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Octavo, paper Torpedoes for Natioua Lieut. U. S. Navy. Oct; Unvyise Lavys. By Lewi cloth ... Cornell University Library .S6S HF1009 Science of business; oiin 1924 030 151 ELL- ,,, UNIVERSITY! LIBRARY -^^ /y Entered, according to Act of Congress, in the year 1885, by RODERICK H. SMITH, In the Office of the Librarian of Congress at Washington. Prest of G, /*. Putnam^s Son* Neva York \5fV PREFACE. The record of facts included in the following chapters was not originally compiled for publication, but rather to satisfy the spirit of personal inquiry. As new facts, how- ever, came to light and arranged themselves alongside those already acquired, a body of truth was formed, which in the opinion of the writer, merited the name that this book bears, and which has induced him to submit his in- vestigations to the public. In order to facilitate the explanation of the facts af- forded by the statistics of business, it was necessary that some guiding principles should be kept in sight, and to establish these principles the two chapters included in Part First were written. The laws there briefly considered, the Direction of Motion, and the Rhythm of Motion, have received universal acceptance from scientific men, and are great aids to help us to understand the phenomena of busi- ness. As this work is intended for the use of business men, it has been my object to condense, as much as was possible, the treatment of the topics considered in the different chap- ters, and this has detracted somewhat from any literary IV PREFACE. style the work may have, by necessitating in many cases, and sometimes without notice, a quick change in the sub- ject-matter. This fault is, however, not greatly to be regretted as it has been my endeavor to ascertain the truth, rather than to achieve artistic merit. Thanks are due to Messrs. R. G. Dun & Co. for in- formation concerning failures ; also to Messrs. Wm. B. Dana & Co., publishers of the New York Commercial and Financial Chronicle, for permission to use their excel- lent review of the New York Stock Market, and to the American Iron and Steel Association, of Philadel- phia, for information relative to the iron industry. Dunkirk, N. Y., July, 1885. TABLE OF CONTENTS. Part JFtwt. CHAPTER PAGE I. The Direction of Motion i II. The Rhythm of Motion lo Part Seconlf. I. General Business 23 II. Iron 42 III. Railroad Building and Consumption of Rails .... 54 IV. Immigration 62 V. Stocks 67 VI. Exchange no VII. Foreign Trade 125 VIII. Grain 132 IX. The Balancing of Prices or Equilibration 145 X. Summary and Conclusion 162 THE SCIENCE OF BUSINESS. Part I. CHAPTER I. THE DIRECTION OF MOTION. Nature, when viewed from an intellectual standpoint, presents to our minds the display of forces, countless in number, varied in aspect, and intricate in operation ; forces that control the motions of the planets and the stars, that, upon our own earth, have caused forests to grow in the carboniferous age, and formed the coal beds which propel the machinery of the nineteenth century ; forces which clear forests and found cities ; forces which plant harvests and reap them ; forces which establish governments and make a language, a literature, a society. Throughout this great conflict, there are certain laws which hold true concerning all phenomena, two of which, the Law of the Direction of Motion and the Law of Rhythm, will respectively form the subject-matter of this and the following chapter. The Law of the Direction of Motion, as formulated by Mr. Spencer, is as follows : Motion takes the line of least resistance or of the greatest traction, or of their resultant. 2 THE SCIENCE OF BUSINESS. Illustrations of this law are numerous. Instance the fall of the stone to the earth, when dropped from the hand, as motion in the line of greatest traction ; and a feather, when dropped from the same distance, as an illustration of the resultant line of resistance — the forces at work being the attraction of gravity and the resistance of the atmosphere ; the path of the falling feather being deflected from a straight line because of its greater resistance to the air. The balloon, whose bulk is lighter than the same bulk of surrounding air, rises, and its direction from moment to moment is the line of resultant resistance determined by the relation between the attraction of the earth, the amount of gas contained, the weight of the ballast, and the force and direction of the wind. The sun shining upon the bosom of a lake heats the air and makes it capable of absorbing moisture, and this air, being warmer and lighter than the surrounding atmosphere, rises till its upward motion is stopped when its volume is of equal weight with an equal volume of air about it. The moisture-laden cloud, being transferred by winds to a cool mountain side, or into a colder region, condenses and deposits its vapor in rain, which, as is commonly observed, falls at a tangent to the horizon. The rivulet to which the rain gives its supply of water runs in the lowest valleys, falls over the rocks, whirls around in eddies, and bends its way through the softest soils, till it reaches the ocean ; the THE DIRECTION OF MOTION. 3 water throughout its course, whether in shape of vapor, mist, rain, snow, or river, having always and everywhere followed the line of least resistance, or of greatest traction, or of their resultant. The fact, as noted by the United States Signal Service, that storms move out of regions of high barometric pres- sure into regions of low barometric pressure, is one of like significance, and, knowing the barometric pressure at differ- ent points, it is possible to predict, with the aid of the law of which we are speaking, the direction and velocity which the far-off storm will take ; and, were all the factors which constitute the phenomena of storms known and measurable, it would be possible to predict, not hours but days in advance, their birth, duration, and direction. To- ward such a goal the youthful science of Meteorology is progressing. When the Jeannette was imbedded in floating ice north of Behring Strait, it was predicted, by one of the crew that her course would be northwest, or the resultant line between the known current, which set strongly to the north, and the prevailing easterly winds. Subsequent events proved the wisdom of the prediction. The ocean currents, while seeming, at first, exceptions to the law, are, when closely examined, found to be apt con- firmations of it. Their general course is away from the equator and towards the poles. This is explicable from the fact that the large amount of vapor which the sun raises in the heated regions causes a partial vacuum, which 4 THE SCIENCE OF BUSINESS. the cold water from the north, keeping close to the bottom of the sea on account of its greater weight, rushes in to fill; while the warm surface water flows off towards the poles, to fill the void left by the retreating cold currents. That this is a true explanation of the process has recently received additional confirmation by lowering a self-registering thermometer at the equator to a great depth, when it was found that the temperature of the water was the same as in the polar regions ; thus proving that there must be submarine cold currents which set toward the equator, as we know there are warm surface currents which flow away from it. Chemistry will furnish us with another example in the familiar reaction by which hydrogen gas is produced by placing sulphuric acid and zinc together ; the zinc uniting with the sulphur and oxygen in the acid, and driving off the hydrogen, which can only be explained by saying that zinc has a greater affinity or force for the sulphur and oxygen than has the hydrogen, which, as it must give up to the greater force, it is obliged to leave. The affini- ties of the elements are of course of different strength, but wherever we see a reaction between elements we may be sure that that reaction will take the line of greatest force. That, in the formation of snowflakes and ice crystals, the frozen water arranges itself along lines of least resistance, all will probably agree, and the crystalline forms of quartz and minerals are products in whose shapes we see additional confirmation of the law. THE DIRECTION OF MOTION. 