Popular Science Monthly/Volume 32/March 1888/The Economic Outlook: Present and Prospective II
By Hon. DAVID A. WELLS.
ECONOMIC DISTURBANCE SERIES, No. VIII.
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, intensified by such transitions, have been more productive of disturbances than at any former period, (for, as previously shown, there are really no new factors concerned in the experiences under consideration), would seem to be mainly these:
1. The displacement or supplanting of labor through more economical and effective methods of production and distribution.
2. Changes in the character or nature of employments consequent upon the introduction of new methods—machinery or processes—which in turn, it is claimed, have tended to lower the grade of labor, impair the independence and restrict the mental development of the laborer.
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 several causes, separately and in detail, attention is next invited.
And, first, as to the extent and influence of the displacement of labor through more economic 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 Department 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 journeymen at hand-loom weaving in their own houses. The introduction of machinery, however, imposed conditions upon these weavers which they found the more difficult to meet the more the machinery was improved. 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 themselves. The independent "master" soon fell into ranks with the dependent factory-hand, but as he grew older and his eyesight failed him lie 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 procuring 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 handlooms are becoming more hopeless every day.
Now, while such cases of displacement of labor appeal most strongly to human sympathy, and pre-eminently constitute a field for individual or societary action for the purpose of relief, it should be at the same time remembered 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 contravention: 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 transitions, 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 of disadvantage or detriment the introduction 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 mankind 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 culminated 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 stocking-making and were dependent upon the continued prosecution of them for their immediate livelihood. The new stocking-frames as they were introduced were accordingly destroyed by the handicraft workmen as opportunity favored (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 supersedure 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, however, 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 materials out of which stockings could be made, ten at least are probably now so employed for a third less number of hours per week, at from three to seven times greater average wages, and living under conditions of comfort that their predecessors could hardly have even anticipated.
In strong contrast also with the report of the pitiful distress 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 cities of Chemnitz (where the handlooms are being rapidly displaced), in Crefeld, Essen, and in Düsseldorf, the standard of living and of comfort among the masses is far higher than at any former period. Writing from Mayence under date of January, 1887, United States Commercial Agent J. H. Smith reports that, "although business is in an unsatisfactory state, it does not seem to affect the workingman greatly. Wages remain pretty much the same, and few discharges of hands take place. The stagnant state of the market only serves to make the necessaries of life cheaper, and to enhance the purchasing power of the laborer's money." United States Consul-General Raine, at Berlin, during the same month, also reported that "wages in Germany show a rising tendency"; that workingmen with permanent work, and wages unchanged, are deriving marked advantages from the low prices of provisions; and that, although the population of Germany has experienced an increase of three millions since 1879, "no lack of work was noticeable."
The readiness with which society comprehends the suffering contingent on the relentless displacement of labor by more economical and effective methods of production and distribution, and the overmastering feelings of sympathy for individual distress thereby occasioned, causes it to generally overlook another exceedingly interesting and important involved factor, and that is the relentless impartiality with which the destructive influences of material progress coincidently affect capital (property) as well as labor. It seems to be in the nature of a natural law that no advanced stage of civilization can be reached except at the expense of destroying in a greater or less degree the value of the instrumentalities by which all previous attainments have been effected. Society proffers its highest honors and rewards to its inventors and discoverers; but, as a matter of fact, what each inventor or discoverer is unconsciously trying to do is to destroy property, and his measure of success and reward is always proportioned to the degree to which he effects such destruction. If to-morrow it should be announced that some one had so improved the machinery of cotton manufacture that ten per cent more of fiber could be spun and woven in a given time with no greater, or a less expenditure of labor and capital than heretofore, all the existing machinery in all the cotton mills of the world, representing an investment of millions upon millions of dollars, would be worth little more than so much old iron, steel, and copper; and the man who should endeavor to resist that change would, in face of the fierce competition of the world, soon find himself bankrupt and without capital. In short, all material progress is effected by a displacement of capital equally with that of labor; and nothing marks the rate of such progress more clearly than the rapidity with which such displacements occur. There is, however, this difference between the two factors involved. Labor displaced, as a condition of progress, will be eventually absorbed in other occupations; but capital displaced, in the sense of substituting the new for what is old, is practically destroyed.
