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About Google Book Search Google's mission is to organize the world's information and to make it universally accessible and useful. Google Book Search helps readers discover the world's books while helping authors and publishers reach new audiences. You can search through the full text of this book on the web at|http: //books .google .com/I m^h^^ , HAK\'AKI) CCII.I.KCK p RECENT ECONOMIC CHANGES AND THEEEt EFFECT ON THE PRODUCTION AND DISTRIBUTION OF WEALTH AND THE WELL-BEING OF SOCIETY BY DAVID A. WELLS, LL. D., D. C. L. MKMBIUC OOBXBBPOHDAXT DB L*imTITDT DB ULLNCB ; OOBRBPONDEICTE RKOIA ACX^AOBMIA DB LIHOBI, ITALIA ; HONORARY FELLOW BOTAL 8TAT18TIGAL 80CIBTT, O. B. ; LATB UlflTXD STATES SPBCiALOOMMissioiaai or rbyrnub, and frbbident AMKBIOAW SOCIAL SCIBNCB ASSOCIATION, BTO. NEW YORK D. APPLETON AND COMPANY 1889 / fc^ru 9^b.;i/j ^ MAY 1 1911 OOPTRIOBT, 1880, By D. APPLETON AND COMPANY. All rights reserved. ^ ^J^" V I f TO D. WILLIS JAMES, THE ENTEBPRISINO AND SUCCESSFUL MERCHANT, THE PUBUC-SPTRITED CITIZEN, THE WISE A2TD GENEROUS PHILANTHROPIST, THIS VOLUME IS RESPECTFULLY 13chitaich BY THE AUTHOB. PREFACE. The economic changes that have occurred during the "i last quarter of a century— or during the present generation I of living men — ^haye unquestionably been more important - and varied than during any former corresponding period of J. the world's history. It would seem, indeed, as if the world, during all the years since the inception of civilization, has been working up on the line of equipment for industrial effort — ^inventing and perfecting tools and machinery, build- ing workshops and factories, and devising instrumentalities for the easy intercommunication of persons and thoughts, and the cheap exchange of products and services ; that this equipment having at last been made ready, the work of using it has, for the first time in our day and generation, fairly begun ; and also that every community under prior or existing conditions of use and consumption, is becoming saturated, as it were, with its results. As an immediate consequence the world has never seen anything comparable / to the re8ult8^)f the recent system of transportation by land/ and water ; never experienced in so short a time such anj expansion of all that pertains to what is called " business ** ;; and has never before been able to accomplish so much in{ vi PREFACE. the way of production with a given amount of labor in a given time. Concurrently, or as the necessary sequence of these changes, has come a series of wide-spread and complex dis- turbances ; manifesting themselves in great reductions of the cost of production and distribution and a consequent remark- able decline in the prices of nearly all staple commodities, in a radical change in the relative values of the precious metals, in the absolute destruction of large amounts of capital through new inventions and discoveries and in the impairment of even greater amounts through extensive reductions in the rates of interest and profits, in the dis- content of labor and in an increasing antagonism of nations, incident to a greatly intensified industrial and commercial competition, f Out of these changes will probably come fur- ther disturbances, which to many thoughtful and conserva- tive minds seem full of menace of a mustering of the bar- barians from within rather than as of old from without, I for an attack on the whole present organization of society, I and even the permanency of civilization itself. The problems which our advancing civilization is forc- ing upon the attention of society are, accordingly, of the utmost urgency and importance, and are already occupying the thoughts, in a greater or less degree, of every intelligent , person in all civilized countries. (But, in order that there ■ may be intelligent and comprehensive discussion of the M situation, and more especially that there may be wise re- medial legislation for any economic or social evils tluil may exist, it is requisite that there should be a clear and full 1 recognition of what has happened^ And to simply and comprehensively tell this — ^to trace out and exhibit in some- PJEkEFAGE* yi2 thing like regular order the canses and extent of the indus- trial and social changes and accompanying disturbances which haye especially characterized the last fifteen or twenty years of the world's history — ^has been the main pur- pose of the author. At the same time the presentation of whateyer in the way of deduction from the record of experi- ence has seemed legitimate and likely to aid in correct con- clusions, has not been disregarded. In the main the following pages are a reproduction of a series of papers originally contributed to and published in " The (New York) Popular Science Monthly," and in part in ** The (London) Contemporary Eeview ** (1887 and 1888). These have, however, in great measure been rewritten, care- fully revised, and brought up to a later date. XoswiCH, CoHXEcncuT, August f 1889. « 4 CONTENTS. L PAGB EooDotnie (fifltnitwuMi since 187S — Chancier and nnivenalitj of such '^ dtftarbeDceB — CooditioiiB antecedent — Experience of Gennony — Of - the United Statee Effect of crop (ailuiea in Europe, 187»-'81— Die-, tnrbancea in Great Britain, Frmoe, Belgium, Buena, and Spain — Chronological prewntation of indnatrial experiences— Specnlationa aa to caoaee — ^Tendency to magnify local influencee — The recognition of a caoae univenal in ita influence neceaaaiy to explain a nnivenal phenomenon •..•••••1 IL The place in history d the yean from 18M to 1885 indusive— New con- ctitaooa d production and distribution — ^The prime factors of eco- . nomic disturbance— Illustrative examples — The Sues Canal — ^Influ- encea of the telegraph on trade— Economy in the construction and management of Yeasels — Disappeannce ci the sailing-vessel — Bevo- Intion in the carrying-trade on land — ^The annual work service of the railroad — ^The Bessemer steel rail — Future supply of food com- modities— Cheapening of iron — ^Displacement of labor by machinery — ^Natural gas — Application of machinery to the |»oduction and transportation of grain — Adam Smith and the manufiicture of pins — The epoch of efficient machinery production — ^Influence of labor dis- turbances on inventions — Prospective disturbing agencies — Displace- ment of the steam-engine . .27 in. Over-production— Periodidty of trade activity and stagnation— Increase in the^ volume of trade with accompanying decline in profits — Do- preanon of agricoHure in Europe — Changes in the relations of labor and capital — ^Destruction of handicrafts — Antagonisms of machinery — Experience of British co-operative sodeties — Influence of improve- ments in production by machinery on international diflerenoes in wages — Changes in the details of product distribution — Chaogea in retail trade— Displacement of the " middle-man " . . .70 X CONTENTa IV. PAOB Depresaion of prices as a cause of economic disturbance— Manifestations of such disturbances — ^Their universality — Average fall in prices since^) 1867-*77 — Methods of determining averages — Cause of the decline — Two general theories — General propositions fundiunental to inquiry — Becent production and price experiences of staple commodities — Sugar — Petroleum — Copper — Iron — Quicksilver — Silver — ^Tin — Tin-plate — ^Lead — Coal — Coffee and tea — Quinine — Paper and rags — Nitrate of soda— Meat— Cheese— Fish— Freights— Wheat-Cotton— Wool- Silk— Jute — Conclusions of the British Qold and Silver Commission 114 V. Price experience of commodities where product has not been greatly augmented — Handicraft products — Prices of India commodities — Exceptional causes for price changes — Coral, hops, diamonds, hides, and leather — Changes in supply and demand regarded by some as not sufSdently potential — ^Divergency of price movements — Evidence from a gold standpoint — Has gold really become scarce f— Gold pro- duction since 1850 — Increase in the gold reserves of civilized coun- tries— Economy in the use of money — Clearing-house experiences — Difforence between gold and silver and other commodities in respect to use — Has the fall in prices increased the burden of debts! — Curi- ous monetary experiences of the United States . . .191 VI. Changes hi recent years in the relative values of the precious metals — Subject not generally understood — Former stability in the price of silver — Action of the German Government in 1878— Concurrent de- dine in the price of silver — Action of the ^* Latin Union " — Influ- ence and nature of India " Coundl bills " — Alleged demonetization of silver — Increased purchasing power of silver — ^Increased product of silver— Economic diBturbances consequent on the decline of silver — Increased production of cotton fiibrics in India — ^Industrial awak- ening in India — Relation of the dedine in the value of silver to the supply of India wheat — International trade, a trade in commodities and not in money— Economic disturbances in the Dutch East In- dies— Natural law governing the selection and use of metallic money- Experience of Corea— The metal coinage system of the world tri- metallic— The gold standard a necessity of advanced dvilization — The tall of prices due to more potent agendes than variations in the volumes or relative values of the predoua metals . . . 224 VIL Governmental interference with production and distribution as a cause of economic diaturbanoe— Eoonomio sequences of the repeal of the Brit- CONTENTS. xi PAOS core Uw« — ^ExteDsum of oommercul fireedom — Sesalting pros- perity — Beactioiiary policy after 1876— CaiiMs influencing to reaction — Commercial policy of Suaaia — ^lUostrationB of recent restrictive commercial legislation — France and Italy — French colonial policy — BeTival of the restrictive commercial ideas of the middle ages — Local and trade legislation in the United States — Restrictions on immigra- tioD and rsKidence — ^Betrogression in the comity of naUons— Results of tariff conflicts in Knrnpft— 'ym dgval<;»pnifint ftf tntfltn ^..^-.^^^^p^ of the abandonment of commercial restrictions in Europe— £xtraor- dinary experiences of the beet-sugar production — ^International con- ference for the abolition of sugar bounties — Experience of France in respect to shipping bounties — Relative commercial importance of dif- ferent European nations — Per capita wealth in different countries — Relative productum and prices of iron and steel in the United States and Great Britun — Augmentation of domestic prices by taxes on im- ports— Economical disturbances contingent on war expenditures . 860 VIIL The economic outlook— Tendency to pessimistic views — Antagonism of sentiment to correct reasoning — The future of industry a process of evolution — The disagreeable elements of the rituation— AJl transi- tions in the life of society accompanied by disturbance — Incorrect views of Tolstoi — Beneficial results of modem economic conditions -^^Existing populations not formerly possible — The Malthusian the- ory— Present application to India — IlluBtrations of the effect of new agricultural methods on production — No future famines in civilized countries — Creation of new industrial pursuits — Doubtful perpetua- tion of the Oovernment of the United States under old economic conditions — Increase in the world's supply and consumption of food — Increase in the varieties of food — Low cost of subsistence under attainable concUtions in the United States — Savings-bank statistics — Decrease of pauperism — Statistics of crime — Increase in the duration of human life — Extermination of certain diseases — Future of medi- cine and surgery — Unfavorable results of new conditions of civiliza- tion—Increase of suicides — Divorce statistics — Change in the condi- tion of the British people since 1840 — Wealth of Great Britain — British education and taxation — Present higher vantage-ground of humanity 824 IX. The discontent of labor— Causes for— Displacement of labor— Results of the invention of stocking-making machinery — Increased opportunity for employment contingent on Arkwright's invention — Destructive influences of material progress on capital — Effect of the employment of labor-saving machinery on wages — On agricultural employments — Extent of labor displacuiient by machinery — The cause of Irish dis- \ xii CONTENTS. PAGS oontent not altogether local— ImpoveriBhment of French proprietors— la there to be an anarchy of production V — Effect of redaction of price on consumption — On opportunities for labor— lUoBtrative examplee— Influence of taxation on restraining consumption — Experiences of tolls on Brooklyn Bridge— Characteristics of diflerent nationalities in respect to the consumption of commodities — Creation of new industries — Effect of import taxes on works of art— Tendency of over-production to correct itself— Present and prospective consumption of iron — ^Work breeds work— Pessimistic views not pertinent to present conditions . S64 X. Discontent of labor in consequence of changes in the conditions of em- ployment— Subordination to method and routine essential to all sys- tematized occupations — Compensations thereftom — Benefits of the capitalistic system of production— Werner Biemens's anticipations — Discontent of labor in consequence of greater intelligence— Best defi- nition of the difference between a man and an animal — ^Increase in personal movement — Change in character of the English, French, and German people— What is socialism! — Meaning of progressive material and sodid development— Advance in wages in Great Britain, the United States, and France — Coincident change in the relative number of the lowest daas of laborers — Relation of wages to the cost of living— Increase in expenditures for rent — Curious demonstration of the improved condition of the masses— Beduction of the hours of labor — Why wages have risen and the price of commodities fallen — Impairment of the value of capital — Beduction of the rates of interest — ^Decline in land values ....... 896 XI. The economic outiook, present and prospective— Necessity of studying the situation as an entirety — Compensation for economic disturb- ances— Inequality in the distribution of wealth a less evil than equal- ity of wealth— The problem of poverty as affected by time— Tendency of the poor toward the centen of population — ^Relation of madiineiy to the poverty problem — Reduction of the hours of labor by legis- lation— Fallacy of eight-hour aryruments — The greatest of gains firom recent material progress — Increase of comfort to the masses from decline of prices — Oleomargarine legislation — Difference between wholesale and retail prices — Relation between prices and poverty — Individual differences in respect to the value-perceiving faculty — Characteristics of the Jews — ^Relative material progress of different countries — ^Material development of Australia and the Aiigentine Re- public—Great economic changes in India— Great material pro^ir'^ees in Great Britain — The economic changes of the ftiture— Further cheap- ening of transportation— Future of agriculture — Position of the iMt third of the nineteenth century in history .... 427 RECENT ECONOMIC CHANGES. ZooDomic doftorbtncm dnoe 187S — Chancter and univenality of sncb di»- tnrbanoea— ConditioiiB antecedent— Experienoe of Gennony — Of the United 8tate»— Effect of crop faUnres in Europe, 1879-' 81— Disturbances in Great Britain, France, Belgium, Buaaia, and 8pun— Chronological preeentalaon of indnatrial experiences— Specolationa as to causes — ^Tendency to magnify local inflaeiices — ^Tbe recognition of a cause universal in its influence to explain a universal phenomenon. The existence of a most curious and, in many respects, unprecedented disturbance and depression of trade, com- merce, and industry, which, first manifesting itself in a marked degree in 1873, has prevailed with fluctuations of intensity up to the present time (1889), is an economic and Bocial phenomenon that has been eyerywhere recognized. Its meet noteworthy peculiarity has been its uniyersality ; affecting nations that haye been inyolyed in war as well as those which haye maintained peace; those which haye a stable currency, based on gold, and those which have an unstable currency, based on promises which have not been kept ; those which liye under a system of free exchange of commodities, and those whose exchanges are more or less restricted. It has been grieyous in old communities like England and Germany, and equally so in Australia, South Africa, and California, which represent the new; it has been a calamity exceeding heavy to be borne, alike by the inhabitants of sterile Newfoundland and Labrador, and of 2 RECENT ECONOMIC CHANGE& the sunny, fruitful sugar-islands of the East and West In- dies ; and it has not enriched those at the centers of the world's exchanges, whose gains are ordinarily the greatest when business is most fluctuating and uncertain.* One of the leading economists and financiers of France, M. Leroy Beaulieu, claims that the suffering has been great- est in his country, humiliated in war, shorn of her territory, aifd paying the maximum of taxation ; but not a few stand ready to contest that claim in behalf of the United States, rejoicing in the maintenance of her national strength and dominion, and richer than eyer in national resources. Commenting upon the phenomena of the industrial de- pression subsequent to the early months of 1882, the Director * Tho poverty in Australia, in 1885, was reported to be more extreme than at any former period in the history of the colonies ; multitudes at Adelaide, South Australia, surrounding the Government House and clamoring for food — the causes of distress assigned being failure of tho harvest, drought, and general commercial depression. This depression, especially of the agricultu- ral interests, continued in a marked degree through the year 1885, the ex- ports of the colonies declining thirteen per cent and the imports six per cent as compared with those of the preceding year. With an increase of three per cent in population for the year, the colonial revenues of 1886 also showed m marked decline as compared with 1885. Since 1887, however, business in Australia has greatly improved. " The close of the year 1884 brought with it little, if any, improvement, in the material condition of South Africa. Commercial disasters may not have been so frequent as during the previous year, but thb may bo explained by the fact that trade has reached so low a level that very little room existed for ftirther failures. No new enterprises have been set on foot, and the sus- pension of many of the public works has tended to further reduce the com- merrial prosperity of the country. Consumption has been upon tho lowest possible scale, retrenchment universal, and want of employment, and even of food, among the laboring-classes, m grave public difficulty." — UniUd SiaUa Consul SiLER, Report to State Department, 1885. January, 1885. The price of mackerel in 1884 (Boston) was lower than at any time since 1849 ; and, in the case of codfish, the lowest since 1838. On the other hand, the price of mackerel in December, 1888, in the same market, was BO high as to almost render the consumption of this article of focn^ a mat- ter of luxury. In mil countries dependent in a groat degree on the production of cane-sugar, the depression of industry in recent years has also been very great, and atiU (1889) continues. ECONOMIC DISTUBBANCBS SINCE 1873. 3 of the United States National Bureau of Labor, in his re- port for 1886, considers the nations inYolved, in respect to their relations to each other and to seyerity of experience, to stand in the following order : Great Britain, the United States, Germany, France, Belgium. The investigations of the director also indicated a conclusion (of the greatest im- jx>rtance in the consideration of causes) ; namely, that the maximum of economic disturbance has been experienced in those countries in which the employment of machinery, the efficiency of labor, the cost and the standard of living, and the extent of popular education are the greatest ; and the minimum in countries, like Austria, Italy, China, Mexico, South America, etc., where the opposite conditions prevail. These conclusions, which are concurred in by nearly all other investigators, apply, however, more especially to the years prior to 1883, as since then ^^ depression '' has mani- fested itself with marked intensity in such countries as Bossia, Japan, Zanzibar, Uruguay, and Houmania. The business of retail distribution generally — owing, probably, to the extreme cheapness of commodities — does not, moreover, appear to have been less profitable than usual during the so-called period of depression ; in contradistinc- tion to the business of production, which has been generally unprofitable. It is also universally admitted that the years immediately precedent to 1873— i. e., from 1869 to 1872 — constituted a period of most extraordinary and almost universal inflation of prices, credits, and business; which, in turn, has been attributed to a variety or sequence of influences, such as excessive speculation ; excessive and injudicious construction of railroads in the United States, Central Europe, and Rus- sia (1867-73) ; the opening of the Suez Canal (1869) ; the Franco-German War (1870-'71); and the payment of the enormous war indemnity of fifty-five hundred million francs (eleven hundred million dollars) which Germany exacted from France (1871-'73). The contemporary comments of 4 RECENT ECONOMIC CHANGES. two English journals, of recognized authority, on the course of eyents in 1872, constitute also an important contribution to our information on this subject. Under date of March, 1873, the London " Economist," in its review of the com- mercial history of the preceding year, says : Of all events of the year (1872) the profound economic changes generated by the rise of prices and wages in this country, in Central and Western Europe, and in the United States, have been the most full of moment And the London " Engineer,*' under date of February, 1873, thus further comments on the situation : The progress of events during 1872 will not soon be forgotten by engineers. The position assumed by the working-classes, and the un- precedented demand for iron and machinery, combined to raise the cost of all the principal materials of construction to a point absolutely without parallel, if we bear in mind that the advance of prices was not localized, but universal, and that the duration of the rise was not limited to a few months or weeks, but, having extended already over a period of some months, shows little sign at this moment of any sen- sible abatement In 1872 scarcely a single step in advance vxu made in th^science or practice of mechanical engineering. No one had time to invent, or improve, or try new things. The workingman is setting spurs to his employers with no gentle touch, and already we find that every master with capital at stake is considering how best he can dis- pense with the men who give him so much trouble. Of course, the general answer always assumes the same shape — use a tool whenever it is possible instead of a man. The period of economic disturbance which commenced in 1873 appears to have first manifested itself almost simul- taneously in Germany and the United States in the latter half of that year. In the former country the great and successful results of the war with France had stimulated CTcry department of thought and action among its people into intense activity. The war indemnity, which had been exacted of France, had been used in part to pay off the debt obligations of the Government, and ready capital be- came so abundant that banking institutions of note almost EXPERIENCE OP GERMANY IN 1872-'73. 5 begged for the opportnnity to place loans, at rates as low as one per cent, with mannfactnrers, for the purpose of en- larging their establishments. As a legitimate result, the whole country projected and engaged in all manner of new industrial and financial undertakings. Thousands of new concerns were called into existence, the management of which did not give the slightest attention to sound com- mercial principles. In Prussia alone six hundred and eightj-seyen new joint-stock companies were founded dur- ing the year 1872 and the first six months of 1873, with an aggregate capital of $481,045,000. The sudden growth of industries, and the temptations of cities and towns (the sud- den augmentation of which is so striking a feature in the history of Germany after the year 1870), had also induced hundreds of thousands of men and women to desert agri- cultural pursuits and to seek employment in trades. Such a state of things, as is now obyious, was most unnatural, and could not continue; and the reaction and disaster came with great suddenness, as has been already stated, in the fall of 1873, but without anticipation on the part of. the multitude. Great fortunes rapidly melted away, industry became paralyzed, and the whole of Germany passed at once from a condition of apparently great prosperity to a depth of financial, industrial, and commercial depression that had never been equaled. In the United States the phenomena antecedent to the crisis were enumerated at the time to be, " a rise of prices, great prosperity, large profits, high wages, and strikes for higher ; large importations, a railway mania, expanded credit, over-trading, over-building, and high living." The crisis began on the 17th of September, 1873, by the faihire of a comparatively unimportant railway company — the New York and Oswego Midland. On the 18th, the banking- house of Jay Cooke & Co. failed. On the 19th, nineteen other banking-houses failed. Then followed a succession of bankruptcies, until in four years the mercantile failures 6 EECENT ECONOMIC CHANGES. had aggregated $775,865,000 ; and on January 1, 1876, the amount of American railway bonds in default amounted to $789,367,655. The period of economic disturbance which thus began in Germany and the United States soon extended to France and Belgium ; and thereafter, but with varying degrees of seyerity, to Great Britain (i. e., in the latter months of the succeeding year), to the other states of Europe, and ulti- mately to the commercial portions of almost eyery country. The testimony before the British Parliamentary Commis- sion (1885-86), however, shows that the depression in Great Britain was not at once universal ; but that,* on the contrary, production, employment, and profits, at such great manu- facturing centers as Birmingham and Huddersfield, were above the average until 1875. By many writers on this subject, the depression and dis- turbance of industry, which commenced in 1873, are re- garded as having terminated in 1878-'79 ; but all are agreed that they recommenced, with somewhat modified conditions, and even with increased severity, in 1882-'83. A full con- sideration of the larger evidence which is now (1889) avail- able would, however, seem to lead to the conclusion that there really was no termination of the abnormal course of events, and the marked definite commencement of which is assigned to 1873, but that what has been regarded as a "termination" was only an "interruption," occasioned by extraordinary causes, varying locally, and by no means universal. Thus, a failure during the years 1879, 1880, and 1881, of the cereal crops of Europe and most other coun- tries of the world, with the exception of the United States — a failure for which, in respect to duration and extent, there had been no parallel in four centuries — occasioned a remark- able demand on the latter country for all the food-products it could supply at extraordinary prices — the exportations of wheat rising from 40,000,000 bushels in 1877 to 122,000,000 in 1879, 163,000,000 in 1880, and 150,000,000 in 1881 ; while EFFECT OF CROP FAILURES IN EUROPE. 7 the corresponding values of the amount exported rose from $47,000,000 in 1877 to $130,000,000 in 1879, $190,000,000 in 1880, and $167,000,000 in 1881. There was also a corre- qMnding increase in the quantity and value of the Ameri- can exports of other cereals, and also of most meat products and provisions.* Such a demand at extraordinary prices for crops, beyond the average in quantity and quality, brought temporary prosperity to American producers, and induced great in- dustrial and commercial activity throughout the United States; and although the crops of other countries were notably far below the average, yet the great advance in prices undoubtedly went far to alleviate the distress of the foreign agriculturist, even if it did not in some cases actu- ally better his condition and increase his purchasing power of other than food-products. The extent to which the American producer availed himself of his increased purchas- ing power during the years under consideration is indicated by the increase which occurred in the importation of foreign merchandise on the part of the United States, namely, from $437,051,000 in 1878 to $667,954,000 in 1880, and $722,- 639,000 in 1882. Such an increase represented payment in part for American exports ($110,575,000 in gold and silver being imported in addition in 1881), and a corresponding demand for the products of foreign industries — the special eJQtect on British industry being characterized by a statement from one of the witnesses before the Royal Commission (a representative of one of the districts of Liverpool) that " the depression continued until 1880, when there occurred an American boom, which temporarily lifted prices and induced * No. 1 spring wheat, which oommanded $1.05 per bushel in the New York market on the lat January, 1878, was quoted at $1.60 at a corresponding date in 1879 ; and at $1.39 in 1881. The corresponding advance in com was from 45 cents per bushel in 1878 to 68 cents in 1879, and 70 cents in 1831 ; while the adTBDoe in meaa-pork was from $7.05 per barrel in 1878 to $12,621 in 1879, and $17 in 1881« 8 RBCBNT ECONOMIC CHANGEa actiyitj." The testimony of other witnesses was, however, to the effect that in many branches of British industry there was no improvement of condition either in 1878, 1880, or in any subseqaent year ; the Commission itself reporting (in December, 1886) that there was a general agreement among those whom it consulted that the depression under consid- eration, ^' so far as Great Britain was concerned, dates from about the year 1875, and, with the exception of a short period enjoyed by certain branches of trade in the years 1880 to 1883, it has proceeded with tolerable uniformity, and has affected the trade and industry of the country gen- erally, especially those branches connected with agriculture.** The Commission further reported that the information re- ceived by them leads to the conclusion that ^' in Belgium, France, Bussia, Scandinavia, Spain, and the United States," the depression has been '^ almost identical in its leading feat- ures with that existing in the United Kingdom." In Germany and Belgium the reaction experienced in 1879, it is admitted, did not extend beyond 1882. In France the condition of agricultural and other labor- ers continued so deplorable that the French Chamber of Deputies appointed a special commission of inquiry in 1884 with a view to devising measures for relief ; while in Great Britain the condition of trade and industry has uninter- ruptedly been regarded since 1882-'83 with great anxiety. There is a very general agreement of opinion in England and on the Continent of Europe that the years 1879, 1885, and 1886 were the worst that have been experienced in the period commencing with 1873. In England, France, and Germany, the increase or decrease in exports is popularly regarded as an indication of the condition of business, and, assuming 100 to represent the exports for 1883, the decline in the value of the exports of these several countries since that year may be represented as follows: England, 1883, 100 ; 1884, 92-2 ; 1885, 88'5, a falling off in two years of 11-5 per cent The record of France is better — 1883, 100; ILLUSTRATIONS OF BUSINESS DEPRESSION. 9 1884, 93-1; 1885, 92-3, a falling off of 77 per cent; whUe Gennany falls behind both coontries : 1882, 100 ; 1883, 98 ; 1884, 89 ; 1885, 87*5, a falling off of 12*5 per cent The transport of merchandise on all the French railways, calcu- lated in tons carried one kilometre, fell progressively from 11,064,000,000 in 1883 to 8,804,000,000 in 1886 ; the water- carriage of France for the same period, calculated in the same manner, remaining stationary. The extreme depression of business in the United States in 1884-'85 showed itself very curiously in the diminution of the receipts of the postal service of the country. In October, 1883, the rates of letter-postage were reduced from three to two cents per half -ounce. The aggregate receipts fell off — as was to be expected — ^but the deficiency for the second year under the reduced rate was largely in excess of what was experienced the first year, although population had increased by at least a million during the second period. For the year 1887 there was a general concurrence of opinion that the world's business experienced a marked improvement Reviewing the condition of British trade and industry, the London " Economist," in its " Commercial History and Review of 1887," says : That we did a distinctly bigger business than in 1886 there can be DO doabt. Whether it was a more profitable business is another ques- tion, and one which it is more difficult to answer. In certain branches of trade manufacturers did undoubtedly improve their position. It was so in the finished iron trade, in ship-building, in the spinning branches of the cotton trade, in the jute trade, and probably in the woolen trade as a whole. And in other branches, if there is no improvement to record, there was certainly little, if any, retrogression. It appears somewhat anomalous that a year which has witnessed these changes for the better in the general condition of (British) trade should aIso have been characterized by louder complaints of lack of employment for and of distress among our working population. For 1887 the foreign trade of France, calculated on the returns for 1886, showed a small improvement 10 RECENT ECONOMIC CHANGES. On the other hand, the condition of trade and industry in Bussia, which is almost exclusiyely an agricultural and pastoral country, continues, as it has been for recent years, to be one of extreme depression. In the production of wheat she has had to compete with two great competitors, the United States and India, both of which haye had de- cided advantages in the contest. Both the United States and India, too, have gained more by the great reduction in the cost of ocean carriage than has Bussia, which, moreover, has suffered from many special difficulties; her political and economical position having necessitated a considerable increase in taxation, which has added to the cost of produc- tion, while some of her best and most accessible customers have shut out her cereal produce as far as possible by the imposition of high customs duties.* In Spain and Portugal the economic condition of affairs during 1887 and 1888 was reported as most deplorable. In the former country emigration was assuming alarming proportions ; and with a depression alike of agriculture and manufactures, the disposition to gain relief by the exclusion of all foreign competing products, or by further restrictions on foreign trade, was becoming almost universal. During the year 1888, owing to an undoubted expansion of trade and a marked rise in the prices of a few commodi- ties, " which bulk largely in the eyes of the public, there was a general disposition in England to believe that there had been a distinct rise in the general level of prices." Ac- cording, however, to the London " Economist," an examina- tion of all available data failed to confirm any such conclu- sion ; but, on the contrary, showed that, eliminating from the discussion a marked advance in the prices of the two * A striking iUofttration of the oondition of Ruwian cultivaton is sup- plied by the fact that some 80,000 of them have surrenderod their land, find- ing the costs incidental to ownership surimss the profits thereof, while the army of beggars inoludcs in itfl ranks landowners numbered by tens of thou- sands.— Oorreipondenc$ London ^^ £conomidf^^ Aov^mber^ 1881, CHRONOLOGICAL PRESENTATION. H metals lead and copper — which was wholly due to specula- tive influences — ^the general level of prices for 1888 was not materially different from what it was in 1887. For the United States, according to the New York "Commercial Bulletin," there was no recovery of prices, the year 1888 closing with prices fully six per cent lower than at its com- mencement. One point of interest which is here specially worthy of note from its hearing on the discussion of causes, is that the recurrence of the period of depression in 1882, after the favorable reaction which occurred to a greater or less extent in 1879, was quiet and gradual, as if matters were naturally again assuming a normal condition, and was not preceded or accompanied by any marked financial or commercial dis- turbances. On the contrary, the money markets of the world remained "easy," and were characterized, as they have ever since been, by a plethora of capital seeking invest- ment and a low rate of interest ; so that the economic dis- turbance since 1882 has been mainly in the nature of a depression of industry, with a renewed and remarkable de- cline of prices ; with absolutely no decline, but rather an increase in the volume of trade, and certainly no falling off in production, as compared with the figures of 1880 and 1881, which years in the United States, and to some extent in other countries, were regarded as prosperous. The following presentation, chronologically arranged, of brief extracts from various publications since 1872-'73, will further assist to a recollection and comprehension of the course of events since that period, and also exhibit the opinions which have been expressed at different times, re- specting the " influence," " causes," and duration of the so- called " depression of trade and industry," by those who, by position or investigation, have assumed to speak with more or less of authority on the subject And, with this intent, attention is first asked to the following retrospect of the curious experience of the iron and steel industry of the 12 RECENT ECONOMIC CHANGES. United States, as exhibited by quotations from the reports of the American Iron and Steel Association from 1873 to 1887: 1873. The year 1872 opened with an increased demand for iron in nearly all civilized countries. Prices advanced rapidly in all marketSb The supply was unequal to the demand, although production was everywhere stimulated. — Report of the American Iron and Steel Aseo- cicUion, Novemhery 187S, 1874. The reaction (in the world's demand for iron) in 1874 has been as general and decided as the advance in 1872 was unexpected and bewildering. It has been felt most severely in the United States ; but in the United Kingdom, and in France and Germany, the iron industry has been so much depressed, all through the year, that many iron-works have been closed, and many others have been employed but a part of the time. The testimony of statistics, and of all calm observers, shows that prostration is greater at the close of 1874 than it was at the close of 1873, and that the general distress is greater. At least a million of skilled and unskilled workingmen and working- women in this country are out of employment to-day, because there is no work for them to do. — Report, December SI, 181 J^ 1877. Since 1873 each year has shown a decrease in the production of pig-iron in the United States, as compared with the preceding year, the percentage of decrease being as follows : 1874, six per cent ; 1875, fifteen per cent ; 1876, eight per cent This is a very great shrinkage, and indicates, with concurrent low prices, a very great depression in the pig-iron industry of the country. If the rate of decrease which marked the period from 1873 to 1876 were to be continued, the pro- duction of pig-iron in the United States would entirely cease in 1884, less than eight years from the present time, and our furnace-stacks would only be useful as observatories for the study of astronomy. — Report, June, 1887. 1878. More than one half of the furnaces, and many of the rolling- mills, were idle the whole year. Prices were so low as to warrant the impression that they could be no lower. — Report, July, 1878, 1879. In nearly all the branches of the domestic iron and steel in- dustries there has been an increased production in 1878 over 1877; but this increase in production has been accompanied by a decrease in prices. At no time in the history of the country have prices for iron and steel been as low as they were in 1878, excepting in colonial days, when the price of pig-iron was lower. — Report, May 6, 1879. 1880. Near the close of 1878 it became evident that the business EXPERIENCB OP THE IRON INDUSTRY. 13 depiession which had succeeded the panic of 1873 was slowly disap- pearing, and that a general reyival of prosperity was at hand. In the clofiing months of 1879 excitement and speculation took the place of the gloom and discouragement with which the American iron-trade had been so familiar scarce one year before, and the business of buying and selling iron became close neighbor to that of gambling in stocks. Safari, May, 1880. No. 1 pig-iron, which sold for $53 per ton at Philadel- phia in September, 1872, sold for $24 in 1874, $21.25 in 1876, $16.50 in 1878, $41 in February, 1880, and $25 in May, 1880. 1882. The year 1881 was the most prosperous year American iron and steel manufacturers have eyer known. — Report, June, 188S. 1883. The extraordinary activity in our iron and steel industries, which commenced in 1879, culminated early in 1882. The reaction was not sudden, but was so gradual and tranquil that for some time it excited no apprehension. In November and December the market was greatly depressed. At the beginning of December, 1881, the average price of steel rails at the (American) mills was $60 per ton, but in December, 1882, the average price was only $39.* In all the fluctu- ations of iron and steel that have taken place in this country, we know of none so sweeping as this decline in the price of steel rails, if we ex- cept in 1879 and 1880, and many of these were entirely speculative. — Report, May, 1888. The cause of this serious reaction was attributed, in the same report, in great measure to the circumstance that " we had increased our capacity for the production of most forms of iron and steel much faster than the consumptive wants of the country had increased.' »> 1884. Since the publication of the last annual report, in May, 1883, the unsatisfactory condition of the American iron-trade, as it then existed, has not improved. It has steadily grown worse. — Report, May, 188 J^ 1887. The year 1886 was one of the most active years the American • The average price of Befwcmcr steel rails, which commanded $39 per ton at American mills in December, 1882, declined to $23.50 in 18S5. For 18S6 it wai IS4.50; for January, 1887, $81.50. 2 14 EECBNT ECONOMIC CHANGBa iron-trade has ever ezperienoed. The improTement in demand which had commenced in the latter part of 1885 was well maintained through- out the whole of 1886. The production of the year in all the leading branches of the trade was much the largest in our history. The remote causes of the revival in the prosperity of the American iron-trade which began in the last half of 1885, and still continues, may be diffi- cult to discover ; but one influential immediate cause is directly trace- able to the meeting of the Bessemer steel-rail manufacturers in August, 1885, at which meeting a restriction of production for one year to avoid the evils of over-production and ruinous prices was agreed upon. This action was almost immediately followed by beneficial results to the iron-trade of the whole country, and to many other branches of domestic industry. An incident of our industrial history for 1886 was the large number of strikes among workingmen. More American workingmen were voluntarily out of employment in that year than in any previous year. — Report for April, 1887, The year 1887 was the most active yiear in the history of the Ameri- can iron-trade, far exceeding all previous years, including the remark- able year 1886, in the production and consumption of iron and steel in all their leading forms. In two years, from 1885 to 1887, we increased our production of pig-iron fifty-eight per cent ; our production of Bes- semer steel ingots, ninety-three per cent ; our production of Bessemer steel rails, one hundred and nineteen per cent ; and our production of open-hearth steel ingots, one hundred and forty-one per cent. These figures tell a story of truly wonderful progress, such as has been wit- nessed in no other great industry in this country, and in no other iron- making country. — Report for May, 1888, The report for January, 1889, may be regarded as in the nature of a natural sequence from the antecedent conditions above reported. There was a decline in the aggregate production of iron and steel in 1888 as compared with 1887, and there was a shrinkage in prices ; so that the year was not a prosperous one for our iron and steel manu- factures, although production was still very large. We did not con- sume as much pig-iron as in 1887. The shrinkage in consumption of Bessemer steel rails in 1888, as compared with 1887, was 790,180 gross tons ; the greatest that has occurred since the collection of the sta- tistics of these industries was undertaken. No. 1 anthracite pig-iron at Philadelphia declined within the year from $21 to $18 per ton ; steel rails from $31.50 to $27.50. EVIDENCES OP BUSINESS DEPRESSION. 15 The following extracts from published statements and opinions are more general in their nature, but not less in- stmctive : 1876. Our country is now passing through a period of unusual depression, both in its industries and its business. The present de- pressed condition of business and of financial affairs exists over all countries haying a high civilization. — Fcicts and Observationa ad- dresaed to the Committee on Finance of the Mutual Life-insurance Company of New York, July, 1876, Printed for the Private Conven- ience of the Trustees, 1876. The inquiry has been sufficiently broad to enable them (the committee) to point out with a considerable degree of accuracy the causes which have immediately operated to produce the present de- pression in the commerce of the country, and in some branches of its manufacturing and mining industries. These causes are quite beyond l^islative control in this country. — Report of Select Committee of the House of Commons, Dominion of Canada, 1876, 1877. Hard times I For four years this sober pass-word has gained in graTity of import. For a time it was panic ; but suppositions of speedy recovery have given place to a conviction of underlying facts that these hard times are more than a panic ; that the existing de- pressions of trade and dearth of employment are not, in popular appre- hension, exaggerated, but are the serious results of causes more perma- nent in their nature than is generally considered. — Hard Times, by Franklin TT. Smith, Boston, 1877, James R, Osgood & Co, Congress of the United States, House of REPRBSEirTATiyES, June 17, 1878. 1878. Mr. Thompson submitted the following resolution, which was agreed to: Wfiereas, labor and the productive interests of the country arc greatly depressed, and suffering severely from causes not yet fully imderstood, etc. : Therefore, Resolved, That a committee of seven members of this House be appointed, whose duty it shall be to inquire into and ascertain the causes of general business depression, etc., and report at the next ses- sion. 1878. Commercial depression is the universal cry — a commercial depression probably unprecedented in duration in the annals of trade, except under the disturbing action of prolonged war. . . . Ample evi- dence abounds on all sides to show its extent and severity in England. b. 16 RECENT ECONOMIC CHANGES. Have other countries bowed their heads in suffering under the com- mercial depression t Let America be the first to speak. In 1873 she experienced a shock of the most formidable kind. She has not recov- ered from the shock at this very hour. Let us visit Germany — Ger- many the conqueror in a great war, and the exactor of an unheard-of indemnity. What do we find in that country! Worse commercial weather at this hour than in any other. Nowhere are louder com- plaints uttered of the stagnation of trade. Austria and Hungary re- peat the cry, but in a somewhat lower voice." And so we come round to France, the people whose well-being has been so visited with the most violent assaults. Her losses and sufferings have surpassed those endured by any other nation. Yet the deep, heavy pressure of her commercial paralysis has weighed upon her the least oppressive of alL Such a depression, spread over so many countries, inflicting such con- tinuous distress, and lasting for so long a period of time, the history of trade has probably never before exhibited. — Bonamt Price, Cof^ temporary Review^ 1878, 1879. The prevailing depression in business from which this coun- try has suffered for six years, and from which nearly every country in Europe is suffering still, has probably furnished support to a greater number of conflicting economical theories than any other occurrence of ancient or modem times. . . . The result, we need hardly say, has not been to raise the reputation of political economy as a science. In fact, it has never seemed so little of a science as during the past five years, owing to the extraordinary array of proof and illustration which the holders of the most widely divergent views have been able to pro- duce.—7%^ Nation {New York), May, 1879, 1879. We have just passed through a period of depression, of which, though it came in perfect agreement with all past experiences, was complicated by such an exceptional conglomeration of untoward cir- cumstances, and protracted to such a weary length, that men seemed to lose faith in the revival which was almost certain to come sooner or later, and began to ask whether the commercial supremacy of this country was not permanently undermined. And now, with the new decade, the revival is really here. — The Recent Depression of Trade, being the Oxford Cobden Prize Essay for 1879, by Walter E, Smithy London, Trubner & Co,, 1880, 1881. The industrial depression is generally thought to have com- menced in the closing months of 1874, and it increased in intensity throughout 1876 and 1877.— iVo/. Henry Fawcett, " Free Trade and Protection'^ London, 1881. 1885. The present depression of trade is remarkable, not so much EXTENT AND INTENSITY OP DEPRESSION. 17 for its intensitj or for its extent — in both of which respects it has been equaled or surpassed on previous occasions — but for its persistence during the long period of eleven years. The industrial depression is generally thought to have commenced in the closing months of 1874 ; and, during every succeeding year, it has continued to be felt with more or less severity, and its remarkable persistence has been com- mented on by politicians and public writers. Usually a period of de- pression is quickly followed by one of comparative prosperity. Such a reaction has been again and again predicted in this case, but, up to the present time, there are no satisfactory indications that the evil days are passing away. It is evident, therefore, that we are suffering in an altogether exceptional manner; that the disease of the social organism is due to causes which have not been in action on former occasions, and that the remedial agencies which have been effective on former occasions have now failed us. — Bcui TimeSy an Essay on the Pteseni Depresnan of Ihide, by Alfred Eussel WaUcLce, London, Oc- tober, 1885. The following are notable extracts from the testimony presented to the Boyal (British) Commission, appointed Aagost, 1885, to inquire into the depression of trade and industry, and embodied in their reports submitted to Parlia- ment in 1885-'86 : 1885. At the present time a general depression of trade and indus- try is stated to exist throughout Italy. While, however, depression is general, it does not act uniformly on all industries. — Testimony of Ellis Colnaghi, Her Majesty's Consul-Oeneral at Florence, October 8, 1885, The depression began full ten years ago, and still continues. — Tes- timony of the Linen Merchants^ Association of Belfast, Ireland, No- vember, 1885, The origin of the depression from which we suffer, and which is at the lowest point yet reached, seems to be a reaction from the ooal-famine period of 1872-'74, and which was perhaps due to the inflation consequent on the Franco-German War in 1870. The prog- ress of depression has been irregular, but with a persistent downward tendency since 1874 The present tendency is still downward. — Testi- mony of the North of England Iron Manufacturer^ Association, Sep- tember, 1885. The depression has been increasing in intensity during the last four years. It was probably never greater than at present at this 18 RECENT ECONOMIC CHANGES. season of the year. — TesHmany of the British Paper-Makert^ Auocia- Hon, September^ 1885. Trade began to be depressed in 1876, and has continued so unti] the year 1883, with intermittent spurts of improYement. But from the end of 1883 the depression has become increasingly acute. — Testi- mony of North Staffordshire Chamber of Commerce, October £1, 1885, As a proof of the deplorable state this trade [woolen-yam spinning, Huddersfield, England] has been in for the last ten or fifteen years, we most respectfully beg to inform you, we hold the list of fifty firms of spinners who have been ruined and brought into bankruptcy court during that period. Another proof of the very serious state of trade here is to be found in the depreciated value of carding and spinning machinery. Good machines, and for all practical purposes equal to new, if brought into the market will only realize some thirty or forty per cent of their cost price. Mill property is also in a similar posi- tion.— Report of the Huddersfieid (England) Chamber of Commerce, October, 1885. 1886. Out of the total number of establishments, such as factories, mines, etc., existing in the country [the United States], about eight percent were absolutely idle during the year ending July 1, 1885, and perhaps five per cent more were idle a part of such time ; or, for a just estimate, seven and a half {jer cent of the whole number of such estab- lishments were idle, or equivalent to idle, during the year named. . . . Making allowance for the persons engaged in other occupations, 998,- 839 constituted " the best estimate " of the possibly unemployed in the United States during the year ending July 1, 1885 (many of the unem- ployed, those who under prosperou:? times would be fully employed, and who during the time mentioned were seeking employment), that it has been possible for the Bureau to make. ... A million people out of employment, crippling all dependent upon them, means a loss to the consumptive power of the country of at least $1,000,000 per day, or a crippling of the trade of the country of over $300,000,000 per annum. — Report on Industrial Depression, United States Bureau of Labor, 1886. 1886. The present crisis has a much more general character than any of the crises which have preceded it ; because it is a part of an abrupt transformation in the production and circulation of the whole world. For the same reason, it is destined to last longer. — M. Leroy Beaulieu, Revue des Deux Mondes, 1886. Summarizing very briefly the answers which we received to our questions and the oral evidence given before us, there would ap(x^ar to be a general agreement among those we consulted : SPECULATION AS TO CAUSES. 19 a. That the trade and industry of the country are in a condition which may be fairly described as depressed. 6. That by this depression is meant a diminution, and, in some cases, an absence of profit, with a corresponding diminution of employ- ment for the laboring-classes. e. That neither the volume of trade nor the amount of capital invested therein has materially fallen off, though the latter has in many cases depreciated in value. d. That the depression above referred to dates from about the year 1875, with the exception of a short period of prosperity enjoyed by certain branches of trade in the years 1880 to 1883. — Report of Briti^ Commission, December, 1886. There is one condition revealed— i. e.,by the statistics of 1885-'86 — that is very noticeable ; which is, that prices in general touched the lowest point in a quarter of a century. There were those who sup- posed that the shrinking processes had been arrested in the preceding year, and yet the figures for 1885-'86, in nearly all departments of business, show lower prices than the previous year. — Report of the Chamber of Commerce, Cincinnatiy 1886, It is of interest to note how few, relatively, of the staples, raw ma- terials or finished products, have left the year 1886 with any special gain in price as compared with one year or with two years ago, and it is even more striking to enumerate the list of those which show actu- ally no gain at all, or a loss in price. — BradstreeVa Journal, January, 1881. Wheat, oats, sugar, butter, tobacco, and petroleum were lower in price at the close of 1886 than at the close of 1885. Com, oats, pork, lard, and cotton were lower at the close of 1876 than at the beginning of 1885.— iW(i. For conditions of trade for the year 1887 and 1888, see Chapter IV. It is almost unnecessary to say that a subject of such transcendent importance, and affecting so intimately the material interests alike of nations and individuals, has nat- urally attracted a great and continually increasing attention throughout the whole civilized world, entailing at least one notable result, namely, that of a large and varied contribu- tion to existing economic literature. Thus, state commis- dons for inquiring into the phenomena under consideration have been instituted by Great Britain, the United States, 20 RECENT ECONOMIC CHANGES. France, Italy, and the Dominion of Canada, all of which have taken evidence and reported more or less voluminously ; the report of the Eoyal British Commission (1885-'86), comprising five folio volumes of an aggregate of about 1,800 pages ; while the books, pamphlets, magazine articles, and reviews on the same subject, including investigations and discussions on collateral matters regarded as elements or results of the economic problem (such as the wide-spread ferment and discontent of labor, and the changes in the monetary functions of gold and silver), which have ema- nated from individuals or commissions, have been suffi- ciently numerous to constitute, if collected, a not inconsid- erable library. In all these investigations and discussions, the chief ob- jective has been the recognition or determination of causes ; and most naturally and legitimately, inasmuch as it is clear that only through such recognitions and determinations can the atmosphere of mystery which to a certain extent envel- ops the phenomena under consideration be dispelled, and the way prepared for an intelligent discussion of remedies. And on this point the opinions or conclusions expressed have been widely and most curiously different Nearly all investigators are agreed that the wide-spread and long-con- tinued " depression of business " is referable not to one but a variety of causes, which have been more or less influential ; and among such causes the following are generally regarded as having been especially potential : " Over-production " ; " the scarcity and appreciation of gold," or " the deprecia- tion of silver, through its demonetization " ; " restrictions of the free course of commerce " through protective tariffs on the one hand, and excessive and unnatural competition occasioned by excessive foreign imports contingent on the absence of " fair" trade or protection on the other; heavy national losses, occasioned by destructive wars, especially the Fmnco- Prussian War; the continuation of excessive war expenditures ; the failure of crops ; the unproductive- CURIOUS DIVERSITY OP OPINIONS. 21 ness of foreign loans or investments ; excessive speculation and reaction from great inflations ; strikes and interruption of production consequent on trades-unions and other organi- zations of labor ; the concentration of capital in few hands, and a consequent antagonizing influence to the equitable diffusion of wealth; "excessive expenditures for alcoholic beverages, and a general improvidence of the working-class- es." A Dutch committee, in 1886, found an important caose in ** the low price of German vinegar." In Germany, in 1886-'88, the continuance of trade depression has been assigned in a great measure to the " inflammable condition of international affairs," and to " looming war " ; although the great decline in the price of beet-root sugar, and the " immigration of Polish Jews," are also cited as having been influentiaL In the investigations undertaken by committees of Con- gress in the United States, the causes assigned by the various witnesses who testified before them were comprised under no less than one hundred and eighty heads ; and an almost equal diversity of opinion was manifested by the witnesses who appeared before the Royal (British) Commission.* The special causes to which a majority of the Commission itself attached any great degree of importance, stated in the order presented by them, are as follows : 1. Changes in the distribution of wealth — i. e., in Great Britain ; 2. Natural tendency to diminution in the rate of profit consequent on the progressive accumulation of capital ; 3. Over-produc- tion ; 4 Impairment of agricultural industry consequent on bad seasons, and the competition of the products of other * The BirmmghAm Chmnber of Commerce attributed it in great part to Gennan and Bel^^an competition, to foreign import duties on home-manu- facCnred goods exported abroad, and exorbitant railway rates ; the Hartlepool Chamber to foreign competition ; Manchester, the same ; Leeds, *' to foreign tarifb " ; Liverpool, to a loss in a once large re-export trade in cotton ; Wol- Terhampton, to changes in the hours of lab<^r resulting from the operation of the Factory, Workshop, and Education Acts, and the action of Uie various tradca-oniooB. Kt 22 RECENT ECONOMIC CHANGES. soils which can be cultivated under more favorable condi- tions; 5. Foreign tariffs and bounties and the restrictive commercial policies of foreign countries ; 6. The working of the British Limited Liability Act. In addition to these special causes, others of a general character were mentioned ; such as ^' the more limited possibilities of new sources of demand throughout the world, and the larger amount of capital seeking employment " ; " the serious fall in prices " ; " the appreciation of the standard of value " so far as con- nected with the fall of prices and foreign competition. A respectable minority of the commission also included, in the list of principal causes, the effect of British legislation, regu- lating the hours and conditions of labor on the cost of pro- duction as compared with other countries ; and the discrimi- nations given by British railways to foreign producers in the conveyance of goods. It would seem as if one could not acquaint himself to any considerable extent with the great body of literature on this subject of the recent depression of trade, without be- coming impressed with the tendency of many writers and investigators of repute, and of most of the persons who have given testimony before the commissions of different countries, to greatly magnify the influence of purely local causes. "The real and deep-seated cause of all our dis- tress," says the "Oxford Prize Essay "for 1879, "is this: the whole world is consuming more than it has produced, and is consequently in a state of impoverishment, and can not buy our wares." Nearly all British writers dwell upon the immense losses to British farming capital, contingent upon deficient crops since 1875, and the decline in the value and use of arable land in the United Kingdom, and concurrent decline in the price of agricultural produce, due to foreign competitive supplies, as prime factors in accounting for trade depression ; while, throughout much of the testimony given before the British Commission by British manufacturers and mer- TENDENCY TO MAGNIFY LOCAL INPLUENCEa 23 chants, the injurious influence of hostile foreign tarifts on the exports of British manufactures, and the competition of foreign manufactures in the British home market, are con- tinuallj referred to as having been especially productive of industrial disturbance. In France, the principal assigned causes are, excessive speculation prior to 1873, followed by bad crops ; the great falling off in the production of wine through the destruction of vineyards by the phylloxera ; * a serious depression of the silk-trade industry ; the disap- pearance of sardines and other fish from the coast of Brit- tany ; excessive taxation ; excessive increase in manufactured products ; and restricted markets due to the competition of foreign nations paying less wages. Li Italy a succession of bad crops, a disease among the sUk-worms, and a stagnation of the silk industry, are prominently cited ; in Denmark, bad harvests, a disturbed state of internal politics, an altera- tion in the metallism of the country in 1873, and general over-production of manufactured products, are popularly assigned as sufficient causes; and in Germany, in recent years, to fears of international disturbances and decline in the prices of beet-root sugar. Excessive taxation upon trade and industry, as a leading cause of trade depression, has also found strong advocacy, and the evidence brought forward is certainly impressive. The annual burden of taxation in Europe for military and * A writer in the " EcoDomiste Francis '^ (18S8) estimates the total loss to France from the ravages of the phylloxera since 1875, when this scoui^ of the French vinejafds first made its appearance, at the enormoos sum of 10,000,000,000 francs, or about $2,000,000,000 ; a sum nearly double the amoimt of the war indemnity of 1871. This estimate is based upon French official ttattatics giving the aggregate area of vineyards destroyed in the country about 2,500,000 acres, and, on the assumption that, in addition to the acreage of vines thus utterly destroyed, the extent of vineyards more or less infested with the phylloxera amounts to about 500,000 acres, making thus together 8,000,000 acres. This calamity has followed very closely upon the losses of the war, which, in addition to the indemnity, were very great ; and has also been ooncorrent with a great increase m public expenditures and in national taxation every year since ihsii period. 24 RECENT ECONOMIC CHANGE& naval purposes at the present time is estimated as at least £200,000,000 ($1,000,000,000). In France, the complaints as to the pressure of taxation on industry are universal. The imperial taxation in 1884 was reported at £120,000,000 ($600,000,000) on a population of 37,000,000. Local tax- ation in France is also very heavy, the octroi duties for Paris alone for the year 1884 having amounted to 139,000,000 francs ($27,800,000), in addition to which were other heavy municipal taxes, as, for example, on carriages, horses, cabs, dogs, market-stalls, funerals, clubs, canals, the keeping of shops, and other commodities and occupations. — Testimony of J. A, CrowBy British Commission. In Italy, according to the British consul-general at Flor- ence (British Commission), the income-tax in 1884 was above thirteen per cent, and the land-tax in some instances as high as twenty-five per cent upon the gross rental. These are independent of local taxation, included in which is the octroi^ which is also described as " very onerous, and, not being confined to articles of food only, have raised a quan- tity of smaU internal barriers, which, in a minor degree, re- place the customs barriers of the several small states into which the country was formerly divided." In respect to Great Britain, the British Commission, as the result of their investigations into this matter, says : " Of the fact of the increase, especially of local taxation, there is no doubt. At the same time it will probably be found that, relatively to the population and wealth of the country, the burden of taxation is now far lighter than in any previous periods." The published opinions of certain persons of note on the subject are also worthy of attention. Mr. Alfred Russel Wallace, in his book entitled " Bad Times," London, 1885, expresses the opinion that among the most efficient causes for the current depression of trade are " wars and excessive armaments, loans to despots or for war purposes, and the accumulation of vast wealth by individuals." THE RECOGNITION OF A CAUSE UNIVERSAL. 25 Dr. Wirth, of Vienna, finds a like explanation in the ex- cessiye conversion, or rather perversion, of private wealth for public purposes. Dr. Engel, of Berlin, regards the mill- ions wasted in war by France and Germany, from 1870 to 1871, and continued and prospective expenditures for like purposes, as culminating causes of almost universal business calamities ; while, in the opinion of Prof. Thorold EogersA the scarcity and consequent deamess of gold have been the J factors of chief importance. But side by side with all the theories that the " depres- sion " has been occasioned by the destruction or non-pro- duction of vast amounts of property by wars, bad harvests, strikes, loss of capital by employment in worthless enter- prises, the conversion of an undue amount of circulating cap- ital into fixed capital, and extravagant consumption, should be placed the facts that statistics not only fail to reveal the existence of any great degree of scarcity anywhere, but, on the contrary, prove that those countries in which depression has been and is most severely felt are the very ones in which desirable commodities of every description — railroads, ships, houses, live-stock, food, clothing, fuel, and luxuries — have^ year by year been accumulating with the greatest rapidity, and offered for use or consumption at rates unprecedented for cheapness. If lack of capital, furthermore, by destruction or perversion, had been the cause, the rate of profit on the use of capital would have been higher ; but the fact is, that the rate of profit on even the most promising kinds of capital during recent years has been everywhere exceptionally low. Another notable tendency among investigators is to as- sign to clearly secondary causes or results, positions of primary importance. Thus (general) over-production,* or an amount * No term has been used more loosely in the discussion of this subject of trade depression than that of " over-production.^^ The idea that there can be such a thing as a general production of useful or desirable commodities^ in excess of what is wanted b an absurdity ; but there may be, as above stated, ■n amount of production in excess of demand at remunerative prices, or, what y 26 RECENT ECONOMIC CHANGES. of production of commodities in excess of demand at remu- nerative pricey finds greater favor as an agency of current economic disturbance than any other. But surely all nations and people could not, with one accord and almost concur- rently, have entered upon a course of unprofitable produc- tion without being impelled by an agency so universal and so irresistible as to almost become invested with the charac- ter of a natural law ; and hence over-production obviously, in any broad inquiry, must be accepted as a result rather than a cause. And so, also, in respect to ^^ metallism " and the enactment of laws restrictive of commerce ; for no one can seriously suppose that silver has been demonetized or tariffs enacted inadvertently, or at the whim and caprice of individuals, with a view of occasioning either domestic or international economic disturbances ; but, on the contrary, the only reasonable supposition is, that antecedent condi- tions or agencies have prompted to action in both cases, by inducing a belief that measures of the kind specified were in the nature of safeguards against threatened economic evils, or as helps to, at least, local prosperity. And as crop failures, the ravages of insects, the diseases of animals, the disappearance of fish, and maladministration of govern- ment, are local and not necessarily permanent, they must all clearly, in any investigation, be regarded as secondary and not primary agencies. In short, the general recognition, by all investigators, that the striking characteristic of the eco- nomic disturbance that has prevailed since 1873 is its univer- sality, of necessity compels a recognition of the fact that the agency which was mainly instrumental in producing it could not have been local, and must have been universal in its in- fluence and action. And the question of interest which next presents itself is. Can any such agency^ thus operative and thus potential, be recognized ? Let us inquire. is BubstantiaUy the Bamo things an exoees of capacity for production ; or tbo term may bo properly ueod to indicate a check on the distribution of products confioqnont on the existenoe of sucli oonditions. II. The place in history of the years from 1860 to 1885 inclusive — New conditions of prodoction and distribution — The prime factors of economic disturb- anoe— DlostTBtiTe examples — The Suez Canal — Influences of the telegraph on trade — Economy in the construction and mana^ment of Tessels — Diii- appearance of the sailing-vessel — Revolution in the carrying-trade on land — The annual work service of the railroad — The Bessemer steel rail — Future supply of food commodities — Cheapening of iron — Displacement of labor by machinery — Natural gas — Application of machinery to the production and transportation of grain — Adam Smith and the mannfacture of pins — The epoch of efficient machinery production — ^Influence of labor disturbances on inventions — ^Prospective disturbing agencies — Displace- ment of the steam-engine. Whek the historian of the future writes the history of the nineteenth century he will doubtless assign to the period embraced by the life of the generation terminating in 1885, a place of importance, considered in its relations to the in- terests of humanity, second to but very few, and perhaps to none, of the many similar epochs of time in any of the cent- uries that have preceded it ; inasmuch as all economists who have specially studied this matter are substantially agreed that, within the period named, man in general has attained to such a greater control over the forces of Nature, and has so compassed their use, that he has been able to do far more work in a given time, produce far more product, measured by quantity in ratio to a given amount of labor, and reduce the effort necessary to insure a comfortable sub- sistence in a far greater measure than it was possible for him to accomplish twenty or thirty years anterior to the time of the present writing (1889). In the absence of BuflSciently complete data, it is not easy, and perhaps not 28 RECENT ECONOMIC CHANGEa possible, to estimate acenrately, and specifically state the average saving in time and labor in the world's work of pro- duction and distribution that has been thus achieved. In a few departments of industrial effort the saving in both of these factors has certainly amounted to seventy or eighty per cent ; in not a few to more than fifty per cent.* Mr. Edward Atkinson, who has made this matter a special study, considers one third as the minimum average that can be accepted for the period above specified, f Other authorities are inclined to assign a considerably higher average. The deductions of Mr. William Fowler, Fellow of University College, London, are to the effect that the saving of labor since 1850 in the production of any given article amounts to forty per cent; J and the British Eoyal Commission * Aooording to the United States Bureau of Laboj (report for 1886), the gain in the power of production in some of the leading indu^triea of the United States *^ during the pa»t fifteen or twenty years," as measured by the displaoo- ment of the muscular labor formerly employed to effect a given result (i. e., amount of product) luis been as follows : In the manufacture of agricaltural implements, from fifty to seventy per cent; in the manufacture of shoes, eighty per cent ; in the manufacture of carriages, sixty -five per cent ; in the inanufocturo of machines and machinery, forty per cent ; in the silk-nuuiu- facture, fifty per cent, and so on. t In a print-cloth factory in New England, in which the conditions of pro- duction were analyzed by Mr. Atkinson, the product per hand was found by liim to have advanced fh)m 26,531 yards, representing 8,382 hours' work In 1871, to 32,391 yards, representing 2,695 hours' work, in 1884 — an increase of twenty-two per cent in product, and a decrease of twenty per cent in hoars of labor. Converted into cloth of their own product, the wages of the operatives in this same mill would have yielded them 6,205 yards in 1871, as compared with 9,737 yarxls in 1884 — an increase of 56^ per cent. During the same period of years the prices of beef, pork, flour, oats, butter, lard, cheese, and wool in the United States declined more than twenty- five per cent. A like investiiration by the same authority of an iron-furnace in Pennsyl- vania showed that, comparing the results of the five years from 1860 to 1864 with the five years fVom 1875 to 1879, the product per hand advanced from 776 tons to 1,219 tons; that the gross value of the product rvmained about the same ; that the number of hands was nnluced from seventy-six to seventy- one ; and that consumers gained a benefit of reduction in price from $27.96 per ton to $19.08. ; *' Wages have greatly increased, but the cost of doing a given amount of THE PLACE IN HISTORY OP THE YEARS 186a-'85. 29 (minority report, 1886) characterizes the amount of labor required to accomplish a given amount of production and / transport at the present time as incomparably less than was requisite forty years ago, and as " being constantly reduced." But be this as it may, out of such results as are defi- nitely known and accepted have come tremendous industrial and social disturbances, the extent and effect of which — and more especially of the disturbances which have culmi- nated, as it were, in later years — it is not easy to appreciate without the presentation and consideration of certain typical and specific examples. To a selection of such examples, out of a large number that are available, attention is accordingly next invited. Let us go back, in the first instance, to the year 1869, when an event occurred which was probably productive of more immediate and serious economic changes — industrial, commercial, and financial — than any other event of this century, a period of extensive war excepted. That was the opening of the Suez Canal. Before that time, and since the discovery by Vasco da Gama, in 1498, of the route to India by the Cape of Good Hope, all the trade of the Western hemispheres with the Indies and the East toiled slowly and nncertainly around the Cape, at an expenditure in time of from six to eight months for the round voyage. The con- tingencies attendant upon such lengthened voyages and Bcrvice, as the possible interruption of commerce by war, or failure of crops in remote countries, which could not easily be anticipated, required that vast stores of Indian and Chi- nese products should be always kept on hand at the one spot in Europe where the consumers of such commodities could speedily supply themselves with any article they re- quired ; and that spot, by reason of geographical position work has greatly decreased, so that five men can dow do the work which would have demanded the labor of eight men in 1850. If this be correct, the aarini^ of labor i» forty per cent in producing any given article." — Appreciation of Gdd^ Wllliam Fowleb, Fellow of UnivtriUy CoUege^ London^ 1886. 80 RECENT ECONOMIC CHANGES. and commercial advantage, was England. Out of this con- dition of affairs came natorallj a vast system of warehousing in and distribation from England, and of British banking and exchange. Then came the opening of the canaL What were the results? The old transportation had been per- formed by ships, mainly sailing-vessels, fitted to go round the Cape, and, as such ships were not adapted to the Suez Canal, an amount of tonnage, estimated by some authorities as high as two million tons, and representing an immense amount of wealth, was virtually destroyed.* The voyage, in place of occupying from six to eight months, has been so greatly reduced that steamers adapted to the canal now make the voyage from London to Calcutta, or vice versa^ in less than thirty days. The notable destruction or great im- pairment in the value of ships consequent upon the con- struction of the canal did not, furthermore, terminate with its immediate opening and use ; for improvements in marine engines, diminishing the consumption of coal, and so ena- bling vessels to be not only sailed at less cost, but to carry also more cargo, were, in consequence of demand for quick and cheap service so rapidly effected, that the numerous and expensive steamer constructions of 1870-'73, being unable to compete with the constructions of the next two years, were nearly all displaced in 1875-'76, and sold for half, or less than half, of their original cost. And within another decade these same improved steamers of 1875-'76 have, in turn, been discarded and sold at small prices, as unfit for the service of lines having an established trade, and replaced with vessels fitted with the triple-expansion engines, and saving nearly fifty per cent in the consumption of fuel. And now " quadruple-expansion " engines are beginning to * ^^ Tho canal may therefore be Bud to have ^vcn a death-blow to Bailin>^- vesaelH, except for a few Bpodal purpoaen.*' — From a paper by Charles Ma^- niao, indoraod by the ^^ London Eoonomist" as a merchant of eminence and experience, entitled to speak with autliority, road before the Indian bection of the London Society of Arta, February, 1876. A ECONOMIC INFLUENCE OF THE SUEZ CANAL. 31 be introduced, and their tendency to sapplant the ^^ triple expansion " is ^ unmistakable." In all commercial history, probably no more striking illostration can be found of the economic principle, that nothing marks more clearly the rate of material progress than the rapidity with which that which is old and has been considered wealth is destroyed by the results of new inyen- tions and discoyeries.* Again, with telegraphic communication between India and China, and the markets of the Western world, permit- ting the dealers and consumers of the latter to adjust to a nicety their supplies of commodities to varying demands, and with the reduction of the time of the voyage to thirty days or less, there was no longer any necessity of laying up great stores of Eastern commodities in Europe ; and with the termination of this necessity, the India warehouse and distribution system of England, with all the labor and all the capital and banking incident to it, substantially passed away. Europe, and to some extent the United States, ceased to go to England for its supplies. If Austria wants any- thing of Indian product, it stops en route^ by the Suez Canal, at Trieste ; if Italy, at Venice or Genoa ; if France, at Marseilles ; if Spain, at Cadiz. How great has been the disturbance thus occasioned in British trade is shown by the following figures : In 1871 the total exports of India were £57,556,000, of which £30,737,000 went to the United Kingdom ; but in 1885, on a total Indian export of £85,- 087,000, the United Kingdom received only £31,882,000. During the same time the relative loss on British exports to India was less than a million and a half sterling. As a rule, also, stocks of Indian produce are now kept, * ** In the la«t analvflis it will appear that there is no such thing as fixed capital ; there is nothing nseful that is very old except the prcciou.^ metals, •imI an life consi^tts in the oonvereion of forces. The only capital which is of permanent value is immaterial— the experience of generationB and the dovel- meot of science." — Eowaso Atkiksok. 32 RECENT ECONOMIC CHANQE& not only in the countries, but at the very localities of their production, and are there drawn upon as they are wanted for immediate consumption, with a greatly reduced employ- ment of the former numerous and expensive intermediate agencies.* Thus, a Calcutta merchant or commission agent at any of the world's great centers of commerce contracts through a clerk and the telegraph with a manufacturer in any country — it may be half round the globe removed — ^to sell him jute, cotton, hides, spices, cutch, linseed, or other like Indian produce, f An inevitable steamer is sure to be in an Eastern port, ready to sail upon short notice ; the merchandise wanted is bought by telegraph, hurried on * In illustration of this curious point, attention is asked to the foUowing extract f^om a review of the trade of British India, for the year 1886, ftt>m the " Times," of India, published at Bombay : *^ What the mercantile oommu- nity " — i. e., of Bombay — " has suffered and is suffering fVonif is the very nar- row margin which now exists between the producer and consumer. Twenty years ago the laige importing houses held stocks, but nowadays nearly ever}*- thing is sold to arrive, or bought in execution of native orders, and the bazaar dealers, instead of European importers, have become the holders of stocks. The cable and canal have to answer for the transformation ; while the ease with which flinds can be secured at home by individuals absolutely destitute of all knowledge of the trade, and minus the capital to work it, has resulted in the diminution of profits both to importers and to bazaar dealers." t Familiar as are the public generally with the operations of the telegraph and the changes in trade and commerce oonscquent upon its submarine exten- eion, the following incident of personal experience may present certmn feat- ures with which they are not acquainted : In the winter of 1884 the writer journeyed from New York to Washington with an eminent Boston merchant engaged in the Calcutta trade. Calling upon the merchant the same evening, after arrival in Washinfrton, he said : " Here is something, Mr. , that may interest you. Just before leaving State Street, in Boston, yesterday forenoon, I telegraphed to my agent in Calcutta, * If you can buy hides and gunny-bags at — price, and find a vessel ready to charter, buy and ship.' When I arrived here (Washington), this afternoon (4 p. m.), I found awaiting me this telegram from my partner in Boston, covering another from Calcutta, received in answer to my dispatch of the previous day, which read as follows : * Hides and gunny- bags purchased^ vessel chartered., and loading begun.'* " Here, then, as an every-day occurrence, was the record of a tmnsaction on the other side of the globe, the correspondence in relation to which traveled a distance equivalent to the entire circumference of tlie globe, all completed in a space of little more than twenty-four hours ! CHANGES IN EAST INDIAN COMMERCK 33 board the ship, and the agent draws for the price agreed upon, through some bank with the shipping documents. In four weeks, in the case of England, and a lesser time for coantries intermediate, the shipment arrives ; the manu- facturer pays the bill, either with his own money or his banker's ; and, before another week is out, the cotton and the jute are going through the factory ; the linseed has been converted into oil, and the hides in the tannery are being transformed into leather. Importations of East Indian produce are also no longer confined in England and other countries to a special class of merchants ; and so generally has this former large and special department of trade been broken up and dispersed, that extensive retail grocers in the larger cities of Europe and the United States are now reported as drawing their supplies direct from native dealers in both China and India. Another curious and recent result of the Suez Canal construction, operating in a quarter and upon an industry that could not well have been anticipated, has been its effect on an important department of Italian agriculture — namely, the culture of rice. This cereal has for many years been a staple crop of Italy, and a leading article of Italian export — the total export for the year 1881 having amounted to 83,598 tons, or 167,196,000 pounds. Since the year 1878, however, rice grown in Burmah, and other parts of the far East, has been imported into Italy and other countries of Southern Europe in such enormous and continually increasing quan- tities, and at such rates, as to excite great apprehensions among the growers of Italian rice, and largely diminish its exportation — the imports of Eastern rice into Italy alone having increased from 11,957 tons in 1878 to 58,095 tons in 1887. For France, Italy, and other Mediterranean ports east, the importation of rice from Southern Asia (mainly from Burmah) was 152,147 tons in 1887, as compared with about 20,000 tons in 1878. That the same causes are also exerting a like influence 28 RECENT ECONOMIC CHANGES. possible, to estimate accurately, and specifically state the average saving in time and labor in the world's work of pro- duction and distribution that has been thus achieved. In a few departments of industrial effort the saving in both of these factors has certainly amounted to seventy or eighty per cent ; in not a few to more than fifty per cent.