Part 19

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.]

INTRODUCTION.

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

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

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

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

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

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

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

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

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

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

I. MODERN MANUFACTURING SYSTEMS OF THE WORLD. 185

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

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

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

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

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

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

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

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