It has previously been pointed out that the great and signal result of the recent extraordinary material progress, has been to increase the abundance and reduce the price of most useful and desirable commodities. But this statement applies to capital, as a commodity, in common with other commodities; and here comes in another very significant and, from a humanitarian point of view, a most important result, or perhaps rather a "law" (pointed out years ago by Bastiat, and in proof of which evidence will be presently submitted), that, "in proportion to the increase of capital, the relative share of the total product falling to the capitalist is diminished, while, on the contrary, the laborer's share is relatively increased. At the same time all progress, from scarcity to abundance, tends to increase also the absolute share of product to both capitalist and laborer, inasmuch as there is more to divide."
Again, it is a singular anomaly, that while an increasing cost of labor has been the greatest stimulant to the invention and introduction of labor-saving machinery, labor employed in connection with such machinery generally commands a better price than it was able to do when similar results were effected by more imperfect and less economical methods. Perhaps the most remarkable illustration of this is to be found in the experience of the American manufacture of flint glass, in which a reduction, since 1870, of from 70 to 80 per cent in the market price of such articles of glass table-ware as goblets, tumblers, wine-glasses, bowls, lamps, and the like, consequent upon the adoption of methods greatly economizing labor and improving quality, has been accompanied by an increase of from 70 to 100 per cent in wages, with a considerable reduction in the hours of labor. M. Poulin, a leading French manufacturer at Rheims, has recently stated that the results of investigations in France show that during this century the progress of wages and machinery has been similar—the wages in French wool-manufactories, which were 11 franc per day in 1816, being (in 1883) 5 francs; while the cost of weaving a meter of merino cloth, which was then 16 francs, is now 1f. 45c. "In Nottingham," says Mr. Edwin Chadwick, the distinguished English economist, "the introduction of more complex and more costly machinery for the manufacture of lace, while economizing labor, augmented wages to the extent of over 100 per cent. I asked a manufacturer of lace whether the large machine could not be worked at the common lower wages by any of the workers of the old machine. 'Yes, it might,' was the answer, 'but the capital invested in the new machinery is very large, and if from drunkenness or misconduct anything happened to the machine, the consequences would be very serious.' Instead of taking a man out of the streets, as might be done with the low-priced machine, he (the employer) found it necessary to go abroad and look for one of better condition, and for such a one high wages must be given."
A remarkable exhibit made in the annual reports of the Illinois Central Railroad, showing the cost of the locomotive service for each year for the past thirty years, is also especially worthy of attention in connection with this subject. From this it appears that the cost per mile run has fallen from 26·52 cents in 1857 to 13·93 cents in 1886; a reduction which has been effected wholly by inventions and improvements in machinery. But a further point of greater interest is, that during this same period the wages of the engineers and firemen have risen from 4·51 cents to 5·52 cents per mile run; or, in other words, the engineers and firemen on the Illinois Central, who in 1857 received 17 per cent of the entire cost of its locomotive service, received in 1886 nearly 40 per cent (39·6) of the total cost.
The introduction of machinery in many branches of industry—and more especially in agriculture—while increasing, perhaps, the monotony of employment, has also greatly lightened the severity of toil, and in not a few instances has done away with certain forms of labor which were unquestionably brutalizing and degrading, or physically injurious.
Another paradox which should not be overlooked in this discussion is, that those countries in which labor-saving machinery has been most extensively adopted, and where it might naturally be inferred that population through the displacement and economizing of labor would diminish, or at least not increase, are the very ones in which population has at the same time increased most rapidly.
