Problems of Industrial Readjustment in the United States Research Report Number 15 February, 1919 Reprinted, May, 1920 National Industrial Conference Board New York State Callege of Agriculture At Cornell University Ithaca, N. B. Library PROBLEMS OF INDUSTRIAL READJUSTMENT IN THE UNITED STATES ResEarcH Report NuMBER I5 FEBRUARY, I9I1Q Reprinted, May, 1920 Copyright 1919 Nationa, INDUSTRIAL CONFERENCE BOARD 15 Beacon STREET Boston, Mass. CONTENTS PAGE FoREWORD . . be) ze & 2g k oto 4 iy ese, iy: INTRODUCTIONS < ¢ 4024 % cee ake ae Re we ee ee OL Tue ProspLeM IN THE UNITED StaTES AND ABROAD .... 2 ReapjJusTMENT aS AFFECTING Lapor ............ 6 DeEMOBILIZATION OF Minirary Forces. ......... «6 Crvitian Wark WorKERS................, %CLt1 Demanp FoR LaBor ...........2..... 14 Women IN INDUSTRY eee ere ; ome Mega 23 EMIGRATION AND IMMIGRATION . . . boy £2 cae a ae tet ee Hours o— WorK .... 1. ee ee ee ee ee OD WacEs.. >. ‘ : ith ASA Mah Glee cae aoa es Peo REPRESENTATION OF WorRKERS ....... +... ... 82 MatTeErRIALs a Resa: deca an a eee «men Oar xe Soa 35 ForEIGN TRADE .... Nee aie ; ie RB Soe wan 89 CapiraAL AND CREDIT .. 1... ee ee ee ee ee eee AT RELATION OF THE GOVERNMENT TO INDUSTRY. ........ 52 Foreword HE accompanying report on Industrial Readjustment in the United States aims simply to define the problem, not to solve it. On issues so broad, so funda- mental, and so intimately related to individual experience and conviction there must inevitably be wide differences of opinion. A clear statement of the questions involved should tend to narrow these differences and promote efforts to reach sound conclusions. Problems of Industrial Readjustment in the United States “Cs aol I JUN In INTRODUCTION A © I ae Say The signing of the armistice on November 11,° 19185: found the United States unprepared for the important’ = problems of peace. While many private agencies had, even before this country entered the war, urged the establishment of official machinery for the study of post- war problems, and while bills have at various times been introduced in both houses of Congress calling for the appointment of official bodies for this purpose, as yet no definite action on a comprehensive scale has been taken by the Government. In this respect the position of the United States is radically different from that of the other belligerents. In Great Britain almost from the outbreak of the war various departmental committees and sub-committees have been engaged in planning and preparing the nation for a return to peace. A Ministry of Reconstruction, established in July, 1917, as a definite cabinet office, has made ex- haustive studies and many recommendations designed to meet the nation’s future problems.’ In France as early as May, 1916, an Interministerial Committee, later organized into an Executive Commission of the various state departments, was created to plan for the rehabilita- tion of the country’s devastated territory and for the reconstruction of its industries. In Germany an Imperial Commission on Economic Transition was formed in August, 1916, to establish credit, revive contracts, deflate currency, reeducate returned soldiers, plan for demobiliza- tion, and meet the many other problems arising out of war. In October, 1917, an Imperial Ministry on Economics, 1¥For a list of the Committees under the Ministry of Reconstruction and the problems with which they have been concerned, see United States Bureau of Foreign and Domestic Commerce. Commerce "Reports, March 6, 1918, pp. 854-862. 1 which absorbed the Commission on Economic Transition, was created to carry out a definite national policy for dealing with reconstruction questions. Other countries have formed similar governmental commissions to deal with after-war problems. Unlike the United States, therefore, most of the belligerents have not found them- selves unprepared at the end of the war for the immediate problems created by it. One reason for this unpreparedness in the United States was that this country entered the war relatively late. Here lands were not devastated nor factories destroyed. Although this country has shared heavily in the cost of the war both in men and resources, the fact remains that it has suffered relatively little from the war’s devas- tating features. Compared with other nations its casual- ties have been small. Changes in the economic fabric have not been so drastic, so complete, or so fundamental here as in the countries of the Allies. Nevertheless, readjustment is without doubt the most important problem confronting the nation today. By readjustment is obviously meant a constructive attempt to smooth the way for a return to normal condi- tions, with such adaptation to changes effected during the war as may be most conducive to the welfare of labor, the prosperity of industry, and the interests of the public. Tue ProspLeM IN THE UNITED STATES AND ABROAD While in general many of the problems of transition, such as demobilization, care for the injured and crippled, placement of civilian war workers, recovery or extension of foreign trade, increased production and continued saving, and release or maintenance of state control of industry are broadly the same in all countries, their relative importance and their treatment vary greatly. In Great Britain, for example, the task is manifestly dif- ferent from our own.’ Within a few months after the outbreak of war great numbers of wounded were being returned and had to be cared for. Trade for the moment seriously decreased and in certain directions was even threatened with complete interruption. Moreover, by 1See, for example, Great Britain. Ministry of Reconstruction. The Aims of Reconstruction, Number 1 in the series of pamphlets on Reconstruction Problems. 2 the well-known Treasury Agreement in the spring of 1915, reached at a conference of employers, trade unionists, and government officials, the trade unions agreed to give up their restrictive customs and practices for the duration of the war and to submit to compulsory arbitration, pro- vided that all rules relinquished would be restored at the end of the war. The trade unions in Great Britain in- cluded about 50% of all the workers; in the engineering trades they included between 80% and 90%, and in the shipbuilding trades almost 100%. It will be seen, there- fore, that this voluntary sacrifice of the trade unions affected a majority of the country’s industrial workers. Furthermore, Great Britain has been much concerned with the best methods of developing and using her natural resources. An empire whose dominions extend into almost every part of the globe, possessed of a great wealth of raw materials, mineral resources, and water power, she has been interested in the best means of conserving these and of seeing that they are employed in the best interests of the nation. These four problems, rehabilitation of returned soldiers and sailors, recovery and extension of foreign trade, restoration of trade unionism, and develop- ment of natural resources of every part of the United Kingdom, have from the early days of the war absorbed attention. In France the problem is mainly reclamation of lands which have been laid waste, rehabilitation of injured men, and restoration of factories and mines destroyed during the war. Since 1914 about one-seventh of the total area of France has at some time been under German occupa- tion.2. The region overrun had in pre-war days contributed about 30% of the industrial output of France; in it were located 26,000 factories and mills, most of which are said to have been destroyed or stripped of machinery. From this section had come 90% of the iron ore, 83% of the pig iron, 75% of the steel, 70% of the coal, 94% of the combed wool, 90% of the flax, and 64% of the sugar. Of 127 blast furnaces in France, 95, or more than two-thirds, were located in occupied territory. The German invasion is said reliably to have cost France in the north 2,100,000 spindles and 13,000 looms and in the east 125,000 spindles 1 National Industrial Conference Board. Industrial News Survey, December, 1917 (British Industrial Commission Supplement). 2'This region is as large as all of Massachusetts, Rhode Island, Connecticut, and New Hampshire. 3 and 6,900 looms.! Its killed alone number 1,325,000; its wounded 3,000,000, of whom 700,000 are permanently incapacitated for further work.? There has therefore been a serious reduction in the industrial population of a nation which has long been laboring under the dis- advantage of a low birth-rate. To rehabilitate every wounded soldier capable of returning to industrial pur- suits is one of the first problems of France. That nation must also consider means of securing food, tools, and machinery during the period of reconstruction as well as creating credit in order to secure necessary supplies without immediate payment. In France, then, the problem is mainly that of restoring men, factories, and lands. In Italy the problem is still different. Here the keynote is internal social and economic development. For a number of years Italy has been losing annually through emigration over 800,000 persons. The hope now is to extend and develop the country’s facilities and resources so as to discourage emigration to other lands, to use an increased labor force in expansion of domestic industry, thereby advancing the nation in industrial importance. Indeed, Italy has already made great efforts to develop her mineral resources and particularly her water power. While such internal expansion is the first problem before the nation, increasing attention has also been given to foreign trade. In Germany the urgent problem is that of the relation of industry to the state. The German Empire has been a military empire in which paternalism has been developed to a high degree. During the summer of 1918 the problem foremost in the public mind was that of continuance and extension of government control and regulation of indus- try on a scale even vaster than hitherto.* Unlike Great Britain, with its wealth of natural resources, Germany has been much concerned because of its comparative lack of raw materials. Present chaotic conditions make it diffi- cult to say what action may be taken in the German Empire; such plans as have been made will necessarily be modified by new governments. It is not unlikely, however, that the influence of the state is to continue 1 Economic World, January 4, 1919, p. 9; Oficial United States Bulletin, December 16, 1918, p. 17; New York Times, January 28, 1919, Sec. 3, p. 6. 2 Official United States Bulletin, January 14, 1919, p. 4. 3See United States Bureau of Foreign and Domestic Commerce. Economic Reconstruction (Miscellaneous series, Bulletin 73). 4 paramount. In this attitude Germany differs from other nations like England and the United States, where the prevailing order is that of private initiative and enterprise. In other countries, as, for example, Spain, Holland, Norway, Sweden, and such South American countries as Chile, Brazil, and Colombia, all of which have appointed governmental commissions on reconstruction,’ the main interest has been recovery from inactivity and uncer- tainty, and extension of foreign trade. The war has been carried on in such manner and in such proportions that few nations have been unaffected by it. Their economic life has been modified in various ways and in general the impending problems of reconstruction vary, being in- fluenced by local conditions, industrial development, and national outlook. Since the problems of other nations differ so greatly, courses of action designed to meet their conditions may not be applied dogmatically to the needs of the United States. Because the experience and background of the Old World differ from that of the New, foreign methods of reconstruction must, in so far as their application to the United States is concerned, be viewed with caution. Furthermore, while the task confronting other belligerents is one of reconstruction, for the United States it is better described as one of readjustment. In none of the nations do the changes that have taken place affect industry alone. During the war, for example, measures have been taken deeply influencing the field of politics. In the United States the vote has been largely granted to women by state legislation. In Great Britain not only has woman suffrage been adopted, but through a new electoral act the vote has been extended so as to add in all 8,000,000 voters to the lists. In Russia and in Germany the form of government has been changed. While it is important to study political, educational, and other social features of readjustment, the more immediate problem is industrial readjustment. In this field the changes that have taken place affect particularly Labor, Materials, Foreign Trade, Capital and Credit, and the Relation of the Government to Industry. ‘These five major problems are here considered and analyzed. 1For a list of the countries in which reconstruction commissions have been appointed see Congressional Record, November 11, 1918, pp. 12622-12625. 5 Il READJUSTMENT AS AFFECTING LABOR First place in the problems of industrial readjustment’ must be given the labor question in its numerous phases. Provision of work for demobilized military and naval forces and the transfer of civilian war workers from wartime tasks to normal pursuits, treatment of women workers who entered industry in response to war demands, possibilities in immigration and emigration, questions of wages, hours, and of working conditions in general, are of paramount importance in the working out of the read- justment process. DEMOBILIZATION OF Mizitrary Forces During the war over 4,000,000 men in the United States were withdrawn from their normal pursuits into the military service of the nation.!| Almost all of them were in the prime of life and had been in active employment. Their withdrawal represented a reduction of over one- twelfth in the total number of persons in the United States engaged in gainful occupations.” Stated in another way, at the signing of the armistice over one-fourth of the entire male population between the ages of eighteen and thirty-one was in military service.® A sudden disbandment of this entire force would create a serious employment situation, for the immediate re- absorption into industrial employment of so large a num- ber of workers would obviously raise extraordinary difficulties. That such an extreme situation will arise is, however, unlikely. 10On November 1, 1918, there were in the army 3,665,000 persons (1,672,000 in the United States and its possessions, and 1,993,000 in the American Expedi- tionary Forces). The total strength of the Navy on November 11, 1918, was 522,449 (in the Marine Corps, 72,440; in the Navy, 216,644; in the Naval Reserve, 290,963; and in the Naval Militia, 14,842). United States. War Department. Annual Report of the Secretary, 1918, p. 9; Congressional Record, January 25, 1919, p. 2141. i 2 The total number of persons, ten years of age and over, engaged in gainful occupations in 1917 was estimated by the United States Bureau of the Census at 43,282,911. aan States. War Department. Annual Report of the Secretary, 1918, p. 6 The men in national service may be divided into two groups: those overseas numbering at the signing of the armistice somewhat more than 2,000,000, and those stationed in various camps in the United States numbering about 1,700,000. So far as the 2,000,000 men over- seas are concerned it may safely be said that their de- mobilization will not inject a seriously disturbing factor into the immediate industrial situation. Although these troops are already coming back in considerable numbers,” and it is the announced policy of the Government to withdraw the entire number as soon as practicable, their return will cover a considerable period of time. Because of the limited shipping accommodations available, it is reasonably certain that several months must elapse before even one-half the present number can be returned to the United States. After the Civil War it required seventeen months to muster out the whole of the Northern army. The Franco-Prussian war, though of relatively short dura- tion, required twenty-eight months for demobilization; the Turko-Russian war eighteen months and the Spanish- American war sixteen months. In the Boer war ten months passed before the last British garrisons were withdrawn from Africa; and in the Russo-Japanese war thirteen months elapsed before the Russian troops were sent back from Siberia across the Ural Mountains. It seems probable, therefore,that the return of American troops now in Europe will be spread over such a period of time that it will not seriously complicate the immediate labor situation. In addition, there are about 200,000 men incapacitated for further military service who present special problems.’ Of these the total number receiving treatment in American, French, or British hospitals overseas on Jan- uary 2, 1919, was 120,391. The total number of sick and wounded returned to the United States to January 17, 1 This figure includes all forms of service. Speaking before the Senate Mili- tary Committee on January 27, 1919, General March stated that there were still in the forces overseas over 1,800,000 men. While as many as 300,000 men might be returned to the United States monthly, determination of the size of the army of occupation rests with the President. 2 The total number returned from France to January 31, 1919, was 236,824. 3The number of those in the American Expeditionary Forces reported wounded to January 24, 1919, was 198,131. Congressional Record, January 25, 1919, p. 2141. 7 1919, was 51,332.! It is understood that the policy adopted with reference to the wounded is to discharge them when cured. Demobilization of the 1,700,000 men in camps in the United States at the signing of the armistice was begun early in December and has advanced so far that about three-quarters of these home forces have already been disbanded. Up to the seventh of February approximately 1,100,850 men had been discharged. It is understood that by the end of February the larger part of the 1,700,000 men in home camps at the signing of the armistice will be released. In Great Britain demobilization is being carried out through discharge of men as positions in industry to which they may return become available. In the United States, on the other hand, the policy of disbandment of complete military units in order of availability for dis- charge, and irrespective of industrial need, has been adopted.2, Under War Department Circular No. 77, however, an enlisted man may be discharged upon his own application if there is sickness or distress in his family, or if he is needed to resume employment in an industry or occupation where his services are urgently required, “provided that such discharge will not disrupt or cripple an existing organization and that the soldier’s services can be spared.”” While the War Department has issued an order® permitting the temporary retention in the Army of all soldiers normally scheduled for discharge who are unable to secure civil employment, it is expected that most of the men will prefer to come into the labor market as soon as they are free to leave. The return of so large a body of men to industry within the space of a few weeks, in a transition period, un- doubtedly throws a heavy strain on the machinery of em- ployment. Frequent assurance has been given by former employers that these men may have their old positions as soon as they are free to resume them. Inquiries by man- ufacturers’ associations, by the United States Employment Service, and other agencies, indicate that this attitude is quite general. However, to the extent that this involves 1 Congressional Record, January 25, 1919, p. 2141. ? For an official statement of the reasons for the adoption of this policy in demobilization, see Congressional Record, January 25, 1919, po. 2123-2124. * United States. War Department. Circular No. 34, issued January 24, 1919. 8 the displacement of other workers who have in the mean- time filled the places of men withdrawn for national ser- vice, their return to work simply shifts the problem of employment instead of solving it. The occupations of these men prior to their entry into the national service are indicated by a tabulation of the effect of the first selective draft in 1917 made by the Provost Marshal General. Estimated Number Total accepted | Percentage Industrial Class Industrial for service | accepted Population, | in first sel- 1917 ective draft Agriculture . «| 13,843,518 | 205,731 1.48 Forestry... . & 4 200,991 7,984 3.97 Animal Husbandry ‘5 ‘ 227,325 4,570 2.01 Mines (coal) : ‘ ‘ 600,148 18,710 3.12 Other mines (copper, lead, iron), quar- TIES, CLC. so a: a : 275,561 10,377 3.77 Oil wells and gas wells ¢ 51,223 3,026 5.91 Manufactures: Building industries .| 2,878,792 57,970 2.01 Chemical industries. : 90,638 4,236 4.67 Clay, glass, and stone industries . 5 246,072 | 6,022 2.45 Clothing industries : 754,062 7,370 98 Food industries . , 396,519 11,687 2.95 Iron and steel industries -| 1,258,312 49,553 3.94 Leather industries... . . : 343,805 5,063 1.47 Liquor and beverage industries 2-4 89,190 1,472 1.65 Lumber and furniture industries . : 541,926 11,458 2.11 Metal (except iron and steel industries) 268,537 10,182 3.79 Paper and printing industries ts 507,986 6,745 1.33 Textile industries . . 2... : 919,800 9,833 1.07 Other manufacturing industries .| 1,254,361 22,089 1.76 Transportation .| 2,831,066 61,077 2.16 Trade and merchandise .. . «| 4,708,908 24,892 53 Public administration (officials, etc.) : 529,315 23,606 4.46 Professional service... . . .| 2,202,609 30,082 1.37 Domestic and manual service . .| 4,208,862 78,221 1.36 Laborers (in general) : -| 4,053,385 114,955 2.84 Total ee ee .| 43,282,911 786,911 It should be understood that these figures relate only to men drawn under the first selective draft; consequently the total number of men withdrawn for the entire period of the war and the percentages as well are several times greater than those here given. Figures issued in February, 1919, gave the total number of men placed in Class 1 1 Report of the Provost Marshal General to the Secretary of War on the First Selective Service Act, 1917, pp. 64-65. 9 under the first registration at 2,679,997, distributed by major industries as follows: Male Class 1 within | Per cent of Occupation employees of selective Class 1 to all all ages* service law |male employees in group Total 2... «| 48,206,912 2,679,997 6.2 Agriculture... . : | 14,777,454 781,231 5.3 Extraction of Minerals . . .| 1,109,544 77,071 6.9 Manufacturing Industries . . . .| 11,484,280 773,455 6.7 Transportation .. . «| 8,264,806 318,185 9.7 Trade . aS -| 4,156,837 194,949 4.7 Public Service . . . | 628,181 12,116 2.3 Professional Service... -| 1,912,093 83,666 4.4 Domestic and Personal Service .| 4,285,270 117,477 2.7 Clerical Occupation é -| 1,938,906 219,926 11.3 Miscellaneous Pa eng 750,041 101,921 13.6 * Evidently refers to both male and female workers. So far as the manufacturing industries are concerned, the general assurance that former positions will be avail- able, coupled with the fact that many of these soldiers are skilled workmen, makes it reasonably certain that they will be placed in industry without much difficulty. This, however, as just stated, leaves the prablem of finding places for the workers whom they replace. The actual number of workers withdrawn from agricul- ture for military service, while large, formed but a small percentage of the total number of persons engaged in that industry. In view of the stimulus given to agriculture by current high prices, which are likely to continue for at least another season, there is little doubt that there will be a demand for workers in this field. Whether they can be readily secured is less certain. While war has always bred a spirit of ‘‘wanderlust” in some of those in military ser- vice, on the other hand, the outdoor life of camps may influence workers who formerly were engaged in sedentary occupations to seek work on the farms. Yet in Canada, distinctly an agricultural country, it has been found that the majority of the returned soldiers prefer employment in cities even though this may involve indoor work. The explanation for this as given by the Canadian Federal Employment Service is that the gregarious character of army life tends to influence men to seek work in the factory, where they are free from the lonely existence which farm work often entails.!. On the whole there is 1 United States Employment Service Bulletin, December 31, 1918, p. 6. 10 little apparent reason to assume that the war has greatly modified the underlying forces which have long operated to drive labor from the farms to the cities and towns. Probably most of the demobilized military forces, with the exception of agricultural workers, will attempt to return to their former fields of work. Crvitian War WorkERS A task of greater magnitude than the finding of places for returning soldiers is that of providing for the large number of civilian war workers who at the time of the signing of the armistice were engaged in the pro- duction of ammunition, equipment, and other supplies essential to the war. It has been estimated that it has required at least four persons to keep one soldier in the field fully supplied and equipped. Some estimates run as high as six and one-half productive units at home for each man in active service abroad. If an estimate of five persons for each man in foreign service can be accepted, it will be seen that the maintenance of 2,000,000 men abroad would have required the labor of 10,000,000 civilian war workers at home. Probably no such ratio as this can be used, since many of the overseas force had only just arrived in France at the time of the signing of the armistice. Between July 1, 1918, and October 1, 1918, the number of those in the American Expeditionary forces was increased by 838,000. Nevertheless, the numbers of civilian war workers actively engaged in the production of war essentials on the 11th of November, 1918, for the forces at home and overseas and on war work for Allies undoubtedly numbered many millions. An estimate of 15,000,000 would be conservative. The signing of the armistice and the rapid progress in the demobilization of home forces have made the con- tinued employment of the major part of this number on war work unnecessary. It also brought almost im- mediately a sharp reduction in new war orders in the United States, both by the home Government and by foreign nations. Furthermore, the United States War Department not only has ceased to place new contracts in most lines, but has cancelled many large contracts outstanding at the cessation of hostilities. Between November 11, 1918, and December 1, 1918, contracts involving an approximate expenditure of $2,613,000,000 11 were cancelled. Some of the cancellations up to that time were: For artillery and ammunition, $750,000,000; for - rifles and machine guns, $53,000,000; for motor vehicles, $282,000,000; for airplane parts, $256,000,000; for chemi- cal warfare, $29,000,000; for gas defense equipment, $130,000,000; for powder and explosives, $275,000,000; for cloth, $364,000, 000; for the Quartermaster Corps, $480,000,000; for the Engineering Corps, $229,000,000; for the medical department, $82,000,000; for iron and steel products and railroad materials, $53,000,000; and for barbed wire, $4,000,000. The total has been greatly increased since December 1, 1918, while contracts involv- ing a much larger amount have been substantially re- duced. These cancellations indicate in a general way the in- dustries and classes of employees most quickly affected by the sudden termination of the war. A further indica- tion of the importance which war work has assumed in the nation’s industries and, as a corollary, some idea of the bearing which the cessation of this work will have on industrial activity geographically is afforded by the following statement of the War Department concerning the placing of its war contracts in 1917: DistRIBUTION, BY STaTES, oF War CONTRACTS OF Unirep States War Department, 1917 Per cent States Amount of total New England States: Maine... $4,879,707 1.1 New Hampshire 6,192,650 1.3 Vermont . 1,092,297 2 Massachusetts . 75,598,289 15.6 Rhode Island 9,593,961 2.0 Connecticut : 17,444,177 3.6 Total... . = : $114,801,081 23.8 Middle Atlantic States: New York . ‘ 70,988,567 14.7 New Jersey . . . : . 14,121,870 2.9 Pennsylvania... ete oe ‘ 20,232,779 4.2 Delaware 3 ‘ 247,464 1 Maryland... .. 2.0.0. Sli te (2% 12,100,800 2.5 District of Columbia ; 526,444 l Virginia gaa ; 4 3 ‘ 3,772,075 8 West Virginia... . o4 ig 389,234 1 Total... . Set . . $122,379,233 25.4 1 Official United States ae November 25, 1918, p. 7. 12 Per cent States Amount of total Southern States — Eastern section: North Carolina... . , a ee 4,671,904 1.0 South Carolina. ao : 7,079,756 1.5 Georgia. . eee eee 5,943,407 1.2 Florida. dl Both, “711,103 wl Alabama eli g eae, er 2,546,287 5 Mississippi. ee oe : 101,993 * Tennessee. . : : 2,447,143 5 Total. .. ; ‘ ps3 $23,501,593 4.8 Southern States — Western section: Louisiana . . . ; ‘ i — 961,348 2 Texas : me eee eters 5,193,534 1.1 Arkansas — S! ARS. ins 589,906 wl Oklahoma ae a a ore 563,487 1 Total . - af ths 1 ayes Sey $7,308,275 1.5 Central States — Eastern section: Ohio... . Bahl, Mc ten le G 36,048,057 7.5 Indiana. . ‘ ‘ i se Re 9,518,377 2.0 Illinois. : AG 94,831,901 19.7 Michigan... . os 16,777,147 3.5 Wisconsin . pi ge & poeta 10,340,922 2.1 Kentucky on eee yeas ae 2,916,461 6 Total . 2 é . $170,432,865 35.4 Central States — Western section: Minnesota be : - : 8,252,417 1.7 Towa . ite =. 2,827,669 6 Missouri A Lek 16,155,258 3.4 Kansas . ‘ oe 1,162,971 2 Nebraska . . e : og 2,813,235 6 South Dakota... : aos 50,136 * North Dakota Goes : ‘ 10,218 = Total... . 4 $31,271,904 6.5 Western States: Montana . . : ; . 9,137 = Wyoming. St es 1,224 * Colorado . ane a 923,936 2 oat New Mexico im Oe 37,341 * Pes Idaho : 56,980 * ; Utah . , ; 1,147,018 2 Nevada . 3 ee 850 © Arizona... a sete 322,013 l California 1,702,534 4 Oregon . . 3 : 585,702 1 Washington : ‘ 7,316,531 1.5 Total. . . ... $12,103,266 2.5 Grandtotal = # ...... $481,798,217 100. * Less than 1/10 per cent. This table shows that the great bulk of the War De- partment’s war contracts made in 1917 was concentrated in a comparatively few states, notably Massachusetts, 13 New York, Illinois, and Ohio. Massachusetts and New York each received approximately 15% of the total, Illinois almost 20%, Ohio’ 742%. With the exception of these states no large share of the War Department’s 1917 war contracts went to any one commonwealth. A distribution of the 1918 contracts is not yet available.' This should mean, conversely, that the termination of war contracts will be chiefly felt in those states where the activity had previously been greatest. Obviously, any serious disturbance in these great manufacturing states is bound to be felt the country over. On the other hand, the fact that large sections of the country had participated only to a moderate extent in war business indicates that there will be correspondingly less need for an extensive shifting of work forces during the ad- justment period. The continued employment of the civilian war workers, like that of the demobilized military forces, is obviously dependent on the demand for labor. DeEmaND FoR LaBoR The sudden ending of the war does not mean a complete cessation of war work. While cancellation of government contracts has occurred on a vast scale, the demand for war commodities will for a time be considerable. The American forces overseas must be supplied with every- thing heretofore needed by them, except munitions, while the food and clothing demands of the home army during the period of demobilization, although constantly declining, will in the aggregate be large. This military demand for commodities will still require the employment of a large number of persons in their production. Nevertheless, the volume of war business has already been violently contracted and must be much further curtailed. Consequently, if labor is to find full employ- ment the demand must come from other quarters. Agriculture: So far as agricultural products are con- cerned, the problem seems to be to find a supply of labor rather than to provide employment. The high prices still prevailing for most staple articles of food are in them- selves an indication of the existence of a large demand, while the fact that household cupboards are almost 1 Such a classification is being prepared by the War Department. 