5 Among geological phenomena also we can see evidence that motion has followed the line of least resistance. From the evidences in the earth's crust we are obliged to think of a far-distant time when the globe rolled through the heavens a molten mass ; and when the water, now in the oceans, was suspended as vapor in the atmos- phere. In the cooling process, which was and is now going on, there came a time when the temperature of the external earth was below 212 degrees, which would allow the vapor to be deposited, thus contracting the volume of the earth. At a subsequent period, owing to further cooling and contraction, the mountain chains and continents appeared on the lines of least resistance. That continents so formed have been modified by subsequent events, such as eruptions, elevations and subsidences, land-slides, glaciers, rivers, lakes, and the' action of the weather in the line of greatest traction or least resistance, or their resultant, is included in the description of each phenomenon.' The history of the past teaches us that civilization moves along lines of least resistance. Among savage tribes the most powerful will drive the weaker tribes before them, and, in localities — as near the sea — where food is plentiful and means of communication between each other ^ It may be objected that the principles we are endeavoring to establish are self-evident propositions ; and that statement of them is sufficient for convic- tion ; and it is replied that general laws have very little weight with most minds until it is shown how and why the generalization has been made. 6 THE SCIENCE OF BUSINESS. and strange tribes is made easy, will increase in numbers and civilization. Instead of each man making his own weapons of war, those who possess the greatest aptitude for making weapons will make them ; those who best can till the ground, do so, and exchange their products for weapons. Thus arise different branches of industry, and a commerce. Market days are held where different com- modities are exchanged, and as the population becomes larger, and the commodities of exchange increase in num- ber and value, necessity will arise, between buyer and seller, for laws regulating such interchange. Thus a nation is born, which increases in wealth and power in proportion as the people of which it is composed increase in the variety and extent of their commercial relations. Between tribes, also, the "logic of events" will require that certain agreements shall be made and kept, respecting the land which each tribe shall occupy, and thus arises a system of law. It is true that many tribes will band together for the pillage or conquest of unfriendly neigh- bors, and, this being accomplished, the nation becomes larger, more complex. Its industries become diversified. Its people have a national feeling. A man is proud to be called a Greek or a Roman. Foreign wars of conquest are attempted. The weakest people must acknowledge the power of Rome. Providence is on the side of the strongest battalions. That this law holds true throughout the phenomena of mind will be observed when examining the motives which THE DIRECTION OF MOTION. 7 lead men to action. Shall I walk to the lake or to the forest, as the sum of attractions at either place is greater, other things being equal, in that direction I am led. The choice of motives is always along the line of least resistance, though the object to be attained is often remote and the obstacles to be overcome numerous. Witness the long and arduous duties through which a lawyer will willingly pass, in order to win a case or to attain a judgeship. Likewise, with thought upon any subject, the strongest reasons invariably attract and hold our belief. We think that which is easiest for us to think, whether true or not ; but when our error is pointed out, the truth becomes easier to believe and the opinion is rectified. Even among those who are supposed to be without ra- tional thought, the law holds with equal force. The insane show by their ravings that the forces of the mind run to their strongest or weakest passions, such as fear, love, jealousy, and the like. The law of the Survival of the Fittest is but another expression of the subject in hand. Those surviving who are the strongest and best fitted for living in their environ- ment, which is equivalent to saying that life moves along the line of greatest traction or least resistance, or of their resultant. Do we not see civilization advancing along those lines where the tractive forces are the greatest, where the least labor will produce the largest crops, and where the obstacles to complete living are the fewest ? o THE SCIENCE OF BUSINESS. Do not people invest their money where it will safely bring the largest returns ? Do we not buy in the cheapest, and sell in the dearest market ? Does not the tide of immi- gration set from least favored nations to the most favored ? Between any number of forces acting upon a body there must exist some relation. If they are all equal, and opposite, the body remains stationary, and, to say that the body would move under these conditions is to say that some force has come into existence, which before was not, — which is to say, that something has come out of nothing. This is inconceivable. If they are not equal and opposite, each force will in- fluence each other force, till the resultant forces are prac- tically reduced to two, and, as between the two resultant forces, motion will take the line of the greatest traction or of the least resistance. To further multiply examples would be much like add- ing proof to certainty, and, as there can be no certainty greater than is the truth that force is indestructible, so there is no truth more certain than that, as between forces, motion takes the line of least resistance. This truth does not hold alone of one class of phenomena, but is appli- cable to all classes, from star clusters to molecules. We see it illustrated about us every day, in innumerable ways. We cannot find a single case where it does not apply. We cannot conceive how motion can take place in any other direction than is specified in the formula. THE DIRECTION OF MOTION. 9 In fact, the proposition that motion takes the line of least resistance, or greatest traction, or their ■ resultant, may be considered an ultimate fact of knowledge, as true and substantial as is our positive knowledge of ex- istence. CHAPTER II. THE RHYTHM OF MOTION. When, from the deck of a steamer, one looks at the furrow or path of the vessel, as it ploughs its way through the sea, he observes that the wake, as it is called, spread- ing away from him for a considerable distance, is always a serpentine line. If he is a man of business, he probably blames the steersman for using time and fuel in making such an indirect course, and, being told that the pilot is one of the best on the water and perfectly competent, he begins to ask himself the cause. To the forward motion, imparted by the revolving screw, he adds the deflections caused by the constant influence of the waves and the currents, the force of the wind, and the unequal shape of the sides of the vessel, all which must be balanced from minute to minute by the influence of the rudder and, as the forces at work are never equal, but always vary ; he concludes that the path consequently can never be straight. Another example of rhythm in moving bodies may be observed in the moving railroad train, the start, the swing- THE RHYTHM OF MOTION. 1 1 ing motion from side to side, to which add those lateral motions which occur as the cars gain in speed, and the finish. The boy, too, with his ear to the track, has dis- covered, long before it came in sight, that the train was coming, by the waves of sound which the vibrations of the wheels have sent to him. The ocean is never quiet. The billows bear waves upon their bosoms, which in turn are ruffled by wavelets and drops of spray. The wavelike appearance of sand dunes, the rolling billows chasing each other up the long beach, and, when the tide goes out, the appearance of the ribbed sea sand, show us further examples of motion along curved lines. Rivers and creeks never flow in straight lines, and even when channels are cut, and the water let into them, there is commenced a wearing away here and an addition there that will eventually change the original straight course to one made up of curves. The eddies and whirl- pools, which from moment to moment form and disappear, show how impossible it is for running water not to be thrown into rhythmic motions. The waterfall shows us another example in the curved appearance of the rapids above the falls, the slowly bending circle which it is begin- ning to make as it takes its final leap, and the rushing and roar of the falling waters is, at a distance, heard as a low musical note. The winds do not blow steadily, but come in gusts of greater or less force. The leaves quiver in the silent air ; the boughs sway to and fro with rhythmic motion in the 12 THE SCIENCE OF BUSINESS. awakening breeze, and in a violent storm the trembling of the house shows that a certain rhythm has been imparted to it. Storms move usually in circles, and have been com- pared to wheels that, while revolving themselves, have also a forward motion. This phenomenon has been accurately observed by the United States Signal Service. Reports, stating the directions of the wind, are received from a large number of stations scattered over an immense stretch of territory. Upon a raised map the stations are marked by small arrows, and these arrows are turned in the direction toward which the wind is blowing as the reports come in from the different stations. The appear- ance of the arrows shows a circle which corresponds to the actual movement of the atmosphere. Vessels at sea, sailing west, with the wind upon the starboard, have passed through the centre of storms, which is marked by a calm, and encountered the wind upon the left or larboard side. Cyclones show this spiral arrangement in the funnel- shaped mass which they present. Sound is produced by the vibration of bodies, and is therefore a mode of motion. When we speak, we do not blow the air from our lungs, but condense it before the mouth and throw it into vibrations. When a bell is rung, or a whistle blown, the vibrations do not come to us in straight lines, but in long or short waves, according to the pitch of the tone. When a metal plate, sprinkled with fine sand, is made to vibrate by drawing a violin bow THE RHYTHM OF MOTION. 