Taking all the machinery-using countries into account, the number of persons who have been displaced during recent years by new and more effective methods of production and distribution, and have thereby been deprived of occupation and have suffered, does not appear to have been so great as is popularly supposed; a conclusion that finds support in the fact that, notwithstanding trade generally throughout the world has been notably depressed since 1873, through a continued decline in prices, reduction of profits, and depreciation of property, the volume of trade—or the number of things produced, moved, sold, and consumed—on which the majority of those who are the recipients of wages and salaries depend for occupation, has all this time continually increased, and in the aggregate has probably been little if any less than it would have been if the times had been considered prosperous. In the United States there is little evidence thus far that labor has been disturbed or depressed to any great extent from this cause. But there is undoubtedly a feeling of apprehension among the masses that the opportunities for employment through various causes—continued large immigration, absorption of the public lands, as well as machinery improvements—are less favorable than formerly, and tend to be still further restricted; and this apprehension finds expression in opposition to Chinese immigration, to the importation of foreign labor on contract, to the increase in the number of apprentices, and in the endeavor to restrict the participation in various employments to membership of certain societies. The reports from many of the large industrial centers of the United States during the past year (1887) have been to the effect, that while specific results are now attained at much less cost and with the employment of much less labor, the increased demand, owing to a reduction in the price and improvement in the quality of the articles manufactured under the new conditions, has operated not merely to prevent any material reduction in the rates of wages, or in the number of employés, but to largely increase both rates and numbers. The annual investigation made by the managers of "Bradstreet's Journal" into the condition of the industries of the country for 1887, indicated that in March of that year 400,000 more industrial employés were at work than in 1885. In thirty-three cities the number of employés at work was 992,000 by the census of 1880, 1,146,009 in January, 1885, and 1,450,000 in March, 1887-The change in the average wages received between 1885-87 as compared with 1882-'85, shows a very general increase: from 10 to 15 per cent in woolen goods and clothing; 15 in cotton goods, silk goods, and iron-mills; 12 per cent in the wages of three fourths of the employés of beef-and pork-packing establishments; 20 per cent in anthracite-coal mining, and the like. In the case of the boot and shoe industry, an opinion expressed by those competent to judge is, that while "there has been a reduction in cost and in the number of employés per 100 cases produced of from 15 to 20 per cent, the actual number of persons employed has been increased; and in cases where the wages of old classes of workmen are affected they have been raised."
On the Continent of Europe, the grievances of labor attributable to new conditions of production and distribution seem to be mainly confined to the agriculturists and to those bred to handicraft employments; and for both of these classes the outlook is not promising.
In Great Britain the number of persons who are in want, for lack of employment, appears to have largely increased in recent years. But as there has been no cessation in the growth of the mechanical industries of the United Kingdom, or in her transportation service by land or sea, or in her production of coal and iron, or in the consumption of her staple food commodities—such growth, although not increasing as it were by "leaps and bounds," as in some former periods (as during the decade from 1865 to 1875), being always in a greater ratio than her increase in population—it would seem that any increase in the number of her necessarily unemployed must have been mainly derived from the one branch of her industry that has not been prosperous, namely, agriculture, in which the losses in recent years on the part alike of landlords, tenants, and farm-laborers, from decline in land and rental values, in the prices of farm products, and through reduction of wages, has been very great. 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; and this substitution is reported as at present continuing at the rate of two hundred and sixty thousand acres per annum.
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 landlords, and at the same time achieve for themselves a comfortable subsistence, there would be no necessity for extraordinary 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 better 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 tenant 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 investigation 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 capable 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 agencies, 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, one of the richest in France, one tenth of the land is abandoned, because it is found that, at present prices, the sale of produce does not cover the expenses of cultivation.
Now, if it were desirable to search out and determine the primary responsibility for the recent large increase in the number of the English unemployed, or for the distress and revolt of the Irish tenantry, or the growing impoverishment of the French and German peasant proprietors, it would be found that it was not so much the land and rent policy of these different countries that should be called to account, as the farmers on the cheap and fertile lands of the American Northwest, the inventors of their cost-reducing agricultural machinery, of the steel rail, and of the compound marine engine, which, collectively, have made it both possible and profitable "to send the produce of five acres of wheat from Chicago to Liverpool for less than the cost of manuring one acre in England." And, looking into this matter from a cosmopolitan point of view, and balancing the aggregate of good and bad results, how small are the evils which have been entailed upon the agricultural laborers in England, Ireland, or elsewhere, in consequence of changes in the condition of their labor, in comparison with the almost incalculable benefits that have come, in recent years, to the masses of all civilized countries, through the increased abundance and cheapness of food, and a consequent increase in their comfort and vitality!
Another matter vital to this discussion may here and next be properly taken into consideration. As the evidence is conclusive that the direct effect of material progress is to greatly increase and cheapen production and to economize labor; and as there is no reason to sup pose that the maximum of progress in this direction has been attained, and every reason to expect that the future will be characterized by like and even greater results progressively occurring, the question arises, Is labor to be continually, and in a degree ultimately displaced from occupation by progressive economy of production? Is continual and fiercer competition to effect sales, both of product and labor, in excess of current demands, likely to produce continued disturbance and an unhealthy fall of prices, extensive reductions in wages, and the more extensive employment of the cheaper labor of women and children? Is society working through all this movement toward what has been called an "anarchy of production"?