14 bare of a great many necessities of life means that a vast reserve supply must be built up anew. In addition, there is the prospect that for many months the foreign demand for food will be exceptionally large.! President Wilson’s statement that $100,000,000 dollars’ worth of food is urgently needed in Europe is now regarded as a low estimate; according to delegates at the Peace Con- ference the need is nearer $400,000,000. United States Food Administrator Hoover in January, 1919, placed the urgent needs of those European peoples whom the Allied nations propose to carry through the winter at 1,400,000 tons, representing a total expenditure, including the cost of distribution, of $350,000,000. This was presented as a minimum estimate to cover this limited field. The Secretary of Commerce, in December, 1918, estimated that no less than twenty million tons of food would have to be exported to Europe in 1919.2, The supply of many articles of food cannot, of course, be increased for several months. Overproduction of foodstuffs is, therefore, a contingency too remote to call for serious discussion. When it is recalled that in normal times agriculture in the United States provides employment for some 14,000,000 individuals, it will be seen that the prospect of a largely increased demand for labor in this quarter is a factor of prime importance in the general employment situation. The Government’s guarantee of $2.26 per bushel for wheat of the 1919 harvests’ obviously provides a great incentive to wheat growers. In the southern sections of the country a demand for farm labor will begin to be felt within a few weeks. In this section the normal labor supply has been considerably reduced by a considerable migration of negroes to northern states. According to the Department of Agriculture, the short- age of farm labor this year may be as acute as it was last 1 According to the United States Department of Agriculture, beet sugar produc- tion in Europe is about 50% short and no large increase is expected within the next twelve months. European countries, it states, will need to import both this year and next about 65,000,000 bushels of rye, 179,000,000 bushels of barley, 118,000,000 bushels of oats, and 255,000,000 bushels of corn. While the United States can supply from its 1918 crop all the oats required, it will lack 8,000,000 bushels of rye, 59,000,000 bushels of barley, and 402,000,000 bushels of corn for domestic consumption and net requirements for Europe. This cannot be sup- plied from elsewhere. — Journal of Commerce, New York, January 27, 1919. 2 Statement at Business Readjustment Conference, Boston, Mass., December 16, 1919; Forum, January, 1919, p. 39. 3 This is the price at Chicago. 15 year. The council of farmers’ organizations at the close of last season estimated this shortage at 3,000,000 men. Perhaps no single circumstance would contribute more to a satisfactory readjustment process than a reduction in the cost of staple food products, cotton, and other articles which figure conspicuously in the cost of living. Should it prove, on the other hand, that a sufficient supply of labor cannot be attracted to the farms, the task of readjustment obviously will be greatly complicated. There has been much discussion of employing returned soldiers in reclamation projects in the West. While such work would tend to relieve unemployment, it will not have an immediate effect on production or cost of agricultural products. Personal, Domestic, and Clerical Service: About 7,000,000 persons are engaged in public administration, personal, domestic, and manual service and in clerical occupations. These 7,000,000 are least likely to be affected by re- adjustment from war to peace. The shortage in domestic and personal servants continues to be acute, and while many women who have left this field for factory work may return, it is doubtful whether the demand will be much lessened. The influences that actuate agricul- tural workers to seek employment in cities operate even more intensely to draw domestic servants to the factory. Textiles: Iron and Steel: Metal Trades: The problem of providing employment is most pressing in the great manufacturing lines such as the textile, the iron and steel and the metal trades industries and various others em- ploying the less skilled labor on a large scale. In these there is considerable evidence of hesitation, with more or less unemployment. In some of the large manufacturing centers, for instance, steel and textile mills are already running only four or five days a week, and a further curtailment is regarded as probable. The copper- producing industry also is on short time because of the unsettled market conditions which have resulted from a reduced demand and the withdrawal of official war prices for the metal, and the large stocks on hand. Production of some of the largest mines has already been cut down sharply, curtailing the demand for labor. In the major branches of the iron and steel industry a slackening demand is generally reported, with evidence of 1 New York Tribune, January 21, 1919. 16 increasing unemployment. Violent reversals of market conditions in this industry are proverbial, as Mr. Carnegie’s oft-quoted phrase, “Steel is either prince or pauper,” testifies. Indeed, if the demand for iron and steel products can be accurately determined it will be comparatively easy to reach a sound judgment as to the employment situation as a whole. Encouragement is found in the fact that the leading steel trade papers generally express the opinion that the transition from war to peace work will be made without great difficulty and indeed with less inconvenience than was experienced in going from a peace to a wartime basis. The iron and steel industry is looking to a substantial demand from Europe for raw materials, machinery, tools, and all articles entering into building construction, esti- mated between $6,000,000,000 and $10,000,000,000. The rehabilitation of the devastated regions of France and Belgium is certain to call for a vast quantity of these materials. Whether the bulk of this will be supplied by France and Great Britain, or whether American manu- facturers will be called upon for a substantial contribution is a matter upon which there is much uncertainty. Lack of transportation facilities will, in any event, for some time tend to handicap such foreign exports not only to Europe but also to South American and other neutral countries. Apparently little difficulty is expected to result from technical problems of readjusting plants from production of war commodities to usual lines of work. Such readjust- ment has in fact already been carried a considerable distance in many lines of industry. In some important industries, notably textiles and footwear, very little re- adjustment of plant was required. Automobiles: The automobile industry is expected by early spring to reach its former production. Automobile manufacturers were reported as eager to work out of their munitions contracts and return to their normal lines of production, and most of them have already done so. The demand for automobiles, it is generally felt by the trade, will be even greater than hitherto. So far as pleasure cars are concerned, however, the industry may be one of the first to feel the effects of a severe trade depression. 17 Shipbuilding: The decision of the Federal Government to continue its merchant marine building program will provide employment for a considerable number of workers directly,! and because of its far-reaching demands for labor in the production of steel, ore, coal, lumber, and scores of other products, its indirect influence will be even more important. Thousands of civilian war workers released from other war work since the signing of the armistice have found employment in shipyards, and apparently the demand for these workers has not yet been filled. The present expectation is that this shipbuilding activity will continue for several years. Boots and Shoes: Rubber: In many lines of manu- factured goods such as footwear it is known that stocks, not only of retailers but of wholesalers as well, are reduced to abnormally low levels, so that manufacturers can be kept busy for a long time simply in replenishing depleted reserves. In several industries of this class the cancella- tion of important government orders caused scarcely a ripple of disturbance in the employment situation, since the workers thus released immediately were transferred to civilian lines of production. Building Trades: A potential labor demand of large proportions exists in the building trades, which have been almost stagnant during the war. In 1912, a normal busi- ness year, the building permits issued in 20 cities of the United States aggregated $554,000,000, whereas in 1917 they had fallen to $397,000,000, and a still greater curtailment undoubtedly occurred in 1918. The March building permits in these 20 cities in 1914 amounted to $55,000,000, whereas in March, 1918, they were only $19,000,000. Building operations in 151 principal cities show for November, 1918, a falling off of 85% as com- pared with November, 1917, itself a poor month.2 There can be no doubt that the deferring of building operations on such a scale means that a large demand for labor is being accumulated against a later day. A great deal of permanent construction work, both public and private, has likewise been postponed during the war. Thus it 1 At the end of January, 1919, there were employed in the wood shipyards 61,502 persons, and in the steel shipyards 316,522, making a total of 378,024 persons throughout the United States engaged in the construction of ships for the Government. ? Official United States Bulletin, January 9, 1919, p. 2. 18 has been estimated by the Secretary of the Emergency Public Works Commission of Pennsylvania! that the amount of public work deferred in the United States during 1917-1918 plus the normal quota of new work for 1919 would be sufficient to provide employment for 2,400,000 men for three months.” In this field, however, the prevailing high cost of labor and materials acts as a serious deterrent, while, moreover, much work of this character cannot be satisfactorily con- ducted in midwinter. With the coming of mild weather there can be little doubt that there will be a considerable demand for labor from this quarter. A revival of con- struction work will of course mean the employment of a large number of carpenters, masons, steelworkers, plumbers, electricians, and others occupied in allied industries such as glass-making, as well as makers of tiles, sanitary ware, and plumbing supplies. New Industries: A sustaining factor of considerable importance in the labor market is found in a fairly numerous group of industries which were largely built up during the war. For example, the manufacture of dye- stuffs and chemicals, for which this country formerly largely relied upon Germany, in 1918 furnished employ- ment for a large number of persons. Many other articles formerly imported from Germany and Austria, such as cutlery, surgical instruments, photographic supplies, toys, and post-cards, are now being made in the United States on a large scale. The expansion of these industries is partly indicated by the increase in American exports. Thus in 1917 exports of chemicals, drugs, and dyes were $181,000,000 as compared with $22,000,000 in 1913; of instruments and appliances for scientific purposes, $6,000,000 against $2,000,000 in 1913; of photographic 1 Annals of the American Academy of Political and Social Science, January, 1919, p. 57. 2Inquiries by the Council of National Defense indicate that at least $100,000,000 of public work has been approved by the proper authorities of the various states. In twenty-eight states expenditure of over $58,250,000 has been authorized for roads, canals, reclamation construction, and for erection of public buildings. In many states appropriations for similar purposes are before the legislature or are being urged. Inquiry by the Bureau of Public Roads of the United States Department of Agriculture as to the number of discharged soldiers and sailors who may be used in construction work shows that in twenty- nine out of thirty-eight states the state highway departments have secured appropritions for work for 11,637 skilled and for 91,904 unskilled laborers. — Official United States Bulletin, January 10, 1919, p. 3. 19 goods, $14,000,000 against $9,000,000; of toys, $2,000,000 against $800,000. Other important increases are indicated by the following table:! Unirep States Exports, 1918 anp 1917, or CERTAIN ArticLtes LarGELY IMpoRTED FROM GERMANY ; Imported Exported pan Y nated States Article from Germany, 1913 1913 1917 Aluminum .. . -| $1,788,065 | $1,046,915 | $20,299,982 Bronze manufactures 3 : 605,649 | .......... 1,586,553 Chemicals, drugs, dyes, medicines 21,128,874 | 29,715,541 | 187,890,822 Clocks and watches . 2 a 852,056 3,606,257 4,276,399 Cocoa and chocolate .. . . 657,499 376,336 3,451,519 Cotton laces and embroideries .| 7,549,308 163,655 1,094,128 Glass and glassware . . ed 2,153,179 4,193,642 13,554,530 Iron and steel — cutlery : : 1,581,159 1,142,148 4,777,655 Musical instruments . : 5 1,257,074 3,799,731 4,142,896 Pencils and pencil leads : 254,980 625,548 2,188,779 Tin manufactures . ‘ 1,495,556 1,453,790 5,411,049 Toys ..... ‘ .| 6,900,774 828,518 1,806,174 Zinc and its manufactures. : 1,304,151 1,754,840 66,383,741 It should be borne in mind that a considerable part of these increases is due to higher prices in 1917, and that the figures do not indicate relative quantities exported. Granting that with the return of peace European pro- ducers of these articles will make a determined effort to recover lost prestige, nevertheless, it seems reasonable to expect that these so-called new industries will continue to absorb a considerable amount of labor. Momentum of Expansion: In estimating the probable demand for labor, it must be remembered that before the outbreak of the war the manufacturing industries of the country had been rapidly expanding. In practically all classes of manufactured articles there was a great increase in production. The actual and the percentage increase in the number of wage-earners in some of the leading manufacturing industries from 1904-1914 is given in the following table: 1United States. Bureau of Foreign and Domestic Commerce. Foreign Com- merce and Navigation of the United States, 1917. 2 United States. Bureau of the Census. Abstract of the Census of Manu- factures, 1914, p. 29. 20 PERCENTAGE OF INCREASE IN WAGE-EARNERS (AVERAGE NUMBER) IN MANUFACTURING ESTABLISHMENTS I904—- 1914 Industry Increase in Increase in number per cent Food. «23 2 ea 4 a es 142,188 40.2 Textiles 2... . ; Se os 342,359 29.6 Iron and steel .. . . . . : 192,424 22.2 Lumber and remanufactures ; 99,393 13.5 Leather and finished products : 42,601 16.1 Paper and printing. .. ‘ 91,260 28.8 Liquors and beverages . . . : 19,814 29.0 Chemicals and allied product: y 72,243 31.8 Stone, clay, and glass ....... he he ae 49,356 17.3 Metals (other than iron and steel) . 1... . 63,623 32.0 Tobacco manufactures .... . a) ses 19,466 12.2 Vehicles for land transportation Z : 126,451 92.6 Railroad repair shops... . ‘ 117,980 47.6 Miscellaneous Bras : 178,796 43.0 Average, all manufacturing industries . .