  1900   |227,347,193|  16.59 |318,126,502|  23.28 |
  1901   |246,394,140|  16.88 |336,605,378|  23.05 |
  1902   |184,786,389|  13.63 |328,831,350|  24.27 |
  1903   |185,308,064|  13.31 |323,244,251|  23.22 |
  1904   |135,747,224|   9.46 |308,835,694|  21.52 |
  1905   |118,185,098|   7.92 |283,064,680|  18.98 |
  1906   |177,216,467|  10.32 |347,385,462|  20.22 |
  1907   |167,348,227|   9.03 |345,706,609|  18.65 |
  1908   |189,051,824|  10.30 |331,961,663|  18.10 |
  1909   |135,663,625|   8.28 |302,457,444|  18.46 |
         |   Crude materials  |  Manufactures for  |
  Year   |     for use in     |   further use in   |
  ending |   manufacturing.   |   manufacturing.   |
  June   +-----------+--------+-----------+--------+
  30--   |           | Percent|           | Percent|
         |  Dollars. |of Total|  Dollars. |of Total|
  1820   | 31,246,382|  60.46 |  4,867,379|   9.42 |
  1830   | 36,482,266|  62.34 |  4,117,606|   7.04 |
  1840   | 75,488,421|  67.61 |  4,841,101|   4.34 |
  1850   | 83,984,707|  62.26 |  6,060,900|   4.49 |
  1860   |216,009,648|  68.31 | 12,641,625|   3.99 |
  1870   |213,439,991|  56.64 | 13,711,708|   3.66 |
  1875   |206,271,795|  41.31 | 27,458,054|   5.50 |
  1880   |238,787,934|  28.98 | 29,044,159|   3.52 |
  1881   |278,918,722|  31.55 | 32,820,713|   3.71 |
  1882   |233,294,072|  31.82 | 37,164,800|   5.07 |
  1883   |288,841,684|  35.92 | 37,996,198|   4.72 |
  1884   |239,510,224|  33.04 | 37,800,437|   5.21 |
  1885   |248,611,181|  34.22 | 39,437,313|   5.42 |
  1886   |254,409,407|  38.21 | 34,037,715|   5.11 |
  1887   |250,236,436|  35.60 | 36,732,490|   5.22 |
  1888   |271,275,629|  39.67 | 40,176,023|   5.88 |
  1889   |286,235,227|  39.19 | 42,712,932|   5.85 |
  1890   |304,566,922|  36.03 | 46,454,992|   5.50 |
  1891   |346,848,321|  39.77 | 47,961,372|   5.49 |
  1892   |315,096,548|  31.02 | 50,284,241|   4.95 |
  1893   |247,289,240|  29.75 | 49,070,703|   5.94 |
  1894   |276,068,989|  31.70 | 67,145,189|   7.72 |
  1895   |264,194,679|  33.30 | 61,812,896|   7.78 |
  1896   |251,817,571|  29.17 | 76,219,728|   8.85 |
  1897   |296,834,858|  28.76 | 98,284,243|   9.52 |
  1898   |286,311,334|  23.66 |101,990,563|   8.43 |
  1899   |277,723,374|  23.07 |117,730,260|   9.78 |
  1900   |325,589,000|  23.75 |152,890,591|  11.15 |
  1901   |397,767,463|  27.24 |148,013,625|  10.12 |
  1902   |373,595,243|  27.56 |131,918,311|   9.73 |
  1903   |408,679,699|  29.35 |140,415,620|  10.09 |
  1904   |461,716,328|  32.17 |174,574,136|  12.17 |
  1905   |472,665,309|  31.69 |209,361,544|  14.03 |
  1906   |500,536,700|  29.13 |226,210,513|  13.17 |
  1907   |593,145,135|  32.00 |259,414,784|  13.99 |
  1908   |556,681,462|  30.33 |261,105,883|  14.23 |
  1909   |520,768,631|  31.78 |229,937,155|  14.04 |
         |    Manufactures    |                    |
  Year   |      ready for     |   Miscellaneous.   |    Total.
  ending |    consumption.    |                    |
  June   +-----------+--------+-----------+--------+-------------
  30--   |           | Percent|           | Percent|
         |  Dollars. |of Total|  Dollars. |of Total|   Dollars.
  1820   |  2,925,165|   5.66 |     84,526|  0.16  |   51,683,640
  1830   |  5,461,589|   9.34 |    182,244|   .31  |   58,524,878
  1840   | 10,584,079|   9.47 |    246,320|   .22  |  111,660,561
  1850   | 17,162,206|  12.72 |    139,494|   .10  |  134,900,233
  1860   | 35,811,383|  11.33 |    988,371|   .31  |  316,242,423
  1870   | 56,329,137|  14.96 |    363,341|   .09  |  376,616,473
  1875   | 74,503,493|  14.92 |  1,680,299|   .34  |  499,284,100
  1880   | 92,774,139|  11.26 |  3,878,448|   .47  |  823,946,353
  1881   |102,458,449|  11.59 |  1,699,395|   .19  |  883,925,947
  1882   |124,835,385|  17.02 |  4,934,240|   .67  |  733,239,732
  1883   |122,448,549|  15.23 |  5,347,936|   .66  |  804,223,632
  1884   |118,172,882|  16.30 |  4,382,192|   .60  |  724,964,852
  1885   |110,818,865|  15.25 |  2,687,919|   .37  |  726,682,946
  1886   |111,627,312|  16.76 |  2,401,382|   .36  |  665,964,529
  1887   |112,417,839|  15.99 |  2,397,691|   .34  |  703,022,923
  1888   |113,892,689|  16.65 |  2,277,041|   .33  |  683,862,104
  1889   |123,183,883|  16.87 |  4,798,885|   .65  |  730,282,609
  1890   |132,527,050|  15.68 |  4,915,101|   .58  |  845,293,828
  1891   |140,349,741|  16.09 |  4,506,825|   .52  |  872,270,283
  1892   |132,792,441|  13.07 |  4,664,390|   .46  |1,015,732,011
  1893   |129,938,284|  15.63 |  4,379,638|   .52  |  831,030,785
  1894   |135,659,274|  15.61 |  7,288,415|   .84  |  869,204,937
  1895   |143,244,969|  18.06 |  5,963,407|   .75  |  793,392,590
  1896   |181,789,157|  21.04 |  5,409,788|   .63  |  863,200,487
  1897   |212,959,122|  20.63 |  7,456,636|   .72  |1,032,007,603
  1898   |222,537,358|  18.38 |  9,463,916|   .78  |1,210,291,913
  1899   |262,656,583|  21.81 |  8,163,203|   .68  |1,203,931,222
  1900   |331,955,684|  24.15 | 14,854,601|  1.08  |1,370,763,571
  1901   |317,764,367|  21.76 | 13,917,833|   .95  |1,460,462,806
  1902   |321,946,540|  23.75 | 14,404,028|  1.06  |1,355,481,861
  1903   |327,489,757|  23.52 |  7,100,911|   .51  |1,392,231,302
  1904   |348,745,843|  24.30 |  5,559,792|   .38  |1,435,179,017
  1905   |402,064,030|  26.95 |  6,403,980|   .43  |1,491,744,641
  1906   |459,812,656|  26.76 |  6,791,584|   .40  |1,717,953,382
  1907   |480,708,667|  25.93 |  7,394,612|   .40  |1,853,718,034
  1908   |489,469,958|  26.68 |  6,515,567|   .36  |1,834,786,357
  1909   |441,820,754|  26.97 |  7,707,984|   .47  |1,638,355,593

Population of the United States 10 Years of Age and Upward, Engaged in   310-
Manufacturing and Other Gainful Occupations, Census Year 1900, by Sex.    311

[From reports of the Bureau of the Census, Department of Commerce and

                                         |                1900.
                 OCCUPATION.             +-----------+-----------+-----------
                                         |   Male.   |  Female.  |   Total.
  AGRICULTURAL PURSUITS                  | 9,404,429 |   977,336 | 10,381,765
  PROFESSIONAL SERVICE                   |   827,941 |   430,597 |  1,258,538
  DOMESTIC AND PERSONAL SERVICE          | 3,485,208 | 2,095,449 |  5,580,657
  TRADE AND TRANSPORTATION               | 4,263,617 |   503,347 |  4,766,964
  MANUFACTURING AND MECHANICAL PURSUITS  | 5,772,641 | 1,312,668 |  7,085,309
                                         |           |           |
               Building trades.          |           |           |
                                         |           |           |
  Carpenters and joiners                 |   599,707 |       545 |    600,252
  Masons (brick and stone)               |   160,638 |       167 |    160,805
  Painters, glaziers, and varnishers     |   275,782 |     1,759 |    277,541
  Paper hangers                          |    21,749 |       241 |     21,990
  Plasterers                             |    35,649 |        45 |     35,694
  Plumbers and gas and steam fitters     |    97,659 |       126 |     97,785
  Roofers and slaters                    |     9,065 |         2 |      9,067
  Mechanics (not otherwise specified)    |     9,351 |        27 |      9,378
                                         |           |           |
        Chemicals and allied products.   |           |           |
                                         |           |           |
  Oil well and oil works employes        |    24,573 |        53 |     24,626
  Other chemical workers                 |    12,035 |     2,688 |     14,723
                                         |           |           |
       Clay, glass, and stone products.  |           |           |
                                         |           |           |
  Brick and tile makers, etc.            |    49,455 |       478 |     49,933
  Glassworkers                           |    47,377 |     2,621 |     49,998
  Marble and stone cutters               |    54,317 |       143 |     54,460
  Potters                                |    13,200 |     2,940 |     16,140
                                         |           |           |
             Fishing and mining.         |           |           |
                                         |           |           |
  Fishermen and oystermen                |    68,478 |       462 |     68,940
  Miners and quarrymen                   |   562,417 |       989 |    563,406
                                         |           |           |
          Food and kindred products.     |           |           |
                                         |           |           |
  Bakers                                 |    74,860 |     4,328 |     79,188
  Butchers                               |   112,815 |       378 |    113,193
  Butter and cheese makers               |    18,593 |       648 |     19,241
  Confectioners                          |    21,980 |     9,214 |     31,194
  Millers                                |    40,362 |       186 |     40,548
  Other food preparers                   |    23,640 |     5,142 |     28,782
                                         |           |           |
      Iron and steel and their products. |           |           |
                                         |           |           |
  Blacksmiths                            |   226,284 |       193 |   226,477
  Iron and steel workers                 |   287,241 |     3,297 |   290,538
  Machinists                             |   282,574 |       571 |   283,145
  Steam boiler makers                    |    33,038 |         8 |    33,046
  Stove, furnace, and grate makers       |    12,430 |        43 |    12,473
  Tool and cutlery makers                |    27,376 |       746 |    28,122
  Wheelwrights                           |    13,495 |        10 |    13,505
  Wireworkers                            |    16,701 |     1,786 |    18,487
                                         |           |           |
      Leather and its finished products. |           |           |
                                         |           |           |
  Boot and shoe makers and repairers     |   169,393 |    39,510 |   208,903
  Harness and saddle makers and repairers|    39,506 |       595 |    40,101
  Leather curriers and tanners           |    40,917 |     1,754 |    42,671
  Trunk and leather-case makers, etc.    |     5,472 |     1,579 |     7,051
                                         |           |           |
           Liquors and beverages.        |           |           |
                                         |           |           |
  Bottlers and soda water makers, etc.   |     9,725 |       794 |    10,519
  Brewers and maltsters                  |    20,687 |       275 |    20,962
  Distillers and rectifiers              |     3,114 |        30 |     3,144
                                         |           |           |
        Lumber and its remanufactures.   |           |           |
                                         |           |           |
  Cabinetmakers                          |    35,552 |        67 |    35,619
  Coopers                                |    37,087 |       113 |    37,200
  Saw and planing mill employes          |   161,251 |       373 |   161,624
  Other woodworkers                      |   104,791 |     6,805 |   111,596
                                         |           |           |
        Metals and metal products        |           |           |
        other than iron and steel.       |           |           |
                                         |           |           |
  Brassworkers                           |    25,870 |       890 |     26,760
  Clock and watch makers and repairers   |    19,305 |     4,815 |     24,120
  Gold and silver workers                |    19,732 |     6,380 |     26,112
  Tin plate and tinware makers           |    68,730 |     1,775 |     70,505
  Other metal workers                    |    54,282 |     2,320 |     56,602
                                         |           |           |
             Paper and printing.         |           |           |
                                         |           |           |
  Bookbinders                            |    14,646 |    15,632 |     30,278
  Box makers (paper)                     |     3,796 |    17,302 |     21,098
  Engravers                              |    10,698 |       453 |     11,151
  Paper and pulp mill operatives         |    26,904 |     9,424 |     36,328
  Printers, lithographers, and pressmen  |   139,166 |    15,981 |    155,147
                                         |           |           |
                  Textiles.              |           |           |
                                         |           |           |
  Bleachery and dye works operatives     |    20,493 |     1,785 |     22,278
  Carpet factory operatives              |    10,371 |     9,001 |     19,372
  Cotton mill operatives                 |   125,788 |   120,603 |    246,391
  Hosiery and knitting mill operatives   |    12,630 |    34,490 |     47,120
  Silk mill operatives                   |    22,023 |    32,437 |     54,460
  Woolen mill operatives                 |    42,566 |    30,630 |     73,196
  Other textile mill operatives          |    53,437 |    51,182 |    104,619
  Dressmakers                            |     2,090 |   344,794 |    346,884
  Hat and cap makers                     |    15,110 |     7,623 |     22,733
  Milliners                              |     1,739 |    86,120 |     87,859
  Seamstresses                           |     4,837 |   146,105 |    150,942
  Shirt, collar, and cuff makers         |     8,491 |    30,941 |     39,432
  Tailors and tailoresses                |   160,714 |    68,935 |    229,649
  Other textile workers                  |     8,862 |    20,671 |     29,533
                                         |           |           |
           Miscellaneous industries.     |           |           |
                                         |           |           |
  Broom and brush makers                 |     8,643 |     1,577 |     10,220
  Charcoal, coke, and lime burners       |    14,405 |        31 |     14,436
  Engineers and firemen (not locomotive) |   223,318 |       177 |    223,495
  Glovemakers                            |     4,503 |     7,768 |     12,271
  Manufacturers and officials, etc.      |   239,649 |     3,360 |    243,009
  Model and pattern makers               |    14,869 |       204 |     15,073
  Photographers                          |    23,361 |     3,580 |     26,941
  Rubber factory operatives              |    14,492 |     7,374 |     21,866
  Tobacco and cigar factory operatives   |    87,955 |    43,497 |    131,452
  Upholsterers                           |    28,663 |     2,158 |     30,821
  Other miscellaneous industries         |   380,167 |    90,922 |    471,089
    Total manufacturing and              |           |           |
      mechanical pursuits                | 5,772,641 | 1,312,668 |  7,085,309
        Grand total                      |23,753,836 | 5,319,397 | 29,073,233

World’s Development of Carrying Power, Production, and Commerce,         312

[From “Transportation Systems of the World,” issued by the Bureau of
Statistics, Department of Commerce and Labor.]

         |           |      Commerce.     ||       Carrying Power.       ||
         |           |                    ||                             ||
         |           +-----------+--------++--------+--------+-----------++
   Year. |Population.|           |        ||        |        |           ||
         |           |   Total.  |   Per  ||  Sail. | Steam. |  Total.   ||
         |           |           | capita.||        |        |           ||
         |           |           |        ||        |        |           ||
         | Millions. | Millions  |        ||Thousand|Thousand| Thousand  ||
         |           |of dollars.|Dollars.||tons.[J]|tons.[J]|tons.[J][K]||
         |           |           |        ||        |        |           ||
  1800[M]|     640   |   1,479   |  2.31  ||  4,026 |   --   |   4,026   ||
  1820[N]|     780   |   1,659   |  2.13  ||  5,814 |  0.023 |   5,894   ||
  1830[N]|     847   |   1,981   |  2.34  ||  7,100 |   .111 |   7,528   ||
  1840[O]|     950   |   2,789   |  2.93  ||  9,012 |   .372 |  10,482   ||
  1850[O]|   1,075   |   4,049   |  3.76  || 11,470 |   .864 |  14,902   ||
  1860[O]|   1,205   |   7,246   |  6.01  || 14,890 |  1.723 |  21,730   ||
  1870[P]|   1,310   |  10,663   |  8.14  || 12,900 |  3.012 |  25,100   ||
  1880[Q]|   1,439   |  14,761   | 10.26  || 14,400 |  5.901 |  37,900   ||
  1890[R]|   1,488   |  17,519   | 11.80  || 12,640 |  8.295 |  47,800   ||
  1900   |   1,543   |  20,105   | 13.02  ||  8,119 | 13.856 |  63,543   ||
  1906   |   1,600   |  26,500   | 16.50  ||  5,469 | 21.094 |  89,845   ||
  1907   |     --    |     --    |   --   ||  5,200 | 22.140 |  93,760   ||
         |         |        |        ||
         |         |        |        ||
         |         |        |        ++
   Year. |Railways.| Tele-  |Cables. ||
         |         |graphs. |        ||
         |         |        |        ||
         |         |        |        ||
         |Thousand |Thousand|Thousand||
         |miles.[J]| miles. | miles. ||
         |         |        |        ||
  1800[M]|    --   |   --   |   --   ||
  1820[N]|    --   |   --   |   --   ||
  1830[N]|      0.2|   --   |   --   ||
  1840[O]|      5.4|   --   |   --   ||
  1850[O]|     24.0|      5 |   1/40 ||
  1860[O]|     67.4|    100 |   1½   ||
  1870[P]|    139.9|    281 |  15    ||
  1880[Q]|    224.9|    440 |  49    ||
  1890[R]|    390.0|    768 | 132    ||
  1900   |    500.0|  1,180 | 200    ||
  1906   | [S]562.8|  1,200 | 200    ||
  1907   |    595.8|   --   |   --   ||
         |     Production of Cotton,      |         |   Gold
         |      Coal, and Pig iron.       |         |production,
         |----------+-----------+---------+         |  decade
   Year. |          |           |         |   Area  |  ending
         |  Cotton. |   Coal.   |Pig iron.|   cul-  |   year
         |          |           |         | tivated.|  named.
         |          |           |         |         |
         | Million  |  Million  | Million | Million | Million
         |pounds.[J]|   tons.   | tons.[J]|acres.[J]|dollars.[L]
         |          |           |         |         |
  1800[M]|       520|       11.6|     0.5 |   360   |    128.5
  1820[N]|       630|       17.2|     1.0 |   402   |     76.1
  1830[N]|       820|       25.1|     1.6 |    --   |     94.5
  1840[O]|     1,310|       44.8|     2.7 |   492   |    134.8
  1850[O]|     1,435|       81.4|     4.4 |    --   |    363.9
  1860[O]|     2,551|      142.3|     7.2 |   583   |  1,334.0
  1870[P]|     2,775|      213.4|    11.9 |    --   |  1,263.0
  1880[Q]|     3,601|      340.0|    18.1 |   749   |  1,150.8
  1890[R]|     5,600|      466.0|    25.2 |   807   |  1,060.1
  1900   |     6,247|      800.0|    41.4 |   875   |  2,100.0
  1906   |  [T]9,971|   [U]987.9| [V]58.1 |   900   |  3,095.0
  1907   |  [T]8,256| [U]1,079.6| [V]59.7 |    --   |  3,259.5

  [J] Mulhall’s estimate, except 1830, 1890, 1900, 1906, and 1907.

  [K] Steam tonnage reduced to sail by multiplying by 4.

  [L] Soetbeer’s estimates prior to 1860.

  [M] Malte-Brun’s estimate for 1804.

  [N] Based on Balbi’s estimate for 1828.

  [O] Based on Michelet’s estimate for 1845.

  [P] Based on Behm-Wagner estimate for 1874.

  [Q] Levasseur’s estimate for 1878.

  [R] Royal Geographic Society estimate.

  [S] Estimates of the Archiv für Eisenbahnwesen.

  [T] Estimates of the United States Census Office.

  [U] Estimates of the United States Geological Survey.

  [V] Estimates of the “Mineral Industry.”

1850 TO 1900]


[Illustration: 3. VALUE OF PRODUCTS AT EACH CENSUS: 1850 TO 1900]

AT EACH CENSUS: 1850 TO 1900]



[Illustration: 1. AVERAGE NUMBER OF WAGE-EARNERS EMPLOYED IN             315


1850 TO 1900]






CONCRETE AND STEEL.                                                      322


[New York author of articles in Applied Science.]

