HD 
 
 fM53 
 
 CORNELL 
 
 UNIVERSITY 
 
 LIBRARY 
 
Cornell University Library 
 HD4901 .M53 
 
 Labor's crisis. 
 
 olin 
 
 an employer's view of la 
 
 3 1924 032 449 013 
 
Cornell University 
 Library 
 
 The original of tliis bool< is in 
 tine Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924032449013 
 
LABOR'S CRISIS 
 
THE MACMILLAN COMPANY 
 
 NEW YORK BOSTON • CHICAGO • DALLAS 
 ATLANTA • SAN FRANCISCO 
 
 MACMILLAN & CO., Limited 
 
 LONDON • BOMBAY ■ CALCUTTA 
 MELBOURNE 
 
 THE MACMILLAN CO. OF CANADA. Ltd. 
 
 TORONTO 
 
LABOR'S CRISIS 
 
 AN EMPLOYER'S VIEW 
 OF LABOR PROBLEMS 
 
 BY 
 
 SIGMUND MENDELSOHN 
 
 iQetoi gorit 
 
 THE MACMILLAN COMPANY 
 
 1920 
 
 A.U righta reserved, 
 
COPTBIGHT, 1920, 
 
 By the MACMILLAN COMPANY 
 
 Set up and electrotyped. Published, August, X920 
 
 S-^ 
 
 y 
 
INTRODUCTION 
 
 This book makes no pretensions to a scientific study 
 of the institution of labor nor of the causes and effects 
 of the present labor unrest. The views and observa- 
 tions presented herein may, however, have some value, 
 even to the student of labor, because they are based 
 upon the practical experience of an employer who has 
 to deal not with the theories, but with the facts which 
 determine the relationship of capital and labor. The 
 political economist is still under the influence of the 
 labor conditions of the nineteenth century, and he is 
 slow to recognize the rapid transformation of the labor 
 problem in more recent years. A labor problem still 
 exists, and in more acute form than ever, but it con- 
 cerns the welfare of society more than of labor. It is 
 no longer based upon excess of labor but upon insuffi- 
 ciency of labor; it no longer relates to an inadequate 
 wage but to an inflated wage; it no longer deals with 
 an oppressed suffering class but with an all powerful 
 and militant element which is striving for economic 
 dominance. The existing labor problem, unlike the 
 labor problems of the nineteenth century, does not in- 
 volve vital moral principles, nor does it deal with any 
 
vi INTRODUCTION 
 
 specific evil from which labor is suffering at the pres- 
 ent time. It does not stir public consciousness, as did, 
 for instance, the question of slavery, child labor, or the 
 inhuman working and living conditions of the laborer. 
 It is nevertheless recognized as the outstanding prob- 
 lem of the day, affecting and menacing the welfare of 
 society wherever the employment of labor is an eco- 
 nomic and social necessity. It cannot be solved by 
 prescribed formulas or principles, whether they relate 
 to Profit-sharing, Industrial Democracy, or any other 
 scheme for conciliating labor. In many instances, the 
 problem is intensified by the employer himself, for the 
 handling of labor, whether in small or in large groups, 
 demands special mental and temperamental qualifica- 
 tions, and particularly when labor is animated by deep- 
 rooted discontent and unrest. 
 
 The phases of the labor problem are in constant 
 state of change, and the theories and doctrines of yes- 
 terday become discredited to-day. The relationship 
 of capital and labor is largely under the influence of 
 fluctuating economic conditions, and a dictatorship of 
 capital may be transformed into a dictatorship of la- 
 bor. New principles and policies are being advocated 
 to insure stability and harmony in this relationship 
 which seem plausible when demonstrated on the ros- 
 trum or in print, but fail in practical operation. The 
 causes and effect of the widespread labor unrest, as 
 well as the proposed remedies, demand study of the 
 
INTRODUCTION vii 
 
 labor questions at close range and under all moods and 
 conditions. It is only in close touch with labor, that 
 the student will observe the deep interest of capital in 
 all matters relating to the welfare of the laborer. It 
 is true that selfish business motives are in most in- 
 stances blended with this benevolent spirit toward la- 
 bor, and that in most instances it is an essential policy 
 imposed by pressure of competition and by the urgent 
 demand for labor. But the fact must nevertheless be 
 recognized that capital can no longer completely sep- 
 arate its own interest from that of labor, for its most 
 valuable asset is the good-will of labor, and the con- 
 servation of labor is its deep concern. It offers to the 
 laborer better living and working conditions; and in 
 many instances maintains for his benefit extensive 
 welfare work, which insures him against the conting- 
 encies of life and also provides him and his family 
 with educational and recreational facilities. More- 
 over, the wage is no longer based upon the economic 
 principle of providing the laborer with the means for 
 a bare existence or, according to the more advanced 
 human principle, of providing him with the means to 
 maintain his physical eflficiency. The wage is now 
 adequate to insure with ordinary care, a better and 
 more stable existence to the laborer and his family 
 than can be obtained by many who are practicing a 
 profession or are engaged in occupations not asso- 
 ciated with manual labor. Hence neither the wagq 
 
viii INTRODUCTION 
 
 nor the living and working conditions can any longer 
 be considered important factors in the labor problem. 
 
 With the exclusion of the main causes heretofore 
 underlying the labor problem, it becomes all the more 
 difficult to reduce the present labor problem to a con- 
 crete proposition. We know of its existence by the 
 manifestation of general labor unrest, which has be- 
 come the accepted term for the new labor problem. 
 " Unrest " is however a vague and an elastic term 
 for a social ill, and in the absence of tangible symptoms 
 the remedial measures are either experiments or ex- 
 pedients. Nevertheless the present labor unrest is a 
 logical sequel of the conditions under which labor ex- 
 isted until very recently. It should be borne in mind 
 that for generations the laborer remained helpless in 
 his degradation and subjection. The industrial devel- 
 opment of the nineteenth century of which (aside from 
 the introduction of mechanical power) he was the main 
 factor and to which he, his wife, and his children con- 
 tributed eleven to fourteen hours of daily toil, only 
 helped to intensify his misery and lower his level in 
 society. His inseparable companion has been poverty, 
 and his training and his characteristics were acquired 
 in the school of poverty. All these aspects, and many 
 more, have to be considered in order to gain an intel- 
 ligent conception of the causes of labor unrest and of 
 the elements which constitute the present labor prob- 
 lem. They will also help to explain the present ag- 
 
INTRODUCTION ix 
 
 gressive attitude of labor toward capital, for the vic- 
 tim of oppression takes naturally to the role of an op- 
 pressor when the tables are turned. 
 
 The psychology of labor strongly influences the re- 
 lation of capital and labor, as well as the performance 
 of labor. The heritage of the laborer is mistrust and 
 prejudice against capital, and these traits can only be 
 transformed into goodwill and confidence when the 
 laborer is made to realize that his own welfare is 
 served and promoted in his employment. 
 
 The instinct to move onward and rise to a higher 
 level is strongly developed in the human being and it 
 forms the force which impels and stimulates human 
 effort and activity. This instinct manifests itself al- 
 ready in the child when it reaches the age of reasoning. 
 It continues to actuate the life of the individual in all 
 of his endeavors until old age no longer lends force and 
 ambition, aim and desires, and unrest gives way to a 
 longing for rest and peace. The laborer is not ex- 
 cluded from the operation of this law, but in his case 
 the effort to rise to a higher level and improve his ex- 
 istence is stamped labor unrest, whereas in others it is 
 considered a natural state of mind and a laudable 
 ambition. 
 
CONTENTS 
 
 PAGE 
 
 Introduction v 
 
 Poverty, Its Nature and Effect i 
 
 Poverty as Related to Labor ii 
 
 Characteristics of Capital and Labor 15 
 
 Labor not a Commodity 19 
 
 Comparative Value of Physical and Mental Exer- 
 tion 23 
 
 Depletion and Deterioration of Labor .... 29 
 
 Labor-Saving Inventions and Labor Supply ... 39 
 
 The Malthusian Theory as Applied to Labor . . 42 
 
 Maximum Effort the Foundation of Society ... 49 
 
 Economic Effect of Curtailed Labor 53 
 
 Can Reduced Hours Advance the Welfare of Labor 
 
 AND OF Society? 64 
 
 Cost of Living Subject to Psychological Influences 71 
 
 Inflated Cost of Living Due to Contraction of Labor 75 
 
 Labor Welfare as Related to Material and Social 
 
 Welfare 7^ 
 
 Causes of the Present Labor Ferment 83 
 
 Profit Sharing as a Basis of Insurance and Pensions 98 
 
 Labor Unrest as a Check upon Industrial Concen- 
 tration 107 
 
 Moral Economics as Applied to Labor 114 
 
xu 
 
 CONTENTS 
 
 Handling of Labor in Small Plants . 
 Labor as It Affects the Wife and the Home 
 Objections to a Legislated Minimum Wage 
 
 Housing of the Laborer 
 
 Inflation and High Taxes — Their Effect 
 
 PAGE 
 125 
 
 141 
 
 145 
 151 
 163 
 
LABOR'S CRISIS 
 
 AN EMPLOYER'S ANALYSIS OF LABOR PROBLEMS 
 
 POVERTY, ITS NATURE AND EFFECT 
 
 Poverty, unlike wealth, cannot be defined in mathe- 
 matical terms nor can it be measured by an inventory 
 of assets and liabilities. It cannot be associated with 
 resources, except that poverty may be said to begin with 
 the loss of material resources and to terminate with 
 their acquisition. It can lay claim, however, to one 
 very vital asset, namely, muscle. Muscle determines 
 physical efficiency and the earning power of manual 
 labor, and these two are inseparably linked, the lower- 
 ing of the one resulting in a corresponding impairment 
 of the other. Poverty being a relative term, referring 
 to a state of living, does not lend itself to concrete 
 definition and is open to various interpretations. To 
 the popular mind it represents a low standard of living 
 associated with an unrelenting struggle with want and 
 privation, with care and suffering, and often also with 
 vice and temptation. In sociology the term is applied 
 to a state of struggle to obtain the necessaries of life. 
 Some authorities extend the line of poverty to a point 
 where actual want does not prevail, but where the 
 
2 LABOR'S CRISIS 
 
 worker is unable to obtain those necessaries which will 
 permit him to maintain physical efficiency. 
 
 That poverty is the direct result of modem economic 
 life, and not a mere accompaniment, and that the in- 
 adequate earnings of the laborer are responsible for 
 his low standard of existence, is widely accepted. 
 Poverty is, however, a complex social problem, which 
 cannot be satisfactorily explained by any single or 
 special cause; and, although the connection between 
 poverty and low earnings is indisputable, forces other 
 than those produced by external conditions strongly 
 operate in determining poverty and also the earning 
 power of labor — for instance, mental and physical 
 qualifications, character, and even temperament are 
 some of the controlling factors in the struggle for exist- 
 ence. 
 
 Poverty is not a modern nor an exclusively economic 
 problem, as some maintain, and, if we accept the theory 
 of biological variations, it may be considered as old 
 as organized society or as variations in the human 
 species. Almsgiving and the protection of the poor, 
 form cardinal .obligations of every religion, and are 
 strongly emphasized and urged in the New Testament 
 as well as in the Old. Historic records prove that 
 the poor received the care of the state under some of 
 the Egyptian dynasties long before the time of Moses. ^ 
 
 1 James H. Breasted, "Ancient Records of Egypt," vol. Ill, 
 1906, pp. 23 ff.; als'o "Development of Religion and Thought in 
 Ancient Egypt" (same author), 1912, pp. 216-56. 
 
POVERTY, ITS NATURE AND EFFECT 3 
 
 No country is exempt from poverty, whether it is a 
 democracy or an autocracy, whether it is an industrial 
 or an agricultural nation. Poverty is as evident in 
 highly civilized as in backward countries — perhaps 
 more so. It was encouraged in the early stages of 
 Christianity by the apostles, who attached a certain 
 dignity and spiritual influence to it, in contrast with 
 the materialism and evil of wealth. It became the 
 symbol of purity and self-abnegation, by means of 
 which salvation could be attained. This spirit still 
 survives in many religious orders. 
 
 Whether poverty is more widespread in the United 
 States than in Europe, is, in the absence of statistics, 
 purely a matter of opinion, but the statement is justified 
 that it is most apparent where wealth is obtrusive, as 
 in large industrial and commercial centers. Poverty 
 requires the contrasting background of wealth to con- 
 vey to the eye and to the mind a vivid picture of its 
 misery. Great as is the contrast between the two, they 
 are nevertheless inseparable companions, and where 
 wealth thrives, poverty also is firmly established. In 
 primitive countries where one standard of existence is 
 common to all, poverty, no matter how intense, is ac- 
 cepted as a perfectly natural state, to which the people 
 are hardened and accustomed, never realizing that their 
 condition can be improved. Civilized life imposes 
 much harder conditions upon society and upon the 
 individual than primitive life. Life's perplexities in- 
 
4 LABOR'S CRISIS 
 
 crease under it, as also do social problems. Pove^|.;/ 
 is a fixed condition and is kept in a state of pem>^,.- 
 nency by the force of suction which not all human 
 beings can escape. Some manage to emerge from it, 
 but others are drawn into it, and the flotsam and jetsam 
 of human shipwrecks keep it constantly renewed. No 
 other interpretation can be made of the Bible texts 
 " the poor shall never cease out of the land " and " ye 
 have the poor always with you." We could picture a 
 state of society in which neither wealth nor poverty 
 operated and in which a uniform standard of living 
 prevailed, were the human species cast in the same 
 mold without any physical or mental variations. But 
 unfortunately, not all human beings are so endowed by 
 nature as to be able to carry on unaided the struggle 
 for existence, and the weaker will always have to rely 
 upon and be sustained by the efforts and achievements 
 of the stronger. 
 
 The instinct of cooperation, evidence of which may 
 also be observed in the life of lower animals, is the 
 only source of strength for the weak, and finds ex- 
 pression, so far as the human being is concerned, in 
 the aid and protection extended by the state and by 
 society to the poor and helpless. Cooperation consti- 
 tutes the vital force not only of charity but of all hu- 
 man institutions, and without it organized society 
 would cease to function. By its operation the small 
 and weak units combine and form single and powerful 
 
POVERTY, ITS NATURE AND EFFECT 5 
 
 t its. Sustaining and prolonging the life of the weak, 
 cooperation must also tend to modify the law of the 
 " survival of the fittest " and to retard its operation. 
 
 There are periods in the life of society when man be- 
 comes callous to the physical suffering of his fellow 
 beings, or when the spiritual welfare of the individual 
 becomes the principal concern of the state and of the 
 church. But there are also periods when a high sense 
 of justice is aroused in behalf of the poor and the 
 oppressed, and the betterment of their condition be- 
 comes the absorbing aim of every agency of organized 
 society. This spirit has been particularly manifest 
 in recent years, and probably at no time since the 
 Christian era have so many far-reaching reforms been 
 enacted in the interest of the poor, particularly of 
 laborers, as in the past five decades. The force of this 
 movement is likely to be still further manifested in the 
 next decade, not solely as a consequence of the World 
 War, but because capital also is recognizing the eco- 
 nomic value of social betterment and more particularly 
 the fact that industrial efficiency and industrial sta- 
 bility can be maintained only by close and harmonious 
 association with labor. 
 
 It is within the memory of many of us when children 
 of tender years worked in factories ten to eleven hours 
 a day with only thirty to forty minutes' intermission 
 for lunch; when women worked under the same 
 time schedule, day or night, as men and without 
 
6 LABOR'S CRISIS 
 
 any restriction as to the character of occupation ; when 
 an accident to a worker in the performance of his 
 vocational duty was treated as a legal question of con- 
 tributory negligence, to the benefit of the lawyer and 
 to the detriment of the victim, who in most instances 
 became an object of charity. Moreover the standard 
 of living has been raised, and the poor (excluding of 
 course the pauper, who presents a distinct phase of 
 poverty) are better housed, better nourished, and bet- 
 ter clothed than they formerly were. What were once 
 considered luxuries of the rich have now become the 
 necessities of the poor. Meat at least once a day, and 
 vegetables and fruit in season and out of season, are 
 now among the essentials of their daily diet. In the 
 housing of the poor some of the objectionable features 
 of the old tenements in the large cities have been re- 
 moved, and certain home comforts, such as bathrooms, 
 hot-water supply, steam heat, and electric lights, are 
 not beyond the reach of the better situated of the poor. 
 Social progress in this country, rapid as it may ap- 
 pear, has however not kept pace with that in some of 
 the European countries, where under a scientific system 
 of social insurance the worker is protected (with the 
 aid of the state and the employer) against almost every 
 contingency which makes for poverty. Temporary 
 and permanent disability, sickness, old age, unemploy- 
 ment, the care of the orphan and the widow, come 
 under this insurance system, which to a large extent 
 
POVERTY, ITS NATURE AND EFFECT 7 
 
 relieves the burden of public charity, as it also tends 
 to lessen the intensity of poverty. It is only a ques- 
 tion of time when a similar policy, which can no longer 
 be considered a doubtful experiment, will be generally 
 adopted in the United States. 
 
 The question naturally arises whether poverty has 
 diminished as a consequence of the marked social 
 progress. According to some authorities poverty is 
 as extensive and intensive as it has ever been, and even 
 more so according to others.^ Some may consider 
 this an anomaly in face of the evidence that in many 
 respects the condition of the poor has been greatly 
 improved. On closer analysis, however, it will be 
 found that the higher living standard of the poor, 
 while it has modified some of the phases or aspects of 
 poverty, has not lessened perceptibly either its extent 
 or its intensity. 
 
 Social progress, whether it relates to labor conditions 
 or to living conditions, imposes a tax upon society, 
 which is reflected either in an increased cost of living 
 or in an increased cost of production. The increased 
 cost of production can be shifted, as it usually is, to 
 the consumer, but the higher standard of living can 
 ultimately be met only by greater efforts and by in- 
 creased earnings of the individual. A higher stand- 
 ard of living, whether it relates to the poor or to the 
 
 ijohn A. Hobson, "Problems of Poverty," third ed., 1896, 
 p. 26. 
 
8 LABOR'S CRISIS 
 
 so-called middle class, demands greater efforts to main- 
 tain than a low standard, and unless the earnings are 
 correspondingly increased to support the additional 
 requirements and the additional strain, the improved 
 living conditions may in themselves intensify the strug- 
 gle and become an important cause of poverty. Back 
 of the wants and the desires must be the power to sat- 
 isfy them; otherwise they breed discontent and unrest, 
 and the existence of the poor is made all the more com- 
 plex and burdensome. If the new wants are satisfied 
 at the cost of other essentials, a condition is created 
 in which one evil may be eliminated and another sub- 
 stituted, as is aptly illustrated by the housing problem 
 of the poor in New York City. 
 
 The wretchedness of the housing of the poor in 
 New York has been vividly depicted by pen and by 
 brush; it has formed an inexhaustible topic for the 
 pulpit and for the stage; it has received more than 
 any other manifestation of poverty the serious attention 
 and study of the leaders in social science, of our legis- 
 lators, and of our philanthropists. As a result of this 
 crystallized sentiment certain rational requirements 
 have been placed upon the construction of new domi- 
 ciles for the poorer class, to correct the many evils 
 which characterized the old tenement house. The 
 Report for 1917 of the New York Tenement House 
 Department proved, however, that more than half of 
 the entire population of Manhattan Island still dwells 
 
POVERTY, ITS NATURE AND EFFECT 9 
 
 in the old squalid tenements in which neither sunlight 
 nor air current reaches the inner rooms, and which are 
 devoid of every home comfort. Owing to the much 
 higher rental of the so-called " new-law tenement 
 house " the poor can avail themselves of it only by 
 crowding the family into a smaller floor space, thus 
 causing congestion, or by taking boarders, which again 
 adds to the congestion, not to mention the moral risk 
 which this makeshift involves. As a result the old 
 tenements, undesirable as they are, still remain the 
 dwelling places of the poor in New York. 
 
 The meager wage of the laborer demands the clos- 
 est financial adjustment, and the least • increase in his 
 expenditures may result in distress. He faces the 
 unalterable economic factor in every attempt he or 
 society may make to improve his living conditions, 
 and if the betterment entails an additional expense, 
 he must either sacrifice other essentials, or all of his 
 earnings are absorbed in the cost of living without 
 any savings for mishaps. Not only those who are in 
 poverty but those who are struggling against it are 
 unconsciously being drawn into its very vortex in the 
 attempt to maintain a standard of existence which is 
 not adjusted to their earnings, and in which no pro- 
 vision has been made for the contingencies of life, 
 like sickness and temporary unemplopment. Any one 
 contingency, unless it is relieved by accumulated sav- 
 ings^ — and the chances of saving are lessened with the 
 
lo LABOR'S CRISIS 
 
 increased requirement, — may quickly transform a 
 state of comfort into a state of want. 
 
 The standard of living is progressive, aflf acting the 
 wealthy as well as the poor, with this diiiference, that 
 the new wants of the poor originate from absolute 
 necessity, whereas those of the wealthy are mostly im- 
 posed by environment or are decreed by fashion and 
 never by absolute necessity. Social progress has not 
 narrowed the gulf which separates the destitute from 
 the affluent. Poverty, using the term relatively, will 
 lessen in proportion to the diminishing distance be- 
 tween it and wealth, and when the gap is closed, the 
 ideal but unfortunately unattainable state of society 
 will be reached in which wealth and poverty no longer 
 exist. 
 
POVERTY AS RELATED TO LABOR 
 
 The poverty problem is so largely a labor and wage 
 question, that by popular usage the term " laboring 
 class " has become synonymous with " poor class." 
 Labor may be said to be the recruiting agency for 
 poverty, and the ranks of the latter are filled with the 
 lees and dregs of labor — the lazy, the shiftless, and 
 the incompetent. The most primitive function in so- 
 ciety, by means of which the individual is enabled to 
 exist without any special training or intelligence, is 
 unskilled labor. This forms the lowest and at the 
 same time the largest stratum of labor, and it is this 
 class which comes in closest touch with poverty and 
 upon which the struggle for existence bears most 
 heavily. It is also this class which is deeply concerned 
 in the labor problem and transmitting it from genera- 
 tion to generation without bringing it nearer to a 
 solution. 
 
 The wage is the return for the exertion of labor, and 
 its value is determined by the purchasing power of 
 the circulating medium and not, as is the popular delu- 
 sion, by the amount received. The reciprocal relation- 
 ship between the wage and the cost of living is very 
 close, and the one cannot rise or decline very mate- 
 
 II 
 
12 LABOR'S CRISIS 
 
 rially without a corresponding movement in the other, 
 thus reestablishing the equiUbrium between the two. 
 The force of the movement is equally expended upon 
 both, and the cause that may, for instance, be respon- 
 sible for an inflated cost of living is also responsible 
 for an inflated wage. The one is not the direct result 
 of the other, as is popularly supposed, but both are 
 equally affected by the same cause, whether the de- 
 rangement of our economic system or monetary infla- 
 tion or social progress. Under certain conditions the 
 fluctuations may be greater in the one than in the other, 
 but eventually the wage and the cost of Hying adjust 
 themselves to each other, with the result that in the end 
 the conditions of the wage earner remains virtually 
 unchanged. 
 
 The minimum wage which can prevail in any coun- 
 try, whether it be the United States or China, is based 
 upon the minimum requirements for sustaining bare 
 life. Labor would eventually become extinct and so- 
 ciety disorganized under " starvation wages," or wages 
 which are inadequate to support life under normal 
 conditions. Labor and poverty are often close com- 
 panions, but labor and starvation are incompatible. 
 The fundamental requirements for sustaining life are 
 not influenced by economic conditions, but by climate, 
 soil, and habit, and to some extent also by the facili- 
 ties of communication with other countries. 
 
 The aliment of each country is entirely under the 
 
POVERTY AS RELATED TO' LABOR 13 
 
 influence of its geographical position. The food of 
 the cold zone will not, as a rule, sustain the life of the 
 inhabitant of the tropical zone, and vice versa. The 
 nature and fertility of the soil determine the charac- 
 ter of the food of each country. Thus the main food 
 in Ireland is potatoes ; in Italy, cereals ; in Japan, rice ; 
 in Arabia, dates. Where vegetation is restricted, as in 
 Norway and Sweden, fish is the main food. In coun- 
 tries favored by climate and soil as well as by exten- 
 sive means of communication, as for instance the 
 United States or England, the choice of food is wider 
 and a diet of animal and vegetable food is general 
 even among the poor. Quantity, quality, or character 
 of the aliment of a people has, however, no bearing 
 upon the living standard so long as the food is ade- 
 quate to preserve the vitality of the individual. The 
 living standard of the Arabian is not lowered because 
 he subsists on dates, nor is the living standard of the 
 workingman in the United States raised because of his 
 more substantial and varied diet. At the lowest level 
 of existence life is centered upon the material wants 
 of the individual, but as the level rises the mental and 
 spiritual forces which actuate a people, as well as an 
 individual, determine the standard of life. 
 
 Both the wage and the requirements for physical ex- 
 istence may be lower in one place or country than in 
 another and yet the standard of living may be equal 
 if not higher. The white laborer in the South has no 
 
14 LABOR'S CRISIS 
 
 lower standard than the laborer in the North, and yet 
 not only is his wage lower, according to census reports, 
 but owing to the milder climate his housing is cruder, 
 his food less substantial, and his clothing of a lighter 
 and cheaper texture. The workingman in a small 
 town averages a smaller wage and has fewer require- 
 ments than the workingman in a large city, but his 
 standard of living is not lower; on the contrary, by 
 many it is considered to be higher. Evidently the 
 wage and the standard of living do not always run par- 
 allel, and the conclusion is also warranted that the wage 
 is not determined by the standard of living but by the 
 cost of living, or in other words by the purchasing 
 power of the wage. Aside from the cost of living, the 
 main wage factors are supply and demand and skill 
 and productiveness of labor. Tradition and custom 
 largely influence the wage, and they are also responsi- 
 ble for wage variations in different localities and in 
 closely allied trades and industries. 
 
 Another factor which enters into wage adjustments 
 is bargaining between employer and employee, but this 
 applies largely to the dealings of organized labor with 
 organized capital, and where collective bargaining op- 
 erates, the wage standard is subject to frequent fluc- 
 tuations. This factor is, however, largely controlled 
 by supply and demand, and the wage standard can- 
 not be lowered where work seeks the laborer, nor can it 
 be advanced where the laborer seeks work. 
 
CHARACTERISTICS OF CAPITAL AND 
 LABOR 
 
 Capital and labor, interdependent as they are, act as 
 two distinct and divergent elements, without any point 
 of close contact, without common aim or interest, 
 and often also without mutual sympathy. They are 
 nevertheless held together by the strongest ties, for 
 labor is dependent upon capital as the agency which 
 insures its existence. Capital, on the other hand, can 
 exercise power and be of value only in conjunction 
 with labor. The conservation of labor is as essential 
 for the preservation of capital as is the preservation 
 of capital for the conservation of labor. The basis of 
 this relationship is the wage of labor and the profit of 
 capital, two opposing interests which are the cause of 
 the eternal conflict between capital and labor. This 
 relationship is not regulated by any fixed law, tradi- 
 tion, or custom, but is mainly controlled by expediency, 
 which the varying economic conditions may impose 
 upon the one side or the other. It may also at times 
 be strongly influenced by outside sentiment and agen- 
 cies, or by causes which have only a remote bearing 
 upon the individual relationship of employer and em- 
 ployee, as when a sympathetic strike is declared with- 
 
 IS 
 
1 6 LABOR'S CRISIS 
 
 out any special grievance against the employer. The 
 intercourse between labor and capital is made all the 
 more complex because labor, being personal and hav- 
 ing individual responsibility, does not come into direct 
 contact with capital, which is impersonal and invis- 
 ible, delegating its powers to intermediaries of different 
 ranks, generally with limited authority and divided re- 
 sponsibility. As a consequence labor is often actu- 
 ated by distrust and suspicion and often also by re- 
 sentment. 
 