* Mr, Edward Atkinson, who has made this matter a special study, considers one third as the minimum average that can be accepted for the period above specified, f Other authorities are inclined to assign a considerably higher average. The deductions of Mr. William Fowler, Fellow of University College, London, are to the effect that the saving of labor since 1850 in the production of any given article amounts to forty per cent; J and the British Eoyal Commission « * Aooording to tho United States Bureau of Laboj (report for 1886), the gain in the power of production in some of the leading induiitries of the United States ^^ during the past fltleen or twenty years," as measured by the displaoo- ment of the muscular labor formerly employed to effect a given result (i. e., amount of product) lias been as foUows : In the manu&cture of agricultural implements, from fifty to seventy per cent; in the manufacture of shoes, eighty per cent ; in the manufacture of carriages, sixty -five per cent ; in the manufacture of machines and machinery, forty per cent ; in the silk-manu- facture, fifty per cent, and so on. t In a print-cloth factory in New England, in which the oonditions of pro- duction were analyzed by Mr. Atkinson, the product per hand was found by him to have advanced from 26,531 yards, representing 8,382 hours' work in 1871, to 82,391 yards, representing 2,695 hours' work, in 1884— an increase of twenty-two per cent in product, and a decrease of twenty per cent in hours of labor. Converted into cloth of their own product, the wages of tho operatives in this same mill would have yielded them 6,205 yards in 1871, as compared with 9,737 yards in 1884-Hin increase of 56Vft per cent. During the same period of years the prices of beef, pork, flour, oats, butter, lard, cheese, and wool in the United States declined more than twenty-five per cent A like invcstiiration by the same authority of an iron-fumaoo in Pennsyl- vania showed that, comparing the results of the five years from 1860 to 1804 with the five years fVom 1875 to 1879, the product per hand advanced from 776 tons to 1,219 tons ; that the gross value of the product remained about the same ; tliat the number of hands was reduced from seventy-six to seventy- one ; and that consumers gained a benefit of reduction in price from $27.95 per ton to $19.08. X ^^ Wages have greatly increased, but the cost of doing a given amount of 34 RECENT ECONOMIC CHANQEa npon the marketing of the cereal crops of the United States is shown by the circumstance that the freight rates on the transport of grain from Bombay to England, by way of the Suez Canal, declined from 32*5 cents per bushel in 1880, to 16*2 cents in 1885 ; and, to the extent of this decline, the ability of the Indian ryot to compete with the American grain-grower, in the markets of Europe, was increased. How great was the disturbance occasioned in the general prices of the commodities that make up Eastern commerce by the opening of the Suez Canal, and how quickly prices re- sponded to the introduction of improyements in distribution, is illustrated by the following experience : The value of the total trade of India with foreign countries, exclusiye of its coasting-trade, was estimated, at the time of the opening of the canal in 1869, at £105,500,000 ($527,500,000). In 1874, however, the value was estimated at only £95,500,000, or at a reduction of ten per cent ; and the inference might natu- rally have been that such a large reduction as ten millions sterling ($50,000,000) in five years, with a concurrent in- crease in the world's population, could oil!y indicate a reduc- tion of quantities. But that such was not the case was shown by the fact that 250,000 tons more shipping (mainly steam, and therefore equivalent to at least 500,000 more tons of sail) was employed in transporting commodities be- tween India and foreign countries in 1874 than in 1869 ; or, that while the value of the trade, through a reduction of prices had notably declined during this period, the quanti- ties entering into trade had so greatly increased during the same time, that 250,000 tons more shipping were required to convey it. In short, the construction of the Suez Canal completely revolutionized one of the greatest departments of the world's commerce and business ; absolutely destroying an immense amount of what had previously been wealth, and displacing or changing the employment of millions of capital and thousands of men; or, as the London ^^ Economist" has ECONOMY IN MABINE CARRIAGES. 85 ezpreased it, ^ so altered and so twisted many of the existing modes and channels of business as to create mischief and confusion " to an extent sufficient to constitute one great general cause for a uniyersal commercial and industrial de- pression and disturbance. The deductions from the most recent tonnage statistics of Great Britain come properly next in order for considera- tion. During the ten years from 1870 to 1880, inclusive, the British mercantile marine increased its movement, in the matter of foreign entries and clearances alone, to the extent of 22,000,000 tons ; or, to put it more simply, the British mercantile marine exclusively engaged in foreign trade did so much more work within the period named ; and yet the number of men who were employed in effecting this great movement had decreased in 1880^ as compared with 1870, to the extent of about three thousand (2,990 ex- actly). What did it? The introduction of steam hoisting- machines and grain-elevators upon the wharves and docks, and the employment of steam-power upon the vessels for steering, raising the sails and anchors, pumping, and dis- charging the cargo ; or, in other words, the ability, through the increased use of steam and improved machinery, to carry larger cargoes in a shorter time, with no increase — or, rather, an actual decrease — of the number of men employed in sail- ing or managing the vessels. Statistical investigations of a later date furnish even more striking illustrations to the same effect from this in- dustrial specialty. Thus, for 1870, the number of hands (exclusive of masters) employed to every one thousand tons capacity, entered or cleared of the British steam mercantile marine, is reported to have been forty-seven, but in 1885 it was only 27*7, or seventy per cent more manual labor was required in 1870 than in 1885 to do the same work. In sailing-vessels the change, owing to a lesser degree of im- provement in the details of navigation, has been naturally smaller, but nevertheless considerable ; twenty-seven hands 86 RECENT ECONOMIC CHANGEa being required in 1885 as against thirty-five in 1870 for the same tonnage entered or cleared.* Another fact of inter- est is, that the recent increase in the proportion of large vessels constructed has so greatly increased the efficiency of shipping, and so cheapened the cost of sea-carriage, to the advantage of both producers and consumers, that much business that was before impossible has become quite pos- sible. Of the total British tonnage constructed in 1870, only six per cent was of vessels in excess of two thousand tons burden ; but in 1884 fully seventeen per cent was of vessels of that size, or larger. Meanwhile, the cost of new iron (oi steel) ships has been greatly reduced; from $90 per ton in 1872-'74 to $65 in 1877, $57 in 1880, while in 1887 first-class freighting screw- steamers, constructed of steel, fitted with triple compound engines, with largely increased carrying capacity (in comparison with former iron construction) and consequent earning power, and capable of being worked at less expense, could have been furnished for $33.95 per ton.f * The official statbtica do not show in tbo British mereaDtile marine whether the economy of labor which was cfifocted prior to 1886 has continued to be progressive ; inasmuch as the totals for 1886-'88 include Lascars and Asi- atics under Asiatic articles of agreement ; allowing for this, however, the pro- portion of men employed to every one thousand tons of shipping was consid- erably smaller in the years 1886-'87 than in 1834-'86. t The following i« a copy of a circular issued in October, 1887, by the rep- resentatives in New York of a weU-known iron-ship-building firm at Newcas- tlo-on-Tyne, England : " Inviting your attention to the inclosed particulars of two steel screw fi-oight stcamcre building to our order, by the well-known builden, Messrs. , of Newcastle-on-Tyne, we beg to give you some additional details : " The contract price is £84,250 each, which is just about £6 17#. (six pounds seventeen shillings sterling) a ton dead-weight capacity, and including all expenses up to time of delivery, will not exceed £7 a ton dead weight, or at present rate of exchange, $88.95 American money. '* ThuA it will bo seen that as regards the cost of these vessels, while of large carrying capacity and consequent earning power, and fitted as they will be with engines of the newest type and with all modem appliances which have been tried and found conducive to quick and economical working (while avoiding aU innovations of an experimental clumicter), the present price of ECONOMY IN CONSTEUCTION OP VESSELS. 37 Prior to about the year 1875 ocean-steamships had not been formidable as freight-carriers. The marine engine was too heavy, occapied too much space, consumed too much ooaL For transportation of passengers, and of freight hav- ing large value in small space, they were satisfactory ; but for performing a general carrying-trade of the heavy and balky articles of commerce they were not satisfactory. A steamer of the old kind, capable of carrying three thou- sand tons, might sail on a voyage so long that she would be compelled to carry twenty-two hundred tons of coal, leaving room for only eight hundred tons of freight ; whereas, at the present time, a steamer with the compound engines and all oCher modem improvements, can make the same voyage and practically reverse the figures — that is, carry twenty-two hundred tons of freight with a consumption of only eight hundred tons of coal. The result of the construction and use of comptand engines in economizing coal has been illus- not over £7 per ton, dead- weight capacity, as against £12 to £13 a few years ago, renders the dijOTerenoe in values relatively even greater than appears at lint sight" A brief examination of what is emhraocd in the constmction of these ves- sels 18 not ft little intere^ng and instmotive, especially to those who recall what was deemed but a comparatively few years ago the very best conditions for ooean steam navigation : Triple-expansion engines — ^three cylinders — of the latest and most approved type. Horse-power, 1,700. Propeller shifting blades and spare set ; each port of engines interchangeable. Two double-ended steel bofleiB, in the cormgated furnaces, to work at one hundred and fifty poonda pressure. Four steam winches of most approved pattern and large power. Steam steering-gear forward, and powerful hand-gear afl. Patent BtocklesB anchors, working direct into hawser pipes, effecting great saving in time, labor, and gear. Water-ballast in double bottom. Lighthouses on forecastle. Decks of steel throughout; height, seven feet, nine inches, being the soitftble height for passengers, horses, and cattle. Ventilation of holds specially provided throng automatio exhaustion by means of the fiinnel. Hatches of huge dimensions capable of taking in locomotives or other large pieces of machinery. Six steel bulkheads, with longitudinal bulkheads throoghoat holds and between docks. Coal consumption, twenty -two tons per day. Coal-bunkers sufficient for forty days' steaming ; outfit in sails, steel hawsers, oil and water tanks, loading and dischanring trear, cutlery, plate, duna, and glass, and optician's stores— all of the bo.«it makers and full supplv. 8 ^ 88 RECENT ECONOMIC CHANGES. trated by Sir Lyon Playf air, by the statement that " a small cake of coal, which would pass through a ring the size of a shilling, when burned in the compound engine of a modern steamboat would drive a ton of food and its proportion of the ship two miles on its way from a foreign port." * Another calculator, says the London " Engineer," has computed that half a sheet of note-paper will develop suflBcient power, when burned in connection with the triple-expansion en- gine, to carry a ton a mile in an Atlantic steamer. How, under such circumstances, the charge for sea-freights on articles of comparatively high value has been reduced, is shown by the fact that the ocean transport of fresh meats from New York to Liverpool does not exceed 1 cent {^d.) per pound ; and including commissions, insurance, and all other items of charge, does not exceed 2 cents (Id.) per pound. Boxed meats have also been carried from Chicago to London as a regular business for 50 cents per 1#0 pounds. In 1860 (jd, (12 cents) per bushel was about the lowest rate charged for any length of time for the transportation of ♦ An interesting example of the coinparativo economy of the old and more modem style of oecilladng marine engines was lately Airnished by an instance quoted by Mr. J. W. T. Harvey, before the Engineering Section of the Bristol (England) Naturalists' Society. The Juno was originally worked with a jei condenser ; after a time this was replaced by a surface condenser, and finally the engines were compounded. Thus we have the same vessel working under three different conditions, and any alteration of coal consumption must be due to the chances in her machinery. The engines originally worked at thirty pounds per square inch, and indicated 1,G05 horse-power ; they drove the vessel at 14*1 knots, using ninety-two tonH of coal per voyage. Subsequently new boilem and a surface condenser were fitted to the ship, the ppcHSuro being thirty pounds ; the same horse-power and speed were then maintained with a consumption of eighty-two and ahalf tons of coal per voyage—a saving of nine and a half tons, or nine per cent. As competition in the carrying-trade became keener, this coal consumption could not be afforded, and it was determined to compound the engines as inexpensively as possible. This was done, and the engines now gave 1,270 horse-power, or 886 horse- power less than Iwfore, and drove the ship at 18*4 knots, or 0*7 knot slower, on a consumption of forty- nine tons of coal per voyage. The coal consumption per horse-power, there- fore, varied under the three conditiona as 100, 91, 67. The consumption imr voyage varied as 100, 91, 53. DISAPPEARANCE OP THE SAILING-VESSEU 39 bulk grain from New York to Liverpool, and for a part of that year the rate ran up as high as 13id. (27 cents) per busheL But for the year 1886 the average rate for the same service was 2id, (5 cents) per bushel ; while in April, 1888, the rate on grain from New York to Liverpool by steam declined to as low a figure as ^d, per bushel of 60 pounds ; %d, to Antwerp, and -^d. to Glasgow. It seems almost need- less to add that these rates were much below the actual cost of carriage. In like manner, the cost of the ocean trans- portation of tea from China and Japan, or sugar from Cuba, or coffee from Brazil, has been greatly reduced by the same caoses. The above are examples on a large scale of the disturb- ing influence of the recent application of steam to maritime industries. The following is an example drawn from com- paratively one of the smallest of the world's industries, pros- ecuted in one of the most out-of-the-way places : The seal- fishery is a most important industrial occupation and source of subsistence to the poor and scant population of New- foundland. Originally it was prosecuted in small sailing- vessels, and upward of a hundred of such craft, employing a large number of men, annually left the port of St. John's for the seal-hunt. Now, few or no sailing-vessels engage in the business ; steamers have been substituted, and the same number of seals are taken with half the number of men that were formerly needed. The consequence is, a diminished opportunity for a population of few resources, and to obtain " a berth for the ice," as it is termed, is considered as a favor. Is it, therefore, to be wondered at, that tlie sailing-vessel is fast disappearing from the ocean ; * that good authorities estimated in 1886 that the tonnage then afloat was about twenty-five per cent in excess of all that was needed to do * The BtatistiGS of the world^A shipping show that in 1885 there wore S$,766 sailing-vessels, of 11,216,618 toa-* ; in 1886 there were 25,155, of 10,411 ,- 807 tons; and in 1887 there were 23,810, of 9,820,492. The decrease in two years was therefore 1,396,123, or 124 per cent 40 EECENT ECONOMIC CHANGES. the then carrying-trade of the world ; and that ship-owners everywhere were unanimously of the opinion that the de- pression of industry was universal ? [During the year 1888, from causes that must be regarded as ex- ceptional (and which will be hereafter noticed), an increased demand for shipping accommodation suddenly sprang up, and which, not being readily supplied, was followed by an almost continued advance in freight rates, until in many directions — L e^ in the Russian grain and Eastern trade — the rise was equal to one hundred per cent advance upon the rates current in 1887 and the early months of 1888. This condition of affairs in turn gave a great impulse to ship-building, especially in Great Britain, where the construction for 1888 amounted to 903,687 tons, as against 637,000 in 1887 ; an extent of annual in- crease that, except in two instances, has never been exceeded. The additional tonnage thus supplied proving in excels of the world's de- mand, the advance in freights in 1888 was in a great measure lost in the first six months of 1889.] Great, however, as has been the revolution in respect to economy and efficiency in the carrying-trade upon the ocean, the revolution in the carrying-trade upon land during the same period has been even greater and more remarkable. Taking the American railroads in gencml as representative of the railroad system of the world, the average charge for moving one ton of freight per mile has been reduced from about 2-5 cents in 18G9 to 1*06 in 1887; or, taking the re- sults on one of the standard roads of the United States (the New York Central), from 1-95 in 1869 to 0-G8 in 1885.* To grasp fully the meaning and significance of these figures, their method of presentation may be varied by saying that two thousand pounds of coal, iron, wheat, cotton, or other commodities, can now be carried on the best managed rail- ways for a distance of one mile, for a sum so small, that outside of China it would be diflBcult to find a coin of equiv- • On certiun of the railroads of the United States an even lower avomco rate of freight has been reported. Thus, for the year 18% tlic Michif^n Central Railroad reported 0*66 cent as their avcra^ rate per ton per mile for that year, and the Lake Shore and Michigan Southern Railroad 0*65 cent for like aervioe. REVOLUTION IN THE CABRYING-TRADE ON LAND. 41 alent yalae to give to a boy as a reward for carrying an ounce package across a street, even if a man or boy could be found in Europe or the United States willing to give or accept so small a compensation for such a service. The following ingenious method of illustrating the same results has been also suggested : The number of miles of railroad in operation in various parts of the world in 1885 was probably about 300,000.* Eeckoning their capacity for transportation at a rate not greater than the results actually achieved in that same year in the United States, it would appear that the aggregate railroad system of the world could easily have performed work in 1885 equivalent to transport- ing 120,000,000,000 tons one mile. " But if it is next con- sidered that it is a fair day's work for an ordinary horse to haul a ton 6*7 miles, year in and year out, it further appears that the railways have added to the power of the human race, for the satisfaction of its desires by the cheapening of products, a force somewhat greater than that of a horse working twelve days yearly for every inhabitant of the globe." In the year 1887 the freight-transportation by the rail- roads of the United States (according to Poor's " Manual ") was equivalent to 60,061,069,996 tons carried one mile; while the population for that year was somewhat in excess of 60,000,000. The railroad freight service of the United States for 1887 was therefore equivalent to carrying a thou- sand tons one mile for every person, or every ton a thousand miles. The average cost of this service was about $10 per annum for every person. But if it had been entirely per- formed by horse-power, even under the most favorable of old-time conditions, its cost would have been about $200 to each inhabitant, which in turn would represent an expendi- ♦ The world's railway mileage for January, 18S9, was probaly in excess of S50,000 miles. At the same date the telegraph system of the world comprised at least 600,000 miles of length of line. 42 RECENT ECONOMIC CHANGES. ture greater than the entire value of the then annual prod- uct of the country; or, in other words, all that the peo- ple of the United States earned in 1887 would not pay the cost of transportation alone of the amount of such serv- ice rendered in that year, had it been performed by horse- power exclusively.* Less than hdf a century ago, the railroad was practically unknown, t It is, therefore, within that short period that this enormous power has been placed at the disposal of every inhabitant of the globe for the cheapening of trans- portation to him of the products of other people and coun- tries, and for enabling him to market or exchange to better advantage the results of his own labor or services. As the extension of the railway system has, however, not been equal in all parts of the world — ^less than thirty thousand miles existing, at the close of 1887, in Asia, Africa, and Australia combined — its accruing benefits have not, of course, been equal. And while all the inhabitants of the globe have un- doubtedly been profited in a degree, by far the greater part of the enormous additions that have been made to the world's working force through the railroad since 1840, have accrued to the benefit of the people of the United States, and of Europe — exclusive of Kussia, Turkey, and the former Turkish provinces of Southeastern Europe — a number not much exceeding two hundred millions, or not a quarter part of the entire population of the globe. The result of this economic change has therefore been to broaden and deepen ♦ One further interestinsr corollary of this exhibit is, that the averap© re- turn, in the form of interest and dividends, on the enormoua ftmount of capital which has been actually expended in order that the present railway service in the United States may be performed, can not be estimated as in excess of four per cent per annum as a maximum. t As late as 1840 there were in operation only about 2,860 miles of railway iu America, and 2,130 in Europe, or a total of 4,990 miles. For practical pur- poses, it may therefore be said that the world's railway system did not then exist ; while its organization and correspondence for doing full and efficient work mu.Ht be referred to a much later period. TlIE BESSEMER STEEL RAIL. 43 rather than diminish the line of separation between the ciTilized and the semi-civilized and barbarons nations. Now, while a multiplicity of inventions and of experi- ences have contributed to the attainment of such results under this railroad system of transportation, the discovery of a method of making steel cheap was the one thing which was absolutely essential to make them finally possible ; inas- much as the cost of frequently replacing rails of iron would have entailed such a burden of expenditure as to have ren- dered the present cheapness of railway transportation utterly unattainable. Note, therefore, how rapidly improvements in processes have followed the discovery of Bessemer, until, on the score of relative first cost alone, it has become eco- nomical to substitute steel for iron in railroad construction. In 1873 Bessemer steel in England, where its price has not been enhanced by protective duties, commanded . $80 per ton ; in 1886 it was profitably manufactured and sold in the same country for less than $20 per ton ! * Within the same time the annual producing capacity of a Bessemer converter has been increased fourfold, with no increase but rather a diminution of the involved labor ; and, by the Gilchrist- Thomas process, four men can now make a given product of steel in the same time and with less cost of material than it took ten men ten years ago to accomplish. A ton of steel rails can now also be made with five thousand pounds of coal, as compared with ten thousand pounds in 1868. " The importance of the Bessemer invention of steel can be best understood by looking at the world's production of that metal in 1887. ♦ The aveiiM^ price of iron rails in Great Britain for the year 18S8 was £6 per ton ; rteel rwle in the same market aold in 1886 for £4 5*. per ton ; and in 1887 wles of Pteel ndls were made in Belgium for £8 16«. ($18.75) per ton, deliverable at the works. The averacre price of steel roils in Pennsylvania (V. 8.) at the works, for 1886, with a tariff on imports of $17 per ton, was |34i^ per ton. Since the be^^inning of 1883 the manufacture of iron mib in the United States has been almost entirely discontinued, and during the years frtnxi 1883 to 1888 there were virtually no market quotations for them. The last recorded average price for iron rails waa $4b}4 P^' ^^ ^ 1882. 44 RECENT ECONOMIC CHANGES. The production of Bessemer steel id the eight chief iron and steel producing countries of the world amounted in that year to 7^9,767 tons, as compared with 6,034,115 tons in 1886, showing an increase of 1,260,094 tons, or twenty per cent The saving effected by railway companies by the use of Bessemer metal and the additional security gained thereby is shown by the fact that a locomotive on the Great Northern Railway has accomplished, with a moderate train-load of passenger-coaches, a statute mile in fifty seconds, or at the rate of seventy-two miles per hour, and makes a considerable continuous run at a speed of one mile per minute — a rate of railway traveling almost beyond the dreams or anticipations of the renowned George Stephen- son." The use of steel in place of iron in ship-construction may be said to date from 1878, and the rapidity with which the former has replaced the latter metal is very remarkable. Thus, in 1878 ** the per- centage of steel used in the construction of steamships in Great Britain was only 1*09, but in 1887 the percentage of iron used in proportion to steel was only 0*93 ; or, in other words, in 1878 there was ninety times as much iron as steel used for steamers, but in 1887 there was more than eight times the quantity of steel used as compared with iron for the same purpose, and, as regards sailing-ships, the quantity of steel used in 1887 amounted to practically one half that of iron." — Address of the President {Mr, Adamson) of the British Iron and Steel Asso- ciation^ May, 1S8S, The power capable of being exerted by the steam-engines of the world in existence and working in the year 1887 has been estimated by the Bureau of Statistics at Berlin as equivalent to that of 46,000,000 horses, representing ap- proximately 1,000,000,000 men ; or at least three times the working population of the earth, whose total number of in- habitants is probably about 1,460,000,000. The application and use of steam alone up to date (1889) has accordingly more than trebled man's working power, and by enabling him to economize his physical strength has given him greater leisure, comfort, and abundance, and also greater opportunity for tliat mental training which is essential to a higher development. And yet it is certain that four fifths of the steam-engines now working in the world have been constructed during the last quarter of a century, or since 1865. PREVENTION OP FAMINES. 45 One of the most momentons and what may be called homanitarian results of the recent great extension and cheapening of the world's railway system and service is, that there is now no longer any occasion for the people of any country indulging in either excessive hopes or fears as to the results of any particular harvest ; inasmuch as the fail- ure of crops in any one country is no longer, as it was, no later than twenty years ago, identical with high prices of grain ; the prices of cereals being at present regulated, not within any particular country, but by the combined produc- tion and consumption of all countries made mutually acces- sible by railroads and steamships. As a matter of fact, in- deed, the granaries for no small portion of the surplus stock of the world's cereals are at the present time ships and rail- road-cara in the process of movement to the points of great- est demand for consumption. Hence it is that, since 1870, years of locally bad crops in Europe have generally witnessed considerably lower prices than years when the local crops were good, and there was a local surplus for export.* In short, one marked effect of the present railroad and steamship system of transportation has been to compel a • A oentiuy ago eyery natioii of Europe ndsed in ordinary years enousrh gndn to supply the needs of its own population, and the circulation of food from oountiy to country, and from province to province, was restricted and even generally prohibited. After the middle of the eighteenth century there were indications that the domestic growth of wheat in England was falling below the consumption of the people ; but this unpleasant fact was studiously ooDcealed by the enormously expensive com laws, which on the one hand artificially stimulated agriculture and kept poor lands in cultivation, and, on the other, restricted through high prices the consumption of bread — and was Dot openly recognized for nearly half a century later. Subsequently the other nations of Europe, with the exception of Euj«sia and Austria- Hungary-, have experienced the same alteration in their food-producing capacity— in part due to natural influences, and in part to artificial factors — which have turned the attention of the people away from the cultivation of cereals into employments that promised to be more profitable ; and they have found it chea{)cr to im- port food than to grow it themselves. So that there are now no countries in Europe save the two above mentioned that have a surplus product of wheat available for export. 46 RECENT ECONOMIC CHANGES. uniformity of prices for all commodities that are essential to life, and to put an end forever to what, less than half a century ago, was a constant feature of European com- mercial experience, commerce, namely, the existence of lo- cal markets, with widely divergent prices for such commod- ities. How much of misery and starvation a locally deficient harvest entailed under the old system upon the poorer classes, through the absence of opportunity of supplying the deficiency through importations from other countries and even from contiguous districts, is shown by the circumstance that in the English Parliamentary debates upon the corn laws, about the year 1840, it was estimated upon data fur- nished by Mr. Tooke, in his " History of Prices," that a deficiency of one sixth in the English harvest resulted in a rise of at least one hundred per cent in the price of grain ; and another estimate by Davenant and King, for the close of the seventeenth century, corroborates this apparently ex- cessive statement. The estimate of these latter authorities was as follows : For a deficit There will be a eqaal to— rise in price of— 1-10 3-10 2-10 8-10 3-10 16-10 4-10 28-10 5-10 45-10 As late as 1817 the difference in France between the highest and the lowest prices of grain in different parts of the country was 45 francs per hectolitre. In 1847 the aver- age difference was 26 francs. Since 1870 the greatest differ- ence at any time has not been in excess of 3-55 francs. The following table, given on German authority, and represent- ing the price (in silver gulden per hectolitre) of grain for various periods, exhibits a like progress of price equalization between nations : PUTUBB SUPPLY OP POOD COMMODITIES. 47 FBRIOD. EngUuiiL France. Belgium. Proflsia. 18iU*dO 10^ 9-60 915 9-40 8-80 7-85 7-61 7-89 7-84 8-59 6-44 7-31 7-99 9-65 9-24 5*65 1831-*40 5-27 1841-'50 6-41 1851-*00 8-07 ISSl-TO 7-79 For grain henceforth, therefore, the railroad and the Bteamjship have decided that there shall be but one market — ^the world ; and that the margin for speculation in this commodity, so essential to the well-being of humanity, shall be restricted to very narrow limits ; the speculator for a rise in wheat in any one country finding himself practically in competition with all wheat-producing countries the moment he undertakes to advance prices ; while abnormal values in one country or market, or excessive reserves at one center or another, are certain to be speedily neutralized and controlled by the influence of all countries and markets. The movement and prices of wheat for the year 1888 furnish a most remarkable illustration and confirmation of the above statements, and also (as Sir James Caird has pointed out) " of the smoothness (at the present time) of the operations of trade under natural conditions." During the eleven months of 1888, ending November 30th, Great Britain imported a little more than sixty-seven million hun- dred-weight of wheat and flour. In the corresponding eleven months of 1887 the foreign supply was practically the same. There was, however, a very great change in the sources of supply. Thus, in 1887, North and South America fur- nished forty-nine million hundred-weight out of the sixty- seven million hundred- weight that Great Britain required ; but in 1888 the harvests of America were comparatively meager, and supplied Great Britain with but twefity-nine million hundred-weight, leaving a deficiency of twenty mill- ions to be obtained from other sources. Eastern Europe, and especially Russia, which were favored during the year 48 RECENT ECONOMIC CHANGES. 1888 with splendid weather and enormous crops, were able to promptly make good the missing twenty millions; but the market changes and vicissitudes of trade consequent on such an extensive transfer of the British supplies of wheat were something extraordinary. Twenty years ago, had Russia in any one year harvested a surplus of wheat as large as she did in 1888, such surplus, through an inabili- ty to cheaply and promptly move it to a market, would have been not only of little monetary value to the producer, but would probably by its unsalable presence in the country have considerably lowered the market price of so much of the crop as was required for home consumption. Under exist- ing conditions, however, great gain accrued to the Russian farmer and to all the interests and nationalities employed in the movements of his product. A demand for shipping for this special trade, which could not at once be fully sup- plied, also occasioned a quick advance in ocean freights in all quarters of the globe, in some instances to the extent of one hundred per cent, and concurrently a revival of the in- dustry of ship-building. On the other hand, this transfer of the wheat-supply of Great Britain represented an im- mense change in the carrying-trade and business of the United States ; while the American speculator, recognizing the local deficiency of the wheat-crop for 1888, and assum- ing that the American supply of this cereal was the prime factor in determining its European price, largely advanced prices (the average price of No. 2 red winter wheat in New York for the six months ending December, 1888, hav- ing been $1.01 per bushel, as compared with 84.2 cents for the corresponding period of 1887). But in this they were disappointed. The European prices did not materially ad- vance ; * and as a consequence, while the American public suffered, " the British consumer was enabled to eat his loaf ♦ EngliMh wheat sold December 25, 1888, at £1 11#. SJ. a quarter, a^innt £1 \\$, 2d.^ or 23^ cents a huBhel more than at tho oorrosponding date in 1887, and U. lOJ. \q^ than in Deocmbor, 1886. INCREASE IN THE WORLD'S PRODUCT OP IRON. 49 st the same price or a less price than he did in the previous year." And if the consomer was not a student of statistics, he would not have been in the least conscious that it was Rnflsian rather than American grain from which his bread was manufactured. In short, under the system of commer- cial freedom which Great Britain has established, all the farming interests on the earth grow with an eye to the pos- Bible advent of the British people as customers ; and while the latter, on their part, have so provided themselves with the best equipment for annihilating time and distance, that it is a matter of indifference to them whether the wheat- fields, which for the time being shall have their preference, are located in India, Russia, Dakota, South America, or Australia. The world's total product of pig-iron increased slowly and r^ularly from 1870 to 1879, at the rate of about 2i per cent per annum, but after 1879 production increased enor- mously, until in 1883 the advance among all nations was 82-2 per cent in excess of the make of 1870, the increase in the product of the United Kingdom being 43 per cent, and that of other countries 139*1 per cent (Testimony of Sir Lowthian Belly British Commission^ 1886), Such an in- crease (after 1879), justified perhaps at the moment, was far in excess of the ratio of increase in the world's population, and for a term of years greatly disproportionate to any in- crease in the world's consumption, and finally resulted, as has been before shown (see Chapter I), in an extreme de- pression of the business, and a remarkable fall of prices. By reason largely of the cheapening of iron and steel, the cost of building railroads has also in recent years been greatly reduced. In 1870-'71, one of the leading railroads of the Northwestern United States built 126 miles, which, with some tunneling, was bonded for about $40,000 per mile. The same road could now (1889) be constructed, with the payment of higher wages to laborers of all classes, for about $20,000 per mile. 60 RECENT ECONOMIC CHANGEa The power to excavate earth, or to excavate and blast rock, is from five to ten times as great as it was when opera- tions for the construction of the Suez Canal were com- menced, in 1859-'60. The machinery sent to the Isthmus of Panama, for the excavation of the canal at that point, was computed by engin^eers as capable of performing the labor of half a million of men. The displacement of muscular labor in some of the cotton-mills of the United States, within the last ten years, by improved machinery, has been from thirty-three to fifty per cent, and the average work of one operative, working one year, in the best mills of the United States, will now, according to Mr. Atkinson, supply the annual wants of 1,600 fully clothed Chinese, or 3,000 partially clothed E^st Indians. In 1840 an operative in the cotton-mills of Bhode Island, working thirteen to fourteen hours a day, turned off 9,600 yards of standard sheeting in a year ; in 1886 the operative in the same mill made about 30,000 yards, working ten hours a day. In 1840 the wages were $176 a year; in 1886 the wages were $285 a year. The United States census returns for 1880 report a very large increase in the amount of coal and copper produced during the ten previous years in this country, with a very large comparative diminution in the number of hands em- ployed in these two great mining industries ; in anthracite coal the increase in the number of hands employed having been 33*2 per cent, as compared with an increase of product of 82*7 ; while in the case of copper the ratios were 15*8 and 70'8, respectively. For such results, the use of cheaper and more powerful blasting agents (dynamite), and of the steam- drill, furnish an explanation. And, in the way of further illustration, it may be stated that a car-load of coal, in the principal mining districts of the United States, can now (1889) be mined, hoisted, screened, cleaned, and loaded in one half the time that it required ten years previously. The report of the United States Commissioner of La- DISPLACEMENT OP LABOR BY MACHINERY. 61 bor for 1886 famlBhes the following additional illustra- tions: ^ In the manufacture of agricultural implements, specific evidence is submitted, showing that six hundred men now do the work that, fifteen or twenty years ago, would have required 2,145 men — a displacement of 1,545. " The manufacture of boots and shoes offers some very wonderful facts in this connection. In one large and long- established manufactory the proprietors testify that it would require five hundred persons, working by hand processes, to make as many women's boots and shoes as a hundred per- sons now make with the aid of machinery — a displacement of eighty per cent " Another firm, engaged in the manufacture of children's shoes, states that the introduction of new machinery within the past thirty years has displaced about six times the amount of hand-labor required, and that the cost of the product has been reduced one half. " On another grade of goods, the facta collected by the agents of the bureau show that one man can now do the work which twenty years ago required ten men. " In the manufacture of fiour there has been a displace- ment of nearly three fourths of the manual labor necessary to produce the same product. In the manufacture of furni- ture, from one half to three fourths qiily of the old number of persons is now required. In the manufacture of wall- paper, the best evidence puts the displacement in the pro- portion of one hundred to one. In the manufacture of metals and metallic goods, long-established firms testify that machinery has decreased manual labor 33^ per cent." In 1845 the boot and shoe makers of Massachusetts made an average production, under the then existing conditions of manufacturing, of 1*52 pairs of boots for each working day. In 1885 each employe in the State made on an aver- age 4'2 pairs daily, while at the present time in Lynn and Haverhill the daily average of each person is seven pairs per 62 RECENT ECONOMIC CHANGES. day, " showing an increase in the power of prcrduction in forty years of four hundred per cent."* The business of making bottles has been arduous and unhealthy, with a waste of about thirty-three per cent of the " melting " ; and, although this waste is used afterward, there is a deterioration in its quality from its employment a second time. For many years this specialty of industrial production experienced little improvement; but it finally commenced in the substitution in 1885 of the so-called Siemens " tank " furnace, in place of the old-fashioned *' coal " furnace for the melting of glass ; one of the for- mer supplanting eight of the latter; requiring four men in place of twenty-eight to feed it, producing 1,000,000 square feet of glass per month, in place of a former product of 115,000 feet, and working continuously, while the coal- fumaces work on an average but eighteen days per month. Such an improvement in the methods of manufacture, as might be expected, revolutionized the former equilibrium, in this department of the glass industry as respects the supply and demand of both labor and product, and occa- sioned serious riots among the glass- workers of Charleroi, in Belgium, where it was first introduced. The process of producing the bottle by " blowing " was not, however, af- fected by the above- noticed improvement ; but within the last year (1888) a practical method of producing bottles is reported as having been invented and practically applied in England, which now bids fair to entirely do away with the process of " blowing," with an accompanying immense in- crease of daily product and a corresponding reduction in the former cost of labor. The following are other notable results, in what may be termed the minor industries : In the manufacture of jewelry, one skilled workman, ♦ Addrofls by Mr. F. W. Norcross, November, 1888, before the BostOD Boot aod Shoe Club. CHANGES IN THE MINOR INDUSTBIEa 53 paid at the rate of two and a half to three dollars per day, and working according to ante-machine methods in use a few years ago, could make np three dozen pairs of sleeve- bnttons per day. Now, one boy, paid five dollars per week, and working on the most modem machinery, can make np nine thousand pairs in a day. In gold (or imitation gold) chain-making, the United States now exports the cheapest grade of such jewelry produced by machinery to Germany, where cottage hand-labor, in the same vocation, can be had for a pittance, and finds a ready sale for them as against Crerman manufacturers. In connection with a new (1889) issue of notes by the Bank of France, for which superiority over anything of this kind heretofore achieved is claimed, and which engrav- ers and chemists believe can not be imitated except at such an expenditure of time and money as would effectually check ail effort in this direction, it is also added that they have been produced in a twentieth part of the time spent on those which are now being withdrawn from circulation. Nothing has had a greater influence in making possible the rapidity with which certain branches of retail business are now conducted, as compared with ten years ago — more especially the sale of groceries — than the cheap and rapid production of paper bags. At the outset, these bags were all made by hand-labor ; but now machinery has crowded out the hand-workers, and factories are in existence in the United States which produce millions of paper bags per week, and not unfrequently fill single orders for three mill- «tons. Paper sacks for the transportation of flour are now (1889) used to the extent of about one hundred millions per annum ; and to this same extent have superseded the use and requirement of cotton sacks and of barrels. With ma- chinery have also come many improvements : square bags that stand up of themselves, and need only when filled from a measure to have the top edges turned over to make the package at once ready for delivery. A purchaser can now 64 RECENT ECONOMIC CHANGES. also take his batter or lard in paper trays that are brine and grease proof ; his vinegar in paper jars that are warranted not to soak for one hour ; a bottle of wine wrapped in a cor- rugated case that would not break if he dropped it on the pavement, and his oysters in paper pails that will hold water overnight. A few years ago, to have furnished gratuitously these packages, would have been deemed extravagance ; but now it is found to pay as a matter of business. The increase in the producing capacity of the United States in respect to the manufacture of paper during the years from 1880 to 1887 inclusive, was also very striking, namely : in number of mills, twenty-five per cent ; in prod- uct, sixty-seven per cent ; in value of product, twenty-seven per cent. The reduction in the prices of paper in the United States under such circumstances has been very great, and since 1872, for all qualities, full fifty per cent* The sobriquet of an apothecary was formerly that of a pill-maker ; but the modern apothecary no longer makes pills, except upon special prescriptions ; inasmuch as scores of large manufactories now produce pills by machinery ac- cording to the standard or other formulas, and every apoth- ecary keeps and sells them, because they are cheaper, better, and more attractive than any that he can make himself. Certain branches of occupation formerly of considerable importance under the influence of recent improvements seem to be passing out of existence. Previous to 1872, nearly all the calicoes of the world were dyed or printed with a col- oring principle extracted from the root known as viadder ; * Id 1880, according to the cenBus, there were 692 p^>er-mill8 in the United States, producing 904,216,000 pounds of paper annually, valued at $55,109,914. In 1887 thero were 866 mills, with an annual product of 1,514,469,000 pounds, valued at $70,000,00<>. In addition to this annual product, paper and manu- factures of paper to the net value of $866,726 were imported. A calculation of the relative amount of paper consumed \^t capita in the United States in l^^H? gives a total ot $1.16 of dome«tic and l*/i» cent of foreij^ manufacture. The tariflf on the importation of paper for that year was twenty-five per cent ad valorem on ^^ writing/' and fifteen per cent on unsized *' printing" papers. EXTINCTION OP CERTAIN INDUSTRIES. 65 the cultivation and preparation of which inyolved the nse of thousands of acres of land in Holland, Belgium, eastern France, Italy, and the Levant, and the employment of many hundreds of men, women, and children, and of large amounts of capital ; the importation of madder into the United King- dom for the year 1872 having been 28,731,600 pounds, and into the United States for the same year 7,786,000 pounds. To-day, two or three chemical establishments in Germany and England, employing but few men and a comparatively small capital, manufacture from coal-tar, at a greatly reduced price, the same coloring principle; and the former great business of growing and preparing madder — with the land, labor, and capital involved — is gradually becoming extinct ; the importations into Great Britain for the year 1887 having declined to 1,934,700 pounds, and into the United States to 1,049,800 pounds. The old-time business of making millstones — entitled to rank among the first of labor-saving inventions at the very dawn of civilization — is rapidly passing into oblivion, be- cause millstones are no longer necessary or economical for grinding the cereals. The steel roller produces more and better flour in the same time at less cost, and as an inevita- ble consequence is rapidly taking the place of the millstone in all countries that know how to use machinery.* And, as the art of skillfully grooving the surface of a hard, flinty rock for its conversion into a millstone is so laborious, so difficult of accomplishment (four or five years of service be- ing required in France from an apprentice before he is allowed to touch a valuable stone), and to a certain extent so dangerous from the fljring particles of steel and stone, humanity, apart from all economic considerations, may well rejoice at its desuetude. • Under the new ^yrtem, »oventy-four per cent of the wheat jroen into flour And twenty-six per cent into oflal or bran, against thirty-three and a third per cent of bran under the old system. 66 RECENT ECONOMIC CHANGES. With the substitution of steamers for sailing-vessels upon the broad ocean, the former extensive business of sail-making, and the demand upon factories for heavy cloth as material for sails, experienced a notable depression, which in later years has continued and increased, because commerce along coast-lines now no longer moves exclusively by sail, but largely in barges dragged or propelled by steam- For the four years next previous to 1886 the demand for sails in the United States is estimated to have decreased to the extent of about twenty-five per cent, although the carrying-trade of the country by ocean, coast, and inland waters, has, dur- ing the same time, increased very considerably. Cotton-seed oil — an article a few years ago absolutely unknown in commerce, and prepared from what was for- merly regarded almost in the light of a waste product, is now manufactured in the United States, and has come into such extensive use as a substitute for lard, olive, and other oils, for culinary and manufacturing purposes, that its pres- ent annual production and sale are estimated to be equiva- lent to about 70,000,000 pounds of lard ; and has contributed not only to notably reduce the price and the place of that important hog-product in the world's markets, but also to impair the production and depress the price of almost all other vegetable oils — the product of the industries of other countries. Another matter of great industrial importance which a very few years ago also was practically unknown is the fuel use in the United States of natural gas, which, during the year 1887, is estimated by the United States Geological Sur- vey to have displaced the use of 9,867,000 tons of coal, hav- ing a value of $15,838,500, as compared with a displacement of 6,453,000 tons in 1886 and 3,131,000 tons in 1885. The total mileage of pipes for the conveyance of natural gas in 1887 was estimated at about 2,500 miles. In November of the same year the whole number of rolling-mills and steel- works in the United States completed or in the course of FUEL USE OP NATURAL GAS. 57 erection was four hundred and forty-five, of which nearly one fourth used natural gas as fuel. One prime factor in the use of this new agency is the small expense attending its application. Thus in one of the large steel-works of Pittsburg, Pa., three men do all the service required in the boiler-room, each one being on duty for eight hours. When coal was used as fuel, the same firm required the services of ninety men in the boiler-room for every twenty-four hours. Another saving is found in a dimin- ished degree of deterioration in the boilers when the gas is carefully used. For household use the advantage of natural gas is equally evident, a single turn of a cock being substi- tuted in place of the former necessarily dirty work of kind- ling a fire when coal was employed. ** Natural gas is, however, not now supplied at as cheap rates as a few years ago. It has, too, strange as it may appear, a rival as a cheap and cleanly fuel in water-oil gas produced from petroleum, which is steadily growing in popularity among American iron and steel and a few other manufacturers. It is claimed that this fuel is cheaper than ooal, or than gas made from it, and that it possesses all the desirable qualities of natural gas, and is far safer. This new fuel possesses also the advantage that it can be produced and used where natural gas can not be obtained, and even where coal may be too expensive for use." — Bepori of Mk. James M. Swank, 1888, But in respect to no other one article has change in the conditions of production and distribution been productive of such momentous consequences as in the case of wheat. On the great wheat-fields of the State of Dakota, where machinery is applied to agriculture to such an extent that the requirement for manual labor has been reduced to a minimum, the annual product of one man's labor, working to the best advantage, is understood to be now equivalent to the production of 5,500 bushels of wheat. In the great mills of Minnesota, the labor of another one man for a year, under similar conditions as regards machinery, is in like manner equivalent to the conversion of this unit of 5,500 58 RECENT ECONOMIC CHANGES. bushels of wheat into a thousand barrels of flour, leaving 500 bushels for seed-purposes; and, although the conditions for analysis of the next step in the way of results are more diflficult, it is reasonably certain that the year's labor of one and a half men more — or, at the most, two men — employed in railroad transportation, is equivalent to putting this thou- sand barrels of flour on a dock in New York ready for ex- portation, where the addition of a fraction of a cent a pound to the price will further transport and deliver it at almost any port ot Europe.* Here, then, we have the labor of three men for one year, working with machinery, resulting in the producing all the flour that a thousand other men ordinarily eat in a year, allowing one barrel of flour for the average consumption of each adult. Before such a result the question of wages paid in the different branches of flour production and trans- portation becomes an insignificant factor in determining a market ; and, accordingly, American flour grown in Dakota, and ground in Minneapolis, from a thousand to fifteen hun- dred miles from the nearest seaboard, and under the au- spices of men paid from a dollar and a half to two dollars and a half per day for their labor, is sold in European markets at rates which are determinative of the prices which Russian peasants, Egyptian " fellahs," and Indian " ryots," can obtain in the same markets for similar grain grown by ♦ ** When the wheat reachoB New York city, and comes into the posaession of a great baker, who ha» established the manufucture of bread on a larffe scale, and who aella the beat of bread to tlie working-people of New York at the lowest posRiblo price, we And that one thousand barrels of flour can be converted into bread and sold over the counter by the work of tliree persons for one year. Lot us add to the six and a half men already named the work of another man six months, or a half a man one year, to keep the machinery in repair, and our modem miracle is, that seven men sutiice to frive one thou> sand persons all the bread they customarily consume in one year. If to these we add three for the work of providing fuel and other materials to the railroad and the baker, our final result is that ten men working one year serve bread to one tbouaand.'' — ''^Didrihution qf ProducU^^'' Edwabd Atkutsoh. THB MANUFACTURE OF PIN& 59 them on equally good soil, and with from fifteen to twenty cents per day wages for their labor. On the wheat-farms of the Northwestern United States it was claimed in 1887 that, with wages at twenty-five dol- lars per month and board for permanent employes, wheat could be produced for forty cents per bushel; while in Rhenish Prussia, with wages at six dollars per month, the cost of production was reported to be eighty cents per bushel. How much more significantly differences manifest them- selves in the results of mechanical production, when long periods of time are taken for comparison, is illustrated by an exhibit in parallel columns of a statement made by Adam Smith in his " Wealth of Nations " (first published in 1776, Vol. I, Chapter I), respecting the manufacture of pins, and which then seemed to him as something extraor- dinary, and a similar statement of the present condition of this business, as set forth in an official report to the United States Department of State in the year 1888 : "To take an example, there- "The relative indifference of fore, from a very trifling manu- high day wages when brought side facture, but one in which the di- by side with such astonishing re- Tision of labor has been very often suits is more apparent yet when taken notice of — the trade of the we deal with industries where au- pin-maker. A workman not edu- toraatic machinery is employed al- cated to this business (which the most exclusively — screw-making, division of labor has rendered a nail-making, pin-making, etc. In distinct trade), nor acquainted the latter industry the coil of with the use of the machinery em- brass wire is put in its proper ploye*l in it (to the invention of place, the end fastened, and the which the same division of labor almost human piece of mechanism, has prolmbly given occasion), could with its iron fingers, does the rest scarce, perhaps, with his utmost of the work. One machine makes industry make one pin a day, and 180 pins a minute, cutting the certainly could not make twenty, wire, flattening the heads, sharp- But in the way in which this busi- ening the points, and dropping ness is now carried on, not only the pin in its proper place. One the whole work is a peculiar trade, hundred and eight thousand pins 60 EECENT ECONOMIC CHANGES. but it is divided into a number of a day is the output of one ma- branches, of which the greater chine. A factory visited by me part are likewise peculiar trades, employed seventy machines. These One man draws out the wire, an- had a combined output per day of other straightens it, a third cuts 7,500,000 pins, or 800 pins to a it, a fourth points it, a fifth grinds paper, 25,000 papers of pins ; al- it at the top for receiving the lowing for stoppages and neoes- head. To make the head requires sary time for repairs, say 20,000 two or three distinct operations; papers. These machines are tended to put it on is a peculiar business, by three men. A machinist with to whiten the pin is another. It a boy-helper attends to the repair- is even a trade by itself to put ing. It will not materially influ- them into the paper, and the im- ence the price of pins whether the portant business of making a pin combined earnings of these five is, in this manner, divided into men be $7.50 or $10 per diem, about eighteen distinct operations. The difference would amount to which, in some manufactories, are one eighth of a cent on a paper of all performed by distinct hands, pins. The likelihood is that when though in others the same man cheaper help is employed a greater will sometimes perform two or number of hands would be em- three of them. I have seen a small ployed for the same work and the manufactory of this kind where same output." — Influenees bearing ten men only were employed, and on Production, Report on Tech- where some of them consequently nicat Education to (he United performed two or three distinct States State Department^ by U, S. operations. But though they were Consul Schoenhoff^ 18S8, very poor, and therefore but in- differently accommodated with the necessary machinery, they could, when they exerted themselves, make among them about twelve pounds of pins in a day. There are in a pound upward of four thousand pins of a middling size. Those ten persons, therefore, could make among them upward of forty-eight thousand pins in a day." — Adam Smith, Wealth of Ifations, a. d. 1770. In other words, in the time of Adam Smith it was re- garded as a wonderful achievement for ten men to make EPOCH OP EFFICIENT MACHINERY. 61 46,000 pins in a day, bat now three men can make 7,500,000 pins of a vastly superior character in the same time. A great number of other similar and equally remarkable experiences, derived from almost every department of indus- try except the handicrafts, might be presented ; but it would aeem that enough evidence has been offered to prove abun- dantly, that in the increased control which mankind has acquired over the forces of Nature, and in the increased utilization of such control — mainly through machinery — ^for the work of production and distribution, is to be found a cause sufficient to account for most if not all the economic disturbance which, since the year 1873, has been certainly universal in its influence over the domain of civilization ; abnormal to the extent of justifying the claim of having been unprecedented in character, and which bids fair in a greater or less degree to indefinitely continue. Other causes may and doubtless have contributed to such a condition of affairs, but in this one cause alone (if the influences referred to can be properly considered as a unity) it would seem there has been sufficient of potentiality to account not only for all the economic phenomena that are under discussion, but to occasion a feeling of wonder that the world has accommo- dated itself so readily to the extent that it has to its new conditions, and that the disturbances have not been very much greater and more disastrous. A question which these conclusions will naturally sug- gest may at once be anticipated. Have not these same in- fluences, it may be asked, been exerted during the whole of the present century, and in fact ever since the inception of civilization ; and are there any reasons for supposing that this influence has been different during recent years in kind and degree from what has been heretofore experienced ? The answer is, Certainly in kind, but not in degree. The world has never seen anything comparable to the results of the recent system of transportation by land and water, never experienced in so short a time such an expansion of all that 62 RECENT ECONOMIC CHANGEa pertains to what is called business, and has never before, as was premised at the outset of this argument, been able to accomplish so much in the way of production with a given amount of labor in a given time. Thus it is claimed in re- spect to the German Empire, where the statistics of pro- duction and distribution have doubtless been mor^"X5arefully studied by experts than elsewhere, that during the period from 1872 to 1885 there was an expansion in the railroad traffic of this empire of ninety per cent ; in marine tonnage, of about a hundred and twenty per cent ; in the general mercantile or commercial movement, of sixty -seven per cent ; in postal matter carried, of a hundred and eight per cent ; in telegraphic dispatches, of sixty-one per cent ; and in bank discounts, of two hundred and forty per cent. Dur- ing the same period population increased about eleven and a half per cent, and from such data there has been a general deduction that, "if one unit of trade was the ratio to one unit of population in Germany in 1872, the proportion in 1885 was more than ten units of trade to one of popula- tion." But, be this as it may, it can not be doubted that whatever has been the industrial expansion of Germany in recent years, it has been at least equaled by England, ap- proximated to by France, and certainly surpassed by the United States.* There is very much that contributes to the support of the idea which has been suggested by M. Laveleye, editor of the " Moniteur des Interets Mat^riels," at Brussels, that the industrial activity of the greater part of this century has been devoted to fully equipping the civilized countries of * A statistical exhibit of the growth of British industrial interests during the rei^ of Queen Victoria (filly years), published in 1887, in connection with the " Queen's Julnlee," showed that the production of cool has increased in Great Britain during this period from 86,000,000 tons to 147,000,000 tons per annum ; and that manufactures had increased in about an equal ratio witli the output of coal — ^that is to say, had about quadrupled (four hundred per cent). Meanwhile, the population of the United Kingdom increased only thirty-three percent. /4I ODERN RAPIDITY OP INDUSTRIAL DEVELOPMENT. 68 he world with economic tools, and that the work of the \atiire, in this saiK^ sphere, must be necessari^ that of re- pair and replacements rather than of new constructions. But a more important inference from this same idea, and one that fully harmonizes with and rationally explains the phenomena of the existing situation is, that the equipment iaving at last been made ready, the work of using it for piodnction has in turn begun, and has been prosecuted so eflkiently, that the world has within recent years, and for the first time, become saturated, as it were, under existing conditions for use and consumption, with the results of these modem improyements. Again, although the great natural labor-saving agencies had been recognized and brought into use many years prior to 1870, their powers were long kept, as it were, in abey- ance ; because it required time for the instrumentalities or methods, by which the world's work of production and dis- tribution was carried on, to adjust themselves to new con- ditions ; and until this was accomplished, an almost infinite number and variety of inventions which genius had pro- duced for facilitating and accelerating industrial evolution were matters of promise rather than of consummation. But, with the extension of popular education and the rapid diffu- sion of intelligence, all new achievements in science and art have been brought in recent years so much more rapidly "within the sphere of the every-day activity of the people" — as the noted German inventor, Dr. Werner Siemens, has expressed it — " that stages of development, which ages ago required centuries for their consummation, and which at the beginning of our times required decades, now complete them- selves in years, and not unf requently present themselves at once in a state of completeness." It should also be remembered that fifty years ago the " sciences " were little more than a mass of ill-digested facts or " unassorted laws," and that in the departments of physics and chemistry comparatively little hivd been accomplished 64 RECENT ECONOMIC CHANGES. in the way of industrial application and direction. To sav indeed, what the worid did not have half a century ago it almost equivalent to enumerating all those things which h\ their understanding, possession, and common use the worh now regai'ds as constituting the dividing lines between civ-' ilization and barbarism. Thus, fifty years ago the railroad and the locomotive were practically unknown. The ocep«ii steam marine dates from 1838, when the Sirius and GrAt Western — the two pioneer vessels — crossed the Atlanti.| to New York. Electricity had then hardly got " beyond the stage of an elegant amusement," and the telegraph wai not really brought into practical use before 1844. The f-Mlow- ing is a further partial list of the inventions, discoveries, and applications whose initial point of " being " is not ouly more recent than the half-century, but whose fuller or iarger de- velopment in a majority of instances is also referable to a much more recent date : The mechanical reapers, mowing and seeding machines, the steam-plow and most other emi- nently labor-saving agricultural devices ; the Bessemer pro- cess and the steel rail (1857) ; the submarine and trans- oceanic telegraph cables (1866) ; photography and all its adjuncts; electro-plating and the electrotype; the steam- hammer, repeating and breech-loading fire-arms, and rifled and steel cannon ; gun-cotton and dynamite ; the industrial use of India-rubber and gutta-percha ; the steam-excavator and steam-drill ; the sewing-machine ; the practical use of the electric light ; the application of dynamic electricity as a motor for maecalataon ; but the supply of different commodities is governed by different laws, and it would be difficult to name any two classes of products that are oootroUed by the same natural conditions. In the case of some commodities it requires bat a brief time to secure an increased production ; in the case of oCbers, months, and even years, are requisite. As respects agricultural pro- ductions, no localiQr accessible by modem means of transportation is depend- ent on its own supplies, or makes its own prices ; and the influences which afflict one part of the worid with disaster bring bountiful supplies to others. Hence it foUows that any periodical cause, common in its effects upon all {wodncts, is impossible. Neither can it be conceived how periodical changes in prices can result from any possible law of nature, unless it can be shown that such laws exist and operate with uniformity on the human mind and on the development of the human intellect, which has not yet been done. One of the most noted, and at the same time one of the mord empirical, attempts to found predictions as to future conditions of business and prices upon past commercial experiences, is embodied in a little book entitled " Benner's Prophe- cies," the work of an Ohio farmer named Benner, which, first published about 1975, has since passed through several editions and been widely circu- lated and quoted. Its prophecies relate mainly to the prices of pig-iron and ho^, and to the next period of oommcrcial and financial disaster. In the case of piff-iron, it is cimmed that the prophecies have been in a measure fulfilled; but in the case of hogs, not one has been. A careful analysis of the book has furthermore proved that it is not of sufficient account or correctness to war- rant any serious attempt at the refutation of its conclasions, which seem to be baaed on little more than the assumption that what has been in respect to prices wiU again happen ; and that the cause of periodicity of panics is to be fbtmd ^^ in our solar system." 82 RECENT ECONOMIC CHANGES. become less local and more universal, because the railroad, the steamship, and the telegraph have broken down the bar- riera between nations, and, by spreading in a brief time the same hopes and fears over the whole civilized world, have made it impossible any longer to confine the speculative spirit to any one country. So that now the announcement of any signal success in any department of production or mercantile venture at once fires the imagination of the en- terprising and reckless in every country, and quickly incites to operations which without such a stimulus would probably not be undertaken. At the same time, the command through the telegraph of instantaneous information throughout the world of the conditions and prospects of all markets for all commodities has also undoubtedly operated to impart steadi- ness to prices, increase the safety of mercantile and manu- facturing operations, and reduce the elements of speculation and of panics to the lowest minimum. One universally recognized and, to some persons, per- plexing peculiarity of the recent long-continued depression in trade is the circumstance, that while profits have been so largely reduced that, as the common expression goes, " it has not paid to do business," the volume of trade throughout the world has not contracted, but, measured by quantities rather than by values, has in many departments notably in- creased. The following are some of the more notable exam- ples of the evidence that can be offered in confirmation of this statement : The years 1879, 1880, and 1881 for the United States were years of abundant crops and great foreign demand, and are generally acknowledged to have been prosperous ; while the years 1882, 1883, and 1884 are regarded as having been years of extreme depression and reaction. And yet the movement of railroad freights throughout the country great- ly increased during this latter as compared with the former period; the tonnage carried by six railroads centering at Chicago in 1884 having been nearly thirty- three per cent VOLUMB OP TRADE AND PRICEa 83 greater than in 1881 ; and the tonnage carried one mile by all the railroads of the United States in 1884 — ^a year of ex- treme depression — having been 5,000,000,000 in excess of that carried in 1882 ; and this, notwithstanding there was a great falling off, in 1884, in the carriage of material for new railroad constraction. Again, the foreign commeice of the United States, measured in dollars, largely declined daring the same later period; but, measured in quantities, there was but little decrease, and in the case of not a few leading articles a notable increase. Thus, for the year 1885 the total value of the foreign commerce of the country in mer- chandise was $93,251,921 less than in the preceding year (1884), but of this decrease $90,170,364, according to the estimates of the United States Bureau of Statistics, repre- sented a decline in price. An exj)ort of 70,000,000 bushels of wheat from the United States in 1884 returned $75,000,- 000 ; while an export of 84,500,000 in 1885 gave less than ♦73,000,000. An export of 389,000,000 pounds of bacon and hams in 1884 brought in nearly $40,000,000 ; but shipments of 400,000,000 pounds in 1885 returned but $37,000,000, or an increase of foreign sales of about 11,000,000 pounds was accompanied by a decline of about $3,000,000 in price. In 1877, 216,287,891 gallons of exported petroleum were valued at $44,209,360 ; but in 1886, 303,911,698 gallons (or 87,623,- 000 gallons more) were valued at only $24,085,767, a decline in value of $19,683,000. But the most remarkable example of changes of this character is to be found in the case of sugar. Thus, in 1883 the United States im|)orted 2,023,- 000,000 pounds of sugar, for which it paid $91,959,000. In 1885, 2,548,000,000 pounds were imported, at a cost of $68,- 531,000; or a larger quantity by 525,000,000 pounds was imported in 1885, as compared with 1883, for $23,428,000 less money. The statistics of the recent foreign trade of Great Britain also exhibit corresponding results. For examj)le, the de- clared aggregate value of British exports and imports for 84 RECENT ECONOMIC CHANGEa 1883 were £667,000,000 as compared with £682,000,000 in 1873, an apparent decline of no little magnitude. But if the aggregate of the foreign trade of Great Britain for 1883 had been valued at the prices of 1873, the total, in place of £667,000,000, would have been £861,000,000, or an increase for the decade of about thirty per cent. Again, the declared value of British imports retained for home consumption for the year 1887 was £302,828,000 ; but had they been valued at the same prices as were paid in 1886, their cost would have been £308,145,000. The saving in the purchases of foreign products by Great Britain in 1887, owing to the fall of prices, as compared with 1886, was, therefore, £5,317,000. On the other hand, if the value of the British exports for 1887, namely, £221,398,000, had been sold on the same terms as in 1886, their value would have amounted to £222,559,000, showing a comparative loss for the year of £1,161,000. Comparing quantities, however, the volume of the British foreign trade for 1887, in com- parison with that of 1886, was about five per cent larger in respect to imports and 4*8 per cent in respect to exports. An explanation of this economic phenomenon of recent years, namely, a continuing increase in the volume of trade, with a continuing low rate or decline in profits, may be found in the following circumstances: One constant result of a decline in prices is an increase (but not necessarily propor- tional or even universal) in consumption. Evidence on this point, derived from recent experiences, will be referred to hereafter; but the following example illustrates how this economic principle manifests itself even under unexpected conditions : In 1878 sulpliate of quinine ruled as high for a time on the London market as i3.96 per ounce, in bulk. In 1887 the quotation was as low as thirty cents per ounce. Quinine is used mainly as a medicine, and is so indispensable in certain ailments that it may be presumed that its cost in 1878 was no great restriction on its consumption, and that no great increase in its use from a reduction in price was to INCREASE IN MATERIAL CONSUMPTION. 85 be expected, any more than an increase in the nse of coffins for a similar reason — both commodities being used to the extent that they are needed, even if a denial of the use of other things is necessary in order to permit of their procure- ment And yet, that increase in the cheapness of quinine has been followed by a notable increase in its consumption, is shown by the fact that the importation of cinchona-bark — ^from which quinine is manufactured — into Europe and the United States during recent years has notably increased, 4,787,000 pounds having been imported into the United States in 1887, as compared with an import of 2,580,000 in 1883, the imports of quinine itself at the same time increas- ing from 1,055,764 ounces, valued at $1,809,000, in 1883, to 2,180,157 ounces, valued at $1,069,918, in 1887. The fol- lowing statement also illustrates even more forcibly the ordinary effect of a reduction of price on the consumption of the more staple commodities : Thus, a reduction (saving) of 6rf. (twelve cents) per week in the cost of the bread of every family in Great Britain (a saving which, on the basis of the decline in the wholesale prices of wheat within the last decade, would seem to have been practicable) has been estimated as equivalent to giving a quarter of a million pounds sterling, or $1,250,000 per week, to the whole people of the kingdom to spend for other things. The evidence is also conclusive that the ability of the population of the world to consume is greater than ever be- fore, and is rapidly increasing. Indeed, such a conclusion is a corollary from the acknowledged fact of increased pro- duction— ^the end and object of all production being con- sumption. Take, for example, the United States, with its present population of sixty-five millions — a population that undoubtedly produces and consumes more per head than any other equal number of people on the face of the globe, and is producing and consuming very much more than it did ten or even five years ago. The business of exchanging the products or services, and of satisfying thereby the wants 6 86 RECENT ECONOMIC CHANGES. of such a people is, therefore, necessarily immense, and with the annual increase of population, and with consuming power increasing in an even larger ratio, the volume of such business must continue to increase. And what is true of the United States is true, in a greater or less degree, of all the other nations of the globe. There is, therefore, nothing inconsistent or mysterious in the maintenance or increase in the volume of the world's business contemporaneously with a depression of trade — in the sense of a reduction of profits — occasioned by an intense competition to dispose of commodities, which have been produced under comparative- ly new conditions in excess of a satisfactory remunerative demand in the world's markets. And, apart from this, it is now well understood that the aggregate movement and ex- change of goods is little if any less in times of the so-called " depression of trade " than in times of admitted prosperity. Again, if depression of business does not signify less busi- ness, it can only signify less profits. In fact, a reduction of profits is the necessary consequence of falling prices, since all the calculations, engagements, and contracts of the em- ploying classes, including wages, are based upon the expec- tation that the prices of their products will remain substan- tially unchanged, or no worse than before. If there is a progressive fall of prices without a corresponding fall of wages, profits must fall progressively, and interest also, since the rate of interest is governed by the profits which can be made from the use of capital. Now this is exactly what has happened in recent years. Profits and prices of commodi- ties have fallen, but wages have not fallen, except in a few special departments. Consequently the purchasing power of wages has risen, and this has given to the wage-earning class a greater command over the necessaries and comforts of life, and tlie purchases of all this great class have supple- mented any forced economizing of tlie employing and well- to-do classes. " The latter are the ones who make the most noise in the newspapers, and whose frequent bankruptcies FAILURE OF CERTAIN ECONOMIC INQUIRIES. 87 most fill the public eye. But they are not those whose con- Bumption of commodities most swells the tonnage of the railways and steamships. They occupy the first cabin, and their names are the only ones printed in the passenger lists, but the steerage carries more consumers of wheat, sugar, and pork than all the cabins together/' The popular sentiment which has instinctively attributed the remarkable disturbance of trade within recent years to the more remarkable changes which have taken place con- currently in the methods of production and distribution has, therefore, not been mistaken. The almost instinctive efforts of producers everywhere to arrest what they consider " bad trade ^ by partially or wholly interrupting production has not been inexpedient ; and the use of the word " over-pro- duction," stripped of its looseness of expression, and in the sense as defined by the British Commission (and as hereto- fore shown), is not inappropriate in discussing the economic phenomena under consideration. It would also seem as if much of the bewilderment that is still attendant upon this subject, and the secret of the fruitlessness of most of the elaborate inquiries that have been instituted concerning it, have been due mainly to an inability to distinguish clearly between a causation that is primary, all-sufficient, and which has acted in the nature of unitv, and causes which are in the nature of sequences or derivatives. An illustration of this is to be found in the tendency of English writers and in- vestigators to consider the immense losses which British farming capital has experienced since 1873, as alone suffi- cient to account for all the disturbances to which trade and industry in the United Kingdom have been subjected dur- ing the same period. That such losses have been extensive and disastrous without precedent, is not to be questioned. Sir James Caird estimates this loss in the purchasing power of the classes engaged in or connected with British agricult- ure, for the single year 1885, as having amounted to £42,- 800,000 ($214,000,000) ; and as the losses for several preced- 88 RECENT ECONOMIC CHANGES. ing years are believed to have been equal or even greater than this, an estimate of a thousand million dollars decline in the value of British farming capital since 1880, from depreciation of land-values, rentals, and prices for stock and cereals, is probably an under rather than an over-esti- mate. Wheat-growing, which was formerly profitable in Great Britain, is reported as not having been remunerative to the British farmer since 1874; a fact that finds eloquent ex- pression in the acknowledged reduction in British wheat acreage from about 4,000,000 acres (3,981,000) in 1869 to 2,317,324 acres in 1887, or more than 40 per cent. And as the English farmers have decreased their production of cereals by reason of the small amount of profit accruing from their labor, the English agricultural laborer has from ne- cessity been compelled to seek other employments, or emi- grate to other countries. [According to a recent report of Major Cragie to the British Farmer^s Club, the wages of farm laborers in England after 1860 ad- vanced on the average thirty per cent ; but since 1881 the average de- cline in wages " over the farmed surface of England " has been at least fourteen per cent ; and in some sections of the country the whole of the rise in the mean wage of ordinary agricultural labors since 1860 has entirely disappeared. The decline in the rents of farm lands in England in recent years has been estimated by the London ** Econo- mist," on the authority of Mr. Clare Read, as not less than thirty per cent, or 10«. per acre on the wheat area — about $8,700,000 yearly. These results may, and probably do, furnish an explanation of the fact that the increase of wheat acreage in Great Britain in 1888 as com- pared with 1887 was 280,708 acres, or 11*8 per cent] That the agricultural populations of the interior states of Europe, which have hitherto been protected in a degree by the barrier of distance against the tremendous cheapening of transportation, are also at last feeling the full effects of its influence, is shown by the statement (United States Con- sular Reports, 1886) that farming land in Germany, remote DECLINE OP BRITISH AGRICULTURK 89 from large cities, where the demand for milk and other perishable products is small, can now be purchased for fifty per cent of the prices which prevailed at the close of the Franco-German War in 1870-'71. And yet such startling results, in the place of being prime factors in occasioning a depression of British trade and industry, are really four re- moTes from the original causes, which may be enumerated in order as follows : Firsts the occupation and utilization of new and immense areas of cheap and fertile wheat-growing land in the United States, Canada (Manitoba), Australia, and the Argentine Republic. Second^ the invention and ap- plication of machinery for facilitating and cheapening the production and harvesting of crops, and which on the wheat- fields of Dakota (as before pointed out) have made the labor of every agriculturist equivalent to the annual production of 5,500 bushels of wheat. Thirds the extension of the system of transportation on land through the railroad, and on sea through the steamship, in default of which the appropria- tion of new land and the invention and application of new agricultural machinery would have availed but little. Fourth^ the discovery of Bessemer, and the invention of the compound (steamship) engine, without which trans- portation could not have cheapened to the degree necessary to effect the present extent of distribution. Now, from the conjoined result of all these different agencies has come a reduction in the world's price of wheat to an extent suf- ficient to make its growing unprofitable on lands taken at high rents, and under unfavorable climatic conditions ; and legislation is powerless to make it otherwise. In short, the whole secret of the recent immense losses of the British and to a lesser extent also of the Continental agriculturist, and the depression of British trade and industry, so far as it has been contingent on such losses, stands re- vealed in the simple statement that American wheat sold for export at the principal shipping ports of the United States in 1885 for 56 cents less per bushel than in 90 RECENT ECONOMIC CHANGES. 1874, 32 cents less than in 1882, and 20 cents less than in 1884* "I have calculated that the produce of five acres of wheat can be brought from Chicago to Liverpool at less than the cost of manuring one acre for wheat in England." — Tes- timony of W. J. Harris, a leading farmer in Devonshire^ Eyigland^ before the British Commission^ 1886. * The average value of the wheat exported from the United States in ^885, according to the tables of the United States Bureau of Statistics, was 86 cents per bushel at the shipping ports. This was a decline of 20 cents from 1884, 26i cents from 1883, 82 cents from 1882, 56 cents from 1874, and 61 cents ftom 1871.' The export value of com was 64 cents in 1885, showing a decline of 7 cent*) from 1884, 14 cents from 1888, 12 cents from 1882, 80 cents from 1875, and 15 cents from 1872. The export value of oats was 87 cents in 1885, showing a decline of 2 cents from 1884, 18 cents from 1888, 7 cents from 1882, 20 cents from 1875, and 14 cents from 1871 . The export price of lard was 7 cents in 1885, showing a decline of 2 cents from 1884, 4 cents from 1888, 6 cents from 1875, 8 cents from 1872, and 9 cents from 1870. How closely the decline in recent years in the export prices of American cereals has been followed by corresponding reductions in the prices of cereals in the markets of Great Britain is exhibited by the following table (published in the British ^^ Farmer's Almanac" for 1886), showing the average prices per quarter of wheat, barley, and oats, in Great Britain for two periods of ten years, commencing with 1865, with a separate estimate for 1885 : CEREALS. Wheat Barley Oats . . Price per quar- ter. Average for the tou years, 1866-1875. 54 7i 39 2 25 10^ Price per qaar- ter. Average for the ten years, 1876-1886. Average priceper quarter for 18a5. />. d. 32 10 80 1 20 7 Similar tables given by the same authority show the gross value per annum of the product of wheat, barley, oats, beef, mutton, and wool, in Great Britain, to have been £35,000,000 ($175,000,000) less in 1885 than were the mean re- turns for the ten years 1866-1875. According also to data given in the returns of the British Registrar-General, the average prices of beef by the carcass in the London market were £58 5*. *ld. per ton during the ten yearn from 1866- 1875, £57 5*. ^, for 1876-1885, and £49 17#. 6rf. for the year 1885. M NEW RELATIONS OP LABOR AND CAPITAL. 91 Indian corn can be successfully and has been extensively raised in Italy. But Indian corn grown in the valley of the Mississippi, a thousand miles from the seaboard, has been transported in recent years to Italy and sold in her markets at a lower cost than the com of Lombardy and Venetia, where the wages of the agriculturist are not one third of the wages paid in the United States for corresponding labor. And one not surprising sequel of this is that 77,000 Itahan laborers emigrated to the United States in 1885. Xow, what has happened in the case of wheat and com has happened also, in a CTeater or less degree, as respects meats and almost all other food products ; increased sup- plies having occasioned reduction of prices, and reduction of prices, in turn, ruinous losses to invested capital and revo- lutionary disturbances in old methods of doing business. The Bessemer rail, the modem steamship, and the Suez Canal have brought the wheat-fields of Dakota and India, and the grazing-lands of Texas, Colorado, Australia, and the Argentine Republic, nearer to the factory operatives in Manchester, England, than the farms of Illinois were before the war to the spindles and looms of New England. Changes in the Relations of Labor and Capi- tal.