The life of properly made concrete is not known. However, specimens
from the times of the Romans are yet in good condition. This material
has very considerable ability to resist compression; it is practically
fireproof and teredo proof; when properly protected it is probably but
little deteriorated by weather changes; and, if properly made, it is
probably inappreciably subject to chemical disintegration when
submerged. But there is one palpable fault--it is weak when subjected
to tensile stresses. On the other hand--steel has great tensile
resistivity and is strong under transverse stress. These two
materials--concrete and steel--supplement each other in valuable
qualities. The possibility of using them in combination depends
largely upon the fact that their co-efficients of expansion are
practically the same for moderate thermal fluctuations. Steel is
easily corroded. Nor is it strictly fireproof, as temperatures which
are not excessive will induce bending and buckling. When it is
surrounded by concrete, steel is protected against both fire and

In many situations, steel would not alone supply the best material of
construction. And the same remark applies to concrete. A striking
instance is the case of the six new docks in Baltimore. Three of these
had already been constructed of wood and stone, when it became evident
that the building of the remaining three and of the long bulkhead
which was part of the scheme along the same lines would entail a
larger expense than the use of reinforced concrete construction. Steel
by itself would have been impossible of consideration because of its
susceptibility to corrosion. Concrete alone could not be used because    323
of the excessive cost of the increased amount of Portland cement. It
is said, that a retaining wall of all concrete would have cost about
$600 per linear foot. Reinforced concrete costs about $58 per foot.

Steel is used, not merely as a reinforcement, but as the material of
forms. Used thus, it may, at times, not only retain the concrete in
position but also prevent the action of the surrounding soil or water.
The possibility of using steel for forms depends largely upon the fact
that many applications of concrete are becoming standardized rapidly.
Thus is permitted a re-use of the steel form that justifies the
expense. But the employment of steel forms sometimes involves the use
of steel in the handling of them. A further use, although perhaps more
remote, is in connection with the arrangements for the handling of the
mixed concrete and of the raw materials. Still more remote, but still
a necessary application, is the use of steel and iron in the crushing
mills and the like. When we look at the question and inform ourselves
of the ramifications, it is not difficult to see that concrete and
steel are materials whose engineering applications are mutually
involved. Concrete is certainly replacing steel in some applications.
But, notwithstanding this, these two are to be regarded as unopposed
to each other on the whole.

When concrete is cast about steel, an adhesive bond ensues. But this
is scarcely to be regarded as sufficient to enable the two to act as
one under tensile stresses. A mechanical bond should be employed. This
is the explanation of the somewhat complicated forms of standard
reinforcement bars.

Concrete properly reinforced is an admirable material for factory
construction. It permits of rapid erection, is fireproof, has a long
life, is adapted to weather conditions, and is economical. The floors
of concrete buildings are easily cleaned and do not develop splinters.

One of the large automobile factories--that of the Geo. N. Pierce        324
Company at Buffalo, N. Y.--is a good instance of the rapidity with
which reinforced concrete buildings may be erected. Within seven
months of the date of signing the contract with the Trussed Concrete
Steel Company, Detroit, Mich., which employs the Kahn system of
reinforcement, certain large structures were ready for use. The floor
space here is 325,000 square feet. It was necessary to provide a
number of large areas unbroken by supports. It was found possible to
use girders having spans of 55 and 61 feet. When subjected to a load,
a girder develops compressive strains above and tensile ones below.
The concrete is well adapted to withstand the one, but not the other.
In an ordinary bridge truss, there may be diagonals that are also
under tensile stress. In the Kahn system of reinforcement, a
horizontal bar from which rigidly attached diagonals extend upward and
outward is provided with a view of enabling the girder to withstand
the tensile stress. In accordance with this design the long girders
were constructed. Girders providing runways for 3-ton cranes were also
constructed. A load of 14 tons placed upon one of the reinforced
concrete girders having a span of 25 feet induced a deflection of only
1/16 inch. This girder is 12 inches wide and 22 inches deep and its
reinforcement consists of three 1 x 3 in. Kahn bars. Hollow tile was
largely employed here in connection with the concrete.

What is known in the trade as the corrugated bar, supplied by the
Corrugated Steel Bar Company is a steel reinforcing rod which provides
shoulders by means of which the concrete is mechanically engaged. This
general type of reinforcement is, however, not confined to this
concern. By means of this style of bar, the engineer is able to secure
the desired mechanical interlock. As the concrete and steel expand and
contract they do so together--unless the temperature change is
excessive--and so the relation between the two is maintained. Such
standard types of reinforcing bars are applicable to multitudes of       325
construction. An interesting example is the railroad bridge over the
Vermilion River near Danville, Illinois. There are three arches, the
central one of which has a span of 100 feet. About 130 tons of
corrugated bars were employed in the construction of this beautiful

Another good example of bridge construction is the bridge over the
Maumee River near Waterville, Ohio. This structure follows the designs
of the National Bridge Company. It has a width of 16 feet between
copings and crosses the river at a point where it is 1,000 feet wide.
It is said that this reinforced bridge will carry a load of 5 tons per
linear foot. The arches are 12 in number, the longest having a span of
90 feet, and the shortest, one of 75 feet. The loading of a bridge
arch produces a lateral thrust upon the piers. If the next arch is not
loaded, then this thrust is unbalanced and must be cared for. This was
done in this case by employing part of the 100 tons of reinforcement
in a vertical position. This bridge having a very long expectation of
life was built at a cost of $77,000. The total amount of concrete was
about 9,200 cubic yards.

The city of Philadelphia has gone into the construction of city
bridges of concrete in rather an extensive way. Among a total of 30 or
more is the reinforced bridge across Poquessing Creek, having a span
of 71 feet. This bridge is rather flat, having a rise of but 9½ feet.
The reinforcement employed here consisted in part of angle bars placed
in pairs to form a kind of T-bar. The principal reinforcement here was
the arch ribs. These were each composed of two of the T-bars arranged
one above the other in such manner that their points of nearest
approach were at the crown. These were latticed together. Such ribs
were placed 4 feet apart. Transversely disposed steel rods held the
whole together. The mechanical interlock here depended upon was due,
no doubt, to the mutual disposition of the various rods, etc.

A railway viaduct, one-half mile or more in length is another example    326
of the Kahn methods. This structure belongs to the Richmond &
Chesapeake Railway and is located at Richmond, Va. There is a span of
70 feet which has girders nearly 6 feet deep. At another span the
girders, probably of about the same depth, sagged but ⅛ inch upon
removal of the falsework.

A style of reinforcement much used consists of a net-like fabric of
metal. This is employed largely in floors to bind the whole mass
together. In the manufacture of this netting, a Canadian company has
found it desirable to repair the inevitable breakages of strands in
manufacture by the use of the Davis-Bournonville Company’s
oxyacetylene torch. It is said that welds can be made on the average
of one in two minutes in the case of an ordinary weight of the fabric.
This netting is made by expanding sheets of perforated metal from a
narrow to a considerable width. It is during this expansion that the
strands sometimes break.

Another style of floor reinforcement is the fabric made from wire.
That floors properly reinforced are quite substantial may be judged
from the case of the United States Fidelity & Guarantee Company. Their
building in Baltimore was exposed to intense heat in the great fire of
1904. In fact, a considerable part of the side walls and the front
fell, leaving floors of concrete. A load of brick giving a pressure of
300 pounds per square foot was arranged on one of the floors to a
distance of 5 feet to each side of one of the girders. The deflection
amounted to ⅛ inch. This was about 1/20 of 1 per cent of the span.
This is an example of Hennibique construction.

Reference has already been made to the Kahn truss reinforcement. With
the same general object in view, the Hennibique truss has been
designed. There are two horizontal bars, one above the other. The
upper is, however, not perfectly horizontal except near the center.
Towards either side, this bar rises as it recedes from the center.       327
These two bars are enveloped by loose stirrups arranged vertically and
at intervals. These are open at the top and closed below.

There are two varieties of piles--the bearing pile and the sheet pile.
Their duties are quite different. One sustains a compressive load, the
other withstands a transverse thrust. But concrete has been used for
both kinds. In the case of the bearing pile, its own intrinsic
qualities are eminently suitable. It has good compressive resistance;
it is teredo proof, and has the prospect of long life whether
conditions are wet, dry or a mixture of the two. Wood makes an
admirable bearing pile, if constantly submerged, but it is a prey to
the teredo. The necessity for constant submergence limits the
usefulness of the wood pile. It must be cut off below the hydraulic
level, and this necessitates carrying the foundation footings to a
lower level than would otherwise ordinarily be the case. With the
concrete bearing pile, on the contrary, the footings may be
constructed at any level desired as the pile itself may be partly
submerged and partly in the dry. However, the concrete pile may be
subjected to other than compressive stresses, especially during its
placement. And so, some reinforce it. Some, no doubt, have in view a
possible buckling when in the ground, particularly if the surrounding
soil is yielding. Reinforcement both longitudinal and transverse is
employed. Longitudinal bars are arranged at intervals around and
within the periphery. These may be bound together by separate hoops
disposed along the length or by wire wound about the longitudinals in
spirals. In the case of concrete sheet piling, the concrete supplies a
surface and forms a protective covering to the imbedded reinforcement
which is here a vital matter and consequently indispensable. In the
dock improvements at Baltimore, to which reference has already been
made, reinforced concrete sheet piling was largely used. The steel
sheet pile could not well have been used here because of its             328
susceptibility to corrosion. The concrete slabs, 12 × 18 inches in
cross-section perform the duty of retaining masses of earth in place
both above and below the water line. There were certain other concrete
constructional elements of an auxiliary character. The total
reinforcement amounted to about 1,200 tons.

With regard to its fireproof qualities, an eloquent testimonial arises
from the fact that the immense Marlborough-Blenheim Hotel at Atlantic
City, a concrete and tile structure, is said to enjoy a saving of
$18,000 per year in fire insurance premiums. The insurance is based on
$600,000. This structure is 560 feet in length and has a width varying
from 60 to 200 feet.

Reference has been made to the close identity of the co-efficients of
expansion for steel and concrete for moderate intervals of
temperature. While this is so, if the thermal range is considerable,
the concrete and the steel cannot be expected to expand and contract
together. In most engineering construction, the range is small, say
150 degrees F., but there are exceptions. One of these relates to the
material used in tall chimneys. The hot gases which pass up these give
rise to rather high temperatures. In fact, it is well-recognized
practice to build a large part of such chimneys double, one shell
enveloping another, with an air space between. Some four or five years
ago what is, perhaps, the very tallest concrete chimney in the United
States was built for the Colusa Parrot Mining & Smelting Company,
Butte, Montana. It is 352½ feet high and has a flue 18 feet in
diameter. A solid wall 1½ feet thick constitutes the base of 21 feet
in height. Above this level, an air space 4 inches wide radially is
arranged between two shells of 5 and 9 inches thick. The inner one is
the thinner. The steel reinforcements used were T-bars. The footing is
of reinforced concrete and rests upon a fill 18 feet deep. A further
important factor which has to be considered is the serious effect        329
of repeated stresses. Partly because of this, it is recommended that a
large factor of safety be adopted. Further, the best practice would
seem to be in the direction of a complete divorce between the inner
and outer shells all the way up and of a uniformity in wall thickness
from bottom to top. Vertical cracks have been noted in some chimneys.
This would indicate the advisability of strong circular reinforcement.
It is thought that a tone concrete following the formula 1:2:2 is
better for the outer shell than a cement mortar. It is said to be
stronger, denser and more impervious to water than a mortar following
the formula 1:3. In order to secure adhesion between layers, the fresh
concrete should be applied wet and the old should perhaps be
resurfaced by tooling.

The compressive resistivity of the usual concretes is considerable.
However, in certain bridge construction in New York City, a need was
felt for a concrete which should have a very high compressive
resistance. And so experiments were made with a concrete formed by
substituting wire nails for the crushed stone. About 60 tests were
made with concrete following the formula 1:2:2⅔. The resulting
material was quite heavy. A cubic foot weighed 196 pounds as compared
with 130 to 160 pounds for ordinary concretes. Eighty-eight pounds of
nails were used in one cubic foot bringing the cost to about $2.30.
This was certainly very expensive material. But where extraordinary
qualities are desired, we have to spend money. Cubes were cast
measuring 6 inches on a side. These were tested to destruction at
different stages of maturity. After the lapse of one week, the lowest
crushing resistance obtained was 2,770 pounds per square inch and the
highest 3,330 pounds. After one month, the minimum crushing strength
was 3,050 pounds, the maximum 8,340 pounds, while the average was
5,645 pounds. When a year had gone by, it was found that four cubes
gave an average of 10,410 pounds. However, the average resistance of     330
17,235 pounds was obtained in the case of cubes 15 months old.

Since concrete is but little affected by water and by fluctuations
between wet and dry conditions, it is not at all remarkable that it
has been employed for sewer and water tower construction. In the
United States a high standpipe has been constructed at Attleboro,
Massachusetts. This is 118 feet high and has an internal diameter of
50 feet. The wall varies from 18 inches in thickness at the bottom to
8 inches at the top. The concrete was made according to the formula
1:2:4. There is another tower 110 feet high and having an external
diameter of about 35 feet. At Anaheim, California, a large tank
together with its substructure has been constructed entirely of
reinforced concrete. The floor of the tank is about 60 feet above the
surface. The tank itself is 38 feet in height and 30 feet in diameter
and has a wall varying in thickness from 5 to 3 inches. The
reinforcement employed was the twisted steel bar.

In order to prevent corrosion of the reinforcement, it is thought
necessary to guard against water entering and dissolving away the
caustic lime contacting with the steel. One way would be to give the
concrete itself a very dense character. Another is to fill the
external pores with a bituminous or oleo-resinous paint. Or, an
insoluble substance suited to fill the pores may be one of the
ingredients when the concrete is mixed. Finally a flexible waterproof
coating may be employed where conditions permit. As to the steel
itself--it is desirable to have it uniform, as then reliance may be
placed upon calculations. For this reason, one of the great concrete
construction companies recommends mild steel as opposed to high carbon

One of the great recommendations of concrete is that it permits
wonderful rapidity of construction. We had an example of this in the     331
case of the Geo. N. Pierce automobile factory. Another was in
connection with the construction of junction caissons for certain
subsurface tubes of the tunnel of the Hudson Companies. These caissons
were three in number and were located on the Jersey shore opposite New
York City. These structures were quite large, being about 100 feet in
length and having a width of about 45 feet. These caissons, one or two
of which were put under air pressure, were constructed of concrete
with steel reinforcement. The use of concrete in the tunnel system and
in the Terminal Building has been very extensive. To complete the
concrete construction, about half a million barrels of Portland
cement, so it is thought, must be consumed. The Gatun Locks at Panama
will require only about four times this amount. The twisted steel bars
of the reinforcement have been used in large quantity.

The work on the water front at Baltimore to which reference has
already been made involved a considerable variety of reinforced
concrete construction. For retaining walls sheet piles were employed.
These ordinarily had a face of 18 inches and a thickness of 12 inches
and a length of 27 feet. As it was not necessary to retain the soil by
an impervious bulkhead, these piles did not interlock. However, they
had to resist a horizontal thrust, and so wales were strung along the
outside at the top. These wales were themselves of concrete reinforced
by means of imbedded lattice girders of steel. In position, the
girders lay flat and thus gave their chief strength to the horizontal
thrust. The wales were supported, in part, by concrete piers. These
were placed by means of steel caissons. These cofferdams were of sheet
steel 27 feet deep and were sunk by open air methods. When in place,
the concrete was put in and the pier thus formed. An upward surface of
the pier provides a means of absorbing the horizontal thrust of the
wales. The piers themselves are, some of them, mutually tied together
across the dock; others are tied to reinforced concrete piles sunk in    332
the body of the dock. The ties are themselves of reinforced concrete.
The steel of the caissons served only as a mold. It is now a matter
apparently of but little importance how soon it corrodes. The
extensive concrete work at Baltimore was done by the Raymond Concrete
Pile Company.

While the question of the teredo seems to have been a factor at
Baltimore because of the probability of its presence in the harbor
when certain sewerage improvements are carried out, this matter was
really an insistent thing in connection with a wharf constructed by
the United Fruit Company at Bocas del Toro in the Republic of Panama.
This wharf is itself of reinforced concrete. But the bearing piles are
what interest us. The native wooden piling, so it seems, would at this
general location become seriously damaged by the teredo within a year.
Some kinds of timber might be expected to have a longer life. The
service of creosoted piles has been estimated as about 15 years.
Besides, piles 70 feet in length were desired. This requirement put
the ordinary reinforced concrete piles out of consideration. What was
actually done was to use an untreated timber pile and then to encase
it where it passed through the water in a reinforced concrete shell.
This shell was made of such size as to allow a space between it and
the enclosed wooden pile. A rich concrete was put in this space at the
bottom and thus excluded the external water. Upon pumping out the
retained water, the major portion of the space was filled with a lean
concrete and a top layer of rich concrete then added in which the
column reinforcement was placed. The steel used for reinforcement was
in the main round bars of mild steel. The piles averaged 58 feet in
length; the shells, 18.4 feet. The cost of these shells was $1.78 per
linear foot. It is said that the cost of the untreated wooden pile
together with its protective coating was not greater than what would
have been the expense for a creosoted pile.

At both the Baltimore docks and the wharf in the tropics, concrete       333
is exposed to the action of sea water. But there is no violence in
this action. However, a very large application of concrete
construction has been recently carried out in a very much exposed
maritime situation off the coast of Florida. It is 156 miles from the
mainland to the island of Key West. Scattered along this interval are
a number of islands, so that in reality the total linear amount of
intervening land is about one-half the distance. Some of the water
passages are only a few hundred feet in width; one is about 2½ miles
wide. The greater portion of the aqueous route is of a shallow depth.
But for about 6 miles the water reached depths up to 30 feet; and this
in connection with an exposed situation. Reinforced concrete viaducts
have been built to accommodate trains and resist the storms. A quarter
million barrels of cement and about 5,700 tons of steel went into
these works.

The viaduct from Long Key is 2 miles long and passed through water
having a depth ranging from 13 to 20 feet. The floor of the Gulf is of
coral. To construct a pier, about 30 piles would be driven in with
their tops projecting up from the floor. A cofferdam would be sunk to
include them and a seal of concrete 1 yard thick be placed. The water
could now be pumped out and the form concreted. The reinforcement
would, of course, be put in place before depositing this concrete. The
pier would then be allowed 3 weeks to mature. The concrete was mixed
with fresh water to avoid the effect of sea water on the steel.
Corrugated bars were used in reinforcing the walls and the 184 arches.
High water is 31 feet below the top of this structure, so that the
track is well protected from the waves.

It may surprise some, but concrete has actually been used as the chief
material in the construction of boats. A reinforced concrete boat was
built thirteen years ago for use on the River Tiber in Italy. Not only
the hull but posts and roof of the structure above deck were of          334
concrete. This house boat was 67 by 21 feet. Another Italian boat is
the Liguria, a barge in actual service. It is 57 by 18 feet and is
rated at 150 tons. The Gretchen is an American example of the stone
boat. She has sailed over long distances on the Atlantic and was
reputed as comparatively a rapid sailer in a heavy sea. Her
reinforcement was a multitude of small rods. This boat drew 14 feet of
water and was 65 feet long and had a beam measurement of 16 feet.

Concrete is an obvious material for coal pockets, especially because
of its fireproof character. A further advantage is the avoidance of a
large maintenance charge. At Charlestown (Boston), the Lehigh &
Wilkes-Barre Coal Company had been expending about $1,000 yearly on
repairs upon a coal pocket. This has now been replaced by a concrete
structure having a capacity of 10,000 tons. It has a depth of 24 feet,
and has a length of 182 feet and a width of 92 feet. It is founded
upon 750 Simplex concrete piles. If wooden piling had been used, the
amount of excavation thus necessitated would have been very
considerable because it would have been necessary to cut them off 10
feet below the surface in conformity with the building laws. Moreover,
about 2,000 wooden piles would have been required because of the limit
of ten tons’ bearing capacity per pile. With the concrete piles,
however, the footings for the columns were constructed with but little
excavation. The columns, side walls, girders, beams, floors--pretty
much everything except the roof--were of reinforced concrete. When a
full load of coal is filled in on the floor, the weight per square
yard is 18 tons.

A similar application is to the construction of grain elevators.
Reinforced concrete has been used at Baltimore in two important
buildings of this kind and also in the case of a third at Buffalo. The
question of fire is here very important. The grain elevator of the
Pennsylvania Railroad at Baltimore is the largest of the three and is    335
constructed to hold 1,000,000 bushels. There are 53 cylindrical bins
having a common height of 79 feet. There are four rows of eight each.
The remaining twenty-one bins occupy spaces in between, three rows
seven in a row. The set of 32 have the larger size and measure 24.2
feet in internal diameter. The walls are 8 inches thick and have both
vertical and circumferential reinforcement. The vertical reinforcement
is round bars of 1⅜-inch diameter. The circumferential reinforcement
consists of interlaced flat bars. By a patented device the bins were
cast in sections. This mold would be attached to the heavier vertical
reinforcement and jacked up as needed.