 To the toiler the wage is not merely a material me- 
 dium by which he is enabled to exist; it represents to 
 him a mighty power which controls his destiny and de- 
 termines whether he is to be spared the pains and hard- 
 ship of poverty or be doomed to a life of deprivation 
 and degradation. The wage is the source of his hope 
 and his despair, and all the human passions and im- 
 pulses are strongly aroused in him when this main fac- 
 tor of his life is in any way affected. The laborer is 
 strongly human, and the faults and merits, the vices 
 and virtues, and the likes and dislikes of human nature 
 all come into full play in the intercourse between labor 
 and capital. The laborer is above all temperamental 
 and impressionable, therefore particularly subject and 
 responsive to the influences of agitation concerning his 
 welfare. He is as responsive to considerate treatment 
 as he can be resentful and stirred over trivial griev- 
 ances. 
 
CAPITAL AND LABOR 17 
 
 Capital and labor form one operating element, but 
 with distinct functions, the one operating through the 
 intellectual powers and the other through the physical 
 powers. Neither could long remain dormant or sus- 
 pend its functions without destroying or endangering 
 the other's existence. Capital is restless and untiring ; 
 it can exist and grow only by venture and enterprise, 
 which create the opportunities for the development and 
 for the employment of labor in every part of the world. 
 Labor is its instrumentality, by means of which capi- 
 tal controls and commands every economic activity and 
 agency, including labor itself. Capital is actuated in 
 its operations and its ventures by great imaginative 
 power and far-reaching vision, and what may appear 
 to the uninitiated as a hazardous undertaking of capi- 
 tal will, in many instances, prove to be the creation of 
 clear reasoning coupled with remarkable foresight. 
 It transforms the desert into a garden by constructing 
 irrigation dams; it populates almost uninhabitable re- 
 gions by building railroads over every barrier; it 
 supplies and regulates existing wants by transporting 
 the excess of one country to fill the needs of another. 
 But its operations extend beyond this, for capital 
 creates and imposes upon the people new wants and 
 desires, and it makes things indispensable to-day which 
 but yesterday were unknown and superfluous. 
 
 In contrast to the unlimited opportimities and activi- 
 ties of capital, labor is circumscribed in its operations. 
 
i8 LABOR'S CRISIS 
 
 and its functions are confined within the narrow scope 
 of physical exertion, which is its only qualification and 
 its only activity. No matter how great the effort and 
 how valuable the service, the material result to the 
 laborer is expressed in terms of wage and not in terms 
 of wealth. It is only when the application of the in- 
 tellect becomes a strong factor in the performance of 
 his work that merit receives recognition and presents 
 to him opportunities to emerge from the rank and from 
 the limitations of the common laborer. The wage of- 
 fers, however, one marked advantage to the laborer in 
 its security and stability, for unlike capital and its in- 
 come the wage is not controlled by the wheel of chance 
 and it assumes no economic or speculative risk. It 
 virtually constitutes a first lien on income, as well as 
 on the principal of capital, and, no matter how great 
 the vicissitudes and the losses of the latter, the wage is 
 not rhaterially affected except by widespread indus- 
 trial depression. Physical strength forms the most 
 dependable and serviceable power and can be imme- 
 diately applied without resorting to any mechanical 
 medium. It always commands a market value and is 
 exchangeable for currency in every part of the world. 
 Unlike capital, physical power cannot be destroyed, 
 and it cannot materially lose its earning power except 
 when old age or physical disability overtakes the 
 laborer. 
 
LABOR NOT A COMMODITY 
 
 Labor is often called a commodity, and until re- 
 cently it was legally recognized as such by our courts, 
 although the very weakness of labor lies in the fact 
 that it possesses none of the characteristics and none 
 of the advantages of a commodity. Unlike a com- 
 modity, it does not lend itself to scientific distribution 
 or marketing. It cannot be manipulated by corner- 
 ing nor by concealing its oversupply with a view to 
 creating a fictitious scarcity or a fictitious price. Its 
 surplus can be reduced only by curtailing the working 
 time or by a slow process of absorption, unless it is 
 diverted into foreign channels by emigration, so as to 
 relieve congestion and restore stability of labor in the 
 home market. Labor and commodity are analogous 
 only in respect to the operation of the laws of supply 
 and demand, but even in this aspect the analogy does 
 not fit, for labor, above all, is a living force, exercis- 
 ing free will and power. Labor, except in slavery, 
 has no owner and determines its own fate. The laws 
 of supply and demand relating to labor are different 
 in spirit, in application, and in interpretation from the 
 laws relating to commodity ; they are modified and hu- 
 manized because they deal with a living force, 
 
 19 
 
20 LABOR'S CRISIS 
 
 Moreover, the mere fact that employment and remun- 
 eration of labor are subject to those laws, does not 
 warrant, even in a popular sense, the classification of 
 manual labor as a commodity. All hiiman activities 
 which serve as a means for a livelihood, and are em- 
 ployed for a remuneration, except when distinguished 
 by special merit and qualifications, come under the in- 
 fluence of the laws of supply and demand. This is 
 equally true of the service rendered by the lawyer, 
 physician, and engineer, as it is of the manual laborer. 
 Whether labor is characterized as a commodity or 
 as a human machine, and both terms are in common 
 use, the analogies are as inconsistent and illogical from 
 a figurative point of view as they are degrading and 
 ■>'icious when taken literally. They are degrading be- 
 cause they violate the dignity and affront the spirit of 
 labor. They tend to depreciate the accomplishment of 
 labor by reducing it to the level of a mechanical force 
 and inanimate matter. They are vicious because they 
 serve to convey a distorted and unreal picture of labor, 
 the most pronounced features of which are helplessness 
 and servitude. In the hands of the social agitator 
 such a picture serves as the most effective means of 
 sowing the seeds of dissatisfaction, imbuing labor with 
 an unshaken conviction that it is a tool and the slave of 
 capital and a long-sufifering victim to an unjust state 
 of society. Labor is not elevated nor improved by ex- 
 aggerating its condition; nor is the individual made 
 
LABOR NOT A COMMODITY 21 
 
 happier by intensifying discontent and creating a spirit 
 of resentment and rebellion against all social order. 
 
 It may seriously be questioned whether labor in this 
 generation may still be justly considered the stepchild 
 of society, generally abused and neglected, and there- 
 fore demanding special consideration. On the con- 
 trary, labor as a producing power shows symptoms of 
 becoming enervated and weakened from an excess of 
 attention and pampering, not only by those who are 
 championing its cause to further their own sordid ends, 
 but also by those who, though deeply interested in its 
 welfare, deal with its problems emotionally and not 
 with calm thought and judgment. Labor welfare work 
 is not always dictated by social justice, and it may even 
 come in conflict with it and seriously harm society. 
 
 The elevation of labor to a point where it will com- 
 mand general recognition, materially and socially, can 
 be permanently achieved only by a slow process of 
 evolution and education, and not by the propaganda 
 of political or professional agitators, nor by rev- 
 olutionary forces which, while they may bring tem- 
 porary and illusory advantages, eventually destroy 
 their own creations. All social progress, includ- 
 ing labor welfare, if it is to become permanently 
 established, must have its source and its force not 
 in mere popular sentiment and impulse but in the 
 awakening of a deep-rooted consciousness of right 
 and justice, and this is a moral movement of slow 
 
22 LABOR'S CRISIS 
 
 growth. Neither the Magna Charta nor the Bill of 
 Rights was a spontaneous creation. The people of 
 the United States, the land of justice and freedom, re- 
 quired a long period of education to arouse them to a 
 consciousness of the injustice, not to say the iniquity, 
 of slavery. Vital labor reforms are slow achievements 
 of a crystallized public sentiment and consciousness. 
 If labor laws do not spring from a profound convic- 
 tion of an existing social maladjustment, but serve 
 merely as a political expedient, they lose their force, 
 are disregarded, and eventually become obsolete. 
 
COMPARATIVE VALUE OF PHYSICAL 
 AND MENTAL EXERTION 
 
 Animal life can be sustained and preserved only by 
 physical exertion, which in man is directed by the men- 
 tal faculties. In the social and economic organiza- 
 tion of the human family physical and mental exer- 
 tion form two distinct elements resulting in manual 
 labor and mental work. Which of the two con- 
 tributes the larger share to the welfare of society and 
 to the production of wealth? This subject has at all 
 times been intensely discussed, and it has also served as 
 the framework for the socialistic theories expounded 
 by Karl Marx and his followers. Treated purely as 
 a biological question, it cannot be answered logically, 
 any more than can the question whether air is more 
 eessential to life than water. Reduced to economic 
 terms, it lends itself by a brief analysis to reasonable 
 deductions. The performance of manual labor mani- 
 fests itself in tangible form, it can be visualized, val- 
 ued, and measured ; whereas the operation of the intel- 
 lect can be conceived only through the agencies it ac- 
 tuates, and is judged by the resultant achievements. 
 Manual labor, owing to the visual manifestation of the 
 exertion, appeals to the imagination and excites popu- 
 
 23 
 
24 LABOR'S CRISIS 
 
 lar sympathy. The mental worker may " earn his 
 bread by the sweat of his brow," and his mental ex- 
 ertion may be as exhausting as the physical exertion 
 of the manual laborer, yet it will not inspire a pathetic 
 portrayal nor will it arouse sympathy. That physical 
 exertion is essential to self-preservation is a funda- 
 mental law, but without the aid of the intellectual pow- 
 ers human existence would be precarious, if at all 
 possible. It is the intellect which is endowed by 
 nature with creative, controlling, and dominating pow- 
 ers, by virtue of which it exercises authority, subjects 
 to its will all brute force, makes the forces of nature 
 serve the needs of man, and establishes law and order 
 in the human family. It is through the intellect that 
 physical exertion is lessened and that productive power 
 is vastly increased by invention and by applying scien- 
 tific methods and principles. It creates opportunities 
 for the performance of labor and for the interchange 
 of the products of labor, and establishes trade and com- 
 merce in the remotest part of the world. 
 
 In the economic struggle for life, labor is controlled 
 by the intellectual powers, and this natural subordina- 
 tion cannot be reversed any more than the operation 
 of the mind can be subordinated to the action of the 
 limb, except in a subconscious state. The mental pow- 
 ers which enter into the performance of manual labor 
 operate within a narrow field, and the opportunities 
 for their more extended application are limited ; hence 
 
PHYSICAL AND MENTAL EXERTION 25 
 
 they become mechanical in their operation. Nor can 
 labor exercise both functions without impairing the one 
 or the other, and particularly the mental, for the mind 
 relaxes under physical exertion. To relieve mental 
 strain, the brain worker tills the soil, chops wood, or 
 indulges in strenuous exercise, by which the mind's 
 activity is temporarily checked. The performance of 
 manual and mental labor are two distinct functions 
 which cannot be merged into one, nor can they be 
 effectively exercised at the same time. In other words, 
 the laborer is not qualified to assume the mental func- 
 tions of managing, supervising, and planning, and at 
 the same time to apply his physical exertion as a means 
 for support. His existence depends upon manual ex- 
 ertion. 
 
 Labor is also handicapped in the economic struggle 
 by competition with the mechanical powers, which 
 closely encroach upon the domain of labor and often 
 replace it. Wherever physical exertion is a factor, 
 its economic value is subjected to a comparative test 
 with the mechanical powers, and only by operating in 
 conjunction with the latter can labor retain its value 
 as a productive power. It follows that the contention 
 of labor that is the paramount factor in the production 
 of wealth, and is entitled to a large share of the profits 
 arising therefrom, is not supported in the actual opera- 
 tion of the economic laws. Four factors enter into 
 economiic enterprise: capital, labor, intellect, and me- 
 
26 LABOR'S CRISIS 
 
 chanical powers. The use of the latter is made possible 
 by the application of the intellect which is an instru- 
 mentality of capital and not of labor. The part which 
 mechanical powers play in the production of wealth, as 
 compared with labor's part, has received little atten- 
 tion and is entirely ignored by labor. Nevertheless 
 in competition with labor they far outrank the latter 
 in productive power and in stability. In many in- 
 stances, mechanical power can and does replace human 
 intelligence and alertness, as for instance in the auto- 
 matic signal system, which replaces the railroad flag- 
 man. Labor cannot consistently claim profits accru- 
 ing from agencies other than its own, even though the 
 agency be mechanical or impersonal, for they are in- 
 struments of capital and not of labor. To use a con- 
 crete illustration: A mining concern is enabled by 
 means of new devices or improved methods of opera- 
 tion to dispense with the greater part of its labor force, 
 and as a result the operating cost is largely decreased. 
 Labor was not a factor in this improvement, which 
 was detrimental to its interest by depriving many of 
 employment, and yet, on the theory of the more rad- 
 ical reformers, labor is entitled to the benefits of the 
 increased profit, even though the result is obtained by 
 the decreased performance of labor. The same prin- 
 ciple is involved in all industrial operations, and it 
 would seem obvious that labor itself does not deter- 
 mine profit. Profit, unless speculative, is determine4 
 
PHYSICAL AND MENTAL EXERTION 27 
 
 by skill of management, under which the available re- 
 sources and forces of an organization, including labor, 
 are properly coordinated and are efficiently applied and 
 controlled. However efficient labor and its control, 
 it will not insure success to an organization if the 
 management is deficient in other respects, for instance 
 in sound judgment in buying or selling or in extending 
 credits. 
 
 Whatever changes the institution of capital and labor 
 may undergo, it will always be actuated by the one fun- 
 damental purpose of securing material benefit, which 
 each of the two parties seeks to derive from their joint 
 operation. The relationship of the two parties cannot 
 be controlled by a system of labor democracy, which, 
 while it may level and democratize economic opportuni- 
 ties, cannot permanently equalize the proper use of 
 those opportunities nor the resulting achievements. A 
 democracy is based on equal rights, but in economic life 
 the rights and duties of employer and employee differ, 
 and an equality cannot be established as long as super- 
 vision and authority are essential in the operation of 
 labor and as long as the brain can achieve more than 
 muscle. 
 
 Vital as manual labor is to the existence of the hu- 
 man race, it cannot, for its own preservation, abolish 
 the economic relationship of employer and employee, 
 nor can it permanently release itself from the control 
 of capital and gain complete economic independence. 
 
28 LABOR'S CRISIS 
 
 It cannot successfully nor logically contest the superi- 
 ority of the intellect over muscle. Labor has to rely 
 upon ethical principles and upon the forces of social 
 justice to modify the condition under which it exists 
 by reason of its lower rank and of its inequality. La- 
 bor can promote its permanent betterment only with 
 the aid of public sentiment and by action of moral 
 laws. Public consciousness has been instrumental in 
 transforming the relationship of capital and labor into 
 a human institution, in which the former hardships 
 and disabilities of labor are no longer manifest, and 
 in which the welfare and the conservation of labor are 
 strong actuating factors. 
 
DEPLETION AND DETERIORATION 
 OF LABOR 
 
 An increasing scarcity and a lower productivity of 
 labor had become manifest throughout the United 
 States for some years prior to the outbreak of the 
 World War, causing an uninterrupted rise in the wage, 
 as well as in the cost of living, as can be clearly traced 
 by statistical data. The United States Bureau of La- 
 bor Statistics, in Bulletin 245 (published 1919), table 
 6, page 24, compares as follows under the union wage 
 and the cost of food for a period of eight years from 
 1907 to 1914, computed on a basis of 100 per cent, 
 for 1907. 
 
 Table I 
 
 
 Rates of wages 
 
 Full-time hours 
 
 Retail prices 
 
 
 per hour 
 
 per week 
 
 of food 
 
 1907 
 
 100 
 
 100 
 
 100 
 
 1908 
 
 1 01 
 
 100 
 
 103 
 
 1909 
 
 102 
 
 99 
 
 108 
 
 I9I0 
 
 lOS 
 
 99 
 
 113 
 
 191 1 
 
 107 
 
 98 
 
 112 
 
 I9I2 
 
 109 
 
 98 
 
 119 
 
 I9I3 
 
 III 
 
 97 
 
 122 
 
 I9I4 
 
 114 
 
 97 
 
 I2S 
 
 Omitting the three war years, 1915, 19 16, and 191 7, 
 which are included in the original,^ the increase from 
 
 1 In order to base the deductions upon normal pre-war condi- 
 
 29 
 
so LABOR'S CRISIS 
 
 1907 to 19 14 aggregates fourteen per cent, in the 
 union wage and twenty-five per cent, in the retail 
 price of food. During the same period the working 
 time of union labor averaged a reduction of three per 
 cent, a week. 
 
 The following tabulation is based on the summaries 
 of 1914, 1909, and 1904 relating to the manufacturing 
 industries of the United States, and was published in 
 19 1 7 by the Bureau of the Census in the Abstract of 
 the Census of Manufactures, 19 14 (published in 
 I9i7)> pages 17-18. 
 
 Table II 
 
 1914 igog 1904 
 
 Average number of 
 
 wage earners 7.036,337 6,615,046 5,468,383 
 
 Wages $ 4,078,332,433 $ 3,427,037,884 $ 2,6x0,444,953 
 
 Value of products. .$24,246,434,724 $20,672,057,870 $14,793,902,563 
 
 According to these data the average annual wage in 
 the above periods was respectively $580, $518, and 
 $477, and shows a total increase of twenty-two per 
 cent, in the ten years prior to the war. Incidentally 
 it may be pointed out here that in view of the fact that 
 the cost of food constitutes, according to estimates, 
 forty-three per cent, of the total expenditures in the 
 budget of the wage earner's family, the higher wage 
 could not have improved materially the economic con- 
 
 tions, statistics relating to the period of the war are purposely 
 omitted in the tables presented here. 
 
DEPLETION AND DETERIORATION 31 
 
 dition of the laborer, unless rent, clothes and other 
 necessary expenditures did not increase in cost during 
 the period of ten years prior to the war. 
 
 The Abstract of the Census of Manufactures, 191 4, 
 presents also in table i, page 16, comparative statis- 
 tical data of the wage, wage earners, and value of 
 product for a period of fifteen years, figured on a per- 
 centage basis, and is given here in abbreviated form. 
 
 Table III 
 
 Percentage of Increase 
 
 1909-1914 1904-1909 1889-1904 
 Average number of wage 
 
 earners 6.4 21.0 16.0 
 
 Wages 190 31-3 30jo 
 
 Value of products 17.3 397 29.7 
 
 The diminished rate of increase in the three factors 
 by which industrial growth is measured, namely, 
 amount of wage, number of wage earners, and value of 
 products, indicates clearly an industrial depression 
 during the period 1909-1914. Statistics are not avail- 
 able to establish the volume of the product of all the 
 manufacturing industries, but it may be safely assumed 
 that the percentage of the decline in rate of increase 
 during the period of 1909-1914 was greater in the 
 volume than in value of the product, inasmuch as the 
 increased cost of labor reflects itself in the value and 
 not in the volume of the product. 
 
 Table 3 does not offer any evidence of labor de- 
 
32 LABOR'S CRISIS 
 
 pletion, for although the rate of increase greatly dimin- 
 ished in the 1909-1914 periods, this condition may 
 be justly attributed to the industrial reaction. But if 
 the statistics of table i are analyzed in conjunction with 
 the statistics of table 3, we are presented with the 
 rather remarkable economic phenomenon of an in- 
 creasing wage coupled with an increasing cost of liv- 
 ing, in the face of an industrial depression, which un- 
 mistakably distinguished the two or three years pre- 
 ceding the outbreak of the war in 1914.^ 
 
 True to the reciprocal power which the wage and the 
 cost of living exert on each other, the rise of twenty- 
 five per cent, in the cost of food automatically forced 
 a compensative rise of twelve per cent, in the union 
 wages and twenty-one per cent, in the average of labor 
 in general. Neither can gain a decided or permanent 
 ascendancy over the other without unbalancing the 
 entire economic and social structure, for, if they were 
 to operate independently, the impossible condition 
 would be created under which the laborer would either 
 reach the point of starvation or become a capitalist 
 owing to the high purchasing value of the wage. 
 
 The statistical tabulations presented here do not, 
 as already pointed out, offer concrete evidence of labor 
 
 1 " By June, 1914, the industries of New York State were 
 feeling keenly the effects of the general industrial depression 
 which had been developing in the United States for over a year." 
 Department of Labor, State of New York, Special Bulletin 85, 
 p. I. 
 
DEPLETION AND DETERIORATION 33 
 
 depletion, but they do warrant certain deductions 
 strongly supporting this theory. The uninterrupted 
 advance in the price of food for a period of eight years 
 prior to the war cannot be attributed to a succession 
 of poor harvests, which was not the case; nor to cur- 
 rency depreciation or inflation, which did not manifest 
 itself in an upward price movement of other commodi- 
 ties ; but seems to have been due to an inadequate food 
 supply. The increasing shortage of farm labor has 
 been widely recognized for many years, and has been 
 attributed to the rapid growth of industrial towns at 
 the expense of rural districts. But in recent years the 
 industrial towns, notwithstanding their constantly in- 
 creasing population, have also given strong evidence of 
 gradual depletion of the labor reservoirs, not only in 
 the decreased supply, but also in the decreased produc- 
 tivity of labor. This phenomenon can be explained 
 only in the light of modern labor reforms and labor 
 regulations. The vast energies which have been with- 
 drawn from every field of labor in consequence of 
 child labor laws, of restricting female labor, of shorter 
 working days, of the increased number of holidays, 
 and, by no means the least, in consequence of the 
 greatly relaxed discipline and control over labor, have 
 greatly reduced the available supply of labor. This 
 condition has been manifest not only in the industries 
 where labor shortage, labor inefficiency, and low pro- 
 duction have been the general complaint, not only on 
 
34 LABOR'S CRISIS 
 
 the farms, where owing to labor shortage full advan- 
 tage cannot be taken of the opportunities for producing 
 more abundant food supplies to meet the normal de- 
 mand, but is also manifest in the home. There the 
 servant problem has become a serious domestic prob- 
 lem, affecting the family life in many respects, as for 
 instance the abandonment of the typically American 
 dwelling, with the privacy and exclusion it offers, for 
 the multi-family apartment house as a permanent home 
 for the family. The natural drift of labor is toward 
 employment offering a maximum wage and attractive 
 vrorking conditions and working hours. Hence an 
 acute labor shortage will first manifest itself and will 
 also become more pronounced in occupations which 
 do not offer those attractions, as farm and domestic 
 labor. 
 
 The labor question presents also a psychological 
 aspect which has a direct bearing on the supply and 
 on the productivity of labor. The performance of 
 labor for a livelihood is not a matter of choice, but is 
 impelled by necessity, and the greater the pressure of 
 need the harder the task of labor. The exertion of 
 energy in all animal life, including that of the human 
 being, is in response to want and necessity, and when 
 life can be maintained with little expenditure of en- 
 ergy, as in particularly favored climates, ease and in- 
 dolence, and not physical activity, are characteristic 
 of the people. The love of rest and ease is an ani- 
 
DEPLETION AND DETERIORATION 35 
 
 mal instinct, characteristic not only of the cattle in 
 pasture and of the beast in the jungle but also strongly- 
 inherent in the human being. When the pressure of 
 necessity is removed and the urgent wants are satisfied 
 with diminished efforts, the driving power of labor 
 also weakens as a consequence, unless it is supported 
 by some strong incentive, such as thrift or ambition, or 
 new desires and wants. But not all people, either wage 
 earners or others, possess the thrift or ambition to 
 provide for more than their immediate wants, and 
 the incentive for work is likely to be weakened if a 
 week's living is insured by the labor of five days. 
 With the greater demand for labor and with the higher 
 earnings and greater freedom of labor, the wage 
 earner is under less constraint and under less necessity 
 of working full time than heretofore, and any trivial 
 occasion or attraction, whether it be a circus parade 
 or the day and often days following a holiday, serves 
 in many instances as an excuse for shirking work. 
 The operation of many industries is temporarily im- 
 paired if not suspended on such occasions, and this evil 
 is generally recognized as an important factor in cur- 
 tailed production, as it is also a contributory cause of 
 labor shortage. It is probably a conservative estimate 
 that the number of absentees in all industrial plants 
 averages approximately four per cent.^ during the 
 
 1 Official statistical data are not available to establish the 
 average daily percentage of absent workers in all or in any of 
 
36 LABOR'S CRISIS 
 
 entire year, which is equivalent to a loss of 280,000 
 industrial workers, or $970^,000,000 in value of prod- 
 ucts. Every hour of leisure diverted from, labor either 
 reduces the production correspondingly or demands 
 additional man power to make good the time loss. 
 The observance of a single holiday by the industrial 
 workers in the United States is equivalent either to 
 the loss of labor power of 25,000 individuals for an 
 entire year or to a diminished production amounting 
 to $80,000,000. 
 
 Leaving out of consideration the abnormal labor 
 shortage as a result of the war, the facts presented here 
 warrant the conclusion that a gradual drainage of the 
 labor reservoirs had been in process for many years 
 prior to the war. Adjustment to peace conditions and 
 the consequent economic reactions can have only a 
 temporary effect upon the labor shortage, for with the 
 increasing power of labor to reduce its working time 
 and to restrict production the process of labor deple- 
 tion will continue. It is likely to become more acute 
 in view of the fact that prior to the World War the 
 labor supply in the United States had been replenished 
 
 the industries. The percentage given here is an estimate based 
 upon the pay rolls of several concerns and upon rough estimates 
 made by others. The percentage of absentees varies in the 
 different industries according to the type of labor employed, 
 and is particularly high in December. In some of the industrial 
 centers work is entirely suspended between Christmas and New 
 Year. 
 
DEPLETION AND DETERIORATION 37 
 
 by the constant inflow of immigration, which is Hkely 
 to be greatly restricted, if not prohibited, by the for- 
 eign nations as a measure of self-preservation and 
 with a view of conserving their own much depleted 
 man power. The possibility must also be considered 
 that newly created ideals and opportunities in the 
 European countries may attract the natives who had 
 emigrated to foreign lands, and that many of those 
 who have landed on the soil of the United States as 
 immigrants will depart as emigrants. Assuming, how- 
 ever, that immigrants will be attracted to the United 
 States in large numbers, restrictive measures will no 
 doubt be enacted to check it, in response to public 
 sentiment and to the pressure of organized labor. The 
 public attributes the spread of Radicalism in this coun- 
 try to the foreign population ; while labor unions ad- 
 vocate the restriction of immigration as the only means 
 of controlling the labor supply. 
 