— Consider next how potent for economic disturbance have been the changes in recent years in the relations of labor and capital, and how clearly and unmistakably these changes are consequents or derivatives from a more potent and antecedent agency. Machinery is now recognized as essential to cheap pro- duction. Nobody can produce effectively and economically without it, and what was formerly known as domestic manu- facture is now almost obsolete. But machinery is one of the most expensive of all products, and its extensive pur- chase and use require an amount of capital far beyond the capacity of the ordinary individual to furnish. There are very few men in the world possessed of an amount of wealth sufficient to individually construct and own an extensive 92 RECENT ECONOMIC CHANGES. line of railway or telegraph, a first-class steamship, or a great factory. It is also to be remembered that for carrying on production by the most modem and effective methods large capital is needed, not only for machinery, but also for the purchasing and carrying of extensive stocks of crude mate- rial and finished products. Sugar can now be, and generally is, refined at a profit of an eighth of a cent a pound, and sometimes as low as a six- teenth ; or, in other words, from eight to sixteen pounds of raw sugar must now be treated in refining in order to make a cent ; from eight hundred to sixteen hundred pounds to make a dollar ; from eighty thousand to one hundred and sixty thousand pounds to make a hundred dollars, and so on. The mere capital requisite for providing and carrying the raw material necessary for the successful prosecution of this business, apart from all other conditions, places it, there- fore, of necessity beyond the reach of any ordinary capital- ist or producer. It has been before stated that, in the manu- facture of jewelry by machinery, one boy can make up nine thousand sleeve-buttons per day ; four girls also, working by modem methods, can put together in the same time eight thousand collar-buttons. But to run an establishment with such facilities the manufacturer must keep constantly in stock thirty thousand dollars' worth of cut ornamental stones, and a stock of cuff-buttons that represents nine thousand different designs and patterns. Hence from such conditions have grown up great corporations or stock com- panies, which are only forms of associated capital organized for effective use and protection. They are regarded to some extent as evils ; but they are necessary, as there is apparently no other way in which the work of production and distribu- tion, in accordance with the requirements of the age, can be prosecuted. The rapidity, however, with which such combinations of capital are organizing for the purpose of promoting industrial and commercial undertakings on a scale heretofore wholly unprecedented, and the tendency INDIVIDUALISM IN PRODUCTION. 93 they have to crystallize into something far more complex ihaxi what has heen familiar to the public as corporations, with the impressive names of syndicates, trusts, etc., also constitute one of the remarkable features of modem busi- ness methods. It must also be admitted that the whole tendency of recent economic development is in the direc- tion of limiting the area within which the influence of com- petition is effective. And when once a great association of capital has been effected, it becomes necessary to have a master-mind to man- age it — a man who is competent to use and direct other men, who is fertile in expedient and quick to note and profit by any improvements in methods of production and variations in prices. Such a man is a general of industry, and corre- sponds in position and functions to the general of an army. What, as a consequence, has happened to the employes? Coincident with and as a result of this change in the meth- ods of production, the modem manufacturing system has been brought into a condition analogous to that of a mili- tary organization, in which the individual no longer works as independently as formerly, but as a private in the ranks, obeying orders, keeping step, as it were, to the tap of the drum, and having nothing to say as to the plan of his work, of its final completion, or of its ultimate use and distribution. In short, the people who work in the modern factory are, as a rule, taught to do one thing — to perform one and gener- ally a simple operation ; and when there is no more of that kind of work to do, they are in a measure helpless. The re- sult has been that the individualism or independence of the producer in manufacturing has been in a great degree de- stroyed, and with it has also in a great degree been destroyed the pride which the workman formerly took in his work — that fertility of resource which formerly was a special char- acteristic of American workmen, and that element of skill that comes from long and varied practice and reflection and responsibility. Not many years ago every shoemaker was or 94 RECENT ECONOMIC CHANGES. could 4}e his own employer. The boots and shoes passed di- rectly from an individual producer to the consumer. Now this condition of things has passed away. Boots and shoes are made in large factories ; and machinery has been so util- ized, and the division of labor in connection with it has been carried to such an extent, that the process of making a shoe is said to be divided into sixty-four parts, or the shoemaker of to-day is only the sixty-fourth part of what a shoemaker once was.* It is also asserted that " the constant employ- ment at one sixty-fourth part of a shoe not only offers no encouragement to mental activity, but dulls by its monotony the brain of the employ6 to such an extent that the power to think and reason is almost lost." f * The following is a reported enumeratioii of the Bpedalties or distinct branches of shoemaking at which men, women, and children are kept con- stantly at work in the most perfect of the modem shoe-factories, no appren- tices being needed or taken in such establishments : ** Binders, blockers, boot- liners, beatcro-out, boot- turners, bottomers, buffers, burnishers, channel ers, counter-makers, crimpers, cutters, dressers, edge-setters, eyeleters, finishers, fitters, heelers, lastcrs, levelers, machine-peggers, McKay stitchers, nailers, packers, parters, peggers, prcsscrs, rosette-makers, siders, sandpaperers, skin- ners, stitchers, stringers, trecrs, trimmers, welters, buttonhole-makers, clamp- ers, deckers, closers, cordors, embossers, gluers, inner-sole-makers, laoers, leather-assortcrs, riveters, rollers, seam-rubbers, shank-pressers, shavers, slip- (icr-liners, sole-leather-cuttcrs, sole-quilters, stampers, stiffeneis, stock-fitters, strippers, taggers, tipmakers, turners, vampers, etc." t The position taken by Prince Krapotkin, who represents to some extent the extreme socialistic movement in Europe, is, *' that the division and sub- division of functions have been pushed so far as to divide humanity into castes almost as firmly established as those of old India. First, the broad division into producers and consumers : little-consuming producers on the one hand, little-producing consumers on tlie other hand. Then, amid the former, a series of further subdivisions — the manual worker and the intellectual worker, sharply separated; and agricultural laborers and workers in manufactures. Amid little-producing oonsiuners are numberless minute subdivisions, the modem ideal of a workman being a man or a woman, a boy or a girl, without the knowledge of ony handicraft, havine no conception whatever of the indus- try in which he or i«he is employed, and only capable of making all day long and for a whole lite the same infinitesimal part of something — fVom the age of thirteen to tliat of sixty pushing the coal-cart at a given spot of the mine, or making the spring of a pen-knife, or the eighteenth part of a pin. The work- ing classes have become,** hesay.^, *^ mcreservant'^ to some machine of a given EMPLOYMENT OF CHILD LABOR. 95 As the division of labor in manufacturing — more espe- cially in the case of textiles — is increased^ the tendency is to supplement the employment of men with the labor of women and children. The whole number of employes in the cotton-mills of the United States, according to the cen- sus of 1880, was 172,544 ; of this number, 59,685 were men, and 112,859 women and children. In Massachusetts, out Of 61,246 employes in the cotton-mills, 22,180 are males, 31,496 women, and 7,570 children. In the latter State certain manufacturing towns, owing to the disparity in the numbers of men and women employed, and in favor of the latter, are coming to be known by the appellation of *'*' she-towns ^ * During recent years the increase in the employment of child- labor in Germany has been so noticeable, that the factory inspectors of Saxony in their official report for 1888 have suggested that such labor be altogether forbidden by the State, and that the hours during which youths between the ages of fourteen to sixteen may be legally employed in fac- tories should be limited to six. deseri{ytion ; mere fleflh-and-bono parts of some immense machinery, having no idea about how and why the machinery is performing its rhythmical move- ments. Skilled artisanship is swept away as a survival of a past which is con- demned to disappear. For the artist who formerly found aesthetic enjoyment in the work of his hands is substituted the human slave of an iron slave,*^ etc, etc. ♦ " The tendency of late years is toward the employment of child-labor. We see men frequently thrown out of employment, owing to the Bpinning- mnle being displaced by the ring-frame ; or children spinning yam, which men used to spin. In the weave-shops, girls and women are preferable to men, so that we may reasonably expect that, in the not very distant future, all the cotton-manufacturing districts will be clat^sed in the category of *■ she- towns.* But people will naturally say, What will become of the men t This is a question which it behooves manufacturerB to take seriously into considera- tion, for men will not stay in any town or dty where only their wives and children can be given employment. Therefore, a pause at the present time might be of untold value in the diturc ; for, just as sure as the world goes round, women and children will seek fresh pastures, where work can be found for the husband and father, in preference to remaining in places where he has to play the part of the * old woman,* wliile they go to work to earn the means of subsiatence." — Wade's Fiher and Fabric. 96 RECENT ECONOMIC CHANGES. Another exceedingly interesting and developing feature of the new situation is that, as machinery has destroyed the handicrafts, and associated capital has placed individual capital at a disadvantage, so machinery and associated capi- tal in turn, guided by the same common influences, now war upon machinery and other associated capital. Thus the now well-ascertained and accepted fact, based on long expe- rience, that power is most economically applied when ap- plied on the largest possible scale, is rapidly and inevitably leading to the concentration of manufacturing in the largest establishments, and the gradual extinction of those which are small. Such also has already been, and such will con- tinue to be, the outcome of railroad, telegraph, and steam- ship development and experience ; and another quarter of a century will not unlikely see all of the numerous companies that at present make up the vast railroad system of the United States consolidated, for sound economic reasons, under a comparatively few organizations or companies.* In * " There are in England eleven ^ntiat companies, but these were formed of two hundred and sixty -two companies, while the six great companies ot France have absorbed forty-eight companies. When the New York Central Bailway was formed in 1858, it consisted of a union of eleven railways. It takes twenty -five pagOA in * Poor^s Manual of Kailroads for 1885 * merely to give a list of nulways in the United States which have been merged in other lines. This shows in marked manner the tendency toward consolidation. There is no exception. It in a phenomenon common to all countries. " By means of combination and concentration of railway property the rail- way business of the country can be conducted most effectively. It is an im- provement in economic methods of large proportions. The experience of the world has demonstrated this so conclusively that it admits of no doubt, and a very little reflection on the nature of the economic functions of the railway will render it clear to the reader. When the general public and the press resist this tendency, or cry out in childish indignation because Mr. Vanderbilt bought the West Shore Railway in the interest of the New York Centnl and Hudson Biver Bailway, they are more foolish than laboring-men who reaitt the introduction of new and improved machinery. The latter have at least the excuse that changed methods of production often occasion the bitterest distress, and injure permanently some few laboring men ; and it ia hard to appredate a permanent advantage which must be acquired by severe present suffering. The impulse to such great economies as can be secured by oom- DESTRUCTION OP SMALL INDUSTRIES. 97 this respect the existing situation in Great Britain (which corresponds to that in all other countries) has thus been represented : *• Trade after trade is monopolized, not necessarily by large capi- talists, but by great capitals. In every trade the standard of necessary size, the minimam establishment that can hold its own in competition, is constantly and rapidly raised. The little men are ground out, and the littleness that dooms men to destruction waxes year by year. Of the (British) cotton-mills of the last century, a few here and there are standing, saved by local or other accidents, while their rivals have either grown to gigantic size or fallen into ruin. The survivors, with steam substituted for water-power, with machinery twice or thrice renewed, are worked while they pay one half or one fourth per cent on their cost. The case of other textile manufactures is the same or stronger stilL Steel and iron are yet more completely the mo- nopoly of gigantic plants. The chemical trade was for a long time open to men of very moderate means. Recent inventions threaten to turn the plant that has cost millions to waste brick and old lead. Already nothing but a trade agreement, temporary in its na- ture, has prevented the closing of half the (chemical) factories of St. Helenas and Widnes, and the utter ruin of all the smaller owners. Every year the same thing happens in one or another of our minor industries." *• The president of one of the largest cotton corporations in New England in a recent annual report stated that *■ competition is so sharp that the profits of a mill are generally only the savings made on the general expenses caused by increased production, so that a mill with a small production finds it impossible to live. Unless the smaller cot- ton-mills have a monopoly of some fancy business, they have all gone under or must faiL' " tnoAtioix IB so strong as to be irresistible. It is one of those forces which over- whelm the man who puts himself afrainst them, though they may be lEruided and directed, wiU one but put one's self in the stream and move with it." — Th^ Reform of Railway Abuses, Ely. ^ The railroads of the country are rapidly moving toward some ^cat evB- tem of consolidation. . . . The movement is to-day going forward more rap- idly— much more rapidly — under the artificial stimulus given to it by the Inter- state Commerce Act than ever before. The next move will be in the direc- tion of railroad systems of twenty thousand miles, each under one common management.'' — Speech of Mx. Chablbs Fraxcis Adams, jh-e&iderU Union BieyU^ h^oreihe Commercial Club^ Boston^ December^ 1888. 98 RECENT ECONOMIC CHANGES. Such changes in the direction of the concentration of production by machinery in large establishments are, more- over, in a certain and large sense, not voluntary on the part of the possessors and controllers of capital, but necessary or even compulsory. If an eighth or a sixteenth of a cent a pound is all the profit that competition and modem im- provements will permit in the business of refining sugar, such business has got to be conducted on a large scale to ad- mit of the realization of any profit. An establishment fitted up with all modem improvements, and refining the abso- lutely large but comparatively small quantity of a million pounds per annum, could realize, at a sixteenth of a cent a pound profit on its work, but 1625. Accordingly, the suc- cessful refiner of sugars of to-day, in place of being as for- merly a manufacturer exclusively, must now, as a condition of full success, be his own importer, do his own lighterage, own his own wharfs and warehouses, make his own barrels and boxes, prepare his own bone-black, and ever be ready to discard and replace his expensive machinery with every new improvement. But to do all this successfully requires not only the command of large capital, but of business qualifica- tions of the very highest order — two conditions that but comparatively few can command. It is not, therefore, to be wondered at that, under the advent of these new conditions, one half of the sugar-refineries that were in operation in the seaboard cities of the United States in 1875 have since failed or discontinued operations. In the great beef slaughtering and packing establish- ments at Chicago, which slaughter a thousand head of cattle and upward in a day, economies are effected which are not possible when this industry is carried on, as usual, upon a very small scale. Every part of the animal — hide, horns, hoofs, bones, blood, and hair — which in the hands of the ordinary butcher are of little value or a dead loss, are turned to a profit by the Chicago packers in the manufacture of glue, bone-dust, fertilizers, etc. ; and accordingly the great pack- ECONOMY OF LAEGE PRODUCTION. 99 era can afford to and do pay more for cattle than would otherwise be possible — ^an adyance estimated by the best anthorities at two dollars a head. Nor does this increased price which Western stock-growera receive come out of the consumer of beef. It is made possible only by converting the portions of an ox that would otherwise be sheer waste into products of value. The following statements have recently been made in California, on what is claimed to be good authority (" Over- land Monthly *'), of the comparative cost of growing wheat in that State on ranches, or farms of different sizes. On ranches of 1,000 acres, the average cost is reported at 92J cents per 100 pounds ; on 2,000 acres, 85 cents ; on 6,000 acres, 75 cents ; on 15,000 acres, 60 cents ; on 30,000 acres, 50 cents ; and on 50,000 acres, 40 cents. Accepting these estimates as correct, it follows that the inducements to grow wheat in California by agriculturists with limited capital and on a small scale are anything but encouraging. The following are other illustrations pertinent to this subject : " It is a characteristic and noteworthy feature of banking in Germany," says the London " Statist," " that the bulk of the business is gradually shifting from the small bankers, who used to do a thriving business, to the great banking companies, leaving quite a number of small cus- tomera almost without any chance to prosper in legitimate operations — concentration of capital and business in the hands of a limited number of powerful customers being the rule of the day." The tendency to discontinue the building and use of small vessels for ocean transportation, and the inability of such vessels to compete with vessels 'of larger tonnage, is shown by the statement that while a steamer of from 200 to 300 tons requires one sailor for every 19*8 tons, a steamer of from 800 to 1,000 tons requires but one sailor for every 41-5 tons. In like manner, while a sailing-vessel of from 200 to 300 tons requires one sailor for every 28-9 tons, a 100 RECENT ECONOMIC CHANGES. sailing-vessel of five times the size, or from 1,000 to 1,600 tons, requires but one sailor for every 60-3 tons. And as it is also claimed that other economies in the construction of the hull or the rigging, and in repairing, are concurrent with the reduction of crews, it is not difficult to understand why it is that large vessels are enabled to earn a percentage of profit with rates of freight which, in the case of small vessels, would inevitably entail losses. It was a m^atter of congratulation after the conclusion of the American war in 1865, that the large plantation sys- tem of cotton-raising would be broken up, and a system of smaller crops, by small and independent farmers or yeo- manry, would take its place. Experience has not, however, verified this expectation ; but, on the contrary, has shown that it is doubtful whether any profit can accrue to a cultivator of cotton whose annual crop is less than fity bales. " Cotton (at the South) is made an exclusive crop, be- cause it can be sold for cash-for an actual and certain price in gold. It is a mere trifle to get eight or nine cents for a pound of cotton, but for a bale of 450 pounds it is 140. The bale of cotton is therefore a reward which the anxious farmer works for during an entire year, and for which he will spend half as much in money before the cotton is grown, besides all his labor and time. And the man who can not make eight or ten bales at least has almost no object in life, and nothing to live on." — BradstreeVs Journal. About fifteen years ago the new and so-called " roller process " for crushing and separating wheat was discovered and brought into use. Its advantages over the old method of grinding by millstones were that it separated the flour more perfectly from the hull or bran of the berry of the wheat, gave more flour to a bushel of wheat, and raised both its color and strength (nutriment). As soon as these facta were demonstrated, the universal adoption of the roller mills and the total abolition of the stone mills became only a EXPERIENCE OP THE MILLING INDUSTRY. 101 question of time, as the latter could not compete with the former. The cost of building mills to operate by the roller process is, however, much greater than that of the old stone mills. Formerly, from $25,000 to $50,000 was an ample capital with which to engage in flour-milling in the United States, where water-power only was employed ; but at the present time from $100,000 to $150,000 is required to go into the business upon a basis with any promise of suc- cess, even with a small miU ; while the great mills of Min- neapolis, St Louis, and Milwaukee cost from $250,000 to $500,000 each, and include " steam " as well as water-power. The consequence of requiring so much more capital to partici- pate in the flour business now than formerly is that the smaller flour-mills in the United States are being crushed, or forced into consolidation with the larger companies, the latter being able, from dealing in such immense quantities, to buy their wheat more economically, obtain lower rates of freight, and, by contracting ahead, keep constantly run- ning.* At the same time there is a tendency to drive the milling industry from points in the country to the larger cities, and central grain and flour markets where cheap freights and large supplies of wheat are available. As might have been anticipated, therefore, the Milwaukee " Directory of American Millers," for 1886, shows a decrease in the number of flour-mills in the United States for that year, as compared with 1884, of 6,812, out of a total in the latter year of 25,079, but an increase at the same time in capacity for flour production. These new conditions of milling have been followed by a movement in England for the consolida- tion in great cities of the flour-mills and bakeries into single establishments, where the bread- making of the whole com- * What has happened in this business in the United States is true also of Great Biitain. In both countries the new system of mlUing and the concen- tnti 8<)*. Pepper, black, per lb *ld. Saltpeter, per cwt 29«. 1879. 4S/r. 57/. 89#. Id. 4*. 9d, 5%d. 13/. 16«. 65*. i}4d. 19«. 1883. 4iys. 4d. <>s 5«V„^/. 84*. lid. 5s. 4d. %d. 11/. 10*. 71*. %d. 15*. Zd. 1888. 41*. lit/. 17*. 9d. :bl. 31*. 9d. 4*. id. 11/. 18*. Zd, 91*. 16*. %d. 120 RECENT ECONOMIC CHANGBa The usual method employed by European economists in order to form a correct idea of the changes of prices in one period as compared with another, is to take the prices of certain selected commodities in a given year, or the average prices of a series of years, as the standard ; represent this by the figure 100 or 1,000, and then note the increase or decrease in price in the case of each article in each subse- quent year in proportion to this standard. Combining the percentage of price alterations among all the articles, a total of the variations experienced become known, and the num- ber thus obtained is termed an index number for the year, or other period under consideration ; or a number expressive of the ratio of price at a given date to the average of some former period. Thus, for example, if the average price of forty articles in the year 18iO were to be taken at 100, and the average decline in the prices of these same articles for the year 1810 was found to be 20 per cent, the index num- ber for the year 1800 would be 100, and for the year 1810, 80.* The difficulties in the way of obtaining satisfactory av- erages from comparisons of prices at different periods by the above or any other methods are, however, almost insuper- able ; so that it may well be doubted whether the determi- nation of an average of general prices is ever within the bounds of possibility. Quotations for a given day or month do not necessarily show the average for the year ; and, in like manner, the selection of a limited number of articles Commenting upon this exhibit of prices, Mr. Giffen remarks: ^' Although some prices are higher now C December, 1888) than in 1885, they are in a very few cases higher than in 1888. They are," on the average, "fiir below the level of 1873, and a good deal below the level of 1879. It is also well to bear in mind that the latter year was one of depreesion of trade, while 1888 was one of expenMon." * For a full exhibit and disonssion of these tables, reference is made to a paper in the Harvard ** Quarterly Journal of Economics" (vol. i. No. S, Bos- ton, 1887), by Prof. J. Laurence Laughlin, and to the ** Final Report of the (British) Gold and 811 ver CommlHsion," pp. 16, 17, 1888. THE «* INDEX" NUMBER SYSTEM. 121 for comparison can not insure correct conclusions respecting the moYement of prices in general. All methods of com- paring price variations which content themselves with mere average quotations of different articles, and which do not pay due regard to the relative importance of each article in the domestic and foreign commerce of a country ; which, for example, allows a change of eighty per cent in the price of an article like cochineal, of which the value sold in any one year is small, to balance a change of two per cent in an article, like sugar, the value of which annually sold is enor- moos, are also in a great degree deceptive and worthless ; * and even when, in the comparison of prices, the importance of considering relative quantities is fully recognized, the data for ascertaining these relations are extremely uncer- tain and questionable. The utmost of service that all such tabular comparisons of prices, even when prepared with all desirable qualifications, are capable of rendering, would, therefore, seem to be limited to certain broad general re- sults, or to the affording of important inferences respecting the tendencies and variations of prices. In all other re- spects they are little other than curiosities ; inasmuch as if some articles in a given period have risen and others have fallen in price, and if the fall of some and the rise of others can be undoubtedly traced to the action of entirely different causes, the grouping of these facts into the form of tables, and the endeavor to reduce the sum of the respective changes to a common average, can prove nothing whatever as to the cause or causes which have been operative in producing the ♦ One oi the best-kDown tables of this character, embracing twenty-two dilTerent articles, has been kept by the London " Economist " for many years as a oonstitnent element of current British commercial history, and by many b regarded as about the most reliable Indication of the movementi^ in the prices of wholesale commodities that can be obtained. The results of this table are, in brief, as follows: If the index number 2,947 be taken to represent the oomhined prices of twenty -two leading commodities at the close of 1872, the oombined prioes of the same commodities at the close of 1886 was 2,059, a dedine of over thirty per cent. 122 RECENT ECONOMIC CHANGES. changes. And between such discordant results effected by entirely diverse influences, there would, furthermore, seem to be no possibility of establishing an average ; for the price of some articles, whose use has been superseded or impaired by change of fashion or new inventions, may fall nearly or quite to zero, while the price of others, by reason of increased demand or interrupted supply, may rise almost to infinity by comparison ; and between such extremes there may be any number of gradations.* All, therefore, that can be confidently affirmed in respect to the extent of the recent depression of prices is, that com- paring the data for 1885-'86 with those of 1866-'76, the de- cline in the wholesale prices of most of the staple commodi- ties of the world's commerce has been extraordinary, and has extended to most countries ; and that the estimate of M. Sauerbeck (before referred to) of thirty-one per cent, as the average measure or extent of this decline, is not ex- cessive. It seems almost unnecessary to remark that a fall of prices, although commonly so considered, can not, in any comprehensive discussion, be regarded as in any sense a pri- * The objections inherent in this system have been forcibly illiistrated by a recent occurrence, to which attention has been called by the " New York Commercial Bulletin ** : Thus, a comparison of index numbers for January and July, 1886, and for Januair, 1887, as deduced from the " Economist's *• tables of prices, indicated a small advance for the latter month in the funeral level of British prices. But the first article on tlie " Economist's " list of prices is coffee, which advanced from July 1, 1886, to January, 1887, to a de- gree sufficient to alone add 50 to the index number of January ; while the entire increase for the whole twenty-two articles was only 86 ; or, in other words, if coffee alone were omitted from the list of articles compared, the net result would show an apparent decline instead of any advance in the general level of prices. *' Certainly," as the " Commcreial Bulletin " remarks, " it is difficult to attach much importance to results having no better basis than this. For coffee is by no means one of the most important articles compared ; it is greatly exceeded in importance by at least twelve of them. But the change in that one article happens to have been surprisingly great, and it thus outweighs far more important changes in other articles, such aa iron or meats.** CAUSES OP RECENT DECLINE OF PRICES. 123 mary caase of economic disturbances ; but that here again something antecedent in the nature of causes, more or less general, must be sought for in explanation. What these causes or agencies have been, how they have acted, and what disturbing influences they have exerted on the world's prices, on the world's industries, commerce, and consumption, and on pre-existing relations of labor and capital, will, when fully told, constitute one of the most important and inter- esting chapters of political economy and commercial history. Such a complete statement, for lack of suflBciently reliable and comprehensive data, can not now be made ; or, in other words, the time for making it has not yet come. And in default thereof it is suflBcient for the present to say, that all economists and financial authorities have substantially agreed that while many circumstances may and doubtless have been contributory, the extraordinary movements in prices under consideration must in the main be referable to one of two causes : Firsts a great multiplication and cheapening of commodities through nmo conditions of production and dis- tribution, which in turn have been mainly (but not exclu- sively) due to the progress of invention and discovery ; and, second^ that the precious metal used for standard money, viz., gold, has, through relative scarcity, owing to dimin- ished production and increased demand, greatly appreciated in value ; in consequence of which a given amount of gold buys more than formerly, or, what is the same thing, the price or purchasing power of commodities, in comparison with gold, has fallen. As to which of these two causes has been most influ- ential, the best authorities who have investigated the subject widely differ. It is also well recognized that the determina- tion of this question is almost fundamental in the so-called bimetallic controversy ; the plea for an increased use of sil- ver as money being wholly predicated on an alleged insuffi- ciency in the supply of gold for effecting the world's ex- changes, while ample evidence of the scarcity of gold is 124 RECENT ECONOMIC CHANGES. claimed to be found in the remarkable fall of prices which has been recently experienced. Preliminary to entering upon any review of this vexed question, a consideration of the following general propo- sitions may possibly help to a determination of opinion in respect to it: First. It is a universally accepted canon, alike in logic and common sense, that extraordinary and complex agencies should never be invoked for the explana- tion of phenomena, so long as ordinary and simple ones are equally available and satisfactory for the same purpose. Second. The most natural presumption, and the one which the commercial world most readily accepts, is, that when an article under free competition declines in price, the supply has outrun the demand ; not of demand in the abstract, for in a certain sense there is no limit to the demand for useful and desirable things, but of demand at the pre-existing price. If this presumption is not correct, then the hitherto universally accepted influence of the law of supply and de- mand on prices has been entirely misunderstood, and belief even in any such law may as well be abandoned. On the other hand, if the presumption is correct, then any cause, other than a disturbance of pre-existing relations of supply and demand, capable of occasioning a decline in prices, must of necessity be an extraordinary one, and demanding evi- dence, not general, but specific and clear in the highest de- gree, as a prerequisite to a belief in its actual occurrence and influence. Now, as to the character of the evidence that can be adduced in support of the two great causes re- spectively to which the decline in prices has been mainly attributed, it is not to be denied that the evidence pertain- ing to the first can, either with or without statistics, be stated with precision ; while the evidence pertaining to the second is at best indefinite, and mainly conjectural. In other words, the " how of the depression of prices," as Prof. Lexis, of Gdttingen, has happily expressed it, through a lowering of the cost of production and transportation, and a PRICE EXPERIENCES OF COMMODITIES. 125 widening of the area of cultivation, is clear to all ; but the how of the effect of the enhancement in value of one de- scription of money no one has, thus far, proved to us in concreto* If any one "affirms a connection between the prevalent low prices and the assumed appreciation of gold arising from scarcity, let him explain the niodus operandi ; let him set forth the process of reasoning ; the motive which impels a seller to accept, except upon the issue of the strug- gle between supply and demand, a lower price for his goods in the face of an abundance of capital and a low rate of interest" f With these premises, attention is n^xt asked to the evi- dence confirmatory of the predominating influence of the first cause, which is to be found in the history of the recent separate or individual economic experiences of the world's great staple commodities ; J and for the purpose of making such an exhibit, it is expedient to group such commodities for consideration under two heads ; namely, those in respect * " Least of all has Mr. Gibbs done so, although he was examined long on this point [by the British Gold and Silver Commission]. After all, he had no argument, except that the formation of prices depends on the quantity of com- modities, and on the quantity of money as compared with those commodities. Henoe if the quantity of money diminishes, prices must fall ; as if the quan- tity of money stands like a dead mass over against the commodities ; as if the efficient purchasing power did not appear only to the slightest extent at the present day, except in the form of cash money ; as if in almost every instance, in which tiie debtor possesses the necessary circulating or personal property, the employment of real money in payment may not be avoided. In England, as oompared with France, perhaps twice the quantity of goods are sold every year ; although the former country has less than one half, perhaps less than one third, of the quantity of money to be found in the latter." — Prof. Lexis, of GdUingtn^ Betiew of the Export of the BritUh Gold and Silver Com- mienon. t Paper by Lord Addington, a Director of the Bank of England ; final report (British) " Gold and Silver Commission," p. 211. t *' A general movement in prices is the resultant of a number of particular movements, and in these particular movements, again, we find the proximate causes of the distribution of the industrial forces of the world and of the wealth which these forces create."— Pbof. J. S. Nicholson, Pirofe$for of IhlUi- cal Eeamamf^ UnivenUy of Edinhurgh^ etc. 126 RECENT ECONOMIC CHANGES. to which the evidence that decline in price has been the direct resultant of new conditions of production and distri- bution is full, clear, and unimpeachable ; and those in re- spect to which, through lack mainly of universally accepted statistical data, the evidence is more or less inferential or circumstantial. Under the first group would be comprised sugar ^ petroleum^ or mineral oilSy coppery iroUy quicksilver ^ tiUy tin-plaiesy nickely leady coaly quininey paper, rags, chemi- calsy meatSy ckeessy fishy and freights j under the secondy wheaty cottony wooly silky jute. Sugar. — Adopting this grouping, the commodity whose recent economic experience will be first related will be sugar ; which, commencing to decline in price in 1880-'81, fell to lower rates in 1887 than has ever been known in the history of modem commerce ; the wholesale price of fair re- fining sugars having been more than one hundred and four- teen per cent higher in 1880 than in the first half of the year 1887.* Now, while improved methods of manufacture and greater and cheaper facilities for transportation have un- doubtedly contributed to such a result, it has been mainly due to an apparent desire, as M. Leroy-Beaulieu has ex- pressed it, on the part of the Governments of France, Ger- many, Austria, Belgium, Holland, Italy, and Russia, " to make their national sugar industry the greatest in the world " by stimulating the domestic production of this com- modity by the payment of what is equivalent to extraor- dinary bounties on its exportation to other countries ; or, in other words, by competing with one another in paying large * How oontinuouB and regular was the decline in the price of sugars is shown by the following table, which exhibita the average price of fair refining sugars in bond (or free of duty) in New York from 1880 to July, 1887, in- oluaive : 1880, 6*08 cents. 1886, 8*06 cents. 1882, 4*63 cents. 1886, 2*92 cents. 1884, 8-81 cents. 1887 (lowest to July), 2-87>i cents. SUGAR. 127 sums for the purpose of speedily getting rid of one of the most yaloable and highly-desired products of the earth con- joined with human industry.* On the other hand, in order to neutralize to some extent the exceptional advantages enjoyed through such an eco- nomic policy by the producers of beet-sugar in Europe, some of the cane-growing countries have felt obliged to encourage, by subsidies or tax-exemptions, their own sugar-production. In both Brazil and the Argentine Republic the manufactur- ers of cane-sugar have obtained a guarantee from the state of a five to six per cent return on their capital invested, while all the machinery needed in this industry may be im- * The payment of direct bounties in Europe for stimulating the produc- tkm of eagar is now and always has been an exception, and the existing system, as a matter of fact, has grown up from the repayment, on the exporta- tkm of sugars, of an excise duty which had been charged upon them. But this repayment in reality constitutes a bounty *^ in its primitive and most insidious form. Let us suppose that one hundred tons of beet-root have been esti- mated, for purposes of taxation, as yielding eight U)iis of sugar, and that the duty has been fixed on that ba^^is. If, by improved manipulation, f^om this amount of beet-root are extracted ten tons, the extra two tons will, if con- sumed in the country, pay no excise duty whatever ; but, if they are exported, the duty which all home sugar is supposed to have paid will be returned. The money given back as duty returned on the two tons which did not pay any duty, is a bounty. " It is obvious that this repayment of unpaid duty forms a substantial help to the sugar-trade. It is not merely so much cash given as a present to the producer, but it is a great incentive to the manufacturer to select the richest roots to make his sugar from, and to exercise his ingenuity in extracting the fullest possible yield from the beets. He only pays on an estimate of eight tons of sugar from a hundred tons of beets. He will not be satisfied with the two tons in excess of this ; he will torture his invention to squeeze eleven or even twelve tons of sugar out of his measure of beets, and the more he makes the greater the direct gift he receives from the Government on exportation. Germany is a striking instance of this, since during the last ten years, through the improvement in machinery, the average yield of sugar has increased from eight tons to nearly twelve on every hundred tons of roots. To the ordinarj' tax-payer in Germany this is not alto$^ther a matter of congratulation, since out of a large revenue collected as excise the state regularly pays back about four fifths in the form of export bounties, with a result that the sugar is im- mensely cheapened — not, however, to the German, but to the foreign con- sumer." 128 RECENT ECONOMIC CHANGES. ported free of duty. In the Spanish West Indies the home Government has (1887) felt compelled to relinquish the ex- port duties on sugars — ^the produce of Cuba and Porto Bico — which have long been regarded as almost indispensable on account of revenue necessities ; while in South Africa and Australia the production of sugar has also been encouraged to such an extent that both of these countries will hereafter be undoubtedly included among the number of important sugar-exporting regions. In Central America, the British and Dutch West India Islands, Guiana, and India (which last produces more sugar than any other country), produc- tion has not as yet been artificially encouraged, and, with the exception of the levying of export taxes in certain lo- calities, neither have any impediments been placed in the way of the natui'al growth of production. But at the same time it can not be doubted that the recent increased facili- ties for transportation and communication have, as before pointed out, been in the nature of a stimulus to the produc- tion of sugar, in common with all other commodities, and have opened up large and fertile sections of the earth which a quarter of a century ago were practically inaccessible. Under such conditions the increase in the production of sugar entering into the world's commerce and available for general consumption has been extraordinary. Mr. Sauer- beck estimates the increase from 1872-'73 to 1885-'86 to have been sixty-eight per cent. Other authorities estimate the increase from 1853 to 1884, exclusive of the product of India and China, to have been at the rate of thirty per cent for each decade, or about one hundred per cent compounded. Between 1882-'83 and 1888-'89 inclusive the increase was in excess of twenty-three per cent. In the Hawaiian Islands, where a remission of duties on sugars exported to the United States is equivalent to an export bounty of about eighty-five per cent (and amounting for the year 1888 to over ♦6,000,- 000), the domestic production of sugar has increased from about 12,000 tons in 1875 (the year before the duties were EXPORT BOUNTIES ON SUGAR. 129 remitted) to 114,000 tons in 1888, an increase (nine hun- dred per cent) that has no parallel in the history of the sug- ar industry. The part that beet-root sugar has played in this increase is shown by the circumstance that while in 1860 the proportion of this variety to the whole sugar-prod- uct of the world was less than twenty per cent, its product for 1886-'87 was estimated as about fifty-six per cent ; Ger- many alone having increased her product from about 200,- 000 tons in 1876 to 594,000 tons in 1880-'81, and to 1,155,- 000 tons in 1884- '85, while the increase of the beet-sugar product in the other bounty-paying states of Europe was not disproportionate. Of this extraordinary increase of product, as large a pro- portion as foreign markets would take was, as a matter of course, exported in order to obtain the benefit of the Gov- ernment bounties on exports, the sugar-export of Germany alone increasing from about 500,000 hundred-weight in 1876 to over 6,000,000 hundred-weight in 1885, and, with every increase of exportation, the Government disburse- ments on account of export bounties increased propor- tionately. The export bounty paid by Russia is estimated to have been as high at one time as $31.25 (£6 Ss.) per ton, and that of France at between $35 and $40 (£7 and £8), representing, in the case of the latter country, an estimated money loss to the treasury and a bounty to the manufact- urer of 43,955,000 francs in 1886 and 92,077,000 francs ($18,555,000) in 1887. In 1887 the French Government somewhat reduced the bounty, but the margin left to the manufacturer is still very effective. In Germany the amount paid in the way of subsidies on sugar was estimated by Deputy Gehlert, in a speech in the German Reichstag in 188G, as having up to that time ap- proximated $40,000,000, while for the year 1887-'88 about $7,000,000 it was claimed would be necessary, or an amount equal to the total wages paid to all workmen in all the Ger- man sugar-refineries. As might also have been expected, 130 RECENT ECONOMIC CHANQEa the profits of producers, and more especially of the sugar- refiners, working under the bounty (export) system, were at the same time enormously increased. In Germany the largest and best-managed beet-sugar manufactories divided for a series of years dividends to the extent of sixty, seventy, ninety, and in one instance one hundred and twenty-five per cent per annum on the capital invested,* and correspond- ing results were also reported in Austria, Eussia, France, and Belgium. How rapidly and extensively sugar has de- clined in price consequent upon such an extraordinary and unnatural increase in production has already been pointed out. How much of disaster this decline has brought to great business interests and to the material prosperity and even the civilization of large areas of the earth's surface, will be made a subject of future notice, f During the year 1888 a marked change occurred in the supply and prices of sugars. The beet-root manufacturers on the Continent of Europe, alarmed at an apparent glut of the sugar market, reduced * ** By a law passed in 1869 it was assumed that it took 12>^ centnen of beet-roots to give one centner of crude sugar, and a tax was levied on this baiiis and a corresponding drawback allowed on exported su^r. Since then great improvements have been made in the process of manufacturing, so that but 103^ centners of roots are uecessary to produce one centner of sugar instead of 12^ as formerly ; but the Government continued to grant a drawback on the basis of 123^. The export drawback thus became an enormous premium to the producers, and the German manufacturers have been enabled to supply aU Europe with cheap sugar ; till, to protect themselves, the other states have had to increase their duties on the imports of foreign sugar." — Report to United States Department of Steniiig Tesults, it would be an error to suppose that it is entitled to ex- dusive credit for the same. Thus, for example, the reduction of freightJ^ s'moe 1873 has been universal for all classes of commodities — on the Pennsylvania Biulroad to an average of fifty-two per cent — and the improved methods of manufacturing barrels, cans, etc, speedily came into common use. It is no lees certain that the economies effected in the refining of mineral oils have not resulted in benefiting consumers to anything like the extent that was possible, without interfering with the realization of large profits by the manufacturing oomlniiatioii. 134 RECENT ECONOMIC CHANGBa time, to vigorously compete with the Bussian product in the world's markets, there seems no prohahilitj that any ad- vance in price is likely to occur in the immediate future. Copper. — This metal touched the lowest price on record in 1886, Lake Superior copper in New York falling from twenty-five cents per pound in 1880 to nine and four fifth cents in May, 1886 ; and in the case of only a very few commodities is the connection between a decline in price and an increase of production and supply so well established and so significant. The increase in the copper product of the world is estimated by Mr. Sauerbeck to have been ninety-seven per cent in the thirteen years from 1873 to 1885, inclusive ; while according to the report of the United States Geological Survey, 1886, the increase from 1879 to 1885 was nearly forty-seven per cent (46*8). The countries which have most notably contributed to this increased prod- uct have been the United States, Spain, and Portugal ; the increase in the case of the former having been from 23,000 tons in 1879 to 74,053 tons in 1885 ; and in that of the latter, from 32,677 tons to 45,749 in the same period. As in all other like cases, the disturbing effect on the industries involved — mining and smelting — contingent on this rapid and remarkable fall of prices, was very great, and in all quarters of the world. In Montana, the Montana Copper Company, with an annual product of 8,000,000 pounds of pure copper, entirely suspended operations ; and the Ana- conda Company, with an annual product of 36,000,000 pounds, shut down twenty out of twenty-eight furnaces, and discharged most of its hands at the mine. In Chili, pro- duction during the year 1885 was diminished to the extent of about ten per cent. In Germany the great Mansfield mine, which reported gross profits in 1884 of 5,675,000 marks, siTstained a loss in the operation of 1885 of 653,338 marks ; and its managers sought relief by petitioning the Imperial Government for the imposition of a higher tariff on the imports of copper into the empire. For the years COPPER. 135 1881-'83 the great San Domingo mine in Portugal paid annual dividends of twelve and a half per cent ; in 1885 the annual rate was reduced to three and three fourths per cent It is important to note, as throwing light on this phe- nomenal decline in the price of a great staple commodity, that while the increase in the product of copper was admitted to be immense and primarily influential, three other agen- cies may be regarded as having concurrently contributed to this result : The first is, that there has been a reduction in the cost of mining, smelting, and marketing copper at the principal mines of the world, owing to improved processes, and re- duced rates of transportation contingent on railroad con- struction. In the case of the Lake Superior mines, this re- duction has been very remarkable ; thus, in one of the lead- ing mines, $5.50 per ton was paid in 1867 for stamping and washing ; in 1876 the same processes cost only 83'89c. per ton, and in 1885 the expense had been still further reduced to 47'31c. Between 1876 and 1885, in like manner, the cost of manipulating the rock was reduced from 3*45c. per ton to l*95c. For the same concern the cost of refined copper per pound at the mine was stated at 15-42c. in 1876 and 8Jc. in 1885 ; and since then there has been further prog- ress in the application of economical methods. The annual report of the "Tamarack" (Lake Superior) Com- pany for the year ending June, 1888, shows the total cost of its annual product of over 10,000,000 pounds of refined copper at the mine to have been 3-97c. per pound. The ad- dition of charges for smelting, freight, commission and office expenses brought up the total cost per pound of re- fined copper, laid down in New York and sold, to 5fc. per pound. This is probably as cheap as any company pro- duces ; and in comparison with 1867, or even with 1876 or 1885, the cheapness of the processes appears phenomenal. Second. The recent discovery and rapid development of 136 RECENT ECONOMIC CHANGES. new and rich mines in Montana, Arizona, the Dominion of Canada, and elsewhere, have engendered a feeling in the metal-trade that the supply of copper is practically illimit- able. Third. During the year 1886 the previous decline in prices was intensified by the circumstance that the con- sumption of copper in Europe fell off 14,000 tons below the average for the two preceding years — a result attributed mainly to the dullness of ship-building, and the various metal industries. In short, the great decline in the price of copper sub- sequent to 1880 and down to 1887 was mainly a normal movement, and any advance in its price since then has been in defiance of the conditions of production. The state of affairs for the producers of copper up to the close of the year 1887 was therefore a gloomy one ; re- lieved only by the circumstance that the low price of this metal tended to enlarge the sphere of its uses, and although the visible supply of copper had not fallen off materially, it was being generally recognized that consumption was gradually gaining on production, and that the stocks of raw material in the hands of smelters and manufacturers, and of finished goods in the hands of dealers and consumers, were very greatly reduced. The opportunity thus pre- sented was seized upon, in the autumn of 1887, by the Soci6t6 des Metaux of France to " corner " the copper market, and advance prices. At the outset it is probable that no very extensive operations were contemplated, but the movement soon acquired such an impetus that those who initiated it were able to perfect, and for a time success- fully carry out, a scheme for the control of the price and supply of copper which hardly finds a parallel in modem commercial experience. In the short space of three months the syndicate advanced the price of copper more than one hundred per cent — Chili bars, which sold in London on the 1st of October, 1887, for £39 15^. per ton, being quoted THE COPPER SYNDICATK 137 on the Ist of January, 1888, at £85 ; at the same time the market price of the shares of many of the principal copper- mining companies were greatly advanced ; from seventy to one hundred per cent, and to even higher premiums. These high prices for copper naturally stimulated its production everywhere throughout the world ; new mines, which the completion of new lines of railroad had brought within easy reach of the market being opened, while old mines, which the competition of stronger companies had kept partially undeveloped, were worked to their utmost capaci- ty ; the total mining output increasing from 224,000 tons in 1887 to 255,000 in 1888. Indeed, for the latter year the world's aggregate production is believed to have surpassed the world's aggregate consumption to the extent of 80,000 tons, or one third of the year's product. Two other influ- ences also virtually contributed to greatly increase the sup- ply of copper. Old and scrap copper, unavailable at eight and nine cents per pound, became important at sixteen cents; and large quantities were collected and pressed upon the market. Consumers also strove for the greatest economy of material under the higher prices ; dispensed with the use of copper altogether in many cases, and in others substi- tuted different materials, especially zinc and iron. Under such circumstances the syndicate in March, 1889, finding itself not only with an immense stock of metal which it could not sell at the current prices which it had established, but also under obligations to take at a high price all that the leading mines of the world could continue to produce for a lengthened period, broke down, and carried with it to ruin the Societe des M6taux of France, and also one of the largest banking institutions of that country — the Comptoir d'Escompte — the price of copper falling in less than thirty days from £80 per ton to £35 and £40 per ton, or to about the point before the advance under the operations of the syndicate began. I&OK. — Sir Lowthian Bell, recognized as one of the best 138 RECENT ECONOMIC CHANGES. authorities on the production of iron and steel, in his testi- mony before the Royal British Commission on the Depression of Trade in 1885, estimated the increase in the world's pro- duction of pig-iron from 1870 to 1884 at eighty-two per cent. The tables of the American Iron and Steel Associa- tion, prepared by Mr. James M. Swank, indicate an increase in the pig-iron product of the world, from 1870 to 1886 in- clusive, of about one hundred per cent. All authorities are therefore substantially agreed that the increase in the pro- duction of this commodity within the period mentioned was not only far in excess of the increase of the world's popula- tion in general, but also of the increase of the population of the principal iron-producing countries. This abnormal aug- mentation of product was not, however, equally distributed over all the years from 1870 to 1886. From 1870 to the end of 1879 it was very small, averaging, according to Mr. Bell, but about two and a quarter per cent per annum ; but after 1879 the production of iron increased all over the world in a most rapid and most extraordinary manner — the product of 1880 over 1879 having been thirty per cent greater in Great Britain, thirty-six per cent in the United States, and thirty-two per cent in Belgium, while in all other iron-producing countries the increase in production was also very notable. The years 1881, 1882, and 1883 were also characterized by continual extraordinary production ; so that at the end of the latter year the annual product of the world was about fifty per cent (49*9) greater than in 1879 ; the increase in Great Britain and the United States for the same period having been forty-one and sixty-seven per cent respectively. Attention is next asked to the price experiences of iron subsequent to 1870. In Great Britain the average prices from 1870 to 1876 rated high, and for part of the time— from 1872 to 1876 — might be fairly characterized as extrava- gant, and even as famine prices. In the United States prices were also well maintained until after 1875, and the PRODUCTION AND PRICE OP IRON. 139 reason for a lack of greater correspondence between British and American pig-iron prices for the period in question is undoubtedly due to the fact that the depression of trade, which commenced in the United States in 1873 and pre- Tailed with great severity in 1874 and 1875, did not mani- fest itself to a corresponding extent in Great Britain until 1876. After 1877 prices continued to decline in both coun- tries, but not to a greater extent than might have been ex- pected, considering the extreme depression of trade which had then become almost uniyersal ; and some descriptions of British iron, as " Staffordshire bars," were even higher in 1879 than in 1870. In 1880 there was a marked advance in the price of iron, both British and American, but after the enormous increase in the world's product in the years 1880-'82 had been experienced the prices of iron began to decline in an extraordinary manner; and in the case of some varieties touched in 1885-'86 the lowest figures ever recorded. Thus, American anthracite pig, which sold in February, 1880, for $41 per ton, declined almost continu- ously until July, 1885, when the low point of 117} was reached ; while in Great Britain, Cleveland pig, which sold for £4 178. Id, in 1872, and £2 58. in 1880, declined to £1 108. 9d. in 1886. The decline in Bessemer steel rails in the English market was from £12 Is. Id. in 1874 to less than £4 in 1887. In the United States, Bessemer steel rails, which commanded $58 per ton at the mills in 1880, fell to $28.25 at the close of the year 1884, reacting to $39^ in March, 1887. Reviewing, specifically, the causes which contributed to the above-noted extraordinary decline in the prices of iron, the following points are worthy of notice : First. The testimony of Sir Lowthian Bell shows that foreign countries have within recent years, and contrary to former experience, increased their production of iron in a far greater ratio than Great Britain, which was formerly the chief factor in the world's supply; and, in consequence. 140 RECENT ECONOMIC CHANGES. have become formidable competitors with Great Britain, not only in their own territories, but also in neutral markets. New fields of iron-ore have been discovered in Germany, France, and Belgium, very analogous in point of character to those which by discovery and development, about the year 1850, in the north of England, led to the subsequent great and rapid increase of British iron production. Second, The power of producing iron with a given amount of labor and capital, and the number of establish- ments with great capacity for production, have, in recent years, greatly increased. For example, the average product per man of the furnaces of Great Britain, which for 1870 was estimated at 173 tons, is reported to have increased to 194 tons in 1880, and 261 tons in 1884, or fifty-one per cent* Between the years 1885 and 1888 the number of furnace-stacks in the five States of Ohio, Michigan, Indiana, Illinois, and Wisconsin, was reduced from 139 to 134, but the product of the remainder during the same time nearly doubled. Third, The substitution of steel for iron has resulted in a notable diminution of the consumption of iron for the at- tainment of a given result, or, in other words, more work is * The claim has been made that as the decUne in the prices of iron in recent years has been f^reater than the improvement in the efficiency of the labor enga^zred in producing iron, the inference is warranted that some other influence than the increased efficiency of labor must have come in to occasion such decline. A comparison of the prices of the standard varieties of iron in 1870 and 1887, shows, however, nome very curious correspondences between the reduced prices and the reported dej^jreo of increase in the efficiency of labor within the same period. Thus, in the United States anthracite pig- iron, which sold at an average in 1871 of $35 per ton, had an average price in 1885 of $18. Cleveland bars, which commanded £6 19*. in 1870, sold for £4 10«. in 1887. At the same time nothing Ls more certain than that a great many other considerations than immediate labor cost enter into and determine the market prices, not only of iron, but of all other commodities. In the case of American wheat, for example, the evidence is indispuUiblc that its cost in the Liverpool market has been reduced to the extent of thirty cents a bushel in the years from 1870-*72 to 1887, from causes whoUy independent of the effi- ciency or wages of the men who produced it. CHANGES IN THE MANUFACTURE OP IRON. 141 • attainable from a less weight of materiaL Sir Lowthian Bell, in his testimony before the Royal British Commission, stated that a ship of 1,700 tons requires seventeen per cent less in weight of pig-iron, in being built of steel rather than of iron, and is capable of doing seven per cent more work. / Again, the quantity of pig-iron requisite for keeping a railroad in repair will depend greatly upon the state in which iron enters into construction; rails of steel, for example, having a far greater durability than rails of iron. * A further example of recent economic disturbance con- sequent upon changes in the manufacture of iron — charac- terized by the Secretary of the British Iron Trade Associa- tion, in his report for 1886, as " one of the most remarkable of modem times " — is to be found in the rapid disuse of the system invented about one hundred years ago by Henry Cort for converting pig-iron into malleable iron by the so- called process of " puddling." Twenty years ago the use of ♦ Opinions, as yet, vary greatly as to the comparative durability of iron and steel rails. In the testimony given before the British Royal Commis:iion, Hr. I. T. Smith, manager of the Barrow Steel Company, gave it as his opin- ion that the life of a steel rail is three times that of an iron rul, adding, ^^ My reason for saying so is, that I know that upon the London and Northwestern Bailroad, where steel rails have been now in use more than twenty years, they consider it so/* Sir Lowthian Bell also, in testifying before the commission, on the effect on the iron -trade of Great Britain from the expected longer duration of steel rails, says : ** Assuming iron rails to last twelve and steel rails twenty-four years, instead of the railways now in existence in the United Kingdom requiring 465,648 tons annually for repairs, 282,824 tons will suffice for the purpose. Although this only involves the saving of a comparatively small weight of pig-iron, it means less work for rcmelting and for our rolling-mills, say to the extent of 4,000 to 5,fXK) tons per week." The difference in duration of iron and steel rails is not, however, in itself a complete measure of the amount of pig- iron required for renewals. This arises from the fact that an iron rail splits up and becomes useless long before the actual wear, as measured by the diminn- turn of weight, renders it unsafe, which often happens when the loss of weight doea not exceed four per cent of the original weight. Steel rails, on the other hand, go on losing weight until they are from ten to twenty per cent lighter than when they were Uud down, before becoming onaafiB. 142 RECENT ECONOMIC CHANGES. • this process was almost oniyersal, to-day it is almost a thing that has past ; and the loss of British capital invested in puddling-fumaces which have been abandoned in the ten years from 1875 to 1885 is estimated to have approximated £4,667,000, or $23,333,000, involving in Great Britain alone a displacement or transfer of workmen to other branches of industry during the same period of about 39,000. After 1883 the production of iron in all iron-producing countries was for a time notably restricted ; the product of the United States, for example, declined from 4,595,000 tons in 1883 to 4,044,000 tons in 1885, and that of Great Britain from 8,490,000 tons to 7,250,657 tons in the cor- responding years ; and as the decline in prices continued, and subsequently reached its extreme in 1885-'86, it has been urged that some other influences than excessive pro- duction must have been influential.* This paradoxical cir- cumstance admits, however, of sufficient explanation. The years 1884, 1885, and 1886 were years of almost unprece- dented business depression, restricting necessarily the uses and demand for iron for industrial purposes ; while at the same time the capacity of every iron-producing country to supply its domestic requirements was greater than ever be- fore. Under such conditions Great Britain, which produces about one half of all the iron and steel that is made in Europe, and more than any other country except Belgium depends on foreign markets to take its surplus of these products, found more difficulty than ever before in dispos- ing of such surplus. The fact that the unsold stocks press- ing upon the markets of the United States and of Europe continued to accumulate during the years 1884 and 1885, when production was restricted and declining, would seem also to be equivalent to a demonstration that no other influ- ence than over-production could have operated at that period to occasion a continual decline in prices. Thus, in 1879 ♦ "FinancUl Chronicle" (New York), January 21, 158S. OVER-PRODUCTIOK OF IRON. I43 the unsold stock of all kinds of pig-iron in the United States in the hands of the makers was only 141,674 tons ; in 1881, 210,876 ; in 1883, 533,800 ; and in 1884, 593,000 tons (the report of the American Iron and Steel Association being authority); while for the United States and Great Britain, conjointly, Sir Lowthian Bell reports the unsold stocks on hand at 1,874,000 tons in 1878, and 2,404,000 in 1884 — ^an increase in these years of 528,000 tons. At the close of 1885 the stock of unsold pig-iron in Great Britain alone amounted to 2,491,000 tons— exactly fifty per cent larger than the stock on hand at the close of 1882, and the largest that had, up to that time, ever been held in Great Britain at the close of any one year. The unsold stock at the close of 1887 was, however, 2,616,000 tons, or 125,000 larger than in 1886. In consequence of increased demand occasioned by ex- tensive railroad constructions, the reduction in production of pig-iron which commenced in the United States in 1884 terminated in 1885-'86, since when production has aug- mented in a manner almost without precedent, namely, forty per cent in 1886 in excess of 1885, thirteen per cent in 1887 in excess of 1886, and eleven per cent in 1888 in ex- cess of 1887, the product for 1888 having been the largest in the experience of the country. The causes influencing the increase in iron production in the United States in 1885-'86 not having been concurrently operative in Europe, the revival there of this industry was somewhat later ; but for the United Kingdom the prodtiction for 1887 was about eight and a half per cent over that in 1886, while for all countries during the same period the increase has beeji esti- mated at 9- 6 per cent. With increased demand for iron, prices in the United States quickly advanced — i. e., from $17.75 per ton for an- thracite pig in July, 1885, to 121.50 in January, 1887. As production increased, however, prices, in harmony with pre- vious experiences, again declined, and in the first six months 144 RECENT ECONOMIC CHANGES. of 1889 American pig-iron generally ruled at lower figures than at any former period. Quicksilver. — Excepting petroleum and quinine, the decline in price of this metal seems to have been greater in recent years than that of any other leading commodity — i. e., from £26 per flask (the highest) on the London market in 1874, to £5 28. 6d. (lowest) in 1884; and from $118 (high- est) to 126 (lowest) on the San Francisco market during the same period — a decline of 77*1 per cent The explanation of this movement of price is to be found mainly in the cir- cumstance that California, which furnishes nearly one half of the world's supply of this metal, increased her production from 30,077 flasks in 1870 to 79,684 in 1877 ; and although, as the result of low prices, many of the mines of California subsequently suspended operations and none paid dividends in 1885, the generally increased supply of quicksilver, coupled with its diminished use in the reduction of silver-ores — con- sequent on the introduction and use of cheaper processes — prevented any material augmentation in its price until 1886-'87, when the price advanced in the latter year to £11 58. per flask in London and to 150 in San Francisco. Silver. — The decline in the average annual price of bar-silver per standard ounce in pence upon the London market has been from 59^ in 1873 to 41| in May, 1888 (the last being the lowest figure in all history), a decline in value in relation to gold in fifteen years of about thirty per cent Notwithstanding this great decline in price, the annual pro- duction of silver during this same period has steadily aug- mented, or from $64,000,000 in 1873 to $95,000,000 in 1880, $122,000,000 in 1885 and $135,000,000 in 1887, an increase in fifteen years of one hundred and eleven per cent. Such a large and constantly increasing product of silver, while its price is declining, suggests a limitless supply.* • The flguree here given are those reported by the Director of the Mint of the United States, the value of silver being taken at the ooining lute in the United States ai ailver dollars of $41.66 to the kilogramme. PRICE EXPERIENCES OF TIN. 146 Tin. — The production and price experiences of this metal daring the last quarter of a century have been very curious. The world's consumption of tin from 1860-'64 constantly tended to be in excess of production, and prices rose from £87 per ton (the lowest figure) in 1864 to £159 (the highest) in 1872. In this latter year the mines of Australia began to produce very largely, and in a short time afforded a supply equal to one third of the world's current consump- tion. Under such circumstances the price of tin rapidly declined, and in October, 1878, touched £52 IO5., the lowest phce ever known in history, a decline of sixty-six per cent. Subsequently the product of Australia declined and that of the "Straits" of Malacca did not materially increase, while that of England (Cornwall) and other countries re- mained nearly stationary. Meantime the consumption of tin throughout the world continually increased, so that prices advanced concurrently — i. e., from £52 lOs. on the London market in 1879 to £105 in May, 1887. Kecogniz- ing this tendency of price movement, a French syndicate — the Societe des Metaux — undertook to control the mar- ket-supply of the metal with a view of still further advanc- ing prices, and for a time were so successful that in Decem- ber, 1887, " Straits " tin was quoted in London at £167 los. As a consequence of such inflation, every pound of tin that could be collected was placed on the market, and, as at the same time consumption was greatly checked, stocks accu- mulated to an unprecedented amount, the year 1887 closing with a visible market-supply full fifty per cent greater than twelve months previous. The syndicate was, nevertheless, enabled for some time to maintain prices at an extremely high level ; but in May, 1888, the receipts of tin from the " Straits " having for the previous five months been increased by upward of 107,000 hundred-weight over the receipts of the corre- sponding period of the preceding year, its ability to do so ceased. The conditions of supply and demand were too much against it, and in two days the advance in price 146 RECENT ECONOMIC CHANGES. which it had taken six months to engineer was lost, tin de- clining on the London market within that time from £166 (1830) per ton to £77 ($485), or over forty per cent. Subse- quently an even lower quotation of £76 per ton was reached. Tin Plates. — Owing to a tendency of consumption to exceed production, tin plates in common with tin ruled at what were termed " famine " prices in 1874, and for some years previous ; the average price for " coke " plates being from 26^. to 27*. per ton. After 1875, prices declined about fifty per cent ; or during the year 1887 to 12s. lid. to 13^. per box. This remarkable and steady decline during a period of fifteen years is as clearly and certainly understood as in the case of tin, above noticed, and is referable to three causes : First, the reduction in the cost of the metal tin. Second, to improvements in the manufacture of iron, and the extensive substitution of steel (plates) in place of charcoal and puddled-iron plates. Third, to new processes of manufacture and tinning ; a modem tin-plate mill turn- ing out every twenty-four hours more than double the product of old-fashioned mills, without any increase in expenditure for motive power or labor. Supply and con- sumption alike under such circumstances have increased to an enormous extent, and the tin-plate trade, instead of being a minor industry of the world, as was formerly and not remotely the case, has become one of great magnitude.* These changes in the conditions of production and prices * An attempt on the part of Germany to break in upon the almost complete monopoly of the manufacture of tin plates enjoyed by Great Britain, by im- posing: a heavy duty on their importation, has been singrularly unsuocessful ; domestic (German) production and exjwrts having diminished, and exports increased, as will appear from the following table : YEAR. 1885. 1878. Production. Ton«. 4,892 8,582 Tons. 5,798 6,807 Exports. Tons. 186 1,696 NICKEL AND LEAD. 147 brought, however, nothing of prosperity to the British tin- plate manufacturing industry ; and the period under con- sideration was characterized by very many failures on the part of (South Wales) producers. Nickel, not many years ago, was a scarce metal of lim- ited uses, and commanded comparatively high prices. Lat- terly the discovery of new and cheaper sources of supply have tended to throw upon the market an amount in excess of the world's present average yearly consumption — esti- mated at between 800 and 900 tons — and, as a consequence, there has been " over-production, and unsatisfactory prices to dealers." There is, moreover, little prospect that prices in respect to this metal will ever rerive — one mine in New Caledonia (Pacific Ocean) alone being estimated as capable of producing two or three thousand tons annually, if re- quired; while the discovery of new deposits of ore is fre- quently reported. Lead experienced a decline, comparing the highest market prices in New York, in January, 1880 and 1885, re- spectively, of about thirty-nine per cent. The world's produc- tion of lead since 1876 has increased very rapidly ; especially in the United States ; the total annual product of which has advanced from 42,540 tons in 1873, to 143,957 in 1883, and 180,555 in 1888. One marked result of this increase has been that the United States, in place of being as formerly a large consumer of foreign lead, now imports but a compara- tively insignificant quantity, namely, 7,035,000 pounds in 1888 as compared with 72,423,000 pounds in 1873. Rich and extensive mines of lead have also in recent years been discovered and worked in Australia. The decline in the price of lead, above noted, occasioned the suspension or bankruptcy of many English lead-mining companies, and during the year 1885 much distress from this cause was reported as existing among English lead- miners. The following is an example of another economic disturbance contingent on changes in the production and 148 RECENT ECONOMIC CHANQE& price of lead ; Formeriy the domestic supply in the United States of white-lead and of all paints, the basis of which is oxide of lead, was derived almost exclusively from manu- factories located upon the Atlantic seaboard ; but with the discovery and working of the so-called silver-lead mines of the States and Territories west of the Mississippi, and the production of large quantities of lead as a product residual, or secondary to silver, the inducements offered for the manufacture of white-lead and lead-paints, through local reductions in the price of the raw material and the saving of freights, have been sufficient to almost destroy the former extensive white-lead and paint business in the Eastern sections of the United States, and transfer it to the Western. At present the lead produced in silver-mining consti- tutes a large proportion of the world's supply of lead ; and most of the mines of lead which do not produce a consid- erable amount of the more precious metal have been aban- doned; "or, in other words, lead is now produced as a valuable by-product in the mining of silver." At the same time the industrial employment of lead is diminishing, other metals having taken its place — especially in the con- struction of pipes — to such an extent that the main use of lead is now for small projectiles, and for the making of paint. Coal. — The decline in the export prices of British coal, comparing the average for 1867-77 with 1886, was about thirty-three per cent. In the United States, although her present annual production of coal is one fourth that of the world, nothing reliable in the way of average prices for a se- ries of years can be given ; inasmuch as, through combina- tions of coal-owners and railways, and by reason of frequent labor troubles among miners, the price of coal in recent years has rarely been determined by natural conditions and has fluctuated greatly from year to year. Thus, on the 1st of January, 1876, 1881, 1882, and 1885, respectively, the price of mining 100 bushels of coal on the railroads entering into PRODUCTION AND PRICES OP COAL. 149 the city of Pittsburg, Pa., was $2.50, $3.50, $4.00, and $3.00 ; and the price of coal at Pittsburg, Pa., on the cor- responding dates, per 100 bushels, was $5.50, $7.00, $7.50, and $5.50. Again, the decline in the average annual price of anthracite coal (by the cargo at Philadelphia), comparing 1870 with 1880, was thirty-eight per cent ; but, as between 1870 and 1886, it was only 66 per cent According to the returns of the United States Geological Sorrey, there was a gain in the production of coal in the United States for the year 1886, as compared with the ag- gregate product of 1885, of 1,785,000 short tons, but a loss in value at the point of production of $4,419,420. For the succeeding year, 1887, on the other hand, there was a gain of 16.333,000 tons over the product of 1886, and a gain in value of $26,483,000. The increase in the production and also of the consump- tion of coal within recent years constitutes one of the most remarkable features in economic history. The increase in the product of the five chief coal-producing countries of the world — Great Britain, the United States, Germany, France, and Belgium — from 1870 to 1886 inclusive, has been in ex- cess of eighty per cent : Great Britain increasing her prod- uct from 109,000,000 gross tons in 1870 to 159,351,000 in 1885, and 169,935,000 in 1888 ; and the United States from 38,468,000 tons in 1870 to 97,000,000 in 1885, 111,000,000 for 1887, and 123,000,000 in 1888, or eleven per cent in excess of the product of 1887. In Germany, the increase reported was from 36,041,000 tons in 1873 to 55,000,000 in 1883. In 1870 the average output of coal per miner in the British coal-mines — counting in all the men employed — was 250 tons, an amount never before reached. In 1879 this average had increased to 280 tons per man ;* and in 1884, according ♦ See testimony of assistant-keeper (Meade) of the mining records of Great Britun, *^ Second Keport of the British CommissioQ on Depression of Tnuie," 1886, p. m. 150 RECENT ECONOMIC CHANGES. to Mr. J. S. Jeans, Secretary of the British Iron Association, was 353 tons,* and for the United States 374 tons. For Germany, the increase was from 261 tons in 1881 to 269 tons in 1883; and in Belgium, for corresponding years, from 165 tons to 173 tons per miner, while for 1887 the average product of each coal-mining hand, according to M. Harze, chief of the Administration of Mines, reached 244 tons, or 15 tons more than in 1886. Concurrently with the enormous increase in the produc- tion of coal and greater efficiency and economy in mining, very much has been done to reduce the amount of coal for- merly used to effect industrial results ; for example, at blast- furnaces, coal was formerly used for heating the boilers that furnished steam for blowing, hoisting, etc., and for heating the air which was blown into the stacks. Now, a well- ordered set of blast-furnaces does not use a single ounce of coal except what goes in to melt the ore. The whole of the heat used to produce the steam required in connection with the furnace, and for heating the stoves for making the hot blast, is obtained from the gases which rise to the top of the stacks in the process of smelting the iron, and which for- merly was all thrown away.f The following short table, based on official statistics, from the London " Economist,*' October, 1888, shows the progressive economy in the use of coal for the production of pig-iron in Great Britain during the short space of the three years 1885, 1886, and 1887: YEAR. Pig-iron. Coal QBed. Per cent of coal. 1887 Tons. 7,559,518 7,009,754 7,415,469 Tons. 15,304,188 14,249,715 15,287,527 203 1880 203 1885 205 • •* Journal of the Royal SUtUtlcal Society/' 1884, pp. 621, 623. t Testimony of J. D. Ellia, chairmaD of John Brown & Co., Sheffield, Britiah ConmuBaion, 1886. ECONOMY IN THE USE OP COAL. 151 The displacement of finished iron by steel, which is rap- idly taking place, also tends to reduce the consumption of coal ; while in the manufacture of gas, and in all steam ap- pliances— more especially in marine locomotion — it is well known that great economies in the use of coal have been effected, whereby it is possible to do a far greater amount of work with a given quantity of fuel than was the case five or ten years ago. In the United States a new agency has come in, namely, natural gas, which has been largely influential in displacing the use of coaL For.the year 1886 the amount of coal thus displaced was estimated by the United States Geological Survey at 6,453,000 tons, valued at $6,847,000, while for 1887 the displacement was about fifty per cent greater, or 9,867,000 tons, having a valuation of $15,838,000. Furthermore, it should not be overlooked that the cost of transporting coal, which constitutes a most important ele- ment in determining its price at the point of consumption, has been subject, both by sea and land, to very great reduc- tions. That the world*s consumption of coal during the period under consideration has progressively and enormously in- creased, and is stiU increasing, is not to be questioned, and, in the absence of any reliable data for ascertaining the rela- tions between the production and consumption of this com- modity, great latitude of opinion on this point is permis- sible ; but, at the same time, the fact that competition for the supply of coal in all the markets of the world has been and is exceedingly keen, goes far to justify the current be- lief of the trade everywhere that production has for years been augmented at a greater rate than the demand war- ranted. In addition, the further facts that new, extensive, and readily accessible coal-fields have been and are continu- ally being discovered, that the supply of coal is regarded as practically inexhaustible, and that the slightest increase of demand is suflScient to speedily stimulate production, would of themselves seem to forbid the assumption that any cause 152 EECENT ECONOMIC CHANGES. except change in supply and demand could have been influ- ential in determining the recent price experiences of coal. Coffee and Tea. — The decline in recent years in the prices of each of these great staple commodities has been almost as remarkable as has been the case with sugar — coffee having touched the lowest prices ever known in com- merce in the early months of 1886, the price of " ordinary," or " exchange standard No. 5," having been seven and a half cents in January of that year in the New York market ; while, according to Mr. Giffen, of the British Board of Trade, the decline in the price of tea, comparing 1882 with 1861, has been greater than that of sugar, or, indeed, of almost any other article. In both cases the decline would seem to find a sufficient explanation in a common expres- sion of the trade circulars, " Our supplies have far outrun our consumptive requirements." In the case of coffee, the total imports into Europe and the United States, comparing the receipts of the year 1885 with 1873, showed an increase of fifty-seven per cent ; while the increase in the crops of Brazil, Ceylon, and Java during the same period has been estimated at fifty- two per cent. Subsequently to January, 1886, the price of coffee, owing to a partial failure of the Brazil crop, rapidly advanced two hundred per cent ; " or- dinary " or " exchange standards " having been sold in New York in 1886 at twenty-two cents, the highest point in the history of American trade, unless possibly during the war, when entirely abnormal circumstances controlled prices. From these high prices there was a subsequent disastrous re- action and extensive failures. The advance in average prices was, however, maintained in 1887, and for so long a time that the reduction in the world's consumption during that year was very great, and for Europe was estimated at the large figures of 77,000 cwts., or over 1,000,000 bags of " Brazil " ; while in the United States the reduction was believed to have been equivalent to two pounds per head of the popula- tion, or double the total annual consumption of Great Britain. COFFEE AND TEA. 153 In the matter of the supply of tea, the total exports from China and India increased from 234,000,000 pounds in 1873 to 337,000,000 pounds in 1885, or forty-four per cent ; the exports from India having increased from 35,000,000 pounds in 1879 to 68,000,000 pounds in 1885 ; 98,000,000 in 1887, and 113,000,000 in 1888.* In this latter year the imports of Indian and Ceylon tea into Great Britain for the first time on record exceeded the imports of Chinese teas ; and herein we have another striking example of the inability of unskilled labor, or labor following old processes, even at ex- treme low wages, to contend against intelligence and ma- chinery ; inasmuch as the English planter in India by skillful cultivation and careful manufacture with machinery is now able to place in Europe a tea of good quality, and greater strength, at a price which the Chinaman, with his old methods, producing an inferior article, can not afford. Sulphate of Quinine, a standard chemical prepa- ration, used extensively all over the world for medicinal purposes, affords another illustration of extraordinary de- clining price movements in recent years, which are thor- oughly capable of explanation. In 1865 the highest price of sulphate of quinine in the English market was 4^. 