13 across its edge, the sand will begin to move and dance, and arrange itself in rhythmic geometrical figures. That music and musical sounds consist of rhythmic vibrations hardly needs to "be pointed out. Even friction is rhythmi- cal ; the flying bullet sings as softly as a bird. Heat, being also a mode of motion, conforms to the same laws as sound, in that it moves in waves and can be radiated, reflected, absorbed, and focussed. The same can also be said concerning light, which travels in shorter and quicker waves. Whether or not electricity is the highest mode of motion that we know, we at least are sure that in its manifestations it presents a rhythm. We know that the aurora, an electrical phenomenon, dances in time to the varying sun-spots, and that magnetic storms obey the same changing influence. The magnetic needle does not point steadily in the same direction, but is subject to daily oscillations. During the early part of the day the north pole of the needle moves towards the west, and returns to its mean position about lo p. M. This daily movement is greater in summer, in our latitude, than in winter, and this diurnal oscillation in- creases and decreases pretty regularly during a period of about eleven years. The maximum and minimum of this period of magnetic disturbance is found to coincide with the maximum and minimum of the sun-spot period. But, it may be objected, there are certainly some motions which are not rhythmical. Witness, for instance, at Creedmore, the flight of the rifle-ball from the shooting-station to the 14 THE SCIENCE OF BUSINESS. target. It is replied that the bullet, when it leaves the gun, is beginning an extremely elliptical circle, having the earth for its central point, and which would be completed but for the resistance offered by the atmosphere and the strong gravitative force which the earth presents. While, on starting out, we thought this might be an exception, it turns out be an excellent illustration. There are the waves of sound produced by the discharge of the powder; the whizz of the shot as it flies toward the mark ; the para- bolic curve, reaching, at its highest point on the thousand- yard range, about seventy-five feet above the target ; and lastly, those thermal undulations caused when the bullet strikes the iron. Astronomy furnishes examples of rhythm in stars that alternately brighten and fade ; in planets that move through immense ellipses ; in comets that come and go with great regularity, and the spiral arrange- ment of the nebulae show a marked and unmistakable rhythm. The revolving earth causes the rhythm of light and darkness, periods at which the daily temperature reaches its maximum and minimum, and in its journey about the sun occur the rhythms of the seasons, Spring, Summer, Autumn, and Winter, when the yearly temperature of any place touches the highest and lowest points ; regularly recurring periods, when the globe reaches its perihelion, or point nearest the sun, and its aphelion, or point most distant from the sun. To which can be added the rhythm THE RHYTHM OF MOTION. 1$ called Nutation, caused by the gyratory motion of the earth not being regular and uniform, which is completed i in about nineteen years, and the rhythm called Precession ■"of the Equinoxes, which is completed in about twenty- six thousand years. The moon moving about the earth is an example of compound rhythm, — lesser rhythms in- cluded in larger ; for, to its own motion about our globe must be added the motion of the earth around the sun, and that far greater rhythm, the motion of the sun itself toward the constellation of Hercules. That the formation of mountain chains presents a cer- tain rhythm, we must admit when we see them extending along lines more or less irregular, and raising their sum- mits to greater or less altitudes ; also the approaches which lead to mountains from opposite sides, and which are sometimes called foot-hills, consist in most cases of waves of rock and soil that face each other. Another character of mountains is formed by the erosive power of rivers, and these also present a certain rhythm as regards height and contour. The third variety, those formed by volcanic action, appearing as they do in regions where the earth's crust is the weakest, or where the internal pressure is the great- est, and having their periods of eruption at approximately equal intervals, and the well-known wave motion of the ground during an earthquake, — these, and like facts would lead us to infer that, among phenomena classed as geologi- cal, as well as among phenomena classed as astronomical, 1 6 THE SCIENCE OF BUSINESS. rhythm is a necessary companion of motion. We have not referred to the marked rhythm of the spouting gey- sers in the Yellowstone region and in Iceland, or to the gradual sinking in some places of the soil, and elevation in other places, or to the successive layers of different silts at the mouths of rivers, causing variations in strata, or of the rhythm both as regards position on and in the earth's crust of mineral deposits; for to mention all the evi- dences would manifestly swell this volume to large pro- portions, as well as tire the reader with almost endless repetition. That vegetation also exhibits rhythmical motion will be observed when we remember that certain plants have had their periods of growth and decay ; when we remember the curved rootlets, the circular trunks and branches, and the annular rings which they exhibit. Leaves, in all varieties of shapes, with small branches running from the stem of each leaf, at regular distances, which in turn support still smaller branchlets and delicate veins, present a certain symmetry of arrangement which points to the same conclusion. The color, too, of the leaves in Au- tumn, consisting of all shades of red, yellow, and brown, slowly melting into each other and appearing in different parts of the forest, and upon certain branches of trees and not upon others, show us, although we may not understand the process, that there is a rhythm of color which answers to the forces and movements that have caused it. THE RHYTHM OF MOTION. 1/ Animal life is rhythmic. From the evidences in the earth's crust we know that after an age of fire has come an age when molluscs and fishes were abundant, after which period came the time when the present coal beds were formed, called the Carboniferous Age ; then followed the age when reptiles were numerous, and then one in which mammals flourished, and, lastly the Quarternary or Age of Man ; ages distinguished from each other by the fact that the special product of such ages slowly advanced to its maximum, and then as slowly declined to its mini- mum. Animals, in ranging over a country where food is plenti- ful and enemies are few, will increase in numbers, and, as their food, from any cause, becomes less abundant and their enemies numerous, will decrease in numbers. With- out entering into a detailed examination of the facts, the evidence is sufficiently strong to say that animal life on the globe has not been one period of uninterrupted ad- vance, but is composed of advances and subsidences extending over long periods of time. It is also to be noticed that what may be said of animal life in general applies, with equal force, to each species which may be considered. That the human race exhibits periods of rise, fall, and decay, it suffices to mention the melancholy names of Jerusalem, Alexandria, Athens, and Rome. Each race distinct. Each history closed forever. Along with the rise and fall of peoples and governments has gone the rise and fall of religions. " 'T was Jove's, 't is