Chapter XIX: Economic Progress

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[7] XIX, 645.

[8] Seager, Introduction to Economics, 176.

[9] Evolution of Modern Capitalism, 35.

[10] Economics, 121.

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

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

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

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

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

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

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

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

[19] Economics, 353.

[20] Political Economy, 381.

[21] Evolution of Modern Capitalism, 297.

[22] Wealth & Progress, 171.

[23] Report Industrial Commission, XIX, 926.

[24] Getting a Living, 475.

[25] Report Industrial Commission, XIX, 746.

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

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

[28] Economics, 337.

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

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

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

[32] Principles of Economics, I, 315.

[33] Industrial Efficiency, II, 451.

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

[35] Report, VII, 644.

[36] Economics, 377.

[37] Political Economy, 344, 345.

[38] Economics, 133.

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

[40] Economics, 360.

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

[42] More truly, the marginal productivity theory.

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

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

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

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

[47] Seager, Introduction to Economics, 73.

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

[49] Socialism and Social Reform, 19.

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

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

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

MANUFACTURING. 179

BY O. P. AUSTIN.

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