4J. ($1.07) per ounce, which gradu- • The British ChaoceUor of the Exchequer, Mr. Goschen, in his budpet speech for 1887, calls attention to the following curious incident of financial disturbance jjjowing out of a change in the quality of tea, which, in turn, has been contingent on a change in the locality or country of its production: " Whereas, ten years ago," he said, " we (Great Britain) received 156,000,000 pounds of tea from China and 28,000.000 pounds from India, or 184,000,000 pf>unds altogether, in 1886 we received 145,000,000 pounds from China and 81,000,»XK) pounds from India. In the transfer of consumption of tea from th© tea of China to that of India, we have to put up with a loss of reveuue owing to the curious fact that the teas of India are stron^rer than the teai< of China, and therefore go further, so that a smaller quantity of tea is required to make the same number of cups of tea." Mr. Goschen further called attention to the fact that " the fell in the price of tea and sugar (in Great Britain) ha.« been so great, that whereas in 1866 a pound of tea and a pound of sugar would have cost 2». td. and in 1876 2g. lii., in 1886 they would have cost only 1«. 7i^., or Zd. less than they would have cost in 1866 with all the duties taken off." 164 RECENT ECONOMIC CHANGES. ally advanced to 9s. 6d, in 1873, reacting to 6s. 9d. in 1876. In the subsequent year, owing to an interruption in the ex- portation of cinchona-bark from South America by civil war in New Granada, and by low water in the Magdalena Eiver, the price advanced to the unprecedentedly high fig- ure of 16s. 6d. ($4.70) per ounce, receding to 135. in 1879, and 12s. ($3) in 1880. In 1883 identically the same article sold in Europe for 3^. 6d. (80 cents) per ounce, in 1885 for 2s. 6d.y and in 1887 to Is. 6d. (30 cents) or less. The history of the influences that have occasioned such results is as follows : Formerly all cinchona-bark from which quinine is manufactured came from the forests of the north- ern states of South America; and as the cinchona-trees were not under any system of cultivation, and as the meth- ods of collecting their barks were wasteful and destructive, reasonable apprehensions began to be entertained, as far back as 1855, that the supply of this most important natural product would ultimately, and at no distant day, be ex- hausted. Moved by such considerations the English and Dutch Goveniments determined, therefore, to attempt the cultivation of the cinchona-trees in India and Java, and the effort has proved exceedingly successful. The first in- stallment of seeds and plants reached Ceylon and Java from South America in 1861, and the first export of bark, con- sisting of but twenty-eight ounces, took place in 1869. After that the East Indian product gradually but enormously in- creased— Ceylon, for example, exporting 6,925,000 pounds in'1882-'83 ; 11,500,000 pounds in 1883-'84; and 15,235,000 pounds in 1885-'86. From Java the exports have been much smaller, but for 1887 were in excess of 2,200,000 pounds. As the world had never before been supplied to such an extent with bark, its price rapidly declined ; and as the cost of quinine is mainly determined by the cost of the crude material from which it is manufjictured, its extraor- dinary price reduction followed, as has been pointed out. Two other circumstances contributed to such a result : the PAPER AND RAOa 155 first is, that while cinchona-barks from South America — the prodact of indigenous trees — ^yield on an average not over two per cent of quinine, the bark of the cultivated tree in the East Indies is reported to yield from eight to twelve per cent. A given quantity of bark, therefore, goes much further in producing quinine than formerly. Secondly j owing to the recent discovery and employment of new and more economical processes, more quinine can now be made at less cost in from three to five days than could have been effected by old methods in twenty days. Paper and Rags. — A quarter of a century ago, or less, paper was made almost exclusively from the fibers of cotton and linen rags; and with an enormous and continually in- creasing demand, paper and rags not only rapidly increased in price, but continually tended to increase, and thus greatly stimulated effort for the discovery and utilization of new fibrous materials for the manufacture of paper. These efforts have been so eminently successful that immense quantities of pulp suitable for the manufacture of paper are now made from the fibers of wood, straw, and various grasses, and so cheaply that the prices of fair qualities of book-paper have declined since the year 1872 to the extent of fully fifty per cent, while in the case of ordinary " news " the decline has been even greater. Rags, although still extensively used, have, by the competitive supply of substitute materials, and a consequent comparative lack of demand, been also greatly cheapened, and the cotton rags sold in 1887 for a lower price in the London market than ever before recorded. The returns of the American Paper-Makers' Association exhibit the following changes that have taken place in this department of industry in the United States, comparing the years 1880 and 1888 : Increase of capital employed, from $46,000,000 to 180,000,000; of product, from 451,000,000 tons to 1,200,000,000 ; of wages, from an average of $1.13 to $1.50 per day. On the other hand, the average value of a pound of paper declined from 609c. in 1880 to 3 '950. in 166 RECENT ECONOMIC CHANGES. 1888 ; and the per cent of labor per pound, from 94 cents to 77 in the same period. In other words, while the cost (wages) of labor has increased thirty-two per cent, the cost of labor per pound of paper has decreased twenty-two per cent. Nitrate op Soda. — The recent price experiences of nitrate of soda (Chilian saltpeter) have been very curious. The supply of this article, which corresponds to the more valuable nitrate of potash (true saltpeter), is practically lim- ited to one locality on the earth's surface — a rainless, desert track — ^in the province of Tarapacd, which formerly belonged to Peru, but has recently been annexed to Chili. It is cheaply and plentifully obtained, at points from fifty to ninety miles from the coast, by dissolving out the nitrate salt from the desert earth, which it impregnates, with water, and concentrating the solution by boiling to the point where the nitrate separates by crystallization. Up to the year 1845 it was an article so little known to commerce that only 6,000 tons were annually exported ; but as its value as a fertilizing agent in agriculture, and as a cheap source of nitrogen in the manufacture of nitric acid, became recognized, the de- mand for it rapidly increased until the amount exported in 1883 was estimated at 570,000 tons, or more than a thousand million pounds. To meet this demand and obtain the profit resulting from substituting skillful for primitive methods of extracting and marketing the nitrate, foreign capital, mainly English, extensively engaged in the business. A large amount of English-made machinery, and many English en- gineers and mechanics, were sent out and planted in the desert; additional supplies of water were secured, and a railroad fifty-nine miles in length constructed to the port of Iquique on tlie sea-coast, for the transportiition of coal, pro- visions, and otlier material up^ and tlie nitrate as a return freight down. So energetically, moreover, was the work pressed, that at the last and most complete establishment constructed under English auspices, the business, employing when in full operation six hundred men, was prosecuted NITRATE OP SODA. 157 unremittingly by night (by the agency of the electric light) as well as by day. The result was exactly what might have been anticipated. The export of nitrate, which was 319,000 tons in 1881, rose to 570,000 tons in 1883 ; and prices at the close of 1883 declined with great rapidity to the extent of more than fifty per cent, or to a point claimed to be below the cost of production. Such a result, threatening the whole business with disaster, led to an agreement on the part of all the interests concerned, to limit from June, 1884, to January, 1887, the product of every establishment to twenty-five per cent of its capacity. But, notwithstanding these well-devised measures, prices were not immediately restored to their former figures, the average price per cwt in London having been 10^. in 1886, as compared with an average of lis. for 1867-'77. Since 1887 the increase in the demand for this commodity, especially by the growers of beet-root on the Continent, has been very marked ; and the world's consumption is estimated to have advanced from 502,000 tons in 1887 to 645,000 in 1888. The world's total supply increased, however, during the same period in a greater proportion, namely, from 507,000 tons in 1887 to 715,000 tons in 1888. The almost certainty that the con- sumption of nitrate of soda is to continue increasing, and the knowledge that its supply is or can be thoroughly con- trolled, gave rise in 1888 to great speculation in the shares of the various producing companies, and advanced their prices to very high figures. This experience of nitrate of soda seems especially worthy of notice, because it constitutes another example of a great and rapid decline in the price of a standard and valuable commodity in the world's com- merce, and for which — all the facts being clearly understood — it is not possible to assign any other cause than that of production in excess of any current demand for consump- tion, and which in turn has been solely contingent on the employment, under novel conditions, of improved methods for overcoming territorial and climatic difficulties. 8 158 RECENT ECONOMIC CHANGES. Concurrently .with the fall in the price of nitrate of soda, saltpeter, or nitrate of potash, also notably declined from 2S8. M. in 1880 to 21$. in 1887 (for English refined), a fact which seems to find a sufficient explanation in the circumstance that nitrate of soda can be used to a certain extent as a substitute for nitrate of potash, and that the ex- port of the latter from India, the country of chief supply, increased from 352,995 cwt. in 1881 to 451,917 cwt in 1885, or thirty-six per cent. The decline in the prices of many chemicals, due to im- provements in methods and to excess of production, has also been very great in recent years — the decline in soda-ash from 1872 having been fifty-four per cent, while bleaching- powders (chloride of lime) declined from £10 in 1873 to £6 15«. in 1878, reacting to £9 in 1887 ; but declined to £7 lbs. in 1888. During 1888 the fiupply of salt — the crude material out of which soda is manufactured — having passed under the control of an organization or " trust," the price of salt, and consequently the price of soda-ash, materially advanced. Caus- tic soda in 1887 touched, however, the lowest price on record. Meats. — The price of meats, according to the statistics of English markets, exhibits no material decline, comparing the average prices of 1867-'77 and of 1878-'85. But during the years 1885 and 1886 the decline was very considerable, and extended also to most other animal products. The per- centage of fall in the carcass prices of different kinds and quantities of meat in London, as given by the London "Economist" of November 27, 1885, was, in comparison with the prices for 1879, as follows : For inferior beef, forty- three per cent ; prime beef, eighteen per cent ; prime mut- ton, thirteen per cent; large pork, twenty- two per cent; middling mutton, twenty-seven per cent. In November, 1887, Mr. W. E. Bear, of England, pub- lished the following estimates of the meat-supply — home and foreign — of the population of the United Kingdom for the years 1877 and 1885, respectively : PRODUCTION AND PRICES OF MEATS. 159 Yeftr. PopoJation. Total meat-suppl j. 1877 83,446,000 30,800,000 cwt. 1885 36,331,000 36,460,000 " Increase of population, 8'6 per cent, supply, 18 " The decline in the average export price of salt beef in the United States was from 8*2 cents per pound in 1884 to 6 cents in 1886 (twenty-six per cent) ; of salt pork from 8*2 cents to 5'9 cents (twenty-seven per cent); of bacon and hams from 9*6 cents to 7*5 cents ; and of lard from 9*4 cents to 6*9 cents. In the case of lard-oil an exceptionally great decline in price in recent years — i. e., from an average of 94 cents per gallon (Cincinnati market) in 1881-'82 to a mini- mnm of 48*8 cents in 1886, is claimed to be due mainly to the large production and more general use of vegetable oils — cotton-seed oil in the United States, and palm and cocoa- nut oils in Europe. The effect of the increased quantity and cheapness of these vegetable oils has been especially marked in England, France, Italy, and Germany ; and has also undoubtedly influenced the price of tallow, the decline of which in English markets, comparing the average prices of 1867-'77 with those of 1886, having been thirty-one per cent, while in the United States the price for 1884-'85 was the lowest on record. The immediate cause of this decline in the price of meats in the United Kingdom and on the Continent of Europe was undoubtedly the new sources of supply of live animals and fresh meats that have been opened up to Europe, and especially to Great Britain, from extra-European coun- tries : the value of the imports into Great Britain from North America of live animals having increased from $1,085,000 in 1876 to $22,980,000 in 1885 ; of fresh meat from $1,950,- 000 to $11,820,000; and of fresh meat from Australia and the river Plate (transported through refrigeration) from $880,000 in 1882 to $5,850,000 in 1885 ; a total increase of from $3,025,000 in 1870 to $40,650,000 in 1885. The abil- 160 RECENT ECONOMIC CHANGES. ity of the three countries named to increase their exports of meat during such a brief period to such an enormous extent, constitutes of itself a demonstration of increased product and of the diminished price that is the invariable accom- paniment of a surplus seeking a market.* All these coun- tries, moreover, coincidently with their increased exports of meats, increased their stocks of cattle, sheep, and pigs. Thus, in the United States the increase in the number of cattle between 1870 and 1880 was sixty-six per cent ; f in Australia, between 1873 and 1883, forty-three per cent; while the recent increase in the Argentine States is believed to have been in a greater ratio. In respect to sheep, also, their number increased in the United States from 33,783,- 000 in 1875 to 50,626,000 in 1884 ; in Australia, from 67,- 144,000 in 1873 to 83,369,000 in 1883, and 97,900,000 in 1887 ; while in the Argentine States the number at present is estimated to be nearly as great as in all Australia. It is probable that the number of cattle in Europe has not increased in recent years, and may have declined, al- though there are no recent accepted statistics on this point " The Continent of Europe, however, as a whole," according to the London "Economist" (October 15, 1887), "supplies itself with beef and spares a surplus for the United King- dom. It is true that a few countries (of the Continent) im- • A statement of the late Neumann -Spallart — a recognized authority — that *^ the total international trade in meat of all kinda had only increased from 1,946,000,000 marks in 1877 to 1,954,000,000 in 1884," has been regarded by some writers as constituting proof tliat the decline in the price of meats during these years could not have been occasioned by any increased supply. If, however, the greatly inereased quantity of meat which a given amount of money (gold) represented in 1884 over 1877 is taken into consideration, the deductions from Mr. Spallart*s figures are capable of a very different interpre- tation. t In the United States there has been since 1888 a marked decline in the value of prairie oatUe on the hoof, which in the main has resulted from ovcr- snpply. In 1888 the receipts at the Union Stock Yards, at Chicago, were 880,000 head in excess of what had ever been received before. Besides, there was a large visible unqiarkcted supply. PEOZEN-MEAT TRADE. 161 • port small quantities of beef in one form or other, but there is a net surplus." Commenting on this subject, an elabo- rate report on " Cattle and Dairy Farming," issued by the United States State Department in 1887, also thus sums up the situation : ^^ It would seem as if the cattle, meat, and dairy producers of the world (that portion at least which prosecutes adyanced agriculture) look to the British markets for the consumption of their surplus products." And, in confirmation of this conclusion, the same report makes the following exhibit of the manner in which the exports of "cattle and their products" from the United States in 1885 were distributed according to value : " To the United King- dom, $54,250,000; to all the other countries in Europe, $3,200,000 ; to all the countries outside of Europe, $4,108,- 176." And what is true of the distribution of the exports of the surplus meat products of the United States in recent years has been equally true of those of Australia, Canada, and the " river Plate." Or, in other words, the admitted great increase in the export of cattle and cattle products, as well as of other meats from all these countries in recent years, has practically sought but one market, namely, that of Great Britain. As bearing on the future meat-supply of Europe, it is important here also to call attention to the rise and devel- opment of a comparatively new industry, namely, " the frozen-meat trade." In 1860, 400 carcasses of frozen mut- ton were imported from Australia into Great Britain ; in 1888 the importations from Australia and the river Plate were close on to 2,000,000 carcasses. One establishment in New Zealand — " The Canterbury Freezing Company" — has, it is stated, contracted with ship-owners for the transporta- tion of frozen mutton to London for the years 1889 and 1890 at a rate not exceeding one penny per pound. This reduction in the charge for freight has been rendered possi- ble by a change in the conditions of trade. At one time only from 10,000 to 12,000 carcasses could be carried in 162 RECENT ECONOMIC CHANGES. eacli ship ; now the average would be between 24,000 and 30,000 carcasses to each vessel. The London charges are reckoned at ^d, per lb. ; in New Zealand they are slightly under ^d. ; the total, therefore, will not exceed 2d. per lb. This, on the minimum price of d^d. in London, will give the farmer 1^. per lb., in addition to skin and fat. The Argentine States of South America are also largely engaged in the exportation of frozen meats, and, under the stimulus of a boimty offered by the Government, the business promises to assume large proportions. Cheese. — American cheese experienced an extraordi- nary decline in price from twelve to thirteen cents in 1880 to 8f and 10^ cents in 1885 ; and, as the American contri- bution of this article of food to the world's consumption has constituted in recent years a large factor, the world's prices generally corresponded with those of the American market. This decline in the United States was due mainly to two causes: First The establishment of the cheese- factory, which brought new processes and new machinery — not adapted for economical use by small or individual farmer producers — to the business of manufacturing, and so revo- lutionized and greatly cheapened production. Second, The relative prices of butter and cheese in the United States after 1880-'81 were so much to the advantage of the latter, that large quantities of milk which had previously gone to the creameries to be made into butter, found their way into factories to be made into cheese ; and for the years 1883, 1884, and 1885, the annual receipts at New York city averaged twenty-five per cent in excess of the receipts for 1880. Demand for export at the same time largely fell off, and so assisted in the decline of prices; the same influences existing in the United States having also appar- ently prevailed to a degree in other cheese-producing coun- tries ; the amount recognized by the trade as having been supplied to the great cheese-consuming countries, Great Britain, the Continent of Europe, and South America, hav- CHEESE AND PISH. 163 ing increased from 1880 to 1884 to the extent of fonrteen per cent. Among new sources of cheese-supply in recent years is New Zealand, whose product in large and rapidly increas- ing quantities is becoming a factor in the European market. The unprofitableness of wheat-culture in many countries is also undoubtedly turning the attention of their farming classes to dairy farming in preference, and for this reason the world*8 supply of cheese has, and is likely to be, largely augmented. One proof of this is to be found in the circum- fstance that the Swiss agriculturists — the reputation of whose cheese product is proverbial — are complaining of an inability to extend and even hold their existing markets, and are devoting more attention to the raising of cattle with a view to their ^exportation. Fish.— The years 1884 and 1885 in the United States were notable for a plethora of all kinds of dry and pickled fish on the one hand, and of extreme low prices of such commodities on the other ; mackerel having touched a lower price in the Boston market than for any year since 1849, while for codfish the price was less than at any time since the year 1838. Subsequently to 1885 the price experiences of mackerel have been most interesting. For some reason the American fishermen have not been able to catch as many mackerel as formerly ; the catch of the New England fleet declining from 478,000 barrels in 1884 to 50,000 bar- rels in 1888. Demand in the latter year, accordingly, soon absorbed the supply ; prices advanced several hundred per cent, and at the close of the year 1888 there was not only no trade in salted mackerel, but there was none possible. Freights. — Although a service and not a commodity, the reduction in recent years of freights, or the cost of transportation and distribution, may be legitimately in- cluded in the first group of price experiences, and here con- sidered, as no other one agency has been more influential in occasioning a decline in prices. It has, moreover, acted 164 RECENT ECONOMIC CHANGES. universally, is without dispute entirely the outcome of new processes, constructions, and machinery, and has no con- nection whatever with matters pertaining to currency, or standards of value. Its influence has also necessarily mani- fested itself very unequally, occasioning the greatest price- reductions in the case of articles — ^like cereals, meats, fibers, ores, and all coarser materials — ^in respect to which trans- portation constitutes the largest element of cost at the place of consumption; and least in the case of articles — ^like textiles, spirits, spices, teas, books, and similar products — where great values are comprised in small bulk. The in- vestigations of Mr. Atkinson show, that had the actual quantity of merchandise moved by the railroads of the United States in 1880 been subjected to the average rate per ton per mile which was charged from 1866 to 1869, the difference would have amounted to at least $500,000,000 (£100,000,000), and perhaps $800,000,000 (£160,000,000), more than the actual charge of 1880. Comparing 1865 with 1885, Mr. Atkinson further shows that, taking a given weight of goods to be moved from Chicago to New York, one thousand miles, by the New York Central Railroad, fifty-eight per cent of the original value was absorbed in transportation and depreciation of the currency in the former year; while in 1885 only twenty per cent was so absorbed — the charge per ton per mile having fallen from 3-45 cents in 1865 to 1-573 cents in 1873, and to 0-68 of a cent in 1885. In 1883 the average rate on all classes of freight, on all classes of railways in the United States, was 1*236 cents per ton per mile. In 1887 it was only a trifle over a cent ; a reduction in the short space of three years that is little less than marvelous. The fall in price for the carriage of commodities by sea has also been as remarkable as the decline in the cost of carriage by land. Freight, on the average, between Calcutta and England experienced a decline of about fifty per cent PRICE CHANGES IN FREIGHTS. 165 in 1885 SB compared with 1875. In the case of India wheat tranjsported to England via the Suez Canal, the de- cline in freights was from 71^. 3d. per ton in October, 1881, to 27«. in October, 1885, or more than sixty-three per cent. Between 1873 and 1885 the tolls and pilotage on the Suez Canal were reduced to the extent of about thirty-three per cent. Freights from New York to Liverpool declined, from 1880 to 1886, as follows (maximum and minimum) : On grain, from 9^. to Id. per bushel ; on flour, from 2o8. to 7s. 6d. per ton ; on cheese, from 508. to 158. per ton ; on cotton, from id. to -^d. per pound ; and on bacon and lard, from 45«. to Is. 6d. per ton. Ocean freights continued very low until the latter months of 1888. In May of that year, wheat to Antwerp from New Tork was taken at half a cent per bushel of sixty pounds ; a rate which could not have paid for the cost of loading and discharging the cargo. As to the cause of the decline in ocean freights there can be no controversy. Between 1881 and 1883 shipping returned fair dividends on the investment. The ocean shipping of the world, taken as a whole, was operated during 1884, 1885, 1886, 1887, and a gi-eat part of the year 1888 without profit The immediate cause of the change in the situa- tion was an over-production of tonnage. The profits made by cargo- vessels prior to 1883 — in some instances very great — stimulated ship-building, and multitudes of men having no practical experience became ship-owners. Capitalists large and small readily furnished the money where invest- ment seemed so promising. Fewer sailing-ships and more steamers were built, largely increasing the capacity for work. In 1875 the business done per ton by British ship- ping, in active employment, was 10^ tons ; in 1886, it was 13^ tons. The transition from wood to iron, and from iron to steel, in the construction of vessels ; the improve- ments in machinery which largely economize fuel and labor ; and the bounty system, by which some of the Continental 166 RECENT ECONOMIC CHANQBa states of Europe offer a premium on ship-building — have also been important factors. Low freights have caused a diminished demand for ship-building materials, and this in turn has depressed the prices of materials for construct- ing ships, and cheapened them. Mr. Robert Giffen, in a report to the Boyal Commission on Trade Depression, has run an interesting line of com- parison between the imports and exports per head, and the entries of shipping per head, in the United Kingdom since 1855-'59. From 1855 to 1874 the values of British imports and exports increased more than the increase of shipping; but after 1874 values increased very slowly, and between 1875-'79 declined, while the increase in shipping went on at very rapid rates. Telegraph Rates. — The great decline in telegraph rates in recent years, in common with all other agencies that have reduced the expenses of business, has also been an instrumentality of no little potency in influencing a decline of general prices. Taking the experience of the United States as a criterion, the charges for the transmission of dispatches were on the average six times less in 1887 than in 1866. For example, the reductions between 1866 and 1887 in the cost of sending ten words from New York to the following various points, was as follows : To Si Louis, from $2.25 to 40c. ; to Galveston, Texas, from $5.50 to 75c. ; to San Francisco, from $7.45 to $1.00; to Washington, from Toe. to 25c. Attention is next asked to the secoiid group of staple commodities which have experienced a notable decline in price in recent years ; and in respect to the causes of which the evidence, although more inferential and circumstantial, through lack of universally accepted data, than in the case of the commodities included in the first group, seems, nev- ertheless, to be sufficiently positive and conclusive. Wheat. — The most important commodity in this group RECENT PRICE EXPERIENCES OP WHEAT. 167 is wheat ; the price experiences of which, in recent years, haye heen as follows : Comparing the years 1875 and 1882, there was no very marked change in the price of wheat in the English market ; the average for the year 1875 having been 45s. %d. per quarter, and for the year 1881, 45«. 4d. In the United States the average export price was $1.12 per bushel in 1875 and $1.11 in 1881. After 1882 prices de- clined rapidly ; the average price of British wheat, which was 45«. 4td. per quarter in that year, falling to 32«. lOd. in 1885, to 31«. 3d. in 1886, and to less than 30«. in 1887, which last quotation was the lowest since average market prices have been officially recorded.* The average price of wheat in the English markets for the decade from 1870 to 1880 was forty-three per cent higher than the average of 1886 ; and the average prices from 1859 to 1872 were sixty-eight per cent higher than the average of 1886. An analysis of the comparative prices of wheat in the United States furnishes corresponding results : the average price of No. 2 spring wheat having declined in the Chicago market from $1.10 (gold) in 1872 to seventy-six and a half cents in 1886; and sixty- seven cents in July, 1887 ; a price equivalent to 29«. per quarter in the harbor at Liverpool, or eighty-six cents per bushel, cost, freight and insurance in- cluded. This is about the lowest price ever reported for the United States since wheat has become an exportable product. In seeking for an explanation of such price phenomena, we find a factor at the outset which has undeniably been most influential, namely, the great reduction in recent years in the cost of the transportation or distribution of all commodi- ties, and more especially of the commodity wheat. Thus, * The Eaton record gave only 26«. 9}id. per quarter as the price for the year 1761, when reduced to Wincheeter buahela ; but there is no certainty that the average for the entire year was even in that one market as low as that, and still lees that the price was as low in more than one hundred and fifty Eng^ lish market towns as it was in 1886. 168 RECENT ECONOMIC CHANGEa the freight on wheat from New York to Liverpool declined from 9id. per bushel in 1880 to Id. per bushel in 1886. According to Mr. Edward Atkinson, who has made this matter a special study, the reduction in the cost of the in- land transportation of American wheat a distance of fifteen hundred miles, comparing the rates charged in 1870-'72 with those of 1887, was equivalent to a fraction over 11«. per quarter reduction in the delivery cost of such wheat in the English market, and for the reduction in the cost of ocean transportation between the two periods, he estimates is. per quarter. In addition, the substitution of sacks cost- ing 13 cents for barrels costing 50 cents (in 1872) is be- lieved to be equivalent to a further reduction, if rated on wheat, of Is. per quarter; and, finally, for reduction of charges in hauling, elevating, and milling (assuming the wheat to be exported in the form of flour) at least Ss. per quarter more must be allowed ; so that, if these estimates of reduction are correct (and they have not been controvert- ed), the American farmer could have sold wheat in Eng- land in 1887 for 34^. per quarter, with as much of profit to himself as 545. per quarter would have atforeded him in the years from 1870 to 1873 inclusive. In June, 1881, and June, 1886, the prices of Cawnpore wheat at Calcutta were at the same level, namely, 2*9 rupees per maund. The cost of Indian wheat in London in 1881 was 4:2s, a quarter, and dls. 6d, in 1886, or 10^. 6d. differ- ence. In 1881 the rate of freight on wheat from India to London was 60s. per ton, and in 1886 30.?., a difference of 30s. per ton, or 6s. 6d. per quarter. The decline in freights, therefore, accounts for 6s. 6d. out of the 10s. 6d. per quarter difference between the prices of Indian wheat in London in 1881 and 1886 respectively, leaving is. per quarter to be contributed by other agencies. Be- tween 1879 and 1886 the charge for the railway transport of grain between Cawnpore and Calcutta (684 miles) was re- duced to the extent of about 2^. per quarter, which repre- INCEEASBD SUPPLY OP WHEAT. 169 sented to the purchaser in Calcutta an equivalent reduction in the cost of Indian production, and in the absence of which the Calcutta and European prices would obviously have been correspondingly increased. A further reduction of 6rf. per quarter " is probably owing to a decline, during the same period, in the price of the gunny-bags " in which the wheat is transported ; leaving Ss. 6d, per quarter, which may not unreasonably be referred to and fully accounted for by the extraordinary decline of more than 125. per quarter, between the years 1880 and 1885, in the export price of American wheat; which, as hitherto, the largest factor in determining the world's surplus of this com- modity, has also been necessarily the largest factor in deter- mining what shall be the price of this surplus in the world's market.* Here, then, is an agency which sufficiently accounts for a great part of the recent decline in the price of wheat, and which would have operated all the same, even if the relative values of the precious metals existing in 1870-'73 had re- mained unaltered. The next point worthy to be taken into consideration in this inquiry is, that the increase in the supply of wheat in recent years, in many parts of the world, has been very great The report of the British Gold and Silver Com- mission (1888) characterizes it "as enormous," and asserts that it " has been due, in a great measure, to the fact that vast territories consisting, in some instances, of virgin soil, have been opened up by the construction of railways, and have become the means of creating supplies largely in ex- cess of the needs of those engaged in their production." f Thus, in the United States, for example, the increase was from 250,000,000 bushels in 1872, to 512,000,000 in 1884, • See " First Report of the British CommUnon " — evidence of Heniy Watcrfleld, C. B., Financial Secretaiy of the India Office, and representing the Government of India, pp. 125, 126. t ** Final Report of the British Gold and Silver Commission/* p. 66. 176 RECENT ECONOMIC CHANGES. declining in the succeeding year (1885) to 357,000,000, and recovering to 477,000,000 in 1886. " It is a significant fact, in connection with the rapid increase of population in the United States, and with the decline in proportion of rural population, that its wheat-supply of forty years ago should not only have been sustained but increased. In 1849 the product was 4*88 bushels for each inhabitant: in 1859, 5*5; in 1869, 7*46; in 1879, 9.16; and in 1884, 9*16 per capita. From 1849 to 1884, a period of thirty- five years, the increase of population was 141 per cent, while the in- crease in the production of wheat was 410 per cent." — Report of the United States Department of Agriculture, 1887. The published results of the investigations of Mr. Ed- ward Atkinson, based on the reports of the United States Agricultural Department, also show that the cereal crops of the United States, measured in bushels, increased from 1873 to 1885 at the rate of nearly one hundred per cent, while the increase of the population of the country dur- ing the same period was not in excess of thirty-seven per cent. In 1881 the Territory of Dakota (U. S.), comprising over 150,000 square miles, had not produced a single bushel of wheat for sale. In 188G its crop was estimated by the U. S. Department of Agriculture at 30,704,000 bushels, or nearly as great as the average annual export of wheat from India since 1880, and which export, according to a recognized Eng- lish authority (Mr. William E. Bear), has been primarily re- sponsible for the decline in recent years in the world's aver- age price of wheat. In 1887 the crop was 62,553,000 bush- els, or one seventh of the total wheat product of the United States in 1886. In 1888 the wheat-crop of this same Terri- tory, owing to a remarkably unpropitious season, declined to 37,948,000 bushels, and was considered a failure ; but if it was a failure, it was, nevertheless, 37,000,000 bushels in comparison with a product of not even one marketable bushel seven years before, and could not afford the slight- est reason for inferring that the future wheat product of EXPORT OP INDIA WHEAT. 171 Dakota is not to go on increasing from year to year in a continuaUy augmenting ratio. Daring the same period, Australia and New Zealand, in which a rapid growth of population inevitably tends to di- vert agricultural industry from wool-producing to wheat- growing, largely increased their production of wheat Previous to 1873 there was practically no trade or move- ment in wheat between Europe and India. The high cost of transportation and the existence of an Indian export- duty of above six per cent made it impossible that there should be any. But with a reduction of freights by sea, fol- lowing the opening of the Suez Canal, and by land, in con- sequence of the construction of railways in India, coupled with a removal of an export duty, the export of Indian wheat commenced and rose to 18,896,000 bushels in 1880, 19,466,000 in 1885, 36,880,000 in 1886, and 41,588,000 in 1887. ** There is nothing more remarkable in the history of railway enter- prise than the development of the traffic that has occurred on Indian railways within the last ten years, to go no further back. In 1876 the total quantity of goods-traffic carried on all the railways of India was 5,750,000 tons. In 1885 the quantity was about 19,000,000 tons. In the year 1876 the mileage open was 6,833 miles, so that the volume of goods-traffic carried per mile was about 800 tons. In 1885 the mileage open was 12^76, so that the average volume of traffic carried per mile was over 1,500 tons. (In 1888 the mileage open was 14,383.) The aggregate volume of traffic in the interval had fully trebled, and the average traffic carried per mile open had almost doubled. Notwith- standing these remarkable results, the traffic which has been developed on the railways of India is less, in proportion to the population, than that of any other country in the world. This is especially the case in reference to goods-traffic, which only represents some -05 of a ton per head of the population, as compared with three tons per head in Canada, and over seven tons per capita in the United Kingdom. But the goods-traffic of India is likely to develop very rapidly in the future, and especially in agricultural produce, of which only about 4,000,000 tons are now annually transported, as compared with 75,000,000 tons in the United States for less than a fourth of the population. — Brad- 9trteC8(y. T,) Journal. 172 RECENT ECONOMIC CHANGES. In 1878 the Argentine States o£ South America were not reckoned as a factor to the smallest extent in the world's wheat-supply; but in 1885 they exported 4,000,000 bush- els of this cereal, and in 1887 over 8,000,000. In the case of Russia her aggregate exports of wheat, comparing the four years from 1873 to 1876 with the four years from 1881 to 1884, increased over thirty-eight per cent ; while for the years of 1887-88 her exports amounted to 1^2,000,000 bushels. In Austria-Hungary the average annual wheat product for the seven years from 1873 to 1880, was 93,000,000 bushels ; but for the seven years from 1880 to 1886, inclu- sive, it was 133,000,000 bushels. Finally, it is to be noted that, in very few branches of production, have greater improvements been made and adopted in recent years than in the growing of wheat ; the maximum result of which finds expression in the statement, which is well supported by evidence, that in California * wheat can now be grown at a cost of not over seventy cents per one hundred pounds, or forty- two cents per bushel. Now while the evidence of the recent great increase in the world's production of wheat is not and can not be questioned, it is nevertheless claimed that such increase has not been in excess of the increased demand for this cereal for consumption, in consequence mainly of the increase in the world's wheat-consuming population; Bnd that here, also, some other cause than oversupply must be sought for to explain the phenomenal decline in the price of this com- modity. Such a claim has found, however, but very few advocates, and its discussion involves the employment and comparison of statistical data that arc in themselves matters * On many of tho lai^ mnchcB of California steam-plows are used, and on others ganp^-plows which turn four to six Airrows and are drawn by fh>m eight to fourteen mules. Not unfycquently the plows are run in a straight line for a distance of six or eight miles. A patent machine for sowing seed is employed, by means of which, it is claimed, one man and a team oan sow one hundred acres of grain in a day. PRODUCTION AND PRICES OP WHEAT. I73 of controversy. On the other hand, the opinion of nearly all inyestigators in all conntries, who are regarded as authorities on this subject, is in the highest degree in favor of the theory of increased supply. Beference has already been made to the opinions of the British Gold and Silver Commission (1888) which was created in great part for the purpose of investigating into the cause of the decline of prices. The opinion of the United States De- partment of Agriculture, as given in the report for 1887, was as follows : " Wheat-growing was stimulated greatly between 1875 and 1880 bj a series of crop failures in Western Europe, causing a demand which never existed before, and may never again. Meantime, the world's production has kept up, with little change or diminution, de- pressing prices, and furnishing cheap bread to consumers, and little profit to producers ; and yet the inquiry is made. Why are prices so low t In view of these facts, the question needs no answer. It is utterly useless to pretend reduction of area, as some do, where there is none. The influence of over-production on prices in the United States is seen in a comparison of the farm prices of wheat per bushel for the two periods from 1870 to 1880, and from 1880 to 1887, viz., $1,049 and $0,833 respectively ; showing a reduction of 20*6 per cent. In a communication to the "Journal of the Royal Agricultural Society" of England, of May 1, 1888, Mr William E. Bear, a recognized authority on agricultural matters, says : "The exports of wheat from India were not considerable until 1881-82, and whether it is merely a coincidence, or more than that, it is a fact that the average price of wheat in England has been per- manently below 45s, a quarter only since 1882." And again, speaking of the relative quantities of wheat imported into the United Kingdom from 1881 to 1887, he says : ** These figures show that the receipts of wheat from India, which in only one previous year had been as much as five percent of the total foreign supplies, rose to 10*3 per cent in 1881, to fifteen per cent in 1885, and to 16*7 per cent in 1886. Surely such proportions were large enough to account for a great fall of prices, considering that they represent receipts from a new source of supply. And as we had not felt the want of these new supplies, there was no 174 RECENT ECONOMIC CHANGES. natural demand for them except at the expense of other importing countries ; and as the other countries had prepared to meet our wants to the full, the large surplus from India produced the effect always to be expected from a glut in the markets." " But the effect of Indian wheat upon prices is more clearly to be estimated by the supply to Europe, which during the six years ending with 1886-*87 averaged over 4,000,000 quarters per annum — a very large quantity to come on top of supplies already ample, and just after wheat production in the United States had reached its maximum. Of course, the entire fall in the price of wheat is not attributed to the Indian supply, as the decline in the prices of commodities has been general But it is contended that the Indian supply is the principal cause of the excessive drop in the value of wheat" * Again, during all the years in which wheat has been de- clining or ruling at low prices, there has never been any apprehension for any length of time, on the part of grain merchants and dealers, of any scarcity of its supply in the * The following representB the opinions of other recognized authoii- ties: The German eoonomist, Kleser, writing on this subject, says : ** The in- quiry whether the cheapness of grain is the result of the specific appreciation of gold, seems to be superfluous in presence of the fact, for instance, that the export of wheat from India grew fh)m an unrecorded minimum in 1870 to 11,- 000,000 cwts. in 1888, a similar expansion of the trade in cereals having occurred in Budsia and the United States.'* See ** Recent Currency Discussions in Ger- many," " British Foreign OfBoe Reports," No. 40, p. 18. The distinguished French economist, M. Leroy-Bcaulieu, as the result of his investigations, has also indorsed, in the *^ Revue des Deux Mondes," the opinion that the cause of the decline in the prices of grain has been unmistakably due to an increase and cheapening of product, and believes that, even in Europe, the supply of food in recent years has increased faster than population. *' The decline in the price of English wheat in twelve years has been 26f. Id. per quarter, and in the last five yean Sa. 6d. per quarter, of eight bushels. The principal causes of this large depreciation in prices are the heavy increase in production of wheat iu British India, Australasia, and in the United States." — BradHreetU Journal^ N. JT., January^ 1888. ** Prices of brcadstuffs have not been fiilly maintained during the past week, for reasons previously explained. Somewhat more favorable reports regarding the growing crops are mentioned as a reason, but the bottom fact in the business is that the eitpply of wk^t continues to exceed by many million bueheU the quantity likely to be required.*^ — ^ew Fork Commercial Bulletin, May 91, 1888. LESSON OP THE WHEAT CROP OP 1888. 175 principal markets of the world. During all these years, the complaint, moreover, of the absence of all profit in pro- ducing wheat has been almost universaL Under such cir- cumstances of pressing necessity, it is almost needless to say that producers, aided by speculators, would have speed- ily advanced the prices of this cereal if it had been in their power; and it is equally clear that the only reason why they have failed to do so is because the trade everywhere has recognized that the supply of wheat was sufficient to meet all demands at the current low prices; and that under such a condition of affairs no material advance in price was possible. In short, during all the years in which the decline in wheat has been phenomenal, the law of supply and demand has not been violated, and price in the world's market has conformed strictly to the supply of the world. The experience of the years 1888 and 1889 would also seem to constitute evidence, almost in the nature of a dem- onstration, of the entire accuracy of the opinion which ascribes the recent low prices of wheat mainly to a supply largely in excess of the world's requirements at prices cur- rent under old conditions of the production and distribu- tion of this commodity. Thus, it is agreed that "the world's product of wheat for 1888 was far below the aver- age ; the crops of the United States, Australia, Canada, and the Argentine Bepublic being regarded as failures ; * and in September, 1888, recognized English authorities pre- dicted a deficiency in the world's supplies for the year, even after allowing for reserved stocks, of 50,000,000 bushels. But this, and all other like predictions, failed to material- it The oontinaed depresaion in the wheat trade under drcumstancca which might have been expected to hnofif an improvement in prices is dis- heartening and calculated to cause growers to despair of remunerative returns for years to oome, as the chances are that it will be a long time before the world's supply will again be as small as it is for the current cereal year." — William E. Bbab, BradMtrufft Journal^ April, 1889. 176 RECENT ECONOMIC CHANGES. ize; for the world's supply of wheat proved so entirely adequate for meeting all demands that its price move- ments for the cereal year 1888-'89 in the London market (the representative center of demand) were most incon- siderable ; and the year closed with a conceded large unsold surplus. The future supply and price of wheat are matters of speculation not pertinent to the present inquiry ; but one point belonging to the domain of fact has certainly an im- portant bearing on these problems, and that is, that the ex- traordinary construction of railroads, especially in the United States, the Argentine Republic, India, and Australia, is making available enormous tracts of land eminently fitted for wheat-culture, which hitherto, by reason of inaccessibil- ity, have practically been non-existent ; while improvements in methods of cultivation have greatly facilitated and cheap- ened production. " Each mile of railroad constructed in a new country is a kind of centrifugal pump furnishing for exportation hundreds of tons of the products of such coun- try." * The report of the United States Agricultural De- partment for 1889 shows an increase in the extent of culti- vated land in the United States, and consequent expansion of agricultural possibilities, that is certainly akin to the marvelous. Between 1879 and 1888 — a period of nine years . — the area occupied by the four principal arable crops of the country — cotton, com, wheat, and oats — experienced an enlargement of 31,000,000 acres; or from 128,000,000 to 159,000,000 acres. Furthermore, great as is the present wheat product of the United States, Mr. Atkinson has shown that all the land at present in actual use in that whole country for growing maize or Indian com, wheat, hay, oats, and other food-crops, is less than 300,000 square miles, out of 1,500,000 miles of arable land embraced in its present national domain ; and, also, that the present entire * M. F. Benuuxl, ** Journal den ^conomistes." FUTURE SUPPLY AND PRICE OP WHEAT. 177 wheat-crop of the United States could be grown on wheat- land of the best quality selected from that part of the area of the State of Texas by which that single State exceeds the present area of the German Empire.* In short, it would seem as if the world in general, for the first time in its history, has now good and sufficient reasons for feeling free from all apprehensions of a scarcity or deamess of bread. But, while from a strictly humani- tarian point of view this is certainly a matter for congratu- lation, the results, viewed from the standpoint of the interests involved, which embraces a large part of the world's popu- lation, appear widely different. The effect of the extensive fall in prices of agricultural products during the last decade has been most disastrous to the agricultural interests and population of Europe. It has reduced farming in England and in most of the states of the Continent to the lowest stage of vitality ; and, by reason of the complaints of their agriculturists, the customs duties of many countries have been largely increased, and the conditions of consumers greatly modified. In France the position has been taken, by not a few familiar with the situation, that the only pos- sible means of salvation for the agriculture of central Eu- rope will be for France, Germany, Austria, and Italy to sink all political antipathies and jealousies and form an inter- national customs union to exclude all food-products from Russia, Australia, and America. The present agricultural condition of Italy is thus de- picted in a report recently made (1888) to the Agricultural Department of the British Privy Council, by Mr. W. N. * Although the prices of grain have seriously fallen in Bussia — about twenty per cent in 1888 below those of 1881— yet, according to a recent report to the Britiah Foreign Office from the British consul at Tanganrog, ^^ The present prices of wheat (1888) not only cover the cost of production , but on most estates in wheat-regions yield a moderate profit, owing, no doubt, to the fact that the cost of production la lower in Bussia than in any other wheat-growing ooozitiy, except India.*' 178 RECENT ECONOMIC CHANGES. Beaaclerk, a secretary in the British diplomatic service. He says : '* Agriculture in Italy is in the throes of a severe crisis. American competition is strongly felt in the corn-trade, and there are those who even go so far as to predict that the agricultural population must ret- rograde to the pastoral state, unless things change for the better — a spectacle which might astonish the uniTerse. And with regard to the great question of progress in agricultural production so as to make a stand against the importation from America, and to secure the future existence of the rural population, the verdict of the landholders of Italy is thus given : as long as millions of acres remain unreclaimed and untilled, as long as the majority and the strongest of men are under arms, as long as huge armies entail excessive expenditure, and agri- culture is suffocated with a weight of taxation which absorbs from one third to one half of the returns, and so long as education, credit, and manures are wanting, we can not strive with a reasonable prospect of success.'* In 1880 forty-four per cent of the entire population of the United States was engaged in agriculture, and less than seven per cent in manufactures ; and since the year 1820, or for a period of sixty-six years, the proportion between the agricultural and non-agricultural exports of this country has been remarkably steady, the average for the former for the whole of this period having been about seventy-eight per cent. Up to the present time there has been little tend- ency to change in these proportions ; but, if the continued fall of prices of agricultural products in the United States and other countries should compel their farming populations to seek other employments, what other employments are open to them ? That the world will ultimately adjust itself to all new conditions may not be doubted ; but what of the period pending adjustment ? As bearing upon this subject, certain statements recently (1889) published by the United States Agricultural Depart- ment are of tlie highest interest and importance. From these it appears that Europe is practically the only market that America can have for her surplus wheat. But the RECENT PRICE EXPERIENCES OF COTTON. 179 wheat-crop of Europe, which haa not materially declined within the last ten years, and which " represents more than half of all that is grown in the world," is so nearly sufficient to meet the wants of its people, that " if the surplus of east- em Europe should be distributed only in the Continental states, it would nearly supply all their deficiencies, leaving practically only Great Britain to receive the imports of other continents, and consume alone the surplus of the wheat markets of the world.'' The present average wheat-crop of Europe is estimated at 1,200,000,000 bushels, and her average annual deficiency of supply, to be made good by foreign imports, at 144,000,- 000 bushels. Of this deficiency the United States, in ordi- nary years, can supply about 100,000,000 bushels; but in 1880 the United States, Russia, India, Australia, and the Argentine Republic exported a surplus of 208,987,000 bush- els, of which the United States contributed sixty-nine per cent It is obvious, therefore, that with this limitation of market, any enlargement of the surplus wheat-product of the United States must inevitably reduce its price at home and abroad. For the other cereal products of the United States the European demand is comparatively inconsiderable. The imports of European countries requiring maize, for exam- ple, do not make a sum half as large as the products of sin- gle States. The deficiency of France could be supplied by single counties, and Germany requires still less. Cotton declined in price, taking the annual reported * averages of upland middlings in Liverpool, from 9^?. per lb. in 1873 to 6|fJ. in 1880 ; 5id. in 1883, and 5^^. in 188G ; the last being the lowest price on record since 1848, when the average was i^d. The world's supply of cotton since 1873 has been as fol- lows : 1872-'73, 6,366,000 bales ; 1882-'83, 10,408,000 bales : * See Annual Tables of Liverpool Cotton Asaociation. 180 RECENT ECONOMIC CHANGES. an increase in ten years of 63*5 per cent. After 1882 there was a notable decline in the estimated crop of the world, but for 1885-'86 the aggregate crop is believed to have been 9,580,000 bales ; or an increase in supply in thirteen years of about fifty per cent. For 1886-'87 the estimate was 9,757,000 bales, and for 1887-88 10,161,000.* Such an in- crease in supply, it seems hardly necessary to say, was very far in excess of any increase in the total population of the world during the period of years under consideration, and also in excess of any increase in the population of those countries of the world that are the principal consumers of cotton fabrics. But here, again, as in the case of wheat, it is contended that the consumption of cotton has in- creased in at least an equal degree, and tables have been published showing that the consumption in a series of recent years has even exceeded production. Hence the decline in the price of cotton, it is argued, must have been due to causes other than those contingent on supply and demand. That consumption of cotton fabrics has greatly increased can not be questioned. It has followed naturally from the very great increase in the productive power of labor, using improved machinery, and a consequent great decline in the prices of such fabrications ; the equivalent of the labor of an operative in the factories of New England having in- creased, for example, from 12,164 yards in 1850 to 19,293 in 1870, and 28,032 in 1884, while the reduction in the price of standard sheetings from 1850 to 1885 was about ten per cent, and of standard prints and printing-cloths, during the same period, approximately forty per cent. A curious discrepancy in the rates of decline in the price of raw materials and of the products manufactured from them (to which attention has been called in the case of pe- troleum) occurs in the price experiences of cotton and cot- ♦ New York ** Financial Chronicle," September 10, 1887. PRODUCTION AND CONSUMPTION OP COTTON. 181 ton fabrications. Thus, comparing 1855 and 1886, the aver- age price of the cotton imported into Great Britain was only five per cent lower in the latter year than in the former ; bnt the decline in the average price of the British exports of cotton cloth during the same period was twenty- one per cent* The agencies that have operated to occasion decline in the two instances would, therefore, seem to have been altogether different. A comparison of the most reliable statistics of the world's cotton production and consumption for recent years furnishes, however, some information on this subject of a definite character. Thus, comparing 1872-'73 with 1882- '83, production increased from 6,366,000 bales to 10,408,- 000, or in the ratio of 63*5 per cent ; the world's consump- tion during the same period increasing from 6,425,000 bales to 9,499,000, or in the ratio of 47*8 per cent. Comparing the years 1872-'73 with 1885-'86, the increase in production was from 6,366,000 bales to 9,580,000, or in the ratio of about fifty per cent ; and of consumption from 6,425,000 bales to 9,371,000, or in the ratio of 45-8 per cent.f At the same time every year closes with a visible uncon- sumed surplus stock of cotton, which varies from about one sixth of the estimated year's consumption (as in 1883-'84) to about one tenth (as in 1887-'88). But, as the average stocks carried over from year to year are not as large as formerly, it is claimed that herein is to be found proof that reduction in the price of cotton could not have occurred through an excess of supply. A consideration, however, of the great changes which have taken place in recent years in the conditions of supply and demand in respect to cotton, in common with most other stable commodities, deprives the claim of much if not of all significance. Fifteen or twenty years ago the means of determining the present and * Addrefls of Mr. Bcrtwhistic, Secretary of Lancaatcr (England) Weavers* Association, 1886. t " Finandal Chronicle," New York, September 15, 1888. 9 182 RECENT ECONOMIC CHANGE& prospective supply of the world's great products were very imperfect, and considerable time was required before reli- able information could be collected and disseminated ; and, in the case of cotton especially it was a matter of doubt whether the United States would speedily or ever regain and hold its former relative importance as a producer of this commodity. Under such circumstances it was un- doubtedly most important, for the stability of production and trade, that great reserves of raw materials should be constantly kept in store, or in sight But with the marvel- ous changes in the facilities for collecting and disseminat- ing information which have come in recent years, with the opening of many new sources of supply, with the ability to know from day to day the amount of stock on hand of any article in any quarter of the globe, and its prospective con- ditions of supply, the same importance no longer attaches to reserve stocks ; and, in fact, they are no longer kept at great central points of distribution to anything like the same extent as formerly. In the case of cotton the manu- facturers of the world have seen the crop of the United States increasing at the rate of seventy-six per cent between the years 1866 and 1872, forty-nine per cent between 1872- '73 and 1885-'86, and they have also learned that not three per cent of the land of the United States available for the production of cotton has as yet been put under cultivation. Improvements in machinery, by which finer yams and fabrics can be furnished at no greater, or even at smaller cost, than coarser and less desirable yams and fabrics were formerly supplied ; or, in other words, the new ability to supply to a considerable extent the popular demand for cotton fabrica- tions with a smaller relative consumption of cotton, would also seem to be equivalent to increasing the supply of cot- ton, or of reducing the necessity of the continued mainte- nance of the reserve stock at figures that formerly might have been regarded as indispensable. But, as bearing on prices, the decline in the avenige of INFLUENCE OP RESEKVE STOCKS. 183 reserve stocks of cotton carried over from year to year, be the amount of sach decline greater or leas, bas no manner of significance, unless such decline has been regarded by consumers as indicative of prospective scarcity or insuffi- cient supply to meet the demands of immediate or future consumption. There is not, however, a particle of evidence that any such apprehension has, in recent years, existed. In point of fact, the evidence all runs to the effect that the apprehension, in recent years, in the minds of the world's great consumers of cotton and all the other staple com- modities— sugar, iron, coal, petroleum, copper, lead, etc. — has been of disturbance in their respective industries, from an over-production and increase, rather than from any decreaac in the supplies of their crude materials ; and such a frame of mind favors, if it does not directly occasion, low prices.* * The following ezpression of opinion relative to the supply of cotton, by the *' Manchester Examiner,*' England (no mean authority), may also be read with interest in connection with this discussion. Writing under date of January 18, 1888, it says: ^' The invisible supply of actual cotton in spinners' hands all over the worid is now the largest on record for this time of the year — English spinners alone holding the unprecedented quantity of 850,000 bales, which has been brought about, to a very laige extent, by the fear that the small crop estimates put forth in November would prove correct Bei^ides the invisible supply of actual cotton, spinners hold cnormoua lines of weekly de- liveries and futures, which means that they can at any time keep out of our market for three nu>Dths, and buy only retail lots. The question is, will they do so when they see plainly for themselves that this crop Is about seven mill- ions, and which means abundance ; and not 6,300,000, which meant scarcity I • . . The fact of the spinner apparently using less American also tends to show that the spinning qualities of the present American crops, which range now fiir higher in grade and quality than in years past, must be much better than the previous crops — an important fact when crops are grown from six and a half to seven millions. This has been entirely lost sight of when estimating the prospects of supply and demand for the last three months of the sea>^n, and thereby prophesying scarcity, which so far has never yet come off, and which was exemplified again last July, August, and September, by prices falling Id, per pound in the &oe of prognosticated scarcity, besides leaving a surplus of 250,000 bales at the end of the season, with the price at 5ift in hopes of a turn in the market. 188 RECENT ECONOMIC CHANGES. not wool entered into the woolen manufactures of this country. Silk. — The decline in the price of silk (Tsatlee), accord- ing to M. Sauerbeck, from the average price of 1867-'77 to the average of 1886, was about forty per cent ; and the average increase in supply of all varieties of silk-fiber, com- paring 1873 with 1885, was reported by the same authority as about twelve per cent. According to the most reliable French statistics, the supply of raw silk — domestic and for- eign— ^available for the markets of Europe, increased from 21,837,000 lbs. in 1884 to 25,702,000 in 1887, or in the ratio of above seventeen per cent. No relation between the price movements of this commodity and supply and demand, or any other agencies, can, however, be established, which fails to take into account the great increase in the use of the ramie and other fibers and materials within recent years as substitutes for or adulterations of silk in the manufacture of fabrics. Thus, recent investigations, made under the au- spices of the United States revenue authorities, indicate, that in the case of the cheaper silks of extensive consumption, materials other than silk often enter into their composition to the extent of even sixty per cent ; and iiaat other meth- ods of adulterating silk, formerly but little known, are now extensively practiced — all of which is equivalent to increas- ing the supply of silk for manufacturing, far beyond what commercial reports respecting the supply of the fiber would indicate. Jute. — Good medium jute declined on the London mar- ket from £17 per ton in 1874 to an average of £11 10«. in 1886, or more than fifty per cent. The increase in exports from British India was from 5,206,570 cwt. in 1876 to 10,- 348,909 cwt. in 1883, or ninety-eight per cent Many other commodities, of greater or less importance, might be included in this investigation, with a deduction of like results ; but a further exhibit is not necessary, for it is difficult to see how any one can rise from an examination of GOLD AND SILVER COMMISSION. 189 the record of the production and price experiences of the commodities which have been specified, which, it must be remembered, represent— considered either from the stand- point of qualities or values — ^the great bulk of the trade, commerce, and consumption of the world, without being abundantly and conclusively satisfied that the decline in their prices, which has occurred during the last ten or fif- teen years, or from 1873, has been so largely due to condi- tions affecting their supply and demand, that if any other causes have contributed to such a result, the infiuence ex- erted has not been extensive ; and, further, that if the prices of all other commodities, not included in the above record, had confessedly been influenced by a scarcity of gold, the claims preferred by the advocates of the latter theory could not be fairly entitled to any more favorable verdict than that of " not proven." The philosophy of the experiences which have been collected and recorded is, that the cost of producing the great staple commodities of the world's trade and commerce have, in comparatively recent years, through inventions and discoveries, been materially reduced; that this result is a permanent one, and that every attempt to restore the old-time prices — as has been especially shown ill the recent price movements of copper, tin, and wheat — results in disaster. Note. — In the year 1886 the British Government created a " com- mission " of persons of eminent qualifications, to " inquire into the re- cent changes in the relative values of the precious metals," embracing causes and results. This commission, after devoting nearly two years to their task, calling to their assistance a large number of persons as witnesses, or experts, whom they regarded as qualified to express opin- ions, submitted a " final " report in October, 1888, embodjring the facts to which their attention had been called; a summary of the argu- ments, on the one side and the other, touching questions in contro- versy ; and a marked diversity of conclusions on the part of the several members of the commission. There was, however, an entire unanimity of opinion on some points, which the commission express as follows : ^ We are of opinion that the true explanation of the phenomena 190 RECENT ECONOMIC CHANGES. which we are directed to investigate is to be found in a combination of causes, and can not be attributed to any one cause alone. The action of the Latin Union in 1873 broke the link between silver and gold, which had kept the price of the former, as measured by the latter, constant at about the legal ratio ; and, when this link was broken, the silver market was open to the influence of all the factors which go to affect the price of a commodity. These factors happen since 1878 to have operated in the direction of a fall in the gold price of that metal." Six members of the commission, embracing one half of the whole number reporting, thus further summarized their conclusions, in re- spect to the remarkable fail in recent years in the prices of commodi- ties: ^' We think that the fall in the price of commodities maybe in part due to an appreciation of gold, but to what extent this has affected prices we think it impossible to determine with any approach to ac- curacy. ** We think, too, that the fall in the gold price of silver has had a tendency operating in the same direction upon prices ; but whether this has been effective to any, and if so, to what extent, we think equally incapable of determination. ^ We believe the fall to be mainly due, at all events, to circumstances independent of changes in the production of, or demand for, the pre- cious metals, or the altered relation of silver to gold. " As regards the fall in the gold price of silver, we think that, though it may be due in part to the appreciation of gold, it is mainly due to the depreciation of silver." ^ In regard to this same problem, the other six members of the com- mission, holding dissentient views, express themselves as follows : " Wo are not insensible to the fact that facilities for production are habitually increasing, and the cost of production is constantly becom- ing less. But those factors have always been in operation since the world began ; and, while we recognize their tendency to depress the prices of C(immoditios, they are not, in our opinion, sufficient to account for the abnormal fall in prices, which has been apparent since the rupt- ure of the bimetallic par, and only since that time." V. I Frioe experience of oommo^tiee where product hae not been greatly aug- mented— ^Handicraft prodacta — Prioea of India oommoditiee — Exception- al oanaea for price changea — Coral, hope, diamonda, hides, and leather — Changea in supply and demand regarded by some as not sufQciently potential — DiTergency of price moTemente — Evidence from a gold stand- point— Has gold really become scarce f — Gold production since 1850 — Increase in the gold reserves of civilized countries — Economy in the use of money — Clearing-house experiences — Difference between gold and silver and other commodities in respect to use — Has the fiill in prices in- creased the burden of debts ? — Curious monetary experiences of the United The qnestion which next naturally saggests itself is, What have been the price movements of such commodities as have not in recent years experienced in any marked degree a change in their conditions of supply and demand ? Do they exhibit any evidence of having been subjected to any influence attributable to the scarcity of gold ? The answer is, that not only can no results capable of any such generalization be aflftrmed, but no one commodity can even be named in respect to which there is conclusive evi- dence that its price has been affected in recent years by in- fluences directly or mainly attributable to any scarcity of gold for the purpose of effecting exchanges. In the first place, all that large class of products or services, which are exclusively or largely the result of handi- crafts ; which are not capable of rapid multiplication, or of increased economy in production, and which can not be made the subject of international competition — have ex- hibited no tendency to decline in price, but rather the reverse. A given amount of gold does not now buy more, 192 RECENT ECONOMIC CHANGES. but less, of domestic service and of manual and professional labor generally than formerly;* does not buy more of amusement ; not more of hand- woven lace, of cigars, and of flax, which are mainly the products of hand-labor ; of cut- glass, of gloves, of pictures, or of precious stones. It buys no more of horses, and other domestic animals ; of pepper ; of cocoa, the cheap production of which is limited to a few countries, and requires an interval of five years between the inception and maturing of a crop; of malt liquors, eggs, currants, and potatoes ; nor also of house-rents, which de- pend largely upon the price of land, and which in turn is influenced by fashion, population, trade, facilities for access, and the like. Retail prices generally have not fallen in proportion to the decline in wholesale prices ; and one ex- planation that has been given for such a result is, that retail trade is more directly and largely dependent on personal services. '* Any one who thinks about the subject of gold and prices must be struck with the curious fact that it is in the wholesale dealings in the principal articles of commerce that the fall of prices is shown to have taken place, and that, at the same time, in these dealings little or no gold is ever used ; while, on the other hand, in the dealings (and in those countries) in which gold is used — such as small retail dealings and wages, no such fall in prices, or no equal fall, has been proved." — Sir Thomas Fabrer, Member of British Gold and Silver Commission. * ** There is no feature in the situation, which the commissioners have been called to examine, so satisfactory as the immense improvement which has taken place in the condition of the working-classes during the last twenty years." — Report of the Royal {British) Commission on the Dq>rss8ion of Tradt^ 1888. ** There does not appear to be any evidence that the salaries of clerks and .others, outside of what may be termed the wage-earning classes proper, have decreased ; and, although some house-rents have fallen. It seems questionable whether, as except the more expensive houses, which are inhabited by the wealthy, there has been any general diminution of house-rent." — Report of iks British Gold and Silver Commission^ Ihrt 11^ 1888. " Instead of an alleged lowering of the price of labor, we have to report, taking a wide extent, rather a ri^ in wages." — Report of Factory Inspectors^ Germany^ 1886, p. 74. PRICES IN NON-PBOGEESSIVE COUNTRIES. 193 How little of change in price has come to the commodi< ties of countries of low or stagnant civilization, that have remained outside of the current of recent progress, is strik- ingly illustrated in the case of a not unimportant article of commerce, namely, the root sarsaparxlla ; which, with a gradually increasing demand, continues to be produced (collected and prepared) in Central America, by the most primitiye methods, and without any change in the condi- tions of supply, save, possibly, some greater facilities for transportation from the localities of production to the ports of exportation. Thus, in the case of Honduras sarsaparilla, at New York, which is the principal distributing market of the world, the ayerage price for the best grade was reported as identical for the years 1881 and 1886; while for the " Mexican," the average reported for 1881 was eight cents per pound, and for 1886, with much larger sales, from seven to eight and a quarter cents. The very slight decline in recent years in the prices of such of the commodities of India as constitute her staple exports is also an illustration to the same effect.* Now, all of the commodities referred to, including labor * Aooording to Mr. Robert GifTen, in his testimony before the British Gold lod Silver Commission, 1886, the general result of aoompanson of India prices shows a fkll of only two per cent in 1880-'84, as compared with 1870-^74, or with the period immediately before the fall in silver : '* The general conclosion appears to me to be that the effect of the present relations between gold and silver have not told appreciably on prices in India, or on the relative progress of her import and export trade/' — TeiUwiony of Sir Lovn BfALLBT, laU Under-Secrdary of State /or India, Memher BriUth Gold and Silver Commisnon, 1886. ** In India, in the opinion of nearly all the witnesses whom we have ex- amined) the purchasing power of the rupee continues unimpaired, and the prices of commodities measured in silver remain practicaUy the same. We have no evidence to show that silver has undergone any material change in relation to commodities, although it has fallen largely in relation to gold ; in other words, the same number of rupees will no longer exchange for the same amount of gold as formerly, but, so far as we can judge, they will purchase as much of any commodity or commodities in India as they did before.** — Final Report British Gold and Silver Commitnon, p. 95. 194 RECENT ECONOMIC CHANGES. and personal service, and many others which might be specified, whose condition in recent years has not been materially influenced by changes affecting their supply and demand, ought to have exhibited evidence, in a decline of prices, of the influence of the scarcity of gold, if any such had been exerted ; but they have not, and the onus of show- ing why they have not clearly rests upon those who deduce from the evidence of price movements the conclusion that the standard of price measurements (gold) has appreciated. The record of extreme changes in prices, by reason of circumstances that are acknowledged to have been purely exceptional, is also most instructive, and removes not a few commodities from the domain of any controverted economic theory respecting monetary influences. Thus, from 1862 to 1870, cotton, owing to war influences, ruled so high — ^from seventy to eight hundred per cent in excess of normal prices — that its inclusion in computations, with a view of determining any averse of prices, or generalization of causes affecting prices during the years mentioned, would, without proper allowance, completely vitiate any conclu- sions. War and interruption of traffic on the upper Nile have increased the prices of "gum- Arabic" and of the drug " senna " in recent years more than a hundred per cent. The prices for French and other competing light wines and brandies are much higher than the average for 1866-'G7, because the phylloxera has so impaired the production of French vineyards that France has of late years imported more wine than she exports. " Cochineal " and " madder " have greatly declined in price since 1873, because their use as dye-stuffs has been to a great extent superseded by equiva- lent and cheaper coloring- materials derived from coal-tar ; and within a very recent period the discovery of a method of cheaply preparing a chemical preparation from cloves, having all the flavoring qualities of tlie vanilla-bean, has already diminished the demand, and bids fair to greatly EXCEPTIONAL CHANGES IN PRICES. 195 impair the price of this heretofore scarce and costly tropical product. Certain animal products, notably entering into commerce, have greatly advanced in price in recent years by reason of a rapid diminution in the number of the animals affording them, as buffalo-horns, ivory, and whalebone. Ivory has trebled in price since 1845, and whalebone in- creased from 32^ cents per pound in 1850 to 85 cents in 1870, and •3.50 in 1886. In October, 1888, according to a circular issued by the ** Baker's Guide " at Havana, Cuba, the price of bread in that city was lower than in any country, either in America or Europe, where wheat is produced. The reasons assigned for this were the substitution of free for slave labor, and the depreciation of paper currency in comparison with gold : ^ flour on the date mentioned selling at $13 per barrel in gold, and paper money at a reduction of two hundred and forty per cent from gold prices." The price of manufactured Mediterranean coral — the trade in which is extensive — has been greatly depressed in recent years by reason of the discovery of new banks of coral on the coast of Sicily, from which the raw material has been obtained most cheaply, and in large excess of demand. The consequent decline in prices has, however, opened new markets in Africa, where the natives now purchase coral ornaments in place of beads of Venetian and German manu- facture. Hops. — Few commodities have fluctuated more violently in price in recent years, or more strikingly illustrate the degree to which supply and demand predominates over all other agencies in determining price, than the vegetable product hops. In 1881 there was an almost universal crop failure, and the highest grade of English hops (East Kent) commanded 7005. per cwt. In 1886 the German Hop- Growers' Association estimated the quantity grown through- out the world at 93,340 tons, and the annual consumption at only 83,200 tons, so that there was an excess of production 196 RECENT ECONOMIC CHANGEa over consumption for that year of nearly 10,000 tons. As might have been expected, there was a notable decline in the world's prices for hops, and the same quality of English hops which commanded 700*. per cwt. in 1882 sold for 74«. in 1887, and in June, 1888, for 685. Later in the year, with unfavorable harvest reports, the price advanced to 147^. Diamonds. — The recent price experience of diamonds is in the highest degree interesting. Diamonds were first discovered in South Africa about the year 1868, and a busi- ness of searching (mining) for them immediately sprang up. At the outset the mining was conducted by individu- als, but, in consequence of the expense, the work gradually and necessarily passed into the control of joint-stock com- panies with command of large capital ; and it was not until 1880 that operations on a great scale were undertaken. The result of this improved system, conjoined with underground mining, was such an increase in the output of diamonds that an oversupply to the market and a serious reduction in price became imminent ; and the period of 1883-'84 was in fact one of falling prices and intense competition among the various producing companies, during which the leading companies paid little or nothing to their shareholders, and some entirely suspended operations.* Continued disaster was, however, finally arrested through a practical consoli- dation of all the companies for the purpose of controlling product and prices ; and a revival in demand having oc- curred about the same time, average prices were advanced between 1885 and 1887 from 20^. 5^. per carat to 235. 7id. The value of the diamonds exported from South Africa ♦ The " Kimbcrly Central Company"— the leading organization — which from 1880 to 1883 increased its dividend from ten to thirty per cent, paid nothing to its shareholders during 1884 and 1885, and at the close of 1886 was only able to declare a dividend of five per cent. The other great diamond- mining company, the *^ De Beers/' was more fortunate, and paid for 1884 to 1886 an average of about eijtrht and a half per cent ; but most of the companies paid nothing during the same period, and some entirely suspended mining. PRODUCTION AND PRICES OF DIAMONDa 197 since the first discovery of the mines, or from 1868 to 1887, is believed to have been between £40,000,000 and £45,000,000 ($200,000,000 to $225,000,000), of which about £15,500,000 ($77,500,000) represents the value of the output from 1883 to 1887. Very curiously, this large export of value — nearly all in the first instance to England — seems to find no dis- tinctive place in the columns of British imports, although they have served in a large measure to enable South Africa to pay for her imports of British and other foreign prod- ucts. If the export of diamonds from South Africa to Europe has aggregated £45,000,000 ($225,000,000) in the rough, the process of cutting may be regarded as having increased their market value full one hundred per cent, or to £90,000,000 (or $437,000,000) ; a greater value than the yield of the world during the two preceding centuries. The aggregate weight of the entire diamond product of the South African mines up to 1887 is estimated at 38,000,000 carats, or over seven and a half tons.* We have, therefore, in this experience, the phenomenon of the strangely persistent value of a comparatively useless gem, during a period when the prices of most other com- modities were diminishing by leaps and bounds, as well as the extraordinary concurrent absorbent power of the world for a greatly increased product. But the demand for dia- monds latterly is thought not to have kept pace with their increasing production ; and it is said that the stock of dia- * Of this immeiiBe prodact there is good reason for believing that a very large proportion found a market in the United States. According to the customs returns, the value of the unset diai^onds which were imported into the United States, and paid duty, from 1877 to 1887, inclusive, was in excess of $50,000,000 ; and it can hardly be doabted that an equal or larger import in the form of unset stones and jewelry escaped during the same period the cognizance of the revenue officials. The value of the present annual import of precious stones not set — mainly diamonds — is about $10,000,000. In 1868 the annual value of a corresponding import was about $1,000,000. These data, imperfect as they are^ afford some indication of the rapid increase in wealth in recent yean among the people of the United States. 198 RECENT ECONOMIC CHANGES. monds in the hands of dealers in 1888 was folly twenty-five per cent in excess of their requirements. To meet and neu- tralize the influence of this condition of affairs, the South African diamonds-mining companies have limited produc- tion, which for the time hafi advanced prices. But the ten- dency obviously is for diamonds to decline in value ; and the wonder, indeed, is that this has not happened at an earlier date. " One thing, furthermore, seems certain, and that is, that when the breakdown of speculation and prices does oc- cur, the consequences will be singular and far-reaching. For it is to be remembered that for the most part the use of dia- monds is a mere whim of fashion, that may change at any time. There is no way of stimulating the demand for them, except by lowering prices, and, of course, if prices were ma- terially reduced, the wealthy votaries of fashion would in- evitably cease to wear diamonds, and would take up some other form of personal adornment." * The price experiences of diamonds in the near future promises, therefore, to be even more interesting than it has been the recent past. In the United States during recent years there has been a remarkable decline in the price of hides and in certain descriptions of leather ; " Buenos Ayres " hides having sold in May, 1889, at the lowest figures for thirty years, while the leather-trade generally has been depressed and unsatis- factory. The agency occasioning the first result is ascribed to the great increase in the supply of domestic hides conse- quent upon a notable extension of the American (Western) cattle industry ; and, in the case of the second, to an over- production and decline in demand for upper leather, in con- sequence of a change in fashion, whereby lighter grades of foot-wear have supplemented the use of " leg-boots." The extreme fluctuation in recent years in the price of certain drugs from well-recognized and unmistakable causes is also worthy of notice. For example, " Turkey opium," ♦ London " Economibt," March, 1S88, PRICES OP DRUGS. 199 a standard article of commerce, which in 1878 commanded 17s. per case in the liondon market, under the influence of sabsequent unusually large crops declined in 1886 to 68. 