It is unnecessary to emphasize the fact that concrete while economical
is not cheap. So that when large masses are used, it is advisable to
reduce the expense by using what may be called “pudding stones.” At
McCalls Ferry a large dam and adjoining power house span the
Susquehanna River. This is a tremendous application of concrete.
However, pudding stones were very properly employed in the
construction of the great dam. Here steel was employed not so much to
reinforce but to supply frames for the molding surfaces. Great pelican
cranes of steel were also employed to handle the concrete, etc. The
face of the dam is a double curve and thus required a precise mold.
Sections of the dam, 40 feet in length, would be constructed to
alternate with open spaces of the same length. When it was desired to
close such open spaces, a great steel apron would be let down on the
upstream face. Concrete could then be laid in the open space.

In all the applications of reinforced concrete with which our
attention has so far been occupied, the case has either been one of
well-recognized practice or closely related to such practice--with the
possible exception of concrete barges. There are two other lines of
engineering application in which it is very desirable to employ          336
concrete, but where we are scarcely entitled to regard its use as
anything more than experimental. Reference is made to telegraph poles
and cross-ties. If a concrete pole really proves adapted to its
service, then we may expect a great reduction in maintenance expense.
It is estimated that renewals of wooden poles in the United States
cost yearly $13,000,000. The prospect of getting a pole which will not
need renewal for a long period is certainly attractive. But the actual
service is severe. This is due not so much to the load which must be
carried as to the horizontal movements under wind pressure. But by
using proper reinforcement, it is thought by some, the pole may be
made to withstand the horizontal thrusts. Some experiments have been
made of a type of pole recommended by the American Concrete Pole
Company, Richmond, Indiana. Four vertical rods bound together by wire
constitute the reinforcement. Such a pole 7 x 7 inches at the top and
12 x 12 inches at the bottom was tested to destruction. This pole was
30 feet long and had its butt end sunk 5 feet into the ground. The
vertical rods were ⅝ inch in diameter and were bound with No. 9
wire. A horizontal thrust or pull at the top of 840 pounds
accomplished a deflection of 6 inches. When this was increased to
1,780 pounds, the deflection amounted to 17 inches. When 2,800 pounds
pressure was employed, the deflection was 30 inches accompanied by a
slight cracking. A deflection of a full yard together with cracking at
the ground line resulted from a pressure of 3,640 pounds. When 7,200
pounds pressure was employed, the cracking became bad and the
deflection amounted to 60 inches. A cedar pole of the same size was
deflected 11 inches by a pull of 840 pounds. With 1,780 pounds, the
deflection was nearly a yard (33 inches); and with 2,200 pounds the
pole broke about 3 feet from the ground. The problem of the telegraph
pole will probably be solved, if this has not already been done.         337

With regard to the cross-tie the case is more difficult. Plain
concrete slabs or beams cannot be used after the manner of the wooden
tie because of their want of elasticity. What is called “center
binding” would be disastrous to plain concrete. The rocking action of
the passing load is also a factor which enters. One method of dealing
with center binding is to divide the tie into two parts, connecting
them with steel rods. The Corell tie is an example of this. In the
Percival tie, the under part of the concrete block is given a
sharpened edge. Beneath the rail itself, the cross-section is a kind
of oval. There is longitudinal reinforcement in the form of four rods,
three arranged at the top and one near the bottom. Three rods are
bound with wire. There is a cushion block of wood which absorbs and
distributes the shocks from the bottom of the rail. Screw spikes and
metallic sockets are employed. Some three or more years ago a hundred
such ties were put in service in a Texas railway. In June, 1909, seven
only were found to have received serious injury. It is thought that
this damage was scarcely chargeable to the ties themselves as when in
position they were between wooden ones whose deterioration might
easily have been the cause of undue disturbance being thrown on the
concrete ties.

We have considered to a slight extent the use of steel as the material
of concrete forms. This line of application, however, promises to
become a very large one. Two notable constructions are now under way
in which the steel form plays a large part. These are the great Gatun
Locks of the Panama Canal and the Catskill Aqueduct. The three double
locks at Gatun will require about 2,000,000 cubic yards of concrete.
Each pair of locks is on a separate level and has three longitudinal
walls. One separates the lock chambers. This central wall is 60 feet
in width. It is not solid as so much concrete would not be required as   338
the water level is approached. Consequently, there is a kind of
V-section which traverses it longitudinally. This is filled in except
for three galleries--one for drainage, one for the electric wires and
one for the men. There is a longitudinal culvert arranged below the
fill in the body of the concrete wall. In the side walls of the lock
chambers are other longitudinal culverts. From the central supply
culvert transverse distributing culverts run off beneath the floors of
the adjacent lock chambers. These have vertical outlets into the lock
chambers themselves. Similarly, but for purposes of emptying the
locks, the longitudinal culverts arranged along the outside are
connected by transverse culverts and vertical openings with the lock
chambers. The members of the two systems of transverse culverts
alternate with each other. The main supply culvert has a diameter of
22 feet part of the way and of 18 feet part of the way. Now these many
culverts, various in form and size, are to be molded in the mass
concrete by means of steel forms. As originally announced, there would
be 12 forms of open hearth boiler steel for the main supply culvert.
Each of these weighs 177,000 pounds. One hundred forms were to be
required. The two main outlet culverts of similar dimensions to the
main supply culvert were thought to require 21 forms, each 12 feet in
length and having a weight of 300,000 pounds. The transverse culverts
were to require 100 forms, each having a length of 10 feet and a
weight of 217,000 pounds. There were thus to be 133 forms having an
aggregate weight of 15,000 tons. It is possible that there may be some
modifications of this plan in minor particulars. The side walls of the
lock chambers are to be mainly vertical planes having a height of,
say, 81 feet. To retain the fresh concrete in place, 12 face plates,
constructed of sheet steel are to be used. These are 7½ inches in
thickness, having face dimensions 78 x 36 feet. Steel towers running on
suitable tracks control these face plates. It is estimated that          339
towers and plates will have an aggregate weight of 26,000 tons. So
that, quite apart from any possible reinforcement application, steel
to the total of about 41,000 tons is to be used for forms and
immediate accessories. But this 41,000 tons is not all. The concrete
is to be cast in great monoliths and to retain the ends of these while
the concrete is fresh, steel girders 6 feet high are to be employed.
If these locks were to be of stone then steel would have played a
rather subordinate part.

The Blaw Collapsible Steel Centering Company are engaged at Panama,
but they are also applying their systems of molding concrete to the
great aqueduct which is to supply New York City with water from the
Catskill Mountain region on the other side of the Hudson River. A
steel centering is used to give form to the interior. Steel forms are
also employed to shape the upper part of the external surface. At
Baltimore, more than three miles of sewer construction was carried out
in accordance with the system of the same company. The centering used
for one portion where the height was 11 feet and the width 12¼ feet
(inside) was employed in 50-foot lengths. In 2 hours, 6 men could
remove such a 50-foot section together with its falsework and have it
in readiness for a repetition of its service. A typical half-round
Blaw center consists of one or more steel plates bent to conform to a
cross-section of a semi-circle. Turnbuckles retain this shell in
position. If we are going to employ this form in sewer construction,
we first dig out our trench to such dimensions and form as to furnish
the mold for the outside surface of the lower part of the concrete
sewer. We then lay concrete in a longitudinal strip along the bottom,
giving the upper surface the form of a shallow gutter. When this is
sufficiently hardened, the semi-circular center may be slid along it
to suitable position. The center has its concavity opening upwards.
The concrete of the invert of the sewer is now placed. The same or a      340
duplicate center may now be used to mold the interior of the upper
part of the sewer.

Portland cement has been in use for a long time. But reinforced
concrete is so modern that in some important lines of engineering
application the fundamental data underlying practice are not fully
determined. In what may be regarded as the first decade (1870-1880) of
the considerable manufacture of Portland cement in the United States,
the total amount produced was only 42,000 barrels. Fifty years and
more would be required for the production of enough cement to
construct the Gatun Locks. Over a decade would be necessary to yield
enough cement for the operations of the Hudson Companies. The price at
this period was about $3.00 per barrel. In 1908 it was 85 cents. But
the production in this year was more than 1,200 times that in 1880.
The value per year of the present output is about $50,000,000.

CHEMISTRY AND THE INDUSTRIES.                                            341


[Assistant Professor of Analytical and Organic Chemistry, Armour
Institute of Technology.]

Chemistry has always been a utilitarian science, a science whose
direct applications to our every-day interests has been on every side
recognized. Even in the days of alchemy, that fantastic forerunner of
our present science, her devotees were concerned with the changing of
the base metals into the noble ones, of lead into silver, and of
copper into gold, and also with the search for the philosopher’s
stone, that mysterious something which would give perpetual youth.

From these workers arose in the course of the years, the facts and the
theories which were incorporated into the science of chemistry. But it
is not entirely to the alchemists that chemistry owes its development.
By far the greater number of facts, if not of theories, came down to
us through the traditional knowledge of the chemical industries.
Numerous animal and vegetable products, such as sugar, starch, the
oils, gums and resins, had been familiar commodities as long back as
history records. And the ancients were informed in such typically
chemical industries as that of dyeing with vegetable dyes, pigment
manufacture, varnish making, soap making, paper making and the
fermentation industries. In fact the science of chemistry as we have
it today owes much more to these unknown workers in the industries who
transmitted their chemical facts from father to son, than it does to
the creations of the imaginations of those picturesque, if not so
truthful, alchemists.

It is entirely impossible to divorce the science of chemistry from       342
its industrial applications. The science owes much to the industries.
The industries owe even more to the science. And if that relationship
has been very close in the past, it is much closer now than it ever
was; and it is getting closer all the while. The utilitarianism of our
age makes it absolutely necessary that the two shall be so united that
the utmost of good shall result from the union.

The application of science in general, and of chemistry in particular,
to the industries has this one general result. It takes that industry
out of the “rule of thumb” class, and places it firmly on a sound
basis. It is no longer conducted in a haphazard manner, but according
to intelligent design, based on the most accurate scientific
information. Of course the fierceness of business competition has
ordered this change, more than any other factor. The pure science of
chemistry would have developed without industrial applications,
because there are investigators who are seeking the truth regardless
of any of its immediate applications. But in the industries, it is a
matter of dollars and cents. The most efficient is the winner. And the
most efficient is the one who utilizes in his business all the
scientific information that can be brought to bear on the subject, and
who is always looking for new facts that can be applied.

Chemistry, then, is applied to the industries in two distinct ways,
the first in discovery, in finding a new substance which can be used,
or a new process by which some useful or necessary substance can be
made; the second in improvement, in making a certain product better,
or cheaper, in utilizing wastes, or in starting from cheaper raw

There are but two kinds of industries: (a) Those which are based on
processes which change the form of matter, such as the manufacture of
furniture for example, and (b) those which are based on processes
which change the composition of matter, such as the manufacture of
Portland cement from clay and limestone. Now group “b” comprises         343
by far the greatest number of industries, and since the science of
chemistry concerns itself with just those changes in the composition
of matter, it is evident that most of our industries are chemical in
their nature. We have but recently come to realize this. A list of
such industries and operations which are essentially chemical would be
found to include almost every industry that we can think of. I need
only make mention of the subject of fuels, gas and coke, of cement,
mortars, brick and other building materials; of petroleum and its
products; of asphalt; of the products of the destructive distillation
of wood; of cellulose and of paper; of pigments, resins, varnishes; of
rubber; of soap, fats and the fatty oils; of gums; of sugar and of
starch; of the textile industries and of the dyes; of leather and
glue; of explosives; of the heavy chemical industries, the manufacture
of acids, alkalies and salts; of the manufacture of glass and the
ceramic industries; of the fermentation industries; of the manufacture
and standardization of medicines; of the subject of soils and
artificial fertilization; of the subject of foods, and of nutrition;
of the subject of water, sewage and sanitation; of photography; of all
the electro-chemical industries and processes; of the production of
steel, of copper, of lead and of all the other metals. I need only
mention this formidable array of subjects and industries to convince
the most sceptical one that chemistry does in fact, concern us,
directly or indirectly, in all of our activities.

As I have said previously, chemistry influences industry in two
distinct ways: First, in the discovery of new substances and new
processes; secondly, in the perfection of known substances and known
processes. In either of these fields the chemist is proud of his
record. The conquests are so numerous that he is at a loss as to how
or where to begin if he would tell of them. The whole field of
industrial chemistry is one succession of chemical achievements,
mammoth industries that had their humble birth in the chemist’s test     344
tube, his beaker, or his retort; the wealth of by-products saved to
the world from what was a few years ago sheer waste; and above all
increased efficiency in the manufacture of all products. The chemist
does not claim more than his due when he points out that his activity
covers the whole field of our daily experiences, and that his activity
has always been for the lessening of waste, for greater efficiency, in
a word, for the development of civilization. To illustrate the points
which have already been brought out, the story of the soda industry,
the beginning of the modern chemical industries, can be used. The
beginning is far back in another century, so intimately is the
development of the soda industry bound up with the advance of

The value of what we now call the alkalies as detergent substances,
was known from the earliest times. The first alkali recorded in
history is burned lime, and was called “caustic” on account of its
characteristic property. Caustic lime is but slightly soluble in
water, hence its use is greatly limited. History fails to tell who it
was who first solved the problem of making a more soluble alkali, but
some one, early in the Middle Ages, discovered that by the action of
caustic lime on the so-called potashes, the ashes which remained on
burning wood, a very soluble caustic was formed. And to this, the long
since forgotten chemist gave the name “caustic potash.” The chemistry
of the discovery is as follows: All plants take potassium, a very
light metal, in some form or other from the soil, to form the
so-called mineral, or bony structure, in other words the skeleton, of
the plant. When these plants are burned the potassium in the form of a
salt, chiefly potassium carbonate, is formed in the ash. These
potassium salts can be extracted by water, and recovered on the
evaporation of the water. These potassium salts, the so-called
“potashes,” were extensively used in the industries of the time, for
example, in making soap, in making glass, in dyeing and in a score of    345
other minor ways. But even as our forests cannot now meet the demand
for timber, so they could not then meet the demand for the “potashes,”
for it requires a large amount of wood to give a comparatively small
amount of potashes, the percentage of potassium salts in wood being
very small indeed. Simultaneously with all this, in northern Spain, on
the seacoast, a number of towns were engaged in burning sea weeds. It
was found that the ashes of sea weeds while not the same as potashes,
nevertheless could be substituted for them. This is historically
recorded as the “barilla” industry. Barilla consisted of 5 per cent of
carbonate of sodium, a metal very similar to potassium. Sodium does
for sea plants just what potassium does for land plants. Barilla was
merely a substitute for potashes, and a very poor substitute at that.
But it was destined to offer the key that solved the whole problem.
The chemists of that time showed the chemical similarity between the
active ingredient of potashes, carbonate of potassium, and the active
ingredient of barilla, carbonate of sodium. The demand for these
alkalies made by the industries was incessant and ever-increasing. The
chemists realized that the direct natural sources of the two, namely,
the wood of the forest and the weeds of the sea, were and always would
be, inadequate to meet the enormously growing demands of the
industries. They saw that some other source would have to be
discovered, or the bodies would have to be prepared artificially. They
realized that while potashes were better than barilla, nevertheless
potassium salts, the ingredients of potashes, were much less widely
distributed in nature than the sodium salts, the ingredients of
barilla. So they set out with the definite object of preparing sodium
carbonate. In 1791 LeBlanc took out a patent for his now famous
process. He was not the only one who worked on the problem; he
happened to be the successful one.

This was the first of the great triumphs of chemistry in the industrial  346
field. The significant point in this story of soda, is that those
industries which were using the alkalies had reached the limit of
their development, because the supply of the alkalies was so limited.
Remember, also, that those industries were fundamental ones. Some
historian has said that you can measure the civilization of a people
by the amount of soap it uses. And here, we see the soap industry of
Europe, the seat of our present civilization, crippled for want of an
alkali. The position of the chemist, his responsibility to society, is
the significant thing in the story. Here was a crisis in the
development of civilization, as important to us as the crisis of the
battle of Marathon. Because the problem was solved in the retort,
instead of on the battle plain, because the battle was fought by the
quiet hand of the chemist, instead of by the fighting men of Greece,
we do not hear so much of it. But it was a triumph, and the credit
belongs to the chemist. To us, as much depended upon the result of the
battle of the molecules in the retort, as upon the defeat of the great

Nor was this battle in the retort a tame one. LeBlanc’s method is an
extremely complicated one. To conduct the process at all requires
chemical knowledge of the most varied kind. And to apply the
improvements that have been worked out in the laboratory, and to carry
into practice the many subsidiary manufactures that have sprung from
this main industry, demands so much technical ability that it has been
said that this manufacture is not merely the foundation of the immense
chemical industries of today, but is also the guiding spirit in them.

LeBlanc, of course, could not foretell the enormous development his
industry was to attain. Nor could he conceive of the ramifications
running from it into countless other activities of our present
civilization. The manufacture of sulphuric acid, one of the most
important products of modern industry, is intimately bound up with
that of soda. And, in the manufacture of sulphuric acid, nitric acid     347
is required, and must be made. Hydrochloric acid is a by-product of
the soda process, and was for a long time permitted to go to waste.
Now it is one of the most valuable products of the LeBlanc soda
process. It is used to make bleaching powder, potassium chlorate, and
otherwise in the industries. Also, the alkaline waste from the soda
process is rich in sulphur. This sulphur is now recovered and put on
the market as such, helping to meet the demand for sulphur that the
Sicilian mines cannot supply.

All those varied industries that were either created or fostered by
the soda industry have made possible the almost fabulously complicated
processes that are now carried out in the manufacture of the aniline
dyes, the artificial odors, like vanillin whose complexity can be
gathered from its formula, C_{6}H_{3}OHOCH_{3}CHO, which tells many
things to the chemist, but not much to the layman, and the artificial
febrifuges like antipyrin, whose formula is C_{11}H_{12}N_{2}O. All
these chemical industries that are the outgrowth of the soda industry,
and that are so dove-tailed with our civilization, have been built up
on the science of chemistry, and worked out by chemists. I have
selected this story of soda to show the commanding position held by
the science of chemistry in directing the course of civilization. It
shows, too, how the entire structure of that civilization is built
around the contributions of the chemist.

As has been already said, it is impossible to separate chemistry from
industry. The farther we go and the more we develop and the more
complex our civilization becomes, the closer become the ties uniting
science and industry. And as everything that deals with the change in
composition of matter is chemistry, it is evident that chemistry is
omnipresent. In the light of what it has accomplished, who shall say
that it is not omnipotent?

The story of soda is a beautiful example of how industry and the need
of civilization can act as a beacon light for the science of             348
chemistry. This illustration will show how the pure science has
created new industries and opened up new activities for civilization.
In 1838 in England, there was born a boy who afterwards was to be
known as Sir Wm. Perkin. He came of a very intelligent family.
Besides, he was gifted with a natural aptitude for chemistry. More
than that, he was put under the direction of Professor Hofmann, one of
the most brilliant of chemists. Perkin would have been called by any
one, an ideal bit of raw material. Hofmann, like many others of those
German chemists, had a faculty of instilling that enthusiasm that is
necessary in the performance of an epoch-making advancement. Perkin
caught that enthusiasm. He rigged up a laboratory in his house and
worked at night and in his vacations on those interesting problems
that Hofmann discussed in his lectures. During one of these vacations,
he was trying to build up, artificially, the substance called quinine,
which was up to that time a purely natural product. His work took an
unexpected turn. Instead of building up quinine, he built what
chemists call now phenyl-sufranine, or mauvëine. This was a new
substance with properties that rendered it an excellent dye. Perkin
established a factory in which the new substance could be prepared on
a large scale; and within a year of its discovery, he had it on the
market. This discovery of Mauve, the first of the artificial dyes,
gave a great impetus to the study of coal tar, from which it was made.
Coal tar, up to that time, was a waste product, made in the process of
heating coal for the manufacture of gas. This coal tar is the raw
material which is used in that enormous chemical industry, the
manufacture of the derivatives of tri-phenyl methane, the so-called
aniline dyes. There is invested in this industry alone, $750,000,000;
and the whole structure, complex as it is, is built on the foundation
of a pure chemical research that was undertaken merely to gratify the
investigative desires of a true scientist, with no thought of its        349
financial results. This achievement of Perkin stands out as one of the
great discoveries of chemistry. And the story of Mauve shows how
science has led the way for industry, just as the story of soda shows
how industry has pointed out the way for science.

Many more stories of the victories of scientific industry could be
told. Much has been done. But the chemist does not live in the glory
of the past. He lives in the possibilities of the future. Every
advancement of the past has opened up many fields of possibilities. If
much has been done, much more remains to be done. And the work of the
future will require the services of the scientist more than did the
work of the past. Those problems whose answers were obvious, have all
been solved. The problems of today are deep ones; they require all the
ingenuity, all the ability that the trained chemist can bring to bear
upon the problems. And they will all tend to increased efficiency.

While chemistry is a fundamental science, while it covers such a
variety of subjects, while the total amount of its established facts
is indeed enormous, nevertheless, it must be said with frankness that
this vastness is made up for the most part by details and more or less
isolated facts and ideas. Chemistry can boast of remarkable
achievements. But the greatest achievements are yet before it. And the
reason is this: Chemistry is not yet a really unified science. The
real fundamentals which will string together all of the isolated facts
and ideas, material of which the chemist has, indeed, reason to feel
proud, are for the most part lacking. That is why the future is so
much larger than the past. And that is why the world can expect from
the chemists much greater achievements in the future than it has seen
accomplished in the past, great as they have been.