 The labor shortage is not wholly confined within 
 the United States, and it is spreading to every country 
 where labor is beginning to assert itself and is demand- 
 ing and receiving political, economic, and social recog- 
 nition. Even in remote Oriental countries, as in 
 Japan, for instance, it is compelling the consideration 
 of radical labor reforms, with the probability of their 
 early enactment into law. The European upheaval is 
 not only changing the demarcation lines in the geo- 
 graphical map of the world ; it is not only revolution- 
 
38 LABOR'S CRISIS 
 
 izing the political institutions of the nations by basing 
 them on democratic if not on what have hitherto been 
 termed socialistic principles of government; but it is 
 also creating a new social era, in which the order of 
 society is being reversed, and those who were at the 
 bottom are becoming the ruling power wherever de- 
 mocracy is having its first test and trial. 
 
LABOR-SAVING INVENTIONS AND 
 LABOR SUPPLY 
 
 Acute labor shortage cannot be materially relieved 
 by new inventions nor by the more extensive applica- 
 tion of labor-saving machinery and devices, although 
 it is the popular belief that they tend to reduce the 
 demand for labor by supplanting it and by augment- 
 ing production. Labor-saving machinery by increas- 
 ing production reduces the cost of the product and 
 creates a larger demand and a wider market. The 
 demand for the product is stimulated and its market- 
 ing facilitated not only by the larger volume but also 
 by the greater speed of production. An article comes 
 into common use and ceases to be a luxury when it 
 meets the requirements of large production, low cost, 
 and speedy delivery. The power loom and the spin- 
 ning mule have not only increased the production and 
 reduced the cost of textile fabrics but they have also 
 caused a large increase in the demand for the fabric 
 as well as for textile labor. The application of me- 
 chanical power and devices in the process of printing 
 has, in proportion to the output, diminished the use 
 of man power, but in the aggregate it has enlarged 
 the demand for labor by largely increasing the use of 
 
 39 
 
40 LABOR'S CRISIS 
 
 the product. It is true that labor-saving machinery 
 does in many instances displace labor, but the surplus 
 is fully absorbed in the industries which are created 
 and expanded in consequence of the use of this ma- 
 chinery and the resultant lower cost of the product. 
 Moreover, the manufacture of the machinery and de- 
 vices themselves employs large forces of labor. Me- 
 chanical power in supplanting muscle makes vast de- 
 mands upon the supply of labor by offering increased 
 opportunities of employment in the workshops, in the 
 mines, in transportation, and in many of the trades 
 which it stimulates and creates. It tends to intensify 
 the demand for labor and not to relieve it. 
 
 It is equally a popular fallacy that the inadequate 
 supply of necessities, due to labor curtailment, can be 
 replenished and a normal production restored by in- 
 venting and developing mechanical devices. Inventive 
 geniuses and revolutionary mechanical inventions are 
 rare, and it takes much time to perfect inventions and 
 to secure their general adoption. Mechanical devices 
 already in use reach perfection in the course of time, 
 which does not suggest or admit further improvement. 
 For instance the sewing machine of the present time 
 does not differ materially from that in use fifty years 
 ago. The power loom reached the limit of its pro- 
 ductive capacity with the introduction of the Draper 
 Magazine loom about twenty-five years ago. The 
 principle of spinning yarn has not changed since the 
 
LABOR-SAVING INVENTIONS 41 
 
 invention of the spinning mttle in the latter part of the 
 eighteenth century, nor has its productive work been 
 greatly improved in the past fifty years. Minor me- 
 chanical inventions and improvements are constantly 
 being introduced, but none of them have been of suf- 
 ficient importance to affect the labor market or to offset 
 materially the declining productivity of labor. 
 
 The end of the nineteenth century marked a climax 
 not only of material and economic development and 
 of physical exertion of labor but also of mechanical 
 invention. Social progress has vastly multiplied wants 
 and demands until the agencies which serve it can no 
 longer keep pace with its rapid strides. 
 
THE MALTHUSIAN THEORY AS 
 APPLIED TO LABOR 
 
 The depletion of labor supply appears a serious 
 economic as well as social problem, because the de- 
 creased production does not result in a correspondingly 
 decreased consumption. On the contrary it is in- 
 creased, and the margin between the two is widened 
 in the course of time. Increased consumption is 
 caused not only by the geometrical increase of popu- 
 lation and by the natural trend of society to increase 
 its wants but also because labor under prosperity be- 
 comes a greater consumer and a smaller producer. 
 Increasing consumption and decreasing production cre- 
 ate a problem to which the Malthusian theory of in- 
 creasing density of population and decreasing means 
 of sustenance might be fittingly applied. However, 
 since the time of Malthus, and long before his time, 
 we have learned to apply to all problems relating to 
 the existence and welfare of human beings the laws 
 of compensation, the laws of adjustment, and the laws 
 of necessity. To make a mental survey of the pos- 
 sible effect upon society of the exhaustion of labor 
 power, we must take into account the following coun- 
 teracting factors: (i) curtailment of nonessential 
 
 43 
 
THE MALTHUSIAN THEORY 43 
 
 wants by a simpler mode of living; (2) economic use 
 and distribution of labor power; (3) the enormous 
 reserves of human energies, which can be awakened 
 and applied to productive occupation only by stress of 
 circumstances or by high ideals. 
 
 The simpler the life, the fewer the wants and the 
 less the opportunities for the employment of hired la- 
 bor. Nonessentials form the predominating and also 
 the fluctuating wants in civilized society, increasing or 
 decreasing in response -to economic conditions. Op- 
 portunities for the employment of labor are created not 
 so much by demands for necessities as by wants im- 
 posed by environment or acquired by habit and by ex- 
 ample. The almost complete dependence of labor upon 
 the production of nonessential commodities can be ap- 
 preciated if we take as an example the manufacture 
 of tobacco, which, according to the Abstract of the 
 Census of Manufactures, 1914 (pp. 31, 48, 222), 
 gives employment to 178,872 wage earners in the 
 United States alone, whereas only 124,052 wage earn- 
 ers are required in bakeries to supply the population 
 of the United States with bread and bakery products, 
 including crackers. What is generally classed as an 
 essential may become a nonessential product by the 
 purpose it serves. For instance, wearing apparel 
 when manufactured not solely for the needs of life but 
 in response to fashion or to individual fads, ceases to 
 be an essential product. The same is true of com. 
 
44 LABOR'S CRISIS 
 
 rye, and barley when they are used for distilling and 
 brewing, and of any other product which enters into 
 the manufacture of a nonessential commodity or serves 
 a nonessential purpose. It is obvious that if civilized 
 society were forced to revert to simpler life and habits, 
 the industries of the entire world would become para- 
 lyzed and the employment of hired labor would be re- 
 duced to a minimum. That the individual can dis- 
 pense, without affecting his well-being, with things 
 which add to his comfort, pleasure, and satisfaction, 
 may be safely assumed, and it is only when he is de- 
 prived of the essentials for sustaining life that suf- 
 fering and hardship result. 
 
 Continued labor shortage will also compel a more 
 economical use and distribution of labor. It will do 
 away with most of the domestic labor, which cannot 
 be economically utilized in a small family group. The 
 service of the cook or waitress has more economic labor 
 value in a public eating place than in the employ of 
 the family. The labor power of the family chauffeur 
 is largely wasted by many hours of inactivity, but ap- 
 plied to productive service this power becomes a vital 
 labor factor. Labor wastage caused by seasonal oc- 
 cupation in certain trades and industries which impose 
 upon the worker long spells of idleness, is preventable 
 by anticipating seasonal wants and providing uninter- 
 rupted employment. How much productive power is 
 wasted by strikes must be left to the imagination, but 
 
THE MALTHUSIAN THEORY 45 
 
 that compulsory arbitration of the issues between cap- 
 ital and labor is becoming a national necessity and that 
 it would greatly relieve labor shortage, cannot be rea- 
 sonably questioned. 
 
 When the depletion of the labor supply reaches an 
 acute stage, new sources of labor energies will be 
 created, which under normal conditions remain dor- 
 mant or are applied to non-muscular occupations. 
 The World War has demonstrated that most effective 
 labor power can be created from the residue, and we 
 might say, from the sediment of a population, after 
 the departure of the physically strongest and fittest, 
 upon whom the functions of labor devolve in times of 
 peace. It has demonstrated that this untrained force 
 can develop mighty powers, which can cope with the 
 enormous requirements of war and at the same time 
 supply the wants of the civilian population. 
 
 The war has also demonstrated the adaptability of 
 the human being to every condition if moved by ne- 
 cessity, by a high reward, or by high ideals, for only 
 under those conditions is the highest level reached in 
 the powers of endurance and resistance, in the applica- 
 tion of energy and human ingenuity, and in the prac- 
 tice of self-denial and self-reliance. These forces 
 come into full action in every human crisis, and prove 
 an aid and a safeguard in the struggle for existence, 
 by overcoming or removing danger, or by adjusting 
 the individual to the conditions which threaten his ex- 
 
46 LABOR'S CRISIS 
 
 istence. The same forces will assert themselves when, 
 according to the Malthusian theory, the soil and the 
 product of the soil shall no longer be adequate to sup- 
 port the congested population of the earth, or when la- 
 bor becomes so exhausted that its products prove in- 
 adequate to meet the normal requirements of society. 
 In either case, the cause itself will provide the antidote 
 and lead to the restoration of equilibrium between con- 
 sumption and production long before the existence of 
 society is seriously menaced. An acute labor short- 
 age will lessen the demand for labor, as well as for its 
 products; it will stimulate self-help and mutual help; 
 it will encourage self-denial and it will cultivate simpler 
 habits and simpler tastes by curtailing many of the 
 nonessentials in life which are acquired for the sake of 
 appearance or through the demands of fashion, habit, 
 and example. Moreover, when labor offers greater 
 earning opportunities with less effort and with fewer 
 hours of work than other vocations, its ranks will be 
 replenished from every walk of life. With the in- 
 centive of a high reward and under stress of individual 
 necessity, the clerk, the teacher, the actor, and even 
 the woman of fashion, apply their untrained hands 
 quite effectively to labor, whether it be in the produc- 
 tion of ammunition or the construction of ships or the 
 tilling of the soil, as the war has conclusively demon- 
 strated. That the pressure of consumption upon pro- 
 duction will give rise to new labor-saving inventions 
 
THE MALTHUSIAN THEORY 47 
 
 may be taken for granted, but the demand for man 
 power will not be lessened thereby, for the general 
 effect of labor-saving machinery on the supply of 
 labor, as has been already explained, is twofold, it 
 dislocates labor and it is also instrumental in providing 
 it with new employment. 
 
 After making full allowance for all the counteract- 
 ing forces which may mitigate the labor depletion, 
 the effect upon society must nevertheless prove serious, 
 for permanent labor contraction can be offset only by 
 a corresponding curtailment in the wants of the people 
 and by lowering the standard of living. A high stand- 
 ard of living cannot be long maintained when labor 
 becomes impotent and inadequate to support it. The 
 housing becomes inadequate and its physical upkeep 
 neglected; as regards clothing, quality is lowered, 
 choice is restricted, wear is prolonged. Comforts and 
 conveniences are sacrificed and order and cleanliness 
 are disregarded, in order to utilize the physical en- 
 ergies for more essential needs. ^Esthetic taste be- 
 comes neglected, and the beautiful and ornamental give 
 way to the simple and the crude. Under permanent 
 and pronounced labor contraction, luxuries of yester- 
 day will no longer become common wants of to-day, 
 nor will the requirements of society be merely matters 
 of individual choice and taste, but will be determined 
 by the disposition and ability of labor to satisfy them. 
 The penduliun swing pf J^terial and economic prog- 
 
48 LABOR'S CRISIS 
 
 ress will be retarded and will adjust itself to the weak- 
 ened powers which control its movement. Human 
 progress has been made possible through physical ex- 
 ertion, and when this vital force is weakened, retro- 
 gression begins and does not stop its downward course 
 until it reaches the plane corresponding with the cur- 
 tailed performance of labor. 
 
MAXIMUM EFFORT THE FOUNDATION 
 OF SOCIETY 
 
 Society rests on certain fundamental principles and 
 dernands above all else that each individual shall, for 
 his own preservation as well as for the preservation of 
 society, render the full measure of service for which 
 he is mentally and physically qualified. All accom- 
 plishment and attainment are based on the full utiliza- 
 tion and exertion of the powers with which the human 
 being is endowed. Retrogression and decadence are 
 the result of relaxed effort and, however abundant the 
 resources of a country or however prolific its soil, 
 stagnation and poverty will characterize, the people 
 and the country if the individual does not exert him- 
 self. With unstinted and. unrestricted labor even the 
 desert can be turned into a garden spot, and the people 
 are happy and contented though they labor to the limit 
 of physical endurance. " Labor if it were not neces- 
 sary to the existence would be indispensable to the 
 happiness of man." A primitive state of society may 
 be maintained on a minimum application of physical 
 and mental power, but the complex mechanism of a 
 civilized state demands maximum exertion, physical 
 
 as well as mental. 
 
 49 
 
50 LABOR'S CRISIS 
 
 The tenets of every religious belief and the laws of 
 every civilized land enjoin but one day of rest in a 
 Vi^eek's labor, and the one day of rest and the six days 
 of labor are embodied and emphasized in the Ten Com- 
 mandments. Although the weekly time division of 
 labor and of rest has been authoritatively established 
 from time immemorial, the daily hours of labor have 
 never in the past been restricted or regulated by canon 
 or by law ; they have been controlled and determined by 
 the sun, by the needs of the people, by custom, and by 
 geographical and climatic conditions. Fewer hours of 
 daily labor and less physical exertion are required to 
 maintain life in the tropical zones and in fertile regions 
 than in the temperate zones and in barren regions. 
 Daylight still determines and limits the time of agri- 
 cultural and pastoral labor, but with the introduction 
 of improved artificial light and the establishment of 
 factory labor in the latter part of the eighteenth cen- 
 tury, the restriction which nature imposed upon in- 
 door labor was removed, and the daily number of 
 hours of labor became largely an economic question 
 which entered into the cost of production. The 
 greater the number of hours of labor and the more 
 hours a manufacturing plant is operated, the lower 
 the cost of production; and keen competition set up 
 its own labor laws, in which the humane aspect re- 
 ceived little consideration. Labor welfare, labor con- 
 servation, labor efficiency, and the many social and 
 
MAXIMUM EFFORT 51 
 
 economic theories which are now being advanced ef- 
 fectively in favor of labor curtailment, did not then 
 carry the force to create a strong public sentiment for 
 improving labor conditions. The task which was im- 
 posed upon the laborer was determined by the limit 
 of human endurance and was made all the harder be- 
 cause of the inhuman living and working conditions. 
 The regular daily working time in the nineteenth 
 century was eleven to fourteen hours in most of the 
 industries, and this time schedule applied to man, 
 woman, and to the working child as well. Nor was 
 the strain of labor lessened with the introduction of 
 mechanical power and with the operation of labor- 
 saving machinery. The running of a sewing machine 
 is no less a strain on the operator than is the ap- 
 plication of the needle by hand. Human energy is no 
 longer the motive power of the loom, but the work 
 of the weaver is nevertheless intensified, not only by 
 operating a greater number of looms, and by the more 
 complex construction and operation of the loom, but 
 also by the physical environment under which he or 
 she labors. Mechanical power and devices have in- 
 creased productiveness of factory work and, while 
 they lessen the demands upon human muscle, they 
 make increased demands upon vigilance and alertness, 
 and the nervous strain is all the greater in consequence. 
 The monotony of labor resulting from the operating 
 of power machinery and from specialization of labor 
 
52 LABOR'S CRISIS 
 
 increases the task and the tedium of the long working- 
 day. The laws of nature set certain restrictions upon 
 the performance of labor, for when it is operated to 
 the point of exhaustion it has reached the extreme 
 limit of maximum labor, and it ceases to be a social 
 advantage or an economic gain. 
 
 A balanced operation of labor, marked neither by 
 excessive nor by inadequate daily work — both con- 
 stitute social evils — can be determined by the resultant 
 efficiency, which in turn is reflected in the production. 
 Where increased efficiency, as the result of the shorter 
 working-day, stimulates production and offsets the 
 decreased operating time, labor curtailment proves a 
 benefit to all concerned, including the state. On the 
 other hand, labor curtailment becomes a pronounced 
 evil to society, even though it may prove a benefit to 
 labor, when production is seriously affected and in- 
 creased efficiency is no longer a material factor in 
 stimulating the production to offset the time loss. 
 When that condition arises, and the demand for the 
 necessities of life exceeds the supply, the entire social 
 and economic organization becomes strained and dis- 
 torted, and a lowering in the standard of living is one 
 of the inevitable consequences. 
 
ECONOMIC EFFECT OF CURTAILED LABOR 
 
 While the working-day of eleven to fourteen hours 
 seriously affected the well-bejng of the laborer, it did 
 not promote the interest of the manufacturer, as is the 
 prevailing theory. The vast industrial development 
 of the nineteenth century increased the struggle of the 
 producer for his economic existence, for the greater 
 the production and the productive facilities, the keener 
 the competition and the lower the profit. Whereas 
 the long working-day creates an abundance of labor 
 and its products, the short working-day contracts both, 
 with the result that competition is lessened, profits are 
 raised, and the consumer is taxed for both the increased 
 leisure of the laborer and the increased profits of the 
 producer. 
 
 The labor reforms which distinguished the latter 
 part of the nineteenth century further curtailed the 
 long working-day and resulted in establishing in some 
 industries a nine-hour and in others a ten-hour work- 
 ing-day. Under the persistent pressure of organized 
 labor, the eight-hour working-day has, however, made 
 rapid progress in recent years and, besides being recog- 
 nized in all Federal, State, and Municipal departments, 
 it is being forced upon all industries by means of 
 
 S3 
 
54 LABOR'S CRISIS 
 
 strikes or threats of strikes. The movement has the 
 active support of some of the leading statesmen and 
 social reformers, on the theory that a standard eight- 
 hour working-day is essential in the interest of health, 
 life, and contentment of the laborer. Moreover it is 
 contended that a shorter working-day will not only 
 benefit the laborer physically, mentally, and morally, 
 but that it will promote higher efficiency, and that more 
 intensive work will compensate reduced working time. 
 
 Labor scarcity invests labor with greater power and 
 the demands of labor multiply with the weakened re- 
 sistance on the part of the employer, who is reimbursed 
 for the additional cost by raising the selling price of 
 the product. Not that all the demands are unjust, 
 but many spring from the prevailing widespread labor 
 unrest, which breeds unreasonable demands. What 
 is popularly termed " labor unrest " is translating into 
 action labor's awakened consciousness of power and 
 importance, and is likely to result in revolutionizing 
 the entire social fabric and placing it upon new po- 
 litical and economic principles. 
 
 The labor reforms of the past four decades have 
 caused an enormous contraction of the productive 
 powers and of the supply of labor. The economic re- 
 sults due to the displacement of child labor, restriction 
 upon woman labor, and curtailment of hours of daily 
 labor reflect themselves in higher wages, labor scarcity, 
 decreased production, and enhanced cost of produc- 
 
CURTAILED LABOR 55 
 
 tion. The effect of the child labor laws must in the 
 absence of complete statistical data be left to conjec- 
 ture. That it greatly increased and strained the de- 
 , mand for adult labor may be reasonably deduced from 
 the fact that, according to the Abstract of the Census 
 of Manufactures, 1914 (published in 1917), only 121,- 
 773 children under the age of sixteen were employed 
 in all the manufacturing industries of the United 
 States, whereas until the latter part of the nineteenth 
 century the employment of children was common in 
 all industries. 
 
 The agitation for a forty- four-hour week, and even 
 for one of thirty hours, is rapidly gaining ground in 
 the United States and in England, and not incon- 
 sistently, for the same reasons which are advanced 
 for an eight-hour day can with equal force be applied 
 to a still shorter working-day or working week. The 
 far-reaching economic as well as social effect of a 
 standard eight-hour work-day and Saturday half holi- 
 day can be visualized if the fact is taken into con- 
 sideration that two hours less of daily labor are equiva- 
 lent to the loss of more than 1,400,000 laborers in the 
 manufacturing industries, which represent only the 
 smaller part of the labor force of the United States. 
 If to the 7,036,337 wage earners in the manufacturing 
 industries in 1914 (see Table 2, page 30) are added 
 the 13,624,027 engaged in 1910^ in agriculture, 
 1 United States Census Report of 1910, vol. iv, p. 40. 
 
56 LABOR'S CRISIS 
 
 forestry, animal husbandry, and extraction of miner- 
 als, or a total of 20,660,364 wage earners, the dif- 
 ference between an eight- and a ten-hour working-day 
 is equivalent to a loss of 4,132,073 workers; while if a 
 standard forty-hour week should prevail, as is being 
 advocated in some industries, the loss as compared 
 with a six-hour week would equal 6,886,788. Con- 
 verted into money value, the reduction of the daily 
 hours of labor from ten to eight is equivalent to a 
 shrinkage in the products of the manufacturing indus- 
 tries of the United States approximating $4,800,- 
 000,000 annually, or twenty per cent, of the total value 
 of the manufactured products in 19 14, which amounted 
 to $24,246,434,724 (see Table 2, page 30). 
 
 The shorter workday, according to the theory of its 
 supporters, results in increased labor productivity and 
 counteracts the effects of curtailed time. But this 
 must be accepted with considerable reservation, for 
 the further removed the worker is from the long work- 
 day which previously prevailed, the less is the gain in 
 efficiency and productivity by further reduction of 
 hours. The average laborer will demonstrate greater 
 productivity in a ten- than in a twelve-hour workday, 
 but the same proportionate results are not obtained in 
 nine hours and still less in eight. ^ On the contrary, 
 
 1 National Industrial Conference Board, Research Report No. 
 12 '{Hours of Work as Related to Output and Health of Work- 
 ers—Wool Manufacturers), Boston, 1918, page 20, contains the 
 
CURTAILED LABOR 57 
 
 reduction of working time beyond a certain normal is 
 likely to promote inefficiency, and this efifect can be 
 observed in any individual performing only a short 
 day's work, whether physical or mental. The human 
 machine, like the mechanical machine, produces the 
 best results, not when operated below its normal but 
 at its normal capacity. Moreover, efficiency is largely 
 an individual characteristic; some relax or become ex- 
 following conclusions regarding the effect of the S4-hour week 
 on the woolen industry: 
 
 " In the case of the S4-hour group a much broader basis of 
 experience is available. This group includes 68 establishments 
 and over S7,ooo employees. Six establishments reported that 
 output was increased; 7 others that it was maintained; 55 that 
 it was decreased. The 13 establishments maintaining or increas- 
 ing production, however, included less than 7% of the total 
 number of workers in this group. The results indicate that 
 the S4-hour week has unquestionably placed a burden on the 
 industry from a production standpoint. The fact that so many 
 establishments report a decrease in output, makes it reasonably 
 clear that the S4-hour week does not give maximum output." 
 
 The effect of the shorter days on the metal manufacturing 
 industries is shown in the following report issued by the Na- 
 tional Industrial Conference Board and published in the press 
 on June 30th, 1919 : " It was possible for a considerable propor- 
 tion of establishments to maintain production on a schedule of 
 fifty hours a week, but that such schedule could not be uni- 
 versally adopted by these industries without some loss of pro- 
 duction." Of the forty-eight-hour week the report said : " If 
 both management and workers could actively cooperate, such a 
 week might prove practicable in a larger number of establish- 
 ments than is now the case. But unless such cooperation is 
 secured there can be little question that the general adoption 
 of a forty-eight hour-week in the metal trades would involve 
 a serious economic loss to the nation." 
 
S8 LABOR'S CRISIS 
 
 hausted after a few hours of labor, others can main- 
 tain it under all normal working conditions. It is a 
 matter of public record that in the operation of the 
 war industries, including ship-building, increased pro- 
 duction depended on increasing working time beyond 
 the prescribed eight-hour day, and as a result, " over- 
 time " with an inflated wage became an established 
 feature and a national necessity. Practical experience 
 in this instance has conclusively demonstrated that 
 eight hours will not equal nine hours, much less ten 
 hours of work, except in certain industries which im- 
 pose great strain, and what could not be accomplished 
 under the stimulus of the war spirit is even less likely 
 to take place under normal conditions. 
 
 Labor efficiency is not generally manifest after a 
 day of rest; on the contrary, in many of the manufac- 
 turing industries Monday or the day following a holi- 
 day is considered the poorest productive day in the 
 week. The theory of increased working efficiency by 
 reason of reduced daily hours of labor, receives sup- 
 port only in certain special industries and under cer- 
 tain conditions. Decreased efficiency becomes a ma- 
 terial factor when physical endurance is weakened, and 
 this condition is influenced not only by time but more 
 by the nature of the work, by the working environ- 
 ment, and by the living conditions of the laborer. 
 Mere fatigue, however, unless it reaches a state of 
 exhaustion, does not seriously affect efficiency, for will 
 
CURTAILED LABOR 59 
 
 power and endurance stimulate the energies which may 
 become temporarily relaxed by fatigue. Without will 
 power and endurance, individual labor efficiency re- 
 mains on a low level, notwithstanding the shorter 
 workday. Some occupations involve, however, great 
 physical and mental strain, and when an overstrained 
 condition of mind or body is reached in the course of 
 a day's work efficiency begins to lessen. The effect of 
 the difference in the degree of strain and exertion to 
 which individual workers are subjected is clearly illus- 
 trated by the personnel of a railroad train, the engineer 
 and fireman of which will in the course of their day's 
 work reach a point of physical exhaustion long before 
 the conductor or brakeman feels the effect of his work. 
 An eight-hour workday may be reasonable and neces- 
 sary in the one case, but in the other seems entirely 
 unwarranted from the standpoint of physical exhaus- 
 tion. The needle worker in the crowded workshop, 
 whether a machine or hand operator, will become ex- 
 hausted and lose in efficiency with fewer hours of 
 daily labor than an outdoor laborer, whether a farmer, 
 bricklayer, or street-cleaner. A standard workday 
 does not, however, differentiate between vocations 
 which, in the interest of health and efficiency, may de- 
 mand a short day's work, and those in which a longer 
 day's work can be performed without apparent detri- 
 ment to health and efficiency. 
 
 In most of the industries affected by an eight-hour 
 
6o LABOR'S CRISIS 
 
 limit, increased efficiency is a negligible factor, and 
 either an increased pay roll or a decreased production 
 nearly proportionate to the decreased number of work- 
 ing hours has been the economic result. To offer a 
 concrete example : After the enactment of the Fe- 
 male Labor Law in the State of New York, the textile 
 mills operating looms with female weavers suffered a 
 loss in production nearly proportionate to the cur- 
 tailed operating time. In order to restore the pro- 
 duction, male weavers had to replace female weavers 
 wherever practicable, or the looms as well as the fe- 
 male weavers had to be increased in number in the ratio 
 of the decreased operating time. In many industries 
 speed and efficiency of the machine is the controlling 
 factor of production, which cannot be increased by 
 more intensive work by the operator. Moreover, in- 
 tensive labor performed in a short workday, demand- 
 ing maximum effort and exertion, may prove as detri- 
 mental to the health of the operator as relaxed labor 
 in a long workday. 
 