lo THE SCIENCE OF BUSINESS. Mahomet's, and other creeds will rise with other years." There are periods in which art and philosophy have flour- ished, followed by the Dark Ages, whence again arise lite- rature and science. Periods in which wars are frequent, to be followed by times of peace. Periods in which the subjective sciences prevail, and periods when the objec- tive sciences demand attention. So, too, with the standards by which commerce has been carried on, has there been an ebb and flow. Coins of gold, silver, and copper have been in use as money for over twenty-five hundred years, and their buying power has been in the order in which they are named. An ounce of gold has been more valuable than an ounce of silver, and this than an ounce of copper. But their rela- tive value has never been permanent, even where the law has sought to discover and fix it. In Greece, gold was reckoned as one to twelve and a half of silver. In Rome, copper was the original standard, and afterward silver. In Cassar's time gold became the standard, and was reckoned as one to twelve of silver, and in the reign of Alexander Severus gold became the sole standard throughout the Roman Empire. After the downfall of that Empire, gold maintained itself for a time in France and Spain, but silver gradually regained its lost place in Europe, to be again gradually displaced by gold as a standard. In 1717 a double standard was estab-' lished in Great Britain, gold being rated to silver as one to about fifteen, and in 18 16 gold was made the sole stand- THE RHYTHM OF MOTION. IQ- ard.' The present ratio of gold to silver is about one to nineteen. In society the tendency that is continually shown to- revert to former styles has given rise to the somewhat trite observation that fashions are rhythmical, undergoing oscillations from one extreme to the other. Dancing consists in the rhythmic motion of the limbs and body to the sound of music, and that music which allows the easiest and most natural arrangement of the limbs in keeping time is commonly conceded to be the best. The exhilaration, too, which it produces consists of an ebb and flow, and that the conversation of an evening party will alternate between times of activity and times of comparative quiet, has probably been within the notice of all. In poetry the presence of rhythm is marked, and upon examining prose writings we shall find a sequence of sen-^ tence to consist of long, short, and medium, and each sen- tence will be further divided into parts where the voice rises or falls, where the stop between propositions is sufificiently long to count from one to six ; and if the words which compose the separated propositions be examined, they will be found to consist of smaller rhythms of sound, put together to represent the thought for which the word stands. Similarly with the ideas which sentences convey to us, there is a constant ebb and flow. The sentence ' Perry's " Elements of Political Economy." 20 THE SCIENCE OF BUSINESS. begins : each word, as it comes to our view, suggests a •conceptibn which is modified by each succeeding word, till the climax of the idea to be conveyed is reached, whence the sentence gradually sinks to its end. Indeed, we hear it frequently remarked that the speaker's or writer's sentences " are well rounded," a tacit recognition that the writing and speaking of sentences is rhythmic. Does the law of ryhthm stop here .' By no means. To the phenomena external to man, which we have been ex- amining for evidence of rhythm, we must now add the phenomena included in his life and acts. We know that men are born, and gradually increase in growth to a maxi- mum of powers, and then gradually decline till death; that included in this greater rhythm are periods of work and of rest, and times of hunger and repletion; times of sickness and of health ; and these, when closely examined, are found to consist of still smaller rhythms. Health is not one continuous joyful existence. There are times when work is pleasant, and times when it lags and is disagreeable. Sickness does not consist of one unyielding pain, but of times when it rises into agony and then slowly subsides. In recognition of this fact some diseases have been named intermittent. Convalescents do not get uniformly better, but have their days of partial relapse. The food that is taken at recurrent meals follows a rhythmic course through the intestines, and, by its oxidation and assimila- tion — processes which upon close examination are found to lie admirable examples of rhythm — keeps alive the heart- THE RHYTHM OF MOTION. 21 beats and the rhythmic inspiration and expiration of the breath. Men in good health increase and decrease in weight continually. Athletes, when highly trained, never keep their full power for a long time, but slowly retro- grade and again advance. The phenomena of life, births, marriages, when tabula- ted and reduced to diagrams, show vast ascents and de- scents, each extending over a period of years. The applause and uproar of large assemblies of men, such as are engaged, for instance, in making Presidential nomina- tions, rises wave upon wave of sound, and slowly sinks again to quiet. In short, the proposition that all motion is rhythmical is recognized as one of the profoundest scientific truths of the day. To suppose a straight course possible, we must con- ceive of a body moving through a boundless space, void of all influence save that of the moving body. This is inconceivable. And as we must conceive of every body as influenced by more than one force, we must admit that rhythm is a necessary concomitant of motion. The sim- plest method has been used in the exposition of the propo- sition, that of example, and it has indeed proved to be the most powerful, as, in selecting illustrations from a great variety of phenomena, we are unable to find a case in which our propositions do not apply. Indeed, that charac- ter of mind which could formulate the law of the direction of motion as here set forth in opposite terms might well 22 THE SCIENCE OE BUSINESS. be worthy of admiration, and, though possible to be for- mulated in words, it could by no means be rendered into thought. Our position, then, is, that rest is nowhere ; that, wher- ever we find motion, that motion is in the line of least resistance, or of greatest traction, or of their resultant, and that motion always is rhythmical. THE SCIENCE OF BUSINESS. Part II. CHAPTER I. GENERAL BUSINESS. Of all the phenomena of trade, there are none more obvious or remarkable, or which have attracted greater attention, than fluctuations in price. These are what ren- der business so attractive to the great body of men who engage in it. The fact that the value of a stock of goods may be increased oftentimes twenty or thirty per cent, without any effort upon the part of the holder, offers to many men particular inducements which are resisted with difificulty. Agriculture and the mechanical arts, it is true, hold out the promise of a comfortable existence, if enthu- siastically followed, but in times of peace it is principally by trade that wealth is amassed. Farmers, however, are not simply producers of wheat and other grains, but all trade and traffic, more or less. Lawyers, doctors, schoolmasters, mechanics, and even clergymen, buy and sell houses and lots, and dabble in stocks, and in so far as they do these things, by which 23 24 THE SCIENCE OF BUSINESS. property is exchanged, they may be classed as business men. But while a business man can always be truthfully and adequately described as an exchanger of commodities, the business itself, the process of exchange, will be found, upon close examination, to consist of a series of motions gone through with by men for the purposes of gain. The dealer in furs, after having, by a certain series of movements, cured, dyed, and softened the skin of the seal, moves his shears through the hide and fashions it into a garment, which, by another series of movements, is ex- changed for money. In order to keep his business from a standstill, he must have a continual supply of new hides, and this demand generates upon the part of other men certain other motions, such as sailing to distant seas, bartering with natives for skins ; or those laborious and complex motions are generated, by which seals are either captured alive, killed and skinned, or shot from a row-boat while sleeping upon the icebergs of an arctic sea. The lumberman, who makes it his business to cut tim- ber, bring it to the market, and prepare it for the opera- tions of the carpenter, from the beginning to the end of his operations goes through motions suitably hinged together to accomplish this ultimate purpose. He moves himself and his men to a place where trees abound. He directs — by the motion of his hands in pointing, and his lips in speaking — which trees shall be felled. His assis- tants, by well-directed movements of their arms in swinging GENERAL BUSINESS. 