Experience thus far, under what may be termed the new régime of production and distribution, does not, however, fairly warrant any such anticipations. Wages, speaking generally, have not fallen, but have increased; and, except in Germany, there is little indication of a tendency to increase the hours of labor, or encroach upon the reservation of Sunday. Everywhere else, even in Russia, the tendency is in the opposite direction.
Again, the extent and rapidity of the increase in the consumption of all useful and desirable commodities and services which follows every increase in the ability of the masses to consume, is one of the most wonderful of modern economic phenomena; and the one thing which, more than any other, augments their ability to consume, is the reduction in the price of commodities, or rather the reduction in the amount of human effort or toil requisite to obtain them, which the recent improvements in the work of production and distribution have effected. Better living, contingent on a reduction of effort necessary to insure a comfortable subsistence, induces familiarity with better things; constitutes the surest foundation for the elevation of the standard of popular intelligence and culture, and creates an increasing desire for not only more but for a higher grade of commodities and services. There are, therefore, two lines upon which the consumption of the products of labor is advancing: the one, in which this stimulant is animal in its nature, and demands food, clothing, shelter, and fuel, for its satisfaction; and the other intellectual, which will only be satisfied by an increased supply of those things which will minister to a higher standard of comfort and education. Thus far the world's manual laborers have not kept up in culture with the improved and quickened methods of production; and therefore in certain departments there is not yet that opportunity for work that there undoubtedly will be in the future.
"There is no good reason why a workingman earning one thousand or fifteen hundred dollars a year, as many do, should not desire as many comforts in the shape of furniture, books, clothing, pictures, and the like for himself and his family, and desire them as intelligently, as the minister, or lawyer, or doctor who is earning a similar amount."
But as abstract conclusions in economic as well as in all other discussions are best substantiated and comprehended through practical examples, to examples let us turn. And first as to certain notable instances derived from recent experiences, showing how remarkably and rapidly increase of consumption has followed reduction of prices, even in cases where the reduction has been comparatively slight, and a marked increase of consumption could not have been reasonably anticipated.
Among the staple food articles that have greatly declined in price during recent years is sugar, and this decline has been attended with a large increase in consumption; the decline in the average price of fair refining sugar in the United States (in bond) having been from 4·75 cents per pound in 1882 to 2·92 cents in 1886; while the average consumption per capita, which was 39 pounds for the five years from 1877 to 1882, was 49·8 pounds for the five years from 1882 to 1887. Comparing 1885 with 1887, the consumption of sugar in the United States increased over 11 per cent, or largely in excess of any concurrent growth of population. Converting, now, so much of this larger consumption as was duo to diminished price (probably more than one hundred million pounds) into terms of acres and labor employed in its production; into the ships and men required for its transportation; into the products, agricultural and manufactured, and the labor they represent, that were given in exchange for it, and we can form some idea of the greater opportunities for labor through larger volume of exchanges, and the increased comfort for those who labor, that follows every reduction in the cost necessary to procure desirable things.
In 1887, with an import price of about 10 cents per pound, the importation of coffee into the United States was 331,000,000 pounds. In 1885, with an average import price of eight cents, the importation was 572,000,000 pounds. Between 1873 and 1885 the coffee product of the world that went to market, concurrently with this large decline in its price, increased to the extent of 52 per cent.
The great reduction in recent years in the price of copper, consequent upon its increased product and a surplus offering upon the world's markets, led to such an extraordinary increase in the demand for manufactures of copper and brass, and such a general extension of the uses of the metal, as to finally not only absorb any surplus stock, but also to create apprehension of an inadequacy of supply. For the year 1886 the authorities of the United States Geological Survey estimate that the increase in the consumption of copper by the leading American manufactories of copper and brass was in excess of 24 per cent; and that a very nearly equal increase was experienced in the preceding year (1885); all of which indicates a large if not a fully proportional increase for the periods mentioned in the opportunity for labor, at comparatively high wages, in these departments of industry. On the other hand, with a large advance in the price of copper during the latter months of 1887, the operations of the manufacturers of copper and brass were reported as having been materially restricted.
Every reduction in the price of gas has been attended with greatly increased consumption, entailing greater demand for labor in the mining and transporting of coal and other materials, and in service of distribution; and it is very doubtful whether the apprehensions of impairment of the value of the capital of the gas companies, which are always excited by such reductions, are ever, to any disastrous extent, realized; and it is the general experience that the profits on the increased demand created by cheaper supply continue to afford to the gas companies reasonable and often equal returns on their invested capital. It seems to be also well established that the extensive introduction and use of the electric light has in no way impaired the aggregate consumption of gas.
