Popular Science Monthly/Volume 31/August 1887/The Economic Disturbances Since 1873 II

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THE

POPULAR SCIENCE

MONTHLY.

 

AUGUST, 1887.


 

THE ECONOMIC DISTURBANCES SINCE 1873.
By Hon. DAVID A. WELLS, LL. D.
II.

WHEN 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 interests of humanity, second to but very few, and perhaps to none, of the many similar epochs of time in any of the centuries 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, obtain a much larger product, "measured by quantity in ratio to a given amount of labor," and reduce the effort necessary to insure a comfortable subsistence 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. In the absence of sufficiently complete data, it is not easy, and perhaps not possible, to estimate accurately, and specifically state the average saving in time and labor in the world's work of production 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.[1] 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.[2] 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;[3] and the British Royal Commission (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 definitely known and accepted have come tremendous industrial and social disturbances, the extent and effect of which—and more especially of the disturbances which have culminated, 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—industrial, commercial, and financial—changes 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 hemisphere with the Indies and the East toiled slowly and uncertainly around the Cape, at an expenditure in time of from six to eight months for the

round voyage. The contingencies attendant upon such lengthened voyages and service, 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 Chinese 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 required; and that spot, by reason of geographical position and commercial advantage, was England. Out of this condition of affairs came naturally a vast system of warehousing in and distribution from England, and of British banking and exchange. Then came the opening of the canal. What were the results? The old transportation had been performed 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.[4] 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 impairment in the value of ships consequent upon the construction 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 enabling vessels not only to be sailed at less cost, but also to carry 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 from eighteen to twenty-five per cent in the consumption of fuel. To which may be added that an iron cargo-steamer of 2,000 tons, which even as late as 1883 cost £24,000 ($120,000) in Great Britain to build, can now (1887) be built with all the modern improvements for about £14,000 ($70,000). In all commercial history, probably no more striking illustration can be found of the economic principle that nothing more clearly marks the rate of material progress than the rapidity with which what is old and has been considered wealth is destroyed by the results of new inventions and discoveries.

Again, with telegraphic communication between India and China and the markets of the Western world, permitting 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 such supplies. If Austria wanted anything of Indian product, it stopped en route, by the Suez Canal, at Trieste; if Italy, at Venice or Genoa; if France, at Marseilles; if Spain, at Cadiz. As a rule, also, stocks of Indian produce are now kept, 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 employment of the former numerous and expensive intermediate agencies.[5] 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 India produce.[6] 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 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 countries intermediate, the shipment arrives; the manufacturer 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 are in the tannery being transformed into leather. What has happened in the case of East India produce seems also likely to happen in the case of the great product of Australia—namely, wool—which for many years has been shipped mainly to London for sale and distribution. For with the increased facilities and reduction in the cost of travel and transportation by the Suez Canal route, the tendency in recent years has been to transfer the market for this wool to the country of its growth; as European Continental, and to some extent American, manufacturers are finding out that by this new arrangement they can have their raw material delivered to them within two or three months of the time of purchase, instead of three or four from the date of shipment to London, and at the same time avoid, to a considerable extent, the "profits" and the "corners" of middle-men and speculators. Under these circumstances the day is probably not far distant when the whole wool-crop of Australia, like the cotton-crop of the United States, will be sold before shipment; and another long-established "course" of trade, which has brought buyers from all the world to London will be broken up, to the temporary injury and loss of some, but to the greater advantage of the many. And in anticipation of this change, the largest warehouses in the world, some covering an area of five acres, have recently been erected in Melbourne, Sydney, and other Australian cities.

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 quantities, 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 nearly 70,000 tons in 1883.

That the same causes are also exerting a like influence upon 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, have declined from 32·5 cents per bushel in 1880, to 16·2 cents in 1885; and to the extent of this decline has the ability of the Indian ryot to compete with the American grain-grower, in the markets of Europe, been increased.