2$, axes, cut through the trunks of the trees, and the attrac- tion of gravity brings the timber to the ground, The sawyers move a saw through the trees and divide them into logs of convenient size. Horses and men, by the expenditure of a certain force, move the logs to the river, from whose waters they are again taken, and when the mill-saw has moved its way through the log, the timber is in such shape as will best serve the wants of the carpen- ter and builder, who, by going through certain other mo- tions, fashion sidewalks, fences, or dwellings. Again, if we inquire concerning the process by which the engine which utilizes the steam-power and drives the saw through the logs has come to its present shape, we shall find that the iron of which it is composed once existed as a dull-red, earthy deposit, and that it has been moved by shovels and barrows, placed in the hold of a vessel, and moved to the blast-furnace, whence it issues as pig iron. And this product, being subject to certain move- ments directed by men, such as being cast, hammered, filed, turned upon a lathe, etc., the perfected shape at last results, and the manufacture of stationary engines, thus carried on by going through motions which shape iron into engines, constitutes an important branch of the iron trade. How true this is, that all business consists of motions, each one may readily determine for himself. Let him who doubts this statement go to his office in the morning and refrain from any motions whatever ; let him refuse to sign checks, write orders, sell bills to customers, and give di- 26 THE SCIENCE OF BUSINESS. rections to clerks, — all which require an expenditure of force, and therefore a generation of motion, — and see how much business he will accomplish. Seriously, then, with- out undertaking an extended exposition, we may safely assert that no business, no process of exchange, can be carried on without motions, and that the purpose for which such motions are gone through with is some kind of a gain, — usually of money, of credit, or of property. Let the purpose be what it may, the motions which each business man goes through are in the line of least resistance, or of the greatest traction, or of their resultant, and they are also rhythmical. Mr. H lives in a town where a large number of cars, rails, and locomotives are made. The people who labor in the shops require meats and vegetables for their daily food, whence arises a demand — a tractive force — for these arti- cles, which Mr. H endeavors to supply. He starts a store and carries a stock of the necessities upon which the laborers live. He furnishes them flour, butter, coffee, sugar, and other articles which necessity or fancy dictates, and in return receives compensation in some representative of value, either labor, property, or money. Whether his sales are large or small depends in some cases upon the rate or price and quality of his goods as compared with the price and quality of his competitor's goods, the customer, other things being equal, patronizing the dealer whose goods, as regards the resultant of price and of quality, are the cheapest. GENE A' A L BUSIA'ESS. 2/ Not only are the business motions between the retail dealer and his customers in the line of least resistance, but this is also true of the business motions between the retail dealer and wholesale dealer, or jobber as he is some- times called. The retail dealer always buys his supplies from the party who can furnish him with the best quali- ties and largest amount of goods at the lowest rates. In addition to quality and price of an article, there may be many factors which determine the business motions be- tween a buyer and a seller, among which may be men- tioned the price of freight, the time required to obtain the goods, the risk of loss in the carriage ; to which may be added those personal forces which affect some men, such as race, color, nationality, religion, political belief, educa- tion, and the age and reputation of the seller. Some busi- ness men will have no dealings with Jews^ some are averse to buying goods of negroes, and, in times of great political excitement, some will rather buy of those of the same political belief. These, although they may not be all, are a few of the causes which determine business motions, to which must be added those latent forces, difH- cult to point out, but which are evident from their effect. Upon examination and comparison of all these forces which regulate the exchange of commodities, we at last arrive at the formula which our law specifies — motion in the line of the least resistance, or of the greatest traction, or of their resultant. Moreover, the business motions which we are here 28 THE SCIENCE OF BUSINESS. considering are rhythmic. Making use again of the fore- going illustration, we see that the number of laborers in the town must be continually increasing or diminishing through emigration or immigration, birth, sickness, or death, requiring constantly an ever-changing amount of food, which generates in the sales of the retailer like rhythms, extending, it may be, over days, weeks, months, and years. The sales are probably the largest and most profitable when the demand is the largest, and least profit- able when the demand is the least. Not only is the ex- change of food products influenced by the number and wants of laborers, but also by the number and wants of all other exchangers, dealers in boots and shoes, clothing, coal, crockery, dry goods, drugs, jewelry, etc., each business showing days of large and small sales, months and years when business is dull or brisk, corresponding to the in- creased or lessened demand. Nor is it to the laboring classes that all business men look for trade. The boot and shoe man sells not only to the laborer, but also to all other business men. The dry-goods man traffics with the jeweler, the jeweler with the druggist, and all with the grocer. Each trades with the other, and endeavors to fill his desires with the least effort, directed to the greatest gain. A fact to be noted here is that the interests of all men are intertwined. Formerly, all a farmer prayed for was abundant crops. If he had large flocks of sheep and herds of cattle, he was happy. If his granaries were well GENERAL BUSINESS. 29 filled and his swine were fat, he was rich. Now the aspect is different. Then he made his own clothes and supplied his wants with the labor of his own hands. Now he finds that, owing to the specialization of labor, he can buy his boots, clothes, and agricultural implements with less trouble and of a better quality than he can himself make them. He now wants a market. He must not only pro- duce, but he must sell. He is no longer the independent being represented by the poets. He sends his wool a thousand miles, it may be, to be spun into cloth. The hides of his cattle are rarely directly utilized by him. His grain is shipped to distant cities, where it is made into bread which keeps alive the employees of the manufac- turer, who supplies him with ploughs, rakes, reapers, wind- mills, and the thousand and one articles which he has now found to be an absolute necessity in carrying on the work of the farm. In order to successfully compete with other farmers he must abandon the primitive methods of his fathers, he must have iron ploughs, rakes, and reapers, and for these things he is dependent upon the manufacturer of these implements, while the manufacturer and his employees are again dependent upon the farmer for the bread they eat and the wages and profits which they respectively receive. Merchants, bankers, stockbrokers, insurance men, and other classes of business men are dependent upon each other and. upon the community at large for their profits and for their livelihood, and each finds his own business most satisfactory when all other 30 THE SCIENCE OF BUSINESS. interests are working smoothly and without commercial discord. During the growth of an intelligent community new branches of business are constantly arising. Within the last hundred years have come the railroad, the electric telegraph, and the telephone. Pig iron has been turned to steel, corn is made into syrup, and dyes, rivalling the colors of the rainbow, are made from coal-tar. With the increased number and complexity of business occupations has come the specialization of labor. One man devotes his life to building railroads, another to making the rails, another to furnishing the cars and locomotives. In the use of electricity some are engaged in telegraphy, others in electric lighting, others in electric railroading. A large class of men are engaged in lumbering, in mining for metals, coal, petroleum, and salt, in making glassware, in manufacturing pottery, iron implements for household use, and stoves. There are men who make brick, and men who lay them, roofers and slaters, plasterers, plumb- ers, gas-fitters, blacksmiths, brass-founders, cabinet-makers, cigar-makers, hatters, clothiers, saddle-makers and harness- makers, goldsmiths and tinsmiths, coopers, draymen, steve- dores, and other trades. Each business of any consider- able extent is again subdivided into specialties. Thus the locomotive builder must employ travelling agents, book-keepers, time-keepers, watchmen, draughtsmen, ma- chinists, moulders, blacksmiths, boiler-makers, brass-work- ers, carpenters, iron finishers, pattern makers, riveters, GENERAL BUSINESS. 