6d. for prime qualities. In 1876-'78 there was so little demand for the drug known as " balsam Tolu " that it seemed not unlikely that its production and market supply would en- tirely cease. In later years, however, it was discovered that it could be used for the manufacture of " chewing-gum " — an article in extensive use in the United States — and the demand thus occasioned has not only created a greater market than ever before, but the increased production has been attended with a reduction of from sixty to seventy per cent in price. The British Gold and Silver Commission call attention, in their " Final Report, 1888 " (pages 67 and 68), to three other causes of an exceptional character that have doubtless been influential in determining prices in a greater or less degree since 1873, and which are in no way connected with any changes in the relative values of the precious metals. The^r*^ is that " the rise in the price of raw products dur- ing the period preceding 1875 exceeded the average rise of the prices of all commodities, while the fall in the prices of raw products since 1875 has been above the average fall. Comparing, therefore, the earlier with the later period, the lower cost of manufacture was in the earlier period counter- acted by the higher cost of raw materials, while in the later period not only was this not the case, but the cost of the raw materials has decreased simultaneously with the dimin- ished cost of manufacture." The second is that, comparing the years since 1873 with previous periods, " there has been a remarkable freedom from an absorption of the people of the Continent of Europe in occupations of war. Their en- ergies have thus been turned instead to industrial and com- mercial pursuits, which has led to an increase in their power of production." A third cause " which has tended to lower certain prices in the open markets of the world, from whicli 200 RECENT ECONOMIC CHANGES. the * index ' numbers of prices are taken, has been the in- crease in protective tariffs. These tariffs, by enabling manu- facturers to demand high prices at home, have, in so doing, enabled them to throw their productions at an unnaturally low price upon foreign markets. In the case of bounties — e. g., those on sugar— the operation of protection upon prices has been more direct ; and even in protected countries, while the first effect of protection has been to raise prices, the ultimate effect has been in many cases to produce a glut, and make it difficult for the protected industries to get rid of their stocks." The divergency in the price movements of different and special commodities has also been very notable — so much so that, out of the long list of articles embraced in the numer- ous tables that have been prepared by European economists for determining the general average of prices during recent periods, the price movements of no two commodities can be fairly regarded as harmonizing. While in the CAse of some staple products prices fell immediately and rapidly after 1873, the prices of others, although subjected to the same gold-scarcity influence, and which did not have this influ- ence neutralized by a decline of production concurrent with continuing demand, exhibited for a long time comparatively little or absolutely no disturbance. This was especially the case in respect to wool, the price of which, long after metals, breadstuffs, chemicals, and cotton goods had succumbed to the wave of depression subsequent to 1873, " continued " (to use the language of the trade) " remarkably healthy," not- withstanding a continually increasing product was recog- nized ; and it was not until 1884 that the decline in the general prices of this commodity gave any occasion for anxiety. In certain tables prepared by Dr. Soetbeer, one hundred leading commodities are divided into seven classes. Com- paring the average prices of these classes in 1886 with those of the period of 1871-'75 — which last immediately preceded SOBTBEER'S PRICE TABLEa 201 the commencement of the alleged scarcity of gold — the fol- lowing results were obtained : There was a fall in Class I (agricultural products) of thirty-one per cent ; in Class II (cattle and fish products) of twenty-three per cent ; in Class III (tropical fruits) of seven per cent ; in Class IV (colonial commodities) of twelve per cent ; in Class V (mining and smelting products) of forty per cent ; in Class VI (textile products) of twenty-four per cent; in Class VII (miscel- laneous articles) of thirty-two per cent Careful comparisons of price movements in recent years also fail to show any exact correspondence of results as respects different countries, the average fall of prices having been apparently less in France and Germany than in Great Britain during the same period ; while the average fall in prices in the United States, in respect to all those commodi- ties which enter into the general wants of man, have been undoubtedly greater than in any other country.* ♦ The foUowing extract fh)in the " Report of the Chamber of Commerce of Cmdmiflti, Ohio/* for the year ending August 81, 1886, strikingly iUustratea the extraordinary dix;line in the price of staple commodities in this great in- terior market of the North American Continent : "There is one condition revealed" — L e., by the statistics of 1885-*86 — ** that 18 very noticeable, which is that prices in general touched the lowest point in a quarter of a century. There were those who supposed that the ahrinking processes had been arrested in the preceding year, and yet the fig- ures for 1886-*86, in nearly all departments of business, show lower prices than the previous year. In presence of the low prices of 1884-*85, it seemed almost incredible that so much of market value could be wrung from them as has been during the past year. Thus, commencing near the alphabetical list, bran declined 9 per cent ; creamery butter, 20*7 ; butterine, 18 ; candles, 18*7 ; soap, 15-2; cattle, 8; coal, delivered, 7'8; middling cotton, 11*9; feathers, 6-7 ; dried applee, 27*4 ; No. 2 mixed (sheUed) com, 14*6 ; No. 2 oats, 5-8 ; New Orleans molasses, 11*6 ; Louisiana rice, 18*1 ; hay, 5 ; hops, 25*2 ; mess- pork, 21 •! ; prime lard, 10-7; lard-oil, 11*7: tallow, 22 ; white-leaf tobacco, 25; flax-seed, 18*4; starch, 13*4; high wines, not including the taxes, 16-3. In a few articles — tanners* bark, clover-seed, lead, barley, wool, etc. — there was an advance ; yet the number is so small as to make them quite excep- tional. " While the depreciation which has taken place the past year (1885-'86), compared with the prices of 1884-' 85, has been marked, it may be interesting 202 REGENT ECONOMIC CHANGES. Now, while such results are not in accordance with what might have been anticipated from and can not be satisfac- torily explained hy any theory of the predominating and depressing influence of a scarcity of gold on prices, they are exactly the results which might have been expected from and can be satisfactorily explained by the conditions of supply and demand — conditions so varying with time, place, and circumstance as to require in the case of every com- modity a special examination to determine its price-experi- ence, and which experience, once recognized, will rarely or never be found to exactly correspond with the experience of any other commodity ; the leading factor occasioning the recent decline in the prices of sugars having been an ex- traordinary artificial stimulus; in quinine, the changes in the sources of supply from natural to artificially cultivated trees; in wheat, the accessibility of new and fertile terri- tory, and a reduction of freights ; in freights, on landy the reduction in the cost of iron and steel, and on the ocean new methods of propulsion, economy in fuel and undue multi- to take a glance at the tremendous redaction which has taken place in the past five years, which, in articles that enter into the every-day wants of man, in not a few instances has been equal to almost one hnlf their value in 1881-^82. The gravitation to a lower plane of value has been so steady us to prevent a f\ill appreciation of the enormous shrinkaf^ to which commodities have been subjected. Thus, in mess-pork the depreciation in the general average price since 1881-^82 has been 48 '5 per cent; in prime steam lard, 46 ; horns, 24*4; shelled com, 48 ; oats (which in Europe have shown no tendency in recent years to fall in price), 89-4 ; rye, 82*6 ; bran, 88*8 ; extra butter, 46*9 ; tallow, 41*4; flour, 84*3; linseed-oil, 80; salt, 18*6; cheese, 171; fair to medium cattle, 18*3; middling cotton, 21*7; Louisiana rice, 28*9; barley, 18'G; and wool, 16 per cent." The report for the year ending August, 1887, thus further states the experi- ence of the Cincinnati market : *^ Low as were the prices of brcadstutTs in the previous year, they touched in the post year (1887) still lower points. The some is true of cattle, sheep, molasses, su;^r, rice, sirups, salt, and, during most of the year, potatoes. The food of the people, in general, was cheap, the labor of the country never having received a larger return, in actual necea- sities and comforts, for wages received. The working forces of the country are so productive that it furnishes either a constant pressure in the direction of lower prices or resistance to advance." SPECIAL PRICE INFLUENCES. 203 plication of yessels; in iron and steel, new processes and new furnaces, affording a larger and better product with less labor in a given time; in certain varieties of wool, changes in fashion, and in others an increase of production in a greater ratio than population and their consuming capacity ; in ores and coal, the introduction of the steam- drill and more powerful explosive agents ; in cheese, a dis- proportionate market price for butter; in cotton cloth, because the spindles which revolved four thousand times in a minute in 1874 made ten thousand revolutions in the same time in 1885 ; in " gum-arabic " and " senna," a war in the Soudan ; in wines, a destruction of the vines by dis- ease ; in American hog-products, a plentiful supply of hogs, consequent upon an abundant com (maize) crop, etc. And yet all these so diverse factors of influence evolve and har- monize under, and at the same time demonstrate, the exist- ence of a law more immutable than any other in economic science — namely, that when production increases in excess of current market demand, even to the extent of an incon- siderable fraction, or is cheapened through any agency, prices will decline ; and that when, on the other hand, pro- duction is checked or arrested by natural events — storms, pestilence, extremes of temperature — or by artificial inter- ference— as war, excessive taxation, or political misrule or disturbances — prices will advance; and, between these ex- tremes of influence, prices will fluctuate in accordance with the progressive changes in circumstances and the hopes and fears of producers, exchangers, and consumers.* • In new ooontries, or countries where industry w confined to the produc- tion of a few staple products, like wool, wheat, sugar, etc., a decline in prices exerts a wider and much more disturbing; influence than in countries where there is great diversity of industry, and where the sources of income and the opportunities for employment are more numerous and more varied. In the latter all branches of industry are rarely depressed at the same time, and pros- perity in some coitipensates to a certain extent for adversity in others. But, in countries of inferior industrial organization and diversification, the interests of the entire community are so common and united that the tendency is 204 RECENT ECONOMIC CHANGES. It should also not be overlooked that extraordinary price movements — ^mainly but not exclusively in the direction of further decline, and as the result of continually changing conditions in the production and supply of commodities — are constantly occurring, and are likely to continue to occur, unless further materia progress is in some way to be ar- rested. Bessemer-steel rails, which commanded £4 5^. in Great Britain in 1886, sold in Belgium in June, 1887, for £3 165. ; sugar, which was thought to have touched the low- est possible price in July, 1886 — ^2*92 cents per pound in New York (for fair refining in bond), sold in July, 1887, in the same market, for 2'37J^ cents, and in 1888 for 3*09 ; cop- per, which brought 25 cents per pound in New York in 1880, sold for 9f cents in 1886, llj cents in 1887, and 16i cents in 1888 ; quicksilver, which sold for Jfcll8 per flask in San Francisco in 1874, sold for 126 in 1884 and 150 in 1887. Sulphate of quinine, which sold in 1885 for 2s. 6d. per ounce (sixty cents), in 1887, owing to continued cheapening in the production and transportation of cinchona-barks and im- provements in manufacture, sold for Is. Gd, (thirty cents), and one of the largest of the world's manufacturers of qui- nine, under date of September, 1887, writes, " No one can predict the future prices of this product, as all past experience goes for naught." "Manila" and "Sisal" hemps, on the other hand, with an admitted notable increase in annual market supply, advanced in price fully one hundred per cent between the 1st of January, 1887, and the corresponding period in 1889, because under the new methods of binding the sheaves of American grain the demand for coarse twines has been in excess of supply. always, for a change of price in one commodity — cither rise or fall— to undaly influence the prices of all commodities. And thia, according to the London "Statist," is what has been particulariy noticeable in Australia, where such a sympathy obtains between the three groat products of that country — wool, wheat, and copper — ttiat it rarely happens that one of them droops in prioo withoat the prioo of the otliera rapidly weakening. CONFLICT OP OPINIONa 205 Sach, then, are the leading and admitted facts illustra- tiye of the nature and extent of the extraordinary and most extensive decline in prices which has occurred in recent years, and which has been the most apparent and proximate (bat not the ultimate) cause of the period of economic dis- turbance which, commencing in 1873, still exists, and seems certain to last for some time longer. Such, also, is a sum- mary of the evidence in support of the view that this recent phenomenal decline of prices is due so largely to the great multiplication and cheapening of commodities through new conditions of production and distribution, that the influence of any or all other causes combined in contributing to such a result has been very inconsiderable, if not wholly inappre- ciable. It is not, however, to be concealed that numerous econo- mists and statisticians of high repute — M. Sauerbeck and others — are nevertheless of the opinion that, allowing all that has been claimed for the influence on prices occasioned by reduction of cost through increased and clieapened pro- duction and distribution, the decline in recent years is too great to be "simply explained away" by these agencies But these authorities have specified no commodities, the analysis of whose production and price-experiences in recent years furnish any sufficient foundation for such a general conclusion ; and it is interesting to note how the experiences of the few — as has been pointed out in the case of wool and gilk — which at first thought would seem to indicate the sensible influence of " other " agencies, on analysis prove to the contrary. Reasoning also from what may be termed the gold standpoint, the evidence to the same effect is not less conclusive. It would seem, in the first place, that if the scarcity influence of gold on prices had originated and operated as the advocates of this theory claim, such influence would have been as all-pervasive, synchronous, irresistible, and constant as the influence of gravitation ; and that some- thing of correspondence, as respects time and degree, in the 10 206 RECENT ECONOMIC CHANGE& resulting price-movements of commodities, would have been recognized. But no such correspondence, as has been shown by examples, has been or can be established. On the con- trary, the movement of general prices since 1873 — although generally downward — has been exceedingly irregular; de- clining until 1878-'79; then rising until 1882-'83; then again declining to an almost unprecedented low average in 1886 ; and in the year 1887 exhibiting, in respect to some commodities, a slight upward tendency, which in 1888-'89 was even more pronounced. It might also have been ex- pected that the influence of a scarcity of gold would have especially manifested itself at or shortly subsequent to the time (1873-'74) when Germany, having demonetized silver, was absorbing gold, and France and the Latin Union were suspending the coinage of silver. But the years from 1875 to 1879, inclusive, taking the English market as the criterion, were characterized generally by an excessive supply of money and currency of all kinds ; and the same has been true of the period from 1880 to 1886-87, when, if the supply of money from gold was constantly diminishing, contrary re- sults would seem to have been inevitable.* * It has, however^ been urged in opposition to this view that, when from any causes prices fall, ^* there will always be an excessive supply of money seeking investments at the money centers,'' and that ^* the supply of money may have diminished, but in the face of falling prices the demand for it will naturally have diminished faster still/' To thi^ it may be answered that, when falling pric^ are accompanied or occasioned by diminished trade, the above infer- ences may be true ; but, in the phenomenal period under consideration, prices have fallen greatly without any diminution of the volume of trade. In fact, the volume of trade, or the quantities of commodities produced, moved, and exchanged, has never been so great in the hliitory of the world as during the last ten or fifteen years ; and the so-called depression of trade during this time bos been mainly due to a reduction of profits tn Huch an extent that, as the expression goes, *' it has not paid to do business," which in turn has been occasioned by an intense competition in all markets U) dispose of an excess of product. Under such circumstances there is no reason to believe that the demand for money has diminished faster than prices have fallen, or to doubt that, if there had been any real scarcity of gold, it would have failed to mani- fest itself. HAS GOLD BECOME SCARCE! 207 But a more interesting question, and one more pertinent to this discussion than any other, is, has gold, in recent years, as an instrumentality for effecting exchanges (by measuring the relation between the various commodities and things exchanged), really become scarce — at least to the extent of occasioning, through its increase of value or purchasing power, a considerable fall in the prices of all commodities ? And on this point the following is a summary of the evi- dence in favor of and in contravention of such a supposi- tion.* The position taken by the advocates or believers in the gold-scarcity theory, is, in brief, that the production of gold in recent years has largely fallen off and become wholly inadequate to meet the demands for coinage con- tingent on the increase in the world's trade, wealth, and population ; and further, and as a direct consequent, that trade everywhere has been obstructed and depressed ; that prices, profits, and wages have faUen, and the burden of public debts and of taxation in general has been aug- mented. That the world's annual product of gold — consequent mainly upon the exhaustion of the mines of California and Australia — has largely diminished in recent years is not dis- puted. Opinions as to the extent of this reduction of sup- ply vary somewhat, but the following estimates of Dr. Soet- beer of the total annual average production since 1851 are accepted as approximately accurate : ♦ To avoid oonfusion of ideas on this subject, it is desirable that the reader shoald keep clearly in view that price is the expression of the value of a com- modity in terms of money, and that the expressions, "fall in prices" and " appreciation of gold," for purposes of the present discussion, mean really one and the same thing. " If you have a fall in prices, you have on apprecia- tion of gold ; and if you have an appreciation of pold, you have a fall in prices." The problem presented is, therefore, not has gold appreciated in ▼aloe or purchasing power — for, a fall in prices being admitted, such a re:*ult beoomea inevitable and coincident — but has its appreciation been due to some- thing that has befallen conmiodities, or something that has befallen gold itself, such as scarcity of supply or extraordinary demand ! 208 RECENT ECONOMIC CHANGES. 1851-'55 £27,815,400 |135,182,844 1866-'60. 28,144,900 137,784,416 1866-70 27,206,900 132,225,634 1876-'80 24,052,200 1 16,893,692 1881-'86 20,804,900 101,111,814 For the year 1888 the estimate is (" New York Financial Chronicle ") £19,056,782, or $92,575,000. The estimates of experts as to the proportion of the annual product of gold which is available for coinage purposes vary considerably ; the uncertain elements in the case being the amount of gold that is recoined and the proportion that is used in the arts and manufactures. That trade, in the sense of diminishing volume, has not been obstructed, and that the decline in prices in recent years has not been occasioned, to any appreciable extent, by reason of the scarcity of gold, would appear to be demon- strated by the evidence that has been herewith presented. For the assertion that wages, generally, have fallen, there is absolutely no foundation, as will be shown hereafter. That profits have fallen must be admitted ; but such a result has been due, in almost every case, to the severe competition engendered by the desire to effect sales in face of a con- tinued supply of commodities in excess of any current market demand ; while in contravention of the assumption that the supply of gold in recent years has been inadequate to meet the increased demands of the world for coinage, etc., the following facts are in the highest degree pertinent, if not wholly conclusive : No one doubts that the amount of gold in the ci\'ili2ed countries of the world has largely increased in recent years. According to Dr. Soetbeer,* the monetary stock of gold and gold reserve in the treasuries and principal banks of ci\'ilized countries has shown an increase for every decade since 1850, and at the end of 1885 was nearly four times what it was in • Soetbecr*8 " Matorialien," second edition, 1886, p. 47. RECENT SUPPLY OP GOLD. 209 1850 ; 80 that, instead of there being a reduced supply of gold, as compared with thirty-five years ago, there is a greatly increased supply. Prof. Laughlin estimates this increase to have been "from 1477,000,000 in 1870-'80 to $836,000,000 in 1885." In 1871-'74 there was, according to the same authority, " $1 in gold for every $3.60 of the paper circulation of the banks of the civilized world ; in 1885 there was $1 of gold for every $2.40 ; the total note circulation increasing during the same time to the extent of $464,000,000, or twenty-nine per cent." In 1870-'74 the gold reserves amounted to twenty-eight per cent of the total note circulation, and sixty-four per cent of all the specie reserves ; in 1885 " the gold bore a larger ratio to a larger issue of paper, or forty- one per cent of the total note circulation, and seventy-one per cent of the specie reserves. This," as Prof. Laughlin remarks, " is a very significant showing. What it means, beyond a shadow of doubt, is that the supply of gold is so abundant that the character and safety of the note circula- tion have been improved in a signal manner." The investigations of Mr. Atkinson have also led him to the conclusion that, while the population of the world since 1849 has increased about forty per cent, the concurrent in- crease in the volume of the money metals has been fully one hundred per cent, and that the value of the gold, added to the circulation during that period, was more than double that of the silver added.* * " We are substantiallj oeitain that the quantity of ^Id and silver com- bined which has been added to the circolation of the money metals between the year 1850 and the year 1885 exceeds the total quantity which was In orc in 1850. That is to say, that portion of the world's product of gold and silver which has been added to the circulation for use as money between these dates, has increased the total amount in circulation more than on4 hundred per cent. IHd the population of the globe increase more than oru hundred per cent in this period! To this question a negative answer may be given with equal •ssoranoe. The increase of population in the civilized states of the world, now numbering only a little over four hundred millions, has been only forty- 210 RECENT ECONOMIC CHANGES. Since 1873-'74 Germany has radically modified her me- tallic circulation, giving preference to and using additional gold, and the United States and Italy have resumed specie payments. But the supply of gold has been sufficient to give to these nations all the gold that they required, with- out apparently affecting the requirements of other countries. Again, it is not disputed that the rate of interest and dis- count has declined in all these countries — ^like Germany, the United States, Scandinavia, Holland, and Italy — ^which in recent years have increased their demand and use of gold for coinage ; whereas a scarcity of money resulting from a scarcity of gold ought to have produced just the contrary effect. The present annual production of gold is enormous com- pared with any period antecedent to 1850.* Between 1820- 1830 its average annual production was $10,000,000 ; be- tween 1831-1840 it was $14,151,000; and between 1840- 1850, $38,194,000. It was at its highest figure— $170,000,000 to $180,000,000— in 1852 ; averaged $101,000,000 from 1881 to 1885 ; and (according to the estimates of the Director of the United States Mint) was $103,000,000 in 1885, and $99,000,000 in 1886. The production of silver has also largely increased in recent years ($39,000,000 in 1850, $64,000,000 in 1873, and $135,000,000 in 1887), and no evidence can be produced to show that there has been any actual diminution in its aggre- two per cent in this period; can the remainder have increased In greater measure ? Surely not. Hcnoe it follows that such an addition of gold and silver has been made to the money metals since 1850 as would have caused them to depreciate between these two dates had the simple quantity or volume of money in circulation per capita been the only element in the problem, " It is also a well-known and ftilly ascertained fact that between these two dates the value of Uie gold added to the circulation of the world very far ex- ceeded the value of the fitilver, the ratio or valuation of silver being computed tLX,J{fUen and one half pounds of silver to one of gold." — Edward ArKivsoif. * ** In the la^t thirty-five years, one and one third times as much gold has been produced as in the three hundred and fifty -eight years preceding 1850." — Lauohlut. ECONOMY IN THE USE OP MONEY. 211 gate Qse by reason of its so-called '' demonetization " in any country. Now, while the supply of the precious metals for money purposes has been amply sufficient to meet all requirements, there is abundant evidence in proof that the use of metallic money for the purpose of effecting exchanges has been greatly supplemented in recent years through numerous and varied agencies. "In America, France, and Germany there are besides gold coins immense sums of silver money, paper money, and uncovered bank-notes ; and these media of cir- culation are fully equivalent to gold in value, owing to pub- lic or private credit ; and, therefore, in the figures of prices they have the same influence in commerce as a correspond- ing amount of gold money would have."* Never before in the history of the world have there been so many and such successful devices invented and adopted for economizing the use of money. Every increase in facil- ities for banking and for the granting and extension of credits largely contributes to this result ; the countries en- joying the maximum of such facilities requiring the small- est comparative amount of coin for their commercial tran- sactions. In the United States the number of national • " In Franoe in latter years we find in the vaults of the Bank of France a cosh reeenre of 1,100 to 1,200 francs in gold, and a like amount in silver of legal tender. Besides this, the note circuktion amounts to 2,600,000,000 to 2,700,000,000 franca, and is, therefore, covered to the extent of nearly half in gold and nearly five sixths in metal. Were there an increased demand for circulation, there could he — political quiet and peace being assured — an issue of 500,000,000 to 600,000,000 francs more in notes covered by the existing cash reserve without causing thereby the least injury to credit. ^* In Germany, too, there can be no talk of any dearth of circulation so long as the Imperial Bank holds a cash reserve of 650,000,000 to 750,000,000 marks in gold and silver, which is treble the sum which before 1870 was quite sufficient for the Prussian Bank. Nearly three fourths of the amount of the notes issued by the Imperial Bank and the other banks of issue are usu- ally metallically covered, and therefore the issue of notes could, if it was only a question of the credit of the notes, be increased by the sum of some 100,000,- 000 marks on the present cash reserve." — Peof. Lkxis, GoUingenf Antwtr to Circular Ldter of British Gold and Silver Commisnon, 1888. 212 RECENT ECONOMIC CHANGEa banks increased from 2,052 in December, 1879, to 3,151 in December, 1888, or in the ratio of over fifty-three per cent. During the same period their capital, surplus, and undi- vided profits increased 38'5 per cent, and their loans and discounts seventy-nine and a half per cent. In England, Scotland, Ireland, and the Channel Islands there were 2,417 banking offices in 1865, and 3,886 in 1885 — an increase which is regarded as extraordinary. The total banking de- posits of England, which were estimated (at one moment) at £676,000,000 in 1874, were £760,000,000 in 1884— an in- crease of £84,000,000 ($408,000,000) in nine years, and this notwithstanding the concurrent great fall in prices. "In Germany, a system of deposit accounts began at the Im- perial Bank in 1876 ; since then they have grown to more than 350,000,000 marks ($85,000,000). Of these deposits, the owners can at any time avail themselves by means of checks, and make their payments throughout the whole empire without any expense." To this must be added the progress made in Germany in recent years in the absorption and utilization of the very smallest reserves of money through the savings-banks system. "There are now scarcely any peasants left in Germany who keep ready money on hand to any considerable amount ; and in families, in which a few decades ago, every child possessed his money-box filled with gold and silver pieces, now every child has his savings-bank book." — Prof. Nassk, of Bonn, Tlie great reduction in the time and cost of distribution of commodities, and the facility with which purchases can be made and credits transmitted by telegraph, have also re- sulted, not only in an enormous saving of capital, but also in an ability to transact an increased business with dimin- ished necessity for the absorption and use of actual money. A most striking illustration in proof of this, given by Mr. Fowler (" Appreciation of Gold," London, 1885), is, that while the total British export and import trade, aggregating £6,000,000,000 from 1866 to 1875, was accompanied by an INTERNATIONAL BALANCES. 213 aggregate export and import of £530,000,000 of bullion and specie, an aggregate value from 1876 to 1885 of £6,700,000,- 000, was moved with the aid of only £439,000,000 of bullion and specie. The same authority refers to an eminent Eng- lish firm doing business with the East, as stating that ^^ their business could now be conducted with one fifth of the capi- tal formerly employed," which would seem to warrant the inference that the reduction in the necessity for using so much of their capital as was represented by money had also been proportionate. For the settlement of international balances — a large function of gold — ^it is certain that every ounce of this metal — ^through the great reduction in the time of ocean- transits — is at the present time capable of performing far more service than at any former period ; the time for the trans- mission of coin and bullion having been reduced in recent years between Australia and England from ninety to forty days, and from New York to Liverpool from twelve or fif- teen to eight or nine days. Such an increase of rapidity in doing work is certainly equivalent to increase in quantity. The very great change which has taken place in the United States in this respect is thus noticed in the report of the United States Controller of the Currencv for 1888 : " Of late years the gold movement across the Atlantic has become much more sluggish, because something has been found to take its place, and to some extent, at least, to serve the purpose of regulating exchanges and transferring capitaL Qertain securities on the New York stock-list have come to be largely and coQstantly ctfiaitia at llie European monetary centers, ana as, by means of cable communication and tnrough the close competition of dealers, their values are gener- ally at a level in all markets, they supply a cheaper means of settle- ment than gold, and a more convenient basis for exchange operations."^ These securities " have become the stock in trade of dealers in foreign exchange ; they are shipped back and forth according as exchange quotations fluctuate ; indeed, in many cases they are not even shipped ; the ownership is transferred by a cablegram, and this transfer supplies a basis for bills of credit Before this new business came in, the 214 RECENT ECONOMIC CHANGE& dealers in foreign exchange, being dependent wholly upon gold to set- tle their balances, or to serve as a basis for drafts or credits whenever the supply of commercial bills proved insufficient, were compelled to carry a stock of coin, or bullion, and this constituted a fund apart from the general monetary stock of the country." The statistics of clearing-houses, which are everywhere multiplying, also show a continued tendency for the settle- ment of financial obligations without the intervention of either notes or coin. In the United States the exchanges effected \hrough the medium of clearing-houses increased $7,604,000,000 in the single year from 1885 to 1886. In the United Kingdom the daily clearances of its banks amount to nearly one fifth of the whole supply of gold in the country ; and for the year 1885, for the three commer- cial centers of London, Manchester, and Newcastle, amount- ed to the almost incomprehensible sum of £6,048,000,000 / ($29,393,280,000). In Germany the clearing-house system only came into full action in 1884, but in 1886 the business had grown to 12,355,000,000 marks; and the question in this connection is most pertinent — i. e., " What relation does I this saving of the use of money bear to the quantity of gold Germany is estimated to have absorbed in her new coin- age ? " — Sib Thomas Fabber, Repeated investigations made in England in recent years prove that only about -06 per cent of coin is used in settling the transactions of banks and bankers of that country ; and the results of an inquiry instituted by the United States Controller of the Currency in 1881 showed that, of all the receipts by 1,966 national banks in one day in that year (June 30th), ninety-five per cent were made up of forms of credit, exclusive of even circulating notes ; while for New York city the percentage was 98*7. At all the banks the proportion of gold coin to the whole receipts was only '65 of one per cent.* A curious indirect illustration of the influ- * in an address before the British Institute of Bankers, November^ 1887, by Mr. J. W. Birch, one of the directors of the Bank of England, he stated MONETARY CONDITION OP PBANCE. 215 ence of the extension of banking facilities, and the use of checks in economizing coin as a medium for effecting ex- changes, is afforded by contrasting the monetary condition of f^i-anoe — a country where the check as a means of payment is comparatively little used, and other banking devices have not been extensively adopted — ^with that of the United States, where all the modem instrumentalities for facilitat- ing exchanges have been quickly adopted and extensively employed. The result is, according to M. Leroy-Beaulieu, that while France has only 38,000,000 inhabitants, as com- pared with 65,000,000 in the United States, it holds, and seems to require, for the transaction of its business a much larger stock of gold — a stock which bears the same propor- tion to that held in the United States as five to three. Taking the amount of gold per capita, the disproportion is even much greater; the amount of goldj according to the same authority, held in France being 131 francs (about $25) per capita, while in the United States it is not in excess of ♦10 (about 52 francs) per capita ; or, in other words, the amount of gold money per capita in France is two and one half times that in the United States. " The transfer by means of checks of the right to the possession of gold, has to a vast extent taken the place of the transfer of gold itself, and it can not be doubted that every day the payments which arc made by means of checks greatly exceed the amount of gold which exists available to meet the checks, if every holder were to insist upon receiv- ing the gold which he is entitled to claim. The purchasing power of the people consists, it appears to us, not only of the actual gold which they possess, or of that which their bankers are possessed of and can that he had "asked the head of the Private Drawing Office of the Bank of England to take out the figures of one week's payments hap-hazard, and the result was that instruments of credit were eighty-seven and a quarter per cent of the total, bank-notes twelve and a quarter per cent, while the ca^h pay- ments amounted to only about three per mille. He had obtained similar Rta- tistics for twenty-two days' payments at Mej^srs. Glyn. Mills & Co., with the result that their average of cash payments was about four and a half per mille.'' 216 RECENT ECONOMIC CHANQEa immediately command, but, to use a popular expression, of the money which they have at their disposal at their bankers', which greatly ex- ceeds the amount of gold which cither they or their bankers could at any time at once command. This is indeed an under-statement of the case, for the credit which customers can obtain from their bankers may have as potent an influence upon prices as their cash balances. So long as those who possess conmiodities are as ready to take checks for them as they would be to take gold, the balance which a man has or can have, at his bankers*, influences prices to the same extent as if he were possessed of that amount of gold.*' — Fined Report of the Britieh Gold and Silver Commission^ Fart 11^ p, 70, In every country which has adopted the "postal money " system, the rapidity with which the public resort to that method of effecting exchanges is also most surprising. The number of " postal " orders issued by the British Post-Office in 1887 was 35,198,754, representing £14,228,734 ($69,151,000) ; while money-orders, domestic and foreign, were issued during the same year to the amount of £27,320,- 000 ($132,776,000). Domestic money-orders were first issued in the United States in 1864. In the fiscal year 1804-'65 the total amount issued represented $1,360,122 ; but for the fiscal year ending June 30, 1888, the amount of such orders issued had grown to $119,649,064. The growth of the international money- order system has been even more marked. Such orders were first authorized in 1869, and the total amount issued from September 1, 1869, to June 30, 1870, was only $22,189. From 1872, however, the system made rapid strides, and in the fiscal year 1887-'88 the total amount issued had grown to $11,293,870. In estimating the influence of any diminished produc- tion of gold in recent years, it is important to bear in mind a point to which attention has been often heretofore called, and that is, that gold and silver are not like other commodi- ties, of which the greater part of the annual production is annually consumed ; but that their use for the purpose of "effecting exchanges does not involve consumption, except GOLD AND SILVER UNLIKE OTHER COMMODITIES. 217 hj loflB and wear ; that the work they have once done they are equally ready to do over and over again, and that every addition to their stock is an addition to the fond available for exchanges. It follows, therefore, that in the case of the precionB metals, a diminution, or an increase in the new supply is of less importance than in the case of consumable articles, and that an increase or diminution of demand has a smaller effect Furthermore, the aggregate stock of gold has not diminished, but has continually increased ; although the annual addition to the world's stock has somewhat di- minished of late years. Dr. Soetbeer estimates " the pro- duction of gold since the end of the fifteenth century to have been £1,553,415,000 ($7,549,596,900). An annual supply of £20,000,000 ($97,000,000) above the present average prod- uct would consequently be about one and a quarter per cent on that stock; while the annual diminution in the supply which has taken place in the last fifteen years would only amount to one quarter per cent per annum." * That such a diminution of supply — even if a much higher esti- mate is adopted — has for each and every year for a consider- able period been far more than supplemented and made good by the reduction in the amount of capital, in the form of money, which the increased facilities for doing business have permitted and effected, is a proposition which it would seem could not well be doubted, f • «( Rnal Report of the British Gold and Silver Commission," p. 18. t " The tnuie of the world \b carried on by credit and capital, and any csQflcs affecting these essentials have infinitely greater effect on prices than a slight proportionate increase or decrease in the production of gold. A mer- diant may not hold ten sovereigns, but he may have capital and credit for ten milUono. An ingenious statistician has calculated the capital of the world in 1880 at £46,000,000,000 sterling" ($230,000,000,000), "and if credit and capital have had the main voice in the question of prices, how minute must have been the effect on the market of an annual reduction in the production of floating capital of ten (sterling) millions per annum, from a short period of most exceptional production, especially when the falling off has been more than bal- anced by the increased economy in the use of gold ! " — Nathakiel Cobk, "^WhtUistAe TrusMioturso/tJU Alleged AppndationqfOoldr*' London,l8SZ, 218 RECENT ECONOMIC CHANGES. The evidence, therefore, seems to fully warrant the fol- lowing conclusions : That the tendency of the age is to use continually less and less of coin in the transaction of busi- ness; and that '^so far from there being any scarcity of gold, there never was a period in the world's commercial history when the existing quantity was so large as at present, in proportion to the necessity for its use or the purposes .it has to serve." The present and rapidly increasing indifference of the business public, alike in Europe and the United States, whose interest in this subject is mainly practical, is also significant, as indicating that the importance formerly con- ceded to the gold-scarcity theory has not been confirmed by experience. In fact, the changes in recent years in the world's economic condition have essentially changed the relative importance of the two functions, which gold as the leading monetary metal discharges ; namely, that of an instrumen- tality for facilitating exchanges and as a measure of values. As civilization has increased, and as new, quicker, and cheaper methods for the interchange of thought and com- modities have been invented and adopted, the function of gold as a medium of exchange — the one that necessitates a large and continually augmenting supply, and entails the greatest wear and loss — is rapidly diminishing in impor- tance by the supplementation of other and better agencies. On the other hand, the function of gold as a measure or verifier of values, by reason of its exemption from value fluctuations to a greater extent than any other product of labor, is becoming of greater and greater importance with the continually increasing volume of the world's production and distribution, and more especially since the other pre- cious metal — silver — has become uncertain and fluctuating in value. But, in discharging this function, the service which gold renders is analogous to that rendered by all other measures, the yard-stick, the bushel measure, or the metal TWO FUNCTIONS OP GOLD. 219 mercnry, which in the tabe of the thermometer or barometer measures the temperature or pressure of the atmosphere. That is, a giyen quantity of gold can be used to an indefinite extent with such a minimum of waste that continuous large supplies are not imperative ; or, as Sir Thomas Farrer has happily expressed it, ^'we are returning in the advanced stage of commerce to a state of barter, in which money is merely the measure and language, not the actual medium, of exchuige, and in which personal rights and duties take the place of cash." * Whether in the case of silver, which has been used for currency purposes throughout the world since 1873 to a greater extent than ever before, but which has ceased to maintain its parity with gold as a measure of value, it is possible, or desirable, to restore the latter quality through legislation, is a subject foreign to the present discussion. But it may not be irrelevant to call attention at this point to the manner in which certain admitted facts touching the recent fall in prices have been misunderstood, and, more especially, have been perverted, with a view of sustaining the theory of the appreciation of gold and of creating exag- gerated ideas respecting consequent impending disasters, and the power of legislation to provide remedies. Thus, in illustration of the assumption that the quantity of gold in the world, available for use as money, mainly regulates prices, and that, prices having fallen by reason of a scarcity of gold, the ratio of debts to assets, or the burdens upon * '* In the original and Bimplest form of barter, goods and servioes were ex- changed directly against one another : a horse against bo many sheep, a day^s labor agunst a day's food, and so on. In the next stage the exchange was effe<^ed by the intervention and actual use of money, which was then both the measmie of value and the actual medium by the use of which the exchange was actuaUy effected. Id the third stage, to which the most advanced nations have now come, the barter is effected not by the use and intervention of money, but by the use and intervention of personal promises, which are made in terms of money, and the value of which is therefore measured by money." 220 RECBNT ECONOMIC CHANGES. debtors, has been increased, the following statements were made in a memorial signed by ninety-five members of the United States House of Bepresentatiyes of the Forty-eighth Congress, and presented to the President of the United States in 1885 : *' Eighteen million bales of cotton were the equivalent in valae of the entire interest-bearing national debt in 1865 ($2,221,000,000); but it will take thirty-five million bales at the price of cotton now (1885) to pay the remainder of sach debt ($1,106,000,000). Twenty-five mill- ion tons of bar-iron would have paid the whole debt ($2,674,000,000) in 1865 ; it will now take thirty-five million tons to pay what remains ($1,375,000,000) after aU that has been paid." The inference, therefore, intended to be conveyed was, that the burden of the national debt of the United States in 1885, notwithstanding the large payments on the same during the previous twenty years, had really been increased, inasmuch as a greater effort of labor, or an inx^reased amount of the products of labor, was now necessary to liquidate it, than when the purchasing power of gold had not been appreciated through its scarcity; and, as with public debts, so also with private debts, especially such as are in the nature of mortgages on land, or on other product- ive fixed capital. Now, in reply to this it is to be said, firsts that the basis assumed for this comparison of prices was, in the case of cotton, entirely unfair and unnatural — the gold price of this commodity in the year 1865, owing to a scarcity occasioned by war, having been more than two hundred and fifty per cent higher than the average prices in 1860 before the war ; while the price of iron for that same year in the American markets was also inflated on even a gold basis ; and, sec- ondly^ that no consideration is given or allowance made in the above comparisons for the results of labor at the two periods of 1865 and 1885 ; not more, and probably much less, actual labor in 1865-'86 having produced 6,550,000 bales of cotton in the United States than was required in RATIO OP DEBTS AND ASSETS. 221 1860 to produce 3,800,000 bales;* wlule in the case of bar-iron the proportion of days' labor to a ton of prod- uct has been diminished more than one half since 1865; and the same is true, also, of that more valuable product of iron, namely, steeL Furthermore, no important prod- uct of the United States can be named in which the labor cost of production has not decreased very much more than has the gold price of the same between 1805 and 1885. In short, if the debtor has got more to pay at the latter than at the former period, it is not the fault of any change in the relations of the precious metals if he has not at the same time got correspondingly more to pay with. The monetary experience of the United States since 1879 has been so especially remarkable, and has such a bear- ing on the economic problem of the relation of money-supply to prices, as to entitle it to extended notice. The following table shows the changes in the circulating media of the United States — bullion, coin, and paper — since January 1, 1879 (when the country resumed specie payments), and January 1, 1889 — a period of ten years : * The iDcreaae in the cotton product of the United States since 1860 has been due mainly to increased use of fertilizers, better tillage, and better con- ditioDfl for the employment of labor. In the Brazos alluvial r^on of Texas, which ranks among the first of cotton-producing regions, the relative increase in cotton product and population between 1870 and 1880, according to tlie United States census, was 1*8 to 1. In what is termed the ^* oak-upland " r^ons of North Carolina, the product of cotton in 1880 had increased over that of 1870 in the ratio of 4*5 to 1, or this region in 1880 produced more cot- ton than the product of the entire State in either 1670 or 1860. " This re- markable result," according to the special United States census report on cotton for 1880, ^' was due mainly to the introduction and general use of com- mercial fertilizers, which not only increase the crop, but hasten its maturity from two to three weeks, and so bring into the cotton belt a strip of plateau country, whose elevation of from 800 to 1,200 feet had placed it just beyond the climatic range of the cotton-plant. This change is in no respect due to altered relations of labor.*' In truth, there was no one thing in which the American advocates of slavery were more mistaken than in the assumption that slave labor was cheap labor. 222 RECENT ECONOMIC CHANGES. CIRCUTiATION. Jan. 1, 1879. Jan. 1, 1889. Total. Gold coin and bullion. . . Silver dollars Silver bullion. . . Fractional silver National-bank notes. . . . Legal-tender notes $278,310,126 22495,550 9,121,417 71,021,162 823,791.674 346,681,016 1,051,420,945 $704,608,169 315,186,190 10,865,237 76,889,983 233,660,027 346,681,016 1,687,890,622 Inc. $426,298,043 " 292,690,640 1,743,820 5,863,821 Dec. 90,131,647 Total currency issues. . . Inc. 636,469,677 Of this large increase of $636,469,077, $578,637,368, in coin and paper, were in the hands of the people ; and $57,832,309, in bullion, coin, and paper, in the national Treasury.* It thus appears that, while there has been an increase in the population of the United States during the period of ten years under consideration of about thirty per cent, the increase in the precious metals and paper available for cir- culation during the same time was 60*05 per cent ; while of coin and paper in active use among the people and banks the increase was 69*6 per cent, or much more than double the rate of increase in population. Now, as during this same period there was a great and universal decline in the prices of commodities in the United States (as elsewhere), the interesting question arises. How do these experiences harmonize with the theory that the volume of circulating medium controls prices, and that the movement of the precious metals puts down prices in the event of a reduction of the supply, and puts them up in the event of an increase of supply ? Note, further, that the increase of gold and sil- ver coin and bullion in the United States during the ten years, from 1879 to 1889, was $72G,G00,000, while the paixjr circulation diminished. Nor can it be maintained that the fall in the value of silver bullion has affected this circula- tion, since, for all purposes of internal circulation, silver and its paper representatives have had the same efficiency and • New York "Financial Chronicle," February 9, 1889. MONETARY EXPERIENCE OP THE UNITED STATES. 223 exchangeable value as existed before the depreciation of sil- ver bollion. The availability of silver coin for the settle- ment on the part of the United States of international bal- ances has been alone affected ; and this, so long as there has been an adequate supply of gold, is an immaterial factor. It would, therefore, seem that the above exhibit furnishes the most complete refutation of the theory that changes in the supplies of the precious metals account for the fall in the prices of commodities.* * It win add to the undentanding of this important economic experience to note the arguments brought forward in the United States in disproof of the above conclusion — the htits^ as stated, being indisputable. It has been Maimed, in the first instance, that as the United States has a vast quantity of produoCs to sell — the prices of which are r^ulated by the prices which the soridaa of such products will command in foreign markets — the homo prices of the flame can not escape conformity to the universal cost ; or, in other words, that the influence of the local inflation of currency that has taken place in the United States has been thus neutralized. But the market value of all the producta of the United States are not regulated by foreign demand ; and, of sadi exceptions, not one can be cited that has unmistakably increased in price during recent years by reason of any increase in the volume of the cir- calating media. It has also t)een maintained that the increasing importations of the United States since 1879 constitute evidence of the fact and influence of inflation — ^L e., by increasing the buying power of her people. But a more Tttdonal explanation would seem to be found in a corresponding increase of exports, or an improvement in national credit, or both cocgoined ; the occur- lence of which would seem to be demonstrated by the &ct that the country from 1879 to 1889 has not been under the necessity of exporting its precious metals in payment of its imports, and not only retained but increased its stock of them. Had the expansion of currency in the United States since 1879 occa- ■ioned any upward tendency of prices, then exports would have been to a like extent checked, and the nation* s ability to import correspondingly restricted. For it is the ability of a country to export that determines its ability to im- port, and not the vice vena proposition. Furthermore, there has been during the period of inflation in the United States no unusual speculation. On the New York Stock Exchange the number of shares sold has been annually de- creasing since 1882, and for the year 1888 the aggregate sales were less than for any time during the previous ten years. I VL Changes in recent years in the lelatiTe valaes of the precious metals — Subject not generally understood — Former stability in the price of silver— Action of the German Government in 1878 — Concorrent decline in the price of silver — Action of the " Latin Union " — Influence and nature of India ** Council bills " — Alleged demonetization of silver— Increased purchasing power of silver — ^Increased product of silver — Economic disturbances con- sequent on the decline of silver — Increased production of cotton &brica in India — Industrial awakening in India — Relation of the decline in the value of silver to the supply of India wheat — International trade, a trade in conmiodities and not in money — Economic disturbances in the Dutch East Indies — Natural law governing the selection and use of metallic money — Experience of Corea — The metal coinage system of the world trimetallic — The gold standard a necessity of advanced civilization — The fidl of prices due to more potent agencies than variations in the volumes or relative values of the precious metals. Notwithstanding tho great attention that has been given to the subject of the cliange in recent years in the relative values of the precious metals, and the disturbing influences resulting therefrom — with its almost interminable resulting publications and public and private discussions — there is probably no other one economic or fiscal problem concerning which there is so little comprehension on the part of the general public, or so little agreement as to causes and results among those who have made it a matter of special investigation.* It is of the first importance, therefore, for • ** From the commencement of our inquiry wo have been profoundly im- pressed with the extreme complexity of the questions submitted for our con- sideration."— Final Report of the British Gold and Silver Commis$ion. *^ It has been my experience, that about nine men out of ten, even of those who mij^ht be expected to have some definite views upon the subject, when asked their opinion upon the expediency or necessity of adopting a bimetallic MONETARY SYSTEM OF GERMANY. 225 the understanding of the past involved economic disturb- ances, that a clear and succinct statement of what has hap- pened should be presented ; and such a statement it is now proposed to attempt. For many years prior to 1873 the bullion price of silver remained very nearly constant at from 60 to 61 pence per ounce on the London market, while the market ratio of gold to silver, or the ratio according to which gold and silver could be interchanged, was limited in London, from 1851 to 1872 inclusive, to a range of variation of from 1 to 15*10 (the minimum) in 1865 to 1 to 15*79 (the maximum) in 1872.* In 1873 the new German Empire — ^recognizing the im- portance of having a monetary system better suited to her advanced industrial and commercial situation than that which she then possessed, and also the desirability of having a uniform coinage throughout the numerous small states that had come to be included under the Imperial Govern- ment— took advantage of the command of a large stock of monetary system, will reply, * Oh, that is a very important question, but I do Doi pretend to understand it.* " — Edwabd Atioxson, British Association Firoeeedingn, 1887. " There never has In this country been any but a very languid interest in the question of bimetallism, and even that slurht interest will not endure if trade goes on improving. The subject is one which the general public do not understand. Thanks to the untiring energy of the advocates of a double standard, a certain number of people have become vaguely imprest^d with the idea that somehow or other dull trade and low prices have been caused by a Bcarcity of money, and that, in some way or other, if our mint were opened to the unrestricted coinage of silver, some of it would find its way into their pockets. This impression, however, would very quickly wear off if trade be- came really active ; and as there is now the prospect of a genuine trade revival, we are inclined to believe that here, at all events, bimetallism will soon die a natural death. In any case, it is evident that there is no such strong propel- ling force behind the agitation as will induce our Government to take any action in the matter in i2i(» of the oonfiicting report of the Gold and Silver Commission. And when it is certain that nothing will be done, it is not worth while to prolong discussion.** — London Eeoncmist^ November 17, 1888. ♦ Pixley and AbelPa »* Tables," London. 226 RECENT ECONOMIC CHANGE& gold, that had accrued through the payment by France of an enormous war indemnity,* to effect reform. An exceed- ingly miscellaneous system of coinage and currency— con- sisting of seventeen yarieties of gold money; sixty-six different coins of silver, possessing full legal-tender powers and constituting (in 1870) 65*7 per cent of the entire circu- lation ; forty-six kinds of notes issued by thirty-five different banks, besides state paper money of various kinds to the extent of 7*5 per cent of the circulation — was accordingly called in, and replaced by a new system of gold and silver coinage and paper currency. In this new system, gold was established as the sole monetary standard of the empire, unlimited of necessity in respect to legal-tender powers, while to silver was assigned the function of subsidiary serv- ice; and for the latter purpose an issue of silver coinage was provided, not to exceed in the aggregate 10 marks ($2.50) for each inhabitant of the empire (a comparatively low figure), with its legal-tender value limited to 20 marks (15). An issue of new paper currency was also authorissed, with a prohibition of the use of notes of a less denomination than 100 marks ($25), to be distributed according to popu- lation among the various states, and redeemable in the new imperial coinage. A proportion of the old silver coinage, which, having been supplanted by gold, was not needed for recoinage under the new system, was offered for sale in the open market as bullion, and the amount actually sold be- tween 1873 and the end of May, 1870, when the sales were suspended, realized $141,784,948. Of this aggregate, $45,- 644,311 was sold between the years 1873 and 1876, and $96,- 140,627 between 1877 and 1879 inclusive. Concurrently with this action of Germany the bullion price of silver bepin to decline, and this decline was un- ♦ The amount in poUi wliioh France paid to Germany directly was $64,- 600,000; but in addition there were French bills of exchan^ which gavs Germany a title to fi^old in places like London, on which such bills were negotiated. DECLINE IN THE PRICE OF SILVER. 227 doabtedlj farther promoted by the subsequent action of tlie so-called " Latin Union " — comprising the five countries of Europe using the franc system, namely, France, Belgium, Italy, Switzerland, and Greece — ^which, fearing lest the silver liberated from use in Germany, and offered for sale, would flow in upon and flood their respective mints, to the entire exclusion of gold if the free coinage of silver was continued ; first restricted (in 1874), and finally (in 1877-78), owing to the continued decline in the value of silver, entirely sus- pended the coinage of silver five-franc-pieces. The coinage of subsidiary silver, or silver of smaller denominations than five francs, was, however, permitted and continued. In 1873, also, the Congress of the United States, in re- vising its coinage system, dropped from the list of silver coins authorized to be thereafter issued from its Mint, the silver dollar of 412|^ grains, although providing for the un- limited issue and coinage of silver in pieces of smaller de- nominations than the dollar; and mainly for the reason that this particular silver coin was not then in circulation in ihe country, and indeed had not been for a period of more than twenty-five years.* The extent of the decline in the price of bar-silver per standard ounce, in pence, upon the London market, since 1873, is shown by the following exhibit of annual average quotations : 1873, 59{d, 1883, 50^. 1874, 58tW. 1885, 4S\id. 1875, 56ld. 1886, 45^. 1876, 52H 1887, 44fon the market about $9,000.00er- tincnt question as to what benefit^ is simply, that which might be expected to accrue from the using of the best rather than an inferior tool ; or of a money instrumentality adapted to the new rather than to the old conditions of production and distribution. One needs but to stand for a brief time at the marts of 252 RECENT ECONOMIC CHANGES. trade in countries of varied degrees of civilization, to qnickly recognize and understand that the kind of money a country will have and use, depends upon and will vary with the extent and variety of its productions, the price of labor, and the rapidity and magnitude of its exchanges ; and investi- gation will further inform him that when mankind, savage, semi-civilized, cmlized, or enlightened, find out byexperimen- tation what metal or other instrumentality is best adapted to their wants as a medium of exchange, that metal or in- strumentality they will employ ; and that statute law can do little more than recognize and confirm the fact In truth, legislation in respect to money, as is the case in respect to other things, never originates any new idea ; " but merely enacts that that which has been found beneficial or preju- dicial in many cases, shall be used, limited, or prohibited in all similar cases within its jurisdiction." Thus, in all coun- tries where prices are low, wages small, transactions limited, and exchanges sluggish, nothing more valuable can be used as money for effecting the great bulk of the exchanges than copper ; and in countries like Mexico and China, even the copper coin corresponding to the American "cent," the English " half-penny," and the French " sou," is often so disproportionate in point of value to the wants of retail trade, that in the former country it is made more useful by being halved and quartered, and in the latter is replaced with some even cheaper metal, as iron or spelter. The wages in all such countries do not in general exceed twenty to twenty-five cents a day, and the sum of such wages, when represented in money, must be capable of division into as many parts in order to be exchanged for the many daily necessities of an individual or a family. But with wa^es at twenty-five cents per day, the use of coined gold would ob- viously be impracticable. The equivalent of a day's labor in gold would be too small to be conveniently handled ; the equivalent of an hour's labor would be smaller than a pin's head. And in a lesser degree would be the inconvenience MONEY OP VARYING CIVILIZATIONS. 253 of using coined silver for effecting the division of similar smaU wages.* In countries of higher civilization, hut still of compara- tively low prices and limited exchanges (and these last mainly internal or domestic), silver naturally takes the place of copper as the coin medium of exchange and as the standard of value ; and as more than a thousand million people are the inhabitants of such countries, silver, reckon- ing transactions by number and probably also by amount, is to-day the principal money metal of the world. On the other hand, in countries of high wages, rapid financial transactions, and extensive foreign commercial re- lations, the natural tendencies are altogether different, and * In many of the lugar-pTodacing islands of the West Indies, the greatest munber of the separate retail purchases at the established stores do not exceed ftom two to three cents in value. In the island of Trinidad, probably seventy- five per cent of an annual importation of about 22,000,000 pounds of bread- stnlfii (110,000 barrels) pass into the ownership of the laboring-classes (whose average annual consumption is estimated at thirty-one pounds per head), through purchases for cash of quantities rarely exceeding a pound at any one time. Corea, a country which until recently has been almost unknown to the dvilized world, affords another striking illustration of the principle that the kind €^ money a people will have and use, if left free to choose, will be de- termined by the nature of their exchanges, through what may be termed a natural proceas of evolution, and not by artificial arrangements. Thus Corea has been proved to be a very poor country ; raising little more of any one product than will suffice for home consumption ; and with a very restricted internal trade, owing to small production and the lack of facilities for personal intercommunication and product distribution. To the m^ority of her people a monthly income equivalent to two or three dollars is represented to be sufficient to meet all their necesedties. Yet even under these unfavorable and limited conditions of exchange, money has been found a necessity, and has come into use in Cores, in some unknown manner, in the shape of small metallic coinage — nominally copper, but really a sort of spelter-piece — 500 to the dollar. With the opening of the ports of the country, a demand ibr cer- tain foreign products has been created ; and these, when obtained in exchange for hides and gold-dust, are sold to the people in quantities so small, that only coins of the value and character mentioned can be conveniently used as media <^ exchange — kerosene, for example, being sold by the half-gill, and matcbea in bandies of a doxen. 12 254 RECENT ECONOMIC CHANGES. favor the more extensive use of gold for money, without at the same time displacing from their legitimate monetary spheres either copper or silver.* The metal coinage system of the world is not therefore " mono - metallic," nor "bimetallic," but trimetallic; and the three metals in the form of coin have been used concur- rently throughout the world ever since the historic period, and in all probability will always continue to be so used ; because by no other system that has yet been devised can the varying requirements of trade in respect to instrumen- talities of exchange and measures of value be so perfectly satisfied. And the only change in this situation of mone- tary affairs has been, that gradually and by a process of evo- lution as natural and inevitable as any occurring in the ani- mal or vegetable kingdom, gold has come to be recognized and demanded as never before in all countries of high civili- zation, as the best instrumentality for measuring values and effecting exchanges. It has become, in the first place, the money of account in the commercial world and of all inter- national trade ; and any country that proposes to find a for- eign market for the surplus products of its labor must employ the very best machinery of trade — railroads, steamships, tel- egraphs, or money — if it does not propose to place itself at a disadvantage. In respect to portability, convenience for use, adaptation ♦ " When barter begins to jdeld place to a money system, gold is not much in request ; the payments are so small as to be best made in silver, or in soino cheaper material, such as copper. At a later stage silver is used, and at a later stage still, gold. The saturation point of people's requirements for copper coin is soon reached ; in England, the poorest classes probably handle more copper coins than any other non-trading classes. The upper artisan and lower mid- dle classes have already reached saturation point with regard to silver ; and a further increase in their incomes would lead them to handle more gold, but not more silver. In countries in which there is not much use of bank-notes, the amount of gold which a non-trading person handles increases rapidly with his income, until his payments become largo enough to be made generally by checks. Then first is the saturation point for gold reachem this source that Grermany proposed to help herself before it was too late, and thereby array herself in the rank of commercial states which, having largo transactions, chose gold, not merely as the most stable in value of the two metals, but as the best medium of exchange for laiige pay- ments.''— Prof. Lauouuk, Uidory of BinutallUm in ths UniUd StaU$, p. 185. THE SINGLE VS. THE DOUBLE STANDABD. 257 gold oyer silyer as a standard of value and a medium of ex- change, there is not a sufficiency of gold to supply the wants of all who may desire to avail themselves of its use for such purposes ; and, therefore, any attempt to effect innovations in former monetary conditions would be impolitic because likely to be generally injurious. But this would not be con- sidered as an argument of any weight if pleaded in opposi- tion to the whole or partial disuse of any other form of tool or machine in order that some better tool or machine might be substituted. That in such a case there would be an ad- vantage to those who could afford to have and use the new, and a corresponding disadvantage to those who could not, may be admitted; but what would be the future of the world's progress, if the use of all improvements was to be delayed until all to whom such use would be advantageous could start on terms of equality ? If, therefore, the above premises are correct ; if certain of the leading states of the world have given a preference to gold over silver in their trade, and have selected a single in place of a former double standard of value — not by rea- son of the adoption of any abstract theory or desire for ex- perimentation, but rather through a determination to put themselves in accord with the new conditions of production and distribution that have been the outcome of inventions and discoveries during the last quarter of a century — ^then the inference is warranted that all attempts to enforce, through any international conference or agreement, any dif- ferent policy or practice, would be as futile as to attempt to displace through legislation railroads by stage-coaches and steamships by sailing-vessels. Finally, to comprehend the phenomenal reduction in the prices of the world's great staple commodities, which has taken place in recent years, it is essential to look for and consider more potent and extensive causes than any varia- tion in the volume or relative values of the money metals, great as they may have been. 258 RECENT ECONOMIC CHANGEa Mechanical and chemical appliances have been invented, deyeloped, and applied for the production and distribution of commodities within the last quarter of a century, which, prior to that time, had hardly formed the subject of rational speculation. The prime object of all these inventions and discoveries, the great stimulus that led to their realization, was to cheapen cost, or, what is the same thing, reduce prices. And the measure of the value of any new industrial method — invention, discovery, appliance, or development — is the extent to which these results are effected by it Thus, " the prices of cloth fell when the spinning-wheel and the hand-looms were superseded ; the price of traveling, when steam superseded horses and the power of wind. The prices of all the world's great staple commodities fell when steam connected the chief sources of their supply with the market-places of all nations, and made possible the wide distribution of perishable products. The prices of all things, again, fell pari passu with the growth of financial institu- tions established to create credits and economize the supply and use of metallic money." The investigations of Mr. Atkinson show that, " while one half the present effort to sustain life consists in the effort or cost of obtaining food, that effort, great as it still is, is so much less than it was prior to 1860, as to make it almost in- capable of expression in specific terms. In 1860 the greater part of the wheat now consumed in Europe could not have been moved a hundred and fifty miles without exhausting its value; now wheat is moved half-way round the world at a fraction of its value." The preservation of food by artificial methods, which to an extent is equivalent to its increased supply, has also been to a very high degree per- fected. In the production of materials for clothing, vast areas of new territory have been added to areas formerly occupied for the production of cotton and wool ; while, in the case of cotton, the change from slave labor to free labor alone has RELATION OF PRICES TO GOLD AND SILVER. 259 greatly reduced its cost of production in that country whose supply determines the price for the worid. " In the con- version of cotton and wool into fabrics it can be proved that one factory operative can do four times the work which one corresponding operative could accomplish between the years 1840 and 1850 ; while the invention and application of the sewing-machine has reduced the time and labor cost neces- sary for the conversion of the cloth into clothing in vastly greater measure." In the case of the useful metals — iron, steel, copper, lead, tin, and quicksilver — the revolution which has occurred in consequence of the discovery and opening of new mines, the application of new methods of smelting, and the facilities for transportation at low cost, have unquestionably reduced the cost (price) of all these products to as great an extent as that of any other class of commodities. To suppose, now, that a change in the relative value of the two precious metals, gold and silver — a change which has not in any degree restricted their natural supply or diminished their monetary or industrial uses — has exercised a concurrent superior and predominating influence in re- spect to the prices of all other commodities or services, would seem to be almost incompatible with the clear ex- ercise of one's reasoning faculties. VII. Governmental interferenoe with production and distribution as a oause of economic disturbance — Economic sequences of the repeal of the British com laws — Extension of commercial ft-eedom — Resulting prosperity — Bcactionory policy after 1876 — Causes influencing to reaction— Commercial policy of Bussia — Illustrations of recent restrictive commercial legislation — France and Italy — French colonial policy— Bevival of the restrictive commercial ideas of the middle ages — Local and trade l^islation in the United States — Restrictions on immigration and residence — Betrogreasion in the comity of nations — Results of tariff conflicts in Europe — The devel- opment of trusts — Indications of the abandonment of commercial restrio- tions in Europe — Extraordinary experiences of the beet-sugar producticHi — International conference for the abolition of sugar bounties — Experience of France in respect to shipping bounties — Belative commercial importanoe of different European nations — Per capita wealth in different countries — Belative production and prices of iron and steel in the United States and Great Britain — Augmentation of domestic prices by taxes on imports — — Economical disturbances contingent on war expenditures. An important cause of economic disturbance in recent years (i. e., since 1873), and one which, in the opinion of the members of the British Commission " On the Depression of Trade and Industry " (1886), and also of most European writers, has been largely instrumental in occasioning uni- Tersal depression of business, has been the increasing tend- ency among nations to favor and practically carry out the policy that the prosperity of their respective people can be best promoted by artificially stimulating domestic industries on the one hand, and imposing restrictions on international commerce or the free interchange of products with foreTgrr nations on the other. After the repeal of the " Com Laws " by Great Britain in 1846, and the subsequent gradual adandonment by that EMANCIPATION OP TRADE. 261 nation of its former illiberal commercial policy — ^followed, as were these measnres, by a remarkable development of British trade and industry — the tendency of popular senti- ment and the policy of governments throughout the civilized world was unquestionably in the direction of emancipating international trade from all arbitrary restrictions ; and be- tween 1854 and 1870 the leading nations negotiated numer- ous treaties for international commercial reciprocity for the achievement of this object, and at the same time materially reduced their duties on imports. This movement (as is now almost forgotten) first found expression in the form of positive legislation in the United States, which in 1854 negotiated a treaty which provided for a free exchange of nearly all crude materials, and mutually free fishery privi- leges with the British provinces of North America ; and, in 1857 (by a vote of 33 to 12 in the Senate, and 124 to 71 in the House) reduced its average duty on all imports to less than fifteen per cent. In fact, had not civil war intervened in 1861, the United States, in a very few years more, would have undoubtedly rivaled Great Britain in freeing its foreign trade and commerce from all restrictions, save for revenue and sanitary purposes.* In 1860, England, under the lead of Mr. Cobden, negotiated with the Emperor Napoleon III, represented by M. Chevalier, the celebrated commercial treaty with France, which, while providing for large recipro- cal reductions or entire removal of many duties on exports * In I860 a redaction of the national reyennes, induced primarily bj the oommerdal panic of 1857 and an increase of national expenditures, with threatened political troubles, led to the introduction of a bill, avowedly with the intent of restoring the tariff rates in foroe prior to 1857 ; and this bill, with amendments, increasing the rates considerably beyond that point, became a law in March, 1861. But, at that date, seven of the Southern States had seceded, and bad withdrawn in great part their Senators and Bepresentatives 6t>m the Federal Congress ; so that the action of Congress, at the time of the passage of this bill, affords no indication of what the legislation of the United States on the subject of the tariff would have then been had domestic tran- quility not been interrupted. 262 RECENT ECONOMIC CHANQEa as well as imports, also entirely abolished all absolute ^ pro- hibitions" on an^ branch of international commerce be- tween the two nations ; as, for example, in respect to coal, the exportation of which to France, England, under a fancied military necessity, had at one period prohibited. Following the Anglo-French treaty, and as the result, doubtless, of its influence, twenty-seven other similar trea- ties, providing for what is called a system of " reciprocity,** were negotiated; in some one or more of which all the states of Europe, with the exception of Greece, participated ; Bussia even breaking through her customary reserve, and entering into more liberal commercial agreements with more than one of her neighbors. And, as many of these differ- ent treaties successfully embodied new and special relaxa- tions in respect to duties on imports— which, in virtue of the so-called "favored-nation clause"* existing in most previous treaties with other countries, became also and at once generally applicable— the area of commercial freedom and its accruing benefits extended very rapidly, and, as it were, without effort, over the greater part of Europe. So that, by the year 1870, " all the great trading nations of Europe — England, France, the states of the German Zoll- verein, Austria, Italy, IloUand, and Belgium — had become one great international body, by all the members of which the principle of stipulating for exclusive advantages for their own commerce seemed to have been abandoned, and not one of whom could take off a duty without every other member at once enjoying increased commercial facilities; while within this body, the operation of the favored-nation clause was such as to make the arrival at almost unlimited freedom of exchange merely a question of time." f ♦ By the " favored-nation " clause ib understood that provision which has been incorporated in moRt treaties in modem times, by which the contracting parties a^n'ee to ^vo to each otlier as ^^ood treatment as each one, then or there- after acting sevornlly, may ^ve to other and the most favored nations. t AdditjSiJ of the President (Qraot Duflf, M. P.) of the Department of Econ- TRADE OP BUEOPE, 1860-1878. 263 Furthermore, not only were these same governments busy during this period in breaking down the artificial barriers which they had previously erected against international trade, but they also sought, as never before, to overcome the natural impediments that had hitherto limited the extension of their trade relations — ^internal as well as external — by improving their highways, constructing and combining rail- ways, and undertaking such stupendous engineering opera- tions as the St. Oothard and Arlberg Tunnels. How wonderfully the trade of the states of Europe, that thus mainly co-operated for promoting the freedom of ex- change, coincidently developed, with an undoubted corre- sponding increase in the wealth and prosperity of their people, is shown by the fact that the European trade of the six nations of Austria, Belgium, France, Holland, Italy, and Great Britain increased, during the years from 1860 to 1873, more than one hundred per cent, while their aggregate popu- lation during the same period increased but 7*8 per cent* How much this remarkable increase of trade was due to the existence and influence of the commercial treaties noted, is demonstrated by the further fact that the increase of the trade of the above-named six nations during the same period with all other countries, in which the conditions of exchange had presumably not been liberalized, was at the rate of only sixty-six per cent. It is also interesting to note that the response made by the Chambers of Commerce and various industrial bodies throughout France to an inquiry addressed to them by the Government in 1875, not only testified to the great benefit which had accrued to French trade and omj and Trade, at the annual meeting of the British Aasociation for the Pro- motion of Social Science, October, 1875. * The results of the Anglo-French treaty in the case of France, as shown bj the subsequent rapid growth of French exports and imports, and of national savings, was akin to the marvelous. In &ct, no higher evidence of the fiscal wisdom of the Emperor Napoleon ITI in agreeing to this treaty could be offered, than the ease with which the French people bore eleven yean later the huge boidens of war indemnities imposed on them by Germany. 261 RECEKT ECONOMIC CHANGES. indastries by reason of her commercial treaties, but also ex- pressed an almost universal wish that they might be renewed upon their expiration upon eyen a more liberal basis ; and it is altogether probable that a similar response would have been made in most of the other countries in Europe had like inquiries at the same time been instituted. But, after the continuance for some years of the almost universal depression of trade and industry which commenced in 1873, or after the year 1876, the tendency of the govern- mental policy of the states of Continental Europe, and to a great extent also popular sentiment, turned in an opposite direction, or toward commercial illiberality ; and now nearly all of the liberal commercial treaties above referred to have been terminated, or notice has been given of their non-renew- al ; and, with the exception of Great Britain, Holland, Den- mark,* and possibly China, there is not a state in the world claiming civilization and maintaining commerce to any ex- tent with foreign countries which has not within recent years materially advanced its import or export duties. Eussia commenced raising her duties on imports in 1877, and has continued to do so until the Russian tariff at tlie present time is in a great degree prohibitory, and one of the highest ever enacted in modern times by any nation. It is also to be noted that, whenever Eussia extends its do- minion, laws are at once promulgated with the undisguised purpose of greatly restricting or entirely destro}ang any commerce which the people of the newly-acquired territory may have previously possessed with other nations. Italy and Austria-Hungary entered upon their reaction- ary tariff policy in 1878 ; Germany in 1879 ; France in * Denmark must be regarded as a purely agricultural country, poasessing no mineral resources or mining population, and very few manufactories, " and while one half of the population live exclusively by agriculture, the industries and various branches of general trade and commerce afford occupation to lees than one fourth of the whole number.'' — Testimony of the BrilUh Oofnmiition on the Deprtsnon of IhuU and Induttry, RESTEICTIVE COMMERCIAL LEGISLATION. 265 1881; Switzerland in 1885; the Dominion of Canada in 1879 and 1887 ; Roumania in 1886 ; Belgium and Brazil in 1887 ; while in the United States, owing to the decline in the prices of goods subject to specific duties, the average ad valorem rate of duty on dutiable merchandise has ad- yanced from 41-61 per cent in 1884 to 47*10 per cent in 1887. In Spain, which quadrupled her foreign commerce under a very liberal commercial policy adopted in 1869, the restrictions on trade have since become so excessive that the only relief opened to the consumer is by alliance with the contrabandist, whose profession is becoming almost as well established in Spain, France, and Italy, as in the mid- dle ages, when but for him, according to Blanqui, com- merce would have well-nigh perished. In Holland, which has hitherto resisted all demands for increased restrictions on her foreign commerce, an association of manufacturers petitioned the Government in May, 1887, in favor of speedy legislation on the tariff, for the purpose of protection to home industries, and set forth the following as reasons for their request : " The national industry lives in a most difficult time. It seems that the last period of the battle of life has appeared for many of its branches. Foreign competition, steeled by protection, equipped and encouraged to a decisive battle for the overpowering of a market for the world, even appears to drive aside the most natural protections of native industry. Now flour has its turn ; next, cattle and meat. In other words, the aim of adjacent and more distant countries appears daily more openly. The industry of the Netherlands is menaced with a total ruin by their oppression." And, as further illustrations of the degree to which a restrictive commercial policy is favored, and the extremes to which it is practically carried, it may be mentioned that some of the small British islands of the West Indies (l^rini- dad and St. Vincent, for example) maintain duties in a high degree restrictive cf the interchange of their comparatively small products; while Venezuela, in 1886, when new and 266 RECENT ECONOMIC CHANGES. prospectively rich alluvial deposits of gold were discovered within her territory, at once imposed a duty on her exports of " raw gold." During the past year (1888) the Manchester (England) Chamber of Commerce passed a resolution to the effect that — "All goods of a nature and kind which we ourselves produce, offered in the markets of the United Kingdom, should pay that equal proportional share of the burden of imperial and local taxation which they would have paid if produced or manufactured in the United Kingdom," Commenting upon the evidence thus afforded of a change in even British commercial sentiments — i. e., from liberality, foresight, and boldness, to illiberality, narrow- mindedness, and timidity — the London " Economist " has thus significantly written : " The time was when the men of Manchester were characterized by a spirit of sturdy self- reliance, and asked nothing better than that they should be left free to fight their own industrial battles ; but, if their Chamber of Commerce is to be regarded as a truly repre- sentative institution, they must have sadly deteriorated. Now they seem to live in perpetual fear of their foreign competitors, and a project has only to be presented to them in the guise of a blow to be struck against their dreaded rivals to insure its ready acceptance by them. The question with them is no longer ' What can we do to help ourselves ? ' but * What can we do to injure our competitors?^ and whether the injury is to be inflicted upon foreigners or upon our fellow-subjects in India appears to be a matter of perfect indifference."