In 1830 the average price of cotton cloth in the United States was about seventeen cents per yard; in 1880 it was seven cents. This reduction of price has been accompanied by an increase in the annual per capita consumption of the people from 5·90 pounds of cloth to 13·91 pounds; which in turn represents a great increase in all the occupations connected with cotton, from its growth to its transformation into cloth and cloth fabrications; and the evidence is conclusive that in all these occupations the share of labor in the progressing augmentations of values and quantities has continually increased; the advance in the wages of the cotton-mill operatives, during the period under consideration, having been fully 80 per cent.
When, through competition, the companies controlling the submarine telegraph lines between the United States and Europe reduced in 1886 their rates from 40 to 12 cents per word, 212 words, it was reported, were regularly transmitted in place of every 100 previously sent. Assuming this report to be correct, a comparison of receipts under the new and old rates would give the following results: 210 words at 12 cents each, $25.20; 100 words at 40 cents each, $40; or a reduction in rates of TO per cent impaired the revenues of the lines to an extent of only 37 per cent.
A reduction in 1886 in the postal system of the United States of three cents in the fee for domestic money-orders not exceeding $5 (or from eight to five cents) has operated to increase the use of this service to the remitters of small sums in a very noticeable degree, the average amount of each order issued in 1887 being but $12,72 as against an average of $14.33 in 1886, and larger sums in previous years; while the increase in the number of money-orders issued in 1887 was 16'27 per cent greater than in 1886. The aggregate value of these orders for 1887 is returned at the large sum of $117,462,000.
The following have been the economic changes within a decade in the business of manufacturing American watches, and the manner in which such changes have affected the welfare alike of owners and employés: "A great reduction in price from which there has been no recovery. Business has invariably, and with scarcely notable friction, adjusted itself to new conditions; and save only in exceptional cases—new companies struggling for a place—the capital invested has been fairly remunerative. Best of all, the wages of operatives have been maintained; for one reason among others, that reductions in rates paid for piece-work have operated to stimulate the intelligence of the workman, so that he devises for his special works methods and appliances which not only increase his speed but his product also, and improve its quality. The great decline in recent years in the price of American watches has not been caused by the importation of foreign watches, but has sprung wholly out of an intense competition between American manufacturers; and from this and other causes the industry has experienced all the vicissitudes incident to the occurrence of what are generally denominated ' hard times.'"
The following examples of the increase in the consumption of commodities, consequent on reductions of price through abatements of taxation, also indicate how largely the opportunities for labor and of the sphere of exchanges or business can be increased in the future by an extension of this policy:
Reductions in the price of tea in Great Britain, following a progressive reduction in the duties on the imports of this commodity, from 2s. 21d. in 1852 to 6d. (the present rate), have been accompanied by an increase in its annual consumption from 58,000,000 pounds in 1851 to 337,000,000 in 1885, or from 1·9 pound per head of the population to 5 pounds.
A removal in 1883 of the comparatively small tax of one cent on every hundred matches imposed by the United States, is reported to have reduced the price about one half, and to have increased the domestic consumption to the extent of nearly one third.
In 1883 a few additions were made to the free list under the tariff of the United States, and among them were included unground spices, which had been previously subjected to duties, which, although heavy as ad valorem, were in themselves so small specifically (as five cents per pound each on pepper, cloves, and pimento) that their influence on the consumption of the American people, with their acknowledged tendency to extravagance, would not have been generally regarded as likely to be considerable; and yet the removal of the duties on these commodities, which pass almost directly into consumption, carried up their importations in the following remarkable manner: In the ease of pepper, from 6,973,000 pounds in 1883 to 10,995,000 pounds in 1886; pimento, from 1,283,000 pounds to 2,500,000 pounds; cassia-buds, from 27,739 pounds to 238,000; cloves, from 989,000 pounds to 1,298,000; nutmegs, from 661,132 pounds to 1,189,456; while the importation and consumption of mace in the country more than doubled and that of cayenne pepper more than trebled during the same period. It is evident, therefore, that the masses of the United States during the continuance of these taxes did not have all the spices they would like, to make their food more palatable and savory; that trade between the spice-producing countries and the United States was restricted; and, as all trade is essentially an exchange of product for product, that the labor of the United States gained under the new conditions, either by sharing in the greater abundance of useful things, or through an increased opportunity for labor in producing the increase of commodities that the increase of exchanges demanded.