31 joiners, painters, and laborers. Any large industry, when carefully examined, will be found to exhibit the truth that ; the tendency of advancing civilization is toward a speciali- 'zation of industry. This division of labor has given a vast increase to that class of men who constitute the medium of exchange — the mercantile classes. Primitive merchants were simply hawkers of wares, dealers in a few simple commodities, travelling through the land bartering and trading for whatever had value to them. Now the mercantile classes are a body, dependent, it is true, upon the producer of food, great in numbers, and as diversified in character as are the wants or fancies of the populace which they endeavor to supply. Everybody is aware how much the interests of the mer- cantile classes and other classes are affected by fluctua- tions in value. Fortunes are made or lost by the rise or fall in price of a commodity of which a merchant may have a large supply. But the merchant is affected not only by the price of articles in his possession, but by the price of articles in the possession of others. He owes a large number of people and a large number of people owe him. His ability to pay depends upon the prices which his customers receive for the produce or goods they have in their possession, or which their debtors produce or have in their possession. Hence there is hardly a fluctuation in the price of any article whatsoever that does not influ- ence to some extent the prosperity of the mercantile 32 THE SCIENCE OF BUSINESS. classes at large, in addition to the particular influence which it may exert upon the fortunes of a particular indi- vidual. In society as we see it to-day, not only each man > is dependent upon other men, but each class of men is dependent upon all other classes, and whatever injures one class of the community effects upon all other classes a like injury. The interests of each are bound up in the interests of all, and the interest of all is bound up in the interest of each. Considering the business of a community as a whole, made up of innumerable motions, diversified, intricate, we are forced to conclude that the general movement of busi- ness in that community must be along the line of least resistance. As has been before pointed out, any number of motions, when brought together, must at last be reduced to two, — that of attraction and that of counter-attraction, and, in the direction of greatest force, motion takes place. Not only, then, must the business which each individual performs be increasing or decreasing, but also the total business done by all individuals ; and, as motion cannot take place in one direction forever, we must expect a constant reversal of motion between limits, or a rhythm. Turning from philosophy to fact, we find that it is the common experience of business men that times are "good," and times are "bad," meaning that exchange of commodities is active or slow. Some attribute the cause to the crops, others to overproduction, others to the influ- ence of the tariff, and others to the political party which GENERAL BUSINESS. 33 may happen to be in power. Without at present examining the adequacy of the several commonly supposed causes to produce the observed effects, we have no hesitancy in saying that times cannot be uniformly good, neither can they be uniformly bad. The number of failures in business is probably as good if not the best exponent of the commercial prosperity of the country, as any index that we have. At least, it will be admitted that that state of affairs which should cause one man among every one hundred and sixty-six traders to fail in one year is much preferable to that state of affairs which should cause one man, in the same time, to fail among every sixty-seven traders. Embracing, as they do, every class of business men, and extending over a large territory, we may expect that such a record of failures will express a general truth ; and, from the course of reasoning heretofore followed, we may expect that the number of failures for any year will not be a fixed quantity. That, viewed singly or collectively, they will show the movement of forces along the lines of least resistance or of greatest traction, and we may also expect that they will present a certain rhythm. That they do present a rhythm, the an- nexed diagram of the average of failures for each year from 1 866-1 885 will graphically show. The data from which the diagram is plotted are as follows : — 34 THE SCIENCE OF BUSINESS. Year. Traders. Failures. Amount of Liabilities. Average of Liabilities. Average of Failures. 1857 4.932 $291,750,000 1858 4,225 95,749.000 1859 3.913 64,394,000 i860 3-676 79,807,000 1861 6,993 207,210,000 1862 1.652 23,049,000 1863 495 7,899,000 1864 520 8,579,000 1865 530 17,625,000 1866 160,303 1.505 53,783,000 I35.736 I in 106 1867 205,000 2,780 96,666,000 34,772 I in 74 1868 276,000 2,608 68,694,000 26,339 I in 105 1869 355,000 2,799 75,054,000 26,813 I in 126 1870 427,292 3.546 88,242,000 24,885 I in 120 187 1 476,018 2,915 85,252,000 21,775 I in 163 1872 532.236 4,069 121,056,000 29,750 I in 130 1873 562,054 5.183 228,499,000 44,084 I in 108 1874 603,904 5.830 155,239,000 26,627 I in 103 1875 644,389 7,740 201,000,000 25,969 I in 83 1876 680,072 9,092 191,117,000 21,020 I in 75 1877 689,000 8,872 190,670,000 21,491 I in 77 1878 713,420 10,478 234,383,000 22,369 I in 67 1879 751.235 6,658 98,149,000 14,741 I in III 1880 787,480 4,735 65,752,000 13.886 I in 166 i88i 810,485 5.582 81,156,000 14.530 I in 145 1882 847.795 6,738 101,548,000 15,070 I in 126 1883 869,170 9,184 172,874,000 18,823 I in 94 1884 937.974 10,968 226,343,000 20,637 I in 86 We are indebted to R. G. Dun & Co. for above statement of failures and liabilities. GENERAL BUSINESS. 35 : ■ ! 1 ' i '■ :■ 4 jxine 1 judi ■ ■" ■' '■■■ /atifi /ana. /K-rn " V /ny/ ItSTZ ■■ ja-ia 1 /St't /at/; /sya /xtf /K-m 1 1 t' /K-ri /HRf) ■ fPXI t 1 1 XRZ 1 i Jii u -nf-^'"' T'firitia '^^ /XR.'J ■i' /H89- /HflS i i " , ,»iin ! ^ 'i IKHf I ' .. .■:.|J /7 tons, while the years 1883 and 1884 show a decided falling off in consumption from the highest point reached in 1882. CHAPTER III. RAILROAD BUILDING. — CONSUMPTION OF IRON AND STEEL RAILS. At the commencement of the year 1884 there were, in the United States, 121,494 miles of railroad in operation, which, at the moderate estimate of ^40,000 per mile, would represent an investment of nearly ^5,000,000,000.^ Of this amount 33,705 miles were built previous to 1864, rep- resenting, at ^40,000 per mile, ^1,348,200,000 ; and 87,789 miles were built since the close of the year 1863, repre- senting, at ^40,000 per mile, ^3,511,560,000. During this latter period, which commences with the year 1864 and extends to the year 1884, 74 per cent of the railroad mileage of the country was built. This period, upon examination, divides itself into four distinct divisions of five years each, two of rapid and two of moderate, rail- road building, as follows : — TWO PERIODS OF MODERATE RAILROAD BUILDING. Miles I»b4 1865 1866 1867 1868 738 1874 I.I77 187s 1,742 1876 2,449 1877 2,979 1878 9,085 Miles 1,105 1,712 2,712 2,281 2,687 10,497 1 This estimate includes road-beds, rails, rolling-stock, depots, etc. Poor's Manual for 1884 shows the amount per mile, as based on bonds and stocks, to be nearer $65,000. 54 RAILROAD BUILDING. 