* ♦ The utter folly and disastrous oonscquencee of the adoption by Great Britain, or other nations, of such a principle of fiscal policy as has been in- dorsed by the Manchester Chamber of Commerce is also thus demonstrated by the " Economist" : " Suppose," it says, " the men of Manchester to have their own way, and the people of the United Kingdom were to levy an import duty THE NEW MANCHESTER POLICY. 267 To many, doubtless, these economic phenomena do not appear to admit of any ready and satisfactory explanation ; while others will unhesitatingly ascribe them to the influ- ence and acceptation of protectionist theories and teach- ings, inculcated under the advantageous but specious cir- cumstance, that the almost universal depression of trade and industry that has prevailed since 1873 commenced at a time when the general commerce of the world was absolutely more free from artificial restrictions than at any former period of its history. The factors that have been concerned in effecting these npon cotton goods entering this ooontry, we oould not reftise to allow India to follow our example, and tax the cotton mana£EK;tares she receives from us, 80 that, to use the words of the Manchester fair-tradeis, thejr *■ should paj that equal and proportional share of the burden of imperial and local taxation which they would ha^re paid if produced or manuiactured ' in India. No doubt, if it be the wish of Manchester that India should act upon this prin- ciple, she will be only too pleased to comply with "it. She parted reluctantly with her cotton duties, and is ready to reimpose them at once, should the home Govemment desire it. But what a sorry figure do the Manchester manufactorers present ! They are apparently in an agony of apprehension because we import ootton manu&ctures of all kinds, to the value of lees than £2,000,000 a year, and in order to put impediments in the way of those im- ports they are ready to indorse a system of protection which, in the case of India alone, would subject to taxation between £19,000,000 and £20,000,000 of their own manufactures, which now enter India every year free of duty. Is it possible to imagine any proposal more suicidal than this ? And there is another point that the fair-traders have entirely overlook^ If there is to be a war of tarifb, it need not necessarily be a war of import tariffs alone. On the principle that a nation is bound to see that all who trade with it contrib- ute as much to its taxation as its own inhabitants, India and the United States would obviously be justified in imposing an export duty upon all the raw cotton they send here. If that cotton were retained at home, and manufact- ured there, it would, in the process of manufacture, contribute to the revenue, since the manu&cturers pay both State and local taxes. Why, then, if the new Manchester doctrine be sound, should not an export duty be levied upon it equal to the amount of taxation that would have been derived from it if it had been kept and worked up at home ? It is no answer to this to say that export duties are restrictive trade. So are import duties ; and if Manchester imagines that it can by means of fiscal arrangements strike at its foreign com- petitOTV without receiving tenfold heavier blows in return it is vastly mis- taken." 268 RECENT ECONOMIC CHANGES. economic changes and accompanying disturbances are not, however, simple, but somewhat numerous and complex. They, nevertheless, admit, it is believed, of clear recognition and statement. In the first place, the results of the Franco- German War — the radical changes in the character and con- struction of war-armaments since that period, and the con- tinual augmentation of permanent military forces, have entailed upon all the states of Europe since 1873 continually increasing expenditures and indebtedness ; and indirect tax- ation, by means of duties on imports, to meet these increas- ing financial burdens, has been found to be most in accord with the maxim attributed to Colbert, that the perfection of taxation consists in so plucking the goose — i. e., the people — as to procure the greatest amount of feathers with the least possible amount of squawking. Again, with the introduction and use of new, more ef- fective, and cheaper methods or instrumentalities of pro- duction, every nation of advanced civilization has experi- enced, in a greater or less degree, an increase in the product of nearly all its industries save those which are essentially handicraft in character, with not only no corresponding in- crease, but often an actual decrease in the number of labor- ers to whom regular and fairly remunerative employment constitutes the only means of obtaining an independent and comfortable livelihood. Every country with accumulating productions has accordingly felt the necessity of disposing of its surplus by exporting it to the markets most freely open to it ; and, as a consequence, that has happened which might have been expected could the exact course of events have been anticipated, namely : increased competition in every home market, engendered by increasing domestic pro- duction and the efforts of foreign producers to export (in- troduce) their surplus ; fiercer competition to effect sales of the excess of competitive products by the sellers of all na- tions in neutral markets ; and an almost irresistible tendency toward a universal depression of prices and profits, and, to SUNDAY LABOR. 269 a greater or less extent, a displacement of labor. It is also to be noted that as the capacity for industrial production increases, and competition to effect sales becomes fiercer, the more feverish is the anxiety to meet competition — spe- cially on the part of foreign rivals — by producing cheaper goods; and that this policy in the. states of Continental Europe, and more particularly in Germany, is antagonizing efforts to shorten the hours of labor and restrict the factory employment of women and children ; and is also tending in a marked degree to do away with the heretofore general practice of suspending labor on Sundays.* * The molts of an extensive inquiry, recently institnted by the British Government, in respect to Sunday labor in Germany (and comprising with the evidence taken three large volumes), shows that in Westphalia, Hhineland, Wartemberg, Baden, Alsace, and Brunswick, Sunday work is only enforced where necessary. Different reports come, however, from Saxony, one stating that ** Sunday labor has become usual in most fiEUitories and workshops solely under the stress of competidon, so that the hours of divine service are now alone excluded, and these only from absolute necessity." Another report says that Sunday labor has become ^^a principle with many employers," while in a number of cases the journeyman or operative seeking an engage- ment must bind himself to work on Sunday, and ^* if the workman refused to work on Sunday, reprisals on the part of the employer would be the inevitar ble result, and this is so, even in spite of the legal restriction of work on Sun- days and festivals." ^* On the whole," says the London *^ Economist," *^ the evidence" (presented in the published report of the Government inquiry) " is un&vorable to the principle of Sunday labor, though it is largely carried on — in all probaMlity more so than is admitted, for in innumerable cases it is ad- mitted that it is hard to get at the real state of affiiirs. Nevertheless, there is general disinclination against putting the principle of no Sunday work into practice where the objectionable system has obtained a footing. On the part of large industrial concerns, it b said that want of continuity would often be a cause of serious loss, while without Sunday labor repairs could never be carried out, even night^work being no adequate substitute. The number of associations which recommend the absolute prohibition of Sunday labor is email in proportion to those which advocate partial prohibition. The ques- tion of Sunday labor is one of considerable interest for England, for it is unquestionable that, among the causes of (jermany's ability to compete with England as a mercantile and industrial country, the tact that here more hours are worked for less money is not the least important. The prohibition of Sunday labor would, of course, mean increased cost of produo- tkni ; and every increase in the cost of production wiU render it more difficult 270 RECENT ECONOMIC CHANGES. To meet this condition or tendency of affairs, two lines of policy have commended themselves to the governments of many countries— especially in Continental Europe — as remedial and easy of execution, namely ; to seek to diversify and increase the home demand for the products of domestic industry on the one band, and to obtain new and larger markets in foreign countries for their surplus productions on the other. And the first of these results it has been sought to accomplish by restricting or prohibiting, through import (tariff) duties, the importation and competitive sale in their respective markets of the surplus products of other nations ; and the second^ by offering bounties on exports, or on the construction and multiplied use of vessels for em- ployment in foreign commerce. In the pressing necessity for finding new and (if possible) exclusive markets for in- creasing machinery products, and for commodities whose production has been artificially stimulated, is undoubtedly also to be found the clew to the policy which within recent years has mainly prompted Germany, France, Belgium, Italy, and Spain to seek to obtain new territorial possessions in Eastern and Central Africa, Southeastern Asia, and in New Guinea and other islands of Polynesia. The commercial policy of Russia under such circum- stances must, however, be regarded as wholly exceptional, and that of the United States as partially so. In the case of the former, her recent increased restrictions on foreign commerce, through greatly increased duties on imports, have not, apparently, been due to the acceptance of any eco- nomic theory in respect to trade, or with any reasonable expectations that an extensive prohibition of imports could permanently add to her revenues from customs, but rather because such action is an essential part of what seems to be a larger and fully accepted national policy, which aims to for Gennanj to outrival older manufacturing oountrios in the markets of the world." COMMERCIAL POLICY OP AUSTRIA. 271 banish and exclude from the empire everything foreign in its nature and origin* — persons, merchandise, language, literature, immigration, and religion ; while in the case of the latter the fiscal policy of the country for now more than a quarter of a century has been based upon the idea that foreign trade is injurious, and therefore importations, with- out which there can be no exportations, should be pre- Tented. Leaying Russia out of account, the nation that took the initiative in breaking in upon the system of comparatively free international exchanges that had gradually come to prevail among the commercial nations of Europe since 1860, was Austria-Hungary, which, feeling the necessity of secur- ing larger markets for her manufactured products, increased her tariff in 1878, with the avowed expectation of obtaining, through new negotiations, greater commercial advantages or concessions, more especially from Germany, than were enjoyed under existing treaties. A similar policy also found favor at about the same time in France, and under its influ- ence the "Anglo-French" and other commercial treaties were either allowed to lapse or were " denounced," and a new general tariff was constructed. The result was not what was probably anticipated. Increased restrictions on imports on the part of Austria, in place of inviting conces- sions, led at once to retaliatory tariffs by Italy and Germany, and the example thus set has been followed by one European Continental state after another, each raising barrier after barrier against the competition of other nations, until all stability of duties on the numerous frontiers has practically ended, baffling the calculations alike of exporters and im- porters, and making the development of almost every trade and industry dependent on bounties, subsidies, and restric- ♦ By a nkaae issued in May, 1888, no foTeigner thereafter is allowed to be- come or to remain a landed proprietor in Russia, a measure that was practi- cally equivalent to the expulsion of a large number of Germans engaged in manufacturing or mining in Busaia. 272 RECENT ECONOMIC CHANGES. tions on exchanges, rather than on their own inherent strength and enterprise. The following examples are illustrative of recent pro- cedures in continuation of this policy : In 1885 Germany deliberately excluded Belgian linen from her markets. This act has not as yet been followed by reprisals by Bel- gium ; but the action of Germany, in repeatedly augmenting in recent years her duties on breadstuffs has been promptly imitated by Austria-Hungary, whose export of cereals was seriously affected. But, notwithstanding these increased duties on the movements of grain between Germany and Austria, the prices of cereals in both of these countries have since continually receded, and the enactment of similar im- posts in France has been followed by a like experience. Belgium, which for many years has been the typical free- trade state of the world, and which in 1885, by her Chamber of Deputies, refused to entertain a proposition to restrict the importation of cattle into the country, has since then, and mainly by a recognition of an inability to compete with the prices established for meats and grain by the United States and other foreign countries, felt compelled to impose high duties on the importation of all live-stock and dead meats — fresh, smoked, or salted. A new tariff, embodying the extreme protective principle recently adopted by Brazil, imposes high and almost prohibitory duties on the importa- tions of rice and all other cereals produced in the country, and, as Brazil has heretofore imported annually some two hundred thousand sacks of rice from foreign countries, the disturbance of trade in this particular is likely to be serious. The United States having imposed heavy duties on the importations of French wines and silks, France improves on the precedent thus established, and excludes by relatively higher duties the importation into her territories of Ameri- can pork.* * Under diftcriminatlng restrictive Icgblation on the part of France aad TARIFF CONFUCrrS OF FRANCE AND ITALY. 273 In Sweden and Norway, on the other hand, where, dur- ing the year 1887, an effort was made under similar circum- stances to restrict by increased duties the entry of foreign flour and other breadstuffs, the proposition was signally de- feated by the return of a large adverse majority to the lower house of the Swedish Riksdag. On the 1st of January, 1888, a treaty of commercial re- ciprocity between France and Italy, negotiated in 1881, was terminated by original stipulation. So far from being re- newed, a renewal was not only not seriously contemplated, but the expiration of the treaty was really regarded with feelings of unmixed satisfaction by many persons in both countries, by reason of the opportunity that would be afforded for mutually increasing the duties on their respect- ive importations. And in this spirit each government has successively enacted special tariffs, all more or less retalia- tory in spirit and destructive of international trade. For example, under the treaty the light, cheap wines of Italy were admitted into France at a mere nominal rate of duty, and were imported in large quantities to supply the deficit in the wine production of France occasioned by the ravages of the phylloxera, while the more valuable French wines were admitted on correspondingly favorable terms into Italy, and obtained an increased consumption. On the expiration of the treaty each government advanced its duties on wines to prohibitory rates, while on most other merchandise the respective increase in rates was from fifty to one hundred per cent. One of the first acts of the French Government after the expiration of the treaty was the promulgation of a decree absolutely prohibiting the future importation of " plants, flowers, cut or in pots, of fruits, fresh vegetables, and, in general, of all horticultural and market-garden produce of Italian origin " ; chestnuts without their shells excepted. GerxQjuiy, the export of American hog-products has diminUhed in value from 1104,000,000 in 1881 to $59,000,000 in 1888. 274 RECENT ECONOMIC CHANGES. How Italy retaliates for such proceedings is illnstrated by the circumstance that the Italian custom-house recently levied fourteen pounds import duty on a dead body sent from France to Milan for cremation, and the same amount as export duty on the ashes as they were carried back into France. Again, the new customs duties and regula- tions of Italy having proved oppressive to French trade, France has retaliated by the withdrawal of all the privileges formerly granted to the Italians in respect to fishing, coast- ing-trade, and port dues on her Mediterranean coasts, in- cluding Algeria. The result of this war of tariffs has been exactly what might have been anticipated. Both countries have suffered severely from the restriction of trade thus arti- ficially produced ; but it is a matter of comment that a cer- tain satisfaction is manifested by the French that the Ital- ians have suffered more than themselves, as it is conceded that the exports from Italy to France have fallen in a far greater proportion than the exports from France to Italy, entailing a very considerable reduction in the customs rev- enue of the latter country.* Smuggling from one country * A comparison of the exports from Italy to France for the first five months of 1887 under the treaty, with the first five months of 1888 after its abrogation, showed the following diminutions of commodities : 24,000 casks and 695,000 bottles of wine ; cattle to the value of about 8,000,000 francs ; cereals to the value of 16,000,000 francs. " Thus far the effects of the blockade seem to have fallen more severely upon Italy than France. In the former country there is a dearth of capital which paralyzes commercial cnteriirise, and the farmers are, in general, poorer and more dependent than the French upon the immediate sale of each year's vintage. In Houthem Italy the distress is already acute. Money is so scarce as to be almost unobtainable by people of moderate me^ins, and many peasant proprietors with mortiragea on their property have been forced to make ruin- ous sacrific'cs. The market values of ordinary wines have fallen as low as four, eiglit, and ten conts jht gallon, and all collateral interests, including cooperage and the tnillio in stavt^, are oorre8i>ondingly depressed. The crisis was precipit4ited at a time when native onlinary wines were abundant and cheap in France, not so muoh by reasm dried grapes Imported from the Levant. As the wine REVIVAL OP SMUGGLINa. 275 to the other prevails to a large extent ; bnt France feels the disturbance from this cause less than Italy, because French goods, being, as a rule, compact and of greater value in equal compass than the average of Italian products, are more easily passed through third countries or smuggled across the front- iers. At the same time it is certain that French trade with Italy has also suffered severely ; the export of many articles of French produce, like silk-piece goods, silk-trim- mings, cotton fabrics, paper-hangings, and the like, having declined from thirty to seventy-five per cent. And yet, not- withstanding these experiences, all negotiations for the re- newal of a commercial treaty between the two nations have thus far led to no results, and political events and influences have constantly tended to make affairs worse, instead of better. The purchase of horses by the Germans in the north- eastern departments of France is regarded in France as an evil only to be met by enactments prohibiting the export of horses ; and the cattle-dealers of Bordeaux and La Vendue accuse the British Government of underhand " protection " by orders in Council alleging cattle-plague to exist in the west of France, and putting restrictions upon the landing of French beasts. In 1880, under a plea that French industry was bur- dened by high rates of inland transportation, and thus ren- dered less able to meet foreign competition, all taxation on the transportation of goods by the water-ways of France — export to Italy had been previously confined mainly to champa^e, Bunrandy, and Bordeaux wines of high quality, the blockade has not sensibly affected the French wine growers or dealers. France has a steady and well-estab- lished export demand for her wines, which Italy has not ; but if the present restrictions are to be permanently maintained, no one can doubt that the Ital- ians, by perfecting their manufacture, will eventually produce large quantities of wines which will bear exportation, and seriously encroach upon a trade with Russia, England, the Netherlands, and the United States, over which France has hitherto held entire oontrol.*^^ Report to tlu UniUd Stata Deport- mmU of Stat4 by Consul Masov, of ManeUUi, 18S8. 276 RECENT ECONOMIC CHANGES. rivers and canals — was abolished. But a movement lias re- cently been started to re-establish this tax, on the ground that the facilities offered by the free use — so far as taxation 1*8 concerned — of the rivers and canals of France, favor for- eign competition, by permitting English, German, and Bel- gian coal to reach the interior of France ; the cheap transport destroying the effect of the import duty enacted for the protection of French coaL With the establishment of French sovereignty over that large area of the earth's surface known as " Indo-China," the markets of that country have been practically closed to the manufactured products of all other countries except France. While the people of India under English rule may buy freely the cotton-stuffs, hardware, and other articles they require in France, Germany, Switzerland, and the United States, as well as in England, without being com- pelled to pay any tribute to the English manufacturers in the form of differential duties, the French still cling to the old colonial system of the sixteenth and seventeenth centu- ries, according to which it is the duty of the colonies to exclusively purchase and consume the products of the mother-country ; and have endeavored to force, so far as possible, the Indo-Chinese to purchase in the French mar- ket, and pay, in addition to the Government taxes, an indus- trial tax, equal to the difference between the price and quality of the French-protected articles and those of com- peting countries. Thus, before the advent of the French, the wretchedly poor population of Indo-China were accus- tomed to clothe themselves mainly with a thin calico, made in China, called " efaniine^'^ which was brought into the country as an article for exchange, with little or no restric- tions ; but under the French rule a prohibitive duty of about fifty per cent of the value of etaminc has been imposed on its importation ; and as every tax is eventually paid by labor, the Indo-Chinese are thus obliged to work an hour or two longer every day to clothe themselves. It is also AN EXTRAORDINARY EXPERIENCE. 277 worthy of note that, since the application of this system, in September, 1887, the importations into Indo-China are re- ported as having diminished to the extent of forty-five per cent, and that the aggregate trade of the country has also been greatly impaired.* The imposition for some time past of excessive discrimi- nating duties by Koumania on importations from Austria — a duty, for example, of six hundred francs being levied on a double cwt. of shoes — has given rise to one of the most extraordinary proceedings in commercial history. To avoid these high duties, the Austrian manufacturers have adopted the plan of sending their goods, in the first instance, ^' to Switzerland or Holland, where in a frontier custom-house they pay a duty which naturalizes them, so that they become Swiss or Dutch products, and as such they are then forwarded to Boumania. The enormous cost of the long railway jour- ney, the duty in Switzerland or Holland, and the duty at the Roumanian frontier, do not together amount to so much as the duty demanded of Austrian goods imported directly by the Roumanians." The Roumanian Government has, there- fore, failed to a great extent in its plan of excluding Austrian products from its territory, and its people have had to pay the high duties imposed upon their importations. Rouma- nia has, furthermore, found it impossible to protest against this scheme by which Austrian manufactures have been im- ported, because it is perfectly fair, and the arrangements for carrying it out are made in such correct form, that the countries whence the goods are imported could not suffer them to be rejected at the Roumanian frontier. Under such * Iq a recent debate in the French Chamber of Deputies, a Rouen ootton- Bpinner defended the customd policy of France in respect to Cochin-China, and attri bated the dLitreas and decline of trade in that country to the failure of ita rice-crop and the depreciation of silver. He ai^pied that the effects of the policy adopted by France had been satisfactory, as the value of the exports of cotton goods from the Rouen district had risen, in the first six months of the year 18S8, 846,000 franca. 18 278 RECENT ECONOMIC CHANGES. experience the Roumanian Government has finally deter- mined to reduce its customs on Austrian merchandise to such an extent that they will not exceed in the aggregate the cost of their transportation to Holland or Switzerland, added to the duties laid by legitimate Swiss and Dutch goods on their importation. The policy of increasing taxes upon imports, and im- posing further restrictions on trade, once entered upon with a view of securing excentional advantages, seems also to find it to its exercise. Thus, in France, commercial policy was abandoned, iportation of wheat, rye, live-stock, ^v/x, ana numerous other commodities, have been aug- mented to many times their former rates ; and the intention has been expressed to deal in the same way with all foreign merchandise at the expiration of her few remaining treaties of commerce, or " conventional tariffs." The duty on sheep imported into France, which was formerly thirty centimes per head, has been progressively raised in ten years to five francs ; that on horned cattle, from three francs sixty cen- times to thirty-eight francs; on codfish, from twelve and a half francs to forty-eight francs per one hundred kilo- grammes ; while on rye, a leading article of food with the French peasantry, a former duty of ten francs per tonne has been raised to thirty francs, with thirty francs additional if the rye is grown in any country out of Europe and imported from any country in Europe. In the United States, notwithstanding the average ad Vitlorvm rate of duty on dutiable merchandise has increased from 41-G per cent in 1884 to 47-10 per cent in 1888, a bill lar<^('ly advancing rates passed the Senate in January, 1889, which litis been characterized by the United States Secre- Uiry of the Treasury as embodying, in respect to many im- portant commodities, " the very refinement of severity on taxation, by making the rates either absolutely or prac- tically prohibitive ; thereby forbidding competition from INFLUENCE OP THE RUSSIAN TARIFF. 279 abroad and subjecting the consumer to inexorable exactions liable and likely to result from combinations of domestic producers." * In July, 1887, Russia increased her duties — which were before very high — on the imports of all foreign iron and steel, to a point that is regarded as nearly or quite prohibi- tory of all imports; and Germany, which has heretofore had an important market for her iron and steel wares in Russia, and has also been a large purchaser of Russian grain, has since then further advanced her duties upon the import of all foreign cereals, her object being avowedly to shut out American as well as Russian competition. A government commission, appointed to inquire into the condition of Russian agriculture, recently reported the lack of knowledge and use of modem tools and machinery as one of the prime causes that stand in the way of any im- provement in the condition of the Russian peasantry ; and yet the high duties which the Government imposes on the importations of such tools and machinery from foreign countries — more especially from England and the United States — militates more than any other one agency against their introduction and employment It is not disputed that the only sound basis for the prosperity of Russia lies in her agricultural resources, and that there is not now, and neither is there likely to be, any important exportation of com- modities other than agricultural produce. But the exist- ing Russian tariff, enacted in the interests of Russian manu- facturers, forces ships to arrive in her ports in ballast, there- by necessitating that the exported surplus grain of the country, which if not sold abroad will not be sold at all, shall be burdened with a double freight rate — 1. e., for the voyage to Russia and the return to a foreign port and market. Russia has large areas of her territory underlaid by coal of the best quality; the coal-basin, for example, * Letter of the United States Secretary of the Treasury, February 27, 1889. 280 RECENT ECONOMIC CHANGES. which yields the famous Silesian coals, whose ashes are like the ashes of heech-wood, extending far across the Bns- sian frontier, and attaining great development in Poland. With a view of promoting her domestic coal industries, and in accordance with her present general policy of ex- cluding, as far as possible, all the products of other countries from the empire, very heavy duties have been imposed for some years on the imports of foreign coal. The result has been that poaI l^^^, been rendered more expensive on the lan in any other of the leading countries t so irregular and deficient is the sup- .1, that the south Russian railwavs are often obliged to use foreign coal, notwithstanding the duty. Again, the policy by which so many German manufacturers have recently been driven from Russia, has, it is understood, almost arrested the exploration and working of the great coal formation in Poland above noticed. It is further most interesting to note how, as the idea of the desirability of restricting trade and commerce is accepted and carried out, the larger and more logically consistent idea of the middle ages, that restrictions should be imposed, not merely on the freedom of commercial intercourse be- tween country and country, but also between districts of the same country, and even between man and man, tends to re- assert itself and demand recognition and acceptance,* as is demonstrated by a variety of incidents on both sides of the Atlantic. In this movement in Europe, France at present takes the load. Thus, for example, French workmen and employers are apparently now in unison of opinion that all * If forei^ tnulo is Bomcthinsf bad in itself, by a parity of reasoninp, domestic trade must ho also more or lesvs injurious. If nations and states grovr rich and pros|x}rouR by not tradini? with one another^ the same principle ouprht to hold pootl in respect to neij^liborin^ cities and towns, and between man and man. Those were inoriments for controlling or even entirely absorbing great industries — as sugar and distilled spirits — and for promoting the economical and moral prosperity of the people by schemes for compulsory insurance of life and against accidents, which have hitherto had no precedents in TBADE RESTRICTIONS IN THE UNITED STATES. 283 the legislation of any country ; and which will require a long time before final judgment can be pronounced on their ex- pediency and practicability. At the same time, in all these movements the Government makes no secret of its desire, in fostering the interests of the people, to concurrently aug- ment their ability to pay taxes. In the United States, notwithstanding the provisions in the Federal Constitution to the contrary, an attempt has been made during the present year (1889) to enlarge the sphere of the " protective " (restrictive) policy, and make it applicable, not merely to the competitive products of for- eign countries, but also to the competitive products of the different States comprised in the Federal Union ; bills hav- ing been introduced in the Legislatures of several States, and enacted into law in two, prohibiting, through indirect methods, the importation of dressed meat, the product of other States. It seems hardly necessary to say that such propositions and enactments are antagonistic to the fun- damental idea upon which the Federal Union of States, known as the " United States," is based — namely, the idea of equality of rights in all the States to the citizens of each and every State — and involve the recognition of a principle which needs only a wider application to effect the dismem- berment of the republic. The recent action of the French Government, in provid- ing that nothing shall be bought for public use which is not of domestic production, and which the outside world has regarded as a policy unworthy of an enlightened nation, has also had its counterpart and precedent in the previous legis- lation of quite a number of the States of the Federal Union ; with this exception, that in France the discrimination is made against foreigners only, while in the United States the discrimination is made against their own countrjrmen living in different political divisions of the country. Nothing, furthermore, in the way of intervention with the domestic pursuits and social practices of the people can 284 RECENT ECONOMIC CHANGEa be found in Germany or Europe to parallel the recent legis- lation of one of the leading States of the Northwest (Min- nesota), a large part of which was the work of a single legis- lative session (limited to sixty days) in 1885, and which has thus been described by a recent writer : * Prominent in importance were statutes providing for the weighing, handling, and inspection of grain ; the construc- tion and location of grain-warehouses, the providing of cars and side-tracks by railroads, and the regulation of rates of transportation. Next, was legislation respecting State loans of " seed-gi'ain " to farmers whose crops had been ruined by grasshoppers; for the subsidizing of State fairs from the State treasury ; for enabling farmers to avoid the payment of a portion of their debts; for protecting butter-makers from the competition of artificial products, such as " butter- ine " ; for regulating the details of the cattle industry, to the extent of registering and giving State protection to brands and other modes of identification, and of stamping out contagious diseases with small courtesy to the rights and wishes of individual owners ; and for regulating the lumber business to such an extent, that not a log can float down a stream to the saw-mill for which it is destined with- out ofiicial cognizance. One State board regulates the piuc- tice of medicine and the admission of new practitioners ; a second, the examination of druggists and compounding clerks, as precedent to entering into business ; while a third regulates the practice of dentistry. Various enactments pre- scribe the toll to be exacted for grinding wheat ; when one man may slay his neighbor's dog with impunity ; how rail- way companies must maintain their waiting-rooms at their stopping-places for passengers ; the hours of labor, and the employment of women and children ; the maximum time for which locomotive engineers and firemen may be con- ♦ " The American State and the American Man,** Albert Shaw, " Con- temporary Review,** May, 1887. ANTAGONISM OP NATIONALITIES. 286 tiniioaslj employed ; what books shall be used in the public schools ; forbidding " raffles " at church fairs under " fright- ful penalties," and making it a crime to give away a lottery- ticket, and a misdemeanor ^^ to even publish an account of a lottery, no matter when or where it has been conducted." Among bills introduced, and which found considerable sup- port, but were not enacted, was one forbidding persons of different sexes to skate together, or even be present at the same hour on the rink floor ; and another to license drink- ers, which provided that no person should be permitted to use intoxicants or purchase liquors of any kind without having first obtained a public license. Concurrently with the increasing restrictions in recent years on the commercial intercourse of nations, and as an undoubted sequence or phase of such policy, has come also a revival of the idea which, since the successful revolt of the British American colonies and the abandonment of the old-time European colonial policy, has been regarded as alike antagonistic to civilization and the Christian precept of national brotherhood and the interdependence of man- kind, namely, that it is advantageous for the people of the separate nationalities to forbid immigration and residence, with a view of participating in their industries and develop- ing their natural resources, to the people of other countries. In initiating this retrogression in the comity of nations, Rus- sia took the lead by adopting measures looking first to the expulsion of her Jewish subjects, then of all resident for- eigners engaged in manufacturing or mining, and, finally, by forbidding any foreigner from becoming or continuing a landed proprietor within her empire. Germany followed, by expelling great numbers of Poles from her northeastern provinces, under the pretext that they were Catholics (or non- Lutherans) and Slavs, but, in truth, because the more civilized and more Christian (?) German laborers disliked their industrial competition. The United States, in like manner, has forbidden the emigration and residence within 286 RECENT ECONOMIC CHANGES. her territory of the Chinese^ ostensibly because they are ^' heathen," immoral, and not capable of political assimila- tion, but really because they have labor to sell in competition with other like vendors ; and a bill has been reported in th& Federal House of Kepresentatives — ^but not passed — ^which imposes conditions on the landing in the United States of any immigrant whatever, which are capable of a very strin- gent restrictive application. Australia, also, is expelling the Chinese bodily from her colonies ; and intimations are made that China, in retaliation, will fall back upon her old-time policy of commercial seclusion, at least to the extent of ex- pelling from her empire the citizens of those states that have discriminated against her own people. France, by a decree in 1888, orders that all foreigners settling perma- nently in France must be registered and obtain permission to do so ; the main and avowed object of the same being to restrict or prevent the further immigration and settlement of the Belgians and Italians, who are the only foreigners who participate to any extent in the domestic trade and industry of the country ; and it is understood that this registration is only a preliminary step to the imposition of heavy differ- ential taxes upon all immigrants into France who receive wages. It is not alleged that these classes of foreign immi- grants disobey the laws of France or resist her officials ; but, on the contrary, it is conceded that they pay their taxes as regularly as French citizens, and do not, like the Chinese in the United States or the Jews in Southeastern Europe, per- ceptibly lower the standard of general civilization. As for- eigners, they are, however, exempt from the burden of con- scription for military service, which is now more severe in France than in any other country except Russia. The Ital- ians, on the other hand, in the absence of law, are endeavoring to drive away French workmen from northern Italy ; resort- ing even, in some instances, to physical force to effect their object. The Swiss, also, by their communal laws, heavily handicap the foreigner, who shares in none of the communal EVIDENCES OP REACTION. 287 distributions ; and even in England there is a loud demand for interference with the Polish Jews, who in some quarters of London underbid certain descriptions of artisans, and are becoming an objectionable feature in the population. In truth, it would seem as if the people of the different nationali- ties are beginning to dislike each other as they used to do in the middle ages, though for entirely different reasons ; the old-time feeling of antagonism having been mainly due to mutual ignorance of each other ; while in these latter days it is undoubtedly referable to an increased acquaintance, due to the greatly increased facilities for personal intercom- munication. " National brotherhood for the future seems therefore likely to be made more cordial by non-intercourse." One further sequence of this condition of affairs — apart from the economic disturbances and contingent losses it has occasioned — which may be regarded as certain is, that the amity between nations, which has grown so much during the last half -century, and which it has been fondly hoped would put an end to war and enormous anticipatory war expenditures, has experienced a marked decrease within a recent period. The outlook for the future has, however, one encouraging feature ; and that is, that the result of such a conflict of tar- iffs as has prevailed in Europe since 1877-'78 has entailed 80 much of commercial friction, such a series of retaliatory measures, and such an arrest of material development, that there are now many signs that the continuation of this state of affairs will not be much longer endurable. In this con- flict, Austria, which was the first country that broke in upon the International Commercial Union that prevailed among the Continental states prior to 1878, has suffered most severely ; her exports and imports having notably de- creased, while her customs taxes have risen in recent years from Is. 8d. to 3s. Kd. per head of her population, and her internal taxes on consumption from 3^. 7d. to 68. Sd. Be- tween 1877 and 1888 Austria's exports of cereals to Grer- 288 RECENT ECONOMIC CHANGES. many decreased from 131,000,000 florins to 101,000,000. In 1878 her exports of wheat were 6,000,000 cwts., but in 1886, when there was by no means a bad harvest in Austria- Hungary, they were reduced to 1,570,000 cwts. During the same time her exports of cattle have been reduced to one fourth and of pigs to one half of their former proportions. There has been a marked decline in banking profits, an in- crease in the mortgages on real property, and a decline in the consumption both of meat and of farinaceous articles of food. To such an extent has her fiscal policy invited repris- als that she is described as '^ standing ^one commercially," and reduced to the position of consuming her own products through necessity. On the other hand, the export trade of Germany with Austria-Hungary has suffered even more. In the five years ending in 1887, its aggregate decrease is re- ported as 70,000,000 florins. In 1881, 248,000,000 florins' worth of manufactured goods were exported by Germany to Austria and Hungary ; in 1886, the sum amounted to 204,- 000,000 only. In 1882, the quantity of twist exported was 18,000,000 florins ; in 1886, it was 12^ millions. The ex- ports of iron and iron articles also decreased in these same years from 17-j^ to ^ million florins. The recent prohibi- tory duties decreed by Russia on the importation of iron and steel have closed numerous iron-furnaces in Silesia, and some of the frontier towns of north Germany, which are extensively interested in flour-milling, have also suffered severely by the all but prohibitory duties imposed by Ger- many on the imports of Russian grain. In Konigsberg, for example, business is mainly dependent on the Russian grain-trade ; but German grain is now so well protected that only 20,000 tons of Russian wheat came into Konigsberg in 1887, as compared with 60,000 tons in 1884. The same place used also to do a good business with Russia in tea, but the Russian tariff has killed this, so that the city appears almost in a state of decay. Dantsic is suffering in the same way, from the same causes, aggravated by the expulsion of BECENT TRADE EXPERIENCES OP EUROPE. 289 the Poles and Jews from Russia, who played an important part in the local trade of the frontiers. While one of the main objects of the present German taviS. was to eftectnally protect her iron and steel industries, experience is showing that these same industries are less able than formerly to compete in foreign markets for the sale of their products. The price of steel rails was much higher in 1888 in Ger- many than in either England or Belgium ; and German manufacturers complain that, by reason of the high prices they have to pay for their crude materials, they are not only unable to obtain foreign contracts, but are put upon the de- fensive as regards English and Belgian makers. Compar- ing 1888 with 1887, the German exports of pig-iron, raiU and manufactures of iron decreased 2,095,820 tons, or over sixteen per cent ; while her imports of the isame increaw^d to the extent of 538,301 tons, or nineteen per cent And of this increase of imports Great Britain funmbed tli/e greater part The returns of the foreign tra/ie of Fran^^e — im\)'jrU and exports — show a continuous decline «nce IHHiK Soiwiii^ standing her high protectiie dutleis, th/e imi^frUiiUm Uy France in 1888 of articles of f^x>d iucrtoi^iA hy nutrti Hmn 80,000,000 francs, while her txi^/ru of tti^ m$tiAi iUi*:r*m^tfi to the extent of 17,00^^H 44,500,000 francs l^s in raw ui^iiA^htH aud |y«rtl}^ mm^^^- factured goods, and exports! U;W{^ xiistii^ m xiu^ f/t'*^fU/ij^ yimr. Of manufactures, her exports wer^r uJy Jaj^ ih \^^h ih»h in 1887. The production d l>^>i^) V/ Kiu^, *ciU^u\ vf 850,000 tons, or twentj-fiotjr \i^r *y^u\. TiMrf*: wma v/fm /*. covery in production in 1 Hh*! ^-n^i^ssx^Uyti ^x '^f>///y 1/;;^* mainly of pig-iron- The statistics of thui UmA^p Vrw^ // \^^^ "'*- particularly striking aiad iji»trtM,nii**r. i^^rw/ lU y^***- i^Of a general increase in h^ twuff r^/Vu^ vju w^^^^u <^/>/^ ^^hUf and the tariff-war Uim^^nm liMif m^ii ^>w.^a h^nkn p^^ 290 REGENT ECONOMIC CHANOES. The immediate result was a great decrease in the exports and imports, and in the customs revenue of the country. Comparing 1888 with 1887, the decrease in the value of im- ports was twenty-six per cent ; in exports, eleven per cent ; and in revenue, 24-8 per cent For the fiscal year 1889-'90 the revenue of the kingdom is estimated at £61,820,000 ($290,355,000), and the deficit of receipts to expenditures at about £9,000,000 ($43,740,000). The condition of the country under the combined influences of increased war ex- penditures and restrictions in trade has been recently de- scribed by Count Ouisso, ex-Mayor of Naples, and a mem- ber of the Italian Parliament, as most critical. From one end of the peninsula to the other the cry is, he says, " Give us the means of selling our products, and we will pay the taxes." * Bussia having sought to close her doors against the produce of other countries, they in their turn have curtailed their purchases of Russian products ; and the shrinkage in the foreign trade of Russia in recent years, and during a })eriod of peace, has accordingly been almost without prece- dent in commercial history. Comparing 1883 with 1887, the decline in her imports was from £51,371,000 to £29,- 160,000 (the depreciation of the value of the ruble being taken into account), or forty-three per cent ; while in the case of her exports the decline, although not so marked (owing to large shipments of cereals contingent on good harvests), was still very significant — namely, from £60,788,- 000 in 1883 to £43,651,000 in 1886, or twenty-six per centf ♦ See also page 178. t The restrictod character of the foreign oommeroo of Rossis, as measured by the value of her importa, is well illustrated by comparing their aggregate (estimated at £29,160,000, or $141,717,600 for 1887) with the aggregates of other leading nations during recent periods. Thus, in the case of Great Brit- ain, the aggregate net value of her imports for 1888 wa« £821,968,679 ($1,608,- 757,000); for the United States, l887-»88, $728,957,000; Holland, 1887, $457,- 072,000; France, 1888, $810,000,000. While excluding foreign products by almost prohibitory duties, Boasia at the same time continues to supply West- FOREIGN COMMERCE OP GREAT BRITAIN. 291 On the other hand, and in striking contrast, the returns of the foreign commerce of Great Britain for 1888 show a gain in the aggregate net Talue of her exports and imports of £20,632,000 ($100,271,000) as compared with the aggregates of 1887. In fact, the idea that a few years ago found great acceptance in Europe, and undoubtedly influenced the com- mercial policy of the different states — ^namely, that increased restrictions on the importation and competitive sales of for- eign products and the resort of bounties on exports would conjointly stimulate industries, relieve their markets from anything like over-production, and inaugurate a period of general prosperity — has utterly failed of realization when subjected to the test of long and actual experience ; and for the following reasons : The stimulus being artificial, was unnatural. Production rapidly increased, and soon created an additional supply of articles, which were already produced in the localities best fitted for their production, in quanti- ties sufficient, or more than sufficient, to meet any existing market demand at remunerative prices, thus occasioning an augmentation of the very evils which it was expected the restrictive commercial policy would prevent, and which may be enumerated in their sequential order somewhat as fol- lows: 1. Over-production in the natural seats of production. \ 2. Domestic competition to effect sales destructive of all \ profits. 3. Special concessions of prices to effect sales in | foreign countries which have been disturbing to the legiti- 1 mate industries of such countries. 4. A general depression \ of prices, and the reduction of business profits to a mini- | em Europe with frrain ; and having been favored with three good harvests in succession, the balance of trade in her fiivor has been attained as oompletelj as anj one could desire ; and for the first ten months of 1888 amounted to no lesa than 827,000,000 rubles. All this, however, has not brought fkvorable results to the country, and especially to the grain-producers ; the tenor of official reports being that the peasantry are so borne down by the burden of thflir taxation, and lack of facilities for selling their produce, that even in the past years of abundant harvests their condition has not experienced any sen- nble improvement. 292 RECENT ECONOMIC CHANGES. mum — all resulting in a condition of affairs which two years ago is said to have drawn out from Count Karolyi, the I^me Minister of Austria, the assertion that ^^ the European States, hy their present retaliatory tariffs, are doing themselves more injury than the most unrestricted international competition could possibly inflict." It seems to be also now generally conceded in Germany and other states of Europe that the depression of business and the disturbances occasioned by the fall of prices, which were most influential in inducing the general reaction in favor of protective duties in 1878, were due to causes that were not to be reached by such remedies, and that the same continue operative to-day in spite of all the customs barriers against international trade that have been erected. Hard experience is also forcing conviction into the minds of men everywhere, that the tendency to impose restrictions on ex- changes by high protective taxes is directly antagonistic to the progress of modern methods of transportation ; and that it is clearly irrational to expend large sums in constructing and perfecting railways and steamships, and then place diffi- culties in the way of marketing the merchandise they carry. All the indications, therefore, seem to favor a reactionary commercial policy in Europe, and a termination of, at least, the severity and intolerance of the existing trade restrictions between the Continental states, Russia excepted. The fol- lowing are additional evidences in favor of such a conclu- sion : The German Chambers of Commerce, in their recent reports, have, with very few exceptions, declared against the present tariff policy as most injurious to the industry and commerce of the empire. A recent report, especially, of the Stuttgart Chamber of Commerce, earnestly urges the Gov- ernment to improve trade by a return to its former recipro- cal conditions.* ♦ "The result of the intenaive and extensive development of the protective system," observes the Stutt^rt Chamber of Commercef " notwithstandisg ita REDUCTION OP EUROPEAN TARIFFS. 293 With a view of promoting navigation, Austria has re- cently decreed that materials and machines for the building of ships may be imported free of duty. Boumania, after having enacted almost prohibitive tariff duties, is beginning to modify them by granting special favors ; a manufacturer of wooden articles, for example, having been granted fifteen years' free import of wood under the condition that eighty per cent of the goods manufactured are again exported. New commercial treaties, involving limited reciprocities, have been made during the past year (1888) between Aus- tria and Switzeriand, and Germany and Switzerland. In the former^ Austria reduces her duties on Svdss cotton fab- rics, silks and laces, condensed milk, and a few other arti- cles, and Switzerland on her imports of Austrian cattle and mineral waters. In the latter^ which is shared by other countries to whom Grermany has accorded the position of the most favored nations, Germany considerably recedes from the extravagantly high duties imposed in 1885 on watches, cotton embroideries, and silk fabrications, and Switzerland makes concessions on certain German manufactures, as lin- ens, ready-made clothing, etc. A treaty of commerce be- tween Austria and Italy, negotiated in 1878, expires during the year 1889, and the Austrian Government has the ques- tion of its renewal under consideration. If the existing re- strictive commercial policy of the empire is to prevail, it beneficial influenoes on many branches of industrj, has been to doablj in- crease the international uncertainty which now burdens trade and (X)nimerce. Every movement in favor of protective duties results in efforts on the part of each country interested in the matter to outbid its neighbor ; and the very duty which is expected to protect a nation produces a reaction on home prices, and causes them to become assimilated to those of international commerce.'* ThLs Chamber believes that the prospect of a lasting improvement in trade would ** be better grounded could only further exactions in international cus- toms tarifb be avoided, and the uncertainty of market-price, which is the outcome of the protective syntem, be removed by an equitable establishment of mutual customs and commercial relations, by an increased stability and certainty of the duration of tarifb, and by a reciprocal return to former oon- ditions." 291 RECENT ECONOMIC CHANGES. will not be renewed ; but a circular issued by M. Bacque- hem, Minister of Commerce, to the Austrian Chambers of Commerce, has much significance. For in it he says : ** It is important to maintain intact the outlets offered to the com- merce, agriculture, and manufactures of the country. Nay, it is desir- able to increase these outlets in yarious directions. But the only way to do this is to have with the other powers treaties of commerce based on stipulated tariffs. The conclusion of such treaties is now the work before the Government.'' Nevertheless, there are great difficulties to be overcome, as the Italians think that the Austrian treaty of 1878 has been disadvantageous to them, because under it Austrian exports to Italy have risen by 13*3 per cent, while those of Italy to Austria have decreased by forty-five per cent. In Germany, when the era of tariff protection was in- augurated, it was maintained that its effect would be a more equal distribution of wealth; but the German people are now fast recognizing that the result has been to increase the strength of the great bankers and manufacturers, who, hav- ing nothing to fear from foreign competition, now exercise complete control over the home market, and, through the creation of a great number of "trusts" or "syndicates," have been especially successful in enforcing higher prices on consumers.* ♦ In Germany, which leads all other countries in the number, variety, and power of its trusts, it is admitted that their formation began Immediatelj after the passage of the high tariff law of 1879. A recent writer in the " ^conomiste Fran^ais" (M. Raflfalovich ), as the result of a study of the trade combinations of all countries — indeed contends — that any trade or manufacturing syndicate not having " the advantage of fiscal protection, and which opemtea on any article of which the pnxluction is not extremely restricted and for more than a very brief period, is absolutely certain to end in disaster." There are in- stances of so-called trusts in articles unprotected by tariffs that appear to oon- tradict thli theory; but M. Baffalovich believes they are all capable of expla- nation consistent with his conclusion. The most striking instance in the United States is the Standard Oil Company ; but in this case the absence of foreign competition until recently and its comparative disadvantages has had the same effect on the domestic market as s prohibitive tariff. Evidently no PROPOSED EUROPEAN ZOLLVEREIN. 295 One project, originally proposed by Prof. Kanfmann, of the University of Tubingen, with a view of improving the condition of trade of Germany, which has been much dis- cussed, and the adoption of which, in the opinion of not a few, is not improbable, is the formation of a Zollverein, or commercial union, among the nations of Central Europe, with a view, as the " Kolnische Zeitung " (which is regarded to some extent as an official organ of the German Govern- ment) has expressed it, "of expanding their markets by means of treaties, so that the surpluses at any one place within their dominions may serve to make up for the de- ficiencies in another," and which, more especially, would " find its account in collectively fighting against economical commonwealths, like the United States, Eussia, China, and Great Britain, which embrace whole continents." f Thb Experience of the Beet-Root Sugar Boun- ties.— The attempt to artificially stimulate the manufacture of beet-sugar in the states of Continental Europe, and at the same time to obviate the evils from the production of this commodity in excess of local or domestic demand by the payment of bounties on its exportation, has constituted such an extraordinary factor of disturbances in the world's sjDdicate can maintain abnonnal prices in any country for any commodity which is extensively produced in other countries, unless it is itself protected by a tariff on competitive imports, or is able to effect the improbable achieve- ment of indodng the producers in all other countries to enter into its combi- nation. t Such a formation of the " United States of Europe "—this phrase being borrowed from the »* Kolnische Zeitung "—coupled with the avowed objecU to be prospectively attained by it, would have a peculiar significance for the United States of America, as the feeling in Europe in respect to the export trade of the United SUtes, especially of food-products, has not been and in not now friendly. " The prohibition of her hog-products, the successive addi- tions to the duties on grain and cattle, and the readiness with which any com- plaint against an American staple is taken up and widely circulated, often in a grossly exaggerated form, are indications of what would be the position of audi a oiKtoms union toward the United Sutes, could it become an aooom- pliahedfiKSt." 296 EECENT ECONOMIC CHANOES. recent economic history as to be worthy of special narration and attention. Although the practice of stimulating through high pro- tective duties and export bounties the production of beet- root sugar in Europe in competition with the cane-sugar product of the tropics dates back to the first quarter of the century, the present complicated and curious state of affairs is really due to an unexpected result of the (German method of taxing beet-sugar, which was adopted in 1869. The idea involved in this method was, in brief, to collect an excise or internal-revenue tax on all sugar produced ; in the first in- stance by taxing the raw beets, and subsequently to give a drawback on whatever sugar was exported equivalent to the tax paid on the beets from which the sugar was made. At the outset it was assumed that about twelve pounds of beets were required to make a pound of sugar, and on this basis the drawback was calculated ; or for every hundred-weight of sugar exported, there was granted a drawback of nearly twelve times tlie tax paid on each hundred-weight of beets. For a number of years after 1869 this arrangement worked well, the drawback being about equivalent and no more than the tax. But nothing stimulates human ingenuity in a greater degree than the prospect of gain through the avoid- ance of a tax ; and gradually a change in the condition of affairs took place. By careful and scientific cultivation the saccharine element in tlie beet was so much increased and the mechanical and chemical methods of extracting it so greatly perfected, that while in 1869 twelve pounds of beets wore needed in the average German factories to make one pound of sugar, in 1878 the requisite quantity was 10-78 pounds; in 1882, 10*08 pounds; in 1884, 0*28 pounds; and in 1886, 8*80 pounds. Sugar was also extracted from the beet-root molasses, which was not taxed at all ; a result at the outset not anticipated, and even considered impractica- ble. The effect of this was to make the drawback on the exports of sugar no longer equivalent to the tax, and convert BEET-ROOT SUGAR BOUNTIES 297 it into a bounty ; or the exporter received a drawback as if he had paid an excise-tax on twelve pounds of beets, when in reality he had paid on a much smaller quantity — less than nine pounds after 1885. The fact that this bounty was accruing was not unknown to the German Government; but as it became especially manifest during the years 1876- '79, when the great depression of industry had developed a strong protectionist feeling, nothing was done to stop it ; but, on the contrary, it was popularly regarded with satis- faction. Under such favorable circumstances, the beet-root sugar product of Germany increased with great rapidity; and as the amount soon far exceeded any requirements for domestic consumption, and as a net profit of from six to seven per cent was guaranteed to the manufactories by the export bounties, the exportations soon assumed gigantic proportions, rising from about 500,000 cwt. in 1876 to over 6,000,000 cwt in 1885. The other states of Continental Europe, finding the markets for their own product of beet- root sugar everywhere supplanted by the German sugars and their domestic manufacturers being even thereby brought to the verge of ruin, made haste to follow the example of Germany, and improve upon it, by offering larger bounties for the domestic production and export of sugars than were offered elsewhere ; until the policy of Germany, France, Belgium, Holland, Austria, and Eussia during recent years, seems to have been to stimulate their domestic product of sugar to the greatest extent, and then enter into competi- tion with each other to see which of them could sell cheap- est to foreigners at the expense of their own people ; the home-grown sugars of France and Germany, for example, selling, it is reported, in England for about one half the prices paid for the same article by the French and German people.* • In 188S-'84, Germany, at an estimated cost of about $8,000,000 in the way of export bounties, exported more than throe flitha of her annual product 298 EECENT ECONOMIC CHANGES. The Russians determined nearly forty years ago to make their own sugar out of the beet-root, and at first encouraged their manufacturers with a specific bounty. Subsequently they substituted for the bounty an almost prohibitory duty on imports, and under this system the production of beets and sugar increased rapidly for many years, with large re- sulting profits to producers. In 1881 the Russian manufact- urers produced just enough to satisfy the demands of the home market. In 1882 there was an excess of production. Prices then began to fall and manufacturers to fail. They could not export their surplus at a profit, because they could not compete in foreign markets. More protection at home was not wanted, because the protection existing was com- plete. Under these circumstances application was made to the Government to pay them for exporting their surplus, and this the Government agreed to do, to the extent of giv- ing a bounty of one ruble per pood* on an exportation that was to be limited to two million poods, with a remission also of all internal taxes on the same. This arrangement continued until January, 188G, when, the Russian market being overstocked with sugar, an extension of the bounty on an unlimited exportation was demanded, and granted by the Government for a period of about six months, or until July, 1886. The result was that the Russian exporters poured upon the English and Italian markets (the only ones readily available to them) during this brief time, and to the great disturbance of the world's markets, sugar to the amount of seven and a half million poods (227,000,000 pounds), leaving still three million poods surplus at home unsold and unsalable. of bect-su^ar. Of tliis exportation a larpe part went to the United Kingdom, where the averairc consumption of RULnir for that year waa in cxccjis of seventy pounds per capita, u» compared with an averajjo of seventeen pounds for th« population of Germany. ♦ The Russian pood equals thirty -five English pounds, and the single sil- ver Russian ruble may be reckoned at sixty cents. SUGAE EXPERIENCE OP FRANCE. 299 The sugar experience of France has been similar to that of Germany, but characterized by some features of special interest. Previous to 1884 the excise tax was levied on the manufactured sugar, but since that year it has been assessed against the raw material, or the beet-root. The average yield had previously been 5'50 per cent, or five and a half kilos to one hundred kilos of root, and under the new system the yield was fixed for the three years ending on the 31st of Au- gust, 1885, 1886, and 1887, for the purpose of taxation, at five or six per cent of refined sugar, according to the pro- cess of manufacture employed, pressure or diffusion. All the surplus yield escaped duty and formed the bounty. Manu- facturers consequently applied themselves to obtain beet- root rich in saccharine, and the result was that the peld was increased from five and a half per cent in 1884 to 7"27 in 1885 ; 8*12 in 1886 ; 8*87 in 1887 ; and 950 per cent in 1888. The surplus of home-made sugar that thus escaped taxation amounted to 22*56 per cent of the total production in 1885 ; 31-21 per cent in 1886 ; and 3644 per cent in 1887. In order not to place French colonial sugar at a dis- advantage, a rebate, first of twelve per cent, and afterward of twenty-four per cent, of the duty was made. This fur- ther increased the quantity of French sugar free of taxa- tion, which rose from 50,728 tons in 1885 to 87,910 in 1886, and 184,154 tons in 1887, representing in money a loss to the treasury and a bounty to the manufacturer of 25,364,- 177 francs in 1885 ; 43,955,072 francs in 1886 ; and 92,077,- 278 francs in 1887. French sugar-manufacturers, to stimu- late the growers of beet in producing a root rich in sugar, pay a premium above a certain density ; but it has been found that improvements in quality can be obtained only through a considerable sacrifice of quantity. By a law enacted in 1887, the yield of sugar liable to duty was raised to seven per cent for 1888, to increase one quarter per cent yearly for four years, but, with an effective yield of over nine per cent, a good margin now remains for the manufacturer's bounty. 300 RECENT ECONOMIC CHANGES. The present (1889) export bounty in Germany, and the annual treasury expenditure in order that foreigners may have cheap sugar, owing to recent changes in the law, will not probably exceed $4,000,000 (£800,000). In Austria, it was estimated that the sacrifice imposed by the sugar bounties cost her population five million florins in 1887, and that the increase in the price of sugar to do- mestic consumers, in consequence of the prohibitory import duties on foreign sugars, amounted to over four and a half million additional; so that the country paid nine and a half million florins (13,277,000) in 1887 for its participation in the business of sugar production. For the year 1885-'86 Belgium is reported to have paid about $4,000,000, and Hol- land $1,500,000, on account of sugar-export bounties. The United States, in this business of selling sugar cheap to for- eigners at the expense of their own people, has also played a not undistinguished part, the exports of refined sugars having risen from 22,227,000 pounds in 1881 to 252,579,000 pounds in 1885, or 26,000,000 pounds in excess of the entire cane-sugar product of the country for the latter year. The secret of this probably was, that a bounty was paid under the guise of a drawback, which the English sugar-refiners estimated at thirty-nine cents per one hundred pounds. This drawback having been reduced by the Treasury De- partment to seventeen cents, the exports for the succeeding year, 1885-'86, at once fell off to 104,339,000 pounds, and in 1888 to only 34,449,000 pounds. The bounty practically paid by the United States to the producers of sugar in the Sandwich Islands, by the relinquishniont of duties on all sugars imported therefrom, while duties are maintained on the import of sugars from all other countries, also amounts at present to at least $0,000,000 ])er annum. The experiences that have followed this attempt, on the part of practical statesmen, to interfere with the natural progress and development of a great industry, constitute one of the most instructive chapters in all economic history. RESULTS OP THE BOUNTY SYSTEM. 301 Judged from certain standpoints, the boonty system, as applied to beet-root sugar, has been unquestionably most successful. It has increased the aggregate product of this variety of sugar so rapidly that, in place of constituting twenty per cent of the whole sugar-product of the world, as it did in 1860, it now represents at least fifty-six per cent of such aggregate. Its artificially increased product has so far exceeded the cun*ent demands of the world for consump- tion that sugar in 1886-'87 ranked in point of retail value with such articles as oatmeal, barley, and flour, and was used to some extent in England as food for cattle ; while its use as a fertilizer, in competition with artificial manures, was even also advocated. The average price of the raw sugars imported into England from 1884 to 1888, as officially re- ported, was 13"63«. per cwt., in comparison with an average of 24-475. for the period from 1869 to 1875, and 20-97*. from 1879 to 1883. Such a reduction in the price of a prime necessity of life has been of immense advantage to consumers. In Great Britain, whose policy since 1874 has been to give her people sugar free of taxation, the per capita consumption has risen from fifty-six pounds in that year to seventy-four pounds in 1886 (as compared with a per capita of about fifty-four pounds in the United States in 1885), while the saving to the British people, from the reduction of the cost of this one item of their living, in the single year of 1884, was esti- mated by a committee representing West India producers, as at least £5,000,000 ($25,000,000), or more than the entire value of the annual sugar product of the West Indies (esti- mated at £4,500,000) ; and at twice the fixed capital invested in sugar-refining in the United Kingdom. Again, the bounty policy developed a large local industry in many of the states of Continental Europe, and for a time paid enormous profits to manufacturers and refiners pro- ducing for export. During the year 1886 the profits of the two leading sugar-refiners of France from export bounties, u 302 RECENT ECONOMIC CHANGEa exclusive of their domestic trade, were reported as aboat £450,000 ($2,225,000) each; but how much of this they were required to part with in order to force, through reduced prices, the sales of their product in other countries, is, of course, not known. It is claimed to have greatly injured the sugar-refining industry of Great Britain ; but, on the other hand, it is certain to have given a great impetus to the business of manufacturing confectionery, preserved fruits, jams, etc., in that country; industries which have given employment to many more persons than were ever occupied in refining sugar.* But there is another side to this picture. Under the influence of an extraordinary and artificial stimulus more sugar has been produced than the world was ready to absorb, even at the reduced prices which the bounties made possible. The price of beet-root, and therefore of all sugar, has con- tinued to decline, until the sugar-industry of Continental Europe (with the possible exception of France) has experi- enced the severest depression. Many establishments have closed or passed into bankruptcy, and it is now well under- stood that tlie only profit available to the manufactories is that derivable from so much of their product as is exported, which in the case of Germany represents more than half of the annual production. In a recent discussion in the Ger- ♦ With tho advantapfe of cheaper BUjjar than any other commercial nadon, the '^jam" industry has developed in Great Britain to a great extent; and this, too, notwithstanding that Great Britain is .a country not especially adapted to the prrowing of fruits, and in which domestic fruits are, as a rule, costly. According to Sir Thomas Farrer, about 100,000 tons (200,000,000 pounds) of refined sugar was used in this industry in the United Kingdom in 18ft4; em|)loying 12,000 men, or more than double the number employed in the British su^ur-rofineries ; and for 18«S the estimate was 150,0m the fact that the imports of raw su^ar fVom the island by Holland have declined— comparing the nwulti* of the year 1870 with thoae of 1886— about ninety per cent. REACTIONARY SUGAR POLICY. 305 well established that German beet-root sugar has been and is now exported half round the globe, and largely sold in Singapore, the center of the great sugar-producing coun- tries of Asia, at a price which makes its use to the manu- facturers of preserved fruits more advantageous than the sugars of Java and the other islands of the Indian Archi- pelago. In British India, owing to the competition of European beet-sugar, the exports of sugar, comparing 1884 with 1887, experienced a decline of 632,439 cwts. ; and a similar competition as respects Australia has threatened with ruin the developing sugar-industry of these countries. In the island of Madagascar, also, the manufacture of sugar, which was formerly the staple industry, has become so unprofit- able, that the people have largely abandoned the cultivation of the cane, and are devoting their labor to the production of tea, tobacco, tapioca, and other tropical products. Finally, the states of Continental Europe, in which the burden of taxation is already most grievous, and in most of which there is a regular and increasing annual deficit, are beginning to feel that they can no longer endure the strain upon their finances which the bounty-paying system to their sugar-industries entails, and which has not brought pros- perity to them or the state. In this reaction, Russia has taken the lead, and with the exception of bounties granted for a period of five years on the export of sugars to Persia, has abolished her former general system of bounties ; and all the other states of Continental Europe exhibit unmistak- able evidences of a desire to follow her example. It is gen- erally agreed in Europe that not only have the fiscal results of the bounty system been wholly unsatisfactory to the several sugar-producing states, but also that the bounties have enabled foreign consumers to obtain sugar at less than its actual cost of production. Competition among the re- finers has compelled them to share their bounties with their customers, and their own have been compelled to pay 306 RECENT ECONOMIC CHANGES. prices abnormally high, in order that foreigners might bny at prices abnormally low. Recent investigations have also developed this curions feature of this sugar-bounty question, and that is, that the country paying the heaviest export bounty does not export the greatest quantity. Thus France, with a reported annoal production of 550,000 tons, and paying a much higher bounty than Germany, exports twenty-nine per cent of her product; while Germany, with an annual production of about a million tons, and paying a much smaller bounty, exports sixty-one per cent of her product It is furthermore recognized that, while a bounty un- naturally stimulates the production of sugar, it also operates to a like extent in discouraging production where no bounty is given ; and that, if the bounty system is continued long enough, it will in a great measure destroy natural production. The great difficulty of the situation, however, is that much of the sugar-industry that has been called into exist- ence artificially would be immediately ruined, with great loss and suffering to a large number of people, if the bounties were at once discontinued ; and the same result would follow by the putting an end to any possibility of exporting, if one, or all but one, of the states should cease paying bounties, and one, like France, should continue to do so. An invitation extended bv the British Government, in 1887, to the various sugar-producing nations, to meet in conference tlirough their representatives, " with a view of arriving at a common understanding for the suppression of (export) duties," was therefore promptly accepted ; and in November of that year such a conference assembled in London, at wliich officially appointounties from their governments, and all the goods which sucli sliipa carry. In fact, if once we admit the prin- ciple that it is right to fight bounties by customs duties or regulations, we commit ourselves to a policy of commercial reprisals, and upon such a policy it would, in our opinion, be tlie height of folly for us to ent<;r.*'— ZowJon £oo7U>mi8t, BOUNTIES FOR SHIPPING. 809 To bring np the narrative of this curious chapter in the world's economic experience to the present date (1889), it is to be added that, owing to a reduction in the produc- tion of sugar through the discouragement of the low prices which the bounty system has occasioned, conjoined with an unfavorable season, and an increasing consumption con- sequent on an increasing population, the world finds itself threatened for a time (1889) with a temporary scarcity of sugar. Prices, accordingly, have greatly advanced, with a prospective outlook for another year of increased produc- tion, and a repetition of price disturbances in the not-dis- tant future. It is also interesting to note that, notwithstanding the experience of the sugar bounties, the Government of the Argentine Republic, while the sugar convention was pend- ing, determined to appropriate an annual sum of $550,000 for three years, in order to stimulate the export trade of that country in beef and mutton for the European market. Bounties for Shipping. — The recent experience of France in attempting to stimulate ship-building and ship- using, through a carefully-devised system of subsidies and bounties, furnishes another illustration of the effect of gov- ernmental interference with the natural course of industries, second in importance only to that afforded by the experience of sugar. Thus, to accomplish the purpose above noted, the French Government offered in 1881 to give a bounty of twelve dol- lars a ton on all ships built in French yards of iron and steel ; and a subsidy of three dollars per ten tons for every thousand miles sailed by French vessels ; and as they did not desire to put any inhibition on the citizens of France buying vessels in foreign countries and making them French property, in case they desired to do so, they proposed to give one half the latter subsidy to vessels of foreign con- struction bought by citizens of France and transferred to the French flag. 810 RECENT ECONOMIC CHANGEa At the outset, as was the case with the sugar bounties, the scheme worked admirably. New and extensive steam- ship lines were organized with almost feverish haste, and the construction of many new and large steamers was promptly commenced and rapidly pushed forward in various French ports, and also in the ship-yards of Great Britain and other countries. The Government paid out a large amount of money, and it got the ships. In two years their tonnage increased from a little over 300,000 to nearly 700,000 tons for steamers alone ; while the tonnage engaged on long voy- ages increased in a single year from 3,600,000 to over 4,700,- 000 tons. It was probably a little galling to the French to find out after two years' experience that most of the subsidies paid by the Government were earned by some two hundred iron steamers and sailers, and that over six tenths of these were built and probably owned in large part in Great Britain ; so that the ship-yards on the Clyde got the lion's share of the money. But as all the vessels were transferred to and sailed under the French flag, and were regarded as belong- ing to the French mercantile marine, everything seemed to indicate that the new scheme was working very well, and that tlie Government had really succeeded in building up the shipping of France. But the trouble was that the scheme did not continue to work. Tlie French soon learned by experience tlie truth of the economic maxim that ships are the children and not the parents of commerce ; and that while it was easy to buy ships out of money raised by tax- ation, the mere fact of the ownership of two or three hun- dred more ships did no more to increase trade than the pur- chase and ownership of two or three hundred more plows necessarily increased to a farmer the amount of arable land to plow ; or, in other words, the French found that they had gone to large expense to buy a new and costly set of tools, and then had no use for them. And, what was worse, they found, furthermore, that SHIPPING EXPEELEXCE OP FRANCE. 311 while they had not increased trade to any material extent, they had increased the competition for transacting what trade they already possessed. The result has been that many French shipping companies that before the subsidy system were able to pay dividends were no longer able; fortunes that had been derived from the previous artificial prosperity have melted away, and the French mercantile marine ceased to grow— only $584,288 being paid out for construction bounties in 1886, as compared with a disburse- ment of $982,673 in 1882.* In fact, the whole scheme proved so disastrous a failure that the late Paul Bert, the eminent French legislator and orator, in a speech in the French Assembly, seriously undertook to defend the French war of invasion in Tonquin on the ground that its continu- ance would afford employment for the new French mercan- tile marine, which otherwise, we have a right to infer, in his opinion would have remained idle. A recent writer — M. Eaffalovich — in the "Journal des Economistes," has also thus summed up the situation. " It may be asserted," he says, that "the bounty system in Prance, which was intended to bridge over a temporary depression, has aggravated the situation, and has proved itself to be a source of mischief, not of cure." The experience of the mercantile marines of Europe during recent years affords the following curious results: It shows, firsts that the pa3rment of bounties has practically availed nothing in arresting the continued decrease in sail- ing-tonnage ; second^ that in the eight years prior to 1880, French shipping, in its most valuable branch-steamers, in- creased faster than the shipping of any of its Continental competitors; but after 1880, the increase in the steam ma- rine of Germany, where no bounties were paid, was relatively greater both in number and tonnage of vessels than in • The total amount paid by France for the conRtruction and mnnimr of ships is estimated to have been 10,588,965 fhmos in 1887, and 9,000,000 in 1888. 312 RECENT ECONOMIC CHANGES. France where large bounties were given after 1881; and was also greater as respects the aggregate tonnage of all Tessels — sail and steam. The obvious expectation of the French Government in resorting to the bounty system for shipping was that ships built and navigated with the aid of the bounties would carry French manufactures into foreign countries, and thus open new markets for domestic prod- ucts. But experience, thus far, has shown that all that has been effected is a transfer, to some extent, of the carriage of goods formerly brought in foreign vessels to French vessels. But, on the other hand, the increase of tonnage, under the stimulus of the bounties, beyond the requirements of traffic, and the consequent reduction of freights, has entailed " a loss, and not a gain to the French nation ; by throwing upon it the burden of a shipping interest that, but for the Government aid, would have been unprofitable, and which, because of such aid, can not conform itself to the demands of trade." * The experience of Austria-Hungary in attempt- ing to find new outlets for their produce, or fresh employ- ♦ " Report on the Mercantile Marines of Forcijs^ Countries," by Worthing- ton C. Ford, U. S. Department of Stiite, Executive Documents, 1886. A report (1889) to the British House of Commons affords tlie latest infor- mation respecting: the payment of bounties in European countries with a view to favorinj? the construction and running of sliips. It apjxjars that such payment8 are made in France, Italy, and Spain. In France the annual outlay on bounties for construction is officially reported to have been £181,6*20 ($982,678) in 1882, and £120,224 ($584,288) in 1886. The sums allowed by Franco for navi^tion depend upon the ajre of the vessel and the materials used in construction. The amount of bounties for navi^tion paid in 1886 was 7,578,347 francs. In Italy, for 1887, the following amounts were paid by the Government: namely, for construction of vessels, £4,587; for repwrs, £7,210: for importing coal, £6,931; for navigiition — steamers, £44,956; sailing-vessels, £06,289 ; total, £159,978. In Spain the bounty is 32«. per ton paid to Spanish ^hip-builders on vessels constructed by them. In Spain, and also in Austria and Belgium, materials used in ship-building are exempted from payment of customs duties. No statement, however, is supplied as to the actual or estimated amount of the aid thus afforded to the construction of vessels in the three countries last named. Postal subsidies are granted in almost all European statos; but these payments can not be reckoned as bounties. INCREASE IN BRITISH TRADE. 313 ment for their shipping by the payment of sabsidies, has been analogous to that of France, and equally unfortunate. The steamers of the Austrian Lloyd Company have made more voyages to the " Far East" than when unsubsidized ; but the exports of Austrian products have not materially increased, while the mercantile marine generally of Austria is rapidly declining. The experience of Great Britain, occcupying, as she has, the position of being the only country in the world of large production and commerce which has not within recent years imposed restrictions on the competitive sale of foreign prod- ducts in her markets, is also exceedingly interesting and instructive. That British trade and production have been injured by attempts in the nature of forced sales on the part of competitors in protected countries to dispose of their surplus products in the English duty-free markets — while the tariffs of their own countries have shielded them from reprisals — and that from like causes Great Britain has ex- perienced severe foreign competition in neutral markets, where British trade had formerly almost exclusive posses- sion, can not be doubted. Thus, the report of the British Commission " On the Depression of Trade and Industry " (1886) shows that the importation of foreign manufactured or partially manufactured goods into Great Britain has in- creased since 1870, at " a slightly more rapid rate " than the increase of its population, having been £1.97 per head in the period 1870-'74, and £2.35 per head in the period 1880-'84. The extent of the injury to British interests from these changes in the conditions of the world's trade does not, however, appear to have been as great as might have been anticipated, or as is popularly supposed, and very curiously has manifested itself in a reduction of profits, rather than in any reduction of the volume of British trade ; the value of British exports to the six protectionist countries of the world— the United States, France, Germany, Russia, Spain, and Italy — having been larger during the years 1880-'84 814 RECENT ECONOMIC CHANGES. than in any quinquennial period of British history, with the exception of the period from 1870-'74, when British trade is known to have been abnormally inflated. Thus the aver- age annual value of British and Irish produce exported to France, Germany, Spain, Italy, Russia, and the United States was £2 26 per head of her population in 1880-'84, as compared with $2 06 in 1875-'79, and £2 18 for 1865-'69. Of the total increase in the shipping trade of the principal maritime nations from 1878 to 1887, one third occurred in British tonnage ; while of the increase in the merchant steam tonnage of different countries, during the same period, nearly two thirds is to be credited to Great Britain. In the year 1887 the mercantile navy of Great Britain, while carrying three fourths of the whole of her own immense commerce, carried at the same time one half of that of the United States, Portugal, and Holland ; nearly one half of that of Italy and Russia ; and more than one third of that of France and Germany. As the ocean mer- cantile tonnage of the United States declined between the years 1878 and 1887 in a greater degree than that of any other country, it is very clear at whose expense the increase in the shipping of other nations was made during this same period. It is also not a little interesting to note that the countries of the world in which, according to the most recent and accepted statistics, the ratio of wealth and the ratio of foreign commerce to the population are the greatest, are Holland and Great Britain, the two states that have emancipated themselves in the greatest degree from all re- strictions on the interchange of products with foreign na- tions— the customs revenue of the former amounting to about one per cent on her imports, and that of the latter to about five and a half per cent.