The original cost of the suspension-bridge between the cities of New York and Brooklyn was $15,000,000, entailing an annual burden of interest at five per cent of §750,000. When first opened to public use in September, 1883, the rates of fare were fixed at five cents per ticket for the cars, and one cent per ticket for foot-passengers, no ticket being sold at any less price by packages. The total receipts for the first year (1883-'84) from all traffic sources were $402,938, and the total number of car and foot passengers was 11,503,440; 5,324,140 of the former and 6,179,300 of the latter. The results of the first year's operations were not, therefore, encouraging as to the ability of the bridge to earn the interest on the cost of its construction. During the second year (1884-'85), the rates of fare remaining the same, the increase in the aggregate number of passengers was comparatively small, or from 11,503,440 to 14,051,030; but in February, 1885, the rates of fare were greatly reduced—i. e., tickets for the cars (when sold in packages of ten) from five cents to two and a half, and tickets for promenade (when bought in packages of twenty-five) from one cent to one fifth of a cent. The results of this reduction immediately showed themselves in a remarkable increase for the year of 71 per cent in the number of car and foot passengers, or from an aggregate of 14,051,630 in 1884-'85 to 25,082,587 in 1885-'86, and this aggregate has gone on increasing to 30,604,726 for the year ending December 1, 1887. Concurrently also the bridge receipts from traffic have increased from $565,544.45 in 1884-'85 (the last year of high fares) to $850,724 for the year ending November 30, 1887, with a net profit on the operations of the year of $495,319, or nearly enough to pay two thirds of the interest on the original investment; or, the result of the bridge operations since the reductions of the rates for its use has been accompanied by an increased passenger movement—car and foot—of 108 per cent, and a gain in receipts of 50 per cent.
A further analysis of the experiences of the New York and Brooklyn Bridge since its construction also reveals some curious tendencies of the American people in respect to consumption and expenditures. During the first year the bridge was open to the public, the number of foot-passengers paying one cent was 6,179,300, and the number of car passengers paying five cents was 5,324,140. The next year, fares remaining unchanged, the number of foot-passengers declined to 3,679,733, and the number of car-passengers increased to 11,951,030. In the third year, with a reduction of foot-fares to one fifth of a cent, the number of foot-passengers declined 410,395, or to an aggregate of 3,239,337; while the number of car-passengers (with a reduction of fare from five to two and a half cents) increased 10,130,957, or to 21,843,250. For the year ending December 1, 1887, the number of foot-passengers further declined 574,929, or to 2,604,413, while the number of car-passengers further increased 8,097,003, or to 27,940,313; or to a total aggregate of 30,004,313. A correct explanation of these curious results may not be possible, but one inference from them that would seem to be warranted is, that when the American people find their pecuniary ability is abundantly sufficient to enable them to satisfy their desire for certain commodities or services, they will disdain to economize; and this idea may find illustration and confirmation in another incident of recent American experience. Thus, when the great decline in the price of sugars occurred in 1883, the American refiners expected that, whatever of increase of consumption might be attendant, would occur mainly in the lower grades of sugar; but, to their surprise, the actual increase was largely in respect to the higher grades. A leading refiner, who, somewhat puzzled at this result, asked one of his workmen for an explanation of it, received the following answer: "I give my wife fifty cents every Monday morning with which to buy sugar for the week for my family, and, as she finds that fifty cents will now buy as many pounds of the white as we once could get of the yellow sugars, she buys the white." A European workman (certainly a Frenchman) would probably have acted differently. He would have taken the same grade as before and got two pounds of additional sweetening for his money; or, more likely, he would have bought the same quantity and quality as before, and saved up the measure of the decline of price in the form of money.
Another explanation of the bridge phenomenon may be that the average American, who is always in a hurry, may think that, with the privilege of riding for two and a half cents, he can not afford the time to avail himself of the privilege of walking for a payment of one fifth of a cent.