In the most fundamental terms, chemistry concerns itself with the
changes which the different kinds of energy produce upon matter.         350
Chemistry concerns itself with two things, energy and matter. And yet
chemistry must admit that it does not know the nature of matter or the
nature of energy. And not knowing, it cannot appreciate.

In this direction lie the achievements of the chemistry of the future.
As the nature of matter and the nature of energy gradually unfold
themselves to the advances of chemical investigation, remarkable
possibilities for future development are disclosed. We are beginning
to see how really wasteful we have been. The frightful wastes which
the movement toward the conservation of our natural resources has
called to our attention, sink into utter insignificance when we
consider what we have lost on account of our ignorance. We are just
beginning to appreciate our wastefulness of chemical energy. A piece
of coal, for example, has in it the possibility of doing ten times as
much work as it is doing now. A piece of radium has stored in it an
almost infinite amount of energy. How to change this internal or
chemical energy into the other forms of energy with which we are
familiar, into heat, or electricity, or ordinary mechanical energy,
that is the problem of the future. The utilization of this vast amount
of potential energy that is stored up in all forms of matter, the
harnessing of it in the service of humanity, this is the problem which
confronts the chemist. It goes down to the very fundamentals of his

But the start has been made. The point of the wedge has already found
entrance. The discovery of radium, and the study of its
decompositions, has opened wide our field of vision. The problem must
yield, as the blows of chemical investigation fall upon the wedge and
drive it home.

Chemistry has always been a utilitarian science. Its results have
always been at the service of humanity. And if we can judge the future
by the past, even discounting for the enthusiasm of the chemist, we
can forsee improved processes which will reduce our present wasteful     351
methods; we can see new processes making for us such things as india
rubber from starch, for which we must now depend upon the bounty of
nature; and we can dimly see the time when we shall be able to utilize
some of that energy which is hidden away in the recesses of matter,
and whose vastness we have just begun to appreciate.



[Professor of Mechanical Engineering, Case School of Applied Science.]

Official reports show that the coal placed on the market amounts
annually to between 450,000,000 and 500,000,000 short tons in the
United States alone. These figures, however, are somewhat misleading
as they do not in any way show the tremendous wastes that are going on
due to our present methods of mining and restrictions in qualities of
coal that can be transported and placed on the market at a reasonable
profit. Careful investigation has shown that the coal wasted or left
in the mines in such form as to be inaccessible to future generations
amounts each year to practically 100 per cent of that placed on the
market, or in other words, at the present time some 450,000,000 tons
are annually lost as far as commercial value is concerned.

If this condition is allowed to continue it is estimated by the United
States Geological Survey that our available supply of bituminous coal
will be exhausted within the next two hundred years.

A realization of the seriousness of this situation has led to a
careful and systematic study of the present lack of efficiency in the
utilization of fuels for both power and metallurgical purposes, to
investigations into more efficient use of the present marketable
grades of fuel, and to a consideration of methods of using the
so-called low-grade fuels, lignites and peats.

The United States Geological Survey has for several years been
investigating the economic value of coals and lignites as gas-producer
fuel. This work, begun with tests of coal and lignite at the             353
coal-testing plant erected at the Louisiana Purchase Exposition, St.
Louis, Mo., in 1904, was continued at St. Louis and at Norfolk, Va.,
and is now being carried on by the Survey at the fuel-testing plant in
Pittsburg, Pa. The tests were undertaken because it was evidently
desirable to determine the value of the gas producer as a means of
increasing efficiency in the use of the coal supplies of the United
States. The early tests proved decidedly encouraging, demonstrating
that many coals now wasted or not mined because they are not
satisfactory fuel for steam-power plants can, by conversion into
producer-gas, be made to do from two to three times as much work as
can be done by the best grades of steam coal burned in a boiler plant.
In consequence, the making of producer-gas tests and the study of the
processes that take place within the gas producer now form an
essential part of the fuel investigations conducted at the Pittsburg
plant under the provisions made by Congress for the analyzing and
testing of mineral fuels.

Rapid Development of the Gas Engine.

It was not until late in the nineteenth century that the gas engine
came into common use, and although many types have been devised within
the last twenty or thirty years it is only within eight or nine years
that large gas engines have been constructed. This development started
eleven or twelve years ago in Germany, Belgium, and England, but
marked progress has been limited to the last eight years.

For a long time the natural fuel of these internal-combustion engines
was city gas, but this was too expensive except for engines of small
capacity. It was seldom found economical to operate units of more than
75 horsepower with this fuel. Cheap gas was essential for the
development of the gas engine, but the early attempts to produce cheap
gas were somewhat discouraging, and for a time it seemed very            354
unlikely that the gas engine would encroach to any extent on the field
occupied by the steam engine. The theoretical possibilities of the
internal-combustion engine operating with cheap fuel promised so much,
however, that the practical difficulties were rapidly overcome, with
the result that the internal-combustion engine has become a serious
rival of the steam engine in many of its applications.

The development of the large gas engine within the last few years has
been exceedingly rapid. It was only ten years ago that a
600-horsepower engine exhibited at the Paris Exposition was regarded
as a wonder, but today four-cycle, twin-tandem, double-acting engines
of 2,000 to 3,500 horsepower can be found in nearly all up-to-date
steel plants, and there are installations in this country containing
several units rated at 5,400 horsepower each.

Development of the Gas Producer for Power Purposes.

The rapid advance of the large gas engine was made possible by
improvements in the production of cheap gas directly from fuel by
means of the gas producer. An early form of producer introduced in
Europe, and now in general use both abroad and in the United States,
is known as the suction producer, a name suggested by the fact that
the engine develops its charge of gas in the producer by means of its
own suction stroke. Although many producers of this type are now used,
most of them are small, seldom exceeding 200 horsepower. A serious
limitation to the utility of the suction producer has been the fact
that, owing to the manner of generating the gas, no tarry fuels could
be used, a restriction that prevented the use of bituminous coals,
lignites, peats, and other like fuels. The fuels in most common use
for producers of this type are charcoal, coke, and anthracite coal,
although attempts are being made so to construct plants that they can
be operated with bituminous or tarry coals.

To meet the demand for the concentration of power in large units,        355
instead of operating a large number of separate installations of small
power capacity, the pressure producer was devised. This producer
develops its gas under a slight pressure due to the introduction of an
air and steam blast, and the gas is stored in a holder until it is
required by the engine. As the gas may thus be stored before passing
to the engine, and as its generation does not depend on the suction
stroke of the engine, tar and other impurities may be removed from it
by suitable devices, and the use of bituminous coal, lignite, and peat
thus permitted.

The pressure producer was closely followed in the course of
development by the down-draft producer, which fixes the tar as a
permanent gas and therefore completely uses the volatile hydrocarbons
in bituminous coal, lignite, and peat.

A few scattered producer-gas plants were installed for power purposes
in the United States before 1900, but the application of this type of
power in any general sense has been developed since that date. During
the first few years of this period of development anthracite coal,
coke, and charcoal were used almost exclusively, although occasionally
pressure and down-draft plants ventured to use a well-tried bituminous
coal known to be especially free from sulphur and caking difficulties
and low in both ash and tar making compounds. The rapid development of
the anthracite plant was to be expected, but it remained for the
United States Geological Survey in its testing plants at St. Louis and
Norfolk to demonstrate the possibility of using in such plants
practically all grades of fuel of any commercial value, without
reference to the amount of sulphur or tarry matter which they contain.
Figures 1 and 2 illustrate the very rapid increase in the number of
installations and in the total horsepower of the plants operating with
bituminous coal and lignite since the beginning of these                 356
investigations by the Geological Survey in 1904.

Owing to the fact that the dates of installation of many plants are
not ascertainable, it is impossible to present the exact growth either
in number of installations or in horsepower. The relative rate is,
however, approximately shown by Figures 1 and 2, the data for which
were secured from 375 installations. The points for the year 1909 are
estimated from the returns for the first five months. These points
have been checked by two or three methods and indicate only the normal
increase established by the rate of development before the business
depression of 1908. It is probable that the actual figures for the
entire year may exceed those indicated.

Relative Results of Steam and Producer-Gas Tests.

In considering the relation between the economic results of plants of
the two types under discussion, namely steam and producer-gas, the
fact should be remembered that today, in the ordinary manufacturing
plant operated by steam power, less than 5 per cent of the total
energy in the fuel consumed is available for useful work at the

In this connection it is of interest and value to glance at the
possibilities of the best-designed and most skilfully operated
commercial plant now in use. The data concerning the steam plant
selected for this determination are derived from a table prepared by
Mr. Stott, superintendent of motive power, Interborough Rapid Transit
Company, New York City, which, as Mr. Stott says, shows “the losses
found in a year’s operation of what is probably one of the most
efficient plants in existence today, and, therefore, typical of the
present state of the art.”

[Illustration: Figure 1.--Annual increase in number of producer-gas      357
power plants in the United States.]

[Illustration: Figure 2.--Annual increase in the total horsepower of     358
producer-gas power plants in the United States.]

Average losses in steam plant of the Interborough Company in             359
converting 1 pound of coal, containing 12,500 British thermal units,
into electricity.

                                        | British  |
                                        | thermal  | Per cent.
                                        |  units.  |
  Loss by friction                      |     138  |     1.1
  Loss in exhaust                       |   7,513  |    60.1
  Loss in pipes and auxiliaries         |     275  |     2.2
  Loss in boiler                        |   1,000  |     8.0
  Loss in stack                         |   1,987  |    15.9
  Loss in ashes                         |     300  |     2.4
        Total losses                    |  11,213  |    89.7
  Energy utilized                       |   1,287  |    10.3
                                        |  12,500  |   100.0

Mr. Stott further presents a table showing the thermal efficiency of
producer-gas plants, concerning which he says:

The following heat balance is believed to represent the best results
obtained in Europe and the United States up to date in the formation
and utilization of producer gas.

Average losses in a producer-gas plant in the conversion of 1 pound of
coal, containing 12,500 British thermal units, into electricity.

                                        | British  |
                                        | thermal  | Per cent.
                                        |  units.  |
  Loss in gas producer and auxiliaries  |   2,500  |    20.0
  Loss in cooling water in jackets      |   2,375  |    19.0
  Loss in exhaust gases                 |   3,750  |    30.0
  Loss in engine friction               |     813  |     6.5
  Loss in electric generator            |      62  |      .5
        Total losses                    |   9,500  |    76.0
  Converted into electric energy        |   3,000  |    24.0
                                        |  12,500  |   100.0

The thermal efficiency of such plants, as given by different writers,
runs as high as 33, 36, and 38.5 per cent, and for some plants figures
as extravagant as “above 40” are boldly published. Although the
present aim has been to give the figures for a producer-gas plant that
may compare favorably with those of the steam plant of the
Interborough Company, an effort has been made to keep well within
obtainable efficiencies. Attention is also directed to the fact that     360
the producer-gas plant considered should be large enough to compare
favorably with the steam plant. This precludes comparisons with
suction plants, which are relatively small but give higher
proportional efficiencies than the larger pressure and down-draft
plants, for these require more or less auxiliary apparatus.

Mr. Stott seems ready to accept a thermal efficiency of 24 per cent
for the best producer-gas plants for comparison with 10.3 per cent
efficiency for his steam plant, but a careful study of the problem has
led to a more conservative estimate for the producer-gas plant,
namely, 21.5 per cent.

The tables just given show the comparative efficiencies reached in
plants of the best type, both steam and producer-gas, but these are
seldom realized in common practice. The results obtained in the
government plant at St. Louis are probably more nearly representative
of the ordinary type of apparatus. These results are as follows:

Relative economies of steam and gas power plants at St Louis in the
conversion of 1 pound of coal, containing 12,500 British thermal
units, into electricity.

                                    |     Steam Power.   |     Gas Power.
                                    | British |          | British |
                                    | thermal | Per cent.| thermal | Per cent.
                                    |  units. |          |  units. |
  Losses in exhaust, friction, etc. |  11,892 |   95.14  |  10,812 |    86.5
  Converted into electric energy    |     608 |    4.86  |   1,688 |    13.5
                                    |  12,500 |  100.00  |  12,500 |   100.0

The ratios of the total fuel per brake-horsepower hour required by the
steam plant and producer-gas plant, under full load, not counting
stand-by losses, are presented below as derived from 75 coals, 6
lignites, and 1 peat (Florida).

The curves in Figure 3 show graphically the great economy secured with
the producer-gas plant. The figures for the producer-gas tests           361
include not only the coal consumed in the gas producer, but also the
coal used in the auxiliary boiler for generating the steam necessary
for the pressure blast--that is, the figures given include the total
coal required by the producer-gas plant.

  Ratios of fuel used in steam and gas plants.

  Average ratio, coal as fired per brake-horsepower hour under
  boiler to coal as fired per brake-horsepower hour in producer    2.7

  Maximum ratio, coal as fired per brake-horsepower hour under
  boiler to coal as fired per brake-horsepower hour in producer    3.7

  Minimum ratio, coal as fired per brake-horsepower hour under
  boiler to coal as fired per brake-horsepower hour in producer    1.8

  Average ratio, lignite and subbituminous coal as fired per
  brake-horsepower hour under boiler to lignite as fired per
  brake-horsepower hour in producer                                2.7

  Maximum ratio, lignite and subbituminous coal as fired per
  brake-horsepower hour under boiler to lignite as fired per
  brake-horsepower hour in producer                                2.9

  Minimum ratio, lignite and subbituminous coal as fired per
  brake-horsepower hour under boiler to lignite as fired per
  brake-horsepower hour in producer                                2.2

  Average ratio, peat as fired per brake-horsepower hour under
  boiler to peat as fired per brake-horsepower hour in producer    2.3

In considering the possible increase in efficiency of the steam tests
with a compound engine, as compared with the simple engine used, the
fact should not be overlooked that a corresponding increase in the
efficiency of the producer-gas tests may be brought about under
corresponding favorable conditions. Not only is the producer passing
through a transitional period, but the gas engine must still be
regarded in the same light. In the larger sizes the vertical
single-acting engine is being replaced by the horizontal double-acting
engine. Other changes and improvements are constantly being made which
tend to increase the efficiency of the gas engine, as compounding and
tripling the expansions have already increased the efficiency of the
steam engine.

As has already been stated, the gas engine used in the tests here
reported is of a type that is rapidly becoming obsolete for this size,
namely, the vertical, three-cylinder, single-acting.

A brief consideration of these points will lead at once to the           362
conclusions that a comparison of the producer-gas plant and steam
plant used in these tests is very favorable to the former, and that
any increase in efficiency in the steam tests that might result from
using a compound engine can be offset by the introduction of a gas
engine of more modern type and a producer plant designed to handle the
special kinds of fuel used.

[Illustration: Figure 3.--Comparative service of coals and lignites in
gas-producer and steam-boiler plants.]

It should be noted that many fuels which give poor results under steam
boilers have been used with great ease and efficiency in the gas
producer, which thus makes it possible to utilize low-grade coals and
lignites that have heretofore been regarded as practically useless.      363
Several of the poorest grades of bituminous coals have shown
remarkable efficiency in the gas producer, and lignites and peat have
been used with great facility, thus opening the way to the
introduction of cheap power into large districts that have thus far
been commercially unimportant owing to lack of industrial
opportunities. Experiments with “bone,” a refuse product in
bituminous-coal mining, have given excellent results, showing an
efficiency in the producer equal to that reached by good steam coal
under boilers. Recent investigations with other low-grade fuels, such
as mine roof slabs, culm, and washery refuse, have also demonstrated
the possibility of using such material to advantage in the producer
under proper commercial conditions.

Number and Class of Plants.

A list of producer-gas power plants recently secured indicates that at
present there are over 500 such plants in operation in the United States,
ranging in size from 15 to 6,000 horsepower.

Figure 4.--Summarized data of producer-gas power plants in United

                         |       |           Horsepower.            |
                         |No. of |                                  |
                         |plants.|                                  |
                         |       +-------+--------+--------+--------+
                         |       | Total.|Average.|Minimum.|Maximum.|
                         |       |       |        |        |        |
Anthracite coal:         |       |       |        |        |        |
  Over 500 horsepower    |    8  |  7,550|   950  |   600  |  1,500 |
  500 horsepower or less |  407  | 40,550|   100  |    15  |    500 |
                         |  415  | 48,100|   116  |    15  |  1,500 |
Bituminous coal:         |       |       |        |        |        |
  Over 500 horsepower    |   20  | 49,000| 2,450  |   750  |  6,000 |
  500 horsepower or less |   17  |  5,150|   300  |    35  |    500 |
                         |   37  | 54,150| 1,460  |    35  |  6,000 |
Lignite:                 |       |       |        |        |        |
  Over 500 horsepower    |    3  |  7,275| 2,430  |   525  |  3,750 |
  500 horsepower or less |   19  |  1,725|    90  |    25  |    250 |
                         |   22  |  9,000|   410  |    25  |  3,750 |
All plants               |  474  |111,250|   235  |    15  |  6,000 |
                         |       | Per
                         | Per   | cent
                         | cent  | of
                         | of    | total
                         | total | horse-
                         |number.| power.
Anthracite coal:         |       |
  Over 500 horsepower    |  ...  |   ...
  500 horsepower or less |  ...  |   ...
                         |   88  |    43
Bituminous coal:         |       |
  Over 500 horsepower    |  ...  |   ...
  500 horsepower or less |  ...  |   ...
                         |    8  |    49
Lignite:                 |       |
  Over 500 horsepower    |  ...  |   ...
  500 horsepower or less |  ...  |   ...
                         |    4  |     8
All plants               |  100  |   100

Data secured from this list are summarized in the table on the           364
previous page according to the type of fuel used, and separately for
all plants above 500 horsepower and for those not exceeding 500

It will be observed from this table that about 88 per cent of the
total number of installations in this country are operating on
anthracite coal (a few using charcoal or coke), and that bituminous
coal and lignite are used in the remaining 12 per cent. Of the total
horsepower approximately 57 per cent is derived from bituminous coal
and lignite and 43 per cent from anthracite coal, charcoal, and coke.
In point of size it will be noted that the bituminous plants average
12½ times the size of the anthracite plants.

In 1906 a large number of these plants were carefully inspected in
order to secure definite information from the owners and operators
regarding the more or less successful operation of such installations.
Similar inspections were made in 1908.

Deductions from Visits of Inspection.

The deductions made from the visits in 1906 were as follows:

1. The plants as a whole are giving remarkable satisfaction
considering the very brief period of development that has passed since
the introduction of this type of power.

2. The most serious difficulty seems to arise from the lack of
competent operators to run the plants rather than from defects or
troubles in the plants themselves.

3. Incompetent salesmen are undoubtedly to blame for serious
misrepresentations and misunderstandings.

4. The neglect shown by some manufacturers in respect to their plants
after they are installed and paid for has not been farsighted, and the
failure of the manufacturers to give the purchasers or operators of      365
plants full information regarding their construction and method of
operating has certainly been detrimental to the business.

At the present time (1910) the following modifications might be
advantageously made to the above statements:

1. Unchanged.

2. This situation still prevails, although there are many more
competent operators today than three years ago. Time will eliminate
this difficulty.

3. With stronger companies this situation is greatly improved.

4. Experience has shown that such neglect produces serious troubles
and financial loss to the manufacturer, and a very decided change for
the better has developed in the last few years. There are, however, a
few small concerns still operating in the producer field on what may
be considered a false basis.

Centralization of Power Development and Distribution.

Central stations for power and lighting are springing up all over the
country. Electric lights are now in general use in towns numbering
their population by hundreds only. Electric transmission for
street-railway service is practically universal and electric power for
shop drive is in great demand. The substitution of the electric
locomotive for the steam locomotive for terminal service and even for
line duty by several leading railway systems is no longer a mere
expectation but is an every-day working reality.

These changes and developments in every section are, to a large
extent, tending to do away with the individual small steam equipment,
whether stationary or locomotive, and are bringing to the front the
central power station, ranging in size from lighting and pumping
plants of less than 100 horsepower in the smaller towns to those of
100,000 horsepower or more required to meet metropolitan demands.        366

European Examples of Advantageous Location.

In the development of central power plants and the reduction of the
cost of power, the producer-gas power plant is an important factor. In
this connection the question of locating such plants directly at the
mines is well worth careful and unbiased attention in the engineering
profession. The advantages to be derived from such a location have
already attracted the commercial interests of Europe. As examples
worthy of thoughtful consideration, the general conditions of
operation of three typical European installations are here described:

Plant A.--This plant, although not situated directly at the mines, is
but a short distance away, and the company owning the plant also owns
the mines from which the fuel is secured. The plant is of the Mond
by-product type and consists of eight pressure producers of 2,500
horsepower each. The fuel used is a run-of-mine bituminous coal said
to contain 8 to 9 per cent ash and 1 to 2 per cent sulphur. This would
indicate that they are utilizing the best grades of coal from their
own mine in the local gas plant and allowing the lower grades to
remain unmined, a fact which I verified before leaving the plant.