55 TWO PERIODS OF ACTIVE RAILROAD BUILDING. Miles 1869 4,615 1870 6,070 1871 7,379 1872 S.878 1873 4,107 28,049 Miles 1879 4,721 1880 7,174 1881 11,142 1882 10,821 1883 6,400 40,258 That period from 1864 to 1868 inclusive, in which 9,085 miles were built at a cost of ^363,400,000 ; that period from 1869 to 1873 inclusive, in which 28,049 miles were built, at a cost of ;SS 1,1 2 1,960,000; that period immediately fol- lowing, from 1874 to 1878, in which 10,497 miles were built, at a cost of 1^419,880,000, and that period from 1879 to 1883 inclusive, known in popular language as the "boom," in which 40,258 miles were built, at a cost of ^1,610,320,000. But this estimate of ^40,000 per mile as the cost of a railroad is probably too low for the two periods of activity ; for iron, steel rails, and wages were much higher during the years from 1879 to 1883 than during the years from 1873 to 1879. Thus, the price of pig iron in November, 1878, was ;^i6.5o per ton, which had risen to %\\ in Feb- ruary, 1880. Iron rails rose from ^34 in January, 1879, to ;^68 in February, 1880; and steel rails from ;^4i in 1878 to ;^85 in February, 1880, in each case doubling, or more than doubling, the price in a few months. Such was the " boom " of 1879, which caused the building of furnaces, mills, and 5 6 THE SCIENCE OF BUSINESS. foundries to supply the increased demand for iron. Prices culminated in February, 1880, but the high prices of steel rails, locomotives, etc., seemed to stimulate instead of to check railroad building. The amount of money paid out in railroad building from 1879 to 1883, inclusive, at the lowest estimate, must have been considerably over ^1,000,000 for each day during the five years, a striking contrast to the $250,000 per day of the previous five years. European and American capital- ists paid out over $300,000,000 each year for building rail- roads in the United States. Of this amount probably one half was paid for labor and for iron, and the balance went to other capitalists, to land, mine, and mill owners, which was again redistributed, and " the end of its influence no man can tell." As a result of this prosperity wages were high, mills and factories were run on full time, and in many cases all day and night. Iron-working machines could not be built with sufficient rapidity, so they were imported from Eu- rope. Plants of factories were enlarged, new additions were made to the buildings, and the workers were increased. True to the American spirit, each manufacturer strove to get to the market first. The pace was too fast. The pro- ducers of railroad material broke the market. They fur- nished more goods than the capitalists wanted or the peo- ple needed, and the natural result followed. Prices fell. In 1884 pig iron had reached $20 per ton, steel rails $28 to $30 per ton, and it is estimated that only about 4,000 RAILROAD BUILDING. 57 miles of railroad were built. This meant the scaling down of wages of all classes of labor connected with railways, the closing of blast furnaces, the shutting up of mills and foundries ; for, as we have the capacity to build at least 12,000 miles of railroad in one year, and have only built 4,000, the result is plainly inevitable. We built too many miles in 1879 to 1883, and must build too few in 1884 to 1888 in order to establish an equilibrium. Nor have we any reason to hope that this regular irregu- larity will cease, for as soon as an equilibrium is reached and an increased demand springs up, when wages and pro- duction have reached their lowest point and turn upward, when profits again become visible to the manufacturer, each blast furnace will be fired up, each mill and foundry will start, and a few years of activity will be again followed by years of depression. Every one who is interested in railway building will endeavor to make hay while the sun shines, and instead of the prosaic and plodding every-day work, on small wages and short hours, incident to depressed business, we shall see activity in every department — the pillar of cloud by day and the pillar of fire by night. The following table, compiled by the Railway GazettCy shows the miles of railroad in operation each year, and the annual increase, from 1830 to 1884. The table of approxi- mate consumption of rails is from the reports of the Ameri- can Iron and Steel Association at Philadelphia : — 58 THE SCIENCE OF BUSINESS. MILES OF RAILROAD IN UNITED STATES. Year. 1830 1831 1832 1833 1834 1835 1836 1837 1838 1839 1840 1841 1842 1843 1844 184s 1846 1847 1848 1849 1850 1851 1852 1853 1854 i8ss 1856 1857 1858 Miles in Operation. 23 95 229 380 633 1,098 1.273 1.497 1.913 2,302 2,818 3.535 4,026 4,185 4.377 4.633 4.93° 5.598 5.996 7.365 9,021 10,982 12,908 15.360 16,720 18,374 22,01 6 24,503 26,968 Annual Increase. 72 134 151 253 46s 175 224 416 389 516 717 491 159 192 256 297 668 398 1.369 1,656 1,961 1,926 2,452 1,360 1.054 3.647 2,647 2,465 RAILROAD BUILDING. 59 MILES OF RAILROAD IN UNITED STATES. Continued. Year. Miles in Operation. Annual Increase, 28,789 1,821 30,63s 1,846 31,286 651 32,120 834 33.170 1,050 33.908 738 35.085 1. 177 36,801 1,742 39.250 2.449 42,229 2,979 46,844 4,615 52.914 6,070 60,283 7.379 66,171 5,878 70,278 4,107 72,383 1,105 74,096 1,712 76,808 2,712 79,089 2,281 81,776 2,687 86,497 4,721 93.671 7,174 104,813 11,142 115.094 10,821 121,494 6,400 125,844 4.350 Approximate Con- sumption of Iron and Steel Rails, including Imports. Tons. 1859 i860 1861 1862 1863 1864 1865 1866 1867 1868 1869 1870 1871 1872 1873 1874 1875 1876 1877 1878 1879 1880 1881 1882 1883 1884 625.157 756.795 906,749 1.019.153 1.341,93s 1,530,850 1,148,849 837.724 811,960 879,916 764.744 882,69s 1,157,420 1,752,526 2,230,421 1,912,921 1,399.671 The Railway Age, of Chicago, places the construction of 1881 at 9,789; 1882, 11,591 ; 1883, 6,755. It would appear from the table of consumption of rails that 1881 was the year when railroad building was the most active. 6o THE SCIENCE OF BUS/ArES:>. In former times " strap rails," consisting of flat pieces of iron 5 to |- inch thick and from 2^ to 41 inches wide, were used on all American railroads. A 'vjnte.v in Brown's History of the First Locomotives in America says that the track of the Baltimore and Ohio Railroad (about 1830) consisted of cedar cross-pieces and of string pieces of yel- low pine from 12 to 24 feet long and 6 inches square, and slightly bevelled upon the top of the upper side for the flange of the wheel, which at that time was upon the out- side. On these string-pieces iron rails were placed, and securely nailed down with wrought-iron nails, countersunk in the rail. The company found in practice that the rails would become loosened from the stringers, and that the ends, called " snake heads," would be frequently forced by the wheels through the bottoms of the cars, and cause ac- cidents of a serious nature. The ilat rail, however, kept its place in American railroads for' many years, and Mr. Poor says : " It was not till 1850 that the longitudinal sill and flat rail was entirely removed from the Utica and Schenectady road, the most important link in the New York Central Line." Flat rails were used on many other roads in the country even after 1 860. After the passage of the tariff act in 1842, American capitalists began to consider the advisability of manufacturing iron rails, which had previously been imported free of duty, and in 1845 the first T rails made in the United States were rolled at Dan- ville, Pennsylvania. The T rail is the invention of an American. No steel rails were made in the United States RAILROAD BUILDING. 6 1 previous to 1867; now no railroad is considered first-class unless it makes use of them. The aggregate consumption of iron and steel rails is coincident with the periods of heaviest railroad building, averaging for the — ^ First period 690,976 tons per year. Second period 1,189,907 tons per year. Third period 835,408 tons per year. Fourth period 1,690,592 tons per year. CHAPTER IV. IMMIGRATION. — 1864-1884, The number of immigrants, according to official figures, arriving in the United States during and including the years 1864 and 1883 was 7,062,670, or one ninth of the total present population of the country. During the five years from 1864 to 1868 inclusive, there were 1,355,675 arrivals. In the next five years, from 1869 to 1873 inclusive, there were 1,948,823 arrivals. Then fol- lowed five years when the immigration fell off over 200,000 per year, as compared with the previous five years, amount- ing to 893,194, after which came the five "boom" years, when it reached the sum of 2,864,978. The following table will show the immigration for each year and for each period : — YEARS OF LIGHT IMMIGRATION. No. of Persons 1864 193.19s 1865 247,453 1866 3141917 1867 310965 1868 289,145 1.355.675 3. No. of Persons 1874 260,814 1875 191.231 1876 157.440 1877 130.502 1878 153.207 893.194 62 IMMIGRA TION. 63 2. No. of Persons 1869 385,287 1870 356>303 1871 346,938 1872 437.75° 1873 422.545 YEARS OF HEAVY IMMIGRATION. 4. 