 Irrespective of efficiency, which is determined by a 
 number of factors, it is generally recognized that the 
 workday of the manual laborer should be neither so 
 long as to endanger his welfare nor so short as to en- 
 danger common welfare. As already pointed out, the 
 exertion and strain of labor varies greatly according 
 to the character of the occupation, and hence cannot 
 be standardized, except as to specific occupations. A 
 
CURTAILED LABOR 6i 
 
 standard workday arbitrarily applied to all labor ir- 
 respective of exertion and of sex, does not seem logical, 
 nor does it entirely meet the humane aspect. If the 
 daily hours of labor are to be influenced solely by 
 humane principles, the workday should discriminate, 
 for instance, between the coal miner and the plumber 
 or house painter. The work of the former involves 
 not only greater exertion than that of the latter, but 
 also greater danger to health and life, not considering 
 the fact that the work is performed under the surface 
 of the earth and under unnatural surroundings. In- 
 stead of a basic workday for all labor, it would seem 
 more just that the character of the work shall differ- 
 entiate and determine the daily working hours, con- 
 sistent with the welfare of the laborer and of society. 
 
 Where labor is abundant and the maximum utiliza- 
 tion of the mechanical equipment as well as maximum 
 production are the main factors of economic operation, 
 a standard six-hour labor day, with full pay, may offer 
 decided advantages over the eight-hour day to the em- 
 ployer as well as to the employee. It permits the em- 
 ployment of two shifts of labor, without resorting to 
 night work ; the one working from 7 a. m. to i p. m. 
 and the other from i p. m. to 7 p. m. The application 
 of individual human energy is lessened thereby by 
 twenty-five per cent., whereas the operation of the 
 mechanical power is increased fifty per cent. While 
 the cost of labor per day for two shifts with full pay 
 
62 LABOR'S CRISIS 
 
 is doubled, production under twelve hours' operation of 
 the plant is increased fifty per cent, and overhead 
 charges are decreased thirty-three and a third per cent. 
 The higher cost of labor under a six-hour workday is 
 offset: (a) by increasing the operation and use of the 
 mechanical power; (b) by decreasing the percentage 
 of overhead charges; (c) by the additional profit from 
 the increased volume of business. In some occupa- 
 tions higher labor efficiency will be attained under a 
 six-hour than under an eight-hour workday. Whether 
 the plant is being operated eight or twelve hours a 
 day, or whether its production is fifty per cent, below 
 the normal, the principal overhead charges, as interest 
 on the capital investment, taxes, power and clerical 
 salaries remain virtually the sarne. Just as the cost 
 of a commodity materially increases through curtailed 
 production, so it decreases in the same ratio through 
 increased production. A basic six-hour labor day can- 
 not, however, prove an economic advantage unless an 
 ample supply of labor permits the employment of two 
 shifts and production is thereby increased fifty per 
 cent. It may benefit an individual concern even where 
 labor is scarce, by attracting it from industries in 
 which a longer workday is operative. This advan- 
 tage, however, ceases if a six-hour day is adopted by 
 other industries in the same locality, i 
 
 The present contraction in the world's production 
 is due not only to relaxed human exertion but also to 
 
CURTAILED LABOR 63 
 
 relaxed mechanical power, which remains inactive and 
 unproductive whenever and wherever human labor 
 relaxes. Unlike human labor, mechanical power can- 
 not attain higher efficiency as a result of curtailed op- 
 erating time. On the contrary, mechanical power 
 demonstrates its highest economic efificiency and value 
 under maximum operation. 
 
CAN REDUCED HOURS ADVANCE THE WEL- 
 FARE OF LABOR AND OF SOCIETY? 
 
 The advocates of the short workday do not confine 
 themselves to economic reasons for the support of this 
 movement, but they also base it upon moral standards, 
 or, to be more specific, they urge it in the interest of 
 the moral and physical betterment of the laborer as 
 well as to promote his contentment. Under this doc- 
 trine of a new sociology, which entirely reverses the 
 fundamental principles of society, a shorter day's work, 
 and not the maximum individual effort and service 
 conducive to life and health, is demanded, not only in 
 the interest of labor but also in the interest of society. 
 Eight hours of daily work have been arbitrarily fixed 
 as the limit beyond which it is contended the moral 
 and physical betterment of the individual laborer is 
 retarded, his efficiency impaired, and his contentment 
 lessened. Contentment is, however, a matter of in- 
 dividual temperament, and a shorter labor day will not 
 create nor develop this characteristic. Some are con- 
 tented and happy under a ten-hour workday, provided 
 their wage permits them to lead a decent existence, 
 whereas others are discontented and rebellious, no mat- 
 ter how short the day's labor or how large the wage. 
 
 64 
 
REDUCED HOURS 65 
 
 Evidently the promised contentment of labor as a 
 result of the eight-hour day proved of very short dura- 
 tion, for a further reduction of working time to a 
 forty-four-hour week basis is being pressed with all 
 the powers which organized labor can command, and 
 in some industries demands are being made for a 
 thirty-hour week. It is needless to point out that the 
 time difference will cause an additional tax upon so- 
 ciety in the form of increased cost of living as a re- 
 sult of the reduced quantity and the higher cost of 
 production. 
 
 Reduced hours of labor not only deplete the sup- 
 ply of labor but the supply of every commodity, with 
 the result that the public, including the laborer him- 
 self, is burdened with an inflated cost of living. Cur- 
 tailed production more than a higher wage is re- 
 sponsible for the high cost of commodities, for a plant 
 which reduces its output below its normal equipment 
 and capital facilities, either has to operate at a loss 
 or to increase largely the rate of profit, the latter be- 
 ing further encouraged by the lessened competition. 
 When the selling price of a product is based upon a 
 low production, and in addition upon a higher wage, 
 a higher cost of operation and maintenance, and a 
 higher rate of profit, an inflated cost to the consumer 
 becomes inevitable, and the public begins to feel the 
 pinch of the high cost of living. 
 
 A most critical state of inflation is created when the 
 
66 LABOR'S CRISIS 
 
 curtailed production is inadequate to meet the normal 
 requirements of the people and when competitive buy- 
 ing operates in place of competitive selling, for then 
 the inflated cost of living goes on unchecked and be- 
 comes a most serious economic and social problem, 
 which becomes burdensome even to those who are in- 
 strumental in creating it. 
 
 Much stress is placed by the advocates of a short 
 workday upon intensive labor, which it is claimed re- 
 sults from lessened hours and increases the produc- 
 tivity of labor. The power of intensive work is, 
 however, an individual and temperamental character- 
 istic, although under a strong stimulus or incentive the 
 average human being is capable of intensifying his 
 efforts, but with frequent relapses, which as a rule off- 
 set the gain and produce an average normal expenditure 
 of energies for a given period. Steady work main- 
 tained at normal energy is more valuable, so far as 
 service and productivity are concerned, then intensive 
 work spasmodically performed imder high pressure. 
 Intensive work is neither an economic nor a social 
 benefit, and if maintained for a long period may im- 
 pair the health and shorten the life of the worker. 
 As in the power engine, the economic value of labor 
 is measured by the total efficient and sustained service 
 in a term of years and not by the amount of energy 
 temporarily applied under certain conditions. 
 
 The laborer is also supposed to require more leisure 
 
REDUCED HOURS 67 
 
 to improve his home life and afford himself more op- 
 portunity for intellectual improvement. But the op- 
 posite could be maintained with equal force, for not 
 increased leisure but steady occupation is a safe moral 
 guardian. The average laborer does not differ in 
 character and disposition from other human beings, 
 and the increased leisure is as likely to tempt him to 
 idleness or to frivolous and undesirable diversion as 
 to be applied to self-improvement. Those vi^ho desire 
 to elevate their family life and themselves will do so 
 whether their day's work consists of eight, nine, or 
 ten hours. Concrete evidence has never been pre- 
 sented to prove that the eight-hour laborer is morally, 
 mentally, or physically of a higher type, nor that his 
 family is on a higher level than that of the nine-hour 
 laborer, provided the wage is the same. The store- 
 keeper and the clerk, as well as many of those engaged 
 in business and in the professions, work more than 
 eight hours a day, but it cannot be said that they are 
 on a lower plane morally, mentally, or physically, than 
 those performing a shorter day's work. 
 
 The industrial development of the last century was 
 responsible for many social evils, not the least of which 
 was the twelve- to fourteen-hour workday, but it does 
 not follow that the other extreme of reducing the 
 hours of labor to a forty-four-hour week, or even to 
 an eight-hour day, regardless of the exertion which the 
 labor involves, will prove a blessing to society or a 
 
68 LABOR'S CRISIS 
 
 permanent benefit to labor. When curtailed working 
 time ceases to be a factor of increased efficiency, it is 
 no longer a benefit but an injury to society. 
 
 Stripped of abstract theories and reduced to a prac- 
 tical problem, the following concrete results of cur- 
 tailment of labor seem to be clearly established : 
 
 1. Increased scarcity of labor, 
 
 2. Decreased production, 
 
 3. Increased cost of labor and of production, 
 
 4. Higher cost of living. 
 
 Existing economic and labor conditions show that 
 the greatly reduced working time has not developed 
 higher labor efficiency nor produced greater labor con- 
 tentment nor reduced labor unrest, but has produced 
 the opposite effect. Decreased production must also 
 lead to decreased consumption, for a wide gap cannot 
 exist between them, and a decided contraction in the 
 one will force the same upon the other. The factor 
 which strongly influences both production and con- 
 sumption, or what is termed supply and demand, is 
 the cost of the product, and, barring temporary ab- 
 normal conditions, consumption and demand are stimu- 
 lated by a low cost and are retarded by a high cost of 
 the product. 
 
 The curtailment of the time of labor presents a 
 logical and comprehensive policy in the interest of 
 
REDUCED HOURS 69 
 
 labor and of far-reaching economic and social conse- 
 quence to the general public. By reducing the day's 
 work the supply and the wage of labor are more ef- 
 fectively controlled and the demand for labor is greatly 
 stimulated. Labor congestion is lessened in times of 
 depression and labor scarcity increased in times of 
 recovery. It enhances the power and the influence of 
 labor, for the greater the scarcity of labor the more 
 effectively can labor command recognition and the 
 more arbitrary and the more numerous becomes its 
 demands. 
 
 Power exercised by those who formerly had to bow 
 to it and were oppressed by it, is rarely distinguished 
 by moderation or consideration. It usually degener- 
 ates into a rule of despotism, serving only the interest 
 of a particular class, regardless of its evil conse- 
 quences upon others. It is not necessary to refer to 
 the French Revolution for an example, for the present- 
 day condition in most of the European countries offer 
 a vivid illustration of the state of society controlled 
 politically and economically by the working class. 
 
 While the curtailment of working time increases the 
 demand for labor and also increases the wage, the 
 advantages, so far as the individual laborer is con- 
 cerned, are nevertheless in many respects delusive, for 
 the high cost of living weighs heavily on him also, not- 
 withstanding his higher wage. Whatever the wage 
 and the standard working time, the gost of living will 
 
70 LABOR'S CRISIS 
 
 adjust itself to the same basis, for in the race between 
 the wage and the cost of living neither can gain a 
 permanent lead. It is only by performing additional 
 work beyond the standard workday, or in other words 
 by increased efforts, that the laborer can gain an eco- 
 nomic advantage over the higher cost of living. Com- 
 mon welfare is not promoted nor can the economic con- 
 dition of the individual laborer be permanently im- 
 proved by reduced effort or by requiring two to ac- 
 complish the work of one. An artificially created eco- 
 nomic condition which stimulates the demand for la- 
 bor by curtailing and restricting individual effort vio- 
 lates the most vital social and economic principles, for 
 the human family can progress to a higher level only 
 by maximum and not by minimum exertion. 
 
COST OF LIVING SUBJECT TO PSYCHO- 
 LOGICAL INFLUENCES 
 
 Psychological influences play a very important 
 part in determining not only supply and demand and 
 the cost of living but also the action and policy of 
 producer and consumer. Fear of competition! and 
 eagerness to expand and to establish new business are 
 powerful factors in restraining excessive profits and 
 violent price fluctuations. The average retail price 
 of food, as shown in table i, page 29, does not in- 
 dicate an advance of over seven per cent, in any one 
 of the eight years, and the total advance for the entire 
 period was twenty-five per cent., or an average of a 
 little over three per cent. Price fluctuations in manu- 
 factured products move within an even narrower 
 range, and, according to " Dun's Index Number," 
 published by Dun's Mercantile Agency, the total in- 
 crease from 1905 to 1914 amounted to eleven per 
 cent, in the price of clothing and only to a fraction 
 of one per cent, in the price of metals. Price stability 
 is under normal circumstances characteristic of most 
 of the finished staple products, and, while the profit 
 may vary, the price remains fixed. For instance, the 
 
 71 
 
72 LABOR'S CRISIS 
 
 retail price of shoes, hats, collars, and shirts, is rarely 
 disturbed, except under abnormal economic conditions. 
 A complete economic revolution, however, takes place 
 when demand exceeds supply and consumer and mer- 
 chant become alarmed at the difficulty and uncertainty 
 of securing the needed supplies. Whereas fear and 
 uncertainty of finding a market for his product im- 
 pose discretion and moderation upon the producer, the 
 opposite effect is produced when the consumer, alarmed 
 by the existing scarcity of goods, attempts to cover 
 his wants and thereby still further aggravates the evil 
 of a deranged economic condition. The more pressing 
 his needs, the higher mount prices and profits and the 
 greater also the temptation of hoarding and of an- 
 ticipating ftiture wants. 
 
 It should be borne in mind that the economic balance 
 necessary to regulate supply and demand and to main- 
 tain economic normality, is not at the point where the 
 two are equal but where the supply is adequate to 
 meet the normal demands without friction and dis- 
 turbance. In other words production must exceed 
 and anticipate consumption and take into account the 
 time required for the transportation and distribution 
 of the product and the maintenance of the reserve sup- 
 ply, which must always be available to satisfy imme- 
 diate needs. The supply of daily bread cannot wait 
 for the milling and transporting of flour, nor can the 
 
COST OF LIVING 73 
 
 individual shivering from cold wait for the manufac- 
 ture of winter clothes. The margin of safety lies in 
 the reserve supply available for immediate consump- 
 tion, and the closer consumption comes to production 
 the more serious the consequence if a depleted supply 
 of goods becomes manifest. The reserve supply acts 
 as the balance wheel in the operation of supply and 
 demand, and, when that becomes affected by inade- 
 quate production, the entire economic machinery is 
 thrown out of gear. 
 
 The whole world, including countries not directly 
 affected by the war, is suffering from a depleted re- 
 serve of the necessary commodities and from a high 
 cost of living, solely as the result of a universally im- 
 paired and weakened productive power. The reserve 
 supplies have been completely drained by the vast de- 
 mands made upon them during the period of the 
 war and by the diversion of the man power from 
 productive to destructive occupation. They cannot be 
 replenished nor can production be speeded up by the 
 persistent policy of labor of enjoying more and more 
 leisure and of resorting to widespread strikes to en- 
 force this policy. Political and legislative action can- 
 not remedy the evil which threatens to reduce society 
 to a primitive state, nor can it create abundance where 
 want exists owing to the impaired functions of labor. 
 
 Economic balance and normality will be restoredl 
 
74 LABOR'S CRISIS 
 
 when labor awakens from its dream of a new Utopia 
 and realizes that its own welfare is closely linked with 
 the welfare of society and that it cannot escape the 
 consequence of an economic policy based upon the 
 principle of maximum return and minimum exertion. 
 
INFLATED COST OF LIVING DUE TO 
 CONTRACTION OF LABOR 
 
 Whereas psychological influences act as a stimulus 
 to the inflation of prices, the rising cost of living is 
 primarily due to economic pressure, which gains in 
 force as the disparity between supply and demand in- 
 creases. Reduced production resulting from cur- 
 tailed labor sets a number of factors in action, each 
 of which adds to the cost of production and has a 
 threefold effect on the cost of labor. It increases the 
 operating cost of labor in proportion to the decreased 
 production; it increases the cost of piece and hour 
 work to equalize the reduced working opportunities; 
 and it raises the wage standard as a result of the 
 higher cost of living. A rising cost of commodities 
 also compounds profits unless the rate of profit is 
 proportionately reduced. An advance of one hundred 
 per cent, in the seUing price of an article requires a 
 reduction of fifty per cent, in the rate of profit if the 
 amount of the latter is not to be increased. But in 
 the face of an inflated business expense and an in- 
 flated living cost, the increased earnings may be per- 
 fectly justified, just as labor is justified under the 
 same conditions in demanding and receiving a largely 
 
 75 
 
76 LABOR'S CRISIS 
 
 increased wage. Not that profiteering is not also one 
 of the features and an inevitable factor of price infla- 
 tion. The race for material gain is inherent in the 
 human being, and greed and reckless speculation be- 
 come particularly manifest under unbalanced social 
 and economic conditions, when restraint is not exer- 
 cised and the sense of proportion is lost. 
 
 A simple illustration will make clear the effect of 
 curtailed labor upon the prices of commodities and the 
 impulse it lends to the inflation of the cost of living. 
 A manufacturing plant equipped and capitalized for 
 a normal output of 100,000 yards, selling at one dol- 
 lar a yard, and yielding a profit of ten thousand dol- 
 lars, or ten per cent on the total sales of $100,000, is 
 by reason of twenty-five per cent, labor curtailment 
 reduced to an output of 75,000 yards. If the same 
 amount of profit is to be earned on the reduced output 
 of 75,000 yards as on the normal output of 100,000 
 yards, namely $10,000, the selling price of the fabric 
 will have to be advanced to $1,331^ a yard. It will 
 be observed that without any additional profit to the 
 producer the mere curtailed production of twenty-five 
 per cent, compels an advance of thirty-three and one- 
 third per cent, in the selling price of the product. But 
 the reduced output also starts a number of other fac- 
 tors to inflate the cost and largely increase the selling 
 price of the fabric. Overhead charges, materials, and 
 supplies, which are likewise afifected in price by the 
 
INFLATED COST OF LIVING ^7 
 
 shorter standard workday and above all by the largely 
 increased wage which is the natural sequel of a higher 
 cost of living, all contribute to swell the productive 
 cost and create a generally inflated economic condition. 
 The greatly increased cost also demands larger work- 
 ing capital and involves greater commercial risk. 
 
 The facts presented here show that the process of 
 inflation follows a natural course according to eco- 
 nomic laws, and the conclusion may be safely drawn 
 that the curtailment of twenty-five per cent, in indus- 
 trial labor productivity will automatically force an 
 average advance of over sixty per cent, in the selling 
 price of the products without any evidence or stigma 
 of profiteering. An average advance of sixty per cent, 
 in the cost of all manufactured products is equivalent 
 to an annual tax on their consumption of $14,547,- 
 860,834, based on the value of the industrial products 
 of $24,246,434,724 for the year 1914, as given in 
 table 2, page 30. Measured by wage value, an ad- 
 vance of three hundred fifty-seven per cent, in the 
 total wage of $4,078,332,433 as shown in table 2 would 
 have the same effect on the cost of the product as a 
 reduced production of only twenty-five per cent. These 
 figures convey in visible form the efifect and the cost 
 of an economic policy of which curtailed labor is the 
 outstanding principle. 
 
LABOR WELFARE AS RELATED TO MA- 
 TERIAL AND SOCIAL WELFARE 
 
 Both material welfare and labor welfare are ele- 
 ments of social welfare, although under certain condi- 
 tions they may affect the latter unfavorably. Ma- 
 terial welfare, often associated with a higher civiliza- 
 tion and a higher standard of living, has purely an 
 economic and material basis and enters into social 
 welfare only when it is instrumental in providing op- 
 portunities and facilities for a decent and healthy ex- 
 istence. Merely serving as a means for increasing 
 comforts and conveniences beyond essential require- 
 ments and for spreading material indulgence and pleas- 
 ures, material welfare forms the antithesis of social 
 welfare, if not a germ of individual and national de- 
 cline and decay. 
 
 Social welfare may reach a high level even though 
 evidence of material welfare does not exist and life 
 is maintained on a more primitive basis than is popu- 
 larly associated with modem civilization. Accumu- 
 lation of wealth may be difficult and rare, industrial, 
 technical, and scientific development may be slow, mod- 
 ern comforts and conveniences may be absent, and yet 
 a people may be far in advance in social welfare and 
 
 78 
 
LABOR WELFARE 79 
 
 in social justice of those showing evidence of material 
 progress and of modern civilization. Social welfare is 
 determined and is actuated by moral forces and it 
 cannot thrive where extreme poverty and great wealth 
 are the contrasting features of a social order. 
 
 Labor welfare, although it enters as an important 
 element into social welfare, may, like material welfare, 
 affect it unfavorably. The protection of life and 
 health and the promotion of the moral and intellectual 
 qualities of the people, whether relating to labor or 
 to any other unit of society, is the aim of the state, as 
 it is also the fundamental principles of social welfare. 
 Beyond that, labor welfare and social welfare may 
 reach a point of decided divergence, and the interest 
 of the former may be diametrically opposed and be 
 detrimental to the principles of the latter. For in- 
 stance, reduced hours of labor, in lessening exertion, 
 and in increasing the opportunities for employment 
 and for a higher wage, promote labor welfare. But 
 in lessening the supplies and greatly enhancing the 
 cost of the necessaries of life they may become a dis- 
 tinct menace to the state as well as to social welfare. 
 To show how delicately the scale of labor welfare and 
 social welfare balance, we will take the case of an 
 increased wage to transportation workers as a result 
 of which the public has to submit either to an increased 
 fare or to curtailed transportation facilities, or the 
 road would be operated at a loss. The greater num- 
 
8o LABOR'S CRISIS 
 
 ber may in this instance have to suffer for the benefit 
 of a few, and the greater number may represent those 
 to whom the increased fare or the decreased railroad 
 facilities is of greater consequence than the increased 
 wage is to labor. 
 
 Evidently the promotion of labor welfare has 
 strongly marked limitations, so far as social welfare 
 is concerned. The impression should not be gained, 
 however, that in the struggle with capital for a just 
 and equitable compensation social welfare is not being 
 promoted. On the contrary social welfare demands 
 that the opportunities for a decent existence shall be 
 offered to all alike; that the weak shall be protected 
 against the strong; that no class shall enjoy special 
 privileges and promote its own welfare to the detri- 
 ment of the common welfare. 
 
 Some of the principal labor reforms, as the child 
 labor laws and female labor laws, were enacted mainly 
 in the interest of society, incidentally also benefiting 
 labor. The child labor laws were not originally fa- 
 vored by the individual laborer, who considered the 
 child an economic asset and a necessary contributor 
 to the support of the family. 
 
 In the broad sense, organized labor cannot be said 
 to be interested in the welfare of the individual la- 
 borer, except as he may be affected by the wage or by 
 hours of labor. Its interest in the laborer is confined 
 
LABOR WELFARE 8i 
 
 to the shop and to the factory and does not extend to 
 the home and to the family. Organized labor is in- 
 different regarding many of the labor questions which 
 enter into social and labor welfare, as, for instance, 
 housing of the laborer or the moral and intellectual 
 improvement of the laborer. This is explained by 
 the contention of organized labor that an adequate 
 wage is the solution of those problems and the cure 
 for most of the social ills. To a large extent this 
 contention is justified, but the fact must also be taken 
 into consideration that dollars and cents alone do not 
 determine the adequacy of the wage, and that it must 
 be supported by thrift, foresight, and frugality, which 
 as a rule are not characteristics of the laborer. The 
 prevailing inflated wage has not materially improved 
 the economic condition of the average laborer, and 
 this is not due so much to the high cost of living, as 
 is being claimed, but to improvident and shiftless 
 habits. He is less exposed to involuntary idleness, 
 but he indulges more in frequent spells of voluntary 
 idleness, which the high wage encourages. In many 
 instances the wage is being dissipated on trifles and 
 useless things, whereas in the more essential factors 
 of a higher standard of living, as for instance decent 
 and sanitary housing, the conditions are unchanged 
 and remain on a low level. The thrifty laborer is, of 
 course, decidedly benefited by the high wage, but he 
 
82 LABOR'S CRISIS 
 
 is the one who is least affected under adverse economic 
 conditions, and he never enters into the poverty 
 problem. 
 
 Labor forms only one of the units of society, not 
 distinct from the others either in privileges and rights 
 or in duties and obligations. When it attempts to set 
 its own welfare above the welfare of the state it cre- 
 ates a condition which violates the principles of democ- 
 racy and brings it into decided conflict with law and 
 order. 
 
CAUSES OF THE PRESENT LABOR FERMENT 
 
 The world-wide labor unrest which is agitating and 
 convulsing society springs from different causes and 
 is moved by a different spirit from industrial labor 
 unrest. It cannot be arrested nor modified by a high 
 wage, nor by a short working-day, nor by any of the 
 ordinary methods and measures which under normal 
 conditions regulate the relationship of labor and cap- 
 ital. It is moved by higher aspirations, demanding 
 not merely a full share in the production of wealth 
 but aiming in many lands at the complete reformation 
 of existing political, social, and economic institutions. 
 This widespread spirit of unrest, which has a dis- 
 tinctly psychological aspect, is not confined to the 
 proletariat nor to any special type of labor nor to any 
 particular industry. The skilled and the unskilled, 
 the industrious and the lazy, the wellpaid and the 
 underpaid, the protected and the abused, come under 
 its magic sway, agitating and fermenting the forces 
 of production wherever labor is a factor of society. 
 With irresistible power it is removing political and 
 social barriers which have endured for ages ; it is dis- 
 integrating and destroying in many lands the founda- 
 tions on which the state and society have been reared ; 
 
 83 
 
84 LABOR'S CRISIS 
 
 it is setting up its own laws and its own economic or- 
 ganizations. Like a torrential stream the momentum 
 of the movement suffers no impediments and is creat- 
 ing its own channels and outlets. 
 
 The employment and treatment of labor were re- 
 duced to ethical principles and to concrete laws in 
 Biblical times, but the labor problem still survives and 
 is likely to endure for all time unless a new social 
 structure can be reared in which the wage will no 
 longer operate as a factor in the performance of labor. 
 Whereas the labor problem may be considered im- 
 mutable, the factors and elements which enter into it 
 are constantly displaced by new ones, which are cre- 
 ated by the social conditions of the period. Slavery, 
 immigration, child labor, the inadequate wage, and the 
 long working-day have all in turn given life to the 
 labor problem in recent times. 
 
 Probably at no time, however, has the employment 
 of labor presented a problem so complex and so dif- 
 ficult of solution as the present labor unrest. It is not 
 based upon nor impelled by any specific evil from 
 which labor is specially suffering at the present time, 
 although it is marked by insatiable demands for higher 
 wages and reduced working time. Its outstanding 
 symptom is violent discontent with existing social 
 conditions, particularly in relation to capital and to 
 the unequal division of wealth. 
 
 The aim of the labor revolt, as it may be correctly 
 
THE PRESENT LABOR FERMENT 85 
 
 termed, varies in different countries according to the 
 political, social, and economic condition of labor. In 
 countries in which the political rights of the laborer 
 have been curtailed, as in Russia and to a less extent 
 in Germany, the economic aims are blurred in the 
 multitude of political and social reforms. In demo- 
 . cratic countries like the United States and England, 
 labor unrest is based upon economic conditions and 
 does not concern itself with the existing political and 
 social institutions. One economic principle gives pow- 
 erful impulse to the labor movement wherever it is 
 taking root — a high wage, with greatly lessened if 
 not minimum exertion. 
 