Mr. Robert Giffen, in a review of the "Recent Rate of Material Progress in England" (British Association, 1887), recognizes an evident tendency, as that country increases in wealth, for the numbers employed in miscellaneous industries, and in what may be called "incorporeal functions"—that is, as artists, teachers, and others, who minister to taste and comfort in a way that can hardly be called material—to increase disproportionately to those engaged in the production of the great staples; and that, therefore, the production of these latter is not likely to increase as rapidly as heretofore. All of which is equivalent to affirming that, in virtue of natural law, the evils resulting from the displacement of labor, through more economic methods of production by machinery, are being gradually and to a large extent counteracted. No one can doubt that this is the tendency in the United States equally as in England, and it finds one striking illustration in the large number of new products that are demanded, and in the number of occupations that have been greatly enlarged or absolutely created in recent years, in consequence of the change in popular taste, conjoined with popular ability, to incur greater expense in the matter of house-building and house-decoration. Ten or fifteen years ago the amount of fine outside work in building constructions—in brick, terra-cotta, stone, and metal—and on interiors, in the •way of painting, paper-hangings, wall-coverings with other materials, fine wood-work, carving, furniture-making, carpet-weaving, draperies for doors and windows, stained glass and mirrors, and improved and elaborate sanitary heating and ventilating apparatus, was but a very small fraction of what is now required. Nothing, furthermore, is more certain than that all three departments of industry are to continue progressively enlarging; for all achievements in this direction increase taste and culture, and these in turn create new and enlarged spheres for industrial occupation.
How these same influences exert themselves for the extension of the intercommunication of intelligence, with the attendant increased demand for service and materials which represent opportunities for labor, is exemplified in the following postal statistics, the result of recent German investigation: Thus, for the year 1865 it is estimated that the inhabitants of the world exchanged about 2,300,000,000 letters; in 1873, the aggregate was 3,300,000,000; in 1885, including postal-cards, it was 6,257,000,000; in 1886, 6,926,000,000, with a larger ratio of increase in the transmission of printed matter, patterns, and other articles; the whole business giving employment to about 500,000 persons, for more than one half of which number there was probably no requirement for service under conditions existing in 1873. And to this aggregate should be added the increased number required to meet the greater requirements for the machinery and service of larger transportation, and vastly larger consumption of all the material and service incident to correspondence. The experience of the postal service of the United States also shows that, at all those points where a free delivery of letters has been established, the postal revenues have quickly and greatly augmented—another illustration that every increased and cheapened facility for use or consumption brings with it greater demands for service or production.
In view, then, of the undoubted tendency, as abundance or wealth increases, for labor to transfer itself, in no small proportions, from lower to higher grades—from the production of the great staples to occupations that minister to comfort and culture, rather than to subsistence—how impolitic, from the standpoint of labor's interests, seems to be the imposition of high taxes (as in the United States) on the importation of works of art of a high character and large cost, under the assumption that it is desirable to tax all such articles as luxuries, and that it is for the interest of the masses to adopt such a policy! In illustration, let us suppose a man of wealth to purchase and import a costly and beautiful art product. Having obtained it, he rarely finds a compensating return for his expenditure in an exclusive and selfish inspection, but rather in exhibiting it to the public; and the public go away from these exhibitions with such higher tastes and culture as impel them to desire to have in their life-surroundings, as much that is artistic and beautiful—not the work of one, but of many—as their means will allow; even if it be no more than a cheerful chromo-lithograph, a photograph, a carpet or a curtain of novel and attractive design, a piece of elegant furniture, or of bronze, porcelain, or pottery. And to supply the new and miscellaneous industries that are created or enlarged by such desires and demands, labor will be, as it were, constantly drained off from occupations in which improved machinery tends to supplant it, into other spheres of employment in which the conditions and environments are every way elevating, because in them the worker is less of a machine, and the rewards of labor are very much greater.