| 1,567,954 28.7 The greater part of this increase occurred in the five years 1905-1909; nevertheless, the expansion of manu- facturing industry was making very rapid progress in the years immediately preceding the war. A further im- portant consideration is that, before the war, export trade in manufactures had increased by leaps and bounds. The manufacturing industries of the country had, therefore, acquired a heavy momentum, which should continue to be felt, provided foreign countries can find means to pay, and provided the necessary vessel tonnage is secured for transportation of the country’s products. Transportation: In addition there are about 3,000,000 persons employed on the railroads, street railways, ferries, and other means of transportation. By far the greater number are employed on the railroads now under govern- ment control. The end of the war is not likely to affect in so great a degree transportation as manufacturing indus- tries. The United States Railroad Administration has already indicated that it will not only continue in its service present employees, but will also try to restore to their former places those released from military service. The street railways have for a long time complained of diffi- culty in securing sufficient workers. No general disloca- tion in the transportation industry is indicated. From a long range point of view, therefore, it is reason- able to assume that there will be a great demand for labor. 21 However, while some observers even predict that before many months the United States may have to face a short- age of men, others look to a sharp, though short, period of unemployment. The Department of Labor has stated officially that it does not look forward to any ex- tended unemployment crisis; nevertheless, it has urged embarkation as far as possible upon work of a public character. The fact that the readjustment period commences in midwinter adds to the uncertainty of the situation. It should also be recognized that peace has come suddenly at a time when costs of material and labor are abnormally high. Under these conditions, in spite of the potential demand for goods, manufacturers naturally hesitate to enter extensively on new commitments. Obviously, the early readjustment of industry is bound up with changes in wages and prices. Buyers naturally hesitate to lay in goods or materials at war prices; and laborers insist on present high wages so long as prices of necessities remain high. Governmental price-fixing, especially of wheat, complicates the situation by keeping up the cost of living; moreover, the large foreign demand for food is likely to maintain high prices for articles entering largely into the laborer’s consumption. Yet prices of goods can fall only when the outlay for materials and labor falls. While the uncertainty as to buying at present prices exists, there is likely to be some decline in production and hence some lessened demand for labor. In short, until price readjustment reaches some stability, more or less unemployment is to be expected. The reports of the United States Employment Service clearly indicate this. The underlying forces working to enlarge industry are so potent that an increasing demand for labor is inevitable sooner or later. Whether the period of such unemployment will be of brief duration or whether an extended period of depression is ahead is the unknown factor in the industrial situation. Already a start has been made in the way of price adjustment. Copper, for instance, is now quoted sub- stantially below the official war price in effect in 1918. Steel prices have undergone considerable downward re- vision, as have wholesale quotations for cotton goods. The same is true of wool and woolens. A leading manu- facturer of radiators early in January announced a re- 22 duction of 25% in price. Several large automobile com- panies have cut off a large part of the war advance in the price of automobiles. Similar reductions are in progress in other industries. Every revision of this sort obviously tends to draw out reserve orders. More recently, substantial reductions in food prices have taken place and further declines are in prospect. WomeEN In INpuUsTRY A further labor factor to come up for consideration in the readjustment period is the dilution of labor that took place during the war as a result of the increase in the number of women workers. The problem of caring for a great number of new women workers in industry, which presses so hard in some foreign countries, is, however, much less serious in the United States. In Great Britain, for instance, the number of women called into industry during the war exceeded 4,000,000, of whom 1,500,000 directly replaced men.1 The increase in France, Italy, Germany, and Austria has also been large. Estimates as to the number of women added to industry in the United States since April, 1917, run as high as a million, but it is doubtful if the number exceeds 500,000 to 600,000. This increase is hardly more than an accelera- tion of the normal movement. The number of women that have actually replaced men is almost negligible. According to the United States Department of Labor ninety-five per cent of the women engaged in war indus- tries previously had to earn their living and most of them had had previous industrial experience. In general, the women added to war industries have been shifted from other occupations declared nonessential during the war. Many have been attracted through the increased wages offered. Many, too, are the wives, relatives, or dependents of men in the service, and may give up their present work when the latter return. While with the cessation of war work it is expected that most of the women will go back to their previous occupations, in certain new fields their employment may be permanent. The United States Railroad Administration has already announced that for the present it will retain its women railroad employees 1Great Britain. Board of Trade. Labour Gazette, June, 1918, pp. 216-217. 23 hired during the war emergency, numbering about 100,000.1 That women will continue to engage largely in industrial work may be safely assumed. Prior to the war hardly an industry existed in which women were not represented. Between 1900 and 1910 the number of women engaged in gainful occupations in the United States increased from 5,319,397 to 8,075,772. Of 13,000,000 persons engaged in agriculture in 1910 about one-seventh were women. In the manufacturing and mechanicalindustries the proportion was somewhat less than one-fifth; in trade the proportion was one-seventh; in transportation one-twentieth. The general range of employment of women in 1910 is apparent from the following table. This proportion probably remained un- changed until the entry of the United States into the war, when the shortage of workers and the high wages offered began to attract larger numbers of women.? NuMBER AND PERCENTAGE OF WoMEN IN INDUSTRY IN Unirep States, 1910 Total number | Number of | Percentage of Occupation of workers, women, 1910 | women in the industry Agriculture, forestry, and animal husbandry... . . «| 12,659,203 1,807,501 14.3 Extraction of minerals... .. 964,824 1,094 wl Manufacturing and mechanical in- dustries .... . .| 10,658,881 1,820,980 17.1 Transportation ‘ .| 2,637,671 106,596 4. Trade... ; . .| 38,614,670 468,088 12.9 Public service . . , 459,291 13,558 2.9 Professional service ....... 1,663,569 733,885 44.1 Domestic and personal service . .| 3,772,174 2,530,846 67.1 Clerical occupations .. . -| 1,737,053 593,224 34.2 Total ys . . .| 88,167,336 8,075,772 21.2 The general attitude of employers toward woman labor during the war has been favorable. In the metal trades many operations of light, semi-skilled nature have been found well suited for women. In certain tasks women have shown greater adaptability than men. They have 1 Of these, 73,000 were in clerical or semi-clerical occupations; 5,600 in cleaning cars or offices, 5,000 in shop work, 2,400 were telegraph operators, and 2,600 telephone operators. Others were employed as bridge attendants, car em- ployees, engine wipers, switch tenders, track workers, and watchwomen. * Statistical Abstract of the United States, 1917, pp. 247 ff. 24 shown great willingness to learn, as well as reliability and similarly valuable characteristics which would make their permanent addition to the labor force desirable.! It is an interesting commentary on the possibilities of the labor situation that some students, instead of inquiring how women workers can be retained are carefully studying the field to see how the number can be greatly increased to meet a labor shortage which they predict for the not distant future. The extension of women’s employment in industry depends largely on their ability to compete with men in the same work. Other conditions being equal, if the women excel or equal men with respect to the quantity and quality of their work, without impairment of their health, which is always a primary consideration, they will doubtless continue in work hitherto open only to men. Undoubtedly the crux of the situation will be wages. Women engaged on government work have received the same pay as men where the work has been the same; otherwise, a lower wage scale has been paid. The De- partment of Labor, in a statement issued December 12, 1918, recommended that wages be established on the basis of occupation and not on the basis of sex, and that the minimum wage-rate paid should be sufficient to cover the cost of maintenance not merely for the individual but for dependents. In its investigations the Depart- ment of Labor has found, however, that ‘“‘the men workers think that women should not have as much pay as men.” EMIGRATION AND IMMIGRATION Another potent issue in the labor market may arise from the character and extent of emigration and immigra- tion in the readjustment period. For three years before the outbreak of the war the United States drew more than 1,000,000 immigrants annually from foreign countries, chiefly from Europe. For the four years of the war the average increment from this source was only about 260,000 yearly, against which must be placed 1In an investigation by the National Industrial Conference Board in June, 1918, into the Wartime Employment of Women in the Metal Trades, it was shown that among ninety employers who considered the introduction of women favorably, sixty-one had found the output of women in their establishment on some work greater than or equal to that of the men. Five found it equal in some cases and only six found it always less. Eighteen made no statement concerning comparative output. 25 an average annual loss by emigration of over 120,000. Comparisons follow: IMMIGRATION AND EMIGRATION, UNITED STATES, 1914-1918 Arrived Departed W914. 6 we we ae 1,218,480 TOG oss. sessed ae 303,338 1915 : . 826,700 1915 . . . . 204,074 1916. i te ahs 298,826 1916 oe Se 129,765 1917 . 295,403 1917 .. . 66,277 1918 it 110,618 1918 2. ww . 94,585 Total . . 2,250,027 Total . . . . 798,039 In other words, the great stream of European immigra- tion to this country was abruptly cut down by the war to less than one-third its normal volume. In this way a theoretical shortage of over 2,000,000 workers was created during the four-year war period. Obviously, it is a question of first importance in any discussion of after-war labor conditions whether that flow will be promptly resumed, whether it will continue restricted, or whether, instead, as some contend, there will be a great outward movement of workers from this country to their native lands. In the opinion of some critics, the enormous task of rehabilitation in Europe, coupled with the serious reduc- tion in man-power in European countries, will for a long time preclude a resumption of European immigration on anything like the pre-war scale. That the war has heavily reduced the labor supply in Europe is apparent. The dead alone are estimated at 7,000,000; those disabled at 8,000,000 more. Should the demand for labor in Europe be normal, such reduction in man-power would, of course, mean an acute labor shortage. Against this reduction in the number of workers, however, must be considered a possible reduction in purchasing power and consequently in the demand for commodities. In the case of Russia, for example, the complete disorganization now apparent in that unhappy country makes it fairly certain that there will be no great increase in employ- ment. In France, on the other hand, the extensive tasks of rehabilitation seem likely to involve a heavy demand for labor, while the natural thrift and energy of the French people are in themselves an assurance against extensive unemployment. In view of the exceptionally heavy losses in men sustained by France in the war it would 26 seem that she can easily utilize all her labor power and indeed that she may draw labor from other countries. In Great Britain the problem depends not so much on home consumption as on ability to maintain foreign mar- kets, but on the whole a large demand for British labor seems a reasonable expectation. The problem in Great Britain is, however, complicated because of the great increase in the number of women employed in industry during the war. A still more serious matter is the disposi- tion of British labor to demand a return to pre-war con- ditions of restricted output. While on the whole British labor made an exceedingly loyal response to the demands of the national crisis, there is now evidence of a recurrence to former low standards of productive efficiency. To the extent that these ideas prevail in that country, the task of readjustment in the United States will be simplified, provided similar fallacies are not adopted by American workers. The case of the Central Powers is less clear, but a large demand for labor in Germany seems probable if a stable Government can be speedily established. On the whole, no immediate resumption of immigration from Europe on a large scale seems probable. Indeed, some are of the opinion that a considerable exodus of labor from the United States is likely to occur. An esti- mate by the Chamber of Commerce of the United States made in 1915, and reaffirmed subsequent to the signing of the armistice, indicated that there were at least a million persons in this country who desired to leave at the close of the war. Such an estimate shows that a large emigration from the United States is a possibility which must be taken into the reckoning. It at least lends support to the view that there will be no early resumption of im- migration on a pre-war scale. Whether there will be a con- siderable exodus of aliens from this country probably will depend chiefly on economic conditions in Europe. But political conditions also play a strong part. Many aliens have a strong attachment for their native lands and a preference to spend their lives there, provided employment at fair wages may be expected and a rea- sonable degree of political liberty assured. The prospect that such liberty will be extended as a result of the war is, therefore, a factor in the situation. But where political conditions abroad are uncertain, with prospect of burdensome taxes and continued government re- 27 strictions, foreigners previously inclined to return to the countries of their nativity may be unwilling to do so now. In addition, the high wages now current in the United States may act as an incentive to keep them here. On the other hand, it is an open question whether many foreigners may not, because of the high wages which they have been able to earn and the savings which they have made, seek to return to their native countries, where both their savings and their labor will be at a premium. It should be realized that in normal times, for example, 100,000 Italians alone return each year from the United States to Italy. Immigration and emigration are also in large measure dependent upon resumption of normal transatlantic steamship service. This is not likely for some time. Present restrictions on the issuance of passports here and abroad for the moment preclude any large movement of workers, but this is a detail which is merely a reflection of governmental policy. Of far greater consequence is the attitude of European governments! and of the United States toward the immigration problem; this in turn may be subordinate to the natural play of economic conditions. Divergence of opinion on this matter brings sharply to the front, as one of the important issues involved in readjustment, the question whether amendment of the immigration laws of this country is desirable, on the one hand, to facilitate a larger inward movement of workers, or, on the other hand, by still more rigid restrictions, to prevent an inflow of low grade labor or of persons in- capacitated by the war, or of the Bolshevik class now causing such serious disorder in Europe. A bill to restrict immigration into the United States for four years is now being considered by Congress. 