 Much as the aims and manifestations of labor unrest 
 may differ in various countries, they spring from a 
 common cause and a common grievance and represent 
 the cumulative result of an unbalanced and unjust so- 
 cial and economic condition dating back several gen- 
 erations. The transition from home industry to fac- 
 tory labor and the rapid development of the latter in 
 the nineteenth century caused a radical change in the 
 life of the wage earner, affecting not only his family 
 life and his working conditions but also imposing upon 
 him new trials and hardships. From the rural dis- 
 tricts and small towns — with the greater ease and 
 comfort they offer and the attachment for home they 
 develop — he was transplanted into congested indus- 
 trial centers, where ideals do not thrive, individuality 
 
86 LABOR'S CRISIS 
 
 and ambition are weakened, and the worker is reduced 
 to an integral part of the mechanism which he is 
 operating. The wage for twelve to fourteen hours of 
 daily labor provided the worker with only the absolute 
 essentials for bare physical existence, but this pre- 
 carious condition often changed into a spell of utter 
 destitution when any contingency arose affecting his 
 earnings or increasing his expenses. Opportunities 
 for self -improvement or for healthy diversion did not 
 exist, the squalid home offered no attraction, and the 
 liquor saloon was his only place of refuge, where he 
 was a welcome patron, and where in the companion- 
 ship of his fellow sufferers he would seek to obliterate 
 his cares and sorrows. The following report sub- 
 mitted in 1885 is in no wise an overdrawn picture of 
 the economic and social status of the average laborer 
 of that period, and in many respects it would fit the 
 conditions of a large part of the laboring class of to- 
 day: 
 
 " Ninety per cent, of the actual producers of wealth 
 have no home that they can call their own beyond the 
 end of the week ; have no bit of soil, or so much as a 
 room, that belongs to them; have nothing of value of 
 any kind, except as much old furniture as will go in a 
 cart; have the precarious chance of weekly wages, 
 which barely suffice to keep them in health ; are housed 
 for the most part in places that no man thinks fit 
 for his horse; are separated by so narrow a margin 
 
THE PRESENT LABOR FERMENT 87 
 
 from destitution, that a month of bad trade, sickness, 
 or unexpected loss, brings them face to face with 
 hunger and pauperism. . . . This is the normal state 
 of the average workman in town or country." ^ 
 
 Pathetic as this portrayal is, it presents a decided 
 improvement upon the deep misery and degradation of 
 the working class in the early part of the nineteenth 
 century, described by President Walker as follows: 
 " The beginning of the present century found children 
 under five and even three years of age, in England, 
 working in factories and brick-yards ; women working 
 underground in mines, harnessed with mules to carts, 
 drawing heavy loads; found the hours of labor what- 
 ever the avarice of the individual mill-owners might 
 exact, were it thirteen, or fourteen or fifteen.^ . . . 
 Children had not a moment free, save to snatch a hasty 
 meal or sleep as best they could. From earliest youth 
 they worked to a point of extreme exhaustion, with- 
 out open air exercises, or any enjoyment whatever, but 
 grew up, if they survived it all, weak, bloodless, miser- 
 able and in many cases deformed cripples, and vic- 
 tims of almost every disease." * 
 
 These iniquities were common, not in the dark ages 
 and not in a barbarous country but in the nineteenth 
 century and in civilized England, the cradle of political 
 
 1 Industrial Remuneration Committee, Report, 1883, p. 429, 
 in paper on Remedies for Social Distress, bty, Frederic Harrison. 
 
 2 Francis A. Walker, " Political Economy," 1888, pp. 380-81. 
 s " Encyclopsedia of Social Reform," 1897, p. 234. 
 
88 LABOR'S CRISIS 
 
 and social reform ! Even the early labor reform meas- 
 ures do not reveal the awakening of a strong moral 
 conscience; they disclose, so far as the treatment of 
 labor is concerned, a deep-rooted moral torpor, which 
 characterized at that period not only England but all 
 civilized countries including the United States. In 
 1 83 1 a law was enacted in England restricting factory 
 labor of children between nine and sixteen years of 
 age to twelve hours a day. It seems almost incon- 
 ceivable in this more enlightened age that twelve hours 
 of daily factory labor by children only nine years of 
 age should have been considered a reform and was 
 sanctioned by enactment of law, not to say approved 
 by human conscience. Nevertheless this slight better- 
 ment symptomatizes an awakening of public conscious- 
 ness to the sins committed against labor and against 
 humanity, as it also marks the dawn of a new era, in 
 which the spirit of labor is impressed upon every act 
 and every endeavor of modem social organization. 
 Labor has shaken off the yoke which it has carried 
 from the times of the Pharaohs in Egypt, and with ir- 
 resistible force it is revolutionizing the fundamental 
 principles which have governed and sustained the hu- 
 man family from time immemorial. 
 
 While the present upheaval is the natural result of an 
 economic maladjustment, which had reduced labor to 
 the lowest level of existence, the awakened conscious- 
 ness in labor of its great inherent powers for a dominat- 
 
THE PRESENT LABOR FERMENT 89 
 
 ing position in the social organization is primarily due to 
 two causes, compulsory education and trade unionism. 
 The one helped to spread enlightenment and awaken 
 the dormant reasoning powers of the ignorant; the 
 other gave power to collective action for labor better- 
 ment, as it has also increased the power of labor to 
 secure a commanding position in society. In countries 
 not touched by compulsory education, popular agita- 
 tion served as the means of stirring the mind of the 
 worker and caused widespread upheaval. The greasy 
 and decaying rag is harmless in the closed closet, but 
 spontaneous combustion will result when the door is 
 opened and the rag is exposed to air. Labor as long as 
 it was kept in darkness and in ignorance remained stag- 
 nant and impotent, but in touch with enlightenment 
 it becomes a combustible and dynamic force, threaten- 
 mg to convulse society to its very foundations. Just 
 as steam and electricity, without the application of sci- 
 entific principles for their proper control, are forces of 
 destruction, so does the awakened spirit of labor de- 
 mand guiding principles based upon right and justice if 
 it is to prove a power not for evil but for good. 
 
 Capital, sensitive as it is to every change, whether 
 political, social, or economic, is quick to recognize the 
 menace to itself and to society from this newly awak- 
 ened spirit of labor. That capital is stirred into ac- 
 tion is indicated by the many devices it is evolving to 
 bring about closer contact and more intimate relation- 
 
90 LABOR'S CRISIS 
 
 ship with labor. By means of limited profit sharing, 
 rewards and bonuses, labor welfare work, by giving 
 labor a voice in labor matters through " industrial de- 
 mocracy," and by numberless individual schemes, it is 
 proposed to conciliate labor and remove or at least les- 
 sen labor unrest. 
 
 All these measures have, however, only a local or 
 temporary effect, depending upon the type and the 
 treatment of the laborer, and they do not help to sat- 
 isfy the large majority of workers, who aspire to more 
 substantial recognition than a benevolent protectorate. 
 The conviction that the wage is an inadequate and in- 
 equitable return for his service is ever present in the 
 mind of the laborer and perpetuates his discontent and 
 his class prejudice. The stipulated wage offers him 
 little opportunity for improving his economic condi- 
 tion, and only under the most favorable circumstances, 
 or only by special mierit, can he permanently detach 
 himself from a standard of life in which care, hardship, 
 and discomfort form the main features. In advanc- 
 ing years his service depreciates in market value and is 
 in less demand when ripe experience forms in other 
 walks of life the most valuable asset. If he were a 
 machine, this loss would be covered by a depreciation 
 reserve fund especially created for this purpose. But 
 in a human machine the reduced earning capacity can, 
 in the absence of other provisions, be met only by the 
 adjustment of the worker to a lower standard of liv- 
 
THE PRESENT LABOR FERMENT 91 
 
 ing. Even in the prime of the laborer's life his tenure 
 of employment is never secure, and owing to economic 
 depressions, trade fluctuations, and seasonality of pro- 
 ducts, he is exposed to frequent spells of involuntary 
 idleness, which seriously affect his sparse earnings, if 
 they do not bring him into poverty or to the verge of 
 poverty. The labor problem is all the more complex 
 because labor and capital form economically as well as 
 socially two opposite elements and are operated under 
 economic principles which discourage co-operative ac- 
 tion and thereby prevent their closer union. 
 
 The fundamental weakness in the relationship of 
 capital and labor is due to the fact that only one of the 
 parties is materially interested in the result of the joint 
 efforts, and solidarity of aim and action cannot be de- 
 veloped under conditions which do not offer a mutual 
 incentive for cooperation. All social institutions de- 
 rive their binding and cohesive force from a common 
 purpose and interest, and the more equitably the bene- 
 fits are shared the stronger and the more enduring the 
 union. Capital and labor will form a strong fellow- 
 ship when they are united by a mutual interest in the 
 achievement and in the result of their joint operations. 
 Labor cannot, however, be instrumental in removing 
 the existing inequality and cannot create an economic 
 equilibrium in its relationship with capital. It exer- 
 cises only certain restricted functions but no special 
 privileges or advantages which it could relinquish or 
 
92 LABOR'S CRISIS 
 
 share with capital. It possesses no other resources 
 than the capacity for labor, and its only interest in the 
 employment is an explicit wage. Capital alone has the 
 power of readjusting the economic relationship on a 
 basis of mutual interest, and it can accomplish this in 
 a measure by relinquishing some of the advantages it 
 enjoys and by instituting a system of labor compensa- 
 tion combining a reasonable wage with some other sub- 
 stantial benefits of vital interest to the laborer. 
 
 The more the benefits are shared with labor, the 
 stronger the union of the two forces will be, and the 
 less also will be the income from capital. The effect 
 on industrial development of a greatly reduced income 
 from capital is not to be minimized, for gain is the 
 stimulus and the magnet which attracts capital to every 
 enterprise and to all parts of the globe. Capital can 
 only operate and in turn produce new capital through 
 the incentive of gain. Without this vital force com- 
 mercial and industrial enterprise would not be pos- 
 sible, opportunities for the employment of labor would 
 not exist, and the economic organization of society 
 would cease to function or be reduced to a primitive 
 state. 
 
 Capital is, however, also characterized by discretion 
 and conservatism, and is exceedingly sensitive to politi- 
 cal, social, and economic disturbances. It is more 
 timid in its operations than the individual, for it seeks 
 safety at the slightest symptom of danger, whereas the 
 
THE PRESENT LABOR FERMENT 93 
 
 latter will risk health and life in pursuit of gain and 
 even in the performance of labor for a meager wage. 
 It is attracted more by permanent security and stabil- 
 ity than by prospective large gains under threatening 
 conditions. Taking all these facts into consideration, 
 the conclusion seems justified that, though a closer bond 
 between capital and labor will involve a shrinkage in 
 the profit from capital, and as a consequence may also 
 weaken the stimulus for industrial enterprise, this will 
 to some extent be offset by offering capital greater sta- 
 bility and security, not to mention the higher operating 
 and labor efficiency that must result from a harmonious 
 relationship with labor. 
 
 Assuming, however, that capital will be vitally af- 
 fected by a greatly reduced income, it will nevertheless 
 find it necessary from force of circumstances and for 
 its own preservation to adjust itself to the spirit of 
 the times and to form a more intimate alliance with 
 labor. No other agency can be created to combat suc- 
 cessfully the revolutionary influences and force to 
 which labor is exposed and to which it is peculiarly sus- 
 ceptible. Capital would not be far-sighted if it failed 
 to recognize that it is deeply involved in the universal 
 social revolt, that in fact it forms the storm center and 
 the issue in the struggle of the masses to free them- 
 selves from its power and its control. 
 
 Modern democracy, as it is being interpreted by the 
 masses and their leaders, not only aims at political and 
 
94 LABOR'S CRISIS 
 
 social equality but aspires to economic supremacy and 
 to the eventual control of the economic if not the po- 
 litical machinery of the world. Visionary as the un- 
 derlying principles of the present social ferment may 
 in many respects appear to the practical mind, the irre- 
 sistible force of this movement is bound to create far- 
 reaching social and economic changes, affecting partic- 
 ularly the operation of capital as well as its accumula- 
 tion. Evidence of the powerful pressure of public 
 sentiment upon capital is not wanting even in coun- 
 tries most favored by normal conditions, like the 
 United States, where by means of every form of taxa- 
 tion capital is being forced to pay heavy tribute for its 
 preservation, and the greater part of its earnings and 
 its income is being deflected to the state. The same 
 spirit which is reflected in the tax measures is also man- 
 ifest in many other laws and the tendency is to curb 
 and restrict capital and to tap its resources to the ut- 
 most for the benefit of the state. Capital may manage 
 to thrive even under adverse conditions and under 
 strained relations with labor, but it exists on the brink 
 of an active volcano, and it is never free from the 
 danger of violent disturbances. Popular prejudice 
 against capital is not a modem manifestation; it is 
 as old as the relationship of master and servant. It 
 has, however, become greatly intensified in modem 
 times by the rapid industrial development, by the vast 
 accumulation of wealth, and by the increasing power 
 
THE PRESENT LABOR FERMENT 95 
 
 of capital. Under an autocratic form of government 
 this prejudice cannot find outward expression, but with 
 the spread of democracy, or rather of socialism, the 
 manifestations against capital are given free rein and 
 may assume dangerous proportions, as is witnessed in 
 many European countries at the present time. 
 
 The relationship of capital and labor, while it con- 
 cerns more directly the two parties, involves neverthe- 
 less a tripartite interest, the third party being the state, 
 or in other words the public, which is distinctly and 
 vitally interested. This relationship is subject to the 
 regulations and in a measure also to the control of the 
 state, which is invested with the power of imposing 
 upon it restrictive and corrective laws in the interest of 
 the commonwealth. The state is concerned in the wel- 
 fare of labor only in so far as it rests upon the interest 
 and the welfare of the public, as for instance when the 
 low living and working standard of the laborer be- 
 comes an injury or a menace to society or when com- 
 mon welfare demands the prohibition of child labor 
 or the restriction of woman labor. 
 
 On the same ground the state is concerned not only 
 in the conflicts of capital and labor but also in their co- 
 operation if the latter is promoted and maintained at 
 the expense and to the detriment of the people. For 
 instance, the coal operators, who under ordinary cir- 
 cumstances would contest an unreasonable advance in 
 the wage, may grant the increase because the burden 
 
96 LABOR'S CRISIS 
 
 can be shifted to the public by a corresponding ad- 
 vance in the selling price of coal. The mutual interest 
 of capital and labor is promoted in this instance, but 
 it nevertheless violates public policy and public interest. 
 As the guardian of public welfare the state can exercise 
 wide latitude in so regulating the relation of capital 
 and labor that the acts of either, or their joint acts, may 
 not become a source of danger to the commonwealth. 
 In a well-balanced social order common welfare is the 
 paramount aim of the state, and the interest of capital 
 and labor is subordinated to it. Unrest is then merely 
 a temperamental manifestation, or the expression of 
 individual discontent, and not an evidence of social 
 maladjustment. 
 
 Employment of labor, whatever its character, de- 
 mands the functions of some agency for the exercise 
 of supervision, control, and authority. Whether these 
 functions are exercised by capital, or by the state 
 according to socialistic theories, the management of 
 labor will always demand the enforcement of order 
 and discipline. Factory labor cannot be operated un- 
 der a rule of unrestricted individual freedom, and 
 whatever changes the institution of labor may undergo, 
 it cannot completely free itself from control and super- 
 vision. Opposition to restraint is inherent in the hu- 
 man being and manifests itself already in the early 
 stages of the child. In the case of the laborer it finds 
 expression in discontent and unrest, particularly when 
 
THE PRESENT LABOR FERMENT 97 
 
 he is led to believe that the control over him is based 
 upon unjust social conditions. 
 
 Labor unrest is a natural manifestation varying in 
 intensity according to the cause or causes which pro- 
 duce it. It can never be eliminated by newly evolved 
 economic principles nor by acts of the state nor by any 
 other process, for a social order distinguished by ab- 
 sence of opposition, strife, and discontent is beyond 
 the power of any human agency tO' establish. More- 
 over, unrest, whether it manifests itself in labor or 
 in any part of our social organization or in the indi- 
 vidual, is not an evil. On the contrary, it is the pro- 
 pelling force of all attainments and achievements, and 
 the progress and development of the human race are 
 marked and distinguished by stages of social unrest. 
 Labor unrest is a symptom not of disease and decline 
 but of life and virility. It is the expression of higher 
 aspirations, and, threatening and disturbing as the 
 movement may seem, labor unrest will eventually lead 
 to a more perfect social order. 
 
PROFIT SHARING AS A BASIS OF INSUR- 
 ANCE AND PENSIONS 
 
 Profit sharing, operated in a spirit of mutual serv- 
 ice and mutual benefit, virtually constitutes a partner- 
 ship of muscle, brain, and capital for the purpose of 
 sharing in the result of the joint operations. Its basic 
 principle is cooperation, and, where cross purposes 
 dominate, profit sharing as an instrument for a close 
 relationship of capital and labor loses its force. To 
 be of practical value, it must demonstrate its advant- 
 ages to the laborer in tangible form. The mere appor- 
 tionment of a small share of the profits will not effect a 
 permanent or decided change in his attitude towards 
 capital. It must include features which rnake him real- 
 ize that the employment not only offers him a decent 
 existence but also insures him a certain degree of se- 
 curity when, owing to old age or disability, he is no 
 longer able to earn a wage, or whenever he is forced 
 into temporary idleness. The average laborer cannot 
 or does not make provision against the many con- 
 tingencies to which he is exposed, and this is not always 
 due to indifference or thriftlessness but often to the 
 close margin within which he has to manage his in- 
 come. Assure the laborer that the employment, aside 
 
 98 
 
PROFIT SHARING 99 
 
 from the wage, offers him protection in infirmity and 
 in old age, and he is more likely to become permanently 
 attached to the service and to the organization. The 
 question of pension is also of direct concern to capital, 
 particularly at this time, when the strong drift towards 
 state paternalism is likely to evolve, among other labor 
 measures, a labor pension system, and capital will be 
 burdened with the cost in any event. 
 
 The principle of profit sharing by itself, as a means 
 of regulating the relation of capital and labor, can 
 prove a success only where an incentive is offered in 
 the substantial share of profit to each individual la- 
 borer, and this can be accomplished only in organiza- 
 tions favored by exceptionally large profits and a rela- 
 tively small working force. Under normal operating 
 conditions the scope of a profit sharing system will 
 have to be greatly broadened, it will have to touch more 
 intimately the life of the laborer, if it is to bring him 
 closer to capital. A practical illustration will make 
 it clear that profit sharing, generously as it may be ad- 
 ministered, will under ordinary circumstances not ma- 
 terially improve the economic condition of the laborer 
 nor change the relation of capital and labor. Take as 
 an example an idustrial concern with $500,000 capital, 
 employing 500 workers, and averaging an annual net 
 profit of $75,000. Assume that after deducting six 
 per cent, interest on the actual cash investment, the bal- 
 ance of the surplus amounting to forty-five thousand 
 
lOO LABOR'S CRISIS 
 
 dollars is divided equally between, capital and labor. 
 Each of the five hundred laborers would then receive 
 forty-five dollars, or fifteen cents a day in addition to 
 his regular wage! But let us assume that the entire 
 surplus of forty-five thousand dollars is allotted to 
 labor and that each laborer receives as his share ninety 
 dollars a year. Will that change the mental attitude of 
 the laborer towards capital and bring about closer 
 affiliation and cooperation ? Any partnership or com- 
 bination in which the one party assumes the entire risk 
 of the business for a bare return of six per cent, on its 
 investment and the other party receives, in addition to 
 a wage or salary, a share of profit averaging $90 per 
 annum, would have no sound basis for existence. It 
 should be borne in mind that fifteen per cent, profit on 
 the capital invested is considered in most instances a 
 satisfactory operating result, and that 500 laborers in 
 a plant requiring $500,000 cash capital form a conserv- 
 ative average. 
 
 Inasmuch as labor represents a multitude, a partner- 
 ship between it and capital does not seem feasible and 
 does not promise the laborer any economic advantage. 
 Nor will a strictly profit sharing plan, with the exclu- 
 sion of a stipulated wage, materially change the rela- 
 tionship of capital and labor, for as shown in the previ- 
 ous illustration, the laborer's share in the division of 
 the profits represents a comparatively negligible figure. 
 
 The wage is inseparable from the employment of la- 
 
PROFIT SHARING loi 
 
 bor, and whatever new principles may be evolved to 
 regulate and improve the relation of capital and labor, 
 the wage factor will remain the outstanding feature. 
 Profit sharing as a supplement to the wage, can how- 
 ever be made a strong factor by giving it the form of 
 a substantial benefit to the laborer, and by means of 
 which he is made to realize the advantages of a close 
 bond with capital. The urgent need of the laborer is 
 protection against contingencies, and the profit sharing 
 system can not only provide an insurance system for 
 the laborer but also encourage and enforce thrift, in 
 which the laborer is often lacking. To make the state- 
 ment clear, we will again refer to the foregoing exam- 
 ple, but in this instance the annual net profit of $45,000, 
 after deducting the six per cent interest on the invest- 
 ment, is appropriated to capital, labor, and labor con- 
 tingency fund, in three equal parts of $15,000 each. 
 The disposition of the one-third share appropriated to 
 capital does not here enter into consideration, and 
 might preferably be applied to the various emergencies 
 to which capital is exposed. The one-third appropri- 
 ated to labor is, however, payable only every two 
 years, with interest added to it, thus virtually constitut- 
 ing a compulsory thrift and saving scheme for periods 
 of two years. The portion credited to labor contin- 
 gencies forms the nucleus for the insurance fund, 
 which does not become operative until the fund ex- 
 ceeds $30,000. With an annual average income of 
 
I02 LABOR'S CRISIS 
 
 $15,000, which is the one-third share of the profits, 
 and the accumulated fund of $30,000, the worker will 
 receive reasonable protection in old age, in sickness, 
 and in involuntary nonemployment. 
 
 This plan is not materially affected in its essential 
 features whether it be applied to a concern with small or 
 with a large capital, except that in the former case 
 the return on the capital will show a proportionately 
 higher rate of profit, which will prove an advantage to 
 the plan. Personal service is an important factor in 
 the smaller establishment, and those who are directly 
 concerned in the management assume functions which 
 in the large establishment are performed by high sal- 
 aried officials and employees thus entailing a large 
 overhead expense. Whereas an average annual profit 
 of fifteen per cent, is considered a fair return on an in- 
 vested capital of $500,000, the same rate of profit 
 would be considered inadequate on an invested capital 
 of $50,000 or, to quote an extreme example, on 
 $10,000. Assuming that twenty-five per cent, repre- 
 sents the average rate of profit of a concern capitalized 
 at $50,000, its annual profit, after deducting six per 
 cent, on the capital invested, will amount to $9,500, in- 
 stead of $4,500, the profit on a fifteen per cent, basis. 
 
 The successful application of the principles of the 
 profit sharing system as outlined, must be tested not un- 
 der favorable conditions but in times of economic reac- 
 
PROFIT SHARING 103 
 
 tions, when unemployment and underemployment im- 
 pose a heavy strain upon the laborer and upon the agen- 
 cies which have been created in his interest. All or- 
 ganizations exposed to great risks provide in times of 
 prosperity an ample reserve fund to cope with unfavor- 
 able conditions when they arise. The labor conting- 
 ency fund, likewise, has to be guarded and nourished 
 with a view of assisting the employee at a critical time, 
 when his feeling of helplessness and despair is most 
 manifest and the need of an organized relief agency is 
 most urgent. Moreover the thrift provision, which 
 forms a feature of this plan, will prove of great benefit 
 to the employee in times of adversity, for he will have 
 available for his support the accumulated profits of 
 two years. 
 
 The assumption should not be conveyed that this 
 roughly outlined profit sharing plan is adapted to every 
 industry or that it can be applied to any industry with- 
 out some modification in its operating features to suit 
 each particular case. It has to take into consideration 
 the type of labor, the nature of the employment, the 
 character of the industry, and, above all, the financial 
 resources and earning capacity of the plant. Profit 
 sharing cannot be practically applied to employment 
 which is intermittent or seasonal, as in some of the 
 needle trades or in the canning industry. It does not 
 lend itself to organizations in which woman labor pre- 
 dominates, because the service, as a rule, is neither con- 
 
I04 LABOR'S CRISIS 
 
 tinuous nor permanent. It cannot be applied to the 
 operation of labor which terminates with the comple- 
 tion of a project, like the construction of a building. 
 
 The profit sharing plan presented here is particularly 
 adapted to industries and mercantile institutions with 
 an adequate working capital and yielding a fair average 
 profit. The capital must be adequate to insure profit- 
 able operation of the industry and to safeguard it 
 against reverses and times of financial distress. The 
 profit must be attractive, for it forms the basis and 
 the life of profit sharing, as it is also the main incen- 
 tive for mutual cooperation. While the scope of the 
 plan may be broadened or modified to adjust it to the 
 requirements of the industry or to the character of the 
 employment, it must be based on the fundamental prin- 
 ciple of a fair and an open division of the profits, and 
 in a manner which will safeguard not only the em- 
 ployee but also the organization. The result of this 
 close cooperation will be made evident to the laborer 
 through the benefits which the profit sharing plan of- 
 fers him, and in the absence of which he and his fam- 
 ily would be seriously affected. 
 
 Aside from the betterment which a profit sharing 
 system of this character promises to effect in the eco- 
 nomic condition of the laborer, it will also modify, if 
 not eliminate, a deep-rooted and generally recognized 
 cause of the antagonism and prejudice of labor towards 
 capital. Exploitation of labor by capital is not a the- 
 
PROFIT SHARING 105 
 
 ory confined exclusively to the followers of Karl Marx. 
 In its broader sense, as applied to the relation of em- 
 ployer and employee, or master and servant, it has 
 formed the fiery topic of the social reformers of all 
 time. It is inbred in all those who toil for a living, and 
 it is also the popular conception, as well as the sci- 
 entific interpretation, of many of the evils arising from 
 industrial and commercial development. It is claimed, 
 and not unjustly, that in the production of wealth, la- 
 bor is not receiving its due share, and the impetus of 
 the widespread labor unrest gains its force from this 
 conviction. By no other means than by an open and 
 fair division of the profits of the joint efforts of cap- 
 ital and labor can this conviction be shaken, and can 
 the theory of the exploitation of labor by capital lose 
 its force and cease to inflame the passions of the 
 masses. 
 
 The advantages of a comprehensive profit sharing 
 system along the lines indicated here may be summar- 
 ized as follows : 
 
 1. Labor and capital will be actuated by mutual in- 
 terest and by close cooperation, which will result in 
 higher labor efficiency and in decreased operating cost, 
 in greater labor stability and in lessened labor restless- 
 ness. 
 
 2. In the popular mind capital will no longer be char- 
 acterized by exploitation of labor or by injustice in 
 withholding from lafegr it? due share. 
 
io6 LABOR'S CRISIS 
 
 3. The worker will receive reasonable protection 
 against many of the contingencies to which he is ex- 
 posed, whether disability, old age, temporary unem- 
 ployment, or underemployment. 
 
 4. Capital will to a large extent be compensated for 
 its reduced income by the greater freedom from strikes 
 and other labor disturbances and by the greater secur- 
 ity of its investment and stability of its income. 
 