1,948,823 No. of Persons 1879 250,565 1880 593.703 1881 720,045 1882 730.349 1883 570.316 2,864,978 1884 454.206 (II months). According to the official record, the number of immi- grants arriving upon our shores in the year 1881 exceeded the population of the State of Connecticut by 97,345 ; the population of Maine by 71,109; the population of Ne- braska by 267,643 ; the population of Vermont by 387,759 ; the population of New Hampshire by 373,054; the popu- lation of West Virginia by 101,588, and the population of Rhode Island by 443,514; and it was less only by 127,417 than the aggregate population of the States of Colorado, Delaware, Florida, Nevada, and Oregon. It also exceeded the population of all the Territories of the United States by 113,226, exclusive of the District of Columbia. This enormous army of workers yearly being landed upon our shores has justly given alarm to European poli- ticians. They do not consist wholly of agricultural labor- ers, as many suppose, but are composed of all classes, — farmers, mechanics, artisans, and professors, and in a few years, owing to the plasticity of our American institutions, are absorbed into the community, and become active and efficient citizens. 64 THE SCIENCE OF BUSINESS. The country which is receiving immigrants and giving them profitable employment is, without doubt, bettering its condition. They not only bring a small capital with them in the shape of actual money, but are, by their labor, necessarily adding to the wealth of the country, in devel- oping its resources, and, by their wants and necessities, are increasing the sales — and consequently the profits — of its traders. If we consider each immigrant as worth to us in labor and money one hundred dollars per year for the first year of his residence, then we received $256,493,200 more in the ten years of heavy immigration than we did in the ten years of light immigration. " No single cause of dissatisfaction with his home circumstances," says the New York Shippi7ig and Com- mercial List (March i, 1882), "can be stated, which explains this phenomenal movement of population from the old world to the new. Germany furnishes the largest quota of the tide of immigration, followed by Canada, then by Scandinavia, then by England and Wales, then by Ireland. It might at first glance be thought that militarism would account for the exodus from Germany, but it should be remembered that the French are under a militarism as severe — if not indeed severer — than the Germans, yet France holds her popula- tion at home. The birth-rate is high in Germany, and over- population might be regarded as another reason, but in England and Scandinavia the proportion of births to the population is phenomenally low ; yet these countries com- IMMICKA TION. 65 bined sent us nearly as many future citizens as Germany. On any single principle, it is difficult to account for this outflow of population from the old world." Do we not, however, from the figures heretofore given, gain a verification of the thought, that the causes lie rather here than there .'' Agreeing as our tables do in their periods of increase and decrease, with like periods in the increase and decrease of failures, and the rise and fall of the price of iron, and the increase and decrease of railroad building, are we not led to reflect that there is a necessary connection between them .'' And while we may readily believe, from theory, that the personal comfort and advantage of an immigrant would be better subserved in times of commercial activity, we become fixed in that idea when we observe that the immigration of numbers rises and falls in accordance with the varying influence of that force. From the evidence which we have, we would infer that the emigrant is not flying from evils in his own country, but is rather impelled to try his fortune in this country by the better promise of gain which it from time to time holds out. However, to show the proof of the cause of immigration is not necessary. Our purpose is fulfilled if we have shown that the movement is rhythmical and marked, and on this point the reader will not be likely to disagree. Another fact worthy of notice, but which need not here be justified by figures, being probably within the recollection of each, is, that the number of people visiting 66 THE SCIENCE OF BUSINESS. foreign lands for pleasure or recreation, and the number of adopted citizens who desire to look once more on the scenes of their childhood, and the number of persons who, having gained a competency, desire to spend the remainder of their days in the land of their birth, rises to large amounts in "good" times, and slowly settles to mod- erate numbers when the summit of the wave is passed. CHAPTER V. STOCKS. It is but half a century since the first iron railroad was constructed in Massachusetts, from West Stockton to Hudson, a distance of twenty-seven miles. In the first- mentioned town were extensive marble quarries and deposits of iron ore. Nearly all the freight of the western border of the State sought an outlet by way of the Hudson River, and hence the construction of the railroad in ques- tion, which was a wonder. About the same time a rail- road was built between Albany and Schenectady, and another in eastern Massachusetts. From that small beginning has grown our present system, which, if ex- tended in a sin^\;r:,traight line, would reach four times about the globe. According to Poor's Manual for 1884, the capital, as based on bonds and stocks, is nearly ;^65,ooo per mile. We may safely assert that the entire capitalized debt of all the railroads in the country is considerably over seven billion dollars. The capital so invested enters not only into the operation of our financial institutions, but rep re- ~ sents the accumulated savings, in whole or in part, of hundreds of thousands of families. It is a favorite investment for all classes of society, 67 ^8 THE SCIENCE OF BUSINESS. both in this country and in Europe, and any fluctuations in its value react upon all classes for weal or woe. It is estimated that in the recent depression of business during the years 1883 and 1 884, the capital invested in railroads suf- fered a depreciation in value sufficient to make — or rather, in this case, to unmake — over one thousand millionaires. Recognizing the fact that this great sum no longer adorns the columns of ledgers, nor figures in the amount of legacies, nor flatters the dreams of avarice, it becomes an interesting task to inquire why it has disappeared, and if we may hope to see it again. As has been our method in former chapters, let us examine the facts of the case, and see if they present any regular order, or have merely been the footballs of chance. We shall expect, of course, that in the early history of any phenomenon we shall find it to present a course somewhat erratic, and while we would perhaps all agree that the his- tory of every existence is from the simple to the com- plex, we must remember that it is also from the indefinite to the definite, and from the irregular to the regular. Without stating the reasons which lead us to expect that the history of the New York Stock Market presents such an appearance, we will proceed to make a survey of that history, and leave the truth of the foregoing remarks to be justified by the results. The following review of the New York Stock Market is from the reports of William B. Dana & Co., publishers of the Commercial and Finaiicial Chronicle, and will present STOCA'S. 69 a fair conception of the course of prices during that time. This review should be read in connection with the table of yearly highest and lowest prices of stocks, which appears on pages 102, 3 and 4. "New York Stock Market, 1860-1885. "i860. — In i860 several of the leading stocks were selling at very low figures. New York & Harlem, in March, sold as low as 8 ; Michigan Southern at 5, and New York & Erie at 8 ; Delaware, Lackawanna, & Western, in January, sold at 54. Canton, in December, got down to 14. Cleveland & Pittsburg, in March, down tos. "1861-62. — In 1861 the market was generally better ; but in 1862 the improvement was more marked. Pennsyl- vania Coal, and Delaware & Hudson Canal reached 119 in December ; Erie, 'j'j\ ; Harlem, 23 ; Delaware, Lacka- wanna, & Western, 130. "1863. — This year the Harlem Company was author- ized to lay tracks on Broadway for horse cars, and the stock reached 179 in August. An injunction prevented the operation. Erie paid its first dividend of 3J per cent. "1864. — The Harlem 'corner' culminated in July at 285 ; that figure, in the same month, being the culminating price of gold. The Harlem corner was the result of large short sales, while nearly the whole of the actual stock had been previously purchased by Commodore Vanderbilt. 70 THE SCIENCE OF BUSINESS. Pittsburg, Fort Wayne, & Chicago was in April run up to I52|. Erie paid two dividends of four per cent each, and Delaware, Lackawanna, & Western, ten per cent in stock, and fifteen in cash. " 1865. — Lee's surrender took place April 9. Erie, in March, ^\ (S) 73I, and December 9i| (as 97. Erie divi- dends, two of i\ per cent. Harlem almost entirely ne- glected. Delaware, Lackawanna, & Western, in January, 222 (a) 225 ; in December, 175. Ohio & Mississippi sold low. Illinois Central paid ten per cent, and varied during the year from 90