1 According to the Swedish Commercial News (Stockholm), England is planning to restrict emigration to other countries as well as to the colonies. Canada, Australia, New Zealand, and South Africa, to guard against possible emigration to other agricultural regions, have placed large tracts of land at the disposal of returning soldiers and their families. In Germany an Imperial De- partment of Immigration and Emigration was formed in May, 1918, to work for the return of Germans from foreign countries as well as to guard and replace their former properties. Austria, like Germany, counts on a large return migra- tion and is considering the allotment of lands to those who return, since most emigrants from Austria-Hungary have been farmers. Switzerland has an Emigration Office to control the work of emigration promoters. It is stated that while it appears that the former rate of emigration from Italy to North and South America will slacken for several years, the former seasonal migration to surrounding countries is expected to continue. France is counting on a con- siderable influx of Italian agricultural labor— United States. Bureau of Foreign and Domestic Commerce. Commerce Reports, January 17, 1919, p. 260. 28 Hours or Worx That the readjustment of labor conditions will involve many efforts toward a further shortening of the workday by legislation or otherwise is practically certain. In several industries labor leaders are already attempting to force an eight-hour day, while various bills providing for shorter hours for women are being introduced in state legislatures. In nearly all labor programs, both here and abroad, the eight-hour day or a workday of “not more than eight hours” is conspicuously mentioned. Some- times this is advocated on the ground that it would provide a cure for unemployment. In the main, how- ever, the demand is merely one expression of the pre- vailing social unrest among the working classes without much regard for its economic effects. Evidence of this is found in frequent suggestions that if an eight-hour day is secured, a campaign for a seven-hour day will follow. Endorsement of the eight-hour day by the Federal Administration in this country has given a decided impetus to the movement, while the frequent adoption of a basic eight-hour day in several industries, although really a matter of wages rather than of hours of work, nevertheless has given point to discussion of a limitation of the workday. Moreover, the question of a general and international standardization of the conditions of work is scheduled for consideration by the Peace Conference. It is not proposed to discuss the merits of these issues at this time. It is clear, however, that a careful analysis of the relationship of hours of work to output, to health, to social needs of. workers, and to national progress is im- peratively demanded as constituting one important issue Uae jt the list of reconstruction problems.’ SUN 19 182k Pexh no feature of the readjustment problem is of ey Eig 9 OOLE ediate concern than the question of wages. CAR Bate Ratés-of wages increased enormously during the war and “~“@arnings not infrequently were doubled. That present 1 Results of extended investigation of this problem in the cotton and wool manufacturing industries and in the boot and shoe industry have been issued by the National Industrial Conference Board. Research Reports, Nos. 4, 7, and 12. WAGES eee 29 wage scales are acting as a serious deterrent to new under- takings by employers in ordinary manufacturing lines, and even more so in the case of construction work, where present labor costs mean a permanently high overhead charge because of inflated investments, is too apparent to permit of argument. A revision of wage scales is bound to come eventually, but the task of readjusting wages on a just and acceptable basis is exceedingly complicated. War bonuses have been discontinued and frequently the elimination of overtime has done away with the payment of extra rates. But even this modest reduction of earnings has been attended by unrest in the ranks of the workers. Wage-earners naturally object to any proposal for a reduction in wage rates. This is particularly true while the cost of living remains at its present level. It is not easy for them to understand that lowered rates of pay if accompanied by decreased prices of the necessities of life may leave them as well off or even better off than they are today. Despite the severe lessons of the war, the dis- tinction between real or effective wages and nominal or money wages is still but incompletely grasped by the average worker. He does not clearly see, moreover, that prevailing abnormal prices of food and other commodities are in considerable measure an inevitable corollary to extraordinary wages. From this vicious circle of in- creasing wages and increasing costs, a way out must somehow be found. One of the first steps is to present the situation to labor in a fair way. At the bottom of the wages question, of course, lies a desire of the wage-earner for a larger share of the product of industry. The American wage-earner as a rule is not attracted to schemes for a radical reorganization of the industrial system. In efforts to evolve a solution of the wage problem, such suggestions as the following, however, are likely to receive widespread attention: Extension of the principle of the minimum wage. Standardization of wage rates for different occupations. Co-operation in industrial establishments with a view toward effecting greater parity in wages. Extension of piecework. Such increased efficiency of workers as will obviate the necessity for a drastic reduction in wage rates. 30 It is not the purpose of this report to deal with the merits of these issues, some of which are of an extremely controversial character. Adequate discussion of the minimum wage calls for a volume in itself. Standardiza- tion of wage rates is being seriously considered in Great Britain as a possible means of alleviating discontent, on the ground that there would be no argument as to the amount of the wage when once the occupation of the worker had been definitely classified. Parity in wage rates is but another way to standardization. This ques- tion is too complicated to be discussed in a few words. Whether the extension of piecework, by presenting a definite incentive to the worker to increase his output, would help to solve the difficulty is a highly interesting suggestion. Against this may be placed the fact that in Great Britain, where piecework was utilized during the war to an extent hitherto unknown in that country, there is now a disposition to advocate a more general adoption of day rates of pay as a means of tiding over the situation. Of all the suggestions current, perhaps none is more constructive in intent than that for increasing individual output to such a degree that it will be possible for em- ployers, at least in manufacturing lines, to pay relatively high rates of wages and continue to expand the volume of business. This may be done through a more careful organization of productive processes, through incentives to personal efficiency, through elimination of various restrictive practices of labor. Obviously, if some practical method of carrying out this program can be devised, employers should be ready to adopt it. A continuance of relatively high wages to the millions of workers in this country means an enormous purchasing power which immediately comes back to the market in the form of a demand for the thousand and one products of the factory. If, therefore, anything definite can be accomplished along this line, not only the wage-earner but the employer and the community at large would benefit. Furthermore, with such increased efficiency, there may actually go a substantial reduction in the cost of com- modities despite high wages. Of all the suggestions for meeting the pressing problem of wages readjustment, therefore, that of increasing the efficiency of production demands first consideration. It seems to be the only means of escaping the vicious circle by which an increasing 31 cost of living is used as a reason for demanding higher wages; which, in its turn, is an important factor in high prices of goods, resulting in still another rise in the cost of commodities consumed by the worker. As one means of increasing efficiency of workers, manufacturers have in certain cases established factory schools to educate their employees in the processes and principles underlying work. Such schools have been used with increasing frequency particularly where women workers are employed or have been introduced. In addi- tion to the opportunity which they offer to train and to Americanize workers, and to teach them to effect savings in materials and in operation, such schools have been reported by manufacturers as a valuable means for permanently improving industrial relations and con- ditions. REPRESENTATION OF WORKERS Another labor readjustment issue which is receiving unusual attention is the matter of giving employees a more definite voice in determining conditions of work. ‘This discussion, which runs all the way from plans for a local shop committee to demands for an “‘equal share” for labor in management and in profits, is covered by the generic term “representation of employees.” In Great Britain the subject has received much atten- tion and is a topic of active discussion. A sub-committee of the Ministry of Reconstruction (the Whitley Com- mittee) has reported in favor of a system of national in- dustrial councils and local and district shop committees. ‘To these plans the British Government has given its official endorsement and both the Ministry of Recon- struction and the Ministry of Labour are actively engaged with manufacturers’ associations and trade unions in organizing and perfecting these councils and committees. In the United States the movement toward some form of representation of employees has been given a powerful impetus by the voluntary action of several of the leading steel companies and by frequent recommendations of the National War Labor Board for the creation of shop committees. The number of works committees estab- lished during the war is unknown. In one hundred and sixteen awards made by the National War Labor Board from its inception to December 31, 1918, provision was. 32 made for works committees in thirty-seven. Experience with these committees has in many cases been too brief to warrant positive conclusions. Advantageous results have been reported with sufficient frequency to invest the plan with a high degree of interest. On the other hand, in establishments where there is opportunity for close personal touch between the employer or his assistants and the employees, notably in the case of so-called small shops, such committees are often regarded as unnecessary or even as inadvisable. Without passing final judgment, it may safely be said that few suggestions for the readjust- ment of labor conditions seem more worthy of thorough- going and candid consideration. Collective Bargaining: Another question, closely re- lated to representation, is that of trade unionism and collective bargaining. In Great Britain there is distinct evidence of a disposition on the part of the Government to foster greater organization both of employers and of employees. In this country the present Administration obviously has given its active support to trade unionism. These issues undoubtedly will figure prominently in all discussions of post-war labor readjustments. Again, it is proper to point out that final conclusions on this as on numerous other matters should be reached only in the light of underlying political and social conditions. In Great Britain, as shown,! labor is highly unionized. A corresponding degree of organization prevails among British employers. Moreover, it has been the policy in the past for employers and employees to hold conferences at regular intervals to discuss conditions of work or special issues in controversy. This process of organization has been greatly accelerated by the war. Collective bargain- ing on a large scale is, therefore, definitely established in Great Britain. In the United States, the proportion of the nation’s wage-earners included in trade unions is comparatively small. Similarly, the organization of employers has made much less headway than abroad. Individual rather than collective bargaining through trade unions has been therule in American establishments. This difference in the sur- rounding conditions has a bearing on the solution of all problems involved in trade unionism. 1See page 3. 33 Among labor questions which promise to come in for discussion during the readjustment period is whether or not such labor organizations, and organizations of em- ployers as well, should be encouraged or in some way compelled to assume a greater degree of legal responsibility to the state and to one another. Under the Clayton Act the trade unions have been freed from the prohibitions of the Sherman Act against combinations to enhance prices. Incorporation of trade unions or, as in England, registration by which the right to sue or to be sued is obtained, promises to come up for active discussion in consideration of labor readjustment problems. A further issue involved in the general question of representation of employees is that of the creation of an industrial court as successor to the National War Labor Board, to which industrial disputes could be referred. Whether such a court predicated on voluntary agreement for adjudication of disputes or for their investigation should be instituted is already receiving much considera- tion. Everything depends on how it is constituted and administered. Certain questions relating to jurisdiction necessarily arise. Should a national industrial court with regional subdivisions, corresponding to the federal district courts and the court of appeals, be instituted, or would it be preferable to create within each state a court to have jurisdiction only within the state? How shall disputes affecting the operation of public utilities, as distinguished from private industries, be settled? The question of industrial peace is obviously one in which not only employer and employee but the com- munity as well is vitally interested. Few matters involved in the readjustment program are of more fundamental importance. 34 Il MATERIALS Perhaps in no direction was the disturbing influence of the war on industry more sharply felt than in the inter- ference with the normal flow of raw materials. The para- mount necessity of securing full production of war supplies compelled a radical curtailment of the use of basic materials in manufactures, from steel and copper to precious metals. Automobile manufacturers found their supply of steel cut in half, while their supply of rubber was even more sharply reduced. Manufacturers of machinery, tools, and practically all other products for civilian trade requir- ing iron and steel were unable to secure their normal quota of raw materials. Besides this, the extraordinary advance in prices acted as an automatic check on purchases.! With respect to fuel the disturbance was even more extraordinary. Here it was not merely a question of dis- tributing the supply, but of an actual deficiency, as the heatless Mondays imposed upon industry at a time when every pound of product was urgently needed eloquently testified. While this shortage was due in part to a lack of transportation facilities, both difficulties were one in origin. Unprecedented interference with the normal movement of foodstuffs is too familiar to require mention. In wool the Government early assumed complete con- trol of allotment; the business was throughout conducted on a hand-to-mouth basis, and many lines of production had to be suspended. 