LABOR UNREST AS A CHECK UPON INDUS- 
 TRIAL CONCENTRATION 
 
 The nineteenth century was characterized by a 
 marked concentration of the productive powers and of 
 industrial enterprise in large industrial towns. The 
 drift of labor from the rural districts to the large towns 
 became irresistible, and neither the inhuman working 
 nor the wretched Hving conditions, which were the lot 
 of the workingman in the congested centers, could 
 check this movement. The cause cannot be attributed 
 solely to the attractions which city life exerts on the 
 young ; nor can it be attributed solely to economic rea- 
 sons and to the greater and more varied opportunities 
 for employment which large industrial centers offer. 
 The movement has largely a psychological basis and 
 resulted from unrest and an irresistible craving for a 
 change from the existing environments, regardless of 
 the danger or suffering entailed. It was impelled by 
 the same psychological forces which induced the farmer 
 to abandon his comfortable homestead in the East, in 
 the middle of the last century, and endure the trials and 
 hardships of founding a new home in the wilds of the 
 far West. It was not solely hunger and the lure of 
 plunder which carried the Goths across the Alps or 
 
 107 
 
io8 LABOR'S CRISIS 
 
 the Normans to the Mediterranean shores. Nor were 
 the masses of the Crusaders inspired purely by desire 
 for adventure. All those historical movements were 
 prompted by the pressure of unrest, which is inherent 
 in the human being and forms the strongest dynamic 
 force in shaping the destiny of nations as well as of 
 the individual. 
 
 The present labor unrest presents the same phenom- 
 enon, but it does not manifest itself in migration; it 
 takes the form of a revolt against the existing social 
 order. Its symptom is a deep-rooted and unrestrain- 
 able discontent, which neither a higher standard of 
 living nor a largely increased wage nor reduced hours 
 of labor can appease. Whatever remedy or palliative 
 is applied, it acts like a stream of water on a burning 
 oilfield. It cannot be restrained, any more than can a 
 volcanic eruption. The present unrest will take its 
 own course and lead to a new social order, which, 
 though it may not conform with all the visions of la- 
 bor, will be based upon new social and economic prin- 
 ciples, and the performance of labor will no longer in- 
 volve occupying a lower and degraded rank in society. 
 The dignity of labor will have a new meaning and a 
 greater importance, and necessity will impose upon 
 every individual, whatever the rank and occupation, a 
 certain amount of self-help which now devolves upon 
 hired labor. 
 
 The widespread unrest is likely to cause, among 
 
LABOR UNREST 109 
 
 other changes, a decided check on industrial develop- 
 ment in the congested cities, which form the storm cen- 
 ters of labor agitation, as they are also the hotbeds for 
 the propagation of the most destructive radical theo- 
 ries. Industrial concentration in the large cities was 
 induced by a number of factors, the most important of 
 which were a large supply of labor and convenient 
 transportation for supplies and for the finished pro- 
 ducts. But, important as those factors are, they do not 
 offset in times of chronic labor disturbance the disad- 
 vantages and risk of operating an industry exclusively 
 in one locality, thus exposing the entire organization 
 to the influence of labor agitation. To use a popular 
 phrase, the concern is putting all of its eggs into one 
 basket and is thereby risking the same danger as in the 
 egg story. 
 
 The demoralizing and disintegrating effect of the 
 prevailing labor conditions will force upon many an 
 industrial concern the policy of dividing its one operat- 
 ing unit into several small units and locating them in 
 different towns. This will not exempt the concern 
 from strikes and other labor troubles, but it is not likely 
 that all the units will be simultaneously affected by 
 labor disturbance. 
 
 The small town offers many advantages, and par- 
 ticularly in the relation of capital and labor, which 
 work in greater harmony than in large cities. The 
 growth and development of the small industrial town 
 
no LABOR'S CRISIS 
 
 is closely linked with the prosperity of its industries, 
 and the decline of the latter is invariably followed by 
 the decline of the former. It uses every effort to at- 
 tract and foster those industries, and in many instances 
 the inhabitants become stockholders. Labor is more 
 or less under the influence of this friendly public senti- 
 ment and good will, and loyalty toward the employer is 
 its marked characteristic. It is for this reason that 
 organized labor does not gain a strong foothold in 
 small industrial towns and in manufacturing villages; 
 or at least it cannot exert its power and its influence, 
 except when it appeals to the foreign laborer, who lacks 
 the spirit and the local pride of the native inhabitant. 
 The good will of the native towards his employer can, 
 however, be easily forfeited by abusive and arbitrary 
 treatment, but under considerate management he will 
 resist and even resent outside influences which may 
 tend to disturb this relationship. 
 
 The environment of the small town promotes a type 
 of labor with marked differences from the proletariat 
 of the large cities. The nomadic spirit rarely mani- 
 fests itself, for the narrow industrial field with its lim- 
 ited opportunities does not encourage frequent changes 
 of employment or of occupation. In many instances 
 the entire family works in the same establishment, the 
 son often succeeding the father in the same occupation. 
 This type of help has particular value, because it pro- 
 motes cooperation, efficiency, and labor stability. 
 
LABOR UNREST iii 
 
 Regular habits and an orderly life are characteristic 
 not only of the inhabitant of the rural district but also 
 of the laborer of the small town. Community and 
 neighborhood spirit is strongly developed and the la- 
 borer takes a direct interest in all local matters, whether 
 social, political, or religious. His home is generally 
 within easy walking distance from the factory, thus 
 saving not only time and expense but permitting him 
 to take his noon meal at home. 
 
 The advantages which the small town offers to in- 
 dustrial enterprise and to the laborer are obvious, but 
 they have not overcome the most potential factor which 
 attracts industrial enterprise to the large cities, namely, 
 ample supply of labor. Although less than forty per 
 cent, of the total population of the United States dwell 
 in cities of over ten thousand inhabitants, those cities 
 employ sixty-seven per cent, of the industrial labor.^ 
 Density of population and industrial concentration ex- 
 ert reciprocal attraction upon each other. The large 
 cities attract industries because of the abundance of 
 labor, and in turn the abundance of industries attracts 
 labor. This reciprocal action can be interrupted and 
 counteracted only by causes which will seriously impair 
 industrial operation in large cities, like scant labor 
 supply and low labor efficiency. Widespread strikes 
 and a greatly diminished and deteriorated supply of 
 
 ^Abstract of the Ceff^ff,; pf Manufactures, 1914, published 
 J917, table 180, p. 284. 
 
112 LABOR'S CRISIS 
 
 labor will not only force a redistribution of labor and 
 remove it from the disturbing influence of the large 
 labor centers but will also decentralize many of the 
 large industries and compel the operation of small 
 manufacturing units distributed in small towns. 
 
 It may be argued that a group of widely scattered 
 manufacturing units, placed under a central control 
 and management, cannot be as economically and as 
 efficiently managed as a single large unit. This is, 
 however, entirely determined by the nature of the in- 
 dustry. Many of the leading industrial organizations, 
 as for instance the American Woolen Company, the 
 American Cigar Company, the American Sugar Com- 
 pany, are entirely dependent for the products upon a 
 number of relatively small factories located at differ- 
 ent points in the country. It may also be argued that 
 the limited supply of labor of the small town restricts 
 industrial operation and expansion. In answer, it is 
 only necessary to point to some of the war industries, 
 which were located at points where neither town nor 
 labor existed, but they were nevertheless able to organ- 
 ize quickly large labor forces, attracted from near and 
 distant labor centers by a higher wage. 
 
 Aside from the advantages of better living condi- 
 tions the worker of the small town has also the ad- 
 vantage of the higher purchasing power of the wage 
 and of a lower living cost due to lower rents and to les- 
 sened requirements in dress, amusements, car fare, 
 
LABOR UNREST 113 
 
 etc. Moreover in the small town the laborer is raised 
 to the dignity of an active and a desirable member of 
 the community ; whereas in large labor centers he loses 
 his individual identity and is reduced to an insignifi- 
 cant mechanical unit of the productive machinery. 
 Most important of all to both capital and labor is the 
 more harmonious relationship which exists between 
 them in the small town, and which is less exposed to 
 the influence of trade unionism and to disturbing la- 
 bor agitation than in large cities. 
 
 In the face of these facts the conclusion seems jus- 
 tified that the present labor unrest will, among other 
 revolutionary changes, restore as a productive factor 
 the importance of the factory village and the small in- 
 dustrial town. It would also follow that with increas- 
 ing opportunities for profitable employment the laborer 
 from the rural districts is more likely to be attracted 
 to the factory village and to the small industrial town, 
 and hence will cause a redistribution of labor and les- 
 sen the drift from the rural districts to the large labor 
 centers. 
 
MORAL ECONOMICS AS APPLIED TO LABOR 
 
 Social and economic conditions are closely related 
 and act in strong sympathy with each other. Social 
 revolutions are invariably accompanied by economic 
 revolutions and vice versa. The introduction of power 
 machinery in the early part of the nineteenth century 
 had far-reaching social consequences, not the least of 
 which were the removal of the family from the home 
 to the factory, thus diminishing the influence and im- 
 portance of home life, and the influx of rural popula- 
 tions to industrial towns, resulting in congestion and in 
 the many social evils due to crowding. Social prog- 
 ress in modern times has effected a revolution in labor 
 conditions, for it has not only eliminated child labor, 
 restricted female labor, curtailed male labor, and lifted 
 the living and working standard of the workingman to 
 a higher level, but it has changed and readjusted the 
 relation of capital and labor. The nineteenth century 
 portrayal of capital as the stem and arrogant autocrat 
 and labor as the downtrodden victim would ill fit mod- 
 ern labor conditions. Labor is no longer treated as a 
 mere commodity reducible to dollars and cents, but is 
 recognized as a strong living force, susceptible and 
 
 114 
 
MORAL ECONOMICS 115 
 
 responsive to every human impulse and demanding in 
 its operation the most judicious care and attention. 
 Social progress has increased the dignity and import- 
 ance of labor and it has also lessened the value and in- 
 fluence of capital. The leveling process has, how^ever, 
 not reached the point of closer community of interest, 
 but it has resulted, so far as capital is concerned, in a 
 decided change of attitude towards labor. 
 
 The spirit of indifiference and arrogance which at one 
 time distinguished capital is giving way to a friendly 
 and benevolent interest in the physical and moral wel- 
 fare of the workingman. Capital no longer attempts 
 to control labor by drastic or arbitrary means but ap- 
 plies the moral code to questions at issue with labor. 
 It does not belittle the value of this moral awakening 
 that it has not been aroused by agitation or legislation 
 or prompted by philanthropic motives ; on the contrary, 
 the change is likely to be permanent because it springs 
 mainly from necessity and self-interest. The old eco- 
 nomic principles and policies can no longer be success- 
 fully applied to modem industrial operations in view of 
 the diminished supply and the greater power of labor. 
 The control of labor is now, more than ever, a difficult 
 problem, which cannot be solved by the application of 
 selfish business principles and methods, but must be in- 
 fluenced by ethical principles or what may be termed 
 " moral economics." The study of the labor question, 
 particularly as related to labor welfare, has become a 
 
ii6 LABOR'S CRISIS 
 
 special science, not exclusively confined to social re- 
 formers and political aspirants but also receiving the 
 serious attention of the employers of labor as an essen- 
 tial economic requirement of modern industrial enter- 
 prise. 
 
 Labor welfare is not only the index of social prog- 
 ress but is becoming recognized as a basic political and 
 economic principle in all civilized countries. Germany 
 and England have been far in advance of the United 
 States in this movement, and some of the measures, as 
 old age pensions, permanent disability provisions, un- 
 employment and life insurance, come close to the prin- 
 ciples and doctrines advocated by socialism. In these 
 two countries, however, the advance of labor welfare 
 is the outgrowth of political aims and policies, whereas 
 in the United States it is due largely to the develop- 
 ment of an economic need and not of a political creed. 
 There is also this difference that in the European coun- 
 tries labor welfare as a creation of the state is confined 
 within the prescribed limits of the laws, beyond which 
 it is not supplemented or stimulated to any large ex- 
 tent by private agencies. In the United States it is a 
 voluntary service beyond the legal requirements and is 
 supported exclusively by capital as the means of 
 strengthening its relationship with labor. Capital has 
 learned from practical experience and observation that 
 labor is more contented and more tractable under a 
 benevolent protectorate than under a stern mastership, 
 
MORAL ECONOMICS 117 
 
 and that a community interest and a spirit of coopera- 
 tion and loyalty can be awakened thereby. 
 
 That this movement is not sporadic nor confined to 
 a few large industries is evidenced by the fact that the 
 New York Public Library has on file a list of seven 
 hundred and fifty concerns which have introduced some 
 form of labor welfare work. Some confine themselves 
 to special benefits, such as pensions, sick benefits, or life 
 insurance; others cover almost the entire field of wel- 
 fare work in a most scientific manner, maintaining 
 well-organized research bureaus for the purpose of im- 
 proving the living and working conditions of their em- 
 ployees. Every possible safeguard is applied to pro- 
 tect employee's health and life at his occupation and 
 in his home. Well-equipped hospitals, dispensaries, 
 and dental clinics are maintained for his benefit, and 
 some of the concerns provide medical attendance, 
 trained nurses, home visitors, whenever they are re- 
 quired by the employee or his family. Nor are his 
 educational, recreational, or even cultural needs neg- 
 lected. In many of the large industries, industrial 
 schools and schools for foreigners are conducted, and 
 club houses with libraries, gymnasiums, theaters, and 
 also outdoor facilities for every sport, including tennis 
 courts, are at the disposal of the employee. Marked 
 improvement is being efifected in the housing of the 
 workers, and in the more recently organized industries 
 this feature has received careful study, with a view of 
 
ii8 LABOR'S CRISIS 
 
 making the home attractive, so far as comfort and 
 modern conveniences are concerned. Restaurants are 
 maintained in most of the large industries, serving 
 food at cost and even below cost, and the following few 
 items copied from a lunch card of a factory restaurant 
 in Rochester, New York, may be accepted as typical 
 of many, at least prior to 1917 : 
 
 Roast beef S cents 
 
 Boiled ham S cents 
 
 Mashed potatoes 3 cents 
 
 Assorted cakes i cent 
 
 Bananas 2 cents 
 
 Milk 2 cents 
 
 Ice cream 3 cents 
 
 Apple pudding S cents 
 
 Some of these restaurants offer a complete lunch con- 
 sisting of soup, meat, two vegetables, dessert, tea or 
 milk, and including bread and butter, at a price ranging 
 from twenty-five to forty cents. 
 
 Apart from all other benefits, some of the concerns 
 have introduced profit sharing, or cooperative plans, 
 and if we may judge from the example of the United 
 States Steel Company, which had in 191 3 over 35,000 
 shareholders among its employees with an aggregate 
 holding of over 125,000 shares, labor is availing itself 
 of this advantage quite freely. This same concern 
 spent on welfare work in 19 16 approximately ten mil- 
 lion dollars, and among other things maintains a school 
 system in Gary, Indiana, for the benefit of its em- 
 
MORAL ECONOMICS 119 
 
 ployees, which is recognized the world over as a model 
 of its kind. With many concerns welfare work forms 
 a notable feature of the organization, and is being ex- 
 tended and perfected, notwithstanding the great ex- 
 pense it entails. The welfare system is the pride and 
 the outstanding feature of the organization, upon 
 which large sums are freely expended without impos- . 
 ing an additional tax, or at least any material tax, 
 upon the beneficiary. It will be observed that the re- 
 sponsibility is not confined to the limits of the factory, 
 nor does it end with the day's work of the employee. 
 Ample opportunities are offered to him during his lei- 
 sure hours for indoor and outdoor diversion, for phys- 
 ical and intellectual improvement, and for social inter- 
 course with his neighbors under attractive conditions. 
 
 Capital is recognizing that the elevation of labor 
 means the elevation of the industry and increases the 
 economic value of the latter by strengthening its per- 
 manency and raising its effectiveness. Above all cap- 
 ital sees that labor efficiency is largely determined by 
 the spirit which actuates the laborer in the perform- 
 ance of his work, and that cooperation and loyalty can 
 be developed and stimulated only where the employer 
 has gained the good will of his employee. 
 
 After this brief outline of labor welfare work the 
 conclusion is justified that capital is doing its share to 
 bring about a closer relationship with labor, and the 
 question naturally suggests itself as to what is the lat- 
 
I20 LABOR'S CRISIS 
 
 ter's attitude under the circumstances described. At 
 the outset it is necessary to point out that labor unions 
 are out of sympathy with the movement, the objec- 
 tion being based upon the following two reasons : first, 
 that the welfare of the individual laborer can be pro- 
 moted only by an adequate wage ; second, that the cost 
 of welfare work constitutes a tax on the wage and be- 
 comes a factor in fixing it. The first contention would 
 seem plausible if it could be demonstrated that capital 
 is cultivating this labor welfare work as a cover for a 
 low wage or for the purpose of reconciling labor with 
 a low wage. This, however, would defeat the very 
 aim of capital of developing higher labor efficiency, 
 the absence of which is impairing every industry and 
 the development of which demands, first of all, an ade- 
 quate wage. Labor efficiency is largely a question of 
 living conditions, and where the latter are low the for- 
 mer must also suffer. Moreover the term adequate 
 wage can be variously interpreted, and may be said to 
 be determined by two factors; the amount of the wage 
 and the disposition of the wage. The wage may be 
 ever so liberal and still prove inadequate if not judi- 
 ciously managed, which unfortunately is the case with 
 a large part of the working class, and which is also the 
 cause of keeping many of them in the grip of poverty. 
 The wage cannot, however, be considered adequate if 
 with reasonable care it fails to insure the essentials for 
 a decent existence, or if it is insufficient to maintain the 
 
MORAL ECONOMICS 121 
 
 worker and his family in proper physical condition. 
 
 The second reason advanced by the labor unions, 
 that the welfare movement constitutes a tax on the 
 wage, could be accepted as a fact only if the wages in 
 the industries supporting labor, welfare were lower 
 than in those in which this factor does not exist. It 
 appears, however, to be established that the highest 
 wage is paid in the industries in which the highest labor 
 efficiency prevails, and in most of these industries 
 labor welfare work is a prominent feature. The atti- 
 tude of organized labor cannot be accepted as reflecting 
 the sentiment of the individual worker, who avails 
 himself freely of the many advantages of organized la- 
 bor welfare, not however without a lurking suspicion 
 regarding the motives of the paternal innovation. 
 Suspicion is a strongly developed trait in the average 
 laborer, and this is largely due to the nature of the re- 
 lationship of capital and labor. 
 
 Moral economics is based upon the theory that a 
 harmonious and friendly relationship between capital 
 and labor can be maintained and that labor efficiency 
 can be promoted only by elevating the living and the 
 working standard of the individual laborer, and that 
 discontent is lessened and permanency of labor in- 
 sured by providing him with decent and attractive sur- 
 roundings, which shall include not only a comfortable 
 home but also the necessary facilities for self-improve- 
 ment, for diversion, and for social intercourse with his 
 
122 LABOR'S CRISIS 
 
 neighbors under conditions which tend to develop a 
 neighborhood and civic spirit. It maintains above all 
 else that his wage shall be adequate to provide him and 
 his family with necessities and the ordinary require- 
 ments for a decent existence. No sacrifices are re- 
 quired of labor under the changed conditions, which 
 offer the worker increased opportunities and privileges 
 without imposing upon him an additional financial bur- 
 den, which capital voluntarily assumes in promoting 
 labor welfare. 
 
 The cold fact must be recognized that altruistic prin- 
 ciples cannot play an important part in industrial and 
 commercial life, and that the laws of competition are 
 tyrannical and are not influenced or softened by senti- 
 mental impulses. It may therefore be taken for 
 granted that the cost of maintaining industrial labor 
 welfare enters into the cost of the finished product, and 
 becomes an important factor, particularly in times of 
 close competition, when the operating cost may be said 
 to determine the success or failure of industrial and 
 commercial enterprise. The cost of maintaining or- 
 ganized labor welfare is, however, in most instances 
 offset by lessened labor turnover, by increased labor 
 efficiency, and by a higher intellectual and moral stand- 
 ard of the laborer. For instance, one of the most seri- 
 ous problems with which capital has to contend is the 
 restless and nomadic spirit which characterizes a large 
 plement of the working class, due partly to discontent 
 
MORAL ECONOMICS 123 
 
 with surroundings and the monotony of the occupation 
 but often also to shiftlessness and to a roving disposi- 
 tion. It is not always the desire for self -betterment 
 but rather a confirmed habit of unrest which prompts 
 the frequent changes of employment, infecting in some 
 instances with this spirit a large part of the working 
 organization of a plant. Others again will work only 
 spasmodically, according to their needs or their whims, 
 and this becomes particularly pronounced in times of 
 prosperity, when the larger income encourages many 
 intervals of self-imposed idleness. Without ambition 
 to elevate themselves and their family, without special 
 wants or desires, they lead a happy-go-lucky existence, 
 exerting themselves only when their needs become ur- 
 gent. These two conditions constitute a most disturb- 
 ing factor, not only affecting every industrial organiza- 
 tion by lowering labor and operating efficiency but also 
 seriously injuring society by increasing and intensify- 
 ing poverty. This type is, however, not beyond re- 
 demption, for under proper environment and healthy 
 influence his habits are gradually modified and he is 
 less inclined to lead a nomadic life and shirk work. 
 
 It is apparent that organized labor welfare offers 
 the laborer many advantages, not the least of which are 
 the opportunities for self-improvement and for a sane 
 existence. It offers capital advantages in a more corr 
 dial relationship with labor and in promoting higher 
 labor efficiency. But it also offers a decided benefit 
 
124 LABOR'S CRISIS 
 
 to the state in training a more intelligent and better 
 fitted citizenship, and in reducing the outlay for main- 
 tenance of corrective institutions. The greatest benefit 
 of organized labor welfare is its tendency to make labor 
 more contented and thereby lessen the pressure of the 
 existing labor unrest. 
 
HANDLING OF LABOR IN SMALL PLANTS 
 
 Organized labor welfare, owing to its great cost, is 
 necessarily confined to organizations with large capital 
 and employing large forces of labor. The special 
 census of manufactures in 1914^ showed that only 31 
 per cent, of the wage earners in the United States are 
 employed in 1996 establishments averaging more than 
 500 laborers each. The remainder, constituting 69 
 per cent, of all the industrial labor, is distributed in 
 smaller groups of less than 500 laborers in 240,939 
 establishments, averaging approximately 20 laborers 
 
 1 The following part of table 193 in the Abstract of the Census 
 of Manufactures, 1914, p. 391, shows the total number of es- 
 tablishments in the United States in 1914, grouped according 
 to the average number of wage earners employed and the per- 
 centage of wage earners in each group. 
 
 Per 
 Wage earners Number of Wage earners cent, of total 
 
 per establishment establishments (average number) wage earners 
 
 1 to 5 140,971 317,216 4.5 
 
 6 to 20 54,379 6o6,S94 8.6 
 
 21 to 50 22,932 742,529 10.6 
 
 51 to 100 11,079 791,726 11.3 
 
 loi to 250 8,47a 1,321,077 18.8 
 
 251 to 500 3,108 1,075,108 15.3 
 
 501 to looo 1,348 926,828 13.2 
 
 Over 1000 648 1,255,259 17-8 
 
 125 
 
126 LABOR'S CRISIS 
 
 each. The fact that 69 per cent, of all labor is dis- 
 tributed in 240,939 small establishments is a very vital 
 point, and has a special bearing on the economic and 
 social importance of the small industrial unit and on 
 labor problems in general. 
 
 The figures clearly establish the f ollovi^ing facts : 
 
 1. The dominating factor, so far as the employment 
 of industrial labor in the United States is concerned, is 
 not the large manufacturing unit employing over 500 
 wage earners but the groups of small units each em- 
 ploying less than 500. 
 
 2. The largest percentage of industrial labor is em- 
 ployed in the medium sized establishments, each em- 
 ploying 100 to 250, with a total of 1,321,077 wage 
 earners, against a total of 1,255,259 employed in es- 
 tablishments of over 1000 wage earners. 
 
 The character and type of labor differ not only be- 
 tween the large and small establishments but also be- 
 tween the large and small cities and towns, just as the 
 rural differs from the urban inhabitant. The differ- 
 ence manifests itself in the mental attitude of the la- 
 borer and in the performance of his work. The rela- 
 tionship of capital and labor assumes a different aspect 
 according to the circumstances and conditions under 
 which labor is performed. It would seem that, not- 
 withstanding the advantages and the inducements 
 which many of the large industries hold out to the 
 laborer, such as organized labor welfare, profit shar- 
 
LABOR IN SMALL PLANTS 127 
 
 ing, and industrial democracy, he becomes more at- 
 tached to the small plant. The cause can be found in 
 the diflference of the working conditions, which are 
 largely influenced by the closer touch with the em- 
 ployer, and in their psychological effect on the laborer. 
 In the large establishment the individual laborer is re- 
 duced almost to a cipher in the swarm of coworkers, 
 each forming a mechanical unit in the operation of the 
 vast machine. The human element is almost entirely 
 lacking in the relationship of employer and employee, 
 discipline is rigid, individuality is suppressed, merit is 
 slow to be recognized, and promotion and betterment 
 are remote. The monotony and sameness of occupa- 
 tion are intensified by the restraint of close supervision 
 and by clock-like control over the movements and ac- 
 tion of the individual laborer. In the small establish- 
 ment, on the other hand, the human element is strongly 
 manifest, not only in the greater freedom of the worker 
 and in the more intimate companionship with his fel- 
 low worker, but in the closer touch with the employer, 
 to whom the laborer can present his grievances and 
 to whom he often applies in trouble and in misfortune. 
 Individual merit has greater opportunity for recogni- 
 tion, and monotony and strain of occupation are re- 
 lieved by greater freedom and relaxed supervision. 
 All this may not promote high operating efficiency but 
 it makes the laborer more content with his employment 
 and with his environment, provided he is working un- 
 
128 LABOR'S CRISIS 
 
 der sympathetic management. The wage is, of course, 
 the all-important factor in the mind of the laborer, and 
 it outranks every other consideration and every other 
 advantage. But the visage being equal, the average 
 worker will under fair treatment become permanently 
 attached to the small establishment, although it lacks 
 the advantages which the large establishment offers by 
 means of organized labor welfare activities. 
 