* In India, also, where there ♦ It iR popularly believed that the per capita wealth of the people of the United States, which the cen«ufl of 1880 fixed at $800— but which, allowing for duplications, is probably not over $500 — is greater than that of any other people. This, however, is not the iaot ; the ratio of wealth to each mhabitMK COMPARATIVE EXPORTS OP EUROPE. 815 are few artificial restrictions on the freedom of exchange, internal trade, manufactures, and foreign commerce have increased in an extraordinary degree within recent years, and the wages of skilled labor have also, at the same time, notably advanced. An analysis of the comparative values of the export trade of the nations of Europe during the five years from 1880-'85 — a period of intense struggle for the domination of the world's markets — affords the following significant re- sults : In cotton and woolen yams and dry-goods, England strengthened her position; in iron and steel goods, her share of the world's trade increased from 64*2 to 66*5 per cent ; while in machinery her exports were pushed up from 66*7 to 69'1 per cent In glass and glass goods England's percentage remained constant, while that of France and Belgium declined. Germany increased her exports of glass and glassware, and also very largely of paper and slightly of machinery, losing ground in respect to the exportation of iron and steel goods, in common with France and Aus- tria. In leather and leather goods Germany leads, while France appears to be rapidly losing her former supremacy. Apart, however, from their bearing on any particular country, a review of all the circumstances connected with the multiplication of restrictions on international commerce, which the majority of civilized nations have jinited in cre- ating in recent years, fully justifies the British Commission and other European authorities in regarding it as a most influential agency in occasioning almost universal economic disturbance. It has been progress backward — ^progress in the direction of that sentiment of the middle ages, which in Great Britaiin being $1,245, and in Holland, $1,200. The wealth of Hol- land, moreover, doubled in the twenty years next prior to 1880, while the gain in population of the country during the same period was comparatively insignificant. In respect to commerce, the ratio to each inhabitant, in 1880f was $150 in Holland, as compared with $91 for Great Britain, and $32 for the United Steles. 316 RECENT ECONOMIC CHANGES. held that, as commerce benefited one country only as it injured some other, it was the duty of erery country to im- pose the most harassing restrictions on its commercial inter- course. The evidence, furthermore, is overwhelming that, as civilization giows more complex, and the use and per- fection of machinery increases, all obstacles placed in the way of the freest interchange of commodities have an in- creasingly disastrous effect in deranging and destroying in- dustry everywhere. Or, in other words, increased knowl- edge respecting the forces of Nature, and a wonderful sub- ordination and use of the same having greatly increased and cheapened the abundance of all useful and desirable things, the majority of the world's legislators and statesmen have seemed to have considered it incumbent upon them to neu- tralize and defeat the beneficent results of such abundance. And the most comforting assurance that progress will not continue to be made in this same direction, is to be found not so much in the intelligence of the masses or their rulers, as in the circumstance that existing restrictions on commerce can not be much further augmented without such an im- pairment of international trade as would be destructive of civilization. As the existing restrictions on commercial intercourse within recent years have not been all imposed at one time, but progressively, and as their influence has accordingly been gradual, the world does not, however, seem to have as yet fully appreciated the extent to which the exchange of products between nations has been thereby interrupted or destroyed. But, as the case now stiinds, Russia practically prohibits her people from any foreign purchases of iron and steel, and in fact seems to desire to limit exchanges of her products for the products of all other nations to the greatest extent possible. Germany, by repeated enactments since 1879, has imposed almost prohibitory duties on the importation of wheat; a measure directed, in the first in- stance, against Kussia, as a means of retaliation for the per- ILLUSTRATIONS OP TRADE RESTRICTIONa 317 secution of German landed proprietors in Poland, but which has severely damaged the German steam flour industry, and benefited no one. Austria imposes heavy tariff rates on the import of almost all German manufactures. Belgium pre- vents the importations of cattle and meats ; Austria, Russia, Germany, France, Belgium, and Holland, of sugar ; France, of pork and pork products ; Brazil, of rice ; while trade be- tween Italy and France has been interrupted to almost as great a degree as mutual governmental action will admit. The imports of Russia, as before pointed out, decreased forty-three per cent in the four years from 1883 to 1887 ; and in the case of no one of the Continental states of Europe has the condition of their foreign trade in recent years been regarded as satisfactory. For the year 1888 there was a decline in the exchanges of every such state with foreign countries ; or, what is the same thing, there was a greater restriction to each one of them of markets for the indus- trial products of their own people. The avowed policy of the United States has for years been to prohibit or obstruct trade on the part of her citizens, in respect to many articles, with the citizens of all foreign countries ; and with this example, and in part from a spirit of retaliation, there can be no doubt that the objective of much of the restrictive commercial legislation of other countries in recent years has been the United States — a policy which has notably affected the agricultural supremacy of the latter country in the world's markets ; the exports from the United States, comparing 1888 with 1881, of cattle, having declined 24*5 in quantity and nineteen per cent in value ; of hog-products, 43*3 in value ; and, of dairy products, over fifty per cent in value. The decline in the value of the exports of the United States to France has been especially noteworthy, namely, from a value of $99,000,000 in 1880 to $40,000,000 in 1886, and $37,780,000 in 1888. Great Britain alone of all the nations, in increasing her territorial possessions, does not take to herself any com- 318 RECENT ECONOMIC CHANGES. mercial privileges which she does not readily and equally share with the people of all other countries. In all discussions as to the expediency of imposing taxes on imports with a view of protecting domestic industries, the question as to the amout of indirect taxation thereby actu- ally entailed through augmentation of prices on the con- sumers of protected products constitutes a most important and interesting feature. Many estimates of the incidence and extent of such taxes — which consumers pay, but which the Government does not receive — have from time to time been made, especially in the United States ; but in the ab- sence of sufficiently precise and unquestionable data they have not been generally regarded as satisfactory, and as a reality are often even unqualifiedly denied. The publica- tion during the year 1888, under the auspices of the Ameri- can Iron and Steel Association, of a complete collection of the statistics of the iron and steel industries of the United States, for many years down tg the close of 1887, embracing both production and prices, with the concurrent prices of British iron and steel from 1830 to 1887,* affords, however, (hitji 80 exact, as to permit the relative prices or cost of iron and stool to tlio consumers of these metals in the United Stiitos and Great Britain for the years from 1878 to 1887 inohisivo, to bo clearly exhibited ; and the amount of indi- ro('t taxation paid by the people of the former country in case, bad crops of cereals, and disastrous specula- tioiiM, like the raimnui Canal, copper syndiootc, and the like, the savings of the Fri'neh iH»<.pK« an* ntill ho larjre that the supply of new capital for every enterpriiH! that pnuniKes Bcourity or profit continually tends to exceed de- mand. ConcUhsive evitlencc of the rapid and enonnouA increase in the wealth of the Vnited Station is claimed to be afforded by the rapid increase in tlie amount of projH'rty annually made subject to fire- insurance. Thus, the smouDt of fire risks outstanding in 18B8 was reported as more than $900,000,- (HH) in oxoess of the aggregate for the previous year ; and, as there is no reason IMPROVEMENT OF THE MASSES. 355 of Great Britain gained in proportion with others in this enormous development of material wealth ? Thanks to the labors of such men as the late Dudley Baxter and Leone Levi, David Chadwick, and Robert Giffen, this question can be answered (comparatively speaking for the first time) with undoubted accuracy. Fifty years ago, one third of the working masses of the United Kingdom were agricultural laborers ; at present less than one eighth of the whole number are so employed. Fifty years ago the artisans represented about one third of the whole population ; to-day they represent three fourths. This change in the composition of the masses of itself im- plies improvement, even if there had been no increase in the wages of the different classes. But, during this same period, the " money " wages of all classes of labor in Great Britain have advanced about one hundred per cent, while the pur- chasing power of the wages in respect to most commodities, especially in recent years, has been also very great Among the few things that have not declined, house-rent is the most notable, a fact noticed equally in Great Britain and France, although in both countries the increase in the num- ber of inhabited houses is very large ; the increase in the item of houses in the income-tax assessments of the United Kingdom between 1875 and 1885 having been about thirty- six per cent.* But high rents, in the face of considerable building, are in themselves proof that other things are cheap, and that the competition for comfortable dwellings is great for supposing that property in 1888 was better insured than in 1887, the only means of accounting for this great increase in the volume of insurance business is, that there was substantially that amount of new wealth added to the coun- try on which insurance was desired. It would seem to be further obvious that this gain could not be in the value of land (for land, as it can not be de- stroyed by fire, is not insured), but must have consisted in new buildings and penonal property of a perishable nature. * The houses built in Great Britain since 1840 have been estimated in value at double the amount of the Biitiah national debt. 356 RECENT ECONOMIC CHANGES* The Govemment of Great Britain keeps and publishes an annual record of the quantities of the principal articles imported, or subject to an excise (internal revenue) tax, which are retained for home consumption per head, by the total population of the kingdom. From these records the following table has been compiled. From a humanitarian point of view, it is one of the most wonderful things in the history of the latter half of the nineteenth century : Per capita consumption of different commodities (imported or sub- ject to excise taases) by the population of Great Britain. ARTICLES. Bacon and hams T lbs. Butter " Cheese " Currants and raisins " K^gs No. Kico lbs. Cocoa ** Coffee " Wheat and wheat-flour " Raw sugar " Refined sugar " Tea " Tobacco '• Wine gals. Spirits (foreign) " Snirits (British) ** Malt bush. Beer (1881) gals. 1840. 1886. 001 11-95 1-05 7-17 0-92 514 1-45 402 3G3 28-12 0-90 10-75 008 0-41 1-08 0-86 42-47 185-76 15-20 47-21 None. 18-75 1-22 4-87 0-86 1-42 0-25 0-36 0-14 0-24 0-83 0-73 1-59 l-64» 27-78 26-61 1887. 11-29 8-14 5*39 4-34 29-37 7-69 0-43 0-79 220-75 52-95 20-25 4-95 1-44 0-37 0-23 0-72 26-96 During all the period of years covered by the statistics of this table, the purchasing power of the British people in respect to the necessities and luxuries of life has therefore been progressively increasing, and has been especially rapid since 1873-'76. Converting this increase in the purchasing power of wages into terms of money, the British workman can now purchase an amount of the necessaries of life for 28^. 5(/., which in 1839 would have cost him 34,'*. O^r/.f But 1879. t David Chad wick, Briti»h ABsociation, 1887. EQUALIZATION OF WEALTH IN GREAT BRITAIN. 357 this statement falls very far short of the advantages that have accrued to him, for wages in Great Britain, as before stated, are fully one hundred per cent higher at the present time than they were in 1839. The impression probably prevails very generally in all countries that the capitalist classes are continually getting richer and richer, while the masses remain poor, or become poorer. But in Great Britain, where alone of all countries the material (i. e., through long-continued and systematized returns of incomes and estates [probate] for taxation) ex- ists for scientific inquiry, the results of investigations dem- onstrate that this is not the case. In the case of estates, the number subjected to legacy and succession duties within the last fifty years has incr^sed in a ratio double that of the population, but the average amount of property per estate has not sensibly augmented. If, therefore, wealth among the capitalist classes has greatly increased, as it has, there are more owners of it than ever before ; or, in other words, wealth, to a certain extent, is more diffused than it was. Of the whole number of estates that were assessed for probate duty in Great Britain in 1886, 77*5 per cent were for estates representing property under £1,000 (115,000). In the matter of national income, a study of its increase and apportionment among the different classes in Great Britain has led to the following conclusions: Since 1843, when the income-tax figures begin, the increase in national income is believed to have been £755,000,000. Of this amount, the income from the capitalist classes increased about one hundred per cent, or from £190,000,000 to £400,- 000,000. But, at the same time, the number of the capital- ist classes increased so largely that the average amount of capital possessed among them per head increased only fifteen per cent, although the increase in capital itself was in excess of one hundred and fifty per cent. In the case of the " up- per " and " middle " classes, the income from their ** work- 358 RECENT ECONOMIC CHANGE& ing " increased from £154,000,000 to £320,000,000, or about one hundred per cent ; while, in the case of the masBes (i. e., the manual labor classes), which have increased in ]>opnla- tion only thirty per cent since 1843, the increase of their incomes has gone up from £171,000,000 to £550,000,000, or over two hundred per cent. Between 1877 and 1886 the number of assessments in Great Britain for incomes between £150 (1750) and £1,000 (t;5,000) increased 19-26 per cent, while the number of assessments for incomes of £1,000 and upward decreased 2*4 per cent.* What has happened to all that large class whose annual income does not reach the taxable limit (£150) is sufficiently indicated by the fact that while population increases pauperism diminishes. Thus, in the United Kingdom, during the last fifty years, the general result of all industrial and societary move- ment, according to Mr. Giflfen, has been, that " the rich have become more numerous, but not richer individually; the * poor ' are, to some smaller extent, fewer ; and those who remain ' poor ' are, individually, twice as well off on the aver- age as they were fifty years ago. The poor have thus had almost all the benefit of the great material advance of the last fifty years." • The following tabic shows how wealth is distributed in the difFerent classes of income-tax-payers in Great Britain under Schedule D, which oom- prinos incomes from profits on trades and employments : ** In 1887 the number of assessments of incomes from £150 to £500 was 2vS5,754, and in 188G it was 847,031, showing an increase of 21*4 per cent; of ini'omt'H between £r)00 and £1,000, the numbers were, in 1877, 82,085, and in 188B, 82,033, no increase at all ; of incomes between £1,000 and £5,000, the numlKjrs were, in 1877, 19,726, and in 1886, 19,260, a decrease of 2-4 per cent ; and of tin; incomes over £5,000, the numbers were, in 1877, 8,122, and in 1886, 8,048, a decrease of 2*3 per cent. It results that from these figures the increase of the income-tax durini? times of depression and during ordinary times, during the times wliich we have been going through and which have not been times of groat pro>|K»rity, there has In^en a most satisfactory increase in the incomes below £.'>00, while no similar increase is seen in the incomes between £500 and £1,000, and upward."— Mr Goschen, " On ih4 DidrHm- tion of Wtalth," Royal iStaiiftical Socuiy of EngUind, 1887. BRITISH NATIONAL SCHOOL SYSTEM. 359 The following further citations from the record of the recent economic experiences of Oreat Britain are also strongly confirmatory of the above conclusions : The amount of life-assurance in the United Kingdom exceeds that of any other country ; having risen from £179,- 900,000 (1872,214,000) in 1856 to £426,600,000 ($2,073,- 376,000) in 1885. The record further shows a very rapid increase in the number of policies issued, while the average amount of the policies continues small ; the meaning of which clearly is, that a larger number of people are not only continually becoming provident, but able to insure them- selves for small amounts. The amount of savings invested in the co-operative stores of Oreat Britain, in which her working-classes are especially interested, was estimated in 1888 to be adequate for the handling of a retail business exceeding a hundred million dollars per annum. The changes in the relations of crime and of educational facilities during the last fifty years of the history of the British people, which have occurred and are still in progress, are in the highest degree encouraging. In 1839 the num- ber of criminal offenders committed for trial was 54,000 ; in England alone, 24,000. Now the corresponding figures (1887) were. United Kingdom, 18,305; England, 13,292. In 1840 one person for every 500 of the population of the British Islands was a convict ; in 1885 the proportion was as one to every 4,100. As late as 1842 there was no national school system in England, and there were towns with populations in excess of 100,000 in which there was not a single public day-school and not a single medical charity. Now education has be- come one of the principal cares of the nation. In 1884 the number of attendants upon schools in the United Kingdom was reported at 5,250,000. In 1887 the number in attend- ance upon schools, for the support of which grants of money are made by Parliament (and which correspond to the pub- 360 RECENT ECONOMIC CHANOES. lie schools of the United States) was 4,019,116, an increase over the preceding year of 103,801. The amount of such parliamentary grants for 1887 was — including Ireland — $24,617,965 ; increase over 1886 of $1,431,005. If we gauge the efficiency of the British educational system in 1887 with what it was in 1870 by the number of teachers employed, the results are equally remarkable. In 1870 there were only 12,467 certificated and 1,262 assistant-masters, while in 1887 there were 43,628 certificated and 18,070 assistant-masters engaged in teaching in the elementary schools. The amount of money expended in erecting, enlarging, and improving " voluntary " schools in Great Britain, which came under the inspection of the Government since 1870, amounts to £6,000,000 ($29,160,000). One illustration of the effect of this greater attention to education upon the masses of the people of Great Britain is found in the fact that, while in 1855, 35-4 per cent of the persons contracting marriage signed the register with their mark, in 1885 only 12-9 per cent did so. The change which has taken place in the relations of the Government of Great Britain to the national life of its people is also very remarkable. Thus, at vthe commencement of the present century the British Government annually appropriated and spent about one third of the national in- come ; now it expends annually about one twelfth. But for tliis greatly diminished ex])enditure the masses of the people now receive an immensely greater return than ever before : in the shape of increased postal and educational facilities, siifer navigation, greater expenditures for the maintenance of the j)iiblic health and public security, greater effort for preventing abuses of labor, etc. Another notable thing is the extent to which the poorer classes of Great Britain have been relieved from immediate burdens of taxation. The taxes which they have to bear, as is the case in the United States, fall primarily on commodities, and are included in national accounts under the heads of customs and excise. RECENT PROGRESS OP THE BRITISH PEOPLE. 361 In 1836 the receipts per head of popuktion from these sources were dOs. Qd., and in 1886 24s. 6d. Bat of these rev- enues the largest proportion is derived from the taxes on liquors and tobacco, which are pure luxuries ; and if such taxes be deducted and allowed for, the taxation of Great Britain through her excise and customs, which was 15s. Gd. per head on the necessaries or semi-necessaries of life in 1836, was not more than 5s. per head in 1886. . Again, with an increase in population from 27,800,000 in 1855 to 36,300,000 in 1885, or thirty per cent, and without a single additional acre of land to place them upon, the physical, intellectual, and moral condition of the British people has steadily improved ; the consumption of spirits, in iUustration, having declined in Great Britain, during the last decade, to an extent sufficient to materially affect the national income.* Between 1881 and 1888 the national debt of Great Britain was reduced by the sum of $302,846,940 ; or from $3,830,722,305 to $3,527,- 875,365. The general conclusion from all these facts, as Mr. Giffen has expressed it, is, that what " has happened to the working- classes in Great Britain during the last fifty years is not so much what may properly be called an improvement, as a revolution of the most remarkable description." And this progress for the better has not been restricted to Great Brit- ain, but has been simultaneously participated in to a greater or less extent by most if not all other countries claiming to be civilized. So far as similar investigations have been in- stituted in the United States, the results are even more favorable than in Great Britain. If thev have not been equally favorable in other than these two countries, we have a right to infer that it has been because the people of the * The decline in the British revenaes from taxes on ** home " and ** for- t\gn" spinttij from 1876 to 1887, was £4,140,000 ($21,000,000) ; whereas, if oonsnmption had kept pace with the growth of population, there would have been an increaite during this same period of over £2,000,000. 362 RECENT ECONOMIC CHANGES. former have not only started in their career of progress from a lower level of civilization and race basis than the latter, bat have had more disadvantages — ^natural and artificial — than the people of either Great Britain or the United States. The average earnings per head of the people of countries founded by the Anglo-Saxon race are confessedly larger than those of all other countries.* But some may say : This is all very interesting and not to be disputed. But how does it help us to understand better, and solve the industrial and social problems of to-day, when the cry of discontent on the part of the masses is certainly louder, and the inequality of condition, want, and suffering is claimed to be greater than ever before? In this way : The record of progress in Great Britain above described is indisputably a record that has been made under circum- stances that, if not wholly discouraging, were certainly un- favorable. It is the record of a country densely populated and of limited area, with the ownership, or free use of land, restricted to the comparatively few; with (until recent years) the largest national debt known in history; with a heavy burden of taxation apportioned on consumption rather than on accumulated property, and the reduction of which, a participation in constant wars and enormous military and naval expenditures have always obstructed or prevented ; with a burden of pauperism at the outset, and, indeed, for the first half of the period under consideration, which almost threatened the whole fabric of society ; and, finally, with a long-continued indisposition on the part of the governing classes to make any concessions looking to the betterment • A rocent British authority malces the hiifhest avera^ earning peT bead in any country to bo in AuHtralia, naiut-ly, £43 4*. Next in order, he places the United Kinfftlom, with an avcn^^3 iH)r capita eaminfi^ capacity of £35 Am. ; then the United States, witli an avera^jc capacity of £27 4*. ; and next, Can- ada, with an avera^ of £'J6 1S«. For tlie Continent of Europe the avera^ ia estimated at £18 \». — Sir Richard Tempuc, ^^ Journal of tht Royal Statitiical Socuty,'' September, 18S4, p. 476. HIGHER VANTAGB-GROUND OP HUMANITY. 363 of the masses, except under the pressure of influences which they had little or no share in creating. And yet, without any '* violent specifics/' or radical societary changes, and apart from any force of statute law, except so far as statute law has been an instrumentality for making previously existing changes in public sentiment effective ; but rather through the steady working of economic laws under con- tinaally increasing industrial and commercial freedom, the working masses of Great Britain, ^ in place of being a de- pendent class, without future and without hope, have come into a position from which they may reasonably expect to advance to any degree of comfort and civilization." Now, with humanity occupying a higher vantage-ground in every respect than ever before ; with a remarkable increase in recent years in its knowledge and control of the forces of nature— the direct and constant outcome of which is to increase the abundance of all useful and desirable commodi- ties in a greater degree than the world has ever before ex- perienced, and to mitigate the asperities and diminish the hours of toil — is it reasonable to expect that further progress in this direction is to be arrested ? Is the present genera- tion to be less successful in solving the difficult social prob- lems that confront it than were a former generation in solving like problems which for their time were more diffi- cult and embarrassing? If the answer is in the negative, then there is certainly small basis for pessimistic views re- specting the effect of the recent industrial and social tran- sitions in the future. But, in view of these conclusions, what are the reasons for the almost universal discontent of labor ? IX. The discontent of labor — CauBes for — Diaplaoement of labor — ^Reflolts of the invention of stocking-making machinery — Increased opportuni^ for em- ployment contingent on Arkwright^s invention — Destructive influencee of material progress on capital — JBffect of the employment of labor-saving machinery on wages — On agricultural employments — ^Eztent of labor displacement by machinery — The cause of Irish discontent not altogether local — Impoverishment of French proprietors — Is there to be an anarchy of production ? — Eflfect of reduction of price on consumption — On oppor- tunities for labor — Illustrative examples — Influence of taxation on restrain- ing consumption — Experiences of tolls on Brooklyn Bridge — Character- istics of different nationalities in respect to the oonsmnption of commodi- ties— Creation of new industries — Effect of import taxes on works of art — Tendency of over-production to correct itself— Present and prospective consumption of iron — Work breeds work — Pessimistic views not pertinent to present conditions. The causes of the almost universal discontent of labor, which has characterized the recent transitions in the world's methods of production and distribution, and which, inten- sified by such transitions, have been more productive of disturbances than at any former period (for, as previously shown, there are reallv no new factors concerned in the ex- periences under consideration), would seem to be mainly these : 1. The displacement or snpplaiiHng of labor through more economical and effective viethods of production and distribution. 2. Changes in the character or 7iature of employments C07isequent upon the introduction of neio methods — ma- chinery or processes — ichich in ttirn have teiided to lower the grade of labor ^ and impair the independence and restrict the mental developme^it of the laborer. THE DISCONTENT OP LABOR. 365 3. The increase in intelligence^ or general information^ on the part of the masses^ in all civilized countries. To a review of the character and influence of these sev- eral causes, separately and in detail, attention is next in- vited. And, firsts as to the extent and influence of the dis- placement of labor through more economical and effective methods of production and distribution. Of the injury thus occasioned, and of the suffering attendant, no more pitiful and instructive example of recent date could be given than the following account, furnished to the United States De- partment of State,* of the effect of the displacement of hand-loom weaving in the city of Chemnitz, Saxony, by the introduction and use of the power-loom : In 1875 there were no less than 4,519 of the so-called "master' weavers " in Chemnitz, each of whom employed from one to ten jour- neymen at hand-loom weaving in his own house. The introduction of machinery, however, imposed conditions upon these weavers which they found the more difficult to meet the more the machinery was im- proved. The plainer goods were made on power-looms, and work in the factories was found to be more remunerative. Instead of giving work to others, they were gradually compelled to seek work for them- selves. The independent ** master " soon fell into ranks with the de- pendent factory-hand, but as he grew older and his eye-sight failed him he was replaced by younger and more active hands, and what once promised to become a well-to-do citizen in his old age now bids fair to become a burden upon the community. Those who had means of pro- curing the newer Jacquard contrivance, or even the improved ** leaf " or ^ shaft-looms," managed to eke out a subsistence ; but the prospects of the weavers who have learned to work only with the hand-looms are becoming more hopeless every day. Now, while such cases of displacement of labor appeal most strongly to human sympathy, and pre-eminently con- stitute a field for individual or societary action for the pur- pose of relief, it should be at the same time remembered * Beport of United States Consul George C. Tanner, Chemnitz, Deoembcr, 1886. 366 RECENT ECONOMIC GHANGEa that the world, especially during the last century, has had a large experience in such matters, and that the following points may be regarded as established beyond the possibility of contradiction : 1. That such phases of human suffering are now, always have been, and undoubtedly always will be, the inevitable concomitants of the progress of civilization, or the transitions of the life of society to a higher and better stage. They seem to be in the nature of " growing-pains,** or of penalty which Nature exacts at the outset, but for once only, whenever mankind subordinates her forces in greater degree to its own will and uses. 2. That it is not within the power of statute enactment to arrest such tran- sitions, even when a large and immediate amount of human suffering can certainly be predicated as their consequent, except so far as it initiates and favors a return of society toward barbarism; for the whole progress in civilization consists in accomplishing greater or better results with the same or lesser effort, physical or mental. 3. All experience shows that, whatever disadvantage or detriment the intro- duction and use of new and improved instrumentalities or methods of production and distribution may temporarily entail on individuals or classes, the ultimate result is always an almost immeasurable degree of increased good to man- kind in general. In illustration and proof of this, attention is asked to the following selection from the record of a great number of well-ascertained and pertinent experiences : The invention of the various machines which culmi- nated in the knitting or weaving of stockings by machinery in place of by hand, occasioned great disturbances about the commencement of the present century among a large body of operatives in the counties of Leicester and Nottingham, in England, who had been educated to old methods of stock- ing-making and were dependent upon the continued prose- cution of them for their immediate livelihood. The new stocking-frames as they were introduced were accordingly destroyed by the handicraft workmen as opportunity favored DISPLACEMENT OP LABOR BY MACHINERY. 867 (over one thousand in a single burst of popular fury), houses were burned, the inventors were threatened and obliged to fly for their lives, and order was not finally restored until the military had been called out and the leading rioters had been arrested and either hanged or transported. Looking back over the many years that have elapsed since this special labor disturbance (one of the most notable in history), the first impulse is to wonder at and condemn what now seems to have been extraordinary folly and wrong on the part of the masses, in attempting to prevent by acts of violence the snpersedure of manual labor engaged in making stockings through the introduction and use of ingenious stocking- making machinery. But, on the other hand, when one remembers the number of persons who, with very limited opportunity for any diversity of their industry, and with the low social and mental development incident to the period, found themselves all at once and through no fault of their own deprived of the means of subsistence for themselves and their families, and are further told by the historian of the period * that, from the hunger and misery entailed by this whole series of events, the larger portion of fifty thousand English stocking-knitters and their families did not fully emerge during the next forty years, there is a good deal to be set down to and pardoned on account of average human nature. The ultimate result of the change in the method of making stockings and its accompanying suffering has, how- ever, unquestionably been that for every one person poorly fed, poorly paid, badly clothed, and miserably housed, who at the commencement of the present century was engaged in making stockings on hand-looms or in preparing the ma- terials out of which stockings could be made, one hundred at least are probably now so employed for a third less num- ber of hours per week, at from three to seven times greater * " Huitory of the Machine-wrought Hosiery Manu&otures," by William Felkin, Cambridge, England, 1867. 368 RECENT ECONOMIC CHANGES. average wages, and living under conditions of comfort that their predecessors could hardly have even anticipated.* The following positive statistical data, derived from an- other department of textile industry, will also show that in these statements there is nothing of assumption and over- estimate, \fut rather a failure to present the magnitude of the actual results. Thus, Arkwright invented his cotton- spinning machinery in 1760. At that time it was estimated that there were in England 5,200 spinners using the spin- ning-wheel, and 2,700 weavers ; in all, 7,900 persons engaged in the production of cotton textiles. The introduction of this invention was opposed, on the ground that it threatened the ruin of these work-people ; but the opposition was put down (in some instances by force), and the machine brought into practical use. Note next what followed. In 1787^-or twenty-seven years subsequent to the invention — a parlia- mentary inquiry showed that the number of persons actually engaged in the spinning and weaving of cotton had risen from 7,900 to 320,000, an increase of 4,400 per cent. In 1833, including the workmen engaged in subsidiary in- dustries, such as calico-printing, this number had increased to 800,000; and at the present time the number who di- rectly find employment in Great Britain in manufacturing cotton is at least 2,500,000. In strong contrast also with the report of the pitiful dis- tress of the displaced hand-loom weavers of Saxony comes this other statement from many sources: That in all the great manufacturing centers of Germany, and especially in • The wages of the Btockinfj-knittcrs in Leicestershiro in the early yean of this century were among the very lowest paid in any branch of industr>' in Great Britain, and did not exceed on an average six shillings a week. In 18«0 the wages paid first-class operatives (men) in the hosierj -factory of the late A. T. Stewart, at Nottingham, England, were 44*. 5J. per week, and for girls of similar capabilities 16«. 6d. Within more recent years Airther improve- ments in machinery, by creating a di8propqt cent. X ** The ajiricultural returns for Great Britain tell us that, from 1878 to 1884, tlie quantity of arable land in the country has decreased considerably more than a million acres. The reason of this is chiefly that landlords hav- ing farms thrown on their hand^, and being unable to obtain fresh tenants, find it the most economical method to lay down the land in permanent past- ure, which requires the minimum of labor, superintendence, and expenditure to work. This in part explains the forced exodus of the agricultural laborers no longer required to cultivate the land thus laid down. About twenty-five laborers are required on an arable fanu of one thousand acres, while probably five would be ample on the same quantity of pasture ; and we should have a diminution of twenty thousand laborers from the change of cultiyation which has taken place, or, with their families, a population of sixty or eighty thou- DISCONTENT OP IRELAND. 377 Mr. Alfred Russel Wallace inclines to the opinion that twenty thousand English farm-laborers, involving, with their families, a population of from sixty to eighty thousand, were, between 1873 and 1887, obliged to quit their homes, and mostly drifted to the larger cities, in consequence merely of substituting, through the increasing unprofitableness of grain-culture, pasture for arable land. We have in these facts, furthermore, a clew to the cause of the increased discontent in recent years in Ireland. If the Irish tenantry could pay the rent demanded by the land- lords, and at the same time achieve for themselves a com- fortable subsistence, there would be no necessity for extraor- dinary governmental interference on their behalf ; and this was what, prior to the years 1873-'75, the prices of farm products — especially of all dairy products — enabled the bet- ter class of Irish tenants to achieve. But, since then, the fall of prices has entirely changed the condition of affairs, and made a reduction and perhaps an entire abolition of the rents of arable land in Ireland an essential, if the Irish ten- ant is to receive anything in return for his labor. A French economist — M. de Grancey — who has recently published the results of a study of Ireland, founded on a personal investi- gation of the country, is of the opinion that, although the population of the island has been reduced by emigration from 8,025,000 in 1847 to 4,852,000 in 1887, it is not now ca- pable of supporting in decency and comfort more than from two to three million inhabitants. The same authority tells us that agricultural distress, occasioned by the same agen- cies, exists to-day in France in as great a degree as in Great Britain. The peasant proprietors have ceased to buy land and are anxious to sell it ; and in the department of Aisne, Hand, which, from this cause alone, have been obliged to quit their homee, and have mostly driAed hopelessly to the g^reat towns." In addition, a large number of farms " are now, and have been for some years, lying absolutely waste and uncultivated."—*^ £ad TSumh," Altbsd Busbxl Wallacx, Lon^ cfi of ar- tisans, in the United Kinjiijdom, forty or fifty years ago, as described by Car- lyle in his ** Past and Present" and '* Sartor Resartus," and by another most reliable English authority, Mr. W. T. Thornton, in his " Over-population and its Remedy," was so deplorable that it is now difficult to realize that it ever existed. t What an enormous stride has been made in the amelioration of the con- dition of the masses of the people of England, taking a more lengthened period into consideration, is strikingly illustrated by the following description, based on authentic data, by Rev. Augustiis Jessop, of the condition of the people of the parirth of Rougham, in the time of Henry III (1216-1272): " The people who lived in this village six hundred years ago were l\y\ng a life hujjely below the level of yours. They were more wretched in their pov- erty ; thoy were incomparably less prosperous in their prosperity ; they were worse clad, worse fed, worse housed, worse tauffht, worse tended, worse gov- erned ; they were sufTerers from loathsome diseases which you know nothing of; the verj' beasts in the fluid were dwarfed and stunted in their growth, and 1 do not believe there were any giants on the earth in those days. The death-rate among the children must have been tremendous. The disregard of human life was so callous tliat we can hardly conceive it. There was every- thing to liar den, nothing to soften ; ever}* where oppression, greed, and fleroe- INFLUENCE OF TRAVEL. 403 The widening of the sphere of one's surroundings, and a larger acquaintance with other men and pursuits, have long been recognized as not productive of content* Writing to his nephew more than one hundred years ago, Thomas Jef- ferson thus concisely expressed the results of his own obser- vation : " Traveling," he says, " makes men wiser, but less happy. When men of sober age travel they gather knowl- edge, but they are, after all, subject to recollections mixed with regret ; their affections are weakened by being extended over more objects, and they learn new habits which can not be gratified when they return home." Again, as the former few and simple requirements of the masses have become more varied and costly, the individual effort necessary for the satisfaction of the latter is not relatively less, even under the new conditions of production, than before, and in many instances is possibly greater. Hence, notwithstanding the large advance in recent years in the average rates of wages, and a greatly increased purchasing power of wages, there is neM. The law of the land was hideously cmel and mercileM, and the gallowB and the pillory— never fiur from any man's door — were seldom allowed to remain long out of use. The ghastly frequency of the punishment of death tended to make people sarago and bloodthirsty. It tended, too, to make men absolutely reckless of consequences when once their passions were roused. * As weU be hying for a sheep as a lamb,' was a saying that had a grim truth in it. The laborer's dwelling had no windows ; the hole in the roof which let out the smoke rendered windows unnecessary. The laborer's fire was in the middle of his house ; he and his wife and children huddled around it, sometimes groveling in the ashes; and going to bed meant flinging themselves down upon straw. The laborer's only light at night was the smoldering fire. Why should he bum a rush-light when there was nothing to look att ** Should we like to change with these forefathers of ouis, whose lives were passed in the way described, six hundred years ago t Were the former times better than these? Has the world grown worse as it has grown older! Has there been no progress, but only decline ? " * Increased facility for communication between Great Britidn and the United States has without doubt been a large fiictor in occasioning the present pro- found discontent of Ireland ; and political subjugation and their existing land system have been more intolerable to the Irish peasant and artisan, since they have been enabled to compare the institutions under which they live with those which their expatriated feUow-coiintrymen enjoy elsewhere. 404 RECENT ECONOMIC CHANGES. no less complaint than ever of the cost of living ; when (as M. Leroy-Beaulieu has pointed out in the case of France *) the foundation for the complaint is for the most part to he found in the circumstance that a totally different style of living has heen adopted, and that society makes conformity with such diHerent style a standard of family respectability. The change in the character of the people of Germany in respect to content since the Franco-German War in 1871, is especially noticeable. Before the war the unpretending, sta- tionary habits of the people tended to make every one con- tented with his lot and averse to social changes. The war, with its excitements and triumphs, and the establishment of the empire, which was conditioned upon and accompanied by the enactment of a multitude of laws freeing the social life of the people from a multitude of restrictions by which it was formerly bound, effected a complete metamorphosis, and this, coinciding with a brief period of great commercial activity and wild sjwculation (see pages 4, 5), created a pro- found impression upon the masses of the people, and seems to have changed permanently and in a great degree their former character. Germany before the war was a country of comparatively cheap living and production. To-day it is not. There is, therefore, unquestionably in these facts an ex- planation in no small part of what to many has seemed one of the greatest puzzles of the times — namely, that with un- doubtedly greater and increasing abundance and cheapness of most desirable things, popular discontent with the existing economic condition of affairs does not seem to diminish, but rather to greatly increase. And out of such discontent, which is not based on anything akin to actual and unavoidable poverty, has originated a fueling that the new conditions of abundance should be further equalized by some other metli- ♦"Tho Fall in tho Price of CommfKlitios ; ita Ouubc and Effect." By Lcroy-Beaulieu. — Eoonomute Fran^aise^ April, 18S7. WHAT IS SOCIALISM f 405 ods than intelligent individual effort, self-denial, and a nat- ural, progressive material and social development (the actu- ality of which is proved by all experience) ; and that the state could, if it would, make all men prosperous ; and there- fore should, in some way not yet clearly defined by anybody, arbitrarily intervene and effect it And this feeling, so far as it assumes definiteness of idea and purpose, constitutes what is called " socialism."* As it is important to make clear the full force and meaning of the term ** self-denial " and ** natural progressive material and social devel- opment," as above used, attention is asked to the following consider- ations : The investigations of Mr. Atkinson show that an increase of five cents* worth of material comfort per day, for every day in the year, to each inhabitant of the United States, would require the annual production and equitable distribution of more than $1,000,000,000 worth of commodities ! In the last analysis, therefore, national pros- perity and adversity are measurable by a difference which is not in ex- cess of the price of a daily glass of beer ; or, if five cents' worth of product for each inhabitant could be added to the capital of the coun- try in excess of the average for each day in the year, such a year, by reason of its increased exchanges and sum of individual satisfactions, could not be other than most prosperous. * On this point the Commissioner of the Bureau of Labor Statistics of the State of Connecticat, in his report for 1887, speaks as follows : *' Necessary wanta have multiplied, and society demands so mach in the style of living that the laboring-man finds it almost impossible to live as respectably now on his wagee as his father did thirty years since upon his. That is, wages have not kept pace with the increasing wants and style of living demanded by sod- ety. The laborer thinks he sees a wider difference between the style in which his employer lives and the way he is compelled to live, than exit^ted between employer and employ^ tliirty years ago. He thinks that this difference is growing greater with the years. Now, as a man's income is, in general, measured by his style of living, he can not resist the conclusion that a larger share of the profits of business goes to his employer than employers received in former years; that the incomes of employers have increased more rapidly than the wages of employes. The laboring people are fully alive to the fact that modem inventions and the like make larger inoomea possible and right. They do not complain of these larger incomes, but they do believe most pro- foondly that they are not receiving their fair share of the benefits conferrwi upon Bodety by these inventions and labor-saving machinea. In this belief Ilea the prindiMd aouroe of their unreal." 406 RECENT ECONOMIC CHANGES. ■ Again, the extraordinary and comparatiyelj recent reductions in the cost of transportation of commodities by land and water (in Uie case of the New York Central and Hudson River Railroad, for exam- ple, from an average of 3*45 cents per ton per mile in 1865 to 0-68 of a cent in 1885), which have reduced the prices of the common articles of food to the masses to the extent of substantially one half, did not involve in their conception and carrying out any idea of benefiting humanity ; but on the contrary those immediately concerned in effect- ing the improvements that have led to such results never would have abated the rates to the public, but would have controlled and main- tained them to their own profit, had they been able. But, by the force of agencies that have been above human control, they have not only not been able to do so, but have been constrained to promptly aooept business at continually decreasing rates, as a condition of making any profit for themselves whatever. And what is true of the results of improvements in the transportation of products is equally true of all methods for economizing and facilitating their production. They are all factors in one great natural movement for continually increasing and equalizing abundance. With this analysis of the causes of the prevailing and almost universal discontent of labor, the following other results — industrial and social — which have been attendant upon the world's recent material progress are worthy of consideration by all desirous of fully comprehending the present economic situation, and the outlook for the future. Advance in Wages. — The average rate of wages, or tlie share which the laborer receives of product, has wnthin a comparatively recent period, and in almost all countries — certainly in all civilized countries — greatly increased. The extent of this increase since 1850, and even since 1860, has undoubtedly exceeded that of any previous period of equal duration in the world's history. Mr. Giffen claims, as the result of his investigations for Great Britain, that " the average money- wages of the work- ing-classes of the community, looking at them in the mass, and comparing the mass of fifty years ago with the mass at the present time, have increased very nearly one hundred ADVANCE m WAGES. 407 per cent.* It is also conceded of this increase in Great Britain that by far the largest proportion has occurred within the later years of this period, and has been concur- rent with the larger introduction and use of machinery. Thus the investigations of Mr. James Caird show, that the advance in the average rate of wages for agricultural labor in England in the twenty-eight years between 1850 and 1878 was forty-five per cent greater than the entire advance that took place in the eighty years next preceding 1850. Mr. GifTen has also called attention to an exceedingly interesting and encouraging feature which has attended the recent improvement in money- wages in Great Britain — and which probably finds correspondence in other countries; and that is, that the tendency of the economic changes of the last fifty years has been not merely to augment the wages of the lowest class of labor, but also to reduce in a marked degree the proportion of this description of labor to the total mass — ^^ its numbers having diminished on account of openings for labor in other directions. But this diminu- tion has at the same time gone along with a steady improve- ment in the condition of the most unskilled laborers them- selves." So that, if there had been no increase whatever in the average money-wages of Great Britain in recent years, the improvement in the general condition of the masses in that country "must have been enormous, for the simple reason that the population at the higher rate of wages has increased disproportionately to the others." One of the most interesting and unquestionably one of the most accu- rate investigations respecting the range of wages since 1850, * This statement was first made by Mr. G\fka in 188S, in his inaugural •ddresH as Premdent of the Royal Statistical Society of England, and was received with sometbing of popular incredulity. But recurring to the same subject in another communication to the same society in 1866, Mr. Giffen asserts that further investigations show that there is no justification whatever for any doubts that may have been entertained as to the correctoefls of his assertions. 1 4:08 RECENT ECONOMIC CHANGKa in the leading industries of Great Britain, was prepared in 1883 by Mr. George Lord, President of the Manchester (England) Chamber of Commerce, which showed that the percentage increase in the average wages paid in eleven of the leading industries of that city between 1850 and 1883 was forty per cent; the increase ranging from 10*30 per cent in mechanical engineering (fitters and tamers) to 74-72 per cent in the case of other mechanics and in medium cotton spinning and weaving. At the meeting of the " Industrial Remuneration Con- ference '' at London, in 1885, Sir Lowthian Bell stated that in the chemical manufacturing industries on the Tyne, England, employing nineteen thousand workmen directly, wages had been increased within his own knowledge in the last twenty-five years thirty-seven and a half per cent, while during the same period the average value of the prod- ucts had declined forty per cent. He also added that all the evidence received from France, Germany, Belgium, and Austria goes to prove that while during the last forty years the cost of living in all these countries had been notably augmented (with an accompanying rise of wages) in the United Kingdom under free-trade measures, with a large average rise in wages, the cost of living has sensibly dimin- ished. In the United States, according to the data afforded by the census returns for 1850 and 1880, the average wages paid for the whole country increased during the interval of these years by 39*9 per cent ; or in a slightly smaller ratio of increase than was experienced during the same period in the industries of that district of England of which its city of Manchester is the center. The figures of the L^nited States census of 1850 can not, however, be accepted with confidence.* * It is at the Hamo time not a littlt^ significant that the CommiHaioner of the Mofiduchusetts Bureau of Labor StutLslicb uliould have reiK>rtcd in lb84, so tlio WAGES IN THE UNITED STATES. 409 As respects agricultnral labor in the United States, the assertion is probably warranted that, taking into account the hours of work, rates of wages, and the prices of commod- ities, the average farm-laborer is one hundred per cent better oft at the present time than he was thirty or forty years ago. In Massachusetts the average advance in the money-wages of this description of labor between 1850 and 1880 was fifty-six per cent, with board in addition. Between 1842 and 1846 the wages of agricultural labor in the United States sank to almost the lowest points of the century. According to the investigations of the Massachusetts Bureau of Labor Statistics, the average advance in general wages in that State from 1860 to 1883 was 28-36 per cent, while the conclusions of Mr. Atkinson are that the wages of mechanics in Massachusetts were twenty-five per cent more in 1885 than they were in 1860. A careful investigation instituted by the Bureau of Labor Statistics for Connecticut of the comparative wages paid in the brass, carpet, clock, silk, and woolen industries of that State in 1860 and 1887, and the comparative cost of the necessaries of life to the operatives at the same periods (see report for 1888), gave the following results: average ad- vance in the wages of males about forty-three per cent, and of females fifty-seven per cent ; decline in the price of staple dry goods, thirty-nine per cent ; of carpets, thirty-six per cent; increase in the average price of groceries and provisions, ten and a half per cent. " There was an average advance in the retail price of such kinds and cuts of meat as are common to the market reports of both dates of thirty- three per cent." Taking the experience of the cities of St Paul and Minneapolis as a basis, recent investigations also show a result of lus investigatioiiB, that while from 1872 to 1888 wai^ advanced on an tkYenge 9*74 per cent in Great Britain, they declined on the avenge in MaasachoactlB durin^^ the sumo period 5*41 |>er oenL 410 RECENT ECONOMIC CHANGBSw marked increase in the average wages of all descriptions of labor in the Northwestern sections of the United States, comparing 1886 with 1875, of at least ten per cent. In all railroad- work, the fact to which Mr. Oiffen has called atten- tion as a gratifying result of recent English experience also here reappears — namely, that the proportion of men earning the highest rates of wages is much greater than it was ten years ago, or more skilled workmen and iewer common workmen are relatively employed. A series of official statistics, published in the *^ Annuaire Statistique de la France," respecting the rates of wages paid in Paris and in the provinces of France in twenty-three leading industries, during the years 1853 and 1883 respect- ively, show that, during the period referred to, the advance in average wages in Paris was fifty-three per cent and in the provinces sixty-eight per cent, the figures being applicable to 1,497,000 workmen out of a total of 1,554,000 ascertained to be occupied in these industries by the French census of 1876.* More recent returns show that for the whole of France, exclusive of Paris, the increase of wages from 1853 to 1884, " pour la petite industrie," was about sixty-six per cent. Accepting the wage statistics of France (and they are official), it would, therefore, appear that the rise of wages in that country during the years above reviewed was greater than was experienced in either England or the United States. M. Yves Guyot, the eminent French economist, is also the authority for the statement that the average daily wages of work-women in France engaged in the manufacture of clothing, lace, embroideries, laundry-work, and the like, increased ninety-four per cent between the years 1844 and ♦ " On the Comparative Etflciency and Eaminjra of Labor at ilome and Abroad," by J. S. Jean*, ** Journal of the Royal Statistical Society " (G. B.), December, 1884. CHANGES IN COST OP LIVING. 411 1872. In both France and England there has been in recent years a very marked tendency in men to abandon trades in which they formerly competed with women, be- cause better channels have been opened to the women for their activities, and consequently the demand for women's labor has become more and more considerable. In the cotton-mills at Mulhansen, Germany, the rates of increase in wages between 1835 and 1880 range between sixty and two handred and fifty-six per cent, the increase in the later years, as in other coantries, haying been par- ticularly noticeable. M. Charles Grad, a French economist, has called attention to the fact that in the textile and metal- lurgic industries of France it is the lowest class of workmen whose wages have risen most in the last fifty years. One factor which has undoubtedly contributed some- what to the almost universal rise of wages during the last quarter of the century has been the immense progress that has been made in the abolition of human slavery— direct, as well as in its modified forms of serfdom and peonage — which thirty years ago existed unimpaired over no incon- siderable areas of the earth's surface, and exerted a powerful influence for the degradation of labor and reduction of av- erage wages to a minimum. Relation of Wages to the Cost of Living. — All conclusions as to the effect of changes in the rates of wages in any country are, however, incomplete, unless accompanied by data which permit of a conversion of wages into living ; for, even the places where an advance in money-wages can not be found (if there are any such), the decline in recent years in the price of commodities is equivalent to an advance in wages. In the case of the United States, and for the period from 1860 to 1885, such data have been furnished by Mr. William M. Grosvenor, through a careful tabulation of the prices of two hundred commodities, embracing nearly every commodity in common use. From these comparisons, that have thus been made available, it appears that, if the pur- o 412 RBCBNT ECONOMIC CHANGES. I chasing power of one dollar in gold coin in May, 1860, be } taken as the standard — or as one hundred cents' worth — ^the corresponding purchasing power of a like dollar in the year ' 1885 was 26-44 itinm |;^Teater. The artisan in Massachusetts . in this latter year, therefore, could either "haye largely i raised the standard of his liying, or, on the same standard, could have saved one fourth of his wages." Similar inyesti- gations instituted in Great Britain (and which had been before made) indicate corresponding results. Another conclusion by Mr. Atkinson would also seem to be incapable of contravention, namely : That the greatly ^ increased product of the fields, forests, factories, and mines of the United States which has occurred during the period from 18G0 to 1885 " must have been mostly consumed by those who performed the actual work, because they consti- tute so large a proportion — substantially about ninety per cent — of the whole number of persons by whom such prod- ucts are consumed," and that " no other evidence is needed to prove that the working man and woman of the United States, in the strictest me'aning of these words, are, decade by decade, securing to their own use and enjoyment an in- creasing share in a steadily increasing product." * The report of the Bureau of Industrial Statistics of the State of Maine, for the year 1887, also present some notable evidence of the continued increase in the purchasing power of wages, and show that, taking the experience of a ty})ical American family in that State, deriving their living from manufacturing employments as a basis, as much of food could be bought in 1887 for one dollar as would have cost *1.20 in 1882 and $1.30 in 1877 ; the difference being mainly due to reductions in the prices of flour, sugar, molasses, fresh meats, lard, oil, and soap. In a paper presented to the British Association in 1886 by Mr. M. G. Mulliall, tlie increase in the purchasing }>ower ♦ " Century Ma<h five per cents, secured by a mortgage on the celebrated quick- silver-mines of New Almaden, in addition to the faith of the Government, 76 and 77 ; Italian six per cents, secured by a pledge of the state revenues from tobacco, 875i ; Japanese nine i)cr cent**, 89 ; Panama Rxulroad seven per cent general mortpa;^^ 93 ; Michigan Central Railroad, first- mortgage sinking-Aind, ei;j:ht per cent, 85; Pennsylvania Railroad six per cent general mortgage (sterling), 91. To-day the Governmuuts of Great Britain and the United States can readily borrow money at 2},^ per cent ; all first-class railroad cor- porations at four percent ; while millions of money have been loaned in recent years on real-estate security in the United States for four per cent, and in Great Britain for throe per cent. In Germany the market rate of dibcount for DECLINE IN LAND VALUES. 423 Decline in Land-Values. — ^Another interesting and curious feature of the existing economic condition — the direct outcome of the recent radical changes in the meth- ods of production and distribution — has been the decline in the yalue of land over large areas of the earth's surface. Thus, in the case of Great Britain, while every other item of national wealth has shown an increase — often most extraordinary — since 1840, the estimated value of land in the United Kingdom since that date, notwithstanding a large increase in population, has heavily decreased.* For- merly Paris obtained its fruit and vegetable supply entirely from lands in its own neighborhood ; and the difference in the cost of transportation gave such lands a marked advan- tage over more distant places. But now the railways bring a considerable period in 1887 was as low as from 1}^ to 1% per cent. Not many years ago the customary rate of interest allowed by the savings-banks and trust companies of the United States was six per cent ; now the former for the most part pay but four, and the trust companies but two to three per cent. British consols in November, 1887, paid to the investor 2i*/i« per cent, while of the best (debenture) railroad stocks of Great Britain none now return as much as four per cent on their current market prices. The dividends of the Imperial (Beichbank) Bank of Germany, in the four years from 1888 to 1886 inclusive, declined 0*96 per cent, and the average of the private banks of Germany during the same period, 1*60 per cent ; all of which clearly indicates that the banking business of Germany is becoming less and less profitable. * According to Mr. Mulhall, the English statistician, the following table exhibits the changes in the leading items of wealth in Great Britain since 1840: [Omitting 6 ciphers.] Bail ways . . . Houses Furniture .. Lands Cattle, etc.. Shipoin^ . . . Merchandise Bullion Sundries . . Total .. 1840. £21 770 885 1,680 380 23 70 61 710 £4,100 1860. £348 1,164 582 1,840 400 44 l&O 105 827 £5,560 18Ar. £831 2,640 1,820 1,542 414 130 821 148 1,869 £0,210 424 RECENT ECONOMIC CHANGES. the same commoditios from very distant places for the same or a less price, and the value of land in the environs of Paris has naturally declined. Fresh grapes are even now brought in large quantities, in casks or baskets, from Algeria — the climate of which favors the growth of the produce of the vine, but is not favorable to wine-making — ^to the cooler regions of central and eastern France, where they are manu- factured into wine. In certain of the departments of France the peasant proprietors of land have ceased to buy land and are anxious to sell it ; and in some instances large tracts have been practically abandoned because the sale of the products of the soil, under the competition to which they are exposed by reason of new conditions, does not return the expenses of their cultivation. In Austria and Germany the competitive supply of agricultural produce from the United States has been so influential, that it is claimed that if the state should wholly discontinue its encouragement of the beet-root sugar-industry by bounties, immense tracts of land would become comparatively valueless. In Portugal, the owners and cultivators of the soil seem to be in a remarkablv unfortunate condition. The Portu- guese farmer, despite heavy protective duties, finds himself unable to successfully contend against the increased import of cereals, miiinly from the United States. The industry in olive-oil, formerly flourishing, is languishing, through the alleged extensive use of American cotton-seed oil as a sub- stitute ; while the demand for Portuguese wines, which for a time was increased by the bad vintages of France, is being impaired, and possibly threatened with destruction, by the continually increasing supply in the French markets of cheaper and more suitiible wines for mixing puq)oses from California, the Cape of Good iroi)e, and Australia. In the Canary Islands, whore the soil is most cheap and fertile, and the vegetation of both the tropic and temperate zones flourishes in great luxuriance, the land question has also be- come of as much importance and embarrassment as in less LAND VALUES IN THE UNITED STATES. 426 favored countries. The former great remunerative indujs- try of these islands was wine, " canary " ; but this, by the im- pairment of the vines, has become of little account. These islands also formerly constituted a large source of supply to the world of cochineal, for the production of which they have special advantages ; but since the discovery and use of the aniline dyes, this industry has been almost destroyed. Curiously, also, a comparatively extensive export of potatoes from the islands to the Spanish West Indies is diminishing through a competitive exportation of the same vegetable from the United States. So that there seems to be nothing left for the land proprietors and cultivators in this locality to do, except to resort to the method, so much in favor at the present time, of mutually taxing each other for their mutual benefit! Over large portions of the West India Islands, great quantities of excellent land, advantageously situated as regards facility of communication with other countries, under exceptionally healthy climatic conditions, and much of which had been formerly under a high state of cultivation, have been absolutely abandoned, or are in the rapid process of abandonment. In the United States, the decline in the value of land has, in many instances, been also very notable. In the New England States, agricultural land, not remote from large centers of population, can often be bought at the present time for a smaller price than what fifty years ago would have been regarded as a fair appraisal, and even less than the cost of the buildings and walls at present upon it* Since the last decennial appraisal of real * In 1887 a house and bam, in f^ood repair, and forty acres of good &nn'in^ land in the town of Killiugsworth, Conn., fteventcen niiles from the Connecti- cut River, were bought for a church rectory, for $350. " In many places in the very heart of the State of Massachusetts it is as it was in Eden when we lead that * there was not a man to tiU the ground.' Thirty miles inward fh>m Worcester, the ' heart of the Commonwealth,' there are whole 8cre» which, sixty yean ago, sold for twenty-two dollars an acre, that are now selling for eleven dollars an acre, although railroads and telegraphs skirt the fields, and the fields themselves are ezoellent farm-land." — Sprinfi/Uld B^ubUoan, 426 RECENT ECONOMIC CHANGES. estate in Ohio (in 1880) "there has been a heavy decline; farm property is from 25 to 50 per cent cheaper to-day than it then was." * In Illinois, according to the Report of the Bureau of Labor Statistics for 1888, there has been an increase in land-values in that State since 1880 in twenty- five counties, a decrease in twenty counties, while in sixteen counties values have remained unchanged. In one county — Madison — the value of farm-lands is thought to have depreciated 33 per cent since 1880. The increase in the value of all the lands in the State, for the decade 1870-'80, according to the United States census for the latter year — the valuation of 1870 being reduced to a gold basis — was 27 per cent ; but, for the eight years from 1880 to 1888, the net gain in land-values for the whole State is now esti- mated at 6*2 per cent. " In the ten cotton States, the value of agricultural land was in 1860, $1,478,000,000 ; in 1880, 11,019,000,000, a decrease of $459,000,000. It would re- quire an addition of 45 per cent of its value in 1880 to raise it to its value in 1860." Meanwhile, the population of these same States has increased 53 per cent. " In 1860, the value per acre of improved land in Georgia was $6 ; in 1886, below $3.50 ; decrease, $2.50. Were the agricultural land divided out among the people, the value per head would have been : in 1860, $150; in 1886, $63; decrease, $87.t ♦ " Inaugural Address of Governor Forakor," Janiuuy, 1887. t Report of a committee of citizens of the ten cotton-growing States (** Sam •• Bamctt, of Georgia, chairman), ** On the Causes of the Depressed Condition of Agriculture, and the Remedies," 1887. XI. The economic outlook, present and prospective — Necessity of studying the situation as an entirety — Compensation for economic disturbances — In- equality in tlie distribution of wealth a less evil than equality of wealth — The problem of poverty as affected by time— Tendency of the poor towaid the centen of population— Relation of machinery to the poverty problem — Seduction of the hours of labor by legislation — Fallacy of eight-hour arguments — The greatest of gains from recent material progress — In- oreaae of comfort to the masses from decline of prices — Oleomargarine legislation — Difference between wholesale and retail prices — Kelation be- tween prices and poverty — Individual differences in respect to the valuo- peroeiving faculty — CharactcriDtios of the Jews — Bolative material progress of different countries— Material development of Australia and the Argen- tine Kcpublic— Groat economic ciianges in India— Great material progress in Great Britiun — The economic changes of the future — Further cheapen- ing of transportation— Future of agriculture— Position of the last third of the nineteenth century in history. In the preceding chapters an attempt has been made to trace out and exhibit in something like regular order the causes and the extent of the industrial and social changes and accompanying disturbances, which have especially char- acterized the last fifteen or twenty-five years of the world's history. The questions which connect themselves with, and are prompted by, such an inquiry and exhibit, are nu- merous and relate to widely different subjects. But, of all these, the one of greatest interest and importance is. What has been, and what is likely to be, the effect of these com- plex economic changes — of this recent and unquestionably great material progress — on the mass of mankind ? Has it been, and is it to be in the future, for the better or the worse ? To not a few, as experience abundantly and also unfortu- nately proves, a ready and sufficient answer may seem pos- 428 RECENT ECONOMIC CHANGES. sible ; but most of those who through continued study and reflection have endeavored to qualify themselves for answer- ing, will probably agree that, upon no other one subject, apart from theology, does the line of investigation run so rapidly into deep waters. The more difficult, however, it is to emerge from such depths, the more important is it to lay hold of and put in place whatever may serve as stepping- stones to attain more definite conclusions than are now pos- sible— conclusions which, while helping continually to more comprehensive views of the situation, will also make all re- medial action on the part of society for acknowledged soci- etary evils, more intelligent, and consequently more effect- ive ; and it is in this direction that the line of most desirable work, and the movement for solving the difficult involved problems, would for the present seem to lie. Entertaining these views, the following deductions, in addition to those which have been incorporated into the preceding pages — which from the outset have been designed to be historical and not controversial — are finally and deferentially sub- mitted. It seems clear that the first and most essential thing for all those who are desirous of determining the extent of the evils which the recent economic disturbances have occa- sioned, and what course of procedure on the part of society and individuals is likely to prove most remedial of them, is to endeavor to understand the situation as an eiitirety ; and that effort is likely to be ineffectual and disturbance intensi- fied by all discussions and actions that start from any other basis. In fact, one of the remarkable features of the situ- ation has been the tendency of many of the best men in all countries to rush, as it were, to the front, and, appalled by some of the revelations which economic investigators every- where reveal, and with the emotional largely predominating over their perceptive and reasoning faculties, to proclaim that civilization is a failure, or that something ought im- mediately to be done, and more especially by the state, with- PESSIMISTIC PREDICTIONS. 429 oat any very clear or definite idea of what can be done, or with any well-considored and practical method of doing. How human society is ever to be at any time anything bat the product of human character and culture, they never tell us ; but they intimate that if the industrious do not promptly divide more freely with the idle, the frugal with the im- provident, the workers with the drones, there will be trouble — mysterious in its nature, but unknown in amount The position of the Russian novelist Tolstoi, before noticed, is a case in point. The distressing picture of what the world has come to during the fifty years of the reign of Queen Victoria, as drawn by the poet Tennyson in his new " Locks- ley Hall," and which Mr. Gladstone has so impressively re- viewed and effectually disapproved, is another. To what a doleful condition mankind is certainly tending, as the result of the unprecedented accumulation of knowledge in the present age, is foretold by Mr. W. H. Mallock, in the fol- lowing assemblage of words, in which mysticism rather than sense is predominant : " For the first time," he says, " man's wide and varied history has become a coherent whole to him. Partly a cause and partly a result of this, a new sense has sprung up in him — an intense self-conscious- ness as to his own position ; and his entire view of himself is under- going a vague change. It is impossible to conceive that this awaken- ing, this discovery by man of himself, will not be the beginning of his decadence ; that it will not be the discovery on his part that he is a lesser and a lower thing than he thought he was, and that his condi- tion will not sink till it tallies with his own opinion of it." On the other hand, it may be confidently asserted that a comprehensive view of the situation will show that not an evil referable to recent economic changes or disturbances can be cited which has not been attended with much in the way of alleviation or compensation, the comparison being between individuals and classes and society as a whole. Thus, the facts in relation to the wages earned by the poor men and women who work for the sellers of cheap clothing, / 480 RECENT ECONOMIC CHANGES. and who seem to be unable to find any more remuneratiye occupations, are indeed pitiful ; but, if clothes were not thus made cheap, many would be clothed far more poorly than they now are, or possibly not at all. It is not the rich man who buys ^^ slop " coats and shirts, but the man who, if he could not be thus supplied, would go ragged or without them. If the decline in the price of cereals and in the value of arable land has forced many who follow agricult- ural pursuits out of emplo3rment, there never was a time in the history of the world when the mass of mankind were fed so abundantly and so cheaply as at present. If the decline in the rates of interest on capital has been a sore grievance to the small capitalists, a reduction in the rate of income from invested property ^' means in the final analysis that the world pays less than it has before for the use of its machinery, and that labor is obtaining a ' larger ' and capital a ' smaller ' share of the compensation paid for production." Inequality in the distribution of wealth seems to many to constitute the greatest of all social evils. But, great as may be the evils that are attendant on such a condition of things, the evils resulting from an equality of wealth would undoubtedly be much greater. Dissatisfaction with one's condition is the motive power of all human progress,* and there is no such incentive for individual exertion as the ap- prehension of prospective want. If everybody was content with bis situation, or if everybody believed that no improve- ment of his condition was possible, the state of the world would be that of torpor, or even worse, for society is so con- stituted that it can not for any length of time remain sta- tionary, and, if, it does not continually advance, it is sure to retrograde.! ♦ " Tho incentivefl of proj^jesfl are the desires inherent in human nature — the dtsirt to ^i^tify the wants of the animal nature, the wants of the intelleotiuJ nature, and the wants of the sympathetic nature — desires that, short of infinity, can never be Ratiafled, as they grow by what they feed on."— Heitbt Gsokob. t The oondiUona which are naturally imbedded, as it were, in human INEQUALITY IN DISTRIBUTION OP WEALTH. 43I It is a matter of regret that those who declaim most loudly against the inequalities in the distribution of wealth, and are ready with schemes for the more " equal division of unequal earnings" as remedies against suffering, are the ones who seem to have the least appreciation of the posi- tive fact, that most of the suffering which the human race endures is the result of causes which are entirely within the province of individual human nature to prevent; and that, therefore, reformation of the individual is something more important than the reformation of society. Furthermore, * " the accumulation of wealth and the centralization of pro- duction and trade in great combinations have never, as a rule, in the United States, been a source of oppression, or of poverty to the non-capitalist or wage- worker " ; and, very curiously, almost every investigation into the wages and employments of the poorer classes shows that their greatest ture, and which war against the realization of the idea of an ultimate equally in the distribution or possession of capital, huve been thus cleariy and forcibly pointed out by Mr. George Baden Powell, in his '* New Homes for the Old Country," published in 1872 after a visit to Australia and New Zealand: ^' Since the arrival of man in the world there have been perpetual questionings as to why all men are not well otL Why should the good things of this life be so unequally distributed ? The two great causes, one as powerful as the other, are cireumdances and talerUs. But these two opposite causes all through man's life influence each other greatly. Circumstances coll forth peculiar tal- ents which might otherwise be uselessly dormant, and talents often take ad- vantage of peculiar circamstances which might otherwise be overlooked and missed. It is by no means improbable that as the world grows wiser some means will be found of considerably raising the lowest stage of existence, but it it entwely againtt the nature ofthinga that all should be equal in every way. Innate pride continually urges men to seek that which is above them, and to many happiness in life is the mere gaining of such successive steps. The essential rule is to work one's own circumstances to the highest point attidn- able by means of the talents possessed. These talents may be said to resolve themselves into various capitals, and a man may have capital for the improve- ment of his condition in the form of money, brains, or health and strength — in fact, he may thrive by the possession of *■ talents,' whether of gold, of the mind, or of the body. With this frilly recognized fact of the diversities of capital. It would seem obviously impottiMe/ar a people to continue long in the humanly impoeed poeeemon qf equai penonal theiree in any oapital,^^ 432 RECENT ECONOMIC CHANGES. oppressors are very frequently the comparatiYely poor them- selves. To understand the problem of poverty, especially with reference to remedial effects, as it at present exhibits itself, it is necessary to look at it comprehensively from two differ- ent standpoints. Viewed from the standpoint of twenty or twenty-five years ago, or before what maybe termed the advent of the " machinery epoch," there is no evidence that the aggregate of poverty in the world is increasing, but much that proves to the contrary. The marked prolonga- tion of human life, or the decline in the average death-rate, in all countries of high civilization; the recognized large increase in such countries in the per capita consumption of all food products ; and the further fact that fluctuations in trade and industry, calamitous as they still are, are less in recent times than they used to be, and less disastrous on the whole in their eHects on the masses, are absolutely conclu- sive on this point. Great as has been the depression of business since 1873, there is no evidence that it has yet made any impression on the " stored wealth " of the people of the great commercial countries ; and that, slow as is the accumulation of capital, a year probably now never passes in which some addition is not made to the previous sum of the world's material resources. The recognized tendency of tlie poor to crowd more and more into the great centers of population — drawn thither, undoubtedly, in no small part by the charities which are there especially to be found, and also by the fact that town labor is better paid than country labor — and the contrasts of social conditions, which exhibit themselves more strikingly at such centers than elsewhere,* * *^ It might sound paradoxical, but it was nevertheless true, that whUe those who had means were perpetually trying to get out from London, thoao who were destitute were always trying to find their way in. There were tens of thousands of men who preferred to live or starve in the streets of London rather than work In comparative comfort in the fields.'' — Frkderio Habkisoit. Recent inveatigationa have also ahown that London, in partioular, is DRIFT OP POPULATION TO CITIES. 433 naturally canse popular observation of poverty to continu- ally center, as it were, at its focus of greatest intensity, and create impressions and induce conclusions that broader and more systematized inspections often fail to substantiate.* No proposition, for example, finds a more general accept- ance among the unthinking masses than that a sparse popu- lation always commands higher wages and a higher standard of comfort than a dense one; and yet there is hardly a proposition in economics which can command so little evi- dence in its favor from the results of experience. ** Even in the middle ages it was only the places where population was dense that wages were high, and in modem times the thinner the people on the land the lower is their standard of comfort ; the laborer, for example, in some parts of Austria and Hungary, where labor is scarce, being worse fed than the average of English paupers. The swollen mainly by its births, and that the total increase from unmigration into that city, after deducting the emigration fh>m it, is only about 10,000 a year. ** London is, in fact, a nation of five millions, and that a nation of five millions should increase by one and a half per cent a year, or 75,000, is nothing in the present condition of human affiurs, when we have neither wars nor famines nor pestUences to create the least surprise among the weU-informed. An addition of 7,500 a year to a city of half a million would, indeed, cause scarcely a remark." ♦ A chapter from the recent experience of the city of Brooklyn, New York, ] in respect to pauperism, affords a very striking illustration of this statement. ' In the five years from 1874 to 1878 inclusive, the number of persons who asked and received outside poor relief from the city authorities increased more than fifty per cent, while the increase in the population of the city during the same ; period was less than fourteen per cent. The evidence would, therefore, almost seem conclusive that the masses of this dty were rapidly becoming poorer and 1 poorer. In the latter year, however, the system of giving outside poor relief j was wholly discontinued. It was feared by many that this action would lead to great distress and suffering, and many charitable persons made prepara- tions to meet the demands they expected would be made upon them. Noth- ing of the kind occurred. Not only was the whole number (46,098) drawing aid firom the county wholly stopped, but it was also accompanied by a de- creased demand on the public institutions and private relief sodeties of the city, and a reduction in the number of inmates in the almshouse. The teach- ing of this experience, which has since been elsewhere substantiated, is, there- fore, to the effect that what seem to be unmistakable proofii of increasing pov- erty were merely methods to supplement wages on the gains from mendicancy. 434 RECENT ECONOMIC CHANGES. great increase in the popalation of England during the last half-cent- ury has been accompanied bj an extraordinary rise in wages ; and it is in London, where the population is most dense, and not in any decay- ing towns in Great Britain or on the Continent, that wages are the highest. The concentration of energy caused by a thick population more than pays for the extra food consumed, and the fluctuations of wages are caused by the rise and fall in the demand for the article made, not by the rise and fall in the number of those who make it. The absolute and final proof of that is, that in any manufacturing town a time of low wages and a time of complaint about want of em- ployment always go together. It is when a trade becomes brisk and hands crowd in from all less employed places, and the population in- creases every year, that wages are at their highest. In the popular mind the immense importance of a great supply of labor is overlooked, and it is assumed unconsciously that this labor is given without adequate return. That is not so, wages being always highest in the fullest cen- ters of industry. There are districts of fhigland where two masters are seeking one man, and where wages, nevertheless, are under twelve shillings a week, the cause being not any thickness or thinness of popu- lation, but the unprofitableness of growing cereals at present prices. There is, of course, danger of a kind in any great aggregation of popu- lation, because any trade may be suspended, as the cotton industry was, by an unexpected misfortune ; but the danger is political, not economic. If the bulk of the workers of Lancashire had moved away in that famine, the wages of the remainder would not, when prosperity returned, have been perceptibly higher. Population is in one way a cause of trade, just as much as steam-power is; and, if England had fifty millions, we should probably find her trade proportionately in- creased and wages as high as ever. She would, in fact, have attracted business which without her free command of labor in masses would never have reached her shores. That is the secret, to take a single in- stance, of the great and growing prosperity of Bombay as a city of manufactures — a prosperity which, though it has brought population, has raised and not lowered the average of wages."