1Such disturbance of the steel market was even greater in England. Thus, at the close of 1917 the allotment of steel under the control of the Ministry of Munitions, as reported by the members of the so-called Kent Commission in their visit to this country in the fall of that year, was as follows: To Allies . .. at fe h.8 ; 138% To shell manufacturers ’ S.aiek or 24% To Admiralty 2% if vee oe 21% To War Office eg Xia Ba ; eae 6% To construction and steel work extensions ea aed 8% To railways, machinery, and aircraft . . ekg . . 17% To other civilian and miscellaneous purposes ...... .- 11% All steel obtained from the United States was devoted to war purposes. 35 With the signing of the armistice the need of such rigid regulation has largely disappeared. The Federal Govern- ment still has its hand on several industries, while the guarantee of a fixed price for the 1919 wheat crop neces- sarily involves a continuance of Government control. On the whole, however, industry is face to face with the problem of adjusting an increased productive capacity to open market conditions at a time when the demand of the principal buyers, the Government and the Allies, has been sharply contracted or even stopped. The expansion in the normal productive capacity has been very‘great. For instance, under the stimulation of war the output of steel in Great Britain and in the United States was enormously increased. Similarly, production of spelter in Great Britain, a large part of the supply of which was obtained from Belgium and Germany before the war, has been tremendously expanded. Both Great Britain and the United States, formerly dependent on Germany for dyestuffs, have entered that industry on a large scale. This list of illustrations could be greatly extended. On the other hand, unstable political and economic conditions have so affected some of the nations as to curtail seriously the production of certain goods for which the world formerly relied upon them. Russia, for example, which was the largest exporter of wheat, rye, barley, oats, manganese ore, and hemp, is in such straits that she cannot even supply her own domestic needs. Similarly, Germany, which ranked first in the production of sugar, potatoes, and potash salts, and second in pig iron and zinc, has so impaired her commercial position that it is extremely doubtful whether she can contribute to the needs of other nations as hitherto. The question arises whether these radical changes in the relative productivity of great manufacturing nations will have a permanent effect on industry. With respect to certain products, it is easy to reply in the negative. The production of cotton, for instance, is still largely in the hands of the United States, and its pre-eminence in the production of copper has not been materially affected by the war. Likewise its relative position in the production of foodstuffs has not been disturbed to any appreciable degree. No new sources of petroleum production, other than those in Mexico, have 36 been developed which seriously threaten the commanding position of the United States. For all these products other nations must continue for an indefinite period to look to this country for their supply to practically the same extent as before the war. The case of coal, however, is somewhat different. The inability of Great Britain to maintain its normal produc- tion and the shutting off of the French coal supply in northern France because of occupation of that territory by the German army, resulted in an unusual export demand for American coal. Thus Great Britain’s coal output fell from 287,000,000 tons in 1913 to 230,000,000 tons in 1918; the United States output meanwhile in- creased 100,000,000 tons. There can be little doubt that, with the restoration of normal conditions abroad, demand for this product will be diverted back to its normal channels, or at least that the gains of the United States will be retained only through extraordinary effort. Similarly the transfer of Alsace-Lorraine with its vast coal deposits from German to French sovereignty injects a new factor into the international situation with respect to that product, and also with respect to iron and several other minerals. Even more important is the question as to how the great increase in capacity for steel production, particularly in the United States and Great Britain and to a less extent in Japan, will affect international trade and consequently the world industry in this great product. That Great Britain will seek to employ a large part of its surplus capacity of steel in supplying the enormous requirements in Belgium and France for the work of rehabilitation goes without saying. While American producers are apparently counting with considerable confidence on a share in this large business, it may as well be conceded that they will meet with the keenest competition from Great Britain. This competition, furthermore, is almost certain to extend to neutral markets. In the case of potash, for which other nations had previously relied on Germany, there is the possibility that France will be able from the potash deposits of Alsace- Lorraine to become an important factor in the world’s trade in this product, while exploitation of the deposits of California and some other sections of this country is already looked forward to with much confidence. In 37 machinery, chemicals, and the hundreds of articles in the production of which Germany was making enormous progress prior to the war, keen competition must be ex- pected. It must not be forgotten that the war did not result in the destruction of German factories, and while the loss of Alsace-Lorraine will enforce rigid restrictions on Germany’s ability to produce some products, it has had comparatively little effect on many others. The situation is one which promises to accentuate pre- war commercial rivalries. Abandonment of various inter- national agreements for the control and allotment of cer- tain materials, such as zinc and tin, adds to the uncertainty. It is a truism to state that that nation will be in the best position to maintain its status in post-war competition which is best able to attain maximum production at minimum cost. It is equally obvious that this end is dependent on the co-operation of labor and management in such production. IV FOREIGN TRADE In discussion of foreign trade after the war the question instantly arises whether the opposing nations will speedily resume former commercial relations or whether there will be an era of international boycotts and trade warfare. So far as an absolute boycott is concerned, there has already been some modification of sentiment. At the Paris Economic Conference in November, 1916, prohibi- tion of trade. with the Central Powers was seriously discussed. At various times employers’ associations and trade organizations in Great Britain have also strongly advocated a boycott of German goods. However, the British Committee on Commercial and Industrial Policy in a statement issued in December, 1916, and reafirmed in December, 1917, recommended that: Any general prohibition of exports to present enemy countries after the war and any continuance of the system of rationing neutral countries are impracticable and inexpedient, but the Paris Resolutions can be carried into effect if a policy of joint control of certain important commodities can be agreed upon between the British Empire and the Allies for the Transitional Period. Any measures should aim at securing to the British Empire and the Allied countries priority for their requirements and should be applied only to materials which are mainly derived from those countries and will be required by them.’ When it is stated that France, which has suffered from the war more than any other nation, with the possible exception of Belgium, is already planning large imports of coal from Germany,” it should be apparent that any rigid boycott of German products is extremely improbable. The practical question of Germany’s ability to meet indemnity demands if her foreign trade is shut off must also be considered. Nevertheless, the war has given too much 1Great Britain. Committee on Commercial and Industrial Policy. Interim Report on the Treatment of Exports from the United Kingdom and British Over- seas Possessions and the Conservation of the Resources of the Empire during the Transitional Period after the War, p. 9. 2United States. Bureau of Foreign and Domestic Commerce. Commerce Reports, December 14, 1918, p. 1012. 39 cause for bitterness to make complete resumption of former commercial relations immediately practicable. Further- more, France, in the opinion of most of her industrial leaders, must face the problem of preventing Germany from gaining the advantage of commercial victory after suffering defeat in the field. The Germans, by pillage and destruction, have practically wiped out many of the industrial communities of northern France.! In most cases factories must be rebuilt, new machinery purchased and installed, and working forces reassembled before the French manufacturers can hope to compete in the world’s markets. On the other hand, Germany has had practically none of her producing units disturbed and needs only the raw materials to resume production on a larger scale. If she is enabled to re-enter foreign trade at once before France has even begun her rehabilitation, the latter country obviously would be placed at a serious dis- advantage in world trade. This problem, which is causing great concern in France, is also of direct importance to the United States. History shows that wars have usually been followed by a rather speedy resumption of trade relationships between belligerents and, moreover, that their trade with each other has generally increased. In the five years following the Franco-Prussian War of 1870-1871, the trade between the two belligerents increased about 40%. In 1869, the year before the outbreak of war, French imports from German territory aggregated about $50,000,000 in value; in 1872, the year after the war, they totalled about 1 Investigation by the Red Cross indicates that the damage to agriculture (soil, live stock, forests, tools) is about $2,000,000,000. The French Govern- ment in May, 1918, estimated among agricultural implements needed to replace losses: 51,000 side-hill plows, 33,000 other plows, 115,000 farm wagons, 88,000 harrows, 50,000 rollers, 48,000 hoes, 36,000 seed drills, 13,000 fertilizers, 16,000 beet extractors, 21,000 winnowing machines, 18,000 horse rakes, 32,000 reapers and binders, 53,000 root cutters. The loss in cattle of all kinds is estimated at 850,000 head, a depletion of 55% from 1913; the loss in horses alone is placed at 60%. In the coal mines over $200,000,000 of machinery has been destroyed; in steel and iron mills over $500,000,000, in the textile industry over $120,000,000, in electric power stations over $50,000,000, in breweries over $250,000,000, in machine shops over $100,000,000, and in foundries over $60,000,000. In all about $4,000,000,000 worth of machinery is needed to replace that destroyed or carried away. It is estimated further that France has lost about 10% of its lumber and 634% of its firewood. Over 2,000,000,000 board feet of lumber have been destoyed. The Committee on Budget of the French Chamber of Deputies in a report made in December, 1918, estimated the total damage, including agriculture, factories, public works, buildings, and furniture, at 64,500,000,000 francs or over $13,000,000,000.— New York Times, January 26, 1919, Sec. 3, p. 6. 40 $70,000,000. In the five years after 1871 they averaged about $66,000,000 annually. On the other hand, German imports from France rose from $60,000,000 in the year before the war to an average of about $83,000,000 an- nually in the five years following the war.1 Another parallel is found in the trade relations between the United States and Spain following the Spanish-American War. In 1897, the year before the outbreak of war, im- ports into the United States from Spain amounted to less than $4,000,000, whereas in the five years after the war they averaged $6,000,000 annually, a gain of 50%. Similarly, exports from the United States to Spain which in 1897 amounted to $11,000,000 rose to an average of $14,000,000 annually in the five years after the war, a gain of 25%. After the war between Russia and Japan in 1904-1905, similar increases in trade between these belligerents were recorded. These facts suggest that, despite the strong feeling engendered by the war, the nations engaged, all of whom are keenly awake to the importance of foreign trade, will resume commercial relations without any extended period ‘of interruption. The value of the international commerce of the nations at war is very great. The chief belligerents were not only the world’s great manufacturers but also the world’s great traders. Moreover, the trade of the Allied nations and the Central Powers with one another was in itself of enormous importance. In 1913 the six Allied powers — Great Britain, France, Belgium, Italy, Japan, and the United States — sold to the Central Powers goods valued at $1,275,000,000, and purchased from them about $1,300,000,000 worth, making the total interchange about $2,575,000,000. The United States in 1913 alone sold to the Central Powers about $360,000,000 worth of merchandise, Great Britain $400,000,000, and France $150,000,000. On the other hand, Germany sold to the United States in 1913 about $190,000,000 worth of merchandise, to Great Britain $340,000,000, to France $200,000,000. In all she sold almost $1,000,000,000 of goods to these six important traders among the Allies. Whether retaliatory measures in the way of tariff 1See O. P. Austin. International Commerce. In E. M. Friedman (ed.) American Problems of Reconstruction, p. 271. 41 legislation will be adopted is a different question. There is considerable evidence that even among the Allied nations the protective tariff system may find increased acceptance. The fact that new industries have sprung up in several countries as an incident to the war gives point to this suggestion. It is interesting that in Great Britain the advisability of adopting a protective tariff has been widely featured in the newspaper and periodical press, although the real significance of this discussion may easily be overestimated.! One object of those who advo- cate a protective tariff for Great Britain is to prevent “dumping” of goods in British markets. That a more highly protective tariff will be advocated in the Congress of the United States, both as a safeguard against such dumping and to shut out goods produced by low paid labor of Central Europe is practically certain. France, always favorable to a protective tariff, has already given notice of her intent to terminate all favored-nation treaties. Every year the United States has become increasingly dependent upon its foreign markets. Today the keenest interest is being shown by American manufacturers in the development of foreign demand. Seldom have so many individual manufacturers sent representatives to foreign countries to survey the outlook for foreign trade. In addition, several large industrial organizations are arrang- ing to send commissions to make similar studies. How vast is the field open for such international com- petition is suggested by the statement that the total inter- national commerce of the world, including both imports and exports, amounted in the year 1913 approximately to $40,000,000,000. Of this total, about $27,360,000,000 represented the imports and exports of the twelve leading belligerents — Great Britain, France, Russia, Japan, 1 For instance, a committee of the British Board of Trade reported as follows: ‘The committee is convinced that for the future safeguarding of the iron and steel industries it will be necessary to establish a system of protective duties, and in this opinion it is supported by the practically united feeling of the British iron and steel producers. . . . The maintenance of a great open market in the midst of the greater producing nations of the world is incompat- ible with the prosperity and even with the existence of a native iron and steel industry. . . . The conditions of competition between Great Britain and her rivals are thoroughly unequal. The iron and steel industries of Germany and America are protected from retaliatory action by heavy tariffs. . . . By reason of a free trade system Great Britain has been compelled to divert her greatest strength from export to the struggle for maintenance of her markets at home.” Great Britain. Board of Trade. Committee on the Iron and Steel Trades, quoted in the Iron Trade Review, January 2, 1919, p. 23. 