The phenomena of the overproduction of certain staple commodities, although for the time being often a matter of difficulty and the occasion of serious industrial and commercial disturbances, are also certain, in each specific instance, to sooner or later disappear in virtue of the influence of what may be regarded as economic axioms, namely: that we produce to consume, and that, unless there is perfect reciprocity in consumption, production will not long continue in a disproportionate ratio to consumption; and also that, under continued and marked reduction of prices, consumption will quickly tend to increase and equalize, or accommodate itself to production. Illustrations of the actual and possible under this head, and of the rapidity with which conditions are reversed and "overproduction" disappears, are most curious and instructive. For example, all authorities in 1885 were agreed that the then existing capacity for manufacturing cotton was greatly in excess of the world's capacity for consumption; the season of 1885-'86 closing with a surplus of nearly 400,000,000 yards on the British market, for which the manufacturers found no demand. Since that date, however, and with no special renewal of business activity in any country except the United States, the world's consumption of cotton fabrics has reached a larger total than ever before, and there are probably at the present time (1888) no more spindles in existence than are necessary to supply the current demands for their products. In the case of sugar, also, an increase in consumption occasioned by low prices, and a notable restriction of production through the same price influences, has reduced an estimated actual surplus of sugar on the world's markets in October, 1885, of 1,012,956 tons, to 568,188 tons in October, 1887, "with a good prospect of all surplus being wiped out by October, 1888." The price of fair refining sugar (in bond, which represents the world's prices) has accordingly advanced from 2·371 cents per pound in July, 1887, to 3·22 in January, 1888.
The production of very few articles has increased in recent years in a ratio so disproportionate to any increase of the world's population as that of iron, and prices of some standard varieties have touched a lower range than were ever before known. Gloomy apprehensions have accordingly been entertained respecting continued overproduction, and its disastrous influence in the future on the involved capital and labor. To comprehend, however, the possibilities for this industry in the future, it is only necessary to have in mind that in 1882 (and the proportions have not probably since varied) the population of the United States and of Europe (398,333,750), comprising less than one fourth of the total population of the world (1,424,686,000), consumed nineteen twentieths of the whole annual production of iron and steel; and that if the population of the world outside of Europe and the United States should increase its annual per capita consumption of iron (which is not now probably in excess of two pounds) to only one half of the average annual per capita consumption of the people of a country as low down in civilization as Russia, the annual demand upon the existing producing capacity of iron would be at once increased to the extent of over six million tons. And, when it is further remembered that civilization is rapidly advancing in many countries, like India, where the present annual consumption of iron per head is very small (2·4 pounds), and that civilization can not progress to any great extent "without the extensive use of iron, the possibilities for the enormous extension of the iron industry in the future, and the enlarged sphere of employment of capital and labor in connection therewith, make themselves evident.
As constituting a further contribution to the study of the so-called industrial phenomenon of "overproduction," and as illustrating how a greater abundance and cheaper price of desirable commodities, work for the equalization and betterment of the conditions of life among the masses, the recent experience of the article quinine should not be overlooked. Owing to greatly increased and cheaper supplies of the cinchona-bark, from which quinine is extracted, and to the employment of new and more economical processes, by which more quinine can be made in from three to five days than could be in twenty under the old system, the markets of the world in recent years have been overwhelmed with supplies of this article, and its price has declined in a most rapid and extraordinary manner, namely: from 16.9. M. ($4.70) the ounce in the English market in 1877, to 12s. ($3) in 1880; 3s. 6d. (80 cents) in 1883; 2s. 6d., in 1885; and to 1s. 6d., (30 cents), or less, in 1887. As quinine is a medicine, and as the increase in the consumption of medicines is dependent upon the real or fancied increase of ill-health among the masses, rather than on any reduced cost of supply (although, in the case of this specific article, decreased cost has undoubtedly somewhat increased its legitimate consumption), the problem of determining how a present and apparently future overproduction was to be remedied has been somewhat difficult of solution. But recently the large manufacturers in Europe have made an arrangement to put up quinine (pills) protected by gelatine, and introduce and offer it so cheaply in the East Indies and other tropical countries, as to induce its extensive consumption on the part of a vast population inhabiting malarious districts which has hitherto been deprived of the use of this valuable specific by reason of its costliness. And it is anticipated that by reason of its cheapness it may, to a considerable extent, supersede the use of opium among the poorer classes living along the Chinese rivers, who it is believed extensively consume this latter pernicious and costly drug, not so much for its mere narcotic or sensual properties, as for the relief it affords to the fever depression occasioned by malaria.
All this evidence, therefore, seems to lead to the conclusion that there is little foundation for the belief largely entertained by the masses, and which has been inculcated by many sincere and humane persons who have undertaken to counsel and direct them, that the amount of remunerative work to be done in the world is a fixed quantity; and that the fewer there are to do it the more each one will get. When the real truth is, that work as it were breeds work; that the amount to be done is not limited; that the more there is done the more there will be to do; and that the continued increasing material abundance which follows all new methods for effecting greater production and distribution, is the true and permanent foundation, and the certain assurance of continually increasing prosperity for the masses in the future.