The plant is designed for the recovery of the sulphate of ammonia and
for supplying gas to the neighboring towns for both metallurgical and
power purposes. As one unit is always held in reserve, the plant is
called 16,000 horsepower. The main distributing line is 3 feet in
diameter, and at the time of my visit there were 37 miles of main, the
longest single run being 6½ miles. Each producer gasifies, on an
average, 20 tons of coal per twenty-four hours. The report of the
engineer in charge indicates that the plant had been in operation
twenty-four hours a day, seven days a week, for two and one-half         367
years without a shut down.

Plant B.--This plant, which is located in the center of a peat bog,
proved of especial interest. It has a capacity of 300 horsepower only,
and is about 3 miles from the town to which the electric current is
supplied. One-half of the plant (150 horsepower) was installed in 1904
and the remainder in 1906. This is probably the first as well as the
smallest producer-gas installation to be located at the mine and
transmit high-voltage current to a point some distance away. This
installation, in 1909, consisted of two suction producers (special
peat type) rated at 150 horsepower each, and two horizontal twin
single-acting four-cycle gas engines of 150 horsepower each, direct
connected to alternating-current three-phase generators, which were
running splendidly in parallel at the time of my visit. The 3,000-volt
current is transmitted to the town, where it is used during the day
for lighting shops and for shop motors. At night the plant supplies
the lights for the streets and residences. The charge for residence
light is 9 cents per kilowatt hour. Both units are in operation from
5:30 a. m. to 6 p. m., and one continues to 11 p. m. each day.

A 35-horsepower peat machine is used for preparing the fuel. This is
driven by an electric motor supplied with current from the power plant
on the bog. As only 750 tons of dry peat are required per year there
is no attempt to work the plant to its maximum. Local farmers are
employed and they work as little or as much as they please, as there
is no difficulty in getting out all the peat needed for a year during
the working season, which in this locality is from April 15 to
September 1. As a result 14 men are employed more or less of their
time. They receive about 50 cents per day each and get out about 20
tons of peat per day.

Coal at this point in Europe costs $3.75 per ton. The dry peat           368
delivered on the operating platform of the producer plant costs only
80 cents per ton.

Plant C.--This plant is installed at the collieries. At the time of my
visit it was under full operation, using roof slabs that gave little
indication, on casual inspection, of containing any combustible
material. It was claimed that this fuel averaged over 60 per cent
ash--a claim which seemed entirely reasonable. At the time of this
visit (1908) the producers were not only supplying a number of
furnaces with gas, but were also operating a 1,000-horsepower and a
250-horsepower gas engine. A 500-horsepower engine was being added to
the equipment. The engines in use were direct connected to electric
generators. The 10,000-volt current is used for operating the local
mine machinery and also for furnishing lights for neighboring towns
and power for a street railroad. The plant was reported to be using
over 100 tons of this low-grade fuel per day.

Favorable Conditions in the United States.

In the United States cheaper power is constantly sought. The
water-power possibilities of the country are being realized and the
hydro-electric power plant is a wholesome cause of competition. The
supply of fuel of marketable grades is not unlimited. Prices for such
fuel must necessarily increase. The cost of transporting coal from the
mines is high, and the possibility of obtaining a sufficient supply of
cars to handle low-grade fuels is questionable. The power demands of
the country are increasing, and this power must be developed at a
reasonable cost. The time is approaching when the cheapest fuel
obtainable must be used to the best economic advantage in order to
develop power at a unit cost consistent with commercial progress.

Consideration of the conditions indicates that in order to keep the      369
price of power developed from fuel down to a consistent figure--

(a) Grades of fuel which warrant transportation, or which may be
defined as “marketable,” should be used with the greatest possible
practicable economy.

(b) The very large percentage of coal of so-called low grade which
today is left at or in the mine must be utilized.

(c) Advantage must be taken of the large deposits of lignite and peat
which are found in many sections of the country.

It is undoubtedly true that in general, under conditions which do not
require the use of steam for other than power purposes, the
producer-gas power plant meets the requirements of (a).

At present the only method of advantageously handling the fuels
mentioned in (b) and (c) is in the gas producer, and the utilization
of these lower grades of fuel on an extensive scale demands
concentration of the power plants within close proximity to the fuel

The logical conclusion from a careful study of the producer-gas power
situation is that the time is not distant when financial interests in
power production will be directed toward the centralization of the
producer-gas power plant at the mines and the distribution of the
energy developed either by high-voltage long-distance electrical
transmission or by pipe systems for conveying the gas.

EFFICIENCY IN SHOP OPERATIONS.                                           370


[Consulting Efficiency Engineer, New York. Published in The Iron Age,
Jan. 6, 1910, and reproduced by special arrangement.]

Managers of industrial enterprises will undoubtedly agree that there
are few qualities which are more to be desired in equipment, methods
and men than that of efficiency. From an extensive study of this
subject in various parts of the country, together with interviews and
correspondence with several hundred concerns, the writer has become
convinced that there is a general lack of definite comprehension of
what efficiency is, whence it springs, how it may be measured and
developed and the results which its cultivation will produce. The
object of this monograph is an endeavor to throw some light upon these
things and to afford a new viewpoint from which to study industrial

The Evolution of Industrial Management.

In the first place we must realize that the management of industrial
enterprises is in a state of evolution. The tremendous growth of the
past few years has caused certain previously satisfactory methods to
become inadequate to present needs. Many details which in the days of
smaller affairs could be absorbed by personal inspection and mentally
stored for use when needed must now, because of their very volume, be
made matters of record.

The character of these records has much to do with their value.
Because financial records are so ancient they have exerted an undue
influence upon the character of all other records. While under our
present civilization, the ultimate object of industrial operations is
to create financial profits, there are many highly important records
which cannot be adequately expressed in terms of money. The business     371
of manufacturing consists of a repetition of mechanical operations.
Mechanical operations necessarily involve considerations of weight,
distance, time and effort, but not of money.

The reason for the failure of so many cost systems to serve the
desired end is that they are based upon a wrong unit. These systems
become useful only beyond a certain point. Other systems have been the
result of a blind craving for aid, but being without broad underlying
principles and not properly tied together and simply, in many cases,
disjointed attempts to improve isolated details, they too have failed.
The result is that attempts by specialists to improve industrial
conditions have been often looked upon with suspicion and this is not
altogether without reason. These very failures, however, have drawn
the attention of men in certain lines of engineering to the rapidly
developing needs of manufacturers. They have attempted to solve the
problems by the use of engineering instead of by accounting methods,
and the results which have been attained prove conclusively that a
material advance has been made.

What Is Efficiency?

With this understanding of the present conditions, let us consider
what efficiency really is. It has been defined as “the ability to
produce certain results,” and this at the very outset necessitates the
existence or creation of a standard of measurement. Our perception of
efficiency, therefore, is correct only in proportion to the precision
of the standard, which must be accurately developed from data which
are not only exact, but complete. A machinist, believed to be
operating at high efficiency, was observed while turning a shaft. His
cut, feed and speed seemed to be beyond criticism. When the shaft was
finished, however, he had to spend half as much time in hunting up a
chain and pad to remove the shaft from the lathe, as he had taken in     372
turning it. This cut his actual efficiency from 100 per cent down to
87 per cent, yet the man was not at fault. His normal work was to
operate a lathe and not to hunt for things which should have been
provided for him. The points to be observed here are not only the
importance of using the right standard of measurement, but that the
efficiency of the man depended very largely upon his surrounding
conditions over which he had no control. These conditions depend upon
the efficiency of the management in securing proper equipment from the
owners. This in turn depends upon the efficiency of the management’s
records in enabling it to state clearly and accurately what increase
in output and consequently in profits will result from improving the
conditions--thus justifying the expenditure required. We see from this
that the true standard is not the possibility under existing
conditions, but that which can be obtained under other and more
desirable conditions.

Managerial Opposition to Change.

The management, which immediately controls the records and conditions
should be the prime source of efforts towards the increase of
efficiency throughout the plant. The opposition of managers to
progress in this respect is exceedingly great, yet not altogether
surprising for these reasons:

1. There is a widespread fallacy that so-called practical experience
in the manual operations or technical processes of a business is the
chief essential to success in its management. This is due to the fact
that perfection of workmanship, of which he knows much, is more
important in the eyes of the artisan than the actual cost of the
operation, of which he knows little, or than the cause of this cost,
of which he knows less.

2. It is only recently that educational institutions have afforded       373
any opportunity for adequate instruction in the art of management,
pure and simple, a principal feature of which is the intelligent
regulation of cost.

3. There has been, and now is, as a result of these two things, a
failure to appreciate the necessity and value of exact data, in proper
terms, of refined and scientific methods of collecting and using it
and of logical reasoning in the solution of industrial problems.

The highest degree of efficiency, therefore, is only to be realized in
a shop where executive methods have reached a high stage of
efficiency, for in these is unquestionably its source.

Time Measurement Important.

The first step is to recognize the necessity and value of a proper
measurement of time, as a guide not only to the executive but to the
workman. A man was observed during 8 successive repetitions of the
operation of making a machine mold in a foundry. The unit times varied
5.2 to 23.6 minutes, the total time for the eight being 104 minutes.
Under the method of timekeeping in use at that shop it was only
ascertained that the eight operations took 1¾ hours or an “average” of
13 minutes each, and the labor cost and distribution of burden were
made on that basis. Because of the absence of any standard time
whatsoever it was not realized that had the man done each of the eight
in 5.2 minutes, they would have been completed in 41.6 minutes,
resulting in a saving of over 60 per cent of the total time. Had the
man received a proper work ticket bearing this standard time, before
he began the work, there is no doubt that he could have easily
performed the work in the shorter time and a marked difference in
proportionate burden and cost would have resulted. Under the existing
methods the management could not know of the waste, and so was
helpless to prevent or cure it.

Every item of time, therefore, is capable of division into two parts:    374
A standard or necessary time and a (more or less) preventable waste,
which latter is the easier thing of the two to determine.

An Example of Increased Efficiency in Riveting.

A gang of four were engaged in riveting some steel plates. By the use
of a stop-watch it was found that a large proportion of the total time
of the riveter and bucker-up was not utilized; yet some one was always
at work. The reason was that the men proceeded along the work in such
a way that the bucker-up covered with his body the holes as yet
unfilled by rivets, he moving from left to right. When, therefore, a
rivet was driven, these two men had to stand aside until another rivet
was placed by the rivet passer. Upon the instruction of the engineer,
they reversed the direction of their movements so as to cover only the
filled holes, thus enabling the passer always to have a rivet ready
for them and making their speed in driving the real gauge of the speed
of the operation. Furthermore, when they encountered a hole that
needed reaming (as was sometimes the case, until the fault was located
with the fitters and remedied), the riveter would lay down the gun,
pick up the reamer, ream the hole, lay down the reamer, pick up the
gun and drive the rivet. When persuaded to test consecutively ten or
more holes after driving the first rivet in a seam to anchor the
plates and then to drive the ten consecutively, they progressed faster
with less effort. These men, receiving not only a standard from the
engineer, but kindly instruction as to how to attain it, and being
stimulated, not by abuse, but by a scientifically determined
bonus--increased their output over 150 per cent beyond the original

In this plant, by the use of these methods, and in about seven months,
the general increase in efficiency of the men was such that the force
was reduced 67 per cent without reduction in volume of output, but      375
with a great reduction in net total unit cost, even after paying the
bonus alluded to and the cost of the expert services which alone
produced this result.

The Use of Bonuses.

It is proper to say a word here on the subject of bonus as a means of
increasing efficiency. The principal merit of this motive lies in the
fact that immediate personal gain is the strongest incentive to
immediate personal effort. It operates just as strongly on the employe
as on the employer. Hope of promotion is too vague and the actual
chances too limited to exert much pressure, but an extra sum in the
pay envelope--or better still, in a separate one--for the disposal of
the “old man himself,” will do wonders. To be most effectual a bonus
must not begin at the point of standard efficiency, but at the point
when average efficiency ceases and extra effort begins; and it should
increase on a curve faster and faster as the point of standard
efficiency is neared, because the accompanying effort will be
correspondingly greater.

Efficiency Methods and Department Heads.

So much for the individual operator. And now for the executives. From
foreman up to and including the highest official the same methods can
and should be applied. Under ordinary circumstances, the workman in
need of material, tools or instruction keeps his skirts clear by a
more or less indefinite and unintelligible request to the foreman. He
thinks it the foreman’s duty to look after him, but that if he does
not do so it’s no business of his. Put that man on standard time and
bonus and if there is anything he thinks the foreman should do or get
for him he speaks loudly and directly. This the foreman does not
resent--as would ordinarily be the case--for his efficiency is
determined by the combined efficiency of his men and upon this his       376
bonus depends. Anything, therefore, that interferes with the progress
of the men touches him closely, and he will move heaven and earth to
eliminate it. All kinds of defects which were previously hidden from
the superintendent are now brought to his attention, and he welcomes
them for exactly the same reason that actuated the foreman. Thus the
change that comes over a shop when efficiency is accurately measured
and adequately rewarded is often astounding.

But this is not all. The possession of exact data as to standard and
actual times makes possible a certain great improvement in, and
addition to, the executive staff and a material increase in the
efficiency of the foreman and department heads. By this is meant the
installation of a planning department, by which the apportionment of
the time of men and machines is controlled. The advantage, indeed, the
positive necessity, of the services of engineers and draughtsmen in
apportioning the different parts of the product is well understood.
The requirements of each part, the strains to which it will be
subjected, the kind, quality and quantity of material required to
resist these strains, the shapes of the pieces, their relations to
each other and many other things are all given most careful attention.
The value of fully constructing the design on paper, as a means of
discovering possible errors or difficulties, and of correcting or
overcoming them before large expense for material and workmanship has
been incurred, are too well realized to need more than a simple
statement for their acceptance. No sane executive would expect his
department heads to take a copy of his customer’s order and
individually work out the details with which they are particularly
concerned and expect the parts to fit. Yet this is just exactly what
is being done as regards the apportionment of productive time; and a
tumult of broken promises of delivery, excessive cost of production,
enormous wastes of time in changing jobs, etc., is the immediate         377
and unavoidable result.

What Can Be Done.

It is perfectly possible, but only to one trained in the particular
art, to schedule the different operations on all of the different
parts of the product; to plot the productive times required, so that
each may begin at such a time in relation to the others that all will
arrive at the point of assembly at the proper time and in the proper
sequence; to combine these studies of the different productive orders
on a chart which will show the disposition to be made of all the men
and machinery; to prepare advance programs for each man and machine
engaged in productive labor; and thus to give to the superintendent
and foremen the advantage of the same predisposition of time that they
now have of material.

As it is now, the time of these persons is entirely too much occupied
with this problem of the disposition of time for which they are only
partly equipped, having, it is true, much of the necessary
information, but no training in the scientific handling of it. They
are, therefore, unable to devote the time they should to the immediate
study of the operations and the provision of tools, material and
instruction to the men. They try to be all over the shop at once and
they depend on getting their information at first hand, and
consequently fail more or less clearly to cover the ground. Having
such schedules and programs as are above described, and with the
proper work tickets distributed on a dispatching board, each one in
the division representing the work upon which a man or machine is
engaged, having the time of commencement and the standard time
thereon, the foreman can see at a glance without leaving his office
what men will shortly finish their work and what steps must be taken
to see that the drawings, tools and materials for their next work are
ready for them in time. Having seen to this he has some leisure to       378
give his attention to matters immediately requiring it, knowing, if
anything is obstructing the other men, that their anxiety to earn
their bonus will cause them promptly to bring such matters to his
attention. Having this schedule, moreover, the foremen are enabled to
order material, etc., ahead and to do so intelligently, thus making
the work of the shop transportation department much simpler. In one
case by this means 25 men were able to handle the intra-shop
transportation in a more satisfactory manner than 75 men had
previously been able to do.

The planning department also greatly aids and is in turn aided by the
purchasing department, for the times when material must or can be got
can intelligently be determined to their mutual advantage. The sales
department, too, when it once gets the idea that the shop is not
working miracles, but has its limitations, can make delivery promises
which really mean something and can be kept, and this is a trump card
of no small importance when the fact becomes realized among the
customers of the concern.

Responsibility of the Management.

In the opinion of those whose opportunities have enabled them to get
at the facts, the inefficiency in manufacturing, which undoubtedly
generally exists today, in spite of the prevailing impression to the
contrary, is only about one-fourth due to the things over which the
employes have control and three-fourths to conditions imposed upon
them by the management. The methods outlined above have achieved
results whenever they have been faithfully and honestly tried, with
proper co-operation by the management and under the direction of
skilled specialists, and the results have continued and will continue
as long as the methods are followed. The effect upon the men is that
from being often listless, indifferent and antagonistic, they become     379
energetic, ambitious and loyal friends.

One thing more: Much has been done and overdone in the line of
so-called welfare work. It is a highly creditable and necessary line
of effort, when confined to attempts to remove from the path of the
employe any obstacle which prevents him from developing his skill and
efficiency to the highest degree. An uncomfortable, unhappy person
cannot be efficient. But as steam is necessary to the engine, so is
incentive necessary to the worker to get him to make the best use of
the facilities provided for him. Under our present civilization, the
same incentive which pushes on the master will push on the man, and
that is direct personal gain in dollars and cents, not for itself, but
for and what that gain will bring. It must come to him quickly after
the exertion which its expectation calls forth, for if long delayed,
the effect is lost. It must also come to him separately from his
regular wage that its amount may be the more readily realized.

Moreover, the results of efficiency methods, within the writer’s
knowledge, are sufficient to convince him that their general adoption
would so increase the purchasing power of the employe, by increasing
his wages and decreasing the cost production, as to have a markedly
beneficial and steadying effect upon the business of the country.

Efficiency methods, however, cannot be successfully designed or
installed by those trained in other lines and prejudiced by other
associations. After these methods have been scientifically developed
to suit the existing conditions and actually put into operation by
those skilled in the art, they may gradually be relinquished into the
control of those who have been educated in the process of
installation, with some hope of success for their future operation.

THE BRIDGE BETWEEN LABOR AND CAPITAL.                                    380


[Former President United Mine Workers of America.]

If the interests of labor and capital were identical--as some
contend--there would be no chasm between them to bridge; and if the
interests of labor and capital were irreconcilable--as others
contend--any effort to unite them would be futile. From an experience
extending over a considerable period, I am quite convinced that
neither of the foregoing propositions will stand the test of close
analysis. My judgment is that the interests of labor and capital,
though divergent in some respects, are nevertheless reciprocal and

To elucidate in a practical way the subject of the proper relationship
between employer and employe, it is necessary to review the activities
of these two factors in the field in which their interests are common
and to mark the point at which they diverge. The employer and the
employe are mutually interested in the successful conduct of industry;
the profits of the one and the wages of the other obviously are
contingent upon it, as both profits and wages must be paid from the
earnings of the enterprise in which the capital of the one and the
labor of the other are jointly invested. This being true, the workman
and the employer are equally concerned in the character of the product
which is manufactured and sold by them, just as they are interested
equally in good markets and regularity of employment. Having worked in
co-operation up to the point of turning out an article that commands a
wide and profitable sale, the question of dividing the earnings of
their joint efforts presents itself. It is the failure of the attempt
to adjust satisfactorily this controversy that gives rise to the         381
differences between employers and workmen and is the basis of the
labor problem as we have it today. True, there are many questions of
discord apart from those of wages and profits, which result in serious
industrial conflicts, but followed back to their source, it will be
found that these issues are inseparably related to those of wages and
profits. In other words, the demand for a shorter workday, for
healthful, sanitary surroundings, has its origin in the irrepressible
desire of the working people for a progressive improvement in their
conditions of life and labor.

In ancient and mediaeval times when the structure of society was
simple and each family consumed all the things it produced; or even at
a later period when the master and the journeyman worked together side
by side, and when the master had been a journeyman and the journeyman
expected to become a master, there was little cause for controversy,
and the problem of labor was not difficult of solution. It was not
until the invention of machinery, the advent of the factory system,
the use of steam, and the application of new processes that the
question of the relationship of employer and employed grew so complex
and impersonal that new methods became necessary in the proper
adjustment of industrial affairs. As step by step industry developed
from the stage of the privately owned factory to the firm and
corporation, to the combination and the trust, the real employer was
removed further and ever further from personal contact with his
employes. As a consequence of this transition, the salaried manager
took the place once held by the actual employer, and the simple and
friendly relations of early days gave way to the intricate and complex
industrial life of this generation.

Coincident with the development of industry which has revolutionized
the whole life and history of our people and our civilization, have
come the local, the district, the national, and finally the
international organizations of labor. These gigantic associations        382
and federations of workmen are the logical and the inevitable
consequence of an industrial development which threatened the
subjugation of the individual workman and forced him, in self-defense,
to merge his interests and his identity with those of his fellow
workmen. The momentous change in the status of the workman which
accompanied the revolution of industrial processes, transformed the
whole problem of labor from the question of production to that of
distribution, and it is the effort to find an equitable adjustment of
the problem of distribution that is taxing to the utmost the ingenuity
of economists, philosophers, and statesmen.