42 Belgium, Italy, Roumania, and the United States; Ger- many, Austria-Hungary, Turkey, and Bulgaria. The manufactures exported by these countries were valued at about $7,000,000,000; their imports of materials for use in manufacturing amounted in 1913 to over $5,000,000,000; of manufactures for further use in man- ufacturing, about $3,000,000,000; and of food, about $4,500,000,000. The imports of the Central Powers alone aggregated in 1913 $3,741,000,000 and _ their exports about $3,253,000,000. Their combined exports and imports thus totalled about $6,994,000,000, or about 17% of the total trade of the world. The eight important Allied belligerents —Great Britain, France, Belgium, Italy, Japan, Russia, Roumania, and the United States — imported in 1913 goods valued at about $10,539,000,000; their exports amounted to $9,832,000,000, giving a total volume of trade of about $20,371,000,000, or about 51% of the total commerce of the world. It will be seen, therefore, that the nations at war carried on about 68%, or over two-thirds, of the total imports and exports enter- ing into the world’s commerce. The share of each of the belligerents in this trade is indicated in the following table: IMPORTS AND EXPORTS, 1913! Country Imports Exports United States $1,813,008,235 $2,428,506,365 France .. . 2,144,820,000 1,852,040,000 Great Britain 3,843,673,695 3,174,101,630 Italy . 727,550,000 785,000 Belgium 916,725,000 715,365,000 Japan 364,715,820 316,230,105 Russia . . 610,269,500 710,474,500 Roumania 118,002,500 134,141,060 Germany . 2,801,679,000 2,549,825,000 Austria 707,165,000 575,645,000 Turkey 197,950,000 108,730,000 Bulgaria 34,250,210 18,640,925 Ot alts 2258 en AS ae $14,279,808,960 | $13,084,484,585 RAE SNe $27,364,293,000 In this vast commerce exports of manufactured goods play an exceedingly important part. In 1913 the exports of manufactures by the Allies totalled about $5,000,000,000, while those of the Central Powers amounted to about $2,000,000,000. In the years just 1The figures here used are taken from the Statesman’s Year Book, 1917. Inasmuch as classifications of imports and exports are not uniform, the amounts are to be regarded as approximate. é 3 preceding the war manufactures formed about 80% of Great Britain’s total exports, about 68% of Germany’s, 65% of those of Austria-Hungary, 58% of those of France, 55% of Italy’s, and about 48% of those of the United States. In all, the belligerents supplied about 80% of the manufactures entering international trade. They also imported about 75% of the manufacturing material and about 65% of the food involved in the world’s trade. The total export and import trade of the United States in 1913, therefore, was approximately $4,279,000,000, or about one-tenth of the world’s international commerce. Since 1913 the foreign commerce of the United States has almost doubled, the total in the fiscal year 1918 amounting to $8,874,000,000, of which total $5,928,000,000 repre- sented exports. In the twelve-month period ending De- cember, 1918, the total exports from the United States were valued at $6,150,000,000, as compared with $5,716,000,000 in the same period of 1917. Imports into the United States in the twelve-month period ending De- cember, 1918, totalled $3,031,000,000, a gain of $79,000,000 over the corresponding period of 1917. The total trade for the calendar year was therefore about $9,181,000,000. A comparison of the exports and imports of the United States for the period 1907-1917 is given below. It affords an idea of the directions taken by the increasing export trade of the country during that period.! Exports Fiscal year Fiscal year Percentage June'30 4907 | Juno'30 fois | increase Europe ... $1,298,452,380 | $3,738,231,162 | 187.9 North America . 349,840,641 1,237,720,614 | 253.8 South America 82,157,174 314,564,482 | 282.9 Asia and Oceania . 133,889,857 582,346,015 | 334.9 Africa 16,511,026 55,423,368 | 235.2 Total . $1,880,851,078 | $5,928,285,641 | 215.2 Imports Europe $747 ,291,253 $411,578,494 44. oF North America 263,576,349 918,488,901 | 248.5 South America . 160,165,537 567,276,702 | 265.2 Asia and Oceania . 242,260,820 972,803,349 | 301.6 Africa 21,127,466 75,911,957 | 259.3 Total $1,434,421,425 | $2,946,059,403 | 105.4 *Percentage decrease due to war; from 1907 to 1914 imports increased 32%. 1 United States. Bureau of Foreign and Domestic Commerce. Commerce and Navigation of the United States, 1917, p. 13. 44 Foreign A stimulus to private initiative in extending foreign trade has already been given by the passage of the Webb- Pomerene Act. This act legalizes the formation of combinations of competing manufacturers and exporters: and frees them from the prohibitions of the Sher- man Anti-Trust Act if their export associations take a certain form in organizing, if they organize in public, submit to supervision, and confine their co-operative activities solely to export trade. Up to the beginning of December, fifty-two statements of such export trade associations, covering combinations of machinery manu- facturers, toolmakers, lumber manufacturers, iron and steel manufacturers, and general exporters were filed with the Federal Trade Commission. A combination in the steel trade is said to include twenty-eight companies with an aggregate annual ingot production of over 20,000,000 tons. The Government, moreover, is taking a more active part in foreign trade exploitation. Recently it was announced that the War Trade Board had organized an exporting company known as the War Trade Board of the United States, Russian Bureau, Inc., with a capital of $5,000,000, to “engage in the business of exporting to Russia and Siberia agricultural implements, shoes, cloth- ing, and other commodities which the Russian population needs, and bringing back Russian and Siberian raw materials.” The company is intended to assist in stabiliz- ing and rehabilitating Russian trade and enterprise, and particularly in encouraging private capital to engage in trade with Russia and Siberia as shipping becomes available for the purpose. It is understood that similar plans are under considera- tion for creating, through the assistance of the Govern- ment, markets for our goods in other countries. The Government’s decision to go on with the building of a great merchant marine should react favorably on the extension of foreign trade. With a large American owned merchant marine there is obviously an added incentive for taking advantage of all opportunities for trade with other countries. The question whether this merchant marine shall be under Government or private control promises to be one of the important problems involved in readjustment in the United States.} 1See pp. 54-56. 45 Aside from the merchant marine is the question how and to what extent the banking facilities of the United States can be expanded and utilized so as to further the efforts of manufacturing interests in their campaigns for extend- ing foreign markets. Much has already been accom- plished in this direction by some of the large banks of the country which have opened important branches in several countries, notably in those of South America. 46 Vv CAPITAL AND CREDIT No accurate calculation of the total cost of the war is as yet possible. Some of the most careful estimates range pect ae $200,000,000,000 without allowing for the loss of life. In round numbers the Central Powers have increased their debts by about $40,000,000,000; the Allies by about $82,000,000,000, of which that of the United States (net) is over $10,000,000,000. These figures, while failing by far to measure the direct costs of the war, stand as a mortgage on the resources of the various countries. Interest and partial payments on this great principal must be paid in taxes each year. The war leaves the United States a creditor instead of a debtor nation. To date, the country has paid foreigners for securities sent home probably $2,500,000,000; it has invested in the obligations of foreign Governments about $3,100,000,000; it has advanced to its Allies through Government loans over $8,588,000,000; and has raised for its own needs through loans about $10,000,000,000. In addition Federal war taxes raised in 1917-1918 were approximately $3,700,000,000, a figure which will be greatly exceeded by the levy of the current fiscal year. This remarkable achievement has been possible only by curtailing extravagance and resorting to saving on a great scale. That is, it was made possible only by the creation of new capital. In the coming readjustment, the United States must face the necessity of another large Government loan in the spring of 1919, of heavy expenditures on the army and navy yet in service. More than that, it is the only country in a position to finance other nations in their period of reconstruction and at the same time to meet the demands of home industry. That there are obvious difficulties in the way of doing this it would be useless to deny. In spite of proverbial American optimism it must be realized that credit, while not dangerously inflated, has been made to carry an 47 unusually heavy burden. The one and only remedy is a continuance of saving just as in the hardest days of the war. Evidence of this need can be seen in the condition of the Federal Reserve Banks. The original purpose of their creation was to rediscount only short-time com- mercial paper; the carrying of securities was discriminated against. ‘Today, however, as a consequence of floating Government bond issues, member banks and the Federal Reserve Banks have made enormous loans on the security of United States bonds. In 1918 such loans by the Federal Reserve Banks had grown from $1,200,000,000 to nearly $2,800,000,000. This action has been quite contrary to the spirit of the Federal Reserve Act, because these assets, while of the highest character, are not liquid in the sense that commercial paper is liquid. The repayment of these loans is the first task of financial readjustment. The possibility of promptly lifting this burden of promises to pay depends on the maintenance of produc- tion on a large scale and, quite as important, on the strength of the saving instinct throughout the country. Under the pressure of war, thrift has been practised to an extraordinary degree. Whether it will be kept up after peace is another question. Already there are evidences of a relaxation of restrictions on unnecessary consumption and of a return to former habits of extravagance. Yet it is obvious that the country must save and keep on saving, if it is to meet the demand on its capital and liquidate its credit obligations as they mature. The capacity for saving still remains as large as ever. It is limited only by the surplus of the production of goods above necessary consumption. All that is needed is to maintain production, stimulate the desire to save, and to control the wastes of extravagance. It is to be re- membered that credit can be liquidated only by produc- tion and exchange of goods. It is the sale of goods and the use of their proceeds expressed in money which pro- vide the true means of liquidation. In this way a large total sum of credit can be maintained in a sound and healthy condition by constant renewal and replacement. But it is not wisdom to overlook the fact that the banks have been forced to carry too large an amount of credit based on securities which is not as liquid as if based on transactions in salable goods. 48 The primary needs of readjustment are ample capital and sound credit. Behind all must be a well-adjusted condition of business, so that industries are kept fully occupied in meeting a legitimate demand and not injured by senseless struggles between managers and workmen. If goods are being actively produced, capital can be saved and credit kept sound. It is imperative, therefore, to do everything possible to stimulate prosperity in all indus- tries, since thereby unemployment can be obviated, large savings made possible, and a current of healthy blood put into the credit organism. For employers and workmen to quarrel at this juncture would be comparable to two men in the water who, instead of quietly trying to save each other, endeavor to strangle each other. But the question at once arises how increased production of merchandise can be paid for? As regards domestic conditions, the answer is easy. Continued large produc- tion in itself would assure the wages essential to current payment for goods and also to saving. The situation in regard to foreign trade is different. The enormous destruction and losses in man-power, materials, and capital in Europe force the question whether these war-weary nations can pay the United States for goods sold to them. The prodigious payments of foreign trade are made by forms of international credit. Foreign exchange enables nations to offset accounts and pay only balances in gold. Gold cannot be sent as the main payment; nor is this essential. Goods may be imported; but production in some foreign countries has been so seriously crippled that for some time at least payment can be made only in part in this manner. In other words, since foreigners cannot pay at once in cash or goods they must have credit until their productive operations can be more fully restored. This country is therefore confronted with the necessity of taking a large share of the payment in forms of credit, chiefly long term government bonds. Acceptance of such securities as payment, in turn, calls for a wide and active market for these securities in this country. As yet our market has not been familiar with many kinds of foreign issues, as Paris, London, Frankfurt, and Vienna have been. Whether it can promptly be induced to absorb them is one of the problems of financial readjustment. A first step is to obtain sound credit conditions behind the payments offered. This depends on after-war pro- 49 ductivity in European countries. Their ability to pay interest and sinking funds for redemption of the prin- cipal depends on their capacity to produce goods and market them. Given the time for recuperation which is covered by the credit operations, Great Britain and her colonies, France and Italy, should soon be able to return to their former peace production. Opinion as to the productivity of the Central Powers, Russia, and Turkey may not be so favorable; but much progress may be expected soon from Czechoslavia (including old Bohemia) Rumania, Jugoslavia, and Greece. Under the pressure of distress, saving and production is certain to result in much new capital even in devastated countries. Much depends on national characteristics. Keeping these things in mind, the United States should be safely paid if it discriminatingly accepts forms of credit in return for goods sold abroad. To sum up, credit at home must remain more or less inflated so long as the assets of banks consist largely of securities and not of those based on transactions in goods. That does not mean, of course, that loans may not be made on securities.. It is a question of proportions. At present, Government loans have been issued on a colossal scale. The proportions of different forms of credit must gradually be changed to a true peace basis. As to the effect of credit on prices, and the best remedy out of the price difficulty, there may be differences of opinion. But it must be kept in mind that prices are made not merely by the forces affecting demand. Money and forms of credit are the channels through which de- mand (based on goods as purchasing power) expresses itself. On the other side, all the forces touching the supply of goods must affect prices, such as the rate of wages, the efficiency of labor, and access to cheap coal and material. The price of potatoes, for instance, is not fixed merely by demand (through money or credit) but also by the supply, that is, by the season, the extent of cultivation and like factors. To whatever extent inflation of credit in this country can be held responsible for our high war prices, they obviously are more directly due to scarcity conditions in materials and the increased price paid for a given labor effort. As prices fall, there may be an adjustment of wages without loss of purchasing power to labor. Credit conditions will not prevent this. The 50 essential point is the maintenance of industrial produc- | tivity, and this is largely dependent on the preservation of such relations between employers and workmen that high productivity and high wages may go on together. Closely related to the problems of capital and credit, and sharply reacting on industrial activity, is the question of taxation. Under the urgent demands of war, taxes have increased heavily, but the unusual prices for mer- chandise have made it possible for industry to meet them. Heavy taxation must, moreover, be faced for a long time. But clearly the burden must be adjusted to the ability of the nation to bear it under new conditions. The one fundamental principle of taxation is that it shall not be so heavy as to discourage the production of new wealth from which taxes can be paid. In the troublesome problems of readjustment the scientific determination of just rates of taxation is of foremost importance. 