How great was the disturbance occasioned in the general prices of the commodities that enter into Eastern commerce by the opening of the Suez Canal, and how quickly prices respond to the introduction of improvements in distribution, is illustrated by the following experience: The value of the total trade of India with foreign countries, exclusive 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 naturally have been that such a large reduction as ten millions sterling ($50,000,000) in five years, with a concurrent increase in the world's population, could only indicate a reduction of quantities. But that such was not the case was shown by the fact that 250,000 tons more shipping was employed in transporting commodities between 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 quantities entering into trade had so greatly increased during the same time, that 250,000 tons more shipping (mainly steam, and therefore equivalent to at least 500,000 more tons of sail) 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 expressed 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 universal commercial and industrial depression and disturbance.

The deductions from the most recent tonnage statistics of Great Britain come properly next in order for consideration. 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 twenty-two million 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 exactly). What caused this? The introduction of steam hoisting-machines and grain-elevators upon the wharves and docks, and the employment of hydraulic appliances and steam-power upon the vessels for steering, raising the sails and anchors, pumping, and discharging 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 sailing or managing the vessels.

Statistical investigations of a later date furnish even more striking illustrations to the same effect from this industrial specialty. Thus, for 1870, the number of hands actually employed for every 1,000 tons capacity, entered or cleared, of the British steam mercantile marine, is reported to have been 47, but in 1884 it was only 28; or seventy per cent more manual labor was required in 1870 than in 1884 to do the same work. In sailing-vessels the change, owing to a lesser degree of improvement in the details of navigation, has been naturally smaller, but nevertheless considerable; 28 hands being required in 1884 as against 33 in 1870 for the same tonnage entered or cleared; to which it may be added that if in these comparisons the tonnage of freight actually transported had been taken, in place of tonnage entered and cleared, whether light, partially, or fully loaded, the difference in the labor required for maritime transportation in favor of 1884 would undoubtedly have been even greater. Another fact of interest 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 possible. Of the total British tonnage constructed in 1870, only six per cent was of vessels in excess of 2,000 tons burden; but in 1884 fully seventeen per cent was of vessels of that size, or larger. Meanwhile, the cost of new iron ships has been reduced, in Great Britain, from $90 per ton in 1872-'74, to $65 in 1877, $60 in 1880, and less than $40 in 1885-'86. Prior to about the year 1875, ocean-steamships had not been formidable as freight-carriers. The marine engine was too heavy, occupied too much space, consumed too much coal. For transportation of passengers, and of freight having large value in small space, they were satisfactory; but for performing a general carrying trade of the heavy and bulky articles of commerce, they were not satisfactory. A steamer of the old kind, capable of carrying 3,000 tons, might sail on a voyage so long that she would be compelled to carry 2,200 tons of coal, leaving room for only 800 tons of freight; whereas, at the present time, a steamer with the compound engines, and all other modern improvements, can make the same voyage and practically reverse the figures that is, carry 2,200 tons of freight with a consumption of only 800 tons of coal. 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 (12d.) per pound; and including commissions, insurance, and all other items of charge, does not exceed 2 cents (1d.) per pound. Boxed meats have also been carried from Chicago to London as a regular business for 50 cents per 100 pounds. In 1860 6d. (12 cents) per bushel was about the lowest rate charged for any length of time for the transportation of bulk grain from New York to Liverpool, and for a part of that year the rate ran up as high as l312d. (27 cents) per bushel. But for the year 1886 the average rate for the same service was 212d. (5 cents) per bushel. In like manner, the cost of the ocean transportation of tea from China and Japan, or sugar from Cuba, or coffee from Brazil, has been greatly reduced by the same causes.

The above are examples on a large scale of the disturbing influence of the recent application of steam to maritime industries. The following is an example drawn from comparatively one of the smallest of the world's industries, prosecuted 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 Newfoundland. 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 now considered as a favor.

Is it, therefore, to be wondered at, that the 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 then carrying-trade of the world; and that ship-owners everywhere have been unanimously of the opinion that the depression of industry is universal?