In the search for a panacea to heal the industrial ills against which
society so justly complains, many suggestions are made and innumerable
remedies proposed. On the one hand are found forces that would deny to
labor the right of organization and combination, although exercising
and enjoying the benefit of these rights themselves; on the other hand
are forces at work advocating and demanding the abolition of the whole
competitive system; between these extremes stands a great army of
workmen and employers earnestly striving to find grounds of mutual
agreement upon which the rights and obligations of each may be defined
and brought into harmony. With all due respect to the opinions of
others, I submit that the path of safety, progress, and justice lies
in the middle course--in the recognition of the right of organization
on the part of both labor and capital, by which and through which
these factors in our industrial progress may work out their inevitable
destiny, contracting freely each with the other upon all questions of
mutual concern.

The trade agreement is the bridge between labor and capital. It
restores, so far as it is possible to do so, the personal
relationship, the mutual interest which existed prior to the advent of
the factory system. It is an acknowledgment of the inter-dependence of
labor and capital, a recognition of the reciprocal interest of           383
employer and employe. When the right of organization among workmen and
employers is fully recognized and freely conceded, and when these
forces adopt and practice the policy of collective bargaining, the day
of the strike and the lockout, of the boycott and the blacklist, with
their attendant evils, losses, and hardships, will have largely passed

THE UNEMPLOYED.                                                          384


[Formerly President University of Wisconsin.]

A striking feature of the industrial world and one well fitted to
occasion alarm is the large number of persons thrown, from time to
time, out of employment. We are forced by it to accept one or other of
two conclusions; that the economic world is mismade, incapable of a
quiet and successful run, or that our handling of it has been in some
way unskillful and misapplied. This fact of unemployment has become
very conspicuous, and to those who suffer from it, and to those who
sympathize with them, exceedingly grevious. A certain portion of the
human family, and that in the most progressive nations, find
themselves superfluous, out of connection with the means of living
though others are obtaining support, comfort and luxury. They have
nothing to do but to die in their tracks. Like the feeble ones in a
forced march through an enemy’s country they first fall behind and
then perish. This state of the case does not arise by accident and
then pass away, it has periods of severity which frequently return,
and stands among those constant dangers which may at any time overtake
a few. This evil comes especially to industrious countries, like
England, and to portions of our own country, like Pittsburg, noted for
their enlarged production. The causes and remedies of this state of
things become, therefore, subjects of anxious inquiry. We may assert
that the want of employment is due in a general way, to the
deficiencies and vices of men, but this assertion does not
sufficiently point out the immediate occasion of the difficulty, nor
furnish us its remedies.

Failure of the means of livelihood arises from indolence, ignorance,     385
vice and unfavorable conditions on the part of those who suffer from
it, conditions often of the nature of accident. But while the
recipients of this disaster are plainly recognized, the disaster
itself comes to them in a measure independent of their failures. We
need to know not only those who are likely to suffer from a given
disease, but how the disease itself arises. The central and most
productive cause in this series of provocations is indolence; the
others accompany indolence and more or less arise from it. By
indolence we mean a want of life and hence a weakness of all the
functions of life. We may mean physical inactivity or intellectual
sluggishness or moral indifference, or may mean them all blended in
one or other of the various ways in which a weak and perverted life
manifests itself. The tramp is physically indolent, he hates work.
This indolence readily extends to intellectual activity; the indolent
person is ignorant of the value of success, of its motives and of its
means. The world reveals few incentives to him and makes few appeals.
This indolence and ignorance do not wholly arrest the wants and
desires of men, and hence vice, as in the case of the thief, enters as
the most ready and immediate means of gratification. The torpid nature
of the moral judgment lends itself to this result, and nothing but
fear, itself weak and vacillating, stands between the indolent man and
habits of gross indulgence, inconsistent with personal and with social

The accidents, misjudgments and disappointments which are liable to
overtake us all owe the injury which they inflict to the weak
personality on which they fall, and so misfortune seems to follow and
persecute those who are least able to bear it. The indolent, passive
mood is a good medium for the accumulation and transfer of every form
of disaster. The class of the helpless is much enlarged by this flow     386
of every form of evil to these low places in conduct and character.

We may clearly recognize these facts and suppose them a sufficient
explanation of the farther fact, that so many are thrown out of
employment and find themselves the waifs of society with no secure
attachment to it. They do, indeed, make conspicuous the failure of
occupation and determine the direction it will take. Their numbers are
seriously increased by it, and their very presence gives the
conditions of its recurrence. They are both causes and effects. They
stand on terms of action and reaction with all the embarrassments of
production. They help to reduce wages, and when wages are reduced,
they are the first to be driven out of employment. They are the
symptoms of the disease, the product of the disease and the means by
which it is carried farther. All failures in the productive process
extend, in their worst results, to this class of defectives. They are
the recipients of past evils, of present and of coming evils. They
arise in connection with a false form of production, must be treated
with it and removed with it. They are a composite product, their
faults not being wholly their own but in part the faults of the
economic system with which they are associated. They are not the
scapegoat on whose head the sins of the people may be laid and then be
borne into the wilderness.

In discussing the causes and remedies of unemployment, we shall see
how far and in what way these feeblest workers are involved in it. We
cannot improve society by simply striking off the evils that have been
developed under it. Healthy growth alone can rid itself of failures.
It often happens in physical disease that what is accepted as a remedy
in the end aggravates the difficulty.

One dislikes to use the word pauper, it so frequently carries with it
an unreasonable and cruel contempt. Yet there are paupers in the human
household, and when the temper is once present it is most difficult of
removal. It is a form of leprosy that eats out all vital power. The      387
pauper temper indicates a disposition to secure immediate ease with no
reference to the comfort of others. It accepts any advantage that
offers without the slightest wish to return it. Yet even this spirit
may offer some excuses for itself. The evils of society which may have
originated far off in the action of the leaders of men, are apt to go
booming downward till they reach, in their most distinctive form, the
pauper class, or those but little above it. Diligence, thrift, skill,
ward off the blow and escape with only a partial loss. Those who are
always in the way of it are the weak ones, to whom prosperity brings
but little and adversity occasions immediate overthrow. When those who
at best are but partially occupied, find that labor is altogether
failing them, the question of relief becomes most difficult. There is
no profitable labor at disposal, and to provide labor means farther
loss; it is charity in its most disguised, expensive and unrequited
form. The worst lesson we can teach those already inclined to
negligence is that a form of labor may be put in the place of real
labor, and that the question of adequacy is one to be answered by
society, not by the needy, recipient of favor. Whatever we may do for
men of feeble productive power we are not to lead them still farther
on in the direction of indolence and worthlessness. Actions are not to
be separated from their normal results. We may frequently be called on
to bear the injury which proceeds from another man’s wrongs, but we
are never called on to disguise the wrong itself. A portion of the
wrong is our own; that we should correct. While the evils are in the
process of infliction we are to bear them sympathetically, but not in
a form which disguises their true character.

Something of the same danger inheres in old-age pensions. Workmen of
usual diligence should receive a return for their labor which would
enable them to provide for age. As long as workmen, reaching the age     388
of three score, generally become dependent on the public, it is
perfectly plain that their wages are too low, that the returns of
production are not fairly distributed. A pension acknowledges the
evil, but does not remove it, it tends rather to confirm it. That the
losses which accompany industrial accidents should be divided between
workmen, managers and the community at large is plainly just, and is
no temptation to remissness. The accident is not the fault of any one
person or class of persons. If it falls upon a large number, it is
more readily borne and increases the motives to care. Our machinery is
operated for the benefit of the entire community, and it is only fair
that the entire community should help to bear the increased dangers.
That injuries should be still left with the workmen on whom they have
accidentally fallen is another proof of the slight hold they have on
the public mind.

Any remedy for the lack of employment which is prompted simply by
compassion and still leaves the evil to overtake the workman is not
social hygiene; is not a recognition of the partiality and
disproportion which still inhere in our productive methods. Labor
should be successful and rewardful when left to its own development.
It is bad to create a pauper temper and most difficult to contend with
it when it has once been called out. Men should be subject to their
own incentives of hope and fear, success and failure, as far as
possible. The same discipline which comes to the active, is the
natural spring of action in the sluggish. Any compassion which reduces
the motives of effort that should come to the entire community, or
which leaves the community satisfied with a maladjustment of duties,
can never provide an adequate correction of bad distribution. We are
placed between a narrow and a wide humanity, between an immediate
reduction of suffering and a removing of its conditions. The final
result is the test of our wisdom and good will.

There are partial remedies of the failure of employment which are        389
fitted to give relief without endangering the future or disturbing the
general conditions of employment. Occupations especially irregular,
like that of the stevedore, may receive especial attention, or may be
united to other forms of labor so as to secure greater uniformity. In
these occupations the employer may frequently have but little motive
to correct an evil from which he prospers by reduced wages. Excess and
deficiency in the various branches of work should be made, as far as
possible, to correct each other. Workmen are often not in a position
to meet successfully these evils. They accept the drift of the labor
market with small power to control it.

Bureaus of intelligence should be established so that the variable
demands for labor of different localities may be quickly met. This is
a public service, and should have the ease and certainty of such
service. The same reasons which lead the Government to take the
direction of immigrants should lead it to render similar aid to
workmen. Workmen are often ignorant of the extent and character of the
employment offered in the distance, and are subject to the exactions
which arise in connection with this want of knowledge. The greater
one’s want the more difficult is the change of locality. Quickness of
response demands both intelligence and nobility.

Savings banks and insurance, while not directly affecting the demand
for labor, tend to equalize and reduce the losses which accompany
variability. They also tend strongly to call out that forecast of evil
and preparation for it which belong to thoughtfulness. The strokes of
fortune lose something of their unexpected and injurious character,
and men are put on voluntary and better terms with the world.

We are not, however, to look on these reductions of danger as covering
the whole problem. Life has its accidents and we can greatly reduce
the evil results of them by patience and prudence, but there still       390
remains the more thoroughgoing effort by which the evil is anticipated
and turned aside.

There should be that general harmony of effort, that proportion of its
several parts to each other, that recognition of the common welfare,
which fortify us against disaster, and force it in the background when
it comes. There is a wise method in production, and a just relation of
its agents to each other, which should greatly reduce the liability of
a want of labor, and should ultimately remove it altogether. A true
democracy should be exempt from this general failure in the results of
activity. Much of our political economy has rested on inferences drawn
from a faulty state of society, as if it and the conclusions contained
in it expressed the real laws of our being. Society, in its most
civilized forms, has always developed a proletariat, it has suffered
drainage, and we have come to think this a sort of necessity, a
natural result of social growth. With this starting point and
expectation we are ready for periods of unemployment, and look at the
misery which arises from them as a corrective. Superfluous lives
cannot be gotten rid of on cheaper terms. We might as well suppose
that disease is an inevitable attachment of physical life and must be
left to go with it. Society never has too many workers, and when they
are not wanted it is because they have been in some way misdirected.
Strong men, industrious and intelligent men, are the wealth of
society. There is never a time in which there is little or nothing to
do in the world; if we think so it is because we cannot see, or see
falsely. Our intelligence determines what is to be done and our
diligence performs it. The world is never deficient in occasions for
labor, no matter how defective we may be in performing it. Nor is
well-devised labor wanting in its returns; intelligence and diligence,
in full exercise, always contradict the notion. The world could not be
the home of man on any other terms. Human life begins to be superfluous  391
the moment labor miscarries, and the miscarriage sinks down to those
who have the least intelligence and industry. The constitutional
disease of society, that which it has propagated with most show of
knowledge, is ignorance and indolence. When we reach this stratum we
are always in difficulty; the more in difficulty because we come to it
in a sluggish rather than in a corrective temper.

Incident to indolence and ignorance are those vices of temper by which
we wish to reach results without labor, or to reach them by the labor
of others rather than by our own labor. As long as these vices are
prevalent among men, whether in the upper or the lower strata of
society, or, as is sure to be the case, in both, periods of arrest
will come. Men will be baffled in their narrow aims, and will have no
broader, more generous ones to put in their place. For a time they
will lie idle till the customary impulses revive and once more set
them in action. Industrial inactivity is like a financial panic. It is
the result of the transient suspension of habitual feelings, and does
not relax till men return to their usual frame of mind. These
distrustful and apprehensive periods are liable to return as long as
men are not pursuing sound purposes in a sober way. Any deficiency in
fairness, integrity and mutual confidence divides society against
itself, and renders a portion of its efforts futile. This is the more
true as the division and subdivision of labor increases, and the final
adjustment of returns is made by complicated exchanges. When a portion
of the community finds its share of good things much reduced, when in
the distribution of the rewards of labor, custom or cunning or force
has robbed them of a reasonable portion, the motives of labor are
greatly lessened, the means of exchange are lessened and the sense of
unity and integrity of society is lost. There is in civilized society
a large body of just and honest production which goes far to sustain
the mind in renewed effort, and keep firm the ties which bind men        392
together. Yet the element of distrust, as in a financial crisis,
extends through the community and weakens the points of life.

The first condition of social, economic strength is that all the
members of society shall find suitable occupation and by means of it
become the givers and receivers of aid. This plain, simple fact has
been much obscured by accepting competition, often in an unethical and
unsocial form, as the general law of economic activity. This law it is
not; and it needs at all times to be held in check by ethical impulses
and by the welfare of the community. It is this welfare which is the
supreme law. Labor owes much of its degradation to a rigid and
unreasonable application of competition. As we go down in the scale of
occupations, and in efficiency in those occupations, the greater is
the injustice and injury that attend on competition till we reach a
point at which large numbers are pressed by it to the very verge of
life. Then comes in that mischievous generalization which tends to
make human degradation a permanent product of nature. The increase of
human life is said to be geometrical, the increase of the means of
life arithmetical, and so the two tendencies grind eternally against
each other. Our best sympathy is expressed in letting this collision
come to the quickest, shortest results. Some of this crushing process
obtains between ill-trained and sluggish, well-trained and active men.
Let it have way.

Yet the agricultural products of the world have not only never given
out, they have never been brought near a maximum. Food, raiment and
shelter are most varied in kind and abundant in quantity where men are
most numerous. The Algonquin Indian wandered in the forest in the
winter, unfed and unsheltered. The foundation of his trouble was his
indolence and ignorance. The inhabitants of India may perish by famine
in large numbers. The distress arises not from the fact that the
people have outstripped the productive power of the world, but           393
because they have outstripped their wisdom in handling those powers.

Let men covet wealth, and at the same time use narrowly and
competitively the means of attaining it, and the two strata of
society, upper and lower, will shape between them a human life in
which want will stand over against luxury, hatred over against
contempt, and the two classes, oppressed by spiritual destitution and
physical poverty, will wage with each a variable and hopeless warfare
such as wisdom and good will can alone leave behind us.

A first remedy for unemployment is to make employment remunerative; so
remunerative that the workman shall be the buyer of many things as
well as the seller of one thing. When his single sale of labor stands
in equipoise over against his many purchases, we shall have buyers as
well as sellers and our production and traffic will never cease. We
have in trade-unions a first step in the adjustment of exchange.
Workmen strive to escape the competition of the incompetent and
shiftless, to redirect distribution in ways more just and equal, and
by this means to be able to play their own part in economic life more
advantageously for themselves and for all. This effort is new in its
breadth of application, but has never been new with the wise and
thrifty. Personal skill and professional attainments have always
lifted themselves above the storm-swept plain of competition, and
gathered about themselves a prosperity and comfort resting on special
and superior exertion. So long as we subject ourselves to the fortunes
of the indolent and set up our standards of life at the very foot of
the slope, we shall have a competition like that of the Chinese to
contend with. We shall march so near the verge of the precipice that
many will be pushed over it, and the least flurry will be disastrous.
A sufficient return for diligence is the first claim and the
safety of labor; it enhances its motives and fortifies it in the         394
possession of what it holds.

With paucity of pay on the one side goes the superabundance of profits
on the other side. The returns of management should be more moderate,
more uniform, more consonant with the general welfare. We can hardly
doubt that an industrial community, well-organized, with a fair share
of intelligence, diligence and honesty, will commend reasonable
prosperity extending to all its members. Indeed this is what actually
takes place in the midway forms of effort. The very poor and the very
rich complement each other. Healthy and wholesome activity is as
possible to the community as to the individual. The chief difference
lies in the increased complexity of communal action and the ease with
which results are misunderstood and misinterpreted. The instinctive
and voluntary life of the individual is replaced in the community by
divided counsels. Men shape opinion and interpret results in view of
their own interests rather than in view of the public welfare. The
public welfare is as much within the scope of human thought, when
attention is directed to it, as is individual well-being. Indeed the
universal and stable prosperity of economic society is as much
dependent on the diligence and sobriety of its members as is
individual welfare on well-ordered labor. The qualities which enhance
success in the one direction are much the same as those which cause it
in the other direction. Extreme and intemperate action work the same
mischief in the one field as in the other. Society is sufficient unto
itself when its purposes and methods are truly social. A sudden
suspension of labor, a large number out of employment, are the result
of disturbing causes which have found their way into the ordinary
processes of production. These causes are an unreasonable accumulation
of power in single hands, speculative ventures and a social philosophy
which holds in light esteem the immediate interests of the mass of       395
the community. I have in mind a peculiar manufacture which had
provided the needed buildings, and surrounded itself with the homes
and help called for. There came a combination of those engaged in this
industry. The works, comparatively new, were discontinued. Production
sought a new center and the old community was left to suffer the loss
of slow dispersion.

We are protected against theft and criminal violence, but we are not
protected against the unprovoked losses which come to us from the
speculative aims of the adventuresome capitalist, though these losses
may greatly exceed those of robbery. The stability of labor and the
returns of labor are often affected in the great centers of production
by opportunities, fanciful or real, which offer themselves to a few of
achieving large wealth; opportunities not so much of creating wealth
as of raking it together. The mass of men do not so much as conceive
that they have any ground of complaint of operations which sweep out
from under them the supports of well-devised industry. Wealth which in
its making and use tends to break up the ordinary methods of industry,
to throw off the minds of men from the familiar reconciliations of
industry and, above all, to weaken the sense of responsibility which
lies between labor and capital, must, from time to time, issue in
industrial disaster to the confusion and loss of labor. Do the best we
may and we cannot anticipate every disturbance, but we are inexcusable
for overlooking the disasters we bring upon others who are working
with us. Much of what is called enterprise renders those engaged in it
almost wholly negligent of the incidental injuries which fall to those
about them. The equilibrium of labor is dependent on the equilibrium
of productive enterprises, and when these accept no restraints the
disturbance will reappear here and there in the productive world very
much at random. Labor presses at one point and is relaxed at another,
subject to the speculative schemes of capital. Extreme wealth in the
hands of a few lacks the economic and social and moral motives which     396
make it a calculable and reliable means in the hands of many. When it
is in the process of accumulation it is lawless; when it is
accumulated it sinks into indolence.

While some gains are pretty sure to accompany the acquisition of great
wealth, once acquired, it disturbs the even flow of economic forces,
and may easily give rise to irregular occupation that brings serious
disturbance to those whose daily wants are to be supplied by labor. It
may be thought that these fluctuations in production arise from its
very nature, and that if we leave men of very different degrees of
intelligence to contend with each other for the prizes of industry,
great inequalities of prosperity are sure to appear. We can escape
them only by forcing back enterprise and making the moderate, medium
men the standards of achievement. This presentation seems plausible,
and will always be urged by those who are willing or eager to take
large risks. Men of large productive power are easily stimulated, and
their resources are kept, in reference to the community at large, in
the most fruitful form when they are compelled to moderate their
efforts, and are not left to the extreme and eccentric ways normal to
them. The community is interested in habitual lines of industry more
than in those which disturb the minds by sudden profits which cannot
be emulated or repeated. Men will separate themselves from their
fellows in the rivalries of production. Only thus is the power of
intelligence fully disclosed, yet the ordinary arrangements of
society, its privileges and opportunities, should be made as equal as
possible; no unfair advantage should be given to one or another form
of production; nor methods be allowed to the successful in achieving
wealth which are not admissible in the community at large. The laws of
the game should be wisely framed and firmly preserved. It is the able
and ambitious who bring the most strain to safe restrictions, and for
whom they are chiefly made. Equality of opportunity is the cardinal      397
principle, and cannot be sacrificed in favor of enterprise. The
enterprise that is wholesome keeps within this law. It may also be
thought that this rigid restraint would deprive the community of some
of the most prevalent means of welfare as well as of some of the most
illustrious agents in prosperity, and that those great and efficient
combinations which we have come to designate as trusts would be lost
to us; that as the result of this loss we should quickly settle down
into a sluggish routine, mediocre ideas ruling the public mind, and so
miss that very prosperity of which we are in search. Industrial
corporations are most efficient agents in wealth-making. We cannot for
a moment think of throwing any real obstacle in the way of their
formation. But while we need their aid, we should also remember the
evils which are liable to come with them. They are the creatures of
law, and the law in giving birth to them should assign them the form
and restrictions which are most consistent with the public welfare.
They are not to be allowed to fall into speculative hands, an
instrument of unrestrained power.