51 VI RELATION OF THE GOVERNMENT TO INDUSTRY The war inevitably brought an extension of Government control over industry. Under the authority of specially enacted legislation the Government has taken over the railroads, the telegraph and telephone and cable systems. It is building a great merchant fleet. It has fixed maxi- mum prices and regulated the distribution of various essential materials and foodstuffs and has rigidly con- trolled the actual consumption of fuels and foods. In many cases it has influenced the adoption of stand- ards in wages, hours, and working conditions. It has regulated the flotation of issues of securities, and has practically controlled the money market. All these activities were embarked upon in response to the ex- traordinary situation created by the war. The authority given the Government for such extensive participation in business ends at a definite time. The railroads, for example, under existing legislation, must be returned to their former owners twenty-one months after the termination of the war. Federal control of telegraph, telephone, marine cable, and radio systems (taken over under the resolution of July 16, 1918) was to be operative only during the continuance of the war. Various other activities of the Government terminate even earlier. Within a definite period, therefore, the nation must face the problem of readjustment of the relations of the Government to industry. That readjust- ment involves difficulties quite as serious as those in- volved in the initial assumption of these relations. Federal control of the railroads was provided for under an act of August 29, 1916. Control was assumed on December 26, 1917, when the President declared that the successful prosecution of the war demanded mobilization of the nation’s transportation facilities under a single authority and that the financial resources of the Govern- ment and those of the railways must be placed under a common direction. The lines taken over included 397,014 miles of track, controlled by 2,905 companies employing 52 1,700,814 persons. The roads extended over every part of the United States. Since taking over the railroads the Government has made many radical changes in their operation. Instead of being subject to the rate-making powers of the Interstate Commerce Commission and the forty-eight states, the Government has established a single control. It has fixed rates, frequently higher than any that would have been permitted under previously existing conditions. Nevertheless, in spite of greater activity and a greater gross income than had ever been experienced, a deficiency of $136,000,000 during the first ten months of federal operation was reported. Increases in wages have largely contributed to this result. In a statement to the Senate Interstate Commerce Committee on January 4, 1919, the Director-General of Railroads reported that the wages bill alone for 1918 was expected to be between $600,000,000 and $700,000,000 greater than that of 1917. The twenty-one months’ period originally provided for will expire in 1920 or in 1921, depending on how soon peace is declared. Already by mergers, unifications, and rearrangements, the Government has made radical changes in the railroad map. If the railroads are to be returned to their private owners it is of paramount importance that this decision be announced promptly and carried out as speedily as practicable, that the task shall not be reduced to the insoluble problem of “‘unscrambling the egg.” On the other hand, an immediate return without the enactment of suitable, remedial legislation, under the present unsettled conditions of wages, rates and general operating conditions involves obvious difficulties and serious burdens to the former owners. Several suggestions have been made for a way out of the dilemma. The United States Railroad Administration has asked a five-year extension of its present control in order to give Government operation a longer test. To many, however, this appears merely an attempt to fasten on the nation by indirection a policy which would not secure public sanction if attempted openly. The Railroad Executives propose a return to private management under Government regulation with the right to fix wages and the creation of a Department of Transportation which would absorb the administrative and all other 53 powers of the Interstate Commerce Commission except its judicial functions. The Interstate Commerce Com- mission insists on private operation under its supervision but with more stringent regulations than_ hitherto. Another plan, proposed by a United States Senator, is that the Government own the roads but lease them to private parties. State Railroad Commissioners, on the other hand, hold that their power over intrastate traffic should be preserved. Shippers want the railroad control law amended so as to strike out the clause permitting the President to supersede with his orders, federal, state, and other laws, and also that the power of fixing rates be restored to the Interstate Commerce Commission." Still another plan is for federal iftcorporation of the railroads. At present the roads hold charters from the various states. Another suggestion is for some form of profit-sharing as has been adopted in Canada, the Govern- ment to receive a share in the profits above a fixed return in place of taxation or as a supplement to low taxation. Still other proposals are advocated by other interests. Whatever policy is determined upon, it is imperative that a decision as to the guiding principle be made promptly. With that determined, reasonable time can be taken for the working out of details. Uncertainty obviously tends to discourage enterprise and to delay the readjustment and further development of industry. What has been said with reference to the readjustment of the conditions affecting the railroads applies also to the telegraph and telephone systems. Here, a policy of im- mediate Government ownership has been definitely advocated by the Postmaster-General. In addition to the readjustments incident to control of railroads and of the telegraph, there is the closely linked problem of shipping. In the period before the war our merchant marine was small. The total of American 1The Interstate Commerce Commission has suggested that legislation be enacted providing for prompt merger without friction into a continental and unified system of all carriers’ lines, facilities, and organizations in time of emergency, “merger within proper limits of the carriers’ lines and facilities in such part and to such extent as may be necessary in the general public interest to meet the reasonable demands of our domestic and foreign commerce,” “limitation of railway construction to the necessities and convenience of the Government and of the public, and assuring construction to the point of these limitations,” development and encouragement of inland waterways and the co-ordination of land and water transportation systems. (Report of the Inter- state Commerce Commission, 1918, p. 2.) 54 shipping registered for foreign trade amounted to only about 1,000,000 tons gross.!. The outbreak of war and the great demands upon ocean shipping resulted in the diversion of a number of vessels from the coastwise trade, but even with an addition of about a million tons gross from this source the demand far exceeded the supply.” Under the stimulus of war necessity, however, the merchant marine has been enormously increased. According to the United States Shipping Board, over 4,000,000 tons of American shipping were built in 1918 and construction for 1919 is expected to reach a much larger total. At this rate of building, the merchant fleet of the United States will be one of the largest in the world. Aside from the actual building of ships the United States Shipping Board has been engaged in training a large personnel to man them. There will thus be available in the comparatively near future not only a large number of ships and shipyards, but also a trained labor supply for them. While the need for munitions ceased abruptly with the signing of the armistice, the need of merchant ships continues about as great as before. The pivotal question in the shipping situation lies as much, however, in the operation of the ships as in their construction. Although the power granted the Shipping Board to build ships is limited only by the amount of the appropriations,’ its powers with reference to their opera- tion are greatly restricted. The Shipping Act provided for retirement of the Government from the shipping industry within five years after the termination of the war. Three ways of meeting the shipping situation have been suggested: (1) continued federal ownership and operation of all ships built by the Government, (2) federal ownership, but lease of ships to private interests, and (3) sale of ships to private owners. Whether control and operation of shipyards and vessels by the Government 1The gross tonnage of vessels engaged in foreign trade and whale fisheries was 1,027,776; the average between 1890 and 1910 was 886,000 tons. Statistical Abstract of the United States, 1917, p. 752. 2The gross tonnage of vessels engaged in coastwise trade and cod and mackerel fisheries in 1913 was 6,858,775, while that engaged in commerce of the Great Lakes in the same year was 2,989,786. Statistical Abstract, 1917, p. 752. 3 United States. Shipping Board. First Annual Report, 1917, p. 7. 55 shall be continued after the war is a readjustment problem of first importance. Aside from the operation of the merchant fleet, another readjustment issue is the revision of the country’s naviga- tion acts. At present several of these acts are distinctly hostile to the development and successful operation of a merchant marine. The La Follette Seaman’s Act, for example, requiring the employment of a certain propor- tion of native Americans as able seamen on ships and the ability of all employees to understand English has generally been held responsible for the practical disap- pearance of American shipping from the Pacific Ocean. Government control of prices, which was carried to an unprecedented length during the war, is advocated by some as a legitimate function of the state in time of peace. Again, during the war the Government through its war agencies has fixed rates of wages for large groups of workers. Through the National War Labor Board and other agencies important influence has been brought to bear on standards of hours of work and of other working conditions. The wartime activities of the Government in respect to regulation of employment fall in a somewhat different category, but even here there is wide difference of opinion as to the desirability of federal participation. The policy of looking to Congress or to governmental agencies to control definitely the details of business is a radical departure from the nation’s traditions. It is one that is certain to come up for keen discussion in working out the problems of readjustment. The changes effected by the war have been such as to increase the authority of the Government and to surround it with powers that would enable it to function unhindered in the emergency. Democracy, which in time of peace tries to assure to the individual maximum opportunity and freedom for personal development and activity, willingly yields its rights in time of national crisis and centralizes authority in the Government in order that there may be but one mind and one action. The re- linquishing of personal liberty as a patriotic duty in the stress Of a great national emergency is, however, not to be construed as a voluntary movement toward socialism and a demand for Government control of private enter- prise in time of peace. 56 Of all the problems involved in readjustment, none is so difficult, so controversial, or so vitally important to per- manent progress as a sound determination and delimita-. tion of the relations of the state to industry. Already it is apparent that public sentiment on this paramount issue of national policy toward industry is rapidly crystal- lizing. The proponents of Government ownership or of rigid Government control are urging their contentions with increased vigor. It is stating only an obvious truth to say that advocates of special social propaganda are seeking to coin partisan advantage from the confusion of war. On the other hand, those who believe that a con- tinuation of the nation’s traditional policy of encouraging individual enterprise, with only such measure of regula- tion as is necessary for the public interest, have been forced to a realization of the fact that the problem has become a real and immediate issue. The difference between the two schools is essentially that between the American and the Continental attitude. This difference has been well put by one writer:! The English and American maxim is that whatever can be done without Government, should be thus done. The Con- tinental principle is that whatever can be done by Govern- ment, should be. It is interesting to note that a similar conflict of opinion is at present in progress in Great Britain where, on the one hand, there is very heavy pressure for an extension of the principle of nationalization of industry while, on the other hand, another group is as determinedly opposing its adoption. It is of more than passing interest that the Committee on Commercial and Industrial Policy of the Ministry of Reconstruction has strongly urged the dis- continuance, whenever possible, of Government control. In its final report? this committee recommends: The policy of the Government should be directed towards the restoration of normal industrial conditions within the shortest possible time. We are strongly of opinion that State control of, and restrictions upon, industry arising out of war conditions will be found to be detrimental under normal conditions and should be removed so soon as pos- sible after the conclusion of peace, due regard being had to the circumstances of each particular case. 1A.T. Hadley. Railroad Transportation, its History and its Laws, p. 187. 2 Page 60, Sec. 318. 57 There is no panacea for the problems of industrial readjustment. Each must be considered on its own merits. A transition period is necessarily a period of hesitation and uncertainty. 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