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 general 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 1869 to 1·05 in 1885; or, taking the results on one of the standard roads of the United States (the New York Central) from 1·95 in 1869 to 0·68 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 railways for a distance of one mile, for a sum so small, that outside of China it would be difficult to find a coin of equivalent value 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. Reckoning 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 transporting 120,000,000,000 tons one mile. "But if it is next considered 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." Less than a half a century ago, the railroad was practically unknown.[7] 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 transportation to him of the products of other people and countries, 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 25,000 miles existing, at the close of 1884, in Asia, Africa, and Australia combined—its accruing benefits have not, of course, been equal. And while all the inhabitants of the globe have undoubtedly 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 Russia, 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 rather than diminish the line of separation, between the civilized and the semi-civilized and barbarous nations.

Now, while a multiplicity of inventions and of experiences 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; inasmuch as the cost of frequently replacing rails of iron would have entailed such a burden of expenditure as to have rendered the present cheapness of railway transportation utterly unattainable. And it is most interesting to note how rapidly improvements in processes have followed the discovery of Bessemer, until, on the score of relative first cost alone, it has become economical to substitute steel for iron in railroad construction.[8] 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 5,000 pounds of coal, as compared with 10,000 pounds in 1868.

One of the most momentous and what may be called humanitarian 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 failure 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 production and comsumption of all countries made mutually accessible by railroads and steamships. 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 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 commerce, namely, the existence of local markets, with widely divergent prices for such commodities. 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, is shown by the circumstance that in the English debates upon the corn laws, about the year 1840, it was estimated, upon data furnished 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 100 per cent in the price of grain; and another estimate by Davenant and King, for the close of the seventeenth century, corroborates this apparently excessive statement. The estimate of these latter authorities was as follows:

For a deficit
equal to—
There will be a
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 average difference was 26 francs. Since 1870 the greatest difference at any time has not been in excess of 3·55 francs. The following table, given on German authority, and representing the price (in silver gulden per hectolitre) of grain for various periods, exhibits a like progress of price equalization between nations:

PERIOD. England. France. Belgium. Prussia.
1821-'30 10·25 7·35 6·44 5·65
1831-'40 9·60 7·61 7·31 5·27
1841-'50 9·15 7·89 7·99 6·41
1851-'60 9·40 7·84 9·65 8·07
1861-'70 8·80 8·59 9·24 7·79

For grain henceforth, therefore, the railroad and the steamship 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 world's total product of pig-iron increased slowly and regularly from 1870 to 1879, at the rate of about 212 per cent per annum; but after 1879 production increased enormously, "until in 1883 the advance among all nations reached 182·2 per cent on the make of 1870; that of the United Kingdom being 143·0, and of other countries 239·1 per cent." (Testimony of Sir Lothian Bell, British Commission, 1886.) Such an increase, 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 increase in the world's consumption, and finally resulted, as has been before shown (see previous paper), in an extreme depression in the business, and a remarkable fall of prices. One experience from this condition of affairs in the United States is worthy of being placed on record: For a long time the effect of prevailing high prices for pig-iron, coupled with the influence of high protective duties imposed on the imports of foreign iron, was to maintain a large number of inferior furnaces in operation; but after 1882-'83 the most intelligent American iron-producers were compelled, as it were, to meet the stagnation and absence of profit in their business by effecting improvements in the quality of their furnaces, and undoubtedly also in their management; and with such effect that the average weekly capacity of the "anthracite" furnaces of the United States has been increased since 1883 from 220 to 264 tons, and of "bituminous" from 346 tons to 507, or to the extent of 46 per cent.