Industrial corporations afford ready means by which small capital and
moderate men are compacted into a service quite beyond the range of
individual producers. The difficulty has been that much dishonesty has
entered into the formation of corporations, and that unreasonable
power has been exercised by those who have had them in charge. The
responsibility of a corporation to the community, expressed in a sound
financial organization and in the relation of its officers to its
stockholders, would in no way restrain the usefulness of these
industrial agencies, and would make them wholly consistent with
extended and equal opportunities in production. Immense wealth has
often been acquired in connection with corporations whose usefulness
to the public has been thereby restricted and the profits of
stockholders disregarded. Nowhere is the eagerness of personal
enterprise so tempted, nowhere does it display itself more               398
disadvantageously than in the large and oftentimes obscure
undertakings of corporations. It is not in reduction of these
agencies, but in behalf of their safe and profitable use, that the
claim arises for uniform and well-regulated action. In large
corporations, as in insurance companies, when the business itself has
fallen into routine, extravagant salaries have been resorted to as a
means of increasing the returns of officers. Oftentimes the plea for
raising salaries is one which is self-propagating. Expenses have been
greatly enlarged and the remuneration must keep pace with them. Yes,
but will not this very increase lead to increased expenditure?
Industrial corporations have been, in the present generation, a
conspicuous means of production, but they have also conspicuously
promoted a bad distribution of wealth, and so helped to promote
irregularity and ultimate suspension in the productive process. There
may never come a time in which the adventuresome capitalist will not
magnify his own usefulness to the community, but there may come a time
in which men shall see that the wealth of a few may be purchased at
the expense of that general comfort which is the proper return of

A possible rapidity in the acquisition of wealth inflames the
speculative temper. We mean by the speculative temper, purchase and
sale, not in reference to production but with the hope of making large
profits independently of production. Speculation is an expression of a
venturesome spirit which, in its impatience, lays light emphasis on
the usually slow methods of increase, and promises itself a rapid road
to success. This hope is often disappointed, and when disappointed
carries with it a more or less extended retardation of business. When
the annual losses by bankruptcy in the United States reach
$200,000,000, the distress of those whose means of livelihood have
been involved in this overthrow must become a very sensible factor.      399
Such a sum would, in its successful use, provide for many households.

The temper which goes with sanguine and unscrupulous methods is a
careless, and often a cruel, one. The democratic notion of equality is
overridden, is pushed aside as of no significance in the business
world. The same persons who insist on an open shop, and give free play
to competition when it depresses labor, regarding it as a familiar and
convenient principle in determining wages, may combine with each other
to control products and enhance profits. The general welfare, which is
the controlling idea, is lost sight of or readily forgotten. They have
one standard when they look out on the community at large, and another
standard when they are preparing the way to make and hold fast their
own gains. The directors of business come easily to think that the
welfare of the community is identical with their own welfare, and that
the enterprise with which they sustain their own affairs is identical
with that on which the public prosperity depends. They readily come to
the conclusion that their activity, so essential to the community,
should be cherished by the community. How possibly can production
progress without them. Discrimination in their favor is a short cut to
the common prosperity. Men of comfortable means and the poor even owe
what they have to the enterprise which scatters wealth everywhere.
There is sufficient truth in this feeling, when not too boldly put, to
hide its failures. The expenditures of the very rich in the purchases
and exchanges they involve do carry a measure of advantage to all, but
they also bear with them an unjust distribution, a luxury and a
poverty, which weaken the unity and sap the strength of society. It is
the very gist of democracy that each man shall count one; that in
spite of the diversities and the advantages among men they shall still
remain units of the same value in the freedom and propagating power by
which the gains of the race are stored. It is neither identity nor      400
arbitrary difference that is admissible, but every man and every class
of men carry with them the potentialities, the social and spiritual
possibilities, which are the germs of historic development. This is
the principle with which all petty social distinctions and all civic
tyrannies have been at war.

While, therefore, the evil of monopolies may appear in various forms
and be met in different ways, they cannot be permanently removed
except by social conditions which equalize opportunities and compel
wealth and power, in all their activity, to conform to general safety.
Production in all its forms and in all its agents must be subject to
that temper of fairness, and come under those principles of equal
rights, which bind the parts of the community together, and make them
one producing and one enjoying agency. Every assertion of settled
superiority in persons, classes and races must be set aside, and the
world in its physical, intellectual and spiritual wealth be left open
to all. Thus history has treated men, and is more and more treating
them, in their claims to consideration. This birthright of men is not
to be denied or stolen; for they who steal it have nothing more than
this same birthright to plead in extenuation, the combinations which
look to the defense and extension of these original gifts are in
order, and all combinations which carry them beyond the bounds of
their own territory are another outbreak of anarchy.

The soundness of this assertion has been recently exemplified in the
history of Pittsburg. Pittsburg is the center of an industry which has
come, perhaps more than any other, under the domination of a few
leading men. In the Homestead strike they succeeded in dealing a heavy
blow to workmen in their efforts to secure something like a fair hold
on production. A little inquiry into a community built up for a few
and ordered by them discloses conditions quite at war with general
well-being. Wages are kept down by the constant presence of the
unemployed: the accidents of a dangerous occupation are left to fall     401
upon workmen; the health of the community suffers great neglect, the
remonstrances of workmen are met with the response, If they do not
like the method let them quit; and the general good order and comfort
of citizens receive but little attention. Here is an object lesson in
which work, sure, skilful and unflinching; wealth, eager, unscrupulous
and unsympathetic, have divided the world between them; no right
gained, no power lost. Men may make wealth under these conditions,
withdrawing it from the fitting returns of labor, but they cannot,
wise as they may be or generous as they may seem to be, restore that
wealth to the community in a form in which it will subserve the same
living purpose it might have subserved if it had never been withdrawn.
The life of a community is achieved where its activity is most intense
and constant. Failing in our service at these vital centers, no
extraneous effort will cover our fault. We might as well draw sap from
a tree and then pour it out on its roots.

We have now given three constitutional remedies for the want of
employment. The first is a more equal distribution of the rewards of
production, thus making the demand for products as extended and
uniform as their production. The second is increased restraints,
especially in connection with corporations, in the action of the
leaders of industry, rendering them more amenable to the wants of the
community to which they belong. The third, arising from the other two
and supporting them, is more unity, more harmony between the several
agents of production.

There was a report not long since in England of an industrial
commission, which had given protracted attention to the irregular
demand for labor. The remedies offered were chiefly palliative. It may
be thought that this form of cure is all within our reach; that what
is here offered as constitutional correctives are beyond our power.
There is some truth in the feeling, and would be much truth in it,       402
were not the actions and the sentiments now enforced under urgent
consideration for reasons of public welfare, not directly involved in
unemployment. We cannot expect to remove so grave an evil as this, the
wavering demand for labor, short of some important change in the
organization of society. Society is a structure of so many and such
delicate dependencies that its perfect action must include the general
integrity of the current relations between men. Unwholesome results of
frequent recurrence are the most direct proof of an unsound system.
Palliatives may soften the evil but cannot overcome it. We should aim
immediately to reduce the difficulty and ultimately to remove its

QUESTIONS IN BUSINESS ADMINISTRATION.                                    403


  The Modern Industrial System.

   1. Describe the three-field system of agriculture.          Page 2.

   2. What were the significant characteristics of a manorial
      society?                                                 Page 2.

   3. What is said to justify the institution of private
      property?                                                Page 4.

   4. What is competition in modern industrial life?           Page 4.

   5. Why has the name “capitalistic production” been applied
      to modern industry?                                      Page 6.

   6. Compare the domestic system of industry with the
      factory system.                                          Page 7.

   7. What are the fundamental conditions of our economic
      life?                                                    Page 8.

  The Agricultural Resources of the United States.

   1. What has been the policy of the Government in its
      disposition of the public domain? Illustrate.            Page 9.

   2. What has been the unique and characteristic feature
      of the land policy of the United States?                 Page 9.

   3. What has been the result of the land policy of the
      United States?                                          Page 10.

   4. What was the first effort toward the solution of
      farming in the arid soils of the West?                  Page 10.

   5. Explain what is meant by dry-farming.                   Page 11.

   6. How do the farms of the United States compare in                    404
      size with those of European countries? To what is
      this difference due?                                    Page 11.

   7. What does the movement of the population from the
      farm to the city indicate?                              Page 13.

   8. What change in method is agriculture undergoing in
      the United States? Give the reason for this change.     Page 14.

   9. Discuss the cereal production of the United States.     Page 15.

  10. Upon what question does the future of the cotton
      production depend?                                      Page 17.

  11. What movement is now put forth to aid in the
      preservation of our forests?                            Page 18.

  The Mineral Resources of the United States.

   1. Into what groups may the natural resources of a
      country be divided? Illustrate.                         Page 19.

   2. What two answers are given to the problem of the
      conservation of a limited supply of resources?          Page 20.

   3. What steps have been taken towards stopping the
      devastation of our resources?                           Page 21.

   4. What estimates are given as to the amount of coal
      in the United States and as to how long this supply
      will last?                                              Page 22.

   5. What is the most favorable situation for iron deposits?
      State reasons.                                          Page 24.

   6. Where is the most wonderful iron-mining region in
      the United States? What makes it such a remarkable
      region?                                                 Page 24.

   7. Of what importance are the precious metals? What
      is the practical problem confronting American
      gold-mining companies at present?                       Page 25.

   8. To what use was copper put in Homeric times? What has              405
      caused it to rise to the front rank in recent years?    Page 26.

   9. How does the present-day application of water power
      to machinery differ from its application prior to
      1890?                                                   Page 28.

  Capitalistic Production.

   1. What five causes does the census report give for the
      rapid industrial development in the United States?      Page 30.

   2. Give Carroll D. Wright’s definition of a factory.       Page 31.

   3. Illustrate the two meanings which “division of labor”
      may indicate.                                           Page 32.

   4. Show how the subdivision of labor brings about the
      extension of labor-saving machinery.                    Page 33.

   5. Name the economies of a large-scale production.         Page 36.

   6. What improvements have made large-scale production
      possible?                                               Page 36.

   7. In what lines of business is there little or no
      development toward large-scale methods? State the
      reasons.                                                Page 37.

   8. What is meant by standardization? What are the
      advantages of such a system?                            Page 38.

  Trusts and Monopolies.

   1. Enumerate the phases through which combinations for
      the purpose of fixing prices, have passed.              Page 40.

   2. What is the advantage of the corporation?               Page 41.

   3. Give a brief history of the trust movement.             Page 42.

   4. What economies are secured by a combined or federated
      industry?                                               Page 43.

   5. Name some of the savings which are peculiar to
      trusts.                                                 Page 44.

   6. Give an illustration showing the profits of a                      406
      successful trust promoter.                              Page 45.

   7. What is the effect of industrial combinations upon
      competitors? Upon producers of raw material?            Page 46.

   8. Explain the two phases of the relation between trusts
      and labor.                                              Page 47.

   9. What conclusion as to the power of the combination
      over prices, does the Industrial Commission reach?      Page 48.

  10. From what two sources do the evils of combination
      come? What remedies have been suggested to meet
      both classes of evils?                                  Page 50.

  Speculation and Crises.

   1. How does the speculator reduce for the merchant the
      speculative risk attaching to price fluctuations?
      Illustrate.                                             Page 52.

   2. What social value lies in the service of the speculator?
      Illustrate.                                             Page 53.

   3. Explain the difference between legitimate speculation
      and illegitimate speculation (gambling).                Page 54.

   4. What is a crisis?                                       Page 55.

   5. Discuss the immediate occasion of a crisis.             Page 56.

   6. What is W. S. Jevons’ theory as to the causes of
      crises?                                                 Page 58.

   7. Explain the over-production theory which is given
      as a cause for crises.                                  Page 58.

   8. What is the credit theory of the cause of a crisis?     Page 59.

   9. Where is the true explanation of a crisis to be found?  Page 60.

  10. Is it possible to prevent the recurrence of crises?     Page 60.

  The Modern Wage System.                                                407

   1. Give some beneficial results and some abuses of the
      factory system.                                         Page 61.

   2. Name five points which Mr. Hobson gives to show that,
      in the transition to the factory system, the position
      of the laborer has been one of increasing dependence.   Page 62.

   3. How does President Hadley define wages?                 Page 63.

   4. Describe the systems of labor which preceded the
      modern wage system.                                     Page 64.

   5. How has the extreme individualism of Adam Smith’s
      theory been modified?                                   Page 65.

   6. What are the three peculiarities of the sale of labor?  Page 66.

  Labor Organizations and Collective Bargaining.

   1. Why have labor organizations grown more rapidly in
      the United States and England than on the Continent
      of Europe?                                              Page 69.

   2. What are the two types of trade unions in the United
      States?                                                 Page 69.

   3. Describe the two most important national organizations
      which have been in this country.                        Page 70.

   4. What are the methods by which labor organizations
      monopolize the labor market?                            Page 71.

   5. Why do labor leaders object to piece work?              Page 72.

   6. What are the two arguments in favor of shorter
      hours put forth by the trade unionist?                  Page 73.

   7. What is the economic justification of the shorter
      working day?                                            Page 74.

   8. Give illustrations where unions have directly limited
      the amount of output.                                   Page 75.

   9. What is the attitude of the majority of the employers
      in the United States toward collective bargaining?      Page 77.

  10. What erroneous ideas exist as to the purpose of labor              408
      organizations?                                          Page 78.

  11. Describe the method of settling an industrial dispute
      by conciliation. Why is the principle of arbitration
      fast going out of favor?                                Page 79.

  Women and Children at Work.

   1. Describe the evils of the early factory system in
      England.                                                Page 80.

   2. Are the women crowding the men out of their
      occupations and taking their places?                    Page 81.

   3. What is the most important reason for the low economic
      position which woman occupies in the industrial
      world?                                                  Page 83.

   4. How does George L. Bolen justify the employment
      of women?                                               Page 86.

   5. How can the evil arising from child labor be cured?     Page 87.

   6. What obstacles have been in the way of efforts to
      improve labor conditions by legislation?                Page 88.

   7. Name, and give examples of, the two classes into
      which the factory acts may be divided.                  Page 88.

   8. What has been accomplished in the United States in
      the way of labor legislation?                           Page 89.

  Unemployment and Insurance.

   1. Classify the unemployed.                                Page 91.

   2. What are personal causes of unemployment?               Page 92.

   3. Name some industrial causes of unemployment.            Page 93.

   4. In what does the remedy for the normal unemployment
      in modern industry lie?                                 Page 95.

   5. Suggest some methods of alleviation of the evils of
      unemployment.                                           Page 96.

   6. State briefly the common law doctrine regarding                    409
      liability for accident.                                 Page 98.

   7. What have foreign countries done toward placing the
      burden of industrial accidents upon the industry itself
      and not upon the laborer?                               Page 99.

   8. Describe the establishment of compulsory insurance
      against sickness and old age in Germany; in Great
      Britain.                                               Page 100.

  Machinery and Industrial Efficiency.

   1. What three evils are charged against machinery?        Page 101.

   2. How does the reabsorption of labor displaced by
      machinery depend upon the demand for an article?       Page 102.

   3. How may machine methods cause irregularities in
      wages and employment?                                  Page 104.

   4. Show the need of a system of industrial education
      in the United States.                                  Page 107.

   5. Describe the system of industrial education which
      exists in Germany.                                     Page 107.

   6. How does the English system of industrial education
      differ from the German?                                Page 108.

   7. What is the character of the industrial schools of
      the United States?                                     Page 108.

   8. How have the people of the United States been aided
      in their industrial development?                       Page 109.

   9. What two obstacles have been met by the movement
      for better industrial education in the United States?  Page 109.

  Profit-Sharing and Co-Operation.

   1. Name the three principal methods of profit-sharing.    Page 110.

   2. What is the economic theory of profit-sharing?         Page 111.

   3. What are the objections against the profit-sharing                 410
      system?                                                Page 112.

   4. Why is the system of profit-sharing comparatively
      limited?                                               Page 113.

   5. According to President Hadley, where is there more
      chance for the success of profit-sharing?              Page 113.

   6. How does co-operation differ from profit-sharing?      Page 114.

   7. What are the reasons for the lack of success of
      co-operation in this country?                          Page 115.

   8. Describe the methods of the Rochdale Society.          Page 115.

   9. How does producers’ co-operation differ from
      consumers’ co-operation?                               Page 116.

  10. Give three examples of successful productive
      co-operation in the United States.                     Page 116.

  11. Enumerate the advantages of co-operation.              Page 116.

  12. What is the ultimate ideal of enthusiastic
      co-operators?                                          Page 117.

  13. Discuss the defects of co-operation.                   Page 117.

  Problems of Distribution.

   1. What are the three great problems of economic
      society?                                               Page 119.

   2. Define functional distribution; personal
      distribution.                                          Page 119.

   3. What views are given as to whether functional
      distribution is actually governed by natural law?      Page 121.

   4. Discuss briefly the distribution of rent.              Page 122.

   5. What is the socialists’ idea as to the profits which
      a business manager receives for his services?          Page 123.

   6. State three theories which have been developed to
      explain the distribution of wages.                     Page 124.

   7. How was the wealth of the United States distributed
      in 1893?                                               Page 125.

   8. Are the poor becoming poorer?                          Page 127.   411

  Saving and Spending.

   1. What is the relation between saving and spending?      Page 129.

   2. What is the real goal of all rational economic
      endeavor?                                              Page 130.

   3. Give the arguments which are put forth condemning
      luxury.                                                Page 132.

   4. What arguments are put forth to show that luxury
      is an indispensable stimulus to progress?              Page 133.

   5. What is the attitude toward luxury taken by
      economists?                                            Page 133.

   6. What is meant by “a socialization of luxury”?          Page 135.

   7. Give an illustration of a waste in consumption due
      to lack of knowledge and training.                     Page 135.

  Money and Banking.

   1. What determines the value of money?                    Page 137.

   2. Give the attempts made in the United States to create
      a slow, steady inflation.                              Page 139.

   3. State three arguments in favor of bimetallism.         Page 139.

   4. Where can we find a sufficient answer to the arguments
      in favor of government paper money? State the answer.  Page 141.

   5. Of what does the money of the United States consist?   Page 141.

   6. What essential quality of good bank money do bank
      notes lack? Explain.                                   Page 143.

   7. Enumerate the suggestions which have been made as
      to a new basis for the issue of bank notes.            Page 143.

   8. Name two other problems connected with the banking
      system of the United States.                           Page 144.

  Transportation and Communication.                                      412

   1. Describe the three kinds of discrimination.             Page 147.

   2. How do the state commissions differ in power?           Page 148.

   3. Explain the monopoly character of express companies.    Page 149.

   4. Show the importance of the internal natural waterways
      of the United States.                                   Page 151.

   5. What problem is offered by our canal system?            Page 151.

   6. Show why the causes for the decline in tonnage of
      American vessels are economic rather than political.    Page 152.

  Taxation and Tariff.

   1. What is John Fiske’s definition of taxes?               Page 154.

   2. What rules of taxation were laid down by Adam Smith?    Page 154.

   3. What is the benefit theory of taxation? How does
      this theory fail?                                       Page 155.

   4. What is the faculty principle of taxation?              Page 155.

   5. What measures have been suggested as to how to
      measure ability? Give the objection to each.            Page 155.

   6. What are the arguments supporting progressive
      taxation?                                               Page 156.

   7. Where does the Federal Treasury derive its revenue?     Page 157.

   8. What tax is the main reliance of the state and local
      governments?                                            Page 158.

   9. Describe an ideal system of taxation for the United
      States. What is the advantage of such a system?         Page 159.

  10. What is the character of the considerations in
      determining tariff policies?                            Page 160.

  11. Explain the home market argument in support of                     413
      protection; the wages argument.                         Page 161.

  12. What is the doctrine of comparative costs?              Page 162.

  13. How do free traders answer the home market argument?
      The infant industries argument?                         Page 162.

  The Functions of the Government.

   1. Name the economic functions of the Government.          Page 163.

   2. What is the theory of anarchism?                        Page 165.

   3. Explain Herbert Spencer’s theory of extreme
      individualism.                                          Page 165.

   4. What is the theory of government most generally held
      by economists and writers in the United States?         Page 166.

   5. In what country is the culture state theory very
      generally held? Explain the theory.                     Page 167.

   6. What does the view known as state socialism advocate?   Page 167.

   7. Give Professor Ely’s definition of socialism.           Page 167.

   8. Explain the cardinal and distinctive element of
      socialism.                                              Page 168.

   9. Enumerate the socialists’ criticisms of our present
      methods of production.                                  Page 168.

  10. What do socialists urge as bases of distribution?
      What basis do socialists of today agree is the best
      one to meet the requirements of justice?                Page 170.