 Among the many schemes which have been evolved 
 with a view of cultivating a spirit of harmony and co- 
 operation in the laborer, profit sharing, organized labor 
 welfare, and industrial democracy are of special im- 
 portance, and each has its advocates, but not the sup- 
 port of organized labor. Harmonious relationship 
 with labor can, however, not be created and maintained 
 by prescribed formulas nor by scientific principles. 
 Whatever method is applied in the handling of labor, it 
 cannot prove a permanent success unless the human 
 spirit is the actuating force, and labor can realize that it 
 is under a rule of right and justice. In this respect the 
 small establishment has a decided advantage over the 
 large, for in the closer and more intimate touch with its 
 employees, the human element plays an important part 
 and gives the relationship greater resistance to disturb- 
 ing influences. In the small plant the complaints and 
 grievances of the employee come to the direct attention 
 of the employer long before the trouble reaches an 
 acute stage or a breach between the two parties is immi- 
 
LABOR IN SMALL PLANTS 129 
 
 nent. In most instances the points of difference are 
 adjusted by the simple policy of " man to man " talk, 
 without resorting to any outside agency by which one 
 might secure an advantage over the other. This is 
 particularly true of establishments in small industrial 
 centers, where trade unionism is not a strong factor. 
 If the issue seriously concerns labor, for instance wages 
 or hours of labor, the negotiations on behalf of the em- 
 ployees are entrusted to a specially appointed delega- 
 tion, and in some cases to the foreman, provided he is 
 in sympathy with the cause, and in conference with the 
 employer a settlement or compromise is generally ef- 
 fected. The greater freedom which the laborer enjoys 
 in the small plant tends to develop in him not only self- 
 confidence and a spirit of initiative, but it also en- 
 courages outspoken criticism, which does not neces- 
 sarily lead to strife but is often instrumental in correct- 
 ing an existing abuse or shortcoming. 
 
 The relationship of capital and labor is maintained 
 in most of the smaller establishments on democratic 
 principles, not in form but in spirit. This should not 
 be confounded with " Industrial Democracy," a newly 
 evolved principle or system for the purpose of promot- 
 ing harmony with labor, which proposes to democra- 
 tize the relationship of capital and labor by granting 
 the latter the right of representation in the adjustment 
 of all labor questions. Like the right of citizenship, 
 this right is exercised not by direct participation but by 
 
I30 LABOR'S CRISIS 
 
 representation through three agencies, termed Con- 
 gress, Senate, and Cabinet. Labor is represented in 
 the first, heads of departments in the second, and the 
 administrative staff in the third. At this point, how- 
 ever, democracy ends, for the most important factor is 
 the veto power, which is vested with the management, 
 and from which there is no appeal. It is evident that 
 if " Industrial Democracy " is to serve its purpose, it 
 must have the unbounded faith and confidence of the 
 laborer and, if once the veto power is arbitrarily exer- 
 cised and comes in conflict with the sentiment of labor, 
 its usefulness is destroyed. Hence the success of this 
 policy depends entirely upon the benevolent disposition 
 of the management and upon the confidence of labor in 
 the management. Where, however, this spirit actuates 
 the relationship of capital and labor, the use of a Con- 
 gress, Senate, and Cabinet for the adjustment of labor 
 disputes seems to be superfluous and cumbersome and 
 may in the end prove an impediment and not an aid. 
 Under any condition this system is as ill adapted for a 
 small concern which has the advantage of personal 
 touch with labor as is a parliamentary form of govern- 
 ment for a small town. 
 
 It is nevertheless true that frequent labor disputes 
 characterize many small establishments in large cites, 
 and particularly the type identified with industries in 
 which low cost of labor, and not merit of the product, 
 is the operating factor. Establishments of this type 
 
LABOR IN SMALL PLANTS 131 
 
 are in most instances handicapped in their competition 
 with large concerns, as well as in their relation with 
 labor, by lack of capital and lack of credit, and are ac- 
 tuated by the one narrow principle of strict economy 
 and saving. Low cost of production is insured by a 
 low cost of labor, and often also by a low standard of 
 living of the employer himself. It must be obvious 
 that in the keen struggle for commercial existence and 
 progress, the small establishment will under those con- 
 ditions not concern itself with the welfare of the em- 
 ployees, except under stress of necessity or under pres- 
 sure of public sentiment. The law of self-preservation 
 has, however, a sharp edge, cutting both ways, and, if 
 applied to the intercourse of capital and labor, leads 
 to the formation of two opposing camps, each eager 
 for the opportunity of retaliating upon the other, with 
 the result that both suffer from frequent strife and 
 both are kept on a low level economically and ethically. 
 Proper handling of labor demands good judgment 
 and tact and a thorough understanding of the human 
 motives which actuate labor. Strife and friction with 
 labor are often due to lack of discretion and often also 
 to the arbitrary and unsympathetic attitude of the em- 
 ployer. Obstinacy, arrogance, and abruptness do not 
 reconcile differences, and this is particularly true in 
 dealing with labor. The employer having as a rule 
 the advantage of a better education and more practical 
 experience, if not of a higher intelligence, it is incum- 
 
132 LABOR'S CRISIS 
 
 bent upon him to adjust judiciously and fairly every 
 issue which may tend to disturb his relationship with 
 labor. The average laborer arrives at his conclusions 
 concerning his employment not so much by the reason- 
 ing as by the emotional powers, and he is therefore 
 largely actuated by impulses, as he is also strongly sus- 
 ceptible to influences. This makes it all the more ne- 
 cessary that all grievances of labor receive careful and 
 impartial consideration if the employer is to retain the 
 confidence and the respect of his employees. In many 
 instances, however, the scale of justice and fairness is 
 so evenly balanced between the contending parties that 
 even an impartial arbitrator would be at a loss to adjust 
 the conflicting interests, and what would be considered 
 an act of justice to one party might prove unjust to 
 the other. The employer has to display a strong dis- 
 criminating sense and he cannot allow self-interest to 
 be the sole determining factor in dealing with labor 
 grievances, as the following incident clearly demon- 
 strates : Some years ago the employees of the concern 
 which will serve here for further illustrations de- 
 manded the observance of Saturday half holiday. To 
 do so necessitated the complete suspension of work on 
 that day in some departments, as the dyeing, bleaching, 
 and scouring, the process of which demands uninter- 
 rupted treatment, and in consequence the existing time 
 schedule had to be adhered to. On closer study the 
 employer subsequently came to the conclusion that the 
 
LABOR IN SMALL PLANTS 133 
 
 Saturday half holiday was a most essential requirement 
 of labor, not so much from the standpoint of rest and 
 needed diversion as for the opportunity it offers to the 
 laborer and to his family to do the necessary shopping 
 and marketing and putting the home in order. In the 
 face of these facts self-interest of the employer, im- 
 portant as it was, had to give way to the higher interest 
 of labor which the grievance involved. 
 
 In most of the industries the small establishment is 
 favored by a closer and more harmonious relationship 
 with labor than the large establishment, and this is 
 particularly manifest in the small towns, where a 
 strong fellow feeling and common interest exists be- 
 tween employer and employees, the former frequently 
 assuming the character of a pater familias, who is the 
 actuating spirit of their activities, whether social, relig- 
 ious, or political. He shares in their joys and in their 
 sorrows, and is present at the weddings and at the 
 funerals, and often acts also as the godfather of the 
 offspring of the employees. The ideal relationship of 
 capital and labor finds here a practical demonstration 
 in a close bond of fellowship based upon community 
 of interest and upon mutual cooperation. 
 
 The actual experience of one of the smaller plants 
 employing about 150 workers will serve to illustrate a 
 thirty-year relationship with labor which has never 
 been marred by serious disturbance or disagreement. 
 The plant is located in an industrial town of about 
 
134 LABOR'S CRISIS 
 
 30,000 inhabitants, and the help, at one time composed 
 of American and Irish, has in the past fifteen years 
 been largely recruited from Italian, Hungarian, and 
 Polish immigrants. From its early stages until re- 
 cently, when the wage became highly inflated, this con- 
 cern had observed the principle of paying its labor at 
 least five per cent, more than the maximum rate pre- 
 vailing in the vicinity for the same class of work, not 
 from motives of philanthropy but as a matter of busi- 
 ness expediency. The loss and annoyance caused by 
 frequent labor turnover justify every means which will 
 induce the laborer to remain at his job, and probably 
 the least costly and the most effective expedient is a 
 liberal wage. Promotion from the ranks was made a 
 marked feature, as an incentive to high effort and keen 
 interest in the result of the work. A boy who was as- 
 signed to the dyeing department as a helper gradually 
 rose to the position of boss dyer, and is at the present 
 time, or was until recently, acting as a professor in a 
 textile school in Philadelphia. Another boy, begin- 
 ning as a helper in the card room, rose to the position 
 of boss carder, and is now filling the highest post as 
 superintendent of the factory. , Organized labor wel- 
 fare was not attempted, or rather, when it was at- 
 tempted on a small scale, did not meet with encourage- 
 ment from the employees. A mutual benefit society 
 was organized among the workers, to which the con- 
 cern contributed annually the same amount as the fees 
 
LABOR IN SMALL PLANTS 135 
 
 collected, but its success proved also its deathblow, for 
 when its accumulated assets reached a rather substan- 
 tial sum, the members insisted upon a distribution, and 
 each received as his share thirty-two dollars. The 
 next attempt, that of insuring in a stock company the 
 entire group of employees against the contingencies 
 of illness and death, likewise proved a failure for the 
 reason that some of the employees declined to assume 
 the one-half cost to which they had pledged themselves. 
 Later attempts to insure the life and the health of the 
 entire group of employees proved a success simply be- 
 cause the company assumed the entire cost. Extreme 
 suspicion by labor manifests itself even when the em- 
 ployees' welfare is the sole consideration of the em- 
 ployer, as was the case in the foregoing two instances. 
 In the absence of organized provisions for the relief 
 of the employee, the concern adopted the policy of deal- 
 ing with each case individually according to its merits. 
 Being a voluntary action on the part of the employer, 
 without any tax on labor, and unexpected by the indi- 
 vidual, it tended to create a more sympathetic relation- 
 ship between employer and employee than could prob- 
 ably be attained by means of organized welfare agency. 
 As an illustration we will quote here the case of an em- 
 ployee who after eighteen years of service had reached 
 the age and the condition of inability to perform longer 
 the necessary labor. He had no savings, his children 
 could not or would not take care of him, and a public 
 
136 LABOR'S CRISIS 
 
 institution would have been his only resort had not the 
 concern retired him on half pay. This primitive pen- 
 sion system has been adopted by the concern as a per- 
 manent policy, the cost of which has in the past ten 
 years never exceeded fifteen hundred dollars per an- 
 num, which is equivalent to an increased wage of ten 
 dollars per annum for each of the one hundred and 
 fifty laborers. 
 
 Little acts like these receive their response, if not 
 their reward, in closer cooperation, in increased loyalty, 
 and in higher efficiency, which have distinguished this 
 labor organization even during the critical period of 
 1 9 18. Labor is essentially human, and the service it 
 renders is largely influenced by the treatment it re- 
 ceives. It is responsive to evidences of appreciation 
 and to words of approbation, just as it will resent 
 words of disapprobation, particularly if they spring 
 from impulse and not from a just cause. Certain 
 acts, no matter how generous or unselfish the motive, 
 are often construed by labor as serving the interest of 
 the employer, or as something to which it is by right 
 entitled, as for instance the practice of paying bonuses 
 at certain periods. The occasion and the state of the 
 labor market must be considered in the recognition of 
 service, if it is not to be interpreted by labor as a sop. 
 The concern already mentioned recently introduced the 
 practice of recognizing periods of service by awarding 
 thrift stamps ranging in amount from twenty-five to 
 
LABOR IN SMALL PLANTS 137 
 
 forty dollars according to the term of service, and em- 
 ployees who have completed ten years of service re- 
 ceive each a fifty-dollar Liberty Bond. The act was 
 particularly appreciated because it was timed when the 
 labor supply was over abundant and the plant was not 
 being operated on full time. 
 
 In some instances the interest of the worker can, by 
 means of certain activities created for his diversion, be 
 directed into channels which, aside from the benefit to 
 employee and employer, may exert a decided influence 
 not only upon the worker's environment but also upon 
 the community, as will be observed from the following 
 experience : 
 
 Induced by the high cost of living in 1916, this same 
 concern hired several acres of land in the vicinity of its 
 factory and, after having it cleared and ploughed, 
 turned it over to thirty-eight of its employees for culti- 
 vation, providing them also with some garden imple- 
 ments and an assortment of vegetable seed. The em- 
 ployees divided the land into thirty-eight equal plots, 
 each man taking care of his own plot for his own bene- 
 fit. The work was performed when the day's labor 
 at the factory ceased and on Saturdays and Sundays, 
 and none of the plots showed at any time evidence of 
 neglect. As a result this group of amateur farmers 
 raised, besides a bountiful crop of cabbages, beans, tur- 
 nips, etc., a full winter supply of potatoes for each in- 
 dividual member of the group, and at a time when this 
 
138 LABOR'S CRISIS 
 
 indispensable vegetable was almost prohibitive in 
 price. The farm has since become a fixed institution, 
 and the entire cost of its maintenance does not exceed 
 two hundred and fifty dollars per annum, which the 
 concern assumes. How much importance is attached 
 to it by some of the employees may be inferred from 
 the fact that one of them, after being discharged from 
 military service owing to a disability, applied for his 
 old job at the factory, but with the condition that the 
 plot which he began cultivating in the spring of that 
 year be restored to him. It is not alone the material 
 and recreational benefit which this primitive farming 
 venture offers to the laborer, but the influence it exerts 
 upon his character, his citizenship, and his relation to 
 the employer that deserves particular notice. 
 
 The foregoing account forms a typical illustration 
 of the smaller establishment in which the relation of 
 employer and employee is based upon the application of 
 certain principles, combining practical business policy 
 with human sentiment. The employer recognizes that 
 this relationship imposes upon him certain moral obli- 
 gations towards his employee, and he also recognizes 
 that labor treated as a commodity and not as a human 
 element will render service accordingly, to the detri- 
 ment of both employer and employee. It should not 
 be inferred that the spirit of unrest which is animat- 
 ing labor in general at the present time, does not in 
 
LABOR IN SMALL PLANTS 139 
 
 some degree also affect this organization. But where 
 employer and employee are actuated by mutual consid- 
 eration and mutual obligations, labor unrest manifests 
 itself in milder form and does not, as a rule, lead to 
 serious or prolonged disturbances. 
 
 Leaving out of consideration the human aspect of 
 this policy in dealing with labor, it may be asked 
 whether from a business point of view the result justi- 
 fies the cost. It will be observed that in the case 
 quoted the employer makes only a few simple but es- 
 sential provisions in the interest of its employees, as 
 group insurance and a crude pension system, but it does 
 not offer protection against other contingencies to 
 which the laborer is also peculiarly exposed, as tem- 
 porary unemployment and short employment. The 
 group insurance embraces the following features : 
 
 1. Life insurance beginning with five hundred dol- 
 lars after the first year and reaching a maximum of 
 fifteen hundred dollars on completion of eleven years 
 of service. 
 
 2. A stipulated income in the event of an employee 
 becoming totally disabled through accident or disease, 
 and this benefit he receives irrespective of the protec- 
 tion which the Workmen's Compensation Law offers 
 him. 
 
 3. Gratuitous service of a visiting nurse in case of 
 sickness of an employee or a member of his family. 
 
140 LABOR'S CRISIS 
 
 The cost of the group insurance based upon a work- 
 ing force of one hundred and fifty employees does not 
 exceed twelve hundred dollars per annum. 
 
 The pension system, crude and limited as it is, proves 
 nevertheless a decided benefit to the aged dependent. 
 Age limit or term of service do not enter into consider- 
 ation, but when an employee reaches the stage of per- 
 manent disability and can no longer earn a wage, he 
 receives a weekly allowance according to his financial 
 and physical condition, not exceeding, however, eight 
 dollars a week. 
 
 The total cost of the various benefits which this con- 
 cern maintains in the interest of its employees aver- 
 ages about thirty-five hundred dollars per annum, 
 which is equivalent to an increase of forty-three cents 
 in the weekly wage of each of its one hundred and fifty 
 employees. The mere fact that with a per capita cost 
 of only 43 cents a week so much can be accomplished 
 in the interest of the employee, not considering the 
 benefit to the employer as a result of the harmonious 
 relation, would seem to be in itself a conclusive answer 
 to the query whether the result of this policy justifies 
 the cost. 
 
LABOR AS IT AFFECTS THE WIFE AND 
 THE HOME 
 
 The moral and intellectual advancement of labor is 
 almost entirely dependent upon an adequate wage and a 
 proper home. The latter must be attractive not only 
 in a physical sense, by offering the essential comforts 
 and satisfying the bodily needs, but also in a spiritual 
 sense, by serving as a source of peace and contentment. 
 The wage must be adequate to enable the wife to devote 
 her whole time to the care of the home, for the manage- 
 ment of a laborer's household, modest and primitive as 
 it is, imposes a hard task upon the wife. Whatever 
 the hours of labor of the husband, the duties of the 
 wife know no end or time limit if the home is to re- 
 ceive the proper care and attention. The low moral 
 and physical condition which is characteristic of the 
 homes of many workingmen may be attributed to an 
 inadequate or an injudiciously expended wage, owing 
 to which the wife is compelled to contribute to the sup- 
 port of the family by doing work outside of the home. 
 In such a home, squalor, neglect, and often also actual 
 misery are strikingly evident, and neither husband nor 
 children receive the necessary care. The children are 
 undernourished owing to lack of properly prepared 
 
 141 
 
142 LABOR'S CRISIS 
 
 food, just as they are also unruly, if not wayward, be- 
 cause of lack of proper control and supervision. It is 
 not an uncommon practice, in homes where husband 
 and wife are both wage earners, to entrust the care of 
 the younger children to an older one, although also a 
 mere child requiring motherly care. Many of the so- 
 cial evils, and especially juvenile delinquency, can be 
 clearly traced to homes which lack motherly super- 
 vision. The child, being left to its own resources, 
 chooses any street diversion which may appeal to its 
 youthful fancy, and long before it has reached matur- 
 ity its character is molded under conditions and in 
 environments which often necessitate care in a correc- 
 tive institution. Nor can the laborer find rest and con- 
 tentment in the neglected home, and he seeks cheer and 
 diversion wherever they offer themselves. In many in- 
 stances the married woman, as a contributor to the sup- 
 port of the family, will continue to work as a wage 
 earner until the last stage of her pregnancy and re- 
 sume her occupation, to the detriment of herself and 
 her infant, long before she has recovered her strength. 
 The increased earnings due to the joint efforts of hus- 
 band and wife may relieve the family from actual 
 want, or help to provide additional comforts, but the 
 material improvement is obtained at the cost of the 
 moral welfare of the family and at the sacrifice of the 
 contentment and happiness of the home. The evil 
 may not directly affect the interest of labor, but it is of 
 
THE WIFE AND THE HOME 143 
 
 vital consequence to society, inasmuch as it undermines 
 the functions and the moral influence of the home and 
 endangers the welfare of the child. 
 
 The married woman as a wage-earning factor of the 
 family presents also another phase which has a decided 
 bearing upon the labor, the duties, and the character of 
 the husband. The picture illustrating the status of 
 the woman in some European countries, which depicts 
 the husband as contentedly smoking his pipe in sweet 
 idleness while the wife is performing heavy labor in 
 the nearby field, is not at all overdrawn. It correctly 
 portrays a social condition which prevails in many 
 lands, and it also conveys the vitiating effect upon the 
 man when woman assumes the labor and the duties 
 which by generally recognized custom, if not by the 
 laws of nature, devolve upon the husband. The male 
 bird displays finer instincts, for it braves all the ele- 
 ments to provide food for its brood while the mate 
 is guarding them in the nest from danger. 
 
 Just as child labor has been recognized as a social 
 evil and its elimination has been accomplished in the 
 greater part of the United States, so the labor of the 
 woman wage earner who has the care of the home 
 and her young children could be judiciously restricted 
 and should be sanctioned only under special circum- 
 stances. The husband is the legal provider for the 
 family, except where perverted moral laws prevail; 
 and, although the standard wage takes this fact into 
 
144 LABOR'S CRISIS 
 
 account, it is nevertheless in many instances inadequate, 
 particularly if the family is large or contingencies 
 arise which impose an additional tax upon the man's 
 earnings. In view of the prevailing high wage the 
 time would seem opportune for restricting the labor 
 of married women to the home, and for insisting that 
 the husband be the sole supporter of the family, except 
 where the wife is by necessity compelled to take his 
 place. If the husband is compelled to provide for the 
 family without his wife's aid he is likely to avoid idle- 
 ness and to become a more persistent and efficient 
 worker in order to increase his earnings. The elim- 
 ination of child labor, which was formerly an im- 
 portant factor in the combined earnings of the family, 
 did not cause serious economic disturbance to those 
 directly concerned in the change, and the reform here 
 advocated is not likely to prove of greater conse- 
 quence, so far as the economic status of the family is 
 concerned. Labor has demonstrated its power of cor- 
 recting most of the evils which interfere with its wel- 
 fare and its interests, but it has neglected to use its 
 influence and its resources in the direction which con- 
 cerns labor and society most vitally, namely, the ele- 
 vation of the home of the workingman. 
 
OBJECTIONS TO A LEGISLATED 
 MINIMUM WAGE 
 
 The wage cannot be considered apart from its pur- 
 chasing power, but, strange as it may seem, this fact 
 was until very recently almost entirely ignored by the 
 wage earner, and in some instances by our legislators 
 and social reformers. Whether the wage be high or 
 low, its actual value is determined by the cost of liv- 
 ing, and under certain conditions the workingman 
 does not fare so well with a high wage as with a low 
 wage. It is only when the inflated cost of living 
 more than absorbs his earnings that the workingman 
 is made to realize that the value of the wage is not 
 measured by the amount of the remuneration but by 
 the cost of his necessities. While the cost of living 
 and the wage act in close sympathy and follow each 
 other's movements, the former is more sensitive to the 
 factors which cause the rise and decline in the cost of 
 commodities and hence is subject to more frequent 
 fluctuations. It is on this account that a minimum 
 wage law, which has already been enacted in dififerent 
 forms in fourteen states, will require frequent revision 
 and readjustment to meet the fluctuating cost of living 
 as well as the changing economic conditions, or it must 
 
 I4S 
 
146 LABOR'S CRISIS 
 
 remain a dead letter. Owing to local differences in the 
 cost of living, the law will also have to provide a dif- 
 ferential rate for large cities and smaller towns, if not 
 for different sections of the same city. Some of the 
 state laws relating to the minimum wage have taken 
 this fact into account by providing for a permanent 
 board with power to regulate the minimum wage ac- 
 cording to the fluctuating cost of living. The task of 
 such a board will, however, be put to a test not when 
 general inflation favors and facilitates raising the mini- 
 mum wage but when general contraction will demand 
 scaling the wage to lower levels. 
 
 Seemingly the law becomes inoperative in times of 
 industrial and commercial activity, when the keen 
 competitive demand for labor creates automatically a 
 high wage scale and the employer is under the neces- 
 sity of employing labor regardless of experience, skill, 
 or efficiency. On the other hand in normal times, 
 when labor is abundant, the efficient worker is likely 
 to have the preference in employment, for he is more 
 profitable to the employer at a maximum wage than 
 the inefficient worker at a legislated minimum wage. 
 In times of economic reaction the minimum wage 
 earner will be placed at a decided disadvantage in com- 
 petition with efficiency and experience, and this handi- 
 cap cannot be removed by legislative act. Laws may 
 be enacted to prevent a decline of the wage below a 
 legally fixed rate, but they cannot compel employment 
 
LEGISLATED MINIMUM WAGE 147 
 
 nor prevent discrimination, and the worker himself 
 will in the end determine which of the two evils is the 
 less, temporary idleness or an inadequate wage. 
 
 The point may also be raised that a minimum wage 
 rate will discourage the employment of learners or ap- 
 prentices in certain trades, for a large number of those 
 who will be affected by the enforcement of the law are 
 young and inexperienced learners on the threshold of 
 a trade, who with increased experience eventually be- 
 come better wage earners. If the employment of 
 learners is, however, made unprofitable to the employer 
 by reason of a drastic minimum wage law, the in- 
 centive for their employment and for their training is 
 likely to be removed, particularly in times when a 
 normal supply of experienced labor is obtainable. 
 
 Aside from the reasons advanced here against a 
 legislated wage, the fact cannot be overlooked that 
 labor has demonstrated in recent years that by col- 
 lective action it can successfully cope with any prob- 
 lem which concerns it, whether it be the wage, the 
 working hours, or any labor regulation. Through the 
 efforts of the labor unions a scientific wage scale is 
 operative in many of the trades, by which every 
 worker, from hepler to foreman, is insured a fair 
 wage according to rank and character of service. 
 This arrangement is all the more effective because it is 
 based upon a mutual wage agreement of the two 
 parties directly concerned in it, the employer and the 
 
148 LABOR'S CRISIS 
 
 employee, and it is not open to the complex and con- 
 flicting legal interpretations of a rigid legislative wage 
 enactment. It is not open to evasion or to serious 
 contention, and both parties adhere strictly to this 
 minimum wage principle because it adjusts itself to 
 all economic fluctuations and forms a scientific base 
 for the wage scale. Trade agreements virtually con- 
 stitute trade codes regulating the relation of capital 
 and labor, by means of which most of the questions 
 at issue can be and in many instances are amicably ad- 
 justed. They also insure greater stability to labor and 
 to capital by lessening the causes for serious labor 
 and trade disturbances. Although the unions exer- 
 cise jurisdiction over only a minor part of the labor 
 element of the United States, their action affects sym- 
 pathetically the entire field of labor, and their rules 
 and rulings not only have the force of law so far as 
 the individual members of the union are concerned but 
 also strongly influence the attitude of unorganized 
 labor in the remotest parts of the country. Just as 
 under pressure of collective action the standard ten- 
 hour day has been gradually reduced to eight hours, 
 with the prospect of still further time curtailment, so 
 can the same forces be instrumental in establishing 
 a generally recognized minimum wage, as has been 
 demonstrated in many of the trades. A minimum 
 wage enforced by collective action of labor will have 
 the advantage of following closely the trend of fluctu- 
 
LEGISLATED MINIMUM WAGE 149 
 
 ations, and it will be less exposed to the evasions and 
 misinterpretations which often characterize legisla- 
 tive enactments. 
 
 The minimum wage law which is being strongly ad- 
 vocated by leading social reformers, having been 
 adopted in fourteen states and in different forms, can- 
 not be said to have had a fair test demonstrating its 
 practical value under all economic conditions. Its 
 operation has not covered any period of marked eco- 
 nomic depression or of a declining wage, and only un- 
 der those conditions can a legislated minimum wage 
 have an opportunity of justifying its enactment. It is 
 also obvious that the law remains dormant and is of 
 little practical value when labor scarcity enables even 
 the inefficient and the inexperienced to earn a wage 
 far above the minimum scale. The present outstand- 
 ing problem the world over is not a low wage earned 
 by excessive labor but an inflated wage earned by 
 greatly diminished labor, and this applies to the mini- 
 mum as well as to the maximum wage. 
 
 It may be suggested that the minimum wage law 
 was enacted to protect the laborer in times of economic 
 reaction or when under pressure of want he is likely 
 to submit to a wage which is inadequate for his sup- 
 port. But even in view of such emergency it will have 
 to be assumed that the present awakening and power 
 of labor is merely a passing manifestation or a deliri- 
 ous outbreak, and that labor has not shaken off the 
 
150 LABOR'S CRISIS 
 
 impotency and lethargy which characterized it in the 
 nineteenth century. It will also have to be assumed 
 that labor is still the ward of the state, requiring spe- 
 cial care to protect it from the unjust and oppressive 
 rule of capital. This, however, would be contrary to 
 the generally accepted conclusion that the power, in- 
 fluence and prestige which labor has gained cannot be 
 destroyed and will remain a permanent force in the 
 social and economic organization. Labor can no more 
 relapse to its old condition than society can to feudal- 
 ism. The new spirit of labor springs from a strong 
 consciousness of its might and of its rights, and it will 
 not suffer the curtailment of any of the vital advan- 
 tages which it has gained, even though the support of 
 the state is withheld. This does not signify that con- 
 traction of the wage from its present inflation will not 
 eventually occur, but it will be accompanied by a re- 
 duced cost of living, and the powers of labor will prove 
 equal to meet this contingency and prevent the wage 
 from reaching a level which would tend to lower the 
 laborer's standard of living. 
 