In the department of textile manufactures, investigation shows that, owing to the greater effectiveness of cotton-machinery, the manufacture of cotton-goods during recent years has also increased in a greater ratio than the increase of population; and that this increase has been going on at the rate of doubling the production in about twenty years. In the United States the doubling period of population is now about thirty-three years; in Europe, about seventy-five years; and, while in Oriental countries the doubling period is not definitely known, it is unquestionably longer than that of the United States. It would, therefore, seem certain that not only is the present product of manufactured cottons in excess of the world's present exchanging capacity, but also that, without a decrease in machinery product, the world's population must speedily increase their annual per capita consumption, if this state of things is not to continue. The report of the factory inspectors of the textile industries of Great Britain, for 1885, shows the following curious changes, consequent on improvements in machinery, to have taken place in the cotton-manufacture of Great Britain since 1874: A decrease of twenty in the whole number of cotton factories; a small increase in (throwing) spindles of 2,604,679, or 0·7 of 1 per cent (a result doubtless owing to the great improvement in the producing capacity of the spindle); an increase of 6·1 per cent in the number of persons employed; and an increase in the number of looms of 97,000, or 21 per cent. Taking all the textile industries of Great Britain into consideration, the number of hands employed in 1884, as compared with 1874, has not decreased, although the increase, 2·8 per cent, has been small in proportion to the increase in production. The number of children employed in 1884 was 34,000 less than 1874, while the number of male and female adults employed increased about 65,000; a change that implies an improvement in the social condition of the country, as well as an increased production.

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 33 to 50 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 East Indians. In 1840 an operative in the cotton-mills of Rhode Island, working thirteen to fourteen hours a day, turned off 9,600 yards of standard sheeting in a year; in 1886 an 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 employed 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 (1887) 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 Labor for 1886 furnishes the following additional illustrations:

"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 persons 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 facts 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 flour there has been a displacement of nearly three fourths of the manual labor necessary to produce the same product. In the manufacture of furniture, from one half to three fourths only of the old number of persons is now required. In the manufacture of wall-paper, the best evidence puts the displacement in the proportion of one hundred to one. In the manufacture of metals and metallic goods, long established firms testify that machinery has decreased manual labor 3313 per cent."

The following are other notable results, gathered from other sources, in what may be termed the minor industries:

In the manufacture of jewelry, one skilled workman, paid at the rate of two and a half to three dollars per day, and working according to anti-machine methods in use a few years ago, could make up three dozen pairs of sleeve-buttons per day. Now, one boy, paid five dollars per week, and working on the most modern machinery, can make up 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 avocation, can be had for a pittance, and finds a ready sale for them as against German manufacturers.

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 millions. With machinery 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 also take his butter 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 corrugated 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 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 according to the standard or other formulas, and every apothecary 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 seem to be passing out of existence under the influence of recent improvements. Previous to 1872, nearly all the calicoes of the world were dyed or printed with a coloring principle extracted from the root known as "madder"; the cultivation and preparation of which involved the use 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 England for the year 1872 having been 28,731,600 pounds, and into the United States for the same year 7,780,000 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 1885 having declined to 2,472,000 pounds, and into the United States to 1,458,313 pounds.

The old-time art of making millstones—entitled to rank among the very first of labor-saving inventions at the very dawn of civilization—is rapidly passing into oblivion, because 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 inevitable 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 being required in France from an apprentice before he is allowed to touch a valuable stone), and to a certain extent so dangerous from the flying particles of steel and stone, humanity, apart from all economic considerations, may well rejoice at its desuetude.

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 also 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, during the same time, increased very considerably.

Cotton-seed oil—an article a few years ago absolutely unknown in commerce, and prepared from what was formerly 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 present annual production and sale are estimated to be equivalent to about 70,000,000 pounds of lard; and has contributed not only to reduce notably 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,

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 Territory 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 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 difficult, 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 thousand barrels of flour on a dock in New York ready for exportation; where the addition of a fraction of a cent a pound to the price will further transport and deliver it at almost any port of Europe.[9]

Here, then, we have the labor of three men for one year, working with machinery, resulting in 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 transportation becomes an insignificant factor in determining a market; and, accordingly, American flour grown in Dakota, and ground in Minneapolis, from a thousand to fifteen hundred miles from the nearest seaboard, by the labor of men paid from a dollar and a half to two dollars and a half per clay 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 them on equally good soil, and with from fifteen to twenty cents per day wages for their labor.