  11. What were Henry George’s arguments against private
      ownership of lands?                                     Page 171.

  12. What is the real issue as to the municipalization of
      local public utilities?                                 Page 172.

  Economic Progress.

   1. What improvement has been made in the condition of
      the working class in the United States? In Great
      Britain?                                                Page 173.

   2. What factors have aided in the enormous expansion                  414
      of production?                                          Page 174.

   3. Give two reasons why labor has not profited more
      by the great increase of wealth.                        Page 175.

   4. State some lines along which reform is needed.          Page 176.


   1. How does the word “manufactures” as it is ordinarily
      used today differ from its original meaning?            Page 180.

   2. What conditions have made western Europe and the
      eastern part of the United States great manufacturing
      sections?                                               Page 183.

  Modern Manufacturing Systems.

   1. What new occupations did the factory system develop?    Page 186.

   2. How did the use of steam affect the location of
      factories?                                              Page 187.

   3. What factors made the price of silk so high before
      the nineteenth century?                                 Page 188.

   4. Why is Gary, Indiana, an advantageous location for
      a manufacturing center?                                 Page 189.

   5. How is it possible to operate by water power, a factory
      located a hundred miles from a waterfall? Give
      two examples.                                           Page 190.

   6. Illustrate the use of electricity in a typical modern
      factory.                                                Page 192.

  Use of Machinery in Manufacturing.

   1. Describe the first machine used in the making of yarn.  Page 193.

   2. Enumerate some of the machines invented in the
      eighteenth century.                                     Page 195.

   3. How did the invention of machinery affect the
      importation of cotton?                                  Page 196.

   4. Show the need of machinery in the iron and steel                    415
      industry.                                               Page 197.

   5. Describe the earliest process of making pig iron.       Page 198.

   6. What is the Bessemer process of making steel?           Page 201.

   7. What have been the causes of the great development
      of the iron and steel industry?                         Page 201.

   8. What is the difference between English and American
      steel works?                                            Page 202.

  Development of the Factory System.

   1. State reasons for the early development of the factory
      system in England.                                      Page 204.

   2. Why was the United States slow about developing
      manufacturing industries?                               Page 205.

   3. Why is any comparison of the value of the manufactures
      of the United States with that of other countries
      defective?                                              Page 210.

   4. Name an article which is the product of one factory
      but which becomes the manufacturing material of
      another.                                                Page 211.

   5. What factors have contributed toward making the
      United States the world’s greatest manufacturing
      nation?                                                 Page 212.

   6. How can it be judged as to whether the value of
      manufactures of a country is in excess of the consuming
      capacity?                                               Page 214.

  Capital in Manufacturing.

   1. Show the part capital plays in building up a company.   Page 214.

   2. What are the advantages gained by having a business
      in the hands of a company or corporation?               Page 215.

   3. Compare the durability of gold with that of other
      products.                                               Page 217.

   4. What was the amount of capital employed in                         416
      manufacturing industries in 1850? In 1905?              Page 218.

   5. How did the Census of 1905 differ from previous
      censuses in the matter of manufacturing establishments? Page 219.

   6. How does the growth in capitalization rank with that
      of the other important branches of manufacturing?       Page 220.

  Trusts and Combinations.

   1. What principle was the cause of the origin of the
      modern company or corporation?                          Page 222.

   2. Explain the provisions of a pool.                       Page 223.

   3. How were the defects of the pool overcome?              Page 224.

   4. What are the advantages of a trust or combination?      Page 225.

   5. What has been the effect of trusts on prices? On
      wages?                                                  Page 226.

   6. Name and classify according to product the companies
      of which the United States Steel Corporation was
      formed.                                                 Page 228.

  The Iron and Steel Industry.

   1. What was the number of establishments for the iron
      and steel industry in the United States in 1880? In
      1905? What does this show?                              Page 233.

   2. What method was used by the early Germans for
      extracting the iron from the ore? By the English
      in 1700? By the early American colonists?               Page 236.

   3. Why was coke used in the smelting of iron ore in
      England much earlier than in America?                   Page 238.

   4. How did the development of railways aid in the
      preservation of our forests?                            Page 239.

   5. What is the puddling process? Why is it necessary?      Page 240.

   6. What process took the place of the puddling process?    Page 241.

   7. What is steel? How is iron obtained by the Bessemer                417
      process made into steel?                                Page 245.

  The Textile Industry.

   1. What is the most important of the textile industries?   Page 247.

   2. Compare the value of textile manufactures in the
      principal countries of Europe during the period from
      1800 to 1896, inclusive, with that of the United
      States during the same period.                          Page 247.

   3. Define textiles. How are they made?                     Page 251.

   4. What were the so-called “Manchester cottons”?           Page 254.

   5. Who invented the spinning jenny? What was its use?      Page 255.

   6. Up until the invention of the water frame, why was
      the making of cloth entirely from cotton impracticable?
                                                              Page 256.

   7. What was the spinning mule? By whom was it invented?    Page 257.

   8. What is the purpose of the cotton gin?                  Page 257.

   9. What factors have made cotton the most important
      textile?                                                Page 258.

  10. Why is the cotton industry moving toward the South?     Page 262.

 Manufacturing Industries of the United States.

   1. Why was manufacturing neglected by the early settlers
      of the United States?                                   Page 263.

   2. What manufactories sprang up in the nineteenth
      century?                                                Page 266.

   3. Name the four greatest producers of manufactures for
      exportation.                                            Page 270.

   4. When was the largest growth of agricultural exports
      in the United States? Of exports of manufactures?       Page 272.

   5. What articles are the chief requisites of                          418
      manufacturing?                                          Page 272.

   6. How do you account for the rapid growth of copper
      as an export of manufacture?                            Page 277.

   7. Illustrate the fact that the United States does not
      need to invade foreign markets with its manufactures.   Page 278.

   8. Distinguish between the gross value of the factory
      product of manufactures and the net value of the same.  Page 284.

   9. Compare the growth of the exportation of manufactures
      with that of the production.                            Page 286.

  10. Under what head does the Bureau of Statistics classify
      boots and shoes; flour; salted meats; illuminating
      oil; pig iron.                                          Page 287.

  Concrete and Steel.

   1. How do concrete and steel supplement each other?        Page 322.

   2. Of what is the standardization of concrete applications
      indicative?                                             Page 323.

   3. What is a corrugated bar?                               Page 324.

   4. Give an example showing the durability of the
      Hennibique construction.                                Page 326.

   5. What advantages over the wooden bearing pile has
      the concrete bearing pile?                              Page 327.

   6. How may the resistivity of usual concretes be
      reinforced?                                             Page 329.

   7. Explain the use of wales in reinforcing a water front.  Page 331.

   8. How are the bearing piles of a wharf in the tropics
      made?                                                   Page 332.

   9. Enumerate various uses to which concrete has been
      put in construction.                              Pages 333, 334.

  10. What is the problem of the concrete telegraph pole?
      How may this be overcome?                               Page 336.

  11. How is the Corell tie made? The Percival tie?           Page 337.  419

  12. What part does steel play in the construction of the
      Gatun Locks of the Panama Canal?                        Page 337.

  13. Give an illustration of the use of steel for molding
      concrete.                                               Page 339.

  Chemistry and the Industries.

   1. Why has it been necessary to put industry on a
      scientific basis?                                       Page 342.

   2. Why is chemistry so closely related to the industries?  Page 343.

   3. Tell in your own words the story of the development
      of the soda industry.                                   Page 344.

   4. Name three important industries which grew out of
      the soda industry.                                      Page 346.

   5. Give an example of how science has led the way for
      industry.                                               Page 348.

   6. What are the great achievements before the chemistry
      of the future?                                          Page 350.

  The Producer-Gas Power Plant.

   1. What was the drawback to the early development of
      the gas engine?                                         Page 353.

   2. Why was the suction producer not practical?             Page 354.

   3. What led to the introduction of the pressure producer?  Page 355.

   4. What is the advantage of the down-draft producer?       Page 355.

   5. What is the ideal relative efficiency of the
      producer-gas plant and the steam plant? The actual
      relative efficiency?                                    Page 360.

   6. What defects in producer-gas plants were learned
      from the inspection in 1908?                            Page 364.

   7. Where are the producer-gas plants of England located?   Page 366.

   8. How can the price of power developed from fuel be                  420
      kept down?                                              Page 369.

  Efficiency in Shop Operations.

   1. What is the reason for the failure of many cost
      systems?                                                Page 371.

   2. Upon what does the efficiency of a workman depend?      Page 372.

   3. What should be used as a standard for the measurement
      of time?                                                Page 373.

   4. When should a bonus begin?                              Page 375.

   5. What effect does the giving of bonuses have on the
      efficiency of the foreman?                              Page 375.

   6. What advantages are gained from having proper time
      cards for the workmen of a concern?                     Page 377.

   7. To be successful, how should efficiency methods be
      introduced?                                             Page 379.

  The Bridge between Labor and Capital.

   1. What is the chief cause at the bottom of all labor
      disputes?                                               Page 380.

   2. When and how was the labor problem brought about?       Page 381.

   3. What three methods of solution are proposed for the
      present problem of distribution?                        Page 382.

   4. In your opinion which method is the best?

  The Unemployed.

   1. What is the central cause of the want of employment?    Page 385.

   2. Show the evil effect of ill-advised charity upon the
      unemployed.                                             Page 387.

   3. What does the practice of giving old-age pensions
      indicate as to the fairness of the distribution of the
      returns of production?                                  Page 387.

   4. Name three ways in which the problem of the unemployed             421
      can be reduced.                                         Page 389.

   5. What are the effects of ignorance and indolence upon
      society?                                                Page 391.

   6. If employment were remunerative, what would be the
      results?                                                Page 393.

   7. What lines of industry should society court?            Page 396.

   8. What are the evils connected with industrial
      corporations?                                           Page 397.

   9. Summarize the remedies for the want of employment.      Page 401.



    factory, 88, 89.

    character of, in U. S., 14.
    most important branch of, 15.
    reorganization of, 15.

    theory of, 165.

    land, of U. S., 9.

  BANKING, 142-145.

    corrugated, 324.

    collective, 77.

    process, 201, 241-246.

    arguments in favor of, 139, 140.

    of arbitration, 79.
    of conciliation, 79.

    use of, 375.

    construction of, 324-326.

    and labor, bridge between (article), 380-383.
    in manufacturing, 214-222.

    Portland, 340.

    production of, in U. S., 15.

    and the industries (article), 341-351.
    a utilitarian science, 341.
    how it creates industries, 348.
    how it influences industries, 342.

    at work, 86-89.

    wage-earning, 61.

    waste of, 352.

    advantages of, 43, 225.
    causes of, illustrated, 227-230.
    effects of, 46-49, 226.
    upon competitors, 46.
    upon consumers, 48, 226.
    upon labor, 47.
    upon opportunity, 49.
    upon wages, 226.
    forms of, 223-225.
    in the railroad world, 146.
    methods of, illustrated, 227-230.
    phases of, 39, 40.

    mandatory, 148.
    supervisory, 148.

    express, monopoly character of, 149.

    defined, 4.
    in modern industrial life, 4, 5.

    and steel (article), 322-340.
    applications of, 324-339.
    as material of construction, 322.
    chimneys of, 328.
    effect of water on, 330, 333.
    rapidity of construction of, 330.
    resistivity of, 329.

    economy in, 135, 136.

    advantages of, 116, 117, 222, 223.
    consumers’, 114.
    defects of, 117, 118.
    producers’, 116.

    production of, in U. S., 16.

    advantages of, to industry, 41, 215.
    industrial, 397.
    United States Steel, 44, 227-230.

    gin, 257.
    manufacturing of, 247-262.
    production of, in U. S., 17, 304.
    world’s production of, 291.

    credit theory of, 59.
    defined, 55.
    immediate cause of, 56.
    must be regarded as unpreventable, 60.
    over-production theory of, 38.
    periodicity of, 57, 58.

    kinds of, 147.

    of interest, 122, 123.
    of profits, 123.
    of rent, 122.
    of wages, 123, 124.
    of wealth, functional, 119-121.
    of wealth, personal, 120, 125-127.

    public, 9.


    practical (article), 1-178.
    progress in, 172-178.

    industrial, 106-110.

    application of, to department heads, 375-377.
    defined, 371.
    increased, illustrated, 374.
    in shop operation (article), 370-379.

    applied to manufacturing, 190-192.

    gas, development of, 353-356.

    of natural products, 182.

    from U. S., 269-288.

    acts, 88, 89.
    described, 31.
    system. (See System.)
    town, rise of, 186.

    number and size of, 11.

    wasteful use of, 18, 19.

    arguments of, 162.

    production of, 216, 217.

    functions of, 163-172.

    defined, 9, 10.

    extreme, 65, 165.
    modified, 166.

    causes of rapid development in, 30.
    cotton, 247-262.
    how carried on, 41.
    iron and steel, growth of, 198-202, 230-246.
    localization of, 33.
    manufacturing. (See Manufacturing.)
    relation between chemistry and, 341-351.
    soda, 344-346.
    specialization of, 32, 33.
    textile, 247-262.

    against sickness and old age, 100.
    compulsory accident, 99, 100.

    processes of making, 198-201, 235-246.

  IRRIGATION, 10, 11.

    American Federation of, 70.
    and capital, bridge between (article), 380-383.
    child, 80, 86-89.
    division of, 32, 33.
    Knights of, 70.
    legislation, purpose of, 68.
    organizations, 68-77.
    previous systems of, compared with modern wage system, 64.
    sale of, peculiarities of, 66, 67.
    woman, 80-86.

    factory, 97.
    labor, purpose of, 68.
    of child labor, 87-89.

    industrial, 5.
    natural, theory of, 166.

    production of, in U. S., 16.

    attitudes toward, 132-134.
    socialization of, 135.

    evils of, 101-106.
    in iron and steel industry, 196-201.
    in textile industry, 196.

    carding, 256.
    early forms of, 193-196.

    English, 1-3.
    characteristics of, 2, 3.

    census of, 207-211.
    why misleading in U. S., 207, 211, 268.
    concentration of, 33, 34.
    exported from U. S., 269-272.
    growth of, 30, 205-214.
    growth of investment in, 218-222.
    statistics of, 229-321.

    application of electricity to, 190-192.
    application of steam to, 187-189.
    areas of the world, 181.
    (article), 179-320.
    capital in, 214-222.
    cotton, 247-262.
    establishments, 219-222, 233.
    growth of, 205-214.
    growth of investment in, 218-222.
    industries of the U. S., 263-288.
    machinery in, 193-203.
    statistics of, 229-321.
    systems of the world, 185-192.

    merchant, 152-154.

    government paper, 140, 141.
    kinds of, in U. S., 141, 217.
    value of, how determined, 137, 138.

    trust, 42.

    change in, opposition to, 372.
    shop, efficiency in, (article), 370-379.

    forms of, 223-225.
    labor, 68-77.
    growth of, 69.
    objects and methods of, 71-77.


    old-age, danger in, 387.

    bearing, 327.
    sheet, 327.

    land, of U. S., 9, 10.

  POOLS, 40, 223.

    agricultural, decline in, 12, 13.

    water, of U. S., 27, 28.

    producer-gas, 352-369.
    conditions favorable to, in U. S., 368, 369.
      location of European, 366-368.
    number and class of, 363.
    relation of, to conservation of fuel resources, 352-369.
    relative results of steam plant and, 356-363.

    capitalistic, 6, 29-39.
    concentration of, 34.
    large-scale, 35-37.
    economics of, 35, 36.
      peculiar to trusts, 44.
    industrial effects of, 37.
    in manufacturing, 36.
    in retail trade, 37.
    social effects of, 38.
    of cotton, 291.
    of cotton in U. S., 17, 304.
    pig-iron, 230, 231.

    of promoters, 45.

    defined, 110.
    economic theory of, 111.
    methods of, 110, 111.
    objections against, 111, 113.
    origin of, 113.
    purpose of, 110.

    private, 3, 4.

    arguments in support of, 160-162.

    public nature of, 148.
    public ownership of, 149.
    rates, 147.

    railroad, 147.

    legislative, of trust evils, 50, 51.

    agricultural, of U. S., 9-19.
    forest, destruction of, 18.
    mineral, of U. S., 19-29.
    alarming condition of, 20-22.

    sources of, 157-159.

    industrial, 5, 6.

    three-year, 2.

    relation of, to spending, 129, 130.
    why necessary, 131.

    Forest, work of, 18.

    as a scheme of distribution, 170.
    defined, 167, 168.
    difficulties of establishing, 169.
    state, 167.

    industrial, 1-8.
    Rochdale, 115.


    social value of, 53.

    relation of, to saving, 129, 130.

  SPINNING JENNY, 196, 255.

    system of, 38.

    when formed, 42.

    as a regulator of industry, 7, 8.
    culture, theory, 167.
    ownership, 171, 172.

    accidents in German industries traceable to different causes, 97.
    cause of idleness, members of trade unions (1900), 93.
    cause of poverty, 92.
    course of wages during 19th century, 173.
    expenditures for different purposes in different places, 128.
    growth of manufactures in 19th century, 30.
    hand and machine methods compared, 103.
    industrial and commercial gas trusts in U. S., (1860-1900), 42, 43.
    of commerce in U. S., 308, 309.
    of manufactures, 229-321.
    annual value of, 289.
    capital invested, 313, 314.
    exportation of, 291.
    importation of, 289.
    summary of, in U. S., 299.
    value of products of, 318-321.
    wage-earners employed (1900), 315.
    of population engaged in manufacturing in U. S., 310.

    and concrete (article), 322-340.
    as material of construction, 322.
    re-inforcement, styles of, 324-326.

    defined, 78.
    losses from, in U. S., 78.

    canal, 151, 152.
    domestic, 7.
    beneficial results of, 60, 61.
    development of, 203-214.
      in England, 214.
      in U. S., 205, 206.
    evils of early, 80, 101-106.
    origin of, 185.
    independent treasury, 144.
    industrial, modern, 1-8.
    characteristics of, 3.
    of interchangeable parts, 38, 39.
    of standardization, 38.
    three-field, 2.
    wage, modern, 60-68.

    defined, 154.
    general property, 158.
    inheritance, 159.

    powers of, 154.
    problems of, 155, 156.
    rules of, 154, 155.

    described, 251, 252.
    manufacturing of, 247-262.

    local, 69.
    national, 69.
    object and methods of, 71-77.

    inland water, 151.
    ocean water, 151.

    advantages of, 225.
    and combinations, 222-230.
    defined, 216.
    economics of production peculiar to, 44.
    effects of,
    upon competitors, 46.
    upon consumers, 48, 226.
    upon labor, 47.
    upon opportunity, 49.
    upon wages, 226.
    evils of, remedied by legislative regulation, 50, 51.
    industrial and gas, organized in U. S. (1860-1900), 42, 43.
    reasons for growth of, 43, 45, 46.

    classified, 91.
    the (article), 384-402.

    a permanent problem, 95.
    cause of, 91-95, 384-386.
    extent of, 90.
    remedies for, 95, 387-390, 393-401.

    iron law of, 124.


    functional distribution of, 119-121.
    personal distribution of, 120, 125-127.

    at work, 80-86.
    economic position of, 84.

      *      *      *      *      *      *

Transcriber’s note:

Obvious printing errors, such as backwards, upside down, or partially
printed letters, were corrected. The last two lines of the Table of
Contents, printed in reverse order, were corrected. Final stops
unprinted at the end of sentences were added.

Dialect, obsolete and alternative spellings were left unchanged.
Pittsburgh (PA) is spelled without the final “h” throughout the book.
Omitted words were not added to the text.

Footnotes in the text were renumbered sequentially and moved to the
end of the article in which the anchor occurs. Footnotes within tables
were changed to letters and were moved to follow the table in which
the anchor occurs. In some tables, a footnote may have more than one

Wide tables were split for easier viewing on small screens.

The following items were changed:

  ‘Bimettalism’ to ‘Bimetallism’ in the Table of Contents, XV
  added space between ‘Ph. D.’ for Ernest Ludlow Bogard byline, page 1
  ‘whch’ to ‘which’ …by which iron and steel…, page 201
  ‘1880’ to ‘1800’ …ten times as much as in 1800…, page 231
  ‘hamp’ to ‘hemp’ …flax, hemp and jute…, page 251
  ‘million’ to ‘millions’ …and 1908, 99 millions…, page 276
  ‘manfactures’ to ‘manufactures’ …was manufactures ready…, page 281
  ‘guns’ to ‘gums’ …the oils, gums and resins,… page 341
  ‘ultilitarianism’ to ‘utilitarianism’ …The utilitarianism of…, pg 342
  ‘guns’ to ‘gums’ …of gums; of sugar and…, pg 343
  ‘grinding’ to ‘guiding’ …also the guiding spirit…, page 346
  ‘lead’ to ‘led’ …has led the way…, page 349
  ‘notions’ to ‘notion’ …democratic notion of…, page 399
  ‘lead’ to ‘led’ …science has led the way…, page 419
  added comma to index entry: STRIKES losses from, in U. S., 78.

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