* One thing wiiich those interested in the discussion of these societary problems need especially to recognize more fully than is generally done is, that, in most of the leading nations, systematic and rigid investigations, in respect to most economic subjects and questions, have now been prose- • London " Eoonomisf NEW FACTOR IN THE PROBLEM OP POVERTY. 435 cuted for a considerable period by governments and indi- viduals ; that the broad general conclusions deducible there- from in respect to mortality, health, wages, prices, pauperism, population, and the like, are not open to anything like rea- sonable doubt or suspicion; and also that the pessimistic views which many enteirtain as to the future of humanity are often directly due to the exposure of bad social condi- tions which have been made in course of these investigations with the purpose of amending them. During the last quarter of a century, however, the prob- lem of poverty has been complicated by a new factor; namely, the displacement of common labor by machinery, which has been greater than ever before in one generation ; or in one country. To what extent the numbers of the helpless poor have been increased from this cause is not definitely known ; but the popular idea is doubtless a greatly exaggerated one. In fact, considering the number and ex- tent of the agencies that have been operative, it is a matter of wonderment that these influences in this direction have not been greater. In the United States little or no evidence has yet been presented that there has been any increase in poverty from this cause.* In London, where the cry of dis- * Acoording to the Beport of the Bureau of Statistics of Labor for BCass*- « ohusetts for 1887, the whole number of persons of both sexes in that State, who were unemployed at their principal occupation during some part of the year preceding the date of the census enumeration (May 1, 1885), was 241,589, of whom 178,168 were males and 69,961 were females. Comparing these fig- ures with tho«e of the population in 1885, viz., 1,941|465, it is found that for every 8*04 persons there was one person unemployed for some part of the year at his or her principal occupation, the percentage of unemployed being greater < in the case of males and less in the case of females. These conclusions, how* ever, throw no light on the number of persons who were unemployed by rea- j son of displacement by machinery ; and are also likely to mislead, unless suffl- \ dent oonnderation is given to the fact that the number of industrial occupations which only admit of being prosecuted during a portion of the year is in evciy community very considerable. And, as a matter of fact, the investigations in question show that there were only 882 persons, representing hardly more than one third of one per cent of the whole number of the unemployed in this State, who were returned as having been unemployed during the entire twelve months. 436 RECENT ECONOMIC CHANGES. tress is at present especially lond and deep, it is ** noteworthy that no measures have yet been taken to ascertain whether that distress is normal or abnormal, and whether it is in- creasing or decreasing." * But even here the opinion, based on what is claimed to be an exhaustiye inquiry, has been expressed that, ^^ although the number of those who are both capable and willing to give fair work for fair pay and are at the same time destitute, is in the aggregate considerable, they yet form but a very small proportion of the unemployed " ; and " that probably not over two per cent of the destitute are persona of good character as well as of average ability in their trades." f *' It is by no means settled that we have too much labor; indeed, the evidence is rather the other way. In many agricult- ural districts there are not hands enough left to do the work, and from almost all trades the report comes in that no skilled hand who will do work need now lack employ- ment." J The following additional facts, of a more general nature, are also pertinent to this subject : That wages everywhere have not fallen but advanced, as a sequence to the introduc- tion and use of cheaper and better machinery and processes, proves that labor, through various causes, probably in the main by reason of increased consumption — ^has not yet been supplanted or economized by such changes to an extent suf- ficient to reduce wages through any competition of the un- employed. The multiplicity and continuance of strikes, and the difficulty experienced in filling the places of strikers with a desirable quality of labor, are also evidence that the supply of skilled labor in almost every department of industry is rather scarce than abundant. ♦ '* The Distress in London," " Fortnightly Review," London, Janumry, 188S. t*'The Workleas, the ThrifUeas, and the Worthlew," "Contemporary Keview/* London, January, 1888. X London " JSoonomiat," January 26, 1889. RELATIONS OP MACHINERY TO WAQE& 437 Again, it is a matter of general experience, that when in recent years, wages, by reason of a depression of prices, have been reduced in any specialty of production, such reductions have been mainly temporary, and are rarely, if ever, equal to the fall in the prices of the articles produced ; whi^jh in turn signifies that the loss contingent on such reductions has been mainly borne by capital in the shape of diminished profits. Notwithstanding all this, it will have to be admitted that the immense changes in recent years in the conditions of production and distribution have considerably augmented — especially from the ranks of unskilled labor and from agri- cultural occupations — the number of those who have a right- ful claim on the world's help and Sjrmpathy. That this increase is temporary in its nature, and not permanent, and that relief will ultimately come, and mainly through an ad- justment of affairs to the new conditions, by a process of industrial evolution, there is much reason to believe. But, pending the interval or necessary period for adjustment, the problem of what to do to prevent a mass of adults, whose previous education has not qualified them for taking advantage of the new opportunities which material progress offers to them, from sinking into wretchedness and perhaps permanent poverty, is a serious one, and one not easy to answer. A comprehensive review of the relations of machinery to wages, by those who by reason of special investigations are competent to judge, has led to the following conclusions : When machinery is first introduced it is imperfect, and re- quires a high grade of workmen to successfully operate it ; and these for a time earn exceptionally high wages. As time goes on, and the machinery is made more perfect and automatic, the previous skill called for goes up to better work and better pay. Then those who could not at the outset have operated the machinery at all, are now called in ; and at higher wages than they had earned before (al- 438 RECENT ECONOMIC CHANGES. though less than was paid to their predecessors), they do the work. Capital in developing and applying machinery may, therefore, be fairly regarded as in the nature of a force ; unintentionally, but of necessity, continually operating to raise all industrial effort to higher and better conditions : and herein we have an explanation of the economic phe- nomenon, that while the introduction of improved machinery economizes and supplements labor, it rarely or never reduces wages. One of the most curious features of the existing economic situation is the advocacy of the idea, and the degree of pop- ular favor which has been extended to it, that a reduction of the hours of labor, enforced, if needs be, by statute, is a " natural means for increasing wages and promoting prog- ress."* This movement in favor of a shorter day of work is not, however, of recent origin, inasmuch as it has greatly commended itself to public sentiment in Great Britain and in the United States for many years, and more recently in a smaller degree in the states of Continental Europe. But it is desirable to recognize that the early agitation in further- ance of this object, and the success which has attended it, were based on reasons very different from those which un- derlie the arguments of to-day. Thus, in England and on the Continent, the various factory acts by which the day's labor has been shortened, were secured by appealing to the moral sense of the community to check the overworking of women and children ; or, in other words, most of such legis- lation has thus far been influenced by moral considerations, and has so commended itself by its results that there is probably no difference of opinion in civilized countries as to its desirability. But the form which this movement has of late assumed is entirely different. It is now economic, and not moral, and its final analysis is based on the assumption ♦ " Wealth and Progress," by George Gunton. D. Appleton & Co., New York. REDUCTION OF HOURS OF LABOR BY STATUTK 439 that the laborer can obtain more of wealth or comfort by working less. It would seem to need no elaborate argument to demon- strate the absurdity of this position. Production must pre- ' cede consumption and enjoyment, and the only way in which the ability of everybody to consume and enjoy can be in- creased is by increasing, so to speak, the output of the whole human family. If production be increased, the worker will, necessarily receive a larger return; if diminished, he will necessarily get a smaller return. And it makes no difference* whether the diminution be effected by reduction in the hours of work, or by less effective work, or by disuse of labor-saving machinery, or by other obstructive agencies. The result will inevitably be the same : there will be less to divide among the producers after the constantly diminishing returns of capital have been withdrawn. It will doubtless be urged that man's knowledge and control of the forces of Nature have increased to such an extent in recent years that almost any given industrial result can be effected with much less of physical effort than at any former period ; and therefore a general and arbitrary reduction of the hours of labor, independent of what has already occurred and is further likely to occur through the quiet influence of natural agencies, is not only justifiable, but every way practicable. This would undoubtedly be true if mankind were content to live as their fathers did. Bnt they are not so content. They want more, and this want is so progressive that the satisfactions of to-day almost cease to be satisfactions on the morrow. But what " more " of abundance, comfort, and even luxury to the masses has been achieved — and its aggregate has not been small — has not been brought about by any diminution of labor, but has been due mainly to the fact that the labor set free by the utilization of natural forces has been re-employed, as it were, to produce them ; or, in other words, recent material prog- ress is more correctly defined by saying that it consists in 440 RECENT ECONOMIC CHANGES. the attainment of greater results with a given expenditure of labor, rather than the attainment of former resolts with a diminished expenditure. Whether the present relation of production to consump- tion which it now seems necessary should be maintained, if the present status of abundance, wages, and prices is to be continued and further progress made, can be maintained with a diminished amount of labor, may not at present ad- mit of a satisfactory answer. Production in excess of cur- rent demand, or over-production, which has been and stUl is a feature of certain departments of industry, and which may seem to favor an affirmative answer, is certain to be a temporary factor, for nothing will long continue to be pro- duced unless there is a demand for it at remunerative prices from those possessed of means to purchase and consume, and therefore can not be legitimately taken into account in forming an opinion on this subject; but, other than this, all available evidence indicates that the answer must be yet in the negative. Thus, for example, the latest results of investigation by the Massachusetts Bureau of Labor Statistics show that during the year 1885 all the products of manufacture in that State could have been secured by steady work for three hundred and seven tvorking days of 9*04 hours each, if this steady work could have been distributed equally among all the persons engaged in manufactures. But, to effect such an equitable distribution is at present almost impossible; and if it could be brought about, a reduction of the hours of labor to eight per day in such industries, as has been ad- vocated by not a few, would reduce the present annual prod- uct of Massachusetts to the extent of more than one ninth. Apart, therefore, from the disastrous competition which would be invited from other States and countries where labor was more productive, to expect that under such a re- duction of product the share at present apportioned to the workers, or, what is the same thing, the existing rates of VALUE OF ACCUMULATED PROPERTY. 44I wages could be maintained, seems utterly preposterous. It is not even too much to say that the very existence of mul- titudes would be endangered, if the present energy of pro- duction were diminished twenty per cent. And in this connection how full of meaning is the following deduction which Mr. Atkinson finds warranted by investigation, namely : " That over a thousand millions' worth of product must be added every year and prices be maintained where they now are, in order that each person in the United States may have five cents more than he now does, or in order that each per- son engaged in any kind of gainful occupation may be able to obtain an increase in the rate of wages of fifteen cents a day. Great and undoubted, therefore, as have been the benefits accruing from machinery and labor-saving inven- tions, the margin that would needs be traversed in order to completely neutralize them by rendering human labor less efficient, is obviously a very narrow one." To which may be added that there is probably no country at the present time where the entire accumulated property would sell for enough to subsist its population on the most economic terms for a longer space than three years. One argument now frequently advanced in favor of the establishment by legislation of eight hours as the uniform standard of a day's labor is worthy of notice, from the curi- ous lack of foresight which it displays. An hour oE the day of every workman now employed would, it is said, create a demand, and give room for many additional laborers. A recent writer * estimates that, assuming eleven hours as the average length of the working day in the United States, an eight-hour system, or a uniform reduction of three hours labor a day, "would withdraw the product of 28,416,477 hours' labor a day from the market without discharging a single laborer." What would then happen is thus de- scribed: * Qeorge Gunton. 442 RECENT ECONOMIC CHANGE& " The commercial vacuum thus produced would, in its effect upon labor and business, be equal to increasing the present demand oyer one fourth, and create a demand for 3,500,000 additional laborers. To meet this demand, about one sixth more factories and workshops would be needed, besides setting our present machinery in operation ; and a further demand for labor would be created in the mines, forges, furnaces, iron-works, and the various industries that contribute to the building and equipment of the requisite new factories and workshops. . . . Nor is this aU. The new demand for labor thus created would necessarily increase the number of consumers, and thereby still farther enlarge the demand for commodities ; and, according to the popular doctrine of supply and demand, the increased demand for labor, by reducing competition among laborers, must tend to increase wages. '' The mass of laborers throughout the country, having three hours a day extra time for leisure and opportunity, and being less exhausted, mentally and physically, will be forced into more varied social rela- tions— a new environment, the unconscious influence of which will naturally awaken and develop new desires and tastes that will slowly and surely crystallize into urgent wants and fixed habits, making a higher standard of living inevitable. . . . This increased consump- tion necessarily implies a corresponding increase in production, and consequently an increased demand for labor and higher wages. . . . It is therefore manifest that the general and permanent economic effect of an eight-hour system would be to naturally increase the aggre- gate consumption and production of wealth." Such reasoning naturally prompts to the asking of a few pertinent questions. If the beneficial results named are certain to follow a uniform reduction of the hours of labor from eleven to eight in the United States, why arbitrarily limit the application of this principle? Why not fix upon four hours as the day's standard ? This would create employ- ment for over 7,000,000 in place of 3,500,000 laborers, and render necessary the erection of more than one sixth more new factories and workshops ? Why, in short, if by a reduc- tion of the hours of labor by statute we can infallibly in- crease the production of wealth or abundance, will not the condition of the race be infinitely improved by a general cessation of all tiresome exertion ? Furthermore, those who advance the above argument in favor of a reduction of the THE DAY'S STANDARD OP LABOR. 443 hours of labor by arbitrary legislative enactment, ignore completely the fact, that if each man does an hour's less work a day, he must lose an hour's pay, and that therefore the purchasing power of the men now employed would be reduced by exactly the amount by which that of the now unemployed men would be increased by employment. If it is proposed to overcome this difficulty by incorporating in the statute reducing the hours of labor a further provision, that employers shall pay the same amount for eight hours' service that they formerly had for nine or ten, or what is the same thing, shall pay for " idle time," it may be rejoined that no special legislation can invalidate the economic axiom, "Less work, less pay," without destroying the rights of property, and with it civilization itself. Another point in connection with this subject is worthy of attention. That the efficiency of labor is largely increased by the use of ma- chinery and new inventions can not be questioned. The world would not be what it is but for these improvements. In default of them the present population of the world could not exist, even in a state of savagery. But machinery can not work alone. It is made useful and effective only through the co-operation of human labor — ^labor of hand and of brain. But if men are to work only four fifths, one half, or one third less number of hours than at present, then the working hours of machinery will be reduced in the same proportion, and the productiveness of labor will be diminished not in proportion to the reduction in the num- ber of hours that are given by hand and brain, but in a much greater proportion. It is possible to even completely neutralize the benefits of all machinery and labor-saving in- ventions by making human effort less efficient. But it may be said that the productive work of machinery will be so increased by new inventions and discoveries as to compensate for any reduction in productive effect likely to follow from any reduction in the hours of labor at present contemplated. This may be in the future, but there is no 444 RECENT ECONOMIC CHANGES. evidence that such a result has been yet attained. Some years ago the State of Massachusetts enacted that the labor of women and children should not exceed ten hours per day. The practical effect of this in textile factories was to cut down the labor of the men operatives to an equal extent The limit of working-time in such establishments being thus shortened, the speed of the machinery was generally in- creased, and thus, within a few months, in connection with the benefit accruing to the operatives by fewer hours of labor, unquestionably restored the former level of production. But manufacturers now agree that to increase the speed of machinery to an extent sufficient to compensate for any further reduction of working-time is at present impossible.* The course of events, nevertheless, warrants mankind in expecting that the progress which has been made in recent years in diminishing the necessity for long hours of labor will be continued; but such progress will be permanent and productive of the highest good only so far as it is de- termined by natural agencies. If the attempt is made to save the time of the masses by radical and artificial methods, leisure will become license ; but, if they can be taught to save their own time, leisure, as already pointed out, will be opportunity. Finally, in all discussions of this subject, it is of the highest importance to keep steadily in view the one great fact taught us by experience in respect to this subject, which is, that^ thus far in the history of industry ^ all that hrritory. OLEOMARGARINE LEGISLATION. 449 In 1885 the registered sales of horse-flesh for hnman oonsumption in Paris were 7,662,412 pounds. In 1886 the sales were officially reported as having increased to 9,001,300 pounds, with an accompanying marked diminution in the consumption of pork. Whether there is any necessary con- nection between the two experiences may not be affirmed, but the facts are suggestive. The attempt to crush out of use, by legislation, one of the most brilliant discoveries of the age, namely, the manu- facture of butter from the fat of the ox, equally as whole- some as that made from the fat (cream) of the cow, is a libel on civilization ; and, as depriving the masses of a better article of desirable food at cheaper rates, than very many of them have been accustomed to have, or can now procure, would be fiercely resented by them, if once properly and popularly understood.* As it is, the experience of the United States in attempt- ing to enforce its so-called " oleomargarine laws " well illus- trates the futility of all attempts to permanently benefit one rival commercial interest at the expense of another through the agency of discriminating class legislation. Thus, notwith- standing the enactment of a great amount of legislation re- stricting or prohibiting the manufacture and sale of oleo- margarine by many of the States and the Federal Govern- ment, the report of the United States Bureau of Internal Kevenue for 1888 shows that the manufacture and consump- ♦ A report on the subject of ** Oleomaixarine," by the Bojal Health De- partment at Munich, submitted March, 1887, says : *' This product is made in great part from such proper ingredients as are useful in nourishment, namely, the fats or greases ; and therefore it is dt importance, as it ftimishes to the poorer classes a substitute for butter which is cheaper and at the same time nourishing. We think that this want has been supplied in a most satisfactory manner by the manufacture of artificial butter. And it is offered in the markets in a condition superior to natural butter as fiu> as deanliness and care- ftil preparation are concerned.*' The conclusions of the chemists employed by the United States Internal Revenue Bureau, as the result of their investiga- tions of this product, are also to the same effect, namely, that it is a wholesome and unolyectionable product. 450 EECENT ECONOMIC CHANGES. tion of this article in response to popular demand is steadily increasing. While the inspection laws of the United States were sufficient to enable its officials to recognize and tax the production during that same year of the great amount of 69,000,000 pounds of oleo-oil — ^" an article produced for the sole purpose of being used in the manufacture of a butter substitute " — they were not sufficiently potent to allow these same officials to determine the use which was made of more than 27,000,000 pounds of this same product; it having been neither exported nor used in the manufacture of oleo- margarine. No doubt, however, was entertained that it was secretly used for the manufacture of some other food product — such, for example, as cheese. The fact that in no country do the masses ever experi- ence as much of benefit from a fall of prices as they would seem to be fairly entitled to have, owing to the great differ- ence between wholesale and retail rates, and that this differ- ence is always greatly intensified in the case of the poor who purchase in small quantities, clearly indicates one of the greatest and as yet least occupied fields for economic and social reform. Flour, in the form of bread, costs usually three times more, when distributed to the poorer consumers in cities of the United States, than the total aggregate cost of growing the wheat out of which it is made, milling it into flour, barreling, and transporting it to the bakeries. The retail prices of meats are enhanced in like manner ; and investigation some years ago showed that, when anthracite coal was being sold and delivered in New York city for $4.50 per ton, it cost people on the East and North Rivers, who bought it by the bucketful, from $10 to $14 per ton. While in recent years the cost of nearly all food products in the United States has (as has been already shown) been so greatly cheapened that their competitive supply has reduced the value of land in Europe and impoverished its agriculturists, the results of the investigations of the Labor Bureau of Connecticut prove that the retail cost to WHOLESALE AND RETAIL PRICEa 451 the wage-earners of that State of most of these articles of food-supply — ^which on the average represents one half of their wages — ^has, comparing the prices of 1887 with those of 1860, greatly increased; corn-meal by the barrel, for example, having advanced forty per cent, and batter from thirty-five to fifty per cent. Similar results are noticed in all other countries. Out of every £100 paid by the consumers of milk in London, Sir James Gaird estimates that not more than £30 finds its way into the hands of the English dairy farmers who in the first instance supply it. In the case of some varieties of fish — mackerel — ^the cost of inland distribution in England has been reported to be as high as four hundred per cent in excess of the price paid to the fishermen. Eggs collected from the farmers in Normandy are sold according to size to Parisian consumers, at an advance in price of from eighty- two to two hundred per cent. The experience of different countries in respect to the difference in the retail and wholesale prices of staple com- modities is not, however, uniform ; the most notable excep- tion perhaps being that American beef, flour, bread, butter, and cheese are, as a rule, sold more cheaply at retail in Lon- don than in New York. The payment of rent is believed by not a few to be the chief cause of social distress, and a continual draught on the resources of the poor, for which no adequate equivalent is returned. And yet investigations similar to those (before noticed) which have demonstrated how small needs be the first cost of the food essentials of a good living, have also led to the opinion that ^not much more than half the money that men usually pay for rent would, if expended in the right direction and under easily prepared guarantees, give them possession of good homes, protected in all the rights given by a title in fee simple, and which they .could transmit unencumbered to their families.** Co-operative associations have done something in the 452 RECENT ECONOMIC CHANOES. • way of remedying the evils resulting from nn&ir and un- necessary enhancements of prices to consomers buying at retail or in small quantities ; but as yet the success Uiat has attended their efforts in this direction, although promising, has been partial and incomplete. Associations of this char- acter appear to find much more of popular favor and sup- port in England than in the United States ; and, probably, for the reason that the great establishments which have sprung up in recent years at almost all the considerable cen- ters of population in the United States for the sale of non- perishable commodities, and which are systematically con- ducted on the economic basis that large sales with relatively small profits ultimately assure the largest aggregate of profits, sell goods of the character indicated at relatively lower retail prices than generally prevail in England, and so limit the sphere of beneficial operation of the American co-operative societies.* * ^* Co-oporation is an excellent thing, but Bodely will not be regenerated because thousands of decent men have the sense to see that if they combine to buy leather wholesale, and to purchase boots for themselves, they will got their boots good and cheap. Even if the principle were applicable to every- thing, society would only be a little more comfortable, and it is not applicable to everything. Every man is not the stronger, as all co-operators affirm, be- cause he is one of a crowd, and there are some operations, swimming, for ex- ample, in which to be untouched by others is a condition of success. As to extinguishing that evil spirit, competition, it is not extinguished or threatened by co-operation, for if the societies became numerous they would compete with one another, and the competition of corporations is the severest of all. Indeed, if they did i^ot, the world would be much injured. Some oo-operatofB dream a dream of a co-operative society growing so large as to monopolize business, but, supposing that dream realized, business would be badly done. Everybody would grow lazy, the goods would deteriorate in quality, prices would become larger, and by-and-by some philanthropic co-operators, purely in the public interest, would be compelled to revolt and set up competition again. Human nature can conquer the temptation to dishonesty, but it never con conquer the disposition to take its ease, and, if it is to strain itself and always do its best in business or anything else, it needs a heavy whip. No whip has ever been discovered so effective as competition, and if it wore dis- pensed with, the human race, even if happier, would be less \Tgopous and less prone to make steady advance toward more perfect work its rule of life.'* — London Eoonomitt, PRICKS AND POVERTY. 453 The relation between prices and poyerty has long at- tracted attention, and nothing new in the way of theory remains to be offered. Three thousand or more years ago, a certain wise man, who had sat at the marts of trade, and made himself conversant with the nature of wholesale and retail transactions, embodied in the following short and sim- ple sentence as much in the way of explanation of their in- Yolyed phenomena as the best results of modem science will probably ever be' able to offer, namely — " The destruction of the poor is their poverty.'^'* — Proverbs^ 10th chapter^ 16th verse. Something in the way of a real contribution to our general understanding of this subject would, however, seem to be found in the recent observation that the value-perceiv- ing sense or faculty is not implanted by Nature in every person, but differs widely in different races and families ; and that '^ he who has it will accumulate wealth with conif- paratively slight exertion, while he who has it not will not gain it, no matter how energetically he labors." * Illustrations of this are familiar to every student and investigator of social science ; but the following one seems especially worthy of record : On the ferries between New York and Brooklyn, the rates of toll were some years ago reduced nearly one half to all who would buy at one time (or at wholesale) fifty cents' worth of tickets. But it was soon noticed that the working-classes, who at morning and evening constituted the bulk of the travel, rarely bought tickets, while they were bought as a rule by those who belonged to banking and mercantile establishments."! * " The Labor-Valae Fallacy," by M. L. Scudder. Chicago, 1886. t '' No one fiimiliar with busiiieaB life would question the special ability of Qennan Jews in all business which requires a comprehension of finance, as weU as in all mercantile pursuits. They do, no doubt, outstrip Englishmen very frequently, almost as frequently as they outstrip Germans in Berlin or Vienna. In the race for wealth, as a result of trade, they have probably dis- tanced an mankind, and the English bankers can no more contend with the Bothschilds in London or Paris than the Parses traders can compete in Bom- bay with the great Jew house of Sassoon. But then, not to mention the spo- 454 RECENT ECONOMIC CHANGES. The countries of the world which within the last third of the century have made the greatest material progress are the United States, Australia, and the States of the Argentine Republic. This has been due largely in all these cases to the vast abundance of cheap and fertile land, which has occa- sioned and made possible a great increase in population. Like conditions have been similarly influential in increasing the population of Russia in a more rapid ratio than in most of the other countries of Europe. The United States, by reason of its great natural resources, and extensive use of machinery and consequent ability to control the supply and the price of many of the great staple articles of the world's consumption — cotton, cereals, meats, tobacco, petroleum, and silver — is at present the great disturbing factor in the world's economic condition. In Australia, the recent increase in population and wealth is extraordinary, and finds a parallel only in the past experi- ence of the United States. During the year 1887 the in- crease of the population of all the colonies, including New Zealand, was three and a half per cent over that of 1886. At the present rate of increase, the inhabitants of Australia at or before the close of the next century will number about 190,000,000 ; and constitute no inconsiderable part of the population of the world. That the increase of wealth in these colonies is also increasing even faster than the increase cial aptitudes of Jews for trading, the result of the unjust persecution of cent- uries which has closed all other careers to them, the Jews are for the most part Uiu^ht business very early as a method of making money, but are not required to put any intellectuality into it. Though often intellectual men, their intellect usuuUy manifests itself outside their business, which they con- duct with skill indeed, but without any special display of mind. Some of the most successfVil amou)? them have been very ignorant men, and almost aU have succeeded rather by virtue of a sort of faculty of accumulation and atten> tion to the uses of money than by any display of what would be deemed in- tellectual power in business. They know, as we onoe heard it described, the * smell of the markeUt * — tlmt b, their tendency toward rising or falling, and they seek carefully for profit ; but it is by business aptitude ratlier than cult- ure that they achieve their highest results." — London Economist. THE ARGENTINB REPUBUC. 455 of population, is claimed to be shown by comparing the average amount left by each person dying in Victoria in the years 1872-1876 with similar bequeathed possessions during the years 1877-1881 and 1882-1886, it being assumed that the average amount left by each person dying is equivalent to the average amount possessed by each person living. On this basis, the national wealth amounted to £185 ($899) per head in the five years, 1872 to 1876 ; to £223 ($1,083) in the five years, 1877 to 1881 ; and to £305 ($1,482) in the five years, 1882 to 1886. This wealth, however, is not accumu- lated in the hands of the few, but is tolerably wide-spread ; nineteen and a half per cent of the population having savings- banks deposits. The average rate of wages is also higher in Australia than in any other country. In the Argentine Republic, during the twenty-five years next preceding 1888, the population increased in a ratio nearly double that of the United States ; while the increase in the value of its landed property since 1882 is estimated at fifty per cent. About forty-five hundred miles of rail- roads were in operation within the territory of the republic on the 1st of January, 1889, with a large number of addi- tional miles under contract. Sleeping-cars now run regu- larly from the Atlantic Ocean to the foot-hills of the Andes ; and the completion of a through line from ocean to ocean, saving five thousand miles of ocean navigation around the extremity of the continent, is a near certainty. In 1878 the exports of wheat, maize, and linseed from the republic were reported as aggregating only 213 tons; in 1887 the aggregate was 632,700 tons. Patagonia, which is in great part included in the territory of the republic, and which only a few years since appeared in our geographies as a dreary and uninhabitable waste, has developed into the rich- est of pastures, with immense possibilities for supplying the world with meat and other desirable animal products — wool, hides, and skins. The immense change which has taken place in the eco- 456 RECENT ECONOMIC CHANGEa nomic condition of India in recent years is also a matter of profound interest and importance. The India of antiquity, so far as its relations to Europe were concerned, has been not unfitly described as a ^' dealer in curiosities," and, under the rule and administration of the East India Ck>mpany, *' as a retail trader in luxuries." But India under British dominion has become a wholesale exporter of food products, seeds, and fibers, and is becoming a manufacturer on a large scale on its own account. In 1834 the value of the aggre- gate exports of India was reported at £9,500,000 ($46,170,- 000) ; in 1887 this aggregate had increased to £92,000,000 ($447,000,000).* In 1865 the manufacture — spinning and weaving — of cotton by .machinery was very inconsiderable. In 1878-'79 the India mill consumption of cotton was only 268,000 bales (of 392 pounds each) ; in 1887-88 it was 815,- 000 bales, an increase in a decade of two hundred and four per cent The history of commerce can also show no parallel to the recent growth of the export trade of India in the item of cotton yarns of her own manufacture; and the period may therefore be not far distant when India, if this department of her trade and industry continues to expand, will be under the necessity of importing raw cotton, in place of exporting it, as she has done for centuries. Another interesting feature of this change in economic conditions is, that whereas India, down to a comparatively recent period, insisted upon being paid for her commodities in the precious metals — largely silver — her foreign trade to-day, as is the case with other great com- mercial nations, consists mainly in the interchange of com- modities exclusive of the precious metals, and with the minimum use of money. But of all old countries, England, considered as the rep- resontixtive of the United Kingdom, leads in all that per- * ** StatUtlcal AUtrttOt for tho Colonial PosticaaioiiB of the United King- • dom/' 1S6S. PROGRESS OF GREAT BRITAIK. 457 tains to ciyilization ; and, making allowance for the excep- tional advantages enjoyed by the United States and Aus- tralia, her relative progress has probably been as great as that of any country. In no one of the countries of Europe has the increase of population been greater, and in Italy, Oermany, and Russia only has there been an approximate increase ; and this result has been especially remarkable, in- asmuch as for many years England has not had an acre of vir- gin soil to expand upon. In no country of Europe, further- more, has the increase of population been probably so largely accompanied by an increase in comfort as in England. Forty years ago the United Kingdom owned only about one third of the world's shipping. Now it probably owns about seven twelfths, and of the existing steam-tonnage it owned seventy-two per cent (in 1887). In respect to exports and imports — comparisons being made per capita — no other nation approximates Great Britain in its results to an extent sufficient to fairly justify a claim in its behalf to the hold- ing of a second place.* In every movement in recent years toward a material betterment of the masses through reduction of the hours of labor, compulsory education of children, advancing wages, acts regulating the payment of wages, factory and mine inspection, extermination of diseases and reduction of the death-rate, cheap postage, diminishing the risks of ocean navigation as to both life and property, establishing co- operative institutions, and the like, England has led the way. In no other of the leading industrial nations are the deposit of savings-banks and provident associations increas- * ** At the present moment the forei^ tnde of England — ^imports nnd ex- ports together, induding the transit trade — is in round flgnres £750,000,000 per annum, about £20 per head of the population. In France the oorrespond- \nfg figures are £429,000,000, and £12 per head ; in the United States, £806,- 000,000, and £6 per head ; in Germany, £488,000,000, and £11 per head ; in Russia, £160,000,000, and £1 10«. per head ; in Austria-Hungary, £148,000,- 000, and £8 10». per head; in Italy, £100,000,000, and £8 10». per head ; and Bo of other nations." — ^Bobxbt Oxfykh, LtUer to tk4 Londom 7»m«f, 1884. 458 RECENT ECONOMIC CHAKaBS. ing more rapidly, or the benefits of life and health insurance so widely extended, or more attention given or greater com- paratiye expenditures made in behalf of education, or so small an amount of crime in proportion to population, or in which pauperism is so rapidly diminishing,* or where greater progress is acknowledged in respect to the equal distribution of wealth. In 1837 the national debt of Eng- land amounted to 19*5 per cent of the national wealth ; in 1880 it amounted to only 8*8 per cent. With the exception of the United States, England is the only other great nation that is reducing its national debt ; and notwithstanding the continuance of an antiquated and unequal system of land tenure, and rigidly defined lines of social organization, Eng- land is the one highly civilized country in which the doc- trines of socialism have made the least progress. Wherever and whenever England now acquires new territory she establishes commercial liberty, and neither claims nor exer- cises any privilege of trade which she does not equally share with the people of all other countries. Under her recent rule India is experiencing an industrial awakening which finds no parallel in her previous history — threatening the supremacy of China in respect to the world's supply of tea, , the United States in respect to the supply of wheat, and Lancashire (England) in the manufacture and exports of cot- ton fabrics. t In 1884 Great Britain virtually took possession of Egypt, and from that moment there was initiated, under the management of a body of skilled engineers and practical ♦ ** We are prone (in the Unitx3d States) to bewail the condition of the Enfflisb laborer and lament the existence of pauperism in England, but the official %ure8 certainly do not warrant much self-gratulation. It m^y be that English private benefactions far exceed our own in amount, but the &ok remains that the English Government aids fewer paupers, proportionately to population, than our own." — Carroll D. Wright. f No country in the world can point to such remarkable figures as India can in her export trade in cotton yams. In eleven years — i. e., from 1877 to to 1888 — the shipments rose from about 7,000,000 pounds to over 118,000,000 pounds. POSSIBLE FUTURE OP SILVER. 459 men, a renovation of the water-supply and irrigation system of the country upon which the life and prosperity of its people depend, and which has already been attended with results of extraordinary beneficence. In Lower Egypt land reclamation is going on at the rate of fifty thousand acres per annum, and in other sections of the Nile Valley at double that amount; giving to a down-trodden and im- poverished race better opportunities than they have had for centuries of supporting themselves by their own labor. Formerly one or two hundred thousand of the wretched fellaheen were annually torn from their homes and forced to labor for months in clearing out the canals of mud and ooze, without pay and with an insufficient supply of the poorest food. Under English management this system of slavery has been practically abolished, and the laborers are now paid wages, or allowed to buy their exemption from work for a very small sum. Something of inference respecting the economic changes of the future may be warranted from a study of the past. It may, for example, be anticipated that whatever of eco- nomic disturbance has been due to a change in the relative value of silver to gold, will ultimately be terminated by a restoration of the bullion price of the former metal to the rates (sixty to sixty-one pence per ounce) that prevailed for many years prior to the year 1873. The reasons which warrant such an opinion are briefly as follows : Silver is the only suitable coin medium for countries of \ comparatively low prices, low wages, and limited exchanges, like India, China, Central and South America, which repre- sent about three fifths of the population of the world, or about a thousand millions of people. Civilization in most of these countries, through the advent of better means of production and exchange, is rapidly advancing — necessitating a continually increasing demand for silver as money, as well as of iron for tools and machinery. Generations also will pass before the people of such countries will begin to economize / 460 RECENT ECONOMIC CHANGES. money by the use to any extent of its representatiyes — ^paper and credit Under such circumstances a scarcity, rather than a superabundant supply of silver, in the world^s market, is the outlook for the future, insfimuch as a comparatiyely small per capita increase in the use of silver by such vast numbers would not only rapidly absorb any existing surplus, but possibly augment demand in excess of any current sup- ply.* The tiue economic policy of a country like the United States, which is a large producer and seller of silver, would therefore seem to be, to seek to facilitate such a result, by removing all obstacles in the way of commerpe between itself and silver-using countries, in order that, through in- creased traffic and consequent prosperity, the demand for silver on the part of the latter may be promoted. The great reduction in the cost of transportation of com- modities has been one of the most striking features of recent economic history; and how essential this reduction has been, and is, to the achievement and maintenance of the present conditions of civilization, may be inferred from the circumstance that '' it takes an annual movement of about a thousand tons one mile to keep alive each inhabitant of the United States." Produce is now carried from Australia to England, a distance of eleven thousand miles, in less time and at less cost than was required a hundred years ago to convey goods from one extremity of the British Islands to * According to statements submitted to the Royal (English) Commis^ioD on Trade Depression, " The quantity of pure silver used for coinage purposes, during the fourteen years ending 1884, was about eighteeD per oent greater than the total production during that period ; and there are other estimates which place the consumption at a still higher figure. It is to be remembered that the coinage demand is fed from other sources than the annual output of the mines. It is supplied to some extent by the melting down of old coinage. Allowing for this, however, the evidence of statistics goes to show that the coinage demand for tlie metal is, and has been, sufficient to absorb the whole of the annual supply that is left free after the consumption in the arts and manufactures has been supplied ; and this conclusion is supported by the fact that nowhere throughout the world has there been any accumulation of un- ooined stocks of the metal." — London Economist, FUTURE TRADE OP THE EAST. 461 the other. The average cost of transporting each ton of freight one mile on the Pennsylvania Railroad daring the year 1887 was ^ff^ of a cent At first thought it would seem as if improvement in this sphere of human effort had certainly found a limit ; hut there are re^isons for believing that even greater reductions are possible. Apart from im- provements in machinery, and greater economies in operat- ing, very few of the great lines of transportation, especially the railways, have as yet sufi&cient of business to continuously exhaust their carrying capacity ;* but, when this is effected, and the present ratio of a large class of fixed expenditures to business is thereby diminished, lower rates for freight, from this cause alone, will be permissible; all of which, however, is simply equivalent to reaffirming the old trade maxim, that it costs proportionately less to do a large than a small business. An anticipation of an immense increase in 'the near future, in the commerce between the countries of the western and eastern hemispheres, owing especially to the introduc- tion into the latter of better methods for effecting exchanges and transmitting information, is certainly warranted by recent experiences. Thus, if the trade between the United Kingdom alone and the leading countries of the East, ex- clusive of India, continues to increase in the next quarter of a century in the same ratio as it has during the last quarter, when commercial facilities were much less than at present, its aggregate value of $190,000,000 in 1860, and $427,000,000 in 1885, will swell to over $1,000,000,000 in the year 1910 ; and, beyond that date, to an amount that must be left to the imagination. That the only possible future for agriculture, prosecuted for the sake of producing the great staples of food, is to be found in large farms, worked with ample capital, especially " * During the year 1887 the mileage of emptj freight-care on the Chicago, Milwaukee and St. Paul Bailroad was reported at 61,210,749, or moie than one third of the total mileage run by loaded fieight-can. 462 RECENT ECONOMIC CHANGES. in the form of machinery, and with labor organized Bome- what after the factory system, is coming to be the opinion of many of the best authorities, both in the United States and Europe. As a further part of such a system, it is claimed that the fkrm must be devoted to a specialty or a few specialties, on the ground that it would be almost as fatal to success to admit mixed farming as it would be to attempt the production of several kinds of diverse manu- factures under one roof and establishment. Machinery is already largely employed in connection with the drying and canning of fruit and vegetables, and in the manufacture of wine. In the sowing, harvesting, trans- porting, and milling of wheat, its utilization has reached a point where further improvement would seem to be almost impossible. In the business of slaughtering cattle and hogs, and rendering their resulting products available for food and other useful purposes, the various processes, involving large expenditure and great diversity of labor, especially in " curing," succeed each other with startling rapidity, and are, or can be, all carried on under one roof, and on such a scale of magnitude and with such a degree of economy that it is said that, if the entire profits of the great slaughtering establishments were limited to the gross receipts from the sjile of the beef-tongues in the one case and the pigs' feet in the other, the returns on the capital invested and the busi- ness transacted would be eminently satisfactory. It is not, however, so well known that the business of fattening cattle by the so-called " factory system," on a most extensive scale, has also been successfully introduced in the North- wostorn and tnins- Mississippi States and Territories, and that great tirms have at present thousands of cattle gathered uiulor one roof, and undergoing the operation of fattening by the most continuous, effective, and economic processes. The rt^sult^ show that one laborer can take care of two hun- dreii stivrs undergoing the process of grain-feeding for the shambkv^, in a systematic, thorough manner, with the ex- IMPROVED TREATMENT OP CATTLE. 463 penditnre of much less time and labor per day than the ordinary farmer spends in tending fifteen or twenty head of fattening steers under the disadvantages common upon the ordinary farms. In these mammoth establishments ^' a steam-engine moves the hay from one large bam to another, as needed, by means of an endless belt, and carries it to a pow- erful machine where it is cut into lengths suitable for feed- ing, and afterward carries the cut hay by other belts to the mixing-room where by means of another machine it is mixed with corn-meal, the com having been previously shelled and then ground on the premises by power from the same en- gine. Again, the mixed feed is carried automatically to the feed-boxes in the stalls. The same engine pumps the water for drinking, which runs in a long, shallow trough within reach of the steers ; and even the stalls are cleaned by water discharged through a hose, the supply being raised by the engine and stored for use. The steers are not removed from the stalls in which they are placed from the time the fat- tening process is begun until they^are ready for transporta- tion to the big establishments above mentioned for system- atic slaughtering. The advantages of such establishments are not, moreover, confined to labor-saving expedients merely. The uniformity of temperature secured through all kinds of weather is equivalent to a notable saving of feed ; for where fluctuations of temperature are extreme and rapid, and not guarded against, '^ a great deal of the grain which the farmer feeds is ' blown away ' after having been consumed by his stock," in form of vital heat, strength, and growth, which are the products of the conversion of the grain on diges- tion.* * It has been found that the pretient usual method adopted on Weetem iknna of feeding jrrain, especially com, without previous grinding, is most oofltly, as the grain in its natural condition is imperfectly digested. Another e^riou/ objection to the imperfect methods of the ordinary farm in grain- feeding is, that the grain is fed in a too concentrated form ; the fact being unknown, or disregarded, that the thrift of the firttcning animal depends 464 RECENT ECONOMIC CHANGES. How great a revolntion in the business of agricoItnTe is yet to be effected by the cultivation of land in large tracts, with the full use of machinery and under the factory-sys- tem, is matter for the future to reveal ; but it can not be doubted that the shiftless, wasteful methods of agriculture, now in practice over enormous areas of the earth's surface, largely on the intimate admixture of ground grain with oouve forage ; and that hay, also, most be ohopped, and more thoroughly intermingled with it, for the attainment of the b68t resalts. But the chopping of the hay and straw and the mixing with meal and water are laborious operations, and hence the economy of applying the steam-engine, and thus saving labor in the busineH of feeding. Another saving is in building materials : the laiger the structure in which the machinery, the hay and grain, and the animals are kept, the Icaa the proportionate quantity of lumber needed ; and then, again, in such an establishment, temperature and ventilation, which in ordinary farming ars matters that receive little attention, ar6 economically and effectively regulated. An American practical farmer, the owner and manager of seven thousand acres (Mr. H. H — '—, of Nebraska), to whom the writer is indebted for many items of information, communicates the foUowing additional review of this subject from the American (Western) standpoint: ^*The average Western larm is now recklessly managed, but capital will come in greater volume and set up processes which will displace these wasteful methods. The revolution is certain, even if the exact steps can not now be precisely indicated. At present tho hay, and much of the grain, and nearly all of the tools and imple- ments, are unsheltered ; and more than fifty per cent of the hay is ruined for a like reason, while the animals thcnLHclvcs (I do not mean now on the wild- stock ranges, but even on the trans-Missouri farms) have no roof over their heads, except the canopy of heaven, with the mercury going occasionally twenty and even thirty degrees below zero. These wasteful methods in farm- ing are in part promoted by the United States homestead law, and the occu- pution of the hitherto incxbaubtible expanse of cheap lands. When the igno- rant, degraded, and impecunious can no longer acquire a hundred and sixty acres upon which to employ their barbarous methods, and when the land already taken up shall have risen from the low prices at which it now 8tands to fifty dollars or more per acre, a now dispensation will arrive. Neither tho cattle, nor the food whieh the cattle consume, will then be nusod by any i^ucb methods as now prevail : neither will they be exposed to the elements in winter. True enou}:h, tho opening up of other virgin fields in Australia, South America, Africa, and elsewhere, may retard this rise in the value of the land in tho wc8tm men, 400 ; limitation of wants of, 400. Apothecary, modem, changes in busi- ness of^ 54. Argentine States, bounties on export of meat, 809 ; meat product of^ 160 ; progress of, 455. Armies of Europe, coat of, 822 ; num- bers of men in, 822. Art, impolicy of taxing, 890 ; stimulus to industrial deyelopment, 890. Artists, increased opportunitiea for employment of, 888. Arts, disappearance of certain, 55. Asia Minor, famines in, 885. Associations, co-operative, 451, 452. Atkinson, Edward, inveetigationa of^ 209, 258, 842, 409, 412 ; on the cost of food, 258, 841 ; on the cultivated land of the United States, 176 ; on the economic value of a glaaa of beer, 405. Australia, conmieroial distress in 1885, 2; recent progress of, 454; wages of labor in, 862. Bacteriology, discoveries in, 848. Bananas, consumption of, 889. Banking, concentration of, 99. Bank-notes, reduced cost of making, 58. Bank of France, gold and silver re- serves In, 211 ; new notes of, 58. Barter, three forms of^ 219. Bastiat's law of the distribution of capital, 870. Bear, W. E., on the meatHrapply ci the United Kingdom, 158. Beaulieu, Leroy, on the cost of living in France, 404. Beef-slaughtering, economics in, 97. Beer, eoonomic value of. a glass of, 405. Beet-root sugar, bounties, European, experience of, 295; production of, 127, 129, 180. Bell, Sir Lowthian, cm the prices of iron, 189. 480 RECENT ECONOMIC CHANGE& Bessemer steel, importanoe of the in- vention, i8. Bessemer steel rails, average prices of, 1888-' 86, 48 ; comparative prices in the United States and Great Britain, 820, 472. Bi-metalism, 225. Bi-metallic controversy, relation of, to civilization, 256. Bleaching-powders, recent prices of, 158. Bombay, recent economic experiences of, 484. Boot and shoe industry, displacement of labor in, by machinery, 52. Boot and slice manufactm^, division of laTx>r in, 94. Bottles, displacement of labor in mak- ing, 52. Bounties, on shipping, 809; sugai^ production, 126, 128, 295, 299 ; ulti- mate effect on production, 806. Brazil, commercial policy of, 272. Bread, cost of manufacture and distri- bution, 58 ; question of future scar- city, 177 ; reduction in the cost of, in Great Britain, 86. Bridge, Brooklyn, economic experi- ences of, 385. Bright' 8 dLicasc, increase of, 350. British commercial sentiments, change in, 266. BritL>h exports and imports in 1887, comparison of volume and values, 84. British industries, growth in fifty years, 62. British people, purchasing power of, 356. British shipping, supremacy of, 318. Brooklyn (N. Y.) suspension-bridge, 835, 886. Bullion, increased facilities for mov- ing, 213. Business, motlem conditi.-ns of, 107 ; new conditions entailing disease, 850. Batter, artilioifll, 449. Buttons, Qhanges in mannfiietaFB and style, 889 ; onff, ooaditiona of mann- fiMitare, 92. California, minimuin cost of growing wheat in, 96. Canal, Liverpool and Maaobestflr, 112. Canals, in France, recent ezpeiienoe of, 118 ; in the United States, com- parative ntea on, 118 ; return to the use of, 112; Sues, eoonomio influ- ence of, 29. Capital and labor, present relafcioiia of, 91. Capital, available, in the worid, 217 ; impairment in value of, 418; in- vested in sugar-refining, 98. Capitalistic system of production, ad- vantages of, 899 ; law of deetmotion of, 869. Carpenters of Paris demand proteo- tion, 281. Carrying-trade, on land, revolution of, 40 ; on sea, 87. Cattle, new methods of fattening, 468 ; use of sugar for feeding, 801. Century, nineteenth, place in history, 465. Cereals, British, recent decline in the prices of, 90 ; regulation of the prices of, 45 ; world's surplus, where stored, 45. ^ Chad wick, David, on the laboring- classes of Great Britain, 856. Cheese, improvements in manufacture of, 162 ; recent price experiences of, 162. Chemicals, recent decline in prioes of, 158. Chemnitz, condition of labor in, 865. Chewing-gum, price and demand for, 199. Child labor, increase of, 95. Children, reduction of death-rate in British union poor-schools, 848. Chili, deposits of nitrate of soda, 156. INDEX. 481 CbinA, Cochin, oommeroe and trade of, 276 ; inferiority in tea-produo- tion, 158 ; recent famines in, 71, 885. Chineee expulsion from the United States, 286 ; immigration, appre- hension of, 874. Cigars, increase in consumption of, 387. Cinchona- trees, coltiyation of, in the East Indies, 15i. Cincinnati, market prices for 188^*87, 201. Circulation, monetary, of the United States, 221-228. Cities, aggregation of population in, 852; tendency of population to, 482. Civilization and barbarism, changes in the conditions that define, 64. Civilization, high, antagonistic to the use of silver, 255 ; modem, tendency of, 824 ; present, made possible by machinery, 836. Civilizations, money of, varying, 258. Clearing-houses, recent statistics of, 214. Cloth, cotton, reduction in the prices of, 258. Clothes, cheap, purchasers of, 481. Clothing, cheap, benefit of, 430 ; pro- duction of materials for, 258 ; ready- made, increase in sizes demanded in the United Sutes, 848. Coal, displacement of use by natu- ral gas, 56 ; eoonomy in consump- tion of, 150; power evolved from consumption of, under modem con- ditiims, 88; production in Bussia, 280 ; product of the United States, 149 ; effect of miichinery on, 50 ; re- cent production and price experi- ences of, 148; reduction in con- sumption of, by ocean-steamers, 88 ; world's product of, 149. Coal-tar colors, economic influence of, 55. Cofifoe, recent production and price ex- perienoes of, 152 ; variations in price and consumption of, 880; world's annual production of, 152. Coinage of the world, tri-metallic, 254. Coinage, silver, of the United States, 228. Coin, small use of, in bank transac- tions, 214. Coins, use of small, when necessary, 252. Colonial policy of France, 276. Comity of nations, decline in, 285. Commerce, foreign, of European coun- tries, 290; how the telegraph has revolutionized, 82 ; ocean, of the world, how carried, 814. Commercial intercourse of nations, how restricted, 816. Commodities, divergence in price- movements, 200 ; modem condi- tions, for cheap production, 74; per capita consumption of, in Great Britain, 856 ; prices of, and the de- cline in the value of silver, 250 ; sup- ply of^ governed by different laws, 81 . Compensations for economic disturb- ances, 480. Competition, social influences of, 452. Connecticut, cost of food in alms- houses of, 841; decline in land- values in, 425; purchasing power of wages in, 405, 409. Consumption, increase in consequence of reduction of price, 888 ; of com- modities, stimulants to, 880; rela- tions to production, 830 ; relation to price, 879. Co-operation, analysis of, 452. Co-operation and the labor problem, 108, 104. Copper, modem cost of producing, 135; production and price-experi- ences of, 134 ; ** syndicate," history of, 137. Copper money, conditions for use cd^ 253. Coral, decline in prices of, 195. Cores, monetary experiences of, 258. 482 RECENT ECONOMIC CHANGES. Cora, export of American, to Italy, 91 ; product of the United States, 884; shelling of, 884. Corn laws, effect of repeal of, 260. Cotton, how bought, 110; manufact- ure of the United States, relation of wages and service, 878 ; purchas* ing power of, at different periods, 220; recent price-experiences of, 179 ; reserve stocka of, 182 ; world's supply of, 181. Cotton cloth, relations of price and consumption, 882. Cotton &brios, recent increased con- sumption of, 180. Cotton-growing, conditions for profit- able, 100. Cotton-mills of the United States, di- vision of employ^ in, 95. Cotton piece-goods, exports of, to India, 240; prices and product, 1865-'85, 220. Cotton-seed oil, use of, 159. Countries, average earnings of people of different, 862 ; non-machinery- using, exempt from economic dis- turbances, 68 ; of greatest progress, 454. Cracker-bakeries, consumption of tin- plate by, 108. Credit and capital, effect on trade of the world, 217. Crime, decline in Great Britain, 845, 859 ; increase in the United States, 345 ; recent Btatistica of, 845 ; rela- tions to education, 859. Crises, financial, of the last century, 81 ; periodicity of, 81. Crop failures in 1879-'81, 6. Cuba, improved production of sugar in, 102. Culture, influence of, on consump- tion, 77. Cycles of panic and speculation, 80. Dakota, wheat product of, 67, 170. Death-rate, decline in, 846. Debtors, relative buidens of, 990. Demonetiiation of tilver, mMniDg of term, 280. DiamoDda, market for, in the United States, 197 ; recent production and prices, experiences ot^ 196, 107; South African supply of^ 190 ; value of, exported from South Africa, 197. Discontent, societaiy, ceases ot^ 407. Diseases, children's, extinotion of, 848; of civilisation, 849, 850. Distress of agricultural labozen in Europe, 876-878. Distribution, modern economies in, 110; of products, dii»turbeDoe in old methods of, 100. Disturbances, economic, mnee 1878, explanation of, 61 ; indostrial, in connection with the invention of stocking-making machinery, 867. Dollar, silver, of the United Statee, experience of, 227. Earnings of people of different na- tionalities, 862. Earth and rock, reduction ia the coet of excavating since 1 859-* 60, 50. East, possible future trade of the, 461. Economic, disturbances since 1878, 1 ; outlook, the, 324, 427 ; peculiarities in the United States, 387. *^ Economist,'' London, tables of index prices, 122. Economics, infiucnce of small, 85. Educational system of Great Britain, 859. Egypt, reclamation of, 459. Eight- hour law, 489. Electricity, industrial use of, 66 ; in- fiucnce of prospective use on labor conditions, 400 ; relations to trade, 65. Employment of labor, changing con- ditions of, 375. Engines, compound steam, economi- cal results of, 88. England, banking deposits of, in INDEX. 483 1874-1884, 212; depr«»^on in, 18; pauperiBQi in, 844; present popa- Union not formerly poetible, 880. Eiunope, development of trade under oonditions of free exchange, 268 ; liberal commercial movement ia, from 1854-'70, 261, 262 ; meat, sup> ply of, 161 ; military Hystem of, Z2S ; present wheat product of, 179 ; re- actionary commercial policy of, 287, 292 ; recent experience of their mereantile marines, 811. Evolution, illustration of sodetary re- form throttj^h, 862 ; material, proa- pect of continuance, 67 ; of industry and society, 827. Exchange, evils from fluotnations of, 288; fluctuations in, an invariable accompaniment of trade, 288. Export bounties on sugars, 126-129. Failures in business, ratio of, 851. FamlDes, prevention of, 45. Farming capital, losses of, in Great Britain, 87. Farm-laborers, English, wages of, 88. Fashion, Influence of, on the price of wool, 188. Fish, cultivation of, for food, 889 ; fe- cundity of, 839; low prices of, in 1884, 2 ; recent decline in prices of, 168. FUnt, Proil Austin, on progress in the treatment of diseases, 848. Flour, displacement of labor in manu- facture of, 52 ; labor, cost of, under modem conditions, 58 ; low cost of ocean transportaUon, 165; manu- facture, new conditions of, 101. Flour-mills and bakeries, consolida- tion of, 101. Food, equalization of prices and sup- ply, 885 ; increase in variety avail- able, 889 ; reduction in the cost of, 258. Foods, increase in consumption of, in the United States, 880. Foraes, controlling business life, 849. France, commercial antagonism with Italy, 274; decline of land-value in, 424; depression of agriculture in, 177; depression of industry in 1888-^88, 9 ; exemplification of the Kalthusian theory in, 888 ; experi- ence with shipping bounties, 810; food experiences in the eighteenth century, 71 ; indemnity paid to Qer- many, 226 ; monetary condition of^ 215 ; slow increment <^ popula- tion in, 888 ; statistics of wages in, 410 ; taxation in, 24. Freedom, commercial, curious illus- tration of the benefits of, 49 ; effect of, on the masses, 868. Freight rates, great reductions on American railroads, 40. Freights, ocean, rec^'^^ir^ ^^ Itf; **" roaos, average rates in the United States, 1888-'87, 164 ; railroad, de- cline in rates of, 164 ; recent price, experiences of, 168, 164. Frenchmen, fhigality of, 888. French sugar bounties, 129. Gain, greatest, that has accrued to the the masses, 444. Gas, natural, use of, 56; relation of consumption to price, 882 ; water- oil, advantages of, 57. Geoiipa, decline in the value of land, 426. German Empire, comparative indus- trial results in, 62. Germany, concentration of banking in- terests in, 99 ; experience with sugar bounties, 129 ; financial and indus- trial depression in, in 1878, 4 ; gold and silver bank reserves, 211 ; mon- etary system, change in, 224, 225 ; in 1873, 225 ; old coinage of, 228 ; re- cent social changes in, 404 ; savings- banks in, 212 ; state regulation of in- dustries, 282; Sunday labor in, 269. Gibbs, Mr. H. H., on the formation of prices, 125. 484 RECENT ECONOMIC CHANGES. Oiffen, Robert, eoonomio inyestifra- tions of, 119, 152, 166, 841, 858, 861. GilohriBt-Thomas steel process, 48. Qlass-makiiig, American, wages in, 871. Gold and prices, 128. Gold and Silver Commission, British report of, 189, 190. Gold and silver unlike other com- modities, 217. Gold, monetary stock of, 208 ; present annual production of, 210 ; relation to British exports and imports, 212 ; saturation-point of, in exchanges, 254 ; scarcity theory, 205-208 ; sta- bility in cost of production, 256 ; two functions of, 220; world's an- nual product of, 207, 208. Government relations to national life in Great Britain, 860. Grain-cradle, results of invention of, 834. Grain, local differences in European prices, 46; variations in prices of, in the seventeenth century, 46. Grancey, M. de, study of Ireland, 877. Great Britain, co-operative societies of, 103 ; cotton-manufacturing in- dustry of, in 1888, 184; monopoly of tin-plate manufacture, 146 ; na- tional income of, 357 ; present con- ditions of wheat-supply, 49 ; rela- tions of government to national life, 360; statistics of income-taxes in, 354. Grosvenor, William M., on changes in prices, 411. Guild system of the middle ages, re- vival of, 281. Handicraft products, recent price ex- periences of, 191. Handicrafts, destruction of, 96. Hand-labor occupations, permanent condition of, 68. Hemps, Manila and Sisal, prices of, 204. Hides, decline in prices of, 198. History, extraoidlDaij oommereial, 277 ; plaoe in, of the period from 1860 to 1885, 27. Hog-products of the United Statea, decline in export of^ 817. Holland and the silver queation, 849. Hops, recent price experiences oi^ 195. Horse-flesh, consumption of, in France, 449. Hours of labor, 414, 415. House-decoratiye industries, 888. Human race, increased power of^ through railroad agendes, 41. Dlinois, decline in land-values in, 426. Hlitcracy, decline of, in Great Britain, 860. Immigration, restrictions on, 285. Index-number system of prices, 120. India, British exports to, 240; In- dia Council bills, influence of, on price of silver, 229; increased ex- ports of, 240; Malthusian theory exomplifled in, 831 ; new indus- tries of, 248; periodical famines in, 331 ; population of, 832 ; prod- uce, recent change in the condi- tions of distribution, 81 ; produc- tion of tea in, 158 ; ndlroad system of, 171 ; reduction of length of voy- age to and from, since 1869, 29; stability of prices in, 193; sugar production of, 306; wheat produo- tion of, 168. Individualism of machinery operatives, 93. Indo-China, commercial experience of, 276. Industrial depression in England, 18 ; recognition of a universal cause of, 25 ; since 1888, relative severity of, in different countries, 8 ; specula- tion as to causes, 19, 22. Industrial development, modem ra- pidity of, 63. Industrial expansion of Germany, 62. INDEX. 485 Industrial over-prodnedon, 78, 74. Indiistiies^iron and steel, of the United States, 818; extinotiou of certain, M,55. Industry, artificial, failure of, in Europe, 290. Inflation of business prior to 1878, 8. Intellif^noe as an element of discon- tent, 40L Interest, reduction in rates of, 421. International halanops, economy in settling, 218. Inventions, destructive influence of, 869; of the future, 65. Ireland, causes of discontent in, 877, 408. Iron and steel, comparative cost in the United States and Great Britain, 820, 487; effect of cheapening on railroad construction, 49 : enhanced cost of, in the United States, 818, 820. Iron,annnal consumption in the United States, 820, 469 ; cause of recent de- cline in prices, 189; comparative consumption in the United States and Great Britain, 818; decline in the use of the puddling process, 141 ; industry of the United States, capi- tal invested in, 821, 478. Iron, production an tion and price, 126; increase in production of, 128 ; modem planta- tion production of, 102; multiple uses of, 801 ; peculiarities of con- sumption in the United States, 887 ; production of the world, 128 ; profit in refining, 92 ; refining, magnitude of capital invested in, 92 ; Sandwich Islands product, 800; email profit in refining, 98. Suicide, increase of, 850 ; statistics of^ 860. Sunday labor, 269. Surgery, prospective advances in, 348. Swank, James M., report on the iron and steel industries of the United States, 318, 467. Tallow, recent decline in prices of, 159. Tariff, protective, influence of, in Ger- many, 294 ; recent French, 278. Toriffs of Continental Europe, 270, 273; taxes on iron and steel im- ports into the United States, 822. Taxation, burden of indirect, 321 ; INDEX. 491 illiifitratioiis of increased oonsnmp- tion oontingent on reduction of, S84, S85 ; indirect, burden of, 818. Taxes, incidents of indirect, illus- tration of, 818 ; on food, 448 ; on iron and steel in the United States, 821, 467. Tea, importation, changes in methods of, 107; increased consumption in Great Britain, oontingent on tax reductions, 884; recent production and price, experiences of, 158, Teachers, increased opportunity for employment of, 888. Telegraph, influence of, on the con- ditions of business, 83; rates, re- cent reductions in, 166. Telegraphy, ftiture wider utilization of, 66. Telephone, creation of employments by, 887 ; ftiture utilization of, 66. Textile manufactures, division of la- bor in, 95. Time, economic advantages ttom the saving of, 445. 'Hn, production and price-experiences of, 145. Tin-man, changes in his business, 107. Tin-plate, economy in the manufact- ure of» 108. Tin-plates, improvements in manu- facture of, 146; production and price-experiences of, 106, 146. Tobacco, increase in consumption of, 888. Tolstoi^s views on dvil society, 829. Tolu, balsam, production, prices, and uses of, 199. Tonnage, ocean, over-supply of, 168 ; statistics of British, 85. Towns, movement of population to- ward, 858. Trade, changes in, through the agencj of the telegraph, 82 ; depremion atj since 1878, 1; emancipation of, from restrictions, 861; European, impid development under oommer- cial freedom, 268 ; experiences from 1872 to 1886, 15, 18; foreign, of Europe, recent changes in, 288, 289; governmental interference with, 260: illustrations of the smoothness of, under natural conditions, 47; increase in the occupation of, 851 ; influence of fluctuating paper money on, 289; international con- ditions of, 247 ; monopolization of, 97 ; of the world, how carried on, 217 ; restrictions, logical results of, 280 ; retail, changes in, 109 ; volume of, not contracted by depression in prices, 82. Transportation, effect of reduction of cost of, 460. Travel, educating influences of, 401. Treaty, Anglo-French, of 1860, 261, 262. Trinidad, restrictive tariff of, 265; small retail purchases in, 258. Trusts, formation and extension of, 294 ; origin of^ 74 ; problem of, 75, 76. Trust, Standard Oil, 188. United Kingdom, daily exchanges through clearing-houses, 214; in- crease in specific productions, 876. United States, annual increase of busi- ness in, 85 ; conditions of existence in, 887; curious monetary experi- ence of, 221 ; decline of its mercan- tile marine, 814 ; financial crisis in 1873, 5 ; gold stock per capita, 215 ; idle population of, in 1885, 18 ; illus- tration of depression of business in 1884-*85, 9 ; increased tariff rates of, 278 ; movement in 1854 for free- dom of trade, 261 ; pauperism in, 844; production and consumption of paper in, 155 ; railroad freight transportation of, in 1887, 41 ; re- cent advance of wages in, 408 ; re- lation of the silver dollar to its 492 RECENT ECONOMIC CHANGE& coinage Bystem, 227; relative ex- ports of, 178; sugar bounties in, 800 ; the world's disturbing &otor, 454 ; use of shoddy in, 187. Value-perceiving faculty, 458. Value, preference for single standard of, 257. Vessel, sailing, disappearance of the, 89. Vessels, economy of construction and management of, 85; large, 99; small, unfitness for cheap trans- portation, 99. Victoria, colony, wealth of, 455. Vineyards, destruction of, by disease, in France, 28. Volume of circulating media, does it control prices ? 222. Wages, advances in rates of, 406 ; com- parative advance of, in England, France, and the United States, 408 ; curious use of high, 77; equaliza- tion of, in different countries, 105 ; highest, where paid, 362 ; influence of machinery on, 437 ; in the iron- fumacea of the United States, 321 ; of cotton-raill operatives in Rhode Island in 1840 and 1886, 50; on wheat-farms in the United States and Prussia, 59 ; proportion enter- ing into the cost of pins, 60 ; rela- tion to the cost of living, 404 ; rise of, concurrent with the fall in prices of commodities, 417 ; source of pay- ment, 417 ; tiieir relation to money, 253. "Wages and machinery, 371-373. Walker, Joseph H., investigations in respect to business success, 352. Wants, creation of new, 389. War expenditures, 322. War, Franco-German, economic re- sults of, 268. Wars, contrast between ancient and modem, 823. Watches, American mannfteten at, 888. Wealth, aocnmnlation dependoit on valne-peroeiving fiicoitj, 458; equalization of^ in Qreat Britain, 858; influence of protective tariflb on the distribution of^ 284; muta- bility of, 852. Wealth of France, 854; Great Britain, 854. Wealth of Great Britain, changea in items of, 428. Wealth of the United States, 884. Weetem Union Telegraph Company, work of, in 1887-'88, 67. West Indies, recent experience in sugar production, 180 ; sugar prod- uct of, 801. Whalebone, increase in price of, 195. Wheat, acreage, recent reduction in Great Britain, 88; American, re- duction of export prices of, 89; American, variations in pri<% from 1879-'81, 7; comparative cost of growing under different conditions, 98; exhaujstion of value by trans- portation, 334; extraonlinary ex- portations of the United States in 1879-'81, 6; future supply of, 176; Indian, cause of increased supply, 244 ; labor coet of, in Dakota, 57 ; lowest recorded price of, 167 ; movements and prices in 1888, 47 ; over-production of, 173 ; phenome- nal decline in, 175 ; price increased by taxation, 448; product of Eu- rope, 179 ; of the United States, 169 ; re<»nt price - experiences of, 166-176. Women, emplojrment in textile in- dustries, 398; increased opportuni- ties for employment, 336. Woolen industry of Ireland, condi- tion of, 373. Wool, production and prices of, 184, 187. INDEX. 493 Wool-prioes, how iniiuenoed by tho use of shoddy, 187. Wools, Australian, decline in the prices of, 188. Work, average daily houra of, in 1860, 415 ; limitation by statute, 438. Work breeds work, 894. Workingmen, increase in the com- forts of, 77. World, agG^repratc capital of, 217 ; trade of, how carried on, 217 ; what it did not have fiily yean •go, C4. Zollverein, German trade, conditions of; in 1870, 262; proposed Euro- pean, 295. THE END. 22 D. APPLETON & CO/8 PUBLICATIONS. THE HISTORY OF BIMETALLISM Ilf THE UlflTED STATES* By J. Laurence Lauohlim, Ph. D., Assistant Pro- fessor of Political Economy in Hanrard University ; author of **The Study of Political Economy," etc With Sixteen Charts and nu- merous Tables. One volume. 8to. Cloth, $2.26. ** Altboogh the plan of this book was coooeiTed with the riew of pretenting simply a history of bimetallism in the United States, it has been necessary, in the nature of the snbiect, to make it something more than that. And yet it was my hope that the effect of an historical InaalrT in enppressinf some of the theoretical Taip^M of the dar misrht be reanzea by showing what oar actual experience with bimetallism has been in contrast with the assertions of some writers as to what it may be.''— .^Vwn Prtfaet. THE STUDY OP POLITICAL ECOlfOMT. HINTS TO STUDENTS AND TEACHERS. By J. Laurescb Laughliji, Ph. D., Assistant Professor of Political Economy in Harvard University. 16mo. Cloth, $1.00. ** The existence of this little book Is dne to an attempt to convey, by lectures to students, an nnderstaudlng of the position which political economy holds in r^fard, not merely to its sctuai useftUness for every citlxen, hot to its dfiscipUnary power. . . . 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Hb sketches in the magazines have well been called fascinating, and the present volume, being a collaction of various papers, will fully sustain hb reputa- tion as am eminendy entertaining and suggestive writer. ** * Flowers and their Pedigrees,' by Grant Allen, with many illustrations, b not merely a description of British wild flowers, but a discussion of why they are, what they are, and how they come to be so: in other words, a scientific study of the migra- tioo and transformation of plants, illustrated by the daisy, the strawbexry, the cleavers, wheat, the mountain tulip, the cuckoo-pint, and a few others. The study b a deUght* fill one, and the book b fiwcinating to any one who has eidier love for flowers or curi- osity about them." — Hart/vrd CauroKt. New York : D. APPLETON & CO., i, 3. & 5 Bond Street D. APPLETON & CO.'S PUBLICATIONS. yjPPLETONS* STUDENTS' LIBRARY. Coo- -*^ sisting of Thirty-four Volumes on subjects in Science, History, Literature, and Biography. In neat i8mo volumes, bound in half leather, in uniform style. Each set put up in a box. Sold in sets only. Price, per set, $20.oa Qmtaimng: 5voL HoMSR. By W. E. Gladstone. Shakspbrb. By E Dowden. EIngush LrrsRATUHB. By S. A Brooks. Greek LiTBRATURK. ByR.CjEBB. Philology. By J. Psilb. English Composition. By J. NiCHOL. Geography. By G. Grove. ChAssiCAX. Geography. By H. F TOZER. Introduction to Science Prim ERS. By T. H. Huxley. Physiology. By M. Forster. Chemistry. By H. E. Roscoe. Physics. By Balfour Stewart. Geology. By A. Gsikib. Botany. By J. D. Hooker. Astronomy. By J. N. Lockybr. Physical Geography. By A Geikie. Political Economy. By W. S. Jkvons. Logic. By W. S. Jbvons. History of Europe. By EL A. Freeman. History of France. By C. M. VoNGE. History of Rome, By M. Creigh- ton. History of Greece. By C. A. Fyffe. Old (Jrrek Life. By J. P. Ma- haffy. Roman Antiquities. By A. S. WiLKINS. Sophoclks. rjy Lf.wis Campbelu Ki'RiPiDBS. Hy j. P. Mahaffy. Vergil, By Prof. H. Nettlkship. Livy. By W. W. C'APRs. Demosthenks ByS. H. Butcher. Milton. By S. A- Brooke. <( The Apostouc Fathses axd tub Apologists. By Rer. G. A. Jackbom. The Fathers or the TmxD Can mat. By RcT. G. A. Jackson. Thomas Carlyle: His life, his Books, his Theories. By A. H. Gubrnsbt. Ralph Waldo Emrbson, Phiknopbcr and PoeL By A. H. Guernsey. Macaulay: His Life, his Writings. By C H. Jones. Short Life or Charles Dickbks. By C H. Jones. Short Lite or Gladstonb. By C H. Jones. RusKiN on Painting. Town Geology. By Charles Kincslby. The Childhood op Religions. By £. Clood. History of the Early Churck. By E. M. Sewsll. The Art of Speech. Poetry and Prose. By L. T. TowNSBND. The Art of Speech. FJoquextce and Logic. By L. T. Townsend. The World's Paradises. By S. G. W. Benjamin. The Great German Composers. By G. T. Ferris. The Great Itauan and French Com- posers. By G. T. Ferris. Great Singers. First Series, By G. T. Ferris. Great Singers. Second Series. By G. T. Ferris. Great Viounists and Pianists. By G. T. Ferris. ytPPLETOiVS' ATLAS OF THE UNITED ^^J- STA TES. Consisting of General Maps of the United Slates and Territories, and a County Map of each of the Stales, printed in Colors. Imperial 8vo. Cloth, $1.50. The Atl.a* also contains Descriptive Text outlining the History, Geo^phy, and Political and Fxiiicitional Organization of the Stitcs, with latest Statisucs of their Resources and Industrie*. NEW YORK: D. APPLETON & CO., PUBLISHERS. D. APPLETON & CO.'S PUBLICATIONS. IDECOLLECTIONS OF THE COURT OF THE -/V TUILERIES. By Madame Carette, Lady-of-Honor to the Empress Eugenie. Translated from the French by Elizabeth Phipps Train, i2mo. Cloth, $i.oo; paper cover, 50 cents. The inside view which these Recollections g:ive of the Court of Louis Napoleon is fresh and of great interest. " We advise every one who admires good work to buy and read iL "—Zondon Morning Po9t, n/TEMOIRS OF MADAME DE REMUSAT '^yj- 1802-1808. Edited by her Grandson, Paul de RiMUSAT, Senator. 3 volumes, crown 8vo. Half bound, $2.25. " Notwithstanding the enormous library of works relating to Napoleon, we know of none ^R^iich cover precisely the ground of these Memoirs. Madame de R^musat was not only lady-in-waiting to Josephine during the eventful years x8oa-x8o8, but was her intimate firiend and trusted confidante. Thus we get a view of die daOy life of Bonaparte and his wife, and the terms on which they lived, not elsewhere to be found."—- y. T. MqU. ** These Memoirs are not only a repository of anecdotes and of portraits sketched from life by a keen-eyed, quick-witted woman ; some of the author's reflections on social and pditical questions are remarkable for weight and penetration. "-•-JVnv V^rM Sun. A SELECTION FROM THE LETTERS OF MADAME DE REMUS A T, 1804-1814. Edited by her Grandson, Paul de R^usat, Senator. i2mo. Cloth, $1.25. n^EMOIRS OF NAPOLEON, his Court and Family, IVl By the Duchess d'Abrantes. In 2 volumes, i2mo. Qoth, $300- The interest excited in the first N^>oleon and his Court by the ** Memoirs of Madame de Rimusat " has induced the publishers to issue the famous " Memoirs of the Ouchess d^Abrantes," which have hitherto appeared in a costly octavo edition, in a much cheaper form, and in a style to correspond with De R^musat. This work will be likely now to be read with awakened interest, especially as it presents a much more favorable portrait of the ipreat Corsican than that limned by Madame de R^musat, and supplies many valu- able and interesting details respecting the Court and Family of Napoleon, which are found in no other work. New York : D. APPLETON & CO., 1, 8, & 5 Bond Street. D. APPLETON d CO/8 PUBLICATIONS' CHIlf A. TRAVELS AND INVESTIGATIONS IN THE MIDDLE KINGDOM. A Study of Its CiviUzation and PoesibiUties. With A Glance at Japan. By James Habrison Wilson, late Major- General United States Volunteers, and Brevet Major-General United States Army. 12mo. Cloth, $1.50. ROUlfDABOUT TO MOSCOW. AN EPICUREAN JOURNEY. By John Bell Bouton, author of "Round the Block.*' 12ido. Cloth, ornamented cover, Russian title-page, 421 pages, $1.50. ** This genial book gives the first tmly American view of the land of NihSllett and NoveliBts. The antbor exposes and playfbUy ridicnles the carrent English misrepresentations of Bnssia. His epicurean circuit for getting into and oat of the empire includes nearlv every country of Europe. He keeps on tbe track of all tbe comforts and luxuries required by American trayelcrs. Toorists will find the Tolume a boon companion. But it la no less designed to please those who stay at home and travel only by book.** BRAZIL: ITS CONDITION AND PROSPECTS. By C. C. Andrews, ex-Consul-General to Brazil ; formerly U. S. Minister to Norway and Sweden. 12mo. Cloth, $1.50. CONTENTS : Preftttorv. Voyage to Brazil. Getting to Housekeeping. Rio and its People. Life and Manners. The Emperor of Braxil. Tiiuca — Pedra Bo- nita. Bituation, Resources, and Climate. American-Brazilian Relations. A Trip into the Interior. Visit to a Coffee-Plantation. Public InstmctioD. Local Ad- ministration. Parliamentary Government. Brazilian Literature. Agriculture and Stock- raisinfir. The Amazon Valley. Beasts of Prey. Slavery ana Emanci- pation. Tbe Beligious Orders. Public Lands and Immigration. ^' I hope I may be able to present some facts in respect to the present situation of Brazil which will be both instructive and entertaining to general readers. My means of acqnaintance with that empire are principally derived from a refidence of three years at Rio de Janeiro, its capital, while employed in the service of the United State** Government., during which period I made a few JonrDcya into the interior.'— i^rvm the Pr^ace. /■^'Y^ A STUDY OF MEXICO. By David A. Wells, LL. D., D. C. L. 12mo. Cloth, $1.00; paper cover, 50 cents. " Mr. Wells's showing ip extremely interesting, and its value is great. Nothing like it has been published in many years/'— iVVw Y