A great number of other similar and equally remarkable experiences, derived from almost every department of industry except the handicrafts, might be presented; but it would seem that enough evidence has been offered to prove abundantly 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 amply sufficient to account for 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 continue indefinitely. 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) there has been sufficent 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 accommodated 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 suggest may at once be anticipated. Have not these same influences, 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 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 respect to the German Empire, where the statistics of production and distribution have doubtless been more carefully studied by experts than elsewhere, that during the period from 1872 to 1885 there was an expansion in the railroad traffic of the empire of ninety per cent; in maritime 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. During 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 population." 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, approximated 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 Intéréts Matériels," at Brussels, that the industrial activity of the greater part of this century has been devoted to equipping fully the civilized countries of the world with economic tools, and that the work of the future, in this same sphere, must be necessarily that of repair 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 having at last been made ready, the work of using it for production has in turn begun, and has been prosecuted so efficiently, 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 modern improvements. 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 abeyance; because it required time for the instrumentalities or methods by which the world's work of production and distribution was carried on to adjust themselves to new conditions; and until this was accomplished, an almost infinite number and variety of inventions which genius had produced for facilitating and accelerating industrial evolution were matters of promise, rather than of consummation. But with the extension of popular education and the rapid diffusion 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 themselves in years, and not unfrequently present themselves at once in a state of completeness."

An influence which has been more potent in recent years than ever before in stimulating the invention and use of labor-saving machinery, and one which should not be overlooked in reasoning upon this subject, has been undoubtedly the increasing frequency of strikes and industrial revolts on the part of the large proportion of the population of all civilized countries engaged in the so-called mechanical occupations, which actions in turn on the part of such classes have been certainly largely prompted by the changes in the conditions of production resulting from prior labor-saving inventions and discoveries. As the London "Engineer" has already pointed out (see page 291, article No. 1), the remedy that at once suggests itself to every employer of labor on the occasion of such trouble with his employés is "to use a tool wherever it is possible instead of a man." A significant illustration of the quickness with with employers carry out this suggestion, is afforded by the well-authenticated fact that the strike among the boot and shoe factories of one county in the State of Massachusetts in the year 1885, resulted in the capacity for producing by the same factories during the succeeding year of a fully equal product, with reduction of at least fifteen hundred operatives; one machine improvement for effecting an operation called "lasting" having been introduced, which is capable of doing the former work of from two hundred to two hundred and fifty men with a force not exceeding fifty men.

Another fact confirmatory of the above conclusions, is that all investigators seem to be agreed that the depression of industry in recent years has been experienced with the greatest severity in those countries where machinery has been most largely adopted, and least, or almost not at all, in those countries and in those occupations where hand-labor and hand-labor products have not been materially interfered with or supplanted. There is no evidence that the mass of the people of any country removed from the great lines of the world's commerce, as in China, India, Turkey, Mexico, and the states of Northern Africa, have experienced any economic disturbance prior to 1883, except from variations in crops, or civil commotions; and if the experience of a few of such countries has been different since 1883, the causes may undoubtedly be referred to the final influence of long-delayed extraneous disturbances, as has been the case in Mexico, in respect to the universal depreciation of silver,[10] and in Japan, from an apparent culmination of a long series of changes in the civilization and economy of that country. There have, moreover, been no displacements of labor or reduction in the cost of labor or product in all those industries in civilized countries, where machinery has not been increased; as, for example, in domestic service, in such departments of agriculture as the raising and care of stock, the growing of cotton, of flax, hemp, and of tropical fibers of like character, or in such mechanical occupations as masonry, painting, upholstering, plastering, and cigar-making, or those of engineers, firemen, teamsters, watchmen, and the like.

Finally, it is of the first importance to note how all the other causes which have been popularly regarded as having directly occasioned, or essentially contributed to, the recent depression of trade and industry—with the exception of such as are in the nature of natural phenomena, as bad seasons and harvests, diseases of plants and animals, disappearance of fish, and the like, and such as are due to excessive taxation, consequent on war expenditures, all of which are local, and the first temporary in character—naturally group themselves about the one great cause that has been suggested, as sequences or derivatives, and as secondary rather than primary in their influence; and to the facts and deductions that are confirmatory of this conclusion attention will be next invited.