HOUSING OF THE LABORER 
 
 Whether it be a mansion or a hovel, the home is 
 the mirror in which are reflected the virtues and the 
 fauhs, the tastes and the habits of its inmates. High 
 ideals and depravity, aspirations and indifference, mod- 
 esty and pretension, thrift and wastefulness, orderli- 
 ness and slovenliness, all leave their imprint on the 
 home and determine for good or for evil its charac- 
 ter and its influence upon the immediate environment. 
 Moreover the home may be considered a fairly ac- 
 curate gauge of the economic condition of the family, 
 whether enjoying abundance or suffering from de- 
 privation, whether it has the advantage of wealth or 
 is struggling against the odds of poverty. A senti- 
 ment of sanctity and inviolability has at all times been 
 attached to the home, and this sentiment has been recog- 
 nized and fostered by every religion and by the laws 
 and customs of every land, no matter how low the state 
 of civilization. 
 
 The instinct of self-preservation suggests to the ani- 
 mal the choice of an abode that will safeguard it and 
 its young from the intrusion of lurking dangers. The 
 bird builds its nest where it is least exposed to the ele- 
 ments, and it makes every provision for the safety of 
 
 iSi 
 
152 LABOR'S CRISIS 
 
 its brood. Human beings, however, cannot in all cases 
 exercise that freedom in the choice of a safe domicile. 
 Paradoxical as it may seem, a higher civilization tends 
 to lower in many essentials the standard and the con- 
 dition of human habitation, for with the expansion 
 of commerce and industry, and with the consequent 
 growth of cities and towns, urban populations become 
 more and more congested and housing more and more 
 contracted, at the expense of the three fundamental re- 
 quirements of sanitary dwellings and decent homes : 
 space, air and light. 
 
 The problem of human habitation may be said to 
 increase with the distance from the equator, as in the 
 northerly latitudes climatic conditions demand not only 
 more substantial and elaborate construction than in the 
 warmer zones, but they also compel closer family con- 
 tact and closer social association within doors, and as 
 a consequence more room space and better housing fa- 
 cilities are required. Surrounding conditions greatly 
 influence the character and type of habitation. For 
 instance in California, where outdoor life the year 
 round is characteristic of the people, the simple bunga- 
 low is popular even among the well-to-do. In the 
 arid regions of the United States the houses have the 
 form of a dry-goods box, the roofs being flat, for roof 
 drainage is unnecessary. 
 
 Just as the domiciliary problem increases with the 
 distance from the equator, so also it becomes more 
 
HOUSING OF THE LABORER 153 
 
 complex and more difficult of solution with the density 
 of population, with the extent and character of the 
 industries, and above all else with a low economic con- 
 dition of the people. The economic condition enters 
 very deeply into this problem and to a large extent 
 establishes the standard of dwellings of different classes 
 of people. Wealth permits a very wide latitude in the 
 choice of a dwelling; it can be made to conform not 
 only to every requirement of sanitation and comfort, 
 but, like that of the migratory bird, the abode may be 
 changed from the extreme cold of the north to the 
 warmth of the south, or vice versa, to suit the changes 
 of the season or the whim of the individual. The evil 
 of neglected and unfit housing begins to make itself 
 manifest with the people who are constantly struggling 
 not so much with poverty as against it, and as the 
 scale of individual earnings declines and the line of 
 extreme poverty is reached, the wretchedness and 
 misery of the housing is laid bare before us. 
 
 The housing of the poor is determined by two fac- 
 tors; first, the amount of the meager wage that can be 
 spared for rent; and, second, the opportunity of finding 
 work in the immediate neighborhood with the least 
 loss of time and money in going to and fro. Under 
 the circumstances the laborer is compelled to accept 
 such housing as may be available and he cannot ex- 
 ercise the necessary judgment or discretion, even in 
 relation to the vital requirements of sanitation and 
 
154 LABOR'S CRISIS 
 
 home comfort. Unless public authorities assert them- 
 selves in his behalf he is left helpless and must submit 
 to conditions that are a menace not only to the physical 
 and moral welfare of himself and his family but to 
 the state as well. 
 
 The housing problem is not confined to the dense 
 centers of population. It seriously affects also the 
 smaller towns in the United States, where space, air, 
 and light are not supposed to command a premium. 
 The economic forces operate here with the same power 
 as in large cities, but the factor which is largely re- 
 sponsible for the low housing standard in the smaller 
 towns is the neglect and in most instances the com- 
 plete absence of official supervision over planning, con- 
 struction, and maintenance of homes. Smaller towns 
 cannot as a rule maintain a well-organized scientific 
 health or building department, and only in case of a 
 serious local epidemic is any effort made to enforce 
 even the simplest rules and regulations of sanitation. 
 As a result workingmen's houses in many of the in- 
 dustrial towns are mere shacks, neglected and dilapi- 
 dated, without even primitive home facilities, and lack- 
 ing proper drainage and the necessary supply of pure 
 water. The tenant becomes as unconcerned in respect 
 to the condition of his home as is the landlord in re- 
 gard to the condition of his property, and the evil is 
 allowed to continue without official interference. 
 
 Fortunately a new spirit is making itself strongly 
 
HOUSING OF THE LABORER 155 
 
 manifest, which must finally result in a widespread bet- 
 terment of the housing of workingmen in industrial 
 towns. This is not being secured by legislation or by 
 an awakened civic interest nor by labor organization 
 but by employers themselves, who have begun to recog- 
 nize that a high standard of labor efficiency can be de- 
 veloped and maintained only through the permanence 
 and stability of labor. Whenever labor displays a 
 nomadic tendency, shifting discontentedly from one 
 place to another and from one occupation to another, 
 efficiency cannot be maintained, and eventually the 
 growth and success of the affected industry will be- 
 come seriously impaired. Some of our noted indus- 
 trial concerns have recognized the wisdom and sound 
 business policy of establishing a closer bond between 
 employer and employees, and the welfare of the em- 
 ployees, particularly in sanitary and domiciliary re- 
 spects, is receiving special study and attention. This 
 does not, however, lessen the evil of the disgraceful 
 dwelling conditions which are still tolerated in so many 
 smaller towns ; but it is safe to assume that the better 
 spirit will become more widespread, particularly in 
 view of the fact that the reform is not being stimu- 
 lated by philanthropic efforts but largely by sound 
 business policy. 
 
 As already emphasized, housing of the poor in the 
 large congested cities, and particularly in New York 
 City with its peculiar topographical situation, presents 
 
156 LABOR'S CRISIS 
 
 a difficult and complicated problem, and its solution is 
 still very remote, with slight hope that all the evils 
 associated with it can ever be entirely removed. Un- 
 like some of the smaller industrial cities where in cer- 
 tain cases the greater part of the population is em- 
 ployed by a single industrial concern, the workingmen 
 in New York are distributed in numberless diversified 
 industries, each industry split up into small units or 
 establishments employing a comparatively small work- 
 ing force. Unlike his fellows in the smaller industrial 
 cities and towns, where in many instances the indus- 
 trial concern owns the houses of its employees, the 
 New York employer cannot for obviows reasons con- 
 cern himself directly with the living conditions of his 
 employees and the evils rarely come under his personal 
 observation. It must, therefore, be evident that the 
 forces which favor the betterment of living conditions 
 of the working class in smaller cities cannot be ex- 
 pected to operate in New York City, and any reform in 
 this direction must come from recognized authorities 
 and by a slow process of education. The workingman 
 must of necessity make his home in the multiple tene- 
 ment, whether his wages average three, four, or five 
 dollars a day. His only choice is between what is 
 known as the new-law tenement and the old type tene- 
 ment erected before 1901, when the present New York 
 building law was enacted. This choice is again re- 
 stricted by the ever-present economic factor, for the 
 
HOUSING OF THE LABORER 157 
 
 standard of the housing condition is largely, if not 
 altogether, determined by the rental. This is the cru- 
 cial point of the housing problem of the poor, for liv- 
 ing conditions have to conform to earnings and not 
 vice versa, and if improved dwelling conditions are 
 based upon higher rentals, the straining point is 
 reached where the purpose of betterment defeats itself. 
 The state can legislate and regulate the housing con- 
 dition of the people, it can enact and enforce laws 
 for the safety, health, and even for the comfort and 
 convenience of the home, but it cannot change unre- 
 lenting economic laws and compel capital to provide 
 improved or approved housing without adequate re- 
 turn on the investment. That the wage earner in New 
 York is still attached to the old tenement, devoid 
 though it be of many fundamental requirements of a 
 proper home, official records conclusively prove. Ac- 
 cording to the Ninth Report of the Tenement House 
 Department of the City of New York, the Borough of 
 Manhattan had, December 31, 1917, 40,822 tenement 
 houses of all types, including high-priced apartment 
 houses, with a total of 541,851 apartments. Of this 
 number 35,288 tenements containing 389,303 apart- 
 ments, were constructed before the enactment of the 
 present Tenement House Laws, and are classified as 
 old-law tenements. The minimum rental in the new- 
 law tenement for an apartment of three rooms with 
 bathroom and hot water supply is $15 per month, the 
 
158 LABOR'S CRISIS 
 
 rent increasing in the more desirable locations nearest 
 to the lines of rapid transit. The minimum rental for 
 a five-room apartment in the old-law tenement is $14 
 per month without bath and hot water supply, or ap- 
 proximately 60 per cent, less than the same number 
 of rooms in the new-law tenement. Since 1918 the 
 scarcity of housing and the rapid advance in rental in 
 New York have become marked, thus intensifying the 
 problem of housing and increasing the importance of 
 the old tenement as a factor. 
 
 It is therefore evident that if a poor man desires to 
 avail himself of the advantages of the new-law tene- 
 ment he must either sacrifice rooming space and crowd 
 his family into fewer rooms or pay a greatly in- 
 creased rental. The first choice must result in room 
 crowding or congestion, and the second is a heavy tax 
 upon his meager earnings, which in most cases he is 
 unable to bear. As a natural consequence the old-law 
 tenement continues to be the predominating dwelling 
 place of the greater part of the population of New 
 York City, and almost exclusively of the poorer class 
 to whose means and needs it is evidently best adapted. 
 
 The flagrant evils of the old tenement have been 
 transmitted to the present generation by the laxity and 
 incompetence of the official authorities of former 
 years, and though in recent years some of the evils 
 have been corrected by the newly constituted Tene- 
 ment House Commission, many more, as for instance 
 
HOUSING OF THE LABORER 159 
 
 the totally inadequate airshafts, remain and will re- 
 main unless the buildings are remodeled and recon- 
 structed, virtually bringing them within the classifica- 
 tion and rental of the new-law tenement. 
 
 The old-law tenement as it now exists lacks not 
 only primitive requirements for the maintenance of a 
 decent standard of living, but it also discourages an 
 economical and orderly management of the home. 
 Facilities for storing and preserving food supplies are 
 not provided. The wash tub in the kitchen serves, 
 when the need becomes very urgent, as a bath tub. 
 Nails and hooks attached to the wall under a rough 
 shelf serve in most cases the purpose of a wardrobe. 
 The walls are either papered or painted in a color 
 scheme which does not tend to the cleanliness of the 
 home. Soft wood floors retaining the moisture add 
 to the hardship of the already overworked house- 
 keeper. Even the furniture is ill adapted for the 
 dwelling of the poor, being either crude and cumber- 
 some or too pretentious for the surroundings. It is 
 all the more remarkable that under almost insurmount- 
 able difficulties many of these homes show every evi- 
 dence of cleanliness and order, of decency and re- 
 spectability, but unfortunately a greater number of 
 families who do not or cannot cultivate those virtues 
 become apathetic and indififerent to their surroundings. 
 
 That the existing conditions in these tenements can 
 in many important respects be improved without im- 
 
i6o LABOR'S CRISIS 
 
 posing a serious tax upon either landlord or tenant, 
 will be shown by the following illustration, taking one 
 or two adjoining old tenements for a practical demon- 
 stration. A shower bath can, in the absence of bathing 
 facilities, be installed in the kitchen in a partitioned 
 space about two feet square and can be connected with 
 a central hot water supply plant placed in the cellar. 
 Adequate shelf and closet space for keeping a limited 
 quantity of food and fuel can be provided in the 
 kitchen. The upper sash of the window frames can 
 be glazed with prismic glass, thus allowing more day- 
 light to relieve the gloom of the inner rooms. Small 
 and inexpensive wardrobes will do away with the un- 
 sanitary practice of exposing the clothes in the living 
 room and in the bedroom. Floor can be laid in nar- 
 row hardwood strips, lessening the work of scrubbing 
 and cleaning. Wall paper can be altogether elim- 
 inated, the walls being painted in a light color scheme, 
 with a view not only of adding light and cheer but 
 also of making it possible to have them washed. The 
 yard fence between the two adjoining houses can be 
 removed to provide a safe playground for the children 
 of the two tenements. 
 
 It will be observed that structural alterations are 
 avoided in this scheme and only certain features are 
 recommended with a view to correcting some of the 
 shortcomings of the old tenement houses. The ques- 
 tion naturally arises whether the landlord can offer 
 
HOUSING OF THE LABORER i6i 
 
 such improvements without materially increasing the 
 rental. Dwelling reform cannot become widespread 
 and achieve its aim if it fails to take into consideration 
 the interest of the landlord, and it is necessary to 
 consider also this phase of the problem to arrive at an 
 intelligent answer. The statement may safely be made 
 that until very recently the possession of real estate 
 proved to many of the owners a liability and not an 
 asset, and this was particularly true of the low type 
 tenement. Drastic but justifiable requirements of the 
 Tenement House Department, higher rate of taxation, 
 greatly increased cost of maintenance, higher rate of 
 interest on mortgages — all contributed and still con- 
 tribute toward creating this condition. But most of 
 all the frequent shifting of tenants and the great cost 
 of repairs and renovations, due in a measure to the 
 carelessness if not to the destructive disposition of 
 some of the occupants, constitute a serious drain upon 
 the rental income, as they are the main causes of the 
 deterioration and depreciation of property. 
 
 The poor tenant, and he must not be confounded 
 with the slum dweller who represents a special type of 
 the lowest class, is not at all indifferent to his dwelling 
 conditions. On the contrary, he is always demanding 
 improvements which he may have observed in the home 
 of a better situated neighbor, where it be a new type 
 of range or a porcelain sink. The roving disposition 
 and the spirit of vandaligni which he sometimes dis- 
 
i62 LABOR'S CRISIS 
 
 plays are mainly due to discontent with his surround- 
 ings. Under favorable dwelling condition he becomes 
 firmly attached to his home, cooperates with the land- 
 lord to maintain the higher standard of the tenement, 
 and even considers it a special privilege to dwell under 
 its roof. 
 
 The complex problem which the intolerable housing 
 conditions of the laborer in New York and other large 
 cities presents, is not to be solved by the expedients 
 recommended here, but they will help to alleviate it 
 by removing at least some of the blemishes which 
 characterize the domiciles of the greater part of the 
 working population of New York City. The home 
 determines and reflects the standard of living, and 
 where it lacks every physical comfort and imposes 
 hardship upon the dweller, it breeds resentment against 
 social order and forms one of the most potent causes 
 of labor discontent. 
 
INFLATION AND HIGH TAXES — THEIR 
 EFFECT 
 
 Economic forces, like the laws of nature, operate 
 relentlessly and despotically, heedless of human laws 
 and ethical principles. They shape and control the 
 fate of nations and individuals, creating and destroy- 
 ing, populating and depopulating, uplifting and sub- 
 merging, establishing close kinship and producing in- 
 equalities and differences in the human family. They 
 give to human action impelling and driving force, 
 stimulating energy and ambition, inciting envy and 
 jealousy, causing feuds and wars, but also establishing 
 peace and stability. All social upheavals and con- 
 vulsions spring from the pressure of the economic 
 forces, or are strongly influenced by them. The pres- 
 ent world unrest has purely an economic aspect and 
 tendency, and is the result of a deranged and an un- 
 balanced economic condition distinguished by vast 
 wealth and extreme poverty. A new social order will 
 eventually evolve from the unrest, and the closer it is 
 adjusted to a state of economic and social balance 
 by eliminating extreme contrasts of rich and poor, the 
 greater will be its stability and the more enduring the 
 peace of the human family. 
 
 163 
 
i64 LABOR'S CRISIS 
 
 The coming social order is still veiled in mystery, 
 but a process of social transformation and social level- 
 ing, as well as of economic readjustment, is already 
 unmistakably manifest, not only in the increasing 
 power and control of labor over the productive forces, 
 but also in the impaired power and control of capital 
 over labor and over the political forces. By lessening 
 the supply of labor and intensifying the demand for it, 
 labor is enforcing a policy by which more laborers are 
 maintained or more time is consumed for a given pro- 
 duction than heretofore. By reducing the perform- 
 ance of labor and of productiveness, society is being 
 forced to restrict and modify its wants, habits and in- 
 dulgences, thus lowering as well as leveling the stand- 
 ard of living. The enormous depletion of the supply 
 of labor, due to social progress, to labor regulations, 
 and to labor's elevation has been statistically demon- 
 strated in the previous chapters.^ It is also generally 
 recognized by those who come in close touch with the 
 operation of labor that when the material improve- 
 ment of the laborer, and particularly of the common 
 laborer, reaches the point where his moderate wants 
 can be supplied with lessened effort, his exertion and 
 close applciation also weaken. The laborer merely 
 displays in this respect the same characteristic as the 
 average human being. All these factors contribute, 
 
 1 Depletion and deterioration of labor, pp. 20-38. Economic 
 effect of curtailed labor, pp. 53-63. 
 
INFLATION AND HIGH TAXES 165 
 
 however, to reduce the productive powers of labor, 
 and it is probably not an exaggerated estimate that in 
 most industries the same number of laborers produce 
 less than seventy per cent, of the pre-war quantity, 
 owing to reduced hours of daily labor, lessened exer- 
 tion, relaxed discipline, frequent absence, not to men- 
 tion chronic labor strikes. The many expedients re- 
 sorted to by the employer, as a high wage, bonuses, 
 etc., have failed to stimulate, to any large extent, a 
 higher productivity of labor. On the contrary, they 
 have made labor more independent and more conscious 
 of its power, and less inclined to exertion. The low 
 labor productivity and not the high wage is primarily 
 responsible for the inflated cost of living, for when 
 production is adequate to meet the demand neither the 
 wage nor the cost of living can materially rise. When 
 1 high wage is instrumental in promoting efficiency and 
 increasing production it lowers the cost of the product 
 in spite of the higher cost of labor. 
 
 It is contended that the present labor problem will 
 ind its natural solution when industrial and financial 
 'caction puts a check upon expansion and inflation, 
 ind the laws of supply and demand react on labor and 
 "estore a normal economic balance. But this can pro- 
 luce only a temporary relapse, for unless the world's 
 ndustries become permanently prostrated, or society 
 "everts to forced labor or slavery, the power of labor 
 vill survive a temporary setback, and will again assert 
 
i66 LABOR'S CRISIS 
 
 itself with full force when normal conditions are re- 
 stored. 
 
 The inflated cost of living operates against the rich 
 as well as the poor, but more particularly and severely 
 against those with a moderate salary or with a fixed in- 
 come. Salary, unlike the wage, is not based upon cost 
 of living, nor is it controlled by trade laws, but is de- 
 termined by nature of the service, by rank of posi- 
 tion, and by individual merit. Inasmuch as the salary 
 does not closely follow the trend of the cost of living, 
 the brain worker must adjust himself to a lower stand- 
 ard of living when economic inflation greatly reduces 
 the purchasing power of his salary. This downward 
 readjustment becomes all the more oppressive to the 
 salaried brain worker because by environment, calling 
 and training, he has to maintain a different standard 
 of living than is essential to the laborer or mechanic. 
 The latter is, by centuries of training, accustomed to a 
 coarser and simpler life, and he is not, as a rule, con- 
 cerned in the refinements of life. Society makes few 
 demands upon him and he is not under the necessity of 
 paying regard to outward appearances and to social 
 conventions. However shabby his clothes or however 
 objectionable his living quarters, it does not affect his 
 wage. The average salaried brain worker, on the other 
 hand, is by circumstances of his employment and by 
 environment compelled to observe social conventions 
 and obligations, and he cannot be indifferent regard- 
 
INFLATION AND HIGH TAXES 167 
 
 ing matters which give at least an outward appearance 
 of respectability. He cannot adapt the customs and 
 ways of the laborer even in trivial matters without 
 lowering his social status and endangering his eco- 
 nomic interest. It would, for instance, violate the dig- 
 nity of his position if, for the sake of economy, he were 
 to bring a " dinner pail " to his place of work, as is 
 characteristic of the manual laborer. 
 
 It does not necessarily follow from all this that 
 measured by material requirements the standard of 
 living of the wage earner is lower, but it differs from 
 that of the brain worker in so far that the cultural and 
 intellectual phases do not form an essential part of it. 
 The same standard of living is not applicable to both, 
 for what forms an essential requirement to the one is 
 a non-essential to the other, excepting when it relates 
 to material wants necessary for physical existence. 
 Under the existing economic conditions the mental la- 
 borer with his rigid salary is forced down to a lower 
 level of existence, whereas the physical laborer is being 
 elevated to a higher level because the more pliable wage 
 does fully meet the inflated cost of living. 
 
 The wage earner has also the advantage over the 
 salaried worker that in many occupations his services 
 beyond the prescribed hours command an enhanced 
 price, and he has frequent opportunities of increasing 
 his revenue, if he is so inclined. But even if we were 
 to assume that the earning power of the wage earner 
 
i68 LABOR'S CRISIS 
 
 does not equal the salary of the average brain worker, 
 he would nevertheless be in a better economic condition, 
 because his essential wants involve a smaller expendi- 
 ture. The economic betterment is even more marked 
 in the common and unskilled laborer, who is emerging 
 from a state of abject poverty to a higher level of ex- 
 istence. He has for ages occupied the lowest position 
 in the social scale, intensifying the labor problem and 
 spreading poverty. His extreme toil and hardship in- 
 sured him only a bare existence even under normal 
 conditions. Whatever evils may otherwise be attrib- 
 uted to the world war, it has raised the common laborer 
 from degradation, and has given him the spirit and the 
 power to demand social justice and economic recog- 
 nition the world over. 
 
 It may be argued that the material advancement of 
 the laborer is due to an abnormal economic condition 
 and that he will resume his former relative position in 
 the economic organization when the laws of supply and 
 demand restore normality. It is a mistake, however, 
 to attribute the elevation of labor purely to existing 
 economic circumstances. Labor progress, so far as it 
 relates to the shorter workday, improved working and 
 living conditions, and abolition of child labor, was 
 largely the result of public sentiment. Long before 
 inflation became manifest the wage was persistently ris- 
 ing for a number of years as shown in Tables I and 11. 
 That a decided industrial reaction will temporarily af- 
 
INFLATION AND HIGH TAXES 169 
 
 feet labor and wages may be taken for granted, but the 
 conditions of the nineteenth century, when the laborer 
 toiled almost unbelievable hours to earn the means for 
 a bare existence, cannot be restored unless labor is re- 
 duced to a state of utter helplessness. No more than 
 those conditions can be revived, can a labor policy sur- 
 vive which confounds equal opportunities with special 
 privileges, and arbitrarily eliminates the economic bene- 
 fits which should distinguish the competent from the 
 incompetent, the industrious from the lazy, the thrifty 
 from the wasteful. It violates the fundamental prin- 
 ciples of society, if not the laws of nature, when it 
 offers a decent existence to all alike, regardless of in- 
 dividual merit and efifort. 
 
 It is true, nevertheless, that the industrial de- 
 velopment and expansion of the nineteenth cen- 
 tury received its impetus and aid from the state of 
 servitude and degradation of labor, which offered an 
 unlimited supply of labor at a low wage. The pro- 
 ductiveness of labor was all the greater because ex- 
 treme want imposed upon the laborer maximum effort 
 which was restricted neither by law nor by labor regu- 
 lations but by the endurance of the individual laborer. 
 Without the vital factor of an almost inexhaustible 
 supply of labor, the vast industrial strides would have 
 been impossible, notwithstanding the marked mechan- 
 ical inventions which distinguished that period. In the 
 face of the exhausted labor reservoirs of the present 
 
I70 LABOR'S CRISIS 
 
 day, the conclusion seems justified that industrial ex- 
 pansion has reached its climax and further develop- 
 ment is unlikely, excepting in countries particularly 
 favored by a large supply of labor, unrestricted hours 
 of labor, and a low wage, as is the case in China and 
 in India. 
 
 Another factor which has a strong bearing upon 
 future industrial development, and expansion, is cap- 
 ital. Industrial development demands, as already 
 pointed out, an adequate and a responsive supply of 
 labor, but above all else it is promoted by saving or 
 earning, which is the basis of capital. The nineteenth 
 century strongly favored and facilitated the accumula- 
 tion of wealth and the operation of capital, and par- 
 ticularly in the United States, where income was im- 
 mune from heavy tax burdens, and free from legis- 
 lated restrictions. This liberal policy has in recent 
 years been completely reversed by drastic laws which 
 divert a large portion of the income of the rich from 
 productive employment to the payment of taxes. Un- 
 der the operation of the Federal income tax law an 
 income of $100,000 is reduced approximately after 
 pa)mient of taxes to $65,000, and an income of $500,- 
 000 is reduced to $177,000, not taking into account 
 state and municipal taxes to which the income is now 
 also subject. It is not a preposterous statement that 
 where the rich have formerly expended on family 
 maintenance one-half of their income, they now have 
 
INFLATION AND HIGH TAXES 171 
 
 resort to retrenchment although their income re- 
 nains the same, as otherwise they must face a deficit 
 It the end of the year, owing to the graduated tax, 
 md to the increased cost of hving estimated at over 
 [00 per cent. The effect of the graduated tax is 
 :learly conveyed by the fact that a pre-war income of 
 f 500,000 was equal to a present day income of $2,100,- 
 Doo, or in other words, the Government's share in the 
 latter is approximately $1,600,000. Income becoming 
 capital, does not remain dormant but is applied to 
 produce additional income, and therefore the amount 
 diverted to the payment of taxes becomes unproductive, 
 unless the Government should apply the collected taxes 
 to maintain and control productive employment. This 
 would be consistent with the fundamental principles 
 of socialism, but opposed to the fundamental prin- 
 ciples of our democracy. High taxes, lowered produc- 
 tivity and deficient and depreciated capital are not in- 
 centives for industrial expansion, nor are they symp- 
 toms of a sound social order. Unless labor can 
 be stimulated to greater efforts and is instrumental in 
 producing increased wealth, violent economic reac- 
 tions, accompanied by industrial recession and a gen- 
 erally lowered standard of living seem inevitable, and 
 particularly in countries where economic progress has 
 been most marked. 
 
 PRINTED IN THB TTNITED STATES OS" AMBBIOA