  1. According to the United States Bureau of Labor (report for 1886), the gain in the power of production in some of the leading industries of the United States "during the past fifteen or twenty years," as measured by the "displacement of the muscular labor" formerly employed to effect a given result (i. e., amount of product), has been as follows: In the manufacture of agricultural implements, from 50 to 70 per cent; in the manufacture of shoes, 80 per cent; in the manufacture of carriages, 65 per cent; in the manufacture of machines and machinery, 40 per cent; in the silk-manufacture, 50 per cent, and so on.
  2. In a print-cloth factory in New England, in which the conditions of production were analyzed by Mr. Atkinson, the product per hand was found by him to have advanced from 26,531 yards, representing 3,382 hours' work in 1871, to 32,391 yards, representing 2,695 hours' work in 1884—an increase of 22 per cent in product, and a decrease of 20 per cent in hours 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 yards in 1884—an increase of 5632100 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 25 per cent. A like investigation by the same authority of an iron-furnace in Pennsylvania showed that, comparing the results of the five years from 1860 to 1864 with the five years from 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; that the number of hands was reduced from 76 to 71; and that consumers gained a benefit of reduction in price from $27.95 per ton to $19.08.
  3. Wages have greatly increased, but the cost of doing a given amount of work has greatly decreased, so that five men can now do the work which would have demanded the labor of eight men in 1850. If this be correct, the saving of labor is 40 per cent in producing any given article."—Appreciation of Gold, William Fowler, Fellow of University College, London, 1886.
  4. "The canal may therefore be said to have given a death-blow to sailing-vessels, except for a few special purposes."—From a paper by Charles Magniac, indorsed by the "London Economist" as a merchant of eminence and experience, entitled to speak with authority, read before the Indian Section of the London Society of Arts, February, 1876.
  5. In illustration of this curious point, attention is asked to the following extract from a review of the trade of British India, for the year 1886, from the "Times," of India, published at Bombay: "What the mercantile community"—i.e., of Bombay—"has suffered and is suffering from, is the very narrow margin which now exists between the producer and consumer. Twenty years ago the large importing houses held stocks, but nowadays nearly everything 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 funds 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."
  6. Familiar as are the public generally with the operations of the telegraph and the changes in trade and commerce consequent upon its submarine extension, the following incident of personal experience may present certain features 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 Washington, 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 transaction on the other side of the globe, the correspondence in relation to which traveled a distance equivalent to the entire circumference of the globe, all completed in a space of little more than twenty-four hours!

  7. As late as 1840 there were in operation only about 2,860 miles of railway in America, and 2,130 in Europe, or a total of 4,990 miles. For practical purposes, 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 must be referred to a much later period.
  8. The average price of iron rails in Great Britain for the year 1883 was £5 per ton. Steel rails in the same market sold in 1886 for £4.5 per ton; and the London "Economist" of June, 1887, mentions a sale of 4,500 tons of steel rails, by a Belgian company, at the equivalent of £3 16s ($18.47) per ton, deliverable at their works. Since the beginning of 1883 the manufacture of iron rails in the United States has been almost entirely discontinued, and during the years from 1883 to 1887 there were virtually no market quotations for them. The last recorded average price for iron rails was $4512 per ton in 1882. The yearly average price of steel rails at the works in Pennsylvania for 1886 was $2812.
  9. When the wheat reaches New York city, and comes into the possession of a great baker, who has established the manufacture of bread on a large scale, and who sells the best of bread to the working-people of New York at the lowest possible price, we find that one thousand barrels of flour can be converted into bread and sold over the counter by the work of three persons for one year. Let us add to the six and a half men already named the work of another man six months, or a half a man one year, to keep the machinery in repair, and our modern miracle is, that seven men suffice to give one thousand 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 thousand."—Distribution of Products, Edward Atkinson.
  10. The average rate of exchange in Mexico on London fell from 41 to 46 per dollar in the early months of 1885 to 38 to 76 in the spring of 1886.